PJBUMI BERHAD ( M) Annual Report. We Make the World. A Better Place

Transcription

1 ( M) Annual Report 2012 We Make the World A Better Place

2 Contents Corporate Information 03 Corporate Structure 04 Directors and CEO s Profiles 05 Five-Year Financial Statistics (Group) 08 Statement from the CEO Operations Review 11 Corporate Social Responsibility 13 Calendar of Events 15 Statement of Corporate Governance 17 Audit Committee Report 23 Statement on Risk Management and Internal Control 26 Other Disclosure Requirements 27 Financial Statements 29 List of Properties 83 Shareholdings Analysis 84 Notice of Twenty-Eighth Annual General Meeting 86 Proxy Form

3 Vision To be a world class total environmental solution provider Mission At PJBumi we are committed to upholding a proud tradition of being the country s leading integrated provider of products and services relating to the efficient and effective management of our environment. In addition to our aim to provide continuous and outstanding cost effective services to our customers nationwide, we remain steadfast in our social responsibility to contribute back to the community in order to ensure the existence of a more caring and responsive society. Vision & Mission

4 03 ANNUAL REPORT 2012 Corporate Information Board of Directors ABDUL RAHMAN BIN HAJI SIRAJ Non-Executive Director (Appointed w.e.f ) MOHD MAHYUDIN BIN ZAINAL Non-Executive Director (Appointed w.e.f ) AHMAD BIN MD DAUD Non- Executive Director (Appointed w.e.f ) MUSTAFA BIN IBRAHIM Non- Executive Director (Appointed w.e.f ) HAJI ZAID BIN ABDULLAH Non-Independent Non-Executive Director (Resigned w.e.f ) HAJI JOHAR BIN YUSOF Non-Independent Non-Executive Director (Resigned w.e.f ) IR. HAJI MOHD GHAZALI BIN OMAR Independent Non-Executive Director (Resigned w.e.f ) DATUK ABDUL HAMID BIN SAWAL Independent Non-Executive Director (Resigned w.e.f ) NIK MD NOR SUHAIMI BIN NIK IBRAHIM Independent Non- Executive Director (Appointed w.e.f ) AUDIT COMMITTEE Chairman Abdul Rahman Bin Haji Siraj Members Ahmad Bin Md Daud Mohd Mahyudin Bin Zainal NOMINATION COMMITTEE Chairman Mustafa Bin Ibrahim Members Abdul Rahman Bin Haji Siraj Ahmad Bin Md Daud REMUNERATION COMMITTEE Chairman Ahmad Bin Md Daud Members Mustafa Bin Ibrahim Mohd Mahyudin Bin Zainal COMPANY SECRETARIES Lim Seck Wah (MAICSA ) M. Chandrasegaran A/L S. Murugasu (MAICSA NO.: ) REGISTERED OFFICE Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, P.O Box Kuala Lumpur Tel : Fax : /5399 SHARE REGISTRAR Mega Corporate Services Sdn Bhd Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, P.O Box Kuala Lumpur Tel : Fax : /5399 AUDITORS Messrs Ernst & Young Chartered Accountants Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490, Kuala Lumpur Tel : Fax : STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad STOCK CODE: PJBUMI STOCK NUMBER: 7163 PRINCIPAL BANKERS Affin Bank Berhad (20546 T) AmBank Berhad (8515 D) RHB Bank Berhad (6171 M) CIMB Bank Berhad (13491 P) Malayan Banking Berhad (3813 K) PRINCIPAL Officer CEO Mohamed Nasir Bin Wan Idris

5 Corporate Structure PJBUMI BERHAD ( M) 100% PJBUMI COMPOSITES SDN BHD 100% PJBUMI WASTE MANAGEMENT SDN BHD 100% PJBUMI SERVICES SDN BHD

6 05 ANNUAL REPORT 2012 Directors and CEO s Profile Abdul Rahman Bin Haji SiRaj 54, Malaysian Independent Non-Executive Director Chairman of the Audit Committee Member of the Nomination Committee He joined the Board on 22 February 2013 as Independent Non-Executive Director. He graduated with Bachelor of Accounting (Honour) Degree from University Kebangsaan Malaysia. He is a member of the Malaysian Institute of Accountants. He has served Texaco Exploration Inc. (Texas) as Chief Accountant from 1983 to While in Texaco, he served in various countries both in Latin America and Asia and was given the task of overseeing the entire offshore and exploration accounting system. His last appointment in Texaco was in Tashkent, Uzbekistan. He subsequently joined Khazanah Nasional Bhd as General Manager in 1995 and was given the task of overseeing Khazanah s new investment programme both locally and overseas. He served Khazanah for two (2) years and later joined Intria Bhd as its Director for Business Development. In 1997, he was appointed as Chief Executive Officer of KBI (Malaysia) Bhd, a position he held for three (3) years until September Thereafter, he was appointed as the Chief Executive Officer of Taliworks Corporation Berhad, a position he held until Currently he is a Freelance Business Consultant. He does not hold any directorship in other public listed Company. He has no family relationship with other directors or major shareholders of PJBumi. He has no conflict of interest with PJBumi and has no convictions of offences within the past ten (10) years except for the traffic offences. MOHD MAHYUDIN BIN ZAINAL 44, Malaysian Non-Independent Non-Executive Director Member of the Audit Committee Member of The Remuneration Committee He joined the Board on 15 January He graduated with Bachelor of Law Degree LLB (Hons) from Universiti Kebangsaan Malaysia. He was admitted as Advocate & Solicitor of High Court of Malaya in He is presently a Director and Chief Executive Officer of ECE Technologies SdnBhd which is now the major shareholder of China Media Group Corporation. He has extensive experience in many spheres of law including commercial litigation, conveyancing and corporate legal practice. He has been involved in large scale of corporate restructuring exercises involving corporate restructuring, mergers and acquisitions of public listed companies locally and also acquisitions of foreign companies in South East Asia. He was directly involved in the listing of Mutiara Goodyear Development Berhad on the Main Board of Bursa Malaysia and the restructuring of Idaman Unggul Berhad (formerly known as Idris Hydraulic (M) Berhad). He was also directly involved in the establishment of Tahan Insurance Berhad, via merger of three insurance companies namely Talasco Insurance Berhad, Tenaga Insurance Berhad and People Insurance Berhad. Prior to joining ECE Technologies in August 2008, he was the Chief Executive Officer / President of WWW Cable Berhad. He was involved in various industries such as manufacturing, property development, construction, financial and insurance and also an Executive Director and Director of several public listed companies namely Idaman Unggul Berhad (formerly known as Idris Hydraulic (M) Berhad), Mutiara Goodyear Development Berhad, Sern Kou Resources Berhad, Tap Resources Berhad, Talasco Insurance Berhad, People Insurance Berhad and Tahan Insurance Berhad. He has no family relationship with other directors or major shareholders. He has no conflict of interest with PJBumi and has no convictions of offences within the past ten (10) years except for the traffic offences.

