2012 - PBA Holdings Bhd

Transcription

One Aim
One
Future
ANNUAL REPORT 2012
Delivering
greater value
As a responsible corporate citizen,
our values are also shaped by
a larger purpose in respecting, sharing and
caring for communities in which we operate.
We connect with our people by recognising and
valuing growth in every possible way.
PBA continues to evolve and expand,
seeking solutions of outstanding quality and
create greater values and deliver greater results to shareholders.
Contents
06
06
07
07
08
09
10
10
11
Vision & Mission
Commitment
Key Corporate Objectives
Core Values
Quality Policy
Environmental Policy
Occupational Safety & Health Policy
Risk Management Policy
Whistleblower Policy
REPORT FOR SUBSIDIARY COMPANY
Perbadanan Bekalan Air Pulau Pinang Sdn. Bhd.
14 - 17
20 - 23
24 - 25
26
27
30
31
34 - 41
44 - 47
50 - 51
54 - 55
Chairmans Message
CEOs Message
CEOs Profile
Corporate Information
Corporate Structure
Financial Highlights
Financial Calendar 2012
Directors Profile
Corporate Calendar
Corporate Responsibility
Awards Received
58 - 59
62 - 63
66
67
72
73 - 75
76 - 77
78 - 85
86 - 87
Board Of Directors
Senior Management Team
Penang Water Supply Statistics
Water Treatment Process
Penang State Water Supply Infrastructure
Operations Review
Administration Report
Statement On Corporate Governance
Statement On Risk Management And
Internal Control
88 - 92 Audit Committee Report
93 Additional Compliance Information
FINANCIAL STATEMENTS
95 - 98
99
100
101
102 - 103
104
105
106
107
108 - 157
158
159 - 160
Directors Report
Consolidated Statement Of Financial Position
Consolidated Statement Of Comprehensive Income
Consolidated Statement Of Changes In Equity
Consolidated Statement Of Cash Flows
Statement Of Financial Position
Statement Of Comprehensive Income
Statement Of Changes In Equity
Statement Of Cash Flows
Notes To The Financial Statements
Statement By Directors / Statutory Declaration
Independent Auditors Report
161 - 163 Analysis Of Shareholdings
164 Top 10 Properties Of The Group
165 - 168 Notice Of Annual General Meeting And
Notice Of Dividend Entitlement
169 Statement Accompanying Notice Of
Annual General Meeting
170 Notice Of Nomination For Appointment Of New Auditors
171 Proxy Form
A beginning
Great things begin when great things come together
06
PBA HOLDINGS BHD (515119-U)
ANNUAL REPORT 2012
A
VISION
Meeting all your water supply needs
A
MISSION
PBAPP will be the leading organisation in water supply
A
COMMITMENT
We will be environmentally sensitive, responsible, proactive,
professional, innovative and committed to excellence and
sustainable development.
We will be responsible for the development of water supply
and delivering the best possible service by being customeroriented.
ANNUAL REPORT 2012
KEY CORPORATE OBJECTIVES
A Uninterrupted water supply
A Customer satisfaction
A Skilled, competent and motivated workforce
A Effective teamwork
A Timely and orderly development of water resources
A Productive utilization of financial and other resources
A Continuous improvement in all fields
A Compliance with all relevant legislations
A Effective relations with government agencies and
industrial organisations
CORE VALUES
A ccountability
C ommunication
T eamwork
I
ntegrity
O n-Going Learning
N ew Ways of Improvement
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ANNUAL REPORT 2012
QUALITY POLICY
In line with its corporate objectives, Perbadanan Bekalan Air Pulau Pinang
Sdn Bhd (PBAPP) is fully committed towards continual improvement as it
strives to provide high quality services and products that will satisfy and
delight customers.
Accordingly, PBAPP will:
A Continually improve and update its Quality Management System
which is based on international ISO9001:2008 standards;
A Sustain a corporate culture driven by continual improvement by
promoting and encouraging innovation, teamwork, diligence and
creativity, as well as a proactive approach to water supply services;
A Provide the best possible training opportunities to encourage its
employees to continuously upgrade their competency levels, knowledge
and skills;
A Uphold its reputation as a model water supply organisation in Malaysia;
A Ensure the protection, preservation and conservation of the environment;
A Provide a safe and healthy working environment for all its personnel;
and
A Ensure that all its personnel are fully committed towards promoting
and implementing this quality management policy in all aspects of its
operations and services.
ANNUAL REPORT 2012
ENVIRONMENTAL POLICY
Sdn Bhd (PBAPP) is fully committed towards protecting, preserving and
conserving the environment while striving to meet all of Penangs water
supply needs.
A Continually improve, update and expand its Environmental Management
System which is based on international ISO14001:2004 standards;
A Strive to conduct its operations in a manner that is in harmony with
nature;
A Reduce and/or control wastage of natural water resources and
consumption of energy and chemicals;
A Conduct its business in a professional manner with emphasis on
measurable key performance indicators and results, good corporate
governance and corporate social responsibility;
A Prevent and avoid, as far as possible, any form of pollution by practising
proper procedures, implementing control and monitoring mechanism,
and conducting ISO14001:2004 audit practices and reviews;
A Comply with all related environmental legislative and legal standards,
requirements and laws set by the Malaysian Government; and
and implementing this environmental management policy in all aspects
of its operations and services.
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ANNUAL REPORT 2012
OCCUPATIONAL SAFETY &
HEALTH POLICY
Sdn Bhd (PBAPP) is fully committed towards protecting, sustaining and
supporting the well-being of its workforce.
A Continually improve and update its Occupational Safety & Health
Management System which is based on international
OHSAS18001:2007 specification;
A Promote safe and healthy work practices in all its offices, complexes
and installations by identifying the hazards, assessing the risks and
implementing control measures;
A Ensure that all its business activities are conducted without
compromising the safety and health of its employees, contractors,
suppliers, customers and visitors;
A Prevent and avoid, as far as possible, any workplace mishap by
practising proper procedures, implementing control and monitoring
mechanisms, and conducting OHSAS18001:2007 audit practices and
reviews;
A Comply with all legislative and legal requirements and laws set by
the Malaysian Government in relation to occupational safety and
health; and
and implementing this occupational safety & health management
policy in all aspects of its operations and services.
RISK MANAGEMENT POLICY
A Continuously identifying and assessing risks and improving control
measures steered by clear guidelines for preventing, detecting and
minimising risks.
A Maintaining a continuous effort towards prioritising and managing
business risk based on the likelihood of occurrence (possibility) and
magnitude of impact (severity) to:
> Ensure business continuity;
> Minimise any unexpected damage to reputation, shareholders
value and confidence, and
> Prevent capital leakage, wastage and loss of earnings.
A There shall be a continuous effort by management to create, promote
and sustain a company-wide culture of risk awareness and
management.
A Daily operating business risks shall be the primary responsibility of
the management and employees of the Company whilst corporate
risks and responsibilities shall remain with the Board.
ANNUAL REPORT 2012
WHISTLEBLOWER POLICY
WHISTLEBLOWER POLICY WITHIN PBA HOLDINGS BHD GROUP OF
COMPANIES
Whistleblowing, involves the disclosure of information to the relevant
authorities by specific employees (within PBAHB and its subsidiaries)
vendors and the general public, who discover breaches of the securities
laws or any possible serious violation of internal policies, procedures or
external laws by the perpetrators, culprits or fraudsters.
WHISTLEBLOWER POLICY gives protection to such persons against
harassment or victimisation as a result of such disclosures; the company
has established internal procedures for handling employee concerns, to
assist companies to address any shortcomings within its processes, and
to facilitate good governance practices.
Therefore, employees, vendors and the general public are encouraged
to raise genuine concerns about possible improprieties in matters of
financial reporting, compliance and malpractices at the earliest opportunity
via the appropriate channel.
THE UNDERLYING FUNDAMENTALS AND RATIONALE OF THE
POLICY
i) All concerns raised will be treated fairly and properly;
ii) The Company will not tolerate harassment or victimization of the
employee, vendors and the general public raising a genuine concern;
iii) Any employee, vendors and the general public making a disclosure
will retain anonymity unless he agrees otherwise;
iv) The Company will ensure that the employees, vendors and the general
public raising a concern is aware of who is handling the matter;
v) The Company will ensure no employees, vendors and the general
public will be at risk of suffering any form of reprisal as a result of
raising a genuine concern;
vi) To enable the Company to achieve the highest possible standards of
corporate governance ethical standards;
vii) The Companys workforce represents a valuable source of information
that can be utilized to identify a potential problem, and deal with it,
before it causes potential damage to the Companys reputation or
stakeholders;
viii) This Policy provides employees, vendors and the general public with
secure channel of reporting impropriety in the knowledge that the
matter will be treated confidentially;
ix) An effective whistleblowing procedure will provide an open, honest
and accountable culture amongst all employees, vendors and the
general public where they can express their concerns, without fear
of victimization or termination of employment.
To report any incidents please contact any of the following Company
Directors who have been appointed as the Liaison Officers, via telephone,
mail or email. The appointed persons will act promptly to investigate the
issue:
YB Prof. Dr. P. Ramasamy
Tel : 04-262 9930
Fax : 04-261 8715
Email : ramasamy@penang.gov.my
Encik Ahmed bin Chee
Tel : 04-829 9428
Fax : Email : ahmadchik@yahoo.co.uk
By mail :
PBA Holdings Bhd
Level 32 Menara Komtar, Jalan Penang, 10000 Pulau Pinang.
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Accountability
Accountability begins with taking responsibility
for our actions that influence the lives of our customers,
fellow workers and stakeholders
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ANNUAL REPORT 2012
CHAIRMANS MESSAGE
Profitability Despite Higher Costs
In 2012, the PBA Holdings Bhd (PBAHB) Group
continued to focus primarily on its core business of
supplying water efficiently in the State of Penang in
the face of higher costs.
ANNUAL REPORT 2012
The Groups revenue in 2012 amounted to RM244.56 million
as compared to RM236.33 million in 2011. Meanwhile, the
profit after tax (PAT) for 2012 was RM28.98 million as compared
to RM45.70 million in 2011.
SUSTAINABLE BALANCE
Key factors that contributed to the RM16.72 million shortfall
in PAT year-on-year include:
Since everyone in Penang needs water every day, water supply
is a critical public service. For these fundamental reasons, it
would be irresponsible and morally wrong to arbitrarily price
water supply beyond the reach of the less fortunate amongst
us.
RM7.56 million more in leasing charges paid to Pengurusan
Asset Air Berhad (PAAB) in 2012, being 12 months payment
as compared to only 5 months payment in 2011, following
our migration to the National Water Services Re-Structuring
Initiative (NWSRI) in June 2011;
RM1.0 million more in licensing fee paid to Suruhanjaya
Pengurusan Air Negara (SPAN) in 2012 (12 months payment)
as compared to 2011 (5 months payment), following
migration to the NWSRI in June 2011;
The PBAHB Groups core business is based on achieving a
sustainable balance between profitability and social responsibility.
While simply raising tariffs may directly increase the profits of
the Group, it will also increase the cost of living for 1.61 million
people in Penang because water is used for drinking, cooking,
cleaning and washing. Higher water tariffs will also affect the
viability and profitability of various businesses and industries
that provide employment for hundreds of thousands of people.
RM1.9 million more in energy costs due to TNBs electricity
tariffs review in mid-2011;
Our job, as we see it, is to supply the best quality water possible,
to as many people in Penang as possible, at the most reasonable
costs possible. That was, is, and will be the primary challenge
for PBAHB.
Higher depreciation costs including a RM2.0 million impairment
of non-operational facilities (the Teluk Bahang conventional
treatment plant and the Prai IV raw water intake scheme);
and
At the same time, being a public listed entity, PBAHB is also
bound by responsibility to consistently deliver fair returns to
every shareholder, be it individual or corporate.
A RM2.4 million impairment (unrealised losses) in the value
of quoted shares invested by fund managers to accommodate
new accounting standards set by the Malaysian Accounting
Standards Board (MASB);
This, PBAHB has done every year, consistently, since 2003
(following listing in 2002). In fact, 2012 marks the 9th consecutive
year in which PBAHB has reported profits; and in which the
company has paid out dividends to all stakeholders.
Amidst the rising costs of doing business, the Group managed
to save RM0.9 million in chemical costs for water treatment.
In 2013 and the years to come, PBAPP will continue to plan,
function and act as a responsible yet profitable licensed water
supplier in Penang. We will continue to focus on continuous
improvement, efficiency, accountability and profitability.
In essence, while the Group strived hard to sustain operational
profitability, the increased costs of sales and administration
costs led to a lower PAT.
That said, 2012 is recorded as a profitable year for the Group.
If one were to look back, our 2012 PAT of RM28.98 million is
higher than the PAT recorded for 2010 (RM26.23 million) and
2009 (RM14.82 million).
DIVIDEND OF 7.5%
After taking into consideration the Groups profitability in 2012,
the Board has proposed a final single tier dividend of 4%, giving
our shareholders a total single tier dividend proposed and
declared of approximately 7.5% for the financial year ended 31
December 2012.
FUTURE PROSPECTS
Insofar as water supply is concerned, there seem to be two
certainties.
The first is that, barring unforeseen circumstances, water demand
will continue to grow in tandem with population and economic
growth. While supplying water efficiently on a day-to-day basis,
the PBAHB Group has also been looking to the future.
After all, we have to ensure that there is always sufficient
supply tomorrow because we do not want our children and
grandchildren to suffer from water shortages.
Based on current projections, PBAPPs existing water supply
infrastructure should be sufficient to meet Penangs water
demand until year 2020. However, we cannot afford to wait
until 2020, when Penang runs out of water, to expand operations
and facilities. By 2016, we must be able to guarantee sufficient
water supply in Penang for 2020 and beyond.
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ANNUAL REPORT 2012
CHAIRMANS MESSAGE (CONTD)
FUTURE PROSPECTS (CONTD)
The second is that water supply costs will inevitably go up.
Electricity, fuel, chemical and manpower costs aside, PBAPP will
have to expand its operations and facilities to cater to demand
as more people and more businesses require more water.
Operational and business expansion requires investment. In
the water supply industry, such investments can cost billions of
ringgit.
As it stands, the Mengkuang Dam is already being expanded
and plans have been submitted to the Federal Government to
tap another raw water source for Penang the Perak River in
our neighbouring state.
These two certainties point to a third certainty - that water
tariffs in Penang (and, for that matter, everywhere else in
Malaysia and the world) can only go up because investments
need to be recouped.
The variables are by how much, and by when. These variables
will ultimately be determined by customer demand.
PBAPP has been striving to optimise its water supply capabilities
in Penang by minimising water loss or non-revenue water (NRW).
Less water loss means more water availability for its customers.
In 2012, we managed to achieve a 17.6% NRW percentage as
compared to 18.4% in 2011. Compared to statistics published
for 2011 in the Malaysia Water Industry Guide 2012, this figure
is the lowest in Malaysia. The national average for 2011 was
36.7%.
On the other hand, the people of Penang have been using more
water per capita. In 2012, the per capita domestic consumption
for water in Penang was 294 litres/capita/day (l/c/d). Compared
to statistics published for 2011 in the Malaysia Water Industry
Guide 2012, this figure is the highest in Malaysia. The national
average for 2011 was 210 l/c/d.
PBAPP has been promoting water saving in Penang to reduce
per capita water consumption. The idea is to defer the need
for additional water supply infrastructure, thereby deferring the
need for investments that will lead to higher tariffs.
The water saving drive incorporates initiatives related
to educational and publicity campaigns, installing water
saving devices as well as a deterrent in the form of the water
conservation surcharge. This three-pronged strategy is based
on the principle of sustainable water supply as promoted and
practiced by leading water supply bodies worldwide, such as
the Public Utilities Board, Singapore, and the Tokyo Waterworks.
If the water saving initiative succeeds, the PBAHB Group will
be able to optimise the lifespan of its existing water supply
infrastructure while sustaining reasonable tariffs for as long as
possible.
Alternatively, if our customers in Penang demand for even
higher volume of water, we will invest in the required water
supply development projects soon. This will lead to significantly
higher tariffs in a shorter span of time but we cannot afford to
run out of water to supply.
At the bottom-line, the PBAHB Group is result-driven. Like any
other business, we must be able to give our customers what
they want. We will continue to supply water efficiently and
profitably. If our customers insist on using more water than
they actually need to, we will have to strive to deliver more
water, albeit at a higher price.
We will monitor developments carefully in 2013 and act
accordingly.
It has been said that in an increasingly crowded world, water
supply is an industry of the future with good long-term prospects.
People will always need water. PBAPP is recognised as being
one of the best, licensed water suppliers in Malaysia, and we
will continue to meet all of Penangs water supply needs.
In line with our ISO 9001:2008 commitment, we are continuously
driven to do better every year. We look forward to delivering
fair returns to you as a shareholder in 2013. Thank you for
your support in 2012 and let us look forward to many more
profitable years to come.
RM2 BILLION WATER SUPPLY PROJECT
Penang is waiting for the Federal Government to implement
the Sungai Perak Water Transfer Scheme (SPWTS) that will
address the future raw water needs of Penang and Perak, as
well as the irrigation needs of the Drainage and Irrigation
Department (DID).
Presently, about 80% of Penangs raw water is drawn from the
Muda River that flows through both Penang and Kedah. A
master plan study commissioned by PBAPP has shown that the
Muda River can only meet Penangs raw water needs until Year
2020.
As such, there is an urgent need for Penang to tap a second
raw water resource soon. This second raw water resource has
been identified to be the Perak River (Sungai Perak) and the
SPWTS will facilitate raw water extraction from this river. The
raw water will then be channelled through a tunnel across the
highlands dividing the Perak River and the Kerian River Basin.
Through the tunnel, the raw water will then be discharged into
the Ijok River and flow to the Kerian River where it can be
drawn and treated at a proposed new Kerian Water Treatment
Plant located within Penang.
ANNUAL REPORT 2012
CHAIRMANS MESSAGE (CONTD)
RM2 BILLION WATER SUPPLY PROJECT (CONTD)
ACKNOWLEDGEMENTS
On 2 June 2011, the Penang State Government signed an
agreement with the Federal Government to facilitate Penangs
migration to the NWSRI. Under the agreement, the Federal
Government agreed to provide grants for future raw water
infrastructure projects.
As in previous years, I would like to record my appreciation for
my fellow Board Members, as well as the management and
staff of the PBAHB Group of Companies. Together, we have
stayed true to our mission of serving as one of the leading
organisations in water supply in 2012.
The estimated cost of the SPWTS is RM2 billion, and the projected
implementation timeline is 7 years. On 30 June 2012, the
Ministry of Energy, Green Technology and Water (KeTTHA)
approved the SPWTS proposal. The National Water Services
Commission (SPAN) has also endorsed it on 7 August 2012.
Given the opportunity and privilege, we should focus on striving
to take the Group to greater heights of achievement, for the
benefit of our shareholders and customers in 2013.
The project is awaiting implementation approval from the
Economic Planning Unit (EPU) of the Prime Ministers Department.
It is expected to commence implementation of the SPWTS in
2013. This project must be completed by 2020 to ensure that
Penang has sufficient water supply in the future.
Lim Guan Eng
21 May 2013
Thank You.
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Growth
Growing begins with planting the seeds of commitment,
knowledge and change
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ANNUAL REPORT 2012
CEOS MESSAGE
Sustaining Operational Efficiency in Penang
As the number of registered water consumers in the State of Penang
reached 533,916 in 2012, Perbadanan Bekalan Air Pulau Pinang Sdn Bhd
(PBAPP), PBAHBs wholly-owned subsidiary, focused on sustaining operational
efficiency to meet all its customers water supply needs.
ANNUAL REPORT 2012
PBAPPs performance as Penangs licensed water operator can be summarised by the following key performance indicators and
results:
Key Performance Indicator
1 Percentage (%) of Urban Population Served
2 Percentage (%) of Rural Population Served
3 Network Density (km of pipeline per sq km of area)
4 Average Number of Connections Per Employee
5 Non-Revenue Water or water loss percentage (%)
6 Total Operational Surplus/(Deficit) - RM million
7 Average Domestic Tariff (RM per 1,000 litres) for the 1st 35,000 litres
per month
8 Average Non-Domestic Tariff (RM per 1,000 litres) for the 1st 500,000 litres
per month
Penang 2012
100
99.7
3.87
445
17.6
21.47**
National Average 2011*
96.8
90.1
1.88
352
37.6
(20.78)
0.31
0.66
1.19
1.36
* Source: Malaysia Water Industry Guide 2012 ** PBAHB statistic
In line with its ISO 9001:2008 certification for continuous improvement, PBAPP also commissions a bi-annual public opinion poll
(POP) to gather unbiased feedback from its customers.
In 2012, PBAPP commissioned the Penang State Institute of Integrity (INPPI) to carry out an independent POP. INPPI interviewed
130 trade consumers and 1,650 domestic consumers in Penang. The following table summarises some of the key findings:
Respondents
Domestic Consumers
Trade Consumers
Respondents
Domestic Consumers
Trade Consumers
Very Good
10%
11%
Good
59%
69%
Very Good
16%
11%
Good
65%
77%
Rating of TAP WATER QUALITY
Average
Very Poor
Poor
21%
1%
9%
11%
2%
7%
Rating of PBAPP SERVICE
Average
Very Poor
Poor
16%
1%
2%
12%
-
Total
100%
100%
Total
100%
100%
INCREASING WATER SUPPLY IN YICHUN CITY
In 2012, Yichun Pinang Water Co. Ltd (YPWC) started supplying an average of 40 million litres of treated water per day (MLD)
from the Yuan He (Yuan River) Water Treatment Plant to Yichun City in Chinas Jiangxi Province. This represents a 25% increase
in the volume of treated water supplied as compared to 2011.
Accordingly, the increase in supply generated a corresponding increase in revenue for YPWC. In 2012, YPWC recorded revenue
amounting to RM4.43 million as compared to RM3.07 million in the previous year.
YPWCs prospects for higher earnings in the future are projected to be bright, with the development of the new Yichun City Airport
and a new industrial area.
YPWC is the China-registered company for Pinang Water Ltd (PWL). PWL represents a joint venture amongst YLI Holdings Bhd,
PBAHB and Ranhill Water (Hong Kong).
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ANNUAL REPORT 2012
CEOS MESSAGE (CONTD)
TRAINING: REACHING OUT TO TOKYO & PEKALONGAN
In November 2012, the Penang Water Services Academy (PWSA) hosted its first joint training programme with Tokyo Suido Services
(TSS) of Japan. This programme was staged for selected PBAPP personnel to learn about the latest technologies, management
culture and NRW management practices of Tokyo Waterworks, one of the most successful water suppliers in Asia.
In the following month, December 2012, PWSA also hosted a three-day visit and study tour led by the Mayor of Pekalongan City
in Java, Indonesia. The visit highlights the prospect for strategic collaborations between PWSA and the water operator that serves
Pekalongan.
During the year in review, PWSA enrolled 246 students through its Fastrack, specialised modules and competency-based water
supply industry programmes in 2012. The academy also provided training for 75 full-time and 48 part-time students under its full
time vocational-level Malaysian Skills Certification (MSC) programmes.
PWSAs corporate clients in 2012 include PBAPP, Majlis Amanah Rakyat (MARA) and the Asian Development Bank (ADB). The
academy has developed two new courses - the Water Distribution Competency Course and the Water Treatment Competency
Course - that will be offered to both local and overseas clients in 2013.
PWSA is a water supply training academy that is managed by PBA Resources Sdn Bhd (PBAR), a wholly-owned subsidiary of PBAHB.
ENHANCING DATA SECURITY (MS ISO/IEC 27001:2007 CERTIFICATION)
In October 2012, PBAPP implemented an information security management system for MS ISO/IEC 27001:2007 certification. This
I.T. initiative is in compliance with a direction from the Suruhanjaya Perkhidmatan Air Negara (SPAN the National Water Services
Commission) to all water operators in Malaysia to acquire certification following the classification of water supply organisations
as Critical National Information Infrastructure.
In seeking MS ISO/IEC 27001:2007 certification, PBAPP has beefed the information security management system at the Sungai
Dua Water Treatment Plant. As at end-2012, all the processes, procedures and tasks required for certification have been completed.
The adequacy audit was carried out in January 2013 and the compliance audit was conducted in March 2013.
On 5 April 2013, PBA has obtained ISMS certification (MS ISO/IEC 27001:2005 and MS ISO/IEC 27001:2007) issued by IQ Net
and SIRIM QAS International.
The scope of the certification is information security management system for the management and treatment of potable water
at the Sungai Dua Water Treatment Plant.
ANNUAL REPORT 2012
CEOS MESSAGE (CONTD)
ACKNOWLEDGMENTS
2012 marks the 9th consecutive year in which the PBAHB Group has delivered positive results in terms of profitability as well as
operational efficiency, customer service, business prospecting and compliance to regulations.
I believe the achievements of 2012 will lay the groundwork for the future as our Group strives to achieve sustainability and growth.
In closing, I thank the Board of Directors for their direction, guidance and support. I also thank all my colleagues the management
and staff of the Group for their efforts and good work during the year in review.
Finally I would also like to acknowledge the support from all our stakeholders, customers and business partners who have helped
to make 2012 another successful year for the PBAHB Group.
Thank You.
Ir. Jaseni Maidinsa
21 May 2013
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ANNUAL REPORT 2012
CEOS PROFILE
Ir. JASENI BIN MAIDINSA
aged 55, Malaysian citizen
Chief Executive Officer of PBA Holdings Bhd (PBAHB) and
General Manager of Perbadanan Bekalan Air Pulau Pinang Sdn Bhd (PBAPP)
Ir. Jaseni Maidinsa was appointed Chief Executive Officer of PBA
Holdings Bhd (PBAHB) and General Manager of Perbadanan
Bekalan Air Pulau Pinang Sdn Bhd (PBAPP) with effect from
1 April 2007.
Ir. Jaseni holds a Diploma in Civil Engineering from Universiti
Teknologi Malaysia (1979); a BSc. (Hons.) Civil Engineering
degree from the University of Glasgow (1984); a Diploma in
Management (Merit) from the Malaysian Institute of Management
(1991); and a Masters Degree in Business Administration from
Universiti Sains Malaysia (2001). He is a registered Professional
Engineer with the Board of Engineers, Malaysia (BEM), and
is also a council member of the Malaysian Water Association
(MWA).
Ir. Jaseni has been serving in PBAPP, and previously in Pihak
Berkuasa Air (PBA), for a total of 27 years. He was the Distribution
and Workshop Engineer for Penang Island, PBA Penang
(1985 - 1987), Consumer Engineer for Penang Island, PBA
Penang (1987 - 1991), Senior Executive Engineer for Planning
and Development for Penang Island, PBA Penang (1991 - 2001)
and Development Manager, PBAPP (2001 - 2007).
He holds 600,000 ordinary shares in the Company but does not
hold any directorship in other public company. He has no family
relationship with any other Directors and / or substantial
shareholders of the Company, no conflict of interest with the
Company and has had no conviction for any offences within the
past ten (10) years other than traffic offences, if any.
ANNUAL REPORT 2012
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ANNUAL REPORT 2012
CORPORATE INFORMATION
PBA GROUP OF COMPANIES
Perbadanan Bekalan Air
Pulau Pinang Sdn Bhd
(475961-X)
PBA Holdings Bhd (515119-U)
Pulau Pinang Sdn Bhd (475961-X)
PBA Resources Sdn Bhd (799680-A)
BOARD OF DIRECTORS
Y.A.B. Tuan Lim Guan Eng
BOARD OF DIRECTORS
BOARD OF DIRECTORS
Ir. Jaseni Bin Maidinsa
Y.B. Dato Mansor Bin Othman
Y.B. Prof. Dr. P. Ramasamy A/L
Palanisamy
Y.B. Prof. Dr. P. Ramasamy A/L
Palanisamy
Encik Raffiq Raveendran Bin
Abdullah
Y.B. Dato Haji Farizan Bin Darus
Y.B. Tuan Lim Hock Seng
Y.B. Tuan Abdul Malik Bin
Abul Kassim
Y.B. Dato' Faiza Binti Zulkifli
(Non-Executive Chairman)
(Non-Executive Deputy Chairman)
(Non-Executive Director)
Y.B. Dato' Faiza Binti Zulkifli
(Non-Executive Chairman)
(Non-Executive Deputy Chairman)
Y.Bhg. Dato Chew Kong Seng
(Independent Non-Executive Director)
Island Springwater Sdn Bhd (795967-A)
BOARD OF DIRECTORS
Y.B. Dato Haji Mokhtar Bin Mohd Jait Ir. Jaseni Bin Maidinsa
Y.B. Tuan Raveentharan A/L
V. Subramaniam
Y.B. Dato Haji Mokhtar Bin Mohd Jait
Tuan Haji Mohamad Bin Sabu
(Company Director)
(Company Director)
(Company Director)
Ir. Ong Eng Chuan
Y.B. Tuan Lau Keng Ee
Y.B. Tuan Tan Cheong Heng
Y.Bhg. Dato Syed Mohamad Bin
Syed Murtaza
Ms. Agatha Foo Tet Sin
Encik Ahmed Bin Chee
Mr. Athi Isvar A/L Athi Nahappan
REGISTERED OFFICE
32nd Floor, Komtar, 10000 Penang
Tel
: (604) 263 3704
Fax
: (604) 263 3735
Website : http://www.pba.com.my
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities Berhad
COMPANY SECRETARY
Thum Sook Fun (MIA 24701)
REGISTRAR
Securities Services (Holdings) Sdn Bhd
Suite 18.05, MWE Plaza,
No.8, Lebuh Farquhar,
10200 Penang
Tel
: (604) 263 1966
Fax
: (604) 262 8544
AUDITORS
KPMG
PRINCIPAL BANKER
Malayan Banking Berhad, Penang
(Trading Services)
Stock Name : PBA
Stock Code : 5041
(Company Director)
ANNUAL REPORT 2012
CORPORATE STRUCTURE
100% equity
(water supply in Penang)
26% equity
(overseas projects)
100% equity
(management company)
100% equity
(water bottling)
(water supply training)
Chairman & Board Directors
Corporate Communications
Planning
&
Development
Production
Quality,Safety &
Health
General Manager
Operations
Facilities
Executive Secretary
Human
Resources
Internal
Audit
Information
Technology
Finance
Corporate
Affairs
Customer
Care
27
Strength
Strength begins when we all come together as one
30
ANNUAL REPORT 2012
FINANCIAL HIGHLIGHTS
Financial Year Ended 31 December
REVENUE
PROFIT BEFORE TAX
PROFIT AFTER TAX
PAID UP SHARE CAPITAL
SHAREHOLDERS' EQUITY
EARNINGS PER SHARE - BASIC (sen)
NET TANGIBLE ASSETS PER SHARE (RM)
REVENUE
2008
RM'000
2009
RM'000
2010
RM'000
2011
RM'000
2012
RM'000
187,857
27,779
31,298
165,603
624,211
9.45
1.88
184,695
15,821
14,817
165,635
630,761
4.47
1.91
198,543
30,830
26,230
165,635
648,283
7.92
1.96
236,328
42,404
45,697
165,635
680,979
13.79
2.06
244,560
23,672
28,975
165,635
699,013
8.75
2.11
PROFIT AFTER TAX
PROFIT BEFORE TAX
(RM000)
236,328
198,543
184,695
187,857
23,672
42,404
30,830
15,821
27,779
28,975
45,697
26,230
14,817
31,298
(RM000)
244,560
(RM000)
12
11
10
09
08
12
11
10
09
08
12
11
10
09
08
PAID UP SHARE CAPITAL
(RM000)
SHAREHOLDERS' EQUITY
EARNINGS PER SHARE - BASIC
165,635
165,635
165,635
165,603
699,013
680,979
648,283
630,761
624,211
8.75
13.79
7.92
4.47
9.45
(sen)
165,635
(RM000)
12
11
10
09
08
12
11
10
09
08
12
11
10
09
08
NET TANGIBLE ASSETS PER SHARE
2.11
2.06
1.96
1.91
1.88
(RM)
12
11
10
09
08
ANNUAL REPORT 2012
FINANCIAL CALENDAR 2012
FINANCIAL YEAR ENDED
31 DECEMBER 2012
12th Annual General Meeting
26 June 2012
Announcement of interim results
* First Quarter
* Second Quarter
* Third Quarter
* Fourth Quarter
17 May 2012
14 August 2012
29 November 2012
20 February 2013
Dividends paid and payable in 2012
Final - 31 December 2011
* Declaration
* Entitlement date
* Payment date
Final Tax Exempt Dividend of 3.5%
29 June 2012
13 July 2012
Interim - 31 December 2012
* Declaration
* Entitlement date
* Payment date
First Interim Single Tier Dividend of 3.5%
14 December 2012
4 January 2013
Final - 31 December 2012
* Declaration
* Entitlement date
* Payment date (if approved by shareholders at the
forthcoming 13th Annual General Meeting)
Proposed Final Single Tier Dividend of 4.0%
5 July 2013
25 July 2013
31
Integrity
Integrity begins with ethical standards at
every level
34
ANNUAL REPORT 2012
DIRECTORS PROFILE
Y.A.B. TUAN LIM GUAN ENG
aged 52, a Malaysian citizen, is the Non-Executive Chairman of
PBA Holdings Bhd (PBAHB). He was appointed to the Board
of Directors of PBAHB on 18 April 2008.
Presently, Y.A.B. Tuan Lim Guan Eng is the Chief Minister of
Penang. He received his tertiary education in Australia, where
he earned his Bachelor Degree in Economics majoring in both
Economics and Accounting from Monash University. He was
also the president of MUMSU (Monash University Malaysian
Student Union).
He does not hold any ordinary shares in the Company or its
subsidiaries, has no family relationship with any other Director
and / or substantial shareholder of the Company, no conflict of
interest with the Company and has had no conviction for any
offences within the past ten (10) years other than traffic offences,
if any.
He started his career as a Senior Executive at a foreign bank
after his graduation before he got involved in politics. He was
first elected as a Member of Parliament for Kota Melaka after
winning the Kota Melaka Parlimentary seat in 1986 and
subsequently was re-elected in 1990 and 1995. He was appointed
as the Socialist Youth Chairman of Democratic Action Party
(DAP) in 1989 and was elected to that post in 1992. In 1995,
he was elected as the DAP Deputy Secretary-General before
being elected as the party Secretary-General in 2004, and has
held the position since. He was also elected by Asiaweek as one
of the key Young Asian Leaders to shape Asias destiny in the
new millenium in 1999. He is also the Chairman of Perbadanan
Bekalan Air Pulau Pinang Sdn Bhd, Invest-In-Penang Berhad,
Penang Global Tourism Sdn Bhd and the other Penang State
Government agency.
He has attended all nine (9) Board Meetings held in the financial
year ended 31 December 2012.
ANNUAL REPORT 2012
DIRECTORS PROFILE (CONTD)
Y.B. DATO MANSOR BIN OTHMAN
aged 63, a Malaysian citizen, is the Non-Executive Deputy
Chairman of PBA Holdings Bhd (PBAHB). He was appointed
to the Board of Directors of PBAHB on 9 June 2009.
Y.B. PROF. DR. P. RAMASAMY A/L PALANISAMY
aged 64, a Malaysian citizen, is a Non-Executive Director of
of Directors of PBAHB on 18 April 2008. He is also a member
of the Nomination Committee of the Company.
He obtained his Bachelor of Social Science and Master of Social
Science from Universiti Sains Malaysia (USM) and also a
M.A;M.Phil from Yale University, United States of America.
Presently, Y.B. Prof. Dr. P. Ramasamy is the Deputy Chief Minister
II of Penang and a Member of State Assembly, Perai Constituency,
Penang State.
He started his career as a research assistant from the year 1976
till year 1978 before joining Universiti Sains Malaysia (USM)
as a lecturer in the year 1979. From 1989 to 1992, he was
