Rising. Challenge Annual Report

Transcription

1 Rising To The Challenge 2007 Annual Report

2 Cover Rationale On the cover of our Annual Report for 2007, the expanse of water in the foreground reflects the nature of our business, while the puncak (the Bahasa Malaysia for peak ) symbolizes both the challenge that lies before us and the achievement to which we aspire. Rising To The Challenge Today, the challenge facing Puncak Niaga is not only to deliver an abundant supply of high quality water without interruptions. It is also to give back to society and to protect the environment for the benefit of future generations. Striking a balance between these two objectives is our prime focus. As the communities of Selangor, Kuala Lumpur and Putrajaya continue to expand, the demand for water rapidly increases. Our goal is both to meet this growing demand and to continuously enhance the calibre of our operations. To this end, PNSB is rolling out a Continual Improvement Programme, while SYABAS has started to implement a wide-ranging Water Quality Improvement Master Plan. These initiatives are amply supported by a substantial investment in research and development. At the same time, we constantly deepen our commitment to fulfilling our social responsibilities and safeguarding the natural world. In 2007, we continued to embrace innovative technologies that enhance water quality; and we extended our programmes dedicated to educating the young on the importance of the conservation of our environment, and especially our nation s rivers.

3 1 Annual Report 2007 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 To address national and international concerns pertaining to the protection, conservation and enhancement of the natural environment we live in.

4 2 Puncak Niaga Holdings Berhad Contents Notice of Annual General Meeting 4 Statement Accompanying the Notice of Annual General Meeting 6 Corporate Information 7 Fact Sheet 9 Corporate Profile 13 Corporate Structure 16 Organisation Structure PNSB 17 Organisation Structure SYABAS 18 Our Role in the Water Supply System 20 Corporate Achievements 21 Five-Year Financial Highlights 22 Financial Calendar 22 Financial & Share Performance 23 Board of Directors 24 Profile of Directors 26 Key Personnel in PNSB 37 Key Personnel in SYABAS 40 Executive Chairman s Message 46

5 3 Annual Report 2007 Eleventh Annual General Meeting Date : Thursday, 26 June 2008 Time : a.m. Venue : Concorde I, Concorde Hotel Shah Alam Level 2, No. 3, Jalan Tengku Ampuan Zabedah C9/C Shah Alam, Selangor Darul Ehsan 52 Operations Review: PNSB Water Treatment Activities 58 PNSB S Continual Improvement Programme 62 Operations Review: SYABAS Water Distribution Activities 70 SYABAS Water Quality Improvement Master Plan 74 Research and Development 78 Corporate Social Responsibility & Environmental Responsibility 94 Corporate Calendar of Events 104 Water News 108 Statement on Corporate Governance 120 Statement on Internal Control 122 Audit Committee Report 128 Risk Management Policy & Report 131 Investor Relations Policy & Report 133 Quality Policy & Report 134 Corporate Disclosure Policy 135 Distribution Schedule of Equity Securities 139 List of Properties 141 Statement of Directors Responsibility for Preparation of Financial Statements 142 Financial Statements Proxy Form

6 4 Puncak Niaga Holdings Berhad Notice of Annual General Meeting NOTICE IS HEREBY GIVEN THAT the Eleventh Annual General Meeting of Puncak Niaga Holdings Berhad ( U) will be held at Concorde I, Concorde Hotel Shah Alam, Level 2, No. 3, Jalan Tengku Ampuan Zabedah C9/C, Shah Alam, Selangor Darul Ehsan on Thursday, 26 June 2008 at a.m. for the following purposes:- 1. To receive the Audited Financial Statements of the Group and of the Company for the financial year ended 31 December 2007 together with the Reports of the Directors and Auditors thereon. Resolution 1 2. To declare a final tax-exempt dividend of 10 sen per share in respect of the financial year ended 31 December 2007 as recommended by the Directors of the Company. Resolution 2 3. 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. Yang Berbahagia Tan Sri Rozali Ismail Resolution 3 b. Yang Berbahagia Tan Sri Dato Hari Narayanan Govindasamy Resolution 4 4. To re-appoint Messrs Ernst & Young as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration. Resolution 5 AS SPECIAL BUSINESS To consider and, if thought fit, to pass the following Ordinary Resolution:- 5. Allotment Of Shares Pursuant To Section 132D Of The Companies Act, 1965 THAT subject always to the Companies Act, 1965, the Articles of Association of the 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 to be issued pursuant to this resolution does not exceed ten per centum (10%) of the issued share capital of the Company for the time being AND THAT the Directors of the Company be and are hereby also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad AND FURTHER THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company. Resolution 6 6. To transact any other ordinary business of which due notice shall have been given.

7 5 Annual Report 2007 NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS ALSO HEREBY GIVEN THAT subject to the approval of the shareholders of the Company at the Eleventh Annual General Meeting, a final tax-exempt dividend of 10 sen per share for the financial year ended 31 December 2007, will be paid on 8 August 2008 to Depositors whose names appear in the Record of Depositors of the Company on 18 July a. shares transferred into the Depositor s Securities Account before 4.00 p.m. on 18 July 2008 in respect of transfers; and b. shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. BY ORDER OF THE BOARD TAN BEE LIAN (MAICSA ) LIM YEW HEANG (MAICSA ) Secretaries Shah Alam 3 June 2008 A Depositor shall qualify for entitlement to the dividend only in respect of:- Notes:- 1. A member entitled to attend and vote at the Meeting is entitled to appoint another person to attend and vote in his stead. 2. A proxy need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the Meeting provided that where a member is an authorised nominee as defined in the Securities Industry (Central Depositories) Act, 1991, it may appoint up to two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 3. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly appointed under a power of attorney or if such appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly appointed under a power of attorney. If this Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading signed as authorised officer under an Authorisation Document which is still in force, no notice of revocation having been received. If this Proxy Form is signed under the attorney duly appointed under a power of attorney, it should be accompanied by a statement reading signed under a power of attorney which is still in force, no notice of revocation having been received. A copy of the Authorisation Document or the power of attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form. 4. Any corporation which is a member of the Company may by resolution of its Directors or other governing body authorise such person as it thinks fit to act as its representative at the Meeting in accordance with Article 82 of the Company s Articles of Association. 5. The instrument appointing the proxy must be deposited at the Registered Office of the Company at 10th Floor, Wisma Rozali, No. 4, Persiaran Sukan, Seksyen 13, Shah Alam, Selangor Darul Ehsan not less than 48 hours before the time set for holding the Meeting or any adjournment thereof. 6. Explanatory Note On Special Business: Resolution 6: The Ordinary Resolution proposed under item 5, 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.

8 6 Puncak Niaga Holdings Berhad Statement Accompanying the Notice of Annual General Meeting DETAILS OF DIRECTORS STANDING FOR RE-ELECTION AT THE ELEVENTH ANNUAL GENERAL MEETING:- Name of YBhg Tan Sri Rozali Ismail YBhg Tan Sri Dato Hari Retiring Director Narayanan Govindasamy Age Nationality Malaysian Malaysian Qualification Bachelor of Laws Degree from Bachelor Degree in Electrical and University of Malaya. Electronics Engineering from University of Northumbria, England. Position In PNHB Executive Chairman Independent Non-Executive Director Working Experience & Occupation YBhg Tan Sri Rozali has 25 years YBhg Tan Sri Dato Hari Narayanan has of working experience. 31 years of working experience. For details, please refer to his profile For details, please refer to his profile on pages 26 & 27 of the Annual Report. on page 32 of the Annual Report. Directorships in other 1. TRIplc Berhad Group 1. Tenaga Nasional Berhad public companies 2. WWE Holdings Bhd Group 2. SP Setia Berhad Equity securities interests in Please refer to page 138 Please refer to page 138 PNHB and its subsidiaries of the Annual Report. of the Annual Report. Family relationship with any None None director and/or major shareholder of PNHB Any conflict of interest None None with PNHB List of convictions for offences None None (other than traffic offences) within the past 10 years

9 7 Annual Report 2007 Corporate Information BOARD OF DIRECTORS Yang Berbahagia Tan Sri Rozali Ismail Executive Chairman Yang Berbahagia Dato Matlasa Hitam Managing Director Yang Berbahagia Dato Ruslan Hassan Non-Independent Non-Executive Director Yang Berbahagia Dato Ir Lee Miang Koi Non-Independent Non-Executive Director Yang Berbahagia Dato Syed Danial Syed Ariffin Chief Operating Officer Yang Berbahagia Tan Sri Dato Hari Narayanan Govindasamy Independent Non-Executive Director Yang Berbahagia Tan Sri Dato Seri Dr Ting Chew Peh Independent Non-Executive Director Yang Berbahagia Datuk Dr Rahman Ismail Independent Non-Executive Director Mr Tan Seng Lee Executive Director, Finance Division Yang Amat Mulia Tengku Dato Rahimah Almarhum Sultan Mahmud Non-Independent Non-Executive Director COMPANY SECRETARIES Madam Tan Bee Lian, MAICSA Madam Lim Yew Heang, MAICSA REGISTERED OFFICE 10th Floor, Wisma Rozali No. 4, Persiaran Sukan Seksyen Shah Alam Selangor Darul Ehsan Tel : Fax : PRINCIPAL OFFICE Wisma Rozali No. 4, Persiaran Sukan Seksyen Shah Alam Selangor Darul Ehsan Tel : Fax : website : (general) : corpcom@puncakniaga.com.my (investors) : investors@puncakniaga.com.my BRANCH OFFICE No. 8, Jalan Senangin 1 Taman Perniagaan Senangin Jalan Sultanah Sambungan Alor Setar Kedah Darul Aman Tel : Fax : No.12, Jalan Todak 5 Pusat Bandar Seberang Jaya Perai Pulau Pinang Tel : Fax : DATE AND PLACE OF INCORPORATION 7 January 1997, Malaysia COMPANY NUMBER U

10 8 Puncak Niaga Holdings Berhad Corporate Information AUDITORS Messrs Ernst & Young (AF 0039) TAX ADVISOR Messrs Ernst & Young Tax Consultants Sdn Bhd PRINCIPAL BANKERS CIMB Bank Berhad (13491-P) RHB Bank Berhad (6171-M) United Overseas Bank (Malaysia) Bhd ( K) SOLICITORS Messrs Adnan Sundra & Low Messrs Azian Haslina & Co Messrs Kadir, Andri & Partners Messrs Lee Hishammuddin Messrs Sivananthan Messrs Wong & Partners Messrs Zaid Ibrahim & Co Messrs Zul Rafique & Partners AUDIT COMMITTEE Chairman: Yang Berbahagia Tan Sri Dato Seri Dr Ting Chew Peh Members: Yang Berbahagia Tan Sri Dato Hari Narayanan Govindasamy Yang Berbahagia Datuk Dr Rahman Ismail Yang Amat Mulia Tengku Dato Rahimah Almarhum Sultan Mahmud Secretaries: Madam Tan Bee Lian Madam Lim Yew Heang REMUNERATION COMMITTEE Chairman: Yang Berbahagia Datuk Dr Rahman Ismail Members: Yang Berbahagia Tan Sri Dato Hari Narayanan Govindasamy Yang Berbahagia Tan Sri Dato Seri Dr Ting Chew Peh Mr Tan Seng Lee Secretaries: Madam Tan Bee Lian Madam Lim Yew Heang SHARE REGISTRAR (Place where all registers of securities are kept) Tenaga Koperat Sdn Bhd ( V) 20th Floor, Plaza Permata Jalan Kampar Off Jalan Tun Razak Kuala Lumpur Tel : Fax : STOCK EXCHANGE LISTING Main Board of Bursa Malaysia Securities Berhad under the Infrastructure Project Companies Sector INDICES Kuala Lumpur Composite Index (KLCI) Kuala Lumpur Syariah Index NOMINATION COMMITTEE Chairman: Yang Berbahagia Datuk Dr Rahman Ismail Members: Yang Berbahagia Tan Sri Dato Hari Narayanan Govindasamy Yang Berbahagia Tan Sri Dato Seri Dr Ting Chew Peh Secretaries: Madam Tan Bee Lian Madam Lim Yew Heang COMPLIANCE, INTERNAL CONTROL AND RISK POLICY COMMITTEE (CICR) Chairman: Yang Berbahagia Tan Sri Dato Seri Dr Ting Chew Peh Members: Yang Berbahagia Dato Matlasa Hitam (Head of CICR) Tuan Haji Sonari Solor Madam Tan Bee Lian Secretary: Encik Mohammed Sofian Ismail (Head of Risk Management Section)

11 9 Annual Report 2007 Fact Sheet PUNCAK NIAGA HOLDINGS BERHAD S FACT SHEET AS AT 29 APRIL 2008 Group Manpower: Management Employees 198 Executive Employees 748 Non-Executive Employees 3,236 Total 4,182 Number of PNSB s Water Treatment Plants 29 Number of Water Treatment Plants with ISO Certifications 13 Authorised Share Capital RM1,300,000,000 Paid-Up Share Capital RM411,142,895 (comprising 411,142,895 ordinary shares of RM1.00 each) Number of RUN Issued 546,875,000 RUN Coupon Rates 2.5% per annum for the first 10 years and 3.5% per annum for the remaining 5 years RUN Maturity Date 18 November 2016 RUN Holders Put Option Date 20 November 2011 RUN Partial Redemption Dates ( ) First (1st) Mandatory Partial Redemption - 20 November 2007 Second (2nd) Mandatory Partial Redemption - 20 November 2008 Third (3rd) Mandatory Partial Redemption - 20 November 2009 Effective Date of ESOS 25 February 2002 Expiry Date of ESOS 24 February 2007 Number of ESOS Offered 51,723,000 Number of ESOS Exercised 42,420,000 Number of ESOS Lapsed 9,303,000

12 10 Puncak Niaga Holdings Berhad 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 Malaysia-Japan Economic Association (MAJECA) Member since Commonwealth Partnership for Technology Management (CPTM) Member since Institute of Marketing Malaysia (IMM) Member since South East Asian Water Utilities Network (SEAWUN) Member since Malaysian Islamic Chamber of Commerce (MICC) Member since Singapore Water Association Member since Malaysian Investors Relations Association (MIRA) Member since Water Association of Selangor, Kuala Lumpur and Putrajaya (SWAn) Member since 2008 Water Treatment Plants: Puncak Niaga (M) Sdn Bhd Central Region Tel/Fax No.: Central Regional Office Tel : Fax : Ampang Intake Tel : Bukit Nanas Tel : Gombak Tel : Kepong Tel : Sungai Batu Tel : Sungai Kroh Tel : Sungai Pusu Tel : Sungai Rangkap Tel : Sungai Rumput Tel :

13 11 Annual Report 2007 Northern Region Tel/Fax No.: Northern Regional Office Tel : Fax : Batang Kali Tel : Bernam River Headworks Tel : Kalumpang Tel : Kuala Kubu Bharu Tel : North Hummock Tel : Rantau Panjang Tel : Fax : (New Plant) Fax : (Old Plant) Sungai Buaya Tel : Sungai Dusun Tel : Sungai Selisek Tel : Fax : Sungai Tengi Tel : (Intake) Southern Region Tel/Fax No.: Southern Regional Office Tel : Fax : Bukit Tampoi Tel : Cheras Mile 11 Tel : Salak Tinggi Tel : Sungai Langat Tel : Fax : Sungai Lolo Tel : Sungai Pangsoon Tel : Sungai Serai Tel : Sungai Selangor Phase 2 # Tel : Fax : Wangsa Maju Tel : Fax : Sungai Sireh Tel : Fax : Syarikat Bekalan Air Selangor Sdn Bhd (SYABAS) District Offices Central Zone Tel/Fax No.: Kuala Lumpur Tel : Jalan Pantai Baru, Kuala Lumpur Fax : Petaling Jalan Templer, Petaling Jaya Tel : Selangor Darul Ehsan Fax :

14 12 Puncak Niaga Holdings Berhad Fact Sheet Northern Zone Tel/Fax No.: Kuala Selangor Tel : Jalan Kelang, Kuala Selangor Fax : Selangor Darul Ehsan Sabak Bernam Tel : Jalan Besar, Sungai Besar Fax : Sabak Bernam, Selangor Darul Ehsan Hulu Selangor Tel : Bangunan JKR, Bukit Kemajuan Kuala Kubu Bahru, Selangor Darul Ehsan Fax : Gombak Tel : Bandar Baru Selayang, Batu Caves Fax : Selangor Darul Ehsan Southern Zone Tel/Fax No.: Hulu Langat Tel : Jalan Semenyih, Kajang Fax : Selangor Darul Ehsan Kuala Langat Tel : Telok Datok, Banting Fax : Selangor Darul Ehsan Sepang Tel : No. 29 Jalan 6, Kosmopleks Fax : Bandar Baru Salak Tinggi Sepang, Selangor Darul Ehsan Klang Tel : Jalan Kota, Klang Fax : Selangor Darul Ehsan Pusat Perkhidmatan Pelanggan (PUSPEL) Toll-Free Helpline: Fax No.: SMS at type: PUSPEL<space> <your complaints/feedback> puspel@syabas.com.my # Awarded the following certifications: 1. Occupational Health & Safety Management System (OHSAS 18001:1999) 2. Environmental Management System (ISO 14001:2004/EN ISO 14001:2004/BS EN ISO 14001:2004/MS ISO 14001:2004) 3. Quality Management System (ISO 9001:2000/EN ISO 9001:2000/BS EN ISO 9001:2000/MS ISO 9001:2000) 4. Competence of Testing Laboratories (ISO/IEC 17025:1999) Awarded the following certification: 1. Quality Management System (ISO 9001:2000/EN ISO 9001:2000/BS EN ISO 9001:2000/MS ISO 9001:2000)

15 13 Annual Report 2007 Corporate Profile OUR COMPANY Puncak Niaga Holdings Berhad (PNHB) Group is the leading and dynamic integrated water services company in Malaysia. PNHB is an investment holding company whilst its subsidiaries are principally involved in the operation, maintenance, management, construction, rehabilitation and refurbishment of water treatment facilities, supply and distribution of treated water within the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya, undertaking research and development and technology development for the water, wastewater and environment sectors as well as undertaking works related to the oil and gas industry and other materials and the provision of offshore and onshore engineering works.

16 14 Puncak Niaga Holdings Berhad Corporate Profile Established on 7 January 1997, PNHB was listed on the Main Board of Bursa Malaysia Securities Berhad on 8 July As at the end of December 2007, PNHB s market capitalisation stood at RM2.0 billion. It is the first water treatment and supply concession company to be listed on Bursa Malaysia Securities Berhad under the Infrastructure Project Company guidelines issued by Securities Commission. OUR CORE BUSINESS AND CAPABILITIES Our subsidiary, Puncak Niaga (M) Sdn Bhd (PNSB) which holds 5 water treatment concessions with the Selangor State Government, is the nation s second largest water supply concessionaire, operating, managing and maintaining 29 water treatment plants with a combined capacity of 1,930 million litres per day. PNSB undertook the finance, design, construction, operation, management and maintenance of the Sungai Selangor Phase 2 Water Treatment Plant with a design capacity of 950 million litres per day at a cost of RM1.28 billion which was completed on 1 January 2001, one year ahead of schedule and the Wangsa Maju Water Treatment Plant with a design capacity of 45 million litres per day at a cost of RM122.0 million which was completed in a record time of six months in July 1998 during the water crisis. These early completion of projects clearly exemplifies the PNHB Group s excellent capabilities in managing and undertaking large-scale water supply projects in Malaysia. Under a separate concession agreement with the Federal Government and the Selangor State Government, our other subsidiary, Syarikat Bekalan Air Selangor Sdn Bhd (SYABAS) supplies treated water to a population of 7.3 million and industrial and commercial users through 1.52 million consumer accounts and also maintains 24,695 km of water pipes, 1,169 service reservoirs, water tanks and reservoirs and 444 pumping stations within the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya. The research and development activities and oil and gas works are carried out respectively by two subsidiaries, namely Puncak Research Centre Sdn Bhd and Puncak Oil & Gas Sdn Bhd. Our customer service centre, PUSPEL which is manned by 60 highly trained call agents operates 24 hours daily and provides customers with a convenient and effective way to contact SYABAS on water supply matters. In May 2007, PUSPEL received the 2007 Malaysia Water Award for Excellence in Customer Service Management from the Malaysian Water Association. Out of the manpower strength of more than 4,000 employees in PNHB Group, more than half comprise management, professionals, technical and supervisory executives with core competencies in, inter alia, engineering, accountancy, legal, management, administration and business; which are instrumental in supporting the Group s business and operations. OUR COMMITMENT TO CORPORATE CITIZENSHIP The PNHB Group is committed to upholding the principles of good corporate governance and core values such as quality, value, service, innovation and trust in the conduct of our business which are integral to our success over the years. We have received various repeat awards and accolades for good governance, annual reporting, occupational safety and health and environmental and social reporting.

17 15 Annual Report 2007 In line with our corporate vision and mission, we seek to be environmentally responsible in the protection, conservation and enhancement of the natural environment, particularly in the management aspect of the water resources which is relevant to our business operations. Our River Rescue Brigade (Briged Penyelamat Sungai) programme which was initiated by our Executive Chairman in 1998 is a programme which aims to educate the younger generation on the importance of the conservation and protection of the environment, especially the rivers. To date, we have enlisted 2,220 school children and 88 schools in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya into the programme. In November 2007, our River Rescue Brigade was accorded an Honourable Mention at the inaugural Prime Minister s Corporate Social Responsibility (CSR) Award Another programme, the Educational Outreach Programme (Turun Ke Padang) launched in 1999, is an extension of the River Rescue Brigade which aims to educate the primary school children located within our areas of operations on the importance of river preservation to ensure the continuous supply of clean water as well as the roles played by PNSB and SYABAS in the water treatment and water distribution processes respectively. OUR FUTURE PLANS As the PNHB Group seeks to grow its business and deliver value to the stakeholders, we will look into expanding our operations in areas related to our core business and competencies within Malaysia and undertaking projects in other countries such as India, China and the Middle East. Scenic view of Klang Gates Dam.

18 16 Puncak Niaga Holdings Berhad Corporate Structure Investment Holding PUNCAK NIAGA (M) SDN BHD 82.50% operation, maintenance, management, construction, rehabilitation and refurbishment of water treatment facilities PUNCAK RESEARCH CENTRE SDN BHD 100% research & development and technology development for water, wastewater and environment sectors IDEAL WATER RESOURCES SDN BHD 100% ceased operation UNGGUL RAYA (M) SDN BHD 100% ceased operation PUNCAK SERI (M) SDN BHD 100% dormant PUNCAK NIAGA (INDIA) SDN BHD 100% dormant SYARIKAT BEKALAN AIR SELANGOR SDN BHD 70% supply and distribution of treated water within Selangor and the Federal Territories of Kuala Lumpur & Putrajaya NS WATER SYSTEM SDN BHD 100% dormant PERBADANAN URUS AIR SELANGOR BERHAD 100% ceased operation PUNCAK OIL & GAS SDN BHD 100% exploration for the production of oil and gas and other materials and the provision of offshore and onshore engineering works

19 17 Annual Report 2007 Organisation Structure BOARD OF DIRECTORS AUDIT COMMITTEE EXECUTIVE CHAIRMAN S OFFICE Senior General Manager Mr Ramalingam K R Arumugam Senior General Manager Encik Zon Abd Hamid General Manager Tuan Syed Aminuddin Syed Zakaria CONTRACT & PROCUREMENT Senior Manager Encik Mohd Azmi Jusoh CORPORATE AFFAIRS DIVISION Executive Director Encik Nasir Khan Illadad Khan FINANCE DIVISION Executive Director Mr Tan Seng Lee EXECUTIVE CHAIRMAN YBhg Tan Sri Rozali Ismail MANAGING DIRECTOR YBhg Dato Matlasa Hitam HUMAN RESOURCES & ADMINISTRATION DIVISION Executive Director YBhg Datuk Mohd Yunus Mohd Amin OPERATION I DIVISION SECRETARIAL Senior General Manager Madam Tan Bee Lian General Manager Madam Lim Yew Heang BUSINESS DEVELOPMENT General Manager Encik Mazlan Ali General Manager Ir Ahmad Marzuki Hashim INTERNAL AUDIT Acting Head (Senior Manager) Encik Mohammed Sofian Ismail CHIEF OPERATING OFFICER YBhg Dato Syed Danial Syed Ariffin CHIEF OPERATING OFFICER S OFFICE General Manager Dr Teoh Seng Giap OPERATION II DIVISION LEGAL General Manager Vacant CORPORATE COMMUNICATIONS General Manager Vacant STRATEGIC RESOURCE CENTRE General Manager Dr Abdul Rahim Awang Kechik FINANCE & ACCOUNTS General Manager Vacant COMPENSATION & BENEFITS Assistant General Manager Encik Nik Azmi Nik Yaacob ACCOUNTS Senior Manager Vacant HUMAN RESOURCES & ADMINISTRATION DIVISION General Manager Encik Azhari Abd Rahman HUMAN RESOURCES MANAGEMENT Manager Encik Muhamad Noor Md Darus ADMINISTRATION Manager Vacant OPERATION OF WTPS Senior General Manager Ir Ooi Cheng Swee PLANT IMPROVEMENT & MAINTENANCE SECTION Senior General Manager Vacant SSP2 WTP Senior Manager Encik Azhani Sukimi MAJOR PROJECT & UPGRADING PROJECT General Manager Ir Tan Hui Kuan SABAH PROJECT General Manager Mr Seng Pay PROTECTIVE SERVICES Manager Encik Abdul Latif Othman WANGSA MAJU WTP Assistant Manager Encik Mohd Hafiz Md Yunos PROPERTY MANAGEMENT Senior Manager Vacant HEALTH, SAFETY & QUALITY MANAGEMENT General Manager Vacant INFORMATION TECHNOLOGY Assistant Manager Encik Mat Suhairi Darin FOOD & BEVERAGE Manager Encik Rosdi Abdul Rahman WATER RESOURCES & ENVIRONMENTAL SURVEILLANCE General Manager Puan Roowina Merican A Rahim Merican (As at 5 May 2008)