7 06 ANNUAL REPORT 2012 Directors and CEO s Profile (cont d) MUSTAFA BIN IBRAHIM 61, Malaysian Independent Non-Executive Director Chairman of the Nomination Committee Member of the Audit & Remuneration Committees He joined the Board on 8 February 2013 as Independent Non-Executive Director. He graduated with Bachelor of Economics, majoring in Applied Economics from University of Malaya and Advanced Diploma Management from Middlesex University, United Kingdom. He started his career in 1975 in the public sector having attached to the Economic Planning Unit, Ministry of Finance. He was involved with the preparation of the Malaysian Government Budgets and was part of the team in the preparation of the Fifth Malaysia Plan. He left the Ministry of Finance to join the State of Terengganu SEDC and was seconded to head to one of its subsidiaries, GPQ SdnBhd, a construction company. In 1983, he joined Bank of Commerce (now known as CIMB Bank), initially serving various branches as the Branch Manager. His last position was as the Senior Vice President Retail Banking. He was instrumental in the retail banking integration between Bank of Commerce and Bank Bumiputra Malaysia Bhd, giving birth to CIMB Bank. While in CIMB Bank, he served in various capacities in high level committees namely, Chairman of Branch Reconfiguration Committee, Member of Credit Committee and Member of Audit Committee. Mustafa left CIMB under a voluntary separation scheme in 2006 to venture into business. In 2005, he was bestowed with Jiwa Mahkota Kelantan by the Sultan of Kelantan. He does not hold any directorship in other public listed Company. He has no family relationship with other directors or major shareholders of PJBumi. He has no conflict of interest with PJBumi and has no convictions of offences within the past ten (10) years except for the traffic offences. AHMAD BIN MD DAUD 59, Malaysian Independent Non-Executive Director Chairman of the Remuneration Committee Member of the Audit Committee Member of the Nomination Committee He joined the Board on 8 February 2013 as Independent Non-Executive Director. He graduated with Master in Business Administration from University Technology Mara (UiTM) in 2000 and Diploma in Electrical and Electronics Engineering from Institute Technology Mara (ITM) in He started his career as Process Engineer with National Semiconductor SdnBhd and later joined Texas Instruments Malaysia SdnBhd as Process Control Engineer involved in semiconductor assembly. In January 1983, he joined Bank Pembangunan Malaysia Berhad and was posted into various positions carrying out various duties from technical evaluation, project rehabilitation, project appraisal, entrepreneurial development, branch operation to risk management. He has vast knowledge and experience in the banking operation. His last position was as an Assistant Vice President, Operational Risk Management which he held before he opted for early retirement in December Presently, he is the Managing Director of AMD Agrofarm Sdn Bhd involved in livestock quarantine services and import of live cattle for local market. He does not hold any directorship in other public listed Company. He has no family relationship with other directors or major shareholders of PJBumi. He has no conflict of interest with PJBumi and has no convictions of offences within the past ten (10) years except for the traffic offences.

8 07 ANNUAL REPORT 2012 Directors and CEO s Profile (cont d) NIK MD NOR SUHAIMI BIN NIK IBRAHIM 56, Malaysian Independent Non-Executive Director He joined the Board on 26 April 2013 as Independent Non-Executive Director. He graduated with Bachelor of Science majoring in Finance from Northern Illinois University Dekalb, Illinois, USA in 1982 and Diploma in Banking Studies from Mara University of Technology (UiTM) in He started his career in 1978 with Malayan Banking Berhad as a Sub-Accountant II, Loan & Supervision, involved in follow-up with branches on reviewing of loan accounts. He was then promoted as Officer I, Corporate Planning. His last position was as Senior Officer, Funding, Treasury. He subsequently joined Maybank Investment Bank in 1991 as Assistant Vice President, Head of Planning & Administration and was involved in credit control, remisier affairs, margin account, corporate planning, human resource, dealing room and retail dealers admin and company s administration. He was then promoted to Head of Commercial Dealing, Dealing Department and carrying out various duties such as managing the Commercial Dealing team trading & marketing activities, participating strongly in financing of IPOs and ESOS and arranging financing for corporate clients. His last position was as an Assistant Vice President, Head of Commercial Dealing Cum Acting General Manager Dealing, Dealing Department which he held until March In 2003, he joined Malayan Banking Berhad as Assistant Vice President, Share Trading Department, and Head of Business Development and involved in expansion of Share Investment Centers (SICS), develop share margin business, introducing new products and strategic initiatives to generate higher trading turnover and brokerage, recruiting, training and managing investment share executives and investment share managers and to develop and monitor the business development of the SICs. Thereafter, he was appointed as Vice President, Funding and Retail Lending (Personal Financing), a position he held until August Presently, he is a freelance business consultant. He does not hold any directorship in other public listed Company. He has no family relationship with other directors or major shareholders of PJBumi. He has no conflict of interest with PJBumi and has no convictions of offences within the past ten (10) years except for the traffic offences. MOHAMED NASIR BIN WAN IDRUS 51, Malaysian Chief Executive Officer Mohamed Nasir joined the Company on 1 January He graduated with a Bachelor of Engineering (Mechanical) from the University of Queensland, Australia. He has wide experience in operations varies from palm oil industries and manufacturing industries. He joined Perwaja Steels Sdn Bhd in 1985 and the last position he held was Deputy Corporate Director (Kemaman Operations). In 1998, he joined Golden Hope Plantation Berhad as General Manager (CEO). He was also involved in the planning, implementation and operation of waste collection sector when he joined Alam Flora Sdn. Bhd. as General Manager of Operations in November 2007 May He then joined Progressive Impact Corporation Berhad as Chief Operation Officer and held the post until December He has no family relationship with other directors or major shareholders of PJBumi. He has no conflict of interest with PJBumi and has no convictions of offences within the past ten (10) years except for the traffic offences.

