CONTENTS
BOARD OF FINANCIAL DIRECTORS’ HIGHLIGHTS CHAIRMAN'S 03 PROFILE 11 12 STATEMENT Corporate Information 02 Board of Directors’ Profile 03 Group Key Senior Management's Profile 08 Management Team of LITRAK Group 10 Financial Highlights 11 Chairman’s Statement 12 Management Discussion and Analysis 14 Sustainability Statement 21 Corporate Governance Overview Statement 40 Statement on Risk Management and Internal Control 46 Audit Committee Report 48 Additional Compliance Information 50 Financial Statements 51 Analysis of Shareholdings 122 Notice of Annual General Meeting 124 Administrative Guide 127 Proxy Form •
25TH ANNUAL GENERAL MEETING
Date 30 SEPTEMBER 2020, WEDNESDAY
Time 11.00 A.M.
Broadcast Venue MANAGEMENT TRICOR BUSINESS CENTRE DISCUSSION & ANALYSIS MANUKA 2 & 3 MEETING ROOM UNIT 29-01, LEVEL 29, TOWER A 14 VERTICAL BUSINESS SUITE AVENUE 3, BANGSAR SOUTH NO. 8 JALAN KERINCHI 59200 KUALA LUMPUR MALAYSIA Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 CORPORATE INFORMATION
BOARD OF DIRECTORS
TAN SRI DATO' SETIA HAJI AMBRIN BIN BUANG Independent Non-Executive Chairman
IR HAJI YUSOFF BIN DAUD Non-Independent Executive Director
DATO' HAJI AZMI BIN MAT NOR Non-Independent Non-Executive Director
DATIN LEE CHOI CHEW Independent Non-Executive Director
PUAN NAZLI BINTI MOHD KHIR JOHARI Independent Non-Executive Director
AUDIT COMMITTEE REGISTERED OFFICE 2nd Floor, Kompleks Operasi LITRAK Datin Lee Choi Chew KM19 Lebuhraya Damansara-Puchong (Chairperson) Bandar Sunway, PJS 9 47500 Subang Jaya Tan Sri Dato' Setia Haji Ambrin bin Buang Selangor Darul Ehsan Puan Nazli binti Mohd Khir Johari Malaysia Tel : 603-7494 7000 Fax : 603-7494 7022 REMUNERATION COMMITTEE
Tan Sri Dato' Setia Haji Ambrin bin Buang AUDITORS (Chairman) Ernst & Young Dato' Haji Azmi bin Mat Nor (Chartered Accountants) Puan Nazli binti Mohd Khir Johari SHARE REGISTRAR Insurban Corporate Services Sdn Bhd NOMINATION COMMITTEE 149 Jalan Aminuddin Baki Tan Sri Dato' Setia Haji Ambrin bin Buang Taman Tun Dr Ismail (Chairman) 60000 Kuala Lumpur Tel : 603-7729 5529 Dato' Haji Azmi bin Mat Nor Fax : 603-7728 5948
Puan Nazli binti Mohd Khir Johari BANKERS
SENIOR INDEPENDENT Malayan Banking Berhad NON-EXECUTIVE DIRECTOR Maybank Investment Bank Berhad Datin Lee Choi Chew E-mail: [email protected] STOCK EXCHANGE LISTING
COMPANY SECRETARIES Bursa Malaysia Securities Berhad Main Market Ms Lim Soo Lye
Ms Chiew Teng Juan WEBSITE
www.litrak.com.my
2 www.litrak.com.my BOARD OF DIRECTORS' PROFILE
Tan Sri Dato' Setia Haji Ambrin was also attached to the Malaysian Embassy in Tokyo, Japan from 1992 to March 1995 as Minister for Economic Affairs and Deputy Head of Mission. He was a Senior General Manager for the Kuala Lumpur International Airport Berhad from April 1995 to February 1999. He was the State Secretary of the Selangor State Government from March 1999 to September 2001 and Secretary General of the Ministry of Education till his appointment as Auditor General of Malaysia.
On 16 May 2016, Tan Sri Dato' Setia Haji Ambrin was conferred an Honorary Doctorate Award which carries the title Prof. (Dr.) by IIC University of Technology, Cambodia. In 2017, he was awarded an Honorary Doctorate in Accounting by Universiti Kebangsaan Malaysia and appointed Professor Ajung by Universiti Utara Malaysia. He is currently a member of Dewan DiRaja Selangor. Formerly, he was a Board Member of the Malaysian lnstitute of Integrity.
In 2018, Tan Sri Dato' Setia Haji Ambrin was appointed by the Malaysian Government as Chairman of the Special Investigation Committee on Procurement, Governance and Finance. In the same year, he was also appointed as the Chairman of Perbadanan Pembangunan Kampung Bharu and as a member of the Board of Trustees of Yayasan Pelaburan Bumiputra.
For the past 13 years, he has been a frequent speaker TAN SRI DATO' SETIA HAJI presenting his views and perspective on public sector AMBRIN BIN BUANG auditing, good governance and integrity at many seminars 71, Malaysian (Male) Independent Non-Executive Director and conferences organised domestically and internationally.
Tan Sri Dato' Setia Haji Ambrin was appointed to the Tan Sri Dato' Setia Haji Ambrin holds a Degree in Board of Directors on 6 September 2017. He also serves Economics from the University of Malaya and a Masters as a Chairman of the Nomination Committee and the in International Business from the University of South Remuneration Committee and he is a member of the Audit Carolina, USA. Committee of the Company.
He was appointed the Auditor General of Malaysia on He is also the Chairman of BIMB Holdings Berhad and an 22 February 2006 upon his retirement after having served Independent Non-Executive Director of Gamuda Berhad. the Government (Malaysian Civil Service) for over 35 years. He completed his tenure as Auditor General of Malaysia Tan Sri Dato' Setia Haji Ambrin does not have any family on 22 February 2017. relationship with any Director and/or major shareholder of the Company. He has no conflict of interest with the His working career includes experience in the Ministry of Company. Trade and lndustry from 1971 to 1982 and was appointed as Deputy Director, Small Scale Industries Division in Tan Sri Dato' Setia Haji Ambrin attended all the 5 board 1981. He has also served in the Malaysian Timber lndustry meetings held during the financial year ended 31 March Board from 1982 to 1987 and the National Institute of 2020. Public Administration from July 1987 to 1991.
3 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 BOARD OF DIRECTORS' PROFILE
IR HAJI YUSOFF BIN DAUD 75, Malaysian (Male), Non-Independent Executive Director
Ir Haji Yusoff graduated from the University of He is the Honorary Non-Executive Chairman of Toyo Brighton with a Bachelor of Science (Honours) Degree Ink Group Berhad. in Electrical Engineering in 1968. He joined National Electricity Board (LLN), Kota Bharu immediately Ir Haji Yusoff was appointed to the Board of Directors after his graduation and in 1970 he was posted to on 14 September 1995. He also serves as a Chairman Kedah as Assistant Engineer Consumers. In 1974, of the Executive Committee and the ESOS Committee he was promoted to District Engineer where he was of the Company. responsible for the planning and implementation of electricity supply for northern Kedah and Perlis. In He does not have any family relationship with any 1977, he became the Senior District Manager, Kuala Director and/or major shareholder of the Company. He Terengganu, where he was responsible for the overall has no conflict of interest with the Company. management and operations of electricity supply in Terengganu. From 1979 to 1980, he was attached Ir Haji Yusoff attended all the 5 board meetings held to Petronas in the Special Projects Department as during the financial year ended 31 March 2020. its Deputy Head responsible for the planning of the Peninsular Gas Utilisation Project.
In 1981, he was appointed a Director of Zaidun-Leeng Sdn Bhd and was subsequently made the Managing Director in 1994; a position which he held until 2002 when he was appointed as the Chairman until today. He has over 52 years of management and professional experience in the consulting engineering industry. Zaidun-Leeng Sdn Bhd specialises in the planning and design of infrastructure projects including mechanical, electrical and structural engineering services for both government and private sectors.
4 www.litrak.com.my BOARD OF DIRECTORS' PROFILE
DATO’ HAJI AZMI BIN MAT NOR 62, Malaysian (Male), Non-Independent Non-Executive Director
Dato' Haji Azmi graduated from the University of Dato' Haji Azmi has extensive knowledge of Strathclyde, Glasgow, Scotland, United Kingdom with developing and managing the implementation a Bachelor of Science Degree in Civil Engineering in of complex infrastructure concession projects in 1983 and a Master of Science Degree in Highway Malaysia as well as overseeing the operations of Engineering from the same university in 1995. infrastructure concessions, namely expressways, water-related and others. He is also heavily He was a Resident Engineer for Public Works involved in the implementation of the Klang Valley Department (JKR), Pahang from 1983 to 1984 and MRT Project. Resident Engineer of JKR, Selangor from 1984 to 1986. As the Resident Engineer, he was responsible Dato' Haji Azmi was appointed to the Board of for supervising the construction of army complex, civil Directors on 3 January 2001. He is also a member work and air force building. of the Executive Committee, the Nomination Committee and the Remuneration Committee of In 1987, he was posted to JKR Kuala Lumpur (Road the Company. Branch) as a Design Engineer responsible for road design and the management and coordination of He is a director and shareholder of Gamuda Berhad, consultants' works. His last position with JKR Kuala a major shareholder of the Company. He has no Lumpur was as Assistant Director of the Central Zone conflict of interest with the Company. Design Unit. He left in 1997 to join Gamuda Berhad as a Manager in Design and Technical. In addition to Gamuda Berhad, his directorships in other public companies are in Kesas Holdings Berhad and Syarikat Pengeluar Air Selangor Holdings Berhad.
Dato' Haji Azmi attended 4 out of the 5 board meetings held during the financial year ended 31 March 2020.
5 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 BOARD OF DIRECTORS' PROFILE
DATIN LEE CHOI CHEW 61, Malaysian (Female), Independent Non-Executive Director
Datin Lee holds a Bachelor Degree in Accounting After optional retirement from MHA in 2000, she (Honours) from the University of Malaya. She is a worked in finance and accounting with a professional member of the Malaysian Institute of Accountants and service firm before her appointment as an Executive an associate member of CPA Australia. Director of a property investment company, chiefly in charge of its financial affairs. Datin Lee started her career in Messrs Othman, Hew & Co (Audit & Tax) in 1983 and in 1984 she joined the Datin Lee was appointed to the Board of Directors Malaysian Highway Authority (MHA) as an accountant on 27 November 2014. She also serves as the and later rose to be its Director of Finance. She spent Chairperson of the Audit Committee of the Company close to 16 years in MHA and it was during this time since 29 August 2018. that major toll expressways were constructed and the privatisation of expressways were implemented She does not have any family relationship with any in Malaysia. She has vast experience in the costing, Director and/or major shareholder of the Company. budget-control and finance of highway projects, She has no conflict of interest with the Company. including toll management and operations. She was involved in the financial evaluation of proposals, Datin Lee attended all the 5 board meetings held negotiation, implementation and management of during the financial year ended 31 March 2020. highway projects under the privatisation scheme.
6 www.litrak.com.my BOARD OF DIRECTORS' PROFILE
PUAN NAZLI BINTI MOHD KHIR JOHARI 66, Malaysian (Female), Independent Non-Executive Director
Puan Nazli holds a Bachelor of Science in Business Puan Nazli's vast exposure in a variety of industries had Administration from The George Washington University, contributed positively to her analytical and conceptual Washington D.C., USA and a Master of Business approach in decision making. Her extensive people Administration from Syracuse University, Syracuse, management and general management experience New York, USA. both at corporate and line-management levels also enables her to provide invaluable input to the Board. After completing her tertiary education, Puan Nazli joined Aseambankers Malaysia Berhad [now known Puan Nazli was appointed to the Board of Directors as Maybank Investment Bank Berhad (ASEAM)] from on 2 February 2018. She is also a member of the September 1981 to January 1996, holding various Audit Committee, the Nomination Committee and the positions. Her last position before she left ASEAM Remuneration Committee of the Company. was Head of Project Development. She is an Independent Non-Executive Director In February 1996, Puan Nazli joined Percon of Gamuda Berhad, a major shareholder of the Corporation Sdn Bhd (Percon), a wholly-owned Company. She has no conflict of interest with subsidiary of Permodalan Nasional Berhad as the the Company. General Manager (Corporate Services). At Percon, she was responsible for putting in place a financial and Puan Nazli attended all the 5 board meetings held corporate restructuring scheme for the company. The during the financial year ended 31 March 2020. job involved enhancing, strengthening and developing Percon's competitive position in the field of engineering All the Directors maintain a clean record with and construction and at the same time, developing regard to convictions for offences within the past the corporate direction for Percon. At group level, 5 years (other than traffic offences, if any) and Puan Nazli represented Percon's interests in various there was no public sanction or penalty imposed subsidiaries and associate companies ranging from by the relevant regulatory bodies during the road concession to property development, both locally financial year. and abroad. She left Percon in July 2002.