20 18 Puncak Niaga Holdings Berhad Organisation Structure EXECUTIVE CHAIRMAN YBhg Tan Sri Rozali Ismail CHIEF EXECUTIVE OFFICER YBhg Dato Ruslan Hassan EXECUTIVE DIRECTOR Encik Othman Ismail GENERAL MANAGER Encik Othman Omar AUDIT DIVISION General Manager Tuan Haji Sonari Solor CORPORATE COMMUNICATIONS & CUSTOMER SERVICE Executive Director Vacant FINANCE Executive Director Madam Thein Kwee Sim HUMAN RESOURSE & ADMINISTRATION Executive Director Tuan Haji Zainuddin Othman ICT, LEGAL & CONTRACT Executive Director Vacant CORPORATE COMMUNICATIONS & PUBLIC AFFAIRS DIVISION General Manager Encik Abdul Halem Mat Som CORPORATE COMMUNICATIONS DEPARTMENT Manager Cik Shahrul Bariah Mohd Rejab EVENT & PUBLIC AFFAIRS DEPARTMENT PUBLIC AFFAIRS Manager Puan Balqesh Abdullah EVENT MANAGEMENT Manager Encik Abdul Raof Ahmad CUSTOMER SERVICE DIVISION General Manager Puan Adelina Iskandar PUSPEL CALL CENTRE DEPARTMENT Senior Manager Tuan Haji Mohd Sufian Sahran ICU DEPARTMENT Manager Encik Abdul Manaf Ayoub YAKIN DEPARTMENT Manager Encik Hazamuddin Hashim COUNTER SERVICE DEPARTMENT Senior Executive Encik Syahruladha Nurlis FINANCE & ACCOUNTS DIVISION TREASURY & BANKING DEPARTMENT Senior Manager Encik Shamsul M Isa ACCOUNTS & FINANCIAL REPORTING DEPARTMENT Senior Manager Ms Yan Siew Ching ASSET MANAGEMENT & PAYMENT DEPARTMENTVacant General Manager Madam Chong Poh Leng BILLING & RECOVERY DIVISION General Manager Puan Jamilah Omar BILLING DEPARTMENT Senior Manager Mr Cheah Kok Leong MONITORING & DEVELOPMENT DEPARTMENT Assistant Manager Vacant RECOVERY DEPARTMENT Manager Mr Vasan a/l Ramachandram HUMAN RESOURCE DIVISION General Manager Vacant Senior Manager Encik Arash Mohd Zin PLAINNING & RECRUITMENT DEPARTMENT Manager Puan Noor Fadilla M Samsi INDUSTRIAL RELATION DEPARTMENT Manager Mr Santhana Krishnan a/l Sinanchalam TRAINING/CAREER DEVELOPMENT DEPARTMENT Manager Puan Yasmin Hood PERFORMANCE MANAGEMENT & CAREER DEVELOPMENT DEPARTMENT Manager Puan Khamsiah Mohd Saad COMPENSATIONS & BENEFITS/ EMPLOYEE RELATIONS DEPARTMENT Assistant Manager Cik Wati Abdul Rahman ADMINISTRATION DIVISION General Manager Vacant Senior Manager Encik Norazmani Ahmad GENERAL ADMINISTRATION DEPARTMENT Manager Encik Abd Rahman Bakar ASSET & OFFICE MANAGEMENT DEPARTMENT Manager Vacant SPORTS & RECREATIONAL DEPARTMENT Assistant Manager Encik As ad Mohd Sidek TRANSPORT DEPARTMENT Assistant Manager Encik M Taran Daniel STORE DEPARTMENT Assistant Manager Encik Norzaini M Yatim SECURITY & ENFORCEMENT DIVISION General Manager Encik Saadon Kardi ENFORCEMENT DEPARTMENT Manager Encik Abd Hafidz M Tahet SECURITY OPERATIONAL DEPARTMENT Assistant Manager Encik Abd Aziz Taip INTELLIGENT UNIT Senior Executive Vacant ADMINISTRATION UNIT Executive Encik Ismail Samek HEALTH SAFETY & ENVIRONMENT DEPARTMENT Manager Encik Taufik Afendy Othman INFORMATION & COMMUNICATION TECHNOLOGY DIVISION Senior General Manager Tuan Haji Mohd Suhaimi Rafie LEGAL & ENFORCEMENT DIVISION General Manager Puan Nik Aliena Salwanee CONTRACT & PROCUREMENT DIVISION General Manager Ir Nasir Ismail NETWORK OPERATION CENTRE DEPARTMENT Manager Encik Mohd Shaffie Mohd Taib BUSINESS APP. SUPPORT & ADMINISTRATION DEPARTMENT Manager Puan Munaliza Maseran PROGRAMME PLANNING & APP. DEVELOP. DEPARTMENT Manager Encik Hamidun Jaafar ADVISORY & LITIGATION Senior Manager Mr Vignesweran a/l Thambirajah PRE TENDER & PROCUREMENT DEPARTMENT Manager Vacant POST TENDER & GENERAL ADMINISTRATION DEPARTMENT Senior Manager Encik Wan Abdul Aziz Wan Muda POST TENDER & GONTRACT MONITORING DEPARTMENT Manager Encik Roslan Mat Tahar

21 19 Annual Report 2007 SECRETARIAL DEPARTMENT Manager Madam Lau Pueh Geok DISTRICT DIVISION General Manager Encik Ismail Rusmin STRATEGIC RESOURCE CENTRE DEPARTMENT General Manager Vacant CHEF OPERATING OFFICER YBhg Dato Ir Lee Miang Koi BUMIPUTERA ENTREPRENEUR PARTICIPATION & DEVELOPMENT DEPARTMENT Special Assistant to Executive Chairman / Senior General Manager Encik Mohamad Isa Mohd Yassin Assistant General Manager Encik Jafar Muda SENIOR MANAGER, COO s Office Ir Wan M Jaafar Wan Ahmad Nasiry OPERATION Executive Director Ir V Subramaniam PLANING & DEVELOPMENT Executive Director Vacant PROJECT Executive Director Encik Sanusi Sulieman MECHANICAL/ ELECTRICAL DEPARTMENT Manager Encik Yusri Abu Samah PROJECT MANAGEMENT DEPARTMENT Manager Encik Hasnol Ezam MIGRATION DEPARTMENT Manager Encik Mohd Azmi TECHNICAL DEPARTMENT Manager Encik Wan Amzari DISTRICT MONITORING DEPARTMENT Assistant Manager Vacant OPERATION/ MAINTENANCE DIVISION General Manager Ir Abd Rahim Shamsudin PRODUCTION DEPARTMENT Senior Manager Ir Amarjit Singh BULK TRANSFER & TRANSMISSION SYSTEM DEPARTMENT Manager Vacant WATER QUALITY DIVISION General Manager Encik Mohd Yaman Mohd Zin TECHNICAL & ENGINEERING DEPARTMENT Manager Encik Roskhamdi Kamaluddin WATER QUALITY & CONSUMER COMPLAINT DEPARTMENT Manager Encik Abd Latif Kamarudin RESEARCH & DEVELOPMENT DEPARTMENT Manager Mr Ragbir Singh a/l Harbans Singh GIS & HYDRAULIC MODELLING DIVISION General Manager Vacant GIS & ASSET DEPARTMENT Senior Manager Encik Hairuddin Munip SCADA & HYDRAULIC MODELLING DEPARTMENT Senior Manager Vacant TECHNICAL SERVICES DIVISION General Manager Encik Mat Sanusi Ibrahim TECHNICAL SERVICES DEPARTMENT Assistant General Manager Ir Hussain Salikin DEVELOPMENT DIVISION General Manager Mr Koh Eng Seng SENIOR MANAGER Cik Maimunah Musa NORTHERN ZONE DEPARTMENT Manager Puan Rosmizah Ahmad CENTRAL ZONE DEPARTMENT Manager Ir Pua Eng Teik SOUTHERN ZONE DEPARTMENT Manager Vacant NORTH ZONE 1. Kuala Selangor (Category C) Senior Manager Encik Abdul Halim Ishak 2. Sabak Bernam (Category C) Senior Manager Encik Abdul Latip Mustafa 3. Hulu Selangor (Category C) Asst General Manager Encik Mohd Yunus Othman 4. Gombak (Category A) General Manager Encik Yusof Saroji CENTRAL ZONE 1. Kuala Lumpur (Category A) General Manager Cik Hayati Ab Wahab 2. Petaling (Category A) General Manager Encik Abdul Rashid Abd Satar SOUTH ZONE 1. Hulu Langat (Category B) General Manager Encik Ariff Ibrahim 2. Kuala Langat (Category C) Asst General Manager Encik Ahmad Suhaidin Ismail 3. Sepang (Category C) Senior Manager Encik Mokhtar Atan 4. Klang (Category A) General Manager Encik Muhamad Darif Idris PROJECT MANAGEMENT DIVISION Senior Manager Encik Muhamad Zuki Mat Zin Senior Manager Encik Musa Omar QS DEPARTMENT Senior Manager Puan Ramnah M Ramli PIPE REPLACEMENT & CONTRACT ADMIN. DIVISION General Manager Encik Mustaffa Kamal A Kadir Jailani CONTRACT ADMINISTRATION DEPARTMENT Manager Madam Phoon Yin Fong ZONE 1 Senior Manager Encik Shahrom Hashim ZONE 2 Assistant Manager Encik Johari Zainal ZONE 3 Executive Encik Norhelmi Mohd Nor NON REVENUE WATER (NRW) DIVISION Senior General Manager Vacant GENERAL MANAGER Ir Albert Loh Thiam Hock ZONE 4 Executive Encik Noor Azam Ishak (As at 5 May 2008)

22 20 Puncak Niaga Holdings Berhad Our Role in the Water Supply System

23 21 Annual Report 2007 Corporate Achievements SME PLATINUM AWARD 2007 PNHB Group s Executive Chairman, Tan Sri Rozali Ismail was a SME Platinum Award 2007 recipient at the SMI Association of Malaysia s SME Recognition Award 2007, on 30 November 2007 CORPORATE SOCIAL RESPONSIBILITY AWARDS 2007 PNSB s River Rescue Brigade received an Honourable Mention at the Prime Minister s Corporate Social Responsibility Awards 2007 at the Sime Darby Convention Centre, Bukit Kiara on 14 November 2007 THE MALAYSIAN WATER ASSOCIATION MALAYSIA WATER AWARD FOR MANAGEMENT 2007 Awarded to Pusat Perkhidmatan Pelanggan (PUSPEL) Syarikat Bekalan Air Selangor Sdn Bhd on 15 May 2007 QUALITY MANAGEMENT SYSTEM CERTIFICATION ISO 9001:2000 EN ISO 9001:2000 BS EN ISO 9001 : 2000 MS ISO 9001: 2000 Bernam River Headworks WTP Bukit Nanas WTP Bukit Tampoi WTP Central Region Office Cheras Mile 11 WTP Northern Region Office Rantau Panjang Old and New WTP Sg Batu WTP Sg Gombak WTP Sg Langat WTP Southern Region Office

24 22 Puncak Niaga Holdings Berhad Five-Year Financial Highlights In RM Dec Dec Dec Dec Dec 03 KEY RESULTS Revenue 1,389,774 1,428,124 1,144, , ,260 Profit before taxation 115, , ,845 77, ,411 Net profit attributable to equity holders of the Company 97, ,602 99,259 46, ,586 BALANCE SHEET Property, plant and equipment 1,526,525 1,495,483 1,424,975 * 1,361,459 * 1,437,709 * Prepaid land lease payments 77,581 20,128 20,356 * 8,107 * 8,195 * Project development expenditure 2,424,376 1,432, , , ,809 Other non-current assets 1,248,469 1,272, , , ,038 Current assets 1,413,084 2,222,729 1,615, ,678 1,342,384 Total assets 6,690,035 6,442,595 4,869,091 3,127,889 3,167,135 ISSUE AND PAID-UP CAPITAL Share capital 411, , , , ,166 Reserves 831,516 1,314, , , ,847 Equity attributable to equity holders of the Company 1,242,659 1,902,111 1,274,648 1,199,142 1,132,013 Net assets per share attributable to equity holders of the Company (RM) RATIOS AND STATISTIC Net profit margin attributable to equity holders of the Company (%) Basic earnings per share attributable to equity holders of the Company (sen) ** ** ** Interest bearing debt (RM 000) 3,760,457 2,923,089 2,423,279 1,504,082 1,613,636 Gearing ratio (times) Current ratio (times) * These comparatives have been restated following the early adoption of the revised FRS Leases in 2006, which resulted in the reclassification of leasehold land as prepaid land lease payments restrospectively. ** These comparatives have been restated to take into account the effects of the bonus issue and consolidation of shares which were part of the Company s Capital Repayment exercise. Financial Calendar Financial year ended 31 December 2007 Announcement of Results: 1st Quarter Results ended 31 March May nd Quarter Results ended 30 June August rd Quarter Results ended 30 September November th Quarter Results ended 31 December February 2008 Book Closure Date for Payment of Final Tax-Exempt Dividend 18 July 2007 Payment of Final Tax-Exempt Dividend of 8 sen per share for the financial year ended 31 December August 2007 Audited Financial Statements for the financial year ended 31 December April 2008 Published Annual Report 3 June th Annual General Meeting 26 June 2008

25 23 Annual Report 2007 Financial Performance Revenue RM 000 Net Profit Attributable to Equity Holders of the Company RM 000 Total Assets RM , ,841 1,144,944 1,428,124 1,389, ,586 46,439 99, ,602 97,626 3,167,135 3,127,889 4,869,091 6,442,595 6,690, Share Performance Price per unit JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR

26 24 Puncak Niaga Holdings Berhad Board of Directors from left to right YBhg Dato Syed Danial Syed Ariffin Chief Operating Officer of PNHB and PNSB YBhg Dato Matlasa Hitam Managing Director of PNHB and PNSB YBhg Tan Sri Rozali Ismail Executive Chairman of PNHB Group YBhg Dato Ruslan Hassan Non-Independent Non-Executive Director of PNHB and Chief Executive Officer of SYABAS YBhg Dato Ir Lee Miang Koi Non-Independent Non-Executive Director of PNHB and Chief Operating Officer of SYABAS

27 25 Annual Report 2007 from left to right YBhg Datuk Dr Rahman Ismail Independent Non-Executive Director of PNHB Mr Tan Seng Lee Executive Director, Finance Division of PNHB and PNSB YBhg Tan Sri Dato Seri Dr Ting Chew Peh Independent Non-Executive Director of PNHB YAM Tengku Dato Rahimah Almarhum Sultan Mahmud Non-Independent Non-Executive Director of PNHB YBhg Tan Sri Dato Hari Narayanan Govindasamy Independent Non-Executive Director of PNHB

28 26 Puncak Niaga Holdings Berhad Profile of Directors YBHG TAN SRI ROZALI ISMAIL AGED 51, MALAYSIAN EXECUTIVE CHAIRMAN OF PNHB GROUP YBhg Tan Sri Rozali Ismail is the founder of Puncak Niaga (M) Sdn Bhd (PNSB), the Executive Chairman of Puncak Niaga Holdings Berhad (PNHB) Group and substantial shareholder of PNHB. He was appointed to the Board of PNHB on 24 April A Bachelor of Laws Degree holder from University of Malaya in 1981, YBhg Tan Sri Rozali 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, he conceptualised the first institution of Islamic banking in Malaysia. Subsequently, in 1987, he started his own legal practice as an Advocate and Solicitor for seven years, specialising in corporate, property and banking works. 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 familyowned 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 January 1997 as the holding company of PNSB and was listed on the Main Board of Bursa Malaysia Securities Berhad on 8 July 1997.

29 27 Annual Report 2007 YBhg Tan Sri Rozali was conferred a Fellowship Award by the Institute of Marketing Malaysia (IMM) on 6 November 2001 for his invaluable contributions to promote the growth and development of the Malaysian property market. 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 Individual Award Category, an award at Asian level, by the Regional Institute of Environmental Technology on 26 March YBhg Tan Sri Rozali was a Top 10 Nominee for the Ernst & Young Entrepreneur Of The Year - Malaysia 2002 and Malaysia 2003 (Master Entrepreneur Category) Award in recognition of his outstanding entrepreneurship and leadership skills. He was conferred an Honorary Doctorate in Complementary Medicines (Humanity Services) by the Open International University for Complementary Medicines, Colombo, Sri Lanka on 24 September On 30 November 2007, YBhg Tan Sri Rozali was bestowed the SME Platinum Award 2007 by the SMI Association of Malaysia for his outstanding entrepreneurship, leadership and achievements in the water industry which the SMI Association of Malaysia recognise as impressive enough to inspire the thousands of SME entrepreneurs who are looking for a role model to emulate, especially an entrepreneur who originated from a small and medium business to become a Chief Executive Officer of a large listed company. YBhg Tan Sri Rozali is a member of various influential governmental and non-governmental associations such as Malaysian Industry-Government Group for High Technology (MIGHT), 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, Yayasan Budi Penyayang Malaysia and a Trustee of Perdana Leadership Foundation. He is the Advisor to IMM, President of the Malay Chamber of Commerce for the State of Selangor, Pro-Chancellor of University Putra Malaysia (July June 2010), Trustee of Yayasan WAQAF Malaysia (YWM) (January December 2009), Governor for Malaysia of Asia Pacific Marketing Federation (APMF) Foundation, Advisor of Gabungan Persatuan Usahawan Melayu Selangor/Wilayah Persekutuan (GAPUMS), Advisor of Gabungan Pelajar Melayu Semenanjung (GPMS) ( Session), Committee Member of Gagasan Badan Ekonomi Melayu (GABEM) Negeri Selangor and Life Member of Gabungan Ikhtisas Dan Usahawan Bumiputra Anak Selangor, Selangor (GIBS). In November 2006, YBhg Tan Sri Rozali set up the Water Association of Selangor, Kuala Lumpur and Putrajaya (SWAn), a non-profit organisation which represents the common interest of all water supply and wastewater industries within the States of Selangor, Kuala Lumpur and Putrajaya and to promote and advance interaction and understanding with members of the general public. He is the current President of SWAn for the 2007/2009 Session. YBhg Tan Sri Rozali is the past Deputy President of the Malaysian Water Association (MWA) (2003/2005 Session), former Board Member of Universiti Utara Malaysia ( ) and past Advisor of the Business and Accounting Faculty Council, University of Malaya (21 May 2004 to 20 April 2007). Besides PNHB, YBhg Tan Sri Rozali is also the Executive Chairman and major shareholder of two other listed companies, namely TRIplc Berhad, a property company and WWE Holdings Bhd, a wastewater and environmental engineering services company. YBhg Tan Sri Rozali attended 3 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

30 28 Puncak Niaga Holdings Berhad Profile of Directors YBHG DATO MATLASA HITAM AGED 68, MALAYSIAN MANAGING DIRECTOR OF PNHB AND PNSB YBhg Dato Matlasa Hitam joined PNSB on 1 July 2003 as Executive Director, Human Resources & Administration Division and was appointed as Managing Director of PNHB and PNSB on 1 October YBhg Dato Matlasa is the Head of PNHB s Compliance, Internal Control and Risk Policy Committee (CICR) and sits on the Board of several private companies. He is the Chairman of SYABAS Audit Committee and a member of the Water Association of Selangor, Kuala Lumpur and Putrajaya (SWAn), a non-profit organisation which represents the common interest of all water supply and wastewater industries within the States of Selangor, Kuala Lumpur and Putrajaya and to promote and advance interaction and understanding with members of the general public. YBhg Dato Matlasa 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 31 years of senior management experience covering areas related to manufacturing, marketing, human resources, finance as well as contract and project management. YBhg Dato Matlasa served as Managing Director/Chief Executive Officer and Board member of both Petronas Methanol (L) Sdn Bhd and Petronas Gas Supply (L) Sdn Bhd from January 1992 to May Prior to joining PNSB, he was the Executive Vice Chairman of WWE Holdings Bhd. YBhg Dato Matlasa attended 6 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

31 29 Annual Report 2007 YBHG DATO RUSLAN HASSAN AGED 52, MALAYSIAN NON-INDEPENDENT NON-EXECUTIVE DIRECTOR OF PNHB AND CHIEF EXECUTIVE OFFICER OF SYABAS YBhg Dato Ruslan Hassan joined PNSB on 1 November 1995 as Head of Corporate Affairs Division. He was appointed 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 Upon securing the Selangor water distribution concession on 1 January 2005, YBhg Dato Ruslan was appointed as Chief Executive Officer of SYABAS. He resigned as a Director of PNSB on 30 September 2005 and was re-designated from Executive Vice Chairman and Executive Director, Corporate Affairs Division of PNHB to Non-Independent Non-Executive Director of PNHB with effect from 1 October YBhg Dato Ruslan is a member of Malaysian Institute of Directors, Malaysian Water Association and Institute of Marketing Malaysia. Upon obtaining a Bachelor of Laws Degree from University of Malaya in 1981, YBhg Dato Ruslan began his career as Legal Advisor and later as Senior Legal Counsel of Esso Production Malaysia Inc. In 1985, he joined Pernas Sime Darby Holdings Sdn Bhd as Group Legal Advisor/Company Secretary. YBhg Dato Ruslan has 4 years of experience as an Advocate and Solicitor. In 1993, he joined Rashid Hussain Berhad as Corporate Affairs Senior General Manager and later appointed as an Executive Committee Member. From November 1995 to February 2003, YBhg Dato 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 as well as various subsidiaries. He also sits on the Board of Perbadanan Urus Air Selangor Berhad and SYABAS. YBhg Dato Ruslan attended 5 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

32 30 Puncak Niaga Holdings Berhad Profile of Directors YBHG DATO IR LEE MIANG KOI AGED 54, MALAYSIAN NON-INDEPENDENT NON-EXECUTIVE DIRECTOR OF PNHB AND CHIEF OPERATING OFFICER OF SYABAS YBhg Dato Ir Lee Miang Koi joined PNSB in 1995 as General Manager, Business Development. He was subsequently appointed as a Director of PNSB and PNHB on 2 February 1999 and 1 September 1999 respectively and Chief Operating Officer of SYABAS on 1 January YBhg Dato Ir Lee resigned as a Director of PNSB on 30 September 2005 and was re-designated from Executive Director, Project and Business Development Division of PNHB to Non- Independent Non-Executive Director of PNHB with effect from 1 October He is a member of Malaysian Water Association, Malaysian Institute of Directors and Institute of Marketing Malaysia. YBhg Dato Ir Lee became a member of the Water Association of Selangor, Kuala Lumpur and Putrajaya (SWAn), a non-profit organisation which represents the common interest of all water supply and wastewater industries within the States of Selangor, Kuala Lumpur and Putrajaya and to promote and advance interaction and understanding with members of the general public, on 10 July YBhg Dato Ir Lee graduated as a civil engineer from Universiti Teknologi Malaysia in 1978 and in 1989, he obtained a Masters Degree in Environmental Engineering majoring in water supply and wastewater engineering from the Asian Institute of Technology in Bangkok. YBhg Dato Ir Lee has 30 years of 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. YBhg Dato Ir Lee attended 6 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

33 31 Annual Report 2007 YBHG DATO SYED DANIAL SYED ARIFFIN AGED 50, MALAYSIAN CHIEF OPERATING OFFICER OF PNHB AND PNSB AND A DIRECTOR OF SYABAS YBhg Dato Syed Danial Syed Ariffin 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 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 2004 (and subsequently re-designated as Executive Director, Operation I Division on 1 April 2005), YBhg Dato Syed Danial was the Acting Executive Director of Operation Division (July 2003 to February 2004). On 16 November 2007, YBhg Dato Syed Danial was appointed as Chief Operating Officer. He is also a Director of SYABAS since 3 September YBhg Dato Syed Danial previously worked with the Pahang Public Works Department for 10 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 Water Supply Project. YBhg Dato Syed Danial 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 several private companies. He is also a member of the Water Association of Selangor, Kuala Lumpur and Putrajaya (SWAn), a nonprofit organisation which represents the common interest of all water supply and wastewater industries within the States of Selangor, Kuala Lumpur and Putrajaya and to promote and advance interaction and understanding with members of the general public. YBhg Dato Syed Danial attended 6 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

34 32 Puncak Niaga Holdings Berhad Profile of Directors YBHG TAN SRI DATO HARI NARAYANAN GOVINDASAMY AGED 58, MALAYSIAN INDEPENDENT NON-EXECUTIVE DIRECTOR OF PNHB YBhg Tan Sri Dato Hari Narayanan Govindasamy, a businessman 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 Bachelor Degree in Electrical and Electronics Engineering from University of Northumbria, England. YBhg Tan Sri Dato Hari is a member of Malaysian Institute of Directors and a Registered Professional Engineer with the Board of Engineers Malaysia. He has vast experience in the field of electrical and electronics engineering and has held key positions at Inchcape Berhad and Tamco Cutler-Hammer Sdn Bhd. He is currently the Chairman of Noblemax Resources Sdn Bhd, Chairman of IEV Group Sdn Bhd, Deputy Chairman of Emrail Sdn Bhd, Deputy Chairman of Leighton Contractors (M) Sdn Bhd and director of several other private companies. YBhg Tan Sri Dato Hari also sits on the Board of Tenaga Nasional Berhad, SP Setia Berhad, Lembaga Lebuhraya Malaysia and Asian Institute of Medicine, Science & Technology. YBhg Tan Sri Dato Hari attended 3 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

35 33 Annual Report 2007 YBHG TAN SRI DATO SERI DR TING CHEW PEH AGED 65, MALAYSIAN INDEPENDENT NON-EXECUTIVE DIRECTOR OF PNHB YBhg Tan Sri Dato Seri Dr Ting Chew Peh joined PNHB on 15 July 2000 as an Independent Non-Executive Director and a member of the Remuneration Committee and the Nomination Committee. Currently, he is the Chairman of PNHB s Audit Committee, and Compliance, Internal Control and Risk Policy Committee. He graduated with a Bachelor of Arts Degree from University of Malaya in 1970 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 YBhg Tan Sri Dato Seri Dr Ting is a member of Malaysian Institute of Directors. YBhg 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 1980 and was subsequently an Associate Professor of the said Faculty until Between 1979 to 1986, YBhg Tan Sri Dato Seri Dr Ting published two books entitled Konsep Asas Sosiologi and Hubungan Ras dan Etnik. In 1987, YBhg Tan Sri Dato Seri Dr Ting ventured into politics with his election as a Member of Parliament for the Gopeng constituency, which he held until the 2008 general elections. He previously served as Parliamentary Secretary of the Ministry of Health ( ), Deputy Minister in the Prime Minister s Department ( ), Minister of Housing and Local Government ( ) and Secretary-General of Malaysian Chinese Association (MCA) ( ). He also sits on the Board of Pan Malaysia Capital Berhad Group, Hua Yang Bhd, Pan Malaysia Corporation Berhad, Johan Holdings Berhad, Complete Logistic Services Berhad and also serves as a director of several private companies. YBhg Tan Sri Dato Seri Dr Ting attended 6 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

36 34 Puncak Niaga Holdings Berhad Profile of Directors YBHG DATUK DR RAHMAN ISMAIL, MD, PHD AGED 49, MALAYSIAN INDEPENDENT NON-EXECUTIVE DIRECTOR OF PNHB YBhg Datuk Dr Rahman Ismail joined PNHB on 3 January 2005 as an Independent Non-Executive Director and was appointed the Chairman of the Remuneration Committee and Nomination Committee and a member of the Audit Committee of PNHB, concurrently. He holds a Doctor of Medicine and Doctor of Philosophy in Epidemiology. He is a committee member of the Academy of Medicine and the Advisor to the Public Health Specialist Society. He attended post-doctoral courses at the Centre of Disease Control Atlanta, USA and Pasteur Institute of France. YBhg Datuk Dr Rahman started his career at the Kuala Lumpur General Hospital before joining Aventis Pasteur International (the world s leading and renowned vaccine manufacturer). He was the Medical and Research Director for Asia Pacific and member of the Management Committee with the company for 7 years from 1997 till he was elected as a Member of Parliament for the Gombak Constituency in March 2004, a post he held until the 2008 general elections. YBhg Datuk Dr Rahman has conducted many studies in infectious disease and vaccinology which were published in the local and international journals. He is often invited to make presentations at the local and international medical conferences. He has received many international recognition and academic awards. YBhg Datuk Dr Rahman is currently the President of the Selangor Professional Group and Secretary for the International Bureau of UMNO Supreme Council. Recently, he was elected as President of the Martial Arts Council (MARCIL) which has 4 million members in this country. YBhg Datuk Dr Rahman attended 6 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

37 35 Annual Report 2007 MR TAN SENG LEE AGED 49, MALAYSIAN EXECUTIVE DIRECTOR, FINANCE DIVISION OF PNHB AND PNSB Mr Tan Seng Lee was appointed to the Board of PNHB and PNSB on 1 September He is a Member of PNHB s Remuneration Committee and SYABAS Audit Committee and past Member of PNHB s Audit Committee for the period 1 September 2005 to 26 February Mr Tan is a Chartered Accountant and Certified Public Accountant and a Member of the Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants and the Institute of Bankers Malaysia. He holds a Master in Business Administration from Charles Sturt University, Australia. Mr Tan has over 27 years of working experience in corporate finance, mergers and acquisition, corporate restructuring, accounting, auditing and banking and has been involved in companies with operations in Europe, Australia, China and Indonesia. Mr Tan began his career as an auditor with a professional accountancy firm, Messrs HRM - Arthur Andersen ( ). In 1986, he joined Bumiputra-Commerce Finance Berhad as Manager, Finance and Treasury and was subsequently promoted to Senior Manager and then Deputy General Manager, Financial Services and Credit Control. Prior to joining the PNHB Group, Mr Tan was the Chief Financial Officer of PROTON Holdings Berhad for the period from 1999 to Mr Tan attended 6 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

38 36 Puncak Niaga Holdings Berhad Profile of Directors YAM TENGKU DATO RAHIMAH ALMARHUM SULTAN MAHMUD AGED 42, MALAYSIAN NON-INDEPENDENT NON-EXECUTIVE DIRECTOR OF PNHB YAM Tengku Dato Rahimah Almarhum Sultan Mahmud was appointed to the Board of PNHB on 1 August 2006 as an Independent Non-Executive Director of PNHB. On 1 January 2007, she was re-designated as Non-Independent Non-Executive Director of PNHB following her appointment as Executive Director of Puncak Research Centre Sdn Bhd. She was a past Member of PNHB s Audit Committee, Remuneration Committee and Nomination Committee for the period 1 August 2006 to 31 December On 26 February 2008, YAM Tengku Dato Rahimah was re-invited to sit on PNHB s Audit Committee. YAM Tengku Dato Rahimah holds a BSc Economics and Accountancy from the City of London University, London, England. She is a member of the Malaysian Institute of Accountants (MIA). Upon completing her degree course in 1989, YAM Tengku Dato Rahimah started her career with the Hongkong Bank in London, England till She then joined Esso Malaysia Berhad for the period from 1991 to 1995 holding positions from Control Advisor, Controllers Department to Senior Accountant, Menara Esso Project Team. As Control Advisor, YAM Tengku Dato Rahimah authored the booklet entitled Doing Business with Esso which was distributed internally and externally to all ESSO s contractors as well as speeches, one of which, was for the Finance Director of Esso Malaysia Berhad, entitled Doing Business In Malaysia Towards Vision 2020 which was published in the MIA magazine. YAM Tengku Dato Rahimah was with the DJAJANTI Group, an Indonesian based company dealing in agriculture and deep sea fishing as a Business Development Manager/Director from 1995 to 1998 whereby she was responsible for seeking business opportunities in Malaysia, Indonesia and Papua New Guinea as well as liaising with government bodies and appropriate business partners. YAM Tengku Dato Rahimah is currently the Executive Director of Data Jitu Sdn Bhd, which is a trading company. She also sits on the Board of Cosway (M) Sdn Bhd, a direct selling company dealing in consumer goods and services and a wholly owned subsidiary of Cosway Corporation Berhad. YAM Tengku Dato Rahimah attended 5 out of the 6 Board Meetings of PNHB held in the financial year ended 31 December 2007.

