COVER RATIONALE. Touching Lives

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2 COVER RATIONALE Touching Lives Puncak Niaga s business touches the lives of the communities where we operate. It is therefore our duty to manage and develop our business in a responsible and sustainable manner. The year in review has seen us consolidate resources and build on our core strengths. The theme pages of this year s Annual Report expresses our commitment towards achieving sustainable development within the water industry in Malaysia and the region, while benefiting the communities and our stakeholders. We will continue to work together with the communities we serve and reinforce the foundations for a better tomorrow.

3 Table Of Contents SEVENTH ANNUAL GENERAL MEETING DATE : Monday, 28 June 24 TIME : 9.3 a.m VENUE : Banquet Hall Kuala Lumpur Golf & Country Club No. 1 Jalan 1/7D Off Jalan Bukit Kiara 6 Kuala Lumpur Pull-out Corporate Information Fact Sheet Corporate Profile Vision & Mission Statements Corporate Structure Organisation Structure Financial Highlights Financial & Share Performances Board of Directors Senior Management Corporate Achievements Executive Chairman Speaks Operations Review Corporate Social Responsibility Corporate Calendar of Events Newspaper Clippings Statement on Corporate Governance Statement on Internal Control Audit Committee Report Risk Management Policy & Report Investor Relations Policy & Report Quality Policy Distribution Schedule of Equity Securities & Property Financial Reports Notice of Annual General Meeting Statement Accompanying the Notice of Annual General Meeting Proxy Form Health, Safety & Environmental Policy & Report Puncak Niaga Holdings Berhad Annual Report 23

4 Corporate Information BOARD OF DIRECTORS YBhg 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 Tuan Syed Danial Syed Ariffin Executive Director Operation Division Encik Abdul Majid Abdul Karim Independent Non-Executive Director YBhg Tan Sri Dato Hari Narayanan Govindasamy Independent Non-Executive Director YB Tan Sri Dato Seri Dr Ting Chew Peh Independent Non-Executive Director GROUP COMPANY SECRETARY Madam Tan Bee Lian, MAICSA REGISTERED OFFICE Suite , 14th Floor Plaza See Hoy Chan Jalan Raja Chulan 52 Kuala Lumpur Tel : Fax : PRINCIPAL OFFICE Suite , 26th Floor Plaza See Hoy Chan Jalan Raja Chulan 52 Kuala Lumpur Tel : Fax : website : (general) : corpcom@puncakniaga.com.my (investors) : investors@puncakniaga.com.my DATE AND PLACE OF INCORPORATION 7 January 1997, Malaysia COMPANY NUMBER U AUDITORS Messrs PricewaterhouseCoopers (AF 1146) TAX ADVISOR PricewaterhouseCoopers Taxation Services Sdn Bhd ( M) PRINCIPAL BANKERS RHB Bank Berhad (6171-M) Bumiputra-Commerce Bank Berhad (13491-P) United Overseas Bank (Malaysia) Berhad (27189-K) SOLICITORS Messrs Kadir, Andri Aidham & Partners Messrs Wong & Partners Messrs Lee Hishammuddin Messrs Sivananthan Messrs Ng Yook Woon, Andrew TC Saw & Co Messrs Azian Haslina & Co Puncak Niaga Holdings Berhad Annual Report 23 2

5 Corporate Information SHARE REGISTRAR (Place where all registers of securities are kept) Tenaga Koperat Sdn Bhd (11841-V) 2th Floor, Plaza Permata Jalan Kampar Off Jalan Tun Razak 54 Kuala Lumpur Tel : Fax : STOCK EXCHANGE LISTING Main Board of Bursa Malaysia under the Infrastructure Project Companies Sector INDICES Kuala Lumpur Composite Index (KLCI) Kuala Lumpur Syariah Index Morgan Stanley Composite Index AUDIT COMMITTEE Chairman: Encik Abdul Majid Abdul Karim Members: YBhg Tan Sri Dato Hari Narayanan Govindasamy YB Tan Sri Dato Seri Dr Ting Chew Peh Encik Mat Hairi Ismail Secretary: Madam Tan Bee Lian REMUNERATION COMMITTEE Chairman: YB Tan Sri Dato Seri Dr Ting Chew Peh Members: YBhg Tan Sri Dato Hari Narayanan Govindasamy Encik Abdul Majid Abdul Karim Encik Mat Hairi Ismail Secretary: Madam Tan Bee Lian NOMINATION COMMITTEE Chairman: YB Tan Sri Dato Seri Dr Ting Chew Peh Members: YBhg Tan Sri Dato Hari Narayanan Govindasamy Encik Abdul Majid Abdul Karim Secretary: Madam Tan Bee Lian COMPLIANCE, INTERNAL CONTROL AND RISK POLICY COMMITTEE (CICR) Chairman: YB Tan Sri Dato Seri Dr Ting Chew Peh 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) 3 Puncak Niaga Holdings Berhad Annual Report 23

6 Fact Sheet PUNCAK NIAGA HOLDINGS BERHAD S FACT SHEET AS AT 26 APRIL 24 Group Manpower: Management Employees 82 Executive Employees 178 Non-Executive Employees 38 Total 64 No. of Puncak Niaga s Water Treatment Plants 28 No. of Water Treatment Plants with ISO Certifications 2 Authorised Share Capital Paid-Up Share Capital RM1,,, Number of RUN Issued 546,875, RUN Coupon Rates RUN Semi-Annual Coupon Payment Dates RM457,785, (comprising 457,785, ordinary shares of RM1. each) 2.5% per annum for the first 1 years and 3.5% per annum for the remaining 5 years 2 May and 2 November RUN Maturity Date 18 November 216 RUN Holders Put Option Date 2 November 211 Number of Warrants Issued 19,374,869 Warrant Conversion Price Number of Warrants Converted RM2.62 None Warrant Maturity Date 2 November 26 Effective Date of ESOS 25 February 22 Expiry Date of ESOS 24 February 27 ESOS Exercise Price (1st Tranche) ESOS Exercise Price (2nd Tranche) ESOS Exercise Price (3rd Tranche) ESOS Exercise Price (4th Tranche) ESOS Exercise Price (5th Tranche) RM2.37 per share RM2.47 per share RM2.13 per share RM2.71 per share RM3.27 per share Number of ESOS Offered (1st Tranche) 33,422, Number of ESOS Offered (2nd Tranche) 2,933, Number of ESOS Offered (3rd Tranche) 2,817, Number of ESOS Offered (4th Tranche) 1,349, Number of ESOS Offered (5th Tranche) 1,635, Total 42,156, Puncak Niaga Holdings Berhad Annual Report 23 4

7 Fact Sheet List of Corporate Memberships: 1. Malaysian Water Association (MWA) Member since Malaysia South-South Association (MASSA) Member since Federation of Public Listed Companies (FPLC) Member since Malaysian Employers Federation (MEF) Member since Malaysian Industry-Government Group for High Technology (MIGHT) Member since Malaysian-German Chamber of Commerce and Industry (MGCC) Member since National Institute of Occupational Safety and Health (NIOSH) Member since American Water Works Association (AWWA) Member since Malaysian-French Chamber of Commerce and Industry (MFCCI) Member since Malaysia-Russia Business Council Member since British Malaysian Chamber of Commerce (BMCC) Member since Research Institute of Investment Analysts Malaysia (RIIAM) Member since Malaysia-Japan Economic Association (MAJECA) Member since Commonwealth Partnership for Technology Management (CPTM) Member since Institute of Marketing Malaysia (IMM) Member since 23 List of Water Treatment Plants: Telephone Nos. 1. Ampang Intake Batang Kali Bernam River Headworks Bukit Nanas Bukit Tampoi Cheras Mile Gombak Kalumpang Kepong Kuala Kubu Bharu North Hummock Rantau Panjang / Salak Tinggi Sungai Batu Sungai Buaya Sungai Dusun Sungai Keroh / Sungai Langat Sungai Lolo / Puncak Niaga Holdings Berhad Annual Report 23

8 Fact Sheet List of Water Treatment Plants (continued) Telephone Nos. 2. Sungai Pangsoon Sungai Pusu / Sungai Rangkap Sungai Rumput Sungai Selangor Phase 2# Sungai Selisek Sungai Serai Sungai Tengi Wangsa Maju* #Awarded the following certifications: 1. Quality Management System (ISO 91:2) 2. Environmental Management System (ISO 141:1996) 3. Safety Management System (OHSAS 181:1999) *Awarded the Quality Management System (ISO 91:2) certification. Puncak Niaga Holdings Berhad Annual Report 23 6

9 Corporate Profile Sungai Langat Dam 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 (now known as Bursa Malaysia) on 8 July It is the first water treatment and supply concession company to be listed on Bursa Malaysia 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 95 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 22. 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 22. Instead, it was completed and commissioned one year ahead of schedule on 1 January Puncak Niaga Holdings Berhad Annual Report 23

10 Corporate Profile 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. 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. On 25 September 23, PNHB had announced to Bursa Malaysia that it has received a letter from the Economic Planning Unit, Prime Minister s Department stating the Federal Government has in principle approved the privatisation of the water supply services in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya to be undertaken by Syarikat Bekalan Air Selangor Sdn Bhd (SYABAS). In this respect, PNHB would be required to take up a 7% equity stake in SYABAS. 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 1,926 million litres per day.this volume is equivalent to approximately 54.55% of the treated water requirement in the State of Selangor Darul Ehsan and the Federal Territory of Kuala Lumpur. SSP2 Water Treatment Plant Administration Building Puncak Niaga Holdings Berhad Annual Report 23 8

11 Vision & Mission Statements Our Vision Our Mission Our Vision To Be The Leading And Dynamic Integrated Water Services Company. Our Mission To provide a synergy of socio-economic products and services in the realm of water treatment, management and distribution and other related businesses. To cater to the increasing challenges in the demand for high quality water production and distribution through the continuous implementation of high quality standards, efficient services, human resources development, innovative technology and operational systems. To actively participate in regional and global business opportunities with linkages to the Company s core activities and related interests. To actively support and participate in programmes and activities aimed at uplifting the community s living standards and value systems in line with the aspirations of Vision 22. To address national and international concerns pertaining to the protection, conservation and enhancement of the natural environment we live in. 9 Puncak Niaga Holdings Berhad Annual Report 23

12 Ensuring A Better future Puncak Niaga Holdings Berhad Annual Report Puncak Niaga Holdings Berhad Annual Report 23

13 Corporate Structure Puncak Niaga Holdings Berhad Investment Holding and Provision of Management Services Puncak Niaga (M) Sdn Bhd 1% operation, maintenance, management, construction, rehabilitation and refurbishment of water treatment facilities Ideal Water Resources Sdn Bhd 1% operation, management, maintenance and undertaking the rehabilitation and refurbishment of water treatment plants Puncak Research Centre Sdn Bhd 1% dormant Puncak Seri (M) Sdn Bhd 1% dormant Unggul Raya (M) Sdn Bhd 1% operation, management, maintenance and monitoring the operation of dams NS Water System Sdn Bhd 1% dormant NS Water Management Sdn Bhd 4% dormant Puncak Niaga Holdings Berhad Annual Report 23 12

14 Organisation Structure Puncak Niaga Holdings Berhad Executive Chairman YBhg Tan Sri Rozali Ismail PNHB Executive Director Project & Business Development Ir Lee Miang Koi Senior General Manager Secretarial Madam Tan Bee Lian Senior General Manager Ir Loh Kit Mun General Manager Encik Ramlan Abdul Rahman General Manager Encik Usman Ali Mustaffa General Manager Internal Audit Encik Sonari Solor Executive Vice Chairman Encik Ruslan Hassan General Manager Strategic Resource Centre Dr Abd Rahim Awang Kechik General Manager Corporate Communications Mr Mohanan Narayanan General Manager Executive Chairman's Office Encik Othman Ismail Executive Director Finance Division Encik Mat Hairi Ismail General Manager Finance & Accounts Mr Ng Wah Tar Assistant General Manager Finance Encik Ismail Maidin Executive Director Operation Division Tuan Syed Danial Syed Ariffin Senior Manager Operation Contract Supervision Encik Hashim Omar Senior Manager Water Resources & Environmental / Dam Operations Puan Roowina Merican A Rahim Merican Executive Director Human Resources & Administration Division Encik Matlasa Hitam General Manager Human Resources & Administration Encik Ahmad Fauzi Yahya Senior Manager Compensation & Benefits Encik Nik Azmi Nik Yaacob PNSB Executive Director Project & Business Development Division Ir Beh Men Huat General Manager Project & Business Development Ir Tan Hui Kuan General Manager Sabah Project Mr Seng Pay Executive Director Corporate Affairs Division Encik Ruslan Hassan General Manager Legal Madam Chan Siew Meei Assistant General Manager Information Technology Encik Mohd Sabaruldin Che Bakar Senior Manager / Plant Manager SSP2 WTP Ir Ausamah Darwish Mohd Daud Manager / Plant Manager Wangsa Maju WTP Encik Abdul Rahman Kadir Safety Officer Encik Sharluddin B Alias Manager Recruitment & Industrial Relations Puan Poziah Abas Manager Administration Encik Kamarulzaman Abu Bakar Manager Protective Services Encik Saadon Kardi Senior Manager Business Development Ir Tham Kin Tuck Senior Manager Project Management Encik Ishak Awang Senior Manager Contract Ir Teh Lee Ngo 13 Puncak Niaga Holdings Berhad Annual Report 23

15 Financial Highlights IN RM YEAR 23 YEAR 22 YEAR 21 BALANCE SHEET Property, plant and equipment 1,445,94 1,528,73 1,66,425 Project development expenditure 246,89 245, ,727 Other non-current assets 132,38 185,74 236,52 Current assets 1,342,384 97,17 61,693 Total tangible assets 3,156,949 2,856,63 2,688,98 ISSUED AND PAID-UP CAPITAL Share capital 451, , ,5 Reserves 68, ,28* 45,495* Shareholders fund 1,132,13 974,36* 842,995* Net tangible assets per share (RM) * 1.9* RATIOS AND STATISTICS Turnover 578,26 565,15 552,337 Net profit after tax 129, ,96* 124,499* Interest bearing debt 1,613,636 1,529,68 1,585,76 In sen Earnings per share * 28.46* In % of turnover Operating profit 22 22* 23* In times Gearing ratio * 1.88* Current ratio * These comparatives have been restated following the change in accounting policy on deferred tax to comply with the MASB Standard 25, Income Taxes. FINANCIAL CALENDAR Financial year end 31 December 23 Announcement of results : 1st quarter results ended 31 March May 23 2nd quarter results ended 3 June August 23 3rd quarter results ended 3 September November 23 4th quarter results ended 31 December February 24 Audited Accounts for the financial year ended 31 December 23 2 April 24 Published Annual Report 4 June 24 Annual General Meeting 28 June 24 Puncak Niaga Holdings Berhad Annual Report 23 14

16 Financial & Share Performances FINANCIAL PERFORMANCE Turnover RM ' Profit After Taxation RM ' Total Tangible Assets RM ' 347,472 35, , ,15 578,26 7,468* 64,935* 124,499* 127,96* 129,586 2,17,695 2,57,973 2,688,98 2,856,63 3,156, * These comparatives have been restated following the change in accounting policy on deferred tax to comply with the MASB Standard 25, Income Taxes. SHARE PERFORMANCE KLCI Share Price (RM) m 2.m Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Monthly Highest Closing Prices Monthly Lowest Closing Prices Kuala Lumpur Composite Index (KLCI) Volume of shares traded 15 Puncak Niaga Holdings Berhad Annual Report 23

17 The Stamina to Succeed Puncak Niaga Holdings Berhad Annual Report Puncak Niaga Holdings Berhad Annual Report 23

18 board of directors YBhg Tan Sri Rozali Ismail, aged 47, Malaysian Executive Chairman YBhg Tan Sri Rozali is the founder of PNSB, the Executive Chairman and substantial shareholder of PNHB. He was appointed to the Board of PNHB on 24 April Upon obtaining a Bachelor of Laws Degree from 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 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 developed 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 Bursa Malaysia on 8 July YBhg Tan Sri Rozali Ismail, Executive Chairman Puncak Niaga Holdings Berhad Annual Report 23 18

19 board of directors In recognition of his outstanding contributions in championing management excellence and best practices in the Malaysian water and wastewater industry,ybhg Tan Sri Rozali was awarded the prestigious Asia Water Management Excellence Award 22 Individual Award Category, an award at Asian level, by the Regional Institute of Environmental Technology on 26 March 22. He was conferred a Fellowship Award by the Institute of Marketing Malaysia (IMM) in November 21 for his invaluable contributions to promote the growth and development of the Malaysian property market. On 16 January 24, he was elected Advisor to IMM. YBhg Tan Sri Rozali was also honoured as a Top 1 Nominee for the Ernst & Young Entrepreneur Of The Year Malaysia 22 and Malaysia 23 (Master Entrepreneur Category) Award in recognition of his outstanding entrepreneurship and leadership skills. YBhg Tan Sri Rozali is the Deputy President of the Malaysian Water Association (MWA) and sits on the Board of Universiti Utara Malaysia, a leading Malaysian university. He is an active member of various influential governmental and non-governmental associations such as Malaysian Industry-Government Group for High Technology, Malaysian Institute of Directors (MID), Malaysian-British Business Council, Malaysia-Indonesia Business Council, Corporate Malaysia Roundtable, Malaysia-Russia Business Council, Commonwealth Partnership for Technology Management, FELDA Community Social Development Committee and Yayasan Budi Penyayang Malaysia. On 17 April 24, he was elected President of the Malay Chamber of Commerce for the State of Selangor (24/28 Session). Besides PNHB,YBhg Tan Sri Rozali is also the Executive Chairman and major shareholder of 2 other listed companies, namely U-Wood Holdings Berhad, a property company and WWE Holdings Berhad, a leading wastewater engineering company in Malaysia. He is the Chairman of Gabungan Wawasan Generasi Felda and also sits on the Board of Perbadanan Urus Air Selangor Berhad (PUAS). YBhg Tan Sri Rozali is the Chairman of PNHB s ESOS Option Committee and is related to PNHB s Executive Director, Finance Division, Encik Mat Hairi Ismail (his younger brother). He is also related to Encik Shaari Ismail (his elder brother), a substantial shareholder of the Company. YBhg Tan Sri Rozali attended all the six Board Meetings of PNHB held in the financial year ended 31 December Puncak Niaga Holdings Berhad Annual Report 23

20 board of directors Encik Ruslan Hassan, aged 48, 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 PNHB on 24 April 1997 and as the Executive Vice Chairman of PNHB on 6 April Currently, he is the Head of PNHB s Compliance, Internal Control and Risk Policy Committee and a member of PNHB s ESOS Option Committee. Early this year, Encik Ruslan was appointed a member of the Industrial Court - Employer Panel for the period 1 January 24 to 31 December 26. He is also a member of MID, MWA and IMM. Upon obtaining a Bachelor of Laws Degree from 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 23, 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 private companies and is an Alternate Director to YBhg Tan Sri Rozali Ismail in PUAS. Encik Ruslan attended all the six Board Meetings of PNHB held in the financial year ended 31 December 23. Encik Ruslan Hassan Executive Vice Chairman and Executive Director, Corporate Affairs Division Encik Mat Hairi Ismail, aged 42, 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 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 worked with the Langkawi Development Authority (LADA) ( ). Encik Mat Hairi is the Managing Director and substantial shareholder of WWE Holdings Bhd and a Non-Executive Director and substantial shareholder of U-Wood Holdings Berhad. Encik Mat Hairi also sits on the Board of PUAS and several private companies. Encik Mat Hairi is related to YBhg Tan Sri Rozali Ismail (his elder brother), the Executive Chairman and substantial shareholder of PNHB. He is also related to another substantial shareholder of PNHB, Encik Shaari Ismail (his eldest brother). Encik Mat Hairi is a member of MID and MWA. Encik Mat Hairi attended five out of the six Board Meetings of PNHB held in the financial year ended 31 December 23. Encik Mat Hairi Ismail Executive Director, Finance Division Puncak Niaga Holdings Berhad Annual Report 23 2

21 board of directors Ir Lee Miang Koi, aged 5, Malaysian Executive Director, Project & Business Development Division Ir Lee joined PNSB in 1995 and is currently responsible for the project and business development of PNHB. Ir Lee was appointed as a Director of PNSB on 2 February 1999 and subsequently to the Board of PNHB on 1 September He is a member of PNHB s ESOS Option Committee, MWA, MID and IMM. 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 26 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, specialising 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 private companies within the PNHB Group. Ir Lee attended all the six Board Meetings of PNHB held in the financial year ended 31 December 23. Ir Lee Miang Koi Executive Director, Project & Business Development Division Tuan Syed Danial Syed Ariffin, aged 46, Malaysian Executive Director, Operation Division Tuan Syed Danial graduated in 1981 with a BSc. (Hons) Degree in Civil Engineering from University of Aston in Birmingham, United Kingdom. He is a civil engineer by profession and has been with the PNHB Group for 8 1/2 years since December He began his career with PNSB as a Manager of Operation and was subsequently promoted to Senior Manager, Assistant General Manager and General Manager of Operation. Prior to his appointment to the Board of PNSB and PNHB on 1 March 24, he was the Acting Executive Director of Operation Division (July 23 to February 24). Tuan Syed Danial previously worked with the Pahang Public Works Department for 1 years, holding positions from Project Engineer ( ) to District Engineer for JKR Cameron Highlands ( ) 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. He is a member of IMM, MWA, a Registered Engineer with the Board of Engineers, Malaysia and also sits on the Board of a private company. He did not attend any Board Meetings of PNHB in the financial year ended 31 December 23 as he was only appointed to the Board of PNHB on 1 March 24. Tuan Syed Danial Syed Ariffin Executive Director, Operation Division 21 Puncak Niaga Holdings Berhad Annual Report 23

22 board of directors Encik Abdul Majid Abdul Karim, aged 45, Malaysian Independent Non-Executive Director Encik Abdul Majid was appointed to the Board of PNHB on 24 April 1997 as an Independent Non-Executive Director and was a past Director of PNSB for the period 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 University of Glasgow, United Kingdom in He began his career as a Technical Assistant with the Urban Development Authority (UDA) ( ), as Property Executive with Boustead Holdings Berhad ( ) and subsequently as Sales Engineer with UAC Berhad ( ). Encik Abdul Majid also sits on the Board of several private companies and is a member of MID. Encik Abdul Majid attended five out of the six Board Meetings of PNHB held in the financial year ended 31 December 23. Encik Abdul Majid Abdul Karim Independent Non-Executive Director YBhg Tan Sri Dato Hari Narayanan Govindasamy, aged 54, Malaysian Independent Non-Executive Director YBhg Tan Sri Dato Hari, a businessman by profession was appointed to the Board of PNHB on 1 July 1999 as an Independent Non-Executive Director. He is a member of PNHB s Audit Committee, Remuneration Committee and Nomination Committee. He holds a Bachelors Degree in Electrical and Electronic Engineering from University of Northumbria, England. YBhg Tan Sri Dato Hari is a member of the Institute of Engineers Malaysia, MID and a Registered Professional Engineer with the Board of Engineers, Malaysia. He has extensive experience in electrical and electronic engineering and has held various key positions with several established companies as an engineer and entrepreneur.ybhg Tan Sri Dato Hari is an active participant of various charitable projects. He also sits on the Board of Tenaga Nasional Berhad, SP Setia Berhad, Lembaga Lebuhraya Malaysia, Asian Institute of Medicine, Science and Technology and several private companies. YBhg Tan Sri Dato Hari attended all the six Board Meetings of PNHB held in the financial year ended 31 December 23. YBhg Tan Sri Dato Hari Narayanan Govindasamy Independent Non-Executive Director Puncak Niaga Holdings Berhad Annual Report 23 22

23 board of directors YB Tan Sri Dato Seri Dr Ting Chew Peh, aged 61, Malaysian Independent Non-Executive Director YB Tan Sri Dato Seri Dr Ting joined PNHB on 15 July 2 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 University of Malaya in 197 and obtained a Master of Science from University of London in He also holds a Doctorate in Philosophy, which he obtained from University of Warwick in YB Tan Sri Dato Seri Dr Ting is a member of MID. YB Tan Sri 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 198 and was subsequently an Associate Professor of the said Faculty until Between 1979 to 1986,YB Tan Sri Dato Seri Dr Ting published two books entitled Konsep Asas Sosiologi and Hubungan Ras dan Etnik. In 1987,YB Tan Sri 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 ( ), Deputy Minister of the Prime Minister s Department ( ) and Minister of Housing and Local Government ( ). Currently,YB Tan Sri Dato Seri Dr Ting is the Secretary-General of Malaysian Chinese Association (MCA). He also sits on the Board of Pan Malaysia Capital Berhad Group, Pan Malaysia Holdings Berhad, Hua Yang Bhd, Johan Holdings Berhad and also serves as a director of several private companies. YB Tan Sri Dato Seri Dr Ting Chew Peh Independent Non-Executive Director YB Tan Sri Dato Seri Dr Ting attended all the six Board Meetings of PNHB held in the financial year ended 31 December 23. 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 1 years. 2. The respective Directors interests in the Company s equity securities are detailed in pages 82 and 85 of the Annual Report.

