Fourth Annual General MeetingTuesday, 26 June 2001at 9.30 amBanquet Hall, Kuala Lumpur Golf & Country ClubNo. 10, Jalan 1/70D, Off Jalan Bukit Kiara, 60000 Kuala Lumpur

Corporate St ructure 02

Company St ructure 03

Corporate Infor mat ion 04

Corporate Prof i le 06

Corporate Achievements 2000 09

Corporate Highl ights 2000 10

F inancial H ighl ights 2000 14

F inancial Calendar 2000 14

F ive-Year Group F inancial H ighl ights 15

Share Per for mance 2000 15

Statement on Corporate Governance 16

Chair man’s Statement 24

Board of Di rectors 34

Senior Management 38

Operat ions Review 43

Envi ronmental Pol icy 52

Envi ronmental Report 53

Organisat ional Safety & Health Pol icy 54

Qual i ty Pol icy 55

Press Cl ippings on Puncak Niaga 2000 56

Dist r ibut ion Schedule of Equi ty Secur i t ies 58

L i s t of Property 60

Audit Committee Report 62

F inancial Report 67

Not ice of Annual General Meet ing106

Proxy For m

Contents

2

Corporate Structure

Puncak Niaga Holdings Berhadinvestment holding and provision of management services

Puncak Niaga (M) Sdn Bhd100%operation, maintenance,management, construction andundertaking the rehabilitation andrefurbishment of water treatmentfacilities

Ideal Water Resources Sdn Bhd100%operation, management,maintenance and undertaking therehabilitation and refurbishment ofWater Treatment Plants

Puncak Research Centre Sdn Bhd100%dormant

Puncak Seri (M) Sdn Bhd100%dormant

Unggul Raya (M) Sdn Bhd100%operation, management,maintenance and monitoring theoperation of dams

NS Water System Sdn Bhd100%dormant

NS Water Management Sdn Bhd40%dormant

3

Company Structure

Executive DirectorCorporate AffairsEncik Ruslan Hassan

Executive ChairmanYBhg Tan Sri Rozali Ismail

Executive Vice ChairmanEncik Ruslan Hassan

Strategic Resource Centre

General Manager Internal AuditSonari Solor

General Manager Executive Vice Chairman’s Office- Special ProjectsUsman Ali Mustaffa

Executive DirectorProject & BusinessDevelopmentIr Lee Miang Koi

General ManagerProject ManagementIr Beh Men Huat

Executive Director Human Resources & AdministrationEncik Ibrahim Ismail

Executive DirectorOperationsYM Raja Azhar Raja Ismail

Executive DirectorFinanceEncik Mat Hairi Ismail

Assistant GeneralManagerSSP2 ProjectYusof Badawi

ManagerHuman ResourcesManagement Selemah Abdul

Senior ManagerProject ManagementIshak Awang

Senior Manager Project & BusinessDevelopment Ir Ahmad MarzukiHashim

Manager AdministrationKamarulzaman Abu Bakar

Senior ManagerTraining Said Muhamad KhalilAbdul Madza Plant Manager

SSP2 WTPSyed Danial Syed Ariffin

General ManagerLegalChan Siew Meei

General ManagerFinance & AccountsNg Wah Tar

General ManagerSecretarialTan Bee Lian

Plant Manager Wangsa Maju WTPAbdul Rahman Kadir

General Manager Ir Loh Kit Mun

Senior ManagerRehabilitation of WTPNasir Ismail

Senior ManagerOperations Contract Supervision (26 WTPs)Hashim Omar

Senior Manager Water Resources &Environmental/Dam OperationsRoowina Merican A RahimMerican

Manager CorporateCommunicationZulkifli Baba Noor

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Senior Manager Contract ManagementIr Teh Lee Ngo

Senior ManagerFinance & AccountsNik Azmi Nik Yaacob

Senior ManagerFinance & AccountsIsmail Maidin

Manager Corporate FinanceRozailan Rosli

General ManagerSyed Danial Syed Ariffin

4

Board Of DirectorsYBhg Tan Sri Rozali IsmailExecutive Chairman

Encik Ruslan HassanExecutive Vice Chairman/Executive Director Corporate Affairs Division

YM Raja Azhar Raja IsmailExecutive DirectorOperations Division

Encik Mat Hairi IsmailExecutive Director Finance Division

Ir Lee Miang KoiExecutive Director Project & Business Development Division

Encik Abdul Majid Abdul KarimIndependent Non-Executive Director

YBhg Dato’ Hari Narayanan GovindasamyIndependent Non-Executive Director

YB Dato’ Seri Dr Ting Chew PehIndependent Non-Executive Director

Group Company SecretaryMadam Tan Bee Lian, MAICSA 7006285

Registered OfficeSuite 1401-1406, 14th Floor, Plaza See Hoy ChanJalan Raja Chulan, 50200 Kuala LumpurTel: 03-201 8648Fax: 03-238 4386

Principal OfficeSuite 2601-2606, 26th Floor, Plaza See Hoy ChanJalan Raja Chulan, 50200 Kuala LumpurTel: 03-201 8648Fax: 03-201 8658website: www.puncakniaga.com.mye-mail: corpcom@puncakniaga.com.my

Date and Place of Incorporation7 January 1997, Malaysia

Company Number416087-U

AuditorsMessrs PricewaterhouseCoopers (AF 1146)

Tax AdvisorPricewaterhouseCoopers Taxation Services Sdn Bhd (464731-M)

Principal BankersBumiputra-Commerce Bank Berhad (13491-P)RHB Bank Berhad (6171-M)United Overseas Bank (Malaysia) Bhd (271809-K)

SolicitorsKadir, Andri Aidham & PartnersRashid & LeeWong & Partners

Share RegistrarTenaga Koperat Sdn Bhd (118401-V)20th Floor, Plaza Permata, Jalan KamparOff Jalan Tun Razak, 50400 Kuala LumpurTel: 03-4041 6522Fax: 03-4042 6352

ConsultantsRanhill Bersekutu Sdn Bhd (72416-V)SMHB Sdn Bhd (63281-X)

Stock Exchange ListingMain Board Kuala Lumpur Stock Exchange(Infrastructure Project Companies Sector)

Corporate Information

To Be The Leading And Dynamic Integrated

Water Services Company

Our Vision

5

Puncak Niaga Holdings Berhad (PNHB) wasincorporated on 7 January 1997 under theMalaysian Companies Act, 1965 as a publiccompany limited by shares. It is an investmentholding company with interest in infrastructureactivities specialising in water engineering andwater-related activities.

PNHB was listed on the Main Board of Kuala LumpurStock Exchange (KLSE) on 8 July 1997. It is the firstwater treatment/supply concession company tobe listed on the KLSE under the InfrastructureProject Company guidelines issued by the SecuritiesCommission.

As an investment holding company, PNHB acted asthe listing vehicle for Puncak Niaga (M) Sdn Bhd(PNSB), an Infrastructure Project Company (IPC).PNSB is the holder of two concessions awarded bythe Selangor State Government. The first, aPrivatisation Cum Concession Agreement (PCCA)awarded on 22 September 1994, allowed PNSB to

take over, operate, maintain, manage, rehabilitateand refurbish 27 existing water treatment plants(WTPs) formerly under the management of theSelangor Waterworks Department. The secondconcession, a Construction Cum OperationAgreement (CCOA) was awarded on 22 March1995, to finance, design, construct, operate,manage and maintain a new 950 million litres perday (MLD) WTP at Bukit Badong under the StateGovernment’s Sungai Selangor Water SupplyScheme Phase 2 Project (SSP2). Both the PCCA andCCOA provide for the concessions to expire on 31December 2020.

Under the CCOA, the development of the SSP2WTP was undertaken in two stages: the first stage,with a production capacity of 475 MLD, wascompleted in October 1998, two months ahead ofthe commitment given to the Selangor StateGovernment. The second stage of the SSP2 WTP,also with a production capacity of 475 MLD, wasoriginally scheduled to be completed and

Corporate Profile

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commissioned on 1 January 2002. Instead, it wascompleted and commissioned one year ahead ofschedule, i.e. on 1 January 2001.

During the water crisis in 1998, PNSB was entrustedby the Federal Government to finance, design andconstruct the Wangsa Maju WTP at a cost ofRM122.0 million. This WTP was completed in arecord time of six months, an amazing feat byengineering standards. The abovementioned earlycompletion of projects clearly exemplifies PuncakNiaga’s excellent capabilities in managing andundertaking large scale water supply projects inMalaysia.

In recognition of Puncak Niaga’s expertise andexperience in water privatisation projects over thepast six years, PNHB was recently invited by theNegeri Sembilan State Government to participatein the privatisation of Jabatan Bekalan Air NegeriSembilan (JBANS). On 20 December 2000, PNHBsigned a Memorandum of Understanding to

undertake the proposed privatisation wherebyPNHB will hold a 30% equity stake in NS WaterKonsortium Sdn Bhd, the concession companywhich has been granted the exclusive privatisationrights of JBANS by the Negeri Sembilan StateGovernment.

Today, PNSB is the largest water supplyconcessionaire in Malaysia. We operate, manageand maintain 28 WTPs with a total averageproduction capacity of 1,902 MLD. This volume isequivalent to approximately 65.6% of the treatedwater requirement of the supply in the State ofSelangor Darul Ehsan and the Federal Territories ofKuala Lumpur and Putrajaya.

7

• To provide a synergy of socio-economic products and services inthe realm of water treatment, management and distribution andother related businesses.

• To cater to the increasing challenges in the demand for highquality water production and distribution through the continuousimplementation of high quality standards, efficient services,human resources development, innovative technology andoperational systems.

• To actively participate in regional and global businessopportunities with linkages to the Company’s core activities andrelated interests.

• To actively support and participate in programmes and activitiesaimed at uplifting the community’s living standards and valuesystems in line with the aspirations of Vision 2020.

• To address national and international concerns pertaining to theprotection, conservation and enhancement of the naturalenvironment we live in.

Our Mission

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10 May SSP2 WTP received ISO 9002 Lloyd’s Register Quality AssuranceCertification.

17 – 18 July Two PNSB teams (3EQ and OperasiS.E.P.) each won the Silver Award inthe Quality Control Circle Convention,Central Region organised by theNational Productivity Centre.

10 August SSP2 WTP received the Gold Awardfrom the Malaysian Society ofOccupational Safety & Health.

12 October PNHB was awarded the KLSECorporate Excellence Award 2000 forMain Board Companies and the KLSECorporate Sectoral Award 2000 forMain Board Infrastructure ProjectCompanies.

16 October SSP2 WTP was awarded theChallenge Trophy at the 2nd ‘First Aid’Competition in the ‘Industrial Sector’category, organised by the PersatuanBulan Sabit Merah.

8 November PNHB was honoured with the NACRA2000 Industry Excellence Award underthe ‘Construction & InfrastructureProject Companies’ category.

Operasi S.E.P.Silver Award

Quality Control CircleConvention

ISO 9002Lloyd’s Register QualityAssurance Certification

2nd ‘First Aid’ Competition,Industrial Sector

Challenge Trophy

NACRA 2000 IndustryExcellence Award

KLSE Corporate SectoralAward 2000

KLSE Corporate ExcellenceAward 2000

3EQSilver Award

Quality Control CircleConvention

Gold AwardMalaysian Society of

Occupational Safety & Health

Corporate Achievements 2000

9

10

Corporate Highlights 2000

6 January Signing Ceremony for DSS2 TurnkeyContract between PNSB and theSelangor State Government.

20 JanuaryCheque presentation ceremony for the National Bumiputera YouthEntrepreneurs’ Exposition at the Ministryof Youth & Sports, Pusat BandarDamansara.

22 JanuaryPuncak Niaga’s Hari Raya Aidil Fitricelebration at the Main Stadium, ShahAlam.

28 & 30 January Puncak Niaga participated in the National Bumiputera YouthEntrepreneurs’ Exposition at Terminal 1,Sultan Salahuddin Abdul Aziz ShahAirport.

16 February Official visit by the UMNO Economicand Youth Development Council toPuncak Niaga’s Head Office.

23 February Educational visit cum picnic session byhearing-impaired children from‘Sekolah Kebangsaan Pendidikan KhasKampung Baru, Kuala Lumpur’ toWangsa Maju WTP and Klang GatesDam.

26 FebruaryOfficial visit by YB Dato’ Haji MohdSharif Jajang, Chairman of theStanding Committee for Infrastructure,Information and Malay Reserve Landsfor Selangor, to Bukit Tampoi WTP.

4 MarchPuncak Niaga’s Open Day at WangsaMaju WTP.

17 MarchPuncak Niaga contributed RM4,000 toInstitut Akhbar Malaysia for theJournalist Award Dinner at Hilton Hotel,Petaling Jaya.

20, 21, 22 & 23 MarchPuncak Niaga participated in the‘Polmet 2000’ Exposit ion entit led“Sustainable Urban Development in theNew Millennium” in conjunction withthe 6th International Conference onPollution In Metropolitan Citiesorganised by Ensearch at Shangri-LaHotel, Kuala Lumpur.

22 MarchPuncak Niaga’s Executive Chairmanpresented a paper entitled “PuncakNiaga’s Experience as an Operator ofa Privatisation Project” in conjunctionwith the ‘Polmet 2000’ Exposition atShangri-La Hotel, Kuala Lumpur.

30 MarchPuncak Niaga contributed RM1,500 toSekolah Pendidikan Khas CacatPendengaran Kampung Baru for theirAnnual Sports Day.

20 AprilSigning Ceremony between PNSB andBumiputra-Commerce Bank Berhad fora RM261,500,000 banking facility tofinance the DSS2 Turnkey Contract.

6 Jan

28 & 30 Jan

20 Apr

4 Mar

2 May

15 July

11

13 June

2 MayDYMM Seri Paduka Baginda YangDipertuan Agong and DYMM SeriPaduka Baginda Raja PermaisuriAgong visited the Sg Semenyih Dam.

2 – 5 MayPuncak Niaga participated in the Water 2000 Exhibit ion and Forum entitled ‘Water: Towards SustainableDevelopment in the New Millennium’ atThe Mines, Kuala Lumpur.

3 May The Official Launch of the River RescueBrigade programme at Sg Langat WTPby YABhg Datin Seri Endon Mahmood,wife to the Deputy Prime Minister ofMalaysia.

24 May Signing Ceremony between PNSB andUnited Overseas Bank Berhad (UOB) fora RM140 million bridging loan facility.

7 JunePNHB’s 3rd Annual General Meetingand Extraordinary General Meeting onthe Composite Issue at Kuala LumpurGolf & Country Club.

13 JuneSigning Ceremony of the LicenseAgreement for mySAP.com softwarebetween PNSB and SAP Malaysia SdnBhd.

1 & 2 July Puncak Niaga participated at theEnvironmental Awareness Campaign atKuen Cheng High School.

3 JulySigning Ceremony of the UnderwritingAgreement between PNHB with RHBSakura Merchant Bankers Berhad,Rashid Hussain Securities Sdn Bhd andCommerce International MerchantBankers Berhad for PNHB’s ProposedRights Issue.

12 July Puncak Niaga made a River CareEducational visit to SekolahKebangsaan Sri Damai, Section 17,Petaling Jaya.

15 JulyPuncak Niaga contributed RM60,000 toBISTARI at a dinner at A’ Famosa,Melaka.

19 JulyOfficials from INTAN Training Centrevisited SSP2 WTP.

10 August YB En Mohamed Khaled Nordin,Deputy Minister of Works, Malaysiavisited the SSP2 WTP.

15 – 17 AugustPuncak Niaga participated in theGreen Campaign organised bystudents from Multimedia University,Cyberjaya.

24 May

10 Aug

3 July

3 May

12

12 Oct

15 August Mayors of 9 district towns under theSecond Water Supply and SanitationProject of Dhaka, Bangladesh,visitedWangsa Maju WTP and Klang GatesDam.

18 August YB Dato’ Seri S. Samy Vellu, Minister ofWorks, Malaysia, witnessed thepresentation of ISO 9002 certification toSSP2 WTP at Equatorial Hotel, KualaLumpur.

13 September Visit by staff of the Ministry of WorksDepartment to SSP2 WTP.

17 September Puncak Niaga donated RM5,000 toPPTD Golf Tournament 2000.

19 SeptemberPuncak Niaga’s Executive Chairmanwas interviewed by TV3 for thedocumentary programme entit led‘Dimensi 2020’.

24 September Puncak Niaga donated RM5,000 to theMalaysian Ex-Police Association ofSelangor Division.

12 October PNHB won the KLSE CorporateExcellence Award 2000 for Main BoardCompanies and the KLSE CorporateSectoral Award 2000 for Main BoardInfrastructure Project Companiescategory.

.

12 October Signing Ceremony between PNSB andUnited Overseas Bank (Malaysia) Bhdfor the RM1,020 million nominal value of Al-Bai’ Bithaman Aji l Secured Serial Primary Bonds Together with Non-Detachable Secondary Bonds and RM350 mil l ion Al-MurabahahCommercial Papers/ Medium TermNotes at Sheraton Imperial Hotel, KualaLumpur.

19 October Live interview by RTM 1 with PuncakNiaga’s Executive Vice Chairman forthe ‘Gemilang Malaysia’ programme.

20 OctoberPuncak Niaga donated RM10,000 to‘Persatuan Ibubapa Dan Guru’ of SMKDato’ Mustaffa, Pasir Panjang atEquatorial Hotel, Shah Alam which wasreceived by the Menteri Besar Selangor,YAB Dato’ Seri Dr Mohamad Khir Toyo.

12 Oct

18 Aug

19 Oct

13 Sep

20 Oct

21 October Puncak Niaga’s River Rescue Brigadeparticipated in the EnvironmentalParade held in conjunction with theEnvironmental Week celebration atDataran Shah Alam.

3 November The launching of ‘Kempen Jimat Air’ atSg Langat WTP officiated by theMenteri Besar Selangor, YAB Dato’ SeriDr Mohamad Khir Toyo.

4 November Puncak Niaga’s Family Day 2000 at theMain Stadium, Shah Alam.

8 NovemberPNHB’s 1999 Annual Report won theNACRA 2000 Industry ExcellenceAward for the Construction andInfrastructure Project Companiescategory.

17 November ‘Majlis Jasamu Dikenang’ for PuncakNiaga’s retirees and presentation ofmonetary awards to children ofPuncak Niaga’s employees who arepursuing studies at institutions of higherlearning.

24 November Puncak Niaga participated at the Selangor Water ConservationCampaign exhibition at Summit USJ,Petaling Jaya.

20 December Signing Ceremony of MOU betweenPNHB, NS Water Sdn Bhd, EasternUti l it ies Sdn Bhd and LembagaPemegang-Pemegang AmanahYayasan Negeri Sembilan for PNHB’sparticipation in the proposedprivatisation of Jabatan Bekalan AirNegeri Sembilan (JBANS).

21 December YABhg Datin Zahrah Kechik, wife of theMenteri Besar Selangor, was the guestof honour at Puncak Niaga’s chequepresentation of a donation amountingto RM32,210 to Rumah Anak-AnakYatim SEKENDI and Yayasan Anak-Anak Yatim Pinggir Taman Tun Dr.Ismail.

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4 Nov21 Oct

8 Nov

17 Nov

20 Dec

21 Dec

3 Nov

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Financial Calendar 2000

2000

1,659,010248,96750,045

561,9352,507,973

437,500376,410813,910

1.83

350,56491,225

1,579,372

21.84

26

437,500

1.942.11

Financial Highlights 2000

In RM’000

Balance sheetFixed assetsProject development costsOther non-current assetsCurrent assets Total tangible assets

Issued and paid up capitalShare capitalReservesShareholders’ fundsNet tangible asset per share

Ratios and statisticsTurnoverNet profit after taxInterest bearing debt

In senEarnings per share

In % of turnoverOperating profit

In RM’000No. of ordinary shares

In timesGearing ratioCurrent ratio

Financial year endAnnouncement of results

1st quarter result as at 31 March 20002nd quarter result as at 30 June 2000 3rd quarter result as at 30 September 20004th quarter result as at 31 December 2000

Listing and quotation of Bonus SharesListing and quotation of Rights SharesAnnouncement of Corporate Proposal comprising of

Proposed RUN Issue, Proposed ESOS and Increase inAuthorised Share Capital

Audited AccountsPublished Annual ReportAnnual General Meeting

31 December 2000

22 May 200028 August 200028 November 200026 February 20016 September 2000

18 October 2000

22 December 200026 April 200131 May 200126 June 2001

1999

1,568,017231,474

45321,904

2,107,695

250,000378,138628,138

2.46

347,47298,972

1,264,816

23.99

28

250,000

2.011.16

‘96 ‘97 ‘98 ‘99 ‘00

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115,

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138,

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183,

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347,

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RM2.00

RM2.50

RM3.00

RM3.50

RM4.00

RM4.50

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Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

15

Share Performance 2000

RM6.00

Pursuant to the implementation of the Composite Issue, PNHB’s share price was adjusted from RM4.68to RM2.48 (ex-price) on 31 July 2000, being the ex-date for the Bonus and Rights Issues.

Five-Year Group Financial Highlights

2,04

2,77

6

2,10

7,69

5

2,50

7,97

3

1,33

2,42

9

505,

724

16

Statement on Corporate Governance

PNHB Group is totally committed to upholding the higheststandards of transparency, accountability and integrity inthe conduct of its business activities in the best interest ofboth its shareholders and the investors at large.

The Board is therefore pleased to report on the Group'scompliance requirement vis-à-vis the Malaysian Codeon Corporate Governance, as follows:-

In 2000, PNHB established an extensive framework andthe appropriate mechanisms (inclusive of the structures,systems and methodologies) for ensuring compliance inaccordance with the principles and practices of goodcorporate governance. In broad terms, thesemechanisms monitor and evaluate:-

• transparency and full disclosure in accountingand auditing practices;

• transparency and full disclosure in annualreport writing;

• transparency and accountabil ity inmanagement performance;

• transparency and full disclosure of seniormanagement remuneration;

• effective internal auditing controls and riskassessment;

• impartial and merit-based employee hiring,promotion and remuneration; and

• impartial and merit-based tendering andcontracting practices.

The requirement to comply with the Malaysian Codeon Corporate Governance wil l only becomeenforceable on 1 June 2001, beginning with public-listed companies having financial years ending 30 June2001 under the Kuala Lumpur Stock Exchange'sRevamped Listing Requirements.

Notwithstanding, PNHB had taken the proactive stepssince the beginning of year 2000 to adopt the higheststandards of due diligence, skill and care towardsensuring the Group's application of the Principles ofCorporate Governance as set out in Part 1 of theMalaysian Code on Corporate Governance and toimplement the Best Practices in CorporateGovernance as set out in Part 2 of the Malaysian Codeon Corporate Governance. Some examples of theproactive steps taken by the Company are:-

• a more transparent and voluntary disclosurebased approach in the preparation andpresentation of the Company's annual report;

• ful l dissemination of information on theCompany in a timely and accurate manner tothe benefit of the Company's shareholdersand the investors at large; for example, theaward of major contracts to companies withinthe PNHB Group, release of severalannouncements on the latest developmentsin respect of the Company’s proposed equityparticipation in Syarikat Pengeluar Air SungaiSelangor Sdn Bhd (SPLASH) for the SSP3 WaterSupply Project, the preparation and despatchof the Circular to Shareholders and theAbridged Prospectus in relation to theCompany’s Composite Issue comprising theBonus and Rights Issues and the release of theGroup’s Quarterly Financial Results;

• increase in the composition of Non-ExecutiveDirectors from two to three Non-ExecutiveDirectors to constitute a fair balance ofExecutive Directors and Non-ExecutiveDirectors at Board level;

• conduct continuing Training and InductionProgrammes for the Group's Directors to equipthem with the requisite skills and knowledge toeffectively discharge their responsibilities asCompany Directors;

• establishment of the Risk ManagementCommittee to effectively identify and manageprincipal risks of the Group's businesses;

• formulation of the Terms of Reference andestablishment of the Remuneration Committeeto ensure a formal and transparent procedurefor developing policies and fixing theremuneration packages of each individualdirector; and

• formulation of the Terms of Reference andestablishment of the Nomination Committeeto ensure a formal and transparent procedurefor appointments of Directors to the Board.

The Group's corporate governance procedures andprocesses are being refined from time to time to ensuretotal compliance of the Malaysian Code on CorporateGovernance by June 2001.

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THE BOARD OF DIRECTORSDuties of DirectorsThe Board of PNHB takes full responsibility in ensuring theeffective performance of the Group in all areas ofoperations, finance, management information system,project and business development, research anddevelopment, human resources and administration aswell as customer, shareholders and investors satisfaction.

The Board also guides the Group in achieving its shortand long-term objectives, advises and implementsstrategies and oversees new business developmentprojects as well as looking after the corporatedevelopment of the Group.