39 37 Annual Report 2007 Key Personnel in PNSB ENCIK NASIR KHAN ILLADAD KHAN AGED 55, MALAYSIAN EXECUTIVE DIRECTOR, CORPORATE AFFAIRS DIVISION Encik Nasir Khan joined PNSB in February 2006 as Executive Director, Corporate Affairs Division. He holds a Bachelor Degree in Social Science, Political Science (Hons) from Universiti Sains Malaysia and a Masters Degree in Public Administration from Pennsylvania State University, United States of America. He also possesses a Diploma in Public Management from National Institute of Public Administration (INTAN), and attended an Executive Management Programme at the School of Government, Harvard University, United States of America. Encik Nasir Khan has more than 30 years of management experience with the Government, holding various positions and covering areas of human resources, security, land development and finance. Prior to joining PNSB, he was the Senior Assistant Director, Budget Division, Ministry of Finance, Malaysia. MADAM TAN BEE LIAN AGED 42, 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 As Group Company Secretary, Madam Tan is responsible for PNHB Group s company secretarial and regulatory compliance. She is a Fellow of the Malaysian Association of the Institute of Chartered Secretaries and Administrators (MAICSA) and has more than 20 years of working experience in company secretarial practice. She had previously worked with Projek Lebuhraya Utara- Selatan Berhad (PLUS) and Metramac Corporation Sdn Bhd/Metacorp Berhad. She is the winner of the ROC-MAICSA Company Secretary Award 2001 for the Listed Company Category. YBHG DATUK MOHD YUNUS MOHD AMIN AGED 60, MALAYSIAN EXECUTIVE DIRECTOR, HUMAN RESOURCES & ADMINISTRATION DIVISION YBhg Datuk Mohd Yunus Mohd Amin joined PNSB on 15 November 2007, as Executive Director, Human Resources & Administration Division. He holds a Degree in Mass Communication from Universitas Padjajaran Bandung, Indonesia and a Diploma in Public Management from National Institute of Public Administration (INTAN). Prior to joining PNSB, he was the Director for Bahagian Geraksaraf Dan Perancangan Dasar, Jabatan Hal Ehwal Khas of the Ministry of Information, Malaysia. YBhg Datuk Mohd Yunus has more than 30 years of management experience during his tenure with the Government, inclusive of 27 years of experience as Diplomatic Service Officer. IR OOI CHENG SWEE AGED 55, MALAYSIAN SENIOR GENERAL MANAGER, OPERATION OF WTPS, OPERATION I DIVISION Ir Ooi joined PNSB in January 2005 as General Manager and was promoted to his current position on 1 January He graduated with a Bachelor of Engineering (Civil) (Hons) Degree from University of Malaya in Ir Ooi has 30 years of working experience in infrastructure works, drainage, road and bridge engineering design, construction supervision of water supply schemes, water supply distribution study and operations of water treatment plants. He is a Professional Engineer registered with the Board of Engineers Malaysia and a member of the Institution of Engineers Malaysia. Prior to joining PNSB, he was the General Manager (Maintenance & Project) of CGE Utilities (M) Sdn Bhd.

40 38 Puncak Niaga Holdings Berhad Key Personnel in PNSB IR TAN HUI KUAN AGED 54, MALAYSIAN GENERAL MANAGER, MAJOR PROJECT & UPGRADING PROJECT, OPERATION II DIVISION Ir Tan joined PNSB in August He graduated with a Bachelor of Engineering (Civil) (Hons) Degree from University of Malaya in He has 25 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. While in PNSB, he has successfully executed and completed the Chennai Water Supply Augmentation Project 1, Package III implemented by Chennai Metropolitan Water Supply and Sewerage Board in Tamil Nadu, India. PUAN ROOWINA MERICAN A RAHIM MERICAN AGED 46, MALAYSIAN GENERAL MANAGER, WATER RESOURCES & ENVIRONMENTAL SURVEILLANCE, OPERATION I DIVISION Puan Roowina Merican joined PNSB on 22 March 1997 as a Manager in the Operations Division in charge of the Environmental Unit. She is now the General Manager of the Water Resources & Environmental Surveillance Department under Operation I Division. Puan Roowina Merican graduated with a BSc (Hons) in Civil Engineering from the University of Surrey in 1984 and subsequently obtained her MEng (Hons) in Water Resources Development in She began her career in 1985 as a Civil Engineer with the Public Works Department and held various positions during her tenure until MR SENG PAY AGED 57, MALAYSIAN GENERAL MANAGER, SABAH PROJECT, OPERATION II DIVISION IR AHMAD MARZUKI HASHIM AGED 46, MALAYSIAN GENERAL MANAGER, BUSINESS DEVELOPMENT Mr Seng Pay joined PNSB in January 2004 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, Diploma in Management from Malaysian Institute of Management (MIM) and a Masters Degree in Business Administration from Heriot-Watt University, United Kingdom. Mr Seng Pay has over 33 years of working experience in the management and construction of water treatment plants. Prior to joining PNSB, he worked with various organisations with his last employer being Ondeo Services (Malaysia) Sdn Bhd. Ir Ahmad Marzuki graduated with a BSc (Hons) Degree in Civil Engineering from Ohio University in Athens in 1984 and a MSc Master in Environmental Civil Engineering from University of Liverpool, England in He is a civil engineer by profession and has been with PNSB since March He began his career with PNSB as a Manager of Dam Operation Department and was subsequently promoted to Senior Manager and Assistant General Manager before assuming his current position as General Manager of Business Development Department. Ir Ahmad Marzuki has more than 24 years experience in the water industry and has held various positions during his tenure with the Public Works Waterworks Branch.

41 39 Annual Report 2007 DR ABDUL RAHIM AWANG KECHIK AGED 56, MALAYSIAN GENERAL MANAGER, STRATEGIC RESOURCE CENTRE Dr Abdul Rahim joined PNSB in July 2003 as General Manager and was appointed as Secretary of the Independent Employees Performance Review Committee (IEPRC) in 2004 and Chairman of the Tender and Contracts Committee in January 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, National Economic Action Council (NEAC), Prime Minister s Office, Ministry of International Trade and Industry (MITI), State Economic Planning Unit of the State of Negeri Sembilan, Ministry of Agriculture and the Ministry of Housing and Local Government. He holds a Doctorate of Philosophy Degree (PhD) in Management, a Bachelor of Arts (Hons) in Education, both from Universiti Sains Malaysia. He obtained a Master of Business Administration from University of Wales College of Cardiff, United Kingdom, a Diploma in Business Administration from University of Birmingham, United Kingdom and a Diploma in Public Management from National Institute of Public Administration (INTAN). ENCIK AZHARI ABD RAHMAN AGED 51, MALAYSIAN GENERAL MANAGER, HUMAN RESOURCES & ADMINISTRATION DIVISION Encik Azhari joined PNSB in November 2007 as General Manager, Human Resources & Administration Division. He graduated from UiTM with a Diploma in Banking Studies as a Maybank scholar and holds a Bachelor Degree in Business Administration (Hons) majoring in Human Resource Management from Universiti Putra Malaysia. Encik Azhari has 25 years of working experience in the areas of Human Resource Management and Training in corporations involved in Banking, IT, Manufacturing, Media, Construction and Logistics. He has worked in American and Japanese MNCs as well as local public listed companies and has assumed various senior positions such as General Manager, Director and Vice President of Human Resource. During his tenure as a HR practitioner, he has served IBM Malaysia, EDS, Sony TV Industries and New Straits Times Press and had undergone intensive and extensive on the job training in the ASEAN region and the US. He has also conducted several overseas training stints as part of his job scope. His last position prior to joining PNSB was Vice President, Group Human Resource of Konsortium Logistik Berhad for 6 1/2 years.

42 40 Puncak Niaga Holdings Berhad Key Personnel in SYABAS ENCIK OTHMAN ISMAIL AGED 50, MALAYSIAN EXECUTIVE DIRECTOR, GOVERNMENT RELATIONS IR V SUBRAMANIAM AGED 58, MALAYSIAN EXECUTIVE DIRECTOR, OPERATIONS Encik Othman joined PNSB in April 2004 as General Manager and was subsequently promoted to Senior General Manager, Executive Chairman s Office on 1 April He was promoted to Executive Director, Government Relations of SYABAS under the Executive Chairman s Office on 1 April He graduated from University of Wales, United Kingdom in 1999 with a Master s Degree in Business Administration. Encik Othman has 16 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. Ir V Subramaniam is the Executive Director, Operations of SYABAS. He has worked with Jabatan Bekalan Air Selangor (JBAS) since 1991 and continued his services with Perbadanan Urus Air Selangor Berhad (PUAS) ( ). He holds a Bachelor of Engineering (Hons) (Civil) Degree from University of Malaya. Ir V Subramaniam has served in the Public Works Department/Water Supply Department/PUAS/SYABAS in various capacities for the past 34 years since graduation in He has vast experience in planning, design and implementation of water supply schemes including managing and operating water supply systems. Ir V Subramaniam successfully handled the 1998 Water Crisis in Selangor and Kuala Lumpur as the then Deputy Director of the Selangor Water Supply Department and published a complete documentation on the management of the water crisis. He has written and presented many technical papers on water supply including papers on privatisation/corporatisation of water supply at local and overseas seminars and conferences including conferences organised by APEC and the World Bank. He has also assisted the Asian Development Bank (ADB), in his capacity as ADB s domestic consultant, in several studies on water supply in the Asian cities. Ir V Subramaniam has drawn up a Water Quality Improvement Master Plan to effectively address water quality issues raised by consumers as well as to change the current public perception on water quality which is currently being implemented. Ir V Subramaniam was awarded the Darjah Kebesaran Setia Mahkota Selangor (SMS), Darjah Kebesaran Setia Sultan Salahuddin Abdul Aziz Shah (SSA), Ahli Mangku Negara (AMN) and Pingat Jasa Kebaktian (PJK) (Terengganu), for his dedication and service to the state and the nation.

43 41 Annual Report 2007 MADAM THEIN KWEE SIM AGED 44, MALAYSIAN EXECUTIVE DIRECTOR, FINANCE ENCIK SANUSI SULIEMAN AGED 47, MALAYSIAN EXECUTIVE DIRECTOR, PROJECTS Madam Thein holds a professional qualification from MICPA and has been a member of MICPA and MIA since She has more than 20 years of working experience in various areas covering auditing, group accounting, corporate debt restructuring and corporate finance. Prior to joining SYABAS, Madam Thein was with the Renong Group of Companies for a total of 7 1/2 years where she served in United Engineers (Malaysia) Berhad ( ) overseeing the group finance and accounting functions and HBN Management Office ( ) where her role was to monitor the financial performance of the listed companies under the Renong Group in addition to the debt restructuring of several companies under the Renong Group subsequent to the financial crisis of In early 2000, she joined Jendela Permai Sdn Bhd, a financial consultancy company prior to joining SYABAS in May 2005 as Head of the Credit Control Unit and thereafter as the Head of Billing and Recovery Division from 1 January 2006 up to 31 March On 1 April 2007, Madam Thein was appointed as Executive Director of Finance, SYABAS. Encik Sanusi graduated with a Second Class Upper Degree in Civil Engineering from University of Malaya in 1984 and started his career with the Penang Water Authority in 1984 holding various positions of Project Engineer, Treatment Engineer and Distribution Engineer until In 1993, he joined a consulting engineering firm Ranhill Bersekutu Sdn Bhd as a Senior Engineer involved in the Johor Baharu Water Supplies Privatisation Scheme. He joined PNSB in 1994 and was appointed as the Project Manager for the RM1.3 billion Sungai Selangor Phase 2 Water Supply Scheme which involved the construction of the Sungai Selangor Phase 2 Water Treatment Plant and its distribution system. In 2000, he joined Ranhill Engineers and Contractors Sdn Bhd as the Project Director in charge of all water supply construction activities of the company. He was then promoted to Chief Operating Officer of Ranhill Civil Sdn Bhd until He joined WWE Holdings Bhd in 2004 as Executive Director before joining PNSB in the same year and was involved in the task force for the privatisation of PUAS to SYABAS. Encik Sanusi has past international construction works exposure in the Kingdom of Saudi Arabia. He assumed his current position as Executive Director, Projects in SYABAS since August 2007.

44 42 Puncak Niaga Holdings Berhad Key Personnel in SYABAS TUAN HAJI ZAINUDDIN OTHMAN AGED 48, MALAYSIAN EXECUTIVE DIRECTOR, HUMAN RESOURCE & ADMINISTRATION Tuan Haji Zainuddin joined SYABAS on 1 April 2005 as General Manager, Human Resource & Administration Division and was promoted to Senior General Manager, Human Resource Division with effect from 1 January 2007 before assuming his current position as Executive Director, Human Resource & Administration on 1 January He holds a Diploma in Public Administration from Universiti Teknologi MARA, Post Graduate Diploma and a Master of Science in Human Resource Management from University of Lincolnshire and Humberside, United Kingdom. He has more than 21 years of working experience in the areas of human resources management and general office administration. MR ALBERT LOH THIAM HOCK IR NASIR ISMAIL AGED 45, MALAYSIAN GENERAL MANAGER, CONTRACT & PROCUREMENT DIVISION Ir Nasir is a member of the Board of Engineers Malaysia (BEM), MWA, SWAn, IWA and Registered Gas Engineer with Energy Commission, Ministry of Energy, Water and Communications. He holds a BSc in Civil Engineering from Memphis State University, Tennessee, USA and MSc in Environmental Engineering from Shimane University, Japan in Prior to joining SYABAS, Ir Nasir was assigned to the task force for the privatisation of SYABAS and has served PNSB since 1998 as Senior Manager responsible for the upgrading and rehabilitation of water treatment plants under the Concession Agreement with the State of Selangor. Previously, he was with Majlis Perbandaran Seremban, consulting engineer firms, contractors and Gas Malaysia Sdn Bhd prior to joining PNSB. AGED 54, MALAYSIAN GENERAL MANAGER, NRW DIVISION Mr Albert Loh joined SYABAS on 14 February 2005 as a Leak Detection Specialist with the NRW Department. He is now the General Manager of NRW Division taking charge of Meter Replacement, District Metering Zone (DMZ) and NRW Management Control. He graduated with a BSc (Hons) from Universiti Sains Malaysia in 1978 majoring in Geophysics. Prior to working with SYABAS, he was employed by an engineering company in Melbourne undertaking water resource investigation, pipe condition assessment and leak detection services in Australia. He had also worked with Malaysia Mining Corporation Bhd from 1981 to 1997 in exploration & mining, oil & gas and utility projects, both locally and overseas.

45 43 Annual Report 2007 TUAN HAJI SONARI SOLOR AGED 52, MALAYSIAN GENERAL MANAGER, INTERNAL AUDIT DIVISION Tuan Haji Sonari joined PNSB on 10 September He is a Chartered Accountant with Malaysian Institute of Accountants and a Fellow Member of Association of Chartered Certified Accountants (UK). He also holds a professional qualification from Chartered Institute of Management Accountants (UK). Tuan Haji Sonari has more than 19 years of working experience at managerial level in the area of accounting with several public listed companies, of which the activities are asset development, manufacturing companies, logging and management consultant. Prior to joining PNSB, Tuan Haji Sonari held the position of Group Division Head, Internal Audit with Land & General Berhad. TUAN HAJI MOHD SUHAIMI RAFIE AGED 52, MALAYSIAN SENIOR GENERAL MANAGER, INFORMATION & COMMUNICATION TECHNOLOGY DIVISION Tuan Haji Mohd Suhaimi holds a Diploma, Advanced Diploma of Civil Engineering and a Post Graduate Diploma in System Analyst from Universiti Teknologi Mara. He has 26 years of working experience in public works and the water supply sector. He began his career in 1979 as a Civil Engineer with Jabatan Kerja Raya, holding various positions until Thereafter, he joined JBAS as a Civil Engineer and continued his service under PUAS ( ). He was the General Manager, Information & Communication Technology Division before he was promoted to Senior General Manager, Information & Communication Technology Division on 1 January ENCIK ABDUL HALEM HAJI MAT SOM AGED 42, MALAYSIAN GENERAL MANAGER, CORPORATE COMMUNICATIONS AND PUBLIC AFFAIRS DIVISION Encik Abdul Halem joined PNSB in 2004 as Personal Assistant to Executive Chairman before assuming the post of Senior Manager, Corporate Communications and Public Affairs Division (CCPA) with SYABAS. He was subsequently promoted to General Manager, CCPA on 1 January Encik Abdul Halem obtained a Diploma in Public Administration (1987) and a Bachelor Degree in Corporate Administration (1998) both from UiTM besides a Certificate in Manufacturing Management from Sanno Institute of Business Administration (SIBA), Tokyo, Prior to joining PNSB, he was the Group Managing Director of Eeman Group of Companies involving in event management as well as production house, human resource consultancy and training, manufacturing of rubber tiles and capital investment. He was previously the Chief Executive Officer at Comiteg Berhad (1994), General Manager at Lagenda Abadi Sdn Bhd (1993), Human Resource Manager at Jamiswilynn (M) Sdn Bhd (1991), and Senior Executive, Administration and Personnel at Omron (M) Sdn Bhd (1988), a Japan-based manufacturing company. He was also the Deputy Assistant Director of Immigration (Work Permit Division) prior to joining Omron.

46 44 Puncak Niaga Holdings Berhad Key Personnel in SYABAS ENCIK ISMAIL RUSMIN AGED 38, MALAYSIAN GENERAL MANAGER, DISTRICT DIVISION ENCIK MOHD YAMAN MOHD ZIN AGED 53, MALAYSIAN GENERAL MANAGER, WATER QUALITY DIVISION Encik Ismail joined PNSB as Operations Executive in In 2003, he was placed under SYABAS Special Project Team as Manager during the privatisation process of the water supply in the State of Selangor, and Federal Territories of Kuala Lumpur and Putrajaya. In 2006, he was promoted to Assistant General Manager to head the Operational Audit & Special Function Division and subsequently promoted to General Manager, District Division on 1 November 2007 to supervise the Mechanical & Electrical Department besides overseeing the operational activities of ten (10) SYABAS District Offices as well as the Secretaries of Work (SOW). Encik Ismail has a Diploma and Advanced Diploma in Business Administration from Universiti Teknologi MARA and Swansea Higher Institute, UK respectively. Encik Mohd Yaman holds a BSc in Structural Engineering from University of Sussex, England in 1982 and an Ordinary National Diploma in Technology (Engineering) from Oldham College of Technology, England. Encik Mohd Yaman has 25 years of working experience involving engineering and environmental consultancy, business development, project/construction management, residential and commercial development, and special projects. Prior to joining SYABAS as General Manager, Water Quality Division in November 2007, he has held various senior positions among others as Executive Director with Elegant Win (M) Sdn Bhd, Chief Operating Officer with ASM Development (Trengganu) Sdn Bhd, Deputy General Manager with Teknik Cekap Sdn Bhd, General Manager with Mercumaju Sdn Bhd, Head of Construction Division with Protellus (M) Sdn Bhd and Construction Manager for Jeddah Sewer Network Project with WWE Holdings Bhd.

47 45 Annual Report 2007 PUAN ADELINA ISKANDAR AGED 47, MALAYSIAN GENERAL MANAGER, CUSTOMER SERVICE DIVISION PUAN JAMILAH HJ OMAR AGED 46, MALAYSIAN GENERAL MANAGER, BILLING & RECOVERY DIVISION Puan Adelina joined SYABAS on 1 August 2007 as General Manager, Customer Service Division. Puan Adelina has more than 20 years experience in public relations and training. She holds a Degree in Humanities and a Masters in Linguistics. Puan Adelina had served as Director, Corporate Communications with the Malaysian Communications and Multimedia Commission where she was responsible for all matters pertaining to media, government and public relations as well as overall strategy of the branding and image building of the commission. Prior to that, she was attached with the Association of Chartered Certified Accountants where she was responsible for members relations as well as corporate communications. Puan Adelina was also in the education field for 10 years as Director of the University Preparatory Programme with an American twinning programme here. Puan Jamilah joined SYABAS as General Manager, Billing & Recovery Division on 1 August She holds a Bachelor of Civil Engineering (Hons) degree from University Technology Malaysia, and has been involved in the water industry since Puan Jamilah started her career at Cawangan Bekalan Air, Jalan Mahameru, Kuala Lumpur, working in the Design and Research Unit from 1984 to In September 1989, she joined Jabatan Bekalan Air Negeri Johor (JBANJ), subsequently known as Syarikat Air Johor Sdn Bhd (SAJSB). As an Assistant Manager, she was responsible both for planning and for managing Pusat Latihan Bekalan Air Sg Layang Negeri Johor. From April 1994 to December 1995, she moved to Planning & Corporate Affairs to review and approve submissions for reticulation and internal plumbing systems. Then, in 1999, she joined the Project Department before being promoted to Agency Head & Central Customer Service Manager in January 2000, being ultimately promoted to become a Departmental Head in the Customer Service Department of SAJ Holdings Sdn Bhd in January Puan Jamilah has vast experience in the water industry due to her exposure in various departments in Public Works Department, JBANJ and SAJ Holdings Sdn Bhd. In 2005, she was appointed as External Consultant to Thames PAM Jaya Jakarta, Indonesia for six months to administer five departments and to conduct courses and workshops pertaining to Customer Service & Billings. Due to her knowledge and experience, she was entrusted with the post of Chairman of Johor State Jawatankuasa Tindakan Jurutera Air Daerah SeMalaysia from 2004 to In addition, Puan Jamilah gained international experience as a Bilingual Teacher for schools under Manchester City Council, under the auspices of the Home & Ministry Affairs UK, from January 1997 to December 1998; and was also the principal of the Malaysian School in Manchester from 1996 to 1998.

48 46 Puncak Niaga Holdings Berhad Executive Chairman s Message Throughout our operations, we seek to balance our duties towards our investors, our employees, our customers YBhg Tan Sri Rozali Ismail EXECUTIVE CHAIRMAN OF PNHB GROUP and society as a whole.

49 47 Annual Report 2007 Dear Shareholders, 2007 was another year of significant progress. Despite the challenging business environment, we met or exceeded most of our Key Performance Indicators, intensified our efforts and contribution towards protection and enhancement of the environment, in particular matters related to raw water source, and successfully launched a series of operational initiatives aimed at ensuring that we remain on track to achieve our vision to be a leading and dynamic integrated water services company. However, we are well aware that further progress is required to improve the level of customer satisfaction, while the environmental battle is still far from won. TAKING STOCK For the global economy, the second half of 2007 was particularly difficult as sub-prime mortgage problems in the USA developed into a wider credit crunch. Thankfully, Malaysia s strong fundamentals combined with the rise in oil prices protected the country from the worst of the market volatility. During the year, buoyant consumer spending and the healthy expansion of various key sectors continued to facilitate development, while the Government s capital market liberalization programme attracted an inflow of foreign capital. Combined with the launch over the last two years of five economic corridors across the country, this enabled the nation to achieve a commendable annual GDP growth of 6.3%. Against this backdrop, on behalf of the Board of Directors of Puncak Niaga Holdings Bhd ( PNHB ), I am pleased to present the Annual Report and Audited Financial Statements of the Group and Company for the financial year ended 31 December REPORTING RESULTS Though 2007 s results were down on the previous year, they remained healthy. Revenue from water services grew from RM1,265.9 million to RM1,333.1 million, but construction revenue declined from RM162.2 million to RM56.6 million. As a result, total Group revenue dipped 2.7% to RM1,389.8 million from RM1,428.1 million the year before. Meanwhile, pre-tax profit fell 68.6% to RM115.4 million compared with RM367.3 million in 2006, mainly due to higher finance costs and a non-recurring gain of RM205.8 million recorded in the preceding financial year. During the year, the Group revised its projected water revenue for the concession period, which resulted in a rise in both the depreciation of concession assets and the amortization of project development expenditure. The effect was an increase of RM18.64 million in the depreciation and amortization charge for the year and a decrease of RM13.98 million in profit after tax and retained earnings. Nevertheless, given the Group s financial strength, the Board is delighted to recommend a tax exempt first and final dividend of 10 sen per share for the financial year ended 31st December 2007 (compared to a tax exempt dividend of 8 sen per share for the financial year ended 31st December 2006). BUILDING THE BUSINESS In 2007, we successfully concluded the Capital Repayment exercise launched in October Involving both a Bonus Issue and a Capital Distribution, the exercise improved the Company s capital structure, rewarded investors for their continuous support of PNHB and helped to unlock shareholder value. Having issued 587,346,993 shares via the Bonus Issue, the Company completed the exercise in March by making a Capital Distribution of RM million. This was followed by a consolidation of the Company s entire issued and paid-up share capital, which was reduced to RM411,142,895. The Capital Repayment was partially funded by the sale of all of PNHB s remaining 12,335,600 treasury shares in the open market for RM39,364,456. I am pleased to report that 2007 saw no change to the credit ratings of our Debt Papers, reflecting our strong financial standing. To finance its operations and capital expenditure programme, in May, Syarikat Bekalan Air Selangor Sdn Bhd ( SYABAS ) issued RM125.4 million of Redeemable Cumulative Preference Shares to the Minister of Finance Incorporated. Later in the same month, in accordance with its Concession Agreement, SYABAS issued RM110.0 million worth of 7% Redeemable Convertible Unsecured Loan Stocks to PNHB and Kumpulan Darul Ehsan Berhad.

