Professional Documents
Culture Documents
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INSIDE
WHAT’S
RESPONSIBLE FINANCIAL
1 GOVERNANCE 2 STATEMENTS
4 Board at a Glance 108 Statement of Directors’ Responsibilities
5 Board Skills and Experience Matrix in relation to the Financial Statements
6 Profile of the Board of Directors 109 Directors’ Report
16 Company Secretaries 115 Statement by Directors
17 Profile of Leadership Team 115 Statutory Declaration
22 Organisation Structure 116 Consolidated Statement of Financial Position
24 Chairman’s Statement on 117 Consolidated Statement of Profit or Loss
Corporate Governance and Other Comprehensive Income
26 Corporate Governance 118 Consolidated Statement of Changes in Equity
Overview Statement
122 Consolidated Statement of Cash Flows
56 Board Audit Committee Report
123 Statement of Financial Position
73 Independent Adviser’s Opinion
124 Statement of Profit or Loss and Other
76 Nomination and Remuneration Comprehensive Income
Committee Report
125 Statement of Changes in Equity
82 Board Risk Committee Report
126 Statement of Cash Flows
86 Statement on Risk
127 Notes to the Financial Statements
Management and Internal
Controls 215 Independent Auditors’ Report
106 List of Internal Policies 219 Analysis of Shareholdings
223 Summary of Landed Property, Plant and Equipment
232 Top 10 Landed Property, Plant and Equipment
PETRONAS Gas Berhad Responsible Financial
4 Governance and Financial Report 2021 Governance Statements
BOARD
AT A GLANCE
20%
60% 20%
10%
30% 40%
10%
60%
TENURE 40%
GENDER 60%
30%
0 - 2 years 6
Male 6
2 - 4 years 3
Female 4
7 - 9 years 1
5
Human Performance
Technology/Digital
Strategic Planning/
Legal/Regulatory
Commercial/
Management
Management
Entrepreneur
Sustainability
Engineering/
International
Information
Economics
Investment
Operations
Marketing
Regional/
Technical
Logistics
Energy
Adnan
Zainol Abidin
Habibah Abdul
Farina
Farikhullah Khan
Datuk Yeow
Kian Chai
Marina Md Taib
Hasliza Othman
PROFILE OF THE
BOARD OF DIRECTORS
ADNAN
ZAINOL ABIDIN
Chairman
Non-Independent Non-Executive Director
Industry Experience
Academic/Professional Qualifications
• Bachelor of Science in Chemical Engineering,
University of Leeds, United Kingdom
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad
Other public company:
• Nil Past Experience
• Executive Vice President and Chief Executive Officer of PETRONAS Gas
Present Appointments
and New Energy Business
• Chief Operating Officer of PETRONAS, Executive • Senior Vice President, PETRONAS Project Delivery & Technology
Vice President and Chief Executive Officer of • Vice President, PETRONAS LNG Assets
PETRONAS Gas Business • Vice President, PETRONAS Global LNG Projects
• Member of PETRONAS Executive Leadership Team • President and Chief Executive Officer, Pacific Northwest LNG (Canada)
• Board Member of various companies in PETRONAS • Chief Executive Officer, Egyptian LNG (Egypt)
• Chief Executive Officer, PETRONAS Chemicals Ammonia Sdn. Bhd.
• 36 years of extensive experience in oil and gas industry
Declaration
• No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• No conflict of interest with PETRONAS Gas Berhad
• No conviction of any offences within the past five years other than traffic offences, if any
• Does not hold more than five directorships in listed issuers
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
7
ABDUL AZIZ
OTHMAN
Managing Director/Chief Executive Officer
Industry Experience
Academic/Professional Qualifications
• Senior Executive Programme, London Business School
• INSEAD Programme, INSEAD Business School
• Bachelor of Science Mechanical Engineering, George
Washington University, United States of America
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad
Past Experience
Other public company:
• Chief Marketing Officer, PETRONAS LNG Limited
• Nil
• Vice President, Strategy & New Ventures, PETRONAS Energy
Present Appointments Canada Limited
• Vice President, Gas & Power, Gas & New Energy • Head, Strategic Planning & Ventures, PETRONAS Chemicals
Business Group Berhad
• Member, Gas & New Energy Executive Leadership • Chief Executive Officer, Vinyl Chloride Malaysia Sdn. Bhd.
Team of PETRONAS • General Manager, Centralised Utilities Facilities (CUF),
• Board Member of various companies in PETRONAS PETRONAS Gas Berhad
• Head (Strategy & Business Planning), PETRONAS
• Manager (Corporate Issues), Business Planning & Development,
PETRONAS
• Engineer, Peninsular Gas Utilisation Project (PGU) with involvement in
Engineering, Procurement, Construction & Commissioning (EPCC) of
Gas Processing Plants (GPP) 2, 3, 5 & 6 PETRONAS Gas Berhad
Declaration
• No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• No conflict of interest with PETRONAS Gas Berhad
• No conviction of any offences within the past five years other than traffic offences, if any
• Does not hold more than five directorships in listed issuers
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
PETRONAS Gas Berhad Responsible Financial
8 Governance and Financial Report 2021 Governance Statements
PROFILE OF THE
BOARD OF DIRECTORS
HABIBAH
ABDUL
Senior Independent Director
Industry Experience
Academic/Professional Qualifications
• Fellow of Institute of Chartered Accountants in
England and Wales
• Member of Malaysia Institute of Certified Public
Accountants
• Member of Malaysian Institute of Accountants
• Bachelor of Economics (Accounting),
University Malaya
Present Directorships
Past Experience
Listed issuer:
• Member of Securities Commission
• PETRONAS Gas Berhad
• Experienced in providing audit and business advisory services to several
• KLCC Property Holdings Berhad
large public listed, multinationals and local corporations
Other public company: • Partner, Arthur Andersen
• Nil • Partner, Ernst & Young
Present Appointments
• Member, Board Audit Committee of
PETRONAS Gas Berhad
• Member, Nomination and Remuneration Committee
of PETRONAS Gas Berhad
• Member, Board Risk Committee of
PETRONAS Gas Berhad
• Board Member, KLCC REIT Management Sdn. Bhd.
• Chairman, Nomination and Remuneration
Committee of KLCC Property Holdings Berhad
• Member, Board Audit Committee of KLCC Property
Holdings Berhad Declaration
• No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• No conflict of interest with PETRONAS Gas Berhad
• No conviction of any offences within the past five years other than traffic offences, if any
• Does not hold more than five directorships in listed issuers
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
9
FARINA
FARIKHULLAH KHAN
Independent Non-Executive Director
Industry Experience
Academic/Professional Qualifications
• Advanced Management Program, Harvard Business
School, United States of America
• Fellow Member of Chartered Accountants, Australia
& New Zealand
• Bachelor of Commerce (Accounting), University of
New South Wales, Australia
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad Present Appointments (Continued)
• KLCC Property Holdings Berhad
• AMMB Holdings Berhad • Chairman, Board Audit Committee of KLCC Property Holdings Berhad
• Icon Offshore Berhad • Member, Board Risk Committee of KLCC Property Holdings Berhad
• Member, Nomination and Remuneration Committee of KLCC Property
Other public company: Holdings Berhad
• Ambank Islamic Berhad • Board Member of KLCC REIT Management Sdn. Bhd.
Foreign Listed Company: • Member, Audit Committee of Icon Offshore Berhad
• EnQuest PLC • Member, Audit Committee of EnQuest Plc
• Member, Safety, Climate and Risk Committee of EnQuest Plc
Present Appointments • Member, Remuneration and Social Responsibility Committee of EnQuest Plc
• Chairman, Board Audit Committee of
Past Experience
PETRONAS Gas Berhad
• Member, Nomination and Remuneration Committee • Board Member, Progress Energy Canada Ltd
of PETRONAS Gas Berhad • Chief Financial Officer, PETRONAS Chemicals Group Berhad
• Member, Board Risk Committee of • Chief Financial Officer, PETRONAS Exploration & Production
PETRONAS Gas Berhad • Chief Financial Officer, PETRONAS Carigali Group of Companies
• Chairman, Group Nomination and Remuneration • Senior Manager, Corporate Planning & Development Division, PETRONAS
Committee of AMMB Holdings Berhad • Senior Associate, Business Services, Coopers & Lybrand, Australia
• Member, Audit Examination Committee of
AMMB Holdings Berhad
• Chairman, Risk Management Committee of Declaration
Ambank Islamic Berhad • No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• Member, Audit Examination Committee of • No conflict of interest with PETRONAS Gas Berhad
Ambank Islamic Berhad • No conviction of any offences within the past five years other than traffic offences, if any
• Does not hold more than five directorships in listed issuers
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
PETRONAS Gas Berhad Responsible Financial
10 Governance and Financial Report 2021 Governance Statements
PROFILE OF THE
BOARD OF DIRECTORS
Industry Experience
Academic/Professional Qualifications
• Masters Degree in Business Administration, Ohio
University, United States of America
• Bachelor of Electrical Engineering, Brighton
University, United Kingdom
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad
Other public company: Past Experience
• Nil • Chief Executive Officer, MyPower Corporation MESI 2.0 (Government of
Malaysia Undertaking)
Present Appointments
• Chairman, Energy Commission Malaysia
• Chairman, Nomination and Remuneration • Chief Executive Officer, MyPower Corporation MESI 1.0 (Incorporated by
Committee of PETRONAS Gas Berhad Ministry of Energy)
• Member, Board Audit Committee of • Senior Vice President, (Corporate Affairs Division) of Tenaga Nasional
PETRONAS Gas Berhad Berhad
• Member, Board Risk Committee of • Vice President (Generation) of Tenaga Nasional Berhad
PETRONAS Gas Berhad • Secondment, Economic Planning Unit of Prime Minister’s Department
• Chairman, Energy Council of Malaysia
• Member, Independent Advisory Panel, Malaysian
Petroleum Resources Corporation
Declaration
• No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• No conflict of interest with PETRONAS Gas Berhad
• No conviction of any offences within the past five years other than traffic offences, if any
• Does not hold more than five directorships in listed issuers
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
11
DATUK YEOW
KIAN CHAI
Independent Non-Executive Director
Industry Experience
Academic/Professional Qualifications
• Master of Science Marine Technology, University of
Strathclyde, United Kingdom
• Bachelor Science Mechanical Engineering, University
College London, United Kingdom
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad
Other public company: Past Experience
• Nil • Advisor, PETRONAS Carigali Sdn. Bhd.
• Vice President, PETRONAS Chemicals Business
Present Appointments • Director, Project Interface Directorate
• Chairman, Board Risk Committee of • Co-Champion PETRONAS OPI Initiative
PETRONAS Gas Berhad • Chief Executive Officer, PETRONAS Chemicals Fertiliser Kedah Sdn. Bhd.
• Member, Nomination and Remuneration Committee • Chief Executive Officer, PETRONAS Carigali (Turkemenistan) Sdn. Bhd.
of PETRONAS Gas Berhad • Head, Exploration and Production Technology Centre
• Chairman, Board of Trustees of PETRONAS • 35 years of extensive experience in oil and gas industry
Abandonment Cess Fund Board
• Independent Non-Executive Director of
PETRONAS Carigali Sdn. Bhd.
• Independent Non-Executive Director of
PETRONAS International Corporation Limited
Declaration
• No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• No conflict of interest with PETRONAS Gas Berhad
• No conviction of any offences within the past five years other than traffic offences, if any
• Does not hold more than five directorships in listed issuers
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
PETRONAS Gas Berhad Responsible Financial
12 Governance and Financial Report 2021 Governance Statements
PROFILE OF THE
BOARD OF DIRECTORS
DATUK MARK
VICTOR ROZARIO
Independent Non-Executive Director
Industry Experience
Academic/Professional Qualifications
• Senior Management Program/Business, Harvard
Business School
• Chartered Accountant, Institute of Chartered
Accountants in England and Wales
• Bachelor of Science, London School of Economics
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad Past Experience
Other public company: • Chief Executive Officer of General Electric (Malaysia)
• Malaysia Convention and Exhibition Bureau • Chief Executive Officer & Member of Governance Council at Agensi
Inovasi Malaysia (AIM)/National Innovation Agency of Malaysia
Present Appointments
• Group Managing Director of Country Heights Holdings Berhad
• Member, Board Risk Committee of • Executive Director at Sunway Holdings Incorporated Berhad (now
PETRONAS Gas Berhad known as Sunway Berhad)
• Member, Board Audit Committee of • Group Chief Financial Officer of Sunway Group
PETRONAS Gas Berhad • Controller, East Asia at Schlumberger Limited
• Director, Bond Pricing Agency Malaysia Sdn. Bhd. • Manager at KPMG Peat Marwick (United Kingdom)
• Chief Executive Officer, Adventa Berhad
Declaration
• No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• No conflict of interest with PETRONAS Gas Berhad
• No conviction of any offences within the past five years other than traffic offences, if any
• Does not hold more than five directorships in listed issuers
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
13
Industry Experience
Academic/Professional Qualifications
• Postgraduate Certificate in Business Administration,
University of Leicester, United Kingdom
• Bachelor of Engineering (Civil & Structural
Engineering), Nanyang Technological University
(N.T.U.), Singapore
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad Past Experience (Continued)
Other public company: • Advisor, Global Capital & Development Pte Ltd, Singapore
• Nil • Advisor, National Central Cooling Company (Tabreed) Abu Dhabi,
United Arab Emirates
Present Appointments • Chief Executive Officer, National Central Cooling Company (Tabreed)
• Member, Board Risk Committee of Abu Dhabi, United Arab Emirates
PETRONAS Gas Berhad • Senior Vice President, Mubadala Investment Company, Abu Dhabi,
United Arab Emirates
Past Experience • Senior Vice President, SembCorp Industries Singapore/MENA
• Director/Senior Advisor, Mubadala Investment • Manager, Keppel FELS ENERGY Pte Ltd, Singapore
Company, Abu Dhabi, United Arab Emirates • Civil Engineer, S.K Pui Chartered Consulting Engineers, Singapore
• Executive Director, Global Capital &
Development Sdn. Bhd.
• Chief Executive Officer, Global Capital &
Development Pte Ltd, Singapore
Declaration
• No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• No conflict of interest with PETRONAS Gas Berhad
• No conviction of any offences within the past five years other than traffic offences, if any
• Does not hold more than five directorships in listed issuers
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
PETRONAS Gas Berhad Responsible Financial
14 Governance and Financial Report 2021 Governance Statements
PROFILE OF THE
BOARD OF DIRECTORS
MARINA
MD TAIB
Non-Independent Non-Executive Director
Industry Experience
Academic/Professional Qualifications
• Advanced Management Programme, Harvard
Business School
• Master of Petroleum Business Management,
University of Adelaide, Australia
• Fellow, Institute of Chartered Accountants in England
and Wales
• Bachelor of Social Studies Accountancy, University of
Exeter, United Kingdom
Past Experience
Present Directorships
• Head, Corporate Strategic Planning, PETRONAS
Listed issuer: • Head, Brunei Operations, PETRONAS Carigali Sdn. Bhd.
• PETRONAS Gas Berhad • Head, Strategic Planning, Petroleum Management Unit, PETRONAS
Other public company: • Senior Manager, Corporate Planning and Development Division, PETRONAS
• Nil
Present Appointments
• Vice President, Treasury of PETRONAS
• Member, Board Audit Committee of
PETRONAS Gas Berhad
• Board Member of various companies in PETRONAS
Declaration
• No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• No conflict of interest with PETRONAS Gas Berhad
• No conviction of any offences within the past five years other than traffic offences, if any
• Does not hold more than five directorships in listed issuers
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
15
HASLIZA
OTHMAN
Non-Independent Non-Executive Director
Industry Experience
Academic/Professional Qualifications
• Masters of Sciences, Chemical Engineering, Texas
A&M University, Texas, United States of America
• Bachelor of Science, Chemical Engineering, Texas
A&M University, Texas, United States of America
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad
Other public company: Past Experience (Continued)
• CEFS Response • Contract Engineer (Project Engineering, Field Development), Petroleum
Management Unit, PETRONAS
Present Appointments • Staff Engineer, Conceptual Engineering and Planning, ExxonMobil
• Vice President, Malaysia Assets, Upstream Business of Exploration and Production, Malaysia Inc
PETRONAS • Senior Engineer, Process Design, ExxonMobil Exploration and Production,
• Board Members of various companies in PETRONAS Malaysia Inc
• Senior Engineer, Conceptual Engineering and Planning, Esso Production
Past Experience Malaysia Inc
• Head (Peninsular Malaysia), Malaysia Assets, Upstream, • Facilities Engineer, Oil Facilities, Esso Production Malaysia Inc
PETRONAS Carigali Sdn. Bhd.
• Head (Resource Development), Malaysia Petroleum
Management, PETRONAS
• Head (Upstream Risk & Assurance), Upstream
Business, PETRONAS
• General Manager (Field Development, Petroleum
Resource Development), Petroleum Management Declaration
Unit, PETRONAS • No family relationship with any Director/Major Shareholder of PETRONAS Gas Berhad
• Senior Manager (Front End Engineering, Field • No conflict of interest with PETRONAS Gas Berhad
• No conviction of any offences within the past five years other than traffic offences, if any
Development), Petroleum Management Unit,
• Does not hold more than five directorships in listed issuers
PETRONAS
FINANCE/AUDIT/MANAGEMENT ACCOUNTING LEGAL/REGULATORY ECONOMICS INVESTMENT ENGINEERING/TECHNICAL OIL AND GAS BANKING AND FINANCE LOGISTICS
COMMERCIAL/MARKETING OPERATIONS STRATEGIC PLANNING/ANALYTICAL/BUSINESS MANAGEMENT
HUMAN PERFORMANCE INFORMATION TECHNOLOGY/DIGITAL ENTREPRENEUR SUSTAINABILITY REGIONAL/INTERNATIONAL POWER AND NEW ENERGY
PETRONAS Gas Berhad Responsible Financial
16 Governance and Financial Report 2021 Governance Statements
COMPANY
SECRETARIES
Malaysian 45 Female
Professional Qualification
• Fellow of the Malaysian Institute of
Chartered Secretaries and Administrators
Malaysian 61 Male
Professional Qualification
• Fellow of the Malaysian Institute
of Chartered Secretaries and
Administrators
• Member of Malaysia Institute of
Accountants
• Associate and Chartered Global
Management Accountant of The
Chartered Institute of Management
Accountants
YEAP KOK LEONG
Company Secretary
17
PROFILE OF
LEADERSHIP TEAM
Nationality/Ethnicity Nationality/Ethnicity
Malaysian/Malay Malaysian/Malay
Age/Gender Age/Gender
56/Male 53/Male
Responsibilities Responsibilities
• Overall management and operations of the business, • Overall management and operations of Gas Processing and
organisational effectiveness and the implementation of the Utilities facilities by ensuring safe, reliable, optimum and efficient
Group’s strategies and policies plant operations
• Manage the respective responsibilities of the divisions and • Ensure delivery of contracted utilities which satisfies customers’
departments in Company requirements as well as achieving optimum gas value chain for
PETRONAS and PGB
Academic/Professional Qualifications • Ensure compliance with regulations and statutory requirements
• Senior Executive Programme, London Business School
• INSEAD Programme, INSEAD Business School Academic/Professional Qualifications
• Bachelor of Science in Mechanical Engineering, George • Bachelor of Science in Mechanical Engineering, George
Washington University, United States of America Washington University, United States of America
Declaration
• No family relationship with any director and/or major shareholder of PGB • No conviction of offences, other than traffic offences, within the past five years
• No conflict of interest with PGB
PETRONAS Gas Berhad Responsible Financial
18 Governance and Financial Report 2021 Governance Statements
PROFILE OF
LEADERSHIP TEAM
Nationality/Ethnicity Nationality/Ethnicity
Malaysian/Malay Malaysian/Malay
Age/Gender Age/Gender
54/Male 47/Female
Responsibilities Responsibilities
• Overall management and operations of Gas Transmission and • Overall Group’s financial and fiscal management, risk management
Regasification facilities by ensuring Safe, Reliable and Efficient as well as investor relations
pipeline network and regasification operations • Provide strategic partnering and finance advisory to the business
• Ensure delivery of gas which satisfies PETRONAS and other particularly on business ventures and commercial arrangements
Shippers’ requirements as well as achieving optimum gas
value chain Academic/Professional Qualifications
• Ensure compliance with regulations and statutory requirements • Member, Malaysian Institute of Accountants
• Fellow, Institute of Chartered Accountants in England and Wales
Academic/Professional Qualifications (ICAEW)
• Bachelor of Chemical Engineering from University of Texas A&I, • Bachelor of Science in Economics and Accounting, University of
United States of America Bristol, United Kingdom
• First Grade Steam Engineer from Malaysian Department of
Occupational Safety & Health Present Appointments
• Director, Kimanis Power Sdn. Bhd.
Present Appointments • Director, Kimanis O&M Sdn. Bhd.
• Chief Executive Officer, Regas Terminal (Sg. Udang) Sdn. Bhd. • Director, Pengerang Gas Solutions Sdn. Bhd.
• Alternate Director, Pengerang LNG (Two) Sdn. Bhd.
Past Experience • Alternate Director, Gas Malaysia Berhad
• Vice President Operations, Trans-Thai Malaysia (Thailand) Limited • Board Member of various companies in PETRONAS
• Senior Operation Manager, PETRONAS Gas Berhad
• Shift Supervisor, Ethylene (Malaysia) Sdn. Bhd. Past Experience
• Operation Engineer, PETRONAS Penapisan (Terengganu) Sdn. Bhd. • Financial Controller, PETRONAS Chemicals Group Berhad
• Senior Manager, Strategic Planning, PETRONAS
• Head, Finance & Administration, Dragon LNG, United Kingdom
• Manager, Financial Accounting, PETRONAS Dagangan Berhad
• Analyst, President/CEO’s Office, PETRONAS
• Executive, Corporate Finance, PETRONAS
• Auditor, Wenham Major Chartered Accountants, United Kingdom
Declaration
• No family relationship with any director and/or major shareholder of PGB • No conviction of offences, other than traffic offences, within the past five years
• No conflict of interest with PGB
19
Nationality/Ethnicity Nationality/Ethnicity
Malaysian/Malay Malaysian/Malay
Age/Gender Age/Gender
47/Male 46/Female
Responsibilities Responsibilities
• Provide overall medium to long-term business strategy for the • Lead and drive the development and implementation of
Company talent strategy for PGB, in line with it’s business strategy and
• Maximise Group’s profitability through effective business requirements
development for growth, commercial negotiations and • Provide HR advisory and consultation to PGB leaders on HR and
resolutions, business ventures management, land acquisition talent matters through insights and foresights
and management • Steer and drive the solutioning of organisational HR matters
• Provide strategic direction for effective and profitable business and deliver integrated HR solutions at pace to ensure that PGB
operations under the Third Party Access (TPA) remains ahead of competition
Declaration
• No family relationship with any director and/or major shareholder of PGB • No conviction of offences, other than traffic offences, within the past five years
• No conflict of interest with PGB
PETRONAS Gas Berhad Responsible Financial
20 Governance and Financial Report 2021 Governance Statements
PROFILE OF
LEADERSHIP TEAM
Nationality/Ethnicity Nationality/Ethnicity
Malaysian/Malay Malaysian/Malay
Age/Gender Age/Gender
49/Female 48/Male
Responsibilities Responsibilities
• Overall management of legal affairs of PGB Group • Overall management of PGB strategies & compliance of its
implementation, risk management and delivery of growth
Academic/Professional Qualifications projects, while safeguarding and sustaining the long-term
• LLB (Honours), Universiti Kebangsaan Malaysia interests of the shareholders, employees and customers
• Admitted as Advocate & Solicitor of the High Court of Malaya • Manage HSE and PGB sustainability development strategy,
agenda, and initiatives as per PGB’s aspirations and direction
in 1997
• Overall management of PGB change management and culture
• Licensed Company Secretary
programs and initiatives, to support PGB’s business requirements
Present Appointments
Academic/Professional Qualifications
• Nil • Bachelor of Mechanical Engineering (Hons), Leeds University
Declaration
• No family relationship with any director and/or major shareholder of PGB • No conviction of offences, other than traffic offences, within the past five years
• No conflict of interest with PGB
21
Nationality/Ethnicity Nationality/Ethnicity
Malaysian/Chinese Malaysian/Malay
Age/Gender Age/Gender
47/Female 44/Male
Responsibilities Responsibilities
• Lead and drive the strategic communications function which • Steer and strategise the implementation of Self-Regulatory in PGB
include external stakeholders’ engagement, media management, • Provide advisory and consultancy to PGB on the implementation
corporate and crisis management communications to meet the and sustainability of Plant Management System
objectives of PGB • Lead and drive stakeholder management with Regulatory and
• Formulate strategies and programmes to define the desired Statutory bodies to continuously align to regulatory & statutory
reputation and brand positioning to continuously secure requirements, PETRONAS and Shareholder’s aspirations and
shareholders’ confidence towards PGB and social license to expectations
operate • Establish purposeful stakeholder management to support PGB’s
• Ensure positive positioning of PGB’s reputation as a socially strategies and plans
responsible organisation and the community’s business partner
of choice through various corporate programme initiatives Academic/Professional Qualifications
• Master of Science in Industrial & Technology Management,
Academic/Professional Qualifications Universiti Kebangsaan Malaysia
• Bachelor of Arts (Communication - Advertising), Charles Sturt • Bachelor of Engineering (Hons) in Mechanical Engineering,
University, Australia Universiti Teknologi PETRONAS
• First Grade Engineer – Internal Combustion Engine, Malaysian
Present Appointments Department of Occupational Safety & Health (DOSH)
• Nil • Vibration Analyst (Category 2), Mobius Institute Board of
Certification, Australia
Past Experience
• Head, Research, Group Strategic Communications, PETRONAS Present Appointments
• Manager, Planning & Research, Corporate & Marketing • Nil
Communication, PETRONAS Dagangan Berhad
• Head, Advertising & Promotions, Corporate & Marketing Past Experience
Communication, PETRONAS Dagangan Berhad • Manager, Mechanical, Operation Engineering Department,
• Manager, Communication Management, Brand Department, Transmission Division, PETRONAS Gas Berhad
PETRONAS Dagangan Berhad • Manager, Gas Transmission Asset Operation & Maintenance,
• Brand Marketing Specialist, Chevron Malaysia Limited Bintulu Operation Center & Southern Operation, PETRONAS
• Commercial & Industrial Business Consultant, Caltex Oil Malaysia Gas Berhad
Limited • Manager, Gas Transmission and Regasification, Technical
Services & Project Execution, Technical Services Department,
PETRONAS Gas Berhad
• Head, Regasification Terminal (RGT) Asset Operation &
Maintenance, RGT Sg. Udang & RGT Pengerang, PETRONAS
Gas Berhad
Declaration
• No family relationship with any director and/or major shareholder of PGB • No conviction of offences, other than traffic offences, within the past five years
• No conflict of interest with PGB
PETRONAS Gas Berhad Responsible Financial
22 Governance and Financial Report 2021 Governance Statements
ORGANISATION
STRUCTURE
BOARD OF DIRECTORS
Company
Secretary*
Managing Director/
Chief Executive Officer
Leadership Team
* Corporate Secretarial function is undertaken by Group Secretarial & Board Governance, PETRONAS
** Legal function is undertaken by Group Legal, PETRONAS
23
11.6% 88.4%
13% 87%
FY2021 FY2021
Age Diversity
3%
1%
65%
FY2021
32%
Note:
1. Data as at 31 December 2021.
Baby Boomers 10
Gen X 534 2. Manpower generation data 2021
Millennials 1,084 is based on the new definition,
i.e Baby Boomers (1965 and
Post Millennials 43 before), Gen X (1966 - 1979),
Total 1,671 Millenials (1980 - 1994) and
Post Millenials (1995 and after).
PETRONAS Gas Berhad Responsible Financial
24 Governance and Financial Report 2021 Governance Statements
CHAIRMAN’S STATEMENT ON
CORPORATE GOVERNANCE
For the year in review, the Board continued to provide oversight on corporate governance and work closely together with
PGB’s management team. Our efforts centred on refining our corporate governance practices to align with the updated
Malaysian Code on Corporate Governance 2021 (MCCG 2021) issued by the Securities Commission Malaysia and the 4th edition of
the Corporate Guidance Guide issued by Bursa Malaysia Securities Berhad. We also worked to recompose PGB’s Board and Board
Committees to ensure more balanced and effective representation, as well as strengthened our overall governance framework.
I am pleased to report that as at the date of this Statement, we have aligned with the MCCG 2021 practice which requires the boards
of large companies to comprise a majority of independent directors to ensure an effective and objective check and balance in relation
to decision making. The roles of Independent Non-Executive Directors (INEDs) are particularly crucial in protecting the interest of
minority shareholders. In line with this, six of PGB’s 10 Board members today are INEDs. Our Board composition also exceeds the
Main Market Listing Requirements of Bursa Malaysia Securities Berhad where more than one-third of board members are to be INEDs.
The MCCG 2021 practices also advocate having 30% women directors on a board and to ensure a policy on gender diversity is in
place. To this end, PGB has four women directors constituting 40% of the Board while the PGB Diversity Policy has been in place
for some time now. Our policy aims to ensure that a good mix of Board member profiles in terms of age and gender, as well as the
necessary perspectives, experiences and expertise are in place to achieve effective stewardship, create value and ensure we remain
relevant amidst the evolving business environment.
25
In May 2021, the PGB Board Risk Committee (BRC) was established as the Board saw the need to have a board committee assisting
the Board in reviewing and evaluating risk in a holistic manner. The establishment also aligns with the MCCG 2021 practice that
recommends that the majority of BRC members be independent directors. Today, the BRC continues to effectively oversee the
Group’s risk management framework and policies, our sustainability agenda, as well as our Environmental, Social and Governance
compliance.
The MCCG 2021 also recommends that a company address sustainability risks and opportunities in an integrated and strategic
manner to support its long-term success. To this end, the year saw us strengthening our sustainability practices and framework to
align with the MCCG 2021. The details of how we have complied with the recommended practices applicable for Large Companies
under the MCCG 2021 are spelt out in our standalone 2021 Corporate Governance Report which is published on our website and
submitted to Bursa Malaysia.
Over the course of 2021, the Group also implemented the following governance and risk management measures:
• In view of COVID-19 pandemic restrictions, PGB’s 38th Annual General Meeting was convened on 20 April 2021 virtually.
There was good participation in the event with a total of 849 shareholders and proxies logging in through the remote
participation and voting facilities;
• To mitigate project risk, the Project Development Department and Project Directorate Department were established.
These units are tasked with shaping project development and ensuring effective project execution within the prescribed
costs and schedules whilst upholding the highest Health, Safety and Environmental standards;
• As part of our commitment towards becoming financially resilient, PGB and its subsidiaries adopted the revised
PETRONAS Financial Policy. The policy aims to ensure efficient capital and liquidity management amidst a volatile
business landscape. It also provides a consistent framework in which financial risks and the relevant strategies to mitigate
such risks;
• To better manage credit risk exposure, PGB Credit Guidelines were set in place enabling us to evaluate the credit
worthiness of customers and assign credit risk ratings to all of them; and
• In relation to the Gas and Utilities supply Business Continuity Plan, the Group performed Business Continuity Management
tests regularly to ensure preparedness and readiness in facing business disruption, as well as to ascertain the effectiveness
and robustness of our response and recovery strategies.
