inspiring - PETRONAS Dagangan Berhad

Transcription

ANNUAL REPORT 2015
PETRONAS Dagangan Berhad
(88222-D)
(88222-D)
Level 30-33, Tower 1, PETRONAS Twin Towers, Kuala Lumpur City Centre, 50088 Kuala Lumpur
Tel: (03) 2051 5000 • Fax: (03) 2026 5505
www.mymesra.com.my
I
N
S
ANNUAL REPORT 2015
P
I
R
I
N
G
2015 was a year of change for PETRONAS Dagangan Berhad. Inspired by our aspiration to become the ”Brand of 1st
Choice”, we embarked on a holistic journey towards delivering change across our organisation through a roll-out
of a culture change programme. This initiative focuses on changing the way we operate and the way we work.
Our proactive philosophy will focus on changes that will further empower our workforce with solutions to help
us achieve our targets. Ultimately, we trust these changes will reflect our commitment to our stakeholders as we
strive to become the “Brand of 1st Choice”.
The icons on the cover reflect the operations, business and technology components that are essential to facilitate
the delivery of effective change in PETRONAS Dagangan Berhad.
HSE CULTURE IMPROVEMENTS
NEW PETRONAS PRIMAX 97
INSPIRE
INNOVATION PLATFORM
EXPANDING REACH
VALUE-DRIVEN
WITH ADVANCED ENERGY FORMULA
BRAND OF 1 CHOICE
COST OPTIMISATION
ASSURANCE
ALIGNMENT
WINNING
FORMULA
ST
OPERATIONAL EXCELLENCE
SUSTAINABLE
TRUSTED BELIEF AND MINDSET
IMPROVED CUSTOMER EXPERIENCE
VALUE CREATION
SUPERIOR PRODUCT QUALITY
IMPROVE VALUE DELIVERY
INSPIRING CHANGE
WHAT’S
INSIDE
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS

(continued)
P E T R O N A S
D A G A N G A N
B E R H A D
INSPIRING CHANGE
KEY MESSAGES
LEADERSHIP
002
002
003
004
005
006
012
042
044
052
054
Our Visions
Our Mission
Shared Values
Business Highlights
Financial Highlights
Chairman’s Statement
MD/CEO’s Statement
020
022
023
024
026
030
032
034
035
About Us
Business Model
Key Business Entities
Our Products & Services
Areas of Operation
Key Milestones
Corporate Information
Group Corporate Structure
Group Organisation Structure
Board of Directors
Profile of Directors
Management Committee
Management Committee Member’s Profile
FINANCIAL REVIEW
058
060
061
062
063
063
064
065
066
067
073
075
Group Financial Review
Five-Year Group Financial Highlights
Five-Year Group Financial Summary
Simplified Group Statement
of Financial Position
Segmental Analysis
Group Quarterly Financial Performance
Statement of Value Added
Distribution of Value Added
Financial Calendar
Investor Relations
Share Performance
Market Capitalisation
BUSINESS STRATEGIES
036
037
038
039
040
040
041
Strategic Objectives
Strategic Initiatives
Strategic Priorities
Strategic Alliances
Code of Ethics and Business Conduct
Corporate Integrity
Key Risks and Opportunities
PETRONAS DAGANGAN BERHAD
ii
ACHIEVEMENTS
076
078
084
085
PDB in the News
Significant Events
Awards and Recognitions
Past Awards
For further information visit
BUSINESS OVERVIEW
FINANCIAL STATEMENTS
086Retail
096Commercial
104LPG
110Lubricants
116 Supply and Distribution
122 Crude Oil and Petroleum
Products Price Trends
123 Economic Outlook and
Prospects
206
211
212
213
214
216
217
SUSTAINABILITY REPORT
126Overview
128 Health, Safety and
Environment
132 Building a High
Performance Culture
138 Driving Innovation
142Customer
144 Corporate Responsibility and
Key Initiatives
144Marketplace
146Workplace
154Environment
158Community
ACCOUNTABILITY
162 Statement on Corporate
Governance
174 Additional Compliance
Information
176 Board Charter
179 Statement on Risk Management
and Internal Control
187 Board Audit Committee Report
191 Board Audit Committee Term
of Reference
193 Statement on Internal Audit
Function
194 Nomination and Remuneration
Committee Report
198 Nomination and Remuneration
Committee Terms of Reference
202 Statement of Directors’
Responsibility
203 Business Continuity
Management
218
219
220
221
222
284
Directors’ Report
Statement by Directors
Statutory Declaration
Consolidated Statement
of Financial Position
of Profit or Loss and Other
Comprehensive Income
of Changes in Equity
of Cash Flows
Statement of Financial Position
Statement of Profit or Loss and
Other Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial
Statements
Independent Auditors’ Report
to the Members
www.
mymesra.
com.
my
006
CHAIRMAN’S STATEMENT
012
MD/CEO’S STATEMENT
SHAREHOLDER’S
INFORMATION
286 Stakeholder Management
Communication
289 Authorised and Issued
Share Capital
289 Analysis of Shareholdings
292 List of Thirty Largest
Shareholders
294 Net Book Value of Land and
Buildings of PDB Company
295 Usage of Land Properties
296 List of Top 10 Landed
Properties
297 Notice of Annual General
Meeting
300 Statement Accompanying
Notice of Annual General
Meeting
301 Administrative Details
302 Corporate Directory
303 Glossary
• Proxy Form
042
BOARD OF DIRECTORS
086
BUSINESS OVERVIEW
OUR
VISION
B R A N D O F 1 ST C H O I C E
WHAT DOES IT MEAN?
“Brand of 1st Choice” drives the core essence of what PETRONAS
Dagangan Berhad (PDB) stands for in terms of delivering quality,
innovation, excellence and differentiating experience for petroleum
products and services in Malaysia.
Given its wide range of innovative products and differentiated
services, PDB is driven to ensure that customers will continue to
recognise, endorse and recommend PETRONAS as their foremost
preferred brand in the downstream oil and gas sector.
HOW PDB ACHIEVES THIS
Supported by a strong delivery network, PDB offers a wide
spectrum of innovative petroleum products and differentiated
services to meet the specific needs of its customers. These
high quality products and services were developed based on
continuous research and development as well as in
partnerships with the best in class brands and companies.
More importantly, PDB has integrated this vision into its
people, processes and procedures to make this aspiration a
reality for each of its core businesses and across all levels
of the Company.
The people at PDB fully embrace this vision and are
committed to translate it into a reality for customers and
stakeholders.
With aggressive plans for market penetration and renewed
commitment towards customer service excellence, PDB has
clearly set the platform for its next stage of growth. The
Company is poised to challenge the market paradigm and
continue being the industry trendsetter. This in turn
will clearly reinforce PETRONAS’ position as the “Brand of
1st Choice”.
OUR MISSION
VALUE DRIVEN FUELS MARKETING WITH MARKET LEADERSHIP IN MALAYSIA
To be the “Brand of 1st Choice“ we are committed to deliver quality fuel products and reliable services to our consumers
nationwide via our reliable network of facilities and business partners. This market leadership is achieved by focusing on
value; driving a high performance culture; ensuring operational and HSE excellence; as well as prudent risk and corporate
governance practices.
SHARED
VALUES
LOYALTY
Loyal to corporation
INTEGRITY
Honest and upright
PROFESSIONALISM
Strive for excellence
COHESIVENESS
United, trust and respect for each other
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
For further
information visit
www.mymesra.
com.my
BUSINESS
HIGHLIGHTS
RETAIL
• Launched the new PETRONAS Primax 97 with Advanced
Energy Formula with Euro 4M specification
• A vast network of more than 1,000 PETRONAS stations and
more than 760 Kedai Mesra
COMMERCIAL
• Sustained market leadership
• Preferred partner in the Aviation industry
• Introduced new products namely Petroleum Coke and Sulphur
LPG
• Sustained market leadership
• Enhanced operational excellence
LUBRICANTS
• Consolidation of lubricants business into one entity that is PDB's subsidiary,
Lub Dagangan Sdn Bhd, which was then renamed as PETRONAS
LUBRICANTS MARKETING (MALAYSIA) SDN BHD
• Extended the Route-To-Market implementation in Sabah and Sarawak to
drive growth and establish its position as a market leader
004
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
SHAREHOLDERS’ INFORMATION
FINANCIAL
HIGHLIGHTS
34
th
Annual General Meeting
PETRONAS
DAGANGAN
BERHAD
Wednesday, 20 April 2016 at 10.00 a.m., Sapphire Ballroom,
Level 1, Mandarin Oriental Kuala Lumpur,
Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia.
as at 31 December 2015
RM
RM
RM
8,070.6 1,084.6 24,697.3
MILLION
TOTAL ASSETS
MILLION
PROFIT BEFORE TAX
MILLION
MARKET CAPITALISATION
ANNUAL REPORT 2015
005
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
Md Arif Mahmood, a Malaysian,
aged 53, is a Chairman and
Non-Independent Non-Executive Director
of PETRONAS Dagangan Berhad.
006
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
CHAIRMAN’S
STATEMENT
DESPITE THE CHALLENGING MARKET ENVIRONMENT, WE
HAD RESPONDED SWIFTLY TO CUSHION OUR EXPOSURE
FROM THE OIL PRICE VOLATILITY.
On behalf of the Board of Directors, I am
pleased to present the Annual Report of PDB
for the financial year ended 31 December 2015.
ECONOMIC AND BUSINESS ENVIRONMENT
REVIEW
Malaysia’s economy expanded at a moderate
pace of 5.0% in 2015, driven by private
consumption and investment. However, consumer
spending patterns remained cautious as
households began to adjust to the implementation
of the Goods and Services Tax in April 2015.
In 2014, the industry witnessed Dated Brent
reaching its peak for the year at USD112.00/bbl
in June, only to have it fall sharply to conclude
at USD62.00/bbl in December. This downward
trend persisted throughout the year in review,
to average at USD52.00/bbl, and this steep
decline in price had significantly impacted our
inventory value. Moreover, as the global
economy continue to weaken, we witnessed a
declining trend in demand despite the low
crude price environment.
In Malaysia, the previously subsidised prices for
Mogas RON95 and Diesel have been on a
managed float system effective 1 December
2014. The average pump prices for 2015 were
RM1.96/litre for RON95 and RM1.91/litre for
Diesel – around 9.0% and 7.0% lower
respectively, compared to subsidised prices
during the corresponding year under review.
Again, despite lower prices, consumer
sentiment and spending remained cautious.
ANNUAL REPORT 2015
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INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
chairman’s
statement (continued)
TOTAL DIVIDEND
FOR THE YEAR
60.0 SEN
PER
ORDINARY SHARE
IN REAFFIRMING OUR COMMITMENT TO CONTINUOUSLY DELIVER
VALUE TO OUR SHAREHOLDERS, I AM PLEASED TO ANNOUNCE
THAT THE COMPANY DECLARED A TOTAL DIVIDEND FOR THE
YEAR OF 60.0 SEN PER ORDINARY SHARE.
FINANCIAL PERFORMANCE AND DIVIDENDS
KEY HIGHLIGHTS
For PDB, against the backdrop of declined average selling
prices and cautious consumers’ spending, it has been a
challenge to maintain sales volume. For the year under
review, we recorded a 4.0% decline in volume sold and
22.2% decrease in revenue, compared to corresponding
year under review.
Despite the gloomy outlook surrounding the industry, PDB
continued to thrive and I am delighted to share some of
our highlights achieved during the year.
Despite the challenging market environment, we had
responded swiftly to cushion our exposure from the oil
price volatility. A concerted effort and commitment from all
business lines had resulted in a reduction of inventory days
from an average of nine days in Quarter 4 2014, to an
average of five days in 2015. Due to the effective inventory
management, PDB had successfully mitigated the lag loss
resulting from the decline in MOPS. This has been a major
contributor for PDB to register stronger performance and
profits throughout the year. We recorded an impressive
52.9% increase in Group Profit Before Tax at RM1.1 billion
for 2015, as compared to 2014.
In reaffirming our commitment to continuously deliver
value to our shareholders, I am pleased to announce that
the Company declared a total dividend for the year of
60.0 sen per ordinary share, which represents a payout
ratio of 79.0%.
008
Driven by our aim to deliver quality fuels and convenience to
customers in well situated locations, we have invested in an
extensive retail distribution network of over 1,000 PETRONAS
stations nationwide, supplemented with more than 760 Kedai
Mesra. On 19 August 2015, we were also the first in the
country to launch the RON97 fuel that met the Euro 4M
specifications, ahead of the gazetted implementation timeline
of 1 September. This product is locally produced at PETRONAS
refineries, which had earlier been upgraded and reconfigured
to employ advanced sulphur removal technology to meet
the Euro 4M specifications.
The Commercial Business marked a milestone when its first
commercial fuel station began operations in Pengerang,
Johor in October 2015. With a capacity of 360,000 litres,
the station will provide sufficient Diesel supply to the
contractors’ vehicles located on site in the development of
Project RAPID and the associated facilities within the
integrated complex. Owned by Koperasi Pengerang Johor
Jaya Berhad – a business entity representing the majority of
local residents – the station is also meant to provide a
steady stream of income to the cooperative while at the
same time, realising PETRONAS’ objectives in increasing
local content and empowering communities wherever we
operate in.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
PDB’S FOCUS AND COMMITMENT TOWARDS SUSTAINABLE PRACTICES
THAT INSTIL A HIGH PERFORMANCE CULTURE HAS BEEN BASED ON
THE PETRONAS CULTURAL BELIEF.
We have also retained our position as Malaysia’s No. 1
Cooking Gas as we continue to focus on high margin
segments and effective cost optimisation.
In addition to our fuel, PETRONAS Lubricants with
ºCoolTech™ technology that fights excessive engine heat
has been instrumental in contributing towards the Mercedes
AMG PETRONAS F1™ team winning its double consecutive
title of World Constructors’ Championship in 2014 and
2015, respectively. Our F1 experience is meant to be enjoyed
by everyday drivers too, leading to the decision to open 16
new LubeXpert outlets – fully branded PETRONAS
workshops for passenger cars and motorcycles – making it
to a total of 67 LubeXpert outlets that offer a complete
range of PETRONAS Lubricants products nationwide. In
addition, PETRONAS LUBRICANTS MARKETING (MALAYSIA)
SDN BHD, a fully owned subsidiary of PDB, was established
on 11 May 2015 to house our domestic lubricants and
marketing operations under one roof as we strive to ensure
long term growth and sustainability in this segment.
OTHER HIGHLIGHTS
It is also heartening to report that PDB has again been
recognised with the Putra Brand Award for the Automotive
Fuel and Lubricants category in 2015. This marks our sixth
consecutive win in the category, thus acknowledging
PETRONAS’ strong brand presence and recognition of the
PETRONAS name amongst the Malaysian public.
PDB’s Sustainability agenda continues to demonstrate our
commitment for sustainable practices across all of our
operations, in line with the efforts and focus of the PETRONAS
Group of Companies. I am pleased to report that for the year
under review, we witnessed a reduction in both our Minor
and Major Fire incidences, all when compared to the
corresponding year under review, further cementing our
commitment to Health, Safety and Environment.
In addition to enhancing disclosure and reporting, I am
delighted that PDB is one of the 34 public listed companies
that are constituents of the FTSE4Good Bursa Malaysia
ANNUAL REPORT 2015
009
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
chairman’s
PDB HAD SUCCESSFULLY IMPROVED ITS RATING IN THE ENVIRONMENTAL,
SOCIAL AND GOVERNANCE (ESG) INDEX BY DEMONSTRATING GOOD ESG
PRACTICES AND DISCLOSURE, OVER AND ABOVE OUR REPUTABLE FINANCIAL
PERFORMANCE.
Index. This was achieved on the back of an improved
position in the Environmental, Social and Governance (ESG)
Index, recognising that PDB has demonstrated good ESG
practices and disclosure, over and above our reputable
financial performance.
Internally, PDB’s focus and commitment towards sustainable
practices that instil a high performance culture has been
based on the PETRONAS Cultural Belief. Essentially, the
focus remains on inculcating a culture of accountability
that drives result oriented performance through focused
execution, aimed at encouraging synergistic collaboration
and shared success within the PETRONAS Group.
010
On a related note, I am also happy to report that PDB has
made significant strides in supporting PETRONAS in its
existing efforts to enhance the Group’s corporate
governance practices, which is underlined by strict principles
of integrity. Not only did we adopt the PETRONAS Integrity
Compliance Framework, PETRONAS Anti-Bribery and
Corruption Manual and PETRONAS Code of Conduct and
Business Ethics, a key milestone was achieved during the
year when PDB and two other listed entities, PETRONAS
Chemicals Group Berhad and PETRONAS Gas Berhad,
together with our key business partners signed the
PETRONAS Contractor Integrity Pledge to seal the joint
commitment in implementing anti-corruption measures in
their respective organisations.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
ACKNOWLEDGEMENT
I would like to place on record of my appreciation to my
predecessor, YBhg Datuk Wan Zulkiflee Wan Ariffin for his
leadership throughout his tenure as Chairman of this Board.
A special thanks also to Mohd Farid Mohd Adnan for his
numerous contributions as a member of the Board. We
would also like to welcome Ir Mohd Firouz Asnan to the
Board, and we look forward to leverage on his extensive
experience in the oil and gas industry for more holistic
deliberations and decision making.
I would also like to put on record my appreciation to the
PDB Board of Directors for their invaluable contribution and
the PDB Management Committee for their effective
stewardship. Sincerest gratitude also goes out to the PDB
employees who have demonstrated dedication and hard
work throughout the year under review.
As PDB gears up its momentum and continue to inspire
change, I look forward to your continued support in our
journey towards our Vision of being the “Brand of 1st Choice”.
My warmest gratitude to our shareholders and stakeholders
for your continued support and confidence in PDB especially
in this challenging environment.
MD ARIF BIN MAHMOOD
Chairman
ANNUAL REPORT 2015
011
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
MD/CEO’S
STATEMENT
AMIDST THESE CHALLENGES, PDB’S ABILITY TO ADAPT AND CHANGE
OUR BUSINESS AND OPERATIONS’ APPROACH RESULTED IN A GROUP
PROFIT BEFORE TAX OF RM1.1 BILLION, AN INCREASE OF 52.9% AS
COMPARED TO THE CORRESPONDING YEAR UNDER REVIEW.
OVERVIEW
At PDB, we are focused on realising our vision to
be the ”Brand of 1st Choice”. Throughout 2015,
we navigated through a challenging environment
but this did not deter us from our desire to serve
our customers’ needs better.
FINANCIAL PERFORMANCE
For the year under review, we witnessed a
slowing of demand in the domestic economy.
Malaysian economy grew at a slower rate of
5.0% as compared to the 6.0% achieved during
the corresponding year under review as lower
commodity prices continued to drag down
growth. Crude oil price continued to be volatile
as it went from a high of USD66.65/bbl in May
2015 to a new low of USD36.00/bbl by the end
of 2015.
Anxieties over the uncertainties of both the global
and domestic market continued to cloud over
private consumption as we saw further cautious
012
consumer spending for the year under review.
The consumer sentiments index continued to
decline since Quarter 2 2014 to a new record
low of 63.8 points in Quarter 4 2015.
Amidst these challenges, PDB’s ability to adapt
and change our Business and Operations’
approach resulted in a Group Profit Before Tax of
RM1.1 billion, an increase of 52.9% as compared
to the corresponding year under review.
Earnings per share increased from 50.5 sen as
at 31 December 2014 to 79.5 sen as at
31 December 2015 as a result of higher profits
for the year under review. Meanwhile, total
assets as at 31 December 2015 was RM8,070.6
million, a decrease from the previous year’s
RM9,540.5 million.
As a testament to PDB’s commitment to
delivering strong shareholder value, PDB
declared a total dividend of 60.0 sen per
ordinary share during the year under review
amounting to a total of RM596.1 million.
Mohd Ibrahimnuddin Mohd Yunus, a Malaysian
aged 52, was appointed as the Managing Director
and Chief Executive Officer of PETRONAS
Dagangan Berhad on 1 February 2014.
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
MD/CEO’s
BUSINESS PERFORMANCE OVERVIEW
Rising above the challenging market environment, our
sustainability is attributed to our ability to change our business
approach and adapt effectively, thus resulting in the strong
financial performance for the year under review.
The Retail Business segment witnessed significant changes
in consumption behaviour, marked by cautious consumer
spending. Furthermore, the implementation of managed
float pricing mechanism effective 1 December 2014 resulted
in pump price changes, in tandem with MOPS. This has in
014
turn, dampened the retail industry demand for both Diesel
and Mogas. The narrowing price differential between RON95
and RON97 had also resulted in customers switching
between the two products. Meeting the changing needs of
our customers, the Retail Business focused on innovative
products and differentiated services to deliver better value
for money.
Our product innovation leveraged on our Mercedes AMG
PETRONAS Formula One™ partnership where PETRONAS’
superior fluid technology has propelled the team to win the
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
2014 and 2015 Formula One™ Constructors Championship.
This winning formula was engineered in collaboration with
PETRONAS Technical Performance Consultant and Mercedes
AMG PETRONAS Formula One™ world champion, Lewis
Hamilton, working with our team of engineers and chemists.
It was also tested at the laboratories, engine and vehicle
testing facilities in Malaysia, Europe and USA.
These PETRONAS Fluid Technology Solutions learnings were
subsequently transferred from the Formula One™ tracks to
the everyday motorists via enhancements in PETRONAS
Primax fuels.
Riding on the momentum achieved through the launch of the
newly enhanced PETRONAS Primax 95 in 2014, Retail Business
further strengthened the PETRONAS Primax brand via the
introduction of the new PETRONAS Primax 97 with Advanced
Energy Formula. The Euro 4M compliant new PETRONAS
Primax 97 with Advanced Energy Formula was launched on 19
August 2015, ahead of the gazetted Euro 4M RON97
implementation timeline.
Our innovative PETRONAS Primax and PETRONAS Dynamic
Diesel fuel offerings were complemented by our
differentiated services at our network of over 1,000
PETRONAS stations nationwide. We are committed to
deliver under one roof convenience to our customers
through our network of more than 760 full fledged Kedai
Mesra, more than 1,500 Automated Teller Machine (ATM)
terminals, over 800 Touch ‘n Go reload terminals, over
1,000 cashless payment terminals and close to 100 Quick
Serve Restaurants.
In response to a tougher cost environment, both our
Commercial and LPG Businesses focused on higher yield
segments for better value delivery, thus resulting in delivering
b e t t e r margin p e rforman c e as c ompa r ed to the
corresponding year under review.
Supported by an extensive and reliable network of 17 fuel and
13 aviation terminals across Malaysia, the Commercial Business
further diversified our product portfolio to include the latest
addition of products, namely Petroleum Coke and Sulphur.
ANNUAL REPORT 2015
015
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
MD/CEO’s
AS MALAYSIA’S NO. 1 COOKING GAS, WE HAVE EIGHT DOMESTIC LPG
BOTTLING PLANTS NATIONWIDE TO CATER TO THE HUGE DEMAND.
TO FURTHER UNLOCK VALUE OF THIS SEGMENT, COST OPTIMISATION
EFFORT AT THE DISTRIBUTION FACILITIES, INCLUDING BETTER
CYLINDER MANAGEMENT, WHICH RESULTED IN LOWER OPERATING
EXPENDITURE AND ENHANCED PROFITABILITY
We further created new value through new Jet A-1 contracts
with Turkish Airlines, British Airways and Lufthansa. The
Commercial Business was also able to capture new
opportunities arising from major infrastructure projects namely
the Mass Rapid Transit construction as well as Pengerang
development resulting in significant demand for Bitumen.
Despite the slight volume reduction for subsidised household
cylinders and commercial segments, LPG Business recorded
a better margin performance. As Malaysia’s No. 1 Cooking
Gas, we have eight domestic LPG bottling plants nationwide
to cater to the huge demand. To further unlock value of this
segment, cost optimisation effort at the distribution facilities,
including better cylinder management, resulted in lower
operating expenditure and enhanced profitability.
The Lubricants Business’ key financial and business performance
indicators were adversely impacted by cautious consumer
spending and aggressive competition. To grow the business in
this competitive landscape, Lubricants Business embarked on
a transformation journey to consolidate our domestic
Lubricants Businesses into Lub Dagangan Sdn Bhd which was
subsequently renamed to PETRONAS Lubricants Marketing
(Malaysia) Sdn Bhd (PLM(M)SB). The consolidation enabled
further synergies thus achieving improved speed to market.
During the year under review, PLM(M)SB continued to drive
the implementation of our Route-to-Market (RTM) initiatives
which aims to improve market penetration of our extensive
016
range of lubricant products, targeting Passenger Vehicles,
Motorcycles, Commercial Vehicles, as well as Industrial and
Marine segments. PLM(M)SB also focused on supply chain
efficiency, business solutions reliability and development of
our marketing capability.
We had also introduced the new PETRONAS Syntium with
ºCoolTech™, an upgraded formulation of base oils and
additives that fight excessive engine heat. This product is
available both locally and abroad.
Our regional business also underwent a portfolio review to
address the changing market environment.
As a result of the review, we have announced PDB
(Netherlands) B.V will divest our businesses in Vietnam. With
the divestment expected to be completed by 2016,
PETRONAS (Vietnam) Co. Ltd. and Thang Long LPG
Company, Ltd. will cease to be indirect subsidiaries of PDB.
For our regional business in the Philippines, PETRONAS
Energy Philippines Incorporated (PEPI) achieved better gross
margin performance as compared to the corresponding
year under review due to our focus in the higher margin
Visayas and Mindanao markets. For the year under review,
PETRONAS International Marketing (Thailand) Company
Limited continued to focus on brand building through
intensive marketing and promotional programmes.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
OPERATIONAL EXCELLENCE
Effective change in our operations’ approach is key to our short term sustainability in this
challenging environment.
To mitigate the downside risks arising from the volatile oil price environment, PDB focused
on the implementation of our Integrated Inventory Management Strategy. Through this
strategy, we achieved lower inventory days of four to five days in 2015 as compared to eight
to nine days in 2014. This was achieved on the back of higher frequency of inventory
replenishment and close monitoring of inventory days.
On top of the inventory optimisation, we also further improved supply and distribution efficiency
as well as cost optimisation efforts. Our primary and secondary distribution efficiency was
further enhanced through smaller parcel deliveries via ship and road tanker rezoning. Our cost
optimisation efforts include prudent spending, review and consolidation of contracts, utilisation
of in house experts as well as adoption of alternative and innovative ideas.
To ensure long term sustainability, we are committed to invest in our assets to ensure high
performance thus translating into operational excellence and realisation of our vision to be
the ”Brand of 1st Choice”.
ANNUAL REPORT 2015
017
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
MD/CEO’s
For the year under review, we further enhanced our supply
and distribution facilities nationwide through the upgrade of
our Miri Fuel Terminal and introduction of the low profile
low flow rate dispenser at the KLIA aviation terminal.
Through enhancements at our LPG terminals which includes
the operationalisation of the Flexspeed facility at our Prai
LPG Terminal, we saw our Overall Equipment Efficiency
improved from 81.0% to 89.0% as compared to same
corresponding year under review. We also continued to
rejuvenate our PETRONAS stations nationwide to better
serve our customers.
Recognising people in the organisation as the most
important asset in PDB, we embarked on a Groupwide
initiative to inculcate accountability, thus optimising our
pool of talents. The initiative included effective engagements
at all levels and enhancements of existing capability and
leadership development programmes.
OCCUPATIONAL SAFETY, HEALTH AND ENVIRONMENT
PDB is committed to ensuring the safety and health of our
assets as well as our surrounding communities. We
continued to improve our Health, Safety and Environment
Management System (HSEMS) through enhancement of our
controls in systems, resources, business processes and
culture as guided by the PETRONAS Mandatory Control
Framework and PETRONAS Technical Standards.
018
For the year under review, we continued to improve our
HSE capabilities and communication, as well as enhance
HSE risk management. We also have in place procedures to
ensure effective incident management and emergency
preparedness. Independent HSE assurance is also carried
out to monitor our HSEMS effectiveness.
Our efforts in enhancing our HSE practices has been
recognised by the Malaysian Society for Occupational
Safety & Health (MSOSH) as PDB achieved yet another
success story in 2015 by sweeping six Gold Awards at the
MSOSH 2014 Award after securing two Gold Awards the
previous year.
BUSINESS OUTLOOK FOR 2016
Despite the foreseeable challenging environment, PDB is
committed to our vision of being ”Brand of 1st Choice”. To
ensure sustainability in the current environment, PDB will
continue to adapt and change our business strategies and
operations’ approach in an effective and timely manner to
ensure better value delivery across PDB.
To capitalise on the changes in the consumers’ market, both
the Retail and Lubricants Businesses will drive our brand
building activities which anchors on quality products,
customer-centric and reliable services and convenient access
to our network. Leveraging on the Mercedes AMG PETRONAS
Formula One™ partnership, both Businesses will work
together with our business partners to deliver the right
PETRONAS brand experience.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
With the cost environment expected to remain challenging
in the short term, both our Commercial and LPG Business
will focus on value driven growth and nurture sustainable
long term partnerships. Cost optimisation across our supply
chain remains a key focus area to ensure competitiveness
and sustainable profitability.
To further improve our responsiveness to changes in future
environment, we will continue to protect and enhance our
key assets for both facilities and people. We will build on
the momentum inspired by the changes introduced during
the year under review to further enhance value.
ACKNOWLEDGEMENTS
I would also like to take this opportunity to thank the
Management Committee as well as the employees of PDB
for your commitment to excellence. It is my pleasure to
welcome onboard to the Management Committee, Ruziah
Azdi Abd Rahman as the new Head of Corporate and
Marketing Communications as well as Tariq Ashra Sulaiman
as the new Head of Corporate Health, Safety and
Environment.
In conclusion, we are inspired by the results we have achieved
from the changes implemented. The positive experiences
gained from these tangible results as well as during the
change process itself will go on to inspire further enhancements
that will form an intricate symphony of transformations thus
moving us to become the ”Brand of 1st Choice”.
On behalf of PDB management and staff, I would like to
express my deepest appreciation to the Board of Directors
for your invaluable guidance during this challenging year.
To our valued customers, business partners, regulatory
bodies and agencies, and our parent company, PETRONAS,
thank you for your unwavering support as well as feedback
on our efforts.
MOHD IBRAHIMNUDDIN BIN MOHD YUNUS
Managing Director/Chief Executive Officer
ANNUAL REPORT 2015
019
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
ABOUTUS
Incorporated on 5 August 1982 and listed on the Main
Board of Bursa Malaysia on 8 March 1994, PDB is the
principal marketing arm of PETRONAS. It has since
established itself as Malaysia’s leading retailer and marketer
of downstream oil and gas products. PDB is committed to
continuously deliver innovative products and differentiated
services in its four core businesses of Retail, Commercial,
LPG and Lubricants.
In pursuit of its growth agenda, PDB leverages on
PETRONAS’ extensive investment in R&D to ensure that it
continues to offer world class quality petroleum products
including Motor Gasoline (Mogas), Aviation Fuel, Diesel, Fuel
Oil, LPG, Kerosene and Bitumen.
An overall market leader in the downstream petroleum
industry, PDB continues to be the market leader in the
Commercial and LPG sectors while the Lubricants Business
has sustained its performance, achieving robust growth
over the years. PDB’s Retail Business has not only retained
its strong performance but has emerged as Malaysia’s
largest petroleum retail network operator with over 1,000
stations and more than 760 Kedai Mesra throughout the
country. Committed to delivering enhanced customer
experience, PDB has forged ahead in expanding its network
of its retail stations, incorporating the one-stop convenience
020
centre concept of fuelling, dining, shopping, banking, car
spa and other services, all under one roof, making it the
preferred choice of Malaysian motorists. On the product
technology front, PDB is focused on accelerating the
growth of innovative and niche products via the PETRONAS
Fluid Technology Solutions™ – a technology that was
developed resulting from the Company’s years of experience
from the dynamic international partnerships with the various
Formula One™ teams including its current partner,
MERCEDES AMG. This partnership has brought tremendous
results with the MERCEDES AMG PETRONAS Formula One™
Team winning the FIA Formula One World Constructors’
Championship for two consecutive years.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
2015 F1 WO6 HYBRID
Over the years, the Company has built an extensive logistics
and distribution system that has remained a key pillar of
PDB’s strength. The comprehensive network of bulk and
aviation depots, bunkering facilities as well as LPG bottling
plants ensure a reliable supply of products at all times.
Furthermore, PDB’s enhanced fleet of road tankers completes
the value chain in ensuring a seamless delivery of its
products to customers and dealers throughout Malaysia.
Having expanded its presence internationally, PDB operates
three downstream companies beyond Malaysian shores
namely, PETRONAS ENERGY PHILIPPINES, INC (PEPI) in
Philippines, PETRONAS (VIETNAM) CO.LTD (PVL) and THANG
LONG LPG COMPANY LIMITED (TLLCL) in Vietnam, and
PETRONAS INTERNATIONAL MARKETING (THAILAND) CO.,
LTD (PIM(T)CL) in Thailand. These companies are involved in
the LPG and Lubricants businesses.
TODAY, PDB IS PROUD THAT ITS ACHIEVEMENTS OVER THE PAST 34 YEARS HAVE
BEEN BACKED BY THE CORE EXPERTISE OF ITS HIGHLY SKILLED WORKFORCE THAT
CONSISTS OF MORE THAN 1,900 EMPLOYEES. THE COMPANY STRONGLY BELIEVES
IN NURTURING AND GROWING TOGETHER WITH ITS PEOPLE AS IT PROVIDES
A STRONG FOUNDATION TO CLEARLY POSITION ITSELF AS THE “BRAND OF 1ST
CHOICE” FOR ALL STAKEHOLDERS.
ANNUAL REPORT 2015
021
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
BUSINESS
MODEL
VALUE DRIVEN
Robust Risk Management
Practices and Sound
Internal Controls
Continuous Cost
Optimisation
Initiatives and
Responsible
Practices
Performance Driven
Culture and Customer
Focused Mindset
Shareholder
Returns
Superior Performing
Assets with continuous
HSE, Operational and
ICT Excellence
To be the “Brand
of 1st Choice”
Business Savvy with
Excellent Competencies to
Deliver Value
Delivers Balanced
Growth and
Differentiated
Customer
Experience
OPE
CE
RATION
AL EXCELLEN
“TO BE THE “BRAND OF 1ST CHOICE“, WE ARE COMMITTED
TO DELIVER SUSTAINABLE AND BALANCED GROWTH TO
OUR SHAREHOLDERS AND CUSTOMERS”
022
SUSTAINABLE
GOVERNANCE
Adheres to High
Standards of
Corporate
Governance and
Best Practices
INSPIRING CHANGE
BUSINESS OVERVIEW
KEY BUSINESS
ENTITIES
ACCOUNTABILITY
PDB is a listed entity with subsidiaries incorporated in Malaysia, Thailand, Vietnam and Philippines.
PDB’s major operating subsidiaries in Malaysia are PETRONAS LUBRICANTS MARKETING (MALAYSIA) SDN BHD (Formerly
known as Lub Dagangan Sdn Bhd) and PETRONAS AVIATION SDN BHD.
PDB (Netherlands) B.V., a wholly owned subsidiary of PDB is an investment holding company for its international subsidiaries,
namely PETRONAS ENERGY PHILIPPINES, INC., PETRONAS INTERNATIONAL MARKETING (THAILAND) CO., LTD., PETRONAS
(VIETNAM) CO., LTD. and THANG LONG LPG COMPANY LIMITED.
PDB’S DOMESTIC MAJOR SUBSIDIARIES
1.
PETRONAS LUBRICANTS MARKETING (MALAYSIA) SDN
BHD (Formerly known as Lub Dagangan Sdn Bhd)
PLM(M)SB’s key business activities are marketing and
distribution of lubricant products in Malaysia.
2. PETRONAS AVIATION SDN BHD
PAVSB’s key business activities are marketing of aviation
fuel and technical consultancy services.
PDB’S INTERNATIONAL SUBSIDIARIES
1.
PDB (Netherlands) B.V.
PDBN’s is an investment holding company for
international subsidiaries.
2. PETRONAS ENERGY PHILIPPINES, INC.
PEPI’s key business activities are bottling and distribution
of LPG and marketing of lubricant products in
Philippines.
3. PETRONAS INTERNATIONAL MARKETING (THAILAND)
CO., LTD.
PIM(T)CL’s key business activities are marketing of
lubricant products in Thailand.
4. PETRONAS (VIETNAM) CO., LTD.
PVL’s key business activities are bottling and distribution
of LPG in Vietnam.
5. THANG LONG LPG COMPANY LIMITED
TLLCL’s key business activities are storage and bottling
of LPG and lease of a jetty in Vietnam.
ANNUAL REPORT 2015
023
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
OUR PRODUCTS
& SERVICES
RETAIL
1.Fuels
• RON95 – PETRONAS Primax 95 with Advanced
Energy Formula
• RON97 – PETRONAS Primax 97 with Advanced
Energy Formula
• Diesel – PETRONAS Dynamic Diesel
2.Convenience Stores
• Kedai Mesra
• Quick Serve Restaurants
• Banking Facilities
• Terminal Services
• Courier Services
•Others
3.Cards
•
•
•
•
Loyalty card – PETRONAS Mesra Loyalty Programme
Fleet card – PETRONAS SmartPay
Co-Branded card – CIMB and Maybank Credit Cards
Gift card – PETRONAS Gift Card
024
COMMERCIAL
Product
Usage
Gasoline
Fuel for bulk transportation
Jet Fuel
Aviation fuel for turbine engine aircrafts
Kerosene
Fuel for heating, lighting, cooking and small
stationary internal combustion engine
Diesel
Suitable for industrial purposes especially
for direct burning, i.e. boiler, furnace,
dryer and etc
Fuel Oil
For boilers, furnaces, ovens and bunker
fired engines
Bitumen
Widely used as a construction material in
road construction, water proofing and
insulation
Sulphur
Widely used across many industries
including fibre, pharmaceutical, personal
care products, steel pickling and water
treatment system
Petroleum
Coke
Normally used as a source of energy or
source of carbon for industrial applications
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
LUBRICANTS
LPG
Household/Domestic
• 12kg Cylinders
• 14kg Cylinders
Passenger Car Motor Oils
• Premium Synthetic
• Full and Semi Synthetic
•Mineral
• OEM Genuine Oils
Industrial/Commercial
• 50kg Cylinders
• Bulk LPG
LPG Distribution Channel
LPG Cylinders
LPG Bulk
LPG Bottling Plants
LPG Bottling Plants
Dealers
Direct Commercial
Customers
Customers
Motorcycle Oils (4T and 2T)
• Premium Synthetic
• Full and Semi Synthetic
•Mineral
• OEM Genuine Oils
Commercial Vehicle
Lubricants
• Heavy Duty Diesel
Engine Oil
• Long Drain Full
Synthetic
• Premium Full Synthetic
• Semi Synthetic and
Mineral
Automotive Functional
Fluids
• Auto Transmission Fluids
and Gear Oils
•Greases
• Radiator Coolant
• Brake Fluids
Industrial & Marine
Lubricants
• Hydraulic Oils
• Compressor Oils
• Turbine Oils
• Agriculture Oils
• Marine Oils
• Metal Working Fluids
• Fishing Boat Oils
• Industrial Gear Oils
Fully Branded Outlets
• PETRONAS LubeXperts
ANNUAL REPORT 2015
025
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
AREAS OF
OPERATION
(Domestic)
Pulau
Langkawi
Prai
Kota Bharu
Bayan
Lepas
Kuala Terengganu
Kertih
Lumut
MALAYSIA
Kuala Lumpur
Dengkil
Subang
Kuantan
Kuala Lumpur
International
Airport
Melaka
Senai
Pasir
Gudang
Johor Bahru
JV depots and facilities are:
1. PS Pipeline Sendirian Berhad/KVDT Fuel Terminal
2. PS Terminal Sendirian Berhad (Tawau and Bintulu)
3. Kuala Lumpur Aviation Fuelling System Sdn Bhd
4. IOT Management Sdn Bhd
5. Tanjung Manis Oil Terminal Management Sdn Bhd
6. Asian Supply Base Sdn Bhd
026
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Bottling Plant
Aviation Depot
Kota Kinabalu
Fuel Terminal
Office
Labuan
Bunkering Facilities
Sepangar Bay
Sandakan
Multi Product Pipeline
Miri
Tawau
Bintulu
Sibu
Tanjung Manis
Kuching
Fuel:
Aviation:
LPG:
1.Prai
2.Melaka
3. Pasir Gudang
4.Kertih
5. Kuching (JV)
6.Bintulu
7. Sepangar Bay
8. Tawau (JV)
1.Langkawi
2. Bayan Lepas
3.Subang
4.KLIA
5.Senai
6.Kertih
7. Kuala Terengganu
8.Kuching
9.Sibu
10.Bintulu
11.Miri
12.Kota Kinabalu
13.Sandakan
1.Langkawi
2.Prai
3.Lumut
4. KVDT (JV)
5. Melaka (Refinery)
6. Pasir Gudang
7.Kuantan
8. Kertih (Refinery)
9. Kuching (JV)
10.Tanjung Manis (JV)
11.Bintulu (JV)
12.Miri
13.ASB Labuan (JV)
14.Labuan
15.Sepangar Bay
16.Sandakan
17.Tawau (JV)
ANNUAL REPORT 2015
027
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
AREAS OF
OPERATION
( International)
Makati
PHILIPPINES
Naga
Iloilo
Iligan
Davao
GenSan
LPG
i.Iloilo
ii.Iligan
iii.Naga
028
iv.Davao
v.GenSan
vi.Makati
Office
Bottling Plant
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Hanoi
Hai Phong
Bangkok
VIETNAM
THAILAND
Go Dau
Ho Chi Minh
LPG
LUBRICANTS
i.Hanoi
ii. Hai Phong
iii. Go Dau
iv. Ho Chi Minh
i.Bangkok
Office
Bottling Plant
Lubricants Warehouse
ANNUAL REPORT 2015
029
INSPIRING CHANGE
KEY MESSAGES
KEY
MILESTONES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
2000
• Launched new
unleaded
petrol, PETRONAS
Primax
1981
•Operated its first service station
at Taman Tun Dr. Ismail
1996
1987
• PDSB launched its
first unleaded fuel,
PRIMAS
•Introduction
of PETRONAS
LUBRAM in
the market,
the first
PETRONAS
Lubricants
1982
• Incorporated as PDSB
on 5 August
030
•Station
reimaging
and
establishment
of Kedai
Mesra
1994
1985
•Introduced
www.mesra.com.my
website to establish
online presence
• Listed on the KLSE
• Launched PRIMAS
PX2
1992
• Converted to a public
company on 21 August
2002
•Mesralink
officially
launched
2001
• PDB offers Kad
Mesra, Real Rewards,
Loyalty Programme
to its customers
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
2015
2010
• Launched PETRONAS Syntium °CoolTech™
• Introduced Euro 5 PETRONAS Dynamic
Diesel in Johor
• Introduced PETRONAS
Primax 97
• Launched the new Euro 4M compliant
PETRONAS Primax 97 with Advanced
Energy Formula ahead of the government’s
gazetted implementation date
2004
• The PETRONAS MERCEDES AMG Formula
One™ Team wins the Formula One
Constructors Championship for two
consecutive years
•Introduced PETRONAS
Primax Baru
•Launched first-of-its-kind LPLFRD in
Southeast Asia at LIMA’15
2011
2006
• Launched new
fuel, PETRONAS
Primax 3
•Introduced
PETRONAS
Urania,
PETRONAS
Primax 95 and
PETRONAS
Dynamic Diesel
• Official launch of 1001st PETRONAS station
at Wangsa Maju
• Consolidation of lubricants business into
one entity that is PDB’s subsidiary, Lub
Dagangan Sdn Bhd, which was then
renamed as PETRONAS LUBRICANTS
MARKETING (MALAYSIA) SDN BHD
•Launched
PETRONAS
Primax 95 Xtra
2009
2012
• Completed the LPG Flexspeed facility in Prai
2014
• Introduced PETRONAS Syntium 7000 lubricant
•L a u n c h e d P E T R O N A S P r i m a x 9 5 w i t h
Advanced Energy Formula
•Appointed Lewis Hamilton, the driver of the
MERCEDES AMG PETRONAS Formula One™
Team as the Technical Performance Consultant
for PETRONAS Primax range of fuels and
PETRONAS Syntium range of lubricants
•The PETRONAS MERCEDES AMG Formula,
One™ T e a m w i n s t h e F o r m u l a O n e
Constructors Championship
2013
• Launched the Gas PETRONAS Home
Delivery
•Official launch of the first fully branded
automobile workshop, PETRONAS LubeXperts
• Launched first-of-its-kind twin stations
namely, PETRONAS Solaris Serdang and
PETRONAS Solaris Putra
• Rollout of PDB’s Corporate Social Responsibility
programme, “Water For Life”
• Regional expansion to the Philippines and
Thailand
•Unveiled the improved PETRONAS SmartPay
Chip Card
• Completed the LPG Flexspeed facility in Melaka
ANNUAL REPORT 2015
031
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
CORPORATE
INFORMATION
DIRECTORS
REGISTERED ADDRESS
Md Arif bin Mahmood
(Chairman)
Tower 1
PETRONAS Twin Towers
Kuala Lumpur City Centre
50088 Kuala Lumpur
Malaysia
Tel :(+603) 2051 5000
Fax :(+603) 2026 5505
Mohd Ibrahimnuddin bin Mohd Yunus
(MD/CEO)
Vimala a/p V. R. Menon
Lim Beng Choon
Datuk Anuar bin Ahmad
Erwin Miranda Elechicon
Nuraini binti Ismail
Ir Mohamed Firouz bin Asnan
BOARD AUDIT COMMITTEE
Vimala a/p V. R. Menon (Chairman)
Lim Beng Choon
BUSINESS ADDRESS
Level 30-33, Tower 1
50088 Kuala Lumpur
Malaysia
Tel :(+603) 2051 5000
Fax :(+603) 2026 5505
NOMINATION AND REMUNERATION
COMMITTEE
Lim Beng Choon (Chairman)
Ir Mohamed Firouz bin Asnan
PRINCIPAL BANKERS
CIMB Bank Berhad
Malayan Banking Berhad
STOCK EXCHANGE LISTING
COMPANY SECRETARIES
Hasnizaini binti Mohd Zain (LS 0009780)
Yeap Kok Leong (MAICSA 0862549)
Main Market of
Bursa Malaysia Securities Berhad
AUDITORS
REGISTRAR
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel :(+603) 7841 8000
Fax :(+603) 7841 8151/7841 8152
032
KPMG
WEBSITE
www.mymesra.com.my
CUSTOMER SERVICE CENTRE
(MESRALINK)
Tel
:1-300-88-8181
E-mail : [email protected]
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
GROUP CORPORATE
STRUCTURE
NETHERLANDS
MALAYSIA
MALAYSIA
MALAYSIA
PDB (NETHERLANDS) B.V.
PETRONAS LUBRICANTS MARKETING
(MALAYSIA) SDN BHD
(FORMERLY KNOWN AS LUB
DAGANGAN SDN BHD)
PETRONAS AVIATION SDN BHD
KUALA LUMPUR AVIATION FUELLING
SYSTEM SDN BHD
PDB: 100%
Investment holding company for
international subsidiaries
PDB: 100%
Sales and marketing of aviation fuel and
technical consultancy services
PDB: 100%
PETRONAS ENERGY PHILIPPINES,
INC.
PDBN: 100%
Bottling and distribution of LPG and
marketing of lubricants
Marketing and distribution of lubricants
Ownership and operation of aircraft refuelling
system at KLIA
MALAYSIA
PS PIPELINE SENDIRIAN BERHAD
PDB: 50%
Shell Malaysia Trading Sdn Bhd: 50%
Operation of Multi-Product Pipeline and
Klang Valley Distribution Terminal
(MPP-KVDT)
THAILAND
PETRONAS INTERNATIONAL
MARKETING (THAILAND) CO., LTD.
PDBN: 100%
Malaysia Airports Holdings Berhad: 20%
Malaysia Airlines Berhad: 15%
Marketing and distribution of lubricants
PHILIPPINES
PDB: 65%
MALAYSIA
PS TERMINAL SENDIRIAN BERHAD
PDB: 50%
Shell Timur Sdn Bhd: 50%
Operation of joint depots and bottling
plants in Tawau
SAUDI ARABIA
UNITED FUEL COMPANY
LIMITED LIABILITY COMPANY
PAV: 40%
Asyad Holding Company for
Commercial and Industrial
Investment LLC: 33%
Tama International Investment
LLC: 27%
Sales and marketing of aviation fuel and
Into – Plane Operation at King Khaled
International Airport,
Kingdom of Saudi Arabia
VIETNAM
PETRONAS (VIETNAM) CO., LTD.
PDBN: 100%
Bottling and distribution of LPG
MALAYSIA
IOT MANAGEMENT SDN BHD
PDB: 20%
VIETNAM
THANG LONG LPG COMPANY
LIMITED
Senari Synergy Sdn Bhd: 70%
Operation of bulk and LPG terminal
PDBN: 100%
DUTA, INC.
PHILIPPINES
PDBN: 40%
KAPARANGAN, INC.
Alsons Consolidated Resources: 30%
DUTA: 100%
Masaligan, Inc: 30%
Investment Holding
034
Operation of bulk fuel terminal
PHILIPPINES
TANJUNG MANIS OIL TERMINAL
MANAGEMENT SDN BHD
PDB: 20%
Senari Synergy Sdn Bhd: 60%
Storage and bottling of LPG and
lease of a jetty
Investment Holding
MALAYSIA
Subsidiary
Jointly Controlled
Associate
INSPIRING CHANGE
BUSINESS OVERVIEW
GROUP ORGANISATION
STRUCTURE
ACCOUNTABILITY
MD/CEO
Board Audit
Committee
• Business Technology
• Corporate & Marketing
Communications
• Project Management Office
Internal
Audit
LPG Business
Retail Business
Commercial Business
LPG, Commercial and
International Business
PAVSB
International Business
Supply & Distribution
PEPI
Duta
Finance
PVL
TLLCL
HRM
PLM(M)SB
Corporate HSE
Legal and Secretariat
PIM(T)CL
ANNUAL REPORT 2015
035
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
Strategic
Objectives
ACHIEVEMENTS
STRATEGIC
OBJECTIVES
Domestic Retail Market
Leadership
Strategic Focus
(2015 – 2019)
2015
Achievements
• Launched the new
PETRONAS Primax 97
with Advanced Energy
Formula with Euro 4M
specification.
• A vast network of
more than 1,000
PETRONAS stations
and more than 760
Kedai Mesra.
Maximising Value for
LPG in Domestic and
Growth in Selective
Regional Markets
• Sustained market
leadership.
• Sustained market
leadership.
• Preferred partner in
Aviation industry.
• Enhanced operational
excellence.
• Introduced new
products, namely,
Petroleum Coke and
Sulphur.
Domestic Lubricant
Market Leadership and
Growth in Selective
Regional Markets
• Consolidation of
lubricants business into
one entity that is PDB’s
subsidiary, Lub
Dagangan Sdn Bhd,
which was then
renamed as PETRONAS
LUBRICANTS
MARKETING
(MALAYSIA) SDN BHD.
• Extended the RTM
implementation in
Sabah and Sarawak to
drive growth and
establish our position
as a market leader.
• Strengthen product
branding and excellent
customer experience.
• Value driven growth
through cost
competitiveness.
• Maximise value in
domestic and regional
markets.
• Efficient sweating of
existing network.
• Preferred partner via
differentiated and
superior services.
• Optimise cost on the
back of an efficient
supply and distribution
network.
• Profitable network
expansion and
management.
• Grow market share via
enhanced network
channels in key target
segments.
• Enhance brand equity
via Fluid Technology
Solutions and superior
product range.
• Increase cost
competitiveness via
efficient supply chain.
Refer to pg 86 (business review)
036
Value Driven Growth in
Commercial Market
INSPIRING CHANGE
BUSINESS OVERVIEW
STRATEGIC
INITIATIVES
ACCOUNTABILITY
INTRODUCTION
SUPPLY & DISTRIBUTION EFFICIENCY
During the year under review, Dated Brent touched the
highest point at USD66.65/bbl on 13 May 2015 before
gradually sliding down to a low of USD36.00/bbl towards
the end of 2015. While the decreasing oil price meant that
consumers had more purchasing power at the Stations, the
Company was exposed to lag loss effect resulting from
higher inventory costs which impacted our profitability. The
Company also recognised that the increasing operating
costs could also further squeeze margins if the appropriate
measures were not taken to address this.
On top of the inventory optimisation, the Company had reevaluated its supply and distribution arrangements by
improving small parcel deliveries via ships and secondary
distribution rezoning.
The Prai LPG Terminal demonstrated operational
improvements due to the new LPG Flexspeed system that
not only came with automated processes but also enabled
manpower optimisation. With the introduction of this
system, the Company managed to save RM1.5 million
annually in operational expenditure.
PDB was impacted by the decline in global oil prices, as
reflected in the Company’s Quarter 4, 2014 financial results.
Taking immediate actions, the PDB Management instructed
each Division and Department to look into improving
processes, including implementing the initiatives on
inventory optimisation, supply and distribution efficiency as
well as continuous cost reduction efforts.
PDB also embarked on research and development initiatives
by developing an innovative new fuel dispensing equipment
for narrow bodied aircraft named LPLFRD or also known as
“Gecko”. Through this innovation, the Company reduced
30.0% of its capital investment against its existing dispenser
and eliminated maintenance cost for the hydraulic system.
INVENTORY OPTIMISATION
CONTINUOUS COST REDUCTION EFFORTS
A major contributor to PDB’s improved performance during
the year under review was the implementation of the
Integrated Inventory Management Strategy. Under this
Strategy, all business lines and enablers developed action
plans to minimise lag loss exposure to PDB. These action
plans were executed through rigorous efforts which
included daily and weekly monitoring of petroleum product
price trends to enable proactive actions to be taken.
PDB changed its processes and procedures to ensure
targets were achieved. The PDB Management urged all
Divisions and Departments to practise prudent spending,
review and consolidate existing contracts with customers
and vendors, utilise in house expertise, actively seek
alternative avenues and innovative ideas for the Company
to achieve more with less, without compromising on quality
or HSE standards.
As a result, PDB achieved better performance margins,
minimised the impact of oil price volatility amid lower
inventory days, from an avarage of nine days in Quarter 4
2014 to an avarage of five days in 2015.
RESULTS AND ACHIEVEMENTS
Based on the implementation of the above initiatives, the
Company improved its performance in 2015, as compared
to the corresponding year under review.
ANNUAL REPORT 2015
037
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STRATEGIC
PRIORITIES
2
1
VISION
• “Brand of 1st Choice” drives the core essence of what
PDB stands for in terms of delivering quality,
innovation, excellence and differentiating experience
for petroleum products and services in Malaysia.
3
HUMAN
CAPITAL
STRATEGIC
FOCUS
• PDB is committed to continuously deliver innovative
products and differentiated services in its four core
businesses of Retail, Commercial, LPG and Lubricants.
• PDB is driven to ensure our customers will continue
to recognise, endorse and recommend PETRONAS as
their foremost preferred brand in the petroleum retail
industry.
4
RETURN TO
SHAREHOLDERS
• PDB has integrated its vision into our people, processes
and procedures to make this aspiration a reality for
each of its core businesses and across all levels of the
Company.
• PDB is consistently delivering good returns to our
shareholders as we have established strong corporate
governance practices to ensure the interests of our
shareholders are protected.
• PDB has adopted six PETRONAS Cultural Beliefs for its
employees namely; Results Matter, Own It!, Focused
Execution, Nurture Trust, Tell Me and Shared Success.
• PDB strengthened our fundamentals to ensure
continuous delivery of sustainable returns to our
shareholders.
038
INSPIRING CHANGE
BUSINESS OVERVIEW
STRATEGIC
ALLIANCES
ACCOUNTABILITY
ANNUAL REPORT 2015
039
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
CODE OF ETHICS AND
BUSINESS CONDUCT
PDB has adopted the PETRONAS CoBE whereby it is a
general reference for use in all the countries in which
PETRONAS conducts operations. The CoBE, together with
the PETRONAS Shared Values, will serve as a guide on how
employees are expected to conduct themselves in their
work. The CoBE will not only promote legal and procedural
compliance, but it will also provide a moral compass to
ensure that employees’ individual behaviour is in line with
the PETRONAS Shared Values.
The CoBE contains detailed policy statements on the
standards of behaviour and ethical conduct expected of
each individual to whom the CoBE applies. The CoBE
applies to all employees and directors within the PETRONAS
Group worldwide. PETRONAS also expects that contractors,
subcontractors, consultants, agents, representatives and
others performing work or services for or on behalf of
PETRONAS will comply with the relevant parts of the CoBE
when performing such work or services. In particular, the
CoBE expressly prohibits improper solicitation, bribery and
other corrupt activities not only by employees and directors,
but also by third parties performing work or services for or
on behalf of companies in the PETRONAS Group.
The implementation of the CoBE is not merely to promote
proper legal compliance but also to ensure that the
individual behaviour of its employees, members of the
Board of Directors and third parties performing work or
services for and on behalf of PETRONAS Group are in line
with the PETRONAS Shared Values, namely Loyalty, Integrity,
Professionalism and Cohesiveness. The CoBE has a detailed
outline of the Company’s expectations and has incorporated
the employees’ duties that are usually an ‘implied’ part of
the employment contract as ‘expressed terms’ in the CoBE.
Since integrity is a vital part of the Company, all employees
are expected to conduct themselves accordingly with the
Company’s interests in mind.
CORPORATE
INTEGRITY
PDB has a zero tolerance policy against all forms of bribery
and corruption. To supplement the objectives of CoBE, PDB
has adhered to the PETRONAS Anti-Bribery and Corruption
Policy and Guidelines (ABC Manual) which guides employees
on matters concerning how to deal with improper
solicitation, bribery and other corrupt activities. PDB also
implemented the PETRONAS Whistleblowing Policy to
provide an opportunity for employees and members of the
public to disclose any improper conduct within the Group.
In the year under review, PDB embarked on several related
programmes to strengthen and ensure a good governance
culture exists within the Company such as adoption of CoBE
040
by its International Subsidiaries, including PIM(T)CL and PEPI,
effective 31 March 2015 and 1 October 2015 respectively.
