Corporate Governance Overview Statement

Board Responsibilities

The board charter sets out matters reserved for the Board’s decision and outlines the Board’s roles and responsibilities; it will be reviewed to align with the updated PPB Group Strategic Plan and Group anti-bribery and corruption (“ABAC”) framework which is being developed; as well as to include sustainability considerations. The schedule of matters for the Board’s decision includes amongst others, the overall Group strategy and direction; major policies, board and board committee appointments; approval of financial statements, corporate plans and budgets, material acquisitions and disposals of assets, and major investments.

The Board is responsible for the overall performance and control of the Group, setting and reviewing the strategic direction of the Group, and monitoring the implementation by management of that strategy. Specific responsibilities are delegated to the three main Board committees, namely the Audit, Nomination and Remuneration Committees. These committees operate within Board-approved terms of reference, and have authority to examine issues and report to the Board with their findings and recommendations.

The roles of the Chairman and Managing Director are separate. The Chairman’s responsibilities include overseeing the governance process, as well as represent the Board to shareholders. The Managing Director is responsible for overseeing the development and operations of the Group’s businesses, and implementing corporate strategies and objectives adopted by the Board.

The Board sets the minimum standards of conduct and personal behaviour; to maintain a uniform set of values and ethics within the Group, a Group-wide code of ethics and code of conduct has been adopted and embedded in the respective Group employee handbooks. The codes are being reviewed and will be strengthened/expanded if necessary. A whistle-blower policy was adopted by the Company in 2015 which is incorporated in the employee handbook, and has also been adopted by the respective business units throughout the Group. The above are also being reviewed to align with the ABAC framework.

In exercising their duties, directors have access to information within the Company and the support of the company secretary. The company secretary also updates directors on statutory and regulatory requirements relating to the discharge of their duties and responsibilities.

During the year ended 31 December 2019, the Board met five times and the attendance record of each Director is set out below:

Board Composition

The Board comprises a majority of independent directors; of the seven Board members, four are independent. The remainder of the Board comprises two non-independent non-executive directors, and the Managing Director.

The independent directors are able to carry out their duties and express their views unfettered by familiarity, or business or other relationships. They provide skills, competencies as well as broader views to enhance the Board’s effectiveness.

The board has agreed that annual shareholders’ approval be sought to extend the tenure of any director who has served for more than nine years as an independent director. Dato’ Capt Ahmad Sufian @ Qurnain bin Abdul Rashid’s tenure as an independent director was extended at the 50th Annual General Meeting (“AGM”) of the Company in 2019 until the conclusion of the next AGM, pursuant to the recommendation in the MCCG. The Nomination Committee (“NC”) and the Board are satisfied that Dato’ Sufian is able to exercise independent judgment and act in the best interests of the Company, and recommended the continuation of Dato’ Sufian’s term as an independent director beyond nine years, for shareholders’ approval at the 51st AGM of the Company.

The Board strives to achieve a balance and mix of skills, experience and perspectives amongst its directors, to collectively bring a range of experience, business, financial and technical expertise for effective oversight of the Group’s diversified businesses, and fulfill the Board’s duties and responsibilities.

The NC also reviews annually the training undertaken by Directors and recommends topics which are relevant or of interest to the Board to keep abreast with business and regulatory developments. In 2019, the Directors attended PPB’s annual in-house training session for directors and senior management, and the topics selected included the following:

• impact of the Companies Act 2016 on directors’ duties and responsibilities.
• the introduction of corporate liability provisions under the Malaysian Anti-Corruption (Amendment) Act 2018.
• an overview of The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“AMLA”), how money laundering affects corporations and individuals, and ways to deal with investigations on money laundering and corruption under the AMLA.
• the paradigm shift in cyber-security, implications of recent cyber-security incidents and challenges faced by organisations, and how to protect from cyber-threats.

In addition to the above, Directors also attended other training sessions during the year:

The criteria for evaluation of candidates for appointment as directors (and senior management positions) include their qualification, occupation, professional and business experience, and is subject to the Company/Group’s requirements and operating environment. Prospective candidates are not discriminated based on gender, age, cultural background etc.

The Group recognises the importance of identifying and developing potential leaders and managers to fill key positions (whether on the board or senior management) in the Company and Group, from both internal and external sources. This is an on-going process based on the Group’s short and longer term needs in terms of skills, expertise, knowledge and experience.

Board evaluation
Candidates for board appointments are reviewed by the NC before recommendation to the Board. The NC is chaired by Encik Ahmad Riza bin Basir, an independent director.

The NC reviews annually the Board size and composition, as well as the mix of Directors necessary for the successful direction of the Company and Group’s businesses. This includes an annual Board assessment, and an assessment of the independent directors, as well as an annual review of the Audit Committee. For the year under review, the Board is satisfied with the present number and composition of its members and is of the view that the Board had discharged its duties and responsibilities effectively with the current mix of skills, knowledge, experience and strengths.

Gender diversity
There is presently no formal gender diversity policy. The Board is of the opinion that it is important to recruit and retain the best available talent, taking into account the mix of skills, experience, knowledge and independence, and based on the Group’s needs and operating environment. Going forward, gender diversity will be one of the factors to be considered in evaluating prospective candidates when a board vacancy arises.

Remuneration
The Board reviews the overall remuneration of executive and non-executive directors to attract and retain directors with the relevant experience and expertise.