All in all, the measures we undertook in 2021 sought to strengthen our corporate governance framework and establish a robust
risk management process. We are confident that these initiatives will hold PGB in good stead as we venture forth into the new normal.
PGB’s commitment to ensuring transparency and accountability throughout the Group is reflected in the awards and recognition
that we continue to receive. In 2021, we were ranked 4th out of the Top 100 Companies for the Excellence Award for Corporate
Governance Disclosure, as well as ranked 1st in the Industry Excellence Award for Utilities at the MSWG-ASEAN Corporate Governance
Awards 2020 event. On top of this, PGB’s Integrated Report 2020 received a Gold award for Best Design at the National Annual
Corporate Report Awards 2021.
Last but not least, on behalf of PGB’s Board, I am delighted to welcome our new Directors, namely Datuk Mark Victor
Rozario, Mr. Sujit Singh Parhar s/o Sukhdev Singh, and Puan Hasliza Othman, all of whom joined us in 2021. We certainly look
forward to their insights and wise counsel. I also wish to convey our sincere gratitude to Puan Emeliana Dallan Rice-Oxley for
her worthy service and contributions to the Board and wish her every success in her endeavours.
In setting the appropriate measures in place and embedding sustainability in a greater measure throughout the Group, we are
confident that our efforts will go a long way in ensuring PGB’s sustainable, long-term growth. Thank you for your unwavering support
of PGB.
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
The Board of PGB presents this Corporate Governance Overview Statement (CG Overview Statement) to provide investors with vital
insights into the corporate governance practices of PGB during the financial year 2021.
The Statement reports on the manner the Group has adopted and applied the following principles and best practices set out in the
following requirements/guides:
1. Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Malaysia);
in addition to being benchmarked against the ASEAN Corporate Governance Scorecard and other applicable laws and
regulations throughout the year ended 31 December 2021.
This CG Overview Statement shall be read together with the Corporate Governance Report 2021 (CG Report 2021) which is
accessible to the public at the Company’s corporate website at www.petronasgas.com.
This CG Overview Statement demonstrates how PGB measures are aligned with the principles of good governance in accordance
with the MCCG 2021 and references are made to the three key CG principles in the MCCG 2021:
PRINCIPLE A
Board Leadership
and Effectiveness
PRINCIPLE B PRINCIPLE C
Effective Audit and Integrity in
Risk Management Corporate Reporting and
Meaningful Relationship
with Stakeholders
27
PGB is committed to high standards of integrity and ethics in the conduct of its business. Good governance is imperative to ensure
sustainable long-term performance, maximise returns for our stakeholders and to create sustainable long-term economic value and
growth of the PGB Group.
Testament to PGB’s commitment in ensuring transparency and accountability is recognised with the following awards and recognition
during the year under review:
PGB’s governance structure and practices are integrated across the PGB Group in creating value for all its stakeholders based on the
following principles:
• promoting the Group’s future growth through sustainable practices aligning to the Group’s sustainability agenda; and
• balancing the autonomy of the various operating entities in the Group with the appropriate checks and balances.
The Board is accountable to shareholders to create and deliver sustainable value through oversight of the management of the
Group’s business, approving strategic plans, monitoring their implementation and providing the necessary support for their successful
execution.
The Board discharges its responsibilities within a clearly defined governance framework and robust mechanisms in place. Through
this framework, the Board, without abdicating its responsibilities, delegates its governance responsibilities to key Committees of the
Board and other Management committees. The Board retains ultimate accountability and responsibility for the performance and
affairs of the Company and ensures that the Group adheres to high standards of ethical behaviour.
Effective operation of the Board relies on clarity of the various roles and responsibilities. There is therefore a clear division of
responsibilities between the leadership of the Board and the executive leadership of the Company’s business in line with the principles
of the MCCG 2021.
The framework shows the governance oversight role of the Board, the various components of governance that facilitate the interaction
and flow between them. The table below describes Group’s governance structure, an overview of the key Committees of the Board
and other Management committees.
PETRONAS Gas Berhad Responsible Financial
28 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
GOVERNANCE STRUCTURE
Independent Non-Independent
Senior Independent
Chairman Non-Executive Non-Executive
Director (SID)
Directors (INEDs) Directors (NINEDs)
Responsible for the Acts as the point of Provide independent Provide in-depth
orderly conduct and contact between judgement and views knowledge and insight
function of the Board Non-Executive from PETRONAS’
Directors (NEDs) and perspective
Chairman as well as
shareholders
Strategic KPIs, progress and implementation
Quarterly
Audit Status Report Senior Management’s Quarterly Enterprise
Quarterly Performance & Risk Report, Governance
Financial Reporting Remuneration and Sustainability
Internal Audit Department
Result Delivery (R2) Leadership Team Risk and Compliance Investment Steering
Steering Committee (LT) Committee Committee
The Board Charter sets out the roles and responsibilities of the Board, the Chairman and the Managing Director/
Chief Executive Officer (MD/CEO), Board appointments and succession planning, establishment of Board Committees, stakeholder
communication, risk management etc.
The delegation of authority as set out in the Board Charter is clear and ensures that the line of authority is in line with the
legal and regulatory requirements. The Board Charter are reviewed and updated from time to time to reflect relevant changes to the
policies, procedures and processes as well as amendments to rules and regulations to ensure the document remains relevant and
consistent with the applicable rules and regulations and recommended best practices.
The Board Charter is available on the Company’s corporate website, www.petronasgas.com together with the Terms of References
(TOR) of all Board Committees.
Board Leadership
The Board is entrusted with the responsibility to promote the success of the Group by directing and supervising the Group’s affairs
in a responsible and effective manner. Each Director has a duty to act in good faith and in the best interest of the Company.
The Directors are aware of their collective and individual responsibilities to all shareholders for the manner in which the affairs of the
Company are managed, controlled and operated. The Board is satisfied that it has fulfilled these duties and obligations during the year
under review by promoting long-term sustainability and success within a framework of prudent and effective control.
The Board safeguards stakeholder value-creation and ensures the strategic plan of the Company supports long-term value creation
and includes strategies on economic, environmental, social and governance (EESG) considerations thereby strengthening the
integration of sustainability in the Company’s operations. Through sustainable practices, the Company is more resilient, enabling
sustainable value and simultaneously maintaining the confidence of its stakeholders.
PETRONAS Gas Berhad Responsible Financial
30 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
In discharging its fiduciary and leadership functions, the roles and responsibilities of the Board are, inter alia, as follows:
Risk Management
Internal Control
• To review and approve financial
and
3 4 Strategy Formulation
• To review, approve and monitor
the annual corporate plans which
statements. includes overall corporate strategy,
• To review and manage principal business plan and targets, human
risks and adequacy of PGB’s internal resources plan, financial plan
control system including systems and budget, risk management
for compliance with applicable laws, plan and information technology
regulations, rules and guidelines. plan to ensure sustainability and
• To ensure that there is an appropriate optimisation of long-term returns.
succession plan for members of the
Board and Leadership Team (LT).
The above roles and responsibilities are clearly set out in the Board Charter.
During the financial year under review, the Board saw some changes in the composition of the Board. Datuk Mark Victor Rozario
was appointed as Independent Non-Executive Director (INED) of the Company effective 1 June 2021, whilst on 15 July 2021,
Sujit Singh Parhar s/o Sukhdev Singh was appointed to the Board as INED and Hasliza Othman was appointed to the Board as
Non-Independent Non-Executive Director (NINED) of PGB. Emeliana Dallan Rice-Oxley, NINED resigned on 15 July 2021.
The Board wishes to record its appreciation and gratitude to Emeliana Dallan Rice-Oxley for her contribution and service during her
tenure as Member of the Board.
31
Designation Number
Designation
of Directors
6/10
• Independent Non-Executive Directors
1/10
• Executive Director (MD/CEO)
10%
30%
Non-Independent Non-Executive Directors (including Chairman)
60%
The composition of the Board exceeds the requirements of Paragraph 15.02 of the MMLR as more than one-third of its members
are INEDs. The Board took cognisance of Practice 5.2 of MCCG 2021 which requires the Board of large companies to comprise a
majority of independent directors. This composition enables an effective and objective check and balance on the Board’s deliberation
and decision making. The roles of the INEDs are crucial particularly in the area of related party transactions where their presence is
imperative to protect the interest of minority shareholders.
The Directors are selected based on their individual merits and experience. The current Board composition comprises individuals
of diverse backgrounds with expertise and skills amongst others in the oil and gas industry, power and new energy sector, legal and
regulatory, economics, engineering/technical, finance, operations strategic planning and sustainability. The current overall Board
composition is adequate in terms of size and diversity of age and gender. This is to ensure inclusiveness of views as well as to facilitate
effective decision-making and constructive deliberation during its meetings.
The NEDs possess the necessary expertise and experience to ensure that the formulation of policies and strategies proposed by
the Management are fully deliberated and examined. They contribute the formulation of policy and decision-making through their
expertise and experience.
In line with the MMLR of Bursa Malaysia, none of the members of the Board holds more than five directorships in listed companies.
Prior to acceptance of any other appointment for directorship in other listed companies, the Directors are required to notify the
Chairman of PGB to ensure that such appointments would not unduly affect their time commitment and responsibilities to the Board.
None of the Directors have appointed any alternates.
The profile of each Director is presented on pages 6 to 15 of the Governance and Financial Report 2021 (GFR 2021).
PETRONAS Gas Berhad Responsible Financial
32 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
The Chairman is primarily responsible for the stewardship and smooth functioning of the Board, whilst the MD/CEO is responsible
for the overall operations of the business, organisational effectiveness and the implementation of the Group’s strategies and policies.
Given the Company’s business integration and synergy with PETRONAS, the Chairmanship of the Company remains with a NINED.
The separation of roles is imperative as both roles have different expectations and serve distinct primary audiences.
The MD/CEO manages the respective responsibilities of the divisions and departments in the Company. He is assisted by the LT who
ensures effective systems, controls and resources are in place to execute business strategies and decisions.
Roles of Chairman
(a) To develop and recommend to the Board the long-term strategy and vision for PGB and/or Group that leads to the
creation of long-term prosperity and stakeholder value.
(b) To develop and recommend to the Board the operational plan and budget that support PGB’s and/or Group’s
long-term strategy.
(c) To foster a corporate culture that promotes ethical practices, encourages individual integrity and the fulfillment of
PGB’s corporate social responsibilities.
(d) To maintain a positive and ethical working environment that is conducive to attracting, retaining and motivating a
diverse work force at all levels.
(a) To recommend suitable management structure and operating authority levels which include delegations of
responsibilities to Management.
(b) To ensure an effective LT below the level of the MD/CEO and to develop an appropriate succession plan.
(c) To formulate and oversee implementation of major corporate policies.
(d) To be accountable to the Board for financial management and reporting, including forecasts and budgets of PGB.
(e) To report to the Board periodically on the Company’s financial positions and results, key performance indicators,
market conditions and business development.
(f) To ensure continuous improvement in quality and value of PGB’s products and services.
(g) To serve as spokesperson for PGB.
(h) To refer to the Board Committee on matters as requested from time to time.
The respective roles and responsibilities of the Chairman and MD/CEO are stated in the Board Charter in the Company’s corporate
website, www.petronasgas.com.
PETRONAS Gas Berhad Responsible Financial
34 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
HABIBAH ABDUL
Senior Independent Director
The Senior Independent Director (SID) acts as the main liaison between the INEDs and the Chairman on matters that may be
deemed sensitive and is available to confidential discussions with other NEDs who may have concerns which they believe have
not been considered by the Board as a whole. She also provides an alternative communication channel for shareholders and
stakeholders to convey their concern and raise issues so that these can be channeled to the relevant parties.
Habibah Abdul fulfills the criteria under the definition of Independent Director pursuant to the MMLR as SID. The appointment
is in line with the best practice recommended by the ASEAN Corporate Governance Scorecard, which is used as a benchmark
by the Company in its effort to maintain the highest standards of good governance. Based on her experience with the Board
and seniority amongst the INEDs, Habibah Abdul satisfies the prescribed criteria, and is the most suitable candidate for the role
of SID. Her familiarity with the operations throughout the years and on the workings of the Board as well as her involvement
with the NRC and BAC have also provided her with in-depth experience on the respective member’s individual roles and forte.
Habibah Abdul also has significant influence within the Board and was able to deliver her role as the SID of PGB.
All queries relating to the Group can be channeled to the SID’s email address, habibah.abdul@petronas.com or directed to the
following address:
Habibah Abdul
Senior Independent Director
PETRONAS Gas Berhad
Level 49-50, Tower 1, PETRONAS Twin Towers
Kuala Lumpur City Centre
50088 Kuala Lumpur
Malaysia
Separation of Powers between the Board and Management (d) Assess the appropriate mix of diversity including gender,
age, skills, experience and expertise required on the Board
The MD/CEO is assisted by the LT, R2 Steering Committee,
and address gaps, if any.
Risk and Compliance Committee and Investment Steering
Committee in managing the business on a day-to-day basis, with
The Board Diversity Policy is accessible to the public for reference
whom he consults regularly.
on Company’s corporate website at www.petronasgas.com.
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
Interview shortlisted
Perform background check 5 6 candidates/consultation with
Chairman of the Board
PGB practices a formal and transparent procedure for appointment of new directors. The Nomination of NINEDs to the Board
is made by PETRONAS, being the majority shareholder of PGB whereas the nomination of INEDs to the Board may be made via
recommendations from the Board members and/or through the engagement of a professional recruitment firm to find the most
suitable candidates to fill any vacant positions.
In its selection of suitable candidates, the NRC adheres to the guidelines stipulated in the Board Succession Planning and Board
Selection Criteria. Once a potential candidate has been shortlisted for recommendation, the Company Secretary will conduct
comprehensive background checks, including checks on financial, character and integrity.
37
All nominees to the Board are first considered by the NRC, taking Board Meetings and Attendance
into consideration mix of skills, competencies, experience,
The Board meets at least quarterly with additional meetings
integrity, personal attributes and time commitment required to
convened as and when necessary. The Board, Board Committees
effectively discharge his or her role as a director. Diversity in
terms of age and gender are also considered during the selection and General meeting for the year under review were scheduled
process. as early as November 2020 to facilitate the Directors in planning
ahead and incorporating the said meetings into their respective
Directors’ Re-election schedules. Aside from the Board meetings, urgent matters are
also decided via written circular resolutions.
In accordance with the MMLR and Article 107 of the Company’s
Constitution, one-third of the Directors of the Company for the
The Board has a formal schedule of matters reserved at Board
time being shall retire by rotation at an AGM of the Company
meetings which includes corporate plans, annual budgets,
provided always that all Directors, shall retire from office at least
operational and financial performance reviews, major investments
once in every three years but shall be eligible for re-election at
and financial decisions, risk management, Management
the AGM. A Director retiring at the AGM shall retain office until the
performance assessment, changes to the Management and
close of the meeting whether adjourned or not. Whilst according
to Article 100 of the Company’s Constitution and the CA 2016, control structure within the Group and including key policies
Directors appointed to fill a casual vacancy or as an addition to and procedures. Relevant members of the LT attend Board
the Board of Directors shall hold office only until the conclusion meetings by invitation and report to the Board on matters
of the next AGM and shall be eligible for re-election. Taking pertinent to their respective areas of responsibility, to present
into consideration the relevant requirements, the Directors’ new proposals or to brief on actions implemented pursuant to
rotation list was presented to the NRC for endorsement prior recommendations made by the Board. All proceedings of the
to recommendation to the Board and the affected Directors are Board meetings are duly minuted and signed. Minutes of each
required to give their consent on their re-election prior to PGB’s Board meeting are properly kept by the Company Secretary.
Board meeting.
The prolonged COVID-19 pandemic has accelerated
In assessing the candidates’ eligibility for re-election, the NRC pre-existing trends in working remotely and how the Board and
considers their competencies, commitment, contribution, Management carry out meetings which are conducted online,
performance based on the Board Effectiveness Evaluation (BEE) including matters relating to strategic conversation, high level
and their ability to act in the best interest of PGB. decision making, financial and governance. As such, all five
Board meetings were held virtually via tele-conference during
The Board at its meeting held on 22 February 2022 endorsed the year. Aside from Board meetings, urgent matters will also
the recommendation of the NRC for the following Directors be decided via written circular resolution. In discharging their
to be considered for re-election pursuant to Article 107
responsibilities during each Board and Committee meeting, the
and 100 of the Company’s Constitution at the forthcoming
Directors were inquisitive in the quest for better understanding
39th AGM and they have given their consent for re-election at the
of items being discussed, vocal during discussions and judicious
AGM:
in the decision-making process. They were impartial in their
views with the Company’s and stakeholders’ best interest at the
Article 107: forefront of every major decision.
• Habibah Abdul
• Marina Md Taib
Article 100:
• Datuk Mark Victor Rozario
• Sujit Singh Parhar s/o Sukhdev Singh
• Hasliza Othman
PETRONAS Gas Berhad Responsible Financial
38 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
The Director’s commitment in carrying out their duties and responsibilities is reflected by their attendance at the Board meetings held
during the year. All Directors complied with the minimum attendance requirement of at least 50% of Board meetings pursuant to the
MMLR of Bursa Malaysia. The Directors’ commitment in discharging their duties and responsibilities is reflected by their attendance at
the Board meetings. The overall percentage of all Board meetings attended by the Directors during the year under review was almost
100%. The Board is satisfied with the level of commitment given by the Directors toward fulfilling their roles and responsibilities.
The details of attendance of each Director on the Board, Board Committees and 38th Annual General Meeting who had served PGB
during the year under review are as follows:
Note:
Abdul Aziz Othman* Appointed 01.01.2021
Datuk Mark Victor Rozario** Appointed 01.06.2021
Sujit Singh Parhar s/o Sukhdev Singh*** Appointed 15.07.2021
Hasliza Othman**** Appointed 15.07.2021
Emeliana Dallan Rice-Oxley ^ Resigned 15.07.2021
2021 saw the Board and Board Committees spent a total of approximately 94 hours 43 minutes in discharging its key fiduciary
duties and oversight functions and responsibilities.
Note:
BSC = Board Strategic Conversation
39
Board Committees
As part of its efforts to ensure the effective discharge of its duties, the Board has delegated certain functions to certain Committees
with their own TOR. On 25 May 2021, the Board approved the formation of the BRC in line with the MCCG 2021’s Step Up
Practice 10.3. Pursuant to the establishment of the BRC, the BAC’s functions on risk management were undertaken by the BRC.
The Chairman of all Committees will report to the Board on the decision or outcome of the Committee meetings. The reports of the
BAC, NRC and BRC are set out on pages 56 to 85 of the GFR 2021.
Presentations and briefings by Management and relevant external consultants, where applicable, are also held at Board meetings to
furnish clarification to assist the Board in making a decision.
The Directors can access the Board papers online through a secured collaborative software which allows the Directors to securely
access, to read and review Board documents and collaborate with other Directors and the Company Secretary electronically.
This software eases the process of distribution of meeting papers and minimises leakage of sensitive information. The online
accessibility facilitates the Directors to read and review the documents or communicate with other Board members at anytime.
The Directors have direct access to the Management and have unrestricted access to any information relating to the Group to
enable them to discharge their duties. The Directors also have direct access to the advice and services of the Company Secretary
and are regularly updated on new statutory and regulatory requirements relating to the duties and responsibilities of the Directors.
The Directors, whether collectively as a Board or in their individual capacity, may seek independent professional advice at PGB’s
expense in furtherance of their duties.
PETRONAS Gas Berhad Responsible Financial
40 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
Group Strategic The Board deliberated on long term strategic options and provide the
Strategy Initiatives and Plans relevant feedback and steer.
Group’s Business Plans The Board deliberated and approved PGB’s business plan. PGB strategic
and Budget targets, operational plan and financial forecasts were presented to the
Board for their deliberation. The Board deliberated the risks as well as
potential challenges, both external and internal, towards achieving the
business plan. The Board considered and approved the budget necessary
to carry out the business plan.
Interim and Special The Board considered and approved the proposals on declaration of
Dividends Interim and Special Dividends.
Management of The Board deliberated and approved PGB critical risks that may significantly
Risk and principal risks impact PGB business goals and targets. The Board constantly monitors
Internal Controls the agreed mitigations to manage or reduce the likelihood and impact of
these critical risks. Key risk indicators which provide early warnings of risk
manifestation were also reported to the Board.
Implementation As part of the role of the Board of PGB, the Board ensures that there is an
Corporate and monitoring of appropriate succession plan for members of the Board. During the year
Governance and succession planning under review, the Board has approved the revision to Board succession
Compliance planning framework and Board Selection Criteria in order to:
1. Include the requirement to undertake background check on the
candidates for Directors;
2. Include risk management in the skills and experience under the Board
Selection Criteria; and
3. Revise cooling-off period for the appointment of Independent Director
and specific person including an existing or former officer, adviser or
transacting party of the listed issuer or its related corporation.
Related Party Transactions Related Party Transactions and Recurrent Related Party Transaction to
and Recurrent Related ensure all transactions are at arm’s length and were carried out on normal
Party Transactions commercial terms and not to the detriment of the minority shareholders.
Overview of Various Agenda Items on the Board and Board Committees Meetings 2021
NRC
Senior Management Performance for FY2020 C
JANUARY
Update on Directors’ Training Programmes for the Financial Year 2021 and Proposed Trainings/Conferences
C
for Directors for the Financial Year 2022
NRC BOARD
MD/CEO and Direct Report’s Scorecards C Q4 2020 Financial Results and Performance review F
FEBRUARY
Selection on the Proposed Independent Litigation and Arbitration Report C
C
Non-Executive Director Candidates Interim and Special Dividends for FY2020 F
Governance and Financial Report 2020: NRC Report C PGB Group Audited Financial Statements FY2020 F
Re-election of Directors at PGB 38th AGM C Strategic Business Discussions S
Results of the Board Effectiveness Evaluation FY2020 C 2020 Integrated Report and Governance and Financial
C
Report
BAC 2020 Corporate Governance Report C
Q4 2020 Financial Results and Performance review F Re-election of Directors at PGB 38th AGM C
RRPT Status Update R Results of the Board Effectiveness Evaluation FY2020 C
PGB Group Audited Financial Statements FY2020 F
2020 Governance and Financial Report Statements C
Review on Related Party Transactions C
Enterprise Risk Report Updates R
PETRONAS Gas Berhad Responsible Financial
42 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
BAC
Quarterly Audit Status Report R
MARCH
Internal Audit Updated Road Map and Proposed Balanced Scorecard R
Declaration on the Organisational Independence for Internal Audit Activity C
Internal Audit Department Progress Updates R
NRC BOARD
Nomination of Independent Non-Executive Director C Q1 2021 Financial Results and Performance review F
MAY
Nomination of Board Risk Committee Members C Litigation and Arbitration Report C
Interim Dividend FY2021 F
BAC Strategic Business Discussion S
Q1 2021 Financial Results and Performance review F Adoption of PETRONAS Economic Sanctions and C
RRPT Status Update R Export Control Policy and Guidelines
Review on Related Party Transactions C Appointment of Independent Non-Executive Directors C
Revision to BAC Terms of Reference C Proposed Establishment of Board Risk Committee and
C
Related Matters
Quarterly Audit Status Report R
Enterprise Risk Profile Report R
BAC BRC
Q2 2021 Financial Results and Performance review F Enterprise Risk Report R
AUGUST
RRPT Status Update R Risk Appetite Quarterly Updates R
Updates on Projects S Review on Business Risks R
Review on Related Party Transactions C Updates on the PGB Sustainability Associated Risk and
R
Review on Related Party Transactions by Mitigations
R
Independent Advisor Updates on the Malaysian Code on Corporate
C
Re-Alignment of PGB Internal Organisation Structure S Governance 2021: Proposed Way Forward
Quarterly Audit Status Report R
Progress Updates on Annual Audit Planning for 2022 R BOARD
Refinement of Audit Rating Guidelines: Classification Q2 2021 Financial Results and Performance review F
R
and Opinion Rating Litigation and Arbitration Report C
Interim Dividend FY2021 F
Strategic Business Discussion S
Establishment of Self-Regulatory Division R
Updates on the Malaysian Code on Corporate
C
Governance 2021: Proposed Way Forward
43
NRC BRC
Updates on Board and Management Succession Planning C 2022 Enterprise Risk Profile (ERP) R
NOVEMBER
Revision of Composition of PGB Board Committees C
2022 Risk Appetite Updates as at Q3
R
2021 and Proposed Refinement
Board Effectiveness Evaluation: Questionnaires C
Review on Business Risks R
BAC
BOARD
Q3 2021 Financial Results and Performance review F
Q3 2021 Financial Results and
KPMG Audit Plan for PGB Group of Companies for 2021 F F
Performance review
RRPT Status Update R
Litigation and Arbitration Report C
Review on Related Party Transactions C
Interim Dividend FY2021 F
Adoption of PETRONAS Tax Policy C
Business Plans 2022-2026 & Budget
PGB Security Policy C F
2022
Proposed Annual Audit Planning and Budget 2022 R Strategic Business Discussion S
PGB Internal Audit Deliverables and Performance in 2021 R PGB Security Policy R
Quarterly Audit Status Report R Adoption of PETRONAS Tax Policy C
PGB 2022 Enterprise Risk Profile R
PGB Risk Appetite Threshold
R
Refinement
Revision of Composition of Board
C
Committees
Updates Board Succession Planning C
Change of Company Secretary C
BAC BOARD
Review on Related Party Transaction C Strategic Business Discussion S
DECEMBER
Update on PGB Group Business Plans 2022 – 2026
F
and Budget 2022
Notes:
F Financial S Strategy R Risk and Internal Control C Corporate Governance and Compliance
PETRONAS Gas Berhad Responsible Financial
44 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
SUSTAINABILIT Y In addition to the Succession Planning for the Directors, the NRC
also reviewed the succession plan for the MD/CEO and LT of the
The Board together with Management takes responsibility for the
Company.
governance of sustainability in the Company, including setting
the Company’s sustainability strategies, priorities and targets.
The NRC continued to focus on conducting all relevant reviews
and assessments of the MD/CEO and LT positions. The NRC
PGB published a separate Sustainability Report 2021. The
is satisfied that there is a sufficient talent pool of potential
Report articulates our commitment to improving the Group’s
successors for PGB MD/CEO and LT and that for critical positions,
sustainability practices so that we are more competitive, more
external talents will be recruited if there are no suitable internal
resilient and adaptable to change which has been reinforced
talents available.
amid the unprecedented challenges of COVID-19. The Report
also sets out in detail the scope of our sustainability reporting and
Onboarding and Continuing Development Programme for
sustainability framework that addresses stakeholder expectations
Directors
across various sustainability issues.
All new Directors appointed to the Board receive a comprehensive
Directors’ Indemnity onboarding programme, conducted by members of the LT
covering key areas of the business, an overview of the Group’s
PGB continues to provide and maintain indemnification for its
financial risk management processes, the internal audit function,
Directors throughout the financial year as allowed under the
innovation and technology, and the corporate governance
CA 2016 to the extent it is insurable under the Directors’ and
framework within the Group. Directors were also updated on
Officers’ Liability Insurance (D&O) procured by the Company.
ongoing and potential projects undertaken by the Group. This
Directors and Officers are indemnified against any liability
programme helps the new Directors to familiarise themselves
incurred by them in discharging their duties while holding office
with the Group’s businesses.
as Directors and Officers of the Company.
