PDZ HOLDINGS BHD (360419-T) NO. 1, Jalan Sungai Aur, 42000 ... Currently, he sits on the Board of Goh Ban Huat Berhad, Scomi Oiltools International Limited (Bermuda) and Marco Holdings

PDZ HOLDING

S BHD (360419-T)2015 ANNUAL REPO

RT

PDZ HOLDINGS BHD (360419-T)

NO. 1, Jalan Sungai Aur,42000 Port Klang,Selangor Darul Ehsan, MalaysiaTel : 603-3169 2233Fax : 603-3165 9311

www.pdzlines.com

Designed & Printed by

E-mail: [email protected] Website: www.bhs.myKuala Lumpur • Malaysia

Book Printing Sdn. Bhd.

1A N N U A L R E P O R T 2 0 1 5

Contents 02 NoticeofANNuAl GeNerAlMeetiNG

04 corporAteiNforMAtioN

05 corporAteStructure

06 DirectorS’profile

09 chAirMAN’SStAteMeNt

11 5-YeArfiNANciAlhiGhliGhtS

12 corporAteGoverNANce report

20 AuDitcoMMitteereport

25 StAteMeNtoNriSk MANAGeMeNt&iNterNAl coNtrol

29 fiNANciAlStAteMeNtS

105 ANAlYSiSofShAreholDiNGS

109 GrouppropertieS

111 proxYforM

A N N U A L R E P O R T 2 0 1 52

Notice of ANNuAl geNerAl meetiNg

Please refer to Explanatory Note A

Ordinary Resolution 2





NOTICE IS HEREBY GIVEN THAT the Twentieth Annual General Meeting of the Company will be held at Bukit Kiara Equestrian & Country Resort, Dewan Perdana, Jalan Bukit Kiara, off Jalan Damansara, 60000 Kuala Lumpur, Malaysia on Wednesday, 23 December 2015 at 11.00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions:-

AGENDA

1. To lay before the meeting the Audited Financial Statements of the Group and the Company for the financial year ended 30 June 2015 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fees in respect of the financial year ended 30 June 2015.

3. To re-elect Encik Basharuddin bin Saad, the Director retiring in accordance with Article 92 of the Company’s Articles of Association:

4. To re-elect Encik Aminuddin Yusof Lana, the Managing Director retiring in accordance with Article 125 of the Company’s Articles of Association.

5. To re-appoint Messrs PKF as Auditors of the Company and to authorise the Directors to fix their remuneration.

6. Authority to Allot Shares pursuant to Section 132D of the Act, “That pursuant to Section 132D of the Act and subject to the approval of all relevant regulatory authorities, the Directors be and are hereby authorized to allot and issue shares in the Company at any time until the conclusion of the next AGM and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten per cent (10%) of the total issued and paid-up share capital of the Company for the time being and that the Directors be and are hereby further authorized to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad.”

7. To transact any other business of which due notice shall have been given in accordance with the Companies Act, 1965.

By Order of the Board

DATO’ MUHAMMAD HAFIDZ BIN NURUDDIN (MAICSA: 7005820)ALWIZAH AL-YAFII BINTI AHMAD KAMAL (MAICSA: 7033148)Secretaries

Kuala LumpurDate: 2 December 2015

3A N N U A L R E P O R T 2 0 1 5

Notice of ANNuAl geNerAl meetiNg (continued)

Notes:

1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies (but not more than two) to attend and vote instead of him. A proxy may but need not be a member of the Company and the provisions of Section 149(1) (b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints two (2) proxies to attend the same meeting, the member shall specify the proportion of shareholding to be represented by each proxy, failing which the appointment(s) shall be invalid.

2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it shall be entitled to appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member of the Company is an exempt authorised nominee which 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.

4. When an authorised nominee or an exempt authorised nominee appoints more than one proxy, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

5. Depositors whose names appear in the Record of Depositors on a date not less than three (3) market days before the Annual General Meeting shall be entitled to attend and vote at the Annual General Meeting or appoint proxies to attend, speak and vote on their behalf.

6. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

7. The Proxy Form shall be deposited with the Company’s Share Registrars, Tricor Investor Services Sdn Bhd, Unit 32-01 Level 32, Tower A, Vertical Business Suite Avenue 3 Bangsar South No 8 Jalan Kerinchi 59200 Kuala Lumpur Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

Explanatory Note A

This Agenda item is meant for discussion only as under the provisions of Section 169(1) of the Companies Act, 1965, the audited financial statements do not require formal approval of shareholders and hence, the matter will not be put forward for voting.

A N N U A L R E P O R T 2 0 1 54

corporAte iNformAtioN

AUDIT COMMITTEEEncik Basharuddin bin Saad (MIA) (Chairman)Encik Ahmad Nazim bin Abd RahmanEncik Anuar bin Ismail

NOMINATION COMMITTEEEncik Anuar bin Ismail (Chairman)Encik Ahmad Nazim bin Abd Rahman Encik Basharuddin bin Saad

REMUNERATION COMMITTEEEncik Aminuddin Yusof Lana (Chairman)Encik Anuar bin Ismail Encik Ahmad Nazim bin Abd Rahman

MANAGING DIRECTOREncik Aminuddin Yusof Lana

COMPANY SECRETARIESYBhg. Dato’ Muhammad Hafidz bin Nuruddin (MAICSA: 7005820)Alwizah Al-Yafii binti Ahmad Kamal (MAICSA 7033148)

REGISTERED OFFICENo. 43-2, Plaza Damansara,Jalan Medan Setia 1, Bukit Damansara,50490 Kuala LumpurTel: (603) 2011 4745Fax: (603) 2011 5745

PRINCIPAL BANKERSAmBank (M) BerhadHSBC Bank Malaysia BerhadOCBC Bank (Malaysia) BerhadCIMB Bank Berhad

