ANNUAL REPORT 2 0 2 0 EMPOW ERING SUST AINABLE GROW THH facts at a glance revenue profit for the total financial year shareholders’ equity 317.9 63.5 1,207.7 (RM million) (RM million) (RM million) Cover Rationale "Empowering Sustainable Growth” accentuates our commitment towards nurturing the integration of sustainability in our business value chain. In pursuing this aspiration, we remain steadfast to balance our economic ambitions with environmental and social considerations. Taliworks’ concept of sustainability complements the Group’s strategic objective to deliver sustainable earnings and long-term value to our stakeholders. 30th Annual General Meeting thirtiethThursday Training Hall 1 & 2, Level 3, Menara LGB, No. 1, 11.00 a.m. 03 June 2021 Jalan Wan Kadir, Taman Tun Dr. Ismail, 60000 Kuala Lumpur CONTENTS CORPORATE FINANCIAL INFORMATION LEADERSHIP STATEMENTS 02 Corporate Information 56 Board of Directors 141 Audited Financial Statements 03 Corporate Profile 58 Directors’ Profile 09 Corporate Milestones 14 Corporate and OTHER Financial Events 2020 GOVERNANCE INFORMATION 16 Corporate Structure 62 Sustainability Statement 259 Analysis of Shareholdings 98 Statement on Risk 259 List of Thirty Largest PERFORMANCE Management and Internal Shareholders REVIEW Control 261 List of Substantial 106 Corporate Governance Shareholders Overview Statement 17 Share Performance Highlights 262 List of Directors’ Holdings 129 Audit and Risk Management in Shares 18 5-Year Financial Highlights Committee Report 263 Notice of Fully Virtual 20 Chairman’s Statement 139 Additional Compliance Annual General Meeting 24 Management Discussion Information and Analysis Form of Proxy New Feature in this Annual Report Follow the steps below to scan the QR code reader in 3 easy steps Download the Run the QR Code Get access to the "QR Code Reader" Reader app and documents related on App Store or point your camera to Taliworks' Annual Google Play to the QR Code Report 2020 & 30th AGM CORPORATE INFORMATION CORPORATE INFORMATION BOARD OF DIRECTORS YAM Tunku Ali Redhauddin Ibni Tuanku Muhriz Raja Datuk Zaharaton Binti Raja Dato’ Zainal Abidin Independent Non-Executive Chairman Senior Independent Non-Executive Director Dato’ Lim Yew Boon Ahmad Jauhari Bin Yahya Executive Director Independent Non-Executive Director Soong Chee Keong Datuk Roger Tan Kor Mee Independent Non-Executive Director Independent Non-Executive Director Dato’ Sri Amrin Bin Awaluddin Lim Chin Sean Independent Non-Executive Director Non-Independent Non-Executive Director AUDIT AND RISK MANAGEMENT COMMITTEE SHARE REGISTRARS Chairman Soong Chee Keong Boardroom Share Registrars Sdn. Bhd. 199601006647 (378993-D) Members Lim Chin Sean 11th Floor, Menara Symphony Dato’ Sri Amrin Bin Awaluddin No. 5, Jalan Prof Khoo Kay Kim, Seksyen 13, Datuk Roger Tan Kor Mee 46200 Petaling Jaya, Selangor, Malaysia T +603 7890 4700 NOMINATING COMMITTEE F +603 7890 4670 Chairman Raja Datuk Zaharaton Binti Raja Dato' Zainal Abidin E [email protected] Members Ahmad Jauhari Bin Yahya W www.boardroomlimited.com Soong Chee Keong AUDITORS REMUNERATION COMMITTEE Deloitte PLT (LLP0010145-LCA) Chairman Raja Datuk Zaharaton Binti Raja Dato' Zainal Abidin Chartered Accountants (AF 0080) Level 16, Menara LGB, No. 1, Jalan Wan Kadir Members Soong Chee Keong Taman Tun Dr. Ismail, 60000 Kuala Lumpur, Malaysia Lim Chin Sean T + 60 3 7610 8888 F + 60 3 7726 8986 COMPANY SECRETARIES Tan Bee Hwee PRINCIPAL BANKERS (SSM PC No.: 202008001497) (MAICSA 7021024) AmIslamic Bank Berhad Wong Wai Foong CIMB Bank Berhad (SSM PC No.: 202008001472) (MAICSA 7001358) HSBC Bank Malaysia Berhad Hong Leong Bank Berhad REGISTERED OFFICE Malayan Banking Berhad Unit 30-01, Level 30, Tower A, Vertical Business Suite STOCK EXCHANGE LISTING Avenue 3, Bangsar South, No 8, Jalan Kerinchi 59200 Kuala Lumpur, Malaysia Main Market T + 60 3 2783 9191 Bursa Malaysia Securities Berhad F + 60 3 2783 9111 Stock & Code : TALIWRK & 8524 (Utilities) PRINCIPAL OFFICE AGM HELPDESK Level 19, Menara LGB, No. 1, Jalan Wan Kadir Contact Person: Taman Tun Dr. Ismail, 60000 Kuala Lumpur, Malaysia Catherina Yeoh/ Nur Adlina Izuddin T + 60 3 2788 9100 Corporate Communications F + 60 3 2788 9101 T +603 2788 9100 E [email protected] E [email protected] W www.taliworks.com.my [email protected] 2 Annual Report 2020 | Taliworks Corporation Berhad [Company No. 196501000264 (6052-V)] CORPORATE PROFILE BACKGROUND HISTORY Taliworks Corporation Berhad (“Taliworks” or the “Group”) is listed on the Main Market of Bursa Malaysia Securities Berhad under the Utilities Sector (Name & Code: TALIWRK & 8524). Taliworks, an established infrastructure company, is primarily involved in four core businesses as follows:- HIGHWAY TOLL WATER TREATMENT, CONCESSIONAIRE, ENGINEERING