24 senior management Encik Matlasa Hitam, aged 63, Malaysian Executive Director, Human Resource & Administration Division Encik Matlasa Hitam joined PNSB on 1 July 23 as Executive Director, Human Resource & Administration Division. He holds a Bachelors Degree in Business Administration (Hons.) from Monmouth College, USA and a Masters Degree in Business Administration (Finance) from Central Michigan University, USA. He has more than 3 years senior management experience covering areas related to manufacturing, marketing, human resources, finance as well as contract and project management. Encik Matlasa served as Managing Director/Chief Executive Officer of the Petronas Group and was Board member of both Petronas Methanol (L) Sdn Bhd and Petronas Gas Supply (L) Sdn Bhd from 1992 to May Prior to joining PNSB, he was the Executive Vice Chairman of WWE Holdings Berhad. Ir Beh Men Huat, aged 48, Malaysian Executive Director, Project & Business Development Division Ir Beh Men Huat joined PNSB in February 1996 as Manager, Project and Business Development Division. He was promoted four times prior to his appointment to the Board of PNSB as Executive Director, Project & Business Development Division on 19 November 23. He holds a BSc in Civil Engineering (Honours) Degree from University of Strathclyde, Scotland and subsequently in 23 obtained a Master of Finance Degree from RMIT University,Australia. He is a member of the Institution of Engineers Malaysia, Malaysian Institute of Management (MIM), MWA and IMM. Prior to joining PNSB, Ir Beh worked with Lembaga Letrik Negara (now known as Tenaga Nasional Berhad), Jabatan Kerja Raya and Lembaga Air Perak. Dr Shamsul Anwar Sulaiman, aged 43, Malaysian Executive Director, Ideal Water Resources Sdn Bhd Dr Shamsul Anwar joined Ideal Water Resources Sdn Bhd, a wholly-owned subsidiary of PNSB, as Executive Director on 2 January 24. He graduated from the University of Leuven, Belgium with a Bachelor in Medical Science in 1987 and a Medical Degree (Hons) in 199 and is a registered member with the Malaysian Medical Council. Currently, Dr Shamsul is the Managing Director of Klinik Famili and D-Jah Corporation Sdn Bhd. He is also the Chairman of Advocate Marketing Worldwide Sdn Bhd. Encik Azizul Nizam Bidin, aged 36, Malaysian Executive Director, Puncak Seri (M) Sdn Bhd Encik Azizul Nizam Bidin was appointed Executive Director of Puncak Seri (M) Sdn Bhd, a wholly-owned subsidiary of PNHB on 24 September He holds a Diploma in Management from MIM and a Diploma in Hotel Management and Catering from Stamford College, Kuala Lumpur. He has vast experience and wide exposure in services relating to special projects and government contracts. Encik Azizul actively contributes his leadership qualities in Yayasan GerakBakti Kebangsaan (YGK) and is a committee member of The Sultan Abdul Hamid College Old Collegians Association (SAHOCA). Puncak Niaga Holdings Berhad Annual Report 23 24

25 senior management Ir Loh Kit Mun, aged 5, Malaysian Senior General Manager, SYABAS Project Ir Loh joined PNSB in April 1998 as General Manager and was promoted to Senior General Manager on 1 March 22. He graduated from University of Malaya with a Bachelor of Civil Engineering Degree in Ir Loh has 26 years of working experience covering 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. Prior to joining PNSB, he was the General Manager (Infrastructure) of KL Linear City Sdn Bhd. Madam Tan Bee Lian, aged 38, Malaysian Senior General Manager, Secretarial/Group Company Secretary Madam Tan joined PNSB as Company Secretary in November 1994 and was promoted twice before assuming her current position as Senior General Manager, Secretarial on 1 January 23. She 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). Madam Tan has more than 16 years experience in company secretarial practice. Prior to joining PNSB, she worked with Project Lebuhraya Utara-Selatan Berhad (PLUS) and was the Assistant Company Secretary of Metramac Corporation Sdn Bhd/Metacorp Berhad. Madam Tan is the winner of the ROC-MAICSA Company Secretary Award 21 for the Listed Company Category. Dr Abd Rahim Awang Kechik, aged 52, Malaysian General Manager, Executive Chairman s Office Dr Abd Rahim joined PNSB in July 23 and currently heads the Strategic Resource Centre. Dr Abd Rahim graduated with a Doctorate in Philosophy (Ph.D) in Business Management in 2 and a Bachelor of Arts (Hons) in Education 1981, both from Universiti Sains Malaysia and a Master of Business Administration in 1991 from University of Wales College of Cardiff, United Kingdom. He also obtained a Diploma in Public Management from the National Institute of Public Administration (INTAN) in 1983 and a Diploma in Business Administration from University of Birmingham, United Kingdom in Prior to joining PNSB, he was an Administrative and Diplomatic Officer with the Government since 1983 and has held various positions, namely in the Ministry of Finance, Prime Minister s Office, Ministry of International Trade and Industry (MITI), State Economic Planning Unit of the State of Negeri Sembilan, Ministry of Agriculture, Ministry of Housing and Local Government and National Economic Action Council (NEAC). Encik Ahmad Fauzi Yahya, aged 43, Malaysian General Manager, Human Resources & Administration Encik Ahmad Fauzi joined PNSB in January 22. He graduated from Eastern Michigan University, USA, with a Bachelor of Business Administration degree majoring in Human Resource Management. Encik Ahmad Fauzi has 2 years of working experience in various disciplines such as human resources, public relations, marketing and sales. His previous employment was with ExxonMobil Malaysia. 25 Puncak Niaga Holdings Berhad Annual Report 23

26 senior management Madam Chan Siew Meei, aged 47, Malaysian General Manager, Legal Madam Chan joined PNSB in May She obtained a Bachelor of Laws Degree from University of Malaya in During the course of her 23-year career, Madam Chan has served as an Advocate and Solicitor, lecturer, company secretary and legal adviser to two public listed companies. Her employment portfolio covers diverse activities ranging from timber and plantation sectors to engineering, property and manufacturing. Madam Loh Lim Chai Kheng, aged 43, Malaysian General Manager, Executive Chairman s Office Madam Loh Lim joined PNSB in November 2. She commenced her articleship with PricewaterhouseCoopers in 1981 and is a member of the Malaysian Institute of Certified Public Accountants (MICPA) and the Malaysian Institute of Accountants (MIA). In 23, she obtained her Masters Degree in Business Administration from University of Strathclyde, Scotland. Madam Loh Lim has more than 21 years of working experience in the areas of audit, accounting, corporate finance, company secretarial and operations. Mr Mohanan Narayanan, aged 38, Malaysian General Manager, Corporate Communications Mr Mohanan joined PNSB in February 24. He graduated from University of London with a Bachelor of Laws Degree in He also holds a post-graduate Diploma in Public Relations. Mr Mohanan has 2 years working experience covering areas in journalism, public relations, advertising, marketing communications and brand management. Prior to joining PNSB, Mr Mohanan was a Public Relations Consultant for several multi national clients and corporations in the US, Europe and Asia- Pacific region. Mr Ng Wah Tar, aged 4, Malaysian General Manager, Finance & Accounts Mr Ng joined PNSB in March 2. He commenced his articleship with an accounting firm in 1984 and is a member of MICPA and MIA. Mr Ng has 2 years of working experience in various areas covering auditing, accounting and finance. Prior to joining PNSB, he was with the Management Services Division overseeing the finance and accounting functions of United Engineers (M) Berhad (UEM). Encik Othman Ismail, aged 46, Malaysian General Manager, Executive Chairman s Office Encik Othman joined PNSB in April 24. He graduated from University of Wales, UK in 1999 with a Masters Degree in Business Administration. Encik Othman has 13 years of working experience covering areas in marketing, sales and administration. Prior to joining PNSB, Encik Othman worked with Edaran Otomobil Nasional Berhad and was the Operations Director of Gold Bridge Construction and Engineering Berhad. Puncak Niaga Holdings Berhad Annual Report 23 26

27 senior management Encik Ramlan Abdul Rahman, aged 38, Malaysian General Manager, SYABAS Project Encik Ramlan joined PNSB in April 24. A Chartered Accountant by profession, Encik Ramlan is a member of MIA, and the Institute of Chartered Accountants New Zealand. He holds a Masters Degree in Business Administration from Ohio University, USA. He has 17 years working experience in the field of accounting and finance. Prior to joining PNSB, Encik Ramlan worked with Malaysian Mining Corporation (MMC) Group for 13 years, holding various finance positions in the MMC Group. Mr Seng Pay, aged 53, Malaysian General Manager, Sabah Project Mr Seng Pay joined PNSB in January 24 and is assigned to oversee and manage the Group s Telibong Water Supply Project in Sabah. He graduated with a Diploma in Mechanical Engineering from the Singapore Polytechnic in 1976 and a Diploma in Management from MIM in He obtained a Masters Degree in Business Administration from Herriot Watt University, United Kingdom in Mr Seng Pay has over 26 years experience in the management and implementation of water treatment plants. Prior to joining PNSB, he worked with various organisations with his last held position being Technical Services Manager with Ondeo Services (Malaysia) Sdn Bhd. Encik Sonari Solor, aged 47, Malaysian General Manager, Internal Audit Encik Sonari joined PNSB on 1 September He holds a professional qualification from the Chartered Institute of Management Accountants (UK) and is a member of MIA and a fellow member of the Chartered Association of Certified Accountants (UK). Encik Sonari has more than 16 years experience in auditing and accountancy in public listed companies dealing in property development, manufacturing, timber and consultancy services. Prior to joining PNSB, Encik Sonari served as Group Divisional Chief, Internal and Management Audit of Land & General Berhad. Ir Tan Hui Kuan, aged 5, Malaysian General Manager, Project & Business Development Ir Tan joined PNSB in August 23. He graduated with a Bachelor of Civil Engineering (Hons) Degree from University of Malaya in He has 23 years of working experience in Jabatan Kerja Raya Malaysia and Lembaga Air Perak in the management of production, distribution, maintenance and consumer services of a District Waterworks Department, geotechnical investigation, maintenance of military camps, project management of military buildings and infrastructures. Prior to joining PNSB, Ir Tan was the Assistant Director for Military Works in Jabatan Kerja Raya Malaysia. Encik Usman Ali Mustaffa, aged 43, Malaysian General Manager, SYABAS Project Encik Usman is a fellow member of the Chartered Association of Certified Accountants (UK) and is also a member of MIA. He joined PNSB in March 21. During his 2 years of working experience, Encik Usman worked 5 years in auditing, 1 years in accounting and 5 years in corporate finance. Encik Usman was the Regional Financial Controller of an American multi national company prior to joining PNSB. 27 Puncak Niaga Holdings Berhad Annual Report 23

28 Corporate Achievements QCC REGIONAL CONVENTION 23 (CENTRAL) - SILVER AWARD Wangsa Maju Water Treatment Plant For Saga Emas Circle QCC REGIONAL CONVENTION 23 (CENTRAL) - SILVER AWARD SSP2 Water Treatment Plant for Operations TAG Team Circle QCC REGIONAL CONVENTION 23 (CENTRAL) - SILVER AWARD SSP2 Water Treatment Plant for Mega Pro Circle OSH AWARD 22 - GOLD MERIT AWARD SSP2 Water Treatment Plant OSH AWARD 22 - GOLD AWARD Wangsa Maju Water Treatment Plant INSTITUTE OF PUBLIC RELATIONS MALAYSIA IPRM CRYSTAL AWARD 22 Environmental Relations Category for the River Rescue Brigade Programme INSTITUTE OF PUBLIC RELATIONS MALAYSIA IPRM CRYSTAL AWARD 22 Voluntary Relations Category for the Educational Outreach Programme KLSE CORPORATE AWARDS 23 SECTORAL AWARD - MAIN BOARD Infrastructure Project Companies Category ERNST & YOUNG ENTREPRENEUR OF THE YEAR - MALAYSIA 22 AND 23 YBhg Tan Sri Rozali Ismail, a Top 1 Nominee under the Master Entrepreneur Category Puncak Niaga Holdings Berhad Annual Report 23 28

29 Corporate Achievements ACCA MALAYSIA AWARDS FOR ENVIRONMENTAL REPORTING 23 Certificate of Appreciation NATIONAL ANNUAL CORPORATE REPORT AWARDS (NACRA) 23 Certificate of Merit KPMG SHAREHOLDER VALUE AWARDS 22 Finalist in the Infrastructure Sector ASIAMONEY CORPORATE GOVERNANCE POLL 22 Voted Best Corporate Governance Standards in the Utilities Sector in Malaysia QUALITY MANAGEMENT SYSTEM CERTIFICATION ISO 91:2 (Upgraded from ISO 9:1994) Wangsa Maju Water Treatment Plant QUALITY MANAGEMENT SYSTEM CERTIFICATION ISO 91:2 (Upgraded from ISO 9:1994) SSP2 Water Treatment Plant ENVIRONMENTAL MANAGEMENT SYSTEM CERTIFICATION ISO 141:1996 SSP2 Water Treatment Plant OCCUPATIONAL HEALTH & SAFETY MANAGEMENT SYSTEM CERTIFICATION OHSAS 181:1999 SSP2 Water Treatment Plant 29 Puncak Niaga Holdings Berhad Annual Report 23

30 Making a Splash Puncak Niaga Holdings Berhad Annual Report Puncak Niaga Holdings Berhad Annual Report 23

31 Executive Chairman Speaks Dear Shareholders, On behalf of the Board of Directors of Puncak Niaga Holdings Berhad (PNHB), I am pleased to present the Annual Report of the Group and the Company for the financial year ended 31 December 23. FINANCIAL REVIEW For the financial year ended 31 December 23, the Group's revenue increased by 2.3% from RM565.1 million recorded in the preceding financial year to RM578.3 million. The increase is mainly due to higher production from the 26 water treatment plants under the PCCA. However, as a result of higher operating cost and lower other operating income, profit before taxation for the financial year ended 31 December 23 only increased marginally from RM18.1 million in the preceding financial year to RM183.4 million. The Board of Directors will not be recommending payment of any dividend to the shareholders of the Company for the financial year ended 31 December 23 in view that the annual debt service cover ratio pursuant to its long term borrowings is less than 1.7 times. The Group s receivables remained high, standing at RM1.14 billion as at 31 December 23. However, the Board is confident that the receivables would be reduced substantially by this year contingent on the finalisation of the privatisation of the water supply services in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya to Syarikat Bekalan Air Selangor Sdn Bhd (SYABAS), wherein PNHB will hold a 7% equity interest.this reduction in the receivables will improve the cashflow of the Group substantially. Under the Privatisation, the Selangor State Government or its representative will hold a 3% equity interest in SYABAS with the balance 7% to be held by PNHB, while the Federal Government will hold one Golden Share. As the resolution of the receivables is an important component of the Privatisation, its implementation will help to resolve gradually the receivables owing by the Selangor State Government to the three major water treatment operators including our wholly-owned subsidiary, Puncak Niaga (M) Sdn Bhd (PNSB). Negotiations are currently underway to finalise the terms and conditions of the Concession Agreement for the Privatisation. Meetings held with the Selangor State Government and the Federal Government thus far have led to agreement on a number of substantial contractual, financial and technical issues. Our Company will make the necessary announcement once negotiations are completed and the Concession Agreement is executed with the Selangor State Government and the Federal Government. In the meantime, SYABAS has proceeded with detailed planning for implementing the necessary works once the Privatisation commences. The technical Master Plan has been drawn up for the capital and operating expenditure works. The capital works programmes include the development and upgrading of distribution system, asset replacement and reducing non-revenue water losses.the operating expenditure programme will bring about an improvement in the operations and maintenance of the entire distribution system, thereby increasing efficiency and enhancing the level of services to the consumers. MATERIAL CORPORATE DEVELOPMENTS On 24 September 23, the Company received a letter from the Economic Planning Unit, Prime Minister s Department informing that the Federal Government has approved in principle, the award of the privatisation of water supply services in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya to SYABAS (the Privatisation). Our Company already has projects in its books that will keep us busy over the next few years. The Company entered into a turnkey sub-contract agreement with Imej Warisan Sdn Bhd on 21 October 23, under which we will plan, design, construct, supervise, test and commission the works for Projek Pembinaan Loji/Kolam Takungan dan Paip Utama Telibong dan Telipok, Sabah.The project with a contract sum of RM313.5 million commenced on 21 October 23 and is expected to complete by March 26. Puncak Niaga Holdings Berhad Annual Report 23 32

32 Executive Chairman Speaks Under the PNHB-LANCO-KHEC JV, a consortium formed comprising our Company, Lanco Infratech Ltd and Kris Heavy Engineering & Construction Sdn Bhd wherein our Company holds a 7% stake, we are currently undertaking a water supply project for the Chennai Metropolitan Water Supply and Sewerage Board, Tamil Nadu, India valued at approximately RM234. million, in November 22 (Chennai Project). The project is targeted for completion in May 24. On 12 August 23, our wholly-owned subsidiary, PNSB was served with a writ of summon by C.G.E Utilities (M) Sdn Bhd (CGE) for the sum of RM84,466,976.8 for works carried out at the 26 water treatment plants under the PCCA, late interest charges as at 31 December 22 and other costs. On 23 October 23, PNSB and CGE reached an agreement to amicably resolve the dispute through a Deed of Settlement which entails the bringing forward of the expiry date of the Operation & Maintenance Sub-Contract between PNSB and CGE (OMSC) from 31 December 22 to 31 December 24 and the withdrawal of all legal cases, as well as the payment of all outstanding sums to CGE in accordance with a schedule of payment. INDUSTRY OUTLOOK The Eighth Malaysia Plan (8MP), which covers the years 21 to 25 has allocated RM3.9 billion towards the development of the country s water resources, an increase of 43% over the amount provided under the previous Malaysia Plan. As demand for water for domestic and industrial use is expected to increase by 5.4% per annum during the 8MP period and the national water supply coverage is expected to increase to 95%, the Government s attention will be focused on longterm water resources planning and development. The Government aims to make the management of water resources more efficient, so that the nation will have an adequate supply of safe water, by continuing with the process of corporatising or privatising state water authorities. As we grow and develop our business, we are mindful that we need to play our part towards the proper management of the nation s water resources. As elaborated in our Operations We are confident that we will be able to operate and manage the 26 water treatment plants which we will takeover from CGE on 1 January 25 since PNSB has the technical and management expertise built over the years. Our Management is in the midst of finalising a blueprint action plan to assume the operation and management responsibilities of the 26 water treatment plants from CGE. This will ensure that the water treatment plants continue to operate smoothly without any disruption or cause any inconvenience to the consumers after PNSB s takeover on 1 January 25. Post takeover, we are confident that the overall operating expenditure of the 26 water treatment plants could be reduced. YBhg Tan Sri Rozali Ismail, Executive Chairman 33 Puncak Niaga Holdings Berhad Annual Report 23

33 Executive Chairman Speaks Review and Health, Safety & Environmental Report, we are continually working towards ensuring this through our commitment to quality, safety and environmental management at our water treatment plants and dams. Our research and development efforts as well as our investment in information technology support our drive towards management of water resource and improved water quality. We have through our Sungai Selangor Phase 2 (SSP2) Water Treatment Plant made a headway by being the first water treatment plant in the country to implement an Integrated Management System (IMS) comprising the Quality Management System ISO 91:2, Environmental Management System ISO 141:1996 and Safety Management System OHSAS 181:1999. On a broader national level, there are major issues relating to water that need to be resolved. Like all other natural resources, water is a finite resource even though renewable to a certain extent. The public has to be educated on the critical importance of conserving and managing our water resources. As a responsible corporate citizen, we continue to put in place various programmes to increase such understanding. It is also essential that our natural environment is protected to preserve the water catchment areas against pollution.we need to address this through our liaisons with the Federal and the State Government authorities. BUSINESS PROSPECTS PNHB Group s business prospects continue to be positive, in line with the projection that Malaysia s growth in real Gross Domestic Product (GDP) for the year 24 will be 5.5% to 6%. Domestic economic activities are expected to strengthen, with the Government s emphasis on reducing reliance on external demand, while domestic demand will increase at a rate of 4.7%. Services and manufacturing will continue to lead GDP growth, with greater focus on the services sector as Malaysia remains on track to attaining developed economy status. However, the agricultural sector will not be sidelined and will in fact be revitalised as the third engine of growth for the nation. The better economic prospects will translate into increased per capital income as well as purchasing power. For the water industry, it will mean higher consumption levels. To ensure the supply of clean water and reduce water losses, there is need to spend about RM2.5 billion and this includes the replacement of 6, km of old asbestos cement water pipes that were laid more than 3 years ago. It also needs to further develop the State s water infrastructure as water resources become fully utilised. Options being explored by the Government include the proposed implementation of inter-state and inter-basin water transfers, such as the Pahang-Selangor water transfer project. With our proven track record, our Group is in a good position to offer its expertise and resources to the Government in implementing these projects. Our Group should also benefit from the Federal Government s implementation of the National Water Resources Master Plan.With a 5-year horizon from 2 to 25 and a total cost estimate of RM52 billion, the Master Plan provides more opportunity for more privatisation of water treatment, distribution and management projects. The implementation of the Master Plan should proceed smoothly as the Federal Government is in the process of assuming the control of water management from the State Governments. Being at the forefront of the water industry, we would expect to be amongst the preferred companies to be given the responsibility of managing other privatised water projects. In addition to the proposed interstate raw water transfer to alleviate or overcome the water shortage, the Government will need to look into the possibility of utilising downstream of surface water source for industrial and non-drinking purposes, identifying potential groundwater sources and to improve water management by reducing non-revenue water and increasing public awareness on water conservation. Hence, there is tremendous opportunity for participation by our Group in the coming years in the areas of water supply engineering works and services. The outlook for our Group is therefore promising and we are optimistic about our future growth and prospects. Our strategic initiatives are in place so that we can capitalise on developments in the domestic and regional water industry. Going forward, as long as we continue to discharge our responsibilities efficiently and promote quality service to our customers, we will continue to be at the forefront of our industry. Puncak Niaga Holdings Berhad Annual Report 23 34

34 Executive Chairman Speaks CORPORATE ACHIEVEMENTS Year 23 was yet another year of acknowledgements and accolades, where our Group continued to receive several prestigious awards and certifications. Our achievements during the year under review have been laid out on pages 28 and 29 of the Annual Report. We are thankful to the various awarding bodies for recognising our hard work and efforts.this will indeed motivate and spur our enthusiasm in the participation of high level corporate competitions towards further raising our overall standards of excellence in the corporate conduct, management and operations of the Group. I also wish to take this opportunity to thank our valued customers, end-users and stakeholders for their confidence in us and to our associates and business partners, for the value created from our joint ventures, as well as to our suppliers and financiers for their continued support in our endeavours. Last but not least, our special thanks goes to the many government authorities and agencies, as well as nongovernmental organisations, who have contributed to our success. Together, we shall be able to meet the challenges for the financial year 24. ACKNOWLEDGEMENTS The Group maintained its position at the forefront of the water industry through the dedication and commitment of its employees. On behalf of the Board of Directors, I wish to extend my gratitude to all our employees for their contributions to the Group s performance and growth for the financial year 23. Tan Sri Rozali Ismail Executive Chairman 2 April 24 PNHB was a finalist at KPMG Shareholder Value Awards 22 on 7 August Puncak Niaga Holdings Berhad Annual Report 23

35 operations review SUNGAI SELANGOR PHASE 2 (SSP2) WATER TREATMENT PLANT The SSP2 Water Treatment Plant recorded a total production of million cubic metres of treated water in 23, an increase of 1.8% from the previous year.the average daily production for the year under review was million litres (22: million litres). As in previous years, there were no violations in treated water quality notwithstanding the adoption of the more stringent Revised National Standard for Drinking Water Quality 2 in January 23. Issues relating to quality, safety and the environment have always been amongst PNSB s top priorities. The Company s commitment to achieve best practices in these areas is reflected in its initiative to implement the Integrated Management System (IMS) at the SSP2 Water Treatment Plant. Certification for the first of the IMS systems, the Quality Management System ISO 91:2, was awarded by Lloyd s Register Quality Assurance SSP2 Water Treatment Plant Administration Building (LRQA) on 15 October 23. The new system replaced the ISO 92:1994 effective 15 December 23. The second management system, the Environmental Management System ISO 141:1996, was initiated in July 22 and accredited by LRQA on 31 October 23. The third stage of the IMS certification, the Safety Management System OHSAS 181:1999 was obtained in January 24. With the receipt of this certification, the SSP2 Water Treatment Plant has become the first water treatment plant in the country to have a fully implemented management system that integrates three critical aspects, i.e. quality, safety and the environment. WANGSA MAJU WATER TREATMENT PLANT Treated water production at the Wangsa Maju Water Treatment Plant during the year was million cubic metres, an increase of 3.% from the previous year, while average daily water production stabilised to 47 million litres (22: 45.6 million litres).there were also no violations in the treated water quality, despite the implementation of the more stringent Revised National Standard for Drinking Water Quality 2.With 1% plant availability throughout the year, the Wangsa Maju Water Treatment Plant continued to maintain its record of zero shutdown hours, a demonstration of the plant employees skills and capabilities. The Wangsa Maju Water Treatment Plant undertook the upgrading of its Quality Management System from version 1994 to version 2 concurrently with the SSP2 Water Treatment Plant and was awarded LRQA s ISO 91:2 on 15 October 23. WATER TREATMENT PLANTS UNDER THE PRIVATISATION CUM CONCESSION AGREEMENT (PCCA) In 23, the 26 water treatment plants (WTPs) under the PCCA achieved a total production of million cubic metres of treated water, an increase of 4.1% from 22. The total production of treated water in 23 was 13.6% above the designated quantity. Puncak Niaga Holdings Berhad Annual Report 23 36

36 operations review Refurbishment works at six WTPs during the year have also contributed to an improvement in the WTPs overall performance, despite 3,928.5 hours of shutdown during the year 23 (22: 4,166.4 hours).the main contributor to the shutdowns, comprising 59.2% of the total shutdown hours, was raw water violations attributed mostly from partial water treatment plants. The scheduled and unscheduled maintenance works and electrical power interruptions each accounted for 17.6% and 8.% of the total shutdown hours. The remaining shutdown hours in 23 were due to pipe bursts or leaks, mechanical and electrical breakdowns as well as rehabilitation and upgrading works. However, close coordination with the Government s Department of Environment, PUAS and other authorities have helped to expedite repair works and further mitigate shutdown hours at the WTPs. The Management uses the plant assessment programme to monitor the WTPs production capability and maintenance performance. Reports from a total of 312 audits together with the independent electrical competence engineers reports and the monthly mechanical and electrical corrective maintenance reports, are also used as a basis to assess the WTPs performance. DAM OPERATIONS PNSB continues to be responsible for the operation and maintenance of Sungai Langat, Klang Gates and Tasik Subang Dams. In line with the Company s emphasis on safety, PNSB conducted three major visual safety inspections in 23. The inspections, which covered all major structures of the dams, were to detect and investigate any dam safety deficiencies and to recommend appropriate corrective actions. Rainfall levels in the dams catchment areas are regularly monitored to assess the possibility of critical storage drawdown at any of the dams. In 23, total rainfall in the catchment area of the Sungai Langat Dam was 2,28.9 mm, the lowest recorded since 1997 and a decrease of 17.6% when compared to the ten-year average ( ) of 2,767. mm/year. At the Klang Gates Dam, total rainfall in the catchment area for the year under review was 2,577.3 mm, a decrease of 12.4% when compared to the ten-year average of 2,943. mm/year. However, the Meteorological Services Department has forecasted that the annual rainfall in these two catchment areas for 24 would remain at or above the average level. At the catchment area of the Tasik Subang Dam, a total rainfall of 2,679.4 mm was recorded for 23, an increase of 23.2% when compared to the nine-year average ( ) of 2,175. mm/year. The prevailing dam reservoir levels and an analysis of past inflows indicate that a storage crisis is not expected in the coming year. Prudence and good practices are exercised to ensure that the optimal amount of raw water is released to the water treatment plants. The three dams are equipped with the Dam Operations Control Curves to help dam operators in meeting the demand from the water treatment plants for raw water release besides conservation of dam water to prolong storage. The respective water treatment plants raw water demand is not expected to change in 24. Sungai Langat Dam 37 Puncak Niaga Holdings Berhad Annual Report 23