During the year under review, the Directors also participated in seminars and training programmes in various capacities, as delegates
and/or speakers, the details of which are set out below:
Trainings Programmes/
No. Director Organiser Date
Conferences Attended
1. Adnan Zainol Abidin • Innovation Masterclass Cohort ELT Innovation Engine – 20 & 24 May 2021
PETRONAS (Workshop) 2 & 11 June 2021
• PETRONAS Board Excellence Programme PETRONAS 5 & 6 July 2021
Advance 2 - Effective Strategy for
Stakeholder Management
• GASTECH 2021 Dubai World Trade Centre 21 - 23
September 2021
• PETRONAS Board Excellence Programme PETRONAS 14 & 15
- Advanced 1: Best Practices for Board October 2021
Excellence
• Abu Dhabi International Petroleum Abu Dhabi National Oil 15 - 18
Exhibition & Conference (ADIPEC) Company (ADNOC) November 2021
2. Abdul Aziz Othman • Economic Regulations and Third Party Mckinsey and Arthur D. Little 11 February 2021
Access Regime
• Mandatory Accreditation Programme Iclif Executive Education 31 March -
(MAP) Center 2 April 2021
• Innovation Masterclass Cohort ELT Innovation Engine – 20 & 24 May 2021
PETRONAS (Workshop) 2 & 11 June 2021
• 5 Critical Laws and Cybersecurity PETRONAS 21 June 2021
• Energy Transition Wood MacKenzie 1 July 2021
• PETRONAS Board Excellence PETRONAS 5&6
Programme- Advance 2: Effective July 2021
Strategy for Stakeholder Management
• Energy Transition Arthur D. Little 23 July 2021
• PETRONAS WoodMackenzie Wood Mackenzie 2 September 2021
Industry Expert Insights Series – Key
Developments in the Gas and LNG
• PETRONAS WoodMackenzie Wood Mackenzie 3 September 2021
Industry Expert Insights Series – Key
Developments in the Power Renewables
and Energy Transition
• PGB Crisis Management and Business PETRONAS Gas Berhad 30 September 2021
Continuity Management Teams Refresher
Training
• PETRONAS Board Excellence Programme PETRONAS 14 & 15
- Advanced 1: Best Practices for Board October 2021
Excellence
PETRONAS Gas Berhad Responsible Financial
46 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
Trainings Programmes/
No. Director Organiser Date
Conferences Attended
3. Habibah Abdul • Economic Regulations and Third Party Mckinsey and Arthur D. Little 11 February 2021
Access Regime
• Asia-Pacific Board Leadership Centre KPMG 7 May 2021
Webinar – Board and Audit Committee
Priorities 2021
• MIA International Accountants Malaysian Institute of 8 - 10 June 2021
Conference 2021 Accountants
• Towards Comprehensive System of The Malaysian Institute of 22 June 2021
Corporate Reporting Certified Public Accountants
• Energy Transition Wood MacKenzie 1 July 2021
• PETRONAS Board Excellence PETRONAS 5 & 6 July 2021
Programme- Advance 2: Effective
Strategy for Stakeholder Management
• Energy Transition Arthur D. Little 23 July 2021
• External Environment Assessment KLCC Property Holdings 28 July 2021
Berhad
• 5 Critical Laws and Cybersecurity PETRONAS 19 August 2021
• The 6th PETRONAS Board Audit PETRONAS 7 September 2021
Committee Forum
4. Farina Farikhullah Khan • JC3’s 2nd Workshop on Climate Change – Bank Negara Malaysia (BNM) 10 February 2021
Series 3 and Securities Commission
Malaysia (SC)
• Economic Regulations and Third Party Mckinsey and Arthur D. Little 11 February 2021
Access Regime
• Implementing Amendments in Asian School of Business 1 June 2021
the Malaysian Code on Corporate
Governance
• Energy Transition Wood MacKenzie 1 July 2021
• PETRONAS Board Excellence PETRONAS 5 & 6 July 2021
Programme- Advance 2: Effective
Strategy for Stakeholder Management
• Energy Transition Arthur D. Little 23 July 2021
• FIDE Elective Program Nominating and ICLIF Executive Education 29 & 30 July 2021
Remuneration Committee: Beyond Box- Centre @ Asia School of
Ticking & Enhancing Effectiveness Business
• The Board’s Role and Responsibilities in FIDE Forum 19 August 2021
Crisis Communication
• 5 Critical Laws and Cybersecurity PETRONAS 19 August 2021
47
Trainings Programmes/
No. Director Organiser Date
Conferences Attended
4. Farina Farikhullah Khan • The 6th PETRONAS Board Audit PETRONAS 7 September 2021
(cont’d ) Committee Forum
• Integrity Training Vision Ethics Advisory Services 24 November 2021
Sdn Bhd
• Cyber Security Awareness Ambank Group Risk 17 December 2021
Management & ABS
5. Dato’ Abdul Razak • Economic Regulations and Third Party Mckinsey and Arthur D. Little 11 February 2021
Abdul Majid Access Regime
• POWER WEEK ASIA Virtual Conference Infocus International Group 15 - 18 March 2021
PTE LTD
• Asia-Pacific Board Leadership Centre KPMG 7 May 2021
Webinar – Board and Audit Committee
Priorities 2021
• Energy Transition Wood MacKenzie 1 July 2021
• PETRONAS Board Excellence Programme PETRONAS 5 & 6 July 2021
-Advance 2: Effective Strategy for
Stakeholder Management
• Energy Transition Arthur D. Little 23 July 2021
• 5 Critical Laws and Cybersecurity PETRONAS 19 August 2021
• The 6th PETRONAS Board Audit PETRONAS 7 September 2021
Committee Forum
• PETRONAS Board Excellence Programme PETRONAS 14 & 15
- Advanced 1: Best Practices for Board October 2021
Excellence
• Securities Commission’s Audit Oversight Securities Commission Malaysia’s 29 November 2021
Board Conversation with Audit Audit Oversight Board (AOB)
Committees
6. Datuk Yeow Kian Chai • Economic Regulations and Third Party Mckinsey and Arthur D. Little 11 February 2021
Access Regime
• POWER WEEK ASIA Virtual Conference Infocus International Group 15 - 18 March 2021
PTE LTD
• Asia-Pacific Board Leadership Centre KPMG 7 May 2021
Webinar – Board and Audit Committee
Priorities 2021
• Energy Transition Wood MacKenzie 1 July 2021
• PETRONAS Board Excellence Programme PETRONAS 5 & 6 July 2021
- Advance 2: Effective Strategy for
Stakeholder Management
• Energy Transition Arthur D. Little 23 July 2021
• 5 Critical Laws and Cybersecurity PETRONAS 19 August 2021
PETRONAS Gas Berhad Responsible Financial
48 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
Trainings Programmes/
No. Director Organiser Date
Conferences Attended
7. Datuk Mark • Onboarding Session PETRONAS Gas Berhad 18 June 2021
Victor Rozario • Energy Transition Wood MacKenzie 1 July 2021
• PETRONAS Board Excellence Programme PETRONAS 5 & 6 July 2021
- Advance 2: Effective Strategy for
Stakeholder Management
• Energy Transition Arthur D. Little 23 July 2021
• 5 Critical Laws and Cybersecurity PETRONAS 19 August 2021
• Mandatory Accreditation Programme Iclif Executive Education Center 6-8
(MAP) September 2021
• PETRONAS Board Excellence Programme PETRONAS 14 & 15
- Advanced 1: Best Practices for Board October 2021
Excellence
• Strategic Planning Theories, Tools and Malaysian Institute of 16 December 2021
Practice for Businesses Accountants
8. Sujit Singh Parhar s/o • Energy Transition Arthur D. Little 23 July 2021
Sukhdev Singh • Onboarding Session PETRONAS Gas Berhad 2 August 2021 &
5 October 2021
• 5 Critical Laws and Cybersecurity PETRONAS 19 August 2021
• Mandatory Accreditation Programme Iclif Executive Education 11 - 13
(MAP) Center October 2021
• PETRONAS Board Excellence Programme PETRONAS 14 & 15
- Advanced 1: Best Practices for Board October 2021
Excellence
9. Marina Md Taib • HSSE & Sustainability Forum – PETRONAS 20 January 2021
Establishing the Nation’s Approach
Towards Achieving Sustainability
Development Goals (Panelist)
• Asia-Pacific Board Leadership Centre KPMG 7 May 2021
Webinar – Board and Audit Committee
Priorities 2021
• Innovation Masterclass Cohort ELT Innovation Engine – 20 & 24 May 2021
PETRONAS (Workshop) 2 & 11 June 2021
• J.P. Morgan APAC CFO and Treasurers JP Morgan 8 September 2021
Forum
• Khazanah Megatrends Forum 2021 Khazanah Nasional Berhad 4 October 2021
• Women’s Global Leadership Conference Women’s Global Leadership 3 November 2021
2021 (Speaker) Conference
• PETRONAS Future Talks – Facilitating PETRONAS 23 November 2021
Investment of Innovation and
Digitalisation in Malaysia (Panelist)
49
Trainings Programmes/
No. Director Organiser Date
Conferences Attended
10. Hasliza Othman • Onboarding Session PETRONAS Gas Berhad 2 August 2021 &
5 October 2021
• Mandatory Accreditation Programme Iclif Executive Education 11 - 13
(MAP) Center October 2021
• PETRONAS Board Excellence Programme PETRONAS 14 & 15
- Advanced 1: Best Practices for Board October 2021
Excellence
Both the Company Secretaries of PGB, Ngian Yoke Fung and Yeap Kok Leong are qualified to act as company secretary under
Section 235 of the CA 2016. They are Fellow of the Malaysian Institute of Chartered Secretaries and Administrators. The Company
Secretaries act as advisors to the Board, particularly with regard to the PGB’s Constitution, policies and procedures and its compliance
with regulatory requirements, codes, guidelines and legislations.
The Company Secretaries ensure that the discussions and deliberations at Board and Board Committee meetings are well
documented, and subsequently communicated to the relevant Management for appropriate actions. The Company Secretaries
update the Board on the follow up of its decisions and recommendations by the Management.
The Company Secretaries constantly keep themselves abreast of the evolving regulatory changes and developments in corporate
governance through continuous training.
During the year under review, the Company Secretaries have attended the following trainings programmes:
Ngian Yoke Fung Companies Act 2016 – Practical Guide for Company Secretaries 1 April 2021
MAICSA Annual Conference 2021 6 & 7 October 2021
The New Norm: Managing Disruption - Resilience and Recovery
Technical Update Session with Securities Commission - Latest Changes 20 August 2021
on Malaysian Code on Corporate Governance 2021
Yeap Kok Leong Tricor Hive Sdn Bhd – Appointments & Revocation of Proxy 22 January 2021
Appointments – Case Study
Tricor Trustco (Labuan) Ltd’s Kuala Lumpur Marketing Office – 2 February 2021
Discretionary Trust – Case Study
MIA International Accountants Conference – Navigating A Sustainable 8 - 10 June 2021
Future With Agility and Resilience
ADP Partner Executive Convention (ADP Global Payroll) – Making Waves 1 - 2 December 2021
PETRONAS Gas Berhad Responsible Financial
50 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
During the year under review, the BEE was conducted internally through a digital platform, focusing on maximising the effectiveness
and performance of the Board and its Committees in the best interests of the Company. The Board will be engaging the services of
an external consultant to perform the BEE exercise once every three years. The Board takes cognisance that the external evaluation
is intended to provide more objectivity that could at times be lacking when carrying out the process internally.
Directors’ Remuneration
Directors’ fee, which is aligned to PGB’s strategic objectives, allows the Board to attract, motivate and retain high calibre talents.
The design of the fees architecture complies with regulatory requirements, embraces market practices and trends, and provides
attractive and balanced rewards.
The Board has established a formal and transparent Directors’ Remuneration Framework which comprises retainer fees, meeting
allowance and benefits in-kind. In compliance with Section 230(1) of the CA 2016, the resolution on the payment of the following
Directors’ fees from the 38th AGM until the forthcoming AGM was tabled for shareholders’ approval:
Note: Malaysian Resident INEDs are entitled to fuel allowance of RM6,000 per annum
The fees and allowances for NEDs will remain until further review by the Board and are subject to the approval of the shareholders
of PGB. PGB noted on the departure from the Guidance 7.2 of MCCG 2021 as the Company does not have any plan to table separate
resolutions on the approval of the fees of each NED and may explore ways to meet the intended outcome in future.
The Directors’ fees and meeting allowances for NINEDs who are also employees of PETRONAS are paid directly to PETRONAS.
The Company also reimburses all expenses incurred by the Directors, where relevant, in the course of carrying out their duties as
Directors.
51
The breakdown of the detailed Directors’ remuneration is Employees of the Company are seconded from PETRONAS.
disclosed in the Corporate Governance Report 2021, which Their remuneration has been benchmarked against the industry
is accessible to the public at Company’s corporate website at and is aligned with the market. In addition, their training,
www.petronasgas.com. succession planning and performance appraisals are aligned
to the PETRONAS’ Human Resources Policies and Strategies.
The remuneration package for the Executive Director of the The Board ensures that only suitable personnel with the relevant
Company is balanced between fixed and performance linked skills and experiences are appointed to management positions
elements. A portion of the Executive Director’s compensation of PGB.
package is variable in nature and is Key Performance Indicator
(KPI) based, which includes the Group’s performance. Their remuneration is based on the prevailing PETRONAS’
Remuneration Philosophy and Guiding Principles, which
Abdul Aziz Othman, the MD/CEO and Executive Director of the can be found on the Company’s corporate website at
Company is not entitled to receive directors’ fee or meeting www.petronasgas.com.
allowances. During the year, he was remunerated an amount of
RM1,176,619 as MD/CEO of PGB. PGB noted on the departure form Practice 8.2 of MCCG 2021
as the components of the remuneration of the Senior
Senior Management’s Remuneration Management which include their salary, bonus, benefits
in-kind and other emoluments are subject to the Personal Data
The remuneration philosophy reflects the Group’s commitment
Protection Act (PDPA) 2010 and PETRONAS Group including its
to be aligned with best practices in the areas of remuneration,
listed companies opt not to disclose the personal data of their
retention and reward to ensure that the Group attracts and retains
senior management personnel to the public at large. At the
exceptional talent. The remuneration packages and incentives
moment, the Company does not have an alternative plan to meet
are regularly evaluated against market-related surveys.
the intended outcome.
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
Related Party Transactions and Conflict of Interest The MD/CEO together with the Head of Finance and Head
Situations of Investor Relations conduct regular dialogues with the
Company’s institutional shareholders and analysts and hold
The Company has established its Policies and Procedures on
quarterly analyst briefings to promote better understanding
RPT and Conflict of Interests Situations (COIs), including RRPTs,
of the Group’s financial performance and operations.
to ensure that they are undertaken on arm’s length basis and
The Company also holds a press conference, albeit virtually
normal commercial terms and are not to the detriment of the
in 2021, immediately after the conclusion of the AGM.
Company’s minority shareholders.
In addition, minutes of the AGM together with the summary of
questions and answers during the meeting are published on the
The information relating to Policies and Procedures on RPTs
Company’s website.
and COIs, Risk Management processes and Internal Control
procedures can be found in the BAC, and Statement on Risk
Visits to the Group’s facilities are organised periodically to
Management and Internal Control (SORMIC) on pages 64 to 72
facilitate better appreciation and insight into the Group’s
and pages 86 to 105 of the GFR 2021, respectively.
business and operations. There was no site visit organised in 2021
as the Company exercises precaution and adheres to Movement
All RPTs including RRPTs entered into by the Company or its
Control Order (MCO) guidelines.
subsidiaries are reviewed by the BAC. The list of transactions
entered into with related parties are incorporated at pages 187
The Company actively updates its website
to 190 of the Audited Financial Statements.
www.petronasgas.com with the latest information on the
corporate and business aspects of the Group. Press statements,
Risk Management and Internal Control
announcements to Bursa Malaysia, analyst briefings and
The Board continues to maintain and review its risk management quarterly results of the Group are also made available on the
processes and internal control procedures to ensure a sound website, and this helps to promote accessibility of information
system of risk management and internal control to safeguard to the Company’s shareholders and all other market participants.
shareholders investments and the assets of the Company and Communication and feedback from investors can also be
the Group. directed to the email address ir.petronasgas@petronas.com or
alternatively, it can be addressed to:
The Statement on Risk Management and Internal Control provides
an overview of the risk management and internal controls within Izan Hajar Ishak
the Group and further details can be found on pages 86 to 105 Head of Investor Relations
of the GFR 2021. Level 49-50, Tower 1
PETRONAS Twin Towers
Kuala Lumpur City Centre
PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING 50088 Kuala Lumpur
AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS Malaysia
COMMUNICATING EFFECTIVELY WITH STAKEHOLDERS In addition, matters of concern to the Group from shareholders of
AND INVESTORS other stakeholders can be addressed to the Senior Independent
Director directly to the following address:
The Board recognises the importance of effective communication
with the Company’s shareholders and other stakeholders Habibah Abdul
including the general public. Information on the Group’s Senior Independent Director
business activities and financial performance is disseminated PETRONAS Gas Berhad
timely through announcements to Bursa Malaysia, postings on Level 49-50, Tower 1, PETRONAS Twin Towers
the Company’s website, press statements, issuance of the Annual Kuala Lumpur City Centre
Report and where required, press conferences. 50088 Kuala Lumpur
Malaysia
Annual General Meeting (AGM) The questions which were not answered at the AGM was
responded within three working days by publishing them on the
The AGM is the principal forum of open dialogue with
Company’s corporate website at www.petronasgas.com under
shareholders. The notice and agenda of our AGM together
the Investor Relations’ page. The questions which were answered
with proxy form were given to shareholders not less than
during the AGM were also published on the Company’s website
28 days before the AGM, which provided shareholders sufficient
for shareholders’ reference.
time to prepare themselves to attend the AGM or to appoint
proxies to attend and vote on their behalf. Each item of ordinary
Pursuant to Paragraph 8.29A of the MMLR, each resolution to
business included in the notice of the AGM will be accompanied
be tabled at an AGM is to be voted by poll. At the 38th AGM, PGB
by an explanatory statement on the effects of the proposed
has engaged Tricor Investor & Issuing House Services Sdn Bhd as
resolution.
the Poll Administrator and Boardroom Corporate Services Sdn
Bhd as Independent Scrutineer for conduct of poll via e-Vote
In view of COVID-19 pandemic conditions, the 38th AGM
application. The Board also encouraged active participation by
convened on 20 April 2021 through a fully virtual manner was
the shareholders and investors during the AGM. A total of 849
in-line with the revised Securities Commission Guidance Note
shareholders and proxies logged in through the RPV.
on the Conduct of General Meetings for Listed Issuers issued on
18 April 2020 (revised on 16 July 2021) and to ensure companies
The minutes of the AGM are accessible to the public on the
can continue to fulfil their obligation under the law and to
Company’s corporate website at www.petronasgas.com.
shareholders during this pandemic.
During the Virtual AGM, the MD/CEO presented a comprehensive INTEGRIT Y AND ETHICS
review of the Group’s performance initiatives and value created
for shareholders. This review was supported by a visual and The Board is committed to a corporate culture that encompasses
graphical presentation of the key points and financial figures. and embraces ethical conduct within the Group by adopting
numerous policies which serve to achieve this commitment.
Prior to the 38th AGM, shareholders were encouraged and given
sufficient opportunity as well as time by the Board to submit Code of Conduct and Business Ethics
questions pertaining to the Integrated Report, resolutions being The PGB Group adopts and practices PETRONAS Code of
proposed and the business of the Company or the Group in Conduct and Business Ethics (CoBE). The CoBE places significant
general prior to seeking approval from members and proxies importance in upholding the principle of discipline, good
on the resolutions. The Board, LT and external auditors were conduct, professionalism, loyalty, integrity and cohesiveness
also present virtually at the 38th AGM to provide answers and that are critical to the success and wellbeing of the Group.
clarification to shareholders. The CoBE details out policy statements on the standards of
behaviour and ethical conduct expected of each individual to
At the AGM, the Chairman plays a pivotal role in fostering whom the CoBE applies. The Group also expects that contractors,
constructive dialogue between shareholders, the Board and sub-contractors, consultants, agents and representatives and
senior management. others performing work or services for or on behalf of the Group
to comply with the relevant parts of the CoBE when performing
The Board endeavored to answer all live questions posed by the such work or services. The CoBE expressly prohibits improper
shareholders during the 38th AGM. The Company received 96 live solicitation, bribery, insider trading, money laundering and other
questions and 35 pre-submitted questions from the shareholders corrupt activity not only by employees and directors but also
and their representatives and during the AGM, the Board had by third parties performing work or services for or on behalf of
addressed 26 live questions and 35 pre-submitted questions at companies in the PETRONAS Group.
the Question-and-Answer session.
The CoBE, which is accessible to the public for reference
on the Company’s corporate website at www.petronasgas.com.
PETRONAS Gas Berhad Responsible Financial
54 Governance and Financial Report 2021 Governance Statements
CORPORATE GOVERNANCE
OVERVIEW STATEMENT
RELATIONSHIP WITH AUDITORS MCCG 2021 and Corporate Governance Guide – 4th Edition issued
by Bursa Malaysia Berhad in addition to being benchmarked
External Auditors
against the ASEAN Corporate Governance Scorecard and other
Through the BAC, the Company maintains a professional and applicable laws and regulations throughout the year ended
transparent relationship with its external auditors, KPMG PLT. 31 December 2021.
The BAC met the external auditors twice during the financial
year to review the scope and adequacy of the Group’s audit The Board is also satisfied that the Company has adopted the
process, financial results, annual financial statements and audit practices and has applied the key Principles of the MCCG 2021
findings. The BAC also met the external auditors twice during the for the year under review. Details of how the Company has
year under review without the presence of Management. At the applied the MCCG Principles and complied with its Practices are
meeting, the external auditors highlighted to the BAC on matters set out in the CG Report 2021. The explanation for the departures
that warranted their attention. is further elaborated in the CG Report 2021.
The role of the BAC in relation to the external auditors is The Board will continue its efforts to raise the bar in terms of
described in the Board Audit Committee Report on pages 60 to the Company’s corporate governance standards and instil
62 of the GFR 2021. a culture that promotes ethical conduct, transparency and
sustainable value creation, with the ultimate objective of realising
Internal Audit long-term shareholder value while taking into account the
interests of other stakeholders.
In maintaining independency and objectivity, PGB’s Internal Audit
function reports directly to the BAC and has unrestricted access
This Statement is made in accordance with a resolution of the
to the BAC, as well as unrestricted access to the function or/and
Board of Directors dated 22 February 2022.
asset under the purview of the BAC. The Internal Audit function is
independent of the activity or operation of other operating units.
Additional Compliance Information
The Internal Audit conducts regular audits on the adequacy
and effectiveness of internal control including compliance to In accordance with Appendix 9C of the MMLR of Bursa Malaysia:
regulatory requirements. Findings and agreed recommendations
1) Status of Utilisation of Proceeds Raised from any
from approved audit engagements are tabled to the BAC.
Corporate Proposal
The role of the BAC in relation to the internal auditors is described In 2021, PETRONAS Gas Berhad executed Commodity
in the Board Audit Committee Report on pages 62 to 63 of the Murabahah Term Financing-i (“CMTF”) with RHB Islamic
GFR 2021. Bank Berhad (“RHB”) for a maximum aggregate principal
amount of up to RM1.3 billion. As at 31 December 2021,
Directors’ Responsibility Statement the net proceeds raised from the CMTF amounting to
RM409.1 million have been utilised for capital expenditures
The Directors have provided assurance that the financial
relating to Gas Transportation business unit.
statements prepared for the financial year ended 31 December 2021
is a true and fair view of the state of affairs of the Company
2) Material Contracts
and the Group as required by the CA 2016. The Statement of
Responsibility by Directors for the audited financial statements There were no material contracts or loans entered into
of the Company and Group is as outlined on page 108. Details by the Company or its subsidiaries involving Directors’ or
of the Company and the Group’s financial statements for the major shareholders’ interests, either still subsisting at the
financial year ended 31 December 2021 are set out on pages 108 end of the year ended 31 December 2021 or entered into
to 218. since the end of the previous period, except as disclosed in
the Audited Financial Statements.
Statement by the Board on Compliance
The Board has deliberated, reviewed and approved this Statement
ADNAN ZAINOL ABIDIN
and is satisfied that the Group has fulfilled its obligations under
Chairman
the relevant paragraphs of the MMLR of Bursa Malaysia, CA 2016,
PETRONAS Gas Berhad Responsible Financial
56 Governance and Financial Report 2021 Governance Statements
TERMS OF REFERENCE
The Terms of Reference (TOR) of the BAC set out the authority, duties and responsibilities of the BAC which are consistent with the
requirements of the MMLR and the Malaysian Code on Corporate Governance 2021 (MCCG 2021).
The TOR of the BAC is available on the Company’s corporate website at www.petronasgas.com.
COMPOSITION
The composition of BAC complies with Paragraph 15.09(1)(b) of the MMLR of Bursa Malaysia and the MCCG 2021 where all five BAC
members are Non-Executive Directors of which four being a majority are Independent Directors. All the four Independent Directors
fulfil the criteria of independence as defined in the MMLR of Bursa Malaysia. None of the members of the BAC is alternate director.
During the year under review, Datuk Mark Victor Rozario was appointed as member of the BAC effective 22 November 2021. With the
new appointment, the BAC now comprise of five members in total.
57
Date of Appointment
No. Members as BAC member Tenure on the BAC
1. Farina Farikhullah Khan 3 years
Chairman 21 November 2018
(Independent Non-Executive Director) 3 months
4. Marina Md Taib
2 years
Member 1 January 2020
1 month
(Non-Independent Non-Executive Director)
5. Datuk Mark Victor Rozario
Member 22 November 2021 2 months
(Independent Non-Executive Director)
The BAC Chairman, Farina Farikhullah Khan and three other members of the BAC, namely, Habibah Abdul, Marina Md Taib and
Datuk Mark Victor Rozario are qualified accountants.
Farina Farikhullah Khan, is a Fellow of the Institute of Chartered Accountants in Australia and New Zealand. Whereas, Habibah Abdul
is a Fellow of the Institute of Chartered Accountants in England and Wales, a Member of Malaysian Institute of Certified Public
Accountants and a Member of Malaysian Institute of Accountants, whilst Marina Md Taib and Datuk Mark Victor Rozario are Fellow of
the Institute of Chartered Accountants in England and Wales.
The profiles of all the BAC members are disclosed on pages 8, 9, 10, 12 and 14 of the GFR 2021.
In this regard, the composition of the BAC is made up with persons who have sound knowledge and understanding of financial
reporting and management requirements. The Company is in compliance with Paragraph 15.09(c)(i) of the MMLR which requires at
least one member of the BAC to be a qualified accountant.
PETRONAS Gas Berhad Responsible Financial
58 Governance and Financial Report 2021 Governance Statements
MEETINGS AND ATTENDANCE Matters deliberated at the BAC meetings included the review
of the Group’s financial statements, quarterly results for the
The BAC meetings for the year under review were scheduled in
announcements to Bursa Malaysia, related party transactions and
November 2020, to facilitate the Members in planning ahead and
recurrent related party transactions, external and internal audit
incorporating the BAC meetings into their respective schedules.
reports, status of open audit findings together with the agreed
corrective actions and internal control. Prior to the establishment
The BAC scheduled to meet quarterly and additional meetings
of the Board Risk Committee on 25 May 2021, the BAC reviewed
were convened as and when necessary. In light of the ongoing
the risk management activities including Enterprise Risk Report
pandemic, the Board and Management continued to leverage on
and Status of Risk Monitoring. In addition to communicating to
technology and carry on meetings online. All BAC meetings held
the Board on matters deliberated during its meeting, the BAC
in the financial year ended 31 December 2021 were carried out
also recommends to the Board, the approval of Group Financial
via digital platform. During the year under review, the BAC met
Statements and quarterly results.
seven times to discharge its duties and functions as a committee
to the Board. The record of attendance of the BAC members can
All proceedings of the BAC meetings were duly recorded in
be found on page 38 of the GFR 2021.
the minutes of each meeting and the signed minutes of each
BAC meeting were properly kept by the Secretary. Minutes of
To facilitate deliberation of audit issues or other areas impacting
the BAC meeting were tabled for confirmation at the following
the financial results of the Company, the MD/CEO, Chief Financial
BAC meeting, after which they were presented to the Board for
Officer, Head of Internal Audit Department (IAD), Head of Risk
notation. Aside from the BAC meetings, urgent decisions were
Management, External Auditors, Leadership Team (LT) and other
also approved via BAC Circular Resolution, which was circulated
persons deemed necessary by the BAC were invited to attend
via e-Signature tool for approval.
the BAC meetings to provide advice and furnish the BAC with
necessary information. The Company Secretary acts as Secretary
to the BAC. CONTINUOUS TRAINING
The BAC members acknowledged the needs for continuous
The Head of IAD presented the internal audit plan to the BAC.
education and trainings. During the year under review, all
The External Auditors also attended the BAC meetings to present
members of the BAC attended training on developments in
the external audit plan for the year and the outcome of the
accounting and auditing standards, practices and rules, in line
statutory audits conducted on the Company and its subsidiaries.
with Practice 9.5 of the MCCG 2021.
Both internal and external audit plans were approved by the BAC
The record of training details of the BAC members can be found
in accordance to the BAC TOR. In addition, the BAC had two
on pages 46 to 48 of the GFR 2021.
private sessions on 18 February 2021 and 18 November 2021 with
the External Auditors without the presence of Management.
ACTIVITIES OF THE BAC DURING THE FINANCIAL
The agenda and meeting papers relevant to the business of the YEAR 2021
meetings were distributed to the BAC members via a secured
As the Board is ultimately responsible for the oversight of the
collaborative software, not less than five business days from the
Company, it is consistently kept informed by the BAC of its
date of each meeting.
activities. As such, the BAC meeting is almost always held before
the Board meeting to ensure that all critical issues, significant
findings and irregularities are communicated to the Board on a
timely basis.
59
During the year under review, the BAC carried out the following Risk Monitoring
activities in discharging its function and duties:
Prior to the establishment of the Board Risk Committee on
25 May 2021, the BAC also assisted the Board in the following
Financial Reporting
risk matters:
• Reviewed the quarterly results announcements to
Bursa Malaysia before recommending the same for approval • Reviewed the Company’s Enterprise Risk Report and Status
by the Board upon being satisfied that, it had complied of Risk Monitoring on quarterly basis.
with applicable approved Malaysian Financial Reporting
• Deliberated on the risk exposures and the mitigation plans
Standards (MFRS) issued by the Malaysian Accounting
required.
Standards Board (MASB), Main Market Listing Requirements
(MMLR) and other relevant regulatory requirements. • Reviewed and endorsed the enhanced risk appetite.
• Reviewed the Company’s and Group’s annual and quarterly
Internal Audit
management accounts.
Prior to 2020, the internal audit function was undertaken by
• Reviewed the audited financial statements of the Company
PETRONAS Group Internal Audit Division (GIAD) in providing
and Group prior to submission to the Board for the
independent objective assurance and consulting activities on
Board’s consideration and approval, upon the BAC being
Governance, Risk and Control (GRC) of PGB.
satisfied that, inter alia, the audited financial statements
were drawn up in accordance with the provisions of the
In November 2019, the BAC had approved and formed a
Companies Act 2016 and the applicable approved MFRSs
dedicated internal audit function within PGB itself. PGB Internal
issued by the MASB.
Audit (IA) function has been officially operationalised on
1 January 2020. This practice is in line with the requirement of
The above reviews were conducted together with the
Bursa Malaysia, Malaysia Code of Corporate Governance (MCCG)
presence of the MD/CEO and Head of Finance.
and the International Professional Practice Framework (IPPF).
Internal Control
In 2021, the BAC had undertaken the following activities, to be in
• Reviewed the effectiveness of the system of internal line with the requirements of IPPF, Institute of Internal Auditors
controls, taking into account the findings from internal and (IIA), Bursa Malaysia and MCCG:
external audit reports.
• Reviewed and endorsed the declaration on the
Corporate Governance Organisational Independence of the Internal Audit
Prior to the establishment of the Board Risk Committee on Activity by the PGB IA for the period of 1 January 2021 to
25 May 2021, the BAC also assisted the Board in the following 31 December 2021. This declaration shall be undertaken
governance matters: annually to allow internal audit to fulfil its responsibilities.
• Undertaken periodic review on the status of PGB IA • Reviewed RPTs and RRPTs in accordance with PGB
organisation structure and capability for demonstration of Guideline and Procedures on RPT and Conflict of Interest
sufficiency and professional due care. Situations to ensure the transactions are at all times carried
out on arm’s length basis and not to the detriment of the
• Monitored the progress of PGB IA deliverables as reported
minority shareholders. The BAC also reviewed the status
quarterly.
update of the RPTs and RRPTs on quarterly basis.
• Assessed the performance of PGB IA with regard to their
ability to provide independent and objective assurance on External Audit
the effectiveness of governance, risk and control to be in
• Reviewed audit strategies and scope for the statutory audit
conformance with recognised international standards.
of the Company’s and Group’s financial statements for the
• Reviewed and deliberated audit reports, recommendations, financial year ended 31 December 2021 as presented by the
and action plans to strengthen PGB’s Governance, Risk and external auditors.
control. The BAC also put forward some suggestions for
• Reviewed with the external auditors the results of the
improvement to reinforce the oversight role and to ensure
statutory audit and the audit report.
that Management holds individuals accountable on their
internal control, risk and governance responsibilities. • Reviewed and endorsed the proposed fees for the statutory
audits.
• Monitored the closure of agreed corrective actions as
reported quarterly until duly resolved. The BAC also • In accordance with the PETRONAS Framework on External
deliberated the justifications provided by Management for Auditors adopted in 2019, the BAC had carried out the
extension of timeline and approved such request where the annual assessment on the performance, sustainability and
justifications were acceptable. independence of the external auditors for the year under
review, based on the following four key areas:
• Reviewed and approved the risk based FY2022 Annual
Audit Plan and budget to ensure comprehensiveness of a) Quality of engagement team and services;
audit coverage, resources and competencies for effective
b) Adequacy of resources;
execution in 2022.
c) Quality of communication and interaction; and
Related Party Transactions and Conflict of Interest Situations d) Independence, objectivity and professional skepticism.
• Appointed Independent Adviser to conduct a review of Overall, the BAC was satisfied with the performance
PGB’s methods or procedures in determining and reviewing and independence of the external auditors. Positive
transaction process and terms of the RRPTs. The objective feedbacks and areas of improvement arising from the
of the review is to opine whether the methods and assessment, have been communicated to the auditors
procedures in determining the transaction prices and terms accordingly.
of the RRPTs are sufficient to ensure that the transactions
are carried out on normal commercial terms and will not
be to the detriment of minority shareholders.