REGISTRARTricor Investor Services Sdn BhdUnit 32-01 Level 32 Tower A Vertical Business Suite, Avenue 3 Bangsar South,No 8 Jalan Kerinchi, 59200 Kuala LumpurTel: (603) 2783 9299Fax: (603) 2783 9222

AUDITORSMessrs PKFChartered AccountantsLevel 33, Menara 1 MKKompleks 1 Mont’ KiaraNo. 1, Jalan Kiara, Mont’ Kiara50480 Kuala Lumpur, MalaysiaTel: (603) 6203 1888Fax: (603) 6201 8880

STOCK EXCHANGE LISTINGBursa Malaysia Securities Berhad Main MarketStock Name : PDZStock Code : 6254

WEBSITE

BOARD OF DIRECTORS

Dato’ Sohaimi bin ShahadanNon-Independent Non-Executive Chairman

www.pdzlines.com

Encik Ahmad Nazim bin Abd RahmanNon-Independent Non-Executive Director

Encik Basharuddin bin SaadIndependent Non-Executive Director

Encik Aminuddin Yusof LanaManaging Director

Encik Anuar bin IsmailIndependent Non-Executive Director

5A N N U A L R E P O R T 2 0 1 5

corporAte structure

Perkapalan Dai Zhun Sdn Bhd

100%PDZ Shipping Agency

(Bintulu) Sdn Bhd100%

Tong Joo Shipping Pte Ltd100%

PDZ Shipping Agency (Kuching) Sdn Bhd

100%

PDZ Lines Sdn Bhd100%

PDZ Shipping Agency (Sibu) Sdn Bhd60%

PDZ Shipping Agency (Johor) Sdn Bhd60%

Perkapalan Dai Zhun (Johore) Sdn Bhd

99.99%

PDZ Shipping Agency (Sabah) Sdn Bhd51%

PDZ Shipping Agency (Tawau) Sdn Bhd51%

PDZ Shipping Agency Sdn Bhd51%

Fokus Marine Sdn Bhd99.99%

Arus Marine Sdn Bhd99.90%

Beta Marine Sdn Bhd99.90%

Erat Marine Sdn Bhd99.90%

Jati Marine Sdn Bhd99.99%

A N N U A L R E P O R T 2 0 1 56

directors’ profile

DATO’SOHAIMIBINSHAHADANAged 46, Malaysian • Non-Independent Non-Executive Chairman

Dato’ Sohaimi Shahadan was appointed as the Chairman of the Company on 28 April 2014.

He holds a Bachelor in Business Administration from University Putra Malaysia, a Master in Corporate Communication from West Coast Institute of Technology and Management at Perth, Australia and a Master in Business Administration from University Kebangsaan Malaysia (UKM)

From 1998 to 2010, he was the Director of Institute of Bumiputra Entrepreneurs and from 2013 to 2015 he was the Chairman of Pelaburan Mara Berhad, an investment entity of Majlis Amanah Rakyat – MARA. He was appointed as the Independent Non-Executive Chairman for KBB Resources Berhad, a public limited company engaged in rice and vermicelli business since 2013. He is also a Non-Independent Non-Executive Chairman of BHS Industries Berhad and Director of Damansara Realty Berhad (DBHD) since 2014.

While engaging in his business, Dato’ Sohaimi is also passionate in the political arena. In 2009, he was entrusted as UMNO Youth Exco Member and served as the Chairman of the Economic Development Bureau (BePU). In 2013, he was elected as a member of UMNO High Supreme Council.

In addition, he also served as Chairman of Asean Young Entrepreneurs Secretarial (AYES), the Chairman of PERDASAMA Muda Malaysia before being appointed as Vice President of PERDASAMA, Committee Member of Selangor Malay Chamber of Commerce Malaysia (DPMM), the Patron of Consortium Cartoonist at Work (CaW), the Entrepreneurs Speaker for Institut Keusahawanan Negara (INSKEN) and also the Chairman of Gerakan Prihatin Rakyat Selangor (GPRS).

Despite being engaged in business and politics, Dato’ Sohaimi also spares his valuable time for charitable organizations and is the founder of “Teratak Che Dah” an orphanage in Kuang, Selangor.

He does not have any family relationship with any Directors and/ or major shareholders of PDZ. He has no conflict of interest in any business arrangements involving PDZ. He has had no convictions for any offences.

AMINUDDINYUSOFLANAAged 66, Malaysian • Managing Director

Encik Aminuddin was appointed to the Board of the Company on 1 April 2013. He was appointed as the Group Managing Director on 1 January 2015. He is also the Chairman of the Remuneration Committee.

He holds a Bachelor of Commerce and Administration Degree from Victoria University of Wellington, New Zealand. He is a Chartered Accountant of the New Zealand Society of Accountants and an Associate member of the Institute of Chartered Secretaries and Administrators.

7A N N U A L R E P O R T 2 0 1 5

directors’ profile (continued)

He had previously served as Director and later Group Managing Director of Renong Berhad from 1990 to 1994 and as Director and Group Managing Director of Faber Group Berhad from 1990 to 1994. He was the Managing Director of Metacorp Berhad from 1995 to 1996. He was also the Managing Director of UEM Builders Berhad from 2000 to 2003.

Currently, he sits on the Board of Goh Ban Huat Berhad, Scomi Oiltools International Limited (Bermuda) and Marco Holdings Berhad.


AHMADNAZIMBINABDRAHMANAged 40, Malaysian • Non-Independent Non-Executive Director

Encik Ahmad Nazim was appointed to the Board of the Company on 18 July 2014. He is the Group CEO of Pelaburan Mara Berhad, an investment and asset management firm wholly-owned by the Government of Malaysia. He has been involved in investments and fundraising activities across various industries and has undertaken acquisitions of both listed and unlisted commercial entities and real estate assets and projects across the region. He was previously CEO of a regional telecommunication group and had served as President Director of its Indonesian subsidiary, responsible for the group’s telecommunication infrastructure business in the region.

