annual report 2002 - puncak niaga · malaysian-german chamber of commerce member since 2002 and...

A n n u a l R e p o r t 2 0 0 2

Cover Concept

"Source of LIFE"

Rivers have been the life source of livingcommunities since time immemorial. Theirfresh, ever-flowing waters support life, carrylife and above all, nourish the lives of allthose who reside within them and aroundtheir productive plains.

This year, our Annual Report cover paystribute to the mighty Sungai Selangor,whose strength, versatility and ability to sustain growth wherever it flows aretrue reflections of Puncak Niaga’sinherent qualities.

As Malaysia’s Leading Water Specialist,Puncak Niaga practises the higheststandards of excellence and integrity in allthat it pursues. Like the nurturing river,we do our utmost to ensure that thequality and outcome of our core activitiessignificantly enhance the quality of life for our customers, our shareholders andour country.

And just as the river flows continuouslyforward, Puncak Niaga works relentlesslytowards increasing its strength and value,surging ahead to become Malaysia’sLeading and Dynamic Integrated WaterServices Company.

Cover Photo: Sungai Selangor meandering throughthe lush terrain.

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Sixth Annual General Meeting

Date :Wednesday, 25 June 2003Time :9.30 a.mVenue :Banquet Hall

Kuala Lumpur Golf & Country ClubNo. 10 Jalan 1/70D Off Jalan Bukit Kiara 60000 Kuala Lumpur

Corporate Information

Fact Sheet

Financial Highlights

Financial & Share Performances

Corporate Profile

Corporate Structure

Organisation Structure

Corporate Achievements

Board of Directors

Senior Management

Vision & Mission Statements

Executive Chairman Speaks

Operations Review

Corporate Calendar of Events

Statement on Corporate Governance

Statement on Internal Control

Audit Committee Report

Risk Management Policy & Report

Investor Relations Policy & Report

Environmental Policy & Report

Organisational Safety and Health Policy

Quality Policy

Newspaper Clippings

Distribution Schedule of Equity Securities & Property

Financial Reports

Notice of Annual General Meeting

Statement Accompanying the Notice ofAnnual General Meeting

Other Compliance Information

Proxy Form

Board of DirectorsYBhg Tan Sri Rozali Ismail

Executive Chairman

Encik Ruslan Hassan

Executive Vice Chairman/

Executive Director

Corporate Affairs Division

Encik Mat Hairi Ismail

Executive Director

Finance Division

Ir Lee Miang Koi

Executive Director

Project & Business Development Division

Encik Abdul Majid Abdul Karim

Independent Non-Executive Director

YBhg Dato' Hari Narayanan Govindasamy


YB Dato' Seri Dr Ting Chew Peh


Group Company SecretaryMadam Tan Bee Lian, MAICSA 7006285

Registered OfficeSuite 1401-1406, 14th Floor

Plaza See Hoy Chan

Jalan Raja Chulan

50200 Kuala Lumpur

Tel : 03-2031 8648

Fax : 03-2078 4386

Principal OfficeSuite 2601-2606, 26th Floor

Plaza See Hoy Chan

Jalan Raja Chulan

50200 Kuala Lumpur

Tel : 03-2031 8648

Fax : 03-2031 8658

website : www.puncakniaga.com.my

e-mail (general) : [email protected]

e-mail (investors) : [email protected]

Date and Place of Incorporation7 January 1997, Malaysia

Company Number416087-U

AuditorsMessrs PricewaterhouseCoopers (AF 1146)

Tax AdvisorPricewaterhouseCoopers Taxation

Services Sdn Bhd (464731-M)

Principal BankersRHB Bank Berhad (6171-M)

Bumiputra-Commerce Bank Berhad (13491-P)

United Overseas Bank (Malaysia) Berhad (271809-K)

SolicitorsMessrs Kadir, Andri Aidham & Partners

Messrs Wong & Partners

Messrs Lee Hishammuddin

Messrs Sivananthan

Messrs Ng Yook Woon, Andrew TC Saw & Co

Messrs Azian Haslina & Co

Corporate Information

Puncak Niaga Holdings Berhad Annual Report 2002 2

Share Registrar(Place where all registers of securities are kept)

Tenaga Koperat Sdn Bhd (118401-V)

20th Floor, Plaza Permata

Jalan Kampar

Off Jalan Tun Razak

50400 Kuala Lumpur

Tel : 03-4041 6522

Fax : 03-4042 6352

Stock Exchange ListingMain Board of Kuala Lumpur Stock

Exchange (KLSE) under the

Infrastructure Project Companies Sector

Indices KLSE Composite Index

KLSE Syariah Index

MSCI Index

Audit CommitteeChairman:


Members:




Secretary:

Madam Tan Bee Lian

Remuneration Committee Chairman:


Members:




Secretary:

Madam Tan Bee Lian

Nomination CommitteeChairman:


Members:



Secretary:

Madam Tan Bee Lian

Compliance, Internal Control and Risk Policy Committee (CICR)Chairman:


Members:

Encik Ruslan Hassan (Head of CICR)

Encik Sonari Solor

Mr Ng Wah Tar

Madam Tan Bee Lian

Secretary:

Encik Mohammed Sofian Ismail

(Head of Risk Management Section)



Fact Sheet

PUNCAK NIAGA HOLDINGS BERHAD’S FACT SHEET AS AT 29 APRIL 2003

Group Staff Strength

Management Staff 55

Executive Staff 177

Non-Executive Staff 373

Total 605

No. of Puncak Niaga’s Water Treatment Plants 28

No. of Water Treatment Plants with ISO Certifications 14

Authorised Share Capital RM1,000,000,000

Paid-Up Share Capital RM439,278,000 (comprising 439,278,000 ordinary shares of RM1.00 each)

Number of RUN Issued 546,875,000

RUN Coupon Rates 2.5% per annum for the first 10 years and 3.5% per annum for the remaining 5 years

RUN Semi-Annual Coupon Payment Dates 20 May and 20 November

RUN Maturity Date 18 November 2016

RUN Holders’ Put Option Date 20 November 2011

Number of Warrants Issued 109,374,869

Warrant Conversion Price RM2.62

Number of Warrants Converted None

Warrant Maturity Date 20 November 2006

Effective Date of ESOS 25 February 2002

Expiry Date of ESOS 24 February 2007

ESOS Exercise Price (1st Tranche) RM2.37 per share

ESOS Exercise Price (2nd Tranche) RM2.47 per share

ESOS Exercise Price (3rd Tranche) RM2.13 per share

Number of ESOS Offered (1st Tranche) 33,422,000

Number of ESOS Offered (2nd Tranche) 2,933,000

Number of ESOS Offered (3rd Tranche) 2,817,000

Number of ESOS Exercised To-Date 1,778,000

List Of Corporate Memberships:-1. Malaysian Water Association Member since 19942. Malaysia South-South Association Member since 19953. Federation of Public Listed Companies Member since 1999

4. Malaysian Employers Federation Member since 1999

5. Malaysian Industry-Government Group For Member since 2001High Technology (MIGHT)

6. Malaysian-German Chamber of Commerce Member since 2002and Industry (MGCCI)

7. National Institute of Occupational Safety Member since 2002and Health (NIOSH)

8. American Water Works Association (AWWA) Member since 2002

9. Malaysian-French Chamber of Commerce Member since 2002and Industry (MFCCI)

10. British Malaysian Chamber of Commerce Member since 2003

List Of Water Treatment Plants Telephone Nos.

1. Ampang Intake* 03-4291 4040

2. Batang Kali* 03-6057 3255

3. Bernam River Headworks* 03-6046 1259

4. Bukit Nanas* 03-2078 0782

5. Bukit Tampoi* 03-8768 6216

6. Cheras Mile 11* 03-8736 0427

7. Gombak* 03-6189 5255

8. Kalumpang 03-6049 1366

9. Kepong 03-6274 9495

10. Kuala Kubu Bharu 03-6064 1327

11. North Hummock* 03-3341 2052

12. Rantau Panjang* 03-3271 0948/9133

13. Salak Tinggi* 03-8706 1103

14. Sungai Batu* 03-6189 0267

15. Sungai Buaya 03-6028 1146

16. Sungai Dusun 03-6046 3649

17. Sungai Keroh 03-6274 9495/03-6091 0001

18. Sungai Langat* 03-9074 9430

19. Sungai Lolo 03-9075 3977/03- 9021 5993

20. Sungai Pangsoon 03-9021 5993

21. Sungai Pusu 03-6189 5255/03-6185 6631

22. Sungai Rangkap 03-6091 0001

23. Sungai Rumput 03-6185 6631

24. Sungai Selangor Phase 2* 03-3279 2008

25. Sungai Selisek 05-454 2003

26. Sungai Serai 03-9075 3977

27. Sungai Tengi 03-6042 2035

28. Wangsa Maju* 03-4143 7006

*Water Treatment Plants with ISO 9002 Certification.



CourseCharting our


From the onset of itsjourney high above inthe Titiwangsa Range,the Selangor River worksto achieve the perfectbalance between theamount of water it carries, and the sediment it transportsdownstream.

Guided by a clearvision to become theLeading and DynamicIntegrated WaterServices Company, Puncak Niaga is continuously striving to balance the development of existing waterresources with our economic, social andenvironmental responsibilities.

Financial Highlights


In RM’000 Year 2002 Year 2001 Year 2000Balance sheet

Property, plant and equipment 1,528,703 1,606,425 1,659,010

Project development expenditure 245,838 255,727 248,967

Other non-current assets 185,740 236,520 50,045

Current assets 907,107 601,693 561,935

Total tangible assets 2,856,603 2,688,980 2,507,973

Issued and paid-up capital

Share capital 439,278 437,500 437,500

Reserves 737,906 555,724 376,410

Shareholders’ fund 1,177,184 993,224 813,910

Net tangible assets per share (RM) 2.66 2.24 1.83

Ratios and statistics

Turnover 565,105 552,337 350,564

Net profit after tax 179,745 179,314 91,225

Interest bearing debt 1,529,608 1,585,076 1,579,372

In senEarnings per share 40.99 40.99 21.84

In % of turnoverOperating profit 32 32 26

In timesGearing ratio 1.30 1.60 1.94

Current ratio 3.66 2.72 2.11

FINANCIAL CALENDARFinancial year end 31 December 2002

Announcement of results

1st quarter results ended 31 March 2002 21 May 2002

2nd quarter results ended 30 June 2002 21 August 2002

3rd quarter results ended 30 September 2002 21 November 2002

4th quarter results ended 31 December 2002 26 February 2003

Audited Accounts for the financial year ended 31 December 2002 23 April 2003

Published Annual Report 3 June 2003

Annual General Meeting 25 June 2003

Financial & Share Performances


FINANCIAL PERFORMANCE

SHARE PERFORMANCE

500

600

700

800

900

1000

1100

CI Share Price (RM)

1999 2000 2001 2002

20m

40m

60m

80m

1.70

1.90

2.10

2.30

2.80

3.50

J F M MA NA S OJ J M MAJ FD NA S OJ J M MAJ FD NA S OJ J M MAJ FD DNA S OJ J

Total Tangible AssetsProfit After TaxationRM '000 RM '000

98 99 00 01 02 98 99 00 01 02 98 99 00 01 02

TurnoverRM '000

183,

415 347,

472

552,

337

350,

564 56

5,10

5

57,2

26

98,9

72 179,

314

91,2

25

179,

745

2,04

2,77

6

2,50

7,97

3

2,10

7,69

5

2,85

6,60

3

2,68

8,98

0

Monthly HighestClosing Prices

KLSEComposite Index (CI)

Volume of sharestraded

Monthly LowestClosing Prices

Puncak Niaga Holdings Berhad (PNHB) was incorporated on 7 January 1997 under the Malaysian Companies

Act, 1965 as a public company limited by shares. It is an investment holding company with interest in

infrastructure activities specialising in water treatment engineering and water-related activities.

PNHB was listed on the Main Board of Kuala Lumpur Stock Exchange (KLSE) on 8 July 1997. It is the first

water treatment and supply concession company to be listed on the KLSE under the Infrastructure Project

Company guidelines issued by the Securities Commission.

As an investment holding company, PNHB acted as the listing vehicle for Puncak Niaga (M) Sdn Bhd (PNSB),

an Infrastructure Project Company (IPC). PNSB is the holder of two concessions awarded by the Selangor State

Government. The first, a Privatisation Cum Concession Agreement (PCCA) awarded on 22 September 1994

allowed PNSB to take over, operate, maintain, manage, rehabilitate and refurbish 27 existing water treatment

plants formerly under the management of the Selangor Waterworks Department, now corporatised and known as

Perbadanan Urus Air Selangor Berhad. The second concession, a Construction Cum Operation Agreement

(CCOA) was awarded on 22 March 1995 to finance, design, construct, operate, manage and maintain a new 950

million litres per day water treatment plant at Bukit Badong under the Selangor State Government’s Sungai

Selangor Water Supply Scheme Phase 2 Project (SSP2). Both the PCCA and CCOA provide for the concessions to

expire on 31 December 2020.

Under the CCOA, the development of the SSP2 Water Treatment Plant was undertaken in two stages. The first

stage, with a production capacity of 475 million litres per day, was completed in October 1998, two months

ahead of the commitment given to the Selangor State Government. The second stage of the SSP2 Water

Treatment Plant, with a production capacity of 475 million litres per day was originally scheduled for

completion and commissioning on 1 January 2002. Instead, it was completed and commissioned one year ahead

of schedule on 1 January 2001.

During the water crisis in 1998, PNSB was entrusted by the Federal Government to finance, design and

construct the Wangsa Maju Water Treatment Plant at a cost of RM122.0 million. This water treatment plant

was completed in a record time of six months, an amazing feat by engineering standards. The above mentioned

early completion of projects clearly exemplifies Puncak Niaga’s excellent capabilities in managing and

undertaking large-scale water supply projects in Malaysia.

In recognition of Puncak Niaga’s expertise and vast experience in water privatisation projects over the past years,

PNHB was invited by the Negeri Sembilan State Government to participate in the privatisation of Jabatan

Bekalan Air Negeri Sembilan (JBANS) in 2000. On 20 December 2000, PNHB signed a Memorandum of

Understanding to undertake the proposed privatisation which PNHB will hold a 30% equity stake in NS

Water Konsortium Sdn Bhd, the concession company which has been granted the exclusive privatisation rights

of JBANS by the Negeri Sembilan State Government.

Today, PNSB is the largest water supply concessionaire in Malaysia. We operate, manage and maintain 28 water

treatment plants with a total average production capacity of 1,903 million litres per day. This volume is

equivalent to approximately 56% of the treated water requirement in the State of Selangor Darul Ehsan and the

Federal Territory of Kuala Lumpur.


Corporate Profile

Corporate Structure


Puncak Niaga Holdings BerhadInvestment Holding and

Provision of Management Services

Puncak Niaga (M) Sdn Bhd

100%operation, maintenance,management, construction andundertaking the rehabilitationand refurbishment of watertreatment facilities

Unggul Raya (M) Sdn Bhd

100%operation, management,

maintenance and monitoringthe operation of dams

Puncak Research Centre Sdn Bhd

100%dormant

Puncak Seri (M) Sdn Bhd

100%dormant

NS Water System Sdn Bhd

100%dormant

NS Water Management Sdn Bhd

40%dormant

Ideal Water Resources Sdn Bhd

100%operation, management, maintenance and undertaking the rehabilitation and refurbishment of water treatment plants

�

Organisation Structure


General Manager Internal Audit

Encik Sonari Solor

Strategic Resource Centre

Puncak Niaga Holdings Berhad

Finance DivisionExecutive DirectorEncik Mat Hairi Ismail

General Manager Finance & AccountsMr Ng Wah Tar

Assistant General ManagerFinance Encik Ismail Maidin

Senior Manager AccountsEncik Nik Azmi Nik Yaacob

General ManagerOperations ITuan Syed Danial Syed Ariffin

Senior General ManagerOperations IIIr Loh Kit Mun

Senior Manager/Plant Manager SSP2 WTPIr Ausamah DarwishMohd Daud

Manager/Plant ManagerWangsa Maju WTPEncik Abdul Rahman Kadir

Ope

rati

ons

I

Ope

rati

ons

II

Senior ManagerRehabilitation of WTPEncik Nasir Ismail

Senior Manager Operation Contract Supervision (26 WTPs)Encik Hashim Omar

Senior Manager Water Resources & Environmental/Dam Operations Puan Roowina Merican A

Rahim Merican

Human Resources& Administration Division Acting Executive DirectorEncik Ruslan Hassan

Corporate Affairs Division Executive DirectorEncik Ruslan Hassan

Project & BusinessDevelopment DivisionExecutive DirectorIr Lee Miang Koi

General ManagerHuman Resources & AdministrationEncik Ahmad Fauzi Yahya

Senior General Manager Corporate CommunicationsEncik Ibrahim Ismail

Senior Manager Business DevelopmentIr Ahmad Marzuki Hashim

Senior Manager Project ManagementEncik Ishak Awang

General Manager LegalMadam Chan Siew Meei

Senior General ManagerSecretarial/GroupCompany SecretaryMadam Tan Bee Lian

Senior ManagerContractIr Teh Lee Ngo

Senior ManagerTrainingEncik Said MuhamadKhalil Abdul Madza

Manager Manpower Services & Industrial RelationsPuan Poziah Abas

Manager Protective ServicesEncik Saadon Kardi

Manager AdministrationEncik Kamarulzaman Abu Bakar

Manager Special ProjectIr Lee Chok Beng

Operation Division Acting Executive DirectorEncik Ruslan Hassan

Executive Vice ChairmanEncik Ruslan Hassan

Executive ChairmanYBhg Tan Sri Rozali Ismail

Manager Compensation & Benefits Vacant

Assistant General ManagerInformation TechnologyEncik Mohd SabaruldinChe Bakar

Corporate Achievements


MSOSH OSH GRAND AWARD 2001by Malaysian Society For Occupational Safety And Health for

Sungai Selangor Phase 2 Water Treatment Plant, 31 July 2002

MSOSH OSH GOLD AWARD 2001by Malaysian Society For Occupational Safety And Health for

Wangsa Maju Water Treatment Plant, 31 July 2002

ROC-MAICSA COMPANY SECRETARY AWARD 2001Awarded to Puncak Niaga’s Group Company Secretary/Senior

General Manager, Secretarial Department, Madam Tan Bee Lian,

under the Listed Company Category, 22 July 2002

In its relentless pursuit towards excellence, Puncak Niaga continuously strives to achievethe highest standards of excellence in its corporate and operational activities. As in theprevious years, the Group continued to garner several prestigious awards and accoladesfor the year 2002 as follows:-

ASIA WATER MANAGEMENT EXCELLENCE AWARD 2002Awarded to Puncak Niaga’s Executive Chairman, YBhg Tan Sri RozaliIsmail under the Individual Award Category during the Water 2002International Water Technology, Equipment, Services & ManagementExhibition & Conference, 26 March 2002


ASIAMONEY CORPORATE GOVERNANCE POLL 2002Voted Best Corporate Governance Standards in the Utilities Sector

in Malaysia, 20 February 2003

ANUGERAH CITRA LAPORAN TAHUNAN 2002Hadiah Penghargaan by Dewan Bahasa dan Pustaka for correct usage of

the national language in the Annual Report 2001, 17 December 2002

NATIONAL ANNUAL CORPORATE REPORT AWARDS (NACRA) 2002 Industry Excellence Award under the Construction & Infrastructure Project

Companies’ Category, 31 October 2002

ANUGERAH KESELAMATAN & KESIHATAN PEKERJAANKEBANGSAAN 2002

Sijil Penghargaan to Puncak Niaga (M) Sdn Bhd for Facilities Category organised by Ministry of Human Resources, 7 October 2002

ERNST & YOUNG ENTREPRENEUR OF THE YEAR AWARD-MALAYSIA 2002

YBhg Tan Sri Rozali Ismail was identified as a Top 10 Nominee under theMaster Entrepreneur Category, 16 January 2003


FlowDirecting the


The banks of the riversteer its course; yet itis ever-shifting,accommodating changewhen needs arise.

Just like the river banks, theManagement ofPuncak Niaga provides vital support to our Group of Companies;steadily guidingthem through theirrespective missionswhile simultaneouslyadvancing with thetimes to effectuatebetter efficiency.

Board Of Directors



From left to right:

Encik Abdul Majid Abdul Karim,

YBhg Tan Sri Rozali Ismail,

Encik Ruslan Hassan,

Encik Mat Hairi Ismail,

Ir Lee Miang Koi,

YB Dato’ Seri Dr Ting Chew Peh,

YBhg Dato’ Hari NarayananGovindasamy.

YBhg Tan Sri Rozali Ismail, aged 46, Malaysian

Executive Chairman

YBhg Tan Sri Rozali is the founder of PNSB, the Executive Chairman and a substantial shareholder of

PNHB. He was appointed to the Board of PNHB on 24 April 1997. Upon obtaining a Bachelor of Laws

Degree from the University of Malaya in 1981, he began his career as Legal Advisor with the Urban

Development Authority (UDA) before joining Bank Islam (M) Berhad in 1983. Together with a few pioneer

bank staff, YBhg Tan Sri Rozali conceptualised the first institution of Islamic banking in Malaysia.

Subsequently, he started his own legal practice as an Advocate and Solicitor for 7 years, specialising in

corporate, property and banking work.

In 1989, YBhg Tan Sri Rozali set up a family-owned company and embarked into the property

development sector, with involvement in several development projects in the Klang Valley, Kuantan and

Johor. Under the banner of Puncak Alam Housing Sdn Bhd, he is now actively developing a new township

known as Bandar Baru Puncak Alam. The family-owned company also ventured into the utility business in

1989 with the setting up of PNSB. Due to his vast experience in various fields, he was entrusted by the

Selangor State Government, via PNSB, to manage the water treatment plants for the whole of the State of

Selangor Darul Ehsan and the Federal Territory of Kuala Lumpur. PNHB was subsequently incorporated in

1997 as the holding company of PNSB and was listed on the Main Board of Kuala Lumpur Stock Exchange

(KLSE) on 8 July 1997.

On 6 November 2001, YBhg Tan Sri Rozali was conferred the Fellowship Award by the Institute of

Marketing Malaysia for his invaluable contribution to the Institute and the marketing fraternity, in

recognition of his superb marketing strategies adopted for the Bandar Baru Puncak Alam and Bandar Puncak

Perdana projects. On 26 March 2002, he was awarded the Asia Water Management Excellence Award 2002

(Individual Award Category) in recognition of his outstanding contributions in championing management

excellence and best practices in the water industry.

More recently, on 16 January 2003, YBhg Tan Sri Rozali was honoured as a Top 10 Nominee for the

inaugural Ernst & Young Entrepreneur Of The Year - Malaysia 2002 (Master Entrepreneur Category)

Award in recognition of his outstanding entrepreneurship and leadership skills.

Currently, YBhg Tan Sri Rozali is the Executive Chairman and substantial shareholder of U-Wood Holdings

Berhad, a KLSE Main Board company which is developing Bandar Puncak Perdana, a 243-hectare mixed

development project located near the Sultan Abdul Aziz Shah Airport. He is also the Executive Chairman

and substantial shareholder of WWE Holdings Bhd, a KLSE Second Board company which is an investment

holding company and contractor for the provision of engineering services related to design, fabrication,

installation and commissioning of water, wastewater treatment, environmental facilities and construction

activities. YBhg Tan Sri Rozali also sits on the Board of several other private companies and is the Deputy

President of the Malaysian Water Association (MWA).

YBhg Tan Sri Rozali is the Chairman of PNHB’s ESOS Option Committee and is related to another

PNHB Director, Encik Mat Hairi Ismail (his younger brother) who serves as PNHB’s Executive Director,

Finance Division. He is also related to Encik Shaari Ismail (his elder brother) who is a substantial

shareholder of the Company.


Board Of Directors


YBhg Tan Sri Rozali Ismail,Executive Chairman

Encik Mat Hairi Ismail, Executive Director, Finance Division


Encik Ruslan Hassan,Executive Vice Chairman andExecutive Director, Corporate Affairs Division

Board Of Directors

Encik Ruslan Hassan, aged 47, Malaysian

Executive Vice Chairman and Executive Director, Corporate Affairs Division

Encik Ruslan joined PNSB on 1 November 1995 as Head of Corporate Affairs Division. His

appointments to-date are to the PNSB Board on 26 December 1996, to the Board of Directors of PNHB

on 24 April 1997 and as the Executive Vice Chairman of PNHB on 6 April 1999. Currently, he is the

Head of PNHB’s Compliance, Internal Control and Risk Policy Committee and a member of PNHB’s

ESOS Option Committee.

As the Executive Vice Chairman of PNHB, Encik Ruslan oversees the day-to-day management of

the PNHB Group, especially in the areas of corporate affairs, operations, human resources and

administration.

After obtaining a Bachelor of Laws Degree from the University of Malaya in 1981, Encik Ruslan began

his career as Legal Advisor with Esso Production Malaysia Inc. In 1985, he joined Pernas Sime Darby

Holdings Sdn Bhd as Group Legal Advisor/Company Secretary. Encik Ruslan has 6 years’ experience as

an advocate and solicitor. In 1993, he joined Rashid Hussain Berhad as Corporate Affairs Senior General

Manager and Executive Committee Member. From November 1995 to February 2003, Encik Ruslan sat

on the Board of Rashid Hussain Berhad and Rashid Hussain Securities Sdn Bhd and served as an Audit

Committee member of both companies. He also sits on the Board of several other private companies.

Encik Mat Hairi Ismail, aged 41, Malaysian

Executive Director, Finance Division

Appointed to the Board of PNSB on 24 May 1994 and then to the Board of PNHB on 24 April 1997, Encik

Mat Hairi is the Executive Director, Finance Division and also a member of PNHB’s Audit Committee,

Remuneration Committee and ESOS Option Committee. He graduated from Universiti Kebangsaan

Malaysia in 1985 with a Bachelor in Accounting (Hons) Degree and is a member of the Malaysian Institute

of Accountants (MIA). In 1985, he started his career as an Accountant at the Accountant General’s Office

in Labuan, and from 1989 to 1992 he served at the Malaysian High Commission in London. Prior to

joining PNSB, Encik Mat Hairi’s last appointment was with the Langkawi Development Authority

(LADA) (1992-1994).

Encik Mat Hairi is the Executive Director (Corporate Services Division) and substantial shareholder of

WWE Holdings Bhd, a KLSE Second Board company which is an investment holding company and

contractor for the provision of engineering services related to design, fabrication, installation and

commissioning of water, wastewater treatment, environmental facilities and construction activities. He

is also a Non-Executive Director and substantial shareholder of U-Wood Holdings Berhad, a KLSE Main

Board company and sits on the Board of several other private companies. Encik Mat Hairi is related to

YBhg Tan Sri Rozali Ismail (his elder brother) who is the Executive Chairman and substantial

shareholder of PNHB. He is also related to another substantial shareholder of PNHB, Encik Shaari

Ismail (his eldest brother).



Board Of Directors

Ir Lee Miang Koi, aged 49, Malaysian

Executive Director, Project & Business Development Division

Ir Lee joined PNSB in 1995 and is responsible for all aspects of PNHB Group’s project management and

business development for new water supply projects. Ir Lee was appointed as a Director of PNSB on

2 February 1999 and subsequently to the Board of PNHB on 1 September 1999. He is also a member of

PNHB’s ESOS Option Committee.

Ir Lee graduated as a civil engineer from University of Technology Malaysia in 1978 and in 1989, he obtained

a Masters Degree in Engineering majoring in water supply and wastewater engineering from the Asian

Institute of Technology in Bangkok. Ir Lee has 25 years’ experience in the water supply sector and has held

various positions during his tenure with the Public Works Department as well as the Waterworks Department

in Malaysia, especially in the field of water supply services. He was previously a Senior Executive Engineer in

the Design and Planning of the Water Supply Branch in the Public Works Department Headquarters and also

Director of the Negeri Sembilan Waterworks Department. He left the Public Works Department in 1991 to

join Ranhill Bersekutu Sdn Bhd, holding positions from Senior Engineer to Vice President. Ir Lee is also a

director of several other private companies within the PNHB Group.

YB Dato’ Seri Dr Ting Chew Peh, aged 60, Malaysian


YB Dato’ Seri Dr Ting joined PNHB on 15 July 2000 as an Independent Non-Executive Director and a

member of the Audit Committee. Currently, he is the Chairman of PNHB’s Nomination Committee,

Remuneration Committee and Compliance, Internal Control and Risk Policy Committee. He graduated

with a Bachelor of Arts Degree from the University of Malaya in 1970 and obtained a Master of Science

from the University of London in 1972. He also holds 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 Sciences at

Universiti Kebangsaan Malaysia from 1974 to 1980 and was subsequently an Associate Professor of the said

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

the Gopeng constituency, which he holds until today. He previously served as Parliamentary Secretary of

the Ministry of Health (1988-1989), Deputy Minister of the Prime Minister’s Department (1989-1990)

and Minister of Housing and Local Government (1990-1999). Currently, YB Dato’ Seri Dr Ting is the

Secretary-General of the Malaysian Chinese Association (MCA) and the Chairman of the Port Klang

Authority. He also sits on the Boards of Pan Malaysia Capital Berhad Group, Pan Malaysia Holdings

Berhad and Hua Yang Bhd which are listed on the Main Board of KLSE, and also serves as director of

several other private companies.


Ir Lee Miang Koi, Executive Director, Project & Business

Development Division

YB Dato’ Seri Dr Ting Chew Peh, Independent Non-Executive Director


YBhg Dato’ Hari NarayananGovindasamy,Independent Non-Executive Director

Encik Abdul Majid Abdul Karim, Independent Non-Executive Director

Board Of Directors

YBhg Dato’ Hari Narayanan Govindasamy, aged 53, Malaysian


YBhg Dato’ Hari Narayanan was appointed to the Board of PNHB on 1 July 1999 as an Independent

Non-Executive Director. He is also a member of PNHB’s Audit Committee, Remuneration Committee and

Nomination Committee. He holds a Bachelors Degree in Electrical and Electronics Engineering from the

Polytechnic of Newcastle-Upon-Tyne, England. He is a member of the Institute of Engineers, Malaysia and

a Registered Professional Engineer with the Board of Engineers, Malaysia. He is also a Director of Tenaga

Nasional Berhad, SP Setia Berhad, Lembaga Lebuhraya Malaysia, Asian Institute of Medicine, Science and

Technology and several other private companies.

Encik Abdul Majid Abdul Karim, aged 44, Malaysian


A past PNSB Director (1994-2001), Encik Abdul Majid was appointed to the Board of PNHB on

24 April 1997 as an Independent Non-Executive Director. He is the Chairman of PNHB’s Audit Committee

and a member of the Remuneration Committee and Nomination Committee. He obtained a Bachelor of

Science (Hons) Degree in Civil Engineering from the University of Glasgow, United Kingdom in 1986. He

began his career as a Technical Assistant with the Urban Development Authority (UDA) (1982-1983), as

Property Executive at Boustead Holdings Berhad (1986-1991) and subsequently as Sales Engineer at UAC

Berhad (1991-1993). Encik Abdul Majid also sits on the Board of several other private companies.

Notes:

1. Save as disclosed above, none of the Directors have:-

(a) any family relationship with any Directors and/or substantial shareholders of the Company;

(b) any conflict of interest with the Company; and

(c) any conviction for offences (other than traffic offences) within the past 10 years.

2. The respective Directors’ interests in the Company’s equity securities are detailed in pages 106 and 109

of the Annual Report.


From left to right:

Encik Ibrahim Ismail,

Madam Loh Lim Chai Kheng,

Ir Loh Kit Mun,

Madam Chan Siew Meei,

Encik Sonari Solor,

Mr Ng Wah Tar,

Encik Ahmad Fauzi Yahya,

Tuan Syed Danial Syed Ariffin,

Madam Tan Bee Lian,

Encik Azizul Nizam Bidin.

Senior Management



Senior Management

Encik Azizul Nizam Bidin, aged 35, Malaysian

Executive Director, Puncak Seri (M) Sdn Bhd

Encik Azizul was appointed Executive Director of Puncak Seri (M) Sdn Bhd, a wholly-owned subsidiary of

PNHB on 24 September 1998. He holds a Diploma in Management from the Malaysian Institute of

Management (MIM) and a Diploma in Hotel Management from Stamford College Group.

In late 1996, Encik Azizul set-up a family owned company focusing in the automotive industry. Through

his achievements and experiences as an entrepreneur for 11 years, he has also participated in joint

ventures or partnerships with Multi National Companies (MNCs) from countries such as USA, Australia

and South Korea which offer domestic services in Malaysia.

In addition to his involvement in entrepreneurship and politics, he is also active in contributing his

leadership qualities in Yayasan GerakBakti Kebangsaan (YGK) and is a committee member of The

Sultan Abdul Hamid College Old Collegians Association (SAHOCA).