61
• Reviewed the non-audit services provided by the external auditors while ensuring there was no impairment of independence
or objectivity. This included monitoring the fee of the total non-audit work carried out by the external auditors so as not to
jeorpardise their independence status. In relation to this, the BAC was provided assurance by the external auditors confirming
their independence throughout the financial year under review. During the year under review, PGB also engaged the external
auditors for non-audit services. Total fees paid to the external auditors were as follows:
2021 2020
Particulars Group Company Group Company
RM’000 RM’000 RM’000 RM’000
Total Statutory Audit fees 521 312 507 303
Total Non-audit Fees:
• Reviewed the Audit Focus Areas identified by the external auditors for the financial year ended 31 December 2021:
EXTERNAL AUDIT In 2021, the internal audit function was headed by Shamliyah
Mohamed @ Arif who holds a Bachelor of Science in Business
In ensuring that the external auditors’ independence is not
Administration (majoring in Finance) from the University of
impaired, the Audit Engagement Partner in charge of the Company
Tulsa, Oklahoma, USA. She is also a certified Internal Control
is allowed to serve in the same role for a maximum of seven
Integrated Framework issued by the Committee of Sponsoring
years before being rotated and is required to observe a minimum
Organisations of the Treadway Commission (COSO) and has
cooling-off period of five years before being re-appointed.
practiced COSO for more than 10 years.
Internally, the external auditors conduct an Independent Partner
Review in order to preserve their independence. The external
Her previous stint with two PETRONAS Public Listed
auditors had also provided their written assurance to the BAC
Companies namely PETRONAS Dagangan Berhad and
that in accordance with the terms of all relevant professional and
PETRONAS Chemicals Group Berhad coupled with more than
regulatory requirements, they had been independent throughout
20 years of experience in various functions within PETRONAS
the audit engagement.
Business, Holding Company, Internal Audit and Assurance
provides an added advantage in steering the new in-house
Annual Reporting
internal audit function in providing reasonable assurance on
The BAC reviewed its report and the SORMIC for the financial Governance, Risk and Control from business and internal audit
year ended 31 December 2021 to ensure that they were prepared perspectives to the BAC.
in compliance with the relevant regulatory requirements and
guidelines. The Internal Audit function is guided by:
During the year, PGB IA performed audit engagements based on In addition, to enhance the auditors’ competencies and their
the approved internal audit plan and presented the reports of the continued professional development, PGB IA supports education
following audit engagement to the BAC: programme that enable its personnel to pursue their career in
relevant internal audit certifications such as Certified Internal
• Audit on the Overall Management of Pengerang LNG (Two)
Auditors (CIA), Certified Integrated COSO framework and
Sdn. Bhd. (PLNG2)
Certified Fraud Examiner (CFE).
• Shareholders Audit on Kimanis Power Sdn. Bhd. (KPSB)
To date, seven of PGB IA personnel are equipped with relevant
• Audit on Commercial Excellence and Customer Centricity
certifications either from accounting professional bodies, Institute
• Shareholders Audit on Industrial Gases Solutions Sdn. Bhd. of Internal Audit, COSO and Malaysia Department of Safety &
(IGSSB) Health. In addition, to elevate team’s skill on the application of
COSO, two internal auditors were sent for COSO certification
• Audit on the Overall Management of PGB Procurement
program and one internal auditor has been registered for CIA.
activities
• Audit on Operations & Maintenance and Process Safety The Group continues its commitment to equip the internal
Management auditors with adequate knowledge to discharge their duties and
• Audit on the Overall Governance of PGB Corruption Risk & responsibilities via continuous training platforms either through
Corporate Liability the Institute of Internal Audit or Functional Skill Group 04 (FS04)
on Internal Audit. FS04 training programs are established based
• Review on PGB Sustainability management and activities on Internal Audit Competency Framework issued by the Institute
• Audit on PGB Project Management and Governance of Internal Auditors. New internal auditors are also provided
activities with on-the-job attachment platform within PETRONAS Internal
Audit fraternity.
• Review on PGB Governance Platforms
In elevating the understanding on GRC, PGB IA also provided
The results of the abovementioned audit engagement were an attachment platform to PGB business and operations
deliberated with the respective Management prior to subsequent practitioners either via long-term attachment (two + one year)
deliberation at the BAC meeting. Respective Management is or attachment in the specific audit assignment. In 2021, 12 PGB
responsible to close all Agreed Corrective Actions within the personnel had been attached for specific assignment including
agreed time frame and status will be reported to the BAC on platforms for execution of three Culture of Accountability
quarterly basis. If extension of time for closure of corrective action assessments and one PGB personnel is attached via long-term
is required, respective Management is to provide reasonable attachment from 2020 and will complete his attachment tenure
justification to the BAC prior to approval for extension. in 2022.
For demonstration of competency and professional due Annually, the auditors are assessed via individual Superior
care, PGB IA is staffed by eight individuals from diverse work Managed Assessment (SMA) to identify their areas of strength and
experiences, competencies and qualification amongst others development area. Personal Development Plan will be prepared
are accounting & finance, operations & maintenance, sales & based on the SMA result of individual auditors.
marketing, information technology & digital, supply & logistics,
strategic planning, project management, safety and other The total cost incurred by the internal audit function of the
related enablers functions. PGB IA is also supported by Technical Company and the Group for the financial year was RM1,936,319
Professional and Subject Matter experts and resources from of which RM252,971 was back charged by GIA to PGB IA for
PETRONAS Group, specifically on sustainability material matters, engagement in 2020 (Third Party Access and Digital Project).
project management, commercial excellence and technical
related areas. Advisories are also sought from PETRONAS Group
Internal Audit Line Experts.
PETRONAS Gas Berhad Responsible Financial
64 Governance and Financial Report 2021 Governance Statements
RELATED PARTY TRANSACTIONS AND CONFLICT During the year under review, PGB has been granted another
OF INTEREST SITUATIONS waiver on 11 October 2021 in having to comply with Paragraph
10.09 of the MMLR in respect of the following:
During the year under review, the BAC reviewed all Related
Party Transactions (RPTs/RRPTs) and Conflict of Interest (COI) a) Supply of gas, petroleum products, industrial gases and
situations based on the Guideline and Procedures of RPT and electricity by PETRONAS Group;
COI (the Guideline). This Guideline lays out the principles and
b) Supply of electricity, water and industrial utilities to
procedures which govern the activities on RPTs/RRPTs and
PETRONAS Group;
COI situations across the PGB Group in complying with the
applicable MMLR and other laws and regulations. The BAC is c) Provision of gas processing and agent services to
satisfied that the Guideline has put in place adequate procedures PETRONAS Group;
and processes to identify, monitor and track all RPTs/RRPTs in
d) Provision of marine facilities and liquefied petroleum gas
a timely and orderly manner to ensure that the RPTs/RRPTs are
import and export services to PETRONAS Group;
at all times, carried out in the best interests of the Group, are
fair, reasonable and on normal commercial terms and are not e) Provision of operation and maintenance to PETRONAS
to the detriment of the minority shareholders. The BAC has, Group;
from time to time reviewed any RPTs that have risen within the
f) Provision of liquified natural gas (LNG) loading, truck
Group in accordance with the Guideline. The procedures and
loading and other LNG services to PETRONAS Group;
processes will also be reviewed from time to time based on the
recommendations from Management. g) Provision of gas up cooling down to PETRONAS Group;
RRPTs that were waived by Bursa Malaysia from complying with the requirement of Paragraph 10.09 of the MMLR are as follows:
Date of
Bursa Malaysia Value of Transactions
Waiver Approval Transacting Parties Relationship Nature of Transactions in 2021 (RM’000)
26 March 2014 • PGB and PETRONAS • PETRONAS is a major • Gas Processing • Gas processing
shareholder of PGB Agreement (GPA) services: RM1,713,271
holding 51%
• Gas Transportation Sabah • Gas transportation
Agreement (GTSA) services (Sabah):
RM7,625
• PPM is a wholly
owned subsidiary of
PETRONAS
PETRONAS Gas Berhad Responsible Financial
66 Governance and Financial Report 2021 Governance Statements
Date of
Bursa Malaysia Value of Transactions
Waiver Approval Transacting Parties Relationship Nature of Transactions in 2021 (RM’000)
27 October 2015 • Pengerang LNG (Two) • PLNG2 is a subsidiary • Ancillary Agreements • Purchase of electricity:
Sdn. Bhd. (PLNG2), of PGB holding 65% for RGT Pengerang RM12,122
PETRONAS and Project
• PETRONAS is a major
PETRONAS’ subsidiaries
shareholder of PGB
and joint ventures
holding 51%
23 October 2020 • PGB, RGTSU and PLNG2 • PGB is owned by • Master Sale and • Purchase of gas for
with PETRONAS Energy PETRONAS of 51% Purchase Agreement internal consumption
and Gas Trading (MSPA) for purchase by PGB, RGTSU and
• RGTSU is a wholly
Sdn. Bhd. (PEGT) of internal gas PLNG2 from PEGT:
owned subsidiary of
consumption RM102,494
PGB
• PLNG2 is a subsidiary
of PGB holding 65%
• PEGT is a wholly
owned subsidiary of
PETRONAS
• PGB with PEGT • PGB is owned by • Gas Supply Agreement • Purchase of fuel gas:
PETRONAS of 51% (GSA) for purchase of RM845,692
fuel gas
• PEGT is a wholly
owned subsidiary of
PETRONAS
11 October 2021 • PGB with PETRONAS • PGB is owned by • Supply of Utilities • Sale of industrial
Chemicals Derivatives PETRONAS of 51% Agreement utilities RM150,881
Sdn. Bhd.
• PC Derivatives is
(PC Derivatives)
a wholly owned
subsidiary of
PETRONAS Chemicals
Group Berhad (PCGB)
• PGB with PETRONAS • PGB is owned by • Supply of Utilities • Sale of industrial
Chemicals Ammonia PETRONAS of 51% Agreement utilities RM59,600
Sdn. Bhd. (PCASB)
• PCASB is a wholly
owned subsidiary
of PCGB
67
Date of
Bursa Malaysia Value of Transactions
Waiver Approval Transacting Parties Relationship Nature of Transactions in 2021 (RM’000)
11 October 2021 • PGB with PETRONAS • PGB is owned by • Supply of Utilities • Sale of industrial
(Cont’d) Chemicals MTBE Sdn. PETRONAS of 51% Agreement utilities RM50,891
Bhd. (PCMTBE)
• PCMTBE is a wholly
owned subsidiary
of PCGB
• PGB with BASF • PGB is owned by • Supply of Utilities • Sale of industrial
PETRONAS Chemicals PETRONAS of 51% Agreement utilities RM29,971
Sdn. Bhd. (BPCSB)
• BPCSB is an associate
company of PCGB
holding 40%
• PGB with PETRONAS • PGB is owned by • Supply of Utilities • Sale of industrial
Chemicals LDPE Sdn. PETRONAS of 51% Agreement utilities RM22,140
Bhd. (PC LDPE)
• PC LDPE is a wholly
owned subsidiary of
PCGB
• PGB with PETRONAS • PGB is owned by • Supply of Utilities • Sale of industrial
Chemicals Aromatics PETRONAS of 51% Agreement utilities RM13,172
Sdn. Bhd. (PC Aromatics)
• PC Aromatics is a
subsidiary of PCGB
holding 70%
• PGB with Ineos PCG • PGB is owned by • Supply of Utilities • Sale of industrial
Acetyls Sdn. Bhd. PETRONAS of 51% Agreement utilities RM8,954
(IPASB)
• IPASB is a joint venture
company of PCGB
holding 30%
PETRONAS Gas Berhad Responsible Financial
68 Governance and Financial Report 2021 Governance Statements
Date of
Bursa Malaysia Value of Transactions
Waiver Approval Transacting Parties Relationship Nature of Transactions in 2021 (RM’000)
11 October 2021 • PGB with PETRONAS • PGB is owned by • Supply of Utilities • Sale of industrial
(Cont’d) Chemicals Ethylene PETRONAS of 51% Agreement utilities RM3,976
Sdn. Bhd. (PC Ethylene)
• PC Ethylene is a
subsidiary of PCGB
holding 87.5%
• RGTSU with PEGT • RGTSU is a wholly • LNG Reloading Service • LNG bunkering income
owned subsidiary of Agreement RM2,429
PGB
• PEGT is a wholly
owned subsidiary of
PETRONAS
• PLNG2 with PEGT • PLNG2 is a subsidiary • LNG Truck Loading • LNG trucking income
of PGB holding 65% Facilities Service RM2,101
Agreement
• PEGT is a wholly
owned subsidiary of
PETRONAS
• PGB with Trans Thai- • PGB is owned by • Access Right • Right of way and
Malaysia (Malaysia) PETRONAS of 51% Agreement and maintenance fees
Sdn. Bhd. (TTM(M)SB) Operation and income RM1,861
• TTM(M)SB is an
Maintenance
associate company
Agreement (OMA) for
of PGB holding 50%
liquified petroleum gas
and sales gas pipeline
• PGB with PETCO Trading • PGB is owned by • Importation and • LPG import and export
Labuan Company Ltd. PETRONAS of 51% Exportation Agreement service fees RM1,636
(PTLCL)
• PTLCL is a wholly
owned subsidiary of
PETRONAS Trading
Corporation Sdn. Bhd.
(PETCO)
69
Date of
Bursa Malaysia Value of Transactions
Waiver Approval Transacting Parties Relationship Nature of Transactions in 2021 (RM’000)
11 October 2021 • PGB with Kertih • PGB is owned by • Supply of Utilities • Sale of industrial
(Cont’d) Terminals Sdn. Bhd. PETRONAS of 51% Agreement utilities RM1,443
(KTSB)
• KTSB is an associate
company of PCGB
holding 40%
• PLNG2 with PETRONAS • PLNG2 is a subsidiary • Master Gas Up Cool • Gassing up cooling
LNG Ltd. (PLL) of PGB holding 65% Down Services down income RM832
Agreement
• PLL is a wholly owned
subsidiary of PETRONAS
LNG Sdn. Bhd. (PLSB)
• PGB with PTLCL • PGB is owned by • Manpower, Routine • Marine facilities
PETRONAS of 51% Maintenance, Utilities income RM563
Cost Recovery and
• PTLCL is a wholly
Rental Facilities
owned subsidiary of
PETCO
• PGB with Voltage • PGB is owned by • Operation and • Operation and
Renewables Sdn. Bhd. PETRONAS of 51% Maintenance Agreement maintenance income
(VRSB) (OMA) for Gebeng RM314
• VRSB is a subsidiary of
solar power plant
PETRONAS Power Sdn.
Bhd. (PPSB)
• PGB with PCASB • PGB is owned by • Compressed Air • Compressed air
PETRONAS of 51% Sharing Agreement facilities services
income RM135
• PCASB is a wholly
owned subsidiary of
PCGB
PETRONAS Gas Berhad Responsible Financial
70 Governance and Financial Report 2021 Governance Statements
Date of
Bursa Malaysia Value of Transactions
Waiver Approval Transacting Parties Relationship Nature of Transactions in 2021 (RM’000)
11 October 2021 • PGB with VRSB • PGB is owned by • Supply of Utilities • Sale of industrial
(Cont’d) PETRONAS of 51% Agreement utilities RM85
• VRSB is a subsidiary of
PPSB
• PGB with PETRONAS • PGB is owned by • Land Management • Project management
Carigali Sdn. Bhd. PETRONAS of 51% Service Agreement fees and operations
(PCSB) (MSA) for Sabah oil and and maintenance
• PCSB is a wholly
gas terminal, Sabah income RM77
owned subsidiary of
Sarawak gas pipeline,
PETRONAS
Dalak pipeline, Sabah
gas terminal and
Labuan gas terminals
• PGB with PCMTBE • PGB is owned by • Fire Water Services • Fire and water services
PETRONAS of 51% Agreement (FWSA) RM46
• PCMTBE is a wholly
owned subsidiary of
PCGB
• PGB with PCMTBE • PGB is owned by • Supply of Utilities • Sale of industrial
PETRONAS of 51% Agreement utilities RM33
• PCMTBE is a wholly
owned subsidiary of
PCGB
71
Date of
Bursa Malaysia Value of Transactions
Waiver Approval Transacting Parties Relationship Nature of Transactions in 2021 (RM’000)
11 October 2021 • PGB with IPASB • PGB is owned by • Fire Water Services • Fire and water services
(Cont’d) PETRONAS of 51% Agreement (FWSA) RM11
• PCASB is a wholly
owned subsidiary of
PCGB
• PGB with PETRONAS • PGB is owned by • Sales and Purchase • Purchase of hydrogen
Chemicals Marketing PETRONAS of 51% Agreement (SPA) RM704
(Labuan) Ltd. (PCML) to supply excess
• PCML is a wholly
hydrogen gas to
owned subsidiary of
Utilities Gebeng (UG)
PCGB
plant
• PGB and RGTSU with • PGB is owned by • Purchase of petroleum • Purchase of petroleum
PETRONAS Lubricants PETRONAS of 51% products for operation products RM408
Marketing (Malaysia)
• RGTSU is a wholly
Sdn. Bhd. (PLMM)
owned subsidiary of
PGB
• PLMM is a wholly
owned subsidiary of
PETRONAS Dagangan
Berhad
PETRONAS Gas Berhad Responsible Financial
72 Governance and Financial Report 2021 Governance Statements
Date of
Bursa Malaysia Value of Transactions
Waiver Approval Transacting Parties Relationship Nature of Transactions in 2021 (RM’000)
11 October 2021 • PGB and PLNG2 with • PGB is owned by • Land Lease Agreement • Lease of land RM265
(Cont’d) PETRONAS Hartabina PETRONAS of 51%
Sdn. Bhd. (PHSB)
• PLNG2 is a subsidiary
of PGB holding 65%
• PHSB is a wholly
owned subsidiary of
PETRONAS
• PGB with PC Ethylene • PGB is owned by • Sell and Deliver • Kerteh Shared Marine
PETRONAS of 51% Utilities Consumption Facilities utilities
Agreement consumption RM20
• PC Ethylene is a
subsidiary of PCGB
holding 87.5%
During the year under review, the Independent Adviser has reviewed the methods and procedures in determining and reviewing
transaction prices and terms of RRPT. A copy of Independent Adviser’s Opinion is disclosed on pages 73 to 75 of the GFR 2021.
The BAC is satisfied that during the year under review, all the RPTs/RRPTs were fairly concluded on prevailing market rate/prices, had
been carried out at arm’s length basis and normal commercial terms/conditions, applicable industry norms and not detrimental to the
interests of PGB and its minority shareholders. The RPTs/RRPTs were reported to the BAC on a quarterly basis.
TERMS OF REFERENCE
The NRC is governed by its Terms of Reference (TOR) which are consistent with the requirements of MMLR of Bursa Malaysia and
Malaysian Code on Corporate Governance 2021 (MCCG 2021).
The TOR of the NRC is available on the Company’s corporate website at www.petronasgas.com.
COMPOSITION
The NRC comprises exclusively of Independent Non-Executive Directors (INEDs), in compliance with the requirement of
Paragraph 15.08A(1) of the MMLR of Bursa Malaysia, which provides that the NRC must comprise exclusively non-executive directors,
majority of whom are independent directors. The NRC is chaired by an Independent Director which is in line with Practice 5.8 of
MCCG 2021.
77
Date of Appointment
No. Members as NRC Member Tenure on the NRC
1. Dato’ Abdul Razak Abdul Majid 3 years
Chairman 21 November 2018
(Independent Non-Executive Director) 3 months
2. Habibah Abdul
8 years
Member 26 November 2013
3 months
(Senior Independent Director)
3. Datuk Yeow Kian Chai 1 year
Member 3 August 2020
(Independent Non-Executive Director) 6 months
The profiles of all the NRC members are disclosed on pages 8 to 11 of the GFR 2021.
Aside from the NRC meetings, urgent decisions were also approved via NRC Circular Resolution, which was circulated via e-Signature
tool for approval.
The prolonged COVID-19 pandemic has accelerated pre-existing trends in working remotely and how the Directors and Management
carry out meetings which are conducted online. During the year under review, the NRC met four times to discharge the duties
and functions as a committee to the Board. The record of attendance of the NRC members can be found on page 38 of the
GFR 2021. The attendance at all NRC meetings met the requisite quorum as stipulated in the NRC TOR. In light of the ongoing
pandemic, the Board and Management continued to leverage of technology and carry out meetings online. All NRC meetings held in
the financial year ended 31 December 2021 were carry out via digital platform.
PETRONAS Gas Berhad Responsible Financial
78 Governance and Financial Report 2021 Governance Statements
The agenda and meeting papers relevant to the meeting were During the reporting year under review, the NRC, having
distributed to the NRC members via a secured collaborative reviewed and assessed the composition of the Board and
software, not less than five business days before the date of each Board Committees, recommended to the Board the following
meeting. appointments and/or noted the resignation of Director:
All proceedings of the NRC meetings were duly recorded in iv) The appointment of Datuk Mark Victor Rozario as INED
the minutes of each meeting and the signed minutes of each effective 1 June 2021.
NRC meeting were properly kept by the Secretary. Minutes of
v) The appointment of Datuk Mark Victor Rozario as Member
the NRC meetings were tabled for confirmation at the following
of BRC effective 1 June 2021.
NRC meeting, after which they were presented to the Board for
notation. vi) The appointment of Sujit Singh Parhar s/o Sukhdev Singh
as INED effective 15 July 2021.
FUNCTIONS OF THE NRC AND RELATED ACTIVITIES vii) The appointment of Hasliza Othman as NINED effective
IN FY2021 15 July 2021.
Board Succession Plan viii) The resignation of Puan Emeliana Dallan Rice-Oxley, the
NINED effective 15 July 2021.
The Board has established a Succession Planning Framework to
ensure orderly identification and selection of new INEDs in the ix) The appointment of Datuk Mark Victor Rozario as Member
event of an opening on the Board, whether such opening exists of BAC effective 22 November 2021.
by reason of an anticipated retirement or expansion of the size x) The appointment of Sujit Singh Parhar s/o Sukhdev Singh
of the Board. as Member of BRC effective 22 November 2021.
Throughout the year under review, the NRC continued to provide xi) The appointment of Habibah Abdul as Member of BRC
essential support to the Board in relation to the succession effective 22 November 2021.
planning of the Board and reviewing the Board’s required mix of
skills and experience as well as reviewing the tenure of INEDs on The NRC, with the help of independent sources identified suitable
the Board. qualified candidates for appointment of the INEDs. The selection
process of the INED candidates was undertaken vigorously to
ensure the candidates possessed the relevant qualification, skills
and experiences suitable to be appointed to the Board of PGB.
Assess and shortlist the potential candidates in consultation with the NRC
Orientation/Induction
None of the Board members of the Company is persons linked directly with the executive powers such as heads of state, heads of
government and ministers and none of the Board members is an active politician. An active politician as defined in the MCCG 2021
is a person is considered politically active if he is a Member of Parliament, State Assemblyman or holds a position at the Supreme
Council, or division level in a political party.
Directors’ Re-Election For the current year, the questionnaires of the BEE were circulated
through a digital platform in November 2021. The questionnaires
Taking into consideration the relevant requirements, the
on the BEE incorporated applicable best practices. The indicators
Directors’ retirement rotation list was presented to the NRC
for the performance of the Board, among others, were the
for endorsement prior to recommendation to the Board and
Board composition, planning process, conduct of meetings,
thereafter, to the shareholders for approval. The recommendation
communication with Management and stakeholders as well as
in turn, is determined through their annual evaluation and
strategy and planning for the Group were used for the Board to
independence assessment, which are assessed by the NRC before
provide their ratings.
any recommendation is made to the Board for deliberation and
approval. The retiring Directors have given their consent for the
The following areas were assessed:
re-election at the 39th AGM, prior to the NRC meeting held in
February 2022. 1. Areas of Board Evaluation
i) Group Dynamics and Effectiveness
The Directors who would be retiring pursuant to Article 107 and ii) Board/Board Committee Effectiveness
Article 100 of the Company’s Constitution are as follows:
2. Director Self/Peer Evaluation
Article 107 of the Company’s Constitution i) Knowledge and understanding, amongst others, on
the role the Board plays in governance, business
• Habibah Abdul
strategy, performance, financials, risk management
• Marina Md Taib and legal and compliance matters
ii) Preparation for Board Meetings
Article 100 of the Company’s Constitution iii) Skills and Experience
iv) Independence
• Datuk Mark Victor Rozario
v) Building Relationship
• Sujit Singh Parhar s/o Sukhdev Singh vi) Professional Development
• Hasliza Othman
BOARD EFFECTIVENESS EVALUATION 2021 REVIEW
MD/CEO AND SENIOR MANAGEMENT PERFORMANCE The results of the BEE 2021 were presented to the NRC on
APPRAISAL 14 February 2022, whereby the NRC noted the findings and
areas that required further improvements. The NRC reviewed
During the year under review, the NRC deliberated on the
the performance of the Board and the Board Committees. The
MD/CEO and Senior Management’s 2021 scorecard and their
NRC noted that the Board is committed to the highest standards
performance against the set targets.
of good governance and continues to be highly effective Board
with strong support from Management. The BEE 2021 report
Board Effectiveness Evaluation
also revealed that the current composition of the Board is
During the year under review, the Board Effectiveness Evaluation well-balanced and equipped with the relevant skills and areas of
(BEE) was conducted internally and the process covered the expertise to steer PGB, especially in its growth strategy.
Board, Board Committees, Peer and Self Evaluations of the Board
members. The BEE 2021 focused on assessing the effectiveness
and performance of the Board and its Committees in the best
interest of PGB. The BEE results were compiled/analysed
internally by the Company Secretarial Team.
81
i) Board Membership and Succession Plan iv) Board Effectiveness and Evaluation
• Reviewed the composition of the Board, assessed and • Assessed the BEE findings for FY2020 and reviewed
recommended the appointment of candidates for the the follow-up actions on the BEE recommendations.
new INEDs. • Reviewed and approved BEE questionnaires for
• Reviewed the composition of the Board Committees FY2021.
and recommended the nomination of BAC and BRC
members. v) Annual Reporting
• Reviewed, assessed, and recommended the
• Reviewed and endorsed the disclosures in the NRC
nomination of the Board Risk Committee Members,
Report for the financial year under review for inclusion
the new Board Committee formed during the
in the Governance and Financial Report 2020.
reporting period.
• Reviewed and assessed the performance of and
made recommendations to the Board with regard
to Directors seeking re-election at the Company’s
38th Annual General Meeting.
TERMS OF REFERENCE
The Terms of Reference (TOR) of the BRC sets out the authority, duties and responsibilities of the BRC to discharge its primary
responsibilities of reviewing the process of identifying, managing, evaluating and monitoring principal risks as well as overseeing the
implementation of appropriate systems and risk assessment processes, to manage such risks for PGB and its subsidiaries. In addition,
the BRC is also responsible to oversee Environmental, Social and Governance, Compliance and Sustainability matters of PGB. All the
requirements under the TOR have been complied with.
In carrying out its oversight responsibilities, each BRC member is to provide individual independent opinions to the fact-finding,
analysis and decision-making process of the BRC, based on their expertise, experience and industrial knowledge.
The TOR of the BRC sets out the authority, duties and responsibilities of the BRC and is available on the Company’s corporate website
at www.petronasgas.com.
83
COMPOSITION
The BRC consists of six members who are all Independent Non-Executive Directors (INED). They possess sound judgement, objectivity,
independent attitude, management experience, professionalism, integrity and knowledge on the industry. None of the BRC members
has appointed alternate directors.
Date of Appointment
No. Members as BRC Member Tenure on the BRC
1. Datuk Yeow Kian Chai
Chairman 25 May 2021 8 months
(Independent Non-Executive Director)
2. Farina Farikhullah Khan
Member 25 May 2021 8 months
(Independent Non-Executive Director)
3. Dato’ Abdul Razak Abdul Majid
Member 25 May 2021 8 months
(Independent Non-Executive Director)
4. Datuk Mark Victor Rozario
Member 1 June 2021 8 months
(Independent Non-Executive Director)
5. Habibah Abdul
Member 22 November 2021 2 months
(Senior Independent Director)
6. Sujit Singh Parhar s/o Sukhdev Singh
Member 22 November 2021 2 months
(Independent Non-Executive Director)
The profiles of all the BRC members are disclosed on pages 8 to 13 of the GFR 2021.
The BRC meetings were scheduled once every quarter with additional meetings convened as and when necessary. During the year
under review, the BRC met two times in discharging its duties and functions as a committee of the Board. The record of attendance
of the BRC members is available on page 38 of the GFR 2021.
To facilitate deliberation of risk issues, the Managing Director/Chief Executive Officer (MD/CEO), Chief Financial Officer and Head of
Risk Management Department (RMD) attended the BRC meetings and provided the BRC their inputs, advice, relevant information and
clarification on relevant items on the agenda. The Company Secretary acted as the Secretary to the BRC.
PETRONAS Gas Berhad Responsible Financial
84 Governance and Financial Report 2021 Governance Statements
The Head of RMD presented the risk management reports including updates on risk monitoring and the corporate risk profile to
the BRC. As and when required, relevant members of the Leadership Teams are invited to apprise the BRC on specific issues
arising from the strategic or high business impact proposals.
The agenda and meeting papers encompassing qualitative and quantitative information relevant to the business of the meetings were
distributed to the BRC members via a secured collaborative software, not less than five business days from the date of each meeting.
Not only does this software ease the process of distribution of meeting papers and minimise leakage of sensitive information,
it also enables the Directors to have access to the proposal papers electronically.
Matters deliberated at the BRC meetings were the review of the PGB’s risk appetite, business risk report, strengthening risk
culture in PGB, corporate risk profile, matters relating to risk management as well as business propositions which required the BRC’s
review and guidance on the risk aspects and aligning to the Environmental, Social and Governance, Compliance and Sustainability
Agenda of PGB thereof.
In light of the ongoing pandemic, the Board and Management continued to leverage of technology and carry out meetings online.
All BRC meetings held in the financial year ended 31 December 2021 were carry out via digital platform.
All proceedings of the BRC meetings were duly recorded in the minutes of each meeting and the signed minutes of each BRC
meeting are properly kept by the Secretary. Minutes of the BRC meeting were tabled for confirmation at the following BRC meeting,
after which they were presented to the Board for notation. Aside from the BRC meetings, urgent decisions were also approved via
BRC Circular Resolution, which was circulated via e-Signature tool for approval.
The ERP established will ensure effective implementation of risk management and will be reviewed annually.
The BRC endorsed 10 principal risks out of which 2 are rated high for FY2022.
2. RISK APPETITE
The BRC reviewed any breach of risk appetite thresholds on quarterly basis, for specific action to ensure risks undertaken in
pursuit of strategic and business objectives were consistently within the approved levels. Subsequently, BRC deliberated and
endorsed the development of risk appetite and its thresholds for year 2022 monitoring.
85
3. RISK MONITORING
Reviewed and endorsed the adequacy and effectiveness of the risk management practices through monitoring of the Key Risk
Indicators (KRIs) and mitigations implementation as updated in the quarterly Enterprise Risk Reports (ERR).
5. SUSTAINABILITY
Having understood the current state of the Company’s Sustainability, the BRC had discussion with Management by providing
guidance anchored at determining PGB’s long term sustainability strategy and agenda as well as developing a Sustainability
Blueprint for PGB.
6. GOVERNANCE
It is the duty of the BRC to review and endorse the governance structure in ensuring it aligns with PGB’s business strategy.