37 operations review INDIA WATER PROJECT In November 22, PNHB was part of a consortium that was awarded a water supply project, namely the Chennai Water Supply Augmentation Project 1 Package III, by the Chennai Metropolitan Water Supply and Sewerage Board, Tamil Nadu, India. The project, valued at RM234. million, involves the supply and laying of 114. km of water supply pipes, construction of a break pressure tank and seven new bridges for pipes river crossing, rehabilitation of seven existing bridges, as well as operation and maintenance for five years. As at end- December 23, 8% of the pipes have been laid and the construction phase of the works is targeted to complete by May 24, as scheduled. Pipe laying - India Water Project SABAH WATER PROJECT On 21 October 23, PNHB entered into a turnkey sub-contract agreement with Imej Warisan Sdn Bhd, whereby PNHB will undertake the planning, design, construction, supervision, testing and commissioning of works for Projek Pembinaan Loji/Kolam Takungan dan Paip Utama Telibong dan Telipok, Sabah. The project with a contract sum of RM313.5 million commenced on 21 October 23 and is expected to complete on 16 March 26. It entails the construction of a new intake and raw water pumping station, water treatment plant, off-river storage, three balancing/service reservoirs as well as 45 km of pipelines. When completed, the new water treatment plant and its associated works will cater for water supply to the Kota Kinabalu Industrial Park and the proposed development projects in Karambunai Peninsular, Pantai Dalit, Sepangar Bay and Jalan Sulaiman. RESEARCH AND DEVELOPMENT (R&D) Much of PNSB s R&D effort is focused on improving operating costs and increasing operational efficiency of the water treatment plants. In 23, PNSB expended close to RM4.7 million on R&D works. The main R&D works entails major refurbishments and upgrading of all the water treatment plants. Other R&D projects includes the trial run of a new polymer conducted at the SSP2 Water Treatment Plant which proved that the new polymer has superior process coagulation properties, which can bring about a potential cost saving of RM1.1 million a year and the study on a specialised treatment system to eliminate iron and manganese without adding chemicals to the water treatment process. SSP2 Water Treatment Plant Laboratory INFORMATION TECHNOLOGY (IT) Puncak Niaga recognises the importance of IT in increasing productivity and driving its business services forward.to continue projecting the desired image as a frontrunner in its industry sector, the Group has revamped its website with a new format that incorporates the latest technology for more efficient information retrieval by visitors to its website. The Puncak Niaga website now incorporates photographs and virtual tours of its water treatment plants.the site also provides information on the Group s services, projects and achievements, as well as its corporate statements and policies. Puncak Niaga Holdings Berhad Annual Report 23 38

38 operations review For increased efficiency in office administration, an in-house Vehicle Management System was developed to manage the administration of the Group s vehicles. The system tracks the movement of vehicles and monitors the maintenance and repair costs. Another system-related project initiated during the year under review was the development of a model for an Integrated Water Utilities System.The project is being driven by PNHB s impending takeover of the water distribution system in the State of Selangor and Federal Territories of Kuala Lumpur and Putrajaya through Syarikat Bekalan Air Selangor Sdn Bhd (SYABAS). The model will integrate a number of systems relating to customer information and billing, operations and maintenance, geographical information, supervisory control and data acquisition, and enterprise resource planning. The Group s anti-virus software was upgraded to the latest version to protect against systems damage and data corruption to the Group s IT system. CRISIS MANAGEMENT Given PNSB s critical role in supplying water to the country s hub, it is essential that the Company is able to respond quickly and effectively to any form of emergency, crisis or disaster, with minimal disruption to its business operations and without damaging its corporate image. The Puncak Niaga Group has in place the Group Crisis Management Plan and Water Treatment Plant Emergency Response Plan since 21.The Crisis Management Committee conducts evaluation, case studies and simulation exercises on a regular basis to assess the employees level of readiness and response capabilities to a crisis. OCCUPATIONAL SAFETY AND HEALTH Given the nature of work at the water treatment plants and dams, the safety and health of employees is of paramount importance to the PNHB Group. To oversee and organise safety and health programmes and activities, a Corporate Safety and Health Committee was established, supported by similar committees at various levels of the Group s operations. Safety-related programmes and activities are regularly conducted at all locations, which include drills, handling of fire-fighting equipment and providing first aid. Since August 23, safety information was disseminated to employees through articles in PNSB s quarterly inhouse newsletter, KITA. Corporate Safety Committee Meeting in progress 39 Puncak Niaga Holdings Berhad Annual Report 23

39 operations review HUMAN RESOURCE MANAGEMENT Puncak Niaga Group delivers an essential service to its customers. This service is performed conscientiously with high standards by a competent, committed and motivated workforce. The employees are compensated competitively at market rates. EMPLOYEES BENEFIT Employees are well taken care of through a range of benefits that includes Motivational Talk organised by the Sports Club comprehensive insurance coverage, interestfree computer, education and personal loans. Medical benefits are provided to employees as well as their dependants and cover outpatient treatment, hospitalisation, dental treatment and maternity expenses. During the year, 11 employees retired from the Group and the retirement benefit paid to them amounted to approximately RM12,. Funeral expenses ranging from RM1, to RM1,2 are also given out to the employee s immediate family in the event of demise of an employee. In total, the Group expended close to RM1.16 million on employees benefits for the financial year 23. The implementation of the five-year Employees Share Option Scheme since year 22 is also another benefit in recognition of long serving employees. TRAINING AND DEVELOPMENT With the Group s emphasis on knowledge and skills development, employees are regularly sent for in-house or external training and development programmes. In addition, employees are encouraged to set up Quality Control Circles (QCCs) which have proven to be an effective means for employees to develop their leadership, communication and problem-solving skills. The Group also benefits in terms of cost-saving measures adopted as a result of the QCCs, without compromising on quality and productivity. For the financial year 23, the Group spent RM3,838 on QCCrelated activities. PNSB s QCC programme for the period concluded with the QCC Prize-Giving Ceremony on 12 April 23 and the projects initiated by all 15 registered circles resulted in total cost savings of RM1.4 million, with the biggest cost-saving benefit of RM932,794 achieved by Operation Tag Team.The team s project involved a study on optimising the usage of polymer in water treatment process at the SSP2 Water Treatment Plant. As part of its drive towards establishing higher standards of quality in its operations, PNSB supports efforts by the National Productivity Corporation (NPC) to promote QCCs.The Company participated in the QCC Mini and Regional Conventions held on 1 April 23 and 9-1 June 23 respectively. PNSB s circles won one Gold Award and two Silver Awards at the QCC Mini Convention 23 and three Silver Awards at the QCC Regional Convention 23 (Central). Puncak Niaga Holdings Berhad Annual Report 23 4

40 operations review EMPLOYEE UNIONS PNSB s Executive Union is currently in negotiation with the Company on its first Collective Agreement. The negotiations are expected to conclude by August 24. The first Collective Agreement with PNSB s Non-Executive Union expired on 31 December 23 and the Management is in the midst of negotiations on the second Collective Agreement with the Non-Executive Union. SEXUAL HARASSMENT Since the establishment of the Group s Sexual Harassment Policy in 21, no cases of sexual harassment has been reported in the Group. During the year, the Protective Services Department conducted a session on Overcoming Crime Against Women for the female employees through a Saturday Encounter Session. SECURITY SERVICES Given that the water treatment plants and dams under PNSB s management are the nation s key strategic assets, PNSB maintains its own security personnel to protect these installations. In addition, an electronic security system incorporating digital video surveillance is also set up at the Wangsa Maju Water Treatment Plant and intake. Plans are underway to install the electronic security system at the SSP2 Water Treatment Plant and the other water treatment plants. Our security personnel are required to undergo vigorous training and bi-yearly physical tests on their level of fitness and readiness to ensure that they are able to discharge their duties effectively and efficiently. EMPLOYEE WELFARE Foster Parent Programme The Foster Parent Programme involving the Management and the water treatment plant employee was initiated as a platform to facilitate close relationship and two-way communication between employees at the Company s Headquarters and the water treatment plants.the programme has provided a means by which employees at the water treatment plants may channel their problems and difficulties to Management, who in turn has gained a better understanding of the roles and responsibilities of these employees. For the year 23, a number of activities were carried out under the Foster Parent Programme. Gotong- Royong community projects involving the beautification of landscapes were organised at a total cost of about RM52,. A children s playground costing approximately RM17, was constructed at the Bernam River Headworks Water Treatment Plant. During the festive seasons, employees at the water treatment plants were given gifts, with a total value of approximately RM23, through their respective foster parents as a gesture of appreciation from the Management. 41 Puncak Niaga Holdings Berhad Annual Report 23

41 operations review Staff Quarters The Quarters Committee looks into the housing needs and welfare of employees at the water treatment plants, as well as to administer the quarters facilities and amenities. During the year under review, the Committee continued to update its inventory on all quarters at the water treatment plants and its occupants, and processed a total of 24 applications for new quarters or transfers.the Committee also settled issues relating to utility bills and vacating of units due to ineligibility arising from retirement, etc. Sports Club Sports competitions and tournaments organised by the Kelab Sukan dan Kebajikan Puncak Niaga (Sports Club) during the year under review included bowling, badminton, volleyball, fishing and other in-door games. The Sports Club Religious Bureau celebrated events such as Israk and Mikraj and organised functions for the recitation of Yaasin. During the Ramadhan month, the Bureau held breaking of fast and Tarawih functions at a number of water treatment plants. Fishing Competition at Green Paradise Fishing Pond, Templer Park, Rawang The Women s Bureau organised two major programmes in 23, i.e. a fishing competition and a self-defence programme, during which a donation of RM1, to the Association of Muslim Single Mothers, Federal Territory/Selangor was made.the donation was presented by the patron of the Women s Bureau,YBhg Puan Sri Faridah Idris, the wife of the Executive Chairman. Self-defence programme organised by the Women s Bureau for all female employees Puncak Niaga Holdings Berhad Annual Report 23 42

42 operations review SHARING OUR VISION The year 23 proved to be yet another successful year for the Puncak Niaga Group as it continues to be at the forefront of the water industry in Malaysia. Given the Group s stature within its industry and the wider business community, the Executive Chairman, YBhg Tan Sri Rozali Ismail, is often invited to share Puncak Niaga s vision and experiences, as well as his perspectives on business in general, at conferences. During the year under review, papers were presented by the Executive Chairman or his representatives at the following events: An Update On The Privatisation Of The Water Industry Making The Most Of Investment Opportunities In Malaysia, Malaysia Infrastructure Conference, February 23; The Impact Of GATS On Local Water Corporation, Civil Society Discussion On Commodification And Privatisation Of Water Resources In The WTO Environment, 8 March 23; Future Direction Of Water Management In Malaysia,World Environment Day Sustainable Water Management And The Media, 5 June 23; Privatisation Of Water Supply Projects, Course On Managing Privatisation, 17 July 23; and Meningkatkan Profesionalisme Melayu Melalui Pendidikan, Konvensyen Pendidikan Melayu 23, 11 Oktober 23. View of the Klang Gates Dam 43 Puncak Niaga Holdings Berhad Annual Report 23

43 CORPORATE SOCIAL RESPONSIBILITY It has always been Puncak Niaga s mission to be a good corporate citizen driven by a social conscience that strives to make a difference in the lives of those who are less fortunate. CONTRIBUTING TO SOCIETY Annually, Puncak Niaga sets aside a budget to support worthy causes and in 23, a total of RM4.36 million was contributed to various religious and educational foundations, youth, sports and entrepreneurial associations and other charities. Some of the contributions made during the year under review were: Three computers to Sekolah Kebangsaan Sungai Merab Luar, Dengkil, Selangor; RM1, to the Association of Muslim Single Mothers, Federal Territory/Selangor; RM1, to Tuanku Abdul Rahman University Fund for a new campus in Perak; RM1, to a charity programme, co-organised by Puncak Niaga and seven other companies operating in the State of Selangor, which raised a total of RM28, for the under privileged communities in the state; RM5, sponsorship to the Malaysia Batik Crafted for the World, a programme initiated by YAB Datin Seri Endon Mahmood to promote Malaysian batik; RM2, to the building fund of the Asian Institute of Medical, Science and Technology, Perak. A charity programme, co-organised by Puncak Niaga and seven other companies operating in the State of Selangor, which was officiated by the DYMM Sultan of Selangor. ASSISTING THE COMMUNITY Being the leading water specialist company in the country, we have an obligation to increase public awareness on the importance of protecting and conserving our natural resources and the environment. As children and young people can act as catalysts to bring about a change in attitude towards the environment in general and river pollution in particular, we believe that one of the best ways of creating this awareness is through educational programmes for the younger generation. Some of the mainstream educational programmes organised by Puncak Niaga are: Educational Outreach Programme: Educates the young on the importance of river preservation to ensure continuous supply of clean water as well as to foster a closer rapport between Puncak Niaga and the community within our areas of operations.ten outreach programmes were held in 23 where Senior Management of the Company would go to the respective primary schools to give talks on river and environment preservation. Educational Outreach Programme No. 32 Puncak Niaga Holdings Berhad Annual Report 23 44

44 CORPORATE SOCIAL RESPONSIBILITY River Rescue Brigade: There are currently 1,285 members from 56 participating primary schools in the State of Selangor and the Federal Territory of Kuala Lumpur. In 23, two programmes were organised to educate the school children on the importance of potable water production, the effects of river pollution and how to counter its threat. Public Visits to Water Treatment Plants (WTPs): We arranged 23 visits by various groups to our WTPs in 23. Visitors were educated on the water treatment processes and the problems inherent in treating polluted water. To support the efforts of Malaysia World Wildlife Fund in increasing public awareness on the importance of environmental conservation, we gave a RM1, sponsorship for the canoe race held at Lake Titiwangsa, Kuala Lumpur on 6 April 23. Our employees also participated in the race and emerged as champion. SUPPORTING NATIONAL AND STATE EVENTS In the spirit of Malaysia Boleh, Puncak Niaga supports various events organised by the Federal and State Governments to mark special occasions.the major events that we participated in during the year under review were: Showcase Exhibition in conjunction with the Non-Aligned Movement Conference (18-26 February); Maal Hijrah 1424 celebration at Bukit Jalil Stadium officiated by our King (4 March); National Water Day, during which we held an Open Day for the public to visit us at the Wangsa Maju Water Treatment Plant (5-6 April); National Maulidur Rasul celebration at Stadium Putra, Bukit Jalil, where 1 of our employees participated in the procession carrying a banner with the title Bersama Hayati Keindahan Islam (14 May); National Labour Day celebration at Stadium Putra, Bukit Jalil (17 May); Launching ceremony of Jalur Gemilang in conjunction with the National Day celebration at Dataran Shah Alam (16 August); National Day parade at Dataran Shah Alam where 4 of our employees participated in the march pass (3 August). CARING FOR OUR EMPLOYEES We believe that employees are the backbone contributing to the success of any organisation. At Puncak Niaga, we recognise that our employees are part of that belief and it is our duty to motivate and care for their general well-being.therefore, we have put in place, an Employees Welfare Programme to help achieve this objective, such as: Foster Parent Programme to create closer relationship and two-way communication between employees at Headquarters and the water treatment plants; Staff Quarters Committee to look into the housing needs and welfare of employees at the water treatment plants, as well as to administer the quarters facilities and amenities; Puncak Niaga s Sports Club to organise events and functions throughout the year, providing employees with opportunities for leisure and recreational activities; Women s Bureau to look after the welfare of our female employees. RECEIVING RECOGNITION On 14 June, 23 Puncak Niaga was given due recognition for its corporate social responsibility contributions by the Institute of Public Relations Malaysia.Two Crystal Awards was bestowed on the Company in recognition of its River Rescue Brigade under the Environmental Relations Category and the Educational Outreach Programme under the Voluntary Relations Category. 45 Puncak Niaga Holdings Berhad Annual Report 23

45 Corporate Calendar of Events 16 JANUARY 23 YBhg Tan Sri Rozali Ismail, Executive Chairman of Puncak Niaga a Top 1 Nominee for the Ernst & Young Entrepreneur of the Year - Malaysia 22 (Master Enterpreneur Category). 4 MARCH 23 Puncak Niaga participated in the Ma al Hijrah celebration at Stadium Bukit Jalil. 8 MARCH 23 Ir Lee Miang Koi presented a paper on The Impact Of GATS On Local Water Corporation at the Civil Society Discussion On Commodification And Privatisation Of Water Resources In The WTO Environment. YBhg Tan Sri Rozali Ismail receiving the Ernst & Young Enterpreneur of the Year - Malaysia 22 - Top 1 Nominee under the Master Enterpreneur Category, 16 January FEBRUARY 23 In conjunction with Hari Raya Aidil Adha, Puncak Niaga s Sports Club organised a Qurban Programme at the Sungai Langat Water Treatment Plant FEBRUARY 23 YBhg Tan Sri Rozali presented a paper on An Update On The Privatisation Of Water Industry - Making The Most Of Investment Opportunities In Malaysia at the Malaysia Infrastructure Conference FEBRUARY 23 Puncak Niaga participated in the NAM Showcase Malaysia Exhibition held during the Non-Aligned Movement Conference from February MARCH 23 Puncak Niaga donated 3 computers to Sekolah Kebangsaan Sungai Merab Luar, Dengkil, Selangor in conjunction with the Educational Outreach Programme No APRIL 23 3 QCC teams from Puncak Niaga participated in the QCC Mini Convention 23 organised by the National Productivity Corporation. The teams bagged a Gold Award and 2 Silver Awards at the Convention. 5 6 APRIL 23 In conjunction with the National Water Day, Puncak Niaga organised an Open Day at Wangsa Maju Water Treatment Plant for the public. 6 APRIL 23 Puncak Niaga emerged as champion in the Race For Survival, a canoe race organised by WWF Malaysia to promote public awareness on environmental conservation. 2 FEBRUARY 23 Puncak Niaga received the Asiamoney Corporate Governance Poll 22 Award for Best Corporate Governance Standards in the Utilities Sector in Malaysia organised by the Asiamoney Magazine at The Ritz Carlton Millennia Hotel, Singapore. Puncak Niaga team in action during the Race for Survival organised by WWF Malaysia, 6 April 23 Puncak Niaga Holdings Berhad Annual Report 23 46

46 Corporate Calendar of Events 12 APRIL 23 Prize-giving ceremony for the winners of the QCC 21/22 Project was held at Puncak Niaga s Headquarters. 14 MAY 23 Puncak Niaga participated in the march pass for the National Maulidur Rasul celebration at Stadium Putra, Bukit Jalil. 17 MAY 23 Puncak Niaga participated in the National Labour Day 23 celebration officiated by the former Prime Minister, YABhg Tun Dr Mahathir Mohamed at Putra Stadium, Bukit Jalil. QCC 21/22 Project Prize-giving Ceremony, 12 April APRIL 23 In conjunction with Secretaries Week, Puncak Niaga hosted a hi-tea celebration at The Regent Hotel, Kuala Lumpur for its secretaries. 22 MAY 23 The Sports Club of Puncak Niaga held a Maulidur Rasul celebration at the Bukit Nanas Water Treatment Plant. 24 MAY 23 Friendly bowling match between RTM and Puncak Niaga at Mid-Valley Megamall. 5 JUNE 23 Ir Lee Miang Koi presented a paper entitled Future Direction Of Water Management In Malaysia at the World Environmental Day - Sustainable Water Management And The Media organised by the Malaysian Centre for Environmental Communicators. Secretaries Week at Regent Hotel, 12 April APRIL 23 Puncak Niaga donated RM1, to the Tuanku Abdul Rahman University Fund through MCA s Huaren Education Foundation. World Environmental Day - Sustainable Water Management And The Media, 5 June JUNE 23 3 QCC teams from Puncak Niaga participated in the QCC Regional Convention 23 (Central) and all 3 teams won Silver Awards. Donation to the Tuanku Abdul Rahman University Fund, 28 April Puncak Niaga Holdings Berhad Annual Report 23

47 Corporate Calendar of Events 14 JUNE 23 Puncak Niaga won 2 Crystal Awards from the Institute of Public Relations Malaysia (IPRM), one under the Environmental Relations Category for the River Rescue Brigade Programme and the other under the Voluntary Relations Category for the Educational Outreach Programme. 25 JUNE 23 PNHB s 6th Annual General Meeting at the Kuala Lumpur Golf & Country Club. PNHB s 6th Annual General Meeting, 25 June 23 IPRM s Crystal Awards Ceremony, 14 June JUNE 23 Working visit by YBhg Tan Sri Rozali Ismail, Executive Chairman and YB Dato Yap Pian Hon, Wakil Parlimen Serdang to the Cheras Mile 11 Water Treatment Plant to view the progress of construction of the weir. 27 JUNE 23 In conjunction with Sekolah Menengah Jalan Kebun s Curriculum Carnival, Puncak Niaga presented a Waterbox demonstration to educate the students on the various water treatment processes. 28 JUNE 23 Friendly bowling match between TV3 and Puncak Niaga at Mid-Valley Megamall. Working visit to Cheras Mile 11 Water Treatment Plant, 18 June JUNE 23 9th Annual General Meeting of the Sports Club of Puncak Niaga held at Stadium Shah Alam. Bowling Match with TV3, 28 June 23 3 JULY 23 Working visit by Selangor State EXCO member to Cheras Mile 11 Water Treatment Plant to view the progress of the construction of the weir, as an alternative source of raw water. 15 JULY 23 Factory visit by CHG Plywood Sdn Bhd, a timber logging company to the Cheras Mile 11 Water Treatment Plant to discuss on steps to prevent contamination in Sungai Cheras. Puncak Niaga Holdings Berhad Annual Report 23 48

48 Corporate Calendar of Events 17 JULY 23 YBhg Tan Sri Rozali Ismail presented a paper entitled Privatisation Of Water Supply Projects at the Managing Privatisation Course. 7 AUGUST 23 PNHB was shortlisted as a finalist for the KPMG Shareholder Value Awards SEPTEMBER 23 Puncak Niaga launched an Environmental Awareness Campaign amongst factory owners at Sungai Langat and Sungai Cheras water catchment areas to educate them on the impact of contamination to the environment. 16 AUGUST 23 Puncak Niaga participated in the Jalur Gemilang launching ceremony held in conjunction with the National Day celebration at Selangor. 23 AUGUST 23 Visit by National Productivity Corporation (NPC) officials to SSP2 Water Treatment Plant, Bukit Badong. Environmental Awareness Campaign, 11 September SEPTEMBER 23 Emergency drill at the SSP2 Water Treatment Plant to assess the level of readiness, capability and effectiveness of the staff in handling emergency situations. Visit by NPC officials to SSP2 Water Treatment Plant, 23 August 23 3 AUGUST 23 Puncak Niaga participated in the National Day 23 midnight march pass at Dataran Shah Alam, Selangor. Emergency drill, 13 September SEPTEMBER 23 Puncak Niaga donated RM2, to the Asian Institute of Medical, Science and Technology building fund. 46th National Day celebration, 3 August Puncak Niaga Holdings Berhad Annual Report 23

49 Corporate Calendar of Events 23 SEPTEMBER 23 Puncak Niaga participated in the Towards Efficient Water And Sewerage Management forum organised by AFFIN-UOB Securities Sdn Bhd. 5-6 OCTOBER 23 Puncak Niaga participated in the Water Management And Sanitation Technology Exhibition organised in conjunction with World Habitat Day 23. Towards Efficient Water And Sewerage Management forum, 23 September SEPTEMBER 23 PNHB participated in the JP Morgan Malaysia Access Day at JP Morgan Securities Ltd Office, in Singapore. 3 OCTOBER 23 Puncak Niaga won the Gold Merit Award and Gold Award in the OSH Award 22 competition organised by the Malaysian Society for Occupational Safety and Health (MSOSH). Water Management And Sanitation Technology Exhibition, 5-6 October OCTOBER 23 Puncak Niaga s Women s Bureau together with the Women Sports & Fitness Foundation Malaysia jointly conducted a self-defense programme for all female employees. Puncak Niaga also donated RM1, to the Association of Muslim Single Mothers, Federal Territory/Selangor. OSH Award 22 Ceremony, 3 October 23 Cheque presentation to the Association of Muslim Single Mothers, Federal Territory/Selangor by YBhg Puan Sri Faridah Idris, wife of the Executive Chairman, 11 October 23 Puncak Niaga Holdings Berhad Annual Report 23 5

50 Corporate Calendar of Events 11 OCTOBER 23 Puncak Niaga participated in the Program Gotong- Royong Perdana, organised by the Kajang Municipal Council in collaboration with Lembaga Urus Air Selangor at Pekan Batu 14, Hulu Langat. 4 DECEMBER 23 PNHB received a Certificate of Merit under the Construction & Infrastructure Project Companies Category at the National Annual Corporate Report Awards (NACRA) 23 dinner. Puncak Niaga donated RM5 to Sekolah Kebangsaan Tun Abdul Aziz Majid at the Program Gotong-Royong Perdana, 11 October 23 National Annual Corporate Report Awards (NACRA) 23, 4 December OCTOBER 23 YBhg Tan Sri Rozali Ismail presented a paper entitled Meningkatkan Profesionalisme Melayu Melalui Pendidikan at the Konvensyen Pendidikan Melayu NOVEMBER 23 Puncak Niaga donated a sum of RM1, to the under privileged at the Majlis Amal Warga Korporat Prihatin Selangor at Kompleks Muhibah, Kota Damansara. The event was officiated by the DYMM Sultan Selangor, Sultan Sharafuddin Idris Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Al Haj. 16 DECEMBER 23 Puncak Niaga participated in the Prime Minister s Hibiscus Award 22/ DECEMBER 23 Puncak Niaga contributed RM5, to the Yayasan Budi Penyayang Malaysia in support of the Malaysian batik industry at the Malaysia Batik Crafted For The World officiated by the Prime Minister s wife,yab Datin Seri Endon Mahmood. Majlis Amal Warga Korporat Prihatin Selangor, 18 November Puncak Niaga Holdings Berhad Annual Report 23