elected as Timbalan Pengarah Pusat Penyelidikan Dasar USM
and subsequently was elected as Dean for Pusat Penyelidikan
Dasar USM in year 1993. He was the Political Secretary to the
Deputy Prime Minister from year 1996 till year 1998 before his
involvement in politics and held various position in Parti Keadilan
Rakyat.
He obtained a Bachelor of Arts in Political Science from Indiana
University, U.S.A., in 1977. He graduated from McGill University,
Canada, in Masters in Political Science and subsequently from
University of Malaya in Doctor of Philosophy (Ph.D.) in Political
Science in the year 1991. He also sits on the Board of InvestIn-Penang Berhad and the other Penang State Government
agency.
if any.
He joined Universiti Kebangsaan Malaysia (UKM) in 1981. He
was promoted to Associate Professor in 1993 and Professor in
1998. Following his retirement in 2005, he joined the Institute
of Southeast Asian Studies, Singapore. He served as a Consultant
for a number of Peace Building Organisations. In 2008, he was
elected to the Democratic Action Partys (DAP) Central Executive
Committee (CEC) and subsequently appointed as Deputy
Secretary General of the party.
He does not hold any shares in the Company or its subsidiaries,
has no family relationship with any other Director and / or
substantial shareholder of the Company, no conflict of interest
with the Company and has had no conviction for any offences
within the past ten (10) years other than traffic offences, if any.
He has attended eight (8) out of nine (9) Board Meetings held
in the financial year ended 31 December 2012.
35
36
ANNUAL REPORT 2012
Y.B. DATO HAJI FARIZAN BIN DARUS
Yaged 53, a Malaysian citizen, is a Non-Executive Director of
of Directors of PBAHB on 9 June 2009.
Y.B. TUAN LIM HOCK SENG
At present, he is the State Secretary of Penang and was appointed
to this position on 16 March 2011. He holds a B.A. (Hons.) from
Universiti Malaya in year 1982 and Diploma in Public
Administration from Institut Tadbiran Awam Negara (INTAN),
Malaysia in 1983. He also obtained his M.Sc. (Human Resource
Development) from Universiti Putra Malaysia in 2004.
Presently, he is a member of the Penang State Legislative
Assembly and also is the State Executive Councillor in charge of
Public Works, Public Utilities and Transportation after the recent
general election 2013. He obtained his Malaysia Certificate of
Education in 1967. He has more than 27 years of vast experience
in the political field after completion of his high school certificate.
He started his career at Jabatan Telekom Malaysia in year 1982
before joining the Administrative and Diplomatic Service of
Malaysia in 1984 as the Assistant Secretary of the Public Services
Commission. After that, he was appointed as the Assistant
District Officer (Land Administrator) in the South Seberang Perai
District and Land Office in 1989 before being transferred to the
North Seberang Perai District and Land Office in 1994. In year
1998, he was promoted as the Principal Assistant Director,
Procurement Division of the Ministry of Finance and subsequently
held the position of Principal Assistant District Officer, North
Seberang Perai District and Land Office in 2000. From 2002 till
2004, he underwent a Masters degree in Human Resource
Development at Universiti Pertanian Malaysia. Upon completion
of his studies, he helmed the South Seberang Perai District and
Land Office as the District Officer and also assumed the position
of Councillor of Seberang Perai Municipal Council. In 2006, he
was the Director of Penang Domestic Trade and Consumer
Affairs Department before being promoted as the President of
the Seberang Perai Municipal Council in 2007 and as Penang
State Financial Officer in June 2009. He assumed the position
of Penang State Secretary in March 2011. He is a Director of
the Penang Development Corporation, Invest-In-Penang Berhad
and also Board Member of the Penang Hill Corporation.
He is deemed to be a substantial shareholder of PBAHB by virtue
of his position as the Penang State Secretary. He does not have
any conflicts of interest with the Company and has had no
records of any previous conviction for any offences within the
past ten (10) years.
ANNUAL REPORT 2012
Y.B. TUAN ABDUL MALIK BIN ABUL KASSIM
of Directors of PBAHB on 16 December 2008.
Y.B. DATO FAIZA BINTI ZULKIFLI
PBA Holdings Bhd (PBAHB). She was appointed to the Board
of Directors of PBAHB on 21 August 2008.
He started his career with a Multi-National Japanese Chemical
company and thereafter managed a number of companies
including Housing Development, Construction, Construction
Material Trading, Electrical Engineering, Food Packing, MultiNational Electronics Co and Travel & Tours.
She holds a Bachelor of Law (Honours) degree from University
of Malaya (1984) and Master of Law in Intellectual Property
and Information Technology Law from University of East Anglia,
United Kingdom in 2006.
He also held the Senior Technical Management position in two
International Engineering & Construction Companies i.e. Christiani
& Nielson, UK and Boskalis International, a Dutch company for
construction of Ports and Submarine Engineering works.
His international exposure in the Middle East started with
his engagement in Saudi in 1998 for a year as a Business
Development Manager with a Saudi-Malaysian Company in
Jeddah and Makkah. He was also involved in a number of
International Business Development Projects in the Middle East
mainly in Saudi before being elected as a member of the Penang
State Legislative Assembly. Presently, he is a State Executive
Councillor in charge of Religious Affairs, Domestic Trade and
Consumer Affairs. He currently also sits on the Board of InvestIn-Penang Berhad and the other Penang State Government
agency.
He has attended seven (7) out of nine (9) Board Meetings held
She started her career in the service in 1984 as a Magistrate in
Klang, Selangor. She held various positions in the legal and
judicial service. She has been appointed as the Penang State
Legal Advisor, an ex-officio member of the State Executive
Council of Penang since July 2007.
She does not hold any shares in the Company or its subsidiaries,
She has attended eight (8) out of nine (9) Board Meetings held
37
38
ANNUAL REPORT 2012
Y.B. DATO HAJI MOKHTAR BIN MOHD JAIT
aged 57, a Malaysian citizen, is a Non-Independent and
Non-Executive Director of PBA Holdings Bhd (PBAHB). He was
appointed to the Board of Directors of PBAHB on 22 March
2011. He is also a member of the Audit Committee and
Nomination Committee of the Company.
TUAN HAJI MOHAMAD BIN SABU
He obtained Bachelor of Agribusiness and Diploma in Animal
Health and Animal Husbandry from University Pertanian Malaysia.
Subsequently, he obtained Diploma in Public Administration
from INTAN Bukit Kiara.
He studied Food Technology in Universiti Teknologi Mara prior
to his involvement in politics. Previously, he was a supervisor in
CCM Bhd. From the year 1990 till year 2004, he was a member
of the parliament for Nilam Puri, Kubang Kerian and Kuala
Kedah. He was also a committee member of the Public Accounts
Committee from year 1995 to year 2004.
He started his career as Veterinary Assistant of Department of
Veterinary Services, Peninsular Malaysia, Kuala Lumpur in year
1981. He was Assistant District Officer (Land Management)
Seberang Perai Utara, Butterworth in year 1989. He has also
served as Assistant District Officer, Land Office of Southwest
District, Penang in year 2001.
He was then promoted as Director of the Department of Director
General of Lands and Mines Selangor, Ministry of Natural
Resources and Environment in year 2005. He also served as
District Officer of Northern Seberang Perai District in 2007 and
then promoted as the President of Seberang Perai Municipal
Council in year 2009. On 16 March 2011, he was then promoted
as the Penang State Financial Officer. He is also a Director of
Penang Development Corporation.
He has attended all nine (9) Board Meetings held during his
tenure in office in the financial year ended 31 December 2012.
He has attended all eight (8) out of nine (9) Board Meetings
held in the financial year ended 31 December 2012.
ANNUAL REPORT 2012
Y. BHG. DATO CHEW KONG SENG
aged 75, a Malaysian citizen, is an Independent Non-Executive
Director of PBA Holdings Bhd (PBAHB). He was appointed to
the Board of Directors of PBAHB on 12 December 2001. He is
also the Chairman of the Audit Committee and a member of
the Nominating Committee of the Company.
Y. BHG. DATO' SYED MOHAMAD BIN SYED MURTAZA
the Board of Directors of PBAHB on 12 February 2009. He
is also a member of the Audit Committee and Nominating
Committee of the Company.
Dato Chew is a Fellow of the Institute of Chartered Accountants
in England and Wales as well as a member of both the Malaysian
Association of Certified Public Accountants and the Malaysian
Institute of Accountants. He had worked in the United Kingdom
from 1964 until 1970 and returned to Malaysia to join Turquand
Young & Co (now known as Ernst & Young). He held various
senior positions in Ernst & Young and was Managing Partner
from 1990 to 1996. His long accounting work experience in
the profession covers a wide variety of industries including
banking and financial institutions, timber based, manufacturing,
trading and foreign investment.
He has over 40 years of vast experience in the business industries.
After completed his high school certificate at Penang Free School,
he then joined Kah Motors and has since been appointed to
key positions in various organisations. He has gained wide
experience whilst holdings various positions in companies such
as Shell Malaysia, Penang Port Commission, etc.
He also sits on the Boards of GW Plastics Holdings Berhad, AEON
Co. (M) Bhd., Encorp Berhad, GuocoLand (Malaysia) Berhad and
Bank of America Malaysia Bhd.
has no family relationship with any other Director and / or major
shareholder of the Company, no conflict of interest with the
Company and has had no conviction for any offences within
the past ten (10) years other than traffic offences, if any.
Currently, he is the Managing Director of Amstrong Auto Parts
Sdn. Bhd. He also heads Penang Tourist Centre Bhd, MITTAS
Bhd, Motorcycle, Scooter Assembly & Distributor Association of
Malaysia and Usains Group of Companies. He is the president
of The Federation of Asian Motorcycle Industries and Steering
Committee International Motorcycle Manufacturers Association.
He is the Executive Chairman of Master-Pack Group Berhad and
Chairman of DRB-HICOM Berhad. He also sits on the boards of
Yayasan Bumiputra Pulau Pinang Bhd, Boon Siew Credit Berhad,
Tourism Entrepreneur Centre Bhd, Globetronics Technology Bhd
and several private limited companies.
He does not hold any shares under his own name in the Company
or its subsidiaries, has no family relationship with any other
Director and / or substantial shareholder of the Company, no
conflict of interest with the Company and has had no conviction
for any offences within the past ten (10) years other than traffic
offences, if any.
He has attended five (5) out of nine (9) Board Meetings held
39
40
ANNUAL REPORT 2012
MS. AGATHA FOO TET SIN
Director of PBA Holdings Bhd (PBAHB). She was appointed
to the Board of Directors of PBAHB on 9 June 2009. She is also
a member of the Audit Committee and Nominating Committee
of the Company.
ENCIK AHMED BIN CHEE
the Board of Directors of PBAHB on 9 June 2009. He is also a
member of the Audit Committee and Nominating Committee
of the Company.
She graduated from the University of Malaya with B.A.(Hons.)
in Anthropology & Sociology in 1984 and from the Australian
National University, Canberra with LL.B. in 1987. She was
admitted to the Supreme Court of the Australian Capital Territory
and the High Court of Australia in 1988. She was also admitted
to the Supreme Court of New South Wales and the Supreme
Court of Victoria in 1989. She commenced practice as an
Advocate and Solicitor in Canberra in 1988. She was called to
the Malaysian Bar in 1990.
He had his secondary education at the Royal Military College
and after spending a year as an instructor at the Outward
Bounds School, he obtained his degree in mechanical engineering
from the University of Nottingham. He is also a Member of the
Institute of Engineers Malaysia. He worked for Shell for ten
years in various capacities in Singapore and East and West
Malaysia before leaving to start his own professional engineering
firm which specialized in the design of factories to process
tropical agricultural products such as oil palm, palm kernel,
copra, rubber and cocoa. His firm undertook projects in Malaysia,
Indonesia, Samoa and Equatorial Guinea. Since the early 1990s,
he has been increasingly involved in the movement for the
preservation of both the natural and built heritage. He was
previously a Council Member of the Malaysian Nature Society
and presently a Council Member of the Penang Heritage Trust.
She has served in various committees of social interest groups
and professional bodies including the Human Rights Committee
of the Malaysian Bar Council, the Management Committee of
the Bar Council Legal Aid Centre, Penang and the Investigating
Tribunal Disciplinary Committee Panel of the Advocates &
Solicitors Disciplinary Board.
She does not hold any ordinary shares in the Company or its
if any.
She has attended eight (8) out of nine (9) Board Meetings held
if any.
ANNUAL REPORT 2012
MR. ATHI ISVAR ATHI NAHAPPAN
the Board of Directors of PBAHB on 9 June 2009. He is also the
Chairman of the Nominating Committee of the Company.
Mr. Isvar completed his tertiary education in the United Kingdom
and is a qualified lawyer by profession. He also completed a
Merchant Bankers Graduate Training Programme in 1975. His
career spanning 36 years includes experience in commercial and
investment banking, corporate and banking legal practice,
general management as Executive Chairman of a listed company,
private equity and investment management. He started his
career in London with Arbuthnot Latham Merchant Bank in
1974 before being seconded to its associate, Chartered Merchant
Bank Berhad in Kuala Lumpur. In 1976, he joined Bank of
America in their corporate lending department. In 1980, he was
called to the Malaysian Bar and established a specialist corporate
and banking practice. In 1985, he took control of a listed
company on the London Stock Exchange and subsequently
developed operations in Malaysia, Singapore, Australia, India,
Indonesia and Hong Kong. In 1995, He sold his interests in the
Group and retired as Executive Chairman of the company. He
currently manages and is a trustee for his family business interests
which include investments in property, public securities and
private equity investments in Australia, India, Malaysia, Singapore
and the United Kingdom.
if any.
41
Collaboration
Collaboration starts when you realise that
other peoples ideas are better than your own
44
ANNUAL REPORT 2012
CORPORATE CALENDAR
8 February 2012
Kelantan Menteri Besar Dato Hj. Nik Aziz Nik Mat and EXCO members visited Penang and
held a discussion on Water Restructuring with PBAPP, which was headed by PBAHB CEO and
PBAPP General Manager, Ir. Jaseni Maidinsa.
7 April 2012
The Commemoration of World Water Day 2012 at Taman Bandaran (Youth Park). The event
was officiated by Chief Minister, Y.A.B. Tuan Lim Guan Eng. Perbadanan Bekalan Air Pulau
Pinang Sdn Bhd (PBAPP), PBAHBs wholly-owned subsidiary sponsored and participated in the
annual event, organised by Water Watch Penang.
ANNUAL REPORT 2012
CORPORATE CALENDAR (CONTD)
12 May 2012
Eighty employees represented the PBAHB Group of Companies during the national-level Labour
Day Celebration at the Malaysia Agro Exposition Park, Serdang.
4 - 8 June 2012
PBA 10th Penang International Junior Squash Championship was held at the Nicol David
International Squash Centre. Some 504 young and aspiring squash players from Malaysia and
around the world participated in the annual event. PBAPP was the main sponsor for the
Championship.
26 June 2012
PBAHBs 12th Annual General Meeting was held at Traders Hotel. Nearly 500 shareholders
and proxy-holders attended the meeting which was chaired by PBAHB Chairman, Y.A.B. Tuan
Lim Guan Eng.
45
46
ANNUAL REPORT 2012
10 July 2012
Fourteen staff who have served the company for 25 years were honoured during the 25 Year
Service Award Ceremony. The Deputy Chief Minister 1, Y.B. Dato Mansor was the guest-ofhonour.
14 August 2012
PBAPP handed over a RM100,000 cheque to Dato Lee Chong Wei, for winning the Silver
medal at the London Olympics 2012. The cheque was presented by the Chief Minister who
is also PBAHB Chairman, Y.A.B. Tuan Lim Guan Eng.
ANNUAL REPORT 2012
22 - 23 September 2012
PBAPP took part in the Green Expo Exhibition held at the Penang International Sports Arena
(PISA).
20 - 21 November 2012
In November 2012, PWSA engaged consultant Tokyo Studio(Suido) Services (TSS) to conduct
training on Countermeasures for Non-Revenue Water (NRW) and Operation Command
Center (techniques for advanced maintenance in Distribution Pipe System).
17 December 2012
Mayor of Kota Pekalongan Mohamad Basyir Ahmad visited PBAPP and held a discussion with
Ir. Jaseni Maidinsa on the potential for cooperation between the two authorities.
47
Community
Community begins with a sense of
responsibility and contribution to the society that
define our existence
50
ANNUAL REPORT 2012
CORPORATE RESPONSIBILITY
PROVIDING CLEAN, SAFE AND AFFORDABLE WATER TO
THE PENANG CONSUMER
International Year of Water Cooperation is the United Nations
theme for World Water Day 2013. In Penang, Perbadanan
Bekalan Air Pulau Pinang (PBAPP), a wholly-owned subsidiary
of PBA Holdings Bhd (PBAHB) continued to supply potable
water efficiently, not only in the city of George Town, but in
all rural areas throughout the state as well.
Since water is essential for life everywhere, everyday, it is the
key corporate social responsibility (CSR) for the PBAHB Group
of Companies, and our main Key Performance Indicator (KPI)
is to provide 100% urban water supply coverage and 99.7%
rural water supply coverage in Penang.
It is indeed a very significant achievement to be able to reach
that level, taking into consideration that the population in
Penang in 2012 was 1.61 million. As the population grows,
our water consumption has also increased to 794 million liters
per day in 2012.
We strive to maintain the lowest domestic water tariff in
Malaysia so water supply is accessible to as many household
as possible. Our domestic water tariffs for consumption of up
to 60,000 liters per month are the lowest in Malaysia because
the tariffs are subsidised. Despite the annual rising costs every
year, PBAPP continues to support the Penang State Governments
people friendly policy to provide cheap water supply to
households, especially low-income households.
SUPPORT FOR THE NEEDY AND RELIGIOUS INSTITUTIONS
For the benefit of very low-income households in Penang,
PBAPP has been providing tariff rebates and interest-free
loans for water supply connections.
Under the Kampung Loans programme 187 households
received interest-free loans totaling RM258,963.23 from PBAPP
for water connections in 2012. The maximum income of these
households was RM1,000 per month; and they were eligible
for interest-free loans of up to RM1,500 each, payable by
installment via water bills. PBAPP also waived all deposit,
including trunk mains contributions for these Kampung Loan
connections.
Under its tariff rebate programme, PBAPP provided two
categories of support to 227 households totaling RM18,484.90
in 2012. The monthly income of these households was not
more than RM460 per month. The beneficiaries were
recommended by the Penang State Welfare Office or District
Offices and endorsed by the State Economic Planning Unit.
The first category, for qualified premises without existing water
connections, one free connection was provided, from the main
pipeline to the premise, to one tap. Needy households who
required pipe connections under this category were also given
waivers for meter deposits. Normal meter deposits range
between RM60 and RM100, depending on the type and size
of building.
The second category, for qualified premises with existing water
connections, PBAPP provided a water bill rebate for consumption
of up to 60,000 liters every two months. The maximum value
of this rebate was RM17.20 per cycle (two months).
Besides the two categories, PBAPP has also provided water
rebates for Places of Worship since March 2009. In 2012, a
total of 1,674 places of worship which consists of mosques,
surau, churches, Chinese and Hindu temples were given rebates
amounting RM67,530.
CONTINUING TO GO GREEN
To date, the Environmental Management Systems at four
PBAPP water infrastructure facilities have been certified to
international IS0 14001:2004 standards. The Teluk Bahang
Dam, Air Itam Water Treatment Plant, Batu Ferringhi Water
Treatment Plant and the Waterfall Treatment Plant have been
essentially branded as green water supply facilities.
As part of its commitment towards continuous improvement,
PBAPP is seeking additional green certifications for all its key
water installations in Penang.
INVOLVEMENT IN SQUASH DEVELOPMENT IN PENANG
PBAHB Group of Companies has always been very supportive
in the development of Squash in Penang. It started with the
building of the international squash centre which is now known
as Nicol David International Squash Centre (NDISC) in 1985.
Since then, PBA continues to assist in the maintenance and
upgrading works to ensure the centre is condusive for hosting
international events.
Besides that, in 2012 the company sponsored the 10th PBA
Penang International Junior Championship apart from funding
to the squash development program in Penang.
CONTRIBUTION TOWARDS SPORTS DEVELOPMENT
In 2012, PBAPP contributed RM500,000 to the State Sports
Committee to help finance the development of sports in Penang.
In supporting the sports excellence, PBAPP contributed RM30,000
to Dato Lee Chong Wei as incentive for being ranked the
World Number One badminton player.
Four Penang-born athletes who participated in the 2012 London
Olympics, Dato Lee Chong Wei, Tee Jing Yee, Chan Peng Soon
and Cheng Chu Sian were also given cash incentives. Dato
Lee Chong Wei was awarded RM100,000, whilst the other
three were presented RM10,000 each.
Being a responsible corporate establishment, PBAPP contributed
a financial aid of RM300,000 to the Football Association of
Penang (FAP).
ANNUAL REPORT 2012
CORPORATE RESPONSIBILITY (CONTD)
In December 2012, Dato Nicol David achieved her 7th World
Squash title. To recognize her success, PBAPP awarded her
RM100,000 to her. Besides Dato Nicol David, PBAPP is also
sponsoring another Penang born World Women Top 10 Squash
Player, who is currently Malaysias number two, Low Wee
Wern.
SUPPORTING PENANG STATE EVENT
PBAPP had also supported the Georgetown Festival 2012, a
month-long celebration of the inscription of George Town on
the UNESCO World Heritage Listing on 7th July, 2008. Scheduled
to be an annual event, the Festival is a feast of theatre, music,
dance, film, art, opera, food, fashion, photography, and
inspirational talks.
The primary objective of the Festival is to provide a platform
to promote arts and culture and to engage all stakeholders to
work collectively with the aim of stimulating Penang's economy
and its presence as a tourism destination. The Festival acts as
a catalyst to advance art and heritage educations, promotes
dialogue, and encourage mutual understanding between urban
communities of the past and present.
This event, which is being the mainstay in Penangs annual
sporting and cultural calendar, also interests tourists and is
recognised as a major state tourism event.
WATER AWARENESS AND CONSERVATION
As Penang is a water-stressed state with limited raw water
resources and unlimited potential for growth, PBAPP promotes
wise usage of water in households.
Penang is the first state to introduce Water Conservation
Surcharge (WCS) as one of the efforts to curb excessive use
of tap water by domestic consumers. It aims to encourage
households, to reduce their per capita domestic consumption
from 286 liters per person per day in 2009 to 233 liters per
person per day by 2015.
PBAPPs sustainable water supply programme in 2012 included
the sponsorship of projects undertaken by Water Watch Penang
(WWP) to promote water awareness and conservation. WWP
is a non-government organisation and it carries out projects
that help to focus public attention on the urgent need to save
water at home.
PBAPP had also one of the contributors for the Penang
Philharmonic Orchestra, which was established to bring the
talented musicians in Penang together to boost the standards
of live classical music in the state. It would promote the cultural
and educational development of the people, in particular the
younger generation, by providing opportunities to learn music
and take part in the activities of both the orchestra and chorus.
PBAPP provided a grant of RM50,000 to WWP in 2012.
PBAPP had also sponsored Penang Island Jazz Festival 2012
which was held on 29th November 2nd December 2012.
Penang or PBAPP in particular led the way in promoting the
installation of Water Saving Devices (WSDs) as a key initiative
in the overall programme to cultivate a water saving culture
in a water-stressed state. It started with the installation of
WSDs at PBAPP buildings first and later PBAPP will be working
with Majlis Perbandaran Pulau Pinang (MPPP) and Majlis
Perbandaran Seberang Perai (MPSP) to implement it throughout
the State of Penang. The company would consistently promoting
WSDs as they can actually save 40-50% of water consumption.
INTERNATIONAL DRAGONBOAT FESTIVAL
This annual event was held on 30th June 1st July 2012 and
attracted more than 2,000 dragonboat rowers from Guam,
Indonesia, Australia, Singapore, Hong Kong, Macau, Phillipines,
UAE, China and Malaysia who took part in the International
Dragonboat Festival at the Teluk Bahang Dam.
Top on WWPs annual calendar is the commemoration of World
Water Day in Penang. Since 1999, PBAPP has been actively
supporting and participating in this event that highlights the
latest information and trends related to water saving in Penang
and all over the world.
51
Empowerment
Empowerment begins with a single realisation that
employees should take initiative to give their best
54
ANNUAL REPORT 2012
AWARDS RECEIVED
Anugerah Kualiti
Year : 1991
Awarded By :
Ketua Pengarah MAMPU
ISO 9001 : 2008
Quality Management
System Certification
Treatment and Supply of Water with
Provision of Customer Services
Obtained Since : 2003
Anugerah
Pejabat Terbaik
Negeri Pulau Pinang
Year : 1991
Awarded By :
Kerajaan Negeri Pulau Pinang
Anugerah Khas
Perkhidmatan Awam
Anugerah
Pengurusan Kewangan
Anugerah Khas
Perkhidmatan Awam
Anugerah Pengurusan
Teknologi Maklumat
Year : 1992
Awarded By :
JPA
Year : 1993
Awarded By :
JPA
ISO 14001 : 2004
Environmental Management
OHSAS 18001 : 2007
OHS Management
Management and Treatment of
Raw Water and
Supply of Potable Water
Treatment and Supply of
Water with a Provision of
Customer Services
Pulau Pinang Sdn. Bhd.
Tingkat 32 & 33,
Menara Komtar
Jalan Penang,
10000 Pulau Pinang, Malaysia
ANNUAL REPORT 2012
AWARDS RECEIVED (CONTD)
MWA Outstanding
Water Award for
Management 2001
Year : 2001
Awarded By :
The Malaysian
Water Association
MS ISO/IEC 17025 : 2005
Silver Award OSH Awards
Year : 2001
Awarded By :
Malaysian Society for
Occupational
Safety & Health
Gold (Class II)
OSH Awards
Anugerah Kualiti
Ketua Menteri
Pulau Pinang
Year : 1993
Awarded By :
Kerajaan Negeri Pulau Pinang
2011 WaterLinks Award
Competent Testing
Laboratory : Chemical
2011 International Award for
Best Water Operator Partnership
Accredited by :
Standards Malaysia
Year : 2011
Awarded By :
WaterLinks
Year : 2006
Awarded By :
Malaysian Society for
Occupational
Safety & Health
ISO/IEC 27001 : 2005 &
MS ISO/IEC 27001 : 2007
Information Technology
Management System for
the Management and
Treatment of Potable Water at
Sungai Dua Water Treatment Plant
Accredited by :
SIRIM QAS International
55
Leadership
Leadership begins with ownership of the work,
the people and the issues around you
58
ANNUAL REPORT 2012
PBAPP BOARD OF DIRECTORS
Y.A.B. TUAN LIM GUAN ENG
Chairman
Y.B. DATO MANSOR BIN OTHMAN
Deputy Chairman
Y.B. DATO HAJI FARIZAN BIN DARUS
Director
Y.B. PROF. DR. P. RAMASAMY A/L PALANISAMY
Director
Y.B. TUAN LIM HOCK SENG
Director
ANNUAL REPORT 2012
PBAPP BOARD OF DIRECTORS (CONTD)
Y.B. DATO FAIZA BINTI ZULKIFLI
Director
Y.B. TUAN LAU KENG EE
Y.B. DATO HAJI MOKHTAR BIN MOHD JAIT
Y.B. TUAN TAN CHEONG HENG
Y.B. TUAN RAVEENTHARAN A/L V. SUBRAMANIAM
Director
Director
Director
Director
59
Teamwork
Teamwork begins with trust and a single common purpose
62
ANNUAL REPORT 2012
PBAHB SENIOR MANAGEMENT TEAM
Ir. Jaseni bin Maidinsa
PBAHB
Chief Executive Officer
ANNUAL REPORT 2012
PBAPP SENIOR MANAGEMENT TEAM (CONTD)
Sitting from left to right :
Standing from left to right :
EN. RAFFIQ RAVEENDRAN BIN ABDULLAH
Human Resources
PUAN YEOH SIEW LIN
Internal Audit
Ir. JAMIL BIN MOHD NOOR
Operations
Ir. JASENI BIN MAIDINSA
General Manager
PUAN MARIAM BINTI ABDUL KADIR
Quality, Safety & Health
Ir. ISMAIL BIN ISHAK
Facilities
Ir. K. JEYABALAN
Corporate Affairs
Ir. CHONG MENG CHOON
Development
PUAN SITI SUBAYDA BINTI S.M. MYDIN
Information Technology
Ir. ONG ENG CHUAN
Production
PUAN JOYCE LEE SUAN IMM
Finance
SAKTI BALAN A/L SHANMUGAM
Customer Services
63
Personal development
Personal development starts when you value learning,
coaching and mentoring
66
ANNUAL REPORT 2012
PENANG STATE WATER SUPPLY STATISTICS 2012
Area of Penang State
Population
Number of Registered Consumers
Water Catchment Area
Total Manpower
Number of Dams
Total Raw Water Storage Capacity
Number of Treatment Plants
Designed Capacity of Treatment Plants
Number of Customer Care Centres
Number of Treated Water Reservoirs
Number of Treated Water Towers
Number of Booster Pump Stations
Total Length of Pipes (100 millimetres and above)
Daily Supply of Treated Water
Daily Water Consumption
Percentage of Non-Revenue Water
Domestic Consumption Per Capita
1,031 sq. km
1.611 million people (est.)
Domestic : 460,966
Trade
: 72,950
Total
: 533,916
62.9 sq. km
1,200
6
46,013 million litres
10
1,387.5 million litres /day
9
65
40
87
4,118 km
964 million litres / day
794 million litres / day
17.6%
294 litres / person / day
ANNUAL REPORT 2012
WATER TREATMENT PROCESS
Raw water
Storage
Screening
Addition of Chemicals
Mixing
Flocculation & Coagulation
Sedimentation
Filtration
Clear Water Tank
Treated Water Pumps
Service Reservoir
Supply to Consumers
67
Innovation
Innovation begins when you dare to put forth creative
new ideas that have potential to change the world
Aerial View of Teluk Bahang Dam
The picturesque Teluk Bahang Dam,
which overlooks the northern seas of Penang island,
is managed in accordance to three international standards ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2001.
72
ANNUAL REPORT 2012
PENANG STATE - WATER SUPPLY INFRASTRUCTURE
ANNUAL REPORT 2012
OPERATIONS REVIEW
Increasing production by 1.62% to meet 2.64% consumption growth
In 2012, Perbadanan Bekalan Air Pulau Pinang Sdn Bhd (PBAPP) treated 352,762,247 cubic metres or cu.m.
(1 cu.m = 1,000 litres) of water in Penang. Compared to the total production volume for 2011 (347,122,991 cu.m.),
this represents an increase of 5,639,256 cu,m. year-on-year. In percentage terms, the increase in production yearon-year was 1.62%.
Through prudent and diligent non-revenue water (NRW) management practices, PBAPP achieved a 17.6% water loss
statistic for the state in 2012, as compared to 18.4% in 2011. In real world terms, PBAPP reduced water loss by
2,190,721 cu.m. year-on-year. Penangs 2012 NRW percentage is likely to be the lowest in Malaysia for the year, as
the 2011 national average published in the Malaysia Water Industry Guidebook 2012 was 36.7%.
Taking into account water loss, the actual registered water consumption in Penang was 290,625,401 cu.m. in 2012,
as compared to 283,159,228 cu.m. in the preceding year. The increase in consumption amounted to 7,446,173 cu.m.
In percentage terms, the increment in water consumption (2012 vs 2011) was 2.64%.
The value of successful NRW management as a measure of water supply efficiency is reflected by the abovementioned
statistics. PBAPP produced only 1.62% more water year-on-year to cater for a 2.64% increase in consumption.
Essentially, less NRW means more availability of billable water; and moreover, PBAPP saved production costs to treat
2,190,721 cu.m. of water.
Customer Growth of 2.60%
During the year in review, PBAPP served a total of 533,916 registered water consumers in Penang, as compared to
520,374 consumers registered in 2011. The growth factor in consumers served year-on-year was 2.60%. In terms
of actual numbers, PBAPPs customer base grew by 13,542 consumers in 2012.
Amongst the registered water consumers, 460,966 were domestic consumers while 72,950 were trade (or nondomestic) consumers. The percentage ratio of domestic and trade consumers served in 2012 was 86.34% : 13.66%.
Consumption analysis statistics show that domestic consumers consumed 173,483,080 cu.m. of water while trade
consumers consumed 117,142,321 cu.m. This means that domestic consumption accounted for 59.69% of the total
water consumption in 2012, with trade consumption accounting for the remaining 40.31%.
While the number of consumers increased by 13,542 year-on-year, PBAPPs workforce increased by 22 personnel.
As such, the company recorded a higher workforce : consumer efficiency index of 1 employee : 445 consumers in
2012, as compared to 2011 (1 : 442).
Year
2010
2011
2012
Production (cu.m.)
349,324,241
347,122,991
352,762,347
Consumption (cu.m.)
285,583,785
283,159,228
290,625,401
Registered Consumers
506,989
520,374
533,916
PBAPP employees
1,148
1,178
1,200
73
74
ANNUAL REPORT 2012
OPERATIONS REVIEW (CONTD)
Building Capacity for Tomorrow
In the water supply industry, a responsible water operator has to always stay ahead of demand because water is an
essential commodity for daily life. Every year, PBAPP has to invest in infrastructure to ensure that water supply services
in Penang can keep pace with population growth, economic expansion and increasing water demand.
Key infrastructure projects implemented/completed by PBAPP in 2012 include:
Construction of an additional 114 million litres per day (MLD) Process Unit at the Sungai Dua Water Treatment
Plant (Penangs primary water treatment plant) to further increase water treatment capacity;
Development of a Water Treatment Sludge Handling System at the Sungai Dua Water Treatment Plant in line with
PBAPPs commitment to be environment- friendly;
Installation of a 600mm mains from Bukit Tengah to Jalan Song Bang Kheng in Seberang Prai to meet projected
higher water demand in the township of Bukit Mertajam;
Completion of construction works for a new 45 million litre Reservoir at Bukit Indera Muda to boost treated water
storage capacity on the Mainland;
Installation of 600mm mains from Teluk Kumbar to Balik Pulau to meet projected higher water demand on Penang
Island;
Laying a 900mm mains along Jalan Tun Dr. Awang in Relau on Penang Island to ensure sufficient supply for the
future;
Completion of works to install a 900mm pipeline from Bayan Lepas to Batu Maung to meet increasing water
demand in a highly industrialised and heavily populated area;
Development of a proprietary Integrated Water Management System (iWMS) to further streamline water
management processes; and
Completion of Strategic Network Model to support future planning of water infrastructure in the state.
Upgrading and Updating the Delivery Network
One of the main causes of burst pipes and murky water that cause inconveniences to PBAPPs customers are outdated water mains and pipes. These components in the water distribution network have outlived design specifications
and need to be replaced to sustain continuous good water supply and a low NRW percentage.
In 2012, PBAPP replaced a total of 53.88km of out-dated mains and pipes throughout the state of Penang. At the
same time, 4,998km of existing pipelines have also been scoured as a preventive maintenance procedure.
At the same time, 92% of all water meters that have been in service for 10 years or more have been replaced to
enhance billing efficiency as well as to facilitate accurate consumption measurement and NRW management analysis.
ANNUAL REPORT 2012
OPERATIONS REVIEW (CONTD)
Monitoring Water Quality
The quality of raw water and PBAPPs treated water is independently monitored by the Ministry of Health (MOH)
regularly to ensure compliance with the Quality Assurance Programme (QAP) set by the MOH.
In 2012, the monitoring/surveillance work was carried on a weekly basis at the raw water intake and treatment plant
output points. At the same time, water quality monitoring work was also carried out on a monthly basis at 194
specified auxiliary points in the distribution network.
Results showed that Penangs treated water quality exceeded the QAP standards in terms of e-coli content, chlorine
residue, aluminium residue and turbidity.
To ensure continued compliance with QAP standards in the future, the following procedures have been put in place:

Scheduled reservoir cleaning once every 5 years;
Scheduled flushing of trunk mains, including application of air scouring technology;
Ad-hoc flushing in areas prone to occurrences of murky water; and
Regular rooftop water tank inspections at high-rise buildings and reporting to management corporations for followup actions.
Conforming to Certified Management Systems
PBAPP continuously ensures that its daily operations comply with the following certifications for:
Quality Management (ISO 9001:2008) company-wide for the treatment and supply of water and the provision
of customer services;
Environmental Management (ISO 14001:2004) Teluk Bahang Dam, Batu Ferringhi Treatment Plant, Waterfall
Treatment Plant and Air Itam Treatment Plant for the management and treatment of raw water and supply of
potable water;
Occupational Safety and Health Management (OHSAS 18001:2007) company-wide for the treatment and supply
of water with the provision of customer services; and
Chemical Testing (Malaysian Laboratory Accreditation Scheme ISO/IEC 17025) PBAPP Laboratory in the Sungai
Dua Water Treatment Plant.
Meeting SPANs Standards
As a water operator licensed by the Suruhanjaya Perkhidmatan Air Negara (the National Water Services Commission
- SPAN), PBAPP is subject to audits and inspections by the regulatory body. SPANs audits and inspections are to
ensure that PBAPP complies with the requirements of the Water Services Industry Act (WSIA 2006) and its pre-set
key performance indicators (KPIs).
In 2012, SPANs certification agencies carried out five audits on PBAPP, in the fields of NRW management, customer
services, treatment and distribution systems, water quality and certification. The results of the audits showed that
PBAPP complied with all of SPANs requirements.
75
76
ANNUAL REPORT 2012
ADMINISTRATION REPORT
PBAHB Group Employee Profile
As at December 2012, the PBAHB Group was employing a total of 1,210 personnel. The workforce composition was
as follows:
Categories
Managers and Assistant Managers
Executives
Clerical and Technical Personnel
Industrial Manual Group
Other subsidiaries
1
3
5
1
10
PBAHB Group
23
56
522
609
1,210
PBAPP
22
53
517
608
1,200
The majority of the employees were aged below 40 years, representing 55.9% of the total workforce. In 2012,
29 employees resigned from service and 20 retired at the age of 58. Six employees passed away while in service during
the year.
Human Resource Development
The Company recognises that having skilled and motivated employees is the key to achieving results and success.
Human Resource Development also shares the same belief whereby investment in the training and development of
employees is the key to institutional excellence. Building on this, Human Resource Development (HRD) had taken
the responsibility in providing programmes that benefit the employees in terms of their career and personal development.
With this in mind, in 2012, HRD had collaborated with Penang Water Services Academy (PWSA) to develop and offer
two tailor-made programmes namely SKM Level 1 Programme and Competency Based Orientation Programme (CBOP)
for the employees career and personal growth. A total of 96 employees from the Production and Operations areas
had benefited from these programmes.
In coping with the rapid change of business environment, HRD has also provided soft skills, team building and motivation
programs for all employees across the board. The training had provided the employees with enhanced knowledge
and new positive outlook in carrying out their jobs.
In 2012, HRD had achieved 5.64 man days of training for the employees company-wide.
A summary of employee attendance for HRD programmes carried out in 2012 is as follows:
HRD Programmes 2012
In-House Programmes
42
2,337
No. of Programmes
No. of Employees Trained
Management
Programmes
Executives
Non-Executives
TOTAL
In-House
148
1,231
1,379
Public
44
11
55
Public Programmes
95
214
Attendance in HRD Programmes 2012
Technical
IT
QSH
Programmes
Programmes
Programmes
In-House
64
277
341
Public
69
54
123
In-House
28
95
123
Public
12
0
12
In-House
134
360
494
TOTAL
Public In-House Public
6
365
131
18
1,943
83
24
2,337
214
There were a total of 29 programmes planned for 2012 Training Calendar. HRD managed to carry out 23 out of the
29 programmes. 6 programmes were not carried out due to change in the training needs at that time as well as
budget constraint.
ANNUAL REPORT 2012
ADMINISTRATION REPORT (CONTD)
Employee Relations
The Management maintains excellent industrial harmony with the two unions namely, Kesatuan Kakitangan PBAPP
Sdn Bhd and Kesatuan Pekerja-Pekerja PBAPP Sdn Bhd. The good relationship helped effectively in minimizing cost.
During the period under review, the Management is in the process of negotiating with the unions the 5th. Collective
Agreement (2012-2014) which has reached 95% completion.
As in previous years there were no disputes in 2012. Both unions had extended their cooperation and understanding
to the Management that enabled in increasing Company competitiveness.
Customer Service
As at 31 December 2012, PBAPP was serving a total customer base of 533,916 registered water consumers in the
State of Penang.
Customer requests and issues were addressed and resolved through direct interaction with the company's 67 customer
service personnel stationed at nine centers; as well as via the 24-Hour Call Centre (04 509 6 509), the pba.com.my
website, the customer@pba.com.my email service and normal correspondences.
The following are the highlights of PBAPP's customer service performance in 2012:
1.
Billing queries
- Responded within 3 working days
97.65%
2.
Response to queries
- Complaints meaningfully responded within 5 days
78.04%
3.
Telephone queries
- Responded within 30 seconds
86.81%
4.
Customer Service Centre
a. Average service waiting time
b. Average service serving time
c. Average payment waiting time
d. Average payment serving time
e. Total number of customer served
f. Total number of payment handled
g. Amount of cash payments handled
5.
24-hour Call Centre
a. Total number of calls received
b. Total number of calls answered
2.91 minutes
5.28 minutes
1.28 minutes
1.27 minutes
584,483
66,749
RM17,211,122.52
168,615
146,368
77
78
ANNUAL REPORT 2012
STATEMENT ON CORPORATE GOVERNANCE
INTRODUCTION
The Board of Directors of PBA Holdings Bhd (the Company) fully subscribes to ensure that the Principles and
Recommendations of the Malaysian Code on Corporate Governance 2012 (MCCG 2012 or Code) together with
the provisions contained in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (LR).
Through this Statement, the Board reaffirms its commitment in upholding the highest standard of corporate governance
throughout the Group as a fundamental part of discharging its responsibilities to enhance the satisfaction of shareholders
and stakeholders and to safeguard their interests, through excellence in Corporate Governance standard at all times.
This statement outlines the Groups main corporate governance practices and policies in alignment with the recommended
principles of MCCG 2012 as below:

Establish clear roles and responsibilities
Strengthen composition
Reinforce independence
Foster commitment
Uphold integrity in financial reporting
Recognise and manage risks
Ensure timely and high quality disclosure
Strengthen relationship between company and shareholders
PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES
I)
The Board and Management
The Board exercises effective leadership and assumes responsibility for its stewardship functions. It oversees the
proper management of the Groups business operations, effective utilization of its resources for profitable returns
on investment by shareholders and any matter relating to succession planning in accordance with the Code, there
is a clear division of responsibilities between the Chairman and Chief Executive Officer (CEO), who is not a Board
member. The CEOs responsibility is to run the business and to ensure implementation of policies and strategies
approved by the Board and to communicate to the Board on matters pertaining to the business results and
performance of the Group.
Key matters reserved for the Boards approval include the annual business plan and budget, dividend policy,
business continuity plan and disposal of fixed assets.
The Chairman is responsible for leading the Board to ensure its effectiveness and integrity and the entrenchment
of good corporate governance practices within the Group.
II) Clear Roles and Responsibilities
The Group is led by the Board who has a wide range of competencies and experiences ranging from the accounting,
business, legal and public service sectors. Presently, the Board comprises fourteen Board members in total, all
holding non-executive positions, of whom 5 members are Independent Non-Executive Directors. The Board has
complied with 1/3 Independent Directors as its members.
The requirement of the Code for an effective Board balance is fulfilled with five of the fourteen Board members
assuming independent non-executive positions, together with the requirement for a Director who is a member
of the Malaysian Institute of Accountants to sit in the Audit Committee (AC). The number of independent nonexecutive Board members is sufficient to lend independent objectivity and added perspectives to the Boards
decision-making process.
ANNUAL REPORT 2012
STATEMENT ON CORPORATE GOVERNANCE (CONTD)
PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (CONTD)
II) Clear Roles and Responsibilities (Contd)
Balance is also ensured by way of the active and unrestricted participation of the Independent Non-executive
Directors (NEDs) in the deliberations and decision-making process of the Board. All Directors have full access to
the background information pertaining to all matters placed before them for decision-making. All Directors are
entitled to call for full disclosure by the Management to ensure that matters moved by the Management for
decision-making by the Board can be discussed and examined in a balanced manner that takes into account the
long term interests, not only of the shareholders, but also of the employees, customers and the communities at
large.
The responsibilities of the Board are inclusive of but not limited to: Oversees and provides valuable inputs on the conduct of the Companys business together with its strategies
from time to time
Delegates the risk management and internal control function to its AC which reports to the Board on the
same
The Board is able to seek independent professional advice at the Companys expense, upon consultation with
the Non-Executive Chairman of the Board
A brief profile of each Director is presented in the preceding pages of this Annual Report.
III) Board Charter and Code of Ethics
The Board of Directors conducted themselves in an ethical manner while executing their duties and functions,
and complied with its existing Companys Guidelines. Notwithstanding that, the formal Board Charter together
with the Code of Ethics are being prepared and will be ready by year 2013.
IV) Board Gender Diversity
The Code recommended the Board to establish a policy formalizing its approach to boardroom diversity. The
Board currently consists of 14 members of which 2 members are female directors. The Board through the
Nominating Committee will include this gender diversity policy as part of its future selection process should the
needs arise.
V) Appointments to the Board and Re-election
In accordance with the Companys Articles of Association, all Directors who are appointed by the Board are subject
to election by shareholders at the first opportunity after their appointment. The Articles also provide that the
Directors shall retire from office once at least in each three years but shall be eligible for re-election at each Annual
General Meeting.
A Director who is over seventy (70) years old is required to submit himself for re-appointment annually in accordance
with section 129(6) of the Companies Act, 1965.
VI) Whistle-Blowing Policy
To enhance corporate governance practices across the Group, a whistle-blowing policy was adopted which provides
directors, officers, employees and stakeholders of the Group with an avenue to report suspected improprieties
such as illegal or unlawful conduct, contravention of the Groups policies and procedures, acts endangering the
health or safety of any individual, public or employee, and any act of concealment of improprieties. The aim of
this policy is to encourage the reporting of such matters in good faith, with the confidence that the person filing
the report, to the extent possible, be protected from reprisal, victimization, harassment or subsequent discrimination.
The details of the whistle-blowing policy are set out in this Annual Report.
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ANNUAL REPORT 2012
PRINCIPLE 2 - STRENGTHEN COMPOSITION
The Group takes serious effort to ensure the Board comprises members with suitable academic and professional
qualifications, skills, expertise and wide exposure.
I)
Nominating Committee (NC)
The NC of the Company was established on 19 February 2013. The NC comprises seven non-executive directors,
majority of whom are Independent Non-Executive directors,
Chairman
Athi Isvar a/l Athi Nahappan (Independent Non-Executive Director)
Members
Y.B. Prof Dr. Ramasamy a/l Palanisamy (Non-Independent Non-Executive Director)
Y.B. Dato' Haji Mokhtar bin Mohd Jait (Non-Independent Non-Executive Director)
Y. Bhg. Dato Chew Kong Seng (Independent Non-Executive Director)
Y. Bhg. Dato' Syed Mohamad Bin Syed Murtaza (Independent Non-Executive Director)
Ahmed Bin Chee (Independent Non-Executive Director)
Agatha Foo Tet Sin (Independent Non-Executive Director)
The terms of reference of the NC further provide that it shall have specific responsibilities in relation to nomination
which shall include: Formulating the nomination, selection and succession policies for members of the Board
Making recommendations to the Board on new candidates for appointment and the re-appointment/re-election
of Directors to the Board
Reviewing the required mix of skills, experience and other qualities of the Board Committees established by
the Board annually
Reviewing and recommending to the Board the appointment of members of Board Committees established
by the Board annually
Establishing a set of performance criteria to evaluate the performance of each member of the Board, and
reviewing the performance of the members of the Board
Ensuring that orientation and education programmes are provided for new members of the Board, and
reviewing the Directors continuing education programmes
II) Continuity Development of Directors
The Board oversees the training needs of the Directors. Directors are regularly updated on the Groups business
and the regulatory environment in which they operate. During the financial year 2012, all directors are updated
on a timely basis of reading materials, on the latest developments on the directors roles and responsibilities.
The Directors are encouraged to attend various professional programmes, which are necessary to enable them
to keep abreast with the changes in guidelines issued by the relevant authorities as well as on the latest
developments in the market place, to complement their services to the Group.
During the financial year 2012, all the Directors had attended briefings presented by the external consultants,
such as Enterprise-Wide Risk Management (ERM): Corporate Risk Scorecard, New Water Resources Projects and
Integrated Revenue Management System (IRMS) Project.
ANNUAL REPORT 2012
PRINCIPLE 2 - STRENGTHEN COMPOSITION (CONTD)
II) Continuity Development of Directors (Contd)
In addition, some of the Directors had also attended the following Conferences, seminar and training programmes
as follows:

Introduction to Fixed Income, Interest Rates and Foreign Exchange
Public Listed Companies Board Audit Committee Forum
A Global Perspective of IFRS and Salient Issues in MFRS
Roundtable Discussion, Value, Creation and Compliance
Managing Corporate Risk and Achieving; Internal Control thru Statutory Compliance
Corporate Directors Training Programme Fundamental
Board Challenges
MAICSA Annual Conference 2012
Malaysian Code on Corporate Governance 2012 and Recognition and Management Risk
2012 National Conference on Internal Auditing-Rising Potential
Directors' Duties and Compliance Training
III) Directors Remuneration
The Directors remuneration is a matter for the full Board to decide based on market conditions, responsibilities
held and the Groups overall financial performance. Individual Director shall abstain from decisions in respect of
his own remuneration. No remuneration committee is established by the Board at the moment as none of the
Directors is holding any executive position. The Board assessed and deliberated the remuneration of directors
collectively in the Board of Directors Meeting.
a) The details of the remuneration of the Directors in the Group payable to the Directors of the Company during
the financial year 2012 were as follows:Directors
Non-Executive Chairman
Non-Executive Deputy Chairman
Non-Independent Non-Executive Directors
Independent Non-Executive Directors
Basic Salary Directors Fees Allowance Benefit-In-Kind
(RM)
(RM)
(RM)
(RM)
NIL
NIL
NIL
9,000
NIL
NIL
NIL
9,000
NIL
NIL
NIL
80,700
NIL
NIL
NIL
147,300
b) The respective remuneration of all the non-executive Board members in the Company falls below the range
of remuneration of RM50,000 for the financial year 2012.
PRINCIPLE 3 - REINFORCE INDEPENDENCE
I)
Annual Assessment of Independence
The Board through the NC assessed the Independent Directors on an annual basis, with a view to ensure the
independent directors bring independent and objective judgement to the Board and this mitigates arising from
conflict of interest or undue influence from interested parties. Where there is a likely conflict of interest position,
the Board would take appropriate action to rectify the situation. Should any director has an interest in any matter
under deliberation, he is required to disclose his interest and abstain from participating in the discussions and
voting on the matter.
The Board also received confirmation in writing from the Independent Directors of their independence. The Board
is satisfied with the assessment of the Independent Directors.
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ANNUAL REPORT 2012
PRINCIPLE 3 - REINFORCE INDEPENDENCE (CONTD)
II) Shareholders approval for the re-appointment of Independent Non-Executive Director for the tenure
in office more than a cumulative term of nine years
Dato Chew Kong Seng has served the Company as Independent Non-Executive Director for a cumulative term
of more than nine years. In line with Recommendation 3.2 of MCCG 2012 where the tenure of an independent
director should not exceed a cumulative term of nine years, the NC (save for Dato' Chew Kong Seng who has
abstained himself from deliberation and review on the subject matter) has assessed the independence of
Dato Chew and recommended him to continue to act as Independent Non-Executive Director of the Company.
The Board is also satisfied with the skills, contribution and independent judgment he brings to the Board. In view
thereof, the Board (save for Dato' Chew Kong Seng who has abstained himself from deliberation on the subject
matter) recommends and supports him to continue to act as an Independent Non-Executive Director of the
Company. The relevant motion on the subject matter will be presented to the shareholders for consideration at
the forthcoming Annual General Meeting.
III) Composition of the Board
It is recommended that the Board must comprise a majority of independent directors where the position of the
Chairman is not an independent director. The Board currently comprises all non-executive directors, of whom five
out of fourteen directors are Independent Non-Executive Directors. The Board therefore has a strong independence
element in its composition as there is a balance of membership in the Board thus ensuring that no individual
dominates the decision making process and the results thereof.
PRINCIPLE 4 - FOSTER COMMITMENT
I)
Time Commitment
The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and
responsibilities as Directors of PBA Holdings Berhad.
The Board would have at least four regular scheduled meetings annually, with additional meetings convened as
and when necessary.
A total of nine (9) Board meetings were held in year 2012. The following is the record of attendance by the Board
members during the financial year:
Names of Directors
Y.B. Dato Mansor bin Othman
Y.B. Prof. Dr. P. Ramasamy a/l Palanisamy
Y.B. Dato Haji Farizan bin Darus
Y.B. Tuan Abdul Malik bin Abul Kassim
Y.B. Dato Faiza Binti Zulkifli
Y.B. Dato Haji Mokhtar bin Mohd Jait
Tuan Haji Mohamad bin Sabu
Y.Bhg. Dato Syed Mohamad bin Syed Murtaza
Mr. Athi Isvar a/l Athi Nahappan
Encik Ahmed bin Chee
Attendance Record
9 out of 9
9 out of 9
8 out of 9
9 out of 9
9 out of 9
7 out of 9
8 out of 9
9 out of 9
8 out of 9
9 out of 9
5 out of 9
8 out of 9
7 out of 9
7 out of 9
ANNUAL REPORT 2012
PRINCIPLE 4 - FOSTER COMMITMENT
I)
Time Commitment (Contd)
In the intervals between Board meetings, for exceptional matters requiring urgent Board decisions, the Board
decisions are obtained via circular resolutions to which sufficient information required is attached to facilitate the
Board making informed decisions.
PRINCIPLE 5 - UPHOLD INTEGRITY IN FINANCIAL REPORTING
I)
Compliance with applicable financial reporting standards
The Board ensures that shareholders are provided with a balanced and meaningful evaluation of the Companys
financial performance its position and future prospects, through the issuance of Audited Financial Statements
and quarterly financial reports, and corporate announcements on significant developments affecting the Company
in accordance with the LR.
The Directors acknowledge responsibility in ensuring that the financial statements of the Company and Group
give a true and fair view of the state of affairs of the Company and Group at the end of the financial year and
of their results and cash flows for the financial year then ended. The Directors have also ensured that the applicable
approved accounting standards in Malaysia and the accounting provisions of the Companies Act, 1965 have been
complied with.
In preparing the financial statements, the Directors have:
applied consistently the appropriate accounting policies adopted;
made reasonable and prudent judgments and estimates;
maintained proper accounting records to enable the preparation of the financial statements with reasonable
accuracy.
In addition, the Directors are also responsible for taking reasonable steps to safeguard the assets of the Company
and Group as well as shareholders interests.
In presenting the annual financial statements and quarterly announcements of results to the shareholders and
to regulatory authorities, the Board aims to present a balanced and meaningful assessment of the Groups financial
position and prospects.
The AC assists the Board in ensuring the accuracy, adequacy and completeness of the financial information to
be disclosed. The financial reports would be reviewed by the AC prior to tabling them to the Board of Directors
for approval and subsequent release to the Bursa Securities.
II) Assessment of suitability and independence of external auditors
The AC normally meets with the Groups external auditors to review the scope and adequacy of the audit process,
the annual financial statements and their audit findings. The AC also met with the external auditors without
management present twice during the financial year 2012 in compliance with the best practice of the Code.
A formal and transparent relationship is established with the Groups external and internal auditors through the
AC. The key features outlining the relationship of the AC with both the external and internal auditors are included
in the AC Report furnished in the Annual Report.
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ANNUAL REPORT 2012
PRINCIPLE 5 - UPHOLD INTEGRITY IN FINANCIAL REPORTING (CONTD)
III) Internal Audit
The Group has an established Internal Audit Department, which assists the AC in the discharge of its duties and
responsibilities. Its role is to provide independent and objective reports on the organizations management, records,
accounting policies and internal controls to the Board.
The total costs incurred by the Group for maintaining the Internal Audit functions for financial year 2012 is
RM852,260.93. Such audits also ensure instituted internal controls are appropriate, effectively applied and achieve
acceptable risk exposures consistent with the Groups risk management policy.
The Internal Audit Department reports directly to the AC and its findings and recommendations are communicated
to the Board.
PRINCIPLE 6 - RECOGNIZE AND MANAGE RISKS
I)
Sound framework to manage risks
The Risk Management Committee (RMC) oversees the ERM framework of the Group, reviews the risk management
policies formulated by Management and makes relevant recommendations to the Board for approval.
The Company continues to maintain and review its internal control procedures to ensure, as far as possible, the
protection of its assets and its shareholders investments.
II) Internal Audit Function
The Board acknowledged its overall responsibility for maintaining a sound system of internal control to safeguard
shareholders investments and the Groups assets. An internal audit department has been established to assist
the AC to ensure a sound system of internal control and risk management is implemented enterprise-wide. The
details of the internal control system are set out in the Statement on Risk Management and Internal Control in
this Annual Report.
PRINCIPLE 7 - ENSURE TIMELY AND HIGH QUALITY DISCLOSURE
I)
Corporate Disclosure Policy
The Company fully complies with the LR in relation to disclosure of information to the Bursa Malaysia. Only the
Chief Executive Officer ("CEO") & Finance Manager are accorded the designated person authority in handling
and disclosure of material information.
The Company has put in place an internal control policy on confidentiality to ensure that confidential information
is handled properly by Directors, employees and relevant parties to avoid leakage and improper use of such
information. The Board is mindful that information which is expected to be material must be announced
immediately.
II) Investor Relations and Shareholders Communication
The Board is ever conscious of the importance and need to communicate with its shareholders, stakeholders and
potential investors to keep them well informed concerning the Groups operations and latest development.
Information disseminated to the investment community conforms to the Bursa Securities disclosure rules and
regulations.
The Company maintains a website at www.pbahb.com.my to facilitate access on pertinent information concerning
the Group and its operations by the shareholders, consumers and public.
ANNUAL REPORT 2012
PRINCIPLE 8 - STRENGHTEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS
I)
Encourage Shareholders Participation at General Meetings
The Companys AGM is a vital forum used to communicate and interact with its shareholders. At each AGM, the
Board presents the financial performance and future direction of the Group and encourages shareholders to
participate in the question and answer session. Each item of special business included in the notice of the AGM
will be accompanied by an explanatory statement to facilitate full understanding and evaluation of issues involved.
A full explanation is given of all the proposed resolutions to be passed at the AGM. A press conference is held
immediately after the Companys AGM to disseminate information pertaining to the Groups financial performance
and operations and to clarify on any issues raised by the media.
II) Effective Communication and Proactive Engagement
At the 12th Annual General Meeting (AGM), the Board were present in person to engage directs with, and
be accountable to the shareholders for their stewardship of the Company.
The proceedings of the 12th AGM included the Chairmans presentation of the Company operating and financial
performance for 2011 and a Q&A session during which the Chairman invited shareholders to raise questions
pertaining to the Companys accounts and other items for adoption at the meeting, before putting a resolution
to vote.
The Directors, CEO/Management and external auditors were in attendance to respond to the shareholders queries.
The Chairman also shared with the shareholders the Companys responses to questions submitted in advance
of the AGM by the Minority Shareholder Watchdog Group.
COMPLIANCE STATEMENT
Save for the exceptions set out above, the Group is in substantial compliance through the financial year with the
principles and recommendations of the Code.
This Statement is made in accordance with the resolution of the Board of Directors dated 21 May 2013.
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ANNUAL REPORT 2012
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
The Board of Directors (the Board) is pleased to provide the following Statement on Risk Management and Internal
Control, which is made pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad with
regards to the nature and scope of risk management and internal controls within the Group during the financial year.
Responsibility
The Board is responsible for the adequacy and effectiveness of the Groups system of risk management and internal
control whilst the Management is to implement the Groups policies on internal control. Notwithstanding that, in view
of the limitations that are inherent in any system of risk management and internal control, this system is designed
to manage rather than to eliminate risks that may hinder the achievement of the Groups corporate objectives. In
pursuing these objectives, risk management and internal controls can only provide reasonable but not absolute
assurance against material misstatement of management and financial information and records or against financial
losses or fraud.
Nature and Scope of Risk Management and Internal Control
The approach to risk management and internal control has always been holistic and process-embedded covering all
aspects of the business and functional risk controls. These integrated controls are designed to mitigate both the
internal and external risks in order to optimize the Groups ability to achieve its corporate objectives. The organizations
risk management process has been formalized via its enterprise-wide Risk Management Framework, which in the
Boards opinion provides an adequate and satisfactory mechanism for an on-going process of identification, evaluation,
managing and monitoring of significant risks. In that regard, the Board acknowledges that the nature and scope of
risk management and internal control of the Group is satisfactory and adequate in addressing its current principal
risks. The Board reviews the risk management process on a regular basis to ensure proper management of risks and
appropriate measures are taken to address any identified weaknesses.
Risk Management Framework
The Board through the Audit Committee is responsible for the governance of risk. This ensures that a sound risk
management and internal control system is maintained by Management towards upholding the shareholders interest
and company assets. The Board also determines the extent of risk the Board is willing to take towards the achievement
of strategic objectives and through the promulgation of its Risk Management Policy; a risk management framework
was established. The Risk Management Committee (RMC) was formed since April 2002 by the Board, consists of
Heads of Department (HOD) which reviews the management of the risk and effectiveness of controls towards
effective risk mitigation. The RMC is also responsible for ensuring that the risk management framework is effectively
implemented within the company through the identification and management of risks.
In 2012 an improved Enterprise-wide risk management (ERM) framework is incorporated within the organization
to ensure a continuous and iterative process towards the enhancement of risk management across the organisation.
This framework is focused on establishing a mechanism where risks are mitigated through internal controls and
reduction of exposures whilst achieving the organisations vision and mission. This also provides a consistent approach
for risk identification, risk measurement, evaluation of existing controls, development risk treatment and action plan,
and also continuous monitoring to ensure compliance. The monitoring of risks, controls and management actions
are updated and monitored using the ERM system.
The RMC updates the Audit Committee through the RMC Chairman from time to time with a summary report of the
significant risks at corporate level and on the status of control measure specified to address and mitigate the risks.
The Board on its part meets to review and deliberate on the risk and control issues reported to them by the Audit
Committee.
ANNUAL REPORT 2012
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTD)
Key Elements of Internal Control
The other key elements of the Groups internal control system are described below:

The Audit Committee and the Board meet every quarter to discuss matters raised by Management on business
and operational matters including potential risks and control issues.

Clearly defined delegation of responsibilities to the Board Committee and Management includes authority limits
to minimize risks of unauthorized transactions. The Board has delegated the responsibilities to the relevant
committees to implement and monitor the Boards policies on controls, eg capital expenditures have to be properly
tendered and approved by the Tenders Board before any contracts are awarded.

The Group has established an organization structure with clearly defined lines of accountability and appropriate
degrees of empowerment, which enables adequate monitoring of the activities and ensures effective flow of
information across the organization. Delegation of authority and appropriate authorization limits imposed at
various levels of Management including those requiring the Boards approval are documented to ensure accountability
and responsibility.

Standard operating procedures (SOP) and policies are set in place for maintaining a sound system of internal
control and they are reviewed and revised, whenever the need arises, to meet the evolving business, operational
and statutory requirements.

Perbadanan Bekalan Air Pulau Pinang Sdn. Bhd. (PBAPP), a wholly-owned subsidiary, has been accredited with
the ISO 9001:2008, ISO 14001:2004 (for 4 sites), OHSAS 18001:2007 and MS ISO/IEC 17025 Accreditation for
Laboratories certifications which confirm the good standing of the organizations quality, environment and safety
management systems, respectively.

A detailed budgeting process is established, requiring all departments in the Group to prepare budgets annually
including capital expenditure proposals, which are discussed and approved by the Board of Directors. A yearly
review of the annual budget is undertaken to deliberate and, where appropriate, to address significant variances
from the said budget.