The responsibilities assumed by the Board relate to:-

• reviewing and adopting a strategic plan forthe Group;

• overseeing the conduct of the Group'sbusiness to evaluate whether the business isbeing properly managed;

• identifying principal risks and ensuring theimplementation of the appropriate riskmanagement systems;

• succession planning, including appointing,training, fixing the compensation of and,where appropriate, replacing seniormanagement;

• developing and implementing an effectiveinvestor relations programme and shareholdercommunications policy for the Company; and

• reviewing the adequacy and the integrity ofthe Company's internal control systems andmanagement information system, includingsystems for compliance with applicable laws,regulations, rules, directives and guidelines.

Composition of the Board The Board of PNHB is made up of eight members,comprising five Executive Directors and threeIndependent Non-Executive Directors. The profile of theBoard is detailed in Pages 35 to 37 of the Annual Report.All directors have served the full year except for YBDato’ Seri Dr Ting Chew Peh, who was only appointedto the Board on 15 July 2000.

The Board members comprise of various professionalsfrom diverse fields such as lawyers, engineers andaccountants and are persons of calibre, credibility andpossessing the necessary skil ls and experience toeffectively discharge the Board's stewardshipresponsibilities in spearheading the Group's growth andfuture direction.

More than one-third of the Board comprise of Non-Executive Directors since the Company recognises thepositive contribution of Non-Executive Directors as equalBoard members to the development of the Company'sstrategy, the importance of representing the interests ofpublic shareholders and providing a balanced andindependent view to the Board. All the Non-ExecutiveDirectors are independent of Management and freefrom any relationship which could interfere with theirindependent judgement.

During the year 2000, the ratio of Non-ExecutiveDirectors was increased to 37.5%, from 28.6% previously.

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Meeting of DirectorsThe Board convened a total of four meetings in 2000, and the respective Directors' attendances are tabulated below:-

* YM Raja Azhar Raja Ismail was away on sick leave from January to December 2000 with the approval of the Board and as such,was unable to attend all Board Meetings in 2000.

At PNSB level, Board Meetings were convened twelve times in 2000.

At Board Meetings, the members deliberated, considered and approved, amongst others, matters pertaining tofinance, corporate and refinancing exercises, management information system, entering into contracts andagreements, determination of bonuses and annual increments, staff confirmation, appointments of key personnel,advisers and consultants, human resources and administration policy matters, risk assessment and management,exploring and undertaking new projects, business opportunities and corporate development.

Each member, including the Independent Non-Executive Directors, actively participates during Board Meetings andcontributes invaluable inputs and recommendations on operational matters, risk management, human resources andadministration policy matters, safety and environmental issues and other concerns relevant to the well-being andgrowth of the Group.

Board members are notified seven days in advance of every meeting, and provided with Board papers so that theyare fully prepared to participate and discharge their duties at the Board Meetings.

Access to Advice and Information In furtherance of their duties, the directors have access to the advice and services of the Company Secretary andto all information within the Company whether as a full Board or in their individual capacity. Where necessary, thedirectors engage independent professionals for advice on specialised issues at the Company's expense to enablethem to discharge their duties with full knowledge of the cause and effect.

Appointments and Election of DirectorsIn accordance with Article No. 101 of the Company's Articles of Association, one-third of the directors shall retirefrom office at each Annual General Meeting. Thereafter, they may offer themselves for re-election.

At the forthcoming Annual General Meeting, YM Raja Azhar Raja Ismail and En Abdul Majid Abdul Karim shall retireby rotation and have offered themselves for re-election.

Name of Director Designation in PNHB No. of Meetings No. of Meetingsheld during the year attended %

YBhg Tan Sri Rozali Ismail Executive Chairman 4 4 100

Encik Ruslan Hassan Executive Vice Chairman/ 4 4 100Executive Director, Corporate Affairs

Encik Mat Hairi Ismail Executive Director, 4 4 100Finance

*YM Raja Azhar Raja Ismail Executive Director, 4 0 0Operations

Ir Lee Miang Koi Executive Director, 4 3 75Project & Business Development

Encik Abdul Majid Abdul Karim Independent Non-Executive Director 4 4 100

YBhg Dato’ Hari Narayanan Independent Non-Executive Director 4 3 75Govindasamy

YB Dato’ Seri Dr Ting Chew Peh Independent Non-Executive Director 4 1 100(appointed on 15 July 2000)

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YB Dato’ Seri Dr Ting Chew Peh, who was appointedduring the year, shall also retire pursuant to Article No.106 and has offered himself for re-election.

Directors’ RemunerationThe remuneration of each director reflects the level ofresponsibility and commitment which goes with Boardmembership. The remuneration of each director isdetermined by the full Board. It is the Board's duty toensure that the levels of remuneration are sufficient toattract and retain the directors needed to run theCompany successfully. The Executive Directors play nopart in deciding their own remuneration and therespective Board members abstain from all discussionpertaining to their remuneration.

Directors' Fee (if any) is tabled to the Company'sshareholders for approval at the Company's AnnualGeneral Meeting.

Directors’ TrainingGiven the varying backgrounds, qualifications andexperience of directors, the Company acknowledgesthat the directors need to be trained to sharpen theirskills in corporate management and strategies, acquirenew knowledge relating to the water industry and beupdated with the latest regulatory developments.

Hence, the directors, both Executive and Non-Executivehave been sent for various training both locally andoverseas to equip them with the necessary skills in orderfor them to effectively discharge their Boardresponsibilities. Some of the seminars and conferencesattended by the directors in year 2000 are as follows:-

1. Dialogue With The Regulators On Disclosure BasedRegulation 2000 and Beyond: Are We Ready?

2. ‘Kursus Bina Negara Perdana 2000’3. Asean Business Summit 20004. Asia-Enterprise Connecting Asian & European

Water Technology Suppliers5. 2nd Annual Conference On World Class Islamic

Finance 6. ‘Konvensyen Ekonomi & Keusahawan Negeri

Selangor Bertajuk Pencapaian Usahawan Melayu-Satu Penilaian Semula'

7. The Do's and Don'ts In Terminating An Employee8. Public Listing Conference

9. 5th Langkawi International Dialogue Global 2000 –Global Trends and Emerging Economies

10. Water 2000 Forum 11. 12th IWSA-ASPAC Regional Conference & Exhibition

Newly appointed directors undergo an in-houseinduction programme which is aimed to familiarise andhelp them to gain a better understanding of theGroup’s businesses, operations and corporate strategyas well as their general responsibilities and duties asCompany Directors so they wil l be able to makeeffective contributions at Board level. As part of theinduction programme, the new directors are alsointroduced to the Senior Management personnel incharge of the respective departments in the Company.

REMUNERATION COMMITTEE In l ine with the Malaysian Code on CorporateGovernance and to comply with the Kuala LumpurStock Exchange's Revamped Listing Requirements to beeffective on 1 June 2001, the Remuneration Committeeof PNHB was established on 13 February 2001 with thefollowing Terms of Reference:-

• to review the annual remuneration packagesof each individual director (both Executiveand Non-Executive) such that the levels ofremuneration are sufficient to attract andretain the directors needed to run theCompany successfully; and

• to recommend to the Board, the remunerationpackages of the directors (both Executive andNon-Executive) of the Company.

Currently, the Remuneration Committee is chaired bythe Executive Chairman and its members include theNon-Executive Directors of the Company.

20

The Remuneration Committee held its first meeting on20 February 2001 whereby it had reviewed theRemuneration Package of the Non-Executive Directorsof the Company and made the appropriaterecommendations to the Board in view of the increasinglevel of responsibility undertaken by them in line with therequirements of the Malaysian Code on CorporateGovernance and the recent changes to the regulatoryframework to promote higher standards of corporategovernance, due diligence and transparency in theCompany. The Board had subsequently endorsed therecommendation of the Remuneration Committee at itsmeeting held on 23 February 2001.

NOMINATION COMMITTEE In l ine with the Malaysian Code on CorporateGovernance and to comply with the Kuala LumpurStock Exchange's Revamped Listing Requirements to beeffective on 1 June 2001, the Nomination Committee ofPNHB was established on 13 February 2001 with thefollowing Terms of Reference:-

• to review the required mix of skills, experienceand other qualit ies, including corecompetencies which Non-Executive Directorsshould bring to the Board;

• to recommend to the Board, candidates forall directorships to be filled;

• to recommend to the Board, Directors to fillthe seats on Board Committees;

• to assess the effectiveness of the Board as awhole, the Committees of the Board, and thecontributions of each individual Director; and

• to examine the size of the Board with a viewto determining the impact of the numberupon its effectiveness.

Currently, the Nomination Committee is chaired by theExecutive Chairman and its members include the Non-Executive Directors of the Company.

MANAGEMENT COMMITTEEThe Management Committee was established since1997 with members comprising the Executive Directorsand the Senior Management of the Company, i.e.Heads of Departments. The Management Committee ischaired by the Executive Vice Chairman of theCompany. The main objective of the ManagementCommittee is to enable the Senior Management to gaina better understanding of the Group's businessoperation and prospects through regular updates byeach Head of Department. It also serves as an avenuefor the Senior Management to brainstorm and resolvecrucial issues relating to the Group's operations andbusiness decisions as well as resolving inter-departmental issues and fostering closer inter-departmental ties and team spirit within the Group.

The Management Committee meets bi-monthly andthere were six meetings of the Management Committeeheld in year 2000.

TENDER AND CONTRACT COMMITTEEIn order to ensure transparency in its business dealingsand fair, arm's length business transactions, the Tenderand Contract Committee of the Company facilitates afair and transparent tender submission and reviewprocess and award of contracts procedure at all times.

The Tender and Contract Committee's Terms ofReference, inter alia, includes but is not limited to thefollowing:-

• to review and vet tender documents;• to review and deliberate on the tender

evaluation reports before making theappropriate recommendations on the awardof tenders to the Board for consideration andapproval;

• to review and deliberate on any proposedomission or addition of variation orders toongoing contracts, extension of t ime ofcontracts and its associated costs andimposition of liquidated and ascertaineddamages on contractors before making theappropriate recommendations to the Boardfor consideration and approval; and

21

• to review and deliberate on the appointmentof consultants and the award of consultancyservices before making the appropriaterecommendations to the Board forconsideration and approval.

ACCOUNTABILITY AND AUDIT Financial Reporting The Company's financial statements are prepared inaccordance with the requirements of the applicableapproved accounting standards in Malaysia and theprovisions of the Companies Act, 1965. The Board isresponsible to ensure that the financial statements of theGroup and the Company give a true and fair view of thestate of affairs of the Group and the Company. TheStatement by Directors' pursuant to Section 169(15) of theCompanies Act, 1965 is set out in page 104 of the AnnualReport.

During the year, the Board had taken the followingsteps towards ensuring that the annual financialstatements and quarterly announcements to theshareholders present a balanced and comprehensiveassessment of the Company's and the Group's positionand prospects, including:-

• adoption of applicable accounting policiesand methods;

• consistent application of the accountingpolicies and methods;

• make judgements and estimates that arereasonable and prudent; and

• state whether applicable accountingstandards have been complied with.

To keep the shareholders, investors and public regularlyinformed of the Company's performance, it has beenthe Company's policy to publish its 2nd quarterly and4th quarterly financial results in at least three local dailynewspapers, i.e. New Straits Times, The Star and BeritaHarian. The Company's annual financial results arepublished in the Company's Annual Report and canalso be accessed at the Company's website atwww.puncakniaga.com.my.

Audit Committee The Audit Committee consists of four members, out ofwhich three are Independent Non-Executive Directorsand the remaining member, En Mat Hairi Ismail is amember of the Malaysian Institute of Accountants. Thisis in compliance with the requirements of the KualaLumpur Stock Exchange's Revamped List ingRequirements to be effective on 1 June 2001.

The Audit Committee Report for the year 2000 isdetailed in pages 62 to 66 of the Annual Report. In year2000, the Audit Committee met six times.

One of the main objectives of the Audit Committee is toreview the Company's annual and quarterly financialstatements, accounting practices, business, operation andfinancial controls. The Internal Audit Department's AnnualAudit Strategic Plans and its findings and follow-up actionson various audits conducted throughout the year are alsoreviewed and endorsed by the Audit Committee.

Relationship with Auditors At all Audit Committee Meetings of PNHB, the InternalAuditors are present. The External Auditors are alsopresent at meetings which deliberate on theCompany's quarterly and annual financial results as wellas at meetings where the Company's and Group'saccounting policies are being reviewed. The ExternalAuditors acted as auditors and reporting accountantsfor the Company's Corporate Exercises such as theComposite Issue which was successfully completed on18 October 2000. Currently, the External Auditors areinvolved in the Company's Proposed RUN Issue (detailsof which are set out in the Chairman's Statement onpage 24 of the Annual Report).

The Company has always maintained a close andtransparent relationship with the Auditors in seekingprofessional advice and ensuring compliance with theaccounting standards.

22

RELATIONSHIP WITH SHAREHOLDERS AND INVESTORSIn line with good corporate governance, the Groupencourages the adoption of an open and transparentpolicy in respect of its relationship with its shareholdersand investors. It is one of PNHB's primary responsibilitiesunder its Corporate Disclosure Policy to ensure that itsshareholders and investors are well informed andupdated on the policies, decisions and strategiesformulated and implemented by the Group and of anynew corporate and business development of the Groupin a timely manner. As such, the Company's generalmeetings provide an appropriate platform for the Boardto report to the shareholders on the Group's businessactivities, as well as to encourage active participationfrom its shareholders and to answer any queries in relationto the affairs of the Group, activities and prospects.

The Board also solicits a broad range of professionaladvice and views in relation to pertinent financial andother strategic policy issues. During the year, the Boardand the Management held several dialogues andbriefings with financial analysts, brokers and institutionalfund managers and investors, both at the Company'spremises and at hotels in Kuala Lumpur.

The Company maintains a very str ict CorporateDisclosure Policy in relation to the protection of price-sensitive information by ensuring that there is noleakage of material information in all contacts withfinancial analysts, brokers, institutional fund managersand investors and the press which has not already beengenerally made available to the Company'sshareholders and the regulatory authorities (whereapplicable).

All queries from the shareholders, whether by mail ortelephone call, are handled directly by a Shareholders'Relations Unit under the purview of the SecretarialDepartment.

The Company also takes the initiative to periodicallykeep the public informed on its financial performance,business developments and corporate achievementsthrough publications in the print media, i.e. PressReleases, Announcements, Annual Report, etc.

Shareholders, investors and members of the public mayalso access the Company's website atwww.puncakniaga.com.my to obtain the latestinformation on the Company.

STATEMENT ON INTERNAL CONTROLS During the year, the Board reviewed the effectiveness,adequacy and integrity of the Group's system of internalcontrols and shall continue to periodically review it toensure that the shareholders' interest, and theCompany's and the Group's assets are protected at alltimes. In particular, the Board reviewed and enhancedthe process for identifying and evaluating the significantrisks affecting the Group's business and the policies andprocedures by which these risks are managed.

The Management is responsible for the identification andevaluation of significant risks applicable to theirrespective areas of business and to formulate the designand operation of suitable internal controls. The riskassessment of the Group is carried out on a continualand consistent basis.

During the year, the Internal Audit Departmentindependently reviewed the risk identificationprocedures and control processes implemented by theManagement and reported its findings to the AuditCommittee at the Audit Committee Meetings. The AuditCommittee reviewed the assurance procedure andpresented its findings to the Board. A broad mix of reviewtechniques was used to obtain a high level of assuranceon the adequacy and integrity of the Group's financial,operational and compliance controls as well as riskassessment and management.

A comprehensive report on the Group's financialinformation, which includes key performance and riskindicators, is also presented to the Board on a regularbasis.

STATEMENT ON GOING CONCERN After conducting due and reasonable enquiry into theaffairs of the Company, the Board firmly believes thatthe Company shall continue to operate as a goingconcern business in the foreseeable future.

Clear Progress &Clear Goals

23

Chairman’s Statement

TAN SRI ROZALI ISMAIL Executive Chairman

”

“

24

With clarity and commitment,Puncak Niaga will not only continueto be a leader in the water servicesindustry, but wil l also continue tosupport and participate in thoseprogrammes and activities aimedat uplifting the nation’s growth inl ine with the aspi rat ions of Vision 2020.

2000 saw both profitability and productivitygains for the Group, as well as recognition froma respected and diverse array of industryprofessionals and specialists.

2000 also brought new challenges as well as arenewed commitment to meet thosechallenges. It was a time which required bothdecisive leadership and careful consensus; ofaggressively seizing new opportunities, whileprudently foregoing others.

The year has once more demonstrated thatPuncak Niaga’s commitment to soundcorporate governance, due dil igence,accountability, integrity and transparency hasbecome an innate and integral component ofhow we conduct our business. Furthermore, byour deeds and by our example, we hope tohelp accelerate the revitalisation andresurgence of corporate growth in Malaysia,and to spearhead a new era of productivity,competitiveness and innovation.

These objectives, along with our CorporateVision ‘To Be The Leading And DynamicIntegrated Water Services Company InMalaysia,’ will require both a clarity of purposeand a firm commitment to reach well-definedgoals. Clarity and commitment can define uson a multiplicity of levels, from the clarity of ourend-product, to our management practicesand philosophy, and how we are perceived bythe regulatory authorities, industry professionals,our partners, our shareholders and the investorsat large.

With clarity and commitment, Puncak Niagawill not only continue to be a leader in thewater services industry, but will also continue tosupport and participate in those programmesand activities aimed at uplifting the nation’sgrowth in line with the aspirations of Vision 2020.

Introduction

The year 2000 marks yet another milestone of

growth and achievement for the Group. It was,

f i r s t and foremost , a year def ined by the

expansion and completion of major projects

undertaken by our wholly-owned subsidiary,

Puncak Niaga (M) Sdn Bhd (PNSB), which

further enhanced our operat ional and

organisational capabilities and consolidated

the Group's position for further growth.

View from the Klang Gates Dam.

25

26

Expanding to Meet Needs and ObligationsThe past year saw an increase in PNSB’s total waterproduction at the 29 water treatment plants to over775 million cubic meters, nearly 6% higher than 1999,thus enabling us to meet the growing water demandsof the consumers in Selangor Darul Ehsan and theFederal Territories of Kuala Lumpur and Putrajaya.

Thanks to the efforts and dedication of our PuncakNiaga team, I am also pleased to report that 2000 sawthe realisation of two significant operational objectives.

The first was the completion of the Sungai SelangorPhase 2 Stage 2 Water Supply Scheme (SSP2-S2) inDecember 2000, which has already resulted in anadditional supply capacity of 475 MLD since goingonline in January 2001. Significantly, SSP2-S2 wascompleted one full year ahead of schedule, furtherdemonstrating PNSB’s capability in the construction andmanagement of large-scale water supply projects.

Second was the completion, also in December 2000, ofthe final portion of work entrusted by the SelangorState Government under the SSP2 Stage 1 WaterDistribution Supply System (DSS1), comprised primarilyof the Bukit Gasing complex. This has further boostedthe distribution of water supply by the Jabatan BekalanAir Selangor to the northwest section of Klang Valley.

These accomplishments are indicative of our technicaland professional excellence. It also demonstrates ourcommitment in fulfilling all our obligations both to theSelangor State Government and to our business partners.

New Challenges, New OpportunitiesThe Group continued to actively explore and pursuenew business opportunities in its core business in 2000.

The Company was honoured by the Federal andSelangor State Governments’ invitation in early 2000 toparticipate in the Sungai Selangor Water Supply SchemePhase 3 (SSP3) project via a 25% proposed equity stakein Syarikat Pengeluar Air Sungai Selangor Sdn Bhd(SPLASH). The 30-year concession agreement calls forthe construction of a new RM2.17 billion water supplyscheme, including one dam along Sg Selangor nearKuala Kubu Bahru, and two WTPs, one each at Rasa andone at Bukit Badong.

Following a year of extensive negotiations with the othermembers of SPLASH, it was concluded that the terms ofthe Company’s participation in SPLASH were not in thebest interests of our shareholders. After carefuldeliberation, the Company made the decision on 15January 2001 not to accept the proposed equity stakeof 25% in SPLASH.

SSP2 Administration Building.

It gives me great pleasure to report that PNHBgarnered the prestigious NACRA IndustryExcellence Award for the Construction &Infrastructure Project Companies categoryonce again in the year 2000.

The Company earned further distinction, againfor practising exemplary corporategovernance, as the proud recipient of theinaugural KLSE Corporate Excellence Award2000 for Main Board Companies and the KLSECorporate Sectoral Award 2000 for Main BoardInfrastructure Project Companies on 12October 2000.

I would like to thank the Management andemployees of Puncak Niaga for beinginstrumental in affirming the Company’sleadership position as the standard bearer forexcellence in corporate governance for public-listed companies in Malaysia. We will continueto strive towards and set ever higher standardsof excellence in optimising the framework of ourbusiness conduct in 2001 and beyond.

It is extremely gratifying to know that thestructures and processes conducive to atransparent corporate environment werealready in place at PNHB in accordance withthe rules, principles and guidelines first set forthby the Malaysian Code on CorporateGovernance in March 2000.

Puncak Niaga’s commitment to excellence inthe area of quality control, safety andoperations management has been equallyrigorous, as evidenced by SSP2 being awardedcertification of ISO 9002 Management Systemby Lloyd’s Register Quality Assurance Limitedon 10 May 2000.

In July 2000, two SSP2 teams won the SilverAward in the Quality Control Circle Conventionfor Central Region, which was sponsored bythe National Productivity Centre.

Notwithstanding the above development, PNHB, in keeping withour long-term growth strategy to seek lucrative new nationaland regional water projects, continued in our businessdevelopment efforts and on 20 December 2000, PNHB enteredinto a Memorandum of Understanding with several parties toparticipate in a 30% equity stake in NS Water Konsortium SdnBhd, which has been granted the exclusive right by the StateGovernment of Negeri Sembilan to undertake the proposedprivatisation of Jabatan Bekalan Air Negeri Sembilan (JBANS).

Negotiations for the proposed privatisation concession arecontinuing into mid-2001, and I can assure you the Companywill proceed with utmost diligence and prudence to ensure thatour shareholders’ interests are fully protected at all times.

Our Group will continue to target other viable water supply-related projects in Malaysia and beyond, as part of our businessexpansion programme.

Meeting Our Quality and Good Corporate Governance GoalsGiven its relatively brief track record as a public-listed company,PNHB has nevertheless grown to become a role model of goodcorporate governance, transparency, accountability andintegrity for all public-listed companies in Malaysia. Recognitionof this first came in 1999, when the Company received theNational Annual Corporate Report Awards (NACRA) IndustryExcellence Award for the Construction & Infrastructure ProjectCompanies category, which honours high standards in thepreparation, presentation and reporting of annual reports.

Signing of MOU on PNHB’s participation in NS Water Konsortium Sdn Bhd.

27

Stage 1 later went on to receive a Gold Awardin August 2000 as part of the OccupationalSafety and Health Award (OSHA) Competitionorganised by the Malaysian Society ofOccupational Safety & Health.

During the year, the Sg Langat, Bernam RiverHeadworks and Bukit Nanas WTPs all obtainedISO 9002 certification for good quality system inoperation and maintenance of WTPs.

SSP2 won yet another Occupational SafetyAward, the 2nd First Aid Competition in theIndustrial Sector category, on 16 October 2000.

While honoured by such recognition, wecertainly do not intend to rest on our laurels. On7 February 2001, the Board of Directors gaveapproval for a corporate taskforce to look intothe implementation of ISO 9001:2000certification for the Corporate Head Office.

Our next goal is to achieve certification of theprestigious Integrated Management System(IMS) 14000 standard which will encompasselements of ISO 9002, OSHA 18000 (Safety)and Environmental Management System14000 (EMS).

Financial Summary I am pleased to inform you that the Groupposted another profitable year, achieving aprofit after taxation of RM91,224,907, on aturnover of RM350,564,235 for the year ended31 December 2000.

This compares with a turnover ofRM347,472,486 for 1999, and a profit aftertaxation of RM98,971,517 for that year. The 8%decrease in profit over the previous year wasattributable first to higher operating andmaintenance costs for the SSP2 facility, in linewith an increase in actual volume of watertreated, and second, to financing costs inconnection with new borrowing facil it iessecured by the Group during the year.

50

100

150

200

250

300

350

400

Revenue(RM)

Net Profit Attributableto Shareholders (RM)

Retained Earnings(RM)

347,472,486 98,971,517 275,240,971350,564,235 91,224,907 366,459,624

19992000

Financial Summary

Corporate ProposalsDuring the year 2000, the Company had successful lyimplemented the Composite Issue comprising:-

(a) Bonus Issue of 125,000,000 new ordinary shares of RM1.00each on the basis of one (1) new ordinary share for everytwo (2) existing ordinary shares (Bonus Issue); and

(b) Rights Issue of 62,500,000 new ordinary shares of RM1.00each on the basis of one (1) new ordinary share for everyfour (4) existing shares held in the Company at an issueprice of RM1.50 per share (Rights Issue).

The Composite Issue was completed on 18 October 2000 with thelisting and quotation of the shares arising from the Rights Issue.Accordingly, the share capital of the Company has beenenlarged to RM437,500,000 from RM250,000,000 the previous year.