7 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 GROUP KEY SENIOR MANAGEMENT'S PROFILE
ENCIK SAZALLY BIN SAIDI 56, Malaysian (Male), Chief Executive Officer
En Sazally graduated from the University of Aberdeen, Scotland, United Kingdom with a Bachelor of Science (Honours) Degree in Civil Engineering in 1989. He joined Mott MacDonald Consulting Engineering Group in London immediately after his graduation as a Civil and Structural Engineer. Trained under the programme with the Institution of Civil Engineers (United Kingdom) and was involved as part of the design engineer team for several major projects in London including the Waterloo International Terminal Station and the connection of fast rail network between England and France under the Channel Connection (Euro Tunnel) project.
Upon returning to Malaysia in 1992, he joined Ranhill Holdings Berhad as Assistant Engineer and thereafter Resident Engineer. He was fully responsible for managing and supervising works on major construction and development sites such as the construction of the PLUS Highway in the Northern Peninsular, Malaysia's first satellite station MEASAT and Rebak Marina Resort in Langkawi, Kedah Darul Aman as well as the largest cement plant project in Pahang Darul Makmur.
En Sazally joined Lingkaran Trans Kota Sdn Bhd as an engineer in 1997 and later rose to become its Chief Executive Officer on 1 July 2005, responsible for the management and operation of Lebuhraya Damansara-Puchong (LDP) and Western Kuala Lumpur Traffic Dispersal Scheme (SPRINT Highway).
He was appointed as the President of the Association of Highway Concessionaires Malaysia (PSKLM) in March 2017 after being the Vice President since its establishment in February 2011, representing 31 tolled highway concessionaires nationwide. PSKLM serves as an intermediary between highway concessionaires across the country with the Government of Malaysia, the Ministry of Works, the Malaysian Highway Authority, the Royal Malaysia Police, government agencies, local authorities and other relevant bodies locally and internationally, involving the development, management and operation of highway industry as a part of the local and national economic catalysts.
En Sazally received the Certificate of Appreciation (Public Individual) from the Petaling District Police in 2005, the Chief Police of Selangor's Certificate of Appreciation (Public Individual) during the Malaysia Police Day 2017 and similar Certificate of Appreciation (Public Individual) from the Serdang District Police in 2019.
He does not have any family relationship with any Director and/or major shareholder of the Company and has no conflict of interest with the Company.
His directorship in other public company is in Kesas Holdings Berhad.
8 www.litrak.com.my GROUP KEY SENIOR MANAGEMENT'S PROFILE
MR STEPHEN LOW CHEE WENG 49, Malaysian (Male), Chief Financial Officer
A Chartered Accountant, Mr Low has been with the Group since October 2006. Having served as the Head of Corporate and Finance for more than 10 years in the Group, Mr Low was promoted to Chief Financial Officer of the Group effective from 1 January 2018.
Mr Low is responsible for the Group's budgetary control, treasury, tax and corporate finance functions. He has extensive working experience in accounting, finance and corporate matters gained while he was attached to a Big 4 auditing firm in Malaysia. He has also worked in various other companies involved in information technology, life insurance and education industries prior to joining the Group.
Mr Low is a member of the Malaysian Institute of Accountants and a Fellow member of CPA Australia.
He does not have any family relationship with any Director and/or major shareholder of the Company and has no conflict of interest with the Company.
All the key senior management maintain a clean record with regard to convictions for offences within the past 5 years (other than traffic offences, if any) and there was no public sanction or penalty imposed by the relevant regulatory bodies during the financial year.
9 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 MANAGEMENT TEAM OF LITRAK GROUP
1 2
3 4 5 6
7 8 9 10
11 12 13
1 EN SAZALLY BIN SAIDI 6 EN SYAH RIZAL BIN SAHARI 10 EN SHAH RIZAL BIN Chief Executive Officer Head of Department, MOHAMED FAWZI Toll Operations Head of Department, 2 MR STEPHEN LOW CHEE WENG Communications Chief Financial Officer 7 MS CHIEW TENG JUAN Company Secretary 11 EN MOHAMAD SHARIF BIN 3 MR FRANCISCO ANTHONY DOSS MOHD KASIM Head of Department, Engineering 8 MR CHUAH LEAN PIN Head of Department, Traffic Safety Head of Department, 4 MR YAU TI SIN Information Technology 12 PN NORAZILAH BINTI ISMAIL Head of Department, Head of Department, Highway Maintenance 9 EN MOHAMMAD NIZAM Human Resource and Administration BIN HAMZAH 5 MS JANE KHOO AI LENG Head of Department, 13 MR LAM CHUNG HON Head of Department, Facilities Maintenance Head of Department, Corporate & Finance SPRINT Corporate & Finance LITRAK
10 www.litrak.com.my FINANCIAL HIGHLIGHTS
Financial Year Ended 31 March 2016 2017 2018 2019 2020
Revenue (RM Million) 416.2 534.2 523.9 516.0 503.8
Profit Before Tax (RM Million) 228.7 292.4 306.4 314.6 342.9
Profit for the Year (RM Million) 174.1 221.0 228.6 236.1 261.9
Basic Earnings Per Share (sen per share) 33.5 42.1 43.3 44.7 49.4
Total Assets (RM Million) 2,239.0 2,279.2 2,260.2 2,217.5 2,123.5
Equity Attributable to Equity Holders of the Company (RM Million) 607.3 715.6 822.9 930.0 1,074.3
Net Assets Per Share (RM) 1.16 1.36 1.56 1.76 2.02
Issued and Fully Paid-up Capital (RM Million) 104.5 222.5* 230.9* 231.3* 246.6*
Market Capitalisation (RM Million) 2,665.7 3,168.5 3,003.8 2,222.8 1,966.0
Net Gearing Ratio (times) 1.43 0.95 0.64 0.36 0.13
* Pursuant to the Companies Act 2016 in Malaysia, the share premium account became part of the share capital.
REVENUE PROFIT FOR THE YEAR RM Million RM Million
534.2 523.9 516.0 261.9 503.8 236.1 221.0 228.6 416.2 174.1
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
EQUITY ATTRIBUTABLE TO EQUITY NET ASSETS PER SHARE HOLDERS OF THE COMPANY RM RM Million
1,074.3 2.02 930.0 1.76 822.9 1.56 715.6 1.36 607.3 1.16
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
11 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020
TAN SRI DATO' SETIA HAJI AMBRIN BIN BUANG Independent Non-Executive Chairman
CHAIRMAN'S STATEMENT
DEAR SHAREHOLDERS,
ON BEHALF OF THE BOARD OF DIRECTORS OF LINGKARAN TRANS KOTA HOLDINGS BERHAD, I AM PLEASED ONCE AGAIN TO PRESENT THE ANNUAL REPORT AND FINANCIAL STATEMENTS OF THE COMPANY AND THE GROUP FOR THE FINANCIAL YEAR ENDED 31 MARCH 2020.
12 www.litrak.com.my CHAIRMAN'S STATEMENT
During the year under review, Malaysia faced Sustainability continues to be an integral part of deeper economic uncertainties due to rising the Board's policies and strategies in managing trade tensions between China and United States. and operating the Group's concession business This was further compounded by the wave of assets. Through these measures, the Board is Covid-19 pandemic, sweeping across the globe confident that the Group will be able to achieve from December 2019, causing severe economic greater inclusiveness and better achievements disruptions across the world. Malaysia was not for all stakeholders as we have done so in spared and the Government has swiftly imposed the past. Operating under a new norm due to Movement Control Order (MCO) on 18 March the Covid-19 pandemic and MCO, the Group 2020, which resulted in tollable traffic volumes has adopted various measures to protect our dropping by 85%-90% on both our highways. staff, users and other stakeholders in ensuring continuity of business and operations of our As a result of the MCO, the Group's revenue highways. Details of this and other disclosures dropped from RM516.0 million achieved are elaborated further in the Sustainability previously to RM503.8 million this year. Statement section of this Annual Report. Notwithstanding the challenging environment, the Group closed the financial year with a record In June 2019, the Group received simultaneous profit for the year of RM261.9 million, compared offers from the Government to acquire both LDP to RM236.1 million recorded previously, due and SPRINT Highway. The cut-off date for the to the Group's cautious approach to spending finalisation of definitive agreements and the target and continuous cost reductions measures. completion date was initially set on 30 August Accordingly, the Group has been able to 2019 and 31 December 2019 respectively but maintain a total dividend pay-out of 25 sen per was deferred several times, the last being on share for the current financial year, similar to the 29 February 2020 for the finalisation of definitive pay-out in the previous financial year. Details of agreements. As no further extensions were the Group's financial performance are discussed executed before that cut-off date, the offers further under the Management Discussion and have since lapsed. Analysis section of this Annual Report. Last but not least, as we move forward Moving forward, the Malaysian and global embracing a new norm, I would like to macro-environment remain highly volatile and extend the Board's sincere appreciation to the uncertain. The twin adverse effects of Covid-19 Management and staff for their unwavering pandemic on our general well-being and stalled loyalty, dedication and commitment which domestic economies, though have been under have contributed significantly to the continued controlled and eased during the Conditional success of the Group. The Board would like to Movement Control Order (CMCO) and thereafter record special appreciation to all our front-liners the current Recovery Movement Control for their bravery and commitment in providing Order (RMCO) stages, will continue to have a uninterrupted services to our highway users lingering impact on the economy and our way throughout the MCO period amid the Covid-19 of life – until an effective vaccine is found. pandemic. The Group also values guidance and Since the relaxation of movement restrictions assistance afforded by government agencies, and restarting of business activities in May local authorities as well as our business 2020, particularly in the Klang Valley, both our associates, suppliers and contractors who highways have registered remarkable recoveries also contributed in their respective ways to of tollable traffic volumes when compared with the continued smooth running of the Group's April 2020, albeit still slightly below pre-MCO operations and business. levels. Barring resurgence of a second wave of the Covid-19 or similar pandemic, the Group This Statement is dated 8 July 2020. envisage tollable traffic volumes to return to the pre-MCO level with the full lifting of the MCO by the Government in the near future.
13 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 MANAGEMENT DISCUSSION AND ANALYSIS
Business Overview
The Group has two major investments in companies involved in the design, construction, operation and maintenance of two major tolled highways in the Klang Valley namely Lebuhraya Damansara-Puchong (LDP) and Western Kuala Lumpur Traffic Dispersal Scheme (SPRINT Highway) together with the management of their toll operations.
Lingkaran Trans Kota Sdn Bhd (LITRAK) Sistem Penyuraian Trafik KL Barat Sdn Bhd (SPRINT)
• Concession holder for 40.0 km LDP • Concession holder for 26.5 km SPRINT Highway • 34 years concession period from 1996 to 2030 comprising 3 links with their respective toll plazas • Commencement of tolling on 25 January 1999 as follows: • 4 toll plazas as follows: (a) Damansara Link – Damansara Toll Plaza (a) Penchala Toll Plaza (b) Kerinchi Link – Pantai Toll Plaza (b) Petaling Jaya Toll Plaza (c) Penchala Link – Bukit Kiara Toll Plaza (c) Puchong Barat Toll Plaza • 36 years concession period from 1998 to 2034 (d) Puchong Selatan Toll Plaza for Damansara Link and Kerinchi Link • 33 years concession period from 1998 to 2031 for Penchala Link • Commencement of tolling on 9 September 2001 for Damansara and Pantai Toll Plazas and on 22 March 2004 for Bukit Kiara Toll Plaza
Sustainability remains the core of the Group's committed focus to being a responsible steward of safe and efficient highways and contributing to overall economic growth and well-being of the communities in which the highways operate. To this end, the Group adopts and continuously review and refine our Annual Strategic Plans which serve as key performance plans for the Management to manage and implement day-to-day strategies, action plans, controls and processes in order to achieve the Group's vision to be a sustainable, reputable and leading highway service provider.
Sustainability Priorities Strategic Plans Economic Environment Social
1 Relieving traffic congestion ✓ ✓ ✓ 2 Revenue enhancement ✓ 3 Upgrade quality standards and system improvements ✓ ✓ ✓ 4 Striving for total customer satisfaction ✓ ✓ ✓ 5 Cost awareness and management ✓ 6 Effective management of sustainability aspects ✓ ✓ ✓
In undertaking the Group's Annual Strategic Plans, the Group has in place a quality policy which requires commitment to excellence in the provision of highway operations and maintenance services. Guided by the pursuit of excellence, the Group strives for total customer satisfaction by being efficient and to listen, understand and meet our customers' requirements and expectations and to continuously improve internal processes, products, services, resources and quality management system.
14 www.litrak.com.my MANAGEMENT DISCUSSION AND ANALYSIS
Financial Review
Financial Year 2020 Financial Year 2019 Change
Revenue RM503.8 million RM516.0 million -2.4% Profit for the Year RM261.9 million RM236.1 million +10.9%
During the financial year, the Group's performance was affected by the implementation of the Movement Control Order (MCO) which started from 18 March 2020. Average weekday tollable traffic for LDP dropped from 460,000 vehicles recorded in the previous financial year to 447,000 vehicles this year. As a result, the Group's revenue for the year dropped slightly by RM12.2 million or 2.4% from RM516.0 million achieved previously to RM503.8 million this year.
Despite the drop in revenue, the Group closed the financial year with a record profit for the year of RM261.9 million, an increase of RM25.8 million or 10.9% compared to RM236.1 million registered in the previous year due mainly to the following:
1. Reduced Finance Costs of RM13.4 million i.e. from RM66.1 million recorded previously to RM52.7 million in the current financial year due to the reduction of the Group's borrowings via a scheduled repayment of bonds.