He currently sits on the Board of Directors of National Bank of Abu Dhabi (M) Berhad and serves as its Chairman of the Risk Management Committee and the Remuneration Committee. He is also a member of the board of UDA Holdings Berhad, a Government-owned urban development company and Singapore-based private equity funds Al Masah Capital (Asia) Pte Ltd and Basil Partners Pte Ltd.

Encik Ahmad Nazim started his career in law and corporate finance and had worked with leading firms in Kuala Lumpur and London and with Securities Commission of Malaysia. He had advised financial institutions and corporations on various aspects of corporate finance, cross-border financing, mergers and acquisitions and restructuring activities.

A keen observer of international affairs, he was the 2011 International Fellow at the Centre for Strategic and International Studies, Washington, DC and a Fulbright scholar at Georgetown University where he obtained his Master of Laws.


A N N U A L R E P O R T 2 0 1 58

directors’ profile (continued)

ANUARBINISMAILAged 63, Malaysian • Independent Non-Executive Director

Encik Anuar was appointed to the Board of the Company on 4 September 2014. He sits in the Audit Committee, the Nomination Committee and the Remuneration Committee.

He holds a Bachelor of Science degree in Chemical and Polymer Engineering from the Loughborough University of Technology, Leicestershire, England.

He was previously with the Shell Malaysia Group of Companies from 1980 to 1996 and with the PETRONAS Group of Companies from 1996 to 2006. His experiences have been in manufacturing and marketing in the downstream businesses of the oil and gas industry including oil refining, LNG, oil and gas trading and petrochemical manufacturing. He is currently providing consultancy services in the downstream oil and gas businesses.

He does not have any family relationship with any Directors and/or major shareholders of PDZ. He has no conflict of interest in any business arrangements involving PDZ. He has had no convictions for any offences.

BASHARUDDINBINSAADAged 61, Malaysian • Independent Non-Executive Director

Encik Basharuddin was appointed to the Board of the Company on 26 August 2015. He sits in the Audit Committee and the Remuneration Committee. He is currently an advocate & solicitor and syarie counsel with Basharuddin Faizie Iskandar.

He was appointed to the Board of Pelaburan MARA Berhad on 2nd February 2012. He is a Fellow of the Association of Chartered Certified Accountants and a member of Malaysian Institute of Accountants. He holds a Degree in Law from the University of London and Certificate of Legal Practice from Qualifying Board Malaysia and Diploma in Syariah Legal Practice from International Islamic University, Malaysia.

He retired as General Manager, Corporate and Commercial Services of Petronas Gas Berhad in September 2009. Over a period of 29 years with the Petronas Group he assumed finance related positions within the Exploration and Production, Retail and Marketing and Gas businesses, and as a General Manager and Senior Manager level, oversaw portfolios which included finance and accounting, commercial and marketing, contracting and procurement, risk management and governance.

He does not have any family relationship with any Directors and/or major shareholders of PDZ. He has no conflict of interest in any business arrangements involving PDZ. He has had no convictions for any offences.

9A N N U A L R E P O R T 2 0 1 5

chAirmAN’s stAtemeNt

Dear Valued Shareholders

“On behalf of the Board of Directors of PDZ Holdings Bhd (“PDZH”), I am pleased to present the Annual Report and Financial Statements for the financial year ended 30 June 2015”.

Financial Results

The Group posted a profit from continuing operations of RM1.98 million for the financial year ended 30 June 2015 against RM2.47 million reported in the preceding financial year. This achievement was made after significant focus on cost reductions and efficiencies. Revenue for the financial year was at RM161.31 million in comparison to RM161.23 million recorded last year, a slight increase due to the overall reduction of revenue per teu.

The Group recorded a loss before tax of RM57.77 million for the financial year against a profit before tax of RM2.18 million for the last financial year. The loss is largely attributable to the one-off expenses for business diversification exercise (RM4.20 million), impairment of property, plant and equipment (RM50.21 million) and impairment of financial asset (RM5.0 million).

Operation Review

Larger vessels were introduced in the markets we serve, resulting in the supply and demand imbalances in these sectors. This resulted in the reduction of ocean freight rates by carriers. Despite the declining rates, we were able to maintain our revenue by increasing our sales volume. The profit from operations was achieved through the concentrated efforts in operational cost reductions and efficiencies. We are however, concerned about the foreign exchange movement, where we began the year with RM3.19 per US Dollar and ended the financial year at RM3.78 per US Dollar. There was a depreciation of the Ringgit Malaysia vis-à-vis US Dollar by 18.5%. This has put tremendous pressure on our costs which are substantially denominated in US Dollars.

Prospects

The global and Malaysian economic situation remains clouded in uncertainty. The slump in the shipping industry is expected to continue in view of the continued supply-demand imbalance caused by excess supply of tonnage. The value of Ringgit Malaysia against the US dollars, should it remain at the current level, will continue to put pressure to our operating costs and profitability.

Against the backdrop of a slowing economy, our strategy is to consolidate to a more competitive cost structure and strive to further improve operational efficiency. We will also enhance our service level and product offering by working with a consortium of shipping partners.

Notwithstanding the above, the management is confident of achieving profitable operational performance for the coming year.

A N N U A L R E P O R T 2 0 1 510

chAirmAN’s stAtemeNt (continued)

Dividend

The Board of Directors does not recommend the payment of any dividend for the financial year ended 30 June 2015.

Acknowledgments

On behalf of the Board of Directors, I would like to welcome new Board member Encik Basharuddin bin Saad and thank Encik Amiruddin bin Abdul Shukor and Datuk Anuar bin Ahmad who have resigned from the Board, for their invaluable contributions to the Group throughout their tenure as Director.

The Board also wishes to extend our deepest appreciation and gratitude to our shareholders, business partners and associates, customers, bankers and agents for their continued support and confidence in PDZH.