The proceeds of RM93,750,000 arising from the Proposed RightsIssue were substantially utilised to repay the RM140 million bridgingloan which was taken prior to the completion of the Rights Issue inview of the urgent need to fund the remainder of SSP2-S2.

Financial Highlights Chart

28

In the last quarter of 2000, PNSB has undertaken a refinancingexercise of its exist ing borrowings to lock in funds atpredetermined fixed interest rates. In conjunction with therefinancing exercise, PNSB has also secured a RM350,000,000 Al-Murabahah Commercial Paper/Medium Term Notes to cater forthe Group’s future expansion into new water-related projects.

On 22 December 2000, the Company announced yet anotherCorporate Proposal, comprising:-

(a) a proposed renounceable rights issue of RM546,875,000nominal value 15-year redeemable unconvertible juniornotes (‘RUN’) with 109,375,000 free detachable warrants(‘Warrants’) at an issue price of RM0.322 per RM1.00nominal value of RUN payable in full upon acceptance onthe basis of RM5.00 nominal value of RUN with one (1) freeWarrant for every four (4) existing ordinary shares of RM1.00each held in the Company (‘Proposed RUN Issue’);

(b) a proposed employees’ share option scheme for eligibleemployees and Executive Directors of the Company andits subsidiaries (‘Proposed ESOS’); and

(c) a proposed increase in the authorised share capital of theCompany from RM500,000,000 comprising 500,000,000ordinary shares of RM1.00 each to RM1,000,000,000comprising 1,000,000,000 ordinary shares of RM1.00 each.

PNSB’s Executive Chairman (right) and Executive Vice Chairman at thesigning ceremony of PNSB’s refinancing exercise.

The Proposed RUN Issue is an integral part of theGroup’s refinancing exercise to reprofile itsfinancing structure. With the Proposed RUNIssue, the shareholders are given theopportunity to build on the existing relationshipwith the Group and take part in the long-termgrowth potential and prospects of the Group.

We are extremely enthusiastic about ourproposed ESOS and confident of its long-termsuccess, as we feel it will foster a stronger senseof participation by our employees in theGroup’s growth, as well as boosting loyalty andcommitment amongst our employees.

The above proposals are expected to becompleted by the second half of 2001, at whichpoint the Group would have concluded itsoverall refinancing exercise and taken on newinvestments in water-related projects.

Water Industry Trends and DevelopmentsPNSB’s operations are based in the State ofSelangor Darul Ehsan and the Federal Territoriesof Kuala Lumpur and Putrajaya, whichcomprise Malaysia’s largest urban centre, aswell as the nation’s economic and industriallocus. The area’s current population of5,545,300 is expected to increase almost 10%by 2005. The area contains roughly two-thirds ofthe country’s total business and manufacturingbase, which contributes a proportionateamount of the nation’s total output of goodsand services.

29

Current water consumption in the State of SelangorDarul Ehsan and the Federal Territories of Kuala Lumpurand Putrajaya is estimated to be 2,900 MLD.Residential consumption accounts for 57% of the total,while industrial and commercial account for about34% and the remaining 9% for other uses. The supply oftreated water is currently made via 31 WTPs with acombined designed capacity of 2,947 MLD. With thecompletion of SSP2-S2 by PNSB, this capacity hasincreased to 3,422 MLD as of early 2001. The latestdemand study has projected that treated waterdemand is likely to hit 3,375 MLD by 2005, and 5,085MLD by 2020.

The growing concentration of industries operating withinthe aforesaid areas, population growth within andmigration to the State of Selangor Darul Ehsan and theFederal Territories of Kuala Lumpur and Putrajaya, and asteady increase in the demand for water, are allexpected in tandem with national economic growth.Coupled with the improvement in infrastructure and thedevelopment of surrounding areas, namely Sepangand the government administrative centre at Putrajaya,the demand for water is expected to continue on itsuptrend.

Concurrently for producers, these trends will raiseoperational expenditure for existing facilities andinfrastructure to provide adequate potable water.Treatment processing costs overall have risen due toincreased levels of contaminants and impurities inexisting water sources. The cost of new treatment,retention, distribution and other infrastructure facilities(and with them the requisite new technologies) willalso r ise steadily. And with increased waterrequirements, new water sources will largely have tobe located and transported at greater distances toreach end-users, thereby further impacting costs.

SSP2 Intake Plant.

At the consumers’ end, environmental initiatives mustcontinue on track, by educating the public and industryto use water wisely and not to pollute valuable waterresources. Not merely is this an environmental agenda,but a political and economic one as well. Consumerstoday pay on average around 80 sen per cubic metre, orless than half the RM1.80 of the actual production cost forsupplying water for the same amount. The current systemhas provided limited incentive for consumers to reducetheir water wastage. An adjustment in the water tariffcorresponds with the rising cost of water treatment andthe maintenance of water treatment facilities. Theincrease in water tariff will encourage more efficientmanagement and utilisation of available water resources.

The Selangor State Government has already taken thefirst step in addressing this anomaly. To more accuratelyreflect economic realities and to institute a moreconservation-oriented, ‘use more, pay more’ approach,the Selangor State Government announced in February2001 that higher tariff rate hikes in the State of SelangorDarul Ehsan and the Federal Territories of Kuala Lumpurand Putrajaya will take effect by April 2001.

30

PNSB will also maintain its leadership position in waterconservation, water management and inenvironmental education. Though less tangible orquantifiable, the efficacy of these efforts will have themost lasting impact of all, not only for us, but for futuregenerations to come.

Having staged an impressive recovery in 2000, theMalaysian economy is projected to post arespectable 3% to 5% annual growth in 2001. As thecountry continues to achieve sustained growth, ithas also enacted broad institutional reforms toenhance transparency and corporate governanceand stimulate competitiveness and innovation.Therefore, we can expect growth to accelerate inthe next few years.

Puncak Niaga will continue to do its part to helpspeed this revitalisation. A healthy economicenvironment, one conducive to growth, and a healthyand productive population enjoying a high standardof living, both require a safe, reliable, and amplesource of potable water, on demand.

Clarity and commitment – environmental, managerial,operational and strategic – accurately reflects PuncakNiaga’s strength as a successful, responsible andforward-thinking company, as we strive to optimallybalance the needs of the consumer, the shareholders,the nation and the environment.

SSP2 Intake Plant and Raw Water Pumping Station.

ProspectsThe water industry, with its high barriers to entry due tothe intensive capital requirement and the fact thatwater has no substitute, will allow operators to maintaintheir monopoly position. The entire water industry in theState of Selangor Darul Ehsan and the Federal Territoriesof Kuala Lumpur and Putrajaya is dominated by fouroperators, namely, PNSB (operator of SSP2, WangsaMaju, and the other 26 WTPs with an aggregatedesigned capacity of 1,902 MLD); SPLASH (operator ofSSP1 with a designed capacity of 950 MLD), TaliworksConsortium (operator of Sungai Sireh WTP with adesigned capacity of 27 MLD); and Konsortium ABASSSdn Bhd (operator of Sg Semenyih WTP with a designedcapacity of 545 MLD).

From these statistics, it can be seen that PNSB continuesto be the industry leader, alone accounting for over halfof the combined designed capacity of the aforesaidoperators.

PNSB’s actual market share of 72.3% for the year 2000 isan even higher percentage, compared with 62%market share in 1999. The Company will continue to bethe nation’s leader in this industry, and we remainconfident that we will achieve an even larger presenceas new markets within the region are explored. Theproposed privatisation exercise in the State of NegeriSembilan is one of several promising initiatives inMalaysia and beyond.

31

Bukit Nanas WTP.

AcknowledgementsOn behalf of the Board of Directors of Puncak Niaga, Iwould like to thank our valued shareholders, customerand end-users for their continued trust and support.

Let me also express my heartfelt gratitude to ourManagement and employees for their outstandingcontributions in 2000 and for their skill, dedication andteamwork in making our Company a leader not only inour industry, but a role model of corporate efficiency,dynamism and innovation. Your undivided commitment,energy and enthusiasm are vital to ensuring the Group’scontinued success.

And finally, thank you to our strategic and financialpartners, and to the relevant governmental authoritiesand agencies and the non-governmental organisations.

TAN SRI ROZALI ISMAIL Executive Chairman

26 April 2001

No. Water Treatment Plant Capacity(MLD)

01 Sungai Langat 386.4002 Bukit Nanas 145.0003 Sungai Batu 113.7004 Batang Kali 20.3005 Ampang Intake 18.0006 Sungai Rangkap 9.0007 Cheras Mile 11 27.0008 Sungai Rumput 4.5009 Gombak 22.5010 Bukit Tampoi 31.5011 Salak Tinggi 10.8012 North Hummock 22.5013 Kepong 2.3014 Sungai Serai 0.9015 Rantau Panjang 31.5016 Bernam River Headworks 20.3017 Sungai Dusun 1.3018 Sungai Selisek 1.3019 Sungai Tengi 1.3020 Kalumpang 6.7021 Kuala Kubu Bahru 6.7022 Sungai Buaya 0.9023 Sungai Kroh 0.5024 Sungai Pangsoon 1.8225 Sungai Pusu 0.0926 Sungai Lolo 0.4127 Wangsa Maju 45.0028 SSP2 950.00

32

A DelicateBalance of Needs

11

Water treatment plant

Dam

10

0701

1402

12 2705

24

2625

09

0822

04

2119

03

1718

0623

13

15

28

1620Sabak Bernam

Kuala Selangor

Hulu Selangor

Gombak

Klang

Petaling

Kuala Langat

Putrajaya

Sepang

Hulu Langat

FederalTerritory

Tasik Subang Klang Gates Sg Langat

Location of Water Treatment Plantsand Dams

33

Encik Ruslan Hassan

1 YBhg Tan Sri Rozali IsmailExecutive Chairman

2 Encik Ruslan HassanExecutive Vice Chairman andExecutive Director,Corporate Affairs Division

Board ofDirectors

From left to right: YBhg Dato’ Hari Narayanan Govindasamy, Encik Abdul Majid Abdul Karim

From left to right: Madam Tan Bee Lian, YB Dato’ Seri Dr Ting Chew Peh

Standing:Encik Mat Hairi Ismail

From left to right: Ir Lee Miang Koi, YM Raja Azhar Raja Ismail

3 YM Raja Azhar Raja IsmailExecutive Director, Operations Division

4 Encik Mat Hairi IsmailExecutive Director, Finance Division

5 Ir Lee Miang KoiExecutive Director, Project &Business Development Division

6 Encik Abdul Majid Abdul KarimIndependent Non-ExecutiveDirector

7 YBhg Dato’ Hari NarayananGovindasamyIndependent Non-ExecutiveDirector

8 YB Dato’ Seri Dr Ting Chew PehIndependent Non-ExecutiveDirector

9 Madam Tan Bee LianGroup Company Secretary/ General Manager, Secretarial

YBhg Tan Sri Rozali Ismail34

3. YM Raja Azhar Raja Ismail, aged 40, MalaysianExecutive Director, Operations DivisionA Director of PNSB since 17 March 1994, YMRaja Azhar was appointed to the PNHB Boardon 24 April 1997. He obtained an AdvancedDiploma in Business Management from theInstitute of Commercial Management, UnitedKingdom. As the Executive Director of theOperations Division, his responsibilities arefocused on the maintenance andmanagement of all water treatment plantsunder the PCCA signed with the Selangor StateGovernment and development of the SSP2project under the CCOA. Previously, he was aLoan Executive for Malaysia Building SocietyBerhad (1983-1984), Manager of Credit andMarketing for DCB Leasing Sdn Bhd (1985-1991)and Director/General Manager of AliranResources (M) Sdn Bhd (1991-1994). YM RajaAzhar is also a director of a number of privatecompanies.

2. Encik Ruslan Hassan, aged 45, MalaysianExecutive Vice Chairman andExecutive Director,Corporate Affairs DivisionEn Ruslan joined PNSB on 1 November 1995 asHead of Corporate Affairs Division. Hisappointments to date are to the PNSB Board on 26December 1996, to the Board of Directors of PNHBon 24 April 1997 and as the Executive ViceChairman of PNHB on 6 April 1999. After obtaininga Bachelor of Laws Degree from the University ofMalaya in 1981, he began his career as a LegalAdvisor in Esso Production Malaysia Inc. In 1985 hejoined Pernas Sime Darby Holdings Sdn Bhd as theirGroup Legal Advisor/Company Secretary. EnRuslan has 6 years experience as an advocateand solicitor. In 1993 he joined Rashid HussainBerhad (RHB) as Corporate Affairs Senior GeneralManager and Executive Committee Member. EnRuslan is currently a Director of RHB and RashidHussain Securities Sdn Bhd. He also sits on the AuditCommittee of both companies and the Board ofother private companies.

1. YBhg Tan Sri Rozali Ismail, aged 44, MalaysianExecutive ChairmanYBhg Tan Sri Rozali is the founder of PNSB, its Executive Chairman and a substantial shareholder of PNHB. He wasappointed to the PNHB Board on 24 April 1997. Upon obtaining a Bachelor of Laws Degree from the Universityof Malaya in 1981, he began his career as Legal Advisor at the Urban Development Authority (UDA) for aperiod of 5 years before he joined Bank Islam (M) Berhad. Together with a few pioneer bank staff, YBhg Tan SriRozali conceptualised the first institution of Islamic banking in Malaysia. Subsequently, he started his own legalpractice as an Advocate & Solicitor for 7 years, specialising in corporate, property and banking work.

In 1989, YBhg Tan Sri Rozali set up a family company and embarked into the property development sector, withinvolvement in several development projects in the Klang Valley, Kuantan and Johor. Under the banner ofPuncak Alam Housing Sdn. Bhd. (formerly known as Bukit Cerakah Development Sdn Bhd), he is now activelydeveloping a new township known as Bandar Baru Puncak Alam. The family company also ventured into theutility business in 1989 with the setting up of PNSB. Due to his vast experience in various fields, he was entrustedby the Selangor State Government, via PNSB, to manage the water treatment plants for the whole of Selangorand the Federal Territory of Kuala Lumpur. PNHB was subsequently incorporated in 1997 as the holdingcompany of PNSB and was listed on the Main Board of Kuala Lumpur Stock Exchange on 8 July 1997.

Currently, YBhg Tan Sri Rozali is the Executive Chairman and substantial shareholder of U-Wood Holdings Berhad, aMain Board company which is developing Bandar Puncak Perdana, a 243-hectare mixed development projectlocated near the Sultan Abdul Aziz Shah Airport. He is also the Executive Chairman and substantial shareholder ofWWE Holdings Bhd, a Second Board company which is involved in the provision of integrated water andwastewater engineering services for both the residential and industrial sectors in Malaysia. He also sits on theBoard of other private companies.

YBhg Tan Sri Rozali is related to another PNHB Director, En Mat Hairi Ismail (his brother) who serves as PNHB’sExecutive Director, Finance Division.

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4. Encik Mat Hairi Ismail, aged 39, MalaysianExecutive Director, Finance DivisionAppointed to the PNSB Board on 24 May1994 and then to the PNHB Board on 24April 1997, En Mat Hairi is the ExecutiveDirector, Finance Division and also amember of PNHB’s Audit Committee. Hegraduated from Universiti KebangsaanMalaysia in 1985 with a Bachelor inAccounting (Hons) Degree. In 1985, hestarted his career as an Accountant atthe Accountant General’s Office inLabuan, and from 1989 to 1992 he servedat the Malaysian High Commission inLondon. His last appointment was with theLangkawi Development Authority (LADA)(1992-1994) before joining PNSB. En MatHairi is an Executive Director andsubstantial shareholder of U-WoodHoldings Berhad, a Main Board company,and WWE Holdings Bhd, a Second Boardcompany. He also sits on the Board ofother private companies.

En Mat Hairi is related to a Director/substantial shareholder of PNHB, YBhg TanSri Rozali Ismail (his brother) who is theExecutive Chairman of PNHB.

5. Ir Lee Miang Koi, aged 47, MalaysianExecutive Director, Project & BusinessDevelopment DivisionIr Lee joined PNSB in 1995 and is responsiblefor all aspects of project management andbusiness development for new water supplyprojects. Ir Lee was appointed as a Directorof PNSB on 2 February 1999 and subsequentlyto the Board of PNHB on 1 September 1999.He graduated as a civil engineer fromUniversity of Technology Malaysia in 1978 andin 1989 obtained a Masters Degree inEngineering majoring in water supplyengineering from the Asian Institute ofTechnology in Bangkok. Ir Lee has 23 yearsexperience in the water supply sector andhas held various positions during his tenurewith the Public Works Department as well asthe Waterworks Department in Malaysia,especially in the field of water supply services.He was a Senior Executive Engineer in theDesign and Planning Department in thePublic Works Department Headquarters andalso Director of the Negeri SembilanWaterworks Department (PWD). He left PWDin 1991 to join Ranhill Bersekutu Sdn Bhd,holding positions from Senior Engineer to VicePresident. Ir Lee is also a director of otherprivate companies within the PNHB Group.

6. Encik Abdul Majid Abdul Karim, aged 42, MalaysianIndependent Non-Executive DirectorA PNSB Director since 17 March 1994, En Abdul Majid was appointed to the PNHB Board on 24 April1997 as an Independent Non-Executive Director. He is the Chairman of PNHB’s Audit Committee.He obtained a Bachelor of Science (Hons) Degree in Civil Engineering from the University ofGlasgow, United Kingdom in 1986. He began his career as a Technical Assistant with the UrbanDevelopment Authority (UDA) (1982-1983), as Property Executive at Boustead Holdings Berhad(1986-1991) and subsequently as Sales Engineer at UAC Berhad (1991-1993). En Abdul Majid also sitson the Board of other private companies.

7. YBhg Dato’ Hari Narayanan Govindasamy, aged 51, MalaysianIndependent Non-Executive DirectorYBhg Dato’ Hari was appointed to the Board of PNHB on 1 July 1999. He is also a member of PNHB’sAudit Committee. He holds a Bachelors Degree in Electrical and Electronics Engineering from thePolytechnic of Newcastle-upon-Tyne. He is a member of the Institute of Engineers, Malaysia, aRegistered Professional Engineer with the Board of Engineers, Malaysia and a Director of theMalaysian Highway Board. He also serves as a Director of Tenaga Nasional Berhad, SP Setia Berhadand other private companies.

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8. YB Dato’ Seri Dr Ting Chew Peh, aged 58, MalaysianIndependent Non-Executive DirectorYB Dato’ Seri Dr Ting joined PNHB on 15 July 2000 as an Independent Non-Executive Director and amember of the Audit Committee. He graduated with a Bachelor of Arts Degree from the University ofMalaya in 1970 and obtained a Master of Science from the University of London in 1972. He alsoholds a Doctorate in Philosophy which he obtained from the University of Warwick in 1976.

YB Dato’ Seri Dr Ting started his career as a lecturer in the Faculty of Humanities and Social Science,National University of Malaysia from 1974 to 1980 and was subsequently an Associate Professor of thesaid Faculty until 1987. Between 1979 to 1986, YB Dato’ Seri Dr Ting published two books entitled‘Konsep Asas Sosiologi’ and ‘Hubungan Ras dan Etnik’.

In 1987, YB Dato’ Seri Dr Ting ventured into politics with his election as a Member of Parliament for theGopeng constituency, which he holds until today. He previously served as Parliamentary Secretary ofthe Ministry of Health (1988-1989), Deputy Minister of the Prime Minister’s Department (1989-1990) andMinister of Housing and Local Government (1990-1999). Currently he is the Secretary-General of theMalaysian Chinese Association (MCA) and the Chairman of the Port Klang Authority. He also sits onthe Board of Pan Malaysian Capital Berhad, a Main Board company and PM Securities Sdn Bhd.

The Board of Puncak Niaga pose with some of the awards won by the Company in 2000.

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Senior Management

1 Encik Ibrahim Ismail Executive Director, Human Resources andAdministration Division

2 Encik Azizul Nizam Bidin Executive Director,Puncak Seri (M) Sdn Bhd

3 Tuan Syed Danial Syed AriffinGeneral Manager,Operation I

4 Encik Usman Ali MustaffaGeneral Manager,Executive ViceChairman’s Office– Special Projects

5 Madam Chan Siew Meei General Manager,Legal

6 Ir Loh Kit Mun General Manager, Operation II

7 Ir Beh Men Huat General Manager,Project Management

8 Encik Sonari Solor General Manager,Internal Audit

9 Madam Tan Bee LianGroup CompanySecretary/ General Manager, Secretarial

10 Mr Ng Wah TarGeneral Manager, Finance & Accounts

43 5 2

8

9

67

101

39

3 Tuan Syed Danial Syed Ariffin, aged 43, MalaysianGeneral Manager, Operation ITn Syed Danial graduated in 1981 with a BSc.(Hons) Degree in Civil Engineering from Universityof Aston, Birmingham, United Kingdom. He joinedPNSB in December 1995 as Manager of theOperations Department. Between 1997 to 1999,Tn Syed Danial was promoted twice, i.e. SeniorManager in 1997 and Assistant General Manager,Operation I in 1999. Recently, in January 2001, TnSyed Danial was further promoted to his currentposit ion and concurrently assumes dualresponsibility as the Plant Manager of Sg SelangorPhase 2 WTP. Prior to joining PNSB, he has workedwith the Pahang Public Works Department for 10years, holding positions from Project Engineer(1981-1983) to District Engineer for CameronHighlands (1983-1991) and the Selangor WaterWorks Department between 1991 to 1995whereby he was the Senior Project Engineeroverseeing the construction of the Sg SelangorPhase 1 Project.

4 Encik Usman Ali Mustaffa, aged 42, MalaysianGeneral Manager, Executive Vice Chairman’sOffice – Special ProjectsEn Usman joined PNSB in March 2001 as GeneralManager, Executive Vice Chairman’s Office –Special Projects. He oversees and coordinatesnew projects undertaken by the Company. EnUsman is a fellow member of The CharteredAssociation of Certified Accountants (UK) byprofession and is also a member of theMalaysian Institute of Accountants (MIA). Duringhis 17 years of service, he spent 5 years in anaudit firm. He joined Malaysia Airlines in 1988 asan Accountant, and was later promoted toSenior Accountant. In 1992, he joined EPEPower Corporation Berhad as a FinanceManager and was mainly responsible for thelisting of the company on the Kuala LumpurStock Exchange in 1993. He was promoted toSenior Manager (Finance) and subsequentlyjoined American MNC as Regional FinancialController in 1993 where he was in charge ofthe financial affairs of the company for theAsia-Pacific region.

1 Encik Ibrahim Ismail, aged 44, MalaysianExecutive Director, Human Resources and Administration DivisionEn Ibrahim joined PNSB in April 1997 as General Manager of the Corporate Affairs Division andwas promoted to Executive Director of Human Resources and Administration Division on 1March 2000. He graduated with a Bachelor of Laws Degree in 1981 from the University ofMalaya and holds a Master of Laws Degree obtained in 1989 from the University of London.Previously, he was in private practice and was also the Dean for the Faculty of Law at UniversitiKebangsaan Malaysia (1988-1992). He served with Petronas as Senior Legal Counsel in its GasDivision (1995-1996) and Senior Manager for the Market Development Department of MalaysiaLNG Tiga Sdn Bhd (1996-1997). He has 20 years experience in various aspects of litigation,conveyancing and corporate work.

2 Encik Azizul Nizam Bidin, aged 33, MalaysianExecutive Director, Puncak Seri (M) Sdn BhdEn Azizul was appointed Executive Director of Puncak Seri (M) Sdn Bhd, a wholly-ownedsubsidiary of PNHB on 24 September 1998. He holds a Diploma in Hotel Management fromStamford College and a Diploma in Management from the Malaysian Institute ofManagement (MIM). He has more than 9 years management and entrepreneurialexperience in diversified operations gained from various ventures and collaboration withforeign companies in setting up local services that provide the vision and exposure forpersonal career development.

40

7 Ir Beh Men Huat, aged 45, MalaysianGeneral Manager, Project ManagementIr Beh joined PNSB in February 1996 as Manager of the Business Development Department. He is now theGeneral Manager, Project Management. He graduated in 1982 with a BSc Degree in Civil Engineeringfrom University Strathclyde, Scotland. Prior to joining PNSB, he worked with the Public Works Departmentand Lembaga Air Perak. His 18 years of working experience cover areas pertaining to projectmanagement and water supply operation and management.

5 Madam Chan Siew Meei, aged 44, MalaysianGeneral Manager, LegalMdm Chan joined PNSB in May 1998 as GeneralManager, Legal. She obtained her Bachelor ofLaws Degree from the University of Malaya in1981. During the course of her 20 year career,Mdm Chan has served as an advocate andsolicitor, lecturer, company secretary and as legaladviser to two public-listed companies. Heremployment portfol io covers very diverseactivities ranging from the timber and plantationsectors to engineering, property andmanufacturing. As such, apart from her legal andcorporate duties, she has attained considerableexperience in administration, human resourcesand company secretarial work.