Ongoing training is provided to the organizations staff to improve their skills and work competencies.
The Internal Audit Function
The Board recognizes that the internal audit function is an important integral component of the governance process.
The Internal Audit Department (Internal Audit) performs internal audit in diverse areas comprising the management,
financial and operational activities within the Group.
The principal responsibility of the Internal Audit is to assist the Audit Committee in monitoring compliance with policies
and procedures and the effectiveness and adequacy of the risk management and control systems in operation. The
Internal Audit undertakes a regular and systematic review of the internal controls of the various operational and
administrative activities to provide the Audit Committee and the Board with a reasonable and independent assurance
that the system of internal controls being implemented is effective in addressing the risks and concerns identified.
The Group, in issuing this statement, has taken into consideration the scope of internal controls of PBAPP whilst
excluding that of Pinang Water Limited, a jointly controlled entity, which is deemed to be immaterial to the Group.
The Board of Directors has received assurance from the Chief Executive Officer and Finance Manager on the adequacy
and effectiveness of the Groups Risk Management and Internal Control system. There has been no material loss
incurred during the year as a result of weaknesses in internal control.
This statement is made in accordance with the resolution of the Board of Directors dated 21 May 2013.
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ANNUAL REPORT 2012
AUDIT COMMITTEE REPORT
1.
Composition
Chairman
: Y. Bhg. Dato Chew Kong Seng
(Independent & Non-Executive Director)
Members
: Y.B. Dato Haji Mokhtar Bin Mohd Jait
(Non-Independent & Non-Executive Director)
Y. Bhg. Dato Syed Mohamad Bin Syed Murtaza
Ms Agatha Foo Tet Sin
The chairman of the Audit Committee is a member of the Malaysian Institute of Accountant (MIA) in accordance
with the Listing Requirements.
2.
Summary of the Terms of Reference of Audit Committee
2.1 Objective
The principal objectives of the Audit Committee are to assist the Board of Directors (the Board) in
discharging its statutory duties and responsibilities relating to accounting and financial reporting practices
of the Company and its subsidiaries. In addition, the Audit Committee shall:
(a) Evaluate the quality of the audits performed by the internal and external auditors;
(b) Provide assurance that the financial information presented by management is relevant, reliable and
timely;
(c) Oversee compliance with laws and regulations and observance of a proper code of conduct; and
(d) Determine the quality, adequacy and effectiveness of the Groups control environment and quality of
the audits.
2.2 Composition
The Audit Committee shall be appointed by the Board from amongst the directors of the Company and
shall consist of not less than three (3) members, all of whom shall be non-executive directors. The majority
of the Committee members shall be independent directors. No alternate director is to be appointed as a
member of the Audit Committee.
At least one member of the Audit Committee:
(i) Must be a member of the Malaysian Institute of Accountants; or
(ii) If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years
working experience and
(a) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants
Act, 1967; or
(b) he must be a member of one of the associations of accountants specified in Part II of the 1st
Schedule of the Accountants Act, 1967; or
ANNUAL REPORT 2012
AUDIT COMMITTEE REPORT (CONTD)
2.
Summary of the Terms of Reference of Audit Committee (Contd)
2.2 Composition (Contd)
(iii) Fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (Bursa
Securities).
The definition of independent directors shall have the meaning given in Chapter 1.01 of the Main Market
Listing Requirements of Bursa Securities (Listing Requirements).
The Chairman of the Audit Committee shall be appointed among the members of the Audit Committee
who shall be an independent director.
2.3 Meetings
Meeting shall be held not less than four (4) times a year.
The quorum for the Audit Committee meeting shall be the majority of members present whom must be
independent directors.
Upon the request of the external auditors, the Chairman of the Audit Committee shall convene a meeting
of the Audit Committee to consider any matter the external auditors believe should be brought to the
attention of the directors or shareholders.
Notice of Audit Committee meetings shall be given to all the Audit Committee members unless the Audit
Committee waives such requirement.
The Finance Manager, the head of internal audit and representatives of the external auditors shall normally
attend meetings. Other Board members and employees may attend meetings upon the invitation of the
Audit Committee. However, the Audit Committee shall meet with the external auditors, the internal auditors
or both, without other Board members and management present at least twice a year and whenever
deemed necessary.
Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the
members present, and in the case of equality of votes, the Chairman of the Audit Committee shall have a
second or casting vote.
The Company Secretary shall be the secretary of the Audit Committee.
2.4 Authority
The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the
expense of the Company,
(a) Have explicit authority to investigate any matter within its terms of reference, the resources required
and full access to information. All employees shall be directed to co-operate as requested by members
of the Audit Committee.
(b) Have full and unlimited/unrestricted access to all information and documents/resources, which are
required to perform its duties as well as to the internal and external auditors and senior management
of the Company and Group.
(c) Obtain independent professional or other advice and to invite outsiders with relevant experience to
attend, if necessary.
(d) Have direct communication channels with the external auditors and person(s) carrying out the internal
audit function or activity.
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ANNUAL REPORT 2012
2.
2.4 Authority (Contd)
(e) Where the Audit Committee is of the view that the matter reported by it to the Board has not been
satisfactorily resolved resulting in a breach of the Listing Requirements, the Audit Committee shall
promptly report such matter to Bursa Securities.
2.5 Duties and Responsibilities
The duties and responsibilities of the Audit Committee are as follows:
1. To nominate a person or persons as auditor.
2. To discuss with the external auditors before the audit commences the nature and scope of the audit,
ensure co-ordination where more than one audit firm is involved.
3. To review with the external auditors their evaluation of the system of internal controls and their audit
report;
4. To review the quarterly and annual financial statements before submission to the Board, focusing
particularly on:
a.
b.
c.
d.
e.
The consistency of and any changes to the accounting policies and practices
Major judgmental areas
Significant adjustments resulting from the audit
The going concern assumption
Compliance with accounting standards and legal requirements
5. To discuss problems and reservations arising from the interim and final audits, and any matter the
auditor may wish to discuss (in the absence of management, where necessary);
6. To review the external auditors management letter and managements response;
7. To do the following, in relation to the internal audit function:
a. Review the adequacy of the scope, functions, competency and resources of the internal audit
function, and that it has the necessary authority to carry out its work;
b. Review the internal audit programme and results of the internal audit process and, where necessary,
ensure that appropriate actions are taken on the recommendations of the internal audit function;
c. Review any appraisal or assessment of the performance of members of the internal audit function;
d. Approve any appointment or termination of senior staff members of the internal audit function;
and
e. Take cognizance of resignations of internal audit staff members and provide the resigning staff
member an opportunity to submit his reasons for resigning.
Pursuant to the Listing Requirements, the Company must establish an internal audit function which is
independent of the activities it audits and to ensure its internal audit function reports directly to the
Audit Committee.
8. To review the cost effectiveness, independence and objectivity of the external auditors and recommend
for the appointment/re-appointment of the external auditors, the audit fee and any questions of
resignation or dismissal of the external auditors to the Board, to be put to shareholders for approval
at the general meeting in relation to the appointment, re-appointment and dismissal of the Companys
external auditors.
ANNUAL REPORT 2012
2.
2.5 Duties and Responsibilities (Contd)
9. To establish policies governing the circumstances under which the contract in relation to the provision
of non-audit services can be entered into by the Group with its external auditors and procedures that
need to be adhered.
10. To review the adequacy and effectiveness of risk management and internal control systems instituted
within the Group.
11. To verify the allocation of the employees share option scheme (ESOS) in compliance with the criteria
as stipulated in the by-law of ESOS of the Company, if any.
12. To review any related party transaction and conflict of interest situation that may arise within the
Company or group including any transaction, procedure or course of conduct that raises questions of
management integrity.
13. To report its findings on the financial and management performance and other material matters to the
Board;
14. To consider the major findings of internal investigations and managements response;
15. To determine the remit of the internal audit function; and
16. To consider other functions as may be agreed to by the Audit Committee and the Board.
2.6 Reporting Procedures
Minutes of each meeting shall be distributed to each member of the Audit Committee. The Audit Committee
Chairman shall report on each meeting to the Board.
The minutes of the Audit Committee meeting shall be signed by the Chairman of the meeting at which
the proceedings were held or by the Chairman of the next succeeding meeting.
3.
Attendance at Audit Committee Meetings
During the financial year 2012, the Audit Committee met six (6) times and the meeting attendance record is as
follows:Name of Committee Members
Y.Bhg. Dato Syed Mohamad Bin Syed Murtaza
Ms Agatha Foo Tet Sin
Attendance Record
6 out of 6
4 out of 6
2 out of 6
5 out of 6
4 out of 6
The Audit Committee has complied with the best practices of the Code and held two dialogue sessions with the
external auditors on 16 April 2012 and 13 August 2012 without the presence of the management.
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ANNUAL REPORT 2012
4.
Summary of Activities
The Audit Committee had carried out the following activities during the financial year 2012:a) Reviewed and approved the internal audit plan after being satisfied with the contents suitability, adequacy
and scope of coverage;
b ) Reviewed and adopted the audit plan of the external auditor so as to meet the requirements of both parties
for the financial year;
c) Reviewed the internal audit reports which were tabled during the year, the audit recommendations and
Managements response to these recommendations;
d ) Monitored the corrective actions taken on the outstanding audit issues to ensure that all the key risks and
control lapses have been addressed;
e) Reviewed the progress report on the risk management activities from the Risk Manager;
f) Reviewed the quarterly and annual financial statements with the Management prior to the submission of
these statements to the Board for approval;
g ) Made recommendation to the Board on the re-appointment of the external auditor;
h ) Highlighted to the Board on significant issues and concerns discussed during the Audit Committee meetings
and, where appropriate, recommended for the Boards approval on proposed corrective solutions or adjustments;
5.
i)
Reviewed and advised on the contents of the Audit Committee Report and the Internal Control Statement
in the Annual Report; and
j)
Reviewed related party transactions of the Company and of the Group.
Internal Audit Function
The internal audit function is carried out by the Groups own Internal Audit Department to assist the Audit
Committee in the governance of the organization by performing the following fundamental activities: Providing an independent review and reasonable assurance on the soundness and adequacy of the organizations
risk management and control systems and making recommendations for improvements, where necessary;
Ascertaining compliance with established policies, directives and procedures; and
Ascertaining accountability and safeguarding of the Groups assets.
ANNUAL REPORT 2012
ADDITIONAL COMPLIANCE INFORMATION
Utilisation of Proceeds
There was no corporate exercise with proceeds from the shareholders during the financial year.
Share Buy-backs
During the financial year, the Company repurchased 2,000 of its issued ordinary shares from the open market as
disclosed in page 132 of this Annual Report. The total consideration paid for the repurchase was RM1,888.00 comprising
of consideration paid amounting to RM1,805.00 and transaction costs of RM83.00. The repurchase transactions were
financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with
Section 67A of the Companies Act, 1965. None of the treasury shares were resold or cancelled during the financial
year.
Options, Warrants or Convertible Securities
There were no issue or exercised of options, or convertible securities during the financial year.
Depository Receipt Programme
The Company did not sponsor any depository receipt programme during the financial year.
Sanctions and / or Penalties
There were no public impositions of sanctions or penalties imposed on the Company and its subsidiaries, directors
or management by the relevant regulatory bodies during the financial year.
Non-Audit Fees
The amount of non-audit fees paid to the external auditors by the Group and by the Company for the financial year
amounted to RM46,000 and RM14,000 respectively for professional fees on tax advisory/services and other services.
Variation in Results
There was no variation between the audited results for the financial year ended 31 December 2012 and the unaudited
for the year ended 31 December 2012 of the Group as previously announced.
Profit Guarantee
The Company did not give any profit guarantee to any parties during the financial year.
Material Contracts
There were no material contracts entered into by the Company and its subsidiaries involving Directors' and major
shareholders' interests which were still subsisting as at the end of the financial year 2012.
93
FINANCIAL STATEMENTS
95 - 98
99
100
101
102 - 103
104
105
106
107
108 - 157
158
159 - 160
Directors Report
Consolidated Statement Of Financial Position
Consolidated Statement Of Comprehensive Income
Consolidated Statement Of Changes In Equity
Consolidated Statement Of Cash Flows
Statement Of Financial Position
Statement Of Comprehensive Income
Statement Of Changes In Equity
Statement Of Cash Flows
Notes To The Financial Statements
Statement By Directors / Statutory Declaration
Independent Auditors Report
ANNUAL REPORT 2012
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 financial year ended 31 December 2012.
Principal activities
The Company is principally engaged in investment holding activities whilst the principal activities of the subsidiaries
are stated in Note 4 to the financial statements.
There has been no significant change in the nature of these activities during the financial year.
Results
Profit for the year attributable to owners of the Company
Group
RM000
Company
RM000
28,975
15,076
Reserves and provisions
There were no material transfers to or from reserves and provisions during the financial year under review except as
disclosed in the financial statements.
Dividends
Since the end of the previous financial year, the Company paid :
i) A final tax exempt dividend of 1.75 sen per share, totalling RM5,797,000 in respect of the financial year ended
31 December 2011 on 13 July 2012; and
ii) A first interim single tier dividend of 1.75 sen per share, totalling RM5,797,000 in respect of the financial year
ended 31 December 2012 on 4 January 2013.
A final single tier dividend of 2.00 sen per share, totalling RM6,625,000 for the financial year ended 31 December
2012 was recommended by the Directors subject to the approval of shareholders at the forthcoming Annual General
Meeting. The financial statements for the current financial year do not reflect this proposed final dividend. Such
dividend, if approved by the shareholders, will be accounted for in shareholders equity as an appropriation of retained
earnings in the financial year ending 31 December 2013.
95
96
ANNUAL REPORT 2012
DIRECTORS REPORT FOR THE YEAR ENDED 31 DECEMBER 2012 (CONTD)
Directors of the Company
Directors who served since the date of the last report are :
Y.A.B. Tuan Lim Guan Eng - Chairman
Y.B. Dato Mansor Bin Othman - Deputy Chairman
Y.B. Prof. Dr. P. Ramasamy A/L Palanisamy
Y.B. Dato Abdul Malik Bin Abul Kassim
Y.B. Dato Farizan Bin Darus
Y.B. Dato Mokhtar Bin Mohd Jait
Y.Bhg. Dato Syed Mohamad Bin Syed Murtaza
Tuan Ahmed Bin Chee
Puan Agatha Foo Tet Sin
Tuan Athi Isvar A/L Athi Nahappan
Directors interests in shares
The interests and deemed interests in the ordinary shares of the Company and of its related corporations (other than
wholly-owned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses
or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors
Shareholdings are as follows :
Number of ordinary shares of RM0.50 each
Balance at
Balance at
1.1.2012
Bought
(Sold)
31.12.2012
Deemed interest
Y. Bhg. Dato Syed Mohamad Bin Syed Murtaza
13,567,900
-
-
13,567,900
None of the other Directors who held office at 31 December 2012 had any interest in the ordinary shares of the
Company and of its related companies during the financial year.
Directors benefits
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive
any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable
by the Directors as shown in the financial statements of the Company and its 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.
ANNUAL REPORT 2012
Issue of shares and debentures
There were no changes in the authorised, issued and paid-up capital of the Company and no debentures were issued
during the financial year.
Option granted over unissued shares
No options were granted to any person to take up unissued shares of the Company during the financial year.
Other statutory information
Before the statements of financial position and statements of comprehensive income of the Group and of the Company
were made out, the Directors took reasonable steps to ascertain that :
i) all known bad debts have been written off and adequate provision made for doubtful debts, and
ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down
to an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances :
i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in
the Group and in the Company inadequate to any substantial extent, or
ii) that would render the value attributed to the current assets in the financial statements of the Group and of the
Company misleading, or
iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group
and of the Company misleading or inappropriate, or
iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the
financial statements of the Group and of the Company misleading.
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.
97
98
ANNUAL REPORT 2012
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.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors :
Dato Farizan Bin Darus
Dato Mokhtar Bin Mohd Jait
Penang,
Date : 11 April 2013
ANNUAL REPORT 2012
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2012
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
767,753
1,296
20,528
740,249
1,418
25,157
721,109
803
24,606
789,577
766,824
746,518
11,696
36,854
6,043
75,269
12,440
36,474
4,116
78,081
13,571
40,109
5,017
66,425
Total current assets
129,862
131,111
125,122
Total assets
919,439
897,935
871,640
165,635
533,378
165,635
515,344
165,635
482,648
699,013
680,979
648,283
6,615
6,385
67,933
220
14,560
69,528
6,500
22,365
28,835
65,236
11,000
-
95,713
98,393
105,071
1,595
123,118
1,595
116,968
2,094
6,552
109,640
Total current liabilities
124,713
118,563
118,286
Total liabilities
220,426
216,956
223,357
Total equity and liabilities
919,439
897,935
871,640
Note
Assets
Property, plant and equipment
Investment in a jointly controlled entity
Other investments
3
5
6
Total non-current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
7
8
9
Equity
Share capital
Reserves
10
11
Total equity
Employee benefits
Loans and borrowings
Deferred income
Deferred liabilities
Deferred tax liabilities
Other non-current payables
12
13
14
15
16
17
Total non-current liabilities
Employee benefits
Deferred liabilities
Trade and other payables
12
13
15
17
The notes on pages 108 to 157 are an integral part of these financial statements.
99
100
ANNUAL REPORT 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note
2012
RM000
2011
RM000
18
244,560
236,328
Cost of sales
(177,204)
(166,212)
Gross profit
67,356
70,116
Other operating income
10,484
18,526
Administrative expenses
(56,373)
(48,781)
21,467
39,861
2,099
2,314
106
229
23,672
42,404
5,303
3,293
28,975
45,697
(228)
386
883
(2,619)
655
(2,233)
Total comprehensive income for the year
29,630
43,464
28,975
45,697
Total comprehensive income for the year attributable
to owners of the Company
29,630
43,464
8.75
13.79
Continuing operations
Revenue
Operating profit
19
Interest income
Share of profit of jointly controlled entity, net of tax
Profit before tax
Income tax expense
20
Profit for the year
Other comprehensive income/(expense), net of tax
Foreign currency translation differences for foreign operation
Fair value of available-for-sale financial assets
30.2
Total other comprehensive income/(expense) for the year
Basic earnings per ordinary share (sen)
21
ANNUAL REPORT 2012
101
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-Distributable
Note
At 1 January 2011
Share
capital
RM000
165,635
Treasury
shares
RM000
(4)
Share
premium
RM000
Fair
value
reserve
RM000
161,944
3,471
Foreign
currency
translation
reserve
RM000
(252)
Distributable
Retained
earnings
RM000
Total
equity
RM000
317,489
648,283
Fair value of
available-for-sale
financial assets
-
-
-
Foreign currency
translation differences
for foreign operation
-
-
-
Total other
comprehensive
income/(expense)
for the year
-
-
-
Profit for the year
-
-
-
Total comprehensive
income for the year
-
-
-
-
-
-
-
-
-
(2)
-
-
-
-
165,635
(6)
161,944
852
134
352,420
680,979
-
-
883
Distribution to owners
of the Company
- Dividends
22
Purchase of
treasury shares
At 31 December 2011/
At 1 January 2012
(2,619)
-
(2,619)
(2,619)
-
-
(2,619)
386
-
386
-
-
45,697
45,697
386
45,697
43,464
(10,766)
(10,766)
386
(2,233)
(2)
Fair value of
available-for-sale
financial assets
-
-
-
883
Foreign currency
translation differences
for foreign operation
-
-
-
-
(228)
-
(228)
Total other
comprehensive
income/(expense)
for the year
-
-
-
883
(228)
-
655
Profit for the year
-
-
-
-
28,975
28,975
Total comprehensive
income for the year
-
-
-
883
28,975
29,630
-
-
-
-
-
(11,594)
(11,594)
-
(2)
-
-
-
165,635
(8)
161,944
1,735
of the Company
- Dividends
Purchase of
treasury shares
At 31 December 2012
22
(228)
(94)
369,801
(2)
699,013
The share capital includes 1 Special Rights Redeemable Preference Share (SRRPS) of RM0.50 each. Refer to
Note 10 to the financial statements for details of the terms and rights attached to the SRRPS.
102
ANNUAL REPORT 2012
CONSOLIDATED STATEMENT OF CASH FLOWS
Note
Cash flows from operating activities
Profit before tax from continuing operations
Adjustments for :
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Impairment of other investments
Amortisation of deferred liabilities
Gain on disposal of other investments
Gain on disposal of property, plant and equipment
Property, plant and equipment written off
Share of profit of jointly controlled entity
Dividend income
Interest income
3
19
19
15
19
19
19
19
Operating profit before working capital changes
Inventories
Cash generated from operations
Income tax paid
Net cash from operating activities
2012
RM000
2011
RM000
23,672
42,404
48,189
2,266
2,388
(1,595)
(1,084)
(25)
128
(106)
(722)
(2,350)
49,660
(665)
(2,498)
(725)
23
(229)
(619)
(2,609)
70,761
84,742
744
(380)
(6,669)
1,131
3,635
(880)
64,456
88,628
(2,865)
(242)
61,591
88,386
683
2,350
27,382
44
(23,174)
(78,889)
555
2,609
32,439
2,023
(33,111)
(70,477)
(71,604)
(65,962)
Cash flows from investing activities
Dividends received
Interest received
Proceeds from disposal of other investments
Proceeds from disposal of property, plant and equipment
Purchase of other investments
Purchase of property, plant and equipment
Net cash used in investing activities
A
ANNUAL REPORT 2012
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2012 (CONTD)
2012
RM000
2011
RM000
(5,797)
13,000
(2)
(10,766)
(2)
7,201
(10,768)
Net (decrease)/increase in cash and cash equivalents
(2,812)
11,656
Cash and cash equivalents at 1 January
78,081
66,425
75,269
78,081
Note
Cash flows from financing activities
Dividends paid
Government loans received
Purchase of treasury shares
Net cash from/(used in) financing activities
Cash and cash equivalents at 31 December
B
NOTE
A. Disposal of property, plant and equipment
During the year, the Group disposed of property, plant and equipment for RM827,000 (2011 : RM2,379,000) of
which RM44,000 (2011 : RM2,023,000) was received in cash and the balance of RM783,000 (2011 : RM356,000)
was either set-off against the advance by BKSA or written off (See Note 3).
B. Cash and cash equivalents
Cash and cash equivalents included in the statements of cash flows comprise cash and cash equivalents as shown
in the Note 9 to the financial statements.
103
104
ANNUAL REPORT 2012
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2012
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
26
266,893
31
266,893
37
266,893
266,919
266,924
266,930
115,120
7,184
103,598
446
9,071
99,277
428
9,091
Total current assets
122,304
113,115
108,796
Total assets
389,223
380,039
375,726
165,635
217,549
165,635
214,069
165,635
209,634
383,184
379,704
375,269
75
128
240
-
75
128
240
5,964
207
217
Total current liabilities
5,964
207
217
Total liabilities
6,039
335
457
389,223
380,039
375,726
Note
Assets
Investments in subsidiaries
3
4
Total non-current assets
Current tax assets
8
9
Equity
Share capital
Reserves
10
11
Total equity
Employee benefits
12
17
Total non-current liabilities
Total equity and liabilities
17
ANNUAL REPORT 2012
105
STATEMENT OF COMPREHENSIVE INCOME
Note
2012
RM000
2011
RM000
18
16,762
16,806
Other operating income
16
38
Administrative expenses
(1,621)
(1,567)
Continuing operations
Revenue
Profit before tax
19
15,157
15,277
Income tax expense
20
(81)
(74)
15,076
15,203
Profit for the year representing total comprehensive
income for the year attributable to owners
of the Company
106
ANNUAL REPORT 2012
STATEMENT OF CHANGES IN EQUITY
Non-Distributable
Share
capital
RM000
Treasury
shares
RM000
Share
premium
RM000
Share
option
reserve
RM000
165,635
(4)
161,944
-
-
-
Distributable
Retained
earnings
RM000
Total
equity
RM000
868
46,826
375,269
-
-
15,203
15,203
-
-
-
(10,766)
(10,766)
-
(2)
-
-
-
(2)
165,635
(6)
161,944
868
51,263
379,704
Profit for the year representing
total comprehensive income
for the year
-
-
-
-
15,076
15,076
Reclassification
-
-
-
(868)
868
-
-
-
-
-
(11,594)
(11,594)
-
(2)
-
-
-
(2)
165,635
(8)
161,944
-
55,613
383,184
Note
At 1 January 2011
Profit for the year representing
total comprehensive income
for the year
of the Company
- Dividends
22
1 January 2012
of the Company
- Dividends
At 31 December 2012
22
The share capital includes 1 Special Rights Redeemable Preference Share (SRRPS) of RM0.50 each. Refer to
Note 10 to the financial statements for details of the terms and rights attached to the SRRPS.
ANNUAL REPORT 2012
107
STATEMENT OF CASH FLOWS
2012
RM000
2011
RM000
15,157
15,277
11
3
(16,511)
(251)
11
(16,511)
(295)
(1,591)
(1,518)
4,989
(93)
12,190
(122)
3,305
10,550
365
(92)
3,670
10,458
Interest received
Purchase of equipment
251
(9)
295
(5)
Net cash from investing activities
242
290
Dividends paid
(5,797)
(2)
(10,766)
(2)
Net cash used in financing activities
(5,799)
(10,768)
Net decrease in cash and cash equivalents
(1,887)
(20)
9,071
9,091
7,184
9,071
Note
Cash flows from operating activities
Profit before tax from continuing operations
Adjustments for :
Depreciation of equipment
Equipment written off
Dividend income
Interest income
3
19
Operating loss before working capital changes
Cash generated from operations
Income tax refunded/(paid)
Net cash from operating activities
Cash flows from investing activities
Cash flows from financing activities
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
A
NOTE
A. Cash and cash equivalents
Cash and cash equivalents included in the statement of cash flows comprise cash and cash equivalents as shown
in Note 9 to the financial statements.
108
ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
PBA Holdings Bhd. is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the
Main Market of Bursa Malaysia Securities Berhad. The address of the registered office and principal place of business
is as follows :
Level 32, Komtar
10000 Penang
The consolidated financial statements of the Company as at and for the financial year ended 31 December 2012
comprise the Company and its subsidiaries (together referred to as the Group and individually referred to as Group
entities) and the Groups interest in a jointly controlled entity. The financial statements of the Company as at and
for the financial year ended 31 December 2012 do not include other entities.
The controlling shareholder of the Company is the State Secretary, Penang.
The Company is principally engaged in investment holding activities whilst the principal activities of the subsidiaries
are stated in Note 4 to the financial statements.
These financial statements were authorised for issue by the Board of Directors on 11 April 2013.
1.
Basis of preparation
(a) Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (MFRS), International Financial Reporting Standards and the Companies Act,
1965 in Malaysia. These are the Group 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.
In the previous years, the financial statements of the Group and the Company were prepared in accordance
with Financial Reporting Standards (FRSs) in Malaysia. The transition to MFRSs has no financial impact to
the financial statements of the Group and the Company.
The following are accounting standards, amendments and interpretations that have been issued by the
Malaysian Accounting Standards Board (MASB) but have not been adopted by the Group and the
Company :
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July
2012
Amendments to MFRS 101, Presentation of Financial Statements - Presentation of Items of Other
Comprehensive Income
MFRSs, Interpretations and amendments 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 (2011)
MFRS 127, Separate Financial Statements (2011)
MFRS 128, Investments in Associates and Joint Ventures (2011)
IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine*
Amendments to MFRS 7, Financial Instruments : Disclosures - Offsetting Financial Assets and Financial
Liabilities
ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS (CONTD)
1.
Basis of preparation (Contd)
(a) Statement of compliance (Contd)
2013 (Contd)
Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards - Government
Loans
Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual
Improvements 2009-2011 Cycle)
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)
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
2014
Amendments to MFRS 10, Consolidated Financial Statements : Investment Entities
Amendments to MFRS 12, Disclosure of Interests in Other Entities : Investment Entities
Amendments to MFRS 127, Separate Financial Statements (2011) : Investment Entities
Amendments to MFRS 132, Financial Instruments : Presentation - Offsetting Financial Assets and Financial
Liabilities
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 Group and the Company plan to apply the abovementioned standards, amendments and
interpretations :
from the annual period beginning on 1 January 2013 for those standards, amendments or interpretations
that are effective for annual periods beginning on or after 1 July 2012 and 1 January 2013, except for
those indicated with * which are not applicable to the Group and the Company.
that are effective for annual periods beginning on or after 1 January 2014.
that are effective for annual periods beginning on or after 1 January 2015.
Material impacts of initial application of a standard, an amendment or an interpretation, which will be applied
retrospectively, are discussed below :
Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle)
The adoption of the amendments to MFRS 116 may result in a change in classification of spare parts that
meet the definition of property, plant and equipment. Those spare parts shall be reclassified from inventories
to property, plant and equipment. The Group is currently assessing the financial impact that may arise from
the adoption of the above amendments to MFRS 116.
109
110
ANNUAL REPORT 2012
1.
Basis of preparation (Contd)
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis other than as disclosed in the financial
statements.
(c) Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (RM), which is the Companys functional currency.
All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise
stated.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with Malaysian Financial Reporting Standards (MFRSs)
requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised and in any future periods affected.
There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have significant effect on the amounts recognised in the financial statements.
2.
Significant accounting policies
The accounting policies set out below have been applied consistently to the periods presented in these financial
statements and in preparing the opening MFRS statements of financial position of the Group and the Company
at 1 January 2011 (the transition date to MFRS framework), unless otherwise stated.
(a) Basis of consolidation
(i)
Subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases. Control exists when the Company has the ability
to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits
from its activities. In assessing control, potential voting rights that presently are exercisable are taken
into account.
Investments in subsidiaries are 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
investments includes transaction costs.
(ii)
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.
ANNUAL REPORT 2012
2.
Significant accounting policies (Contd)
(a) Basis of consolidation (Contd)
(ii)
Business combinations (Contd)
Acquisitions on or after 1 January 2011
For acquisitions on or after 1 January 2011, the Group measures the cost of goodwill at the acquisition
date as :
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the
acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities
assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in 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.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.
Acquisitions before 1 January 2011
As part of its transition to MFRS, the Group elected not to restate those business combinations that
occurred before the date of transition to MFRSs, i.e. 1 January 2011. Goodwill arising from acquisitions
before 1 January 2011 has been carried forward from the previous FRS framework as at the date of
transition.
(iii) Acquisitions of non-controlling interests
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.
(iv) Loss of control
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary,
any non-controlling interests and the other components of equity related to the subsidiary. Any surplus
or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest
in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.
Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial
asset depending on the level of influence retained.
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(a) Basis of consolidation (Contd)
(v)
Jointly-controlled entities
Jointly-controlled entities are accounted for in the consolidated financial statements using the equity
method less any impairment losses unless it is classified as held for sale or distribution (or included in
a disposal group that is classified as held for sale or distribution). The consolidated financial statements
include the Groups share of the profit or loss and other comprehensive income of the equity accounted
joint ventures, after adjustments, if any, to align the accounting policies with those of the Group, from
the date that joint control commences until the date that joint control ceases.
When the Groups share of losses exceeds its interest in an equity accounted joint venture, the carrying
amount of that interest (including any long-term investments) is reduced to zero 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 joint venture.
Investment in jointly controlled entities are stated in the Companys statement of financial position at
cost less impairment losses, unless the investment is classified as held for sale or distribution.
(vi) Non-controlling interests
Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not
attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated
statement of financial position and statement of changes in equity within equity, separately from equity
attributable to the owners of the Company. Non-controlling interests in the results of the Group is
presented in the consolidated statement of comprehensive income as an allocation of the profit or loss
and the comprehensive income for the year between non-controlling interests and owners 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.
(vii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.
