Business Overview

6. INFORMATION ON OUR GROUP 6. INFORMATION ON OUR GROUP 6.1 Our Company We were incorporated in Malaysia under the name Gas Malaysia Sdn Bhd on 16 May 1992 under the Companies Act pursuant to a joint venture agreement entered into between MMC­Shapadu, Tokyo Gas-Mitsui and PETRONAS on 30 March 1992. We commenced business on 16 May 1992. In December 2000, our Group, via GM(LPG) expanded our business to include the supply of reticulated LPG to the industrial, commercial and residential sectors within Peninsular Malaysia. On 11 September 2006, PETRONAS transferred its shares in our Company, save for the Special Share, to PGB. Subsequently, on 19 August 2011, we were converted into a public company. The principal activity of our Company is to sell, market and distribute natural gas as well as construct and operate the NGDS in Peninsular Malaysia. The principal activities of our subsidiaries, GM(LPG) and PTSB are the supply and sale of LPG via a reticulation system and property holding respectively. Our headquarters is situated in Shah Alam, Selangor Darul Ehsan. As at LPD, we have three (3) regional offices, located in Prai, Gebeng and Pasir Gudang, and seven (7) branch offices located in Kuala Lumpur, Shah Alam, Bangi, Kluang, Putrajaya, Senawang and Sri Manjung, to provide efficient operations and maintenance and effective customer service.
6.2 Pre-IPO Exercise In conjunction with, and as an integral part of our listing of and quotation for all the issued and paid-up ordinary shares of our Company on the Main Market of Bursa Securities, we implemented the following pre-IPO exercises: 6.2.1 Acquisition by PGB of the Special Share from PETRONAS and removal of the special rights and powers attached to the Special Share (“Acquisition of Special Share”) We were jointly held by the following shareholders: Direct equity interest in our Company Number of ordinary shares of RM1,OOO Shareholders each in our Company % MMC-Shapadu  353,108  55.00  Tokyo Gas-Mitsui  160,503  25.00  PGB  128,388  20.00  PETRONAS  1*  #  642,000  100.00
Notes: Special Share. # Less than 0.01%. On 23 April 2012, PGB acquired the Special Share from PETRONAS for a cash consideration of RM4,400 which was arrived at on a willing buyer-willing seller basis. Upon transfer of the Special Share to PGB, the special rights and powers which were attached to the Special Share were removed on 23 April 2012 via termination of the Joint Venture Agreement and amendments to the Memorandum and Articles of Association of our Company. As at 30 April 2012, PGB is a 60.66%-owned subsidiary of PETRONAS.
6. INFORMATION ON OUR GROUP (Cont’d) 6.2.2 Subdivision of 642,000 .ordinary shares of RM1,000.00 each in our Company into 1,284,000,000 GMB Shares Our Company undertook a subdivision of one (1) ordinary share of RM1 ,000.00 each into 2,000 GMB Shares, which resulted in an increase in the number of issued and paid-up ordinary shares in our Company from 642,000 ordinary shares of RM1,000.00 each to 1,284,000,000 GMB Shares. The subdivision of shares was effected on 23 April 2012 to facilitate the Offer For Sale and Listing. 6.2.3 Issuance of one (1) Special Rights RPS to PETRONAS (“Issuance of Special Rights RPS”) On 23 April 2012, our Company issued one (1) Special Rights RPS at an issue price of RMO.50 to PETRONAS and adopted the special rights attached to the Special Rights RPS via amendments to the Memorandum and Articles of Association of our Company. 6.3 Our corporate structure 6.3.1 After the Pre-IPO Exercise and prior to the IPO Our corporate structure after the Pre-IPO Exercise and prior to the IPO is set out below: MMC­Tokyo Gas­Shapadu Mitsui 55.00% PGB 20.00% PETRONAS 1 Special Rights RPS 25.00%
100.00% 100.00% GM(LPG) PTSB
6. INFORMATION ON OUR GROUP (Cont’d) 6.3.2 Upon the IPO Our corporate structure upon the IPO is set out below:
MMC- Tokyo  PGB  Public  Shapadu  Gas-Mitsui  40.70%  18.50%  14.80%  25.93%
Eligible Directors(1) 0.07% PETRONAS 1 Special Rights RPS
100.00% 100.00% GM(LPG) PTSB Note: (I) 870,000 GMB Shares representing 0.07% of the issued and paid-up share capital of our Company will be allocated to eligible Directors of our Company which are deemed non-public. 6.4 Share capital and changes in share capital As at LPD, our authorised share capital is RM1,000,000,000 comprising 1,999,999,900 ordinary shares of RMO.50 each and 100 preference shares of RMO.50 each. Our current issued and paid-up share capital is RM642,000,000.50 comprising 1,284,000,000 Shares and 1 Special Rights RPS. Details of the changes in our issued and paid-up share capital since our incorporation up to the LPD are as follows: No. of ordinary Cumulative issued Date of shares/Special Par and paid-up share allotment Rights RPS value Consideration capital RM RM 16.05.1992 3 shares 1,000.00 Cash (Subscribers’ shares) 3,000 24.08.1992 8,697 shares 1,000.00 Cash 8,700,000 17.03.1993 14,000 shares 1,000.00 Cash 22,700,000 28.01.1994 3,600 shares 1,000.00 Cash 26,300,000 28.04.1994 9,000 shares 1,000.00 Cash 35,300,000 29.07.1994 7,500 shares 1,000.00 Cash 42,800,000 28.11.2008 599,200 shares 1,000.00 Bonus issue on the basis of 642,000,000 14 new ordinary shares of RM1 ,000.00 each in GMB for every one (1) existing ordinary share of RM1 ,000.00 each in GMB

 

6. INFORMATION ON OUR GROUP (Cant’d) No. of ordinary Cumulative issued Date of shares/Special Par and paid-up share allotment Rights RPS value Consideration capital RM RM 23.04.2012 1,284,000,000 0.50 Subdivision of ordinary 642,000,000 Shares shares with par value of RM1,OOO.00 each to RMO.50 each 23.04.2012 1 Special Rights 0.50 Issuance of Special Rights 642,000,000.50 RPS RPS to PETRONAS 6.5 Subsidiaries As at LPD, our subsidiaries and their principal activities are as follows: Date and Issued and country of paid-up share Effective Name incorporation capital interest Principal activities RM % GM(LPG) 25 March 1992 10,000,000 100.00 Supply and sale of LPG via a Malaysia reticulation system PTSB 7 April 1993 5,000 100.00 Property holding Malaysia Set out below are further information on our subsidiaries. 6.5.1 Direct subsidiary of our Company (a) GM(LPG) (Company No. 237042-T) (i) History and business GM(LPG) was incorporated in Malaysia under the Companies Act on 25 March 1992 as a private limited company under the name Excellent Pillar (M) Sdn Bhd and subsequently changed its name to MMC (Vietnam) Holdings Sdn Bhd on 20 July 1992. On 11 November 2000, GM(LPG) changed its name to its present name. GM(LPG) commenced business in November 2000. The principal activity of GM(LPG) is the supply and sale of LPG via a reticulation system. (ii) Share capital As at LPD, the authorised share capital of GM(LPG) is RM25,000,OOO comprising 25,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of GM(LPG) is RM10,000,OOO comprising 10,000,000 ordinary shares of RM1.00 each. 6. INFORMATION ON OUR GROUP (Cont’d) The changes in the issued and paid-up share capital of GM(LPG) since its incorporation up to the LPD, are as follows: Cumulative No. of issued Date of ordinary Par and paid-up allotment shares value Consideration share capital RM RM 25.03.1992 2 1.00 Cash 2 (Subscribers’ shares) 31.01.2001 7,400,000 1.00 Cash 7,400,002 13.02.2001 2,599,998 1.00 Cash 10,000,000 (iii) Substantial shareholders GM(LPG) is a wholly-owned subsidiary of our Company. (iv) Subsidiary and associate company of GM(LPG) As at LPD, GM(LPG) does not have any subsidiary or associate company. (b) PTSB (Company No. 260737-M) (i) History and business PTSB was incorporated in Malaysia under the Companies Act on 7 April 1993 as a private limited company under its present name. PTSB commenced business in January 1999. The principal activity of PTSB is property holding. Currently, PTSB owns the piece of land where our headquarters is situated. (ii) Share capital As at LPD. the authorised share capital of PTSB is RM100,OOO comprising 100,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of PTSB is RM5,OOO comprising 5,000 ordinary shares of RM1.00 each. The changes in the issued and paid-up share capital of PTSB since its incorporation up to the LPD, are as follows: Cumulative No. of issued Date of ordinary Par and paid-up allotment shares value Consideration share capital RM RM 07.04.1993 2 1.00 Cash 2 (Subscribers’ shares) 05.05.1993 4,998 1.00 Cash 5,000 56

 

6. INFORMATION ON OUR GROUP (Cont’d) (iii) Substantial shareholders PTSB is a wholly-owned subsidiary of our Company. (iv) Subsidiary and associate company of PTSB As at LPD, PTSB does not have any subsidiary or associate company. Our Group does not have any outstanding warrants, options, convertible securities and uncalled capital as at LPD. As at LPD, neither our Company nor our subsidiaries are involved in any bankruptcy, receivership or similar proceedings. 6.6 Material capital expenditures and divestitures The following table sets forth our capital expenditures and divestitures (which include property, plant and equipment) for the past three (3) FYE 31 December 2009, 31 December 2010 and 31 December 2011: Description FYE 31 December 2009 2010 2011 (RM’OOO) Investment Freehold properties . 4,371 Building -leasehold . 744 Motor vehicle . 3,014 364 699 Office and gas equipment.. . 1,411 1,330 5,463 Furniture and fittings . 12 119 Office renovation . 81 148 420 Pipelines system(1) . 34,602 64,575 61,123 Capital work-in-progress . 63,576 67,756 27,289 Divestment Motor vehicle . 3,120 254 Office and gas equipment.. . 4,925 436 312 Furniture and fittings , . 728 16 3 Office renovation ~ . 425 Capital work-in-progress(2) . 52,931 60,167 64,100 Notes: (1) Net of capital contribution from our customers.