6 Ir Loh Kit Mun, aged 47, MalaysianGeneral Manager, Operation IIIr Loh joined PNSB in April 1998 and overseesthe operation, maintenance and rehabilitationof 26 WTPs, contract supervision, damoperations, water resources and environmentalissues. Upon graduation from the University ofMalaya with a Bachelor of Civil EngineeringDegree in 1978, he worked as an engineer withthe Drainage and Irrigation Department (1978-1980). Then he served as Chief Engineer (lastdesignation) at SMHB Sdn Bhd (1980-1993),Associate at Ranhill Bersekutu Sdn Bhd (1993-1995) and General Manager (Infrastructure) ofKL Linear City Sdn Bhd (1995-1998). His 22 yearsof working experience covers areas pertainingto irr igation drainage, hydrology, waterresources and supply, design and constructionof dams, river engineering, drainage and floodmitigation, infrastructure development,environmental assessment, management ofengineering projects and operation of WTPs.

41

10 Mr Ng Wah Tar, aged 37, MalaysianGeneral Manager, Finance & AccountsMr Ng was articled with an accounting firm in 1984. He is a member of the Malaysian Institute ofAccountants (MIA) and the Malaysian Association of Certified Public Accountants (MACPA). Afterspending 10 years in the accounting profession where he last served as Audit Manager for 3 years,he joined United Engineers (M) Berhad (UEM) as the Accountant of its Trading Division in 1994. Hewas subsequently promoted to Senior Manager, Finance in 1997 and then transferred to theManagement Services Division overseeing the finance and accounting functions of UEM. Afterserving UEM for 6 years, he joined PNSB in March 2000 as General Manager, Finance & Accounts.

8 Encik Sonari Solor, aged 44, MalaysianGeneral Manager, Internal AuditEn Sonari has more than 10 yearsexperience in auditing andaccountancy in public-listed companiesdealing in property development,manufacturing, timber and consultancyservices. He is a fellow member of TheChartered Association of Certif iedAccountants (UK) and also holds aprofessional qualif ication from TheChartered Institute of ManagementAccountants (UK). Prior to joining PNSB in1998, he served as Group DivisionalChief, Internal and Management Auditof Land & General Berhad, ChiefOperating Officer of Sepakat ComputerConsultants Sdn Bhd, Audit Manager ofDMIB Berhad and Accountant of UtusanMelayu Berhad.

9 Madam Tan Bee Lian, aged 35, MalaysianGroup Company Secretary/ General Manager, SecretarialMdm Tan has more than 12 years corporate secretarialexperience in both private and public-l istedcompanies. She has been with the PNHB Group formore than 6 years and was involved in the successfullisting of PNHB on the Main Board of the Kuala LumpurStock Exchange on 8 July 1997. She joined PNSB inNovember 1994 as Company Secretary, was promotedto Group Company Secretary in January 1998 and wasfurther promoted to General Manager, Secretarial, inMarch 2000. She is a graduate of the Institute ofChartered Secretaries and Administrators (ICSA) andattained associateship in 1992. Prior to joining PNSB, sheworked in the Secretarial & Legal Department ofProject Lebuhraya Utara-Selatan Berhad (PLUS) andwas the Assistant Company Secretary of MetramacCorporation Sdn Bhd/Metacorp Berhad, a companylisted on the Second Board of Kuala Lumpur StockExchange. In November 2000, Mdm Tan was awardedthe ROC-MAICSA Company Secretary Award 2000Runner-Up for the Listed Company Category inrecognition of her excellence, competence andprofessionalism as a Chartered Secretary.

42

Operations Review

PNSB engineer taking water sample for research at SSP2 WTP’s Settling Tank.

SSP2 Stage 2Construction of SSP2 Stage 2 was completed on 22 December 2000 and the plant became operationalon 1 January 2001. SSP2 Stage 2 opened a full yearahead of its scheduled completion date of 31December 2001. The early completion of SSP2 Stage 2and its subsequent supply of water to JBAS aresignificant as it allows PNSB to enjoy the benefit of thestep-up for bulk supply rate and fixed payment underthe CCOA at an earlier date.

SSP2 Stage 2 augments water supply to areas in KualaLumpur, Petaling Jaya, Gombak, Shah Alam and Klang.

The combined production of SSP2 Stage 1 and Stage 2(based on actual demand), as at March 2001 stands atan average of 503 MLD.

Water production for PNSB in the year 2000 totaled767,766,258 cubic meters , compared with732,119,000 cubic meters in 1999, an increase of4.86%. This gain was attributed to both the increasein water demand and the Company's efficiency inoperating its water treatment facilities above thedesignated designed capacity.

SSP2 Stage 1SSP2 Stage 1 continues to showcase the Company'shigh calibre of professionalism in water serviceoperations and management. The plant, which hasbeen running smoothly since its commissioning in July1998, achieved its full capacity of 475 MLD in December2000. On 10 May 2000, SSP2 WTP received ISO 9002certification for the operation, maintenance andproduction of potable water from the internationallyacclaimed ISO certification body, Lloyd's RegisterQuality Assurance. During the year, SSP2 WTP garneredseveral awards and accolades, both in productivity andareas of safety & health.

These achievements, which demonstrated themanagement's speed and ability in achieving optimalperformance, are all the more noteworthy in light of thefacility's short period on-line.

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Sungai Selangor Phase 2 Stage 1 Water DistributionSupply System (DSS1)On 12 December 2000, PNSB completed the last portionof works entrusted by the Selangor State Governmentunder the DSS1 project at the Bukit Gasing pumpingstation and a reservoir at Sg Buloh. The Bukit Gasingworks have significantly boosted the water supplycapacity to Old Klang Road and the adjoining areas.

Sungai Selangor Phase 2 Stage 2 Water DistributionSupply System (DSS2)DSS2 was awarded to PNSB on 9 September 1999 bythe Selangor State Government to augment watersupply distribution to Klang and Kuala Lumpur. TheDSS2 project is expected to be fully completed byJune 2001. DSS2 will allow the conveyance of anadditional 285 MLD of treated water from SSP2 tothese demand areas.

Operations of 27 WTPs under PCCAIn 2000, the 27 WTPs under the PCCA achieved anaggregate production of 367,093,941 cubic meters or16.5% above the designated quantity. Daily averageproduction was 1 million cubic meters.

To ensure a high level of performance at all WTPs, PNSBconducts regular plant assessments to monitor the levelof maintenance, quality of operation and overallmanagement of the WTPs. Monthly mechanical andelectrical (M&E) breakdown reports and operation &maintenance (O&M) reports are generated formonitoring purposes mainly to highlight and improveon areas that require attention. Where necessary, theexisting programmes will be expanded through theimplementation of new procedures to enhance therespective WTPs' performance. Through this, the WTPs’production capacity and level of maintenance areconsistently monitored and maintained.

Wangsa Maju WTP Open Day officiated by YBhg Dato’ Lee LamThye, Chairman of NIOSH.

SSP2 Treated Water Pumping Station.

W

Wangsa Maju WTPBuilt on a fast-track approach by PNSB during the watercrisis in 1998, the Wangsa Maju WTP, which supplies treatedwater to the Wangsa Maju area, has operated smoothlysince its commissioning on 14 July 1998. The WTP has aproduction capacity of 45 MLD. However, the actualwater demand for the year averaged at 34 MLD.

The WTP was outfitted with a technologically advanced'Dissolve Air Flotation System', which incorporates asophisticated and highly efficient clarification process usingmicro-bubbles to separate flocs from clear water. This hasenabled the WTP to produce high quality treated water.

The success of this facility has been such that PNSB iscurrently documenting the WTP's operating procedure forISO 9002 certification. To ensure successful accreditation,two significant appointments have been made: first, theMalaysian Institute of Quality Assurance Berhad (MIQA) hasbeen named consultant and trainer for the certificationprogramme, followed by Lloyd's appointment as thedesignated registrar. The ISO 9002 certification for WangsaMaju WTP has been sucessfully acquired on 19 April 2001.

Sg Semenyih WTPManaged and operated by PNSB since 4 May 1997 on ayear-to-year renewal basis, the Sg Semenyih WTPconsistently performed above its designed capacity of545 MLD in 2000, averaging at an impressive 645 MLD. TheWTP was handed back to the Selangor State Governmenton 2 January 2001.

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On 2 August 2000, Ampang Impounding WTP washanded back to JBAS as the plant had not beenoperational since taken over by PNSB in 1994. Atpresent, PNSB manages 26 WTPs under the PCCA.

Refurbishment of WTPs under PCCAThe purpose of the refurbishment programme is torepair, rehabilitate and upgrade the 27 WTPs so thatthe treated water produced meets the designatedquality and quantity requirements of the PCCA.

Under the PCCA, the Company is mandated toallocate RM150,000,000 towards the refurbishmentworks of the 27 WTPs. As at December 2000, 42contracts amounting to RM105,640,000 have beencompleted under the programme, while another threecontracts amounting to RM33,456,888 are expected tobe completed by the first quarter of 2001. In addition,six new contracts totaling RM8,147,734 have beenapproved by JBAS for implementation.

To date, the Company has expended RM132.75 millionon the refurbishment works of the WTPs under thePCCA. Other proposed refurbishment works are beingreviewed and prioritised.

Dam OperationsPNSB currently operates three dams: Sg Langat, KlangGates and Tasik Subang. The annual rainfall in 2000recorded an increase of 6.3% compared to 1999 areas follows:-

The Malaysian Meteorological Services Department'sforecast for 2001 predicts rainfall levels to remain at orabove average. As such, the Company does not expectany water crisis due to shortages of raw water.

The operation of the dams in relation to the release ofraw water is regulated by the reservoir control curves.The reservoir control curves are implemented by theCompany and aim to maximise water storage againstsupply at the dams.

Al l dams are constantly monitored for structuralintegrity. Regular inspections of the surroundingtopography and other activities are also conducted toprotect against landslide formation, which could affectthe safety of the dams.

Business DevelopmentThe Group continued to actively explore and pursuenew business opportunities in water-related projectsthroughout the year 2000.

In December 2000, PNHB was invited to participate inthe proposed privatisation of the Jabatan Bekalan AirNegeri Sembilan with several parties through a 30%equity stake in the concession company, NS WaterKonsortium Sdn Bhd.

During the year, PNHB also participated in severalwater-related infrastructure project tenders in otherstates. At present, the Company is await ing theoutcome of these tenders.

Rainfall (mm)

500

1000

1500

2000

2500

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1010

2020

3030

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8080

Catchment area size(sq km)

Storage level

2020

4040

6060

8080

100100

2020

4040

6060

8080

100100

Klang Gates Tasik SubangSg Langat

% increase/(decrease)compared to 1999

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SSP2 treated water pipeline (2100 mm diameter) to MatangPagar Reservoir.

In a proactive move to raise the level of the employees'safety awareness, especially at the WTPs, the Companyconducted safety drills on a regular basis. Some of thesafety drills were conducted in collaboration with therelevant authorities including the Fire Brigade, Police andHospital. In 2000, 13 safety drills took place at various WTPs.Upon completion of each safety drill, a post-mortemreport is submitted to the Management for furtherevaluation. Weaknesses of the safety drill procedures areidentified and refined accordingly.

Information Technology The Company had successfully implemented the newfinancial system SAP R/3, now known as mySAP.com,which began in April 2000 with the Financial, Logistic andAsset Management modules. The system went 'live' inNovember 2000. The Company plans to implement theHuman Resources Management module by the secondhalf of 2001.

Apart from the on-going Intranet expansion of theCompany's Integrated Office Automation System(PINTAS), to include more information such as historicaldata and departmental Intranet sites, the Company hasalso explored the deployment of a Supervisory ControlAnd Data Acquisition (SCADA) based perimeter securitysystem incorporating video surveillance for all WTPs andreservoirs, and the establishment of a WTP SupervisoryCentre at the Head Office.

Chlorine leak safety drill at Sg Batu WTP.

Sg Selangor Water Supply Distribution Schematic Diagram.

Crisis ManagementTo enable the Company to respond effectively to anyform of emergency, crisis or disaster occurring at theHead Office such as fire, strikes, or at the WTPs such asoperation sabotage, major raw water violations anddrought, the Crisis Management Procedure Plan andthe WTP Emergency Response Plan are constantlyreviewed and fine-tuned.

Mock crisis drills incorporating elements of the CrisisManagement Procedure Plan and WTP EmergencyResponse Plan continued to be carried out in 2000 toensure that procedures and responsibil it ies arecoordinated and refined and also to ascertain thelevel of preparedness of both the Head Office andWTP employees in facing and handling any unforeseencrisis events.

Occupational Health and Safety (OHS) As part of its continuing effort to ensure effectivepractise of OHS at the workplace, two new safety andhealth committees were set up in 2000, i .e. theCorporate Safety & Health Committee and the HeadOffice Safety & Health Committee. These committeesare given the responsibility to oversee, review andmonitor all safety-related issues and to put in place thenecessary policies so as to ensure that all issues onemployees’ safety and health are addressed andprotected at all times. The former OHS committeerepresents a steering committee which monitors theactivities of other safety and health aspects at theHead Office, various WTPs and construction sites asrequired by the Occupational Safety and Health Actand Regulations 1994.

DUSUN KUBONGRESERVOIR

KEPONG ESTATERESERVOIR

MATANG PAGARRESERVOIR

MATANG PAGARRESERVOIR

BATU ARANGRESERVOIR

SUNGAI BULOHRESERVOIR

BATU ESTATERESERVOIR

BUKIT SENTULRESERVOIR

BUKIT LIPATKAJANG

RESERVOIR

BUKIT JELUTONGRESERVOIR

BUKIT RAJARESERVOIR

EFFINGHAM ESTATERESERVOIR

BUKIT MAYONGRESERVOIR

BUKIT MAYONGRESERVOIR

LAM BEE ESTATE RESERVOIR

RAW WATERPUMPING STATION

(PHASE 2)

(PHASE 1)

SUN

GA

I SE

LAN

GO

R

TREATED WATERPUMPING STATION

BUKIT BADONGTREATMENT WORKS

SUNGAI SELANGOR WATER SUPPLYDISTRIBUTION SCHEMATIC

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Human Resources and Employee Relations The Company values the importance of its humanresources towards ensuring the attainment of itsCorporate Vision and Mission. Towards this end, theManagement adheres to the principle that employeesplay a vital role in fulfilling the Company's aspirations.Hence, the Management actively promotes a results-oriented work culture along with a strong esprit de corpsamongst the employees. Besides fostering teamwork, italso encourages individual initiative and innovation.

In the aspect of industrial relations, PNSB practises the'smart partnership' concept between employer andemployees through two recognised bodies, namelythe Joint Consultative Committee (JCC), and‘Kesatuan Kakitangan Puncak Niaga (M) Sdn Bhd’(Non-Executive Union). Through the effectiveleadership and cooperation of these two entities,employees' rights are protected.

JCC represents the executive employees of the WTPsand strives to forge a harmonious and mutuallybeneficial relationship between them and theCompany. JCC helps to promote a conducive workingenvironment for the executive employees of the WTPs byproviding a forum for them to raise their views and ideasto the Company. The Company implements these views,where relevant.

Recognition by the Company of the Non-Executive Unionis vital to a smooth working relationship for both parties.PNSB is currently in the final stage of negotiations with theNon-Executive Union to conclude a Collective Agreement.It is hoped that this Collective Agreement will establish anew benchmark in employer/employee relations at PNSB.

SSP2 WTP Command Centre.

The 'Kesatuan Eksekutif Syarikat Puncak Niaga (M) SdnBhd' (Executive Union) has also been recentlyestablished and recognised by the Company.

The careful cultivation of employee relations andemployee empowerment grew in 2000 with thecontinued implementation of the Foster ParentProgramme, whose objective is to establish a closerrelationship and more effective two-waycommunication between Head Office and WTPemployees. The Programme arranges for Head OfficeManagement employees to visit the respective WTP ordam in order to get acquainted with the WTPemployees. It also works to address problems anddifficulties faced by the WTP employees and at thesame time to update the WTP employees on theCompany's progress. Indirectly, the Programme aims tostrengthen and increase job performance and moraleof the WTP employees.

Employee WelfareThe Proposed Employees Share Option Scheme (ESOS)for all eligible employees and Executive Directors ofPNHB Group to be implemented upon approval of therelevant authorities will contribute significantly towardsemployee welfare and empowerment. The ProposedESOS will enable eligible employees and the ExecutiveDirectors to participate in the future growth of theGroup and serves as an incentive to employees to bemore actively involved in the operations of the Group.At the same time, it gives the employees a greatersense of belonging so that they will be more motivatedand productive in their work.

Year 2000 Family Day at Stadium Shah Alam.

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The Human Resources Planning Committee, establishedsince 1999, aims to provide equitable and unbiasedappraisal of employees and to make fair employeeperformance ratings and employee remunerationrecommendations to the Board.

On another level, the Company cares for employees'welfare by providing a wide range of benefits andassistance as a reward for their commitment anddedication to the Company. This has taken the form ofmedical benefits and insurance coverage for theemployees and their immediate family, car and housinginterest subsidies benefit scheme, interest-free computerloans, education and personal loans. Collectively, thesebenefits constitute one of the most comprehensive andgenerous employee welfare programmes available inMalaysia.

For the year 2000, the Company provided car andhousing interest subsidies amounting to RM245,655 andextended a total of RM409,149 in interest-free education,computer and personal loans to its employees.

Besides monetary aid, the Company also assists all PNSBengineer employees to obtain the Professional Engineer(IR) qualification by giving them the necessary exposureand training via a Professional Engineers TrainingProgramme, thereby helping them to achieve theircareer goals as professionally qualified engineers.

To ease travel and commuting hardships, as well asalleviating strains resulting from family separation, theCompany has also constructed 'surau', staff quartersand community halls at several WTPs.

Responding to the increased reports of sexualharassment in the workplace nationwide, theCompany, as a concerned employer, formed a workingcommittee to study the issue and to formulate a Policyon Sexual Harassment to be approved by the Board ofDirectors prior to implementation.

Another platform for professional and personalengagement between the Management and theemployees is the Kelab Sukan dan Kebajikan PuncakNiaga Kuala Lumpur (Puncak Niaga Sports Club). ThePuncak Niaga Sports Club promotes interactionamongst all levels of employees by organising social,cultural and religious events as well as sports andoutdoor activit ies such as f ishing competit ions,mountain climbing, etc.

The Puncak Niaga Sports Club has also been instrumentalin helping to meet the educational needs of theemployees' children, both at the primary and secondarylevel, by playing an active role in gathering past year'sexamination questions and answers for distribution to theemployees' children. Occasionally, the Puncak NiagaSports Club will organise motivational talks, seminars andstudy trips for the employees' children.

TrainingTraining is an integral component to the Group'ssuccess. As such, the training strategies are multi-level,complementary and mutually supportive. Based on ananalysis of the Company's needs, the training regimen iscategorised into six core areas, namely:-

• Developmental… Designed to enhance personaldevelopment while empowering attainment ofthe Company's core values, its vision and mission.

Majlis Maulidul Rasul celebrations at Stadium Shah Alam.

Puncak Niaga’s ‘Sumbangan Saguhati Kepada Anak-anakKakitangan Yang Berjaya Ke Institusi Pengajian Tinggi’.

49

• Technical/functional… Intended to improve skillsand knowledge in areas directly related to dailyjob/task requirements.

• Management & leadership… Aimed at improvingparticipants' ability to manage others, leadgroups, organise resources and processes anddirect projects.

• Business… Business tool-oriented programmesproviding specific knowledge and process skills inorder to perform a particular function.

• Multimedia… Designed to provide greaterproficiency in IT and computer-related skills.

• Career enhancement… A platform to attainhigher qualification in one's area of expertise,either on-the-job, or through formal certification.

In its efforts to minimise skills gaps and improve corecompetencies among its employees, the Companyhas designed specific training interventions to enablethe successful performance of these individuals in theirjobs. Such programmes have produced tangible gainsfor the Company in terms of enhanced productivityand commitment.

The Company is at the forefront of providing innovativeemployee training schemes. These include a broadrange of inter-disciplinary programmes, whereby theemployees are exposed to skills outside their immediateareas of expertise. This approach has increased theemployees' competencies significantly.

New employees, meanwhile, undergo a thoroughinduction and orientation programme to speed upassimilation with the Company's culture and workingenvironment.

Training expenditure for 2000 totaled RM410,742, ofwhich an estimated RM287,172 was spent for 30 in-house programmes and RM123,570 for 79 externalprogrammes. Employees who have attended externalprogrammes are required to share their knowledge withtheir peers through the 'Saturday Encounter' sessionswhich also promote the employees' self-confidence inpublic speaking and presentation skills.

As in the past, PNSB continued to play a prominent roleon the world stage, sharing its expertise and technicalknow-how with its industry counterparts, governmentalbodies and non-governmental organisations in 2000.

During the year, the Company participated in severalinternational seminars and conferences, including theChina Business Summit 2000 in China, Asia-EuropeBusiness Forum in Vienna, Malaysian-British Partnership inLondon, etc. The Company’s Executive Chairmanpresented influential papers on the water privatisationindustry in Malaysia at the following forums:

In-house training session at Stadium Shah Alam.

Puncak Niaga’s Executive Chairman presenting a paper at thePolmet 2000 Exposition at Shangri-La Hotel, K.L..

Month Forum Title of Presentation Paper

Mar Polmet 2000 Puncak Niaga's ExperiencesExposition in as an Operator of a PrivatisedKuala Lumpur Project

May Water 2000 Di rect ion of Water SupplyF o r u m i n Management & DevelopmentKuala Lumpur In Malays ia — A Pr ivate

Sector’s View

Nov 12th Lessons and Experiences of IWSA-ASPAC Ongoing Privatised Projects: R e g i o n a l Case Study — MalaysiaConference & Exhibition inChiangmai, Thailand

Social Contributions Leadership in any industry, especially in a vital sectorsuch as water services, is not solely won by marketshare, earnings or growth. It also embodies social andcivic responsibil ity. As a responsible and caringcorporate citizen, PNHB allocates a significant amountof the Company's profits each year to increase thestandard of living and to meet the needs of society, inparticular, the less privileged in our country.

In 2000, the Company donated a total of RM1,675,386towards charitable purposes, compared with RM349,173in the previous year. These contributions were given toreligious and educational groups, youth, sports andentrepreneurial associations, medical and disabilityfoundations and other worthy charitable causes assummarised below:-

Community RelationsWe believe that the most valuable contribution we canmake is to educate and provide the resources neededby our community through programmes that promotethe protection of the environment. That is why, besidescontributions in monetary form, the Company, throughits team of dedicated employees, also devotes time,energy and skills in fostering environmental awarenessamongst the public, especially on the importance ofcaring for our rivers, streams and lakes.

PNSB's renowned 'River Rescue Brigade' continues toenlist primary school children in years four and five in theprogramme's ongoing clean-up, conservation andeducational activities. To date, PNSB has enlisted 1,000primary school children in the State of Selangor and theFederal Territories of Kuala Lumpur and Putrajaya asmembers of its River Rescue Brigade.

On 3 May 2000 the Sg Langat WTP hosted a huge RiverRescue Brigade launch ceremony for new members,officiated by YABhg Datin Seri Endon Mahmood, wifeof the Deputy Prime Minister of Malaysia. On 21October 2000, PNSB's River Rescue Br igadeparticipated in the Environmental Week celebration atDataran Shah Alam, Selangor.

Community relation efforts are also a vital part ofeducating and informing the public about water-related issues. To encourage smart water use as well asto give the public a better understanding of what theCompany does, PNSB held its annual WTP Open Day on4 and 5 March 2000. A total of 10 WTPs took part in theevent in 2000, which was officiated by YBhg Dato' LeeLam Thye at the Wangsa Maju WTP.

‘Shopping Spree’ for children of Sekendi Orphanage with thespouse of Puncak Niaga’s Executive Chairman.

Official Launch of the River Rescue Brigade by YABhg Datin SeriEndon Mahmood at Sg Langat WTP.

Orphanages RM 68,110Schools RM 15,179Sports Activities RM 230,000Yayasan Budi Penyayang Malaysia RM 1,000,000Charitable Organisations RM 121,000Perkim Bahagian Negeri Selangor RM 45,000Tabung Pembinaan

Kelab Kecacatan Fizikal RM 2,973Surau Al-Hidayah Taman Bukit Kepong RM 193,124Total RM 1,675,386

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A Multi-levelMission

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52

Environmental Policy

Puncak Niaga, a water treatment specialist company,is committed to continuous improvement in protectingthe environment, minimising pollution, conservingnatural resources and operating its facilities in anenvironmentally sound manner.

In accordance with its Enviromental Policy, theCompany shall:-

1. Establish an Environmental Management System• set objectives and targets for improvement of

environmental performance;• develop and implement programmes and

activities in line with our Environmental Policy;• emphasise the prevention of pollution in our

activities; and• develop and implement procedures to avoid

and manage incidents which may have anadverse environmental impact.

2. Compliance to Requirement• fully comply with all applicable environmental

laws, regulations and standards including theNational Standards and Malaysian Regulationsand other requirements relevant to the waterindustry;

• establish an internal environmental controlstandard/system, where applicable, in order tocomply with the requirements; and

• to operate in a manner that provides forenvironmental specifications and sensitivity to theenvironmental needs of the community, wherepracticable.