(b) Property, plant and equipment
(i)
Recognition and measurement
Items of property, plant and equipment are measured at cost less any accumulated depreciation and
any accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other
costs directly attributable to bringing the asset to working condition for its 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. Purchased software that
is integral to the functionality of the related equipment is capitalised as part of that equipment.
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2.
(b) Property, plant and equipment (Contd)
(i)
Recognition and measurement (Contd)
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 gain or loss on disposal of an item of property, plant and equipment is determined by comparing
the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised
net within other operating income and administrative expenses respectively in profit or loss.
(ii)
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the
carrying amount of the item if it is probable that the future economic benefits embodied within the
component will flow to the Group and the Company, and its cost can be measured reliably. The carrying
amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing
of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual
assets are assessed, and if a component has a useful life that is different from the remainder of that
asset, then that component is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of
each component of an item of property, plant and equipment. Leased assets are depreciated over the
shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment
under construction are not depreciated until the assets are ready for their intended use.
The depreciation rates for the current and comparative periods are as follows :
Leasehold land
Buildings and building improvements
Reservoirs
Plant and machinery
Motor vehicles
Equipment and furniture
%
1-2
2 - 33.33
2
2 - 15
20
10 - 33.33
Property, plant and equipment of a subsidiary which were acquired from Badan Kawal Selia Air (BKSA)
upon its corporatisation on 1 March 1999 are depreciated over their remaining useful lives.
Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period,
and adjusted as appropriate.
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(c) Leased assets
(i)
Finance leases
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards
of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at
an amount equal to the lower of its fair value and the present value of the minimum lease payments.
Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy
applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance expense
and the reduction of the outstanding liability. The finance expense is allocated to each period during
the lease term so as to produce a constant periodic rate of interest on the remaining balance of the
liability. Contingent lease payments 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.
(ii)
Operating leases
Leases, where the Group or the Company does not assume substantially all the risks and rewards of
the ownership are classified as operating leases and, the leased assets are not recognised on the
statement of financial position.
Payments made under operating leases are recognised in the profit or loss on a straight-line basis over
the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of
the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in
the reporting period in which they are incurred.
(d) Impairment
(i)
Financial assets
All financial assets (except for investments in subsidiaries and jointly controlled entities) are assessed
at each reporting date whether there is any objective evidence of impairment as a result of one or
more events having an impact on the estimated future cash flows of the asset. Losses expected as a
result of future events, no matter how likely, are not recognised. For an investment in an equity
instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence
of impairment. If any such objective evidence exists, then the financial assets recoverable amount is
estimated.
An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured
as the difference between the 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.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is
measured as the difference between the assets acquisition cost (net of any principal repayment and
amortisation) and the assets current fair value, less any impairment loss previously recognised. Where
a decline in the fair value of an available-for-sale financial asset has been recognised in the other
comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity
to profit or loss.
ANNUAL REPORT 2012
2.
(d) Impairment (Contd)
(i)
Financial assets (Contd)
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in
profit or loss and is measured as the difference between the financial assets carrying amount and the
present value of estimated future cash flows discounted at the current market rate of return for a
similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as
available for sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be
objectively related to an event occurring after the impairment loss was recognised in profit or loss, the
impairment loss is reversed, to the extent that the assets carrying amount does not exceed what the
carrying amount would have been had the impairment not been recognised at the date the impairment
is reversed. The amount of the reversal is recognised in profit or loss.
(ii)
Other assets
The carrying amounts of other assets except for inventories are reviewed at the end of each reporting
period to determine whether there is any indication of impairment. If any such indication exists, then
the assets recoverable amount is estimated. For goodwill, the recoverable amount is estimated each
period at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely independent of the cash inflows of
other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose
of goodwill impairment testing, cash-generating units to which goodwill has been allocated are
aggregated so that the level at which impairment testing is performed reflects the lowest level at which
goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination,
for the purpose of impairment testing, is allocated to group of cash-generating units that are expected
to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit
exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the cashgenerating unit (group of cash-generating units) and then to reduce the carrying amounts of the other
assets in the cash-generating unit (group of cash-generating units) on a pro rata basis.
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(d) Impairment (Contd)
(ii)
Other assets (Contd)
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at the end of each reporting period for any indications that
the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable amount since the last impairment loss was recognised.
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 profit or loss in
the financial year in which the reversals are recognised.
(e) Financial instruments
(i)
Initial recognition and measurement
A financial asset or a financial liability 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.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument
not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition
or issue of the financial instrument.
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 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.
(ii)
Financial instrument categories and subsequent measurement
The Group and the Company categorise financial instruments as follows :
Financial assets
(a)
Loans and receivables
Loans and receivables category comprises debt instruments that are not quoted in an active
market.
Financial assets categorised as loans and receivables are subsequently measured at amortised cost
using the effective interest method.
(b) Available-for-sale financial assets
Available-for-sale category comprises investment in equity and debt securities instruments that
are not held for trading.
ANNUAL REPORT 2012
2.
(e) Financial instruments (Contd)
(ii)
Financial instrument categories and subsequent measurement (Contd)
(b) Available-for-sale financial assets (Contd)
Investments in equity instruments that do not have a quoted market price in an active market
and whose fair value cannot be reliably measured are measured at cost. Other financial assets
categorised as available-for-sale are subsequently measured at their fair values with the gain or
loss recognised in other comprehensive income, except for impairment losses, foreign exchange
gains and losses arising from monetary items and gains and losses of hedged items attributable
to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the
cumulative gain or loss recognised in other comprehensive income is reclassified from equity into
profit or loss. Interest calculated for a debt instrument using the effective interest method is
recognised in profit or loss.
All financial assets, are subject to review for impairment (see Note 2(d)(i)).
Financial liabilities
All financial liabilities are subsequently measured at amortised cost.
Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose
fair values cannot be reliably measured are measured at cost.
(iii) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due
in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts are classified as financial liabilities and are amortised to profit or loss
using a straight-line method over the contractual period or, when there is no specified contractual
period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial
guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of
the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the
obligation amount and accounted for as a provision.
(iv) Regular way purchase or sale of financial assets
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms
require delivery of the asset within the time frame established generally by regulation or convention
in the marketplace concerned.
A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using
trade date accounting. Trade date accounting refers to :
(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and
(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition
of a receivable from the buyer for payment on the trade date.
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(e) Financial instruments (Contd)
(v)
Derecognition
A financial asset or part of it is derecognised when, and only when the contractual rights to the cash
flows from the financial asset expire or the financial asset is transferred to another party without
retaining control or substantially all 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 profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the
contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference
between the carrying amount of the financial liability extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised
in profit or loss.
(f) Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is measured based on the weighted average cost formula, and includes expenditure
incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and
condition. In the case of manufactured inventories, cost includes an appropriate share of production overheads
based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and the estimated costs necessary to make the sale.
(g) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid
investments which have an insignificant risk of changes in fair value with original maturities of three months
or less, and are used by the Group and the Company in the management of their short term commitments.
For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank
overdrafts and pledged deposits.
(h) Provisions
A provision is recognised if, as a result of a past event, the Group 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 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.
The unwinding of the discount is recognised as finance cost.
(i) Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be
estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed
as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations,
whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events,
are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
ANNUAL REPORT 2012
2.
(j) Equity instruments
Instruments classified as equity are measured at cost on initial recognition and are not re-measured
subsequently.
(i)
Issue expenses
Costs directly attributable to issue of instruments classified as equity are recognised as a deduction
from equity.
(ii)
Ordinary shares
Ordinary shares are classified as equity.
(iii) Special rights redeemable preference share capital
The Special rights redeemable preference share (Special Share) would enable the State Government
of Penang through the State Secretary, Penang to ensure that certain major decisions affecting the
operations of the Company are consistent with the State Government of Penangs policies. The Special
Share can only be held by the State Secretary, Penang or its successor, or the Chief Minister or any
person acting on behalf of the State Government of Penang (Special Shareholder).
The Special Shareholder is not entitled to any dividend or to participate in the capital distribution upon
the dissolution of the Company but shall rank for repayment in priority to the ordinary shares. The
Special Shareholder, may subject to the provisions of the Companies Act, 1965, require the Company
to redeem the Special Share at par at any time. Other rights and restrictions attached to the Special
Share are set out in Article 17 of the Companys Articles of Association.
(iv) Repurchase, disposal and reissue of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of the consideration paid, including
directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased
shares that are not subsequently cancelled are classified as treasury shares in the statements of changes
in equity.
Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in
the reduction of the share premium account or distributable reserves, or both.
Where treasury shares are sold or reissued subsequently, the difference between the sales consideration
net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity,
and the resulting surplus or deficit on the transaction is presented in share premium.
(k) Foreign currency
(i)
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period
are retranslated to the functional currency at the exchange rate at that date.
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(k) Foreign currency (Contd)
(i)
Foreign currency transactions (Contd)
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end
of the reporting date except for those that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences
arising on the retranslation of available-for-sale equity instruments or a financial instrument designated
as a hedge of currency risk, which are recognised in other comprehensive income.
(ii)
Operations denominated in functional currencies other than Ringgit Malaysia
The assets and liabilities of operations denominated in functional currencies other than RM, including
goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at
the end of the reporting period, except for goodwill and fair value adjustments arising from business
combinations before 1 January 2011 which are treated as assets and liabilities of the Company. The
income and expenses of foreign operations are translated to RM at exchange rates at the dates of the
transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the
foreign currency translation reserve (FCTR) in equity. However, if the operation is a non-wholly-owned
subsidiary, then the relevant proportionate share of the translation difference is allocated to the noncontrolling interests. When a foreign operation is disposed of such that control, significant influence
or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified
to profit or loss as part of the profit or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation,
the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When
the Group disposes of only part of its investment in an associate or joint venture that includes a foreign
operation while retaining significant influence or joint control, the relevant proportion of the cumulative
amount is reclassified to profit or loss.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable
to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains
and losses arising from such a monetary item are considered to form part of a net investment in a
foreign operation and are recognised in other comprehensive income, and are presented in the FCTR
in equity.
(l) Revenue and other income
(i)
Sale of water
Revenue from water supplied to consumers are recognised when invoiced and upon services being
rendered.
(ii)
Contribution for trunk mains
Contribution for trunk mains is recognised as income when invoiced and upon services being rendered.
ANNUAL REPORT 2012
2.
(l) Revenue and other income (Contd)
(iii) Sales from training facilities and education business
Revenue is recognised when invoiced and upon services being rendered.
(iv) Sales from water bottling business
Revenue from the sales of water bottling business in the ordinary course of activities is measured at
fair value of the consideration received or receivable, net of returns and allowances, trade discounts
and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an
executed sales agreement, that the significant risks and rewards of ownership have been transferred
to the customer, recovery of the consideration is probable, the associated costs and possible return
of goods can be estimated reliably, and there is no continuing management involvement with the
goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be
granted and the amount can be measured reliably, then the discount is recognised as a reduction of
revenue as the sales are recognised.
(v)
Dividend income
Dividend income is recognised in profit or loss on the date that the Groups or the Companys right
to receive payment is established, which in the case of quoted securities is the ex-dividend date.
(vi) Rental income
Rental income is recognised in profit or loss on a straight-line basis over the term of the lease. Lease
incentives granted are recognised as an integral part of the total rental income, over the term of the
lease. Rental income from subleased property is recognised as other income.
(vii) Interest income
Interest income is recognised as it accrues using the effective interest method in profit or loss except
for interest income arising from temporary investment of borrowings taken specifically for the purpose
of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on
borrowing costs.
(viii) Government grants
Government grants that compensate the Group for the cost of an asset are recognised initially as
deferred income at fair value when there is reasonable assurance that they will be received and that
the Group will comply with the conditions associated with the grant and are then recognised in profit
or loss as other income on a systematic basis over the useful life of the asset.
Grants that compensate the Group for expenses incurred are recognised in profit or loss as other
income on a systematic basis in the same periods in which the expenses are recognised.
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(m) Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit
or loss except to the extent that it relates to a business combination or items recognised directly in equity
or other comprehensive income.
Current tax expense is the expected tax payable or receivable on the taxable income or loss for the year,
using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment
to tax payable in respect of previous financial years.
Deferred tax is recognised, using the liability method, providing for temporary differences between the
carrying amount of assets and liabilities in the statements of financial position and their tax bases. Deferred
tax is not recognised for the following temporary differences : the initial recognition of goodwill and the
initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected
to be applied to the temporary differences when they reverse, based on the laws that have been enacted
or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or
on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax
assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each
reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
Unutilised reinvestment allowance, being a tax incentive that is not a tax base of an asset is recognised as
deferred tax asset to the extent that it is probable that future taxable profits will be available against which
the unutilised tax incentive can be utilised.
(n) Employee benefits
(i)
Short-term employee benefits
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and
sick leave are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short term cash bonus or profitsharing plans if the Group has a present legal or constructive obligation to pay this amount as a result
of past service provided by the employee and the obligation can be estimated reliably.
(ii)
State plans
The Groups contributions to the statutory pension funds are charged to profit or loss in the financial
year to which they relate. Once the contributions have been paid, the Group has no further payment
obligations.
ANNUAL REPORT 2012
2.
(n) Employee benefits (Contd)
(iii) Defined benefit plans
The Groups net obligation in respect of defined benefit retirement plans is calculated separately for
each plan by estimating the amount of future benefit that employees have earned in return for their
service in the current and prior periods; that benefit is discounted to determine the present value. Any
unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate
is the yield at the end of the reporting period on highly quality corporate bonds that have maturity
dates approximating the terms of the Groups obligations and that are denominated in the same
currency in which the benefits are expected to be paid. The calculation is performed annually by a
qualified actuary using the projected unit credit method. When the calculation results in a benefit to
the Group, the recognised asset is limited to the total of any unrecognised past service costs and the
present value of economic benefits available in the form of any future refunds from the plan or
reductions in future contributions to the plan. In order to calculate the present value of economic
benefits, consideration is given to any minimum funding requirements that apply to any plan in the
Group. An economic benefit is available to the Group if it is realisable during the life of the plan, or
any settlement of the plan liabilities.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service
by employees is recognised in profit or loss on a straight-line basis over the average period until the
benefits become vested. To the extent that the benefits vest immediately, the expense is recognised
immediately in profit or loss.
The Group recognised all actuarial gains or losses arising from defined benefit plans in other comprehensive
income and all expenses related to defined benefit plans in personnel expenses in profit or loss.
The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when
the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change
in the fair value of plan assets, change in the present value of defined benefit obligation and any related
actuarial gains and losses and past service cost that had not previously been recognised.
(o) 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 results are reviewed regularly by the chief
operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions
about resources to be allocated to the segment and to assess its performance, and for which discrete financial
information is available.
(p) Earnings per ordinary share
The Group presents basic earnings per share data for its ordinary shares (EPS).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company
by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares
held.
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3.
Group
Buildings
Plant
Equipment
and
Capital
and Motor
and work-inbuilding
furniture progress
Land improvements Reservoirs machinery vehicles
RM000 RM000
RM000 RM000
RM000
RM000
RM000
Total
RM000
Cost
At 1 January 2011
Additions
Disposals/Written off
Reclassification
25,298
192
78,900
109
(1,765)
509
55,010
20,169
623,458 12,976
4,152
641
(88)
74,060
128
36,789 148,951
1,241
64,334
(668)
(356)
8,594 (103,652)
1 January 2012
25,490
77,753
75,179
701,582
45,956
383
281
608
25,873
78,034
75,787
798,536
14,008
51,873
2,285
1,143
12,061
-
11,429
-
197,093
-
9,132
-
27,130
-
-
259,130
1,143
3,428
12,061
11,429
197,093
9,132
27,130
-
260,273
Additions
Reclassification
At 31 December 2012
3,681
(790)
94,063
13,745
263
-
981,382
70,477
(2,877)
-
109,277 1,048,982
1,023
73,922
(356)
(783)
5,250 (100,585)
78,889
(1,929)
-
81,831 1,125,942
Depreciation and impairment loss
At 1 January 2011
Accumulated depreciation
Accumulated impairment loss
Depreciation for the year
209
-
1,974
(476)
1,499
-
35,151
(66)
1,444
-
9,383
(658)
-
49,660
(1,200)
1 January 2012
2,494
1,143
13,559
-
12,928
-
232,178
-
10,576
-
35,855
-
-
307,590
1,143
3,637
13,559
12,928
232,178
10,576
35,855
-
308,733
202
276
-
1,599
-
1,720
-
2,696
1,419
15,158
-
14,648
-
267,028
1,990
11,907
-
43,343
-
-
354,780
3,409
4,115
15,158
14,648
269,018
11,907
43,343
-
358,189
At 1 January 2011
21,870
66,839
43,581
426,365
3,844
9,659
148,951
721,109
1 January 2012
21,853
64,194
62,251
469,404
3,169
10,101
109,277
740,249
At 31 December 2012
21,758
62,876
61,139
529,518
2,101
8,530
81,831
767,753
Impairment loss
35,545
1,990
(695)
1,331
-
7,792
(304)
-
48,189
2,266
(999)
At 31 December 2012
Carrying amounts
ANNUAL REPORT 2012
125
3.
Property, plant and equipment (Contd)
During the year, Perbadanan Bekalan Air Pulau Pinang Sdn. Bhd., a subsidiary of the Company, transferred certain
capital work-in-progress relating mainly to replacement of mains and water resource projects carried out on behalf
of Badan Kawal Selia Air, Pulau Pinang (BKSA) amounting to RM55,000 (31.12.2011 : RM265,000 and 1.1.2011:
RM11,968,000) to BKSAs account and the remaining amount was written off.
Equipment
and furniture
RM000
Company
Cost
At 1 January 2011
Addition
111
5
At 31 December 2011/1 January 2012
116
Addition
Written off
At 31 December 2012
9
(8)
117
At 1 January 2011
74
11
85
Written off
11
(5)
At 31 December 2012
91
Carrying amounts
At 1 January 2011
37
31
At 31 December 2012
26
126
ANNUAL REPORT 2012
3.
Property, plant and equipment (Contd)
Included in the carrying amount of land are :
Freehold land
Leasehold land with unexpired lease period of more than 50 years
31.12.2012
RM000
Group
31.12.2011
RM000
1.1.2011
RM000
5,343
16,415
4,960
16,893
4,960
16,910
21,758
21,853
21,870
Certain freehold land and leasehold land of the Group with carrying amounts of RM186,000 (31.12.2011 :
RM197,000 and 1.1.2011: RM197,000) and RM356,000 (31.12.2011 : RM650,000 and 1.1.2011: RM687,000)
respectively are in the process of being registered under the name of a subsidiary.
4.
Investments in subsidiaries - Company
Unquoted shares, at cost
Share-based payments allocated to subsidiaries
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
266,025
868
266,025
868
266,025
868
266,893
266,893
266,893
The subsidiaries, all of which are incorporated in Malaysia, are as follows :
Name of subsidiary
Effective ownership interest
31.12.2012 31.12.2011 1.1.2011
%
%
%
Pulau Pinang Sdn. Bhd.
100
100
100
Water supplier involved in the abstraction
of raw water, treatment of water, supply
and sale of treated water to consumers.
Island Springwater Sdn. Bhd.
100
100
100
Providing water bottling services and to
promote and sell water management
software and energy know-how. The
subsidiary has ceased operations during the
financial year.
PBA Resources Sdn. Bhd.
100
100
100
Providing training facilities, education and
other non-water related businesses.
ANNUAL REPORT 2012
127
5.
Investment in a jointly controlled entity
Group
Share of post acquisition reserves
Company
* RM99
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
*
1,296
*
1,418
*
803
1,296
1,418
803
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
*
*
*
Details of the jointly controlled entity which is incorporated in Federal Territory of Labuan, Malaysia are as
follows :
Name of jointly
controlled entity
Pinang Water Limited
Effective ownership interest
31.12.2012 31.12.2011 1.1.2011
%
%
%
26
26
26
Constructing water-infrastructure projects,
water treatment, management and supply
of treated water for government, industries,
commercial and domestic consumers.
The Groups aggregate share of the non-current and current assets, non-current and current liabilities, income
and expenses of the jointly controlled entity are as follows :
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
Non-current assets
Current assets
6,095
1,427
6,574
1,086
6,285
784
Total assets
7,522
7,660
7,069
Non-current liabilities
Current liabilities
(25)
(6,201)
(129)
(6,113)
(225)
(6,041)
Total liabilities
(6,226)
(6,242)
(6,266)
2012
RM000
2011
RM000
1,153
8
(1,055)
799
137
(707)
Assets and liabilities
Results
Revenue
Other income
Expenses, including finance costs and taxation
128
ANNUAL REPORT 2012
6.
Other investments - Group
These investments are managed by external fund management companies in accordance with the terms of the
Investment Management Mandate. As at year end, the funds were invested as follows :
Non-current
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
17,554
21,751
20,918
40
2,934
126
3,280
1,327
2,361
2,974
3,406
3,688
20,528
25,157
24,606
2,974
17,554
3,406
21,751
3,688
20,918
20,528
25,157
24,606
17,554
21,751
20,918
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
11,121
575
-
11,929
503
8
12,998
565
8
11,696
12,440
13,571
Available-for-sale financial assets
Quoted investments in Malaysia
Fixed deposits with licensed banks
Money market placement
Representing items :
At cost/amortised cost
At fair value
Market value of quoted investments
7.
Inventories - Group
At cost :
Spare parts and consumables
Chemicals
Manufactured inventories
The cost of inventories recognised as an expense during the financial year amounted to approximately RM8,895,000
(2011 : RM10,856,000).
ANNUAL REPORT 2012
8.
Note
Group
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
18,769
16,588
11,522
5,008
635
6,262
6,180
4,064
462
9,185
6,175
4,084
1,096
17,235
6,172
18,085
19,886
28,587
36,854
36,474
40,109
114
108,826
6,180
162
97,261
6,175
143
92,962
6,172
115,120
103,598
99,277
Trade
Trade receivables
Non-trade
Deposits
Prepayments
Other receivables
Amount due from jointly controlled entity
8.2
Company
Non-trade
Other receivables
Amount due from subsidiaries
Amount due from jointly controlled entity
8.1
8.2
8.1 Amount due from subsidiaries
The non-trade amount due from subsidiaries is unsecured, interest-free and repayable on demand.
8.2 Amount due from jointly controlled entity
The non-trade amount due from jointly controlled entity comprises shareholders advances and payments
made on behalf. The amount is interest-free and repayable on demand.
129
130
ANNUAL REPORT 2012
9.
Group
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
2,671
72,598
5,468
72,613
5,525
60,900
75,269
78,081
66,425
184
7,000
171
8,900
191
8,900
7,184
9,071
9,091
Cash and bank balances
Short-term deposits with licensed banks
Company
Cash and bank balances
Short-term deposits with licensed banks
10. Share capital - Group/Company
Authorised :
Special rights redeemable
preference share (SRRPS)
of RM0.50 each
Ordinary shares of
RM0.50 each
31.12.2012
Number
Amount of shares
(000)
RM000
31.12.2011
Number
Amount
of shares
RM000
(000)
1.1.2011
Number
of shares
Amount
(000)
RM000
*
**
*
**
*
**
500,000
1,000,000
500,000
1,000,000
500,000
1,000,000
500,000
1,000,000
500,000
1,000,000
500,000
1,000,000
*
**
*
**
*
**
165,635
331,271
165,635
331,271
165,635
331,271
165,635
331,271
165,635
331,271
165,635
331,271
Issued and fully paid :
Special rights redeemable
preference share (SRRPS)
of RM0.50 each
Ordinary shares
of RM0.50 each
* RM0.50
** 1 SRRPS
ANNUAL REPORT 2012
10. Share capital - Group/Company (Contd)
The SRRPS would enable the State Government of Penang through the State Secretary, Penang to ensure that
certain major decisions affecting the operations of the Company are consistent with the State Government of
Penangs policies. The SRRPS can only be held by the State Secretary, Penang or its successor, or the Chief Minister
or any person acting on behalf of the State Government of Penang (Special Shareholder).
The Special Shareholder is not entitled to any dividend or to participate in the capital distribution upon the
dissolution of the Company but shall rank for repayment in priority to the ordinary shares. The Special Shareholder
may, subject to the provisions of the Companies Act, 1965, require the Company to redeem the SRRPS at par
at any time. Other rights and restrictions attached to the SRRPS are set out in Article 17 of the Companys Articles
of Association.
11. Reserves
Note
Group
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
369,801
352,420
317,489
161,944
(8)
(94)
1,735
161,944
(6)
134
852
161,944
(4)
(252)
3,471
163,577
162,924
165,159
533,378
515,344
482,648
55,613
51,263
46,826
161,944
(8)
-
161,944
(6)
868
161,944
(4)
868
161,936
162,806
162,808
217,549
214,069
209,634
Distributable
Retained earnings
Non-distributable
Share premium
Treasury shares
Foreign currency translation reserve
Fair value reserve
11.2
11.4
11.5
Company
Distributable
Retained earnings
Non-distributable
Share premium
Treasury shares
Share option reserve
11.2
11.3
131
132
ANNUAL REPORT 2012
11. Reserves (Contd)
11.1 Section 108 tax credit
During the financial year, the Company made an irrevocable option to forego its Section 108 tax credit
available and paid dividends to its shareholders under the single tier system.
11.2 Treasury shares
The shareholders of the Company in the Annual General Meeting held on 26 June 2012, approved the
Companys plan to purchase up to 10% of its issued and paid-up share capital of ordinary shares with par
value of RM0.50 each.
During the financial year ended 31 December 2012, the Company repurchased 2,000 of its issued and
paid-up ordinary shares from the open market.
Number of shares
Purchase price
RM
Consideration
RM000
Transaction cost
RM000
Total consideration
RM000
1,000
1,000
0.89
0.92
1
1
-
1
1
For the financial year ended 31 December 2011, the Company repurchased 2,000 of its issued and paidup ordinary shares from the open market. The average price paid for the shares repurchased was
RM 0.96 per share.
The shares repurchased were financed by internally generated funds. The shares repurchased are being
held as treasury shares in accordance with Section 67A of the Companies Act, 1965.
Of the total 331,270,401 issued and fully paid ordinary shares of RM0.50 each as at 31 December 2012,
8,000 (2011 : 6,000) ordinary shares are held as treasury shares by the Company. The number of outstanding
ordinary shares in issue is therefore 331,262,401 (2011 : 331,264,401) ordinary shares of RM0.50 each.
11.3 Share option reserve
The share option reserve comprises the cumulative value of employee services received for the issue of
share options. When the option is exercised, the amount from the share option reserve is transferred to
share premium. When the share options expire, the amount from the share option reserve is transferred
to retained earnings.
11.4 Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the
translation of the financial statements of the jointly controlled entity whose functional currency is other
than RM.
11.5 Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial
assets until the investments are derecognised or impaired.
ANNUAL REPORT 2012
133
12. Employee benefits
The Group operated an unfunded defined benefit scheme (the scheme) for all its employees in prior years.
However, this scheme was terminated with effect from 1 January 2011 and was replaced with the Employees
Provident Fund Top-Up Plan. Upon the termination of the scheme, the balance at 1 January 2011 was reclassified
to other payables and accruals (Note 17). The amount is payable to the employees of the Group and the Company
over a 5-year period. The outstanding balance of the unfunded defined benefit scheme as at 1 January 2011
was adjusted to reflect the actual amount to be paid by the Group. The effect of such adjustments amounting
to RM8,819,000 is recognised in profit or loss in financial year 2011.
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
Present value of unfunded obligations
Unrecognised actuarial losses
-
-
36,428
(5,499)
Total employee benefits
-
-
30,929
-
-
2,094
-
-
1,727
8,960
18,148
-
-
28,835
-
-
30,929
Present value of unfunded obligations
Unrecognised actuarial losses
-
-
131
109
Total employee benefits
-
-
240
-
-
240
-
-
240
-
-
240
Group
Analysed as :
Current
Non-current
Within one year
Between one and five years
More than five years
Company
Analysed as :
Non-current
Within one year
134
ANNUAL REPORT 2012
12. Employee benefits (Contd)
Movements in the present value of defined benefit obligations are as follows :
2012
RM000
Group
2011
RM000
Company
2011
2012
RM000
RM000
At 1 January
Amount reclassified to other
payables and accruals
-
30,929
-
240
-
(30,929)
-
(240)
At 31 December
-
-
-
-
31.12.2012
%
31.12.2011
%
1.1.2011
%
-
-
6.20
5.00
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
6,615
-
-
65,236
6,552
6,615
-
71,788
Principal actuarial assumptions used for the purpose of the actuarial valuation are as follows :
Discount rate
Future salary increase
13. Loans and borrowings, unsecured - Group
Term loans :
Non-current
Current
During the current financial year, a subsidiary obtained an unsecured and interest-free term loan from the State
Government of Penang to finance Non-Revenue Water projects. The term loan is repayable over 20 years with
effect from 14 September 2016.
The unsecured term loans outstanding at 1 January 2011 were obtained from the State Government of Penang
to finance major water projects.
Pursuant to migration of the Penang State Water Assets and the loans thereon to Pengurusan Aset Air Berhad
(PAAB) during financial year 2011, the subsidiary entered into Facility and Lease Agreements (FLA) with PAAB