(2) This represents reclassification of capital work-in-progress to other asset classes under investment upon such works being completed.

7. BUSINESS OVERVIEW 7.1 Overview We were established to sell, market and distribute natural gas as well as construct and operate the NGDS within Peninsular Malaysia. The NGDS that we operate is a network of natural gas pipelines which connects to the PGU. Natural gas is supplied by PETRONAS to us at transfer points known as city gate stations which are predominantly owned and operated by PGB. Natural gas is transferred to the NGDS through the PGU. In December 2000, our Group, via GM{LPG), expanded our business to include the supply of reticulated LPG to the industrial, commercial and residential sectors within Peninsular Malaysia. As at LPD, GM{LPG) purchases LPG from PETRONAS Dagangan Berhad and Boustead Petroleum Marketing Sdn Bhd. The expansion enabled us to supply LPG to locations not served by the NGDS. As at LPD, we operate a total of approximately 1,800 km pipelines across Peninsular Malaysia serving 700 industrial customers, 519 commercial customers and 10,612 residential customers for natural gas. In relation to the supply of LPG, as at LPD, we serve 1 industrial customer, 1,132 commercial customers and 20,663 residential customers. We are the only company licensed under the GSA by the Energy Commission, with the approval of the Minister, to supply and sell reticulated natural gas in Peninsular Malaysia. The licence to supply and sell reticulated natural gas was granted on 1 September 1998 and will expire on 1 September 2028. In addition, we have also been granted the licence to supply and sell reticulated LPG on 15 December 2000 and the said licence will expire on 15 December 2020. Our licensed activities are principally regulated by the Energy Commission. The Director General of Gas Supply (whose functions are now performed by the Energy Commission), in consultation with the Minister, may extend the period of the licences to supply and sell reticulated natural gas and LPG respectively upon the terms and conditions as he considers fit to impose. Our headquarters is situated in Shah Alam, Selangor Darul Ehsan. As at LPD, we have three (3) regional offices, located in Prai, Gebeng and Pasir Gudang, and seven (7) branch offices located in Kuala Lumpur, Shah Alam, Bangi, Kluang, Putrajaya, Senawang and Sri Manjung, to provide efficient operations and maintenance as well as effective customer service. Our mission is to provide the cleanest, safest, most cost effective and reliable energy solutions to the nation. Currently, our customer base consists of diverse industries such as food and beverage, rubber, non-metallic minerals, glass, fabricated and basic metal, chemicals, electric and electronics, paper, printing and publishing, textiles, hotels, shopping malls as well as hospitals. In line with our vision to be an innovative energy solutions provider which supports the Government’s effort to improve energy efficiency, we have taken the initiative to introduce and promote a new energy utilisation technique to our customers, i.e CHP. This solution will enable customers to utilise more energy from the same volume of gas consumed, thus significantly reducing their total energy cost. As at 31 December 2011, our Group had total assets of RM1 ,474.4 million and shareholders’ equity of RM1 ,009.5 million. For the FYE 31 December 2011, we generated PAT of RM229.2 million on revenue of RM2,000.2 million. 7. BUSINESS OVERVIEW (Cont’d) 7.2 Key milestones and achievements The table below includes the dates and description of significant events in our corporate history: Date Description
30 March 1992 16 May 1992 18 August 1997 1 September 1998 1 February 2000 15 December 2000 1 February 2003 1 June 2003 28 February 2007 24 October 2007 1 November 2009 12 July 2010 19 August 2011 23 February 2012 23 April 2012 Joint venture agreement entered into between MMC-Shapadu, Tokyo Gas-Mitsui and PETRONAS (“JVA”) We were incorporated as a private company Signing of the Existing Gas Supply Agreement for the supply of gas between PETRONAS as the seller and our Company as the buyer We obtained the Natural Gas Distribution Licence We were awarded with the certificate for implementing a Quality Management System which complies with MS ISO 9002 : 1994 (upgraded to ISO 9001 : 2008 and the issue date of the current certificate is 29 October 2009) We obtained the LPG Distribution Licence We were awarded with the certificate for implementing an Environmental Management System which complies with MS ISO 14001 : 1997 (upgraded to MS ISO 14001 : 2004 on 20 May 2006 and the issue date of the current certificate is 23 December 2011) We achieved two (2) million man hours without lost time injury Supplemental agreement to the JVA entered into following the transfer of PETRONAS’ legal and beneficial ownership of all of its 8,559 ordinary shares of RM1.000.00 each in our Company to its subsidiary, PGB, save for the Special Share retained by PETRONAS. on 11 September 2006 We were awarded with the certificate for implementing an Occupational Health and Safety Management System which complies with OHSAS 18001 : 1999 (upgraded to OHSAS 18001 : 2007 on 31 October 2008 and the issue date of the current certificate is 23 November 2010) Signing of First Supplemental Agreement to the Existing Gas Supply Agreement between PETRONAS as the seller and our Company as the buyer for the increase of gas supply from 150 MMScfd to 300 MMScfd Signing of Second Supplemental Agreement to the Existing Gas Supply Agreement between PETRONAS as the seller and our Company as the buyer for the increase of gas supply from 300 MMScfd to 382 MMScfd We were converted to a public company Signing of the New Gas Supply Agreement for the supply of gas between PETRONAS as the seller and our Company as the buyer Termination of the Joint Venture Agreement 7. BUSINESS OVERVIEW (Cont’d) 7.3 Our competitive strengths . 7.3.1 We have wide strategic pipeline coverage in Peninsular Malaysia As at LPD, we operate a total of approximately 1,800 km pipelines across Peninsular Malaysia. The PGU is the backbone for the NGDS in Peninsular Malaysia. Leveraging on the PGU, we are able to further extend our coverage to strategic areas as detailed in Section 7.6 of this Prospectus, where the majority of the industrial sectors are located. As the industrial sector in these areas expand and grow, we are poised to tap into this growth efficiently with minimal capital expenditure. 7.3.2 Our management and technical teams are experienced and competent with significant industry knowledge and exposure in the oil and gas industry Gur management and technical teams are composed of experienced personnel with significant industry knowledge and exposure in the oil and gas industry. We have proven track records in gas distribution as well as functional expertise across a broad spectrum of business activities from operations to sales and marketing. We believe that this strong team has led our Group to achieve the RM2.0 billion revenue milestone for the FYE 31 December 2011, and whose commitment, dedication and . innovation will be the key to our Group’s brighter future. Based on this track record, we believe that our team is well equipped with the knowledge and experience to successfully manage and grow our Group’s business. 7.3.3 We are committed to a high-level of customer service Based on our track record for the past five (5) years up to the LPD, we have successfully fulfilled our contractual supplies to our customers with a reliability rate of gas supply of 99.9%. This demonstrates our reliability in the sale of natural gas. In addition, our experienced operation and maintenance team have managed to respond to all customer complaints within an average of 31 minutes from 1 January 2011 up to the LPD which is well within our standard operating procedure of responding within 90 minutes to all customer complaints. We understand and appreciate that the conversion and building of a natural gas system is a large investment. Hence, to ensure our customers reap the benefits from this system, we work closely with our customers to ensure that their natural gas consumption needs are efficiently met. For example, we monitor and compare our customers’ natural gas consumption against actual energy output. If the actual output is not optimal, our customers will be advised, after investigation, on the best methods to achieve optimum yields from their natural gas usage. 7.3.4 The properties of natural gas provide a competitive edge to our customers In addition to the competitive strengths of our Group, there are also advantages of natural gas as a fuel source. Natural gas is an efficient energy source compared to other common fuel sources such as MFG, LPG, coal and diesel. The average heat combustion value of natural gas is higher than MFG, LPG, coal and diesel. Due to this efficiency, natural gas provides more thermal power to its users, thus, providing more energy output per weight. 