The Managing Director’s remuneration is determined after taking into account his duties and responsibilities as Managing Director of PPB, his roles in various capacities in the main business units, and the Group’s performance for the year. For non-executive directors, the remuneration reflects their roles and responsibilities, and the recommendation thereof is a matter for the Board as a whole subject to shareholders’ approval.

The details of the individual directors’ remuneration paid/payable for FYE2019 on a Group and Company basis are set out below:

* Employees Provident Fund

The remuneration of the top five senior management of the PPB Group (excluding those who are also Directors of PPB) paid/payable for FYE2019 on an aggregated basis in RM50,000 bands is as follows:

The Board is of the opinion that the disclosure of the senior management’s names and remuneration components (salary, bonus, benefits in-kind, other emoluments) would not be in the best interest of the Group due to confidentiality, business and personal security concerns.

The above disclosure is deemed sufficient to enable stakeholders to assess senior management remuneration vis a vis the Group’s performance.

Audit Committee
The Audit Committee (“AC”) comprises entirely of independent directors; the AC Chairman is also separate from the Chairman of the Board.

The principal functions of the AC include the following:

• Ensure that the financial statements comply with applicable financial reporting standards, and assess the suitability and independence of external auditors.
• Assess the adequacy and effectiveness of the Group’s enterprise-wide risk management and internal control framework.

The members of the AC possess a mix of skills, knowledge and experience to enable them to discharge their duties and responsibilities pursuant to the AC’s terms of reference. An annual self and peer evaluation of the AC is carried out and reviewed by the NC.

The Audit Committee Report on pages 55 to 57 of the annual report provides more details on the AC’s functions during the year.

Risk management and internal control framework
Responsibility for ensuring a sound internal control system and reviewing the effectiveness of the system lies with the Board. The Group’s system of risk management and internal control is designed to manage, rather than eliminate, the risk of failure to achieve the Company’s corporate objectives and safeguard the Group’s assets. It therefore provides reasonable but not absolute assurance against material misstatement, fraud or loss.

A risk management and internal control framework has been established which covers the Group’s risk assessment process and internal controls, with oversight and reporting on the effectiveness of this function. There were no significant risk management and internal control failings or weaknesses which resulted in material losses or contingencies during the financial year.

The Statement on Risk Management and Internal Control set out on pages 58 and 59 of the 2019 Annual Report provides a more detailed description of the state of risk management and internal controls.

Communication with stakeholders
PPB’s Corporate Disclosure Policy (“CDP”) sets out the disclosure policies and procedures, and provides a framework to communicate effectively with stakeholders and the public generally. The policy may be viewed at the Company’s website: https://www.ppbgroup.com/investor-relations/corporatedisclosure- policy.php

The Company seeks to provide stakeholders with timely, accurate, clear and equal access to material information on the Company’s performance and operations. The principal sources of information disseminated by the Company during the year include the annual report, quarterly investor updates, news releases and company website.

PPB’s investor relations programme is directed at both individual and institutional investors, the objective of which is to maintain ongoing awareness of the Company’s performance amongst shareholders, media and the investing community. This includes twice-yearly analyst briefings after the release of the half-yearly and final results together with media conferences. The Company also makes every attempt to meet requests for meetings or information from the investing community.

In respect of integrated reporting <IR>, the Board is of the opinion that there must be a sufficient timeframe for <IR> to be better understood and appreciated by management; and that there should be minimal duplication of the same information which is required to be disclosed pursuant to other legislation. The present contents of the annual report contain financial and non-financial information are considered to provide a fairly comprehensive overview of the Group. No timeframe has been fixed for the adoption of <IR> for the time being.

Conduct of general meetings
Meetings of the Company’s shareholders are held in the Klang Valley, Peninsular Malaysia. The venue of the meeting is centrally located, accessible by public transport, and there is ample parking space in and around the premises.

The notice of the 50th AGM was sent to members 28 days before the meeting together with the Annual Report. The AGM notice sets out the resolutions to be tabled and includes explanatory notes and other relevant information on the matters to be discussed and decided at the AGM. Shareholders can exercise their votes either in person, or appoint a representative or proxy to attend and vote on their behalf.

It is the Company’s practices that all Board members including the respective chairs of the various committees attend AGMs and are available to deal with any questions on matters under their purview. At the meetings, shareholders can express their views or raise questions relating to the Group’s financial performance and business operations.

The Company will explore the use of technology to facilitate voting in absentia and/or remote shareholders’ participation at general meetings, taking into consideration the accuracy and stability of such technologies, applicable laws and regulations, and resources required vis a vis the benefits.

FOCUS AREAS ON CORPORATE GOVERNANCE
The updated Group Strategic Plan covers the four main business segments, and aims to:

• align the Group’s business activities towards the achievement of its vision and objectives;
• provide a framework within which the businesses can operate and develop;
• help management monitor and actualise investments, project development plans and prospects; and
• facilitate discussion with stakeholders on the Group’s businesses.

The 5-year strategic plans of the various business units were updated in 2019/2020 to align their business operations, and operational and tactical plans with the Group’s objectives in response to a dynamic environment; and include economic, environmental and social (ie sustainability) considerations. The Board approved the overall PPB Group Strategic Plan (2019-2023) in February 2020.

This statement is made in accordance with a resolution of the Board of Directors dated 6 April 2020.