50 48 Puncak Niaga Holdings Berhad Executive Chairman s Message In August, PNHB acquired the remaining 30% equity interest in Puncak Oil & Gas Sdn Bhd ( POG ) from Damini Corporation Sdn Bhd ( Damini ), making POG a wholly-owned subsidiary. POG has entered into joint ventures with Aerosystems Tactical Sdn Bhd ( ATSB ) to carry out businesses related to the oil and gas sector. In November, Puncak Niaga (M) Sdn Bhd ( PNSB ) carried out a first mandatory partial redemption of RM54,687,500 of the outstanding RM546,875,000 nominal value Junior Notes A from PNHB. PNHB in turn utilized the proceeds to undertake a mandatory partial redemption of RM54,687,500 of the outstanding RM546,875,000 nominal value Redeemable, Unconvertible Junior Notes ( RUN ) from PNHB s RUN holders. On 1 November 2006, the Government approved an increase in the tariff levied by SYABAS which was due since 1 January Arising from the delay in the approval and implementation of the water tariff revision, the Government compensated SYABAS in the form of a Government Grant of RM129.8 million which is only available for NRW works. A sum of RM50.0 million was received in August 2007 and a further RM75.0 million in January The balance of RM4.8 million remains outstanding as at the date of writing. During the year, the Company participated in tenders for various water projects at home and abroad. In an initiative to broaden our horizons by focusing on regional opportunities, in July, we collaborated with India s Patel Engineering Ltd in a bid to secure the IV Mumbai Water Supply Project. Though the bid was unsuccessful, we learned some valuable lessons along the way which should stand us in good stead as we seek to expand overseas. MEETING CUSTOMER EXPECTATIONS While we are wholly committed to meeting our customers expectations, we must acknowledge that we still receive requests for better water quality, and that there are some localized low water pressure problems and interruptions to supply. In 2007, we remained resolute in pursuing our commitment to continuous improvement and rapid response to customer concerns. In recognition of the progress we made in these areas, we were deeply honoured when, in May, the SYABAS Customer Service Centre, PUSPEL, was named the winner of the 2007 Malaysia Water Award (Management Category) by the Malaysian Water Association. PUSPEL was praised specifically for its efficient and systematic services and for its efforts to solve water problems faced by customers and to create awareness of the consumers role. IMPROVING GOVERNANCE Throughout our operations, we seek to balance our duties towards our investors, our employees, our customers and society as a whole. This means not only conducting our business efficiently, ethically and profitably, but upholding the principles of openness and transparency.

51 49 Annual Report 2007 Educational Outreach Programme No. 87 at Sekolah Kebangsaan Seksyen 9, Kota Damansara, Petaling Jaya. SYABAS s Water Quality Campaign Turun Padang Bersama Media to witness Air Scouring works at USJ 13, Subang Jaya. TAKING RESPONSIBILITY For PNHB, environmental and social responsibility is a matter of crucial importance. In 2007, we added another advanced water treatment technology at our Sungai Rumput and Kepong Water Treatment Plants ( WTPs ): Ultra Filtration Membrane Technology. Since then, the treated water quality produced has improved tremendously from 3-5 Nephelometric Turbidity Unit ( NTU ) previously to below 0.5 NTU today. With this installation, plant shutdowns that frequently occurred in the past whenever there was high raw water turbidity at these two WTPs, especially during the rainy season, can now be minimized. As a result, we have been able to improve our services in terms of supply as well as quality. We are pleased to announce that in November 2007, we received an Honourable Mention in the Prime Minister s CSR Award for our efforts in forming young minds through our education initiatives. One of these is the River Rescue Brigade (Briged Penyelamat Sungai) in which students are taken on visits to PNSB s WTPs and dams to learn about the importance of protecting our environment and especially our rivers. Programmes such as this reaffirm our zeal to enhance our corporate social responsibility by improving on the sustainability of our various CSR endeavours. Over 6,000 schoolchildren have benefitted from the various educational programmes implemented over the last ten years, enjoying especially the hands-on approach adopted. We are passionate about the environment and are determined to excel in our community work. The main challenges we foresee for 2008 involve global climate change. This is one of the most critical challenges of our time. Recent events have emphatically demonstrated our growing vulnerability to climate change, and scientific consensus has confirmed that human activities are largely responsible for the problem. Climate change will damage agriculture, cause sea-levels to rise, accelerate the erosion of coastal zones, increase the intensity of natural disasters, drive various species to extinction and foster the spread of water-borne diseases.

52 50 Puncak Niaga Holdings Berhad Executive Chairman s Message Scenic view of Klang Gates Dam. At PNHB, we are aware of the impacts of greenhouse gas emissions on the atmosphere. Our strategy focuses on understanding the impacts of climate change, monitoring the situation, developing and implementing adaptation measures and raising awareness. As yet, we do not have a cohesive programme to offset our greenhouse gas emissions or any substantial energy reduction plans. To meet the challenges of climate change, we will continue to be responsible, innovative and sustainable in the conduct of our business. MOVING FORWARD Prospects are good for PNHB. Despite the slowdown of the US and EU economies, the Malaysian economy is projected to grow between 6% and 6.5% in 2008, and we are optimistic that the local water industry will continue to expand at the projected rate of 6% until The execution of water-related projects during the second half of the Ninth Malaysia Plan presents great opportunities for all market players. PNHB, being one of the country s largest and most efficient water companies, is well placed to leverage on its expertise to carry out the projected jobs, thus helping to ensure an affordable supply of clean drinking water for the people of Malaysia. After several years of planning, the Government officially commissioned the National Water Services Commission ( SPAN ) in April 2007, and the Water Services Industry Act 2006 ( WSIA ) became effective on 1 January With this development, Malaysia is now taking a holistic approach to the management of the water and wastewater industries. The momentum of reform will continue in 2008 and beyond with the enforcement of the SPAN Act 2006 and the WSIA. We believe that restructuring the industry through smart partnerships between the State and Federal Governments and private companies will benefit both the general public and the nation as a whole.

53 51 Annual Report 2007 Meanwhile, with our continuing efforts to reduce non-revenue water, increase collection and control overheads, we are confident that, in 2008, the Group will continue to record solid financial results and deliver value for our shareholders and all our stakeholders. New Meter Plastic Launching at Taman TTDI Jaya. With SPAN fully established, we are looking carefully at whether our subsidiaries, PNSB and SYABAS, should maintain their current status as concessionaires or become licensees under SPAN. In making this decision, the Group will act in the best interests of its shareholders, lenders, customers and all its stakeholders. In the years ahead, we will continue to seek out opportunities to enhance shareholder value by expanding our operations in areas related to our core business. Avenues for exploration include moving into other states within Malaysia, undertaking projects overseas (especially Build Operate & Transfer water supply projects in India, China and the Middle East), and moving into the wastewater industry. In particular, expanding into the wastewater industry would not only be a synergistic extension of our current business, but would also be in line with the objectives of the recent Water Bills to integrate the water supply system with the sewerage system. GIVING THANKS The commendable results we achieved in 2007 are a splendid tribute to the hard work and dedication of our staff. On behalf of the Board, I would like to offer each and every one of them our sincere appreciation. We are profoundly grateful for the unwavering support we received during the year from our shareholders, customers, business partners and financiers. I would also like to extend our thanks to the Federal Government and the Selangor State Government as well as various government authorities, agencies and non-governmental organizations for the guidance they so consistently provided. Finally, I wish to offer my heartfelt gratitude to my fellow Board members and the entire Management team for the tremendous contribution they made to the business throughout the year. Together, with the support of all our stakeholders, we are confident that we will meet the challenges that lie ahead in TAN SRI ROZALI ISMAIL Executive Chairman 23 April 2008

54 52 Puncak Niaga Holdings Berhad Operations Review PNSB Water Treatment Activities PNSB is committed to meeting stringent quality standards throughout its operations. YBhg Dato Matlasa Hitam MANAGING DIRECTOR PNSB YBhg Dato Syed Danial Syed Ariffin CHIEF OPERATING OFFICER PNSB

55 53 Annual Report 2007 At PNHB s 82.5% owned subsidiary, Puncak Niaga (M) Sdn Bhd ( PNSB ), we continued to invest in the future by continuously improving our systems and processes, by embracing new technologies that enhance water quality, and by building expertise through developing the core competencies of our people. Throughout 2007, the reservoirs at all our dams provided the maximum amount of raw water to our water treatment plants ( WTPs ) without our reservoir levels ever dropping below Operational Rule Curve No. 1. This enabled our WTPs, in turn, to supply all the treated water required by SYABAS. WATER TREATMENT PLANT ( WTP ) OPERATIONS PNSB is the nation s second largest water supply concessionaire, operating, managing and maintaining 29 WTPs with a combined capacity of 1,930.0 million litres per day. Thanks to the high level of staff commitment and the diligent execution of scheduled preventive maintenance, there were no major plant interruptions in 2007, and all our WTPs consistently met both production demands and the stipulated water quality standards saw a fractional drop in the production of treated water at all our WTPs, mainly due to slightly lower demand by SYABAS. In 2007, the Sungai Selangor Phase 2 ( SSP2 ) WTP produced million cubic metres of treated water, down 0.52% on the million cubic metres recorded the year before. Average daily production dipped to million litres from million litres in Wangsa Maju WTP produced million cubic metres of treated water, a decrease of 2.14% from million cubic metres the previous year. Average daily production was 50.0 million litres as against 51.0 million litres in In April 2007, the total number of our WTPs rose to 29 when PNSB was given the right to operate and maintain the Sungai Sireh WTP. DAM OPERATIONS PNSB operates and maintains the Sungai Langat, Klang Gates and Tasik Subang Dams. Performance in 2007 was good, and there was no critical storage drawdown at any of the dams. The dams operate using the Operational Rule Curve which regularly monitors rainfall levels in the dams catchment areas and helps our operators meet the demand from the WTPs while conserving as much reservoir water as possible. At all three dams, the reservoir levels were maintained above Operational Rule Curve No. 1 for the whole of 2007, allowing the reservoirs to supply the maximum amount of raw water to the WTPs they feed. Total rainfall at the Sungai Langat Dam catchment area was 2,477.90mm, down 2.5% on the 19-year average of 2,540.84mm/year. At the Klang Gates Dam, the reservoir reached maximum capacity in May thanks to the extraction of raw water from the Gombak River by the Wangsa Maju WTP and a 24.4% increase in rainfall in the catchment area, which rose to 2,944.40mm, well above the 20-year average of 2,366.30mm/year. The reservoir level at Tasik Subang Dam fluctuated during the year due to the constant release of water required by the North Hummock WTP while, at 2,545.10mm, the total annual rainfall in the catchment area was only a little higher than the 11-year average of 2,530.41mm. The WTPs under the Privatisation Cum Concession Agreement ( PCCA ) produced some million cubic metres of treated water, a 3.38% drop from million cubic metres the previous year.

56 54 Puncak Niaga Holdings Berhad Operations Review PNSB Water Treatment Activities The Malaysian Meteorological Department forecasts an average level of rainfall for 2008 following a weak to moderate El Nino at the beginning of the year. Since the reservoirs at all three dams were full at the end of 2007 and no major change in raw water demand from the WTPs is expected in the year ahead, we do not foresee any critical storage drawdown at any of our dams in To ensure the safety and stability of the dams, PNSB conducted two major visual safety inspections in The inspections covered mechanical and electrical equipment and all major dam structures. ONGOING PROJECTS By the end of 2007, PNSB completed the new intake, raw water pumping station, off-river storage, balancing reservoirs and water pipelines for the Telibong and Telipok project in Sabah. The water treatment plant should be ready by June The project will be able to supply 80.0 million litres per day of treated water to residential developments, industrial parks and tourist resorts in the Tuaran area. Meanwhile, PNHB and its joint venture partners continued to operate and maintain the Chennai Water Supply Augmentation Project 1 - Package III, for which the joint venture undertook the construction work between 2002 and The maintenance service contract runs until January View of SSP2 WTP.

57 55 Annual Report 2007 QUALITY MANAGEMENT PNSB is committed to meeting stringent quality standards throughout its operations. The SSP2 WTP is the nation s first water treatment plant to have implemented an Integrated Management System, which combines Quality Management System ISO 9001:2000, Environmental Management System ISO 14001:2004 and the Safety Management System OHSAS 18001:1999. Both the SSP2 and Wangsa Maju WTPs once again successfully maintained their various ISO certifications from the internationally renowned Lloyd s Register Quality Assurance, which conducts surveillance audits every six months to verify that the WTPS are operating the ISO 9001 system properly. In 2007, the SSP2 WTP s, ISO/IEC laboratory accreditation by the Department of Standards Malaysia was upgraded from the 1999 to the 2005 version, and the scope was expanded to include microbiological testing. Raw water intake at SSP2 WTP. Aeration process to oxidize the raw water at SSP2 WTP.

58 56 Puncak Niaga Holdings Berhad Operations Review PNSB Water Treatment Activities Sedimentation tank at Gombak WTP. Visit by delegates from Vietnam to Wangsa Maju WTP. Meanwhile, three of our Regional Offices and eight more WTPs under the PCCA achieved ISO 9001:2004 Quality Management System certification. All the documentation and procedures required for certification were developed in-house, while our own personnel conducted all ISO 9001-related training. We aim to achieve ISO certification for another seven of our WTPs in As well as helping the Company to maximize its efficiency and productivity, the certification has increased staff morale by defining roles and responsibilities more clearly, thus boosting motivation and job satisfaction. INFORMATION TECHNOLOGY During the year, our information technology ( IT ) capabilities were considerably enhanced. PNSB became one of the first companies in Malaysia to upgrade its MySAP Business Application suite to MySAP ECC version 6.0, which provides more features and better performance. Additional SAP modules were also implemented including Funds Management, Cheque Printing and Remittance Advice, while a number of reports were customized for the Material Management module. Since our HR system is now integrated with the SAP financial system, the payroll results generated by the HR system are now processed and converted into journal format entries based on General Ledger Codes charging rules. The output of the journal entries are then exported to an ASCII file based on the format specified by SAP also saw the implementation of a Helpdesk application called TCO! Stream which enables us to identify and resolve computer issues fast. Meanwhile, to improve the Company s asset management, we introduced barcode tagging and asset tracking to monitor the movement of our assets.

59 57 Annual Report 2007 Educating the children on water treatment process. Auxiliary police personnel attended the basic training at the Police Training Centre. SECURITY Since the WTPs and dams managed by PNSB are classified as Protected Areas and Protected Places, PNHB has been granted an Auxiliary Police licence from the Royal Malaysian Police. PNSB s Protective Services Department has 299 Auxiliary Police personnel who are responsible for safeguarding and protecting the Group s people, premises and assets. As well as controlling security at the WTPs, dams, stores, offices and the SYABAS collection centres, the Auxiliary Police escort cash transfers and important documents. They also coordinate protocol at Company events, conduct investigations and undertake any special tasks assigned by the Management. All Auxiliary Police personnel undergo basic training at the Police Training Centre ( PULAPOL ) in Jalan Semarak, Kuala Lumpur. In 2007, to enhance security, new and improved guardhouses were constructed at a large number of our WTPs and dams. We are also currently looking into installing CCTV; and, in 2008, we will be improving the security fencing.

60

61 PNSB S Continual Improvement Programme For PNSB s Continual Improvement Programme, 2007 was marked by a series of solid achievements. By continuously upgrading our WTPs, we were able to ensure for the people of Selangor, Kuala Lumpur and Putrajaya a constant supply of water, producing on average 1,930.4 million litres per day compared to 1,909 million litres per day in In addition, our proactive strategy of preventive maintenance once again ensured minimal plant shutdowns and interruptions to water supply. Meanwhile, our continued investment in new technologies to enhance water quality produced increasingly favourable results.

62 60 Puncak Niaga Holdings Berhad PNSB S Continual Improvement Programme PNSB S Continual Improvement Programme PLANT IMPROVEMENT PROGRAMME At the WTPs under the PCCA, a RM50 million plant improvement programme was successfully completed in July, enhancing the overall efficiency of our plant operations, process treatments, facilities, infrastructure, and mechanical and electrical equipment. During the year, we implemented a computerized management system at our major WTPs to enhance preventive maintenance and reduce plant shutdowns and interruptions to water supply. The system not only generates work orders at the beginning of each year, specifying and scheduling all preventive maintenance work, it monitors execution and produces monthly reports. To date, this has enabled us to meet our maintenance objectives 100%. ULTRA FILTRATION MEMBRANE TECHNOLOGY 2007 also witnessed a major investment in water technology. The Sungai Rumput and Kepong WTPs were upgraded to full treatment plants using ultra filtration membrane technology. The two ultra filtration plants were commissioned in September and October respectively. Plant operation is fully automatic and (unlike with conventional plants) does not require coagulant. Used by many developed nations, the ultra filtration membrane technology removes water-borne pathogens, bacteria, viruses and parasites, including those resistant to chlorine, thus ensuring clearer and safer water. This will improve the level of service to the rural population by minimizing partial plant shutdowns. The Dam Aeration System piloted at the Klang Gates Dam in 2006 resulted in an improvement in raw water quality at source, leading to reduced chemical consumption at the Bukit Nanas and Wangsa Maju WTPs. Command Centre at SSP2 WTP.

63 61 Annual Report 2007 SLUDGE TREATMENT Each year, PNSB s WTPs generate about 664 metric tons of sludge. In 2007, we embarked on the construction and installation of sludge treatment facilities at 15 of our WTPs. The sludge treatment facilities comprise a concrete thickener, a mechanical decanter, piping and buildings as well as mechanical and electrical works. OTHER INITIATIVES Many other initiatives undertaken by us to enhance water quality and achieve sustainable development, are reported in the Corporate Social Responsibility & Environmental Responsibility section on pages 78 to 93 of this Annual Report. The thickeners thicken the sedimentation from the WTPs, while the decanters dry out the thickened sludge to produce solid sludge cakes which can then be disposed of at landfill sites. The effluent discharged by the sludge treatment facilities into the river will meet either the Class A or Class B standards required by the Department of Environment. We expect the sludge treatment facilities to be commissioned in stages between March and June Front view of the Sg Rumput Ultra Filtration Plant. Ultra Filtration Membrane Module.

64 62 Puncak Niaga Holdings Berhad Operations Review SYABAS Water Distribution Activities In May, PUSPEL won the 2007 Malaysia Water Award for Excellence in Customer Service Management from the Malaysian Water Association. YBhg Dato Ir Lee Miang Koi CHIEF OPERATING OFFICER OF SYABAS YBhg Dato Ruslan Hassan CHIEF EXECUTIVE OFFICER OF SYABAS

65 63 Annual Report 2007 For 2007, PNHB s 70% owned subsidiary, Syarikat Bekalan Air Selangor Sdn Bhd ( SYABAS ), set itself several key targets. To enhance our financial performance, our goals were to increase billing growth by at least 16%, improve collection efficiency to at least 103%, and better manage our average operating cost. We also determined to reduce non revenue water ( NRW ) by at least 6.8% to 27.8% and exceed our client charter and mandatory level of service. I am pleased to report that we met all the targets except for NRW which was computed as 32.95% as at the end of Nevertheless, we have achieved a total reduction in NRW of 9.83% since the commencement of the Concession Agreement ( CA ) and are still on target to achieve the levels set in the CA. We aimed, as well, to meet customer expectations on the quality of treated water. In this respect, we made good progress during the year and, in 2008, we are intensifying our efforts to deliver the treated water quality standards that the consumers want. In the last three years, we have invested some RM1.2 billion in capital expenditure programmes to upgrade our water distribution network. In a parallel move, to ensure transparency and good corporate governance, we have established an Audit Committee at SYABAS level even though it is not a requirement for privately owned entities. WATER DISTRIBUTION SERVICES SYABAS distributes treated water to about 7.3 million consumers, as well as factories, commercial and industrial buildings in Selangor, Kuala Lumpur and Putrajaya. Of its million consumer connections, 85% are for domestic use. Amongst other facilities, SYABAS maintains 24,695km of water pipes, 1,169 service reservoirs and elevated tanks and 444 booster pumping stations. SYABAS purchases treated water from three water concessionaires: Puncak Niaga (M) Sdn Bhd ( PNSB ), Syarikat Pengeluar Air Sungai Selangor Sdn Bhd ( SPLASH ), and Konsortium ABASS Sdn Bhd ( ABASS ). During the year, we continued to implement a number of major pipe laying projects designed to increase connectivity between various water supply sources and enhance water supply reliability and water pressure to rapidly developing areas. These measures have greatly benefited the districts of Gombak, Kuala Lumpur, Petaling, Kuala Selangor, Sabak Bernam and Hulu Selangor. Further works are ongoing to improve water supply reliability to Klang and Hulu Langat. NON REVENUE WATER ( NRW ) Our Concession Agreement requires us to reduce our NRW level from 42.78% as at 1 January 2005 to 15.0% by 31 December In 2007, we continued to roll out various programmes to reduce NRW, but did not manage to achieve the ambitious target set for the year. A vigorous analysis has been done to re-strategize and intensify the programme for Pipe replacement continued in critical areas. Between 1 January 2005 and 31 December 2007, 728km of pipes were laid, resulting in significant NRW savings, reducing leaks and bursts, and improving water quality. During the year, SYABAS also launched Malaysia s first "trenchless" pipe replacement programme. Though expensive, this modern technology, which involves inserting a new pipe to replace the old one without open trenching, is ideal in areas where the traffic disruption caused by conventional open cut method is unacceptable - for example, in parts of Kuala Lumpur s golden triangle and other busy areas in Kuala Lumpur and Petaling Jaya. In October 2007, we started two pipe replacement packages using trenchless methods involving 21km of pipes of various sizes, ranging from 100mm to 250mm in diameter. Under the various key programmes to reduce NRW, we have set up a total of 367 District Metering Zones ( DMZ ), up to the end of 2007, covering about 30% of the water distribution network. In August, we began to extend the DMZs to cover the rest of the network. In six districts, we also installed cross border meters to facilitate water balance analysis and enable us to accurately measure the NRW performance of each of these districts. Pending the implementation of DMZs throughout the network, we established 145 Pressure Management Zones ( PMZ ), which also help to reduce pipe bursts and leaks. More PMZs will be set up in 2008.

66 64 Puncak Niaga Holdings Berhad Operations Review SYABAS Water Distribution Activities NRW Workshop on Water Loss Management at Holiday Inn Glenmarie. Water Quality Programme Turun Padang Bersama Media to witness cleaning works at the Puncak Jalil s Service Reservoir. Equipped with sophisticated electronic equipment, our leak detection inspectors and technicians checked the entire water distribution network and detected and repaired 10,411 leaks. Meanwhile, 799 faulty float and altitude valves were repaired, and inspection and preventive maintenance at storage tanks and service reservoirs ensured the proper monitoring and control of overflows. To further reduce NRW losses, we replaced 202,420 old and stuck meters while, for large users, we installed reliable electromagnetic flow meters where automatic meter reading features can be activated in future. To combat water theft, which is especially rampant at construction sites and industrial areas, our Enforcement Division investigated 4,387 cases of illegal water tapping, of which 256 are now in the process of legal action. During the year, we finalized the specification for the implementation of our Supervisory Control And Data Acquisition ( SCADA ) system - a massive project designed to manage and maintain our entire water distribution operation. We expect the commencement of the system installation in 2008 and completion in To facilitate hydraulic modeling and further DMZ works, we pushed ahead with mapping the distribution system, registering and digitizing all relevant data in GIS format. Hydraulic modeling simulates the way in which the distribution system will react under different conditions - making it a predictive rather than a reactive system. During the year, we developed the hydraulic model for the trunk main system, and we will continue with its calibration in 2008.

67 65 Annual Report 2007 SYABAS s customer service executive attending to consumers. Sustained quality of water for future generations to come. CUSTOMER SERVICE Pusat Perkhidmatan Pelanggan ( PUSPEL ) provides customers with a convenient and effective way to contact us on water supply matters. Manned by 60 highly trained call agents based at our Headquarters and District Offices, PUSPEL operates 24 hours a day, seven days a week and 365 days a year. PUSPEL was originally just a call centre. Today, it also monitors the remedial actions taken in response to customer complaints and reports back to the customer. The centre s outstanding performance was formally recognized in May when PUSPEL received the 2007 Malaysia Water Award for Excellence in Customer Service Management from the Malaysian Water Association. Nevertheless, we are well aware that there are further enhancements still to make and, in 2008, we will escalate our efforts to improve the service we provide. During the year, PUSPEL handled some 227,098 cases and received 583,052 calls. Our agents responded to 98% of these calls, and 98% of all calls were answered within six seconds. PUSPEL also answered over 18,000 letters, faxes, s and SMS. As well as being trained in customer service and company operations, PUSPEL staff regularly visit call centres run by other organizations. By learning from their technologies, people skills and management paradigms, our staff are empowered to upgrade our systems and services and achieve higher levels of performance. In 2007, PUSPEL s Unit Kerjasama Informasi Pelanggan ( YAKIN ) conducted 1,429 briefings and dialogue sessions with various residents associations and community leaders to keep them informed in advance of pipe replacement programmes and scheduled water disruptions. As at the year end, YAKIN had compiled details of 2,338 Ketua Kampung/Ketua Taman/Pengerusi JKKK in its database. This will enable YAKIN to send out automated advance notices of future scheduled water disruptions.

68 66 Puncak Niaga Holdings Berhad Operations Review SYABAS Water Distribution Activities Water samples taken from the top, middle and bottom of the service reservoir. PNHB Group s Executive Chairman at the National Enviro Conference and Exhibition Meanwhile, the Industrial Consumer Unit ( ICU ) continued to send out notices, identify badly-hit trade areas, follow up and resolve reported water disruption cases, update its database of industrial customer profiles and conduct water quality surveys. ICU executives visited 2,851 trade consumers in BILLING AND COLLECTION Prompt and accurate billing is crucial to the success of our business. In 2007, total billings amounted to RM1.333 billion, an increase of 5.3% from the RM1.266 billion recorded in Improved billing quality resulted in a further cut in the number of bills that had to be estimated for reasons such as faulty meters and locked gates. The number dropped from 1.6% in 2006 to 1.3% in 2007, even though there was a 0.7% increase in the number of billable accounts, which rose from 1.51 million as at 31 December 2006 to 1.52 million as at the end of One way we reduced estimated bills was to relocate meters from within the premises to outside the premises with locked gates. This exercise started in June 2007 and, to-date, 4,684 meters have been relocated. The old meters were replaced with plastic meters to allay consumer fears of the meters being stolen for their metal content. Another method employed to improve billing performance was the systematic replacement of faulty and aged meters to ensure accurate and reliable meter readings. SYABAS continued with its policy of changing all meters above seven years old. In 2007, some 202,420 meters were replaced and by end of 2007, there were no longer any meters above seven years old in the water distribution network. SYABAS has also begun changing large commercial consumer meters to electromagnetic flow meters equipped with remote, Automatic Meter Reading ( AMR ) facilities. By 31 December 2007, 42 meters had been changed to AMR meters of various sizes, ranging from 50mm to 250mm. With enhanced billing and recovery mechanisms in place, SYABAS successfully reduced outstanding receivables to RM149.8 million in 2007 from RM213.5 million the previous year - despite a RM197.0 million (excluding the Government Grant receivable amounting to RM129.0 million in 2006) increase in overall billings. The RM63.7 million reduction in receivables was achieved by strict monitoring of water bill accounts, prompt issuance of reminder notices, and disconnections of overdue accounts. In 2007, SYABAS performed 237,533 disconnections and 147,770 reconnections, and improved collection efficiency from 101.6% in 2006 to 102.7% in 2007 (based on cash collections against billings for the respective years). With the reduction in receivables, debtors turnover dropped from 77 days in 2006 to 48 days in For 2008, our new target for debtors turnover is 45 days.

69 67 Annual Report 2007 Handover Ceremony of the Form for the Migration from Bulk Metering Account To Individual Metering Account For High Rise Residential Units to the representatives from the high rise management corporations. Cleaning works at SYABAS s service reservoir. The implementation of Inter District Reconnection ( I-Recon ) in 2006 has facilitated the settlement of overdue payments at any SYABAS District Office following the disconnection of the water supply, thereby enabling reconnection immediately after payments have been made. Some 8,757 accounts were transacted via I-Recon during the year. Another notable initiative was the migration by owners of condominiums, apartments and flats from Bulk Meter accounts to Individual Meter accounts ( migration ). This programme was officially launched in May As at 31 December 2007, SYABAS had received 185 applications for migration involving 52,949 individual units. So far, 122 premises have been inspected and 181 inspection reports sent out. From the 185 applications, 13 applications have been approved without any conditions and 21 applications approved with conditions. Together, these account for some 6,094 individual units. So far, two premises (involving 248 accounts) have completed the migration process. In 2008, SYABAS will continue to encourage more management companies of condominiums, apartments and flats to apply for migration. INFORMATION AND COMMUNICATION TECHNOLOGY ( ICT ) One of our main goals is to make SYABAS an ICT-based company. Ultimately, every Division in SYABAS will operate online, not just for the purposes of record-keeping, but for running its activities; and the role of our ICT Division is to provide the facilities, system applications and infrastructure that SYABAS needs to work efficiently and effectively. The SYABAS Integrated Water Management Information Systems ( SWIMS ) provides the framework for all our ICT initiatives by integrating five main areas: operation and maintenance; NRW; customer service; financial; and billing and collection. During the year, the ijob integrated repair job management application was massively upgraded. The integration of ijob with CRM and Accounting has greatly enhanced customer service by helping SYABAS to resolve customer complaints and handle repairs fast, besides ensuring payment to contractors within the credit period. Going forward, approval of all applications for water supply to new condominiums and apartments will be based on individual meter readings.