9 08 ANNUAL REPORT 2012 FIVE-YEAR FINANCIAL STATISTICS (Group) REVENUE (RM 000) 17,313 23,087 28,853 26,601 17,420 NET PROFIT/(LOSS) FOR THE YEAR (RM 000) -20, ,754 1,081-4,342 LIQUIDITY: Current Ratio PROFITABILITY: Operating Expenses Ratio (%) Operating Profit Margin (%) Return on Capital Employed (%) BASIC EARNINGS PER SHARE (sen) NET ASSET PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY (RM) SHARE PRICES AS AT 31 DECEMBER (RM) SEGMENTAL REVENUE (RM 000): Manufacturing & Composites Construction, Maintenance & Design Waste Management Services 8,629 1,656 7,028 13,758 1,887 7,442 16,237 4,549 8,067 13,014 4,344 9,243 7,390 2,259 7,771 YEARLY PERFORMANCE OF GROUP S REVENUE (RM 000) YEARLY PERFORMANCE OF GROUP S PROFITABILITY (RM 000) 30,000 25,000 20,000 17,313 23,087 28,853 26,601 17,420 5, , ,754 1,081-4,342 15,000-10,000 10,000-15,000 5,000-20,000-20, , SEGMENTAL REVENUE (RM 000) 18,000 16,000 14,000 13,758 16,237 13,014 Manufacturing Construction, Maintenance & Design WASTE MANAGEMENT SERVICES 12,000 10,000 8,000 8,629 7,028 7,442 8,076 9,243 7,390 7,771 6,000 4,000 2,000 1,656 1,887 4,549 4,344 2,

10 Statement from the CEO Dear Valued Shareholders, On behalf of the Board of Directors, it is my privilege and honour to present PJBumiBerhad s Annual Report and Audited Financial Statements at the Group and Company level for the financial year ended 31 December was probably the most challenging and exciting in the history of PJBumi. The company had to contend with multiple challenges to sustain its market share and profitability. There is an entire change in the boardroom and major shareholders in December 2012 and early Moving forward with the new management team, PJBumi are focusing on core capabilities in manufacturing segment of package sewerage treatment plants and waste management. On the positive note the group will continue to focus on the business turn around strategy and accelerate its growth in the highly profitable business segment such as operation and maintenance of sewerage treatment plant, retrofitting and upgrading of existing sewerage treatment plants in order to increase our revenue.

11 10 ANNUAL REPORT 2012 Statement from the CEO (Cont d) FINANCIAL PERFORMANCE In financial year of 2012 (FY 2012), PJBumi Group s revenue drop by 25% to RM17.31million from RM23.09 reported in the previous year. The drastic decrease in revenue during the financial year been contributed by Composites & Manufacturing sector has been covers 50% of the total revenue in As for Waste Management sector, Alam Flora continues to be our most important partner in solid waste management i.e. for area cleansing and collection business. During the year under review, PJBumi Group recorded a net loss RM20.25 million compare to RM0.76 million in The loss was mainly attributable by the disposal of Alam Flora Sdn Bhd s share. BUSINESS GROWTH We believe PJBumi could have a strong presence in the area of operation and maintenance of sewage treatment plants. PJBumi has a large installed base of package sewage treatment plants most of them may need to be refurbished or upgraded. The Key Management Team and the Operation Team are focusing in this business segment to increase the revenue and profitability. PJBumi is also focusing on expanding our facilities management in securing more area on waste management, operating waste management transfer station, landfill operation maintenance and general M&E work. This provides greater opportunity for our business growth in the years ahead. FUTURE PLAN PJBumi enters into the new financial year with confidence, and continue to adhere to its determinants for improvement in the financial results, debt restructuring, cash flow as well as in the business performance which in turn can appreciate higher rates of return that our investors expected from the business. Our future plans include a business expansion in construction and renewable energy which will ensure that we continue to deliver on the expectation of all stakeholders and expect a greater demand from our customers, especially when resolving environmental issues become urgent and important. CORPORATE SOCIAL RESPONSIBILITY The Group believes that effective corporate responsibility can deliver benefits to its businesses and, in turn, to its shareholders, by enhancing reputation and business trust, risk management performance, relationships with regulators, staff motivation and attraction of talent, customer preference and loyalty, the goodwill of local communities and long-term shareholder value. Most importantly, the Board and management team require that all its practices give due consideration to the interest of the Group s stakeholder, ensuring all business objectives are pursued with integrity and full compliance with the law and forward thinking as possible. CORPORATE GOVERNANCE AND INVESTOR RELATIONS The Group remains committed to uphold and maintain its good corporate governance track record through timely objective reporting and constant communications with all its stakeholders. DIVIDENDS Based on our financial performance and cash flow position hereby reported, the directors do not recommend any payment of dividends in respect of the financial year ended 31 December ACKNOWLDGEMENT On behalf of the board, we would like to take this opportunity to express our appreciation to all our employees during our difficult and unprecedented market conditions for their loyalty, support and commitment efforts in developing the Group in We wish to thank our valued customers, suppliers, bankers, business associates and other stakeholders for their support and loyalty and look forward to their continued trust and support. Finally, to our dear shareholders, our special thanks to all of you, for the continuous support and confidence in the Group and we assure you that we will continue to work to uphold your trust in us. Thank you. MOHAMED NASIR BIN WAN IDRUS Chief Executive Officer