The BRC was briefed on the updated MCCG 2021 and the Company’s compliance status to the MCCG 2021. The BRC had
endorsed the Company’s Corporate Governance Way Forward for approval of the Board.
The BRC plays a vital role in reviewing the adequacy and effectiveness of risk management processes for PGB. In this regard, the BRC
reviews and challenges the ERR focusing on the status of KRIs and risk mitigation implementation in ensuring effective management
of risk.
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
This statement is made pursuant to Paragraph 15.26 (b) RISK MANAGEMENT PRACTICES
of the Main Market Listing Requirements (MMLR) of Risk Management is regarded by the Board to be an integral part
Bursa Malaysia Securities Berhad (Bursa Malaysia) where of the Group’s organisational processes, with the objective of
the Board of Directors of public listed companies are maintaining sound system and ensuring its continuing adequacy
required to publish a statement about the state of the and integrity. Risk Management is firmly embedded in the Group’s
management system. The Group’s Risk Management Policy is to
internal controls of the listed issuer as a group.
adopt an effective and progressive Enterprise Risk Management
(ERM) system to identify, evaluate and monitor the risks faced by
The Board is committed to maintain and continuously improve the Group and to take specific measures to mitigate these risks.
PETRONAS Gas Berhad and its subsidiaries (Group)’s system of
risk management as well as internal controls and is pleased to
provide the following statement which outlines the nature and RISK OVERSIGHT STRUCTURE
scope of risk management and internal controls of the Group The Group risk oversight structure allows risk information flow
during the year under review. for effective oversight on risk management implementation at all
levels. Risks are reviewed at various levels, namely at Divisional
As internal control is an integral part of the Group’s risk and Plant Leadership Teams (PLTs), Project Steering Committees
control continuum to achieve the Group’s objectives, the (PSCs) and Credit Risk Management Committee (CRMC) within
Group adopts PETRONAS’ shared values of loyalty, integrity, the Group, before it is deliberated at the PETRONAS Gas Berhad
professionalism and cohesiveness which set the tone for a sound (PGB) Group Risk and Compliance Committee (RCC), PGB Board
system of risk management and internal controls. Risk Committee (BRC), and prior to the establishment of PGB
BRC in May 2021, PGB Board Audit Committee (BAC).
Context
Governance Setting
• Risk Policy • External Context
• Internal Context
• Organisation Structure
• Risk Appetite
• Roles & Responsibilities
• Risk Criteria
Continual
Improvement Risk
Assessment
• System Monitoring
& Review ERM • Risk Identification
• Risk Assurance
• ERM Capability
FRAMEWORK • Risk Analysis
• Risk Evalution
• COP’s Discussion
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
The Group’s Risk Policy communicates the Board’s and Management’s expectations on risk management implementation and
business continuity practices.
In addition, the Group’s risk appetite is determined to further enhance clarity on the risks that the Group is willing to pursue and or
retain. The risk appetite takes into account relevant parameters as well as business strategies and performance expectations and is
reviewed annually.
Strategic
Capital investment returns
Portfolio distribution
Legal and
Regulatory
Compliance Financial
Zero tolerance on Key performance on
breach of laws and capital, profitability and
regulations liquidity
Operational
Reputational
Health, safety and environment
Sentiments in
Operational excellence
mainstream media
Project excellence
89
Enterprise Risk Profiling and Assessment follows a process which ensures a consistent approach in assessing and analysing risks
faced by the Group, guided by its approved strategies and plans. Risks are reviewed annually with involvement from Management
and Subject Matter Experts (SMEs) from divisions and departments across the Group with discussions focused on risks which could
potentially impede the Group from meeting its objectives.
The following structured process within the ERM Framework was adopted:
CONTEXT SETTING
• Define the scope of the risk assessment (i.e. Business Decision/Risk Profile/Project).
• Understand external environment and consider the strategic, organisational/business objectives, KPI, stakeholders’
expectations, preliminary risks.
• Determine the Risk Appetite (the amount of risk that an organisation is willing to pursue).
RISK ASSESSMENT
RISK MATRIX
Almost
Our Risk Matrix
Certain As part of ERM, each risk is mapped based on a matrix which specifies
the likelihood and impact of the risk. The likelihood and impact of these
Likely risks are assessed and evaluated against PGB’s risk appetite and tolerance
LIKELIHOOD
level. Likelihood rating states the probability of the risk to happen, while
Possible
impact rating specifies the extent of its impact if the risk occurs. Both
measurements can be expresed qualitatively or quantitatively.
Unlikely Key Risk Indicators (KRIs) and mitigation actions have also been identified
and implemented accordingly. Key risk indicators are identified to facilitate
Remote
monitoring of the risks and provide an early warning signal on recognised
risks. The key risks and mitigation actions are monitored and reported to
Insignificant Minor Moderate Major Severe RCC, BRC* and Board for deliberation and guidance on a quarterly basis.
IMPACT
Very High High Medium Low
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
Prior to risk profiling and assessment activities, various impact rating assigned to the key risks were also discussed
inputs are analysed in setting the context of the assessment, against the Company’s risk tolerance and appetite. Further
which include both internal and external factors that may mitigations were identified for each of the key risks
impact the Group’s businesses and operations. Internal which were mainly in the strategy and commercial areas,
context, key considerations include recent Health, Safety, and aligned with the Group’s focus in driving business
Security and Environment (HSSE) performance or audit strategies and plans to achieve its aspirations as set out in
findings, operational performance as well as project PGB Material Matters in Integrated Report 2021.
related matters. From external context, recent changes
in regulatory or statutory requirements as well as shifts in Both Regasification Terminal Sungai Udang Sdn Bhd and
industry outlook and landscape are also considered and Pengerang LNG (Two) Sdn Bhd, which are operating
analysed as they may have direct or indirect impact to the subsidiaries within the Group also prescribe to the PRM
Group operations. framework and practices. Guidance was provided to
Kimanis Power Sdn Bhd and Pengerang Gas Solutions Sdn
Each risk is mapped based on a matrix which specifies its Bhd, both joint venture companies, on the practices of
likelihood (how likely is the risk to happen) and its impact PGB Risk Policy and PRM.
(the extent of its impact if it did happen), analysing from
both qualitative and quantitative perspectives. The matrix Risk assessments in decision making (RADM) were also
is adopted from PETRONAS ERM Framework and adapted conducted on new business ventures and strategies, as it
based on the Group’s risk appetite and tolerance level. is a key component to facilitate informed decision making
Depending on risk treatment strategies adopted, mitigation at Steering Committees, Leadership Team, BRC and Board
plans are outlined to mitigate the risks to an acceptable where more than 80 risk assessments were facilitated by
level. RMU across the Group.
KRIs are identified to facilitate monitoring of the risks which b) Plant and Facilities Risk
provide an early warning signal on potential emerging risks.
The respective PLTs are responsible in ensuring adequate
Risk Owners, Risk Mitigation Owners and Risk Focal persons
and effective Plant and Facilities Risk Management (PFRM)
are assigned for each risk to ensure the risk mitigations
at the Divisions. The Group manages its operational risks
developed are appropriately implemented, monitored and
via PFRM. Under PFRM, risks relevant to operations at the
regularly reported.
divisions are assessed, monitored and reported to the
respective Business Divisions’ PLT. As per the Enterprise
RMU provides updates on the Group’s ERM implementation
Risk, these risks are rated based on its probability and
to PGB RCC and subsequently, to PGB BRC in the form of
impact to the divisions’ operations. Appropriate mitigation
quarterly Enterprise Risk Report (ERR). The report covers
plans are put in place for every key risk.
the risk profile and status of risk mitigation implementation,
KRIs as well as risk management framework implementation
During the year under review, the plant and facilities risk
and risk initiatives.
review was conducted for both Gas Processing and Utilities
(GPU) Division, and Gas Transmission and Regasification
During the year, a review of the Enterprise Risk Profile
(GTR) Division. The respective divisions’ risk profiles were
was conducted throughout the Group (including at
deliberated, updated and approved at Division’s PLTs.
subsidiaries and JV companies) where key issues and risks
Subsequently, these risks were monitored with mitigation
were deliberated at length based on the latest context
actions tracked and periodically reported to the respective
considering internal and external factors, focusing on the
PLTs.
High and Medium risks. The rationale of the likelihood and
91
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
g) Health, Safety, Security and Environment (HSSE) Risk Similar to other organisations, PGB is exposed to corporate
liability under Section 17A of Malaysian Anti-Corruption
The Group leverages on the PETRONAS Health, Safety and
Commission (MACC) Act (2009) that penalises commercial
Environment Management System (HSEMS) to manage
organisation for failure to prevent bribery and corruption,
HSSE risks and ensure that operations are in compliance
effective from 1 June 2020. The sole defense available
with the HSSE regulatory requirements. The HSEMS
to protect the commercial organisation is through the
ensures that HSSE risks within the business are managed
implementation of Prime Minister Office (PMO)‘s Guidelines
effectively. In addition, the Group subscribes to PETRONAS
on Adequate Procedures based on five principles known as
HSSE Mandatory Control Framework to strengthen HSSE
TRUST:
governance within the Group through clear requirements.
• Top Level Commitment
Major risks in HSSE are identified with its mitigation actions • Risk Assessment
monitored through Hazards and Effects Management • Undertake Control Measure
Process (HEMP), Plant Facilities Risk Management and • Systematic Review, Monitoring and Enforcement
Enterprise Risk Management (ERM). Amongst the focus areas • Training and Communication
for the year under review is HSSE compliance improvement
via digitalisation, efficient functional assurance, upskilling In view of this, Adequate Procedures Implementation
HSSE capability and effective communication programme. Plan have been developed and is being monitored under
Let’s Comply & Intervene programme (Jom Patuh & Tegur) the Enterprise Risk Profile (ERP) to ensure the Group is
is also progressing as part of the continuous efforts toward protected from liability under Section 17A of MACC Act
inculcating a pervasive behavioural safety culture. (2009). In addition, the required trainings on five critical
laws i.e. competition, sanctions, anti-bribery & corruption,
The Group has established multiple platforms to conduct export controls and personal data protection have been
periodic management review on HSSE related risks and conducted.
events in addressing changes that are triggered from
93
CRISIS MANAGEMENT
The Group crisis management framework and practices are in adherence to the PETRONAS Crisis Management framework which
provides the foundation for consistent and effective crisis response. The Group has in place contingency planning that defines the
structure and processes for managing emergencies and crisis at operational and company level. There is a three-tiered response
system in place as outlined based on severity of the crisis which provides clear demarcation of response control and required
capability of emergency or crisis team members in order to protect and save people, environment, asset and reputation. In the event
of business disruptions during crisis events, Business Continuity Plan (BCP) will be activated to ensure business continuity.
ISI
CON
S AS
IMPR
SESSMENT
CRISIS
MANAGEMENT
FRAMEWORK
(CMF)
EX
SE
TE
S
ER
IS T I N N
PO Y
C
IN G & S
E EG • Strategies & Actions
G SR
(T
&E CRISI TRAT Development
) S • Resources Identification
• Emergency/Crisis
• T&E Planning
Management Plan
• T&E Execution
Establishment
• T&E Review
• Emergency/Crisis
Management Plan
Communication
PETRONAS Gas Berhad Responsible Financial
94 Governance and Financial Report 2021 Governance Statements
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
Crisis
A situation where there is a potential
for multiple fatalities/injuries
3 Crisis
Incident is affecting PGB
CRISIS BUSINESS CONTINUITY business/operations. Require PGB
and severe damage to property, MANAGEMENT TEAM MANAGEMENT TEAM management involvement on
environment and business which strategic decision making.
involves neighbouring sites and
TIER
2
surrounding communities.
Minor Emergency
Emergency response is within the
1 Incident
Disruption is manageable at
control and capability of assets/area/ EMERGENCY BUSINESS CONTINUITY
RESPONSE TEAM RESPONSE TEAM operational level. No management
regional office/site emergency
intervention is required.
response.
CMT Chairman
PGB MD/CEO
CMT Secretary
Head, Risk Management
Historian
Executive Risk Management
PGB Pandemic Preparedness Response Guideline which was established in 2020 continues to be in place to:
• provide guidance to strategise preparedness and response to minimise the risk imposed by COVID-19 outbreak;
• align the action plans as stipulated by PETRONAS Pandemic Preparedness and Response Team; and
• reduce the impact on the Company’s business activities by safeguarding its people, environment, assets and reputation.
Daily monitoring is conducted where critical operational information, including on staff and contractors, is shared with Management
and key personnel. Recovery management continues to be in place through PGB barrier management and is reviewed in line with
developments of the outbreak, to ensure zero operations and business disruption. Additionally, employees’ vaccination rate was also
monitored to ensure adherence to Government’s SOP in providing safe working environment for staff.
PPRT STRUCTURE
Chairman
Head
GPU/GTR/HO
Secretary
Head HSSE
Team Member Team Member Team Member Team Member Team Member
Head Head Head Head Group
Risk Management Occupational Health Human Resource Emergency Response Security
PETRONAS Gas Berhad Responsible Financial
96 Governance and Financial Report 2021 Governance Statements
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
Standards
People
Process
Infrastructure
Business Impact Analysis (BIA) prioritises the Group’s key business functions and spells out the timeframe to resume each function
in the event of disruptions. It is periodically reviewed and updated with the objective to identify criticality of business functions and
determine resource requirements to be allocated for recovery and resumption.
The Group has put in place the Gas and Utilities supply Business Continuity Plan (BCP) which adopts a three-tiered approach in
escalating response which will assist the Group in effectively responding and managing gas and utilities supply disruption. The Group
has also formulated BCP in responding to the inaccessibility of PETRONAS Twin Towers where its Head Office operates, to resume its
Head Office’s critical functions be it virtually or at established alternate worksite.
RMU provides guidance and reference to ensure compliance to the Group’s BCM requirements including capability building whereby
assurance and continuous awareness programmes are in place, as part of the overall BCM continual improvement.
During the year under review, the Group performed BCM testing and exercise in December 2021 to ensure preparedness and readiness
in facing business disruption, as well as to ascertain effectiveness and robustness of respond and recovery strategies. From the testing
and exercise, findings and gaps were registered for further improvement.
97
BCMT Chairman
PGB MD/CEO
BCMT Secretary
Head, Health, Safety,
Environment & Business
Excellence
Historian
Executive Risk Management
Head, Head,
Head, Chief Financial
Strategic Business Development
Legal Officer
Communications & Commercial
PETRONAS Gas Berhad Responsible Financial
98 Governance and Financial Report 2021 Governance Statements
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
INTERNAL AUDIT FUNCTION In 2021, PGB IA is staffed by eight individuals with relevant
experience and qualifications. PGB IA was headed by Shamliyah
The Board recognises that the internal audit function is an
Mohamed @ Arif and she holds a Bachelor of Science Business
integral part of PGB corporate governance.
Administration (majoring in Finance) from the University of Tulsa,
Oklahoma, USA.
The internal audit function was undertaken by the PGB Internal
Audit (IA) in providing independent, objective assurance and
The key activities of the internal audit function and audit
consulting activities on Governance Risk and Controls of PGB.
competencies are set out in the BAC Report on pages 59 to 60
of this Annual Report.
This practice is in line with the requirement of Bursa Malaysia,
Malaysia Code of Corporate Governance (MCCG) and the
International Professional Practice Framework (IPPF issued by OTHER SIGNIFICANT ELEMENTS OF INTERNAL
the Institute of Internal Auditors). CONTROL SYSTEM
The other significant elements of the Group’s internal control
In demonstrating independency, objectivity, impartiality,
system are tabulated below.
proficiency, and professional due care:
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
The Guideline requires the use of various processes to • Where possible, benchmarking is conducted on the
ensure that RPTs/RRPTs are conducted on arm’s length prices of similar services/product available in the
basis, normal commercial terms, and are not to the market.
detriment of the Group’s minority shareholders. It aims to • The Board has the overall responsibility to ensure
provide guidelines under which certain transactions and compliance to the established Guidelines to approve
situations must be reviewed and endorsed by the various and monitor RPTs/RRPTs and COI situations. The
governing parties of the Group and/or disclosed to the Board and/or BAC may also appoint individuals and
regulators and governing bodies. committees to examine the RPTs/RRPTs, as deemed
appropriate.
It also prescribes the processes required to identify,
evaluate, approve, monitor and report RPTs/RRPTs as well • Bursa Malaysia has granted PGB exemptions and
as manage COI. Such processes include identification various waivers from complying with the requirements
and screening of transactions, negotiations and approval/ of the MMLR from having to seek shareholders’
mandate mechanism, monitoring and reporting principles, mandate for RRPT with PETRONAS and their Group
and renewal or changes in the terms or termination of such of Companies. The exemption essentially states that
dealings. In principle, the Guideline sets forth the following: the exempted RRPTs must be transacted on an arm’s
length basis.
• If a Director or a related party has an interest
in a transaction, he or she will abstain from any • A database is maintained to capture the list of related
deliberation and decision making at the Board of PGB parties and RPTs/RRPTs which have been entered
or subsidiaries (as the case may be) in respect of such into.
transaction.
PETRONAS Gas Berhad Responsible Financial
102 Governance and Financial Report 2021 Governance Statements
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
n) Leadership Development
l) Capability Development
The Group recognises the importance of Leadership
The Group invests in building the staff capability
Development in ensuring the organisation has sufficient
towards highly competent and capable workforce to
competent leaders currently and for the future. Leadership
deliver superior results. The Group aligns its capability
development in PGB aims to identify and develop leaders
development efforts through the PETRONAS Superior
at every level of the employee career guided by the
Managed Assessment Framework (SMA) for Executive and
PETRONAS Leadership Framework with the objective to
PETRONAS Competency Based Assessment System (PECAS)
have a bigger pool of leaders that can drive and steer the
for Technical Non-executive, where staff capabilities are
company’s business strategy. The PETRONAS Leadership
continuously developed and assessed.
Competencies and PETRONAS Cultural Beliefs guide
staff to better understand the PETRONAS Leadership
The Group has also established a platform through the
Philosophy, emphasising on competencies and behaviours
Company Capability Development Working Committee
to promote better internalisation of the values.
(CDWC) to deliberate on staff capability and intervention
plans. The Working Committee will drive capability gap
closure for each Technical and Non-Technical Skill Group,
which is to be done jointly between the staff, Supervisors
and/or dedicated Discipline Resource Person (DRP).
103
o) Code of Conduct and Business Ethics Under the policy, a whistleblower will be accorded with
protection of confidentiality of identity, to the extent
The Group adopts and practices PETRONAS Code of
reasonably practicable. An employee who whistle blows
Conduct and Business Ethics (CoBE). The CoBE, which is
internally will also be protected against any adverse and
accessible to the public for reference on the Company’s
detrimental action for disclosing any improper conduct
official website at www.petronasgas.com, places
within the Group, to the extent reasonably practicable,
significant importance in upholding the principle of
provided that the disclosure is made in good faith. Such
discipline, good conduct, professionalism, loyalty, integrity
protection is accorded even if the investigation later reveals
and cohesiveness that are critical to the success and
that the whistle blower is mistaken as to the facts and the
wellbeing of the Group. The CoBE consists of detailed
rules and procedures involved.
policy statements on the standards of behaviour and
ethical conduct expected of each applicable individual.
q) PETRONAS Raid Protocol
The Group also expects that contractors, sub-contractors,
consultants, agents and representatives and others The Company’s policies are aligned to the PETRONAS
performing work or services for or on behalf of the Group Raid Protocol in ensuring appropriate manner in handling
to always act consistently with the relevant parts of the interaction with, and submission of information and data
CoBE when performing such work or services. The CoBE to the authorities in the event that raids are carried out
expressly prohibits improper solicitation, bribery and other within the premises of Company’s offices worldwide.
corrupt activity not only by employees and directors but It is an internal procedure in response to the scope and
also by third parties performing work or services for or on powers of the authorities under relevant laws and various
behalf of companies in the PETRONAS Group. jurisdictions.
In compliance with the CoBE, the Company adopts the r) Human Rights Commitment
PETRONAS Anti-Bribery and Corruption (ABC) Manual
The Group is committed to uphold internationally
which governs the prevention of corruption and unethical
recognised human rights in areas of its operations,
practices within the Group. The ABC Manual sets forth
complying with its Code of CoBE, and all relevant legal
the policy statement and guidelines on how to deal with
requirements.
improper solicitation, bribery and other corrupt activities
and issues that may arise in the course of business.
The Group subscribes to PETRONAS Social Performance
Framework. The introduction of this framework covers the
p) Whistleblowing Policy
supply chain, community well-being, labour and working
The Group has adopted the PETRONAS Whistleblowing conditions for contractors, and third party security which
Policy (WBP) which provides an avenue for employees and will strengthen the commitment of social responsibility.
members of the public to disclose any improper conduct The Group is working closely with PETRONAS Group HSE
committed or about to be committed in accordance with (GHSE) to increase the human rights awareness across the
the procedures as provided under the policy. The WBP is organisation.
accessible to the public for reference on the Company’s
official website at www.petronasgas.com.
PETRONAS Gas Berhad Responsible Financial
104 Governance and Financial Report 2021 Governance Statements
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROLS
u) Insurance
The Group has in place and maintains at all times such
relevant insurance/Takaful policies/contracts and have
coverage which are industry standard as are customarily
taken out and maintained by other companies in the same
industry. Insurances are subscribed to with advice by
PETRONAS Group Insurance, ensuring appropriate covers
are in place and leveraging on common policies across
PETRONAS Group, where applicable.
105
LIST OF
INTERNAL POLICIES
Good governance enables PGB to function efficiently and effectively by providing clarity on acceptable as well as expected standards
of behaviour. In carrying out our business activities responsibly, safely and reliably, we are guided by PETRONAS’ Shared Values of
Loyalty, Professionalism, Integrity and Cohesiveness. These are supported by our strict conformance to respective laws, rules and
regulations.
PETRONAS Leadership
PETRONAS Framework PETRONAS Technical
and Capability PGB Security Policy
on External Auditors Standards
Development Policy
PETRONAS Position
PETRONAS Raid PETRONAS Zero
Statement on PGB Stop Work Policy
Protocol Tolerance (ZeTo) Rules
Climate Change
The financial statements of the Group and of the Company as set out on pages 116 to 214, are properly drawn up so as to give a true
and fair view of the financial position of the Group and of the Company as at 31 December 2021, and of their financial performance
and their cash flows for the year then ended.
The Directors consider that in preparing the financial statements of the Group and of the Company:
The Directors are responsible for ensuring that the accounting and other records and registers required by the Malaysian Companies
Act 2016 to be retained by the Company and its subsidiaries have been properly kept in accordance with the provisions of the
said Act.
The Directors also have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets
of the Group and the Company, and to enable the preparation of financial statements of the Group and of the Company that are
free from material misstatement, whether due to fraud or error.
109
DIRECTORS’
REPORT
for the year ended 31 December 2021
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the
year ended 31 December 2021.
PRINCIPAL ACTIVITIES
The principal activities of the Company in the course of the financial year remained unchanged and consist of separating natural gas
into its components and storing, transporting and distributing such components thereof for a fee and the sale of industrial utilities.
The principal activities of subsidiaries, joint ventures and associate are stated in Note 4, Note 5 and Note 6 to the financial statements
respectively.
SUBSIDIARIES
The details of the Company’s subsidiaries are disclosed in Note 4 to the financial statements.
RESULTS
In RM’000 Group Company
Attributable to:
Shareholders of the Company 1,988,940 2,214,348
Non-controlling interests 122,464 –
PETRONAS Gas Berhad Responsible Financial
110 Governance and Financial Report 2021 Governance Statements
DIRECTORS’
REPORT
for the year ended 31 December 2021
DIVIDENDS
During the financial year, the amount of dividends paid by the Company were as follows:
(i) In respect of the financial year ended 31 December 2020 as reported in the Directors’ Report of that year, a fourth interim
dividend of 22 sen per ordinary share amounting to RM435,321,000 and a special interim dividend of 5 sen per ordinary share
amounting to RM98,937,000 declared on 22 February 2021 and paid on 19 March 2021; and
– a first interim dividend of 16 sen per ordinary share amounting to RM316,597,000 declared on 25 May 2021 and paid on
18 June 2021;
– a second interim dividend of 16 sen per ordinary share amounting to RM316,597,000 declared on 23 August 2021 and
paid on 17 September 2021; and
– a third interim dividend of 18 sen per ordinary share amounting to RM356,172,000 declared on 22 November 2021
and paid on 17 December 2021.
The Directors had on 22 February 2022 declared a fourth interim dividend of 22 sen per ordinary share amounting to RM435,321,000
and a special interim dividend of 10 sen per ordinary share amounting to RM197,873,000, in respect of the financial year ended
31 December 2021.
The financial statements for the current financial year do not reflect the declared interim dividends. The dividends will be accounted
for in equity as an appropriation of retained profits in the financial statements for the financial year ending 31 December 2022.
DIRECTORS
Directors who served during the financial year until the date of this report are:
DIRECTORS (CONTINUED)
Subsidiaries
Directors Alternates
Abdul Aziz bin Othman* (appointed on 5 February 2021) Shariza Sharis binti Mohd Yusof (alternate to PGB’s nominees)
Chan Yew Kai Teo Seow Ling (alternate to Chan Yew Kai)
Zainab binti Mohd Salleh Ngau Wu Wei (alternate to Zainab binti Mohd Salleh)
Zainal Abidin bin Zainuddin* Azman bin Jaafar (alternate to Dato’ Ramlee bin A Rahman)
Abdul Razak Faiz bin Sulaiman* (appointed on 1 September 2021)
Dato’ Ramlee bin A Rahman (appointed on 1 September 2021) Dzulkifly bin Hassan (alternate to Lukman bin Abu Bakar)
Hisham bin Maaulot* (appointed on 20 October 2021) (resigned on 1 September 2021)
Kamalbahrin bin Ahmad* (resigned on 5 February 2021)
Lukman bin Abu Bakar (resigned on 1 September 2021)
Abdul Razak bin Saim* (resigned on 20 October 2021)
In accordance with Article 107 of the Company’s Constitution, Habibah binti Abdul and Marina binti Md Taib will retire by rotation
from the Board at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-election.
In accordance with Article 100 of the Company’s Constitution, Datuk Mark Victor Rozario, Sujit Singh Parhar s/o Sukhdev Singh and
Hasliza binti Othman who have been appointed to fill casual vacancies on the Board, will retire at the forthcoming Annual General
Meeting, and being eligible, offer themselves for re-election.
PETRONAS Gas Berhad Responsible Financial
112 Governance and Financial Report 2021 Governance Statements
DIRECTORS’
REPORT
for the year ended 31 December 2021
DIRECTORS’ INTERESTS
The Directors in office at the end of the 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 spouses and/or children of the Directors who
themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:
Balance at Balance at
Name 1.1.2021 Bought Sold 31.12.2021
Balance at Balance at
Name 1.1.2021 Bought Sold 31.12.2021
Balance at Balance at
Name 1.1.2021 Bought Sold 31.12.2021
None of the other Directors holding office at 31 December 2021 had any interest in the ordinary shares of the Company and of its
related corporations during the financial year.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit
(other than the benefit included in the aggregate amount of remuneration received or due and receivable by Directors as shown in
Note 27 to the financial statements or the fixed salary of a full time employee of the Company or of related corporations), 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.
113
ISSUE OF SHARES
There were no changes in the issued and paid up capital of the Company during the financial year.
(i) necessary actions had been taken in relation to the writing off of bad debts and the provisioning of doubtful debt and satisfied
themselves that 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, their values as shown in the accounting
records of the Group and of the Company, had 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.
PETRONAS Gas Berhad Responsible Financial
114 Governance and Financial Report 2021 Governance Statements
DIRECTORS’
REPORT
for the year ended 31 December 2021
(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 material contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No material 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 2021 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.
(i) the amount of fees and other benefits paid to or receivable by them from the Company or its subsidiary companies as
remuneration for their services to the Company or its subsidiary companies; and
(ii) the estimated money value of any other benefits received or receivable by them otherwise than in cash from the Company or
from any of its subsidiaries;
There are no amounts paid to or receivable by any third party in respect of the services provided to the Company or any of its
subsidiary companies by any Director or past Director of the Company.
AUDITORS
The auditors, KPMG PLT, have indicated their willingness to accept re-appointment.
Kuala Lumpur,
Date: 22 February 2022
115
STATEMENT BY
DIRECTORS
In the opinion of the Directors, the financial statements set out on pages 116 to 214, are drawn up in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in
Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2021 and of
their financial performance and cash flows for the financial year then ended on that date.
Kuala Lumpur,
Date: 22 February 2022
STATUTORY
DECLARATION
I, Shariza Sharis binti Mohd Yusof, the officer primarily responsible for the financial management of PETRONAS GAS BERHAD,
do solemnly and sincerely declare that the financial statements set out on pages 116 to 214 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 provisions of the
Statutory Declarations Act, 1960.
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
as at 31 December 2021
ASSETS
Property, plant and equipment 3 13,272,393 13,216,195
Investments in joint ventures 5 705,018 631,248
Investments in associate 6 151,780 142,482
Long term receivables 7 171,381 208,453
Deferred tax assets 9 167,525 217,915
14,468,097 14,416,293
TOTAL NON-CURRENT ASSETS
4,718,006 3,928,322
TOTAL CURRENT ASSETS
19,186,103 18,344,615
TOTAL ASSETS
EQUITY
Share capital 13 3,165,204 3,165,204
Reserves 14 9,933,360 9,469,553
13,339,510 12,968,534
TOTAL EQUITY
LIABILITIES
Borrowings 16 3,278,907 3,134,260
Deferred tax liabilities 9 1,240,275 1,240,578
Provisions 17 30,550 –
Deferred income 18 1,181 2,127
1,295,680 999,116
TOTAL CURRENT LIABILITIES
5,846,593 5,376,081
TOTAL LIABILITIES
19,186,103 18,344,615
TOTAL EQUITY AND LIABILITIES
The notes set out on pages 127 to 214 are an integral part of these financial statements.
117
2,111,404 2,082,281
PROFIT FOR THE YEAR
2,111,404 2,082,281
PROFIT FOR THE YEAR
The notes set out on pages 127 to 214 are an integral part of these financial statements.
PETRONAS Gas Berhad Responsible Financial
118 Governance and Financial Report 2021 Governance Statements
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
for the year ended 31 December 2021
The notes set out on pages 127 to 214 are an integral part of these financial statements.
119
Attributable to shareholders
of the Company
Distributable
Non-
Retained controlling Total
In RM’000 Note Profits Total Interests Equity
The notes set out on pages 127 to 214 are an integral part of these financial statements.
PETRONAS Gas Berhad Responsible Financial
120 Governance and Financial Report 2021 Governance Statements
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
for the year ended 31 December 2021
The notes set out on pages 127 to 214 are an integral part of these financial statements.
121
Attributable to shareholders
of the Company
Distributable
Non-
Retained controlling Total
In RM’000 Note Profits Total Interests Equity
The notes set out on pages 127 to 214 are an integral part of these financial statements.
PETRONAS Gas Berhad Responsible Financial
122 Governance and Financial Report 2021 Governance Statements
CONSOLIDATED STATEMENT OF
CASH FLOWS
for the year ended 31 December 2021
Total cash outflows for leases during the year comprise repayment of lease liabilities and related interests totalling RM189,282,000
(2020: RM197,720,000).
