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embracing

progress
2012 ANNUAL REP ORT

Over the years, PETRONAS Gas Berhad has experienced


tremendous growth, propelled by the tenacity and
determination of our people, who are our most valuable asset.
Our personnel throughout Malaysia work day and night - each
bringing their own unique capability, insights and talents to the
table to ensure our continuity and progress as a business.
Like the many leaves of a tree, we see each of them
contributing directly to the growth and resilience of this
Company - each embracing the spirit of progress in their own
individual ways.
As we weather the challenges that come our way, our roots
remain firmly planted in the foundations of our business, even
as our branches continue to reach out far and wide towards
infinite opportunities. Together, we embrace our journey of
progress to a better tomorrow with open arms.

PETRONAS Gas Berhads liquefied natural gas (LNG)


Regasification Terminal is the first of its kind in Malaysia,
paving the way for the importation of gas to supplement the
energy consumption needs of the country.

PETRONAS GAS BERHAD (101671-H)

Contents
Our Vision, Mission and Shared Values

Corporate Responsibility

70

Embracing Change

CR in the Marketplace

72

Five-Year Group Financial Highlights

CR in the Workplace

78

Corporate Information

CR in the Environment

82

Our Operations

10

CR in the Community

84

Our Presence

12

Calendar of Events

86

Organisational and Corporate Structure

14

Corporate Governance

90

Corporate and Management Directory

15

Corporate Governance Statement

92

Board of Directors

16

Nomination and Remuneration Committee Report

99

Directors Profiles

18

Nomination and Remuneration Committees

Management Committee

24

Management Committees Profiles

26

Statement on Risk Management and Internal Control

104

Business Review

34

Board Audit Committee Report

110

Chairmans Statement

36

Board Audit Committees Terms of Reference

113

CEOs Business Review

40

Statement of Directors Responsibility

116

Performance Review

52

Financial Statements

117

Financial Review

54

Other Information

195

Statement of Value Added

60

Summary of Landed Property, Plant and Equipment

196

Performance of Shares

61

Training Programmes Attended by Directors

203

Financial Calendar

61

Analysis of Shareholdings

205

Supporting Progress

62

Corporate Directory

209

Powering Progress

64

Notice of Annual General Meeting

210

Progressive Mindset

66

Administrative Details

212

PGB in the News

68

Proxy Form

Awards and Achievements

69

Terms of Reference

102

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

Our Vision
Our Mission

A World Class Gas and


Utilities Company

We are a business entity


Gas is our core business
Our primary responsibility is to
add value to this natural resource

Our Shared Values


Loyalty Professionalism
Integrity Cohesiveness

Embracing
Change
PGB Today
PETRONAS Gas Berhad (PGB) has been in
business for 29 years and counting. Since its
incorporation on 23 May 1983 until today,
PGB continues to contribute to the nations
economic growth and progress.
Gas processing and gas transmission remain
the core business of PGB. The process begins
at its six gas processing plants located in Kertih
and Paka, operated by the Companys Plant
Operations Division (POD). Natural gas from the
offshore fields of Terengganu is processed there
before being piped into PGBs Peninsular Gas
Utilisation (PGU) pipeline which is operated by the
Transmission Operations Division (TOD). TOD is
responsible for the transmission and delivery of
sales gas to customers in the power, industrial
and commercial sectors throughout Peninsular
and East Malaysia.
In 1998, PGB expanded its business into
manufacturing, supplying and marketing of
industrial utility products to customers in the
Kertih Integrated Petrochemical Complex and
Gebeng Industrial Area through its Centralised
Utility Facilities Division (CUF).
PGBs vast experience in industrial utility
products is the key to unlock the door to the
world of power producing. In 2009, PGBs

business landscape evolved further to include


the generation of electricity with the formation
of Kimanis Power Sdn Bhd, a joint venture
company with Yayasan Sabah. The entity was
set up to develop a 300MW gas fired power
plant in Kimanis to meet the growing demand for
electricity in the state of Sabah.
With a renowned technical capability and a strong
track record in gas transmission operations
and project management, PGB entered into an
agreement with PETRONAS Carigali Sdn Bhd
for the provision of project management and
execution services for the Sabah-Sarawak Gas
Pipeline Project (SSGP).
Our latest venture is the foray into the liquefied
natural gas (LNG) regasification business. PGB
is developing Malaysias first LNG Regasification
Terminal (RGT) which is located in Sungai Udang,
Melaka, which will allow the importation of LNG
to cater for increases in gas demand.
Progress is a journey of growth. With our
dedicated and reliable personnel contributing
their energies towards PGBs success, we are
confident of reaching many more important
milestones in years to come.

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

Five-Year

Group
Financial
Highlights

12 months ended
RM Million

9 months
ended

12 months
ended

31.3.2009

31.3.2010

31.3.2011

31.12.2011

31.12.2012

Revenue

3,415.1

3,221.8

3,525.0

2,765.1

3,576.8

Profit Before Tax

1,231.4

1,243.8

1,900.3

1,433.0

1,844.5

928.0

940.7

1,439.1

1,080.8

1,397.1

Total Assets

9,867.1

9,834.7

10,509.9

10,746.5

13,462.2

Total Equity

8,038.3

8,017.0

8,515.2

8,643.9

9,282.7

Long Term Liabilities

1,610.9

1,583.3

1,542.5

1,508.4

2,673.8

- Before Tax

36.1

38.6

53.9

51.8

51.6

- After Tax

27.2

29.2

40.8

39.1

39.1

Earnings Per Share (sen) - Basic

46.9

47.6

72.7

54.6

71.0

406.3

405.1

430.3

436.8

469.1

Profit After Tax

Profit as % of Revenue

Net Assets Per Share (sen)

PETRONAS GAS BERHAD (101671-H)

2011*

2011

71.0
2011*

2012

2012

2010

2011

2011*

2010

Note:
Financial year 2009, 2010 and 2011 comprise reporting period from 1 April to 31 March.
* For the nine months period ended 31 December 2011.

469.1

2009

436.8

2012

2012

430.3

2011*

405.1

1,508.4

2011

406.3

1,542.5

2010

2,673.8
1,583.3

sen

1,610.9

Net Assets per Share

RM million

9,282.7

2009

Before Tax

Long Term Liabilities

2009

51.6
39.1

2011*

8,643.9

8,017.0

10,746.5

2012

8,038.3

10,509.9

2011*

13,462.2

9,834.7

RM million

9,867.1

Total Equity

RM million

2011

2011
After Tax

Total Assets

2010

39.1

2010

Profit Before Tax (PBT)

2009

51.8

53.9
2009

40.8

38.6
29.2

36.1

1,433.0

1,844.5
2012

8,515.2

Profit After Tax (PAT)

2011*

27.2

2011

1,397.1

940.7
2010

1,080.8

928.0
2009

1,439.1

1,243.8

RM million

1,231.4

2010

Profit as % of Revenue
1,900.3

Profit

2009

54.6

3,576.8
2012

47.6

2011

46.9

2010

2,765.1

3,221.8

2009

72.7

Sen

3,525.0

Earnings per Share

RM million

3,415.1

Revenue

2011

2011*

2012

PETRONAS GAS BERHAD (101671-H)

Embracing
Capability

PGBs growth over the years has been shaped by the dedicated men and women who devoted
their energies, time and ideas towards taking the Company forward. Their ability to learn, unlearn
and re-learn has placed us at the leading edge of capability building in the countrys gas industry,
transforming them into some of the most sought after talents not just locally, but around the world.
Our focus on capabilty building will continue to colour our road to progress in years to come.

2,550 km
Gas pipeline network
throughout Malaysia

29 years
Experience in gas
processing and
transmission

2,060
mmscfd
Gas processing
capacity

PETRONAS GAS BERHAD (101671-H)

Corporate Information
Our Operations

10

Our Presence

12

Organisational and Corporate Structure

14

Corporate and Management Directory

15

Board of Directors

16

Directors Profiles

18

Management Committee

24

Management Committees Profiles

26

10

PETRONAS GAS BERHAD (101671-H)

Our
Operations

Gas Processing

Gas Transmission

Plant Operations Division (POD)


POD operates the six gas processing plants
in the state of Terengganu. The plants are divided
into two complexes Gas Processing Plant A
in Kertih and Gas Processing Plant B in Paka.
With total combined sales gas processing capacity
of over 2,000 million standard cubic feet per day,
these gas processing plants process natural gas
into sales gas and other by-products such as
ethane, propane and butane to be transmitted
to PETRONAS customers in power and
non-power sectors via PGBs PGU pipeline
network.

Transmission Operations Division (TOD)


TOD operates the PGU pipeline network
by managing the supply of gas to PETRONAS
customers while ensuring the reliability,
safety and efficiency of operations.
The Segamat Operations Centre which houses
the PETRONAS Gas Control Centre acts
as a mission control for the entire PGU network.

PETRONAS GAS BERHAD (101671-H)

11

PETRONAS Gas Berhad (PGB) business portfolio is divided into five major divisions Plant Operations, Transmission
Operations, Centralised Utility Facilities, Technical & Facilities Development and LNG Regasification.
The first two are directly related, with the former responsible for processing the gas piped from PETRONAS offshore fields
while the latter is responsible for transporting the processed gas via the Peninsular Gas Utilisation (PGU) pipeline network
to PETRONAS customers. The third division, supports the gas value chain by supplying industrial utilities to the various
petrochemical plants operating in Kertih, Terengganu and Gebeng, Pahang. The fourth division is a technical services outfit
for PGB, which also extends its expertise in engineering and project management to other entities within the PETRONAS Group.
The fifth division is dedicated to oversee and drive PGBs foray into the liquefied natural gas (LNG) regasification business
to augment Malaysias gas supply.
With current expansion and growth involving new business ventures, PGB is branching out to other new and exciting areas
of growth. With projects such as the Sabah-Sarawak Gas Pipeline, Kimanis Power Plant and LNG Regasification Terminal
expected to be commissioned in 2013, we are gearing up and getting ready to usher in a new period of growth.

Industrial Utilities

Centralised Utility Facilities (CUF)


CUF supplies a range of industrial
utilities to the petrochemical
businesses in Kertih Integrated
Petrochemical Complex in Terengganu
and Gebeng Industrial Area in Pahang.
The industrial utilities include electricity,
steam, industrial gases and other
by-products such as liquid oxygen,
liquid nitrogen, demineralised water,
raw water, cooling water and boiler
feed water.

Engineering and Project


Management Services
Technical and Facilities
Development Division (TFDD)
TFDD is the engineering and
project management arm of PGB.
With vast technical experience,
TFDD also provides project
management services to other
companies within the PETRONAS
Group such as PETRONAS Carigali
Sdn Bhd for the Sabah-Sarawak
Gas Pipeline project.

LNG Regasification

LNG Regasification Division (RGTD)


RGTD is responsible for overseeing
the engineering, construction and
commissioning of LNG regasification
facilities throughout Malaysia.

12

PETRONAS GAS BERHAD (101671-H)

Our Presence
PGB Total Pipeline Length
(in operation)

Complex GPP

Capacity
mmscfd

1,658 km

310

Lateral

374 km

250

PERLIS

C2, C3 and C4

357 km

250

20

250

GPP Interconnect

116 km

500

Main

GPP A

GPP B
Sarawak
Total

45 km

2,550 km

Total

PULAU
PINANG

Major Customers
1.

TNB Paka

10. TNB Tuanku Jaafar

2.
3.

YTL Paka
TNB Pasir Gudang

11. Port Dickson Power


12. Genting Sanyen Power

4.
5.

YTL Pasir Gudang


Senoko Energy

13. TNB Serdang


14. TNB Connaught Bridge

6.
7.

Keppel Gas
Pahlawan Power,

15. TNB Kapar


16. GB3 Lumut

8.

Tg. Kling
Panglima Power,

17. Segari Energy Ventures


18. Prai Power

9.

Teluk Gong
Powertek,

19. TNB Gelugor


20. Technology Tenaga

Teluk Gong

18

KELANTAN
TERENGGANU

PERAK

GPP B

CUF Kertih

17
GPP A

16

PAHANG

Gas - in

CUF Gebeng

SOUTH
CHINA
SEA

SELANGOR

32 km

Kertih - Teluk Kalong


PGU II

19

Perlis Consortium

Main Pipeline
PGU I

KEDAH

500
2,060

1984
15

685 km

14

Sector I : 233 km
Teluk Kalong - Segamat

1991

Sector II : 241 km
Segamat - Kapar

1991

Sector III : 211 km


Segamat - Singapore

1991

STRAITS
OF MELAKA

13

NEGERI
SEMBILAN

12

11
10
9

MELAKA
7

PGU III

450 km

Sector I : 184 km
Meru - Lumut

JOHOR
CUSTOMERS

1996
Gas Processing Plant (GPP)

Sector II : 176 km
Lumut - Gurun

1998

1998
265 km

Kertih - Segamat
Loop 2
Segamat - Meru

Compressor Station

Sector III : 90 km
Gurun - Pauh
Loop 1

Centralised Utility
Facilities (CUF)

1999

Tenaga Nasional
Berhad Power Station
Independent Power
Producer Power Station
LNG Regasification Terminal

226 km
2001

SINGAPORE

PETRONAS GAS BERHAD (101671-H)

13

Miri Pipeline System Network

LUTONG

PIASAU

SOUTH
CHINA
SEA

1
PUJUT

MIRI TOWN

SOUTH
CHINA
SEA
LUAK
Taman Tunku
Teacher Training College
Kimanis

SABAH

Bintulu Pipeline
System Network
3
TG. KIDURONG 6

SOUTH
CHINA
SEA

Miri

Bintulu

SARAWAK

CUSTOMERS

FACILITIES

1 SESCO Miri Power Station

Pipeline

2 Sarawak Gas Distribution System

Power Station

3 Bintulu Edible Oils Sdn. Bhd.

Industry

4 Syarikat Sebangun Sdn. Bhd.

Kimanis
Power Plant

5 Sime Darby Austral Sdn. Bhd.


6 Biport Bulkers Sdn. Bhd.

14

PETRONAS GAS BERHAD (101671-H)

Organisational Structure
BOARD OF DIRECTORS
BOARD AUDIT COMMITTEE

NOMINATION AND REMUNERATION COMMITTEE

MANAGING DIRECTOR/
CHIEF EXECUTIVE OFFICER
MANAGEMENT COMMITTEE

PLANT OPERATIONS
FINANCE

TRANSMISSION OPERATIONS

CORPORATE AND COMMERCIAL SERVICES

CENTRALISED UTILITY FACILITIES

TECHNICAL AND FACILITIES DEVELOPMENT

LNG REGASIFICATION

LEGAL AND CORPORATE SECRETARIAT

BUSINESS PLANNING

HUMAN RESOURCE MANAGEMENT

HEALTH, SAFETY AND ENVIRONMENT

PROJECT SUPPLY CHAIN MANAGEMENT

RISK MANAGEMENT

Corporate Structure
Subsidiaries

50%

Jointly Controlled Entity

Regas Terminal (Sg. Udang) Sdn Bhd

Industrial Gases Solutions Sdn Bhd

Kimanis Power Sdn Bhd

Kimanis O&M Sdn Bhd

14.8%

99%

Regas Terminal (Lahad Datu) Sd Bhd

60%

Regas Terminal (Pengerang) Sdn Bhd

60%

100%

100%

PETRONAS GAS BERHAD

Associate Company

Gas Malaysia Berhad

PETRONAS GAS BERHAD (101671-H)

15

Corporate and
Management Directory

DIRECTORS

BOARD AUDIT COMMITTEE

Datuk Anuar bin Ahmad

Dato N. Sadasivan N.N. Pillay

Samsudin bin Miskon

Dato Ab. Halim bin Mohyiddin

Tower 1, PETRONAS Twin Towers,

Dato N. Sadasivan N.N. Pillay

Datuk Rosli bin Boni

Kuala Lumpur City Centre,


50088 Kuala Lumpur

Dato Mohammad Medan bin Abdullah


Datuk Rosli bin Boni
Ir. Pramod Kumar Karunakaran

REGISTERED OFFICE
AND BUSINESS ADDRESS

NOMINATION AND
REMUNERATION COMMITTEE

Tel: (+603) 2051 5000


Fax: (+603) 2051 6555

Dato Ab. Halim bin Mohyiddin

Lim Beng Choon

Lim Beng Choon

Dato N. Sadasivan N.N. Pillay

AUDITORS

Dato Mohammad Medan bin Abdullah

KPMG Desa Megat & Co.

SECRETARIES

PRINCIPAL BANKER

Intan Shafinas (Tuty) binti Hussain


(LS 0009165)

CIMB Bank Berhad

Yeap Kok Leong (MAICSA 0862549)

STOCK EXCHANGE LISTING

REGISTRAR
Symphony Share Registrars Sdn Bhd
(378993-D)
Level 6, Symphony House,
Pusat Dagangan Dana 1,
Jalan PJU 1A/46,
47301 Petaling Jaya,
Selangor Darul Ehsan
Tel: (+603) 7841 8000
Fax: (+603) 7841 8151

Main Market of Bursa Malaysia


Securities Berhad
WEBSITE
www.petronasgas.com

16

PETRONAS GAS BERHAD (101671-H)

Board of
Directors

PETRONAS GAS BERHAD (101671-H)

17

From left:

Muri bin Muhammad

Lim Beng Choon

Dato N. Sadasivan N.N. Pillay

Samsudin bin Miskon

Dato Ab. Halim bin Mohyiddin


Datuk Anuar bin Ahmad

(Managing Director/Chief Executive Officer)

Dato Mohammad Medan bin Abdullah

(Chairman)

Datuk Rosli bin Boni

Ir. Pramod Kumar Karunakaran

Ramlan bin Abdul Malek

18

PETRONAS GAS BERHAD (101671-H)

Directors
Profiles
Datuk Anuar bin Ahmad
Chairman
Malaysian (age 59)
Appointed as Director and Chairman of PETRONAS Gas Berhad on
17 August 2010.
Skills and Experience: Datuk Anuar holds a Bachelor of Science Degree
(Econs) from the London School of Economics & Political Science,
University of London, United Kingdom and had attended Harvard
Business Schools Advanced Management Programme,
United States of America.
He joined PETRONAS in 1977 and is currently the Executive Vice
President (EVP) of Gas and Power Business, PETRONAS.
Prior to his appointment as EVP of Gas and Power Business, he held
various senior managerial positions in the International Marketing Division
and Corporate Planning Unit of PETRONAS Trading Corporation Sdn Bhd
and PETRONAS Dagangan Berhad respectively. Datuk Anuar has also
held the positions of Vice President of Oil Business, PETRONAS, as well
as Vice President of Human Resource Management, PETRONAS.
Datuk Anuar is a member of the PETRONAS Executive Committee and
PETRONAS Management Committee. He also sits on the Board of several
other companies within the PETRONAS Group.

PETRONAS GAS BERHAD (101671-H)

19

Samsudin bin Miskon


Managing Director/Chief Executive Officer
Malaysian (age 52)

Dato N. Sadasivan N.N. Pillay


Senior Independent Non-Executive Director
Malaysian (age 73)

Appointed to the Board of PETRONAS Gas Berhad as Managing Director/


Chief Executive Officer on 1 March 2007.

Appointed to the Board of PETRONAS Gas Berhad


on 29 August 1995.

Skills and Experience: Samsudin holds a B.Sc (Hons) in Chemical


Engineering from Aston University, United Kingdom in 1983. He obtained
a Masters of Science in Project Management from Reading University,
United Kingdom in 1994. In 2005, Samsudin attended the Advanced
Management Program at Harvard Business School, United States of
America.

Skills and Experience: He graduated in Economics from the University


of Malaya in 1963.

Samsudin began his career with PETRONAS in 1983 as a process


engineer and was involved in the operations, design and project
implementation of gas processing facilities in PETRONAS Gas Berhad
until 1992.
He had held several positions in the PETRONAS Group including serving
as General Manager in the Plant Division of OGP Technical Services Sdn
Bhd accountable for the project management of gas processing and
petrochemical plants until 2000. He then served as the General Manager
of Malaysia LNG Dua Sdn Bhd and subsequently as the Senior General
Manager of Malaysia LNG Sdn Bhd until 2005, managing the operations
of the PETRONAS LNG Complex in Bintulu, Sarawak.
Prior to his current appointment, Samsudin was the Senior General
Manager of Leadership and Capability Development Department of
Human Resource Management Division in PETRONAS.
Samsudin is currently the Chairman of Kimanis Power Sdn Bhd, Regas
Terminal (Sg. Udang) Sdn Bhd, Regas Terminal (Pengerang) Sdn Bhd
and Regas Terminal (Lahad Datu) Sdn Bhd. He also sits on the Board of
several companies in the PETRONAS Group.
External Appointment:
Director, Gas Malaysia Berhad

Dato N. Sadasivan began his career with the Economic Development


Board Singapore upon graduation until 1967. In 1968, Dato N. Sadasivan
joined the Malaysian Industrial Development Authority (MIDA) and was
appointed as the Director-General of MIDA in 1984. He served in that
capacity until his retirement in 1995.
External Appointments:
Executive Chairman, SKA Management Consultants Sdn Bhd
Director, APM Automotive Holdings Berhad
Director, Bank Negara Malaysia
Director of seven private companies (Sdn Bhd)
Committee Membership:
Chairman, Board Audit
Nomination and Remuneration

20

PETRONAS GAS BERHAD (101671-H)

Directors Profiles

Dato Mohammad Medan bin Abdullah


Non-Independent Non-Executive Director
Malaysian (age 54)

Datuk Rosli bin Boni


Non-Independent Non-Executive Director
Malaysian (age 56)

Appointed to the Board of PETRONAS Gas Berhad


on 1 November 2010.

Appointed to the Board of PETRONAS Gas Berhad


on 1 November 2010.

Skills and Experience: Dato Medan graduated with a Bachelor of


Laws from the University of Malaya and had attended the Advanced
Management Program at the Wharton School, University of Pennsylvania,
Philadelphia, United States of America.

Skills and Experience: Datuk Rosli holds a Bachelor of Science in


Petroleum Engineering from the University of Wyoming, United States of
America in 1979.

Dato Medan began his career in 1982 at PETRONAS as a Legal Officer


at the Legal Services Department and had since held various positions
before his current appointment as the Senior General Manager (SGM) of
Group Corporate Affairs Division of PETRONAS in May 2010.
He has helmed various senior positions within the PETRONAS Group,
including that of Managing Director/Chief Executive Officer (CEO)
of Malaysia LNG Group of Companies, SGM of Group Tenders and
Contracts Division, Executive Assistant to the President/CEO of
PETRONAS, SGM of Corporate Services Division in PETRONAS Carigali
Sdn Bhd and General Counsel for Exploration & Production Business,
PETRONAS.
Dato Medan possesses a proven track record in achieving various
significant successes across the oil and gas value chain, to contribute
towards PETRONAS overall profitability and growth.
Dato Medan is currently a member of PETRONAS Management
Committee and sits on the Board of several companies in the PETRONAS
Group.
External Appointments:
Director, PETRONAS Dagangan Berhad
Director, Bintulu Port Holdings Berhad
Committee Membership:
Nomination and Remuneration

Datuk Rosli has 32 years of experience in the petroleum industry.


He began his career with PETRONAS in 1980 in the area of sub-surface
engineering, wireline operations, well drilling and well-testing operations.
He served as a Field Asset Manager for five years from 1996 to 2000.
From July 2000 to March 2004, Datuk Rosli was involved in several
overseas assignments at top management level, namely with Premier
Oil plc in the United Kingdom, an oil development project in Chad and
exploration in Bahrain.
From April 2004 to February 2010, he served as the General Manager
(GM) in the Petroleum Management Unit in Exploration & Production
Division, Senior GM of the Operations Division in charge of all production
operations both in Malaysia and overseas and as the Senior GM of the
Corporate Human Resource Shared Services. He is active in the Society
of Petroleum Engineer (SPE) and has served in the committee of various
SPE forums and workshops.
External Appointment:
Chief Executive Officer with Malaysia-Thailand Joint Authority (MTJA)
Committee Membership:
Board Audit

PETRONAS GAS BERHAD (101671-H)

21

Ir. Pramod Kumar Karunakaran


Non-Independent Non-Executive Director
Malaysian (age 53)

Dato Ab. Halim bin Mohyiddin


Independent Non-Executive Director
Malaysian (age 67)

Appointed to the Board of PETRONAS Gas Berhad


on 25 July 2011.

Appointed to the Board of PETRONAS Gas Berhad


on 4 August 2011.

Skills and Experience: Ir. Pramod holds a Bachelor of Science,


Communication (Electronics) Engineering from Leeds Polytechnic,
United Kingdom.

Skills and Experience: Dato Ab. Halim graduated with a Bachelor of


Economics (Accounting) from the University of Malaya in 1971 and thereafter
joined Universiti Kebangsaan Malaysia as a Faculty member of the Faculty
of Economics. He obtained his Masters of Business Administration from the
University of Alberta, Edmonton, Alberta, Canada in 1973 and subsequently a
Diploma in Accountancy from University Malaya in 1975.

Ir. Pramod joined PETRONAS in 1984 and is currently the Vice President
of Infrastructure, Utilities, Gas and Power Business. Prior to assuming
this position, he has held various senior positions in PETRONAS including
as the Managing Director/Chief Executive Officer of Ethylene (M)
Sdn Bhd, Senior General Manager and Head of Group Plant Performance
Management, Group Technology Solution and General Manager (Plant)
of ASEAN Bintulu Fertilizer Sdn Bhd.
Ir. Pramod also sits on the Boards of other companies within the
PETRONAS Group.
External Appointment:
Director, PETRONAS Dagangan Berhad

He joined KPMG/KPMG Desa Megat & Co. in 1977 and had his early
accounting training in both Malaysia and the United States of America.
He was made Partner of KPMG in 1985. During his tenure as Partner for
17 years, he held various designations in KPMG and acted as receiver
and manager and liquidator for several companies. At the time of his
retirement on 1 October 2001, he was the Partner in Charge of the
Assurance and Financial Advisory Services Divisions and was also looking
after the Secured e-Commerce Practice of the Firm.
He is a past member of the Education Committee of the International
Federation of Accountants (IFAC), representing Malaysia in the Committee
from 2001-2005.
External Appointments:
Council Member of The Malaysian Institute of Certified Public
Accountants (MICPA)
Chairman of the Education Training Committee of the Institute
Member of the Malaysian Institute of Accountants (MIA)
Director, HeiTech Padu Berhad
Director, Utusan Melayu (Malaysia) Berhad
Director, Kumpulan Perangsang Selangor Berhad
Director, Amway (Malaysia) Holdings Berhad
Director, KNM Group Berhad
Director, ECM Libra Financial Group Berhad
Director, Amcorp Properties Berhad
Director, RCE Capital Berhad
Director, DiGi Telecommunications Sdn Bhd
Committee Membership:
Board Audit

22

PETRONAS GAS BERHAD (101671-H)

Directors Profiles

Lim Beng Choon


Independent Non-Executive Director
Malaysian (age 53)

Muri bin Muhammad


Independent Non-Executive Director
Malaysian (age 70)

Appointed to the Board of PETRONAS Gas Berhad


on 4 August 2011.

Appointed to the Board of PETRONAS Gas Berhad


on 25 November 1996.

Skills and Experience: Beng Choon holds a Bachelor of Science


(First Class Honours) in Mathematics and Computer Science from the
Australian National University, Canberra, Australian Capital Territory,
Australia and has attended numerous Accenture Management Training
Programs in the United States of America and the IMD Leadership
Program in Switzerland.

Skills and Experience: He holds a Master of Science in Biological


Oceanography from Dalhousie University, Halifax, Canada.

Beng Choon was the Country Managing Director in Accenture, the global
consulting, technology and outsourcing company, before he retired in
2009. He held various positions during his 28 years tenure in Accenture,
including that of Managing Partner for Accentures Resources Industry
Group (Oil & Gas, Chemicals, Utilities, Natural Resources) in South Asia.
He also had oversight of the Management Consulting practice across
industries in ASEAN.
Beng Choon has extensive experience in management consulting which
spans strategy formulation, operational consulting and merger integrations
and has led complex projects to deliver transformational change for
multinationals as well as top Malaysian companies. Prior to moving into
management consulting, he was in technology consulting covering IT
Strategies and System Integration work.
External Appointments:
Trustee in the ECM Libra Foundation
Director, PETRONAS Dagangan Berhad
Director, Hong Leong Bank Berhad
Director, MISC Berhad
Committee Membership:
Chairman, Nomination and Remuneration

Muri started his career with PETRONAS in 1975 and had served for
27 years in various capacities, including as the Managing Director/
Chief Executive Officer of ASEAN Bintulu Fertilizer Sdn Bhd and
Managing Director/Chief Executive Officer of Malaysia LNG Sdn Bhd.
Muri retired as the Vice President of Gas Business, PETRONAS in 2002.
Upon his retirement, he was appointed as an Advisor to Gas Business,
PETRONAS, until the end of March 2005.
On 1 September 2005, he was appointed by the Government as a
member of the Energy Commission of Malaysia and served for the full
term of four years until August 2009. He has also served as a Director of
various international gas pipeline companies namely APA Group, a public
listed Australian gas transmission and energy company, Transportadora
de Gas delNorte (TGN) and Transportadora de Gas del Mercosur (TGM),
both gas transmission companies of Argentina.
Muri was also on the Board of several PETRONAS subsidiaries and has
held the position of the Chairman of the Board of the Gas District Cooling
Group of Companies, PETRONAS NGV Sdn Bhd, Bekalan Air KIPC Sdn
Bhd and OGP Technical Services Sdn Bhd.
External Appointment:
Board Member, Petromin PNG Holdings Limited
Committee Membership:
Board Audit
Muri has since vacated office on 31 December 2012 pursuant to
Paragraph 15.05 (3) (c) of the Main Market Listing Requirements of
Bursa Malaysia Securities Berhad.

PETRONAS GAS BERHAD (101671-H)

23

Ramlan bin Abdul Malek


Non-Independent Non-Executive Director
Malaysian (age 58)
Appointed to the Board of PETRONAS Gas Berhad
on 1 November 2010.
Skills and Experience: Ramlan holds a degree in Chemical Engineering
from the University of Bath, United Kingdom.
Ramlan joined PETRONAS in 1979 and possesses 33 years of
working experience mainly in the area of Exploration & Production (E&P).
He is currently the Vice President of Petroleum Management,
E&P Business of PETRONAS. As the Head of Petroleum Management
Unit (PMU), his present responsibilities covers promotion and regulation
of the upstream activities in Malaysia. PMU also acts as the petroleum
resource owner and production sharing contracts manager in Malaysia.
Prior to assuming his current position in June 2010, he was the
Vice President of E&P Business and has held several technical and
general management positions in PETRONAS, PETRONAS Carigali
Sdn Bhd and PETRONAS Research Sdn Bhd. Ramlan also sits on
the PETRONAS Management Committee.
External Appointments:
Chairman, Society of Petroleum Engineers (SPE) Asia-Pacific Sdn Bhd
Board Member, Malaysia Petroleum Resource Corporation
Board Member, Malaysia-Thailand Joint Authority
Ramlan has since vacated office on 31 December 2012 pursuant to
Paragraph 15.05 (3) (c) of the Main Market Listing Requirements of
Bursa Malaysia Securities Berhad.

None of the Directors has:


Any family relationship with any other Director and/or major shareholder
Any conflict of interest with PETRONAS Gas Berhad
Any conviction for offences within the past 10 years other than traffic offences

24

PETRONAS GAS BERHAD (101671-H)

Management
Committee

From left:

Muhamed Ali bin Hashim Muhamed

Wan Mohd Muzani bin Wan Muda

Zilfalilah binti Abdul Aziz

Azlimi bin Mohd Lazim

Aida Aziza binti Mohd Jamaludin

Abdul Rashid bin Mukri

Mohd Sukri bin Ibrahim

Samsudin bin Miskon

Norarnizar bin Ali Amran

Intan Shafinas (Tuty) binti Hussain

Ir. Hudal Firdaus bin Dimyati

Ahmad Nawawi bin Mohd Yatim

Helmi bin Zaidan

PETRONAS GAS BERHAD (101671-H)

25

26

PETRONAS GAS BERHAD (101671-H)

Management
Committees
Profiles
Samsudin bin Miskon
Managing Director/Chief Executive Officer
Malaysian (age 52)
Appointed to the Board of PETRONAS Gas Berhad
as Managing Director/Chief Executive Officer in March 2007.
Skills and Experience: Samsudin holds a B.Sc (Hons) in Chemical
Engineering from Aston University, United Kingdom in 1983. He obtained
a Masters of Science in Project Management from Reading University,
United Kingdom in 1994. In 2005, Samsudin attended the Advanced
Management Program at Harvard Business School, United States of
America.
Samsudin began his career with PETRONAS in 1983 as a process
engineer and was involved in the operations, design and project
implementation of gas processing facilities in PETRONAS Gas Berhad
until 1992.
He had held several positions in the PETRONAS Group including serving
as General Manager in the Plant Division of OGP Technical Services Sdn
Bhd accountable for the project management of gas processing and
petrochemical plants until 2000. He then served as the General Manager
of Malaysia LNG Dua Sdn Bhd and subsequently as the Senior General
Manager of Malaysia LNG Sdn Bhd until 2005, managing the operations
of the PETRONAS LNG Complex in Bintulu, Sarawak.
Prior to his current appointment, Samsudin was the Senior General
Manager of Leadership and Capability Development Department of
Human Resource Management Division in PETRONAS.
Samsudin is currently the Chairman of Kimanis Power Sdn Bhd,
Regas Terminal (Sg. Udang) Sdn Bhd, Regas Terminal (Pengerang)
Sdn Bhd and Regas Terminal (Lahad Datu) Sdn Bhd. He also sits on the
Board of several companies in the PETRONAS Group.
External Appointment:
Director, Gas Malaysia Berhad

PETRONAS GAS BERHAD (101671-H)

27

Azlimi bin Mohd Lazim


Senior General Manager, Plant Operations Division (POD)
Malaysian (age 47)

Aida Aziza binti Mohd Jamaludin


General Manager, Finance Division
Malaysian (age 39)

Appointed as Senior General Manager of POD


in April 2012.

Appointed as General Manager of Finance Division


in September 2012.

Skills and Experience: Azlimi holds a degree in Chemical Engineering


from Lamar University, Texas, United States of America (USA). He also
attended the Advance Management Program at the Wharton School,
University of Pennsylvania, Philadelphia, USA in 2007.

Skills and Experience: Aida Aziza holds a Bachelor of Accounting and


Finance from the University of Lancaster, United Kingdom.

Azlimi began his career as a Trainee Engineer in 1990 at Sabah Gas


Industries in the Methanol Plant Division and later joined PETRONAS in
March 1991 as Shift Operations Supervisor at MTBE Malaysia Sdn Bhd
(MTBE).
Azlimis six years experience in the Dehydro Section provided the platform
for him to emerge as Section Head at the Export Terminal Section in
1996. In 1998, he was appointed as Senior Process Engineer and
subsequently returned to the Dehydro Section as Operations Manager
within the same year. Azlimi was later promoted to MTBE Plant Asset
Senior Manager in April 2003 in the same operating unit.
After 13 years at MTBE, Azlimi was appointed in December 2004 as
General Manager of Gas Processing Plant A, PETRONAS Gas Berhad
and thereafter at Gas Processing Plant B, Kg Tok Arun Paka until March
2011.
Subsequently, he was appointed as President/Chief Executive Officer of
Trans Thai-Malaysia (Thailand) Ltd in Songkhla, Thailand from April 2011
until March 2012.
Azlimi is currently the Chairman of Kimanis O&M Sdn Bhd.

Aida Aziza began her career with PETRONAS in October 1996 as an


executive in the Budget Department of the PETRONAS and in the ensuing
years, has held various positions in the PETRONAS Group, including
serving as General Manager for the Finance and Accounts Services
Department.
Aida Aziza has acquired more than 16 years of experience in accounting
and finance related assignments. She has led several Financial Reporting
Standard and Malaysian Financial Reporting Standard implementations
for PETRONAS Group of Companies as well as the implementation of the
SAP ECC6.0 for PETRONAS.
Aida Aziza is a Director of Kimanis O&M Sdn Bhd.
External Appointments:
Fellow, Association of Chartered Certified Accountant
of United Kingdom
Alternate Director, Gas Malaysia Berhad

28

PETRONAS GAS BERHAD (101671-H)

Management Committees Profiles

Norarnizar bin Ali Amran


General Manager, Transmission Operations Division (TOD)
Malaysian (age 51)

Mohd Sukri bin Ibrahim


General Manager, Centralised Utility Facilities Division (CUF)
Malaysian (age 50)

Appointed as General Manager, TOD


in November 2011.

Appointed as General Manager, CUF


in August 2009.

Skills and Experience: Norarnizar holds a Bachelor Degree in Chemical


Engineering from University Technology Malaysia and Diploma in
Mechanical Engineering from Mara Institute of Technology.

Skills and Experience: Mohd Sukri holds a Bachelor Degree of Science


in Petroleum Engineering from the West Virginia University, United States
of America.

Norarnizar has been in the gas industry for more than 29 years since
he began his career as a Project Engineer in Gas Processing Plant Project
in 1984. He was involved in the design and project implementation of gas
processing facilities.

Upon graduation, he started his career as a Service Engineer with


a drilling company serving Esso Production Malaysia Inc and
Sarawak Shell Berhad. His career in PETRONAS started in 1991
as a Shift Supervisor in PETRONAS Gas Berhad where he was involved
in the project implementation of several gas plants. In 1997, he was
assigned to the project engineering, construction, commissioning and
operations at CUF. Prior to his current position, he was assigned to
Gas Processing Plant B as Senior Manager of Plant Operations.

Norarnizar has acquired vast experience in the gas transmission operation


from his assignment in PETRONAS Gas Berhad, assuming the positions
of Pipeline Executive, Regional Manager and finally as Senior Manager,
Operation in 2005. Prior to his appointment to the current position, he
was the Senior Manager of Operation Engineering Department, TOD.

Mohd Sukri also serves as a Director for Kimanis Power Sdn Bhd
and Industrial Gases Solutions Sdn Bhd.

PETRONAS GAS BERHAD (101671-H)

29

Ir. Hudal Firdaus bin Dimyati


Head, LNG Regasification Division
Malaysian (age 49)

Ahmad Nawawi bin Mohd Yatim


General Manager, Technical and Facilities Development
Division (TFDD), Malaysian (age 49)

Appointed as Head of LNG Regasification Division


in January 2011.

Appointed as General Manager, TFDD


in January 2011.

Skills and Experience: Ir. Hudal Firdaus holds a Degree in Civil


Engineering from the University of Toledo, Ohio, United States of America.

Skills and Experience: Ahmad Nawawi holds a Degree in Mechanical


Engineering from University of New Brunswick, Canada.

Ir. Hudal Firdaus joined PETRONAS in September 1993 as Deputy Project


Services Manager of OGP Technical Services Sdn Bhd after working in a
multinational oil and gas company for six years.

Ahmad Nawawi joined PETRONAS Gas Berhad in October 1987 as a


Trainee Engineer and was then appointed as a Mechanical Engineer for
the Gas Processing Plant (GPP) 2 and 3 Project in the following year.
In 1993, he was reassigned by PETRONAS to OGP Technical Services
Sdn Bhd for the GPP 5 and 6 Project, the Propane Dehydrogenation
Project and the District Cooling Plant Projects.

Ir. Hudal Firdaus was involved in the implementation of various cross


border pipeline projects in Malaysia, Thailand and Sudan. In 1999,
he served as an Audit Manager in the Group Internal Audit Division,
PETRONAS and later as a Senior Manager where he was responsible
for the audits on gas and petrochemical companies within PETRONAS
Group. In 2003, he was appointed as Head of Business Development
under the Gas Business Unit, PETRONAS, and was responsible for
pursuing gas business opportunities in Myanmar and Thailand.
Ir. Hudal Firdaus joined PETRONAS Gas Berhad in April 2005 as Senior
Manager, Engineering Management Department, Technical and Facilities
Development Division (TFDD) and was later promoted to General Manager
of TFDD in January 2006.
He is a Director of Regas Terminal (Sg. Udang) Sdn Bhd, Regas Terminal
(Pengerang) Sdn Bhd and Regas Terminal (Lahad Datu) Sdn Bhd.
External Appointments:
Member, Board of Engineers, Malaysia
Member, Institution of Engineers, Malaysia

A decade later, he joined Gas Business Unit, PETRONAS, where he was


responsible for business development for the Indonesian market.
Ahmad Nawawi was appointed as Head of Project Engineering for
the Sabah-Sarawak Integrated Oil & Gas Project in 2006 prior to his
appointment in PETRONAS Gas Berhad in January 2011.

30

PETRONAS GAS BERHAD (101671-H)

Management Committees Profiles

Muhamed Ali bin Hashim Muhamed


Managing Director, Kimanis Power Sdn Bhd
Malaysian (age 55)

Wan Mohd Muzani bin Wan Muda


General Manager, Corporate and Commercial
Services Division (CCSD), Malaysian (age 47)

Appointed as Managing Director, Kimanis Power Sdn Bhd


in January 2009.

Appointed as General Manager, CCSD


in July 2012.

Skills and Experience: Muhamed Ali holds a Bachelor of Science (Hons)


in Civil Engineering from Middlesex Polytechnic, United Kingdom.

Skills and Experience: Wan Mohd Muzani holds a Bachelor of Science


in Chemical Engineering from California State University, Long Beach,
United States of America.

Muhamed Ali began his career in PETRONAS as a Project Engineer


after graduating in 1983 and his experiences include the management
of pipeline system integrity and plant constructions. He also has vast
experience in managing projects including the Gas Processing Plant 1,
Export Terminal, Peninsular Gas Utilisation 2 and Malaysia LNG Tiga
Project.
Prior to his current position, Muhamed Ali headed the Business
Development of LNG in the Gas Business Unit, PETRONAS in which
he was responsible for managing the entry for PETRONAS global LNG
ventures through partnerships or acquisitions. Among the ventures he
developed are Egyptian LNG and Gladstone LNG. His LNG business
development scope covered India, Iran, Myanmar, China and Taiwan.

He started his career with PETRONAS in October 1988 as a Process


Engineer at the Plant Operations Division, PETRONAS Gas Berhad (PGB).
He spent most of his time in the plant, holding various positions in areas
of Plant Technical Services, Project Management and Production Planning
where he acquired in-depth experience in plant design and the operations
of a gas plant.
Wan Mohd Muzani was also involved in the start-up and commissioning of
Gas Processing Plant (GPP) 2, 3 and 4 and Plant Rejuvenation Project for
GPP 1. Prior to his current position, he was the Senior Manager, Business
Planning Department overseeing the business plan and budget and
business portfolio management for PGB.
Wan Mohd Muzani has since assumed the position of General Manager,
Technical Services, Malaysia LNG Sdn Bhd effective February 2013.

PETRONAS GAS BERHAD (101671-H)

31

Zilfalilah binti Abdul Aziz


General Manager, Human Resources Management (HRM) Division
Malaysian (age 45)

Intan Shafinas (Tuty) binti Hussain


Senior Legal Counsel and Company Secretary
Malaysian (age 40)

Appointed as General Manager, HRM Division


in January 2009.

Appointed as Company Secretary


in May 2012.

Skills and Experience: Zilfalilah holds a Degree in Computer Science


and Mathematics from the New Mexico Institute of Mining and
Technology, New Mexico, United States of America.

Skills and Experience: Intan Shafinas holds an LLB (Hons) from the
University of Leicester, United Kingdom and Certificate in Legal Practice
(Legal Profession Qualifying Board, Malaysia).

Zilfalilah began her career in PETRONAS in 1990 as a Management


Executive, where she was assigned to develop the Human Resource
Information System.

Prior to joining PETRONAS, Intan Shafinas had garnered five years of


banking experience having worked at several financial institutions in
Malaysia.

Since then, Zilfalilah has served in various capacities in the field of


human resource management, amongst others, the development of
the PETRONAS Leadership Dimensions, Leadership and Performance
Management System and employees reward programmes. She had also
served in Vinyl Chloride (Malaysia) Sdn Bhd, a subsidiary of PETRONAS
Chemicals Group Berhad.

Her career in PETRONAS started in 2001 as a Legal Executive with


the Petrochemical Business, PETRONAS. In 2007, she was attached
to the Corporate Services and Technology Department, Legal Division,
PETRONAS, providing legal advisory services in the area of intellectual
property and commercialisation of technologies. In January 2011, she was
appointed as Senior Legal Counsel of Corporate Services, PETRONAS.

Zilfalilah has since assumed the position of General Manager,


Human Resource Division, PETRONAS Chemicals Group Berhad,
effective March 2013.