70 68 Puncak Niaga Holdings Berhad Operations Review SYABAS Water Distribution Activities SYABAS s Pipe Replacement Programme in Salak South Garden. To boost productivity and consolidate the SWIMS framework, in 2007, we upgraded various existing systems and implemented several new ones: iprocurement is an integrated procurement management and vendor payment application, designed to improve procurement management. Having been pilot-implemented in the Gombak District, the system is being developed in phases to meet the users requirement for additional functions, with the first phase handling the direct purchase of goods and services. ifile is an Office Filing Management System designed to register, monitor and manage files and documents. The system standardizes filing codes, tracks the movement and location of files, and centralizes file management, while providing access by various Departments. It also has hierarchical security features which allows access only by personnel with appropriate authorization. ienforcement enables our Enforcement Division to monitor, manage and handle cases of illegal water tapping. The system is integrated with our CRM system so that information reported by consumers is automatically reported to the Enforcement Division for action. The next step is to link the system to the Legal Division. idirectory records the contact details and profiles of both Federal and State authorities and NGOs. Shared by SYABAS and PNSB, in 2007, the system was upgraded to include additional details. imdcc handles disputed bills where pipe leaks, faulty meters or other faults have resulted in an apparently inaccurate bill. Since it is integrated with our Consumer Profile and CRM systems, such complaints are routed to the imdcc system automatically. As well as managing complaints quickly and efficiently, the system deals with the issuing of credit and debit notes. elearning is an interactive tutorial system that enables SYABAS Training Department and divisional facilitators to provide self-learning modules online. TENDER & AWARD OF CONTRACTS In line with our Client Charter, we expect our contractors to deliver efficient and high quality services and carry out works of a high standard. Following the 2007 run of our Pre-Qualification and Registration of Contractors programme, 97 new contractors, suppliers and consultants were registered with SYABAS. During the year, we awarded 860 contracts worth RM329.3 million to 392 contractors, suppliers and consultants by way of open tender. The contracts covered capital expenditure, operation and maintenance programmes, consultancy services and supply of goods. 777 of the contracts, worth RM323.7 million were awarded to Bumiputra companies.

71 69 Annual Report 2007 SYABAS s Chief Executive Officer at the Licensed Plumbers Course held at Intekma Resort and Convention Centre. SYABAS runs numerous training and development programmes to develop the skills of Bumiputra contractors and help them to compete effectively in the marketplace. During the year, we considerably enhanced one of our key initiatives, the Program Penyertaan Usahawan Bumiputra ( PPUB ) to implement the development programme. As well as contractors, plumbers play a vital role in ensuring hasslefree, leak-free and high quality plumbing works and connections. To increase the number of properly skilled and qualified plumbers, we have signed a Memorandum of Understanding with Akademi Binaan Malaysia ( ABM ) for recruitment and training collaboration programmes for potential plumbers and these programmes are expected to commence in 2008.

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73 SYABAS Water Quality Improvement Master Plan For SYABAS, water quality remains our top priority, and the water we supply to our consumers is safe for consumption and well within both the Ministry of Health s Drinking Water Quality Standards and the requirements of the Mandatory Level of Service specified under our Concession Agreement with the Federal Government and the State Government of Selangor. However, a lot of consumers still question the quality of the water supplied to their taps. One of the main reasons is that, due to aggressive marketing by water filter manufacturers and distributors, many consumers have installed water filters in their homes and are now comparing tap water with filtered water.

74 72 Puncak Niaga Holdings Berhad SYABAS Water Quality Improvement Master Plan OBJECTIVES Although we have complied with the statutory standards, consumers are not satisfied and demand a standard comparable to filtered or bottled water. In response, SYABAS has strategized and started to implement a holistic Water Quality Improvement Master Plan. The Water Quality Improvement Master Plan has been drawn up both to improve the quality of the water we distribute as well as to change consumer perception of water quality. The five main immediate term programmes aimed at achieving these targets have commenced as follows: Air Scouring. Reservoir Cleaning and Inspection. Water Quality Sampling. Immediate response to Consumer Complaints. Consumer Awareness and Education. WATER QUALITY SAMPLING For the Water Quality Sampling Programme, samples are taken at designated sampling stations. There are presently 1,012 sampling stations in the distribution system maintained by us. Water quality sampling is carried out by the Ministry of Health and tested by the Chemistry Department following the Ministry s Drinking Water Quality Standards. An average of 1,000 samples are taken every month by the Ministry of Health. Based on the results from the Ministry of Health, the water quality in the distribution system for 2007 is generally in compliance with the Concession Agreement Mandatory Level of Service and within the Ministry s Quality Assurance Programme (QAP). Further to this, water quality sampling is also carried out in-house and tested by Third Party Accredited Private Laboratories against a higher internal standard. AIR SCOURING An air scouring programme is ongoing, designed to systematically clean all our reticulation pipes initially on a six-month cycle. Over 13,000km of reticulation pipes of 200mm diameter and below were originally identified for cleaning using air scouring machines. We have spent more than RM2 million on the purchase of air scouring machines, accessories and spares for this purpose. In 2007, more than 7,000km of pipes were air scoured. As at the time of writing, the air scouring programme was 64% complete, and the first cycle is expected to be completed by May RESERVOIR CLEANING AND INSPECTION Under the Reservoir Cleaning and Inspection Programme, all the service reservoirs are cleaned manually and thereafter inspected every six months to test water quality using depth-samplers. Subsequent cleaning of the reservoirs will be carried out if water quality violations are detected. To date, a total of 821 or 85% of the reservoirs have been cleaned. The remaining reservoirs are expected to be cleaned within the first quarter of 2008 with alternative measures in place so as to avoid water supply interruptions. The first cycle reservoir inspection target for 2007 has also been achieved with 731 reservoirs inspected. The second exercise of reservoir cleaning based on water quality violations detected is being arranged. SYABAS s Water Quality Improvement Programme at Apartment Hillside, Taman Melawati, Gombak.

75 73 Annual Report 2007 IMMEDIATE RESPONSE TO CONSUMER COMPLAINTS On response to consumer complaints, we have set a target to achieve a quick initial response time not exceeding one hour to all water quality complaints from consumers followed by resolution of the complaint. The scope of work covers initial investigation involving in-situ testing of physical parameters and taking the necessary remedial actions. A Water Quality Consumer complaint report has also to be submitted. Consumers normally complain about the aesthetic aspect of the drinking water, hence field testing of physical parameters (turbidity, colour, residual chlorine and ph) using portable test kits is employed to identify the level and nature of the contaminant in the distribution system. For this purpose, SYABAS has purchased 53 portable test kits. If the initial results show no water quality violations, the consumers will be advised to check their internal system. If violations are detected, appropriate remedial actions will be taken. Re-sampling will be done to determine the effectiveness of resolution action taken and to indicate if the contaminant is still present in the system. On average, 273 water quality complaints a month were registered in Our response time to consumer complaints has improved and in 80% of cases we now meet the target of one hour initial response time. CONSUMER AWARENESS AND EDUCATION The Consumer Awareness and Education Programme is a plan to create immediate consumer awareness of water quality issues especially emphasizing that the quality of water supplied to consumers is safe for consumption. An education campaign on water quality issues is also ongoing via advertising and promotions, event management and print and electronic advertisements and infomercials on our water quality efforts. We plan to launch at least one programme a month beginning in 2008 covering various target groups of consumers and all the activities relating to water quality. Site visit with YB Teresa Kok in conjunction with SYABAS s Pipe Replacement Programme at Salak South Garden. SYABAS s Water Quality Campaign Turun Padang Bersama Media to witness Air Scouring Works at USJ 13, Subang Jaya.

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77 Research and Development Through research and development, PNHB strives continuously to improve the quality, sustainability and reliability of Malaysia s water supply; modernize and advance the nation s water technology; and improve our own operational efficiency and cost control. We are currently in the process of setting up a Puncak Research and Development Centre ( PRDC ). This state-of-the-art, water research centre will not only address current water supply and wastewater issues, but also act as a one-stop reference, solution and training centre for the industry, both in Malaysia and across the region.

78 76 Puncak Niaga Holdings Berhad Research and Development PNSB Several R&D projects dedicated to enhancing our plant processes came to fruition during the year. 33 WTP water filters were replaced with new ones, purpose-designed by our R&D team based on what we have learned from experience about how to optimize effectiveness and efficiency. In addition, following river siltation studies by PNSB at 13 of our WTP intakes over a period of six months, for which a report was submitted to the Selangor State Government, the latter agreed in principle that silt can now be removed from the intakes. In an effort to improve water quality, a project is currently ongoing aimed at reducing high ammonia content in rivers. Successful laboratory tests have already been completed and we are now waiting for the right weather conditions to test the results in a real life river scenario. Studies of filter performance, and ways to optimize coagulant dosage are also in progress. SYABAS In 2007, the R&D initiatives undertaken by SYABAS included: The use of alternative technologies such as trenchless pipe replacement The use of alternative products such as variable speed pumping systems and plastic water meters The introduction of battery operated/solar powered electromagnetic flow meters for large consumers The introduction of automatic meter reading for condominiums and apartments The implementation of the SCADA system for data transmission via a GPRS network Downsizing distribution mains to increase water velocity and improve water quality New designs and materials for pipe/valve markers to enhance durability and cost effectiveness Bacteriological analysis namely, E-Coli and Total Coliform conducted on treated water and raw water at the Central Lab located at SSP2 WTP.

79 77 Annual Report 2007 PUNCAK RESEARCH AND DEVELOPMENT CENTRE ( PRDC ) Currently being established at Bukit Nanas Kuala Lumpur, the new PRDC should be operational within the next three years. The Centre is being jump-started by a collaboration between PNHB s wholly owned subsidiary, Puncak Research Centre Sdn Bhd ( PRCSB ), and DHI Denmark ( DHI ), a global leader in the field of water treatment. DHI will provide input on laboratory design, equipment and R&D facilities and potential R&D projects and, to ensure the centre s successful operation, DHI will also second support staff to train the PRDC research team and assist with assignments. As well as with DHI, PRCSB is looking to collaborate with local R&D institutions and universities on projects in the water, wastewater and environment industries. A trained lab personnel conducting chemical analysis to monitor the metal contents in water.

80 Corporate Social Responsibility & Environmental Responsibility Quality, value, service, innovation and trust are fundamental values that have played an integral role in Puncak Niaga s success over the years. At Puncak Niaga, we recognize the importance of achieving commercial success in ways that honour ethical values as well as respecting our stakeholders and caring for the environment. This is why we have established a Corporate Social Responsibility ( CSR ) programme which allows us to manage our operations responsibly and create greater value for our shareholders. We work hard to fulfil our responsibilities and are continuously looking for ways to improve on our overall performance. It is our duty as a caring corporate citizen to give back to the community and raise awareness on various issues that affect our society.

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82 80 Puncak Niaga Holdings Berhad Corporate Social Responsibility & Environmental Responsibility For Puncak Niaga, good corporate social responsibility has always been about the effective and efficient operation of our business. It is about getting the balance right so that we can best serve the interests of our customers, the environment and society at large. We aim to be the leading and dynamic integrated water services company in the provision of reliable and sustainable water solutions, and growing our business through competitive advantage. To meet our objectives, we have developed five core themes: People. Environment. Reputation. Customers. Competitiveness. Sungai Langat WTP. 20th River Rescue Brigade event at Sg Langat WTP. OUR MISSION Our corporate mission provides active support and participation in programmes that uplift the community s living standards and value systems in line with the aspirations of Vision We are committed to addressing national and international concerns, pertaining to the protection, conservation and enhancement of the natural environment. We seek to manage our business responsibly and sensitively, with the objective of making a difference in the lives of people around us.

83 81 Annual Report 2007 ABOUT THIS REPORT Over the last six years, our reporting has appeared in several presentational styles. However, one key message has remained constant: the importance of Puncak Niaga working towards its long term goal of becoming a sustainable water company. Puncak Niaga has always sought to disclose its performance in assuring conservation and preservation of the natural environment, ensuring the health and safety of its employees and caring for the local communities. This year, in a natural development mirroring our progression, we have placed stronger emphasis on these reporting areas, as we believe that they are intrinsically linked and that corporate social responsibility and environmental, health and safety issues fall under the wider banner of sustainable development. Our target audience consists of all stakeholders, including investors, government leaders, regulators, employees, business partners, academics, non-governmental organizations, environmental groups, advocacy organizational leaders, individuals with interests in corporate responsibility and the communities where we do business. POLICY AND MANAGEMENT As a measure of our concern about issues relating to Health, Safety and the Environment ( HSE ), both at the workplace and in the community, we have developed our Health, Safety and Environmental Policy, which has been in place for several years now and is constantly reviewed to enable our team to effectively manage these issues. Health, Safety and Environmental Policy Our Corporate Health, Safety and Environmental ( HSE ) System aims to: Provide a safe and environmental friendly workplace in the most effective manner; Highlight to clients and ultimately the public of the Company s commitment to HSE; and Facilitate staff induction in regard to their knowledge on HSE. It is the policy of Puncak Niaga Holdings Berhad and its subsidiaries ( PNHB Group ) to provide, so far as is practicable, a safe, healthy and environmental friendly workplace for all employees, contractors, visitors and interested members of society. In the spirit of consultation and cooperation, the Management and employees will strive together to achieve the goals and objectives of this Policy. Health, Safety and Environment Our Clear Vision As a provider of essential drinking water, we recognize the responsible role we play in society and in the protection and improvement of our environment. PNHB s Tenth Annual General Meeting proceedings. Senamrobik in session at Wisma Rozali, Shah Alam.

84 82 Puncak Niaga Holdings Berhad Corporate Social Responsibility & Environmental Responsibility ACHIEVEMENTS AND CHALLENGES FOR 2007 Throughout 2007, we have endeavoured in many areas to go beyond our regulatory duty to make a real difference to the environment and communities we serve. However, to move forward and improve as a business, we must acknowledge that we have also seen several challenges during the year. It is important to us that these are reported with the same transparency as our good news to provide a balanced view of the performance of Puncak Niaga. MANAGING SUSTAINABLE DEVELOPMENT In order to contribute effectively to sustainable development, we have a responsibility to act as diligent stewards of the natural environment. We do this by focusing on mitigating the harmful environmental impacts of our business activities and enhancing biodiversity at our sites. This not only strengthens our relationship with society, but demonstrates our commitment to environmental excellence. We work in close collaboration with the Department of Environment ( DOE ), Jabatan Kawal Selia Air Selangor ( JKAS ), Lembaga Urus Air Selangor ( LUAS ) and the relevant authorities at the state and federal levels in ensuring environmental care. We are members of various Selangor State committees such as the Jawatankuasa Tetap Alam Sekitar Negeri Selangor and Jawatankuasa Tetap Infrastruktur dan Kemudahan Awam Negeri Selangor to mitigate pollution incidences. Currently, we operate and maintain two river warning monitoring stations at Sungai Langat and Sungai Selangor Phase 2 WTPs to provide early warning of possible raw water quality violations. In addition, our toll-free river watch telephone hotline ( ) enables the public to inform us of pollution incidences. Our Environmental Surveillance Section under the Operation I Division continues to undertake monitoring and surveillance activities, through regular sanitary surveys, special environmental investigations at all water catchment areas, investigations of violations and reporting to the relevant authorities (namely DOE and LUAS), and undertaking studies of water quality problems faced by the WTPs and dams. In total, the operating expenditure for the Environmental Surveillance Section in 2007 was RM261, as compared to RM305, spent in The decrease was due to our Aqualab station at Sungai Langat which was commissioned in 1998, not being operational since the second quarter of 2007 due to obsolescent. We have made plans to replace the whole system with a new one under our 2008 budget. In January 2005, we established a Central Laboratory Unit to conduct raw and treated water quality assessments, and a Process Improvement Section to ensure the effectiveness at every stage of the water treatment process, from the point of entry and the WTP intake through the various treatment systems until the water leaves the WTP at the balancing reservoir. Our stringent assessment in 2007 covers the following: Hourly tests on four physical and five chemical parameters. Continuous monitoring of raw water, settled water and treated water quality by online analyzers at the WTPs. Daily analysis for microbiological parameters. Weekly tests by the Central Laboratory Unit and the Ministry of Health ( MOH ) at the outlets of the WTPs and the balancing reservoir. Monthly tests are undertaken for all parameters by an accredited laboratory according to schedules set by the MOH. We hope that, by adopting these measures, we can have better control over the quality of water produced at each stage of its treatment process and be able to take appropriate action when violation occurs. Gotong-Royong in session at Wisma Rozali, Shah Alam. Pipe maintenance in progress.

85 83 Annual Report 2007 WATER QUALITY INDEX PROGRAMME A Water Quality Index ( WQI ) Programme is conducted on a monthly basis for all WTPs, including during the wet and dry seasons. The WQI value is computed to allow determination of the cleanliness and availability of water usage for water supply, aquaculture and irrigation purposes, as tabulated below:- WQI Class Water Usage Class I Conservation of natural environment Water supply I practically no treatment necessary Fishery I very sensitive aquatic species Class IIA Water Supply II conventional treatment required Fishery II sensitive aquatic species Class IIB Recreational use with body contact Class III Water Supply III extensive treatment required Fishery III common species of economic value and tolerant species; livestock drinking Class IV Irrigation Class V Water unsuitable for any of the above uses (Source: Department of Environment Malaysia) In 2007, 28 WTPs were monitored, compared with 27 in The Water Quality Index ratings for 2006 and 2007 are shown below: WQI Class I 8 7 II III 5 5 IV 0 0 V 0 0 SUM From the monthly readings of the 28 WTPs taken in 2007, 7 stations were in Class I, 16 stations were in Class II, and the remaining 5 stations in Class III, compared to 2006 when 8 stations were in Class I, 14 stations in Class II and 5 stations in Class III. QUALITY VIOLATIONS In 2007, we recorded a total amount of 799 raw water quality violations and 217 cases of plant shutdown due to raw water violations, compared to 830 and 225 respectively in This represents a 3.7 % decrease in The breakdown of the violated parameters in 2007 is as follows: Parameter group No. of violation Microbiological Group I - Physical Group II Inorganic matter Group III Heavy metals 6 5 Group IV Pesticides 0 0 TOTAL Most violations occurred in the Langat River, Selangor River and Bernam River basins, as recorded below: Catchment Area No. of No. of violation WTP(s) Langat River basin Selangor River basin Bernam River basin Kelang River basin Buluh River basin Tengi River basin TOTAL Raw water contamination can lead to plant shutdown, particularly at the partial WTPs where the design factors limit the plant s ability to treat poor raw water quality. The 217 shutdown cases in 2007 contributed to a total production loss of 4, hours (2006: 225 cases resulted in 3, hours of shutdown). Figure 1: Analysis on annual raw water quality violations and plant shutdowns Annual Raw Water Violations & Plant Shutdowns ( ) Frequency Total Raw Water Quality Violations Plant Shutdown Due To Raw Water Violation

86 84 Puncak Niaga Holdings Berhad Corporate Social Responsibility & Environmental Responsibility The major probable cause of plant shutdown was the leaking of contaminants from road accidents and construction works as well as the discharge of industrial domestic effluents into the waterways: Shutdown No. Date WTP Hours Parameter Probable Source of Pollution Bukit Tampoi hrs High ammonia Suspected discharge from STPs during dry season Sg Selisek hrs Diesel Sand mining activity - 2 km upstream Cheras Mile hrs High ammonia Suspected discharge from STPs during dry season Salak Tinggi hrs High ammonia Suspected discharge from STPs and Textile factory Gombak 9.25 hrs Diesel Lorry (carrying logs) accident at KM 28.0, KL - Karak Highway Bukit Tampoi hrs High ammonia Domestic discharge along Sg Langat Salak Tinggi 8.92 hrs Blackish colour Suspected discharge from STPs and Textile factory and high ammonia Gombak 2.50 hrs Diesel Lorry (carrying rubber tubes) accident at KM 28.1, KL - Karak Highway Salak Tinggi 9.25 hrs Pungent odour Suspected discharge from Textile factory Ampang Intake hrs Landslide and flood Mud and runoffs from the nearby forest reserve area contaminating treatment plant facilities such as flocculation tank, sedimentation tank, filter tanks and clear water tank Gombak 9.33 hrs Diesel Diesel spillage from an overturned lorry at KM 28.0 KL - Karak Highway Gombak hrs Diesel Diesel spillage from an overturned lorry at KM 36.5 KL - Karak Highway Kuala Kubu hrs High turbidity Raw water pipe installation work by SYABAS CAPEX Works programme Bharu has caused abnormal high turbidity raw water from Kubu Intake TOTAL hrs Bukit Tampoi WTP experienced a total shutdown of hours in February 2007 due to high ammonia content in the river most likely due to the decrease in dilution of discharges from sewage treatment plants during the dry season. Figure 2: Discharge of effluent from a sewage treatment plant in Taman Permata located approximately 4 km upstream of Bukit Tampoi intake Figure 3: Confluent between the effluent discharge drain and Sungai Langat

87 85 Annual Report 2007 Another major pollution series in 2007 involved our Salak Tinggi WTP, which had to be shut down due to contamination of raw water from Sungai Labu by high ammonia levels. The indication of this pollution was from the presence of dead fishes on the water surface. Upon investigation, it was noted that most incidences were likely to be caused by industrial discharge from Nilai Industrial Park and the failure of sewage treatment plants also located in Negeri Sembilan. In 2007, a total of three pollution incidences with one incident lasting more than two days were recorded at the Salak Tinggi WTP. They were due to high ammonia content and pungent odour from the effluent discharge from STPs and other industries. Figure 4: Discharge of effluent from Nilai Industrial Park into river RIVER WATER SURVEILLANCE SYSTEM We have installed a River Water Surveillance System at our WTPs to supplement the conventional monitoring of river water quality. This surveillance system monitors the concentration of pollutants and contaminants in the river water, thus triggering an automatic sampler system to collect and store polluted water for further analysis and action. The system will also automatically alert the WTP staff in the event of power failures and drastic variances in the river water. The choice of parameters to be monitored depends on the historical pollution record of the river and the activities upstream of the WTP, such as: Ammonia. Turbidity. Chemical Oxygen Demand ( COD ). Oil detection (kerosene, diesel, petrol, palm oil, etc). So far, we have installed the River Water Surveillance System at five of our WTPs which are prone to raw water pollution. They are: Sungai Gombak Intake. Sungai Langat Intake. Cheras Miles 11 Intake. Bukit Tampoi Intake. Labu Lanjut Intake (Salak Tinggi WTP). In June 2007, the Ampang Intake WTP had to be shut down for hours due to the inundation of the treatment plant facilities such as the flocculation tank, sedimentation tank, filter tanks and clear water tank raw water by mud and surface runoffs from the nearby forest reserve area. Environmental investigation suspected that the incident could have been caused by landslide and flooding due to abnormal heavy rainfall in the catchment area. Figure 5: Plastic sheets had been applied to the exposed slopes to cover the landslide as temporary measures to minimise effects of erosion and muddy water discharge into public drain CARING FOR THE ENVIRONMENT At Puncak Niaga, we continually strive to improve our environmental programmes through management reviews which address the possible need to change policies, objectives, targets and other elements of our Environmental Management Systems ( EMS ). In 2007, two EMS internal audits were conducted to evaluate the effectiveness and efficiency of our EMS, as well as to ensure that all activities in our WTPs have minimal impact on the environment. Besides that, we also hold bi-annual Environmental Aspect and Impact Studies to identify the environmental impacts of our WTPs and to draft management plans to mitigate or eliminate any high risk environmental consequences. Staff members from the same field participate in brainstorming sessions to identify all possible environmental impacts of the treatment plants. These impacts are then evaluated and rated according to probability and severity. A management plan will be established to mitigate impacts that are rated as high risk. One of the environmental programmes that we operate in our WTPs is Scheduled Waste Control, which determines the methods of waste disposal that we use. We firmly believe in the importance of recycling and actively encourage it in our workplace and WTPs.

88 86 Puncak Niaga Holdings Berhad Corporate Social Responsibility & Environmental Responsibility We take our corporate environmental responsibility seriously in the protection, conservation and enhancement of the natural environment, particularly in the management aspect of the water resources. Various initiatives have been taken to improve river water quality, and throughout 2007, the following initiatives were successfully implemented: Six Environmental Impact Studies were conducted as planned at the six water catchment areas supplying water to the 29 WTPs. Six Sanitary Surveys were conducted for Sungai Selisek, Salak Tinggi, Sungai Batu, Sungai Sireh, Bernam River Headworks and Sungai Bernam WTPs. Monthly Water Quality Index ( WQI ) Programmes were completed at 27 stations covering the WTPs and dams. 13 environmental investigation cases were conducted in relation to major WTP shutdowns due to raw water violations. 46 environmental investigation cases were undertaken to evaluate and highlight pollution risks and impacts on the WTP and dam operations. The Water Quality Surveillance Programme under the Central Laboratory Section on water quality was conducted periodically, as planned. 26 locations were identified as possible disposal sites for disposal of residual sludge from 15 WTPs, and proposals have been submitted to the Selangor State Government. A field survey and assessment for alternative of raw water sources was conducted within the Langat and Sungai Selangor catchment areas. Provided assistance to the Crisis Management Centre ( CMC ) during plant shutdown cases. IMPACT ON THE ENVIRONMENT At Puncak Niaga, we are aware of the impacts of greenhouse gas emissions on the atmosphere. Our strategy focuses on understanding the impacts of climate change, monitoring the situation, developing and implementing adaptation measures and raising awareness. ENERGY CONSUMPTION Figure 6: Electricity consumption for Puncak Niaga s WTPs from 2005 to 2007 Kilowatt/hour 250,000, ,000, ,000, ,000,000 50,000, Our electricity usage for 2007 was 218,958,691 kwh, compared to 222,741,304 kwh in 2006 and 232,359,912 kwh in It is noted that our WTPs produced a total of 134, metric tonnes of CO2 in 2007, compared to 136,985.9 metric tonnes in 2006 and 142, metric tonnes in 2005 (Figure 7). Our use of electricity has reduced from 2005 to 2007 by 5.78% and conversely, our carbon emissions have also reduced. Figure 7: Carbon emissions for Puncak Niaga s WTPs from 2005 to 2007 Metric tonnes 160, , , , , , , , North Region Central Region South Region Wangsa Maju Sg Sireh SSP2 North Region Central Region South Region Wangsa Maju Sg Sireh SSP2 We strive to reduce energy consumption by carrying out regular preventive maintenance programmes as well as overhauling equipment to ensure our WTPs are running efficiently. The treatment of water and its distribution is an energy intensive process. As quality standards increase, our demand for electricity grows and we have strived to ensure efficient and optimal energy consumption in our treatment processes. There are currently no energy reduction programmes at Puncak Niaga.