7. BUSINESS OVERVIEW (Cont’d) In addition, natural gas is also considered a cleaner fuel source because it produces fewer pollutants. Specifically, natural gas produces less carbon dioxide (C02) per unit of heat produced compared to coal, diesel, LPG or MFO. The lower carbon nature of natural gas means it is cleaner and this translates to lower maintenance costs and less frequent outages for the machines that use natural gas. Furthermore, currently in Malaysia, at the average regulated price range of RM16.07 per MMBtu as at 1 June 2011, natural gas is one of the cheapest energy sources as compared to other fuels. These properties of natural gas provide our customers with an edge over their competitors who utilise other fuel sources. Operating with natural gas enables our customers to run their operations more efficiently and at more competitive costs. 7.3.5 We benefit from a strong strategic relationship and support from our shareholders As a result of the shareholding structure, we enjoy beneficial relationships with our shareholders, namely MMC-Shapadu, Tokyo Gas-Mitsui, PGB and PETRONAS. We believe our strategic relationship with our shareholders allows us to benefit from knowledge sharing of technical expertise as well as on-site personnel training. Our strong strategic relationships have allowed us to exchange ideas and share best practices and know-how as part of our on-going efforts to continuously enhance our capabilities. 7.4 Future plans and strategies Expansion ofour customer base The apparent consumption of natural gas in Malaysia grew from about 315 billion cubic feet in 1990 to an estimated 1,260 billion cubic feet in 2010. This is a three-fold increase over the two-decade period, with a compounded annual growth rate (CAGR) of about 7.2%. The ability to satisfy Peninsular Malaysia’s demand for gas has been constrained since 2007 as there continues to be challenges in bringing new supply sources to the market. This shortage of natural gas may be addressed with the expected completion of the LNG regasification facility in Melaka by end of July 2012. As we have secured additional allocation of supply from PETRONAS, we will be expanding our area of coverage to new areas in Peninsular Malaysia. Furthermore, natural gas is one of the cheapest energy sources in Malaysia at the current regulated price compared to other fuels. There are still a large number of industrial users currently utilising other fuel sources such as diesel, LPG and fuel oils who intend to convert to natural gas, but we have been unable to supply to these users due to the shortage of available natural gas in Malaysia previously. However, with the execution of the New Gas Supply Agreement where we have managed to secure additional allocation of supply from PETRONAS, we are now able to tap into these new and readily available customers. With the Malaysian Institute of Economic Research forecasting the Malaysian economy to grow between 5.0% and 6.0% in year 2012, our existing customers’ demand for natural gas consumption is estimated to increase in tandem as they increase production output and add future capacity, as well as the building of new plants via new domestic and foreign investments. As at LPD, we have a total of 700 industrial customers for natural gas and any production expansion of these customers will likely result in the increase in their natural gas requirements. 7. BUSINESS OVERVIEW (Cont’d) (i) Diversifying to CHP In addition to the above, to cater to the growing demand of gas from our existing customers and to meet our plans to increase our customer base, we have introduced our customers to diversify into CHP where we provide advisory and promotional services to them. As at LPD, we have 28 existing customers who are using CHP. The usage of CHP by our customers has contributed to some increase in gas demand and consumption from these customers have resulted in an increase in revenue from the sale of natural gas. CHP is an energy efficient system that generates electricity (and/or mechanical energy) and thermal energy with a single fuel source. The thermal energy generated can be used for steam production, hot water or air-conditioning (chilled water) by using absorption chiller. This is in contrast with common practice where electricity is generated at a central plant (Tenaga Nasional Berhad / Independent Power Projects) and then converted on-site for heating and cooling energy requirement. CHP has high thermal efficiency. Efficiencies of up to 90% are possible compared to 40% in conventional thermal generation and about 60% in combined cycle generation plants. CHP will increase the efficiency of use of fuels and thus will lower the cost of generation. Distributed generation will reduce energy loss and improve the quality of supply. These will result in lower impact on the environment and prolong the life of Malaysia’s fossil fuels reserves. Based on our experience and track record in the industry, coupled with our sound technical and functional knowledge concerning CHP plants supplying natural gas to numerous CHP customers, we believe that we have the capability to diversify into the CHP business in which we plan to operate CHP plants for the sale and generation of electricity and thermal energy to our customers. 7.5 Products Our principal activity is to sell, market and distribute natural gas as well as construct and operate the NGDS in Peninsular Malaysia. The principal activities of our subsidiaries, GM(LPG) and PTSB are the supply and sale of LPG via a reticulation system and property holding. Our principal products are as follows: Natural gas: It is an odourless, colourless, gaseous hydrocarbon mixture made up of methane (CH4) and a small percentage of other light hydrocarbons. Natural gas is found naturally underground. After it is processed, the gas is compressed and distributed through pipelines. Natural gas is commonly used as fuel and feed stock in industrial and commercial applications, such as in boilers, furnaces, ovens, as well as for air conditioning. Natural gas is a non-toxic gas which is lighter than air. LPG: It is a mixture of gases, mainly 30% propane (C3Ha) and 70% butane (C4H10). LPG is commonly used as fuel in homes for cooking and heating as well as in industries. It is derived from a number of processes including refinery processes, crude oil stabilisation, and natural gas processing. LPG is a non-toxic gas which is heavier than air. 7. BUSINESS OVERVIEW (Cont’d) The revenue contribution from our principal products over the past three (3) FYE 31 December 2009,2010 and 2011 are as follows: Products FYE 31 December 2009 % 2010 % 2011 0/0 (in RM millions, except for percentages) Sale of natural gas…………………….. 1,726.5 98.5 1,775.0 98.2 1,962.2 98.1 Tolling fees…………………………………………… 10.9 0.6 13.0 0.7 14.4 0.7 Sale of LPG _—-:-:::-1::-:5:-.7..,-0.9 19.5 1.1 23.6 1.2 Total 1,753.1 100.0 1,807.5 100.0 2,000.2 100.0 The following table sets forth our sales volume from the sale of natural gas, tolling fees and LPG in millions MMBtu and the daily average of natural gas volume in MMScfd for the periods indicated: Products FYE 31 December 2009 2010 2011 (in millions MMBtu) Volume of natural gas . 107.3 117.6 124.6 Volume of natural gas transported to PETRONAS NGV and GDC stations . 10.7 12.3 13.1 Volume of LPG . 0.2 0.2 0.3 Daily average of natural gas volume (in MMScfd) 287 315 336 7.6 Principal markets We are the only company licensed under the GSA by the Energy Commission, with the approval of the Minister, to supply and sell reticulated natural gas in Peninsular Malaysia. As at LPD, we principally market and distribute natural gas to customers in Peninsular Malaysia initially consuming two (2) MMScfd and below of natural gas. Our principal markets are mainly in the Central and Southern region of Peninsular Malaysia with a combined sales volume of natural gas sold to industrial customers of 73.5% for both the FYE 31 December 2010 and 31 December 2011. The sales volume of natural gas sold to industrial customers based on locations of our existing gas supply is as follows: % of total sales volume of natural gas Geographical region EXisting gas supplysold to industrial customers—-=-=——‘–‘—“——–­FYE FYE 31 December 2010 31 December 2011 % 0/0 Central region  Kuala Lumpur, Petaling Jaya, Kelana Jaya, Damansara, Batu Caves, Sungai Buloh, Selayang, Kundang, Jeram, Ijok, Batang Be~untai, Rawang, Shah Alam, Klang, Pandamaran, Bandar Sultan Sulaiman, West Port, North Port, Sepang, Salak Tinggi, Puchong, Serdang, Banting, Teluk Panglima Garang, Balakong, Dengkil, Beranang, Semenyih, Kajang, Cheras, Seri Kembangan, Bangi, Putrajaya, Cyberjaya, KLiA  41.3  41.3  Southern region  Pasir Gudang, Tg. Langsat, Tebrau, Tampoi, Larkin, Plentong, Senai, Kulai, Air Hitam, Kluang, Alor Gajah, Ayer Keroh, Cheng, Tangga Batu, Batu Berendam, Nilai, Bukit Rambai Senawang, Seremban  32.2  32.2  Northern region  Lumut, Setiawan, Seri Manjung, Kamunting, Parit Buntar, Nibong Tebal, Kulim, Prai, Sungai Petani, Kangar  21.3  21.6  Eastern region  Gebeng, Kuantan Kemaman, Kerteh  Port,  Teluk  Kalong,  5.2  4.9  63