3. Monitoring and Controll ing of EnvironmentalIssues• continuously monitor and control the

environmental parameters for environmentalperformance improvement;

• implement pollution reduction programmeswhere feasible to minimise the environmentalimpact from hazardous material, noise andwastewater; and

• develop and implement continuous programmeson the management of scheduled and non-scheduled waste incorporating the 4R Concept,i.e. Refrain, Reuse, Recycle and Reduce.

4. Communication and Training• communicate and create awareness of the

Company’s Environmental Policy andenvironmental issues amongst our employees,contractors, visitors and interested members ofsociety; and

• encourage our employees in environmentalinitiatives and support them with training andawareness programmes in environmental issues.

Puncak Niaga’s Environmental Policy shall bereviewed by Management from time to time forpossible revisions in light of changing conditions.

The signature below indicates endorsement of PuncakNiaga’s Environmental Policy and the Management’sand employees’ commitment to and adherence ofthe policy.

TAN SRI ROZALI ISMAILExecutive Chairman

Raw water quality monitoring is one of the mostimportant on-going tasks PNSB has undertaken since1994, when it was first awarded the PCCA by theSelangor State Government. Over the years, theCompany has put into place a wide range ofsafeguards and procedures, while at the same timeworking closely with the Ministry of Health (MOH),Department of Environment (DOE), local authoritiesand other government agencies and departments toidentify and address raw water violations andaccidental spills of contaminants.

Cases of raw water quality violations recorded for 2000increased to 1,044 from 809 cases recorded in 1999.This indicates that more pollutants are beingdischarged into rivers, most likely due to increasedsewage/effluent discharges from new developmentcentres, non-functioning sewage treatment plants,land-clearing activities, leakage, spillage or dischargeof industrial chemicals or wastes, etc.

Monitoring of raw water at the intake and treatedwater quality as it leaves the WTP is conducted:-

• every two hours for physical parameters andsome chemical parameters;

• every week for microbiological parameters;• every month for all parameters according to

schedules set by an independent laboratory;• water quality compliance monitoring is

conducted to ensure the raw, settled andtreated water of the WTPs complies with therequirements of the PCCA and MOH standards;

• four critical WTPs (Sg Langat, Salak Tinggi, Cheras,Bukit Tampoi) are monitored regularly forammonia content in the raw, settled and treatedwater, as ammonia is one of the indicators ofpollution; and

• fluoride levels in the treated water are also monitored,with monthly and weekly reports submitted to theDentistry Office of MOH.

PNSB conducts regular sanitary surveys to identifypotential polluters of raw water sources. Sanitary surveysare conducted in cooperation with the DOE, MOH andlocal authorities. As at December 2000, a total of 29surveys have been conducted. Environmental impactinvestigations, which are preliminary forms of sanitarysurvey, are also carried out. These investigations hadhighlighted illegal quarrying activity near Sg Gombak,sand mining activity upstream of Batang Kali WTP, andabove-normal silver levels in Sg Semenyih.

The River Warning Monitoring System (RWMS) installed atSg Langat since 8 May 1998 continued to provideadvanced warning of possible raw water violationsbased on turbidity, conductivity/total dissolved solids,pH, dissolved oxygen, ammonium, nitrates andphosphates. In early 2001, a second RWMS facilitycommenced operations at Sg Selangor.

As part of its ongoing commitment to environmentaland natural habitat preservation, the Company alsocompleted an extensive tree-replanting andlandscaping project at the Bukit Gasing PumpingStation. This exercise has resulted in the restoration of alarge green lung area affected by the construction ofthe reservoir. This shall be the blueprint for the re-forestation and beautification schemes of theCompany's future projects.

Environmental Report

River Warning Monitoring System at Sg Langat.

Bukit Nanas WTP.

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54

Organisational Safety & Health Policy

It is the policy of Puncak Niaga to provide, so far as is practicable pursuant to Section 15 of theOccupational Safety and Health Act, 1994 and all other relevant legislations, a safe and healthyworking environment for all the employees, and in the spirit of consultation and cooperation, theManagement and employees shall together strive to achieve the established goals and objectives ofthis policy.

Without prejudice to the generality of the above statement, the Organisational Safety & Health Policyof Puncak Niaga is:-

• to provide and maintain a safe place and system of work;• to ensure that all the employees are informed, instructed, trained and supervised on how to

perform their jobs safely and without risk to health;• to investigate all accidents and near-misses and to take corrective measures to ensure that

accidents or near-misses will not recur;• to comply with all legal requirements on safety and health as stipulated in the Occupational

Safety and Health Act 1994, the regulations made under it and the approved codes ofpractises; and

• to review this policy as and when appropriate.

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Quality Policy

It is the policy of Puncak Niaga to provide quality services to fulfil its contractual obligations to the SelangorState Government.

Puncak Niaga shall strive to consistently meet the quality standards pre-determined in the PCCA & CCOA.Puncak Niaga is fully committed to perform all its obligations under the PCCA & CCOA with full responsibility,due diligence and efficiency.

To Be The Leading And Dynamic Integrated Water Services Company, we shall adopt a quality managementsystem based on internationally recognised standards, which will ensure a planned, systematic and proactiveapproach to quality in all aspects of our work.

Puncak Niaga’s quality management shall be characterised by:-

• proactiveness at all levels;• the consistent application of ‘Right First Time Every Time’ principle;• empowerment of employees to solve problems expeditiously; and• a culture of continuous improvement and teamwork.

All employees shall share the responsibility to understand and diligently implement the Quality Policy.

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Press Clippings on Puncak Niaga 2000

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58

Distribution Schedule of Equity Securities

Authorised capital: RM 500,000,000 Issued and paid-up capital: RM 437,500,000Class of shares: Ordinary shares of RM1 each

No. of Holders Holdings Total of Holdings %

449 Less than 1,000 147,023 0.037,790 1,000 — 10,000 24,929,049 5.701,203 10,001 —100,000 30,307,547 6.93

182 100,001 to less than 5% of issued shares 139,754,131 31.946 5% and above of issued shares 242,362,250 55.40

Total 9,630 437,500,000 100.00

30 Largest Shareholders as per Record of Depositors as at 4 May 2001Name of Shareholders No. of Shares %

01 AMSEC Nominees (Tempatan) Sdn Bhd (102918 T) 59,513,000 13.60Arab-Malaysian Finance Berhad for Central Plus (M) Sdn Bhd

02 Employees Provident Fund Board 47,630,750 10.8903 Arab-Malaysian Nominees (Tempatan) Sdn Bhd (51181 W) 42,526,000 9.72

Arab-Malaysian Finance Bhd for Central Plus (M) Sdn Bhd (7/655-6)04 UOBM Nominees (Tempatan) Sdn Bhd (15356 H) 31,877,500 7.29

Pledged Securities Account for Central Plus (M) Sdn Bhd (MP)05 Arab-Malaysian Finance Berhad (Temp 5493) 31,065,000 7.10

Pledged Securities Account for Central Plus (M) Sdn Bhd (SMART)06 Al Wakalah Nominees (Tempatan) Sdn Bhd(122372 P) 29,750,000 6.80

Pledged Securities Account for Central Plus (M) Sdn Bhd-BIMBHO07 Central Plus (M) Sdn Bhd (183535 W) 12,927,500 2.9508 DB (Malaysia) Nominee (Tempatan) Sdn Bhd (66878U) 12,210,000 2.79

DBSPN for Central Plus (M) Sdn Bhd09 Bank Kerjasama Rakyat Malaysia Berhad 7,000,000 1.60

Pledged Securities Account for Kumpulan Darul Ehsan Berhad10 Al Wakalah Nominees (Tempatan) Sdn Bhd(122372 P) 5,250,000 1.20

Pledged Securities Account for Corporate Line (M) Sdn Bhd - BIMBHO11 Kumpulan Darul Ehsan Berhad (148040 T) 3,718,750 0.8512 Amanah Raya Nominees (Tempatan) Sdn Bhd (434217 U) 3,661,750 0.84

Amanah Saham Wawasan 202013 HLG Nominee (Tempatan) Sdn Bhd (250650 T) 3,617,000 0.83

PB Trustee Services Berhad for HLB Growth Fund 14 Malaysia Nominees (Tempatan) Sendirian Berhad (6193 K) 3,600,000 0.82

Pledged Securities Account for Kumpulan Perangsang Selangor Bhd (01-00058-000)15 Amanah Raya Nominees (Tempatan) Sdn Bhd (434217 U) 3,528,000 0.81

Amanah Saham Malaysia 16 Kumpulan Wang Amanah Pencen 3,500,000 0.8017 Mayban Nominees (Tempatan) Sdn Bhd (258939 H) 3,256,000 0.74

Pledged Securities Account for Central Plus (M) Sdn Bhd (505 01923654A)18 Corporate Line (M) Sdn Bhd (172689 H) 2,990,750 0.6819 Perbadanan Nasional Berhad (TEM9157K) 2,989,500 0.6820 HSBC Nominees (Tempatan) Sdn Bhd (258854 D) 2,874,000 0.66

HSBC (M) Trustee Bhd for OSK-UOB Equity Trust (3175)21 Cartaban Nominees (Asing) Sdn Bhd (263367 W) 2,558,000 0.58

State Street Australia Fund Q3VD for Fullerton (Private) Limited22 Amanah Raya Nominees (Tempatan) Sdn Bhd (434217 U) 2,448,250 0.56

Sekim Amanah Saham Nasional23 Universal Trustee (Malaysia) Berhad (17540 D) 2,443,750 0.56

BHLB Pacific High Growth Fund 24 Kumpulan Darul Ehsan Berhad (148040 T) 2,038,750 0.4725 Permodalan Negeri Selangor Berhad (206347 V) 1,747,500 0.4026 HSBC Nominees (Tempatan) Sdn Bhd (258854 D) 1,746,000 0.40

HSBC (M) Trustee Bhd for Arab-Malaysian Cumulative Growth Fund (3639)27 Arab-Malaysian Nominees (Tempatan) Sdn Bhd (51181 W) 1,608,000 0.37

Arab-Malaysian Trustee Bhd for HLB Penny Stock Fund (5/4-3)28 Lembaga Tabung Angkatan Tentera 1,585,000 0.3629 Arab-Malaysian Finance Berhad (TEM5493) 1,487,500 0.34

Pledged Securities Account for Beevee (M) Sdn Bhd (SMART)

30 Largest Shareholders as per Record of Depositors as at 4 May 2001Name of Shareholders (cont’d) No. of Shares %

30 Amal Assurance Bhd (197499 U) 1,333,500 0.30Total 332,481,750 76.00

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List of Substantial Shareholders as at 4 May 2001 (As Per Register of Substantial Shareholders)Name of Shareholders No. of Total No. %

Shares of Shares

01* TAN SRI ROZALI BIN ISMAIL 231,432,250 52.9002* SHAARI BIN ISMAIL 231,432,250 52.9003** CENTRAL PLUS (M) SDN BHD (183535 W) 223,142,500 51.0004 AMSEC NOMINEES (TEMPATAN) SDN BHD (102918 T) 59,885,925 13.69

Beneficial owners:-Patwant Singh A/L Niranjan Singh 4,000Lee Heng Choong 12,000Teh Eng Yeap 21,000Matlasa Bin Hitam 21,000Tiong Kiong King 35,000Chang Beng Leong 1,000Wong Teck Mee 7,000Chin Khoy Yan 1,750Lim Wah Sang 1,250Teh Lip Pink 112,000Tan Kim Teh 250Amran Bin Abu Bakar 21,000Son Hai Yong 1,000Baby @ Jyandralai A/L Fulchand Kothari 2,000Ahmad Zubaidi Bin Baharumshah 1,500Koh Choong Lan 8,750Teo Chin Hwa 63,000Yap Keong @ Yap Kong Nam 18,000Ng Kim Keong 1,750Munshir Bin Abdullah 3,000Lai Beng Thiem 175Wong Tack Meng 7,000Abdul Hadi Bin Alias 3,500Central Plus (M) Sdn Bhd (183535-W) 59,513,000 The Visitor in Federation of Malaya of the Christian 16,000Brother's SchoolsMichael Robin Jayesuria 2,000Thiagarajan Sethu Chettiar 2,000Zilfalila Haton Bte Abdul Rahman 2,000Lee Lit Phong 1,000Towry Law Asset Management Sdn Bhd Expatriate Provident Fund 1,000Sethw Hassan Bin Sethw Ghani 2,000

05 EMPLOYEES PROVIDENT FUND BOARD 47,630,750 10.8906 ARAB-MALAYSIAN NOMINEES (TEMPATAN) SDN BHD (51181 W) 44,362,000 10.14

Beneficial Owners:-Arab-Malaysian Finance Berhad 42,526,000for Central Plus (M) Sdn Bhd Assar Asset Management Sdn Bhd 126,000for Sarawak Land Development BoardAssar Asset Management Sdn Bhd 28,000for Sarawak Land Consolidation and Rehabilitation AuthorityAssar Asset Management Sdn Bhd 21,000for Sarawak Plantations Services Sdn BhdAssar Asset Management Sdn Bhd 70,000for Bintulu Development Authority Assar Asset Management Sdn Bhd 35,000for Lembaga Kumpulan Wang Kawasan Konsesi HutanAssar Asset Management Sdn Bhd 7,000for Sesco Employees Provident FundAssar Asset Management Sdn Bhd 7,000for Lembaga Amanah Kebajikan Darul FalahAssar Asset Management Sdn Bhd 7,000for Mayang Tea Sdn BhdAssar Asset Management Sdn Bhd 7,000for Faradale Enterprise Bhd

Type of Property and Location Land Area Net Book Value Tenure Remaining Lease Period(Expiry Date)

Vacant Land at Precinct 2.2Pusat Bandar Shah AlamSection 14 Shah Alam 111,443 sq. ft. RM 8,217,173 Leasehold 99 yearsSelangor Darul Ehsan 99 years (17 Dec 2099)

List of Property

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List of Substantial Shareholders as at 4 May 2001 (As Per Register of Substantial Shareholders)Name of Shareholders No. of Total No. %

Shares of Shares

Assar Asset Management Sdn Bhd 14,000for Harwood Timber Sdn Bhd Arab-Malaysian Trustee Bhd 1,490,000for unit holders of HLB Penny Stock Fund Arab-Malaysian Trustee Bhd 24,000as trustee for shares acquired by the unit trust fund, BHLB Pacific Dana Al Ihsan

07 ARAB-MALAYSIAN FINANCE BERHAD (TEM5493) 34,602,500 7.91Beneficial Owners: -Rajini Bin Ramlan 615,000 Beevee(M) Sdn Bhd (347870 K) 1,487,500 Simfoni Warisan Sdn Bhd (378892 K) 971,250 Nadzir Bin Sheikh Fazir 3,500 Tan Chok Uing @ Tan Chok Sing 8,750 Phang Soon Ping 9,000 Michiel Leo A/L Leo Philip 1,750 Louis S/O Savarimuthu 5,250 Zahariah binti Abu Kassim 8,750 Chuah Chong Lai 17,500 Bong Kee Kien 4,250 Jeyadas P Nadarajah 1,750 Fang Kok Leong @ Phang Soon Fook 356,000 Sharabuddin Bin Kudus 15,750 Naemuddin Bin Abdullah 31,500 Central Plus (M) Sdn Bhd (183535 W) 31,065,000

08 UOBM NOMINEES (TEMPATAN) SDN BHD (15356 H) 31,879,500 7.29Beneficial Owners:-Central Plus (M) Sdn Bhd (183535 W) 31,877,500 Mohamad Ghazali B. Mat Saleh 2,000

09 DB (M) NOMINEE (TEMPATAN) SDN BHD (66878 U) 12,441,000 2.84Beneficial owners:- Central Plus (M) Sdn Bhd (183535 W) 12,210,000 K&N Kenanga Holdings Berhad (302859 X) 201,250 Tan Chai Tiam 15,750 Koperasi Pegawai-Pegawai Kerajaaan Malaysia Berhad (TrustAcc/Client) 14,000 (3951)

10 KUMPULAN DARUL EHSAN BERHAD (148040 T) 12,000,000 2.74

* Deemed interest by virtue of 50% equity interest in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd** Held in own name and various nominee names

Focus on Youth

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62

Audit Committee Report

The Board of PNHB is pleased to present the Audit Committee Report for the year 2000.

1 Composition of the Audit Committee

The Audit Committee comprises of the following:-

Chairman : Encik Abdul Majid Abdul Karim (Independent Non-Executive Director)Members : YBhg Dato’ Hari Narayanan Govindasamy (Independent Non-Executive Director)

YB Dato’ Seri Dr Ting Chew Peh (Independent Non-Executive Director)Encik Mat Hairi Ismail (Executive Director, Finance)

Secretary : Madam Tan Bee Lian (Group Company Secretary)

2 Activities of the Audit Committee

In a proactive move towards ensuring the promotion of high standards of corporate governance, accountability,due diligence and integrity, the Audit Committee had undertaken the following activities in year 2000:-

• reviewed the annual audit plan with the External Auditors in terms of the nature of the audit procedures,significant accounting and auditing problems, impact of new or proposed changes in the accountingstandards and regulatory requirements;

• reviewed the audit programme, performance and findings of the Internal Audit Department (‘IAD’);• monitored the implementation of IAD’s Audit Programme;• ensured that sufficient internal audit coverage was accorded on all areas of the Group’s business and

activities;• assessed the capacity of IAD to fulfil its responsibilities for reviewing, amongst other things, the scope of

IAD’s charter and the qualifications and experience level of its staff; • evaluated the standards of internal controls of the Company and financial reporting by holding specific

discussions with the Management on the overall adequacy of the Company’s Internal Control System;• acted upon the request of the Board to investigate and report on issues relating to the management of

the Company;• reviewed the Company’s compliance with certain government regulations; and• assessed the performance of the Company’s financial management.

3 Meetings of the Audit Committee

The Audit Committee met six times in year 2000 and the details of the attendance of each member of theAudit Committee are as follows:-

Audit Committee Member Designation in PNHB No. of Meetings No. of Meetings Percentageheld during the year attended %

Encik Abdul Majid Abdul Karim Chairman 6 6 100

Encik Mat Hairi Ismail Member 6 5 83

YBhg Dato’ Hari Narayanan Member 6 5 83Govindasamy

YB Dato’ Seri Dr Ting Chew Peh Member 6 3 100(appointed on 15 July 2000)

At each Audit Committee Meeting, IAD tabled itsaudit report to the Audit Committee fordeliberation. Weaknesses of procedures wereidentif ied and the respective Heads ofDepartments were asked to take the necessaryactions to rectify those weaknesses, and to putproper procedures and control mechanisms inplace to prevent future occurrences of a similarnature.

An example of the audit findings in year 2000 wasthe discovery of hospital bills totaling RM142,161which had been paid by the Company but notclaimed from insurance or the respectiveemployees in accordance with the Company’spolicy on medical entitlement. Subsequently, asubstantial amount of the hospital bills wererecovered and the Human ResourcesManagement Department (HRM) had since thenimplemented a procedure to closely monitor thehospital bills to ensure that all claims are promptlymade and received. In addition, HRM had alsodisseminated information on the Group’sInsurance Scheme to all employees to avoidmisunderstanding on the respective employee’smedical entitlement.

Another audit finding was the uncollectedtelephone charges for personal calls made byemployees during the period from November 1998to April 1999 totaling RM13,000. The AdministrationDepartment took the approprate actions byissuing stern letters of reminder to the respectiveemployees for their unpaid telephone bills. TheAdministration Department also issued a Circularto all employees to remind them to limit theirpersonal calls. As a result, a substantial portion ofthe outstanding telephone charges wererecovered in 2000 and the Company’s telephonebills have been significantly reduced.

It is also the Audit Committee’s normal practicethat External Auditors are invited to present theirviews to the Audit Committee in respect of theCompany’s quarterly and annual financial resultsbefore the Audit Committee submits itsrecommendation to the Board for approval.

Minutes of each Audit Committee Meeting weredistributed to all members of the Board for notation.Concurrently, the said minutes were also tabled to theBoard for endorsement and action, where necessary,at each Board Meeting, and the Chairman of theAudit Committee reported on each meeting to theBoard at the Board Meetings.

4 Internal Audit Department

IAD was established under the Audit Committeein 1997. Its main duty is to carry out audits on theCompany’s operation procedures and internalcontrol systems. During the year, IAD carried outpriority audits on the following areas:-

• award of contracts;• physical verification of Progress Claims;• time attendance system;• water treatment plants;• information technology system; and• cost of production of WTPs in reference to their

compliance with the PCCA and CCOArequirements, such as quality and quantity ofwater produced.

In October 2000, fol lowing the issuance of the‘Exposure Draft By The Taskforce On Internal Controls –Statement Of Internal Controls: Guidance For DirectorsOf Public Listed Companies’, IAD undertook a specialexercise of gathering financial and operational risksinformation from all Departments/Divisions in theCompany to enable the preparation of an EnterpriseWide Risk Profile. This exercise was completed inDecember 2000.

The Enterprise Wide Risk Profile was then used as abasis to formulate current and future Audit StrategicPlans of IAD. The first plan, which focuses on high-riskareas, was implemented on 1 January 2001.

A Risk Management Committee was established toformalise the identification, measurement and controlof risks that threaten the assets or earnings of theCompany and the Group. The Risk ManagementCommittee is headed by the Executive Director ofFinance Division and the committee members are IADitself and representatives from the Strategic ResourceCentre. The Risk Management Committee regularlypresents its report to the Audit Committee for reviewand endorsement.

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5 Terms of Reference of the Audit Committee

a. CompositionThe Board shall elect an Audit Committeefrom amongst themselves (pursuant to aresolution of the Board of Directors),comprising of at least three (3) Directorswhere the majority of them should not be:-

i. Executive Directors of the Company or anyrelated corporation;

ii. A spouse, parent, brother, sister, son oradopted son, daughter or adopted daughterof an Executive Director of the Company orany related corporation; or

iii. Any person having a relationship which, in theopinion of the Board of Directors, wouldinterfere with the exercise of independentjudgement in carrying out the function of theAudit Committee.

The members of the Audit Committee shall elect aChairman from amongst themselves who is not anExecutive Director or employee of the Companyor any related corporation. It would beadvantageous if the Chairman possesses a strongpersonality, have knowledge and experience infinancial reporting, good leadership skills and iskeen to get financial reporting and controls right.

All members of the Audit Committee, includingthe Chairman, will hold office only so long as theyserve as Directors of the Company. Should anymember of the Audit Committee cease to be aDirector of the Company, his membership in theAudit Committee would cease forthwith.

It is a desirable for membership on the AuditCommittee to be rotated amongst all theDirectors of the Company such that eachDirector will serve a period of three (3) years onthe Audit Committee.

If the members of the Audit Committee for anyreason be reduced to below three (3), the Boardof Directors shall within three (3) months of thatevent, appoint such number of new members asmay be required to make up the minimumnumber of three (3) members.

b. ObjectivesThe primary objectives of the Audit Committeeare to:-i. Provide assistance to the Board in fulfilling its

fiduciary responsibilities, particularly in theareas relating to the Company’s accountingand management controls, financial reportingand business ethics policies.

ii. Provide greater emphasis on the auditfunction by increasing the objectivity andindependence of external and internalauditors and providing a forum for discussionthat is independent of the Management.

iii. Maintain through regularly scheduledmeetings a direct line of communicationbetween the Board and the external auditors,internal auditors and financial management.

iv. Strengthen the role of Non-Executive Directorsby improving their knowledge andunderstanding of the Company’s operation.

v. Undertake such additional duties as may beappropriate and necessary to assist the Board.However, whether or not the Audit Committeeshould undertake one or more of theadditional duties rests on the Board’sviewpoint on corporate needs and theenvironment in which the Company operates.

c. Duties and ResponsibilitiesIn fulf i l l ing its primary objectives, the AuditCommittee will need to undertake the followingduties and responsibilities:-

c.1 Oversee All Matters Relating to External andInternal Auditi. Review the annual audit plan with the

external auditors. The Committee shall meetwith the external auditors prior to thecommencement of the annual audit todiscuss:-- The general outline of the extent and timing

of the auditors’ proposed coverage oflocation such as branches, departments,factories, divisions and subsidiaries.

- The nature of the audit procedures to beperformed.

- The extent of any planned reliance on thework of the internal auditors and theanticipated effect of this reliance on theexamination.

64

- Any significant accounting and auditingproblems that the auditors can foresee.

- The impact on the financial statements ofany new or proposed changes inaccounting standards or regulatoryrequirements.

- The effect on the audit of significant data–processing systems.

Following review of the plan, the AuditCommittee may request the external auditors toper form additional audit work directed tospecific areas of concern to the Committee.ii. Oversee the internal audit department. The

Audit Committee in overseeing the internalaudit department will:-- Review the audit programme, scope,

performance and findings of the internalauditors.

- Monitor the implementation of theprogramme so that sufficient internal auditcoverage is accorded. In this respect, onlythe Committee can consider and approveor otherwise, all requests by seniormanagement to uti l ise internal auditpersonnel for non-audit assignments.

