Syarikat Bekalan Air Selangor Sdn Bhd 31 December 2011

Annual Report 2011 Puncak Niaga Holdings Berhad

EXPANDING HORIZONS

ANNUAL REPORT 2011 0A Expanding Horizons

Despite the challenges surrounding The dove symbolizes renewal of life the water industry in Selangor, 2011 and a sign of hope, peace and love. In was a year of signiﬁ cant and positive this design, the blue color represents development for Puncak Niaga Holdings our business of providing clean water, Berhad (“PNHB”) Group – a year in green is CSR and red is the new and which we crossed new frontiers. vibrant oil and gas revenue contributor to PNHB Group’s bottomline. During the year, the Group embarked into the Oil & Gas arena with the acquisitions of two sizeable oil and gas entities. In addition, our business operations continued to expand beyond the conﬁ nes of the Klang Valley with a new project in Sarawak. 15th We remained wholeheartedly committed Annual General Meeting to our stakeholders, to society and the Date 26 June 2012 (Tuesday) environment, and during the year, we Time 10.00 am implemented new CSR initiatives while Venue Concorde 1 vigorously pursuing existing ones. Concorde Hotel Shah Alam, Level 2 No. 3, Jalan Tengku Ampuan Zabedah C9/C 40100 Shah Alam Selangor Darul Ehsan Our Mission

To meet the increasing challenges in the Our demand for high quality water supply, Vision wastewater and environmental systems through the continuous implementation of high quality standards, efficient services, To Be A Leading Regional human capital development, innovative Integrated Water, Wastewater technologies and operational systems. And Environmental Solutions Provider And To Emerge As A To share our experience and offer our expertise Significant Player In The through Smart Business Partnerships, Public Oil & Gas Sector. Private Partnerships or other innovative business models.

To actively participate in local, regional and global business opportunities with linkages to the Company’s core activities, waste water & solid waste management, environment management and oil & gas sectors.

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 2020.

To address national and international concerns pertaining to the protection, conservation and enhancement of the natural environment we live in. Table Of Contents

004 About Us PNHB Structure Notice Of Annual General Meeting 016 044 Executive Chairman’s Corporate Structure 006 Message Appendix 1 - 045 Proposed Amendments 025 Organisation Structure - To The Articles Of About This Report PNSB Association Of The Company 026 046 011 Corporate Profi le Organisation Structure - SYABAS Statement Accompanying 028 The Notice Of Annual Corporate Information 048 General Meeting Organisation Structure - 012 031 POG PNHB Fact Sheet 2011 Key Highlights 049 034 Organisation Structure - Our Role In The GOM Resources Water Supply System 035 Milestones Leadership 038 Water News 052 Board Of Directors’ Profi le 040 Corporate Achievements 063 Board Of Directors 064 Key Personnel Profi le - PNSB 070 Key Personnel Profi le - SYABAS 081 Key Personnel Profi le - Sino Water Pte Ltd 082 Key Personnel Profi le - POG 084 Key Personnel Profi le - GOM Resources Performance Corporate 209 Review Responsibilities Statement Of Directors’ Responsibility 086 132 For Preparation Of Five-Year Financial Highlights Valuing Our People Financial Statements 087 152 Five-Year Group Performance Preserving Our Environment Financial Statements 088 167 Share Price & Volume Traded Engagement With 212 Our Community Financial Statements 089 Financial Calendar 175 Corporate Events

Other Information Operations Accountability 381 Review Distribution Schedule 178 Of Equity Securities 092 Corporate Disclosure Policy 385 Operations Review 179 Puncak Niaga (M) Sdn Bhd List Of Properties Statement On 097 Corporate Governance 387 Operations Review 193 GRI Index Syarikat Bekalan Statement On Internal Control Air Selangor Sdn Bhd 195 105 Proxy Form Audit Committee Report Operations Review Puncak Oil & Gas Sdn Bhd 201 Corporate Directory GOM Resources Sdn Bhd Risk Management (formerly known as Policy & Report Global Offshore Malaysia Sdn Bhd) 204 Investor Relations 107 Policy & Report Business Expansion 206 110 Quality Policy & Report Delivering Service Excellence 207 117 Health, Safety And Delivering Quality Environmental Policy 208 SYABAS’ Corporate Responsibility Policy Annual Report 2011 Puncak Niaga Holdings Berhad

Notice Of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Fifteenth Annual General the issued share capital of the Company for the time being Meeting of Puncak Niaga Holdings Berhad (416087-U) will AND THAT the Directors of the Company be and are hereby be held at Concorde I, Concorde Hotel Shah Alam, Level 2, also empowered to obtain the approval for the listing of No. 3, Jalan Tengku Ampuan Zabedah C9/C, 40100 Shah Alam, and quotation for the additional shares so issued on Bursa Selangor Darul Ehsan on Tuesday, 26 June 2012 at 10.00 a.m. Malaysia Securities Berhad AND FURTHER THAT such for the following purposes: - authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.” 1. To receive the Audited Financial Statements of the Resolution 6 Group and of the Company for the ﬁ nancial year ended 31 December 2011 together with the Reports of the 5. Special Resolution Directors and Auditors thereon. Resolution 1 Proposed Amendments To The Articles Of Association Of The Company 2. To re-elect the following Directors of the Company who retire by rotation pursuant to Article 98 of the Company’s “THAT the proposed amendments to the Articles of Articles of Association: - Association of the Company as set out in Appendix I (“Proposed Amendments To The Articles Of Association (a) YBhg Dato’ Hashim Bin Mahfar Resolution 2 Of The Company”) of the Annual Report 2011 (“Proposed Articles Amendments”) be and are hereby approved (b) YBhg Dato’ Ir Lee Miang Koi Resolution 3 and adopted AND THAT the Directors and Secretaries of the Company be and are hereby authorised to execute (c) Mr Ng Wah Tar Resolution 4 all relevant documents and to do all acts and things as deemed necessary to give full effect to the Proposed 3. To re-appoint Messrs Ernst & Young as the Auditors of the Articles Amendments.” Company and to authorise the Directors of the Company Resolution 7 to ﬁ x their remuneration. Resolution 5 6. To transact any other ordinary business of which due notice AS SPECIAL BUSINESS shall have been given.

To consider and, if thought ﬁ t, to pass the following Ordinary Resolution and Special Resolution: - BY ORDER OF THE BOARD 4. Ordinary Resolution

Allotment Of Shares Pursuant To Section 132D Of The Companies Act, 1965 TAN BEE LIAN (MAICSA 7006285) “THAT subject always to the Companies Act, 1965, LIM YEW HEANG (MAICSA 7007653) the Articles of Association of the Company and the approvals Secretaries of the relevant governmental/regulatory authorities, the Directors of the Company be and are hereby empowered, Shah Alam pursuant to Section 132D of the Companies Act, 1965, 4 June 2012 to issue and allot 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 ﬁ t provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten per centum (10%) of

004 Annual Report 2011 Puncak Niaga Holdings Berhad

Notice Of Annual General Meeting

Notes: - 6. Any corporation which is a member of the Company may by resolution of its Directors or other governing body authorise such person as 1. In respect of deposited securities, only members whose names it thinks fi t to act as its representative at the Meeting in accordance appear in the Record of Depositors on 18 June 2012 (General Meeting with Article 82 of the Company’s Articles of Association. Record of Depositors) shall be entitled to attend, speak and vote at this Fifteenth Annual General Meeting. 7. The instrument appointing the proxy must be deposited at the Offi ce of the Company’s Share Registrar, Tricor Investor Services Sdn Bhd at 2. A member entitled to attend and vote at the Meeting is entitled to Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed appoint another person to attend and vote in his stead. Putra, 59200 Kuala Lumpur not less than 48 hours before the time set for holding the Meeting or any adjournment thereof. 3. A proxy need not be a Member of the Company and the provision of Section 149(1)(b) of the Act shall not apply to the Company. There shall 8. Explanatory Notes And Statement Of Effect For Special Business: - be no restriction as to the qualifi cation of the proxy. Resolution 6 – Ordinary Resolution : Allotment Of Shares Pursuant To 4. A Member shall not be entitled to appoint more than two (2) proxies to Section 132D Of The Companies Act, 1965 attend and vote at the Meeting provided that, The Ordinary Resolution proposed under Agenda 4 of the Notice of this (a) where a Member is an authorised nominee as defi ned in the Fifteenth Annual General Meeting dated 4 June 2012 is for the purpose Central Depositories Act, it may appoint up to two (2) proxies in of seeking a renewal of the general mandate to empower the Directors respect of each Securities Account it holds with ordinary shares of the Company pursuant to Section 132D of the Companies Act, 1965, of the Company standing to the credit of the said Securities from the date of the above Meeting, to issue and allot ordinary shares Account. from the unissued share capital of the Company for such purposes as the Directors of the Company consider would be in the interest of the (b) where a Member is an exempt authorised nominee which holds Company. This authority will, unless revoked or varied at a General ordinary shares in the Company for multiple benefi cial owners Meeting, expire at the next Annual General Meeting of the Company. in one securities account namely, Omnibus Securities Account, there is no limit to the number of proxies which the exempt This authority will provide fl exibility to the Company for allotment authorised nominee may appoint in respect of each Omnibus of shares for any possible fund raising activities, including but not Securities Account it holds with ordinary shares of the Company limited to placement of shares, funding future investment(s) and/or standing to the credit of the said Omnibus Securities Account. working capital.