7. BUSINESS OVERVIEW (Cont’d) Our customers are from the industrial, commercial, and residential sectors in Peninsular Malaysia where the sale and supply of natural gas to them are governed by terms and conditions contained in their respective supply contracts. As at LPD, we serve 700 industrial customers, 519 commercial customers and 10,612 residential customers for natural gas. Our industrial customers made up approximately 99% of our sales in each of the past three (3) financial years from 2009 to 2011, while our combined sales from both the commercial and residential customers contributed approximately 1% in each of the past three (3) financial years from 2009 to 2011. Sales to these customers are based on their gas usage. In relation to the supply of LPG, as at LPD, we serve 1 industrial customer, 1,132 commercial customers and 20,663 residential customers. The breakdown of our sales volume of natural gas classified by industrial, commercial and residential customers is as follows: Sectors FYE 31 December 2009 % 2010 % 2011 % —(‘in millions MMBtu, except for percentages) Industrial  106.4  99.2  116.6  99.1  123.6  99.2  Commercial……………………………………………… 0.9  0.8  1.0  0.9  1.0  0.8  Residential  _-==-=­ Total  107.3  100.0  117.6  100.0  124.6  100.0
Note: Negligible. In the industrial sector, our natural gas is used by a broad range of end-user segments, including food, beverages and tobacco, rubber products, basic and fabricated metal, non­metallic metal products, chemical products, glass products, paper, printing and publishing, textile products, electrical and electronics and plastic products. The diversity of our end-user segments outlines the versatility of natural gas in all industrial and commercial applications. The breakdown of our end-user segments is as follows: Customers sales volume by industry % of sales volume Food, beverage and tobacco Rubber products Basic and fabricated metal Non-metallic mineral products Chemical products Glass products Paper, printing and publishing Textile products Electrical and electronics Plastic products Others FYE 31 December 2010 27% 24% 12% 10% 8% 7% 4% 4% 2% 1% 1% FYE 31 December 2011 27% 24% 12% 10% 8% 7% 5% 3% 2% 1% 1% 7. BUSINESS OVERVIEW (Cont’dj In each of these sectors, our natural gas is used for heating, chilling, appliance operation and co-generation purposes as follows: Sector Application of our products Industrial Boilers Dryers Heat treatment Furnaces Melters
Commercial Oven I stove Boilers I water heater Natural gas vehides (“NGV’)
Residential Oven I stove Water heater Clothes dryer
Co-Generation I CHP Generation of electricity Chilled water I cooling Steam
7.7 NGDS Our NGDS transports natural gas from the transfer points to our industrial, commercial and residential customers through an extensive network of distribution pipelines and stations. As at LPD, we operate a total of approximately 1,800 km pipelines across Peninsular Malaysia. Our network of pipelines is connected from the PGU primarily via the city gate stations which are predominantly owned and operated by PGB to our customers’ facilities. The majority of the pipelines are installed within road reserve land, river reserve land and railway reserve land. Prior to the installation of these pipelines, wayleave approvals must be obtained from the relevant authorities such as Jabatan Kerja Raya, local councils, Lembaga Lebuhraya Malaysia, Jabatan Pengairan dan Saliran and Keretapi Tanah Melayu Berhad for us to install our gas pipelines within the reserve land. Such wayleaves are granted for as long as the pipelines remain installed and in a majority of those cases, no rental or fee is payable by us. Other than wayleaves granted by the relevant authorities, there are also some wayleave arrangements entered into with third party land owners which are contained in written agreements, where consideration is payable thereunder and these wayleave arrangements are subject to renewals upon the expiry thereof. We cannot discount the risk that we have to relocate our pipelines at our costs due to future developments within the reserves undertaken by the authorities. Nonetheless, in accordance with our standard operating procedure, we are required to and will take all the necessary steps to secure such approvals before we commence work on installing pipes. 7. BUSINESS OVERVIEW (Cont’d) As at lPD, we operate 36 odoriser stations, 744 service stations. 91 district stations, 73 regulating stations and 76 area stations. The service stations are installed in our customers’ premises while other stations are installed on our own land, leased land (where we have entered into tenancy and lease agreements with relevant parties), land not owned by us, TOl (Temporary Occupancy Licence) land, customers’ premises as well as land reserved for gas. Some of these agreements to occupy the land on which the stations were installed are subject to renewal at the end of their respective terms. We have not encountered nor experienced any major or insurmountable difficulty with regard to the renewal of these agreements. For the FYE 31 December 2011, the total annual rental paid for wayleaves and stations were RM208,730.96 and RM30,814.56 respectively. The table below is a breakdown of stations in our NGDS as at lPD: Total stations Odoriser Service District Regulating Area Region Station Station Station Station Station Northern ……………….., 9 130 10 Central ………………….. 9 367 59 72 69 Eastern………….,…….., 726 116 Southern ……………….. 11221 21 1 36744 91 73 76Total Pursuant to conditions imposed by the SC vide its approval letter dated 7 October 2011 in respect of the IPO and the Listing under Section 212(5) of the CMSA and the equity requirements for public companies, we have identified that as at lPD, there are 22 stations out of 1.020 stations erected on land not designated for gas station use where we are in the midst of rectifying the same or erected on the plots of land where we have been following up with the relevant land owners or authorities to ascertain the respective land Use Conditions. The 22 affected stations comprises of two (2) odoriser stations, 13 district stations, one (1) regulating station and six (6) area stations. Please refer to Section 5.2.6 of this Prospectus for further details. 7.8 Operation process flow NGDS Our natural gas supply is sourced from PETRONAS via a transmission pipeline owned and operated by PGB, namely the PGU. The natural gas is supplied to us at a transfer point known as city gate stations, where the natural gas is transferred to our pipeline through the PGU. At each city gate station, there is an odoriser station that injects odorant into the natural gas to odorise it as part of safety requirements. From here on, the natural gas is distributed throughout our NGDS via feeder lines and distributions lines located throughout Peninsular Malaysia. Depending on the volume and pressure of natural gas required, the pressure in these pipelines is reduced at either district stations, service stations, area stations or regulating stations. Once the gas pressure has been reduced to the appropriate level, it is delivered to the customer’s internal piping system.

4.3 psig SingleServiceDevelopment / Hospital / = METER Station Hotel 67
7. BUSINESS OVERVIEW (Cont’dj (i) PGU The PGU project which commenced in 1984 is the only main gas pipeline in Peninsular Malaysia spanning more than 2,500 km. It comprises main gas transmission pipelines, supply pipelines, lateral pipelines and interconnection pipelines. The system comprises six (6) gas-processing plants with a combined capacity of 2,060 MMScfd, producing methane, ethane, propane, butane and condensate. The PGU is owned and operated by PGB. (ii) City gate station These are stations predominantly owned and operated by PGB with gas pressure regulating and gas metering facilities. The outlet gas pressure is reduced to 260 psig before entering our NGDS. These stations are the custody transfer points between our NGDS and the PGU. (iii) Odoriser station These are stations with an odorant dispensing facility located immediately after city gate stations. In this station, an odorant is injected into the gas to odorise it so as to meet safety requirements. As natural gas is colourless and odourless, the odorant is added to provide a distinctive odour to the gas to enable easy detection of leaked gas. (iv) Feeder line
This gas pipeline is made of carbon steel. It distributes natural gas at the pressure of 150-260 psig from the city gate· stations to the service line of district stations and service stations. These pipes usually reside on the Government’s road reserves.
(v) District station
These are stations with pressure regulating facilities, where the natural gas pressure from the feeder line is reduced to 50 psig before entering the distribution line.