89 87 Annual Report 2007 ANNUAL RAINFALL As forecasted by the Malaysian Meteorological Department, the annual rainfall remained normal for Prudent practices were exercised to ensure that the optimal amount of raw water is released to the WTPs. Our three dams are equipped with the Dam Operations Control Curves to guide and assist dam operators to meet the demands of the WTPs through prudent raw water release with consideration for conservation to tide during dry period. SUPPLY CHAIN Our corporate responsibilities include the decisions we make when procuring goods and services for the business. To this end, we have to consider how we can have a positive influence over environmental impacts through specification, tendering, negotiation and the management of our contracts. We source a wide range of products and services from office supplies to water treatment chemicals. We work hard to ensure that our suppliers are reliable with the required level of competence and ability in all aspects of the work they carry out. Contractors and consultants are selected using the best value approach, which, among other things, enables us to assess them on their environmental credentials. Once selected, we work in partnership to achieve continuous improvement, with a common purpose and shared responsibilities. Our suppliers are monitored and evaluated on the quality of items supplied, timeliness of their deliveries and compliance with safety and environmental requirements. All existing suppliers are evaluated on a yearly basis to maintain their registration with us. Any non-compliance or non-conformance with our requirements will be rejected. In the case of non-conformance to environmental and safety measures, the suppliers will be issued with a Corrective Action Request ( CAR ) which will then be reflected in their yearly evaluation. As yet, we have not carried out any programmes to green our supply chain. However, our contractors are required to comply with the Environmental Quality Act (EQA 1974) and legislations pertaining to Health, Safety and Environment including formulating an Emergency Response Plan ( ERP )to deal with any environmental incidents such as mishaps during transportation of chemicals. All our contractors and their workers are also advised to attend safety training to ensure safety and health at the work site. SERVING THE COMMUNITY Our paramount duty at Puncak Niaga is to serve the community and safeguard the environment. Sustainability is therefore crucial to every aspect of our business. This is why we actively support and participate in a wide array of initiatives to raise living standards and enhance environmental protection. HUMANITARIAN EFFORTS Our business revolves around the communities we serve. Therefore, we have always been driven to positively impact our local and national communities. For example, in January 2007, more than 11,500 bottles of drinking water were donated to flood victims in Johor and Pahang. Five tankers carrying water and 50 stationary tankers were also provided to distribute clean drinking water to the victims. During the Pahang floods in December 2007, we sent 112 of our personnel (including our engineers and technicians) with 41 vehicles to assist JBA Pahang for 14 days. We also donated RM20,000 worth of basic food supplies, fresh water supply and medical aid to the flood victims. 50 SYABAS personnel assisted in the distribution of drinking water provided by five tankers to ensure that all assistance was rendered effectively and efficiently. Humanitarian Mission to assist victims in Temerloh and Bera, Pahang. Humanitarian Mission to assist victims in Temerloh and Bera, Pahang.

90 88 Puncak Niaga Holdings Berhad Corporate Social Responsibility & Environmental Responsibility EDUCATION INITIATIVES We believe that the younger generation is the key to the future well-being of our planet. As such, we endeavour to teach them about the protection and conservation of the environment through our education programmes. We have a dedicated team running our environmental awareness programme. Over 6,000 schoolchildren have benefitted from the various educational programmes implemented over the last 11 years, enjoying especially the hands-on approach adopted. We have found that this programme is still as popular as ever amongst school children. The aim of our programme is to raise awareness of the importance of water and water conservation, which is achieved through a varied range of events and activities. One of these programmes for school children is the River Rescue Brigade (Briged Penyelamat Sungai) that was initiated in It has remained a key programme in which students are taken on visits to Puncak Niaga s WTPs and dams. Our River Rescue Brigade programme is aimed at educating the younger generation about the importance of the conservation and protection of our environment, especially our nation s rivers. In 2007, 165 school children from four primary schools participated in the River Rescue Brigade, making it a total enrolment of 2,220 school children and 88 schools into the programme. To date, RM1,094,195 has been spent for our River Rescue Brigade programme. We are proud to announce that in 2007, we received an Honourable Mention in the Prime Minister s CSR Award for our River Rescue Brigade. Our Educational Outreach Programme (Turun ke Padang), launched in 1999, is an extension of the River Rescue Brigade and is aimed at educating young people on the importance of river preservation to ensure the continuous supply of clean water. In 2007, the Senior Management of both Puncak Niaga and SYABAS visited 21 primary schools located within our areas of operation to give talks on how to care for our rivers and the environment, as well as the roles played by Puncak Niaga and SYABAS in the water treatment and water distribution processes respectively. A total of 1,000 school children were involved. As of December 2007, we have spent RM128,815 on the programme, which has benefitted 1,750 school children in 25 primary schools. CARING FOR SOCIETY We believe in giving back to the society in which we operate and have been very active in community service projects. One of them was the Open Day that was held by SSP2, Sungai Langat, Wangsa Maju and Bukit Nanas WTPs in conjunction with World Water Day 2007 to promote public awareness on the importance of protecting our water resources, a key component of the natural environment. We received 1,335 visitors, which included students, children, foreign delegates and the army. OUR CONTINUOUS EFFORTS THROUGH PUBLIC AWARENESS Public awareness and educational programmes play an important role in reducing public apathy towards environmental protection. Puncak Niaga continues to provide strong support for all efforts by the government and non-governmental organizations towards this end by participating in exhibitions and programmes. Humanitarian Mission to assist flood victims in Batu Pahat, Johor. In conjunction with the World Water Day, PNSB organised a talk and exhibition booth at SMK Puterijaya, Jalan Pudu, Kuala Lumpur.

91 89 Annual Report 2007 As part of the Company s Social Environmental Awareness Programme, we have successfully held a total of 15 visits to various factories since 2003, primarily to highlight the impact of pollution and the need to preserve our water resources. The factories visited in our Factory Visit Programme in 2007 were Tai Kwong-Yokohama Battery Industries Sdn Bhd, Epson Toyocom (M) Sdn Bhd, Tan Chong Motor Assemblies Sdn Bhd and Central Sugar Refinery Sdn Bhd. Due to the positive responses from the factories, we will continue with our Factory Visit Programme in the coming years. CARING FOR OUR EMPLOYEES SALARY REVISION We strive to instil a conducive and rewarding environment at the workplace. As such, we provide an attractive Employee Benefits Programme which includes comprehensive insurance coverage, housing and car loan subsidies, as well as interest-free education, computer and personal loans. Our employees and their dependants also enjoy medical benefits that cover outpatient treatment, hospitalization and surgical and maternity expenses. Given the increasing cost of living and PNSB s policy of recruiting high calibre personnel by offering an attractive remuneration package, in March 2007, executive salaries were revised so that: The minimum starting salary for an executive was increased from RM1,450 to RM2,200 (and RM2,600 for those with a professional qualification) The salaries of existing executives rose by between RM239 and RM409, based on length of service and salary grade Similarly, the salaries of 194 long service and high performing non-executive employees were raised in February saw a major upgrading of staff quarters. 44 new units were built, and 177 units were refurbished and the number of bedrooms increased from one to three. 562 new employees were recruited during the year, mainly to support the operations of both PNSB and SYABAS. As of 31 December 2007, the Group s total staff strength stood at 4,367, 2.78% up on the previous year. STAFF TRAINING AND DEVELOPMENT In order to remain as one of the leading water companies in Malaysia, we need to groom our staff so that they can develop and grow with the Company. As such, the Training Unit at both PNSB and SYABAS had conducted a series of intellectual forums by inviting experts in the water industry to share their views and knowledge with our employees. In 2007, we spent a total of RM1.56 million on staff training and development programmes. This includes conducting technical training related to our WTPs and Water Distribution operations, refresher training courses on company policies and procedures; and personal and leadership development skills. We also provided training on how to project a professional image when dealing with customers for our SYABAS frontline staff such as meter readers, counter staff and technicians. Wellness Programmes were also conducted for the Senior Management and secretaries of SYABAS to enhance staff well-being and to boost staff morale. Budaya Kerja SYABAS was introduced in March 2007 to instil a positive work culture to all SYABAS employees, while the New Technician Familiarization Programme was introduced in June 2007 to place newly recruited technicians at different Departments within SYABAS for a six-months training period to familiarise them with SYABAS operations. PNSB s employees involved in Ekspedisi Menuju Puncak at Mount Kinabalu, Sabah. SYABAS s 2007 Annual Sports Carnival.

92 90 Puncak Niaga Holdings Berhad Corporate Social Responsibility & Environmental Responsibility APPRENTICE SCHEME PROGRAMME At Puncak Niaga, as part of our contribution to nation building, we do our best to equip fresh graduates with relevant working experience in the water industry. This is why we launched the Apprentice Scheme Programme in June 2007 to provide university graduates with a one year training programme with exposure to the operations at both PNSB and SYABAS. From the 60 shortlisted candidates for the first batch, 14 were approved by the Management to attend the programme. SYABAS has also implemented an Industrial Training Programme where four undergraduates were selected to undergo training at SYABAS s Head Office and the District Offices from October to December We also prepared a comprehensive industrial training module, including the Standing Operating Procedures ( SOP ) of all our Departments, site visitations, installation information and our Health, Safety and Environment ( HSE ) regulations and policies. CARING FOR HEALTH AND SAFETY As a responsible employer, we seek to ensure that our employees, and those who contribute to our success through the supply chain, are fairly treated. We feel it is unacceptable for anyone to be injured or become ill from the work we undertake. Throughout 2007, we have demonstrated out commitment to improving health and safety at the workplace by providing the necessary health and safety mechanisms for our employees who may be exposed to hazards while performing their duties. The Occupational Safety And Health Act 1994 (Act 514) and Regulations specify the need for employers to ensure, so far as is practicable, the safety, health and welfare at work of all the employees. Although steps are taken in line with statutory requirements, we rely on our own internal control measures in giving priority to safety at the workplace. A structure is already in place to ensure this: our Corporate Health and Safety Committee that was established in 2004 and is supported by similar committees at operational level. We are proud to say that all our WTPs are safe with respect to chemical exposure by virtue that none of our 129 WTP staff have acquired occupational diseases or poisoning where medical examination was carried out by an Occupational Health Doctor registered with the Department of Occupational Safety and Health. In 1999, we introduced our Safety and Health Policy. This policy was reviewed and expanded in 2003 to our Health, Safety and Environment Policy (HSE Policy), which incorporates the element of environment at the workplace. With this policy, we ensure that HSE measures are implemented and monitored company-wide. In February 2007, SYABAS successfully established a HSE Department. Since then, we have organized various programmes and activities, including the publication of the Contractor Guidelines booklet which highlights HSE rules and regulations to be complied with by contractors while working for SYABAS. As of December 2007, 40 companies had been briefed on the guidelines. Besides that, the HSE Department has also been involved in six induction courses to brief newly employed staff on occupational safety and health issues and legal requirements that have to be followed. As part of the HSE Department s objective in order to provide a safe and healthy workplace for the Company, a Basic First Aid Training Course was successfully conducted by the HSE Department in August which involved 33 staff members from all levels in our Company. Apprentice Scheme Programme. Safety Drill in session at Wisma Rozali, Shah Alam.

93 91 Annual Report 2007 All staff members at our WTPs and dams are required to undergo a minimum of four man-days of training annually while permanent contractors must undergo at least one man-day of training a year. The proper implementation of our health and safety measures requires that our employees and permanent contractors be adequately trained in three categories: Statutory Requirements, Competency Training and General Training. Besides that, a Corporate Health, Safety and Environmental Manual was established to ensure an environmentally-friendly workplace, demonstrate the Management s commitment towards reducing its environmental impacts, and equipping staff with environmental management knowledge. Site Safety Inspections ( SSI ) are conducted periodically to evaluate the implementation of health and safety programmes at our WTPs. They also serve to identify weaknesses in the programmes so that mitigation measures can be made to meet health and safety standards. From the total of 24 SSIs that were conducted in 2007, all of them were rated above 90%. This shows the high level of commitment to health and safety by our staff members. Safety mock drills are also regularly held to evaluate the level of readiness in any emergency situation in our WTPs. By implementing such drills, we can identify and improve on weaknesses in our ERP. A total of 22 safety mock drills were conducted in 2007, where some of the scenarios involved included chlorine leaks, fire drills and workplace accidents. LOST TIME INJURY AT WATER TREATMENT PLANTS AND DAMS We are proud to announce that the SSP2 WTP has continued with its track record in demonstrating a high level of commitment to safety and health standards at the workplace. In April 2006, the SSP2 WTP achieved the benchmark of two million hours of no Lost Time Injury ( LTI ), one of the major indicators of safety performance adopted internationally by most industries. The accumulated man-hours without LTI since July 1998 until 31 December 2007 was at 2,595,292.51, a testament to the employees high level of awareness of safety and health standards. Besides that, the SSP2 WTP also achieved the target set for the WTP Audit Major Non-Conformance Request ( NCR ) by encountering no major non-conformances in the plant during the auditing period. In February 2007, SSP2 WTP received the National Excellence Award in Occupational Safety and Health 2006, the highest award in safety and health. CRISIS OR EMERGENCY READINESS Since PNHB Group produces and supplies treated water to the nation s hub, namely the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya, it is critical for us to be able to handle and respond quickly and effectively to any emergency or crisis, with minimal inconvenience to consumers and disruption to our operations. A Crisis Management Plan ( CMP ) and WTP ERP have been formulated and can be activated to empower our personnel to respond fast, systematically and effectively to any crisis or emergency. These plans cover both PNSB and SYABAS, and also involve the state authorities and relevant government agencies such as BOMBA, the Police and the Malaysian Red Crescent Society. Induction Programme for new employees at Wisma Rozali, Shah Alam. Majlis Perasmian Program Latihan Kem Tahunan Siri Regimen Pakar Pengendalian Air (AW) RAJD at Padang Kampung Fajar, Felda Sg Tengi Selatan, Hulu Selangor.

94 92 Puncak Niaga Holdings Berhad Corporate Social Responsibility & Environmental Responsibility The Group s response to a crisis or emergency is controlled and coordinated by our Crisis Command Centre ( CCC ). In 2007 and up to January 2008, the Centre was activated several times to handle the following incidents: No. Description Period (Day/s) Colour Code 1 Bukit Tampoi WTP shutdown due to high ammonia content suspected to be discharged 2 Red from STPs during dry season on 05/02/2007 and 13/03/ Sungai Selisek WTP shutdown due to diesel pollution from sand mining activity about 1 Red 2km upstream on 11/02/ Cheras Mile 11 WTP shutdown due to high ammonia content suspected to be 1 Red discharged from STPs and textile factory on 12/02/ Salak Tinggi WTP shutdown due to high ammonia content and pungent odour suspected 3 Red to be discharged from STPs and textile factory on 15/02/2007, 17/03/2007 and 09/06/ Gombak WTP shutdown due to diesel pollution / spillage from lorry accidents at 4 Red Kuala Lumpur Karak Highway on 09/03/2007, 14/04/2007, 02/08/2007 and 01/11/ Ampang Intake WTP shutdown due to landslide and flood incident from the 1 Red nearby forest reserve area on 10/06/ Kuala Kubu Bharu WTP shutdown due to high turbidity from the installation works of 1 Red raw water pipe by SYABAS CAPEX works programme on 01/11/ Bukit Nanas WTP shutdown due to damage of 42 raw water pipeline arising from 1 Red construction of highway on 17/01/2008. View from Sg Langat Dam.

95 93 Annual Report 2007 We are pleased to report that all emergency situations were handled successfully by the Management and Operations personnel of PNSB and SYABAS, which collaborated closely with the relevant authorities, the media and consumer groups, and succeeded in bringing crisis such as the oil spill at the Gombak River under control with minimum shortcomings. Much of this success was due to our experience in handling a similar incident last year. Code Green ERP drills (in which the emergency can be controlled and terminated by the Emergency Commander and Intervention Teams) were conducted at all WTPs during the year under review. FESTIVE SEASON CONTINGENCY PLANS As usual, we took important measures to manage possible water shortage issues during the festive season. The contingency plan for Hari Raya Puasa 2007 included continuous monitoring of water treatment and distribution, with officers and contractors on standby and ready to activate the ERP at any time. SCHEDULED PLANT SHUTDOWNS Scheduled plant shutdowns are important for maintenance purposes. In the second half of 2007, SYABAS in collaboration with the respective WTP operators, conducted several scheduled plant shutdowns at the SSP1, Bukit Nanas, SSP3 and Sungai Semenyih WTPs. TALKING TO OUR STAKEHOLDERS As a water company, we have a varied and wide range of stakeholders who are interested in and affected by our activities. In 2007, we continued our engagement process through various methods with three key stakeholder groups: our employees, clients, and NGOs. MEDIA COVERAGE 2007 saw increased media coverage of environmental issues such as deteriorating river water quality and devastating floods throughout the country. We expect these issues to dominate newspaper headlines again in 2008, as the public becomes more concerned about environmental values and the threat of global climate change. As a company that is committed to environmental sustainability and savvy on technological innovation and improvement, we are confident that we can turn these challenges into opportunities. EVERYONE S DUTY AND RESPONSIBILITY For Malaysia to achieve sustainable development and for our future generations to continue enjoying our natural resources, it is the duty and responsibility of every individual and corporation, including the PNHB Group, to protect and conserve the natural environment in our day-to-day activities. Scenic view of Klang Gates Dam.

96 94 Puncak Niaga Holdings Berhad Corporate Calendar of Events 3 JANUARY 2007 SYABAS organised a Majlis Ibadah Qurban 1427H at SYABAS Headquarters, Jalan Pantai Baru. 15 JANUARY 2007 SYABAS organised a Corporate Social Responsibility Programme Misi Bantuan Kemanusiaan bagi Mangsa-Mangsa Banjir di Rompin, Pahang dan Batu Pahat, Johor. 20 JANUARY 2007 PNSB participated in the Maal Hijrah 1428H/227M (National Level) celebration at Stadium Bukit Jalil. 27 JANUARY 2007 Launching of Persatuan Kakitangan Syarikat Bekalan Air Selangor, Wilayah Persekutuan Kuala Lumpur dan Putrajaya. 26 JANUARY 2007 SYABAS organised a Majlis Penyampaian Hadiah-hadiah Pelanggan Prihatin SYABAS at SYABAS Headquarters. 30 JANUARY 2007 PNSB/SYABAS participated in the National Conference on Sustainability Malaysia FEBRUARY 2007 SYABAS organised a Majlis Penyerahan Pampasan Insurans Kepada Keluarga Kakitangan SYABAS at SYABAS Headquarters, Jalan Pantai Baru.

97 95 Annual Report FEBRUARY 2007 PNSB s Educational Outreach Programme No. 81 at Sekolah Kebangsaan Kuala Kubu Bharu, Kuala Kubu Bharu, Selangor. 26 FEBRUARY - 1 MARCH 2007 NRW Workshop on Water Loss Management at Holiday Inn Glenmarie Kuala Lumpur officiated by Puan Azizah Yusoff, Director of Jabatan Kawal Selia Air Selangor (JKAS). 6 FEBRUARY 2007 PNSB s Managing Director receiving the National Institute of Occupational Safety and Health Excellence Award Gold Award for SSP2 WTP organised by the National Council for Occupational Safety and Health. 13 MARCH 2007 SYABAS organised a Majlis Penyerahan Kenderaan Kepada JKAS, at Grand BlueWave Hotel Shah Alam with YB Dato Haji Abdul Fatah Haji Iskandar, Selangor EXCO as the guest of honour. 15 MARCH 2007 Signing Ceremony of the Memorandum of Understanding between Puncak Niaga and DHI Water Environment Health Denmark. 22 MARCH 2007 In conjunction with the World Water Day, PNSB organised a talk and exhibition booth at SMK Puterijaya, Jalan Pudu, Kuala Lumpur. 30 MARCH 2007 Handover Ceremony of Sungai Sireh Water Treatment Plant (WTP) from Kumpulan Perangsang Selangor Berhad to PNSB.

98 96 Puncak Niaga Holdings Berhad Corporate Calendar of Events 12 APRIL 2007 In conjunction with World Water Day, PNSB organised a WTP Open Day at Wangsa Maju WTP. 15 APRIL 2007 SYABAS launched its New Plastic Meter at Taman TTDI, Shah Alam officiated by YB Dato Ahmad Nawawi Dato M. Zain, Chairman of Sports, Education and Human Development Comittee. 17 APRIL 2007 SYABAS s Water Quality Campaign Turun Padang Bersama Media to witness Air Scouring works at USJ 13, Subang Jaya. 19 APRIL 2007 PNSB s River Rescue Brigade No. 20 at Sungai Langat WTP officiated by YBhg Datuk Marimuthu Nadason, President of the Federation of Malaysian Consumers Associations (FOMCA). 25 APRIL 2007 Educational Outreach Programme No. 17 at Sekolah Kebangsaan Sungai Terap, Tanjung Karang, Selangor (PNSB & SYABAS).

99 97 Annual Report APRIL 2007 SYABAS organised a NRW Workshop on Water Loss Management at Holiday Villa Hotel & Suites Subang, Selangor. 9 MAY 2007 PNSB s Educational Outreach Programme No. 84 at Sekolah Kebangsaan Bukit Jelutong, Shah Alam. 15 MAY 2007 SYABAS s Chief Executive Officer receiving the 2007 Malaysia Water Award (Management Category) for PUSPEL organised by the Malaysian Water Association. 22 MAY 2007 SYABAS organised a Majlis Perasmian Kursus Tukang Paip Berlesen at INTEKMA Resort and Convention Centre. 24 MAY 2007 SYABAS s Water Quality Programme Turun Padang Bersama Media to witness cleaning works at the Puncak Jalil s Service Reservoir.

100 98 Puncak Niaga Holdings Berhad Corporate Calendar of Events 28 MAY 2007 SYABAS organised a Briefing on the Guidelines For Migration From Bulk Meter Account To Individual Metering For High Rise Residential Units at the Dewan Jubli Perak, SUK and officiated by YB Dato Haji Abdul Fatah Haji Iskandar, Selangor EXCO. 13 JUNE 2007 SYABAS organised a Turun Padang Bersama Media Operasi Pemotongan Bekalan Air Wilayah Hulu Langat. 1-3 JUNE 2007 PNSB/SYABAS participated in Pameran Persidangan Antarabangsa Ke 4 Enterprise Asia 2007 held at Putra World Trade Centre, officiated by The Honourable Deputy Prime Minister, YAB Dato Seri Najib Tun Haji Abdul Razak. 21 JUNE 2007 Visit by officials from Contact Centre Association of Singapore (CCAS). 23 JUNE 2007 SYABAS organised a Majlis Penyampaian Hadiah-Hadiah Pelanggan Prihatin & Kemaskini Maklumat Pengguna SYABAS at the Grand BlueWave Hotel Shah Alam JUNE 2007 SYABAS hosted Mesyuarat EXCO Jurutera Air Daerah Bil 6 Sesi 2005/2007 at Grand BlueWave Hotel Shah Alam.

101 99 Annual Report JUNE 2007 PNHB s 10th Annual General Meeting at Concorde Hotel Shah Alam. 26 JUNE 2007 PNSB s successful Ekspedisi Menuju Puncak at Mount Kinabalu, Sabah. 16 JULY 2007 SYABAS organised a Majlis Perasmian Program Latihan Kem Tahunan Siri Regimen Pakar Pengendalian Air (AW)RAJD at Padang Kampung Fajar, Felda Sungai Tengi Selatan, Hulu Selangor. 30 JUNE 2007 In conjunction with the Selangor Industrial Week 2007, PNSB/SYABAS participated in the Selangor Industrial Citizens Congregation at Stadium Malawati, Shah Alam. 24 JULY 2007 SYABAS s Water Quality Programme Turun Padang Bersama JKKK & Media to witness the Cleaning of Sungai Kajang Service Reservoir and the distribution of brochures on Water Quality. 28 JULY 2007 PNSB s staff emergency evacuation safety drill at Wisma Rozali followed with a gotong-royong session at a nearby vacant land. 4 AUGUST 2007 SYABAS s Annual Sports Carnival (Finals) at Stadium Matshushita, Shah Alam.

102 100 Puncak Niaga Holdings Berhad Corporate Calendar of Events 6 AUGUST 2007 Visit by delegations from Vietnamese Water Supply & Sanitation Companies to SYABAS Headquarters. 15 AUGUST 2007 PNSB s River Rescue Brigade No. 21 officiated by YBhg Tan Sri Dato Ir Zaini Omar, Chairman of National Water Services Commission at Sungai Sireh WTP, Tanjung Karang, Selangor. 11 AUGUST 2007 SYABAS organised a Community Programme Program Khidmat Masyarakat PEKA Bersama PDK at the Pusat Dalam Komuniti, Kampung Kuantan, Batang Kali. 31 AUGUST 2007 Procession to commemorate Hari Kemerdekaan ke AUGUST 2007 SYABAS organised a Program Peningkatan Kualiti Air Wilayah Gombak at Apartment Hillside, Taman Melawati.

103 101 Annual Report SEPTEMBER 2007 Visit by the Sri Lankan Muslim business delegation to PNHB. 6 & 7 SEPTEMBER 2007 Briefing by SYABAS on Proposed Design Guidelines with Association of Consulting Engineers Malaysia (ACEM), Real Estate & Housing Developers Association (REHDA) & JKAS. 25 SEPTEMBER 2007 PNSB organised a Majlis Berbuka Puasa at Sungai Batu WTP. 8 SEPTEMBER 2007 Demolition of illegal rafts at Klang Gates Dam by PNSB personnel.

104 102 Puncak Niaga Holdings Berhad Corporate Calendar of Events 27 SEPTEMBER 2007 Majlis Berbuka Puasa dan Solat Terawih Berjemaah with His Royal Highness, the Chancellor of Universiti Putra Malaysia. 5 OCTOBER 2007 PNSB organised a Majlis Berbuka Puasa at Wisma Rozali. 4 OCTOBER 2007 PNSB organised a Majlis Berbuka Puasa with His Royal Highness, the Sultan of Selangor at the Masjid Negeri, Shah Alam. 14 NOVEMBER 2007 PNHB Group s Executive Chairman receiving an Honourable Mention for PNSB s River Rescue Brigade at the Prime Minister s Corporate Social Responsibility Awards 2007 at the Sime Darby Convention Centre, Bukit Kiara. 8 OCTOBER 2007 Visit by Selangor State EXCO to flash flood location in Hulu Langat.

105 103 Annual Report NOVEMBER 2007 SYABAS organised a Handover Ceremony of the Form for the Migration From Bulk Meters Account To Individual Metering For High Rise Residential Units to the representatives from the high rise management corporations at SYABAS Headquarters, Jalan Pantai Baru NOVEMBER 2007 PNHB Group participated in the Middle East Career Carnival 2007 in Cairo, Egypt. 30 NOVEMBER 2007 PNHB Group s Executive Chairman receiving the SME Platinum Award 2007 at the SME Recognition Award DECEMBER 2007 SYABAS organised a Majlis Penyampaian Hadiah Pelanggan Prihatin SYABAS for the month of April till September 2007 held at the Grand BlueWave Hotel Shah Alam. 29 DECEMBER 2007 SYABAS organised a Corporate Social Responsibility Programme Bantuan Kemanusian Kepada Mangsa-Mangsa Banjir di Temerloh and Bera, Pahang.