Where a Member appoints two (2) or more proxies (as the case maybe), As at the date of this Notice, the Company did not implement its the appointments shall be invalid unless he specifi es the proportions proposal for new allotment of shares under the general mandate of his holdings to be represented by each proxy. pursuant to Section 132D of the Companies Act, 1965 as granted at the Fourteenth Annual General Meeting of the Company held on 5. The instrument appointing a proxy shall be in writing under the hand of 27 June 2011. 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 offi cer or attorney duly appointed under a power Resolution 7 – Special Resolution: Proposed Amendments To The of attorney. If this Proxy Form is signed under the hand of an offi cer Articles of Association Of The Company duly authorised, it should be accompanied by a statement reading “signed as authorised offi cer under an Authorisation Document which The Special Resolution proposed under Agenda 5 of the Notice of is still in force, no notice of revocation having been received”. If this this Fifteenth Annual General Meeting dated 4 June 2012 is for the Proxy Form is signed under the attorney duly appointed under a power purpose of seeking the shareholders’ approval for amendments to the of attorney, it should be accompanied by a statement reading “signed Company’s Articles of Association following Bursa Malaysia Securities under a power of attorney which is still in force, no notice of revocation Berhad Main Market Listing Requirements’ amendments in relation having been received”. A copy of the Authorisation Document or the to Disclosure and Other Obligations pursuant to Bursa Malaysia power of attorney, which should be valid in accordance with the laws Berhad’s letter dated 22 September 2011. of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form. The amendments to the Company’s Articles of Association namely, appointment of multiple proxies by exempt authorised nominee, no restriction on proxy’s qualifi cation and according proxies same rights as members to speak at general meeting are aimed at providing greater clarity and certainty to the market.

005 Annual Report 2011 Puncak Niaga Holdings Berhad

Appendix I

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

The details of the Proposed Amendments to the Articles of Association of the Company are as follows :-

To amend the following existing Article 2 and existing Article 77 of the Articles of Association of the Company and to incorporate the following new Article 76A and new Article 77A immediately after the existing Article 76 and existing Article 77, respectively:-

EXISTING ARTICLE PROPOSED ARTICLE

Article 2 Article 2 Interpretation clause Interpretation clause

In these Articles, the words standing in the ﬁ rst column of the In these Articles, the words standing in the ﬁ rst column of the table next hereinafter contained shall bear the meanings set table next hereinafter contained shall bear the meanings set opposite to them respectively in the second column thereof, opposite to them respectively in the second column thereof, if if not inconsistent with the subject or context :- not inconsistent with the subject or context :-

WORDS MEANINGS WORDS MEANINGS

The Act The Companies Act, 1965 and every The Act The Companies Act, 1965 and every other Act for the time being in force other Act for the time being in force concerning companies and affecting the concerning companies and affecting the Company. Company.

The Company Puncak Niaga Holdings Berhad or such The Company Puncak Niaga Holdings Berhad or such other name to which it may be changed other name to which it may be changed from time to time. from time to time.

These Articles These Articles of Association as These Articles These Articles of Association as originally framed and adopted or as originally framed and adopted or as altered from time to time by Special altered from time to time by Special Resolution. Resolution.

The Directors The Directors for the time being of the The Directors The Directors for the time being of the Company. Company.

The Offi ce The Registered Offi ce for the time being The Offi ce The Registered Offi ce for the time being of the Company. of the Company.

The Seal The Common Seal of the Company. The Seal The Common Seal of the Company.

The Secretary Any person appointed by the Directors The Secretary Any person appointed by the Directors to perform any of the duties of the to perform any of the duties of the Secretary of the Company and includes Secretary of the Company and includes any person appointed temporarily or as any person appointed temporarily or as an assistant secretary. an assistant secretary.

Central Bursa Malaysia Depository Sdn Bhd. Central Bursa Malaysia Depository Sdn Bhd. Depository Depository 006 Annual Report 2011 Puncak Niaga Holdings Berhad

Appendix I

EXISTING ARTICLE PROPOSED ARTICLE

WORDS MEANINGS WORDS MEANINGS

Central The Securities Industry (Central Central The Securities Industry (Central Depositories Act Depositories) Act 1991. Depositories Act Depositories) Act 1991.

Depositor A holder of a securities account Depositor A holder of a securities account established by the Central Depository. established by the Central Depository.

Record of A record provided by Central Record of A record provided by Central Depositors Depository to the Company under Depositors Depository to the Company under Chapter 24.0 of the Rules. Chapter 24.0 of the Rules.

Deposited A security standing to the credit of a Deposited A security standing to the credit of Security securities account and includes Security a securities account and includes securities in a securities account that is securities in a securities account that is in suspense. in suspense.

Exchange Bursa Malaysia Securities Berhad. Exchange Bursa Malaysia Securities Berhad.

Listing The Listing Requirements of the Listing The Listing Requirements of the Requirements Exchange or Rules including any Requirements Exchange or Rules including any amendment to the Listing Requirements amendment to the Listing Requirements that may be made from time to time and that may be made from time to time and such practice notes or circulars as may such practice notes or circulars as may be issued by the Exchange from time be issued by the Exchange from time to time. to time.

Group The Company together with its Group The Company together with its subsidiaries and associate companies subsidiaries and associate companies in which the Company hold 20% or more in which the Company hold 20% or more of the issued capital. of the issued capital.

Member A Depositor who shall be treated as if Member A Depositor who shall be treated as if he were a member pursuant to Section he were a member pursuant to Section 35 of the Central Depositories Act but 35 of the Central Depositories Act but excludes the Central Depository in its excludes the Central Depository in its capacity as a bare trustee member. capacity as a bare trustee member.

Rules The Rules of the Central Depository and Rules The Rules of the Central Depository and shall have the meaning given in Section shall have the meaning given in Section 2 of the Central Depositories Act. 2 of the Central Depositories Act.

Trading Days A day on which the stock market of Trading Days A day on which the stock market of the Exchange is open for trading in the Exchange is open for trading in securities. securities.

007 Annual Report 2011 Puncak Niaga Holdings Berhad

Appendix I

EXISTING ARTICLE PROPOSED ARTICLE

WORDS MEANINGS WORDS MEANINGS

Securities An account established by a central Securities An account established by a central Account depository for a depositor for the Account depository for a depositor for the recording of deposit or withdrawal recording of deposit or withdrawal of securities and for dealing in such of securities and for dealing in such securities by the depositor. securities by the depositor.

Jumbo same meaning as is assigned to that Jumbo same meaning as is assigned to that Certificate expression under the Central Certificate expression under the Central Depositories Act. Depositories Act.

None None Authorised As deﬁ ned in the Central Depositories nominee Act.

None None Exempt An authorised nominee as deﬁ ned in the authorised Central Depositories Act which is nominee exempted from compliance with the provisions of subsection 25A(1) of the Central Depositories Act.

None None Omnibus A securities account held by an exempt Securities authorised nominee for multiple Account beneﬁ cial owners.

Writing shall include printing and lithograph and any other Writing shall include printing and lithograph and any other mode or modes of representing or reproducing words in a mode or modes of representing or reproducing words in a visible form. visible form.

Words importing the singular number only shall include the Words importing the singular number only shall include the plural number and vice versa. plural number and vice versa.

Words importing the masculine gender only shall include the Words importing the masculine gender only shall include the feminine; and feminine; and

Words importing persons shall include corporations and Words importing persons shall include corporations and companies. companies.

Subject as aforesaid, any words or expressions deﬁ ned in the Subject as aforesaid, any words or expressions deﬁ ned in the Act shall, except where the subject or context forbids, bear Act shall, except where the subject or context forbids, bear the same meanings as in these Articles. the same meanings as in these Articles.

008 Annual Report 2011 Puncak Niaga Holdings Berhad

Appendix I

EXISTING ARTICLE PROPOSED ARTICLE

Article 76A Article 76A Rights of Proxies

None A member of the Company entitled to attend and vote at a meeting of a General Meeting of the Company, or at a meeting of any class of members of the company, shall be entitled to appoint any person as his proxy to attend and vote at the General Meeting. A proxy appointed to attend and vote at a General Meeting shall have the same rights as the member to speak at the General Meeting.

Article 77 Article 77 Proxy need not be a member Proxy need not be a member

A proxy need not be a Member of the Company and the A proxy need not be a Member of the Company and the provision of Section 149(1)(b) of the Act shall not apply to provision of Section 149(1)(b) of the Act shall not apply to the the Company. A Member shall not be entitled to appoint Company. There shall be no restriction as to the qualifi cation more than two (2) proxies to attend and vote at the Meeting of the proxy. provided that where a Member is an authorised nominee as defi ned in the Central Depositories Act, 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 specifi es the proportions of his holdings to be represented by each proxy.

009 Annual Report 2011 Puncak Niaga Holdings Berhad

Appendix I

EXISTING ARTICLE PROPOSED ARTICLE

Article 77A Article 77A Appointment Of Proxy

None A Member shall not be entitled to appoint more than two (2) proxies to attend and vote at the Meeting provided that,

(a) where a Member is an authorised nominee as deﬁ ned in the Central Depositories Act, 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.

(b) where a Member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneﬁ cial owners in one securities account namely, Omnibus Securities Account, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Securities Account it holds with ordinary shares of the Company standing to the credit of the said Omnibus Securities Account.

Where a Member appoints two (2) or more proxies (as the case may be), the appointments shall be invalid unless he speciﬁ es the proportions of his holdings to be represented by each proxy.