(vi) Distribution line

This gas pipeline is mainly made of polyethylene. It distributes natural gas at the pressure of 35-50 psig from the district stations to the service line of area stations, regulating stations and service stations. These pipes usually reside on the Government’s road reserves. (vii) Service station These are stations with pressure regulating and gas metering facilities where natural gas pressure mainly from either the feeder lines or the distribution lines is reduced to the appropriate level before being supplied to industrial and commercial customers. They act as transfer points for natural gas between our pipelines and the customer’s internal piping system. (viii) Regulating station These are stations with pressure regulating facilities where the natural gas pressure from the distribution line is reduced to 4.3 psig before being supplied to commercial customers. 68 7. BUSINESS OVERVIEW (Cont’d)
(ix) Area Station These are stations with pressure regulating facilities where natural gas pressure from the distribution line is reduced to 0.43 psig before being supplied to residential customers. In addition to natural gas sales to our customers, we also charge tolling fees if our pipeline is used to connect to non-customers such as PETRONAS’ gas stations in Peninsular Malaysia to supply compressed natural gas for use by NGVs and GDCs. 7.9 Types, sources and availability of supplies We source all of our gas supply from PETRONAS through the PGU. Gas, extracted from various domestic gas fields off the coast of Terengganu as well as West Natuna Indonesia and the PM3 Commercial Arrangement Area (CM) between Malaysia and Vietnam, is processed at PGS’s gas processing plants in Kerteh and Paka, Terengganu before it enters the PGU. Gas from Malaysia-Thailand Joint Development Area is processed at the gas separation plants in Songkhla province. Thailand before entering the PGU through the Trans­Thailand Malaysia pipeline network. PGU by PGB and the concentration of GMB’s customers in Peninsular Malaysia -WEST NATUNA (Indonesia) Legend: PG.U pipeline _ GMf> regional offices … 6MB branchoffices (Source: GMB) Singapore 7. BUSINESS OVERVIEW (Cont’dj As at LPD, the key supplies used for our business activities are as described below: Raw materials Description of usage Sources Natural gas  Primary supplies  PETRONAS  LPG  Primary supplies  PETRONAS  Dagangan  Berhad  and  Boustead  Petroleum Marketing Sdn Bhd (BHPetrol)
In addition to the raw materials above, an additive odorant is added into the natural gas for safety purposes in order to detect gas leakages. 7.9.1 Existing Gas Supply Agreement On 18 August 1997, we signed the Existing Gas Supply Agreement with PETRONAS where PETRONAS is to supply us with natural gas. The salient terms of the Existing Gas Supply Agreement are contained in the ensuing paragraphs. The Existing Gas Supply Agreement which took effect from 6 January 1993 is for a duration of 20 years and will expire on 31 December 2012. Starting from 2003 to 31 October 2009, the maximum amount of natural gas that PETRONAS agreed to supply us with was up to 150 MMScfd. We have represented to PETRONAS that the natural gas shall be used exclusively for onward distribution to our customers and we shall not supply gas to any of our customers indiVidually in excess of 56,634 standard cubic meter (Sm3) per day (which is equivalent to approximately 2 MMScfd). The price of natural gas supplied by PETRONAS pursuant to the Existing Gas Supply Agreement is currently in accordance with the buying price of natural gas regulated by the Government as set out in Section 5.2.1 of this Prospectus. Our gas supply volume from PETRONAS was increased to a maximum of 300 MMScfd pursuant to the First Supplemental Agreement signed on 1 November 2009. From 1 December 2009, our gas supply volume was subsequently increased by another 82 MMScfd, bringing the total volume of gas supply from PETRONAS to our Company to 382 MMScfd. On 12 July 2010. we signed the Second Supplemental Agreement which confirmed PETRONAS’ commitment to such increase of gas supply volume to the Company up to 31 December 2011. PETRONAS. vide its letter to our Company dated 5 April 2011, confirmed that the gas supply volume of 382 MMScfd shall be further extended from 1 January 2012 until 31 December 2012. The summary of the changes in our natural gas supply volume is detailed below: Period Maximum gas supply volume from PETRONAS MMScfd  From 2003 -31 October 2009  150  From 1 November 2009  300  1 December 2009 -31 December 2012  382
We are also required to observe the take-or-pay obligation and excess gas pricing for natural gas taken above the stipulated quantity. 7. BUSINESS OVERVIEW (Cont’d) 7.9.2 New Gas Supply Agreement In view of the impending expiry of the Existing Gas Supply Agreement, we signed the New Gas Supply Agreement with PETRONAS on 23 February 2012 to replace the Existing Gas Supply Agreement upon its expiry on 31 December 2012. The New-Gas Supply Agreement takes effect from 1 January 2013. The salient terms of the New Gas Supply Agreement are contained in the ensuing paragraphs. (i) The tenure of the New Gas Supply Agreement is for a period of 10 years but the New Gas Supply Agreement provides for us to have the right to request for a further extension of five (5) years subject to the availability of gas supply and the renegotiation of any terms of the agreement, if requested by either ourselves or PETRONAS. The New Gas Supply Agreement is for the supply of natural gas of up to 534,143 gigajoule per day (which is equivalent to approximately 492 MMScfd) for the period commencing from 1 January 2013 until 31 December 2022 on a step-up basis. Pursuant to the New Gas Supply Agreement, we are allowed to supply natural gas to our customers who initially consume 5,428 gigajoule of natural gas per day (which is equivalent to approximately 141,584 standard cubic meter (Sm3) per day or five (5) MMScfd) and below_ [The rest of this page is intentionally left blank] I Company No. 240409-T I 7. BUSINESS OVERVIEW (Cant’d) In addition, pursuant to the New Gas Supply Agreement, our buying price from PETRONAS from 1 January 2013 to 31 December 2022 is as follows: Buying price under the New Gas Supply Agreement in accordance with the volume” of gas supplied From 1 January 2013 until 31 December 2013  From 1 January 2014 until 31 July 2014  From 1 August 2014 until 31 December 2014  From 1 January 2015 until 31 December 2022  Gigajoule .per day  MMScfd (approximate)  Gigajoule per day  MMScfd (approximate)  Gigajoule per day  MMScfd (approximate)  Gigajoule per day  MMScfd (approximate)  Maximum volume of gas supply PETRONAS per day which shall Government regulated price’  contracted be subject  by to  414,721  382  414,721  382  325,697  300  325,697  300  Maximum volume of gas supply PETRONAS per day which shall LNG plus price  contracted by be subject to  43,426  40  75,996  70  165,020  152  208,446  192  Total  458,147  422  490,717  452  490,717  452  534,143  492  Notes:
Currently, the Government regulated price is as per the announcement made by the Government on 30 May 2011, details of which are set out in Section 5.2.1 of this Prospectus. As indicated in the announcement, the buying price of natural gas for our Company will be increased by RM3.00 per MMBtu every six (6) months beginning 1 June 2011 to December 2015 and the buying price of natural gas will be at market prices starting from 2016. A The volume of gas supplied is on a step-up basis. In the event of the issuance of any instructions or directive from time to time by the Government of Malaysia to PETRONAS in respect of regulated pricing for the sale of gas in Malaysia (“Government Directive”), PETRONAS may by written notice to us unilaterally amend the terms of the New Gas Supply Agreement in any manner that it deems fit in order to implement the Government Directive. The Government Directive shall not in any circumstance whatsoever be deemed to be an automatic amendment to or of any provisions of the New Gas Supply Agreement and shall not apply to the volume of gas which is subject to the LNG plus price. In addition, the New Gas Supply Agreement provides for the take-or-pay obligation and excess gas pricing, surcharges such as overrun surcharge and variance surcharge to be imposed upon us, further details of which are set out in Sections 5.2.4 and 5.2.5 of this Prospectus. 72
7. BUSINESS OVERVIEW (Cont’d) (ii) Under the terms of the New Gas Supply Agreement, we shall be liable for and shall, to the exclusion of all other remedies, indemnify and hold PETRONAS harmless against any and all claims for loss, damage, costs (including legal costs) and expense of whatever kind and nature, including all related costs and expense in respect of personal injury to or death of our customers, our personnel or our subcontractors’ personnel and in respect of loss of or damage to property of our customers arising out of or in connection with the New Gas Supply Agreement save in the case where loss or damage to our customers’ property is caused by our Company having unknowingly accepted natural gas that has failed to conform with the quality specifications from PETRONAS in which case, PETRONAS shall be liable for such loss or damage subject to the limit in liability as agreed. (iii) PETRONAS reserves the right to review and revise the daily quantity of natural gas supplied downwards when the average consumption for any three (3) consecutive months is less than 75% of the daily quantity of natural gas supplied and PETRONAS shall notify us in writing in such event. That notwithstanding, the daily quantity of natural gas supplied will not be revised downwards if we can prove that the lesser consumption is due to outage of plant or genuine and justifiable business cycle downturn of our customers and we have issued to PETRONAS the justification for the lesser consumption within 30 days from the date of receipt of PETRONAS’ notification. In the event of a supply deficiency resulting from a force majeure event, emergency situation, shutdown of facilities, or under delivery or insufficient delivery of natural gas, PETRONAS shall have the right and discretion to supply natural gas at a quantity that is lower than the daily quantity of natural gas supplied or to suspend the supply of natural gas in any manner it thinks fit. PETRONAS shall, in the event it intends to exercise such rights, give us adequate notice as soon as practicable stating the quantity to be supplied to us and the period for which such deficiency is expected to last. Upon receiving notification from PETRONAS, we shall use our best endeavours to reduce our offtake to the quantity specified by PETRONAS, failing which PETRONAS reserves the right to suspend the delivery of natural gas to us. Notwithstanding any provisions to the contrary in the New Gas Supply Agreement, PETRONAS shall not be obligated to deliver any dry gas in the event of a supply failure resulting from a force majeure event, emergency situation or shutdown of facilities. (iv) Where there is a default, the non-defaulting party may, upon giving not less than two (2) weeks’ written notice to the defaulting party, terminate the New Gas Supply Agreement if the breach committed is incapable of remedy. Where a breach is capable of remedy, the non-defaulting party may immediately, upon giving written notice to the defaulting party, terminate the New Gas Supply Agreement if the defaulting party fails to remedy that breach within 30 days from the date of receipt of notice of breach from the non­defaulting party or such longer period as may be reasonable. In addition, PETRONAS may by giving two (2) weeks’ written notice to us, terminate the New Gas Supply Agreement under, amongst others, the following circumstances: (a) our non-compliance with the provisions on payment to PETRONAS under the New Gas Supply Agreement;