51 Newspaper clippings Puncak Niaga Holdings Berhad Annual Report 23 52

52 Newspaper clippings 53 Puncak Niaga Holdings Berhad Annual Report 23

53 Shaping A Better Tomorrow Puncak Niaga Holdings Berhad Annual Report Puncak Niaga Holdings Berhad Annual Report 23

54 Statement on Corporate Governance The Board of Puncak Niaga has always viewed corporate governance as pivotal to the success of the Group s business and has adopted corporate governance principles even before the inception of the Malaysian Code on Corporate Governance (the Code) in July 21.The Board remains unreservedly committed to applying and ensuring that the Group complies with the principles and best practices of corporate governance as set out in the Code. Puncak Niaga s sincere and relentless pursuit of exemplary corporate conduct has time and again been given due recognition by the regulatory authorities as evidenced by it being awarded the inaugural KLSE Corporate Excellence Award 2 for the Main Board and KLSE Corporate Sectoral Award 2 for the Main Board Infrastructure Project Companies category in year 21 and more recently on 13 February 24, the KLSE Corporate Sectoral Award 23 for the Main Board Infrastructure Project Companies category as a repeat recipient. During the year 23, a Board Charter was formulated and adopted by the Board as a guidance on how business is to be conducted by the Company in line with international best practices and standards of good corporate governance. For the same purpose, the Group continues to refine and revamp its financial objectives, goals, policies and procedures, controls and risk management framework to meet the evolving corporate environment. The Board of Puncak Niaga is therefore pleased to report on how the Group has applied the principles of the Code and best practices of corporate governance as set out in the Code during the year 23. BOARD OF DIRECTORS (A) THE BOARD With the adoption of the Board Charter, the Board members, whether acting in their individual capacities or as a whole, have the common objective of ensuring that the Vision and Mission of the Company as set on page 9 of the Annual Report are achieved. The Board members are aware of their fiduciary duties and responsibilities and the various legislations and regulations affecting their conduct.they take cognizance that they are expected to act in a professional manner and as such, take full responsibility for the performance of the Company and of the Group. The roles of the Executive Chairman and Executive Vice Chairman are separate, each with responsibilities clearly divided between them to ensure a balance of power and authority so that no one individual has unfettered powers of decisionmaking. Their respective roles together with the roles of the Executive Directors and Independent Non-Executive Directors are spelt out in the Board Charter. YB Tan Sri Dato Seri Dr Ting Chew Peh is the Company s Senior Independent Non-Executive Director, to whom shareholders concerns may be conveyed. (B) BOARD COMPOSITION There was no change in the Board s composition during the year 23. However on 1 March 24, upon the recommendation of the Nomination Committee, Tuan Syed Danial Syed Ariffin was appointed to the Board of both PNHB and PNSB as Executive Director, Operation. Puncak Niaga Holdings Berhad Annual Report 23 56

55 Statement on Corporate Governance Tuan Syed Danial is a Civil Engineer by profession and has been with the Group for 8 1/2 years, overseeing the management and operation of water treatment plants. His appointment complements the effectiveness of the Board in discharging its duties and responsibilities. With the appointment of Tuan Syed Danial, the Board now comprises eight members. Five are Executive Directors and three are Independent Non-Executive Directors. Though the number of Executive Directors has increased from four to five, the Board balance of at least 1/3 Independent Non-Executive Directors is still maintained. All Board members are individuals of caliber and credibility. They are professionals from diverse disciplines, qualifications and experiences in law, engineering and accounting. Together, they play an instrumental role to the Group s continued growth and success.their profiles are set out on pages 18 to 23 of the Annual Report. (C) BOARD MEETINGS In year 23, the Board met six times at the Board Room on 26th Floor, Suite , Plaza See Hoy Chan, Jalan Raja Chulan, 52 Kuala Lumpur. The meetings were held as follows: Day Date Time Tuesday 25 February p.m. Thursday 13 March p.m. Wednesday 23 April p.m. Wednesday 21 May p.m. Wednesday 2 August noon Wednesday 19 November a.m. The details of the respective Directors attendances for the above meetings are as follows: Name of Director Designation No. of meetings attended % Tan Sri Rozali Ismail Executive Chairman 6 1 Ruslan Hassan Executive Vice Chairman / 6 1 Executive Director, Corporate Affairs Mat Hairi Ismail Executive Director, Finance 5 83 Lee Miang Koi Executive Director, Project 6 1 & Business Development Abdul Majid Abdul Karim Independent Non-Executive 5 83 Director Tan Sri Dato Hari Independent Non-Executive 6 1 Narayanan Govindasamy Director Tan Sri Dato Seri Independent Non-Executive 6 1 Dr Ting Chew Peh Director The day-to-day administration, management and operation have been delegated to the Board of PNSB which met eight times in year 23, to deliberate and approve on annual budgets, capital investments, project and business development, internal controls and changes in the Group s policies and procedures. 57 Puncak Niaga Holdings Berhad Annual Report 23

56 Statement on Corporate Governance (D) SUPPLY OF INFORMATION AND ACCESS TO ADVICE Except under exceptional circumstances, Board members are given at least seven days notice before any Board Meeting is held and the Board papers are circulated to the Board members at least two working days prior to the date of the Meeting. Where necessary, Company personnel will be called upon by the Board during the Board Meetings to present and to clarify their papers. Board members are expected to participate fully, frankly and constructively in all Board deliberations and bring the benefit of their particular knowledge, skills and abilities to the Board. Where issues involve conflicts of interest, the interested Director abstains from discussing or voting on the matter. All Directors have full and unlimited 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 all familiar and aware of their duties and responsibilities as well as the implementation of good corporate governance and compliance practices in the Group. (E) APPOINTMENT OF DIRECTORS All appointments to and removals from the Board are approved by the Board upon the recommendation of the Nomination Committee. 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. (F) RE-ELECTION OF DIRECTORS Article 98 and Article 99 of the Company s Articles of Association provide that 1/3 of the Directors shall retire from office at each Annual General Meeting and all Directors shall retire from office at least once every three years but may offer themselves for re-election. Article 13 of the Company s Articles of Association provides that any person appointed as an additional Director shall hold office only until the next following ordinary General Meeting of the Company and shall be eligible for re-election. Upon the recommendation of the Nomination Committee, the following Directors shall retire at the Seventh Annual General Meeting of the Company and had offered themselves for re-election: (i) Ir Lee Miang Koi, retiring pursuant to Article 98; (ii) En Abdul Majid Abdul Karim, retiring pursuant to Article 98; (iii) YB Tan Sri Dato Seri Dr Ting Chew Peh, retiring pursuant to Article 99; and (iv) Tuan Syed Danial Syed Ariffin, retiring pursuant to Article 13. Puncak Niaga Holdings Berhad Annual Report 23 58

57 Statement on Corporate Governance (G) BOARD COMMITTEES The Board has delegated specific responsibilities to the Board Committees whose functions and authorities are spelt out in their respective terms of reference to assist the Board in the efficient and effective discharge of its duties. A brief summary of the various Board Committees as well as their composition are as follows: Name of Director Audit Remuneration Nomination Compliance, ESOS Committee Committee Committee Internal Option Control and Committee Risk Policy Committee TAN SRI ROZALI ISMAIL, Executive Chairman Chairman RUSLAN HASSAN, Executive Vice Chairman / Executive Director, Corporate Affairs Member Member MAT HAIRI ISMAIL Executive Director, Finance Member Member Member LEE MIANG KOI, Executive Director, Project & Business Development Member ABDUL MAJID ABDUL KARIM Independent Non-Executive Director Chairman Member Member TAN SRI DATO SERI DR TING CHEW PEH Independent Non-Executive Director Member Chairman Chairman Chairman TAN SRI DATO HARI NARAYANAN GOVINDASAMY Independent Non-Executive Director Member Member Member The Board Committees exercise transparency and full disclosure in their proceedings. Where applicable, issues are reported to the Board with the appropriate recommendations by the Board Committees. DIRECTORS REMUNERATION (A) LEVEL AND MAKE UP OF REMUNERATION The Company has a formal procedure to determine the remuneration of each member of the Board which is the responsibility of the Remuneration Committee to recommend. Remuneration of the Executive Directors are performance-linked while remuneration paid to the Non-Executive Directors reflect their contributions and the time spent attending to the Company s affairs. (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.The respective Directors abstain from discussing and voting on their remuneration at the Board Meetings. 59 Puncak Niaga Holdings Berhad Annual Report 23

58 Statement on Corporate Governance (C) DISCLOSURE OF DIRECTORS REMUNERATION The details of the remuneration of each Director of the Company during the financial year ended 31 December 23 are as follows: Name of Director Fees Salaries Bonuses Benefits- Allowance Employees Total in-kind Provident Fund TAN SRI ROZALI ISMAIL RUSLAN HASSAN MAT HAIRI ISMAIL LEE MIANG KOI ABDUL MAJID ABDUL KARIM , - 53, TAN SRI DATO HARI NARAYANAN GOVINDASAMY , - 31, TAN SRI DATO SERI DR TING CHEW PEH , - 34, TOTAL , - 118, The remuneration packages of the Directors of the Group for the financial year ended 31 December 23 with categorisation into the appropriate components are as follows: Independent Remuneration Packages Executive Directors Non-Executive Directors (RM) (RM) FEES - - SALARIES 2,732,56 - BONUSES - - BENEFITS-IN-KIND 113,55 - ALLOWANCE 742, , EMPLOYEES PROVIDENT FUND 428,28 - TOTAL 4,16, , Details of the Directors Remuneration at Company Level and Group Level for the financial year ended 31 December 23, in successive bands of RM5, are tabulated as follows: Company Level Group Level Range of Remuneration per annum No. of Executive No. of Non-Executive No of Directors Directors Directors RM1 to RM5, * RM5,1 to RM1, RM15,1 to RM2, RM2,1 to RM25, * RM6,1 to RM65, RM8,1 to RM85, RM85,1 to RM9, RM1,2,1 to RM1,25, * Directors who were appointed to the Group during the financial year ended 31 December 23. Puncak Niaga Holdings Berhad Annual Report 23 6

59 Statement on Corporate Governance (D) DIRECTORS SHARE OPTION As at 31 December 23, a total of 963, options were exercised by the Executive Directors under the Company s ESOS. (E) DIRECTORS TRAINING In year 23, the Directors attended various seminars and courses to keep themselves abreast with the latest developments in the legislations and for purposes of fulfilling the Continuing Educational Programme under Bursa Malaysia. SHAREHOLDERS The Group maintains effective communication with its shareholders and stakeholders through one to one or group dialogues, participation in investor conferences organised by local and foreign institutional houses, s, phone calls, Company General Meetings and other Company events. The Company s Investor Relations Policy & Report is set out on pages 75 to 78 of the Annual Report. ACCOUNTABILITY AND AUDIT (A) FINANCIAL REPORTING The Board takes responsibility in ensuring 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, 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 the accurate and timely release to Bursa Malaysia of the Group s quarterly and annual financial results. The half yearly results are also published in the local daily newspapers for the benefit of the investment community. (B) 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, 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 keep accounting records which discloses 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, The Board has the overall responsibility to take all steps as are reasonably open to them to safeguard the assets of the Group to prevent and detect frauds and other irregularities. 61 Puncak Niaga Holdings Berhad Annual Report 23

60 Statement on Corporate Governance (C) RELATIONSHIP WITH AUDITORS The Company maintains a professional relationship with its external auditors.a report by the Audit Committee together with its Terms of Reference is set out on pages 66 to 71 of the Annual Report. (D) INTERNAL CONTROL The Statement on Internal Control is set out on pages 64 and 65 of the Annual Report. OTHER COMPLIANCE INFORMATION (A) SHARE-BUY BACKS The Company did not purchase any of its own shares during the financial year ended 31 December 23. (B) OPTIONS,WARRANTS OR CONVERTIBLE SECURITIES During the financial year ended 31 December 23, a total of 11,888, options had been exercised and none of the warrant holders converted their warrants into ordinary shares. (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 23. (E) NON-AUDIT FEES During the financial year ended 31 December 23, the Group paid the following non-audit fees to the external auditors: (i) Tax advisory and compliance work - RM28,812 (ii) Review of non-financial reporting frame work - RM6, (iii) Other non-audit related service - RM2, (F) VARIATIONS IN RESULTS The Company s/group s audited results for the financial year ended 31 December 23 did not vary from the unaudited results which was announced to Bursa Malaysia on 26 February 24. (G) PROFIT GUARANTEE The Company does not provide profit guarantee to any parties. (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 23. Puncak Niaga Holdings Berhad Annual Report 23 62

61 Statement on Corporate Governance (J) MATERIAL CONTRACTS INVOLVING DIRECTORS AND SUBSTANTIAL SHAREHOLDERS During the financial year ended 31 December 23, neither the Company nor its subsidiaries entered into any material contracts or loan 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 23 are as follows: Date Nature of Contract Parties Consideration/ Mode of Satisfaction Relationship with Director/Substantial Shareholder 8 October 1994 Operation & Maintenance Agreement For Mandai Sari Sdn Bhd (Mandai Sari) to undertake the operation and maintenance of the 27 water treatment plants under the Privatisation Cum Concession Agreement (PCCA). Puncak Niaga (M) Sdn Bhd (PNSB) and Mandai Sari. PNSB to pay Mandai Sari a fixed monthly fee of RM41,667 as well as for treated water produced and supplied, which is measured in accordance with the provisions of the PCCA. Mandai Sari is a subsidiary of Central Plus (M) Sdn Bhd (CP), whereby CP is a substantial shareholder of Puncak Niaga Holdings Berhad (PNHB). 8 October 1994 Refurbishment Works Agreement For C.G.E. Utilities (M) Sdn Bhd (CGE) to undertake the refurbishment works for the 27 water treatment plants under the PCCA. PNSB, Mandai Sari and CGE. Contract sum of RM15 million which is being paid progressively to CGE based on physical progress and subject to verification by PUAS. Mandai Sari is a subsidiary of CP, whereby CP is a substantial shareholder of PNHB. 31 May 1995 Operation & Maintenance Sub-Contract For Mandai Sari to sub-contract the above Operation & Maintenance Agreement to CGE. PNSB, Mandai Sari, CGE and Compagnie General Des Eaux (now known as Veolia Water). Mandai Sari to pay CGE for treated water produced and supplied, which is measured in accordance with the provisions of the agreement. Mandai Sari is a subsidiary of CP, whereby CP is a substantial shareholder of PNHB. 25 September 23 Agreement For The Sale And Purchase Of Shares In Syarikat Bekalan Air Selangor Sdn Bhd (SYABAS). YBhg Tan Sri Rozali Bin Ismail (TSRI), Mat Hairi Bin Ismail (MHI), CP and PNHB. PNHB to acquire 7% equity interest in SYABAS for a total purchase price of RM38,9,84 upon SYABAS executing the Concession Agreement for the privatisation of the water supply services in the State of Selangor, Federal Territories of Kuala Lumpur and Putrajaya. TSRI is the Executive Chairman and substantial shareholder of PNHB through his 5% equity interest in CP. MHI is an Executive Director of PNHB and the younger brother of TSRI. STATEMENT OF GOING CONCERN Upon making due and reasonable enquiry into the affairs of the Group, the Board firmly believes that the Group shall continue to operate as a going concern business in the foreseeable future. 63 Puncak Niaga Holdings Berhad Annual Report 23

62 Statement On Internal Control INTRODUCTION The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders investments and the Group s assets. The Bursa Malaysia Listing Requirements requires Directors of 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 21, 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 Risk Management Policy & Report set out on pages 72 to 74 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 Divisions and Departments have clearly documented Procedures Manuals incorporating control procedures and the scopes of responsibilities and authorities. The Procedures Manuals are updated regularly to incorporate all elements necessitated by changes in the legislation, industry best practices and business dynamics. 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. 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. Puncak Niaga Holdings Berhad Annual Report 23 64

63 Statement On Internal Control The Compliance, Internal Control and Risk Policy Committee, which is chaired by YB Tan Sri Dato Seri Dr Ting Chew Peh, an Independent Non-Executive Director was established in October 21. 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 2, ensures transparency and competitive pricing in the award of contracts within the Group. 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. The Limits of Authority Policy was approved by the Board for implementation in April 23 and distributed to all Divisions and Departments within the Group in May 23. GUIDANCE FOR DIRECTORS OF PUBLIC LISTED COMPANIES Since the issuance of the Statement on Internal Control: Guidance for Directors of Public Listed Companies (Guidance) in December 2, the Group has 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 23, 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 approved by the Board of Puncak Niaga and reviewed by the external auditors. For and on behalf of the Board of Puncak Niaga Holdings Berhad, Tan Sri Dato Seri Dr Ting Chew Peh Chairman Compliance, Internal Control and Risk Policy Commitee 25 Febuary Puncak Niaga Holdings Berhad Annual Report 23

64 Audit Committee Report The Board of Directors of Puncak Niaga Holdings Berhad (PNHB) is pleased to present the report of the Audit Committee for the financial year MEMBERSHIP AND MEETINGS The Audit Committee comprises the following members and details of attendance of each member at Audit Committee Meeting held during the financial year 23 are as follows: Composition of Committee Number of Number of meetings held meetings attended % Encik Abdul Majid Abdul Karim Chairman/Independent Non-Executive Director Encik Mat Hairi Ismail Member/Executive Director, Finance YBhg.Tan Sri Dato Hari Narayanan Govindasamy Member/Independent Non-Executive Director YB Tan Sri Dato Seri Dr Ting Chew Peh Member/Independent Non-Executive Director The General Manager (Internal Audit), General Manager (Finance & Accounts) and other members of Senior Management attended these meetings upon the invitation by the Chairman of the Audit Committee. The Group s external auditors were also invited to attend all these meetings. 2. SUMMARY OF ACTIVITIES During the financial year 23, the Audit Committee carried out its duties as set out in the terms of reference. Other main activities carried out by the Audit Committee during the financial year included the following: FINANCIAL RESULTS Reviewed the quarterly and year-to-date unaudited financial results of the Group before tabling to the Board for consideration and approval. Reviewed the reports and the audited financial statements of the Company and of the Group together with the external auditors prior to tabling to the Board for approval. EXTERNAL AUDIT Reviewed the external auditors scope of work and audit plan for the year and made recommendation to the Board on their appointment and remuneration. Reviewed and discussed external auditors audit report and areas of concern highlighted in the management letter, including management s response to the concerns raised by the external auditors. Discussed on significant accounting and auditing issues, impact of new or proposed changes in accounting standards and regulatory requirements. Puncak Niaga Holdings Berhad Annual Report 23 66

65 Audit Committee Report INTERNAL AUDIT Reviewed the Internal Audit plan, programmes of resources requirements for the year and assessed the performance of the Internal Audit Department. Reviewed the Internal Audit reports which highlighted the audit issues, recommendation and the Management responses and directed actions to be taken by the Management to rectify and improve the system of Internal control. Monitored the implementation programmes recommended by the Internal Audit arising from its audits in order to obtain assurances that all key risks and control concerns have been fully addressed. RELATED PARTY TRANSACTION Reviewed the related party transactions entered into by the Company and the Group. 3. INTERNAL AUDIT FUNCTIONS The Group has an established Internal Audit Department which assists the Audit Committee in the discharge of its duties and responsibilities. The Internal Audit Department provides an independent assurance on risk management and internal controls. The audit focuses on regular and systematic review of the internal control and management information systems, including the system for compliance with applicable laws, regulations, rules, directives and guidelines. The annual audit plan of the Internal Audit Department which was developed on risk analysis approach was approved by the Audit Committee at the last Audit Committee Meeting of the preceding financial year. The scope of the Internal Audit Department s function covered the audit of adequacy of risk management, operational controls, compliance with established procedures, guidelines and statutory requirements and also the various computer application system and network of the Company and of the Group. The Internal Audit Department had conducted the evaluation of the system of internal control that encompassed the Group s governance, operations and information systems. The Internal Audit reports, which highlighted the internal controls weaknesses, were deliberated by the Audit Committee and the recommendations were duly acted upon by the Management. Examples of the key areas audited by the Internal Audit Department during the financial year 23 were the review on Risk of Lack of Clear Human Resources Strategy and Planning, Review on Risk of Failure of Information Technology System, Review on Risk of Dry-up, Pollutions and Leakages/Structural Collapse of the Dam and the review on the activities of PNSB s Quarters Committee. 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 67 Puncak Niaga Holdings Berhad Annual Report 23

66 Audit Committee Report 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.1Oversee 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. Puncak Niaga Holdings Berhad Annual Report 23 68

67 Audit Committee Report - 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 employee, 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. 69 Puncak Niaga Holdings Berhad Annual Report 23

68 Audit Committee Report 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. Puncak Niaga Holdings Berhad Annual Report 23 7

69 Audit Committee Report In addition to the Committee members, the Head of Internal Audit Department 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. 71 Puncak Niaga Holdings Berhad Annual Report 23

70 RISK MANAGEMENT POLICY & REPORT 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 21, 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 Senior Management in August 21, 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 21 has since then been fully implemented by the Management and employees of Puncak Niaga. Puncak Niaga Holdings Berhad Annual Report 23 72

71 RISK MANAGEMENT POLICY & REPORT COMPLIANCE, INTERNAL CONTROL AND RISK POLICY COMMITTEE (CICR) The establishment of the CICR was formalised by the Board in October 21.The members of the CICR comprise the following: Chairman : YB TAN SRI DATO SERI DR TING CHEW PEH Independent Non-Executive Director Members : ENCIK RUSLAN HASSAN Executive Vice Chairman (Head of Compliance, Internal Control and Risk Policy Committee) MDM TAN BEE LIAN Senior General Manager, Secretarial Department MR NG WAH TAR General Manager, Finance and Accounts Department ENCIK SONARI SOLOR General Manager, Internal Audit Department Secretary : ENCIK 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 23. A) 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: - Long-term and short-term strategies. - 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. 73 Puncak Niaga Holdings Berhad Annual Report 23

72 RISK MANAGEMENT POLICY & REPORT B) CICR ACTIVITIES MEETINGS HELD AND ISSUES COVERED During the year 23, the CICR held five meetings, of which three were chaired by YB Tan Sri Dato Seri Dr Ting Chew Peh (Chairman of CICR) and two were chaired by Encik Ruslan Hassan (Head of CICR). 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 regards 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.the main risks, controls and management actions are highlighted for the CICR to deliberate. 3. An update on risk audits completed by the Internal Audit Department. 4. 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 AND 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 Heads of Departments or their representatives, held a total of nine meetings between 29 April 23 and 2 July 23 to review the Group s Enterprise-Wide Risk Profile.The Group s Enterprise-Wide Risk Profile is reviewed annually to take into consideration changes in the business environment, strategies and functional activities of the Group. A detailed Board Paper on the Working Group s deliberations was submitted to the CICR and the PNHB Board. The Group s Enterprise-Wide Risk Profile was reassessed by the Working Group in early 24. DIVISIONAL AND DEPARTMENTAL RISKS The respective Heads of Divisions and Departments are responsible for assessing and managing their Divisional and Departmental risks. Using the Corporate Risk Scorecard software, the Heads of Divisions and Departments have submitted their detailed risk scorecard reports to the Risk Management Section after the end of each quarter. CORPORATE RISK SCORECARD SOFTWARE The Group utilises a risk management tool namely, the Corporate Risk Scorecard (CRS) software 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 and assists the Management of Puncak Niaga to successfully achieve their corporate objectives. Puncak Niaga Holdings Berhad Annual Report 23 74

73 INVESTOR RELATIONS POLICY & report 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: - perception on our Company s risk is reduced; - enhance feedback of our Company s performance; - our Company s share valuation becomes more realistic; - develop confidence in our Management team and management style; and - 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. 75 Puncak Niaga Holdings Berhad Annual Report 23

74 INVESTOR RELATIONS POLICY & report INVESTOR RELATIONS REPORT The Board is pleased to report on the investor relations efforts undertaken by Puncak Niaga during the year 23 as follows: DIALOGUES WITH INVESTORS The Top Management of Puncak Niaga actively participates in meetings, dialogues and briefings sessions with local and foreign investment groups. During the year 23, the Top Management held more than 6 dialogues and briefing sessions with existing and potential investors, research analysts and fund managers. Some of these dialogues resulted in the publication of articles and write-ups favouring the Company s securities. The Company was also invited to participate in the following investors conferences, both locally and regionally: Date 25 July 23 Event Investors Conference Organiser Citigroup and Smith Barney Venue The Ritz Carlton Millenia Hotel Singapore 23 September 23 Dialogue Session with Corporate Captains in the Water and Sewerage Industry of Towards Efficient Water And Sewerage Management Forum Affin-UOB Securities Sdn Bhd JW Marriott Hotel Kuala Lumpur 26 September 23 Malaysia Access Day JP Morgan Securities Ltd Republic Plaza Singapore 31 October 23 Malaysia Corporate Day Citigroup and Smith Barney The Ritz Carlton Millenia Hotel Singapore 2 November 23 ABN AMRO These Tiggers Do Bounce ABN AMRO Asia Securities (Singapore) Pte Limited Conrad Hotel Bangkok Thailand The outcome of the conferences were encouraging with the investors promising greater investment in the Company s securities.the Company s foreign shareholding rose from 2.69% in July 23 to 7.73% by end of 23.This reflects the foreign funds strong support and confidence in the Company generally and its Management. Puncak Niaga Holdings Berhad Annual Report 23 76

75 INVESTOR RELATIONS POLICY & report INVESTORS ACCESS TO INFORMATION The Company makes timely announcements to the Exchange on its quarterly financial results and all material developments of the Group. It also ensures that its Audited Accounts and Annual Report are completed and released within the stipulated timeframe required by the regulatory authorities. The Company ensures disclosure of information over and above the regulatory authorities disclosure requirements so that the investment community can make careful and informed investment decisions on the Company s securities. Shareholders and investors can access the Company s information at or through Bursa Malaysia s website at The Investor Relations Unit (IRU) also helps in the timely dissemination of the Group s latest announcements and corporate developments via s to the shareholders, investors and analysts who have registered themselves with the IRU. For the year 23, IRU ed 19 updates eg. announcements and write-ups on Puncak Niaga to the shareholders, investors and analysts. In turn, the IRU received 35 queries and feedbacks from the shareholders, investors and analysts. So far, the feedbacks received have been encouraging and many have expressed their satisfaction towards the Company s efforts in promoting investor relations through the IRU programme. Upon the request of the shareholders at the Company s AGM in 23, the Annual Report 23 has been produced in the form of CD-ROM in order to save cost and to be in tandem with the rapid development of information technology. Nevertheless, the Company has made available printed copies of the Annual Report in both English and Bahasa Malaysia versions, which will be given to the shareholders upon request. ANNUAL GENERAL MEETING (AGM) Puncak Niaga believes that the AGM is the best forum for the Management to foster better relationship with the Company s shareholders. As such, the Board ensures that the agenda for the AGM is precise and where required, explanations on special businesses and information on Directors seeking re-election are provided in the Notice of AGM so as to enable the shareholders or their proxies to prepare themselves for the AGM. In line with good corporate governance practices, the Management has been giving business presentations followed by a Question & Answer Session at its AGM so that its shareholders are updated on the Group s financial performances, business operations and developments. Besides giving the shareholders a better view of the Group s business progress, it also provides an opportunity for the shareholders to actively participate in the AGM by asking genuine and relevant questions related to the Group s business and to contribute ideas to the Company. The Question & Answer Session during the AGM promotes effective two-way communication between the Company and its shareholders. It is also Puncak Niaga s way of expressing We value your views in our pursuit to build long-term relationship with our shareholders. 77 Puncak Niaga Holdings Berhad Annual Report 23