Included in the Group’s cash and cash equivalents are RM23,457,000 (2020: RM24,351,000) in a finance service reserve account being
designated as security and a fixed balance amounting to RM30,000 in a trustee reimbursable account in relation to a subsidiary’s
Islamic financing facility.
The notes set out on pages 127 to 214 are an integral part of these financial statements.
123
STATEMENT OF
FINANCIAL POSITION
as at 31 December 2021
ASSETS
Property, plant and equipment 3 8,451,461 7,903,410
Investments in subsidiaries 4 1,341,162 1,608,853
Investments in joint ventures 5 283,059 283,059
Investments in associate 6 76,466 76,466
Long term receivables 7 171,381 208,453
10,323,529 10,080,241
TOTAL NON-CURRENT ASSETS
4,460,620 3,270,223
TOTAL CURRENT ASSETS
14,784,149 13,350,464
TOTAL ASSETS
EQUITY
Share capital 13 3,165,204 3,165,204
Reserves 14 8,918,010 8,227,286
12,083,214 11,392,490
TOTAL EQUITY
LIABILITIES
Borrowings 16 412,624 6,774
Deferred tax liabilities 9 1,240,275 1,240,462
Provisions 17 10,318 –
Deferred income 18 1,181 2,127
1,036,537 708,611
TOTAL CURRENT LIABILITIES
2,700,935 1,957,974
TOTAL LIABILITIES
14,784,149 13,350,464
TOTAL EQUITY AND LIABILITIES
The notes set out on pages 127 to 214 are an integral part of these financial statements.
PETRONAS Gas Berhad Responsible Financial
124 Governance and Financial Report 2021 Governance Statements
2,214,348 1,734,440
PROFIT FOR THE YEAR
The notes set out on pages 127 to 214 are an integral part of these financial statements.
125
STATEMENT OF
CHANGES IN EQUITY
for the year ended 31 December 2021
The notes set out on pages 127 to 214 are an integral part of these financial statements.
PETRONAS Gas Berhad Responsible Financial
126 Governance and Financial Report 2021 Governance Statements
STATEMENT OF
CASH FLOWS
for the year ended 31 December 2021
Total cash outflows for leases during the year comprise payment of lease liabilities and related interests totalling RM640,000
(2020: RM800,000).
The notes set out on pages 127 to 214 are an integral part of these financial statements.
127
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
PETRONAS GAS BERHAD is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the
Main Market of Bursa Malaysia Securities Berhad. The address of the principal place of business and registered office of the Company
is as follows:
The Company is principally engaged in separating natural gas into its components and storing, transporting and distributing
such components thereof for a fee and the sale of industrial utilities. The principal activities of its subsidiaries, joint ventures and
associate are as stated in Note 4, Note 5 and Note 6 to the financial statements respectively.
The holding company as well as the ultimate holding company is Petroliam Nasional Berhad (“PETRONAS”), a company incorporated
in Malaysia.
The consolidated financial statements of the Company as at and for the financial year ended 31 December 2021 comprises the
Company and its subsidiaries (collectively referred to as the “Group”) and the Group’s interests in joint ventures and an associate.
1. 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 the
Companies Act, 2016 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 2021, the Group and the Company have adopted amendments to MFRSs (“pronouncements”) that
have been issued by the Malaysian Accounting Standards Board (“MASB”) as described fully in Note 31 to the financial
statements.
MASB has also issued 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 including their impact on
the financial statements in the period of initial application are set out in Note 32 to the financial statements. The new
and revised pronouncements which are not yet effective that are not relevant to the operation of the Group and of the
Company are set out in Note 33.
These financial statements were approved and authorised for issue by the Board of Directors on 22 February 2022.
PETRONAS Gas Berhad Responsible Financial
128 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting
policies that have the most significant effect on the amounts recognised in the financial statements are described in the
following Notes:
Subsidiaries are entities, including structured 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.
129
Investments in subsidiaries 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 investment includes transaction costs.
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-company transactions are eliminated on consolidation and revenue and profits relate to external transactions
only. Unrealised losses resulting from inter-company transactions are also eliminated unless cost cannot be recovered.
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 from the acquisition date, which is the date on
which control is transferred to the Group. 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 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.
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.
Business combinations arising from transfers of interests in entities that are under the control of the shareholder that
controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period
presented, or, if later, at the date that common control was established; for this purpose, comparatives are restated. The
assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling
shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same
components within Group equity and any resulting gain or loss is recognised directly in equity.
PETRONAS Gas Berhad Responsible Financial
130 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
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 total 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.
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 former subsidiary, any
non-controlling interests and the other components of equity related to the former subsidiary from the consolidated
statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the
Group retains any interest in the former 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 a fair value through other comprehensive
income financial asset depending on the level of influence retained.
2.2 Associate
An associate is an entity 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 less any impairment losses,
unless it is classified as held for sale or distribution. 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.
131
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 such as loans and advances) 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 the profit or loss. Any retained interest in the
former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the
initial carrying amount of a financial asset.
When the Group’s interest in an associate decreases but does not result in loss of significant influence, any retained
interest is not re-measured. 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.
Unrealised profits arising from transactions between the Group and its associate are eliminated to the extent of the
Group’s interests in the associate. Unrealised losses on such transactions are also eliminated partially, unless cost cannot
be recovered.
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 as described in Note 2.2.
PETRONAS Gas Berhad Responsible Financial
132 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
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 any accumulated impairment
losses.
Cost includes expenditures that are directly attributable to the acquisition of the assets 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 cost of
material and direct labour. For qualifying assets, 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 components 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.
Subsequent costs
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
Depreciation for property, plant and equipment other than freehold land and projects-in-progress, is recognised in profit
or loss on a straight-line basis over the estimated useful lives of each component 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 50 years or over the remaining land lease period, whichever is shorter.
The estimated useful lives of the other property, plant and equipment and right-of-use assets are as follows:
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.
Right-of-use assets are subsequently depreciated using the straight-line method from the commencement date to the
earlier of the end of the useful life of the right-of-use assets or the end of the lease term.
Derecognition
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.
2.5 Leases
(i) Definition of a lease
A contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period
of time in exchange for a consideration. To assess whether a contract conveys the right to control the use of an
identified asset, the Group and the Company assess whether:
• the contract involves the use of an identified asset – this may be specified explicitly or implicitly and should be
physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has
a substantive substitution right, then the asset is not identified;
• the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout
the period of use; and
• the customer has the right to direct the use of the asset when it has the decision-making rights that are most
relevant to changing how and for what purpose the asset is used. The customer has the right to direct the use
of the asset if either the customer has the right to operate the asset; or the customer designed the asset in a
way that predetermines how and for what purpose it will be used throughout the period of use.
At inception or on reassessment of a contract that contains a lease component, the Group and the Company
allocate the consideration in the contract to each lease and non-lease component on the basis of their relative
stand-alone prices.
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134 Governance and Financial Report 2021 Governance Statements
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(a) As a lessee
The Group and the Company recognise a right-of-use asset and a lease liability at the lease commencement
date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying
asset or the site on which it is located, less any lease incentives received.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the respective Group entities’ incremental borrowing rate is used. Generally, the Group entities
use their incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
The Group and the Company exclude variable lease payments that are linked to future performance or usage
of the underlying asset from the lease liability. Instead, these payments are recognised in profit or loss in the
period in which the performance or use occurs.
The Group and the Company assess at lease commencement whether it is reasonably certain to exercise the
extension options in determining the lease term.
The Group and the Company have elected not to recognise right-of-use assets and lease liabilities for
short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group and
the Company recognise the lease payments associated with these leases as an expense on a straight-line
basis over the lease term.
The Group and the Company present right-of-use assets that do not meet the definition of investment property
in ‘property, plant and equipment’ and lease liabilities in ‘borrowings’ in the statement of financial position.
135
(b)
As a lessor
When the Group and the Company act as a lessor, it determines at lease inception whether each lease is a
finance lease or an operating lease.
To classify each lease, the Group and the Company make an overall assessment of whether the lease transfers
substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then
the lease is a finance lease; if not, then it is an operating lease.
If an arrangement contains lease and non-lease components, the Group and the Company apply
MFRS 15 Revenue from Contracts with Customers to allocate the consideration in the contract based on the
stand-alone selling price.
Where applicable, for finance lease, the Group and the Company recognise assets held under a finance lease in
its statement of financial position and presents them as a receivable at an amount equal to the net investment in
the lease. The Group and the Company use the interest rate implicit in the lease to measure the net investment
in the lease.
(iii)
Subsequent measurement
(a) As a lessee
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
The estimated useful lives of right-of-use assets are determined on the same basis as those of property,
plant and equipment. Depreciation of certain right-of-use assets are subsequently capitalised into carrying
amount of other assets whenever they meet the criteria for capitalisation. In addition, the right-of-use asset is
periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is measured at amortised cost using the effective interest method (see Note 2.7(vi)).
It is remeasured when there is a change in future lease payments arising from a change in an index or rate,
if there is a revision of in-substance fixed lease payments, or if there is a change in the Group’s estimate of
the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment
of whether it will exercise a purchase, extension or termination option. The Group will reassess whether it is
reasonably certain to exercise the extension option if there is a significant change in circumstances within
its control.
When the lease liability is remeasured as described in the above paragraph, a corresponding adjustment is
made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of
the right-of-use asset has been reduced to zero.
PETRONAS Gas Berhad Responsible Financial
136 Governance and Financial Report 2021 Governance Statements
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FINANCIAL STATEMENTS
31 December 2021
When there is lease modification due to increase in the scope of lease by adding the right-to-use one or more
underlying assets, the Group and the Company assess whether the lease modification shall be accounted for
as a separate lease or similar to reassessment of lease liability. The Group and the Company account for lease
modification as a separate lease when the consideration for the lease increases by an amount commensurate
with the stand-alone price for the increase in scope and any appropriate adjustments.
When there is lease modification due to decrease in scope, the Group and the Company decrease the
carrying amount of the right-of-use asset and remeasure the lease liability to reflect the partial or full
termination of the lease. The corresponding gain or loss shall be recognised in profit or loss. Lease liabilities
are remeasured for all other lease modifications with corresponding adjustments to the right-of-use asset.
(b)
As a lessor
The Group and the Company recognise lease payments received under operating leases as income on a
straight-line basis over the lease term as part of “revenue”.
The Group and the Company recognise finance income over the lease term, based on a pattern reflecting a
constant periodic rate of return on the Group’s and the Company’s net investment in the lease. The Group
and the Company aim to allocate finance income over the lease term on a systematic and rational basis.
The Group and the Company apply the lease payments relating to the period against the gross investment in
the lease to reduce both the principal and the unearned finance income. The net investment in the lease is
subject to impairment requirements in MFRS 9 Financial Instruments (see Note 2.8).
2.6 Investments
Long-term investments in subsidiaries, associate 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
(see Note 2.7).
A financial instrument is recognised in the statement of financial statement position when, and only when, the Group or
the Company becomes a party to the contractual provisions of the instrument.
Regular way purchases or sales are recognised on the trade date i.e. the date that the Group and the Company commit to
purchase or sell the financial asset.
137
A financial asset (unless it is a receivable without a significant financing component) and a financial liability is measured at
fair value plus or minus, in the case of a financial instrument not at fair value through profit or loss, any directly attributable
transaction cost incurred at the acquisition or issuance of the financial instrument. A trade receivable that does not
contain a significant financing component is initially measured at the transaction price.
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.
The Group and the Company will apply the practical expedients provided in the amendments to MFRS 9 Financial
Instruments, MFRS 139 Financial Instruments: Recognition and Measurement, MFRS 7 Financial Instruments: Disclosures,
MFRS 4 Insurance Contracts and MFRS 16 Leases (Interest Rate Benchmark Reform – Phase 2) in future periods if they
become applicable.
As of 31 December 2021, the Group and the Company have had no transactions for which the benchmark rate had
been replaced with an alternative benchmark rate and therefore have not yet applied the practical expedients
provided in the amendments.
Financial assets are classified as measured at amortised cost or fair value through profit or loss (“FVTPL”),
as appropriate.
The Group and the Company determine the classification of financial assets at initial recognition. The financial
assets are not subsequently reclassified unless the Group and the Company change their business model for
managing financial assets in which case all affected financial assets are reclassified on the first day of the first
reporting period following the change of the business model.
a) Amortised cost
Amortised cost category comprises financial assets that are held within a business model whose objective is to
hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding. The financial assets are
not designated as fair value through profit or loss.
Subsequent measurement
Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective
interest method (see Note 2.7(vi)). Interest income and foreign exchange gains and losses are recognised in
profit or loss.
PETRONAS Gas Berhad Responsible Financial
138 Governance and Financial Report 2021 Governance Statements
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FINANCIAL STATEMENTS
31 December 2021
All financial assets not classified as measured at amortised cost as described above are measured at fair
value through profit or loss. This includes derivative financial assets (except for a derivative that is a financial
guarantee contract or a designated and effective hedging instrument as per Note 2.7(iii)). On initial recognition,
the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured
at amortised cost or at fair value through other comprehensive income as at fair value through profit or loss if
doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Subsequent measurement
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 2.23.
(ii)
Financial liabilities
a) Amortised cost
Subsequent to initial recognition, other financial liabilities are subsequently measured at amortised cost using
the effective interest method (see Note 2.7(vi)).
Gains and losses are recognised in the profit or loss when the liabilities are derecognised as well as through the
amortisation process.
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.
On initial recognition, the Group or the Company may irrevocably designate a financial liability that otherwise
meets the requirements to be measured at amortised cost as at fair value through profit or loss:
• if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise;
• a group of financial liabilities or financial assets and financial liabilities is managed and its performance is
evaluated on a fair value basis, in accordance with a documented risk management or investment strategy,
and information about the Group is provided internally on that basis to the Group’s key management
personnel; or
• if a contract contains one or more embedded derivatives and the host is not a financial asset in the scope of
MFRS 9, where the embedded derivative significantly modifies the cash flows and separation is not prohibited.
139
Financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair value
with gains or losses, including any interest expenses are recognised in the profit or loss.
For financial liabilities where it is designated as fair value through profit or loss upon initial recognition,
the Group and the Company recognise the amount of change in fair value of the financial liability that is
attributable to change in credit risk in the other comprehensive income and remaining amount of the change
in fair value in the profit or loss, unless the treatment of the effects of changes in the liability’s credit risk
would create or enlarge an accounting mismatch.
(iii)
Hedge accounting
A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk
associated with all, or a component of, a recognised asset or liability or a highly probable forecast transaction and
could affect the profit or loss.
In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective
hedge is recognised in other comprehensive income and accumulated in equity and the ineffective portion is
recognised in profit or loss. The effective portion of changes in the fair value of the hedging instrument that is
recognised in other comprehensive income is limited to the cumulative change in fair value of the hedged item,
determined on a present value basis, from inception of the hedge.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as
inventory, the amount accumulated in the hedging reserve and the cost of hedging reserve is included directly in the
initial cost of the non-financial item when it is recognised. This is not a reclassification adjustment and will not be
recognised in OCI for the period. This also applies where the hedged forecast transaction of a non-financial asset or
non-financial liability subsequently becomes a firm commitment for which fair value hedge accounting is applied.
For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost of hedging
reserve is reclassified to profit or loss in the same period or periods during which the hedged expected future cash
flows affect profit or loss as a reclassification adjustment.
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument expires or is sold,
terminated or exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash
flow hedges is discontinued, the amount that has been accumulated in the hedging reserve remains in equity if
the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to
profit or loss as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs, any amount
remaining in accumulated other comprehensive income must be accounted for depending on the nature of the
underlying transaction as described above.
PETRONAS Gas Berhad Responsible Financial
140 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
The Group and the Company use derivative financial instruments such as interest rate swaps and forward currency
contracts to manage certain exposures to fluctuations in interest rates and 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, other than those accounted
for under hedge accounting as described in Note 2.7(iii), are recognised in profit or loss.
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 recognised in the
profit or loss.
An embedded derivative is recognised separately from the host contract where the host contract is not a financial
asset, and accounted for separately if, and only if, the derivative is not closely related to the economic characteristics
and risks of the host contract and the host contract is not measured 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.
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.
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.
Interest income is recognised by applying effective interest rate to the gross carrying amount except for credit
impaired financial assets (see Note 2.8(i)) where effective interest rate is applied to the amortised cost.
141
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 “pass-through” arrangement without
retaining control of the asset or substantially all the risks and rewards of the asset. On derecognition 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, except for equity investments at fair value through other comprehensive income
where the gain or loss are recognised in other comprehensive income.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.
On derecognition of a financial liability, the difference between the carrying amount of the financial liability
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. In the case of waiver of debt from owners, the gain is
recognised in equity as capital reserve.
2.8 Impairment
(i) Financial assets
The Group and the Company recognise loss allowances for expected credit losses on financial assets measured at
amortised cost.
The Group and the Company measure loss allowances on cash and cash equivalents at an amount equal to lifetime
expected credit loss.
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit loss.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and
when estimating expected credit loss, the Group and the Company consider reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information
and analysis, based on the Group’s and the Company’s historical experience and informed credit assessment and
including forward-looking information, where available.
The Group and the Company assume that the credit risk on a financial asset has increased significantly if it is past
due.
The Group and the Company consider a financial asset to be in default when the borrower is unlikely to pay its
credit obligations to the Group and the Company in full, without recourse by the Group and the Company to actions
such as realising security.
PETRONAS Gas Berhad Responsible Financial
142 Governance and Financial Report 2021 Governance Statements
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FINANCIAL STATEMENTS
31 December 2021
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the
expected life of a financial instrument, while 12-month expected credit losses are the portion of expected credit
losses that result from default events that are possible within the 12 months after the reporting date.
The maximum period considered when estimating expected credit losses is the maximum contractual period over
which the Group is exposed to credit risk.
An impairment loss in respect of financial assets measured at amortised cost is recognised in profit or loss and the
carrying amount of the asset is reduced through the use of an allowance account.
All financial assets, except for those measured at fair value through profit or loss, are subject to impairment
(see Note 2.7(i)).
(ii)
Other assets
The carrying amounts of other assets, other than inventories, deferred tax assets and non-current assets 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. An impairment loss recognised in respect of a cash-generating
unit is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to reduce the
carrying amount of the other assets in the unit on a pro-rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less
costs of disposal. In assessing 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 or cash-generating unit. 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.
Impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications
that the loss has decreased or no longer exists. An impairment loss is 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 profit or
loss in the year in which reversals are recognised.
143
2.10 Inventories
Inventories 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 the estimated costs necessary to make the sale.
Cost of material stores and spares consists of the invoiced value from suppliers and import duty charges and is determined
on a weighted average basis.
2.11 Provisions
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.
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.
As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund
(“EPF”). Such contributions are recognised as an expense in the profit or loss as incurred.
PETRONAS Gas Berhad Responsible Financial
144 Governance and Financial Report 2021 Governance Statements
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FINANCIAL STATEMENTS
31 December 2021
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.
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 reinvestment allowances, unused investment tax allowances, unused
tax losses and other 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 reinvestment allowances, unused
investment tax allowances, unused tax losses and other unused tax credits can be utilised.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset 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.
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 the related tax benefit can be realised.
Unused reinvestment allowance and unused investment tax allowance, being tax incentives that is not a tax base of
an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be
available against which the unused tax incentive can be utilised.
145
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 are not retranslated at reporting date, except for
those that are measured at fair value, are retranslated to the functional currency at the exchange rate 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. On consolidation, the assets
and liabilities of subsidiaries with functional currencies other than Ringgit Malaysia, are translated into Ringgit Malaysia at
the exchange rates ruling at reporting date.
The income and expenses are translated at the exchange rates at the dates of the transactions or an average rate that
approximates those rates.
Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency
translation reserve within equity.
2.15 Borrowing 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 expenditure for the assets
is being incurred, borrowing costs 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 or sale are completed.
Exchange differences arising from foreign currency borrowings, although regarded as an adjustment to borrowing costs,
are not capitalised but instead recognised in the profit or loss in the period in which they arise.
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is the weighted average
of borrowings that are outstanding during the year, other than borrowings made specifically for the purpose of financing
a specific qualifying asset, in which the actual borrowing cost incurred on that borrowing less any investment income on
the temporary investment of that borrowings will be capitalised. Borrowing costs incurred subsequently to the completion
of a specific qualifying asset are included in the determination of the capitalisation rate.
PETRONAS Gas Berhad Responsible Financial
146 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
An entity transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises
revenue over time, if one of the following criteria is met:
(a) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity
performs; or
(b) the entity’s performance creates or enhances an asset (for example, work-in-progress) that the customer controls
as the asset is created or enhanced; or
(c) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable
right to payment for performance completed to date.
If a performance obligation is not satisfied over time in accordance with the above criteria, then the Group or the Company
satisfies the performance obligation and recognises revenue at a point in time.
All interest and other costs incurred in connection with borrowings are expensed as incurred, other than that capitalised
in accordance with the accounting policy stated in Note 2.15. The interest component of finance lease payments is
accounted for in accordance with the policy set out in Note 2.5.
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.
Diluted EPS is determined by adjusting profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding during the period, for the effects of all dilutive potential ordinary shares, if any.
2.21 Contingencies
(i) Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent
liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence
will only be confirmed by the occurrence or non-occurrence of one or more future events, are also as disclosed as
contingent liabilities unless the probability of outflow of economic benefit is remote.
(ii)
Contingent assets
When an inflow of economic benefit of an asset is probable where it arises from past events and where existence
will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly
within the control of the entity, the asset is not recognised in the statement of financial position but is disclosed as
a contingent asset. When the inflow of economic benefit is virtually certain, then the related asset is recognised.
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
The fair value of financial instruments that are actively traded in organised financial markets are 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.
(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 and the Company use observable market data as far
as possible. Fair value is 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 identifiable 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.
The Group and the Company recognise transfers between levels of the fair value hierarchy as of the date of the event or
change in circumstances that caused the transfers.
149
At cost:
Freehold land 4,504 – – – 4,504
Land improvement 109,006 – – – 109,006
Buildings 455,896 4,790 (21) 9,734 470,399
Plant and pipelines 21,702,244 26,436 (20,277) 524,956 22,233,359
Storage units 817,416 – – – 817,416
Plant turnaround/major inspection 1,551,926 – – 167,274 1,719,200
Office equipment, furniture and fittings 60,965 191 (322) 3,487 64,321
Other plant and equipment 511,761 3,095 (107) (21,406) 493,343
Computer software and hardware 149,329 – (7,626) 18,933 160,636
Motor vehicles 26,756 – (1,945) – 24,811
Projects-in-progress 1,360,204 1,146,199 – (715,936) 1,790,467
Right-of-use
Leasehold land 660,986 14,173 (34) 1,869 676,994
Plant and pipelines 729,882 – – (176,034) 553,848
Storage units 989,549 – – – 989,549
i. Adjustments to right-of-use assets following lease modification arising from rate revision in accordance with
MFRS 16 Leases amounting to RM171,081,000.
ii. Adjustments to property, plant and equipment transferred to inventory of RM8,701,000, consumables assets
expensed-off of RM790,000 and finalisation of project costs amounting to RM4,095,000.
PETRONAS Gas Berhad Responsible Financial
150 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Accumulated depreciation
and impairment losses:
Freehold land – – – – –
Land improvement 5,311 1,677 – – 6,988
Buildings 174,568 12,978 (7) 57 187,596
Plant and pipelines 13,812,291 608,195 (19,179) 689 14,401,996
Storage units 103,456 34,843 – – 138,299
Plant turnaround/major inspection 852,433 189,236 – – 1,041,669
Office equipment, furniture and fittings 43,909 4,010 (322) 75 47,672
Other plant and equipment 185,429 28,652 (74) (807) 213,200
Computer software and hardware 102,827 18,753 (7,626) 1 113,955
Motor vehicles 22,247 2,081 (1,945) – 22,383
Projects-in-progress – – – – –
Right-of-use
Leasehold land 164,572 8,672 (5) 14 173,253
Plant and pipelines 85,914 23,308 – (32,645) 76,577
Storage units 361,272 50,600 – – 411,872
* Relates to depreciation adjustment of right-of-use assets following lease modification arising from rate revision in
accordance with MFRS 16 Leases.
151
At cost:
Freehold land 4,504 – – – 4,504
Land improvement 109,006 – – – 109,006
Buildings 453,697 – (536) 2,735 455,896
Plant and pipelines 21,597,416 580 (40,909) 145,157 21,702,244
Storage units 817,416 – – – 817,416
Plant turnaround/major inspection 1,338,690 – (5,902) 219,138 1,551,926
Office equipment, furniture and fittings 56,030 220 (289) 5,004 60,965
Other plant and equipment 415,969 3,311 (1,471) 93,952 511,761
Computer software and hardware 136,565 – (4,306) 17,070 149,329
Motor vehicles 26,340 1,233 (817) – 26,756
Projects-in-progress 891,236 966,675 – (497,707) 1,360,204
* Relates to inventories transferred to property, plant and equipment of RM18,186,000 offset by consumable assets
expensed-off of RM1,454,000.
PETRONAS Gas Berhad Responsible Financial
152 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Accumulated depreciation
and impairment losses:
Freehold land – – – – –
Land improvement 3,634 1,677 – – 5,311
Buildings 162,765 12,063 (260) – 174,568
Plant and pipelines 13,211,903 632,134 (31,727) (19) 13,812,291
Storage units 68,617 34,844 – (5) 103,456
Plant turnaround/major inspection 650,457 207,878 (5,902) – 852,433
Office equipment, furniture and fittings 40,492 3,653 (281) 45 43,909
Other plant and equipment 162,337 24,525 (1,433) – 185,429
Computer software and hardware 95,520 11,613 (4,306) – 102,827
Motor vehicles 20,574 2,449 (776) – 22,247
Projects-in-progress – – – – –
Right-of-use
Leasehold land 156,050 8,554 (32) – 164,572
Plant and pipelines 59,017 26,897 – – 85,914
Storage units 310,672 50,600 – – 361,272
At cost:
Freehold land 4,504 – – – 4,504
Buildings 353,855 – (21) 6,001 359,835
Plant and pipelines 17,469,733 11,784 (20,277) 487,298 17,948,538
Plant turnaround/major inspection 1,489,148 – – 168,849 1,657,997
Office equipment, furniture and fittings 42,833 191 (322) 429 43,131
Other plant and equipment 309,030 3,046 (107) 29,065 341,034
Computer software and hardware 140,328 – (7,626) 7,434 140,136
Motor vehicles 26,010 – (1,945) – 24,065
Projects-in-progress 1,342,981 1,136,691 – (706,059) 1,773,613
Right-of-use
Leasehold land 648,723 14,173 (34) (221) 662,641
* Relates to property, plant and equipment transferred to inventories of RM6,689,000 and reclassification of consumable
assets expensed-off RM228,000.
PETRONAS Gas Berhad Responsible Financial
154 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Accumulated depreciation
and impairment losses:
Freehold land – – – – –
Buildings 159,512 8,078 (7) – 167,583
Plant and pipelines 12,512,943 381,360 (19,178) – 12,875,125
Plant turnaround/major inspection 807,470 180,540 – – 988,010
Office equipment, furniture and fittings 30,607 2,254 (323) 25 32,563
Other plant and equipment 130,560 15,952 (74) – 146,438
Computer software and hardware 99,184 11,452 (7,626) – 103,010
Motor vehicles 21,665 1,917 (1,945) – 21,637
Projects-in-progress – – – – –
Right-of-use
Leasehold land 161,840 8,079 (5) – 169,914
At cost:
Freehold land 4,504 – – – 4,504
Buildings 351,852 – (536) 2,539 353,855
Plant and pipelines 17,388,171 499 (40,659) 121,722 17,469,733
Plant turnaround/major inspection 1,289,214 – (5,902) 205,836 1,489,148
Office equipment, furniture and fittings 37,978 185 (289) 4,959 42,833
Other plant and equipment 284,943 3,311 (1,470) 22,246 309,030
Computer software and hardware 125,854 – (4,306) 18,780 140,328
Motor vehicles 25,594 1,233 (817) – 26,010
Projects-in-progress 805,066 914,784 – (376,869) 1,342,981
Right-of-use
Leasehold land 641,825 7,320 (110) (312) 648,723
* Relates to consumable assets expensed-off of RM1,499,000 offset by inventories transferred to property, plant and
equipment of RM400,000.
PETRONAS Gas Berhad Responsible Financial
156 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Accumulated depreciation
and impairment losses:
Freehold land – – – – –
Buildings 152,095 7,677 (260) – 159,512
Plant and pipelines 12,138,040 406,555 (31,652) – 12,512,943
Plant turnaround/major inspection 617,050 196,322 (5,902) – 807,470
Office equipment, furniture and fittings 28,752 2,136 (281) – 30,607
Other plant and equipment 119,489 12,504 (1,433) – 130,560
Computer software and hardware 92,745 10,745 (4,306) – 99,184
Motor vehicles 20,156 2,285 (776) – 21,665
Projects-in-progress – – – – –
Right-of-use
Leasehold land 153,654 8,218 (32) – 161,840
3.1 As a lessee
Right-of-use assets
Group
Right-of-use assets are mainly in relation to lease of land from state governments and a related company, rental of seabed
from state government, usage of jetty facilities from a related company and charter hire of floating storage units from a
related company.
Company
Right-of-use assets are in relation to lease of lands from state government and a related company.
PETRONAS Gas Berhad Responsible Financial
158 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Group Company
In RM’000 2021 2020 2021 2020
Total depreciation 82,580 86,051 8,079 8,218
Extension options
Certain lease contracts contain extension option exercisable before the end of the non-cancellable contract period.
The discounted potential future lease payments arising from exercisable extension option was not included in the lease
liabilities due to uncertainty at the reporting date as to whether the Group will exercise the extension terms.
The Group also applied judgment and assumptions in determining the incremental borrowing rate of the respective leases.
Group entities first determine the closest available borrowing rates before using significant judgment to determine the
adjustments required to reflect the term, security, value or economic environment of the respective leases.
Lease modification
During the year, lease modification arose from the rate revisions on the rental of seabed from state government and usage
of jetty facilities of the Group’s subsidiaries. In accordance to MFRS 16 Leases, the change in the consideration of the
leases has been adjusted by remeasuring the lease liabilities using the discount rate at the date of modification ranging
from 8.2% to 8.4%. Corresponding adjustments were made against the respective right-of-use assets.
3.2 As a lessor
The Company leased out a warehouse to a subsidiary under operating lease arrangement expiring in 2024. The lease
income recognised in profit or loss during the year amounted to RM103,000 (2020: RM103,000).
The operating lease payments to be received until end of the lease tenure amounted to RM266,000 (2020: RM61,000).
The titles of certain land are in the process of being registered in the Company’s name.
159
Included in additions to project-in-progress of the Group and of the Company are borrowing costs capitalised during
the year of RM8,297,000 (2020: RM6,003,000) and RM6,511,000 (2020: RM233,000) respectively. The interest rate on
borrowings capitalised for Group and Company was 5.5% (2020: 7.0%) and 2.4% (2020: 2.3%) per annum respectively.