Other programmes held were five CoBE refresher sessions
for its employees; conducted several briefings on Substance
Misuse Programme; performed six random Drug Testing
sessions on 80 employees; delivered three Industrial Relations
upskilling programme for Line Managers/Superiors; organised
an Employee Education and Awareness Programme on
Integrity and Corruption in collaboration with the Chief
Integrity Officer’s office. In addition, ten of PDB’S main
contractors had also signed the Corporate Integrity Action
Pledge which signified the agreement and commitment
towards adoption of Corporate Integrity at their organisation.
INSPIRING CHANGE
BUSINESS OVERVIEW
KEY RISKS AND
OPPORTUNITIES
ACCOUNTABILITY
INTRODUCTION
PDB remains a strong industrial player despite the risks and
uncertainties it is facing, in particular the downward trend of oil
price, weakening Ringgit and market deregulation.
KEY RISKS
OPPORTUNITIES
During the year under review, oil price touched the highest
point at USD66.65/bbl on 13 May 2015 before gradually
sliding down to a low of USD36.00/bbl towards the end of
2015. The continuous fall in oil price in 2015 has increased
PDB’s exposure due to intermonth price variance leading to
lag loss effect impacting our margins.
In view of the downward trend in oil price, the Company
has strengthened its processes to ensure effective inventory
management is conducted, especially during this critical
period.
The weakening of the Ringgit since May 2015 had also
impacted Malaysia’s economy during the year under review.
However, PDB was not materialy exposed to the fluctuation
of currency as the Company relied on domestically sourced
products, in which the transactions were Ringgit denominated.
The Government had announced the enforcement dates of
Euro 4M and Euro 5 specifications for Diesel and Mogas in
Malaysia. In light of this, PDB launched its new PETRONAS
Primax 97 with Advanced Energy Formula, the first RON97
fuel to meet the Euro 4M specifications on 19 August 2015,
two weeks ahead of the gazetted 1 September 2015
enforcement date.
The Malaysian Government had announced the
implementation of a managed float pricing mechanism for
Diesel and RON95 effective 1 December 2014. The possibility
of full market deregulation implementation for free float
market base pricing is also a factor that the Company
monitors closely.
Starting January 2014, all Diesel powered vehicles entering
Singapore were required to meet the permissible levels of
smoke opacity to below 40 Hartridge Smoke Unit. To
capture this opportunity, PDB had made available Euro 5
diesel at two of its stations, namely, at PS Lebuhraya Pasir
Gudang and PS Gelang Patah during the year under review.
ANNUAL REPORT 2015
041
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
BOARD OF
DIRECTORS
from left:
•
•
•
•
Nuraini binti Ismail • Datuk Anuar bin Ahmad • Vimala a/p V. R. Menon • Lim Beng Choon
Md Arif bin Mahmood (Chairman) • Mohd Ibrahimnuddin bin Mohd Yunus (MD/CEO)
Ir Mohamed Firouz bin Asnan • Erwin Miranda Elechicon
Company Secretaries: Hasnizaini binti Mohd Zain • Yeap Kok Leong
042
ANNUAL REPORT 2015
043
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
PROFILE OF
DIRECTORS
MD ARIF BIN MAHMOOD
Nationality
Malaysian
Age/Gender/Ethnicity
53/Male/Malay
Date of Appointment
16 April 2015
Md Arif Mahmood is the Chairman and a Non-Independent
Non-Executive Director of PETRONAS Dagangan Berhad.
He holds a Bachelor of Science in Electrical Engineering
(summa cum laude) from Boston University, USA and a
Masters of Business Administration from Massachusetts
Institute of Technology, USA.
His vast experience in the oil and gas industry spans more
than 30 years. He joined PETRONAS in 1984 and spent the
first 10 years of his career as a system/measurement
engineer covering various facets of engineering, design,
construction, commissioning, technical services and
operations. He has also held various senior positions in
PETRONAS including Senior Vice President of Corporate
Strategy, Vice President of Oil Business, Managing Director/
Chief Executive Officer of ASEAN Bintulu Fertiliser Sdn Bhd,
Senior General Manager of Retail Business Division,
PETRONAS Dagangan Berhad and General Manager (Gas
Processing – Plant B) of PETRONAS Gas Berhad.
He is currently the Executive Vice President and CEO of the
Downstream Business, PETRONAS. He is a member of
PETRONAS Board, Executive Committee, People Development
Committee and Talent Council. He chairs the Board of
PETRONAS Chemicals Group Berhad and a number of
PETRONAS’ subsidiaries. He is also a Member of PETRONAS
University of Technology Industry Advisory Panel.
On 1 May 2015, he joined the Board of PETRONAS
Ch e m i ca l s Gr o up B e rh a d a s a N on - I n d e pe n d e n t
Non-Executive Director and Chairman.
044
He was appointed to the Board of PETRONAS Dagangan
Berhad on 16 April 2015. During the financial year under
review, he attended four Board meetings.
He complies with Paragraph 15.06(1) of the MMLR of
Bursa Malaysia with two directorships in the listed issuers
as follows:
(i) PETRONAS Dagangan Berhad; and
(ii) PETRONAS Chemicals Group Berhad.
He has never been charged for any offence within the
past 10 years and has no family relationship with any
Director or Major Shareholder of the Company nor any
conflict of interest with the Company.
He has completed the Mandatory Accreditation
Programme as required by Bursa Malaysia.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Mohd Ibrahimnuddin Mohd Yunus is the Managing
Director and the Chief Executive Officer (CEO) of
PETRONAS Dagangan Berhad.
He holds a Bachelor’s Degree in Economics from York
University, Ontario, Canada.
Having been with PETRONAS for over 29 years, his
professional experience spans across Marketing and
Trading, Human Resource Management as well as
Corporate Affairs. He has held several Senior Management
positions prior to his current appointment.
He was previously the CEO of PETRONAS LNG Sdn.
Bhd. and prior to that, he was the Head of Compensation
and Benefits, Human Resource Management, PETRONAS.
He was also assigned as the CEO of PT PETRONAS
Niaga Indonesia in 2007.
Nationality
Malaysian
52/Male/Malay
Date of Appointment
1 February 2014
This is his second stint at PETRONAS Dagangan Berhad as
he led the LPG Business in 2005.
A large part of his PETRONAS career was at PETRONAS
Trading Corporation Sdn. Bhd., where he spent 13 years
and his last position there was as General Manager of LPG
and Petroleum Products Trading.
During the financial year under review, he attended five
Board meetings.
He complies with Paragraph 15.06(1) of the MMLR of Bursa
Malaysia with one directorship in the listed issuer that is
He has never been charged for any offence within the past
10 years and has no family relationship with any Director or
Major Shareholder of the Company nor any conflict of
interest with the Company.
ANNUAL REPORT 2015
045
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
PROFILE OF
DIRECTORS
(continued)
LIM BENG CHOON
Nationality
Malaysian
56/Male/Chinese
Date of Appointment
13 August 2012
Lim Beng Choon is a Senior Independent Non-Executive
Director, Chairman of the Nomination and Remuneration
Committee, and a member of the Board Audit Committee of
He holds a Bachelor of Science (Hons) in Mathematics and
Computer Science from the Australian National University,
Canberra, Australia.
He was the Country Managing Director at Accenture, the
global consulting, technology and outsourcing company,
before he retired in 2009. He held various positions during
his 28-year tenure at Accenture, including that of Managing
Partner for Accenture’s Resources Industry Group (Oil and
Gas, Chemicals, Utilities and Natural Resources) in Southeast
Asia. He has attended numerous Accenture Management
Training Programmes around the globe, including the IMD
Leadership Programme in Switzerland. He also had oversight
of their Management Consulting practice across industries
for the ASEAN region.
His extensive experience in management consulting spans
strategy formulation, operational consulting and merger
integrations. He has led complex projects to deliver
transformational change for Malaysian and foreign multinational
companies. Prior to moving into management consulting, he
was in technology consulting covering Information
Technologies strategies and system integration work.
Currently, he serves as a Trustee in the ECM Libra
Foundation, actively advising on their welfare initiatives. He
is an Independent Non-Executive Director on the boards of
PETRONAS Gas Berhad and MISC Berhad as well as a
member of various board committees.
046
Berhad on 13 August 2012. During the financial year
under review, he attended five Board meetings, four
Board Audit Committee meetings and two Nomination
and Remuneration Committee meetings.
Bursa Malaysia with three directorships in the listed
issuers as follows:
(i) PETRONAS Dagangan Berhad;
(ii) PETRONAS Gas Berhad; and
(iii) MISC Berhad.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
VIMALA A/P V. R. MENON
Nationality
Malaysian
61/Female/Indian
Date of Appointment
18 November 2011
She is currently a member of the Board of Trustees of
PEMANDU Corporation and a Senior Independent NonExecutive Director, Audit Committee Chairman and a
member of the Nomination and Remuneration Committee
of PETRONAS Chemicals Group Berhad. She is also an
Independent Non-Executive Director and Audit Committee
Chairman of Cycle & Carriage Bintang Berhad.
On 1 July 2015, she joined the Board of DiGi.Com Berhad
as Independent Non-Executive Director and member of the
Audit and Risk Committee.
Vimala V. R. Menon is an Independent Non-Executive
Director and the Chairman of the Board Audit Committee
She is a Chartered Accountant, a Fellow of the Institute
of Chartered Accountants in England and Wales, and a
member of the Malaysian Institute of Accountants.
She began her career at Deloitte KassimChan in 1982. In
1984, she joined Edaran Otomobil Nasional Berhad
(“EON Berhad”) and subsequently retired in 2007 as
Executive Director of Finance and Corporate Services.
She was Director of Finance and Corporate Services at
Proton Holdings Berhad from 2008 to 2009. At various
times from 1990 to 2006, she served on the boards of
EON Berhad, EON Bank Berhad, Jardine Cycle & Carriage
Limited and PT Astra International Tbk, Indonesia.
She was appointed to the Board of PETRONAS Dagangan
Berhad on 18 November 2011. During the financial year
under review, she attended five Board meetings and four
Board Audit Committee meetings.
She complies with Paragraph 15.06(1) of the MMLR of Bursa
Malaysia with four directorships in the listed issuers as
follows:
(i)
(ii)
(iii)
(iv)
PETRONAS Dagangan Berhad;
PETRONAS Chemicals Group Berhad;
DiGi.Com Berhad; and
Cycle & Carriage Bintang Berhad.
She has never been charged for any offence within the past
ANNUAL REPORT 2015
047
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
PROFILE OF
DIRECTORS
(continued)
DATUK ANUAR BIN AHMAD
Nationality
Malaysian
62/Male/Malay
Date of Appointment
1 August 2014
Datuk Anuar Ahmad is a Non-Independent Non-Executive
Director of PETRONAS Dagangan Berhad.
He holds a Bachelor of Science (Econs) from the London
School of Economics and Political Science, University of
London, United Kingdom and attended Harvard Business
School’s Advanced Management Programme (AMP), USA.
He joined PETRONAS in 1977 and has held various senior
managerial positions in the International Marketing Division
and Corporate Planning Unit of PETRONAS Trading
Corporation Sdn Bhd and PETRONAS Dagangan Berhad,
respectively. Datuk Anuar has also held the positions of Vice
President of Oil Business, Vice President of Human Resource
Management and Executive Vice President of Gas and
Power Business, PETRONAS.
Datuk Anuar previously served PETRONAS Dagangan Berhad
as its Managing Director/Chief Executive Officer from 1 July
1998 until 1 October 2002. He was appointed as Chairman
of PETRONAS Dagangan Berhad from 3 October 2005 to 17
August 2010. He was also the Chairman of PETRONAS Gas
Berhad from 17 August 2010 to 15 May 2014.
He was a member of the PETRONAS Executive Committee,
PETRONAS Management Committee, and on the Board of
PETRONAS, until he retired from PETRONAS on 15 April 2014.
Currently, he is a Senior Independent Non-Executive
Director of E.A. Technique (M) Berhad and Independent
Non-Executive Director ENRA Group Berhad (formerly
known as Perduren (M) Berhad), both of which are
companies listed on Bursa Malaysia.
048
Berhad on 1 August 2014. During the financial year
under review, he attended five Board meetings.
Bursa Malaysia with three directorships in the listed
issuers as follows:
(i) PETRONAS Dagangan Berhad;
(ii) ENRA Group Berhad (formerly known as Perduren
(M) Berhad); and
(iii) E.A. Technique (M) Berhad.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
ERWIN MIRANDA ELECHICON
Nationality
Filipino
57/Male/Filipino
Date of Appointment
1 August 2014
Vice-President responsible for the Fabric & Home Care
category in Southeast Asia, Australia/New Zealand and India
until 2005.
He joined Jollibee Foods Corporation, the largest food
service company in Southeast Asia, in 2006 as a member of
its Corporate Management Committee. He took on leadership
assignments for the next five years in Jollibee Foods’
subsidiary companies as the President and CEO of the
Greenwich Pizza Company, and Fresh N’ Famous Foods, Inc.
(Chowking – chinese quick service restaurant chain). He was
also the Head of International Business Development of
Jollibee Foods Corporation.
Erwin Miranda Elechicon is an Independent Non-Executive
Director and a member of the Nomination and
Remuneration Committee of PETRONAS Dagangan Berhad.
He holds a Bachelor of Arts Degree in Economics, cum
laude, from the Ateneo de Manila University, Philippines.
He had attended courses in Finance at Columbia
Business School and in Marketing at Kellogg School of
Management, USA.
He has 37 years marketing and general management
experience in the consumer goods, food service,
advertising and business process outsourcing industries
across Asia.
He began his career at Procter & Gamble Philippines
(“P&G”) in 1979, and has held positions of increasing
responsibility at the world’s largest consumer goods
company. In the course of his career at P&G, Erwin has
lived and worked in India, Malaysia, Singapore and Vietnam,
as well as the Philippines. His last role at P&G was as
He is currently Chairman of Assurant BPO Solutions, Inc., a
Philippine business process outsourcing company. He is
also a member of the Board of Directors of U-Bix
Corporation, one of the Philippines’ largest integrated office
systems and service providers; and of Alliance Select Foods
International, Inc., a leading canned tuna and smoked
salmon manufacturer.
Berhad on 1 August 2014 and was subsequently appointed
as a member of the Nomination and Remuneration
Committee on 7 August 2014. During the financial year
under review, he attended four Board meetings and one
Nomination and Remuneration Committee meeting.
Malaysia with one directorship in the listed issuer that is
ANNUAL REPORT 2015
049
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
PROFILE OF
DIRECTORS
(continued)
NURAINI BINTI ISMAIL
Nationality
Malaysian
53/Female/Malay
Date of Appointment
18 November 2011
Nuraini Ismail is a Non-Independent Non-Executive Director
and member of the Board Audit Committee of PETRONAS
Dagangan Berhad.
She is a Fellow of the Association of Chartered Certified
Accountants (ACCA), United Kingdom.
She joined PETRONAS in 1992 and is currently the Vice
President of Treasury, PETRONAS. Prior to assuming this
role, she has held various senior positions in the PETRONAS
Group including Senior General Manager, Group Treasury of
PETRONAS, General Manager, Finance and Accounts
Services and General Manager, Commercial Services of
Malaysian International Trading Corporation Sdn. Bhd.
Her work experience covers several areas including treasury,
audit, tax, corporate finance, corporate planning, methods
and systems, financial and management accounting, group
budget, group consolidation, trade finance, credit control,
loans rehabilitation, financial analyst, bank operations,
logistics and operations.
Prior to PETRONAS, she had served in various organisations
including Bank Bumiputra Malaysia Berhad, Bumiputra
Merchant Bankers and Mayban Finance Berhad.
She is also a board member and committee member of
several companies within the PETRONAS Group.
050
She was appointed to the Board of PETRONAS Dagangan
Berhad on 18 November 2011. During the financial year
under review, she attended four Board meetings and
four Board Audit Committee meetings.
She complies with Paragraph 15.06(1) of the MMLR of
Bursa Malaysia with one directorship in a listed issuer
that is PETRONAS Dagangan Berhad.
She has never been charged for any offence within the
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
IR MOHAMED FIROUZ BIN ASNAN
Nationality
Malaysian
50/Male/Malay
Date of Appointment
6 October 2015
Sabah and Labuan, and Head of Sabah Operations under
PETRONAS Carigali Sdn Bhd. He was also the Country
Chairman of PETRONAS Vietnam and General Manager of
Business Development, Corporate Planning and Development
Division where he was responsible for planning, identifying
and evaluating new business opportunities, including
mergers and acquisitions.
Ir Mohamed Firouz Asnan is a Non-Independent
Non-Executive Director and a member of the Nomination
and Remuneration Committee of PETRONAS Dagangan
Berhad.
He holds a Bachelor of Science in Civil Engineering from
University of Louisiana at Lafayette, USA in 1987 and
then attained his Masters of Business Administration
from Massachusetts Institute of Technology, USA as a
Sloan Fellow in 2001. He is a registered professional
engineer and a member of the Institution of Engineers,
Malaysia.
He joined PETRONAS in 1989 and is currently the Vice
President of Oil Business, a post he has held since 1
September 2015. He is responsible for managing
PETRONAS Oil Business which consists of refining,
trading and marketing of crude and petroleum products.
Prior to his current position, he has held a number of
senior management positions within the PETRONAS
Group of Companies including Chairman of PETRONAS
Between 2001 and 2003, he was seconded to the PETRONAS
Dubai Office where he was responsible for identifying and
developing growth opportunities for PETRONAS in the Middle
East, North Africa and Central Asia Region. Prior to that, he
had served in the Corporate Planning Unit as a Business
Planner and later as the Business Performance Manager
responsible for performance reporting for the entire
PETRONAS Group. He was also part of the team working on
the institutionalisation of value based management practices
for PETRONAS Group.
On 1 October 2015, he joined the Board of MISC Berhad as
a Non-Independent Non-Executive Director. He was
appointed to the Board of PETRONAS Dagangan Berhad on
6 October 2015. During the year under review, he attended
two Board meetings.
Malaysia with two directorships in the listed issuers as follows:
(i) PETRONAS Dagangan Berhad; and
(ii) MISC Berhad.
He has completed the Mandatory Accreditation Programme
on 9 and 10 December 2015 as required by Bursa Malaysia.
ANNUAL REPORT 2015
051
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
MANAGEMENT
Shaharuddin bin Muhammad Sidek
Head, Retail Business Division
Puteri Liza Elli Sukma
Chief Financial Officer
052
Lu Jia Lih
Head, LPG, Commercial and International Business Division
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
COMMITTEE
Zubair bin Abdul Razak
CEO, PETRONAS LUBRICANTS MARKETING (MALAYSIA) SDN BHD
(Formerly known as Lub Dagangan Sdn Bhd)
Manisah binti Shaari
Head, Human Resource Management Division
Mohd Shobri bin Abu Bakar
Head, Supply and Distribution Division
Ruziah Azdi binti Abd Rahman
Head, Corporate and Marketing Communications Department
Hasnizaini binti Mohd Zain
Head, Legal and Secretariat Division
Tariq Ashra bin Sulaiman
Head, Corporate Health, Safety and Environment Department
ANNUAL REPORT 2015
053
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
MANAGEMENT COMMITTEE
MEMBER’S PROFILE
Managing Director/
Chief Executive Officer
MOHD IBRAHIMNUDDIN
BIN MOHD YUNUS
PUTERI LIZA ELLI SUKMA
Puteri Liza Elli Sukma, a Malaysian aged
43, was appointed as the Chief Financial
Mohd Ibrahimnuddin Mohd Yunus, a
Officer of PETRONAS Dagangan Berhad
Malaysian aged 52, was appointed as
on 1 December 2013.
the MD/CEO of PETRONAS Dagangan
Berhad on 1 February 2014.
Starting out as an auditor at KPMG
Melbourne, Australia in 1994, Puteri Liza
Having been with PETRONAS for over
joined PETRONAS Group Finance in
29 years, his professional experience
1997 before moving to the Planning
cuts across Marketing and Trading,
and Resource Allocation Unit and
Human Resource Management as well
subsequently, Group Strategic Planning
as Corporate Affairs. He has held
of PETRONAS in 2004. She then moved
several senior management positions
to PETRONAS Gas Berhad in 2007
prior to his current appointment.
where she became the Senior Manager
of the Financial and Management
He was previously the CEO of
Accounting Department. She then went
PETRONAS LNG Sdn Bhd and before
on to head the Finance Division of
that, the Head of Compensation &
several PETRONAS Group’s subsidiaries
Benefits, Human Resource Management
including
of PETRONAS. He was also the CEO of
Corporation Sdn Bhd prior to assuming
PT PETRONAS Niaga Indonesia in
the position of Chief Financial Officer
2007. This is his second stint at
PETRONAS
Trading
PETRONAS Dagangan Berhad as he
had led the LPG Business in 2005. He
Puteri Liza graduated with a Bachelor
spent a large part of his career attached
of Commerce (Accounting) Degree
to PETRONAS Trading Corporation Sdn
from the University of New South
Bhd where he spent 13 years as the
Wales, Australia and is a member of the
General Manager of LPG and Petroleum
Chartered Accountants Australia and
Products Trading. In addition, Mohd
New Zealand.
Ibrahimnuddin is currently a member
of Advisory Council Visa Asia Pacific.
Ibrahimnuddin holds a Bachelor’s
Degree in Economics from York
University, Ontario, Canada.
054
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Head, Retail Business Division
SHAHARUDDIN BIN
MUHAMMAD SIDEK
Shaharuddin Muhammad Sidek, a
Malaysian aged 51, assumed the role
of Head of Retail Business Division of
PETRONAS Dagangan Berhad on
1 January 2014.
Shaharuddin’s career in PETRONAS
began in 1985 when he joined
PETRONAS Gas Sdn Bhd’s Sales and
Finance Department as a trainee. After
a short stint with the PETRONAS Group
Strategic Planning Division, he returned
to PETRONAS Gas Berhad in 1997.
In 2004, he was seconded to
PETRONAS’ Corporate Strategy Division
to assist in the Integrated Transition
Programme and later returned to
PETRONAS Gas Berhad as the Senior
Manager for the Commercial Division.
Later that year, he was appointed as
the Head of PETRONAS Gas and Power
Business Development for the Thailand
market. Two years later, he joined
Malaysia LNG Sdn Bhd as the General
Manager of the Marketing and Trading
Division for emerging markets covering
China, India and Southeast Asia.
Head, LPG, Commercial and
International Business Division
LU JIA LIH
Lu Jia Lih, a Malaysian aged 56, joined
PETRONAS Dagangan Berhad as the
Head of LPG, Commercial and
International Business Division on
1 January 2014.
Lu started her career with PETRONAS
in 1982 as a Section Head for the IMD
where she subsequently held several
positions in Operations, Planning and
Trading in IMD for the next 15 years.
In 1997, Lu joined Malaysia LNG Tiga
Sdn Bhd as the General Manager of
Business Development in the MLNG
Tiga Project. Later in 2005, she joined
Malaysian International Trading
Corporation Sdn Bhd as the General
Manager for its polymer division and
then as the General Manager of
International Business. Thereafter, she
was assigned as PETRONAS’ Head of
Portfolio Management – Thailand in
the EVP (Downstream) Office in 2010.
In 2011, she was appointed the CEO of
In 2008, he was entrusted to head
several of PETRONAS’ special projects
including the procurement of LNG for
Peninsular Malaysia and Head Project
Directorate Sabah Sarawak Integrated
Oil & Gas Project before being
appointed as the Head of Power
Business, under the Infrastructure and
Utilities, Gas and Power Business,
PETRONAS.
PVL, a position she held until 31
Shaharuddin is an economics graduate
from the University of Toledo, USA.
Kebangsaan Malaysia.
December 2013.
Lu has attended senior management
CEO,
PETRONAS LUBRICANTS
MARKETING (MALAYSIA) SDN BHD
(Formerly known as Lub Dagangan
Sdn Bhd)
ZUBAIR BIN ABDUL RAZAK
Zubair Abdul Razak, a Malaysian aged
51, assumed his position as CEO of
PLM(M)SB on 1 January 2015.
Zubair began his career in PETRONAS
as a Project Engineer in PETRONAS
Refining and Marketing Division in 1987.
From 1989 to 2001, he served in
PETRONAS Penapisan (Melaka) Sdn
Bhd, holding various positions within
the Company.
In 2001, Zubair joined PETRONAS
Dagangan Berhad as a Manager and
was subsequently promoted as the
Senior Manager of the Engineering
Department, Supply and Distribution
Division. He assumed the position of
the General Manager of LPG Business
Division in 2009 before being appointed
as the Head of Supply and Distribution
Division in 2013.
Zubair graduated in Mechanical
Engineering from the University of
Southwestern Louisiana, USA in 1986.
and leadership programmes from the
world’s leading business schools
including INSEAD in 1999 and Harvard
Business School in 2007. She holds a
Bachelor of Economics from Universiti
ANNUAL REPORT 2015
055
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
MANAGEMENT COMMITTEE
MEMBER’S Profile (continued)
Head, Supply and
Distribution Division
Head, Human Resource
Management Division
MOHD SHOBRI BIN
ABU BAKAR
MANISAH BINTI SHAARI
Mohd Shobri Abu Bakar, a Malaysian
joined PETRONAS Dagangan Berhad as
aged 55, joined PETRONAS in 1982. He
its Head of Human Resource
assumed the role of Head of Supply
Management Division on 1 November
and Distribution Division, overseeing
2012.
Manisah Shaari, a Malaysian aged 52,
the Company’s end to end integrated
supply chain distribution since
Manisah began her career at PETRONAS
1 January 2014.
in 1987 and she has since served in
various Human Resource Management
Prior to his appointment as General
functions within the PETRONAS Group
Manager in 2005, Mohd Shobri served
including
in the Supply and Distribution Division
Company, PETRONAS Maritime
of the Company for 23 years, during
Services Sdn Bhd, Malaysia International
which he held various management
Trading Corporation Sdn Bhd and
positions covering project management,
PETRONAS Trading Corporation Sdn
maintenance, logistics planning,
Bhd. She has played an important role
operations and distribution.
in leading and driving the development
PETRONAS
Holding
and implementation of people strategy
He then oversaw the expansion of
as well as managing the operations of
PETRONAS Lubricants Unit as its
cross discipline HR processes
General Manager in the Asia market. In
throughout her 28-year tenure with
2007, he was appointed as the Head of
the Group.
Lubricants Business Division for the
Company, a position which he held
Manisah obtained her degree in
until 31 December 2013.
Business Administration from Ohio
University, USA and holds a Masters in
An engineer by training, Mohd Shobri
Business Administration from Toledo
graduated with a degree in Mechanical
University, USA.
Engineering from Universiti Teknologi
Malaysia. Mohd Shobri also serves as
Directors in various subsidiary
companies within the Group.
056
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Head, Corporate and Marketing
Communications Department
Head, Legal and
Secretariat Division
Head, Corporate Health, Safety
and Environment Department
RUZIAH AZDI BINTI
ABD RAHMAN
HASNIZAINI BINTI
MOHD ZAIN
TARIQ ASHRA BIN
SULAIMAN
Ruziah Azdi Abd Rahman, a Malaysian
Hasnizaini Mohd Zain, a Malaysian aged
Tariq Ashra Sulaiman, a Malaysian aged
aged 52, was appointed as the
41, was appointed as the Joint Company
37, joined PETRONAS Dagangan Berhad
Head of Corporate and Marketing
Secretary of PETRONAS Dagangan
on 16 February 2015 as the Head of
Communications Department on
Berhad on 8 August 2014. She is also
Corporate Health, Safety and
1 December 2015.
the Company Secretary for PETRONAS
Environment Department.
Dagangan Berhad’s subsidiaries and
Ruziah has more than 25 years of
experience in retail services, advertising
and promotions, franchise
development, media as well as
branding. She has held various senior
management positions in PDB,
PETRONAS Chemicals Group and the
East Coast Economic Region
Development Council.
In her current position, she is
responsible for the planning,
development and implementation of
all corporate and product branding
strategies, stakeholder and reputation
management strategies for PDB as well
as overall digital presence.
Ruziah holds a Bachelor of Science in
Business Management (Economics
and Finance) from University of
Tennessee, USA.
joint venture companies.
Tariq joined PETRONAS in September
2001 as a Process Engineer in
Hasnizaini joined PETRONAS to manage
PETRONAS Chemicals Fertiliser Kedah
the Corporate Services and Technology
Sdn Bhd. In 2009, he joined PETRONAS
segment under the Legal Services Unit
Group Risk Management Unit –
in 2006. Then in 2011, she was
Corporate Services Division as the
transferred to the Oil Business, Legal
Manager of Plant, Project & Contractor
Division where she provided legal
Risk Management. He then served in
advisory for merger and acquisition
Group HSE PETRONAS as Manager and
projects, downstream marketing,
subsequently Senior Manager, HSE
refining and trading.
Assurance; and then as Senior Manager,
Risk and Incident Management. In 2014,
Hasnizaini graduated from the University
he was appointed as Principal, Technical
of Leeds, United Kingdom with a
Professional – Operations Safety.
Bachelor of Laws and also holds a
Masters in Comparative Laws from the
Tariq graduated in Chemical Engineering
International Islamic University Malaysia.
from Universiti Teknologi PETRONAS,
Malaysia.
ANNUAL REPORT 2015
057
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
GROUP
FINANCIAL REVIEW
As the leading domestic marketing arm of petroleum
products in Malaysia, PDB is committed to uphold the trust
of our customers by continuously providing quality products
and differentiated services, while fostering the ‘Customers
1st’ culture within the Company.
This section aims to assist stakeholders in understanding
our audited financial statements and the metrics used to
assess our business performance.
For comparability reasons, the analysis is conducted based
on the financial results for the year ended 31 December
2015, against the corresponding year under review.
The Retail segment’s decrease in consolidated revenue of
14.0% or RM2,199.3 million was mainly due to a decrease
in sales volume of Diesel, arising from the impact of
Managed Float implementation beginning December 2014
which has resulted in lower Retail industry demand for
Diesel.
Operating Profit however, increased by 80.6% mainly due to
lower operating expenditure, higher other income and
higher gross profit. Higher gross profit was mainly
attributable to revision in APM for LPG effective June 2015,
coupled with cost optimisation initiatives undertaken during
the year under review. These were also compounded by
last year’s lower gross profit arising from the sharp decline
in MOPS prices.
SEGMENTAL ANALYSIS
Our operations consist of mainly Retail and Commercial
segments. Retail segment comprises of sales and purchases
of petroleum products in the retail sector of the Retail, LPG
and Lubricants businesses. Commercial segment comprises
of sales and purchases of petroleum products to the
remaining commercial sectors.
COMMERCIAL SEGMENT
The Commercial segment operates in a highly competitive
market and our performance is influenced by a number of
factors, including but not limited to, petroleum product price
(MOPS) movement, number and location of distribution
outlets, general economic condition and competitive pressure.
RETAIL SEGMENT
Commercial Segment
The Retail segment operates in a regulated environment as
the prices of petroleum products such as Diesel, Mogas,
and LPG sold in the retail sector are set by the Government.
The Malaysian Government had implemented a managed
float pricing mechanism in which the retail pump price
moves in tandem with MOPS. The APM elements remain
intact under this managed float mechanism.
Retail Segment
RM’000
Revenue
Operating Profit
058
FY2015
FY2014
13,508,086
526,357
15,707,397
291,367
RM’000
Revenue
Operating Profit
FY2015
FY2014
11,637,854
541,828
16,616,168
411,243
The Commercial segment’s consolidated revenue decreased
by 30.0% or RM4,978.3 million, mainly due to a decrease in
average selling prices for Aviation, Fuel Oil and Diesel.
Operating Profit increased by 31.8%, mainly as a result of
higher gross profit, higher other income and lower operating
expenditure. Higher gross profit was mainly a result of
various efforts undertaken to improve margins. Improvement
in margins was mainly contributed by Bitumen.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
OPERATING EXPENDITURES
For the financial year ended 31 December 2015, our
operating expenditures had reduced by 8.6% mainly due to
lower manpower expenses, advertising and promotion
expenses as well as higher net gain on foreign currency.
receivables by RM469.9 million arising from lower product
prices and sales volume in FY2015 compared to FY2014,
and lower inventory balance by RM406.4 million following
effective inventory management.
TOTAL LIABILITIES
OTHER INCOME
Other income increased by 60.1% compared to the
corresponding year under review, mainly as a result of an
accounting reclassification arising from GST implementation
which has no profit impact, as well as higher interest income.
Total liabilities decreased by 35.0% from RM4,748.7 million
to RM3,086.6 million for the year ended 31 December 2015.
The decrease was mainly due to lower trade and other
payables by 35.9% in line with the decline in petroleum
product prices.
(RM/Liter)
3.0
DIVIDEND
For the financial year ended 31 December 2015, the Board
of Directors has declared a total interim dividend of 60.0
sen per ordinary share, which represents a dividend payout
ratio of 79.0%. This includes a single tier interim dividend of
20.0 sen per ordinary share declared in Quarter 4, 2015.
MOPS for Jan – Dec 2014
2.5
2.0
1.5
1.0
0.5
Net Dividend Payout Ratio
%
Nov 2014
Dec 2014
Nov 2015
Dec 2015
79
Oct 2014
113
2015
Oct 2015
74
2014
Aug 2014
Fuel Oil 380CST
Sep 2014
94
2013
Jul 2014
Mogas 95
Fuel Oil 180CST
Sep 2015
91
2012
Jun 2014
Diesel 0.05%S
(RM/Liter)
3.0
2011*
May 2014
Apr 2014
Mar 2014
Feb 2014
Jan 2014
0.0
MOPS for Jan – Dec 2015
2.5
2.0
*Based on a nine-month financial period ended 31 December
2011.
**The above includes special dividends declared. Excluding special
1.5
1.0
dividends: PE2011: 51%, FY2012: 63%, FY2014: 71%
0.5
Aug 2015
Jul 2015
Jun 2015
May 2015
Apr 2015
Mar 2015
Feb 2015
Total assets decreased by 15.4% compared to the previous
year mainly contributed by decrease in cash and cash
equivalents by RM581.0 million arising from repayment of
IMTN amounting to RM300.0 million. Lower total assets
was also attributable to decrease in trade and other
0.0
Jan 2015
TOTAL ASSETS
Diesel 0.05%S
Mogas 95
Fuel Oil 180CST
Fuel Oil 380CST
ANNUAL REPORT 2015
059
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
FIVE-YEAR GROUP
FINANCIAL HIGHLIGHTS
OPERATING RESULTS (RM MILLION)
Revenue
Operating Profit
Profit before taxation
Net profit attributable to shareholders
of the Company
KEY BALANCE SHEET DATA (RM MILLION)
Property, plant and equipment
Total assets
Total borrowings
Total liabilities
Share capital
Shareholders' equity
SHARE INFORMATION
Per share (sen)
Basic earnings
Gross dividend
Share price as at financial year end (RM)
FINANCIAL RATIOS
Return on Revenue
Return on Equity
Return on Total Assets
Debt to Equity Ratio
Dividend Payout Ratio
PE 2011*
FY2012
FY2013
FY2014
FY2015
22,268
906
899
29,515
1,174
1,165
32,342
1,125
1,109
32,341
728
709
25,171
1,094
1,085
655
837
812
502
790
3,616
9,801
1,073
4,989
993
4,779
3,766
9,924
464
5,078
993
4,810
3,892
10,167
583
5,338
993
4,790
4,031
9,541
494
4,749
993
4,752
3,990
8,071
212
3,087
993
4,952
65.9 sen
80 sen
17.80
84.2 sen
105 sen
23.50
81.7 sen
70 sen
31.44
50.5 sen
60 sen
17.12
79.5 sen
60 sen
24.86
3.0%
13.7%
6.7%
22.5%
91.3%
2.9%
17.4%
8.5%
9.6%
94.0%
2.5%
16.9%
8.1%
12.2%
74.1%
1.6%
10.6%
5.3%
10.4%
113.0%
3.2%
16.0%
9.8%
4.3%
79.0%
* Based on nine-month financial period ended 31 December 2011.
060
INSPIRING CHANGE
BUSINESS OVERVIEW
FIVE-YEAR GROUP
FINANCIAL SUMMARY
ACCOUNTABILITY
PROFIT BEFORE TAXATION
(RM Million)
22,267.8
29,515.0
32,341.9
32,341.0
25,171.2
898.9
1,165.2
1,109.4
709.3
1,084.6
REVENUE
(RM Million)
2011*
2012
2013
2014
2015
2011*
2012
2013
2014
2015
836.8
811.8
501.6
790.0
4,778.9
4,810.0
4,790.1
4,752.2
4,952.3
EQUITY ATTRIBUTABLE TO
SHAREHOLDERS (RM Million)
654.5
PROFIT AFTER TAXATION ATTRIBUTABLE
TO SHAREHOLDERS (RM Million)
2011*
2012
2013
2014
2015
2011*
2012
2013
2014
2015
TOTAL ASSETS (RM Million)
9,801.2
9,923.7
10,167.3
9,540.5
8,070.6
4,989.2
5,078.4
5,337.8
4,748.7
3,086.6
TOTAL LIABILITIES (RM Million)
2011*
2012
2012
2014
2015
2011*
2012
2012
2014
2015
65.9
84.2
81.7
50.5
79.5
EARNINGS PER SHARE (Sen)
2011*
2012
2013
2014
2015
* Based on nine-month financial period ended
31 December 2011.
ANNUAL REPORT 2015
061
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SIMPLIFIED GROUP STATEMENT
OF FINANCIAL POSITION
TOTAL ASSETS 19%
16%
2014
2015
22%
48%
11%
20%
Non-Current Assets
Inventories
Trade and Other Receivables
Cash and Cash Equivalents
8%
TOTAL LIABILITIES AND
1%
SHAREHOLDERS’ EQUITY
56%
3%
1%
4%
50%
31%
2014
2015
40%
42%
4%
10%
Trade and Other Payables
Other Current Liabilities
Share Capital
062
2%
Reserves
Non-Controlling Interests
Non-Current Liabilities
12%
INSPIRING CHANGE
BUSINESS OVERVIEW
SEGMENTAL
ANALYSIS
REVENUE
ACCOUNTABILITY
51%
46%
2014
2015
49%
Retail
Commercial
54%
GROUP QUARTERLY
In RM Million
Revenue
Operating profit
Profit Before Tax
Earnings per share (sen)
Dividend per share (sen)
In RM Million
Revenue
Operating profit
Profit Before Tax
Earnings per share (sen)
Dividend per share (sen)
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total FY2015
6,101
287
284
20.7
12.0
6,493
376
374
27.5
14.0
6,529
301
298
22.0
14.0
6,048
131
129
9.3
20.0
25,171
1,095
1,085
79.5
60.0
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total FY2014
8,294
229
223
15.6
12.0
8,368
253
251
18.7
14.0
8,227
231
224
16.1
12.0
7,453
16
12
0.04
22.0
32,342
729
710
50.4
60.0
ANNUAL REPORT 2015
063
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT OF
VALUE ADDED
Value added is defined as the value created by the activities of a business and its employees and in the case of PDB is
determined as revenue less the cost of goods and services. The value added statement reports on the calculation of value
added and its application among the stakeholders in the Group. This statement shows the total wealth created and how it
was distributed, taking into account the amounts retained and reinvested in the Group for future growth.
Group
2015
RM’000
2014
RM’000
Revenue
25,171,210
32,340,998
Less Purchase of goods and services
(23,784,803)
(31,115,241)
1,386,407
1,225,757
Other income
327,124
204,348
Financing costs
(13,444)
(21,009)
3,779
1,906
1,703,866
1,411,002
Value added
Share of net profit of associates
VALUE CREATED
064
INSPIRING CHANGE
BUSINESS OVERVIEW
DISTRIBUTION OF
VALUE ADDED
ACCOUNTABILITY
20%
24%
31%
14%
2014
2015
14%
2%
40%
17%
37%
1%
VALUES DISTRIBUTION
Employees
Providers of Equity (net dividends)
Providers of debt
Government (taxation)
Retained for reinvestment and future growth
ANNUAL REPORT 2015
065
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
FINANCIAL
CALENDAR
12 FEBRUARY 2015
Announcement of the audited consolidated results for the 4th quarter ended
31 December 2014
27 MARCH 2015
Date of payment of the special interim dividend for the 4 th quarter ended
31 December 2014
15 APRIL 2015
33rd Annual General Meeting
11 MAY 2015
Announcement of the unaudited consolidated results for the 1st quarter ended
31 March 2015
25 JUNE 2015
Date of payment of the interim dividend for the 1 st quarter ended
31 March 2015
6 AUGUST 2015
Announcement of the unaudited consolidated results for the 2nd quarter ended
30 June 2015
22 SEPTEMBER 2015
Date of payment of the interim dividend for the 2 nd quarter ended
30 June 2015
2 NOVEMBER 2015
Announcement of the unaudited consolidated results for the 3rd quarter ended
30 September 2015
4 DECEMBER 2015
Date of payment of the interim dividend for the 3 rd quarter ended
30 September 2015
19 FEBRUARY 2016
Announcement of the unaudited consolidated results for the 4th quarter ended
31 December 2015
17 MARCH 2016
Date of payment of the interim dividend for the 4 th quarter ended
31 December 2015
22 MARCH 2016
Date of Notice of 34th Annual General Meeting and date of issuance of FY2015
Annual Report
20 APRIL 2016
34th Annual General Meeting
066
INSPIRING CHANGE
BUSINESS OVERVIEW
INVESTOR
RELATIONS
OVERVIEW
In 2011, PDB adopted the IRPG to ensure that the Company
adheres to the best practices amongst the listed companies.
This is in line with Bursa Malaysia Corporate Disclosure
Guide 2011 which guarantees fair and timely disclosure of
information to all shareholders.
The mandate to champion the IRPG lies with the IR Unit,
and the activities are led by PDB’s MD/CEO, Mohd
Ibrahimnuddin Mohd Yunus, CFO, Puteri Liza Elli Sukma and
Head of Strategic Planning, Raja Zera Raja Zaib Shah, as
well as other senior management team members. They are
supported by the IR team.
With external developments continuing to be volatile, PDB
had intensified its IR efforts to reach out further and more
frequently to the stakeholders to ensure they were
constantly kept abreast of the Company’s latest developments
and performance.
ACCOUNTABILITY
The strategic objective for PDB’s IR activities during the year
under review was to strengthen the coverage with investors
in the region and promote a deeper understanding of our
strategic vision, mission and business fundamentals within
the investing community in light of the changing economic
and competitive landscape.
During the year under review, in addition to the quarterly
results announcements and one-on-one meetings, PDB
participated in four Conferences and two Roadshows in
selected geographies. The selection of the Investor
Conference and Roadshows were based on a number of
factors, including the corporate investors’ representation
and alignment with our shareholder base and conference
focus. In addition to participating in the Investor Conferences
and Roadshows, PDB undertook meetings with foreign
shareholders via conference calls to ensure continued
engagement with shareholders.
PDB has always remained focused on value creation for its
shareholders, and continuously ensures that analysts and
key institutional investors are given the opportunity to
engage with the senior management team who actively
runs the business.
COMMITMENT TO SHAREHOLDERS
PDB recognises the importance of engaging our investors
and believes that good, clear and credible communication
will foster confidence and build understanding that will lead
to maximum shareholder value.
During the year under review, PDB continued to stay on
course in providing our investing community with
information on an equal basis, promptly and in a clear and
consistent manner. This was made possible through effective
teamwork between the IR team and various information
providers and leaders within the Company.
ANNUAL REPORT 2015
067
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INVESTOR
RELATIONS (continued)
During investor meetings and quarterly results briefings,
management shared PDB’s strategies, business and financial
performances. For the year under review, IR team had met
with a total of 153 analysts and fund managers from 74
companies, higher than the previous years due to the
interest from the investment community. The IR team
continued to actively seek feedback to ensure PDB remained
current with our shareholders expectations.
ANALYST BRIEFINGS
For the year under review, PDB conducted four briefings to
Analysts upon its quarterly financial and business
performance results. IR team ensured the analyst briefing
presentation materials are made available on PDB’s website
under the IR section, immediately after the briefings. This is
part of PDB’s continuous efforts to provide timely
information distribution of quarterly results.
The quarterly results announcement and analyst briefings for
the year under review were conducted on the following dates:
•
•
•
•
13 February 2015
12 May 2015
7 August 2015
3 November 2015
INVESTOR ENGAGEMENTS
Despite the challenging global economic landscape in 2015,
PDB saw increments in investment community meetings
with the senior management as they were sought to deliver
greater understanding and explanation on PDB’s operational,
business and financial performances. The engagement
varied from Corporate Conferences, Roadshows, One-onOne meetings, small group meetings, and conference calls.
The Company not only participated in local conferences
and roadshows, but also conducted regional engagements
with shareholders in Hong Kong, Singapore and Japan to
share the current business performances, strategic insights
and outlook.
068
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Some of the key events participated by the Company
in 2015 included:
Venue
Event
Date
Organiser
Kuala
Lumpur,
Malaysia
CIMB 7th
Annual Malaysia
Corporate Day
6 Jan
2015
CIMB
Kuala
Lumpur,
Malaysia
Invest Malaysia
23-24
Apr 2015
Bursa
Malaysia &
CIMB
Hong
Kong
AllianceDBS
Non-Deal
Corporate
Roadshow
Singapore CIMB Non-Deal
Corporate
Roadshow
Japan
AffinHwangDaiwa Malaysia
Corporate Day
21-22
AllianceDBS
May 2015
4 Sept
2015
INVESTMENT COMMUNITY VISIT TO PRAI TERMINAL,
PULAU PINANG
In order to foster in-depth understanding on PDB’s business
operations, the IR team had organised a visit for its investment
community comprising the institutional shareholders, fund
managers and analysts, to one of PDB’s facilities in Prai, Pulau
Pinang on 12 November 2015. The visit is an annual initiative
undertaken by the IR team since 2012 with the objective of
providing the Analysts, Fund Managers and Institutional
Shareholders first hand information to enable them to have
better valuation on PDB’s business and share value.
CIMB
28-29
AffinHwangSept 2015
Daiwa
ANNUAL REPORT 2015
069
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INVESTOR
ANNUAL GENERAL MEETING
PDB’s 33rd AGM was held on 15 April 2015 at
Sapphire Ballroom, Level 1, Mandarin Oriental
Kuala Lumpur. Shareholders were able to
provide feedback and raise questions to the
Board and senior management. All the
proposed resolutions were duly passed by
the shareholders.
NACRA 2015 – GOLD AWARD FOR BEST
DESIGNED
The NACRA was established in 1985 to
promote excellence in annual corporate
briefing as well as transparency and
accountability in corporate reporting.
The 2015 NACRA Awards Ceremony was held
on 26 November 2015 at the Grand Ballroom,
Intercontinental Hotel, Kuala Lumpur.
For the year under review, PDB won its very
first Gold Award for Best Designed Annual
Report 2014.
070
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
FTSE4GOOD RATING ON ESG
DIVIDEND POLICY
Bursa Malaysia and FTSE4Good have taken various steps to
promote sustainable practices amongst the listed issuers. In
order to encourage the listed issuers in Malaysia to further
enhance their sustainability reporting, Bursa Malaysia had
launched the CSR guidelines and sustainability portal in 2015.
PDB adopts a dividend policy which is based on dividend
payout ratio of around 50.0% of Profit After Tax at the
company level. However, in the past, PDB has been paying
more than 50.0% dividend payout to its shareholders.
During the year under review, the IR and Corporate HSED
teams had jointly initiated series of engagement with Bursa
Malaysia and FTSE4Good seeking their advice on ways to
improve PDB’s ESG rating.
PDB had successfully improved its ESG’s rating and is now a
FTSE4Good constituent starting December 2015. With this
recognition from Bursa Malaysia and FTSE4Good, PDB has
proven to be a responsible corporate citizen to its shareholders.
Based on the consistent dividend payout in the past, PDB
has won two prestigious awards namely, Second Runner Up
for the Best Return to Shareholder Award by the Malaysian
Business and Most Consistent Dividend Policy Award during
the 3rd Southeast Asia Institutional Investor Corporate Award
in 2011 and 2013, respectively. The Awards received
have proven that PDB is a company with strong
business fundamentals and delivers sustainable returns
to its shareholders.
During the year under review, PDB declared a dividend of
60.0 sen per ordinary share or total dividend amounting
to RM596.1 million as a testament PDB’s assurance to
its shareholders.
ANNUAL REPORT 2015
071
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INVESTOR
CREDIT RATING
WEBSITE AND FEEDBACK
MARC has assigned final rating of MARC-1/SAAAIS to
PDB’s Islamic Commercial Papers and IMTN Programme
(Sukuk Programme) to up to RM2.0 billion under the Islamic
principle of Murabahah with a stable outlook. The affirmed
ratings are equalised to the ratings of PETRONAS on
which MARC maintains a public information ratings of
AAA/MARC-1/Stable.
The IR Unit maintains its deliverables in PDB’s corporate
website as it serves as an excellent platform to communicate
with internal and external stakeholders on the business and
financial performances. PDB’s corporate website at www.
mymesra.com.my continued to garner attention with queries
and feedback received, both locally and overseas. The IR
team continued to ensure that the IR section of the
corporate website remained up-to-date with the latest
company disclosures.
ANALYSTS COVERAGE
As at December 2015, PDB is covered by eight research
houses, reflecting strong interest by the investment
community.
No
Research House
1
KAF-Seagroatt Campbell
2
TA Securities
3
CIMB
4
AllianceDBS
5
Hong Leong Investment Bank
6
MIDF Research
7
Kenanga Investment Bank
8
Macquarie Securities
072
IR CONTACT
The investment community may forward their enquiries and
feedback to PDB’s IR team. The details of IR’s contact are
as follows:
1.
Raja Zera Raja Zaib Shah
Head, Strategic Planning
Email: [email protected]
2. Nur Asyirin Ibrahim
Manager, Investor Relations
3. Natalia Inani Norsalehe
Executive, Investor Relations
INSPIRING CHANGE
BUSINESS OVERVIEW
SHARE
PERFORMANCE
ACCOUNTABILITY
Total Volume
Traded
FBM KLCI
(Lots)
(Points)
Share Price
(RM)
35
350,000
30
300,000
2,000
1,600
25
250,000
20
200,000
15
150,000
10
100,000
5
50,000
0
0
1,200
800
Total Volume Traded
PDB Stock Lowest Price
993,454,000
OUTSTANDING
shares as at 31 December 2015
PDB Stock Highest Price
0
Dec-15
Dec-14
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
400
FBM KLCI
LOWEST SHARE
PRICE IN 2015
HIGHEST SHARE
PRICE IN 2015
as at 21 January 2015
as at 25 November 2015
RM16.32 RM25.04
DESPITE THE WEAKER EQUITY MARKET IN 2015, THE
COMPANY’S SHARE PRICE OUTPERFORMED THE OTHER
OIL AND GAS COUNTERS IN THE COUNTRY.
The Malaysian equities market experienced its ups and
down due to many factors, including the prevailing fear of
global and domestic economic uncertainties, the falling oil
prices and the weakening Ringgit.
Malaysia capital market in 2015 was generally weaker than
the preceding period under review. Nevertheless, Malaysia
appears to have managed to maneuver itself through 2015’s
course of slippery slopes and danger zones.
ANNUAL REPORT 2015
073
INSPIRING CHANGE
KEY MESSAGES
SHARE
PERFORMANCE (continued)
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
The FBM KLCI, in particular, experienced a tumultuous year.
During the period under review, FBM KLCI stood at a year
high of 1,862.8 points in July 2015. The weak market took
over the reins shortly after, and a global sell down of
equities brought the FBM KLCI to a year low of 1,532.14
points in August 2015.
The Ringgit’s dismal performance was due to external
pressures, such as uncertainties surrounding the US Federal
Reserve’s expected interest rate hike coupled with China’s
slowing growth. Nonetheless, the weaker Ringgit had
opened up an opportunity for the foreign investors to invest
in the Company’s stock.
The declining trend in the FBM KLCI in the second half of
the year coincided with the continued decline in crude oil
prices that was precipitated by a supply glut and the
pressure of strengthening US Dollar. Dated Brent was
trading at over USD110.00/bbl per barrel in June of 2014,
had tumbled to a year low of USD37.00/bbl per barrel, also
its lowest since 2009. The prices of other commodities like
crude palm oil and rubber also dropped during the year
under review due to uneven global economic growth.
Crucially, the world’s second largest economy and Malaysia’s
biggest trading partner, China, experienced an economic
slowdown. This wreaked havoc on a commodity-dependent
Malaysia. The FBM KLCI closed its trading at a new high of
1,958.0 points on the last day of the period under review.
Despite the uncertainties in the global economy during the
period under review, PDB’s share price remained resilient
hovering between RM16.00 in January 2015 to RM25.00 by
end of December 2015.
1Q
The Company’s share price movement was in line with the
FBM KLCI trending since 2005 to end-2011. However,
during the period under review, the Company’s share price
diverged from the FBM KLCI trend.
Unlike the other sectors, whilst Malaysia had been affected
by the weaker Ringgit, falling oil price and weak economic
outlook, the Company’s share price remained resilient
hovering between and average of RM19.05 in Quarter 1 2015
to and average of RM24.12 in Quarter 4 2015. The Company
hit its all-time high of RM25.04 on 25 November 2015. This
is a reflection of the Company’s strong fundamentals and
performance. The Company had also seen a rise in foreign
shareholding, which have increased by 2.5% from 5.1% in
January to 7.6% in December 2015.
2Q
3Q
4Q
FY2015
Share Price
(RM)
Price
Date
Price
Date
Price
Date
Price
Date
Price
Date
High
Low
Close
20.00
16.32
20.00
30 Mar
21 Jan
31 Mar
22.40
19.68
20.58
28 Apr
26 May
30 Jun
21.96
19.82
21.82
25 Sep
20 Aug
30 Sep
25.04
22.00
24.86
25 Nov
1 Oct
31 Dec
25.04
16.32
24.86
25 Nov
21 Jan
31 Dec
Average
Price (RM)
1Q
2Q
3Q
4Q
FY2015
19.05
20.63
21.37
24.12
21.29
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Percentage (%)
Foreign
Shareholdings
5.09
5.13
5.26
5.49
5.68
5.99
6.19
6.23
6.67
6.95
7.40
7.62
074
INSPIRING CHANGE
BUSINESS OVERVIEW
MARKET
CAPITALISATION
ACCOUNTABILITY
HIGHEST MARKET
CAPITALISATION (RM)
As at 31 December 2005
As at 31 December 2013
3,934
MILLION
993,454,000
OUTSTANDING
LOWEST MARKET
CAPITALISATION (RM)
shares as at 31 December 2015
31,234
MILLION
(RM million)
31,234
35,000
23,346
4,947
3,934
8,643
10,000
7,153
8,593
15,000
11,623
20,000
17,008
17,683
25,000
5,000
24,697
30,000
0
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
’15
Year
Note: As at last trading day of the calendar year
ANNUAL REPORT 2015
075
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
076
ANNUAL REPORT 2015
077
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SIGNIFICANT
EVENTS
15, 16, 20, 21 FEBRUARY 2015
20 MARCH 2015
PETRONAS Coffee Break in conjunction with Chinese
New Year
Launch of Low Profile Low Flat Rate Dispenser
The PETRONAS Coffee Break is PDB’s flagship road safety
campaign that encourages motorists to stop, relax and
refresh at participating PETRONAS stations during the
festive period balik kampung exodus.
PDB distributed 150,000 limited edition festive pouches
containing canned coffee and snacks to motorists at 40
participating service stations nationwide over the four-day
campaign period, which covered 15, 16, 20 and 21 February
2015 for Chinese New Year and 15, 16, 20 and 21 July 2015
for Hari Raya Aidilfitri.
PDB introduced its new fuel dispensing equipment for
narrow bodied aircrafts, the LPLFRD at the LIMA’15 exhibition.
This was one of the many new innovations which PDB
injected into its business operations to add value to the way
we do things. The equipment, first to be introduced in
Malaysia and Southeast Asia, has been in operation at KLIA
since April 2015.
21 MARCH 2015
VISA PETRONAS Spend and Win Contest
Lucky winner Amer Hafizi Abdul Halim from Perak received
his grand prize, a Mercedes-Benz C200, from MERCEDES
AMG PETRONAS Formula One™ Team driver Nico Rosberg
at the prize presentation ceremony for the Visa PETRONAS
Spend and Win Contest in Kuala Lumpur. The contest was
one of the many customer rewards activities held throughout
the year with business partners to engage and mutually
reward loyal customers.
078
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
24 MARCH 2015
2 APRIL 2015
PETRONAS StreetSmart
Prize presentation for Revive Isotonic-PETRONAS Match
and Win Contest
MERCEDES AMG PETRONAS Formula One™ Team driver,
Lewis Hamilton paid a surprise visit to students of SMK Seri
Tanjong in Tanjung Kling, Melaka, who were participants in
the PETRONAS StreetSmart programme. Hamilton took the
opportunity to speak to students on the importance of
road safety. He also shared his experiences in the Formula
One™ races.
Oon Soo Ong, a pharmacist from Kuala Lumpur achieved
his dream of watching Manchester United in action live at
Old Trafford when he emerged as the grand prize winner
of the PETRONAS Match and Win Contest. The prize
presentation ceremony was held at the Penchala Link
PETRONAS station, Kuala Lumpur. The contest was a
collaboration between PDB and its business partner,
Permanis Sdn Bhd.
13 APRIL 2015
PETRONAS Ways2Win Campaign
As part of PDB’s ongoing efforts to add value and reward
its loyal customers, the launch of PETRONAS Ways2Win
Campaign gave customers the opportunity to win instant
rewards with every purchase of RM40 at PETRONAS stations.
The campaign was launched by the MDTCC Minister, YB
Dato’ Sri Hasan Malek at PETRONAS Solaris Station in
Serdang, Selangor.
ANNUAL REPORT 2015
079
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
significant
Events (continued)
15 APRIL 2015
25 MAY 2015
PDB 33rd Annual General Meeting
The Edge Billion Ringgit Club: Meet the CEO Talk at
KDU Glenmarie
PDB held its 33rd AGM on 15 April 2015 at the Mandarin
Oriental, Kuala Lumpur. It was attended by 573 shareholders
and proxies. The AGM was led by the Chairman of PDB’s
Board, YBhg Datuk Wan Zulkiflee Wan Ariffin.
PDB’s MD/CEO, Mohd Ibrahimnuddin Mohd Yunus took
time to address students from Kolej Damansara Utama at
the Edge Billion Ringgit Club: Meet the CEO Talk organised
by The Edge Financial Daily. This initiative provided university
students with a platform to engage and interact with some
of Malaysia’s top CEOs. The students also received tips,
strategies and guidance from the MD/CEO that would aid
them in their future career.