To the management and employees of the Group, thank you for your loyalty, commitment and dedication.

Last but not least, I thank my fellow colleagues on the Board for their contribution and active participation on the Board and look forward to their continuing support.

Dato’ Sohaimi ShahadanChairman

11A N N U A L R E P O R T 2 0 1 5

5-Year Financial Highlights

Revenue 184,827 214,220 200,625 161,229 161,311

Profit/(loss) from continuing operations 5,389 12,279 (10,918) 2,474 1,980

Profit/(loss) for the financial year 3,775 10,563 (12,448) 865 (58,810)

Profit/(loss) attributable to owners of the Company 2,373 9,094 (13,829) (493) (60,018)

Dividends – tax exempt 0 0 0 0 0

Dividend rate (%) 0 0 0 0 0

Equity attributable to owners of the Company 96,809 105,909 92,097 91,670 31,743

Basic earnings/(loss) per share (sen) 0.27 1.05 (1.59) (0.06) (6.90)

Net assets per share (sen) 11.14 12.18 10.59 10.55 3.65

2011 2012 2013 2014 2015 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000

0

50

100

150

200

250

184.827 214.220

200.625

161.229

REVENUE (RM million)

0

20

40

60

80

100

12096.809 105.909

92.09791.670

31.743

EQUITY attributable to owners of the Company (RM million)

2011 2012 2013 2014

2011 2012 2013 2014

161.311

2015

02468

101214

3.65

11.14 12.18

10.5910.55

NET ASSETS per share (sen)

2011 2012 2013 2014 2015

0

5

(10)(20)(30)(40)(50)(60)

10

15

5,389

(10,918)

2,4741,980

PROFIT/(LOSS) from continuing operations(RM million)

2011 20122013

2014 2015

12,279

2015

fiNANciAl highlights

A N N U A L R E P O R T 2 0 1 512

corporAte goverNANce report

The Board of Directors at PDZ Holdings Bhd (“PDZH”) acknowledges the importance of maintaining good corporate governance in the Group and is committed to ensure that the principles and best practices of corporate governance as set out in the Malaysian Code on Corporate Governance 2012 (“the Code”) are being observed.

The Board is pleased to report on how the Group had applied the principles contained in the Code, having regard to the recommendations stated under each principle for the financial year ended 30 June 2015.

A Board of Directors

(a) The Board

The Board of Directors comprises members with a wide range of experience in shipping, oil & gas, management, marketing, banking, administration, finance and accounting. The combination of skills and experiences of the Directors set forth a synergy of strength in charting the direction of the Group. The Directors’ profiles of the Company are set out in pages 6 to 8 of the Annual Report.

The Board has overall responsibility for the strategic direction of the Group and oversees the Group’s businesses to ensure that they are properly managed and carried out. It has further adopted the pertinent responsibilities as listed in the Code to facilitate the discharge of the Board’s stewardship responsibilities.

(b) Board Committee

There are three committees of the Board, namely the Audit Committee, Nomination Committee and Remuneration Committee. All these committees operate under their respective set of clearly defined terms of reference. Each of the committee has the authority to examine particular issues and report to the Board with their recommendations. The ultimate decisions on all matters lie with the Board.

Audit Committee

The composition and terms of reference of the Audit Committee together with its report are presented on pages 20 to 24 of the Annual Report.

Nomination Committee

The Nomination Committee was established by the Board on 25 March 2002 comprising exclusively of Non-Executive Directors, comprising of independent and non-independent, with the responsibility of proposing new nominees for the Board including the Board’s committees and carrying out the process of assessing the performance and contribution of each individual Director and overall effectiveness of the Board on an ongoing basis. All the assessments and evaluations carried out will be properly documented.

13A N N U A L R E P O R T 2 0 1 5

corporAte goverNANce report (continued)

The changes to the members of the Nomination Committee are as follows:-

(1) Encik Anuar bin Ismail – Chairman (2) Encik Ahmad Nazim bin Abdul Rahman (3) Encik Basharuddin bin Saad (4) Amiruddin bin Abdul Shukor (Ceased as member on 3 April 2015)

The Nomination Committee also assists the Board to review annually its required mix of skills and experience and other qualities, including core competencies which the Non-Executive Directors should bring to the Board.

Remuneration Committee

The Remuneration Committee was established by the Board on 25 March 2002. There had been changes to the members of the Remuneration Committee as follows:-

(1) Encik Aminuddin Yusof Lana – Chairman (Appointed on 1 January 2015) (2) Encik Anuar bin Ismail (3) Encik Ahmad Nazim bin Abdul Rahman (4) Datuk Anuar bin Ahmad (Ceased as member on 11 March 2015) (5) Encik Amiruddin bin Abd Shukor (Ceased as member on 3 April 2015)

The main responsibility of the Remuneration Committee is to recommend to the Board the remuneration of the Executive Directors in all its forms, drawing from outside advice where necessary. The Remuneration Committee also reviews Non-Executive Directors’ remunerations on an annual basis. The Executive Directors play no part in decisions on their own remunerations.

(c) Board Balance

The Board currently has five (5) members, comprising one (1) Non-Independent Non-Executive Chairman, one (1) Managing Director and three (3) Non-Executive Directors, two (2) of whom are Independent. Therefore, the Company complies with the requirements of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”) for Independent Non-Executive Directors to make up at least or nearest one third of the Board membership as well as the requirement for a director who is a member of the Malaysian Institute of Accountants to sit in the Audit Committee.

The composition of the Board is deemed fairly balanced to complement itself in providing the industry-specific knowledge, technical and commercial experience. This balance enables the Board to provide clear and effective leadership to the Company and to bring informed and independent judgment to various aspects of the Company’s strategies and performance.

There is a clear division of responsibility between the Executive Directors to ensure a proper balance of power and authority. Decisions made by the Board are communicated through the Managing Director to the senior management team.