76 INVESTOR RELATIONS POLICY & report SHAREHOLDERS AND INVESTORS DATABASE The IRU maintains a Register of Shareholders and Investors comprising particulars of shareholders, investors and analysts who wish to be regularly updated on the Group s corporate developments and performance via . For those who wish to be included in the IRU s Register, kindly us your contact information via investors@puncakniaga.com.my or write to us at Investor Relations Unit, c/o Secretarial Department, Puncak Niaga Holdings Berhad, Suite , 14th Floor, Plaza See Hoy Chan, Jalan Raja Chulan, 52 Kuala Lumpur. Similarly, to enable us to further improve on our level of operations and services to the community and the stakeholders, kindly forward your comments, views and concerns to the Company via our addresses at corpcom@puncakniaga.com.my for public enquiries and investors@puncakniaga.com.my for investors enquiries. EXCERPTS OF S RECEIVED BY THE IRU DURING THE YEAR 23..would appreciate if you could keep us posted on any upcoming Analyst Briefings received from a local institutional fund manager (May 23).congratulate you and your committee on the successful organisation of the last Annual General Meeting.The presentation was insightful. received from an individual shareholder (July 23) would like to be included into the distribution list of results, announcements... received from a Hong Kong based fund manager (August 23).NACRA 23, Congratulations. Glad to be part of it received from an individual shareholder (December 23) Puncak Niaga Holdings Berhad Annual Report 23 78

77 Quality Policy 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. 79 Puncak Niaga Holdings Berhad Annual Report 23

78 Distribution Schedule Of Equity SECURITIES & PROPERTY ORDINARY SHARES AS AT 26 APRIL 24 Authorised Capital : RM 1,,, Issued and Paid-Up Capital : RM 457,785, Nominal Value : RM 1. per ordinary share Holdings No. of Holders % of Holders Total Holdings % of Issued Capital less than , , 1, ,646, ,1 1, 6, ,898, ,1 1, 1, ,848, ,1 22,889,249 (less than 5% of issued capital) ,722, ,889,25 (5% of issued capital) and above ,66, TOTAL 9, ,785, 1. 3 Largest Shareholders As Per Record of Depositors No. of % of Issued Name of Shareholder Shares Held Capital 1. Central Plus (M) Sdn Bhd 77,24, Amsec Nominees (Tempatan) Sdn Bhd 4,, AmFinance Berhad For Central Plus (M) Sdn Bhd 3. Employees Provident Fund Board 27,419, AMMB Nominees (Tempatan) Sdn Bhd 17,26, AmTrustee Berhad For Central Plus (M) Sdn Bhd (7/914-8) 5. RHB Capital Nominees (Tempatan) Sdn Bhd 16,, Pledged Securities Account For Central Plus (M) Sdn Bhd (TSR 68155) 6. Lembaga Tabung Haji 14,23, Corporate Line (M) Sdn Bhd 13,31, Central Plus (M) Sdn Bhd 11,74, Malaysia Nominees (Tempatan) Sendirian Berhad 8,59, Great Eastern Life Assurance (Malaysia) Berhad (Par 1) 1. AmFinance Berhad 6,523, Pledged Securities Account For Central Plus (M) Sdn Bhd (SMART) 11. HLG Nominee (Tempatan) Sdn Bhd 5,23, PB Trustee Services Berhad For HLG Growth Fund 12. Botly Nominees (Tempatan) Sdn Bhd 4,418, Pledged Securities Account For Koon Yew Yin 13. HSBC Nominees (Asing) Sdn Bhd 4,249, BNY Brussels For The Great Eastern Life Assurance Co Ltd Puncak Niaga Holdings Berhad Annual Report 23 8

79 Distribution Schedule Of Equity Securities & Property 3 Largest Shareholders As Per Record of Depositors No.of % of Issued Name of Shareholder (continued) Shares Held Capital 14. Bumiputra-Commerce Nominees (Tempatan) Sdn Bhd 4,,.87 - Pledged Securities Account For Central Plus (M) Sdn Bhd (17152 JTRK) 15. Malaysian Assurance Alliance Berhad 4,, Malaysia National Insurance Berhad 3,544, Universal Trustee (Malaysia) Berhad 3,343, Cartaban Nominees (Tempatan) Sdn Bhd 3,228,5.7 - Amanah SSCM Nominees (Tempatan) Sdn Bhd For Employees Provident Fund Board (JF44) 19. Kumpulan Darul Ehsan Berhad 3,24, PAB Nominees (Tempatan) Sdn Bhd 3,173,.69 - Pledged Securities Account For Central Plus (M) Sdn Bhd (Jln Bunus) 21. Malaysia Nominees (Tempatan) Sendirian Berhad 3,97, Amanah SSCM Asset Management Berhad For Amanah Smallcap Fund Berhad (JM73) 22. Cartaban Nominees (Asing) Sdn Bhd 2,867,.63 - SSBT Fund G444 For Goldman Sachs Asia Portfolio 23. Cartaban Nominees (Asing) Sdn Bhd 2,837, State Street Australia Fund Q3VD For Fullerton (Private) Limited 24. Cimsec Nominees (Tempatan) Sdn Bhd 2,761,1.6 - Commerce Asset Fund Managers Sdn Bhd For Employees Provident Fund Board 25. Cartaban Nominees (Asing) Sdn Bhd 2,59,.57 - SSBT Fund 5EF For BT Pyramid Emerging Markets Fund 26. AMMB Nominees (Tempatan) Sdn Bhd 2,514,.55 - AmTrustee Berhad For HLG Penny Stock Fund (5/4-3) 27. Citicorp Nominees (Tempatan) Sdn Bhd 2,45,.54 - CMS Dresdner Asset Management Sdn Bhd For Employees Provident Fund 28. Universal Trustee (Malaysia) Berhad 2,334, Pacific Premier Fund 29. Universal Trustee (Malaysia) Berhad 2,298,.5 - SBB Emerging Companies Growth Fund 3. AMMB Nominees (Tempatan) Sdn Bhd 2,25,.49 - MIDF Aberdeen Asset Management Sdn Bhd For Employees Provident Fund (7/836-2) TOTAL 295,78,7 64.6% 81 Puncak Niaga Holdings Berhad Annual Report 23

80 Distribution Schedule Of Equity SECURITIES & PROPERTY Directors Interests in Ordinary Shares As Per Register of Directors Shareholdings No. Of Shares Held In The Company No. Name of Director Direct Interest % Indirect Interest % 1 YBhg Tan Sri Rozali Ismail 947,.21 19,51, Encik Ruslan Hassan 44, Encik Mat Hairi Ismail 22,75 * Ir Lee Miang Koi 144,.3 2, 2 * 5 Encik Abdul Majid Abdul Karim 3, * YBhg Tan Sri Dato Hari Narayanan Govindasamy 21, YB Tan Sri Dato Seri Dr Ting Chew Peh Tuan Syed Danial Syed Ariffin 25, Deemed interest by virtue of 5% equity interest each in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd respectively 2 Held in nominee name, Bumiputra-Commerce Nominees (Tempatan) Sdn Bhd * negligible List of Substantial Shareholders As Per Register of Substantial Shareholders (excluding bare trustees) No. Of Shares Held In The Company No. Name of Substantial Shareholder Direct Interest % Indirect Interest % 1 YBhg Tan Sri Rozali Ismail 947,.21 19,51, Encik Shaari Ismail ,51, Central Plus (M) Sdn Bhd 88,98, ,759, Employees Provident Fund Board 26,615, ,586, Deemed interest by virtue of 5% 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 Puncak Niaga Holdings Berhad Annual Report 23 82

81 Distribution Schedule Of Equity SECURITIES & PROPERTY WARRANTS AS AT 26 APRIL 24 Holdings No. of % of Total % of Holdings Holdings Holdings Warrants Issued less than , , 1, ,345, ,1 1, 2, ,55, ,1 1, ,899, ,1 5,468,742 (less than 5% of warrants issued) ,562, ,468,743 (less than 5% of warrants issued) & above ,12, TOTAL 4, ,374, Largest Warrant Holders As Per Record Of Depositors No. of % of Name Of Warrant Holder Warrants Warrants Held Issued 1. Corporate Line (M) Sdn Bhd 53,12, Employees Provident Fund Board 3,78, AmFinance Berhad 2,537, Pledged Securities Account For Fang Kok Phang Soon Fook (SMART) 4. HSBC Nominees (Asing) Sdn Bhd 1,5, BNY Brussels For The Great Eastern Life Assurance Co Ltd 5. HLG Nominee (Tempatan) Sdn Bhd 1,255, PB Trustee Services Berhad For HLG Growth Fund 6. Universal Trustee (Malaysia) Berhad 1,24, TA Islamic Fund 7. OSK Nominees (Tempatan) Sdn Bhd 1,215, Pledged Securities Account For Koon Yew Yin 8. DB (Malaysia) Nominee (Asing) Sdn Bhd 957, Deutsche Bank AG Singapore PBD For Sea Crest Foundation 9. Chung Sow Leng 859, HSBC Nominees (Tempatan) Sdn Bhd 852, HSBC (M) Trustee Bhd For Amcumulative Growth (3639) 11. Fang Kok Phang Soon Fook 87, Botly Nominees (Tempatan) Sdn Bhd 791, Pledged Securities Account For Koon Yew Yin 13. TA Nominees (Tempatan) Sdn Bhd 763,2.7 - Pledged Securities Account For Kong Kien Kok 83 Puncak Niaga Holdings Berhad Annual Report 23

82 Distribution Schedule Of Equity SECURITIES & PROPERTY 3 Largest Warrant Holders As Per Record Of Depositors No. of % of Name Of Warrant Holder (continued) Warrants Warrants Held Issued 14. DB (Malaysia) Nominee (Asing) Sdn Bhd 7,.64 - Deutsche Bank AG Singapore PBD For Green Meadows Foundation 15. Cheong Pang Kwan 676, TA Nominees (Tempatan) Sdn Bhd 643, Pledged Securities Account For Ling Kok Wah 17. Citicorp Nominees (Asing) Sdn Bhd 6,.55 - MLPFS For New Frontier Consultancy Ltd 18. Teng U Heng 6, Malaysia Nominees (Tempatan) Sendirian Berhad 575,.53 - Amanah SSCM Asset Management Berhad For Amanah Smallcap Fund Berhad (JM73) 2. HSBC Nominees (Asing) Sdn Bhd 554,.51 - Mscoil For Specialist Trading Limited 21. Botly Nominees (Tempatan) Sdn Bhd 53,.48 - Pledged Securities Account For Tan Kit Pheng 22. Mayban Nominees (Tempatan) Sdn Bhd 489,.45 - Pledged Securities Account For John Leong Chung Hin (11195AW689) 23. Universal Trustee (Malaysia) Berhad 42,.38 - Alliance First Fund 24. BHLB Trustee Bhd 367, TA Comet Fund 25. TA Nominees (Tempatan) Sdn Bhd 337, Pledged Securities Account For Tee Tuan Chok 26. Citicorp Nominees (Asing) Sdn Bhd 333,.3 - GSI For The Blackhorse Asia Fund 27. Kong Mah Realty (M) Sdn Bhd 35, Mayban Nominees (Tempatan) Sdn Bhd 283,.26 - Pledged Securities Account For Su Tiing Uh (178AW63) 29 Amsec Nominees (Asing) Sdn Bhd 25,.23 - G K Goh Stockbrokers Pte Ltd For Martin Columba Gallagher (2E/35379) 3. Wong Kok Hou 25,.23 TOTAL 76,783, Puncak Niaga Holdings Berhad Annual Report 23 84

83 Distribution Schedule Of Equity SECURITIES & PROPERTY Directors Interests In Warrant As Per Register Of Directors Warrantholdings No. Of Warrants Held In The Company No. Name of Director Direct Interest % Indirect Interest % 1 YBhg Tan Sri Rozali Ismail ,12, Encik Ruslan Hassan 21, Encik Mat Hairi Ismail 52, Ir Lee Miang Koi 18, Encik Abdul Majid Abdul Karim YBhg Tan Sri Dato Hari Narayanan Govindasamy 52, YB Tan Sri Dato Seri Dr Ting Chew Peh Tuan Syed Danial Syed Ariffin Deemed interest by virtue of 5% equity interest in Corporate Line (M) Sdn Bhd 1 LIST OF PROPERTY AS AT 31 DECEMBER 23 Remaning Leasehold Period Description & Date of Land Net Book (Expiry Existing Location Acquisition Area Value Tenure Date) use Vacant Land 14/2/1998 1,364 sq.m. RM8,195,48 99 years 96 years none H.S.(D) Leasehold expiring on PT 32, Section 14 17/12/299 Bandar Shah Alam District of Petaling Selangor 85 Puncak Niaga Holdings Berhad Annual Report 23

84 steady growth Puncak Niaga Holdings Berhad Annual Report Puncak Niaga Holdings Berhad Annual Report 23

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86 23 financial report Directors 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 89 Puncak Niaga Holdings Berhad Annual Report 23

87 Directors Report for the financial year ended 31 December 23 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 23. 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 16 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 Company RM RM Net profit for the financial year 129,586,447 1,682,927 Dividends No dividends have been paid or declared by the Company since 31 December 22. The Directors do not recommend the payment of any dividend for the financial year ended 31 December 23. 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 RM439,278, to RM451,166, by way of the issuance of 11,888, new ordinary shares of RM1. each for cash as follows: Purpose of issue No. of ordinary shares of RM1. each Exercise of options by eligible employees pursuant to the Employees Share Option Scheme 11,888, The above new ordinary shares issued during the financial year ranked pari-passu in all respects with the existing ordinary shares of the Company. Puncak Niaga Holdings Berhad Annual Report 23 9

88 Directors Report for the financial year ended 31 December 23 Employees Share Option Scheme The Employees Share Option Scheme ( ESOS ) of the Company, governed by the ESOS Bye-Laws, was principally approved by the shareholders of the Company at the Extraordinary General Meeting of the Company held on 26 June 21 and became effective following the implementation by the Company on 25 February 22. The ESOS shall be in forced for a duration of five (5) years commencing from 25 February 22. 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 1% of the total issued and paid up ordinary shares of the Company at the point in time when an offer is made. (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 following Executive Directors of the Company: (i) (ii) (iii) (iv) Tan Sri Rozali bin Ismail Ruslan bin Hassan Mat Hairi bin Ismail Lee Miang Koi (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 27. (e) The exercise price of the options at which the eligible employees are entitled to subscribe for the ordinary shares of RM1. 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 Malaysia Securities Exchange Berhad for the five (5) market days immediately preceding the respective dates of offer subject to a discount of not more than 1%, or at the par value of the ordinary shares of the Company of RM1. each, whichever is higher. (f) The eligible employees 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 within the Group. (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. 91 Puncak Niaga Holdings Berhad Annual Report 23

89 Directors Report for the financial year ended 31 December 23 Employees Share Option Scheme (continued) (h) The basis on which the options may be exercised, up to the expiry of the ESOS on 24 February 27, in accordance with the Directors approval is as follows: Number of options Percentage of options exercisable granted and unexercised as at Tranche 31 December 23 % % % % 1 19,215, ,211, ,957, ,172, ,555, The movements of the options over the ordinary shares of RM1. each of the Company granted under the ESOS during the financial year are as follows: Date of Exercise Number of options Tranche options price granted per option At At RM Granted Exercised Lapsed* ,524, (1,58,) (1,251,) 19,215, ,843, (832,) (8,) 1,211, ,817, (821,) (39,) 1,957, ,349, (177,) 1,172, 33,367, 4,166, (11,888,) (2,9,) 23,555, * Due to resignations or offers not taken up 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 3, options and above, which are as follows: Number of options over ordinary shares of RM1. each Name of eligible At At employees Granted Exercised Lapsed** Nik Nazman bin Husin 5, 5, Ibrahim bin Ismail 35, (14,) 21, Loh Kit Mun 35, (1,) 25, Azlan bin Hamid 3, (3,) Ramalingam a/l K.R. Arumugam 3, (12,) 18, Syed Danial bin Syed Ariffin 3, (6,) 24, Tan Bee Lian 3, 5, (68,) 282, Sonari bin Solor 27, (69,) 21, Ng Wah Tar 24, 6, (8,) 22, ** Due to resignation Puncak Niaga Holdings Berhad Annual Report 23 92

90 Directors Report for the financial year ended 31 December 23 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 Tan Sri Dato Hari Narayanan a/l Govindasamy Tan Sri Dato Seri Dr.Ting Chew Peh Syed Danial bin Syed Ariffin (appointed on 1 March 24) In accordance with Article 98 of the Company s Articles of Association, Lee Miang Koi and Abdul Majid bin Abdul Karim 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. In accordance with Article 99 of the Company s Articles of Association, Tan Sri Dato Seri Dr. Ting Chew Peh retires from office, on triennial basis, at the forthcoming Annual General Meeting and, being eligible and upon the recommendation of the Nomination Committee, offers himself for re-election. In accordance with Article 13 of the Company s Articles of Association, Syed Danial bin Syed Ariffin who was appointed since the last Annual General Meeting, retires from office at the forthcoming Annual General Meeting and, being eligible and upon the recommendation of the Nomination Committee, offers himself for election. 93 Puncak Niaga Holdings Berhad Annual Report 23

91 Directors Report for the financial year ended 31 December 23 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. each At Transfer At Acquired Sold from/(to) Direct interests in the Company: Tan Sri Rozali bin Ismail 33, 41, 74, Ruslan bin Hassan 394, 193, (178,) 5, 459, Mat Hairi bin Ismail 22,75 22,75 Lee Miang Koi 144, 144, Abdul Majid bin Abdul Karim 3, 3, Tan Sri Dato Hari Narayanan a/l Govindasamy 21, 21, Indirect interests in the Company: Tan Sri Rozali bin Ismail 19,51, 7,126,554 (7,126,554) 19,51,* Ruslan bin Hassan 22,5 (152,5) (5,) Mat Hairi bin Ismail 29,5 29,5^^ Lee Miang Koi 2, 2,^^ Tan Sri Dato Hari Narayanan a/l Govindasamy 21, (21,) Redeemable Unconvertible Junior Notes in RM At Transfer At Acquired Sold from/(to) Direct interests in the Company: Tan Sri Rozali bin Ismail 12,879,24 12,879,24 Ruslan bin Hassan 78,125 78,125 Mat Hairi bin Ismail 261, ,875 Lee Miang Koi 245, 245, Indirect interests in the Company: Tan Sri Rozali bin Ismail 2,68,891 (12,879,24) 7,729,687^ Tan Sri Dato Hari Narayanan a/l Govindasamy 262,5 (262,5) Puncak Niaga Holdings Berhad Annual Report 23 94

92 Directors Report for the financial year ended 31 December 23 Directors' interests (continued) Number of warrants At Transfer At Acquired Sold from/(to) Direct interests in the Company: Tan Sri Rozali bin Ismail 51,466,812 (51,466,812) Ruslan bin Hassan 41,625 (2,25) 21,6 Mat Hairi bin Ismail 52,375 52,375 Lee Miang Koi 18, 18, Tan Sri Dato Hari Narayanan a/l Govindasamy 52,5 52,5 Indirect interests in the Company: Tan Sri Rozali bin Ismail 1,545,937 51,466,812 (51,466,812) 51,466,812 53,12,749^ Tan Sri Dato Hari Narayanan a/l Govindasamy 52,5 (52,5) (* deemed interest by virtue of 5% 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) (^ deemed interest by virtue of 5% shareholding interest in Corporate Line (M) Sdn. Bhd.) (^^ held by nominees) Number of options over ordinary shares of RM1. each At At Granted Exercised Lapsed Direct interests in the Company: Tan Sri Rozali bin Ismail 2,17, (41,) 1,76, Ruslan bin Hassan 1,67, (193,) 1,477, Mat Hairi bin Ismail 85, 85, Lee Miang Koi 85, 85, 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. each At At Acquired Sold Deemed interest in the Company: Tan Sri Rozali bin Ismail 183,867,25 (7,126,554) 176,74,696 The other Directors 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. 95 Puncak Niaga Holdings Berhad Annual Report 23

93 Directors Report for the financial year ended 31 December 23 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 8 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) (ii) (iii) certain Directors who received remuneration as Directors/Executive Directors of related corporations; 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 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) (b) 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 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) (b) (c) 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 which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or 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 Puncak Niaga Holdings Berhad Annual Report 23 96

94 Directors Report for the financial year ended 31 December 23 Statutory information on the financial statements (continued) (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 41 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) (b) 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 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 events that occurred during the financial year are disclosed in Note 44 to the financial statements. Significant event subsequent to the balance sheet date The significant events that occurred subsequent to balance sheet date is disclosed in Note 45 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, will not be seeking re-appointment at the forthcoming Annual General Meeting. Signed on behalf of the Board of Directors in accordance with their resolution dated 2 April 24. Tan Sri Rozali bin Ismail Director Mat Hairi bin Ismail Director Kuala Lumpur 97 Puncak Niaga Holdings Berhad Annual Report 23

95 Consolidated income statement for the financial year ended 31 December 23 Note Group 23 RM 22 RM Revenue 6 578,26,34 565,15,11 Other operating income 1,16,388 14,416,92 Operating and maintenance cost (118,192,292) (113,81,833) Staff cost 7 (28,231,651) (26,617,683) Administrative expenses (23,329,72) (21,849,555) Depreciation and amortisation expenses (11,85,776) (11,87,863) Profit from operations 9 316,762, ,165,78 Finance cost 11 (133,847,211) (136,51,435) Share of results of jointly controlled entity ,638 Profit from ordinary activities before taxation 183,411,58 18,113,643 Taxation: - Company and subsidiaries 12 (53,677,385) (53,17,212) - Jointly controlled entity 12 (147,226) (53,824,611) (53,17,212) Net profit for the financial year 129,586, ,96,431 Earnings per ordinary share - basic 13(a) sen sen - diluted 13(b) sen sen The notes on pages 15 to 149 form an integral part of these financial statements. Puncak Niaga Holdings Berhad Annual Report 23 98

96 Company income statement for the financial year ended 31 December 23 Note Company 23 RM 22 RM Revenue 6 3,96, 3,96, Other operating income 38,275,818 32,87,919 Staff cost 7 (16,931) Administrative expenses (1,372,342) (1,212,296) Depreciation of property, plant and equipment (88,45) (88,45) Profit from operations 9 4,775,431 35,513,647 Finance cost 11 (38,276,759) (32,839,198) Profit from ordinary activities before taxation 2,498,672 2,674,449 Taxation 12 (815,745) (84,33) Net profit for the financial year 1,682,927 1,87,146 The notes on pages 15 to 149 form an integral part of these financial statements. 99 Puncak Niaga Holdings Berhad Annual Report 23

97 Balance sheets as at 31 December 23 Non-current assets Property, plant and equipment Project development expenditure Investment in subsidiaries Investment in an associate Interest in jointly controlled entity Other investments Junior Notes A Advances to a subsidiary Debt Service Reserve Account Long-term receivables Current assets Inventories Trade and other receivables Tax recoverable Deposits, bank and cash balances Less: Current liabilities Trade and other payables Hire-purchase payables Borrowings Note Group RM RM 1,445,93,671 1,528,72, ,88, ,838,486 2,544,224 12,59 12,662 81,73,519 79,618,389 47,778,515 16,18,547 1,824,75,573 1,96,28, , ,277 1,17,49, ,85,967 1,191,859 1,122,63 17,163,631 85,316,135 1,342,383,937 97,16, ,185,945 16,596, , , ,937,283 86,17, ,113,22 247,743,854 Company RM RM 8,195,48 8,283, ,,15 123,,15 2,195, ,741, ,775, ,368,87 361,368,87 714,52, ,428,283 7,26,778 17,7, , ,387 77,93, ,693 85,948,11 18,76,821 42,4,121 1,828,991 42,4,121 1,828,991 Net current assets 1,18,27, ,363,128 43,943,89 16,247,83 Less: Non-current liabilities Long-term payables Hire-purchase payables Borrowings Deferred taxation ,13,18 2,57,564 1,495,138, ,195,847 1,81,8,178 1,132,13,13 3,63,23 1,439,397,47 22,878, 1,645,338, ,35, ,741, ,741, ,74,94 196,775, ,775,846 58,9,267 Capital and reserves Share capital Share premium Reserve on consolidation Merger reserve Retained earnings ,166, 69,527,248 92,322 (4,999,998) 652,227,558 1,132,13,13 439,278, 53,294,348 92,322 (4,999,998) 522,641, ,35, ,166, 69,527,248 18,1, ,74,94 439,278, 53,294,348 16,327,919 58,9,267 The notes on pages 15 to 149 form an integral part of these financial statements. Puncak Niaga Holdings Berhad Annual Report 23 1

98 Consolidated statement of changes in equity for the financial year ended 31 December 23 Share capital Nominal Non-distributable Share Reserve on Merger Distributable Retained Note value premium consolidation reserve earnings Total RM RM RM RM RM RM Group At 1 January 22 - as previously reported 437,5, 5,858,488 92,322 (4,999,998) 545,773,68 993,224,492 - change in accounting policy 36 (15,229,) (15,229,) - as restated 437,5, 5,858,488 92,322 (4,999,998) 395,544,68 842,995,492 Issue of share capital 34 1,778, 2,435,86 4,213,86 Net profit for the financial year 127,96, ,96,431 At 31 December ,278, 53,294,348 92,322 (4,999,998) 522,641, ,35,783 At 1 January 23 - as previously reported 439,278, 53,294,348 92,322 (4,999,998) 725,519,111 1,177,183,783 - change in accounting policy 36 (22,878,) (22,878,) - as restated 439,278, 53,294,348 92,322 (4,999,998) 522,641, ,35,783 Issue of share capital 34 11,888, 16,232,9 28,12,9 Net profit for the financial year 129,586, ,586,447 At 31 December ,166, 69,527,248 92,322 (4,999,998) 652,227,558 1,132,13,13 The notes on pages 15 to 149 form an integral part of these financial statements. 11 Puncak Niaga Holdings Berhad Annual Report 23

99 Company statement of changes in equity for the financial year ended 31 December 23 Non- Company At 1 January 22 Issue of share capital Net profit for the financial year At 31 December 22 Note 34 Share capital Nominal value RM 437,5, 1,778, 439,278, distributable Share premium RM 5,858,488 2,435,86 53,294,348 Distributable Retained earnings RM 14,457,773 1,87,146 16,327,919 Total RM 52,816,261 4,213,86 1,87,146 58,9,267 At 1 January 23 Issue of share capital Net profit for the financial year At 31 December ,278, 11,888, 451,166, 53,294,348 16,232,9 69,527,248 16,327,919 1,682,927 18,1,846 58,9,267 28,12,9 1,682, ,74,94 The notes on pages 15 to 149 form an integral part of these financial statements. Puncak Niaga Holdings Berhad Annual Report 23 12