Intan Shafinas then joined PETRONAS Chemicals Group Berhad in


August 2011 and was subsequently appointed as Senior Legal Counsel of
Legal and Corporate Secretariat Department, PETRONAS Gas Berhad, in
March 2012.
She currently holds several positions as Company Secretary for Regas
Terminal (Sg. Udang) Sdn Bhd, Regas Terminal (Pengerang) Sdn Bhd,
Regas Terminal (Lahad Datu) Sdn Bhd, Gas District Cooling (UTP) Sdn
Bhd, Industrial Gases Solutions Sdn Bhd, Kimanis Power Sdn Bhd and
Kimanis O&M Sdn Bhd.
External Appointment:
Member and Honorary Secretary, Board of Visitors, Prince Court
Medical Centre

32

PETRONAS GAS BERHAD (101671-H)

Management Committees Profiles

Abdul Rashid bin Mukri


Senior Manager, Business Planning Department (BPD)
Malaysian (age 46)

Helmi bin Zaidan


Senior Manager, Health, Safety and Environment
Department (HSE), Malaysian (age 39)

Appointed as Senior Manager, BPD


in July 2012.

Appointed as Senior Manager, HSE


in February 2012.

Skills and Experience: Abdul Rashid holds a Bachelor of Engineering


(Civil) from the University of Western Australia, Australia.

Skills and Experience: Helmi holds a Bachelor of Science in Petroleum


Engineering from the University of Wyoming, United States of America and
Master of Science in Process Safety and Loss Prevention from University
of Sheffield, United Kingdom.

Abdul Rashid started his career in 1991 with PETRONAS Gas Berhad as a
Developmental Executive in Construction Management. He acquired nine
years of Project Management experience working in various areas from
Front End Engineering Design to Planning and Control. Subsequently,
he spent two years with Australian Pipeline Trust in pipeline capacity
marketing for Moomba to Sydney Pipeline and Central West Pipeline in
New South Wales, Australia.
Abdul Rashid then spent the next ten years of his career in Gas Business
Unit, PETRONAS, holding various positions where he acquired experience
in Joint Venture Management, Gas Monetisation, Unconventional Gas and
Business Development.

Helmi began his career with PETRONAS in 1996 as a Developmental


Executive. He was then involved in the Gas Processing Plant 5 and 6
startup as a Shift Supervisor. The next 15 years of his career in Plant
Operations Division (POD) saw him holding various positions where he
acquired experience in plant operations, process design, turnaround
planning and process safety. Prior to his current position, he was the HSE
Manager for POD.

PETRONAS GAS BERHAD (101671-H)

33

Karima binti Mohd Noor


General Manager, Finance Division, up to August 2012
Malaysian (age 37)

Skills and Experience: Karima holds a Degree in Economics, majoring


in Accounting and Finance from the London School of Economics and
Political Science, University of London, United Kingdom. She is also a
member of the Malaysian Institute of Certified Public Accountants and
Malaysian Institute of Accountants.
Prior to joining PETRONAS, she pursued her articleship with Hanafiah
Raslan & Mohamad. She began her career in PETRONAS in February
2002 as a Finance Executive in PETRONAS Carigali Sdn Bhd and in the
ensuing years, she served as an analyst in the Office of the President.
She joined PETRONAS Gas Berhad in December 2008 and held various
positions in the Financial and Management Accounting Department within
the Finance Division.
Karima was appointed as the General Manager of Finance Division from
February 2011 up to August 2012. She has since assumed the position
of Head of Group Planning and Performance, Finance and Accounts
Services Department of PETRONAS effective September 2012.

34

Business Review
Chairmans Statement

36

CEOs Business Review

40

Embracing
Challenges

PETRONAS GAS BERHAD (101671-H)

The road to growth is studded with challenging milestones.


At PGB we have taken on challenging new projects to expand
our business portfolio, knowing full well that our mental strength,
capability and endurance will be tested by entering uncharted territory.
While we have experienced both triumphs and tribulations, we are
determined to stay the course.

99.99%

99.9%

99.5%

PGU Pipeline Reliability

POD Sales Gas


Reliability

CUF Electricity
Reliability

36

PETRONAS GAS BERHAD (101671-H)

In this challenging year, our people


have exhibited resilience and resolve
to overcome tremendous challenges
in project execution, while ensuring
that day-to-day operations continue
to run efficiently.

PETRONAS GAS BERHAD (101671-H)

37

Chairmans
Statement
The financial year ending 31 December 2012 was challenging for the
Company. In the operations, we did well generating a profit before tax
of RM1,844.5 million and profit after tax of RM1,397.1 million on revenue
of RM3,576.8 million. The results were enhanced by gains made from
partial sale of PETRONAS Gas Berhads equity in an associate company,
Gas Malaysia Berhad.
The Company unfortunately experienced delays in the construction
of the Melaka Regasification Terminal and the rejuvenation and revamp
of Gas Processing Plant (GPP)3 and GPP2 (collectively known as
Plant Rejuvenation and Revamp 2 Project or PRR2).
The Board is recommending a final dividend of 35 sen per share. In addition
to the interim dividend of 15 sen per share paid in December 2012,
the total gross dividend for the year is 50 sen per share. This represents
a dividend payout ratio of 70.4%.

38

PETRONAS GAS BERHAD (101671-H)

Chairmans Statement

Operations Gas Processing and


Transmission
As always, the Company strived to
maintain operational excellence at world
class standards. Unfortunately, a fire
incident resulting in a fatality and several
injuries caused delay in the completion of
the rejuvenation and revamping of GPP3
and GPP2. Fortunately though, the delay
has not caused interruption of gas supply
to the nation.
Our gas pipeline network reliability once
again, exceeded world class standard at
99.99%.
Operations Utilities
The Companys Centralised Utility Facilities
(CUF) in Kertih and Gebeng continued
to register revenue growth on the back
of stronger selling prices and higher
sales volume of electricity and steam to
customers.
Plant Rejuvenation and Revamp
I have communicated in the previous
report that the Company is undertaking
works to ensure that the plants integrity
and reliability can be sustained for another
20 years of operations.

The replacement, refurbishment,


upgrading and modification of the
Companys GPP under the contract
awarded in 2010 is on-going and will be
completed this year, albeit there is a slight
delay.
I am also pleased to inform members
that during the year, we have awarded
Engineering, Procurement, Construction
and Commissioning (EPCC) contract for
our Plant Rejuvenation and Revamp 4
(PRR 4) project. It involves the rejuvenation
and revamp activities of GPP4, Kertih
Compressor Station B and Dew Point
Control Unit 2. The project is planned to
be completed in 2015.
Regasification Terminals
The Melaka LNG Regasification Terminal
was planned to be operational by
September 2012. Unfortunately due
to construction issues, the project is
now delayed and is expected to be
commissioned only by the second quarter
of 2013.
The expected positive impact from this
business will only be now reflected in the
Companys earnings beginning second
half of 2013.

The progress of the other two LNG


Regasification Terminals at Pengerang,
Johor and Lahad Datu, Sabah have
been slow, in line with the progress of
Refinery and Petrochemical Integrated
Development project and Lahad Datu
Power Station.
People Our Most Valuable Resource
PETRONAS Gas Berhad (PGB) success
would not have been possible without the
support of its dedicated and committed
pool of talents.
In this challenging year, our people
have exhibited resilience and resolve
to overcome tremendous challenges in
project execution, while ensuring that
day-to-day operations continue to run
efficiently.
With a view of PGBs future growth and
expansion, the Company will continue
to place an emphasis on capability
development of its existing workforce
through training and coaching. The
Company will supplement these efforts
by recruiting capable and experienced
external talents. The success of these
efforts will ensure that PGB has the right
talent pool to propel its business further in
years to come.

PETRONAS GAS BERHAD (101671-H)

39

We take HSE seriously. We recognise


that a safety-oriented mindset must be
embraced by all.

Corporate Social Responsibility (CSR)


The Company recognises the importance
of engaging with the local community
wherever we operate. Our key CSR
initiatives have always focused on the
participative involvement of our staff,
reaching out to the communities around
our operations, especially through
programmes focusing on educational
improvement and community welfare.
In the year under review, CSR activities
such as the acclaimed Program Bakti
Pendidikan PETRONAS (PBPP) allowed
employees to volunteer their energy
and knowledge towards encouraging
better academic achievement and selfconfidence amongst primary school
students in selected schools surrounding
our operations.
I am pleased to note that during
FY2012, we have experienced notable
improvements in the academic
performance of primary school students
adopted under our PBPP programme.
It is our sincere hope that the mentoring
and encouragement provided by our staff
through the programme will place these
young students on the path to a brighter
future.

Additionally, we continued to carry


out a number of community welfare
activities under the umbrella of our CSR
programme, which focuses on assisting
less fortunate members of society, such as
those in the lower income groups as well
as orphans.
Health, Safety and Environment (HSE)
We take HSE seriously. We have devoted
a lot of time and resources towards
embedding a safety-driven culture
amongst our people. Notwithstanding
these efforts, we regrettably experienced
one fatality involving a contractors worker.
We recognise that a safety-oriented
mindset must be embraced by all. As
part of this effort, we have introduced
programmes which are preventive and
corrective in nature, as well as initiated
efforts to enhance HSE leadership and
ownership amongst our people and
contractors.
We certainly wish to improve our HSE
performance to ensure that the regrettable
incidents such as those experienced
during the year can be prevented in the
future.

Recognition
As usual, I would like to take this
opportunity to express my sincere
thanks to all our stakeholders for their
continuous support and confidence in
PGB. My deepest appreciation goes to the
Board of Directors for their guidance and
counsel, as well as to the Management
and employees of PGB for their loyalty,
dedication and strong sense of ownership
which has helped us overcome the odds,
time and again. My gratitude also goes to
the various authorities for their support,
cooperation and assistance provided.

Datuk Anuar Ahmad


Chairman

40

PETRONAS GAS BERHAD (101671-H)

CEOs
Business Review
INTRODUCTION

Embracing Progress
Financial Year 2012 was a watershed year for PETRONAS Gas Berhad (PGB) as we continue to chart the
Companys course along the strategic path for growth initiated a number of years ago.
As a Company that has established a firm foundation in the gas processing and transmission business,
we are aware of the fact that the Company must look beyond its conventional business model in order to
generate new sources of revenues for the future.
Based on this insight, PGB has diversified its business model to venture into liquefied natural gas (LNG)
regasification, power generation and Third Party Access (TPA) as a possible means of injecting new vigour
into the Company.
Admittedly, the path to progress is not without its challenges. In the year that was, we continue to be united
in our resolution to steer PGB through various project challenges and issues. While there were moments when
the complexity of the challenge can be confounding, even to the most experienced hands, our determination
to do our best and see things through have helped us arrive to where we are today.
The tough lessons and pain we faced during the year of growth have made us much wiser and more
determined to reach our promised destination.
We remain committed to the pursuit of growth and embracing progress that will not only sustain PGBs
business but will also ensure the advancement of its business model to weather the challenges of an
ever-changing gas industry, whatever tomorrow brings.
The progress of our journey so far is detailed out in the following pages.

PETRONAS GAS BERHAD (101671-H)

41

We continue to be united in our


resolution to steer PGB through
various project challenges and issues.
Our determination to do our best and
see things through has helped us
arrive at where we are today.

42

PETRONAS GAS BERHAD (101671-H)

CEOs Business Review


Against the background of a challenging year, PGB
persevered and delivered commendable results for FY2012

FINANCIAL PERFORMANCE

FINANCIAL HIGHLIGHTS
Group Profit after tax
improved by 3.7% despite
decrease in revenue,
augmented by income from
partial disposal of stake in an
associate.
Earnings per share
attributable to shareholders
increased by 4.3% to 71.0
sen from 68.1 sen.
Successfully secured Islamic
Financing Facilities with a
nominal value of RM1.16
billion for the construction of
the Kimanis Power Plant.

OPERATIONAL
HIGHLIGHTS
Consistently performing at
world class standard for gas
pipeline reliability.
Kimanis Power Plant is on
track to be commissioned by
end of 2013.
Awarded Engineering,
Procurement, Construction
and Commissioning package
for PRR4 to Toyo Engineering
Corporation of Japan.

Delivering Value to Our


Stakeholders
During the year under review the
Company continues to deliver its
commitments as outlined under the 4th
Term Gas Processing and Transmission
Agreement (GPTA) with PETRONAS.
The GPTA provides for PETRONAS to
remunerate PGB with a Throughput Fee
(TF) for processing and transmitting gas to
PETRONAS customer.
While the agreement guarantees a stable
and reliable income stream for PGB, the
Company has always pride itself in its
ability to add further value and generate
spinoffs that will increase revenues and
enhance its profitability.
Challenges in the upstream continue
to limit the volume of feed gas supply
processed and transmitted through PGBs
system, impacting the scale of revenue
earned from the GPTA arrangement.
Furthermore, project challenges
experienced during the year under review
also delayed the introduction of new
income streams to PGBs revenue.
Against this background, PGB persevered
and delivered a commendable financial
performance for FY2012. The Group
recorded a revenue of RM3,576.8 million,
a decrease of RM79.5 million (2.2%) as
compared to the previous year mainly
due to lower revenue contribution from
gas processing, though partly negated
by higher sales of utilities and gas
transmission revenues.

During the year, the cost of revenue


decreased by 5.2% to RM1,806.8 million
from RM1,906.5 million previously. As a
result, the Group recorded a profit before
tax of RM1,844.5 million for the financial
year ended 31 December 2012, which is
an increase of RM60.7 million (3.4%).
The Groups profit before tax was also
augmented by the income generated from
the partial disposal of its stake in Gas
Malaysia Berhad, an associate company,
which generated a gain of RM100 million.
Profit after tax for the financial year under
review increased to RM1,397.1 million,
which is RM49.7 million and 3.7% higher
than the performance recorded last year.
Earnings per share attributable to the
shareholders of the Company increased
to 71.0 sen from 68.1 sen in the previous
year.
The Board of Directors is recommending
a final dividend of 35 sen per share under
the single tier system. Together with the
interim dividend of 15 sen per share
under the single tier system paid out on
20 September 2012, total gross and net
dividend for the financial year ended 31
December 2012 will amount to 50 sen per
share, which represents a dividend payout
ratio of 70.4%.

PETRONAS GAS BERHAD (101671-H)

43

BUSINESS SEGMENTS

Gas Processing and


Transportation Business
Sustaining Reliability against a
Challenging Background
The Companys Gas Processing Plants
(GPP) operated by our Plant Operations
Division (POD) in Kertih and Paka in
Terengganu experienced continued
challenges due to prolonged upstream
constraints which resulted in decreased
feed gas supply. During the year under
review, our GPPs processed an average of
1971 million standard cubic feet per day
(mmscfd) of gas.
Our Peninsular Gas Utilisation (PGU)
pipeline network also received 409
mmscfd of gas from the Malaysia-Thailand
Joint Development Area (MTJDA). Total
sales gas delivered to customers was
2,132 mmscfd.

Sustaining our business


PGBs effort to rejuvenate and revamp its plant will extend the life of the Companys capital assets for
many years to come, ensuring continued reliability and operability.

44

PETRONAS GAS BERHAD (101671-H)

Despite facing a number of challenges


during the year, the Company continued
to sustain its plant operations at
commendable standards. GPPs sales gas
reliability was at 99.9% while its reliability
for ethane was at 90.1%. The reliability
for propane and butane was recorded at
91.7%
The Company also managed to sustain
its pipeline reliability above world class
average, chalking 99.99% for the year.

Utilities Business
Generating Higher Value
Our Centralised Utility Facilities (CUF)
plants in Kertih, Terengganu and Gebeng,
Pahang continued to deliver relatively
good performance, despite experiencing
some plant-related issues during the year.
Notwithstanding this, CUF registered a
commendable 10% revenue growth on the
back of higher volumes of electricity and
steam sales, and higher realised product
prices.
CUF charted 94.9% reliability for steam,
95.9% reliability for industrial gases as well
as 99.5% reliability for electricity during the
year under review.

On the path to future growth


PGBs foray into new businesses such as LNG regasification (above) and power generation (below)
is expected to bring on new revenue streams for the Group.

PETRONAS GAS BERHAD (101671-H)

45

CEOs Business Review

PLANT REJUVENATION AND REVAMP

Sustaining Operability and Asset


Integrity
During the year under review, the
Company experienced delays in
completing its Plant Rejuvenation and
Revamp project (PRR2) which comprises
the rejuvenation and revamp of facilities
in our GPP2, GPP3 and the Kertih
Compressor Station located in our GPP
Complex A in Kertih and the Export
Terminal (ET) Units 3 and 4 in Kemaman,
Terengganu.
Despite the above, we are working hard
to achieve our collective completion date
in late 2013 as planned. The completion
of the PRR is expected to sustain
PGBs plant reliability and integrity for an
additional 20 years while generating major
savings in capital investment.
As announced last year, PGB has also
embarked on the PRR4 project, which
will involve GPP4, Kertih Compressor
Station B (KCS B) and Dew Point
Control Unit 2 (DPCU2) within GPP
Complex A, in Kertih, Terengganu. The
Engineering, Procurement, Construction
and Commissioning (EPCC) package has
been awarded to a consortium led by Toyo
Engineering Corporation of Japan. The
project is expected to be completed by
2015.
LNG REGASIFICATION TERMINAL
PROJECT

Adding a New Node for Growth


PGB is in the final stages of completing
the development of Malaysias very first
offshore LNG Regasification Terminal
(RGT) in Sungai Udang, Melaka, although
we have been experiencing delays that

was contributed by construction issues.


The completion of the project will ensure
the security of gas supply to Peninsular
Malaysia, as well as meet the increasing
demand from consumers in the power
generation and manufacturing sectors.
As announced during the financial
year, the project is expected to be
commissioned by second quarter
of FY2013.
There was no material effect on PGBs
earnings and net assets for the year
under review resulting from the later
commencement of operations at the RGT.
Resulting from this, the expected positive
impact from the RGT business will only
be reflected in PGBs earnings in the next
financial year ending 31 December 2013.
OTHER PROJECT UPDATES

Weathering Challenges
During the year under review, PGB
continued to provide project management
services for the construction of the
Sabah-Sarawak Gas Pipeline carried out
by contractors for PETRONAS Carigali
Sdn Bhd, which is expected to undergo
commissioning in 2013.
This effort showcases our capability
in undertaking the development and
construction management of a key gas
infrastructure project along some of the
most challenging terrains and operating
environments in Malaysia, leveraging on
our previous experience in developing the
Peninsular Gas Utilisation system.
I am pleased to inform that our jointventure effort with Yayasan Sabah,
Kimanis Power Sdn Bhd, has reported
commendable progress with the
construction of its 300MW gas-fired
power plant located in Kimanis, Sabah.

The plant is expected to begin supplying


its first 100MW of electricity by the end of
2013 providing much needed additional
electricity supply to support the states
economic growth and social well-being.
Last year, Kimanis Power also successfully
secured Islamic Financing Facilities of
a nominal value of RM1.16 billion. The
first series of the Sukuk programme has
been issued on 8 August 2012 with an
aggregate nominal value of RM860.0
million.
HEALTH, SAFETY AND
ENVIRONMENT (HSE)

Strengthening Our Commitment


to Safety
For the year under review despite our
aspiration to raise our focus on HSE,
we regret to inform that our projects
experienced some incidents that impacted
our HSE performance. We recorded
Lost Time Injury Frequency (LTIF), Total
Reportable Case Frequency (TRCF) and
Fatal Accident Rate (FAR) rating of 0.19,
1.3 and 4.67 respectively. We regrettably
experienced one fatality by one of our
contractors during activity carried out
in our GPP, during a fire incident. Since
then, we have doubled our efforts to
strengthen our internal safety culture as
well as ensuring that the zero tolerance
mindset to safety is also emulated by the
contractors working on our projects.
Regardless of all the challenges faced by
PGB, we continue to work hard to ensure
that HSE standards and practices at all
our areas of operations are fully complied
with. We are also working with all safety
regulatory bodies to ensure that necessary
steps are taken to provide a better safety
measure to prevent any incidents from
recurring in the future.

46

PETRONAS GAS BERHAD (101671-H)

CEOs Business Review

CORPORATE RESPONSIBILITY IN
THE ENVIRONMENT

Sustaining the Balance


As a responsible corporate citizen
that gives due focus to the economic,
social and environmental aspects of
our operations, PGB continues to
support programmes which promote
environmental awareness and
sustainability.
Our Environmental 4G (Green Care,
Green Mind, Green Ownership and Green
Growth) Program is still going strong. For
the year under review, we turned our focus
to waste minimisation, aimed at reducing
the total amount of scheduled wastes
generated in 2012.
Our waste minimisation efforts not only
ensured that less waste is being disposed,
it also translates to financial savings for the
Company, as costly waste disposal fees
can be reduced.
The positive impact of our efforts has not
gone unnoticed as PGB was also invited
to share our 4G experience and success
stories during the PETRONAS Groups
Environmental Community of Practice
(COP), which is a testament to the
strength of the program.

Further to this, PGB staff also contributed


their bit to the environment by organising
two mangrove conservation campaigns
which involved the replanting of mangrove
seedlings at identified areas. This is to
ensure the continued preservation of
mangrove areas as natural habitats for
rare flora, fauna and aquatic life species,
as well natural safeguards against
coastal erosion. The campaigns were
held at Kampung Mercang, in Marang,
Terengganu on 14 July 2012 and later
at Kuala Selangor National Park on 15
December 2012.
As part of our efforts to promote a healthy
lifestyle amongst our staff, PGB carried out
a Mass Health Screening Program for all
PGB permanent staff from March to June
2012. The results were shared with all staff
starting December 2012. The analysis
of the results will be used to plan healthrelated programs for 2013.
PGB also embarked on the Fitness to
Work (FTW) initiative with a special focus
on our Emergency Response Team (ERT)
members in 2012. This is to ensure that
our ERT members,who are often the first
responders during emergencies, are fit
and able to carry out their responsibilities,
especially under the stressful conditions
of an emergency. Under this program, all
ERT members are required to undergo
and pass a fitness assessment test.

CORPORATE RESPONSIBILITY IN
THE WORK PLACE

In the Pursuit of High


Performance
In PGB, we consider our people as our
most valued and cherished asset. During
the year, we continue to work towards
enhancing the skills and capability of our
existing talent pool, as well as attracting
experienced and motivated professionals
from the industry to become part of our
family. The combination of these initiatives
is expected to enhance PGBs standing as
a high-performing organisation.
In 2012, our efforts were focused on
integrating succession planning and
mobility to channel the energies of our
best talents to the most critical business
undertakings being carried out by the
Company. At the same time, this will
ensure the continuity of our operations,
thanks to the pipeline of talents groomed
to succeed personnel who have been
appointed to other positions within PGB.
Also critical to the success of PGB during
the year was our internally-developed
leadership development efforts. Signature
initiatives such as our Building Leadership
Programme for our budding leaders have
allowed PGB to nurture and grow our
tree of leadership and capability. This
sustained effort has borne fruit in the form
of many capable and talented individuals
much sought after within the PETRONAS

PETRONAS GAS BERHAD (101671-H)

47

Group to fill critical positions and lead key


projects. Based on the success seen so
far, we will continue to nurture this tree
not only for PGBs business continuity
but also for the benefit of the rest of
the PETRONAS Group,to produce a
pipeline of talent who are able to lead the
Corporation into its next phase of growth.
Additionally, we have organised a number
of programmes aimed at enhancing the
hard and soft business skills of our staff,
as well as allow leaders to share their tacit
knowledge with budding talents in the
Group.
Pulling all of this together is our regular
internal communication sessions with
staff. We continue to hold extensive
communication sessions every quarter
to give our people an insight into PGBs
financial and operational performance in
the preceding quarter, as well as to rally
them to improve business performance
and delivery, moving forward.

People are at the heart of our success


We continue to work hard to inculcate a safety-oriented culture at the workplace in PGB. (above)
Constant communications is the key towards ensuring that we reach our business goals. (bottom left)
Our leaders invest time and effort to nurture and develop the capability of our young staff. (bottom right)

48

PETRONAS GAS BERHAD (101671-H)

CORPORATE RESPONSIBILITY IN
THE COMMUNITY

Sharing our Success


We have always believed that it is our
responsibility to try and make a difference
in the lives of communities surrounding
our extensive operations. Thus, PGBs
Corporate Social Responsibility (CSR)
programmes have acted as bridge
between the Company and the larger
community - allowing our employees to
assist others through education-based,
as well as community welfare initiatives,
devoting their time, resources and
knowledge towards the betterment of all.
Through our flagship Program Bakti
Pendidikan PETRONAS (PBPP), we
reached out to standard, four, five and
six students from selected schools from
around our operations to help them
improve their academic performance in
subjects such as Mathematics, English
and Science, through tuition classes and
Fun Learning activities.

Sharing our success


We place an emphasis on developing upgrading the technical capability of our staff. (above)
Constant communication between the management and employees allows us to cascade key messages effectively. (bottom left)
Our CSR programmes allow us to form closer bonds with the community. (bottom right)

PETRONAS GAS BERHAD (101671-H)

49

CEOs Business Review

Throughout 2012, PGB continued to


support the programme in four schools
namely Sekolah Kebangsaan Santong in
Paka, Terengganu; Sekolah Kebangsaan
Batu Anam in Segamat, Johor; Sekolah
Kebangsaan Pinang Tunggal in Kepala
Batas, Pulau Pinang; and Sekolah
Kebangsaan Sungai Baging in Kuantan,
Pahang.
Since the introduction of this programme
in 2006 to date, more than 1,000 students
have benefited from the tuition classes
sponsored by PGB, as well as the Fun
Learning sessions conducted by PGBs
volunteer-facilitators.
I am pleased to note that during the year,
PGB saw the graduation of our fifth batch
of PBPP students. Of the total of 101
students under the programme who sat
for the UPSR 2012 Examination, some
71.3% have passed the examination. Of
this total, some 13 students scored 5As,
12 students scored 4As and a remaining
12 students received 3As. I am truly
delighted with this achievement as its
shows that our staffs voluntary efforts
to motivate and nurture these young
students have paid off handsomely.

In addition to the PBPP, our people have


also carried out numerous staff-driven and
staff-led CSR activities, aimed at assisting
the less fortunate members of our
community. In line with our slogan Bakti
Dihulur, Kasih Disemai which means
Kindness Extended, Affection Nurtured
we have reached out to the communities
around our operation centres by carrying
out CSR activities almost on a weekly
basis involving the elderly, the physically
challenged, single mothers and orphans
throughout the country. Over and above
the funds earmarked by the Company
towards realising these programmes,
our personnel contributed approximately
RM150,000 of their own personal
donations to sustain this effort.
RECOGNITIONS

Credit for a Job Well Done


During the year, PGB clinched a number of
awards, attesting to the recognition given
by the authorities and regulatory bodies
towards various efforts taken to raise
safety standards and practices, as well as
enhance our operations excellence as a
premier gas and utility company.
On the HSE front, PGB won eight awards
conferred by the Malaysian Society for
Occupational Safety and Health (MSOSH)
at the MSOSH Awards for the year 2011:

1 Grand Award won by Plant


Operations Division
1 Gold Merit and 3 Gold Class
1 Award won by Transmission
Operations Division
1 Gold Merit Award and 1 Gold Class
1 Award won by Centralised Utility
Facilities
1 Gold Class 1 Award won by
Technical and Facilities Development
Division

PGBs Transmission Operations Division


also won the 2011 National Occupational,
Safety and Health (OSH) Excellence
Awards for the Gas Utilities Category.
PGB also sustained its dominance by
clinching the Best Annual Report in
the Industrial Products and Technology
category of the National Annual Corporate
Report Award (NACRA) for the third
consecutive year, attesting to the high
level of disclosure and quality of reporting
exhibited in its annual report.
APPRECIATION

A Note of Appreciation
On behalf of the management, I would
like to take this opportunity to put on
record my sincere appreciation to all our
employees who have toiled day and night,
at our plants, facilities and project sites
throughout Malaysia for their relentless
efforts and strong commitment to PGB
throughout the year. Their undaunted
spirit, patience in the face of adversity
and willingness to perform above and
beyond the call of duty has allowed this
Company to establish a firm foundation
and progress tremendously over the past
three decades.
I would also like to thank our Chairman
Yang Berbahagia Datuk Anuar bin Ahmad
for his guidance, stewardship and support
to PGBs management in dealing with
one of the most challenging periods in
our Companys history. His guidance
and understanding has given us the
confidence to stay the course and ensure
that the Company emerges stronger and
more robust as we move forward.

50

CEOs Business Review

The year under review also saw some


changes in the composition of our
Management Committee, as old faces
move on to other growth opportunities,
and new faces arrive, bringing fresh
insights and ideas that will continue to
invigorate our internal pool of creativity as
we move forward.
In this vein I would like to thank En Rashid
bin Muhamad, Pn Noryati binti Mohd Noor,
and Cik Karima binti Mohd Noor, who
have taken up other challenges elsewhere
within the PETRONAS Group, as well as
En Md Nasser bin Abdullah who retired in
mid-2012 for their excellent service and
contributions towards PGBs growth. I
also welcome their successors En Azlimi
bin Mohd Lazim, Pn Intan Shafinas (Tuty)
binti Hussain, Pn Aida Aziza binti Mohd
Jamaludin and En Wan Mohd Muzani bin
Wan Muda respectively.
Further to this, I would like to also express
my sincere thanks to our customers,
business partners, valued contractors,
Federal and State authorities, regulatory
bodies and agencies, as well as our parent
Company PETRONAS for the immense
trust, support and cooperation given
through the years. We hope to continue to
nurture a mutually beneficial relationship
that will stand the test of time.
My special note of thanks goes to our
shareholders who continue to place their
trust and confidence on our counter. We
pledge to work harder to return more value
to your investment in our Company.

Last but not least, the Company would


like to express its immense appreciation
to our esteemed Board of Directors
whose wisdom and penetrating insights
have allowed the management to steer
through challenging waters towards our
desired destination. We hope to continue
to benefit from their sound counsel as we
embrace progress in every aspect of our
efforts.
In our relentless pursuit of growth in 2012,
we faced challenges and growing pains
aplenty. While the year has been truly
challenging, I am proud to note that the
Company and its people have emerged
stronger, wiser and more determined to
meet future odds. We recognise that the
path to progress is long, winding and
hard, and this journey is only at its very
beginning. But we are determined to
complete what we have initiated and fulfill
the amanah entrusted upon us with the
best of our abilities In Sha Allah.

SAMSUDIN BIN MISKON


Managing Director/Chief Executive Officer

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

51

Strengthening our foundation and moving forward


Our plants integrity is critical to our business continuity. (above)
The development of our RGT in Melaka will allow us to tap into new opportunities for growth. (below left)
Our growth into power business extends our presence into a new area of the energy value chain. (below right)

52

PETRONAS GAS BERHAD (101671-H)

Embracing
Opportunities

Performance Review
Financial Review

54

Statement of Value Added

60

Performance of Shares

61

Financial Calendar

61

Supporting Progress

62

Powering Progress

64

Progressive Mindset

66

PGB in the News

68

Awards and Achievements

69

PETRONAS GAS BERHAD (101671-H)

53

Great opportunities lie ahead for those who are willing to embrace it. At PGB
we are ever willing to capitalise on new growth opportunities that will generate
greater value for our stakeholders. Our willingness to do things differently to
secure this value is the hallmark of our commercial success.

RM3,576.8
million

RM1,397.1
million

Revenue

Profit After Tax

70.4%
Dividend Payout Ratio

54

PETRONAS GAS BERHAD (101671-H)

Financial
Review
FINANCIAL RESULTS
HIGHLIGHTS FOR FY2012

RM3,576.8
million in Revenue
Revenue of RM3,576.8 million
for the year is sustained
by contribution from Gas
Processing and Gas
Transportation Segments.

RM1,397.1
million in Profit After Tax
Profit After Tax increased by
3.7% or RM49.7 million after
accounting for gains from partial
disposal of shareholdings in an
associate through IPO.

70.4%
Dividend Payout Ratio
The Board is recommending
a final dividend of 35 sen per
share. Including interim dividend
of 15 sen per share paid in
December 2012, the gross
dividend per share for the year
is 50 sen.

RM13,462.2
million in Total Assets
Total Assets of the Group
increased by RM2,715.7 million
in line with investments in
major growth projects and
rejuvenation and revamp of
the existing plants.

Overview
PETRONAS Gas Berhad (PGB) Group
have changed its financial year end from
31 March to 31 December effective
from the previous reporting period in
accordance with PETRONAS Groupwide
practice to align its financial year to
calendar year. To allow comparable review
of performance in terms of operations and
business activities, PGB Groups financial
performance for the year ended
31 December 2012 is compared against
the performance of the last 12 months
from 1 January 2011 to 31 December
2011 (FY2011) which combines PE2011
and Quarter 4, FY2010/11.
The Group delivered a solid financial
performance for the year ended
31 December 2012 (FY2012) on the back
of sustainable revenue streams from gas
processing and transportation businesses,
amidst management focus on growth
initiatives.
We recorded profit after tax of
RM1,397.1 million, representing an
increase of RM49.7 million or 3.7% from
RM1,347.4 million in FY2011.

Revenue
In the year under review the Group
recorded revenue of RM3,576.8 million,
a reduction by RM79.5 million (2.2%)
from RM3,656.3 million recorded in
FY2011 primarily due to lower gas

processing revenue (GPR) by


RM206.7 million (12.0%) negated by
higher sales of utilities by RM86.1 million
(10.0%) and gas transportation revenue
(GTR) by RM41.1 million (3.8%).
The decrease in GPR by
RM206.7 million (12.0%) was mainly
contributed by lower performance based
structure (PBS) income as a result of
lower volume exported for both propane
and butane in line with the decrease in
production of these liquid by-products
by 13.4% and 14.2% respectively.
The declined production of these liquid byproducts was contributed by composition
in the feedgas received from domestic gas
fields. The impact of lower volume was
however cushioned by improved realised
prices of propane and butane.
The GPR decrease was offset by
an increase in utilities revenue by
RM86.1 million (10.0%) from
RM860.1 million to RM946.2 million
mainly attributable to higher revenue
from electricity, steam and industrial
gases, driven by higher consumption
by customers and full year effect of the
upward revision in the utilities prices in
line with the increase in fuel gas price
effective 1 June 2011. Under the sales
and purchase agreements between
PGB and its customers, any increase
in fuel gas cost will be passed through
to the customer via price adjustment.

PETRONAS GAS BERHAD (101671-H)

55

Revenue by Segment
RM million
1,511.2

FY2012

Gas processing

Cost of Revenue
Cost of revenue for the Group decreased
by RM99.7 million (5.2%) from
RM1,906.5 million in FY2011 to
RM1,806.8 million in FY2012. The
decrease was mainly due to impairment
of certain plant and equipment made in
FY2011 amounting to RM90.7 million,
lower staff cost by RM50.4 million and
lower inventory written off by
RM27.2 million. However, this was
negated by higher fuel gas cost by
RM59.6 million due to the full year effect
of the increase in fuel gas price.

Gross Profit
Gross profit for the Group in the year
under review was higher by
RM20.2 million (1.2%) from
RM1,749.8 million to RM1,770.0 million.

FY2011

1,078.3

1,119.4

During the year, PETRONAS made


a higher capacity reservation for the
Peninsular Gas Utilisation (PGU) pipeline
by 24 mmscfd (1.2%) from 2,048 mmscfd
in FY2011 to 2,072 mmscfd in FY2012.
This resulted in the increase of GTR
by RM41.1 million (3.8%) from
RM1,078.3 million recorded in
the previous year.

1,717.9

860.1

946.2

Gas transportation

Utilities

Gross profit for gas transportation and


utilities segments increased by
RM165.2 million (24.5%) and
RM16.5 million (11.3%) respectively whilst
gas processing segment decreased by
RM161.5 million (17.4%).

Other Income and Administrative


Expenses
Other income and administrative expenses
for the Group was higher by
RM63.1 million. This was primarily
contributed by gains of RM100.0 million
arising from partial disposal of investment
in an associate, Gas Malaysia Bhd
(GMB) through initial public offering (IPO)
during the year under review offset by
higher other expenses by RM38.4 million
compared to FY2011.

Profit
The Group recorded higher profit before
tax by RM60.7 million (3.4%) from
RM1,783.8 million to RM1,844.5 million.
The Groups associate, GMB contributed
share of profit after tax of RM22.1 million
whilst the jointly controlled entity,
Industrial Gases Solutions Sdn Bhd (IGS)
contributed share of profit after tax of

RM1.8 million. The total share of profit


after tax of equity accounted associate
and jointly controlled entity amounted
to RM23.9 million, a decrease by
RM23.2 million (49.3%) compared to
FY2011 mainly resulting from partial
divestment of 5.2% of our interest in GMB
through IPO during the year.
The Groups subsidiaries, Kimanis Power
Sdn Bhd (KPSB), Regas Terminal
(Sg. Udang) Sdn Bhd (RGTSU) and
Regas Terminal (Lahad Datu) Sdn Bhd
registered losses of RM25.0 million,
RM21.2 million and RM17.6 million
respectively in relation to general and
administrative and other expenses during
the year. The other subsidiaries namely
Kimanis O&M Sdn Bhd and Regas
Terminal (Pengerang) Sdn Bhd did not
incur any significant profit or loss during
the year.
Tax expense at RM447.4 million was
higher by RM11.0 million (2.5%) compared
to RM436.4 million in FY2011. Effective
tax rate was at 24.6% compared to 25.1%
for the previous year. The effective tax
rate for the year under review is slightly
lower than the statutory corporate tax
rate of 25% mainly due to capital gain on
partial divestment of investment in GMB of
RM100.0 million which is not subjected to
income tax.

56

PETRONAS GAS BERHAD (101671-H)

Financial Review

Results by Segment

Assets

RM million

RM million
145.5

162.0

135.0

768.7

930.2

185.0 488.8

459.8
10,501.9

7,458.3

2,365.5
2,614.4

FY2012

FY2012

FY2011

FY2011

674.1

839.3

Gas processing

Gas transportation

As a result, the Group recorded profit after


tax of RM1,397.1 million, an increase by
RM49.7 million (3.7%) from
RM1,347.4 million recorded in the
corresponding year. Earnings per share
(EPS) for the Group increased by 2.9 sen
(4.3%) from 68.1 sen to 71.0 sen, with
1.2 sen attributed from our 14.8% interest
in GMB.

Dividends
During the year, the Company paid interim
dividend of 15 sen per share under
the single tier tax system amounting to
RM296.8 million. The Board of Directors
is recommending a final dividend of
35 sen per share under the single tier tax
system amounting to RM692.6 million
in respect of the financial year ended
31 December 2012. This, together with
the interim dividend, will result in total
gross and net dividend of 50 sen per
share, representing a dividend payout ratio
of 70.4% on the profit after tax attributable
to the shareholders of the Company
for the financial year ended
31 December 2012.

Segment Financial Performance


Gas Processing
The Gas Processing segment contributed
43.4% or RM768.7 million of the Groups
gross profit. Segment results dropped by

Utilities

Property, plant
and equipment

RM161.5 million or 17.4% compared to


FY2011 due to lower revenue by
RM206.7 million or 12.0% as
previously mentioned.

Cash and fund


investments

Investment in
associate and
jointly controlled entity

Others

11.3% in line with higher revenue,


partly offset by higher cost of utilities
and depreciation charges.

Assets
Gas Transportation
The Gas Transportation segment
continued to be the key contributor to
the Group, accounting for 47.4% or
RM839.3 million of the Groups gross
profit. Segment revenue for the year at
RM1,119.4 million, represents an increase
of RM41.1 million or 3.8% on the back
of higher transportation capacity booked
by customer. Segment results improved
by RM165.2 million or 24.5% mainly
due to one off impairment loss on asset
amounting to RM90.7 million last year
coupled with the aforesaid increase in
revenue.

The Groups total assets increased


by RM2,715.7 million (25.3%)
from RM10,746.5 million as at
31 December 2011 to RM13,462.2 million
as at 31 December 2012.
Property, plant and equipment
increased by RM3,043.6 million (40.8%)
from RM7,458.3 million as at
31 December 2011 to RM10,501.9
million as at 31 December 2012 mainly
as a result of further investments in major
growth projects and improvements to
maintain the integrity of the Groups assets
totaling RM3,735.8 million negated by
depreciation of RM663.1 million.

Utilities
The Utilities segment contributed 9.2% or
RM162.0 million of the Groups gross profit
on the back of RM946.2 million revenue.
Segment revenue was higher by
RM86.1 million or 10.0% compared
to FY2011 contributed by higher
consumption by customers and upward
revision in the utilities prices in line with
the increase in fuel gas price effective
1 September 2011. The Utilities segment
results improved by RM16.5 million or

Investment in associate decreased by


RM51.8 million (28.8%) to RM127.8 million
as at 31 December 2012 compared to
RM179.6 million as at 31 December
2011, mainly due to partial divestment
of investment in GMB through IPO of
RM44.5 million and after taking into
consideration dividend received of
RM29.4 million and share of profit in GMB
of RM22.1 million. Investment in jointly
controlled entity increased by
RM1.8 million (33.3%) to RM7.2 million

57

PETRONAS GAS BERHAD (101671-H)

Equities

Liabilities

RM million

RM million
122.3
950.8

86.5

115.8

146.5

2,102.4

1,978.7

444.7

1,978.7

458.3

FY2012

1,053.0

1,004.0

Borrowings

FY2012

FY2011

Deferred tax

Payables

as at 31 December 2012 as compared


to RM5.4 million as at 31 December 2011
as result of share of profit in IGS of
RM1.8 million.
Fund and other investments of
RM160.4 million comprise investments
in Malaysian Government Securities and
other unquoted securities held as at
31 December 2012.
The Group generated RM2.1 billion in
cash from operation. This was sufficient
to sustain the current year dividend
payment to the shareholders of
RM791.5 million and significant portion of
the Groups capital investments. During
the year, a subsidiary of the Group,
KPSB made a drawdown of
RM1.0 billion Islamic financing facilities
to finance its power plant project in
Kimanis, Sabah. Consequently, the
Groups cash and cash equivalents
decreased by RM163.8 million (6.9%)
from RM2,368.8 million as at
31 December 2011.

Liabilities
Total liabilities for the Group increased
by RM2,077.0 million (98.8%)
from RM2,102.5 million as at
31 December 2011 to RM4,179.5 million

Taxation

FY2011

6,578.7

7,188.2

Share capital

as at 31 December 2012. The increase


was mainly due to higher borrowings by
RM1,657.7 million (372.7%) and trade
and other payables by RM472.6 million
(105.6%).
The increase in borrowings was
attributable to issuance of Sukuk Series
1 based on the principles of Istisna and
Ijarah term financing of RM860.0 million
by KPSB and finance lease liabilities of
RM798.7 million assumed by RGTSU in
relation to the charter hire of two floating
storage units at LNG Regasification
Terminal in Sg. Udang, Melaka.
The increase in trade and other payables
by RM472.6 million (105.6%) was in line
with increase in capital expenditure to
support the Groups growth projects.

Equity
Total equity for the Group attributable to
the shareholders of the Company as at
31 December 2012 increased by
RM609.5 million (7.1%) from
RM8,557.4 million as at 31 December
2011 to RM9,166.9 million. The increase
was mainly contributed by profit
attributable to the shareholders of the
Company of RM1,405.2 million, negated
by dividend payment of RM791.5 million.

Reserves

Non-controlling interests

The non-controlling interests contributed


further to the increase in equity by
RM29.3 million (33.9%) from
RM86.5 million as at 31 December 2011
to RM115.8 million as at 31 December
2012. The non-controlling interests mainly
consists of the minority shareholders
proportion of the share capital and
reserves of KPSB.

Significant Event
On 10 September 2012, the Company
entered into a Shareholder Agreement
with Sabah Energy Corporation Sdn
Bhd for the purpose of undertaking the
construction and development of the
LNG Regasification Facilities in Lahad
Datu, Sabah (Facilities). RGTLD will be
responsible for the overall coordination
and strategic management of the project
from the development stage and will also
own, operate and maintain the Facilities
with an expected capacity of 0.76 million
tonnes per annum.