010 Annual Report 2011 Puncak Niaga Holdings Berhad

Statement Accompanying The Notice Of Annual General Meeting

DETAILS OF DIRECTORS STANDING FOR RE-ELECTION AT THE FIFTEENTH ANNUAL GENERAL MEETING:-

Name of Retiring Director Dato’ Hashim Bin Mahfar Dato’ Ir Lee Miang Koi Mr Ng Wah Tar

Age 52 58 48

Nationality Malaysian Malaysian Malaysian

Qualiﬁ cation Institute of Chartered Masters Degree Certiﬁ ed Public Secretaries And in Environmental Accountant, Administrators (UK) Engineering Australia

Position In PNHB Managing Director Non-Independent Executive Director, Non-Executive Director Corporate Finance Division

Working Experience For details of YBhg For details of YBhg For details of & Occupation Dato’ Hashim Mahfar’s Dato’ Ir Lee Miang Koi’s Mr Ng Wah Tar’s profi le, please refer profi le, please refer profi le, please refer to his profi le on page 054 to his profi le on page 056 to his profi le on page 062 of the Annual Report of the Annual Report of the Annual Report

Directorships None None None in other public companies

Equity securities None Please refer to None interests in PNHB page 384 of the and its subsidiaries Annual Report

Family relationship None None None with any director and/or major shareholder of PNHB

Any conﬂ ict of None None None interests with PNHB

List of convictions None None None for offences (other than trafﬁ c offences, if any) within the past 10 years

011 Annual Report 2011 Puncak Niaga Holdings Berhad

2011 Key Highlights

We operate, manage and maintain 29 WTPs with a combined capacity of 1,930 million litres per day.

The Group expanded its horizons in the Oil & Gas sector in 2011.

In 2011, Our WTPs All our Our achieved an 29 WTPs impressive WTPs delivered combined capacity of 99.9% performed 703.48 million compliance well. cubic metres of treated water. with treated water quality standards. Complaints We We received to be achieved distributed a acknowledged a Collection daily average of within Efficiency of 4,143 30 99.9%. MLD minutes of treated and we achieved water to about 99.23%. 7.5 million consumers.

012 Annual Report 2011 Puncak Niaga Holdings Berhad

Puncak Values

Our Company’s values, the PUNCAK VALUES shape our organisational culture and guide the way we run our business. They are integrated into our business processes and our core values.

At PUNCAK, we are and continuously seek to be:

Passionate about our business for sustainable performance.

United as one in our corporate responsibility strategy to align with our Vision to be the Leading Regional Integrated Water, Wastewater And Environmental Solutions Provider And To Emerge As A Signiﬁ cant Player In The Oil & Gas Sector.

Nurture our human capital towards an exemplary workforce.

Corporate Governance guides the way we run our business in an evolving global business environment.

Accountable for all our actions and engagement process with our stakeholders.

Knowledgeable in all aspects of our business operations and continue to be the trusted and reliable provider of clean water supply.

013 Annual Report 2011 Puncak Niaga Holdings Berhad

014 Annual Report 2011 Puncak Niaga Holdings Berhad

Enhancing Performance

2011 saw our water business achieve or exceed every one of its Key Performance Indicators. To meet increasing consumer demand, PNSB’s Water Treatment Plants increased the production of treated water by some 1.63%, while SYABAS continued to maintain and enhance the water distribution system and to provide efﬁ cient customer service.

The Oil and Gas division contributed to 11.17% of the Group’s revenue whilst Construction contributed 12.01% of the Group’s revenue.

015 Annual Report 2011 Puncak Niaga Holdings Berhad

Executive Chairman’s Message

YBHGYBHG TAN SRI ROZALI ISMAIL EXECUTIVEEXECUTIVE CHAIRMAN OF PNHB GROUP

Dear valuedvalued Shareholders and Stakeholders,

20201111 proprovedve to be yet another exceptionally challenging year for Puncak Niaga Holdings BerhadB (“PNHB”) and the Group (“PNHB Group” or the “Group”) as we continue toto deliver ourselves in not only the water sector, but also in the Oil & Gas andand constructionconstru sectors in our continuous efforts to enhance shareholder value.

Despite ththe challenging circumstances, I am proud to record that the Group onceonce agaagainin excelled in our Key Performance Indicators (“KPIs”), conserving the environment,environmen fulﬁ lling our commitments to our stakeholders as a responsible water servicesservices pprovider,r and achieving sustainable growth. During the year, the Group also undertookundertook severals water related projects in the construction sector.

016 Annual Report 2011 Puncak Niaga Holdings Berhad

Executive Chairman’s Message

Effective 1 January 2011, the Group adopted BACKGROUND the IC Interpretation 12 (Service Concession Arrangements) (“IC Interpretation 12”) in In 2011, the global economy again faced a accordance with the Financial Reporting diffi cult environment. Although disruptions to Standard requirements. Although the Group the global supply chain caused by the natural reported a net loss of RM83.72 million disasters in Japan lessened considerably, (audited) for the fi nancial year ended new challenges emerged including the 31 December 2011 following the adoption of still-unfolding euro zone debt crisis. Despite IC Interpretation 12 which also resulted in this, towards the year end, global economic a substantial decrease in the shareholders’ activity still managed to expand, albeit at a equity (as of 31 March 2011, the shareholders’ more modest and uneven pace. equity was RM35.6 million), the Group’s business viability and cash fl ow profi le remain The growth of most Asian economies remained unchanged. However, as at 31 December 2011, resilient in the face of the global economic the Group’s shareholders’ equity was RM107.1 turmoil even as regional exports were million and had exceeded the benchmark sustained by demand both from within the shareholders’ equity of RM40.0 million region and from other emerging economies. and accordingly, no longer fall under the In addition, regionwide, domestic demand was Practice Note 17 (Criteria and Obligations robust while private consumption was driven of PN17 Companies) (“PN17”) criteria of by a combination of rising wages and strong On the Main Market Listing Requirements of labour markets. 28 September 2011 Bursa Malaysia Securities Berhad (“Bursa the Group, Securities”). At the home front, the Malaysian economy via PNHB’s wholly successfully met the various challenges owned subsidiary, On 28 September 2011 the Group, via PNHB’s posed by ongoing problems in global fi nancial Puncak Oil & Gas wholly owned subsidiary, Puncak Oil & Gas markets, an unfavourable fi scal environment Sdn Bhd, expanded Sdn Bhd, expanded its horizons in the Oil & Gas and weak labour market conditions in the sector with the acquisitions of GOM Resources advanced economies. Healthy domestic its horizons in the Sdn Bhd (formerly known as Global Offshore demand was spurred by increased household Oil & Gas sector. Malaysia Sdn Bhd) (“GOM Resources”) and and business spending as well as higher public KGL Ltd (“KGL”), respectively. sector expenditure, while regional demand led to an improvement in the external sector. As always, the outstanding loyalty, dedication, commitment, sense of responsibility and effort (Source: Bank Negara Malaysia Quarterly Bulletin, Third Quarter 2011.) of our Management and workforce despite the various challenging issues, coupled with their Against this backdrop, on behalf of the Board unwavering commitment to delivering the of Directors of PNHB, I am pleased to present highest level of service to the consumers, has the Annual Report and the Audited Financial enabled the Group to maintain the quality of Statements of the Company and Group for the water supply throughout 2011 and expanded fi nancial year ended 31 December 2011. its horizons beyond the water sector.

All this is aptly embodied by the theme for our Annual Report 2011, “Expanding Horizons”.

017 Annual Report 2011 Puncak Niaga Holdings Berhad

Executive Chairman’s Message

CHALLENGES the ever-increasing demand for treated water in the nation’s most populous area The uncertainty in the water services sector and the fast-growing probability of a water in Selangor and the Federal Territories of shortage. The water shortage situation will be Kuala Lumpur and Putrajaya, ongoing since further aggravated unless additional interim 2008, remains unresolved with no decisive measures are put in place by the Government action taken in the protracted restructuring immediately to alleviate the impending water of the water services sector in Selangor and crisis prior to the completion of the new the Federal Territories of Kuala Lumpur and Langat 2 Water Treatment Plant (“WTP”), Putrajaya (“Proposed Restructuring”) by the where its completion date is uncertain. Government. Further to these ongoing challenges, the At the same time, neither the water tariff adoption of IC Interpretation 12 by the Group adjustment for the third operating period for the fi nancial statements for the fi nancial commencing 1 January 2009 and ended year ended 31 December 2011 has resulted 31 December 2011 nor the compensation in in the Group reporting a net loss of RM83.72 lieu thereof by the Selangor State Government million (audited) for the fi nancial year ended to Syarikat Bekalan Air Selangor Sdn Bhd 31 December 2011. An explanation of the (“SYABAS”) under the Concession Agreement accounting treatment of IC Interpretation 12 dated 15 December 2004 signed between and its effects are set out under the heading SYABAS, the Federal Government and the “Financial Performance” of this Executive Selangor State Government (“Concession Chairman’s Message. Agreement”), was forthcoming as the matter was referred to the court for decision. Although the adoption of IC Interpretation 12 Inevitably, this culminated in acute cash fl ow does not affect the Group’s business viability problems for SYABAS resulting in its inability and the cash fl ow profi le of the Group, it to make full payment for water purchases from nevertheless triggered the equity criteria the three water treatment operators, namely under PN 17 in the fi rst quarter ended Konsortium ABASS Sdn Bhd (“Konsortium 31 March 2011. As previously announced on ABASS”), Syarikat Pengeluar Air Sungai 31 May 2011, the Company had obtained a Selangor Sdn Bhd (“SPLASH”) and Puncak PN 17 conditional waiver from Bursa Securities Niaga (M) Sdn Bhd (“PNSB”). from being categorised as an Affected Listed Issuer under PN 17 until the release of Meanwhile, the Government’s decision to its quarterly results for the period ending freeze the SYABAS Capital Expenditure 30 June 2012 on or before 31 August 2012. (“CAPEX”) programme in July 2008 pending The Group had however, self-regularised its the protracted Proposed Restructuring, position since 30 September 2011. remains in force, with the exception of some very critical works for which limited funding On the rating of the Group’s debts which was made available. The protracted Proposed fell below the minimum rating under their Restructuring has also adversely affected our respective trust deeds, which arose from position to drawdown from other sources of Malaysian Rating Corporation Berhad’s funding to fi nance our CAPEX Programme. (“MARC”) various rating actions on the This has in effect crippled our plans to Selangor water sector bonds including refurbish, rehabilitate and enhance water the rating actions against the bonds of the distribution infrastructure in Selangor and Company, PNSB and SYABAS respectively on the Federal Territories of Kuala Lumpur and 6 April 2011, waivers were obtained from the Putrajaya and is especially worrying given respective bondholders for declaration of Event 018 Annual Report 2011 Puncak Niaga Holdings Berhad

Executive Chairman’s Message

of Default and also waiver on minimum rating FINANCIAL PERFORMANCE requirements for Redeemable Unsecured Bonds (“RUBs”) and Bithaman Ajil Islamic With effect from 1 January 2011, PNHB Debt Securities (“BaIDS”) at the respective adopted IC Interpretation 12 as required bondholders’ meetings held in 2011. by the Financial Accounting Standards. IC Interpretation 12 applies to service concession Subsequently, as part of the Federal operators and explains how to account for Government’s efforts to protect the stability obligations undertaken and rights received and integrity of the nation’s bond market, in the in service concession arrangements. As a second half of 2011, Pengurusan Aset Air Bhd result, PNHB’s consolidated shareholders’ (“PAAB”) via their wholly owned subsidiary equity decreased substantially from RM1,501.4 company, Acqua SPV Bhd (“Acqua”), acquired million as at 31 December 2010 to RM35.6 all the bonds from the Group. million as at 31 March 2011.