Encik Ibrahim Ismail, aged 46, Malaysian

Senior General Manager, Corporate Communications

Encik Ibrahim joined PNSB in April 1997 as General Manager of the Corporate Affairs Division. He

graduated with a Bachelor of Laws Degree in 1981 from the University of Malaya and holds a Master of

Laws Degree obtained in 1989 from the University of London. He began his legal career with the Judicial

& Legal services, serving as a Magistrate from 1981 to 1982. He left the service to join a private practice

and was the Dean for the Faculty of Law at Universiti Kebangsaan Malaysia (1988-1992). He served with

Petronas as Senior Legal Counsel in its Gas Division (1995-1996) and Senior Manager for the Market

Development Department of Malaysia LNG Tiga Sdn Bhd (1996-1997).

He has 22 years’ experience in various aspects of litigation, conveyancing and corporate work. He is

currently the Senior General Manager of the Corporate Communications Department.

Ir Loh Kit Mun, aged 49, Malaysian

Senior General Manager, Operations II

Ir Loh joined PNSB in April 1998 and oversees the operation, maintenance and rehabilitation of 26 WTPs,

contract supervision, dam operations, water resources, environmental matters and initial development of

the Geographical Information System (GIS). Upon graduation from the University of Malaya with a

Bachelor of Civil Engineering Degree in 1978, he worked as an Engineer with the Drainage and Irrigation

Department (1978-1980). Then he served as Chief Engineer (last designation) at SMHB Sdn Bhd

(1980-1993), Associate at Ranhill Bersekutu Sdn Bhd (1993-1995) and General Manager (Infrastructure)

at KL Linear City Sdn Bhd (1995-1998). His 25 years of working experience covers areas pertaining to

irrigation drainage, hydrology, water resources and supply, design and construction of dams, river

engineering, drainage and flood mitigation, infrastructure development, environmental assessment,

development of GIS, management of engineering projects and operation of water treatment plants.

Madam Tan Bee Lian, aged 37, Malaysian

Senior General Manager, Secretarial/Group Company Secretary

Madam Tan has more than 14 years of corporate secretarial experience in both private and public listed

companies. She joined PNSB in November 1994 as Company Secretary. She has been the Group Company

Secretary of the PNHB Group since January 1998. In January 2003, she was promoted to Senior General

Manager, Secretarial. Madam Tan is a Fellow of both the Malaysian Association of the Institute of Chartered

Secretaries and Administrators (MAICSA) and the Institute of Company Secretaries Malaysia (ICSM). Prior

to joining PNSB, she worked in the Secretarial & Legal Department of Project Lebuhraya Utara-Selatan

Berhad (PLUS) and was the Assistant Company Secretary of Metramac Corporation Sdn Bhd/Metacorp

Berhad, a company listed on the Second Board of the Kuala Lumpur Stock Exchange.

On 22 July 2002, Madam Tan emerged as the winner of the ROC-MAICSA Company Secretary Award

2001 for the Listed Company Category in recognition of her excellence, competence and professionalism as

a Chartered Secretary.

Encik Ahmad Fauzi Yahya, aged 42, Malaysian

General Manager, Human Resources & Administration

Encik Ahmad Fauzi joined PNSB in January 2002 as General Manager, Human Resources & Administration.

His responsibilities include to develop and implement the Group's Human Resources policies as approved

by the Board and to maintain good working relations with the Group's in-house unions. He graduated from

the Eastern Michigan University, USA, with a Bachelor of Business Administration degree majoring in

Human Resource Management. He has 17 years of extensive working experience in Japanese and American

multinational companies and has exposure in various disciplines such as human resources, public relations,

marketing and sales. His last employment was with Mobil Oil Malaysia Sdn Bhd (now known as ExxonMobil

Malaysia), where he served since 1991.


Madam Chan Siew Meei, aged 46, Malaysian

General Manager, Legal

Madam Chan joined PNSB in May 1998 as General Manager, Legal. She obtained her Bachelor of Laws

Degree from the University of Malaya in 1981. During the course of her 22-year career, Madam Chan has

served as an Advocate and Solicitor, lecturer, company secretary and as legal adviser to two public listed

companies. Her employment portfolio covers very diverse activities ranging from the timber and plantation

sectors to engineering, property and manufacturing. As such, apart from her legal and corporate duties, she

has attained considerable experience in administration, human resources and company secretarial work.

Madam Loh Lim Chai Kheng, aged 42, Malaysian

General Manager, Executive Chairman’s Office

Madam Loh Lim joined PNSB as General Manager, Executive Chairman’s Office in November 2000. Her

portfolio covers feasibility assessment of potential investments and projects, planning and setting up of

new projects and investments, including assisting in drawing up financing, agreements and

systems set up. She is a member of the Malaysian Institute of Certified Public Accountants (MICPA) and

the Malaysian Institute of Accountants (MIA). Madam Loh Lim has 20 years of working experience in the

areas of audit, accounting, corporate finance, company secretarial and operations.

Mr Ng Wah Tar, aged 39, Malaysian

General Manager, Finance & Accounts

Mr Ng commenced his articleship with an accounting firm in 1984. He is a member of the Malaysian

Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants (MICPA). After

spending 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. He was

subsequently promoted to Senior Manager, Finance in 1997 and subsequently transferred to the

Management Services Division overseeing the finance and accounting functions of UEM. After serving

UEM for 6 years, Mr Ng joined PNSB in March 2000 as General Manager, Finance & Accounts.


Senior Management

Encik Sonari Solor, aged 46, Malaysian

General Manager, Internal Audit

Encik Sonari has more than 15 years’ experience in auditing and accountancy in public listed companies

dealing in property development, manufacturing, timber and consultancy services. He is a member of the

Malaysian Institute of Accountants (MIA) and a fellow member of The Chartered Association of Certified

Accountants (UK). He also holds a professional qualification from the Chartered Institute of Management

Accountants (UK). Prior to joining PNSB in 1998, Encik Sonari served as Group Divisional Chief, Internal

and Management Audit of Land & General Berhad, Chief Operating Officer of Sepakat Computer

Consultants Sdn Bhd, Audit Manager of DMIB Berhad and Accountant of Utusan Melayu Berhad.

Tuan Syed Danial Syed Ariffin, aged 45, Malaysian

General Manager, Operations I

Tuan Syed Danial graduated in 1981 with a BSc. (Hons) Degree in Civil Engineering from University of

Aston in Birmingham, United Kingdom. He joined PNSB in December 1995 and currently holds the

position of General Manager, Operations I Department. Prior to joining PNSB, he worked with the Pahang

Public Works Department for 10 years, holding positions from Project Engineer (1981-1983) to District

Engineer for JKR Cameron Highlands (1983-1991) and the Selangor Water Works Department between

1991 to 1995 whereby he was the Senior Project Engineer overseeing the construction of the Sungai

Selangor Phase 1 Project.


Vision & Mission Statements


To Be The Leading And Dynamic IntegratedWater Services Company.

• To provide a synergy of socio-economicproducts and services in the realm of water treatment, management and distribution and other related businesses.

• To cater to the increasing challenges inthe demand for high quality water production and distribution through thecontinuous implementation of high quality standards, efficient services,human resources development, innovativetechnology and operational systems.

• To actively participate in regional andglobal business opportunities with linkages to the Company’s core activitiesand related interests.

• To actively support and participate inprogrammes and activities aimed atuplifting the community’s living standards and value systems in line withthe aspirations of Vision 2020.

• To address national and internationalconcerns pertaining to the protection,conservation and enhancement of thenatural environment we live in.

Our Vision

Our Mission

To Our Dear Shareholders

On behalf of the Board of Directors of Puncak Niaga Holdings Berhad, I am pleased to present to you the

Annual Report of the Group and of the Company for the financial year ended 31 December 2002.

FINANCIAL REVIEW

The Group achieved a total gross revenue of RM565.11 million for the financial year ended 31 December

2002, an increase of 2.3% compared to RM552.34 million for the financial year ended 31 December

2001. The increase in total gross revenue is attributed to the annual upward adjustment in the bulk

supply rate. Despite an increase in financing cost, profit before taxation for the current financial year rose

0.24% to RM180.11 million compared to RM179.69 million for the preceding financial year as a result

of the higher total gross revenue coupled with lower operating cost.




CORPORATE DEVELOPMENT

The Employees’ Share Option Scheme (ESOS) which was approved by the shareholders of the Company

on 26 June 2001, became effective on 25 February 2002. The ESOS is to enable the Executive Directors

and eligible employees of the Group to participate in the future growth of the Group. It is also designed

to reward and retain key employees and attract new employees with skills vital for improvement of the

operations and continued growth of the Group.

The ESOS exercise price for the 1st tranche was fixed at RM2.37 per share on 25 February 2002 based

on a 10% discount of the 5 days weighted average market price. On 26 August 2002, the exercise price

for the 2nd tranche ESOS to newly eligible employees of the Group was fixed at RM2.47 per share, also

based on a 10% discount of the 5 days weighted average market price. More recently, the exercise price

for the 3rd tranche was fixed at RM2.13 per share on 26 February 2003 based on a 10% discount of the

5 days weighted average market price.

For the RM546,875,000 Nominal Value 15-Year Redeemable Unconvertible Junior Notes (RUN) which

were listed on 28 November 2001, the Company had made two semi-annual coupon payments at 2.5% per

annum totaling RM13,671,875 to the holders of the RUN. The first coupon payment was made on 20 May

2002 while the second payment was made on 20 November 2002. The third payment will be made on

20 May 2003.

None of the 109,374,869 free detachable warrants which were issued with the RUN has been converted

to-date due to the sluggish market condition. (Note: Warrant conversion price is at RM2.62)

INDUSTRY OUTLOOK

Under the Eighth Malaysian Plan period from years 2001 to 2005, a total of RM3.97 billion has been

allocated for the development of the nation’s water resources. This represents an increase of 43% over that

provided for under the Seventh Malaysian Plan. The key objective of the Eighth Malaysian Plan is ‘Growth

With Resilience’, increasing efficiency, productivity and reliability of service through continuous review

and stricter enforcement of performance standards and technical specifications by using the latest proven

technologies. The focus would be on efficiency in the management of the nation’s water resources to ensure

the nation will have an adequate supply of safe water. The Group’s corporate objectives in the water supply

business are very much in line with the foregoing to participate in any opportunity that may arise in the

process of the implementation of the Eighth Malaysian Plan by the Government.

The Group’s areas of operations in the State of Selangor Darul Ehsan and the Federal Territory of Kuala

Lumpur currently have a population of 5.55 million and are estimated to grow by 10% by year 2005,

including inward migration from other states in Malaysia. Current water consumption estimated at 3,400

million litres per day is expected to grow by 6% to 8% per annum for the next five years. Industrial and

commercial users account for about 34% of total metered consumption while residential and other

consumers account for the balance.

The process of corporatisation or privatisation of state water authorities has continued from the Seventh

Malaysian Plan period. The Terengganu Water Supply Department, the Penang Water Authority and the

Selangor Water Supply Department have been corporatised and the water authorities for Melaka, Negeri

Sembilan, Pahang, Perak and Sabah are slated either for corporatisation or privatisation under the current

Plan period.

The Group is keeping abreast with the progress of this development so as to seize any opportunities that

may arise for the participation by the Group.

Insufficient water resources in the State of Selangor Darul Ehsan, Melaka and Pulau Pinang are foreseen as

all viable water sources to meet the continued growth in water demand in those states have already been

fully exploited. Inter-state and inter-basin water transfers will become a necessary feature to overcome

shortfalls in supply for water-deficit states. The Federal Government has put in efforts to enhance

inter-basin water transfers such as from the Kelinchi Dam in the Muar River Basin to the Terip Dam in the



Linggi River Basin, Negeri Sembilan. The engineering study and design for the inter-state water transfer

from Pahang to Selangor, which involves the construction of the Kelau Dam and a 45-kilometer tunnel,

was completed in year 2000. The Pahang-Selangor Raw Water Transfer Project is designed to transfer a

maximum capacity of 2,400 million litres per day of raw water through pipelines and a tunnel from Pahang

to Selangor as well as the Federal Territory of Kuala Lumpur and subsequently to Negeri Sembilan. This

proposed inter-state water transfer project once implemented by the Federal Government would provide

the Group with opportunities to expand its range of water-related businesses.

PRODUCTIVITY AND QUALITY IMPROVEMENTS THROUGH INFORMATION &COMMUNICATION TECHNOLOGY (ICT) AND RESEARCH & DEVELOPMENT(R&D) INVESTMENTS

Water treatment techniques are continuously being fine-tuned to produce good quality potable water. The

processes are adopted after continuous R&D studies to enhance operational efficiency which in turn reduced

the operating costs of water treatment plants without compromising on the quality of the treated water

produced by our plants. The Group has increased the use in applications of ICT to help establish databases

for the operational requirement and Management’s decision-making. The Group’s IT infrastructure has also

been upgraded in phases for both hardware and software to increase staff efficiency and productivity.

Drinking water must be clear, colourless and odourless. It must be pleasant to drink and free from all

harmful micro-organisms, chemicals and radiochemical contaminants and within the safety and quality

standards set by the Ministry of Health under the National Guidelines for Drinking Water Quality. During

the year, the Group continued its R&D works. The most notable achievement from our R&D efforts is

the improvement in effective manganese removal process in treated water as well as efficiency gains in

modification of the process system such as flouride dosing of treated water.

CORPORATE GOVERNANCE

Our Statement on Corporate Governance is set out on pages 68 to 76.

There were no sanctions, reprimands and/or penalties imposed on either the Company or the Group,

Directors or Management by the relevant regulatory authorities during the year.

ENVIRONMENTAL PROTECTION INITIATIVES

The environmental conditions of the Group’s areas of operations impact significantly on the level and

quality of service and product delivered to end-users. During the year, a total of six Environmental Impact

Studies were conducted to ensure that the Group’s activities continue to be carried out in an environmentally

responsible manner. Sanitary Surveys and Water Quality Monitoring are conducted throughout the year as

part of the operational and monitoring programmes. We work closely with the governmental authorities to

stop any third-party activity that may have the potential to cause pollution to our water sources.


Whilst safeguarding the security and safety of drinking water, the Group’s environmental programmes also

play an important role in helping the Government to prevent environmental degradation by ignorant or

irresponsible parties.

The Group is in the process to construct a sludge treatment plant at the Wangsa Maju Water Treatment

Plant at our cost as further contribution towards environmental protection. Four sludge lagoons have

already been constructed at the SSP2 Water Treatment Plant. This clearly demonstrates our commitment

towards environmental protection and emphasises the need for sludge treatment facilities at the water

treatment plants for proper treatment of sludge. We are hopeful that these pilot sludge treatment facilities

would persuade the Government to allocate funds and authorise the construction of similar sludge

treatment facilities at all the water treatment plants under our management.

CORPORATE SOCIAL RESPONSIBILITIES

In line with the Group’s philosophy of being a caring and responsible corporate citizen, the Group has

continuously supported various charitable non-profit organisations such as Pusat Zakat Selangor, UMNO

Bumiputra Education Fund, PUSPANITA Fund and local orphanages whereby a total of RM1,482,273.40

was donated to these organisations during the financial year.

LOOKING FORWARD

Up to the third quarter of year 2002, Malaysia’s Gross Domestic Product (GDP) growth has been driven by

strong domestic demand and has also benefited from the recovery in exports. The Government’s fiscal and

expansionary monetary policies put in place have buoyed the domestic economy. Exports expanded on the back

of a gradual recovery in electronics, while primary commodity exports have done well with the upsurge in

prices. The year 2002 Bank Negara Annual Report indicated real GDP expanded by 4.2%. However, the

economy is expected to be negatively affected for the year 2003, given the weak world economy and uncertain

threats posed by the Severe Acute Respiratory Syndrome (SARS) virus and the aftermath of the Iraq war.

Malaysia’s GDP is projected to decelerate to 3.7% in 2003 in view of the foreseeable

weaknesses in the external sector even though the Government had announced that the fiscal stimulus

package would mitigate the impact on the country’s economy.

The Group has pursued various water-related business opportunities in the domestic as well as in the

regional markets. Relying on its core competencies, the Group continues to actively pursue growth in

potable water-related projects in the various states in Malaysia, trying to secure a share of the

corporatisation or privatisation opportunities arising from the various state water authorities.

I am pleased to report a recent success in our business forays. On 22 November 2002, the Company has, on

behalf of a Consortium comprising the Company, Lanco Infratech Ltd and Kris Heavy Engineering &

Construction Sdn Bhd signed a contract with the Chennai Metropolitan Water Supply and Sewerage Board

of India on the Chennai Water Supply Augmentation Project 1 – Package III (Chennai Project). The

Chennai Project which involves the supply and laying of water supply pipelines, including a 5-year

operation and maintenance contract, is worth a total contract sum of Rs292,47,05,102.76 or approximately

RM234 million. PNHB holds a 70% stake in the Consortium.



On the domestic front, NS Water Konsortium Sdn Bhd (NSWK), the water concession company which has

been granted the exclusive privatisation rights of Jabatan Bekalan Air Negeri Sembilan (JBANS) is still

engaged in negotiations on the terms and conditions of the concession agreement for the privatisation of

JBANS. The Company will hold a 30% equity stake in NSWK.

The substantial amount of account receivables has remained high despite our collection efforts. There is

however, negligible risk of default and the Group has remained engaged with our customer to resolve the

issue of slow payments. Whilst it may be a concern for shareholders, there are opportunities inherent in

staying engaged in negotiations for strategic positioning that may well yield the Group favourable

business opportunities in the process of resolving the issue.

The world and the Malaysian economies weigh heavily on the global business confidence where it is now

in a stage of uncertainty. However, the water supply business where the Group is engaged is resilient

towards economic vagary since water is a basic necessity. The challenge for the year 2003 as recognised

by the Board of Directors is to achieve growth in the Group’s business amidst such uncertainty and

increasing market competition.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors of Puncak Niaga Holdings Berhad, I would like to express my sincere

thanks and utmost appreciation to our valued customers, end-users and shareholders for their continued

support and trust.

My gratitude and thanks also go to our Management and all employees for their hard work, dedication and

commitment. It is with their continued support, loyalty and commitment that the Group is able to face

the challenges and take advantage of any business opportunities that may arise in future.

Last but not least, our special thanks to the

various Governmental authorities and agencies,

Non-Governmental Organisations (NGOs), our

business and strategic partners, associates, suppliers

and financiers, all of whom have contributed

significantly to our successes this past year and who

would continue to play an important role in our

future success.

Tan Sri Rozali Ismail

Executive Chairman23 April 2003


YBhg Tan Sri Rozali Ismail, a Top 10 Nominee for the Ernst & YoungEntrepreneur of The Year-Malaysia 2002 (Master EntrepreneurCategory) Award


OpportunitiesCarving New


The power generated bythe river allows it tocarve out new landscapes;forming fresh tributariesand spreading its area ofinfluence to enable thegrowth of new regions.

Backed by years ofexperience and knowledge, PuncakNiaga is in the positionto take on newopportunities; creatingeven more innovativeproducts and services tofurther grow ourbusiness while enhancing the livingstandards of our communities.

Sungai Selangor Phase 2 Water Treatment Plant

During the year 2002, the Sungai Selangor Phase 2 (SSP2)

Water Treatment Plant continued to operate smoothly. A

total of 321.82 million cubic meters of treated water was

produced at the plant, marking an increase of 30% from the

247.34 million cubic meters produced in 2001. The rise was

attributed to the extension of water supply to the Klang and

Shah Alam areas via the Bukit Mayong Reservoir.

SSP2 Water Treatment Plant’s reliability for year 2002 stood

at 100%, with water production stabilised to 881.70 million

litres per day. There was no incident of any violation in

treated water quality nor any major shutdown throughout the year. This was largely due to the on-line

monitoring system and stringent control measures in place.

As part of PNSB’s commitment to ensure clean water supply to the consumers, SSP2 Water Treatment

Plant in collaboration with Perbadanan Urus Air Selangor Berhad (PUAS) undertook the cleaning of two

reservoirs during the year. The first was at Matang Pagar Reservoir in May 2002 and the second at Bukit

Mayong Reservoir in June 2002. Due to the slippery floor and the high chlorine fumes in the tank at

Matang Pagar Reservoir, the work was considered dangerous. The Emergency Response Plan was activated

with strict safety and health regulations imposed. With proper planning and coordination, cleaning works

at both reservoirs were carried out smoothly and successfully without any interruption to water supply or

complaints from the consumers.

In July 2002, SSP2 Water Treatment Plant was awarded the MSOSH’s Grand Award for its excellence in

safety management systems at the plant. SSP2 Water Treatment Plant is one of only four

companies/facilities in the country to be conferred with this prestigious award.

After two comprehensive surveillance audits conducted by Lloyd’s Register Quality Assurance of United

Kingdom, SSP2 Water Treatment Plant has once again maintained its ISO 9002 accreditation. This bears

testimony to the hard work and dedication of the entire team at the plant, who has remained totally

committed to achieving the highest standards in quality of plant operations.

In compliance with the latest standard requirements and to ensure continuity of the management process, SSP2

Water Treatment Plant has targeted to upgrade the current Quality Management System ISO 9002:1994 to

ISO 9001:2000 by July 2003. Our competent employees are currently conducting the exercise in-house.


Operations Review

SSP2 Water Treatment Plant


SSP2 Water Treatment Plant has also targeted to be accredited with the Environmental Management

System ISO 14001:1996 and Safety & Health Management System OHSAS 18001:1999. At this

juncture, awareness training and preparation of documentation is being carried out and the plant is on

schedule to obtain certification in May 2003. With the certification, SSP2 Water Treatment Plant will

be the first water treatment plant in the country to obtain a system that is integrated with quality,

environment and safety.

In October 2002, SSP2 Water Treatment Plant took the initiative to carry out the chemical exposure

monitoring to check the concentration of airborne chemicals. Results showed that the plant is in compliance

with the Permissible Exposure Limit (PEL) set by the Department of Safety and Health (DOSH), Malaysia.

Wangsa Maju Water Treatment Plant

For the year 2002, Wangsa Maju Water Treatment Plant’s

production stood at 16.65 million cubic meters of treated

water, an increase of 25% from the 13.33 million cubic meters

achieved in year 2001. This increase in production was mainly

due to the additional areas that had to be supplied by the plant

during the prolonged drought from February to September

2002. Average daily production for Wangsa Maju Water

Treatment Plant in year 2002 was 45.61 million litres per day.

Like SSP2 Water Treatment Plant, Wangsa Maju Water

Treatment Plant enjoyed 100% performance in year 2002, with

no shutdown or violation in the quality of water produced.

After two surveillance audits conducted by Lloyd’s Register Quality Assurance of United Kingdom,

Wangsa Maju Water Treatment Plant has successfully maintained its ISO 9002 accreditation. This

achievement reflects PNSB’s commitment towards producing quality water through disciplined

management processes that improve plant operations. For the year 2003, we have targeted to upgrade the

plant’s current Quality Management System ISO 9002:1994 to ISO 9001:2000 by July 2003 and are on

course for the Environmental Management System ISO 14001:1996 accreditation in December 2003.

In July 2002, Wangsa Maju Water Treatment Plant, in its first attempt at the MSOSH safety competition,

won the prestigious Gold Award for excellence in safety management systems at the plant, marking once

again, its commitment to excellence.

In an effort to improve security, a state-of-the-art Digital Video Security Surveillance System (DVR) was

installed to enhance security features at the plant. The pilot project, which will eventually be extended to

Wangsa Maju Water Treatment Plant


all water treatment plants, is equipped with digital recording, motion detector, alarm system,

auto-dialling and remote viewing to provide full video surveillance of the water treatment plant. Thus

far, it has helped to reduce the number of security guards required at the plant.

Operations Of 26 Water Treatment Plants Under PCCA

In year 2002, the 26 water treatment plants operated by Puncak Niaga under the PCCA produced 344.22

million cubic meters of treated water, which is 9.18% above the designed capacity. This, however, signifies

a decrease of 3.00% in production compared to that of year 2001.

The decrease in production of treated water from the 26 water treatment plants was mainly due to the

exercise by PUAS to reconfigure the water distribution system in view of the full commissioning of the

SSP2 Water Treatment Plant in October 2000 and the Sungai Rasa Water Treatment Plant in

November 2001. The decrease in production was also attributed to PUAS purchasing water from other

water operators.

Despite the above and there being more than 4,000 hours lost due to unscheduled shutdowns in the year

2002, the 26 water treatment plants’ combined production was still above the PCCA’s designated

quantity. The major cause of the shutdowns was raw water violations, which accounted for 57.7% of the

total shutdowns. Scheduled maintenance accounted for 18.7% of the total shutdowns and 10.8% was due

to electrical power interruptions.

The water treatment plants’ maintenance and production performance continued to be diligently

monitored under the yearly Plant Audit programme. Supplemented by the Competent Electrical

Engineers’ Inspection and the monthly Mechanical and Electrical Corrective Maintenance Inspections,

plant shutdowns were kept to a minimum. In addition, our close rapport with Tenaga Nasional Berhad

(TNB) has assisted in a substantial reduction in shutdown time caused by power failure. Thus far,

TNB has been swift in mobilising standby power generators to any water treatment plants affected by

power interruptions.

Under the PCCA, 12 water treatment plants have received the MS ISO 9002 certification from SIRIM

namely, the Bukit Nanas, Sungai Batu, Bernam River Headworks, Sungai Langat, North Hummock,

Batang Kali, Rantau Panjang, Gombak, Cheras Mile 11, Bukit Tampoi, Ampang Intake and Salak

Tinggi Water Treatment Plants. With 12 water treatment plants under the PCCA being certified MS

ISO 9002, in addition to SSP2 and Wangsa Maju Water Treatment Plants, Puncak Niaga takes pride

that 98% of its total production are from water treatment plants managed according to established

quality assurance standards. This bears strong testimony of Puncak Niaga’s commitment to all-round

service and operational excellence.

Operations Review


Dam Operations

PNSB continues to operate and maintain the Sungai Langat,

Klang Gates and Tasik Subang Dams with prudence and

exercises good practice in releasing the optimal amount of water

for the water treatment plants. The three dams recorded an

annual rainfall difference of +6.02%, -3.08% and +28.96%

respectively in year 2002 as compared to year 2001.

From January to April 2002, all three dams experienced varying

degrees of low rainfall due to the slight effects of the El Nino

phenomena, resulting in several residential areas being affected

by water shortages. Nevertheless, the dams managed to recover

their storage by the end of year 2002.

The Dam Operations Unit continued to work closely with PUAS on the monitoring of the water level and

identification of alternative raw water sources such as ponds and rivers. The operation of the dams is

regulated by the Dam Operations Control Curves developed for each dam.

As part of the dam safety management procedure, the Company has implemented a programme to

constantly survey and monitor the general area, structure and water quality of the dams. Daily

instrumentation readings are taken to gauge the safety of the dams, as well as monthly visual inspections

of the dam areas, particularly along water banks and upstream tributaries. If there are any abnormalities

detected, an environmental investigation would be carried out. All the dams are also constantly monitored

for structural integrity. A regular inspection of the surrounding topography is taken to protect against

landslide formation. In line with international standards and procedures, the Company also allows an

internationally recognised consultant to inspect the dams once in every five years.

BUSINESS DEVELOPMENT

The year 2002 saw the Company spreading its wings and establishing business ties on new shores. Tenders

were submitted for several water-related infrastructure projects, both locally and abroad throughout the year.

As a result of competitive bidding, the Company was successful in securing a new water supply project in

Chennai, India. The Chennai Water Supply Augmentation Project 1 - Package III involves the supply and

laying of 114 km of water supply pipelines with a diameter of 1,750 mm to 1,875 mm in Chennai, India

and the operation and maintenance of the completed works for 5 years. The Company signed a

RM234 million Contract with the Chennai Metropolitan Water Supply and Sewerage Board on

Klang Gates Dam


Operations Review

22 November 2002. Puncak Niaga Holdings Berhad (PNHB) enters the project as part of a consortium

which includes Lanco Infratech Ltd and Kris Heavy Engineering & Construction Sdn Bhd with a 70:20:10

participation ratio.

In light of these developments, the Group remains confident of securing future successes in its business

development efforts and will remain focused in identifying and pursuing new water-related infrastructure projects

in Malaysia and abroad to enhance the Group’s net worth.

RESEARCH AND DEVELOPMENT (R&D)

In order to maintain PNSB’s position at the forefront of the

water industry and to meet the constant demands of producing

high quality water from our water treatment plants, the

Company continues to invest a significant percentage of its

resources into R&D. For the year 2002, the Group spent close

to RM5.2 million on R&D. As a result of these initiatives,

various innovative technologies have been developed and

implemented to increase operational efficiency while reducing

costs at the plants.

During the year 2002, a new fluoridation system was

installed at the SSP2 Water Treatment Plant to improve the

quality of water for prevention of tooth decay. Previously, the fluoride solution in the preparation tank was

transferred to the dosing system through pumps. Through research, the system has been modified to use

ejectors to transfer the solution. This has eliminated the need for electricity and maintenance of the pump

and resulted in cost savings in plant operations without compromising on quality.

The SSP2 Water Treatment Plant had also experienced many technical difficulties with the lime D-mixer.

Leakage of lime through the gland packing had left the chemical room dirty and had also contributed to

high maintenance costs. However, due to extensive research carried out over a nine month period by the

plant employees, the leakage and frequent system breakdowns were subsequently resolved by replacing a

rotating blade with a lighter material.

Other studies have also been successfully conducted to increase the effectiveness of manganese removal in

treated water and removal of excess sand from the sludge plant. All these were done using internal

resources. Not only does this reflect the high level of competency amongst the plant employees, more

importantly, it encourages them to be innovative and directly involved in the Group’s efforts towards

reducing operating costs.

Filter Media Research at SSP2 Water Treatment Plant’s laboratory


INFORMATION TECHNOLOGY (IT)

In line with our continued efforts to improve productivity with IT-driven automation, an exercise was

carried out in year 2002 to replace all IT equipment that was deemed outdated and obsolete. Personal

computers, servers, printers and other peripherals were all replaced, where necessary. In tandem,

productivity tools (software) were also upgraded to the latest versions in this exercise.

Year 2002 saw an increased effort in mitigating the menace arising from software virus attacks through the

Internet and other IT disasters affecting the operations of the Group’s computer systems. An IT Systems

Disaster Recovery Plan was formulated to outline a set of procedures and remedial action plan to guide the

Group to restore lost data, replace faulty hardware and to relocate to a temporary office site in the event of

major calamities.

Inspired by its Corporate Vision to achieve excellence, the IT Department developed its own in-house

Computerised Asset Management System which will ensure effective and efficient asset management for

the Group. The IT Department is currently developing a similar system to better monitor and

administer the maintenance of the Group’s vehicles.

A Computerised Auto Staff Attendance programme has also been implemented to help ensure safety

and security at the workplace. Apart from keeping unauthorised people out of the workplace, the

system also allows the Administration Department to manage and monitor the daily attendance of the

employees with the touch of a button.

For the Group to maintain its competitive edge, the implementation of the mySAP.com system will be

followed by the Human Resource and Payroll modules which is planned to be fully implemented in

year 2003.

Our water treatment plants rely on state-of-the-art systems to ensure the highest standards of operational

quality are met. The Company continues to operate the Supervisory, Control and Data Acquisition (SCADA)

System for centralised monitoring and supervision. This allows tracking of all relevant information and data

from the water treatment plants and dams via real-time at the operations centre. The management of the

maintenance activities at the SSP2 Water Treatment Plant is simplified and assisted by a Computerised

Management System called MAXIMO that enables automated management and control of the activities at

the desktop. Along with the River Warning Monitoring System (RWMS) which are already in operation at

Sungai Langat and Sungai Selangor, the Company is developing a prototype mobile RWMS to analyse raw

water quality and alert the water treatment plants on any potential pollution.


Operations Review

STRATEGIC RESOURCE CENTRE (SRC)

The SRC was set up in 1997 specifically for the purpose of establishing a one-stop centre where

information of strategic importance including water industry research findings, in-house R&D projects’

results and other strategic business intelligence are gathered and disseminated to the relevant

departments within the Group.

It is the Group’s long-term goal to develop a full-fledged think tank, which will be coordinated through the

SRC. It is hoped that the think tank will grow into a strategic business partner of the Company via its industry

and market research reports, informative articles and write-ups. It is SRC’s aspiration to play an active and

important role in Puncak Niaga’s business expansion activities in the domestic and overseas markets.

During the year 2002, SRC produced several informative fact-sheets on other markets as well as write-ups and

reports on relevant issues in the water and water-related industries. SRC intends to become a more active

player in formulating and strategising the Group’s business decisions in the ever-competitive water industry.