2. Lower Maintenance Expenses of RM11.1 million i.e. from RM26.1 million in the previous financial year to RM15.0 million in the current financial year due mainly to lower provision for resurfacing obligation (i.e. provision for heavy repair) made in the current financial year. The total provision for heavy repair balance of RM25.7 million as at the end of the financial year has been assessed to be sufficient for this purpose.
3. Improved Share of Results of Associates, Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd and its subsidiary SPRINT (SPRINT Group), of RM16.9 million i.e. from a share of profit of RM1.5 million previously compared to RM18.4 million achieved in the current year. The main contributing effect towards this increase is higher revenue attributable to higher Government compensation accruals recognised for Penchala Link's Bukit Kiara Toll Plaza of which concession toll rates were supposed to increase from 1 January 2019. Whilst in the previous year the impact was only for a period of three months, this year the impact of the toll rate increase was for the full twelve months. On the other hand, average weekday tollable traffic on SPRINT Highway decreased around 5.0% from 210,000 vehicles recorded previously to 199,500 vehicles in the current year due to similar reasons as discussed above for LDP.
15 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 MANAGEMENT DISCUSSION AND ANALYSIS
Ongoing daily Contra Flow at Petaling Jaya Toll Plaza to mitigate morning peak congestions tailed back from Federal Highway
The third and final scheduled toll rate increase for LDP Operational Review in accordance with the Concession Agreement was due on 1 January 2016. Since 2016, LITRAK has been Both LDP and SPRINT Highway continue to play crucial compensated by the Government for the difference in toll roles of providing inter-urban connectivity to commuters rates between the amount paid by users and the rates within the Klang Valley due to their respective strategic provided for in the Concession Agreement. alignments and connectivity to the communities in which the highways transverse through. LDP forms part of The Group's total borrowing outstanding (which relates the western link of the Middle Ring Road 2 (MRR2) to the outstanding Sukuk Musyarakah Islamic Securities and provides crucial interconnection along the north- (Sukuk) borrowings undertaken by LITRAK on LDP) reduced south corridor from Damansara in the north to Puchong/ further from RM994.8 million in the previous financial year Serdang/Putrajaya in the South. On the other hand, end to RM780.7 million due to the scheduled repayment SPRINT Highway provides vital links between MRR2 and of the principal amount of Sukuk borrowings due during Inner Ring Road for communities located in Petaling Jaya the financial year. Consequently, the Group's net gearing and western part of Kuala Lumpur and beyond. ratio has improved further from 0.36 at the end of last financial year to 0.13 at the end of this financial year arising Traffic congestion management continues to be the key from the earlier mentioned reduction of Sukuk borrowings challenge in managing the expectations of our highway outstanding as well as higher profit after tax achieved and users. The challenges are further exacerbated as both LDP better cost management. and SPRINT Highway operate as open toll systems with numerous accesses located along the highways especially The Group's closing cash balance remains strong and at the toll-free sections of the respective highways. Major resilient – totalling RM626.8 million as at the end of this congestion management plans implemented and continued financial year. The closing cash balance is mainly held by to be undertaken by the Group to mitigate or contain the LITRAK to meet its Sukuk obligation to maintain the Debt congestions include the following measures: Service Cover Ratio of 2.0 times over scheduled principal and interest repayments. During the financial year, RAM Ratings has also reaffirmed LITRAK's Sukuk borrowings at AA2 level.
16 www.litrak.com.my MANAGEMENT DISCUSSION AND ANALYSIS
1. Continuation of the major contra flow management traffic disruptions to users and also to eliminate the risk of scheme between KM 21 and KM 17 northbound of flooding on the highways during unusually high torrential LDP aimed at mitigating morning peak congestion rainfall. Major ongoing projects and proposed projects and queue lengths traffic at the northbound of the along our highways which are being closely managed and Petaling Jaya Toll Plaza. Implemented since 2014, monitored by the Group include the following: this scheme has proven to successfully relieve daily morning peak hour congestions from Puchong Major Ongoing Projects to Sunway/Federal Highway, which was primarily attributed to the spill over and tailback effect of 1. The integration with Damansara-Shah Alam traffic from the heavily congested Federal Highway. Expressway (DASH) at Penchala Interchange onto both LDP and SPRINT Highway and upgrading of the interchange by Empire 2. Continuation of signalised junction enhancement Damansara Development. programmes at major interchanges along the LDP, following the successful implementations of similar 2. The integration at Kerinchi Interchange on programmes at SS2, Jalan Majlis and Serdang Kerinchi Link of SPRINT Highway with Interchanges previously. Completed programmes at Setiawangsa-Pantai Expressway (SPE). SS2, Jalan Majlis and Serdang Interchanges have shown significant improvement in the level of service, 3. The construction of the MRT Line 2 Sungai traffic queue lengths and user's waiting time and Buloh-Serdang-Putrajaya (MRT Line 2 SSP) are being monitored and reviewed regularly. Similar crossing LDP at Serdang Interchange. conversions of traffic light systems at Taman Megah and Bandar Utama Interchanges are still being 4. The construction of Light Rail Transit Line 3 pursued and followed through pending approval from (LRT3) from Bandar Utama to Johan Setia in Klang at Kayu Ara Interchange on Damansara local and other authorities and consensus of various Link of SPRINT Highway. stakeholders and affected communities. 5. Massive ongoing mixed developments along Congestion management measures are complemented by LDP and SPRINT Highway such as Empire active monitoring and management by the Group of major Damansara project, Icon City project, KL Eco projects implemented or proposed to be carried out along City project and Damansara Pavillion project. our highways. For major development proposed projects along the highways, close collaboration and monitoring Major Proposed Projects with project owners, contractors and local authorities are being carried out by the Group to ensure safety and 1. The upgrading of Serdang Interchange on LDP by operating procedures are adhered to at all times, minimal Lembah Penchala Sdn Bhd.
Ramp from Damansara Uptown to SPRINT Highway
17 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 MANAGEMENT DISCUSSION AND ANALYSIS
Newly upgraded Bandar Puteri Interchange, Puchong Pavement rehabilitation in progress
During the year, the upgrading works of Bandar Puteri under LDP's Frequent Traveller's Programme (FTP). Puchong Interchange on LDP by Flora Development As a responsible corporate citizen, the Group has and upgrading works at Damansara Uptown have been also carried out various community-based CSR successfully completed and proven to alleviate traffic activities during the year including hosting/organising congestion during peak hours at the respective locations. major festive celebrations with local communities and extending contributions to the underprivileged, old Customer satisfaction, service quality improvements and folks' homes and orphanages as well as awareness effective management of sustainability aspects are also key programme on environmental care for staff. focus areas which the Group constantly seeks to improve, especially in the light of competition from competing During the year, SPRINT Highway had participated and won alignments and other transportation modes. Strategic actions Gold Award at the Malaysia Green Highway Index (MyGHI) undertaken or adopted by the Group include: Awards organised by the Malaysian Highway Authority (MHA). The award was given upon assessing five core 1. Improving road ridership comfort via continuous areas; sustainable design and construction activities, energy pavement maintenance strategy and programme. efficiency, environmental and water management, material Pavement conditions are constantly monitored whilst and technology as well as social and safety. repair and rehabilitation works are being implemented and extended to several areas requiring attention to Since the relaxation of the MCO in May 2020 onwards, ensure smooth riding experience for our road users tollable traffic volumes on both highways has since and monitored as a preventive strategy for long-term rebounded albeit still below pre-MCO level. The Group is preservation of the highway pavement assets. optimistic that traffic will return to pre-MCO level in near term when MCO is fully lifted. 2. Continuation of the promotion and use of Radio- Frequency Identification (RFID) technology for Operating under a new norm, the Group has implemented toll collection of which the price of the sticker tag various preventive measures including practicing social (transponder) is more affordable for users. Dedicated distancing at workplace, compulsory temperature checking RFID lanes have been installed at each bound of all at all premises' entrances, constant staff awareness and toll plazas at both our highways in 2018 with additional reminder programmes, compulsory wearing of face masks lanes being planned to be installed from time to time for our front-liners, increase sanitisation of high touch-points as such usage volume increases. work surfaces, implemented work-from-home programme to reduce number of staff working in office and leverage on 3. Continuation of the Group's Corporate Social technology for online meetings and discussions. Responsibility (CSR) programmes for our road users including the provision of toll discounts on festive holidays; the provision of rebates to qualified users
18 www.litrak.com.my MANAGEMENT DISCUSSION AND ANALYSIS
Significant Business Risks compensation due is crucial in managing the Group's financial liquidity position as well as reducing risk of For the Group, the risk of disruption to toll revenue generation breaching the respective concession companies' loan remains the biggest threat. The major risk factors that could covenants. disrupt revenue generation adversely are as follows: 3. Reduction in revenue as a result of lower number 1. Threat of second wave of Covid-19 or any other major of toll-paying vehicles passing through the Group's pandemic which necessitates re-imposition of similar toll plazas because of preference to use alternate travel restrictions on users of public/private vehicles. mode of transportation, such as LRT, MRT or Bus As witnessed during the MCO, tollable traffic volumes Rapid Transit (BRT), or lesser demand for intra-city dropped significantly resulting in severe revenue losses. travel as more private/public entities allow their staff Even with subsequent relaxation of MCO in May 2020, to work from home in light of the lingering threat of traffic on both highways have not rebounded to pre- Covid-19. For alternative transportation modes, this MCO levels. threat will only be relevant in the longer term when the Klang Valley region has a fully comprehensive 2. Delay in the receipt of toll compensation from the and integrated public transportation system. On Government. Since the Government did not approve the change of work arrangements, whilst this threat the toll rates increase for LDP and Kerinchi and would persist until a vaccine is found, this risk may Penchala Links of SPRINT Highway as scheduled be mitigated by travellers who opted to switch from in the Concession Agreement, the Government public transportation to private vehicle use due to would be required to compensate the concession exposure anxieties of Covid-19. holders according to the provisions of the respective Concession Agreements. Timely receipt of such toll
Our dedicated Auxiliary Police team ever ready to serve our highway users
19 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 MANAGEMENT DISCUSSION AND ANALYSIS
Our dedicated Traffic Control Centre provides 24 hours monitoring and surveillance of traffic conditions on LDP and SPRINT Highway
4. The Group also faces threat of unable to collect tolls As for the impact of the MCO, the Group is monitoring for a long period of time as a result of any catastrophic the recovery rate of tollable traffic volumes on both our events, such as a major landslide or a bridge collapse, highways pending full lifting of the MCO by the Government which makes it impossible for vehicles to access in the near term as discussed above. On the same note, the toll plazas. For this risk, the corresponding costs the Group is also monitoring the impact of the recently of repairs and loss of revenue has been adequately introduced RM30 unlimited monthly pass (My30) for all rails mitigated by the Group through the various insurance e.g. LRT, MRT and BRT under the Government's Penjana policies undertaken. Programme aimed at alleviating workers financial woes and reviving the country's economy after being hampered by Group's Business Outlook the Covid-19 pandemic.
The Government continues to freeze toll rates for year Since there are no further scheduled toll rates increases 2020 in order to alleviate the burden of rising living costs for LDP and Penchala Link of SPRINT Highway until the of the Rakyat. As such, toll rates on LDP and SPRINT end of the respective concession periods, revenue growth Highway's Kerinchi and Penchala Links will remain can only be achieved exclusively by traffic growth. For unchanged and compensation payable by the Government Damansara and Kerinchi Links of SPRINT Highway, there will be determined in accordance with the provisions of is still one last scheduled toll rate increase for both toll the respective highways' concession agreements. plazas in 2022. Hence, revenue growth can be expected from both tollable traffic growth and toll rates increases. Moving forward, tollable traffic volumes on both LDP and SPRINT Highway are expected to see very marginal growth. The Group's future profitability is expected to continue Competition from competing road alignments and public to be resilient. Depreciation and Amortisation Expenses transportation will continue to weigh-in on tollable traffic is a non-cash item and expected to grow marginally volumes for both Highways of the Group. On 1 February moving forward whilst Finance Costs is expected to 2020, PLUS Highway had restructured and reduced their reduce gradually as the Group pares down the Sukuk toll rates to be 18% lower than prevailing rates. The Group borrowings based on scheduled repayments. The Group is cautiously optimistic that this reduction may not have a will continue to maximise dividend payout to shareholders significant impact on the traffic volumes for the Group's by distributing any surplus cash after setting aside funds highways due to different origin-destination travel routes of to meet future loan obligations and operational and PLUS Highway's users in the Klang Valley versus ours. capital expenditures.
This Statement is dated 8 July 2020.