On 1 November 2011, PNHB entered into a The primary reason for the shareholders’ conditional Sale & Purchase Agreement with equity decrease is that the new accounting Acqua and PNSB to sell its entire holdings treatment under IC Interpretation 12 requires of PNSB Redeemable Unsecured Coupon the entire present value of the Annual Charges, Bearing Notes (“PNSB JNA Notes”) to Acqua Land Use Charges, and Fixed Capacity for a total consideration of RM328.1 million. Charges payable by SYABAS to the Selangor The sale was completed on 18 November 2011. State Government and the water treatment On the same date, the Company concurrently operators, be capitalised as intangible assets completed the Put and Call Option Exercises and subject to amortisation. A corresponding of the Company’s RM546,875,000.00 Nominal amount is credited as a concession liability and Value of 15-Year Redeemable Unconvertible subjected to notional interest which is charged Notes (“Notes”) pursuant to the Trust Deed to the income statement. The application of dated 5 September 2001 Constituting The these adjustments also resulted in higher Notes. Accordingly, the Company’s Notes water purchasing cost being allocated to the were withdrawn from the Offi cial List of Bursa income statement. Securities on 21 November 2011. With this, for the fi nancial year ended The legal suits in relation to Konsortium 31 December 2011, the Group registered ABASS, SPLASH and the Selangor State a loss after taxation of RM83.72 million Government are still ongoing. The amount (audited), despite recording a 25.7% of water tariff compensation claimed in increase in revenue to RM2.59 billion from the suit by SYABAS against the Selangor RM2.06 billion (Restated) in 2010. The State Government has, since the previous increase in revenue was due to higher water Annual Report, increased from RM471.6 consumption, higher construction revenue million (for the period from 1 January 2009 to and contribution from the Oil & Gas division. 31 December 2009) to RM1,054.2 million for the The net loss after taxation is mainly due to period from 1 January 2009 to 31 March 2011 a higher operating cost as a result of the under the terms of the Concession Agreement. increase in the water purchasing cost allocated to the income statement, combined with the As the Group expands into the Oil & Gas and higher fi nance cost of the notional interest the construction sectors, we aim to ensure arising from the notional concession liabilities delivery of sustainable or improved results for mentioned above. the Group.

019 Annual Report 2011 Puncak Niaga Holdings Berhad

Executive Chairman’s Message

Despite the loss and as mentioned earlier, the CORPORATE DEVELOPMENTS Group’s business operations and cash ﬂ ow are not affected as the new accounting treatment Entry Into Oil & Gas Sector does not result in additional utilisation of cash resources. In 2010, the Group expanded its horizon to include the Oil & Gas sector in the Group’s Dividend business plans.

Given the need for the Group to conserve In line with this vision, on 23 May 2011, its fi nancial resources under the current PNHB’s wholly owned subsidiary, Puncak circumstances as highlighted above, the Oil & Gas Sdn Bhd (“POG”) entered into two Board of Directors does not recommend any separate Sale & Purchase Agreements with fi nal dividend for the fi nancial year ended Global International Vessels Ltd (“GIVL”) for 31 December 2011. the acquisition of 40% equity interest in GOM Resources and KGL respectively, which were ACHIEVEMENTS completed on 30 June 2011. The acquisitions of the remaining 60% equity interest in GOM As in previous years, the challenges we face Resources and KGL were completed on have spurred our determination to fulfi l our 28 September 2011, making both GOM stakeholder commitments and in particular Resources and KGL wholly-owned subsidiaries to ensure that consumers continue to get the of POG. best services. Thus, in spite of the challenges mentioned above, the Group exceeded all of GOM Resources is involved in the business the KPIs set with the exception of reduction in of construction and subsea services and Non Revenue Water (“NRW”) which was marine support services to the offshore affected by the protracted SYABAS CAPEX freeze. Oil & Gas industry in Malaysia whilst KGL is the registered and benefi cial owner of the We continued to deliver not only the supply of pipelaying barge “DLB 264”. high quality water but consistently outstanding standard of customer service. Within our The acquisitions of GOM Resources and KGL fi nancial resources constraint, we prioritised provide a platform for PNHB’s entry into the Oil critical works and strategic programmes and & Gas industry, which the Group has identifi ed pushed ahead with our efforts and investment as a sector in which it intends to strengthen its in Research and Development (“R&D”) and presence over the next few years. Information and Communication Technology (“ICT”) – thereby continuing to enhance the Details of the business activities of GOM cost-effectiveness of our operations. Resources and KGL are given on pages 105 and 106 of this Annual Report. PNSB has consistently adhered to the Integrated Management System covering ISO Water Related Construction Projects 9001 (Quality Management System), ISO 14001 (Environment) and OHSAS 18001 (Safety) Over the years, PNHB Group has amassed a Management Systems in the water treatment formidable amount of water related expertise operations. which has enabled us to set our sights on a variety of water and water-related construction projects.

020 Annual Report 2011 Puncak Niaga Holdings Berhad

Executive Chairman’s Message

A 40:60 unincorporated joint-venture between Although we do not have any current projects PNHB and Quality Concrete Holdings Bhd in India, we have qualifi ed for several large (“Konsortium Puncak Niaga Holdings Bhd – water projects which are pending decision on Quality Concrete”) is currently undertaking a award to the successful bidders/tenderers contract for a Rural Water Supply Project in from the respective clients, while in China Sarawak from 2010 to 2012 for the Government our construction works of two projects have of Malaysia. completed and currently pending Testing and Commissioning. In both countries, competition Undertaken for the Rural and Regional is keen, and it is vital to have the right business Development Ministry, the project involves partners and good strategic plan with the supply, construction and commissioning appropriate risk assessments. of water supply facilities to rural areas in Sarawak and is due to be completed by Though the economies of Indochina, A 40:60 31 December 2012. The contract, worth specifi cally Cambodia and Vietnam, are unincorporated RM667.32 million, is expected to contribute relatively young, rapid national development joint-venture positively to the earnings and net asset per presents us with major potential opportunities between PNHB and share of the Group for the fi nancial year ended in these countries, and we hope to be able to Quality Concrete 31 December 2011. benefi t from these opportunities. Holdings Bhd (“Konsortium Additionally, the Group is also exploring the CORPORATE & ENVIRONMENTAL SOCIAL opportunities of designing, constructing and Puncak Niaga RESPONSIBILITY operating other water-related facilities within Holdings Bhd – the country and abroad. Corporate Social Responsibility (“CSR”) Quality Concrete”) is integral to the Group’s overall business is currently Overseas Expansion strategy, underpinning the responsible and undertaking a sustainable delivery of our key business contract for a Rural In 2011, PNHB continued to explore the drivers. We believe that the integration of Water Supply potential for overseas expansion, focusing CSR across the Group and the inclusion of mainly on China, India, Indonesia, Cambodia Project in Sarawak broader social and environmental issues into and Vietnam, where there is a massive and from 2010 to 2012 our decision-making will help us achieve our urgent need for sustainable development and for the Government effi cient management of water and wastewater business goals. CSR acts as a building block of Malaysia. resources. for shareholder value creation and benefi ts the communities in our areas of operations. For this reason, the Group expanded its operations overseas, setting up a wholly owned PNHB believes that everyone deserves access subsidiary in India and a Representative Offi ce to clean water. We are committed to delivering in Vietnam in 2011. outstanding quality and a reliable service at an affordable price. Our R&D team continues The Group is continuing to bid for potential to evaluate the best possible water treatment water and water related projects in India processes and water distribution operations together with strategic partners, and likewise to deliver high water quality to the public. in other countries. In 2012, the Group will CSR is embedded into each stage of our water continue its business development efforts service delivery process to ensure that they to clinch potential water and water-related are economically, environmentally and socially business via Government-to-Government sustainable. arrangements and joint ventures with reliable local partners. Our expertise and experience in the water and water-related sector make us a strong contender in bids overseas. 021 Annual Report 2011 Puncak Niaga Holdings Berhad