CRISIS MANAGEMENT

The Crisis Management Plan (CMP) and the Water Treatment Plant Emergency Response Plan (ERP), which

were put in place in year 2001 and updated in year 2002, enabled the team to be in a constant state of readiness

to respond effectively to any form of emergency, crisis or disaster at the Group’s premises and installations. The

Plans work together to ensure the most effective response to any crisis situation or disaster with minimal

disruption to the Group’s business operations, and most importantly, to protect the Group’s corporate image.

They are constantly reviewed and improved to address any weaknesses noted.

In order to test the effectiveness of the CMP and ERP and to assess the level of readiness of employees from

both the Headquarters and water treatment plants, safety drills and crisis management drills were conducted

during the year, incorporating elements of the Plans. On 30 July

2002, an emergency safety drill was conducted at the Bukit

Nanas Water Treatment Plant and the CMP and ERP were

activated. During the drill, the crisis management procedures on

responding to an emergency situation at the water treatment

plant were tested, reviewed and proven to be effective.

Chemical suppliers, in particular chlorine suppliers, were also

required to have their Crisis Management Plan (CMP) and this

requirement has been incorporated in the Chemical Supply

Agreement. The suppliers’ CMPs were also tested and

coordinated with the CMP and ERP.Emergency safety drill at Bukit Nanas Water Treatment Plant

OCCUPATIONAL SAFETY & HEALTH

Puncak Niaga remains fully committed in ensuring a safe and healthy working environment for its employees.

Guided by the Corporate Safety and Health Committee and realising its duty as a responsible employer, the

Group had increased funding to organise safety and health programmes and activities during the year 2002.

Along with regular training programmes involving chemical disaster and first aid handling, fire-fighting

equipment handling and chemical safety, three significant safety-oriented programmes were also

implemented in year 2002.

On 30 July 2002, an emergency drill was held at the Bukit

Nanas Water Treatment Plant as part of the activities

implemented in relation to the Control of Industrial Major

Accident Hazards Regulations, 1996 (CIMAH). The drill

was held with the participation of several Government and

private agencies such as Bomba dan Penyelamat Wilayah

Persekutuan, Royal Malaysian Police, Department of

Occupational of Safety and Health (DOSH), Department of

Environment (DOE), Enforcement Department from City

Hall and our chemical supplier, CCM Chemical Sdn Bhd.

In October 2002, a series of evacuation talks were also organised and held at Puncak Niaga’s

Headquarters for all Headquarters’ employees. The talks, conducted by Bomba and Penyelamat Wilayah

Persekutuan, were designed to prepare the employees to respond to any emergency within the building

including the use of various types of fire extinguishers.

An Occupational Safety and Health Awareness Talk was conducted at the Stadium Shah Alam on

19 October 2002 for all employees and a speaker was specially invited from the National Institute of

Ocupational Safety & Health (NIOSH) to brief the employees on their respective responsibilities towards

ensuring occupational safety and health in the work place, in line with the Occupational Safety and

Health Act, 1994.

In relation to training on chlorine handling, our employees are regularly sent to the chlorine manufacturer’s

premises to undergo extra training on correct chlorine handling procedures.


Employees receiving training by Bomba dan PenyelamatWilayah Persekutuan


HUMAN RESOURCES MANAGEMENT

The Company continues to implement various programmes and initiatives to encourage work excellence

amongst employees, while at the same time ensuring their welfare. Adopting a pro-active

results-orientated work culture, Puncak Niaga encourages its employees to express their individual views

to help develop and improve the work process.

Employee Unions

The year 2002 saw the signing of the Collective Agreement between PNSB and the Non-Executive

Union (Kesatuan Kakitangan PNSB) on 15 May 2002, which was approved by the Industrial Court

through its consent award on 22 May 2002.

The Executive Union (Kesatuan Eksekutif Syarikat PNSB) is

currently in negotiation with the Company on its Collective

Agreement. To facilitate effective evaluation of the proposed

Collective Agreement, a Collective Agreement Committee

was formed before the commencement of negotiations.

Except for some designated positions, employees of the

Company are free to join either the Executive or

Non-Executive Union. Overall, the relationship between

the Management and Union representatives remains

cordial and co-operation is focused on achieving the

Company’s goals and objectives.

Employees’ Training Programmes

Training is an on-going process and an integral component for the continued success of any organisation.

The underlying purpose of conducting training is to keep the organisation competitive by keeping its

people competitive. It is a straight forward attempt to attain business results through its people. As such,

the training objectives implemented at Puncak Niaga are multiple in nature. They are complementary, yet

far reaching in scope.

All training programmes that were initiated in year 2002 sought to achieve the following three major areas:-

• Define what jobs mean in the organisation.

• Identify and describe the core competencies that premise the jobs.

• Define and describe the developmental interventions which are necessary to ensure the job incumbents

remain competent and current in their set of competencies.

Operations Review

Signing of the First Collective Agreement between Puncak Niaga and the Non-Executive Union


In our efforts to minimise the skill gaps and improve core competencies among our employees, specific

training interventions have been designed to enable them to perform successfully in their jobs. This has

directly benefited the Company by enhancing the employees’ job efficacy towards better productivity.

The training interventions included a broad range of inter-disciplinary training programmes, whereby

employees were exposed to skills outside their immediate areas of expertise. This approach has, to a large

extent, equipped the employees with multi-skill competencies in discharging their duties whilst at the

same time, allowing them to be flexible and adapt to any changes.

The in-house Saturday Encounter programme, which was initiated in 1999, has helped the employees

enhance their understanding with regards to the policies and procedures at departmental and organisational

levels, as well as improving their job knowledge skills. In year 2002, the Training Department successfully

conducted and co-ordinated the following Saturday Encounter programmes:-

• Finance for Non–Finance Managers

• Legal Seminar

• Safety and Health Seminar

• Employees’ Insurance Coverage Policy Talk

• Fire Demonstration and Evacuation Drills

The Group spent RM127,293 for training during the financial year 2002, of which RM43,731 was spent

on in-house programmes and the remaining RM83,562 was used for external training programmes.

Sexual Harassment Committee

Since the formation of the Sexual Harassment Committee comprising a cross-section of employees from

various departments on 20 October 2001, no cases of sexual harassment have been reported in the Group.

The Group’s Sexual Harassment Policy was adopted and officially implemented on 20 October 2001.

In year 2002, the Committee members attended seminars on Sexual Harassment to equip themselves with the

requisite knowledge and skills to handle and investigate any complaints of sexual harassment in the Group.

In March 2002, the Groups’ Sexual Harassment Policy Handbook was distributed to all employees with

the hope that the handbook will provide the employees with a better understanding of what constitutes

sexual harassment, the policies and procedures involved in handling sexual harassment and their respective

roles and rights.

Security Services

The water treatment plants and dams managed by PNSB are considered important strategic assets to the

country. Therefore, PNSB takes the job of protecting these installations very seriously. Maintaining its own

security personnel, PNSB ensures that the security force receives the relevant training to enable them to

carry out their duties effectively.

Apart from the basic Security Guards training received by 98% of the security force, there were also other

courses such as Security Guards Physical Aptitude Test, Basic Investigation Techniques, Top Supervisors and

Police Investigation Courses conducted for the security personnel in year 2002.

EMPLOYEE WELFARE

Foster Parent Programme

The Foster Parent Programme was first initiated in the early days of PNSB, with the aim of creating better

relations and more effective two-way interactive communications between the Headquarters and water

treatment plants’ employees. The programme has proven to be an excellent platform used to identify

problems and difficulties faced by employees at the water treatment plant and for them to channel these

issues to the Management. It also gives Management an in-depth understanding on the roles and functions

of water treatment plants’ employees, creating opportunities for both parties to exchange views pertaining

to their job functions and responsibilities.

Under the programme, the Management is required to visit the respective water treatment plants’

employees under their care once a month. The visits are meant to build rapport and exchange ideas and

views on improving the overall working standard of the water treatment plants. The meetings have proven

to be productive and constructive in addressing issues that would otherwise be left unnoticed.

During the year 2002, the projects that have been carried out under the Foster Parent Programme at the

water treatment plants included the construction of children’s playgrounds, badminton courts, fishponds

and landscape beautification projects on a “gotong-royong” concept.

The refurbishment and construction of children’s playgrounds at the water treatment plants were also initiated

under the programme. The construction of the playgrounds is a continuing project undertaken on a need basis.

During the Hari Raya, Deepavali and Chinese New Year festivals, employees at the water treatment plants

were presented with gifts from the Management. The gifts were delivered together with a message from

the Executive Chairman through the Foster Parents for each of the water treatment plants.


Operations Review


Once again, the programme continued to receive warm support from both the Management and employees

in year 2002. The level of commitment shown by both parties has made the programme a significant

channel for a two-way interactive communication to improve administrative, operational and social matters

of the water treatment plants’ employees.

Quarters Committee

The Quarters Committee, comprising nine members from various departments, was formed in early 2002

to ensure that the housing needs and welfare of the employees at the water treatment plants are being

looked after in accordance with PNSB’s Quarters Policy, which serves as a guide to the Quarters Committee

on the administration of the quarters’ facilities and amenities.

An inventory audit of all the 26 water treatment plants and

its occupants has been completed by the Quarters Committee

for the purpose of updating the records to facilitate a more

efficient management and administration of the quarters.

To monitor the maintenance and upkeep of the quarters and

its amenities throughout the State of Selangor Darul Ehsan

and the Federal Territory of Kuala Lumpur, three quarters

assessments were carried out and reports were prepared to

update the Board.

For year 2002, 22 new applications for quarters or transfers were

processed by the Quarters Committee.

The Quarters Committee held eight meetings throughout the year 2002 and forwarded several

recommendations on improvement of the quarters for the Board’s consideration and approval.

Sports and Recreational Club

Since its establishment in 1994, Kelab Sukan dan

Kebajikan Puncak Niaga (Sports Club) has become a vital

tool in promoting social interaction and integration

between all levels of employees. The Sports Club regularly

organises various social, sports and recreational activities

for the employees.

In year 2002, apart from regular sports activities such as

fishing, volleyball, football and bowling competitions,

there was also a sports carnival organised with JabatanSports Club members participating in a football tournament

SSP2 Water Treatment Plant’s newly built surau

Bekalan Air Negeri Sembilan, the state water agency, with

the intention of establishing better interaction and

rapport between the two organisations. 50 employees,

including the Management, participated in the successful

2-day event held in Seremban.

Educational visits to Petrosains, Kuala Lumpur City

Centre and the Kuala Lumpur Tower were also arranged

for the employees’ children during the school holidays.

The visits were spread over three days since the response

was overwhelming, with 113 children participating in

the field trip.

Special events for religious celebrations such as Ma’al Hijrah

and Ibadah Korban were also organised, along with functions

to celebrate major festivals such as Hari Raya Aidil Adha and

Hari Raya Aidilfitri.

In conjunction with Women’s Day 2002, the women’s section

of the Sports Club, Biro Hawa, organised a Women’s Day

celebration with the theme “Bekerja Dalam Kesepaduan:

Wanita, Hak Asasi Manusia Dan Keamanan” which was held

on 22 June 2002 at the Maple Suite, Jalan Changkat Raja

Chulan, Kuala Lumpur. The event was officiated by YBhg

Puan Sri Faridah Idris, wife of the Executive Chairman and

was attended by the Group’s female employees.

SOCIAL CONTRIBUTIONS

As a caring corporate citizen, Puncak Niaga takes pride in its social and civic responsibilities and

allocates a percentage of its funds for donations to worthy charitable causes. For the financial year 2002,

a total of RM1,421,835 was contributed to various religious and educational foundations, youth, sports

and entrepreneurial associations and other charities. In addition, our Executive Chairman and Senior

Management personnel have contributed many hours of their time to various educational foundations

and community development programmes. The women’s section of the Sports Club, Biro Hawa, organised


Operations Review

Educational visit to Petrosains

YBhg Puan Sri Faridah Idris presenting prizes during theWomen’s Day celebration


an annual outing for orphans in conjunction with the Hari Raya

Aidilfitri celebration, whereby children from three orphanages

were treated with “baju raya” shopping at a departmental store

in Petaling Jaya before breaking fast. Cash donations were also

given to the orphans. The event was graced by YBhg Puan Sri

Faridah Idris, wife of the Executive Chairman.

COMMUNITY RELATIONS

The Company, through its team of dedicated employees,

continues to utilise its resources to help create awareness on the

importance of protection of our natural water sources from all

forms of pollution. Utilising our resources, both monetary and

knowledge, Puncak Niaga supports various schemes and programmes that have been developed and

implemented to educate the local communities on the importance of having access to clean water.

River Rescue Brigade (Briged Penyelamat Sungai)

Established on 14 March 1998, the River Rescue Brigade was the brainchild of Puncak Niaga’s Executive

Chairman, YBhg Tan Sri Rozali Ismail. Its objectives are to create awareness amongst the younger

generation and to educate them on the importance of conservation and protection of our rivers.

The year 2002 saw the River Rescue Brigade grow to 1,110 members from 49 participating schools in the State

of Selangor Darul Ehsan and the Federal Territory of Kuala Lumpur. Activities included visits to water

treatment plants where the school children are exposed to the importance of potable water production and the

effects and prevention of river pollution. News bulletins were distributed to the club members once in every

two months to keep them updated on current water issues and events of the River Rescue Brigade.

Puncak Niaga plans to extend the River Rescue

Brigade to the secondary and tertiary students in

year 2003. There are also plans to organise a

“Perkhemahan Alam Sekitar” or Summer Camp for

its members.

The establishment of the River Rescue Brigade is a clear

indication of Puncak Niaga’s role and commitment in

creating a caring younger generation who are aware of their

environment. It is hoped that the school children will

benefit from the club and will act as catalysts to create a

change of attitude in handling future river pollution issues.

YBhg Puan Sri Faridah Idris shopping with orphans inconjunction with the Hari Raya Adilfitri celebration

River Rescue Brigade event

Operations Review

Educational Outreach Programme (Turun Ke Padang)

Similar to the River Rescue Brigade, the Educational Outreach Programme (EOP) educates our future

generation on the importance of river preservation in ensuring the continuous supply of clean water. Puncak

Niaga has implemented a comprehensive programme where our officers make visits to selected primary

schools in the State of Selangor Darul Ehsan and the Federal Territory of Kuala Lumpur each month.

The EOP was launched on 15 June 1997 by Puncak Niaga’s Executive Chairman, YBhg Tan Sri Rozali

Ismail and was approved by the Education Departments of the State of Selangor Darul Ehsan and the

Federal Territory of Kuala Lumpur respectively.

The EOP highlights the role of Puncak Niaga and other

parties like PUAS in the treatment and supply of water to

the consumers. Talks and video screenings are given on the

importance of the river as a source of clean water and group

activities are organised to allow the students to conduct

their own water treatment experiments.

The students are also quizzed based on the talks and

demonstrations given by the Company’s officers. Currently,

the EOP is purely targeted at primary school students since

we believe that the young will be an agent of change or a

catalyst in the change of attitude towards river preservation.

In year 2002, a total of ten primary schools were selected and visited by Puncak Niaga under the EOP. The

same quota has been set for year 2003.

Workshops, Forums, Exhibitions and Seminars

In year 2002, the Group continued to actively participate in various workshops, forums, exhibitions and

seminars on the privatisation of public water facilities, water industry, environment and investor relations,

as follows:-

1. Water 2002 Expo organised by AMB Exhibitions in collaboration with the Ministry of Works on

26 March 2002.

2. “Bengkel Eksekutif Perniagaan” Workshop organised by Pusat Pungutan Zakat Selangor on

2 May 2002.


Students participating in the EducationalOutreach Programme

3. Presentation of a working paper at the “Pengurusan

Lembangan Sungai Selangor” Seminar organised by

Lembaga Urus Air Selangor and WWF Malaysia on

30 May 2002.

4. Presentation of a paper entitled “Kesan Pencemaran

Terhadap Mutu Air Yang Dirawat Di Loji Rawatan Air”

at the “Bengkel Pengurusan Mutu Air Negeri Selangor”

organised by Jabatan Kesihatan Negeri Selangor on 8 and

9 July 2002.

5. Presentation of a paper entitled “Air: Cabaran, Isu

dan Masa Depan” at the “Air Anugerah Tuhan”

Seminar organised by Institut Kefahaman Islam

Malaysia on 17 July 2002.

6. Water Industry Exhibition organised by PUAS on 25 July 2002.

7. Malaysian Malay Symposium and Exhibition organised by Universiti Kebangsaan Malaysia from 24 to

31 August 2002.

8. KLSE Investors’ Week 2002 from 23 to 29 September 2002.

9. Paya Indah Wetlands Exhibition from 11 to 13 October 2002.

10. Selangor Environmental Week Exhibition from 27 to 29 October 2002.


Presentation of a working paper by PNSB at the“Pengurusan Lembangan Sungai Selangor” Seminar



Executive Chairman’s working visit to Bukit Nanas Water TreatmentPlant, 22 March 2002

Contribution of HaemodialysisMachine, 21 February 2002

12 January 2002• Safety Briefing to employees at the Bukit Nanas Water Treatment Plant by the Fire

and Safety Department.

9 February 2002• Visit by Messrs PricewaterhouseCoopers to the SSP2 Water Treatment Plant.

21 February 2002• Puncak Niaga donated a haemodialysis machine to the Tg Karang District Hospital.

24 February 2002• Puncak Niaga’s Sports & Recreational Club organised a Hari Raya Aidil Adha

Korban Programme at the Sungai Langat Water Treatment Plant.

28 February 2002• Briefing to analysts on the Group’s financial results for

the year ended 31 December 2001.

14 March 2002• Visit by Penang Water Works Department to the Wangsa

Maju Water Treatment Plant.

15 March 2002• Puncak Niaga participated in the Ma’al Hijrah celebration held

at Stadium Bukit Jalil.

22 March 2002• Executive Chairman’s working visit to the Bukit Nanas

Water Treatment Plant in conjunction with the WorldWater Day.

26 - 29 March 2002• Puncak Niaga participated in The Water 2002 Expo held at The Mines Exhibition

and Convention Centre, Kuala Lumpur. In conjuction with the event, YBhg TanSri Rozali Ismail was awarded The Asia Water Management Excellence Award2002 (Individual Award Category).

2 April 2002 • Educational Outreach Programme No. 18 at Sekolah Kebangsaan Pandan

Indah, Ampang.

16 April 2002 • Educational Outreach Programme No. 19 at Sekolah Rendah Jenis Kebangsaan

(Cina) Yit Khwan, Tanjung Karang.

30 April 2002 • River Rescue Brigade No. 12 at Bernam River Headworks Water Treatment Plant,

officiated by YB Dato’ Mohd Sharif Jajang, Selangor State EXCO member.

Launching of River Rescue BrigadeNo. 12, 30 April 2002

PNHB’s Executive Chairman, YBhg Tan Sri Rozali Ismailreceiving the Asia Water Management Excellence Award 2002

(Individual Award Category), 26 March 2002

2 May 2002 • Puncak Niaga participated in the Klang District Water Conservation Campaign, officiated by

YB Dato’ Mohd Sharif Jajang, Selangor State EXCO member.

3 May 2002 • Educational Outreach Programme No. 20 at Sekolah Kebangsaan Bandar, Banting.

4 May 2002 • Puncak Niaga participated in the National Labour Day 2002 celebration, officiated by the Prime

Minister, YAB Dato’ Seri Dr. Mahathir Mohamed at Stadium Malawati, Shah Alam.

15 May 2002 • Signing of the Collective Agreement between Puncak Niaga (M) Sdn Bhd and its Non-Executive Union.

23 May 2002 • Cheque presentation of RM790,153.89 to Pusat Zakat

Selangor, being voluntary business tithing for year 2001.

25 May 2002 • Puncak Niaga participated in the march pass for the

National Maulidur Rasul celebration at Stadium Putra,Bukit Jalil.

30 & 31 May 2002 • Puncak Niaga presented a working paper entitled

“Pengurusan Lembangan Sungai Selangor” at the 2-dayworkshop organised by Lembaga Urus Air Selangor andWorld Wildlife Fund Malaysia at Fraser’s Hill.

12 June 2002 • Educational Outreach Programme No. 21 and donation of 3 computers at Sekolah Kebangsaan

Seksyen 18, Shah Alam.

15 June 2002• Puncak Niaga’s Employees Meeting at Stadium Malawati, Shah Alam.

15 June 2002• Friendly bowling match between TV3 and Puncak Niaga at Bangsar Bowl, Bangsar Shopping

Complex.

22 June 2002• Women’s Day celebration with the theme “Bekerja Dalam Kesepaduan:Wanita, Hak Asasi

Manusia Dan Keamanan”, organised by Biro Hawa at the Maple Suite, Jalan Changkat RajaChulan, Kuala Lumpur.

26 June 2002• PNHB’s 5th Annual General Meeting at the Kuala Lumpur Golf and Country Club.


Signing Ceremony of the CollectiveAgreement, 15 May 2002

Payment of “Zakat Pendapatan” toPusat Zakat Selangor in conjunction

with the Executive Business TitheWorkshop, 23 May 2002

PNHB’s 5th Annual General Meeting, 26 June 2002

Women’s Day celebration,22 June 2002


29 June 2002• Puncak Niaga (PNSB) Sports and Welfare Club’s 8th

Annual General Meeting (AGM) at Stadium Shah Alam.

3 July 2002• Visit by Ministry of Health to the SSP2 Water

Treatment Plant.

4 July 2002• Safety Audit by the Malaysian Society Of Occupational

Safety & Health (MSOSH) to evaluate the operations of theSSP2 Water Treatment Plant for the MSOSH GrandAward Competition.

13 July 2002• Visit by the Chennai Metropolitan Water Supply and Sewerage

Board (CMWSSB), India to the SSP2 Water Treatment Plant.

13 July 2002• Educational Outreach Programme No. 22 at Sekolah Kebangsaan Dato’ Abu

Bakar Baginda, Sepang, Kajang.

16 & 17 July 2002• Puncak Niaga’s Executive Vice Chairman presented a paper entitled “Air,

Cabaran, Isu dan Masa Depan”, at the “Air Anugerah Tuhan” seminarorganised by Institut Kefahaman Islam Malaysia.

20 July 2002• Puncak Niaga contributed RM50,000 to the UMNO Bumiputra

Education Fund during the dinner of the Alumni of Overseas UMNOClubs at the Putra World Trade Centre.

22 July 2002• PNHB’s Group Company Secretary was awarded the ‘ROC-MAICSA

Company Secretary Award 2001’, under the Listed Company Category.

25 July 2002• Puncak Niaga participated in the Water Industry Exhibition in conjunction

with “Seminar Kepenggunaan Air” organised by Perbadanan Urus AirSelangor Berhad at the Grand Blue Wave Hotel, Shah Alam.

30 July 2002• Educational Outreach Programme No. 23 at the Sekolah Kebangsaan

Kuala Selangor.

2 - 4 August 2002• PNHB participated in the Mayban Securities International Investors

Conference held at the Andaman Datai Bay, Langkawi.


PNSB’s Sports and Welfare Club’s 8thAGM, 29 June 2002

CMWSSB’s visit to SSP2 WaterTreatment Plant, 13 July 2002

Alumni of Overseas UMNO ClubsDinner, 20 July 2002

Madam Tan Bee Lian, our Group Company Secretary, receiving the ‘ROC-MAICSA Company Secretary Award 2001’, 22 July 2002


8 August 2002• Educational Outreach Programme No. 24 at

Sekolah Kebangsaan Gombak Setia, Kuala Lumpur.

10 August 2002• Puncak Niaga participated in the ‘Save Water

Campaign’ for the District of Hulu Langat.

10 & 24 August 2002• Visit by employees of Assunta Hospital, Petaling

Jaya to the Wangsa Maju Water Treatment Plant.

17 August 2002• Friendly bowling match between Utusan

Malaysia and Puncak Niaga at the Ampang SuperBowl, Ampang Point.

17 August 2002• Puncak Niaga donated RM50,000 to the PUSPANITA Fund during the Majlis Makan Malam Amal

Sumbangsih 2002 at Dewan Perdana FELDA, Kuala Lumpur.

17 & 24 August 2002• Visit by students of Universiti Putra Malaysia (UPM) to the SSP2 Water

Treatment Plant.

30 August 2002• Puncak Niaga participated in the National Day 2002 march pass at

Dataran Kemerdekaan, Shah Alam.

24-31 August 2002 • Puncak Niaga participated in the exhibition held in conjunction with the

Malaysian Malay Symposium and the 45th National Day Celebration, atDewan Canselor Tun Abdul Razak, Universiti Kebangsaan Malaysia.

9 September 2002• Visit by the Persatuan Perusahaan Air Minum Seluruh Indonesia and

George Kent (M) Bhd to the SSP2 Water Treatment Plant.

10 September 2002 • SSP2 and Wangsa Maju Water Treatment Plants won the Grand Award

and Gold Award respectively for occupational safety and health, organisedby the Malaysian Society for Occupational Safety & Health (MSOSH).

12 September 2002• Visit by students of The Japanese School of Kuala Lumpur to the Wangsa

Maju Water Treatment Plant and Klang Gates Dam.

14 September 2002 • Friendly bowling match between Unit Perancangan Ekonomi Selangor

and Puncak Niaga at Plaza Alam Sentral, Shah Alam.

Malaysian Malay Symposium, 24 August 2002

UPM’s visit to SSP2 Water TreatmentPlant, 17 & 24 August 2002

45th National Day celebration,30 August 2002

MSOSH Occupational Safety and Health Award ceremony, 10 September 2002


17 September 2002 • Educational Outreach Programme No. 25 at Sekolah Rendah Jenis Kebangsaan

Tamil Vivekananda, Petaling Jaya.

19 September 2002 • Visit by students of Universiti Malaya to Wangsa Maju Water Treatment Plant.

23 - 29 September 2002 • PNHB participated in the KLSE Investors’ Week 2002.

28 September 2002• Friendly bowling match between Berita Harian and Puncak Niaga at the

Cosmic Bowl, Sunway Pyramid.

4, 11 & 18 October 2002• Safety Talk by officials of the Fire and Safety Department

on fire and evacuation procedures for high-rise buildings to Puncak Niaga’s employees at the Company’s Headquarters.

10 October 2002• 15 circles participated at Puncak Niaga’s Quality

Control Circle (QCC) Project Presentation.

11-13 October 2002• Puncak Niaga participated in an exhibition held in

conjunction with the launching of Paya Indah Wetlandsby YAB Dato’ Seri Dr Mahathir Mohamad.

17 October 2002• Educational Outreach Programme No. 26 at Sekolah

Kebangsaan Bukit Beruntung, Rawang.

18 October 2002• Puncak Niaga participated in an exhibition held in conjunction with the launching

of the “Kempen Penjimatan Air Negeri Selangor” for Hulu Langat District.

19 October 2002• Occupational Safety and Health Awareness Talk by officials of NIOSH at

Stadium Shah Alam for Puncak Niaga’s employees.

21 October 2002• Puncak Niaga sponsored the ICT Centre at Sungai Choh, Rawang which was

officiated by YAB Menteri Besar Selangor.

26 - 27 October 2002• PNSB/JBANS Mini Sports Carnival held at Sekolah Teknik

Ampangan, Seremban.


Friendly bowling match betweenPuncak Niaga and Berita Harian,28 September 2002

Encik Md Nor Ahmad, KLSE’s Deputy President ExchangeOperations visiting PNHB’s booth during the launch of the

KLSE Investors’ Week 2002, 23 - 29 September 2002

PNSB/JBANS Mini Sports Carnival,26 - 27 October 2002

QCC Project Presentation,10 October 2002


27 - 29 October 2002• Puncak Niaga participated in an exhibition at Stadium Kajang in conjunction with the

Selangor Environmental Week, which was officiated by YAB Menteri Besar Selangor.

29 October 2002• Visit by officials of Health Ministry of Vietnam to the Wangsa Maju Water Treatment Plant.

31 October 2002• PNHB was awarded the NACRA Industry Excellence Award 2002 for the Construction

& Infrastructure Project Companies’ Category for its 2001 Annual Report.

6 November 2002• Educational Outreach Programme No. 27 at Sekolah Kebangsaan Klang.

17 November 2002• Puncak Niaga contributed RM10,000 to ophanages in

conjunction with the “Majlis Berbuka Puasa” ceremony bySelangor UMNO Youth held at the residence of YABMenteri Besar Selangor.

20 November 2002• Puncak Niaga’s Sports and Welfare Club donated RM60,000 to

210 orphans from Asrama Damai Rumah Anak-anak YatimKuang, Pertubuhan Anak-anak Yatim Darul Izzah andPertubuhan Kebajikan Anak-anak Yatim Sekendi.

20 November 2002• “Majlis Berbuka Puasa” for Puncak Niaga’s employees and

210 orphans at Stadium Shah Alam.

23 & 30 November 2002• Visit by students of Universiti Malaya to the Wangsa Maju Water Treatment Plant.

25 November 2002• Company Briefing to EPF officials at the Company’s Headquarters.

29 November 2002• Puncak Niaga donated RM33,000 to four foster families for the Hari Raya

celebration and as educational aid.

17 December 2002• Puncak Niaga was awarded the “Hadiah Penghargaaan, Anugerah Citra Laporan

Tahunan 2001” by Dewan Bahasa dan Pustaka for correct usage of the nationallanguage in its 2001 Annual Report.

18, 20 & 24 December 2002• Educational visit to Petrosains, KLCC & KL Tower by PNSB employees’ children.

28 December 2002• Hari Raya Aidilfitri gathering at the Company’s Headquarters for all employees.

Hari Raya Gathering, 28 December 2002

YBhg Puan Sri Faridah Idrisshopping with orphans for

Hari Raya celebration,20 November 2002

“Majlis Berbuka Puasa” withemployees and orphans,

20 November 2002

PNHB’s Executive Vice Chairman receiving the NACRAIndustry Excellence Award 2002, 31 October 2002


GrowthNurturing and

Sustaining


The river never rests. Itcontinually feeds andnurtures its environs toensure it receives, inreturn, the sedimentsand organisms necessaryto maintain its balanceand sustain the lifewithin its waters.

The success of PuncakNiaga lies not only inthe completion of ourprojects but in thestringent, on-goingcontrols we undertaketo ensure that eachdevelopment operatesat its optimal level ofefficiency at all times.

The Board places utmost importance on the practice of high standards of corporate governance in the

Group’s business dealings and is unreservedly committed towards ensuring that the principles and best

practices of corporate governance as set out in the Malaysian Code on Corporate Governance (the Code) are

complied by the Company. Accordingly, the Board is pleased to report to the shareholders on how the

Company has applied the principles of the Code and complied with the best practices in corporate

governance as set out in the Code.

During the year, proactive steps were taken by the Board to further enhance the Group’s corporate

governance procedures and processes in line with international best practices on corporate governance,

which include:-

• formulation and implementation of the ‘Guidelines for Recommending Candidates for Board

Appointments’ by the Nomination Committee;

• formulation and implementation of the ‘Guidelines for Determining Directors Remuneration’ by the

Remuneration Committee;

• formulation and implementation of the ‘Form of Evaluation of Board Effectiveness’ by the Nomination

Committee; and

• formulation and implementation of the ‘Audit Committee Self-Assessment Form’ by the

Nomination Committee.

BOARD OF DIRECTORS

The Board

The Board takes full responsibility for the performance of the Group and guides the Group towards achieving its

short and long-term objectives, setting corporate strategies for growth and new business development while

providing advice and direction to the Management to enable the Group to achieve its corporate goals, thus

enhancing the shareholders’ investment.

The Board has a formal list of matters reserved for its decision making, including overall Group strategy and

direction, setting the human resources and administration policies, approval of the annual budget, acquisitions

and disposals, corporate exercises, major capital expenditure, operational and financial matters as well as

promoting customer, shareholders and investor relations. Some matters are delegated to the Board Committees

which operate within clearly defined terms of reference.

Composition of the Board

The Board comprises seven members, of whom four are Executive Directors and three are Independent

Non-Executive Directors. There was no change in the Board’s composition during the year 2002.

The profile of the Board is set out on Pages 20 to 27 of the Annual Report.

The Board members are professionals from diverse disciplines, tapping on their respective qualifications and

experiences in law, engineering and accounting. Together, they bring a wide range of business experience



Day Date Time

Wednesday 27 February 2002 4.00 p.m.

Wednesday 24 April 2002 1.00 p.m.

Tuesday 21 May 2002 3.00 p.m.

Wednesday 21 August 2002 4.30 p.m.

Thursday 21 November 2002 4.00 p.m.

The details of the respective Directors’ attendances for the above meetings are as follows:-

Name of Director Designation No. of Meetings held No. of Meetings %during the financial year attended

* YBhg Tan Sri Executive Chairman 5 4 80Rozali Ismail

Encik Ruslan Hassan Executive Vice Chairman 5 5 100

** Encik Mat Executive Director, 5 4 80Hairi Ismail Finance

Ir Lee Miang Koi Executive Director, Project 5 5 100& Business Development

Encik Abdul Majid Independent Non-Executive 5 5 100Abdul Karim Director

***YBhg Dato’ Hari Independent Non-Executive 5 3 60Narayanan DirectorGovindasamy

YB Dato’ Seri Independent Non-Executive 5 5 100Dr Ting Chew Peh Director

* YBhg Tan Sri Rozali Ismail was away on overseas official trip.