- Assess the capacity of the internal auditdepartment to fulfil its responsibilities byconsidering, amongst other things, the scopeof the department’s authority as presented inthe department’s charter, the qualificationsand experience level of its staff, the degreeto which internal auditors are independentof the activities they audit and the reportingrelationship between the head of internalaudit and senior management.

- Review the coordination of audit effortsbetween external and internal auditors,where practical, with a view to maximisingaudit effectiveness and controlling externalaudit costs.

iii. Review the assistance and cooperation givenby the Company’s officers to the external andinternal auditors.

iv. To nominate the external auditors forappointment.

v. The external and/or internal auditors shallhave the right to appear and be heard at anymeeting of the Audit Committee and shallappear before the Audit Committee whenrequired to do so by the Audit Committee.

vi. Upon the request of the external and/orinternal auditors, the Chairman of the AuditCommittee shall convene a meeting of theCommittee to consider any matters theauditors believe should be brought to theattention of the Committee.

c.2 Evaluate the Standards of Internal Control andFinancial Reportingi. Hold specific discussions with senior corporate

management to discuss the overall adequacyof the internal control system.

ii. Meet with the internal and external auditorsconcerning their evaluation of the system ofinternal accounting controls.

iii. Consider the nature and disposition of therelevant comments appearing in the reportsprepared by the internal auditors and in theexternal auditors’ management letter.

c.3 Review of Financial Statementsi. Meet with the Management and the external

auditors to discuss the annual f inancialstatements of the Company or Group and theresults of the audit before recommendingapproval by the Board.

ii. Review the nature and resolution of anysignificant accounting and auditing problemsencountered during the examination.

iii. It is good practice for the Audit Committee tomeet the Management at a regular interval toreview the results of the Company or Group,such as quarterly review of the results.

iv. Review the nature of any related partytransactions that may arise within theCompany or Group.

v. Review the nature of any signif icantadjustments, reclassifications or additionaldisclosures proposed by the external auditorsthat are currently significant or may becomesignificant in the future.

65

vi. Review the adequacy of disclosure of theimpact of any changes during the year inaccounting policies, standards and/orregulatory requirements.

vii. Review the reasons for the major fluctuationsin financial statement balances for the currentyear compared to prior years.

viii. Review for any unusual circumstances orsituations reflected in the financial statements,including identifying any marginal operations.

ix. Review the nature of any unusual or significantcommitments or contingent liabilities.

x. Review of any significant differences betweenthe annual report and other reports, such asreports to the regulatory agencies.

xi. Review for any significant differences informat or disclosure from industry norms.

c.4 Additional Duties and Responsibilitiesi. Act upon the Board of Director’s request to

invest igate and report on any issues orconcerns in regard to the management ofthe Company.

ii. Review the Company’s bus iness ethicscode, the method of monitor ingcompl iance with the code and thedisposition of reported exceptions.

iii. Review executive expenses.iv. Review policies on sensitive payments.v. Review compl iance with certa in

government regulations.vi. Review policies to avoid conflicts of interest

and review past or proposed transactionsbetween the Company and members ofmanagement.

vii. Review certain aspects of the Company’spension plan and compliance with relevantlaws and regulations.

viii.Assess the per for mance of f inancialmanagement.

ix. Such other functions as may be agreed toby the Audit Committee and the Board ofDirectors.

d. Access to RecordsIn carrying out their duties and responsibilities, theAudit Committee will in principle have full, freeand unrestricted access to all Company records,property and personnel.

e. Meetings and MinutesIt is good practice for the Audit Committee tohold a minimum of four (4) meetings a year,although additional meetings may be called atany time at the Chairman’s discretion. It wouldbe desirable that the notice of meetings be sentat least seven (7) days before the time set for themeeting together with an agenda to all membersof the Committee and any persons that may berequired to attend. The recommended quorumfor each meeting shall be three (3) members.

In addition to the Committee members, the headof internal audit will normally be in attendance atthe meetings. Representatives of the externalauditors are to be in attendance at meetingswhere matters relating to the audit of thestatutory accounts and/or the external auditorsare to be discussed.

The Chief Executive Officer and/or otherappropriate officers may be invited to attend,except for those portions of the meetings wheretheir presence is considered inappropriate, asdetermined by the Committee Chairman.

Minutes of each meeting shall be kept anddistributed to each member of the Committeeand also to the members of the Board. TheCommittee Chairman shall report on eachmeeting to the Board. The Secretary to the AuditCommittee shall be the Company Secretary.

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67

Financial Report Directors’ Report 68

Consolidated Income Statement 74

Income Statement 75

Balance Sheets 76

Consolidated Statement of Changes in Equity 77

Statement of Changes in Equity 78

Cash Flow Statements 79

Notes to the Financial Statements 80

Statement by Directors 104

Statutory Declaration 104

Report of the Auditors 105

Directors’ Reportf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 0

The Directors have pleasure in submitting their report together with the audited financial statements of the Groupand of the Company for the financial year ended 31 December 2000.

Principal activities

The principal activities of the Company during the financial year are that of investment holding and provision ofmanagement services. The principal activities of the subsidiary companies are set out in note 12 to the financialstatements.

There have been no significant changes in the nature of the activities of the Group and of the Company during thefinancial year.

Financial results

Group CompanyRM RM

Net profit attributable to shareholders 91,224,907 1,950,100

Dividends

No dividends have been paid, declared or proposed by the Company since 31 December 1999.

Reserves and provisions

Material transfers to and from reserves during the financial year are disclosed in the Statement of Changes in Equity.There were no material transfers to or from provisions during the financial year.

Share capital

The authorised share capital of the Company was increased from 300,000,000 ordinary shares of RM1 each to500,000,000 ordinary shares of RM1 each on 7 June 2000.

During the financial year, the issued and paid up share capital of the Company was increased from RM250,000,000to RM437,500,000 with the issuance of 187,500,000 ordinary shares of RM1 each as follows:-

No. of ordinaryPurpose and date of issue shares of RM1 each

Bonus issue of one (1) ordinary share for every two (2) existing ordinary shares held, on18 August 2000 125,000,000

Rights issue of one (1) ordinary share for every four (4) existing ordinary shares held at 62,500,000an issue price of RM1.50 per share, on 10 October 2000

The Bonus Shares and Rights Shares issued during the financial year rank pari-passu in all respects with the existingordinary shares of the Company and were listed on the Kuala Lumpur Stock Exchange (‘KLSE’) on 6 September 2000and 18 October 2000 respectively.

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69

Employee Loyalty Share Option Scheme

Pursuant to the Company’s Employee Loyalty Share Option Scheme (‘ELSOS’), which became effective on 8 July1997, options over 9,094,000 ordinary shares of RM1 each in the Company were allocated to eligible employees inthe period to 8 July 2000 to take up the issued ordinary shares of the Company offered by the holding company,Central Plus (M) Sdn. Bhd. and another corporate shareholder, Corporate Line (M) Sdn. Bhd.

The salient features of the ELSOS are as follows:-

(a) Eligible person are employees who as at 30 April 1997 have been confirmed in writing as a full-timeemployee of the Group and includes full-time Executive Directors.

(b) The options allocated may be exercised in three (3) tranches within the period of three (3) years up to 8 July2000.

(c) The exercise price for the ordinary shares under the ELSOS shall be the retail fixed price of RM3.80 on the datethe option is exercised.

(d) The total number of ordinary shares offered under the ELSOS shall comprise 9,094,000 issued and fully paid upordinary shares of RM1 each of the Company.

During the financial year, options over 5,566,000 ordinary shares of RM1 each were granted in the second trancheand third tranche in July 2000 at an exercise price of RM3.80 per ordinary share and as at the end of the financialyear, all of the options have been exercised by the eligible employees.

As at 31 December 2000 all options pursuant to the ELSOS have been allocated.

Directors

The Directors who have held office during the period since the date of the last report are:-

Tan Sri Rozali bin IsmailRuslan bin HassanRaja Azhar bin Raja IsmailMat Hairi bin IsmailLee Miang KoiAbdul Majid bin Abdul KarimDato’ Hari Narayanan a/l GovindasamyDato’ Seri Dr Ting Chew Peh (appointed on 15 July 2000)

Directors’ interests

According to the Register of Directors’ Shareholdings, particulars of interests in shares in the Company and its relatedcorporations during the financial year of those Directors holding office at the end of the financial year are as follows:-

Number of ordinary shares of RM1 eachAt 1.1.2000 Addition Disposal At 31.12.2000

Direct interests in the Company:- SharesRuslan bin Hassan 238,000 156,000 (30,000) 364,000Raja Azhar bin Raja Ismail 3,000 282,250 – 285,250Mat Hairi bin Ismail 3,000 39,750 (20,000) 22,750Lee Miang Koi 50,000 94,000 – 144,000Abdul Majid bin Abdul Karim 2,000 1,000 – 3,000

Indirect interests in the CompanySharesRuslan bin Hassan – 262,500 – 262,500*Raja Azhar bin Raja Ismail 225,000 168,750 – 393,750*Mat Hairi bin Ismail – 416,000 (153,500) 262,500*Lee Miang Koi 10,000 8,000 – 18,000*Dato’ Hari Narayanan a/l Govindasamy 120,000 90,000 – 210,000*(*held by nominees)

Number of ordinary shares of RM1 eachAt 1.1.2000 Allocated Exercised At 31.12.2000

Share options under ELSOSRuslan bin Hassan 150,000 – (150,000) –Raja Azhar bin Raja Ismail 160,000 – (160,000) –Mat Hairi bin Ismail 160,000 – (160,000) –Lee Miang Koi 29,000 – (29,000) –

Number of ordinary shares of RM1 eachAt 1.1.2000 Addition Disposal At 31.12.2000

Shares held by Central Plus (M) Sdn. Bhd. (holding company) in the Company 127,510,000 95,632,500 – 223,142,500

By virtue of his substantial interests in Central Plus (M) Sdn. Bhd., Tan Sri Rozali bin Ismail is deemed to be interested inthe shares of the Company and all its subsidiary companies and associated company.

Number of ordinary shares of RM1 eachAt 1.1.2000 Addition Disposal At 31.12.2000

Direct interests in the holding company:-Central Plus (M) Sdn BhdTan Sri Rozali bin Ismail 13,496,500 – – 13,496,500

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By virtue of his substantial interests in Central Plus (M) Sdn. Bhd., Tan Sri Rozali bin Ismail is deemed to be interested inthe shares of all the other subsidiary companies and associated companies of Central Plus (M) Sdn. Bhd. to theextent Central Plus (M) Sdn. Bhd. has an interest.

The other Director in office at the end of the financial year did not hold any interest in shares in or debentures of theCompany or its related corporations.

Directors’ benefits

Since the end of the previous financial year, no Director of the Company has received or become entitled toreceive a benefit (other than the Directors’ remuneration shown in note 6 to the financial statements) by reason of acontract made by the Company or a related corporation with the Director or with a firm of which he is a member, orwith a company in which he has a substantial financial interest, except for:-

(i) certain Directors who received remuneration as Directors/Executives Directors of related corporations andthe benefits arising from the options over shares in the Company allocated to certain Directors under theELSOS as disclosed in the earlier section of this report;

(ii) Tan Sri Rozali bin Ismail who has deemed interests in a related company, Mandai Sari Sdn. Bhd. whichundertakes to operate, maintain and manage the water treatment facilities under the terms of theOperation and Maintenance Agreement dated 8 October 1994 with the Company;

(iii) Tan Sri Rozali bin Ismail who has deemed interests in a related company, RZ Management Services Sdn. Bhd.which provides secretarial services to the subsidiary company, Puncak Niaga (M) Sdn. Bhd. (‘PNSB’); and

(iv) Tan Sri Rozali bin Ismail and Mat Hairi bin Ismail who have deemed interests in a related company, PuncakNiaga Overseas Capital Sdn. Bhd. which provides project and investment consultancy services for overseasinvestment to the subsidiary company, PNSB.

Neither during nor at the end of the financial year was the Company a party to any arrangement whose object wasto enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Companyor any other body corporate.

Statutory information on the financial statements

Before the income statements and balance sheets of the Group and of the Company were made out, the Directorstook reasonable steps:-

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making ofprovision for doubtful debts and satisfied themselves that all known bad debts had been written off and thatadequate provision had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course ofbusiness their values as shown in the accounting records of the Group and of the Company have beenwritten down to an amount which they might be expected so to realise.

Statutory information on the financial statements (cont’d)

At the date of this report, the Directors are not aware of any circumstances:-

(a) which would render the amounts written off for bad debts or the amount of the provision for doubtful debtsin the financial statements of the Group and of the Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and ofthe Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of theGroup and of the Company misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period oftwelve months after the end of the financial year which, in the opinion of the Directors, will or may substantiallyaffect the ability of the Group and of the Company to meet their obligations when they fall due.

At the date of this report, there does not exist:-

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financialyear which secures the liability of any other person; or

(b) any contingent liability of the Group and of the Company which has arisen since the end of the financialyear.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report orthe financial statements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors,

(a) the results of the Group’s and of the Company’s operations during the financial year were not substantiallyaffected by any item, transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report anyitem, transaction or event of a material and unusual nature likely to affect substantially the results of theoperations of the Group and of the Company for the financial year in which this report is made.

Ultimate holding company

The Directors regard Central Plus (M) Sdn. Bhd., a company incorporated in Malaysia as the ultimate holdingcompany.

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Auditors

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

In accordance with a resolution of the Board of Directors dated 26 April 2001.

Tan Sri Rozali bin IsmailDirector

Mat Hairi bin IsmailDirector

Kuala Lumpur

74

GroupNote 2000 1999

RM RM

Revenue 5 350,564,235 347,472,486

Other operating income 24,969,021 17,969,877

Operating and maintenance costs (118,254,658) (110,747,827)

Staff cost (26,438,392) (25,717,998)

Administrative expenses (17,527,784) (18,489,924)

Depreciation and amortisation expenses (58,474,056) (53,838,941)

Profit from operations 6 154,838,366 156,647,673

Finance costs 7 (63,593,459) (57,676,156)

Share of results of associated company (20,000) –

Profit from ordinary activities before taxation 91,224,907 98,971,517

Taxation 8 – –

Net profit attributable to shareholders 91,224,907 98,971,517

Earnings per ordinary share- basic 9 21.84 sen 23.99 sen

Consolidated Income Statementf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 0

The notes on pages 80 to 103 form an integral part of these accounts.

75

CompanyNote 2000 1999

RM RM

Revenue 5 3,960,000 3,960,000

Other operating income 3,917,180 –

Staff cost (216,627) (115,804)

Administrative expenses (705,790) (230,155)

Amortisation of leasehold land (85,521) (85,521)

Profit from operations 6 6,869,242 3,528,520

Finance costs 7 (3,823,942) –

Provision for diminution in value of investment in associated company (20,000) –

Profit from ordinary activities before taxation 3,025,300 3,528,520

Taxation 8 (1,075,200) (1,075,200)

Net profit attributable to shareholders 1,950,100 2,453,320

The notes on pages 80 to 103 form an integral part of these accounts.

Income Statementf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 0

Balance Sheetsa s a t 3 1 D e c e m b e r 2 0 0 0

Group CompanyNote 2000 1999 2000 1999

RM RM RM RM

Non current assetsProperty, plant and equipment 10 1,659,009,853 1,568,016,952 8,217,173 8,302,694Project development expenditure 11 248,967,241 231,473,695 – –Subsidiary companies 12 – – 123,000,105 123,000,100Associated company 13 – – – –Other investments 14 45,050 45,050 – –Advances to subsidiary company 15 – – 361,368,807 271,368,807Debt Service Reserve Account 16 50,000,000 – – –

1,958,022,144 1,799,535,697 492,586,085 402,671,601

Current assetsInventories 17 777,265 822,426 – –Amount due from customers on construction

contracts 18 221,362,795 49,474,083 – –Trade and other receivables 19 297,740,021 191,276,581 57,347,096 8,294,400ELSOS scheme 21 – 21,150,800 – 21,150,800Deposits, bank and cash balances 22 42,054,887 59,179,942 860,182 25,825

561,934,968 321,903,832 58,207,278 29,471,025

Less: Current liabilitiesTrade and other payables 23 125,428,927 217,473,308 774,805 5,476,716Hire purchase creditors 25 1,286,852 1,438,814 – –Short term borrowings 26 138,754,891 57,728,358 48,000,000 21,150,800Taxation 1,246,001 1,246,001 1,200,000 1,200,000

266,716,671 277,886,481 49,974,805 27,827,516

Net current assets 295,218,297 44,017,351 8,232,473 1,643,509

Less: Non current liabilitiesDeferred taxation 27 – – – –Long term borrowings 28 1,436,893,333 1,203,576,055 – –Hire purchase creditors 25 2,436,672 2,072,275 – –Retention sum – 9,766,283 – –

1,439,330,005 1,215,414,613 – –813,910,436 628,138,435 500,818,558 404,315,110

Capital and reservesShare capital 29 437,500,000 250,000,000 437,500,000 250,000,000Share premium 50,858,488 143,805,140 50,858,488 143,805,140Reserve on consolidation 92,322 92,322 – –Merger reserve (40,999,998) (40,999,998) – –Retained earnings 30 366,459,624 275,240,971 12,460,070 10,509,970

813,910,436 628,138,435 500,818,558 404,315,110

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The notes on pages 80 to 103 form an integral part of these accounts.

77

Share capital Non-distributable DistributableNominal Share Reserve on Merger Retained

value premium consolidation reserve earnings TotalRM RM RM RM RM RM

GroupAt 1 January 1999 250,000,000 143,805,140 92,322 (40,999,998) 176,269,454 529,166,918Net profit for the financial

year – – – – 98,971,517 98,971,517At 31 December 1999 250,000,000 143,805,140 92,322 (40,999,998) 275,240,971 628,138,435Issue of share capital- bonus issue 125,000,000 (125,000,000) – – – –- rights issue 62,500,000 31,250,000 – – – 93,750,000Expenses relating to issue

of shares – (1,843,432) – – – (1,843,432)

Stamp duty refund – 2,646,780 – – – 2,646,780Goodwill on acquisition of

subsidiary company written off – – – – (6,254) (6,254)

Net profit for the financial year – – – – 91,224,907 91,224,907

At 31 December 2000 437,500,000 50,858,488 92,322 (40,999,998) 366,459,624 813,910,436

The notes on pages 80 to 103 form an integral part of these accounts.

Consolidated Statement of Changes in Equityf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 0

Statement of Changes in Equityf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 0

Non-Share capital distributable Distributable

Nominal Share Retainedvalue premium earnings Total

RM RM RM RM

CompanyAt 1 January 1999 250,000,000 143,805,140 8,056,650 401,861,790

Net profit for the financial year – – 2,453,320 2,453,320At 31 December 1999 250,000,000 143,805,140 10,509,970 404,315,110

Issue of share capital - bonus issues 125,000,000 (125,000,000) – –- rights issues 62,500,000 31,250,000 – 93,750,000

Expenses relating to issue of shares – (1,843,432) – (1,843,432)

Stamp duty refund – 2,646,780 – 2,646,780

Net profit for the financial year – – 1,950,100 1,950,100

At 31 December 2000 437,500,000 50,858,488 12,460,070 500,818,558

78The notes on pages 80 to 103 form an integral part of these accounts.

79

Group CompanyNote 2000 1999 2000 1999

RM RM RM RMOperating activitiesCash receipt from customers 236,612,837 419,366,067 – 1,195,200Dividends received – – 12,254,400 –Cash paid to operators (109,361,707) (89,684,493) – –Cash paid to contractors (216,183,967) (118,096,742) – –Cash paid to employees and for operating

expenses (49,354,833) (38,428,564) (284,190) (352,078)Cash (utilised in)/from operations 31 (138,287,670) 173,156,268 11,970,210 843,122Interests paid (41,596,367) (50,231,775) (3,823,942) –Interests received 1,669,344 6,554,147 3,917,180 –

(39,927,023) (43,677,628) 93,238 –Net cash flow (utilised in)/ from operating

activities (178,214,693) 129,478,640 12,063,448 843,122Investing activitiesAcquisition of investment in subsidiary companies – (3) (5) (3)Acquisition of investment in associated company (20,000) – (20,000) –Proceeds from disposal of fixed assets 515,652 148,389 – –Purchase of fixed assets and payment for capital

work in progress (179,937,984) (244,336,762) – –Payments for project development expenditure (30,869,124) (14,649,207) – –Payment for Wangsa Maju water treatment plant – (4,441,484) – –Advances to subsidiary companies – – (153,762,434) (849,698)Repayment of advance to a related company (6,893,808) – – –Advances to a related company – (4,307,188) – –Net cash flow from investing activities (217,205,264) (267,586,255) (153,782,439) (849,701)Financing activitiesProceeds from long term borrowings 1,387,561,424 – – –Repayment of long term borrowings (1,100,000,000) – – –Proceeds from short term borrowings 140,000,000 8,400,000 140,000,000 –Repayment of short term borrowings (92,000,000) – (92,000,000) –Stamp duty refund received 2,646,780 – 2,646,780 –Payment for bonus and rights issue expenses (1,843,432) – (1,843,432) –Proceeds from rights issue 93,750,000 – 93,750,000 –Exercise of share options (ELSOS) 21,150,800 – 21,150,800 –Repayment of ELSOS loan (21,150,800) – (21,150,800) –Repayment of hire purchase liabilities (1,819,870) (1,620,163) – –Net cash flow from financing activities 428,294,902 6,779,837 142,553,348 –Increase/(decrease) in cash and cash equivalents 32,874,945 (131,327,778) 834,357 (6,579)Cash & cash equivalents at beginning of financial

year 59,179,942 190,507,720 25,825 32,404Transfer to Debt Service Reserve Account 16 (50,000,000) – – –Cash & cash equivalents at end of financial year 42,054,887 59,179,942 860,182 25,825Cash & cash equivalent comprises:-Deposits with a licensed bank 821,982 – – –Bank and cash balances 41,232,905 59,179,942 860,182 25,825

42,054,887 59,179,942 860,182 25,825

The notes on pages 80 to 103 form an integral part of these accounts.

Cash Flow Statementsf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 0

Notes to the Financial Statementsf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 0

1 General information

The principal activities of the Company during the financial year are that of investment holding and provision ofmanagement services. The principal activities of the subsidiary companies are set out in note 12 to the financialstatements.

The holding company is Central Plus (M) Sdn. Bhd., a company incorporated in Malaysia.

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on theMain Board of the Kuala Lumpur Stock Exchange.

The address of the registered office of the Company is as follows:-

Suite 1401-1406, 14th FloorPlaza See Hoy ChanJalan Raja Chulan50200 Kuala Lumpur

2 Award of concessions

The subsidiary company, Puncak Niaga (M) Sdn. Bhd. (‘PNSB’) has been awarded the following concessions bythe State Government of Selangor:-

(i) to take over, operate, maintain, manage, rehabilitate and refurbish existing water treatment plants locatedin Selangor Darul Ehsan and Wilayah Persekutuan for a period of 26 years ending on 31 December 2020;

(ii) to construct, operate, maintain and manage the new water treatment facilities, namely the Sungai SelangorWater Supply Scheme Phase 2, Stages I and II (‘SSP2’) for a period of 26 years ending on 31 December 2020;and

(iii) to manage, operate and maintain the water treatment plant at Sungai Semenyih, located in Selangor DarulEhsan for a period of one year commencing from 5 May 1998 or the completion date of the privatisation ofJabatan Bekalan Air Selangor, whichever is earlier. The water treatment plant was officially handed back tothe State Government of Selangor on 2 January 2001 (Note 38).

On 17 January 1998, PNSB was given a right by the Federal Government to develop a water treatment plantand its related facilities in Wangsa Maju. The construction work commenced in January 1998 and wascompleted in July 1998. Subsequent to the completion, PNSB has been managing, operating and maintainingthe water treatment plant.

3 Basis of preparation

The financial statements of the Group and of the Company have been prepared under the historical costconvention and comply with the applicable approved accounting standards in Malaysia and the provisions ofthe Companies Act, 1965.

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3 Basis of preparation (cont’d)

The preparation of financial statements in conformity with the applicable approved accounting standards andthe provisions of the Companies Act require the Directors to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenue and expenses during the reported period. Actualresults could differ from those estimates.

4 Summary of significant accounting policies

The following accounting policies have been used consistently in dealing with items which are consideredmaterial in relation to the financial statements.

(a) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiarycompanies made up to the end of the financial year. Subsidiary companies are consolidated from the dateon which control is transferred to the Group and are no longer consolidated from the date when that controlceases.

Subsidiary companies are consolidated using the acquisition method of accounting except for a subsidiarycompany which is consolidated using the merger method of accounting in accordance with MalaysianAccounting Standards No. 2 ‘Accounting for Acquisitions and Mergers’, as disclosed in Note 12.

Merger method

Under the merger method of accounting, the results of the subsidiary company is presented as if the mergerhad been effected throughout the current and previous financial years. On consolidation, the differencebetween the carrying value of the investment over the nominal value of the shares acquired is treated asmerger reserve in accordance with the merger relief provisions under Section 60(4) of the Companies Act,1965.