The Board of Directors regularly review the strategic direction of the Company and the progress of the Company’s operations, taking into account changes in the business and political environment and risk factors such as level of competition.

A N N U A L R E P O R T 2 0 1 514


The presence of Independent Non-Executive Directors fulfils a pivotal role in corporate governance accountability, as they provide unbiased and independent views and advice in ensuring that the strategies proposed by the management are fully deliberated and examined in the long-term interests of the Group, as well as the shareholders, employees, customers, suppliers and the many communities in which the Group conducts its business.

(d) Board of Directors’ Meeting

The Board has a schedule of matters specifically reserved for its deliberation, such as approval of corporate plans and budgets, material acquisitions and disposal of assets, major capital projects, financial results and board appointments. The schedule ensures that the direction and control of the Group are in the hands of the Board.

Four official board meetings were held during the reporting financial year and the attendance record of each Board Member at the Board Meetings are set out below.

All deliberation and conclusions thereon had been properly recorded by the Company Secretary present at the meetings. The Board is satisfied with the level of commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company.

Number of Name of Director Status Meetings Attended

Dato’ Sohaimi bin Shahadan Chairman, Non-Independent 3 / 4 Non-Executive Director

Encik Ahmad Nazim bin Abd Rahman Non-Independent Non- 2 / 4(re-designated as Non-Executive Executive Director Director on 1 January 2015)

Encik Aminuddin Yusof Lana Managing Director 4 / 4(re-designated as Managing Director on 1 January 2015)

Encik Anuar bin Ismail Independent Non-Executive 3 / 4 Director

Encik Basharuddin bin Saad Independent Non-Executive NA(appointed as Non-Executive Director Director on 27 August 2015)

Datuk Anuar bin Ahmad Independent Non-Executive 2 / 2(resigned as Non-Executive Director Directoron 11 March 2015)

Encik Amiruddin bin Abdul Shukor Non-Independent Non- 2 / 2(resigned as Non-Executive Director Executive Directoron 3 April 2015)

15A N N U A L R E P O R T 2 0 1 5


Title Area of Focus

1. World LPG Conference – Expanding Horizons Oil and Gas

2. Board Reward and Recognition Governance

3. Recent Development in Selected MFRSs Financial Accounting

(e) Supply of Information

All Directors are provided with an agenda and a set of Board papers prior to the Board meetings or Committee meetings to enable the Directors to obtain further information or explanations, where necessary, in order to be briefed properly before the meeting. The Board papers covered in a comprehensive manner all items in the agenda and include, amongst others, the Group financial performance, industry trends, business plans and proposals, quarterly results announcements, proposed policies and procedures, operational issues and updates on statutory regulations and requirements affecting the Company and the Group.

All members of the Board, whether as a whole or in their individual capacity, have ready and direct access to the advice and services of the Company Secretaries to assist them in the furtherance of their duties. Where necessary, the Board may engage independent professional advisers at the Group’s expense on specialized issues to enable them to discharge their duties proficiently.

(f) Appointments to the Board

The appointment of new directors is the responsibility of the Board after considering recommendations of the Nomination Committee, which had established a formal and transparent procedure in relation to the assessment of candidates for appointment as directors.

(g) Directors’ Training

In compliance with the MMLR, all the Directors have completed the Mandatory Accreditation Programme accredited by Bursa Malaysia Securities Berhad (“BMSB”).

The Directors are also encouraged to attend educational programmes and seminars to equip themselves to effectively discharge their duties as Directors.

Conferences, seminars and training programmes attended by the various Directors during the financial year are summarised as follows:-

The Directors will on a continuous basis, evaluate and ascertain their training needs to keep abreast with the current regulatory issues and development in various aspects of the business environment.

A N N U A L R E P O R T 2 0 1 516


Type of Remuneration Executive Non-Executive Directors Directors Total (RM) (RM) (RM)

(a) Fees 0 560,000 560,000

(b) Salaries and other emoluments 919,000 0 919,000

(c) Estimated value of benefits-in-kind 0 0 0

Total 919,000 560,000 1,479,000

ii) The number of Directors and their remuneration fall are as follows:-

Band (RM) Numbers of Executive Number of Directors Non-Executive Directors

1 - 50,000 0 3 50,001 - 100,000 1 3100,001 - 150,000 0 0150,001 - 250,000 0 1250,001 - 300,000 1 0300,001 - 450,000 2 0

Total 4 7

(h) Re-election of Directors

In accordance with the Company’s Memorandum and Articles of Association, one third of the Board members are required to retire at every Annual General Meeting and, if they offer themselves for re-election, be subject to re-election by shareholders. Newly appointed Directors shall hold office until the next Annual General Meeting and shall then be eligible for re-election by the shareholders. All Directors shall retire from office at least once in every three (3) years but shall be eligible for re-election.

B Directors’ Remuneration The Board endeavors to ensure that the levels of remuneration offered for Directors are

sufficient to attract and retain people needed to run the Group successfully. In the case of Executive Directors, the component parts of remuneration are structured to link rewards to corporate and individual performance. In the case of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the particular non-executive concerned.

The details of Directors’ Remuneration payable to all the Directors of the Company during the financial year ended 30 June 2015 are as follows:-

i) Aggregate remuneration of Directors categorized into the following components:-

Note: The above disclosures conform with the requirement under Appendix 9C Part A (11) of MMLR. Details of the remuneration of individual Director are not revealed for security and confidentiality reason.

17A N N U A L R E P O R T 2 0 1 5

corporate governance report (continued)

C RelationshipwithShareholdersandInvestors

The Board recognises the importance of being accountable to the Group’s investors and shareholders and as such maintains a constructive communication policy that enables the Board and the Management to communicate effectively with the shareholders, stakeholders and investors generally. In addition to the Company’s compliance with the continuing disclosure obligations contained in the MMLR, shareholders are kept informed of the Group’s progress through the Annual Reports, quarterly financial statements and at the Company’s Annual General Meetings (“AGM”).