** Encik Mat Hairi Ismail was away on Haj leave.

*** YBhg Dato’ Hari Narayanan Govindasamy was unable to attend the Board Meetings as he had to attend other business meetings.

Puncak Niaga Holdings Berhad Annual Report 2002 69Puncak Niaga Holdings Berhad Annual Report 2002

and expertise which are vital towards the effective discharge of the Board’s responsibilities for the

Company’s stewardship and the successful direction and growth of the Group.

More than one third of the Board is represented by Independent Non-Executive Directors who are

independent of the Management and free from any business or other relationship with the Management;

thereby promoting independence in the Board’s deliberations and decision making.

The roles of the Executive Chairman and Executive Vice Chairman are separate, each with clearly defined

responsibilities. YB Dato’ Seri Dr Ting Chew Peh is the Company’s Senior Independent Non-Executive

Director, to whom shareholders’ concerns may be conveyed.

Board Meetings

In year 2002, the Board met five times at the Board Room on 26th Floor, Suite 2601-2606, Plaza See Hoy

Chan, Jalan Raja Chulan, 50200 Kuala Lumpur. The meetings were held as follows:-

To facilitate the smooth transaction of the Group’s business and operations, the day-to-day administration

and management of the Group have been delegated to the Board of Puncak Niaga (M) Sdn Bhd (PNSB),

who met eight times in year 2002, to deliberate and approve on matters related to the Group’s business

including corporate plans and annual budgets, capital investments, project and business development,

internal controls and changes in the Group’s policies and procedures. Performance factors such as product

and service quality and environmental issues were also discussed.

Supply of Information and Access To Advice

All Board Meetings held during the year were preceded by a notice issued by the Group Company Secretary.

The agenda together with the relevant reports and papers for each meeting are made available to the

Directors at least seven days prior to the date of each Board Meeting. The Directors are also given sufficient

time to obtain further information or explanation on matters presented in the Board papers. The matters

tabled during the Board Meetings include:-

• Minutes of Meetings of the Board Committees;

• operational and financial performance reports;

• any changes to the Group’s corporate strategies;

• environmental issues directly affecting the Group’s operations; and

• other special issues which require the Board’s attention and decision.

Where necessary, the Board whether as a full Board or in their individual capacities, may engage

independent professionals at the Company’s expense to advise on issues of concerns to facilitate the proper

discharge of their statutory and fiduciary duties.

All Directors have access to the advice and services of the Group Company Secretary. The Directors are

regularly updated by the Group Company Secretary on the latest developments in the legislations and

regulatory framework affecting the Group and they are also advised on their duties and responsibilities as

well as the implementation of good corporate governance and compliance practices in the Group.

Appointment of Directors

All appointments of new Directors are recommended by the Nomination Committee to the Board for

approval. The Board, through the Nomination Committee, annually reviews the required mix of skills,

experience and other qualities of the Directors to ensure that the Board is functioning effectively and

efficiently. In year 2002, there was no new appointment to the Board as the Board was confident that the

present Board possesses adequate experience and expertise to efficiently oversee and ensure that the Group’s

strategies are properly considered and implemented.

The Company recognises that its Directors may be invited to sit on the Board of other companies. It allows

its Directors to accept non-executive appointments, with the Board’s prior consent and as long as these

appointments are not in conflict with the Company’s interest. The Board is of the view that the exposure

gained by its Directors from the directorships in other companies will be valuable to the Company as it will

enable the Directors to have a wider perspective of various aspects of business.



Re-election of Directors

Article 98 of the Company’s Articles of Association provides that one-third of the Directors shall retire from

office at each Annual General Meeting and being eligible, may offer themselves for re-election.

Upon the recommendation of the Nomination Committee, Encik Mat Hairi Ismail and YBhg Dato’ Hari

Narayanan Govindasamy shall retire by rotation at the forthcoming Annual General Meeting and have offered

themselves for re-election.

Board Committees

To enable the Board to effectively and efficiently discharge its duties, the Board is assisted by the following

Board Committees with their respective approved terms of reference:-

Committee Chaired by

Audit Committee Encik Abdul Majid Abdul Karim, Independent Non-Executive Director

Remuneration Committee YB Dato’ Seri Dr Ting Chew Peh, Independent Non-Executive Director

Nomination Committee YB Dato’ Seri Dr Ting Chew Peh, Independent Non-Executive Director

Compliance, Internal Control and Risk Policy YB Dato’ Seri Dr Ting Chew Peh, Committee Independent Non-Executive Director

ESOS Option Committee YBhg Tan Sri Rozali Ismail, Executive Chairman

Management Committee Encik Ruslan Hassan, Executive Vice Chairman

(a) Audit Committee

The Audit Committee Report for the financial year 2002 is set out on pages 79 to 85 of the Annual Report.

(b) Remuneration Committee

The Remuneration Committee comprises the following members:-

Chairman : YB Dato’ Seri Dr Ting Chew Peh (Independent Non-Executive Director)

Members : YBhg Dato’ Hari Narayanan Govindasamy (Independent Non-Executive Director)

Encik Abdul Majid Abdul Karim (Independent Non-Executive Director)

Encik Mat Hairi Ismail (Executive Director, Finance)

Secretary : Madam Tan Bee Lian (Group Company Secretary)

The terms of reference of the Remuneration Committee are:-

• to establish and annually review the remuneration packages of each individual Executive Director

such that the levels of remuneration are sufficient to attract and retain the Directors needed to run

the Company successfully; and

Puncak Niaga Holdings Berhad Annual Report 2002Puncak Niaga Holdings Berhad Annual Report 2002 71

• to make recommendation to the Board and the respective Directors shall abstain from the

discussion of their own remuneration.

The levels of remuneration of the Executive Directors reflect their experience, level of responsibilities

and contribution to the Company.

The Remuneration Committee met twice during the year 2002 with its members in full attendance. At

the meeting held on 22 January 2002, the Committee recommended the Salary Increment for Year

2002 and Bonus for Year 2001 for the Executive Directors of PNSB for PNSB’s Board’s approval. At

the subsequent meeting held on 1 April 2002, the ‘Guidelines for Determining Directors’

Remuneration’ were adopted for implementation by the Remuneration Committee.

(c) Nomination Committee

The Nomination Committee comprises the following members:-

Chairman : YB Dato’ Seri Dr Ting Chew Peh (Independent Non-Executive Director)

Members : YBhg Dato’ Hari Narayanan Govindasamy (Independent Non-Executive Director)

Encik Abdul Majid Abdul Karim (Independent Non-Executive Director)


The terms of reference of the Nomination Committee are:-

• to annually review the required mix of skills and experience and other qualities, including core

competencies which Non-Executive Directors should bring to the Board;

• to recommend to the Board, candidates for all directorships to be filled;

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

• to annually assess the effectiveness of the Board as a whole, the committees of the Board and for

assessing the contribution of each individual Director; and

• to examine the size of the Board with a view to determining the impact of the number upon

its effectiveness.

In year 2002, two meetings of the Nomination Committee were held whereby the Nomination

Committee approved the implementation of the ‘Guidelines for Recommending Candidates for Board

Appointments’ on 1 April 2002 and also the ‘Form of Evaluation of Board Effectiveness’ and the ‘Audit

Committee Self-Assessment Form’ on 17 December 2002.

(d) Compliance, Internal Control and Risk Policy Committee (CICR)

The primary responsibility of CICR is to monitor the Risk Management process within the Group and

the extent of compliance with the Statement of Internal Control requirements. The CICR provides

summary reports to the Board at regular intervals.



(e) ESOS Option Committee

The ESOS Option Committee administers the Group’s Employees’ Share Option Scheme (ESOS

Scheme) which became effective on 25 February 2002. The ESOS Option Committee comprises the

following members:-

Chairman : YBhg Tan Sri Rozali Ismail (Executive Chairman)

Members : Encik Ruslan Hassan (Executive Vice Chairman)

Encik Mat Hairi Ismail (Executive Director, Finance)

Ir Lee Miang Koi (Executive Director, Project & Business Development)


The ESOS Option Committee met three times in year 2002 to approve the ESOS Option Committee’s

Term Sheet and Work Plan, to deliberate and approve on matters relating to the allocation of ESOS to

the eligible employees and to approve the issuance of the first and second tranches of ESOS to the

eligible employees.

(f) Management Committee

The Management Committee, headed by the Executive Vice Chairman, is made up of the Executive

Directors and Senior Management personnel of the Company. At its meetings, the Management

Committee reviews the performance of the Company and resolves operational as well as

inter-departmental issues. The Management Committee also reviews and comments on proposal papers

prior to tabling to the Board for approval.

The Management Committee meets at least once in every two months. In year 2002, the Management

Committee met eight times.

Directors’ Remuneration

(a) Level and Make Up of Remuneration

In recommending the remuneration for the Executive Directors, the Remuneration Committee aims to

give the Executive Directors every encouragement to enhance their’s and the Company’s performance

and to ensure that the Executive Directors are fairly but responsibly rewarded for their individual

contributions and performance.

The Remuneration Committee does not determine the remuneration of the Non-Executive Directors but

may make recommendation to the Board on the sum, if requested. The Non-Executive Directors’

remuneration is a matter to be determined by the Board as a whole. The fees paid to the individual

Non-Executive Directors are a fair reflection of the contribution which they make to the Company and the

time they spend attending to the Company’s affairs, for example, as members of the Board Committees.

In order to preserve their independence, the Non-Executive Directors do not participate in any Company

performance related or profit sharing scheme, pension fund or medical aid.


(b) Procedure

The Remuneration Committee deliberates and recommends to the Board, the remuneration packages of the

Executive Directors. The Board, as a whole, determines the remuneration of the Non-Executive Directors.

During the Board’s deliberation on the respective Directors’ remuneration, the respective Directors

play no part in deciding their own remuneration and abstain from discussing or voting on their

own remuneration.

(c) Disclosure of Remuneration

The details of the remuneration of each Director of the Company during the financial year ended

31 December 2002 are as follows:-

Name of Directors Fees Salaries Bonuses Benefit- Allowance Employeesin-kind Provident

Fund

Tan Sri Rozali Ismail - - - - - -

Ruslan Hassan - - - - - -

Mat Hairi Ismail - - - - - -

Lee Miang Koi - - - - - -

Abdul Majid - - - - 109,406 -Abdul Karim

Dato’ Hari Narayanan - - - - 72,010 -Govindasamy

Dato’ Seri Dr Ting - - - - 79,010 -Chew Peh

Total - - - - 260,426 -

The remuneration packages of the Directors of the Group for the financial year ended 31 December

2002 with categorisation into the appropriate components are as follows:-

Remuneration Packages Executive Directors Independent Non-Executive(RM) Directors (RM)

Fees - -

Salaries 2,578,452 -

Bonuses 172,580 -

Benefits-in-kind 230,491 -

Allowance 708,860 260,426

Employees Provident Fund 428,145 -

Total 4,118,528 260,426



On 26 February 2002, the Executive Directors were offered a total of 5.9 million new ordinary shares of the

Company under the ESOS Scheme. As at 31 December 2002, 360,000 options had been exercised by the

Executive Directors.

Directors’ Training

In year 2002, the Directors attended various seminars and courses to train and equip themselves to

effectively discharge their duties and to keep abreast with the latest developments in the legislations and

the water industry.

An in-house Induction Programme is arranged for newly appointed Directors to facilitate their

understanding of the Group’s business operations and corporate strategy. During the induction, the new

Directors are introduced to the Senior Management personnel of the Company. A Directors’ Manual is also

made available to the new Directors for their reference.

SHAREHOLDERS

Investor Relations

The Company’s Investor Relations Policy & Report is set out on pages 91 to 93 of the Annual Report.

Annual General Meeting (AGM)

The Company recognises the importance of maintaining effective bilateral communication with its

shareholders and uses the AGM as one of the platforms to achieve this purpose. All shareholders are

encouraged to attend the AGM and participate in the proceedings. They are given the opportunity to ask

questions relating to the Group’s performance and business activities and seek clarification on the

resolutions proposed.

ACCOUNTABILITY AND AUDIT

Financial Reporting

It is the Board’s responsibility to ensure that the financial statements of the Group and the Company give

a true and fair view of the state of affairs of the Group and the Company as required under Section 169(15)

of the Companies Act, 1965. Efforts are made to ensure that the financial statements comply with the

provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia.

The Board also ensures that the quarterly and annual financial results are released to the Kuala Lumpur

Stock Exchange well within the stipulated time frame in order to provide timely and accurate information

to the investing public at large.



Statement of Directors’ Responsibility for Preparation of Financial Statements

The financial statements of the Group and Company have been drawn up in accordance with the applicable

approved accounting standards in Malaysia and the provisions of the Companies Act, 1965. The Directors

are responsible in ensuring that the financial statements give a true and fair view of the state of affairs of

the Group and Company at the end of the financial year and of the results and cash flows of the Group and

Company for the financial year.

In preparing the financial statements, the Directors have:-

• selected suitable accounting policies and applied them consistently;

• made judgements and estimates that are reasonable and prudent;

• ensured that all applicable accounting standards have been followed; and

• prepared financial statements on the going concern basis as the Directors have a reasonable expectation,

having made appropriate enquiries, that the Group and the Company have adequate resources to continue

in operational existence for the foreseeable future.

The Directors have the responsibility for ensuring that the Company keeps accounting records which

disclose with reasonable accuracy, the financial position of the Group and Company and which enables them

to ensure that financial statements comply with the Companies Act, 1965.

The Board has the overall responsibilities for taking all reasonable steps as are reasonably open to them to

safeguard the assets of the Group to prevent and detect frauds and other irregularities.

Relationship with Auditors

The Internal Auditors attend all Audit Committee Meetings. The external auditors are also invited to

attend the Audit Committee Meetings that deliberate on the Company’s quarterly and annual financial

results. During the Audit Committee Meetings, the external auditors highlighted observations made

during the course of audit to the Audit Committee.

The Company has always maintained a close and transparent professional relationship with the

external auditors.

Internal Control

The Statement on Internal Control is set out on pages 77 to 78 of the Annual Report.

Statement On Going Concern

Upon conducting due and reasonable enquiry into the affairs of the Company, the Board firmly believes that

the Company shall continue to operate as a going concern business in the foreseeable future.


INTRODUCTION

The Malaysian Code on Corporate Governance requires public listed companies to maintain a sound system

of internal control to safeguard shareholders’ investments and the Company’s assets. The Kuala Lumpur

Stock Exchange (KLSE) Listing Requirements requires Directors of public listed companies to include a

statement in their annual reports on the state of their internal controls.

RESPONSIBILITY

The Board of Puncak Niaga is responsible for maintaining a sound system of internal control and for

reviewing its adequacy and integrity so as to safeguard shareholders’ investments and the Group’s assets.

The Board and Management have implemented a control system designed to identify and manage risks

facing the Group in pursuit of its business objectives. This internal control system, by its nature, can only

provide reasonable and not absolute assurance against material misstatement or loss.

The Group has in place ongoing processes for identifying, evaluating, monitoring and managing significant

risks faced by the Group during the year. The Management is responsible for the identification and

evaluation of significant risks applicable to their respective areas of business and to formulate suitable

internal controls. This process is reviewed by the Board via a specific Board Committee, namely the

Compliance, Internal Control and Risk Policy Committee, which dedicates its time at periodic intervals

throughout the year for discussion on this matter.

RISK MANAGEMENT FRAMEWORK

Risk Management is firmly embedded in the Group’s Management system and is every employee’s

responsibility. In October 2001, the Board formally approved a systematic risk management structure

and process for the Group. Since then, the structure and process have been fully implemented by the

Management and employees of the Puncak Niaga Group. The Group’s risk management framework is

explained in detail in the Group’s Risk Management Policy & Report set out on pages 86 to 90 of the

Annual Report.

INTERNAL CONTROL SYSTEM

The key elements of the Group’s internal control system and assurance processes, inter alia, encompass the

following:-

• All major decisions require the final approval of the Board and are only made after appropriate in-depth

analysis. The Board receives regular and comprehensive information covering all Divisions and

Departments within the Group.

• All Departments and Divisions have clearly documented Procedures Manuals incorporating control

procedures and the scopes of responsibilities and authorities. The Procedures Manuals are updated

regularly depending on practical needs and to incorporate all elements necessitated by changes in the

Statement On Internal Control


legislation, industry best practices and business dynamics. The latest revision in-line with the increase in

risk awareness being promulgated throughout the Group was completed in April 2002. The recent

update on the Procedures Manuals was carried out in March 2003.

• The Internal Audit Department independently reviews the control processes implemented by the

Management from time to time and periodically reports on its findings and recommendations to the Audit

Committee. The duties and responsibilities of the Audit Committee are detailed in the Terms of Reference

of the Audit Committee set out on pages 82 to 85 of the Annual Report. The Audit Committee, by

consideration of both Internal and External Audit Reports, is able to gauge the effectiveness and adequacy of

the internal control system, for presentation of its findings to the Board.

• The Compliance, Internal Control and Risk Policy Committee, which is chaired by YB Dato’ Seri

Dr Ting Chew Peh, an Independent Non-Executive Director was established in October 2001. This

Committee closely monitors the Risk Management process within the Group and the extent of

compliance with the Statement on Internal Control requirements.

• The Tender and Contracts Committee, which was set up in year 2000, ensures transparency and

competitive pricing in the award of contracts within the Group.

• Management Committee Meetings which are attended by all Executive Directors and Senior Management

are held bi-monthly to discuss and resolve, where necessary, on the Group’s operational matters.

• A detailed budgeting process has been established, requiring all Divisions and Departments to prepare

their respective budgets annually. These budgets are then reviewed and approved by the Board prior to

actual implementation each year. The monitoring of actual performance versus budget, with major

variances being followed up, is done on a monthly basis and management action is taken to tighten or to

rectify any shortcomings, where necessary.

Guidance for Directors of Public Listed Companies

The KLSE Task Force on Internal Control issued the ‘Statement on Internal Control: Guidance for Directors

of Public Listed Companies’ (Guidance) in December 2000. Based on the Guidance, the Group formulated a

comprehensive checklist to monitor its level of readiness on the Guidance. The Group aims to not just achieve

full compliance, but also to improve on the Group’s processes by implementing best business practices in line

with international best practice standards. Throughout the year 2002, the Compliance, Internal Control and

Risk Policy Committee has closely monitored the Group’s level of readiness with the Guidance.

This Statement on Internal Control has been prepared in accordance with the Guidance and has been reviewed

by the external auditors and subsequently approved by the Board of Puncak Niaga.

For and on behalf of the Board of Puncak Niaga Holdings Berhad,

Dato’ Seri Dr Ting Chew Peh

Chairman

Compliance, Internal Control and Risk Policy Committee

23 April 2003

Statement On Internal Control


The Board of PNHB is pleased to present the Audit Committee Report for the financial year 2002.

1.Composition of the Audit Committee

The Audit Committee comprises the following:

Chairman: Encik Abdul Majid Abdul Karim (Independent Non-Executive Director)

Members : Encik Mat Hairi Ismail (Executive Director, Finance)

YBhg Dato’ Hari Narayanan Govindasamy (Independent Non-Executive Director)

YB Dato’ Seri Dr Ting Chew Peh (Independent Non-Executive Director)


2.Activities of the Audit Committee

In its effort to further enhance the effectiveness and quality of its internal audit function, the Audit

Committee has formally adopted the ‘Guidelines on Internal Audit Function’ which were issued in July

2002. The ‘Guidelines’ were prepared by a special taskforce set up with the guidance of the Securities

Commission and published in July 2002 to complement the KLSE Listing Requirements and the

Statement on Internal Control : Guidance for Directors of Public Listed Companies.

Activities undertaken by the Audit Committee during the financial year 2002 were:-

• review of the Annual Audit Plan with the external auditors on the scope of their audit including

audit procedures, significant accounting and auditing issues, impact of new or proposed changes in

accounting standards and regulatory requirements;

• review of the Internal Audit Department’s (IAD) Strategic Audit Plan to ensure sufficient coverage

was accorded to all high risk areas of the Group’s business and activities;

• monitored the implementation of IAD’s Annual Audit Plan and any changes thereto;

• review of the major findings reported by IAD and Management’s implementation of the recommended

corrective actions;

• assessed the manpower capacity of IAD to ascertain that the department was adequately manned by

appropriate employees with the right qualifications and experience to fulfil its responsibilities as a

corporate resource in support of the Audit Committee;

• evaluated the standards of internal controls of the Group and financial reporting by holding regular

discussions with Management on the overall adequacy of the Group’s Internal Control System;

• acted upon the directives of the Board to investigate and report on issues relating to the management

of the Group;

• reviewed the Group’s compliance with the relevant government regulations; and

• assessed the performance of the Group’s financial management.

3.Meetings of the Audit Committee

The Audit Committee met five times in the financial year 2002 and the details of the attendance of each

member of the Audit Committee are as per overleaf:-



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

Encik Abdul Chairman Independent Non- 5 5 100Majid Abdul Executive DirectorKarim

Encik Mat Member Executive Director, 5 4 80Hairi Ismail Finance

YBhg Dato’ Member Independent Non- 5 3 60Hari Narayanan Executive DirectorGovindasamy

YB Dato’ Seri Member Independent Non- 5 5 100Dr Ting Executive DirectorChew Peh

During the Audit Committee Meetings, IAD tabled its internal audit reports to the Audit Committee for

deliberation and direction. Weaknesses of procedures were identified and the respective Heads of

Departments were asked to take the necessary actions to rectify those weaknesses and improve on proce-

dures and control mechanisms to prevent future occurrences of a similar nature.

The Audit Committee also invited the external auditors to present their findings in respect of the

Company’s audited annual financial results before the Audit Committee submitted its recommendation to

the Board for approval.

Minutes of the Audit Committee Meetings were distributed to all members of the Board for notation and

also tabled at the Board Meetings for further deliberation. At each Board Meeting, the Chairman of the

Audit Committee reported and highlighted to the Board, all findings discussed by the Audit Committee.

For year 2002, IAD initially planned its audit on departmental basis by reviewing the level of each

Department’s compliance with policy and procedures, statutory requirements, good industry practices, etc

and identifying risks, which were peculiar to the respective Departments under review. However, in the sec-

ond half of 2002, with the Audit Committee’s consent, IAD focused on the enterprise-wide risks i.e risks

that were identified during the brainstorming sessions of the Risk Management Scorecard Working Group

(comprising Executive Directors and Senior Management). The enterprise-wide risks identified are risks

facing the Group as a whole and the controls implemented to manage these risks are being managed by one

or more departments in the Company.

IAD played an important role in providing assurances to the Audit Committee and ultimately to the Board

of Directors as to whether effective controls were being implemented in the monitoring and mitigation of

the possible risk exposures affecting the Group.

Set out below are some recommendations and assurances provided by IAD for year 2002:-

1. Inventory and Storage System at the SSP2 Water Treatment Plant Storehouse.

2. Increasing Receivables.

3. Inadequate Raw Water Quantity and Poor Raw Water Quality.



Audit on Inventory and Storage System at the SSP2 Water Treatment Plant Storehouse

The scope and objective of the audit included evaluating the accuracy and completeness of the inventory

system through inventory verification to ascertain physical existence, storage system and recording system.

In addition, IAD also conducted the assessment of software controls, securities facilities and adherence to

established procedures.

Generally, IAD concluded that the storehouse was well maintained, tidy and clean. Management agreed to

look into ways to further enhance the current policies and procedures on the disaster recovery plan and other

areas affecting the SSP2 Water Treatment Plant Storehouse.

Audit on Increasing Receivables

The objectives and the scope of the review were to assess the extent of level of comfort that could be placed

on Management in controlling trade receivables. As at 31 May 2002, the short and long term trade receiv-

ables and the debt for the DSS2 project amounted to RM728 million, out of which RM195 million was

the balance outstanding for the DSS2 project. Average collection from January 2001 to May 2002 was

about 59% of the invoices billed.

It was observed that the trade receivables is on the increasing trend as PUAS is only able to make partial

settlement towards the monthly invoices raised by PNSB. Management is taking pro-active measures to

develop proposals to the Selangor State Government to resolve the huge outstanding receivables.

In general, IAD concluded that the billings, collection administration and records maintained by the

Finance & Accounts Department were addressed satisfactorily.

Audit on Inadequate Raw Water Quantity and Risk of Poor Raw Water Quality

IAD noted the controls that were in place to manage the risk of inadequate raw water quantity and the risk

of poor raw water quality. Dam Control Rules Curves have been developed to control the operation of

Sungai Langat Dam, Klang Gates Dam and Tasik Subang Dam respectively. The curves give the maxi-

mum abstraction rate to ensure supply is available on a sustainable basis. There were close monitoring

of rainfall pattern, weather, river flow and climatic changes. Environmental Impact Studies were car-

ried out for the whole catchment areas to identify existing activities and potential sources of pollution

and its effect on current and future water quality.

Environmental investigations were carried out to look into specific environmental issues such as plant shut-

downs, pollution, etc.

Detailed Sanitary Survey Reports were submitted to the Menteri Besar of Selangor, PUAS, Jabatan Alam

Sekitar Negeri Selangor and Jabatan Kesihatan Negeri Selangor for their further action.

To further enhance the quality of raw water, regular raw water samplings were conducted by PNSB and

an independent laboratory.

On public educational programmes, PNSB implemented the River Rescue Brigade, Education Outreach

Programme, visits to water treatment plants and participated in various exhibitions aimed at creating

public awareness on the importance of protecting our raw water sources.


4.Terms of Reference of the Audit Committee

a. Composition

The Board shall elect an Audit Committee from amongst themselves (pursuant to a resolution of the Board

of Directors), comprising of at least three (3) Directors where the majority of them should not be:-

i. Executive Directors of the Company or any related corporation;

ii. A spouse, parent, brother, sister, son or adopted son, daughter or adopted daughter of an Executive

Director of the Company or any related corporation; or

iii. Any person having a relationship which, in the opinion of the Board of Directors, would interfere

with the exercise of independent judgement in carrying out the function of the Audit Committee.

The members of the Audit Committee shall elect a Chairman from amongst themselves who is not an

Executive Director or employee of the Company or any related corporation. It would be advantageous if

the Chairman possesses a strong personality, have knowledge and experience in financial reporting, good

leadership skills and is keen to get financial reporting and controls right.

All members of the Audit Committee, including the Chairman, will hold office only so long as they serve

as Directors of the Company. Should any member of the Audit Committee cease to be a Director of the

Company, his membership in the Audit Committee would cease forthwith.

It is desirable for membership on the Audit Committee to be rotated amongst all the Directors of the

Company such that each Director will serve a period of three (3) years on the Audit Committee.

If the members of the Audit Committee for any reason be reduced to below three (3), the Board of

Directors shall within three (3) months of that event, appoint such number of new members as may be

required to make up the minimum number of three (3) members.

b.Objectives

The primary objectives of the Audit Committee are to:-

i. Provide assistance to the Board in fulfilling its fiduciary responsibilities, particularly in the areas

relating to the Company’s accounting and management controls, financial reporting and business

ethics policies.

ii. Provide greater emphasis on the audit function by increasing the objectivity and independence of

external and internal auditors and providing a forum for discussion that is independent of

the Management.

iii. Maintain through regularly scheduled meetings a direct line of communication between the Board

and the external auditors, internal auditors and financial management.

iv. Strengthen the role of Non-Executive Directors by improving their knowledge and

understanding of the Company’s operation.

v. Undertake such additional duties as may be appropriate and necessary to assist the Board. However,

whether or not the Audit Committee should undertake one or more of the additional duties rests on

the Board’s viewpoint on corporate needs and the environment in which the Company operates.



c. Duties and Responsibilities

In fulfilling its primary objectives, the Audit Committee will need to undertake the following duties

and responsibilities:-

c.1 Oversee All Matters Relating to External and Internal Audits

i. Review the annual audit plan with the external auditors. The Committee shall meet with the external

auditors prior to the commencement of the annual audit to discuss:-

- The general outline of the extent and timing of the auditors’ proposed coverage of location such

as branches, departments, factories, divisions and subsidiaries.

- The nature of the audit procedures to be performed.

- The extent of any planned reliance on the work of the internal auditors and the anticipated effect

of this reliance on the examination.

- Any significant accounting and auditing problems that the auditors can foresee.

- The impact on the financial statements of any new or proposed changes in accounting standards

or regulatory requirements.

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

Following review of the plan, the Audit Committee may request the external auditors to perform

additional audit work directed to specific areas of concern to the Committee.

ii. Oversee the internal audit department. The Audit Committee in overseeing the internal audit

department will:-

- Review the audit programme, scope, performance and findings of the internal auditors.

- Monitor the implementation of the programme so that sufficient internal audit coverage is accorded.

In this respect, only the Committee can consider and approve or otherwise, all requests by Senior

Management to utilise internal audit personnel for non-audit assignments.

- Assess the capacity of the internal audit department to fulfil its responsibilities by considering,

amongst other things, the scope of the department's authority as presented in the department's

charter, the qualifications and experience level of its staff, the degree to which internal auditors

are independent of the activities they audit and the reporting relationship between the head of

internal audit and Senior Management.

- To review the coordination of audit efforts between external and internal auditors, where practical,

with a view to maximising audit effectiveness and controlling external audit costs.

iii.Review the assistance and cooperation given by the Company's officers to the external and

internal auditors.

iv. To nominate the external auditors for appointment.

v. The external and/or internal auditors shall have the right to appear and be heard at any meeting of

the Audit Committee and shall appear before the Audit Committee when required to do so by the

Audit Committee.


vi. Upon the request of the external and/or internal auditors, the Chairman of the Audit Committee

shall convene a meeting of the Committee to consider any matters the auditors believe should be

brought to the attention of the Committee.

c.2 Evaluate the Standards of Internal Control and Financial Reporting

i. Hold specific discussions with Senior Corporate Management to discuss the overall adequacy of

the internal control system.

ii. Meet with the internal and external auditors concerning their evaluation of the system of internal

accounting controls.

iii. Consider the nature and disposition of the relevant comments appearing in the reports

prepared by the internal auditors and in the external auditors’ management letter.

c.3 Review of Financial Statements

i. Meet with the Management and the external auditors to discuss the annual financial statements

of the Company or Group and the results of the audit before recommending approval by the Board.

ii. Review the nature and resolution of any significant accounting and auditing problems

encountered during the examination.

iii. It is good practice for the Audit Committee to meet the Management at a regular interval to

review the results of the Company or Group, such as quarterly review of the results.

iv. Review the nature of any related party transactions that may arise within the Company or Group.

v. Review the nature of any significant adjustments, reclassifications or additional disclosures

proposed by the external auditors that are currently significant or may become significant in the future.

vi. Review the adequacy of disclosure of the impact of any changes during the year in accounting

policies, standards and/or regulatory requirements.

vii. Review the reasons for the major fluctuations in financial statement balances for the current year

compared to prior years.

viii.Review for any unusual circumstances or situations reflected in the financial statements,

including identifying any marginal operations.

ix. Review the nature of any unusual or significant commitments or contingent liabilities.

x. Review of any significant differences between the annual report and other reports, such as reports

to the regulatory agencies.

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

c.4 Additional Duties and Responsibilities

i. Act upon the Board of Directors’ request to investigate and report on any issues or concerns in

regard to the management of the Company.

ii. Review the Company’s business ethics code, the method of monitoring compliance with the code

and the disposition of reported exceptions.

iii. Review executive expenses.

iv. Review policies on sensitive payments.



v. Review compliance with certain government regulations.

vi. Review policies to avoid conflicts of interest and review past or proposed transactions between the

Company and members of the Management.

vii. Review certain aspects of the Company’s pension plan and compliance with relevant laws

and regulations.

viii.Assess the performance of financial management.

ix. Such other functions as may be agreed to by the Audit Committee and the Board of Directors.

d. Access to Records

In carrying out their duties and responsibilities, the Audit Committee will in principle have full, free

and unrestricted access to all Company records, property and personnel.

e. Meetings and Minutes

It is good practice for the Audit Committee to hold a minimum of four (4) meetings a year, although

additional meetings may be called at any time at the Chairman’s discretion. It would be desirable that

the notice of meetings be sent at least seven (7) days before the time set for the meeting together with

an agenda to all members of the Committee and any persons that may be required to attend. The

recommended quorum for each meeting shall be three (3) members.

In addition to the Committee members, the head of internal audit will normally be in attendance at

the meetings. Representatives of the external auditors are to be in attendance at meetings where

matters relating to the audit of the statutory accounts and/or the external auditors are to be discussed.