(b) if we use the natural gas illegally or the use is not in accordance with the New Gas Supply Agreement or if there is evidence of our attempt todoso; or

73 7. BUSINESS OVERVIEW (Cont’d) (c) if we fail to take natural gas after a lapse of 90 days continuously from our last day of offtake at any time due to any reason other than force majeure or any failure by PETRONAS to deliver natural gas. Furthermore, PETRONAS may immediately, upon giving written notice to us, terminate the New Gas Supply Agreement if the Natural Gas Distribution Licence is revoked due to our fault. Upon termination of the New Gas Supply Agreement owing to our default, PETRONAS shall cease the supply of natural gas to us and we shall settle all amounts due to PETRONAS under the New Gas Supply Agreement up to the date of termination and compensate PETRONAS for all unrecovered capital costs related to work expended by PETRONAS. 7.10 Technology used We utilise various technologies in our NGDS to enhance the distribution system as well as to monitor the network and condition of the pipelines. The technologies used are: Cathodic Protection System -Sacrificial Anode Cathodic Protection System (SACP) is used to prevent corrosion at the pipelines from taking place. Sacrificial cathodic protection occurs when a metal is coupled to a more anodic metal. When electrically connected, the anodic metal becomes a source of negative charge which prevents corrosion to the pipelines. In addition. an external coating is also applied to the pipeline as a supplement measure to protect the structural pipeline from corrosion. Horizontal Directional Drilling (HOD) -Horizontal directional drilling is a trenchless process used in the laying of pipelines underground and consists of three distinct phases. The first phase is the drilling of a pilot hole from the surface on one side of the designed profile and exiting at the surface on the other side. Then, the second phase begins by enlarging the pilot hole to the desired diameter to accept the pipeline. Finally, the pipeline is pulled into place through the enlarged borehole. Supervisory Control and Data Acquisition (SCADA) -SCADA is a system which generally refers to industrial control systems that monitors the infrastructure. This centralised system monitors distribution pressure of our gas pipelines across Peninsular Malaysia. Our control room which is located in Shah Alam overlooks this SCADA system. Gas Chromatography (GC) -The chromatography equipment is used to analyse the natural gas compounds. The equipment is installed at various locations within the distribution network for operational monitoring of the natural gas composition. Geographic Information System (GIS) -GIS is a system that captures, stores, manages and presents data with reference to the geographical location. Specifically, we used GIS to manage information on our gas facilities in Peninsular Malaysia centrally in digital format that consists of pipeline routes and depths, gas stations, and facilities database. 7. BUSINESS OVERVIEW (Cont’dj 7.11 R&D Notwithstanding that as at LPD, we do not have any formal R&D policies and budgets, we continuously strive to improve our processes to enhance efficiency and have funded various ad-hoc researches carried out by local universities such as University Teknologi Malaysia (UTM) on project basis. The Company supported two (2) researches on pipeline studies. The first research was conducted from 1 June 2006 to 28 February 2007 to study the effects of gas pipeline safety distance from other utilities in particular, water pipes, and another research was conducted from 24 February 2010 to 15 July 2011 to study the impact of water jet leaks from water pipes to the gas pipeline. The findings of these researches have enabled us to establish preventive measures to avoid erosive wear behaviour. 7.12 Safety procedure We uphold and practise stringent policies and procedures to ensure reliable, timely and safe delivery of natural gas to our customers. We adhere to strict quality control and safety measures at all stages of our business, from the planning and construction of the new NGDS to operations and maintenance, as follows: 7.12.1 Planning stage At this stage, the planning of strategic pipeline routes and isolation valves locations is selected with future infrastructure expansion by authorities and third parties taken into consideration. The isolation valves are usually used to isolate a section of the gas pipeline to facilitate maintenance, equipment removal or shutdowns. In addition, the looping system is also planned for stability and continuity in gas supply. This looping system connects the customers in a “ring” configuration system so that if a section of the gas pipeline is interrupted, it may not impact the customers. 7.12.2 Engineering stage At the engineering stage, the design and materials specification are chosen in accordance with the GSA and Gas Supply Regulations 1997 and international accepted codes and standards. The selection of these materials is made to withstand operating pressure and other external loads, as well as protection against corrosion and over pressurisation to meet safety requirements. 7.12.3 Procurement stage We source our own steel and polyethylene pipes required for the installation of our gas pipelines. Our steel pipes are sourced from American Petroleum Institute (“API”) licensed pipe manufacturers which produce steel pipes according to a verified quality management system and API product specifications. Further to the above, mill inspection of the steel pipes is carried out by a third party inspection agency which provides us with the assurance that the steel pipes procured by us are of acceptable quality. 7.12.4 Construction stage During the construction stage, we appoint competent contractors who are registered with us to design, engineer, procure, construct and commission the gas pipelines to comply with MS ISO 9001, MS ISO 14001, and OHSAS 18001. Upon receiving the approval from the Energy Commission and other relevant authorities, the construction works commence. Our personnel will accompany the contractors on-site to supervise the installation and construction activities. For the underground gas pipeline, it is installed at a minimum depth of 0.9 metres. 7. BUSINESS OVERVIEW (Cont’d) Numerous inspection and tests are carried out during this stage. The major types of tests carried out are listed as below: Type of inspection I tests Descriptions Welder qualification test A means by which the ability of welder to make sound welds using qualified welding procedure is assessed. Non-destructive testing on welded joints A means by which the quality of weld is assessed by using methods that do not involve disturbance, stressing or breaking of the welded joints. Holiday detection test A means by which the presence of discontinuity in a protective coating that exposes unprotected surface of steel pipe to the environment is revealed, in which the holiday (discontinuity) shall then be repaired. Pipeline pressure test A means by which the integrity of completed pipeline is assessed, in which the pipeline is filled with a fluid, sealed and sUbjected to pressure. It is used to validate integrity and detect construction defects and defective materials. Pipeline dryness inspection A means by which the desired dryness inside of the completed pipeline is ascertained before the pipeline is put into service, in which dried gas (compressed air or nitrogen) is passed through the pipeline to remove free water. It is to prevent the potential for gas hydrate formation in the pipeline that may result in possible disruption to service. 7.12.5 Operations and maintenance Our operations and maintenance team carry out the day to day operations and maintenance of the gas facilities that include the pipelines and stations. Periodical preventive maintenance and troubleshooting are performed to ensure gas facilities conditions are maintained. Daily pipeline patrolling is carried out to monitor unauthorised third party works within the vicinity of our pipelines. In addition, all third party works within the vicinity of the gas facilities are supervised. The regional and branch offices have dedicated on-call and emergency response teams who physically attend to emergencies within 90 minutes upon notification. Apart from periodical maintenance, a specific pipeline integrity inspection is carried out initially within one year after installation. A follow-up inspection is carried out again on the 10th year and thereafter, routine inspections are carried out every five (5) years. 7.13 Sales and marketing Our headquarters is situated in Shah Alam, Selangor Darul Ehsan. As at LPD, we have three (3) regional offices, located in Prai, Gebeng and Pasir Gudang, and seven (7) branch offices located in Kuala Lumpur, Shah Alam, Bangi, Kluang, Putrajaya, Senawang and Sri Manjung. Our Sales and Marketing Department is divided into three (3) main sectors, namely industrial, commercial and residential. Our sales team is further divided geographically into the northern region, central and eastern region and southern region. Our Group has initiated the following marketing strategies to sustain and expand our business: (i) understanding our customers’ demand trend and matching our natural gas supply allocation to these trends to maximise their consumption usage;
(ii) continuous provision of consultation advice, customer services including after-sales services and positioning ourselves as an innovative and reliable energy solution providerto foster customer loyalty;

(iii) developing new business opportunities with existing and potential customers by way of referrals; (iv) collaboration with investment authorities to identify potential customers who intend to set up manufacturing facilities, including foreign investors in Malaysia; and
(v) keeping abreast of new processes and technological development in the gas industry to better meet our customers’ requirements.