20 www.litrak.com.my SUSTAINABILITY STATEMENT
Introduction Key Highlights
The Group aims to be a sustainable, reputable and leading highway service provider. Being the operator of 2 strategically- located urban highways in the heavily populated areas within Klang Valley, the Group recognises that sustainability is crucial in securing the long-term continuity of our business and creating shared values for our stakeholders. We remain steadfastly RM516.9mil committed to our responsibilities in addressing economic, social More details on page 26 and environmental issues around us and as such, focus our approaches and measures to address them by embedding more effective sustainable practices into our day-to-day business. This Statement serves to communicate our economic, environmental, social and governance performance and demonstrate how sustainability influence the way we do business. RM89.5mil About This Statement More details on page 26
Reporting Framework, Scope and Boundary
Our Sustainability Statement 2020 is the fourth statement issued by the Group and is prepared in accordance with the Bursa Malaysia Securities Berhad's Main Market Listing Requirements and Bursa Sustainability Reporting Guidelines (2nd Edition). 1,847 days More details on page 36 This Statement covers LITRAK as a Group, including SPRINT, its associate company (together “LITRAK Group”) and covers the period from 1 April 2019 to 31 March 2020. The scope is consistent with the Annual Report unless otherwise specified. We strive to continuously improve the integrity and accuracy of 0.005 per 1,000 vehicles o o w y the data and analysis contained in this Statement so as to give More details on page 34 our stakeholders with better insights into how we monitor, collect, analyse and report sustainability performance of the Group.
Independent Assurance We have not sought any external assurance for this Statement LDP: RM13.4mil and will consider seeking assurance for our key sustainability SPRINT Highway: RM8.8mil indicators as our reporting matures. More details on page 34
Feedback
We value our stakeholders' feedback on this Statement to continuously improve our reporting and sustainability practices. Please contact us with any questions you have about this The Board: 40% Statement or its contents via: Workforce: 53% More details on page 36 Corporate website : http://www.litrak.com.my
Facebook : https://www.facebook.com/litrakgroup We are responsible to track and manage Twitter : https://twitter.com/LDPtrafik accidents and breakdowns incidents : https://twitter.com/SPRINTtrafik occurring on the full length of our highways on both the tolled and toll-free sections.
21 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 SUSTAINABILITY STATEMENT
Sustainability Governance
Strong and effective sustainability governance structure the Board drives our sustainability vision; keeping us focused is crucial in monitoring and streamlining the Group's and accountable to manage our sustainability objectives. sustainability efforts and safeguarding the interests of our Management of sustainability risks and opportunities is key stakeholders. For the year under review, the sustainability integrated with our various policies, guidelines and systems governance structure of the Group remains unchanged. which also guide our business practices and promote ethical The Board bears overall responsibility for the sustainability business conduct and environmentally-conscious practices. performance of the Group. Supported by the Management,
Sustainability Governance Structure
Board of Directors* • Ultimate accountability for managing sustainability matters • Ensures business strategy considers sustainability
Management • Chief Executive Officer • Formulates sustainability strategy • Chief Financial Officer • Oversees implementation of the sustainability strategy • Heads of Business Units • Considers input of business functions in sustainability processes, e.g. materiality assessment
Business Functions • Supports strategy implementation • Reports on performance and targets • Coordinates sustainability-related disclosures
* The Board of Directors is supported by the Audit Committee, the Nomination Committee, the Remuneration Committee, the Executive Committee and the ESOS Committee. For more information, please refer to the Corporate Governance section on page 40.
Stakeholder Engagement
We believe in maintaining an open and constructive Our key stakeholder groups were identified and prioritised channel of communication with our key stakeholders by our heads of departments, taking into consideration as we value their views and feedback. Meaningful and the level of influence and dependence a stakeholder regular engagements with them are held through various group has over our business. Our key stakeholders formal and informal channels. Effective stakeholder include but are not limited to, shareholders and investors, engagement takes into consideration their needs and government and regulators, road users, employees and concerns in the development of meaningful and inclusive local communities. business action plans and strategies. Each stakeholder group has its unique perspective that contributes to our successes and brings us closer to achieving our vision to be a sustainable, reputable and leading highway service provider.
22 www.litrak.com.my SUSTAINABILITY STATEMENT
Key Stakeholder Engagement
Key Channel of Frequency of Key Topics Our Response Stakeholders Communication Engagement and Concerns
Shareholders • Annual General • Annually • Dividend rate • Provide ongoing financial and Investors Meetings • Business and non-financial disclosures • Announcements • Quarterly and strategy as and when • Traffic growth required • CAPEX • Company • As and when Reports required
Government • Periodic Report • Periodically • Listing • Maintain high standards in and • Annual Report • Annually Requirements economic, environmental, and Regulators • Written • As and when • Regulatory social-related regulations, e.g. communication required compliance maintenance and cleanliness • Site visits • Periodically and of highways maintenance • Please refer to page 38 on our compliance with government regulations and standards
Road Users • Customer • As and when • Traffic • Please refer to page 27 on service required congestion how we manage traffic channels • Toll fees congestion and highway • Company • As and when • Highway maintenance website, emails required maintenance • Toll rates are as per the and social Concession Agreement with media the Government of Malaysia • Meetings • Periodically • Site visits • Periodically
Employees • Intranet • Periodically • Compensation • Offer competitive and internal and benefits performance-based rewards platforms • Career and incentives • Meetings • Periodically development • Provide talent development • Events • Periodically programmes
Local • Company • Periodically • Highway • Uphold high standards of Communities website and maintenance highway maintenance in social media • Noise levels accordance to the Malaysian • Written • As and when Highway Authority (MHA)'s communication required standards • Exhibitions and • As and when • Please refer to page 32 for meetings required more information on our noise mitigation measures
23 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 SUSTAINABILITY STATEMENT
Materiality Assessment
Materiality assessment is a fundamental process in ensuring we channel our sustainability efforts on matters that have significant economic, environmental and social impact and/or substantively influences the interests of our key stakeholders and our business. Our material matters form the focus of this Statement and the basis for the indicators that we use to track and measure our sustainability performance. For the year under review, we have performed a review of our material matters to ensure its relevance and applicability for our key internal stakeholders from various business units via the same 3-step process adopted last year as follows:
1 2 3
com m w m y o y o o m w y o o m w o o o o m o c o m o y m o o c o m c o . o y o o c o y m m o o m m o . y o o c m o m w . w .
o o o m y m ow.
24 www.litrak.com.my SUSTAINABILITY STATEMENT
Materiality Matrix
The Management revisited the material matters identified in the previous year to ensure its relevance and applicability for Financial Year Ended (FYE) 2020, and concluded that the matters identified remain relevant and applicable for this year and this was reaffirmed by the Board of Directors.
High Economic Performance Regulatory Compliance
Traffic Congestion
Road Safety and Maintenance Road User Satisfaction Employee Management Energy Anti-Corruption
Community Investment Innovation Health, Safety and Environment Diversity Waste
Stakeholders Concern/Interest Noise Procument Practices
Low Impact To Business High
Legend: Economic Environment Social High Priority Medium Priority Low Priority
Top Material Matters and Their Boundaries
Our Priorities Material Matters Boundary
Economic Economic Performance LITRAK Group* Traffic Congestion LDP and SPRINT Highway Procurement Practices LITRAK Group Community Investment LITRAK Group Environment Energy LITRAK Group Noise LDP and SPRINT Highway Waste LITRAK Group Social Road Safety and Maintenance LDP and SPRINT Highway Road User Satisfaction LDP and SPRINT Highway Employee Management LITRAK Group Health, Safety and Environment LITRAK Group Diversity LITRAK Group Anti-Corruption LITRAK Group Regulatory Compliance LITRAK Group
* LITRAK Group includes LITRAK Headquarters (HQ), LDP and SPRINT Highway.
25 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 SUSTAINABILITY STATEMENT
The management of these high and medium prioritised material matters, including specific policies, initiatives and indicators associated to the material matters are further elaborated in the following sections.
Economic
We are committed to responsible practices across our business and aim to maximise the value we create and distribute to our key stakeholders. The value we provide to our stakeholders mainly encompasses strong economic performance, effective solutions to traffic congestion, socioeconomic support and community engagements.
Economic Performance
Economic performance is essentially one of our core high priority materiality matters in creating long-term value for our business and our stakeholders. We undertake practical approaches towards financial management by continuously identifying and mitigating risks and reviewing our performance against internal and external benchmarks.
For the year under review, the Group registered revenue of RM503.8 million and profit before tax of RM342.9 million. Our revenue was hampered by the growing threat of Covid-19 pandemic and the Movement Control Order (MCO) implemented to contain the spread of Covid-19 towards the end of the financial year. Despite the resulting slight drop in revenue, the Group achieved a record profit before tax of RM342.9 million due to lower finance costs pursuant to scheduled repayment of borrowings, tighter expenses control and management and higher contribution of profits from associate. The diagram below illustrates the direct economic value generated and distributed on an accrual basis.
Direct Economic Value Generated and Distributed
Value Generated (RM'000)
Value Distributed (RM'000)
Value Generated (RM'000)
Value Distributed (RM'000)
Value Generated (RM'000)
Value Distributed (RM'000)
To Employees To Government To Providers of Capital Retained for Future Reinvestment and Growth
Note: Value generated comprises net operating income, other income and share of result of an associate.
Further information on our economic performance can be found in:
• Financial Highlights: page 11 • Chairman's Statement: pages 12 to 13 • Management Discussion & Analysis: pages 14 to 20 • Financial Statements: pages 51 to 121
26 www.litrak.com.my SUSTAINABILITY STATEMENT
Traffic Congestion
Effective traffic congestion management remains one of the main focus of our high materiality matters and day-to-day operations. Rapid and massive developments over the years along LDP and SPRINT Highway coupled with the numerous accesses along the non-tolled sections of our highways have contributed to the congestion particularly during peak-hours. Our efforts deployed over the years include initiating contra flow, lane channelisation and reducing traffic light phasing at signalised intersections, taking into consideration feedback and complaints from regulatory authorities and the public, e.g. via LITRAK Feedback Management System (LIFS).
As both our highways operate as open toll systems, the key challenge we face in ensuring a smoother traffic flow would be managing and monitoring the traffic flowing to/from the numerous egresses/ingresses connecting into our highways. Other challenges extend beyond our right-of-way (R.O.W) and control which include weaving of traffic due to drivers' attitudes and the inflow of trucks, trailers and slow-moving vehicles during peak hours. Further details of the initiatives taken to address the issue of traffic congestion can be found on pages 16 to 18 of the Management Discussion and Analysis.
Initiatives to Relieve Traffic Congestion
Year LDP SPRINT Highway
FYE2020 • Changing the traffic light system at the Traffic Light Junction Pavement rehabilitation at Jalan Putra Permai near Giant hypermarket from a 4-Phase to 3-Phase traffic signal dispersal system • Providing a contra flow along a 3 km stretch on LDP Northbound between KM 21 to KM 18 on weekdays • Pavement rehabilitation
FYE2019 • Changing the traffic light system at Jalan Majlis Interchange Pavement rehabilitation from a 4-Phase to 3-Phase traffic signal dispersal system • Providing a contra flow along a 3 km stretch on LDP Northbound between KM 21 to KM 18 on weekdays • Pavement rehabilitation
FYE2018 • Widening to provide additional 4th lane along a 0.9 km stretch Pavement rehabilitation on LDP Northbound between KM 1 to KM 1.9 • Upgrading of the existing Serdang Signalised Junction from a 4-Phase to 2-Phase traffic signal dispersal system • Providing a contra flow along a 3 km stretch on LDP Northbound between KM 21 to KM 18 on weekdays • Pavement rehabilitation
Our traffic management initiatives throughout the years have been relatively effective in reducing queue lengths and waiting time for road users, improving the respective mainlines' and junctions' level of service. By tracking the above parameters and continuously reviewing the traffic data and travel patterns of our highways, we are able to measure the effectiveness of our congestion management initiatives.
Procurement Practices
Effective and transparent procurement practice is another key high materiality matter to the Group. We undertake strict annual review exercise of all our suppliers on their service levels, product/service quality and pricing competitiveness. New contractors and suppliers are rigorously vetted for their financial and performance capabilities by the Management and are required to be presented to and approved by the Executive Committee prior to being registered into our panel of approved contractors and suppliers.
27 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 SUSTAINABILITY STATEMENT
Our procurement policy requires significant value purchases to be carried out via a tender process. During the year under review, we have enhanced and strengthened this process by mandating a second tender via e-procurement systems for greater transparency and good governance practice. These procurement strategies and standards helps us manage our expenses effectively and in a sustainable manner. Furthermore, we continue to emphasise on local procurement sources which helps to create economic opportunities and fuel national economic growth, reduce our carbon footprint from transportations and develop strong relationships that are built on mutual trust.
Amount Spent on Local Suppliers (RM'mil)
LDP and LITRAK HQ SPRINT Highway
26.6
15.7
12.9 18.6 17.9 12.3
10.9 10.3 9.6 5.9 5.8 5.5
3.6 2.8 1.4 1.0 0.8 0.3
2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 Maintenance and Other Operational Purchase Maintenance and Other Operational Purchase Heavy Repairs Expenses* of Assets Heavy Repairs Expenses* of Assets
* Other operational expenses include toll operation expenses, office related expenses, travelling and security and other expenses.
Community Investment
Being a responsible corporate citizen, we emphasise on creating positive impacts to society. Since the inception of the Group, we have not only contributed financially to various community and social causes, but also helped organised a range of programmes with the aim of building more resilient and harmonious communities. During the year under review, the Group had contributed/incurred RM1.98 million to many of such causes, with the largest contribution going towards toll discounts and rebates to our highway users. Such contributions and strategic customer/community engagement programmes are important in building long-term sustainable relationships with all our stakeholders on a continuous basis.