100 Cash flow statements for the financial year ended 31 December 23 Group Company Note RM RM RM RM Operating activities Receipts from customer 283,426,92 352,176,593 Dividends received 2,764,8 2,764,8 Payments for operating expenses (152,138,328) (14,93,55) (1,349,64) (1,62,471) Payments to contractors (8,219,473) (1,58,674) Net cash generated from operations ,69,119 29,737,369 1,415,16 1,162,329 Interest paid (13,631,425) (99,669,941) (13,671,875) (13,671,875) Taxation paid (428,794) (1,95,45) (18,914) Interest received 1,293,26 1,6,183 14,557,24 13,74,98 (12,767,13) (1,515,28) 885,365 14,119 Net cash inflow from operating activities 2,32,16 19,222,161 2,3,525 1,176,448 Investing activities Purchase of property, plant and equipment (2,836,611) (5,872,242) Project development expenditure (16,598,599) (5,11,835) Advances from/(to) subsidiaries 49,133,85 (5,861,651) Advance to jointly controlled entity (2,195,812) (2,195,812) Proceeds from disposal of property, plant and equipment 29,2 622,311 Net cash (outflow)/inflow from investing activities (21,421,822) (1,36,766) 46,937,273 (5,861,651) Financing activities Proceeds from borrowings 115,, Exercise of share options pursuant to ESOS 28,12,9 4,213,86 28,12,9 4,213,86 Repayment of borrowings (55,726,548) (78,,) Repayment of hire-purchase payables (1,427,14) (1,719,744) Net cash inflow/(outflow) from financing activities 85,967,212 (75,55,884) 28,12,9 4,213,86 13 Puncak Niaga Holdings Berhad Annual Report 23

101 Cash flow statements for the financial year ended 31 December 23 (continued) Group Company Note RM RM RM RM Net increase/(decrease) in cash and cash equivalents 84,847,496 23,355,511 77,358,698 (471,343) Cash and cash equivalents at beginning of the financial year 85,316,135 61,96, ,693 1,16,36 Transfer to designated account for repayment of Term Loan (DSS II) 28 (53,48,698) (55,726,548) Deposits for Standby Letters of Credit and Ad-hoc Bank Guarantees 28 (88,9,196) (74,79,195) Cash and cash equivalents at end of the financial year 28,664,737 29,589,587 3,113, ,693 Cash and cash equivalents comprise: Deposits with licensed banks 88,451,787 56,58,289 74,79,195 Less: Deposits held in a designated account for repayment of Term Loan (DSS II) 28 (55,726,548) Deposits for Standby Letters of Credit and Ad-hoc Bank Guarantees 28 (88,9,196) (74,79,195) 361, ,741 Bank and cash balances 81,711,844 28,735,846 3,113, ,693 Less:Transfer to designated account for repayment of Term Loan (DSS II) 28 (53,48,698) 28,664,737 29,589,587 3,113, ,693 The notes on pages 15 to 149 form an integral part of these financial statements. Puncak Niaga Holdings Berhad Annual Report 23 14

102 Notes to the financial statements for the financial year ended 31 December 23 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 16 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 Malaysia Securities Exchange Berhad. The address of the registered office of the Company is as follows: Suite , 14th Floor Plaza See Hoy Chan Jalan Raja Chulan 52 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. 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. 15 Puncak Niaga Holdings Berhad Annual Report 23

103 Notes to the financial statements for the financial year ended 31 December 23 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 nonpayment 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) under the Privatisation cum Concession Agreement ( PCCA ) dated 22 September 1994, to take over, operate, maintain, manage, rehabilitate and refurbish existing water treatment plants located in Selangor and Wilayah Persekutuan of Kuala Lumpur for a period of 26 years ending on 31 December 22; and (ii) under the Construction cum Operation Agreement ( CCOA ) dated 22 March 1995, 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 22. 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 Subsequent to the completion, PNSB has been managing, operating and maintaining the water treatment plant. Puncak Niaga Holdings Berhad Annual Report 23 16

104 Notes to the financial statements for the financial year ended 31 December 23 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, 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 23 are as follows: MASB Standard 25 Income Taxes MASB Standard 27 Borrowing Costs MASB Standard 29 Employee Benefits With the exception of MASB Standard 25 (see Note 36), there are no changes in accounting policy that affect net profit or shareholders equity as the Group and the Company were already following the recognition and measurement principles in these standards. Where applicable, comparatives have been reclassified or extended to take into account the requirements of new applicable approved accounting standards adopted in the financial statements. 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. 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. 17 Puncak Niaga Holdings Berhad Annual Report 23

105 Notes to the financial statements for the financial year ended 31 December 23 5 Summary of significant accounting policies (continued) 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 6(4) of the Companies Act, 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. Puncak Niaga Holdings Berhad Annual Report 23 18

106 Notes to the financial statements for the financial year ended 31 December 23 5 Summary of significant accounting policies (continued) (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. 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. 19 Puncak Niaga Holdings Berhad Annual Report 23

107 Notes to the financial statements for the financial year ended 31 December 23 5 Summary of significant accounting policies (continued) (e) Jointly controlled entity Jointly controlled entity comprises an unincorporated joint venture over which there is contractually agreed sharing of control by the Group with third parties. The Group s interest in the 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 interest 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 the 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. 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. Puncak Niaga Holdings Berhad Annual Report 23 11

108 Notes to the financial statements for the financial year ended 31 December 23 5 Summary of significant accounting policies (continued) (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: Over the remaining period of the concession Water treatment plants ending 31 December 22 Plant and equipment 1% to 2% Office equipment 2% Furniture and fittings 2% Motor vehicles 2% Computers and software 33 1/3% Renovation 2% 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. 111 Puncak Niaga Holdings Berhad Annual Report 23

109 Notes to the financial statements for the financial year ended 31 December 23 5 Summary of significant accounting policies (continued) (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. Puncak Niaga Holdings Berhad Annual Report

110 Notes to the financial statements for the financial year ended 31 December 23 5 Summary of significant accounting policies (continued) (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) Income taxes Current tax expense is determined according to the tax laws of each jurisdiction in which the Group and the Company operates and include all taxes based upon the taxable profits, including withholding taxes payable by a foreign joint venture on distributions of retained earnings to the Company, and real property gains taxes payable on disposal of properties. Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or unutilised tax losses can be utilised. Deferred tax is recognised on temporary differences arising on investments in subsidiaries, an associate and an interest in a jointly controlled entity, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred tax. (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) Share capital Ordinary shares are classified as equity. Dividends on ordinary shares are recognised as liability when declared. Proposed final dividends on ordinary shares are accrued as liabilities only after approval by the shareholders. (r) Employee benefits (i) Short-term employee benefits Wages, salaries, paid annual leave and medical leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group and of the Company. 113 Puncak Niaga Holdings Berhad Annual Report 23

111 Notes to the financial statements for the financial year ended 31 December 23 5 Summary of significant accounting policies (continued) (r) Employee benefits (continued) (ii) Defined contribution plan The Group s and the Company s contribution to defined contribution plans are charged to the income statement in the financial year to which they relate. Once the contributions have been paid, the Company has no future obligations. (s) 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. (t) Foreign currency Foreign currency transactions are converted into Ringgit Malaysia at exchange rates prevailing at the transaction dates, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. Monetary assets and liabilities in foreign currencies are translated at exchange rates prevailing at the balance sheet date, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. All exchange differences are dealt with through the income statement. The principal closing rate used in translation of foreign currency amounts is as follows: Foreign currency Indian Rupee RM8.345 N/A Puncak Niaga Holdings Berhad Annual Report

112 Notes to the financial statements for the financial year ended 31 December 23 5 Summary of significant accounting policies (continued) (u) 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 financial liabilities with a maturity of less than one (1) year are assumed to approximate their fair values. 6 Revenue Group Company RM RM RM RM Invoiced value of bulk quantity of treated water supplied to the State Government of Selangor 578,26,34 565,15,11 Gross dividend income 3,84, 3,84, Management fees 12, 12, 578,26,34 565,15,11 3,96, 3,96, 115 Puncak Niaga Holdings Berhad Annual Report 23

113 Notes to the financial statements for the financial year ended 31 December 23 7 Staff cost Group Company RM RM RM RM Wages, salaries and bonus 2,767,687 19,29,613 14,331 Defined contribution retirement plan 2,77,31 2,575,335 2,6 Other employee benefits 4,693,933 4,751,735 28,231,651 26,617,683 16,931 The number of persons, including Executive Directors, employed by the Group and Company at the end of the financial year was 629 (22: 616) and Nil (22: Nil) respectively. The Group contributes to the Employees Provident Fund, the national defined contribution plan. Once the contributions have been paid, the Group has no further payment obligations. 8 Directors Remuneration The Directors of the Company in office during the financial year were as follows: Executive Directors Tan Sri Rozali bin Ismail Ruslan bin Hassan Mat Hairi bin Ismail Lee Miang Koi Non-Executive Directors Abdul Majid bin Abdul Karim Tan Sri Dato Hari Narayanan a/l Govindasamy Tan Sri Dato Seri Dr.Ting Chew Peh The aggregate amount of emoluments receivable by Directors of the Company during the financial year was as follows: Group Company RM RM RM RM Executive Directors: - Wages, salaries and bonus 2,45,4 2,564,66 - Defined contribution retirement plan 381,24 45,18 - Estimated money value of benefits-in-kind 13,8 223,8 - Other employee benefits 687,36 74,31 Non-Executive Directors: - Meeting allowances 118, 95, 118, 95, - Leave passage 165, ,426 3,695,44 4,158,97 118, 26,426 Puncak Niaga Holdings Berhad Annual Report

114 Notes to the financial statements for the financial year ended 31 December 23 9 Profit from operations The following items have been charged/(credited) in arriving at profit from operations: Group Company RM RM RM RM Depreciation of property, plant and equipment 4,147,87 4,142,885 88,45 88,45 Amortisation of water treatment plants 82,75,188 81,946,473 Amortisation of project development expenditure 15,628,5 14,999,624 Rental of premises 2,622,652 2,413,31 Hire of transport and equipment 213, ,813 Accretion of discount on bonds and notes 24,297,347 2,41,865 22,966,69 19,166,11 Amortisation of debt issuance expenses 937, ,468 Directors remuneration: - Directors of the Company other emoluments 118, 26, , 26,426 - Directors of subsidiaries other emoluments 4,16,517 3,888,37 Auditors' remuneration 9, 9, 15, 15, Allowance for diminution in value of other investments 63 32,388 Interest income from deferred payment contract (6,742,824) (8,775,68) Interest income on deposits (2,724,83) (3,434,31) (1,637,74) (33,33) Interest income on advances to a subsidiary (13,671,875) (13,671,875) Income from discount on notes (22,966,69) (19,166,11) Gain on disposal of property, plant and equipment (29,2) (51,44) 117 Puncak Niaga Holdings Berhad Annual Report 23

115 Notes to the financial statements for the financial year ended 31 December 23 1 Auditor s remuneration PricewaterhouseCoopers Malaysian Firm Group Company RM RM RM RM Statutory audit (Note 9) 75, 75, 15, 15, Fee for other services: - Tax advisory and compliance work 25,662 68,35 5,8 5,9 - Review of non-financial reporting framework 6, 6, - Other non-audit related service 2, 2, 18, ,35 26,8 2,9 Other accounting firms in Malaysia Group Company RM RM RM RM Statutory audit (Note 9) 15, 15, Fee for other services: - Tax advisory and compliance work 3,15 3,15 18,15 18,15 11 Finance cost Group Company RM RM RM RM Finance cost comprises: Financing cost on borrowings under Islamic banking principles 79,37,283 79,136,153 Financing cost on conventional borrowings 54,634,117 56,152,34 36,637,944 32,837,886 Interest expense on hire-purchase 36, ,68 Bank charges (185,) 393,262 1,111 1,312 Other interest expense 1,637,74 133,847, ,51,435 38,276,759 32,839,198 Puncak Niaga Holdings Berhad Annual Report

116 Notes to the financial statements for the financial year ended 31 December Taxation The taxation charge in the income statements represents: Group Company RM RM RM RM Current tax: - Malaysian tax 359, , ,745 84,33 - Foreign tax 147,226 Deferred tax (Note 33) 53,317,847 52,649, 53,824,611 53,17, ,745 84,33 Current tax: - Current financial year 619,25 66,19 815,745 84,33 - Overaccrual in prior year (112,486) (237,978) Deferred tax: - Origination and reversal of temporary differences 53,317,847 52,649, 53,824,611 53,17, ,745 84,33 The explanation of the relationship between taxation and profit from ordinary activities before taxation is as follows: (a) Numerical reconciliation between taxation and the product of accounting profit multiplied by the Malaysian tax rate: Group Company RM RM RM RM Profit from ordinary activities before taxation 183,411,58 18,113,643 2,498,672 2,674,449 Tax calculated at the Malaysian tax rate of 28% (22: 28%) 51,355,96 5,431,82 699, ,846 Tax effects of: - Different tax rates in another country 8,448 - Expenses not deductible for tax purposes 2,48,995 3,259, ,117 55,457 - Utilisation of previously unutilised tax allowances (132,18) (633,28) - Overaccrual in prior year (112,486) (237,978) - Permanent tax losses from certain subsidiaries 117, ,1 - Deferred tax assets not recognised 17,81 Taxation 53,824,611 53,17, ,745 84, Puncak Niaga Holdings Berhad Annual Report 23

117 Notes to the financial statements for the financial year ended 31 December Taxation (continued) (b) Numerical reconciliation between the average effective tax rate and the Malaysian tax rate: Group Company % % % % Malaysian tax rate Tax effects of: - Different tax rates in another country Expenses not deductible for tax purposes Utilisation of previously unutilised tax allowances (.7) (.35).. - Overaccrual in prior year (.6) (.13).. - Permanent tax losses from certain subsidiaries Deferred tax assets not recognised.6... Average effective tax rate The tax charge for the Company is principally in respect of interest income and dividend income received from its subsidiary. Group Company 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 1,962,57 9,422,994 1,962,57 9,422,994 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 129, ,587 Tax losses for which the related tax credit has not been recognised in the financial statements 68,75 587,74 127, ,822 Puncak Niaga Holdings Berhad Annual Report 23 12

118 Notes to the financial statements for the financial year ended 31 December Earnings per ordinary share (a) Basic earnings per share The basic earnings per ordinary share of the Group for the financial year of sen (22: sen) is calculated by dividing the net profit for the financial year by the weighted average number of ordinary shares in issue during the financial year RM RM Net profit for the financial year 129,586, ,96,431 Weighted average number of ordinary shares in issue 442,944, ,543,449 Basic earnings per share sen sen (b) Diluted earnings per share The diluted earnings per ordinary share of the Group for the financial year of sen (22: sen) is calculated by dividing the net profit for the financial year 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 31(iv)), and options granted to the eligible employees pursuant to the ESOS (Note 34). In assessing the dilution in earnings per share arising from the issue of both warrants and 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 options RM RM Net profit for the financial year 129,586, ,96,431 Weighted average number of ordinary shares in issue 442,944, ,543,449 Adjustment for: - warrants 6,862,837 2,18,483 - options 4,791,538 3,82,752 Weighted average number of ordinary shares for diluted earnings per share 454,598, ,734,684 Diluted earnings per share sen sen Comparative earnings per share information has been restated to take into account the effect on the net profit for the financial year arising from the change in accounting policy with respect to deferred tax (Note 36). 121 Puncak Niaga Holdings Berhad Annual Report 23

119 Notes to the financial statements for the financial year ended 31 December Property, plant and equipment Long-term Water Plant Furniture Computers Group leasehold treatment and Office and Motor and land plants equipment equipment fittings vehicles software Renovation Total RM RM RM RM RM RM RM RM RM 23 Cost At 1 January 8,716,411 1,749,438,913 7,87,45 2,379,788 3,229,378 11,995,45 6,377,565 6,149,697 1,796,156,842 Additions 1,699,526 2, ,223 1,44, ,487 84,1 3,423,98 Disposals (751,584) (751,584) At 31 December 8,716,411 1,751,138,439 7,87,45 2,58,736 3,424,61 12,288,275 6,576,52 6,233,797 1,798,828,356 Accumulated depreciation At 1 January 432, ,775,29 1,824,255 1,863,524 3,118,438 7,563,49 4,767,768 5,18, ,453,994 Charge for the financial year 88,45 82,75, , ,953 81,287 1,571, , ,842 86,222,275 Released on disposals (751,584) (751,584) At 31 December 52, ,85,478 2,617,786 2,57,477 3,199,725 8,383,16 5,719,916 5,575, ,924,685 Net book value At 31 December 8,195,48 1,426,287,961 5,252, , ,876 3,95, , ,531 1,445,93, Cost At 1 January 8,716,411 1,746,74,712 7,82,49 2,97,747 3,174,286 11,191,726 5,148,62 5,28,551 1,79,62,525 Additions 2,734,21 79, ,41 55,92 3,152,485 1,228, ,146 8,473,483 Disposals (3,) (2,349,166) (2,379,166) At 31 December 8,716,411 1,749,438,913 7,87,45 2,379,788 3,229,378 11,995,45 6,377,565 6,149,697 1,796,156,842 Accumulated depreciation At 1 January 344,841 16,828, ,55 1,643,479 3,26,825 8,93,625 3,849,735 4,872, ,637,224 Charge for the financial year 88,45 81,946, , 22,45 91,613 1,737, ,33 236,27 86,89,358 Released on disposals (5,25) (2,267,338) (2,272,588) At 31 December 432, ,775,29 1,824,255 1,863,524 3,118,438 7,563,49 4,767,768 5,18, ,453,994 Net book value At 31 December 8,283,525 1,56,663,623 6,45,79 516,264 11,94 4,431,636 1,69,797 1,41,273 1,528,72,848 Puncak Niaga Holdings Berhad Annual Report

120 Notes to the financial statements for the financial year ended 31 December Property, plant and equipment (continued) Company Long-term leasehold land RM 23 Cost At 1 January/31 December 8,716,411 Accumulated depreciation At 1 January 432,886 Charge for the financial year 88,45 At 31 December 52,931 Net book value At 31 December 8,195,48 22 Cost At 1 January/31 December 8,716,411 Accumulated depreciation At 1 January 344,841 Charge for the financial year 88,45 At 31 December 432,886 Net book value At 31 December 8,283,525 At 31 December 23, the unexpired period of lease of the long-term leasehold land is 96 years. Included in the cost of water treatment plants are interest and financing cost on long-term borrowings capitalised amounting to RM286,75,263 (22: RM286,75,263). Property, plant and equipment of a wholly-owned subsidiary, PNSB, with a total net book value of RM1,437,699,433 (22: RM1,52,384,32), have been charged as security for long-term borrowings (Note 31(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: Motor vehicles RM RM Cost 6,667,1 6,843,637 Accumulated depreciation (3,36,444) (2,69,524) Net book value 3,63,656 4,153, Puncak Niaga Holdings Berhad Annual Report 23

121 Notes to the financial statements for the financial year ended 31 December Project development expenditure Group RM RM Cost At 1 January 315,714,54 31,63,75 Additions 16,598,599 5,11, ,313, ,714,54 Accumulated amortisation (85,54,554) (69,876,54) At 31 December 246,88, ,838,486 Included in project development expenditure is concession acquisition cost of RM14,847,596 (22: RM14,847,596) with an unamortised balance of RM1,185,96 (22: RM1,785,24) at the end of the financial year. 16 Investment in subsidiaries Company RM RM Unquoted shares in Malaysia, at cost 123,,15 123,,15 The details of the subsidiaries are as follows: Name of company Puncak Niaga (M) Sdn. Bhd. # Country of incorporation Malaysia Effective equity interest held by the Group % % 1 1 Principal activities Operation, maintenance, management, construction and undertaking the rehabilitation and refurbishment of water treatment facilities Held through 1% ownership by Puncak Niaga (M) Sdn. Bhd. - Ideal Water Resources Sdn. Bhd.* Malaysia 1 1 Operation, management, maintenance and undertaking the rehabilitation and refurbishment of water treatment plants - Unggul Raya (M) Sdn. Bhd.* Malaysia 1 1 Operation, management, maintenance and monitoring the operation of dams Puncak Research Centre Sdn. Bhd.* Puncak Seri (M) Sdn. Bhd.* NS Water System Sdn. Bhd.* Malaysia Malaysia Malaysia Dormant Dormant Dormant # subsidiary consolidated using the merger accounting method * not audited by PricewaterhouseCoopers, Malaysia Puncak Niaga Holdings Berhad Annual Report

122 Notes to the financial statements for the financial year ended 31 December Investment in an associate Group Company RM RM RM RM Unquoted investment in Malaysia, at cost 2, 2, 2, 2, Allowance for diminution in value of investment (2,) (2,) Share of loss in associate (2,) (2,) The Group has excluded its share of cumulative loss after taxation of the associate amounting to RM2,316 (22: RM18,483) 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. The details of the associate are as follows: Name of Company Country of Effective equity interest incorporation held by the Group Principal activities % % NS Water Management Sdn. Bhd. Malaysia 4 4 Dormant 18 Interest in a jointly controlled entity Group Company RM RM RM RM Advances to a jointly controlled entity 2,195,812 2,195,812 Share of net assets of the jointly controlled entity 348,412 2,544,224 2,195,812 The Group and Company have a 7% interest in an unincorporated jointly controlled entity in India, PNHB-Lanco-KHEC Joint Venture, which is presently in the construction industry. The Group s share of the assets and liabilities of the jointly controlled entity is as follows: RM RM Non-current assets 39,649 Current assets 46,471,716 Current liabilities (46,162,953) Net assets 348, Puncak Niaga Holdings Berhad Annual Report 23

123 Notes to the financial statements for the financial year ended 31 December Investment in a jointly controlled entity (continued) The Group s share of the revenue and expenses of the jointly controlled entity is as follows: Group RM RM Revenue 11,188,376 Expenses excluding taxation (1,692,738) Profit from ordinary activities before taxation 495,638 Taxation (147,226) Profit from ordinary activities after taxation 348, Other investments Group RM RM Quoted shares in Malaysia, at cost 471, ,139 Allowance for diminution in value of quoted shares (459,8) (458,477) 12,59 12,662 Market value of quoted shares 12,59 12,662 The market value of these investments at the balance sheet date is equivalent to the fair value. 2 Junior Notes A Company RM RM Nominal value 546,875, 546,875, Less : Yield to maturity (37,781,25) (37,781,25) At cost 176,93,75 176,93,75 Cumulation of accretion of yield to maturity 43,648,165 2,682,96 219,741, ,775,846 Puncak Niaga Holdings Berhad Annual Report

124 Notes to the financial statements for the financial year ended 31 December 23 2 Junior Notes A (continued) The Company subscribed for RM546,875, nominal value of Junior Notes A ( JNA ) issued on 2 November 21 by its wholly-owned subsidiary, PNSB, at an issue price of RM.322 per RM1. 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,, of PNSB s Al-Murabahah Commercial Papers ( MCPs ) with the remaining balance utilised for its working capital purposes. 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 (1) 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 (1) equal instalments each comprising 1% 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 (1th) 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 16.93% (22: 16.93%) per annum. 21 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 RM345,87,471 (22: RM345,87,471) (Note 43) 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. 127 Puncak Niaga Holdings Berhad Annual Report 23

125 Notes to the financial statements for the financial year ended 31 December Debt Service Reserve Account Under the terms of agreement for the issue of the RM1,2,, 1 years Al-Bai Bithaman Ajil Islamic Debt Securities primary bonds together with non-detachable secondary bonds ( BaIDS ) and RM35,, 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 31(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 21 (Note 31(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 3.% (22: 2.97%) per annum. 23 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 21. 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 21. Group RM RM Deferred repayment periods are as follows: Amount receivable within 12 months (included in trade receivables - Note 25) 83,596,976 59,338,454 Amount receivable after 12 months 47,778,515 16,18, ,375, ,447,1 Included in amount receivable after twelve (12) months is retention sum on contract amounting to RM Nil (22: RM8,314,334). Puncak Niaga Holdings Berhad Annual Report

126 Notes to the financial statements for the financial year ended 31 December Long-term receivables (continued) The weighted average effective interest rate per annum appplicable 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 Fair value interest rate per annum RM RM % % Group Long-term receivables (Note 43) 13,479, ,742, The carrying amount of these receivables at the balance sheet date were not reduced to their estimated fair value as above, as these receivables are receivable from the State Government of Selangor and the Directors are of the opinion that the amounts are recoverable in full. 24 Inventories Group RM RM Water treatment chemicals, at cost 978, , Trade and other receivables Group Company RM RM RM RM Trade receivables 1,141,787,178 78,816,547 Amount due from customer on construction contract (Note 26) 7,662,325 Advances and loans to staff 1,14,311 1,745,35 Amounts due from subsidiaries (Note 27) 1,59,731 11,713,479 Sundry receivables 15,28,685 34,44,584 5,669,547 5,194,262 Deposits 2,29,85 2,125, , Prepayments 2,257,572 1,119,242 1,17,49, ,85,967 7,26,778 17,7, Puncak Niaga Holdings Berhad Annual Report 23

127 Notes to the financial statements for the financial year ended 31 December Trade and other receivables (continued) Included in trade receivables is RM83,596,976 (22: RM59,338,454) representing unpaid and current portion of deferred payments on contract due within twelve (12) months, pursuant to the DSS II contract (Note 23). Included in sundry receivables of the Group is RM8,442,598 (22: RM8,442,598) 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 3 days (22: 3 days). 26 Construction contracts Group RM RM Aggregate costs incurred to date 7,662,325 Amount due from customer on construction contract (Note 25) 7,662,325 The construction contract is undertaken by a subsidiary and is in relation to the turnkey sub-contract for planning, design, construction, supervision, testing and commissioning of a water supply scheme in the State of Sabah. The construction contract is in its initial stage and the subsidiary has not recognised any profits from the construction contract nor issued any progress billings as at the balance sheet date. 27 Amounts due from/(to) subsidiaries The amounts due from/(to) subsidiaries are interest free, unsecured and payable at call. 28 Deposits, bank and cash balances Group Company RM RM RM RM Deposits with licensed banks 88,451,787 56,58,289 74,79,195 Bank and cash balances 81,711,844 28,735,846 3,113, ,693 17,163,631 85,316,135 77,93, ,693 Included in deposits with licensed banks, for the Group, are restricted monies amounting to RM53,48,698 (22: RM55,726,548) representing deposits in a designated account for the repayment of the Term Loan (DSS II) (Note 31 (ii)) and RM88,9,196 (22: RM Nil) representing deposits for Standby Letters of Credit ( SBLC ) and Ad-hoc Bank Guarantees. The deposit for SBLC placed by the Company amounted to RM74,79,195 (22: RM Nil) The weighted average effective interest rate applicable to deposits with licensed banks at the balance sheet date was 2.83% (22: 2.53%) per annum. Deposits of the Group have an average maturity of 179 days (22: 14 days). Puncak Niaga Holdings Berhad Annual Report 23 13