The Board of Directors of the Company holds the view that the AGM serves as the primary means of communicating with the shareholders. At every AGM, the Board presents the progress and performance of the Group’s businesses and provides shareholders with an opportunity to put their questions in person. The members of the Board and Committees together with the External Auditors are available to respond to shareholders’ questions during the meeting. Extraordinary General Meeting (“EGM”) is held as and when shareholders’ approvals are required on specific matters. Notices of AGM and EGM are issued in a timely manner to all shareholders whose names appear on the Company’s Register of Depositors supplied by the Bursa Malaysia Depository. In addition, shareholders may also address their concerns, if any, to Encik Aminuddin Yusof Lana, the Managing Director of the Company, via fax no. 603-4143 3889 or via the Company’s website, www.pdzlines.com or by mail to the Company’s registered office.

D AccountabilityandAudit

RelationshipwiththeAuditors

The role of the Audit Committee in relation to the external auditors is described on pages 20 to 24 of the Annual Report. The Company has always maintained a transparent relationship with its Auditors in seeking their professional advice towards ensuring compliance advice with the relevant accounting standards.

InternalControl

The Statement on Risk Management & Internal Control furnished on pages 25 to 27 of the Annual Report provides an overview of the state of internal controls within the Group.

FinancialSupporting

The Audit Committee reviews the Group’s quarterly results and annual financial statements to ensure correctness and adequacy. Thereafter, the said results and financial statements are presented to the Board, who is responsible for ensuring that the quarterly results and financial statements of the Group present a balanced and fair assessment of the Group’s financial position and prospects. The quarterly results are released to the BMSB via BURSA LINK after the Board has adopted them. The Statement by Directors pursuant to Section 169(15) of the Companies Act, 1965 is set out on page 34 of the Annual Report.

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E OtherInformation

Non-auditfees

Non-audit fees paid to external auditors for the financial year ended 30 June 2015 amounted to RM58,000.

MaterialContracts

There were no material contracts entered by the Company and its subsidiaries which involve Directors’ and major shareholders’ interests since the previous financial year ended 30 June 2014.

Options,WarrantsorConvertibleSecurities

The Company did not issue any options, warrants or convertible securities in the financial year ended 30 June 2015.

F CorporateSocialResponsibility(CSR)

A culture of corporate responsibility has proven its worth in pursuing the Group’s key business objectives and delivering better returns to the stakeholders.

Throughout the year, the Group continued to carry out its CSR activities focusing on the following aspects:

Community

The Group participates in organisations that seek to provide opportunities for civic, economic and educational growth and social and physical health. Participation takes various forms and includes benevolent initiatives such as gifts, sponsorship, and donations in-kind.

WorkPlace

Our employees are the core of our success and growth. To ensure employees at every level make the fullest contribution to the Group’s performance and to the achievement of goals, we seek to recruit people with the right skills and quality. As part of our human capital developments, the Group arranged training programmes focusing on job related and management development programmes to enhance their job performance and career advancement.

Every opportunity is taken for staff of all levels to socialise and mingle after office hours. Apart from organizing sports and games for staff, we also hold functions such as monthly birthday tea-parties, festival celebrations and annual dinners to strengthen the bonds of friendship and instill a sense of belonging among employees.

The Group presents long service awards to employees in appreciation of their loyalty and commitment to the Company. Employees are also provided with adequate medical benefits including hospitalization and personal accident insurance.

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Safety&Environment

On this aspect, we ensure that worksites and surrounding areas are well maintained with high safety standards. Safety and environmental pollution awareness programs are conducted regularly for all our staff. Regular ship security internal audits are carried out for our vessels in compliance with the International Ship & Port facility Security Code (ICPS) by our dedicated team.

We place high priority on fuel management and considerable effort is expended on our schedule planning and development on optimal route to conserve fuel. Fueling guidelines have been drawn up to monitor fuel usage.

We also emphasize the recycling of paper, reading material and other consumables in our offices.

Marketplace

The Group’s corporate responsibility initiatives are evident through its engagement with all stakeholders including employees, customers, suppliers, local communities and host government authorities where it operates.

We have continued to maintain our market share, an indication of good management which is expected to deliver long term performance and signals better risk management capabilities, especially in the current climate of uncertainty amidst and the volatile financial and economic turmoil.

The Group is committed to maintaining its corporate practices and enhancing a fair return on the shareholders’ investments through its good business practices. During the shareholders’ meeting we take the opportunity to further provide our shareholders a better understanding of the Group’s progress and performance.

G Directors’ResponsibilityStatement

In connection with the preparation of the annual financial statements of the Company and the Group, the Directors are required to ensure that the financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 in Malaysia, Malaysia Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Company and the Group as at 30 June 2015 and of their financial performances and cash flows for the financial year ended 30 June 2015.

The Directors are responsible for ensuring adequacy of accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act, 1965. They have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company to prevent and detect fraud and other irregularities.

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audit committee report

The Board of PDZ Holdings Bhd (“PDZH” or “Company”) is pleased to present the Report on the Audit Committee for the financial year ended 30 June 2015 as follows:-

COMPOSITIONOFTHEAUDITCOMMITTEE

Encik Basharuddin bin Saad (Chairman)Independent Non-Executive Director

Encik Ahmad Nazim bin Abdul RahmanNon-Independent Non-Executive Director

Encik Anuar bin IsmailIndependent Non-Executive Director

Note: The previous Audit Committee members, Datuk Anuar bin Ahmad resigned on 11 March 2015 and Encik Amiruddin bin Abdul Shukor resigned on 3 April 2015.