30-31 MAY 2015
KL Big Kitchen Festival 2015
No culinary adventure is complete without the presence of
Gas PETRONAS, Malaysia’s No. 1 cooking gas. PDB was one
of the main sponsors for Kuala Lumpur Big Kitchen Festival
2015, an event organised by the Kuala Lumpur City Hall and
Visit KL, in collaboration with Tourism Malaysia and the
Ministry of Tourism and Culture Malaysia. The three-day
festival at Dataran Merdeka also saw safety demonstrations
being held at the Gas PETRONAS booth as part of our
commitment to educate customers on LPG cylinder handling.
080
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
16 JUNE 2015
2 JULY 2015
Reader’s Digest Trusted Brand Awards 2015
Kombo RM5 Untuk Cuti Idaman Anda Campaign
PDB was honoured to receive the title of Best Petrol
Station, a renowned accolade awarded in the Reader’s
Digest Trusted Brand Awards 2015 that represented the
strength of the company’s reputation as a petroleum retail
marketing company.
PDB offered its Kad Mesra members a chance to win an all
expenses paid customised holiday to a destination of their
choice with the launch of the Kombo RM5 Untuk Cuti
Idaman Anda campaign. The campaign required a minimum
purchase worth RM5 of any Mesra promotion item for a
chance to win the grand prize of travel packages worth
RM20,000.00. The campaign was held from 1 July to
31 August 2015.
As a trusted brand that enjoys a strong local connection,
this win further inspired us to strive to be relevant to our
consumers by staying true to our promises and delivering
excellent customer experience.
19 AUGUST 2015
Launch of the new PETRONAS Primax 97 with Advanced
Energy Formula
PDB created history by becoming the first oil and gas retail
company in Malaysia to launch its Euro 4M compliant
RON97 fuel, the new PETRONAS Primax 97 with Advanced
Energy Formula, two weeks ahead of the government’s
gazetted implementation date. The event was launched by
YB Dato’ Seri Hamzah Zainudin, MDTCC Minister, at the
Technology Park Malaysia PETRONAS station and witnessed
by Md Arif Mahmood, EVP and CEO, Downstream Business,
PETRONAS.
ANNUAL REPORT 2015
081
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
significant
Events (continued)
21 AUGUST 2015
4 SEPTEMBER 2015
Putra Brand Awards
Malaysian Society for Occupational Safety and Health
Awards 2014
PDB proved its mettle as a trusted fuel brand by winning
the Putra Brand Gold Award for the sixth consecutive year
in the Automotive Fuel category and for the second
consecutive year for the Automotive Lubricant category.
The award was an honour for PETRONAS, a brand that has
consistently received gold accolades at the Putra Brand
Icon Awards. It also further reinforced the strong brand
presence and recognition of the PETRONAS brand amongst
the Malaysian public.
PDB clinched six Gold Awards at the MSOSH Awards 2014,
cementing its standing as a company that is committed to
safety and health in all aspects of its operations. As a
responsible petroleum company that has the interest of its
businesses, employees, surroundings and community close
to its heart, HSE is of utmost importance to PETRONAS.
26 NOVEMBER 2015
National Annual Corporate Report Awards
PDB emerged as the Gold Winner for Best Designed
Category at the NACRA 2015 Awards, a first for the company
in this category. The win is hoped to become an inspiration
for PDB in the coming years as we pride ourselves on being
an organisation that is committed towards promoting
excellence, transparency and accountability in our financial
reporting. NACRA is jointly organised by Bursa, Malaysia
Institute of Accountants and The Malaysia Institute of
Certified Public Accountants.
082
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
26 NOVEMBER 2015
9 DECEMBER 2015
Launch of Kad Mesra ANGKASA at Melaka International
Trade Centre
Water For Life at Kampung Pinapak, Pitas, Sabah
PDB, in collaboration with ANGKASA, launched the
company’s first co-branded loyalty card for co-operative
members at an event held in conjunction with the Malaysian
Carnival of Cooperatives’ Products and Services 2015. The
event was launched by MDTCC Minister YB Dato’ Seri
Hamzah Zainudin. The new co-branded card will enable
users to claim and redeem points at any PETRONAS station
and Kedai Mesra, in addition to discounts and other benefits
from existing Kad Mesra and ANGKASA merchants.
About 40 PDB employees and PETRONAS station dealers
were part of the team of volunteers for the Water For Life
programme at Kampung Pinapak in Pitas, Sabah. This grass
root based CSR programme brought in facilities to help the
villagers gain access to continuous supply of clean water
for their daily use.
This year PDB also brought the Water For Life programme
to Kampung Belantik in Sik, Kedah and Kampung Runchang
in Pekan, Pahang. Together with our partner, the Malaysian
Nature Society, and volunteers from PDB’s regional offices,
the programme benefitted more than 4,000 residents from
795 families.
16 DECEMBER 2015
PDB Townhall: PDB Then, Now and Beyond
The fourth and final PDB Town Hall of 2015 was attended
by 155 staff including Managers In Charge from all regions
which took place at Hilton Sentral Kuala Lumpur. The
internal engagement aims to fulfil the objective that PDB
staff are constantly engaged and in direct communication
with each other. The MD/CEO emphasised on the
importance of staff building and upholding the vision to
become the ”Brand of 1st Choice”.
ANNUAL REPORT 2015
083
INSPIRING CHANGE
KEY MESSAGES
AWARDS AND
RECOGNITIONS
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
READER’S DIGEST
TRUSTED BRAND
AWARDS 2015
PUTRA BRAND
AWARDS 2015
NACRA AWARDS
2015
GOLD AWARD FOR
BEST PETROL STATION
GOLD AWARD FOR
AUTOMOTIVE – FUEL &
LUBRICANTS
GOLD AWARD FOR
BEST DESIGNED
MSOSH AWARDS 2014
Gold
Class I
Gold
Class I
Gold
Class I
Gold
Class I
Gold
Class II
Gold
Class II
Prai Fuel & LPG
Terminal
Kertih Fuel &
LPG Terminal
Pasir Gudang
Fuel & LPG
Terminal
Kuantan Fuel
Terminal
Melaka Fuel &
LPG Terminal
Lumut Fuel
Terminal
* MSOSH Awards 2014 – Awards received in September 2015.
084
INSPIRING CHANGE
BUSINESS OVERVIEW
PAST
AWARDS
ACCOUNTABILITY
AWARDS RECEIVED IN 2013
AWARDS RECEIVED IN 2014
Putra Brand Awards
Gold, Automotive – Fuel Category
Putra Brand Awards
Gold, Automotive – Fuel & Lubricants Category
By Association of Accredited Advertising Agents (4As)
Malaysia
Putra Brand Icon Award
By the Association of Accredited Advertising Agents (4As)
Malaysia
Reader’s Digest Trusted Brand Awards
Best Petrol Station
BrandLaureate Best Brands Awards 2012-2013
Product Branding – Best Brands in Consumer Category for
Car Lubricants (PETRONAS Syntium)
By the Asia Pacific Brands Foundation (APBF)
Malaysian Society for Occupational Safety & Health Awards
Two Gold Class 1 MSOSH Awards, Oil & Gas Sector:
Prai Fuel & LPG Terminals and Kertih LPG Terminal
Asia Pacific Award
Best Regional Jet Fuel Marketer
By Armbrust Aviation Group (AAG)
Asia Pacific Award
Best Regional Jet Fuel Marketer
By Armbrust Aviation Group (AAG)
Reader’s Digest Trusted Brand Awards
Best Petrol Station Category
3rd Annual Southeast Asia Institutional Investor
Corporate Awards
Most Consistent Dividend Policy for Malaysia
By Alpha Southeast Asia (Editorial for Global Investors)
ANNUAL REPORT 2015
085
RETAIL
NETWORK EFFICIENCY
THE FOCUS FOR 2015 WAS TO INCREASE
THE CAPABILITIES OF THE EXISTING
NETWORK AND TO SWEAT THE ASSETS
THAT ARE ALREADY IN HAND
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
RETAIL
ACHIEVEMENTS
BUSINESS OPERATIONS
The Retail Business Division has always been at the forefront
of the Company’s businesses and is the touch point that is
constantly engaging the customers in delivering our
products and services.
The PETRONAS stations network remains the largest
throughout the nation, standing true to our brand essence
of being a trusted retailer with a passion for customers’
convenience.
The Retail Business drives the sales of fuel and non-fuel
products for the Company, providing a one-stop centre
convenience that delivers exceptional customer experience
at its stations.
selling prices as a result of falling crude oil prices and
significant lower volume of Retail Diesel due to competitive
prices with commercial sector were the main factors
contributing to the lower revenue performance.
The non-fuel business segment continued to make
tremendous strides, growing from strength to strength and
holding its own, contributing more than 10.0% of Retail
Business’ total margin.
For the year under review, despite the weaker consumer
spending patterns, the Retail Business’ non fuel segment
still managed to record a 4.0% growth.
KEY PRODUCTS & SERVICES
PETRONAS Stations
In the wake of the fall in global crude oil prices, the Retail
Business remained stable despite shrinking margins and
lower revenue. For the year under review, Retail Business
contributed close to 50.0% of the Company’s overall margin
and about 40.0% of the Company’s net profit.
Facing tremendous challenges, the Retail Business continued
its pursuit of PDB’s goal to become Malaysia’s “Brand of 1st
Choice”. Adapting to the volatile market with determined
focus, the Retail Business posted a revenue of 16.0% lower
than the corresponding year under review. The lower
The focus for 2015 was to increase the capabilities of the
existing network and to sweat the assets that are already in
hand. For the year under review, Retail Business operates
more than 1,000 stations.
Retail Business continues to shape and develop the future
of new Malaysian entrepreneurs that join the PETRONAS
Retail fraternity, either as an appointed station dealer or a
trusted business partner. In addition to this, SME businesses
are also given the opportunity to market their products
through the chain of Kedai Mesra convenience stores.
MORE THAN
10.0%
NON-FUEL
BUSINESS
OF RETAIL BUSINESS
TOTAL MARGIN
Despite cautious consumer spending, the Retail
Business’ non-fuel segment still managed to
record a 4.0% growth.
088
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
THE RETAIL BUSINESS DRIVES THE SALES OF FUEL AND
NON-FUEL PRODUCTS FOR THE COMPANY, PROVIDING A
ONE-STOP CENTRE CONVENIENCE THAT DELIVERS EXCEPTIONAL
CUSTOMER EXPERIENCE AT ITS STATIONS.
ANNUAL REPORT 2015
089
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
RETAIL
(continued)
Kedai Mesra
The PETRONAS Kedai Mesra remains the
market leader in Petrol Station Convenience
Stores with the largest network of
convenience stores at petrol stations in
Malaysia. Kedai Mesra’s total network
currently stands at more than 760
nationwide. With convenience in mind, the
PETRONAS Kedai Mesra are fully equipped
with ATMs (1,549 ATM terminals), Touch ‘n
Go facilities (871 reload terminals) and
e-Pay terminals (1,025 terminals).
Complementary Business
OPERATING
STATIONS
>1,000
090
As convenience is the primary goal for customers that frequent PETRONAS
stations, the Retail Business believes in providing customers with solutions
to their needs, all under one roof. PETRONAS stations have been further
enhanced through complementary business offerings ranging from foodto-go items to various business partner facilities that include QSR, banking
facilities, courier services and other conveniences.
During the year under review, the Company had in place 95 QSR outlets and
more than 70 other business partners to enhance the customer experience
at the stations. This year, Kenny Rogers Roasters and Roti Boy were amongst
the latest additions to the growing list of renowned business partners.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
95
QSR
OUTLETS
MORE THAN 70 OTHER
BUSINESS PARTNERS TO
ENHANCE THE CUSTOMER
EXPERIENCE AT THE STATIONS
Card Business
PETRONAS Mesra Loyalty Programme (Kad Mesra)
Loyalty is important in the Retail Business. Without loyal
customers that continue to patronise PETRONAS stations
for the products and services, PETRONAS would not be
where it is today. As the business continues to evolve, so
does the customer who is always looking for that
something extra.
ANNUAL REPORT 2015
091
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
RETAIL
(continued)
THE PETRONAS MESRA LOYALTY PROGRAMME BRINGS FURTHER VALUE
TO CUSTOMERS AS KAD MESRA HOLDERS ARE ABLE TO ENJOY A WIDE
VARIETY OF SPECIAL OFFERINGS OR DISCOUNTS THROUGH THE EVER
GROWING STABLE OF PARTNERS AND MERCHANTS.
These customers are recognised and rewarded through the
PETRONAS Mesra Loyalty Programme. This programme
allows members to earn Mesra points using their PETRONAS
Mesra Cards when fuelling up at PETRONAS stations
nationwide or when purchasing products from the Kedai
Mesra. Accumulated points can be used to redeem either
fuel or selected items from the Kedai Mesra by simply
swiping the Kad Mesra. The PETRONAS Mesra Loyalty
Programme brings further value to customers as Kad Mesra
holders are able to enjoy a wide variety of special offerings
or discounts through the ever growing stable of partners
and merchants.
BIG, Automobile Association of Malaysia, Astute Xperience
(Travel Services), Pryxious.com (travel channel management),
PETRONAS Twin Towers Gift Shop, Twin Towers Fitness
Centre, PETROSAINS, San Francisco Coffee, Sunway Lost
World of Tambun, 11th Street and Zalora.
PETRONAS SmartPay
The PETRONAS SmartPay is a corporate card which offers
convenience and efficiency for companies to facilitate
greater control over their fleet management in terms of
monitoring movement and expenditure of their fleet’s fuel
utilisation. Fleet management has become even more
For the year under review, the Company extended the
Card’s benefits and privileges through new strategic
partnerships. Recently it just established a partnership with
ANGKASA, working on the strength of their network and
members base. Existing partners and merchants are AirAsia
092
convenient since the introduction of our Smartpay Online
system which allows the customers to review and monitor
all transactions for all their cards and also allows for the
Fleet Manager to block or increase credit limits for any
particular card when necessary.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
60.0%
of PETRONAS stations offer the new
PETRONAS Primax 97 with Advanced
Energy Formula with more to be made
available in 2016.
For the year under review, the Company continuously
engaged with potential and current customers
through various programmes such as product
showcases, fraud mitigation sessions, festive
celebrations, sporting and leisure activities.
KEY INITIATIVES
Launch of the new PETRONAS Primax 97 with Advanced
Energy Formula
On 19 August 2015, PDB introduced its new PETRONAS
Primax 97 with Advanced Energy Formula that is engineered
for superior acceleration two weeks ahead of the gazetted
implementation date. The new fuel is also the first RON97
fuel to meet the Euro 4M specification and it complements
our PETRONAS Primax 95 that gives superior efficiency. The
launch, held at PETRONAS station in Technology Park
Malaysia, was officiated by YB Dato’ Seri Hamzah Zainuddin,
Minister of MDTCC and attended by Encik Md Arif Mahmood,
Chairman of PDB, Encik Mohd Ibrahimnuddin Mohd Yunus,
MD/CEO of PDB, Ministry officials, PDB Management and
members of the media.
At present, about 60.0% of PETRONAS stations offer the
new PETRONAS Primax 97 with Advanced Energy Formula
with more to be made available in 2016.
ANNUAL REPORT 2015
093
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
RETAIL
(continued)
Marketing and Promotion
Promotions are an important aspect in Retail
Business, especially in promoting PETRONAS
Primax, PETRONAS Dynamic Diesel and Kedai
Mesra offerings. To attract customers to the
stations, the following promotional activities
were conducted throughout 2015:
094
•
PETRONAS Ways2Win (13 April – 14 June 2015) – with every RM40
purchased at PETRONAS stations, customers have two ways to win.
Customers can either choose a voucher for instant redemption or
to participate in the contest for a chance to win the grand prize of
three years worth of fuel.
•
Bank Islam Swipe & Drive Further Campaign (15 June –
15 September 2015) – with minimum RM30 spent using their Bank
Islam card at PETRONAS stations, customers can stand a chance to
win daily prizes of RM1,000 worth of fuel and the Grand Prize of an
Umrah Package or one year worth of fuel.
•
Kombo RM5 Untuk Cuti Idaman (1 July – 31 August 2015) –
Purchase any RM5 Combo in the Kedai Mesra and stand a chance
to win a dream vacation.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
•
Home of Champions Merchandise Redemption
(15 September – 31 January 2016) – specially
designed merchandise with F1 theme was made
available at all PETRONAS stations for redemption.
PETRONAS Kad Mesra members, the programme was
also used as a platform for Retail Business to engage
with customers in getting a better understanding of
their needs.
•
Spend at PETRONAS with Maybank Cards
(15 October – 15 December 2015) – customers
stood a chance to win a Mercedes Benz and
Cash Back.
PROSPECTS
Customer Relationship Management
Maintaining customer relations is without question a
primary importance in ensuring the sustainability of our
business. In our effort to improve customer experience
at our station, the Retail Business had conducted
series of CIA programmes throughout 2015. Apart
from conducting marketing activities on PETRONAS
products and services as well as acquisition of new
The Retail Business remains committed in growing
the business to become the domestic retail market
leader, leveraging on its extensive PETRONAS station
network nationwide. To achieve this target, the Retail
Business will continue to provide innovative products
and differentiated services, supported by improved
marketing initiatives that not only reach out to
customers, but also reward existing and potential
customers throughout Malaysia.
ANNUAL REPORT 2015
095
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
COMMERCIAL
VALUE DRIVEN GROWTH
COMMERCIAL BUSINESS IS FULLY
COMMITTED TO SERVE THE NEEDS OF THE
VARIOUS INDUSTRIES THROUGH ITS
DYNAMIC SALES FORCE AND
DIFFERENTIATED SERVICES
096
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
COMMERCIAL
ACHIEVEMENTS
BUSINESS OPERATIONS
FOCUSED AND
CONCERTED EFFORTS,
SUPPORTED BY EFFECTIVE
COST MANAGEMENT
INITIATIVE GREATLY
CONTRIBUTED TO THE
COMPETITIVENESS AND
GROWTH OF THIS
PORTFOLIO.
098
The Commercial Business markets petroleum products in bulk to
various industries and market segments including manufacturing,
aviation, power, oil and gas exploration, agriculture, fisheries and
transportation. Fully ISO 9001:2008 certified since 2008, the
Commercial Business is fully integrated with a strong supply base,
logistics and extensive distribution network throughout Malaysia.
The main petroleum products marketed by Commercial Business
are Diesel, Aviation Fuel, Bitumen, Fuel Oil, Kerosene and Mogas.
In 2015, Commercial Business expanded its product range to
include Petroleum Coke and Sulphur, marketed mainly in the
domestic market. The Commercial Business is fully committed to
serve the needs of the various industries through its dynamic
sales force and differentiated services.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Despite the challenging external environment in 2015,
cloaked by the drastic fall of crude prices, which started in
June 2014, the weakening Ringgit and uncertainties in
economic environment, the Commercial Business overcame
these adversities and produced a commendable bottom
line. The Commercial Business initiated various initiatives
and plans to remain robust and as a result, recorded its
best performance in the last ten years in terms of profitability.
For the year in review, the Commercial Business contributed
about 40.0% of PDB’s net profit. As compared to the
previous year, the Commercial Business registered stronger
financial performance in 2015, as its sales volume increased
by about 1.0% and net profit contributed by 17.0% whilst its
revenue dipped about 29.0% against the same corresponding
year under review.
KEY PRODUCTS AND SERVICES
Diesel experienced a significant volume growth of
4.3% from 2014, despite the modest overall industry demand
growth of only 1.0% to 2.0%. Focused and concerted
efforts, supported by effective cost management initiatives
greatly contributed to the competitiveness and growth of
this portfolio. Highest growth was recorded in the dealership
segment, bunker and construction sectors whilst demand
from subsidised sectors such as fisheries and transportation
showed contractions during the year under review, a direct
result from the ongoing subsidy rationalisation efforts by
the Government. The overall industry demand for Diesel in
the power sector and natural gas connected industries also
showed contractions as a result of more stable natural gas
supply during the year. Demand from oil and gas exploration
sectors also experienced a slowdown in 2015 due to lower
exploration activities stemming from the bearish crude oil
price environment.
AWARDED
BEST
REGIONAL
JET FUEL
Marketer in Asia Pacific for
2 consecutive years
ANNUAL REPORT 2015
099
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
COMMERCIAL
(continued)
Jet A-1 fuel demand declined as a result of softening
demand for air travel in Malaysia as well as the ongoing
route rationalisation by Malaysia Airlines Berhad despite
some growth in the low cost sector. The result is also
attributed to the negative perception of the Malaysian
aviation industry, a consequence from the three aviation
tragedies involving Malaysia Airlines Berhad and AirAsia,
Malaysia’s two biggest home carriers and the largest
domestic customers of Jet A-1. Despite these challenges,
the Commercial Business minimised the impact through
better cost control and by securing contracts with other
domestic and foreign carriers such as Turkish Airlines,
British Airways and Lufthansa. Despite the generally
mundane performance of the aviation sector in 2015, the
industry is projected to rebound in the coming years, in line
with the expected recovery of the economy, regional boost
in tourism and cargo demands in Asia.
100
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Fuel Oil remains a significant portfolio for the
Commercial Business. For the inland market, closure of the
Port Klang WEBS terminal since October 2014 provided the
Commercial Business with the logistics advantage to supply
key customers from PDB’s Prai depot in Penang. However,
demand for Fuel Oil from the Power Sector was significantly
reduced as a result of sufficient piped gas supply and
cheaper coal. Despite this challenge, the Commercial
Business successfully sustained its margin performance for
Fuel Oil by optimising its inventory and reducing unit cost,
whilst ensuring continuous supply to the key sectors in
bunker and other inland industries.
The Commercial Business is committed to further develop
its capabilities and resources to strengthen its position in
the domestic Bitumen market. Moving forward, the
Commercial Business will continue to aggressively
strengthen the Company’s markets position, whilst taking
advantage of several major infrastructure projects slated for
development in 2016.
From 1 January 2015, the Commercial Business started
introducing new product portfolios into its range of
offerings, namely Petroleum Coke and Sulphur. Petroleum
Coke is mainly used by industries for heating, or blending
with coal to enhance its calorific value. Sulphur, on the
other hand, is used as feedstock to produce various
Bitumen enjoyed a good year, despite operating in
a highly competitive market, during the year under review.
This segment recorded outstanding performance with sales
volume up by 33.0% in 2015 from 2014. This strong
performance was supported by the effective supply
optimisation and competitive pricing strategies implemented
at all depots throughout Peninsular Malaysia, Sabah and
Sarawak.
chemical products including sulfuric acid and solvents. The
first year sales performance of these special products have
been very encouraging, with volume amounting to
390,000MT for Petroleum Coke and 57,000MT for Sulphur
sold. Moving forward, Commercial Business will continue to
capture the tremendous growth potential in further
developing our marketing capabilities in these products, not
just as a value added portfolio to our current product
range, but also as diversified offerings to our customers.
BITUMEN
33.0% SEGMENT
This segment recorded an outstanding
performance in sales volume for 2015 against
corresponding year under review
ANNUAL REPORT 2015
101
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
COMMERCIAL
(continued)
THE YEAR 2015 ALSO MARKED A MILESTONE
FOR COMMERCIAL BUSINESS WITH THE
COMMENCEMENT OF OPERATIONS OF
ITS FIRST COMMERCIAL FUEL STATION IN
PENGERANG ON 1 OCTOBER 2015.
KEY INITIATIVES
Aviation Technical Services Assistance
Our expertise in the aviation industry and the adoption of
PETRONAS Aviation Technical Standards are recognised and
adopted in all of PETRONAS aviation refuelling locations
worldwide. Our proven technical capabilities spearheaded
by our subsidiary, PAVSB, has allowed the Commercial
Business to extend the services wider to our valued
customers and partners in the domestic market. The
Commercial Business provides aviation technical services
which includes inspection, training as well as areas covering
HSE. In 2015, we extended our services to other small
domestic into plane service providers and individual
customers handling their own aviation fuel for their private
aircrafts and helicopters. This further reinforced the
recognition and trust towards PETRONAS as the “Brand of
1st Choice” and the preferred partner in the aviation industry.
RAPID Pengerang
The Commercial Business works to help meet the country’s
growing demand in a responsible way. This means operating
safely, reducing our impact on the environment and sharing
benefits with the communities.
For many decades, we have actively participated in the
national development agenda. PDB has a significant role to
play in the development and implementation phase.
102
Providing fuel is essential for Malaysia’s growth and
development. We are involved in major infrastructure and
development projects in Malaysia. Several key projects that
were initiated in 2015, such as RAPID Pengerang, received
direct and indirect involvement from PDB.
The Commercial Business takes seriously its responsibility to
ensure customers’ satisfaction. We truly understand the
importance of ensuring continuous supply of our products
and its contribution to the bottom line of our customer’s
business. High quality products and services as well as
supply continuity to these sectors are crucial in ensuring
the sustainability and continuity of the sectors in Malaysia.
The year 2015 also marked a milestone for Commercial
Business with the commencement of operations of its first
Commercial Fuel Station in Pengerang on 1 October 2015.
The station with a capacity of 360,000 litres serves myriad
of vehicles, lorries and buses used in the RAPID project in
Pengerang.
Apart from supporting the RAPID Project development in
terms of ensuring consistent fuel supply, the Commercial
Business also provided ample business opportunities for
local entrepreneurs to venture into Commercial retailing
through various commercial dealership appointments.
PROSPECTS
To sustain its market leadership in
Malaysia, the Commercial Business
will continue to provide personalised
services and differentiated offerings,
leveraging on PDB’s extensive, fully
integrated supply and logistics
strength. We believe that we are in
a strong position to add value to
the Company, further supported by
an innovative and dynamic
workforce that is able to capitalise
on market opportunities. Despite
the prospects of a more challenging
year in 2016, maturing commercial
demand, market volatilities and
moderate economic growth, the
Commercial Business is expected
to push beyond our boundaries
and remain the key value driver to
PDB’s core strategies. At the
product portfolio level, Bitumen,
Petroleum Coke and Sulphur are
expected to maintain its growth
momentum and increase their
contribution to the overall
Commercial Business performance
in 2016.
LPG
DELIVERING VALUE
LPG BUSINESS PURSUED A VALUE DRIVEN
GROWTH STRATEGY BY FOCUSING ON COST
OPTIMISATION AND IMPROVING EFFICIENCY
ACROSS ITS VAST DISTRIBUTION NETWORK
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
LPG
ACHIEVEMENTS
The LPG Business has successfully reinforced its position as
Malaysia’s No. 1 Cooking Gas through its value driven
growth strategy by focusing on cost optimisation and
improving efficiency across its vast distribution network
despite a very challenging market environment in 2015. The
LPG Business continued to maximise value for the household
segment and further improved its competitive edge in the
commercial segment through superior customer services.
BUSINESS OPERATIONS
The LPG Domestic Business drives the marketing and sales
of cooking gas under the brand name of Gas PETRONAS,
currently available in four different cylinder sizes – 12kg and
14kg suitable for household use, while the 50kg and bulk
LPG (ranging from 200kg to 32,000kg tank sizes) are
suitable for both SMIs and industrial customers.
Through its ‘value driven growth’ strategy, the LPG Domestic
Business has commendably strengthened Gas PETRONAS’
position as Malaysia’s No. 1 Cooking Gas.
KEY PRODUCTS AND SERVICES
12kg and 14kg Cylinders
During the year under review, the subsidised household
segment comprising of 12kg and 14kg cylinders continued
to be the key contributor to the LPG Business. The LPG
Business leveraged on Gas PETRONAS’ vast network of
authorised dealers to sustain its market leadership while
enhancing value. Further enhancements were made through
value driven initiatives that included sweating of assets and
focusing on high cylinder turnaround areas to drive the
business to a new level of performance.
50kg Cylinders and Bulk Sales
The commercial segment recorded a slight decrease in
volume for the year under review as compared to the
corresponding year under review due to aggressive
expansion of natural gas distribution, particularly in the
Northern and Southern regions. The impact was cushioned
through the increase in C50kg sales via intensified marketing
efforts coupled with stronger enforcement by MDTCC on
illegal subsidy leakage linked to decanting activities and low
Saudi Contract Price environment in 2015.
In its pursuit to deliver maximum value, LPG Domestic
Business successfully contributed about 20.0% to the
Company’s bottom line in 2015 compared to about 16.0%
contribution in corresponding year under review.
106
KEY BUSINESS INITIATIVES
Cost Optimisation
The LPG Business initiated various cost optimisation
initiatives in its pursuit of achieving greater cost efficiencies
that is centred on improving contract management
performance and enhancing operational excellence, in a bid
to unlock value across its business chain.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
12 14
“
kg &
kg
CONTINUED TO BE THE KEY
CONTRIBUTOR TO LPG BUSINESS”
Governance and Internal Control
I n t e rn al an d e x t e rn al a udi ts w er e
undertaken throughout the year under
review to ensure Governance and Internal
Control was duly exercised. The LPG
Business has been ISO 9001:2008
certified since 2007, with implementation
of Quality Management System which
fulfils the requirements from processes,
procedures, compliance to governance
on marketing and sales of LPG products
to customers.
During the year under review, the LPG
Business has successfully demonstrated
its ability to maintain the ISO certification
through an audit conducted by SIRIM in
December 2015.
ANNUAL REPORT 2015
107
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
LPG
(continued)
NO.1
COOKING GAS
THROUGH ITS ‘VALUE
DRIVEN GROWTH’
STRATEGY, THE LPG
DOMESTIC BUSINESS HAS
COMMENDABLY
STRENGTHENED GAS
PETRONAS’ POSITION AS
MALAYSIA’S NO.1
COOKING GAS.
INTERNATIONAL BUSINESS
The LPG Business is a key segment
of the Philippines downstream oil
industry. As a widely used fuel
commodity in the country, the LPG
Business sector is highly competitive
in a deregulated market condition.
In the Philippines, PEPI’s customer
base in Mindanao, Visayas and
Luzon is served via an established
logistics support system,
infrastructure and continuously
expanding network of distributors.
PEPI has the second largest market
share in the Visayas and Mindanao
regions, covering household,
108
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
commercial, autogas and bulk industrial LPG
segments. PEPI is focused on strengthening its
growth trajectory in the high margin household
segment through prudent inventory management,
risk management and provision of differentiated
services to industrial customers.
PEPI is firmly committed towards offering quality
and safe LPG cylinders. In realising this, it has
introduced initiatives that improved operations
and supply logistic costs. Other continuous
initiatives include the enhancement of processes
and frameworks on corporate governance,
guided by the Group’s stringent policies and
guidelines.
PROSPECTS
Backed by solid foundation and dedicated
workforce, the LPG Business remains steadfast
in reinforcing its position, not only as Malaysia’s
No. 1 Cooking Gas but also as the overall leader
in the nation’s LPG industry, whilst delivering
value and continuously enhancing its services to
its loyal customers.
ANNUAL REPORT 2015
109
LUBRICANTS
INNOVATING CHANGE
OUR RANGE OF PREMIUM AUTOMOTIVE
LUBRICANTS PRODUCTS CONTINUE TO
EVOLVE AND IS TODAY RECOGNISED AND
ACCREDITED BY MAJOR AUTOMOTIVE
MANUFACTURERS
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
LUBRICANTS
ACHIEVEMENTS
2ND
LARGEST
lubricants market in
Southeast Asia
BUSINESS OPERATIONS
The Lubricants Business retained its market position despite a challenging and competitive industry
outlook. Driven by the Company’s aspiration to achieve market leadership in the near future, the
Lubricants Business underwent a transformation journey with the consolidation of lubricants
business into one entity that is PDB’s subsidiary, LDSB, which was then renamed as PLM(M)SB, to
undertake the sales and marketing activities of PETRONAS Lubricants Business in Malaysia.
Leveraging on the extensive range of lubricant products, the Business caters to wide markets
covering Passenger Vehicles, Motorcycles, Commercial Vehicles, Industrial and Marine segments
and specialises in the lubricant functional fluids and technical services.
112
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
THE PETRONAS
SYNTIUM RANGE WAS
UPGRADED TO INCLUDE
°COOLTECH™, A UNIQUE
FORMULATION OF BASE
OILS AND ADDITIVES
THAT FIGHT EXCESSIVE
ENGINE HEAT
In view of Malaysia’s weak economic condition during the
year under review, the Lubricants Business recorded a lower
volume against corresponding year under review due to the
cautious consumer spending.
Commercial Vehicle Lubricants cater to lubricant usage
for commercial vehicles (i.e. trucks, bus, prime-movers and
the like) that run on heavy duty diesel engines. PETRONAS
Urania is our brand for this segment and it offers products
from the mineral to the full synthetic range. To further
complement this segment, we also offer automotive gear
oil, automatic transmission fluid and specialty products such
as brake fluid and coolants.
Industrial and Marine Lubricants offer products targeted
to industrial and marine segments. We have a full range of
lubricants to meet consumer requirements from compressor,
circulation, hydraulic, turbine, gear oil and marine products.
PETRONAS LubeXperts are fully branded PETRONAS
workshops for passenger cars and motorcycles, offering a
complete range of PETRONAS Lubricants products. Initiated in
2013, it is aimed at expanding market penetration and
increasing PETRONAS Lubricants brand exposure in hightstreet
segment as well as at PETRONAS stations. The first LubeXpert
was launched at Auto Deutsch, Desa Pandan on April 2013. In
2015, 16 more new LubeXpert outlets opened, making it to
the total of 67 LubeXpert outlets currently operating nationwide
KEY PRODUCTS & SERVICES
Passenger Car Motor Oils cater to the lubricants needs of
the Passenger Vehicle segment in the automotive industry.
PETRONAS Syntium is our flagship product which fully
complements the semi synthetic to full synthetic range.
During the year under review, the PETRONAS Syntium
range was upgraded to include °CoolTech™, a unique
formulation of base oil and additive that fights excessive
engine heat.
Key accounts using our PETRONAS Syntium range are
Perodua, PROTON, Naza KIA, Peugeot, Citroen, Mercedes
Benz, BMW and more. Our product offerings also include
PETRONAS Mach 5 premium mineral grade, PETRONAS
NGV Lube and PETRONAS M-Plus.
Motorcycle Oils cater to the requirements of the
motorcycle segment. We have two brands under this
segment, namely PETRONAS Syntium Moto and PETRONAS
Sprinta. PETRONAS Syntium Moto offers products from the
semi-synthetic to full synthetic grades while PETRONAS
Sprinta offers mineral grades.
KEY INITIATIVES
Formation of PETRONAS LUBRICANTS MARKETING
(MALAYSIA) SDN BHD
Transformation Initiatives
During the year under review, the Lubricants Business went
through a transformation journey with the formation of a
single entity to undertake the sales and marketing activities of
PETRONAS Lubricants Business in Malaysia. The strategic
formation of this new entity will be a strong platform for the
Business to achieve its market leadership aspirations, due to
the enhancement of its business focus and talent management.
The transformation journey started in late August 2014, involving
the leadership teams of the Lubricants Business entities
(Lubricants Business Division in PDB and LDSB) as well as those
from PLISB. The key objective of the transformation initiatives
was to look into the redesign of PETRONAS Lubricants Business
model in Malaysia to create a unified commercial setup that will
enhance our capacity, deliver aggressive growth rates and attain
market leadership aspirations.
ANNUAL REPORT 2015
113
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
LUBRICANTS
(continued)
Business operations for the unified entity began on 1 January 2015 with
a series of initiatives implemented to stabilise and streamline operational
processes to cater to the compatibility integration with existing PDB and
PLISB operations as well as to ensure a seamless level of service for
customers. On 11 May 2015, the entity was officially named PLM(M)SB.
Route-To-Market in East Malaysia
The Lubricants Business cited positive growth in East Malaysia (Sabah and
Sarawak) due to the implementation of end-to-end transformation called
RTM. Initiated in Peninsular Malaysia in 2013, RTM showed double digit
volume growth in 2013 and 2014.
The objectives of extending this programme to East Malaysia was to
drive growth and establish our position as a market leader. In May 2015,
nine Market Execution Partners for East Malaysia were signed on to
extend PLM(M)SB’s reach in East Malaysia for the implementation of the
RTM programme.
The transformation journey of PLM(M)SB was continued with the
establishment of a stronger financial enterprise system, SAP ECC6, that
streamlined and integrated the supply chain practices with PLISB for
better efficiency as well as address capability development within the
new organisation.
114
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
PROSPECTS
INTERNATIONAL SUBSIDIARIES
With stiff competition and emergence of new players in the
industry, the Lubricants Business will continue its aggressive
growth strategy and strive towards establishing its market
leadership.
The lubricants market in Thailand has strived despite having
aggressive competition throughout the year. During the
year under review, the revenue for Lubricants Business in
Thailand had decreased by 5.6% as a result of lower unit
selling price.
As part of an overall initiative to grow PLM(M)SB business,
the transformation initiatives implemented addressed key
areas of RTM for the high street indirect business in
Peninsular Malaysia and the deployment of sales teams
managing Direct Key Accounts in their respective regions.
This has enhanced our reach and improved our level of
customer service to both customers and consumers alike.
The transformation journey continues to focus on
consolidating the indirect and direct Lubricants Businesses
of PDB into a single entity to garner synergies to achieve
an improved speed to market, focused execution and talent
development.
Throughout the year under review, PIM(T)CL decided to
focus on business growth, which involved engaging their
OEMs and conducting intensive marketing and promotional
programmes. Due to the high competition experienced in
the region, PIM(T)CL focused on increasing brand awareness
via the use of digital media. Programmes for both internal
and external parties were done in order to have fully trained
distributors of the product. In pursuit of this, PIM(T)CL has
also taken the necessary steps to increase the number of
sales personnel and dealers in the region.
ANNUAL REPORT 2015
115
SUPPLY AND
DISTRIBUTION
DELIVERING EXCELLENCE
STRATEGIES HAVE ALWAYS BEEN DRIVEN
AND INSPIRED BY THE FOUR CORE VALUES,
NAMELY STAKEHOLDER VALUE, CUSTOMER
SATISFACTION, OPERATIONAL EXCELLENCE
AND ORGANISATIONAL EFFECTIVENESS
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUPPLY AND
DISTRIBUTION
OVERALL
EQUIPMENT EFFICIENCY
81.0% 89.0%
through continuous operational monitoring,
SDD improved its LPG bottling operations’
Overall Equipment Efficiency by reducing
operational interruptions while maximising
on delivery.
BUSINESS OPERATIONS
During the year under review, SDD focused on cost optimisation
and supply reliability. With its extensive supply chain network of
primary and secondary distribution, SDD appraised and
transformed existing processes to provide the most economical
and reliable delivery to the customers supporting other enablers
and business lines. This was done by ensuring uninterrupted
end-to-end supply chain from product sourcing right up to
delivery of the Company’s products to customers and dealers.
KEY ROLES AND RESPONSIBILITIES
SDD’s main roles and responsibilities include product sourcing,
distribution, infrastructure planning and engineering services.
These functions ensured adequate and reliable operational
facilities for business sustainability.
SDD’s strategies have always been driven and inspired by its four
core values, namely Stakeholder Value, Customer Satisfaction,
Operational Excellence and Organisational Effectiveness.
118
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
KEY BUSINESS INITIATIVES
Operational Excellence
Stakeholder Value
A key factor at SDD is to ensure that products are delivered
to customers at the most competitive cost and without
operational interruptions. In pursuit of this, SDD strategised
and initiated the Integrated Inventory Management system
that minimised the intermonth price exposure variance due
to the prolonged downward trend in oil prices. Through
continuous monitoring and proactive actions taken, this
initiative resulted in a more current unit cost that reflected
current market prices. In essence, this initiative promoted
competitive pricing that allowed business lines to realise the
Company’s sales agenda.
SDD remained committed towards creating value for its
customers and business partners by improving the efficiency
of product sourcing, primary and secondary distribution as
this ensured better control and undisrupted supply. SDD
also focused on optimising its terminals’ inventory and
operating expenditure to continuously provide competitive
advantages and cost optimisation. The realignment and
optimisation of TC vessels resulted in the cost reduction of
approximately 5.0% of the total annual freight cost.
SDD also actively looked for new ventures to add more
value to the services provided. As such, SDD worked with
other oil companies on throughput arrangements, leveraging
on existing facilities and capabilities without jeopardising its
market share. This initiative not only contributed towards
additional income to the organisation and further improved
asset utilisation but also reduced the terminal’s operational
unit cost. More value added initiatives are being planned to
support business growth and sustainability.
Customer Satisfaction
SDD focused on enhancing customer satisfaction through
the delivery of quality products and differentiated services
in a timely and cost effective manner. A new process to
manage customer complaints online was developed to
ensure it adhered to the standard operating procedures to
deliver on the Company’s brand promise. Moving forward,
ongoing efforts are being carried out to ensure that these
practices becomes a norm for SDD to carry out its business.
The initiative started with daily oil prices analysis and
monitoring of variance between the Company’s product
costs vis-à-vis market price. The continuous price downward
trend triggered all parties to successively implement predetermined mitigation actions such as frequent and smaller
parcel products delivery to the Company’s terminals and
managed product intake from refineries to ensure better
pricing strategy. This resulted in competitive product pricing
and performance improvement.
In addition, with continuous operational monitoring, SDD
improved its LPG bottling operations Overall Equipment
Efficiency rate from 81.0% to 89.0%, reducing operational
interruptions while maximising on delivery.
ANNUAL REPORT 2015
119
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUPPLY AND
DISTRIBUTION
(continued)
Organisational Effectiveness
BUSINESS ACHIEVEMENTS
To support the Company’s business growth and sustainability,
SDD continuously conducts various studies to improve the
Company’s efficiency. To further improve organisational
effectiveness, SDD conducted several major short and long
term studies, including a study on unmanned terminal
rationalisation and terminal optimisation review which
included the implementation of Drag Reducing Agent on
Multi Product Pipeline to improve its capacity. The studies
focused on detailed review of the Company’s options for
business continuation pre-and post-2020 as well as the long
term operational requirements beyond 2020, with due
consideration given to operational limitations and advantages.
Following this, specific strategies were developed and
assessed for business growth and sustainability. In essence,
these studies have provided PDB and SDD with a firm
direction on future plans with regard to its operations, for
the benefit of all stakeholders.
MSOSH 2014 Award
Following the success of the Company in the MSOSH 2013
Awards in the corresponding year under review, the
Company achieved yet another success story during the
year under review by sweeping six Gold Awards for
commendable occupational safety and health performance
in the MSOSH 2014 Awards. The award recognises
companies from various sectors who have performed
exceptionally well in occupational safety and health aspects.
The award strengthened the Company’s commitment
towards occupational safety and health, while at the same
time boosting the morale and confidence of employees
towards building a safe working environment.
…THE COMPANY ACHIEVED YET ANOTHER SUCCESS
STORY DURING THE YEAR UNDER REVIEW BY
SWEEPING SIX GOLD AWARDS FOR COMMENDABLE
OCCUPATIONAL SAFETY AND HEALTH PERFORMANCE
IN THE MSOSH 2014 AWARDS.
120
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
KEY PROJECTS AND INITIATIVES
LPG Flexspeed System at Prai LPG Terminal
SDD successfully commissioned the Prai LPG Flexspeed
System ahead of schedule in December 2015 as it was
completed within a duration of 12 months. The objective of
the project was to increase the Prai LPG Terminal production
capacity with a high speed production bottling capability to
a total of 5,400 cylinders per hour via two Flexspeed
lines dedicated for C12 and C14 cylinders to meet the
Company’s growth.
The project resulted in operational improvements and cost
savings via manpower optimisation with the use of the
automated processes that came with the Flexspeed system.
PDB Miri Fuel Terminal
SDD successfully commissioned its biggest fully owned fuel
terminal in Sarawak, the PDB Miri Fuel Terminal, on 15
October 2015. The project was completed two weeks
ahead of time and obtained its Certificate of Fitness to
Operate, well ahead of its contractual period of 13 months.
Due to this, the project achieved cost savings as the capital
investment was 7.0% lower than the initial budgeted amount.
The terminal, currently operating with bigger storage
capacity of 3.0 million litres in total against its initial capacity
of 1.4 million litres, comprises two new vertical tanks to
support the business growth. Apart from that, the terminal
has been equipped with a new bottom loading facility, a fire
fighting system consisting of fire tank and fire pumps and
one new administration building. The facilities are able to
support long term volume growth and demand surge
during peak seasons. Low inventories have also given
significant improvement in vessel replenishment turnaround
time due to lesser load port congestion and predicted
season which affected vessel travel times.
Biodiesel Project in East Malaysia
Following the Government’s mandate of Biodiesel
implementation, SDD completed all B7 Biodiesel facilities in
Sabah and Sarawak. With this, the whole country is now
being supplied with B7 Biodiesel. The implementation of the
government initiative in East Malaysia involved the use of
additional PME by 138,000MT annually, which resulted in an
annual saving of 159.4 million litres of fossil diesel. SDD
also ensured an uninterrupted supply of PME to support the
initiatives through efficient procurement to all PS in East
Malaysia.
PROSPECTS
Moving forward, SDD will continue to focus on cost
optimisation, supply reliability and sustainability, customer
satisfaction, HSE assurance and operational excellence
towards supporting the Company’s overall aspiration of
becoming the ”Brand of 1st Choice”.
ANNUAL REPORT 2015
121
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
CRUDE OIL AND PETROLEUM
PRODUCTS PRICE TRENDS
USD/BBL
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
Jan
2005
Jan
2006
Jan
2007
Jan
2008
Jan
2009
Jan
2010
CRUDE: Tapis
CRUDE: Brent
RON97 ULG
JET A-1
DIESEL 0.05%
DIESEL 0.25%
Jan
2011
Jan
2012
Jan
2013
Jan
2014
Jan
2015
Dec
2015
Year
RON95 ULG
Note: Average monthly prices are based on MOPS.
After the drastic drop of global crude benchmark, Dated
Brent, in the second half of 2014, peaking at USD115.30/bbl
in June 2014 to a low of USD56.00/bbl at the end of 2014;
crude oil continued its downward trend throughout the
year under review. Dated Brent touched the highest point
at USD66.65/bbl on 13 May 2015 before gradually sliding
down to a low of USD36.00/bbl towards the end of 2015.
For the year under review, Dated Brent price averaged at
USD52.80/bbl, lower by about half from 2014’s average of
USD99.00/bbl. For petroleum products, the MOPS prices
are the key benchmark prices in this region. Throughout
2015, RON97 ULG, RON95 ULG and Diesel 0.05% averaged
at USD71.00/bbl, USD69.00/bbl and USD65.00/bbl,
respectively.
The unending bearish market for both crude oil and
petroleum products is attributed to the oversupply situation
122
as OPEC persistently held on to a “no output cut” policy to
claim market share leadership. Furthermore, the strong
supply growth from US tight oil, and the potential lifting of
sanctions on Iran led to expectations of higher oil exports
from Iran. On the demand side, expectation of interest rate
hike by the U.S. Federal Reserve reduced investors’ appetite
for commodities including oil, coupled with lingering
concerns about lower economic growth in China and
emerging markets.
Moving forward, global oil market is projected to remain in
an oversupply position in 2016, although the pace of global
stock builds could decrease to 0.6 mil bpd from 1.7 mil
bpd, as OPEC supply remains robust despite lower nonOPEC output. Demand is expected to give support as the
US economy is on the road of recovery and other emerging
markets including China and India are expected to continue
growing, albeit at a moderate level.
INSPIRING CHANGE
BUSINESS OVERVIEW
ECONOMIC OUTLOOK
AND PROSPECTS
ACCOUNTABILITY
PDB REMAINS COMMITTED TOWARDS
REINFORCING ITS MARKET LEADERSHIP AND ADDING
VALUE TO ITS BUSINESSES BY STRENGTHENING ITS
BRAND, BUILDING ON ITS INNOVATIVE CUSTOMERCENTRIC MINDSET AND FOCUSING ON ITS COST
COMPETITIVENESS – IN ITS JOURNEY TOWARDS
BECOMING THE BRAND OF 1ST CHOICE.
Global economic growth was estimated at 3.1% in 2015, a
slower growth compared to 2014. Expansion in the
advanced economies continued at a modest pace, while
growth in emerging markets and developing economies
decelerated, led by the imminent slowdown in China.
Downside risks to the outlook has escalated, particularly in
emerging markets and developing economies, influenced
by low commodity prices, increase in capital outflows from
the emerging markets, combined with downward pressure
on their currencies and increasing financial market volatility.
These risks pose downward pressure on the global economy,
with their effects to be felt throughout 2016. Global
economy is expected to be fragile, with modest growth
projected to be at 3.4%.
In the Southeast Asia region, estimated growth remains
steady at 4.6% in 2015 and projected at 4.9% in 2016. For
the ASEAN-5 economies (Indonesia, Malaysia, Philippines,
Thailand, Vietnam), weaker terms of trade as a result of
currency depreciation against major currencies is expected
to contribute to a bearish growth for both Malaysia and
Indonesia in 2015. The weaker commodity prices will
further drag the growth of the commodity-exporting
economies.
For Malaysia, GDP growth for 2015 was recorded at a
moderate pace of 5.0%, largely driven by the private sector,
both consumption and investments. Net exports remained
strong on the back of weaker imports due to weakening
Malaysian Ringgit. In 2016, the uncertainty of global
economy will continue to put more downward risks. GDP
growth is forecasted to moderate at between 4.0% and
4.5% as the economy continues to experience external and
internal uncertainties.
To address the challenging economic environment, the
Company will be aligning its business strategies to sustain
its overall market leadership and shareholders’ value. PDB
remains committed towards reinforcing its market leadership
and adding value to its businesses by strengthening its
brand, building on its innovative customer-centric mindset
and focusing on its cost competitiveness – in its journey
towards becoming the ”Brand of 1st Choice”.
ANNUAL REPORT 2015
123
SUSTAINABILITY
REPORT
RESPONSIBLE CORPORATE CITIZEN
PDB CONTINUES TO EMBRACE POLICIES,
PRACTICES AND PROCEDURES THAT
CLEARLY OUTLINE OUR COMMITMENT TO
DELIVER SUSTAINABLE AND LONG TERM
VALUE TO OUR STAKEHOLDERS
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUSTAINABILITY
REPORT
126
PETRONAS CORPORATE
SUSTAINABILITY FRAMEWORK
Limiting
emissions of
greenhouse
gases into the
atmosphere.
Preventing and
eliminating
injuries, health
hazards and
damage to
property and
communities,
including
conserving the
environment.
Ensuring that
products
conform to
quality and HSE
standards
throughout the
product lifecycle
and meet the
needs of society.
Societal Needs
Product Stewardship
Biodiversity
Ensuring projects
and operations
do not have
significant effect
on the diversity
of animals and
plants.
Health, Safety &
Environment
Sustaining the
Company’s
profitability
through value
creation, efficient
extraction and
manufacturing
processes.
Promoting
efficient use of
hydrocarbons
and water, and
supporting the
use of renewable
energy.
Climate Change
Shareholder Value
Natural Resource Use
Our approach to sustainability is guided by PETRONAS
Corporate Sustainability Framework which recognise the
value of sustainable growth, giving back to the community,
minimising the impact to the environment, as well as
maintaining safe and reliable operations.
Safeguarding
human rights
within our sphere
of influence,
contributing to
community
needs, investing
in training
and education,
promoting arts
and sports and
conducting our
business in a
transparent
manner.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Sustainability to PDB means meeting the world’s growing energy needs in a responsible and holistic manner, by balancing the
economic, environmental and social needs of our stakeholders, steered by solid governance and ethical business practices.
In addition, PETRONAS CoBE expresses our commitment to sustainable development as follows:
PART III
WORKPLACE CULTURE
AND ENVIRONMENT
3. SUSTAINABLE DEVELOPMENT
3.1 PETRONAS is committed to sustainable development in order to help meet the world’s growing energy needs
through economical, environmental and socially responsible efforts.
3.2 You should aim to create lasting social benefits; safeguard the health and safety of employees, contractors and
neighbours; minimise disruptions to the community; lower emissions; minimise impact on ecosystems and
biodiversity; and use energy, water and other resources more efficiently.
Source: PETRONAS CoBE.
The Company holds our partners, contractors and suppliers
to similar standard of conduct.
The year under review saw continued volatility in the capital
markets with the Malaysian economy facing financial
vulnerability. As a responsible corporate citizen, PDB
continues to embed sustainability in our business operations.
We engage with our stakeholders comprising our own
employees, business partners, shareholders, customers,
regulatory authorities, local communities, contractors and
suppliers.
PDB is currently refining the tools, processes and
sustainability reporting mechanisms internally. By
strengthening our business practices concurrently, this will
only help propel us into the future.
On 12 December 2015, Bursa Malaysia announced that PDB
has met the globally recognised sustainability standards for
inclusion in the FTSE4Good Bursa Malaysia Index. PDB is
very pleased with the recognition and inclusion in the
FTSE4Good Bursa Malaysia Index, and as such the Company
will strengthen and continue in its efforts to integrate
sustainability into its business strategy.
FTSE Russell (the trading name of FTSE International
Limited and Frank Russell Company) confirms that PDB
has been independently assessed according to the
FTSE4Good criteria, and has satisfied the requirements
to become a constituent of the FTSE4Good Index
Series. Created by the global index provider FTSE
Russell, FTSE4Good is an equity index series that is
designed to facilitate investment in companies that
meet globally recognised corporate responsibility
standards. Companies in the FTSE4Good Index Series
have met stringent environmental, social and governance
criteria, and are positioned to capitalise on the benefits
of responsible business practice.
ANNUAL REPORT 2015
127
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUSTAINABILITY
REPORT (continued)
HEALTH, SAFETY
AND ENVIRONMENT
PDB is committed to safeguard the health and safety of its people,
business partners, customers, surrounding communities, public
and all stakeholders; and puts protecting the environment as one
of its priorities in driving a sustainable business and operational
excellence.
The Company views the inculcation of HSE practices as a
prerequisite in this journey, aiming at making HSE a culture
that is embedded in all aspects of its business. In exercising
this aspiration, PDB holds on to the governance of HSE
Management System, a system that has been established
and rolled out to all of the Company’s operations since its
early days.
responsibility is emulated at all levels; spreading the message
that HSE is critical to each and every one of its employees.
The management’s commitment is carved in the Company’s
HSE Policy Statement; a written pledge signed off by the
Company’s highest executive officer, MD/CEO. It mandates
strict adherence to HSE regulations and requirements
across the Company, by our employees, contractors,
suppliers and joint venture partners.
LEADERSHIP COMMITMENT
PDB’s management demonstrates visible HSE leadership
and commitment through a set of exemplary roles in
safeguarding the health and safety of our employees. The
roles include integrating and balancing HSE aspects in
business decisions and leading the development of HSE
strategic objectives and targets. In operationalising the
commitment, PDB management drives HSE initiatives at all
levels with clear expectations, targets and objectives; with
each member of the management carrying the highest
portion of HSE KPIs. The show of accountability and
128
HSE governance at PDB is strengthened with commitment
to adhere to PETRONAS HSE Mandatory Control Framework
and PETRONAS Technical Standards. Adopting demonstration
of As Low As Reasonably Practicable (ALARP) as the
Company’s risk appetite in managing HSE risks, PDB
establishes its HSE strategic objectives and targets to
rationalise and operationalise the intent of its HSE aspiration.
The HSE strategic objectives are incorporated into HSE
Plan, and cascaded to the respective Divisions and closely
monitored to ensure everything that has been planned is
materialised effectively and in a timely manner.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
BUILDING HSE FOUNDATION
In ensuring that a HSE plan is executable and effective, PDB
provides a firm foundation that includes competent
employees, a relevant structure, practical deliberation and
decision making platforms, monetary budget and access to
critical documents of standards, legislation and other
requirements. At all levels, HSE roles and responsibilities are
clearly defined in job or position descriptions and are
documented, communicated and reviewed periodically.
HSE Committees
HSE committees focus on relevant HSE issues and provide a
platform for communication amongst and between
management and employees. The committees are utilised to:
• Stimulate effective two way communication on HSE
issues between management and employees
• Engage all staff in the implementation of HSEMS
• Provide avenue for employees’ feedback on HSE matters
• Provide HSE advisory to the management for informed
decision
• Provide a platform to monitor adequacy and effectiveness
of controls put in place to manage HSE risks.
PDB Corporate HSE Committee is chaired by the MD/CEO,
who is also a Director of the Company. Heads of Divisions
were appointed as committee members to ensure commitment
from senior management team. HSE risks, incidents and
performance are also deliberated by the PDB MC and
presented to the Board for oversight on a quarterly basis.
HSE Capability
An intent is only as good as the person executing it. PDB
gives significant emphasis in ensuring its employees and
servicing contractors are capable in implementing assigned
tasks. Appropriate training programmes are identified and
provided to ensure necessary skills and knowledge are
acquired prior to performing a job in a safe manner. Basis
of identification includes job function requirement, legislative
and standards requirements, discipline pre-set training
requirement, as well as other best practices by the industry
with similar operations and activities. Compliance to training
requirements are monitored through the implementation of
HSE Competence Assurance, a system that is able to
provide the management an effective oversight over the
status of competency of the workforce.
No. of Staff Trained in HSE
2014 80
2015 375
375
7,680
No. of Man Hour Training
for year in 2015
960
hours
Hours
days
Days
2014 3,512 439
2015 7,680 960
ANNUAL REPORT 2015
129
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUSTAINABILITY
REPORT (continued)
HSE Communications
For the year under review, we undertook initiatives to
engage our business partners, customers as well as
contractors to strengthen HSE management in our day to
day operations. Engagement with local communities and
public is also embedded in various programmes
implemented. Our initiatives were focused on factors that
could cause incidents and how to mitigate HSE risks.
We engaged authorities such as MDTCC, DOSH, DOE and
APMM to obtain updates on the latest legal requirements
that apply to PDB facilities. Such information is disseminated
to all relevant asset owners for compliance.
RISK-BASED PLANNING AND IMPLEMENTATION
With the HSEMS, supplemented by PETRONAS Enterprise
Risk Management Framework, provides risk oversight to
PDB Board, looking into various focus risk areas including
HSE risks. With a solid foundation set by the management,
operationalisation begins with HEMP, which calls for
identification of hazards, assessment of risks, and
implementation of controls. The process not only provides
detail contents of risks but also allow intelligent risk-based
prioritisation; a crucial approach in ensuring that plans are
structurally and systematically implemented. Several risk
assessment tools and techniques are used in HEMP, each
examining different aspects of an operation or activity;
suitable for specific areas or stages of operations. Examples
include Job Hazard Analysis, Process Hazard Analysis,
Chemical Health Risk Assessment, and Environmental
Impact Assessment.