The Chief Executive Officer and/or other appropriate officers may be invited to attend, except for those

portions of the meetings where their presence is considered inappropriate, as determined by the

Committee Chairman.

Minutes of each meeting shall be kept and distributed to each member of the Committee and also to

the members of the Board. The Committee Chairman shall report on each meeting to the Board. The

Secretary to the Audit Committee shall be the Company Secretary.


RISK MANAGEMENT POLICY

The Board has approved the following Group’s Risk Management Policy Statement:

"The Puncak Niaga Group’s Risk Management Policy is to identify, measure and control risks that may

prevent the Group from achieving its objectives.

Our challenge is to apply risk management to all parts of our business to ensure business risks are

minimised and opportunities enhanced.

We will achieve, maintain and review a proper risk management system. This commitment is driven

by the Board of Directors, which in turn is implemented by the Management and extends to all

employees of the Group.

This policy statement assigns responsibility for risk management to all Puncak Niaga Group employees and

acknowledges that corporate responsibility lies with the Board of Directors of the Puncak Niaga Group."

RISK MANAGEMENT REPORT

There are risks faced by all companies in the various facets of their corporate lives. The nature of such

risks including systemic, market, employees, economic, legislation, financial and others, need to be

identified and managed to reduce the possibility and impact of any adverse effects. Puncak Niaga

recognises this and has initiated risk management programmes to ensure its business risks are minimised

and opportunities enhanced.

The Board of Puncak Niaga established the following framework in October 2001, for the management of

the Group’s corporate risks:-

1. Group’s Risk Management Policy Statement.

2. Formation of the Compliance, Internal Control and Risk Policy Committee.

3. Terms of Reference of the Compliance, Internal Control and Risk Policy Committee.

4. Setting up of a Risk Management Section, which reports to the Compliance, Internal Control and Risk

Policy Committee.

As a follow-up from the Strategic Corporate Risk Management Workshop held for the Board and Senior

Management in August 2001, information on Risk Management has been fully disseminated to all

employees in the form of booklets, posters and through the Group’s internal communications network.

In addition, the risk management framework which was established in October 2001 has since then been

fully implemented by the Management and employees of Puncak Niaga.



COMPLIANCE, INTERNAL CONTROL AND RISK POLICY COMMITTEE (CICR)

The establishment of the CICR was formalised by the Board in October 2001. The members of the CICR

comprise the following:-

Chairman : YB Dato’ Seri Dr Ting Chew Peh

(Independent Non-Executive Director)

Members : En Ruslan Hassan

Executive Vice Chairman

(Head of Compliance, Internal Control and Risk Policy Committee)

Mr Ng Wah Tar

General Manager, Finance and Accounts Department

En Sonari Solor

General Manager, Internal Audit Department

Madam Tan Bee Lian

Senior General Manager, Secretarial Department

Secretary : En Mohammed Sofian Ismail

Manager, Internal Audit Department

(Head of Risk Management Section)

There was no change in the membership of the CICR during the year 2002.

TERMS OF REFERENCE OF THE CICR

The CICR shall provide assistance to the Board of Directors of Puncak Niaga in discharging its fiduciary

responsibilities relating to safeguarding shareholders’ investment and the Group’s assets through a

structured approach to Risk Management. The primary responsibilities of the CICR are:-

• Formulating strategies to manage the overall risks associated with the Group’s activities. This entails

decisions on:-

º Long-term and short-term strategies.

º Justifiable capital allocation based on return per unit of risk.

• Recommending the appropriate risk management policies and procedures, which shall be reviewed

frequently to ensure consistency with fundamental changes in the economy, market conditions

and regulations.

• To periodically review the Group’s overall objectives by assessing the current risk portfolio composition

and determining the desired exposures of each major area of risk.

• To monitor and assess the risk portfolio composition of significant activities of the Group.

• To keep abreast of both current risk management techniques and theories, and any possible or actual

changes in the regulatory environment, and to recommend the appropriate action.


CICR ACTIVITIES

Meetings held and attendance

During the year 2002, the CICR held five meetings and the attendance of the CICR members is as follows:-

(i) Meetings chaired by YB Dato’ Seri Dr Ting Chew Peh (Chairman of CICR)

Name Designation Designation in Meetings invited Meetings Percentagein Committee PNHB Group to attend attended %

YB Dato’ Seri Dr Chairman Independent Non– 3 3 100Ting Chew Peh Executive Director

Mr Ng Wah Tar Member General Manager 3 2 67

Encik Sonari Solor Member General Manager 3 3 100

Madam Tan Bee Lian Member Senior General 3 3 100Manager

Encik Mohammed Secretary Manager 3 3 100Sofian Ismail

(ii) Meetings chaired by Encik Ruslan Hassan (Head of CICR)

Name Designation Designation in Meetings invited Meetings Percentagein Committee PNHB Group to attend attended %

Encik Ruslan Hassan Head Executive Vice 2 2 100Chairman

Mr Ng Wah Tar Member General Manager 2 2 100

Encik Sonari Solor Member General Manager 2 2 100

Madam Tan Bee Lian Member Senior General 2 2 100Manager

Encik Mohammed Secretary Manager 2 2 100Sofian Ismail

At its meetings, the CICR reviewed in detail, the Status Reports prepared by the Risk Management

Section. The issues covered included the following:-

1. The level of readiness of the Group and the respective Divisions and Departments with regard to the

‘Statement on Internal Control’ requirements.

2. The progress of the risk assessment and risk monitoring exercises at Departmental, Divisional and

enterprise-wide levels.

3. The results of enterprise-wide risk audits carried out by the Internal Audit Department.



4. The review to ascertain the effective utilisation of the Corporate Risk Scorecard software to identify,

measure and monitor all corporate risks identified within the Group.

5. Other relevant risk issues affecting the Group, from time to time.

RISK MANAGEMENT SCORECARD WORKING GROUP & ENTERPRISE-WIDE RISKS

The Group recognises that Risk Management involves a structured approach, combining the efforts of all

functions within the Group, to minimise the possibility and impact of unexpected damages so as to

contribute towards greater efficiency and better decision making. The Risk Management Scorecard

Working Group comprising all Executive Directors and the Heads of Departments held a total of 37

brainstorming sessions from October 2001 to April 2002 to comprehensively develop the Group’s Risk

Profile and to set up the various key controls and process requirements across all functions. These are

subsequently updated annually after taking into consideration the changing risk profiles as dictated by

changes in the business environment, strategies and functional activities of the Group from time to time.

The Group’s Risk Profile has been recently reassessed by the Risk Management Scorecard Working Group

in early 2003 in order to ensure that the Group’s Risk Profile is up-to-date.

DIVISIONAL AND DEPARTMENTAL RISKS

The respective Heads of Divisions/Departments are responsible for assessing and managing their

Divisional/Departmental risks. Using the Corporate Risk Scorecard software, the Heads of

Divisions/Departments have submitted their detailed risk scorecard reports to the Risk Management

Section on a regular basis. The first risk scorecard reports were finalised by all Divisions/Departments in

the first half of year 2002. These reports which documented the controls and processes for managing the

risks for purposes of assessing the effectiveness of the controls, were then subsequently updated quarterly,

i.e. as at 30 September 2002 and 31 December 2002 respectively.

CORPORATE RISK SCORECARD SOFTWARE

The Group invested in a risk management tool namely, the Corporate Risk Scorecard (CRS) software in

October 2001, to identify, measure and manage all corporate risks affecting the Group. The CRS software

offers a systematic approach to the management of enterprise-wide risks facing corporations. The CRS

software, inter alia, assists the Management of Puncak Niaga to successfully achieve their corporate

objectives. It was implemented at Enterprise and Divisional/Departmental levels within the Puncak Niaga

Group in October 2001 and was fully completed in April 2002.

The risk scorecard reports produced by the CRS software, incorporates the strategy, objectives, controls,

management action plans, gross and nett risk ratings.

In July 2002, the CRS software was further upgraded to Version 2, wherein a multitude of enhanced and

additional features were incorporated in the CRS software to facilitate more comprehensive Risk

Management techniques. With the upgrade to Version 2, the Group’s Risk Assessment function is now

linked to the compliance/audit aspect within the Enterprise-wide Risk Management Framework and

enables all key risk activities of the Group to be synchronised.




Compliance, Internal Control and Risk Policy Committee

Chairman – Independent Non-Executive Director

Head – Executive Vice Chairman

Define risk strategies and policies

Implement risk strategies

Risk Management Section

Section Head

Selected personnel totally involved in this activity

Full time support to Compliance, Internal Control and

Risk Policy Committee

Carry out day-to-day risk management function

BOARD

Compliance, Internal Control

& Risk Policy Committee

Board

Understand the risks affecting the Group

Ultimately responsible for managing risks

Ensure overall effectiveness of controls and risks

Approve risk management strategies and policies

Risk Management Scorecard Working Group

Heads of Departments and Directors

Brainstorms Risk Profile at Group level

Risk Management

Section

GROUP RISK MANAGEMENT ORGANISATION

INVESTOR RELATIONS POLICY

As a responsible corporate citizen, Puncak Niaga is totally

committed to upholding the highest standards of

transparency, accountability and integrity in the conduct of

our business activities in the best interest of our

shareholders as well as to allow potential investors to make

careful and informed investment decisions based on full and

transparent disclosure of information.

Puncak Niaga’s Investor Relations Policy aims to build

long-term relationships and credibility with our shareholders

and potential investors based on trust, honesty, openness,

transparency and sound understanding of the Company.

To achieve its objectives, the Company will endeavour to undertake the following:-

1.Creating Quality Dialogue• To create an environment where the effective bilateral communication between the Company and

our shareholders and investors both informs and educates through regular, open and transparent

provision of relevant and invaluable information over the long-term which will build mutually

beneficial long-term relationships vis-à-vis to foster a clearer understanding of the shareholders’

and investors’ expectations of the Company.

• To engage in quality dialogue with our shareholders and investors whereby the relationship is

based on the principles of honesty, openness and transparency and to foster mutual understanding

between the Company and our shareholders and investors.

• To reap the benefits of engaging in quality dialogue:-

º perception on our Company’s risk is reduced;

º enhance feedback of our Company’s performance;

º our Company’s share valuation becomes more realistic;

º develop confidence in our Management team and management style; and

º works as a guide in the evaluation of our Company’s business strategy.

2.Investor Communications Statement• To implement an efficient and effective Investor Relations Programme as part of our ongoing

shareholders’ and investors’ communication obligations.

• To provide high quality, meaningful and timely information over and above that is required by law

in order to improve the shareholders’ and investors’ understanding of our Company.

• To strive for key competence in the area of professional investor relations vide adequate resources

and capability.

• To earn the trust, respect and confidence of our existing shareholders and investors.

• To build and maintain long-term relationships with our existing shareholders and investors.

• To initiate long-term relationship building with potential shareholders and investors.

Our commitment to the above Policy is driven by the Board of Directors of Puncak Niaga Group and

implemented by the Management.



Investors Briefing on Puncak Niaga’s financial results

INVESTOR RELATIONS REPORT

The Company’s Investor Relations Policy, which is founded

on the Investor Communications Statement, provides the

framework for formulating the Company’s investor relations

activities and support infrastructure for investor relations.

The Investor Communications Policy is structured towards

improving the market’s perception and understanding of the

Company and its business.

In pursuit of building a long-term relationship with its

shareholders and institutional investors, the Board has set up

an Investor Relations Unit under the purview of the

Company’s Secretarial Department to maintain an open and

transparent channel of communication with the shareholders

and institutional investors. A dedicated e-mail address, [email protected] was set up in year

2002 for the purpose of facilitating open communication with the shareholders and investors as an avenue

for them to direct their enquiries. The Investor Relations Unit also maintains a record of the shareholders’

and investors’ e-mail addresses and updates them regularly on the Company’s latest developments. A

journal recording all forms of communication whether through mail, fax, e-mail or telephone is kept and

reviewed by the Group Company Secretary to ensure that all shareholders’ queries are recorded and attended

to promptly. During the reporting period, the Company received numerous queries including one from a

shareholder regarding the Put Option Date for the Company’s Redeemable Unconvertible Junior Notes

(RUN) and another from an overseas analyst regarding the Company’s capital structure. The Company also

regularly receives commendations from shareholders via its investor relations e-mail address. Mr Tan Lee

Seng wrote, “Thank you for sending us the write ups on Puncak Niaga Group” while Mr Tan Chong Suew

e-mailed “Thank you for keeping shareholders informed on the great achievement of the Company. Please

convey my heartfelt congratulations to the entire team. Keep up the great job”. These are just a couple of

excerpts from the e-mails received by the Company in year 2002.

In addition to the Annual Reports that are sent to the shareholders and the Quarterly Financial Results that

are announced to the Kuala Lumpur Stock Exchange (KLSE) for public release, the Company also makes

timely public announcements of corporate proposals and material information to the KLSE in accordance

with the Listing Requirements of the KLSE.

The Company’s general meetings is yet another forum for the Company to build its rapport and relationship

with its shareholders. Shareholders are encouraged to attend and participate at these meetings by raising

questions on the resolutions proposed and to enquire on the affairs of the Group. Our Senior Independent

Non-Executive Director, YB Dato’ Seri Dr Ting Chew Peh has also availed himself to attend to any queries

that the shareholders may have.

In year 2002, the Investor Relations Unit organised three analyst briefings and more than 50 dialogues were

held with various financial analysts, local and foreign research and investment houses as part of the

Company’s ongoing investor relations programme.



YBhg Datuk Azlan Zainol, Chief Executive Officer of EPFlistening attentively to the Company’s briefing

The Company was also invited to participate in the

Mayban Securities International Investors Conference

organised by Mayban Securities Sdn Bhd from 2 - 4

August 2002 at The Andaman Datai Bay, Langkawi. At

the conference, the Company gave a presentation on the

Company’s development and outlook.

During the KLSE Investors’ Week 2002 which was held at

the Exchange Square from 23 - 29 September 2002, the

Company took up two exhibition booths and gave a one-

hour Company presentation to approximately 80 analysts

and investors. In view of the encouraging response from

investors during the KLSE Investors’ Week, the Company

will continue to support the KLSE in this event in the coming

years for the following reasons:-

a) To further stimulate the interest of potential investors through an effective and direct dissemination

of information on the Group’s business activities, market position, revenue flows, management and

control structures of the Group;

b) To promote the Company’s corporate image to the public so as to create a distinction from its competitors

and to correct any public misconception arising from the Company’s business activities; and

c) To promote and stimulate growth in the Malaysian capital market.

Our employees who were involved in the KLSE Investors’ Week

2002 have also gained invaluable experience from the

interaction and communication with the investing public. In

gaining knowledge of the investors’ motivation and fears over

their investments in general and in PNHB in particular; has

helped the Company in the formulation of its strategies in

addressing all investor-related issues, whether real or imagined.

At the request of the Employees Provident Fund Board

(EPF), a major shareholder of the Company, a Company

briefing was arranged for seven senior representatives of

EPF on 25 November 2002 at the Company’s premises. The

EPF delegation was headed by its Chief Executive Officer,

YBhg Datuk Azlan Zainol.

The Company’s website, www.puncakniaga.com.my is accessible for our shareholders, investors and

members of the public to obtain information on the Company.

Shareholders, investors and the public are also encouraged to communicate any comments, feedbacks,

views, concerns and queries to the Company via our e-mail addresses, i.e [email protected]

(public enquiries) or [email protected] (investors’ enquiries), to enable us to further improve

on our level of operations and service to the community and to achieve our Vision as ‘The Leading And

Dynamic Integrated Water Services Company’.

Our Financial Advisor taking questions from the press andanalysts during the KLSE Investors’ Week 2002


YBhg Tan Sri Rozali Ismail receiving a souvenir at theMayban Securities International Investors Conference


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Ensuring Our Future

EnvironmentalPolicy & Report

MALAYSIA’S WATER SPECIALIST


ENVIRONMENTAL POLICYPuncak Niaga, a water treatment specialist company, is committed to continuous improvements in

protecting the environment, minimising pollution, conserving natural resources and operating its facilities

in an environmentally sound manner.

In accordance with its Environmental Policy, the Company shall:-

1.Established an Environmental Management System

• sets 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 an adverse

environmental impact.

2.Compliance to Requirement

• fully comply with all applicable environmental laws, regulations and standards including the

National Standards and Malaysian Regulations and other requirements relevant to the water industry;

• establish an internal environmental control standard/system, where applicable, in order to comply

with the requirements; and

• to operate in a manner that provides for environmental specifications and sensitivity to the

environmental needs of the community, where practicable.

3.Monitoring and Controlling of Environmental Issues

• continuously monitor and control the environmental parameters for environmental performance

improvement;

• implement pollution reduction programmes where feasible to minimise the environmental impact from

hazardous materials, noise and wastewater; and

• develop and implement continuous programmes on 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 and environmental issues

amongst our employees, contractors, visitors and interested members of society; and

• encourage our employees in environmental initiatives and support them with training and awareness

programmes in environmental issues.

Puncak Niaga’s Environmental Policy shall be reviewed by Management from time to time for possible

revisions in light of changing conditions.

Clear water at Sungai Kancing,Taman Rimba

Clear water at Sungai Batang Kali

Rubbish dumping along Sungai Selangor, contributingto water pollution

ENVIRONMENTAL REPORT

The level of pollution in the waterways feeding the dams and water treatment plants significantly impacts

on our performance to produce water to the required Drinking Water Quality Standards stipulated by the

Ministry of Health. The various initiatives taken by us to safeguard the environment, not only benefits the

country as a whole, but also contributes to a better and healthier standard of living for our community,

through access to clean water.

Physical safeguards and water pollution monitoring procedures are in place to detect pollution before the

pollution load reaches the intake in the waterways. Even though we do not have the legislative powers to

stop polluters, our close cooperation with the Department of Environment (DOE), local enforcement

authorities, the Ministry of Health and other governmental agencies have assisted us to preserve the

environment and ensure the sustainability of our business activities.

The main causes of raw water pollution are accidental spillage of contaminants, illegal discharge or

dumping of raw sewage or chemicals and siltation due to indiscriminate land development. All these

factors regularly cause disruptions and hinder our operations at the water treatment plants.

Raw Water ViolationsBased on the monthly analysis carried out by a certified independent laboratory, there were 909 cases of

raw water quality violations in year 2002 (compared to 957 cases recorded in year 2001). This represents

a reduction of 5.02%.

Our vigilance in reporting violations to the authorities has helped in identifying sources of raw water

pollution leading to action being taken against some of the polluters. In year 2002, there were 175 cases

of plant shutdowns due to raw water pollution, mostly due to high turbidity and colour levels. With our

assistance, the DOE was able to trace the source of pollution and act against the polluters.

Several meetings were held between the DOE State of Selangor and the DOE State of Negeri Sembilan,

to discuss raw water pollution problems at the Sungai Labu catchment area leading to shutdowns at the

Earthworks activities at the banks of Sungai SelangorSoil erosion by the banks of Sungai Sembah

Salak Tinggi Water Treatment Plant. These meetings resulted in the formation of a joint watch

group involving both states to monitor the pollution load at the Sungai Labu catchment area.

Our Company’s toll free river watch line, 1800-88-3254, has been in operation since April

1997. It enables the public to report any incidences of pollution or to bring to the Company’s

attention, cases of parties polluting the waterways, such as indiscriminate dumping of

untreated waste, illegal sand mining activities, illegal logging activities and others.

Raw Water Quality Monitoring InitiativesWe are commited in discharging our responsibility to ensure that the treated water produced

from our water treatment plants are safe and of the highest quality. The quality of the raw water

at the intake and the treated water as it leaves the water treatment plants are monitored and

laboratory tested at frequent intervals, as follows:-

• Once every two hours daily, on a 24-hour basis against normal days quality standards of

three physical and six chemical parameters;

• Daily, for microbiological parameters and on a weekly basis by the Ministry of Health; and

• Monthly, for all parameters by an accredited independent laboratory according to the

schedules set by the Ministry of Health.

The quality of water is monitored at every stage of the process i.e. from the point of entry at

the intake of the water treatment plant, to the settled water and until it leaves the water

treatment plant at the balancing reservoir.

In addition to the above, we also adhere strictly to the following:-

• Water Quality Compliance monitoring is conducted to ensure the raw, settled and treated

water of the water treatment plants complies with the Standards set out in the Privatisation

Cum Concession Agreement (PCCA), Construction Cum Operation Agreement (CCOA) and

the Ministry of Health’s Drinking Water Quality Standards;

• Fluoride levels in the treated water are also monitored regularly and reports are submitted to

the Dentistry Office of the Ministry of Health; and

• Treated Water Compliance daily monitoring on minimum and maximum levels of

key parameters.

The Company conducts regular sanitary surveys to identify potential polluters of raw water sources

either jointly with the Ministry of Health or independently. A total of six sanitary surveys were

conducted in year 2002, bringing the total sanitary surveys conducted since year 1998 to 38.

Environmental impact investigations, which are preliminary forms of sanitary surveys,

continue to be carried out in year 2002. These investigations highlighted the following

sources of pollution:-

• Effluent discharges from industrial and inefficient sewage treatment plants;

• Domestic waste from local residential areas;

• Deforestation and earthworks contributing to surface run-off and soil erosion;

Monitoring the status of the watertreatment process

Water is regularly tested to ensureit complies with quality standards

River Gated Weir is used toregulate the river level forwater extraction

Sludge Thickening Tanks

Protective emergency response suits

• Leachate from illegal dumping sites;

• Agricultural and livestock farming activities; and

• Encroachment and recreation along the riverbanks and within the dam catchment areas.

The River Warning Monitoring System (RWMS) installed at Sungai Langat and Sungai Selangor

respectively continue to provide advance warning of possible raw water violations based on selected

physical and chemical parameters. The RWMS analyses water using standard methodologies of selected

parameters and gives prior warning to the water treatment plants of potential polluted raw water from the

rivers before it reaches the water treatment plant.

Dam Safety ManagementIn the area of dam safety management, we have implemented a programme to constantly survey and monitor

the dam area. The programme includes:-

• daily observation on the dams’ general area, structure and water quality;

• monthly visual inspection of dam areas, particularly along the dam embankments and upstream

tributaries. Should there be any abnormalities detected, environmental investigations will be carried out;

• monthly raw water pipeline and downstream river monitoring for any signs of structural faults,

contamination or encroachment;

• scheduled water quality sampling and analysis at selected stations within the dam areas and incoming

tributaries within the catchment areas; and

• inspection by an independent dam consultant at five-year intervals.

Sludge Treatment at Water Treatment PlantsThe water treatment plants taken over by us under the PCCA were not equipped with proper facilities for

sludge treatment. As such, we have proposed to the Selangor State Government to build sludge treatment

facilities at all of the 26 water treatment plants under the PCCA in stages. Perbadanan Urus Air Selangor

(PUAS) has been assigned to study and implement the proposal.

For the SSP2 Water Treatment Plant, four sludge lagoons were constructed at our own cost.

Similarly, for the Wangsa Maju Water Treatment Plant, a sludge treatment plant would also be

constructed at our own cost as our contribution towards environmental protection.

Chlorine Safety As chlorine is a major hazard to the environment, all water treatment plants have provided a specific

chemical building whereby exhaust fans are installed to operate automatically to disperse gas in minute

quantity upon the sensor detecting the presence of chlorine gas. However, should the chlorine gas

level exceed five milligrams per litre, the ventilation fans will automatically close and the chemical building

will be sealed to prevent the chlorine gas from escaping into the atmosphere.

The major water treatment plants have been installed with Chlorine Scrubber Systems. The system will be

activated automatically to neutralise any chlorine gas trapped in the chemical building in the event of

leakage before the neutralised gas is allowed to be discharged into the atmosphere.


River Warning Monitoring System

In addition to the above safety arrangement, our selected employees have also been trained at the chlorine

manufacturer’s premises to handle chlorine leaks and they have been equipped with the necessary equipment.

Periodic drills are conducted under the Water Treatment Plant Emergency Response Plan and the

employees have been made to familiarise themselves with the action required of them, to investigate

and seal the leak should it occur.

ISO 14001:1996 Certification - Environmental Management System The Company’s business processes that may have environmental impact are constantly under review and,

where necessary, modified with the adoption of best practices in balancing environmental sensitivities. In

this connection, the SSP2 and Wangsa Maju Water Treatment Plants target to obtain the Environmental

Management System ISO 14001:1996 certification by May 2003 and December 2003 respectively.

Environmental Rejuvenation & ProtectionOur ongoing commitment to the preservation of the environment and natural habitat, is aptly

demonstrated in the beautification of the landscape surrounding the Bukit Gasing Pumping Station,

where an extensive tree planting and landscaping project was completed in year 2000. The exercise

resulted in the restoration of a large green lung area affected by the construction of a reservoir. This project

shall be the model for the reforestation and landscaping of sites affected by the Company’s future projects.

There are also extensive landscaping works at both the SSP2 and Wangsa Maju Water Treatment

Plants. They have become our showcase projects, demonstrating our commitment for technological innovations

in our development activities, made with a conscious effort at environmental preservation and conservation.

We are conscious of the possible environmental impact from our business activities. Research &

Development activities into design of water clarification processes using mechanical means instead of

chemicals are on-going. Efforts for development of optimal chemical dosing levels are made to reduce the

chemical loads in water. This will ensure the safest standards for water quality to not only safeguard the

consumer’s health but to also safeguard the riverine flora and fauna.

QCC Presentation on chemical dosage Reforestation at Bukit Gasing Pumping Station

River Rescue Brigade No. 9

Educational Outreach ProgrammeNo. 18

Educational Outreach ProgrammeNo. 21

The Company’s efforts in environmental protection are highlighted in the Company’s

in-house newsletter, KITA, which is circulated to all employees to raise their level of

awareness on rivercare and environmental protection and the impact of their work on

the environment.

Rivercare Awareness and Educational ProgrammesPuncak Niaga will continue to support all efforts by the Governmental and non-governmental

agencies towards the protection and conservation of the environment by participating in various

exhibitions and programmes aimed at creating public awareness on the importance of

protecting our water sources.

On our own, we have also been aggressively inculcating rivercare awareness and the

importance of environmental protection amongst school children through our River Rescue

Brigade and Educational Outreach Programmes. We have spent RM135,127.87 on both

programmes during the year 2002. The programmes have been designed to educate the

younger generation on the importance of potable water production and the effects and

prevention of river pollution. Activities include visits to the water treatment plants, river

cleaning projects, as well as theoretical education on the causes of pollution.

A bi-monthly newsletter entitled “DIDI Newsletter” is produced and distributed to

members of the River Rescue Brigade to keep them updated on current water issues. The

success of these programmes and activities has persuaded Puncak Niaga to extend its reach

by introducing the newsletter to a wider audience. There are also plans to set up a

“Perkhemahan Alam Sekitar” or Summer Camp for the River Rescue Brigade members.

Educational Outreach Programmes held in year 2002Programme Date VenueNo.18 2 April 2002 Sekolah Kebangsaan Pandan Indah, Ampang.

19 16 April 2002 Sekolah Rendah Jenis Kebangsaan (Cina) Yit Khwan,Tanjung Karang.

20 3 May 2002 Sekolah Kebangsaan Bandar, Banting.

21 12 June 2002 Sekolah Kebangsaan Seksyen 18, Shah Alam.

22 13 July 2002 Sekolah Kebangsaan Dato’ Abu Bakar Baginda,Sepang, Kajang.

23 30 July 2002 Sekolah Kebangsaan Kuala Selangor.

24 8 August 2002 Sekolah Kebangsaan Gombak Setia, Kuala Lumpur.

25 17 September 2002 Sekolah Rendah Jenis Kebangsaan Tamil Vivekananda,Petaling Jaya.

26 17 October 2002 Sekolah Kebangsaan Bukit Beruntung, Rawang.

27 6 November 2002 Sekolah Kebangsaan Klang.

THE FUTURE IS ALSO IN YOUR HANDS

Each and every one of us has a

part to play in ensuring our

future. Here are a few simple

steps we can take to save

water, prevent pollution and

help improve the quality of

our rivers and drinking water

in our daily routine.

1. Repair leaky taps and toilets as soon as you notice them -

help save up to 300 litres of water a day.

2. Turn off the tap while brushing your teeth, shaving and

washing the dishes - save 12-15 litres each time.

3. Run the washing machine and dishwasher only when they

are fully loaded - save between 1,500-2,500 litres of water

each month.

4. Recycle water when there may be another use for it - e.g. for

watering plants or garden.

5. Sweep off, instead of hosing, the driveway or patio - save

650 litres of water and prevent contaminants such as dirt,

motor oil, fertilisers and animal waste from flowing into

our rivers.

6. Install water-saving showerheads and high-performance,

low-flush toilets - save up to 90 litres a day per person, or up

to 75,000 litres of water a year per family of four.

7. Fix car leaks promptly - help prevent contaminants such as

motor oil and other fluids from flowing down our streets,

through the monsoon drains and into our rivers.

8. Water your lawn and garden only in the morning or evening -

water evaporates quickly during the middle of the day.

9. Report all significant water losses to the respective

authorities - e.g. broken pipes, open hydrants, etc.

10. Buy and use environmentally friendly products - choose safer,

multi-purpose cleansers marked with only a ‘Caution’

warning, rather than ‘Poison’ and ‘Danger’ on the label.

Remember, every drop counts. You can make a difference.


It is the policy of Puncak Niaga to provide, so far as is practicable pursuant to Section 15 of the

Occupational Safety and Health Act, 1994 and all other relevant legislations, a safe and healthy working

environment for all its employees, and in the spirit of consultation and cooperation, the Management and

employees shall together strive to achieve the established goals and objectives of this policy.

Without prejudice to the generality of the above statement, the Organisational Safety & Health Policy of

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 of practices; and

• to review this policy as and when appropriate.

Organisational Safety & Health Policy

Safety Drill at Bukit Nanas Water Treatment Plant Safety talk conducted by Bomba dan Penyelamat Wilayah Persekutuanat Bukit Nanas Water Treatment Plant


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

Selangor State Government.

Puncak Niaga shall strive to consistently meet the quality standards pre-determined in the PCCA and

CCOA. Puncak Niaga is fully committed to perform all its obligations under the PCCA and CCOA with

full responsibility, due diligence and efficiency.

To Be The Leading And Dynamic Integrated Water Services Company, we shall adopt a quality

management system based on internationally recognised standards, which will ensure a planned,

systematic and proactive approach 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.

Quality Policy

Water Treatment Plant employee at work Wangsa Maju Water Treatment Plant accredited with ISO 9002


Newspaper Clippings


LivesEnriching the

We Touch


The river is rich in itsusefulness. It cleanses,nourishes, transportsand generates growthwherever it flows.

Like the river, PuncakNiaga seeks to enrichthe lives we touchthrough our productsand services. As theleading water specialistin the country, we arecommitted to deliverthe best returns invalue to our customersand shareholders alike.