WASTE MANAGEMENT SUPPLY AND DISTRIBUTION OPERATIONS AND AND CONSTRUCTION MAINTENANCE OPERATOR In year 2000, LGB Group, being one of In 2004, Taliworks diversified its business 2020 marked a major milestone for the pioneers in the privatisation of interests to include wastewater Taliworks when the Group successfully potable water treatment and supply management in the People’s Republic entered into two separate conditional services in Malaysia since 1987 of China. Thereafter, it expanded into Share and Sale Agreements (“SPA”) to undertook a reverse takeover exercise the highway toll concessionaire, acquire four (4) solar assets with an by injecting 100% equity interest in operations and maintenance business aggregate capacity of 19-megawatt Sungai Harmoni Sdn. Bhd. (“Sungai in 2007. peak, located within the vicinity of the Harmoni”) and Taliworks (Langkawi) Kuala Lumpur International Airport. Sdn. Bhd. (“Taliworks Langkawi”) In 2016, Taliworks completed the Pursuant to the SPA, the completion of respectively, and a 45% equity interest realignment of its strategic business, the acquisitions is subjected to the in C.G.E Utilities (M) Sdn. Bhd. into focusing on mature operational satisfaction of the condition precedents Carpets International Malaysia Berhad, cash-generating utilities/ infrastructure as stated in the SPA before or earlier which was then listed on the Second businesses to support its general than 31 December 2021. Board of the Kuala Lumpur Stock dividend policy by disposing its Exchange (“KLSE”) (now known as businesses in the People’s Republic of Bursa Malaysia Securities Berhad). China and subsequently acquired a Subsequently on 27 October 2000, it was 35% equity interest in SWM Environment transferred to the Main Board of the Holdings Sdn. Bhd. (“SWMEH”), adding KLSE and was renamed Taliworks waste management business in Corporation Berhad on 24 November Malaysia to Taliworks’ profile. 2000. The water treatment, supply and distribution business subsequently became Taliworks’ main core business. 3 CORPORATE INFORMATION Corporate Profile WATER TREATMENT, SUPPLY AND DISTRIBUTION operating capacity 950 million litres per day supplies treated potable water to large parts of Selangor and Kuala Lumpur 2013 till 31 October 2020. All operations have since been handed over to Syarikat Air Darul Aman Sdn. Bhd., a corporatised body under the government of Kedah. Sungai Harmoni Sdn. Bhd. Sungai Harmoni is the O&M operator of SSP1 with One of Taliworks’ core businesses is in the water supply sector. The business a combined design operating capacity of 950 entails an operations and maintenance (“O&M”) contract for the Sungai million litres per day. As part of the water Selangor Water Treatment Plant Phase 1 (“SSP1”) that supplies treated restructuring exercise undertaken by the State potable water to large parts of Selangor and Kuala Lumpur. Government of Selangor to consolidate the water industry in the state, Sungai Harmoni The Group had previously operated and maintained Pulau Langkawi’s entered into the Bulk Water Supply Agreement entire water supply and distribution facilities under a 25-year concession, in 2019 with Pengurusan Air Selangor Sdn. Bhd. which expired in October 2020. Taliworks Langkawi was granted an (“Air Selangor”) in which its SSP1’s O&M contract authorisation under Section 192(5) of the Water Services Industry Act 2006 was extended for an additional 7 years to by the National Water Services Commission to undertake and carry out December 2036. As a condition to operate SSP1, O&M activities under the Langkawi Water Supply Privatisation Agreement Sungai Harmoni was awarded an Individual dated 7 October 1995 and the Supplemental Agreements dated 4 August License pursuant to Section 9 of the Water 1999, 22 July 2001 and 1 August 2004. The undertaking of the O&M Services Industry Act 2006 from the Suruhanjaya activities managed by Taliworks Langkawi was effective from 1 February Perkhidmatan Air Negara (“SPAN”). 4 Annual Report 2020 | Taliworks Corporation Berhad [Company No. 196501000264 (6052-V)] growing Cheras-Kajang vicinity, it eases traffic congestion and reduces travel time for daily HIGHWAY TOLL commuters. The highway concession comprises two toll plazas (with toll collection at one bound), namely the Batu 9 toll plaza (Kajang bound) and CONCESSIONAIRE, the Batu 11 toll plaza (Kuala Lumpur bound), one rest and service area and nine interchanges. OPERATIONS AND 2014 marked Taliwork’s first collaboration with Employees Provident Fund Board (“EPF”) through the acquisition of an effective 31.85% equity interest in Cerah Sama via TEI Sdn. Bhd. (“TEI”). MAINTENANCE Taliworks’ effective equity interest in Cerah Sama, on the other hand, reduced from 55% to 28.05%.