12 Cash Margin Velocity 5 - Paradigm Strategy Growth Excellent Customer Management High Performance Corporation Significantly Improve Revenue Return to Profitability In 2012 PJBumi has continuosly enhanced these paradigms to sustain its business performance in a competitive and uncertain market volatility. Moving forwards, we will continue to revisit the 5-paradigm strategy and refined further to cater for future growth and new scenario Operations Review

13 12 ANNUAL REPORT Operations Review (Cont d) People Process Performance People are at the core at PJBumi. It has been our goal to attract and retain the best people, whose efforts, skills and judgements can be leveraged in improving our business process and maximize the Group s performance. We continued to organize various trainings and motivation programs for our people across the board for continuos improvement in a challenging time.

14 Corporate Social Responsibility

15 14 ANNUAL REPORT 2012 Corporate Social Responsibility (Cont d) We believe that Corporate Social Responsibility (CSR) is an integral part of good business management. We have clear responsibility towards our customers, employees and shareholders. PJBumi remains committed to CSR by acting responsibly, operating sustainably and contributing to the community s surroundings. CSR has contributed a positive impact to the employees, communities, the environment and indirectly our business. Environmental sustainability is enhanced through our products and solutions, which helps PJBumi and our valued customers to reduce energy consumption, reduce land area usage and to save the environment. We are committed to prioritize on the health and wellbeing of our employee. We ensure that all of the staffs at sites are equipped with the safety requirements by the authority. We also have established a Safety, Health and Workplace policy to ensure safety working environment and zero accident at site.

16 Calendar of Events

17 16 ANNUAL REPORT 2012 Calendar of Events (Cont d) JANUARY 2012 April 2012 Annual Dinner We were the 1st Runner up for the volleyball tournament Inter - Group of Companies December 2012 September 2012 PJBumi has organised the Big Walk 2012 events at Taman Botani, Putrajaya Motivation course for employees Appreciations 2012 Monthly birthday celebration for all employees from Jan Dec 2012

18 17 ANNUAL REPORT 2012 Statement Of Corporate Governance The Board of PJBumi Berhad ( the Company or PJBumi ) recognises the importance of adopting high standards of corporate governance in the Company in order to safeguard stakeholders interests as well as enhancing shareholders value. Pursuant to Paragraph of the Listing requirements of Bursa Malaysia Securities Berhad ( Bursa Malaysia ), this corporate governance statement (the Statement ) sets out how the Company has applied the 8 Principles of the Malaysian Code on Corporate Governance ( MCCG 2012 ) and observed the 26 Recommendations supporting the Principles during the financial year under review, following the release of the MCCG 2012 by the Securities Commission in late March Where a specific Recommendation of the MCCG 2012 has not been observed during the financial year under review, the non-observation, including the reasons thereof, is mentioned in this Statement. PRINCIPLE 1 - ESTABLISH CLEAR RULES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT The Board recognises the key role it plays in charting the strategic direction of the Company and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions: reviewing and adopting a strategic plan for the Company, addressing the sustainability of the Group s business; overseeing the conduct of the Group s business and evaluating whether or not its businesses are being properly managed; identify principal business risks faced by the Group and ensuring the implementation of appropriate internal controls and mitigating measures to address such risks; ensuring that all candidates appointed to senior management positions are of sufficient calibre, including the orderly succession of senior management personnel; overseeing the development and implementation of a shareholder communications policy, including an investor relations programme for the Company; and reviewing the adequacy and integrity of the Group s internal control and management information systems. To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit Committee, Nominating Committee and Remuneration Committee, to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board. Board Charter All Directors and Management of the Company are aware of their respective roles and responsibilities, including the limits of authority accorded. The Board recognizes the need to formalize such demarcation of duties to provide clarity and guidance to Directors and Management. There is an entire change in the Board members in the early The Board has yet to formalize the Board Charter. Code of Conduct and Whistle-Blower Policy The Board has yet to formalize the Code of Conduct and Whistle-Blower policy. Sustainability of Business The Board is mindful of the importance of business sustainability and, in conducting the Group s business, the impact on the environmental, social and governance aspects is taken into consideration. Accordingly, the new Board will take appropriate steps to turn around the Company. Supply of, and Access to, Information The Board is supplied with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters, by way of Board reports or upon specific requests, for decisions to be made on an informed basis and effective discharge of Board s responsibilities.