to enable water supply services to be carried out on the lands leased from PAAB. The FLA is effective for a period
of 45 years from 1 August 2011. Further details of the operating lease are disclosed in Note 23 to the financial
statements.
Pursuant to the above events, the outstanding balance of the term loans was converted into a lease incentive
and the outstanding balance of the term loans was reclassified to deferred liabilities (Note 15).
ANNUAL REPORT 2012
135
14. Deferred income - Group
Deferred income represents the difference between the nominal value of the interest free term loan obtained
from the State Government of Penang to finance Non-Revenue Water projects and the fair value of the loan
measured on initial recognition. The deferred income is amortised over the useful life of the assets funded which
ranged from 25 years to 50 years.
15. Deferred liabilities - Group
Non-current
Current
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
67,933
1,595
69,528
1,595
-
69,528
71,123
-
Deferred liabilities represents lease incentives that are amortised over the lease period of 45 years with effect
from 1 August 2011. During the financial year, RM1,595,000 (31.12.2011 : RM665,000) was amortised and
applied against the lease expense attributable to the FLA as disclosed in Note 13 to the financial statements.
16. Deferred tax liabilities - Group
At 1 January
Recognised in profit or loss (Note 20)
At 31 December (presented after appropriate offsetting)
2012
RM000
2011
RM000
6,500
(6,280)
11,000
(4,500)
220
6,500
136
ANNUAL REPORT 2012
16. Deferred tax liabilities - Group (Contd)
The movements in deferred tax liabilities and assets (prior to offsetting) during the financial year are as
follows :
At
1.1.2011
RM000
Recognised
in profit
or loss
(Note 20)
RM000
91,773
5,753
At
31.12.2011
RM000
Recognised
in profit
or loss
(Note 20)
RM000
At
31.12.2012
RM000
5,960
(27)
97,733
5,726
6,058
339
103,791
6,065
97,526
5,933
103,459
6,397
109,856
(7,607)
(74,724)
(3,128)
(1,067)
7,607
(13,723)
3,128
(7,445)
(88,447)
(8,512)
(14,123)
(1,354)
2,800
(102,570)
(1,354)
(5,712)
(86,526)
(10,433)
(96,959)
(12,677)
(109,636)
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
2,067
1,155
(1,273)
2,041
1,082
(1,465)
1,567
612
(1,227)
1,949
1,658
952
Deferred tax liabilities
Property, plant and
equipment - capital allowance
Contributions for trunk mains
Deferred tax assets
Employee benefit plan
Unutilised reinvestment allowance
Unabsorbed capital allowance
Other items
Deferred tax has not been recognised in respect of the following items :
Unabsorbed capital allowance
Unutilised tax losses
Other temporary differences
The unutilised tax losses, unabsorbed capital allowance and other temporary differences do not expire under
current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not
probable that future taxable profits will be available against which the Group can utilise the benefits therefrom.
ANNUAL REPORT 2012
137
17. Trade and other payables
Note
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
2,791
3,273
3,386
42,647
5,797
71,883
43,062
70,633
38,488
67,766
120,327
113,695
106,254
123,118
116,968
109,640
17.3
14,560
22,365
-
17.1
167
5,797
207
-
217
-
5,964
207
217
75
128
-
Group
Current
Trade payables
Non-trade
Other payables and accruals
Dividend payable
Refundable deposits
17.1
17.2
Non-current
Company
Current
Other payables and accruals
Dividend payable
Non-current
17.3
17.1 Other payables and accruals
Included in other payables and accruals of the Group are advances received from BKSA for future water
resource projects and progress payments to be made on BKSAs behalf amounting to RM451,000
(31.12.2011 : RM506,000 and 1.1.2011 : RM770,000).
17.2 Refundable deposits
Refundable deposits comprise of water supply deposits, reticulation mains deposits, security deposits and
pipe maintenance deposits from customers.
17.3 Other non-current payables
Other non-current payables comprise of amount payable to employees of the Group and the Company
pursuant to the termination of the unfunded defined benefit scheme (Note 12). The related current amount
payable to employees of RM7,441,000 (31.12.2011 : RM11,284,000 and 1.1.2011 : RM Nil) is included
under current other payables and accruals.
138
ANNUAL REPORT 2012
18. Revenue
2012
RM000
Gross dividend from a subsidiary
Interest income
Sale of water
Contribution for trunk mains
Sales from water bottling business
Sales from training facilities business
Sales from education business
Group
2011
RM000
Company
2011
2012
RM000
RM000
251
232,570
11,240
43
103
353
295
225,812
9,486
95
114
526
16,511
251
-
16,511
295
-
244,560
236,328
16,762
16,806
19. Operating profit
Operating profit is arrived at :
2012
RM000
Group
2011
RM000
Company
2012
2011
RM000
RM000
After charging :
Adjustment pursuant to termination
of retirement benefits plan
Auditors remuneration
Audit fees
- KPMG Malaysia
Non-audit fees
- KPMG Malaysia
- Local affiliate of KPMG Malaysia
Dams and mains lease charges
Directors allowance
- present Directors
- past Director
Impairment loss on :
- trade and other receivables
- property, plant and equipment
- other investments
Inventories written off
- depreciation (Note 3)
- written off
Raw water intake charges
Rental of equipment
Rental of premises
Water supply licence fee
-
8,819
-
-
122
112
16
13
16
30
12,966
18
56
5,402
11
3
-
9
3
-
420
-
403
4
246
-
235
2
1,489
2,266
2,388
301
534
98
-
-
48,189
128
8,095
97
1,021
2,326
49,660
23
10,899
620
1,309
11
3
-
11
-
ANNUAL REPORT 2012
139
19. Operating profit (Contd)
2012
RM000
Group
2011
RM000
Company
2011
2012
RM000
RM000
and after crediting :
Adjustment pursuant to termination
of retirement benefits plan
Bad debts recovered
Gain on disposal of other investments
Gain on disposal of property, plant and
equipment
Gross dividend received from investments
quoted in Malaysia
Income from miscellaneous jobs
Income from reconnection fees and final
connection charges
Rental income
- buildings
- meters and plant and machinery
3
1,084
2
2,498
-
27
-
25
725
-
-
722
2,714
619
2,654
-
-
2,921
2,932
-
-
683
764
777
750
-
-
20. Income tax expense
Recognised in profit or loss
2012
RM000
Income tax expense on continuing operations
Group
(5,303)
2011
RM000
(3,293)
Company
2012
2011
RM000
RM000
81
74
Major components of tax expense include :
Income tax expense
Current year
Prior year
2012
RM000
Group
2011
RM000
Company
2012
2011
RM000
RM000
854
123
1,319
(112)
74
7
69
5
977
1,207
81
74
(6,932)
652
(4,995)
495
-
-
(6,280)
(4,500)
-
-
(5,303)
(3,293)
81
74
Deferred tax expense
Current year
Prior year
Total tax expense
140
ANNUAL REPORT 2012
20. Income tax expense (Contd)
Reconciliation of effective tax expense
2012
RM000
Group
2011
RM000
Company
2011
2012
RM000
RM000
Profit for the year
Total tax expense
28,975
(5,303)
45,697
(3,293)
15,076
81
15,203
74
Profit excluding tax
23,672
42,404
15,157
15,277
5,918
(456)
2,375
71
10,601
(779)
1,049
177
3,789
(4,128)
413
-
3,819
(4,128)
378
-
(14,123)
137
775
(13,723)
(984)
(17)
383
7
5
(5,303)
(3,293)
81
74
Income tax calculated using
Malaysian tax rate of 25% (2011 : 25%)
Income not subject to tax
Non-deductible expenses
Deferred tax assets not recognised
Deferred tax recognised in respect of
unutilised reinvestment allowance
Effect of tax incentive
Other items
Under provision in prior year
Total tax expense
21. Earnings per ordinary share - Group
Basic earnings per ordinary share
The basic earnings per ordinary share is calculated by dividing the profit for the year attributable to owners of
the Company by the weighted average number of ordinary shares in issue during the financial year as follows :
2012
RM000
2011
RM000
28,975
45,697
331,264
331,266
8.75
13.79
2012
(000)
2011
(000)
Issued ordinary shares at 1 January
Effect of treasury shares held
331,271
(7)
331,271
(5)
Weighted average number of ordinary shares in issue
331,264
331,266
Weighted average number of ordinary shares in issue
Basic earnings per ordinary share (sen)
ANNUAL REPORT 2012
141
22. Dividends - Group/Company
2012
Final 2011 tax exempt dividend
Interim 2012 single tier dividend
2011
Final 2010 tax exempt dividend
Interim 2011 tax exempt dividend
Gross dividends per ordinary share (sen)
Sen per
share
(net of tax)
Total
amount
RM000
Date of payment
1.75
1.75
5,797
5,797
13 July 2012
4 January 2013
3.50
11,594
1.50
1.75
4,969
5,797
3.25
10,766
15 July 2011
23 December 2011
2012
RM
2011
RM
3.75
3.50
The gross dividends per ordinary share as disclosed above takes into account the total interim and final dividend
for the financial year.
The Directors recommended a final single tier dividend of 2.00 sen per share, amounting to RM6,625,000 for
the financial year ended 31 December 2012 subject to the approval of shareholders at the forthcoming Annual
General Meeting. The financial statements for the current financial year do not reflect this proposed final dividend.
Such dividend, if approved by the shareholders, will be accounted for in shareholders equity as an appropriation
of retained earnings in the financial year ending 31 December 2013.
23. Operating lease arrangements - Group
Leases as lessee
Pursuant to the Water Services Industry Act 2006 (Act 655) with the objective amongst others to establish a
regulatory environment that facilitates financial self-sustainability amongst the water operators in the water
service industry, a subsidiary has henceforth entered into Facility and Lease Agreements with Pengurusan Aset
Air Berhad (PAAB) to enable water supply services to be carried out on the lands leased from PAAB. The lease
amounted to RM14.56 million per annum for a period of 45 years effective 1 August 2011. These Facility and
Lease Agreements supersede the operating lease agreements previously entered into with BKSA.
142
ANNUAL REPORT 2012
23. Operating lease arrangements - Group (Contd)
Leases as lessee (Contd)
Non-cancellable operating lease rentals are payable as follows :
Non-cancellable operating lease rentals :
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
14,561
58,244
561,815
14,561
58,244
576,376
8,446
26,746
30,500
634,620
649,181
65,692
Within one year
Between one to five years
The lease payments recognised in profit or loss during the financial year are disclosed in Note 19 to the financial
statements.
Leases as lessor
A subsidiary leased part of freehold land to third parties for a period ranging from 30 to 60 years with rent
increment of 20% every five years. The future minimum lease payments under the non-cancellable lease are as
follows :
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
320
1,330
43,638
200
880
38,100
200
840
38,340
45,288
39,180
39,380
Less than one year
More than 5 years
24. Employee benefits expense
2012
RM000
Wages and salaries
Social security costs
Post-employment benefits :
- defined contribution plan
- adjustment pursuant to
termination of defined benefit plan
Other staff related expenses
Group
2011
RM000
Company
2011
2012
RM000
RM000
51,232
546
42,032
530
346
3
316
3
8,193
6,847
62
63
5,574
8,819
5,261
36
(27)
46
65,545
63,489
447
401
ANNUAL REPORT 2012
143
25. Related party
Identity of related parties
For the purposes of these financial statements, parties are considered to be related to the Group 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, or where the Group or the Company and
the party are subject to common control or common significant influence. Related parties may be individuals or
other entities.
Related parties also include key management personnel defined as those persons having authority and responsibility
for planning, directing and controlling the activities of the Group either directly or indirectly. Key management
personnel includes all the Directors of the Group, and certain members of senior management of the Group.
The Group has related party relationship with its controlling shareholder, subsidiaries, a jointly controlled entity
and key management personnel.
Significant related party transactions
The significant related party transactions of the Group and the Company are shown below. The balances related
to the below transactions are shown in Note 8.
Transactions with a jointly controlled entity
Group/Company
2012
2011
RM000
RM000
Reimbursement of expenses
4
3
Key management personnel
Key management personnel are defined as those persons having authority and responsibility for planning, directing
and controlling the activities of the Group and of the Company either directly or indirectly. The key management
personnel includes the Directors of the Company, and certain members of senior management of the Group and
of the Company. The key management personnel compensation are as follows :
Directors :
- Allowances
Other key management personnel :
- short-term employee benefits
- defined contribution plan
- adjustment pursuant to termination
of defined benefit plan
- estimated monetary value of
benefits-in-kind
2012
RM000
Group
2011
RM000
Company
2012
2011
RM000
RM000
420
407
246
237
2,717
460
2,490
440
65
9
164
26
-
580
-
-
77
94
2
9
3,254
3,604
76
199
3,674
4,011
322
436
144
ANNUAL REPORT 2012
25. Related party (Contd)
Government related entities
A subsidiary, Perbadanan Bekalan Air Pulau Pinang Sdn. Bhd. (PBAPP) transacts with entities directly or indirectly
controlled by the State Government of Penang through its state government authorities, agencies, affiliations
and other organisations, collectively referred to as government-related entities. The transactions with these
government-related entities include but are not limited to the sale of water, rendering and receiving services,
leasing of assets, and use of public utilities.
These transactions are conducted in the ordinary course of PBAPPs business. PBAPP has established policies,
pricing strategy and approval process for purchases and sales of products and services, which are independent
of whether the counterparties are government-related entities or not.
For the financial year ended 31 December 2012, management estimates that the aggregate amount of PBAPPs
significant transactions with other government-related entities approximate 2% (2011: 2%) of the Groups revenue
and 3% (2011: 4%) of the Groups total expenses.
26. Capital commitments - Group
Contracted but not provided for
Authorised but not contracted for
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
118,000
107,000
64,000
44,000
134,000
247,000
27. Operating licence for water supply service operations
Amendments to the Federal Constitution were made to transfer the jurisdiction of water supply services from
the State List to the Concurrent List. These amendments were gazetted on 10 February 2005 and they enable
the Federal Government to regulate water supply services while the State Government regulates the raw water
resources.
New acts were subsequently enacted, namely the Water Services Industry Act 2006 (Act 655)(WSIA 2006) and
the Suruhanjaya Perkhidmatan Air Negara Act 2006 (Act 654)(SPAN 2006). The WSIA 2006, which came into
force on 1 January 2011, provides for the regulation of water supply services and sewerage services and the
establishment of a licensing and regulatory framework to promote the national policy objectives for the water
supply services and sewerage services industries. The SPAN 2006, which was approved by Parliament in June
2006 and came into force on 1 February 2007, provides for the establishment of the regulatory body called
Suruhanjaya Perkhidmatan Air Negara (SPAN) to carry out the provisions of WSIA 2006.
On 2 June 2011, a subsidiary was granted Individual Service License and Facility License by SPAN pursuant to
Section 9 of the WSIA 2006. The licence shall be effective from 1 June 2011 until 31 May 2014 and the licence
fee payable is calculated at 1% of the revenue from the sale of water by the subsidiary.
ANNUAL REPORT 2012
145
28. Contingent liabilities - Company (unsecured)
Corporate guarantee given to a bank in
respect of credit facilities granted to a
jointly controlled entity
31.12.2012
RM000
31.12.2011
RM000
1.1.2011
RM000
25
129
225
The Company has also undertaken to provide continuing financial support to certain subsidiaries to enable them
to meet their financial obligations as and when they fall due.
29. Segmental information
The Group only has one reportable segment, which is principally engaged in the abstraction of raw water,
treatment of water, supply and sale of treated water to consumers in the State of Penang and to engage in
water related business. The Groups Chief Executive Officer (the Chief operating decision maker) reviews internal
management reports on the reportable segment on a monthly basis.
Accordingly, information by operating segment on the Groups operations as required by FRS 8 is not presented.
Geographical segment
Geographical segmental information has not been prepared as the Groups operations are confined to Penang,
Malaysia.
30. Financial instruments
30.1 Categories of financial instruments
The table below provides an analysis of financial instruments categorised as follows :
(a) Loans and receivables (L&R);
(b) Available-for-sale financial assets (AFS); and
(c) Financial liabilities measured at amortised cost (FL).
Financial assets
Carrying
amount
RM000
L&R
RM000
AFS
RM000
20,528
36,219
75,269
2,974
36,219
75,269
17,554
-
132,016
114,462
17,554
31.12.2012
Group
Other investments
Trade and other receivables (excluding prepayment)
146
ANNUAL REPORT 2012
30. Financial instruments (Contd)
30.1 Categories of financial instruments (Contd)
Financial assets
Carrying
amount
RM000
L&R
RM000
AFS
RM000
115,120
7,184
115,120
7,184
-
122,304
122,304
-
25,157
36,012
78,081
3,406
36,012
78,081
21,751
-
139,250
117,499
21,751
103,598
9,071
103,598
9,071
-
112,669
112,669
-
24,606
39,013
66,425
3,688
39,013
66,425
20,918
-
130,044
109,126
20,918
99,277
9,091
99,277
9,091
-
108,368
108,368
-
Company
31.12.2011
Group
Other investments
Company
1.1.2011
Group
Other investments
Company
ANNUAL REPORT 2012
147
30.1 Categories of financial instruments (Contd)
Carrying
amount
RM000
FL
RM000
13,000
137,678
13,000
137,678
150,678
150,678
6,039
6,039
139,333
139,333
335
335
71,788
109,640
71,788
109,640
181,428
181,428
217
217
31.12.2012
Group
Loans and borrowings (including deferred income)
Company
31.12.2011
Group
Company
1.1.2011
Group
Company
148
ANNUAL REPORT 2012
30.2 Net gains and losses arising from financial instruments
Net gains/(losses) on :
2012
RM000
2011
RM000
209
674
(2,619)
-
883
(2,388)
(1,489)
(2,619)
(534)
(2,994)
(3,153)
Available-for-sale financial assets
- recognised in other comprehensive income
- reclassified from equity to profit or loss
- impairment loss on other investments
30.3 Financial risk management
The Group has exposure to the following risks from its use of financial instruments :
Credit risk
Liquidity risk
Market risk
30.4 Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. The Groups exposure to credit risk arises principally from its
receivables from customers and investment securities. The Companys exposure to credit risk arises principally
from loans and advances to subsidiaries and a jointly controlled entity and financial guarantees given to a
bank for credit facilities granted to a jointly controlled entity.
Receivables
Risk management objectives, policies and processes for managing the risk
The risk of counterparties defaulting is controlled by the application of credit approvals, limits and monitoring
procedures. Credit risks are minimised and monitored via deposits received from consumers and notices
sent out to consumers 7 days after due date for settlement of debt. Trade receivables are monitored on
an ongoing basis via the Groups management reporting procedures. The risk associated with the short
term and fixed deposits placed with licensed banks is managed by placing such deposits with licensed banks
with good credit rating.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is
represented by the carrying amounts in the statements of financial position.
Management has taken reasonable steps to ensure that trade receivables that are neither past due nor
impaired are stated at their realisable values. The Group uses ageing analysis to monitor the credit quality
of the trade receivables and the risk is also mitigated by the deposits collected from customers.
ANNUAL REPORT 2012
149
30.4 Credit risk (Contd)
Receivables (Contd)
Exposure to credit risk, credit quality and collateral (Contd)
Receivables amounting to RM29,753,000 (31.12.2011 : RM26,164,000 and 1.1.2011: RM20,610,000) are
secured by deposits collected from customers.
The disclosure of the exposure of credit risk for trade receivables as at the end of the reporting period by
geographic region is not disclosed as the Groups operations are confined to the Penang State.
Impairment losses
The Group maintains an ageing analysis in respect of trade receivables only.
The ageing of trade receivables as at the end of the reporting period was :
Group
Gross
RM000
Individual
impairment
RM000
Net
RM000
9,927
1,968
6,072
11,786
(22)
(10,962)
9,927
1,968
6,050
824
29,753
(10,984)
18,769
7,425
1,848
5,993
10,898
(14)
(9,562)
7,425
1,848
5,979
1,336
26,164
(9,576)
16,588
2,608
3,681
5,268
9,053
(35)
(9,053)
2,608
3,681
5,233
-
20,610
(9,088)
11,522
31.12.2012
Not past due
Past due 15 - 60 days
Past due more than 365 days
31.12.2011
Not past due
1.1.2011
Not past due
150
ANNUAL REPORT 2012
Receivables (Contd)
Impairment losses (Contd)
The movements in the allowance for impairment losses of trade receivables during the year were :
Group
At 1 January
Impairment loss recognised
Impairment loss reversed
Impairment loss written off
At 31 December
2012
RM000
2011
RM000
9,576
1,552
(125)
(19)
9,088
651
(142)
(21)
10,984
9,576
The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group
is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against
the receivable directly.
Investments and other financial assets
Investments are allowed only in liquid securities and only with counterparties that have good credit rating.
These investments are managed by external fund management companies in accordance with the terms
of the Investment Management Mandate.
As at the end of the reporting period, the Group has only invested in domestic securities. The maximum
exposure to credit risk is represented by the carrying amounts in the statements of financial position.
The investments and other financial assets are unsecured.
ANNUAL REPORT 2012
151
Investments and other financial assets (Contd)
Impairment losses (Contd)
The Group recognised an impairment loss of RM2,388,000 (31.12.2011: RM Nil and 1.1.2011: RM Nil) in
respect of the Groups other investments. The movements in the allowance for impairment loss during the
financial year were:
2012
RM000
2011
RM000
At 1 January
Impairment loss recognised
2,388
-
At 31 December
2,388
-
Group
Inter company balances
The Company provides unsecured advances to subsidiaries and a jointly controlled entity. The Company
monitors the results of the subsidiaries and jointly controlled entity regularly.
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying
amounts in the statements of financial position.
Impairment losses
As at the end of the reporting period, there was no indication that the loans and advances to the subsidiaries
and jointly controlled entity are not recoverable. The Company does not specifically monitor the ageing of
these advances. Nevertheless, these advances are not regarded as overdue and are repayable on demand.
Financial guarantees
The Company provides unsecured financial guarantees to a bank in respect of credit facilities granted to a
jointly controlled entity. The Company monitors on an ongoing basis the results of the jointly controlled
entity and repayment made by the jointly controlled entities.
152
ANNUAL REPORT 2012
Financial guarantees (Contd)
The maximum exposure to credit risk amounted to RM25,000 (31.12.2011 : RM129,000 and 1.1.2011 :
RM225,000) representing the outstanding banking facilities of the jointly controlled entity as at the end
of the reporting period.
As at the end of the reporting period, there was no indication that the jointly controlled entity would default
on repayment.
The financial guarantees have not been recognized since the fair value on initial recognition was not material.
30.5 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Groups exposure to liquidity risk arises principally from its various payables and loans and borrowings.
The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the
management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when
they fall due.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or
at significantly different amounts.
ANNUAL REPORT 2012
153
30.5 Liquidity risk (Contd)
Maturity analysis
The table below summaries the maturity profile of the Groups and the Companys financial liabilities as
at the end of the reporting period based on undiscounted contractual payments :
Non-derivative
financial liabilities
Carrying
amount
RM000
More
Contractual Contractual
2-5
than
1-2
cash Under
interest
years
years 5 years
flows 1 year
rate
RM000 RM000 RM000 RM000 RM000
%
Group
31.12.2012
(including deferred
income)
13,000
137,678
-
150,678
13,000
137,678 123,118
7,280
1,300
7,280
11,700
-
150,678 123,118
7,280
8,580
11,700
31.12.2011
139,333
-
139,333 116,968
7,633
14,732
-
71,788
109,640
-
71,788
6,552
109,640 109,640
6,552
-
19,656
-
39,028
-
181,428 116,192
6,552
19,656
39,028
1.1.2011
181,428
Company
31.12.2012
6,039
-
6,039
5,964
37
38
-
335
-
335
207
43
85
-
217
-
217
217
-
-
-
31.12.2011
1.1.2011
154
ANNUAL REPORT 2012
30.6
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
other prices will affect the Groups financial position or cash flows.
30.6.1 Currency risk
The Group is not significantly exposed to foreign currency risk as transactions denominated in a currency
other than the functional currency of the Group entities is not material.
30.6.2 Interest rate risk
Cash flows interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a
financial instrument will fluctuate due to changes in market interest rates. The Groups and the Companys
income and interest-earning financial assets are mainly short term in nature and have been mostly placed
in short-term and fixed deposits with licensed banks.
The Groups and the Companys exposure to interest rate risk is not material as the Group and the
Company do not have any significant interest bearing financial liabilities and interest-earning financial
assets other than the short-term deposits placed with licensed banks.
30.6.3 Other price risk
Equity price risk arises from the Groups investments in equity securities.
Management of the Group monitors the equity investments on a portfolio basis. Material investments
within the portfolio are managed on an individual basis and all buy and sell decisions are approved by
the Risk Management Committee of the Group.
Equity price risk sensitivity analysis
The management is of the view that the results of the Group is not sensitive towards changes in equity
price risk as there are no equity investments being designated as fair value through profit or loss. Changes
in equity price risk for equity investments designated as available-for-sale is not significant to the total
equity of the Group.
30.7
Fair values of financial instruments
Recognised financial instruments
The carrying amounts of cash and cash equivalents, short term receivables and payables approximate
their fair values due to the relatively short term nature of these financial instruments.
ANNUAL REPORT 2012
155
30.7 Fair values of financial instruments (Contd)
Recognised financial instruments (Contd)
The fair values of the other financial assets and financial liabilities, together with their carrying amounts
shown in the statements of financial position are as follows :
Financial assets
Quoted shares
Fixed deposits with licensed bank
Money market placement
31.12.2012
Carrying
Fair
amount
value
RM000 RM000
31.12.2011
Carrying
Fair
amount
value
RM000
RM000
1.1.2011
Carrying
Fair
amount
value
RM000
RM000
17,554
40
2,934
17,554
40
2,934
21,751
126
3,280
21,751
126
3,280
20,918
1,327
2,361
20,918
1,327
2,361
22,001
24,630
33,649
28,412
-
-
13,000
6,615
-
-
71,788
#
(including deferred income)
The following summarises the methods used in determining the fair value of financial instruments reflected
in the above table.
Investment in quoted shares and debt securities
The fair values of financial assets that are quoted in an active market are determined by reference to their
quoted closing bid price at the end of the reporting period.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the end of the reporting
period.
# It was not practicable to estimate the fair value of the interest-free term loans which were obtained
from the State Government of Penang due to the lack of comparability of information on discount rate
and repayment terms.
156
ANNUAL REPORT 2012
30.7.1 Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different
levels have been defined as follows :
Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 : Inputs for the asset or liability that are not based on observable market date (unobservable
inputs).
Level 1
RM000
Level 2
RM000
Level 3
RM000
Total
RM000
17,554
-
-
17,554
21,751
-
-
21,751
20,918
-
-
20,918
Financial assets
31.12.2012
Investment in quoted shares
31.12.2011
1.1.2011
31. Capital management
The Groups objectives when managing capital is to maintain a strong capital base and safeguard the Groups
ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain
future development of the business.
There were no changes in the Groups approach to capital management during the financial year.
32. Explanation of transition to MFRSs
As stated in Note 1(a), these are the first financial statements of the Group and of the Company prepared in
accordance with MFRSs.
The accounting policies set out in Note 2 have been applied in preparing the financial statements of the Group
and of the Company for the financial year ended 31 December 2012, the comparative information presented
in these financial statements for the financial year ended 31 December 2011 and in the preparation of the
opening MFRS statement of financial position at 1 January 2011 (the Groups date of transition to MFRSs).
The transition to MFRSs does not have any material financial impact to the financial statements of the Group
and the Company.
ANNUAL REPORT 2012
157
33. Supplementary information on the breakdown of realised and unrealised profits or losses
The breakdown of the retained earnings of the Group and of the Company as at 31 December, into realised and
unrealised profits, pursuant to paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements,
are as follows :
Total retained earnings :
- Realised
- Unrealised
Share of retained earnings of
jointly controlled entity
- Realised
Add : Consolidation adjustments
Total retained earnings at 31 December
2012
RM000
Group
2011
RM000
Company
2012
2011
RM000
RM000
314,851
(220)
303,856
(6,500)
55,613
-
51,263
-
314,631
297,356
55,613
51,263
1,390
1,284
-
-
316,021
298,640
55,613
51,263
53,780
53,780
-
-
369,801
352,420
55,613
51,263
The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination
of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities
Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.
158
ANNUAL REPORT 2012
STATEMENT BY DIRECTORS
PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
In the opinion of the Directors, the financial statements set out on pages 99 to 156 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 as of
31 December 2012 and of their financial performance and cash flows for the financial year then ended.
In the opinion of the Directors, the information set out in Note 33 on page 157 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 :
Dato Farizan Bin Darus
Dato Mokhtar Bin Mohd Jait
Penang,
STATUTORY DECLARATION
PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965
I, Joyce Lee Suan Imm, the officer primarily responsible for the financial management of PBA Holdings Bhd., do
solemnly and sincerely declare that the financial statements set out on pages 99 to 157 are, to the best of my
knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and
by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the abovenamed at Georgetown in the State of Penang on 11 April 2013.
Joyce Lee Suan Imm
Before me :
Goh Suan Bee (P125)
Commissioner for Oaths
ANNUAL REPORT 2012
INDEPENDENT AUDITORS REPORT
TO THE MEMBERS OF PBA HOLDINGS BHD.
Report on the Financial Statements
We have audited the financial statements of PBA Holdings Bhd., which comprise the statements of financial position
as at 31 December 2012 of the Group and of the Company, and the statements of 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 99 to 156.
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 controls
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 the 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.
159
160
ANNUAL REPORT 2012
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF PBA HOLDINGS BHD. (CONTD)
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.
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 33 on page 157 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. 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
of 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
As stated in Note 1 to the financial statements, PBA Holdings Berhad adopted Malaysian Financial Reporting Standards
(MFRS) and International Financial Reporting Standards (IFRS) on 1 January 2012 with a transition date of
1 January 2011. These standards were applied retrospectively by the Directors to the comparative information in these
financial statements, including the statements of financial position as at 31 December 2011 and 1 January 2011, and
the statements of comprehensive income, changes in equity and cash flows for the year ended 31 December 2011
and related disclosures. We were not engaged to report on the comparative information that is prepared in accordance
with MFRS and IFRS, and hence it is unaudited. Our responsibilities as part of our audit of the financial statements
of the Group and of the Company for the year ended 31 December 2012 have, in these circumstances, included
obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2012 do not contain
misstatements that materially affect the financial position as of 31 December 2012 and financial performance and
cash flows for the year then ended.
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
AF 0758
Chartered Accountants
Penang, Malaysia
Ooi Kok Seng
2432/05/13 (J)
Chartered Accountant
ANNUAL REPORT 2012
161
ANALYSIS OF SHAREHOLDINGS
AS AT 7 MAY 2013
Authorised Capital
:
Issued and Fully Paid-Up Capital :
Class of Equity Securities
Voting Rights
:
RM500,000,001
RM165,635,201
Comprising of 331,270,401 Ordinary Shares of RM0.50 each (Shares) and 1
Special Rights Redeemable Preference Share of RM0.50 (Special Share)
1 vote per Share
Distribution Schedule of Shareholders
No. of Holders
4
6,341
2,372
743
141
2
9,603
Size of Shareholdings
Less than 100
100 - 1,000
1,001 - 10,000
10,001 to 100,000 shares
100,001 to less than 5% of issued shares
5% and above of issued shares
No. of Shares #
192
6,287,408
10,498,100
23,647,600
75,507,200
215,150,001
331,090,501
%#
0.00
1.90
3.17
7.14
22.81
64.98
100.00
Note:# Exclude 1 Special Share which is not listed on the Main Market of Bursa Malaysia Securities Berhad and 179,900
Shares which are currently held as treasury shares.
List of the 30 Largest Securities Account Holders
(without aggregating the securities from different securities accounts belonging to the same person)
No. Name
1
2
3
STATE SECRETARY, PENANG
PENANG DEVELOPMENT CORPORATION
EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD
PLEDGED SECURITIES ACCOUNT FOR YAYASAN BUMIPUTRA
PULAU PINANG BHD (PEN)
4
CITIGROUP NOMINEES (TEMPATAN) SDN BHD
EMPLOYEES PROVIDENT FUND BOARD
5
LEE JOO PING
6
TEOH GUAN KOK & CO. SDN. BERHAD
7
PARK AVENUE CONSTRUCTION SDN BHD
8
LEE JOO PING SDN BHD
9
NEOH CHOO EE & COMPANY, SDN. BERHAD
10 QUARRY LANE SDN BHD
No. of
Shares held #
%#
182,050,001
33,100,000
13,567,900
54.98
10.00
4.10
8,049,500
2.43
4,239,300
3,764,000
2,575,800
1,841,300
1,600,000
1,290,000
1.28
1.14
0.78
0.56
0.48
0.39
162
ANNUAL REPORT 2012
ANALYSIS OF SHAREHOLDINGS AS AT 7 MAY 2013 (CONTD)
List of the 30 Largest Securities Account Holders (Contd)
No. Name
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
EMERALD LODGE SDN. BHD.
WEIDA (M) BHD
QUARRY LANE SDN BHD
CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND
HSBC NOMINEES (ASING) SDN BHD
EXEMPT AN FOR HSBC TRINKAUS& BURKHARDT (INTERNATIONAL) SA
ONN KOK PUAY (WENG GUOPEI)
HLG NOMINEE (TEMPATAN) SDN BHD
HONG LEONG BANK BHD FOR GOH CHAI HONG
LIM KHUAN ENG
EMPLOYEES PROVIDENT FUND BOARD (PHEIM)
PUBLIC NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR TAN HOCK CHENG
PUBLIC NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR WONG KAM MUN
JASENI BIN MAIDINSA
NEO SUAN KEONG
LEE KONG JIN SDN BHD
CHA CHONG MING @ CHEAR TIANG MENG
LEUNG SOOK MEE
BUTTERWORTH ICEWORKS SDN BERHAD
DYNAQUEST SDN. BERHAD
GOLDEN FRESH SDN BHD
KOAY HENG TEONG
No. of
Shares held #
%#
1,264,000
1,196,500
1,100,000
1,089,200
0.38
0.36
0.33
0.33
1,081,900
0.33
1,015,600
1,000,000
0.31
0.30
982,400
758,800
0.30
0.23
750,000
0.23
744,500
0.22
600,000
600,000
585,000
506,000
501,000
500,000
500,000
500,000
455,000
0.18
0.18
0.18
0.15
0.15
0.15
0.15
0.15
0.14
ANNUAL REPORT 2012
163
ANALYSIS OF SHAREHOLDINGS AS AT 7 MAY 2013 (CONTD)
SUBSTANTIAL SHAREHOLDERS
(excluding those who are bare trustees pursuant to Section 69 of the Companies Act, 1965)
Name of Substantial Shareholders
State Secretary, Penang
Perbadanan Pembangunan Pulau Pinang
Direct Interest
182,050,001
33,100,000
No. of Shares held
% #
Indirect Interest
54.98
10.00
-
Direct Interest
-
No. of Shares held
%
Indirect Interest
13,567,900
-
%
-
Note
a
-
%#
Note
4.1
b
DIRECTORS SHAREHOLDINGS
Name of Directors
Y.B. Prof. Dr. P. Ramasamy A/L Palanisamy
Y.B. Tuan Abdul Malik Bin Abul Kassim
Y. Bhg. Dato' Chew Kong Seng
Y. Bhg. Dato' Syed Mohamad Bin Syed Murtaza
Mr. Athi Isvar A/L Athi Nahappan
Notes:a)
Exclude 1 Special Share which is not listed on the Main Market of Bursa Malaysia Securities Berhad
b)
Deemed interest held through Yayasan Bumiputra Pulau Pinang Bhd pursuant to Section 6A of the Companies
Act, 1965.
INTEREST IN THE RELATED CORPORATIONS
None of the above Directors have any interest in Shares in the related corporations of the Company.
164
ANNUAL REPORT 2012
TOP 10 PROPERTIES OF THE GROUP
Details of the Top 10 Properties of the Group are as follows:-
LAND AREA
(HECTARE)
NET BOOK
VALUE AS AT
31 DECEMBER
2012
RM000
99 years