Executive Chairman’s Message

2011 marked an active year at PNHB. Various CORPORATE GOVERNANCE CSR activities were introduced during the year to focus on community development, PNHB Group is profoundly aware of its environmental conservation, workplace responsibility to implement and abide by best talent management and development, quality practice and the principles of good corporate improvement and sustainable marketplace governance throughout its operations. practices. We reached out to all our Accordingly, we are totally committed to stakeholders in these activities including our demonstrating transparency, integrity and customers, media partners, shareholders, accountability in everything we do. We are Government agencies, our people and the equally dedicated not only to maintaining the consumers. I am pleased to see an increasing highest ethical standards but also to achieving number of employees volunteering for our CSR sustainability both in our operations and in our activities such as the “Misi Bantuan Bekalan impact on the environment for the benefi ts of Air” to Johor, Melaka and Port Dickson, active our customers, shareholders, stakeholders participation in the Regimen 60 Program and and business associates. continued contribution to the Tabung Budi Programme. This is testament to our success ACCOLADES AND ACCOMPLISHMENTS in instilling a sense of responsibility and spirit of employee volunteerism amongst our 2011 brought the Group widespread recognition employees as good corporate citizens. of its innovations, high safety standards and product and service excellence. Our focus On 8 September 2011, the Prime Minister, YAB Datuk Seri Mohd Najib Tun Haji Abdul PNSB received a total of 19 Innovative & Creative for 2012 will Razak announced plans for a Low Carbon Circle (“ICC”) Awards in 2011. At the Malaysian be increasing Cities Framework and Assessment System. Productivity Corporation (“MPC”) Mini ICC stakeholder value This system aims to propel Malaysia towards a 2011 held on 26 April 2011, fi ve of our teams as we believe that low carbon economy and achieve a 40% carbon won three Gold Awards and two Silver Awards. it is an integral part dioxide reduction by 2020. Work commenced At the MPC Regional Conventions 2011 held of running our on our Carbon Management Plan during 2009, on 27 to 28 June 2011, 20 to 21 July 2011 and business which can when we fi rst reported our Greenhouse Gas 25 to 26 July 2011, six of our teams received greatly affect the (“GHG”), adhering to the World Resources four Gold Awards and two Silver Awards, and Group’s success. Institute GHG Protocol. In 2011, we continued two teams achieved 3 Gold Star Awards and to identify links between GHG emissions one team achieved 2 Gold Star Award from the and the provision, usage and treatment of MPC National ICC Convention 2011 held on water including the widespread introduction 19 to 20 October 2011. At the International ICC of water effi ciency measures, water quality Conference Quality Creative Circle 2011 held in enhancement and management of our water Yokohama, Japan from 11 to 15 September 2011 footprint. our Tag Team succeeded in garnering the prestigious Excellent Award for its cost-cutting Our focus for 2012 will be increasing and innovative project, namely ‘Unstable micro stakeholder value as we believe that it is an sand in the Actifl o process’. integral part of running our business which can greatly affect the Group’s success. Our CSR On 22 July 2011, the Malaysian Society for efforts place emphasis on risk management Occupational Safety & Health (“MSOSH”) gave and operational effi ciencies to provide value recognition to the operational calibre of fi ve added services, community development of our WTPs. The Gombak, Cheras Mile 11, and talent management. Our principal of Wangsa Maju and SSP2 WTPs won Gold sustainable innovation is key to delivering this Class I Awards, while the Rantau Panjang commitment. WTP received a Gold Class II Award. On 022 Annual Report 2011 Puncak Niaga Holdings Berhad

Executive Chairman’s Message

21 December 2011, the National Council for PROSPECTS Occupational Safety & Health (“NCOSH”) honoured the SSP2 WTP with a Gold Trophy Economic Prospects Award. With downside risks on the increase, the In 2011, SYABAS received Gold Awards for the global growth outlook remains volatile, and ten District Offi ces namely, Petaling District, the potential deepening of the fi scal crisis Hulu Langat District, Klang District, Kuala in the advanced economies could strain the Lumpur District, Kuala Langat District, Sepang international fi nancial system further. Despite District, Gombak District, Hulu Selangor this, led once again by China, Asia’s emerging District, Kuala Selangor District and Sabak economies are predicted to grow robustly in Bernam District at MSOSH OSH Award 2011. 2012, buffered by strong fundamentals, sound budgets and high reserves. On 28 June 2011, PNHB was awarded the Best Environmental Services Technology Company Bank Negara Malaysia anticipates that Award at the World Finance Technology Awards Malaysia’s Gross Domestic Product growth 2011. On 28 July 2011, PNHB was awarded the will moderate slightly to 5.0% in 2012. Masterclass Company Category Award at the Although the uncertainties in the international International Standard Quality (ISQ) Award environment will have an impact on Malaysia’s 2011. prospects, rising domestic demand is predicted to underpin and secure national On 14 September 2011, PNHB was awarded economic growth. Meanwhile, expansion in the Industry Excellence Award Water Sector private consumption and private investment at the launching ceremony of 5th Edition combined with public spending and investment Malaysia 1000 and on 4 October 2011, PNHB activity are expected to lend further support garnered a Commendation for Integrated to growth. Reporting of Annual Report at the Association of Chartered Certifi ed Accountants (ACCA) (Sources: Bank Negara Malaysia and Asian Development Malaysia Sustainability Reporting Awards Bank) Gas (MaSRA) 2011. Saving Tips Travelling at fast speed PNHB attained the Employee of Choice - Silver can consume up to 45% Award at the 11th Malaysia HR Awards 2011 more fuel. on 13 October 2011.

023 Annual Report 2011 Puncak Niaga Holdings Berhad

Executive Chairman’s Message

Group Prospects APPRECIATION

PNHB Group remains committed to supporting On behalf of the Board, I wish to end my any resolution of the Proposed Restructuring message to our shareholders and stakeholders of the water services sector that proves as I began it – with a tribute and heartfelt benefi cial to all stakeholders concerned: appreciation to our Management and staff. I the water industry players, and above all, am ever grateful for their tremendous support, the public. and I commend them unreservedly for their hard work and their unfailing commitment to At home, prospects for the Group are bright. maintaining an outstanding level of service to Whatever the outcome of the issues currently our customers and to meeting our KPIs despite facing us as a water concessionaire, we are the challenging circumstances in 2011. hopeful for a win-win resolution in the near future. We are also now making inroads into My thanks also go to our customers, investors, the water infrastructure construction sector, fi nanciers and business partners, whose which is already expanding our business not loyalty and support have once again been vital just within Malaysia but overseas. Meanwhile, to everything we achieved during the year. In our initial foray into the Oil & Gas arena has addition, I deeply appreciate the guidance and met with commendable success and augurs co-operation we received from the Federal well for the future, and we are hopeful to clinch Government and the various government more Oil & Gas projects in accordance with authorities, agencies and non-governmental our vision to become a signifi cant player in organisations. this sector. Finally, and on a personal note, I wish to Our newly formed Indian subsidiary and the express my heartfelt gratitude to my fellow Representative Offi ce in Vietnam have provided Board members and to all of the Group’s two operational bases for our international Management team, who have kept the Group expansion efforts in addition to our subsidiaries on track to achieve our vision To Be A Regional in China. With a growing presence across Asia, Water, Wastewater And Environmental we are well-positioned to capitalise on the Solutions Provider And To Emerge As A development opportunities which the region Signifi cant Player In The Oil & Gas Sector. has made available. 2012 will be another challenging year, but I am Looking ahead, the Group has the vision, the confi dent that, with full commitment from the resources and the willpower to continue in its Management team and staff and full support quest to achieve sustainable long-term growth from our shareholders and stakeholders, for the benefi t of all its stakeholders and we will continue to fulfi l our obligations by shareholders, of the environment, and of the delivering the highest levels of service to our nation as a whole. customers, protecting the environment, and contributing positively to the communities in the areas of our operations.

TAN SRI ROZALI ISMAIL Executive Chairman 26 April 2012

024 Annual Report 2011 Puncak Niaga Holdings Berhad

About This Report

THIS INTEGRATED REPORT DEMONSTRATES THE COHESION OF PUNCAK NIAGA HOLDINGS BERHAD (“PNHB”) TRIPLE BOTTOM LINE APPROACHES. THESE INCLUDE STRATEGY, GOVERNANCE AND FINANCIAL PERFORMANCE AND THE SOCIAL, ENVIRONMENTAL AND ECONOMIC CONTEXT. BY REINFORCING THESE CONNECTIONS, OUR INTEGRATED REPORTING HELPS US TO TAKE MORE SUSTAINABLE DECISIONS AND DELIVER AN ACCURATE REPRESENTATION OF OUR PERFORMANCE TO OUR STAKEHOLDERS. THE CORPORATE SOCIAL RESPONSIBILITY (“CSR”) SECTION PROVIDES DISCLOSURE OF OUR SUSTAINABILITY EFFORTS IN THE AREAS OF MARKETPLACE, WORKPLACE, COMMUNITY AND ENVIRONMENT. THROUGH THIS REPORT, WE STRIVE TO COMMUNICATE MORE EFFECTIVELY WITH OUR STAKEHOLDERS. TOGETHER WITH THE REPORT ON FINANCIAL AND OPERATIONS ASPECTS OF OUR BUSINESS ACTIVITIES, THE FULL REPORT PROVIDES A CLEAR, COMPREHENSIVE AND TRANSPARENT REPRESENTATION OF PNHB’S PERFORMANCE IN MANAGING THE ECONOMIC, SOCIAL AND ENVIRONMENTAL ASPECTS OF OPERATIONS.

This Report also presents our approaches As part of our continuous commitment to material issues and ability to sustain in delivering greater transparency on our value in the short, medium and longer term. approach to reporting, we have applied Quantitative indicators are used wherever the most recent and most comprehensive relevant for better accuracy. We ensure that sustainability reporting guidelines produced the measurements and claims in this Report by the Global Reporting Initiatives (“GRI”), are accurately collected and reported. We GRI G3.1 Guidelines, which falls under Level also ensure that the underlying methodology A application level. This latest guidelines is sound. In order to quantify the progression cover a wider range of issues on the main of our CSR sustainability milestones, the sustainability areas: economic, social and achievements in 2011 have been compared environmental. The GRI G3.1 Content Index against previous years. Certain regulatory which can be found on pages 387 to 393 of performance data contained in PNHB’s 2011 this Annual Report serves as an interactive Annual Report is subject to regulatory audit. navigation tools and reﬂ ects our disclosure on each indicator outlined by the GRI. We will continuously improve the level of disclosures in our future Reports.