58

PETRONAS GAS BERHAD (101671-H)

Financial Review
Group Financial Performance
RM million
3,576.8 3,656.3

1,806.8 1,906.5

1,844.5 1,783.8
1,397.1

Revenue

Cost of Revenue
12 months ended 31.12.2012

Profit Before Tax

1,347.4

Profit After Tax

12 months ended 31.12.2011

OPERATIONAL HIGHLIGHTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER
12 months ended
31.12.2012
(mmscfd)

12 months ended
31.12.2011
(mmscfd)

1,971

1,915

56

2.9

409

355

54

15.3

Total gas injected into the system

2,380

2,270

110

4.9

Total sales gas delivery


to customers

2,132

1,976

156

7.9

12 months ended
31.12.2012
(MT)

12 months ended
31.12.2011
(MT)

Ethane production

1,185,222

1,282,652

(97,430)

(7.6)

Propane production

1,124,454

1,342,329

(217,875)

(16.2)

745,281

890,482

(145,201)

(16.3)

Utilities

12 months ended
31.12.2012

12 months ended
31.12.2011

Electricity (kwh)

1,965,491,245

1,880,053,728

85,437,516

4.5

4,414,512

4,411,926

2,586

0.1

639,260,832

615,212,510

24,048,323

3.9

Gas Processed

Feedgas processed at the


gas processing plants
Sales gas delivery from JDA

Liquid by-products

Butane production

Steam (MT)
Industrial Gases (Nm3)

Increase/(Decrease)
(mmscfd)
%

Increase/(Decrease)
(MT)
%

Increase/(Decrease)
Volume
%

PETRONAS GAS BERHAD (101671-H)

59

Net Dividends Per Share


sen

33.7

35.0

35.0

25.0

35.0*

11.3

15.0

15.0

15.0

15.0

31.3.2010

31.3.2011

9 months ended
31.12.2011

12 months ended
31.12.2012

31.3.2009

12 months ended

Interim Dividend

Final Dividend

* To be approved at the Companys Thirtieth Annual General Meeting on 16 May 2013.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


FOR THE FINANCIAL YEAR ENDED 31 DECEMBER

12 months ended
31.12.2012
RM million

Group
12 months ended
31.12.2011
RM million

Gas processing revenue

1,511.2

1,717.9

(206.7)

(12.0)

- Throughput services

1,242.0

1,242.0

269.2

475.9

(206.7)

(43.4)

1,119.4

1,078.3

41.1

3.8

- Performance based structure income


Gas transportation revenue
Sale of industrial utilities

RM million

Variance
%

946.2

860.1

86.1

10.0

3,576.8

3,656.3

(79.5)

(2.2)

Cost of gas processing

(742.5)

(787.7)

45.2

5.7

Cost of gas transportation

(280.1)

(404.2)

124.1

30.7

Cost of industrial utilities

(784.2)

(714.6)

(69.6)

(9.7)

(1,806.8)

(1,906.5)

99.7

5.2

1,770.0

1,749.8

20.2

1.2

70.9

7.8

63.1

809.0

Revenue

Cost of revenue
Gross profit
Other income and
administrative expenses
Operating Profit

1,840.9

1,757.6

83.3

4.7

Financing costs

(20.3)

(20.9)

0.6

2.9

Share of profit after tax of accounted


associate and jointly controlled entity

23.9

47.1

(23.2)

(49.3)

1,844.5

1,783.8

60.7

3.4

(447.4)

(436.4)

(11.0)

(2.5)

1,397.1

1,347.4

49.7

3.7

71.0

68.1

2.9

4.3

Profit before tax/ Revenue margin

51.6%

48.8%

Profit after tax/ Revenue margin

39.1%

36.9%

Profit before tax


Tax expense
Profit after tax
Basic earnings per ordinary share (sen)

60

PETRONAS GAS BERHAD (101671-H)

Statement of Value Added

14%

15%
27%

33%
13%

13%

31.12.2012

31.12.2011

Group
40%

45%

To shareholders

Retained for reinvestment


and future growth

To employees

To government

Group

Revenue
Purchase of goods and services

12 months
ended
31.12.2012
RM mil

12 months
ended
31.12.2011
RM mil

3,576.8

3,656.3

(872.0)

(788.1)

2,704.8

2,868.2

Other Income and Expenses

223.0

150.1

Financing costs

(20.3)

(20.8)

Share of profit after tax of equity accounted associate


and jointly controlled entity

23.9

47.1

2,931.4

3,044.6

To employees Employment costs

393.4

398.1

To government Taxation

447.4

436.4

To shareholders Dividends

791.5

989.4

Value added

Value added available for distribution


DISTRIBUTION

Non-controlling Interest

(8.1)

(0.3)

Retained for reinvestment and future growth


Depreciation and amortisation

693.5

862.7

Retained profit

613.7

358.3

2,931.4

3,044.6

PETRONAS GAS BERHAD (101671-H)

61

Performance of Shares

For the Year


Ended 31 Dec

For the Year


Ended 31 Dec

2011

2012

2013

Highest price

15.64

20.50

19.90

Lowest price

11.10

14.70

17.28

Jan - Feb

Volume

Shares

Closing Price (sen)/


Composite Index
2,100

85,000
80,000
75,000
70,000
65,000
60,000
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

Jan
2012

1,900
1,700
1,500
1,300
1,100
900
700
500
300
100

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Composite Index

Dec

Jan
2013

Feb

Closing Price

Volume

Financial Calendar
FINANCIAL YEAR FROM 1 JANUARY 2012 TO 31 DECEMBER 2012

RESULTS

First Quarter ended 31 March 2012

Announced On

9 May 2012

Second Quarter ended 30 June 2012

Announced On

15 August 2012

Third Quarter ended 30 September 2012

Announced On

23 November 2012

Fourth Quarter ended 31 December 2012

Announced On

21 February 2013

Entitlement Date

4 September 2012

Paid On

20 September 2012

Entitlement Date

29 May 2013

Payable On

19 June 2013

DIVIDENDS
Interim

Final

NOTICE OF ANNUAL GENERAL MEETING

15 April 2013

THIRTIETH ANNUAL GENERAL MEETING

16 May 2013

62

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

63

Supporting
Progress
PETRONAS Gas Berhads tremendous
growth trajectory in the last few years
would not have been possible without the
support of our dedicated and resilient staff.
Our people are deeply involved in every
aspect of our business value chain and are
instrumental in pushing the boundaries of
our performance.
In order to support our leading edge in
talent management, we continue to place
an emphasis in developing the leadership
ability, mindset and capability of our
people through various programmes
which enhances their soft skills,
encouraging them to tap their inner
source of strength to deliver stronger
performance.

At the same time, we have put in place


specific initiatives that will allow our people
to develop multi-faceted capability in both
business and technical-based skill areas.
Through this effort, we hope to develop a
pipeline of future leaders who are equally
competent and at ease in the realm of
plant-based technical work, as well as
the commercial aspect of managing a
business.

PGB Staff Population


3,366 and counting, spread
over operations in Peninsular
Malaysia, Sabah and
Sarawak

64

PETRONAS GAS BERHAD (101671-H)

Powering
Progress
PETRONAS Gas Berhads decision to
embrace new business ventures naturally
led us to staking a foothold in the power
business, a natural extension of our
proven capability in the industrial utilities
business.
The development of the Kimanis Power
Plant (KPP) symbolises our commitment
to test the limits of our ability in project
development, as well as to grow
our presence beyond our traditional
geographical stronghold in Peninsular
Malaysia.
Situated in Kimanis Bay, Papar, Sabah,
the KPP is being developed by Kimanis
Power Sdn Bhd, a joint venture company
between PETRONAS Gas Berhad (PGB)
and NRG Consortium (Sabah) Sdn Bhd,
the energy arm of Yayasan Sabah.

The 300MW gas-fired power plant is part


of the larger Economic Transformation
Programme initiatives introduced to spur
economic growth throughout Malaysia.
The power plant will receive natural
gas produced from offshore Sabah via
Sabah Oil and Gas Terminal. On track for
completion in late 2013, the electricity
generated will be transmitted into the
existing Sabah State Grid under a 21-year
Power Purchase Agreement signed on
February 2012 with Sabah Electric Sdn
Bhd.
While progressing forward, PGB will
continue to add value to Malaysias gas
resources, ushering a new era of growth
for the people Sabah.

Kimanis Power Plant


First 100MW to be
produced by 2013

PETRONAS GAS BERHAD (101671-H)

65

66

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

67

Progressive
Mindset
As a business entity, PETRONAS Gas
Berhad (PGB) is always thinking differently
on how to achieve real, sustainable and
long-term growth whilst introducing
innovative ideas to unlock endless
possibilities for our business growth. With
our reliable operations and competent
workforce, PGB has progressively raised
its profile as one of Malaysias premier
infrastructure and utilities companies.

Our ability to create value has been widely


recognised, ensuring that we continue to
attract the attention of those who scour
the market for stable returns and reliable
performance over time.

In its three decades of growth, PGB


has experienced numerous challenges
that could have impacted our business
trajectory. However, at each juncture, our
progressive mindset and determination to
succeed has always allowed us to emerge
wiser and stronger and determined to take
on even bigger challenges as we move
ahead.

TOP 10
PGBs progressive growth over
the years has elevated it into one
of 10 biggest companies listed on
Bursa Malaysia in terms of market
capitalisation.

68

PETRONAS GAS BERHAD (101671-H)

PGB in the News


Sabah Energy
to take stake
in PetGas
regasification
project

Terminal Regasifikasi
terapung catat
sejarah baru
industri minyak

The Star Online, 10 September 2012

Berita Harian, 4 June 2012

PETRONAS
Gas to spend
RM1 billion
on Sabah
The Sun, 16 May 2012

TERMINAL
LNG DAPAT
SAMBUTAN

Re-gasification
terminal marks
state as an oil
and gas hub
The Star Online,
7 June 2012

Ekonomi, Berita Harian, 1 June 2012

Regasification facility
first of its kind
in Malaysia
New Straits Times, 5 June 2012

Loji LNG
Sungai Udang
lonjak
pendapatan
Berita Harian,
16 May 2012

Fired up on
power plants potential
New Straits Times, 4 June 2012

PetGas LNG
regasification
terminal draws interest
StarBiz, The Star, 1 June 2012

PetGas sasar
peningkatan perolehan
Utusan Malaysia, 16 May 2012

PETRONAS GAS BERHAD (101671-H)

69

Awards and Achievements


MSOSH

OSH

The annual Malaysian Society for Occupational Safety and Health (MSOSH)
awards recognises companies in Malaysia that demonstrated outstanding
occupational safety and health performance.
Grand Award

The award is an initiative of the National Council for Occupational Safety


and Health (NCOSH) under the Ministry of Human Resources to give
recognition to employers and employees in various sectors in the industry
that achieved excellence in managing safety and health systems in their
organisations.

MSOSH Grand Award Winner 2011 for Plant Operations Division (POD)

OSH National Award Winner for Gurun Regional Office

Gold Merit

MSOSH OSH Gold Merit Award Winner 2011 for Segamat Operation
Center (SOC), Transmission Operations Division (TOD)

MSOSH OSH Gold Merit Award Winner 2011 for Centralised Utility
Facilities, Kertih (CUFK)

Gold Class 1

MSOSH OSH Gold Class 1 Award Winner 2011 for Kuantan Regional
Office, Shah Alam Regional Office and Seremban Regional Office, TOD

MSOSH OSH Gold Class 1 Award Winner 2011 for Centralised Utility
Facilities, Gebeng (CUFG)

MSOSH OSH Gold Class 1 Award Winner 2011 for Technical and
Facilities Development Division (TFDD)

NACRA
The National Annual Corporate Reports Award (NACRA) is jointly
organised by Bursa Malaysia Berhad, Malaysia Institute of Accountants
(MIA), and the Malaysia Institute of Certified Public Accountants (MICPA)
to promote excellence in corporate reporting, greater transparency and
accountability by respective parties in their financial reporting and to
acknowledge and recognise high quality corporate reporting.

Industry Excellence Awards Winner under the Industrial Products and


Technology category in National Annual Corporate Reward Awards
(NACRA 2012) for Annual Report Ending 31 December 2011

ICC
The innovative and Creative Circle (ICC) Convention is organised by the
Malaysia Producitivity Corporation (MPC) to promote ICC activities as
well as a culture of excellence at the work place and also provide an
opportunity to share ICC best practices as well as to benchmark among
the best ICC projects.

Gold Medal Three Stars for CUF Team (Fusion Ready Eco-Energy) at
the NationaI ICC Convention

IKM Excellence Award


The Institut Kimia Malaysia Laboratory Excellence Awards was introduced
by the Institute to ensure the laboratorys commitment to achieve
excellence in providing quality and competent testing services pertaining
to local legislation, especially in the fields of health, safety and the
enviroment.

IKM Laboratory Excellence Award for POD

CERTIFICATIONS
Certifications allow PGB to benchmark its systems, operations and
procedures against internationally recognised benchmarks and ensure
that the key elements are kept up to date to guarantee optimal standards
of operations.

SIRIM Recertification of OHSAS 18001:2007, MS1722: Part 1:2005


Occupational Health and Safety Management System and
MS ISO 14001:2004 Environmental Management System for TOD,
POD and CUF

Recertification of MS ISO 9001:2008 Quality Management System for


PGB

Surveillance Audit on MS ISO 14001:2004 Environmental


Management System for POD and TFDD

Certification of Quality Improvement Practices (5S) from the Malaysia


Productivity Corporation (MPC) for Export Terminal (ET), POD

70

PETRONAS GAS BERHAD (101671-H)

Embracing
Possibilities

PETRONAS GAS BERHAD (101671-H)

71

Corporate Responsibility

Total 45
Visits to PGB Plants
and Operations
entertained in FY2012

CR in the Marketplace

72

CR in the Workplace

78

CR in the Environment

82

CR in the Community

84

Calender of Events

86

32%
savings

> 1,000
students

Recovery effort from


schedule waste
management

Adopted under Program


Bakti Pendidikan
PETRONAS since 2006

An oft-beaten path may branch out leading to the road not taken. Who knows what new
possibilities can be found in the end. At PGB, we constantly think of ways to enhance
our Corporate Responsibility initiatives to maximise the possibilities of success, as well as
leave a lasting positive impact on our multifaceted stakeholders.

72

PETRONAS GAS BERHAD (101671-H)

Corporate
Responsibility
Sharing the Fruits of Progress
At PETRONAS Gas Berhad (PGB), we
view our Corporate Responsibility (CR)
initiatives as part and parcel of the way
we do business. At every step of the way,
we invest in people development and
capacity building efforts that will leave
a lasting impact on our stakeholders.
We recognise the fact that our
determination to embrace progress will be
meaningless if the benefits are not shared
equitably with our stakeholders.
As a responsible corporate citizen who
pursues sustainable growth, we are
continuously finding ways to sustain
our momentum in everything that we do,

including the development and rollout of


our CR initiatives. Our involvement in CR
includes activities and interactions with
communities, authorities, regulators, nongovernmental organisations, shareholders
and our workforce.
People and socio-economic developments
remain the core of our CR framework, with
education being our main focus in most
activities conducted under the Companys
CR banner.
Our CR initiatives are designed to enrich
our stakeholders with new skills and build
capability, allowing them to set clear and

CR in the Marketplace
GOING BEYOND BUSINESS
AS USUAL
At PETRONAS Gas Berhad (PGB), we
continue to do our business responsibly
while charting our growth progress.
We are committed in continuing to add
value to the nation, the gas and utilities
industry and the communities in which we
operate as well as to our shareholders and
stakeholders.
We subscribe to the belief of upholding
high standards of accountability,
transparency, fairness and integrity in the
way we conduct ourselves to ensure a
sustainable and profitable business model.
Being a responsible corporate citizen
and maintaining strong ethical values are
entrenched in our corporate culture.

direct goals that will enrich their lives


and encourage them to become better
individuals.
The crown jewel of our CR effort is
Program Bakti Pendidikan PETRONAS
(PBPP), which embodies our longterm engagement through education.
Through the programme, our employees
progressively and proactively contributed
to a structured motivation and tuition
programme involving primary school
students, thus imbuing them with skills
which are beneficial for their future. PBPP
will continue to be the flag-bearer of PGBs
CR portfolio for years to come.

PETRONAS GAS BERHAD (101671-H)

73

Another stream of our CR effort involves


positioning and providing capable
talents in supporting business growth,
while enriching these individuals with
continuous learning, upskilling and
training. Our workforce is constantly being
redefined, reimagined and reshaped with
the necessary knowledge and proper
competency tools that will allow us to face
any challenges at hand.

Another critical area which is covered by


our CR initiatives is the Health, Safety and
Environment (HSE) elements which are
critical towards sustaining our operability
and the overall wellbeing of our workforce.
As a common Key Performance Indicator
(KPI) throughout PGB, our inculcation of
a strong safety-based culture is part and
parcel of the way we approach all aspects
of our operations.

Aligning this with PGBs aspiration of


embracing progress through business
growth, staff-driven innovation is widely
encouraged at PGB, in addition to
sustaining our high level of operational
excellence.

Last but not least, to our shareholders,


we are committed to creating value for
your investment by putting in place sound
and practical business strategies, under
the guidance from the Board of Directors,

and execution by PGBs management,


supported by rigorous corporate
governance practices at all levels.
At PGB, we continue to reach out to our
stakeholders so that we are able to share
the hard won fruits of progress together.

(left)
The strength of our
business is built
upon the progressive
mindset of our people.
(right)
Our willingness to
innovate has allowed
us to learn, unlearn
and relearn, in order to
improve the quality of
our delivery.

74

PETRONAS GAS BERHAD (101671-H)

CR in the Marketplace

COMMITTED TO BEING A GOOD


CORPORATE CITIZEN
In the marketplace, good corporate
governance and superior offering of
products and services are vital in being a
responsible corporate citizen.

Services and Products


Our Vision, Mission and Shared Values are
reflected in the quality of our products and
services. Our processing, transmission
and utility facilities are operating reliably
while some are operating at par with world
class standards.

Corporate Governance
PGB, under the auspices of PETRONAS,
continues its journey in embracing the
financial control framework across the
Group, following its formal establishment
in the FY2010/11. The objective is to
provide reasonable assurance on the
accuracy and reliability of the Companys
financial statements. PGB embarked on
this initiative in its quest to uphold good
governance across the Company.

During the year, reliability for sales gas,


ethane, propane and butane for our gas
processing plants are at 99.9%, 90.1%,
91.7% and 91.7% respectively. Our
Peninsular Malaysia gas transmission
pipelines continues to maintain world
class systems reliability at 99.99% whilst
reliability for our electricity, steam and
industrial gases are at 99.5%, 94.9% and
95.5% respectively.

Our corporate governance in the area of


corporate reporting had been accredited
with the Industry Excellence Awards for
exemplary performance in the Industrial
Products & Technology industry by the
National Annual Corporate Report Awards
2011 for the third time in a row.

DEDICATED IN HELPING THE NATION

Our people work day


and night to ensure the
reliability of our plants.

Gas is a depleting natural resource.


Nevertheless, gas contributes to
approximately half of the Malaysian power
generation mix, indicating the nations high
dependency on gas supply. It is important
to the nation that PGB maintains high

operational performance standards for


its plants and pipeline network to ensure
seamless processing and delivery of gas
and utilities to customers. The ongoing
Plant Rejuvenation and Revamp (PRR)
project to extend the useful life of our
Gas Processing Plant (GPP) 2, 3 and 4
by another 20 years, is a testament to
our long term commitment to provide a
sustainable gas supply to the nation.
On top of striving to ensure uninterrupted
gas supply to the nation, PGB has
unceasingly made every effort to meet
rising gas demand as it is committed
to Malaysias long-term economic
development. Even in the face of
necessary but painful challenges, PGB
continues to persevere in ensuring the
development of liquefied natural gas (LNG)
Regasification Terminal (RGT) in Melaka
and the implementation of Third Party
Access (TPA). These will enable Malaysia
to import additional gas supplies from
abroad to fulfill future growth demand
and ensure security of gas supply for the
nation.

PETRONAS GAS BERHAD (101671-H)

75

CONTINUOUSLY ENHANCING
KNOWLEDGE OF THE GAS INDUSTRY
AND OUR COMMUNITY
PGB embraces the advancement in
technology for the betterment of the gas
industry. In relation to that, we continue to
encourage the advancement of knowledge
in the area of gas technology, with the
objective of promoting safe practices,
stimulating development of the gas
industry in Malaysia and enhancing the
understanding of general public on the
role of gas as a clean and efficient energy
resource of choice for the nation.
Imparting knowledge and engaging
with our peers, government agencies,
academia and the public are essential to
enhance our stakeholders awareness
of our business. Our commitment to this
cause is evidenced as follows:
1. Participation in international and
domestic conferences, forums or
seminars:
25th World Gas Conference;
4 - 8 June 2012

Paper presentation at National


Energy Security Conference,
Suruhanjaya Tenaga;
28 February 2012
4th National Energy Forum,
Malaysia Gas Association;
27 September 2012

2. Engagements with international


and domestic corporations through
delegation visits to our GPPs,
Centralised Utility Facilities (CUF) and
Segamat Operation Centre (SOC):
Porsche Team;
25 March 2012
Tenaga Nasional Berhad;
19 April 2012
GEVO Ltd.;
24 May 2012
Kuraray Co. Ltd.;
30 May 2012
P.T Transportasi Gas Indonesia;
18 June 2012 and
19 September 2012

Brunei LNG Sdn Bhd;


28 June 2012
Virdia;
3 July 2012
Genomatica Inc;
24 July 2012
Mitsubishi;
24 July 2012
Iraq Plant;
24 September 2012
Talisman Malaysia Ltd.;
4 October 2012
Konebada Petroleum Park Authority,
Papua New Guinea;
17 - 18 October 2012
Minister of Municipalities and Public
Works of Iraq;
5 November 2012
Trans Thai-Malaysia Sdn Bhd;
27 November 2012

The development of
new projects allows
us to gain new
experiences, knowledge
and insights.

76

3. Engagements with Government


agencies, local authorities and
communities through delegation
visits to our GPPs, CUF, Transmission
Operation Divisions (TOD) Regional
Offices and RGT:
Department of Occupational Safety
and Health;
17 January 2012
Jabatan Kerja Raya Negeri Perak;
19 January 2012
Jabatan Kastam Diraja Malaysia
Negeri Kedah;
12 February 2012
KDYMM Sultan & Sultanah
Terengganu, YAB Menteri Besar
Terengganu and Ahli-ahli Majlis
Tertinggi Terengganu;
15 March 2012
Persatuan Ibu Bapa dan
Guru (PIBG) Sekolah Rendah
Kebangsaan Tengah Kuala
Kemaman;
20 March 2012

Our multifaceted CR
initiatives not only allow
us to forge a much
closer relationship with
our stakeholders,
but also plant the
seeds of future growth
and sustainability.

Malaysian Industrial Development


Finance Berhad;
21 March 2012
Palm Oil Industrial Cluster (POIC),
Sabah;
28 March 2012
Terengganu State Executive
Council;
9 April 2012
Department of Environment;
29 April 2012
Minister of Human Resource;
15 May 2012
Malaysian Investment Development
Authority;
30 May 2012
East Coast Economic Region;
30 May 2012
Chief Minister of Melaka;
4 June 2012
Institut Penyelidikan Piawaian dan
Perindustrian Malaysia (SIRIM);
6 June 2012

PETRONAS GAS BERHAD (101671-H)

TIM Naziran (Majlis Keselamatan


Negara);
17 July 2012
Tentera Udara DiRaja Malaysia;
23 October 2012
Majlis Perbandaran Dungun,
Terengganu;
17 December 2012

4. Engagements with universities through


visits by students to our GPPs, CUF
and SOC :
Queens University Belfast, Northern
Ireland;
13 February 2012
Universiti Tun Hussein Onn Malaysia;
13 February 2012
Universiti Institut Teknologi MARA;
28 February 2012 and
13 May 2012

PETRONAS GAS BERHAD (101671-H)

77

Universiti Malaya;
2 April 2012
Pahang Skills Development Centre;
5 September 2012
Politeknik Sultan Mizan;
5 November 2012
Institut Kemahiran MARA;
6 November 2012
Universiti Institut Teknologi MARA;
12 November 2012
Politeknik Ungku Omar;
20 November 2012

5. Engagements with financial institutions


and audit firms through familiarisation
visits to our GPPs and CUF:
Delfort Group;
2 March 2012 and 31 July 2012
KPMG Desa Megat & Co.;
3 December 2012
6. Engagement with media and press
through familiarisation visit to our RGT:
Bernama, New Straits Times, Berita
Harian, The Star, Utusan Malaysia
and Jabatan Penyiaran Melaka;
20 May 2012

HAVING OUR SHAREHOLDERS


INTEREST AT HEART
The Company has been renowned for
its strong and consistent returns. Over
the year under review, our share price
appreciated by 28% and ended the year
on high note of RM19.52 per share.
Likewise, the KLCI Composite Index
increased by 10.3% over the same year.
Our ability to set a new record high and
correspond to the KLCI Composite Index
is a testimony of continuous investor
confidence in our financial strength,
operational performance and growth
progress.

PGB strongly believes in providing our


shareholders with a strong understanding
of how we conduct our business. By
giving them opportunities to get direct
access to our operations, the shareholders
are able to understand the operations and
how we approach our business. In 2012,
the Company arranged two shareholders
visitation programmes on 4 July 2012 and
25 September 2012 to the Companys
GPP in Terengganu and CUF Gebeng in
Pahang.

At the Companys 29th Annual General


Meeting held on 15 May 2012, there was
a healthy and constructive engagement
session between the Chairman and the
shareholders of the Company in which
many shareholders queries, concerns
and suggestions were brought up and
addressed by the Board of Directorss in an
open and transparent manner.

Our Annual General


Meetings provide
a platform for our
shareholders to interact
with the key movers
of our business in an
open and conducive
atmosphere.

78

PETRONAS GAS BERHAD (101671-H)

CR in the Workplace
PROVIDING A PIPELINE OF TALENTS
TO SUPPORT GROWTH
Human Resource (HR) has become more
complex with todays increasing global
and multi-generation workforce. With
a dynamic and challenging business
landscape for the year under review, the
need for HR to proactively plan to ensure
the availability of the required and capable
talent has become a vital step in initiating
a business planning cycle.
PGB realises that we need to understand
our talent requirements that are necessary
to execute our business strategies.
High performance can be achieved and
sustained by building the right set of
competencies in the workforce and by
aligning and deploying the most effective
methods to particular job functions.

ALIGNING THE ORGANISATIONS


STRUCTURE WITH BUSINESS
STRATEGIES
As a dynamic corporation, PGB continues
to find ways to optimise its structure and
functionality in order to meet increasingly
complex business challenges head on.
For the year under review, PGB focused
on restructuring and realigning certain
divisions such as our Finance and Human
Resource to ensure that the Company
houses only the optimum and effective
organisational functions. This restructuring
and realignments in the Company resulted
from the refocusing of certain functions
and to ensure better integration in various
business processes. Through this effort,
PGB can further deliver outstanding
services, improve performance as well as
support new growth initiatives.

The Technical Criticality Assessment


and Skill Criticality Assessment were
conducted as a synergised effort
between HR and the subject matter
experts as well as Head of Divisions
to review and determine the required
number of Technical Professionals (TPs)
and Technical Trade Specialists (TTS).
Following this assessment, the Company
has filled up 84% of the required TPs and
TTS.

We place great
emphasis on the
career development
of our technical
staff throughout our
operations.

ACHIEVING A HIGHLY SKILLED AND


DYNAMIC WORKFORCE THROUGH
INTEGRATED SUCCESSION
PLANNING AND MOBILITY
In the quest of addressing the recruitment
and retention of talents, PGB has made
concerted efforts to strengthen succession
planning, internal progression and mobility
as well as talent sourcing.
The Succession Planning is aimed to
develop wholesome successors, in both
leadership skills and functional capabilities.
In 2012, PGB had successfully planned
the succession of all technical managerial
positions and the succession is expected
to take place eventually within two to five
years.
At PGB, we believe that internal
progression and mobility will help us build
a highly-skilled and dynamic workforce. In
2012, we accomplished a mobility rate of
30% through the movement of staff within
PGB and across PETRONAS Group.

PETRONAS GAS BERHAD (101671-H)

79

This, together with Succession Planning,


become a powerful tool for PGB to move
forward in business by having a steady
and ready pool of multi-talented human
capital.
RAPID AND EFFECTIVE
RECRUITMENT IN FACING THE
GLOBAL TALENT WAR
PGB realises that the process of recruiting
talents requires us to understand and
source talent more strategically, based on
clear definitions of skill gaps and needs
for the future. As the battle for talent
intensifies in the oil and gas industry,
PGB has taken the necessary steps to
acquire only the best of talents. With the
rollout of a new recruitment system for
PETRONAS recruiters, the e-Recruitment,
the traditional talent sourcing process has
become more rapid and aggressive.
The Company had also reached out
and participated in four national-level
career exhibitions. These were important
platforms for the Company to promote
its numerous job opportunities and at the
same time gain access to a diverse pool of
eligible and bright talents.

DEVELOPING LEADERS FOR


TOMORROW
In todays uncertain business climate
and fast changing economy, it is more
important than ever to find the competitive
edge that will allow our organisation to get
ahead of the competition. Thus, we are
continuously looking into exclusive training
programmes and development strategies
to ensure we adopt the best practices
for the Company in meeting the essential
phase of people development. A number
of leadership programmes have been
developed and enhanced to support this
effort:

The programme was developed for


Non Executives and Secretaries to
help them close their competency
gaps and enhance their supervisory
skill. Common gaps were identified
and development plans were
proposed.

Special Al-Falah (Back to Basic)


This new programme which was
introduced during the year focused
on reemphasising core values such as
being responsible and accountable to
perform as a leader based on Islamic
values and subsequently practice the
values in coaching subordinates at
senior management level.

Building Leaders Programme


We have established Building Leaders
Programme (BLP) as a structured
leadership programme with the
intention to groom and mold high
performing staff in preparing them to
become future PGB and PETRONAS
leaders. Since its inception in 2005,
197 staff have been enrolled into the
programme and 93 or 47% of the
participants have been promoted to
higher positions within the Group.

Competency Development
Programme for NENT and
Secretaries

Facilitation Skills for E4 and above Fast Forward 31:13


This experiential learning programme
was introduced to help leaders
improve their presentation skills by
empowering three key elements of
presentations excellence
-clarity, credibility and confidence.

The business leaders


of tomorrow are given
ample opportunities to
develop their skills in
PGB.

80

PETRONAS GAS BERHAD (101671-H)

CR in the Workplace

Leadership Programme for 1st


Successor for CUF Peer Assist
Leadership (PAL@CUF)
The programme was created with
the intention to leverage on peer to
peer relationship. The benefits include
collaboration among peers, building a
shared knowledge base, developing
peers to give and receive ideas which
will accelerate leadership development.

BENCHMARKING THE CRITICAL


MEASUREMENT OF SUCCESS
In an effort to continuously improve our
practice and ensure we are at par with the
top players in the industry, a benchmarking
exercise was carried out together with
ExxonMobil, Malayan Banking Berhad,
Bank Negara Malaysia and Schlumberger.
Representatives from PGB Management
together with the HRM heads from these
leading companies compared notes on
the Leadership Development and Talent
Management Strategy and Philosophy.
One of the key takeaways identified from

A number of capability
development initiatives
were rolled out during
the year to accelerate the
development of our staff.

this benchmarking exercise is for PGB


to upskill line managers knowledge and
skills towards increasing line ownership in
managing our talents.
ENHANCING HUMAN TALENT AND
SKILL IS CRUCIAL
Human talent is the combination of the
right capability and will of people to
achieve the organisations and nations
goals. With Accelerated Capability
Development Assessment for Technical
Executives (ACD) introduced since
2009, various intervention and capability
efforts have been enforced to ensure
that our staff acquired the highest level of
Technology Know-How (TKH).
The establishment of the Annual TKH
Target last year enabled the Company to
plan and implement various measures to
ensure that the TKHs target is met. This
year, the Company had made tremendous
achievement by having minimal gaps
left to achieve the TKH target. TKH is

measured based on individual staffs ACD


results and TKH performance, cascaded
up to the Companys TKH performance.
PACD DRIVES TECHNICAL
CAPABILITY ENHANCEMENT AND
DEVELOPMENT
PGB Accelerated Capability Development
Committee (PACD) was established
in FY2011 to identify, formulate and
initiate the master plan and strategies for
technical staff capability development to
support business needs and growth. With
quarterly PACD sittings, the committee
which comprises of the Companys Skill
Group Resource Persons (SKG RPs) and
selected Head of Divisions, convene to
discuss capability development strategies
and planning of capability intervention
plans. This year, a number of major
capability strengthening initiatives had
been identified and conducted.

PETRONAS GAS BERHAD (101671-H)

81

One of the initiatives that was conducted


was PGBs Career Path for Technical
Executives. The Career Path had been
established as a main tool to chart the
Technical Executives career path, either
laterally or through progression. The
establishment of the Technical Skill Group
career path was the result of in depth
discussions and challenge sessions
amongst the Companys SKG RPs and
subject matter experts. The career path
was deliberately used as a key tool in our
Succession Planning for the managerial
positions.
EMPLOYEE ENGAGEMENT A KEY
FOR SUCCESS
Employee engagement continues to be
an important element to the success of
this organisation, whereby it provides an
emotional connection between employees
and their organisation. This leads to
improved performance, productivity,
employee retention, customer service and
loyalty.

PGB understands that employees need to


receive relevant, timely and personalised
communication from the organisation on
their vision and goals. Any changes, such
as new people, systems and processes
were communicated clearly and twoway communication between employee
and management is encouraged.
Quarterly Communication Session on the
Companys performance were conducted
across the divisions and communicated
by the Companys Management
Committee. At the various divisions,
other communication sessions were also
conducted such as Mimbar Mahabbah
in CUF, Jom Sembang in TOD and
POD Leaders Engagement Session in
POD. Monthly tazkirah sessions were also
conducted for employees to reflect on
their actions, thoughts and to share values
and lesson learnt.

connect with the employees. Service


providers such as Employees Provident
Fund, Lembaga Hasil Dalam Negeri, ING
Insurance Berhad and Ambank Group
were present at the one stop centre to
address any concerns or issues from the
employees. For non-executives, quarterly
engagement sessions were conducted
with Kesatuan Kakitangan Petroliam
Nasional Berhad (KAPENAS) to discuss on
their welfare and development.

In addition, PGB HR community also


organised Customer Appreciation Day
across the four divisions in PGB to
provide a platform for HR to engage and

Our extensive employee


engagement activities allow
us forge a closer bond
between our management
and staff.

82

PETRONAS GAS BERHAD (101671-H)

CR in the Environment
SUSTAINING EXCELLENCE IN
A CHALLENGING OPERATING
ENVIRONMENT
Health, Safety and Environment (HSE) is
a no-compromise element which dictates
the working manner in PGBs business
and operations. During the year under
review, as a growing Company, we were
faced with many challenges which were
part and parcel of our efforts in expanding
the footprint of our operations.
2012 HSE PERFORMANCE
For the year under review despite our
aspiration to raise our focus on safety,
we regret to inform that our projects
experienced some incidents that impacted
our HSE performance. We recorded
Lost Time Injury Frequency (LTIF), Total
Reportable Case Frequency (TRCF) and
Fatal Accident Rate (FAR) rating of 0.19,
1.3 and 4.67 respectively.
Regardless of all the challenges faced by
PGB, we are working hard to ensure that
HSE standards and practices everywhere
we do business is fully complied.

We have enhanced our


incident management
procedures to ensure
better management of
incident reporting and
investigation.

PGB is also working closely with all safety


regulatory bodies to ensure that necessary
steps is taken to provide a better safety
measure to prevent any incidents from
recurring in the future.
HSE MANAGEMENT SYSTEM
INITIATIVES
In 2012, PETRONAS Group HSE Division
rolled out the HSE Mandatory Control
Framework (MCF). This framework was
designed based on the experience
acquired during PETRONAS involvement
in the design, construction, operation
and maintenance of processing units
and facilities as well as national and
international standards and codes
of practice. Upon adoption of this
framework, PGB has carried out review
and assessment of our existing HSE
Management System (HSEMS) and
currently on track in closing all identified
gaps.
During the year, PGB initiated Incident
Analysis which evaluated three years
of incident data with an aim to identify
the common causes of incidents and
appropriate action plans. One of the

key deliverables of this initiative is the


enhancement of incident management
procedure which leads to a more
streamlined approach to incident reporting
and investigation, with the roles and
responsibilities of each party clearly stated.
The initiative is further supported by other
programmes such as:
1) Tripod Beta Training - Tripod Beta
is an investigation analysis tool to
help investigators analyse the root
cause of an incident. The training was
aimed towards increasing the users
understanding of this tool resulting in
better output from the investigation and
addressing the correct root causes.
2) PETRONAS iHSE System - iHSE is
an online platform to manage and share
HSE information across PETRONAS,
managed by Group HSE Division. For
PGB, during the year, the system was
used for Performance Reporting as
well as to track the status of incident
investigations and action items.

PETRONAS GAS BERHAD (101671-H)

83

3) Electronic Permit to Work (ePTW)


The ePTW was rolled out to CUF
Gebeng as an initiative to move from
the normal paper-based to an online
system. The main aim is to increase
efficiency and compliance, as well
as improve record keeping. The
implementation to other operating
divisions will be rolled out progressively.
4G ENVIRONMENT INITIATIVES
PGBs 4G Programme (Green Care,
Green Mind, Green Ownership and Green
Growth) is still going strong. For the year
under review, the focus was on waste
minimisation. In 2012, PGB managed to
reduce its scheduled waste handling cost
by 32% as compared to the previous year,
which translates into a saving of RM2.8
million. Our waste minimisation efforts
not only meant that less waste is being
disposed, it also translates to financial
savings for our Company, as costly waste
disposal fees can be avoided.

During the year, PGB was also invited


to share our 4G experience and
success stories during the PETRONAS
Environmental Community of Practice
which was a testament to the strength of
the programme.
PGB staff also contributed to the
preservation of the environment by
organising two mangrove conservation
campaigns where mangrove seedlings
were planted at the identified areas. The
campaigns were held at Kg. Mercang,
Marang on 14 July 2012 and also at Kuala
Selangor National Park on 15 December
2012.
HEALTH INITIATIVES
At PGB, maintaining the personal health
and wellbeing of our staff is critical to
ensure optimum manning and efficient
operation as our business operates
around the clock. In 2012, PGB enhanced
the coverage of Mass Health Screening
Programme for all PGB permanent staff.
The analysis of the results will be used
to craft health-related programmes for
2013. PGB also embarked on the Fitness
to Work (FTW) initiative with the given
focus in 2012 being on our Emergency
Response Team (ERT) members.
We acknowledge the importance for
ERT members, who are often the first
responders during emergencies, to be
physically fit and able to carry out their
duties. Under this programme, all ERT
members were required to undergo and
pass a fitness assessment test.

We introduced waste
minimisation efforts which
produced savings for the
Company.

CERTIFICATIONS AND AWARDS COMMITMENT SAYS IT ALL


During the year under review, PGB
Head Office (HO), Centralised Utility
Facilities (CUF) and Transmission
Operations Division (TOD) successfully
underwent the recertification process for
Environmental Management System (MS
ISO 14001:2004), Occupational Health
and Safety Management System (OHSAS
18001:2007) and MS 1722:2005 in
ensuring that our management system is
up to date and is continually improving.
As for awards, PGB continued to show
strong performance in HSE with a total of
eight Malaysian Society for Occupational
Safety and Health (MSOSH) Awards won
for the year 2011:
POD won Grand Award
TOD won one Gold Merit and three
Gold Class 1 Award
CUF won Gold Merit Award and Gold
Class 1 Award
Technical and Facilities Development
Division (TFDD) won Gold Class 1
Award
PGBs TOD also won the Occupational
Safety and Health (OSH) National Award
from the National Council for Occupational
Safety and Health (NCOSH).

84

PETRONAS GAS BERHAD (101671-H)

CR in the Community
SHARING PROGRESS WITH FUTURE
GENERATIONS
The Company continues to innovate
and implement a broad range of CSR
programmes and initiatives in localities
where it operates. Among these
initiatives are the flagship Program
Bakti Pendidikan PETRONAS (PBPP),
interaction and engagement activities
with local authorities, public awareness
programmes as well as other social
responsibility programmes aimed at
enriching and empowering the livelihood
of its stakeholders, in tandem with the
PETRONAS Group of Companies CSR
aspiration.
PROGRAM BAKTI PENDIDIKAN
PETRONAS (PBPP): CULTIVATING
EXCELLENCE IN SOCIETY
PGB continued maintaining four schools
under the PBPP during the year under
review, namely Sekolah Kebangsaan
Santong in Paka, Terengganu; Sekolah
Kebangsaan Batu Anam in Segamat,
Johor; Sekolah Kebangsaan Pinang
Tunggal in Kepala Batas, Pulau Pinang;
and Sekolah Kebangsaan Sungai Baging
in Kuantan, Pahang. The programme was
initiated in 2002 by PETRONAS. With
support and involvement by the Company
since 2006, more than 1,000 students
have benefited from this programme.

Our fun learning sessions


are much awaited by the
children taking part in our
PBPP initiative.

PBPP is a structured and integrated longterm education programme focusing on


marginally performing school children
or better known as HaLus or Harapan
Lulus (Potential to Pass) according to the
Ministry of Education. The programme is
designed to enhance teaching methods
and approach in order to improve
academic achievements specifically in
Mathematics, English and Sciences for
standard four, five and six pupils.

Students are able to build their confidence


and character through various activities
conducted by the facilitators which
are designed to bring out their hidden
potential. Each session covers a wide
range of personal values and skills such
as creative thinking, public speaking,
networking, presentation skills and team
spirit. PBPP has managed to bring out the
best in these students when coupled with
the academic sessions.

PBPP emphasises on soft skills


development through specially crafted
and scheduled Fun Learning sessions
conducted by PGB staff who volunteered
their time and energy on a monthly basis
with these future leaders. Students under
the PBPP selected schools will undergo
two key elements:

Apart from these two elements, our


PBPP students were also taken
on annual educational field trips to
PETRONAS experiential learning facilities
PETROSAINS, where they experienced
the science of the petroleum business in
a fun and interactive manner as well as
to the Dewan Filharmonik PETRONAS
and Galeri PETRONAS where they were
exposed to classical music and fine arts.
In addition to the places mentioned above,
these students were also taken to the
Companys corporate headquarters at
the PETRONAS Twin Towers where they
were able to experience the breathtaking
view of Kuala Lumpur from the Towers
Skybridge.

Academic sessions conducted by their


school teachers twice weekly in the
form of extra tuition financed by PGB;
and
Fun Learning session conducted by
PGB staff volunteers, known as staff
facilitators, held once or twice a month.

PETRONAS GAS BERHAD (101671-H)

85

During the year under review, students


who sat for the Standard Six Examination
known as Ujian Penilaian Sekolah
Rendah (UPSR), participated in an
annual motivational camp and solat
hajat organised by our staff volunteers.
In recognising the students overall
achievements and acknowledging their
efforts in achieving outstanding results and
demonstrating improvements at school,
an annual prize giving ceremony was
organised by PGB.
In 2012, PGB saw the graduation of our
fifth batch of PBPP students. A total of
101 students sat for the UPSR 2012
Examination. Out of this total, 71.3%
passed the examination of which 13
students scored 5As, 12 students scored
4As and 12 students scored 3As. This
remarkable achievement of students under
PBPP is a success to be proud of.
WORKING FOR THE COMMUNITY:
GOING BEYOND EXPECTATIONS
As a responsible company, PGB continues
to implement a series of holistic and staffdriven Corporate Social Responsibility
(CSR) programmes. From assisting senior
citizens, the physically challenged and

single mothers to giving motivational and


moral support to orphans; our staffs
commitment in working together and
giving back to society has always been
carried out beyond the call of duty.
Adhering closely with the Companys
tagline which sums up that every act of
kindness instills the spirit of caring for each
other or Bakti Dihulur, Kasih Disemai,
our CSR effort saw an increased number
of activities, a sign that we at PGB are
serious in assisting the members of the
community in places we operate.
During the year under review, a total of
approximately RM150,000 was donated
by senior management and staff for these
CSR activities. Through these personal
contributions, the Company was able to
conduct an average of one CSR activity
per week across all divisions nationwide.
REACHING OUT PROACTIVELY TO
THE COMMUNITY
The Company has conducted a series
of public awareness programmes to
engage with the local communities within
the vicinity of its plants, facilities and vast
network of gas pipelines. Through these

engagements, we were able to create


awareness on preventive and safety
control measures which need to be carried
out, for example, along our Peninsular
Gas Utilisation (PGU) pipeline routes and
Right of Way (ROW). The public were also
made aware of how to activate emergency
procedures should the unexpected occur.
These awareness programmes were jointly
organised by the Company and relevant
authorities and agencies such as the Fire
and Rescue Services Department, the
Royal Malaysian Police, the Malaysian
Armed Forces, the Municipal Councils and
the Department of Environment. In 2012,
PGB conducted more than 30 awareness
programmes throughout Malaysia.
The Company also recognises the
importance and necessity of fostering
good relations with relevant local
authorities and media to promote better
understanding of its business. Through
this good relationship, the Company was
also able to understand and keep abreast
with the regulatory requirements of the
different agencies. Activities to foster
relationship and enhance rapport include
plant visits, sporting activities and regular
engagement sessions.

PGBs staff facilitators take


part in monthly interaction
and motivation sessions
with primary school children
participating in PBPP.

86

Calendar of Events
A
13 FEBRUARY
A delegation of 35 students from Queens
University Belfast, Northern Ireland and
PETRONAS Technology Ventures Sdn Bhd
visited the Companys Gas Processing Plant
Complex A (GPP A) in Kertih, Terengganu.
B
16 FEBRUARY
Power Purchase Agreement document
exchange between Sabah Electricity
Sdn Bhd (SESB) and PGBs joint venture
company, Kimanis Power Sdn Bhd (KPSB)
witnessed by Honorary Prime Minister at
Magellan Sutera, Kota Kinabalu, Sabah.
C
2 MARCH
Delfort Group visited PGBs Centralised
Utility Facilities (CUF) in Gebeng, Pahang.
4 MARCH
PGB organised its Annual Golf Tournament
involving members of the Board of Directors
and key stakeholders at Glenmarie Golf and
Country Club, Selangor.
15 MARCH
D
KDYMM Sultan of Terengganu, Sultan
Mizan Zainal Abidin and KDYMM Sultanah,
Tuanku Nur Zahirah accompanied by YAB
Menteri Besar of Terengganu Datuk Seri
Ahmad Said, together with members of the
State Legislative Council made an official
visit to PGBs GPP A in Kertih, Terengganu.