1.441
13.149
14.590
165,318
Quarters
& Treatment
Plant
In perpetuity
10.294
30,322
Workshop,
Store,
Quarters &
office
99 years
97 years
In perpetuity
2.066
0.859
0.304
LOT NO.
LOCATION
(MUKIM,
BANDAR/
DAERAH)
TYPE
TENURE
Sungai Dua
Treatment Plant
2394
2395
11, SPU

Treatment
Plant
2
Batu Ferringhi
Quarters,
Bungalow &
Treatment Plant
443
17, DTL
3
Rifle Range Road
Workshop, Store &
Office
2105,
2137 & 2138
726
Sect. 2,
Georgetown,
DTL
ITEM
NO.
1
PROPERTY
4
Pulau Jerejak
Reservoir
5
3.229
20,596
11255
Mk 13 DTL
Reservoir
In perpetuity
3.539
20,164
Jawi Office &
Store
PT534
11, SPS
Office/Store
99 years
6.992
14,298
6
Reservoir at
Batu Kawan
1452
PT1887
13, SPS

Reservoir
99 years

1.5112
0.2045
1.7157
13,278
7
Bukit Indera
Muda Reservoir
927
928
1113
908
3, SPT

21, SPT
3, SPT
Reservoir
99 years

In perpetuity
2.959
2.970
0.859
0.741
7.529
144
646
658
659
661
Sect. 4,
Jelutong,
DTL

Reservoir
In perpetuity

5.623
8.802
2.430
0.289
0.930
18.074
9,040
8
Bukit Dumbar
Reservoir
13,093
9
Kepala Batas Office,
Bertam
PT20
6, SPT
Office
99 years
1.262
7,675
10
Prai Store,
Workshop &
Office
3154
6, Kaw.
Prai IV, SPT
Store,
Workshop &
Office
60 years
1.214
6,409
ANNUAL REPORT 2012
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Thirteenth (13th) Annual General Meeting of PBA Holdings Bhd. (PBAHB
or the Company) will be held at Pinang Ballroom, Traders Hotel, Magazine Road, 10300 Penang on Saturday,
29 June 2013 at 11.00 a.m. for the following purposes: AGENDA
As Ordinary Business
1.
To receive the Audited Financial Statements for the financial year ended 31 December 2012
together with the Reports of the Directors and Auditors thereon.
2.
To re-elect the following Directors who retire in accordance with Article 114 of the Companys
Articles of Association: a)
b)
c)
d)
3.
Y.B. Prof. Dr. P. Ramasamy a/l Palanisamy
Y.B. Dato' Farizan bin Darus
Y.B. Dato' Faiza binti Zulkifli
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
To consider and if thought fit, to pass the following resolutions in accordance with Section
129(6) of the Companies Act, 1965 as ordinary resolutions: a) That Y.Bhg. Dato Chew Kong Seng retiring in accordance with Section 129 of the Companies
Act, 1965, be and is hereby re-appointed as Director of the Company and to hold office until
the next Annual General Meeting of the Company.
Resolution 6
b) That Encik Ahmed Bin Chee retiring in accordance with Section 129 of the Companies Act,
1965, be and is hereby re-appointed as Director of the Company and to hold office until the
next Annual General Meeting of the Company.
Resolution 7
4.
To approve the declaration of a final single tier dividend of 4% for the financial year ended
31 December 2012.
Resolution 8
5.
To appoint Messrs Grant Thornton, having consented to act, as Auditors of the Company for
the ensuing year in place of the retiring Auditors, Messrs KPMG, to hold office until the conclusion
of the next Annual General Meeting and to pass the following resolution as Ordinary Resolution,
with or without modifications: That Messrs Grant Thornton be appointed as auditors of the Company in place of the retiring
auditors, Messrs KPMG, at a remuneration to be fixed by the Directors and to hold office until
the conclusion of the next Annual General Meeting.
Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965 is set out in
the Annual Report 2012.
Resolution 9
165
166
ANNUAL REPORT 2012
NOTICE OF ANNUAL GENERAL MEETING (CONTD)
6.
As Special Business
To consider and if thought fit, to pass the following resolutions: 6.1
Ordinary Resolution: Proposed renewal of share buy-back authority for the Company to purchase its
own ordinary shares of up to 10% of its issued and paid-up ordinary share capital
(Proposed Renewal of Share Buy-Back Mandate)
THAT, subject to the Companies Act, 1965 (the Act), the provisions of the Companys
Memorandum and Articles of Association, the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad (Bursa Securities) and all other applicable laws, guidelines,
rules and regulations, the Company be and is hereby authorized, to the fullest extent
permitted by law to purchase such amount of ordinary shares of RM0.50 each in the
Company (PBAHB Shares) from time to time through Bursa Securities upon such terms
and conditions as the Directors may deem fit and expedient in the interest of the Company
provided that:i) the aggregate number PBAHB Shares which may be purchased or held by the Company
shall not exceed ten per centum (10%) of the total issued and paid-up ordinary share
capital for the time being of the Company;
ii) the maximum fund to be allocated by the Company for the purpose of purchasing the
PBAHB Shares under the Proposed Renewal of Share Buy-Back Mandate shall not
exceed the share premium account and/or retained profits of the Company for the
time being;
iii) the authority conferred by this resolution shall commence immediately upon passing
of this ordinary resolution and shall continue to be in force until:
(a) the conclusion of the next Annual General Meeting (AGM) of the Company
following the forthcoming AGM, at which time the authority will lapse unless
renewed by ordinary resolution, either unconditionally or conditionally; or
(b) the expiration of the period within which the next AGM after the date is required
by law to be held; or
(c) revoked or varied by ordinary resolution passed by the shareholders in a general
meeting,
whichever occurs first, but not so as to prejudice the completion of purchase(s) by the
Company of the PBAHB Shares before the aforesaid expiry date and, made in any
event, in accordance with the provisions of the guidelines issued by Bursa Securities
and any prevailing laws, rules, regulations, orders, guidelines and requirements issued
by any relevant authorities;
iv) upon completion of the purchase(s) of the PBAHB Shares by the Company, the Directors
of the Company be and are hereby authorised to cancel the PBAHB Shares so purchased
or to retain the PBAHB Shares so purchased as treasury shares of which may be
distributed as dividends to shareholders and/or resold on the Bursa Securities and/or
subsequently cancelled, or to retain part of the PBAHB Shares so purchased as treasury
shares and cancel the remainder and in any other manner as prescribed by the Act,
rules, regulations and orders made pursuant to the Act and the requirements of the
Bursa Securities and any other relevant authority for the time being in force;
ANNUAL REPORT 2012
6.
As Special Business (Contd)
AND THAT the Directors of the Company be and are hereby authorised to take all such
steps as are necessary or expedient to implement, finalise, complete or to effect the
Proposed Renewal of Share Buy-Back Mandate with full powers to assent to any conditions,
modifications, resolutions, variations and/or amendments (if any) as may be imposed by
the relevant authorities and to do all such acts and things as the said Directors may deem
fit and expedient in the best interest of the Company to give effect to and to complete
the purchase of the PBAHB Shares.
Resolution 10
6.2
Ordinary Resolution: Retention of Dato Chew Kong Seng, who has served as an Independent NonExecutive Director of the Company for a cumulative term of more than nine (9)
years, to continue to act as an Independent Non-Executive Director of the Company
THAT subject to the passing of the Resolution 6, approval be and is hereby given to
Dato Chew Kong Seng, who has served as an Independent Non-Executive Director of the
Company for a cumulative term of more than nine (9) years, to continue to act as an
Independent Non-Executive Director of the Company in compliance with the recommendation
Resolution 11
of Malaysian Code on Corporate Governance 2012.
6.3
Special Resolution: Proposed Amendments to the Articles of Association of the Company
THAT the proposed deletions, alterations, modifications, variations and additions to the
Articles of Association of the Company in the manner as set out in the Circular to
Shareholders dated 7 June 2013 (Proposed Amendments) be and are hereby approved.
AND THAT the Directors and Secretary of the Company be and are hereby authorised to
sign and execute all relevant documents, acts and things as may be required for and in
connection with and to give effect to the Proposed Amendments with the full power to
assent to any conditions, deletion, alteration, modifications, variations and/or amendments
Resolution 12
as may be required by the relevant authorities.
7.
To transact any other ordinary business of which due notice shall have been given.
NOTICE OF DIVIDEND ENTITLEMENT
NOTICE IS ALSO HEREBY GIVEN that a final single tier dividend of 4% in respect of the financial year ended
31 December 2012, if approved by members of the Company, will be paid on 25 July 2013. The entitlement date
for the dividend payment is 5 July 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 5 July 2013 in respect of ordinary
transfers; and
(b) Shares bought on the Bursa Securities on a cum entitlement basis according to the Rules of the Bursa Securities.
By Order of the Board,
THUM SOOK FUN
(MIA 24701)
Company Secretary
Dated: 7 June 2013
Penang
167
168
ANNUAL REPORT 2012
Explanatory Notes to Special Business: (i)
Resolution No. 10 for the Proposed Renewal of Share Buy-Back Mandate
The proposed adoption of the Resolution No. 10 is to renew the authority granted by the shareholders of the Company at
the 12th AGM held on 26 June 2012. The proposed renewal of the Shares Buy Back mandate will allow the Directors to buyback and/or hold up to a maximum of 10% of the Companys issued and paid-up share capital at any point of time, by utilising
the amount allocated which shall not exceed the total retained profits and/or share premium account of the Company, subject
to the Act, Main Market Listing Requirements of Bursa Securities (Listing Requirements), any prevailing laws, orders,
requirements, rules, regulations and guidelines issued by the relevant authorities at the time of purchase. This authority,
unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next AGM of the Company,
or the expiration of period within which the next AGM is required by law to be held, whichever is earlier.
(ii) Resolution No. 11 for the retention of Dato Chew Kong Seng, who has served as an Independent Non-Executive Director
of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive
Director of the Company
Both the Nominating Committee and the Board have assessed the independence of Dato Chew Kong Seng, who has served
as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, and recommended
him to continue to serve as an Independent Non-Executive Director of the Company based on the following justifications:a) He fulfilled the criteria under the definition of Independent Director as stated in the Listing Requirements, and thus, he
would be able to function as check and balance, provide a broader view and brings an element of objectivity
to the Board.
b) He remains objective and independent in expressing his view and in participating in deliberation and decision making of
the Board and Board Committees.
c) He continues to demonstrate conduct and behaviour that are essential indicators as independence.
(iii) Resolution No. 12 for the Proposed Amendments to the Articles of Association of the Company
The Proposed Amendments are to streamline the Companys Articles of Association to be aligned with the amendments to
the Listing Requirements.
Further information on the Proposed Renewal of the Share Buy-Back Mandate and Proposed Amendments are set out in the
Statements and Circular to Shareholders dated 7 June 2013, which is dispatched together with the Companys Annual Report
2012.
Notes :
1.
In respect of deposited securities, only members whose name appear in the Record of Depositors on 24 June 2013 shall be
entitled to attend, speak and vote at the meeting.
2.
A member entitled to attend and vote at the Meeting is entitled to appoint two (2) or more proxies to attend and vote in
his or her stead. Where a member appoints two or more proxies, the appointments shall be invalid unless he or she specifies
the proportions of his or her shareholdings to be represented by each proxy.
3.
A proxy may but need not to be a member of the Company and the provisions of Section 149 (1)(a), (b) and (c) of the
Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. Any
proxy or duly authorised representative appointed to vote and attend instead of a member, shall have the same right as the
member to speak at the meeting.
4.
In the case of a corporate member, the instrument appointing a proxy must be either under its common seal or under the
hand of its officer or attorney duly authorised.
5.
Where a member of the Company is an authorised nominee who holds ordinary shares in the Company for multiple beneficial
owners in one securities account (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.
6.
The instrument appointing a proxy must be deposited with the Company's registered office at 32nd Floor, Komtar, 10000
Pulau Pinang not less than 48 hours before the time fixed for holding the Meeting or any adjournment thereof.
ANNUAL REPORT 2012
STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING
(PURSUANT TO PARAGRAPH 8.27(2) OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA SECURITIES)
As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above
Directors who are standing for re-election or re-appointment) at this forthcoming 13th AGM.
169
170
ANNUAL REPORT 2012
NOTICE OF NOMINATION FOR APPOINTMENT OF NEW AUDITORS
No. of Shares held
FORM OF PROXY
I / We
(Full name Company number in capital letters)
of
NRIC No.
(Full address in capital letters and telephone number)
being a member/members of PBA Holdings Bhd. hereby appoint
(Name of proxy as per NRIC, in capital letters)
of
or failing him/her,
of
NRIC No.
(Full address in capital letters)
(Name of proxy as per NRIC, in capital letters)
NRIC No.
(Full address in capital letters)
or failing him/her, the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the
Thirteenth (13th) Annual General Meeting of the Company to be held at Pinang Ballroom, Traders Hotel, Magazine
Road, 10300 Penang on Saturday, 29 June 2013 at 11.00 a.m. and at any adjournment thereof.
Please indicate your vote by a (X) in the respective box of each resolution. If no specific direction as to voting is
given, the proxy will vote or abstain from voting on the resolutions at his/her discretion.
AS ORDINARY BUSINESS:
For Against
Resolution 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
Resolution 2 To re-elect Y.A.B. Tuan Lim Guan Eng as Director of the Company
Resolution 3 To re-elect Y.B. Prof. Dr. P. Ramasamy a/l Palanisamy as Director of the Company
Resolution 4 To re-elect Y.B. Dato' Farizan bin Darus as Director of the Company
Resolution 5 To re-elect Y.B. Dato' Faiza binti Zulkifli as Director of the Company
Resolution 6 To re-appoint Y.Bhg. Dato Chew Kong Seng as Director of the Company
Resolution 7 To re-appoint Encik Ahmed bin Chee as Director of the Company
Resolution 8 To approve the declaration of a final single tier dividend of 4% for the financial
year ended 31 December 2012
Resolution 9 To appoint Messrs Grant Thornton as auditors of the Company in place of the
retiring auditors, Messrs KPMG, at a remuneration to be fixed by the Directors
and to hold office until the conclusion of the next Annual General Meeting
AS SPECIAL BUSINESS:
Resolution 10 Ordinary Resolution Proposed Renewal of Share Buy-Back Mandate
Resolution 11 Ordinary Resolution Retention of Dato Chew Kong Seng as an Independent
Non-Executive Director of the Company
Resolution 12 Special Resolution Proposed Amendments to the Articles of Association of the
Company
* Strike out whichever not applicable
Dated this _______ day of _____________________, 2013.
Signature/Common Seal of Shareholder(s)
Notes:1. In respect of deposited securities, only members whose name appear in the Record of Depositors on 24 June 2013 shall be entitled to attend, speak and
vote at the meeting.
2. A member entitled to attend and vote at the Meeting is entitled to appoint two (2) or more proxies to attend and vote in his or her stead. Where a member
appoints two or more proxies, the appointments shall be invalid unless he or she specifies the proportions of his or her shareholdings to be represented by
each proxy.
3. A proxy may but need not to be a member of the Company and the provisions of Section 149 (1)(a), (b) and (c) of the Companies Act, 1965 shall not apply
to the Company. There shall be no restriction as to the qualification of the proxy. Any proxy or duly authorised representative appointed to vote and attend
instead of a member, shall have the same right as the member to speak at the meeting.
4. In the case of a corporate member, the instrument appointing a proxy must be either under its common seal or under the hand of its officer or attorney duly
authorised.
5. Where a member of the Company is an authorised nominee who holds ordinary shares in the Company for multiple beneficial owners in one securities account
(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.
6. The instrument appointing a proxy must be deposited with the Company's registered office at 32nd Floor, Komtar, 10000 Pulau Pinang not less than 48 hours
before the time fixed for holding the Meeting or any adjournment thereof.
7. Any alteration in this form must be initialed.
Please fold across the line and close
stamp
The Company Secretary
PBA Holdings Bhd.
(515119-U)
32nd Floor, Komtar, 10000 Pulau Pinang.
Please fold across the line and close
46%
of the worlds
population
do not have piped water, and
global warming is a reality.