Distribution Schedule Of Equity Securities & Property

ORDINARY SHARES AS AT 29 APRIL 2003Authorised Capital : RM1,000,000,000

Issued and Paid-Up Capital : RM439,278,000

Nominal Value : RM1.00 per ordinary share

Holdings No. of Holders % of Holders Total Holdings % of Issued Capital

less than 1,000 459 4.26 150,024 0.03

1,000 - 10,000 8,948 83.08 27,762,968 6.32

10,001 - 100,000 1,149 10.67 31,550,192 7.18

100,001 - 21,963,899 (less than5% of issued capital) 211 1.96 209,657,346 47.73

21,963,900 (5% of issued capital)and above 3 0.03 170,156,750 38.74

TOTAL 10,770 100.00 439,278,000 100.00

30 Largest Shareholders As Per Record of Depositors No. of % of IssuedName of Shareholders Shares Held Capital

1.Amsec Nominees (Tempatan) Sdn Bhd 85,013,000 19.35

- AmFinance Berhad For Central Plus (M) Sdn Bhd

2.Central Plus (M) Sdn Bhd 47,564,000 10.83

3.Employees Provident Fund Board 37,579,750 8.55

4.AMMB Nominees (Tempatan) Sdn Bhd 17,026,000 3.88

- AmTrustee Berhad For Central Plus (M) Sdn Bhd (7/914-8)

5.RHB Capital Nominees (Tempatan) Sdn Bhd 16,000,000 3.64

- Pledged Securities Account For Central Plus (M) Sdn Bhd

(TSR 681055)

6.Central Plus (M) Sdn Bhd 11,723,000 2.67

7.CIMB Nominees (Tempatan) Sdn Bhd 8,720,000 1.99

- Commerce International Merchant Bankers Berhad

8.Malaysia Nominees (Tempatan) Sendirian Berhad 8,344,500 1.90

- Great Eastern Life Assurance (Malaysia) Berhad (Par 1)

9.Bank Kerjasama Rakyat Malaysia Berhad 7,000,000 1.59

- Pledged Securities Account For Kumpulan Darul Ehsan Berhad

10. AmFinance Berhad 6,523,750 1.49

- Pledged Securities Account For Central Plus (M) Sdn Bhd

11. Corporate Line (M) Sdn Bhd 6,134,750 1.40

12. HLG Nominee (Tempatan) Sdn Bhd 5,023,250 1.14

- PB Trustee Services Berhad For HLG Growth Fund


30 Largest Shareholders As Per Record of Depositors No. of % of Issued

Name of Shareholders (continued) Shares Held Capital

13. Malaysian Assurance Alliance Berhad 5,000,000 1.14

14. Mayban Nominees (Tempatan) Sdn Bhd 4,197,000 0.96

- Mayban Trustees Berhad For Affin Equity Fund (930090)

15. Amanah Raya Nominees (Tempatan) Sdn Bhd 4,000,000 0.91

- Amanah Saham Malaysia

16. Malaysia Nominees (Tempatan) Sendirian Berhad 3,600,000 0.82

- Pledged Securities Account For Kumpulan Perangsang

Selangor Bhd (01-00058-000)

17. Kumpulan Wang Amanah Pencen 3,500,000 0.80

18. Universal Trustee (Malaysia) Berhad 3,343,000 0.76

- CMS Premier Fund


- Amanah Saham Wawasan 2020

20. AllianceGroup Nominees (Tempatan) Sdn Bhd 3,000,000 0.68

- Alliance Merchant Nominees (Tempatan) Sdn Bhd For

Kumpulan Darul Ehsan Berhad

21. Malaysia National Insurance Berhad 2,619,750 0.60

22. AMMB Nominees (Tempatan) Sdn Bhd 2,514,000 0.57

- AmTrustee Berhad For HLG Penny Stock Fund (5/4-3)


- Sekim Amanah Saham Nasional




- AmTrustee Berhad For BHLB Pacific Dana Al-Ihsan (5/2-7)


- BHLB Pacific High Growth Fund


- Amanah SSCM Asset Management Berhad For Amanah

Smallcap Fund Berhad (JM730)


- BHLB Pacific Emerging Companies Growth Fund


- MIDF Aberdeen Asset Management Sdn Bhd For Employees

Provident Fund (7/836-2)

30. AmFinance Berhad 2,033,000 0.46

- Pledged Securities Account For Fang Kok Leong @ Phang Soon Fook (SMART)

TOTAL 310,040,750 70.58




Directors’ Interests in Ordinary Shares As Per Register of Directors’ Shareholdings

No. Of Shares Held In The CompanyDirect Interest % Deemed Interest %

1 YBhg Tan Sri Rozali Ismail 330,000 0.07 190,051,0001

43.26

2 Encik Ruslan Hassan 394,000 0.09 202,5002

0.05

3 Encik Mat Hairi Ismail 22,750 0.01 209,5002

0.05

4 Ir Lee Miang Koi 144,000 0.03 20,0003

0.005

5 Encik Abdul Majid Abdul Karim 3,000 0.001 - -

6 YBhg Dato’ Hari NarayananGovindasamy - - 210,000

40.05

7 YB Dato’ Seri Dr Ting - - - -Chew Peh

1 Deemed interest by virtue of 50% equity interest each in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd respectively

2 Held in nominee name, CIMSEC Nominees (Tempatan) Sdn Bhd

3 Held in nominee name, Bumiputra-Commerce Nominees (Tempatan) Sdn Bhd

4 Held in nominee name, Mayfin Nominees (Tempatan) Sdn Bhd

List of Substantial Shareholders As Per Register of Substantial Shareholders (excluding bare trustees)

No. Of Shares Held In The CompanyDirect Interest % Deemed Interest %

1 YBhg Tan Sri Rozali Ismail 330,000 0.07 190,051,0001

43.26

2 Encik Shaari Ismail - - 190,051,0001

43.26

3 Central Plus (M) Sdn Bhd 59,304,500 13.50 124,562,7502

28.36

4 Employees Provident Fund Board 37,579,750 8.55 3,630,0003

0.83

1 Deemed interest by virtue of 50% equity interest each in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd respectively

2 Held in various nominee names

3 Shares held and managed by various Portfolio Managers

No. Name

No. Name


WARRANTS AS AT 29 APRIL 2003

Holdings No. of Holders % of Holders Total Holdings % of Warrants

Issued

less than 1,000 711 14.00 344,750 0.32

1,000 - 10,000 3,752 73.90 10,710,538 9.79

10,001 - 100,000 540 10.64 16,091,233 14.71

100,001 - 5,468,742 (less than 5% of warrants issued) 72 1.42 25,234,099 23.07

5,468,743 (5% of warrants issued) and above 2 0.04 56,994,249 52.11

TOTAL 5,077 100.00 109,374,869 100.00

30 Largest Warrant Holders As Per Record of Depositors No. of Warrants % of Warrants

Name of Warrant Holders Held Issued

1.Rozali Bin Ismail 51,466,812 47.06

2.Employees Provident Fund Board 5,527,437 5.05

3.AmFinance Berhad 2,047,000 1.87

- Pledged Securities Account For Fang Kok Leong @ Phang Sook Fook (SMART)

4.Malaysia Nominees (Tempatan) Sendirian Berhad 1,971,600 1.80


5.Bank Kerjasama Rakyat Malaysia Berhad 1,750,000 1.60

- Pledged Securities Account For Kumpulan Darul Ehsan Berhad

6.Corporate Line (M) Sdn Bhd 1,533,687 1.40

7.HLG Nominee (Tempatan) Sdn Bhd 1,255,812 1.15

- PB Trustee Services Berhad for HLG Growth Fund

8.Fang Kok Leong @ Phang Soon Fook 1,103,000 1.01

9.Universal Trustee (Malaysia) Berhad 1,000,000 0.91

- TA Islamic Fund

10. BHLB Trustee Berhad 875,000 0.80

- TA Comet Fund

11. Lau Wai Fong 735,000 0.67

12. Malaysia Nominees (Tempatan) Sendirian Berhad 575,000 0.53

- Amanah SSCM Asset Management Berhad for Amanah

Smallcap Fund Berhad (JM730)

13. Cheong Pang Kwan 572,000 0.52

14. Wong Lee Yun 550,000 0.50


30 Largest Warrant Holders As Per Record of Depositors No. of Warrants % of Warrants

Name of Warrant Holders (continued) Held Issued



16. HSBC Nominees (Tempatan) Sdn Bhd 436,600 0.40

- HSBC (M) Trustee Bhd for Amcumulative Growth (3639)

17. Universal Trustee (Malaysia) Berhad 374,000 0.34

- Alliance First Fund

18. Mak Ngia Ngia @ Mak Yoke Lum 357,000 0.33

19. Lembaga Tabung Angkatan Tentera 343,750 0.31

20. Teo Kin Swee 312,000 0.29

21. OSK Nominees (Asing) Sdn Berhad 292,000 0.27

- Pledged Securities Account For Tan Boon Chiang

22. Southern Investment Bank Berhad 286,000 0.26

- Employee’s Provident Fund

23. Mayban Nominees (Tempatan) Sdn Bhd 268,000 0.25

- Pledged Securities Account For Fong Swee Eng (318AC0001)

24. Mayban Nominees (Tempatan) Sdn Bhd 266,000 0.24

- Pledged Securities Account For Su Tiing Uh (178AW0603)

25. Amanah Raya Nominees (Tempatan) Sdn Bhd 238,000 0.22

- AUTB Progress Fund


- Great Eastern Life Assurance (Malaysia) Berhad (Non Par 1)

27. Tan Seng Kow 237,000 0.22

28. Wong Kok Hou 230,000 0.21

29. Asia Life (M) Berhad 223,500 0.20

- As Beneficial Owner (M’sia Life Fund)

30. Tasec Nominees (Tempatan) Sdn Bhd 220,000 0.20

- TA Asset Management Sdn Bhd For Yayasan Sabah (YS)

TOTAL 75,737,598 69.25


No. Name


Directors’ Interests In Warrants As Per Register Of Directors’ Warrantholdings

No. Of Warrants Held In The CompanyDirect Interest % Deemed Interest %

1 YBhg Tan Sri Rozali Ismail 51,466,812 47.06 1,545,9371

1.41

2 Encik Ruslan Hassan 41,625 0.04 - -

3 Encik Mat Hairi Ismail 52,375 0.05 - -

4 Ir Lee Miang Koi 18,000 0.02 - -

5 Encik Abdul Majid Abdul Karim - - - -

6 YBhg Dato’ Hari Narayanan Govindasamy - - 52,500

20.05

7 YB Dato’ Seri Dr Ting Chew Peh - - - -

1 Deemed interest by virtue of 50% equity interest in Corporate Line (M) Sdn Bhd

2 Held in nominee name, Mayfin Nominees (Tempatan) Sdn Bhd

LIST OF PROPERTY AS AT 31 DECEMBER 2002

RemaningLeasehold Period

Description & Date of Land Area Net Book (Expiry ExistingLocation Acquisition Value Tenure Date) use

Vacant Land 14/2/1998 10,364 sq.m. RM8,283,525 99 years 97 years noneH.S.(D) 142037 Leasehold expiring on PT 32, Section 14 17/12/2099 Bandar Shah Alam District of Petaling Selangor

Director’s Reportfor the financial year ended 31 December 2002




Financial

ReportsDirectors’ Report

Consolidated Income Statement

Company Income Statement

Balance Sheets

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity

Cash Flow Statements

Notes to the Financial Statements

Statement by Directors

Statutory Declaration

Report of the Auditors

112-119

120

120

121

122

122

123-124

125-157

158

158

159

Directors’ Reportfor the financial year ended 31 December 2002


The Directors have pleasure in submitting their report together with the audited financial statements of the Group and of the

Company for the financial year ended 31 December 2002.

Principal activities

The Group is principally engaged in the operation, maintenance, management, construction and rehabilitation of water

treatment facilities. The principal activities of the Company during the financial year are that of investment holding and

provision of management services. The principal activities of the subsidiaries are set out in Note 13 to the financial statements.

There has been no significant change in the nature of the activities of the Group and of the Company during the financial year.

Financial Results Group CompanyRM RM

Profit after taxation 179,745,431 1,870,146

Dividends

No dividends have been paid or declared by the Company since 31 December 2001. The Directors do not recommend the

payment of any dividend for the financial year ended 31 December 2002.

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

During the financial year, the issued and fully paid up capital of the Company increased from RM437,500,000 to

RM439,278,000 by way of the issuance of 1,778,000 new ordinary shares of RM1.00 each for cash as follows:

Purpose of issue No. of ordinary shares of RM1.00 each

Exercise of share options by eligible employees pursuant to the Employees’ Share Option Scheme 1,778,000

The above new ordinary shares issued during the financial year ranked pari-passu in all respects with the existing ordinary

shares of the Company.

Employees’ Share Option Scheme

The Company’s Employees’ Share Option Scheme (‘ESOS’), governed by the ESOS Bye-Laws, was principally approved by the

shareholders at the Extraordinary General Meeting of the Company held on 26 June 2001 and became effective following the

implementation by the Company on 25 February 2002. The ESOS shall be in forced for a duration of five (5) years

commencing from 25 February 2002.


Employees’ Share Option Scheme (continued)

The salient features of the ESOS are as follows:

(a) The ESOS is set up for the participation in ordinary shares of the Company only. The maximum number of new ordinary

shares which may be made available under the ESOS shall not exceed 10% of the total issued and paid up ordinary shares

of the Company at the point in time when an offer is made. At the commencement of the ESOS, the total number of new

ordinary shares available for offer was 43,750,000 ordinary shares of RM1.00 each.

(b) Eligible employees are those who have been in service of the Group for a continuous period of at least one (1) year

including full time Executive Directors who are involved in the day-to-day management and on the payroll of the Group.

(c) The ESOS is administered by the Option Committee which comprise the Executive Directors of the Company.

(d) The options granted under the ESOS may be exercised by the grantee by notice in writing to the Company during the

period commencing from the date of offer and before the expiry of the ESOS on 24 February 2007.

(e) The exercise price of the options at which the eligible employees are entitled to subscribe for the ordinary shares of

RM1.00 each in the Company under the ESOS is the weighted average market price of the shares of the Company as

quoted in the daily official list issued by the Kuala Lumpur Stock Exchange for the five (5) market days immediately

preceding the respective dates of offer subject to a discount of not more than 10%, or at the par value of the ordinary

shares of the Company of RM1.00 each, whichever is higher.

(f) The eligible employee to whom the options have been granted has no right to participate, by virtue of the options, in any

share issue of any other company.

(g) The new ordinary shares issued arising from the ESOS shall rank pari-passu in all respects with the then existing ordinary

shares of the Company except that they shall not be entitled to any dividends, rights, allotments and/or other

distributions, the entitlement date of which is prior to the date of allotment of the said new ordinary shares.

(h) The basis on which the options may be exercised, up to the expiry of the ESOS on 24 February 2007, in accordance with

the Directors’ approval is as follows:

Number of options granted and Percentage of options exercisableTranche unexercised as at 31 December 2002 2003 2004 2005 2006 2007*

% % % % %

1 30,524,000 45 71 90 100 100

2 2,843,000 49 71 92 100 100

33,367,000

* The ESOS expires on 24 February 2007



(i) The movements of the options over the ordinary shares of RM1.00 each of the Company granted under the ESOS during

the financial year are as follows:

Exercise Number of share optionsDate of options price At

Tranche granted per option Granted Exercised Lapsed** 31.12. 2002

1 26.2.2002 RM2.37 33,422,000 (1,778,000) (1,120,000) 30,524,000

2 26.8.2002 RM2.47 2,933,000 0 (90,000) 2,843,000

36,355,000 (1,778,000) (1,210,000) 33,367,000

** Due to resignations or offers not taken up

(j) The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the full list

of option holders and their holdings, except for eligible employees (excluding Executive Directors) with option allocation

of 250,000 options and above, which are as follows:

Number of options over ordinary shares of RM1.00 eachAt date of At

Name of eligible employees offer/granted Exercised Lapsed* 31.12.2002

Nik Nazman bin Husin 500,000 0 0 500,000

Beh Men Huat 350,000 0 (350,000) 0

Ibrahim bin Ismail 350,000 0 0 350,000

Loh Kit Mun 350,000 0 0 350,000

Azlan bin Hamid 300,000 0 0 300,000

Ramalingam a/l K.R. Arumugam 300,000 0 0 300,000

Sonari bin Solor 300,000 (30,000) 0 270,000

Syed Danial bin Syed Ariffin 300,000 0 0 300,000

Tan Bee Lian 300,000 0 0 300,000

Chan Siew Meei 250,000 (8,000) 0 242,000

Ismail bin Maidin 250,000 0 0 250,000

Mohd Sabaruldin bin Che Bakar 250,000 0 0 250,000

* Due to resignation


Directors

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

Tan Sri Rozali bin Ismail

Ruslan bin Hassan

Mat Hairi bin Ismail

Lee Miang Koi

Abdul Majid bin Abdul Karim

Dato’ Hari Narayanan a/l Govindasamy

Dato’ Seri Dr. Ting Chew Peh

In accordance with Article 98 of the Company’s Articles of Association, Mat Hairi bin Ismail and Dato’ Hari Narayanan a/l

Govindasamy retire from office by rotation at the forthcoming Annual General Meeting and, being eligible and upon the

recommendation of the Nomination Committee, offer themselves for re-election.

Directors' interests

According to the Register of Directors’ Shareholdings, particulars of interests in shares, notes, warrants and options in the

Company and its related corporations during the financial year of those Directors holding office at the end of the financial year

are as follows:

Number of ordinary shares of RM1.00 eachAt Transfer At

1.1.2002 Acquired Sold from/(to) 31.12.2002

Direct interests in the Company:

Tan Sri Rozali bin Ismail 0 330,000 0 0 330,000

Ruslan bin Hassan 364,000 30,000 0 0 394,000

Mat Hairi bin Ismail 22,750 0 0 0 22,750

Lee Miang Koi 144,000 0 0 0 144,000

Abdul Majid bin Abdul Karim 3,000 0 0 0 3,000

Indirect interests in the Company:

Tan Sri Rozali bin Ismail 212,251,000 0 (22,200,000) 0 190,051,000

Ruslan bin Hassan 202,500 0 0 0 202,500


Lee Miang Koi 20,000 0 0 0 20,000

Dato’ Hari Narayanan a/l Govindasamy 210,000 0 0 0 210,000

(* deemed interest by virtue of 50% shareholding interest in both Central Plus (M) Sdn. Bhd., a substantial corporate

shareholder, and in Corporate Line (M) Sdn. Bhd., a corporate shareholder of the Company)

(^^ held by nominees)


*

^^

^^

^^

^^



Directors' interests (continued)

Redeemable Unconvertible Junior Notes in RMAt Transfer At



Ruslan bin Hassan 708,125 0 0 0 708,125


Lee Miang Koi 245,000 0 0 0 245,000


Tan Sri Rozali bin Ismail 20,608,891 0 0 0 20,608,891


Number of warrantsAt Transfer At



Tan Sri Rozali bin Ismail 51,516,812 0 (50,000) 0 51,466,812

Ruslan bin Hassan 141,625 0 (100,000) 0 41,625


Lee Miang Koi 49,000 0 (31,000) 0 18,000


Tan Sri Rozali bin Ismail 1,545,937 0 0 0 1,545,937


Number of options over ordinary shares of RM1.00 eachAt date of At

offer/granted Exercised Lapsed 31.12.2002


Tan Sri Rozali bin Ismail 2,500,000 (330,000) 0 2,170,000

Ruslan bin Hassan 1,700,000 (30,000) 0 1,670,000

Mat Hairi bin Ismail 850,000 0 0 850,000

Lee Miang Koi 850,000 0 0 850,000

(** held by nominee and deemed interest by virtue of 50% shareholding interest in Corporate Line (M) Sdn. Bhd.)

(^ deemed interest by virtue of 50% shareholding interest in Corporate Line (M) Sdn. Bhd.)

(^^ held by nominees)

**

^^

^

^^


Directors' interests (continued)

By virtue of his substantial interests in shares of Central Plus (M) Sdn. Bhd. (‘CPMSB’), a substantial corporate shareholder

of the Company, Tan Sri Rozali bin Ismail is deemed to have an interest in the shares of the Company and all its subsidiaries

and associate to the extent CPMSB has an interest.

Number of ordinary shares of RM1.00 eachAt At

1.1.2002 Acquired Sold 31.12.2002

Deemed interest in the Company:

Tan Sri Rozali bin Ismail 206,067,250 0 (22,200,000) 183,867,250

The other Director in office at the end of the financial year did not hold any interest in shares, notes, warrants or options in

the Company or its related corporations.

Directors' benefits

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or

objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the

Company or any other body corporate other than the options over the shares granted by the Company to eligible employees

and Executive Directors of the Company and its subsidiaries pursuant to the Company’s ESOS mentioned above.

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit

(other than the Directors' remuneration and benefits as disclosed in Note 7 to the financial statements) by reason of a contract

made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company

in which he has a substantial financial interest, except for:

(i) certain Directors who received remuneration as Directors/Executive Directors of related corporations;

(ii) Tan Sri Rozali bin Ismail who has deemed interests in a related party, Mandai Sari Sdn. Bhd., which undertakes to operate,

maintain and manage the water treatment facilities under the terms of the Operation and Maintenance Agreement dated

8 October 1994 with Puncak Niaga (M) Sdn. Bhd. (‘PNSB’), a wholly-owned subsidiary; and

(iii) Tan Sri Rozali bin Ismail who has deemed interests in a related party, RZ Management Services Sdn. Bhd. which provides

corporate secretarial services to the Group.

Statutory information on the financial statements

Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took

reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for

doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had

been made for doubtful debts; and


Statutory information on the financial statements (continued)

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their

values as shown in the accounting records of the Group and of the Company had been written down to an amount which

they might be expected so to realise.

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 allowance for doubtful debts in 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 of the Company

misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of

the Company misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months

after the end of the financial year which, in the opinion of the Directors, will or may substantially affect 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 or of the Company which has arisen since the end of the financial year which secures

the liability of any other person; or

(b) any contingent liability of the Group or of the Company which has arisen since the end of the financial year except as

disclosed in Note 37 to the financial statements.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the

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 substantially affected 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 any item, transaction

or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of

the Company for the financial year in which this report is made.


Significant events during the financial year

The significant event that occurred during the financial year are disclosed in Note 36 to the financial statements.

Significant event subsequent to the financial year balance sheet date

The significant event that occurred subsequent to balance sheet date is disclosed in Note 37 to the financial statements.

Ultimate holding company

The Company has no corporate shareholder being regarded by the Directors of the Company as the ultimate holding company

nor as the holding company.

Auditors

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

Signed on behalf of the Board of Directors in accordance with their resolution dated 23 April 2003.


Director


Director

Kuala Lumpur



Consolidated Income Statementfor the financial year ended 31 December 2002

The notes on pages 125 to 157 form an integral part of these financial statements.

Group 2002 2001

Note RM RM

Revenue 6 565,105,110 552,336,942

Other operating income 14,416,902 11,514,068

Operating and maintenance cost (113,801,833) (126,318,650)

Staff cost (26,878,109) (25,754,925)

Administrative expenses (21,589,129) (20,412,047)

Depreciation and amortisation expenses (101,087,863) (98,694,027)

Profit from operations 7 316,165,078 292,671,361

Finance cost 8 (136,051,435) (112,982,535)

Profit from ordinary activities before taxation 180,113,643 179,688,826

Taxation 9 (368,212) (374,770)

Net profit for the financial year 179,745,431 179,314,056

Earnings per ordinary share

- basic 10 40.99 sen 40.99 sen

- diluted 10 40.51 sen N/A*

* N/A – Not applicable

Company2002 2001

Note RM RM

Revenue 6 3,960,000 3,960,000

Other operating income 32,870,919 3,201,340

Staff cost (277,357) (396,278)

Administrative expenses (951,870) (773,365)

Amortisation of leasehold land (88,045) (95,404)

Profit from operations 7 35,513,647 5,896,293

Finance cost 8 (32,839,198) (3,051,830)

Profit from ordinary activities before taxation 2,674,449 2,844,463

Taxation 9 (804,303) (846,760)

Net profit for the financial year 1,870,146 1,997,703

Company Income Statementfor the financial year ended 31 December 2002


Balance Sheetsas at 31 December 2002


Group Company2002 2001 2002 2001

Note RM RM RM RM

Non-current assetsProperty, plant and equipment 11 1,528,702,848 1,606,425,301 8,283,525 8,371,570Project development expenditure 12 245,838,486 255,727,275 0 0Subsidiaries 13 0 0 123,000,105 123,000,105Associate 14 0 0 0 0Other investments 15 12,662 45,050 0 0Junior Notes A 16 0 0 196,775,846 177,609,835Advances to a subsidiary 17 0 0 361,368,807 361,368,807Debt Service Reserve Account 18 79,618,389 77,249,387 0 0Long-term receivables 19 106,108,547 159,225,537 0 0

1,960,280,932 2,098,672,550 689,428,283 670,350,317

Current assetsInventories 20 817,277 1,051,835 0 0Trade and other receivables 21 819,850,967 538,445,470 17,007,741 10,857,054Tax recoverable 1,122,603 234,576 524,387 234,576Deposits, bank and cash balances 23 85,316,135 61,960,624 544,693 1,016,036

907,106,982 601,692,505 18,076,821 12,107,666

Less: Current liabilitiesTrade and other payables 24 160,596,262 121,414,890 1,828,991 2,031,887Hire-purchase payables 25 977,149 1,176,156 0 0Borrowings 26 86,170,443 98,081,664 0 0Taxation 0 649,210 0 0

247,743,854 221,321,920 1,828,991 2,031,887

Net current assets 659,363,128 380,370,585 16,247,830 10,075,779

Less: Non-current liabilitiesLong-term borrowings 27 1,439,397,047 1,484,247,493 196,775,846 177,609,835Hire-purchase payables 25 3,063,230 1,571,150 0 0

1,442,460,277 1,485,818,643 196,775,846 177,609,8351,177,183,783 993,224,492 508,900,267 502,816,261

Capital and reservesShare capital 28 439,278,000 437,500,000 439,278,000 437,500,000Share premium 53,294,348 50,858,488 53,294,348 50,858,488Reserve on consolidation 92,322 92,322 0 0Merger reserve (40,999,998) (40,999,998) 0 0Retained earnings 29 725,519,111 545,773,680 16,327,919 14,457,773

1,177,183,783 993,224,492 508,900,267 502,816,261

Consolidated Statement of Changes in Equityfor the financial year ended 31 December 2002


Share capital Non-distributable Distributable

Nominal Share Reserve on Merger Retainedvalue premium consolidation reserve earnings Total

Note RM RM RM RM RM RM

Group

At 1 January 2001 437,500,000 50,858,488 92,322 (40,999,998) 366,459,624 813,910,436

Net profit for the financial year 0 0 0 0 179,314,056 179,314,056

At 31 December 2001 437,500,000 50,858,488 92,322 (40,999,998) 545,773,680 993,224,492

Issue of share capital 28 1,778,000 2,435,860 0 0 0 4,213,860

Net profit for the financial year 0 0 0 0 179,745,431 179,745,431

At 31 December 2002 439,278,000 53,294,348 92,322 (40,999,998) 725,519,111 1,177,183,783

Non-Share capital distributable Distributable

Nominal Share Retainedvalue premium earnings Total

Note RM RM RM RM

Company

At 1 January 2001 437,500,000 50,858,488 12,460,070 500,818,558

Net profit for the financial year 0 0 1,997,703 1,997,703

At 31 December 2001 437,500,000 50,858,488 14,457,773 502,816,261

Issue of share capital 28 1,778,000 2,435,860 0 4,213,860

Net profit for the financial year 0 0 1,870,146 1,870,146

At 31 December 2002 439,278,000 53,294,348 16,327,919 508,900,267

Company Statement of Changes in Equityfor the financial year ended 31 December 2002




Cash Flow Statementsfor the financial year ended 31 December 2002

Group Company2002 2001 2002 2001

Note RM RM RM RM

Operating activities

Receipts from customer 352,176,593 393,796,524 0 0

Dividends received 0 0 2,764,800 2,764,800

Payments for operating expenses (140,930,550) (165,727,298) (1,602,471) (1,302,519)

Payments to contractors (1,508,674) (74,551,425) 0 0

Net cash generated from operations 30 209,737,369 153,517,801 1,162,329 1,462,281

Interest paid (99,669,941) (98,641,528) (13,671,875) 0

Taxation paid (1,905,450) (1,206,136) (18,914) (1,206,136)

Interest received 1,060,183 671,394 13,704,908 149,510

(100,515,208) (99,176,270) 14,119 (1,056,626)

Net cash inflow from operating

activities 109,222,161 54,341,531 1,176,448 405,655

Investing activities

Purchase of property, plant and

equipment (10,983,077) (6,701,032) 0 (249,801)

Purchase of Junior Notes A 0 0 0 (176,093,750)

Advances to subsidiaries 0 0 (5,861,651) 0

Repayment of advances by a subsidiary 0 0 0 48,000,000

Proceeds from disposal of property,

plant and equipment 622,311 911,390 0 0

Net cash outflow from investing activities (10,360,766) (5,789,642) (5,861,651) (128,343,551)

Financing activities

Proceeds from long-term borrowings 0 287,357,485 0 176,093,750

Exercise of share options pursuant

to ESOS 4,213,860 0 4,213,860 0

Repayment of borrowings (78,000,000) (277,988,554) 0 (48,000,000)

Repayment of hire-purchase (1,719,744) (1,819,177) 0 0

Repayment of advances to a related party 0 (4,347,241) 0 0

Payment of debt issuance expenses 0 (5,848,665) 0 0

Net cash (outflow)/inflow from

financing activities (75,505,884) (2,646,152) 4,213,860 128,093,750

Cash Flow Statementsfor the financial year ended 31 December 2002 (continued)



Group Company2002 2001 2002 2001

Note RM RM RM RM

Net increase/(decrease) in cash and

cash equivalents 23,355,511 45,905,737 (471,343) 155,854

Cash and cash equivalents at

beginning of the financial year 61,960,624 42,054,887 1,016,036 860,182

Transfer to Debt Service Reserve

Account 18 0 (26,000,000) 0 0

Transfer to designated account for

repayment of Term Loan (DSS II) 23 (55,726,548) 0 0 0

Cash and cash equivalents at

end of the financial year 29,589,587 61,960,624 544,693 1,016,036

Cash and cash equivalents comprise:

Deposits with licensed banks 56,580,289 12,855,989 0 0

Less: Deposits held in a designated

account for repayment of

Term Loan (DSS II) 23 (55,726,548) 0 0 0

853,741 12,855,989 0 0

Bank and cash balances 28,735,846 49,104,635 544,693 1,016,036

29,589,587 61,960,624 544,693 1,016,036


1 General information

The Group is principally engaged in the operation, maintenance, management, construction and rehabilitation of water

treatment facilities. The principal activities of the Company during the financial year are that of investment holding and

provision of management services. The principal activities of the subsidiaries are set out in Note 13 to the financial statements.

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Board of

the Kuala Lumpur Stock Exchange.

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

Suite 1401 - 1406, 14th Floor

Plaza See Hoy Chan

Jalan Raja Chulan

50200 Kuala Lumpur

The Company has no corporate shareholder being regarded by the Directors of the Company as the ultimate holding company

nor as the holding company.

The Group and the Company did not transact in foreign currencies during the financial year. All transactions and balances of

the Group and of the Company are denominated in Ringgit Malaysia.

2 Financial risk management objectives and policies

The Group’s activities expose it to a variety of financial risks, including interest rate risk, market risk, credit risk, liquidity

and cash flow risk. The Group’s overall financial risk management objective is to ensure that the Group creates value for its

shareholders. The Group focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects

on the financial performance of the Group. Finance risk management is carried out through risk reviews, internal control

systems, insurance programmes and adherence to Group financial risk management policies. The Board regularly reviews

these risks and approves the risk management policies, which covers the management of these risks.

Interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interest rates. Interest

rate exposure arises from the Group’s borrowings and deposits, and is managed through the use of a mix of fixed and

floating rate debts.

Market risk

For key product and/or service purchases, the Group establishes floating and fixed priced levels that the Group considers

acceptable. The bulk supply rates charged by Puncak Niaga (M) Sdn. Bhd. (‘PNSB’), a wholly-owned subsidiary, to the State

Government of Selangor for the supply of treated water is indexed to changes in prices of chemicals, electricity tariff and

Consumer Price Index. Accordingly, this helps to mitigate inflation risk.

Notes to the Financial Statementsfor the financial year ended 31 December 2002



2 Financial risk management objectives and policies (continued)

Credit risk

Credit risk arises when sales are made on deferred credit terms. The Group’s credit risk is concentrated on a single customer

i.e. the State Government of Selangor, and the terms of payments are stated in the concession agreements with the State

Government of Selangor.

At present, the Group is solely dependent on the State Government of Selangor being a single customer for the purchase of

its treated water and due to this sole dependency on the State Government of Selangor for revenue, any late or non-payment

by the State Government of Selangor may have an adverse impact on the cash flows and/or profits of the Group.

The Group seeks to control credit risk by continuously holding discussions and negotiations with the State Government of

Selangor with respect to the settlement and recoverability of the amounts due.

Liquidity and cash flow risk

Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate

amount of committed credit facilities and the ability to close out market positions. Due to the capital intensive and project

based nature of the underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit

lines available.

3 Award of concessions

PNSB, a wholly-owned subsidiary, had been awarded the following concessions by the State Government of Selangor:

(i) to take over, operate, maintain, manage, rehabilitate and refurbish existing water treatment plants located in Selangor

Darul Ehsan and Wilayah Persekutuan of Kuala Lumpur for a period of 26 years ending on 31 December 2020; and

(ii) to construct, operate, maintain and manage the new water treatment facilities, namely the Sungai Selangor Water Supply

Scheme Phase 2, Stages I and II (‘SSP2’) for a period of 26 years ending on 31 December 2020.

On 17 January 1998, PNSB was given a right by the Federal Government to develop a water treatment plant and its related

facilities in Wangsa Maju. The construction work commenced in January 1998 and was completed in July 1998. Subsequent

to the completion, PNSB has been managing, operating and maintaining the water treatment plant.

4 Basis of preparation

The financial statements of the Group and of the Company have been prepared under the historical cost convention unless

otherwise indicated in the summary of significant accounting policies below. The financial statements comply with the

applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.


4 Basis of preparation (continued)

The new applicable approved accounting standards adopted in the financial statements of the Group and of the Company for

the financial year ended 31 December 2002 are as follows:

(a) Restrospective application

(i) MASB Standard 19 “Events After the Balance Sheet Date”

(ii) MASB Standard 20 “Provisions, Contingent Liabilities and Contingent Assets”

(iii) MASB Standard 22 “Segment Reporting”

The adoption of the above new Standards did not have any significant impact to the presentation of the financial statements

nor to the income recognition and measurement principles of the Group and of the Company.