TERMSOFREFERENCE

Membership

The PDZH Audit Committee (“the Audit Committee” or “the Committee”) shall be appointed by the Board from amongst their number and shall consist of not less than 3 members, a majority of whom shall be independent non-executive directors. Executive director and alternate director cannot be appointed as member of the Committee. In the event of any vacancy in the Committee which results in non-compliance of paragraph 15.09(1) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements (“MMLR”), the vacancy shall be filled within 3 months.

At least one member of the Committee must be qualified under paragraph 15.09(1)(c) of the MMLR.

The Chairman of the Committee shall be an independent non-executive director appointed by the Board.

FrequencyofMeetings

Meetings shall be held not less than four times a year. In addition, the Chairman of the Committee may call a meeting of the Committee upon the request of the external auditors, to consider any matters the external auditors believe should be brought to the attention of the Board and shareholders.

Majority members present in person who are independent non-executive directors shall be a quorum.

Secretary

The Company Secretary shall be the Secretary of the Committee.

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audit committee report (continued)

Authority

The Audit Committee shall, at the Company’s expense, have the following authority and rights:-

1. full and unrestricted access to any information and documents from the external auditors and senior management of the Company and the Group which are relevant to the activities of the Company.

2. be provided with the necessary resources which are required to perform its duties.

3. the right to investigate into any matter within its Terms of Reference and as such, have direct communication channel with the external auditors and persons carrying out the internal audit function of the Company.

4. the liberty to obtain independent professional advice and to secure the attendance of such external parties with relevant experience and expertise at its meeting if it considers this necessary.

5. be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of the other directors and employees of the Group, whenever deemed necessary.

6. may extend invitation to other non-member directors and officers of the Company to attend a specific meeting, whenever deemed necessary.

Duties

The Audit Committee shall report to the Board of Directors either formally in writing, or verbally, as it considers appropriate on the matters within its Terms of Reference.

The duties of the Audit Committees shall be:-

1. To review the audit plan with the external auditors;

2. To review the audit report with the external auditors;

3. To review the assistance given by the Company’s officers to the external auditors and to meet with the external auditors without executive directors board members’ present at least twice a year;

4. To review the quarterly results and year-end financial statements of the Company and the Group, prior to the approval by the Board, focusing particularly on:

a. change in or implementation of major accounting policies; b. significant and unusual events; and c. compliance with accounting standards, regulatory and other legal requirements.

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5. To review any related party transaction and conflict of interest situation that may arise within the Company and the Group including any transaction, procedure or course that raises questions of management integrity;

6. To review the adequacy of the scope, functions, competency and resource of the internal audit function and to ensure that it has the necessary authority to carry out its work;

7. To take cognisance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his/her reasons for resigning, if the staff member concerned so desires;

8. To review any internal audit programme, processes, the results of the internal audit programme, processes or investigations undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;

9. To review any evaluation made on the systems of internal control with the internal and external auditors;

10. To recommend to the Board of Directors the appointment of the external auditors and their fees;

11. To consider any resignation or removal of the external auditors, and to furnish such written explanation or representation from the external auditors to Bursa Malaysia Securities Berhad;

12. To review whether there is reason (supported by grounds) to believe that the external auditors are not suitable for re-appointment;

13. The Chairman of the Audit Committee should engage on a continuous basis with senior management, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company; and

14. To undertake such other functions as may be agreed by the Audit Committee and the Board.

PerformanceReview

The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board of Directors of the Company at least once every three (3) years to determine whether the Committee and members have carried out their duties in accordance with the Audit Committee’s Terms of Reference.

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MEETINGSOFTHEAUDITCOMMITTEE

The attendance records of each Audit Committee Member at these Meetings are as follows:

The Group’s Internal Audit Consultants, Financial Controller and other non-member Directors attended the meetings by invitation. The Committee had also met with the external auditors twice during the financial year without the presence of the executive board members and management.

The minutes of each Audit Committee Meeting were documented and distributed to all members of the Board.

SUMMARYOFACTIVITIESOFTHECOMMITTEE

The activities of the Audit Committee during the financial year ended 30 June 2015, included:-

1. reviewed the unaudited quarterly reports on the consolidated results of the Group prior to tabling of the same to the Board of Directors.

2. reviewed the accounting issues arising from the updates of new developments on accounting standards, amendments and interpretations.

3. reviewed the external auditors’ report in relation to their audit findings and accounting issues arising from the audit of the Group for the financial year ended 30 June 2015.

4. considered matters relating to corporate governance in compliance with the MMLR and the Malaysian Code on Corporate Governance.

5. reviewed with the internal audit consultant, external auditors and the management, the adequacy of the existing policies, procedures and systems of internal control of the Group, as well as recommended procedures for improvements or enhancements.

AuditCommitteeMember Status NumberofMeetings Attended

1. Encik Anuar bin Ismail Independent 3 / 4 Non-Executive Director

2. Encik Ahmad Nazim bin Abdul Rahman Non-Independent 1 / 4 Non-Executive Director

3. Encik Basharuddin bin Saad Independent 1 / 1 Non-Executive Director

4. Encik Amiruddin bin Abdul Shukor Non-Independent 2 / 2 (Resigned on 3 April 2015) Non-Executive Director

5. Datuk Anuar bin Ahmad Independent 2 / 2 (Resigned on 11 March 2015) Non-Executive Director

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6. reviewed internal audit reports and ensured that appropriate action has been taken by the management to implement the recommendations of the internal auditors.

7. reviewed the assistance given by the management to the external auditors.

8. reviewed the audit plan which listed out the audit programme planned by the external auditors.

9. reviewed 2016 Group Budget and recommended the same for Board approval.

INTERNALAUDITFUNCTION The Group has outsourced its internal audit function to a company specialising in internal auditing and risk management. The principal objective of the internal audit function is to assist the Board of Directors in maintaining a sound system of internal control within the Group so as to safeguard the shareholders’ investment and the Group’s assets. The internal audit function is to provide independent assessments to ensure that the system of internal control of the Group is adequate, efficient and effective. The consultants report directly to the Audit Committee. The scope of the internal audit function covers the audits of all business units and operations of the Group.