13 MAY
PGBs Board of Directors visited RGT
facilities at Sungai Udang, Melaka.
A

F
15 MAY
PGB held its 29th Annual General Meeting
at Intercontinental Hotel Kuala Lumpur,
Jalan Ampang, Kuala Lumpur.
4 JUNE
The World Gas Conference was officially
launched by Prime Minister of Malaysia,
YAB Dato Sri Mohd Najib Tun Abdul Razak
at Kuala Lumpur Convention Centre.
YAB Chief Minister of Melaka, Datuk Seri
Mohd Ali Mohd Rustam launched the
liquefied natural gas (LNG) Regasification
Terminal (RGT) in Sungai Udang, Melaka, in
conjunction with the World Gas Conference
hosted by Malaysia in Kuala Lumpur.

C
D

15 JUNE
The MD/CEOs office conducted CSR
activity at Kampung Batu 16 in Hulu Langat,
Selangor, involving the construction of a
home for a less-fortunate family.
18 JUNE
A group of 35 staff from Transportasi
Gas Indonesia (TGI) visited PGBs Gas
Processing Plant Complex B (GPP B) in
Paka, Terengganu.

11 APRIL
Regas Terminal (Sg. Udang) Sdn Bhd
carried out Corporate Social Responsibility
(CSR) by distributing basic necessities to
the less fortunate families in Pantai Puteri,
Melaka.

28 JUNE
A delegation from Brunei Liquefied Natural
Gas (BLNG) visited PGBs Centralised Utility
Facilities (CUF) in Kertih, Terengganu.

E
8 MAY
YB Dato Sri Peter Chin Fah Kui of Ministry
of Energy, Green Technology and Water
visited Kimanis Power Plant Site.

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

87

3 JULY
G
A delegation from Virdia visited PGBs CUF
in Kertih, Terengganu.
14 JULY
PGB carried out CSR at Rumah Anak Yatim
Kesayangan in Petaling Jaya, Selangor
with a programme titled Inspirational Team
Building Activity.
19 JULY
H
Signing ceremony of Financing Agreement
between Kimanis Power Sdn Bhd and
CIMB Investment Bank, HSBC Amanah
& Malaysian Trustees Bhd at Malaysian
Petroleum Club, PETRONAS Twin Towers.
B

24 JULY
I
A delegation from Genomatica Inc. and
Mitsubishi visited PGBs CUF in Kertih,
Terengganu.

8 AUGUST
PGB via KPSB obtained Islamic Financing
Facilities or Sukuk Programme with a
nominal value of up to RM1.16 billion,
consisting of two series, to finance the
construction of the Kimanis Power Plant.
I

10 SEPTEMBER
PGB entered into a Shareholder Agreement
with Sabah Energy Corporation Sdn Bhd to
construct and develop LNG regasification
facilities in Lahad Datu, Sabah.
14 SEPTEMBER
PGB organised its Majlis Ramah Mesra
Aidilfitri 2012 at the Mandarin Oriental Hotel,
Kuala Lumpur to forge a closer relationship
with its key stakeholders.

88

Calendar of Events

19 SEPTEMBER
A group of 10 personnel from TGI visited
TOD in Segamat, Johor.
24 SEPTEMBER
A delegation of 20 Iraqi Government
officials went on plant familiarisation
programme held at GPP B in Paka,
Terengganu.

8 OCTOBER
PETRONAS Chairman, YBhg Tan Sri Mohd
Sidek Hassan visited the RGT facility in
Sungai Udang, Melaka.
J
16 18 OCTOBER
PETRONAS Gas Bhd joined the Innovative
and Creative Circle (ICC) organised by
Malaysia Productivity Corporation (MPC).
K
17 18 OCTOBER
A group of 5 personnel from Konebada
Petroleum Park Authority of Papua New
Guinea visited GPP A & B, and CUF in
Terengganu.
L
5 NOVEMBER
A delegation of 5 personnel from the
Ministry of Municipalities and Public Works
of the Republic of Iraq visited PETRONAS
water processing plant in Dungun,
Terengganu which is managed by PGB.
9 NOVEMBER
PGB signed a contract with the consortium
of Toyo Engineering Corporation and Toyo
Engineering & Construction Sdn Bhd for
the provision of Engineering, Procurement,
Construction and Commissioning (EPCC)
for the Plant Rejuvenation and Revamp
(PRR4) project.

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

89

18 NOVEMBER
PGB organised the PGBs Contractors
Forum at Zenith Hotel, Kuantan, Pahang to
forge a greater understanding between the
Company and its contractors, especially
in matters involving services and materials
procurement.

M
25 NOVEMBER
TOD hosted the PGB-Senoko Interaction
Games with Senoko Energy Pte Ltd at the
Le Grandeur Palm Resort, Senai, Johor.

M
M

28 - 29 NOVEMBER
PGB hosted the Regional Process
Technology Forum at Swiss-Garden Resort
and Spa, Kuantan, Pahang, which was
also participated by the representatives of
Trans-Thai Malaysia (Thailand) Ltd, Brunei
LNG and Malaysia LNG Sdn Bhd.
3 DECEMBER
A delegation of 8 personnel from Messrs
KPMG Desa Megat & Co, PGB external
auditors visited PGBs CUF and GPP B in
Kertih, Terengganu.

90

PETRONAS GAS BERHAD (101671-H)

The strong foundations we lay today will ensure our continued sustainability as a business
tomorrow. At PGB, we believe that robust governance practices will help us create value for
our stakeholders and promote their best interest. By embracing high governance standards we
hope to ensure that the Group will continue to chart positive growth and contribute extensively
towards the economic, social and environmental spheres.

RM38,625
million
Market Capitalisation

RM19.52
Closing share price at
end of FY2012

RM13,462
million
Total Assets

Embracing
Sustainability

PETRONAS GAS BERHAD (101671-H)

91

Corporate Governance
Corporate Governance Statement

92

Nomination and Remuneration Committee Report

99

Nomination and Remuneration Committees Terms of Reference 102


Statement on Risk Management and Internal Control

104

Board Audit Committee Report

110

Board Audit Committees Terms of Reference

113

Statement of Directors Responsibility

116

92

PETRONAS GAS BERHAD (101671-H)

Corporate Governance Statement

The Board is entrusted with the responsibility


to exercise reasonable and proper care of
the Companys resources for the best interests
of shareholders.

The Board of Directors (Board) of PETRONAS Gas Berhad


recognises that its primary responsibility is to safeguard and
promote the interests of the shareholders and to enhance the
long-term value of the Company. The Board continuously strives
and is fully committed to maintaining high standards of corporate
governance throughout the organisation and to safeguard the
interests of the shareholders.
The Board in this Corporate Governance Statement complies
with paragraph 15.25 of the Main Market Listing Requirements
(MMLR) of Bursa Malaysia Securities Berhad and the
Amendments to MMLR in relation to Corporate Governance
and has substantially applied and conformed to the Principles
of Corporate Governance and the Best Practices in Corporate
Governance as set out in the Malaysian Code on Corporate
Governance 2012 (MCCG 2012).
THE BOARD AND BOARD COMMITTEES
1. Principal Responsibilities of the Board
The Board is generally entrusted with the overall governance
of the Company and its Group (Group wherever it appears
in this Corporate Governance Statement shall mean the
Company and its subsidiaries), the responsibility to exercise
reasonable and proper care of the Companys resources for
the best interests of its shareholders as well as to safeguard
the Companys assets.
The Board is mindful of the importance of the establishment
of clear roles and responsibilities in discharging its fiduciary
and leadership function as recommended by MCCG 2012
and in this regard the Board has assumed the following
responsibilities:

i)

Review and approve the annual corporate plan, which


includes overall corporate strategy, operational plan,
marketing plan, human resources plan, financial plan and
budget, risk management plan and information technology
plan.

ii) Oversee the conduct of business, and to evaluate whether


the business is being properly managed.
iii) Identify principal risks and ensure the implementation
of appropriate systems to control, monitor and manage
these risks.
iv) Oversee the succession planning and appointment
of senior management, including ensuring senior
management personnel are of sufficient calibre.
v) Review the adequacy and integrity of internal control
systems and management information systems, ensuring
the establishment of sound framework of reporting on
internal controls, including regulatory compliance.
vi) Review and approve financial statements.
The roles and responsibilities of the Directors are documented
in the Board Charter which sets out the strategic intent,
key values, principles and guidelines that are to be applied by
the Chairman, Managing Director and Chief Executive Officer
(MD/CEO), Board and the Board Committees, as well as
identifying their functions in the Company and Group.
This Board Charter shall be periodically reviewed, as and
when necessary. A copy of the Board Charter is available on
the Companys corporate website.

PETRONAS GAS BERHAD (101671-H)

93

The Board further acknowledges its role in establishing a


corporate culture comprising ethical conduct within the
Group. In line with this principle, the Board has adopted the
PETRONAS Code of Conduct and Business Ethics (CoBE)
which sets out the standards of behaviour and ethical conduct
for the Board and Group and for external parties liaising with
the Group. This CoBE shall be periodically reviewed, as and
when necessary. In addition, the Board has also adopted the
PETRONAS Whistleblowing Policy. A copy of the CoBE is
available on the Companys corporate website.
2. An Effective Board Composition
A. Composition
The Board comprises eight Directors including the
Independent Non-Executive Directors who have been
selected based on their character, calibre, extensive
experience and expertise in a wide range of industries,
as well as their ability to add strength to the stewardship
of the Company.
The Board consists of members who have the mix of
skills, knowledge, experience and strength in qualities
which are relevant to enable the Board to carry out its
responsibilities in an effective and competent manner as
well as providing balance and independence of the Board.
The current composition of the Board is in compliance
with Paragraph 15.02 of the MMLR as one third of its
members are Independent Directors.
As at the date of this report, the Board comprises the
following:
Executive Director
(also the MD/CEO)

1/8

(12.5%)

Independent Non-Executive Directors

3/8

(37.5%)

Non-Independent Non-Executive Directors 4/8


(including the Chairman)

(50%)

The profile of each Director is presented in the Board of


Directors Profile on pages 18 to 23 of the annual report.
Given that the Companys synergetic business and
operational integration with the PETRONAS Group of
Companies, the Chairman of the Company would have to
be and is a Non-Independent Non-Executive Director.
There is a clear demarcation of responsibilities within the
Company to ensure a balance of power and authority.
The positions of Chairman and Managing Director are

separately held. The Chairman is primarily responsible for


running the Board and ensuring that all Directors have
full and timely access to all relevant information, which is
necessary for informed decision-making. The Managing
Director who is also the Chief Executive Officer oversees
the implementation of Board policies, the day-to day
running of the business and operational decision-making.
The MD/CEO also manages the respective responsibilities
of the divisions and departments in the Company and
he is assisted in the management of the business by
the Management Committee (MC). The MC serves in
an advisory capacity to the MD/CEO in accomplishing
the vision, mission, strategies and objectives set for
the Company. The distinct and separate roles of the
Chairman and the MD/CEO ensure a balance of power
and authority, such that no one individual has unfettered
powers of decision making.
All Non-Executive Directors have the necessary expertise
and skill to ensure that the strategies proposed by the
Management are fully evaluated, taking into account
the long-term interests of the shareholders. They review
and engage with the Management and provide input to
the strategy development and the planning process of
the Company. In doing so, the Non-Executive Directors
consider and rationalise the initiatives and priorities towards
developing value proposition for the Company to enhance
its competitiveness in achieving the Companys target.
In addition, they contribute to policy formulation and
are actively involved in decision-making. They provide
guidance and promote professionalism and competence
among Management and employees.
The Directors who are nominated as the representatives
of Petroliam Nasional Berhad (PETRONAS), when making
any decisions, always act in the best interest of the
Company in line with Section 132(1E) of the Companies
Act, 1965, Malaysia.
During deliberation of the board papers at the Board
meetings, any Director who is faced with any conflict of
duties or conflict of interests declares his interests and
refrains himself from participating in the discussions of
such board papers.
During the financial year under review, Encik Muri bin
Muhammad and Encik Ramlan bin Abdul Malek vacated
office pursuant to Paragraph 15.05(3)(c) of the MMLR,
effective from 31 December 2012.

94

PETRONAS GAS BERHAD (101671-H)

Corporate Governance Statement

B. Independence
The presence of the Independent Non-Executive Directors
is essential in providing unbiased and independent views,
advice and judgement, as well as safeguarding the
interests of other parties such as minority shareholders
of the Company. The concept of independence adopted
by the Board is in accordance with the definition of an
Independent Director in Paragraph 1.01 of the MMLR.
Dato N. Sadasivan N.N. Pillay has been appointed as the
Senior Independent Non-Executive Director to whom any
concerns pertaining to the Company may be conveyed.
Dato N. Sadasivan N.N. Pillay has served as Senior
Independent Director for 17 years.
Recommendation 3.2 of the MCCG 2012 states that the
tenure of an Independent Director should not exceed
a cumulative term of nine years. However, following
an assessment by the Nomination and Remuneration
(NomRem) Committee and the Board, the Board
recommends that Dato N. Sadasivan N.N. Pillay
continues to serve as an Independent Director subject to
shareholders approval at the forthcoming Annual General
Meeting (AGM) of the Company on the basis of the
following justifications:a) His appointment is made in accordance with the
requirements of the MMLR;
b) He provided effective check and balance in the
proceedings of the Board and the Board Committees;
c) He provided objectivity in decision making through
unbiased and independent views as well as advice
and judgement, to the Board;
d) He exhibited high commitment and devoted sufficient
time and attention to his responsibilities as an
Independent Non-Executive Director of the Company;
and
e) He exercised due care in the interest of the Company
and shareholders during his tenure as an Independent
Non-Executive Director of the Company.
In consideration of the above, the Board has concluded to
seek shareholders approval to retain Dato N. Sadasivan
N.N. Pillay as an Independent Non-Executive Director of
the Company at the forthcoming AGM.

The remaining two Independent Non-Executive Directors,


Dato Ab. Halim bin Mohyiddin and Encik Lim Beng
Choon, are professionals in their own right with wide
ranging experiences, skills and expertise in various fields.
Pursuant to the recommendation of MCCG 2012, the
performance assessment of both Non-Independent and
Independent Directors was undertaken and reported to
the Board. Specific assessment of the independence
of the Independent Directors is included in the annual
performance assessment for the financial year ended 31
December 2012. The NomRem Committee and the Board
have conducted an assessment on the independence of
the Independent Directors and undertake to perform such
assessment annually.
C. Gender Diversity
The Board does not have a specific policy on Gender
Diversity. However the Board is continuously looking into
inviting to the Board people of talent based on merits
including skills, knowledge and experience bearing in mind
the need for diversity, including gender diversity.
3. Board Structures and Procedures
A. Board and Board Committee Meetings
Board meetings are scheduled in advance before the
beginning of the new financial year to enable the Directors
to plan ahead their schedules to fit the series of meeting
in the year. Board meetings are held at minimum of
quarterly intervals with additional meetings, including
special meetings, held whenever necessary. There were
five meetings held during the financial year under review.
Most of the Directors attended all of the Board meetings.
The details of the attendance of the Directors for the
financial year under review are as follows:
Table 1 : Attendance Record
Name of Directors

Attendance

Datuk Anuar bin Ahmad

5/5

Samsudin bin Miskon

5/5

Dato N. Sadasivan N.N. Pillay

5/5

Dato Mohammad Medan bin Abdullah

4/5

Datuk Rosli bin Boni

5/5

PETRONAS GAS BERHAD (101671-H)

95

Table 1 : Attendance Record


Name of Directors

Attendance

Ir. Pramod Kumar Karunakaran

5/5

Dato Ab. Halim bin Mohyiddin

5/5

Lim Beng Choon

5/5

Muri bin Muhammad*

2/5

Ramlan bin Abdul Malek*

2/5

* Vacated office on 31 December 2012 pursuant to


Para 15.05(3)(c) of the MMLR.

B. Supply of and Access to Information


In discharging their duties with reasonable care, skill and
diligence, the Directors will be accorded with sufficient
information on any subject matter so as to enable the
Directors to make the business judgment in the best
interest of the Company and shareholders.
Prior to the Board meetings, every Director is given
an agenda and a set of Board papers covering the
agenda items to facilitate informed decision-making.
The agenda and the Board papers which contain
quantitative information and other related performance
factors are circulated prior to the Board meetings and
this will enable the Directors to have a good assessment
of the subject in hand prior to arriving at any decision.
The MD/CEO leads the presentation of the Board papers
and provides comprehensive explanation on pertinent
issues. All proceedings of Board meetings are minuted
and signed by the Chairman of the meeting in
accordance with the provisions of Companies Act, 1965,
Malaysia. Minutes of the Board meetings which include
a record of the decision and resolution of the Board
meetings are properly maintained by the Company
Secretary.
The Board is kept updated on the Companys activities
and operations on a regular basis. All Directors have
full access to information, including monthly reports on
Company activities, both financial and operational.
In addition, whenever independent professional advice is
required by the Directors, outside experts may, and have
been engaged at the Companys expense.

The Directors have access to the advice and services


of the Company Secretaries, whose appointments and
resignations are subject to the Boards approval.
The Chairman is always accorded with strong and
positive support of the Company Secretaries in
ensuring the effective functioning of the Board.
The Company Secretaries attend all Board meetings
and ensure that accurate and adequate records of the
proceeding of the Board meetings and decision made
are properly kept. The Company Secretaries also ensure
that the Board members receive briefings on changes in
regulation or law, as circumstances require.
The Board is fully aware of, and acts on any matters for
decision to ensure proper direction and control of the
Company. Such matters, outlined in the Companys Limits
of Authority, clearly establish the authority of the Board
and the Management.
The Board may, whenever required, as provided by
the Articles of Association, set up Board Committees
delegated with specific powers and responsibilities.
C. Training of Directors
In compliance with the MMLR, the Directors are mindful
that they shall receive appropriate training which may be
required from time to time to keep them abreast with the
current developments of the industry as well as the new
statutory and regulatory requirements.
During the financial year under review, the members
of the Board have attended the relevant development
and training programmes, either attended by the Directors
according to their individual needs or as arranged by the
Company Secretary, to enhance their ability in discharging
their duties and responsibilities more effectively.
The details of which are set out on pages 203 to 204
of the annual report.
Any new Director is given a comprehensive understanding
of the operations of the Company through regular briefings
on Company history and financial control systems.
In addition, plant visits are arranged to ensure first-hand
understanding of the Companys operation.

96

PETRONAS GAS BERHAD (101671-H)

Corporate Governance Statement

D. Re-election of Directors
Pursuant to Article 93 of the Companys Articles of
Association an election of Directors shall take place
each year at the AGM of the Company where one-third
of the Directors who are longest in office shall retire and,
if eligible, may offer themselves for re-election.
In accordance with the Companys Articles of Association,
at the 29th AGM held on 15 May 2012, two Directors
retired by rotation and were re-elected to the Board by
the shareholders.
Pursuant to Article 96 of the Companys Articles of
Association, any Director so appointed shall hold office
only until the next following AGM of the Company and
shall then be eligible for re-election but shall not be taken
into account in determining the Directors who are to retire
by rotation at that meeting. At the 29th AGM held on
15 May 2012, three Directors were re-elected in
accordance with this provision.
Pursuant to Section 129 of the Companies Act, 1965,
Malaysia, a Director who is over 70 years of age must
retire at the AGM of the Company, and may be
re-appointed by shareholders with not less than a threefourth majority. At the 29th AGM held on 15 May 2012,
one Director was re-appointed pursuant to this provision.
The Director who attained the age of 70 years was reappointed pursuant to Section 129 of the Companies
Act, 1965, Malaysia as he is a highly regarded personality
in the business community. He has demonstrated to the
Board that he exercises independent judgment and has
acted in the best interest of the Company and ensured
that the varied competing interests of all stakeholders are
respected without compromising financial performance
and accountability of the Company.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration (NomRem) Committee of the
Company was established on 14 November 2011 and is made
up of entirely Non-Executive Directors which comprises two
Independent Non-Executive Directors and one Non-Independent
Non-Executive Director. In line with the MCCG 2012, all
NomRem Committee members including the Chairman shall be
Non-Executive Directors; the majority including the Chairman

shall be Independent Directors. The members of the NomRem


Committee shall be appointed by the Board from amongst their
number and shall consist of not less than three members.
A report on the membership of the NomRem Committee, its
Terms of Reference and its duties, responsibilities as well as its
activities are detailed out in pages 99 to 101 and 102 to 103
respectively in the annual report.
BOARD AUDIT COMMITTEE
The Board Audit Committee (BAC) comprising mainly the
Independent Non-Executive Directors has specific terms of
reference including the review of the interim and full year financial
statements and preliminary announcements, internal financial
controls and the reports of the Group Internal Audit Division
of PETRONAS. It ensures the adequacy and integrity of the
Companys internal control system and management information
system and that they are in compliance with the Companys
policies and procedures, applicable laws and regulations and
MMLR. The BAC monitors the effective implementation of
programmes to ensure compliance to the Companys Risk
Management Policy. It will continue to ensure that the principal
risks facing the Company are identified and monitored and
appropriate measures are undertaken to manage these risks.
The BAC Terms of Reference and the BAC Report are detailed
out in pages 110 to 112 and 113 to 115 respectively in the
annual report.
RELATIONSHIPS WITH SHAREHOLDERS
1. Engagements with Shareholders
The Company recognises the importance of timely, fair and
equal dissemination of information to shareholders and public
generally. In this regard, it adheres strictly to the disclosure
requirements of Bursa Malaysia. Besides the announcement
via Bursa LINK, the Company communicates regularly with
the shareholders through the annual report and the quarterly
financial reports.
Institutional investors and analysts are also given the
opportunity to meet with the Management on performance,
corporate governance and other matters affecting the
shareholders interests.

PETRONAS GAS BERHAD (101671-H)

97

In providing shareholders with the opportunity to gain


first-hand exposure on the Companys operations, several
visits to Gas Processing Plants located in Kertih and Paka,
Terengganu, as well as its Centralised Utility Facilities
located in Gebeng, Pahang, were organised during the year.
Shareholders were given a presentation on the Companys
operations and were provided the opportunity to ask for
more information in respect of the plant operations. The
Management believes that shareholders, by having a better
understanding of the Companys activities, will have a
greater sense of belonging to the Company. Such two-way
communication increases corporate transparency and helps
shareholders take a longer term view of their investment
based on a better understanding of the Companys corporate
strategy and operations.
2. Disclosures
The Board recognises the need to fully disclose to
shareholders all major developments in relation to the Group
on a timely basis. In addition to the mandatory disclosures
requirement by Bursa Malaysia as well as other corporate
disclosures, the Company has long established its corporate
website (www.petronasgas.com) to allow the public
particularly the shareholders, investors and analysts to have
access to information such as corporate profile, policies
and guidelines, contact details of designated persons and
announcements made to Bursa Malaysia.
The Company has recently established an internal Corporate
Disclosure Policy to facilitate disclosure of information. This
guide is based on the requirements as set out in the MMLR.
A copy of the Corporate Disclosure Policy is available on the
Companys corporate website.
In all circumstances, the Company preserves confidentiality
with regard to undisclosed material information about the
Company and continuously stresses the importance of timely,
fair and equal dissemination of information to the shareholders
and the public generally.

3.

AGM
The AGM is a crucial mechanism in shareholders
communication. Shareholders are notified of the meeting
and provided with a copy of the Companys Annual Report
21 days before the meeting. At each AGM, the Board
provides shareholders with an opportunity to ask questions
on the progress and performance of the Company, without
limiting the time and types of questions asked, prior to
seeking approval by show of hands from members and
proxies on the audited financial statements. The Chairman
informs on the availability of poll voting by shareholders on
matters raised during the AGM.
During the meeting, the Chairman and Board members
respond to all queries and undertake to provide sufficient
clarification on issues and concerns raised by the
shareholders. The external auditors are also present to
provide their professional and independent clarification on
issues and concerns raised by the shareholders. The status of
all resolutions proposed at the AGM is submitted to the
Bursa Malaysia at the end of the meeting day. A summary of
the discussions at the AGM is kept by the Management for
future reference.
The Board has ensured that where there is special business
included in the notice of the Annual or Extraordinary General
Meeting, each item of the special business is accompanied by
a full explanation of the effects of the proposed resolution.

ACCOUNTABILITY AND AUDIT


1. Financial Reporting
The Board aims to present a balanced and understandable
assessment of the Companys position and prospects.
This also applies to other price-sensitive public reports and
reports to regulators. The Directors responsibility statement is
enclosed in page 116 of the annual report.
2. Risk Management and Internal Control
The Board continues to maintain a sound system of risk
management and internal control to safeguard shareholders
investment and the Companys assets. The principle is further
elaborated under the Statement on Risk Management and
Internal Control by the Directors in pages 104 to 109 of the
annual report.

98

PETRONAS GAS BERHAD (101671-H)

Corporate Governance Statement

3. Relationship with the Auditors


The external auditors, Messrs KPMG Desa Megat & Co.,
have continued to report to members of the Company on
their opinions which are included as part of the Companys
financial reports with respect to their audit on each years
statutory financial statements. In so doing, the Company has
established a transparent arrangement with the auditors to
meet the auditors professional requirements. From time to
time, the auditors highlight to the BAC and the Board matters
that require the Boards attention. The Report by the BAC on
the review of audit reports is enclosed in pages 110 to 112 of
the annual report.
The Company continuously reviews and monitors the
suitability and independence of external auditors. The
BAC obtains assurance from the external auditors on their
independence in discharging their duties.

This statement is made in accordance with the resolution of the


Board of Directors dated 11 March 2013.

Datuk Anuar Ahmad


Chairman

Samsudin Miskon
MD/CEO

ADDITIONAL COMPLIANCE INFORMATION


1. Non-Audit fees
The amount of non-audit fees paid and payable to the
external auditors by the Company for the financial year ended
31 December 2012 was RM343,000.
2. Sanctions
During the year under review, there were no sanctions and/or
penalties imposed on the Company, Directors or Management
by the relevant regulatory bodies.
3. Material Contracts
There were no material contracts entered into by the
Company during the financial year, other than the Gas
Processing and Transmission Agreement (GPTA) entered
since 1 April 1994 between the Company and its substantial
shareholder, PETRONAS, for the provision of separating
natural gas into its components and storing, transporting and
distributing such components thereof for a fee.
The GPTA provides for revision of the terms and conditions
every five years. The last revision of the GPTA was made on
31 March 2010 which revised the throughput fee structure
for the period from 1 April 2010 to 31 March 2014 and also
entailed clearer demarcation of terms and remuneration
structure between processing and transportation of gas.

PETRONAS GAS BERHAD (101671-H)

99

Nomination and Remuneration Committee Report

Lim Beng Choon Dato N. Sadasivan N.N. Pillay Dato Mohammad Medan bin Abdullah

In compliance with Paragraph 15.08A of the Main Market Listing


Requirements of Bursa Malaysia Securities Berhad (MMLR),
the Nomination and Remuneration (NomRem) Committee of
the Company was established on 14 November 2011.
The NomRem Committee is pleased to present the Nomination
and Remuneration Committee Report for the financial year ended
31 December 2012.
COMPOSITION
The NomRem Committee currently comprises three members.
In line with the Malaysian Code of Corporate Governance 2012
(MCCG 2012), all NomRem Committee members including the
Chairman shall be Non-Executive Directors. The majority including
the Chairman are Independent Directors.
The NomRem Committee is chaired by an Independent
Director, Encik Lim Beng Choon. Whilst the MCCG 2012 has
recommended that the NomRem Committee be chaired by the
Senior Independent Director, the Senior Independent Director,
Dato N. Sadasivan N.N. Pillay is currently the Chairman of the
Board Audit Committee. The Board has instead elected
Encik Lim Beng Choon as the Chairman of the NomRem
Committee so as to have different Directors chairing the
committees to leverage on different perspectives and dynamics
as well as to ensure that each Independent Director has equitable
roles and responsibilities.

The members of the NomRem Committee currently are:


No.

Name of Members

1.

Lim Beng Choon


Chairman
(Independent Non-Executive Director)

2.

Dato N. Sadasivan N.N. Pillay


(Senior Independent Non-Executive Director)

3.

Dato Mohammad Medan bin Abdullah


(Non-Independent Non-Executive Director)

By invitation, the Managing Director/Chief Executive Officer


(MD/CEO), Company Secretaries and the General Manager
of Human Resources Management Division are present for
deliberations which require their input or advice.
RESIGNATION OF NOMREM MEMBERS
Any NomRem Committee member may resign effective upon the
date of the member giving oral or written notice to the Chairman
of the Board, the Company Secretary or the Board (unless
the notice specifies a later time for the effectiveness of such
resignation). The Board will elect a successor to take office when
the resignation becomes effective.
The appointment of a NomRem Committee member shall
automatically be terminated if the member ceases to be a Director
for any reason whatsoever or as determined by the Board.

100

PETRONAS GAS BERHAD (101671-H)

Nomination and Remuneration Committee Report

ROLES AND RESPONSIBILITIES


The following shall be the common recurring duties and
responsibilities of the NomRem Committee in carrying out its
purposes. These duties and responsibilities are set forth as a
guide to the NomRem Committee with the understanding that
the NomRem Committee may amend or supplement them as
appropriate under the circumstances to the extent permitted by
applicable laws:
a) Assess the effectiveness of the Board as a whole, the
Committees of the Board and the contribution of each
individual Director.
b) Review regularly the selection criteria for Board membership,
the Board structure, size and composition and make
recommendations for any adjustments thereto.
c) Develop membership qualifications for the Board, including
defining specific criteria for Director independence and
Committee membership.
d) Review annually the Boards mix of skills, education and
experience and other qualities including core competencies
which Directors should bring to the Board, taking into account
the current and future needs of the Company.
e) Establish and recommend the remuneration structure and
policy for Directors and Senior Management and review
changes to the policy, as necessary.
f)

Implement/maintain a reward system for Directors and


Senior Management based on their performance against the
Companys results.

The Terms of Reference governing the NomRem Committee is


stipulated on pages 102 to 103 of the annual report.

During the financial year under review, the NomRem Committee


met twice and the attendance of the members are as follows:
Name of Members

Attendance

Lim Beng Choon (Chairman)

2/2

Dato N. Sadasivan N. N. Pillay

2/2

Dato Mohammad Medan Abdullah

2/2

The NomRem Committee had carried out an assessment on


the effectiveness of the Board as a whole, the Committees of
the Board as well as the contribution of each individual Director
through a Board Effectiveness and Directors Evaluation exercise,
the report of which has been tabled to the Board.
The NomRem Committee is also implementing a skills mapping
exercise for the Directors to review the mix of skills, education
and business experience and other qualities including core
competencies of the Directors. This exercise will enable the
NomRem Committee to access and review the selection criteria
for future Board membership and make recommendations for
adjustments.
At the start of the year, the NomRem Committee reviewed the
Key Performance Indicators, the Performance Management
System and the Remuneration Structures set up for the Senior
Management level. Upon completion of the year, the NomRem
Committee has duly reviewed the performance reviews and
rewards of the Senior Management. In addition, all changes made
at the Management Committee level have been presented to the
NomRem Committee for input.
DIRECTORS FEES

MEETINGS AND ACTIVITIES


The NomRem Committee will deliberate on the above matters
during meetings which shall be held at least twice a year or at
such other times as the Chairman of the NomRem Committee
deems necessary. In addition to the schedule of regular meetings
established by the NomRem Committee, the Chairman of the
NomRem Committee may call a special meeting at any time.
In order to form a quorum, two of the members of the NomRem
Committee must be present, one of whom must be
an Independent Director.

With the exception of the MD/CEO, all Non-Executive Directors


are paid Directors fees as approved by the shareholders at the
Annual General Meeting, based on the recommendation of the
Board. For the financial year under review, the breakdown is as
follows:

PETRONAS GAS BERHAD (101671-H)

101

Directors
Fees
(RM)

Board
Meeting
Attendance
Fees
(RM)

Board Audit
Committee
Meeting
Attendance
Fees
(RM)

NomRem
Meeting
Attendance
Fees
(RM)

Total
(RM)

Nil

Nil

Nil

Nil

Nil

Dato N. Sadasivan N.N. Pillay

68,000.00

15,000.00

13,000.00

3,000.00

99,000.00

Dato Mohammad Medan bin Abdullah

69,000.00

12,000.00

Nil

3,000.00

84,000.00

Datuk Rosli bin Boni

61,000.00

15,000.00

9,000.00

Nil

85,000.00

Ir. Pramod Kumar Karunakaran

Nil

Nil

Nil

Nil

Nil

Dato Ab. Halim bin Mohyiddin

68,000.00

15,000.00

9,000.00

Nil

92,000.00

Lim Beng Choon

70,000.00

15,000.00

Nil

6,000.00

91,000.00

Muri bin Muhammad*

68,000.00

6,000.00

7,000.00

Nil

81,000.00

Nil

Nil

Nil

Nil

Nil

404,000.00

78,000.00

38,000.00

12,000.00

532,000.00

Directors Name
Datuk Anuar bin Ahmad

Ramlan bin Abdul Malek*


Total

*Vacated office on 31 December 2012 pursuant to Paragraph 15.05(3)(C) of the MMLR.

Fees for certain Directors appointed by PETRONAS are paid


directly to PETRONAS as Board of Directors representation fees.
During the year, the Company paid RM272,000 as Board of
Directors representation fees for PETRONAS. A formal written
policy and procedures for Directors remuneration is currently
being developed.
The MD/CEO, an employee of PETRONAS, is seconded to the
Company as an Executive Director. The MD/CEO, as well as the
other Directors representing PETRONAS, possesses a mix of
skills, knowledge, expertise and experience, each contributing
towards safeguarding the interests of the Company. At the
same time, their presence gives the Board a deeper insight
into PETRONAS operations with greater accountability for the
Companys performance, both financial and operational. In
consideration of the service of the MD/CEO, the Company is
required to pay a management fee to cover all payroll-related
costs and benefits ordinarily incurred by him in the course of his
employment. During the year, the Company paid RM737,000 as
management fee. The Company also reimburses all reasonable
expenses incurred by the Directors, where relevant, in the course
of carrying out their duties as Directors.

In addition to the MD/CEO, other Management staff have been


seconded from PETRONAS. Their training and succession
planning are aligned to the PETRONAS Human Resources
Management Division. The Board ensures that only appropriate
personnel with the relevant skills and experience are appointed
to Management positions of the Company. The Board further
ensures that the members of the Management Committee of the
Company are rewarded based on performance.
REPORTING PROCEDURES
The Chairman of the NomRem Committee reports on key issues
deliberated at the NomRem Committee to the Board and Minutes
of the Meetings of the NomRem Committee are circulated to all
members of the Board.

Lim Beng Choon


Chairman
Nomination and Remuneration Committee
11 March 2013

102

PETRONAS GAS BERHAD (101671-H)

Nomination and Remuneration Committees


Terms of Reference
CONSTITUTION
The Nomination and Remuneration (NomRem) Committee was
formed by the Board pursuant to its meeting on 14 November
2011.

MEMBERSHIP
The members of the NomRem Committee shall be appointed
by the Board from amongst their number and shall consist of
not less than three members. In line with the Malaysian Code
of Corporate Governance 2012 (MCCG 2012), all NomRem
Committee members including the Chairman shall be NonExecutive Directors. The majority of the NomRem Committee
members including the Chairman shall be Independent Directors.
The members of the NomRem Committee shall elect a Chairman
from amongst their number who shall be an Independent Director.
The actual number of members shall be determined from time to
time by resolution of the Board.
The terms of office and performance of the NomRem Committee
and each of its members shall be reviewed by the Board
periodically as to whether the NomRem Committee and/or its
members have carried out its duties in accordance with its Terms
of Reference.

shall elect one of their members from the independent directors


as Chairman of the meeting. Other Directors, key executives
and employees may attend any particular meeting only at the
NomRem Committees invitation.
The Company Secretary or in his/her absence, his/her deputy
shall be the Secretary of the NomRem Committee. Minutes of the
meetings shall be duly entered in the books provided therefor.
Meetings shall be held at least twice a year or at such other times
as the Chairman of the NomRem Committee deems necessary.
In addition to the schedule of regular meetings established by the
Committee, the Chairman of the NomRem Committee may call a
special meeting at any time.
Meetings of the NomRem Committee shall be arranged by the
Secretary at the request of the Chairman or any other member
of the NomRem Committee. Unless otherwise agreed, notice of
each meeting confirming the venue, time and date shall be issued
to each NomRem Committee member and to other attendees (as
appropriate) in advance of each scheduled meeting date together
with an agenda and supporting papers.
The NomRem Committee shall regulate its own detailed
procedure, in particular:
i)

the calling of meetings;

RESIGNATION OF MEMBERS

ii) the notice to be given for meetings;

Any NomRem Committee member may resign effective upon the


date of the member giving oral or written notice to the Chairman
of the Board, the Company Secretary or the Board (unless
the notice specifies a later time for the effectiveness of such
resignation). The Board will elect a successor to take office when
the resignation becomes effective.

iii) the voting and proceedings of meetings;

The appointment of a NomRem Committee member shall


automatically be terminated if the member ceases to be a director
for any reason whatsoever or as determined by the Board.

MEETING
To form a quorum, two of the members of the NomRem
Committee must be present, one of whom must be Independent
Director.
The Chairman of the NomRem Committee will be designated
by the Board based upon recommendation by the members. In
the absence of the Chairman, the remaining members present

iv) the keeping of minutes; and


v) the custody, production and inspection of minutes.

AUTHORITY
The NomRem Committee is authorised by the Board to
investigate any activity within its Terms of Reference. It
is authorised to seek any information it requires from any
employees, Company officers and external parties.
The NomRem Committee is authorised to engage external
consultants and other advisers, or otherwise obtain such
independent legal or other professional services it requires.
The NomRem Committee will have or be provided with sufficient
resources undertaking its duties, including access to the
Company secretariat.

PETRONAS GAS BERHAD (101671-H)

103

DUTIES AND FUNCTIONS

i)

The following shall be the common recurring duties and


responsibilities of the NomRem Committee in carrying out its
purpose. These duties and responsibilities are set forth as a
guide to the NomRem Committee with the understanding that
the NomRem Committee may amend or supplement them as
appropriate under the circumstances to the extent permitted by
applicable laws:

To implement a formal appraisal process for the evaluation


of the effectiveness of the Board as a whole, the committees
and the individual contribution of each Board member.

j)

To carry out other actions and do such other things as may be


referred to it from time to time by the Board.

The NomRem Committee shall, amongst others, undertake the


following functions in relation to remuneration:

a) To assess Directors on an on-going basis, the effectiveness of


the Board as a whole, the Committees of the Board and the
contribution of each individual Director.

i)

b) To review regularly the selection criteria for Board


membership, the Board structure, size and composition and
make recommendations to the Board with regard to any
adjustments which are deemed necessary.

ii) to implement/maintain a reward system for Directors and


Senior Management based on their performance against the
Companys results; and

c) To develop membership qualifications for the Board and all


Board Committees, including defining specific criteria for
Director independence and Committee membership.

d) To look into suggestions for candidates for membership on


the Board, recommend prospective Directors, with a view, to
provide an appropriate balance of knowledge, experience and
capability on the Board, including shareholders nominations
to the Board and assess the suitability of potential candidates
against the set criteria.

e) To review annually the Boards mix of skills, education and


experience and other qualities including core competencies
which Directors should bring to the Board, taking into account
the current and future needs of the Company.

f)

To review and recommend to the Board appropriate corporate


governance policies and procedures of the Company.

g) To monitor compliance with corporate governance standards.

h) To annually convene a meeting with the Chairman of any


committee appointed by the Board for purpose of reviewing
their roles and responsibilities and facilitating appropriate
coordination.

to establish and recommend the remuneration structure


and policy for Directors and Senior Management and review
changes to the policy, as necessary;

iii) to review and recommend the entire individual remuneration


packages for each of the Directors and Senior Management.
REPORTING PROCEDURES
Draft minutes of each meeting shall be distributed to all members
of the NomRem Committee. The minutes of the NomRem
Committee meeting shall be confirmed at the next meeting of the
NomRem Committee and shall be available on request from the
Company Secretary to all Non-Executive Directors. The confirmed
minutes of the meeting will be tabled to the Board for notation
succeeding the NomRem Committee meeting.
Any decision shall be decided by a majority of votes. In the case
of an equality of votes, the Chairman of the meeting shall have a
second or casting vote.

104

PETRONAS GAS BERHAD (101671-H)

Statement on Risk Management and Internal Control


The Group adopts PETRONAS shared values of loyalty, integrity,
professionalism and cohesiveness which set the tone for a sound
system of risk management and internal control. The Board is
committed to maintain and continuously improve the Groups
system of risk management as well as internal control and is
pleased to provide the following statement which outlines the
nature and scope of risk management and internal control of the
Group during the year under review.

BOARDS ACCOUNTABILITY
The Board acknowledges the importance of a sound risk
management system and internal control practices for good
corporate governance with the objective of safeguarding
shareholders investments and the Groups assets. The Board
affirms its overall responsibilities for the Groups system of risk
management and internal control and has undertaken a review
of the adequacy and effectiveness of those systems including
financial and operational and compliance with relevant laws and
regulations.
In view of the limitations that are inherent in any system of
internal control, this system is designed to manage, rather than
eliminate, the risk of failure of achieving the corporate objectives.
Accordingly, it can only provide reasonable but not absolute
assurance against material misstatement or losses.
The Group has in place an ongoing process for identifying,
evaluating, monitoring and managing all significant risks faced by
the Group, that has been in place for the year and up to the date
of approval of the annual report and financial statements. This
process is regularly reviewed by the Board in accordance with the
Statement on Risk Management and Internal Control: Guidelines
for Directors of Listed Issuers.

The Risk Management Department (RMD) is entrusted with


responsibility of ensuring effective risk governance and
implementation within the Group. The risk profile of the Group
has been established based on the enterprise risk management
concept with principal risks identified and regular reviews of key
risk indicators and risk treatments.
RMD provides regular updates to both PGB Management
Committee (MC) and Board Audit Committee (BAC) in the form
of quarterly Enterprise Risk Report (ERR). The report covers the
risk profile and status of risk mitigation implementation, i.e. event
mitigation, risk management framework implementation and
risk initiatives. The detailed risk events, risk rating as well as the
status updates of the mitigation actions are also updated in the
PETRONAS INTERISK system.

Event Mitigation
Detailed risk events arising from PGBs business, together with
existing controls and risk levels are discussed and approved
by the BAC together with the appropriate risk mitigations to
address the risks. The risk mitigations identified are monitored for
completion and the resultant residual risks are determined and
reduced to an acceptable risk level as approved by the BAC.
In addition, risk assessments are also conducted for new
business ventures. The risk assessments report which covers risk
profile and mitigations are included in the business development
proposal reported to the Business Development Steering
Committee chaired by PGB Managing Director/Chief Executive
Officer (MD/CEO).

Risk Management Framework Implementation


Project Risk

RISK MANAGEMENT
Risk management is regarded by the Board to be an integral part
of the Groups organisational processes, with the objective of
maintaining a sound system and ensuring its continuing adequacy
and integrity. Risk Management is firmly embedded in the Groups
management system. The Groups Risk Management Policy is to
adopt an effective and progressive enterprise risk management
system to identify, analyse, appraise and monitor the risks facing
the Group and to take specific measures to mitigate these risks.

The Group continues to implement Project Risk Management


processes in line with the PETRONAS Project Management
System (PPMS) requirements. The Group carries out Project Risk
Assessments, Independent Reviews and Lessons Learnt for all its
major and critical projects. The Project Risk Assessment reports
are captured in the Project Risk Management (PRisMa) system to
enable efficient monitoring and reporting.
Project risk is monitored and reported to the Management via
monthly Project Risk Report. The report which also includes
project risk areas of concern is incorporated into the ERR
submitted to BAC on a quarterly basis.

PETRONAS GAS BERHAD (101671-H)

105

PGB Strategic Thrusts


Deliver World Class Operational
Performance

Pursue Profitable Revenue Growth

Achieve People Excellence

Enterprise Risk Profiling

Risk Mitigation Implementation

Risk Management Framework


Implementation

Event Mitigation

Mitigation follow-up and


determination of residual risk
New business venture risk
event mitigation

Project Risk
Contractor Risk
Credit Risk
Business Continuity Management
HSE Risk
Finance Risk

Risk Initiatives

Risk Management Forum


Risk Management
Effectiveness Assessment
BCP drill

Enterprise Risk Reporting


PGB Enterprise Risk Management System

Contractor Risk
Contractor risk is managed through technical and commercial
tendering evaluation exercises facilitated by PGBs Project Supply
Chain Management (PSCM) Department and PETRONAS Group
Shared Material and Services Organisation (SMSO) prior to the
award of contracts in compliance with the PETRONAS Group
tendering and contract policy and procedures. The Contractor
Risk Assessment (CoRA) process is an integral part of the
contractor selection process which is being applied prior to
awarding the contract to the contractor.