This Report is available to all stakeholders in hard copy on request and can be downloaded from our corporate website.

SCOPE OF REPORTING

Reporting Period: 1 January to 31 December 2011

Coverage: PNHB Group including all of its subsidiaries, local and overseas

Date of Publication: 4 June 2012

025 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Proﬁ le

OUR COMPANY

THE PUNCAK NIAGA HOLDINGS BERHAD (“PNHB”) GROUP IS THE LEADING REGIONAL INTEGRATED WATER, WASTEWATER AND ENVIRONMENTAL SOLUTIONS PROVIDER AND AN EMERGING SIGNIFICANT PLAYER IN THE OIL & GAS SECTOR. 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, THE SUPPLY AND DISTRIBUTION OF TREATED WATER WITHIN THE STATE OF SELANGOR AND THE FEDERAL TERRITORIES OF KUALA LUMPUR AND PUTRAJAYA, UNDERTAKING WORKS RELATED TO THE OIL AND GAS INDUSTRY AND OTHER MATERIALS AND THE PROVISION OF OFFSHORE AND ONSHORE ENGINEERING WORKS AS WELL AS UNDERTAKING RESEARCH AND DEVELOPMENT AND TECHNOLOGY DEVELOPMENT FOR THE WATER, WASTEWATER AND ENVIRONMENT SECTORS.

Established on 7 January 1997, OUR CORE BUSINESS July 1998, during the water In mid 2008, PNHB Group PNHB was listed on the Main AND CAPABILITIES crisis. These early completion entered the China market Board of Bursa Malaysia of projects clearly exemplifi es via its 80% owned subsidiary, Securities Berhad (now Our subsidiary, Puncak the PNHB Group’s excellent Sino Water Pte Ltd (“SWPL”), known as the Main Market Niaga (M) Sdn Bhd (“PNSB”) capabilities in managing a company incorporated in of Bursa Malaysia Securities which holds five water and undertaking large-scale Singapore which focuses Berhad) on 8 July 1997. As at treatment concessions water supply projects in primarily on potential markets the end of 31 December 2011, with the Selangor State Malaysia. in China. PNHB had on PNHB’s market capitalisation Government, is the nation’s 15 December 2010 further stood at RM393.0 million. It is second largest water supply Under a separate concession increased its stake in the fi rst water treatment and concessionaire, operating, agreement with the Federal SWPL to 98.65%. SWPL supply concession company managing and maintaining Government and the Selangor has established various to be listed on Bursa Malaysia 29 water treatment plants State Government, our other subsidiaries in the People’s Securities Berhad under with a combined capacity subsidiary, Syarikat Bekalan Republic of China to the Infrastructure Project of 1,930 million litres per Air Selangor Sdn Bhd undertake potable water Company guidelines issued day. PNSB undertook the (“SYABAS”) supplies treated and wastewater projects in by Securities Commission. fi nance, design, construction, water to a population of 7.5 several provinces in China. operation, management million including industrial and maintenance of the and commercial users, with To facilitate PNHB Group’s Sg Selangor Phase 2 Water a total registration of 1.794 overseas expansion plans Treatment Plant with a million consumer accounts. in water and our new design capacity of 950 million SYABAS also undertakes the business sectors in the litres per day at a cost of maintenance of 26,145 km Asian countries, in mid 2010, RM1.28 billion which was of water pipes, 1,469 service PNHB formed a wholly owned completed on 1 January reservoirs, elevated water Singapore subsidiary, Puncak 2001, one year ahead of tanks and suction tanks and Niaga Overseas Capital Pte schedule. Subsequently, 557 booster pumping stations Ltd, which will spearhead PNSB completed the Wangsa within the State of Selangor our entry into Vietnam, Maju Water Treatment Plant and the Federal Territories of Cambodia, Laos and other with a design capacity of Kuala Lumpur and Putrajaya. Asian countries. 45 million litres per day at a cost of RM122.0 million in a record time of six months in

026 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Proﬁ le

In March 2011, PNHB set Our customer contact centre, OUR COMMITMENT TO Rescue Brigade was accorded up a Representative Ofﬁ ce PUSPEL which is manned by CORPORATE CITIZENSHIP an Honourable Mention in Ho Chi Minh City, Saigon, a team of highly trained call at the inaugural Prime Vietnam to explore potential agents operates 24 hours The PNHB Group is Minister’s Corporate Social business opportunities in daily and provides customers committed to upholding the Responsibility (CSR) Award Vietnam. with a convenient and effective principles of good corporate 2007. Another programme, way to contact SYABAS on governance and core values the Educational Outreach On 10 March 2011, PNHB water supply matters. In such as quality, value, Programme (“Turun Ke formed a 99.99% owned May 2007, PUSPEL received service, innovation and trust Padang”) launched in 1999, subsidiary in India, Puncak the 2007 Malaysia Water in the conduct of our business is an extension of the River Niaga Infrastructures & Award for Excellence in which are integral to our Rescue Brigade which aims Projects Private Limited Customer Service Management success over the years. We to educate the primary and which will focus primarily on from the Malaysian Water have received various repeat secondary school and tertiary potential markets in India. Association. awards and accolades for level children located within good governance, annual our areas of operations On 23 May 2011, PNHB’s On 8 October 2010, PUSPEL reporting, occupational on the importance of river wholly owned subsidiary, was awarded the special safety and health; and preservation. The objectives Puncak Oil & Gas Sdn award, “The Best Emerging environmental and social of these programmes are to Bhd (“POG”) entered into Contact Centre” category for reporting. ensure the continuous supply Agreements to acquire 40% Government Link Company of clean water as well as to equity interest in two (2) oil by Contact Centre Association In line with our corporate enlighten them on the roles and gas entities, namely of Malaysia or Customer vision and mission, we played by PNSB and SYABAS GOM Resources Sdn Bhd Relationship Management & seek to be environmentally in the water treatment and (formerly known as Global Contact Centre Association responsible in the water distribution processes, Offshore Malaysia Sdn Bhd) of Malaysia in recognition of protection, conservation and respectively. (“GOM Resources”) and KGL PUSPEL’s excellent customer enhancement of the natural Ltd (“KGL”) with proven track service to all water users in environment, particularly in OUR FUTURE PLANS records in undertaking oil Selangor and the Federal the management aspect of and gas works for Petronas Territories of Kuala Lumpur the water resources, which As the PNHB Group seeks to which will enable Puncak and Putrajaya. is relevant to our business grow its business and deliver Group to make further forays operations. Our River Rescue value to the stakeholders, we and strengthen its presence Out of the manpower strength Brigade (“Briged Penyelamat will look into expanding our as a signiﬁ cant company in of more than 4,000 employees Sungai”) programme operations in areas related the oil & gas industry. The in the PNHB Group, more than which was initiated by our to our core business and 40% equity acquisitions of half comprise Management, Executive Chairman in 1998 other sector such as oil & gas GOM Resources and KGL were professionals, technical is a programme which aims sector, and competencies completed on 30 June 2011. and supervisory executives to educate the younger within Malaysia and with core competencies in generation on the importance undertaking projects in other On 28 September 2011, POG engineering, accountancy, of the conservation and countries such as India, China completed the acquisitions legal, management, protection of the environment, and the ASEAN countries. of the remaining 60% equity administration and business; especially the rivers. To date, interest in GOM Resources which are instrumental we have enlisted 4,630 school and KGL thereby resulting in supporting the Group’s children and 218 schools in in both GOM Resources and business and operations. the State of Selangor and KGL becoming wholly owned the Federal Territories of subsidiaries of POG. Kuala Lumpur and Putrajaya into the programme. In November 2007, our River 027 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Information

BOARD OF DIRECTORS Yang Amat Mulia Tengku COMPANY SECRETARIES BRANCH OFFICES Dato’ Rahimah Almarhum Madam Tan Bee Lian Kuala Terengganu Offi ce Yang Berbahagia Sultan Mahmud Tan Sri Rozali Ismail (MAICSA 7006285) Non-Independent 201B Executive Chairman Non-Executive Director Jalan Sultan Zainal Abidin Madam Lim Yew Heang 20000 Kuala Terengganu (MAICSA 7007653) Yang Berbahagia Yang Berbahagia Terengganu Darul Iman Dato’ Hashim Mahfar Tan Sri Dato’ Ahmad Tel : +609-623 8589 Managing Director REGISTERED OFFICE Fuzi Haji Abdul Razak Fax : +609-624 8589 Independent 10th Floor, Wisma Rozali Yang Berbahagia Non-Executive Director No. 4, Persiaran Sukan Penang Offi ce Dato’ Ruslan Hassan Seksyen 13, Non-Independent Mr Ng Wah Tar 40100 Shah Alam No. 12, Jalan Todak 5 Pusat Bandar Seberang Jaya Non-Executive Director Executive Director Selangor Darul Ehsan 13700 Perai, Pulau Pinang Corporate Finance Division Tel : +603-5522 8589 Yang Berbahagia Fax : +603-5512 0220 Tel : +604-397 8589 Dato’ Ir Lee Miang Koi Non-Independent PRINCIPAL OFFICE Sarawak Offi ce Non-Executive Director Wisma Rozali Lot 10864 &10865 No. 4, Persiaran Sukan Section 64, KTLD Yang Berbahagia Seksyen 13 Jalan Mendu Dato’ Syed Danial Syed Ariffi n 40100 Shah Alam 93200 Kuching, Sarawak Chief Operating Offi cer Selangor Darul Ehsan Tel : +6082-332 589 Tel : +603-5522 8589 Fax : +6082-337 589 Yang Berbahagia Fax : +603-5522 8598 Tan Sri Dato’ Hari e-mail (general): Sri Aman Site Offi ce (Zone 1) : Narayanan Govindasamy [email protected] 1st Floor, Lot 440 Independent e-mail (investors): Block 3, Jalan Council Non-Executive Director [email protected] 95000 Sri Aman, Sarawak website: Tel : +6083-320 335 Yang Berbahagia www.puncakniaga.com.my Fax : +6083-320 340 Tan Sri Dato’ Seri Dr Ting Chew Peh Sarikei Site Offi ce (Zone 2) : Independent 1st Floor, No. 82C Non-Executive Director Wisma CS Kua Jalan Masjid Lama 96100 Sarikei, Sarawak Tel : +6084-656 206 Fax : +6084-656 208

