DELIVERING SUSTAINABLE RETURNS ANNUAL REPORT 2019 PNB remains focused on our mandate of delivering sustainable returns to our unit holders despite the challenging economic climate. Profitability and sustainability can reinforce each other. Business should do well, do right and do good – and it pays beyond just numbers. We approach investments with a clear forward vision. We focus on sustainable long-term returns, and we believe that for businesses to thrive, the societies in which we operate must thrive too. INSIDE THIS REPORT OVERVIEW ASNB’S TRANSFORMATION JOURNEY ORGANISATIONAL CAPABILITY 4 Who We Are 70 ASNB’s Strategic Plan 2018-2022 76 Key Statistics: Human Capital 5 Corporate Information - Expansion of Digital Reach 77 Training & Development 6 Organisation Structure - Expansion of Agent Network 80 5-Year Technology Blueprint 8 Our Value Chain - Branch Transformation 81 Cultivating Innovation 10 2019 Milestones - Establishment of Outsourced Call Centre 12 Key Financial Highlights - Financial Literacy & Education SOCIAL OBJECTIVES LEADERSHIP 84 Corporate Social Responsibility Report 18 Board of Trustees of Yayasan 98 Uplifting the Bumiputera Community Pelaburan Bumiputra 20 Board of Directors 28 PNB Leadership Team CORPORATE GOVERNANCE 102 Statement on Corporate Governance MESSAGE 112 Statement on Risk Management and Internal Control 34 Message from the Group Chairman 121 Statement on Corporate Compliance 40 The President & Group Chief Executive’s and Integrity Review 125 Audit Committee Report 128 Shariah Advisory Committee Report INVESTMENT PORTFOLIO 50 Global Footprint, Investment Philosophy and Process FINANCIAL STATEMENTS 52 Strategic Asset Allocation 54 Strategic Investment 131 PNB Group 5-Year Consolidated 60 Private Investment Coterminous Proforma Financials 62 Fixed Income 132 Independent Auditors’ Report 63 Real Estate 133 Unit Trust Funds 65 Merdeka 118 OVERVIEW PERMODALAN NASIONAL BERHAD PERMODALAN NASIONAL BERHAD OVERVIEW WHO WE ARE CORPORATE INFORMATION VISION BOARD OF DIRECTORS To be a Distinctive World Class 1 Tan Sri Dr. Zeti Akhtar binti Aziz 4 Tan Sri Datuk Zainun binti Ali 7 Dato Dr. Nik Ramlah Investment House Group Chairman binti Nik Mahmood 2 Encik Abdul Jalil 5 Datuk Dr. Mohd. Yaakub 8 Dato’ Johan bin Ariffin bin Abdul Rasheed bin Haji Johari (Appointed with effect from 1 October 2019) MISSION Holder of Capital Markets Services 3 Tan Sri Ahmad Badri 6 Datu Haji Soedirman 9 Dato’ Abdul Rahman bin Ahmad Licence for Fund bin Mohd. Zahir bin Haji Aini (Resigned on 30 September 2019) To enhance the economic wealth of Management the Bumiputera community and all Malaysians, for the prosperity of NOMINATION AND REMUNERATION COMPLIANCE COMMITTEE SHARIAH ADVISORY COMMITTEE COMMITTEE the nation Licensed Unit 1. Tan Sri Datuk Zainun binti Ali 1. Datuk Dr. Mohd. Daud bin Bakar Trust Management 1. Tan Sri Dr. Zeti Akhtar binti Aziz (Chairman) (Chairman) Company (Chairman) 2. Encik Abdul Jalil bin Abdul Rasheed 2. Tan Sri Dato’ Seri (Dr.) Haji Harussani 2. Datuk Dr. Mohd. Yaakub bin Haji Johari (Appointed with effect from 1 October 2019) bin Haji Zakaria VALUES 3. Datu Haji Soedirman bin Haji Aini 3. Dato Dr. Nik Ramlah binti Nik Mahmood 3. Dato’ Haji Mohamad Shukri 4. Tan Sri Ahmad Badri bin Mohd. Zahir 4. Dato’ Abdul Rahman bin Ahmad bin Mohamad (Appointed with effect from 17 January 2019, (Resigned on 30 September 2019) Competence 4. Dato’ As-Sheikh Haji Nooh bin Gadot resigned with effect from 25 November 2019) 5. Prof. Emeritus Dato’ Dr. Mahmood We possess the competency to TENDER COMMITTEE Zuhdi bin Ab. Majid FIXED PRICE UNIT VARIABLE PRICE UNIT INVESTMENT COMMITTEE 6. Dr. Aida binti Othman deliver high performance 1. Datuk Seri Dr. Nik Norzrul Thani TRUST FUNDS TRUST FUNDS 7. Dato’ Idris bin Kechot 1. Tan Sri Dr. Zeti Akhtar binti Aziz bin N. Hassan Thani (Appointed with effect from 7 August 2019) (Chairman) (Chairman) Humility 2. Encik Abdul Jalil bin Abdul Rasheed 2. Encik Abdul Jalil bin Abdul Rasheed (Appointed with effect from 1 October 2019) (Appointed with effect from 1 October 2019) REGISTERED OFFICE We treat people with mutual respect, 3. Datuk Seri Dr. Nik Norzrul Thani 3. Dato Dr. Nik Ramlah binti Nik Mahmood Permodalan Nasional Berhad bin N. Hassan Thani 4. Dato’ Abdul Rahman bin Ahmad stay grounded to our roots, always Level 4, Balai PNB 4. Datuk Dr. Mohd. Daud bin Bakar (Resigned on 30 September 2019) cognisant that we serve a greater 201-A, Jalan Tun Razak 5. Dato’ Johan bin Ariffin 50400 Kuala Lumpur purpose 6. Dato’ Abdul Rahman bin Ahmad PROPERTY INVESTMENT COMMITTEE Tel: 03-2050 5100 (Resigned on 30 September 2019) 1. Tan Sri Dr. Zeti Akhtar binti Azi Fax: 03-2050 5268 (Chairman) Integrity AUDIT COMMITTEE 