3.5 Impairment
A subsidiary of the Group has entered into an agreement with the state government (“the lessor”) to lease a seabed land
situated off the coast of Sg. Udang in Melaka for 25 years from 2011 to 2036 on which the subsidiary’s LNG regasification
terminal and offshore pipeline resides. Upon termination or expiry of the agreement, the land is to be re-delivered to the
lessor in a manner to be mutually agreed between both parties.
Under the agreement, the lessor may require the land to be delivered together with all of the subsidiary’s equipment,
erections, fixtures, structures and sub-structures (“the assets”) constructed on the land at a consideration to be mutually
agreed between the parties. Should there be no mutual agreement on the consideration, the lessor may then require
the subsidiary to remove the assets, or they may appoint a third party to carry out the removal works and recharge
the subsidiary for the costs incurred. The subsidiary of the Group has assessed that currently it is not probable that the
subsidiary will be required to remove the assets.
4. INVESTMENTS IN SUBSIDIARIES
Company
In RM’000 2021 2020
Investment at cost:
- unquoted shares
Redemption of redeemable preference shares relates to redemption by Pengerang LNG (Two) Sdn. Bhd. in the current year and
by Regas Terminal (Sg. Udang) Sdn. Bhd. in the previous year.
PETRONAS Gas Berhad Responsible Financial
160 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Regas Terminal (Sg. Udang) Own and operate LNG Malaysia 100 100
Sdn. Bhd. regasification terminal
Summarised financial information of non-controlling interest has not been disclosed as the non-controlling interest of the
subsidiary is not individually material to the Group.
Investments at cost
- unquoted shares 283,059 283,059 283,059 283,059
Share of post-acquisition profits and reserves 421,959 348,189 – –
The Group’s involvements in joint arrangements are structured through separate vehicles which provide the Group rights to the
net assets of these entities. Accordingly, the Group has classified these investments as joint ventures.
161
705,018 631,248
Group’s share of net assets
Other information
Dividends received 47,000 39,160
Group’s share of the net assets and results are significantly contributed by Kimanis Power Sdn. Bhd. and Pengerang Gas Solutions
Sdn. Bhd.
PETRONAS Gas Berhad Responsible Financial
162 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
* Although the Group has more than 50% of the ownership in the equity interest of these entities, the Group has determined
that it does not have sole control over these entities considering that strategic and financial decisions of the relevant
activities of these entities require unanimous consent by all shareholders.
6. INVESTMENTS IN ASSOCIATE
Group Company
In RM’000 2021 2020 2021 2020
Investments at cost
- quoted shares 76,466 76,466 76,466 76,466
Share of post-acquisition profits and reserves 75,314 66,016 – –
Although the Group has less than 20% of the ownership in the equity interest of Gas Malaysia Berhad, the Group has determined
that it has significant influence over the financial and operating policies of the associate through representation on the Board
of Directors.
Other information
Dividends received 29,642 25,746
7. LONG-TERM RECEIVABLES
Group and Company
In RM’000 Note 2021 2020
171,381 208,453
7.1 Term loan due from a joint venture is unsecured, bears interest at a rate of 5.5% (2020: 5.5%) per annum and repayable in
tranches at various due dates from 2021 to 2025.
PETRONAS Gas Berhad Responsible Financial
164 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
8. DERIVATIVES
Nominal Carrying Nominal Carrying
value amount value amount
In RM’000 Note 2021 2021 2020 2020
Group
Derivative assets at fair value through
profit or loss
Forward foreign exchange contracts 11 257,275 1,104 5,215 15
Included within:
Trade and other receivables 11 1,104 15
Trade and other payables 19 761 161
Company
Derivative assets at fair value through
profit or loss
Forward foreign exchange contracts 11 33,288 462 260 2
Included within:
Trade and other receivables 11 462 2
Trade and other payables 19 59 2
In the normal course of business, the Group and the Company enter into derivative financial instruments to manage their normal
business exposures in relation to interest rates and foreign currency exchange rates consistent with their risk management
policies and objectives.
165
9. DEFERRED TAX
Recognised deferred tax assets/(liabilities)
Group
Property, plant and equipment – – (1,571,022) (1,608,606) (1,571,022) (1,608,606)
Deferred income 510 737 – – 510 737
Expected credit loss 98 628 – – 98 628
Unabsorbed capital allowances 1,841 2,198 – – 1,841 2,198
Unused investment tax allowances 495,823 582,380 – – 495,823 582,380
Company
Property, plant and equipment – – (1,240,891) (1,241,835) (1,240,891) (1,241,835)
Deferred income 510 737 – – 510 737
Expected credit loss 106 636 – – 106 636
Deferred tax assets have not been recognised in respect of the following items (stated at gross):
Group Company
In RM’000 2021 2020 2021 2020
The unused tax losses relates to a subsidiary of the Group. In accordance with Paragraph 5 of Income Tax (Exemption) (No.7)
Order 2013 (Income based exemption for statutory income of a qualifying person derived from RAPID Complex), the subsidiary’s
unused tax losses does not expire. Deferred tax assets have not been recognised in respect of these items because it is not
probable that the Group can utilise the benefits in the foreseeable future.
PETRONAS Gas Berhad Responsible Financial
166 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Charged/
Group (Credited)
2021 At to profit At
In RM’000 1.1.2021 or loss 31.12.2021
Charged/
Group (Credited)
2020 At to profit At
In RM’000 1.1.2020 or loss 31.12.2020
(1,373) 757 (616)
Charged/
Company (Credited)
2020 At to profit At
In RM’000 1.1.2020 or loss 31.12.2020
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Recognised in profit or loss as:
Cost of revenue 23,685 27,498 23,243 27,107
Inventories written-off 266 12,721 266 12,721
Reversal of inventories written-off (2,251) – (2,251) –
Impairment losses on inventories 6,117 1,214 6,032 1,214
Group Company
In RM’000 2021 2020 2021 2020
Trade 153,503 145,385 153,499 145,381
Non-trade 16,682 2,939 16,682 2,740
170,185 148,324 170,181 148,121
In the previous year, included in amount due from holding company at year end were GST receivables amounting to
RM2,906,000 for the Group and RM2,696,000 for the Company.
11.2 Amount due from subsidiaries arose in the normal course of business and relates to:
Company
In RM’000 2021 2020
Trade 421 366
Non-trade 1,944 2,446
2,365 2,812
11.3 Amount due from joint ventures and associate arose in the normal course of business and relates to:
Trade 400 914
Non-trade 10,525 6,093
10,925 7,007
11.4 Amount due from related companies arose in the normal course of business and relates to:
Group Company
In RM’000 2021 2020 2021 2020
Trade 560,833 465,997 440,760 345,129
Non-trade 8,057 26,813 3,302 21,792
568,890 492,810 444,062 366,921
PETRONAS Gas Berhad Responsible Financial
170 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Trade 27,707 15,428
Non-trade 65 16
27,772 15,444
The Group’s and the Company’s cash and bank balances are held in the In-House Account (“IHA”) managed by PETRONAS
Integrated Financial Shared Service Centre (“IFSSC”) to enable more efficient cash management for the Group and the Company.
Included in the Group’s cash and cash equivalents are RM23,457,000 (2020: RM24,351,000) in a finance service reserve
account being designated as security and a fixed balance amounting to RM30,000 in a trustee reimbursable account in relation
to a subsidiary’s Islamic financing facility.
All of the Group’s and the Company’s cash and cash equivalents in the current year and in the previous year are interest-bearing
balances.
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per
share at meetings of the Company.
171
14. RESERVES
Retained Profits
The Company has sufficient retained earnings to distribute single tier dividends paid out of income derived from operations
which are tax exempted in the hands of shareholders pursuant to Paragraph 12B, Schedule 6 of the Income Tax Act, 1967.
Capital Reserve
Capital reserve represents available reserve in a subsidiary that has been capitalised arising from redemption of preference
shares.
Foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of a subsidiary whose functional currency is different from that of the Group’s presentation currency.
Hedging Reserve
Hedging reserve records the portion of the gain or loss on hedging instruments in a cash flow hedge that is determined to
be an effective hedge in accordance with accounting policy stated in Note 2.7(iii). When the hedged transaction occurs, the
gain or loss on the hedging instrument is transferred out from equity to either profit or loss or the carrying value of assets,
as appropriate. If the forecast transaction is no longer expected to occur, the gain or loss recognised in equity is transferred to
profit or loss.
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
16. BORROWINGS
Group Company
In RM’000 Note 2021 2020 2021 2020
Non-current
Secured
Islamic financing facility 16.1 1,500,000 1,610,000 – –
Lease liabilities 16.2 1,372,967 1,524,260 6,684 6,774
Total non-current secured borrowings 2,872,967 3,134,260 6,684 6,774
Unsecured
Islamic financing facility 16.3 405,940 – 405,940 –
Total non-current unsecured borrowings 405,940 – 405,940 –
Total non-current borrowings
3,278,907 3,134,260 412,624 6,774
Current
Secured
Islamic financing facility 16.1 110,000 90,000 – –
Lease liabilities 16.2 58,209 55,161 89 82
Total current secured borrowings 168,209 145,161 89 82
Total current borrowings
168,209 145,161 89 82
Total borrowings
3,447,116 3,279,421 412,713 6,856
Group
Secured
Islamic financing facility 1,610,000 110,000 105,000 330,000 1,065,000
Lease liabilities 1,431,176 58,209 68,753 247,460 1,056,754
3,041,176 168,209 173,753 577,460 2,121,754
Unsecured
Islamic financing facility 405,940 – – 405,940 –
Total borrowings
3,447,116 168,209 173,753 983,400 2,121,754
Company
Secured
Lease liabilities 6,773 89 97 220 6,367
Unsecured
Islamic financing facility 405,940 – – 405,940 –
Total borrowings
412,713 89 97 406,160 6,367
173
In RM’000 2021 2020
The RM-denominated Islamic Murabahah Medium Term Notes (“Sukuk Murabahah”) relates to issuance by a subsidiary of
the Group totalling RM1.7 billion under its Islamic Medium Term Note Programme (“Programme”).
The Sukuk Murabahah bears profit rates ranging from 2.03% to 3.74% per annum and the remaining amount is fully
repayable at their various tranches due dates from 2022 to 2040.
It is secured by way of first ranking assignment and charge over a finance service reserve account as disclosed in
Note 12 which is to be funded to a minimum balance equivalent to the next 6 months’ principal and next 6 months’
periodic profit payment due.
In connection with the Programme, the subsidiary (“Issuer”) has agreed to the following significant covenants:
ii) Issuer shall maintain a Finance Service Cover Ratio of not less than 1.25 times.
16.2 The Group’s lease liabilities represent committed future payments for rights-of-use assets in relation to charter hire of
floating storage units, usage of jetty facilities, lease of land and rental of seabed by subsidiaries of the Group from related
companies and state government.
The lease liabilities bear interest at rates ranging from 8.1% to 9.1% per annum.
16.3 The unsecured Islamic financing facility obtained by the Group and the Company comprises:
In RM’000 2021 2020
On 22 February 2021, the Company obtained a 3-year unsecured Commodity Murabahah Term Financing facility for a
maximum aggregate principal up to RM1.3 billion.
The Commodity Murabahah bears a profit rate ranging from 2.41% to 2.43% per annum and is repayable in full in
March 2024.
PETRONAS Gas Berhad Responsible Financial
174 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Islamic
Group financing Lease
In RM’000 facilities liabilities Total
Loan from
corporate
Islamic shareholder
Group financing Lease of a
In RM’000 facility liabilities Term loan subsidiary Total
* The unsecured term loan obtained by the Company was prepaid on 21 October 2020.
** Loan from corporate shareholder of a subsidiary bore interest at a rate of 6.5% per annum and was prepaid in full on
21 October 2020.
PETRONAS Gas Berhad Responsible Financial
176 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Islamic
Company Lease financing
In RM’000 liabilities facility Total
Company Lease Term
In RM’000 liabilities loan Total
* The unsecured term loan obtained by the Company was prepaid on 21 October 2020.
177
17. PROVISIONS
Group Company
In RM’000 2021 2020 2021 2020
The movements of provision for decommissioning during the financial year are as follows:
At 31 December 2021
30,550 10,318
The provision comprises of provision for decommissioning of property, plant and equipment in relation to the Group’s and
Company’s obligation to decommission and remove certain assets, and to restore land leased to its original condition upon
expiry between 2036 and 2046.
The corresponding amount of the provision for decommissioning made has been capitalised into the relevant property, plant
and equipment and accounted for in accordance with the policy set out in Note 2.4.
The provision has been made based on present value of estimated decommissioning costs using discount rates ranging from
3.9% to 4.2%.
2,126 3,072
Deferred income mainly relates to the payments received in advance from a related party amounting to RM2,126,000
(2020: RM3,072,000) for the utilisation of Company’s properties over a period of time by the related party. The deferred income
is subsequently recognised in the profit or loss on a time apportionment basis over the specified period.
PETRONAS Gas Berhad Responsible Financial
178 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
19.1 Included in other payables and accruals are amounts owing to suppliers and contractors for purchase of property,
plant and equipment for the Group of RM450,480,000 (2020: RM316,644,000) and for the Company of RM450,480,000
(2020: RM297,473,000).
19.2 Amounts due to holding company, related companies, subsidiaries and joint venture arose in the normal course of business
and are non-trade in nature.
20. REVENUE
Revenue from contracts with customers
The Group’s total revenue which also represents revenue from contracts with customers are disaggregated by primary
geographical market and major products and services as follows:
Group Company
In RM’000 2021 2020 2021 2020
Geographical locations
Peninsular Malaysia 5,640,977 5,581,068 4,229,431 4,182,529
Sabah and Sarawak 7,625 11,049 7,625 11,049
Total revenue from contracts with customers
5,648,602 5,592,117 4,237,056 4,193,578
Products and services
Gas processing services 1,719,813 1,710,677 1,719,813 1,710,677
Gas transportation services 1,165,712 1,165,728 1,165,712 1,165,728
Regasification services 1,391,139 1,396,570 – –
Utilities
- Electricity 542,298 547,498 542,298 547,498
- Steam 465,093 433,006 465,093 433,006
- Industrial gases 273,667 265,462 273,667 265,462
- Others* 63,017 61,334 63,017 61,334
LNG ancillary services 22,334 3,432 – –
Operations and maintenance services 5,529 8,410 7,456 9,873
Total revenue from contracts with customers
5,648,602 5,592,117 4,237,056 4,193,578
The Group’s disaggregated revenue for each reportable segments are as follows:
Group
2021 Gas Gas
In RM’000 Processing Transportation Regasification Utilities Total
Group
2020 Gas Gas
In RM’000 Processing Transportation Regasification Utilities Total
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
The following describes information about the nature and timing of the satisfaction of performance obligations in contracts
with customers, including significant payment terms and the related revenue recognition policies.
Nature of products and Timing of recognition or method used to recognise Variable elements in
services revenue and significant payment terms consideration
Gas processing services
Processing of natural gas into Upon services being rendered, invoices are issued at There is a performance based
sales gas and by-products pre-determined tariff on a monthly basis, at month-end income upon achieving certain
and payable within 30 days. plant and equipment efficiency to
extract liquid by-products from
natural gas of which contributes
less than 10% of total consideration.
Gas transportation services
Transportation of processed Upon services being rendered, invoices are issued at No variable considerations.
gas to end customers pre-determined tariff on a monthly basis, at month-end
and payable within 30 days.
Regasification services
Regasification of liquefied Upon services being rendered, invoices are issued at No variable considerations.
natural gas into Peninsular pre-determined tariff on a monthly basis, at month-end
Gas Utilisation (“PGU”) and payable within 30 days.
pipeline network and
Pengerang Integrated
Complex (“PIC”)
Utilities
Sale of industrial utilities to Upon industrial utilities distribution to customers, No variable considerations.
petrochemical complexes invoices are issued at pre-determined rates on a monthly
and national electricity grid basis, at month-end and payable within 30 days.
LNG ancillary services
Gassing up cooling Upon services being rendered, invoices are issued at No variable considerations.
down services pre-determined tariff per service basis and payable
within 7 days.
LNG reloading services Upon services being rendered, invoices are issued at No variable considerations.
pre-determined tariff on a monthly basis, at month-end
and payable within 30 days.
LNG truck loading services Upon services being rendered, invoices are issued at No variable considerations.
pre-determined tariff on a monthly basis, at month-end
and payable within 30 days.
Operations & maintenance
services
Provision of manpower Upon services being rendered, invoices are issued at No variable considerations.
to operate and maintain pre-determined tariff on a monthly basis, at month-end
customer facilities
and payable within 30 days.
181
The following table shows revenue expected to be recognised in the future related to performance obligations that are
unsatisfied (or partially unsatisfied) at the reporting date. The disclosure only provides information for contracts that have a
duration of more than one year.
The Group has a 20-year agreement from 2014 to 2033 with the holding company to provide gas processing services called the
Gas Processing Agreement (“GPA”). Pursuant to the 2nd term of the GPA effective 1 January 2019 till 31 December 2023, there
is remaining an unsatisfied performance obligation to the customer for the next 2 years. There is no unsatisfied performance
obligation beyond 5 years as tariffs and quantity nomination have yet to be agreed.
As allowed by the accounting standards, the Group and the Company applied the practical expedient for exemption on disclosure
of information on remaining performance obligation that is unsatisfied (or partially unsatisfied) for contracts with customers as
the performance obligation has an original expected duration of one year or less as follows:
Regas Terminal (Sg. Udang) Sdn. Bhd. (“RGTSU”), being a subsidiary company, has a long term agreement with a related
company to provide LNG regasification services that is subject to annual capacity nomination by the customer.
Pengerang LNG (Two) Sdn. Bhd. (“PLNG2”), being a subsidiary company, has a long term agreement with a related company
to provide LNG regasification services that is subject to annual capacity nomination by the customer.
iii) Utilities
The Group has long term agreements to supply industrial utilities to various customers in the Kertih Integrated
Petrochemical Complex and Gebeng Industrial Area that are subject to daily, monthly, quarterly and annual nominations
by the customers as well as fixed minimum offtake charges.
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
and crediting:
Dividend income (quoted)
- associate – – 29,642 25,746
Dividend income (unquoted)
- subsidiaries – – 713,031 152,168
- joint ventures – – 47,000 39,160
Gain on disposal of property, plant and equipment 3,217 – 3,217 25
Unrealised gain on foreign exchange – 23,838 11,596 –
Interest income:
- fund investment 70,508 106,212 64,858 97,317
- term loan due from a subsidiary – – – 63,915
- term loan due from a joint venture 13,749 14,707 13,749 14,707
Rental income on land and buildings 4,739 4,734 5,258 5,256
Net write-back of impairment losses on
expected credit loss 19 51 30 2,169
Reversal of inventories written-off 2,251 – 2,251 –
183
Other financing costs in the previous year related to costs on prepayment of loan from corporate shareholder of a subsidiary
and on issuance of Islamic financing facility by the same subsidiary.
Total tax expenses recognised in profit or loss 530,268 527,920 473,854 467,038
Tax expense on share of profit of joint ventures 12,669 20,303 – –
Tax expense on share of profit of associate 11,079 9,786 – –
Total tax expenses
554,016 558,009 473,854 467,038
PETRONAS Gas Berhad Responsible Financial
184 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Group
In RM’000 % 2021 % 2020
Company
In RM’000 % 2021 % 2020
* Comprise of tax incentives granted to a subsidiary and joint venture in Pengerang, Johor.
The deferred tax assets and liabilities in respect of temporary differences that will be realised in 2022 are originated at blended
rates. The blended rates are measured at 24% on the first RM100 million of estimated chargeable income and one-off 33% on
the remaining estimated chargeable income for the year of assessment 2022 in accordance with the provision of Malaysian
Finance Act 2021.
185
24. DIVIDENDS
Company
In RM’000 2021 2020
Ordinary
Interim paid:
2019 - Fourth interim dividend of 22 sen per ordinary share – 435,321
2019 - Special interim dividend of 10 sen per ordinary share – 197,873
2020 - First interim dividend of 16 sen per ordinary share – 316,597
2020 - Second interim dividend of 16 sen per ordinary share – 316,597
2020 - Special interim dividend of 50 sen per ordinary share – 989,366
2020 - Third interim dividend of 18 sen per ordinary share – 356,172
2020 - Fourth interim dividend of 22 sen per ordinary share 435,321 –
2020 - Special interim dividend of 5 sen per ordinary share 98,937 –
2021 - First interim dividend of 16 sen per ordinary share 316,597 –
2021 - Second interim dividend of 16 sen per ordinary share 316,597 –
2021 - Third interim dividend of 18 sen per ordinary share 356,172 –
1,523,624 2,611,926
The Directors had on 22 February 2022 declared a fourth interim dividend of 22 sen per ordinary share amounting to
RM435,321,000 and a special interim dividend of 10 sen per ordinary share amounting to RM197,873,000, in respect of the
financial year ended 31 December 2021.
The financial statements for the current financial year do not reflect the declared interim dividends. The dividends will
be accounted for in equity as an appropriation of retained profits in the financial statements for the financial year ending
31 December 2022.
The net dividend per ordinary share for the respective financial year ended 31 December takes into account the total interim
dividends declared as follows:
Company
In Sen 2021 2020
50 100
82 127
PETRONAS Gas Berhad Responsible Financial
186 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Company
In Sen 2021 2020
Group Company
In RM’000 2021 2020 2021 2020
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 may be individuals or other entities.
The Group’s and the Company’s related parties include subsidiaries, joint ventures, associate, as well as the holding and ultimate
holding company, Petroliam Nasional Berhad (“PETRONAS”) and its related entities. The Group’s related parties also include
Government of Malaysia and its related entities as the Company’s holding company, PETRONAS is wholly-owned by the
Government of Malaysia.
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 key management personnel include all the Directors of the Group.
Group Company
In RM’000 2021 2020 2021 2020
Directors
- Fees 1,007 823 1,007 823
- Benefit-in-kind 28 24 28 24
In addition to directors’ compensation paid directly as above, the Company paid to the holding company fees for representation
on the Board of Directors and reimbursement of key management personnel costs and benefits as disclosed below.
In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following
transactions with related parties during the financial year:
Group Company
In RM’000 2021 2020 2021 2020
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Holding company:
- Gas processing fee income 1,702,547 1,694,150 1,702,547 1,694,150
- Interest income from fund investments 70,207 101,385 64,838 92,513
- Insurance claim 12,519 – 12,519 –
- Internal gas consumption and performance incentive 10,724 9,984 10,724 9,984
- Gas transportation fee income 7,625 7,581 7,625 7,581
- Staff secondment services (301,380) (346,233) (280,733) (324,092)
- Information, communication and technology charges (45,849) (52,292) (44,020) (50,735)
- Insurance expense (25,757) (23,664) (21,734) (18,176)
- Staff medical expense (15,407) (15,850) (14,251) (14,983)
- Financial services (11,690) (12,221) (11,241) (12,097)
- Corporate security charges (9,719) (9,313) (9,317) (9,352)
- Supply chain and management services (6,623) (17,389) (5,988) (16,078)
- Rental of office premises (6,310) (5,774) (6,310) (5,774)
- Fees for representation on the Board of Directors (667) (695) (667) (695)
- Reimbursement of key management costs (1,177) (1,499) (1,177) (1,499)
Related companies:
CEFS Response
- Contribution for emergency response services (10,795) (13,165) (10,785) (13,158)
Gas Asia Terminal (L) Pte. Ltd.
- Time charter services (240,071) (241,976) – –
Pengerang Power Sdn. Bhd.
- Purchase of electricity (12,122) (77,438) – –
PETCO Trading Labuan Co. Ltd.
- LPG import and export service fees 6,543 6,543 6,543 6,543
PETRONAS Carigali Sdn. Bhd.
- Operations and maintenance services charges (8,991) (4,013) (8,991) (4,013)
PETRONAS Chemicals Ammonia Sdn. Bhd.
- Sale of industrial utilities 184,970 183,254 184,970 183,254
PETRONAS Chemicals Aromatics Sdn. Bhd.
- Sale of industrial utilities 49,077 55,050 49,077 55,050
PETRONAS Chemicals Derivatives Sdn. Bhd.
- Sale of industrial utilities 478,928 503,361 478,928 503,361
PETRONAS Chemicals Ethylene Sdn. Bhd.
- Sale of industrial utilities 9,444 5,807 9,444 5,807
189
Subsidiaries:
Regas Terminal (Sg. Udang) Sdn. Bhd.
- Management fee income – – 2,832 3,294
- Pipeline maintenance fee income – – 1,880 1,463
- Annual access right fee income – – 416 418
- Technical and engineering services fee income – – 363 –
- Rental income of warehouse – – 103 103
- Transfer of assets – – – (175)
Pengerang LNG (Two) Sdn. Bhd.
- Interest income – – – 63,915
- Breakage costs – – – 13,930
- Management fee income – – 2,868 2,868
- Technical and engineering services fee income – – 156 –
- Pipeline maintenance fee income – – 46 –
PETRONAS Gas Berhad Responsible Financial
190 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Joint ventures:
Industrial Gases Solutions Sdn. Bhd.
- Sale of industrial utilities 4,671 6,342 4,671 6,342
- Purchase of nitrogen (739) (1,252) – –
Kimanis Power Sdn. Bhd.
- Secondment fee income 1,166 1,463 1,166 1,463
Pengerang Gas Solutions Sdn. Bhd.
- Interest income 13,749 14,707 13,749 14,707
- Secondment fee income 642 589 642 589
- Management fee income 277 – 277 –
Included in the fees for representation on the Board of Directors are fees paid directly to holding company in respect of certain
directors who are appointees of the holding company.
Information regarding outstanding balances at reporting date arising from related party transactions are disclosed in Note 7,
Note 11, Note 16, Note 18 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 and have been established on a commercial basis.
191
• Gas processing – activities include processing of natural gas from gas fields offshore the East Coast of Peninsular Malaysia
into salesgas and other by-products such as ethane, propane and butane.
• Gas transportation – activities include transportation of sales gas to shippers’ end customers throughout Malaysia and
export to Singapore as well as provision of operations and maintenance services.
• Regasification – activities include regasification of liquefied natural gas (“LNG”) into the Peninsular Gas Utilisation pipeline
network and provision of LNG reloading, truck loading and gassing up and cooling down services.
• Utilities – activities include manufacturing, marketing and supplying of industrial utilities to the petrochemical complexes
in the Kertih and Gebeng Industrial Area and provision of operations and maintenance services.
Performance is measured based on segment gross profit as included in the internal management reports. Segment gross profit
is used to measure performance as management believes that such information is the most relevant in evaluating the results of
the segments.
Segment results refer to segment gross profit. The total segment results include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis. Unallocated expenses mainly comprise forex gain or loss, other corporate
income and expenses.
The total of segment assets are measured based on all assets of a segment, excluding interest bearing assets and corporate
assets as these are managed on a group basis.
The segmental information in respect of the joint ventures and associate is not presented as the contribution of the associate
and joint ventures and the carrying amounts of investment in the associate and joint ventures have been reflected in the
statement of profit or loss and other comprehensive income and statement of financial position of the Group. Details of the
joint ventures and associate are disclosed in Note 5 and Note 6 to the financial statements respectively.
Segment capital expenditure is the total cost incurred during the period to acquire non-current assets that are expected to be
used for more than one period, other than financial instruments and deferred tax assets.
PETRONAS Gas Berhad Responsible Financial
192 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Group
Business Segment
2020 Gas Gas
In RM’000 Processing Transportation Regasification Utilities Total
Group
Business Segment
2020 Gas Gas
In RM’000 Processing Transportation Regasification Utilities Total
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
The following are major customers with revenue that contribute to equal or more than 10 percent of Group revenue:
- PETRONAS Energy and Gas Trading Sdn. Bhd. Gas Transportation and Regasification 2,546,107 2,556,494
- Petroliam Nasional Berhad (“PETRONAS”) Gas Processing and Gas Transportation 1,720,896 1,711,715
- PETRONAS Chemicals Group Berhad Utilities 965,746 1,019,073
Pursuant to Gas Supply Act (Amendment) 2016, the Third Party Access code was introduced by Suruhanjaya Tenaga for the
owner of gas facilities to purchase their own internal gas consumption. Hence, PETRONAS Gas Berhad and its subsidiaries had
on 30 November 2020 entered into the following agreements with PETRONAS Energy & Gas Trading Sdn. Bhd.:
Upon expiry of the current 20-year sale and purchase agreement for the purchase of fuel gas for Utilities business,
PETRONAS Gas Berhad had on 30 October 2020 entered into the following new agreement with PETRONAS Energy & Gas
Trading Sdn. Bhd.:
Financial assets
Long term receivables (excluding Expected
Credit Losses (“ECL”)) 7 171,696 – 171,696
Trade and other receivables (excluding
prepayments and ECL) 11 861,706 1,104 862,810
Cash and cash equivalents 12 3,782,457 – 3,782,457
Financial liabilities
Borrowings (excluding lease liabilities) 16 (2,015,940) – (2,015,940)
Trade and other payables (excluding deferred income) 19 (1,067,306) (761) (1,068,067)
Financial assets
Long term receivables (excluding ECL) 7 208,856 – 208,856
Trade and other receivables (excluding prepayments,
GST receivables and ECL) 11 714,887 15 714,902
Cash and cash equivalents 12 3,138,898 – 3,138,898
4,062,641 15 4,062,656
Financial liabilities
Borrowings (excluding lease liabilities) 16 (1,700,000) – (1,700,000)
Trade and other payables (excluding deferred income) 19 (838,029) (161) (838,190)
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Financial assets
Long term receivables (excluding ECL) 7 171,696 – 171,696
Trade and other receivables (excluding
prepayments and ECL) 11 735,589 462 736,051
Cash and cash equivalents 12 3,672,309 – 3,672,309
Financial liabilities
Borrowings (excluding lease liabilities) 16 (405,940) – (405,940)
Trade and other payables (excluding deferred income) 19 (976,668) (59) (976,727)
Financial assets
Long term receivables (excluding ECL) 7 208,856 – 208,856
Trade and other receivables (excluding prepayments,
GST receivables and ECL) 11 590,784 2 590,786
Cash and cash equivalents 12 2,626,718 – 2,626,718
3,426,358 2 3,426,360
Financial liabilities
Trade and other payables (excluding deferred income) 19 (692,072) (2) (692,074)
The Group and the Company are exposed to various risks that are particular to its core business which consists of separating
natural gas into its components and storing, transporting and distributing such components thereof for a fee, the sale of
industrial utilities and the regasification of liquefied natural gas for a fee. These risks, which arise in the normal course of the
Group’s and the Company’s business, comprise credit risk, liquidity risk and market risk relating to interest rates and foreign
currency exchange rates.
The Group and the Company have policies and guidelines in place that sets the foundation for a consistent approach towards
establishing an effective financial risk management across the PETRONAS Group.
197
Risk taking activities are undertaken within acceptable level of risk or risk appetite, whereby the risk appetite level reflects
business considerations and capacity to assume such risks. The risk appetite is established at Board level, where relevant, based
on defined methodology and translated into operational thresholds.
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 view of the balance between risk and
reward.
Credit risk
Credit risk is the potential exposure of the Group and of the Company to losses in the event of non-performance by
counterparties. The Group’s and the Company’s exposure to credit risk arise from their operating activities, primarily from
their receivables from customers and fund investments. The credit risk arising from the Group’s and the Company’s normal
operations are controlled by individual operating units in line with PETRONAS’ policies and guidelines.