Acquisition method

Under the acquisition method of accounting, the results of subsidiary companies acquired or disposed ofduring the financial year are included from the date of acquisition up to the date of disposal. At the date ofacquisition, the fair values of the subsidiary companies’ net assets are determined and these values arereflected in the consolidated financial statements. The difference between the acquisition cost and the fairvalues of the subsidiary companies’ net assets is reflected as goodwill or reserve on consolidation.

All intercompany transactions, balances and unrealised gains on transactions between group companiesare eliminated, unrealised losses are also eliminated unless cost cannot be recovered. Where necessary,accounting policies for subsidiary companies have been changed to ensure consistency with the policiesadopted by the Group.

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4 Summary of significant accounting policies (cont’d)

(b) Goodwill

Goodwill arising on consolidation represents the excess of the fair value of purchase consideration ofsubsidiary companies over the Group’s share of the fair value of their separable net assets at the date ofacquisition and is written off against the Group’s retained profits.

(c) Subsidiary companies

A subsidiary company is a company in which the Group has a long term equity investment of more than 50%and where the Group has power to exercise control over the financial and operating policies so as to obtainbenefits from their activities.

Investments in subsidiary companies, are stated at cost and provision is only made where, in the opinion ofthe Directors, there is a permanent diminution in value. Permanent diminution in the value of an investment isrecognised as an expense in the period in which the diminution is identified.

(d) Associated company

Investment in associated company is accounted for in the consolidated financial statements using theequity method of accounting. Associated company is a company in which the Group exercises significantinfluence. Significant influence is the ability to participate in the financial and operating policy decisions ofthe associated company but not control over those policies.

Investment in associated company is stated at cost and provision is only made where, in the opinion of theDirectors, there is a permanent diminution in value. Permanent diminution in value of an investment isrecognised as an expense in the period in which the diminution is identified.

Equity accounting involves recognising in the income statement the Group’s share of the results ofassociated company for the period. The Group’s investment in associated company is carried in thebalance sheet at an amount that reflects its share of the net assets of the associated company less premiumpaid on acquisition, which is written off against the Group’s retained profits. Equity accounting isdiscontinued when the carrying amount of the investment in an associated company reaches zero, unlessthe Group has incurred obligations or guaranteed obligations in respect of the associated company.

Unrealised gains on transactions between the Group and its associated companies are eliminated to theextent of the Group’s interest in the associated companies; unrealised losses are also eliminated unless thetransaction provides evidence on impairment of the asset transferred. Where necessary, in applying theequity method, adjustments are made to the financial statements of associated companies to ensureconsistency of accounting policies with the Group.

(e) Other investments

Long term investments are stated at cost unless in the opinion of the Directors, there has been a permanentdiminution in value, in which case a provision is made. Permanent diminution in the value of investment isrecognised as an expense in the period in which the diminution is identified.

82

4 Summary of significant accounting policies (cont’d)

(f) Property, plant and equipment

Property, plant and equipment are stated at cost, which comprises the purchase cost and any incidentalcost of acquisition, less accumulated depreciation except for capital work-in-progress which are notdepreciated. Long term leasehold land is stated at cost and amortised over the period of the lease of 99years.

Capital work-in-progress represents the development and construction costs incurred for the new watertreatment facilities, namely the SSP2 Stage II. The water treatment facilities were completed in December2000, and accordingly, have been reclassified to water treatment plants.

All other property, plant and equipment are depreciated on a straight line basis to write off the cost of eachasset to their residual values over their estimated useful lives at the following annual rates:-

Water treatment plants Over the remaining period of the concession ending 31 December 2020Plant and equipment 10%Office equipment 20%Furniture and fittings 20%Motor vehicles 20%Computers and software 33 ⅓%Renovation 33 ⅓%

(g) Assets acquired under hire purchase arrangements

Property, plant and equipment acquired under hire purchase are capitalised in the financial statements andare depreciated in accordance with the policy set out in note 4(f) above. The corresponding outstandingobligations due under the hire purchase after deducting finance charges are included as liabilities in thefinancial statements. Finance charges are allocated to the income statements over the periods of therespective agreements.

(h) Project development expenditure

Project development expenditure are stated at cost and comprises expenditure incurred for therehabilitation and refurbishment of water treatment facilities and concession acquisition cost. Projectdevelopment expenditure are amortised over the period of the concession. However, should no futureeconomic benefits be expected to flow from the project development expenditure, the amount capitalisedis charged as an expense in the income statement in the period in which such a decision is made.

(i) Construction contracts

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognisedonly to the extent of contract costs incurred that it is probable will be recoverable and contract costs arerecognised as expenses.

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4 Summary of significant accounting policies (cont’d)

(i) Construction contracts (cont’d)

When the outcome of a construction contract can be estimated reliably, contract revenue and contractcosts are recognised over the period of the contract as revenue and expenses respectively. The Group usesthe percentage of completion method to determine the appropriate amount of revenue and costs torecognise in a given period; the stage of completion is measured by reference to the actual costs incurredto date to estimated total costs for each contract. When it is probable that total contract costs will exceedtotal contract revenue, the expected loss is recognised as an expense immediately.

The aggregate of the costs incurred and the profit/loss recognised on each contract is compared againstthe progress billings up to the financial year end. Where costs incurred and recognised profits (lessrecognised losses) exceed progress billings, the balance is shown as ‘Amounts due from customers onconstruction contracts’. Where progress billings exceed costs incurred plus recognised profits (lessrecognised losses), the balance is shown as ‘Amounts due to customers on construction contracts’.

(j) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weightedaverage basis and includes transportation and handling costs.

(k) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which theyare identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at theperiod end.

(l) Capitalisation of borrowing costs

Borrowing costs incurred in connection with financing the construction of the capital work-in-progress arecapitalised and included as part of the construction costs respectively until the assets are ready for theirintended use.

(m) Deferred taxation

Deferred taxation is provided for using the liability method in respect of all material timing differencesbetween accounting income and taxable income except where the tax effects of such timing differencesare not expected to be reversed in the foreseeable future.

Deferred tax benefits are recognised only if there is a reasonable expectation of their realisation in theforeseeable future.

(n) Cash and cash equivalents

Cash and cash equivalents comprises cash in hand, bank balances, demand deposits and short term, highlyliquid investments that are readily convertible to known amounts of cash and which are subject to aninsignificant risk of changes in value.

84

4 Summary of significant accounting policies (cont’d)

(o) Revenue recognition

Revenue of the Group is recognised when the treated water is discharged through the reading meterinstalled at the reservoir.

Dividend income is recognised when the shareholder’s right to receive payment is established.

Management fee is recognised on an accrual basis.

Other revenue earned by the Group are recognised on the following bases:-

(i) Revenue relating to long term construction contracts are accounted for under the percentage ofcompletion method; the stage of completion is measured by reference to the actual costs incurredto date to estimated costs for each contract.

(ii) Interest income is recognised on an accrual basis.

(p) Comparatives

Certain comparative figures have been extended or reclassified to comply with the additional disclosurerequirements of the 13 new MASB standards that are applicable for the financial year ended 31 December2000.

5 Revenue

Group Company2000 1999 2000 1999

RM RM RM RMInvoiced value of bulk quantity of treated water

supplied to the State Government of Selangor 350,564,235 347,472,486 – –Gross dividend income – – 3,840,000 3,840,000Management fees – – 120,000 120,000

350,564,235 347,472,486 3,960,000 3,960,000

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6 Profit from operations

Group Company2000 1999 2000 1999

RM RM RM RMThe following items have been charged/(credited) in

arriving at profit from operations:-Depreciation of property, plant and equipment 4,626,399 5,008,515 85,521 85,521Amortisation of water treatment plants 40,472,079 37,960,348 – –Amortisation of project development expenditure 13,375,578 10,870,078 – –Rental of premises 1,694,609 2,706,873 – –Hire of transport and equipment 921,268 287,424 – –Directors’ remuneration

- fees – 626,067 – –- other emoluments 4,540,258 3,605,803 104,750 42,000

Auditors’ remuneration- current year 90,000 90,000 15,000 15,000- underprovision in respect of previous year – 15,000 – 5,000

Provision for diminution in value of investment in associated company – – 20,000 –

Interest income on deposits (6,010,492) (6,617,139) (93,238) –Interest income on advances to subsidiary company – – (3,823,942) –Profit on construction contracts* (15,916,469) (11,315,435) – –Gain on disposal of property, plant and equipment (503,725) (37,303) – –

* Profit on construction contract of the Group is arrived at as follows:-

Group2000 1999

RM RM

Gross revenue recognised 237,122,625 56,639,499Contract cost recognised (221,206,156) (45,324,064)

15,916,469 11,315,435

The estimated monetary value of benefits-in-kind received and receivable by the Directors otherwise than incash from the Group amounts to RM170,742 (1999: RM156,017).

The number of persons employed by the Group and the Company at the end of the financial year were 689(1999: 707) and 1 (1999: 1) respectively.

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7 Finance costs

Group Company2000 1999 2000 1999

RM RM RM RMFinancial costs comprise:-Interest expense on conventional borrowings 43,896,633 56,971,786 – –Financing cost on borrowings under Islamic banking

principles 7,847,928 – – –Interest expense on bridging loans 3,823,942 – 3,823,942 –Interest expense on hire purchase 469,335 553,891 – –Bank charges 28,843 133,208 – –Arrangement fees and termination charges on loan

facilities 7,526,599 – – –Other interest expense 179 17,271 – –

63,593,459 57,676,156 3,823,942 –

8 Taxation

The taxation charge in the income statements represents:-

Group Company2000 1999 2000 1999

RM RM RM RMMalaysian income tax based on the chargeable

income for the financial year – – 1,075,200 1,075,200

There is no taxation charge for the Group for the financial year primarily due to the utilisation of available capitalallowances. The amount of tax savings for the Group for which credit is taken for the financial year isapproximately RM34,564,000 (1999: RM1,760,000).

The taxation charge for the Company for financial year is principally in respect of dividend income receivedfrom its subsidiary company. The effective tax rate of the Company is higher than the applicable statutory taxrate due to the disallowance of certain expense items as a deduction for taxation purposes.

9 Earnings per ordinary share

The basic earnings per ordinary share for the financial year is calculated by dividing the net profit attributable toshareholders of RM91,224,907 (1999: RM98,971,517) by the weighted average number of ordinary shares in issueduring the financial year of 417,708,334 (1999: 412,500,000) shares.

There is no diluted earnings per ordinary share as the Company’s Employee Loyalty Share Option Scheme doesnot affect the basic earnings per ordinary share as the options are over existing issued and fully paid ordinaryshares of the Company currently held by the trustees. There is no new issue of ordinary shares upon the exerciseof these options.

Comparative earnings per share information has been restated to take into account the effect of the bonus issueof one (1) ordinary share for every two (2) existing ordinary shares held and the rights issue of one (1) ordinaryshare for every (4) existing ordinary shares held at an issue price of RM1.50 per share during the financial year.

87

10 Property, plant and equipment

Group Long term Water Plant Furniture Computers Capital

leasehold treatment and Office and Motor and work-in-

land plants equipment equipment fittings vehicles software Renovation progress Total

RM RM RM RM RM RM RM RM RM RM

2000

Cost

At 1 January 8,466,610 920,126,030 994,014 2,018,681 3,334,389 11,234,577 3,140,050 4,777,411 670,627,353 1,624,719,115

Additions – – 1,002,771 54,476 – 2,171,350 1,187,493 49,895 131,872,295 136,338,280

Disposals – – – – – (1,912,724) – – – (1,912,724)

Reclassifications – 801,778,014 721,634 – – – – – (802,499,648) –

At 31 December 8,466,610 1,721,904,044 2,718,419 2,073,157 3,334,389 11,493,203 4,327,543 4,827,306 – 1,759,144,671

Accumulated

depreciation

At 1 January 163,916 39,662,162 205,157 1,133,768 2,060,811 6,468,090 2,349,526 4,658,733 – 56,702,163

Charge for the

financial year 85,521 40,472,079 300,052 362,674 846,346 2,109,634 791,732 130,440 – 45,098,478

Released on

disposals – – – – – (1,665,823) – – – (1,665,823)

Reclassifications – (87,491) 87,491 – – – – – – –

At 31 December 249,437 80,046,750 592,700 1,496,442 2,907,157 6,911,901 3,141,258 4,789,173 – 100,134,818

Net book value

At 31 December 8,217,173 1,641,857,294 2,125,719 576,715 427,232 4,581,302 1,186,285 38,133 – 1,659,009,853

1999

Cost

At 1 January 8,466,610 122,530,608 970,848 1,737,485 3,301,705 10,714,317 2,935,973 4,692,669 1,199,461,778 1,354,811,993

Additions – 2,970 68,166 281,196 32,684 717,690 204,077 84,742 268,758,027 270,149,552

Disposals – – (45,000) – – (197,430) – – – (242,430)

Reclassifications – 797,592,452 – – – – – – (797,592,452) –

At 31 December 8,466,610 920,126,030 994,014 2,018,681 3,334,389 11,234,577 3,140,050 4,777,411 670,627,353 1,624,719,115

Accumulated

depreciation

At 1 January 78,395 1,701,814 76,688 772,045 1,398,468 4,371,050 1,715,432 3,750,751 – 13,864,643

Charge for the

financial year 85,521 37,960,348 132,205 361,723 662,343 2,224,647 634,094 907,982 – 42,968,863

Released on

disposals – – (3,736) – – (127,607) – – – (131,343)

At 31 December 163,916 39,662,162 205,157 1,133,768 2,060,811 6,468,090 2,349,526 4,658,733 – 56,702,163

Net book value

At 31 December 8,302,694 880,463,868 788,857 884,913 1,273,578 4,766,487 790,524 118,678 670,627,353 1,568,016,952

88

10 Property, plant and equipment (cont’d)

Company Long termleasehold land

RM

2000

Cost

At 1 January/31 December 8,466,610

Accumulated depreciation

At 1 January 163,916Charge for the financial year 85,521At 31 December 249,437

Net book value

At 31 December 8,217,173

1999

Cost

At 1 January/31 December 8,466,610

Accumulated depreciation

At 1 January 78,395Charge for the financial year 85,521At 31 December 163,916

Net book value

At 31 December 8,302,694

Included in water treatment plant cost and capital work-in-progress are interest and financing costs on longterm borrowings capitalised amounting to RM286,075,263 (1999: RM105,636,635) and RM Nil (1999:RM139,343,703) respectively.

Property, plant and equipment of a subsidiary company, PNSB, have been charged as security for long termborrowings (note 28).

In determining the recoverable amount of property, plant and equipment of the Group and of the Company,with the exception of the long term leasehold land, expected future cash flows have been discounted to theirpresent value.

89

Assets acquired under hire purchase arrangements

The value of the property, plant and equipment of the Group includes the following assets acquired under hirepurchase arrangements:

Motor vehicles 2000 1999RM RM

Cost 10,798,239 9,723,839Accumulated depreciation (6,547,845) (5,456,078)Net book value 4,250,394 4,267,761

11 Project development expenditure

Group2000 1999

RM RMCostAt 1 January 259,013,108 249,559,192Additions 30,869,124 9,453,916

289,882,232 259,013,108Amortisation (40,914,991) (27,539,413)At 31 December 248,967,241 231,473,695

Included in project development expenditure is concession acquisition cost of RM16,207,552 (1999: RM16,207,552)with an unamortised balance of RM11,983,907 (1999: RM13,744,869) at the end of the financial year.

12 Subsidiary companies

Company2000 1999

RM RM

Unquoted shares at cost 123,000,105 123,000,100

The details of the subsidiary companies are as follows:

Country of Effective equity interestName of Company incorporation held by the Group Principal activities

2000 1999% %

Puncak Niaga (M) Sdn. Bhd. # Malaysia 100 100 Operation, maintenance,management, construction andundertaking the rehabilitation andrefurbishment of water treatmentfacilities

90

12 Subsidiary companies (cont’d)

Country of Effective equity interestName of Company incorporation held by the Group Principal activities

2000 1999% %

Held through 100% ownership byPuncak Niaga (M) Sdn. Bhd.- Ideal Water Resources Sdn. Bhd.* Malaysia 100 100 Operation, management,

maintenance and undertaking therehabilitation and refurbishment ofwater treatment plants

- Unggul Raya (M) Sdn. Bhd.* Malaysia 100 100 Operation, management,maintenance and monitoring theoperation of dams

Puncak Research Centre Sdn. Bhd.* Malaysia 100 100 DormantPuncak Seri (M) Sdn. Bhd.* Malaysia 100 100 DormantNS Water System Sdn. Bhd.* Malaysia 100 – Dormant

# subsidiary company consolidated using the merger accounting method* not audited by PricewaterhouseCoopers, Malaysia

13 Associated company

Group Company2000 1999 2000 1999

RM RM RM RM

Unquoted investment at cost 20,000 – 20,000 –Provision for diminution in value of investment – – (20,000) –Share of loss in associated company (20,000) – – –

– – – –

Group2000 1999

RM RMAnalysis of associated company is as follows:-Group’s share of net assets – –Premium on acquisition – –

– –

The Group has excluded its share of loss after taxation of the associated company amounting to RM14,485(1999: Nil) from the financial statements following the discontinuating of the equity accounting for the results ofthe associated company as the carrying value of this investment has reached zero.

91

13 Associated company (cont’d)

The details of the associated company are as follows:-

Country of Effective equity interestName of Company incorporation held by the Group Principal activities

2000 1999% %

NS Water Management Sdn. Bhd. Malaysia 40 – Dormant

14 Other investments

Group2000 1999

RM RM

Quoted shares in Malaysia, at cost 471,139 471,139Provision for diminution in value of investment (426,089) (426,089)

45,050 45,050Market value of quoted investment 18,425 47,250

15 Advances to subsidiary company

During the finanical year, the Company advanced an additional RM138,043,946 to its subsidiary company, PNSB,to finance its working capital of which RM48,043,946 resides under amount due from subsidiary company (note20). This cash advance is unsecured and carries interest at rates ranging between 3.66% and 4.95% per annumduring the financial year and is not repayable within the period of 12 months from the balance sheet date.

The remaining balance of the advances to subsidiary company of RM271,368,807 is unsecured, interest free andis also not repayable within the period of 12 months from the balance sheet date.

16 Debt Service Reserve Account

Under the terms of agreement for the issue of the RM1,020 million 10 years Al-Bai’ Bithaman Ajil Islamic DebtSecurities primary bonds together with non-detachable secondary bonds (‘BaIDS’) and RM350 million Al-Murabahah Commercial Papers (‘MCPs’)/Al-Murabahah Medium Term Notes (‘MMTNs’) Issuance Facility by itssubsidiary company, PNSB, a deposit equivalent to 12 months projected payment obligation under the BaIDSand MCP/MMTN that are outstanding at any point in time is required to be placed in a Debt Service ReserveAccount (‘DSRA’). The DSRA shall be maintained with a minimum balance of RM50 million as at 31 December2000. PNSB is not entitled to withdraw any money from the DSRA without prior consent of the Security Trusteeexcept on condition that the BaIDS and MCP/MMTN have been redeemed (note 28(iii)).

17 Inventories

Group2000 1999

RM RM

Water treatment chemicals, at cost 777,265 822,426

92

93

18 Amount due from customers on construction contracts

Group2000 1999

RM RM

Aggregate costs incurred to date 522,110,000 349,867,280Attributable profits on contract works performed to date 44,795,284 29,465,550

566,905,284 379,332,830Progress billings (345,542,489) (329,858,747)Amount due from customers on construction contract 221,362,795 49,474,083

Retention sum on contracts 15,850,000 15,738,384

Included in cost incurred to date on construction contracts is interest on borrowings of RM6,037,903 (1999:RM4,663,102).

19 Trade and other receivables

Group Company2000 1999 2000 1999

RM RM RM RM

Trade receivables 233,306,822 101,556,843 – –Advances to contractors* 35,156,546 64,023,600 – –Advances and loans to staff 2,898,388 4,274,266 – –Amount due from holding company – 1,651,117 – –Amount due from subsidiary companies (note 20) – – 56,083,796 –Amount due from a related company 7,101,717 7,101,717 74,250 –Dividend receivable from subsidiary company – – – 8,294,400Sundry receivables 16,523,594 7,893,448 1,189,050 –Deposits 2,191,142 1,422,501 – –Prepayments 561,812 3,353,089 – –

297,740,021 191,276,581 57,347,096 8,294,400

Included in trade receivables is RM40,364,856 (1999: RM18,798,451) representing unpaid balances of progressbillings owing by customers on construction contracts.

* The advances to contractors were given for project working capital purposes, in respect of the SungaiSelangor Water Supply Scheme and Distribution Supply System projects pursuant to the respective contracts.

20 Amount due from subsidiary companies

Included in amount due from subsidiary companies is an additional advance of RM48,043,946 to a subsidiarycompany, PNSB, during the financial year which carries interest at rates ranging between 3.66% and 4.95% perannum. This advance is unsecured and has no fixed terms of repayment (note 15).

The balance of the amount due from subsidiary companies is interest free, unsecured and has no fixed terms ofrepayment.

21 ELSOS scheme

The amount due from the trustee of the ELSOS scheme in respect of advances the Company has given to themto acquire the 5,566,000 option shares from the holding company, Central Plus (M) Sdn. Bhd. and anothercorporate shareholder, Corporate Line (M) Sdn. Bhd. was fully repaid in August 2000.

22 Deposits, bank and cash balances

Group Company2000 1999 2000 1999

RM RM RM RM

Deposits with licensed banks 821,982 – – –Bank and cash balances 41,232,905 59,179,942 860,182 25,825

42,054,887 59,179,942 860,182 25,825

23 Trade and other payables

Group Company2000 1999 2000 1999

RM RM RM RM

Trade payables 2,645,024 9,911,248 774,805 116,578Amount due to contractors 21,810,411 147,330,288 – –Amount due to related companies 42,629,973 30,278,169 – –Amount due to a subsidiary company – – – 5,360,138Accrued interest payable on borrowings 41,038,473 15,082,346 – –Trade accruals 10,261,717 14,860,332 – –Retention sum 7,026,530 – – –Amount owing to Directors 16,799 10,925 – –

125,428,927 217,473,308 774,805 5,476,716

24 Amount due to related companies

The amount due to related companies is interest free, unsecured and has no fixed terms of repayment.

25 Hire purchase creditors

Group2000 1999

RM RM

Analysis of hire purchase liabilities:-Payable within one year 1,645,355 1,781,621Payable between one and two years 1,268,949 1,225,784Payable between two and five years 1,225,712 1,066,876Payable after five years 252,742 –

4,392,758 4,074,281Financing charges (669,234) (563,192)

3,723,524 3,511,089

94

25 Hire purchase creditors (cont’d)

Group2000 1999

RM RMRepresenting hire purchase liabilities, net of interest in suspense:-

Payable within twelve months 1,286,852 1,438,814Payable after twelve months 2,436,672 2,072,275Total payable 3,723,524 3,511,089

26 Short term borrowings

Group Company2000 1999 2000 1999

RM RM RM RMSecured:-

Term Loan (DSS II) due within 12 months (Note 28) 48,088,554 – – –Government Support Loan due within 12 months

(Note 28) 18,266,337 12,177,558 – –Term Loan II – 21,150,800 – 21,150,800

Unsecured:-Revolving credit 24,400,000 24,400,000 – –Bridging loan 48,000,000 – 48,000,000 –

138,754,891 57,728,358 48,000,000 21,150,800

(i) The revolving credit facility is unsecured and repayable on demand. The interest rates for the financial yearranged between 4.80% and 5.20% (1999: 5.19% and 9.15%) per annum.

(ii) The bridging loan facility is unsecured and carries interest at rates ranging between 3.66% and 4.95% (1999:Nil) per annum during the financial year.

(iii) Pursuant to the Company’s Employee Loyalty Share Option Scheme (‘ELSOS’), which became effective on 8July 1997, options over 9,094,000 ordinary shares of RM1 each in the Company were allocated to eligibleemployees in the period to 31 December 1999 to take up the issued shares offered by the holding company,Central Plus (M) Sdn. Bhd. and another shareholder, Corporate Line (M) Sdn. Bhd. Term Loan II was taken bythe Company to provide financing to the trustee of the ELSOS to acquire 5,566,000 of the 9,094,000 shares.

The Term Loan II is unsecured and repayable from the proceeds arising out of the options exercised by theeligible employees under the ELSOS within the period of 3 years up to 8 July 2000 or by a single bulletrepayment not later than July 2000. The interest rates ranged between 8.66% and 10.10% (1999: 12.25% and14.00%) per annum during the financial year. The Term Loan II was fully repaid in August 2000.