Efforts towards enhancing HEMP implementation in 2015
included a Company-wide review of the Hazards and
Effects Register, involving Subject Matter Experts from the
Fuel, LPG and Aviation Terminals, Retail and NGV Stations,
as well as LPG and Commercial storage facilities; driven by
findings from past incidents and near-misses, audit findings,
newly-introduced hazard, facility or process and any change
that may introduce new or different level of HSE risks.
130
Notwithstanding all efforts in preventing incidents, the
Company realises that fate do find its ways; and normally at
the least expected of situation and time. Hence, it is also one
of the Company’s priority to keep everyone on their toes,
ready for any emergency situation. PDB Crisis and Disaster
Management Manual stipulates the requirements to take
proactive steps to ensure that we are prepared for unexpected
events. The manual also specifies the emergency response
structure along with clear roles and responsibilities. The
Company conducts periodic assessments to ensure adequacy
and effectiveness of controls to manage emergency
scenarios. This includes testing of response equipment’s
adequacy and readiness; as well as response capabilities
through emergency exercises at our operating facilities.
Regardless of how unwanted an incident is, the Company
strives to find remedies through the process of learning from
incidents. All incidents are investigated in a timely manner.
Recommendations resulting from investigations which
include both corrective and preventive actions are monitored,
and their progress is reported to the management. Lessons
learnt from incidents are shared across the Company
including relevant contractors and business partners to
prevent recurrence of similar incidents; in the form of specific
action items that are monitored and tracked for closure. At
all times, lessons are not only made learnt at similar
operations, but also being extended throughout the Company.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
TIER 3 EMERGENCY RESPONSE EXERCISE FOR KERTIH FUEL AND
LPG TERMINAL (EX-PETIR II)
One of the biggest scales of emergency response exercise conducted
was Tier 3 Emergency Response (Ex-Petir II) which was jointly organised
by PDB, PETRONAS Carigali Sdn Bhd Peninsular Malaysia Operations and
PP(T)SB which was successfully conducted on 21 April 2015.
The exercise was conducted to assess the capability and readiness of
our ERT, Eastern Region Emergency Management Team, PDB
Headquarters Support and Unification of Command between PP(T)SB,
Central Emergency and Fire Services and various response agencies
towards mitigation of the crisis. The exercise included full movement of
ERT and deployment of firefighting equipment during emergency with
external assistance from Kertih and Kemaman response agencies
(BOMBA, police, and hospital).
CONTINUAL IMPROVEMENT
Built around the Plan-Do-Check-Act
cycle, HSEMS requires an effective built-in
improvement system, to stay relevant,
updated and continually improving.
Internal and independent HSE Assurance
exercises are carried out, with analysis of
findings being presented to the PDB MC,
PDB Board and PETRONAS Downstream
Executive Committee. For the year under
review, PDB was subjected to HSE
Assurance by PETRONAS Group HSE. The
findings and recommended corrective
actions of this assurance exercise was
consolidated with those of the HSE
assurance conducted in previous years by
several stakeholders. Correction Action
Plans were consolidated for Companywide implementation and tracked for
closure; providing not only a holistic
approach in gap closures; but also ensures
sustainability of implementation.
Analysis from these Assurances; together
with other inputs from incidents, near
misses and external lessons are put
together against each sub-elements of
HSEMS, allowing identification of areas
within the system that require
improvement. This is a formal process in
place for PDB management to review the
effectiveness of the HSEMS implementation
and ensuring continual improvement of
the system; and subsequently the
Company’s sustainability in managing HSE.
ANNUAL REPORT 2015
131
INSPIRING CHANGE
KEY MESSAGES
SUSTAINABILITY
REPORT (continued)
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
BUILDING A HIGH
PERFORMANCE CULTURE
Creating a high performance culture requires a systematic approach to managing
the performance of organisations, teams and individuals. The Company is guided by
PETRONAS Learning and Development Framework and Top Talent Development
Framework which is grounded on the principle of continuous learning in nurturing
competent workforce by strategic learning, leadership, technical knowledge and
capabilities.
LEADERSHIP DEVELOPMENT
TOTAL EMPLOYEES
>1,900
In line with PETRONAS Leadership Vision, PDB strives to
develop leaders at all levels to uphold the PETRONAS
Shared Values and demonstrate the leadership competencies
in a high performance culture.
2014
Total Training Mandays:
Average Training Mandays:
4,380 days
2.74 days
2015
Total Training Mandays:
Average Training Mandays:
4,027 days
2.52 days
To build the right leaders to meet the Company’s needs
and aspirations, the PDB leadership development activities
and initiatives for employees at all levels are guided by
PETRONAS Learning and Development Framework, and Top
Talent Development Framework.
Leadership Development Programmes offered by the
PETRONAS Leadership Centre
Selected PDB executives, managers and higher management
employees participated in the wide array of high impact
leadership development programmes which were available
at PLC. The programmes held include the Senior
Management Development Programme, Management
132
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Development Programme, Leadership Excellence at
PETRONAS for Senior Managers and General Managers,
Maximising Your Leadership Success, Emerging Leaders
Programme, and Foundation of Leadership.
Through these programmes, participants were equipped
with the required competencies to affect positive change in
the organisation, business acumen as well as management
and leadership skills.
PDB Managerial Development Programme
To enhance managers’ leadership competencies in leading
change, innovation and maximising business opportunities,
the PDB MDP was introduced as an in-house training
intervention. A total of 18 managers graduated from this
programme on 24 February 2015.
Throughout the seven month programme, participants
attended individual and group coaching sessions, sharing
sessions by internal and external leaders, and also a visit to
the 3M Innovation Centre. Participants also implemented
group projects that centred on innovative solutions, which
led to cost savings and improved the Company’s competitive
advantage.
Leadership that Empowers Programme
Succession Management
The PETRONAS Top Talent Management Value Chain was
implemented to identify top talents within the organisation,
review talent on an overall basis to determine their strengths,
areas of development, career plans and finally match them
against the critical positions within the organisation. In the
context of PDB, rigorous talent identification exercises
resulted in a 13.0% increase of its top talent pool. As for its
31 critical positions, plans were made to identify successors
for the positions to ensure uninterrupted business operations
upon employee mobility or attritions.
The increase number of experienced top talents that
resulted in a bigger pool of potential successors also
contributed towards the Ready Now Successors to PBD
critical positions ratio of 2.4:1. Annual reviews were
conducted on the succession plans to ensure its feasibility
for implementation, as and when the critical positions are
vacated.
In addition, PDB conducted succession plan reviews for its
Senior Management positions to identify suitable leaders
within PETRONAS to take over leadership positions whenever
required. The deliverables achieved served as valuable
information for PETRONAS Downstream Business in
deliberating and endorsing plans for future implementation.
The programme was conducted with the objective of
enabling managers to acquire various leadership styles in
managing their subordinates. A total of 12 managers
attended the programme on 7 and 8 May 2015. This
programme was proven to be useful and effective through
the behavioural effectiveness survey which was conducted
several months after the training.
ANNUAL REPORT 2015
133
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUSTAINABILITY
REPORT (continued)
PDB Unleash Your Potential Programme
The PDB UYP is a six-month programme, which kicked off on 11 August 2015 and participated by 13 PDB executives. The
objective of this programme was to develop employees’ potential on conceptual thinking, judgement and empathy. The
learning modules included a business project dubbed as the ‘Dagang Challenge’, leadership journey sharing session by the MD/
CEO, coaching sessions and an external visit to Genovasi, the only design thinking school in Malaysia.
As part of the ‘Dagang Challenge’, the PDB UYP Batch 2015 launched the #FUELLINGCOMMUNITIES campaign on 28
November 2015 at Pusat Rukun Tetangga Taman Segar, Cheras.
The campaign‘s objective was to demonstrate that PETRONAS cares about the community, their wellbeing and
environment while creating a purpose for customers to spend at PETRONAS station.
The initiative was rolled out to a localised community area. Each customer who spent a minimum of RM30 on fuel
purchase at the selected PETRONAS station, will collect 1 Community Point. All accumulated points will be used for the
collective good of the entire community through charity activities.
+28,888 CP
+58,888 CP
+88,888 CP
Painting and Gotong-Royong at
Pusat Rukun Tetangga Taman Segar
Park amenities for Pusat Rukun
Tetangga Taman Segar
PETRONAS StreetSmart Programme
at Sekolah Kebangsaan Taman Segar
134
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
EXECUTIVE AND NON-EXECUTIVE CAPABILITY
DEVELOPMENT
Technical Managers Capability Assessment
TMCA was rolled out to evaluate the functional capability of
Technical Managers in managing operating assets using a
set of functional skills in discharging their roles and
responsibilities effectively.
For the rollout, the functional skill set was developed in
collaboration with Technical Capability Management
PETRONAS and PDB’s discipline resource persons. The
assessment commenced from September to October 2015,
whereby 10 Terminal Managers were assessed and
development plans identified for gap closure purposes.
PDB Downstream Grounding Programme
The PDB DGP is a structured and systematic training
approach for Technical Executives under the Process
Technology/Operations Skill Group with the objective of
capitalising tacit knowledge and developing their skills in
preparing them for bigger roles in the organisation. DGP is
expected to contribute higher value creation towards
operational excellence.
PDB adopted the DGP to replace the former Management
Trainee Programme that was implemented in 2013. The
programme was adopted from Downstream Business,
PETRONAS and further customised to suit PDB’s Terminal and
Depot Operations.
In developing the modules, a working committee was
formed comprising discipline resource individuals from the
business lines, in collaboration with Downstream Capability
Unit. The team spent five months reviewing the current
DGP logbook and Competency Level and Evaluation. The
revised PDB DGP was approved on 24 September 2015. A
handing over ceremony was conducted on 8 October 2015
between Head of HR Downstream and the MD/CEO. The
programme is also seen to be able to “jumpstart” the
participants’ learning journey as evidenced from the previous
programme participants from the Downstream Business
who yielded commendable Accelerated Capability
Development baseline results which thereon accelerated
their capability development in PETRONAS. The programme
is scheduled to begin in January 2016.
PDB Sales and Marketing Career Paths
Career Path is a tool which can be used by employees to
chart their career development within an organisation. At
PETRONAS, career paths are available based on the respective
skills segment with clear demarcation between enabler,
business technical and technical professional career paths.
In PDB, executives include those from technical to nontechnical background, with majority coming from the nontechnical pool. In view of the nature of its business, PDBspecific career paths were developed for the Sales and
Marketing Executives to help them acquire the necessary
skills for career progression through structured mobility.
ANNUAL REPORT 2015
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INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUSTAINABILITY
REPORT (continued)
Career path defined seven career opportunities within PDB
and relevant functions were identified for employees to
acquire functional experiences to progress along the
identified career ladders.
Non-Executive Non-Technical Capability
Non-Executives Learning and Development Framework
focuses on NENT employees’ functional and behavioural
capabilities.
Eligible NENT employees are required to undergo NENT
Assessments to evaluate their competencies and readiness
for their next career progression. In preparing them for the
assessment, three Microsoft Solution Programme sessions
involving participants were conducted in March, April and
October 2015. All participants passed and were considered
for promotions.
Non-Executive Technical Capability
PETRONAS Competency based Assessment System is a
structured skill assessment system introduced to PETRONAS
group wide in 2006 for NET employees.
The purpose of PECAS is to confirm the competency of our
NET (Technicians and Operators) through a structured
assessment process covering elements of knowledge, skills
and attitude against PETRONAS Occupational Skills Standard.
Three external verification sessions for the PECAS portfolio
were conducted in the year under review to certify and
recommend the competency levels of the identified
technicians through portfolio verifications. As a result, 95
technicians were certified as competent which is 82.0% of
the total eligible NET employees for the assessment.
136
PDB Internship Programme
The PDB Internship Programme is designed to provide
undergraduate students with practical experiences which
are related to their academic backgrounds for a duration as
specified by their academic institutions.
For the year under review, a total of 190 students underwent
the internship programme with PDB.
Skim Latihan 1Malaysia/Graduate Employability
Enhancement Scheme
The Graduate Employability Enhancement Scheme or better
known as the SL1M-GEES-PETRONAS, is a soft skills training
programme, developed by PETRONAS in collaboration with
the Government of Malaysia to enhance the marketability
and employability of Malaysian graduates under the Skim
Latihan 1Malaysia initiative.
The training programme is focused on helping unemployed
graduates acquire critical soft skills and provide them with
an experiential learning experience that equips them with a
diverse set of personal attributes in preparing them to work
in business/corporate environment. For the year under
review, 10 trainees from GEES/SL1M programme were
placed in PDB.
PDB Executives Action Team
Established in 2014, the PDBeat was designed to create
additional value to the Company. This was carried out via
operational improvements as well as activities that
strengthened the brand and improved organisational culture.
PDBeat also acts as a leadership capabilities development
platform for young executives. The club’s operating model
anchors on four key principles, namely cross organisation
participation, executive empowerment, value creation for
PDB and economical execution. Membership is open to all
PDB executives at no cost and all staff have the opportunity
to participate in any PDBeat organised activities.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
During the year under review, the initiatives held covered
five key areas, namely education, sports and recreational,
innovation, CSR and social events. Among the activities
conducted include learning visits to Google Malaysia Office,
3M Innovation Centre and KVDT, an innovation talk, LIFE of
PI Competition 2015, children’s book donation drive, and
spring cleaning at Rumah Titian Kaseh Titiwangsa.
PDBeat also partnered with nine other HCU/OPUs to
organise the inaugural PETRONAS YPC Sports Carnival. The
club also assisted in coordinating the PETRONAS Primax
Race All-Stars 2015.
LIFE of PI – Listen, Integrate and Facilitate Execution
of Potential Ideas Programme
LIFE of PI was established in 2014 as a platform for staff to
share their ideas directly with the MD/CEO. The programme
is conducted in a casual setting to allow ideas to flow freely
and motivate staff to think of innovative concepts for the
Company.
In 2015, PDBeat decided to make the LIFE of PI sessions
more interesting and competitive by introducing the LIFE of
PI Competition. The competition is open to all PDB staff
nationwide. PDB Non-Executives were also required to be
part of this competition and submit at least one of their
ideas as this demonstrated their importance to the Company.
Throughout the competition, 15 creative ideas were
deliberated.
At the end of the sessions, it has increased the level of
awareness amongst PDB’s staff as it has created a platform
for them to share their ideas with PDB’s top management,
especially with the MD/CEO.
PDB Brownbag
The PDB Brownbag is a series of talks organised by the
Strategic Planning Department, Finance Division with the
objective of further enhancing the capability of the Company’s
planning fraternity. During the year under review, four PDB
Brownbag sessions were conducted, with topics ranging from
the economic outlook, embedding risk assessments in business
plans to the PETRONAS Investment and Allocation Framework.
The sessions helped participants improve their functional
capabilities as well as gain a better understanding on the
subject matter for their role as key planners of their
respective departments.
ANNUAL REPORT 2015
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INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUSTAINABILITY
REPORT (continued)
DRIVING
INNOVATION
2015 F1 WO6 HYBRID
We are committed to explore new approaches in innovation, automation
and technology integration. This is to ensure continuous improvements in
our products, services and processes, as well as to become a more
efficient company in the current market environment.
138
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
LAUNCH OF THE NEW PETRONAS PRIMAX 97 WITH ADVANCED ENERGY FORMULA
In August 2015, the new PETRONAS Primax 97 with Advanced Energy Formula was made available at about 60.0% of
PETRONAS stations and more to be made available in 2016.
PETRONAS PRIMAX 97 WITH ADVANCED ENERGY FORMULA DELIVERS SUPERIOR ACCELERATION WITH THE
FOLLOWING THREE KEY ATTRIBUTES:
Protects the engine with the nation’s first lower sulphur gasoline: On top of its lower
sulphur content that benefits sulphur sensitive emission systems, the new formulation
also removes and prevents deposits, providing long-term protection the fuel injectors.
Provides better combustion with technology of the winning formula: The fine quality
base fuel produced by world class PETRONAS refineries in an optimised formulation
developed through our partnership with the MERCEDES BENZ AMG PETRONAS Formula
One™ Team. With better combustion, motorists can experience longer, smoother drives
with each tank of new PETRONAS Primax 97.
Improves drivability with the world’s first use of new chemistry: This new improved
chemistry ensures better friction reduction at the cylinder wall and enhances the engine
oil’s function, resulting in smoother acceleration.
ANNUAL REPORT 2015
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INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUSTAINABILITY
REPORT (continued)
PETRONAS DYNAMIC DIESEL – IMPROVED
FORMULATION
In December 2015, the newly improved PETRONAS Dynamic
Diesel was made available at all PETRONAS stations
nationwide. This enhanced PETRONAS Dynamic Diesel
cleans the engine, restores power and provides better
combustion for superior economy and reliability. The new
PETRONAS Dynamic Diesel delivers the following benefits:
• Recorded best power restoration among the Malaysian
diesel fuels tested. Testing included industry standard
common-rail direct-injection engines.
• Cleans engine: Removes and prevents internal and
external injector deposits for finer fuel spray and better
engine life.
• Restores power: Regain engine performance, efficiency
and reliability by protecting modern diesel injectors.
• Better combustion: Easier starting and better drivability
through improved combustion properties and friction
reduction.
INTRODUCTION OF PETRONAS SYNTIUM WITH
°COOLTECH™
During the year under review, the Company introduced the
new PETRONAS Syntium with °CoolTech™, in Malaysia on
21 March 2015. The event was launched by PETRONAS top
management and Nico Rosberg of the MERCEDES AMG
PETRONAS F1 Team.
PETRONAS Syntium with °CoolTech™ is available both
locally and abroad. The new engine oil is an upgraded
formulation of base oils and additives that fight excessive
engine heat. The technology developed is derived from the
race track and met the requirements of other major OEMs
to provide consumers with optimum engine performance
and a trouble free driving experience across all conditions.
140
Downstream Continuous Improvement Convention
Awards 2015
SDD enrolled in the Downstream Continuous
Improvement Convention, jointly hosted by PETRONAS
DBE, PP(T)SB and KAPENAS.
DCIC is part of the Downstream Continuous
Improvement practices that strive to propagate
ownership and commitment, accelerate internalisation
of PETRONAS Cultural Beliefs as well as inculcate a
problem solving and innovative mind set amongst the
front-liners, in line with the theme ‘Living Cultural
Beliefs Through Continuous Improvement’. PDB won
one Gold and two Silver Awards for the following
projects:
• KLIA Aviation Terminal (Team KAiZEN) – Gold
Award; Designed and fabricated a tool that prevents
fuel splash while the JC Carter is being connected
to the aircraft adapter during the de-fuelling
process. Product spillage during de-fuelling was
avoided and through the implementation of a
Customer Satisfaction Survey, customer complaints
were reduced by 80.0%.
• Sepangar Bay Fuel Terminal (Team Sahabat Nabalu)
– Silver Award; Designed and fabricated a system
that minimised ergonomic and product loss issues
while off-loading products. The project eliminated
Unsafe Acts and Unsafe Condition aspects, reduced
off-loading time by 60.0% and in doing so,
contributed RM0.3 million in operational cost
savings annually.
• Bayan Lepas Aviation Terminal (Team BOLDS) –
Silver Award; Designed and fabricated an oil
interceptor system that improved waste oil
recovery. Work processes improved by 92.0%,
leading to a reduction in Unsafe Act and Unsafe
Condition, including operational time and
manpower usage.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
LOW PROFILE LOW FLOW RATE DISPENSER
By innovating on process simplification, SDD introduced its new fuel dispensing equipment for narrow
body aircraft named LPLFRD or otherwise known as “Gecko”. It is a compact, low profile, low flow rate
dispensing vehicle that is dedicated for refuelling narrow body aircrafts such as Boeing 737-400, Boeing
737-800 and Airbus A320. Through this project, SDD reduced 30.0% of its capital investment against the
existing dispenser and replaced the existing hydraulic system with a levelled platform, thereby eliminating
the need for costly maintenance for the hydraulic system. In addition, the new type of dispenser improved
operational efficiency given the faster operational turnaround from the simplified refuelling procedure by
eliminating hydraulic movements, saving time between five and 10 minutes per refuel session. The
equipment also provides safer refuelling platform with proper guard rails.
The new equipment, being used at KLIA since April 2015 has become the first of its kind in Malaysia and
Southeast Asia. Aside from the cost saving benefits, the “Gecko” also provides better ergonomic handling
of fuelling operations to narrow body aircraft due to the availability of fixed platforms.
ANNUAL REPORT 2015
141
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SUSTAINABILITY
REPORT (continued)
CUSTOMER
ASTRO XLR8 AUTOMOTIVE FESTIVAL AT PULLMAN
PUTRAJAYA LAKESIDE
For the first time ever, ASTRO XLR8 Automotive Festival,
powered by PETRONAS Primax 97 with Advanced Energy
Formula was held at the Pullman Putrajaya Lakeside. This
inaugural event hosted a total of over 20 automotive car clubs
from all over Malaysia, from vintage cars to Lamborghinis.
Activities included The King of Clubs where each car club
competed against each other in a series of challenges for the
coveted title of The King of Clubs. Other than this, the event
was also home to Asia Klasika, an automotive show displaying
over 80 classic cars and more than 20 superbikes, including
the personal collection of DYMM Sultan of Johor himself. This
marked the first time that PETRONAS came in as a title
partner. XLR8 drew a crowd of approximately 30,000
throughout the entire weekend and gave PETRONAS media
coverage worth RM22.0 million, thus increasing the brand
awareness and visibility of the newly launched PETRONAS
Primax 97 with Advanced Energy Formula.
PETRONAS DYNAMIC XPERIENCE
This is an Experience to Believe event where the Retail
Business in partnership with PETRONAS Lubricants, engaged
with 4x4 car clubs from across the country to sample
PETRONAS Dynamic Diesel and PETRONAS Urania, and
provide testimonies on their experience. In December 2015,
the PETRONAS Dynamic Xperience kicked off in Kota
Kinabalu, Sabah where a total of 40 4x4 vehicles comprising
of three different car clubs from around Kota Kinabalu, took
part in this experiential journey of discovery. Participants
who were mainly users of our competitors’ products were
given a full tank of PETRONAS Dynamic Diesel and taken
on a 150km journey around Kota Kinabalu, making pit stops
142
at two of our PETRONAS stations along the way. At the
stations, participants were required to complete tasks to
collect valuable points which at the end of the day would
be tabulated to select the top five winners. The PETRONAS
Dynamic Xperience has proven to be a tremendous success
as it proved the superiority of our Fuel Engineering and
through the testimonials from participants whom have
switched to become PETRONAS customers.
KL BIG KITCHEN FESTIVAL 2015
PDB was proud to be one of the main sponsors for the Kuala
Lumpur Big Kitchen Festival 2015, an event organised by the
Kuala Lumpur City Hall and Visit KL, in collaboration with
Tourism Malaysia and the Ministry of Tourism and Culture
Malaysia. The three day festival at Dataran Merdeka which
was officiated by Guest of Honor, Seri Paduka Baginda Raja
Permaisuri Agong Tuanku Hajjah Haminah Hamidun, brought
together top local and international chefs, restaurants and
street food operators serving authentic Malaysian dishes. The
event was attended by more than 50,000 local and
international visitors.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Besides supporting Ministry of Tourism & Culture to
showcase Kuala Lumpur as the gastronomic destination for
Southeast Asia, Gas PETRONAS as No. 1 Cooking Gas in
Malaysia used this opportunity to further promote HSE and
create awareness towards safe usage of LPG amongst
community.
LPG DEALERS’ STORE OPENING CEREMONY
During the year under review, the LPG Business launched
new premises for its dealers, in line with PDB’s emphasis for
these premises to adhere to stringent HSE standards. The
new premises launched were MTP Abdul Kadir Sdn Bhd
LPG storage facilities and office on 17 March 2015 at Jalan
Sungai Tiram, Johor and Wisma Rompin Enterprise in
Bahau, Negeri Sembilan on 23 October 2015. These new
premises are the benchmark for all channel members to
follow and this will subsequently raise the safety standard
of LPG industry as a whole.
The event was also an opportunity for the LPG Business to
participate in CSR activities and reach out to support local
communities such as orphanages, children with special
needs and poor families. The LPG Business believes in
leading by example and hopes these activities encourage all
LPG Dealers to continuously support and contribute to the
needs of local communities.
HARI PENGGUNA KEBANGSAAN
The event was organised by MDTCC at Dataran Merdeka
from 23 to 25 October 2015. PDB opened a booth where
we conducted a membership drive for our PETRONAS Kad
Mesra and sold our PETRONAS Gift Cards.
FIESTA LARUT
Held in Larut Matang and Selama, Perak, Fiesta Larut is an
annual event organised by MDTCC to introduce to the
locals on products and services managed under the Ministry.
During this event, PDB hosted a booth which featured a
Mini Mesra Store, an F1 simulator, a photo booth and also
a Remote Control Track.
Throughout this event, registration for Kad Mesra
membership was acquired along with the sales of PETRONAS
Gift Cards.
SAFETY TALK AND AWARENESS PROGRAMME
As part of our continued focus to enhance safety awareness
among commercial customers, a series of engagement
sessions were held throughout the six regions on LPG
product knowledge, safe handling and customer services.
These sessions were part of our efforts to equip customers
with better knowledge and awareness on our LPG products,
increase customers’ confidence level on the quality of our
products and share safety tips in handling our LPG cylinders.
ANNUAL REPORT 2015
143
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
CORPORATE RESPONSIBILITY
AND KEY INITIATIVES
MARKETPLACE
We strengthened our efforts to create opportunities and
build long term relationships with our business partners and
commercial customers in developing our business network.
Through training and sharing sessions, we provided guidance
to them in managing HSE risks more effectively when doing
business. We also held annual conferences and business
reviews to leverage on how we can work together to meet
our long term goals.
Dynamic Diesel products as well as the SmartPay chipbased fleet card. This event, which was jointly hosted with
SPAD, will be held throughout 2016 in Johor and Penang.
Through this event, we were able to address the public
transport industry and advocate PETRONAS as the partner
of choice for fuel.
ROAD TANKER OPERATIONS GUIDELINE DAY 2015
PETRONAS RETAIL DEALERS CONFERENCE 2015:
MANAGING NEW REALITIES
For the year under review, the Dealer Conference was held
in the historical city of Melaka at Equatorial Hotel. A total
of 850 PETRONAS station dealers shared the realities of the
petroleum industry and the changes needed to weather the
challenges that lay ahead. The conference allowed the
Retail Business of PDB to communicate directly with its
large network of dealers: as well as share the direction and
plans moving forward.
SAFETY BRIEFING FOR PUBLIC TRANSPORT INDUSTRY
Working together with SPAD, the Company participated in
SPAD’s Industry Code of Practise Safety Briefing, with 200
participants from the public transport industry from Pahang,
Terengganu and Kelantan. During the event, the Retail
Business shared with the delegates on both safety and
reliability aspects of PETRONAS Primax and PETRONAS
144
RTOG Day 2015 was successfully held on 3 and 4 October
2015 in Kuching. Jambhala Sdn Bhd, one of our APH
orchestrated this successful event which provided a platform
to recognise the hardworking APHs. This was the second
event organised by FMD in an effort to instil a sense of
friendly competition, and also acted as a training ground for
the APHs to strengthen their core competencies with
regards to RTOG compliance.
RTOG Day 2015 was attended by over 200 guests, which
included PDB personnel, Senior Management as well as
APH representatives, RKP and exhibitors.
PDB drivers were also given intensive and frequent training
to ensure that they were able to protect themselves and
other road users. RTOG Day 2015 also served as a networking
platform for new drivers and suppliers, and provided drivers
with the opportunity to test their emergency response skills
to ensure that they were able to respond in the correct
manner during incidents. Plans have also been put in place
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
to set-up a platform at national level that allowed sharing of
experiences and best practices amongst transportation
industry players in Malaysia. The platform would also serve to
increase road safety standards in Malaysia.
Prior to the RTOG Day 2015, the team carried out a
Corporate Social Responsibility programme on 1 October
2015 by reaching out to the students from Madrasah Darul
Uloom Islamiyah, Kuching.
SYNERGY TOWARDS EXCELLENCE
In terms of promoting a mutually-beneficial business
partnership with customers, the Commercial Business
continues to carry out a series of CRM activities. A notable
event organised by the Central Region was the “Synergy
Towards Excellence”, held on 11 October 2015, involving
key customers and their families. Apart from inculcating
product knowledge among participants, it was also aimed
at strengthening business partnership with key customers as
well as a gesture of appreciation for their significant
contribution over the years with Commercial Business.
In addition, Commercial Business conducted periodic training
sessions for MINDEF, Felda, Sime Darby and KTMB to keep
them abreast with the latest development and safe handling
of petroleum products used in its operations.
LPG PRODUCT KNOWLEDGE AND EMERGENCY
RESPONSE EXERCISE
An Emergency Response Exercise was conducted at the
premises of LPG Premier Dealer, Wazdar Sdn Bhd in
Machang, Kelantan on 4 September 2015. The main
objective of the exercise which is organised annually by the
LPG Business Division, was to strengthen coordination
between PDB, Premier Dealer’s ERT and Authorities as well
as to test the level of preparedness of the Premier Dealer’s
ERT in dealing with emergency situations. The event was
participated by local authorities such as BOMBA, Royal
Malaysian Police, the local district hospital, DOSH, MDTCC
and JPAM as well as LPG East Premier Dealers and Kelantan
LPG Dealers.
EMERGENCY RESPONSE PREPAREDNESS
DEMONSTRATION AT PETRONAS LPG PREMIER DEALER
BERCHAM SEPAKAT, IPOH, PERAK
The LPG Business continued to collaborate with Government
Agencies such as MDTCC, BOMBA, DOSH and many others
within the industry to ensure business continuity without
compromising safety.
During the year under review, Perak DOSH invited the LPG
Business to participate in their 2015 OSH Week on 5 August
2015 to provide the Demonstration of ERP for PETRONAS
LPG Premier Dealers, which is governed by the Control of
Industrial Major Accident Hazards Regulation. This is in
conjunction with Perak DOSH 2015 OSH Week which was
held from 3 – 7 August 2015. The selected PETRONAS LPG
Premier Dealer was Bercham Sepakat Sdn Bhd located at
Bercham, Ipoh, Perak.
The emergency scenario set up by the team was executed
as planned and more importantly, the exercise elevated the
ERT and dealers awareness towards emergency preparation.
LPG DEALER MANAGEMENT
The LPG Business remains committed to ensure our network
of LPG dealers is the most preferred, operate at the most
efficient and safe manner while providing the highest level
of customer service. Currently, the LPG Business manages
52 premier dealers and 267 dealers operating nationwide.
Aside from imposing high standards of governance and
audit on our LPG dealers, the LPG Business also ensures
that all our dealers comply with regulatory requirements
and standards such as MS830 requirements on the Dealers’
facilities; DOSH requirement for LPG storage and
implementation of Route Hazard Mapping to reduce risks
while transporting LPG.
INDUSTRY ENGAGEMENT WITH GOVERNMENT AGENCIES
During the year under review, LPG Business together with
other LPG industry players and MDTCC successfully
conducted the inaugural “Siri Jelajah Roadshow” with all
LPG dealers across six regions. The roadshow enabled the
relevant government agencies to obtain an in depth
understanding on the LPG industry as well as provided a
platform for sharing of best practices, regulations and
compliance matters across the LPG supply chain.
ANNUAL REPORT 2015
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INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
AND KEY INITIATIVES (continued)
WORKPLACE
At PDB, our workforce is our greatest asset in ensuring business
sustainability. Acknowledging this, we have taken a number of
workplace health and safety initiatives for the safety and wellbeing
of our employees, as well as managing their personal career
progression and growth through capability building, leadership
and technical skill development.
The Company’s Human Resource Policies and
Procedures are in line with the PETRONAS
Group Human Resource Policies and
Procedures as it serves as a guideline for daily
operations and decision making. The Policies
encompass overall HR Value Chain, namely
Human Capital Strategy, Talent Sourcing,
Talent Development, Remuneration,
Performance Management, Services and
Attrition.
In December 2015, PDB subscribed to
PETRONAS Compliance Desktop® which
consist of CoBE and ABC Manual e-Learning
modules. The first phase was rolled out to all
PETRONAS employees and expected to be
completed by March 2016. For further
information on CoBE, refer to page 40.
146
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
HUMAN RIGHTS
Total employees, Malaysia and International Operations
PDB adheres to PETRONAS Human Rights commitment
which is in line with the United Nations Guiding Principles:
Local
“PETRONAS is committed to respecting internationallyrecognised human rights in areas of its operations,
complying with its Code of Conduct and Business Ethics
and all relevant legal requirement.”
15%
International
85%
The objective of the commitment is to ensure our activities
are governed by human rights principles, laws, best industry
practices and standards to manage impacts in our areas of
operation. The Commitment is applicable to all employees,
contractors, subcontractors and any third parties within
PDB premises or performing work and/or business for or on
behalf of the Company.
EMPLOYMENT DIVERSITY
We are committed to maintaining a safe work environment
enriched by diversity and characterised by open
communication, trust, fair treatment and respect.
The Company’s bench strength consists of 84.9% Malaysians
while the remaining 15.1% are made up of employees from
other nationalities including Vietnamese, Thai and Filipino.
Domestic
International
Total Employees
1,660
296
1,956
The Company’s commitment to promote diversity and
improve its service is also reflected in specific initiatives.
The PDB Human Resource Regional Meeting, for instance is
conducted on an annual basis to strengthen alignment and
integration of HR practices across the PDB Group. The
participants consist of PDB HRM Managers and
representatives from local subsidiaries such as PLM(M)SB
and International Subsidiaries namely PEPI, PIM(T)CL and
PVL. For the year under review, the meeting was conducted
on 11 and 12 November 2015 to provide a platform for HR
capability building through the sharing of information and
HR best practices. The meeting also served as an avenue
for those who needed to seek advice and support on the
planning, implementation, monitoring and reporting of
relevant HR activities.
ANNUAL REPORT 2015
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INSPIRING CHANGE
KEY MESSAGES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
Ratio of Female to Male Employees
During the year under review, PDB Group comprised of a
high percentage of permanent employees, of which 69.1%
are male employees and 30.9% are female employees.
MALE
EMPLOYEE ATTRITION
69.0%
PDB understands the importance of identifying key factors
that contribute to employee resignations in order for the
Company to retain employees. Though PDB’s employee
resignation stood at a non-alarming rate of 1%, PDB
continuously strives to retain its employees through various
initiatives to ensure they remained inclusive, focused and
consistently engaged. This is important to allow employees
to feel a sense of belonging and work towards achieving
the Company’s vision and mission.
31.0%
FEMALE
For the Company, the percentage of contract employees
stood at 14.3% (279 employees) to an overall manning of
1,956 employees.
Resignation by Age Group and Gender
Gender
Total Employees
Male
1,352
Female
604
Total
1,956
Ratio of Contract Employees to Permanent Employees
2
1
1
14%
Temporary
148
6
2
1
31-35
2
6
36-40
1
2
41-50
1
51-55
86%
2
2
26-30
Permanent
Male
BUSINESS STRATEGIES
Female
1
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
TALENT SOURCING
PDB, in alignment with PETRONAS Group Talent Sourcing
policies and procedures, provides equal opportunities for
any qualified and competent individual to be employed by
the Company from various multicultural/multiracial
background, locally and internationally. Talent sourcing
seeks to optimise manning levels in the organisation by
having the right candidate for the right position as this will
ensure implementation of business plans.
Several sourcing channels are used for recruitment including
the PETRONAS recruitment portal – www.petronas.com/
careers, Rigzone, Jobstreet, PETRONAS Sponsored Students,
PETRONAS Employee Referral Programme, printed media,
social media, headhunters and career fairs. PDB also
embarked on a new method called e-recruitment – using
Microsoft Lync. In 2015, PDB has successfully conducted
eight sessions using e-recruitment covering Sabah, Sarawak,
Melaka, Kertih and KLCC.
PDB has also joined several recruitment drives with the
objective to increase diversity of the candidates received.
More than 500 CVs were obtained along the way and more
than 70.0% were shared with respective departments in
PDB for consideration.
PDB ONBOARDING PROGRAMME
The PDB Onboarding Programme is an in house event to
help newcomers (new hires, transfer in and interns) adjust to
the social and performance aspects of their jobs quickly and
smoothly. The one-day event is a collaboration between
several divisions/departments to create a warm welcome to
the newcomers, with a focus on the following areas:
• Overview of PDB High Level Organisation Structure and
PDB MC Members
• Introduction to PDB Knowledge Management and
functional application platforms (Aspire, MyHRM, PETRONAS
website and MyPassport)
• Corporate Briefing
• Upclose and personal session with an identified PDB MC
Member
• Briefing on HSE Policy, ZeTo rules and HSEMS
• Introduction to PETRONAS Cultural Beliefs
• Introduction to PDB Buddy Programme
LABOUR UNION MANAGEMENT
PDB is governed by PETRONAS Group Employee Relations
and Industrial Relations Policies and Procedures which
provides guidance on the regulation of the employee’s
Code of Conduct and discipline; management of industrial
relations issues (i.e. disciplinary matters and union issues);
managing in house unions and collective bargaining with
the intention of inculcating positive values and work culture
within a conducive workplace environment. The policy is
also governed by the prevailing labour legislations.
For the year under review, several activities were conducted
to strengthen industrial harmony at the workplace including
KAPENAS quarterly meetings which saw the participation of
representatives from the Management, Executives and NonExecutives and four Collective Agreement Upskilling sessions
for Line Managers and Superiors.
HR ENGAGEMENT AND COMMUNICATION
HR Live! which is an online HR engagement and
communication platform was launched in 2015 as cost
effective way to communicate with employees across all
regions.
ANNUAL REPORT 2015
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INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SAFETY
HR Live Menu
Safety Performance
HR
LIVE
1
2
3
TECHNICAL ASSESSMENT
AND CHIT CHAT
HR ENGAGEMENT AND
COMMUNICATION SESSION
GST BRIEFING
For the year under review, HR LIVE! was used to conduct
the following:
1.
HR E-Engagement and Communication Session
A total of six sessions were conducted at terminals
located in Lumut, Pasir Gudang, Senai, Bayan Lepas,
Bintulu and Tawau Sales Office.
2. Chit Chat and Interview Sessions
A total of six chit chat and interview sessions were
conducted.
3. Goods and Services Tax Briefing
Briefings were conducted in 10 different business
locations.
4. Employee Performance Management
Performance appraisals were conducted for the mid
year reviews.
150
For the year under review, the Company maintained zero
fatalities. However, increased LTIF and TRCF as compared
to the same period last year were the result of increased
awareness of incident reporting related to business travel
and office safety. In relation to the issue, the Company has
introduced Office Safety Programme for all employees.
2013
2014
2015
0
1
0
0
0
0
0
19.03
0
0
0
0
LOST TIME INJURY
FREQUENCY (LTIF)
No. of injuries per one million
man hours
Employees
Contractor
0.22
0.19
0.20
0
1.00
0
TOTAL REPORTABLE CASE
FREQUENCY (TRCF)
No. of cases per one million
man hours
Employees
Contractor
0.9
0.39
0.64
0
1.17
0
NO. OF FATALITIES
Employees
Contractor
FATALITY ACCIDENT RATE
Recordable Fatalities per 100
million man hours
Employees
Contractor
Note: No. of TRC = No. of Fatality + No. of LTI
We strive to sustain good safety performance in PDB.
Targeted programmes are put in place to enhance Health
and Safety awareness among employees and contractors,
and increasing employee participation in such programmes.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Safe Motorcycle Riding Campaign
In continuous pursuit to ‘Take Safety Personal’, the Company
launched the Safe Motorcycle Riding Campaign, in
collaboration with JKJR Pulau Pinang.
The campaign was attended by the Director of JKJR Pulau
Pinang who enlightened staff on safe motorcycle riding
habits as well as hazards on the roads that may lead to
accidents and fatality. The campaign was launched to
encourage employees to be more vigilant and extra careful
when riding to and from work. Free luminescent safety
vests and reflective stickers were also issued to all
participants of the campaign.
By conducting CHRA, PDB is expected to increase the level
of legal compliance in the workplace, standardise control
measures in every workplace involved and ease the
monitoring and tracking process of remedial action plans.
Ergonomics, Manual Handling and Back Protection
Programme
For the year under review, PDB Corporate HSE, SDD OEAD
and AOD co-organised a dedicated programme to manage
and control ergonomics risk factors present in the operations
at KLIA Aviation Fuel Terminal, specifically for aviation refuellers. This programme is a result of Health Risk
Assessment and Ergonomics Risk Assessment conducted
for PDB Aviation Operations.
Defensive Driving Course for LPG Pallet Lorry Drivers
On 1 March 2015, a total of 35 LPG pallet lorry drivers and
premier dealers assembled at the Melaka Sales Office for
the Defensive Driving Course for existing drivers. This
programme was conducted by the LPG Business to highlight
the importance of defensive driving, as a reminder for
premier dealers to continuously maintain their vehicles in
compliance with road regulations and LPG terminal
guidelines.
The Ergonomics Excellence Centre of NIOSH Malaysia was
engaged to conduct the programme. A total of five sessions
were conducted in August and September involving
approximately 90 participants. The course comprised five
customised modules including practical training as well as
exercise sessions on back strengthening/protection in
addition to theoretical knowledge.
HEALTHY WORKFORCE
Chemical Health Risk Assessment
For the year under review, PDB initiated a different approach
in assessing risks for chemical hazards via the application of
generic CHRA for PETRONAS stations in view of optimisation
and similarities between workplaces.
Various engagement sessions were conducted with DOSH,
Putrajaya together with PETRONAS DBE and PETRONAS
Group HSE. A total of 17 verifications were conducted at
identified PETRONAS stations.
ANNUAL REPORT 2015
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INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
Management of Fatigue
PDB Medical Committee
Following recommendation of Health Risk Assessment
conducted previously, the Company conducted Management
of Fatigue Awareness Programme specifically for Aviation
Operators at six Aviation Terminals from June to September
2015. The Programme was aimed at providing employees
with a better understanding on issues related to fatigue and
guidelines on the prevention, management and mitigation
of fatigue in the workplace. Proper fatigue management at
workplace helps to reduce risk of accidents, injuries and
illness associated with impairment of work performance
due to fatigue.
The Medical Committee was established on 29 April 2014
to facilitate and implement the following matters:
Fitness to Work
The Company’s Fitness to Work Programme aims to ensure
all employees are medically fit to perform their jobs and
reduce risks of injuries and illnesses caused by mismatch
between physical and mental fitness in meeting job
demands. The types of fitness to work assessment include
pre employment, pre-placement, job specific and ‘for
cause’ health assessment.
The Company ensures mandatory health assessments are
conducted through the Company’s panel clinics as part of
recertification requirements for road tanker drivers. Health
checks include general fitness, visual and hearing impairment,
and absence of ischemic disease, epilepsy and potential
heart diseases, among others. It is also a mandatory
requirement for the hauler management sector to conduct
drug and alcohol tests for all road tanker drivers every six
months with one test conducted unannounced.
152
• Employees with Medical Condition and under proposal
for Medical Board Out or Prolong Illness;
• Substance Misuse Policy; and
• Other matters such as:
– Dana As-Syakirin/KAPENAS to provide assistance for
employees with medical condition.
– Deliberate on the employees’ Fitness to Work
assessment upon medical check-up.
This committee is chaired by HRMD and comprises members
from the HSE and HRM fraternity as well as managers from
regional offices.
During the year under review, a total of five Medical Board
Out cases and three Prolong Illness cases were managed.
One employee was referred to Dana As-Syakirin for further
assistance in providing medical related financial assistance.
As part of Substance Misuse Programme implementation,
random drug testings were conducted for 80 employees.
Safety Data Sheet
In view of CLASS Regulations 2013, all SDSs of PDB’s
products were developed in collaboration with PETRONAS
Group HSE.
These SDSs are used as a means of communicating HSE
information to end users of chemicals and persons that
come into contact/handle chemicals. The SDSs are
accessible to all including public in PETRONAS SDS Portal:
https://sds.petronas.com.my.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Hello Tomorrow HSE Campaign Sabah 2015
Hello Tomorrow HSE Campaign was successfully
conducted by FLTO Sabah in August 2015. ‘Fit to Work’
was selected as the theme of the programme for the
year under review. The objective of the campaign was
to provide a platform to enhance employees knowledge
on their eligibility as well as requirements for SOCSOrelated claim submissions.
The Department of Health of Sabah was invited to the
terminal for a talk session as well to facilitate the Health
Screening Programme for terminal employees. The event
was also participated by the terminal ERT members as
well as its operations employees.
Global/Regional Health Issues
In conjunction with the event, a blood donation drive
was successfully conducted, and was supported by the
Department of Health, Sabah. The blood donation drive
saw a total of 60 bags of blood (equivalent to 27 litres)
successfully contributed to the Tabung Darah Sabah
and Labuan.
Sabah FLTO also successfully organised an interterminal futsal tournament with the objective of
promoting a healthy and active life through sports as
well as to encourage a good team spirit amongst the
FLTO Sabah family members. Regional Retail Business
and Lubricants Business representatives were invited to
participate in the event and they also took the
opportunity to promote their products.
As a company with operations across several countries,
PDB remains committed to address regional and global
health issues to safeguard the health of our employees.
PDB is guided by the PETRONAS Policy on HIV/AIDS in
respecting human rights, dignity and privacy of persons
living with HIV/AIDS. The policy underpins our commitment
to ensure that no individual is unfairly discriminated against
or stigmatised on account of his or her HIV status.
In response to the prolonged regional haze impacting a
large area of our operations in Malaysia over a few months
in 2015, HSE Alert was issued to advise our employees and
contractors on ways to reduce the risk of haze-related
health effects. N95 Disposable Particulate Respirators were
also distributed to employees in affected areas.
In October 2015, the Ministry of Health reported an increase
of typhoid fever cases in Kuala Lumpur. A Health Advisory
Infographic was communicated to all employees on how to
take precautionary measures to safeguard their health
during the typhoid outbreak.
ANNUAL REPORT 2015
153
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
ENVIRONMENT
In line with the Company’s HSE Policy and guided by the PETRONAS
Corporate Sustainability Framework, we are committed to protecting the
environment in areas where we operate. This means responsibly managing
our emissions, discharges and waste; as well as promoting efficient use
of water and energy.
CLIMATE CHANGE AND ENERGY USE
At PDB, we recognise the emerging climate change risks,
and we are guided by the PETRONAS Corporate Sustainability
Framework on Climate Change to limit GHG emissions and
support the use of renewable energy. This is also reflected
in our initiatives in promoting energy efficiency, and
delivering fuel efficiency in our products.
For the year under review, our total carbon footprint from
fleet operations and purchased electricity from our terminal
operations was estimated to be 78,149 MT of carbon
dioxide equivalent (tCO2e). Of this, our fleet operations
accounted for 78.8% of total tCO2e, followed by 21.2% from
purchased electricity. The Company’s fleet operations
utilised approximately 163,470 MT of diesel, while electricity
consumption attributed to our terminal operations was
approximately 109,712 gigajoules.
154
PDB has set 2015 as the base year for GHG data, and the
Company strives to further improve completeness and
accuracy of GHG data, in line with internationally recognised
accounting methodology.
Renewable Energy
The Company continued to convert solar energy into
electricity using PV technology at its first of its kind energy
efficient PETRONAS Twin Stations (PETRONAS Solaris Putra
and PETRONAS Solaris Serdang). The PV panels generate half
the electricity required for the stations to operate. These
solar panels are able to generate 194 kilowatt of energy per
hour. During year under review, the solar panel has generated
approximately 86 megawatt-hour of electricity.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
In line with the Malaysian Government’s direction to
promote the use of cleaner renewable energy to reduce
national dependency on non-renewable fossil fuels as well
as to bolster the palm oil industry, the implementation of
biodiesel initiative had been extended to the whole of
Malaysia. Currently, our specially formulated biodiesel is
commercially available as PETRONAS Dynamic Diesel at all
our PETRONAS stations.
WATER
Energy Efficiency
Water Withdrawal at PDB Terminals
As part of our efforts in improving energy efficiency at our
PETRONAS stations, fluorescent lighting is progressively
being replaced with the more energy efficient LED lighting.
At this stage, more than 10.0% of all our PETRONAS stations
have been fitted with LED lighting.
We acknowledge on the increasing risks of water scarcity
due to growing population, urbanisation and industrialisation
which has increased the demand for water resources. Thus,
we recognise the need to manage water responsibly and
began to closely monitor fresh water withdrawal and
effluent quality from our terminal operations.
13%
WASTE MANAGEMENT
PDB continues to strengthen our internal processes and
capabilities to ensure our facilities comply with the stringent
regulations on hazardous waste handling and disposal. For
the year under review, PDB generated hazardous waste
totaling up to approximately 3,610 MT from our terminal
operations. Of this, about 84.0% was safely disposed,
whereas 16.0% was sent for recycling and recovery at
licensed premises.
Where possible, the Company seeks innovative ways to
reduce, recover and reuse waste in order to minimise our
environmental footprint. For example, an initiative was
undertaken at our Bayan Lepas Aviation Terminal to enhance
waste oil recovery from the terminal’s oil separator, thereby
reducing the total quantity of waste oil-water mixture that
was sent for disposal. The team designed a system that
consists of a floating suction equipment and intermediate
tank. The suction tool allowed for the oil-water mixture to
be collected and further separated. This initiative saved
manhours spent on carrying out this task manually, resolved
ergonomic issues and reduced the quantity of waste sent
for disposal.
87%
Fuel and LPG
Aviation
In the year under review, fresh water withdrawal was
estimated to be 113 thousand cubic meters (m3). Majority of
our water withdrawal were from Fuel and LPG terminal
operations which accounted approximately 87.0% of the
total. Water was mainly used for LPG cylinder washing
sanitary uses and chain lubrication. Efforts are currently
ongoing to strengthen accurate accounting of fresh water
withdrawal so that water use reduction initiatives can be
identified.
ANNUAL REPORT 2015
155
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
156
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
All our facilities are equipped with oil interceptor systems and/
or effluent treatment systems to prevent any unplanned or
uncontrolled discharges from directly entering public drains and
rivers. Effluent discharges are monitored on a regular basis.
SPILLS
In 2015, the number of hydrocarbon spills to the environment
greater than one barrel was five, up from three in 2014. PDB
continues to investigate and learn from spills. An LOPC Prevention
Programme which commenced in 2014, continued to be
implemented this year, with the objective of improving the
design, maintenance of equipment, operations of our storage
facilities and piping.
The Company conducted an assessment of oil spill response
preparedness and capabilities of our Langkawi Fuel Terminal.
The terminal’s oil spill response plan is being updated and efforts
are currently on going to review and strengthen our oil spill
response preparedness at other facilities.
AIR EMISSIONS
In year under review, SOx and NOx emissions from our fleet
operations and terminal operations were estimated to be 19
metric tonnes and 740 metric tonnes respectively. We are
enhancing our emissions monitoring and SOx and NOx loadings
inventory by reviewing our existing practices.
ANNUAL REPORT 2015
157
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
COMMUNITY
As a brand that fuels communities, we are committed to giving back in
the areas where our businesses operate. Our corporate social investment
initiatives provide the platform for PDB and the community to evolve
together, through three focus areas namely education, community well
being and development and environment.
Our strong tradition of volunteerism and
community involvement encourages
employees to collectively drive the Company’s
Corporate Responsibility programme. This
involves active collaboration with PETROSAINS,
Malaysian Nature Society, PETRONITA and
Young Professional’s Club.
Mesralink
PDB’s Customer Service Centre (Mesralink)
provides customers and the community
with efficient and personalised service in
addressing concerns and feedback. This
is to ensure all complaints received via
telephone calls, emails and faxes are
being processed until completely resolved
and responded accordingly.
158
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
WATER FOR LIFE
Water For Life embodies PDB’s commitment to give back to
the communities in the areas where we operate. Going
strong in our third consecutive year, this grass roots based
CSR programme provides basic infrastructure required for
continuous supply of clean water for daily consumption to
communities with little or no access to this basic necessity.
For the year under review, PDB brought the Water For Life
programme to Kampung Belantik in Sik, Kedah; Kampung
Runchang in Pekan, Pahang; and Kampung Pinapak in Pitas,
Sabah. Together with our partner, the Malaysian Nature
Society, volunteers from PDB’s regional offices and our
PETRONAS station dealers, this programme benefited more
than 4,000 residents from 795 families. Installations from this
programme accounted for 17 water storage tanks, nine water
pumps with filtration systems and 8km of piping.
PETRONAS STREETSMART
Good habits on the road start from young. This is the
central theme of the PETRONAS StreetSmart programme, a
road safety programme held in collaboration with
PETROSAINS. The half day workshop modules incorporate
easy to understand science based activities where students
can relate their understanding of applied science to safety
in reality. The programme caters to primary and secondary
school students with modules designed to appeal to the
respective target audiences.
The PETRONAS StreetSmart programme was conducted at
20 schools in six regions last year, benefited to 2,000
students nationwide.
A surprise for PETRONAS StreetSmart last year came in the
form of a special visit by MERCEDES AMG PETRONAS
Formula One™ Team driver Lewis Hamilton at SMK Seri
Tanjong, Melaka. The reigning Formula One™ World
Champion spoke to the students on the importance of road
safety and his experience in the Formula One™ races.
Hamilton is also PETRONAS Technical Performance
Consultant and a spokesperson on road safety in other
parts of the world.
ANNUAL REPORT 2015
159
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
SPONSORSHIP FOR RAMADHAN – BUBUR LAMBUK
COOKING EVENTS
In the spirit of sharing, PDB participated in the annual bubur
lambuk cooking tradition at Masjid Jamek Kampung Baru by
sponsoring 160 Gas PETRONAS LPG cylinders to aid the
mosque in its signature preparation of Bubur Lambuk
Agong. The bubur lambuk was prepared and distributed
daily for free to the public at this historical venue, which
once served as the main mosque in the city.
As part of Gas PETRONAS commitment and responsibility to
the community in promoting safe cooking practices, a media
engagement was conducted on 24 June 2015. During this
160
event, safety tips on safe handling of LPG cylinders were
demonstrated together with a presentation on Gas PETRONAS
Safety Video featuring Dato’ Chef Wan.
Other Ramadhan Bubur Lambuk activities supported by PDB
nationwide included Jelajah Ramadan RTM 2015, JOHORfm
Bubur Lambuk Cooking Competition, Majlis Penyediaan
Bubur Lambuk by Sabah BOMBA, Menara KL Bubur Lambuk
Cooking Competition and Komuniti 1Malaysia Cooking
Festival by Kondo Rakyat Desa Pantai. PDB also sponsored
chef hats, aprons and t-shirts for volunteers during the
preparation of the bubur lambuk.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
PETRONAS COFFEE BREAK
PROGRAM JELAJAH RAMADHAN
For 16 consecutive years, we have conducted our flagship
campaign called PETRONAS Coffee Break as part of our
road safety advocacy initiative. Held during the Chinese
New Year and Hari Raya Aidilfitri festive seasons, the
campaign encourages customers to refresh at participating
PETRONAS stations and enjoy free coffee and snacks.
Program Jelajah Ramadhan is a collaboration between PDB
and Radio Television Malaysia to provide essential aid to
local communities, in particular the less fortunate members
of society in rural areas. A nationwide tour was carried out
during the month of Ramadhan to help communities
prepare for the Hari Raya Aidilfitri celebrations.
PDB distributed 150,000 limited edition festive pouches
containing beverages and snacks to customers at 40
selected PETRONAS stations nationwide over the four-day
campaign period, which covered 15, 16, 20 and 21 February
2015 for Chinese New Year and 15, 16, 20 and 21 July 2015
for Hari Raya Aidilfitri.
A myriad of activities, which include cooking and preparing
popular dishes such as bubur lambuk, rendang tok, pulut
and others were activities part of the programme to foster
harmony and sharing during this holy month. The teams
also stopped at selected PETRONAS stations throughout
their journey to conduct activities such as kurma distribution
and giving out contributions to those in need.
The bi-annual campaign also included the distribution of
leaflets listing out safety tips to motorists when they
received their pouches of goodies.
As part of our media engagement initiatives, we visited our
media stakeholders such as The Star, Sin Chew Daily, China
Press, Nanyang Siang Pau, Kwong Wah Yit Poh, New Straits
Times, Berita Harian, Harian Metro, Utusan Malaysia, Kosmo!
and Sinar Harian to promote the PETRONAS Coffee Break
campaign. The PETRONAS team shared the pouches with
the media members in the spirit of spreading festive cheer.
To further reinforce our commitment to road safety, we
contributed RM40,000 worth of PETRONAS Primax 95 with
Advanced Energy Formula to St. John Ambulance of
Malaysia to fuel its 50 ambulances during these two festive
seasons. These ambulances provide emergency response
services along major highways during peak travel period,
thereby continuing our long term partnership with the
organisation for 21 consecutive years. The month-long programme was fuelled by PETRONAS
Primax 95 with Advanced Energy Formula. In addition, PDB
also sponsored PETRONAS LPG cylinders, aprons and chef
hats to aid in the cooking activities. This is the second year
PDB sponsored the programme.
VOLUNTEERING BY PDB YOUNG EXECUTIVES
PDBeat or the PDB Executives Action Team contributed to
PETRONITA’s corporate social responsibility event held on
9 July 2015 at Rumah Titian Kaseh, Kuala Lumpur. The
event included spring cleaning activities, donation of books
for the shelter’s children and breaking of fast with residents
from the shelter. The event received participation from
17 PDBeat volunteers.
Rumah Titian Kaseh is a non-governmental organisation
that provides temporary shelter for the less fortunate
community, which include orphans, abandoned children,
the disabled, underprivileged senior citizens, single mothers
and domestic abuse victims. The shelter is home to 130
residents, including two partially disabled adults, six partially
disabled children, 21 single mothers and six senior citizens.
ANNUAL REPORT 2015
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INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT ON
CORPORATE GOVERNANCE
The Board is committed to high standards of corporate
governance and strives to ensure that it is practised
throughout the Group as a fundamental part of discharging
its responsibilities to protect and enhance shareholders’
value and raise the performance of the Group.
• To review the Company’s plan and budget including
cash flow forecast for the forthcoming year and financial
projections;
In this Statement, the Board reports on the manner the
Group has adopted and applied the principles and best
practices as set out below:-
• To ensure there is an appropriate succession plan for
the Directors and Management; and
(i) MCCG 2012; and
(ii) MMLR of Bursa Malaysia.