2. Encik Abdul Jalil bin Abdul Rasheed AUDITORS (Appointed with effect from 1 October 2019) We will not compromise on integrity 1. Datuk Mohd. Anwar bin Yahya and we are committed to the highest (Chairman) 3. Datuk Seri Dr. Nik Norzrul Thani Messrs Hanafiah Raslan & Mohamad PLT bin N. Hassan Thani level of ethical conduct 2. Datuk Seri Dr. Nik Norzrul Thani bin N. Hassan Thani 4. Datuk Dr. Mohd. Daud bin Bakar BANKERS 3. Dato Dr. Nik Ramlah binti Nik Mahmood 5. Dato’ Johan bin Ariffin 6. Dato’ Abdul Rahman bin Ahmad Maybank Islamic Berhad Prudence Malayan Banking Berhad RISK MANAGEMENT COMMITTEE (Resigned on 30 September 2019) We are focused in safeguarding our 1. Dato Dr. Nik Ramlah binti Nik Mahmood APPEAL COMMITTEE unit holders’ wealth (Chairman) 2. Datuk Seri Dr. Nik Norzrul Thani 1. Tan Sri Datuk Zainun binti Ali bin N. Hassan Thani (Chairman) Passion 3. Datuk Mohd. Anwar bin Yahya 2. Tan Sri Ahmad Badri bin Mohd. Zahir 3. Datuk Dr. Mohd. Yaakub bin Haji Johari We are passionate in our task to 4. Datu Haji Soedirman bin Haji Aini achieve beyond the ordinary 4 ANNUAL REPORT 2019 5 OVERVIEW PERMODALAN NASIONAL BERHAD PERMODALAN NASIONAL BERHAD OVERVIEW ORGANISATION STRUCTURE ORGANISATION STRUCTURE BOARD OF DIRECTORS Group Chairman TAN SRI DR. ZETI AZIZ President & Group Chief Executive JALIL RASHEED Company Secretary & Legal Risk Management Compliance & Integrity Company Secretary Internal Assurance Compliance Shariah Management Public Affairs Treasury Strategy Legal Integrity PNB Research Institute Corporate Strategy Sdn Berhad Strategic Asset Allocation Communications Transformation Education Public Markets Strategic Investments Private Markets Real Estate Technology Group Finance Unit Trust Sales & Channel Banking & Insurance Direct Investments Real Estate Investment IT Security Finance Management Management Investment Fund Management Economics Analysis Industrial & Motors Global Fund Investments IT Business Analyst Unit Trust Strategy & Procurement Global Real Estate & Product Management ASB Funds Consumer Asia-Pacific Funds Investment Plantation, Healthcare Discretionary Transformation & Telco Management Office Investment Processing Customer Service ASM Funds Developed Real Estate Special Projects Communications Economies Energy, Utilities & Infrastructure Branch Management & ASN Funds Technology Support Property Operations Supervision Healthcare Commodities Facilities Management Services Property & Construction Proprietary PNB Development Sdn Berhad Project Management Fund Financials Foreign Exchange Development Assets – Business Application Preferred Client & Agent & Rates PNB 1194 Systems Management Corporate Governance PNB Commercial Sdn Berhad Property Maintenance Global Equity Strategy Strategy & Foreign Equity Market Business Solutions PNB Merdeka Ventures IT Architecture & Strategy Exchange Operations Credit Analysis Sdn Berhad General Services Unit Holders Outsourced Core Application Systems Communications & Funds Business Fixed Income Listed REIT (Pelaburan Human Capital Security Financial Education Process & Data Hartanah Nasional Berhad) Management IT Service Management Unit Trust Operations & Human Capital Planning & Attana Hotels & Development Record Administration Division Resorts Sdn Bhd Accounts Department Operating Subsidiary Human Resource Marketing & Publicity Operations & Administration Units 6 ANNUAL REPORT 2019 7 OVERVIEW PERMODALAN NASIONAL BERHAD PERMODALAN NASIONAL BERHAD OVERVIEW OUR VALUE CHAIN OUR VALUE CHAIN 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 PNB RUNS A ROBUST END-TO-END PROCESS FOR INVESTMENT SELECTION Due Diligence, Selection of Objective Idea Analysis, Investable Setting Generation Forecast & Assets Valuation Global Commodity Trade Monitoring Prices GDP Executive Review, Portfolio Growth & Active Rebalancing, Fixed Price Unit Trust Funds Construction Management Monetisation & Exit Real Market Estate Sentiments WITH AN EFFECTIVE GOVERNANCE OPERATING MODEL Private Equity Business Units Leadership Team Investment Committees Board Currency President & Group Unit Trust Fund Investment Trust Public Chief Executive Committee Deed INVESTMENT Movements Equity Variable Price Unit Trust Funds PORTFOLIO Asset Management Board Strategic Business Units PNB Investment Committee of Directors Fixed Interest Fixed Price Variable Price Proprietary Unit Trust Unit Trust Compliance Committee Investment Income Rates Fund Funds Funds Management Agreement Cash Audit Committee Group Assurance Geo-Politics Financial & Board Corporate Capital Compliance Risk Management Committee Management Audit of Directors Earnings Department Flows Department Other PNB Board Committees Risk Management Department REGULATED