128 Notes to the financial statements for the financial year ended 31 December Trade and other payables Group Company RM RM RM RM Trade payables 2,614,381 72,466,155 Amounts due to contractors 271,78 3,789,973 Amount due to a subsidiary (Note 27) 4,242,189 Finance cost payable 73,683,162 65,849,524 1,535,745 1,535,745 Trade accruals 23,599,895 18,455, , ,246 Retention sum 17,923 Amount owing to Directors 16,799 16, ,185,945 16,596,262 42,4,121 1,828,991 Included in trade payables and trade accruals are RM18,464,238 (22: RM7,897,978) and RM21, (22: RM81,) 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 3 days (22: 3 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. 3 Hire-purchase payables Group RM RM Analysis of hire-purchase payables: Payable within one year 1,25,64 1,254,32 Payable between one and two years 1,44,68 1,73,52 Payable between two and five years 1,835,935 2,212,759 Payable after five years 6,559 3,582 4,137,742 4,84,425 Less: Financing charges (577,24) (8,46) 3,56,538 4,4,379 Present value of hire-purchase payables: Payable within one year 989, ,149 Payable between one and two years 871, ,13 Payable between two and five years 1,692,175 1,998,415 Payable after five years 6, ,712 3,56,538 4,4,379 Representing hire-purchase payables, net of interest-in-suspense: Payable within 12 months 989, ,149 Payable after 12 months 2,57,564 3,63,23 3,56,538 4,4, Puncak Niaga Holdings Berhad Annual Report 23

129 Notes to the financial statements for the financial year ended 31 December 23 3 Hire-purchase payables (continued) The weighted average effective interest rate per annum applicable to hire-purchase payables at the balance sheet date and the fair value of hire-purchase payables as at balance sheet date were as follows: Weighted average effective Fair value interest rate per annum RM RM % % Group Hire-purchase payables (Note 43) 3,666,286 4,36, Borrowings Group Company RM RM RM RM Current Secured: Government Support Loan 36,532,674 3,443,895 Term Loan (DSS 11) 53,44,69 55,726,548 89,937,283 86,17,443 Unsecured: Revolving Credit 25,, 114,937,283 86,17,443 Long-term Secured: Government Support Loan 85,242,95 91,331,684 Term Loan (DSS 11) 62,85, ,21,283 Al-Bai Bithaman Ajil Bonds 1,1,58,328 1,8,61,662 Al-Murabahah Commercial Papers/ Al-Murabahah Medium Term Notes 122,, 32,, Redeemable Unconvertible Junior Notes 214,581, ,253, ,741, ,775,846 1,495,138,659 1,439,397,47 219,741, ,775,846 Total Secured: Government Support Loan 121,775, ,775,579 Term Loan (DSS 11) 116,21, ,936,831 Al-Bai Bithaman Ajil Bonds 1,1,58,328 1,8,61,662 Al-Murabahah Commercial Papers/ Al-Murabahah Medium Term Notes 122,, 32,, Redeemable Unconvertible Junior Notes 214,581, ,253, ,741, ,775,846 1,585,75,942 1,525,567,49 219,741, ,775,846 Unsecured: Revolving Credit 25,, 1,61,75,942 1,525,567,49 219,741, ,775,846 All the long-term borrowings carry fixed interest rates except for the Al-Murabahah Commercial Papers. Puncak Niaga Holdings Berhad Annual Report

130 Notes to the financial statements for the financial year ended 31 December Borrowings (continued) Analysis of borrowings: Maturity profile Total carrying amount < 1 year 1-2 years 2-5 years >5 years RM RM RM RM RM Group At 31 December 23 Secured: Government Support Loan 121,775,579 36,532,674 6,88,779 18,266,337 6,887,789 Term Loan (DSS II) 116,21,283 53,44,69 51,82,669 11,723,5 Al-Bai Bithaman Ajil Bonds 1,1,58,328 18,, 54,, 29,58,328 Al-Murabahah Commercial Papers/Al-Murabahah Medium Term Notes 122,, 122,, Redeemable Unconvertible Junior Notes 214,581,752 19,375, 15,26,752 1,585,75,942 89,937, ,171, ,364, ,62,869 Unsecured: Revolving Credit 25,, 25,, 1,61,75, ,937, ,171, ,364, ,62,869 At 31 December 22 Secured: Government Support Loan 121,775,579 3,443,895 6,88,779 18,266,337 66,976,568 Term Loan (DSS II) 171,936,831 55,726,548 53,44,69 62,85,674 Al-Bai Bithaman Ajil Bonds 1,8,61,662 54,, 468,61,662 Al-Murabahah Commercial Papers/Al-Murabahah Medium Term Notes 32,, 32,, Redeemable Unconvertible Junior Notes 191,253,418 54,687,5 136,565,918 1,525,567,49 86,17,443 59,493,388 77,759, ,144,148 Company At 31 December 23 Secured: Redeemable Unconvertible Junior Notes 219,741,915 19,375, 11,366,915 At 31 December 22 Secured: Redeemable Unconvertible Junior Notes 196,775,846 54,687,5 142,88, Puncak Niaga Holdings Berhad Annual Report 23

131 Notes to the financial statements for the financial year ended 31 December Borrowings (continued) The Al-Bai Bithaman Ajils Bonds and Redeemable Unconvertible Junior Notes are further analysed as follows: Group Group Company Al-Bai' Bithaman Ajil Bonds Redeemable Unconvertible Redeemable Unconvertible Junior Notes Junior Notes RM RM RM RM RM RM Nominal value 1,2,, 1,2,, 546,875, 546,875, 546,875, 546,875, Less: Yield to maturity (1,532,693) (1,532,693) (37,781,25) (37,781,25) (37,781,25) (37,781,25) 1,9,467,37 1,9,467,37 176,93,75 176,93,75 176,93,75 176,93,75 Less: Debt issuance expenses (4,552,312) (4,552,312) (5,848,665) (5,848,665) Net proceeds 1,4,914,995 1,4,914,995 17,245,85 17,245,85 176,93,75 176,93,75 Cumulation of accretion of yield to maturity 3,95,392 2,574,114 43,648,165 2,682,96 43,648,165 2,682,96 Cumulation of amortisation of debt issuance expenses 1,687,941 1,112, ,52 326,237 1,1,58,328 1,8,61, ,581, ,253, ,741, ,775,846 (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 (2) years commencing on 11 April It is secured on all moneys standing to the credit of the Special Project Account. The interest rate is fixed at 8% (22: 8%) per annum on the outstanding balance of the loan amount. PNSB has been negotiating with the Federal Government to restructure the loan in view of the lower bulk supply rate offered by the State Government of Selangor. On 24 December 23, the Federal Government has, in principle, agreed to restructure the Government Support Loan by lowering the interest rate to 3% per annum and accordingly revises the repayment schedule of the loan. Notwithstanding, the restructuring is conditional upon the payment of RM3,, as the first principal repayment, upon PNSB being paid by the Federal Government in conjunction with the privatisation of the water supply services in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya to Syarikat Bekalan Air Selangor Sdn. Bhd. ( SYABAS ). (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 21 and thereafter on 2 January 23. The subsequent repayments will be on an annual basis until year 26. 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 7.6% (22: 7.6%) per annum. Puncak Niaga Holdings Berhad Annual Report

132 Notes to the financial statements for the financial year ended 31 December Borrowings (continued) (iii) Al-Bai Bithaman Ajil Bonds and Al-Murabahah Commercial Papers/Al-Murabahah Medium Term Notes On 12 October 2, PNSB entered into several agreements with United Overseas Bank (Malaysia) Berhad and various parties to raise RM1,2,, 1-Year Al-Bai Bithaman Ajil Islamic Debt Securities primary bonds together with non-detachable secondary bonds ( BaIDS ) and RM35,, Al-Murabahah Commercial Papers ( MCPs )/Al- Murabahah Medium Term Notes ( MMTNs ) Issuance Facility. Subsequently, on 28 October 2, PNSB issued the entire BaIDS and RM12,, of MCPs, the proceeds of which were utilised mainly to repay the Revolving Underwriting Facility of RM8,, and Term Loan of RM3,,. The BaIDS primary bonds will mature beginning 27 October 25 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% (22: 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 25. The tender rates ranged between 2.97% and 4.35% (22: 2.8% and 3.2%) 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. No dividend by PNSB will be declared and paid where inter-alia: the outstanding balance in the DSRA is less than 1. 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 21: (i) (ii) (iii) Interest Cover Ratio of at least 2. times; Debt Equity Ratio of not more than 4. times; and Annual Debt Service Cover Ratio of at least 1.25 times. (iv) Redeemable Unconvertible Junior Notes On 2 November 21, the Company issued RM546,875, Nominal Value 15-Year Redeemable Unconvertible Junior Notes ( RUN ) with 19,374,869 free detachable warrants at an issue price of RM.322 per RM1. nominal value of RUN on the basis of RM5. nominal value of RUN with one (1) free warrant for every four (4) existing ordinary shares of RM1. each held in the Company. The RUN was offered to the entitled shareholders and is constituted by a Trust Deed dated 5 September 21. The RM176,, 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,, of its MCPs with the remaining balance utilised for its working capital purposes. 135 Puncak Niaga Holdings Berhad Annual Report 23

133 Notes to the financial statements for the financial year ended 31 December Borrowings (continued) (iv) Redeemable Unconvertible Junior Notes (continued) 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 (1) 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 (1) equal instalments each comprising 1% 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 (1th) 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 Malaysia Securities Exchange Berhad. (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. (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 21. (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. Puncak Niaga Holdings Berhad Annual Report

134 Notes to the financial statements for the financial year ended 31 December Borrowings (continued) (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 annum % % Group Government Support Loan Term Loan (DSS II) Revolving Credit 3.61 Group and Company Redeemable Unconvertible Junior Notes (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: Fair value Group RM RM Government Support Loan (Note 43) 119,52,476 12,51,923 Term Loan (DSS II) (Note 43) 115,45, ,451,87 32 Long-term payables The long-term payables represent an amount owing by PNSB to an Operation and Maintenance Sub-Contractor, Mandai Sari Sdn. Bhd. ( MSSB ), in respect of the terms stipulated in the Deed of Settlement dated 23 October 23 ( the Deed ) entered into by PNSB and CGE Utilities (M) Sdn. Bhd., the Operation and Maintenance Sub-Contractor to MSSB (Note 44(c)). The long-term payables are unsecured, interest free and are not repayable within the next twelve (12) months. Pursuant to the terms of the Deed, the settlement of the amount is to be made over a period of thirty (3) months commencing October 23. The amount payable at the end of the financial year are as follows: Group RM RM Amount payable within 12 months (included in trade payables - Note 29) 18,464,238 7,897,978 Amount payable after 12 months 47,13,18 65,567,346 7,897, Puncak Niaga Holdings Berhad Annual Report 23

135 Notes to the financial statements for the financial year ended 31 December Long-term payables (continued) The fair value of the long-term payables at the balance sheet date was as follows: Fair value RM RM Group Long-term payables (Note 43) 58,532, Deferred taxation Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off deferred tax assets against deferred tax liabilities and when the deferred taxes relate to the same tax authority. Group RM RM Deferred tax liabilities (subject to income tax) (256,195,847) (22,878,) Analysis of deferred tax liabilities At 1 January (22,878,) (15,229,) (Charged)/credited to income statement (Note 12) - property, plant and equipment (52,813,855) (55,261,63) - project development expenditure (439,441) 2,61,47 - interest receivable (64,719) 1,947 - quoted investment 168 9,69 At 31 December (256,195,847) (22,878,) Subject to income tax Deferred tax assets (before offsetting) Property, plant and equipment 7,734,33 91,154,837 Tax losses 68,929,316 68,929,316 Quoted investments 128, , ,792,161 16,212,527 Offsetting (139,792,161) (16,212,527) Deferred tax assets (after offsetting) Deferred tax liabilities (before offsetting) Property, plant and equipment (329,61,16) (297,216,839) Project development expenditure (66,254,35) (65,814,99) Interest receivable (123,498) (58,779) (395,988,8) (363,9,527) Offsetting 139,792,161 16,212,527 Deferred tax liabilities (after offsetting) (256,195,847) (22,878,) Puncak Niaga Holdings Berhad Annual Report

136 Notes to the financial statements for the financial year ended 31 December Deferred taxation (continued) Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through the future taxable profits is probable. The Directors are of the opinion that the Group will be able to reduce tax payable in view of future profits and benefits accruing to the Group from the existing water concessions which have been awarded to the Group (Note 3) to which the deferred tax asset relates. The tax losses have no expiry date. The amount of deductible temporary differences and unutilised tax losses of the Company (both of which have no expiry date) for which no deferred tax asset is recognised in the balance sheet are as follows: Company RM RM Deductible temporary differences 5,6 5,6 Tax losses 127, , Share capital Ordinary share of RM1. each Group Company RM RM RM RM Authorised: At 1 January/31 December 1,,, 1,,, 1,,, 1,,, Issued and fully paid up: At 1 January 439,278, 437,5, 439,278, 437,5, Issued during the financial year: Exercise of options under ESOS 11,888, 1,778, 11,888, 1,778, At 31 December 451,166, 439,278, 451,166, 439,278, During the financial year, 11,888, new ordinary shares of RM1 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 ranging between RM2.13 and RM2.71 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 Employees Share Option Scheme ( ESOS ) of the Company, governed by the ESOS Bye-Laws, was principally approved by the shareholders of the Company at the Extraordinary General Meeting of the Company held on 26 June 21 and became effective following the implementation by the Company on 25 February 22. The ESOS shall be in forced for a duration of five (5) years commencing from 25 February Puncak Niaga Holdings Berhad Annual Report 23

137 Notes to the financial statements for the financial year ended 31 December Share capital (continued) 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 1% of the total issued and paid up ordinary shares of the Company at the point in time when an offer is made. (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 following Executive Directors of the Company: (i) (ii) (iii) (iv) Tan Sri Rozali bin Ismail Ruslan bin Hassan Mat Hairi bin Ismail Lee Miang Koi (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 27. (e) The exercise price of the options at which the eligible employees are entitled to subscribe for the ordinary shares of RM1. 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 Malaysia Securities Exchange Berhad for the five (5) market days immediately preceding the respective dates of offer subject to a discount of not more than 1%, or at the par value of the ordinary shares of the Company of RM1. each, whichever is higher. (f) The eligible employees 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 within the Group. (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. Puncak Niaga Holdings Berhad Annual Report 23 14

138 Notes to the financial statements for the financial year ended 31 December Share capital (continued) Employees Share Option Scheme (continued) (h) The basis on which the options may be exercised, up to the expiry of the ESOS on 24 February 27, in accordance with the Directors approval is as follows: Number of options Percentage of options exercisable granted and unexercised as at Tranche 31 December 23 % % % % 1 19,215, ,211, ,957, ,172, ,555, RM RM Number of options vested at balance sheet date 1,925, 5,718, The movements of the options over the ordinary shares of RM1. each of the Company granted under the ESOS during the financial year are as follows: Date of Exercise Number of options options price At At Tranche granted per option Granted Exercised Lapsed* RM ,524, (1,58,) (1,251,) 19,215, ,843, (832,) (8,) 1,211, ,817, (821,) (39,) 1,957, ,349, (177,) 1,172, 33,367, 4,166, (11,888,) (2,9,) 23,555, At At Granted Exercised Lapsed* ,422, (1,778,) (1,12,) 3,524, ,933, (9,) 2,843, 36,355, (1,778,) (1,21,) 33,367, * Due to resignations or offers not taken up 141 Puncak Niaga Holdings Berhad Annual Report 23

139 Notes to the financial statements for the financial year ended 31 December Share capital (continued) Employees Share Option Scheme (continued) Details relating to options exercised during the year are as follows: Fair value of Exercise Number of sharess issued shares at price per Exercise date exercise date option RM RM April , May , June , July , August , September , October , November , June , July ,455, August ,731, September ,362, October ,272, November , December , 11,888, 1,778, The additions to the share capital and share premium relating to options exercised during the financial year are as follows: RM RM Ordinary share capital at par 11,888, 1,778, Share premium 16,232,9 2,435,86 Proceeds received on exercise of options 28,12,9 4,213,86 Fair value at exercise date of share issue 37,835,16 5,73,88 The fair value of shares issued on the exercise of options is the closing market price at which the Company s shares were traded on the Malaysia Securities Exchange Berhad on the day of exercise of the options. 35 Retained earnings The Company has sufficient tax credits under Section 18 of the Income Tax Act, 1967 to frank all of its retained earnings as at 31 December 23, if distributed as dividends, without incurring additional tax liabilities. Puncak Niaga Holdings Berhad Annual Report

140 Notes to the financial statements for the financial year ended 31 December Change in accounting policy During the financial year, the Group changed its accounting policy on deferred tax to comply with MASB Standard 25 Income Taxes. In previous years, deferred tax was recognised for timing differences except when there was reasonable evidence that such timing differences would not reverse in the foreseeable future. The tax effect of timing differences that resulted in a debit balance or a debit to the deferred tax balance was not carried forward unless there was a reasonable expectation of its realisation. The potential tax saving relating to a tax loss carried forward was only recognised if there was assurance beyond any reasonable doubt that future taxable income would be sufficient for the benefit of the loss to be realised. The Group has now changed its accounting policy to recognise deferred tax on temporary differences arising between the amounts attributable to assets and liabilities for tax purposes and their carrying values in financial statements. Deferred tax assets are recognised to the extent that is probable that taxable profit will be available against which deductible temporary differences or unutilised tax losses can be utilised. In addition, deferred tax is recognised on temporary differences arising from investments in subsidiaries, an associate and an interest in a jointly controlled entity, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. This change in accounting policy has been accounted for retrospectively. The effect of this change in accounting policy on the Group s financial statements are as follows: As Effects of previously change in As reported policy restated RM RM RM At 1 January 22: Retained earnings 545,773,68 (15,229,) 395,544,68 Financial year ended 31 December 22: Taxation 368,212 52,649, 53,17,212 Earnings per share: - basic (sen) 4.99 (12.1) diluted (sen) 4.51 (11.87) At 1 January 23: Deferred tax liabilities 22,878, 22,878, Retained earnings 725,519,111 (22,878,) 522,641, Puncak Niaga Holdings Berhad Annual Report 23

141 Notes to the financial statements for the financial year ended 31 December Net cash generated from operations Group Company RM RM RM RM Net profit for the financial year 129,586, ,96,431 1,682,927 1,87,146 Adjustments for: Depreciation of property, plant and equipment 4,147,87 4,142,885 88,45 88,45 Amortisation of project development expenditure 15,628,5 14,999,624 Amortisation of water treatment plants 82,75,188 81,946,473 Accretion of discount on bonds and notes 24,297,347 2,41,865 22,966,69 19,166,11 Amortisation of debt issuance expenses 937, ,468 Interest on hire-purchase 36, ,68 Gain on disposal of property, plant and equipment (29,2) (51,44) Allowance for diminution in value of other investments 63 32,388 Taxation 53,824,611 53,17, ,745 84,33 Share of results of jointly controlled entity (495,638) Interest income (9,466,97) (12,29,981) (38,275,648) (32,87,919) Interest expense 18,436,4 114,5,16 15,39,579 13,671,875 Changes in working capital: - Receivables (282,912,936) (219,324,77) (1,14,499) (1,364,236) - Payables (3,14,847) 24,888,645 (67,58) (22,896) Net cash generated from operations 123,69,119 29,737,369 1,415,16 1,162, Significant related party transactions and balances CPMSB is a substantial corporate shareholder of the Company. By virtue of their substantial shareholding in CPMSB, Tan Sri Rozali bin Ismail, a Director of the CPMSB and the Company, and Shaari bin Ismail are deemed to have control over the Company. Puncak Niaga Holdings Berhad Annual Report

142 Notes to the financial statements for the financial year ended 31 December Significant related party transactions and balances (continued) 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. Syarikat Bekalan Air Selangor Sdn. Bhd. RZ Management Services Sdn. Bhd. A subsidiary of CPMSB A subsidiary of CPMSB A Director related corporation 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, Lee Miang Koi and Syed Danial bin Syed Ariffin. 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: Group RM RM Operating and maintenance charges by Mandai Sari Sdn. Bhd. 68,656,87 65,32,322 Management fees charged by Mandai Sari Sdn. Bhd. 5,4 5,4 Secretarial fees charged by RZ Management Services Sdn. Bhd. 24, 24, 145 Puncak Niaga Holdings Berhad Annual Report 23

143 Notes to the financial statements for the financial year ended 31 December Significant related party transactions and balances (continued) 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: Group Related party Type of transaction Payables RM RM Mandai Sari Sdn. Bhd. Operating and maintenance charges 58,92,211 7,897,978 RZ Management Services Sdn. Bhd. Secretarial fees 21, 81, 58,941,211 7,978, Commitments Group RM RM (a) Commitment under the terms of the Privatisation Cum Concession Agreement dated 22 September 1994 for the rehabilitation and refurbishment of water treatment facilities 7,551,663 1,265,62 (b) Commitment under the terms of the Deed of Settlement dated 23 October 23 for the early termination of the Operation and Maintenance Sub- Contract dated 31 May 1995 (Note 44(c)) 25,, 4 Non-cancellable operating lease commitments Group RM RM Payable within one year 2,132,537 1,926,333 Payable between one and five years 1,723,948 63,8 3,856,485 1,99,133 Puncak Niaga Holdings Berhad Annual Report

144 Notes to the financial statements for the financial year ended 31 December Contingent liabilities Group Company RM RM RM RM Unsecured Corporate guarantee given to a bank for facilities granted to a subsidiary 5,, 5,, Financial guarantee given to a bank for facilities granted to a jointly controlled entity 74,79,195 74,79,195 Trade and performance guarantees extended to third parties 23,941,39 26,451,5 42 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. 43 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, an associate and a jointly controlled entity, and borrowings under the basis of Islamic banking principles as these are excluded from MASB Standard 24 Financial Instruments: Disclosure and Presentation. 147 Puncak Niaga Holdings Berhad Annual Report 23

145 Notes to the financial statements for the financial year ended 31 December Financial instruments (continued) Fair values (continued) The carrying amounts of other financial assets and financial liabilities of the Group and of the Company at the balance sheet date approximated their fair values except as set out below: Group Carrying Fair At 31 December 23 Note amount value RM RM Financial asset Long-term receivables ,375,491 13,479,476 Financial liabilities Hire-purchase payables 3 (3,56,538) (3,666,286) Borrowings: - Government Support Loan 31 (121,775,579) (119,52,476) - Term Loan (DSS II) 31 (116,21,283) (115,45,439) Long-term payables 32 (65,567,346) (58,532,387) (37,113,746) (296,764,588) Company Carrying Fair amount value RM RM Financial asset Advances to a subsidiary ,368,87 345,87,471 Group Carrying Fair At 31 December 22 Note amount value RM RM Financial asset Long-term receivables ,447,1 162,742,451 Financial liabilities Hire-purchase payables 3 (4,4,379) (4,36,549) Borrowings: - Government Support Loan 31 (121,775,579) (12,51,923) - Term Loan (DSS II) 31 (171,936,831) (171,451,87) Long-term payables 32 (297,752,789) (295,81,342) Company Carrying Fair amount value RM RM Financial asset Advances to a subsidiary ,368,87 345,87,471 Puncak Niaga Holdings Berhad Annual Report

146 Notes to the financial statements for the financial year ended 31 December Significant events during the financial year (a) (b) (c) The Company had on 25 September 23 entered into a Share Sale and Purchase Agreement with Central Plus (M) Sdn. Bhd., Tan Sri Rozali bin Ismail and Mat Hairi bin Ismail to acquire 7, ordinary shares of RM1. each in SYABAS at a total cash consideration of RM38,9,84 (Note 45). The proposed acquisition, which represents 7% of the issued and paid-up share capital of SYABAS, is one of the salient terms contained in the approval from the Economic Planning Unit of the Prime Minister s Department, for the privatisation of the water supply services in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya ( the Privatisation ) to be undertaken by SYABAS. The acquisition, among others, is conditional upon the signing of the Concession Agreement for the Privatisation. All terms and conditions of the Share Sale and Purchase Agreement remained valid within the approval period which expired on 31 March 24. On 21 October 23, the Company entered into a Turnkey Sub-Contract Agreement with Imej Warisan Sdn. Bhd. ( IWSB ), whereby IWSB had appointed the Company as its sub-contractor for the planning, design, construction, supervision, testing and commissioning of the Projek Pembinaan Loji/Kolam Takungan Dan Paip Utama Telibong Dan Telipok at Kota Kinabalu, Sabah. The contract sum of this Turnkey Sub-Contract is RM313,5,. On 23 October 23, PNSB entered into a Deed of Settlement ( the Deed ) with CGE Utilities (M) Sdn. Bhd. ( CGE ), an Operation and Maintenance Sub-Contractor for the existing water treatment plants under the concession awarded by the State Government of Selangor to PNSB via the PCCA ( the Concession ). CGE was appointed as Operation and Maintenance Sub-Contractor to MSSB, the Operation and Maintenance Contractor for the Concession and a subsidiary of CPMSB, under the Operation and Maintenance Sub-Contract ( OMSC ) dated 31 May 1995 between PNSB, MSSB,Veolia Water and CGE. Upon the execution of the Deed, the expiry date of the OMSC has been brought forward from 31 December 22 to 31 December 24. Amongst others, the Deed stipulates that PNSB shall pay to CGE a sum of RM25,, as full and final compensation in respect of the early termination of the OMSC on 31 December 24, which shall be paid not later than 1 April 26 (Note 39(b)). 45 Significant event subsequent to the balance sheet date The Company had, on 31 March 24, entered into a Supplemental Agreement with CPMSB, Tan Sri Rozali bin Ismail and Mat Hairi bin Ismail, to revise the approval period stipulated in the Share Sale and Purchase Agreement dated 25 September 23 to acquire 7, ordinary shares of RM1. each in SYABAS at a total cash consideration of RM38,9,84 (Note 44(a)). Under the Supplemental Agreement, all salient terms of the Share Sale and Purchase Agreement entered into on 25 September 23, shall remain the same, except for the approval period, which has been extended from 31 March 24 to 3 September Approval of financial statements The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 2 April Puncak Niaga Holdings Berhad Annual Report 23

147 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 98 to 149 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 23 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, Signed on behalf of the Board of Directors in accordance with their resolution dated 2 April 24. Tan Sri Rozali bin Ismail Director Mat Hairi bin Ismail 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 98 to 149 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, 196. Mat Hairi bin Ismail Director Subscribed and solemnly declared by the abovenamed Mat Hairi bin Ismail at Kuala Lumpur, Malaysia on 2 April 24. Before me Paisah Muridan (No. W187) Commissioner for Oaths Puncak Niaga Holdings Berhad Annual Report 23 15

148 Report of the auditors to the members of Puncak Niaga Holdings Berhad Company no: U We have audited the financial statements set out on pages 98 to 149. 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) (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and the state of affairs of the Group and of the Company as at 31 December 23 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 16 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 (969/3/5(J/PH)) Partner of the firm Kuala Lumpur 2 April Puncak Niaga Holdings Berhad Annual Report 23