Credit Risk
To reduce its credit risk exposure, the Group continues to apply
the Credit Risk Management processes whereby the customers
are assessed using the PETRONAS Credit Risk Rating System
(PCRRS) to ensure alignment with the credit assessment process
adopted by the PETRONAS Group. The system evaluates the
creditworthiness and assigns credit risk ratings to all the Groups

external customers. In addition, annual reviews are conducted on


the assigned credit risk ratings of these customers while the trend
of the customers financials are also analysed to detect early signs
of financial distress and provide early warning to Management.
The Group has established its Credit Risk Tolerance Limit for
utilities customers to minimise potential loss from credit exposure.
The credit risk is monitored and reported to the business and
Management via monthly Credit Risk Report. The report also
includes Credit Value at Risk which measures potential loss from
customers overdue balances against Credit Risk Tolerance Limit.
On a quarterly basis, the report is incorporated into the ERR
submitted to BAC.
During the year under review, the Group adopted the revised
PETRONAS Credit Risk Rating methodology and applied the
upgraded PCRRS to ascertain the creditworthiness of the
customers for an effective credit exposure management.

106

PETRONAS GAS BERHAD (101671-H)

Statement on Risk Management and Internal Control

Business Continuity Management


The Plant and Facilities Risk Management (PFRM) and Business
Continuity Plan (BCP) are governed under the Business Continuity
Management (BCM) capability as part of the Integrated Plant
Operations Capability System (iPOCS) driven by PETRONAS
Group Technology Solutions (GTS). The iPOCS supports
the PETRONAS Operational Excellence (OE) Framework
implementation in PETRONAS.
PFRM is established at the operating divisions to embed risk
assessment, risk mitigation, monitoring and reporting of risk that
are relevant to plant and facilities environment.
The Company has in place BCP that defines the structure and
processes for managing emergencies at the operational and
Company level. Scheduled drills and exercises are carried out at
various facilities/asset levels to ensure the readiness in the event
of an emergency or crisis. During the year under review, one BCP
drill was conducted at Transmission Operations Division (TOD)
in Segamat and one table top drill was carried out to test the
adequacy and reliability of the BCP for Peninsular Malaysia Gas
Supply. BCP was activated at Centralised Utility Facilities (CUF)
in Kertih to ensure continuity of supply of industrial gases
to customers.

During the year under review, external audit was conducted


for SIRIM recertification for MS ISO 14001:2004 Environmental
Management System, OHSAS 18001:2007 Occupational Health
and Safety Management System and MS1722:2005 Occupational
Health and Safety Management System at Head Office, CUF
and TOD in line with the Groups initiative to integrate its various
management systems under the PGBs Integrated Management
System.

Finance Risk
The Company has adopted PETRONAS Corporate Financial
Policy (CFP) which sets forth the policy for financial management
activities embedding the principles of financial risk management.
The CFP governs financial risk management practices across
the Company. The Company has established CFP supporting
guidelines to manage its finance risk exposures that includes
counterparty risk, liquidity risk, foreign exchange risk and interest
rate risk.

Risk Initiatives
The Group continues to enhance risk management awareness
and capability building across the Group through various risk
communication sessions such as sharing, forum and engagement
sessions.

Health, Safety and Environment (HSE) Risk


The Group leverages on the PETRONAS HSE Management
System (HSEMS) to manage HSE risk and ensure that operations
are in tandem with the HSE regulatory requirements. The HSEMS
process ensures that HSE risk within the business is managed
effectively. In ensuring effective implementation of HSEMS, a
Mandatory Control Framework was deployed to strengthen the
HSE governance within the Group.
The Group reviews its risk register on regular basis in addressing
the changes that triggered from incidents, plant modifications
activities and amendment of the PETRONAS Technical Standard
(PTS). HSE assurance is carried out to provide independent
assurance on the effectiveness of HSE controls. The assurance
reports are presented to the Management.

The Group benefits from being part of the PETRONAS Group,


which has an established Board Governance and Risk Committee
that primarily provides guidance and recommends strategies and
policies, as well as groupwide risk management awareness and
capability building program.

Moving Forward
The Group will continue its focus in implementing key risk
management strategies and initiatives towards institutionalisation
of risk management as a business culture throughout the Group.

INTERNAL AUDIT FUNCTION


The Board recognises that the internal audit function is an integral
part of the governance process. PETRONAS Group Internal
Audit Division (GIAD) undertakes the internal audit function of the
Group and provides independent assurance on the adequacy and
effectiveness of the internal control systems implemented by the
Group, and reports its findings directly to the BAC.

PETRONAS GAS BERHAD (101671-H)

107

The internal audit function includes undertaking reviews of the


Groups system of internal controls, its operations and selected
key activities based on risk assessment and in accordance with
the annual internal audit plan which is presented and approved by
the BAC.
BAC receives and reviews all GIAD audit reports and directs
the Management for the necessary corrective actions. The
Management is responsible for ensuring that agreed corrective
actions are taken on the reported areas within the required time
frame. Accordingly, the status of the audit issues is reported to
the BAC on a quarterly basis.
GIAD adopts the standards and principles outlined in the
International Professional Practices Framework of the Institute of
Internal Auditor.
The key activities of the internal audit function are set out in the
BAC Report on page 110 to 112.

Organisation Structure

An organisational structure which defines the formal lines of


responsibility and delegation of authority is in place to assist in
implementing the Groups strategies and day-to-day business
activities. A process of hierarchical reporting has been
established which provides a documented and auditable trail
of accountability. The Companys organisational structure is
set out on page 14 of the annual report.

The Company has a Management Committee which serves


in an advisory capacity to the MD/CEO in accomplishing the
vision, mission, strategies and objectives set for the Group.

Various functional committees have also been established


across the Group to ensure the Groups activities and
operations are properly aligned towards achieving the
organisation goals and objectives.

Budget Approval

Budgets are an important control mechanism used by the


Group to ensure an agreed allocation of Group resources
and that the operational managers are sufficiently guided
in making business decisions. The Group undertakes a
comprehensive annual planning and budgeting exercise which
include the development of business strategies for a five-year
period and establishment of performance indicators against
which operating units and subsidiaries are evaluated.

Variances against budget are analysed and reported to


the MC and BAC/Board on a monthly and quarterly basis
respectively. Management monitors major variances and
undertakes actions, where necessary.

OTHER SIGNIFICANT ELEMENTS OF INTERNAL


CONTROL SYSTEM
The other significant elements of the Groups internal control
system are tabulated below.

Board

The Board meets at least once a quarter, in order to maintain


full and effective supervision on the overall governance of the
Group. The MD/CEO leads the presentation of Board Papers
and provides comprehensive explanation on pertinent issues.
In arriving at any decisions, based on recommendations by
the Management, a thorough deliberation and discussion
by the Board is a prerequisite. In addition, the Board is kept
updated on the Groups activities and its operations on a
regular basis.

The Board reviews any significant issues arising from changes


in the business environment, which may result in significant
risks to the Group. The General Manager of Finance Division
provides the Board with quarterly performance report.

Where areas for improvement in the system are identified, the


Board considers the views and recommendations made by
the BAC and Management.

Limits of Authority

A documented Limits of Authority (LOA) with clear lines of


accountability and responsibility serves as a tool of reference
to identify the appropriate approving authority at various levels
of management including matters that require the Boards
approval.

108

PETRONAS GAS BERHAD (101671-H)

Statement on Risk Management and Internal Control

System and Control

Systems and Control Unit of Finance Division conducts


scheduled governance and compliance audits in addition
to the internal audits conducted by GIAD. The audits are
meant to provide assurance to the Management on the
Groups internal control effectiveness and compliance to PGB
Enterprise Resource Planning (ERP) systems established
roles and segregation of duties, LOA, policies and work
procedures. At the end of each audit, a report is presented to
the PGB MC highlighting findings and the agreed corrective
actions. The status of the audit issues are monitored and
reported to PGB MC on a quarterly basis.

Tender Committee

Tender Committee structure with defined level of


responsibilities has been established to review all major
contracts. Subsequent to the review by the relevant Tender
Committees, the contracts will be subjected to approval by
the relevant approving authority who is independent from the
Tender Committees. Tenders are called for and are awarded
based on factors such as capability, quality, track record,
speed of delivery and cost.

Operating Procedures and Guidelines

Internal control procedures are documented in standard


operating procedure manuals with established guidelines on
business planning, capital expenditure, financial operations,
performance reporting, plant and transmission operations,
supply chain management, human resource, information
technology and HSE.

Financial Control Framework

The Company has adopted PETRONAS Financial Control


Framework (FCF) with the principal objective of enhancing the
quality of the Companys financial reports through a structured
process of ensuring the adequacy and effectiveness of
key internal controls operating at various levels within
the Company at all times. FCF requires among others,
documentation of key controls, remediation of control gaps
as well as a regular conduct of testing of control operating
effectiveness.

On a semi-annual basis, each key process owner at various


management levels is required to complete and submit
a Letter of Assurance which provides confirmation of
compliance to key controls for the areas of the business for
which they are accountable.

Contingency Planning

The Group has contingency planning in place that defines


the structure and processes for managing emergencies at
operational locations. There is a three-tier response system
in place which provides a clear demarcation of roles and
responsibilities between emergency site management,
operating division management and MC.

The above integrated contingency planning together with


business continuity strategies shall enhance the Group
preparedness to respond and reduce the impact of crisis as
well as recover and restore the Groups critical functions within
a reasonable period of time toward sustaining the Groups
operational survival thus protecting business and customers
during crisis or disaster.

MANAGEMENT ROLE
Management is accountable to the Board for the implementation
of the processes in identifying, evaluating, monitoring and
reporting of risks and internal control as prescribed above. The
MD/CEO and General Manager of Finance Division provided
assurance to the Board that the Groups risk management and
internal control system are operating adequately and effectively.

WEAKNESSES IN INTERNAL CONTROL THAT


RESULT IN MATERIAL LOSSES
There were no material losses incurred during the year as a result
of weaknesses in internal control. Management continues to
take measures to strengthen the internal control environment.
Accordingly, the Board is satisfied that the Groups risk
management system and internal control system are adequate
and effective.

PETRONAS GAS BERHAD (101671-H)

109

REVIEW OF THIS STATEMENT


The external auditors have reviewed this Statement on Risk
Management and Internal Control pursuant to the scope set
out in Recommended Practice Guide (RPG) 5 issued by the
Malaysian Institute of Accountants (MIA) for inclusion in the annual
report of the Group for the year ended 31 December 2012, and
reported to the Board that nothing has come to their attention
that cause them to believe that the statement is inconsistent with
their understanding of the process the Board has adopted in the
review of the adequacy and effectiveness of risk management
and internal controls within the Group.
RPG 5 does not require the external auditors to consider whether
the Directors Statement on Risk Management and Internal
Control covers all risks and controls, or to form an opinion on the
adequacy and effectiveness of the Groups risk management and
internal control system including the assessment and opinion by
the Directors and Management thereon.
This Statement on Risk Management and Internal Control is made
in accordance with the resolution of the Board dated 11 March
2013.

Datuk Anuar bin Ahmad


Chairman

Samsudin bin Miskon


Managing Director/ Chief Executive Officer

110

PETRONAS GAS BERHAD (101671-H)

Board Audit Committee Report

The Board Audit Committee (BAC) of PETRONAS Gas Berhad is


pleased to present the Audit Committee Report for the financial
year ended 31 December 2012 in compliance with Paragraph
15.15 of Main Market Listing Requirements of Bursa Malaysia
Securities Berhad (MMLR).
COMPOSITION
The BAC was formed by the Board pursuant to its meeting on
14 August 1995. Currently the BAC comprises of three Directors,
in compliance with Paragraph 15.09(1)(a) of the MMLR.
The members are as follows:
No.

Name of Members

1.

Dato N. Sadasivan N.N. Pillay


Chairman
(Senior Independent Non-Executive Director)

2.

Dato Ab. Halim bin Mohyiddin


(Independent Non-Executive Director)

3.

Datuk Rosli bin Boni


(Non-Independent Non-Executive Director)

4.

Encik Muri bin Muhammad*


(Independent Non-Executive Director)

* Vacated office on 31 December 2012 pursuant to Paragraph 15.05(3)(c)

Dato Ab. Halim bin Mohyiddin is currently presiding as a Council


Member of The Malaysian Institute of Certified Public Accountants
(MICPA) and also serves as the Chairman of the Education
Training Committee of the Institute. He is also a member of
the Malaysian Institute of Accountants (MIA). In this regard,
the Company is in compliance with Paragraph 15.09(1)(c)(i)
of the MMLR.

TERMS OF REFERENCE
The BAC is governed by the Terms of Reference as stipulated
on pages 113 to 115 of the Annual Report. All the requirements
under the Terms of Reference were fully complied with.

MEETINGS
During the year, the BAC held four meetings. The Meeting
attendance record of the members are as follows:
Name of BAC Members

Attendance

Dato N. Sadasivan N.N. Pillay

4/4

Dato Ab. Halim bin Mohyiddin

4/4

Datuk Rosli bin Boni

4/4

Encik Muri bin Muhammad*

3/4

of the MMLR.
* Vacated office on 31 December 2012 pursuant to Paragraph 15.05(3)(c)

In line with the Malaysian Code on Corporate Governance 2012


(MCCG 2012) and Paragraph 15.09(1)(b) of the MMLR, all three
BAC members are Non-Executive Directors, two of whom are
Independent Directors. Both Independent Directors satisfy the
test of independence under Paragraph 1.01 of the MMLR.

of the MMLR.

PETRONAS GAS BERHAD (101671-H)

111

Dato N. Sadasivan N.N. Pillay Dato Ab. Halim bin Mohyiddin Datuk Rosli bin Boni Encik Muri bin Muhammad

By invitation, the Managing Director/Chief Executive Officer


(MD/CEO), Company Secretaries, General Manager of Finance
Division, Head of Risk Management Department, external and
internal auditors were also present during deliberations which
required their inputs and advice.
The Head of Group Internal Audit Division of PETRONAS (GIAD)
was present at the BAC meetings to present the internal audit
reports to the BAC. Relevant members of the Management were
at times invited to brief the BAC on specific issues arising from the
audit findings. The partner of the external auditors also attended
the BAC meeting to present the external audit plan for the year
as well as the outcome of the statutory audit conducted on the
Company. In addition, during the year, the BAC met with the
external auditors twice without the presence of the Management.
Deliberations during the BAC meetings included performance
review of the Company, the proposed annual and interim financial
reporting to Bursa Malaysia Securities Berhad, the status of open
audit findings together with the agreed corrective actions and risk
management activities.
It is common practice that the draft BAC minutes are circulated
to the Board members prior to the Board meeting subsequent to
the BAC meeting. This assists the BAC Chairman to effectively
convey to the Board on matters deliberated at the BAC meeting.
Minutes of the BAC meeting are tabled for confirmation during the
next BAC meeting, after which it is distributed to the Board for
notation. In addition to communicating to the Board on matters
deliberated during the BAC meeting, the BAC Chairman also
recommends to the Board the approval of annual and interim
financial statements.

SUMMARY OF ACTIVITIES OF THE BAC


The following activities were carried out by the BAC during the
financial year ended 31 December 2012:
1. Reviewed the annual internal audit plan for the year including
its scope, basis of assessments and risk ratings of the
proposed areas of audit.
2. Reviewed and deliberated on reports of audits conducted by
the GIAD.
3. Monitored all corrective actions on audit findings identified by
the GIAD until all issues are resolved.
4. Reviewed the quarterly financial results including quarterly
financial announcements to Bursa Malaysia Securities Berhad
before recommending the same for approval by the Board
upon being satisfied that, it complies with applicable approved
Malaysian Financial Reporting Standards (MFRS) issued by
the Malaysian Accounting Standards Board, MMLR and other
relevant regulatory requirements.
5. Reviewed potential impact of implementation of new MFRSs
to the Companys financial statements.
6. Reviewed the Companys annual and quarterly management
accounts.
7. Reviewed the appointment of external auditors and their
remuneration thereof.
8. Reviewed with the external auditors audit strategy and scope
for the statutory audit of the Companys financial statements
for the financial year ended 31 December 2012.

112

PETRONAS GAS BERHAD (101671-H)

Board Audit Committee Report

9. Reviewed with the external auditors the results of the statutory


audit and the audit report.
10. Reviewed the audited financial statements of the Company
prior to submission to the Board for their consideration and
approval, upon being satisfied that, inter alia, they were drawn
up in accordance with the provisions of the Companies Act,
1965, Malaysia and the applicable approved MFRS issued
by the Malaysian Accounting Standards Board. The review
also included relevant statements in relation to the financial
statements, being the Corporate Governance Statement,
Statement on Risk Management and Internal Control,
Statement of Directors Responsibilities and BAC Report.

The resulting reports from the audits were reviewed by the


BAC and subsequently forwarded to the Management for the
necessary corrective actions. The Management is responsible for
ensuring that corrective actions are taken within the required time
frame.

REPORTING TO THE EXCHANGE


For the financial year under review, the BAC was of the view that
the Company was in compliance with the MMLR and as such, the
reporting to Bursa Malaysia Securities Berhad under Paragraph
15.16 of the MMLR was not required.

11. Reviewed the Companys Enterprise Risk Report, Status of


Risk Monitoring and deliberated on the risk exposures and the
required mitigation plans.

INTERNAL AUDIT
The internal audit function of the Company was carried out by the
GIAD. They maintained at all times their impartiality, proficiency
and due professional care by having their plans and reports
directly under the purview of the BAC.
The internal audits were undertaken to provide independent
assessments on the adequacy, efficiency and effectiveness of the
Companys internal control systems in anticipating potential risks
exposures over key business processes within the Company.
The BAC has full access to internal auditors and received reports
on all audits performed.
During the financial year under review, the internal auditors had
carried out audits according to the internal audit plan which had
been approved by the BAC. Internal audits were carried out to
provide assurance that internal controls are established and
operating as intended to achieve effective and efficient operations
and adherence to applicable policies, guidelines and procedures.
The audits conducted during the year were:

Audit on PGB Transmission Operations Division Open Access


Readiness.

Audit on PGB Finance Activities.

Shareholders Audit on Industrial Gases Solutions Sdn Bhd.

Audit on Kimanis Power Plant Project Management and


Governance Activities.

Dato N. Sadasivan N.N. Pillay


Chairman
Board Audit Committee
11 March 2013

PETRONAS GAS BERHAD (101671-H)

113

Board Audit Committees Terms of Reference


CONSTITUTION
The Board Audit Committee (BAC) was formed by the Board
pursuant to its meeting on 14 August 1995.

MEMBERSHIP
The members of the BAC shall be appointed by the Board from
amongst their number and shall consist of not less than three
members. In line with Paragraph 15.09(1)(b) and 15.10 of the
Main Market Listing Requirements of Bursa Malaysia Securities
Berhad (MMLR), all BAC members including the Chairman
shall be Non-Executive Directors. The majority of the BAC
members including the Chairman shall be Independent Directors.
An Independent Director shall be a Director who fulfills the
requirements as provided in the MMLR.
All BAC members must be financially literate with at least one
member of the BAC:
a) shall be a member of the Malaysian Institute of Accountants;
or
b) if he/she is not a member of the Malaysian Institute of
Accountants, he/she must have at least three years working
experience; and
i)

passed the examinations specified in Part I of the First


Schedule of the Accountants Act, 1967, Malaysia; or

ii) is a member of one of the associations of accountants


specified in Part II of the First Schedule of the
Accountants Act, 1967, Malaysia; and
c) fulfills such other requirements as prescribed or approved by
Bursa Malaysia Securities Berhad.
The members of the BAC shall elect a Chairman from amongst
their number who shall be an Independent Director.
If a member of the BAC resigns, dies or for any other reason
ceases to be a member with the result that the number of
members is reduced to below three, the Board shall within three
months of that event, appoint such number of new members
as may be required to make up the minimum number of three
members.

No alternate Director can be appointed as a member of the BAC.


The terms of office and performance of the BAC and each of its
members shall be reviewed by the Board periodically to whether
the BAC and/or its members have carried out its duties in
accordance with its Terms of Reference.

MEETING
To form a quorum, the majority of the members present must be
Independent Directors and one of whom shall be the Chairman
of the BAC. The BAC shall be able to convene meetings with the
external auditors, internal auditors or both without the presence of
any other Directors or employees whenever it deems necessary.
The external auditors and internal auditors have the right to
appear and be heard at any meeting of the BAC and shall appear
before the BAC when required to do so by the BAC.
The Company Secretary or in his/her absence, his/her deputy
shall be the Secretary of the BAC. Minutes of the meetings shall
be duly entered in the books provided therefor.
Meetings shall be held not less than four times a year.
The external auditors may request a meeting if they consider it
necessary. The Chairman of the BAC shall convene a meeting
of the Committee to consider any matters the external auditor
believes should be brought to the attention of the Board or
shareholders.

AUTHORITY
The BAC is authorised by the Board to investigate any activity
within its Terms of Reference. It is authorised to seek any
information it requires from any employee and all employees are
directed to cooperate with any request made by the BAC.
The BAC is authorised by the Board to obtain outside legal
or other independent professional advice and to secure the
attendance of outsiders with relevant experience and expertise if it
considers this necessary.
The BAC is authorised by the Board to communicate directly
with internal and external auditors, as well as the members
of Management such as the Chairman of the Company and

Managing Director/Chief Executive Officer on a continuous basis


in order to be informed and updated with matters related to the
Company.

114

PETRONAS GAS BERHAD (101671-H)

Board Audit Committees Terms of Reference

DUTIES AND FUNCTIONS

3) Financial Reporting Review

The duties and functions of the BAC shall be:

To review with the Management and the external auditors the


quarterly results and year-end financial statements prior to the
approval by the Board, focusing particularly on:

1) External Audit
a) To consider the appointment of the external auditors,
the audit fees, and any question in relation to resignation
or dismissal of the external auditors before making
recommendation to the Board; and
b) To review and discuss with the external auditors, before
the audit commences, the nature and scope of the audit,
and ensure coordination where more than one audit firm is
involved.
2) Internal Audit
a) To review the internal audit plan, consider the major
findings of internal audits and Managements responses,
and ensure coordination between the internal and external
auditors;
b) To review the adequacy of the scope, functions,
competency and resources of the internal audit functions
and that it has the necessary authority to carry out its
work;
c) To review the audit reports;
d) To direct and where appropriate supervise any special
project or investigation considered necessary;
e) To prepare periodic reports to the Board summarising
the work performed in fulfilling the BACs primary
responsibilities; and
f)

To determine the remit of internal audit function which


reports directly to the BAC. The internal audit function
should be independent of the activities they audit and
should be performed with impartiality, proficiency and due
professional care.

i)

any change in accounting policies and practices;

ii) significant and unusual events;


iii) major judgmental areas;
iv) significant adjustments resulting from the audit;
v) the going concern assumption;
vi) compliance with accounting standards; and
vii) compliance with other legal requirements and MMLR.

4) Related Party Transactions


To review any related party transaction and conflict of interest
situation that may arise in the Company including any
transaction, procedure or course of conduct that raises the
questions of management integrity.
5) Internal Control
To keep under review the effectiveness of internal control
systems and the internal and/or external auditors evaluation
of these systems and in particular review the external auditors
Management Letter and Managements responses.

PETRONAS GAS BERHAD (101671-H)

115

6) Other Matters
a) To arrange for periodic reports from Management, the
external auditors and the internal auditors to assess the
impact of significant regulatory changes, and accounting
or reporting developments proposed by accounting and
other bodies, or any significant matter that may have a
bearing on the annual examination;
b) To discuss problems and reservations arising from the
internal audits, interim and final audits, and matters the
internal and external auditors may wish to discuss (in the
absence of Management where necessary);
c) Where the BAC is of the view that a matter reported by it
to the Board has not been satisfactorily resolved resulting
in a breach of the MMLR, the BAC must promptly report
such matter to the Securities Commission; and
d) Carrying out any other functions that may be mutually
agreed upon by BAC and the Board.

REPORTING PROCEDURES
The Secretary shall circulate the minutes of meetings of the BAC
to all members of the Board.

116

Statement of Directors Responsibility


IN RELATION TO THE FINANCIAL STATEMENTS

The financial statements of the Group and of the Company as set out on pages 118 to 191,
are properly drawn up so as to give a true and fair view of the state of affairs of the Group
and of the Company as at 31 December 2012 and of the results of its operations and cash
flows for the year ended on that date.
The Directors consider that in preparing the financial statements of the Group and of the
Company:

appropriate accounting policies have been used and consistently applied;

reasonable and prudent judgments and estimates were made;

all Malaysian Financial Reporting Standards and the Companies Act, 1965, Malaysia
have been followed; and

are prepared on a going concern basis.

The Directors are responsible for ensuring that the accounting and other records
and registers required by the Companies Act, 1965, Malaysia 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 prevent
and detect fraud and other irregularities.

PETRONAS GAS BERHAD (101671-H)

Financial
Statements

Directors Report

118

Statement by Directors

123

Statutory Declaration

123

Consolidated Statement of Financial Position

124

Consolidated Statement of Profit or Loss


and Other Comprehensive Income

125

Consolidated Statement of Changes in Equity

126

Consolidated Statement of Cash Flows

127

Statement of Financial Position

128

Statement of Profit or Loss and Other


Comprehensive Income

129

Statement of Changes in Equity

130

Statement of Cash Flows

131

Notes to the Financial Statements

132

Independent Auditors Report

192

118

PETRONAS GAS BERHAD (101671-H)

Directors Report
FOR THE YEAR ENDED 31 DECEMBER 2012

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 2012.

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, associate and jointly controlled entity are as stated in note 4, note 5 and note 6 to the financial statements
respectively.

Results
Group
RM000

Company
RM000

Profit for the year

1,397,101

1,478,722

Attributable to:
Shareholders of the Company
Non-controlling interests

1,405,205
(8,104)

1,478,722

Dividends
During the financial year, the Company paid:
i)

a final dividend of 25% per ordinary share under single tier system in respect of the financial period ended 31 December 2011 amounting
to RM494,683,000 on 13 June 2012; and

ii)

an interim dividend of 15% per ordinary share under single tier system in respect of the financial year ended 31 December 2012 amounting
to RM296,810,000 on 20 September 2012.

The Directors propose a final dividend of 35% per ordinary share under single tier system amounting to RM692,556,000 in respect of the financial
year ended 31 December 2012 for shareholders approval at the forthcoming Annual General Meeting.
The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will
be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2013.

Reserves and Provisions


There were no material movements to or from reserves and provisions during the year under review other than as disclosed in the financial
statements.

PETRONAS GAS BERHAD (101671-H)

119

Directors Report
FOR THE YEAR ENDED 31 DECEMBER 2012

Directors of the Company


Directors who served since the date of the last report are:
Datuk Anuar bin Ahmad
Dato N. Sadasivan N.N. Pillay
Samsudin bin Miskon
Dato Mohammad Medan bin Abdullah
Datuk Rosli bin Boni
Pramod Kumar Karunakaran
Dato Ab. Halim bin Mohyiddin
Lim Beng Choon
Muri bin Muhammad (office vacated on 31 December 2012)
Ramlan bin Abdul Malek (office vacated on 31 December 2012)
The offices of Muri bin Muhammad and Ramlan bin Abdul Malek were vacated on 31 December 2012 pursuant to paragraph 15.05(3)(c) of the
Main Market Listing Requirements.
In accordance with Article 93 of the Companys Articles of Association, Datuk Anuar bin Ahmad and Datuk Rosli bin Boni 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 96 of the Companys Articles of Association, no Directors were appointed to fill a casual vacancy in the Board, thus,
no Director will retire at the forthcoming Annual General Meeting and offer themselves for re-election.
In accordance with Section 129(6) of the Companies Act, 1965, Dato N. Sadasivan N.N. Pillay is retiring at the forthcoming Annual General
Meeting. Dato N. Sadasivan N.N. Pillay offers himself for re-appointment and is eligible to be re-appointed.

Directors Interests
The Directors in office at the end of the year who have interests in the shares of the Company and of its related corporations other than wholly
owned subsidiaries as recorded in the Register of Directors Shareholdings are as follows:
Number of ordinary shares of RM1.00 each in
the Company
Name

Muri bin Muhammad


Dato Ab. Halim bin Mohyiddin

Balance at
1.1.2012

Bought

Sold

Balance at
31.12.2012

7,000
5,000

(7,000)

5,000

Number of ordinary shares of RM1.00 each in


PETRONAS Dagangan Berhad
Name

Datuk Anuar bin Ahmad


Muri bin Muhammad

Balance at
1.1.2012

Bought

Sold

Balance at
31.12.2012

2,000
10,000

(10,000)

2,000

120

PETRONAS GAS BERHAD (101671-H)

Directors Report
FOR THE YEAR ENDED 31 DECEMBER 2012

Directors Interests (continued)


Number of ordinary shares of RM1.00 each in
KLCC Property Holdings Berhad
Name

Lim Beng Choon

Balance at
1.1.2012

Bought

Sold

Balance at
31.12.2012

34,200

(13,000)

21,200

Number of ordinary shares of RM0.10 each in


PETRONAS Chemicals Group Berhad
Name

Datuk Anuar bin Ahmad


Muri bin Muhammad
Ramlan bin Abdul Malek
Dato Mohammad Medan bin Abdullah
Pramod Kumar Karunakaran
Samsudin bin Miskon
Datuk Rosli bin Boni
Dato Ab. Halim bin Mohyiddin
own
others

Balance at
1.1.2012

Bought

Sold

Balance at
31.12.2012

20,000
10,000
10,000
6,000
6,000
6,000
6,000

(10,000)

20,000

10,000
6,000
6,000
6,000
6,000

5,000
5,000

5,000
5,000

The other Directors holding office at 31 December 2012 had no 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 period, no Director of the Company has received nor become entitled to receive any benefit (other than
the benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements 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.

Issue of Shares
There were no changes in the issued and paid up capital of the Company during the financial year.

Options Granted Over Unissued Shares


No options were granted to any person to take up unissued shares of the Company during the financial year.

PETRONAS GAS BERHAD (101671-H)

121

Directors Report
FOR THE YEAR ENDED 31 DECEMBER 2012

Other Statutory Information


Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:
i)

there are no bad debts to be written off and no provision need to be made for doubtful debts, and

ii)

any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they
might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:
i)

that would render it necessary to write off any bad debts or provide for any doubtful debts, 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.

At the date of this report, there does not exist:


i)

any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities
of any other person, or

ii)

any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period
of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group
and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 December 2012 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.

Significant Event During the Financial Year


Shareholders Agreement for Regas Terminal (Lahad Datu) Sdn. Bhd. (RGTLD)
On 10 September 2012, the Company entered into a Shareholder Agreement with Sabah Energy Corporation Sdn. Bhd. for the purpose of
undertaking the construction and development of the LNG Regasification Facilities in Lahad Datu, Sabah (Facilities). RGTLD will be responsible
to the overall coordination and strategic management of the project from the development stage and will also own, operate and maintain the
Facilities with an expected capacity of 0.76 million tonnes per annum.

122

Directors Report
FOR THE YEAR ENDED 31 DECEMBER 2012

Subsequent Events
There were no material events subsequent to the end of the year.

Auditors
The auditors, Messrs KPMG Desa Megat & Co., have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors
in accordance with a resolution of the Directors:

Datuk Anuar bin Ahmad

Samsudin bin Miskon

Kuala Lumpur,
21 February 2013

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

123

Statement by Directors
In the opinion of the Directors, the financial statements set out on pages 124 to 190, are drawn up in accordance with Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view
of the financial position of the Group and of the Company at 31 December 2012 and of their financial performance and cash flows for the year
ended on that date.
In the opinion of the Directors, the information set out in note 34 on page 191 to the financial statements has been compiled in accordance
with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to
Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format
prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Datuk Anuar bin Ahmad

Samsudin bin Miskon


Kuala Lumpur,
21 February 2013

Statutory Declaration
I, Aida Aziza binti Mohd Jamaludin, 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 124 to 191 are, to the best of my knowledge and belief, correct and I make
this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the above named Aida Aziza binti Mohd Jamaludin
at Kuala Lumpur in Wilayah Persekutuan on 21 February 2013

BEFORE ME:

124

PETRONAS GAS BERHAD (101671-H)

Consolidated Statement of
Financial Position
AT 31 DECEMBER 2012

ASSETS
Property, plant and equipment
Investment in associate
Investment in jointly controlled entity

Note

31.12.2012
RM000

31.12.2011
RM000

1.4.2011
RM000

3
5
6

10,501,881
127,796
7,205

7,458,272
179,567
5,414

6,830,609
175,087
2,606

10,636,882

7,643,253

7,008,302

103,044
356,786
160,422
2,205,070

102,449
386,371
245,562
2,368,834

100,399
369,997
275,082
2,756,079

2,825,322

3,103,216

3,501,557

13,462,204

10,746,469

10,509,859

11
12

1,978,732
7,188,199

1,978,732
6,578,673

1,978,732
6,487,024

13

9,166,931
115,815

8,557,405
86,516

8,465,756
49,415

9,282,746

8,643,921

8,515,171

1,639,284
1,004,045
30,517

444,735
1,053,000
10,692

423,580
1,107,000
11,937

2,673,846

1,508,427

1,542,517

463,146
920,258
122,208

447,632
146,489

340,030
112,141

1,505,612

594,121

452,171

4,179,458

2,102,548

1,994,688

13,462,204

10,746,469

10,509,859

TOTAL NON-CURRENT ASSETS


Trade and other inventories
Trade and other receivables
Fund and other investments
Cash and cash equivalents

7
8
9
10

TOTAL CURRENT ASSETS


TOTAL ASSETS
EQUITY
Share capital
Reserves
Total equity attributable to the shareholders of the Company
Non-controlling interests
TOTAL EQUITY
LIABILITIES
Borrowings
Deferred tax
Other long term liabilities

14
16
17

TOTAL NON-CURRENT LIABILITIES


Borrowings
Trade and other payables
Taxation
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES

The notes set out on pages 132 to 191 are an integral part of these financial statements.

14
19

PETRONAS GAS BERHAD (101671-H)

125

Consolidated Statement of Profit or Loss


and Other Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2012

Note

1.1.2012
to
31.12.2012
RM000

1.4.2011
to
31.12.2011
RM000

Revenue
Cost of revenue

20
20

3,576,771
(1,806,762)

2,765,124
(1,347,251)

Gross profit
Administration expenses
Other expenses
Other income

20

1,770,009
(152,038)
(70,178)
293,177

1,417,873
(113,038)
(37,572)
153,391

Operating profit
Financing costs
Share of profit after tax of equity-accounted associate and jointly controlled entity

21
22

1,840,970
(20,342)
23,921

1,420,654
(16,263)
28,600

1,844,549
(447,448)

1,432,991
(352,198)

1,397,101

1,080,793

Other comprehensive expense


Item that may be reclassified subsequently to profit or loss
Change in fair value of cash flow hedge

(6,976)

Total other comprehensive expense for the year/ period

(6,976)

1,390,125

1,080,793

1,405,205
(8,104)

1,081,014
(221)

PROFIT FOR THE YEAR/ PERIOD

1,397,101

1,080,793

Total comprehensive income attributable to:


Shareholders of the Company
Non-controlling interests

1,401,019
(10,894)

1,081,014
(221)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR/ PERIOD

1,390,125

1,080,793

71.0 sen

54.6 sen

Profit before taxation


Tax expense

23

Profit for the year/ period

TOTAL COMPREHENSIVE INCOME FOR THE YEAR/ PERIOD


Profit attributable to:
Shareholders of the Company
Non-controlling interests

Basic and diluted earnings per ordinary share

The notes set out on pages 132 to 191 are an integral part of these financial statements.

13

25

126

PETRONAS GAS BERHAD (101671-H)

Consolidated Statement of
Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2012

Attributable to shareholders of the Company


Non-distributable

Distributable

Share
Capital
RM000

Share
Premium
RM000

Hedging
Reserve
RM000

Retained
Profits
RM000

Total
RM000

Non-controlling
Interests
RM000

Total
Equity
RM000

1,978,732

1,186,472

5,300,552

8,465,756

49,415

8,515,171

Profit for the period

1,081,014

1,081,014

(221)

1,080,793

Total comprehensive
income for the period

1,081,014

1,081,014

(221)

1,080,793

(692,556)
(296,809)

(692,556)
(296,809)

37,322

37,322
(692,556)
(296,809)

(989,365)

(989,365)

37,322

(952,043)

Balance at 31 December 2011

1,978,732

1,186,472

5,392,201

8,557,405

86,516

8,643,921

Balance at 1 January 2012

1,978,732

1,186,472

5,392,201

8,557,405

86,516

8,643,921

Cash flow hedge


Profit for the year

(4,186)

1,405,205

(4,186)
1,405,205

(2,790)
(8,104)

(6,976)
1,397,101

Total comprehensive
income for the year

(4,186)

1,405,205

1,401,019

(10,894)

1,390,125

(494,683)
(296,810)

(494,683)
(296,810)

40,193

40,193
(494,683)
(296,810)

(791,493)

(791,493)

40,193

(751,300)

1,978,732

1,186,472

(4,186)

6,005,913

9,166,931

115,815

9,282,746

Note

Balance at 1 April 2011

Issuance of ordinary share


capital to non-controlling interests
Dividends 31.03.2011 final
Dividends 31.12.2011 interim

24
24

Total (distribution to)/


contribution from shareholders

Issuance of ordinary share capital to


non-controlling interests
Dividends 31.12.2011 final
Dividends 31.12.2012 interim
Total (distribution to)/
contribution from shareholders
Balance at 31 December 2012

24
24

The notes set out on pages 132 to 191 are an integral part of these financial statements.

PETRONAS GAS BERHAD (101671-H)

127

Consolidated Statement of Cash Flows


FOR THE YEAR ENDED 31 DECEMBER 2012

1.1.2012
to
31.12.2012
RM000

1.4.2011
to
31.12.2011
RM000

3,700,035
(1,210,753)

2,806,156
(1,004,189)

Interest income from fund and other investments


Taxation paid

2,489,282
92,039
(520,684)

1,801,967
72,624
(371,850)

Net cash generated from operating activities

2,060,637

1,502,741

29,433
(2,554,475)
144,447
85,000
478

(20,000)
21,312
(1,016,191)

50,000
22,059

(2,295,117)

(942,820)

CASH FLOWS FROM FINANCING ACTIVITIES


Financing costs paid
Drawdown of Islamic financing facilities
Dividends paid
Advances from non-controlling interests
Repayment of term loan
Issuance of ordinary share capital to non-controlling interests

(21,544)
1,016,000
(791,493)
332
(156,000)
23,421

(10,213)

(989,365)
16,772

35,640

Net cash generated from/ (used in) financing activities

70,716

(947,166)

(163,764)

(387,245)

2,368,834

2,756,079

2,205,070

2,368,834

Note

CASH FLOWS FROM OPERATING ACTIVITIES


Cash receipts from customers
Cash paid to suppliers and employees

CASH FLOWS FROM INVESTING ACTIVITIES


Purchase of fund and other investments
Dividends received
Purchase of property, plant and equipment
Proceeds from disposal of investment in associate
Maturity of other investments
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities

NET DECREASE IN CASH AND CASH EQUIVALENTS


CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR/ PERIOD
CASH AND CASH EQUIVALENTS AT END OF THE YEAR/ PERIOD

The notes set out on pages 132 to 191 are an integral part of these financial statements.

10

128

PETRONAS GAS BERHAD (101671-H)

Statement of Financial Position


AT 31 DECEMBER 2012

ASSETS
Property, plant and equipment
Investment in subsidiaries
Investment in associate
Investment in jointly controlled entity

Note

31.12.2012
RM000

31.12.2011
RM000

1.4.2011
RM000

3
4
5
6

6,712,376
2,192,101
76,466
250

6,449,104
881,716
103,336
250

6,702,248
75,729
103,336
250

8,981,193

7,434,406

6,881,563

103,044
549,385
160,422
1,706,219

102,449
428,441
245,562
2,322,896

100,399
374,513
275,082
2,743,731

2,519,070

3,099,348

3,493,725

11,500,263

10,533,754

10,375,288

1,978,732
7,192,152

1,978,732
6,504,923

1,978,732
6,415,176

9,170,884

8,483,655

8,393,908

1,004,000
9,688

444,735
1,053,000
10,692

423,580
1,107,000
11,937

1,013,688

1,508,427

1,542,517

448,019
745,789
121,883

395,198
146,474

326,728
112,135

1,315,691

541,672

438,863

2,329,379

2,050,099

1,981,380

11,500,263

10,533,754

10,375,288

TOTAL NON-CURRENT ASSETS


Trade and other inventories
Trade and other receivables
Fund and other investments
Cash and cash equivalents

7
8
9
10

TOTAL CURRENT ASSETS


TOTAL ASSETS
EQUITY
Share capital
Reserves

11
12

TOTAL EQUITY
LIABILITIES
Borrowings
Deferred tax
Other long term liabilities

14
16
17

TOTAL NON-CURRENT LIABILITIES


Borrowings
Trade and other payables
Taxation
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES

The notes set out on pages 132 to 191 are an integral part of these financial statements.

14
19

PETRONAS GAS BERHAD (101671-H)

129

Statement of Profit or Loss


and Other Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2012

Note

1.1.2012
to
31.12.2012
RM000

1.4.2011
to
31.12.2011
RM000

Revenue
Cost of revenue

20
20

3,576,771
(1,806,762)

2,765,124
(1,347,251)

Gross profit

20

1,770,009

1,417,873

(147,483)
(12,573)
335,520

(107,363)
(37,572)
174,616

Administration expenses
Other expenses
Other income
Operating profit

21

1,945,473

1,447,554

Financing costs

22

(20,342)

(16,263)

1,925,131

1,431,291

(446,409)

(352,179)

1,478,722

1,079,112

Profit before taxation


Tax expense
PROFIT FOR THE YEAR/ PERIOD REPRESENTING
TOTAL COMPREHENSIVE INCOME FOR THE YEAR/ PERIOD

The notes set out on pages 132 to 191 are an integral part of these financial statements.

23

130

PETRONAS GAS BERHAD (101671-H)

Statement of Changes in Equity


FOR THE YEAR ENDED 31 DECEMBER 2012

Attributable to shareholders of the Company


Non-distributable

Distributable

Share
Capital
RM000

Share
Premium
RM000

Retained
Profits
RM000

Total
RM000

1,978,732

1,186,472

5,228,704

8,393,908

Profit for the period

1,079,112

1,079,112

Total comprehensive income for the period

1,079,112

1,079,112

(692,556)
(296,809)

(692,556)
(296,809)

(989,365)

(989,365)

Balance at 31 December 2011

1,978,732

1,186,472

5,318,451

8,483,655

Balance at 1 January 2012

1,978,732

1,186,472

5,318,451

8,483,655

Profit for the year

1,478,722

1,478,722

Total comprehensive income for the year

1,478,722

1,478,722

(494,683)
(296,810)

(494,683)
(296,810)

(791,493)

(791,493)

1,978,732

1,186,472

6,005,680

9,170,884

Note

Balance at 1 April 2011

Dividends 31.03.2011 final


Dividends 31.12.2011 interim

24
24

Total distribution to shareholders of the Company

Dividends 31.12.2011 final


Dividends 31.12.2012 interim

24
24

Total distribution to shareholders of the Company


Balance at 31 December 2012

The notes set out on pages 132 to 191 are an integral part of these financial statements.

PETRONAS GAS BERHAD (101671-H)

131

Statement of Cash Flows


FOR THE YEAR ENDED 31 DECEMBER 2012

1.1.2012
to
31.12.2012
RM000

1.4.2011
to
31.12.2011
RM000

3,712,700
(1,229,001)

2,806,156
(998,034)

Interest income from fund and other investments


Taxation paid

2,483,699
86,775
(520,000)

1,808,122
72,537
(371,840)

Net cash generated from operating activities

2,050,474

1,508,819

(194,084)
(1,271,139)

29,433
(648,249)
144,447
85,000
478

(36,724)
(805,987)
(20,000)
21,312
(252,640)

50,000
113,963

(1,854,114)

(930,076)

(21,544)
(791,493)

(10,213)
(989,365)

(813,037)

(999,578)

(616,677)

(420,835)

2,322,896

2,743,731

1,706,219

2,322,896

Note

CASH FLOWS FROM OPERATING ACTIVITIES


Cash receipts from customers
Cash paid to suppliers and employees

CASH FLOWS FROM INVESTING ACTIVITIES


Advances to subsidiary
Subscription of shares in subsidiaries
Purchase of fund and other investments
Dividends received
Purchase of property, plant and equipment
Proceeds from disposal of investment in associate
Maturity of other investments
Proceeds from disposal of property, plant and equipment

Net cash used in investing activities


CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs paid
Dividends paid
Net cash used in financing activities
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR/ PERIOD
CASH AND CASH EQUIVALENTS AT END OF THE YEAR/ PERIOD

The notes set out on pages 132 to 191 are an integral part of these financial statements.