Community Investment by Category
13.0% 2.4% 0.9% 1.4% 0.8% 0.4% 0.8% 0.4%
FYE2020 84.5% FYE2019 95.4%
Festive Celebration Education Philanthrophy Road Safety Awareness Toll Discounts and Rebates
28 www.litrak.com.my SUSTAINABILITY STATEMENT
Some of the highlights from our community programmes include the following:
Ramadhan Charity Event on 16 May 2019
A total of 50 children from Pusat Jagaan Telaga Kasih Nur Muhammad, Kota Damansara were treated to an Aidilfitri Shopping Spree at AEON Shah Alam. Around RM200 was spent on each child to ensure they are not left out during the Raya celebrations. The home also received cash donation and groceries totalling RM14,000 from the Group.
Majlis Jalinan Mesra Aidilfitri on 24 June 2019
A joyous Aidilfitri celebration was held at Kompleks Operasi LITRAK, Subang Jaya, hosted by the Group along with KESAS and SMART Tunnel. Invitees included representatives from resident associations and schools from the surrounding communities located along our highways' alignments. Embracing the spirit of Aidilfitri, 40 children from Pertubuhan Kebajikan Asnaf Al-Barakh, Keramat were invited and each of them received "Duit Raya" from the Group. Groceries as well as cash contribution were also donated to the home.
29 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 SUSTAINABILITY STATEMENT
Merdeka Day Celebration on 30 August 2019
The Group organised a Merdeka movie screening programme at Sekolah Menengah Kebangsaan Bandar Puchong Jaya (A), Puchong on the eve of Merdeka Day aimed at instilling patriotic values among the 100 participants involved who are mainly students and staff from the school. The movie aired was PASKAL, a locally produced movie based on a true story about naval military bravery and exploits.
Deepavali Charity Event on 30 October 2019
Deepavali joy was happily shared with patients of the Neuroscience, Orthopedics and Surgical section from the Women and Children Hospital, Kuala Lumpur. Staff from the Group, along with staff from KESAS and SMART Tunnel celebrated the festival of lights with more than 100 patients, where they were entertained by clowns with balloons etc arranged by the Group. Each and every patient also received Deepavali "angpow" and goody bag from the Group.
30 www.litrak.com.my SUSTAINABILITY STATEMENT
Environment
Back to School Event on 19 December 2019 We are cognizant of the impact of our business operations on the environment The Group, along with KESAS and SMART Tunnel, organised a and are working towards more structured "Back to School Programme" at Kompleks Operasi LITRAK. This management and mitigation of these programme involved 60 underprivileged children from Rumah Amal impacts across our value chain. Our Limpahan Kasih, Puchong and Yayasan Chow Kit, Kuala Lumpur. environmental efforts include reducing Each child received a set of school supplies and stationeries worth energy consumption, optimising paper RM200 to assist them in their preparation for the 2020 school usage, as well as addressing noise session and alleviate the financial burden of their families. pollution from our highways. We will continue to explore ways to reduce our environmental footprint and drive operational efficiency in our journey towards sustainable growth.
On 4 December 2019, we are honoured that SPRINT Highway was awarded the Gold Award certification for the category of Tolled Highways (In Operations) at the Malaysia Green Highway Index (MyGHI) 2018 Awards which was presented by the Honourable Chief Secretary of the Ministry of Works, YBhg. Dato' Dr. Syed Omar Sharifuddin bin Syed Ikhsan and the Director General of the MHA, YBhg. Dato' Ir. Mohd Shuhaimi bin Hassan. MyGHI was implemented by the MHA since 2016 and applicable to all highways in Malaysia.
Chinese New Year Charity Event on 21 January 2020
The Group celebrated Chinese New Year with senior citizens from Rumah Sejahtera Jenjarom, Selangor in collaboration with KESAS and SMART Tunnel. Prior to the event day, the Group carried out renovations, repairs and cleaning works at the home. New furniture, including a washing machine, bed frames, kitchen cabinet and sofa set were donated to the home. In addition, each senior citizen received a goody bag and "angpow" from the Group during this event.
31 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 SUSTAINABILITY STATEMENT
Energy Number of Complaints on Noise Level
As highway operators, we are mindful that our energy No. of Complaints Received conservation efforts need to be properly managed and LDP SPRINT Highway balanced with road users' safety and driving comfort particularly by ensuring sufficient street lightings along the FYE2020 1 Nil mainlines at our highways, high-mast lightings at our toll FYE2019 1 1 plazas and tunnel lightings and air quality monitoring systems as well as round-the-clock operation and maintainance of FYE2018 2 Nil our traffic control surveillance systems, CCTVs, Variable Message Signs (VMS) and traffic lights systems. Waste We acknowledge that by having a stable energy supply chain, it would be crucial to provide excellent facilities and Managing waste in a responsible and ethical manner is services to our highway users. In this regard, we strive to important to us in ensuring compliance with the relevant improve our energy consumption on an ongoing basis by waste regulations and to reduce adverse effects on the various measures including replacing buildings' fluorescent environment. In our business, we play an important role in lightings with energy efficient LED lightings and by switching ensuring proper disposal of waste indirectly accumulated off lights, power sockets and office equipment when not in from our business, such as roadside litters, sand, fallen use. Moving forward, we will continue to manage our energy trees or large obstructions. Our efforts include scheduled consumption, explore and adopt new technology for future and regular road cleaning and maintenance using road energy conservation initiatives for our highways. sweepers, cleaning of drain culverts along highways, trimming of overgrown grass, shrubs and tree branches on or along our highways. Total Energy Consumption, kWh We aim to progressively enhance the effectiveness of our waste management procedures and reduce the amount of 15,258,756 14,029,691 waste generated through recycling, proper disposal and 13,198,340 monitoring of waste materials. We encourage our staff to reduce paper usage by digitising records, minimising printing and using recycled paper on an ongoing basis. Digitalisation (or paperless transformation) efforts are also being carried out in collaboration with authorities including but not limited to submission of documents and/or records to the MHA via digitalised systems such as:
• Expressway Performance Indicator System (EPI) – an online reporting and monitoring system by MHA to gauge highway performance. • Malaysian Highway Road Accident Database & FYE2019 FYE2018 Analysis System (MHRoads) – an online reporting Noise system to MHA on accident statistics. • Toll Roads Evaluation & Monitoring System (TEAMS) – Both our highways transverse through highly-developed an online reporting system to MHA for the evaluation urban residential and business communities. Regular and maintenance of pavement works. monitoring and maintaining acceptable noise levels along our • Sistem Pembangunan Tepi Lebuhraya (ePTL) – an highways according to prevailing standards and guidelines online system to facilitate application to MHA by helps to protect the well-being of these communities within third parties to carry out any form of work within the vicinities of the highways. Noise mitigation initiatives, highway's right-of-way (R.O.W). which include building noise barrier walls and planting • Advertising Display Management System (SPPI) – an of trees and shrubs, are usually prompted by results of online system to facilitate application to MHA to noise level assessment exercise or noise level complaints, construct advertising structures along the highway. if any. All noise level complaints received are investigated by conducting site visits and performing a noise level assessment test, if required. To date, we have recorded minimal complaints for both our highways as tabulated below, thus proving the effectiveness of our noise mitigation initiatives.
32 www.litrak.com.my SUSTAINABILITY STATEMENT
Social Road Safety Awareness Being socially responsible helps us strengthen our stakeholders' Initiatives on 28 May 2019 and confidence and build mutual trust, respect and long lasting relationships. 31 July 2019 We focus on creating positive impact on social systems by promoting the well-being of our employees, prioritising road users' comfort and During the year, 2 road safety awareness satisfaction and by working closely with the relevant authorities. programmes were carried out by the Group with the objective of educating road users on Road Safety and Maintenance safe driving practices. The first was held on 28 May 2019 at Kompleks Operasi To be a leading sustainable highway service provider, the key aspect LITRAK focusing on motorcyclists using of our business is to provide our road users with a safe network the motorcycle lane on LDP next to our of roads for a smooth end-to-end journey. We strive our best with Petaling Jaya Selatan Toll Plaza. This event the aim to prevent accidents and facilitate prompt assistance for was held in collaboration with PETRON vehicle breakdowns and emergencies. Our highways are constantly Malaysia, Jabatan Keselamatan Jalan monitored and maintained to prevent, detect and rectify poor road Raya (JKJR) and Expressway Mobile conditions or any occurrences that may turn the road impassable Patrol Vehicle (EMPV) unit. Whilst on 31 or unsafe, such as landslides, floods or potholes through CCTVs July 2019, another programme was also managed by traffic controllers at our Traffic Control Centre (TCC) on held at Kompleks Operasi LITRAK, in a 24/7 basis, as well as on-site surveillance by the Group's Auxiliary collaboration with Wazimoto and Pusat Police team. We also conduct road safety awareness campaigns Giat Mara. A total of 100 participants, on a regular basis to promote positive road safety etiquette and from Pusat Giat Mara Puchong and the encourage road users to practice regular vehicle maintenance and Group’s staff, were involved in this safety servicing of their vehicles. awareness programme.
33 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 SUSTAINABILITY STATEMENT
During the year under review, we spent a total of All incidences of accidents and vehicle breakdowns on RM13.4 million for LDP and RM8.8 million for SPRINT our highways are recorded and monitored. These data Highway on road maintenance. The lower cost of road are then subsequently analysed to identify accident- maintenance is a testament to our investment in high prone areas and the causes. Such analyses enable us quality materials and infrastructure for our highways. to take preventative and corrective actions to reduce the likelihood of similar accidents or breakdowns. Over Amount Spend on Road Maintenance (RM'mil) the past 3 years, our road safety management initiatives have been effective in reducing the average accident and 8% breakdowns rate per day relative to the tollable traffic 22.7 volume of our highways as demonstrated by the data
73% below: 13.4 13.9 11.8 8.8 8.2
FYE2019
6% 9% 12% 35% 38% 44% FYE2018 LDP SPRINT Highway
Note: Higher amounts of heavy repair works were spent by LDP and SPRINT Highway for FYE2018 based on the respective scheduled pavement rehabilitation programmes.
Overall Accident and Breakdown Statistics
LDP SPRINT Highway Types of Indicators FYE2020 FYE2019 FYE2018 FYE2020 FYE2019 FYE2018
Tollable traffic volume (million) 155.6 159.5 161.3 66.8 69.8 73.5
Accidents* 804 802 1,228 411 349 460
Breakdowns 4,695 5,830 6,248 2,145 2,288 2,504
Average breakdowns per day 12.9 16.0 17.1 5.9 6.3 6.9
Total breakdowns and accidents 5,500 6,632 7,476 2,556 2,637 2,964
* The main causes of accidents include dangerous and reckless driving, loss of control, rainy weather, drivers’ fatigue and mechanical and engine failures due to lack of maintenance.
Road User Satisfaction
Road users are among our most important stakeholders and road user satisfaction was identified as a high priority matter in the Materiality Matrix. We aim to maximise road user satisfaction and experience through quality excellence, effective communication and operational efficiency. These measures includes our continuous efforts in managing and alleviating traffic congestions and effective spending on road maintenance.
We measure road user satisfaction through regular surveys and feedback collected from our road users through our corporate website and social media channels. We target to resolve all reasonable public complaints within 7 working days. In FYE2020, we resolved an average of 70% of the complaints within the target of 7 days for both LDP and SPRINT Highway.
34 www.litrak.com.my SUSTAINABILITY STATEMENT
Feedback Received for LDP and SPRINT Highway
LDP SPRINT Highway FYE2020 FYE2019 FYE2018 FYE2020 FYE2019 FYE2018
Number of feedback received 172 227 200 54 90 69
(i) Suggestions 9 18 14 1 6 4
(ii) Complaints 131 147 131 44 69 54
(iii) Enquiries 3 10 13 1 0 5
(iv) Compliments 1 4 2 0 1 2
(v) Third-party claims 14 20 32 5 9 2
(vi) Requests 14 28 8 3 5 2
Number of complaints resolved 92 119 107 31 42 37 within 7 days
Number of complaints resolved 39 28 24 13 27 17 > 7 days
Number of complaints yet to 0 0 0 0 0 0 be resolved
Achieved target (%) 70 81 82 71 61 69
Employee Management At the Group, we seek to retain our talents by providing comparable remuneration and benefits and career In the business of operating tolled highway concessions, development opportunities for all our employees. We employees are our invaluable resource. We place aim to further improve our employees' retention and importance on fair treatment and providing them with to consistently create a sense of community within the equal opportunities to develop their careers and skills. Group. Due to our continuous efforts in driving these Their professional growth and well-being contribute initiatives, our turnover rate is relatively low and in fact to our business success. We focus our efforts on has slightly decreased over the years as shown below: recruiting, training and retaining our talent pool to support current and future business needs. Turnover Rate
Talent Acquisition and Retention 14% 14%
As the business environment grows and evolves, 12% retaining the right talent is vital to ensure we deliver long- term value for all our stakeholders. Talent acquisitions are normally sourced internally, to provide opportunities for career advancement of existing employees as well as externally, through various channels including online job portals and social networking platforms. We seek to groom our talents into promising leaders of the Group as part of our succession planning.