106 104 Puncak Niaga Holdings Berhad Water News

107 105 Annual Report 2007

108 106 Puncak Niaga Holdings Berhad Water News

109 107 Annual Report 2007

110 108 Puncak Niaga Holdings Berhad Statement on Corporate Governance The Board of Puncak Niaga is pleased to state that Puncak Niaga is in compliance with the Best Practices in Corporate Governance as set out in Part 2 of the Malaysian Code on Corporate Governance (Revised 2007) (the Code ). We believe that the principles of good governance are integral to Puncak Niaga s growth and ability to promote the confidence of its stakeholders. Since 2003, the Board has adopted a Board Charter, which provides guidance on how business is to be conducted in line with international best practices and standards of good corporate governance. In 2004, the Board has also adopted a Corporate Disclosure Policy and Procedure, which was formulated in line with the Guide On Best Practices In Corporate Disclosure issued by the Task Force on Corporate Disclosure Best Practices established by Bursa Malaysia Securities Berhad ( Bursa Securities ). From time to time, the Group continues to monitor, 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 as set out in Part 1 of the Code and best practices of corporate governance and the extent to which it has complied with the best practices as set out in the Code during the year BOARD OF DIRECTORS (a) THE BOARD The Group is helmed by an effective and experienced Board, comprising individuals of caliber and credibility from a diverse blend of professional backgrounds. With the adoption of the Board Charter, the Board members, whether acting in their individual capacities or as a whole, share the common objective of ensuring that the Vision and Mission of the Company as set out on page 1 of this Annual Report, are achieved. Each Board member is fully aware of the fiduciary duties and responsibilities and the various legislations and regulations affecting their conduct as Directors of the Company, and as such, takes full responsibility for the performance of the Company and of the Group. The role of the Executive Chairman is separate from that of the Managing Director. The Board Charter sets out the specific responsibilities to be discharged by the Board members collectively and the individual roles expected from the Executive Chairman, Managing Director, Executive Directors and Non-Executive Directors. YBhg Tan Sri Dato Seri Dr Ting Chew Peh is the Company s Senior Independent Non-Executive Director, to whom shareholders concerns may be conveyed. His profile is set out on page 33 of this Annual Report. (b) BOARD COMPOSITION There was no change in the Board s composition during the year YBhg Dato Syed Danial Syed Ariffin was redesignated as Chief Operating Officer of PNHB and PNSB on 16 November The Board s composition of ten (10) members, comprising four (4) Executive Directors, three (3) Non-Independent Non-Executive Directors and three (3) Independent Non- Executive Directors, is in compliance with Paragraph of the Listing Requirements of Bursa Securities. The composition of the Board brings to the Group a diverse wealth of skills, knowledge as well as a balanced mix of experience and expertise to effectively discharge the Board s responsibilities for competent stewardship of the Group. Together, the Board spearheads the Group s growth and future direction. The profile of the Board Members are set out on pages 26 to 36 of this Annual Report. None of the Directors has any convictions for any offences within the past ten (10) years (other than traffice offences, if any) or has any conflict of interest with the Company or has any family relationship with any Director and/or major shareholder of the Company. (c) BOARD MEETINGS In 2007, the Board met six (6) times at the Board Room on the 12th Floor, Wisma Rozali, No. 4, Persiaran Sukan, Seksyen 13, Shah Alam, Selangor Darul Ehsan, as follows:- Day Date Time Monday 26 February a.m. Monday 23 April a.m. Thursday 24 May a.m. Thursday 23 August a.m. Thursday 22 November a.m. Wednesday 5 December p.m.

111 109 Annual Report 2007 The details of the respective Director s attendances at the above Board Meetings are as follows:- No. of Meetings Name of Director Designation attended % Tan Sri Rozali Ismail Executive Chairman Dato Matlasa Hitam Managing Director Dato Ruslan Hassan Non-Independent Non-Executive Director Dato Ir Lee Miang Koi Non-Independent Non-Executive Director Dato Syed Danial Syed Ariffin Chief Operating Officer Tan Sri Dato Hari Independent Non-Executive Narayanan Govindasamy Director Tan Sri Dato Seri Independent Non-Executive Dr Ting Chew Peh Director Datuk Dr Rahman Ismail Independent Non-Executive Director Tan Seng Lee Executive Director, Finance Tengku Dato Rahimah Non-Independent Non-Executive Almarhum Sultan Mahmud Director Sufficient notice is given for all Board Meetings. In between Board Meetings, approvals on matters requiring the sanction of the Board are sought by way of circular resolutions enclosing all relevant information to enable the Board to make informed decisions. All circular resolutions approved by the Board will be tabled for notation at the next Board Meeting.

112 110 Puncak Niaga Holdings Berhad Statement on Corporate Governance (d) DIRECTORS CODE OF ETHICS The Directors continue to observe a code of ethics based on the code of conduct expected of Directors of companies as set out in the Company Directors Code of Ethics established by the Companies Commission of Malaysia. (e) SUPPLY OF INFORMATION AND ACCESS TO ADVICE Each Board member is supplied with information on a timely basis to enable them to effectively discharge their duties and responsibilities. Except under exceptional circumstances, Board members are given at least seven (7) days notice before any Board Meeting is held and the Board papers are circulated to the Board members at least two (2) working days prior to the date of the Meeting to facilitate the Directors to peruse the Board papers and review the issues to be deliberated at the Board Meeting well ahead of the meeting date. Where necessary, the Company s personnel will be called upon by the Board during the Board Meetings to present and to clarify any Board papers presented. All Board members are expected to participate actively in Board deliberations and bring the benefit of their particular knowledge, skills and abilities to the Board. Where a potential conflict of interest arises, it is mandatory for the Director concerned to declare his interest and abstain from the deliberation and decision-making process. The Board has unrestricted and constant access to and interaction with the Senior Management. Each Board member also has full 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. The Directors are familiar and aware of their duties and responsibilities as well as the implementation of good corporate governance and compliance practices in the Group. Where necessary, the Directors may, whether collectively as a Board or in their individual capacities, seek external and independent professional advice from experts in furtherance of their duties at the Company s expense. (f) GROUP COMPANY SECRETARY The Group Company Secretary ensures that Board procedures are both followed and reviewed regularly and has the responsibility in law to ensure that each Board member is made aware of and provided with guidance as to their duties, responsibilities and powers. She is also responsible for ensuring the Group s compliance with the relevant statutory and regulatory requirements. (g) APPOINTMENT OF DIRECTORS All Board appointments and removals thereof are approved by the Board upon the recommendation of the Nomination Committee. The Board, through the Nomination Committee, has established a formal and transparent procedure in relation to the assessment of candidates for Board appointments. The Board, through the Nomination Committee, also reviews the required mix of skills, experience and other qualities of the Directors annually to ensure that the Board continues to function effectively and efficiently. (h) RE-ELECTION OF DIRECTORS Articles 98 and 99 of the Company s Articles of Association provide that one third of the Directors shall retire from office by rotation at each Annual General Meeting and all Directors shall retire from office at least once every three (3) years but may offer themselves for re-election. Article 103 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 Eleventh Annual General Meeting of the Company and, save and except for YBhg Datuk Dr Rahman Ismail, who did not seek for re-election, had offered themselves for re-election:- i. YBhg Tan Sri Rozali Ismail, retiring pursuant to Article 98; ii. YBhg Tan Sri Dato Hari Narayanan Govindasamy, retiring pursuant to Article 98; and iii. YBhg Datuk Dr Rahman Ismail, retiring pursuant to Article 98.

113 111 Annual Report 2007 The information on the Directors standing for re-election are contained in the Statement Accompanying the Notice of Annual General Meeting. (i) EVALUATION OF BOARD EFFECTIVENESS As in the previous years, the Board has, with the assistance of the Group Company Secretary, conducted an annual peer evaluation of the Board s effectiveness in the following key areas:- i. Compliance; ii. Board Meetings; iii. Board Functions; iv. Board Structure; v. Board Committees; vi. Financial and Operational Reporting; vii. Planning and Objectives; viii. Risk Assessment; ix. New Business Opportunities and Projects; x. Human Resources; and xi. Directors Observations and Additional Comments. (j) 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. The Board Committees will observe the same rules of conduct and procedures as the Board, unless otherwise determined by the Board. A summary of the various Board Committees at PNHB level and their composition are as follows:- Compliance, Internal Control Audit Remuneration Nomination and Risk Policy Name of Director Committee Committee Committee Committee Tan Sri Rozali Ismail Executive Chairman Dato Matlasa Hitam Managing Director Head Dato Ruslan Hassan Non-Independent Non-Executive Director

114 112 Puncak Niaga Holdings Berhad Statement on Corporate Governance Compliance, Internal Control Audit Remuneration Nomination and Risk Policy Name of Director Committee Committee Committee Committee Dato Ir Lee Miang Koi Non-Independent Non-Executive Director Dato Syed Danial Syed Arrifin Chief Operating Officer Tan Sri Dato Hari Member Member Member Narayanan Govindasamy Independent Non-Executive Director Tan Sri Dato Seri Dr Ting Chew Peh Chairman Member Member Chairman Independent Non-Executive Director Datuk Dr Rahman Ismail Member Chairman Chairman Independent Non-Executive Director Tan Seng Lee Member* Member Executive Director, Finance Tengku Dato Rahimah Almarhum Sultan Mahmud Non-Independent Non-Executive Director Member** Note : * Ceased to be a Member on 26 February 2008 ** Appointed as a Member on 26 February 2008 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. Since 2005, in order to expedite the Board s decision-making process at the operating companies level, an Executive Committee ( EXCO ) comprising the Executive Directors was established at PNSB and SYABAS respectively whereby both the PNSB and SYABAS EXCO Meetings are held fortnightly to deliberate on matters requiring the Board s mandate in between the Board Meetings.

115 113 Annual Report 2007 DIRECTORS REMUNERATION (a) PROCEDURE, LEVEL AND MAKE UP OF REMUNERATION The Company has a formal procedure to determine the remuneration of each Board member which are reviewed, from time to time, against market practices. In the case of the Executive Directors, their remuneration are structured so as to link rewards to corporate and individual performance and their remuneration packages comprise a salary, allowances, bonuses and other benefits as normally accorded to similar positions in other comparable companies. Performance is measured against profits and other targets set from the Company s annual budget and business plans as well as achievements of targeted returns to shareholders. In the case of the Independent Non-Executive Directors, their remuneration reflect their contributions and the time spent attending to the Group s affairs and they are paid a fixed monthly allowance, leave passage and meeting allowances for each Board and Board Committee meeting that they attend. The Remuneration Committee is responsible for recommending the remuneration packages of the Directors to the Board. The Board, as a whole, determines the remuneration of the Non-Executive Directors. Individual Directors shall abstain from discussing and voting on their own remuneration at the Board Meetings. (b) DISCLOSURE OF DIRECTORS REMUNERATION The details of the remuneration received and receivable by the Company s Directors from the Company during the financial year ended 31 December 2007 are as follows:- Employees Leave Provident Fees Salaries Bonuses Passage Allowance Fund Total Name of Director (RM) (RM) (RM) (RM) (RM) (RM) (RM) Tan Sri Rozali Ismail Dato Matlasa Hitam Dato Ruslan Hassan Dato Ir Lee Miang Koi Dato Syed Danial Syed Ariffin Tan Sri Dato Hari Narayanan Govindasamy 45,000 46,000 91,000 Tan Sri Dato Seri Dr Ting Chew Peh 45,000 78, ,000 Datuk Dr Rahman Ismail 45,000 58, ,000 Tan Seng Lee Tengku Dato Rahimah Almarhum Sultan Mahmud

116 114 Puncak Niaga Holdings Berhad Statement on Corporate Governance The remuneration packages of the Directors of the Company received and receivable from the Group for the financial year ended 31 December 2007 are categorised into the appropriate components as follows:- Executive Non-Executive In RM Directors Directors Fees Salaries 5,436,360 Bonuses 2,437,347 Benefits-in-kind 214,690 Allowances 866, ,000 Employees Provident Fund 1,262,391 Leave Passage 272, ,000 Total 10,489, ,000 Details of the Directors Remuneration at Company and Group levels for the financial year ended 31 December 2007, in bands of RM50,000 are tabulated as follows:- Company Group Level Level No. of Range of No. of Non- Remuneration Executive Executive No. of per annum Directors Directors Directors RM50,001 to RM100, RM100,001 to RM150, RM250,001 to RM300, RM600,001 to RM650, RM900,001 to RM950, RM950,001 to RM1,000, RM1,250,001 to RM1,300, RM1,300,001 to RM1,350, RM5,100,001 to RM5,150, (c) DIRECTORS SHARE OPTIONS There were no share options exercised by the Executive Directors under the Company s ESOS during the financial year ended 31 December 2007 as the options had expired, lapsed and became void and ceased to be exercisable after the expiry date or the exercisable period respectively. (d) DIRECTORS TRAINING In 2007, the Directors have attended training programmes, seminars and conferences organised either by the Company or the various training providers, such as:- Market Talk 2007 Managing Challenges Towards Sustainable Water Resources & Environment International Conference on Water Management and Technology Application in Developing Countries International Water Conference in Berlin Langkawi International Dialogue 2007 Corporate Governance Management - Audit Committee Role & The Internal Audit Function Understanding Financial Reporting For Directors and Senior Management A Discussion on Key Obligation Requirements For Companies Listed on Bursa Malaysia Updates on Listing Requirements : Issues and Challenges Related Party Transactions Managing Strategic Corporate Planning Malaysia PFI Programme - An Update on Latest Development and The Way Forward In addition, the Executive Chairman and some Directors have also presented papers at seminars and forums on waterrelated subjects, both locally and abroad. All PNHB Directors are committed in continuous education in order to be updated on the latest regulatory and corporate governance developments, besides enhancing professionalism and knowledge to enable them to discharge their duties effectively. SHAREHOLDERS COMMUNICATION AND INVESTOR RELATIONS POLICY The Board acknowledges the need for the Company s shareholders and investors to be informed of all material business and corporate developments concerning the Group in a timely manner. In addition to various announcements made during the year, the timely release of the Groups consolidated financial results on a quarterly basis provides the shareholders and investors with an overview of the Group s financial and operational performances.

117 115 Annual Report 2007 The Company maintains regular and 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, attending to shareholders and investors s and phone calls enquiries, Company General Meetings and other Company events. The Company s Investor Relations Policy & Report is set out on pages 131 to 132 of this Annual Report. ACCOUNTABILITY AND AUDIT (a) FINANCIAL REPORTING The Board is responsible for the quality and completeness of publicly disclosed financial reports. In presenting the annual financial statements, quarterly reports and the annual reports to the shareholders of the Company, the Board takes appropriate steps to present a clear and balanced assessment of the Group s position and prospects. This also applies to other price-sensitive public announcements and reports to the regulatory authorities. The Group s financial statements and quarterly announcements, prepared using appropriate accounting policies, consistently and supported by reasonable and prudent judgements and estimates, will be reviewed and deliberated by the Audit Committee in the presence of the external auditors, internal auditors of the Company and the Executive Director of Finance Division prior to recommending them for adoption by the Board. The Audit Committee ensures that information to be disclosed are accurate, adequate and in compliance with the various disclosure requirements imposed by the relevant authorities. The Board discusses and reviews the recommendations proposed by the Audit Committee prior to its adoption. The Board also ensures the accurate and timely release of the Group s quarterly and annual financial results to Bursa Securities. The half yearly results are published in the newspapers for the benefit of the investing public. (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 take responsibility in ensuring that the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2007 and of the results and the cash flows of the Group and of the Company for the financial year then ended. In preparing the financial statements, the Directors have:- Selected suitable accounting policies and applied them consistently; Made judgements and estimates that are reasonable and prudent; Ensured that all applicable accounting standards have been followed; and Prepared financial statements on the going concern basis as the Directors have a reasonable expectation, having made appropriate enquiries, that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. The Directors have the responsibility for ensuring that the Company keeps accounting records, which discloses with reasonable accuracy, the financial position of the Group and Company and which enables them to ensure that the financial statements comply with the provisions of 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. (c) RELATIONSHIP WITH EXTERNAL AUDITORS The Board maintains a transparent and professional relationship with the Group s external auditors. A report by the Audit Committee together with its Terms of Reference is set out on pages 122 to 127 of this Annual Report.

118 116 Puncak Niaga Holdings Berhad Statement on Corporate Governance (d) INTERNAL CONTROL The Board acknowledges its overall responsibility for maintaining a sound system of internal control, which provides reasonable assurance in ensuring the effectiveness and efficiency of the Group s operations and to safeguard its assets and interests in compliance with the relevant laws and regulations as well as the internal financial administration procedures and guidelines. The Group s Statement on Internal Control is set out on pages 120 to 121 of this Annual Report. OTHER COMPLIANCE INFORMATION (a) SHARE BUY BACK During the financial year ended 31 December 2007, the Company had re-sold a total of 12,335,600 of its ordinary shares of RM1.00 each ( Puncak Shares ), which were bought during the financial year ended 31 December 2006 and have been retained as treasury shares, through the open market. The details of the Puncak Shares re-sold by the Company during the financial year ended 31 December 2007 are as follows:- Total No. Of Treasury Re-Sale Price Per Share (RM) Consideration Month Shares Re-Sold Lowest Price Highest Price Average Price Received (RM) January 12,335, ,364, Total 12,335, ,364, The Company did not buy back any of its shares during the financial year ended 31 December 2007 and in consequence thereof, there were no Puncak Shares which have been retained as treasury shares in the Company as at 31 December (b) OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES There were no options, warrants or convertible securities exercised during the financial year ended 31 December 2007 as the options and warrants had expired, lapsed and become void and ceased to be exercisable after the expiry date or the exercisable period, respectively. (c) AMERICAN DEPOSITORY RECEIPT ( ADR ) / GLOBAL DEPOSITORY RECEIPT ( GDR ) The Company does not sponsor any ADR or GDR programme.

119 117 Annual Report 2007 (d) SANCTIONS AND/OR PENALTIES The Company and its subsidiaries, Directors and Management have not been imposed with any sanction and/or penalties by the relevant regulatory bodies during the financial year ended 31 December (e) NON-AUDIT FEES During the financial year ended 31 December 2007, the Group paid the following non-audit fees to the external auditors:- (i) Tax advisory and compliance work - RM180,950 (ii) Other non-audit related service - RM23,000 Non-audit fees payable to the external auditors, Messrs Ernst & Young relates to the review of the Statement of Internal Control and other professional services including tax compliance, tax planning and advisory services. (f) VARIATIONS IN RESULTS There was no material variation in the Audited Financial Statements for the financial year ended 31 December 2007 contained in this Annual Report as compared with the unaudited results of the Group announced to Bursa Securities on 27 February (g) PROFIT GUARANTEE The Company does not provide any profit guarantee to any parties. (h) REVALUATION POLICY ON LANDED PROPERTIES The Group does not adopt a policy of regular revaluation of its property. Details of the Group s properties are disclosed on page 139 of this Annual Report. (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 2007.

120 118 Puncak Niaga Holdings Berhad Statement on Corporate Governance (j) MATERIAL CONTRACTS INVOLVING DIRECTORS AND SUBSTANTIAL SHAREHOLDERS Material contracts entered into by the Group, which involve the interests of Directors and major shareholders of the Company and its subsidiary companies and material contracts which are still subsisting at the end of the financial year ended 31 December 2007, are as follows:- Consideration/ Mode of Relationship with Director/ Date Nature of Contract Parties Satisfaction Substantial Shareholder 15 December Concession Agreement Syarikat Bekalan Air Not Applicable YBhg Tan Sri Rozali Ismail ( TSRI ) 2004 Selangor Sdn Bhd is a substantial shareholder of PNHB ( SYABAS ), the State held directly under his personal Government of name and indirectly held through Selangor Darul Ehsan his 100% equity interest in and the Federal Central Plus (M) Sdn Bhd ( CPlus ) Government and Corporate Line (M) Sdn Bhd ( CLine ). PNHB in turn, holds 70% equity interest in SYABAS. 31 December Shareholders Agreement PNHB, Kumpulan Not Applicable TSRI is a substantial shareholder 2004 Darul Ehsan Berhad of PNHB held directly under his ( KDEB ) and SYABAS personal name and indirectly held through his 100% equity interest in CPlus and CLine. PNHB in turn, holds 70% equity interest in SYABAS. 23 February Subscription Agreement PNHB, KDEB Not Applicable TSRI is a substantial shareholder 2006 In Relation To The and SYABAS of PNHB held directly under his Subscription For Up To personal name and indirectly held RM1.045 Billion Nominal through his 100% equity interest in Value Of Redeemable CPlus and CLine. PNHB in turn, Cumulative Unsecured holds 70% equity interest in SYABAS. Loan Stocks Of SYABAS ( RCULS ) 8 December Subscription Agreement Puncak Niaga Not Applicable TSRI is a substantial shareholder 2006 In Relation To The Issue (M) Sdn Bhd ( PNSB ) of PNHB held directly under his Of RM435.0 Million (as the Issuer), personal name and indirectly held Nominal Of Redeemable United Overseas Bank through his 100% equity interest in Unsecured Bonds To PNHB (Malaysia) Bhd CPlus and CLine. PNHB in turn, (as the Facility Agent holds 82.5% equity interest in PNSB. and the Issue Agent) and PNHB

121 119 Annual Report 2007 Consideration/ Mode of Relationship with Director/ Date Nature of Contract Parties Satisfaction Substantial Shareholder 25 April Agreement Relating PNSB and SYABAS Not Applicable TSRI is a substantial shareholder 2007 To Rehabilitation And of PNHB held directly under his Upgrading Of 26 personal name and indirectly held Water Treatment Plants through his 100% equity interest in CPlus and CLine. PNHB in turn, holds 82.5% and 70% equity interests in PNSB and SYABAS, respectively. 16 August Sungai Lolo Water The State Not Applicable TSRI is a substantial shareholder 2007 Treatment Plant Government of of PNHB held directly under his (Extension) Operation And Selangor Darul personal name and indirectly held Maintenance Agreement Ehsan and PNSB through his 100% equity interest in CPlus and CLine. PNHB in turn, holds 82.5% equity interest in PNSB. 16 August Novation Agreement The State Not Applicable TSRI is a substantial shareholder 2007 In Relation To Sungai Government of of PNHB held directly under his Lolo Water Treatment Selangor Darul personal name and indirectly held Plant (Extension) Ehsan, PNSB and through his 100% equity interest in Operation and SYABAS CPlus and CLine. PNHB in turn, Maintenance Agreement holds 82.5% and 70% equity interests in PNSB and SYABAS, respectively. STATEMENT OF GOING CONCERN Barring any unforeseen circumstances and 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. This Statement on Corporate Governance has been approved by the Board of PNHB on 23 April 2008.

122 120 Puncak Niaga Holdings Berhad Statement on Internal Control 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 Listing Requirements of Bursa Malaysia Securities Berhad requires Directors of listed companies to include a statement in their annual reports on the state of their internal controls. RESPONSIBILITY The Boards of the PNHB Group are responsible for maintaining sound systems of internal control and for reviewing their adequacy and integrity so as to safeguard the 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 of PNHB 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. 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 respective Boards / Executive Committees within the Group (PNHB / PNSB / SYABAS) and are only made after appropriate indepth analysis. The respective Boards / Executive Committees receive regular and comprehensive information covering all Divisions / Departments / Districts in the respective companies within the Group. All Divisions and Departments of PNSB have clearly documented Procedure Manuals and/or Policies whilst SYABAS has Standard Operating Procedures and/or Policies incorporating control procedures and the scopes of responsibilities and authorities. The Procedure Manuals / Standard Operating Procedures / Policies are updated regularly to incorporate all elements necessitated by changes in the legislation, industry best practices and business dynamics. RISK MANAGEMENT FRAMEWORK Risk Management is firmly embedded in the Group s management system and is every employee s responsibility. In October 2001, the Board of PNHB 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 PNHB Group. The Group s risk management framework is explained in detail in the Risk Management Policy & Report set out on pages 128 to 130 of the Annual Report.

123 121 Annual Report 2007 The Internal Audit Department of PNSB, 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 of PNHB. 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. The Board of SYABAS established an Audit Committee with its own Terms of Reference on 3 August The Internal Audit Division of SYABAS extends a copy of its Internal Audit Reports to the Executive Chairman and summarised Status Reports on its activities are regularly submitted to the Management of SYABAS. The Compliance, Internal Control and Risk Policy Committee, which is chaired by YBhg Tan Sri Dato Seri Dr Ting Chew Peh, an Independent Non-Executive Director was established in October 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 of PNSB and the Tender Committees of SYABAS ensure transparency and competitive pricing in the award of contracts within the Group. A detailed budgeting process has been established for PNSB and SYABAS requiring all Divisions / Departments / Districts to prepare their respective budgets annually. These budgets are then reviewed and approved by the respective Boards / Executive Committees 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. Both PNSB and SYABAS have their own Limits of Authorities that have been approved by their respective Boards. Self Assessment Audit Forms (which list all key procedures), have been developed for all Departments of PNSB. With effect from 31 March 2008, all Departments are required to submit a written declaration quarterly, to the Internal Audit Department, as to whether all the key procedures have been complied with. 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 2000, the Group has monitored its level of readiness with 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 2007, 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 PNHB 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 Committee 23 April 2008

124 122 Puncak Niaga Holdings Berhad 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 the Audit Committee Meetings held during the financial year 2007 were as follows: Number of Number of Composition Meetings Meetings Percentage of Committee Held Attended (%) YBhg Tan Sri Dato Seri Dr Ting Chew Peh Chairman/Independent Non-Executive Director % YBhg Tan Sri Dato Hari Narayanan Govindasamy Member/Independent Non-Executive Director % YBhg Datuk Dr Rahman Ismail Member/Independent Non-Executive Director % Mr Tan Seng Lee (Note 1) Member/Executive Director ~ Finance % (Note 1 Ceased to be a member on 26 February YAM Tengku Dato Rahimah Almarhum Sultan Mahmud (Non-Independent Non-Executive Director) was appointed a member of the Audit Committee on 26 February 2008.) The Senior Manager (Internal Audit), General Manager / Senior Manager (Operation I) 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 these meetings where matters relating to the audit of the statutory accounts and / or the external auditors are to be discussed. The Company Secretary, Mdm Tan Bee Lian is the Secretary to the Audit Committee. 2. SUMMARY OF ACTIVITIES During the financial year 2007, the Audit Committee carried out its duties as set out in the terms of reference. The 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 recommendations 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. Internal Audit Reviewed the Internal Audit Plan, programme of resource requirement for the year and assessed the performance of the Internal Audit Department.

125 123 Annual Report 2007 Reviewed the Internal Audit reports, which highlighted the audit issues, recommendations and the Management s responses and directed action to be taken by the Management to rectify and improve the system of internal control. Monitored the implementation of recommendations made by the Internal Audit Department arising from its audits in order to obtain assurances that all key risks and control concerns have been fully addressed. Related Party Transactions Reviewed all related party transactions entered into by the Company and the Group. 3. INTERNAL AUDIT FUNCTIONS Puncak Niaga Holdings Berhad ( PNHB ) / Puncak Niaga (M) Sdn Bhd ( PNSB ) PNHB/PNSB has an established Internal Audit Department, which assists the Audit Committee in the discharge of its duties and responsibilities. The PNHB/PNSB s Internal Audit Department is headed by En Mohammed Sofian Ismail who is also the Head of the Risk Management Section. En Mohammed Sofian Ismail is a Chartered Member of the Institute of Internal Auditors, Malaysia ( CMIIA ), a Certified Internal Auditor ( CIA ) and holds a Certification in Control Self Assessment ( CCSA ) both from the Institute of Internal Auditors, Inc, USA, a Certified Information Systems Auditor ( CISA ) of the Information Systems and Control Association, USA, an associate of ( ISC ), USA and a Master of Business Administration holder from Bond University, Australia. He has more than 25 years working experience in both internal and external audit. The Internal Audit Department provides an independent assurance on risk management and internal control. The Department 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 based on a risk analysis approach), was approved by the Audit Committee at the 51 st Audit Committee Meeting of the Company held on 22 November The scope of the Internal Audit Department s functions covered the audit on the adequacy of risk management, operational controls, compliance with established procedures, guidelines and statutory requirements and also the various computer application systems and networks of the Company and of the Group. The Internal Audit Department has conducted the evaluation of the system of internal control that encompasses the Group s governance, operations and information systems. The Internal Audit reports, which highlights internal control weaknesses, were deliberated by the Audit Committee and the recommendations were duly acted upon by the Management. In 2007, the Internal Audit Department undertook 50 major audit assignments covering all the 28 active Water Treatment Plants, high-risk areas identified by the Risk Management Scorecard Working Group and adhoc assignments requested by the Senior Management. Examples of other key areas audited by the Internal Audit Department during the Financial Year 2007 were Dam Operations at Sungai Langat / Klang Gates / Tasik Subang Dams, Water Quality Records, Risk of Chlorine Leaks Within Facilities, Compliance With DOSH Requirements / Electricity Regulations, Raw Water Quantity and Quality Surveillance, HRMS System, Risk of Breach of Covenants - Finance and Accounts Department, Risk of Viruses / Hackers and Inadequate Back-ups, etc. The total cost incurred by the Internal Audit Department in relation to the conduct of the internal audit functions of PNHB / PNSB during the year 2007 exceeded RM700,

126 124 Puncak Niaga Holdings Berhad Audit Committee Report SYABAS ii At least one (1) member of the Audit Committee: Due to the complexity of its water distribution operations which are dissimilar to that of PNSB s water treatment operations, the Board of SYABAS formally ratified the establishment of the Internal Audit Division on 1 September 2006 and an Audit Committee with its own terms of reference was formed on 3 August The Internal Audit Division of SYABAS is headed by En Sonari Solor, a member of the Malaysian Institute of Accountants (MIA), Fellow of the Chartered Association of Certified Accountants (UK) and a professional qualification holder from the Chartered Institute of Management Accountants (UK). En Sonari Solor has more than 20 years of working experience in audit and accounting in public listed companies. He was formerly the Head of PNHB/PNSB Internal Audit Department for the period September 1998 to August 2006 before assuming his current position as Head of SYABAS Internal Audit Division. At SYABAS, the audit emphasis was to determine whether the financial and other controls are in place to ensure the integrity of information pertaining to the tariff adjustment e.g. Review of Components in the Tariff Formula, Review of Capital Expenditure Works, Review of Volume of Water Purchased, etc. The total cost incurred by the Internal Audit Division in relation to the conduct of the internal audit function of SYABAS during the year 2007 was RM497, TERMS OF REFERENCE OF PNHB S AUDIT COMMITTEE (Note 2) 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 which fulfils the following requirements: i All the members of the Audit Committee must be Non-Executive Directors of the Company (and excluding Alternate Directors) with a majority of them being Independent Directors; and a b must be a member of the Malaysian Institute of Accountants; if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience and: 1 he must have passed the examinations specified in Part I of the 1 st Schedule of the Accountants Act 1967; or 2 he must be a member of one of the associations of accountants specified in Part II of the Accountants Act 1967; or 3 fulfils such other requirements as prescribed or approved by the Exchange. The members of the Audit Committee shall elect a Chairman from amongst themselves who shall be an Independent Director. 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. The Chairman of the Audit Committee will maintain continuous engagement with the Board Members and Senior Management of the Company and the external auditors in order to be kept abreast of matters affecting the Company. All members of the Audit Committee should be financially literate. 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. 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 the event, appoint such number of new members as may be required to make up the minimum number of three (3) members.

