ANNUAL REPORT 2018 THE VALUE OF INVESTMENT goes beyond creating wealth - it is about creating things that matter. Because for millions of people every day, we are more than skyscrapers, more than just numbers, more than money. We see ourselves through the people we serve. The individuals, the businesses, the communities and our nation. For them it is about what we do, and the value that we bring to the community. And who we are that forms the capital that creates lasting change. PERMODALAN NASIONAL BERHAD (PNB) was Table of Contents established on 17 March 1978 as one of the instruments of the Government's New Economic Policy (NEP). Over the last four decades, PNB has grown to become one of the largest fund management companies in Malaysia. Staying focused on our mandate, we strive to enrich the lives of the Bumiputeras and all Malaysians in the years ahead. 1 OVERVIEW 5 ASNB'S TRANSFORMATION JOURNEY 004 Who We Are 006 Our Value Chain 070 ASNB's Strategic Plan 2018-2022 008 Corporate Information - Pillar I: Delivering the Right Products 009 Organisation Structure to Customers 010 2018 Milestones - Pillar II: Transforming Marketing, Sales 012 Our 40th Anniversary and Distribution 014 Key Financial Highlights - Pillar III: Enriching Customer Experience 2 LEADERSHIP 6 ORGANISATIONAL CAPABILITY 020 Board of Trustees of Yayasan Pelaburan Bumiputra 076 Key Statistics: Human Capital 022 Board of Directors 077 Training & Development 030 Senior Management 080 Business Process & Innovation 035 Key Executives - Asset Management 7 SOCIAL OBJECTIVES - Strategic Investments - Property/Real Estate 084 Corporate Social Responsibility Report - Unit Trust 095 Uplifting the Bumiputera Community - Corporate 8 CORPORATE GOVERNANCE 3 MESSAGES 098 Statement on Corporate Governance 040 A Message from the Group Chairman 106 Statement on Risk Management & 046 The President & Group Chief Internal Control Executive's Review 115 Statement on Corporate Compliance 119 Audit Committee Report 4 INVESTMENT PORTFOLIO 121 Shariah Advisory Committee Report 054 Global Footprint, Investment Philosophy 9 FINANCIAL STATEMENTS and Process 056 Strategic Asset Allocation 124 PNB Group 5-Year Consolidated 058 Public Equity Coterminous Proforma Financials 064 Private Investment 125 Independent Auditors' Report 065 Fixed Income 126 Unit Trust Funds 066 Real Estate 2 Permodalan Nasional Berhad | Annual Report 2018 Annual Report 2018 | Permodalan Nasional Berhad 3 OVERVIEW Who We Are Who We Are OVERVIEW Vision Yayasan Pelaburan Bumiputra 1 To be a Distinctive World Class Investment House 1 Mission To Enhance the Economic Wealth of the Bumiputera Community and All Malaysians, for the Prosperity of the Nation FIXED PRICE UNIT TRUST FUNDS Values Competence Humility Integrity (formerly known (formerly known (formerly known as Amanah Saham as Amanah Saham as Amanah Saham We possess the We treat people with mutual We will not compromise Didik) Wawasan 2020) 1Malaysia) competency to deliver respect, stay grounded to our on integrity and we are high performance roots, always cognisant that committed to the highest level VARIABLE PRICE UNIT TRUST FUNDS we serve a greater purpose of ethical conduct Prudence Passion We are focused in We are passionate in our safeguarding our task to achieve beyond (formerly known (formerly known (formerly known (formerly known (formerly known as Amanah Saham as Amanah as Amanah Saham as Amanah as Amanah unit holders' wealth the ordinary Nasional 2) Saham Gemilang - Nasional 3 Imbang) Saham Gemilang - Saham Gemilang - Kesihatan) Pendidikan) Persaraan) 4 Permodalan Nasional Berhad | Annual Report 2018 Annual Report 2018 | Permodalan Nasional Berhad 5 OVERVIEW Our Value Chain Our Value Chain OVERVIEW Annual income distribution to unit holders is The returns of the portfolio are generated from the capital derived from the performance of the portfolio gains and recurring income from each asset class 1 1 Unit Trust Investment Management How Where Manager Company Performance of assets is Enabling the sharing of driven by a combination corporate wealth to unit of macroeconomic and holders Geo - market factors Politics Global Fixed Price Unit Trust Funds Trade 01 Objective Setting Market Sentiments 02 Idea Generation Public Equity Fixed Income Currency Movements Due Diligence, 03 Analysis, Forecast Global & Valuation Selection of Capital Unit Holders 04 Investable Key Drivers Assets Flows Variable Price Unit Trust Funds Private Domestic Portfolio Investments 05 Construction Commodity Prices Execution & Active 06 Management Monitoring, Review, Cash Real Estate Interest 07 Rebalancing, Rates Monetisation & Exit GDP Corporate Growth Earnings Unit holders invest in PNB manages the investments of the Investments are made across a diversified portfolio