FYE2019 FYE2018
35 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 SUSTAINABILITY STATEMENT
Benefits LITRAK Group Gender Diversity
Executive & Above Non-Executive The Group offers competitive compensation package and attractive benefits which caters to the diverse 70% 69% 70% 45% 46% 45% needs of our staff regardless of their positions. Pro-family benefits such as childcare subsidies, childcare and family care leaves, 90 days maternity leaves, pre-natal and post-natal support and family hospitalisation insurance on a co-sharing basis are offered over and 30% 31% 30% 55% 54% 55% beyond regulatory requirements or industry norms and Men underlines the Group's effort in attracting and retaining Women talents. FYE2020 FYE2020
Furthermore, in support of work-life balance for our staff, LITRAK Group Workforce Age Diversity we offer pro-health benefit schemes such as the Flexi- Executive & Above Non-Executive Wellness Benefits and Flexi-Work Arrangement to all our 24% 19% 15% 8% 7% 6% employees. We also show our appreciation towards our long serving employees through the Long Service Awards and Employee Share Options Scheme (ESOS). The 70% 72% 73% 57% 55% 50% consistent high numbers of long service award recipients over the last few years is a testament to the Group's staff oriented policies and initiatives. Over 50 30-50 Number of Long Service Award Recipients 6% 9% 12% 35% 38% 44% Under 30 FYE2020 FYE2020 FYE2020 FYE2019 FYE2018 Training and Development Number of 74 102 70 employees Training and development programmes are essential to increase the professional knowledge and skills of Diversity employees at each level, which in return, contribute to improve customer service quality and work output quality Our diversity principles are guided by our Diversity and and ultimately the long-term success of our business. Inclusion Policy. We believe employee diversity promotes Training programmes provided to our employees are both a culture of open-mindedness and harnesses a more in-house as well as external and catered to various levels collaborative environment and approach to work. Women of our employees' hard and soft-skills requirements such composition on the Board remained at a commendable as: ratio of 40% which is higher than the Malaysian Code on Corporate Governance's recommended ratio of 30% • Self-Savvy for large companies. Women also constituted 53% • People Savvy of the Group's overall workforce, thus reinforcing our • Business Savvy commitment to uphold fair gender representation whilst • Contract Administration aiming to achieve greater age diversity within the Group. • Functional Skills • Digital Literacy • Building Information Modelling Academy • Quality, Safety & Health
For the year under review, we clocked in 1,847 days of training for employees at all levels. We have set annual training targets for our employees to continuously upskill them to meet our customers' expectations and their professional development goals.
36 www.litrak.com.my SUSTAINABILITY STATEMENT
Average Training Hours Per Employee Per Annum Health, Safety and Environment by Employee Category The Group is committed to promote a safe and healthy FYE2020 FYE2019 FYE2018 working environment and to properly manage the associated risks regarding safety, health and welfare of our employees, Executive 33.0 20.7 38.2 contractors and the public. We further inculcate a culture & above of safety among our employees through providing regular Non-Executive 23.0 30.2 31.1 health and safety information and trainings. During the year under review, a total of 76 staff had attended trainings Total per 24.5 29.1 33.2 relating to occupational first aid and CPR programmes, employee whilst another 120 staff had attended a talk on mental health awareness organised by the Group.
In line with the Group's commitment to promote healthy workforce, a 5-month Weight Loss Challenge Programme was held at the end of FYE2019 up to early FYE2020. A total of 83 employees of the Group participated in this programme and winners of the programme were rewarded with cash prizes, hampers and certificates of recognition. For the rest of the staff, various awareness activities were also held during the duration of the programme, such as Low Calories Day, Staircase Challenge Day, Sugar-Off Day to promote awareness and healthy living lifestyle among staff.
Managing Covid-19 Risks Meanwhile, CWC is tasked to implement measures and policies approved by CSC relating to such risk The Covid-19 pandemic was first reported in Malaysia mitigation efforts and report day-to-day findings to in January 2020. Due to the highly contagious nature the CSC. Proper standard operating procedures were of this novel virus and high mortality rates particularly adopted and benchmarked against regulatory guidelines for the elderly and those with underlying co-morbidities, to ensure seamless continuation on operations of the Government was forced to impose the Movement the respective departments particularly for our front- Control Order (MCO) on 18 March 2020 across the liners. Preventive measures taken at work places in nation to combat this outbreak. accordance with the relevant authorities’ guidelines. CWC is chaired by the Head of Human Resource and For the Group, the Management has since 11 February Administration Department and staffed by members 2020, taken various preventive measures in managing from various levels and departments. health and operational risks associated with this new threat. For a start, the Management has set up specific All employees were provided with face masks, hand committees i.e. Covid-19 Steering Committee (CSC) and sanitisers and hand soaps. Frequent sanitisation and Covid-19 Working Committee (CWC) to this end. Chaired disinfection of work spaces and common touch points by the Chief Executive Officer and involving all Heads were carried out. Other preventive measures taken to of Departments, CSC is the top leadership committee safeguard the health of employees and visitors are: in providing guidance, direction and coordinate efforts relating to management and containment of this new • health and temperature screening for all staff and threat. The Board was briefed at a special Board meeting visitors to the office premises on a daily basis; held on 8 May 2020 regarding the impact of the Covid-19 • regular dissemination of sufficient information to and MCO on the financials, business and operations by create awareness amongst all employees; the Management and CSC. Throughout the MCO and its • enforcement of social distancing in work space subsesequent phases i.e. Conditional Movement Control and staff work rotation during MCO and CMCO; Order (CMCO) and Recovery Movement Control Order • mandatory daily health status declaration by all (RMCO), all CSC’s meetings are conducted online via staff via online application to assist contact tracing Microsoft Teams on a bi-weekly basis. of any suspected cases, if any.
37 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 SUSTAINABILITY STATEMENT
Anti-Corruption
The Group vigourously continues to uphold a high level of ethical business conduct and strongly promotes honesty, transparency and responsibility to all levels and aspects of our business operations. The Group is mindful of the coming into effect of Section 17A of the Malaysian Anti-Corruption Commission Act 2009 on 1 June 2020 and are in the midst of finalising an Anti-Corruption Policy for adoption to safeguard the Group against any offences committed by persons associated with the Group. In the interim, the Group is guided by our Code of Practice and supported by manuals and policies, including the Whistleblowing Policy and No-Gifts Policy.
We place great emphasis on the importance of assessment on corruption risk throughout the Group with the necessary mitigation plans. During the year under review, a total of 188 staff attended anti-corruption awareness programmes which were conducted/facilitated by the Malaysian Anti-Corruption Commission (MACC) at Kompleks Operasi LITRAK on 23 April 2019 and 10 September 2019.
Number of Employees Who Have Attended Anti-Corruption Awareness Programme
1st Session 2nd Session Total
Executive & above 47 13 60
Non-Executive 42 86 128
Total 89 99 188
Regulatory Compliance
Maintaining regulatory compliance and meeting the standards of our key stakeholders - the Government and Regulatory Authorities are vital to our business sustainability. As a large urban highway service provider, we are subjected to various social, environmental and industry specific laws, such as Concession Agreements, regulations set by MHA and the Ministry of Works, Employment Act 1955 and Environmental Quality Act 1974.
It is essential for us to work closely with MHA for process improvements and enhancements to prepare ourselves for annual toll certification and systems verification. External audits by MHA are carried out every month on all tolled highways to check compliance with MHA's standards and guidelines. All non-compliance issues raised by MHA throughout the year are swiftly addressed with a corrective action plan. The non-compliance issues mainly involved damaged road furniture, maintenance of landscape, damaged and maintenance of building items, damaged and cleanliness of pavements and maintenance of drainage systems.
Since 2010, LDP and SPRINT Highway have consistently achieved 100% in MHA's Maintenance Audit Ranking, resulting in joint first ranking amongst 26 other concession companies in the Central Region. As in the past, we continually aim to improve our regulatory compliance by conducting regular internal inspections and raise the operation team's awareness in relation thereto.
38 www.litrak.com.my SUSTAINABILITY STATEMENT
Non-compliance Maintenance Issues Raised from MHA’s Highway Maintenance Standard Audit
LDP SPRINT Highway FYE2020 FYE2019 FYE2018 FYE2020 FYE2019 FYE2018
No. of non-compliance issues 103 151 219 139 163 148
Note: All maintenance issues raised by MHA have been resolved.
Our Way Forward
For the Group, sustainability is an ongoing journey that will steer us towards the long-term growth and progress of the business. We will continuously look for opportunities to improve our sustainability record and uphold the highest standards in order to strengthen the value we create for our stakeholders. In the year ahead, we will continue to look towards placing a greater emphasis on environmental matters and initiatives.
This Statement is dated 8 July 2020.
39 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 CORPORATE GOVERNANCE OVERVIEW STATEMENT
The Board is pleased to report to the Company's Practice 12.3 shareholders and investors an overview of the Company's Listed companies with a large number of shareholders or corporate governance practices during the financial which have meetings in remote locations should leverage year 2020 up to the date of this report. This Overview technology to facilitate – summarises the Company's application of the principles • including voting in absentia; and and recommendations of the Malaysian Code on Corporate • remote shareholders' participation at General Meetings. Governance (the “Code”). In line with the latitude accorded under the Code, the The Company's corporate governance disclosure is Company has provided explanations to the aforesaid made pursuant to Paragraph 15.25(1) of the Main Market departure or non-adoption of the corporate governance Listing Requirements (Listing Requirements) of Bursa practices in the CG Report. Malaysia Securities Berhad (Bursa Malaysia) guided by Practice Note 9 of Bursa Malaysia's Listing Requirements Principle A: Board Leadership and Effectiveness and Corporate Governance Guide (3rd Edition). This Corporate Governance Overview Statement should be Board Responsibilities read together with the Corporate Governance Report (CG Report) prepared in a prescribed format on the The Board has the overall responsibility for good corporate application of the Company's corporate governance governance, strategic direction and investments of the practices in detailed pursuant to Paragraph 15.25(2) of Group. It plays a primary role in the conduct and control the Listing Requirements. The CG Report is available on of the Group's affairs. The Board recognises the key roles the Company's website at www.litrak.com.my. in setting the strategic direction and policy regarding the business and affairs of the Company and the Group for In building a sustainable business, the Board is committed the benefit of shareholders and other stakeholders of the to continuously uphold the highest standards of corporate Company. governance practices in LITRAK Group to safeguard the interest of all stakeholders and at the same time In ensuring the Board is able to discharge its duties enhancing the financial performance of the Group and and responsibilities more effectively and efficiently, hence, shareholders' value. the Board is supported by the Audit Committee, the Nomination Committee, the Remuneration Committee, the The Company has applied all the practices propagated Executive Committee and the ESOS Committee. All Board under the Code for the financial year ended 31 March Committees discharge their duties within their respective 2020 save for the following: terms of references and make recommendations to the Board if matters are beyond their authority limits set Practice 7.2 out in the Authority Chart. The ultimate responsibility for Disclosure on a named basis the top five senior management's decision making lies with the Board. remuneration component in bands of RM50,000 The Board Committees are assisted by competent and Practice 7.3 – Step Up dedicated management team in discharging their duties Fully disclose the detailed remuneration of each member and responsibilities. The Executive Director and the of senior management on a named basis Management on the other hand deal with the day to day operations of the Group in accordance with the directives Practice 9.3 – Step Up of the Board and the Board Committees, discharged their The board to establish a Risk Management Committee duties within the authority limit approved by the Board to oversee the Company's risk management framework and make recommendations to the Board Committees and policies or the Board for approval if matters are beyond their authority limits spelled out in the Authority Chart. Practice 11.2 Adoption of integrated reporting
40 www.litrak.com.my CORPORATE GOVERNANCE OVERVIEW STATEMENT