19 18 ANNUAL REPORT 2012 Statement Of Corporate Governance (Cont d) PRINCIPLE 1 - ESTABLISH CLEAR RULES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT (cont d) Supply of, and Access to, Information (Cont d) Good practices have been observed for timely dissemination of meeting agenda, including the relevant Board and Board Committee papers to all Directors prior to the Board and Board Committee meetings, to give effect to Board decisions and to deal with matters arising from such meetings. In addition, the Board members are updated on the Company s activities and its operations on a regular basis. All Directors have access to all information of the Company on a timely basis in an appropriate manner and quality necessary to enable them to discharge their duties and responsibilities. Senior Management of the Group and external advisers are invited to attend Board meetings to provide additional insights and professional views, advice and explanations on specific items on the meeting agenda. Besides direct access to Management, Directors may obtain independent professional advice at the Company s expense, if considered necessary, in furtherance of their duties. Directors have unrestricted access to the advice and services of the Company Secretary to enable them to discharge their duties effectively. The Board is regularly updated and advised by the Company Secretary who is qualified, experienced and competent on statutory and regulatory requirements, and the resultant implications of any changes therein to the Company and Directors in relation to their duties and responsibilities. The Company Secretary, who oversees adherence with board policies and procedures, briefs the Board on the proposed contents and timing of material announcements to be made to regulators. The Company Secretary attends all Board and Board Committees meetings and ensures that meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are taken and maintained accordingly. PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD There was a total change in the Board members during the financial year Currently, the new Board consisted of five (5) members, comprising four (4) Independent Non-Executive Directors and a Non-Independent Non-Executive Director. This composition fulfills the requirements as set out under the Listing Requirements of Bursa Malaysia, which stipulated that at least two (2) Directors or one-third of the Board, whichever is higher, must be Independent. The profile of each Director is set out in this Annual Report. The Directors, with their differing backgrounds and specializations, collectively bring with them a wide range of experience and expertise in areas such as legal; accounting; corporate affairs; banking and finance. Nominating Committee Selection and Assessment of Directors A Nominating Committee has been established, with specific terms of reference, by the Board, comprising exclusively Independent Non-Executive Directors as follows: 1. Encik Mustafa bin Ibrahim - Chairman (Independent Non-Executive Director) 2. Encik Abdul Rahman bin Haji Siraj Member (Independent Non-Executive Director) 3. Encik Ahmad bin Md Daud Member (Independent Non-Executive Director) The Nominating Committee is primarily responsible for recommending suitable appointments to the Board, taking into consideration the Board structure, size, composition and the required mix of expertise and experience which the Director should bring to the Board. It assesses the effectiveness of the Board as a whole, the Board Committees and the contribution of each Director, including Non-Executive Directors. The final decision on the appointment of a candidate recommended by Nominating Committee rests with the whole Board. The Board is entitled to the services of the Company Secretary who would ensure that all appointments are properly made upon obtaining all necessary information from the Directors. During the financial year, the Nominating Committee met once, attended by all members, to assess the balance composition of Board members based on merits, Directors contribution and Board effectiveness. The Company has no policy on gender diversity or target set but believes in merits and commitment of its Board members. The Nominating Committee assesses the Board members on an objective basis.

20 19 ANNUAL REPORT 2012 Statement Of Corporate Governance (Cont d) PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD (cont d) Appointment and Re-election of Directors Pursuant to the Articles of Association of the Company, one-third (or the number nearest to one-third) of the Directors are required to retire from office at each annual general meeting. Further, all the Directors are required to retire from office at least once in every three (3) years. However, a retiring Director is eligible for re-election at the meeting at which he or she retires. An election of the retiring Directors shall take place every year. Any person appointed as a Director, either to fill a casual vacancy or as an addition to the existing Directors shall hold office only until the conclusion of the next annual general meeting, and shall be eligible for re-election but shall not be taken into account in determining the directors who are to retire by rotation at that meeting. Directors Remuneration A Remuneration Committee has been established by the Board, comprising a majority of Non-Executive Directors as follows: 1. Encik Ahmad bin Md Daud - Chairman (Independent Non-Executive Director) 2. Encik Mustafa bin Ibrahim - Member (Independent Non-Executive Director) 3. Encik Mohd Mahyudin bin Zainal Member (Non-Independent Non-Executive Director) The Remuneration Committee has been entrusted by the Board to determine that the levels of remuneration are sufficient to attract and retain Directors of quality required to manage the business of the Group. The Remuneration Committee is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the Executive Directors. In the case of Non-Executive Directors, the level of remuneration shall reflect the experience and level of responsibilities undertaken by the Non-Executive Directors concerned. In all instances, the deliberations are conducted, with the Directors concerned abstaining from discussions on their individual remuneration. During the financial year under review, the Committee met once attended by all members. Details of Directors remuneration for the financial year ended 31 December 2012 are as follows: Executive Directors (RM) Non-Executive Directors (RM) Directors fees - - Salaries - - Other emoluments - - Benefits-in-kind - - Allowance - 42,000 Total - 42,000 The number of Directors whose remuneration falls into the following bands is as follows: Range of Remuneration (RM) Executive Non-Executive 50,000 and below - 4 PRINCIPLE 3 REINFORCE INDEPENDENCE OF THE BOARD The new Board has yet to appoint a Chairman. The four (4) Independent Non-Executive Directors and the Non-Independent Non-Executive Director bring objective and independent views, advice and judgment on interests, not only of the Group, but also of shareholders and stakeholders. Independent Non-Executive Directors are essential for protecting the interests of shareholders and can make significant contributions to the Company s decision making by bringing in the quality of detached impartiality.