The internal audit function has adopted a risk-based approach to audit assessments and reviews. The consultants have carried out audit assignments in accordance with the approved plan and their findings, together with any recommendations, have been reported directly to the Audit Committee.

The total cost incurred for the Group’s internal audit function in respect of the financial year ended 30 June 2015 was RM15,000. The activities of the internal audit function is detailed in the Statement on Risk Management & Internal Control on pages 25 to 27 of this Annual Report.

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Statement on riSK management & internaL controL

The Board of PDZ Holdings Bhd is committed to continuously improve the Group’s risk management and internal control system and is pleased to present the following Statement on Risk Management & Internal Control for the financial year ended 30 June 2015. This Statement is made in pursuant to Paragraph 15.26 (b) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements and the Statement on Risk Management & Internal Control: Guidelines for Directors for Public Listed Issuers, 2012.

1. Board’sResponsibility

The Board recognises the importance of sound controls and risk management practices to good corporate governance. The Board acknowledges its overall responsibility in establishing a sound risk management framework and internal control system within the Group. The Board is equally aware that the risk management framework and internal control system are designed to manage the Group’s risks within an acceptable risk appetite, rather than eliminate the risk of failure to achieve the policies, goals and objectives of the Group. In this regard, the risk management framework and internal control system can only provide reasonable assurance, and not absolute assurance against material misstatement of financial information and records or against financial losses or fraud.

2. RiskManagementFramework

The overall risk management practice of the Group involves an ongoing process designed to identify the principal risks to the achievement of the Group’s policies, goals and objectives to evaluate the nature and extent of those risks and to proactively manage them efficiently, effectively and economically. The Group adopts an enterprise wide risk management approach and all the active business of the companies within the Group are considered and categorised in accordance with their main functional activities. This process has been in place for the year under review and up to the date of issuance of the annual report and financial statements.

Risk identification and evaluation process

The risks are identified through a series of interviews and discussions with the key personnel and management of the Group. The risk identification process includes consideration of both internal and external environment factors. External environmental factors include economic and political changes, changes in the behavior of competitors, new regulations or legislation and technological developments. Internal factors include changes in key personnel, introduction of new or revision of existing policies and procedures. Next, the risks identified are evaluated by examining the potential impact on the Group if a risk crystallised as well as the likelihood of occurrence. The risk level shall be rated low, medium or high accordingly. The risks are also classified into four categories according to their potential impact on the Group:

• Business Risks • Strategic Risks

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Statement on riSK management & internaL controL (continued)

• Operational Risks • Financial Risks

Risk adoption and monitoring process All the risks identified are documented into a “Business Risk Profile”. The Business Risk

Profile of the Group is updated on an ongoing basis and approved by the Board.

The Business Risk Profile serves as a tool for the heads of department/business unit for managing key risks applicable to their areas of business activities on a continuous basis. All key risks and issues are regularly reviewed and resolved by the Management team at regular meetings. Through these mechanisms, key risks identified in the Business Risks Profile are timely assessed and control procedures or mitigating factors are re-evaluated accordingly in order to ensure that the key risks are mitigated to an acceptable level.

The Internal Audit team on a regular basis reviews the effectiveness and adequacy of control procedures adopted by the Group in mitigating the key risks identified in the Business Risk Profile. Any weaknesses noted during the review are reported to the Audit Committee. Through these mechanisms, the Audit Committee can be assured that the key risks of the Group are regularly reviewed and appropriately managed to an acceptable level.

3. InternalControls The key elements of the Group’s system of internal controls that the Board has established

in reviewing the adequacy and effectiveness of the risk management and internal control system are as follows:

• The Group has an appropriate organizational structure for planning, executing, controlling and monitoring business operations in order to achieve the Group’s business objectives. Lines of responsibility and delegation of authority are clearly defined.

• To ensure the uniformity and consistency of practices and controls within the Group. Standard Operating Procedures have been formalised and documented for the key business processes.

• Business units prepare an annual budget and present it to the Board for approval. Any variance of actual performance against budget are monitored and reported in the monthly management meetings. The results are consolidated and presented to the Board on a regular basis.

• The Group’s vessels are subject to regulatory requirements; the vessels complied with the requirements of International Safety Management Code (ISM), International Ship and Port Facility Security Code (ISPS) and are certified by Classification Society.

• The Executive Directors act as the channel of communication between the Board and the Management. The Executive Directors are empowered to manage the business of the group and implement the Board’s directives and policies.

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Statement on riSK management & internaL controL (continued)

• Investment options are referred to the Board for review and decision.

• Regular internal audit visits are carried out to provide independent assurance on the effectiveness of the Group’s system of internal controls and advising Management on areas for further improvements.

• The Audit Committee meets at least four times a year and regularly reviews the effectiveness of the Group’s system of internal controls. The Committee meets with the internal auditors and external auditors to review their reports.

4. AssurancefromManagement

In accordance with the Statement on Risk Management & Internal Control - Guidelines for Directors of Listed Issuers, the Board has received assurance from the Managing Director and Chief Financial Officer that to the best of their knowledge the risk management and internal control of the Group are operating effectively and adequately, in all material aspects, based on the risk management and internal control framework adopted by the Group.

5. ReviewoftheStatementbytheExternalAuditors

As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the External Auditors have reviewed this Statement on Risk Management & Internal Control. The External Auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of process the Board has adopted in the review of the adequacy and integrity of internal control and risk management of the Group.

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PDZ HOLDINGS BHD (360419-T) NO. 1, Jalan Sungai Aur, 42000 ... Currently, he sits on the Board of Goh Ban Huat Berhad, Scomi Oiltools International Limited (Bermuda) and Marco Holdings

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