• To review and approve financial statements of the
Group;
• To ensure that the Company has in place a policy to
enable effective communication with its shareholders
and other stakeholders.
Board Composition
BOARD OF DIRECTORS
Roles and Responsibilities of the Board
The Board is entrusted with the responsibility to promote
the success of the Group by leading and overseeing the
Group’s affairs. In discharging the Board’s stewardship
responsibilities, the Board has assumed the following
principal roles:
• To discuss and critically examine strategies proposed by
the Management taking into account the long term
interest of the shareholders as well as other stakeholders;
• To contribute to the formulation of policies and decision
making through the Board’s accumulated expertise and
experience;
• To identify principal risks and ensure that these risks are
managed in a proper and effective manner;
• To review the integrity and capability of the Group’s
internal control systems as well as its management
information system;
• To oversee and critically review the proper management
of the Group’s businesses;
162
The Board comprises eight members, one of whom holds
a dual role as Managing Director and Chief Executive
Officer. There are three members who are independent and
non-executive and four other non-independent and nonexecutive members, including the Chairman.
As at the date of this report, the percentage of the Board
composition is as follows:
Executive Director
(also the Managing Director/
Chief Executive Officer)
1 out of 8
(12.5%)
Independent
Non-Executive Directors
3 out of 8
(37.5%)
Non-Independent Non-Executive Directors
(including Chairman)
4 out of 8
(50.0%)
The current composition of the Board is in compliance with
Paragraph 15.02 of the MMLR as more than one-third of its
members are independent directors.
During the year under review, there were changes in the
Board composition whereby Md Arif Mahmood was
appointed as Chairman on 16 April 2015 in place of Datuk
Wan Zulkiflee Wan Ariffin who is now the President and
Group Chief Executive Officer of PETRONAS.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
On 6 October 2015, Ir Mohamed Firouz Asnan was
appointed as Non-Independent and Non-Executive Director
in place of Mohd. Farid Mohd. Adnan.
The Directors have vast and diversified experiences in their
respective areas. Together, the Directors bring a wide range
of business and financial experience, skills and technical
expertise, diversity in terms of gender, ethnicity and age
that are vital to the Board’s successful stewardship of the
Group. The Board also believes that the current composition
of the Board satisfactorily represents the interest of the
shareholders. The profile of each Director is presented on
page 044 to page 051 of this Annual Report.
The Board practices a clear division of duties and
responsibilities between the Chairman, MD/CEO and NonExecutive Directors to ensure a balance of power and
authority in the Board. The Chairman is primarily responsible
for the orderly conduct and function 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. The positions of
Chairman and MD/CEO are held by two different individuals.
The MD/CEO is assisted by the Management Committee in
managing the business on a day-to-day basis. The
Management Committee ensures that effective systems,
controls and resources are in place to execute business
strategies and decisions taken by the MD/CEO and/or
the Board.
The Non-Executive Directors ensure that the strategies
proposed by the Management are fully deliberated, taking
into account the long term interest of the shareholders and
stakeholders. They contribute to the formulation of policy
and decision making through their expertise and experience.
They also provide guidance and promote professionalism
and competence among the Management and employees.
The Non-Executive Directors do not participate in the day
to day management of the Group nor engage in any
business dealing or other relationship with any companies
within the Group. The Independent Non-Executive Directors
play a significant role in providing unbiased and independent
views, advice and judgement taking into account the interest
of relevant stakeholders including minority shareholders of
the Company. For the financial year under review, the
Independent Non-Executive Directors have reaffirmed their
independence based on the criteria of Independent Directors
as provided in the MMLR.
The Board has on 12 February 2015 appointed Lim Beng
Choon, Chairman of the Nomination and Remuneration
Committee as the Senior Independent Director. Lim Beng
Choon has fulfilled the criteria under the definition of
Independent Director pursuant to the MMLR.
All queries relating to the Group can be channeled to
the Senior Independent Director’s email address,
[email protected] or directed to the
following address:Lim Beng Choon
Senior Independent Director
Level 68, Tower 1, PETRONAS Twin Towers
50088 Kuala Lumpur
Malaysia
In accordance with the MMLR, none of the members of the
Board hold more than five directorships in listed companies.
Prior to acceptance of any other appointment for
directorships in other listed companies, the Directors are
required to first notify the Chairman to ensure that such
appointments would not unduly affect their time
commitment and responsibilities to the Board.
ANNUAL REPORT 2015
163
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
statement on
CORPORATE GOVERNANCE (continued)
Board Meetings
Supply of Information
The Board meets at least quarterly with additional meetings convened as and
when necessary. Board meetings for financial year 2015 were scheduled in
November 2014 to facilitate the Directors to plan ahead and fit the Board
meetings into their respective schedules.
A set of Board papers encompassing
comprehensive information are circulated
to all Directors at least five business days
prior to each Board meeting. The Board
papers contain among others objectives,
background, critical issues, implications,
risks, strategic fit, recommendations and
other pertinent information to enable the
Board to make an informed decision.
Amongst the matters deliberated at Board meetings include business plans,
annual budgets, operational and financial performance reviews, major
investments and financial decisions, investor relations updates, changes to the
organisation structure within the Group, including key policies and procedures
and limits of authority. The Board Audit Committee’s and Nomination and
Remuneration Committee’s updates are also presented and discussed at Board
meetings. All proceedings of Board meetings are duly recorded in the minutes
of meeting and signed minutes of each Board meeting are properly kept by
the Company Secretary.
During the financial year under review, the Board met five times. The attendance
of the Board members is as follows:
No
Board Members
Total Number of
Meetings Attended
1
Md Arif Mahmood (Chairman)
(appointed on 16 April 2015)
4 out of 4 (100%)
2
Datuk Wan Zulkiflee Wan Ariffin (Chairman)
(retired on 15 April 2015)
1 out of 1 (100%)
3
Mohd Ibrahimnuddin Mohd Yunus (MD/CEO)
5 out of 5 (100%)
4
Lim Beng Choon
5 out of 5 (100%)
5
Vimala V. R. Menon
5 out of 5 (100%)
6
Datuk Anuar Ahmad
5 out of 5 (100%)
7
4 out of 5 (80%)
8
Nuraini Ismail
4 out of 5 (80%)
9
Ir Mohamed Firouz Asnan
(appointed on 6 October 2015)
2 out of 2 (100%)
10
Mohd. Farid Mohd. Adnan
(resigned on 6 October 2015)
3 out of 3 (100%)
164
The early distribution of the board papers
is to enable the Directors to have
sufficient time to peruse the Board
papers and seek clarifications or further
details from the Management or the
Company Secretary. Any Director may
request matters to be included in the
agenda. Urgent papers may be presented
and tabled at meetings under
supplemental agenda.
Presentations and briefings by the
Management and relevant external
consultants, where applicable, are also
held at Board meetings to advise the
Board and furnish relevant information
and clarification for the Board to arrive
at a considered decision.
Access to Board papers and other
relevant information are carried out
through online application which allows
the Directors to securely access board
documents.
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
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
duties. The Directors also have direct access to the advice
and services of the Company Secretary 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.
Board Committees
To assist the Board in discharging its duties, the Board has
established two Board Committees whose compositions are
in accordance with the best practices as prescribed by the
MMLR of Bursa Malaysia and MCCG 2012. The functions
and Terms of Reference of the Board Committees, as well
as authority delegated by the Board to these Board
Committees, are reviewed and updated from time to time.
(a) Board Audit Committee
The Board Audit Committee comprises two Independent
Non-Executive Directors and one Non-Independent
Non-Executive Director. In line with good corporate
governance, the Executive Director is not a member of
the Board Audit Committee.
The Board Audit Committee reviews quarterly and
annual financial statements, announcements on
quarterly results, internal audit reports and ensures that
the internal control system and management
information system are in compliance with the
Company’s policies and procedures, applicable laws
and regulations. The Board Audit Committee also
monitors the effective implementation of programmes
to ensure compliance to the Group’s Risk Management
Policy and ensures that principal risks are identified and
monitored and appropriate measures are undertaken to
manage these risks.
The report on the Board Audit Committee is presented
on page 187 to page 190 and the Terms of References
of the Board Audit Committee is presented on page
191 to page 192 in this Annual Report.
(b) Nomination and Remuneration Committee
The Nomination Committee and Remuneration
Committee have been amalgamated into a single
committee and is now known as Nomination
and Remuneration Committee with effect from
7 August 2014.
The Nomination and Remuneration Committee
comprises entirely Non-Executive Directors as per the
requirement of Paragraph 15.08A(1) of the MMLR of
Bursa Malaysia and recommendation 2.1 of MCCG
2012 where the Committee must comprise exclusively
Non-Executive Directors with majority being
Independent Directors.
The Nomination and Remuneration Committee ensures
that the Board comprises members with relevant
expertise and experiences drawn from business,
financial and technical background. The wide spectrum
of skills, experiences and diversity in terms of gender,
ethnicity and age strengthen the Board’s composition.
Accordingly, the Nomination and Remuneration
Committee reviews the skills of the Board members.
The report on the Nomination and Remuneration
Committee is presented on page 194 to page 197 and
the Terms of References of the Nomination and
Remuneration Committee is presented on page 198 to
page 201 in this Annual Report.
Continuing Development Programme for Directors
All the Directors have attended the Mandatory Accreditation
Programme as required under the MMLR of Bursa Malaysia.
The Chairman, Md Arif Mahmood completed the Mandatory
Accreditation Programme in June 2009 whilst Ir Mohamed
Firouz Asnan completed the Mandatory Accreditation
Programme in December 2015.
The Directors are regularly updated on the Group’s business
activities and regulatory environment in which the Group
operates. As an integral part of orientation programme for
new directors, the Company provides comprehensive
briefings on the Group’s operations and financial
performance and site visits to the Group’s facilities.
ANNUAL REPORT 2015
165
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
statement on
The Directors observe Principle 4 of MCCG 2012 and
recognise the importance and value of attending conferences
and seminars in order to keep themselves abreast with the
development and changes in the industry the Group
operates, as well as to update themselves on new statutory
and regulatory requirements. During the year under review,
the Directors have attended and participated in programmes,
conferences and forums that covered the areas of corporate
governance, finance, relevant industry updates and global
business developments which they considered as useful in
contributing to the effective discharge of their duties as
Directors. The Directors also participated in the familiarisation
visits to the Group’s various facilities.
Particulars of training programmes attended by the Directors as at 31 December 2015 are as follows:
No
Director
Training Programmes Attended
1.
Md Arif Mahmood
• Senior Management Development Programme
• PETRONAS Woman Network
• Strategic Research Insight Forum “Outlook and Lookout” – Engagement with
Wharton MBA Students
• Strategic Insight Day
2.
Mohd Ibrahimnuddin
Mohd Yunus
•
•
•
•
•
Lead the Change : Getting Women on Boards
The Global Sustainability and Impact Investing Forum
Site Visit to Klang Valley Distribution Terminal, Dengkil, Selangor, Malaysia
New Companies Bill 2015 and Boardroom War/Tussle
Site Visit at PETRONAS Energy Philippines, Inc’s LPG Terminal, Cebu, Philippines
3.
Lim Beng Choon
•
•
•
•
Special Discussion on Trans-Pacific Partnership Agreement
Creating an Entrepreneurial Culture
Myths of Innovation
4.
Vimala V.R. Menon
• Board Chairman Series Part 2 – Leadership Excellence from the Chair
• Khazanah Mega Trends
• Global Transformation Conference
5.
Datuk Anuar Ahmad
• Cooking the Books – The Malaysian Recipe on Financial Fraud
• Site Visit to Klang Valley Distribution Terminal, Dengkil, Selangor, Malaysia
6.
•
•
•
•
Site Visit to PETRONAS Energy Philippines, Inc’s Bottling Plant, Iligan, Philippines
Site Visit to PETRONAS Energy Philippines, Inc’s LPG Terminal, Cebu, Philippines
Philippine Securities and Exchange Commission and the Philippine Stock
Exchange Corporate Governance Forum
7.
Nuraini Ismail
•
•
•
•
Finance Global Talent Strategy Workshop
Strategic Insights Day
Asia Oil and Gas Conference
166
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
No
Director
Training Programmes Attended
8.
• Site Visit to the Klang Valley Distribution Terminal, Dengkil, Selangor, Malaysia
• New Companies Bill 2015 and Boardroom War/Tussle
• Maximising Your Leadership Success (“MYLS”) Leadership Conversation with
Newly Appointed Managers
• Vice President Oil Business Leadership Sharing Session with Managers
9.
Datuk Wan Zulkiflee Wan Ariffin
• IChemE’s Soiree des Fellow : Talk by Dr David Brown, CEO & Paul Ellis,
President IChemE Malaysia
• Media Spokes Person Training for Executive Vice Presidents
• Panelist session : Fundamentals for Realising Sustainable Growth – GE Oil &
Gas Conference – Florance
• Talk by Mr. Timothy Geithner, former United States Secretary of the Treasury
10.
•
•
•
•
•
•
•
•
Top Team Integration Session on Cultural Belief for Downstream Business
Strategic Insights Day
Human Resource Leadership Conversation Session
Platts PETRONAS Day
Engagement with PDB Lubricant
Oil & Gas Thought Leaders Roundtable Networking
Downstream Leadership Programme ‘Change the Culture, Change the Game’
Asia Oil and Gas Conference
Re-Appointment and Re-election
Board Effectiveness Evaluation
In accordance with Article 93 of the Articles of Association
of the Company, at every Annual General Meeting (“AGM”),
one-third of the Directors shall retire from office by rotation
and may offer themselves for re-election at least once in
every three years. Directors who are appointed by the
Board during the financial year are subject to re-election by
shareholders at the first AGM held following their
appointments.
Since 2013, the Company conducts Board Effectiveness
Evaluation for its Board, Board Committees, individual
Director and peer review. The purpose of the Board
Effectiveness Evaluation is to measure the effectiveness of
the performance of the Board, Board Committees and
individual Director.
As per recommendation 3.2 and 3.3 of MCCG 2012, the
tenure of an independent directors should not exceed a
cumulative term of nine years. Upon completion of the nine
years, an independent director may continue to serve on
the board subject to the directors’ re-designation as a nonindependent director or the board must justify and seek
shareholders’ approval in the event it retains the director as
an independent director.
Currently, none of the Independent Non-Executive Directors
of the Company has served the Board for more than nine
years.
The questionnaires on the Board Effectiveness Evaluation
are designed to assess the following areas:
(a)
(b)
(c)
(d)
(e)
Board structure;
Board operation;
Board’s roles and responsibilities;
Chairman’s roles and responsibilities; and
Roles of the Board Committees.
The areas evaluated for the individual Directors are as
follows:
(a)
(b)
(c)
(d)
Dynamic and participation;
Integrity and independence;
Technical competencies; and
Skills and contribution.
ANNUAL REPORT 2015
167
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
statement on
Upon completion of the Board Effectiveness Evaluation
form by the Directors, Legal and Corporate Secretariat
Department collates and carry out an analysis on the
feedback received. The analysis conducted is presented to
the Nomination and Remuneration Committee for
deliberation.
Directors’ Remuneration
The remuneration structure of Non-Executive Directors of
the Company is as follows:
• Fees for duties as Directors and additional fees for
undertaking responsibilities as Chairman of the Board; and
The fees for Non-Executive Directors are determined by the
Board and subject to the approval of the shareholders of
the Company at AGM. Meeting allowance for all the NonExecutive Directors is determined by the Board.
The Director’s fees and meeting allowance for certain NonIndependent Non-Executive Directors who are also
employees of PETRONAS and holding positions of Vice
President and above are paid directly to PETRONAS. The
presence and participation of the Non-Independent NonExecutive Directors who are employees of PETRONAS give
the Board a deeper insight into PETRONAS operations.
• Meeting allowance for each meeting attended.
For the year under review, the breakdown of the Directors’ remuneration is as follows:Nomination
and
Audit Remuneration
Committee
Committee
Meeting
Meeting
Attendance Attendance
Fees^
Fees^
(RM)
(RM)
Directors’
Fees
(RM)
Board
Meeting
Attendance
Fees^
(RM)
Md Arif Mahmood
76,500
16,000
Nil
Datuk Wan Zulkiflee Wan Ariffin
31,500
4,000
Nil
72,000
Name of Directors
Mohd Ibrahimnuddin Mohd Yunus
Lim Beng Choon
AGM
(RM)
Others**
(RM)
Total
(RM)
Nil
Nil
Nil
92,500*
Nil
Nil
4,000
Nil
39,500*
Nil
Nil
Nil
Nil
Nil
Nil
15,000
8,000
6,000
3,000
3,000
107,000
Vimala V. R. Menon
72,000
15,000
12,000
2,000
3,000
6,000
110,000
Datuk Anuar Ahmad
72,000
15,000
Nil
Nil
3,000
6,000
96,000
72,000
12,000
Nil
2,000
3,000
Nil
89,000
Nuraini Ismail
72,000
12,000
8,000
Nil
3,000
Nil
95,000*
18,000
6,000
Nil
2,000
Nil
Nil
26,000*
54,000
9,000
Nil
2,000
3,000
Nil
68,000*
540,000
104,000
28,000
14,000
22,000
15,000
723,000
Total
* Fees paid and payable to PETRONAS.
**Others includes petrol/fleet card.
^ Meeting attendance fees are based on the number of meetings attended by the Directors.
168
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
The remuneration package for the Executive Director of the
Company is balanced between fixed and performancelinked elements. A portion of the Executive Director’s
compensation package is variable in nature and is KPI
based, which includes the Group’s performance. As an
Executive Director, he is not entitled to receive director’s
fee and meeting allowance.
The MD/CEO together with the CFO and the Company’s
Investor Relations Unit conduct regular dialogues with its
institutional shareholders and analysts, and hold quarterly
analysts briefings to further explain the Group’s quarterly
financial results. These engagements promote better
understanding of the Group’s financial performance and
operations.
Mohd Ibrahimnuddin Mohd Yunus, MD/CEO and an Executive
Director of the Company, is an employee of PETRONAS and
is seconded to the Company. In consideration for the service,
the Company is required to pay PETRONAS to cover all
payroll related costs and benefits ordinarily incurred by him
in the course of his employment. During the year,
RM721,729.11 was paid for his services as MD/CEO of the
Company.
The Company actively updates its website www.mymesra.
com.my with the latest information on the corporate and
business aspects of the Group. Press releases, announcements
to Bursa Malaysia, analyst briefings and quarterly results of
the Group are also made available on the website and this
helps to promote accessibility of information to the
Company’s shareholders and other stakeholders.
Communication and feedback from shareholders and other
stakeholders can also be directed to email address zera@
petronas.com.my or alternatively, it can be addressed to:
Management staff and executives of PDB are also seconded
from PETRONAS. Their training and succession planning are
aligned to the PETRONAS’ Human Resource Policies and
Strategies. The Board ensures that only appropriate
personnel with the relevant skills and experiences are
appointed to Management positions of PDB.
Pursuant to Article 84 of the Company’s Articles of
Association, PDB also reimburses reasonable expenses
incurred by Directors, where relevant, in the course of
carrying out their duties as Directors.
RELATIONSHIP WITH SHAREHOLDERS
Communications between the Company and its investors
The Board recognises the importance of effective
communications with the Company’s shareholders and other
stakeholders. Information on the Group’s business activities
and financial performance is publicised through
announcements to Bursa Malaysia, postings on the Company’s
website, press releases, issuance of Annual Report and where
required, press conferences. Immediately after the conclusion
of the AGM, the Company holds a press conference with the
media and any materials distributed during the press
conference are published in the Company’s website.
Raja Zera Raja Zaib Shah
Head, Strategic Planning
Finance Division
Level 31, Tower 1
50088 Kuala Lumpur
Malaysia
The AGM is the principal forum of open dialogue with
shareholders. The notice and agenda of AGM together with
Forms of Proxy are given to shareholders at least 21 days
before AGM, which gives shareholders sufficient time to
prepare themselves to attend the AGM or to appoint proxy
to attend and vote on their behalf. Each item of special
business included in the notice of the AGM will be
accompanied by an explanatory statement on the effects of
the proposed resolution.
ANNUAL REPORT 2015
169
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
statement on
During the AGM, the MD/CEO presents a comprehensive
review of the Group’s performance and value created for
shareholders as well as current development of the Group.
This review is supported by a visual and graphic presentation
of the key points and financial figures. Questions raised by
the Minority Shareholders Watchdog Group prior to the
AGM are also shared with all shareholders during the AGM
together with feedback on pertinent issues and queries
relating to the Company’s business which is uploaded onto
the Company’s website prior to AGM day.
At each AGM, shareholders are encouraged and given
sufficient opportunity as well as time by the Board to raise
questions on issues pertaining to the Annual Report,
resolutions being proposed and the business of the
Company or the Group in general prior to seeking approval
by show of hands from members and proxies on the
resolutions. The shareholders may request for a poll vote
on matters raised at the AGM.
The Board, Senior Management, external auditors and other
advisors, are present at AGM to provide answers and
clarifications to shareholders.
The Company also engages independent scrutineers to
count, audit and validate the votes for each proposal
presented to shareholders. The minutes of the general
meetings are accessible on the Company’s website.
ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board is committed to providing a fair and objective
assessment of the financial position and prospects of the
Group in the quarterly financial results, annual financial
statements, Annual Reports and all other reports or statements
to shareholders, investors and relevant regulatory authorities.
The Statement of Directors’ Responsibility in respect of
preparation of the annual audited financial statements is set
out on page 202 of this Annual Report.
170
Related Party Transactions and Conflict of Interest
Situations
The Group has established Policies and Procedures on
Related Party Transactions (“RPTs”) and Conflict of Interest
(“COI”) Situations (“Policies and Procedures”) to promote
continuous awareness and provide consistent approach to
all RPTs and Recurrent Related Party Transactions (“RRPTs”)
or COI situations.
The said Policies and Procedures require the use of various
processes to ensure that RPTs/RRPTs are conducted on an
arm’s length basis, which are consistent with the Group’s
normal business practices and policies, and will not be to
the detriment of the Group’s minority shareholders. It aims
to provide guidelines under which certain transactions and
situations must be reviewed and endorsed by the various
governing parties of the Group, disclosed to the regulators
and governing bodies and the processes required to identify,
evaluate, approve, monitor and report RPTs and RRPTs and
manage COI.
The Statement on Risk Management and Internal Control
includes an overview of the Group’s policies and procedures
on RPTs and RRPTs, as set out on page 179 to page 186 of
this Annual Report.
Whistleblowing Policy
The Group has adopted the PETRONAS Whistleblowing
Policy which provides an avenue for the Group’s employees
and members of the public to disclose any improper conduct.
Under the Whistleblowing Policy, a whistleblower will be
accorded with protection of confidentiality of identity, to
the extent reasonably practicable. An employee who
whistleblows internally will also be protected against any
adverse and detrimental actions for disclosing any improper
conduct committed or about to be committed within the
Group, to the extent reasonably practicable, provided that
the disclosure is made in good faith. Such protection is
accorded even if the investigation later reveals that the
whistleblower is mistaken as to the facts and the rules and
procedures involved. The whistleblowing policy is accessible
to the public for reference on the Company’s official
website at www.mymesra.com.my.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Code of Conduct and Business Ethics
Selection of Vendors
The Group adopts and practices PETRONAS Code of
Conduct and Business Ethics (“CoBE”) which emphasises
and advances the principle of discipline, good conduct,
professionalism, loyalty, integrity and cohesiveness that are
critical to the success and well being of the Group. The
CoBE contains detailed policy statements on the standards
of behaviour and ethical conduct expected of each individual
of the Group. The Group also expects that contractors,
sub-contractors, consultants, agents and representatives
and others performing work or services for or on behalf of
the Group to comply with the relevant parts of the CoBE
when performing such work or services. The CoBE expressly
prohibits improper solicitation, bribery and other corrupt
activity not only by employees and directors but also by
third parties performing work or services for or on behalf of
companies in the PETRONAS Group.
The Group has adopted PETRONAS Tendering process and
governing principles that are embedded in the PETRONAS
Supply Chain Management Policy for vendors’ selection.
Generally, the main selection criteria is based on technically
acceptable and commercially lowest bid.
Included as part of the CoBE is the Anti-Bribery and
Corruption Policy which explicitly prohibits the giving and
acceptance of bribes, in whatever form, by employees
including giving and receiving of facilitation payments in all
business dealings. The CoBE is accessible to the public for
reference on the Company’s official website at www.
mymesra.com.my.
Risk Management and Internal Control
The Group has established Tender Committees to carry out
independent assessment on bidders’ proposals and to
ensure tendering activities are carried out as per its Terms
of Reference.
Tendering processes are as follows:
(i) Tender Plan approval;
(ii) Technical Evaluation;
(iii) Commercial Evaluation; and
(iv) Award Recommendation.
Company Secretaries
The Company Secretaries of the Company are qualified to
act as company secretary under Section 139A of the
Companies Act, 1965. The Company Secretaries play an
advisory role to the Board, particularly with regard to the
Company’s constitution, Board policies and procedures, and
its compliance with regulatory requirements, codes and
guidance.
The Board continues to maintain and review its risk
management processes and internal control procedures to
ensure a sound system of risk management and internal
control to safeguard shareholders’ investments and the
assets of the Company and the Group.
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. Company
Secretaries update the Board on the follow up of its
decisions and recommendations by the Management.
The Statement on Risk Management and Internal Control
which provides an overview of the state of risk management
and internal controls within the Group is set out on page
179 to page 186 of this Annual Report.
The Company Secretaries constantly keep themselves
abreast with 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 in discharging their functions.
ANNUAL REPORT 2015
171
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
statement on
Trading on Insider Information
Every quarter, a reminder notice is sent to the Directors and
the Management emphasising the rules in dealing with the
Company’s shares whilst in possession of price sensitive
information relating to the Group.
During the year, there were no cases reported on insider
trading.
Relationship with External Auditors
Through the Board Audit Committee, the Company
maintains a professional and transparent relationship with
its external auditors, Messrs. KPMG.
The Board Audit Committee met the external auditors once
without the presence of the Management for the external
auditors to highlight to both the Board Audit Committee
and the Board on matters that warrant their attention.
The role of the Board Audit Committee in relation to the
external auditors is described in the Board Audit Committee
Report on page 187 to page 190 of this Annual Report.
The Malaysian Code on Corporate Governance 2012
The Board is committed and strives to observe the principles
and recommendations of the new MCCG 2012, of which
observance is on voluntary basis.
The Group has fully adopted all recommendations of the
MCCG 2012 except for the following:
1. Recommendation 2.2 – The gender diversity policies
and targets and the measures taken to meet the
targets.
The Board does not have a written gender diversity
policy. However, the Directors have vast and diversified
experiences in their respective areas. Together, the
Directors bring a wide range of business and financial
experience, skills and technical expertise, diversity in
terms of gender, ethnicity and age that are vital to the
172
Board’s successful stewardship of the Group. Currently,
there are two female directors on the Board
representing 25% of the Board composition.
2. Recommendation 2.3 – The Board should establish
formal and transparent remuneration policies and
procedures to attract and retain directors.
The Company does not have a policy on the
remuneration of the Directors. However, the Company
is considering to develop a formal written policy and
procedures for directors’ remuneration. Currently, the
remuneration of the Directors is competitive and
attractive as it has been benchmarked against the
industry.
3. Recommendation 3.5 – The Board must comprise a
majority of independent directors where the Chairman
of the Board is not an independent board member.
The Chairman of the Company is currently a NonIndependent Non-Executive Director. This is premised
on the high level of integration with PETRONAS’
business. The Board currently has three Independent
Non-Executive Directors, four Non-Independent NonExecutive Directors and one Executive Director. The
current Board composition is currently in compliance
with Paragraph 15.02 of the MMLR, as one-third of the
Board members are Independent Directors. The
Company intends to maintain the current Board
composition.
4. Recommendation 5.2 -The Audit Committee should
have policies and procedures to assess the suitability
and independence of external auditors.
The Company does not have a policy and procedures
to assess the suitability and independence of the
external auditors. However, as part of the annual audit
exercise, the Company obtains assurance from the
external auditors confirming their independence
throughout the year under review.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Statement by the Board on Compliance
The Directors have provided assurance that the financial
statements prepared for each financial year give a true and
fair view of the state of affairs of the Company and the
Group as at the end of the financial year and of the results
and cash flow of the Group for the financial year as required
by the Companies Act, 1965. The Statement of Directors’
Responsibility for the audited financial statements of the
Company and Group is outlined on page 202 of the Annual
Report. Details of the Company and the Group financial
statements for the financial year ended 31 December 2015
are set out on pages 206 to 285 of this Annual Report.
The Board has deliberated, reviewed and approved this
Statement. The Board considers and is satisfied that the
Group has fulfilled its obligations under the relevant chapters
of the MMLR of Bursa Malaysia and the MCCG 2012, on
corporate governance and applicable laws and regulations
throughout the year ended 31 December 2015.
This Statement is made in accordance with the resolution
of the Board of Directors dated 19 February 2016.
Md Arif Mahmood
Chairman
ANNUAL REPORT 2015
173
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
ADDITIONAL COMPLIANCE
INFORMATION
Additional Compliance Information in accordance with Appendix 9C of the MMLR of Bursa Malaysia is as follows:
1.0
UTILISATION OF PROCEEDS FROM CORPORATE
PROPOSALS
There were no Corporate Proposals undertaken for
the year under review.
[Disclosed in accordance with Appendix 9C, Part A, Item 13
6.0
NON-AUDIT FEES
The amount of non-audit fees paid and payable to
the External Auditors by the Company for the
financial year ended 31 December 2015 was
RM346,000.00 (RM340,000.00 for the financial year
ended 31 December 2014).
of the MMLR]
of the MMLR]
2.0
SHARE BUY-BACK
The Company did not propose any share buy-back
during the financial year.
7.0
VARIATION IN RESULTS
There were no profit estimates, forecasts or
projections made or released by the Company during
the financial year.
and Appendix 12D of Paragraph 12.23 of the MMLR]
3.0
OPTIONS OR CONVERTIBLE SECURITIES
The Company did not issue any options or convertible
securities during the financial year.
of the MMLR]
4.0
DEPOSITORY RECEIPT PROGRAMME
The Company did not sponsor any depository receipt
programme during the financial year.
of the MMLR]
5.0
IMPOSITION OF SANCTIONS/PENALTIES
There were no sanctions and/or material penalties
imposed on the Company or its subsidiaries, Directors
or Management by the relevant regulatory bodies
of the MMLR]
174
of the MMLR]
8.0
PROFIT GUARANTEE
The Company did not give any profit guarantee
of the MMLR]
9.0
MATERIAL CONTRACTS INVOLVING INTERESTS OF
DIRECTORS AND MAJOR SHAREHOLDERS
There were no material contracts or any contracts in
relation to loans entered into by the Company and/
or its subsidiaries involving interests of Directors or
major shareholders either subsisting as at 31
December 2015 or entered into since the end of the
previous financial year ended 31 December 2014.
of the MMLR]
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
10.0 ANALYSIS OF SHAREHOLDINGS
14.0 TRAINING ATTENDED BY DIRECTORS
The analysis of shareholdings is disclosed on pages
289 to 293 of this Annual Report.
The list of trainings attended by Directors is disclosed
on pages 166 to 167 of this Annual Report.
of the MMLR]
of the MMLR]
11.0 LISTING OF PROPERTIES
15.0 CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES
The summary of Landed Property for the financial
year ended 31 December 2015 is disclosed on page
296 of this Annual Report.
The corporate social responsibility activities
undertaken by the Company is disclosed on pages
of the MMLR]
of the MMLR]
12.0 SHARE ISSUANCE SCHEME
The Company did not have any Share Issuance
Scheme as required under paragraph 8.17 of the
MMLR.
16.0 RECURRENT RELATED PARTY TRANSACTIONS OF A
REVENUE OR TRADING IN NATURE ( RRPTs )
Details of the RRPTs entered into during the financial
year ended 31 December 2015 is disclosed on pages
[Pursuant to Paragraph 10.09(2)(b) and Paragraph 3.1.5 of
of the MMLR]
Practice Note 12 of the MMLR]
13.0 SHARE OPTION SCHEME FOR EMPLOYEES
The Company did not have any Share Option Scheme
for its Employees.
of the MMLR]
ANNUAL REPORT 2015
175
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
BOARD
CHARTER
1.INTRODUCTION
This Board Charter (“Charter”) has been developed to
emphasise PETRONAS Dagangan Berhad’s (“PDB”)
Board of Directors’ (“the Board”) commitment to high
standards of corporate governance. It adopts best
practices, applicable rules and regulations, processes
and procedures to guide the Board in the discharge of
its duties and functions.
In this Charter, a reference to PDB shall, where
applicable, include reference to PDB’s subsidiaries and
to PDB’s jointly operated and associate companies.
2. OBJECTIVE
The Charter sets out the roles, responsibilities,
membership and operation of the Board. The powers
and authorities of the Board are derived from the
Articles of Association of PDB (“Articles”), the Companies
Act, 1965, Main Market Listing Requirements (“MMLR”)
of Bursa Malaysia Securities Berhad (“Bursa Malaysia”)
and other regulatory guidelines and requirements that
are in force.
3.
ROLES OF THE BOARD
The Board’s primary commitment is to lead and oversee
the business of PDB and to ensure that the conduct of
PDB operations promotes business sustainability,
integrity and complies with the relevant laws, rules and
regulations.
3.1 The Board’s roles are:(i) To review, approve and monitor the strategic
business plans, goals and key policies proposed
by the Management to ensure sustainability
and optimisation of long term returns;
(ii) To review and approve financial statements;
176
(iii) To identify, continuously assess and manage
principal risks affecting PDB and implement
an effective system of internal control,
mitigation measures and risk management;
(iv) To oversee the conduct and the performance
of the Management as well as PDB’s Business;
(v) To ensure that there is an appropriate
succession plan for members of the Board
and Management; and
(vi) To develop and implement an investor
relations programme or shareholders’
communications policy.
3.2 Chairman
The Chairman is appointed from a member of the
Board. The Chairman leads the Board in the
conduct of the Board Meetings and is also
responsible for the effective performance of the
Board.
There is a clear division of roles and responsibilities
between the Chairman and the Managing Director/
Chief Executive Officer.
3.3Managing Director/Chief Executive Officer
The Managing Director/Chief Executive Officer is a
member of the Board. He is responsible for the
overall operations of the business, organisational
effectiveness of PDB and the implementation of
the strategies, targets and policies set by the
Board. He is assisted by the Management
Committee in managing the business on the
day-to-day basis, which he consults regularly.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
4. BOARD MEMBERSHIP
5.
4.1 Attributes and Composition
BOARD COMMITTEES
5.1 The Board may from time to time, establish
Committees as it considers appropriate to assist in
carrying out its duties, in addition to its
responsibilities and allow detailed deliberation on
specific issues. The Board currently delegates
certain functions to the following Committees to
assist in the execution of its responsibilities:-
The Board ensures that its composition meets the
requirements of PDB to achieve efficient decision
making, given the broad range of experiences,
knowledge, qualifications and expertise available.
The composition of the Directors shall at all times
comply with the MMLR, the Articles, other relevant
laws and regulations.
i.
ii.
The Board assesses its performance and that of
individual Directors on an annual basis. In addition,
the Board also assesses the independence of the
independent directors and their ability to bring
unbiased and objective judgement to the Board’s
deliberations.
Audit Committee; and
Nomination and Remuneration Committee.
5.2 The Committees shall operate under its respective
Terms of Reference. The Chairman of the
respective Committees reports to the Board on
the outcome of the Committee meetings and
minutes of Committee meetings are made
available to all Directors.
4.2 Board Appointment and Board Succession
Planning
The appointment of a new Director is made upon
recommendation from the Nomination and
Remuneration Committee whose primary
responsibilities are to evaluate, assess and
recommend candidates for the Board’s approval.
All Directors are expected to commit to their
responsibility to PDB, including in the exercise of
their fiduciary and leadership roles. The Directors
shall inform the Chairman before accepting new
directorship in any other public listed company.
6.
DIRECTORS’ REMUNERATION
Directors’ remuneration is generally determined at
levels which would continue to attract and retain
Directors of high calibre and with the required
competence. The Board is assisted by the Nomination
and Remuneration Committee in assessing and
recommending suitable remuneration for the Directors.
4.3 Induction and Training for Board Members
Each newly appointed Director is provided with a
Director’s dossier to serve as an induction literature
on PDB’s expectations, business and operations. In
addition to the Mandatory Accredited Programme,
the Board shall assess further training needs of the
Directors on an on-going basis.
ANNUAL REPORT 2015
177
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
board
charter (continued)
7. BOARD PROCESS
7.1 Board Meetings
The Board meets every quarter with additional
meetings convened as and when urgent issues
and/or important decisions are required to be
taken. Notwithstanding the scheduled Board
meetings, any Director may, at any time, and the
Company Secretary shall, on the requisition of a
Director, convene a meeting of Directors. The
Management and the external consultants may be
invited to attend Board meetings to present or
report on matters relating to their areas of
responsibility.
All proceedings in Board Meetings are recorded as
minutes of the meeting and signed by the
Chairman, in accordance with the provisions of
the Companies Act, 1965.
8. PETRONAS CODE OF CONDUCT AND BUSINESS
ETHICS
The Board has adopted the PETRONAS Code of
Conduct and Business Ethics (“PETRONAS CoBE”) that
seeks to ensure ethical behaviours and conduct by the
Directors, all PDB’s employees and external parties
liaising with PDB. This Board Charter shall be read in
conjunction with PETRONAS CoBE.
9.
STAKEHOLDER COMMUNICATION
The Board recognises the importance of effective
communications with PDB’s shareholders and other
stakeholders including the general public. Information
on PDB’s business activities and financial performance
is disseminated timely through announcements to
Bursa Malaysia, postings on PDB’s website, press
releases, issuance of Annual Report and where required,
press conferences.
7.2 Financial Reporting/Non-Financial Reporting
The Board is committed to present a fair and
balanced evaluation of PDB’s financial position,
performance and prospects by ensuring that the
financial treatment of the accounts of PDB Group
is in compliance with the applicable law,
regulations and reporting standards.
7.3 Access to Advice
All Directors have access to the advice and
services of the Company Secretaries. The Board is
entitled to obtain external independent professional
advice on matters relating to PDB’s business and
operations at PDB’s expense.
178
10. RISK MANAGEMENT
The Board acknowledges the importance of maintaining
a sound system of internal control and a robust risk
management practices to manage financial and health,
safety and environment risks, for good corporate
governance with the objective of safeguarding the
shareholder’s investment and the Group’s assets.
INSPIRING CHANGE
STATEMENT ON
RISK MANAGEMENT
AND INTERNAL CONTROL
INTRODUCTION
The Statement is made pursuant to Paragraph 15.26(b) of
the MMLR of Bursa Malaysia where the Board of Directors
of public companies are required to publish a statement
about the state of the internal control of the listed issuer as
a group. The MCCG 2012 requires the Board of Directors
of a listed company to establish a sound risk management
framework and internal control system. Observance to the
MCCG 2012 is on voluntary basis. The Group adopts the
PETRONAS Shared Values of Loyalty, Integrity, Professionalism
and Cohesiveness which set the tone for a sound system of
risk management and internal control.
The Board is committed to maintain and continuously
improve the Group’s system of risk management as well as
internal control. The Group is currently operating in a
challenging oil price environment and competitive market
in which risk management and internal control system must
be responsive in order to support its business objectives.
The Board is pleased to provide the following statement
which outlines the nature and scope of risk management
and internal control of the Group during the financial year
under review.
BOARD ACCOUNTABILITY
The Board acknowledges the importance of maintaining a
sound internal control system and a robust risk management
practice for good corporate governance with the objective
of safeguarding the shareholders’ investments and the
Group’s assets. The Board affirms its overall responsibility
for reviewing the adequacy and the integrity of the Group’s
risk management and internal control system which ensures
compliance with applicable laws, regulations and guidelines.
BUSINESS OVERVIEW
ACCOUNTABILITY
The Group has established a process for identifying,
evaluating, monitoring and managing significant risks that
may materially affect the achievement of corporate
objectives. This process is being implemented throughout
the Group and the Board will continue to review this
process periodically, enhancing it as and when relevant to
ensure sustainability.
In view of the limitations that are inherent in any internal
control system, this system is designed to manage, rather
than eliminate, the risk of failure in achieving the Group’s
objectives. Hence, it can only provide reasonable, but not
absolute assurance, against material misstatements or
losses.
MANAGEMENT ACCOUNTABILITY
Management is accountable to the Board for the
implementation of the processes in identifying, evaluating,
monitoring and reporting of risks and internal controls as
prescribed above. The MD/CEO and the CFO have provided
the Board with assurance that the Group’s risk management
and internal control system is operating adequately and
effectively, in all material aspects, to ensure achievement of
corporate objectives. In providing the above assurance by
MD/CEO and CFO, similar letters of assurance have also
been obtained from Management Committee members
confirming the adequacy and effectiveness of risk
management practices and internal control system within
their respective areas.
RISK MANAGEMENT
The Group has established risk management practices to
safeguard its business interest from risk events that may
impede achievement of business strategy, enable value
creation and growth through identification of opportunities
and provide assurance to the Group’s various stakeholders.
ANNUAL REPORT 2015
179
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT ON
RISK MANAGEMENT
AND INTERNAL CONTROL (continued)
The Group has adopted the PETRONAS Resiliency Model
(“PRM”) in 2015 that provides an integrated view on the
overall strategy for managing risk, focusing on three areas
of business resiliency, namely Enterprise Risk Management
(“ERM”), Crisis Management (“CM”) and Business Continuity
Management (“BCM”).
PDB has adopted an ERM Framework which outlines the
elements and processes to identify, assess, treat and monitor
risks impacting its business and supporting activities.
The main components of the Group’s risk governance and
structure consist of the Board, the Board Audit Committee
(“BAC”) and the Management. The structure allows for
strategic risk conversations to take place between the
Board, the BAC and the Management on a quarterly basis.
The Board is responsible for the overall risk oversight for
the Group. The Board’s roles include reviewing and
monitoring the Group’s critical risks and ensuring that a
robust system is in place to manage these risks. The Board
also reviews the adequacy and integrity of the Group’s
internal control systems including systems for compliance
with applicable laws, regulations, rules, directives and
guidelines.
The Board, assisted by the BAC, provides advice to the
Board on risk matters. The BAC’s roles include reviewing,
endorsing policies and frameworks as well as other key
components of risk management to be implemented within
the Group.
The Management oversees the effective implementation of
risk policies and guidelines, ERM and institutionalisation of a
risk management culture within the organisation through the
Risk Management Committee. The Risk Management
Committee’s roles include reviewing and monitoring the
Group’s key risks and its mitigation actions which are reported
to the BAC, and subsequently to the Board. The Group has
also placed appropriate operational risk mechanisms covering
the areas of systems, processes, reporting of risks, knowledge
management and assurance activities.
180
During the year under review, PDB established its risk
profile based on the ERM process consisting of key risks in
the areas of Market, Strategy, Health, Safety and Environment,
Finance, Operations and Technology. The likelihood and
impact of these risks were assessed and evaluated against
PDB’s risk appetite and tolerance levels, while appropriate
key risk indicators and mitigation actions have been
identified and implemented accordingly. Among the key risk
mitigations implemented during the year of review was the
inventory management to mitigate market risk of declining
oil prices. The key risks and mitigation actions were
monitored and reported to the PDB Risk Management
Committee, the BAC and the Board for their deliberation
and guidance on a quarterly basis. Risk Assessments were
also conducted on investment proposals to support decision
making by the Management and Board.
PDB remains committed towards building its capabilities for
an effective business resumption that safeguards the
interests of its key stakeholders, reputation, brand and value
creating activities following any prolonged disruptive
incident. As such, PDB adopted the PETRONAS BCM
Framework as the foundation for clear and consistent BCM
practices to ensure continuation of business during
prolonged disruption. Throughout the year, the Group
underwent several activities in line with its key processes
within its framework, including the review of its Business
Impact Analysis and Business Recovery Strategy, of which
are critical inputs for the development of the Group’s
Business Continuity Plan (“BCP”).
There are other risk committees such as Health, Safety and
Environment (“HSE”) Committee, Credit Control Committee,
Tender Committee and Business Information Technology
Management of Change Committee to support the
Management in specific risk areas and good governance
practices.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
During the year under review, PDB implemented the
following risk activities which are in line with PETRONAS’
practices:
• Participated in the BCM exercise to test the resumption
of Critical Business Functions staff at Alternate Worksites
and Virtual Office;
• Conducted Emergency Management exercises at five
locations during the year under review. The objectives
of the exercise were to assess the capabilities of the
Emergency Management Team and Unification of
Command between PDB and various parties towards
mitigation of the crisis;
• Enhanced Hazards and Effects Management Process
through review and strengthening of operation-specific
Hazards and Effects Registers for PDB operating units,
including Terminals (Fuel, LPG and Aviation), Retail and
NGV Stations and storage facilities at customer sites;
• Performed HSE assurance with PETRONAS Group
HSE to ensure effective HSE Management System
implementation and that HSE risks were adequately
managed; and
• Initiated Risk Management Validation to ensure existing
risk mitigations identified in the risk profile were
implemented as intended.
At PDB, risk management is conducted through an ongoing
process between the Board, the Management and the
employees of the Group. The Group will continue its focus
on institutionalising risk management as a business culture
within the Group.
INTERNAL AUDIT
Internal audits are undertaken to provide independent
assessments on the Group’s internal control systems to
evaluate potential risks exposure across key business
processes and ensure proper conduct of business within
the Group. The BAC has full and direct access to Internal
Auditors and receives reports on all internal audits
performed.
During the financial year, the internal audit function was
carried out by the PDB Internal Audit Department (“IAD”),
which was established on 1 April 2011, with a direct reporting
line to the BAC, in line with the recommendation of
principle 6.2 of the MCCG 2012. IAD’s mission is to enhance
and protect the organisational value by providing risk based
and objective assurance, advice and insight. A key objective
of the IAD is to assist the Group in accomplishing its goals
by bringing a systematic and disciplined approach to
evaluate and improve the effectiveness of risk management,
control and governance processes within the Group.
IAD maintains its impartiality and due professional care by
having its plans and reports directly under the purview of
the BAC. Through the continuous training of its staff, the
IAD has also put in place relevant procedures to ensure that
its staff are competent and adequately equipped in carrying
out their duties and responsibilities.
IAD’s position within the Group, its authority, responsibilities
and scope of work is defined in the Internal Audit Charter
(“the Charter”) that is approved by the BAC. The Charter
was established consistent with the requirement of the
Institute of Internal Auditors’ International Standards of the
Professional Practice of Internal Auditing which includes the
Definition of Internal Auditing, the Code of Ethics, and the
International Standards for the Professional Practice of
Internal Auditing.
IAD reviews the internal controls across selected key
activities of the Group’s businesses in accordance with the
approved risk based internal audit plan. IAD continues to
independently and objectively monitor compliance with
regard to policies, procedures and the effectiveness of the
internal control systems. Significant findings and
recommendations for improvement are highlighted to the
Management and the BAC, with periodic follow up on the
implementation of action plans. The Management is
responsible for ensuring that corrective actions are
implemented accordingly.
ANNUAL REPORT 2015
181
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT ON
RISK MANAGEMENT
OTHER KEY ELEMENTS OF INTERNAL CONTROL SYSTEMS
In reinforcing the Board’s commitment to maintain a sound
system of internal control, the Board continues to maintain
and implement a strong control structure and environment
for the proper conduct of the Group’s business operations
as follows:
Board of Directors
The Board meets at least once on a quarterly basis and has
set a schedule of matters, which is required to be brought
to its attention for discussion, thus ensuring that it maintains
full and effective supervision over appropriate controls. The
MD/CEO leads the Management in presentation of board
papers and ensures Management provides detailed
explanation of pertinent issues. In arriving at any decision
requiring Board’s approval as set out in the Limits of
Authority manual on recommendation by the Management,
thorough deliberation and discussion by the Board is a
prerequisite. In addition, the Board is kept updated on the
Group’s activities and its operations on a regular basis.
The MD/CEO reports to the Board on significant issues
arising from the changes in the business and external
environment which may result in significant risks to the
Group. The CFO provides the Board with quarterly
performance reports and related financials of the Group.
Board Audit Committee
The Board has delegated the duty of reviewing and
monitoring the effectiveness of the Group’s system of
internal control to the BAC.
The BAC assumes the overall duties of reviewing with the
External Auditors their audit plan, audit report, as well as
their findings and recommendations pursuant to the
statutory audit. The BAC also evaluates the adequacy and
effectiveness of the Group’s risk management and internal
control systems by reviewing the internal control issues
identified by the Internal Auditors and Management.
182
The BAC meets at least once every quarter, having full and
unimpeded access to the Internal and External Auditors.
Further information relating to the activities of the BAC
have been set out in the BAC’s report.
Organisation Structure and Management Committees
An organisational structure, which is not only aligned to the
business and operational requirements but with clearly
defined lines of responsibility, accountability as well as
levels of authority, which has been put in place to assist in
implementing the Group’s strategies and day-to-day
business activities.
The Group has a Management Committee which serves in
an advisory capacity to the MD/CEO in accomplishing the
vision, mission, strategies and objectives set for the Group.
Various functional committees have also been established
across the Group to ensure the Group’s activities and
operations are properly aligned towards achieving the
organisation goals and objectives.
Limits of Authority
The Group has established Limits of Authority which defines
the appropriate approving authority to govern and manage
the business decision process. The Limits of Authority sets
out a clear line of accountability and responsibility which
serves as a reference in identifying the approving authority
for various transactions, including matters that require
Board’s approval. It not only provides a framework of
authority and accountability within the Group, but also
facilitates decision-making at the appropriate level in the
Group hierarchy.
Credit Risk Framework and Guidelines
The PETRONAS Credit Risk Framework and Guidelines
facilitates management of credit risk exposures from customers.
It also allows credit exposure to be closely tracked as a
monitoring and control tool to guide credit risk decision.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Risk Control Self-Assessment
Regular self-assessment of internal controls for key
processes are also conducted by respective divisions, based
on Risk Control Self-Assessment (“RCSA”) process. Based on
the RCSA findings, the Head of Division will provide
assurance on the level of internal controls within their
respective areas to MD/CEO and CFO.
Financial Control Framework
The Group has implemented a Financial Control Framework
(“FCF”) to ensure key internal controls are adequate and
effective at all times. The framework requires the
documentation of key processes, outlines a structured
assessment process to identify control gaps and the required
mitigation action. Annually, each key process owner at
various management levels is required to provide FCF its
level of compliance and key controls for their respective
business areas. The FCF, thus provides assurance on the
quality of the Group’s financial reports.
Corporate Financial Policy
The Group has adopted the PETRONAS Corporate Financial
Policy (“CFP”) which sets forth the policy for financial
management activities, embedding the principles of financial
risk management. The CFP governs financial risk
management practices across the Group. It prescribes a
framework in which financial risk exposures are identified
and managed.
Business Plan and Budget
The Group undertakes an annual budgeting and forecasting
exercise which includes development of business strategies
for the next five years and the establishment of key
performance indicators against which the overall
performance of the Group, including the respective
performance of business segments and companies within
the Group, can be measured and evaluated. Operating and
capital expenditure requirements are tabled to the Board for
approval, prior to the commencement of a new financial
year. The Group’s performance is reported internally on a
monthly basis to the Management Committee. The Group’s
quarterly performance is also presented to the Board with
comparison to approved plans as well as against prior
periods. The Group’s strategic direction is also reviewed
through a rigorous assessment process, taking into account
changes in market conditions and significant business risks.
The Group adopts and practices the PETRONAS Code of
Conduct and Business Ethics (“CoBE”). The CoBE is
accessible to the public for reference on PDB’s official
website at www.mymesra.com.my which emphasises and
advances the principle of Discipline, Good Conduct,
Professionalism, Loyalty, Integrity and Cohesiveness that are
critical to the success and well being of the Group. The
CoBE contains detailed policy statements on the standards
of behaviour and ethical conduct expected of each individual
of the Group. The Group also expects that contractors,
sub-contractors, consultants, agents and representatives
and others performing work or services for or on behalf of
the Group to comply with the relevant parts of the CoBE
when performing such work or services. The CoBE explicitly
prohibits improper solicitation, bribery and other corrupt
activities, not only by employees and directors, but also by
third parties performing work or services for or on behalf of
companies in the PETRONAS Group.
Whistleblowing Policy
The Group has adopted the PETRONAS Whistleblowing
Policy (“WBP”) which provides an avenue for the Group
employees and members of the public to disclose any
improper conduct, in accordance with the procedures as
provided under the policy. The WBP is accessible to the
public for reference on the Company’s official website at
www.mymesra.com.my.
ANNUAL REPORT 2015
183
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT ON
RISK MANAGEMENT
Under the WBP, a whistleblower will be accorded with
protection of confidentiality of identity, to the extent
reasonably practicable. An employee who is an internal
whistleblower will also be protected against any adverse
and detrimental actions for disclosing any improper conduct
committed or about to be committed within the Group to
the extent reasonably practicable, provided that the
disclosure is made in good faith. Such protection is accorded
even if the investigation later reveals that the whistleblower
is mistaken as to the facts and the rules and procedures
involved.
Information and Communications Technology
Tender Committee
Related Party Transactions and Conflict of Interest
The Tender Committee (“TC”) structure which comprises
cross-functional representatives has been established to
review all major purchases and contracts. The TC provides
the oversight function on tendering matters prior to approval
by the relevant Approving Authorities as set out by the
Limits of Authority.
The Group has established Policies and Procedures on
Related Party Transactions (“RPTs”) and Conflict of Interest
(“COI”) Situations (“Policies and Procedures”) to promote
continuous awareness and provide consistent approach to
all RPTs and Recurrent Related Party Transactions (“RRPTs”)
or COI situations.
Employees Performance Management
The said Policies and Procedures require the use of various
processes to ensure that RPTs/RRPTs are conducted on an
arm’s length basis, which are consistent with the Group’s
normal business practices and policies, and will not be to
the detriment of the Group’s minority shareholders. It aims
to provide guidelines under which certain transactions and
situations must be reviewed and endorsed by the various
governing parties of the Group, disclosed to the regulators
and governing bodies and the processes required to identify,
evaluate, approve, monitor and report RPTs and RRPTs and
manage COI.
The Group selects talents for employment through a
structured recruitment process. The professionalism and
competency of staff are continuously enhanced through a
disciplined training and development programme. A
performance management system has been put in place to
measure staff performance against agreed key performance
indicators on a semi-annual basis.
Operating Procedures and Guidelines
The Group has developed Operating Procedures and
Guidelines (“OPG”) which covers business planning, capital
expenditure, financial operation, performance reporting,
operations, marketing and sales, supply chain management,
human resource management, information system as well
as health, safety and environment. These define the policies
and procedures for day-to-day operations and act as
guidelines for proper measures to be undertaken in a given
set of circumstances. The policies and procedures are also
reviewed on a regular basis to ensure continued relevance
and effectiveness.
184
Information and Communications Technology (“ICT”) is
deployed in the Group to automate work processes, where
possible, and to efficiently collect key business information.
The Group continues to enhance its information and
communication systems in ensuring that it can act as an
enabler to improve business processes, work productivity
and decision making throughout the Group. System reviews
are conducted to confirm adequate controls are in place to
ensure adherence to the Group’s business objectives,
policies and procedures.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Such processes include identification and screening of
transactions, negotiation of transaction and approval/
mandate mechanism, monitoring and reporting principles,
and renewal or changes in the terms or termination of such
dealings. In principle the said Policy and Procedure sets
forth the following:
• All sourcing and sales of the Group’s products, general
merchandise and/or shared facilities/services shall be
based on market or industry or negotiated pricing
formulas and the terms are not more favourable to the
related party than those generally applied to a third
party, in order to ensure that the transactions are on an
arm’s length basis;
• Database is maintained to capture the list of related
parties and RPTs/RRPTs which have been entered into;
• If a Director or a related party has an interest in a
transaction, he or she will abstain from any deliberation
and decision making at the Board or subsidiary
company’s Board (as the case may be) in respect of the
said transaction;
• The BAC is responsible to ensure that the policies and
procedures relating to RPTs/RRPTs and COI situations
are sufficient to ensure that RPTs/RRPTs are carried out
on an arm’s length basis and not to the detriment of the
Group’s minority shareholders;
• The Board has the overall responsibility to ensure
compliance to the established guidelines and procedures
to approve and monitor RPTs/RRPTs and COI situations.
The Board and/or BAC may also appoint individuals and
committees to examine the RPTs/RRPTs, as deemed
appropriate;
• On an annual basis, all Directors and any related party
of the Group will declare in writing an annual declaration
form, designed to elicit information about current/
potential relationships and/or COI situations, involving
their interest, either directly or indirectly. All Directors
and any related party of the Group shall also notify in
writing of any interest in RPT or COI situation when it
becomes known to them;
• The Directors have completed Declaration of Interest for
the financial year under review in line with the Policies
and Procedures; and
• Bursa Malaysia has granted the Company exemptions
from having to seek shareholders’ mandate for RRPTs
with PETRONAS, Ministry of Finance and Khazanah
Group of Companies. The said exemption essentially
states that the exempted RRPTs must be transacted on
an arm’s length basis.
REVIEW OF THIS STATEMENT BY EXTERNAL AUDITORS
The External Auditors have reviewed this Statement on Risk
Management and Internal Control, pursuant to the scope
set out in Recommended Practice Guide (“RPG”) 5 (Revised
2015), Guidance for Auditors on Engagements to Report on
the Statement on Risk Management and Internal Control
included in the Annual Report issued by the Malaysian
Institute of Accountants (“MIA”) for inclusion in the Annual
Report of the Group for the year ended 31 December 2015,
and reported to the Board that nothing has come to their
attention that causes them to believe that the statement
intended to be included in this Annual Report of the Group,
in all material respects:
(a) has not been prepared in accordance with the
disclosures required by paragraphs 41 and 42 of the
Statement on Risk Management and Internal Control:
Guidelines for Directors of Listed Issuers, or
(b) is factually inaccurate.
ANNUAL REPORT 2015
185
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT ON
RISK MANAGEMENT
RPG 5 (Revised 2015) does not require the External Auditors
to consider whether the Directors’ Statement on Risk
Management and Internal Control covers all risks and
controls, or to form an opinion on the adequacy and
effectiveness of the Group’s risk management and internal
control system including the assessment and opinion by the
Board and Management thereon. The Auditors are also not
required to consider whether the processes described to
deal with material internal control aspects of any significant
problems disclosed in this Annual Report will, in fact,
remedy the problems.