21 20 ANNUAL REPORT 2012 Statement Of Corporate Governance (Cont d) PRINCIPLE 4 FOSTER COMMITMENT OF DIRECTORS The Board met 8 times for financial year The meetings are scheduled well in advance before the end of the preceding financial year to facilitate the Directors in planning their meeting schedule for the year. Board and Board Committee papers which are prepared by Management, provide the relevant facts and analysis for the convenience of Directors. The meeting agenda, the relevant reports and Board papers are furnished to Directors and Board Committee members well before the meeting to allow the Directors sufficient time to peruse for effective discussion and decision making during meetings. At the quarterly Board meetings, the Board reviews the business performance of the Group and discusses major operational and financial issues. The Chairman of the Audit Committee informs the Directors at each Board meetings of any salient matters noted by the Audit Committee and which require the Board s attention or direction. All pertinent issues discussed at Board meetings in arriving at the decisions and conclusions are properly recorded by the Company Secretary by way of minutes of meetings. Board Meetings There were eight (8) Board meetings held during the financial year ended 31 December 2012, with details of Directors attendance set out below: Name of Board Member Haji Zaid bin Abdullah (resigned w.e.f ) Haji Johar bin Yusof (resigned w.e.f ) Ir. Haji Mohd Ghazali bin Omar (resigned w.e.f ) Datuk Abdul Hamid bin Sawal (reigned w.e.f ) Mohd Mahyudin bin Zainal (appointed w.e.f ) Ahmad bin Md Daud (appointed w.e.f ) Mustafa bin Ibrahim (appointed w.e.f ) Abdul Rahman bin Haji Siraj (appointed w.e.f ) Nik Md Nor Suhaimi bin Nik Ibrahim (appointed w.e.f ) Number of Meetings Attended Designation (Out of 8 held) Non-Independent Non-Executive Director 8/8 Non-Independent Non-Executive Director 8/8 Independent Non-Executive Director 8/8 Independent Non-Executive Director 8/8 Non-Independent Non-Executive Director - Independent Non-Executive Director - Independent Non-Executive Director - Independent Non-Executive Director - Independent Non-Executive Director - It is the practice of the Company for Directors to devote sufficient time and efforts to carry out their responsibilities. Directors Training Continuing Education Programmes The Board is mindful of the importance for its members to undergo continuous training to be apprised on changes to regulatory requirements and the impact such regulatory requirements have on the Group. None of the Board members have attended the Directors training during the financial year Four of the directors who were appointed in year 2013 have attended the Mandatory Accreditation Programme ( MAP ) conducted by Bursatra Sdn Bhd within the stipulated timeframe required in the Listing Requirements except for one director namely, Nik Md Nor Suhaimi bin Nik Ibrahim who was appointed on 26 April 2013, will be attending the MAP within the timeframe as stipulated in the Listing Requirements. Throughout the year, the Directors have received updates and briefings, particularly on industry regulatory requirements. The External Auditors also briefed the Board members on any changes to the Malaysian Financial Reporting Standards that would affect the Group s financial statements during the financial year under review.

22 21 ANNUAL REPORT 2012 Statement Of Corporate Governance (Cont d) PRINCIPLE 5 UPHOLD INTEGRITY IN FINANCIAL REPORTING BY COMPANY It is the Board s commitment to present a balanced and meaningful assessment of the Group s financial performance and prospects at the end of each reporting period and financial year, primarily through the quarterly announcement of Group s results to Bursa Malaysia, the annual financial statements of the Group and Company. A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing paragraph. Statement of Directors Responsibility for Preparing Financial Statements The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group as at the end of the financial year and of the results and cash flows of the Group for the financial year then ended. The Directors are satisfied that in preparing the financial statements of the Group for the year ended 31 December 2012, the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on the going concern basis. The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with the Companies Act, Audit Committee In assisting the Board to discharge its duties on financial reporting, the Board has established an Audit Committee, comprising of two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director, with Encik Abdul Rahman bin Haji Siraj as the Committee Chairman. The composition of the Audit Committee, including its roles and responsibilities, are set out in the Audit Committee Report of this Annual Report. One of the key responsibilities of the Audit Committee in its specific terms of reference is to ensure that the financial statements of the Group and Company comply with applicable financial reporting standards in Malaysia. Such financial statements comprise the quarterly financial report announced to Bursa and the annual statutory financial statements. As the Board understands its role in upholding the integrity of financial reporting by the Company, it will take steps to revise the Audit Committee s terms of reference by formalizing a policy on the types of non-audit services permitted to be provided by the external auditors of the Company so as not to compromise their independence and objectivity, including the need for the Audit Committee s approval in writing before such services can be provided by the external auditors. In assessing the independence of external auditors, the Audit Committee will in future require written assurance by the external auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian Institute of Accountants. PRINCIPLE 6 RECOGNISE AND MANAGE RISKS OF THE GROUP During the financial year under review, the Board had yet to establish a structured risk management framework to manage business risks, although Management has a process to identify and evaluate significant risks faced by the Group. This represents a departure from Recommendation 6.1 of the MCCG 2012 which stipulates the need for the Board to establish a sound framework to actively identify, assess and monitor key business risks faced by the Group to safeguard shareholder s investment and the Group s assets. In the absence of such a structured framework, issues on risks were discussed at Board meetings where the Chief Executive Officer would articulate risks associated with projects and investment, including any risk exposure that the Group faced in its operations. The Board is aware of the importance of such a framework and will take measures to formalize one, which is expected to consider the risk appetite of various companies in the Group as well as the Group itself. The Company for the time being does not have the internal audit function as the staff has left during the financial year. The Company has yet to identify and revive the internal audit division.

23 22 ANNUAL REPORT 2012 Statement Of Corporate Governance (Cont d) PRINCIPLE 7 ENSURE TIMELY AND HIGH QUALITY DISCLOSURE The Board is aware of the need but is yet to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders. Presently, the senior management, Chief Executive Officer and Financial Controller are the persons authorised and responsible to approve and disclose material information to regulators, shareholders and stakeholders. The Company Secretary will seek approval from senior management and Board approval for any public release. PRINCIPLE 8 STRENGTHEN RELATIONSHIP BETWEEN THE COMPANY AND ITS SHAREHOLDERS Shareholder Participation at General Meeting The Annual General Meeting ( AGM ), which is the principal forum for shareholder dialogue, allows shareholders to review the Group s performance via the Company s Annual Report and pose questions to the Board for clarification. At the AGM, shareholders participate in deliberating resolutions being proposed or on the Group s operations in general. The Notice of AGM is circulated at least twenty one (21) days before the date of the meeting to enable shareholders to go through the Annual Report and papers supporting the resolutions proposed. Shareholders are invited to ask questions both about the resolutions being proposed before putting a resolution to vote as well as matters relating to the Group s operations in general. All the resolutions set out in the Notice of the last AGM were put to vote by show of hands and duly passed. The outcome of the AGM was announced to Bursa on the same meeting day. Going forward, the Board will adopt poll voting for related party transactions, if any, which require specific approvals, including the announcement of the detailed results showing the number of votes cast for and against for each resolution. Communication and Engagement with Shareholders The Board recognises the importance of being transparent and accountable to the Company s investors and, as such, has various channels to maintain communication with them. The various channels of communications are through the quarterly announcements on financial results to Bursa, relevant announcements and circulars, when necessary, the Annual and Extraordinary General Meetings and through the Group s website at where shareholders can access pertinent information concerning the Group.