10

132

PETRONAS GAS BERHAD (101671-H)

Notes to the
Financial Statements
31 DECEMBER 2012

PETRONAS GAS BERHAD is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Board of the
Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business is:
Tower 1, PETRONAS Twin Towers
Kuala Lumpur City Centre
50088 Kuala Lumpur
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, associate and jointly controlled entity 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 as at and for the financial year ended 31 December 2012 comprise the Company and its subsidiaries, and
the Groups interest in an associate and a jointly controlled entity.

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 (MFRSs), International Financial Reporting Standards (IFRSs) and the Companies Act, 1965 in Malaysia. These are
the Groups and the Companys first financial statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of
Malaysian Financial Reporting Standards has been applied.
These financial statements also comply with the applicable disclosure provisions of the Listing Requirements of Bursa Malaysia
Securities Berhad.
In the previous years, the financial statements of the Group and of the Company were prepared in accordance with Financial
Reporting Standards (FRSs) in Malaysia.
The transition to MFRSs does not have financial impact to the financial statements of the Group and of the Company.
The Group and the Company have early adopted the amendments to MFRS 101, Presentation of Financial Statements which are
effective for annual periods beginning on or after 1 July 2012. The early adoption of the amendments to MFRS 101 has no impact
on the financial statements other than the presentation format of the statement of profit or loss and other comprehensive income.
The Malaysian Accounting Standards Board (MASB) has issued other new and revised MFRSs, amendments and IC interpretations
(collectively referred to as pronouncements) which are not yet effective and therefore, have not been implemented by the Group
and the Company in these financial statements as set out in note 32. New pronouncements that are not relevant to the operation
of the Group and of the Company are set out in note 33.
These financial statements were authorised for issue by the Board of Directors on 21 February 2013.

PETRONAS GAS BERHAD (101671-H)

133

Notes to the Financial Statements


31 DECEMBER 2012

1.

Basis of Preparation (continued)


1.2

Comparative figures
The Group and the Company have changed its financial year end from 31 March to 31 December effective from the previous
reporting period. Consequently, the current financial statements are for a period of 12 months from 1 January 2012 to 31 December
2012. The comparatives figures are for the previous 9 months period from 1 April 2011 to 31 December 2011.

1.3

Basis of measurement
The financial statements of the Group and of the Company have been prepared on the historical cost basis, other than as disclosed
in the accounting policies below whereby certain items are measured at fair value.

1.4

Functional and presentation currency


The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment
in which the entity operates (the functional currency). The Groups and the Companys financial statements are presented in
Ringgit Malaysia (RM), which is also the Companys functional currency.
All financial information presented in RM has been rounded to the nearest thousand, unless otherwise stated.

1.5

Use of estimates and judgments


The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the 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 amount recognised in the financial statements are described in the following notes:
i)
ii)
iii)

2.

Note 3
Note 16
Note 30

:
:
:

Property, Plant and Equipment;


Deferred Tax; and
Financial Instruments.

Significant Accounting Policies


The accounting policies set out below have been applied consistently to all periods presented in these financial statements and in preparing
the opening MFRS statements of financial position of the Group and of the Company at 1 April 2011 (the transition date to MFRS framework)
and comparatives for the financial period ended 31 December 2011, unless otherwise stated.
2.1

Basis of consolidation
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain benefits from its activities.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases.

134

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.1

Basis of consolidation (continued)


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
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 Group measures goodwill as the excess of the aggregate of consideration transferred, amount recognised for any non-controlling
interests in the acquiree and the fair value of any previously held equity interest in the acquiree over the fair value of the identifiable
assets acquired and liabilities assumed. When the excess is negative, the difference is recognised immediately in the profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value
or at the proportionate share of the acquirees identifiable net assets at the acquisition date.
Costs related to the acquisition, other than those associated with the issuance of debt or equity securities, that the Group incurs in
connection with a business combination are expensed as incurred.
Non-controlling interests
Non-controlling interests at the reporting date, being the portion of the net assets of subsidiaries attributable to equity interests that
are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated statement of
financial position and statement of changes in equity within equity, separately from equity attributable to the equity shareholders of
the Company. Non-controlling interests in the results of the Group are presented in the consolidated statement of profit or loss and
other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between the noncontrolling interests and the equity 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 Groups 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
When control of a subsidiary is lost, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests
and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in
profit or loss. If the Group retains any interest in the 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 an available-for-sale financial asset depending
on the level of influence retained.

PETRONAS GAS BERHAD (101671-H)

135

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


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.
An associate is accounted for in the consolidated financial statements using the equity method. The consolidated financial
statements include the Groups share of post-acquisition profits or losses of the equity-accounted associate, after adjustments
to align the accounting policies with those of the Group, from the date that significant influence commences until the date that
significant influence ceases.
The Groups share of post-acquisition reserves and retained profits less losses is added to the carrying amount of the investment
in the consolidated statement of financial position. These amounts were taken from the latest audited financial statements or
management financial statements of the associate.
When the Groups share of post-acquisition losses exceeds its interest in an equity-accounted associate, the carrying amount of
that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to
the extent that the Group has an obligation or has made payments on behalf of the investee.
Unrealised profits arising from transactions between the Group and its associate are eliminated to the extent of the Groups interests
in the associate. Unrealised losses on such transactions are also eliminated partially, unless cost cannot be recovered.
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 a resulting gain or loss being recognised in profit or loss. Any retained interest in the former associate at the date
when significant influence is lost is re-measured at fair value and this amount is regarded as the initial carrying amount of a financial
asset.
When the Groups interest in an associate decreases but does not result in a 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.
Investment in associate is measured in the Companys 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 transactions costs.

2.3

Jointly controlled entity


The Group has an interest in a joint venture which is a jointly controlled entity. A joint venture is a contractual arrangement whereby
the Group and other parties undertake an economic activity that is subject to joint control, established by contractual agreement
and requiring unanimous consent for strategic financial and operating decisions. A jointly controlled entity is a joint venture that
involves the establishment of a separate entity in which each venturer has an interest.
Investment in the jointly controlled entity is accounted for in the consolidated financial statements using the equity method of
accounting as described in note 2.2.

2.4

Property, plant and equipment and depreciation


Freehold land and project-in-progress are stated at cost less accumulated impairment losses, if any, and are not depreciated. Other
property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

136

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.4

Property, plant and equipment and depreciation (continued)


Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to
bringing the assets to working condition for their intended use, and the costs of dismantling and removing the items and restoring
the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour.
For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs as described in
note 2.16. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
The cost of replacing part 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 part will flow to the Group and 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.
Buildings are depreciated over 50 years or over the remaining land lease period, whichever is shorter.
Depreciation for property, plant and equipment other than freehold land and project-in-progress, is recognised in the profit or loss
on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Property, plant and
equipment are not depreciated until the assets are ready for their intended use.
Leased properties are depreciated over the lease term or the estimated useful lives, whichever is shorter. Leasehold land is
depreciated over the lease term.
The estimated useful lives of the property, plant and equipment are as follows:
Plant and pipelines
Expendable capital improvements
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection

5 - 55 years
3 years
6 - 7 years
5 - 7 years
5 years
4 years
3 - 7 years

Estimates in respect of certain items of plant and equipment were revised during the year (refer to note 3).
Property, plant and equipment individually costing less than RM5,000 are expensed off in the year of purchase.
The depreciable amount is determined after deducting residual value. The residual value, useful life and depreciation method are
reviewed at each financial year end to ensure that the amount, period and method of depreciation are consistent with previous
estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and
equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from
its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in the profit
or loss.

PETRONAS GAS BERHAD (101671-H)

137

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.5

Leased assets
Finance lease
A lease is recognised as a finance lease if it transfers substantially to the Group and the Company all the risks and rewards incidental
to ownership. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present
value of the minimum lease payments at the inception of the lease. Subsequent to initial recognition, the asset is accounted for in
accordance with the accounting policy applicable to that asset. The corresponding liability is included in the statement of financial
position as borrowings.
Minimum lease payments made under finance leases are apportioned between the finance costs and the reduction of the
outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the
assets acquired, are amortised over the lease term so as to produce a constant periodic rate of interest on the remaining balance of
the liability for each accounting period. The finance costs for leased assets which is not yet ready for its intended use, are accounted
for in accordance with the policy set out in note 2.16.
Contingent lease payments, if any, are accounted for by revising the minimum lease payments over the remaining term of the lease
when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment.

2.6

Investments
Long term investments in subsidiaries, associate and jointly controlled entity are stated at cost less impairment loss, if any, in the
Companys financial statements. The cost of investment includes transaction costs.
The carrying amount of these investments includes fair value adjustments on shareholders loans and advances, if any.

2.7

Intangible asset goodwill


Goodwill arising from business combinations is initially measured at cost. Following the initial recognition, goodwill is measured at
cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more
frequently if events or changes in circumstances indicate that the carrying value may be impaired.
In respect of equity-accounted investee, the carrying amount of goodwill is included in the carrying amount of the investment.
The entire carrying amount of the investment is reviewed for impairment when there is objective evidence of impairment.

2.8

Financial instruments
A financial instrument is recognised in the statement of financial position when, and only when, the Group or the Company becomes
a party to the contractual provisions of the instrument.
i)

Financial assets
Initial recognition
Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity
investments or available-for-sale financial assets, as appropriate. The Group and the Company determine the classification
of financial assets at initial recognition.

138

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.8

Financial instruments (continued)


i)

Financial assets (continued)


Initial recognition (continued)
Financial assets are recognised initially at fair value, normally being the transaction price plus, in the case of financial assets
not at fair value through profit or loss, any directly attributable transaction costs.
Purchases or sales that require delivery of financial assets within a timeframe established by regulation or convention in
the marketplace (regular way purchases) are recognised on the trade date, i.e. the date that the Group and the Company
commit to purchase or sell the financial asset.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss includes financial assets held for trading and financial assets designated
upon initial recognition as at fair value through profit or loss. This category includes derivative financial instruments entered
into by the Group and the Company that do not meet the hedge accounting criteria.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with gains or
losses recognised in the profit or loss. The methods used to measure fair value are as stated in note 2.8(vi).
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Subsequent to initial recognition, such financial assets are carried at amortised cost, using the effective
interest rate method (note 2.8(vii)), less impairment losses.
Gains and losses are recognised in the profit or loss when the loans and receivables are derecognised or impaired, as well
as through the amortisation process.

ii)

Financial liabilities
Initial recognition
Financial liabilities are classified as financial liabilities at fair value through profit or loss, or loans and borrowings as appropriate.
The Group and the Company determine the classification of financial liabilities at initial recognition.
Financial liabilities are recognised initially at fair value less, in the case of loans and borrowings, any directly attributable
transaction costs.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated
upon initial recognition as at fair value through profit or loss. This category includes derivative financial instruments entered
into by the Group and the Company that do not meet the hedge accounting criteria.

PETRONAS GAS BERHAD (101671-H)

139

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.8

Financial instruments (continued)


ii)

Financial liabilities (continued)


Subsequent measurement (continued)
Financial liabilities at fair value through profit or loss (continued)
Financial liabilities at fair value through profit or loss are carried on the statement of financial position at fair value with gains
or losses recognised in the profit or loss. The methods used to measure fair value are as stated in note 2.8(vi).
Loans and borrowings
Subsequent to initial recognition, loans and borrowings are measured at amortised cost using the effective interest rate
method as stated in note 2.8(vii).
Gains and losses are recognised in the profit or loss when the liabilities are derecognised, as well as through the amortisation
process.

iii)

Hedge accounting
Cash flow hedge
A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated
with 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 the ineffective portion is recognised in profit or loss.
Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit
or loss in the same period or periods during which the hedged forecast cash flows affect profit or loss. If the hedge item is a
non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is removed from equity
and included in the initial amount of the asset or liability. However, loss recognised in other comprehensive income that will
not be recovered in one or more future periods is reclassified from equity into profit or loss.
Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or
exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the hedge
designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or loss on the hedging instrument
remains in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, any
related cumulative gain or loss recognised in other comprehensive income on the hedging instrument is reclassified from
equity into profit or loss.

iv)

Derivative financial instruments


The Group and the Company uses derivative financial instruments such as forward currency contracts to manage certain
exposures to fluctuations in foreign currency exchange rates.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered
into and are subsequently re-measured 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 2.8(iii), are recognised directly to the profit or loss.

140

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.8

Financial instruments (continued)


iv)

Derivative financial instruments (continued)


An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if,
it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised
as at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is
accounted for in accordance with policy applicable to the nature of the host contract.
In general, contracts to sell or purchase non-financial items to meet expected own use requirements are not accounted
for as financial instruments. However, contracts to sell or purchase commodities that can be net settled or which contain
written options are required to be measured at fair value, with gains and losses recognised in the profit or loss.

v)

Offsetting of financial instruments


Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if, and
only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, or to realise the assets and settle the liabilities simultaneously.

vi)

Fair value of financial instruments


The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to
quoted market prices at the close of business at the end of reporting date.
For financial instruments where there is no active market, the fair value is determined using valuation techniques. Such
techniques may include using recent arms 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. Where fair value cannot
be reliably estimated, assets are carried at cost less impairment losses.

vii)

Amortised cost of financial instruments


Amortised cost is computed using the effective interest rate 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.

viii)

Derecognition of financial instruments


Financial assets
A financial asset is derecognised when the rights to receive cash flows from the asset have expired or, the Group and
the Company have transferred their rights to receive cash flows from the asset or have assumed an obligation to pay the
received cash flows in full without material delay to a third party under a 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.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. On
derecognition of a financial liability, the difference between the carrying amount of the financial liabilities extinguished or
transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is
recognised in the profit or loss.

PETRONAS GAS BERHAD (101671-H)

141

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.9

Impairment
i)

Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired.
A financial asset is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more
events that has occurred after the initial recognition of the asset (an incurred loss event) and that loss event has an impact
on the estimated future cash flows of the financial asset that can be reliably estimated.
For loans and receivables carried at amortised cost, individually significant financial assets are tested for impairment
on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk
characteristics.
An impairment loss is measured as the difference between an assets carrying amount and the present value of estimated
future cash flows discounted at the assets original effective interest rate. The carrying amount of the asset is reduced
through the use of an allowance account and the amount of the loss is recognised in the profit or loss.
If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring
after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the
allowance account.

ii)

Other assets
The carrying amounts of other assets, other than inventories, are reviewed at each reporting date to determine whether
there is any indication of impairment. For certain classes of assets, the carrying amounts are reviewed more frequently if
events or changes in circumstances indicate that the carrying value may be impaired, as described in the respective assets
accounting policies.
If any such indication exists, the assets 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 that are largely independent from
other assets and groups. Impairment losses recognised in respect of a cash-generating unit are allocated first to reduce
the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the
unit on a pro-rata basis.
The recoverable amount is the greater of the assets fair value less cost to sell and its value in use. In assessing value in use,
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
An impairment loss in respect of goodwill is not reversed in a subsequent period. In respect of other assets, impairment
losses are reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Reversals of impairment losses are credited to the profit or loss in the year in which the reversals are recognised.

142

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.10

Cash and cash equivalents


Cash and cash equivalents consist of cash on hand and bank balances, deposits with licensed financial institutions and highly liquid
investments which have an insignificant risk of changes in value.

2.11

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 selling expenses.
Cost of maintenance material and spares consists of the invoiced value from suppliers and import duty charges and is determined
on a weighted average basis.
Cost of liquefied gases and water is determined on a weighted average basis.

2.12

Provisions
A provision is recognised if, as a result of a past event, the Group or the Company has 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 increase 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.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the
obligation 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, 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.

2.13

Employee benefits
Short term benefits
Wages and salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated
services are rendered by employees of the Group and of the Company.
Defined contribution plans
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.

2.14

Taxation
Tax on the profit and loss for the year comprises current and deferred tax. Income tax is recognised in the profit or loss except to
the extent it relates to items recognised directly in equity, in which case it is recognised in equity.
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.

PETRONAS GAS BERHAD (101671-H)

143

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.14

Taxation (continued)
Deferred tax
Deferred tax is provided for, using the liability method, on temporary differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unabsorbed capital
allowances, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences, unabsorbed capital allowances, unused tax losses and unused tax credits can
be utilised.
Deferred tax is not recognised if the temporary difference arises on initial recognition of goodwill or negative goodwill, and the initial
recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects
neither accounting nor taxable profit.
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 tax rates enacted or substantially enacted at the end of 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, but 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 assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.

2.15

Foreign currency transactions


In preparing financial statements of individual entities in the Group, transactions in currencies other than the entitys functional
currency are translated to the functional currency at rates of exchange ruling on the transaction dates.
Monetary assets and liabilities denominated in foreign currencies at the reporting date have been retranslated to the functional
currency at the foreign exchange rates ruling on the reporting date.
Non-monetary assets and liabilities denominated in foreign currencies, which are measured at fair value, are retranslated to the
functional currency at the foreign exchange rates ruling at the date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in foreign currency are not retranslated.
Gains and losses on exchange arising from retranslation are recognised in the profit or loss.

2.16

Borrowing costs
Borrowing costs which are directly attributable to the acquisition, construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to be prepared for their intended use or sale, are capitalised as part of the cost of
those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditures for the asset are 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.

144

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

2.

Significant Accounting Policies (continued)


2.16

Borrowing costs (continued)


The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is the weighted average of the
borrowing costs applicable to borrowings that are outstanding during the period, other than borrowings made specifically for
the purpose of financing a specific qualifying asset, in which case the actual borrowing cost incurred on that borrowing less any
investment income on the temporary investment of that borrowing, will be capitalised.

2.17

Revenue
Revenue from gas processing services is recognised in the profit or loss based on actual and estimates of work done in respect of
services rendered for separating natural gas into its components.
Revenue from gas transportation services is recognised in the profit or loss based on services rendered for transporting and
distributing the processed gas.
Revenue from sale of industrial utilities is recognised in the profit or loss based on utilities distributed to the buyer at pre-determined
rates.

2.18

Financing costs
Finance costs comprise interest payable on borrowings and profit share margin on Islamic financing facilities.
All interest and other costs incurred in connection with borrowings are expensed as incurred, other than capitalised in accordance
with the accounting standard stated in note 2.16. The interest component of finance lease payments is accounted for in accordance
with the policy set out in note 2.5.

2.19

Deferred income
Deferred income is recognised in the profit or loss on a time proportion basis over the agreed contract period or applicable period.

2.20

Earnings per share


The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares.
Basic EPS is calculated by dividing the profit and loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit and loss attributable to ordinary shareholders and the weighted average number
of ordinary shares outstanding for the effects of all dilute potential ordinary shares, which comprise convertible notes and share
options granted to employees.

2.21

Operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Groups other components. An operating
segments operating whose operating results are reviewed regularly by entitys chief operating decision maker, which in this case is
the Board to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete
financial information is available.

PETRONAS GAS BERHAD (101671-H)

145

Notes to the Financial Statements


31 DECEMBER 2012

3.

Property, Plant and Equipment

Group

At cost
Freehold land
Leasehold land
long lease
short lease
Buildings
Plant and pipelines
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection
Projects-in-progress

Group

Accumulated depreciation
Freehold land
Leasehold land
long lease
short lease
Buildings
Plant and pipelines
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection
Projects-in-progress

At
1.1.2012
RM000

Additions
RM000

Disposals/
Transfers/
Write offs Reclassification
RM000
RM000

At
31.12.2012
RM000

3,137

932

4,069

371,110
161,726
194,248
13,707,159
61,491
107,284
58,845
26,675
406,347
1,590,367

1,168

677
591
4,497
853
1,286

3,725,804

(17,981)
(166)
(500)
(592)
(2,544)
(62,592)
(24,679)

7,000

45,262
61,976
(35,116)
(1,934)
22,486

69,766
(169,440)

379,278
161,726
239,510
13,751,831
26,800
109,347
81,592
25,417
413,521
5,122,052

16,688,389

3,735,808

(109,054)

20,315,143

At
1.1.2012
RM000

Charge for
the year
RM000

Disposals/
Transfers/
Write offs Reclassification
RM000
RM000

At
31.12.2012
RM000

59,537
36,680
55,711
8,693,700
57,454
72,268
39,182
19,965
195,620

6,587
147
4,917
547,002
1,458
7,063
5,661
3,133
87,153

(17,672)
(151)
(472)
(592)
(2,515)
(58,574)

21,619
(2,904)
(35,916)
(476)
17,677

66,124
36,827
82,247
9,220,126
22,845
78,383
61,928
20,583
224,199

9,230,117

663,121

(79,976)

9,813,262

146

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

3.

Property, Plant and Equipment (continued)

Group

At cost
Freehold land
Leasehold land
long lease
short lease
Buildings
Plant and pipelines
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection
Projects-in-progress

Group

Accumulated depreciation
Freehold land
Leasehold land
long lease
short lease
Buildings
Plant and pipelines
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection
Projects-in-progress

At
1.4.2011
RM000

Additions
RM000

Disposals/
Write offs
RM000

Transfers/
Adjustments
RM000

At
31.12.2011
RM000

3,096

41

3,137

370,737
161,726
193,069
13,655,296
61,046
107,092
46,642
26,114
319,480
613,221

209
325
167
521
53
1,209

1,131,562

(47,973)
(83)
(885)
(60)
(1,467)
(4)

373

970
99,511
361
556
12,210
819
86,871
(154,416)

371,110
161,726
194,248
13,707,159
61,491
107,284
58,845
26,675
406,347
1,590,367

15,557,519

1,134,087

(50,472)

47,255

16,688,389

At
1.4.2011
RM000

Charge for
the period
RM000

Disposals/
Write offs
RM000

Transfers/
Adjustments
RM000

At
31.12.2011
RM000

54,622
36,570
52,510
8,268,257
56,502
67,959
36,357
19,157
134,976

4,915
110
3,201
407,844
1,022
4,704
2,885
2,275
60,648

(29,656)
(70)
(395)
(60)
(1,467)
(4)

47,255

59,537
36,680
55,711
8,693,700
57,454
72,268
39,182
19,965
195,620

8,726,910

487,604

(31,652)

47,255

9,230,117

PETRONAS GAS BERHAD (101671-H)

147

Notes to the Financial Statements


31 DECEMBER 2012

3.

Property, Plant and Equipment (continued)

Company

At cost
Freehold land
Leasehold land
long lease
short lease
Buildings
Plant and pipelines
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection
Projects-in-progress

Company

Accumulated depreciation
Freehold land
Leasehold land
long lease
short lease
Buildings
Plant and pipelines
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection
Projects-in-progress

At
1.1.2012
RM000

Additions
RM000

Disposals/
Transfers/
Write offs Reclassification
RM000
RM000

At
31.12.2012
RM000

3,137

932

4,069

371,110
161,726
194,044
13,707,159
61,367
107,284
58,457
26,324
406,347
581,830

1,168

678
532
4,497
689
1,286

929,173

(17,981)
(166)
(500)
(592)
(2,544)
(62,592)
(8,398)

7,000

45,262
61,976
(35,116)
(1,934)
22,486

69,766
(169,440)

379,278
161,726
239,306
13,751,832
26,617
109,347
81,040
25,066
413,521
1,333,165

15,678,785

938,955

(92,773)

16,524,967

At
1.1.2012
RM000

Charge for
the period
RM000

Disposals/
Transfers/
Write offs Reclassification
RM000
RM000

At
31.12.2012
RM000

59,537
36,680
55,619
8,693,700
57,414
72,268
39,031
19,812
195,620

6,587
147
4,877
547,003
1,437
7,063
5,574
3,045
87,153

(17,672)
(151)
(472)
(592)
(2,515)
(58,574)

21,619
(2,904)
(35,916)
(476)
17,677

66,124
36,827
82,115
9,220,127
22,784
78,383
61,690
20,342
224,199

9,229,681

662,886

(79,976)

9,812,591

148

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

3.

Property, Plant and Equipment (continued)

Company

At cost
Freehold land
Leasehold land
long lease
short lease
Buildings
Plant and pipelines
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection
Projects-in-progress

Company

Accumulated depreciation
Freehold land
Leasehold land
long lease
short lease
Buildings
Plant and pipelines
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection
Projects-in-progress

At
1.4.2011
RM000

Additions
RM000

Disposals/
Write offs
RM000

Transfers/
Adjustments
RM000

At
31.12.2011
RM000

3,096

41

3,137

370,737
161,726
192,865
13,655,296
60,928
107,092
46,254
25,763
319,480
485,656

209
325
161
521
53
1,209

342,494

(47,973)
(83)
(885)
(60)
(1,467)
(4)
(91,904)

373

970
99,511
361
556
12,210
819
86,871
(154,416)

371,110
161,726
194,044
13,707,159
61,367
107,284
58,457
26,324
406,347
581,830

15,428,893

345,013

(142,376)

47,255

15,678,785

At
1.4.2011
RM000

Charge for
the period
RM000

Disposals/
Write offs
RM000

Transfers/
Adjustments
RM000

At
31.12.2011
RM000

54,622
36,570
52,449
8,268,257
56,475
67,959
36,264
19,073
134,976

4,915
110
3,170
407,844
1,009
4,704
2,827
2,206
60,648

(29,656)
(70)
(395)
(60)
(1,467)
(4)

47,255

59,537
36,680
55,619
8,693,700
57,414
72,268
39,031
19,812
195,620

8,726,645

487,433

(31,652)

47,255

9,229,681

PETRONAS GAS BERHAD (101671-H)

149

Notes to the Financial Statements


31 DECEMBER 2012

3.

Property, Plant and Equipment (continued)

31.12.2012
RM000

Freehold land
Leasehold land
long lease
short lease
Buildings
Plant and pipelines
Office equipment, furniture and fittings
Other plant and equipment
Computer hardware and software
Motor vehicles
Plant turnaround/ major inspection
Projects-in-progress

Group
Carrying Amount
31.12.2011
1.4.2011
RM000
RM000

31.12.2012
RM000

Company
Carrying Amount
31.12.2011
1.4.2011
RM000
RM000

4,069

3,137

3,096

4,069

3,137

3,096

313,154
124,899
157,263
4,531,705
3,955
30,964
19,664
4,834
189,322
5,122,052

311,573
125,046
138,537
5,013,459
4,037
35,016
19,663
6,710
210,727
1,590,367

316,115
125,156
140,559
5,387,039
4,544
39,133
10,285
6,957
184,504
613,221

313,154
124,899
157,191
4,531,705
3,833
30,963
19,350
4,725
189,322
1,333,165

311,573
125,046
138,425
5,013,459
3,953
35,016
19,426
6,512
210,727
581,830

316,115
125,156
140,416
5,387,039
4,453
39,133
9,990
6,690
184,504
485,656

10,501,881

7,458,272

6,830,609

6,712,376

6,449,104

6,702,248

Restrictions of land title


The titles of certain freehold and leasehold lands are in the process of being registered in the Companys name.
Projects-in-progress
Included in additions to the projects-in-progress of the Group is borrowing costs (net of fund investment income of RM4,184,000 (31.12.2011:
RM Nil; 1.4.2011: RM Nil) arising from the Islamic financing facilities and finance lease liabilities capitalised during the year of RM38,904,000
(31.12.2011: RM Nil; 1.4.2011: RM Nil). The additions also includes leased assets amounting to RM841,009,000 (31.12.2011: RM Nil;
1.4.2011: RM Nil) which are accounted for as assets of the Group.
The borrowing rate on borrowings capitalised range from 4.25% to 9.20% (31.12.2011: Nil) per annum.
Projects-in-progress of RM784,990,000 of a subsidiary secures the Islamic financing facilities, obtained to finance the construction of a
power plant by the subsidiary (see note 14).
Change in estimates
During the year, the Company reviewed the major components and useful lives of its property, plant and equipment. Accordingly, this
resulted in reclassifications of significant components of certain items of plant and equipment and revisions to the estimated useful lives
of certain plant and equipment. The revision was accounted for prospectively as a change in accounting estimates, and its effect to the
current and future periods are as follows:
i)

increase in depreciation charges for the year by RM59,300,000 due to one-off impact from assets which useful lives have
expired; and

ii)

decrease in yearly depreciation charges by RM35,700,000 as a result of increase in the assets useful lives.

150

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

4.

Investment in Subsidiaries
31.12.2012
RM000

Company
31.12.2011
RM000

881,716

75,729

1,271,139
39,246

803,465
2,522

Total conversion of advances made

1,310,385

805,987

At end of the year/ period

2,192,101

881,716

Note

Investment at cost:
unquoted shares
At beginning of the year/ period
Conversion of advances made:
during the year/ period
in prior year/ period

8.5

Details of the subsidiaries are as follows:


Name of
company

Principal
activities

Country of
incorporation
31.12.2012
%

5.

Effective percentage
holding
31.12.2011
%

1.4.2011
%

Kimanis Power
Sdn. Bhd. (KPSB)

Generation and sale


of electricity

Malaysia

60

60

60

Kimanis O&M Sdn. Bhd.

Provision of operation and


maintenance services to KPSB

Malaysia

60

60

Regas Terminal (Sg. Udang)


Sdn. Bhd.

Manage and operate


LNG regasification terminal

Malaysia

100

100

Regas Terminal (Pengerang)


Sdn. Bhd.

Manage and operate


LNG regasification terminal

Malaysia

100

100

Regas Terminal (Lahad Datu)


Sdn. Bhd.

Manage and operate


LNG regasification terminal

Malaysia

99

100

Investment in Associate
31.12.2012
RM000

31.12.2011
RM000

Group
1.4.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

Investment at cost:
quoted shares
in Malaysia
unquoted shares

76,466

103,336

103,336

76,466

103,336

103,336

Share of post-acquisition profits


and reserves

51,330

76,231

71,751

127,796

179,567

175,087

76,466

103,336

103,336

488,382

488,382

Market value of quoted shares

PETRONAS GAS BERHAD (101671-H)

151

Notes to the Financial Statements


31 DECEMBER 2012

5.

Investment in Associate (continued)


Summary of financial information on associate:
31.12.2012
RM000

Total assets (100%)


Total liabilities (100%)
Revenue (100%)
Profit (100%)

1,513,480
505,068
2,125,294
162,828

31.12.2011
RM000

1,474,426
464,972
2,000,170
229,154

1.4.2011
RM000

1,616,026
448,476
1,807,475
298,278

During the year, the associate of the Group was listed on the Main Market of Bursa Malaysia Securities Berhad. Following the initial public
offering exercise, the Group reduced its equity holding in the associate from 20% to 14.8% and recorded gain of RM99,978,000 in the
consolidated financial statements of the Group and RM117,577,000 in the separate financial statements of the Company upon completion
of the exercise.
The Group continues to equity-account the associate as it has retained its significant influence over the financial and operating policy of the
associate through representation on the associates board of directors.
Details of the associate are as follows:
Name of
company

Gas Malaysia Berhad

6.

Principal
activities

Country of
incorporation

Selling, marketing, distribution


and promotion of natural gas

Malaysia

Effective percentage
holding
31.12.2012
31.12.2011
%
%

14.8

20.0

1.4.2011
%

20.0

Investment in Jointly Controlled Entity

Investment at cost:
unquoted shares
Share of post-acquisition
profits and reserves

31.12.2012
RM000

31.12.2011
RM000

Group
1.4.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

250

250

250

250

250

250

6,955

5,164

2,356

7,205

5,414

2,606

250

250

250

31.12.2012
RM000

31.12.2011
RM000

1.4.2011
RM000

24,275
10,408
21,569
2,815

17,953
8,884
25,665
4,858

8,408
4,106
17,254
2,454

Summary of financial information on jointly controlled entity:

Total assets (100%)


Total liabilities (100%)
Revenue (100%)
Profit (100%)

152

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

6.

Investment in Jointly Controlled Entity (continued)


Details of the jointly controlled entity are as follows:
Name of
company

Industrial Gases Solutions


Sdn. Bhd.

7.

Principal
activities

Country of
incorporation

Selling, marketing, distribution and


promotion of industrial gas

Malaysia

Effective percentage
holding
31.12.2012
31.12.2011
%
%

1.4.2011
%

50

50

50

31.12.2012
RM000

31.12.2011
RM000

1.4.2011
RM000

989
102,055

764
101,685

663
99,736

103,044

102,449

100,399

Trade and Other Inventories


Group/Company

Liquefied gases and water


Maintenance materials and spares

Maintenance materials and spares amounting to RM1,326,000 were written off during the financial year (31.12.2011: RM Nil; 1.4.2011:
RM28,504,000).

8.

Trade and Other Receivables


Note

Trade receivables
Other receivables
Deposits
Prepayments
Amounts due from:
Holding company
Related companies
Subsidiaries
Jointly controlled entity
Trade
Related parties
Trade
Advances to subsidiaries

8.1

8.1

8.2
8.3

8.4
8.5

31.12.2011
RM000

Group
1.4.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

14,943
16,124
1,020
6,729

15,035
26,256
1,020
12,263

14,678
28,274
1,021
16,035

14,943
13,725
1,020
2,185

15,035
26,154
1,020
12,263

14,678
28,222
1,021
16,020

147,881
151,885

129,116
189,383

169,327
121,481

147,881
151,885
5,458

129,116
189,383
2,926

169,327
121,481
2,061

1,299

1,845

3,354

1,299

1,845

3,354

16,905

11,453

15,827

16,905
194,084

11,453
39,246

15,827
2,522

356,786

386,371

369,997

549,385

428,441

374,513

31.12.2012
RM000

Included in other receivables of the Group and of the Company is interest receivable of RM7,443,000 (31.12.2011: RM22,747,000;
1.4.2011: RM24,202,000).

PETRONAS GAS BERHAD (101671-H)

153

Notes to the Financial Statements


31 DECEMBER 2012

8.

Trade and Other Receivables (continued)


8.2

The amount due from holding company relates to:


31.12.2012
RM000

Group/Company

Trade
Non-trade

8.3

Trade
Non-trade

191,449
(43,568)

164,623
(35,507)

202,557
(33,230)

147,881

129,116

169,327

31.12.2012
RM000

31.12.2011
RM000

1.4.2011
RM000

116,896
34,989

118,954
70,429

70,778
50,703

151,885

189,383

121,481

8.4

The amounts due from related parties are in relation to associates and jointly controlled entities of the holding company.

8.5

Advances made in prior year amounting to RM39,246,000 was converted to ordinary shares in a subsidiary during the year. The
balance of advances to subsidiaries amounting to RM194,084,000 will be converted to ordinary shares in subsidiaries, upon
obtaining necessary approvals from the respective shareholders.

Fund and Other Investments


Group/Company

Fair value through profit or loss


Designated upon initial recognition
Malaysian Government Securities
Corporate private debt securities

10.

1.4.2011
RM000

The amounts due from related companies relate to:


Group/Company

9.

31.12.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

1.4.2011
RM000

20,016
140,406

59,971
185,591

89,891
185,191

160,422

245,562

275,082

Cash and Cash Equivalents

Cash and bank balances


Deposits placed:
Licensed banks
Other corporations

31.12.2012
RM000

31.12.2011
RM000

Group
1.4.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

101,281

700

326

573

694

321

2,061,789
42,000

1,998,360
369,774

2,307,835
447,918

1,663,646
42,000

1,952,428
369,774

2,295,492
447,918

2,205,070

2,368,834

2,756,079

1,706,219

2,322,896

2,743,731

Included in deposits placed with licensed banks of the Group is an amount of RM18,000,000 (31.12.2011: RM Nil; 1.4.2011: RM Nil)
being deposits held under designated account as a security for the payment of the Islamic financing facilities obtained by a subsidiary
(see note 14).

154

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

11.

12.

Share Capital
31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

Authorised:
2,000,000 ordinary shares of RM1 each

2,000,000

2,000,000

2,000,000

Issued and fully paid:


1,978,732 ordinary shares of RM1 each

1,978,732

1,978,732

1,978,732

Reserves
Retained Profits
As introduced by the Finance Act 2007, the Company has adopted the single tier company income tax system with effect from year of
assessment 2008 and the Company pays dividend under the single tier system.
Hedging Reserve
This 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 2.8(iii).

13.

Non-Controlling Interests
This consists of the non-controlling interests proportion of share capital and reserves of partly-owned subsidiaries.

14.

Borrowings
31.12.2011
RM000

Group
1.4.2011
RM000

566,426
(118,407)
15,127

Total current borrowings

463,146

Non-Current
Term loan
Derivative asset-CEA
Islamic financing facilities
Finance lease liabilities

855,746
783,538

Total non-current borrowings


Total borrowings

Note

Current
Term loan
Derivative asset-CEA
Finance lease liabilities

15

15

31.12.2011
RM000

Company
1.4.2011
RM000

566,426
(118,407)

448,019

652,921
(208,186)

587,314
(163,734)

652,921
(208,186)

587,314
(163,734)

1,639,284

444,735

423,580

444,735

423,580

2,102,430

444,735

423,580

448,019

444,735

423,580

31.12.2012
RM000

31.12.2012
RM000

PETRONAS GAS BERHAD (101671-H)

155

Notes to the Financial Statements


31 DECEMBER 2012

14.

Borrowings (continued)
Terms and debt repayment schedule
Group

Term loan (net of CEA)


Islamic financing facilities
Finance lease liabilities

Company

Term loan (net of CEA)

Total
RM000

Under 1
year
RM000

1-2
years
RM000

2-5
years
RM000

Over 5
years
RM000

448,019
855,746
798,665

448,019

15,127

16,505

99,531
59,764

756,215
707,269

2,102,430

463,146

16,505

159,295

1,463,484

Total
RM000

Under 1
year
RM000

1-2
years
RM000

2-5
years
RM000

Over 5
years
RM000

448,019

448,019

Term loan
The unsecured term loan comprising the 6th series 3.4% Samurai Bond was on lent from PETRONAS to the Company on 21 April 1997.
The term loan represents an amount equivalent to Yen 16 billion. Under the Currency Exchange Agreement (CEA) with PETRONAS, the
repayment of the principal amount is at a fixed exchange rate of 100 Yen RM2.838. The loan is due for payment in 2013 at a contracted
amount of RM454.1 million.
The CEA being an embedded derivative attached to the Yen 16 billion term loan is valued and accounted separately at each reporting date
due to the risks and characteristics not being closely related to the host contract. The term loan is translated at the spot rate at the reporting
date whereas the CEA is measured at fair value. The fair value of the CEA is based on the discounted net cash flow of the difference
between forward exchange rate and contracted rate. Any increase or decrease in the translation or valuation is recorded accordingly in the
profit or loss.
The market risk on the fair value or future cash flows of the term loan and CEA will fluctuate depending on the exchange rate and interest
rate movement.
For the purpose of presentation of the financial statements, both the term loan and the CEA are netted off since the conditions of legally
enforceable right and the intention to settle on net basis are met.
The net unrealised loss arising from retranslation of term loan and revaluation of CEA during the year was RM3,285,000 (31.12.2011: net
unrealised loss of RM21,155,000).
Islamic financing facilities
The Islamic financing facilities obtained by a subsidiary of the Group with a nominal value up to RM1.16 billion, comprise Shariah
principles of Istisna and Ijarah term financing (Sukuk Programme) bearing a yield payable at a range between 4.25% to 5.50% per annum.
The Sukuk Programme consists of two series, namely Sukuk Programme Series 1 and Series 2. Sukuk Programme Series 1 have been
issued on 8 August 2012 with an aggregate nominal value of RM860.0 million which is repayable up to 16 years from the date of first issue.
The Sukuk Programme Series 2 which has an aggregate nominal value up to RM300.0 million and tenures up to 10.5 years is yet to be issued.
The Islamic financing facilities have been obtained to finance the construction of the power plant by the subsidiary and are secured by the
project-in-progress of RM784,990,000 (see note 3).

156

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

14.

Borrowings (continued)
Islamic financing facilities (continued)
In connection with the Sukuk Programme above, the subsidiary of the Group has agreed on the following significant covenants:

15.

i)

will not incur or permit to exist any indebtedness for borrowed monies or enter into any derivative transactions or give any guarantee
in respect of any indebtedness of any person other than pursuant to this Sukuk Programme or permitted indebtedness;

ii)

shall not create or permit to exist any security interest over its assets other than those contemplated under this Sukuk Programme,
but excluding liens arising in the ordinary course of business;

iii)

shall not dispose of the whole or any substantial part of its assets, save for obsolescence and/or deterioration;

iv)

shall not have any subsidiaries;

v)

commencing from the financial year following the financial year when the full commercial operation date is achieved, maintain a
minimum Finance Service Cover Ratio (FSCR) of at least 1.25x.

Finance Lease Liabilities


Finance lease liabilities are payable as follows:
31.12.2012

Group
Less than one year
Between 1 - 2 years
2 - 5 years
More than 5 years

Minimum
lease
payments
RM000

Interest
RM000

88,041
87,967
264,139
1,289,566
1,729,713

31.12.2011

Principal
RM000

Minimum
lease
payments
RM000

Interest
RM000

Principal
RM000

72,914
71,462
204,375
582,297

15,127
16,505
59,764
707,269

931,048

798,665

1.4.2011

Group
Less than one year
Between 1 - 2 years
2 - 5 years
More than 5 years

Minimum
lease
payments
RM000

Interest
RM000

Principal
RM000

PETRONAS GAS BERHAD (101671-H)

157

Notes to the Financial Statements


31 DECEMBER 2012

16.

Deferred Tax
The components and movements of deferred tax liabilities and assets during the year prior to and after offsetting are as follows:

Group
Deferred tax liabilities
Property, plant and equipment
Financial instrument valuation

Deferred tax assets


Deferred income
Foreign currency translation

Total

Group
Deferred tax liabilities
Property, plant and equipment
Financial instrument valuation

Deferred tax assets


Deferred income
Foreign currency translation

Total

At 1.1.2012
RM000

Charged/
(Credited) to
Profit or Loss
RM000

At 31.12.2012
RM000

1,053,456
52,337

(46,649)
(22,445)

1,006,807
29,892

1,105,793

(69,094)

1,036,699

(3,088)
(49,705)

(1,485)
21,624

(4,573)
(28,081)

(52,793)

20,139

(32,654)

1,053,000

(48,955)

1,004,045

At 1.4.2011
RM000

Charged/
(Credited) to
Profit or Loss
RM000

At 31.12.2011
RM000

1,102,478
41,224

(49,022)
11,113

1,053,456
52,337

1,143,702

(37,909)

1,105,793

(3,399)
(33,303)

311
(16,402)

(3,088)
(49,705)

(36,702)

(16,091)

(52,793)

1,107,000

(54,000)

1,053,000

158

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

16.

Deferred Tax (continued)

Company
Deferred tax liabilities
Property, plant and equipment
Financial instrument valuation

Deferred tax assets


Deferred income
Foreign currency translation

Total

Company
Deferred tax liabilities
Property, plant and equipment
Financial instrument valuation

Deferred tax assets


Deferred income
Foreign currency translation

Total

At 1.1.2012
RM000

Charged/
(Credited) to
Profit or Loss
RM000

At 31.12.2012
RM000

1,053,456
52,337

(46,694)
(22,445)

1,006,762
29,892

1,105,793

(69,139)

1,036,654

(3,088)
(49,705)

(1,485)
21,624

(4,573)
(28,081)

(52,793)

20,139

(32,654)

1,053,000

(49,000)

1,004,000

At 1.4.2011
RM000

Charged/
(Credited) to
Profit or Loss
RM000

At 31.12.2011
RM000

1,102,478
41,224

(49,022)
11,113

1,053,456
52,337

1,143,702

(37,909)

1,105,793

(3,399)
(33,303)

311
(16,402)

(3,088)
(49,705)

(36,702)

(16,091)

(52,793)

1,107,000

(54,000)

1,053,000

The above deferred tax liabilities and assets are offset as there is a legally enforceable right to set off current tax assets against current tax
liabilities and the deferred taxes relate to the same tax authority.

PETRONAS GAS BERHAD (101671-H)

159

Notes to the Financial Statements


31 DECEMBER 2012

17.

Other Long Term Liabilities

Note

Derivative liabilities
Deferred income

18

31.12.2012
RM000

31.12.2011
RM000

Group
1.4.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

20,829
9,688

10,692

11,937

9,688

10,692

11,937

30,517

10,692

11,937

9,688

10,692

11,937

31.12.2012
RM000

31.12.2011
RM000

Note
Group/Company

Deferred income
At beginning of the year/ period
Addition
Less: Recognised in the profit or loss

12,351

(1,658)

14,406

(2,055)

At end of the year/ period

10,693

12,351

31.12.2012
RM000

31.12.2011
RM000

1.4.2011
RM000

1,005
9,688

1,659
10,692

2,469
11,937

10,693

12,351

14,406

Analysis of deferred income:


Current
Non-current

19

Deferred income mainly relates to the payment received in advance from third party, related companies and related parties for the rights
given to these parties to use the Companys property, plant and equipment over a period of time. The deferred income is subsequently
recognised in the profit or loss on a time apportionment basis over the specified period.