The internal control systems discussed in this statement do
not apply to joint ventures and associated companies which
falls under the control of their majority shareholders.
Nonetheless, the interest of the Group is safeguarded
through the representatives on the Board of the joint
ventures and associated companies and through the review
of management accounts received.
This statement is made in accordance with the resolution
of the Board of Directors dated 19 February 2016.
CONCLUSION
Based on the above, the Board is of the view that the
system of risk management and internal control instituted
throughout the Group is sound and provides a level of
confidence on which the Board relies for assurance. In the
year under review, there was no significant control failure
or weakness that would result in material losses,
contingencies or uncertainties requiring separate disclosure
in this Annual Report.
The Board and Management continue to review and
strengthen the Group’s risk management and internal
control system to ensure ongoing adequacy and
effectiveness of the system of internal control and risk
management practices to meet the changing and
challenging operating environment.
186
Md Arif Mahmood
Chairman
INSPIRING CHANGE
BUSINESS OVERVIEW
BOARD AUDIT
COMMITTEE REPORT
OVERVIEW
The Board Audit Committee is pleased to present its report
for the financial year ended 31 December 2015 in
compliance with Paragraph 15.15 of MMLR of Bursa Malaysia.
ACCOUNTABILITY
The Board assesses the performance of the Board Audit
Committee and its members through an annual Board
effectiveness evaluation. The Board is satisfied that the
Board Audit Committee and its members discharged their
functions, duties and responsibilities in accordance with its
Terms of Reference.
COMPOSITION
The Board has established the Board Audit Committee since
3 March 1994. The composition of the Board Audit
Committee during the financial year under review is as
follows:
(1) Vimala V. R. Menon (Chairman)
(Independent Non-Executive Director)
(2) Lim Beng Choon
(Independent Non-Executive Director)
(3) Nuraini Ismail
(Non-Independent Non-Executive Director)
In compliance with Paragraph 15.09(1)(b) of the MMLR and
the MCCG 2012, all three Board Audit Committee members
are Non-Executive Directors including two Independent
Directors who fulfil the criteria of independence as defined
in the MMLR. None of the Independent Directors have
appointed alternate directors.
The Chairman of the Board Audit Committee, Vimala V.R.
Menon and Nuraini Ismail are both qualified accountants.
Vimala V.R. Menon is a member of the Malaysian Institute
of Accountants and also a Fellow of the Institute of
Chartered Accountants in England and Wales whilst Nuraini
Ismail is a Fellow member of the Association of Chartered
Certified Accountants, United Kingdom. In this regard, the
Company is in compliance with Paragraph 15.09(c)(i) under
the MMLR which requires at least one member of the Board
Audit Committee to be a qualified accountant.
TERMS OF REFERENCE
The Terms of Reference sets out the authority, duties and
responsibilities of the Board Audit Committee. The Terms of
Reference of the Board Audit Committee as set out on
page 191 to page 192 of this Annual Report are consistent
with the MMLR and the MCCG 2012. All the requirements
under the Terms of Reference are fully complied with.
MEETINGS AND ATTENDANCE
The Board Audit Committee meets at least quarterly with
additional meetings convened as and when necessary.
Board Audit Committee meetings for financial year 2015 are
scheduled in November 2014 to facilitate the Directors to
plan ahead and fit the Board Audit Committee meetings
into their respective schedules.
The agenda and a set of meeting papers encompassing
qualitative and quantitative information relevant to the
business of the meeting are distributed via electronic
application to the Board Audit Committee members not
less than five business days from the meeting dates.
The Board Audit Committee met four times during the year
ended 31 December 2015 and details of attendance of the
Board Audit Committee members are as follows:-
ANNUAL REPORT 2015
187
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
No
BOARD AUDIT
COMMITTEE REPORT (continued)
Board Audit Committee Members
Total Number of
Meetings Attended
1.
Vimala V. R. Menon (Chairman)
4 out of 4 (100%)
2.
Lim Beng Choon
4 out of 4 (100%)
3.
Nuraini Ismail
4 out of 4 (100%)
The MD/CEO, CFO, Head of Risk Management, Head of Internal Audit and
external auditors were invited to attend Board Audit Committee meetings to
appropriately brief and furnish the members of Board Audit Committee with
relevant information and clarification to relevant items on the agenda.
At the conclusion of each meeting, recommendations are made for the
Management to improve the internal controls, procedures and systems of the
Group, where relevant.
Deliberations during the Board Audit Committee meetings included performance
review of the Company, annual and interim financial reporting to Bursa
Malaysia, the status of audit findings together with the agreed corrective
actions and risk management activities.
All proceedings of Board Audit Committee meetings are duly recorded in the
minutes of each meeting and signed minutes of each Board Audit Committee
meeting are properly kept by the Company Secretary. It is a common practice
that the draft Board Audit Committee minutes are circulated to the Board
members prior to the Board meeting subsequent to the Board Audit Committee
meeting. This assists the Board Audit Committee Chairman to brief the Board
matters deliberated at the Board Audit Committee meeting. Minutes of the
Board Audit Committee meeting are tabled for confirmation during the next
Board Audit Committee meeting, after which it is distributed to the Board for
notation.
During the year under review, Board Audit Committee had one private session
with the external auditors without the presence of the Management.
SUMMARY OF ACTIVITIES OF THE
During the year ended 31 December
2015, the Board Audit Committee carried
out the following activities in discharging
its functions and duties:External Audit
(a) Reviewed and recommended the
terms of engagement and fees
structure of external auditors for
Board’s approval;
(b) Reviewed and approved the external
auditors audit plan and scope for
the year under review; and
(c) Reviewed the external audit report.
Internal Audit
(a) Reviewed and approved the annual
in t e rn al au d it p lan to ens ur e
adequacy of resources,
competencies and coverage of
entities based on risk assessment;
(b) Reviewed internal audit reports on
the effectiveness and adequacy of
governance, risk management,
operational and compliance
processes;
(c) Reviewed the measures to improve
the system of internal control;
(d) R e v i e w e d t h e a d e q u a c y a n d
effectiveness of agreed corrective
actions undertaken by management
on significant and secondary issues
raised;
(e) Reviewed the Internal Audit Charter
which establishes the purpose,
authority and responsibilities of the
internal audit activities;
188
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
(f) Reviewed the result of Quality Assurance Review on
Internal Audit Department carried out by Institute of
Internal Auditors Malaysia; and
(g) Reviewed the performance of Internal Audit Department
for financial year ended 2014.
Financial Results
Corporate Governance
(a) Reviewed the impact of relevant regulatory changes
and ensured compliance by the Company and the
Group; and
(b) Recommended the revision to Limits of Authority
manual of the Company.
(a) Reviewed the audited financial statements of the
Group and draft announcement to Bursa Malaysia prior
to submission to the Board for their consideration and
approval. The review was to ensure that the audited
financial statements were drawn up in accordance with
the provisions of the Companies Act, 1965 and the
applicable approved accounting standards. The review
and discussions were conducted with the MD/CEO and
the CFO of the Company;
Annual Reporting
(b) Reviewed the quarterly financial results and draft
announcement to Bursa Malaysia prior to the approval
by the Board, to ensure compliance to the MMLR, the
applicable financial reporting standards as well as other
relevant legal and regulatory requirements. The review
and discussion were conducted with MD/CEO and the
CFO of the Company;
Related Party Transactions (“RPTs”)/Recurrent Related
Party Transactions (“RRPTs”)
(c) Reviewed the relevant corporate governance and
internal controls statements for the annual report in
relation to the audited financial statements, prior to the
approval by the Board, to ensure that they were
prepared incompliance to MMLR, Malaysian Accounting
Standards Board and other relevant legal and regulatory
requirements, in particular, the quarterly and year end
financial statements;
The Board Audit Committee also reviewed the disclosures
on the Corporate Governance Statement, Board Audit
Committee Report, Statement on Risk Management and
Internal Control and Statement on Internal Audit Function
for the financial year ending 31 December 2015. These
statements are as set out on pages 162 to 173, 187 to 190,
179 to 186 and 193 respectively.
The Board Audit Committee ensured that there were
adequate Policies and Procedures in place to identify and
monitor RPTs/RRPTs such that they were conducted on an
arm’s length basis, and not detrimental to the minority
shareholders. These Policies and Procedures were reviewed
by the Group’s External Auditors and independently audited
by a third audit firm; and
The Board Audit Committee performed a quarterly review
of all RRPTs by the Company.
(d) Reviewed the progress of ongoing risk management
activities to identify, evaluate, monitor and manage
critical risks including the Company’s Business
Continuity Management Policy and Framework;
(e) Reviewed the implementation of Financial Control
Framework; and
(f) Reviewed the Trade Accounts Receivables Status of the
Company.
ANNUAL REPORT 2015
189
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
BOARD AUDIT
Risk Management
(a) Reviewed and endorsed all policies, frameworks,
guidelines and other key components of risk
management for implementation within the Company
and throughout the Group;
(b) Reviewed and endorsed corporate risk profile for the
Group; and
(c) Reviewed the progress of ongoing risk management
activities to identify, evaluate, monitor and manage
critical risks.
INTERNAL AUDIT
The internal audit function of the Group is carried out by
the Internal Audit Department of the Company.
They maintained at all times their impartiality, proficiency
and due professional care by having their plans and reports
directly under the purview of the Board Audit Committee.
The internal audits were undertaken to provide independent
assessment on the adequacy, efficiency and effectiveness of
the Group’s internal control systems in the assessment of
potential risk exposures over key business processes within
the Group. The Board Audit Committee has full and direct
access to Internal Auditors and received reports on all
internal audit engagements performed.
190
During the financial year, the Internal Auditors had carried
out audits according to the risk-based internal audit plan
which had been approved by the Board Audit Committee.
In performing the audits, they also conformed to the
Internal Audit Charter. The internal audit provides assurance
that adequate and effective internal controls are in place
and relevant policies, procedures and guidelines and
applicable laws and regulations are adhered to.
The Board Audit Committee reviews the audit reports and
directs the Management for the necessary corrective actions
and process improvements. The Management is responsible
for ensuring that the recommendations are implemented
accordingly.
The total costs incurred for the internal audit function of
the Company and the Group for the financial year was
RM3,426,136.45. Further details of the activities of Internal
Audit Department are presented in the Statement on Internal
Audit Function on page 193 in this Annual Report.
Vimala V. R. Menon
Chairman
INSPIRING CHANGE
BUSINESS OVERVIEW
TERM OF REFERENCE
ACCOUNTABILITY
CONSTITUTION
The Audit Committee was created by the Board pursuant to its resolution
on 3 March 1994.
MEMBERSHIP
MEETING
• The members of the Audit Committee shall be appointed
by the Board from amongst their number and shall
consist of not less than three members. All the Audit
Committee members must be Non-Executive Directors
with majority of them being Independent Directors.
Independent Directors shall be one who fulfils the
requirement as provided in the Main Market Listing
Requirements (“MMLR”) of Bursa Malaysia Securities
Berhad (“Bursa Malaysia”).
• A quorum shall be two members, both being Independent
Directors and one of whom shall be the Chairman of the
Audit Committee. The Audit Committee shall be able to
convene meetings with the External Auditors, Internal
Auditors or both, excluding the attendance of other
directors and employees whenever deemed necessary.
The External Auditors and Internal Auditors have the right
to appear and be heard at any meeting of the Audit
Committee and shall appear before the Committee when
required to do so by the Audit Committee.
• All the Audit Committee members must be financially
literate and at least one member of the Audit Committee:
i.
must be a member of the Malaysian Institute of
Accountants; or
ii.
if he/she is not a member of the Malaysian Institute
of Accountants, he must have at least three years
working experience and:
a. he/she must have passed the examinations
specified in Part I of the First Schedule of the
Accountants Act, 1967; or
b. he/she must be a member of one of the
associations of accountants specified in Part
II of the First Schedule of the Accountants
Act, 1967.
iii. fulfils such other requirements as prescribed or
approved by the Bursa Malaysia.
• The members of the Audit Committee shall elect a
Chairman from amongst them who shall be an
Independent Director.
• If a member of the Audit Committee resigns, dies or for
any other reason ceases to be a member with the result
that the number of members is reduced below three, the
Board shall within three months of that event, appoint
such number of new members as may be required to
make up the minimum number of three members.
• No alternate Director can be appointed as a member of
the Audit Committee.
• The Company Secretary or in his/her absence, his/her
deputy shall be the Secretary of the Audit Committee.
Minutes of the meetings shall be duly entered in the
books provided therefor.
• Meetings shall be held not less than four times a year.
The External Auditors may request a meeting if they
consider it necessary. The Chairman of the Audit
Committee shall convene a meeting of the Committee
to consider any matters the External Auditors believe
should be brought to the attention of the Directors or
shareholders.
AUTHORITY
• The Audit Committee is authorised by the Board to
investigate any activity within its Terms of Reference. It
is authorised to seek any information it requires from
any employee and all employees are directed to cooperate with any request made by the Audit Committee.
• The Audit Committee is authorised by the Board to
obtain external legal or other independent professional
advice and to secure the attendance of outsiders with
relevant experience and expertise if it considers
necessary.
ANNUAL REPORT 2015
191
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
board audit committee
term of reference (continued)
DUTIES AND FUNCTIONS
• The duties and functions of the Audit Committee shall
be:
a. to consider the suitability and independence of
External Auditors for their appointment, the audit
fee, and any questions of resignation or dismissal of
the External Auditors before making recommendation
to the Board;
b. to discuss with the External Auditors before the
audit commences the nature and scope of the
audit, and ensure coordination where more than
one audit firm is involved;
c. to review with the Management and the External
Auditors the quarterly results and year end financial
statements prior to the approval by the Board,
focusing particularly on:
–
–
–
–
–
–
–
any change in accounting policies and practices;
significant and unusual events;
major judgemental areas;
significant adjustments resulting from the audit;
the going concern assumption;
compliance with accounting standards; and
compliance with stock exchange and legal
requirements.
d. t o a r r a n g e f o r p e r i o d i c r e p o r t s f r o m t h e
Management, the External Auditors, and the Internal
Auditors to assess the impact of significant
regulatory changes, and accounting or reporting
developments proposed by accounting and other
bodies, or any significant matters that may have a
bearing on the annual examination;
e. to discuss problems and reservations arising from
the internal or external interim and final audits, and
matters the External or Internal Auditors may wish
to discuss (in the absence of Management where
necessary);
f.
to review the internal audit programme, consider
t he m a j or f in d i n gs o f i n te r n a l a u d it s and
Management’s response, and ensure coordination
between the Internal and External Auditors;
192
g. to review the adequacy of the competency of the
internal audit function;
h. to review the performance of the Head of Internal
Audit for the Management’s endorsement;
i.
to approve the appointment or termination of the
Head of Internal Audit;
j.
to review any related party transaction and conflict
of interest situation that may arise in the Company
including any transaction, procedure or course of
conduct that raises questions on the Management’s
integrity;
k. to keep under review the effectiveness of internal
control systems, and the Internal and/or External
Auditors’ evaluation of these systems and in
particular, review the External Auditor’s Management
Letter and Management’s Response;
l.
to review the audit reports;
m. to review the risk management framework,
processes and responsibilities and assess whether
they provide reasonable assurance that risks are
managed within tolerable ranges;
n. to direct and where appropriate, supervise any
special project or investigation considered
necessary;
o. to prepare periodic report to the Board of Directors
summarising the work performed in fulfilling the
Audit Committee’s primary responsibilities; and
p. to consider other topics, as defined.
REPORTING PROCEDURES
• The Secretary shall circulate the minutes of meetings of
the Audit Committee to all members of the Board.
INSPIRING CHANGE
BUSINESS OVERVIEW
STATEMENT ON
INTERNAL AUDIT FUNCTION
On 1 April 2011, the Board established an in-house internal
audit function with a direct reporting line to the Board Audit
Committee (“BAC”). PDB Internal Audit Department (“IAD”)
supports the BAC in their governance responsibilities as stated
in the BAC’s Terms of Reference. At the same time, IAD assists
the Management in enhancing the risk management, control,
and governance processes within the Group.
The Head of IAD reports functionally to the BAC and
administratively to the MD/CEO. The BAC reviews IAD’s
annual budget and resource requirements, and approves
the internal audit plan. Periodically, the Head of IAD
communicates quarterly the results of internal audit
engagements to the BAC, as well as presents a report on
IAD’s performance.
IAD demonstrates its authority, responsibility, independence
and objectivity as prescribed in the Internal Audit Charter,
which is periodically reviewed and approved by the BAC.
The Head of IAD communicates the Internal Audit Charter
to the Management and throughout the Group.
IAD adopts the Institute of Internal Auditors’ International
Professional Practices Framework (“IPPF”) which includes the
Definition of Internal Auditing, the Code of Ethics, and the
International Standards for the Professional Practice of
Internal Auditing. In performing internal audit engagements,
IAD staff adheres to IAD’s Procedures and Guidelines Manual,
as well as relevant PETRONAS policies and procedures.
IAD continues to adopt the risk based audit plan to ensure
that audit programmes carried out are prioritised based on
the Group’s key risks. In deriving the audit plan, IAD gathers
input from a variety of sources including reviewing the
corporate risk profile for the Group, business plans and
strategies, past audit history, and feedback from the Senior
Management and the BAC.
In 2015, IAD performed reviews in various areas involving
the Retail Business, the Commercial Business, the Supply
and Distribution Division, the Legal and Corporate Secretariat
Services Division, as well as the local and international
Subsidiaries and Associates. IAD covered key audit scope
such as:
–
–
–
–
Terminal operations and maintenance
Sales and marketing
Product supply chain management
Logistics and distribution
ACCOUNTABILITY
– Project management
–Procurement
– Information & communications technology
– Human resource management
– Accounting and financial activities
IAD highlights to the BAC on the key control issues, significant
risks and relevant recommendations for improvement, along
with Management’s responses and agreed corrective actions.
On quarterly basis, IAD monitors the progress of these
actions and reports the status to the BAC.
During the financial year, the internal audit activities were
performed in-house with strength of 10 staff comprising of
internal audit managers and internal auditors. IAD continues
its commitment to equip the staff with adequate knowledge
and proficiencies to discharge their duties and responsibilities.
This involved staff’s participation in trainings, workshops and
seminars performed in-house or external.
Annually, individual internal auditors undergoes a functional
competency assessment to identify skill gaps (if any). This
helps IAD to determine and plan the learning and
development activities that will assist the staff in closing the
gaps. The appraisal process is part of PETRONAS capability
development programme for internal auditors, which
considers the Institute of Internal Auditors (“IIA”) Global
Internal Audit Competency Development Framework. The
capability development programme for internal auditors
comprises the following core competencies:
–
–
–
–
–
Internal audit delivery
Technical expertise
Personal skills
Internal audit management
Professional ethics
Akmal Nur Anuar
Head
Internal Audit Department
Vimala V. R. Menon
Chairman
ANNUAL REPORT 2015
193
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOMINATION AND
REMUNERATION
COMMITTEE REPORT
OVERVIEW
The Nomination and Remuneration
Committee of the Company is pleased
to present the Nomination and
Remuneration Committee Report for the
financial year ended 31 December 2015
in compliance with Paragraph 15.08A of
MMLR of Bursa Malaysia.
COMPOSITION
The Board established the Nomination
Committee and Remuneration
Committee on 16 February 2011 which
were later amalgamated into a single
committee and is now known as the
Nomination and Remuneration
Committee.
The members of the Nomination and Remuneration Committee comprise two
Independent Non-Executive Directors and one Non-Independent NonExecutive Director which is in compliance with the requirement of Paragraph
15.08A(1) of MMLR of Bursa Malaysia as well as recommendation 2.1 of the
MCCG 2012 where the committee must comprise exclusively Non-Executive
Directors with majority are Independent Directors.
Lim Beng Choon, Senior Independent Director has been appointed as Chairman
of the Nomination and Remuneration Committee since 7 August 2014.
During the financial year under review, there was a change to the composition
of the Nomination and Remuneration Committee where Ir Mohamed Firouz
Asnan was appointed in place of Mohd. Farid Mohd. Adnan on 6 October
2015. Based on the Board Effectiveness Evaluation findings, the Board is
satisfied with the performance and effectiveness of the Nomination and
Remuneration Committee in providing sound advice and recommendations to
the Board.
TERMS OF REFERENCE
The members of the Nomination and
Remuneration Committee during the
financial year under review comprise the
following Directors:
The Terms of Reference of the Nomination and Remuneration Committee as
set out on pages 198 to 201 of this Annual Report are consistent with the
MMLR of Bursa Malaysia and the MCCG 2012. All the requirements under the
Terms of Reference are fully complied with.
NRC
(1) Lim Beng Choon (Chairman)
(Independent Non-Executive
Director)
(2) Erwin Miranda Elechicon
(Independent Non-Executive
Director)
(3) Ir Mohamed Firouz Asnan
(Non-Independent Non-Executive
Director)
(4) Mohd. Farid Mohd. Adnan
(Non-Independent Non-Executive
Director)
194
MEETINGS
During the financial year under review, the Nomination and Remuneration
Committee in discharging its duties and functions as sub-committee of the
Board, held two meetings and details of attendance of the members are as
follows:
No
Nomination and Remuneration
Committee Members
Total Number of
Meetings Attended
1.
Lim Beng Choon (Chairman)
2 out of 2 (100%)
2.
1 out of 2 (50%)
3.
1 out of 1 (100%)
4
1 out of 1 (100%)
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
The MD/CEO, Head of Legal and Secretariat, Head of
Human Resource and any other persons deemed necessary
are invited to attend Nomination and Remuneration
Committee meetings to appropriately brief and furnish the
members of Nomination and Remuneration Committee
with relevant information and clarification to relevant items
on the agenda.
At the Nomination and Remuneration Committee meeting
held on 9 February 2015, the members of the Nomination
and Remuneration Committee reviewed the remuneration
structure and benchmarking for the Management of the
Company. A review of the career path in the Company and
PETRONAS was also conducted to ensure that is strong
practice of talent development and retention. In this
meeting, the Board performance for the previous year was
also reviewed together with the annual report statement.
At a meeting of the Nomination and Remuneration
Committee held on 27 October 2015 where performance
and succession plan of the Management were deliberated,
the Directors who are non-members of Nomination and
Remuneration Committee were invited to provide their
input and views on the performance and succession plan of
the Management.
The Nomination and Remuneration Committee meetings
for financial year 2015 were scheduled in November 2014
to facilitate the Directors to plan ahead and fit the
Nomination and Remuneration Committee meetings into
their respective schedules. This is also to provide the
members with ample notice of the meetings.
The agenda and a set of meeting papers relevant to the
business of the meeting are distributed via electronic
application to the Nomination and Remuneration Committee
members not less than five business days from the meeting
dates.
All proceedings of Nomination and Remuneration Committee
meetings are duly recorded in the minutes of each meeting
and the signed minutes are properly kept by the Secretary.
The draft minutes are circulated to the Nomination and
Remuneration Committee members subsequent to the
meeting but prior to the Board meeting. This assists the
Nomination and Remuneration Committee Chairman to
effectively convey to the Board, matters deliberated at the
meeting. The minutes of the Nomination and Remuneration
Committee meetings are also distributed to Board for their
notation.
BOARD APPOINTMENT PROCESS
The Company practices a formal and transparent procedure
for appointment of new Directors. Nomination of Directors
to the Board is made either by PETRONAS being the
majority shareholder or through engagement of professional
recruitment firm to find suitable or best possible candidates
to fill in the position as the Independent Non-Executive
Directors.
All nominees to the Board are first considered by the
Nomination and Remuneration Committee, taking into
consideration the mix of skills, competencies, experience,
integrity and time commitment required to effectively
discharge his or her role as a director. Diversity in terms of
age, gender and ethnicity is also considered in ranking and
selecting the best candidates. This is to promote good
decision making by harnessing different insights and
perspectives.
The recommended candidate is then scheduled to meet
selected existing Directors and Chairman in an interview to
confirm suitability. The final decision is then made by the
Board.
DIRECTORS’ RE-ELECTION AND RE-APPOINTMENT
Since 2014, the Nomination and Remuneration Committee
has implemented a policy whereby independent nonexecutive directors are appointed only for a tenure of three
years. Further extension to the tenure will be at the Board’s
discretion based on the performance of the Director.
ANNUAL REPORT 2015
195
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOMINATION AND
REMUNERATION
Based on the schedule of retirement by rotation, the
Nomination and Remuneration Committee is responsible
for recommending to the Board those Directors who are
eligible to stand for re-election or re-appointment. The
recommendation is based on the performance of the
Directors, taking into account the results of their latest
Board Evaluation, contribution to the Board through their
skills, experience, strengths and qualities, level of
independence and ability to act in the best interest of the
Company in decision making.
Article 93 of the Articles of Association of the Company
provides that one-third of the Directors of the Company for
the time being shall retire by rotation at an Annual General
Meeting 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 Annual General
Meeting.
The Nomination and Remuneration Committee at their
meeting held on 2 February 2016 recommended to the
Board for Nuraini Ismail and Lim Beng Choon to be retired
and put up for re-election at the 34 th Annual General
Meeting. Both Nuraini Ismail and Lim Beng Choon are
eligible for re-election and had expressed their intention to
seek re-election.
During the year under review, Md Arif Mahmood and Ir
Mohamed Firouz Asnan were appointed as Non-Executive
Directors to the Board of the Company on 16 April 2015
and 6 October 2015 respectively. Article 96 of the Articles
of Association of the Company provides amongst others,
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 Annual General
Meeting and shall then be eligible for re-election.
The Nomination and Remuneration Committee at their
meeting held on 2 February 2016 recommended to the
Board for Md Arif Mahmood and Ir Mohamed Firouz Asnan
to be put up for re-election under Article 96 at the
forthcoming Annual General Meeting.
196
ANNUAL ASSESSMENT
Every year, under the purview of the Nomination and
Remuneration Committee, a formal evaluation is undertaken
to assess the effectiveness of the following:
(a) The Board as a whole and the various Board Committees;
(b) Contribution of each Individual Director; and
(c) Independence of Independent Directors.
This is conducted through a Board Evaluation process
which consists of a Board and Peer Annual Assessment
(Board Evaluation). The Board Evaluation focuses on
maximising the effectiveness and performance of the Board
in the best interest of the Company.
ACTIVITIES OF THE NOMINATION AND REMUNERATION
COMMITTEE
During the financial year under review, the Nomination and
Remuneration Committee carried out the following activities
in discharging its functions and duties:
(i)
Board Evaluation
• Established the Individual Director Self/Peer
Evaluation Questionnaires to evaluate on the
following areas:
(a) Board structure;
(b) Board operation;
(c) Board’s roles and responsibilities;
(d) Chairman’s roles and responsibilities; and
(e) Roles of the Board Committees.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
The areas evaluated for the individual Directors are
as follows:
(a) Dynamic and participation;
(b) Integrity and independence;
(c) Technical competencies; and
(d) Skills and contribution.
• Assessed the performance of the Board as whole,
its sub-committees and members through the
Board and Directors Evaluation exercise and initiated
action to work on areas which have been identified
for improvement.
(iv) Performance Management
• Reviewed the objective setting and performance
evaluation of MD/CEO and the Management at the
onset of the year 2015.
• Reviewed the succession plan for the MD/CEO and
the Management.
• Reviewed the compensation and benefits structure
for the Management.
• Reviewed careers paths implementation in the
Company to ensure successful skills development
and retention.
(v) Directors’ Training
(ii) Skills Evaluation
• Carried out a skill mapping exercise for the Directors
to review the mix of skills, education and business
experience as well as other qualities, including core
competencies of the Directors.
(iii) Board Membership
• Gathered inputs from the Directors and analysed
training needs.
• Identified programmes/events for the continuous
education of the Board members to ensure that
they are up-to-date on new regulations and
conversant with industry trends and developments.
• Assisted the Board in defining and assessing
qualifications for Board membership and identify
qualified individuals.
• Recommended candidates to fill vacancies on the
Board.
• Recommended the Directors who are eligible for
re-election at the Annual General Meeting.
Lim Beng Choon
Chairman
Nomination and Remuneration Committee
• Ensured the Board comprises members that are not
only equipped with the relevant skills and experience
but also taking into consideration time commitment
and diversity in terms of gender, ethnicity and age.
ANNUAL REPORT 2015
197
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOMINATION AND
REMUNERATION
COMMITTEE TERMS
OF REFERENCE
1.PURPOSE
The Committee is to assist the Board of Directors (“the
Board”) in the following areas:a.
Establish and assess membership qualifications for
the Board of Directors, including defining specific
criteria for Directors’ independence and committee
membership criteria;
b. Recommend to the Board on candidates for
directorship for both the Executives and NonExecutives to the Board of the Company (in
consideration of the professionalism, mix of skills,
experience, personality, competency and integrity
as required therein);
c. Periodically assess the performance of the Board
as a whole, the various Committees of the Board
and the contribution of each individual Director;
and
d. Review and recommend the remuneration policies
and procedures which is used to determine
remuneration packages of Directors, including that
of the Chief Executive Officer (“CEO”) as well as the
key Senior Management personnel within the
Company.
2.
SCOPE OF AUTHORITY
a. The Committee within the scope of its assigned
duties is authorised to seek any information it
requires from employees, company officers and
external parties;
b. The Committee may engage external consultants
and other Advisers or otherwise obtain such
independent legal or other professional services it
requires, at the expense of the Company; and
c. The Board will provide the Committee with
sufficient resources to undertake its duties,
including access to the company secretariat.
198
3.COMPOSITION
a. The Committee shall have at least three members;
b. Members shall be appointed by the Board from
amongst its members and shall comprise
exclusively of Non-Executive Directors, a majority
of whom must be independent;
c. The actual number of members shall be determined
from time to time by resolution of the Board; and
d. Members of the Committee should be suitably
knowledgeable in matters pertaining to Corporate
Governance.
4. REMOVAL AND RESIGNATION
a. The entire Committee or individual member may
be removed from office without cause by the
affirmed vote of a majority of the Board of
Directors;
b. Any committee member may resign effective
upon giving written notice to the Chairman of the
Board of Directors, the Company Secretary or the
Board of Directors (unless the notice specifies a
later time for the effectiveness of such resignation);
and
c. If the resignation of a member is effective at a
future time, the Board of Directors may elect a
successor to take office when the resignation
becomes effective.
5.QUORUM
The presence of two directors which includes one
Independent Non-Executive Director shall form a
quorum for the Committee Meetings.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
6.CHAIRMAN
a. The Chairman may be designated by the Board
based upon recommendations by the Committee,
if any; and
e. Minutes of each meeting shall be distributed to
each member of the Committee;
f.
Minutes of each meeting shall be distributed to
the Board for notation. Meeting minutes shall be
confirmed at the next meeting of the Committee
and shall be available on request from the
Secretary to all Non-Executive Directors;
g.
Questions arising shall be decided by a majority of
votes. In the case of an equality of votes, the
Chairman of the meeting shall have a second or
casting vote provided that where two members
form a quorum, the Chairman of the meeting at
which only such a quorum is present, or at which
only two members are competent to vote on the
question at issue, shall not have a casting vote;
b. In the absence of the Chairman, the remaining
members present shall elect one of their members
as Chairman of the meeting.
7.SECRETARY
The Secretary to the Committee shall be the Company
Secretary or any other person appointed by the
Committee.
8.
MEETINGS AND MINUTES
a.
The Committee shall meet at least once a year or
at such other times as the Chairman of the
Committee deems necessary;
b. In addition to the regular meeting schedule
established by the Committee, the Chairman of
the Committee may call a special meeting at any
time;
c. Meetings of the Committee shall be arranged by
the Secretary at the request of the Committee
Chairman or any other member of the Committee.
Unless otherwise agreed, notice of each meeting
confirming the venue, time and date shall be
forwarded to each Committee member and to
other attendees (as appropriate) in advance of
each scheduled meeting date together with an
agenda and supporting papers;
d. The Committee shall regulate its own detailed
procedures, in particular, the calling of meetings,
the notice to be given for meetings, the voting and
proceedings of meetings, the keeping of minutes
and the custody, production and inspection of
minutes;
h. The Committee may also decide by way of the
Committee’s circular resolutions. A resolution in
writing signed or approved by letter by all the
members who may at the time be present in
Malaysia, being not less than two Directors are
sufficient to form a quorum shall be valid and
effectual as if it had been passed at a meeting of
the Nomination and Remuneration Committee
duly called and constituted. All such resolutions
shall be described as “Nomination and Remuneration
Committee Circular Resolutions” and shall be
forwarded or otherwise delivered to the Secretary
without delay and shall be recorded by the
Secretary in the Company’s minute book and
submitted for confirmation at the next Board
meeting, following the receipt thereof by the
Secretary; and
i.
Attendance of other directors and employees at any
particular Committee meeting shall only be at the
Committee’s invitation, specific to the relevant
meeting.
ANNUAL REPORT 2015
199
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
9.
NOMINATION AND
REMUNERATION
COMMITTEE TERMS
OF REFERENCE (continued)
COMMITTEE EVALUATION
Executive and Non-Executive Directorship on
the Board of the Company, as required, to
provide an appropriate balance of knowledge,
skills, experience and capability in meeting the
needs of the Company;
The Committee will annually complete a self-evaluation
of the Committee’s own performance and effectiveness.
The Committee will also consider whether any changes
to the Committee’s Terms of Reference are appropriate.
v.
10. DUTIES AND RESPONSIBILITIES
The following shall be the common recurring duties
and responsibilities of the Committee in carrying out
its purposes. These duties and responsibilities are set
forth as a guide to the Committee with the
understanding that the Committee may alter or
supplement them as deemed appropriate under the
circumstances to the extent permitted by applicable
laws.
a. Board Composition:
i.
ii.
The Committee shall review and assess the mix
of skills, expertise, composition, size and
experience of the Board, including core
competencies of the Non-Executive Directors,
as well as consider aspects of boardroom
diversity;
iv. The Committee shall be responsible for making
the recommendation to the Board and
reviewing potential candidates for both
200
vi. The Committee shall monitor compliance
with Board of Directors and Board Committee
membership criteria; and
vii. The Committee shall be responsible for
overseeing the development of a succession
management plan for the Non-Executive
Directors.
b. Board Effectiveness Review:
i.
The Committee shall assess:
a. the effectiveness of the Board as a
whole;
The Committee shall make recommendations
with regard to any adjustments that are
deemed necessary as an outcome of the
review and assessment of the Board structure,
size and composition;
iii. The Committee shall make appropriate
recommendations to the Board on matters of
renewal or extension of Directors’ appointment
and reappointment of retiring Directors;
The Committee shall establish and provide an
on-going review of the membership
qualifications for the Board of Directors and
all Board Committees, including defining
specific criteria for Director’s independence
and committee membership criteria;
b. the Committees of the Board; and
c. the contribution of Directors, through
rigorously assessment and evaluation
processes.
All assessments and evaluations carried out
by the Committee in the discharge of all its
functions shall be properly documented; and
ii.
The Committee shall provide oversight of the
performance and effectiveness of the selfevaluation process for the Board and its
Committees.
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
c. Directors’ Development:
i.
The Committee shall undertake the assessment
of Directors’ training and development needs
(e.g. seminars, training, programmes,
workshops and conferences) to further
enhance business acumen and professionalism
in discharging their duties to the Company;
and
f.General:
i.
The Committee shall consider the appointment
of the service of such Advisors or Consultants
as it deems necessary to fulfil its functions;
and
ii.
The Committee shall take such other actions
and do such other things as may be referred
to it from time to time by the Board.
ii. The Committee shall keep itself updated on
new regulations and requirements in relation
to governance.
d.Remuneration:
i.
The Committee shall review and recommend
the Company’s framework, relating to the
policy and procedures in determining the
remuneration and compensation packages of
the Directors, including the CEO, Management
Committee members as well as the key
Senior Management personnel of the
Company; and
ii. The Committee shall review and recommend
the remuneration of Non-Executive Directors
to ensure that it is aligned to the market and
reflective of experience and expertise that
commensurate with the duties and
responsibilities.
e. The Committee shall also undertake the following
in relation to the Company’s CEO and key Senior
Management:i.
The Committee shall, at least annually,
evaluate the CEO and Senior Management’s
performance as measured against the goals
and objectives of the Company; and
ii.
The Committee shall oversee the development
of a succession management plan for the
CEO and Senior Management and shall make
an annual report to the Board.
ANNUAL REPORT 2015
201
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT OF
DIRECTORS’ RESPONSIBILITY
IN RELATION TO THE FINANCIAL STATEMENTS
The financial statements of the Group and of the Company as set out on pages 206 to 283, are
properly drawn up so as to give a true and fair view of the state of affairs of the Group and the
Company as at 31 December 2015 and of the results of its operations and cash flows for the
financial period ended on that date.
The Directors consider the following in preparing the financial statements of the Group and of
the Company:
•
•
•
•
appropriate accounting policies have been used and are consistently applied;
reasonable and prudent judgements and estimates were made;
the Companies Act, 1965 and Malaysian Financial Reporting Standards have been adhered to; and
prepared on a going concern basis.
The Directors are also responsible for ensuring that the accounting and other records and
registers required by the Companies Act, 1965 to be retained by the Group and the Company
have been properly kept in accordance with the provisions of the said Companies Act, 1965.
The Directors also have general responsibilities for taking such steps that are reasonably available
to them to safeguard the assets of the Group and of the Company, and to prevent and detect
fraud and other irregularities.
202
INSPIRING CHANGE
BUSINESS OVERVIEW
BUSINESS CONTINUITY
MANAGEMENT
PDB has adopted the PETRONAS BCM Framework which
acts as its guideline to ensure its business remains resilient,
protected and continues to operate effectively in the event
of a crisis or during prolonged disruptions.
During the year under review, the Company revised its
Business Impact Analysis, where the data collected was
used to assist the management in deciding the most
appropriate Business Recovery Strategy for its respective
business lines and enabling entities. These critical inputs
were then incorporated into PDB’s BCP, which is the main
document for reference when faced with a crisis.
In ensuring the robustness of the BCP, PDB participated in
two simulation tests as follows:
(a) A simulation exercise was conducted on 26 November
2015 on the unavailability of office building as
workplace, specifically Menara Dayabumi (code named
Exercise Dayabumi-2). Menara Dayabumi is a regional
office for PDB and the CBF staff onsite were tested on
their preparedness to resume business operations
during a crisis.
ACCOUNTABILITY
(b) An integrated simulation exercise was conducted on
7 December 2015 on the unavailability of PETRONAS
Twin Towers (code named Exercise Siaga-3) as
workplace as well as to test the readiness and
effectiveness of PETRONAS Twin Towers BCP’s Crisis
Management and BCM plans. The simulation also
tested the level of preparedness of the CBF staff as
they were required to mobilise to alternate work sites/
virtual offices and resume business operations at
optimum levels.
Necessary information and feedback were gathered upon
the completion of each exercise and analysed for continuous
BCM improvement.
In summary, the Company recognises that unanticipated
events may happen which leads to business expectations
being compromised. As such, PDB will continue to adopt
and adapt the necessary BCM practices to ensure the
business resumes effectively, as well as protect the
Company’s reputation and stakeholders’ interests.
ANNUAL REPORT 2015
203
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
FINANCIAL
STATEMENTS
206
211
212
213
214
216
217
218
219
220
221
222
284
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 Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Independent Auditors’ Report to the Members
204
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
DIRECTORS’
REPORT
FOR THE YEAR ENDED 31 DECEMBER 2015
The Directors are pleased to submit their report and the audited financial statements of the Group and of the Company for
the financial year ended 31 December 2015.
PRINCIPAL ACTIVITIES
The principal activity of the Company during the course of the financial year remains unchanged as domestic marketing of
petroleum products.
The principal activities of the subsidiaries, associates and joint ventures are stated in Note 32, Note 33 and Note 34 to the
financial statements respectively. There has been no significant change in the nature of these activities during the financial
year.
RESULTS
Group
RM’000
Company
RM’000
Profit for the year
794,624
758,518
Attributable to:
Shareholders of the Company
Non-controlling interests
789,975
4,649
758,518
–
794,624
758,518
DIVIDENDS
The dividends paid by the Company since the end of the previous financial year are as follows:
In respect of the financial year ended 31 December 2014:
(i) A single tier special interim dividend of 22.0 sen per ordinary share amounting to RM218,559,880 on 27 March 2015.
In respect of the financial year ended 31 December 2015:
(i) A single tier interim dividend of 12.0 sen per ordinary share amounting to RM119,214,480 on 25 June 2015;
(ii) A single tier interim dividend of 14.0 sen per ordinary share amounting to RM139,083,560 on 22 September 2015; and
(iii) A single tier interim dividend of 14.0 sen per ordinary share amounting to RM139,083,560 on 4 December 2015.
The Directors had on 19 February 2016 declared a single tier interim dividend of 20.0 sen per ordinary share amounting to
RM198,690,800 in respect of the financial year ended 31 December 2015.
The financial statements for the current financial year do not reflect the declared interim dividend. The dividend will be
accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2016.
206
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
RESERVES AND PROVISIONS
There were no material transfers to and from reserves and provisions during the financial year other than as disclosed in
the financial statements.
DIRECTORS OF THE COMPANY
Directors who served since the date of the last report are:
Md Arif bin Mahmood – appointed as Chairman on 16 April 2015
Mohd Ibrahimnuddin bin Mohd Yunus – Managing Director/CEO
Vimala a/p V R Menon
Lim Beng Choon
Mohamed Firouz bin Asnan – appointed on 6 October 2015
Datuk Wan Zulkiflee bin Wan Ariffin – retired as Chairman on 15 April 2015
Mohd Farid bin Mohd Adnan – resigned on 6 October 2015
DIRECTORS’ INTERESTS
The Directors in office at the end of the financial year who have interests and deemed interests in the shares of the Company
and of its related corporations other than wholly owned subsidiaries (including the interests of the spouse and/or children of
the Director who themselves are not Director of the Company) as recorded in the Register of Directors’ Shareholdings are as
follows:
Name
Shares in PETRONAS
Dagangan Berhad
Number of ordinary shares at RM1.00 each
Balance at
Balance at
1.1.2015
Bought
Sold
31.12.2015
–
3,000
–
3,000
ANNUAL REPORT 2015
207
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
DIRECTORS’
REPORT (continued)
DIRECTORS’ INTERESTS (CONTINUED)
Name
Vimala a/p V R Menon
Name
Md Arif bin Mahmood
Name
Mohamed Firouz bin Asnan
Name
Shares in PETRONAS
Chemicals Group Berhad
Balance at
Balance at
1.1.2015
Bought
Sold
31.12.2015
6,000
20,000
10,000
20,000
–
–
–
–
–
–
–
20,000
6,000
20,000
10,000
–
Balance at
16.4.2015
Bought
Sold
Balance at
31.12.2015
20,000
–
–
20,000
Balance at
6.10.2015
Bought
Sold
Balance at
31.12.2015
6,000
–
–
6,000
Shares in PETRONAS
Gas Berhad
Balance at
Balance at
1.1.2015
Bought
Sold
31.12.2015
5,000
–
–
5,000
None of the other Directors holding office at 31 December 2015 had any interest in the ordinary shares of the Company
and of its related corporations during the financial year.
208
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any
benefit (other than the benefit included in the aggregate amount of emoluments received or due and receivable by Directors
as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the
Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial
financial interest.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the
Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body
corporate.
ISSUE OF SHARES
There were no changes in the issued and paid up capital of the Company during the financial year.
OPTIONS GRANTED OVER UNISSUED SHARES
No options were granted to any person to take up unissued shares of the Company during the financial year.
OTHER STATUTORY INFORMATION
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to
ascertain that:
(i) all known bad debts have been written off and adequate provision made for doubtful debts, and
(ii) any current assets which were unlikely to be realised, in the ordinary course of business, have been written down to
an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(i)
that would render the amount written off for bad debts, or the amount of the provision for doubtful debts in the Group
and in the Company inadequate to any substantial extent, or
(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the
Company misleading, or
(iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and
of the Company misleading or inappropriate, or
(iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial
statements of the Group and of the Company misleading.
ANNUAL REPORT 2015
209
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
DIRECTORS’
REPORT (continued)
OTHER STATUTORY INFORMATION (CONTINUED)
At the date of this report, there does not exist:
(i)
any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which
secures the liabilities of any other person, or
(ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become
enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors,
will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall
due.
In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended
31 December 2015 have not been substantially affected by any item, transaction or event of a material and unusual nature nor
has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this
report.
AUDITORS
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors
in accordance with a resolution of the Directors:
MD ARIF BIN MAHMOOD
Kuala Lumpur,
Date: 19 February 2016
210
INSPIRING CHANGE
BUSINESS OVERVIEW
STATEMENT BY
DIRECTORS
ACCOUNTABILITY
In the opinion of the Directors, the financial statements set out on pages 213 to 282 are drawn up in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies
Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company at 31
December 2015 and of their financial performance and cash flows for the year ended on that date.
In the opinion of the Directors, the information set out in Note 38 on page 283 to the financial statements has been
compiled in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or
Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the
Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors
in accordance with a resolution of the Directors:
MD ARIF BIN MAHMOOD
Kuala Lumpur,
ANNUAL REPORT 2015
211
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATUTORY
DECLARATION
I, PUTERI LIZA ELLI SUKMA, the officer primarily responsible for the financial management of PETRONAS Dagangan Berhad,
do solemnly and sincerely declare that the financial statements set out on pages 213 to 283, are, to the best of my
knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by
virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the abovenamed
PUTERI LIZA ELLI SUKMA at KUALA LUMPUR
in WILAYAH PERSEKUTUAN on 19 February 2016.
BEFORE ME:
COMMISSIONER OF OATHS
212
INSPIRING CHANGE
BUSINESS OVERVIEW
CONSOLIDATED STATEMENT OF
FINANCIAL
POSITION
AT 31 DECEMBER 2015
ACCOUNTABILITY
2015
RM’000
2014
RM’000
3,989,865
491,950
3,015
10,281
9,412
4,031,094
500,908
2,781
6,736
8,227
4,504,523
4,549,746
625,558
1,649,252
1,258,637
32,635
1,031,957
2,119,144
1,839,684
–
TOTAL CURRENT ASSETS
3,566,082
4,990,785
TOTAL ASSETS
8,070,605
9,540,531
Note
ASSETS
Prepaid lease payments
Investments in associates
Investments in joint ventures
Deferred tax assets
3
4
6
7
17
TOTAL NON-CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
9
10
11
12
EQUITY
Share capital
Reserves
13
14
993,454
3,958,865
993,454
3,758,725
Total equity attributable to shareholders of the Company
15
4,952,319
31,693
4,752,179
39,644
4,984,012
4,791,823
113,321
153,066
27,427
134,726
140,189
29,120
293,814
304,035
98,499
2,602,174
67,600
24,506
359,638
4,059,457
25,578
–
TOTAL CURRENT LIABILITIES
2,792,779
4,444,673
TOTAL LIABILITIES
3,086,593
4,748,708
TOTAL EQUITY AND LIABILITIES
8,070,605
9,540,531
TOTAL EQUITY
LIABILITIES
Borrowings
Deferred tax liabilities
Other long term liabilities and provisions
16
17
18
TOTAL NON-CURRENT LIABILITIES
Borrowings
Trade and other payables
Taxation
Liabilities classified as held for sale
16
19
12
The notes on pages 222 to 283 are an integral part of these financial statements.
ANNUAL REPORT 2015
213
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
PROFIT OR LOSS AND OTHER
COMPREHENSIVE
INCOME
Note
Revenue
– sales of petroleum products
– rendering of services
Cost of revenue
– cost of petroleum products
– cost of services
Gross profit
Selling and distribution expenses
Administration expenses
Other income
Operating profit
Financing costs
Share of profit after tax of equity accounted associates and joint ventures
Tax expense
PROFIT FOR THE YEAR
20
21
22
2015
RM’000
2014
RM’000
25,145,940
25,270
32,321,470
19,528
25,171,210
32,340,998
(23,110,473)
(27,852)
(30,404,491)
(27,989)
(23,138,325)
(30,432,480)
2,032,885
(280,669)
(985,027)
327,124
1,908,518
(350,969)
(1,033,502)
204,348
1,094,313
(13,444)
3,779
728,395
(21,009)
1,906
1,084,648
(290,024)
709,292
(201,142)
794,624
508,150
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences arising from translation of financial
statements of foreign operations
29,175
11,858
TOTAL OTHER COMPREHENSIVE INCOME FOR THE YEAR
29,175
11,858
823,799
520,008
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
214
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
2015
RM’000
2014
RM’000
Profit attributable to:
789,975
4,649
501,572
6,578
PROFIT FOR THE YEAR
794,624
508,150
Total comprehensive income attributable to:
819,150
4,649
513,430
6,578
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
823,799
520,008
79.5 sen
50.5 sen
Note
Earnings per ordinary share
Basic
25
ANNUAL REPORT 2015
215
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
CHANGES
IN
EQUITY
<--Attributable to the shareholders of the Company-->
<------------ Non-distributable ------------> Distributable
Foreign
currency
translation
Capital
Retained
Share
reserve
reserve
profits
capital
RM’000
RM’000
RM’000
Note
RM’000
At 1 January 2014
Exchange difference arising from
translation of financial statements
of foreign operations
Profit for the year
Total comprehensive income
for the year
Dividends paid
23
At 31 December 2014
At 1 January 2015
Exchange difference arising from
translation of financial statements
of foreign operations
Profit for the year
Total comprehensive income
for the year
Waiver of loan for a subsidiary
acquired under common control
business combination in prior
year
Dividends paid
Total transactions with
shareholders of the Company
At 31 December 2015
23
216
Total
equity
RM’000
993,454
(820)
(44,053)
3,841,535
4,790,116
39,366
4,829,482
–
–
11,858
–
–
–
–
501,572
11,858
501,572
–
6,578
11,858
508,150
–
–
11,858
–
–
–
501,572
(551,367)
513,430
(551,367)
6,578
(6,300)
520,008
(557,667)
993,454
11,038
(44,053)
3,791,740
4,752,179
39,644
4,791,823
Note 13
Note 14
Note 14
Note 14
993,454
11,038
(44,053)
3,791,740
4,752,179
39,644
4,791,823
–
–
29,175
–
–
–
–
789,975
29,175
789,975
–
4,649
29,175
794,624
–
29,175
–
789,975
819,150
4,649
823,799
–
–
–
–
(3,069)
–
–
(615,941)
(3,069)
(615,941)
–
(12,600)
(3,069)
(628,541)
–
–
(3,069)
(615,941)
(619,010)
(12,600)
(631,610)
993,454
40,213
(47,122)
3,965,774
4,952,319
31,693
4,984,012
Note 13
Note 14
Note 14
Note 14
Total
RM’000
Noncontrolling
interests
RM’000
Note 15
Note 15
INSPIRING CHANGE
BUSINESS OVERVIEW
CASH
FLOWS
ACCOUNTABILITY
2015
RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid to suppliers and employees
2014
RM’000
25,547,500
(24,685,761)
33,057,234
(30,267,119)
861,739
(2,325)
(242,775)
2,790,115
(3,267)
(236,837)
Net cash generated from operating activities
616,639
2,550,011
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income from fund and other investments
Acquisition of a joint venture
Advances to a joint venture
Purchase of property, plant and equipment
Prepayment of leases
Proceeds from disposal of property, plant and equipment
54,554
–
–
(315,010)
(21,012)
9,550
23,534
(1,028)
(3,067)
(395,062)
(42,392)
8,872
Net cash used in investing activities
(271,918)
(409,143)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Dividends paid to non-controlling interests
Net repayment of term loan
Net (repayment)/drawdown of Islamic medium term notes
Net (repayment)/drawdown of Islamic financing facilities
Net drawdown/(repayment) of revolving credit facilities
Interest paid on term loan
Profit margin paid for Islamic medium term notes
Profit margin paid for Islamic financing facilities
(615,941)
(12,600)
(10,066)
(300,000)
(16,550)
42,288
(1,512)
(5,281)
(4,891)
(551,367)
(6,300)
(2,146)
300,000
6,933
(397,152)
(1,277)
(5,368)
(4,498)
Net cash used in financing activities
(924,553)
(661,175)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
NET FOREIGN EXCHANGE DIFFERENCES
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
(579,832)
4,541
1,839,684
1,479,693
1,358
358,633
CASH AND CASH EQUIVALENTS AT END OF THE YEAR (Note 11)
1,264,393
1,839,684
Interest expenses paid
Taxation paid
Included in Cash and Cash Equivalents at end of the year is an amount of RM5,756,000 categorised as Disposal Group Held
for Sale as disclosed in Note 12.
ANNUAL REPORT 2015
217
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT OF
FINANCIAL
POSITION
AT 31 DECEMBER 2015
2015
RM’000
2014
RM’000
3,614,346
491,950
283,425
1,959
25
14,231
3,676,113
500,908
254,721
1,959
25
26,507
4,405,936
4,460,233
556,560
1,461,397
1,219,406
987,556
2,043,331
1,754,464
TOTAL CURRENT ASSETS
3,237,363
4,785,351
TOTAL ASSETS
7,643,299
9,245,584
993,454
3,925,080
993,454
3,785,572
4,918,534
4,779,026
133,691
25,160
125,304
28,336
158,851
153,640
–
2,495,835
70,079
300,000
3,985,113
27,805
TOTAL CURRENT LIABILITIES
2,565,914
4,312,918
TOTAL LIABILITIES
2,724,765
4,466,558
TOTAL EQUITY AND LIABILITIES
7,643,299
9,245,584
Note
ASSETS
Prepaid lease payments
Investments in subsidiaries
Investments in associates
Investments in joint ventures
Long term receivable
3
4
5
6
7
8
TOTAL NON-CURRENT ASSETS
Inventories
EQUITY
Share capital
Reserves
9
10
11
13
14
TOTAL EQUITY
LIABILITIES
Other long term liabilities and provisions
17
18
TOTAL NON-CURRENT LIABILITIES
Borrowings
Taxation
218
16
19
INSPIRING CHANGE
BUSINESS OVERVIEW
STATEMENT OF
PROFIT OR LOSS AND OTHER
COMPREHENSIVE
INCOME
ACCOUNTABILITY
Note
31,854,308
(30,051,715)
1,827,974
(239,647)
(893,525)
344,818
1,802,593
(326,323)
(953,313)
229,911
20
21
1,039,620
(5,709)
752,868
(15,562)
22
1,033,911
(275,393)
737,306
(207,829)
758,518
529,477
Gross profit
Selling and distribution expenses
Administration expenses
Other income
Tax expense
PROFIT/TOTAL COMPREHENSIVE INCOME FOR THE YEAR
2014
RM’000
24,258,120
(22,430,146)
Revenue
Cost of revenue
Operating profit
Financing costs
2015
RM’000
ANNUAL REPORT 2015
219
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT OF
CHANGES
IN
EQUITY
Attributable to shareholders of the
<----------------- Company ----------------->
Non-distributable
Distributable
Retained
Capital
Share
profits
reserve
capital
RM’000
RM’000
RM’000
Note
At 1 January 2014
Profit/total comprehensive income for the year
Dividends paid
At 31 December 2014/1 January 2015
Profit/total comprehensive income for the year
Waiver of loan for a subsidiary acquired under
common control business combination in prior year
Dividends paid
At 31 December 2015
23
23
993,454
–
–
26,920
–
–
3,780,542
529,477
(551,367)
4,800,916
529,477
(551,367)
993,454
–
26,920
–
3,758,652
758,518
4,779,026
758,518
–
–
(3,069)
–
–
(615,941)
(3,069)
(615,941)
993,454
23,851
3,901,229
4,918,534
Note 13
Note 14
Note 14
220
Total
equity
RM’000
INSPIRING CHANGE
BUSINESS OVERVIEW
STATEMENT OF
CASH
FLOWS
ACCOUNTABILITY
2015
RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid to suppliers and employees
2014
RM’000
24,647,481
(23,801,289)
32,431,475
(29,684,354)
Interest expenses paid
Taxation paid
846,192
–
(224,732)
2,747,121
(2,490)
(231,161)
Net cash generated from operating activities
621,460
2,513,470
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiary
Dividends received
Interest income from fund and other investments
Purchase of property, plant and equipment
Prepayment of leases
Proceeds from disposal of property, plant and equipment
Proceeds from redemption of redeemable preference shares
Advances to a subsidiary
–
23,400
52,760
(292,994)
(21,012)
9,550
8,000
(15,000)
(30,723)
11,700
21,252
(349,544)
(42,392)
8,862
–
–
(235,296)
(380,845)
(615,941)
–
(300,000)
(5,281)
(551,367)
(400,000)
300,000
(5,368)
(921,222)
(656,735)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
(535,058)
1,754,464
1,475,890
278,574
CASH AND CASH EQUIVALENTS AT END OF THE YEAR (Note 11)
1,219,406
1,754,464
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Net repayment of revolving credit
Net (repayment)/drawdown of Islamic medium term notes
Profit margin paid for Islamic medium term notes
Net cash used in financing activities
ANNUAL REPORT 2015
221
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
1.
NOTES TO THE
FINANCIAL
STATEMENTS
31 DECEMBER 2015
BASIS OF PREPARATION
1.1 Statement of Compliance
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of
Companies Act, 1965 in Malaysia.
These financial statements also comply with the applicable disclosure provisions of the Listing Requirements of
Bursa Malaysia Securities Berhad.
As of 1 January 2015, the Group and the Company adopted amendments to MFRS and IC Interpretations
(collectively referred to as “pronouncements”) that have been issued by the Malaysian Accounting Standards Board
(“MASB”) as described in Note 35.
The adoption of these pronouncements do not have any material impact to the financial statements of the Group
and of the Company.
MASB has also issued new and revised pronouncements which are not yet effective for the Group and the
Company and therefore have not been adopted in these financial statements. These pronouncements are set out
in Note 36.
These financial statements were approved and authorised for issue by the Board of Directors on 19 February 2016.
1.2 Basis of Measurement
The financial statements of the Group and the Company have been prepared on historical cost basis except for,
as disclosed in the accounting policies below, certain items which are measured at fair value.
1.3 Functional and Presentation Currency
The individual financial statements of each entity in the Group are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). The Group’s and the Company’s
financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.
1.4 Use of Estimates and Judgements
The preparation of financial statements in conformity with MFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
222
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
1.