127 125 Annual Report 2007 B. Objectives The primary objectives of the Audit Committee are to: i ii iii iv v 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. 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. Maintain through regularly scheduled meetings a direct line of communication between the Board and the external auditors, internal auditors and financial management. Strengthen the role of Non-Executive Directors by improving their knowledge and understanding of the Company s operation. Undertake such additional duties as may be appropriate and necessary to assist the Board. However, whether or not the Audit Committee should undertake one or more of the additional duties rests on the Board s viewpoint on corporate needs and the environment in which the Company operates. C. Duties And Responsibilities In fulfilling its primary objectives, the Audit Committee will need to undertake the following duties and responsibilities: C.1 Oversee All Matters Relating to External and Internal Audits i Review the Annual Audit Plan with the external auditors. The Committee shall meet with the external auditors prior to the commencement of the annual audit to discuss: The general outline of the extent and timing of the auditors proposed coverage of location such as branches, departments, factories, divisions and subsidiaries. ii The nature of the audit procedures to be performed. The extent of any planned reliance on the work of the internal auditors and the anticipated effect of this reliance on the examination. Any significant accounting and auditing problems that the auditors can foresee. The impact on the financial statements of any new or proposed changes in accounting standards or regulatory requirements. The effect on the audit of significant data-processing systems. Following its 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. 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 the 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 adequacy of the scope of the Department s authority as presented in the Department s charter, the competency, qualifications and experience level of its employees, 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.

128 126 Puncak Niaga Holdings Berhad Audit Committee Report Review any appraisal or assessment of the performance of the staff of the Internal Audit Department. C.2 Evaluate the Standards of Internal Control and Financial Reporting Approve any appointment or termination of the Head of the Internal Audit Department. To take cognizance of the staff resignations in the Internal Audit Department and their reasons for resigning as stated in the Exit Interview Form(s). The Internal Audit Department shall exercise independence, impartiality, proficiency and due professional care in the discharge of its internal audit function and the activities it audits within the Company and Group. i ii iii Hold specific discussions with Senior Corporate Management to discuss the overall adequacy of the internal control system. Meet with the internal and external auditors concerning their evaluation of the system of internal accounting controls. 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. iii iv v vi To review the coordination of audit efforts between external and internal auditors, where practical, with a view to maximizing audit effectiveness and controlling external audit costs. Review the assistance and cooperation given by the Company s officers to the external and internal auditors. Any letter of resignation from the external auditors. To recommend the nomination of a person or persons as external auditors or re-appointment or whether there is reason (supported by grounds) to believe that the external auditors is not suitable for re-appointment. 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. vii 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. viii The Audit Committee may convene meetings with the external auditors and/or internal auditors, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary. C.3 Review of Financial Statements i ii iii iv v vi 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. Review the changes in or implementation of major accounting policy changes, the nature and resolution of any significant accounting and auditing problems encountered during the examination. 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. Review the nature of any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of the Management s integrity. Review the nature of any significant adjustments and unusual events, reclassifications or additional disclosures proposed by the external auditors that are currently significant or may become significant in the future. Review the adequacy of disclosure of the impact of any changes during the year in accounting policies, standards and/or regulatory requirements.

129 127 Annual Report 2007 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 x xi Review the nature of any unusual or significant commitments or contingent liabilities. Review of any significant differences between the annual report and other reports, such as reports to the regulatory agencies. Review for any significant differences in format or disclosure from industry norms. C.4 Additional Duties and Responsibilities i ii iii iv v vi Act upon the Board of Directors request to investigate and report on any issues or concerns in regard to the management of the Company. Review the Company s business ethics code, the method of monitoring, compliance with the code and the disposition of reported exceptions. Review executive expenses. Review policies on sensitive payments. Review compliance with certain government regulations. 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. x When the Audit Committee is of the view that a matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements of Bursa Malaysia Securities Berhad, the Audit Committee shall promptly report such matter to the Exchange. 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, with the majority of members present being Independent Directors. In addition to the Committee members, the Executive Director of Finance Division and the Head of Internal Audit Department will normally be in attendance at the meetings. Representative 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, other Board Members 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. The Audit Committee will meet with the external auditors without the Executive Directors present at least twice a year. 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. (Note 2 The revised Terms of Reference for PNHB s Audit Committee, as approved by the PNHB Board on 26 February 2008.)

130 128 Puncak Niaga Holdings Berhad Risk Management Policy & Report RISK MANAGEMENT POLICY The Board of Puncak Niaga Holdings Berhad has approved the following Group s Risk Management Policy Statement: The PNHB 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 PNHB Group employees and acknowledges that corporate responsibility lies with the Board of Directors of the PNHB 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 following steps were taken by the Board of Puncak Niaga in October 2001, for the management of the Group s corporate risks: As a follow up from the Strategic Corporate Risk Management Workshop held for the Board and Senior Management in August 2001, information on Risk Management has been fully disseminated to all employees in the form of posters and through the Group s internal communications network. In addition, the risk management framework which was established in October 2001 has since then been fully implemented by the Management and employees of Puncak Niaga. COMPLIANCE, INTERNAL CONTROL AND RISK POLICY COMMITTEE (CICR) The establishment of the CICR was formalised by the Board in October The members of the CICR comprise the following: Chairman: YBhg Tan Sri Dato Seri Dr Ting Chew Peh (Independent Non-Executive Director) Members: YBhg Dato Matlasa Hitam Managing Director (Head of Compliance, Internal Control and Risk Policy Committee) Madam Tan Bee Lian (Senior General Manager, Secretarial Department) Tuan Haji Sonari Solor (General Manager, Internal Audit Division - SYABAS) Secretary Encik Mohammed Sofian Ismail Senior Manager, Internal Audit Department (Acting Head) (Head of Risk Management Section) 1. The preparation of the Group s Risk Management Policy Statement. 2. The formation of the Compliance, Internal Control and Risk Policy Committee with its own Terms of Reference. 3. The setting up of a Risk Management Section, which reports to the Compliance, Internal Control and Risk Policy Committee.

131 129 Annual Report 2007 Following his resignation from PNSB, Mr Ng Wah Tar (who had been a member of the CICR since its inception), has not attended any CICR meetings since 2 August 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. Reviewing periodically the Group s overall objectives by assessing the current risk portfolio composition and determining the desired exposures of each major area of risk. B) CICR ACTIVITIES MEETINGS HELD AND ISSUES COVERED During the year 2007, the CICR held eight (8) meetings, of which four (4) were chaired by YBhg Tan Sri Dato Seri Dr Ting Chew Peh (Chairman of CICR) and four (4) were chaired by YBhg Dato Matlasa Hitam (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 PNSB 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. The effective utilisation of the Corporate Risk Scorecard software to identify, measure and monitor all corporate risks identified within PNSB. 4. Other relevant risk issues affecting the Group, from time to time. Monitoring and assessing the risk portfolio composition of significant activities of the Group. Keeping abreast of both current risk management techniques and theories, and any possible or actual changes in the regulatory environment, and recommending the appropriate action.

132 130 Puncak Niaga Holdings Berhad Risk Management Policy & Report 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 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. The Risk Management Scorecard Working Group (RMSWG), comprising all Heads of Departments or their representatives, met on 22 and 24 October 2007 to review the Group s Enterprise-Wide Risk Profile. The deliberations of the RMSWG were in turn reviewed by the CICR. Subsequently, a detailed Board Paper on the Group s Enterprise-Wide Risks was submitted to the PNHB Board. The Group s Enterprise-Wide Risk Profile will be reassessed by the RMSWG in DIVISIONAL AND DEPARTMENTAL RISKS (PNSB) 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 PNSB / PNHB utilises a risk management tool namely, the Corporate Risk Scorecard (CRS) software to identify, measure and manage all corporate risks affecting PNSB. The CRS software offers a systematic approach to the management of enterprisewide risks facing corporations and assists the Management of Puncak Niaga to successfully achieve their corporate objectives. RISK MANAGEMENT AT SYABAS A formal Risk Management structure was approved by the Board of SYABAS in November A meeting of all Senior Management staff of SYABAS was held on 5 May 2007 to deliberate upon the detailed Risk Profile for the Company. Arising from this meeting and further feedback from all Senior Management staff, a detailed EXCO (Executive Committee) Paper entitled Risks Facing SYABAS For The Year 2007 was prepared for and approved by the SYABAS EXCO on 19 September The said EXCO Paper was also submitted to the CICR. The Risk Management Scorecard Working Group of PNHB / PNSB took into consideration the risks identified by SYABAS, when developing the Enterprise-Wide Risk Profile for the PNHB Group.

133 131 Annual Report 2007 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 capabilities. 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 the PNHB Group and implemented by the Management. INVESTOR RELATIONS REPORT Investor relations is the means by which listed companies maintain dialogue with their existing shareholders and potential investors. It is a strategic management responsibility to present an accurate picture of corporate performance and prospects, thus enabling the investment community, through an informed market, to determine a realistic share price. As a result, investor relations can have a positive impact on the Company s market value and cost of capital relative to its industry sector and the overall economic climate. The year 2007 has been challenging amidst Puncak Niaga s relentless pursuit to gain leadership in the water industry.

134 132 Puncak Niaga Holdings Berhad Investor Relations Policy & Report The Board is therefore pleased to report on Puncak Niaga s investor relations activities during 2007 as follows:- DIALOGUES WITH INVESTORS The Top Management of the Group actively engages in meetings, dialogues and briefing sessions with local and foreign institutional groups. In 2007, more than 58 dialogues and group briefing sessions were conducted with existing and potential investors, local and foreign fund managers and financial analysts from research and asset management houses. A Clients Briefing Session on Puncak Niaga was held at the premises of ECM Libra Investment Bank Berhad (formerly known as ECM Libra Avenue Securities Berhad) on 6 March INVESTORS ACCESS TO INFORMATION In line with our Investor Relations Policy, Puncak Niaga ensures timely disclosure of information over and above the regulatory authorities disclosure requirements so as to enable the investment community to make careful and informed investment decisions on the Company s securities. Shareholders and investors can access the Company s information and corporate announcements at or In year 2007, the Investors link was established at the Company s website to enable immediate access to these information. Since 22 October 2004, in our efforts to meet disclosure obligations towards our shareholders, investors and stakeholders, the Group has adopted and implemented the Puncak Niaga Corporate Disclosure Policy (as set out on page 134 of this Annual Report), formulated in line with the Guide On Best Practices In Corporate Disclosure issued by Bursa Malaysia Securities Berhad s Task Force on Corporate Disclosure Best Practices. The public may also access information on SYABAS at ANNUAL GENERAL MEETING (AGM) The Board of Puncak Niaga firmly believes that the AGM is the best forum to promote a closer relationship with our shareholders, enabling us to continue our engagement process with them. Since 2003, our AGM has been preceded by a Company Presentation followed by a Questions and Answers Session. Our shareholders are updated on the Group s corporate performance, latest developments and issues of concern to the shareholders. This is especially important as we are the water services provider in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya and our shareholders are our consumers. It is Puncak Niaga s way of saying We value your views and We are here to serve you better. At the same time, our shareholders feedback which are relevant to our operations are taken into consideration in our business decisions. At our AGM held on 28 June 2007, we set up the PUSPEL customer service counter at a secretariat room at the AGM venue to enable our shareholders to check on online water related enquiries. In view of our role as a water services provider, we intend to continue this practice at our future AGMs for the benefit of our shareholders. INVESTOR RELATIONS UNIT The Investor Relations Unit ( IRU ) maintains a database of shareholders and investors who wish to be updated on the Group s corporate developments and performance via . Kindly us your contact details to the attention of Madam Tan Bee Lian, Group Company Secretary/Senior General Manager, Secretarial via investors@puncakniaga.com.my or by mail at Investor Relations Unit, c/o Secretarial Department, Puncak Niaga Holdings Berhad, 10th Floor, Wisma Rozali, No. 4, Persiaran Sukan, Seksyen 13, Shah Alam, Selangor Darul Ehsan, should you wish to be included in our database. Similarly, to enable us to further improve our level of services to the community and our 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. All water-related enquiries in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya, such as complaints on water disruptions, pipe bursts, low water pressure, etc., may be addressed to SYABAS Customer Service Centre, puspel@syabas.com.my or the toll-free line, or SMS PUSPEL<space><your complaints/feedback> to

135 133 Annual Report 2007 Quality Policy & Report QUALITY POLICY It is the policy of Puncak Niaga to provide quality services to fulfill its contractual obligations to the Selangor State Government. Puncak Niaga shall strive consistently to 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. Consistent application of the Right First Time Every Time principle. Empowerment of employees to solve problems expeditiously. A culture of continuous improvement and teamwork. All employees shall share the responsibility to understand and diligently implement the Quality Policy. INNOVATIVE AND CREATIVE CIRCLE PROGRAMME PNSB s Innovative and Creative Circle ( ICC ) programme is dedicated to boosting efficiency, productivity, quality and costsavings by solving technical, administrative and procedural issues. The programme is also designed to enable cross-functional teams involved in value-creation projects to complete projects fast. Staff at our Head Office and WTPs participate in the ICC programme, and a specially-appointed ICC Secretariat implements and monitors the progress of ongoing ICC projects. A total of 29 ICC teams participated in the ICC programme. 26 submitted projects for consideration, of which 22 were accepted by the Secretariat. After careful consideration, the Secretariat shortlisted 11 projects for implementation: 8 from the WTPs and 3 from Head Office. The shortlisted projects aim to :- Optimize the flocculation process. Enhance floc formation and cut cost in the coagulation process. Reduce the use of liquid alum. Reduce modified liquid alum in WTP operations. Reduce sediment in the sediment water tanks at Sungai Tengi WTP. Reduce tripping at wash water pumps. Improve filter runtime. Cut the cost of maintaining dust extractors at chemical plants. Cut the cost of maintaining company vehicles. Implement an aeration system at Klang Gates Dam. Implement e-filing.

136 134 Puncak Niaga Holdings Berhad Corporate Disclosure Policy As a responsible corporate citizen, Puncak Niaga is totally committed to upholding the highest standards of transparency, accountability and integrity in the disclosure of all material information on the Company to the investing public in an accurate, clear, complete and timely manner in accordance with the corporate disclosure requirements as set out in the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ). The primary objectives of Puncak Niaga s Corporate Disclosure Policy are: 1. To promote and maintain market integrity and investor confidence. 2. To provide equal access to the Company s material information in an accurate, clear, timely and complete manner and to avoid selective disclosure to the investing public. 3. To exercise due diligence such that information disseminated to the investing public will be as far as possible accurate, clear, timely and complete. 4. To put in place an efficient management of information procedure that promotes accountability for the dissemination of material information to the investing public. 5. To build good investor relations with the investing public based on the principles of trust, honesty, openness, transparency and sound understanding of the Company. To achieve its objectives, the Company will endeavour to undertake the following: 1. ESTABLISH POLICIES AND PROCEDURES Ensure written policies and procedures of the Company ( Puncak Niaga s Corporate Disclosure Policy and Procedure ) that encompass the Corporate Disclosure Policy and other requirements relating to corporate disclosure as set out in the Listing Requirements of Bursa Securities. Appoint a senior officer of the Company to oversee and coordinate disclosures to ensure the Company complies with the Listing Requirements of Bursa Securities. Ensure that only designated persons are the Company s spokespersons. Ensure due compliance with Puncak Niaga s Corporate Disclosure Policy And Procedure. 2. EXERCISE DUE DILIGENCE AND PREPARATION Ensure that the persons responsible for disseminating material information to the investing public, exercise due diligence in ensuring that information to be released is accurate, clear, timely and complete. Ensure that due care is observed when briefing and responding to analysts, institutional investors, the media and the investing public. 3. USE OF INFORMATION TECHNOLOGY Take advantage of current information technology to disseminate information to the investing public. Our commitment to the above Policy is driven by the Board of Directors of the PNHB Group and implemented by the Management.

137 135 Annual Report 2007 Distribution Schedule of Equity Securities as at 29 April 2008 ANALYSIS OF SHAREHOLDINGS Authorised Share Capital Issued and Paid-Up Share Capital Class of Shares Voting Rights : RM1,300,000,000 : RM411,142,895 comprising 411,142,895 ordinary shares of RM1.00 each : Ordinary shares of RM1.00 each : One vote per ordinary share DISTRIBUTION OF SHAREHOLDINGS Shareholders Shares Size of Malaysian Foreigner Total Malaysian Foreigner Total Shareholdings No. % No. % No. % No. % No. % No. % Less than ,428 * 170 * 11,598 * 100-1,000 1, , , ,185 * 973, ,001-10,000 4, , ,487, , ,729, , , ,234, ,769, ,003, ,001-20,557, # 1.61 # # 2.09 # 227,760,747 # # 46,089, ,850,526 # # (less than 5% of the issued share capital) 20,557,145 (5% of ,441, ,095, ,537, the issued share capital) and above Total 6,481 # # ,658 # 100 # 326,896,148 # # 82,209, ,106,095 # 100 # Notes:- * Negligible. # Excluding a total of 2,036,800 PNHB shares bought back by PNHB and retained as treasury shares as at 29 April LIST OF TOP THIRTY SECURITIES ACCOUNT HOLDERS AS PER RECORD OF DEPOSITORS (Without aggregating the securities from different securities accounts belonging to the same Depositors) % of Issued and Paid-up No. Name of Shareholder No. of Shares Held Share Capital # 1 CIMB Group Nominees (Tempatan) Sdn Bhd 39,000, WWE Holdings Bhd For Corporate Line (M) Sdn Bhd (49988 JTRK) 2 Central Plus (M) Sdn Bhd 34,441, HSBC Nominees (Asing) Sdn Bhd 34,095, Exempt An For JPMorgan Chase Bank, National Association (Bermuda) 4 Employees Provident Fund Board 20,301,

138 136 Puncak Niaga Holdings Berhad Distribution Schedule of Equity Securities as at 29 April 2008 % of Issued and Paid-up No. Name of Shareholder No. of Shares Held Share Capital # 5 RHB Capital Nominees (Tempatan) Sdn Bhd 20,000, Pledged Securities Account For Central Plus (M) Sdn Bhd (TSR ) 6 AmSec Nominees (Tempatan) Sdn Bhd 19,920, AmBank (M) Berhad For Central Plus (M) Sdn Bhd 7 UOBM Nominees (Tempatan) Sdn Bhd 19,900, Pledged Securities Account For Central Plus (M) Sdn Bhd (PCB) 8 Lembaga Tabung Haji 17,516, Citigroup Nominees (Tempatan) Sdn Bhd 16,400, CMS Asset Management Sdn Bhd For Employees Provident Fund 10 Amanah Raya Nominees (Tempatan) Sdn Bhd 14,198, Amanah Saham Wawasan AmSec Nominees (Tempatan) Sdn Bhd 11,918, AmTrustee Berhad For Central Plus (M) Sdn Bhd (CS-CPLUS) 12 HDM Nominees (Tempatan) Sdn Bhd 9,500, Pledged Securities Account For Central Plus (M) Sdn Bhd (IB) 13 Cartaban Nominees (Asing) Sdn Bhd 9,194, State Street Australia Fund ATB1 For Platinum Asia Fund 14 Amanah Raya Nominees (Tempatan) Sdn Bhd 9,123, Skim Amanah Saham Bumiputera 15 Amanah Raya Nominees (Tempatan) Sdn Bhd 8,147, Amanah Saham Malaysia 16 HSBC Nominees (Tempatan) Sdn Bhd 6,300, Pledged Securities Account For Central Plus (M) Sdn Bhd ( ) 17 AmSec Nominees (Tempatan) Sdn Bhd 5,000, CMS Dresdner Asset Management Sdn Bhd For Tenaga Nasional Berhad Retirement Benefit Trust Fund (RB-TNB-CMS) 18 HSBC Nominees (Tempatan) Sdn Bhd 4,830, HSBC (M) Trustee Bhd For CMS Premier Fund (4959) 19 HSBC Nominees (Asing) Sdn Bhd 4,371, KBC Bank NV Brussels For KBC Equity Fund

139 137 Annual Report 2007 % of Issued and Paid-up No. Name of Shareholder No. of Shares Held Share Capital # 20 Corporate Line (M) Sdn Bhd 4,318, Cartaban Nominees (Asing) Sdn Bhd 3,811, The Governor And Company Of The Bank Of Ireland For KBC ECO Water Fund 22 Citigroup Nominees (Asing) Sdn Bhd 3,600, GSCO For TRF Master Fund (Cayman) LP 23 HSBC Nominees (Asing) Sdn Bhd 3,547, BNY Brussels For Powershares Global Water Portfolio 24 HSBC Nominees (Asing) Sdn Bhd 3,223, Exempt An For The Hongkong And Shanghai Banking Corporation Limited (HBFS-I CLT ACCT) 25 Ng Yim Hoo 3,015, HSBC Nominees (Asing) Sdn Bhd 2,883, Exempt An For Morgan Stanley & Co Incorporated 27 HSBC Nominees (Asing) Sdn Bhd 2,398, TNTC For Premier Utilities Trust PLC 28 Citigroup Nominees (Tempatan) Sdn Bhd 2,366, Uni.Asia Life Assurance Berhad (Life Fund) 29 Citigroup Nominees (Asing) Sdn Bhd 2,150, CB LDN For Stichting Pensioenfonds Zorg En Welzijn 30 Permodalan Nasional Berhad 1,990, Total 337,463, Note: # Excluding a total of 2,036,800 PNHB shares bought back by PNHB and retained as treasury shares as at 29 April 2008.

140 138 Puncak Niaga Holdings Berhad Distribution Schedule of Equity Securities as at 29 April 2008 DIRECTORS INTEREST IN ORDINARY SHARES AS PER REGISTER OF DIRECTORS SHAREHOLDINGS Direct No. of Shares Held in the Company Indirect No. Name of Director Interest % # Interest % # 1 YBhg Tan Sri Rozali Ismail 1,729, ,037, YBhg Dato Matlasa Hitam 3 YBhg Dato Ruslan Hassan 4 YBhg Dato Ir Lee Miang Koi 10,000 ~ 8,225 * ~ 5 YBhg Tan Sri Dato Hari Narayanan Govindasamy 175, YBhg Tan Sri Dato Seri Dr Ting Chew Peh 42,000 ^ YBhg Dato Syed Danial Syed Ariffin 8 YBhg Datuk Dr Rahman Ismail 9 Mr Tan Seng Lee 10 YAM Tengku Dato Rahimah Almarhum Sultan Mahmud Notes:- + Deemed interest by virtue of 100% equity interests each in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd respectively, of which 92.5% is held in own name and 7.5% is held in the children s names. * Deemed interest by virtue of shares held by brother, Lee Meow Choon pursuant to Section 134 of the Companies Act, ^ Deemed interest by virtue of shares held by spouse, Tay Boon Ling pursuant to Section 134 of the Companies Act, # Excluding a total of 2,036,800 PNHB shares bought back by PNHB and retained as treasury shares as at 29 April ~ Negligible. SUBSTANTIAL SHAREHOLDERS BASED ON THE REGISTER OF SUBSTANTIAL SHAREHOLDERS (EXCLUDING BARE TRUSTEES) No. of Shares Held in the Company Direct Indirect No. Name of Substantial Shareholder Interest % # Interest % # 1 YBhg Tan Sri Rozali Ismail 1,729, ,037, Central Plus (M) Sdn Bhd 36,179, ,538,900 * Corporate Line (M) Sdn Bhd 4,318, ,000,000 * Employees Provident Fund Board 20,251, ,400,000 ^ Utilico Emerging Markets Limited 34,095,950 * 8.33 Notes:- + Deemed interest by virtue of 100% equity interests each in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd respectively, of which 92.5% is held in own name and 7.5% is held in the children s names. * Held in nominee name(s). ^ Share held and managed by Portfolio Manager. # Excluding a total of 2,036,800 PNHB shares bought back by PNHB and retained as treasury shares as at 29 April 2008.

141 139 Annual Report 2007 List of Properties as at 31 December 2007 Net Book Remaining Description & Date of Land Area Value Leasehold Existing Location Acquisition (sq.m) (RM) Tenure (Expiry Date) Use Wisma Rozali 01/08/ ,952 39,347, years 95 years Office No. 4 & 6, Leasehold expiring on Premises Persiaran Sukan 22/01/2102 Seksyen Shah Alam Selangor Darul Ehsan Vacant Land H.S.(D) /02/ ,364 7,931, years 92 years Rented out PT 32, Seksyen 14 Leasehold expiring on to a car park Bandar Shah Alam 17/12/2099 operator District of Petaling Selangor Darul Ehsan Vacant Land H.S.(D) , PT /04/ ,267,188 Freehold N/A None H.S.(D) , PT /04/ H.S.(D) , PT /04/ Mukim Pekan Subang Jaya Daerah Petaling Selangor Darul Ehsan Vacant Land H.S.(D) 6163, PT /2/ ,438 57,086, years 94 years None H.S.(D) 6164, PT ,092 Leasehold expiring on H.S.(D) 6165, PT ,299 24/10/2101 H.S.(D) 6166, PT ,733 Mukim Of Ijok District Of Kuala Selangor Selangor Darul Ehsan 4 Storey Shophouse 21/3/ ,864, years 85 years Office No. 12, Jalan Todak 5 Leasehold expiring on Premises Pusat Bandar Seberang Jaya 21/10/ Prai Pulau Pinang

142

143 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 take responsibility in ensuring that the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2007 and of the results and the cash flows of the Group and of the Company for the financial year then ended. In preparing the financial statements, the Directors have:- Selected suitable accounting policies and applied them consistently; Made judgements and estimates that are reasonable and prudent; Ensured that all applicable accounting standards have been followed; and Prepared financial statements on the going concern basis as the Directors have a reasonable expectation, having made appropriate enquiries, that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. The Directors have the responsibility for ensuring that the Company keeps accounting records, which discloses with reasonable accuracy, the financial position of the Group and Company and which enables them to ensure that the financial statements comply with the provisions of 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.

144 142 Puncak Niaga Holdings Berhad Financial Statements