028 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Information

SYARIKAT BEKALAN AIR KGL LTD’S OFFICE Luwei (Pingdingshan) INDIA OFFICE SELANGOR SDN BHD’S Water Co. Ltd c/o Lot 1, 2nd Floor Puncak Niaga (SYABAS) OFFICE No. 6 Wisma Siamloh Infrastructures & Projects ShunCheng Road (East) SYABAS Head Ofﬁ ce Jalan Kemajuan Private Limited Lushan County Jalan Pantai Baharu 87007 Federal 1, Kutchery Road Henan Province 59200 Kuala Lumpur Territory of Labuan Mylapore, Chennai 600004 467300 People’s Tel : +603-2282 6244 / Tamil Nadu, India Tel : +608-7417810 Republic of China +603-2088 5400 Fax : +608-7424220 Tel : +91-44-42102058 Tel / Fax : Fax : +603-2282 7976 Fax : +91-44-42102028 e-mail: +86-375-5891036 SINGAPORE OFFICE [email protected] VIETNAM OFFICE Sino Water Pte Ltd’s and Xinnuo Water Website: (Representative Office) www.syabas.com.my Puncak Niaga Overseas (Binzhou) Co. Ltd Network: Capital Pte Ltd’s Ofﬁ ce Chenlou Industrial & 16F, Saigon Tower follow@puspel No. 8, Eu Tong Sen Street Commerce Park 29, Le Duan Street (on Twitter and Facebook) #22-85 & #22-86 Laodian Village District 1, Ho Chi Minh City The Central Yangxin County Saigon, Vietnam Shandong Province PUNCAK OIL & Singapore 059818 Tel : +84-8-35207701 251802 GAS SDN BHD’S OFFICE Tel : +65 62249220 Fax : + 84-8-38236288 (Main Line) / People’s Republic of China Unit 12-1, Level 12 +65 62227926 DATE AND PLACE OF No. 11, Jalan 16/11 Fax : +65 62226812 Luancheng Dayu Water INCORPORATION Pusat Dagang Seksyen 16 Supply Co. Ltd 46350 Petaling Jaya 7 January 1997, Malaysia CHINA OFFICES No. 17, Xinyuan Road Selangor Darul Ehsan Luancheng County Tel : +603-7958 5533 Sino Water Environmental Hebei Province COMPANY NUMBER Fax : +603-7956 7375 Consultancy (Shanghai) 051430 People’s 416087-U Co. Ltd Republic of China GOM RESOURCES SDN BHD Unit 301, No. 398 Tel / Fax : City Gateway (FORMERLY KNOWN +86-311-88031652 AS GLOBAL OFFSHORE Caoxi (North) Road MALAYSIA SDN BHD)’S Xuhui District OFFICE 200030 Shanghai Hebei Sino Panlong People’s Republic of China Industrial Water Supply Level 4 & 17, Tower 1 Tel : +86-21-60905282 Co. Ltd ETIQA Twin Towers Fax : +86-21-60905281 No. 117, Renmin Road 11, Jalan Pinang Yuanshi County 50450 Kuala Lumpur Hebei Province Tel : +603-2177 4600 051130 People’s Fax : +603-2166 8867 Republic of China Tel / Fax : +86-311-84638813

029 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Information

AUDITORS SHARE REGISTRAR AUDIT COMMITTEE NOMINATION COMMITTEE (place where all registers Messrs Ernst & Young Chairman: Chairman: of securities are kept) (AF 0039) Yang Berbahagia Tan Sri Yang Berbahagia Tricor Investor Services Dato’ Seri Dr Ting Chew Peh Tan Sri Dato’ Ahmad TAX ADVISORS Sdn Bhd (118401-V) Fuzi Haji Abdul Razak Level 17 Members: Ernst & Young Tax The Gardens North Tower Members: Consultants Sdn Bhd Yang Berbahagia Mid Valley City Tan Sri Dato’ Hari Yang Berbahagia Lingkaran Syed Putra Narayanan Govindasamy Tan Sri Dato’ Hari PRINCIPAL BANKERS 59200 Kuala Lumpur Yang Amat Mulia Tengku Narayanan Govindasamy RHB Bank Berhad (6171-M) Tel : +603-22643883 Dato’ Rahimah Almarhum Yang Berbahagia CIMB Investment Bank Fax : +603-22821886 Sultan Mahmud Tan Sri Dato’ Seri Berhad (18417-M) Yang Berbahagia Dr Ting Chew Peh AmIslamic Bank Berhad STOCK EXCHANGE LISTING Tan Sri Dato’ Ahmad (295576-U) Fuzi Haji Abdul Razak Secretaries: Main Market Of Bursa CIMB Bank Berhad Madam Tan Bee Lian Malaysia Securities Berhad (13491-P) Secretaries: Madam Lim Yew Heang under Infrastructure Madam Tan Bee Lian Project Companies Sector SOLICITORS Madam Lim Yew Heang COMPLIANCE, INTERNAL CONTROL Messrs Adnan Sundra & Low INDICES REMUNERATION AND RISK POLICY Messrs Belden FTSE Bursa Malaysia COMMITTEE COMMITTEE (CICR) Messrs Marcia Ng & Kuala Lumpur Chairman : Chairman: Associates FTSE Bursa Malaysia Yang Berbahagia Messrs Sreenevasan Young Emas Syariah Index Yang Berbahagia Messrs Zul Raﬁ que & Tan Sri Dato’ Ahmad Tan Sri Dato’ Seri Partners Fuzi Haji Abdul Razak Dr Ting Chew Peh

Members : Members: Yang Berbahagia Yang Berbahagia Tan Sri Dato’ Hari Dato’ Hashim Mahfar Narayanan Govindasamy (Head of CICR) Yang Berbahagia Mr Ng Wah Tar Tan Sri Dato’ Seri Madam Tan Bee Lian Dr Ting Chew Peh Madam Wong Ley Chan Mr Ng Wah Tar Tuan Haji Sonari Solor Cik Hayati Ab Wahab Secretaries : Madam Tan Bee Lian Secretary: Madam Lim Yew Heang Madam Johty Priyatharashani D/O Tiagarajah

030 Annual Report 2011 Puncak Niaga Holdings Berhad

PNHB Fact Sheet

PNSB FACT SHEET AS AT 31 DECEMBER 2011

Number of PNSB’s 29 AUTHORISED SHARE CAPITAL Water Treatment Plants RM1,300,000,000 Number of Water Treatment Plants 20 PAID-UP SHARE CAPITAL with ISO Certifications RM411,142,895 (comprising 411,142,895 ordinary shares of RM1.00 each)

COMPLETION OF RUN PUT OPTION AND CALL OPTION EXERCISES SYABAS FACT SHEET 18 November 2011 AS AT 31 DECEMBER 2011 Number of SYABAS’ 1.794 million WITHDRAWAL OF RUN FROM Consumer Accounts THE OFFICIAL LIST OF BURSA MALAYSIA SECURITIES BERHAD Maintenance of water pipes 26,145 km 21 November 2011

Number of service reservoirs, 1,469 elevated water tanks and suction tanks

Number of pumping stations 557

GROUP MANPOWER AS AT 26 APRIL 2012

Category No. of Gender Race (In Malaysia) Race (Overseas) of Employees Personnel Male Female Malay Chinese Indian Others Chinese

Management 305 221 84 231 44 11 6 13 Executive 1,006 518 488 895 54 30 18 9 Non-Executive 3,275 2,659 616 2,924 6 187 18 140

Total 4,586 3,398 1,188 4,050 104 228 42 162

031 Annual Report 2011 Puncak Niaga Holdings Berhad

PNHB Fact Sheet

LIST OF CORPORATE MEMBERSHIPS

1 Malaysian Water Association (MWA) Member since 1994

2 Malaysia South-South Association (MASSA) Member since 1995

3 Federation of Public Listed Companies (FPLC) Member since 1997

4 Malaysian Employers Federation (MEF) Member since 1999

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

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

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

8 American Water Works Association (AWWA) Member since 2002

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

10 Malaysia-Russia Business Council Member since 2002

11 British Malaysian Chamber of Commerce (BMCC) Member since 2003

12 Malaysia-Japan Economic Association (MAJECA) Member since 2003

13 Commonwealth Partnership for Technology Management (CPTM) Member since 2003

14 Institute of Marketing Malaysia (IMM) Member since 2003

15 South East Asian Water Utilities Network (SEAWUN) Member since 2004

16 Malaysian Islamic Chamber of Commerce (MICC) Member since 2006

17 Singapore Water Association Member since 2006

18 Malaysian Investors Relations Association (MIRA) Member since 2008

19 Water Association of Selangor, Kuala Lumpur and Putrajaya (SWAn) Member since 2008

20 Malaysian Nature Society (MNS) Member since 2009

21 Environmental Management & Research Association of Malaysia (ENSEARCH) Member since 2009

22 Malaysia-Europe Forum (MEF) Member since 2011

23 Malaysia External Trade Development Corporation (MATRADE) Member since 2012

032 Annual Report 2011 Puncak Niaga Holdings Berhad

PNHB Fact Sheet

GROUP MANPOWER ANALYSIS as at 26 April 2012

BREAKDOWN BY JOB CATEGORY BREAKDOWN BY GENDER

7% 7% 7% 22% 15% 41%

MALE FEMALE

71% 78% 52%

BREAKDOWN BY RACE

6% 5% 6% 13% 22% 42%

MALAY INDIAN CHINESE

72% 82% 52%

8% 14% 6% 43%

CHINESE OTHERS overseas operation

Management 43% 86% Executive Non-Executive

033 Annual Report 2011 Puncak Niaga Holdings Berhad

Our Role In The Water Supply System

REGULATORY AUTHORITIES OPERATORS

Manages river Selangor Water basin upstream Rivers Dams Management Authority (LUAS) beginning 3 nautical miles from the sea Dam Operators in Selangor