of asset ASNB's products unit trust funds classes and geographies to manage risk exposure 6 Permodalan Nasional Berhad | Annual Report 2018 Annual Report 2018 | Permodalan Nasional Berhad 7 OVERVIEW Corporate Information Organisation Structure OVERVIEW Board of Directors 1. Tan Sri Dr. Zeti Akhtar binti Aziz (Group Chairman) 5. Datuk Dr. Mohd. Yaakub bin Haji Johari Board of Directors Group Chairman's Office Group Company Secretary 2. Dato' Abdul Rahman bin Ahmad 6. Datu Haji Soedirman bin Haji Aini Group Chairman 3. Datuk Ahmad Badri bin Mohd. Zahir 7. Dato Dr. Nik Ramlah binti Nik Mahmood 4. Tan Sri Datuk Zainun binti Ali 8. Dato' Johan bin Ariffin Tan Sri Dr. Zeti Aziz Risk Management 1 Office of PGCE 1 Internal Assurance Legal President & Group Chief Executive Nomination & Remuneration Risk Management Property Investment Corporate Affairs & Compliance & Integrity Committee Committee Committee Communications Dato' Abdul Rahman Ahmad 1. Tan Sri Dr. Zeti Akhtar binti Aziz 1. Dato Dr. Nik Ramlah 1. Tan Sri Dr. Zeti Akhtar binti Aziz PNB Research Institute Sdn Berhad (Chairman) binti Nik Mahmood (Chairman) (Chairman) Compliance 2. Datuk Ahmad Badri bin Mohd. Zahir 2. Datuk Seri Dr. Nik Norzrul Thani 2. Dato' Abdul Rahman bin Ahmad 3. Datuk Dr. Mohd Yaakub bin N. Hassan Thani 3. Datuk Seri Dr. Nik Norzrul Thani Shariah Management Integrity bin Haji Johari 3. Datuk Mohd. Anwar bin Yahya bin N. Hassan Thani 4. Datu Haji Soedirman bin Haji Aini 4. Datuk Dr. Mohd Daud bin Bakar 5. Dato' Johan bin Ariffin Asset Management Strategic Investments Property/Real Estate Investment Committee Compliance Committee Appeal Committee Investment Public Equity Real Estate Investment Management 1. Tan Sri Dr. Zeti Akhtar binti Aziz 1. Tan Sri Datuk Zainun binti Ali 1. Tan Sri Datuk Zainun binti Ali Strategic Asset Allocation Private Investment Global Real Estate & Funds Investment (Chairman) (Chairman) (Chairman) 2. Dato' Abdul Rahman bin Ahmad 2. Dato' Abdul Rahman bin Ahmad 2. Datuk Ahmad Badri bin Mohd. Zahir Investment Analysis Corporate Planning & Strategy Real Estate Special Projects 3. Datuk Seri Dr. Nik Norzrul Thani 3. Dato Dr. Nik Ramlah binti Nik 3. Datuk Dr. Mohd Yaakub Equity Market Operations Corporate Services Facilities Management & General Services bin N. Hassan Thani Mahmood bin Haji Johari Fixed Income 4. Datuk Dr. Mohd Daud bin Bakar 4. Datu Haji Soedirman bin Haji Aini Economics Landbanks & CSR 5. Dato' Johan bin Ariffin • PNB Development Sdn Berhad Fund Management • PNB Value Homes Sdn Berhad ASB Funds Turnaround Audit Committee Tender Committee Shariah Advisory ASM Funds • PNB Commercial Sdn Berhad 1. Dato Dr. Nik Ramlah 1. Datuk Seri Dr. Nik Norzrul Thani Committee ASN Funds Listed REIT binti Nik Mahmood (Chairman) bin N. Hassan Thani (Chairman) 1. Datuk Dr. Mohd Daud bin Bakar • Pelaburan Hartanah Nasional Berhad 2. Datuk Seri Dr. Nik Norzrul Thani bin 2. Dato' Abdul Rahman bin Ahmad (Chairman) Proprietary Fund N. Hassan Thani 3. Dato Dr. Nik Ramlah 2. Tan Sri Dato' Seri (Dr.) Haji Harussani International Hospitality • PNB Management Services Sdn Berhad 3. Datuk Mohd. Anwar bin Yahya binti Nik Mahmood bin Haji Zakaria 3. Dato' Haji Mohamad Shukri Development Assets bin Mohamad • PNB Merdeka Ventures Sdn Berhad 4. Dato' As-Sheikh Haji Nooh • Development Assets - PNB 1194 bin Gadot 5. Professor Dato' Dr. Mahmood Zuhdi Group Finance, Unit Trust bin Abdul Majid Human Capital & IT 6. Dr. Aida binti Othman Branch Management & Supervision Finance Unit Trust Operations & Record Procurement Administration Investment Processing Registered Office Auditors Bankers Marketing & Financial Literacy Human Capital Permodalan Nasional Berhad Messrs Hanafiah Raslan & Mohamad Maybank Islamic Berhad Agent Management & Customer Management Information System Relations Level 4, Balai PNB Malayan Banking Berhad Business Process and Innovation 201-A, Jalan Tun Razak Unit Trust Strategy & Product 50400 Kuala Lumpur Management Tel : 03-2050 5100 Sales & Channel Management Fax : 03-2050 5268 Business Solutions Accounts 8 Permodalan Nasional Berhad | Annual Report 2018 Annual Report 2018 | Permodalan Nasional Berhad 9 OVERVIEW 2018 Milestones 2018 Milestones OVERVIEW 22 JANUARY 27 FEBRUARY 15 MARCH 17 APRIL 19 APRIL 1 1 Appointment of Bank Mualamat as PNB officially welcomes Park Hyatt to 40th Anniversary Celebration at Launch of PNB Value Homes in Official opening of Minggu Saham Amanah Saham Nasional Berhad Kuala Lumpur where it will be located Menara PNB. Port Dickson, Negeri Sembilan. Amanah Malaysia 2018 in Batu Pahat, (ASNB) Agent. on the top 17 floors of the 118-storey Johor. PNB 118 tower. The Park Hyatt brand will manage and operate the luxury hotel when it opens its doors in 2021. 28 AUGUST 18 AUGUST 1 JULY 30 JUNE 30 MAY 19 APRIL