160

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

18.

Derivative Liabilities
Note

Group
Non-current
Forward foreign exchange contracts
Current
Forward foreign exchange contracts

Included within:
Trade and other payables
Other long-term liabilities

19
17

31.12.2012
RM000

31.12.2011
RM000

1.4.2011
RM000

20,829

7,099

27,928

7,099
20,829

27,928

A subsidiary of the Group has entered into forward foreign exchange contracts to manage its exposures in relation to foreign currency
exchange rates as required by the principal terms of the Islamic financing facilities (see note 14).
The fair value of forward foreign exchange contracts is based on the fair value difference between the contracted rates and forward rates of
similar forward foreign currency contracts at reporting date.
The subsidiary has adopted cash flow hedge accounting whereby only the foreign currency risk of the forecast transactions has been
designated as the hedged item. The effective portion of the gain or loss on the hedging instruments (i.e. the forward foreign exchange
contract) is recognised in other comprehensive income and subsequently recorded in equity until the hedged transaction occurs, while
the ineffective portion is recognised in the profit or loss. As at 31 December 2012, the balance recognised under hedging reserve in equity
amounts to RM4,186,000 (31.12.2011: RM Nil; 1.4.2011: RM Nil). There has been no ineffective portion recognised in the profit or loss
during the year (31.12.2011: RM Nil; 1.4.2011: RM Nil).
The cash flows associated with the effective portion of the cash flow hedge are expected to occur and affect the profit or loss between
2013 and 2032 to match the hedge item.

PETRONAS GAS BERHAD (101671-H)

161

Notes to the Financial Statements


31 DECEMBER 2012

19.

Trade and Other Payables


Note

Trade payables
Other payables and accruals
Derivative liabilities
Amounts due to:
Holding company
Related companies
Advances from
non-controlling interests
Deferred income

18

17

31.12.2012
RM000

31.12.2011
RM000

Group
1.4.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

899,384
7,099

428,234

184
321,254

738,370

392,572

184
309,634

6,019
6,414

967

14,441

6,414

967

14,441

337
1,005

16,772
1,659

1,682
2,469

1,005

1,659

2,469

920,258

447,632

340,030

745,789

395,198

326,728

Included in other payables and accruals are amounts owing to suppliers and contractors for purchase of property, plant and equipment of
approximately RM708,991,000 (31.12.2011: RM368,667,000; 1.4.2011: RM250,771,000) for the Group and RM620,083,000 (31.12.2011:
RM329,377,000; 1.4.2011: RM237,004,000) for the Company. Also included in other payables is interest payable of RM51,772,000
(31.12.2011: RM9,886,000; 1.4.2011: RM3,835,000) and RM8,684,000 (31.12.2011: RM9,886,000; 1.4.2011: RM3,835,000) for the
Group and the Company respectively.
The amounts due to holding company and related companies are non-trade in nature. These payables arose from the normal course of
business.

20.

Revenue and Gross Profit


1.1.2012
to
31.12.2012
RM000

1.4.2011
to
31.12.2011
RM000

Revenue
gas processing fees
gas transportation fees
sale of industrial utilities

1,511,169
1,119,392
946,210

1,299,873
803,461
661,790

Total

3,576,771

2,765,124

742,481
280,049
784,232

579,024
231,246
536,981

Total

1,806,762

1,347,251

Gross profit

1,770,009

1,417,873

Group/Company

Cost of revenue
cost of gas processing
cost of gas transportation
cost of industrial utilities

162

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

21.

Operating Profit

Operating profit is arrived at after charging:


Audit fees
Underprovision of audit fees in prior years
Depreciation of property, plant and equipment
Inventory written off
Property, plant and equipment expensed off
Property, plant and equipment written off
Rental of equipment and motor vehicles
Rental of land and buildings
Loss on disposal of other investments
Loss on realised foreign exchange
Loss on unrealised foreign exchange
Unrealised loss on changes in values of Malaysia
Government Securities and other unquoted securities
Staff costs
wages, salaries and others
contributions to Employees Provident Fund
and crediting:
Dividend income from associate
quoted in Malaysia (2011: unquoted)
Gain on realised foreign exchange
Gain on disposal of other investments
Gain on disposal of property, plant and equipment
Gain on partial disposal through initial public offering of an associate
Interest income from fund and other investments
Rental income on land and buildings
Unrealised gain on changes in values of Malaysia
Government Securities and other unquoted securities

1.1.2012
to
31.12.2012
RM000

Group
1.4.2011
to
31.12.2011
RM000

1.1.2012
to
31.12.2012
RM000

Company
1.4.2011
to
31.12.2011
RM000

312

663,121
1,326
361
29,078
7,599
7,277

1,459
12,800

219
5
487,604

577
1,149
4,649
5,318
224
161
21,155

222

662,886
1,326
361
12,797
7,560
6,927

3,285

209

487,433

577
1,149
4,649
5,206
224
136
21,155

188

188

345,105
48,317

330,626
41,238

336,749
46,974

327,465
41,238

48
478
99,978
72,551
202

4,388

71,169
218

29,433
1,062
48
478
117,577
71,471
202

21,312

4,388

71,082
218

704

704

PETRONAS GAS BERHAD (101671-H)

163

Notes to the Financial Statements


31 DECEMBER 2012

22.

Financing Costs
1.1.2012
to
31.12.2012
RM000

Group
1.4.2011
to
31.12.2011
RM000

1.1.2012
to
31.12.2012
RM000

Company
1.4.2011
to
31.12.2011
RM000

20,342
17,198
25,890

16,263

20,342

16,263

63,430

16,263

20,342

16,263

20,342

16,263

20,342

16,263

17,198
25,890

63,430

16,263

20,342

16,263

1.1.2012
to
31.12.2012
RM000

Group
1.4.2011
to
31.12.2011
RM000

1.1.2012
to
31.12.2012
RM000

Company
1.4.2011
to
31.12.2011
RM000

496,403

409,244
(3,046)

495,409

409,240
(3,061)

496,403

406,198

495,409

406,179

(43,363)
(5,592)

(54,000)

(43,711)
(5,289)

(54,000)

(48,955)

(54,000)

(49,000)

(54,000)

Tax expense

447,448

352,198

446,409

352,179

Tax expense
Tax expense on share of profit of associate
Tax expense on share of profit of jointly controlled entity

447,448
6,941
765

352,198
9,172
669

446,409

352,179

Total tax expense

455,154

362,039

446,409

352,179

Interest expense:
Term loan
Islamic financing facilities
Finance lease liabilities

Recognised in profit or loss:


Term loan
Capitalised into projects-in-progress:
Islamic financing facilities
Finance lease liabilities

23.

Tax Expense

Current tax expense


current year/ period
over provision in prior year/ period

Deferred tax expense


reversal of temporary differences
over provision in prior year/ period

164

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

23.

Tax Expense (continued)


A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to total tax expense at the
effective income tax rate of the Group and of the Company is as follows:

1.1.2012
to
31.12.2012
RM000

Group
1.4.2011
to
31.12.2011
RM000

1.1.2012
to
31.12.2012
RM000

Company
1.4.2011
to
31.12.2011
RM000

1,844,549

1,432,991

1,925,131

1,431,291

Taxation at Malaysian statutory tax rate of 25% (31.12.2011 - 25%)


Non-deductible expenses
Income not subject to tax
Utilisation of unabsorbed capital allowance
Recognition of previously unutilised tax losses

461,137
24,609
(25,000)

358,248
8,359
(937)
(70)
(515)

481,283
7,167
(36,752)

357,823
2,745
(5,328)

Over provision in prior year

460,746
(5,592)

365,085
(3,046)

451,698
(5,289)

355,240
(3,061)

Total tax expense

455,154

362,039

446,409

352,179

1.1.2012
to
31.12.2012
RM000

Company
1.4.2011
to
31.12.2011
RM000

Profit before taxation

24.

Dividends

Ordinary
Final paid:
31.12.2011 - 25% per ordinary share under single tier system
(31.03.2011 - 35% per ordinary share under single tier system)
Interim paid:
31.12.2012 - 15% per ordinary share under single tier system
(31.12.2011 - 15% per ordinary share under single tier system)

Proposed:
Final:
31.12.2012 - 35% per ordinary share under single tier system

494,683
692,556

296,810
296,809
791,493

989,365

692,556

The proposed final dividend of 35% per share under single tier system amounting to RM692,556,000 in respect of the financial year ended
31 December 2012 has not been accounted for in the financial statements.

PETRONAS GAS BERHAD (101671-H)

165

Notes to the Financial Statements


31 DECEMBER 2012

24.

Dividends (continued)
The net dividend per ordinary share for the financial year ended 31 December 2012 takes into account the total interim and proposed final
dividends for the financial year as follows:

Interim dividend per ordinary share paid - net


Final dividend per ordinary share proposed - net

25.

1.1.2012
to
31.12.2012
Sen

Company
1.4.2011
to
31.12.2011
Sen

15.0
35.0

15.0
25.0

50.0

40.0

Earnings Per Share


Basic earnings per share
The calculation of basic earnings per ordinary share (EPS) at 31 December 2012 was based on the Groups net profit attributable to
shareholders of the Company of RM1,405,205,000 (31.12.2011: RM1,081,014,000), over the number of ordinary shares outstanding
during the year of 1,978,732,000 (31.12.2011: 1,978,732,000).
Diluted earnings per share
The Company has not issued any dilutive potential ordinary shares, hence, the diluted EPS is the same as the basic EPS.

26.

Capital Commitments
Outstanding commitments in respect of capital expenditures not provided for in the financial statements are:

Property, plant and equipment


Approved and contracted for
Less than one year
Between one and five years

Approved but not contracted for


Less than one year
Between one and five years

31.12.2012
RM000

31.12.2011
RM000

Group
1.4.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

733,914
723,129

927,883
1,222,603

1,168,795
2,092,600

378,331
597,894

65,084
704,373

1,031,065
1,150,044

1,457,043

2,150,486

3,261,395

976,225

769,457

2,181,109

1,008,196
5,639,630

1,068,657
3,484,437

147,519
481,060

513,902
517,083

406,066
2,610,977

132,426
169,282

6,647,826

4,553,094

628,579

1,030,985

3,017,043

301,708

8,104,869

6,703,580

3,889,974

2,007,210

3,786,500

2,482,817

166

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

27.

Related Party Disclosures


Related parties
For the purposes of these financial statements, parties are considered to be related to the Group or the Company if the Group or the
Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and
operating decisions, or vice versa. Related parties may be individuals or other entities.
The Groups related parties include subsidiaries, associate, jointly controlled entity as well as the holding and ultimate holding company,
Petroliam Nasional Berhad (PETRONAS) and its related entities. The Groups related parties also include:

i) Government of Malaysia and its related entities as the Companys holding company, PETRONAS is wholly-owned by the Government of
Malaysia; and
ii) 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. Key management personnel include all Directors of the Group.
Key management personnel compensation
1.1.2012
to
31.12.2012
RM000

Group
1.4.2011
to
31.12.2011
RM000

1.1.2012
to
31.12.2012
RM000

Company
1.4.2011
to
31.12.2011
RM000

540

439

532

417

41

63

41

63

581

502

573

480

Directors
Fees
Other short term employee benefits
(including estimated monetary value of benefits-in-kind)

The Company paid management fee to the holding company in relation to services of key management personnel of the Company as
disclosed in page 167.

PETRONAS GAS BERHAD (101671-H)

167

Notes to the Financial Statements


31 DECEMBER 2012

27.

Related Party Disclosures (continued)


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/ period:
Group
1.4.2011
to
31.12.2011
RM000

1.1.2012
to
31.12.2012
RM000

Company
1.4.2011
to
31.12.2011
RM000

(5,002)
(17,027)

(80,480)
78,409

(81,318)
55,180

(80,480)
78,409

(81,318)
55,180

(650)

(50,793)

(50,793)

(33,955)

(39,218)

(31,893)

(39,218)

(31,022)

1,511,169
1,119,392
(451,455)
(5,007)
(19,351)
(20,342)
(6,691)
(6,855)
(12,996)

(737)
(528)
(272)

1,299,873
803,461
(308,624)
(21,912)
(11,097)
(16,263)
(5,005)
(5,032)
(3,896)
(22,493)
(553)
(470)
(217)
(791)

1,511,169
1,119,392
(451,455)
(5,007)
(19,351)
(20,342)
(6,237)
(6,795)
(12,890)

(737)
(369)
(272)

1,299,873
803,461
(308,624)
(21,912)
(11,097)
(16,263)
(5,005)
(5,032)
(3,896)
(22,493)
(553)
(470)
(217)
(791)

1.1.2012
to
31.12.2012
RM000

Government of Malaysias related entities


CIMB Bank Berhad
Advisory fee
Interest payable
Tenaga Nasional Berhad
Purchase of electricity
Sales of industrial utilities
Yayasan Sabah
Land rental
Johor Bahru Valuation and Property Services Department
Land premium
POIC Sabah Sdn. Bhd.
Land reclamation and study
TNB Repair and Maintenance Sdn. Bhd.
Provision of repair and maintenance services
Holding company:
Gas processing fee income
Gas transportation fee income
Purchase of fuel gas
Insurance expense
Information, communication and technology charges
Interest expense
Corporate security charges
Rental of office premises
Supply chain and management services
Technical consultancy fees
Management fees
Internal audit services
Fees for representation in the Board of Directors
Others

168

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

27.

Related Party Disclosures (continued)

Related companies:
PETRONAS Chemicals Aromatics Sdn. Bhd.
Sale of industrial utilities
Vinyl Chloride (Malaysia) Sdn. Bhd.
Sale of industrial utilities
PETRONAS Chemicals Ammonia Sdn. Bhd.
Sale of industrial utilities
MTBE Malaysia Sdn. Bhd.
Sale of industrial utilities
Petlin (Malaysia) Sdn. Bhd.
Sale of industrial utilities
Bekalan Air KIPC Sdn. Bhd.
Purchase of treated water
Management fee income
PETRONAS Carigali Sdn. Bhd.
Project management fee
CEFS Response
Contribution for emergency response services
Optimal Group of Companies
Sale of industrial utilities
Ethylene Malaysia Sdn. Bhd.
Sale of industrial utilities
PETRONAS Management Training Sdn. Bhd.
Training and development related costs
PETRONAS Technical Training Sdn. Bhd.
Training and development related costs
PETRONAS Technical Services Sdn. Bhd.
Technical consultancy fees
PETRONAS Penapisan Melaka Sdn. Bhd.
Lease of land for pipeline route
Rental of office premises
Purchase of office building
Gas Asia Terminal (L) Pte. Ltd.
Time charter services

1.1.2012
to
31.12.2012
RM000

Group
1.4.2011
to
31.12.2011
RM000

1.1.2012
to
31.12.2012
RM000

Company
1.4.2011
to
31.12.2011
RM000

42,105

29,249

42,105

29,249

60,303

32,350

60,303

32,350

108,787

81,287

108,787

81,287

110,512

72,057

110,512

72,057

72,915

48,679

72,915

48,679

(13,529)
500

(9,902)
375

(13,529)
500

(9,902)
375

52,786

41,268

52,786

41,268

(8,458)

(7,260)

(8,458)

(7,260)

290,747

218,492

290,747

218,492

2,582

2,311

2,582

2,311

(3,209)

(4,059)

(3,204)

(4,059)

(4,643)

(3,386)

(13,016)

(13,016)

(127)
(124)
(1,100)

(50,448)

PETRONAS GAS BERHAD (101671-H)

169

Notes to the Financial Statements


31 DECEMBER 2012

27.

Related Party Disclosures (continued)

Subsidiaries:
Regas Terminal (Sg. Udang) Sdn. Bhd.
Management fee
Rental of warehouse
Regas Terminal (Pengerang) Sdn. Bhd.
Management fee
Regas Terminal (Lahad Datu) Sdn. Bhd.
Management fee
Jointly controlled entity:
Industrial Gases Solutions Sdn. Bhd.
Sale of industrial utilities
Associates and jointly controlled entities of the holding company:
Kertih Terminal Sdn. Bhd.
Sale of industrial utilities
BASF PETRONAS Chemicals Sdn. Bhd.
Sale of industrial utilities
BP PETRONAS Acetyls Sdn. Bhd.
Sale of industrial utilities
Trans Thai-Malaysia (Malaysia) Sdn. Bhd.
Access right of way fee
Annual operations and maintenance fee

1.1.2012
to
31.12.2012
RM000

Group
1.4.2011
to
31.12.2011
RM000

1.1.2012
to
31.12.2012
RM000

Company
1.4.2011
to
31.12.2011
RM000

4,656
43

4,656

365

365

876

876

4,628

5,215

4,628

5,215

6,258

4,669

6,258

4,669

97,039

64,160

97,039

64,160

39,812

27,234

39,812

27,234

2,025
2,209

810
709

2,025
2,209

810
709

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. The above has been stated at transacted amount.
Included in the management fees paid to the holding company is payment for services of certain key management personnel of the
Company.
Included in the fees for representation in 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 8, note 17 and
note 19.

170

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

28.

Operating Segments
The Group has four reporting segments, as described below, which offer different products and services and are managed separately
because they require different technology and marketing strategies. The following summary describes the operations in each of the Groups
reporting segments:

Gas processing activities include processing of natural gas from gas fields offshore the East Coast of Peninsular Malaysia into sales
gas and other by-products such as ethane, propane and butane.

Gas transportation activities include transportation of the processed gas to PETRONAS end users throughout Malaysia and export
to Singapore.

Utilities activities include manufacturing, marketing and supplying of industrial utilities to the petrochemical complexes in the Kerteh
and Gebeng Industrial Complexes.

Regasification the intended activities include regasification of liquefied natural gas for PETRONAS and third parties to be used
throughout Malaysia. The regasification facility is presently under construction and targeted to be completed in year 2013.

For each of the reportable segment, the Group chief operating decision maker, which in this case is the Board of Directors of the Group,
reviews performance reports at least on a quarterly basis.
Performance is measured based on segment operating profit, as included in the performance reports to the Board of Directors. Segment
operating profit is used to measure performance as management believes that such information is the most relevant in evaluating the results
of the segments.

PETRONAS GAS BERHAD (101671-H)

171

Notes to the Financial Statements


31 DECEMBER 2012

28.

Operating Segments (continued)


Business segments
31.12.2012

Gas
Processing
RM000

Gas
Transportation
RM000

Utilities
RM000

Regasification
RM000

Total
RM000

Revenue

1,511,169

1,119,392

946,210

3,576,771

768,688

839,343

161,978

1,770,009

Segment results
Unallocated income

70,961

Operating profit
Financing costs
Share of profit after tax of equity-accounted associate and jointly controlled entity

1,840,970
(20,342)
23,921

Profit before taxation


Tax expense

1,844,549
(447,448)

Profit for the year

1,397,101

Included in the measure of segment results are:


Depreciation and amortisation
Unallocated depreciation and amortisation

361,160

99,998

201,458

662,616
505

Business segments
31.12.2011

Gas
Processing
RM000

Gas
Transportation
RM000

Utilities
RM000

Regasification
RM000

Total
RM000

Revenue

1,299,873

803,461

661,790

2,765,124

720,849

572,215

124,809

1,417,873

Segment results
Unallocated income

2,781

Operating profit
Financing costs
Share of profit after tax of equity-accounted associate and jointly controlled entity

1,420,654
(16,263)
28,600

Profit before taxation


Tax expense

1,432,991
(352,198)

Profit for the period

1,080,793

Included in the measure of segment results are:


Depreciation and amortisation
Unallocated depreciation and amortisation

253,129

107,367

126,979

487,475
129

172

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

28.

Operating Segments (continued)


Business segments
31.12.2012

Gas
Processing
RM000

Gas
Transportation
RM000

Utilities
RM000

Regasification
RM000

Total
RM000

Segment assets

3,464,172

2,268,449

1,429,291

3,001,157

10,163,069

Investment in associate
Investment in jointly controlled entity
Unallocated assets

127,796
7,205
3,164,134

Total assets
Included in the measure of segment assets are:
Capital expenditure
Unallocated capital expenditure

13,462,204
830,964

47,031

61,686

2,233,245*

3,172,926
562,882

* Capital expenditure for Regasification segment includes leased assets amounting to RM841,009,000 which are accounted for as assets
of the Group (refer note 3).
Business segments
31.12.2011

Gas
Processing
RM000

Gas
Transportation
RM000

Utilities
RM000

Regasification
RM000

Total
RM000

Segment assets

3,005,791

2,309,303

1,554,056

6,869,150

Investment in associate
Investment in jointly controlled entity
Unallocated assets

179,567
5,414
3,692,338

Total assets
Included in the measure of segment assets are:
Capital expenditure
Unallocated capital expenditure

10,746,469
264,809

43,795

36,386

344,990
789,097

PETRONAS GAS BERHAD (101671-H)

173

Notes to the Financial Statements


31 DECEMBER 2012

28.

Operating Segments (continued)


Segment results
The total segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Unallocated items mainly comprise fair value gain or loss on financial asset, finance income, income taxes and other corporate expenses.
Segment assets
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 associate and jointly controlled entity is not presented as the contribution of the associate and
jointly controlled entity and the carrying amount of investment in the associate and jointly controlled entity are not material and have been
reflected in the statement of comprehensive income and statement of financial position of the Group. Details of the associate and jointly
controlled entity 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 segment assets that are expected to be used for more
than one period.
Products and services segments

Gas processing fees


Gas transportation fees
Utilities
Electricity
Steam
Industrial gases
Others

1.1.2012
to
31.12.2012
RM000

1.4.2011
to
31.12.2011
RM000

1,511,169
1,119,392

1,299,873
803,461

434,041
288,186
164,357
59,626

299,151
196,293
123,343
43,003

3,576,771

2,765,124

Geographical information for revenue and non-current assets is not disclosed as the Group is pre-dominantly operated in Malaysia.

29.

Holding Company
The holding company as well as the ultimate holding company is Petroliam Nasional Berhad (PETRONAS), a company incorporated in
Malaysia.

174

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments
Categories of financial instruments
The table below provides an analysis of financial instruments categorised as follows:
i.
ii.

Loans and receivables (L&R);


Fair value through profit or loss (FVTPL);
Designated upon initial recognition (DUIR);
iii. Loans and borrowings (L&B).

Group

31.12.2012
Financial assets
Trade and other receivables (excluding prepayments)
Fund and other investments
Cash and cash equivalents

Financial liabilities
Borrowings
Other long term liabilities (excluding deferred income)
Trade and other payables (excluding deferred income)

Group

31.12.2011
Financial assets
Trade and other receivables (excluding prepayments)
Fund and other investments
Cash and cash equivalents

Financial liabilities
Borrowings
Trade and other payables (excluding deferred income)

Note

L&R/
(L&B)
RM000

FVTPL
-DUIR
RM000

Derivatives
used for
hedging
RM000

Carrying
amount
RM000

8
9
10

350,057

2,205,070

160,422

350,057
160,422
2,205,070

2,555,127

160,422

2,715,549

(2,220,837)

(912,154)

118,407

(20,829)
(7,099)

(2,102,430)
(20,829)
(919,253)

(3,132,991)

118,407

(27,928)

(3,042,512)

Note

L&R/
(L&B)
RM000

FVTPL
RM000

Carrying
amount
RM000

8
9
10

374,108

2,368,834

245,562

374,108
245,562
2,368,834

2,742,942

245,562

2,988,504

(652,921)
(445,973)

208,186

(444,735)
(445,973)

(1,098,894)

208,186

(890,708)

14
17
19

14
19

PETRONAS GAS BERHAD (101671-H)

175

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Categories of financial instruments (continued)
Group

L&R/
(L&B)
RM000

FVTPL
RM000

Carrying
amount
RM000

353,962

2,756,079

275,082

353,962
275,082
2,756,079

3,110,041

275,082

3,385,123

(587,314)
(337,561)

163,734

(423,580)
(337,561)

(924,875)

163,734

(761,141)

Note

L&R/
(L&B)
RM000

FVTPL
RM000

Carrying
amount
RM000

8
9
10

547,200

1,706,219

160,422

547,200
160,422
1,706,219

2,253,419

160,422

2,413,841

(566,426)
(744,784)

118,407

(448,019)
(744,784)

(1,311,210)

118,407

(1,192,803)

Note

1.4.2011
Financial assets
Trade and other receivables (excluding prepayments)
Fund and other investments
Cash and cash equivalents

Financial liabilities
Borrowings
Trade and other payables (excluding deferred income)

Company

31.12.2012
Financial assets
Trade and other receivables (excluding prepayments)
Fund and other investments
Cash and cash equivalents

Financial liabilities
Borrowings
Trade and other payables (excluding deferred income)

14
19

176

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Categories of financial instruments (continued)
Company

31.12.2011
Financial assets
Trade and other receivables (excluding prepayments)
Fund and other investments
Cash and cash equivalents

Financial liabilities
Borrowings
Trade and other payables (excluding deferred income)

Company

1.4.2011
Financial assets
Trade and other receivables (excluding prepayments)
Fund and other investments
Cash and cash equivalents

Financial liabilities
Borrowings
Trade and other payables (excluding deferred income)

Note

L&R/
(L&B)
RM000

FVTPL
RM000

Carrying
amount
RM000

8
9
10

416,178

2,322,896

245,562

416,178
245,562
2,322,896

2,739,074

245,562

2,984,636

(652,921)
(393,539)

208,186

(444,735)
(393,539)

(1,046,460)

208,186

(838,274)

L&R/
(L&B)
RM000

FVTPL
RM000

Carrying
amount
RM000

358,493

2,743,731

275,082

358,493
275,082
2,743,731

3,102,224

275,082

3,377,306

(587,314)
(324,259)

163,734

(423,580)
(324,259)

(911,573)

163,734

(747,839)

14
19

Note

Certain fund and other investments have been designated upon initial recognition as at fair value through profit or loss as management
internally monitors these investments on fair value basis.
The fair value of borrowings is shown on page 187. For all other financial instruments, the carrying amount is either the fair value, or are not
materially different from the fair value.
The fair value movements for financial assets categorised as at fair value through profit or loss are mainly attributable to changes in market
prices.

PETRONAS GAS BERHAD (101671-H)

177

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Financial risk management
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 and the sale of industrial utilities. These
risks, which arise in the normal course of the Groups and the Companys business, comprise credit risk, liquidity risk and market risk relating
to interest rates and foreign currency exchange rates.
The Group has policies and guidelines in place that sets the foundation for a consistent approach towards establishing an effective risk
management across the Group.
The Groups and the Companys 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
Groups and the Companys exposure to credit risk arise from its operating activities, primarily from trade receivables and from its investing
activities, primarily from fund and other investments. The credit risk arising from the Groups and the Companys normal operations are
controlled by individual operating units in line with PETRONAS policies and guidelines.
Receivables
The Group and the Company minimise credit risk by entering into contracts with highly credit 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 Groups overall credit exposure against
limits and securities.
Depending on the types of transactions and counterparty 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 for amounts due from related parties.

178

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Credit risk (continued)
Receivables (continued)
As at the reporting date, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the
statement of financial position. The ageing of trade receivables as at the reporting date is analysed below:

Group/Company

Current
Past due 1 to 30 days
Past due 31 to 60 days
Past due 61 to 90 days
Past due more than 90 days

Representing:
Trade receivables (note 8)
Amounts due from holding company (note 8.2)
Amounts due from related company (note 8.3)
Amounts due from jointly controlled entity (note 8)
Amounts due from related parties (note 8)

31.12.2012
RM000

31.12.2011
RM000

1.4.2011
RM000

326,290
1,236
1,478
862
11,626

299,343
517
76
119
11,855

300,854
499
801
689
4,351

341,492

311,910

307,194

14,943
191,449
116,896
1,299
16,905

15,035
164,623
118,954
1,845
11,453

14,678
202,557
70,778
3,354
15,827

341,492

311,910

307,194

Fund and other investments


The Group and the Company are also exposed to counterparty credit risk from financial institutions through fund investment activities
comprising primarily money market placement and investments in bonds. 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 Groups
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 undertakes a credit risk management activities similar to the
credit management and monitoring procedures for receivables.
As at the reporting date, the maximum exposure to credit risk arising from fund and other investments is represented by the carrying
amounts in the statement of financial position.
The fund and other investments are unsecured, however, in view of the sound credit rating of counterparties, management does not expect
any counterparty to fail to meet its obligation.
Liquidity risk
Liquidity risk is the risk that suitable sources of funding for the Groups and the Companys business activities may not be available.
In managing its liquidity risk, the Group and the Company maintain sufficient cash and liquid marketable assets.

PETRONAS GAS BERHAD (101671-H)

179

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Maturity analysis
The table below summarises the maturity profile of the Groups and of the Companys financial liabilities as at the reporting date based on
undiscounted contractual payments:

Carrying
amount
RM000

Contractual
interest/
profit rates
per annum
%

Contractual
cash flow*
RM000

Within 1
year
RM000

1-2
years
RM000

2-5
years
RM000

More
than
5 years
RM000

Unsecured term loan


from holding company
Term loan (net of CEA)

448,019

3.4

473,359

473,359

Islamic financing facilities

855,746

4.3 - 5.5

1,324,303

59,647

42,860

224,763

997,033

Finance lease liabilities

798,665

9.2

1,729,713

88,041

87,967

264,139

1,289,566

Trade and other payables


(excluding deferred
income and derivative
liabilities)

912,154

912,154

912,154

27,928

(592,221)
633,986

(229,633)
237,015

(61,333)
60,315

(2,570)
2,791

(298,685)
333,865

4,481,294

1,540,583

129,809

489,123

2,321,779

Group

31.12.2012
Financial liabilities

Derivative liabilities
Forward foreign
exchange contracts
- Inflows
- Outflows

3,042,512

* The contractual cash flow is inclusive of the principal and interest payments.

180

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Maturity analysis (continued)

Carrying
amount
RM000

Contractual
interest/
profit rates
per annum
%

Contractual
cash flow*
RM000

Within 1
year
RM000

1-2
years
RM000

2-5
years
RM000

More
than
5 years
RM000

Unsecured term loan


from holding company
Term loan (net of CEA)

444,735

3.4

498,498

22,199

476,299

Trade and other payables


(excluding deferred
income)

445,973

445,973

445,973

944,471

468,172

476,299

Group

31.12.2011
Financial liabilities

890,708

* The contractual cash flow is inclusive of the principal and interest payments.

Carrying
amount
RM000

Contractual
interest/
profit rates
per annum
%

Contractual
cash flow*
RM000

Within 1
year
RM000

1-2
years
RM000

2-5
years
RM000

More
than
5 years
RM000

Unsecured term loan


from holding company
Term loan (net of CEA)

423,580

3.4

504,023

19,969

19,969

464,085

Trade and other payables


(excluding deferred
income)

337,561

337,561

337,561

841,584

357,530

19,969

464,085

Group

1.4.2011
Financial liabilities

761,141

* The contractual cash flow is inclusive of the principal and interest payments.

PETRONAS GAS BERHAD (101671-H)

181

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Maturity analysis (continued)

Carrying
amount
RM000

Contractual
interest/
profit rates
per annum
%

Contractual
cash flow*
RM000

Within 1
year
RM000

1-2
years
RM000

2-5
years
RM000

More
than
5 years
RM000

Unsecured term loan


from holding company
Term loan (net of CEA)

448,019

3.4

473,359

473,359

Trade and other payables


(excluding deferred
income)

744,784

744,784

744,784

1,218,143

1,218,143

Company

31.12.2012
Financial liabilities

1,192,803

* The contractual cash flow is inclusive of the principal and interest payments.

Carrying
amount
RM000

Contractual
interest/
profit rates
per annum
%

Contractual
cash flow*
RM000

Within 1
year
RM000

1-2
years
RM000

2-5
years
RM000

More
than
5 years
RM000

Unsecured term loan


from holding company
Term loan (net of CEA)

444,735

3.4

498,498

22,199

476,299

Trade and other payables


(excluding deferred
income)

393,539

393,539

393,539

892,037

415,738

476,299

Company

31.12.2011
Financial liabilities

838,274

* The contractual cash flow is inclusive of the principal and interest payments.

182

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Maturity analysis (continued)

Carrying
amount
RM000

Contractual
interest/
profit rates
per annum
%

Contractual
cash flow*
RM000

Within 1
year
RM000

1-2
years
RM000

2-5
years
RM000

More
than
5 years
RM000

Unsecured term loan


from holding company
Fixed rate loan

423,580

3.4

504,023

19,969

19,969

464,085

Trade and other payables


(excluding deferred
income)

324,259

324,259

324,259

828,282

344,228

19,969

464,085

Company

1.4.2011
Financial liabilities

747,839

* 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 include interest rates, foreign currency exchange rates and other indices that
could adversely affect the value of the Groups and of the Companys financial assets, liabilities or expected future cash flows.
Interest rate risk
The Groups and the Companys investments in fixed-rate debt instruments are exposed to a risk of change in their fair value while
investments in floating-rate debt instruments are exposed to a risk of change in their future cash flows, due to changes in interest rates.
All interest rate risks are monitored and managed proactively in line with PETRONAS policies and guidelines.

PETRONAS GAS BERHAD (101671-H)

183

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Interest rate risk (continued)
The interest rate profile of the Groups and of the Companys interest-bearing financial instruments based on carrying amounts as at
reporting date is as follows:

Fixed rate instruments


Financial assets
Financial liabilities

Floating rate instruments


Financial assets

31.12.2012
RM000

31.12.2011
RM000

Group
1.4.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

2,229,210
(2,102,430)

2,578,693
(444,735)

2,995,834
(423,580)

1,831,067
(448,019)

2,532,761
(444,735)

2,983,491
(423,580)

126,780

2,133,958

2,572,254

1,383,048

2,088,026

2,559,911

35,001

35,003

35,001

35,001

35,003

35,001

As at 31 December 2012, 99% of the financial instruments of the Group and the Company are fixed rate instruments (31.12.2011: 99%).
Since most of the Groups and the Companys financial assets and liabilities are fixed rate instruments measured at amortised cost, a
change in interest rate is not expected to have material impact on the Groups and the Companys profit or loss.
Foreign currency risk
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 Malaysian Ringgit. As such, it is not exposed to any
significant foreign currency risk.
The Groups and the Companys foreign exchange management policy is to minimise economic and significant transactional exposure
arising from currency movements. For major capital projects, the Group and Company perform assessment of potential foreign exchange
risk exposure at the investment decision phase to determine the appropriate foreign exchange risk management strategy. When deemed
necessary and appropriate, the Group and the Company will enter into forward exchange contracts to hedge and minimise their exposure
to the foreign currency risk.

184

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Foreign currency risk (continued)
The Groups and the Companys exposure to foreign currency risk, based on carrying amounts as at the reporting date are as follows:
31.12.2012
Denominated in
EUR
JPY
RM000
RM000

USD
RM000

GBP
RM000

798,709
161,293
523,320

4,013

23,466
110,940

2,013
8

Estimated forecast purchases

1,483,322
(490,835)

4,013

134,406
(115,497)

2,021

Net foreign currency exposure

992,487

4,013

18,909

2,021

Group

Financial liabilities
Borrowings
Trade and other payables
Forward foreign exchange contracts

31.12.2011
Denominated in
EUR
JPY
RM000
RM000

Group

USD
RM000

GBP
RM000

Financial liabilities
Borrowings
Trade and other payables

29,885

17

8,181

14,311
157

29,885

17

8,181

14,468

1.4.2011
Denominated in
EUR
JPY
RM000
RM000

Group

USD
RM000

GBP
RM000

Financial liabilities
Borrowings
Trade and other payables

45,659

2,089

5,969

45,659

2,089

5,969

PETRONAS GAS BERHAD (101671-H)

185

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Foreign currency risk (continued)
31.12.2012
Denominated in
EUR
JPY
RM000
RM000

Company

USD
RM000

GBP
RM000

Financial liabilities
Borrowings
Trade and other payables

83,068

4,013

622

2,013
8

83,068

4,013

622

2,021

31.12.2011
Denominated in
EUR
JPY
RM000
RM000

Company

USD
RM000

GBP
RM000

Financial liabilities
Borrowings
Trade and other payables

21,477

17

1,390

14,311
157

21,477

17

1,390

14,468

1.4.2011
Denominated in
EUR
JPY
RM000
RM000

Company

USD
RM000

GBP
RM000

Financial liabilities
Borrowings
Trade and other payables

45,659

2,089

5,969

45,659

2,089

5,969

Currency risk sensitivity analysis


Sensitivity analysis for a given market variable provided in this note, discloses the effect on profit or loss and equity as at 31 December 2012
assuming that a reasonably possible change in the relevant market variable had occurred at 31 December 2012 and had 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 where relevant. 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 Groups actual
exposure to market prices is constantly changing with changes in the Groups portfolio of among others, commodity, 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.

186

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Currency risk sensitivity analysis (continued)
The following table demonstrates the indicative pre-tax effects on the profit or loss of applying reasonably foreseeable market movements
in the following foreign currency exchange rates:

31.12.2012
USD
GBP
EUR
JPY

31.12.2011
USD
GBP
EUR
JPY

+/Change in
currency
rate

Effect on
profit or
loss

Group
Effect on
equity

Company
Effect on
profit or
loss

RM000

RM000

RM000

5
10
10
5

55,189
401
13,680
101

10,753

4,153
401
62
101

+/Change in
currency
rate

Effect on
profit or
loss

Group
Effect on
equity

Company
Effect on
profit or
loss

RM000

RM000

RM000

5
10
10
5

1,494
2
479
724

1,074
2
139
724

This analysis assumes that all other variables, in particular interest rates, remain constant.
A depreciation in the above foreign currency rates would have had equal but opposite effect, on the basis that all other variables remain
constant.

PETRONAS GAS BERHAD (101671-H)

187

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Fair value
The fair values of financial liabilities measured at amortised cost, together with the carrying amounts shown in the statement of financial
position are as follows:

Group

Loans and borrowings:


Term loan (net of CEA)
Islamic financing facilities
Finance lease liabilities

Company

Loans and borrowings:


Term loan (net of CEA)

Carrying
amount
RM000

31.12.2012
Fair
value
RM000

Carrying
amount
RM000

31.12.2011
Fair
value
RM000

Carrying
amount
RM000

1.4.2011
Fair
value
RM000

448,019
855,746
798,665

450,659
855,746
798,665

444,735

452,165

423,580

437,763

2,102,430

2,105,070

444,735

452,165

423,580

437,763

Carrying
amount
RM000

31.12.2012
Fair
value
RM000

Carrying
amount
RM000

31.12.2011
Fair
value
RM000

Carrying
amount
RM000

1.4.2011
Fair
value
RM000

448,019

450,659

444,735

452,165

423,580

437,763

As at 31 December 2012, the term loan and the CEA are fair valued separately. The fair value of the term loan is derived from the price
sourced from third party and translated at the spot rate at the reporting date. The fair value of the CEA (note 14) is netted off against the
carrying value of the term loan.
Fair value hierarchy
The table below shows the fair value hierarchy of financial instruments carried at fair value. The different levels have been defined as
follows:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Input 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 Groups and the Companys financial assets and financial liabilities carried at fair value are classified under Level 2 as follows:

Financial assets
Malaysia Government Securities
Corporate private debt securities

Financial liabilities
Forward foreign exchange contracts

31.12.2012
RM000

31.12.2011
RM000

Group
1.4.2011
RM000

31.12.2012
RM000

31.12.2011
RM000

Company
1.4.2011
RM000

20,016
140,406

59,971
185,591

89,891
185,191

20,016
140,406

59,971
185,591

89,891
185,191

160,422

245,562

275,082

160,422

245,562

275,082

27,928

188

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

30.

Financial Instruments (continued)


Income/ (expense), net gains and losses arising from financial instruments
Interest
income
RM000

Interest
expense
RM000

Others
RM000

Total
RM000

Group
1.1.2012 to 31.12.2012
Financial instruments at fair value through profit or loss
- Designated upon initial recognition
Loans and receivables
Financial liabilities at amortised cost
Derivatives used for hedging
- recognised in profit or loss
- recognised in equity

7,755
64,796

(20,342)

(89,919)

96,472

(82,164)
64,796
76,130

(20,952)
(6,976)

(20,952)
(6,976)

Total

72,551

(20,342)

(21,375)

30,834

Group
1.4.2011 to 31.12.2011
Financial instruments at fair value through profit or loss
- Designated upon initial recognition
Loans and receivables
Financial liabilities at amortised cost

7,209
63,960

(16,263)

44,932

(65,768)

52,141
63,960
(82,031)

Total

71,169

(16,263)

(20,836)

34,070

Interest
income
RM000

Interest
expense
RM000

Others
RM000

Total
RM000

Company
1.1.2012 to 31.12.2012
Financial instruments at fair value through profit or loss
- Designated upon initial recognition
Loans and receivables
Financial liabilities at amortised cost

7,755
63,716

(20,342)

(89,919)

87,556

(82,164)
63,716
67,214

Total

71,471

(20,342)

(2,363)

48,766

Company
1.4.2011 to 31.12.2011
Financial instruments at fair value through profit or loss
- Designated upon initial recognition
Loans and receivables
Financial liabilities at amortised cost

7,209
63,873

(16,263)

44,932

(65,743)

52,141
63,873
(82,006)

Total

71,082

(16,263)

(20,811)

34,008

PETRONAS GAS BERHAD (101671-H)

189

Notes to the Financial Statements


31 DECEMBER 2012

31.

Capital Management
The Group and the Company define capital as its total equity and debt. The objective of the Group and the Companys capital management
is to maintain an optimal capital structure and ensure availability of funds in order to meet financial obligations, support business growth
and maximises shareholders value. As a subsidiary of PETRONAS, the Group and the Companys approach in managing capital is set out
in the PETRONAS Group Corporate Financial Policy.
The Group and the Company monitor and maintain a prudent level of total debt to total asset ratio and ensures compliance with all
covenants under debt and shareholders agreements and regulatory requirements, if any.
There were no changes in the Group and the Companys approach to capital management during the year.
Under the requirement of Bursa Malaysia Practice Note No.17/2005, the Company is required to maintain consolidated shareholders equity
equal to or not less than 25% of the issued and paid-up capital (excluding treasury shares) and such shareholders equity is not less than
RM40 million. The Company has complied with this requirement.

32.

New and Revised Pronouncements Yet in Effect


The following new and revised MFRSs, amendments and IC interpretations (collectively referred to as pronouncements) that have been
issued by the Malaysian Accounting Standards Board will become effective in future financial reporting periods and have not been adopted
by the Group and/or the Company:
Effective for annual periods beginning on or after 1 January 2013
MFRS 10, Consolidated Financial Statements
MFRS 11, Joint Arrangements
MFRS 12, Disclosure of Interests in Other Entities
MFRS 13, Fair Value Measurement
MFRS 119, Employee Benefits (revised)
MFRS 127, Separate Financial Statements
MFRS 128, Investments in Associates and Joint Ventures
Amendments to MFRS 7, Financial Instruments: Disclosures Offsetting Financial Assets and Financial Liabilities
Amendments to MFRS 10, Consolidated Financial Statements: Transition Guidance
Amendments to MFRS 11, Joint Arrangements: Transition Guidance
Amendments to MFRS 12, Disclosure of Interests in Other Entities: Transition Guidance
Amendments to MFRS 101, Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle)
Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle)
Amendments to MFRS 132, Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle)
Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2009-2011 Cycle)
Effective for annual periods beginning on or after 1 January 2014
Amendments to MFRS 132, Financial Instruments: Presentation Offsetting Financial Assets and Financial Liabilities

190

PETRONAS GAS BERHAD (101671-H)

Notes to the Financial Statements


31 DECEMBER 2012

32.

New and Revised Pronouncements Yet in Effect (continued)


Effective for annual periods beginning on or after 1 January 2015
MFRS 9, Financial Instruments (2009)
MFRS 9, Financial Instruments (2010)
Amendments to MFRS 7, Financial Instruments: Disclosures Mandatory Effective Date of MFRS 9 and Transition Disclosures
The adoption of the above pronouncements except for MFRS 10 and MFRS 11, are not expected to have material impact on the financial
statements of the Group and of the Company in the period of initial application.
MFRS 10 introduces a new single control model to determining which investees should be consolidated. MFRS 10 supersedes MFRS
127, Consolidated and Separate Financial Statements and IC Interpretation 112, Consolidation Special Purpose Entities. There are three
elements to the definition of control in MFRS 10: (i) power by investor over an investee, (ii) exposure, or rights, to variable returns from
investors involvement with the investee, and (iii) investors ability to affect those returns through its power over the investee.
The Group has re-evaluated its involvement with investees under the new control model. Based on its reassessment, the Group concluded
that it has not had control over certain subsidiaries of which the Group owns 60% of the voting rights considering that strategic and financial
decision of the relevant activities of the investees require unanimous consent by the Group and other parties. Upon adoption of MFRS
10, the Group will de-consolidate these subsidiaries retrospectively. These investees will be equity-accounted for using MFRS 11, Joint
Arrangements.
The change of the accounting policy is not expected to have material impact on the Groups reported income or net assets.