BASIS OF PREPARATION (CONTINUED)
1.4 Use of Estimates and Judgements (continued)
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements are
described in the following notes:
(i) Note 2.4 and Note 3
: Property, Plant and Equipment;
(ii) Note 2.5 and Note 4
: Prepaid Lease Payments;
(iii) Note 10
: Trade and Other Receivables;
(iv) Note 2.12 and Note 18
: Other Long Term Liabilities and Provisions;
(v) Note 2.14 and Note 17 : Deferred Tax;
(vi) Note 2.19 and Note 19 : Deferred Revenue; and
(vii)Note 2.22 and Note 29
2.
: Financial Instruments
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial
statements and have been applied consistently by the Group and the Company, unless otherwise stated.
2.1 Basis of Consolidation
Subsidiaries
Subsidiaries are entities controlled by the Company. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. Potential voting rights are considered when assessing control only when such rights are
substantive. The Group considers it has de facto power over an investee when, despite not having the majority of
voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s
return.
The financial statements of subsidiaries are included in the consolidated financial statements of the Group from
the date that control commences until the date that control ceases.
All inter-companies transactions are eliminated on consolidation and revenue and profits relate to external
transactions only. Unrealised losses resulting from inter-companies transactions are also eliminated unless cost
cannot be recovered.
ANNUAL REPORT 2015
223
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
2.
NOTES TO THE
FINANCIAL STATEMENTS (continued)
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1 Basis of Consolidation (continued)
Business Combinations
A business combination is a transaction or other event in which an acquirer obtains control of one or more
businesses. Business combinations are accounted for using the acquisition method. The identifiable assets acquired
and liabilities assumed are measured at their fair values at the acquisition date. The cost of an acquisition is
measured as the aggregate of the fair value of the consideration transferred and the amount of any non-controlling
interests in the acquiree. Non-controlling interests are stated either at fair value or at the proportionate share of
the acquiree’s identifiable net assets at the acquisition date.
When a business combination is achieved in stages, the Group remeasures its previously held non-controlling
equity interest in the acquiree at fair value at the acquisition date, with any resulting gain or loss recognised in the
profit or loss. Increase in the Group’s ownership interest in an existing subsidiary is accounted for as equity
transactions with differences between the fair value of consideration paid and the Group’s proportionate share of
net assets acquired, recognised directly in equity.
The Group measures goodwill as the excess of the cost of an acquisition as defined above and the fair values of
any previously held interest in the acquiree over the fair value of the identifiable assets acquired and liabilities
assumed at the acquisition date. When the excess is negative, a bargain purchase gain is recognised immediately
in profit or loss.
Goodwill arising from business combinations prior to 1 October 2009 is stated at the previous carrying amount
less subsequent impairments, pursuant to the adoption of MFRS framework by the Group in the financial year
ended 31 December 2012.
Transaction costs, other than those associated with the issuance of debt or equity securities that the Group incurs
in connection with a business combination, are expensed as incurred.
Non-controlling Interests
Non-controlling interests at the reporting period, being the portion of the net assets of subsidiaries attributable to
equity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are
presented in the consolidated statement of financial position and statement of changes in equity within equity,
separately from equity attributable to the equity shareholders of the Company. Non-controlling interests in the
results of the Group are presented in the consolidated statement of profit or loss and other comprehensive income
as an allocation of the profit or loss and other comprehensive income for the year between the non-controlling
interests and shareholders of the Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even
if doing so causes the non-controlling interests to have a deficit balance.
224
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
2.
2.1 Basis of Consolidation (continued)
Non-controlling Interests (continued)
The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as
equity transactions between the Group and its non-controlling interest holders. Any difference between the
Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or
against Group reserves.
Loss of Control
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any
non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit
arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous
subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted
for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence
retained.
2.2Associates
Associates are entities in which the Group has significant influence including representation on the Board of
Directors, but not control or joint control, over the financial and operating policies of the investee company.
Associates are accounted for in the consolidated financial statements using the equity method. The consolidated
financial statements include the Group’s share of post-acquisition profits or losses and other comprehensive
income of the equity accounted associates, after adjustments to align the accounting policies with those of the
Group, from the date that significant influence commences until the date that significant influence ceases.
The Group’s share of post-acquisition reserves and retained profits less losses is added to the carrying value of
the investment in the consolidated statement of financial position. These amounts are taken from the latest audited
financial statements or management financial statements of the associates.
When the Group’s share of post-acquisition losses exceeds its interest in an equity accounted associate, the
carrying amount of that interest (including any long term investments) is reduced to nil and the recognition of
further losses is discontinued except to the extent that the Group has an obligation or has made payments on
behalf of the associate.
When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the
entire interest in that associate, with the resulting gain or loss being recognised in profit or loss. Any retained
interest in the former associate at the date when significant influence is lost is remeasured at fair value and this
amount is regarded as the initial carrying amount of a financial asset.
ANNUAL REPORT 2015
225
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
2.
NOTES TO THE
2.2 Associates (continued)
When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any
retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in profit
or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified
proportionately to the profit or loss, if that gain or loss would be required to be reclassified to profit or loss on
the disposal of the related assets and liabilities.
Investments in associates are measured in the Company’s statement of financial position at cost less any
impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments
includes transactions costs.
Unrealised profits arising from transactions between the Group and its associates are eliminated to the extent of
the Group’s interests in the associates. Unrealised losses on such transaction are also eliminated partially, unless
cost cannot be recovered.
2.3 Joint Arrangements
Joint arrangements are arrangements in which the Group has joint control, established by contracts requiring
unanimous consent for decisions about the activities that significantly affect the arrangements’ returns.
Joint arrangements are classified as either joint operation or joint venture. A joint arrangement is classified as joint
operation when the Group or the Company has rights to the assets and obligations for the liabilities relating to an
arrangement. The Group and the Company account for each of its share of the assets, liabilities and transactions,
including its share of those held or incurred jointly with the other investors, in relation to the joint operation. A
joint arrangement is classified as joint venture when the Group has rights only to the net assets of the arrangements.
The Group accounts for its interest in the joint venture using the equity method.
2.4 Property, Plant and Equipment
Freehold land and projects-in-progress are stated at cost less accumulated impairment losses and are not
depreciated. Other property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly
attributable to bringing the assets to working condition for their intended use, and the costs of dismantling and
removing the items and restoring the site on which they are located. The cost of self-constructed assets also
includes the costs of materials and direct labour. For qualifying asset, borrowing costs are capitalised in accordance
with the accounting policy on borrowing costs. Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
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2.4 Property, Plant and Equipment (continued)
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component will flow
to the Group or the Company and its cost can be measured reliably. The carrying amount of the replaced item
of property, plant and equipment is derecognised with any corresponding gain or loss recognised in the profit or
loss accordingly. The costs of the day-to-day servicing of property, plant and equipment are recognised in the
profit or loss as incurred.
Depreciation for property, plant and equipment other than freehold land and projects-in-progress, is recognised
in the profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property,
plant and equipment.
Property, plant and equipment are not depreciated until the assets are ready for their intended use.
Buildings are depreciated over 20 – 30 years or over the remaining land lease year, whichever is shorter.
Lease properties are depreciated over the lease term or the estimated useful lives, whichever is shorter. Leasehold
land is depreciated over the lease term. The leasehold land are categorised into long lease and short lease. Long
lease is defined as a lease with an unexpired lease year of fifty years or more. Short lease is defined as a lease
with an unexpired lease year of less than fifty years.
The estimated useful lives of the other property, plant and equipment are as follows:
•
•
•
•
Plant, machinery, tankage and pipeline
Office equipment, furniture and fittings
Motor vehicles
Computer hardware and software
2
3
4
5
– 30 years
– 10 years
– 15 years
years
The depreciable amount is determined after deducting residual value. The residual value, useful life and depreciation
method are reviewed at each financial year end to ensure that the amount, period and method of depreciation
are consistent with previous estimates and the expected pattern of consumption of the future economic benefits
embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying
amount is recognised in the profit or loss.
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NOTES TO THE
2.5 Leased Assets
A lease arrangement is accounted for as finance or operating lease in accordance with the accounting policy
stated below. When the fulfilment of an arrangement is dependent on the use of a specific asset and the
arrangement conveys a right to use the asset, it is accounted for as a lease although the arrangement does not
take the legal form of a lease.
(i) Finance Lease
A lease is recognised as a finance lease if it transfers substantially to the Group and the Company all the risks
and rewards incidental to ownership. Upon initial recognition, the leased asset is measured at an amount
equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial
recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. The
corresponding liability is included in the statement of financial position as borrowings.
Minimum lease payments made under finance leases are apportioned between the finance costs and the
reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing
commitments and the fair value of the assets acquired, are recognised in the profit or loss and allocated over
the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each accounting period.
(ii) Prepaid Lease Payments
Leases of a leasehold land which in substance is a finance lease is classified as property, plant and equipment.
The remaining leases of a leasehold land which is not in substance a finance lease, together with prepaid
rental for service station sites and depots, are operating leases and recognised as prepaid lease payments.
The payment made on entering into or acquiring such leasehold land and prepaid rental arrangement is
amortised over the lease term in accordance with the pattern of benefits provided.
Prepaid lease payments are recognised as an expense in the profit or loss on a straight-line basis over the
term of the lease or the year of the agreements.
2.6Investments
Long term investments in subsidiaries, associates and joint ventures are stated at cost less impairment loss, if any,
in the Company’s financial statements, unless the investment is classified as held for sale or distribution. The cost
of investments includes transaction costs.
The carrying amount of these investments includes fair value adjustments on shareholder’s loans and advances, if
any.
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2.
2.7 Non-Current Assets Held for Sale
Non-current assets and disposal groups comprising assets and liabilities that are expected to be recovered primarily
through sale rather than through continuing use, are classified as held for sale. This condition is regarded as met
only when the sale is highly probable and the asset is available for immediate sale in its present condition.
Immediately before classification as held for sale, the assets (or all the assets and liabilities in a disposal group) are
remeasured in accordance with the Group’s applicable accounting policies. Thereafter, on initial classification as
held for sale, the assets or disposal group are measured at the lower of carrying amount and fair value less cost
to sell. Any differences are charged to the profit or loss.
Intangible assets, property, plant and equipment and investment properties once classified as held for sale are not
amortised or depreciated. In addition, equity accounting of equity-accounted investees ceases once classified as
held for sale.
2.8 Financial Instruments
A financial instrument is recognised in the statement of financial position when, and only when, the Group or the
Company becomes a party to the contractual provisions of the instrument.
(i) Financial Assets
Initial Recognition
Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, heldto-maturity investments or available-for-sale financial assets, as appropriate. The Group and the Company
determine the classification of financial assets at initial recognition.
Financial assets are recognised initially at fair value, normally being the transaction price plus, in the case of
financial assets not at fair value through profit or loss, any directly attributable transaction costs.
Purchases or sales that require delivery of financial assets within a timeframe established by regulation or
convention in the marketplace concerned (“regular way purchases”) are recognised on the trade date i.e. the
date that the Group and the Company commit to purchase or sell the financial asset.
Fair value adjustments on shareholder’s loans and advances at initial recognition, if any, are added to the
carrying value of investments in the Company’s financial statements.
ANNUAL REPORT 2015
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NOTES TO THE
2.8 Financial Instruments (continued)
(i) Financial Assets (continued)
Subsequent Measurement
Financial assets at fair value through profit or loss
Fair value through profit or loss category comprises financial assets that are held for trading, including
derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging
instrument), contingent consideration in a business combination and financial assets that are specifically
designated into this category upon initial recognition.
Financial assets categorised as fair value through profit or loss are subsequently measured at their fair value with
gains or losses recognised in the profit or loss. The methods used to measure fair value are stated in Note 2.22.
Loans and receivables
Loans and receivables category comprises debt instruments that are not quoted in an active market.
Subsequent to initial recognition, financial assets categorised as loans and receivables are measured at
amortised cost using the effective interest method.
Held-to-maturity investments
Held-to-maturity investments category comprises debt instruments that are quoted in an active market and
the Group or the Company has positive intention and ability to hold the assets to maturity. Subsequent to
initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest
method.
The Group and the Company did not have any held-to-maturity investments during the year ended 31
December 2015.
Available-for-sale financial assets
Available-for-sale category comprises investment in equity and debt securities instruments that are not held
for trading.
Investments in equity instruments that do not have a quoted market price in an active market and whose fair
value cannot be reliably measured are measured at cost. Other financial assets categorised as available-forsale are subsequently measured at fair value with unrealised gains and losses recognised directly in other
comprehensive income and accumulated under available-for-sale reserve in equity until the investment is
derecognised or determined to be impaired, at which time the cumulative gain or loss previously recorded in
equity is recognised in the profit or loss.
The Group and the Company did not have any available-for-sale investments during the year ended 31
December 2015.
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2.
(ii) Financial Liabilities
Initial Recognition
Financial liabilities are classified as financial liabilities at fair value through profit or loss or loans and
borrowings, as appropriate. The Group and the Company determine the classification of financial liabilities at
initial recognition.
Financial liabilities are recognised initially at fair value less, in the case of loans and borrowings, any directly
attributable transaction costs.
Subsequent Measurement
Financial liabilities at fair value through profit or loss
Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a
derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent
consideration in a business combination and financial liabilities that are specifically designated into this
category upon initial recognition.
Financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair value
with gains or losses recognised in the profit or loss.
Loans and borrowings
Subsequent to initial recognition, loans and borrowings are measured at amortised cost using the effective
borrowing cost/interest method.
Gains and losses are recognised in the profit or loss when the liabilities are derecognised as well as through
the amortisation process.
(iii) Derivative financial instruments
The Group and the Company use derivative financial instruments such as forward rate contracts to manage
certain exposures to fluctuations in foreign currency exchange rates.
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when
the fair value is positive and as financial liabilities when the fair value is negative.
Any gains and losses arising from changes in fair value on derivatives during the year are taken directly to the
profit or loss.
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FINANCIAL REVIEW
ACHIEVEMENTS
2.
NOTES TO THE
(iii) Derivative financial instruments (continued)
An embedded derivative is recognised separately from the host contract and accounted for as a derivative if,
and only if, it is not closely related to the economic characteristics and risks of the host contract and the
host contract is not categorised as at fair value through profit or loss. The host contract, in the event an
embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the
nature of the host contract.
In general, contracts to sell or purchase non-financial items to meet expected own use requirements are not
accounted for as financial instruments. However, contracts to sell or purchase commodities that can be net
settled or which contain written options are required to be recognised at fair value, with gains and losses
taken to the profit or loss.
(iv) Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial
position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
(v) Amortised Cost of Financial Instruments
Amortised cost is computed using the effective interest method. This method uses effective interest rate that
exactly discounts estimated future cash receipts or payments through the expected life of the financial
instrument to the net carrying amount of the financial instrument. Amortised cost takes into account any
transaction costs and any discount or premium on settlement.
(vi) Derecognition of Financial Instruments
Financial Assets
A financial asset is derecognised when the rights to receive cash flows from the asset have expired or, the
Group and the Company have transferred their rights to receive cash flows from the asset or have assumed
an obligation to pay the received cash flows in full without material delay to a third party under a “passthrough” arrangement without retaining control of the asset or substantially all the risks and rewards of the
asset. On de-recognition of a financial asset, the difference between the carrying amount and the sum of the
consideration received (including any new asset obtained less any new liability assumed) and any cumulative
gain or loss that had been recognised in equity is recognised in the profit or loss.
Financial Liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.
On de-recognition of a financial liability, the difference between the carrying amount of the financial liabilities
extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in the profit or loss.
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2.
2.9Impairment
(i) Financial Assets
All financial assets (except for financial assets categorised as fair value through profit or loss, investments in
subsidiaries and investments in associates and investments in joint ventures) are assessed at each reporting
date to determine whether there is any objective evidence of impairment as a result of one or more events
having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events,
no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged
decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence
exists, then the financial asset’s recoverable amount is estimated.
An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in
profit or loss and is measured as the difference between the asset’s carrying amount and the present value
of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount
of the asset is reduced through the use of an allowance account.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is
measured as the difference between the asset’s acquisition cost (net of any principal repayment and
amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a
decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive
income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or
loss and is measured as the difference between the financial asset’s carrying amount and the present value
of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as availablefor-sale are not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss
is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would
have been had the impairment not been recognised at the date the impairment is reversed. The amount of
the reversal is recognised in profit or loss.
ANNUAL REPORT 2015
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LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
2.
NOTES TO THE
2.9 Impairment (continued)
(ii) Other Assets
The carrying amounts of other assets, other than inventories, amount due from contract customers, deferred
tax assets and financial assets (financial assets in this context exclude investments in subsidiaries, associates
and joint ventures), are reviewed at each reporting date to determine whether there is any indication of
impairment.
If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised if
the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable
amount. Impairment losses are recognised in the profit or loss.
A cash-generating unit is the smallest identifiable asset group that generates cash flows from continuing use
that are largely independent from other assets and groups. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and
then to reduce the carrying amounts of the other assets in the unit on a pro-rata basis.
The recoverable amount is the greater of the asset’s fair value less cost to sell and its value in use. In assessing
the value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
An impairment loss in respect of goodwill is not reversed in the subsequent year. In respect of other assets,
impairment losses are reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
Reversals of impairment losses are credited to the profit or loss in the year in which the reversals are
recognised, unless it reverses an impairment loss on a revalued asset, in which case it is credited directly to
revaluation surplus. Where an impairment loss on the same revalued asset was previously recognised in the
profit or loss, a reversal of that impairment loss is also recognised in the profit or loss.
2.10Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, bank balances and deposits with licensed financial institutions
and highly liquid investments which have insignificant risk of changes in value. For the purpose of the statements
of cash flows, cash and cash equivalents are presented net of bank overdrafts and deposits restricted, if any.
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2.
2.11Inventories
Inventories of petroleum products and non-tradeable spare parts are stated at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses.
Cost of petroleum products includes direct costs and transportation charges necessary to bring the inventories
to their present locations and condition and is determined on the weighted average basis.
The cost of spare parts is the invoiced value from suppliers.
2.12Provisions
A provision is recognised if, as a result of a past event, the Group and the Company have a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are determined by discounting the expected future net cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. Where discounting is used, the accretion in the provision due to the passage of time is recognised
as finance cost.
The amount recognised as a provision is the best estimate of the expenditure required to settle the present
obligation at the reporting date. Provisions are reviewed at each reporting date and adjusted to reflect the current
best estimate.
Possible obligations whose existence will only be confirmed by the occurrence or non-occurrence of one or
more future events not wholly within the control of the Group, are not recognised in the financial statements
but are disclosed as contingent liabilities unless the possibility of an outflow of economic resources is considered
remote.
In particular, information about provisions that has the most significant effect on the amount recognised in the
financial statements is described in Note 18.
2.13 Employee Benefits
(i) Short Term Benefits
Wages and salaries, bonuses and social security contributions are recognised as an expense in the year in
which the associated services are rendered by employees of the Group and the Company.
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2.
NOTES TO THE
2.13 Employee Benefits (continued)
(ii) Defined Contribution Plans
As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees
Provident Fund (“EPF”).
Some of the Group’s foreign subsidiaries make contributions to their respective countries’ statutory pension
schemes and certain other independently administered funds which are defined contribution plans.
Such contributions are recognised as an expense in the profit or loss as incurred.
2.14Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the profit
or loss except to the extent it relates to items recognised directly in equity, in which case it is recognised in
equity.
(i) Current Tax
Current tax expense is the expected tax payable on the taxable income for the year, using the statutory tax
rates at the reporting date, and any adjustment to tax payable in respect of previous years.
(ii) Deferred Tax
Deferred tax is provided for, using the liability method, on temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In
principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets
are recognised for all deductible temporary differences, unabsorbed capital allowances, unused tax losses and
unused tax credits to the extent that it is probable that future taxable profit will be available against which
the deductible temporary differences, unabsorbed capital allowances, unused tax losses and unused tax
credits can be utilised.
Deferred tax is not recognised if the temporary difference arises from initial recognition of goodwill or from
the initial recognition of an asset or liability in a transaction which is not a business combination and at the
time of the transaction, affects neither accounting profit nor taxable profit nor loss.
Deferred tax is measured at the tax rates that are expected to apply in the period when the assets is realised
or the liability is settled, based on the laws that have been enacted or substantively enacted by the end of
the reporting period.
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2.
2.14Taxation (continued)
(ii) Deferred Tax (continued)
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or
on different tax entities, where they intend to settle current tax liabilities and assets on a net basis or their
tax assets and liabilities will be realised simultaneously.
Deferred tax asset is reviewed at each reporting date and is reduced to the extent that it is no longer
probable that the future taxable profit will be available against which related tax benefit can be realised.
2.15 Foreign Currency Transactions
In preparing the financial statements of individual entities in the Group, transactions in currencies other than the
entity’s functional currency (foreign currencies) are translated to the functional currencies at rates of exchange
ruling on the transaction dates.
Monetary assets and liabilities denominated in foreign currencies at the reporting date have been retranslated to
the functional currency at rates ruling on the reporting date.
Non-monetary assets and liabilities denominated in foreign currencies, which are measured at fair value, are
retranslated to the functional currency at the foreign exchange rates ruling at the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost in foreign currency are not
retranslated.
Gains and losses on exchange arising from retranslation are recognised in the profit or loss, except for differences
arising on the retranslation of available-for-sale equity instruments, which are recognised in equity.
On consolidation, the assets and liabilities of subsidiaries with functional currencies other than Ringgit Malaysia
are translated into Ringgit Malaysia at the exchange rates approximating those ruling at reporting date except for
goodwill and fair value adjustments arising from business combinations before 1 April 2011 which are treated as
assets and liabilities of the acquirer company pursuant to the adoption of MFRS framework.
The income and expenses are translated at the average exchange rates for the year, which approximates the
exchange rates at the dates of the transactions. All resulting exchange differences are taken to the foreign
currency translation reserve within equity.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable to the
Group’s foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses
arising from such a monetary item are considered to form part of a net investment in a foreign operation and
are reclassified to other comprehensive income and accumulated under foreign currency translation reserve in
equity. Upon disposal of the investment, the cumulative exchange differences previously recorded in equity are
recognised in the consolidated profit or loss.
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2.
NOTES TO THE
2.16Borrowing Costs and Foreign Currency Exchange Differences Relating to Projects-in-Progress
Borrowing costs which are directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to be prepared for their intended use or sale,
are capitalised as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditures for
the assets is being incurred, borrowing cost are being incurred and activities that are necessary to prepare the
asset for its intended use or sale are in progress. Capitalisation of borrowing costs ceases when all activities
necessary to prepare the qualifying asset for its intended use are completed.
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is the weighted
average of the borrowing costs applicable to borrowings that are outstanding during the year, other than
borrowings made specifically for the purpose of financing a specific project-in-progress, in which case the actual
borrowing cost incurred on that borrowing less any investment income on the temporary investment of that
borrowings will be capitalised.
Exchange differences arising from foreign currency borrowings, although regarded as an adjustment to borrowings
costs, are not capitalised but instead recognised in the profit or loss in the period in which they arise.
2.17Revenue
Revenue from sale of petroleum products is recognised in the profit or loss when the significant risks and rewards
of ownership have been transferred to the buyer.
Revenue from services rendered is recognised in the profit or loss based on the value of services performed
during the year.
2.18Financing Costs
Financing costs comprise of interest payable on borrowings and profit share margin on Islamic Financing Facilities
and unwinding of discount for provision of dismantling, removal and restoration costs.
All interest and other costs incurred in connection with borrowings are expensed as incurred, other than those
capitalised in accordance with the accounting standard stated in Note 2.16. The financing costs on borrowings
are recognised using the effective profit/interest method.
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2.
2.19PETRONAS Mesra Loyalty Programme
PETRONAS Mesra Loyalty Programme is an in-house loyalty programme where members are awarded with
PETRONAS Mesra points at the point of sale made at PETRONAS stations and Kedai Mesra. The monetary value
attributed to the awarded points is treated as deferred revenue and only recognised as revenue in the profit or
loss on redemption, cancellation and expiration of the points. Currently, members can redeem the awarded points
for purchase of fuel at PETRONAS Stations or items at Kedai Mesra.
On an annual basis, fair value of the deferred revenue will be estimated by reference to the monetary value
attributable to the awarded points and points redemption profile. This accounting treatment is in line with IC
Interpretation 13, Customer Loyalty Programmes.
2.20Earnings Per Ordinary Share
The Group presents basic earnings per ordinary share (“EPS”) data for its ordinary shares.
Basic EPS is calculated by dividing the profit and loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period.
2.21 Operating Segments
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components, and for which discrete financial information is available. An operating segment’s operating
results are reviewed regularly by the Group’s chief operating decision maker, which is the Board of Directors of
the Company, to make decisions about resources to be allocated to the segment and assess the Group’s
performance.
2.22Fair Value Measurements
Fair value of an asset or a liability, except for lease transactions, is determined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes
place either in the principal market or in the absence of a principal market, in the most advantageous market.
(i) Financial instruments
The fair value of financial instruments that are actively traded in organised financial markets is determined by
reference to quoted market bid prices at the close of business at the end of reporting date. For financial
instruments where there is no active market, fair value is determined using valuation techniques. Such
techniques may include using recent arm’s length market transactions; reference to the current fair value of
another instrument that is substantially the same; discounted cash flow analysis or other valuation models.
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ACHIEVEMENTS
2.
NOTES TO THE
2.22Fair Value Measurements (continued)
(ii) Non-financial assets
For non-financial assets, the fair value measurement takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use.
When measuring the fair value of an asset or a liability, the Group uses observable market data as much as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the input used in the
valuation technique as follows:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 –
Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 –
Inputs for the asset or liability that are not based on observable market data (unobservable
input).
The fair value of an asset to be transferred between levels is determined as of the date of the event or change
in circumstances that caused the transfer.
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3.
PROPERTY, PLANT AND EQUIPMENT
Group
At cost
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
Projects-in-progress
At
1.1.2015
RM’000
Additions
RM’000
Disposals/
Write-offs
RM’000
Transfers
RM’000
Transfer
to disposal
group held
for sale
RM’000
1,057,864
–
(6,885)
(32,869)
–
1,018,110
560,589
12,262
2,081,657
2,312,698
428,955
65,061
567,941
403,608
628
–
441
44,228
6,771
1,810
13,365
263,787
(824)
–
(4,372)
(58,584)
(5,125)
(763)
(1,190)
(63)
42,325
3,282
36,142
184,880
28,665
10,763
11,625
(284,813)
–
–
(3,519)
(38,805)
(294)
(2,592)
(425)
–
602,718
15,544
2,110,349
2,444,417
458,972
74,279
591,316
382,519
7,490,635
331,030
(77,806)
–
(45,635)
7,698,224
At
31.12.2015
RM’000
Note 12
Group
Accumulated depreciation and
impairment losses
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
Transfers
RM’000
Transfer
to disposal
group held
for sale
RM’000
At
31.12.2015
RM’000
–
–
–
809
13,918
333
96,976
161,869
31,499
5,109
31,761
–
(201)
–
(2,041)
(43,899)
(5,183)
(711)
(1,194)
–
–
–
–
231
–
–
(231)
–
–
–
(1,751)
(34,582)
(294)
(2,377)
(414)
–
88,934
5,165
1,241,911
1,488,115
315,275
61,662
506,488
–
341,465
(53,229)
–
(39,418)
3,708,359
At
1.1.2015
RM’000
Depreciation
charge for
the year
RM’000
Disposals/
Write-offs
RM’000
809
–
75,217
4,832
1,148,727
1,404,496
289,253
59,641
476,566
–
3,459,541
Note 12
ANNUAL REPORT 2015
241
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
3.
NOTES TO THE
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Group
At cost
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
Group
Accumulated depreciation and
impairment losses
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
242
At
1.1.2014
RM’000
Additions
RM’000
Disposals/
Write-offs
RM’000
Transfers
RM’000
Transfer
to disposal
group held
for sale
RM’000
1,036,132
–
(2,782)
24,514
–
1,057,864
537,011
12,262
2,021,775
2,051,128
387,261
63,126
524,944
504,272
–
–
412
35,456
6,158
1,066
25,210
397,686
–
–
(13,994)
(83,517)
(4,781)
(2,777)
(1,442)
(3,971)
23,578
–
73,464
309,631
40,317
3,646
19,229
(494,379)
–
–
–
–
–
–
–
–
560,589
12,262
2,081,657
2,312,698
428,955
65,061
567,941
403,608
7,137,911
465,988
(113,264)
–
–
7,490,635
At
1.1.2014
RM’000
Depreciation
charge for
the year
RM’000
Disposals/
Write-offs
RM’000
Transfers
RM’000
Transfer
to disposal
group held
for sale
RM’000
At
31.12.2014
RM’000
1,202
–
(393)
–
–
809
67,290
4,556
1,066,766
1,333,062
266,040
59,003
448,043
–
8,054
276
93,932
150,591
29,390
2,417
29,356
–
(127)
–
(11,971)
(79,157)
(6,177)
(1,779)
(833)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75,217
4,832
1,148,727
1,404,496
289,253
59,641
476,566
–
3,245,962
314,016
(100,437)
–
–
3,459,541
At
31.12.2014
RM’000
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
3.
Group
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
Carrying amounts
2015
2014
RM’000
RM’000
1,017,301
1,057,055
513,784
10,379
868,438
956,302
143,697
12,617
84,828
382,519
485,372
7,430
932,930
908,202
139,702
5,420
91,375
403,608
3,989,865
4,031,094
ANNUAL REPORT 2015
243
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
3.
NOTES TO THE
Company
At cost
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
Company
Accumulated depreciation
and impairment losses
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
244
Disposals/
Write-offs
RM’000
At
31.12.2015
RM’000
At
1.1.2015
RM’000
Additions
RM’000
1,057,864
–
(6,885)
(32,869)
1,018,110
550,989
12,262
2,051,110
1,720,242
426,543
56,556
554,795
402,073
–
–
36
9,348
4,621
–
11,916
233,579
(810)
–
(4,372)
(52,159)
(4,874)
(447)
(1,101)
–
42,325
3,282
36,142
184,824
28,078
10,763
11,317
(283,862)
592,504
15,544
2,082,916
1,862,255
454,368
66,872
576,927
351,790
6,832,434
259,500
(70,648)
At
1.1.2015
RM’000
Depreciation
charge for
the year
RM’000
809
–
70,069
4,832
1,125,423
1,147,850
287,377
54,181
465,780
–
13,099
333
95,365
124,244
30,909
3,853
30,863
–
3,156,321
298,666
Transfers
RM’000
–
7,021,286
Disposals/
Write-offs
RM’000
Transfers
RM’000
At
31.12.2015
RM’000
–
–
809
(187)
–
(2,041)
(39,330)
(4,936)
(447)
(1,106)
–
–
–
–
–
–
–
–
–
82,981
5,165
1,218,747
1,232,764
313,350
57,587
495,537
–
(48,047)
–
3,406,940
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
3.
Company
At cost
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
Company
and impairment losses
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
At
1.1.2014
RM’000
Additions
RM’000
Disposals/
Write-offs
RM’000
Transfers
RM’000
At
31.12.2014
RM’000
1,036,121
–
(2,782)
24,525
1,057,864
527,859
12,262
1,993,414
1,714,162
387,105
58,078
513,550
277,521
–
–
399
10,315
5,595
1,036
23,496
389,470
–
–
(13,994)
(89,095)
(4,438)
(2,558)
(1,111)
(3,971)
23,130
–
71,291
84,860
38,281
–
18,860
(260,947)
550,989
12,262
2,051,110
1,720,242
426,543
56,556
554,795
402,073
6,520,072
430,311
(117,949)
–
6,832,434
At
1.1.2014
RM’000
Depreciation
charge for
the year
RM’000
Disposals/
Write-offs
RM’000
Transfers
RM’000
At
31.12.2014
RM’000
1,202
–
(393)
–
809
62,847
4,556
1,045,797
1,117,124
261,576
55,073
437,810
–
7,349
276
92,370
115,126
29,107
1,501
28,796
–
(127)
–
(12,744)
(84,400)
(3,306)
(2,393)
(826)
–
–
–
–
–
–
–
–
–
70,069
4,832
1,125,423
1,147,850
287,377
54,181
465,780
–
2,985,985
274,525
(104,189)
–
3,156,321
ANNUAL REPORT 2015
245
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
3.
NOTES TO THE
Company
Freehold land
Leasehold land
– Long lease
– Short lease
Buildings
Motor vehicles
Carrying amounts
2015
2014
RM’000
RM’000
1,017,301
1,057,055
509,523
10,379
864,169
629,491
141,018
9,285
81,390
351,790
480,920
7,430
925,687
572,392
139,166
2,375
89,015
402,073
3,614,346
3,676,113
Restrictions of land title
The titles to certain freehold and leasehold land are in the process of being registered in the Company’s name.
Additions to projects-in-progress
Included in addition to project-in-progress is the following:
i.
Borrowing cost of the Islamic financing facilities of the Group amounting to RM NIL (2014: RM1,550,000). In the
previous year, the borrowing cost rate of the Islamic financing facilities capitalised ranged from 3.85% to 4.10% per
annum.
246
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
4. PREPAID LEASE PAYMENTS
Disposals/
Write-offs
RM’000
At
31.12.2015
RM’000
Group and Company
At
1.1.2015
RM’000
Additions
RM’000
At cost
Leasehold land
Prepaid rental
51,804
719,683
–
18,094
(57)
(3,791)
51,747
733,986
771,487
18,094
(3,848)
785,733
Group and Company
At
1.1.2015
RM’000
Charge for
the year
RM’000
Accumulated amortisation
Leasehold land
Prepaid rental
29,067
241,512
1,421
25,101
(57)
(3,261)
30,431
263,352
270,579
26,522
(3,318)
293,783
Group and Company
At
1.1.2014
RM’000
Additions
RM’000
Disposals/
Write-offs
RM’000
At
31.12.2014
RM’000
At cost
Leasehold land
Prepaid rental
51,907
684,684
1,106
38,033
(1,209)
(3,034)
51,804
719,683
736,591
39,139
(4,243)
771,487
At
1.1.2014
RM’000
Charge for
the year
RM’000
Disposals/
Write-offs
RM’000
At
31.12.2014
RM’000
28,365
219,500
1,596
25,025
(894)
(3,013)
29,067
241,512
247,865
26,621
(3,907)
270,579
Group and Company
Accumulated amortisation
Leasehold land
Prepaid rental
Disposals/
Write-offs
RM’000
At
31.12.2015
RM’000
ANNUAL REPORT 2015
247
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
4. PREPAID LEASE PAYMENTS (CONTINUED)
Group and Company
Carrying amounts
2015
2014
RM’000
RM’000
Leasehold land
Prepaid rental
21,316
470,634
22,737
478,171
491,950
500,908
Restrictions of land title
The titles to certain leasehold land are in the process of being registered in the Company’s name.
5.
INVESTMENTS IN SUBSIDIARIES
Company
2015
2014
RM’000
RM’000
283,425
Unquoted shares at cost
254,721
During the year, the Company had:
i. subscribed to ordinary shares of a subsidiary amounting to RM3,000,000;
ii. subscribed to redeemable preference shares of a subsidiary amounting to RM30,309,000; and
iii. redeemed preference shares of a subsidiary amounting to RM4,605,000.
Details of the subsidiaries are stated in Note 32 to the financial statements.
6.
INVESTMENTS IN ASSOCIATES
Group
Share of post-acquisition profits and reserves
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
1,959
1,056
1,959
822
1,959
–
1,959
–
3,015
2,781
1,959
1,959
Security
The assets of an associate with the cost of RM12,637,000 (2014: RM10,779,000) have been pledged as security for the
term loan facility of a subsidiary as set out in Note 16 to the financial statements.
248
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
6.
INVESTMENTS IN ASSOCIATES (CONTINUED)
Summary of financial information on associates:
Group
Total assets (100%)
Total liabilities (100%)
Revenue (100%)
Profit/Total comprehensive income (100%)
2015
RM’000
2014
RM’000
45,429
35,446
15,568
1,548
37,760
28,368
14,053
998
Details of the associates are stated in Note 33 to the financial statements.
7.
INVESTMENTS IN JOINT VENTURES
Group
Share of post-acquisition profits and reserves
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
1,053
9,228
1,053
5,683
25
–
25
–
10,281
6,736
25
25
Summary of financial information on joint ventures:
Group
Total assets (100%)
Total liabilities (100%)
Revenue (100%)
Profit/Total comprehensive income (100%)
2015
RM’000
2014
RM’000
80,470
37,020
264,252
8,996
99,393
50,411
281,629
5,224
Details of the joint ventures are stated in Note 34 to the financial statements.
ANNUAL REPORT 2015
249
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
8.
NOTES TO THE
LONG TERM RECEIVABLE
Group
Loan to a subsidiary
2015
RM’000
2014
RM’000
14,231
26,507
The loan to a subsidiary is unsecured, interest-bearing at 3.05% (2014: 2.82%) per annum charged semi-annually and
is repaid in instalments until maturity on 15 April 2020.
9.INVENTORIES
Group
Petroleum products
Others
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
621,484
4,074
1,026,217
5,740
556,560
–
987,556
–
625,558
1,031,957
556,560
987,556
23,110,473
6,723
7,648
30,404,491
4,878
3,838
22,430,146
–
5,539
30,051,715
–
3,838
23,124,844
30,413,207
22,435,685
30,055,553
Recognised in profit or loss:
Inventories recognised as cost of sales
Write-down to net realisable value
Inventory written off
Inventory is carried at the lower of cost and net realisable value.
250
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
10. TRADE AND OTHER RECEIVABLES
Group
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
1,049,076
363,342
143,452
1,322,773
586,272
72,394
871,263
363,342
115,744
1,167,525
586,272
40,996
–
29,324
–
22,760
16,298
19,693
4,564
19,693
–
4,101
108,638
–
8,876
152,866
4,903
–
106,551
108,708
–
151,943
Less: Impairment losses
1,697,933
(48,681)
2,165,941
(46,797)
1,497,794
(36,397)
2,079,701
(36,370)
1,649,252
2,119,144
1,461,397
2,043,331
Trade receivables
Subsidy receivables
Other receivables, deposits and prepayments
Advances and loans to:
Subsidiaries
Associates and joint ventures
Amounts due from:
Subsidiaries
Related companies
The amounts due from subsidiaries, associates, joint ventures and related companies are unsecured and arose in the
normal course of business.
Included in advances and loans to subsidiaries are:
i.
an amount of RM15,000,000 (2014: RM NIL) relating to a shareholder advance to a subsidiary which is interestbearing at 3.90% (2014: NIL) per annum; and
ii. an amount of RM1,298,000 (2014: RM4,564,000) relating to the current portion of a shareholder loan to a
subsidiary which is interest-bearing at 3.05% (2014: 2.82%) per annum.
Other advances to subsidiaries and associates are unsecured, interest free and repayable on demand.
Included in subsidy receivables is an amount of RM89,900,000 in respect of subsidy claimed for diesel, which is
pending approval from the Government Authorities, whereby all relevant documentations to support these claims have
been submitted.
ANNUAL REPORT 2015
251
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
11. CASH AND CASH EQUIVALENTS
Group
Cash with PETRONAS Integrated Financial Shared
Services Centre
Cash and bank balances
Deposits placed with licensed banks
Company
2015
2104
RM’000
RM’000
2015
RM’000
2014
RM’000
1,224,508
25,064
9,065
1,721,909
106,294
11,481
1,211,753
7,653
–
1,684,523
69,941
–
1,258,637
1,839,684
1,219,406
1,754,464
A portion of the Group’s and Company’s cash and cash equivalents are held in the In-House Account (“IHA”) managed
by PETRONAS Integrated Financial Shared Services Centre (“IFSSC”) to enable more efficient cash management for the
Group and the Company.
Included in cash and cash equivalents of the Group are interest-bearing balances amounting to RM1,250,980,000
(2014: RM1,795,372,000).
12. DISPOSAL GROUP HELD FOR SALE
Following the Group’s commitment to sell two of its subsidiaries, the related assets and liabilities of the subsidiaries are
presented as assets/liabilities classified as held for sale. Efforts to sell the subsidiaries are ongoing and the transaction
is expected to complete in 2016.
Group
2015
Note
RM’000
Assets classified as held for sale:
Inventories
12.1
6,217
5,486
15,176
5,756
32,635
Liabilities classified as held for sale:
Borrowing
12.2
10,896
13,610
24,506
The carrying amounts of property, plant and equipment of the disposal group is the same as its carrying amounts
before it was being reclassified to current assets.
252
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
12. DISPOSAL GROUP HELD FOR SALE (CONTINUED)
Note 12.1
Property, plant and equipment held for sale comprise the following:
Cost
Note
Group
2015
RM’000
3
3
45,635
(39,418)
6,217
Note 12.2
Borrowing comprises an unsecured revolving credit which bears interest rate of 5.3% per annum.
13. SHARE CAPITAL
Number of shares
2015
2014
’000
’000
Amount
2015
RM’000
2014
RM’000
Group and Company
Authorised:
Ordinary shares of RM1.00 each
1,000,000
1,000,000
1,000,000
1,000,000
Issued and fully paid:
Ordinary shares of RM1.00 each
993,454
993,454
993,454
993,454
ANNUAL REPORT 2015
253
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
14.RESERVES
Capital reserve
Capital reserve arose as a result of business combination of entities under the common control of PETRONAS and
comprise merger deficit and capital contribution.
(i) Merger deficit
Merger deficit represents the excess of cost of acquisition over the Group’s interest in the net carrying value of
identifiable net assets, liabilities and contingent liabilities of the acquiree. Merger deficit is classified as part of nondistributable reserves.
(ii) Capital contribution
Capital contribution represents the excess of amount paid or payable to the Company over the cost of acquisition.
Capital contribution is classified as part of non-distributable reserves.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the
financial statements of subsidiaries whose functional currencies are different from that of the Company’s functional
currency as well as foreign currency differences arising from the translation of monetary items that are considered to
form part of a net investment in a foreign operation.
15. NON-CONTROLLING INTERESTS
This consists of the non-controlling interests’ proportion of share capital and reserves of a partly-owned subsidiary.
254
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
16.BORROWINGS
Group
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
10,066
8,586
–
–
71,376
–
17,057
34,277
300,000
16,775
–
–
–
–
300,000
–
98,499
359,638
–
300,000
27,681
32,197
–
–
85,640
102,529
–
–
113,321
134,726
–
–
Current
Secured
Term loan
Unsecured
Revolving credits
Islamic medium term notes
Islamic financing facilities
Non-current
Secured
Term loan
Unsecured
Terms and debt repayment schedule
Group
2015
Secured
Term loan
Unsecured
Revolving credits
Total
RM’000
Under
1 year
RM’000
1–2
years
RM’000
2–5
years
RM’000
Over 5
years
RM’000
37,747
10,066
10,066
17,615
–
71,376
102,697
71,376
17,057
–
17,685
–
57,114
–
10,841
174,073
88,433
17,685
57,114
10,841
ANNUAL REPORT 2015
255
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
16. BORROWINGS (CONTINUED)
Group
2014
Secured
Term loan
Unsecured
Revolving credits
Company
2014
Unsecured
Total
RM’000
Under
1 year
RM’000
1–2
years
RM’000
2–5
years
RM’000
Over 5
years
RM’000
40,783
8,586
8,586
23,611
–
34,277
300,000
119,304
34,277
300,000
16,775
–
–
17,352
–
–
55,690
–
–
29,487
453,581
351,052
17,352
55,690
29,487
300,000
300,000
–
–
–
Unsecured Revolving Credits
The unsecured revolving credits of the Group bear interest at rates ranging from 2.50% to 2.90% (2014: 2.50% to 5.30%)
per annum.
Secured Term Loan
The secured term loan obtained by the Group is secured by way of a charge over assets of an associate (see Note 6).
The secured term loan bears interest at a rate of 4.04% (2014: 2.61%) per annum with principal repayment of 20 equal
monthly instalments commencing October 2014.
Unsecured Islamic Financing Facilities
The unsecured Islamic financing facilities are governed by the Musharakah Mutanaqisah and Commodity Murabahah
principles, and bear a profit margin ranging from 4.41% to 4.61% (2014: 4.10% to 4.39%) above the financing bank’s
cost of fund per annum.
256
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
17. DEFERRED TAX
The components and movements of deferred tax liabilities and assets during the year are as follows:
At
1.1.2015
RM’000
Group
Deferred tax assets
Unutilised tax losses
Other provisions
(140,189)
(153,066)
At
1.1.2015
RM’000
At
31.12.2015
RM’000
3,218
5,009
(1,701)
2,886
1,517
7,895
8,227
1,185
9,412
(149,424)
At
1.1.2014
RM’000
Deferred tax assets
Unutilised tax losses
Other provisions
(12,877)
At
31.12.2015
RM’000
Credited/
(charged)
to profit
or loss
RM’000
At
1.1.2014
RM’000
Group
Credited/
(charged)
to profit
or loss
RM’000
Credited/
(charged)
to profit
or loss
RM’000
9,235
Credited/
(charged)
to profit
or loss
RM’000
At
31.12.2014
RM’000
(140,189)
At
31.12.2014
RM’000
3,218
4,406
–
603
3,218
5,009
7,624
603
8,227
ANNUAL REPORT 2015
257
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
17. DEFERRED TAX (CONTINUED)
At
1.1.2015
RM’000
Company
(125,304)
At
1.1.2014
RM’000
(136,722)
Credited/
(charged)
to profit
or loss
RM’000
(8,387)
Credited/
(charged)
to profit
or loss
RM’000
At
31.12.2015
RM’000
(133,691)
At
31.12.2014
RM’000
11,418
(125,304)
18. OTHER LONG TERM LIABILITIES AND PROVISIONS
Group
Dismantling, removal and restoration costs
Other long term liabilities
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
25,160
2,267
28,336
784
25,160
–
28,336
–
27,427
29,120
25,160
28,336
Dismantling, removal and restoration costs
The movement of provision for dismantling, removal and restoration costs during the financial year is shown below:
Group
2015
RM’000
2014
RM’000
Balance at 1 January
Net changes in provisions
Reversal of provisions
Unwinding of discount
28,336
36
(6,600)
3,388
23,914
399
(801)
4,824
Balance at 31 December
25,160
28,336
258
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
18. OTHER LONG TERM LIABILITIES AND PROVISIONS (CONTINUED)
Under provisions of certain land lease agreements, the Company has an obligation to dismantle and remove structures
on certain sites and restore those sites at the end of the lease term to an acceptable condition consistent with the
lease agreement.
For these affected sites, the liabilities for dismantling, removal and restoration costs are recognised at present value of
the compounded future expenditure estimated using existing technology, at current prices and discounted using a real
discount rate.
The present value of the estimated costs is capitalised as part of the asset and the related provisions raised on the date
when the obligation arises. The capitalised cost is depreciated over the expected life of the asset. The increase in the
net present value of the provision for the expected cost is included as finance costs in the profit or loss.
Any change in the present value of the estimated expenditure is reflected as an adjustment to the provision.
While the provision is based on the best estimate of future costs and the economic lives of the affected assets, there
is uncertainty regarding both the amount and timing of incurring these costs. All the estimates are reviewed on an
annual basis or more frequently, where there is indication of a material change.
19. TRADE AND OTHER PAYABLES
Group
Trade payables
Other payables
Deferred revenue
Amounts due to:
Holding company
Subsidiaries
Related companies
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
112,867
840,053
38,796
229,429
1,082,644
37,295
76,946
760,216
38,708
197,983
1,044,816
37,265
253,689
–
3,155
1,353,614
513,986
–
2,458
2,193,645
253,463
9,733
3,155
1,353,614
509,084
–
2,458
2,193,507
2,602,174
4,059,457
2,495,835
3,985,113
Deferred revenue is attributable to the monetary value of the awarded Mesra points under PETRONAS Mesra Loyalty
Programme. The movement has been recorded in the profit or loss. On an annual basis, the fair value of the deferred
revenue will be estimated by reference to the monetary value attributable to the awarded points and the points
redemption profile.
ANNUAL REPORT 2015
259
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
19. TRADE AND OTHER PAYABLES (CONTINUED)
While the deferred revenue is based on the best estimate of future redemption profile, there is uncertainty regarding
the trend of redemption. All the estimates are reviewed on an annual basis or more frequently, where there is indication
of a material change.
The amounts due to holding company, associates, joint ventures and related companies arose in the normal course of
business.
20. OPERATING PROFIT
Group
Included in operating profit are the following
charges:
Audit fees
– KPMG Malaysia
– Overseas affiliates of KPMG Malaysia
Non-audit fees paid
– KPMG Malaysia
Amortisation of prepaid lease payments
Staff costs
Contribution to EPF
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Impairment losses on trade and other receivables
Inventories written down to net realisable value
Inventories written off
Property, plant and equipment written off
Rental of land and building
Rental of plant and equipment
Other receivables written off
and credits:
Gain on disposal of property, plant and equipment
Dividend income from:
Subsidiaries (unquoted)
Interest income from deposits
Income from rental of premises
Net gain on foreign exchange
Reversal of impairment losses on trade receivables
260
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
585
205
566
171
476
–
454
–
346
26,522
203,596
34,191
341,465
–
2,543
6,723
7,648
13,308
41,354
5,639
7,684
340
26,621
270,932
37,310
314,016
5,011
4,193
4,878
3,838
1,056
31,423
10,401
57
298
26,522
162,184
31,711
298,666
–
420
–
5,539
10,035
31,031
5,538
7,684
340
26,621
244,420
36,001
274,525
4,898
12
–
3,838
–
23,689
9,700
57
3,707
–
3,597
–
–
54,511
1,456
25,601
659
–
22,809
2,290
6,416
1,003
23,400
52,760
31
28,559
393
11,700
21,252
1,727
6,375
953
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
21. FINANCING COSTS
Group
Unwinding of discount
– Provision for dismantling, removal
and restoration costs
Interest on revolving credits
Interest on term loan
Profit margin on Islamic medium term notes
Profit margin on Islamic financing facilities
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
3,388
1,795
1,115
2,321
4,825
4,824
3,189
1,277
8,627
3,092
3,388
–
–
2,321
–
4,824
2,111
–
8,627
–
13,444
21,009
5,709
15,562
22. TAX EXPENSE
Group
Current tax expense
Current year
Prior year
2015
RM’000
2014
RM’000
Company
2015
2014
RM’000
RM’000
280,638
(2,306)
217,804
(6,824)
269,321
(2,315)
216,737
2,510
278,332
210,980
267,006
219,247
Deferred tax expense
Origination and reversal of temporary differences
(Over)/Under provision in prior year
12,333
(641)
(7,738)
(2,100)
7,843
544
(7,105)
(4,313)
11,692
(9,838)
8,387
(11,418)
290,024
201,142
275,393
207,829
ANNUAL REPORT 2015
261
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
22. TAX EXPENSE (CONTINUED)
A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income
tax expense at the effective income tax rate of the Group and the Company is as follows:
2015
%
2014
RM’000
%
RM’000
Group
1,084,648
Taxation at Malaysian statutory tax rate
Effect of different tax rates in foreign jurisdiction
Non-deductible expenses, net of non-taxable income
Effect of changes in tax rates
Effect of net deferred tax assets not recognised
– current tax expense
– deferred tax expense
Tax expense
709,292
25
–
2
–
–
271,162
(337)
19,239
–
2,907
25
–
5
(1)
–
177,323
(564)
37,589
(5,821)
1,539
27
292,971
29
210,066
(1)
–
(6,824)
(2,100)
290,024
28
201,142
RM’000
%
–
–
(2,306)
(641)
27
2015
%
2014
RM’000
Company
1,033,911
Taxation at Malaysian statutory tax rate
Effect of changes in tax rates
Non-deductible expenses, net of non-taxable income
– current tax expense
– deferred tax expense
Tax expense
262
737,306
25
–
2
258,477
–
18,687
25
(1)
4
184,327
(5,221)
30,526
27
277,164
28
209,632
–
–
2,510
(4,313)
28
207,829
–
–
27
(2,315)
544
275,393
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
23.DIVIDENDS
Group and Company
2015
2014
RM’000
RM’000
In respect of financial year ended 31 December 2014:
Single tier special interim dividend of 22.0 sen per ordinary share (2014: 17.5 sen)
218,559
173,855
119,214
139,084
139,084
119,214
139,084
119,214
615,941
551,367
In respect of financial year ended 31 December 2015:
Single tier interim dividend of 12.0 sen per ordinary share (2014: 12.0 sen)
The Directors had declared a single tier interim dividend of 20.0 sen per ordinary share amounting to RM198,690,800
in respect of the financial year ended 31 December 2015 which has not been accounted for in the financial statements.
24. RELATED PARTIES DISCLOSURES
Significant transactions with related parties
For the purposes of these financial statements, parties are considered to be related to the Group or the Company if
the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise
significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or
the Company and the party are subject to common control.
Related parties also include key management personnel defined as those persons having authority and responsibility for
planning, directing and controlling the activities of the Group either directly or indirectly and an entity that provides
key management personnel services to the Group.
The Group’s and the Company’s related parties include subsidiaries, associates, joint ventures as well as the Government
of Malaysia and its related entities as the holding company is wholly-owned by the Government of Malaysia.
Key management personnel compensation
Group and Company
2015
2014
RM’000
RM’000
Directors
Fees
Other short term benefits (including estimated monetary value of benefits-in-kind)
387
15
327
15
402
342
ANNUAL REPORT 2015
263
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
24. RELATED PARTIES DISCLOSURES (CONTINUED)
The Company pays management fees to the holding company in relation to services of an Executive Director and also
fees for certain Non-Executive Directors of the Company.
In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the
following significant transactions with related parties during the financial year:
Group
Sales of petroleum products:
Related companies
Federal and State Government of Malaysia
Government of Malaysia’s related entities
Purchases of petroleum products:
Related companies
Holding company
Fees for representation in the Board of Directors*:
Holding company
Company
2015
2014
RM’000
RM’000
2015
RM’000
2014
RM’000
1,179,541
310,759
3,041,493
1,697,262
399,959
4,380,004
1,179,541
310,759
3,041,493
1,697,262
399,959
4,379,977
21,784,321
698,955
30,905,969
564,076
21,784,321
698,955
30,905,969
564,076
1,057
1,058
1,057
1,058
* Fees paid directly to holding company in respect of Directors who are appointees of the holding company.
Information regarding outstanding balances arising from related party transactions as at 31 December 2015 is disclosed
in Note 10 and Note 19.
The Directors of the Company are of the opinion that the above transactions have been entered into in the normal
course of business.
264
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
25. EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share
The calculation of basic earnings per ordinary share at 31 December 2015 was based on the profit attributable to
ordinary shareholders and a weighted average number of ordinary shares outstanding calculated as follows:
Group
Profit for the year attributable to shareholders (RM’000)
Number of ordinary shares (’000)
Basic earnings per ordinary share (sen)
2015
2014
789,975
993,454
79.5
501,572
993,454
50.5
Diluted earnings per ordinary share
No diluted earnings per share is disclosed in these financial statements as there is no dilutive potential ordinary share.
26. COMMITMENTS
Outstanding commitments in respect of capital expenditure at reporting year not provided for in the financial statements
are:
Group
Approved and contracted for
Approved but not contracted for
2015
RM’000
2014
RM’000
Company
2015
2014
RM’000
RM’000
9,104
185,942
21,208
308,458
8,754
165,991
20,171
220,406
195,046
329,666
174,745
240,577
27. CONTINGENT LIABILITIES
There were no material contingent liabilities and contingent assets during the year.
28. OPERATING SEGMENTS
The Group’s reportable segments comprise of Retail, Commercial and Others. Each reportable segment offers different
services because they require different marketing strategies.
For each of the reportable segment, the Group’s chief operating decision maker which is the Board of Directors of the
Company, reviews internal management reports at least on a quarterly basis.
ANNUAL REPORT 2015
265
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
28. OPERATING SEGMENTS (CONTINUED)
The Group’s reportable segments are as follows:
• Retail –consist of sales and purchase of petroleum products to the retail sector
• Commercial –consist of sales and purchase of petroleum products to the commercial sector
• Others –
comprise mainly of aviation fuelling services, technical services and business activities other than
retail and commercial segment
Segment performance is measured based on profit or loss before tax, depreciation and amortisation, finance costs and
interest as included in the internal management reports that are reviewed by the Company’s Board of Directors.
Segment profit is used to measure performance as management believes that such information is the most relevant in
evaluating the results of certain segments relative to other entities that operate within these industries.
In RM’000
Business Segments
2015
Retail Commercial
2014
Others
Group
Retail Commercial
Others
Group
13,508,086
11,637,854
25,270
25,171,210
15,707,397
16,616,168
17,433
32,340,998
Operating expenditures:
Depreciation and amortisation
Other income
308,381
265,433
57,703
58,633
1,903
3,058
367,987
327,124
281,900
190,110
57,133
14,082
1,604
156
340,637
204,348
Operating profit
526,357
541,828
26,128
1,094,313
291,367
411,243
25,785
728,395
4,952
3,667
4,825
13,444
13,168
4,748
3,093
21,009
Revenue
Finance costs
Share of profit after tax of
associates and joint ventures
3,779
1,906
1,084,648
709,292
Geographical information
There is no disclosure on geographical segment information as the results of the Group’s operations outside of Malaysia
are not material during the year under review.
Major customers
No disclosure on major customer information is required as there are no customers representing 10 percent or more
of the Group’s revenue.
266
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
29. FINANCIAL INSTRUMENTS
Categories of financial instruments
The table below provides an analysis of financial instruments categorised as follows:
(i) Loans and receivables (“L&R”); and
(ii) Loans and borrowings (“L&B”); Note
L&R/
(L&B)
RM’000
Total
carrying
amount
RM’000
Group
2015
Financial assets
Financial liabilities
Borrowings
2014
Financial assets
Borrowings
10
11
16
19
10
11
16
19
1,649,252
1,258,637
1,649,252
1,258,637
2,907,889
2,907,889
(211,820)
(2,602,174)
(211,820)
(2,602,174)
(2,813,994)
(2,813,994)
2,119,144
1,839,684
2,119,144
1,839,684
3,958,828
3,958,828
(494,364)
(4,059,457)
(494,364)
(4,059,457)
(4,553,821)
(4,553,821)
ANNUAL REPORT 2015
267
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
29. FINANCIAL INSTRUMENTS (CONTINUED)
Categories of financial instruments (continued)
Note
L&R/
(L&B)
RM’000
Total
carrying
amount
RM’000
Company
2015
Financial assets
10
11
1,461,397
1,219,406
1,461,397
1,219,406
2,680,803
2,680,803
19
(2,495,835)
(2,495,835)
2014
Financial assets
10
11
2,043,331
1,754,464
2,043,331
1,754,464
3,797,795
3,797,795
(300,000)
(3,985,113)
(300,000)
(3,985,113)
(4,285,113)
(4,285,113)
Borrowings
16
19
Financial Risk Management
Petroliam Nasional Berhad (PETRONAS) has policies and guidelines in place that sets the foundation for a consistent
approach towards establishing an effective financial risk management across the PETRONAS Group.