7. BUSINESS OVERVIEW (Cont’d) 7.14 Major customers For the past three (3) FYE 31 December 2009, 2010 and 2011, none of our major customers individually contribute more than 10% of our total revenue. Our top five (5) customers and their revenue contributions are as follows: Length of relationship as at 31 December Top 5 customers 2011 FYE 31 December
2009 0/0 2010 % 2011 0/0 (Approximate number of years) (in RM millions, except for percentage) Nippon Electric Glass (M) Sdn Bhd … 16 35.1 2.0 45.0 2.5 57.9 2.9 Malaysian Sheet Glass Sdn Bhd ……. 17 38.4 2.2 36.7 2.0 38.3 1.9
Hartalega Sdn Bhd ………………………. 8 22.9 1.3 27.1 1.5 38.3 1.9
Fatty Chemical (Malaysia) Sdn Bhd… 7 38.5 2.2 37.0 2.0 35.4 1.8 Central Sugars Refinery Sdn Bhd …… 8 28.9 1.6 33.7 1.9 35.0 1.7 Total top 5 customers’ revenue contribution
163.8 9.3 179.5 9.9 204.9 10.2 1,753.1 100.0 1,807.5 100.0 2,000.2 100.0Total revenue 7.15 Major supplier PETRONAS, the national oil and gas company, is our only supplier of natural gas. Our total purchases from PETRONAS for the past three (3) FYE 31 December 2009, 2010 and 2011 are listed as follows: Length of relationship as at Top supplier 31 December 2011 FYE 31 December 2009 % 2010 0/0 2011 % (Approximate number of years) (in RM millions, except for percentage) PETRONAS . 19 1,303.7 100.0 1,304.4 100.0 1,605.5 100.0 Total purchases of natural gas 1,303.7 100.0 1,304.4 100.0 1,605.5 100.0 7.16 Interruptions to business and operations Our Group has not experienced any major interruption in business which had a significant effect on operations during the 12 months period prior to the LPD. 7.17 Seasonality Our Group’s revenue is not materially affected by any seasonal factors. However, we do notice a slight drop in the natural gas consumption by our customers during the festive periods throughout the year, namely during Hari Raya Aidilfitri and Chinese New Year. 7. BUSINESS OVERVIEW (Cant’d) 7.18 Intellectual properties We have filed with the Register of Trade Marks, among others, the following trade mark registration applications under the Trade Marks Regulations 1977, Trade Marks Act 1976 to establish our brand names: Application  Trade mark  Expiry date  number  Class ————-­ Status  8 November  00015832  16  (letterheads;  memo  pads;  telefaxes  Registered  2020  forms; envelopes; compliment slips; stickers;  rubber stamps; leaflet for safety booklet; all  included in class 16)

8 November  02013922  45 (personal and social services rendered  Registered  2012  by others to meet the needs of individuals  included in class 45)
GAS MALAYSIA GMNET 21 March 03003261 45 (personal and social services rendered Registered 2013 by others to meet the needs of individuals included in class 45) 7.19 Human resource As at LPD, we have a total workforce of 358 employees comprising two (2) personnel in the Managing Director’s office, seven (7) personnel in the Human Resource Department, 47 personnel in the Technical Services Department, 143 personnel in Operations and Maintenance, 51 personnel in Marketing, 81 personnel in Accounting and Finance, 17 personnel in Procurement and Contracts, seven (7) personnel in the Health, Safety, Environment and Quality Department and three (3) personnel in the Legal Department. As evidence of our employees’ commitment to our Group, as at LPD, a total of 288 employees (or approximately 80%) have been in service for more than five (5) years. Number of employees for the past three (3) FYE 2009 to 2011 and as at LPD Department Total headcount Length of service up to LPD FYE 31 December As at <11-5 >5 2009 2010 2011 LPD year years years Managing Director’s office……………… 2 2 2 2 2 Human resource ………………………….. 7 7 7 7 7 Technical services ……………………….. 55 55 51 47 1 8 38 Operations and maintenance …………. 129 133 143 143 3 37 103 Marketing ……………………………………. 56 55 52 51 1 1 49 Accounting and finance …………………. 81 81 81 81 4 12 65 Procurement and contracts ……………. 17 17 16 17 1 1 15
Health, safety, environment and quality ………………………………………. 7 7 7 7 7 Legal………………………………………….. 3 2 3 3 2 357 359 362 358 11 59 288Total Our employees do not belong to any labour union. We have not been involved in and neither are we aware of any potential judicial or administrative disputes for wrongful dismissal of our employees for the past five (5) years up to the LPD. 7. BUSINESS OVERVIEW (Cont’d) Training and development We recognise the importance of human resources as a key element to our success. All new employees recruited by the Group are required to undergo in-house orientation conducted by the respective department heads to familiarise themselves with our Group’s corporate vision, culture and policies. New technical personnel are also provided with training to equip them with the necessary working knowledge and skills in order for them to carry out their job responsibilities efficiently. We invest in external training, particularly on programmes related to technical skills and workplace safety. In addition, we provide on-the-job training where new employees will be trained at their worksites under normal working conditions. For the past three (3) years ended 31 December 2009, 2010 and 2011 and from 1 January 2012 up to LPD, our employees had participated in the following training programmes: (i) Training in year 2009 Course title Training provider I Organizer Health, Safety, Environment and Quality (HSEQ) at Construction Site Introduction to Natural Gas and Properties and Hazards of Natural Gas Internal Piping Design Chemical Safety and Spill Management Accident Investigation -Root Cause Analysis Hazard Identification Risk Assessment Risk Control Fire Fighting Training 5th Asian Pipeline Conference & Exibition Pengagihan & Pemasangan Sistem Bekalan Elektrik Management Development Programme Certificate Course in Gas Distribution for Gas Fitter II Certificate Course in Gas Distribution for Gas Engineer and Gas Engineering Supervisor . Swagelok Tube Fitting Installation and Tube Bending Seminar NIOSH 1ih National Conference on Occupational Safety and Health 24th World Gas Conference 2009 (ii) Training in year 2010 Course title Internal GMB Training Internal GMB Training Internal GMB Training Internal GMB Training Internal GMB Training Internal GMB Training Academy of Safety and Emergency Care Sdn Bhd ASCOPE Gas Centre Centre for Management Technology Sdn Bhd Asian Institute of Management, Manila, Philippines Gas Technology Centre, University Technology Malaysia, Skudai, Johor Gas Technology Centre, University Technology Malaysia, Skudai, Johor Kuala Lumpur Valve & Fitting (M) Sdn Bhd National Institute Of Occupational Safety and Health World Gas Conference 2009 Secretariat Training provider I Organizer Health, Safety, Environment and Quality (HSEQ) Awareness Program Introduction to PE and Steel Pipeline Training Internal Piping Design Training Introduction to Natural Gas and Properties and Hazards of Natural Gas Fire Fighting Training 79 Internal GMB Training Internal GMB Training Internal GMB Training Internal GMB Training Academy of Safety and Emergency Care Sdn Bhd 7. BUSINESS OVERVIEW (Cont’d) Course title Training provider I Organizer Certificate Course in Gas Distribution for Gas Engineer and Gas Engineering Supervisor Certificate Course in Gas Distribution for Gas Fitter MAP Asia 2010 76th Management Development Programme First Aid Training Swagelok Tube Fitting Installation and Tube Bending Seminar Energy Forum Securing a Sustainable Energy Future for Malaysia 6th Asian Pipeline Conference and Exhibition GASEX 2010 Conference Exhibition: Pursuing Cooperation, Paradigm on Energy, Environment & Economy, Taipei, Taiwan Gas Pricing (iii) Training in year 2011 Gas Technology Centre, University Technology Malaysia, Skudai, Johor Gas Technology Centre, University Technology Malaysia, Skudai, Johor GIS Development Sdn Bhd Asian Institute of Management, Manila, Philippines Good Responses Emergency and Training Services Kuala lumpur Valve & Fitting (M) Sdn Bhd Malaysian Gas Association (MGA) Malaysian Gas Association (MGA) Malaysian Gas Association (MGA) IBC Asia (S) Pte Ltd Course title Training provider I Organizer Seminar Perkastaman Roles and Responsibilities of Health, Safety and Environment (HSE) Committee Confined Space Safety -Entry Supervisor & Authorised Gas Tester Course t h Management Development Program, Manila, Philippines Planning and Managing Windows 7 Professional Course in Gas Distribution for Gas Engineers and Gas Engineering Supervisors Series 34 Certificate Course in Gas Distribution for Gas Fitter II Defensive Driving OSHA 1994 and OHSAS 18001 Workplace (OSH) Inspection Introduction to Natural Gas and Properties and Hazards of Natural Gas Regulator Overhaul, Troubleshooting and Station Acceptance Test Defensive Driving Disciplinary Procedures Chemical Management and Hazard Communication Maintaining a Microsoft SQl Server 2008 Read, Analyze and Interpret Financial Statements Effective Payroll Management and Computation Handling Misconduct and Conducting a Domestic Inquiry at Work -“Preparation, Documentation and Procedures” JobStreet.com -HR and Networking Events Effective Cathodic Protection System Masterclass Financial Essential for Non-Financial Professionals 80 Persatuan Pegawai Kanan Kastam Malaysia Internal GMB Training Internal GMB Training Asian Institute of Management, Manila, Philippines KnowledgeCom Corporation Sdn Bhd Gas Technology Center, University Technology Malaysia, Skudai, Johor Gas Technology Center, University Technology Malaysia, Skudai, Johor BH Management Internal GMB Training Internal GMB Training Internal GMB Training Internal GMB Training Golden Gears System MEF Academy Sdn Bhd Internal GMB Training Info Trek Sdn Bhd Arrow Training Sdn Bhd Calibre Skills Development SP Training & Management JobStreet.com Sdn Bhd UNI Strategic Pte Ltd IBN Global Network Sdn Bhd 7. BUSINESS OVERVIEW (Cont’d) Course title Training provider I Organizer Hazard Identification, Risk Assessment and Control Introduction, Application &Operation of Pipeline Current Mapper (PCM) Certificate Course in Gas Distribution for Gas Engineering Supervisors Certificate Course in Gas Distribution for Gas Fitter II 17’h Series 2011 Handling of Gas Odorant 7th Asian Pipeline Conference &Exhibition (APCE) Flow Metering and Custody Transfer Malaysia FRS Update and IFRS Convergence Seminar Accident Investigation &Root Cause Analysis Seminar on the Revised MS 930:2010 for the Gas Industry Practical Troubleshooting and Problem Solving of PLCS and SCADA System OSH Seminar: Putting Philosophy into Practices Fire Fighting Training Gas Sales &Transportation Agreements Regulator Overhaul, Troubleshooting &Station Acceptance Test Writing in Plain Language for Managers and Executives Seminar Perlindungan Keselamatan Sosial (iv) Training from 1 January 2012 up to LPD Course title Internal GMB Training RDG Supply Sdn Bhd Gas Technology Center, University Technology Malaysia, Skudai, Johor Gas Technology Center, University Technology Malaysia, Skudai, Johor Process-3 Solutions Sdn Bhd Malaysian Gas Association (MGA) UNI. Strategic Pte Ltd KPMG Internal GMB Training Sirim Berhad IDC Technology (M) Sdn Bhd NIOSH Good Responses Emergency and Training Services UNI Strategic Pte Ltd Internal GMB Training Plain Language Solutions Sdn Bhd Pertubuhan Keselamatan Sosial (PERKESO) Training provider I Organizer All You Need to Know About Sick and Hospitalisation Leave CEP Legal Compliance and Evaluation SAMP Defensive &Safety Driving Course Integrated Management System ISO 9001 :2008, ISO 14001:2004 &OHSAS 18001:2007 Awareness Training Federation of Malaysian Manufacturers (FMM) Internal GMB Training SAMP Advance Driving &Riding School AJA EQS Certification (M) Sdn Bhd 7. BUSINESS OVERVIEW (Cont’d) 7.20 Governing laws and regulations The main laws and regulations governing our Group’s operation and activities are summarised below. The following does not purport to be an exhaustive description of all relevant laws and regulations of which our business is subject to. 7.20.1 Gas Supply Act, 1993 The GSA is an Act to provide for, amongst others, the licensing of the supply of gas to consumers through pipelines and related matters, the tariff for the supply of gas and the maintenance, repair, upgrading, removal or alteration of pipelines or installations. 7.20.2 Gas Supply Regulations, 1997 These regulations contain provisions in relation to amongst others, the categories of licence granted under the GSA, the approvals for, inspection and testing of gas installations, as well as the registration of competent persons to carry out work on gas pipelines and gas installations. 7.20.3 Occupational Safety and Health Act, 1994 (“OSHA”) We are also subject to the OSHA. Under the OSHA, we have a general duty to our employees to provide and maintain the plants and systems of work that are, so far as is practicable, safe and without risks to health, provide information, instruction, training and supervision to ensure, so far as is practicable, the safety and health of our employees at work, and to provide a working environment, which is as far as possible safe, without risks to health, and adequate as regards to facilities for their welfare at work. We also have a duty to ensure, so far as is practicable, that other persons, not being our employees, who may be affected thereby are not exposed to risks to their safety or health. As we employ more than 100 employees, we are obliged under OSHA to employ a safety and health officer, who is tasked with ensuring the due observance of the statutory obligations as regards to workplace health and safety and the promotion of a safe conduct of work at the place of work. We have also set up a health and safety committee, which we consult in promoting and developing measures to ensure the safety and health at the place of work of the employees and in checking the effectiveness of such measures. 7.20.4 Environmental Quality Act, 1974 The Environmental Quality Act, 1974 restricts pollution of the atmosphere, noise pollution, pollution of the soil, pollution of inland waters without a licence, prohibits the discharge of oil into Malaysian waters, discharge of wastes into Malaysian waters without a licence and prohibits open burning. The agency responsible for implementing and monitoring Malaysia’s environmental regulations and policies is the Malaysian Department of Environment and the local environmental authority. I Company No. 240409-T I 7. BUSINESS OVERVIEW (Cont’d) 7.21  Certifications and recognitions  Our recent certifications and recognitions include:  Issue date  Expiry date  Current accreditation I award I certificates  Description  Awarding Organization  1 February 2000 (original certification date) Issue Date: 29 October 2009  31 January 2013  ISO 9001 : 2008. Certificate Number AR 1901  Quality Management Systems -Requirements. Scope of Certification: Provision of Natural Gas and Liquefied Petroleum Gas Distribution Systems to Industrial, Commercial and Residential Sectors in Peninsular Malaysia  SIRIM QAS International Sdn Bhd  1 February 2003 (original certification date) Issue Date: 23 December 2011  31 January 2015  ISO 14001 : 2004. Certificate Number ER 0289  Environmental Management Systems -Requirements with Guidance for Use. Scope of Certification: Provision of Natural Gas and Liquefied Petroleum Gas Distribution Systems to Industrial, Commercial and Residential Sectors in Peninsular Malaysia  SIRIM QAS International Sdn Bhd  24 October 2007 (original certification date) Issue Date: 23 November 2010  23 October 2013  OHSAS 18001 : 2007. Certificate Number SR 0342  Occupational Health and Safety Management Systems -Requirements. Scope of Certification: Provision of Natural Gas and Liquefied Petroleum Gas Distribution Systems to Industrial, Commercial and Residential Sectors in Peninsular Malaysia  SIRIM QAS International Sdn Bhd  [The rest of this page is intentionally left blank]
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