24 23 ANNUAL REPORT 2012 Audit Committee Report 1. Introduction The Board is pleased to present the Report of the Audit Committee for the financial year ended 31 December 2012 in accordance with Paragraph of the Main Market Listing Requirements ( Listing Requirements ) of Bursa Malaysia Securities Berhad ( Bursa Malaysia ). The Audit Committee provides assistance to the Board in reviewing and monitoring the integrity of the Group s financial reporting process and accounting records and reviewing the Group s risks. It also reviews the Group s audit process and compliance with relevant legal and regulatory requirements. 2. Composition The Audit Committee was established by the Board of Directors with the present Committee comprising of two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. Name Abdul Rahman bin Haji Siraj (Chairman) Ahmad bin Md Daud (Member) Mohd Mahyudin bin Zainal (Member) Designation Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director The AC Chairman, Encik Abdul Rahman bin Haji Sirajis a member of the Malaysian Institute of Accountants and hence, complies with paragraph 15.09(1)(c)(i) of the MMLR of Bursa Malaysia Securities Berhad. 3. Role of Audit Committee The Audit Committee assists, support and implements the Board s responsibility to oversee the Group s operations in the following manner:- Provides the means for the review of the Group s processes of producing financial data, its internal controls and independence of the Group s Internal and External Auditors. Reinforces the independent of the Group s External Auditors. Reinforces the objectivity of the Group s Internal Auditors. 4. Authority In carrying out their duties and responsibilities, the Committee shall have the authority to:- Investigate any activity of the Company and its subsidiaries within its terms of reference. Have direct communication channels with the External Auditors, Internal Auditors as well as employees of the Group. Empowered to consult independent experts, where necessary, to assist in executing its duties.

25 24 ANNUAL REPORT 2012 Audit Committee Report (Cont d) 5. Key Functions and Responsibilities The key functions and responsibilities of the Audit Committee are as follows:- Financial Reporting To review the quarterly and year-end financial statements, prior to the approval by the Board of Directors, focusing particularly on: the going concern assumption, changes in or implementation of major accounting policy changes, significant and unusual events, compliance with the applicable approved accounting standards and other legal and regulatory requirements. Related Party transaction To review related party transactions and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions or management integrity, if any. Audit Report To prepare and review the annual Audit Committee Report for the Board s approval. This includes the terms of reference, number of meeting held and attended by members and summary of activities for inclusion in the Annual report. External Auditor To review whether there is reason to believe that the external auditors is not suitable for reappointment, to consider the nomination of a person or persons as external auditors and the audit fee and to consider any questions of resignation or dismissal of external auditors. To review external audit plan and scope for the Group. To review the Internal Control Statement for the Group for the inclusion in the Annual report. To review matters arising from audit finding and to be satisfied with appropriate action taken in response to the findings. Internal Control To review the audit plan, evaluation of the system of internal controls, audit report and management letter and management response and any matters that the External Auditors may wish to discuss (in the absence of the management). To ensure that the system of internal control are soundly intact, effectively administered and constantly monitored. Internal Audit To review the adequacy of the scope of the internal audit function, programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit findings. Other Matters To promptly report such matter to the Bursa Securities if the Audit Committee is of the view that the matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements.

26 25 ANNUAL REPORT 2012 Audit Committee Report (Cont d) 6. Summary of ACTIvities undertaken by the Audit Committee for 2012 The Audit Committee met four (4) times during the financial year ended 31 December Attendance by each member of the Audit Committee during the financial year ended 31 December 2012 are as follows:- Name Datuk Abdul Hamid bin Sawal (reigned w.e.f ) Haji Zaid bin Abdullah (resigned w.e.f ) Ir. Haji Mohd Ghazali bin Omar (resigned w.e.f ) Abdul Rahman bin Haji Siraj (appointed w.e.f ) Ahmad bin Md Daud (appointed w.e.f ) Mohd Mahyudin bin Zainal (appointed w.e.f ) Number of Meetings Attended (Out of 4 held) 4/4 4/4 4/ The Audit Committee Members were served with the meeting agendas and relevant board papers which were distributed earlier before the meeting. The Company Secretary is the Secretary to all Audit Committee meetings. During the financial year, the activities of the Audit Committee were as follows:- 1. Reviewed the unaudited quarterly financials statements and the audited financial statements of the Company and its Group to ensure compliance with the Listing Requirements of Bursa Securities, MFRS and other legal and regulatory requirements before recommending the same for the Board s approval. 2. Reviewed the changes to the accounting policies further to the implementation of the Financial Reporting Standards. 3. Reviewed and deliberated on the statements for disclosure in the Annual Report. 4. Reviewed and discussed with the external auditor on statutory audit plan, the nature and scope of the statutory audit and the proposed audit and other audit-related service fees. 5. Review and deliberated the Internal Audit report, findings and follow-up report. 7. Internal Audit Functions There is an entire change in Board members and controlling shareholders since The Group did not have an Independent Internal Audit Division or outsourced its internal audit function in the financial year However, the Board will be enhancing the Group s Internal Audit Function by engaging the services of an external professional consultancy firm which will report to the Audit Committee and assists the Board of Directors in monitoring and managing risks and internal controls.