(b) Prospective application from 1 January 2002

(i) MASB Standard 21 “Business Combinations”

The Group has elected to adopt the transitional provision to apply this Standard prospectively. Accordingly, the

effects of the business combination of PNSB under the merger accounting entered into prior to 1 January 2002 have

not been restated.

(ii) MASB Standard 23 “Impairment of Assets”

The adoption of this new Standard did not have any material impact to the financial statements.

(iii) MASB Standard 24 “Financial Instruments: Disclosure and Presentation”

The Group has elected to adopt the transitional provision to apply this Standard prospectively. Accordingly, the

following presentation and disclosures have been adopted in the financial statements:

• comparatives are not disclosed upon first application of this Standard; and

• the effects of compound instruments issued prior to 1 January 2002 have not been reclassified to its liability and

equity components.

This Standard is not intended to apply to the recognition, measurement and disclosure of transactions and events

conducted on the basis of Islamic banking principles.

The preparation of financial statements in conformity with the applicable approved accounting standards in Malaysia and the

provisions of the Companies Act, 1965 requires the Directors to make estimates and assumptions that affect the reported amounts

of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported

amounts of revenue and expenses during the reported financial year. Actual results could differ from those estimates.

5 Summary of significant accounting policies

The following accounting policies have been used consistently in dealing with items which are considered material in relation

to the financial statements.

(a) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiaries made up

to the end of the financial year. Financial statements of subsidiaries are consolidated from the date on which control is

transferred to the Group and are no longer consolidated from the date when that control ceases.



5 Summary of significant accounting policies (continued)

(a) Basis of consolidation (continued)

Financial statements of subsidiaries are consolidated using the acquisition method of accounting except for the financial

statements of PNSB, which is consolidated using the merger method of accounting in accordance with Malaysian

Accounting Standard No. 2 “Accounting for Acquisitions and Mergers”.

Merger method

Under the merger method of accounting, the results of the subsidiary is presented as if the merger had been effected

throughout the current and previous financial years. On consolidation, the difference between the carrying value of the

investment over the nominal value of the shares acquired is treated as merger 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 subsidiaries acquired or disposed of during the financial

year are included from the date of acquisition up to the date of disposal. At the date of acquisition, the fair values of

the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The

difference between the acquisition cost and the fair values of the subsidiaries’ net assets is reflected as goodwill or

reserve on consolidation as appropriate.

All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated,

unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the

financial statements of the subsidiaries to ensure consistency with the accounting policies adopted by the Group.

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its

net assets together with the goodwill on acquisition, and is recognised in the income statement in the financial year in

which the disposal is made.

(b) Goodwill on consolidation

Goodwill arising on consolidation represents the excess of the cost of acquisition of subsidiaries over the Group’s share of

the fair value of their separable net assets at the date of acquisition and is written off against the Group’s retained earnings.

Negative goodwill represents the excess of the fair value of the Group’s share of identifiable net assets acquired over the

cost of acquisition. Negative goodwill is presented in the same balance sheet classification as goodwill. To the extent that

negative goodwill relates to expectations of future losses and expenses that are identified in the Group’s plan for the

acquisition and can be measured reliably, but which do not represent identifiable liabilities, that portion of negative

goodwill is recognised in the income statement when the future losses and expenses are recognised. Any remaining

negative goodwill, not exceeding the fair values of the non-monetary assets acquired, is recognised in the income

statement over the remaining weighted average useful life of those assets; negative goodwill in excess of the fair values of

those assets is recognised in the income statement immediately.

(c) Subsidiaries

A subsidiary is an enterprise in which the Group has power to exercise control over the financial and operating policies

so as to obtain benefits from their activities.



(c) Subsidiaries (continued)

Investments in subsidiaries are stated at cost except where, in the opinion of the Directors, there is an indication of

impairment, in which case the carrying amount of the investment is assessed and written down immediately to its

recoverable amount.

(d) Associate

An associate is an enterprise in which the Group is able to exercise significant influence. Significant influence is the ability

to participate in the financial and operating policy decisions of the associate but not control over those policies.

Investment in associate is stated at cost except where, in the opinion of the Directors, there is an indication of impairment,

in which case the carrying amount of the investment is assessed and written down immediately to its recoverable amount.

Investment in associate is accounted for in the consolidated financial statements using the equity method of accounting.

Equity accounting involves recognising in the income statement the Group’s share of the results of the associate for the

period. The Group’s investment in associate is carried in the balance sheet at an amount that reflects its share of the net

assets of the associate less premium paid on acquisition, which is written off against the Group’s retained earnings. Equity

accounting is discontinued when the carrying amount of the investment in an associate reaches zero, unless the Group

has incurred obligations or guaranteed obligations in respect of the associate.

Unrealised gains on transactions between the Group and its associate are eliminated to the extent of the Group’s interest

in the associate. Unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset

transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of the

associate to ensure consistency of accounting policies with the Group.

(e) Jointly controlled entity

Jointly controlled entity comprises unincorporated joint venture over which there is contractually agreed sharing of

control by the Group with third parties. The Group’s interest in jointly controlled entity is accounted for in the

consolidated financial statements by the equity method of accounting.

Equity accounting involves recognising in the income statement the Group’s share of the results of the jointly controlled

entity for the period. The Group’s investment in the jointly controlled entity is carried in the balance sheet at an amount

that reflects its share of the net assets of the jointly controlled entity.

Unrealised gains on transactions between the Group and its jointly controlled entity are eliminated to the extent of the

Group’s interest in the jointly controlled entity; unrealised losses are also eliminated unless the transaction provides evidence

on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments have been made to the

financial statements of jointly controlled entity to ensure consistency of accounting policies with those of the Group.

(f) Other investments

Long-term investments are stated at cost and allowance is only made where, in the opinion of the Directors, there is a

permanent diminution in value. Permanent diminution in the value of an investment is recognised as an expense in the

financial year in which the diminution is identified.




(f) Other investments (continued)

The gain or loss on disposal of an investment is the difference between net disposal proceeds and its carrying amount, and

is recognised in the income statement in the financial year in which the disposal is made.

Notes which are acquired and held up to maturity are stated at cost adjusted for amortisation of premium and/or accretion

of discount to maturity.

(g) Property, plant and equipment

Property, plant and equipment are stated at cost, which comprises the acquisition cost and any incidental cost arising

from the acquisition, less accumulated depreciation and impairment losses except for capital work-in-progress which are

not depreciated. Long-term leasehold land is stated at cost less accumulated amortisation and impairment losses. The

long-term leasehold land is amortised over the period of the lease of 99 years.

All other property, plant and equipment are depreciated on a straight line basis to write off the cost of each asset to their

residual values over their estimated useful lives at the following annual rates:

Water treatment plants Over the remaining period of the concessionending 31 December 2020

Plant and equipment 10% to 20%

Office equipment 20%

Furniture and fittings 20%

Motor vehicles 20%

Computers and software 33 1/3%

Renovation 20% to 33 1/3%

Where an indication of impairment exists, the carrying amount of an asset is assessed and written down immediately to

its recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the income

statement in the financial year in which the disposals are made.

(h) Assets acquired under hire-purchase arrangements

Property, plant and equipment acquired under hire-purchase are capitalised in the financial statements and are

depreciated in accordance with the accounting policy set out in Note 5(g) above. The corresponding outstanding

obligations due under the hire-purchase after deducting finance charges are included as liabilities in the financial

statements. Finance charges are allocated to the income statements over the periods of the respective agreements.

(i) Project development expenditure

Project development expenditure are stated at cost and comprise expenditure incurred for the rehabilitation and

refurbishment of water treatment facilities and concession acquisition cost. Project development expenditure are

amortised over the period of the concession. However, should no future economic benefits be expected to be derived from

the project development expenditure, the amount capitalised is charged as an expense in the income statement in the

financial year in which such a decision is made.



(j) Construction contracts

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the

extent of contract costs incurred that it is probable will be recoverable and contract costs are recognised as expenses.

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over

the period of the contract as revenue and expenses respectively. The Group uses the percentage of completion method to

determine the appropriate amount of revenue and costs to recognise in a given period; the stage of completion is measured by

reference to the actual costs incurred to date to the estimated total costs for each contract. When it is probable that total

contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

No profit is recognised where contract works are in its initial stage or have not reached a stage of completion where it is

possible to determine the financial outcome of the contract with reasonable accuracy.

The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings

up to the financial year end. Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the

balance is shown as ‘Amounts due from customers on construction contracts’. Where progress billings exceed costs incurred

plus recognised profits (less recognised losses), the balance is shown as ‘Amounts due to customers on construction contracts’.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and

includes transportation and handling cost incurred.

(l) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the financial year in which they are

identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date.

(m) Bonds and notes

Bonds and notes issued by the Company and the Group are initially recognised based on the proceeds received, net of

issuance expenses incurred and are adjusted in subsequent financial years for amortisation of premium and/or accretion of

discount to maturity, using the effective yield method. The premium amortised and/or discount accreted is recognised

in the income statement over the period of the bonds and notes.

(n) Capitalisation of borrowing costs

Borrowing costs incurred in connection with financing the construction of the capital work-in-progress are capitalised

and included as part of the construction costs respectively until the assets are ready for their intended use.

(o) Deferred taxation

Deferred taxation is provided for using the liability method in respect of all material timing differences between

accounting income and taxable income except where the tax effects of such timing differences are 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 the foreseeable future.




(p) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits and short-term, highly liquid

investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of

changes in value.

(q) Revenue recognition

Revenue of the Group is recognised when the treated water is discharged through the reading meter installed at the

respective reservoirs.

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 of completion

method; the stage of completion is measured by reference to the actual costs incurred to date to estimated total

costs for each contract.

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

(r) Financial instruments

Financial instruments carried on the balance sheet include deposits, bank and cash balances, other investments,

receivables, payables and borrowings.

(i) Financial instruments recognised on the balance sheet

The particular recognition methods adopted for financial instruments recognised on the balance sheet are disclosed

in the individual policy statements associated with each item.

(ii) Fair value estimation for disclosure purposes

The fair value of publicly traded securities is based on quoted market prices at the balance sheet date.

In assessing the fair value of financial instruments, the Group and the Company use a variety of methods and make

assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer

quotes for the specific or similar instruments are used for long term debt. Other technique, such as the discounted

value of future cash flows, is used to determine the fair value for the remaining financial instruments. In particular,

the fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current

market interest rate available to the Group and the Company for similar financial instruments.

The face values for financial assets and liabilities with a maturity of less than one (1) year are assumed to approximate

their fair values.

6 Revenue

Group Company2002 2001 2002 2001

RM RM RM RM

Invoiced value of bulk quantity of treated

water supplied to the State Government

of Selangor 565,105,110 552,336,942 0 0

Gross dividend income 0 0 3,840,000 3,840,000

Management fees 0 0 120,000 120,000

565,105,110 552,336,942 3,960,000 3,960,000

7 Profit from operations

Group Company2002 2001 2002 2001

RM RM RM RM

The following items have been charged/(credited) in arriving at profit from operations:

Depreciation of property, plant and equipment 4,142,885 3,950,523 88,045 95,404

Amortisation of water treatment plants 81,946,473 80,782,067 0 0

Amortisation of project development expenditure 14,999,624 13,961,439 0 0

Rental of premises 2,413,310 1,874,649 0 0

Hire of transport and equipment 165,813 210,545 0 0

Accretion of discount on bonds and notes 20,401,865 2,647,671 19,166,011 1,516,085

Amortisation of debt issuance expenses 836,468 512,996 0 0

Directors’ remuneration:

- Directors of the Company

• other emoluments 260,426 257,748 260,426 257,748

- Directors of subsidiaries

• other emoluments 3,888,037 4,698,017 0 0

Auditors' remuneration 90,000 90,000 15,000 15,000

Allowance for diminution in value of

other investments 32,388 0 0 0

Interest income from deferred payment contract (8,775,680) (8,802,901) 0 0

Interest income on deposits (3,434,301) (2,137,656) (33,033) (149,510)

Interest income on advances to a subsidiary 0 0 (13,671,875) (1,535,745)

Income from discount on notes 0 0 (19,166,011) (1,516,085)

Profit on construction contracts * 0 (148,382) 0 0

Gain on disposal of property, plant and equipment (510,404) (198,649) 0 0




7 Profit from operations (continued)

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

Group 2002 2001

RM RM

Gross revenue recognised 0 38,489,068

Contract cost recognised 0 (38,340,686)

0 148,382

The estimated monetary value of benefits-in-kind provided to the Directors of the Group by way of usage of the Group’s assets

and provision of other benefits amounted to RM230,491 (2001:RM138,906).

The number of persons employed by the Group and the Company at the end of the financial year were 616 (2001:617) and

Nil (2001:1) respectively.

8 Finance cost

Group Company2002 2001 2002 2001

RM RM RM RM

Finance cost comprises:

Financing cost on borrowings under Islamic

banking principles 79,136,153 84,087,183 0 0

Financing cost on conventional borrowings 56,152,340 28,403,450 32,837,886 3,051,830

Interest expense on hire-purchase 369,680 389,248 0 0

Bank charges 393,262 102,611 1,312 0

Other interest expense 0 43 0 0

136,051,435 112,982,535 32,839,198 3,051,830

9 Taxation

The taxation charge in the income statements represents:

Group Company2002 2001 2002 2001

RM RM RM RM

Malaysian income tax based on the chargeable income

for the financial year 606,190 349,720 804,303 821,710

(Over)/underprovision in prior years (237,978) 25,050 0 25,050

368,212 374,770 804,303 846,760


9 Taxation (continued)

The taxation charge for the Group for the financial year is principally in respect of interest income received by its subsidiary.

The effective tax rate of the Group is lower than the applicable statutory tax rate due to the utilisation of available capital

allowances. The amount of tax savings arising from the utilisation of the capital allowances for the Group for which credit is

taken for the financial year is approximately RM78,701,000 (2001:RM76,213,000).

The taxation charge for the Company for the financial year is principally in respect of dividend income received from its

subsidiary. The effective tax rate of the Company is higher than the applicable statutory tax rate due to the disallowance of

certain expense items as a deduction for taxation purposes.

Group Company2002 2001 2002 2001

RM RM RM RM

Tax losses

Tax savings as a result of the utilisation of current year

tax losses for which the related tax credit is recognised

during the financial year 9,465,505 253,490 9,465,505 253,490

Tax savings from the utilisation of tax losses

brought forward from previous years for

which the related tax credit is recognised

during the financial year 545,600 0 0 0

Tax losses for which the related tax credit has not been

recognised in the financial statements 594,078 1,139,658 127,822 127,822

10 Earnings per ordinary share

The basic earnings per ordinary share of the Group for the financial year of 40.99 sen (2001:40.99 sen) is calculated by

dividing the net profit for the financial year of RM179,745,431 (2001:RM179,314,056) by the weighted average number of

ordinary shares in issue during the financial year of 438,543,449 (2001:437,500,000) shares.

The diluted earnings per ordinary share of the Group for the financial year of 40.51 sen (2001:not applicable) is calculated by

dividing the net profit for the financial year of RM179,745,431 by the weighted average number of ordinary shares in issue

adjusted to assume the conversion of all dilutive potential ordinary shares i.e. warrants, which was granted for free to all

subscribers of the RUN (Note 27(iv)), and share options granted to the eligible employees pursuant to the ESOS (Note 28).

In assessing the dilution in earnings per share arising from the issue of both warrants and share options, a calculation is done

to determine the number of shares that could have been acquired at market price. This calculation serves to determine the

‘bonus’ element to the ordinary shares outstanding for the purpose of computing the dilution. No adjustment is made to net

profit for the financial year in the calculation of the diluted earnings per share in connection with the issue of the warrants

and share options.


Group


10 Earnings per ordinary share (continued)

2002RM

Net profit for the financial year 179,745,431

Weighted average number of ordinary shares in issue 438,543,449

Adjustment for:

- warrants 2,108,483

- share options 3,082,752

Weighted average number of ordinary shares for diluted earnings per share 443,734,684

Diluted earnings per share 40.51 sen

The comparative for diluted earnings per ordinary share is not presented in the financial statements as the effects of the

assumed exercise of warrants in prior financial year is anti-dilutive. The share options were granted to the eligible employees

during the financial year.

11 Property, plant and equipment

Long-term Water Plant Furniture Computersleasehold treatment and Office and Motor and

land plants equipment equipment fittings vehicles software Renovation TotalRM RM RM RM RM RM RM RM RM

2002

Cost

At 1 January 8,716,411 1,746,704,712 7,820,490 2,097,747 3,174,286 11,191,726 5,148,602 5,208,551 1,790,062,525

Additions 0 2,734,201 79,555 282,041 55,092 3,152,485 1,228,963 941,146 8,473,483

Disposals 0 0 (30,000) 0 0 (2,349,166) 0 0 (2,379,166)

At 31 December 8,716,411 1,749,438,913 7,870,045 2,379,788 3,229,378 11,995,045 6,377,565 6,149,697 1,796,156,842

Accumulated

depreciation

At 1 January 344,841 160,828,817 977,505 1,643,479 3,026,825 8,093,625 3,849,735 4,872,397 183,637,224

Charge for the

financial year 88,045 81,946,473 852,000 220,045 91,613 1,737,122 918,033 236,027 86,089,358

Released on

disposals 0 0 (5,250) 0 0 (2,267,338) 0 0 (2,272,588)

At 31 December 432,886 242,775,290 1,824,255 1,863,524 3,118,438 7,563,409 4,767,768 5,108,424 267,453,994

Net book value

At 31 December 8,283,525 1,506,663,623 6,045,790 516,264 110,940 4,431,636 1,609,797 1,041,273 1,528,702,848

Group


11 Property, plant and equipment (continued)

Long-term Water Plant Furniture Computersleasehold treatment and Office and Motor and

land plants equipment equipment fittings vehicles software Renovation TotalRM RM RM RM RM RM RM RM RM

2001

Cost

At 1 January 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

Additions 249,801 24,800,668 5,912,655 179,714 33,156 453,711 841,784 389,290 32,860,779

Disposals 0 0 (810,584) (155,124) (193,259) (755,188) (20,725) (8,045) (1,942,925)

At 31 December 8,716,411 1,746,704,712 7,820,490 2,097,747 3,174,286 11,191,726 5,148,602 5,208,551 1,790,062,525

Accumulated

depreciation

At 1 January 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

Charge for the

financial year 95,404 80,782,067 732,360 252,819 246,313 1,811,187 728,099 84,341 84,732,590

Released on

disposals 0 0 (347,555) (105,782) (126,645) (629,463) (19,622) (1,117) (1,230,184)

At 31 December 344,841 160,828,817 977,505 1,643,479 3,026,825 8,093,625 3,849,735 4,872,397 183,637,224

Net book value

At 31 December 8,371,570 1,585,875,895 6,842,985 454,268 147,461 3,098,101 1,298,867 336,154 1,606,425,301




Company Long-termleasehold land

RM

2002

Cost

At 1 January/31 December 8,716,411

Accumulated depreciation

At 1 January 344,841

Charge for the financial year 88,045

At 31 December 432,886

Net book value

At 31 December 8,283,525

2001

Cost

At 1 January 8,466,610

Additions 249,801


Accumulated depreciation

At 1 January 249,437

Charge for the financial year 95,404

At 31 December 344,841

Net book value


At 31 December 2002, the unexpired period of lease of the long-term leasehold land is 97 years.

Included in cost of water treatment plants are interest and financing cost on long-term borrowings capitalised amounting to

RM286,075,263 (2001:RM286,075,263).

Property, plant and equipment of a wholly-owned subsidiary, PNSB, with a total net book value of RM1,520,384,302

(2001:RM1,598,005,574), have been charged as security for long-term borrowings (Note 27(iii)).

In determining the recoverable amount of property, plant and equipment of the Group with the exception of the long-term

leasehold land, expected future cash flows have been discounted to their present value.



Assets acquired under hire-purchase arrangements

The value of the property, plant and equipment of the Group includes the following assets acquired under hire-purchase

arrangements:

2002 2001Motor vehicles RM RM

Cost 6,843,637 7,939,111

Accumulated depreciation (2,690,524) (5,083,051)

Net book value 4,153,113 2,856,060

12 Project development expenditure

Group2002 2001

RM RM

CostAt 1 January 310,603,705 289,882,232

Additions 5,110,835 20,721,473

315,714,540 310,603,705

Accumulated amortisation (69,876,054) (54,876,430)

At 31 December 245,838,486 255,727,275

Included in project development expenditure is concession acquisition cost of RM14,847,596 (2001:RM14,847,596) with an

unamortised balance of RM10,785,240 (2001:RM11,384,573) at the end of the financial year.

13 Subsidiaries

Company2002 2001RM RM

Unquoted shares in Malaysia, at cost 123,000,105 123,000,105



13 Subsidiaries (continued)

The details of the subsidiaries are as follows:

Country of Effective equity interest

Name of company incorporation held by the Group Principal activities

2002 2001% %

Puncak Niaga (M) Sdn. Bhd. # Malaysia 100 100 Operation, maintenance,

management, construction and

undertaking the rehabilitation

and refurbishment of water

treatment facilities

Held through 100% ownership by

Puncak Niaga (M) Sdn. Bhd.

- Ideal Water Resources Sdn. Bhd.* Malaysia 100 100 Operation, management,

maintenance and undertaking

the rehabilitation and

refurbishment of water

treatment plants

- Unggul Raya (M) Sdn. Bhd.* Malaysia 100 100 Operation, management,

maintenance and monitoring

the operation of dams

Puncak Research Centre Sdn. Bhd.* Malaysia 100 100 Dormant

Puncak Seri (M) Sdn. Bhd.* Malaysia 100 100 Dormant

NS Water System Sdn. Bhd.* Malaysia 100 100 Dormant

# subsidiary consolidated using the merger accounting method

* not audited by PricewaterhouseCoopers, Malaysia

14 Associate

Group Company2002 2001 2002 2001

RM RM RM RM

Unquoted investment in Malaysia, at cost 20,000 20,000 20,000 20,000

Allowance for diminution in value of investment 0 0 (20,000) (20,000)

Share of loss in associate (20,000) (20,000) 0 0

0 0 0 0

The Group has excluded its share of cumulative loss after taxation of the associate amounting to RM18,483

(2001:RM18,357) from the financial statements following the discontinuation of the equity accounting for the results of the

associate as the carrying value of this investment has reached zero.


14 Associate (continued)

The details of the associate are as follows:

Country of Effective equity interest

Name of company incorporation held by the Group Principal activities

2002 2001

% %

NS Water Management Sdn. Bhd. Malaysia 40 40 Dormant

15 Other investments

Group2002 2001

RM RM

Quoted shares in Malaysia, at cost 471,139 471,139

Allowance for diminution in value of other investments (458,477) (426,089)

12,662 45,050

Market value of quoted investments 12,662 16,488

The market value of these investments at the balance sheet date is equivalent to the fair value.

16 Junior Notes A

Company2002 2001RM RM

Nominal value 546,875,000 546,875,000

Less: Yield to maturity (370,781,250) (370,781,250)

At cost 176,093,750 176,093,750

Cumulation of accretion of yield to maturity 20,682,096 1,516,085

196,775,846 177,609,835

The Company subscribed for RM546,875,000 nominal value of Junior Notes A (‘JNA’) issued on 20 November 2001 by its

wholly-owned subsidiary, PNSB, at an issue price of RM0.322 per RM1.00 nominal value of JNA. The JNA are redeemable,

unconvertible, unsecured and substantially mirror the structure of the Redeemable Unconvertible Junior Notes (‘RUN’)

issued by the Company. The proceeds of the JNA was utilised to repay RM168 million of PNSB’s Al-Murabahah Commercial

Papers (‘MCPs’) with the remaining balance utilised for its working capital purposes.



16 Junior Notes A (continued)

The main features of the JNA are as follows:

(a) The JNA carries a coupon rate of 2.5% per annum receivable semi-annually for the immediate ten (10) years from the

date of issue of the JNA and 3.5% per annum receivable semi-annually thereafter for the next five (5) years.

(b) PNSB shall redeem the JNA in ten (10) equal instalments each comprising 10% of the aggregate nominal value of all

outstanding JNA commencing on the sixth (6th) anniversary of the date of issue of the JNA. On the tenth (10th)

anniversary of the date of issue of the JNA, PNSB has the option to redeem the JNA by paying the principal amount

outstanding on that date. On the same day, the holders of the JNA also have the option to sell the JNA back to PNSB

for a consideration equivalent to the principal amount outstanding on that day.

(c) The JNA was issued back-to-back with the RUN. Proceeds from the RUN was immediately utilised to subscribe for the

JNA by the Company. Accordingly, the proceeds from the coupon payments and redemptions of the JNA would be

utilised by the Company for coupon payments and redemptions of the RUN.

At balance sheet date, the carrying amount of the JNA approximated the fair value.

The effective interest rate applicable to the JNA at the balance sheet date was 7.30% (2001: 7.70%) per annum.

17 Advances to a subsidiary

The advances to a wholly-owned subsidiary, PNSB, are unsecured, interest free and are not repayable within the period of

twelve (12) months from the balance sheet date.

The carrying amount of these advances at the balance sheet date were not reduced to their estimated fair value of

RM345,807,471 (Note 35) as these advances are receivable from a profitable wholly-owned subsidiary and the Directors are

of the opinion that the amounts are recoverable in full.

18 Debt Service Reserve Account

Under the terms of agreement for the issue of the RM1,020 million 10 years Al-Bai’ Bithaman Ajil Islamic Debt Securities

primary bonds together with non-detachable secondary bonds (‘BaIDS’) and RM350 million MCPs/Al-Murabahah Medium

Term Notes (‘MMTNs’) Issuance Facility by its wholly-owned subsidiary, PNSB, a deposit equivalent to twelve (12) months

projected payment obligations under the BaIDS and MCPs/MMTNs that are outstanding at any point in time is required to be

placed in a Debt Service Reserve Account (‘DSRA’). PNSB is not entitled to withdraw any money from the DSRA without prior

consent of the Security Trustee except on condition that the BaIDS and MCPs/MMTNs have been fully redeemed (Note 27(iii)).

At the balance sheet date, the carrying amount of the deposits held in the DSRA approximated the fair value. The deposits

held in the DSRA is maintained for long term until the full redemption and expiry of the BaIDS on 27 October 2010

(Note 27(iii)) and is presently yielding interest income at market interest rates.

The weighted average effective interest rate applicable to the deposits held in the DSRA at the balance sheet date was 2.97%

(2001:2.90%) per annum.


19 Long-term receivables

The long-term receivables mainly represent an amount due from a customer i.e. the State Government of Selangor, on contract

in respect of the Sungai Selangor Water Supply Scheme Phase 2 - Distribution Supply System II (‘DSS II’) which was

completed on 6 July 2001. Pursuant to the terms of the contract, the payments for the contract sum are to be made over a

period of five (5) years commencing from 2001 (Note 21).

Group2002 2001

RM RM

Deferred repayment periods are as follows:

Amount receivable within 12 months (included in trade receivables - Note 21) 59,338,454 72,083,447

Amount receivable after 12 months 106,108,547 159,225,537

165,447,001 231,308,984

Included in amount receivable after twelve (12) months is retention sum on contract amounting to RM8,314,334

(2001:RM8,314,334).

The weighted average effective interest rate per annum applicable to the long-term receivables at the balance sheet date and

the fair value of long-term receivables as at balance sheet date were as follows:

Weighted average effective interest rate

Carrying Fair per annumamount value 2002 2001

RM RM % %

Group

Long-term receivables (excluding retention sum) 157,132,667 155,089,270 5.00 5.00

Retention sum 8,314,334 7,653,181 0 0

Long-term receivables (Note 35) 165,447,001 162,742,451

The carrying amount of the long-term receivables at the balance sheet date were not reduced to their estimated fair value of

RM162,742,451 as the Directors are of the opinion that the amounts are recoverable.

20 Inventories

Group2002 2001

RM RM

Water treatment chemicals, at cost 817,277 1,051,835



21 Trade and other receivables

Group Company2002 2001 2002 2001

RM RM RM RM

Trade receivables 780,816,547 505,916,236 0 0

Advances and loans to staff 1,745,350 2,492,545 0 0

Amounts due from subsidiaries (Note 22) 0 0 11,713,479 5,730,304

Sundry receivables 34,044,584 28,040,335 5,194,262 5,126,750

Deposits 2,125,244 1,501,394 100,000 0

Prepayments 1,119,242 494,960 0 0

819,850,967 538,445,470 17,007,741 10,857,054

Included in trade receivables is RM59,338,454 (2001:RM72,083,447) representing unpaid and current portion of deferred

payments on contract due within twelve (12) months, pursuant to the DSS II contract.

Included in sundry receivables of the Group is RM8,442,598 (2001:RM11,448,958) due from a subsidiary of Central Plus

(M) Sdn. Bhd. (‘CPMSB’), a substantial corporate shareholder of the Company.

The credit term of trade receivables is 30 days.

22 Amounts due from subsidiaries

The amounts due from subsidiaries are interest free, unsecured and payable at call.

23 Deposits, bank and cash balances

Group Company2002 2001 2002 2001

RM RM RM RM

Deposits with licensed banks 56,580,289 12,855,989 0 0

Bank and cash balances 28,735,846 49,104,635 544,693 1,016,036

85,316,135 61,960,624 544,693 1,016,036

Included in deposits with licensed banks are restricted monies amounting to RM55,726,548 (2001:RM Nil) representing

deposits in a designated account for the repayment of the Term Loan (DSS II) (Note 27 (ii)).

The weighted average effective interest rate applicable to deposits with licensed banks at the balance sheet date was 2.53%

(2001:2.70%) per annum.

Deposits of the Group have an average maturity of 14 days (2001:30 days).


24 Trade and other payables

Group Company2002 2001 2002 2001

RM RM RM RM

Trade payables 72,466,155 48,264,097 0 0

Amounts due to contractors 3,789,973 1,479,973 0 0

Finance cost payable 65,849,524 51,726,910 1,535,745 1,535,745

Trade accruals 18,455,888 19,834,189 293,246 496,142

Retention sum 17,923 92,922 0 0

Amount owing to Directors 16,799 16,799 0 0

160,596,262 121,414,890 1,828,991 2,031,887

Included in trade payables and trade accruals are RM70,897,978 (2001:RM44,753,806) and RM81,000 (2001:RM100,000)

respectively which are amounts due to subsidiaries of CPMSB, a substantial corporate shareholder of the Company.

The credit term of trade payables granted to the Group is 30 days. Notwithstanding, the Group is paying its major trade

payables on back-to-back terms based on collections from its sole customer i.e. the State Government of Selangor.

25 Hire-purchase payables

Group2002 2001

RM RM

Analysis of hire-purchase payables:

Payable within one year 1,254,032 1,311,494

Payable between one and two years 1,073,052 679,646

Payable between two and five years 2,212,759 996,112

Payable after five years 300,582 280,249

4,840,425 3,267,501

Less: Financing charges (800,046) (520,195)

4,040,379 2,747,306

Present value of hire-purchase payables:

Payable within one year 977,149 1,176,156

Payable between one and two years 952,103 604,003

Payable between two and five years 1,998,415 911,610

Payable after five years 112,712 55,537

4,040,379 2,747,306

Representing hire-purchase payables, net of interest-in-suspense:

Payable within 12 months 977,149 1,176,156

Payable after 12 months 3,063,230 1,571,150

4,040,379 2,747,306

25 Hire-purchase payables (continued)The weighted average effective interest rate per annum applicable to hire-purchase payables at the balance sheet date and thefair value of hire-purchase payables as at balance sheet date were as follows:

Weighted averageeffective interest rate

Carrying Fair per annumamount value 2002 2001

RM RM % %

Group

Hire-purchase payables (Note 35) 4,040,379 4,306,549 5.01 6.24

26 BorrowingsGroup

2002 2001RM RM

Secured:

Government support loan due within 12 months (Note 27) 30,443,895 24,355,116

Term loan (DSS II) due within 12 months (Note 27) 55,726,548 55,726,548

Al-Murabahah Commercial Papers due within 12 months (Note 27) 0 18,000,000

86,170,443 98,081,664

27 Long-term borrowingsGroup Company

2002 2001 2002 2001RM RM RM RM

Secured:

Government support loan 121,775,579 121,775,579 0 0

Term loan (DSS II) 171,936,831 171,936,831 0 0

Al-Bai’ Bithaman Ajil Bonds 1,008,601,662 1,006,831,662 0 0

Al-Murabahah Commercial Papers 32,000,000 110,000,000 0 0

Redeemable Unconvertible Junior Notes 191,253,418 171,785,085 196,775,846 177,609,835

1,525,567,490 1,582,329,157 196,775,846 177,609,835

Due within 12 months

Government support loan (Note 26) 30,443,895 24,355,116 0 0

Term loan (DSS II) (Note 26) 55,726,548 55,726,548 0 0

Al-Murabahah Commercial Papers (Note 26) 0 18,000,000 0 0

86,170,443 98,081,664 0 0

Due after 12 months

Government support loan 91,331,684 97,420,463 0 0

Term loan (DSS II) 116,210,283 116,210,283 0 0

Al-Bai’ Bithaman Ajil Bonds 1,008,601,662 1,006,831,662 0 0

Al-Murabahah Commercial Papers 32,000,000 92,000,000 0 0

Redeemable Unconvertible Junior Notes 191,253,418 171,785,085 196,775,846 177,609,835

1,439,397,047 1,484,247,493 196,775,846 177,609,835

1,525,567,490 1,582,329,157 196,775,846 177,609,835




27 Long-term borrowings (continued)

Analysis of borrowings:

Group Company2002 2001 2002 2001

RM RM RM RM

Payable within one year 86,170,443 98,081,664 0 0

Payable between one and two years 59,493,388 59,493,388 0 0

Payable between two and five years 653,072,011 533,072,011 0 0

Payable after five years 726,831,648 891,682,094 196,775,846 177,609,835

1,525,567,490 1,582,329,157 196,775,846 177,609,835

All the long-term borrowings carry fixed interest rates except for the Al-Murabahah Commercial Papers.