The Authority Chart approved by the Board set out the Management, principles and best practices of corporate authority limits of the Executive Committee, the Executive governance, statutory and regulatory requirements. The Director, the Management and matters reserved for the Board is of the view that the Directors' Manual, the Board's decision. Company's Constitution together with the provisions of the laws and the Listing Requirements have collectively The Chairman ensures that the Board is effective by captured the essence of the contents of a Board Charter providing leadership to the Board in formulating the as recommended under the Code. strategic direction of the Group. The roles of the Chairman and the Executive Director are distinct and separate In this regard, in addition to the above policies, the as spelled out in their respective terms of references. Group is also in the midst of finalising an Anti-Corruption In addition to ensuring the Board's effectiveness in Policy to safeguard the Company against any offences discharging its duties and responsibilities, the Chairman committed by persons associated with the Company provides the overall leadership in deliberation and decision and the Group under Section 17A of the Malaysia Anti- making at Board Meetings without limiting the collective Corruption Commission Act 2009. responsibility of the Board. The Board with the assistance of the Company Secretaries On the other hand, the Executive Director with the continuously review and update the Directors' Manual in assistance of the Group's Chief Executive Officer and its efforts to ensure compliance with the recommendations Chief Financial Officer, oversees the management and day of the Code. to day operations of the Group in line with the policies and procedures adopted by the Board and the Company. Board Composition Where need be, he would highlight matters of concern to the Board for its attention. The Board recognises the importance of diversity with an appropriate mix of skills, knowledge, experience and The Chairman, the Board and the Board Committees are independent elements to achieve effective stewardship supported by suitably qualified and competent Company and management of the Company. Secretaries comprising a lawyer and a Chartered Secretary who are responsible alongside with the Board In line with the recommendation of Practice 4.1 of the members for compliance with various legal and regulatory Code that a majority of the members of the Board of requirements. The Company Secretaries assist the Board large companies should comprise Independent Directors to organise the information necessary for the Board to with at least 30% women directors, the Board is pleased deal with the agendas of meetings on a timely basis. The to disclose that the Board now comprises five members Directors are updated by the Company Secretaries from with majority of them being Independent Directors. The time to time on new statutory and regulatory requirements Board composition comprises three Independent Non- relating to the duties and responsibilities of the Directors. Executive Directors, one Non-Independent Non-Executive Director and one Non-Independent Executive Director with In place of a Board Charter, the Board is being guided women Directors making up 40% of the Board members. by the Directors' Manual adopted since 2002. The Manual sets out amongst others, the Board composition, the major The Board members have a wide range of experience and duties and responsibilities of Directors, schedules of matters expertise in areas of engineering, construction, infrastructure, reserved for the Board's decision, terms of references of the concessions, finance, investment, accounting, auditing, Chairman, the Executive Director, the Senior Independent commercial, corporate affairs, Government's requirements Non-Executive Director, the Executive Committee, the Audit and operations. With this mix of skills, experiences, Committee, the Nomination Committee, the Remuneration backgrounds and specialisations, all matters tabled to the Committee, and the ESOS Committee, the Risk Management Board for consideration are well reviewed and deliberated. Policies and Procedures, Shareholders Communication and Investors Relation Policy, Whistleblowing Policy, The profiles of the Board members are set out on pages 3 Directors' Code of Conduct, Diversity and Inclusion to 7 of the Annual Report 2020. Policy, Corporate Disclosure Policy, External Auditor Policy, Remuneration Policy for Directors and Key Senior
41 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 CORPORATE GOVERNANCE OVERVIEW STATEMENT
Background/Specialisation Age Gender Engineering/Construction Accounting/Auditing Investment/Finance/ Affairs Commercial/Corporate Operations Infrastructure/Concession/ RequirementsGovernment's Public Services/ 60 to 69 Years 70 to 79 Years Male Female
Directors Tan Sri Dato' Setia Haji Ambrin bin Buang / / / / Ir Haji Yusoff bin Daud / / / / / Dato' Haji Azmi bin Mat Nor / / / / / Datin Lee Choi Chew / / / / / / Puan Nazli binti Mohd Khir Johari / / / / / /
The Board through the Nomination Committee and Code, the Independent Directors were required to carry out supported by the Company Secretaries conducted an self-assessment which was designed to help Independent annual evaluation by each Director of the effectiveness of Directors to identify whether they are independent under the the Board as a whole and its Board Committees for the guidelines of Bursa Malaysia's Listing Requirements. financial year 2020. The Nomination Committee reviewed and assessed the effectiveness of the Board as a whole Based on the various annual evaluations conducted, the including the independence of the Independent Directors, Board is of the opinion that the current Board composition the composition, size and mix of skills, qualifications, with a majority of its members being Independent Non- qualities and experiences of the existing Board of Directors, Executive Directors having a diverse background is the attendance of the Directors, the effectiveness of the sufficient to fairly safeguard the investments of the minority Board Committees in fulfilling their functions and identify shareholders and to protect the interests of all stakeholders. suitable trainings for Directors. The evaluation results are considered by the Nomination Committee, which then The Board recommended that the following Directors who make recommendations to the Board. are retiring pursuant to Clause 100 of the Constitution of the Company and standing for re-election at the forthcoming The Audit Committee was required to conduct a self- AGM to continue to serve and add value to the Company assessment for the financial year 2020. The assessment was and the Group: designed to help its members to gain an insight into how well the Audit Committee has been meeting its objective and • Tan Sri Dato' Setia Haji Ambrin bin Buang; how well they had applied good practices recommended by • Puan Nazli binti Mohd Khir Johari. the Code. All Directors have attended at least one training/workshop/ Practice 4.1 of the Code calls for a majority of the board briefing (collectively “trainings”) during the financial year members of large companies to comprise independent ended 31 March 2020. The trainings attended by the directors. To ensure compliance with Practice 4.1 of the respective Directors are as follows:
42 www.litrak.com.my CORPORATE GOVERNANCE OVERVIEW STATEMENT
Directors Topic
Tan Sri Dato' Setia Haji • Enhancing Corporate Governance by Understanding Legal Liabilities Ambrin bin Buang – "Act or Resign" • Corporate Liability Provision Seminar: "What it is & associated implications to the Board of Directors, Partners, Top Management and other Personnel in the event of prosecution"
Ir Haji Yusoff bin Daud • Corporate Governance Advocacy Programme: Cyber Security in the Boardroom
Dato' Haji Azmi bin Mat Nor • Enhancing Corporate Governance by Understanding Legal Liabilities – "Act or Resign"
Datin Lee Choi Chew • Audit Committee Institute Breakfast Roundtable 2019: ✓ Evolving Global and Local Landscape of AML & Sanction – Should I be Concerned? ✓ Tax Risk Management & Board Responsibility • Leadership Greatness in Turbulent Times: Building Corporate Longevity • Independent Directors Programme: The Essence of Independence • Audit Committee Institute Breakfast Roundtable 2019: ✓ Corporate Liability ✓ Governance Revelations from Inquest Reports ✓ Business Continuity Management – Counting the Costs and Benefits: A Critical Perspective
Puan Nazli binti Mohd Khir Johari • Audit Committee Institute Breakfast Roundtable 2019: ✓ Evolving Global and Local Landscape of AML & Sanction – Should I be Concerned? ✓ Tax Risk Management & Board Responsibility • Enhancing Corporate Governance by Understanding Legal Liabilities – "Act or Resign" • Section 17A Malaysian Anti-Corruption Commission (Amendment) Act 2018
Remuneration Based on the aforesaid study, the Company's remuneration packages for Non-Executive Directors and Executive The Board has in place a Remuneration Policy for Director are within market's expectation and no increment Directors and Key Senior Management to support and was recommended for both the Executive Director and drive the business strategy and long-term objectives of Independent Non-Executive Directors for financial year ending the Company and the Group. The Board through the 31 March 2021 due to amongst others, the challenging Remuneration Committee conducted an annual review of business environment expected in the forthcoming year. the remuneration package of the Board of Directors. The Remuneration Committee relied on a study conducted by The fees and benefits payable to the Independent Non- the Human Resource Department on the remuneration Executive Directors for the financial year ended 31 March packages of directors of companies listed on Bursa 2020 are subjected to shareholders' approval at the Malaysia with market capital around RM2 billion and Company's AGM in accordance with Section 230 of the comparable industry peers/of similar size or operations to Companies Act 2016. The remunerations of the Executive gauge the remuneration range for Independent Directors Director and Independent Non-Executive Directors for and Executive Directors to ensure competitiveness with the financial year ended 31 March 2020 are disclosed the market before making appropriate recommendation to in detailed on a named basis on page 88 of the Annual the Board for consideration and approval. Report 2020.
43 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 CORPORATE GOVERNANCE OVERVIEW STATEMENT
Principle B: Effective Audit and Risk Management The Audit Committee has received a written assurance from the external auditors, Ernst & Young (EY), confirming Audit Committee their independence in accordance with the MIA By-Laws. The Audit Committee has on 20 February 2020 and 22 The Audit Committee comprises solely of Independent June 2020, reviewed the suitability and independence of Non-Executive Directors, a step up as recommended the external auditors and was satisfied that they have met by the Code for a majority of them to be Independent the relevant criteria prescribed under Paragraph 15.21 of Directors. The positions of the Chairman of the Board Bursa Malaysia's Listing Requirements. Hence, the Audit and the Audit Committee are held by different individuals Committee recommended their re-appointment for the to ensure overall effectiveness and independence of the financial year ending 31 March 2021. Audit Committee. The Audit Committee met the external auditors twice All the Audit Committee members are financially literate. during the financial year without the Executive Director Collectively, they possess the necessary skills and and the Management being present. The meeting enabled experience to discharge their duties and responsibilities the external auditors to, in confidence, exchange views in accordance with the Audit Committee's Terms of and opinion, raise issues or concerns relating to their Reference. audit of the Company and the Group.
The Chairperson of the Audit Committee, Datin Lee The full Audit Committee Report detailing the activities Choi Chew being a member of the Malaysian Institute of the Internal Audit Department and that of the Audit of Accountants, fulfils the requirement set out under Committee are set out on pages 48 to 49 of the Annual Paragraph 15.09(1)(c) of the Listing Requirements of Report 2020. Bursa Malaysia which calls for at least one member of the Audit Committee to be a member of the MIA. Risk Management and Internal Control Framework
The principal objectives of the Audit Committee are The Board recognises the importance of risk management to protect the interest of the investing public and to and internal controls as part of an integral part of the ensure more effective corporate governance. Towards overall management process and has put in place a achieving its objectives, the Committee assist the Board in Risk Management Policies and Procedures since 2001. discharging its fiduciary duties in particular the reviewing It is responsible for maintaining a sound system of of amongst others, the financial reporting process to internal control, which provides reasonable assessment ensure the results of the Company are fairly disclosed, of effective and efficient operations, internal financial risks management and internal control system. control procedures and guidelines and compliance with laws and regulations as well as with internal policies and The Board has in place an External Auditor Policy which procedures to safeguard the interests of the shareholders provides that the Audit Committee is responsible for making and stakeholders. recommendations to the Board regarding the appointment and removal of the external auditors. In making those The Board regularly review the process of risk management recommendations, the Committee conducted an annual and internal control system to ensure the effectiveness of review of the effectiveness, performance, objectivity and the system through the Audit Committee with the assistance independence of the external auditors. The Policy also of its dedicated team of internal auditors which carry out provides that a former key audit partner shall observe ongoing risk assessment and auditing of the different a cooling-off period of at least two years before being areas of the business covering financial, operational and appointed as a member of the Audit Committee. compliance throughout the year.
The External Auditor Policy was recently revised in The Board is of the view that the risk management accordance with the provision of the By-Laws (On and internal control system in place during the year Professional Ethics, Conduct and Practice) of The Malaysian under review, is adequate and effective to safeguard the Institute of Accountants (MIA By-Laws) where the audit shareholders' investment and the Group's assets. partner responsible for the external audit of the Group is subject to rotation at least every seven financial years. The Statement on Risk Management and Internal Control furnished on pages 46 to 47 of the Annual Report 2020 provides an overview of the state of risk management and internal control within the Group.
44 www.litrak.com.my CORPORATE GOVERNANCE OVERVIEW STATEMENT
Principle C: Integrity in Corporate Reporting and The shareholders had direct access to the Board members Meaningful Relationship with Stakeholders and Senior Management who were on hand to answer their questions on agenda items of the AGM or any Communication with Stakeholders questions pertaining to the Group's business activities and performance. All enquiries from the shareholders were The Company believes in maintaining an open and addressed by the Board and the Senior Management constructive channel of communication with its shareholders, accordingly. The Chief Financial Officer also presented stakeholders and investors and it has in place a Shareholders the Company's responses to the enquiries raised by Communication and Investors Relation Policy to ensure the Minority Shareholders Watch Group (MSWG) to the effective communication with its shareholders. shareholders at the AGM as requested by MSWG. Press conference with the journalists was normally held after Information about the Group is disseminated via the the AGM. Company's website, annual reports, shareholders' circulars, quarterly financial results and other announcements made The external auditors were also invited to attend the to Bursa Malaysia from time to time. In addition, the Company's AGM to answer any queries from the Company has in place LDP's and SPRINT Highway's shareholders pertaining to their audit of the Company Twitter accounts to disseminate real-time traffic updates and the Group. of events happening along LDP and SPRINT Highway to help users plan their journeys. The Company has since 2017 adopted electronic voting system. To facilitate greater shareholder participation, the The Group Chief Financial Officer meets institutional Company will continue to explore leveraging technology investors, fund managers and analysts from time to time to facilitate electronic voting and remote shareholders to directly address issues that investors may have and to participation especially in the wake of Covid-19 pandemic. explain or clarify aspects of the business or operations of the Group and at the same time, enlighten them with the Besides general meetings, the shareholders, stakeholders, Group's performance and business activities. investors and the general public could communicate with the Company via the Group's website at www.litrak.com. Conduct of General Meetings my or the Senior Independent Non-Executive Director, Datin Lee Choi Chew at [email protected]. General meetings of the Company remain the main forum of direct communication with its shareholders. In line with This Statement is prepared in compliance with Bursa good governance practice, notice of the Company's 24th Malaysia's Listing Requirements and is to be read together AGM held on 28 August 2019 was issued at least 28 with the Corporate Governance Report. days before the AGM date. The whole Board of Directors attended the Company's 24th AGM. The Chairman This Statement was approved by the Board of Directors encouraged the shareholders to actively participate in on 29 June 2020. discussions and deliberations at the Company's AGM. The Chairmen and members of the Board Committees were also available to response to any questions the shareholders may have for them.