(i) Receivables
Risk management objectives, policies and processes for managing the risk
The Group and the Company minimise its credit risk by entering into contracts with highly rated counterparties. Potential
counterparties are subject to credit assessment and approval prior to any transaction being concluded and existing
counterparties are subject to regular reviews, including re-appraisal and approval of granted limits. The creditworthiness
of counterparties is assessed based on an analysis of all available quantitative and qualitative data regarding business risks
and financial standing, together with the review of any relevant third party and market information. Reports are prepared
and presented to the management that cover the Group’s overall credit exposure against limits and securities.
Depending on the types of transactions and counterparty’s creditworthiness, the Group and the Company further mitigate
and limit risks related to credit by requiring other credit enhancements such as cash deposits and bank guarantees.
No collateral or other credit enhancement is required from related parties.
At each reporting date, the Group and the Company assess whether any of the trade receivables are credit impaired.
The gross carrying amounts of credit impaired trade receivables are written off (either partially or in full) when there is
no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor
does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the
write-off. Nevertheless, trade receivables that are written off could still be subject to enforcement activities.
PETRONAS Gas Berhad Responsible Financial
198 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables are represented
by the carrying amounts in the statement of financial position.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired.
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
As at the reporting date, significant receivables relate to amounts due from holding company and amounts due from
related companies.
In managing credit risk of trade receivables, the Group manages its debtors and takes appropriate actions (including but
not limited to legal actions) to recover long overdue balances.
The Group and the Company perform credit rating assessment of all its counterparties in order to measure Expected
Credit Loss (“ECL”) of trade receivables for all segments using the PETRONAS Credit Risk Rating system. This credit rating
assessment considers quantitative assessment using the counterparties’ financial statements or a qualitative assessment
of the counterparties which includes but is not limited to their reputation, competitive position, industry and geopolitical
outlook.
In determining the ECL, the probability of default assigned to each counterparty is based on their individual credit rating.
This probability of default is derived by benchmarking against available third party and market information, which also
incorporates forward looking information.
Loss given default is the assumption of the proportion of financial asset that cannot be recovered by conversion of
collateral to cash or by legal process, and is assessed based on the Company’s historical experience.
199
The following table provides information about the exposure to credit risk and ECLs for trade receivables as at
31 December 2021 which are grouped together as they are expected to have similar risk nature.
Group Gross
2021 carrying Loss Net
In RM’000 Note amount allowance balance
Representing
Trade receivables 11 774,171 (29) 774,142
Company Gross
2021 carrying Loss Net
In RM’000 Note amount allowance balance
Representing
Trade receivables 11 653,674 (29) 653,645
* Amounts not subject to loss allowances relates to credit notes issued to customers.
PETRONAS Gas Berhad Responsible Financial
200 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Group Company
In RM’000 Note 2021 2020 2021 2020
Representing:
Trade receivables 11 31,728 11,257 30,887 11,257
Amounts due from holding company 11.1 153,503 145,385 153,499 145,381
Amounts due from subsidiary 11.2 – – 421 366
Amounts due from joint ventures 11.3 400 914 400 914
Amounts due from related companies 11.4 560,833 465,997 440,760 345,129
Amounts due from related parties 11.5 27,707 15,428 27,707 15,428
Other receivables
Credit risks on other receivables are mainly arising from term loan due from a joint venture company. The term loan due
from a joint venture company has fixed terms of repayment as disclosed in Note 7 to the financial statements.
201
As at the end of the reporting period, the maximum exposure to credit risks is represented by their carrying amounts in
the statement of financial position. The Group and the Company have provided allowances for expected credit losses on
these amounts. The movements in the allowance for expected credit losses during the year are as follows:
2021 Trade Other
In RM’000 receivables receivables Total
Group
Opening balance (2) (462) (464)
Impairment (loss)/reversal recognised (27) 46 19
Closing balance (29) (416) (445)
Company
Opening balance (2) (473) (475)
Impairment (loss)/reversal recognised (27) 57 30
Closing balance (29) (416) (445)
The Group and the Company are also exposed to counterparty credit risk from financial institutions through fund
investments activities which is managed by PETRONAS IFSSC on behalf of the Group comprising primarily money market
placement. 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 met the appropriate rating and other relevant criteria,
and within approved credit limits, as stipulated in the policies and guidelines. The treasury function is governed by a
counterparty credit risk management framework.
As at the reporting date, the maximum exposure to credit risk arising from fund investments is represented by the carrying
amounts in the statement of financial position.
The credit risk on a financial instrument is considered low, if the financial instrument has a low risk of default, the borrower
has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic
and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its
contractual cash flow obligations. The Group and the Company assume that there is a significant increase in credit risk
when it is past due.
While the fund investments are unsecured, the Group and the Company do not expect any of the counterparties to fail to
meet its obligation in view of their sound credit ratings.
PETRONAS Gas Berhad Responsible Financial
202 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to
liquidity risk arise principally from its trade and other payables and borrowings. In managing its liquidity risk, the Group and the
Company maintain sufficient cash and liquid marketable assets.
The Group’s and the Company’s borrowing power is not limited by the Company’s and respective Group entities’ constitutions.
However, certain borrowing covenants impose limited restrictions on some of the debt level of the Group and Company.
Maturity analysis
The table below summarises the maturity profile of the Group’s and of the Company’s financial liabilities as at the reporting date
based on undiscounted contractual payments:
Contractual
interest per
Group annum/
2021 Carrying discount rate Contractual Within 1
In RM’000 amount % cash flows* year
Islamic Murabahah Medium Term Notes 1,610,000 2.12 to 3.74 2,031,971 155,846
Commodity Murabahah Term Financing 405,940 2.41 to 2.43 431,451 9,952
Lease liabilities 1,431,176 8.1 to 9.1 2,511,248 174,290
Trade and other payables (excluding deferred income) 1,068,067 – 1,068,067 1,068,067
Group More
2021 1-2 2-5 than 5
In RM’000 years years years
Contractual
interest per
Company annum/
2021 Carrying discount rate Contractual Within 1
In RM’000 amount % cash flows* year
Company More
2021 1-2 2-5 than 5
In RM’000 years years years
Contractual
interest per
Group annum/
2020 Carrying discount rate Contractual Within 1
In RM’000 amount % cash flows* year
Islamic Murabahah Medium Term Notes 1,700,000 2.0 to 3.7 2,194,248 138,836
Lease liabilities 1,579,421 7.2 to 9.1 2,811,581 177,692
Trade and other payables (excluding deferred income) 838,190 – 838,190 838,190
Group More
2020 1-2 2-5 than 5
In RM’000 years years years
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Contractual
interest per
Company annum/
2020 Carrying discount rate Contractual Within 1
In RM’000 amount % cash flows* year
Company More
2020 1-2 2-5 than 5
In RM’000 years years years
* The contractual cash flow is inclusive of the principal and interest payments.
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 includes interest rates, foreign currency exchange
rates and other indices that could adversely affect the value of the Group’s and of the Company’s financial assets, liabilities or
expected future cash flows.
The Group’s and the Company’s investments in fixed rate debt instruments are exposed to a risk of change in their fair value due
to changes in interest rates. The Group’s and Company’s variable rate borrowings are exposed to a risk of change in cash flows
due to changes in interest rates. Short term receivables and payables are not significantly exposed to interest rate risk.
All interest rate exposures are monitored and managed proactively in line with PETRONAS policies and guidelines. The Group
enters into hedging transactions to minimise exposure to the interest rate movement in accordance with policies and guidelines.
The Group and the Company are also exposed to the ongoing interbank offered rates (IBOR) reforms on its financial instruments
that will be replaced or reformed as part of these market-wide initiatives.
205
The Group’s and the Company’s main IBOR exposure are indexed to USD LIBOR which will be discontinued on a revised
timeline of 30 June 2023. The alternative reference rate is Secured Overnight Financing Rate (SOFR). The Group has established
PETRONAS LIBOR Transition committee which monitors and manages the Groupwide transition to alternative rates with an aim
to achieve economically equivalent transactions and minimal impact upon transition. As at reporting date, transitional activities
are currently ongoing, and the Group and the Company have no transactions for which the benchmark rate had been replaced
with an alternative benchmark rate.
The interest rate profile of the Group’s and the Company’s interest-bearing financial instruments based on carrying amount as
at reporting date is as follows:
Group Company
In RM’000 2021 2020 2021 2020
All interest rate exposures are monitored and managed proactively in line with PETRONAS’ policies and guidelines.
A change of basis points (b.p.s) in interest rates for financial asset and financial liabilities respectively at the end of the reporting
period would have increased pre-tax profit or loss by the amounts shown below. The analysis assumes that all other variables,
in particular foreign currency rates, remain constant.
Group Company
In RM’000 2021 2020 2021 2020
For the Group’s and the Company’s interest-bearing financial assets and liabilities that are fixed rate instruments measured
at amortised cost, a change in interest rate is not expected to have material impact on the Group’s and the Company’s profit
or loss.
PETRONAS Gas Berhad Responsible Financial
206 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in foreign currency exchange rates. The Group and the Company are exposed to varying levels of foreign currency risk when
they enter into transactions that are not denominated in the respective companies’ functional currencies or when foreign
currency monetary assets and liabilities are translated at the reporting date.
The Group and the Company operate predominantly in Malaysia and transact mainly in Ringgit Malaysia.
The Group’s and the Company’s foreign exchange management policy are to minimise economic and significant transactional
exposures arising from currency movements. For major capital projects, the Group and the Company perform assessment of
potential foreign exchange risk exposure at the investment decision phase to determine the appropriate foreign exchange
risk management strategy. Residual net positions are actively managed and monitored against prescribed policies and
control procedures. When deemed necessary and appropriate, the Group and the Company will enter into derivative financial
instruments to hedge and minimise its exposures to the foreign currency movements.
The Group’s and the Company’s exposure to foreign currency risk (a currency which is other than the functional currency of
the Group entities), based on carrying amounts as at the reporting date are as follows:
Group
In RM’000 2021 2020
Denominated in USD
Financial assets
Long term receivables 171,696 208,856
Trade and other receivables 75,683 53,200
247,379 262,056
Financial liabilities
Lease liabilities (1,416,430) (1,566,455)
Trade and other payables (13,105) (33,283)
(1,429,535) (1,599,738)
Net exposure
(1,182,156) (1,337,682)
207
Company
In RM’000 2021 2020
Denominated in USD
Financial assets
Long term receivables 171,696 208,856
Trade and other receivables 58,903 35,690
230,599 244,546
Financial liabilities
Trade and other payables (8,013) (27,958)
Net exposure
222,586 216,588
Sensitivity analysis for a given market variable provided in this note, discloses the effect on profit or loss as at 31 December 2021
assuming that a reasonably possible change in the relevant market variable had occurred at 31 December 2021 and been applied
to the risk exposures in existence at that date to show the effects of reasonably possible changes in price on profit or loss and
equity to the next annual reporting date. Reasonably possible changes in market variables used in the sensitivity analysis are
based on implied volatilities, where available, or historical data for equity and commodity prices and foreign exchange rates.
Reasonably possible changes in interest rates are based on management judgment and historical experience.
The sensitivity analysis is hypothetical and should not be considered to be predictive of future performance because the
Group’s actual exposure to market prices is constantly changing with changes in the Group’s portfolio of among others, debt
and foreign currency contracts where relevant. Changes in fair values or cash flows based on a variation in a market variable
cannot be extrapolated because the relationship between the change in market variable and the change in fair value or cash
flows may not be linear. In addition, the effect of a change in a given market variable is calculated independently of any change
in another assumption and mitigating actions that would be taken by the Group. In reality, changes in one factor may contribute
to changes in another, which may magnify or counteract the sensitivities.
PETRONAS Gas Berhad Responsible Financial
208 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
The following table demonstrates the indicative pre-tax effects on the profit or loss of applying reasonably foreseeable market
movements in the following currency exchange rates:
Group Company
Appreciation
in foreign
currency rate Effect on Effect on
In RM’000 % profit/(loss) profit/(loss)
2021
USD 10 (118,216) 22,259
2020
USD 10 (133,768) 21,659
A depreciation in foreign currency rate above would have had equal but opposite effect, on the basis that all other variables
remain constant.
In the previous year, the Company had unwound the interest rate swaps entered to hedge the cash flow risk in relation to the
floating interest rate of the USD term loan of USD322,003,000 with a loss of RM1,980,000 recognised in the profit or loss.
The interest rate swaps had the same nominal value of USD322,003,000 and was settled every quarter, consistent
with the interest repayment schedule of the bond and was unwound as the Company had fully prepaid the term loan on
21 October 2020.
209
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 carried at fair value and those not carried at fair value for which fair value is
disclosed, together with their fair values and carrying amounts shown in the statement of financial position.
2021
Financial assets
Long term receivables – 171,696 171,696 171,696
Derivative assets 1,104 – 1,104 1,104
Financial liabilities
Islamic financing facilities – (2,015,940) (2,015,940) (2,015,940)
Derivative liabilities (761) – (761) (761)
2020
Financial assets
Long term receivables – 208,856 208,856 208,856
Derivative assets 15 – 15 15
Financial liabilities
Islamic financing facility – (1,700,000) (1,700,000) (1,700,000)
Derivative liabilities (161) – (161) (161)
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
2021
Financial assets
Long term receivables – 171,696 171,696 171,696
Derivative assets 462 – 462 462
Financial liabilities
Islamic financing facility – (450,940) (450,940) (450,940)
Derivative liabilities (59) – (59) (59)
2020
Financial assets
Long term receivables – 208,856 208,856 208,856
Derivative assets 2 – 2 2
Financial liabilities
Derivative liabilities (2) – (2) (2)
The calculation of fair value for derivatives and non-derivatives assets and liabilities within financial instruments depends on the
type of instruments as follows:
• Fair value of non-derivative financial instruments, which is determined for disclosure purposes, is calculated based on
the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the
reporting period.
• Fair value of forward exchange contracts are estimated by discounting the difference between the contractual forward
price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on
government bonds).
211
Interest Interest
In RM’000 income expense Others Total
Group
2021
Financial assets at amortised cost 84,257 – 9,685 93,942
Financial assets at fair value through profit or loss – – 777 777
Financial liabilities at amortised cost – (47,908) (1,817) (49,725)
2020
Financial assets at amortised cost 120,919 – 11,871 132,790
Financial assets at fair value through profit or loss – – 308 308
Financial liabilities at amortised cost – (81,815) (401) (82,216)
Financial liabilities at fair value through profit or loss – – (8,358) (8,358)
Company
2021
Financial asset at amortised cost 78,607 – 9,666 88,273
Financial asset at fair value through profit or loss – – 404 404
Financial liabilities at amortised cost – – (1,452) (1,452)
Financial liabilities at fair value through profit or loss – – (153) (153)
2020
Financial asset at amortised cost 175,939 – 11,249 187,188
Financial asset at fair value through profit or loss – – 450 450
Financial liabilities at amortised cost – (43,474) (15,921) (59,395)
Financial liabilities at fair value through profit or loss – – (540) (540)
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
The Group and the Company monitor and maintain a prudent level of total debt to total asset ratio to optimise shareholder
value and to ensure compliance with covenants under debt and shareholders’ agreements and regulatory requirements, if any.
There were no changes in the Group’s and the Company’s approach to capital management during the year.
Amendments to MFRS 9 Financial Instruments, MFRS 139 Financial Instruments: Recognition and Measurement and
MFRS 7 Financial Instruments: Disclosures, MFRS 4 Insurance Contracts and MFRS 16 Leases (Interest Rate Benchmark Reform
– Phase 2)
Amendment to MFRS 16 Leases (COVID-19 Related Rent Concessions beyond 30 June 2021)
The principal changes in accounting policies and their effects are set out below:
Amendments to MFRS 9 Financial Instruments, MFRS 139 Financial Instruments: Recognition and Measurement, MFRS 7 Financial
Instruments: Disclosures, MFRS 4 Insurance Contracts and MFRS 16 Leases (Interest Rate Benchmark Reform – Phase 2)
The amendments provide practical expedients whereby modifications due to changes in interest rate benchmark resulting from
interest rate benchmark reform, would only require an update to the effective interest rate to reflect the change in the interest
rate benchmark and would not result in derecognition or adjustment to the carrying amount of financial instruments and leases.
The amendments also provide practical reliefs for hedge accounting requirements.
These amendments had no material impact on the consolidated financial statements of the Group and the Company.
The Group and the Company intend to use the practical expedients in future periods if they become applicable. As at reporting
date, transitional activities are currently ongoing, and the Group and the Company have no transactions for which the benchmark
rate had been replaced with an alternative benchmark rate.
The initial application of the above-mentioned pronouncements did not have any material impact to the financial statements
of the Group and the Company.
213
Amendments to MFRS 101 Presentation of Financial Statements (Classification of Liabilities as Current or Non-current)
Amendments to MFRS 101 Presentation of Financial Statements and MFRS Practice Statement 2 (Disclosure of Accounting
Policies)
Amendments to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors (Definition of Accounting Estimates)
Amendments to MFRS 112 Income Taxes (Deferred Tax related to Assets and Liabilities arising from a Single Transaction)
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 above-mentioned pronouncements beginning from the respective dates
the pronouncements become effective. The initial application of the above-mentioned pronouncements are not expected to
have any material impacts to the financial statements of the Group and the Company.
PETRONAS Gas Berhad Responsible Financial
214 Governance and Financial Report 2021 Governance Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2021
33. NEW PRONOUNCEMENTS NOT APPLICABLE TO THE GROUP AND THE COMPANY
The MASB has issued pronouncements which are not relevant to the Group and Companies and hence, no further disclosure is
warranted.
Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements to MFRS
Standards 2018−2020)
Amendments to MFRS 141 Agriculture (Annual Improvements to MFRS Standards 2018−2020)
INDEPENDENT
AUDITORS’ REPORT
to the members of PETRONAS Gas Berhad (Company No. 198301006447 (101671-H)) (Incorporated in Malaysia)
We have audited the financial statements of PETRONAS Gas Berhad., which comprise the statements of financial position as at
31 December 2021 of the Group and of the Company, and the statements of profit or loss and other comprehensive income,
statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes
to the financial statements, including a summary of significant accounting policies, as set out on pages 116 to 214.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of
the Company as at 31 December 2021, and of their financial performance and their 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 2016 in Malaysia.
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing.
Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial
Statements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
We are independent of the Group and of Company in accordance with the Bylaws (on Professional Ethics, Conduct and Practice) of
the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code
of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our
other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the
financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
PETRONAS Gas Berhad Responsible Financial
216 Governance and Financial Report 2021 Governance Statements
INDEPENDENT
AUDITORS’ REPORT
to the members of PETRONAS Gas Berhad (Company No. 198301006447 (101671-H)) (Incorporated in Malaysia)
Refer to Note 2.4 - Significant accounting policy: Property, plant and equipment and depreciation and Note 3 - Property, plant and
equipment.
The Group and the Company have significant property, plant and equipment including projects-in-progress recognised as at the end
of the reporting period. During the year, the Group and the Company completed significant capital projects and capitalised costs
amounting to RM716 million and RM706 million respectively. Due to the size, complexity and volume of transactions involved in the
capitalisation and componentisation process, there is a risk that the costs capitalised are not in accordance of MFRS 116, Property,
Plant and Equipment. It is a significant area that our audit focuses on because it requires us to exercise judgement in evaluating
management’s process over the capitalisation and componentisation of the completed projects.
• checked the completion date of project-in-progress to determine that completed projects were capitalised timely;
• evaluated the capitalisation process and determined that costs capitalised met the requirements of MFRS 116;
• evaluated the componentisation process to determine that significant components with different useful lives are depreciated
separately; and
• assessed that any borrowing costs capitalised met the requirement of MFRS 123, Borrowing Costs.
Information Other than the Financial Statements and Auditors’ Report Thereon
The Directors of the Company are responsible for the other information. The other information comprises the information included
in the Directors’ Report, and Statement on Risk Management and Internal Control (but does not include the financial statements of
the Group and of the Company and our auditors’ report thereon), which we obtained prior to the date of this auditors’ report, and the
remaining parts of the annual report, which are expected to be made available to us after that date.
Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not and
we will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial
statement of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
When we read the remaining parts of the annual report, if we conclude that there is a material misstatement therein, we are required
to communicate the matter to the Directors of the company and take appropriate actions in accordance with approved standards on
auditing in Malaysia and International Standards on Auditing.
217
The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that
give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards
and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the
Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the
Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations,
or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved
standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing,
we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 internal control of the Group and
of the Company.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of
the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group and the Company
to cease to continue as a going concern.
PETRONAS Gas Berhad Responsible Financial
218 Governance and Financial Report 2021 Governance Statements
INDEPENDENT
AUDITORS’ REPORT
to the members of PETRONAS Gas Berhad (Company No. 198301006447 (101671-H)) (Incorporated in Malaysia)
• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company,
including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying
transactions and events in a manner that gives a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the
financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our auditors’ report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other Matter
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in
Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Petaling Jaya
ANALYSIS OF
SHAREHOLDINGS
as at 18 February 2022
SHARE CAPITAL
Share Capital : RM1,978,731,915 comprising 1,978,731,915 ordinary shares
Class of Shares : Ordinary Shares
Voting Rights : One Vote Per Ordinary Share (on a poll)
DISTRIBUTION OF SHAREHOLDINGS
CLASSIFICATION OF SHAREHOLDERS
ANALYSIS OF
SHAREHOLDINGS
as at 18 February 2022
Direct Indirect
No. of % of Total No. of % of Total
Shares Shares Shares Shares
1. CIMB Group Nominees (Tempatan) Sdn Bhd
- Exempt AN for Petroliam Nasional Berhad 1,008,616,900 50.97 Nil Nil
- Exempt AN for Petroliam Nasional Berhad (PRF) 536,400 0.03 Nil Nil
Total 1,009,153,300 51.00 Nil Nil
2. Employees Provident Fund Board 275,000,700 13.90 Nil Nil
3. Kumpulan Wang Persaraan (Diperbadankan) 207,123,500 10.47 Nil Nil
Direct Indirect
No. of % of Total No. of % of Total
No. Name Shares Shareholdings Shares Shareholdings
1. Adnan Zainol Abidin Nil Nil Nil Nil
2. Abdul Aziz Othman Nil Nil Nil Nil
3. Habibah Abdul Nil Nil Nil Nil
4. Farina Farikhullah Khan Nil Nil Nil Nil
5. Dato’ Abdul Razak Abdul Majid Nil Nil Nil Nil
6. Datuk Yeow Kian Chai 3,000 0.00* Nil Nil
7. Datuk Mark Victor Rozario Nil Nil Nil Nil
8. Sujit Singh Parhar s/o Sukhdev Singh Nil Nil Nil Nil
9. Marina Md Taib Nil Nil Nil Nil
10. Hasliza Othman Nil Nil Nil Nil
* negligible
% of Total
No. Name No. of Shares Shareholdings
1. CIMB GROUP NOMINEES (TEMPATAN) SDN BHD 1,008,616,900 50.97
EXEMPT AN FOR PETROLIAM NASIONAL BERHAD
2. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 265,131,600 13.40
EMPLOYEES PROVIDENT FUND BOARD
3. KUMPULAN WANG PERSARAAN (DIPERBADANKAN) 205,060,900 10.36
4. AMANAHRAYA TRUSTEES BERHAD 77,304,200 3.91
AMANAH SAHAM BUMIPUTERA
5. AMANAHRAYA TRUSTEES BERHAD 32,074,900 1.62
AMANAH SAHAM MALAYSIA 3
6. AMANAHRAYA TRUSTEES BERHAD 27,341,700 1.38
AMANAH SAHAM MALAYSIA
7. AMANAHRAYA TRUSTEES BERHAD 26,000,000 1.31
AMANAH SAHAM MALAYSIA 2 - WAWASAN
8. AMANAHRAYA TRUSTEES BERHAD 16,597,300 0.84
AMANAH SAHAM BUMIPUTERA 2
9. CARTABAN NOMINEES (ASING) SDN BHD 14,271,700 0.72
EXEMPT AN FOR STATE STREET BANK & TRUST COMPANY
(WEST CLT OD67)
10. LEMBAGA TABUNG HAJI 13,178,800 0.67
11. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 12,667,200 0.64
GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (PAR 1)
12. CARTABAN NOMINEES (TEMPATAN) SDN BHD 8,183,300 0.41
PAMB FOR PRULINK EQUITY FUND
13. HSBC NOMINEES (ASING) SDN BHD 7,994,012 0.40
JPMCB NA FOR VANGUARD TOTAL INTERNATIONAL STOCK
INDEX FUND
14. HSBC NOMINEES (ASING) SDN BHD 7,424,863 0.38
JPMCB NA FOR VANGUARD EMERGING MARKETS STOCK INDEX FUND
15. PERMODALAN NASIONAL BERHAD 6,947,900 0.35
16. DB (MALAYSIA) NOMINEE (ASING) SON BHD 5,483,000 0.28
BNYM SA/NV FOR PEOPLE’S BANK OF CHINA (SICL ASIA EM)
17. AMANAHRAYA TRUSTEES BERHAD 5,210,600 0.26
AMANAH SAHAM BUMIPUTERA 3 - DIDIK
18. AMANAHRAYA TRUSTEES BERHAD 4,710,800 0.24
PUBLIC ISLAMIC DIVIDEND FUND
19. MAYBANK NOMINEES (TEMPATAN) SDN BHD 4,500,000 0.23
MAYBANK TRUSTEES BERHAD FOR PUBLIC ITTIKAL FUND
(N14011970240)
PETRONAS Gas Berhad Responsible Financial
222 Governance and Financial Report 2021 Governance Statements
ANALYSIS OF
SHAREHOLDINGS
as at 18 February 2022
% of Total
No. Name No. of Shares Shareholdings
20. HSBC NOMINEES (ASING) SDN BHD 4,024,500 0.20
JPMCB NA FOR BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A.
INVESTMENT FUNDS FOR EMPLOYEE BENEFIT TRUSTS
21. HSBC NOMINEES (ASING) SDN BHD 3,949,200 0.20
J.P. MORGAN SECURITIES PLC
22. CITIGROUP NOMINEES (ASING) SDN BHD 3,928,700 0.20
EXEMPT AN FOR CITIBANK NEW YORK (NORGES BANK 14)
23. MAYBANK NOMINEES (TEMPATAN) SDN BHD 3,871,900 0.20
MAYBANK TRUSTEES BERHAD FOR PUBLIC REGULAR SAVINGS FUND
(N14011940100)
24. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 3,577,900 0.18
EMPLOYEES PROVIDENT FUND BOARD (CIMB PRIN)
25. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 3,317,700 0.17
GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (PAR 3)
26. AMANAHRAYA TRUSTEES BERHAD 3,058,100 0.15
PUBLIC ISLAMIC EQUITY FUND
27. HSBC NOMINEES (ASING) SDN BHD 2,985,600 0.15
BNY MELLON FOR TD GLOBAL LOW VOLATILITY FUND
28. HSBC NOMINEES (ASING) SDN BHD 2,957,300 0.15
JPMCB NA FOR VANGUARD FIDUCIARY TRUST COMPANY
INSTITUTIONAL TOTAL INTERNATIONAL STOCK MARKET
INDEX TRUST II
29. HSBC NOMINEES (ASING) SDN BHD 2,612,160 0.13
JPMCB NA FOR MSCI EQUITY INDEX FUND B - MALAYSIA
30. CARTABAN NOMINEES (TEMPATAN) SDN BHD 2,585,700 0.13
PBTB FOR TAKAFULINK DANA EKUITI
223
SUMMARY OF
LANDED PROPERTY, PLANT AND EQUIPMENT
A summary of the landed property, plant and equipment of PETRONAS Gas Berhad and its subsidiaries as at 31 December 2021
Lot No. 3541 30.09.1991 03.04.2050 GPP 4 / DPCU 2 34.6 27.5 266,400
(60 years) Compressor 30.1 65,010
station
Office
Administration 24.2 12,220
building
SUMMARY OF
LANDED PROPERTY, PLANT AND EQUIPMENT
Office
Administration
building
Office
Maintenance 20.6 1,015
building
Warehouse 20.6 1,004
PETRONAS Gas Berhad Responsible Financial
226 Governance and Financial Report 2021 Governance Statements
SUMMARY OF
LANDED PROPERTY, PLANT AND EQUIPMENT
Office
Operation centre 29.4 8,080
Pasir Gudang Regional Leasehold Leasehold land 4.1 7,993
Operations Office, Expiry:
PLO 332, Jalan Perak 4,
Pasir Gudang Industrial
Area, 81700 Pasir Gudang,
Johor Darul Takzim
Lease from
third party
Land 6,368
227
Office
Administration
building
Lease from
third party
Land 7,778
Jetty 448,627
NEGERI SEMBILAN
Seremban Regional Freehold land 14.0 5,701
Operations Office, KM 11,
Jalan Seremban-Tampin,
71450 Sg. Gadut,
Seremban, Negeri
Sembilan Darul Khusus
SUMMARY OF
LANDED PROPERTY, PLANT AND EQUIPMENT
Land 3,125
PIPELINES
PGU I – total gas 20.03.1985 Leasehold Pipelines 37.3 N/A 73,801
pipeline comprises 6 Expiry: Pipelines in
km from Kertih to Paka, (40, 60 and leasehold land
Terengganu, 32 km from 99 years)
Kertih to Teluk Kalong, Terengganu: Terengganu:
Terengganu and two 53 lots 309 .1
40km of lateral lines from
the GPPs to the Export
Terminal in Tanjung
Sulong, Terengganu Darul
Iman
PETRONAS Gas Berhad Responsible Financial
230 Governance and Financial Report 2021 Governance Statements
SUMMARY OF
LANDED PROPERTY, PLANT AND EQUIPMENT
Melaka: Negeri
139 lots Sembilan:
460.2
Negeri
Sembilan: Selangor:
262 lots 298.0
Selangor:
140 lots
PGU III – total gas 06.01.1996 Leasehold Pipelines Sector 1: N/A 399,491
pipeline comprises Expiry: Pipelines in 26.1
Sector 1 – 184 km from (99 years) leasehold land
Meru, Selangor to
Lumut, Perak, Selangor: Selangor : Sector N/A
Sector 2 – 176 km 94 lots 178.3 2&3:
from Lumut, Perak to 24.2
Gurun, Kedah, WP Kuala WP Kuala
Sector 3 – 90 km of Lumpur : Lumpur :
NPS 36” mainline from 14 lots 17.9
Gurun to Pauh, Perlis
Perak: Perak :
360 lots 539.9
Penang: Penang :
96 lots 118.1
Kedah: Kedah:
262 lots 473.9
Perlis: Perlis:
80 lots 87.0
231
Pahang: Pahang:
315 lots 103.8
PGU Loop 2 – total gas 01.11.2000 Leasehold Pipelines 21.4 N/A 271,650
pipeline of 226 km from Expiry: Pipelines in
Segamat, Johor to Meru, (99 years) leasehold land
Selangor
Melaka: Melaka:
4 lots 1.3
Negeri Negeri
Sembilan: Sembilan:
4 lots 1.1
TOTAL 10,458,494
PETRONAS Gas Berhad Responsible Financial
232 Governance and Financial Report 2021 Governance Statements
TOP 10
LANDED PROPERTY, PLANT AND EQUIPMENT