Investor Relations

Corporate Governance Overview Statement

This Corporate Governance Overview Statement (“CGS”) provides a summary of the corporate governance practices of PPB Group Berhad (“PPB”) and its subsidiaries (“Group”) during the financial year ended 31 December 2017 (“FYE2017”) with reference to the three Principles in the Malaysian Code on Corporate Governance (“MCCG”), viz:

  1. board leadership and effectiveness;
  2. effective audit and risk management; and
  3. integrity in corporate reporting and meaningful relationship with stakeholders.

It also highlights key focus areas and future priorities in relation to our corporate governance practices.

This statement should be read together with the Company’s Corporate Governance Report (“CGR”) for FYE2017 which is based on a prescribed format to provide a more detailed description of the Group’s corporate governance practices vis-à-vis the MCCG. The CGR is available on the websites of Bursa Malaysia (http://www.bursamalaysia.com) and PPB (https://www.ppbgroup.com). The CGS should also be read in tandem with the other statements in the 2017 Annual Report, viz the Audit Committee Report, Statement on Risk Management and Internal Control, and Sustainability Statement.

The MCCG was released on 26 April 2017 and came into effect on the same date. During the year, the Board reviewed an analysis of the Group’s corporate governance practices vis-à-vis the practices and recommendations in the MCCG, and agreed that the Company would take appropriate action where applicable to comply with the provisions in the MCCG. A briefing on the MCCG was also held as part of the annual directors’ training session.

The Group’s governance structure during the year was as follows:

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS

Board Responsibilities And Duties

The board charter (last updated in 2014) sets out matters reserved for the Board’s decision and outlines the Board’s roles and responsibilities. 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, and 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 whistleblower policy was adopted by the Company in 2015 which is also incorporated in the employee handbook. This was progressively adopted by the respective business units throughout the Group.

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 2017, the Board met five times and the record of the attendance of each Director is set out below:

Name of Director Number of meetings attended % of attendance
Tan Sri Datuk Oh Siew Nam 5 100
Lim Soon Huat 5 100
Dato’ Capt Ahmad Sufian @ Qurnain bin Abdul Rashid 5 100
Datuk Ong Hung Hock 5 100
Soh Chin Teck 5 100
Ahmad Riza bin Basir 5 100
Tam Chiew Lin 5 100

Board Composition

The Board comprises a majority of independent directors since 1 December 2017. Of the seven directors on the Board, 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 would exceed nine years after 22 June 2018. 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 have agreed to recommend the extension of Dato’ Sufian’s term as an independent director beyond the completion of his nine-year tenure, for shareholders’ approval at the 49th Annual General Meeting (“AGM”) of the Company to be held on 15 May 2018.

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 2017, the Directors attended PPB’s annual in-house training session for directors and senior management, and the topics selected were relevant and of interest to the Group and the Directors which included the following:

•    Briefing on the Malaysian Code on Corporate Governance
•    Business continuity management
•    Cyber-security and building cyber resilience

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

Name of Director Title/Subject
Mr Lim Soon Huat
  • Corporate governance breakfast series: Leading in a volatile, uncertain, complex, ambiguous (VUCA) World
Mr Soh Chin Teck
  • Fraud Risk Management workshop
  • Independent Directors’ programme: The essence of independence
Dato’ Capt Ahmad Sufian
@ Qurnain bin Abdul Rashid
  • 2017 National Conference – Audit Committee Leadership Track
  • Effective Audit & Risk Management
Madam Tam Chiew Lin
  • Sustainability forum for directors/CEOs: The velocity for global change & sustainability – The new business model
  •  Companies Act, 2016 vis-à-vis Malaysian Companies Law
  • The FIDE Elective programme – Current issues in corporate governance
  • Corporate income tax, transfer pricing and GST: Tax audits and updates
  • 2017 National Conference – Audit Committee Leadership Track
  • Corporate governance breakfast series: Leading in a volatile, uncertain, complex, ambiguous (VUCA) World
Encik Ahmad Riza bin Basir
  • 2017 National Conference – Audit Committee Leadership Track
  • Assessment of the board, board committees and individual directors – Taking stock of performance
  • The Companies Act 2016 – Key changes and implications to directors and management
  • Audit Committee Conference 2017

The criteria for the 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 also 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 FYE2017 on a Group and Company basis are set out below:

GROUP
Figures in RM’000 Fees Salary Bonus Meeting allowances Benefits-in-kind EPF* Total
Executive Director
Lim Soon Huat 22 985 1,600 1 24 413 3,045
Non-executive Directors
Tan Sri Datuk Oh Siew Nam 505 - - 6 27 - 538
Datuk Ong Hung Hock 80 1,044 1,400 6 47 147 2,724
Dato' Capt Ahmad Sufian @
Qurnain bin Abdul Rashid
- - - - - - -
Soh Chin Teck - - - - - - -
Ahmad Riza bin Basir - - - - - - -
Tam Chiew Lin - - - - - - -
COMPANY
Figures in RM’000 Fees Salary Bonus Meeting allowances Benefits-in-kind EPF* Total
Executive Director
Lim Soon Huat - 985 1,600 1 24 413 3,023
Non-executive Directors
Tan Sri Datuk Oh Siew Nam 505 - - 6 27 - 538
Datuk Ong Hung Hock 75 - - 6 - - 81
Dato' Capt Ahmad Sufian @
Qurnain bin Abdul Rashid
93 - - 12 - - 105
Soh Chin Teck 100 - - 25 - - 125
Ahmad Riza bin Basir 77 - - 10 - - 87
Tam Chiew Lin 90 - - 15 - - 105

* 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 FYE2017 on an aggregated basis in RM50,000 bands is as follows:

Remuneration bands Number of senior management staff
RM1,050,001 – RM1,100,000 1
RM1,150,001 – RM1,200,000 1
RM1,200,001 – RM1,250,000 1
RM1,250,001 – RM1,300,000 1
RM1,550,001 – RM1,600,000 1

PRINCIPLE B – EFFECTIVE AUDIT AND RISK Management

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 to 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 48 to 51 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 52 to 53 of the 2017 Annual Report provides a more detailed description of the state of risk management and internal controls.

PRINCIPLE C – INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

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/corporate-disclosure-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 which may be 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 have always been 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 49th AGM of the Company was sent to members 28 days before the meeting together with the 2017 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.

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-à-vis the benefits.

FOCUS AREAS ON CORPORATE GOVERNANCE
The Group strategic plan is reviewed at intervals and updated to reflect changes relating to the Group’s environmental influences, opportunities and concerns. The strategic plan was last reviewed and adopted in 2014, and the next review is tentatively scheduled in 2019 which will incorporate, inter alia economic, environmental and social considerations (ie sustainability).

The aforesaid review of the strategic plan is also intended to cover other governance areas such as the board charter, various policies and practices etc, as part of an overall exercise to align them with the latest regulatory and operating environment, based on a more holistic approach.

This statement is made in accordance with a resolution of the Board of Directors dated 28 March 2018.

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