33.

New Pronouncements Not Applicable to the Group and the Company


The MASB has issued amendments and IC interpretation which are not yet effective, but for which are not relevant to the operations of the
Group and of the Company and hence, no further disclosure is warranted.
Effective for annual periods beginning on or after 1 January 2013
Amendments to MFRS 1, Firsttime Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2009-2011 Cycle)
Amendments to MFRS 1, Firsttime Adoption of Malaysian Financial Reporting Standards - Government Loans
IC 20, Stripping Costs in the Production Phase of a Surface Mine

PETRONAS GAS BERHAD (101671-H)

191

Notes to the Financial Statements


31 DECEMBER 2012

34.

Disclosure of Realised and Unrealised Profit


The retained profits as at the end of reporting period consists of:

31.12.2012
RM000

Group
31.12.2011
RM000

31.12.2012
RM000

Company
31.12.2011
RM000

6,967,958
(1,029,230)

6,352,810
(1,042,644)

7,002,795
(997,115)

6,361,095
(1,042,644)

5,938,728

5,310,166

6,005,680

5,318,451

Total share of retained profits/ (accumulated losses)


from associated company:
- realised
- unrealised

61,129
(9,799)

89,319
(13,088)

Total share of retained profits/ (accumulated losses)


from jointly controlled entity:
- realised
- unrealised

6,935
20

5,164
1

Consolidation adjustments

5,997,013
8,900

5,391,562
639

6,005,680

5,318,451

Total retained profits

6,005,913

5,392,201

6,005,680

5,318,451

Total retained profits/ (accumulated losses)


of the Company and its subsidiaries:
- realised
- unrealised

The realised and unrealised profits are complied based on the Guidance on Special Matter No.1, Determination of Realised and Unrealised
Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian
Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

192

PETRONAS GAS BERHAD (101671-H)

Independent Auditors Report


TO THE MEMBERS OF PETRONAS GAS BERHAD

Report on the Financial Statements


We have audited the financial statements of PETRONAS GAS BERHAD, which comprise the Statements of Financial Position as at 31 December
2012 of the Group and of the Company, and the Statements of Profit or Loss and Other Comprehensive Income, Changes in Equity and Cash
Flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory
information, as set out on pages 124 to 190.
Directors Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in
Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved
standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, we consider internal control relevant to the entitys preparation of financial statements that give a
true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December
2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards,
International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on Other Legal and Regulatory Requirements


In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a)

In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have
been properly kept in accordance with the provisions of the Act.

(b)

We are satisfied that the accounts of the subsidiaries that have been consolidated with the Companys financial statements are in form
and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received
satisfactory information and explanations required by us for those purposes.

(c)

Our audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3)
of the Act.

PETRONAS GAS BERHAD (101671-H)

193

Independent Auditors Report


TO THE MEMBERS OF PETRONAS GAS BERHAD

Other Reporting Responsibilities


Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in note 34 on
page 191 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing
Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial Reporting Standards. We have
extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly
compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or
Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of
Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia
and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG DESA MEGAT & CO.


Firm Number: AF 0759
Chartered Accountants
Petaling Jaya,
21 February 2013

ADRIAN LEE LYE WANG


Approval Number: 2679/11/13(J)
Chartered Accountant

194

PETRONAS GAS BERHAD (101671-H)

PETRONAS GAS BERHAD (101671-H)

195

Other
Information

Summary of Landed Property, Plant and Equipment

196

Training Programmes Attended by Directors

203

Analysis of Shareholdings

205

Corporate Directory

209

Notice of Annual General Meeting

210

Administrative Details

212

Proxy Form

196

PETRONAS GAS BERHAD (101671-H)

Summary of Landed Property,


Plant and Equipment
A summary of landed property, plant and equipment of PETRONAS Gas Berhad and its subsidiaries as at 31 December 2012

Location

Acquisition
Date

Tenure

Description
and usage

Land Area
(hectare)

Age of Plant
and Building
(years)

Build-up
Area
(sq. m)

Net Book Value


as at
31 December 2012
(RM000)

TERENGGANU
Gas Processing Plants,
Kertih
Km 105,
Jalan KuantanKuala Terengganu
24300 Kertih,
Kemaman,
Terengganu Darul Iman
Lot No. 1903

Lot No. 3541

Lot No. 1902

30.09.1991

30.09.1991

30.09.1991

Gas Processing Plants,


Paka,
Km 8, Kg. Tok Arun,
Off Jalan Santong
23100 Paka, Dungun,
Terengganu Darul Iman
Lot No. 7346

03.08.1997

640,927

Leasehold
Expiry :

Leasehold land

28.02.2043
(Sub-Lease
60 years)

Plant
GPP 1
GPP 2
GPP 3

87.9

03.04.2050
(60 years)

GPP 4 / DPCU 2
Compressor
station

34.6

26.02.2082
(99 years)

Office
Administration
building 1
Administration
building 2
Fire station

Leasehold
Expiry :

Leasehold land

13.07.2058
(60 years)

Plant
GPP 5
GPP 6
DPCU 3

03.08.1997

20.06.2058
(60 years)

(Vacant)

95,998
123,310
123,310

18.5

266,400

21.1

65,010

27.4

1,282

22.7
24.8

6,892
3,248

2.7

1,041,333

189.6

Office
Administration
building
Lot No. 7220

28.3
20.4
20.1

27.0

13.9
13.0
14.3

200,000
220,000
60,000

15.2

12,220

PETRONAS GAS BERHAD (101671-H)

197

A summary of landed property, plant and equipment of PETRONAS Gas Berhad and its subsidiaries as at
31 December 2012 (continued)

Location

Acquisition
Date

Export Terminal
Operation
Tanjung Sulong,
24000 Kemaman,
Terengganu Darul Iman
Lot No. 1314

24.07.1993

Tenure

Description
and usage

Leasehold
Expiry :

Leasehold land

19.03.2025
(40 years)

Plant
Unit 1,2,3,4

Land Area
(hectare)

Age of Plant
and Building
(years)

Build-up
Area
(sq. m)

Net Book Value


as at
31 December 2012
(RM000)

130,084

9.7

28.1

2.8

28.1

1,146

Office
Administration
building
Lot No. 1333

24.07.1993

Leasehold
Expiry :

Centralised Utility
Facilities (CUF)
Operations, Kertih
Kertih Integrated
Petrochemical
Complex, Km 105,
Jalan Kuantan Kuala Terengganu,
24300 Kertih,
Kemaman,
Terengganu Darul Iman
Lot No. 8065

11.03.2027
(40 years)

Marine facility
Breakwater
jetty

818,885

Leasehold land
Plant
CGN B
CGN C
CGN D, E, F
Water plant
CGN G
ASU
Lab & workshop

21.12.1999

19.08.2060
(60 years)

Control room

37.1

Office
Administration
building

13.1
13.1
12.6
12.6
12.7
11.8
11.8

667
667
2,000
2,000
667
15,451
729

11.6

1,820

11.9

514

PAHANG
Kuantan Regional
Operations Office Lot 1,
Sector 1,
Bandar Indera Mahkota,
25200 Kuantan,
Pahang Darul Makmur
Lot No. PT16756

04.01.1989

Leasehold
Expiry :

Leasehold land

04.01.2088
(99 years)

Office
Regional office

8,385

11.2

21.2

2,428

198

PETRONAS GAS BERHAD (101671-H)

Summary of Landed Property, Plant and Equipment

A summary of landed property, plant and equipment of PETRONAS Gas Berhad and its subsidiaries as at
31 December 2012 (continued)

Location

Acquisition
Date

Kuantan Compressor
Station,
Kampung Mahkota,
Km 19, Jalan Gambang,
26070 Kuantan,
Pahang Darul Makmur

Tenure

Description
and usage

Land Area
(hectare)

Leasehold
Expiry :

Leasehold land

26.08.2101
(99 years)

Plant
Compressor
station
Compressor
station

20.1

Leasehold land

18.8

Age of Plant
and Building
(years)

Build-up
Area
(sq. m)

Net Book Value


as at
31 December 2012
(RM000)

152,888

Lot No. PT60398


04.01.1989

17.11.1999
Centralised Utility
Facilities (CUF)
Operations, Gebeng
Lot 139A,
Gebeng Industrial Area,
Phase III
26080 Kuantan,
Pahang Darul Makmur

Leasehold
Expiry :
08.01.2100
(99 years)

Lot No. PT15127

19.1

1,142

3.2

4,378
385,734

Plant
CGN A
CGN B
CGN C
N2GEN
Water plant

13.1
13.1
13.1
13.1
12.6

667
667
667
360
2,000

Office
Maintenance
building
Warehouse

11.6
11.6

1,015
1,004

JOHOR
Segamat Operation
Centre,
Gas Transmission
System,
Km 10, Lebuhraya
Segamat-Kuantan
85000 Segamat,
Johor Darul Takzim
Lot No. PTD564

22.09.1991

Leasehold
Expiry :

Leasehold land

18.02.2102
(99 years)

Plant
Compressor
station
Office
Operation centre

63,248

61.3
15.0

2,792

20.4

8,080

PETRONAS GAS BERHAD (101671-H)

199

A summary of landed property, plant and equipment of PETRONAS Gas Berhad and its subsidiaries as at
31 December 2012 (continued)

Location

Acquisition
Date

Pasir Gudang Regional


Operations Office,
PLO 332, Jalan Perak 4,
Pasir Gudang Industrial
Area,
81700 Pasir Gudang,
Johor Darul Takzim
Lot No. PTD84942

23.04.1989

Tenure

Description
and usage

Leasehold
Expiry :

Leasehold land

22.04.2088
(99 years)

Office
Regional office

Land Area
(hectare)

Age of Plant
and Building
(years)

Build-up
Area
(sq. m)

Net Book Value


as at
31 December 2012
(RM000)

7,906

4.1

20.5

2,428

NEGERI SEMBILAN
Freehold land

Seremban Regional
Operations Office,
Km 11,
Jalan Seremban Tampin,
71450 Sg. Gadut,
Seremban,
Negeri Sembilan
Darul Khusus
Lot No. 21958

16.02.1994

Freehold

Office
Regional office

7,011

15.2

21.4

2,428

SELANGOR
Shah Alam Regional
Operations Office,
Lot 1, Jalan Jemuju
Lima 16/13E,
Shah Alam Industrial
Area, Section 16,
40200 Shah Alam,
Selangor Darul Ehsan
Lot No. PT606

12.10.1990

Meru Compressor
Station,
Lot 1586 (G3907),
Mukim of Jeram,
District of
Kuala Selangor,
Selangor Darul Ehsan
Lot No. PT6875

04.08.1998

Leasehold
Expiry :

Leasehold land

11.10.2089
(99 years)

Office
Regional office

Leasehold
Expiry :

Leasehold land
(Vacant)

10.08.2107
(99 years)

7,666

2.9

21.1

2,428

5.4

N/A

N/A

1,099

200

PETRONAS GAS BERHAD (101671-H)

Summary of Landed Property, Plant and Equipment

A summary of landed property, plant and equipment of PETRONAS Gas Berhad and its subsidiaries as at
31 December 2012 (continued)

Location

Acquisition
Date

Tenure

Description
and usage

Land Area
(hectare)

Age of Plant
and Building
(years)

Build-up
Area
(sq. m)

Net Book Value


as at
31 December 2012
(RM000)

PERAK
Sitiawan Regional
Operations Office,
Lot 33263, Jalan Dato
Ahmad Yunus,
32000 Sitiawan,
Perak Darul Ridzuan
Lot No. PT4535

Leasehold
Expiry :

Leasehold land

27.06.2101
(99 years)

Office
Regional office

Leasehold
Expiry :

Leasehold land

18.12.1997

22.04.2102
(99 years)

Office
Regional office

1.11.2006

Leasehold
Expiry :
31.10.2105
(99 years)

Leasehold land

04.11.1997

4,758

3.2

15.2

1,604

KEDAH
Gurun Regional
Operations Office,
PO Box 31,
Km 1, Jalan Jeniang,
08300 Gurun,
Kedah Darul Aman
Lot No. 8173
8.0 km TTM Pipeline
land at District of
Kubang Pasu,
Kedah Darul Aman

5,235

2.9

14.3

1,604
1,110

Pipeline
Pipeline across
8.0 km

24.7

Pipeline
Meter station
pipeline across
42.2 km

N/A
located
along road
reserve area

7.8

N/A

SARAWAK
Miri Operations Office,
Lot 2075, Block 4,
Jalan Cattleya 2B,
Piasau Industrial Area,
PO Box 1504,
98008 Miri,
Sarawak

N/A

Pipeline
Meter station
pipeline across
4.2 km

Bintulu Gas Meter


Station,
Kidurong Industrial
Area,
Part of Lot 155,
Block 20,
Kemena Land District,
97007 Bintulu,
Sarawak
Lot No. 1646

21.10.2004

16.07.2067
(60 years)

14,094

22.8

2,066

92

0.1

16.2

630

PETRONAS GAS BERHAD (101671-H)

201

A summary of landed property, plant and equipment of PETRONAS Gas Berhad and its subsidiaries as at
31 December 2012 (continued)

Location

Acquisition
Date

Tenure

Description
and usage

Land Area
(hectare)

Age of Plant
and Building
(years)

Build-up
Area
(sq. m)

Net Book Value


as at
31 December 2012
(RM000)

Sabah
Kg Kuala Benoni,
Kimanis, Papar,
Sabah
Lot No.
PT20-09020166
Subleased to KPSB

Leasehold
Expiry :

03.04.2009

31.12.2038
(30 years)

20.03.1985
PGU I total gas
pipeline comprises
6 km from Kertih to
Paka, Terengganu
and 32 km from Kertih
to Teluk Kalong,
Terengganu and two
40 km of lateral lines
from the GPPs to
the Export Terminal
in Tanjung Sulong,
Terengganu Darul Iman

Leasehold
Expiry :
(40, 60 and
99 years)

01.01.1992
PGU II total gas
pipeline comprises
Sector 1 233 km
from Teluk Kalong,
Terengganu to
Segamat, Johor,
Sector 2 241 km
from Segamat, Johor
to Kapar, Selangor, &
Sector 3 - 211 km from
Segamat, Johor to
Singapore

Leasehold
Expiry :
(99 years)

Leasehold land

17.4

N/A

N/A

72

Plant
Power station

PIPELINES
Pipelines
Pipelines in
leasehold land
Terengganu:
43 lots

38,214
28.3
Terengganu:
237.32

544,507

Pipelines
Pipelines in
leasehold land
Terengganu :
19 lots
Pahang:
333 lots

N/A

21.1
Terengganu:
79.83
Pahang:
531.67
Johor:

Johor:
645 lots (Inclusive
Loop 1 & Loop 2)

966.86

Melaka:
139 lots

Melaka:
191.03

Negeri
Sembilan:
263 lots

Negeri
Sembilan:
463

Selangor:
137 lots

Selangor:
278.9

N/A

202

PETRONAS GAS BERHAD (101671-H)

Summary of Landed Property, Plant and Equipment

A summary of landed property, plant and equipment of PETRONAS Gas Berhad and its subsidiaries as at
31 December 2012 (continued)

Acquisition
Date

Location

PGU III total gas


pipeline comprises
Sector 1 - 184 km
from Meru, Selangor
to Lumut, Perak,
Sector 2 - 176 km
from Lumut, Perak to
Gurun, Kedah,
Sector 3 - 90 km of
NPS 36 mainline from
Gurun to Pauh, Perlis

06.01.1996

Description
and usage

Tenure

Leasehold
Expiry :
(99 years)

Selangor:
92 lots

Selangor:
178.6

WP
Kuala
Lumpur:
14 lots

WP
Kuala
Lumpur:
17.9

Perak:
362 lots

Perak:
543.8

Penang:
95 lots

Penang:
118.84

Kedah:
256 lots

Kedah:
472.29

Perlis:
77 lots

Perlis:
87.3

Pahang:
358 lots
01.11.2000

Negeri
Sembilan:
6 lots
TOTAL

535,186

17.1

N/A

Sector 2&3
15.2

N/A

13.4

N/A

Terengganu:
142.25
Pahang:
128.08
392,831

Pipelines
Pipelines in
leasehold land
(Part of PGUs
document of title)
Melaka:
4 lots

Net Book Value


as at
31 December 2012
(RM000)

329,825

Pipelines
Pipelines in
leasehold land
Terengganu:
77 lots

Build-up
Area
(sq. m)

Sector 1:

Pipelines
Pipelines in
leasehold land

PGU Loop 1 total gas 04.10.1999


pipeline of 265 km from
Kertih, Terengganu to
Segamat, Johor

PGU Loop 2 total


gas pipeline of 226 km
from Segamat, Johor
to Meru, Selangor

Land Area
(hectare)

Age of Plant
and Building
(years)

12.4

N/A

Melaka:
1.31
Negeri
Sembilan:
1.25
5,131,090

Abbreviations:
CGN

DPCU

Cogenerator Plant
Dew Point Control Unit Plant

N2GEN

Nitrogen Generator

GPP

Gas Processing Plant

ASU

Air Separation Unit

PETRONAS GAS BERHAD (101671-H)

203

Training Programmes
Attended by Directors
1.

2.

3.

Datuk Anuar bin Ahmad

25th World Gas Conference, Kuala Lumpur

Site Visit to Regasification Terminal, Sg. Udang

Samsudin bin Miskon

GSCM Forum 2012 - Integrity-Insider Threat

11 January 2012

National Energy Security Conference

28 February 2012

25th World Gas Conference, Kuala Lumpur

4 June 2012

4th National Energy Forum

27 September 2012

E&P Capability Exchange 2012

24 October 2012

Mandatory Accreditation Programme

5 December 2012

Site Visit to Regasification Terminal, Sg. Udang

Dato N. Sadasivan N.N. Pillay

Audit Committee Institute-Breakfast Roundtable titled The Audit Committees


Oversight Role on Financial Reporting

Corporate Governance Updates


MFRS 10 - Consolidation : A new single control model
MFRS 11 - Reassesing Joint Ventures Accounting

4.

5.

6.

4 June 2012

5 December 2012

15 December 2012

Site Visit to Regasification Terminal, Sg. Udang

Dato Mohammad Medan bin Abdullah

25th World Gas Conference, Kuala Lumpur

Site Visit to Regasification Terminal, Sg. Udang

4 June 2012

Datuk Rosli bin Boni

PETRONAS BAC Forum

2 March 2012

Offshore Decommissioning Asia Conference

19 June 2012

Site Visit to Regasification Terminal, Sg. Udang

Ir. Pramod Kumar Karunakaran

25th World Gas Conference, Kuala Lumpur

Site Visit to Regasification Terminal, Sg. Udang

4 June 2012

204

PETRONAS GAS BERHAD (101671-H)

Training Programmes
Attended by Directors

7.

8.

Dato Ab. Halim bin Mohyiddin

PETRONAS BAC Forum

Site Visit to Regasification Terminal, Sg. Udang

Lim Beng Choon

Bursa Malaysia Governance Program - Role of Audit Committee in Assuring Audit Quality

22 May 2012

Hong Leong Bank Group Directors Training - Optimising IFRS Convergence by KPMG

25 May 2012

MISC Group Directors Training - Malaysian Code on Corporate Governance 2012:


Implications & Challenges to the Board of Directors by Busatra

5 December 2012

Management Succession & Related Talent Management Issues:


Insights for the Board of Directors by AON Hewitt

5 December 2012

9.

Site Visit to Regasification Terminal, Sg. Udang

Muri bin Muhammad

10.

2 March 2012

Site Visit to Regasification Terminal, Sg. Udang

Ramlan bin Abdul Malek

International Petroleum Technology Conference

6 February 2012

Offshore Technology Conference

30 April 2012

25th World Gas Conference, Kuala Lumpur

4 June 2012

Site Visit to Regasification Terminal, Sg. Udang

Site Visit to Kimanis Power Plant, Kimanis

PETRONAS GAS BERHAD (101671-H)

205

Analysis of Shareholdings
AS AT 29 MARCH 2013

Category

No. of
Shareholders

Less than 100

% of Total
Shareholders

No. of Shares

% of Total
Shareholdings

131

1.27

1,788

100 - 1,000

7,322

70.91

6,933,037

0.35

1,001 - 10,000

2,099

20.33

7,075,597

0.36

10,001 - 100,000

484

4.69

17,842,234

0.90

100,001 to less than 5% of issued shares

286

2.77

388,807,359

19.65

0.03

1,558,071,900

78.74

10,325

100.00

1,978,731,915

100.00

5% and above of issued shares


Total

0.00 *

* Insignificant % shareholding

Classification of Shareholders
No. of Shareholders
Malaysian Foreigner
INDIVIDUAL

No. of Shares
Malaysian
Foreigner

Shares Percentage
Malaysian Foreigner

8,725

90

13,716,307

343,843

0.69

0.02

73

295,120,600

14.92

144,000

192

3,878,702

144,000

0.20

0.01

10

1,571,000

0.08

772

450

1,538,736,136

125,077,327

77.76

6.32

9,778

547

1,853,166,745

125,565,170

93.65

6.35

BODY CORPORATE
Banks/finance companies
Investments trusts/
foundation/ charities
Other types of companies
GOVERNMENT AGENCIES/INSTITUTIONS
NOMINEES
OTHERS
Total
* Insignificant % shareholding

0.00 *

206

PETRONAS GAS BERHAD (101671-H)

Analysis of Shareholdings
AS AT 29 MARCH 2013

List of Directors Shareholdings


No. of Shares

% of Total
Shareholdings

Encik Samsudin bin Miskon

Dato N. Sadasivan N.N. Pillay

Dato Mohammad Medan bin Abdullah

Datuk Rosli bin Boni

Ir. Pramod Kumar Karunakaran

Dato' Ab. Halim bin Mohyiddin

5,000

Lim Beng Choon

Muri bin Muhammad

10

Ramlan bin Abdul Malek

No.
1

Name
Datuk Anuar bin Ahmad

0.00 *

List of Directors Shareholdings in PETRONAS Dagangan Berhad


No. of Shares
2,000

% of Total
Shareholdings
0.00 *

No.
1

Name
Datuk Anuar bin Ahmad

Encik Samsudin bin Miskon

Dato N. Sadasivan N.N. Pillay

Dato Mohammad Medan bin Abdullah

Datuk Rosli bin Boni

Ir. Pramod Kumar Karunakaran

Dato' Ab. Halim bin Mohyiddin

Lim Beng Choon

Muri bin Muhammad

10

Ramlan bin Abdul Malek

No. of Shares

% of Total
Shareholdings

List of Directors Shareholdings in KLCC Property Holdings Berhad


No.
1

Name
Datuk Anuar bin Ahmad

Encik Samsudin bin Miskon

Dato N. Sadasivan N.N. Pillay

Dato Mohammad Medan bin Abdullah

Datuk Rosli bin Boni

Ir. Pramod Kumar Karunakaran

Dato' Ab. Halim bin Mohyiddin

Lim Beng Choon

Muri bin Muhammad

10

Ramlan bin Abdul Malek

* Insignificant % shareholding

11, 000

0.00 *

PETRONAS GAS BERHAD (101671-H)

207

Analysis of Shareholdings
AS AT 29 MARCH 2013

List of Directors Shareholdings in PETRONAS Chemicals Group Berhad


No. of Shares
20,000

% of Total
Shareholdings
0.00 *

6,000

0.00 *

No.
1

Name
Datuk Anuar bin Ahmad

Encik Samsudin bin Miskon

Dato N. Sadasivan N.N. Pillay

Dato Mohammad Medan bin Abdullah

6,000

0.00 *

Datuk Rosli bin Boni

6,000

0.00 *

Ir. Pramod Kumar Karunakaran

6,000

0.00 *

Dato' Ab. Halim bin Mohyiddin**

10,000

0.00 *

Lim Beng Choon

Muri bin Muhammad

10

Ramlan bin Abdul Malek

10,000

0.00 *

* Insignificant % shareholding
** Inclusive of deemed interest by virtue of his spouses shareholdings of 5,000 units pursuant to Section 134(12)(c) of the Companies Act, 1965, Malaysia

List of Top 30 Shareholders


No.

Names

No. of Shares

Cartaban Nominees (Tempatan) Sdn Bhd

1,199,768,000

60.63

255,316,700

12.90

Citigroup Nominees (Tempatan) Sdn Bhd


(Employees Provident Fund Board)
Kumpulan Wang Persaraan (Diperbadankan)

Amanahraya Trustees Berhad

Amanahraya Trustees Berhad (Amanah Saham Wawasan 2020)

Amanahraya Trustees Berhad (Amanah Saham Malaysia)

20,000,000

1.01

Cartaban Nominees (Asing) Sdn Bhd

18,044,360

0.91

17,900,900

0.90

16,226,496

0.82

(Petroliam Nasional Berhad (Strategic Inv))

102,987,200

5.21

83,631,300

4.23

22,896,200

1.16

(Skim Amanah Saham Bumiputera)

(Exempt AN for State Street Bank & Trust Company (West CLT OD67)

Malaysia Nominees (Tempatan) Sendirian Berhad


(Great Eastern Life Assurance (Malaysia) Berhad (PAR 1))

HSBC Nominees (Asing) Sdn Bhd


(BBH and Co. Boston for Vanguard Emerging Markets Stock Index Fund)

10

Amanahraya Trustees Berhad AS 1 Malaysia

16,111,800

0.81

11

Amanahraya Trustees Berhad (Amanah Saham Didik)

9,038,000

0.46

12

AMSEC Nominees (Tempatan) Sdn Bhd Amtrustee Berhad for CIMB Islamic Dali
Equity Growth Fund (UT-CIMB-DALI)
Cartaban Nominees (Tempatan) Sdn Bhd
(Exempt AN for Eastspring Investments Berhad)
HSBC Nominees (Asing) Sdn Bhd

7,351,900

0.37

6,437,000

0.33

6,184,565

0.31

13
14

(Exempt AN for JPMorgan Chase Bank, National Association (U.A.E))

15

Amanahraya Trustees Berhad (Public Islamic Dividend Fund)

5,230,200

0.26

16

Permodalan Nasional Berhad

4,500,000

0.23

208

PETRONAS GAS BERHAD (101671-H)

Analysis of Shareholdings
AS AT 29 MARCH 2013

List of Top 30 Shareholders


No.

Names

No. of Shares

17

4,314,100

0.22

18

Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board


(Nomura)
Pertubuhan Keselamatan Sosial

4,280,000

0.22

19

HSBC Nominees (Asing) Sdn Bhd

4,276,205

0.22

20

HSBC Nominees (Asing) Sdn Bhd

3,848,228

0.19

3,804,100

0.19

(Exempt AN for The Bank of New York Mellon (Mellon ACCT))

(Exempt AN for JPMorgan Chase Bank, National Association (U.S.A))

21

HSBC Nominees (Asing) Sdn Bhd


(Exempt AN For JPMorgan Chase Bank, National Association (Norges BK Lend))

22

Amanahraya Trustees Berhad Public Islamic Select Enterprises Fund

3,700,500

0.19

23

Citigroup Nominees (Asing) Sdn Bhd Legal & General Assurance

3,626,383

0.18

24

Citigroup Nominees (Tempatan) Sdn Bhd

3,584,100

0.18

3,426,200

0.17

3,323,000

0.17

2,798,100

0.14

(Pensions Management) Limited (A/C 1125250001)

Exempt AN for American International Assurance Berhad

25

HSBC Nominees (Asing) Sdn Bhd


(Exempt AN for JPMorgan Chase Bank, National Association (BVI))

26
27

Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board


(CIMB PRIN)
HSBC Nominees (Asing) Sdn Bhd
(Exempt AN for JP Morgan Bank, (Ireland) Public Limited Company)

28

HSBC Nominees (Asing) Sdn Bhd BNY Brussels for City of New York Group Trust

2,625,500

0.13

29

Valuecap Sdn Bhd

2,500,000

0.13

30

Amanahraya Trustees Berhad Public Islamic Optimal Growth Fund

2,498,700

0.13

1,840,229,737

93.00

TOTAL
List of Substantial Shareholders
No.

Names

No. of Shares

% of Total
Shareholdings

Cartaban Nominees (Tempatan) Sdn Bhd

1,200,304,400

60.66

(Petroliam Nasional Berhad (Strategic Inv) & Petroleum Research Fund)

Employees Provident Fund Board

268,702,000

13.58

Kumpulan Wang Persaraan (Diperbadankan)

106,324,000

5.37

PETRONAS GAS BERHAD (101671-H)

209

Corporate Directory
PETRONAS Gas Berhad
Level 49-51, Tower 1
PETRONAS Twin Towers
Kuala Lumpur City Centre
50088 Kuala Lumpur
Telephone : + 6 03 2051 5000
Fax
: + 6 03 2051 6555 (Corporate Secretary), + 6 03 2051 6992 (General)
Operations / Regional Offices:
Gas Processing Plants, Kertih
Km 105, Jalan Kuantan-Kuala Terengganu
24300 Kertih, Kemaman
Terengganu Darul Iman
Telephone : + 6 09 831 2345
Fax
: + 6 09 827 1710
Gas Processing Plants, Paka
Km 8, Kg. Tok Arun, Off Jalan Santong
23100 Paka, Dungun
Terengganu Darul Iman
Telephone : + 6 09 831 5656
Fax
: + 6 09 827 4578
Export Terminal Operation
Tanjung Sulong
24000 Kemaman
Terengganu Darul Iman
Telephone : + 6 09 862 4321
Fax
: + 6 09 863 1146
Centralised Utility Facilities (CUF)
Operations, Kertih
Kertih Integrated Petrochemical Complex
Km 105, Jalan Kuantan-Kuala Terengganu
24300 Kertih, Kemaman
Terengganu Darul Iman
Telephone : + 6 09 830 5500
Fax
: + 6 09 830 5514
Centralised Utility Facilities (CUF)
Operations, Gebeng
Lot 139A, Gebeng Industrial Area
Fasa III, 26080 Kuantan
Pahang Darul Makmur
Telephone : + 6 09 586 3300
Fax
: + 6 09 586 3311

Segamat Operation Centre,


Gas Transmission System
Km 10, Lebuhraya Segamat-Kuantan
85000 Segamat
Johor Darul Takzim
Telephone : + 6 07 935 3000
Fax
: + 6 07 931 6521
Pasir Gudang Regional
Operations Office
PLO 332, Jalan Perak 4
Pasir Gudang Industrial Area
81700 Pasir Gudang
Johor Darul Takzim
Telephone : + 6 07 251 0333
Fax
: + 6 07 251 0400
Seremban Regional Operations Office
Km 11, Jalan Seremban-Tampin
71450 Sg. Gadut, Seremban
Negeri Sembilan Darul Khusus
Telephone : + 6 06 677 6777
Fax
: + 6 06 677 7799
Shah Alam Regional Operations Office
Lot 1, Jalan Jemuju Lima 16/13E
Shah Alam Industrial Area, Section 16
40200 Shah Alam
Selangor Darul Ehsan
Telephone : + 6 03 5510 6222
Fax
: + 6 03 5510 1528
Sitiawan Regional Operations Office
Lot 33263, Jalan Dato Ahmad Yunus
32000 Sitiawan
Perak Darul Ridzuan
Telephone : + 6 05 692 5611/12/13/14
Fax
: + 6 05 692 5615

Gurun Regional Operations Office


Km 1, Jalan Jeniang, P.O. Box 31
08300 Gurun
Kedah Darul Aman
Telephone : + 6 04 468 5518
Fax
: + 6 04 468 5519
Kuantan Regional Operations Office
Lot 1, Sector 1, Bandar Indera Mahkota
25200 Kuantan
Pahang Darul Makmur
Telephone : + 6 09 573 2802
Fax
: + 6 09 573 2813
Kertih Regional Operations Office
Level 1, PETRONAS East Coast Regional
Office, 24300 Kertih, Kemaman
Terengganu Darul Iman
Telephone : + 6 09 867 3500
Fax
: + 6 09 864 0375
Miri Operations Office
Lot 2075, Block 4, Jalan Cattleya 2B
Piasau Industrial Area, P.O. Box 1504
98008 Miri
Sarawak
Telephone : + 6 085 661 144
Fax
: + 6 085 656 362
Bintulu Operations Office
Lot 1622 & 1623, Ground Floor
Jalan Sommerville, P.O. Box 2190
97011 Bintulu
Sarawak
Telephone : + 6 086 316 517
Fax
: + 6 086 311 960
Kimanis Power Sdn Bhd
Suite B-12-3a, Block B,
Level 3a, KK Times Square,
Off Coastal Highway,
88100 Kota Kinabalu,
Sabah
Telephone : +6 088 324 200
Fax
: +6 088 324 223

210

PETRONAS GAS BERHAD (101671-H)

Notice of Annual General Meeting


NOTICE IS HEREBY GIVEN THAT the Thirtieth Annual General
Meeting of the Company will be held at Emerald Room,
Mandarin Oriental Hotel, Kuala Lumpur City Centre, 50088 Kuala
Lumpur on Thursday, 16 May 2013 at 10.00 a.m. to consider the
following matters:

Agenda
As Ordinary Business
1. To receive the Audited Financial Statements for the financial
year ended 31 December 2012 together with the Reports of
(Resolution 1)
the Directors and Auditors thereon.
2. To approve the payment of final dividend of 35 sen per
ordinary share under the single tier system in respect of the
(Resolution 2)
financial year ended 31 December 2012.
3. To re-elect the following Directors pursuant to Article 93 of the
Companys Articles of Association:
(Resolution 3)
(a) Datuk Anuar bin Ahmad
(Resolution 4)
(b) Datuk Rosli bin Boni

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT


NOTICE IS ALSO HEREBY GIVEN THAT subject to the
approval of members at the Thirtieth Annual General Meeting
to be held on 16 May 2013, a final dividend of 35 sen per ordinary
share under the single tier system will be paid on 19 June 2013
to shareholders whose names appear in the Register of
Depositors on 23 May 2013.
A Depositor shall qualify for entitlement only in respect of:
(a) Shares transferred into the Depositors Securities Account
before 4.00 p.m. on 23 May 2013 in respect of ordinary
transfers.
(b) Shares bought on Bursa Malaysia Securities Berhad on a cum
entitlement basis according to the Rules of Bursa Malaysia
Securities Berhad.

4. To approve the Directors fees of up to RM986,000 in


respect of the financial year ending 31 December 2013.
(Resolution 5)
5. To re-appoint Messrs KPMG Desa Megat & Co. as Auditors
of the Company and to authorise the Directors to fix their
(Resolution 6)
remuneration.
As Special Business
6. To consider and, if thought fit, to pass the following Resolution
with or without modifications:
THAT Dato N. Sadasivan s/o N.N. Pillay, retiring in
accordance with Section 129 of the Companies Act, 1965,
Malaysia and who has served as an Independent Director of
the Company for more than nine years be and is hereby
re-appointed as an Independent Director of the Company
to hold office until the conclusion of next Annual General
(Resolution 7)
Meeting of the Company.
7. To transact any other business for which due notice has been
given.

By Order of the Board

Intan Shafinas (Tuty) Hussain (LS 0009165)


Yeap Kok Leong (MAICSA 0862549)
Company Secretaries
Kuala Lumpur
23 April 2013

PETRONAS GAS BERHAD (101671-H)

211

Notice of Annual General Meeting

Notes:
1. For the purposes of determining a member who shall be entitled

7. If this Proxy Form is signed under the hand of an officer duly


authorised, it should be accompanied by a statement reading signed

to attend and vote at the forthcoming Thirtieth Annual General

as authorised officer under Authorisation Document which is still in

Meeting of the Company, the Company shall be requesting the

force, no notice of revocation having been received. If this Proxy

Record of Depositories as at 9 May 2013. Only a depositor whose

Form is signed by an attorney duly appointed under a power of

name appears on the Record of Depositors as at 9 May 2013 shall

attorney, it should be accompanied by a statement reading signed

be regarded as a member entitled to attend, speak and vote at the

under Power of Attorney which is still in force, no notice of revocation

meeting as well as for appointment of proxy(ies) to attend and vote on

having been received. A copy of the Authorisation Document or the

his/her stead.

Power of Attorney, which should be valid in accordance with the laws


of the jurisdiction in which it was created and is exercised, should be

2. A member may appoint not more than two proxies to attend the same

enclosed with this Proxy Form.

meeting. A proxy may but need not be a Member of the Company


and a Member may appoint any person to be his proxy without
limitation and the provision of Section 149(1)(b) of the Companies
Act, 1965, Malaysia shall not apply to the Company. There shall be no
restriction as to the qualification of the proxy.
3. Where a member of the Company is an authorised nominee as
defined under the Securities Industry (Central Depositories) Act, 1991
(SICDA), it may appoint at least one proxy but not more than two
proxies in respect of each securities account it holds with ordinary
shares of the Company standing to the credit of the said securities
account.
4. Where a member of the Company is an exempt authorised nominee
which holds ordinary shares in the Company for the omnibus account,
there is no limit to the number of proxies which the exempt authorised
nominee may appoint in respect of each omnibus account it holds.
An exempt authorised nominee refers to an authorised nominee
defined under the SICDA which is exempted from compliance with
the provisions of subsection 25A(1) of SICDA.
5. Where a member or the authorised nominee appoints two proxies,
or where an exempt authorised nominee appoints two or more

8. Explanatory Notes:
(i) Resolution 5 - Directors fees for financial year ending
31 December 2013
The Directors fees approved for the financial year ended
31 December 2012 was RM853,000.00. The actual Directors
fees for the Non-Executive Directors paid during the financial year
ended 31 December 2012 was RM804,000.

The Directors fees proposed for the financial year ending


31 December 2013 (FY 2013) are calculated based on the
number of scheduled Board and Board Committees meetings
and assumption that all the Non-Executive Directors will remain
office until the end of the FY 2013. This resolution is to facilitate
payment of Directors fees in FY 2013. The Board will seek
shareholders approval at the next Annual General Meeting in the
event the Directors fees proposed is insufficient due to increase
in number of Board and Board Committees meetings and/or
increase in Board size.
(ii) Resolution 7 - Section 129 of the Companies Act, 1965,
Malaysia

proxies, the proportion of shareholdings to be represented by each

Pursuant to Section 129 of the Companies Act, 1965, Malaysia

proxy must be specified in the instrument appointing the proxies.

the proposed Resolution 7 is to seek shareholders approval on


the re-appointment of Dato N. Sadasivan s/o N.N. Pillay as a

6. The instrument appointing a proxy shall be in writing (in the common

Director who is over the age of seventy and has served as an

or usual form) under the hand of the appointer or if the Member is

independent director for more than nine years. Please refer to

a corporation, either under seal or under the hand of an officer or

Item 2B as stated in the Corporate Governance Statement of the

attorney duly authorised and shall be deposited at the office of the

Annual Report for detailed information.

Companys Share Registar, Symphony Share Registars Sdn Bhd,


Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU
1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan, at least 48 hours
before the meeting or if the meeting is adjourned at least 48 hours
before the time fixed for the the adjourned meeting.

212

PETRONAS GAS BERHAD (101671-H)

Administrative Details
PETRONAS Gas Berhad Thirthieth Annual General Meeting

Registration

Parking

1)

Registration will start at 8.00 a.m. on 16 May 2013 in front of


the Emerald Room, Mandarin Oriental Hotel, Kuala Lumpur.

9)

2)

Please produce your original Identity Card (IC) to the


registration staff for verification. Please make sure you collect
your IC thereafter.

3)

Upon verification, you are required to write your name and


sign on the Attendance List placed on the registration table.

4)

You will also be given an identification tag. No person will be


allowed to enter the meeting room without the identification
tag. There will be no replacement in the event that you lose
or misplace the identification tag.

5)

6)

No person will be allowed to register on behalf of another


person even with the original IC of that other person.
The registration counter will handle only verification of identity
and registration.

Help Desk
7)

Please proceed to the Help Desk for any clarification or


enquiry.

8)

The Help Desk will also handle revocation of proxys


appointment.

Please take note that PETRONAS Gas Berhad (PGB) will not
be providing cash reimbursements for parking. Instead,
you are advised to park at P1 / P2 / P3 / P4 of
Mandarin Oriental Hotel, Kuala Lumpur. Please bring along
your parking ticket for validation at the counter near the
Emerald Room.

10) By validating the parking ticket, you will not be charged for
parking when you leave. Please be advised that the ticket
will expire by 4 p.m. on 16 May 2013. Any additional costs
incurred for parking after 4 p.m. will not be borne by PGB.
11) Please be advised that PGB will not reimburse any parking
costs incurred at any other location. As such, please observe
the parking areas mentioned in Item 9 above.

Annual Report
12) PETRONAS Gas Berhads Annual Report for Financial Year
2012 is available on:
http://www.bursamalaysia.com
http://www.petronasgas.com

PETRONAS GAS BERHAD (101671-H)

Proxy Form

No. of Shares Held

I/We
(Full Name In Capital Letters)

of
(Full Address)

being a *Member/Members of PETRONAS GAS BERHAD, do hereby appoint


(Full Name In Capital Letters)

of
(Full Address)

or failing him
(Full Name In Capital Letters)

of
(Full Address)

or failing him, the CHAIRMAN OF MEETING, as *my/our proxy to vote for *me/us and on *my/our behalf at the Thirtieth Annual General
Meeting to be held at Emerald Room, Mandarin Oriental Hotel, Kuala Lumpur City Centre, 50088 Kuala Lumpur on Thursday, 16 May
2013 at 10.00 a.m and at any adjournment thereof.
Please indicate with an X in the space provided below how you wish your votes to be casted. If no specific direction as to voting is
given, the Proxy will vote or abstain from voting at his discretion.
No.

Resolutions

For

Against

ORDINARY BUSINESS
1.

To receive the Audited Financial Statements for the financial year ended 31
December 2012 together with the Reports of the Directors and Auditors
thereon.
2.
To approve the payment of final dividend of 35 sen per ordinary share
under the single tier system in respect of the financial year ended
31 December 2012.
3.
To re-elect Datuk Anuar bin Ahmad as Director pursuant to Article 93 of
the Companys Articles of Association.
4.
To re-elect Datuk Rosli bin Boni as Director pursuant to Article 93 of the
Companys Articles of Association.
5.
To approve the Directors fees of up to RM986,000 in respect of the
financial year ending 31 December 2013.
6.
To re-appoint Messrs KPMG Desa Megat & Co. as Auditors of the
Company and to authorise the Directors to fix their remuneration.
SPECIAL BUSINESS
7.

To re-appoint Dato N. Sadasivan s/o N.N. Pillay, who has served as an


Independent Director of the Company for more than nine years as an
Independent Director of the Company to hold office until the conclusion
of the next Annual General Meeting of the Company in accordance with
Section 129 of the Companies Act, 1965, Malaysia.

8.

To transact any other business for which due notice has been given.

* Strike out whichever not applicable.

As witness my/our hand this

day of

2013.
Signature of Member/Common Seal

Notes:
1. For the purposes of determining a member who shall be entitled to attend and vote at the forthcoming Thirtieth Annual General Meeting of the Company, the Company shall be
requesting the Record of Depositories as at 9 May 2013. Only a depositor whose name appears on the Record of Depositors as at 9 May 2013 shall be regarded as a member
entitled to attend, speak and vote at the meeting as well as for appointment of proxy(ies) to attend and vote on his/her stead.
2. A member may appoint not more than two proxies to attend the same meeting. A proxy may but need not be a Member of the Company and a Member may appoint any person
to be his proxy without limitation and the provision of Section 149(1)(b) of the Companies Act, 1965, Malaysia shall not apply to the Company. There shall be no restriction as to the
qualification of the proxy.
3. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (SICDA), it may appoint at least one proxy but
not more than two proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
4. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for the omnibus account, there is no limit to the number of proxies
which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the
SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.
5. Where a member or the authorised nominee appoints two proxies, or where an exempt authorised nominee appoints two or more proxies, the proportion of shareholdings to be
represented by each proxy must be specified in the instrument appointing the proxies.
6. The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointer or if the Member is a corporation, either under seal or under the
hand of an officer or attorney duly authorised and shall be deposited at the office of the Companys Share Registar, Symphony Share Registars Sdn Bhd, Level 6, Symphony House,
Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan, at least 48 hours before the meeting or if the meeting is adjourned at least 48 hours before
the time fixed for the the adjourned meeting.
7. If this Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading signed as authorised officer under Authorisation Document
which is still in force, no notice of revocation having been received. If this Proxy Form is signed by an attorney duly appointed under a power of attorney, it should be accompanied
by a statement reading signed under Power of Attorney which is still in force, no notice of revocation having been received. A copy of the Authorisation Document or the Power of
Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form.

fold here

Affix
Stamp

Symphony Share Registrars Sdn Bhd


Level 6, Symphony House, Pusat Dagangan Dana 1,
Jalan PJU 1A/46, 47301 Petaling Jaya,
Selangor Darul Ehsan, Malaysia

fold here

PETRONAS Gas Berhad

(101671-H)

Tower 1, PETRONAS Twin Towers,


Kuala Lumpur City Centre,
50088 Kuala Lumpur.
Tel : (+603) 2051 5000
Fax: (+603) 2051 6555

www.petronasgas.com