27 26 ANNUAL REPORT 2012 Statement On Risk Management And Internal Control Introduction The Statement on Risk Management and Internal Control is made in accordance with Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Malaysia ) which requires Malaysian public listed companies to make a statement about their risk management and internal control in their annual reports. This is in line with the Malaysian Code on Corporate Governance ( MCCG ) BOARD RESPONSIBILITIES The Board of Directors ( the Board ) of PJBumi Berhad ( the Group ) have the overall responsibility to establish a system of risk management and internal control for the Group in order to ensure key risk areas are managed to an acceptable level to achieve the Group s key business objectives. In this regard, the Board and Management have put in place processes and procedures to identify, assess, monitor and manage risks, including system updates in line with changes to business environment, operating conditions and regulatory requirements. The system of internal control with its processes and procedures are designed to manage rather than eliminate the risk that may restrict or prevent the achievement of the Group s business objectives. These processes and procedures by their nature, can only provide reasonable but not absolute assurance against material misstatements, losses or fraud. RISK MANAGEMENT FRAMEWORK The Group is establishing a risk management framework through an ongoing process of identifying, evaluating and managing significant risks encountered by the Group. The Board regularly reviews this process and applies corrective measures to mitigate and manage the risks. INTERNAL CONTROL STRUCTURE For year 2012, the Company underwent a series of corporate exercises such as disposal of investment and capital reduction. The Company had limited resources and priority was given on business sustainability and debt recovery. There was a very limited scope in internal control process and system. Mowing forward, the new Board will continue to review the adequacy and integrity of the internal control systems as follows:- i. Review the internal audit findings, recommendations and progress of the proposed recommendations. ii. Independent review of the internal control system by the Internal Audit with proposed recommendations for further improvements. iii. Defined delegation of responsibilities and authorities in the form of organisation structures and limits of authorities. OTHER RISKS AND CONTROL PROCESSES The Group also has in place an organisational structure with defined line of responsibilities, delegation of authorities and a process of hierarchical reporting. The existence of Standard Operating Procedure provides the rules and guidance for the employees in performing their daily tasks. The Board is provided with financial information on a quarterly basis, which includes key performance and risk indicators, and amongst others, the monitoring of results against budget. WEAKNESSES IN INTERNAL CONTROLS THAT RESULT IN MATERIAL LOSSES There were many material losses and litigation suits incurred during the financial year as a result of weaknesses in monitoring. The Board and Management will continue to take measures to strengthen the internal control within the Group. CONCLUSION The Board and Management are firm on implementing continuous measures of improvement to further strengthen the current risk management and internal control systems. Statement made in accordance with resolution of the Board of Directors dated 26th April 2013.

28 27 ANNUAL REPORT 2012 Other Disclosure Requirements Pursuant To The Listing Requirements Of Bursa Securities 1. UTILISATION OF PROCEEDS FROM CORPORATE EXERCISE i. Disposal of 12,000,000 ordinary shares of RM1.00 each representing 15.79% equity stakes in Alam Flora Sdn Bhd for a cash consideration of RM20,400, PJBumi Waste Management Sdn Bhd, a wholly-owned subsidiary of PJBumi Berhad had on 29 May 2012 disposed off 15.79% equity stakes in Alam Flora Sdn Bhd for a cash consideration of RM20,400, to generate fresh cash flows to reduce bank borrowings and for working capital of the Group. ii. Capital reduction of the issued and paid-up capital of PJBumi PJBumi had on 21 September 2012 been granted High Court Order to successfully implement capital reduction from RM50,000,000 comprising of 50,000,000 ordinary shares of RM1.00 each to RM25,000,000 comprising 50,000,000 ordinary shares of RM0.50 each. The credit arising from the capital reduction amounting to RM25,000,000 was used to set off against accumulated losses in the Company. 2. SHARE BUY-BACKS PJBumi has not purchase any of its own shares during the financial year under review. 3. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES There were no options, warrants or convertible securities exercised in respect of the financial year. 4. DEPOSITORY RECEIPT PROGRAMME( DRP ) PJBumi did not sponsor any DRP during the financial year. 5. IMPOSITION OF SANCTIONS / PENALTIES There were no public impositions of sanctions or penalties imposed on the Company or its subsidiaries, directors or management by the regulatory bodies during the financial year. 6. NON-AUDIT FEES There were no non-audit fees paid during the financial year under review. 7. PROFIT ESTIMATE, FORECAST AND PROJECTIONS The Company did not undertake any profit estimate, forecast or projections during the financial year under review. 8. VARIANCE IN RESULTS There has been no material variance between the audited results for the financial year ended 31 December 2012 and the unaudited results previously announced. 9. PROFIT GUARANTEE The Company did not give any form of profit guarantee to any parties during the financial year under review. 10. MATERIAL CONTRACTS AND CONTRACTS RELATING TO LOANS There were no contracts relating to loan and material contracts of the Company and its subsidiaries involving the Directors and substantial shareholders since the end of the previous financial year.

29 28 ANNUAL REPORT 2012 Other Disclosure Requirements (Cont d) Pursuant To The Listing Requirements Of Bursa Securities 11. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE AND TRADING NATURE ( RRPT ) The recurrent related party transaction of the Company during the year amounted to RM384,000 with details as stated in Note 29 to the financial statements 12. REVALUATION POLICY ON LANDED PROPERTIES The Group does not adopt a policy on regular revaluation to its landed properties. 13. CORPORATE SOCIAL RESPONSIBILITY ( CSR ) The CSR is disclosed in page 13 and 14 of the Annual Report.

30 Financial Statements Directors Report 30 Statement by Directors 33 Statutory Declaration 33 Independent Auditors Report 34 Statements of Comprehensive Income 36 Statements of Financial Position 37 Statements of Changes in Equity 39 Statements of Cash Flows 40 Notes to the Financial Statements 42