95

27 Deferred taxation

Timing differences for which deferred taxation benefits have not been accounted for in the financial statements:-

Group2000 1999

RM RM

At 1 January 293,049,642 –(Utilised)/arising during the financial year (108,351,292) 293,049,642At 31 December 184,698,350 293,049,642

Representing the timing difference benefits:-Unabsorbed tax losses 184,698,350 255,421,449Unutilised capital allowances – 37,628,193

184,698,350 293,049,642

In addition to the above timing difference benefits, the Group also has unutilised reinvestment allowancesamounting to RM784,880,990 (1999: RM484,880,990). These benefits will only be obtained when the Group derivefuture assessable income of a nature and of an amount sufficient for these benefits to be utilised.

28 Long term borrowings

Group Company2000 1999 2000 1999

RM RM RM RM

Secured:-Government Support Loan due after 12 months 103,509,242 109,598,021 – –Term loan (DSS II) due after 12 months 118,173,096 – – –Al-Bai’ Bithaman Ajil Bond 1,005,210,995 – – –Murabahah Commercial Paper 210,000,000 – – –Term Loan I – 300,000,000 – –Revolving underwriting facility (RUF) – 800,000,000 – –Unamortised interest – (6,021,966) – –

– 793,978,034 – –1,436,893,333 1,203,576,055 – –

The long term borrowing facilities, with the exception of the Government Support Loan and Term Loan (DSS II),are secured by fixed charges over all the assets of PNSB, the rights of PNSB under the Concession Agreements,construction contract and project agreements undertaken by PNSB.

(i) The Government Support Loan is repayable in equal annual instalments over a period of 20 yearscommencing on 11 April 1999. It is secured on all moneys standing to the credit of the Special ProjectAccount. The interest rate is fixed at 8% (1999: 8%) per annum on the outstanding balance of the loanamount. PNSB is currently negotiating with the Federal Government to restructure the loan in view of thelower bulk supply rate offered by the State Government of Selangor.

96

28 Long term borrowings (cont’d)

(ii) The Term Loan to finance the Sungai Selangor Water Supply Scheme Phase 2 Stage II - Distribution SupplySystem II (‘DSS II’) project is repayable in 5 unequal instalments commencing on 31 October 2001 andthereafter on 2 January 2002. The subsequent repayments will be on annual basis until year 2005. The TermLoan (DSS II) is secured via the assignment of the DSS II construction contract and project account, proceedsfrom the DSS II project and the designated account, contractors’ performance bond and insurance policieson the DSS II project. Interest is payable semi-annually and fixed at 7.60% (1999: Nil) per annum.

(iii) On 12 October 2000, PNSB entered into several agreements with United Overseas Bank (Malaysia) Berhad(‘UOB’) and various parties to raise RM1,020 million 10 year Al-Bai’ Bithamin Ajil Islamic Debt Securities primarybonds together with non-detachable secondary bonds (‘BaIDS’) and RM350 million Al-MurabahahCommercial Papers (‘MCPs’)/Al-Murabahah Medium Term Notes (‘MMTNs’) Issuance Facility. Subsequently,on 28 October 2000, PNSB issued the entire BaIDS and RM120 million of MCPs, the proceeds of which wereutilised mainly to repay the Revolving Underwriting Facility (‘RUF’) and Term Loan I.

The BaIDS primary bonds will mature beginning 27 October 2005 and on annual basis, for each series issued.The non-detachable BaIDS secondary bonds are serviced semi-annually from the date of primary bondswere issued, at rates of 7% to 8% (1999: Nil) per annum.

The MCP/MMTN will expire 5 years from the date of agreement i.e. 12 October 2005. The tender rates rangedbetween 3.03% and 3.18% (1999: Nil) per annum during the financial year on the outstanding balance.

The facility for the BaIDS, MCP and MMTN is secured by way of deposit of an aggregate sum in the DebtService Reserve Account (‘DSRA’) equivalent to 12 months projected payment obligation under the BaIDSand MCP/MMTN that are outstanding at any point in time. The DSRA shall be maintained with a minimumbalance of RM50,000,000 as at 31 December 2000. PNSB is not entitled to withdraw any money from theDSRA without prior consent of the Security Trustee except on condition that the BaIDS, MCP and MMTN havebeen redeemed.

No dividend by PNSB will be declared and paid where inter-alia:-

• the outstanding balance in the DSRA is less than 1.0 time of the aggregate quantum of the Issuer’spayment obligations under the BaIDS and the MCP/MMTN for a period of twelve months commencingfrom the date on which the dividend is contemplated; or

• the Annual Debt Service Cover Ratio and the Forward Debt Service Cover Ratio are less than 1.7 times.

The Company will also be required to maintain the following financial ratios, which will be measured annuallycommencing on 31 December 2001:-

(i) Interest Cover Ratio of at least 2.0 times;

(ii) Debt Equity Ratio of not more than 4.0 times; and

(iii) Annual Debt Service Cover Ratio of at least 1.25 times.

97

28 Long term borrowings (cont’d)

(iv) Term Loan I is repayable in fourteen semi-annual instalments based on pre-determined percentages ofoutstanding balance, commencing at the earlier of six months after the completion of the new facilities, orthe year 2002. The interest rate of Term Loan I for the financial year is fixed at 8.5% (1999: 8.5%) per annum.The Term Loan I was fully repaid during the financial year (note 28(iii)).

(v) The RUF facility will expire at the earlier of 2 years after the completion of the new facilities, or the year 2004,and upon its expiration, may be converted at the option of the Company into a 5 year term loan. Theinterest rates of RUF for the financial year ranged between 3.00% and 5.05% (1999: 5.25% and 9.00%) perannum and are issued with tenures of one, two, three or six months. The RUF was fully repaid during thefinancial year (note 28 (iii)).

29 Share capital

Group Company2000 1999 2000 1999

RM RM RM RMOrdinary share of RM1 each

Authorised:-At 1 January 300,000,000 300,000,000 300,000,000 300,000,000Increased during the financial year 200,000,000 – 200,000,000 –At 31 December 500,000,000 300,000,000 500,000,000 300,000,000

Issued and fully paid up:-

At 1 January 250,000,000 250,000,000 250,000,000 250,000,000Issued during the financial year:-

Bonus issue of one (1) ordinary share for every two (2) existing ordinary shares held 125,000,000 – 125,000,000 –

Rights issue of one (1) ordinary share for every four (4)existing ordinary shares held at an issue price of RM1.50 per share 62,500,000 – 62,500,000 –

187,500,000 – 187,500,000 –At 31 December 437,500,000 250,000,000 437,500,000 250,000,000

The Bonus Shares and the Rights Shares issued during the financial year rank pari-passu in all respects with theexisting ordinary shares of the Company and were listed on the Kuala Lumpur Stock Exchange (‘KLSE’) on 6September 2000 and 18 October 2000 respectively.

30 Retained earnings

The Company has sufficient tax credits under Section 108 of the Income Tax Act, 1967 to frank the payment ofnet dividends up to approximately RM1,206,000 (1999: RM1,206,000) out of its retained earnings as at 31December 2000, without incurring additional tax liabilities.

98

31 Cash (utilised in)/from operations

Group Company2000 1999 2000 1999

RM RM RM RM

Net profit attributable to shareholders 91,224,907 98,971,517 1,950,100 2,453,320Adjustments for:-

Depreciation of property, plant and equipment 4,626,399 5,008,515 85,521 85,521Amortisation of project development expenditure 13,375,578 10,870,078 – –Amortisation of water treatment plants 40,472,079 37,960,348 – –Interest on hire purchase 469,335 553,891 – –Gain on disposal of property, plant and equipment (503,725) (37,303) – –Share of results of associated company 20,000 – – –Provision for diminution in value of investment – – 20,000 –Taxation – – 1,075,200 1,075,200Interest income (6,010,492) (6,617,139) (3,917,180) –Interest expense 55,568,503 56,971,786 3,823,942 –Changes in working capital:-- Receivables and prepayments (279,574,501) 20,704,442 8,932,627 (2,764,800)- Payables and accruals (57,955,753) (51,229,867) – (6,119)

Cash (utilised in)/from operations (138,287,670) 173,156,268 11,970,210 843,122

32 Acquisition of subsidiary company

On 20 July 2000, the Group entered into a Share Sale Agreement and acquired the entire paid up capital of NSWater System Sdn. Bhd. comprising five (5) ordinary shares of RM1 each for a total cash consideration of RM5.

Details of net assets acquired, goodwill and cash flow arising from the acquisition are as follows:-

At date ofAcquisition

RM

Cash in hand 5Other payables (6,254)Fair value of net assets acquired at 20 July 2000 (6,249)Goodwill 6,254Total purchase consideration 5Less:- Cash in hand acquired (5)Cash obtained from acquisition of subsidiary company –

99

32 Acquisition of subsidiary company(cont’d)

The effects of the acquisition on the financial results of the Group from the date of acquisition to 31 December2000 are as follows:-

RM

Revenue –Operating costs (687)Loss on operations (687)Finance cost –Loss on ordinary activities before tax (687)Taxation –Net loss attributable to shareholder (687)

The effects of the acquisition on the financial position of the Group at 31 December 2000 are as follows:-

At31.12.2000

RM

Cash in hand 5Other payables (6,941)Group’s share of net liabilities (6,936)

33 Significant related party transactions and balances

The holding company is Central Plus (M) Sdn. Bhd., a company incorporated in Malaysia which owns 51% of theissued share capital of the Company.

In the normal course of business, the Company undertakes on an arm’s length basis certain transactions withcompanies deemed related parties by virtue of being members of the Central Plus group of companies. TheCentral Plus group of companies, with whom the Group and Company transact with, include the followingcompanies:-

Other related parties Relationship

Mandai Sari Sdn. Bhd. A subsidiary company of Central Plus (M) Sdn. Bhd.Central Plus Aviation & Services Sdn. Bhd. A subsidiary company of Central Plus (M) Sdn. Bhd.Syarikat Bekalan Air Selangor Sdn. Bhd. A subsidiary company of Central Plus (M) Sdn. Bhd.RZ Management Services Sdn. Bhd. A Director related corporationPuncak Niaga Overseas Capital Sdn. Bhd. A Director related corporation

The common Directors of Puncak Niaga (M) Sdn. Bhd., who are also Directors of the Company are Tan Sri Rozalibin Ismail, Ruslan bin Hassan, Raja Azhar bin Raja Ismail, Mat Hairi bin Ismail, Lee Miang Koi and Abdul Majid binAbdul Karim.

Ruslan bin Hassan and Lee Miang Koi, who are Directors of the Company, are also the Directors of Unggul RayaSdn. Bhd., NS Water System Sdn. Bhd. and Puncak Research Centre Sdn. Bhd.

100

33 Significant related party transactions and balances (cont’d)

Tan Sri Rozali bin Ismail, Mat Hairi bin Ismail and Ruslan bin Hassan are also Directors of Ideal Water Resources Sdn.Bhd. Ruslan bin Hassan is also the Director for Puncak Seri Sdn. Bhd.

Significant related party transactions

The related party transactions undertaken in the normal course of business are on terms and prices agreed withthe respective related parties.

The significant related party transactions are as follows:-

Group2000 1999

RM RMSignificant related party transactionsOperating and maintenance charges by Mandai Sari Sdn. Bhd. 71,620,169 67,476,082Repayment/(receipt) of advance to/(from) Syarikat Bekalan Air Selangor Sdn. Bhd. 6,893,808 (6,893,808)Management fees charged by Puncak Niaga Overseas Capital Sdn. Bhd. 1,080,000 1,080,000Hiring of transport charged by Central Plus Aviation & Services Sdn. Bhd. 724,000 144,000Management fees charged by Mandai Sari Sdn. Bhd. 500,000 500,000Secretarial fees charged by RZ Management Services Sdn. Bhd. 240,000 240,000

Related party balances

Related party balances which arose from the above significant related party transactions and remainoutstanding at the financial year end, are as follows:-

Group2000 1999

Related party Type of transaction RM RMPayablesMandai Sari Sdn. Bhd. Operating and maintenance charges 42,481,973 23,384,361Central Plus Aviation and Services

Sdn. Bhd. Hiring charges 148,000 144,000Puncak Niaga Overseas Capital

Sdn. Bhd. Management fees 1,033,422 1,080,000RZ Management Sdn. Bhd. Secretarial fees 240,000 –Syarikat Bekalan Air Selangor Sdn Bhd Advance – 6,893,808

43,903,395 31,502,169

101

34 Capital commitments

Group Company2000 1999 2000 1999

RM RM RM RMCommitment under the terms of the Privatisation cum

Concession Agreement dated 22 September 1994 for the rehabilitation and refurbishment of water treatment facilities 17,247,000 22,367,000 – –

Commitment under the terms of the Construction Agreement dated 22 March 1995 for the construction and completion of Sungai Selangor Water Supply Scheme Phase 2 Stage II 26,665,000 70,621,000 – –

35 Contingent liabilities

Group Company2000 1999 2000 1999

RM RM RM RMUnsecuredCorporate guarantee given to a bank for facilities

granted to a subsidiary company – – 50,298,500 50,298,500Trade and performance guarantees extended to

third parties 16,848,000 17,345,480 – –

36 Segmental reporting - Group

Segmental analysis is not presented as the Group is primarily involved in the operation, maintenance,construction, rehabilitation and refurbishment of water treatment facilities and operates principally in Malaysia.

37 Significant events during the financial year

(a) On 20 December 2000, the Company entered into a Memorandum of Understanding (‘MOU’) with severalparties to set out their mutual intention and understanding in respect of the proposed privatisation ofJabatan Bekalan Air Negeri Sembilan by N.S. Water Konsortium Sdn. Bhd. (‘NSW Konsortium’). Under theterms of the MOU, the Company shall take up a 30% equity interest in NSW Konsortium.

(b) On 21 December 2000, PNSB had practically completed and satisfactorily commissioned the SungaiSelangor Phase 2 Stage 2 Water Treatment Plant (‘SSP2 Stage 2 WTP’). The completion and successfulcommissioning of the SSP2 Stage 2 WTP and the issuance of the Certificate of Practical Completion by theConsultant Engineer, in fulfillment of the requirement of the Construction Cum Operation Agreement dated22 March 1995 signed between PNSB and the State Government of Selangor, allows PNSB to claim for thestep up in the bulk supply rate chargeable to Jabatan Bekalan Air Selangor. The step up in the bulk supplyrate together with the increase in the production volume by 475 MLD (million litres per day) is expected tocontribute positively to the Group’s earnings in financial year 2001.

102

37 Significant events during the financial year (cont’d)

(c) On 22 December 2000, Commerce International Merchant Bankers Berhad announced, on behalf of theCompany, inter alia, the following proposals:-

(i) a proposed renounceable rights issue of RM546,875,000 nominal value 15-year redeemableunconvertible junior notes (‘RUN’) with 109,375,000 free detachable warrants at an issue price of RM0.322per RM1.00 nominal value of RUN payable in full upon acceptance on the basis of RM5.00 nominal valueof RUN with one (1) free warrant for every four (4) existing ordinary shares of RM1.00 each held in theCompany (‘Proposed RUN Issue’); and

(ii) a proposed employees share option scheme for eligible employees and Executive Directors of theCompany and its subsidiaries (‘Proposed ESOS’).

The application to the Securities Commission on the Proposed RUN Issue was made on 15 February 2001 andis currently pending approval from the Securities Commission. To date, the Company has not made anysubmission in respect of the Proposed ESOS to the relevant authorities.

38 Significant event subsequent to balance sheet date

(a) On 2 January 2001, PNSB handed over the operation and maintenance of the Sungai Semenyih WaterTreatment Plant (‘SSWTP’) to the State Government of Selangor. The cessation of operation andmaintenance of the SSWTP is not expected to have any material effect on the Group’s future earnings.

103

104

We, Tan Sri Rozali bin Ismail and Mat Hairi bin Ismail, being two of the Directors of Puncak Niaga Holdings Berhad,state that, in the opinion of the Directors, the financial statements set out on pages 74 to 103 are drawn up so as togive a true and fair view of the state of affairs of the Group and the Company as at 31 December 2000 and of theresults and cash flows of the Group and the Company for the financial year ended on that date in accordance withthe applicable approved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965.

Signed at Kuala Lumpur, Malaysia on 26 April 2001.

In accordance with a resolution of the Board of Directors dated 26 April 2001.

Tan Sri Rozali bin IsmailDirector

Mat Hairi bin IsmailDirector

I, Mat Hairi bin Ismail, being the Director primarily responsible for the financial management of Puncak NiagaHoldings Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financialstatements set out on pages 74 to 103 are correct, and I make this solemn declaration conscientiously believing thesame to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Mat Hairi bin IsmailDirector

Subscribed and solemnly declared at Kuala Lumpur, Malaysia on 26 April 2001.

Before meMaisharah Binti Abu Hassan (W181)Commissioner for Oaths

Statutory Declaration

Statement by Directors p u r s u a n t t o S e c t i o n 1 6 9 ( 1 5 ) o f t h e C o m p a n i e s A c t , 1 9 6 5

105

We have audited the financial statements set out on pages 74 to 103. These financial statements are the responsibilityof the Company’s Directors. Our responsibility is to express an opinion on these financial statements based on ouraudit.

We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by Directors, as well as evaluating the overall financial statements presentation. Webelieve that our audit provides a reasonable basis for our opinion.

In our opinion:-

(a) the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965and applicable approved accounting standards in Malaysia so as to give a true and fair view of:

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financialstatements; and

(ii) the state of affairs of the Group and of the Company as at 31 December 2000 and of the results andcash flows of the Group and Company for the financial year ended on that date;

and

(b) the accounting and other records and the registers required by the Act to be kept by the Company and bythe subsidiary companies of which we have acted as auditors have been properly kept in accordance withthe provisions of the Act.

The names of the subsidiary companies of which we have not acted as auditors are indicated in Note 12 to thefinancial statements. We have considered the financial statements of these subsidiary companies and the auditors’reports thereon.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with theCompany’s financial statements are in form and content appropriate and proper for the purposes of thepreparation of the consolidated financial statements and we have received satisfactory information andexplanations required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualificationand did not include any comment made under subsection (3) of Section 174 of the Act.

PricewaterhouseCoopers(AF: 1146)Public Accountants

Mohd Daruis Zainuddin(969/03/03(J/PH))PartnerKuala Lumpur26 April 2001

Report of the Auditors to the Members ofP u n c a k N i a g a H o l d i n g s B e r h a d C o m p a n y n o : 4 1 6 0 8 7 U

106

NOTICE IS HEREBY GIVEN that the Fourth Annual General Meeting of Puncak Niaga Holdings Berhad (416087-U) willbe held at the Banquet Hall, Kuala Lumpur Golf & Country Club, No.10, Jalan 1/70D, Off Jalan Bukit Kiara, 60000Kuala Lumpur on Tuesday, 26 June 2001 at 9.30 a.m. for the following purposes:-

1. To receive the Audited Accounts of the Company for the year ended 31 December 2000 andthe Reports of the Directors and Auditors thereon.

2. To re-elect the following Directors retiring in accordance with Article 101 of the Company’sArticles of Association:-a. YM Raja Azhar Bin Raja Ismail b. Encik Abdul Majid Bin Abdul Karim

3. To re-elect YB Dato’ Seri Dr Ting Chew Peh, a Director retiring in accordance with Article 106 ofthe Company’s Articles of Association.

4. To re-appoint Messrs PricewaterhouseCoopers as the Auditors of the Company and to authorisethe Directors to fix their remuneration.

AS SPECIAL BUSINESS:-

To consider and, if thought fit, to pass the following Ordinary Resolution:-

5. Allotment Of Shares Pursuant To Section 132D Of The Companies Act, 1965

“THAT, subject always to the Companies Act, 1965, the Articles of Association of the Companyand the approvals of the relevant governmental/regulatory authorities, the Directors of theCompany be and are hereby empowered, pursuant to Section 132D of the Companies Act1965, to issue shares in the Company from time to time and upon such terms and conditions andfor such purposes as the Directors of the Company may deem fit provided that the aggregatenumber of shares issued pursuant to this resolution does not exceed 10% of the issued sharecapital of the Company for the time being AND THAT the Directors of the Company be and arealso empowered to obtain the approval for the listing of and quotation for the additional sharesso issued on the Kuala Lumpur Stock Exchange AND FURTHER THAT such authority shall continueto be in force until the conclusion of the next Annual General Meeting of the Company”.

To consider and, if thought fit, to pass the following Special Resolution:-

6. Proposed Amendments To The Articles Of Association Of The Company

“THAT, the alterations, modifications, deletions and/or additions to the Articles of Association of theCompany contained in Appendix 1, signed by a Director of the Company for the purposes ofidentification, be and are hereby approved”.

7. To transact any other ordinary business of which due notice shall have been given.

Resolution 1

Resolution 2Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Notice of Annual General Meeting

FURTHER NOTICE IS HEREBY GIVEN that a Depositor shall be eligible to attend this Meeting only in respect of:-

(a) Shares deposited into the Depositor’s Securities Account before 12.30 p.m. on 18 June 2001 in respect of shareswhich are exempted from mandatory deposit;

(b) Shares transferred into the Depositor’s Securities Account before 12.30 p.m. on 18 June 2001 in respect ofordinary transfers;

(c) Shares bought on Kuala Lumpur Stock Exchange on a cum entitlement basis according to the Rules of theKuala Lumpur Stock Exchange.

Shareholders are reminded that pursuant to the Securities Industry (Central Depositories) (Amendment) (No. 2) Act,1998 which came into force on 1 November 1998, all shares not deposited with Malaysian Central Depository Sdn Bhdby 12.30 p.m. on 1 December 1998 and not exempted from mandatory deposit, have been transferred to the Ministerof Finance (‘MOF’). Accordingly, the eligibility to attend this Meeting for such undeposited shares will be the MOF.

BY ORDER OF THE BOARD

TAN BEE LIANMAICSA 7006285SecretaryKuala Lumpur31 May 2001

107

Notes:-1. A member entitled to attend and vote at the Meeting is entitled to

appoint a proxy to attend and vote in his stead. A proxy need notbe a member of the Company.

2. The instrument appointing a proxy shall be in writing under thehand of the appointer or his attorney duly authorised or if suchappointer is a corporation, it must be either under its seal or underthe hand of an officer or attorney duly authorised.

3. The instrument appointing the proxy must be deposited at theRegistered Office of the Company at Suite 1401-1406, 14th Floor,Plaza See Hoy Chan, Jalan Raja Chulan, 50200 Kuala Lumpur notless than 48 hours before the time set for holding the Meeting orany adjournment thereof.

4. Explanatory Notes On Special Business:- Resolution 6:-The Ordinary Resolution proposed under item 5, if passed, will givethe Directors of the Company, from the date of the above Meeting.authority to issue and allot ordinary shares from the unissued capitalof the Company for such purposes as the Directors of the Companyconsider would be in the interest of the Company. The authority will,unless revoked or varied at a General Meeting, expire at the nextAnnual General Meeting of the Company.Resolution 7:-The Special Resolution proposed under item 6 will facilitateamendments made to the Articles of Association of the Companyin line with Chapter 7: Articles of Association of the RevampedListing Requirements of Kuala Lumpur Stock Exchange which willtake effect on 1 June 2001.

This page has been intentionally left blank.

108

Proxy Form

Notes:-1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a

member of the Company.2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised or if such appointer is a

corporation, it must be either under its seal or under the hand of an officer or attorney duly authorised.3. The instrument appointing the proxy must be deposited at the Registered Office of the Company at Suite 1401-1406, 14th Floor, Plaza See Hoy

Chan, Jalan Raja Chulan, 50200 Kuala Lumpur not less than 48 hours before the time set for holding the Meeting or any adjournment thereof.

Puncak Niaga Holdings Berhad (416087-U)

(Incorporated in Malaysia)

I/We

of

being a Member/Members of the Company hereby appoint

of

as my/our proxy, to vote for me/us and on my/our behalf at the Fourth Annual General Meeting of Puncak NiagaHoldings Berhad to be held at the Banquet Hall, Kuala Lumpur Golf & Country Club, No.10, Jalan 1/70D, Off Jalan BukitKiara, 60000 Kuala Lumpur on Tuesday, 26 June 2001 at 9.30 a.m. and at any adjournment thereof, as indicated below:-

No Resolution For Against

1. To receive the Audited Accounts of the Company for the year ended 31 December 2000 and the Reports of the Directors and Auditors thereon.

2. To re-elect YM Raja Azhar Bin Raja Ismail as Director.3. To re-elect Encik Abdul Majid Bin Abdul Karim as Director.4. To re-elect YB Dato’ Seri Dr Ting Chew Peh as Director.5. To re-appoint Messrs PricewaterhouseCoopers as the Auditors of the Company

and to authorise the Directors to fix their remuneration.6. To empower the Directors of the Company to issue shares pursuant to Section

132D of the Companies Act, 1965.7. To approve the Proposed Amendments to the Articles of Association of the

Company.

Please indicate with a cross (x) how you wish your votes to be cast in respect of each Resolution. In the absence ofspecific directions, your proxy will vote or abstain as he thinks fit.

No. of shares held

Signature(s)/Common Seal of Shareholder(s) Signed this day of 2001

110

Puncak Niaga Holdings Berhad (416087-U)Suite 1401 – 1406, 14th Floor

Plaza See Hoy ChanJalan Raja Chulan

50200 Kuala Lumpur

Stamp

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