The Group’s and the Company’s goal in risk management is to ensure that the management understands, measures
and monitors the various risks that arise in connection with their operations. Policies and guidelines have been
developed to identify, analyse, appraise and monitor the dynamic risks facing the Group and the Company. Based on
this assessment, the Group and the Company adopt appropriate measures to mitigate these risks in accordance with
their views of the balance between risk and reward.
The main financial risks faced by the Group and the Company arising from the use of financial instruments in their
normal activities are credit risk, liquidity risk, market risk, profit or interest rate risk and foreign currency risk.
268
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Credit Risk
Credit risk is the potential exposure of the Group and the Company to losses in the event of non-performance by
counterparties. The Group’s and the Company’s exposures to credit risk arise principally from receivables from
customers and placement in money market. Credit risks are controlled by individual companies in line with PETRONAS’
policies and guidelines.
Trade and Other Receivables
Credit evaluations are performed on an on-going basis where customers’ credit worthiness are evaluated using a list
of qualitative and quantitative weighted criteria.
The Group uses ageing analysis to monitor the credit quality of the receivables. With respect to the trade and other
receivables that are neither impaired nor past due, there is no indication as of reporting date that the debtors will not
meet their payment obligations. As at the year end, 91.5% (2014: 95.7%) of gross trade receivables of the Group are
within the credit terms.
The Group and the Company mitigate their credit risks within a conservative framework by dealing with creditworthy
counterparties or setting credit limits on exposures to counterparties where appropriate. These are done on an ongoing basis to constantly monitor any developments. The Group and the Company further mitigate and limit credit risks
by securing collateral or other credit enhancements such as cash deposits, letter of credit, Amanah Saham Bumiputera
(ASB) and bank guarantee.
On reporting date, there is a significant concentration of credit risk of the Group arising from an amount owing from
a customer constituting 26% (2014: 31%) of the total trade receivables of the Group, of which all outstanding balances
are current.
In addition, there is a significant concentration of credit risk of the Group being an amount owing from the Government
constituting 72% (2014: 89%) of the total other receivables of the Group relating to subsidies arising from the Automatic
Pricing Mechanism governing the sale of petroleum products.
The maximum exposure to credit risk for the Group and the Company is represented by the carrying amount of each
financial asset, without taking into account the fair value of any collateral.
ANNUAL REPORT 2015
269
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
Trade and Other Receivables (continued)
The movements in the allowance for impairment losses of trade and other receivables during the year are as follows:
Group
2015
RM’000
2014
RM’000
Company
2015
2014
RM’000
RM’000
Opening balance
Impairment loss recognised
Reversal of impairment
46,797
2,543
(659)
43,607
4,193
(1,003)
36,370
420
(393)
37,311
12
(953)
Closing balance
48,681
46,797
36,397
36,370
Fund and Other Investment
The Group and the Company are also exposed to counterparty credit risk from financial institutions through fund and
investment activities comprising primarily money market placement and investments in bonds, and trade facilities. These
exposures are managed in accordance with existing policies and guidelines that define the parameters within which the
investment activities shall be undertaken in order to achieve the Group’s investment objective of preserving capital and
generating optimal returns above appropriate benchmarks within allowable risk parameters.
Investments are only made with approved counterparties who meet the appropriate rating and other relevant criteria,
and within approved credit limits, as stipulated in the policies and guidelines. The treasury function undertakes credit
risk management activities similar to the credit management and monitoring procedures for receivables.
The maximum exposure to credit risk is represented by the carrying amounts in the statements of financial position.
As at the reporting date, the Group and the Company have only interests in short term domestic money market
instrument. In view of the credit rating of counterparties, the Group and the Company do not expect any counterparties
to fail to meet its obligation.
Liquidity Risk
Liquidity risk is the risk that suitable sources of funding for the Group’s and Company’s business activities may not be
available. The Group's and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities
of financial assets and liabilities. The Group's and the Company’s objective is to maintain a balance between continuity
of funding and flexibility through use of stand-by credit facilities. The Company’s current credit rating enables it to
access banking facilities in excess of current and immediate future requirements of the Group and the Company.
270
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Maturity Analysis
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the
reporting date based on undiscounted contractual payments:
Group
2015
Unsecured Islamic financing facilities floating
rate
Unsecured revolving credit floating rate
Secured term loan floating rate
Carrying
amount
RM’000
102,697
71,376
37,747
2,602,174
Effective
profit
margin or
interest Contractual
rate cash flows
RM’000
%
4.44
2.75
4.04
–
2,813,994
2014
Unsecured Islamic financing facilities floating
rate
Unsecured Islamic medium term notes fixed rate
Unsecured revolving credit floating rate
Unsecured revolving credit fixed rate
Secured term loan floating rate
119,304
300,000
31,222
3,055
40,783
4,059,457
4,553,821
4.15
3.53
3.00
5.30
2.61
–
Within 1
year
RM’000
1-2
years
RM’000
2-5
years
RM’000
More than
5 years
RM’000
116,311
71,736
41,207
2,602,174
21,334
71,736
10,473
2,602,174
21,195
–
10,896
–
62,748
–
19,838
–
11,034
–
–
–
2,831,428
2,705,717
32,091
82,586
11,034
136,314
302,350
31,375
3,217
42,308
4,059,457
21,416
302,350
31,375
3,217
8,810
4,059,457
21,283
–
–
–
9,040
–
63,070
–
–
–
24,458
–
30,545
–
–
–
–
–
4,575,021
4,426,625
30,323
87,528
30,545
ANNUAL REPORT 2015
271
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
Liquidity Risk (continued)
Maturity Analysis (continued)
Company
2015
2014
Unsecured Islamic medium term notes fixed rate
Carrying
amount
RM’000
Effective
profit
margin or
interest Contractual
rate cash flows
RM’000
%
Within 1
year
RM’000
1-2
years
RM’000
2-5
years
RM’000
More than
5 years
RM’000
2,495,835
–
2,495,835
2,495,835
–
–
–
300,000
3,985,114
3.53
–
302,350
3,985,114
302,350
3,985,114
–
–
–
–
–
–
4,287,464
4,287,464
–
–
–
4,285,114
Market Risk
Market risk is the risk or uncertainty arising from changes in market prices and their impact on the performance of the
business. The market price changes that the Group and the Company are exposed to include interest rates and foreign
currency exchange rates that could adversely affect the value of the Group’s and the Company’s financial assets,
liabilities or expected future cash flows.
Profit Margin or Interest Rate Risk
Profit margin or interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market rates.
The Group’s exposure to the risk of changes in market rates relates primarily to the Islamic financing facilities and term
loan of subsidiaries with floating profit margin and interest rate. Changes in the profit margin may expose the Group
to a risk of change in cash flows.
The Group’s remaining interest-bearing financial asset and financial liability, which consists mainly of fixed rate short
term fund placement and short term revolving credit facilities do not have significant exposure to interest rate risk.
All profit or interest rate exposures are monitored and managed proactively in line with PETRONAS’ policies and
guidelines.
As at 31 December 2015, 95% (2014: 39%) of the interest-bearing financial liabilities of the Group are floating rate
instruments.
272
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ACCOUNTABILITY
Profit Margin Risk Sensitivity Analysis
As at 31 December 2015, it is estimated that an increase/decrease of 100 basis points in profit margin of the Islamic
financing facilities or in interest rate of the term loan, with all other variables held constant, would not have any
significant impact to the Group’s cash flows.
Foreign Currency Risk
The Group and Company are exposed to varying levels of foreign exchange risk when they enter into transactions that
are not denominated in the respective companies’ functional currencies and/or when foreign currency monetary assets
and liabilities are translated at the reporting date. The main underlying economic currencies of the Group’s cash flows
are Ringgit Malaysia and US Dollars. The Company’s funds are managed by PETRONAS Integrated Financial Shared
Services Centre (IFSSC) whereby foreign currency exposure is internally hedged with IFSSC and IFSSC will execute
external hedging where required.
The Group’s and the Company’s exposure to foreign currency risk, based on carrying amounts as at the reporting date
is as follows:
2015
2014
Denominated
Denominated
in
in
USD’000
RM’000
USD’000
RM’000
Group
Financial assets
Net exposure
727
29,166
3,123
125,238
180
70,949
630
247,931
29,893
128,361
71,129
248,561
9,911
42,558
101,436
354,469
19,982
85,803
(30,307)
(105,908)
727
29,166
3,123
125,238
–
66,932
–
233,894
29,893
128,361
66,932
233,894
5,325
22,865
73,674
257,452
24,568
105,496
(6,742)
(23,558)
Company
Financial assets
Net exposure
ANNUAL REPORT 2015
273
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
Currency risk sensitivity analysis
The following table demonstrates the indicative post-tax effects on the profit of applying reasonably foreseeable market
movements in the currency exchange rates:
2015
2014
Appreciation
Appreciation
Effect
in foreign
Effect
in foreign
on profit
currency
on profit
currency
or loss
rate
or loss
rate
RM’000
%
RM’000
%
Group
USD
10
8,580
5
(3,972)
Company
USD
10
10,550
5
(883)
This analysis assumes all other variables, in particular interest rates, remain constant.
A depreciation in USD would have had equal but opposite effect, on the basis that all other variables remain constant.
274
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Fair value information
The Group’s financial instruments consist of cash and cash equivalents, trade and other receivables and trade and other
payables.
The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings
reasonably approximate their fair values due to the relatively short term nature of these financial instruments.
The following table analyses financial instruments not carried at fair value for which fair value is disclosed, together
with the carrying amounts shown in the statement of financial position.
Fair value of financial
instruments not carried
at fair value
Level 3
Total
RM’000
RM’000
Carrying
amount
RM’000
Group
2015
Term loan
88,871
34,159
88,871
34,159
102,697
37,747
123,030
123,030
140,444
103,584
39,239
103,584
39,239
119,304
40,783
142,823
142,823
160,087
2015
Financial Asset
Long term loan to a subsidiary
14,082
14,082
14,231
2014
Financial Asset
Long term loan to a subsidiary
23,769
23,769
26,507
2014
Term loan
Company
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and
interest cash flows, discounted at the prevailing rate of interest charged on the respective loans at the end of the
reporting period.
ANNUAL REPORT 2015
275
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
Income/(expense), net gains and losses arising from financial instruments
Net gain/(loss)
Group
2015
RM’000
2014
RM’000
Company
2015
2014
RM’000
RM’000
Financial instruments through profit and loss
Forward contracts
Loans, receivables and payables
(5)
64,328
166
(3,683)
(5)
75,228
166
12,512
Total
64,323
(3,517)
75,223
12,678
30. CAPITAL MANAGEMENT
The Group defines capital as total equity and debt. The objective of the Group’s capital management is to maintain an
optimal capital structure and ensure availability of funds to support its business and maximise shareholders’ value. As a
subsidiary of Petroliam Nasional Berhad (PETRONAS), the Group’s approach in managing capital is set out in the
PETRONAS Group Corporate Financial Policy.
The Group monitors and maintains a prudent level of total debt to total asset ratio to optimise shareholders’ value and
to ensure compliance with covenants under debt and shareholders’ agreements and regulatory requirements, if any.
The debt equity ratio of the Group as at 31 December 2015 is 4.2:100 (2014: 9.6:100).
There were no changes in the Group’s approach to capital management during the year.
Under the requirement of Bursa Malaysia Practice Note No.17/2005, the Group is required to maintain consolidated
shareholders’ equity equal to or not less than 25% of the issued and paid-up capital (excluding treasury shares) and
such shareholders’ equity is not less than RM40 million. The Group has complied with this requirement.
31. HOLDING COMPANY
The holding company is Petroliam Nasional Berhad (PETRONAS), a company incorporated in Malaysia.
276
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
32. SUBSIDIARIES AND ACTIVITIES
Effective
ownership and
voting interest
2015
2014
Principal Activities
Companies incorporated
in Malaysia
65%
65%
To operate aviation fuelling at Kuala Lumpur
International Airport, Sepang.
PETRONAS LUBRICANTS MARKETING
(MALAYSIA) SDN BHD (f.k.a. Lub
Dagangan Sdn Bhd)
100%
100%
To market and distribute lubricants.
PETRONAS AVIATION SDN. BHD.
100%
100%
To provide technical consultancy services.
100%
100%
Investment holding company.
100%
100%
To buy, sell, store, distribute and market liquefied
petroleum gas (LPG) and other petroleum products.
100%
100%
To market and distribute lubricants.
**PETRONAS (VIETNAM) CO., LTD.
100%
100%
To store, process and distribute LPG.
**THANG LONG LPG COMPANY LIMITED
100%
100%
To store and bottle LPG and lease jetty.
Kuala Lumpur Aviation
Fuelling System Sdn. Bhd.
Company incorporated in Netherlands
*PDB (Netherlands) B.V.
Company incorporated in Philippines
**PETRONAS ENERGY PHILIPPINES, INC.
Company incorporated
in Thailand
*PETRONAS INTERNATIONAL
MARKETING (THAILAND) CO., LTD.
Companies incorporated in Vietnam
* Not audited by member firms of KPMG International
** Audited by member firms of KPMG International
ANNUAL REPORT 2015
277
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
33. ASSOCIATES AND ACTIVITIES
Effective
ownership and
voting interest
2015
2014
Companies incorporated in Malaysia
*IOT Management Sdn. Bhd.
20%
20%
To operate and manage a petroleum storage terminal
with facilities for receipt, storage and delivery of
petroleum products at Senari, Kuching, Sarawak for the
users, PETRONAS Dagangan Berhad and Shell Timur
Sdn. Bhd.
*Tanjung Manis Oil Terminal
Management Sdn. Bhd.
20%
20%
To operate and manage a petroleum storage terminal
with facilities for receipt, storage and delivery of
petroleum products at Bandar Baru Tanjung Manis,
Mukah, Sarawak for the users, PETRONAS Dagangan
Berhad and Shell Timur Sdn. Bhd.
**Duta, Inc.
40%
40%
To lease properties to PETRONAS Energy Philippines,
Inc.
**Kaparangan, Inc
(wholly owned by Duta, Inc.)
40%
40%
To engage in the business of buying, investing,
exchanging, selling securities of every kind and leasing
land.
Company incorporated in Philippines
** Audited by member firms of KPMG International
278
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
34. JOINT VENTURES AND ACTIVITIES
Effective
ownership and
voting interest
2015
2014
Companies incorporated
in Malaysia
PS Pipeline Sdn. Bhd.
50%
50%
To maintain and operate the Multi-Product Pipeline
and Klang Valley Distribution Terminal (MPP-KVDT) and
the associated facilities for the transportation of the
petroleum products on behalf of the MPP-KVDT
owners/shareholders.
PS Terminal Sdn. Bhd.
50%
50%
To operate, manage and maintain the joint facilities –
terminal, depot, warehouse etc. in Tawau and Bintulu on
behalf of the owners, PETRONAS Dagangan Berhad and
Shell Timur Sdn. Bhd.
40%
40%
To import fuel and spare parts for jets, supply and
distribution of fuel for aircrafts and operate fuel storage
facilities in all airports in the Kingdom of Saudi Arabia.
Company incorporated
in Kingdom of Saudi Arabia
*United Fuel Company Ltd
ANNUAL REPORT 2015
279
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
35. ADOPTION OF NEW AND REVISED PRONOUNCEMENTS
As of 1 January 2015, the Group and the Company adopted the following pronouncements that are applicable and
have been issued by the MASB as listed below:
Effective for
Amendments
Amendments
Amendments
Amendments
Amendments
Amendments
annual periods beginning on or after 1 July 2014
to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle)
to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)
to MFRS 119, Employee Benefits – Defined Benefit Plans: Employee Contributions
to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)
The initial adoption of the abovementioned pronouncements do not have any material impact to the financial
statements of the Group and the Company.
36. PRONOUNCEMENTS YET IN EFFECT
The following pronouncements that have been issued by the Malaysian Accounting Standards Board will become
effective in future financial reporting periods and have not been adopted by the Group and/or the Company in these
financial statements:
Effective for annual periods beginning on or after 1 January 2016
Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual Improvements 20122014 Cycle)
Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle)
Amendments to MFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations
MFRS 14, Regulatory Deferral Accounts
Amendments to MFRS 101, Presentation of Financial Statements – Disclosure Initiative
Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets – Clarification of Acceptable
Methods of Depreciation and Amortisation
Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle)
Amendments to MFRS 127, Separate Financial Statements – Equity Method in Separate Financial Statements Amendments
to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014 Cycle)
Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014 Cycle)
Effective for annual periods beginning on or after 1 January 2018
MFRS 9, Financial Instruments (2014)
MFRS 15, Revenue from Contracts with Customers
280
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
36. PRONOUNCEMENTS YET IN EFFECT (CONTINUED)
Effective for a date yet to be confirmed
Amendments to MFRS 10, Consolidated Financial Statements: Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture
Amendments to MFRS 128, Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
The Group and the Company are expected to apply the abovementioned pronouncements beginning from the
respective dates the pronouncements become effective.
(i) MFRS 15, Revenue from Contracts with Customers
MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13,
Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation
18, Transfers of Assets from Customers and IC Interpretation 131, Revenue – Barter Transactions Involving
Advertising Services.
The Group is currently assessing the financial impact that may arise from the adoption of MFRS 15.
(ii) MFRS 9, Financial Instruments
MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the
classification and measurement of financial assets. Upon adoption of MFRS 9, financial assets will be measured at
either fair value or amortised cost.
The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.
ANNUAL REPORT 2015
281
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NOTES TO THE
37. NEW PRONOUNCEMENTS NOT APPLICABLE TO THE GROUP AND THE COMPANY
The MASB has issued pronouncements which are not yet effective, but for which are not relevant to the operations of
the Group and the Company and hence, no further disclosure is warranted.
Amendments to MFRS 10, Consolidated Financial Statements – Investment Entities: Applying the Consolidation
Exception
Amendments to MFRS 12, Disclosure of Interests in Other Entities – Investment Entities: Applying the Consolidation
Exception
MFRS 14, Regulatory Deferral Accounts
Amendments to MFRS 116, Property, Plant and Equipment – Agriculture: Bearer Plants
Amendments to MFRS 128, Investments in Associates and Joint Ventures – Investment Entities: Applying the
Consolidation Exception
Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle)
Amendments to MFRS 141, Agriculture – Agriculture: Bearer Plants
282
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
38. RETAINED EARNINGS
The breakdown of the retained earnings of the Group and the Company as at 31 December 2015, into realised and
unrealised profits, pursuant to Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements are as
follows:
Group
2015
RM’000
Total retained profits
– realised
– unrealised
2014
RM’000
Company
2015
2014
RM’000
RM’000
4,119,185
(111,775)
3,968,823
(99,372)
4,004,558
(103,329)
3,852,944
(94,292)
4,007,410
3,869,451
3,901,229
3,758,652
Total retained profits of associates
attributable to the Group
– realised
1,056
821
–
–
Total retained profits of joint ventures
attributable to the Group
– realised
9,228
5,683
–
–
(51,920)
(84,215)
–
–
3,791,740
3,901,229
3,758,652
Less: Consolidation adjustments
Total retained profits
3,965,774
The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination of
Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad
Listing Requirements, issued by Malaysian Institute of Accountants on 20 December 2010.
ANNUAL REPORT 2015
283
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INDEPENDENT AUDITORS’
REPORT TO THE MEMBERS
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of PETRONAS Dagangan Berhad, which comprise the statements of financial
position as at 31 December 2015 of the Group and of the Company, and the statements of profit or loss and other
comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and
a summary of significant accounting policies and other explanatory information, as set out on pages 222 to 282.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view
in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements
of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company
as of 31 December 2015 and of their financial performance and cash flows for the year then ended in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies
Act, 1965 in Malaysia.
284
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company
and its subsidiaries, of which we have acted as auditors, have been properly kept in accordance with the provisions of
the Act.
(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as
auditors, which are indicated in the Note 32 to the financial statements.
(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial
statements are in form and content appropriate and proper for the purposes of the preparation of the financial
statements of the Group and we have received satisfactory information and explanations required by us for those
purposes.
(d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made
under Section 174(3) of the Act.
OTHER REPORTING RESPONSIBILITIES
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information
set out in Note 38 on page 283 to the financial statements has been compiled by the Company as required by the Bursa
Malaysia Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards or
International Financial Reporting Standards. We have extended our audit procedures to report on the process of compilation
of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with
the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of
Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of
Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies
Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of
this report.
KPMG
Firm Number: AF 0758
Chartered Accountants
CHONG DEE SHIANG
Approval Number: 2782/09/16(J)
Chartered Accountant
Petaling Jaya,
ANNUAL REPORT 2015
285
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STAKEHOLDER MANAGEMENT
COMMUNICATION
PDB defines stakeholders as those who may be affected by or have an effect or influence on its business and operations.
Each year, the Company will monitor and assess its stakeholders based on the publicity generated about the Company,
smoothness in receiving the approval to run its business and operations, market sentiments towards the Company’s
performances, and feedback from internal stakeholders.
PDB is honoured to be part of the daily lives of the people in the country whom the Company engages with, at both
individual and organisational levels. PDB has introduced various formal and informal channels of communication with each
of its stakeholder groups in order to understand their needs and concerns on matters related to PDB’s business and
operations. The Company’s goal is to manage its stakeholders’ expectations effectively to achieve sustainable long term
relationships.
During the year under review, the Company has strategically engaged with its stakeholders via the following communication
channels:Stakeholders
Name of the Engagements
PDB Board of Directors
Official/Formal Meeting
Board Away Day
Quarterly
Annually
Board Site Visit
Annually
Government Authorities/Regulatory Bodies
• State Governments
•MOF
•MDTCC
•CUSTOMS
Frequency
Ad hoc
Monthly
•MPIC
Weekly/Quartely/
Ad Hoc
Bi-Annually/
Quartely/Ad-Hoc
Ad hoc
Ad hoc
Ad hoc
Ad hoc
Ad hoc
Ad hoc
Ad hoc
Ad hoc
Ad hoc
Annually
•MPOB
•EPU
•PEMANDU
•KLCH
•BOMBA
•MHA
• LPTC (SPAD)
• Land Office
• Municipal Council
• PDB Facilities’ Visits
Formal and Informal Meetings/Dialogue Sessions/Forums/
Sharing Sessions/Networking/Terminal Visits
Industry Association
Formal Meetings
Networking
Ad hoc
Ad hoc
Vendors/Suppliers
Business Reviews
Forums
Sharing Sessions
Annually
Quarterly
Ad hoc
286
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Customers
Customer Feedback Management
Mesralink
Loyalty Programmes
Events/Dialogues/Roadshows/Engagement Sessions
Daily
Daily
Regularly
Regularly
Media
Press Releases
Press Conferences
Media Coverages
Regularly
Regularly
Regularly
Social Media
Engagement with social media practitioners
Promotion via PDB's official Twitter, Facebook,
Instagram and YouTube accounts
Regularly
Daily
Employees
Townhalls
Top Management Message
Employee Satisfaction Survey
Dialogues
Intranet and Newsletters
Employee Engagement Programmes
PDBeat Club
LIFE of PI
Annually
Monthly
Annually
Regularly
Regularly
Regularly
Regularly
Regularly
Academics
Talent Sourcing
Quarterly
Business Partners
Progress Report
Annual and Sustainability Reports
Corporate Presentations
Signing Ceremonies
Regularly
Annually
Ad hoc
Ad hoc
Union
Persatuan Pengusaha Stesen Minyak PETRONAS Malaysia
KAPENAS
Ad hoc
Quaterly
JV Partners
BOD Meetings
Management Meetings
Operations Meetings
Networking
NGOs
Formal Meetings
Shareholders and Investment Community
AGM
Analyst Briefings
Formal Meetings
PDB Facilities’ Visits
Networking sessions
Bi-Annually
Bi-Annually
Quarterly
Annually
Ad hoc
Annually
Quarterly
Ad-hoc
Annually
Quaterly
ANNUAL REPORT 2015
287
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
Stakeholder Management
Communication (continued)
Professional Bodies:•Auditors
•MSWG
•MIRA
•Bursa
•NIOSH
Formal Meetings
Formal Meetings/Networking Sessions
Workshops/Formal Meetings
Formal Meetings
Formal Meetings
Ad hoc
Ad hoc/Annually
Ad hoc
Ad hoc
Ad hoc
Community
Website
Visits, Seminars and Joint Activities
Community Engagement Activities
Daily
Annually
Ad hoc
Regularly
Public
Website
Mesralink
Campaign and Roadshows
Regularly
Daily
Annually
Regularly
STRATEGIC ENGAGEMENT
The Government relations scope of activities are focused on strengthening the professional networking relationship with the
related authorities for the benefit of PDB’s interests. The scope includes implementing and executing Government related
activities, coordinating and conducting meetings with the authorities as well as facilitating interaction and leading
engagements with the local Government. In addition to this, the Government relations personnel work hand in hand with
business lines and the management to resolve issues with relevant parties.
288
INSPIRING CHANGE
BUSINESS OVERVIEW
AUTHORISED AND
ISSUED SHARE CAPITAL
ACCOUNTABILITY
AS AT 10 FEBRUARY 2016
Authorised Share Capital Issued and Paid-up Share Capital
Class of Shares Voting Rights : RM1,000,000,000
: RM993,454,000 comprising 993,454,000 ordinary shares of RM1.00 each
: Ordinary Shares of RM1.00 each
: One Vote Per Ordinary Share (On A Poll)
ANALYSIS OF
SHAREHOLDINGS
Size of Holdings
Less than 100
100 – 1,000
1,001 – 10,000
10,001 – 100,000
100,001 to less than 5% of issued shares
5% and above of issued shares
No. of
Holders
% of Total
Shareholders
No. of
Shares
% of
Total Shares
171
1,754
4,523
523
199
1
2.39
24.46
63.07
7.29
2.78
0.01
1,390
1,194,517
12,168,337
18,346,239
267,739,517
694,004,000
0.00
0.12
1.22
1.85
26.95
69.86
7,171
100.00
993,454,000
100.00
ANNUAL REPORT 2015
289
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
analysis of
shareholdings (continued)
CLASSIFICATION OF SHAREHOLDERS
As at 10 February 2016
No. of Holders
Category
% of Total
Shareholdings
No. of Shares
Malaysian
Foreign
Malaysian
Foreign
Malaysian
Foreign
5,739
67
16,584,879
429,224
1.67
0.04
45
1
114,311,600
28
11.50
0.00
1
188
7
565
0
4
0
554
1,400
4,747,302
7,423,300
768,853,212
0
690,000
0
80,413,055
0.00
0.48
0.75
77.39
0.00
0.08
0.00
8.09
6,545
626
911,921,693
81,532,307
91.79
8.21
•Individuals
• Body Corporate
a. Banks/Finance Companies
b. Investment Trusts/Foundation/
Charities
c. Other types of companies
• Government Agencies/Institutions
•Nominees
LIST OF SUBSTANTIAL SHAREHOLDERS
Direct
1.
CIMB Group Nominees (Tempatan) Sdn Bhd
(Exempt AN for Petroliam Nasional Berhad)
(Exempt AN for Petroliam Nasional Berhad (PRF))
2. Employees Provident Fund Board
Indirect
No. of
Shares
% of
Total Shares
No. of
Shares
% of
Total Shares
694,004,000
69.86
200,900*
0.02
50,336,400
5.07
0.00
0.00
* Deemed interest in 200,900 shares of PETRONAS for Petroleum Research Fund held through CIMB Group Nominees (Tempatan) Sdn
Bhd pursuant to Section 6A of the Companies Act, 1965.
290
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
LIST OF DIRECTORS’ SHAREHOLDINGS
No. Name
1.
2.
3.
4.
5.
6.
7.
8.
Md Arif Mahmood
Lim Beng Choon
Vimala V. R. Menon
Datuk Anuar Ahmad
Nuraini Ismail
No. of
Shares
% of Total
Shareholding
Nil
3,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
0.00
Nil
Nil
Nil
Nil
Nil
Nil
No. of
Shares
% of Total
Shareholding
3,000
Nil
2,000
2,000
Nil
Nil
Nil
Nil
Nil
Nil
0.00
Nil
0.00
0.00
Nil
Nil
Nil
Nil
Nil
Nil
LIST OF MANAGEMENT’S SHAREHOLDINGS
No. Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Puteri Liza Elli Sukma
Shaharuddin Muhammad Sidek
Lu Jia Lih
Zubair Abdul Razak
Mohd Shobri Abu Bakar
Manisah Shaari
Hasnizaini Mohd Zain
Tariq Ashra Sulaiman
Ruziah Azdi Abdul Rahman
ANNUAL REPORT 2015
291
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
LIST OF THIRTY LARGEST
SHAREHOLDERS
No. of
Shares
% of
Total Shares
694,004,000
69.86
48,307,900
4.86
46,278,600
4.66
11,203,400
1.13
8,650,700
0.87
8,248,800
0.83
7,949,400
0.80
6,831,700
0.69
KUMPULAN WANG PERSARAAN (DIPERBADANKAN)
5,465,800
0.55
MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD
5,031,100
0.51
4,906,800
0.49
4,380,700
0.44
4,014,086
0.40
3,952,500
0.40
3,708,700
0.37
3,669,562
0.37
Name
1.
CIMB GROUP NOMINEES (TEMPATAN) SDN BHD
(EXEMPT AN FOR PETROLIAM NASIONAL BERHAD)
2.
CITIGROUP NOMINEES (TEMPATAN) SDN BHD
(EMPLOYEES PROVIDENT FUND BOARD)
3.
AMANAHRAYA TRUSTEES BERHAD
(AMANAH SAHAM BUMIPUTERA)
4.
(AMANAH SAHAM WAWASAN 2020)
5.
(AMANAH SAHAM MALAYSIA)
6.
(AMANAH SAHAM DIDIK)
7.
(AS 1MALAYSIA)
8.
CARTABAN NOMINEES (ASING) SDN BHD
(EXEMPT AN FOR STATE STREET BANK & TRUST COMPANY (WEST CLT OD67))
9.
10.
(GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (PAR 1))
11.
HSBC NOMINEES (ASING) SDN BHD
(BBH AND CO BOSTON FOR VANGUARD EMERGING MARKETS STOCK INDEX FUND)
12.
(PUBLIC ISLAMIC SELECT ENTERPRISES FUND)
13.
(EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (U.S.A.))
14.
DB (MALAYSIA) NOMINEE (ASING) SDN BHD
(BNYM SA/NV FOR PEOPLE’S BANK OF CHINA (SICL ASIA EM))
15.
(PUBLIC ISLAMIC DIVIDEND FUND)
16.
(EXEMPT AN FOR THE BANK OF NEW YORK MELLON (MELLON ACCT))
292
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
No. of
Shares
% of
Total Shares
PERMODALAN NASIONAL BERHAD
3,391,100
0.34
CARTABAN NOMINEES (TEMPATAN) SDN BHD
3,265,000
0.33
2,432,000
0.24
2,340,000
0.24
PERTUBUHAN KESELAMATAN SOSIAL
2,297,200
0.23
2,214,900
0.22
2,160,700
0.22
2,000,000
0.20
Name
17.
18.
(EXEMPT AN FOR EASTPRING INVESTMENTS BERHAD)
19.
MAYBANK NOMINEES (TEMPATAN) SDN BHD
(MAYBANK TRUSTEES BERHAD FOR PUBLIC REGULAR SAVINGS FUND (N14011940100)
20.
(MAYBANK TRUSTEES BERHAD FOR PUBLIC ITTIKAL FUND (N14011970240)
21.
22.
(EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (JPMELAB AIF APG))
23.
CARTABAN NOMINEES (ASING) SDN BHD
(GIC PRIVATE LIMITED FOR GOVERNMENT OF SINGAPORE (C))
24.
(SETIAUSAHA KERAJAAN PULAU PINANG)
25.
STATE FINANCIAL SECRETARY SARAWAK
2,000,000
0.20
26.
FOH CHONG & SONS SDN BHD
1,884,000
0.19
CITIGROUP NOMINEES (ASING) SDN BHD
1,875,800
0.19
STATE SECRETARY KEDAH INCORPORATED
1,800,000
0.18
1,791,000
0.18
1,772,700
0.18
27.
(EXEMPT AN FOR CITIBANK NEW YORK (NORGES BANK 14))
28.
29.
(PUBLIC ISLAMIC SECTOR SELECT FUND)
30.
(PUBLIC ISLAMIC EQUITY FUND)
ANNUAL REPORT 2015
293
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
NET BOOK VALUE OF
LAND & BUILDINGS OF
PDB COMPANY
Freehold
CENTRAL REGION
NORTHERN REGION
SOUTHERN REGION
EAST COAST REGION
SARAWAK
SABAH
HEADQUARTER
Grand Total
294
Area
(sq. ft.)
No. of
Lots
Area
(sq. ft.)
86
41
43
46
37
27
1
5,321,836
3,883,115
1,514,640
1,688,456
1,679,205
2,305,475
17,939,413
668,297
242,731
431,183
100,603
35,256
35,781
23,352
200
126
185
86
40
34
1
9,664,003
7,566,210
7,096,701
3,267,967
1,760,507
2,491,088
17,939,413
295,121
158,529
181,027
111,653
63,917
52,269
1,653
281
34,332,140
1,537,203
672 49,785,889
864,169
No. of
Lots
114
85
142
40
3
7
-
4,342,167
3,683,095
5,582,061
1,579,511
81,302
185,613
-
267,311
51,165
76,232
35,724
33,131
32,987
23,352
391
15,453,749
519,902
400,986
191,566
354,951
64,879
2,125
2,794
1,017,301
Building
Net Book
Value of
Buildings
(RM’000)
Area
(sq. ft.)
No. of
Lots
Total Land
Net Book
Value of
Land
(RM’000)
Net Book
Value of
Land
(RM’000)
Net Book
Value of
Land
(RM’000)
Leasehold
INSPIRING CHANGE
BUSINESS OVERVIEW
USAGE OF
LAND PROPERTIES*
Klang
Valley
Bulk Distribution
Terminal
Depot
ACCOUNTABILITY
LPG
Storage
& Bottling
Plant
Multi
Product
Pipeline
Service
Station
Training
Centre &
Service
Station Warehouse
Vacant
Land
Grand
Total
CENTRAL REGION
NORTHERN REGION
SOUTHERN REGION
EAST COAST REGION
SARAWAK
SABAH
HEADQUARTER
–
3
–
–
3
3
–
2
–
–
–
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
1
190
114
175
79
35
30
–
1
–
–
–
–
–
–
–
–
–
1
–
–
–
7
9
10
5
2
1
–
200
126
185
86
40
34
1
Grand Total
9
2
1
1
623
1
1
34
672
* Build on Freehold and Leasehold land only.
**The remaining stations and depots were built on land on operating and prepaid leases.
ANNUAL REPORT 2015
295
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
LIST OF TOP 10
LANDED PROPERTIES
AS AT 31 DECEMBER 2015
Name of facilities and location
PSS JLN KOLAM AYER AMPANG Lot 36904,
Jalan Kolam Air Lama, 68000 Ampang, Kuala Lumpur
Net Book
Value (RM)
11,925,292
PSS KM 58 KL-KARAK H/WAY
Lot 8207 Mukim Bentong, Daerah Bentong, 28400 Bentong, Pahang
8,591,234
PSS TELAGA HARBOUR PARK
Petronas Service Station, Harbour Park Langkawi, Pantai Kok, 07000 Padang Matsirat, Kedah
7,837,675
PSS PLUS/BESRAYA HIGHWAY PGS KM 305
PLUS Arah Selatan, Lot 896, GRN 46223, Mukim Kajang, 43650 Hulu Langat, Selangor
7,325,230
PRAI BOTTLING PLANT
PETRONAS Dagangan Berhad, Prai Fuel Terminal, Lot 93, Prai Industrial Area, 13600 Prai, Penang
7,256,915
PSS KM0.7 BESRAYA
KM 0.7, Lebuhraya Sg. Besi, 43300 Seri Kembangan, Selangor
5,941,693
PSS BKT ANTARABANGSA (HYPERSTATION)
Lot PT 3429, Jalan Wangsa 2, Bukit Antarabangsa, 68000 Ampang, Selangor
5,142,014
PSS NKVE-DAMANSARA BOUND
Lot 15385 Km 15.3 NKVE-Damansara Bound, 47000 Sungai Buloh, Selangor
4,991,372
PSS FEDERAL-HIGHWAY (KLANG BOUND)
KM 12.3 Lebuhraya Persekutuan Arah Klang, Seksyen 15, 40200 Shah Alam, Selangor
4,195,732
PSS KILIMU RANAU
Part Of Lot N.T 063021303, Kg Kilimu, Jalan Ranau-Poring, 89300 Ranau, Sabah
4,145,523
296
INSPIRING CHANGE
BUSINESS OVERVIEW
NOTICE OF
ACCOUNTABILITY
NOTICE IS HEREBY GIVEN THAT the 34th Annual General Meeting of PETRONAS Dagangan
Berhad (“the Company”) will be held at the Sapphire Ballroom, Level 1, Mandarin Oriental
Kuala Lumpur, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia on Wednesday,
20 April 2016 at 10.00 a.m. for the following purposes:
AGENDA
As Ordinary Business
1. To receive the Audited Financial Statements for the financial year ended 31 December 2015 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 in accordance with Article 93 of the Company’s
Articles of Association and, being eligible, offer themselves for re-election:
(a) Nuraini binti Ismail
(b) Lim Beng Choon
(Resolution 1)
(Resolution 2)
3. To re-elect the following Directors who retire in accordance with Article 96 of the Company’s
Articles of Association and, being eligible, offer themselves for re-election:
(a) Md Arif bin Mahmood
(b) Ir Mohamed Firouz bin Asnan
(Resolution 3)
(Resolution 4)
Please refer to Explanatory Note B.
4. To approve the Directors’ fees of RM723,000.00 payable to Non-Executive Directors for the
financial year ended 31 December 2015.
(Resolution 5)
Please refer to Explanatory Note C.
5. To approve the Directors’ fees of up to RM902,000.00 with effect from 1 January 2016 until the
next Annual General Meeting of the Company payable to Non-Executive Directors.
(Resolution 6)
Please refer to Explanatory Note C.
6. To re-appoint Messrs. KPMG, as Auditors of the Company for the financial year ending 31 December
2016 and to authorise the Directors to fix their remuneration.
(Resolution 7)
Please refer to Explanatory Note D.
7. To transact any other business for which due notice has been given.
By Order of the Board
HASNIZAINI BINTI MOHD ZAIN (LS 0009780)
YEAP KOK LEONG (MAICSA 0862549)
Company Secretaries
Kuala Lumpur
22 March 2016
ANNUAL REPORT 2015
297
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
notice of
annual general meeting (continued)
NOTES:
Proxy and/or Authorised Representative
1.
2.
For the purposes of determining a member who shall
be entitled to attend and vote at the forthcoming 34th
Annual General Meeting (“AGM”), the Company shall be
requesting the Record of Depositors as at 12 April
2016. Only a depositor whose name appears on the
Record of Depositors as at 12 April 2016 shall be
entitled to attend and vote at the meeting as well as
for appointment of proxy(ies) to attend and vote on
his/her stead.
A member of the Company entitled to attend and vote
at the meeting may appoint not more than two proxies
to attend and vote on his behalf. A proxy may but
need not be a Member of the Company and a Member
may appoint any person to be his proxy without
limitation and the provision of Section 149(1)(b) of the
Companies Act, 1965 shall not apply to the Company.
There shall be no restriction as to the qualification of
the proxy.
3. 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 but not more than two
proxies in respect of each Securities account it holds
with ordinary shares of the Company standing to the
credit of the said Securities accounts.
6. 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 and must be deposited at the
Company’s Share Registrar, Symphony Share Registrars
Sdn. Bhd., Level 6, Symphony House, Pusat Dagangan
Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor,
Malaysia, not less than 48 hours before the time fixed
for holding the meeting.
7. 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.
Explanatory Notes
Note A
Audited Financial Statements for the Financial Year
Ended 31 December 2015
4. Where a member of the Company is an exempt
authorised nominee which holds ordinary shares in the
Company for the omnibus account, there is no limit to
the number of proxies which the exempt authorised
nominee may appoint in respect of each omnibus
account it holds. An exempt authorised nominee refers
to an authorised nominee defined under the SICDA
which is exempted from compliance with the provision
of subsection 25A(1) of SICDA.
The audited financial statements are laid before the
shareholders pursuant to the provisions of Section 169(1)
and (3) of the Companies Act, 1965. The same is for
discussion and not put forward for voting.
5. 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.
Article 93 of the AA 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.
298
Note B
Re-election of Directors who retire in accordance with
Article 93 and Article 96 of the Company’s Articles of
Association (“AA”)
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
Article 96 of the AA provides, amongst others, 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 then be
eligible for re-election.
The Nomination and Remuneration Committee of the
Company determines the eligibility of each director standing
for re-election at the AGM based on the performance of
the Directors, taking into account the results of their latest
Board Evaluation, contribution to the Board through their
skills, experience, strengths and qualities, level of
independence and ability to act in the best interest of the
Company in decision making.
The profiles of the retiring Directors are set out in the
Profile of the Board of Directors on pages 044 to 051 of
the 2015 Annual Report.
The Board endorsed the Nomination and Remuneration
Committee’s recommendation that the Directors who retire
in accordance with Article 93 and Article 96 of the AA are
eligible to stand for re-election.
Note C
Non-Executive Directors’ Fees
The remuneration structure of the Non-Executive Directors
(“NEDs”) of the Company is as follows:
The shareholders at the last AGM held on 15 April 2015
approved RM664,000.00 per annum as Directors’ fees for
the financial year ended 31 December 2014.
Details of the fees payable to the NEDs for the financial
year ended 31 December 2015 are enumerated on page
168 of the 2015 Annual Report.
The Directors’ fees proposed for the financial year ending
31 December 2016 and payment of the fees from 1 January
2017 until the conclusion of the next AGM (“FYE2016/2017”)
are calculated based on the number of scheduled Board’s
and Board Committees’ meetings and assumption that all
the NEDs will remain in office until the next AGM. This
resolution is to facilitate payment of the Directors’ fees for
FYE2016/2017.
The Board will seek shareholders’ approval at the next AGM
in the event the Directors’ fees proposed is insufficient due
to an increase in the number of the Board’s and Board
Committees’ meetings and/or increase in the Board size.
Note D
Re-appointment of Auditors
The Board at its meeting held on 19 February 2016 endorsed
for the re-appointment of Messrs. KPMG as External Auditors
of the Company for the financial year ending 31 December
2016 be presented to the shareholders for approval.
• Monthly fixed fees for duties as Director/Chairman; and
• Meeting allowance for each meeting attended.
The Directors’ fees and meeting allowance for Md Arif
Mahmood, Nuraini Ismail and Ir Mohamed Firouz Asnan,
being the Non-Independent Non-Executive Directors who
are also employees of Petroliam Nasional Berhad
(“PETRONAS”) and holding positions of Vice President and
above are paid directly to PETRONAS.
ANNUAL REPORT 2015
299
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
STATEMENT ACCOMPANYING
NOTICE OF
PURSUANT TO PARAGRAPH 8.27(2) OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES
BERHAD
The following are Directors retiring pursuant to Articles 93 and 96 of the Company’s Articles of Association:
1.
The Directors who are standing for re-election pursuant to Article 93 of the Company’s Articles of Association are as
follows:• Nuraini binti Ismail • Lim Beng Choon
Resolution 1
Resolution 2
2. The Directors who are standing for re-election pursuant to Article 96 of the Company’s Articles of Association are as
follows:• Md Arif bin Mahmood
• Ir Mohamed Firouz bin Asnan
Resolution 3
Resolution 4
The profiles of the respective Directors who are standing for re-election as stated in the Notice of 34th Annual General
Meeting are set out in the Profile of the Board of Directors on pages 044 to 051 of this Annual Report.
The details of the Directors’ interests in the securities of the Company as at 10 February 2016 are stated on page 291 of
this Annual Report.
300
INSPIRING CHANGE
ADMINISTRATIVE
DETAILS
BUSINESS OVERVIEW
ACCOUNTABILITY
34TH ANNUAL GENERAL MEETING
REGISTRATION
(1) Registration will start at 8.15 a.m. on 20 April 2016 in front of the Sapphire Ballroom, Level 1, Mandarin Oriental Kuala
Lumpur, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia.
(2) Please produce your original Identity Card (“IC”) to the registration staff for verification. Please make sure you collect
your IC 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 tag. No person will be allowed to enter the meeting room without the
identification tag. There will be no replacement in the event that you lose or misplace the identification tag.
(5) No person will be allowed to register on behalf of another person, even with the original IC of that person.
(6) The registration counter will handle only verification of identity and registration.
HELP DESK
(7) Please proceed to the Help Desk for any clarification or enquiry.
(8) The Help Desk will also handle revocation of proxy’s appointment.
PARKING
(9) Please take note that PDB will not be giving cash reimbursements for parking this year. Instead, you are advised to park
at Levels P2 and P4 of Mandarin Oriental Kuala Lumpur and car park opposite Ascott Kuala Lumpur (KLCC Management).
Please bring along your parking ticket for validation at the counter near the Sapphire Ballroom.
(10) By validating the parking ticket, you will not be charged for parking when you leave. Please be advised that the ticket
would expire by 4 p.m. on 20 April 2016. Any additional costs incurred for parking after 4 p.m. will not be borne by
PDB.
(11) Please be advised that PDB will not reimburse any parking costs incurred at any other location. As such, please observe
the parking areas mentioned in Item 9 above.
ANNUAL REPORT
(12) PDB’s Annual Report for Financial Year 2015 is available on:
http://www.bursamalaysia.com
http://www.mymesra.com.my
ANNUAL REPORT 2015
301
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
CORPORATE
DIRECTORY
HEAD OFFICE
Level 30-33, Tower 1, PETRONAS Twin Towers
Kuala Lumpur City Centre, 50088 Kuala Lumpur
Tel : (+603)-2051 5000 Fax : (+603)-2026 5505
REGIONAL OFFICES
CENTRAL REGION
SOUTHERN REGION
SARAWAK REGION
Level 12, Menara Dayabumi
Jalan Sultan Hishamuddin
P. O. Box 11946
50762, Kuala Lumpur
Tel: (+603)-2783 6000
Fax: (+603)-2260 1527
1st & 2nd Floor
Bangunan PETRONAS
Lot 12106, Bandar Baru UDA
Km 7, Jalan Skudai
81200, Johor Bahru, Johor
Tel: (+607)-233 6000
Fax: (+607)-233 6001
3rd & 4th Floor
Wisma Naim
Lot 2679, Jalan Rock
93200, Kuching, Sarawak
Tel: (+6082)-255 200
Fax: (+6082)-412 712
Officer in Charge:
Mohd Ajmi Abdi
NORTHERN REGION
Lot No. 93
Prai Industrial Estate
13600, Prai, Pulau Pinang
Tel: (+604)-390 7291/7201
Fax: (+604)-399 0211
Manager in Charge:
Shuhaimi Hashim
302
Manager in Charge:
Badruldin Isami Ibrahim
EASTERN REGION
Manager in Charge:
Johnnes Gobli anak Jien
SABAH REGION
A-39 & A-43, Jalan Haji Abdul Aziz
25000, Kuantan, Pahang
Tel: (+609)-513 7022/7099
Fax: (+609)-514 4040
Lot 7AF01-7AF13, Block A, Level 7
Karamunsing Complex
88300, Kota Kinabalu, Sabah
Tel: (+6088)-525 777
Fax: (+6088)-269 817
Manager in Charge:
Azri Othman
Manager in Charge:
Tuan Ameran Tuan Yaacob
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
GLOSSARY
ABC
Anti-Bribery and Corruption
EPM
Employee Performance Management
AEF
Advanced Energy Formula
EPU
Economic Planning Unit
AGM
ERP
Emergency Response Plan
ALARP
As Low As Reasonably Practicable
ERT
Emergency Response Team
AMG
Aufrecht, Melcher and Großaspach
EVP
Executive Vice President
ANGKASA
Angkatan Koperasi Kebangsaan Berhad
FAR
Fatal Accident Rate
AOD
Aviation Operations Department
APH
Aspiring Professional Hauler
FBM KLCIFTSE Bursa Malaysia Kuala Lumpur
Composite Index
ASB
Asian Supply Base Sdn Bhd
FLTO
Fuel and LPG Terminal Operations
ATM(s)
Automatic Teller Machine(s)
FMD
Fleet Management Department
bblbarrel
FRDM Fire and Rescue Department of
Malaysia/“BOMBA”
Board
The Board of Directors of PDB
bpd
Barrels per day
Bursa Malaysia
Bursa Malaysia Securities Berhad
CEO
Chief Executive Officer
CFO
GroupPETRONAS Dagangan Berhad and
Subsidiaries
CHRA
Chemical Health Risk Assessment
Group HSE
Group Health Safety and Environment
CIA
Communication in Action
GST Goods and Services Tax
CIAP
Corporate Integrity Action Pledge
HAZMAT
Hazardous Material
CIO
Chief Integrity Officer
HEMPHazards and Effects Management
Process
CLASSClassification, Labelling and Safety Data
Sheet of Hazardous Chemicals
GEESGraduate Employability Enhancement
Scheme
GHG
Greenhouse gas
HR
Human Resource
CO2
Carbon Dioxide
HRMD
Human Resource Management Division
CoBE
HSE
Health, Safety and Environment
CP
Community Point
CRM
Customer Relationship Management
HSEMSHealth, Safety and Environment
Management System
CSR
Corporate Social Responsibility
ICOP
Industry Code of Practise
CUSTOMS
Royal Malaysian Customs Department
IMD
International Marketing Department
DBE
Downstream Business Excellence
INSEADInstitut Européen d’Administration des
Affaires
DCICDownstream Continuous Improvement
Convention
DOSHDepartment of Occupational Health
and Safety
DYMM
Duli Yang Maha Mulia
ISOInternational Organization for
Standardization (ISO)
JKJR
Jabatan Keselamatan Jalan Raya
JPAM
Jabatan Pertahanan Awam Malaysia
ANNUAL REPORT 2015
303
INSPIRING CHANGE
KEY MESSAGES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
GLOSSARY
(continued)
KAPENASKesatuan Kakitangan Petroliam Nasional
Berhad
MINDEF
Ministry of Defense
MLNG
Malaysia Liquified Natural Gas
KDU
Kolej Damansara Utama
MMLR
Main Market Listing Requirements
KL
Kuala Lumpur
MOFMinistry of Finance
KLCC
MOPS
KLCH/DBKLKuala Lumpur City Hall/Dewan
Bandaraya Kuala Lumpur
Mean off Platts Straits
MOSTIMinistry of Science, Technology and
Innovation
KLIA
Kuala Lumpur International Airport
KPMG
Messrs KPMG
MPICMinistry of Plantation, Industries and
Commodities
KVDT
Klang Valley Distribution Terminal
MPOB
Malaysia Plam Oil Board
LDSB
Lub Dagangan Sdn Bhd
MPP
Multiproduct Pipeline
LED
Light Emitting Diode
MS830
Malaysian Standard 830
LIFE
Lubricant Integration For Excellence
MSOSHMalaysian Society for Occupational
Safety & Health
LIFE of PIListen, Integrate and Facilitate
Execution of Potential Ideas
LIMALangkawi International Maritime &
Aerospace Exhibition
NACRANational Annual Corporate Report
Awards
MT
Metric Tonnes
LNG
Liquified Natural Gas
LOPC
Loss of Primary Containment
NENTNon-Executive Non-Technical
Capability
LPG
Liquified Petroleum Gas
NET
Non-Executive Technical
LPLFRD
Low Profile Low Flow Rate Dispenser
NGV
Natural Gas Vehicle
LPTC
Land Public Transport Commission
LTIF
Lost Time Injury Frequency
NIOSHNational Institute for Occupational
Safety and Health
MC
Management Committee
MCCG 2012Malaysian Code on Corporate
Governance 2012
MCDF
Malaysian Civil Defence Force
MCF
Mandatory Control Framework
MD/CEOManaging Director/Chief Executive
Officer
MDP
Managerial Development Programme
MDTCCMinistry of Domestic Trade,
Cooperatives and Consumerism
MHA
Malaysia Highway Association
304
NLDFNon-Executives Learning and
Development Framework
NOX
Nitrogen Oxides
OEADOperational Excellence and Assurance
Departments
OEM(s)
Original equipment manufacturer(s)
OPECOrganization of the Petroleum
Exporting Countries
OSH
Occupational Health and Safety
PAVSB
PETRONAS Aviation Sdn Bhd
PCG
PETRONAS Chemicals Group Berhad
INSPIRING CHANGE
BUSINESS OVERVIEW
ACCOUNTABILITY
RTOG
Road Tanker Operations Guidelines
PDB DGPPDB Downstream Grounding
Programme
SDD
Supply and Distribution Division
SDS
Safety Data Sheet
PDB or the Company
SIRIMStandards and Industrial Research
Institute of Malaysia
PDBSB
PETRONAS Dagangan Sdn Bhd
SL1M
Skim Latihan 1Malaysia
PDBeat
PDB Executives Action Team
SME Small Medium Enterprise
SMK
Sekolah Menengah Kebangsaan
SOCSO
Social Security Organization
SOX
Sulphur Oxides
SPAD
Suruhanjaya Pengangkutan Awam Darat
TC
Time Charter
TLLCL
Thang Long LPG Company Limited
TM
Technical Managers
PCSB
PETRONAS Carigali Sdn Bhd
PECASPETRONAS’ Competency-based
Assessment System
PEMANDU
Performance Management Delivery Unit
PEPI
PETRONAS Energy Philippines, Inc.
PETRONAS
Petroliam Nasional Berhad
PETRONITA
The Ladies’ Association of PETRONAS
PIM(T)CLPETRONAS International Marketing
(Thailand) Co. Limited
PLISBPETRONAS Lubricant International
Sdn Bhd
PLM(M)SBPETRONAS Lubricants Marketing
(Malaysia) Sdn Bhd
PME
Palm – Oil Methyl Ester
PMO
Project Management Office
PP(T)SB
PETRONAS Penapisan Terengganu
PVPhotovoltaic
PVL
PETRONAS (Vietnam) Co., Ltd
QSR(s)
Quick Serve Restaurant(s)
RAPIDRefinery and Petrochemical Integrated
Development Project
TMCATechnical Managers Capability
Assessment
TRCF
Total Recordable Cases Frequency
TSER
Relations
Talent Sourcing and Employee
ULG
Unleaded Gasoline
USA
United States of America
USD
United States Dollar
WEBS
West Port Bunkering Services
YAB
Yang Amat Berhormat
YB
Yang Berhormat
YPC
Young Professionals’ Club
RKP
Rakan Khidmat Penghantar
ZeTo
Zero Tolerance
RM
Ringgit Malaysia
Directors
Members of the Board
RON
Research Octane Number
Management
Senior Key Personnel of PDB
RTM
Route to Market
ANNUAL REPORT 2015
305
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PROXY FORM
Number of Ordinary Shares Held
CDS Account No.
I/We
Tel:
of
being a member of PETRONAS Dagangan Berhad (“the Company”) hereby appoint:
Full Name (in Block)
NRIC/Passport No.
Proportion of Shareholdings
No. of Shares
%
Address
and/or (delete as appropriate)
Full Name (in Block)
NRIC/Passport No.
Proportion of Shareholdings
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 34th Annual
General Meeting of the Company to be held at the Sapphire Ballroom, Level 1, Mandarin Oriental Kuala Lumpur,
Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia on Wednesday, 20 April 2016 at 10.00 a.m. and at any
adjournment thereof.
Resolution
*Ordinary Business
For
1
Re-election of Nuraini binti Ismail as a Director
2
Re-election of Lim Beng Choon as a Director
3
Re-election of Md Arif bin Mahmood as a Director
4
Re-election of Ir Mohamed Firouz bin Asnan as a Director
5
Directors’ Fees of RM723,000.00 payable to Non-Executive Directors for the
financial year ended 31 December 2015
6
Directors’ Fees of up to RM902,000.00 with effect from 1 January 2016 until
the next Annual General Meeting of the Company payable to Non-Executive
Directors
7
Re-appointment of Messrs. KPMG as Auditors of the Company
Against
* 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:
Signature/Common Seal of Shareholder(s)
Notes:
1. For the purposes of determining a member who shall be entitled to attend
and vote at the forthcoming 34th Annual General Meeting, the Company
shall be requesting the Record of Depositors as at 12 April 2016. Only a
depositor whose name appears on the Record of Depositors as at
12 April 2016 shall be entitled to attend and vote at the meeting as well
as for appointment of proxy(ies) to attend and vote on his/her stead.
2. A member of the Company entitled to attend and vote at the meeting
may appoint not more than two proxies to attend and vote on his behalf.
A proxy may but need not be a Member of the Company and a Member
may appoint any person to be his proxy without limitation and the
provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply
to the Company. There shall be no restriction as to the qualification of
the proxy.
3. 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 but not more than two proxies in respect
of each Securities account it holds with ordinary shares of the Company
standing to the credit of the said Securities accounts.
4. Where a member of the Company is an exempt authorised nominee
which holds ordinary shares in the Company for the omnibus account,
there is no limit to the number of proxies which the exempt authorised
nominee may appoint in respect of each omnibus account it holds. An
exempt authorised nominee refers to an authorised nominee defined
under the SICDA which is exempted from compliance with the provision
of subsection 25A(1) of SICDA.
5. 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.
6. 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 and must be deposited at the Company’s Share
Registrar, Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House,
Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor,
Malaysia, not less than 48 hours before the time fixed for holding the
meeting.
7. 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.
FOLD HERE
AFFIX STAMP
HERE
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya, Selangor
Malaysia
FOLD HERE
ANNUAL REPORT 2015
(88222-D)
(88222-D)
Level 30-33, Tower 1, PETRONAS Twin Towers, Kuala Lumpur City Centre, 50088 Kuala Lumpur
Tel: (03) 2051 5000 • Fax: (03) 2026 5505
www.mymesra.com.my
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ANNUAL REPORT 2015
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