149 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting of Puncak Niaga Holdings Berhad (41687-U) will be held at the Banquet Hall, Kuala Lumpur Golf & Country Club, No. 1, Jalan 1/7D, Off Jalan Bukit Kiara, 6 Kuala Lumpur on Monday, 28 June 24 at 9.3 a.m. for the following purposes: 1. To receive the Audited Accounts of the Company for the financial year ended 31 December 23 and the Reports of the Directors and Auditors thereon. Resolution 1 2. To re-elect the following Directors of the Company who retire by rotation pursuant to Article 98 of the Company s Articles of Association: (a) Ir Lee Miang Koi (b) Encik Abdul Majid Abdul Karim Resolution 2 Resolution 3 3. To re-elect YB Tan Sri Dato Seri Dr Ting Chew Peh who retires pursuant to Article 99 of the Company s Articles of Association. Resolution 4 4. To re-elect Tuan Syed Danial Syed Ariffin who retires pursuant to Article 13 of the Company s Articles of Association. Resolution 5 5. To appoint Messrs Ernst & Young as the Auditors of the Company in place of the retiring auditors, Messrs PricewaterhouseCoopers and to authorise the Directors of the Company to fix their remuneration. Resolution 6 AS SPECIAL BUSINESS: To consider and, if thought fit, to pass the following Ordinary Resolution: 6. Allotment Of Shares Pursuant To Section 132D Of The Companies Act, 1965 THAT subject always to the Companies Act, 1965, the Articles of Association of the 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 1% 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 Bursa Malaysia AND FURTHER THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company. Resolution 7 7. To transact any other ordinary business of which due notice shall have been given. BY ORDER OF THE BOARD TAN BEE LIAN (MAICSA 76285) Secretary Kuala Lumpur 4 June 24 Puncak Niaga Holdings Berhad Annual Report

150 Notice of Annual General Meeting 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 , 14th Floor, Plaza See Hoy Chan, Jalan Raja Chulan, 52 Kuala Lumpur not less than 48 hours before the time set for holding the Meeting or any adjournment thereof. 4. Explanatory Notes: a. Ordinary Resolution 6 Our auditors, Messrs PricewaterhouseCoopers had indicated that they do not wish to seek re-election at the Seventh Annual General Meeting of the Company.To f ill the vacancy, a Notice of Nomination of Auditors pursuant to Section 172 (II) of the Companies Act, 1965 has been received by the Company for the nomination of Messrs Ernst & Young, who have given their consent to act as Auditors of the Company. A copy of the Notice of Nomination of Auditors dated 24th April 24 is annexed as Appendix A. b. Ordinary Resolution 7 The Ordinary Resolution proposed under item 6, 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.This authority will, unless revoked or varied at a General Meeting, expire at the next Annual General Meeting of the Company. 153 Puncak Niaga Holdings Berhad Annual Report 23

151 Notice of Annual General Meeting Appendix A Puncak Niaga Holdings Berhad Annual Report

152 Statement Accompanying the Notice of Annual General Meeting 1) BOARD MEETINGS In year 23, the Board met six times at the Board Room on 26th Floor, Suite , Plaza See Hoy Chan, Jalan Raja Chulan, 52 Kuala Lumpur. The details of the respective Directors attendances at the Board meetings are as follows: Name of Director Designation No. of meetings attended % Tan Sri Rozali Ismail Executive Chairman 6 1 Ruslan Hassan Executive Vice Chairman/ Executive Director, Corporate Affairs 6 1 Mat Hairi Ismail Executive Director, Finance 5 83 Lee Miang Koi Executive Director, Project & Business Development 6 1 Abdul Majid Abdul Karim Independent Non-Executive Director 5 83 Tan Sri Dato Hari Narayanan Govindasamy Independent Non-Executive Director 6 1 Tan Sri Dato Seri Dr Ting Chew Peh Independent Non-Executive Director 6 1 2) DATE,TIME AND VENUE OF THE SEVENTH ANNUAL GENERAL MEETING The Seventh Annual General Meeting of Puncak Niaga Holdings Berhad will be held as follows: Date : Monday, 28 June 24 Time : 9.3 a.m Venue : Banquet Hall, Kuala Lumpur Golf & Country Club No. 1 Jalan 1/7D, Off Jalan Bukit Kiara, 6 Kuala Lumpur 3) DIRECTORS STANDING FOR RE-ELECTION Directors who are standing for re-election are as follows: (i) Ir Lee Miang Koi, retiring pursuant to Article 98; (ii) Encik Abdul Majid Abdul Karim, retiring pursuant to Article 98; (iii) YB Tan Sri Dato Seri Dr Ting Chew Peh, retiring pursuant to Article 99; and (iv) Tuan Syed Danial Syed Ariffin, retiring pursuant to Article 13. 4) DETAILS OF DIRECTORS STANDING FOR RE-ELECTION (i) Ir Lee Miang Koi, aged 5, Malaysian Executive Director, Project & Business Development Division Ir Lee joined PNSB in 1995 and is currently responsible for the project and business development of PNHB. Ir Lee was appointed as a Director of PNSB on 2 February 1999 and subsequently to the Board of PNHB on 1 September He is a member of PNHB s ESOS Option Committee, Malaysian Water Association, Malaysian Institute of Directors and Institute of Marketing Malaysia. 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 26 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, specialising 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 private companies within the PNHB Group. Ir Lee s securities holdings in the Company are as follows: Description of Securities Direct Holding Indirect Holding Ordinary Shares 144, (.3%) *2, (.4%) Warrant 18, (.2%) - * Held in nominee name, Bumiputra-Commerce Nominees (Tempatan) Sdn Bhd. 155 Puncak Niaga Holdings Berhad Annual Report 23

153 Statement Accompanying the Notice of Annual General Meeting (ii) Encik Abdul Majid Abdul Karim, aged 45, Malaysian Independent Non-Executive Director Encik Abdul Majid was appointed to the Board of PNHB on 24 April 1997 as an Independent Non-Executive Director and was a past Director of PNSB for the period 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 University of Glasgow, United Kingdom in He began his career as a Technical Assistant with the Urban Development Authority (UDA) ( ), as Property Executive with Boustead Holdings Berhad ( ) and subsequently as Sales Engineer with UAC Berhad ( ). Encik Abdul Majid also sits on the Board of several private companies and is a member of Malaysian Institute of Directors. Encik Abdul Majid holds 3, (.1%) ordinary shares of the Company. (iii) YB Tan Sri Dato Seri Dr Ting Chew Peh, aged 61, Malaysian Independent Non-Executive Director YB Tan Sri Dato Seri Dr Ting joined PNHB on 15 July 2 as an Independent Non-Executive Director and a member of the Audit Committee. Currently, he is 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 University of Malaya in 197 and obtained a Master of Science from University of London in He also holds a Doctorate in Philosophy, which he obtained from University of Warwick in YB Tan Sri Dato Seri Dr Ting is a member of Malaysian Institute of Directors. YB Tan Sri 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 198 and was subsequently an Associate Professor of the said Faculty until Between 1979 to 1986,YB Tan Sri Dato Seri Dr Ting published two books entitled Konsep Asas Sosiologi and Hubungan Ras dan Etnik. In 1987,YB Tan Sri 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 ( ), Deputy Minister of the Prime Minister s Department ( ) and Minister of Housing and Local Government ( ). Currently, YB Tan Sri Dato Seri Dr Ting is the Secretary-General of Malaysian Chinese Association (MCA). He also sits on the Board of Pan Malaysia Capital Berhad Group, Pan Malaysia Holdings Berhad, Hua Yang Bhd, Johan Holdings Berhad and also serves as a director of several private companies. YB Tan Sri Dato Seri Dr Ting does not hold any of the Company s securities. (iv) Tuan Syed Danial Syed Ariffin, aged 46, Malaysian Executive Director, Operation Division Tuan Syed Danial graduated in 1981 with a BSc. (Hons) Degree in Civil Engineering from University of Aston in Birmingham, United Kingdom. He is a civil engineer by profession and has been with the PNHB Group for 8 1/2 years since December He began his career with PNSB as a Manager of Operation and was subsequently promoted to Senior Manager, Assistant General Manager and General Manager of Operation. Prior to his appointment to the Board of PNSB and PNHB on 1 March 24, he was the Acting Executive Director of Operation Division (July 23 to February 24). Tuan Syed Danial previously worked with the Pahang Public Works Department for 1 years, holding positions from Project Engineer ( ) to District Engineer for JKR Cameron Highlands ( ) 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. He is a member of Institute of Marketing Malaysia, Malaysian Water Association, a Registered Engineer with the Board of Engineers, Malaysia and also sits on the Board of a private company. Tuan Syed Danial holds 25, (.1%) ordinary shares of the Company. Notes: Save as disclosed above, none of the Directors standing for re-election 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 1 years. Puncak Niaga Holdings Berhad Annual Report

154 Puncak Niaga Holdings Berhad Proxy form I/We of being a Member/Members of Puncak Niaga Holdings Berhad hereby appoint of as my/our proxy to attend and vote for me/us and on my/our behalf at the Seventh Annual General Meeting of Puncak Niaga Holdings Berhad to be held at the Banquet Hall, Kuala Lumpur Golf & Country Club, No. 1, Jalan 1/7D, Off Jalan Bukit Kiara, 6 Kuala Lumpur on Monday, 28 June 24 at 9.3 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 23 and the Reports of the Directors and Auditors thereon. 2. To re-elect Ir Lee Miang Koi as Director of the Company. 3. To re-elect Encik Abdul Majid Abdul Karim as Director of the Company. 4. To re-elect YB Tan Sri Dato Seri Dr Ting Chew Peh as Director of the Company. 5. To re-elect Tuan Syed Danial Syed Ariffin as Director of the Company. 6. To appoint Messrs Ernst & Young as the Auditors of the Company in place of the retiring auditors, Messrs PricewaterhouseCoopers and to authorise the Directors of the Company to fix their remuneration. 7. To empower the Directors of the Company to issue shares pursuant to Section 132D of the Companies Act, 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. Signature(s)/Common Seal of Shareholder(s) No. of shares held: NRIC / Company No: Signed this day of 24 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 , 14th Floor, Plaza See Hoy Chan, Jalan Raja Chulan, 52 Kuala Lumpur not less than 48 hours before the time set for holding the Meeting or any adjournment thereof. 157 Puncak Niaga Holdings Berhad Annual Report 23

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157 HEALTH, SAFETY & ENVIRONMENTAL POLICY It is the policy of Puncak Niaga to provide, so far as is practicable, a safe, healthy and environmental friendly workplace for all employees, contractors, visitors, interested members of society and others, and in the spirit of consultation and cooperation, the Management and employees will together strive to achieve goals and objectives of this Policy. Without prejudice to the generality of the above statement, the Policy of Puncak Niaga is: 1. to provide and maintain a safe and environmental friendly workplace and system of work and to continually improve its environment and safety performance. 2. to continuously emphasise on the prevention of pollution in all activities. 3. to ensure environmental and safety objectives and targets are set and reviewed. 4. to ensure all employees are informed, instructed, trained and supervised on how to perform their job safely and without risk to health and without any harm to the environment. 5. to investigate all accidents and near-misses and to take corrective measures to ensure the accidents or near-misses will not recur. 6. to comply with all legal and other requirements on health, safety and environment and other good practices which Puncak Niaga subscribes. 7. to review this Policy as and when appropriate and to ensure it is understood by all employees and is available to all interested parties. HEALTH, SAFETY & ENVIRONMENTAL REPORT CONSERVING AND PROTECTING OUR WATER RESOURCES At Puncak Niaga, we recognise that we have a key role to play in relation to the care and management of a very valuable natural resource water. It is a finite even though renewable resource that can slowly deteriorate its usefulness to mankind if not conserved and protected. Understanding our role and responsibility as Malaysia s Leading Water Services Company, it is one of Puncak Niaga s missions to address national and international concerns pertaining to the protection, conservation and enhancement of the natural environment in which we live. Over the years, Puncak Niaga has implemented many initiatives to protect the environment and improve river water quality. We have intensified our efforts from year to year in our quality monitoring, assisted to a large extent by computer-generated analysis of trends and statistics and reporting the results to the relevant authorities. We have set up a toll-free river watch telephone hotline ( ), which has been in operation since 1997 which enabled the public to inform us of incidents of pollution such as the indiscriminate dumping of untreated waste, illegal sand mining and logging activities which we have highlighted to the relevant authorities for enforcement. Erosion and landslides along Sungai Selangor Sand mining activity on the river bank of Sungai Batang Kali Livestock farming along Sungai Semenyih Dumping of chemical drums near Sungai Langat 1

158 In addition, surveillance and investigations are conducted through our Environmental Unit, which undertake the following functions: Conduct regular sanitary surveys and special environmental investigations on all catchment areas to our water treatment plants (WTPs) to detect activities which may have adverse effects on treatment processes and the raw water quality; Constantly monitor the raw water quality, investigate violations and forward report to the Department of Environment (DOE) or relevant authorities on actions to be taken in order to bring the levels to the acceptable quality for treatment; Operate and maintain the automated river warning monitoring stations to provide early warning of possible raw water quality violations; and Undertake research or studies on water quality problems faced by the WTPs and on treatment plant processes in order to improve the quality of water supplied. INCREASING PUBLIC AWARENESS ON ENVIRONMENTAL PROTECTION AND CONSERVATION Public awareness and educational programmes play an important role in reducing public apathy towards environmental protection and conservation. Puncak Niaga continues to provide strong support to all efforts of the Government and Non- Governmental Organisations towards this end by participating in exhibitions and programmes such as an Open Day at the Wangsa Maju WTP for the public in conjunction with the World Water Day 23 to promote public awareness on the importance of protecting our water resources, a key component of the natural environment. Educational Outreach Programme No. 28 Our River Rescue Brigade programme, involving schoolchildren from primary schools in the State of Selangor and the Federal Territory of Kuala Lumpur is aimed at educating young people on the importance of conservation and protection of our nation s rivers. In 23, a total of 2 schoolchildren from eight primary schools participated in the River Rescue Brigade making a total enrolment of 1,285 into the programme to date. Our Educational Outreach programme, an extension of the River Rescue Brigade aims to educate young people on the importance of river preservation to ensure the continuous supply of clean water. The programme was conducted at ten primary schools in 23 and we spent RM13,85.26 on both programmes. MAINTAINING HIGH QUALITY, INTERNATIONAL STANDARDS AND BEST PRACTICES Another of Puncak Niaga s mission is To Cater To The Increasing Challenges In The Demand For High Quality Treated Water Through The Continuous Implementation Of High Quality Standards, Efficient Services, Effective Human Resources Development, Innovative Technology And Operational Systems. In discharging our responsibility to ensure that the water produced from our WTPs is safe and of high quality, we conduct quality assessments and evaluation exercises at every stage of the process, from the point of entry at the intake of the WTP to treatment until it leaves the WTP at the balancing reservoir.this involves stringent monitoring and numerous laboratory testing as follows: Once every two hours daily on a 24-hour basis against quality standards of four physical and five chemical parameters; Daily for microbiological parameters; Weekly testing at outlets of our WTPs and balancing reservoir by the Ministry of Health (MOH); and Monthly for all parameters by an accredited independent laboratory according to schedules set by MOH. 2

159 In addition, the quality of the raw, settled and treated water are monitored and tested to comply with the standards set out in the Privatisation Cum Concession Agreement and the Construction Cum Operation Agreement, as well as MOH s Drinking Water Quality Standards. Fluoride levels in the treated water are checked regularly and reports submitted to the Dentistry Office of MOH. In 23, Environmental Impact Studies were conducted on each of the six water catchment areas and six Sanitary Surveys, including joint surveys with the authorities, covering at least one WTP in each survey. The results were submitted to the relevant authorities with the jurisdiction to enforce and control the pollution sources. Puncak Niaga completed two cycles to determine the Water Quality Index at all WTPs and dams and submitted the findings to the authorities. Eighteen cases of major WTP shutdowns and thirteen cases of pollution risk or impact were also investigated and reported to the Management during the year under review together with two cases to study and propose alternative raw water resources. ENVIRONMENTAL ASSIGNMENTS AND PERFORMANCE Scope of work Environmental Studies Details Environmental Impact Studies (EIS) Sanitary Surveys (SS) Water Quality Index (WQI) Determination Target To conduct EIS on each of the 6 water catchment areas. To conduct 3 SS covering at least one WTP each. To compute a WQI database for all raw water sources for 28 WTPs and 3 dams. Achievement All 6 EIS completed. Conducted 6 SS inclusive of joint surveys with the authorities. Completed 2 cycles of WQI determination at all 28 WTPs and 3 dams. Environmental Investigations To investigate each of the WTP s shutdown major cases. Completed and brought up 18 cases to the Management s attention. To evaluate and highlight pollution risk/impact. Completed and brought up 13 cases to the Management s attention. To study and propose alternative raw water resources. Completed and brought up 2 cases to the Management s attention. Water Quality Assessment Quality Assurance Programme Monthly raw and treated water sampling. Completed. 2-hourly analysis at WTPs. Completed. Daily compliance. Completed. Daily ammonia data. Completed. *Weekly/Monthly fluoride. Completed. Study on violation and chemical element To evaluate and highlight any cases of violation. Completed study on iron and manganese. River Watch Operations & Maintenance To operate and maintain the River Warning Monitoring Station. Good operating condition. Research & Study Waste Management (Sludge Treatment) To study and highlight the sludge treatment needs to the authorities. Completed. * Weekly flouride testing for WTPs located in the Federal Territory. 3

160 At Puncak Niaga, issues relating to quality, safety and the environment have always been our concern. Our commitment to achieving best practices in these areas is reflected in our initiative to implement the Integrated Management System (IMS) at the Sungai Selangor Phase 2 (SSP2) WTP as our pilot project. We received certification from Lloyd s Register Quality Assurance (LRQA) on 15 October 23 for the first of the IMS, i.e. the Quality Management System ISO 91:2. On 31 October 23, we were accredited the second IMS, Environmental Management System ISO 141:1996, while the third IMS, the Safety Management System OHSAS 181:1999, was obtained in January 24. With this, the SSP2 WTP has become the first water treatment plant in the country to have a fully implemented management system that integrates three critical aspects, i.e. quality, safety and the environment. The implementation of the IMS is expected to extend to all the WTPs under the management of Puncak Niaga. Study 1: Sludge Treatment To meet the requirements of the Environmental Quality Act set by DOE, Puncak Niaga requires a budget of RM12 to RM15 million to install sludge treatment systems at all the 26 WTPs over a five-year period. We have submitted a funding proposal to the Selangor State Government and PUAS has been instructed to proceed with the works. At present, PUAS has commenced preliminary works at two WTPs, namely the Sungai Langat and Cheras Mile 11 WTPs. Study 2: Reddish Raw Water At Cheras Mile 11 WTP One of the environmental investigations involved investigating the source of reddish raw water pollution that caused seven shutdowns at the Cheras Mile 11 WTP between 22 May and 7 July 23: No. Date of shutdown Shutdown (hours) Production Loss (m 3 ) 1 22 May , June , June , June , June , June , July ,762 Total , 557 Reddish colouration of raw water at the intake of Cheras Mile 11 WTP The investigation, which was conducted with the assistance of DOE Selangor, indicated that the reddish colouration could have originated from the illegal dumping of industrial effluent from a timber processing or plywood manufacturing factory. Since raw water from Sungai Cheras is of poor quality and not suitable for treatment, we decided not to extract raw water from the river effective early January 24 since a new intake weir at Sungai Langat, which lies upstream from Sungai Cheras confluence has been constructed on 1 January 23 at a cost of RM3.28 million. This has led to an improved raw water source and reduced supply interruptions due to shutdown of the WTPs attributed to unacceptable raw water quality from Sungai Cheras. To avoid similar incidences of pollution, Puncak Niaga introduced a series of environmental awareness campaigns to factories located upstream of the new intake and the response from these factories has been positive. 4

161 Study on alternative raw water resourcing Study 3: Alternative Water Resources At Selangor River Basin As part of Puncak Niaga s contingency plan to minimise the shortage of treated water supply to consumers, a study was undertaken on a number of potential ponds and tributaries as alternative raw water resources at the Selangor River Basin. An environmental survey was also conducted, which identified eight potential locations for water storage and future use along the basin, with a total volume capacity of 4.4 MG/182.1 ML. These ponds serve as alternative raw water sources to Sungai Selangor in the event of drought The dams under Puncak Niaga s management are also subjected to the same level of scrutiny as the water treatment plants. In line with our emphasis on safety standards, we conducted three major visual safety inspections of the dams in 23. The inspections, which covered all major structures of the dams, were to detect and investigate any dam safety deficiencies and to recommend appropriate corrective actions.as part of our adherence to international standards and practices, we have proposed to PUAS that an independent dam safety inspection be undertaken by an external consultant for the year 24. Our emphasis on quality and high standards is supported by our employees active involvement in Quality Control Circles (QCC). In 23, we spent RM3,838 on QCC-related activities, an investment which has brought rewards for the Company. The QCC projects initiated by all the 15 registered circles for the period resulted in total cost savings of RM1.4 million, without compromising quality or productivity. Our QCC circles participated in the QCC Mini and Regional Conventions organised by the National Productivity Corporation on 1 April 23 and 9-1 June 23 respectively.we won one Gold Award and two Silver Awards at the QCC Mini Convention 23 and three Silver Awards at the QCC Regional Convention 23 (Central). IMPROVING OUR SERVICES THROUGH RESEARCH & DEVELOPMENT (R&D) Much of Puncak Niaga s R&D effort is focused on improving operating costs and increasing operational efficiency of the WTPs. In 23, we expended close to RM4.7 million on R&D projects, which mainly entailed major refurbishments and upgrading of all the WTPs. We undertake studies on environment and water quality. During the year, we conducted a trial run of a new polymer at the SSP2 WTP which proved that the polymer has superior coagulation properties. Such properties will help to lower chemical costs and extend filter runtime and the consequent reduction in electricity cost and water loss can bring about a potential cost saving of RM1.1 million a year. We are also concerned about the consistently high total iron content in raw water, which sometimes exceeds the Wangsa Maju WTP engineers checking on the raw water quality at the aerator 5

162 parameter set by MOH. An in-house preliminary study was conducted in May 23 on the possible elimination of iron and manganese from raw water without adding chemicals to the treatment process.the second stage of the study is now underway and the results are expected to be known by 24. River Warning Monitoring Station BEING PREPARED IN EMERGENCIES AND CRISIS Given PNSB s critical role in supplying water to the country s hub, we have in place the Crisis Management Plan and Water Treatment Plant Emergency Response Plan to help us respond quickly and effectively to any form of emergency, crisis or disaster, with minimal disruption to our business operations. On 13 September 23, an evaluation exercise was conducted to assess chlorine handling, fire fighting and emergency rescue in a confined space.the response teams, comprising four teams from the SSP2 WTP and two teams from the Wangsa Maju WTP, were able to demonstrate, through both their theoretical knowledge and performance in practical exercises, the level of their skills and capabilities to mitigate any crisis should it occur. The evaluation on our response teams was undertaken by the Crisis Management Committee in collaboration with the Fire Department, Department of Occupational Safety and Health (DOSH) and an expert on confined space. During the year, the Crisis Management Committee also carried out case studies and simulation exercises on crisis scenarios such as the possibility of Severe Acute Respiratory Syndrome (SARS) affecting the Group s major water treatment plants in the country.the action plans developed during the simulation exercises, were incorporated into the Crisis Management Plan. The Group s Crisis Management Centre was activated twice during the year under review. One was in conjunction with the Non- Aligned Movement Summit in February 23 and the other was in relation to the Conference of the Organisation of Islamic Countries in October 23. During these events, the Centre was manned 24 hours a day for ten days and worked in close liaison with the Government s Operation Centre. ENSURING THE HEALTH AND SAFETY OF OUR EMPLOYEES The safety and health of our employees at the water treatment plants and dams is of paramount importance to Puncak Niaga.To oversee and organise safety and health programmes and activities, a Corporate Safety and Health Committee was established in September 21 supported by similar committees at various levels of the Group s operations. In 23, Puncak Niaga s Safety & Health Policy and Environmental Policy were consolidated into one Policy in light of the implementation of the Integrated Management Systems at SSP2 WTP. This is the first review on the Group s Safety and Health Policy since its inception on 12 March 1999 to be in line with the changing business environment. Safety-related programmes and activities are regularly conducted at all locations, which include drills, handling of fire-fighting equipment and providing first aid. In August 23, safety information was disseminated to the employees through articles in our quarterly in-house newsletter, KITA. Emergency drill at SSP2 WTP 6

163 SSP2 WTP has demonstrated a high level of commitment to safety and health standards at the workplace. In June 23, SSP2 WTP achieved the benchmark of one million hours of no Lost Time Injury (LTI), one of the major elements used as an indicator of safety performance adopted internationally by most industries. It is worthy to note that since September 22, the LTI has included contractors and suppliers manhours after they have undergone extensive safety and health training and familarisation at the WTP.The benchmark achieved indicates that SSP2 WTP has been accident-free since the day the plant was commissioned in July 1998, a testament to the employees high level of awareness on safety and health standards. In October 23, SSP2 WTP received MSOSH s OSH Gold Merit Award 22 for excellence in the implementation of safety and health programmes. At the same time, Wangsa Maju WTP won the MSOSH s OSH Gold Award 22. The implementation of the occupational safety and health management of the 26 WTPs under the PCCA is closely monitored by our Corporate Safety and Health Officer. Safety and health activities undertaken at these plants include external audits by DOSH, site safety inspections by the Safety and Health Officer and occupational safety and health training programmes, such as Managing Occupational Safety and Health at Sungai Langat WTP, Utilisation of Self-Contained Breathing Apparatus at Sungai Batu WTP and Job Hazard Analysis at Wangsa Maju WTP. Between 6-1 October 23, a safety and health awareness campaign was also undertaken at Sungai Batu WTP. Sixteen safety drills were conducted at prominent WTPs to familiarise and equip the employees in responding to unforeseeable crisis situations. OUR FUTURE At the present day, caring for health, safety and the environment is a continuous challenge in light of the diverse socio-cultural background of our society which places less emphasis and awareness on these issues previously. In regard to water management, we are fully aware of how the quality of our river water is being affected by deforestation, uncontrolled development, industrial discharges and dumping of solid wastes.the DOE s Water Quality Index for 2 found that 52 river basins in the country were populated with suspended solids resulting from poorly planned and uncontrolled land clearing activities, 18 river basins had low oxygen levels due to industrial charges and 33 river basins were polluted with ammoniacal nitrogen from animal husbandry activities and domestic sewage disposal. With environmental compliance varying from industry to industry, it is difficult for the authorities to compel industries to adopt cleaner production measures that will not pollute the waterways. Alternative options therefore need to be explored to ensure that our water is safe and clean.these options include waste minimisation and waste re-cycling As a responsible corporate citizen, Puncak Niaga continues to do its part in the areas of quality, environmental conservation, occupational health and safety. We will continue in our pursuit of the highest standards in health, safety and the environment in the interests of our Company and the stakeholders, including the communities we serve. Klang Gates Dam 7