45 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
Board's Responsibility Management to address such risks. Any internal or external changes that may significantly impact the risk profile and The Board affirms its overall responsibility for the Group's risk control measures are also highlighted. The Board reviews management and internal control system, and for reviewing and discusses with the Management at the Board meeting the adequacy and effectiveness of the risk management the summary of significant risks and additional controls to and internal control system. The Board recognises that such be implemented (if any). risk management and internal control system is designed to manage the major risks identified, rather than to eliminate the During the year, key risks have been identified. The details of risk of failure. Accordingly, such system can only provide risk description and key mitigation measures are disclosed reasonable and not absolute assurance against material in the Management Discussion and Analysis Statement on error, misstatement or loss. The Board confirms that the page 19. risk management and internal control system in place for the year under review and up to the date of approval of Key Risk Management and Internal Control Features this statement for inclusion in the annual report is adequate and effective to safeguard the shareholders' investment Key features of the processes established within the Group and the Group's assets. The process is regularly reviewed which can contribute to a sound system of risk management by the Board and is guided by the Statement on Risk and internal control are as follows: Management and Internal Control: Guidelines for Directors of Listed Issuers and the Group's Risk Management Policy • various Board committees have been established to and Procedures. assist the Board in discharging its duties. The Committees include: Risk Management – Executive Committee The Management assists the Board in implementing the – Audit Committee ongoing process of identifying, evaluating and managing – Remuneration Committee significant risks applicable to their respective areas of – Nomination Committee business or function and in formulating suitable measures – ESOS Committee to address these risks. The respective heads of departments identify both external and internal risks that may have • a defined organisational structure with clear lines of impact in meeting their departmental objectives, perform responsibility, delegation of authority and accountability evaluation and ranking of risks identified, and formulate is in place; control activities to manage the risks. Risks identified are evaluated and measured by the probability of occurrence • Policies and Standard Operating Procedures which are and impact of the risks. systematically documented and made available to guide staff in their day-to-day work processes. These policies The Group has established an appropriate risk management and procedures are reviewed regularly and updated infrastructure which is tailored to the specific circumstances when necessary; of the Group and is guided by the principles of ISO 31000. Having established the business objectives, each business • a comprehensive information system comprising or functional unit is required to identify and document budgets, key business indicators and performance those risks that can significantly affect their achievement results on operations are reported to the Management of objectives together with the associated measures that and the Directors. The regular and comprehensive flow are capable of managing, mitigating or avoiding such of information allows the Management and the Directors risks. New areas are introduced for assessment as the to review business unit's performance against budgets risk profile of the business changes. By this process, each and performance indicators on regular basis; business or functional unit identifies the risks, controls and processes for managing them in a risk assessment • a detailed budgetary planning and control process in report. Risk assessment is an ongoing process where the which annual budgets for business or functional units are mapping of significant risks are reviewed and deliberated reviewed and approved by the Board. The performance during the periodic management meetings. A written report of the units is assessed against the approved budgets is presented to the Audit Committee on the significant and actions are taken to address major variances risks impacting the Group and the measures taken by the identified;
46 www.litrak.com.my STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
• an ISO 9001:2015 Quality Management System, which is The Board confirms that the Group's risk management subject to regular review and improvement, continuously and internal control system is being properly implemented manages and controls the quality requirement of the throughout the Group and continuous reviews of the risk Company's services; management and internal control system are being carried out to ensure its adequacy and effectiveness. All internal • a Performance Management System whereby business control weaknesses identified during the period have been, objectives are clearly defined and targets are set for or are being addressed. There were no major internal control each individual employee. Employees' performances are weaknesses that require disclosure in the Annual Report. monitored, appraised and rewarded according to the achievement of targets set; The Board has received assurance from the Chief Executive Officer and the Chief Financial Officer that the Group's • training and development programmes are identified risk management and internal control system is operating and scheduled for employees to acquire the necessary adequately and effectively, in all material aspects, based knowledge and competency to meet their performance on the risk management and internal control system of the and job expectations; Group.
• an adequately resourced Internal Audit Function which, Review of the Statement by External Auditors reports directly to the Audit Committee, conducts regular reviews and provides audit reports on adequacy of the The external auditors have reviewed this Statement on Risk Group's system of internal controls; Management and Internal Control pursuant to the scope set out in Audit and Assurance Practice Guide (“AAPG”) • Senior Management conduct regular site visits and 3, Guidance for Auditors on Engagements to Report on communicate with employees of different levels to have the Statement on Risk Management and Internal Control first-hand knowledge of significant operational matters included in the Annual Report issued by the Malaysian and risks; Institute of Accountants (“MIA”) for inclusion in the annual report of the Group for the year ended 31 March 2020, • Board representations in its associated company, Sistem and reported to the Board that nothing has come to their Penyuraian Trafik KL Barat Holdings Sdn Bhd. Financial attention that cause them to believe that the statement and operational information of the associated company intended to be included in the annual report of the Group, in is reported regularly to the Directors of the Company. all material respects, has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of The Executive Committee was established by the Board to the Statement on Risk Management and Internal Control: manage the business of the Group and to ensure that the Guidelines for Directors of Listed Issuers, or is factually Group's operations are in accordance with the corporate inaccurate. objectives, strategies and the annual budget as well as the policies and business directions that have been approved by AAPG 3 does not require the external auditors to consider the Board. The Executive Committee implements strategies whether the Directors' Statement on Risk Management and approved by the Board and addresses issues arising from Internal Control covers all risks and controls, or to form an changes in both the external business environment and opinion on the adequacy and effectiveness of the Group's internal operating conditions. risk management and internal control system including the assessment and opinion by the Directors and the The Management's proposals on the Group's strategic Management thereon. The report from the external auditor plans are tabled to the Board for approval and updates was made solely for, and directed solely to the Board on operational matters are also provided to the Board at of Directors in connection with their compliance with the the Board meetings. In addition, the Management also Listing Requirements of Bursa Malaysia Securities Berhad reports to the Board with quarterly financial information and for no other purposes or parties. The external auditors and significant changes in the business and the external do not assume responsibility to any person other than the environment which affects significant risks. Board of Directors in respect of any aspect of this report.
This Statement has been approved by the Board of Directors on 29 June 2020.
47 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 AUDIT COMMITTEE REPORT
Membership the system of internal controls of the various operating divisions within the Group. Internal Audit Function is guided The Audit Committee, appointed by the Board from amongst by the internal policies and procedures as well as the its members, comprises the following members, all of whom Professional Practices Framework in assessing and reporting are Independent Non-Executive Directors. on the adequacy and effectiveness of the internal control.
Composition During the year, internal auditors had undertaken independent audit assignments of the various operating divisions within The members of the Audit Committee are: the Group in accordance with the approved annual audit plan. The resultant audit reports were presented to the • Datin Lee Choi Chew Audit Committee for deliberation and forwarded to the Chairperson/Independent Non-Executive Director Management for the necessary corrective actions to be taken. • Tan Sri Dato' Setia Haji Ambrin bin Buang Member/Independent Non-Executive Director Arising from the risk evaluations conducted by the Management with the operating divisions, risk assessment • Puan Nazli binti Mohd Khir Johari reports were summarised by internal auditors for the Member/Independent Non-Executive Director consideration of the Audit Committee.
The Chairperson of Audit Committee is appointed by the A summary of the internal audit activities and works Board and is not the Chairperson of the Board. Collectively, performed during the financial period is as follows: the Audit Committee members have a wide range of necessary skills, knowledge and experience, including i. prepared the annual audit plan for consideration by the accounting and financial reporting in discharging their duties. Audit Committee;
Terms of Reference ii. undertaken independent audit assignments. Among the scope of coverage are corporate and finance, The information on terms of reference is available on the human resource and administration, toll operations and Company's website at www.litrak.com.my. information technology. These audits are to ascertain that the internal controls are appropriate, effectively INTERNAL AUDIT FUNCTION AND ACTIVITIES applied and consistent with the established procedures. In performing such reviews, recommendations for The Internal Audit Function of the Company is performed improvements and enhancements to the existing in-house by its Internal Audit Department and jointly with system of internal controls and work processes are external resources in areas where its expertise is lacking. made where necessary; The Internal Audit Function is staffed by 6 personnel with relevant experience and qualifications. The Head of Internal iii. conducted follow-up reviews to determine the adequacy, Audit, Mr. Chua Teong Eng is a Chartered Member of The effectiveness and timeliness of action taken by the Institute of Internal Auditors Malaysia (CMIIA) with over Management on audit recommendations; 20 years of work experience in internal audit. The Internal Audit Function reports directly to the Audit Committee and iv. reviewed the allocations of share options pursuant to maintains its independence, proficiency and due professional the ESOS during the financial year to verify whether care. the allocations were done in accordance with the criteria set out in the ESOS By-laws and by the ESOS In assisting the Audit Committee in the discharge of its Committee; and duties and responsibilities, the Internal Audit Function adopts a risk-based audit approach when preparing its annual v. reviewed related party transactions. audit plan which is approved by the Audit Committee. The principal role of the Internal Audit Function is to provide The total costs incurred for the Internal Audit Department for independent and objective reports on the effectiveness of the financial year ended 31 March 2020 was RM554,587.
48 www.litrak.com.my AUDIT COMMITTEE REPORT
Attendance 3. Internal Audit
During the financial year ended 31 March 2020, the Audit a. the risk-based annual audit plan and budgeted Committee held four meetings. The meetings were held on resources proposed by the internal auditors for 29 May 2019, 22 August 2019, 28 November 2019 and 20 the Group to ensure adequate audit scope and February 2020. The attendance record of the members for coverage on the activities of the Group, considering the meetings is as follows: the independence, authority and effectiveness, the adequacy of the competency and resources of the Name of Director Attendance Internal Audit Function to carry out its work.
i Datin Lee Choi Chew (4/4) b. the performance in terms of the progress of audit ii Tan Sri Dato’ Setia Haji Ambrin (4/4) work and adequacy of coverage of the Internal bin Buang Audit Function.
iii Puan Nazli binti Mohd Khir Johari (4/4) c. the internal audit assessment and investigation undertaken during the year, the audit SUMMARY OF AUDIT COMMITTEE'S ACTIVITIES recommendations made and Management's response to these recommendations, and ensure In discharging its duties and responsibilities for the financial that material findings are adequately addressed by year ended 31 March 2020, the Audit Committee has in the Management. accordance with its terms of reference deliberated and reviewed the following activities: 4. Risk Management
1. Financial Reporting the risk assessment reports compiled from risk evaluations conducted by the Management prior to its the Group's quarterly and year-end financial results submission to the Board for consideration. prior to submission to the Board for consideration and approval, focusing particularly on matters relating to 5. Related Party Transactions changes in major accounting policies, significant and unusual events, compliance with accounting standards the report on related party transactions during the and other disclosure requirements. financial year.
2. External Audit 6. Annual Reporting
a. the suitability, objectivity and independence of a. the Audit Committee Report and its recommendation the external auditors and recommended their to the Board for inclusion in the respective financial re-appointment. year Annual Report.
b. the audit planning memorandum of the external b. the Statement on Risk Management and Internal auditors in a meeting to discuss their audit Control and its recommendation to the Board for strategy, audit focus and resources prior to the inclusion in the respective financial year Annual commencement of their annual audit. Report.
c. matters arising from meetings with the external 7. Other Matters auditors without the presence of other Directors and employees of the Company. a. the progress reports on implementation of recommendations arising from Malaysian Highway Authority's monthly inspection on compliance with the highway maintenance standards.
b. share option allocations under the ESOS of the Company.
49 Lingkaran Trans Kota Holdings Berhad 199501006186 (335382-V) Annual Report 2020 ADDITIONAL COMPLIANCE INFORMATION
1. Audit and Non-audit Fees (iii) Percentage of options applicable to Directors and Senior Management under the ESOS: The amount of audit and non-audit fees paid to external auditors for the financial year ended 31 March 2020 is During the Since as follows: Financial Year Commencement Ended up to Company Group 31 March 2020 31 March 2020 (RM'000) (RM'000) Description % % Audit fees to 60 124 Aggregate 1 50 Ernst & Young maximum Non-audit fees to 8 8 allocation Ernst & Young Actual 1 10 granted 2. Material Contracts Involving Directors'/Major Shareholders' Interests (iv) Options granted to and exercised by Non-Executive There were no material contracts entered into by the Directors under the ESOS during the financial year Company or its subsidiaries involving Directors and ended 31 March 2020: major shareholders of the Company since the end of the previous financial year. Amount of Amount of Name of Options Options 3. Employee Share Option Scheme (ESOS) No. Director Granted Exercised
(i) The Company has only one ESOS in existence 1. Puan Nazli 20,000 – during the financial year ended 31 March 2020. It binti Mohd was implemented on 9 October 2013 for a period Khir Johari of 5 years. The tenure of ESOS may be extended for up to another 5 years immediately from the expiry of the first 5 years provided that the total duration of the ESOS shall not be more than 10 years from the effective date of the ESOS. On 23 July 2018, the Board has on the recommendation of the ESOS Committee given its approval to extend the existing ESOS for a further 5 years upon the expiry of the first 5 years on 9 October 2018. The details of the implementation of the aforesaid ESOS are set out on pages 100 to 103 of the financial statements.
(ii) The total number of options granted, exercised and outstanding under the ESOS since its commencement up to 31 March 2020 are set out in the table below:
No. of Options Granted (Since Commencement up to 31 March 2020) Description Grand Total Directors
Granted* 26,490,000 1,740,000
Exercised 16,194,000 1,100,000
Outstanding 10,296,000 640,000
* Net of resignations
50