The Al-Bai Bithaman Ajil Bonds and Redeemable Unconvertible Junior Notes are further analysed as follows:

Group Group CompanyRedeemable Unconvertible Redeemable Unconvertible

Al-Bai' Bithaman Ajil Bonds Junior Notes Junior Notes2002 2001 2002 2001 2002 2001

RM RM RM RM RM RM

Nominal value 1,020,000,000 1,020,000,000 546,875,000 546,875,000 546,875,000 546,875,000

Less: Yield to maturity (10,532,693) (10,532,693) (370,781,250) (370,781,250) (370,781,250) (370,781,250)

1,009,467,307 1,009,467,307 176,093,750 176,093,750 176,093,750 176,093,750

Less: Debt issuance expenses (4,552,312) (4,552,312) (5,848,665) (5,848,665) 0 0

Net proceeds 1,004,914,995 1,004,914,995 170,245,085 170,245,085 176,093,750 176,093,750Cumulation of

accretion of yield to maturity 2,574,114 1,338,260 20,682,096 1,516,085 20,682,096 1,516,085

Cumulation of amortisation of debt issuance expenses 1,112,553 578,407 326,237 23,915 0 0

1,008,601,662 1,006,831,662 191,253,418 171,785,085 196,775,846 177,609,835




(i) Government Support Loan

The Government Support Loan which was obtained from the Federal Government in 1998 to finance the construction of the

Wangsa Maju water treatment plant and its related facilities, is repayable in equal annual instalments over a period of twenty

(20) years commencing on 11 April 1999. It is secured on all moneys standing to the credit of the Special Project Account.

The interest rate is fixed at 8% (2001:8%) per annum on the outstanding balance of the loan amount. PNSB is currently

negotiating with the Federal Government to restructure the loan in view of the lower bulk supply rate offered by the State

Government of Selangor.

(ii) Term Loan (‘DSS II’)

The Term Loan to finance the Sungai Selangor Water Supply Scheme Phase 2 Stage II - Distribution Supply System II

(‘DSS II’) project is repayable in five (5) unequal instalments commencing on 31 October 2001 and thereafter on 2 January

2003. The subsequent repayments will be on an annual basis until year 2006. The Term Loan (DSS II) is secured via the

assignments of the DSS II construction contract and project account, proceeds from the DSS II project and the designated

account, contractors’ performance bond and insurance policies on the DSS II project. Interest is payable semi-annually and

fixed at 7.60% (2001: 7.60%) per annum.

(iii) Al-Bai’ Bithaman Ajil Bonds and Al-Murabahah Commercial Papers/Al-Murabahah Medium Term Notes

On 12 October 2000, PNSB entered into several agreements with United Overseas Bank (Malaysia) Berhad and various

parties to raise RM1,020 million 10-Year Al-Bai’ Bithaman Ajil Islamic Debt Securities 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. Subsequently, on 28 October 2000, PNSB issued the

entire BaIDS and RM120 million of MCPs, the proceeds of which were utilised mainly to repay the Revolving

Underwriting Facility of RM800 million and Term Loan of RM300 million.

The BaIDS primary bonds will mature beginning 27 October 2005 and on an annual basis, for each series issued. The

non-detachable BaIDS secondary bonds are redeemable semi-annually from the date the primary bonds were issued, at

rates of 7% to 8% (2001:7% to 8%) per annum during the financial year on the primary bonds outstanding.

The MCPs/MMTNs will expire five (5) years from the date of agreement i.e. 12 October 2005. The tender rates ranged

between 2.80% and 3.20% (2001:2.80% and 3.12%) per annum during the financial year.

The facilities for the BaIDS, MCPs and MMTNs are secured by way of deposit of an aggregate sum in the DSRA equivalent

to twelve (12) months projected payment obligations under the BaIDS and MCPs/MMTNs that are outstanding at any point

in time. PNSB is not entitled to withdraw any money from the DSRA without prior consent of the Security Trustee except

on condition that the BaIDS, MCPs and MMTNs have been fully redeemed. In addition, the facilities are also secured by fixed

charges over all the assets of PNSB, the rights of PNSB under the concession agreements, construction contracts and project

agreements undertaken by PNSB.



(iii) Al-Bai’ Bithaman Ajil Bonds and Al-Murabahah Commercial Papers/Al-Murabahah Medium Term

Notes (continued)

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’s payment obligations

under the BaIDS and MCPs/MMTNs for a period of twelve (12) months commencing from 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 annually

commencing 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.

(iv) Redeemable Unconvertible Junior Notes

On 20 November 2001, the Company issued RM546,875,000 Nominal Value 15-Year Redeemable Unconvertible Junior

Notes (‘RUN’) with 109,374,869 free detachable warrants at an issue price of RM0.322 per RM1.00 nominal value of RUN

on the basis of RM5.00 nominal value of RUN with one (1) free warrant for every four (4) existing ordinary shares of RM1.00

each held in the Company. The RUN was offered to the entitled shareholders and is constituted by a Trust Deed dated

5 September 2001. The RM176 million proceeds from the RUN issue was immediately utilised to subscribe for the JNA

issued by PNSB, the Company’s wholly-owned subsidiary. PNSB subsequently, utilised the proceeds to repay RM168 million

of its MCPs with the remaining balance utilised for its working capital purposes.

The main features of the RUN and warrants are as follows:

(a) The RUN carries a coupon rate of 2.5% per annum payable semi-annually for the immediate ten (10) years from the date

of the issue of the RUN and 3.5% per annum payable semi-annually thereafter for the next five (5) years.

(b) The Company shall redeem the RUN in ten (10) equal instalments each comprising 10% of the aggregate nominal value

of all outstanding RUN commencing on the sixth (6th) anniversary of the date of issue of the RUN. On the tenth (10th)

anniversary of the date of issue of the RUN, the Company has the option to redeem the RUN by paying the principal

amount outstanding on that date. On the same day, the holders of the RUN also have the option to sell the RUN back to

the Company for a consideration equivalent to the principal amount outstanding on that day.

(c) The RUN and the warrants are transferable and are quoted on the Kuala Lumpur Stock Exchange.

(d) The RUN is secured on the JNA issued by PNSB. The Company is also required to create a security account to receive

only proceeds from coupon payment and redemption of the JNA by PNSB, and thereafter to pay the coupon payment and

redemption of the RUN.




(iv) Redeemable Unconvertible Junior Notes (continued)

(e) Holders of the warrants have the right to subscribe for new ordinary shares of the Company in cash at any time during the

period commencing one (1) day after the date of issue of the warrants and ending on the date being five (5) years from the

date of issue of the warrants (‘exercise period’). The exercise price of the warrants is RM2.62 per new ordinary share of the

Company subject to adjustments under certain circumstances in accordance with the provisions of the Deed Poll dated

5 September 2001.

(f) The warrants that are not exercised during the exercise period will lapse and become void thereafter.

(g) The new ordinary shares issued arising from the exercise of the warrants during the exercise period shall rank pari-passu

in all respects with the then existing ordinary shares of the Company except that they shall not be entitled to any

dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of

the said new ordinary shares.

The Company is restricted from declaring and paying any dividends:

(i) if there is any amount due but not paid under the RUN; or

(ii) in the event a default has occurred or is continuing and has not been waived.

(v) Effective interest rates

The effective interest rates per annum applicable to conventional long-term borrowings i.e. not under the basis of Islamic

banking principles, at the balance sheet date were as follows:

Effective interest rate per annum2002 2001

% %

Group

Government Support Loan 8.00 8.00

Term Loan (DSS II) 7.60 7.60

Group and Company

Redeemable Unconvertible Junior Notes 7.30 7.70

(vi) Estimated fair values

The carrying amounts of the RUN of the Group and of the Company at balance sheet date approximated their fair values.

The fair values of other conventional long-term borrowings at balance sheet date were as follows:

Carrying Fairamount value

RM RM

Group

Government Support Loan (Note 35) 121,775,579 120,051,923

Term Loan (DSS II) (Note 35) 171,936,831 171,451,870


28 Share capital

Group Company2002 2001 2002 2001

RM RM RM RM

Ordinary share of RM1.00 each

Authorised:

At 1 January 1,000,000,000 500,000,000 1,000,000,000 500,000,000

Increased during the financial year 0 500,000,000 0 500,000,000

At 31 December 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000

Issued and fully paid up:

At 1 January 437,500,000 437,500,000 437,500,000 437,500,000

Issued during the financial year:

Exercise of options under ESOS 1,778,000 0 1,778,000 0

At 31 December 439,278,000 437,500,000 439,278,000 437,500,000

During the financial year, 1,778,000 new ordinary shares of RM1.00 each were issued by the Company for cash arising from

the exercise of options by eligible employees pursuant to the Company’s Employees’ Share Option Scheme at an exercise price

of RM2.37 per share.

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of

the Company.

Employees’ Share Option Scheme

The Company’s Employees’ Share Option Scheme (‘ESOS’), governed by the ESOS Bye-Laws, was principally approved by the

shareholders at the Extraordinary General Meeting of the Company held on 26 June 2001 and became effective following the

implementation by the Company on 25 February 2002. The ESOS shall be in forced for a duration of five (5) years

commencing from 25 February 2002.

The salient features of the ESOS are as follows:

(a) The ESOS is set up for the participation in ordinary shares of the Company only. The maximum number of new ordinary

shares which may be made available under the ESOS shall not exceed 10% of the total issued and paid up ordinary shares

of the Company at the point in time when an offer is made. At the commencement of the ESOS, the total number of new

ordinary shares available for offer was 43,750,000 ordinary shares of RM1.00 each.

(b) Eligible employees are those who have been in service of the Group for a continuous period of at least one (1) year

including full time Executive Directors who are involved in the day-to-day management and on the payroll of the Group.

(c) The ESOS is administered by the Option Committee which comprise the Executive Directors of the Company.



28 Share capital (continued)


(d) The options granted under the ESOS may be exercised by the grantee by notice in writing to the Company during the

period commencing from the date of offer and before the expiry of the ESOS on 24 February 2007.

(e) The exercise price of the options at which the eligible employees are entitled to subscribe for the ordinary shares of

RM1.00 each in the Company under the ESOS is the weighted average market price of the shares of the Company as

quoted in the daily official list issued by the Kuala Lumpur Stock Exchange for the five (5) market days immediately

preceding the respective dates of offer subject to a discount of not more than 10%, or at the par value of the ordinary

shares of the Company of RM1.00 each, whichever is higher.

(f) The eligible employee to whom the options have been granted has no right to participate, by virtue of the options, in any

share issue of any other company.

(g) The new ordinary shares issued arising from the ESOS shall rank pari-passu in all respects with the then existing ordinary

shares of the Company except that they shall not be entitled to any dividends, rights, allotments and/or other distributions,

the entitlement date of which is prior to the date of allotment of the said new ordinary shares.

(h) The basis on which the options may be exercised, up to the expiry of the ESOS on 24 February 2007, in accordance with

the Directors’ approval is as follows:

Number of Options Percentage of options exercisablegranted and

unexercised as atTranche 31 December 2002 2003 2004 2005 2006 2007*

% % % % %

1 30,524,000 45 71 90 100 100

2 2,843,000 49 71 92 100 100

33,367,000

* The ESOS expires on 24 February 2007

(i) The movements of the options over the ordinary shares of RM1.00 each of the Company granted under the ESOS during

the financial year are as follows:

Date of Exercise Number of share optionsoptions price At

Tranche granted per option Granted Exercised Lapsed** 31.12.2002

1 26.2.2002 RM2.37 33,422,000 (1,778,000) (1,120,000) 30,524,000

2 26.8.2002 RM2.47 2,933,000 0 (90,000) 2,843,000

36,355,000 (1,778,000) (1,210,000) 33,367,000

** Due to resignations or offers not taken up


29 Retained earnings

The Company has sufficient tax credits under Section 108 of the Income Tax Act, 1967 to frank the payment of net dividends

up to approximately RM17,168,000 (2001:RM15,976,000) out of its retained earnings as at 31 December 2002, without

incurring additional tax liabilities.

30 Net cash generated from operation

Group Company2002 2001 2002 2001

RM RM RM RM

Net profit for the financial year 179,745,431 179,314,056 1,870,146 1,997,703

Adjustments for:

Depreciation of property, plant and equipment 4,142,885 3,950,523 88,045 95,404

Amortisation of project development expenditure 14,999,624 13,961,439 0 0

Amortisation of water treatment plants 81,946,473 80,782,067 0 0

Accretion of discount on bonds and notes 20,401,865 2,647,671 19,166,011 1,516,085

Amortisation of debt issuance expenses 836,468 512,996 0 0

Interest on hire-purchase 369,680 389,248 0 0

Gain on disposal of property, plant and equipment (510,404) (198,649) 0 0

Allowance for diminution in value of other investments 32,388 0 0 0

Taxation 368,212 374,770 804,303 846,760

Interest income (12,209,981) (10,940,557) (32,870,919) (3,201,340)

Interest expense 114,050,160 109,329,966 13,671,875 1,535,745

Changes in working capital:

- Receivables (219,324,077) (211,232,462) (1,364,236) (2,585,158)

- Payables 24,888,645 (15,373,267) (202,896) 1,257,082

Net cash generated from operations 209,737,369 153,517,801 1,162,329 1,462,281

31 Significant related party transactions and balances

CPMSB is a substantial corporate shareholder of the Company. Tan Sri Rozali bin Ismail, a Director of the Company has

substantial direct interest in shares in CPMSB.

In the normal course of business, the Company undertakes on agreed terms and prices, certain transactions with companies

deemed related parties by virtue of having a common substantial shareholder. The CPMSB group of companies and other

related parties, with whom the Group and Company transacted with, include the following:

Related parties Relationship

Mandai Sari Sdn. Bhd. A subsidiary of CPMSB

Syarikat Bekalan Air Selangor Sdn. Bhd. A subsidiary of CPMSB

RZ Management Services Sdn. Bhd. A Director related corporation

Puncak Niaga Overseas Capital Sdn. Bhd. A Director related corporation



31 Significant related party transactions and balances (continued)

The common Directors of PNSB, who are also Directors of the Company are Tan Sri Rozali bin Ismail, Ruslan bin Hassan,

Mat Hairi bin Ismail and Lee Miang Koi.

Ruslan bin Hassan and Lee Miang Koi, who are Directors of the Company, are also Directors of Unggul Raya (M) Sdn. Bhd.,

NS Water System Sdn. Bhd. and Puncak Research Centre Sdn. Bhd.

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 (M) Sdn. Bhd.

Significant related party transactions

The related party transactions undertaken in the normal course of business are on terms and prices agreed with the respective

related parties.

The significant related party transactions during the financial year are as follows:

Group2002 2001

RM RM

Operating and maintenance charges by Mandai Sari Sdn. Bhd. 65,320,322 68,909,495

Repayment of advance to Syarikat Bekalan Air Selangor Sdn. Bhd. 0 4,347,241

Management fees charged by Puncak Niaga Overseas Capital Sdn. Bhd. 0 270,000

Management fees charged by Mandai Sari Sdn. Bhd. 500,004 500,004

Secretarial 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 remained outstanding at the

balance sheet date, are as follows:

GroupRelated party Type of transaction 2002 2001

RM RM

Payables

Mandai Sari Sdn. Bhd. Operating and maintenance charges 70,897,978 44,753,806

RZ Management Services Sdn. Bhd. Secretarial fees 81,000 100,000

70,978,978 44,853,806


32. Capital Commitments

Group2002 2001

RM RM

Commitment under the terms of the Privatisation Cum Concession Agreement dated

22 September 1994 for the rehabilitation and refurbishment of water treatment facilities 10,265,062 16,933,000

Commitment under the terms of the Construction Cum Operation Agreement dated

22 March 1995 for the construction and completion of Sungai Selangor Water Supply

Scheme Phase 2 Stage II 0 500,000

33. Contingent Liabilities

Group Company2002 2001 2002 2001RM RM RM RM

Unsecured

Corporate guarantee given to a bank for facilities

granted to a subsidiary 0 0 50,000,000 50,000,000

Trade and performance guarantees

extended to third parties 26,451,500 17,448,000 0 0

34 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.

35 Financial instruments

Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity

instrument of another enterprise. These includes, amongst others, investments, deposits, cash and bank balances, receivables,

payables and borrowings.

Fair values

There is no disclosure of fair value for investments in subsidiaries and associate, and borrowings under the basis of Islamic

banking principles as these are excluded from MASB Standard 24 “Financial Instruments: Disclosure and Presentation”.



35 Financial instruments (continued)

Fair values (continued)

The carrying amounts of other financial assets and liabilities of the Group and of the Company at the balance sheet date

approximated their fair values except as set out below:

GroupCarrying Fair

Note amount valueRM RM

Financial asset

Long-term receivables 19 165,447,001 162,742,451

Financial liabilities

Hire-purchase payables 25 (4,040,379) (4,306,549)

Long-term borrowings:

- Government Support Loan 27 (121,775,579) (120,051,923)

- Term Loan (DSS II) 27 (171,936,831) (171,451,870)

(297,752,789) (295,810,342)

CompanyCarrying Fair

Note amount valueRM RM

Financial asset

Advances to a subsidiary 17 361,368,807 345,807,471

36 Significant events during the financial year

(a) The Company implemented an ESOS on 25 February 2002. The ESOS, governed by the ESOS Bye-Laws, was principally

approved by the shareholders at the Extraordinary General Meeting of the Company held on 26 June 2001. The ESOS

shall be in forced for a duration of five (5) years commencing from 25 February 2002.

(b) On 4 March 2002, the Company entered into a Second Supplemental Agreement with N.S. Water Sdn. Bhd., Eastern

Utilities Sdn. Bhd. and Lembaga Pemegang-Pemegang Amanah Yayasan Negeri Sembilan for the purpose of extending

the Memorandum of Understanding (‘MOU’) dated 20 December 2000 by yet another six (6) months with effect from

20 December 2001 up to 30 June 2002. The MOU sets out the respective parties mutual intention and understanding

in respect of the proposed privatisation of Jabatan Bekalan Air Negeri Sembilan by N.S. Water Konsortium Sdn. Bhd.

With the execution of the said supplemental agreement, the MOU shall continue to subsist unless terminated by the

occurrence of any of the events as stated in Clause 5 of the MOU.

On 12 August 2002, the Company entered into a Third Supplemental Agreement with N.S. Water Sdn. Bhd., Eastern

Utilities Sdn. Bhd. and Lembaga Pemegang-Pemegang Amanah Yayasan Negeri Sembilan for the purpose of extending

the MOU dated 20 December 2000 by a further six (6) months with effect from 1 July 2002 up to 31 December 2002.


36 Significant events during the financial year (continued)

(c) On 28 January 2002, the Company formed a consortium with Lanco Infratech Ltd. and Kris Heavy Engineering &

Construction Sdn. Bhd. to submit a tender bid to undertake the Chennai Water Supply Augmentation Project

1 - Package III (‘Chennai Project’) which involves the supply and laying of water supply pipelines (including a 5-year

operation and maintenance contract). On 6 November 2002, the Company, on behalf of the consortium, received a letter from

the Chennai Metropolitan Water Supply and Sewereage Board of India informing its acceptance of the consortium’s tender

bid. The total contract sum awarded is INR292,47,05,102.76 (Rupees Two Hundred and Ninety Two Crores Forty Seven

Lakhs Five Thousand One Hundred and Two and Paise Seventy Six) which is equivalent to approximately RM234 million.

The Chennai Project shall be undertaken by the consortium via the establishment of an unincorporated joint venture,

comprising the Company, Lanco Infratech Ltd. and Kris Heavy Engineering & Construction Sdn. Bhd., with a

participating ratio of 70%:20%:10% respectively. The unincorporated joint venture has not commenced operations as at

31 December 2002.

37 Significant event subsequent to balance sheet date

On 24 March 2003, the unincorporated joint venture mentioned in Note 36(c) above, accepted credit facilities totalling

INR950 million (equivalent to approximately RM76 million) from a licensed bank in India. The credit facilities are secured

by way of a Standby Letter of Credit (‘SBLC’), the facility of which was granted to the Company by a licensed bank in Malaysia.

Todate, the cumulative amount of SBLC issued amounted to approximately RM46 million.

Statement by Directors Pursuant to Section 169(15) of the Companies Act, 1965


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 120 to 157 are drawn up so as to give a true

and fair view of the state of affairs of the Group and of the Company as at 31 December 2002 and of the results and cash flows

of the Group and of the Company for the financial year ended on that date in accordance with the applicable approved

accounting standards in Malaysia and the provisions of the Companies Act, 1965.

Signed on behalf of the Board of Directors in accordance with their resolution dated 23 April 2003.


Director


Director

Statutory Declaration

I, Mat Hairi bin Ismail, being the Director primarily responsible for the financial management of Puncak Niaga Holdings

Berhad, do solemnly and sincerely declare that the financial statements set out on pages 120 to 157 are, in my opinion, correct

and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the

Statutory Declarations Act, 1960.


Director

Subscribed and solemnly declared by the abovenamed Mat Hairi bin Ismail at Kuala Lumpur, Malaysia on 23 April 2003.

Before me

Pasiah Muridan

(No. W187)

Commissioner for Oaths


We have audited the financial statements set out on pages 120 to 157. These financial statements are the responsibility of the

Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require that we plan

and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by Directors, as well as

evaluating the overall financial statement presentation. We believe 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, 1965 and 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 financial statements; and

(ii) the state of affairs of the Group and of the Company as at 31 December 2002 and of the results and cash 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 by the subsidiary

of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

The names of the subsidiaries of which we have not acted as auditors are indicated in Note 13 to the financial statements. We

have considered the financial statements of these subsidiaries and the auditors’ reports thereon.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company's financial

statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial

statements and we have received satisfactory information and explanations required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and did not

include any comment made under subsection (3) of Section 174 of the Act.

PricewaterhouseCoopers

(AF: 1146)

Chartered Accountants

Mohd Daruis Zainuddin

(969/03/05(J/PH))

Partner of the firm

Kuala Lumpur

23 April 2003

Report of the Auditors to the Members of Puncak Niaga Holdings Berhad


NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of Puncak Niaga Holdings Berhad

(416087-U) will be held at the Banquet Hall, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara,

60000 Kuala Lumpur on Wednesday, 25 June 2003 at 9.30 a.m. for the following purposes:-

1. To receive the Audited Accounts of the Company for the financial year ended 31 December 2002 Resolution 1

and the Reports of the Directors and Auditors thereon.

2. To re-elect the following Directors of the Company retiring in accordance with Article 98 of the

Company's Articles of Association:-

(a) Encik Mat Hairi Bin Ismail Resolution 2

(b) YBhg Dato’ Hari Narayanan a/l Govindasamy Resolution 3

3. To re-appoint Messrs PricewaterhouseCoopers as the Auditors of the Company and to authorise Resolution 4

the Directors of the Company to fix their remuneration.

AS SPECIAL BUSINESS:-

To consider and, if thought fit, to pass the following Ordinary Resolution:-

4. Allotment Of Shares Pursuant To Section 132D Of The Companies Act, 1965 Resolution 5

5. To transact any other ordinary business of which due notice shall have been given.

BY ORDER OF THE BOARD

TAN BEE LIAN (MAICSA 7006285)

Secretary

Kuala Lumpur

3 June 2003

Notice of Annual General Meeting

"THAT, subject always to the Companies Act, 1965, the Articles of Association of the Company

and the approvals of the relevant governmental/regulatory authorities, the Directors of the

Company be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to

issue shares in the Company from time to time and upon such terms and conditions and for such

purposes as the Directors of the Company may deem fit provided that the aggregate number of

shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the

Company for the time being AND THAT the Directors of the Company be and are hereby also

empowered to obtain the approval for the listing of and quotation for the additional shares so issued

on the Kuala Lumpur Stock Exchange AND FURTHER THAT such authority shall continue to

be in force until the conclusion of the next Annual General Meeting of the Company."


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.

4. Explanatory Note On Special Business:-

Resolution 5:-

The Ordinary Resolution proposed under item 4, if passed, will give the Directors of the Company, from the date of

the above Meeting, authority to issue and allot ordinary shares from the unissued capital of the Company for such

purposes as the Directors of the Company consider would be in the interest of the Company. The authority will,

unless revoked or varied at a General Meeting, expire at the next Annual General Meeting of the Company.

Statements Accompanying the Noticeof Annual General Meeting


Particulars of Directors standing for re-election at the Sixth Annual General Meeting:-

Names of Retiring Directors Encik Mat Hairi Bin Ismail YBhg Dato’ Hari NarayananDetails a/l Govindasamy

Age 41 53

Nationality Malaysian Malaysian

Qualification Bachelor in Accounting (Hons) Degree Bachelor Degree in Electrical and from Universiti Kebangsaan Malaysia Electronics Engineering from

Polytechnic of Newcastle-Upon- Tyne, England

Position in PNHB Executive Director, Finance Division Independent Non-Executive Director

Working Experience & Encik Mat Hairi has 18 years of YBhg Dato’ Hari has 26 years of Occupation working experience. For details, working experience. For details,

please refer to his profile on page 23 please refer to his profile on pageof the Annual Report 27 of the Annual Report

Directorships in (1) WWE Holdings Bhd (1) Tenaga Nasional Berhadother public companies (2) U-Wood Holdings Berhad (2) SP Setia Berhad

Details of attendance at 4/5 (80%) 3/5 (60%)Board Meetings

The place, date and hour of the Please refer to page 69 of the Please refer to page 69 of the Board Meetings Annual Report Annual Report

Equity securities interests in Please refer to pages 106 and 109 Please refer to pages 106 and 109PNHB and its subsidiaries of the Annual Report of the Annual Report

Family relationship with any Encik Mat Hairi is the younger brother Nonedirector and/or substantial of YBhg Tan Sri Rozali Ismail, the shareholder of PNHB Executive Chairman and substantial

shareholder of PNHB; andEncik Shaari Ismail, who is asubstantial shareholder of PNHB

Any conflict of interest Encik Mat Hairi is a substantial Nonewith PNHB shareholder of WWE Holdings Bhd,

which is an investment holding company and contractor for the provision of engineering services related to design, fabrication, installation and commissioning of water, wastewater treatment, environmental facilities and construction activities

List of convictions for offences None None(other than traffic offences) within the past 10 years



(a) Share-Buy Backs

The Company did not purchase any of its own shares during the financial year ended 31 December 2002.

(b) Options, Warrants or Convertible Securities

The Company had issued two (2) tranches of share options on 26 February 2002 and 26 August 2002 respectively

pursuant to the ESOS which became effective on 25 February 2002. During the financial year 2002, 1,778,000

options had been exercised. On warrants, none of the warrant holders converted their warrants into ordinary shares

during the financial year ended 31 December 2002.

(c) American Depository Receipt (ADR) / Global Depository Receipt (GDR)

The Company does not sponsor any ADR or GDR programme.

(d) Sanctions and/or Penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by

the relevant regulatory bodies during the financial year ended 31 December 2002.

(e) Non-Audit Fees

During the financial year ended 31 December 2002, the Company did not pay any non-audit fees to the external auditors.

(f) Variations in Results

The Company’s/Group’s audited results for the financial year ended 31 December 2002 did not vary from the

unaudited results which was announced to the KLSE on 26 February 2003.

(g) Profit Guarantee

Not applicable.

(h) Revaluation Policy on Landed Properties

The Group does not adopt a policy of regular revaluation of its property.

(i) Recurrent Related Party Transaction

The Company did not enter into any recurrent related party transaction which requires the shareholders’ mandate

during the financial year ended 31 December 2002.

(j) Directors’ Remuneration

The details of the Directors’ Remuneration at Company and Group Level for the financial year ended 31 December

2002, in successive bands of RM50,000 are tabulated overleaf:-

Range of Remuneration Company Level Group Levelper annum No. of Executive No. of Non-Executive No. of Directors

Directors Directors

RM1 to RM50,000 - - 1

RM50,001 to RM100,000 - 2 2

RM100,001 to RM150,000 - 1 1

RM150,001 to RM200,000 - - 1

RM600,001 to RM650,000 - - 1

RM900,001 to RM950,000 - - 2

RM1,350,001 to RM1,400,000 - - 1

(k) Material Contracts Involving Directors’ and Substantial Shareholders’ Interests

During the financial year ended 31 December 2002, neither the Company nor its subsidiaries entered into any material

contracts with the Directors and substantial shareholders of the Company. However, material contracts involving Directors and

substantial shareholders which are still subsisting at the end of the financial year ended 31 December 2002, are as follows:-

Date Nature of Contract Parties Consideration/Mode Relationship withof Satisfaction Director/Substantial

Shareholder

8 October Operation & Maintenance Puncak Niaga (M) PNSB to pay Mandai Sari a Mandai Sari is a 1994 Agreement - For Mandai Sdn Bhd (PNSB) and fixed monthly fee of RM41,667 subsidiary of Central

Sari Sdn Bhd to undertake Mandai Sari Sdn Bhd as well as for treated water Plus (M) Sdn Bhd (CP),the operation and (Mandai Sari) produced and supplied, which whereby CP is amaintenance of the 27 is measured in accordance with substantial shareholder water treatment plants the provisions of the PCCA of Puncak Niagaunder the Privatisation Holdings Berhad Cum Concession (PNHB)Agreement (PCCA)

8 October Refurbishment Works PNSB, Mandai Sari and Contract sum of RM150 million Mandai Sari is a 1994 Agreement - For CGE C.G.E Utilities (M) Sdn which is being paid subsidiary of CP,

to undertake the Bhd (CGE) progressively to CGE based on whereby CP is arefurbishment works for physical progress and subject substantial shareholderthe 27 water treatment to verification by Perbadanan of PNHBplants under the PCCA Urus Air Selangor Berhad

31 May Operation & Maintenance PNSB, Mandai Sari, Mandai Sari to pay CGE for Mandai Sari is a 1995 Sub-Contract - For CGE and Compagnie treated water produced and subsidiary of CP,

Mandai Sari to sub- General Des Eaux supplied, which is measured in whereby CP is a contract the above (now known as accordance with the provisions substantial shareholder Operation & Maintenance Vivendi Water) of the agreement of PNHBAgreement to CGE




Proxy Form

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 Sixth Annual General Meeting of Puncak Niaga Holdings

Berhad to be held at the Banquet Hall, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara,

60000 Kuala Lumpur on Wednesday, 25 June 2003 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 financial year ended 31 December 2002 and the Reports of the Directors andAuditors thereon.

2. To re-elect Encik Mat Hairi Bin Ismail as Director of the Company.

3. To re-elect YBhg Dato’ Hari Narayanan a/l Govindasamy as Director of the Company.

4. To re-appoint Messrs PricewaterhouseCoopers as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration.

5. To empower the Directors of the Company to issue shares pursuantto Section 132D of the Companies Act, 1965.

Please indicate with a cross (✗ ) how you wish your votes to be cast in respect of each Resolution. In the absence of specific

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 2003

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)Suite 1401 - 1406, 14th Floor

Plaza See Hoy ChanJalan Raja Chulan

50200 Kuala Lumpur

Fold Here

Fold Here

Stamp

Malaysia’s Water Specialist • Pakar Air Malaysia

Puncak Niaga Holdings Berhad (416087-U)

Suite 2601-2606, 26th Floor, Plaza See Hoy Chan,

Jalan Raja Chulan, 50200 Kuala Lumpur.

Tel: 03-2031 8648 Fax: 03-2031 8658

website: www.puncakniaga.com.my

e-mail: [email protected]

A n n u a l R e p o r t 2 0 0 2

annual report 2002 - puncak niaga · malaysian-german chamber of commerce member since 2002 and...

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