• Puncak Niaga (M) Sdn Bhd (PNSB) Department of Oversees • Syarikat Pengeluar Air Sungai Environment environment issues Selangor Sdn Bhd (SPLASH) (DOE) concerning rivers • Konsortium ABASS Sdn Bhd

Department of Flood control Irrigation and Drainage and river Malaysia (DID) management Policy, Planning, Enforcement and Surveillance by Government Agencies by Government and Surveillance Planning, Enforcement Policy,

SCHEMATIC DIAGRAM OF WATER TREATMENT SYSTEM

Raw Water Pump Band Screen Grit Chamber WTP Operators in Selangor

• Puncak Niaga (M) Sdn Bhd (PNSB) Intake • Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH)

Modified Chlorine • Konsortium ABASS Sdn Bhd Liquid Alum FILTRATION TANK Sodium Silicoflouride Hydrated Lime National Water

Services Commission Aerator Flocculation Filtration (SPAN) Channel Gallery Sedimentation Tank Treated Mixing Water Balancing Channel Pump Reservoir

Bulk To River / Sludge Lagoons Clear Water Tank Meters

Ministry of Health Water Supply Distributor (MOH) BOOSTER - water quality for Selangor, Kuala Lumpur STATION and Putrajaya

WATER SERVICE RESERVOIR Syarikat Bekalan Air Selangor TOWER RESERVOIR Sdn Bhd (SYABAS)

Consumers

Water Meter Water Meter Water Meter Water Meter (Condominium/ Flat) (Industrial/ Factory) (Office) (Shopping Centre)

Water Meter Water Meter (Residential Home) (Government/ Institutional) 034 Annual Report 2011 Puncak Niaga Holdings Berhad

Milestones

1997 2000 08 JUL 12 OCT Listing on the Main Board PNHB won the KLSE of the KLSE (now known Corporate Excellence as Main Market of Bursa Award 2000 for Main Malaysia Securities Berhad Board Companies and effective 3 August 2009) the KLSE Corporate and launching of Puncak Sectoral Award 2000 for 08 JUL Niaga Holdings Berhad’s Main Board Infrastructure (“PNHB”) Homepage. Project Companies.

16 OCT 08 NOV Signing Ceremony of Turnkey Construction Contract between PNSB PNHB was honoured and Seni Kembara-Hazama-Central Energy-OTV Consortium for the with the NACRA 2000 construction of Stage 2 of SSP2 Water Treatment Plant (“WTP”). Industry Excellence Award for the ‘Construction & Infrastructure Project Companies’ category. 1998 14 MAR Rivercare Campaign I for school children was launched by YB Datuk 2001 Haji Mohd Khalid Mohd 19 APR Yunus, the former Deputy Minister of Education. PNHB received the Certificate of Approval 14 MAR 20 JUL by Lloyd’s Register Quality Assurance Official Ceremony to ISO 9002:1994,EN ISO mark the release of 9002:1994, BS EN ISO initial 100 MLD of treated 9002:1994, MS ISO water at SSP2 WTP. 9002:1994 for Quality Management System of Wangsa Maju WTP. 06 NOV PNHB was awarded the NACRA 2001 Industry Excellence Award 1999 under the ‘Construction & Infrastructure Project Companies’ 04 JAN category. PNHB was included in the KLSE Composite Index (now known PNSB received the Occupational Safety & Health Award 2000 as FTSE Bursa Malaysia Kuala Lumpur Composite Index). Gold Award for SSP2 WTP.

09 APR 10 NOV Signing Ceremony of the PNHB was awarded the Anugerah Citra Laporan Tahunan 2001 Second Amendment to by Dewan Bahasa dan Pustaka. the Construction Cum Operation Agreement.

01 DEC 09 APR PNHB was included in the Morgan Stanley Capital International Standard Index.

035 Annual Report 2011 Puncak Niaga Holdings Berhad

Milestones

2002 2005 26 MAR 01 JAN PNHB Group’s Executive Chairman, YBhg Tan Sri Rozali Ismail YAB Dato’ Seri Dr Mohd was awarded the Asia Water Management Excellence Award 2002 Khir Toyo officiated the under the Individual Award Category. ceremony to mark the commencement of 31 OCT operations of SYABAS at SYABAS’ Headquarters. PNHB was awarded the NACRA 2002 Industry 01 JAN Excellence Award 19 JAN under the ‘Construction & Infrastructure Project YBhg Tun Dr Lim Keng Yaik, the former Minister of Energy, Companies’ Category. Water and Communications, witnessed the Signing Ceremony of the Financing Facilities Agreement between SYABAS and a panel of financial institutions at Hotel Istana Kuala Lumpur. 2003 2006 20 FEB 16 OCT PNHB received the PNHB announced a Asiamoney Corporate capital repayment of up Governance Poll 2002 to RM767.84 million via Award for ‘Best a cash distribution to Corporate Governance reward its shareholders. Standards in the Utilities Sector in Malaysia’. 28 NOV 28 NOV Official Opening 14 JUN Ceremony of Wisma Rozali, PNHB received the Institute of Public Relations Malaysia IPRM Shah Alam, Selangor. Crystal Award 2002 under the Environmental Relations Category for the River Rescue Brigade Programme and the Voluntary Relations Category for the Educational Outreach Programme. 2007 15 MAR 2004 Signing Ceremony of the Collaboration Agreement 13 FEB between Puncak Research PNHB was awarded the KLSE Corporate Sectoral Award 2003 Centre Sdn Bhd and for Main Board by Bursa Malaysia. DHI Water • Environment • Health Denmark. 15 DEC 14 NOV Concession Agreement for 30 MAR the Privatisation of Water Handover Ceremony 26 JUNE Supply Distribution in of Sg Sireh WTP from PNSB’s ‘Ekspedisi Selangor and the Federal Kumpulan Perangsang Menuju Puncak’ at Territories of Kuala Lumpur Selangor Berhad to PNSB. Mount Kinabalu, Sabah. and Putrajaya between SYABAS, the Federal 31 DEC 15 MAY Government and the 14 NOV Selangor State Government. SYABAS garnered the 2007 Malaysia Water Award PNSB received an (Management Category) Honourable Mention for 31 DEC for PUSPEL. its River Rescue Brigade at the Prime Minister’s Handover Ceremony of the 26 WTPs in Selangor, Kuala Lumpur Corporate Social and Putrajaya from CGE Utilities (M) Sdn Bhd to PNSB at Responsibility Awards 2007. Bukit Nanas WTP.

036 Annual Report 2011 Puncak Niaga Holdings Berhad

Milestones

2008 2009 22 MAY 10 JAN PNHB was shortlisted SYABAS launched PUSPEL’s new logo with the service motto under the Social Reporting “Friendly, Committed and Trusted” as a symbol of SYABAS’ Category for ACCA ongoing commitment to provide the best services to consumers. Malaysia Environmental And Social Reporting Awards (MESRA) 2007 [now 13 AUG known as ACCA Malaysia PNHB was the winner Sustainability Reporting for Integrated Reporting (MaSRA) Awards]. in an Annual Report at ACCA Malaysia 11 NOV Sustainability Reporting SYABAS was awarded Awards (MaSRA) 2009. the Malaysian Business Ethics Excellence Award 2008 under the Large 19 MAY Company Category. SYABAS was awarded Silver Awards for Innovation in “Information 17 NOV & 15 DEC Technology, Computer PNSB received the Integrated Management System (IMS) Software and Training Certification for the Provision of Construction Services certified Category” and “Solution by URS Certification (M) Sdn Bhd (URS) and accredited under Technology in Water United Kingdom Accredited Service (UKAS). Manager” at Water Inno Awards 2009 – Malaysian 19 NOV Water Association. PNHB was awarded the NACRA 2008 Industry Excellence Award for Main Board Construction & Infrastructure Project Companies 1 DEC Category. PNHB was awarded the Certificate of Merit at National Annual Corporate Report Awards (NACRA) 2009.

2010 14 JAN 2 NOV SYABAS launched PUSPEL on social networks, “follow@puspel” The Official Launch of SYABAS’ Operation Command Center on Twitter and Facebook. (“OCC”).

13 APRIL 8 NOV Two of SYABAS’ teams PNHB was the winner were awarded Gold Awards for Integrated Reporting at the Innovative & Creative in an Annual Report Circle Central Region for ACCA Malaysia Mini Convention 2010. Sustainability Reporting Awards (MaSRA) 2010. 14 JAN 8 OCT 8 OCT SYABAS/PUSPEL was 9 DEC awarded the Best Emerging The Highest Award In Contact Centre Award The Malaysian Business 2010 at the Customer Ethics Excellence Award Relationship Management & 2010/2011 (Main Category Contact Centre Association Of Large Company) were of Malaysia Award 2010. awarded to both PNSB and SYABAS, respectively.

037 Annual Report 2011 Puncak Niaga Holdings Berhad

Water News

038 Annual Report 2011 Puncak Niaga Holdings Berhad

Water News

039 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Achievements

1. Asia Pacific Entrepreneurship Awards (APEA 2011) Entrepreneur of the Year 2011 awarded to YBhg Tan Sri Rozali Ismail on 20 July 2011

2. World Finance Technology Awards 2011 Best Environmental Services Technology Company awarded to PNHB on 28 June 2011

3. World Finance Technology Awards 2011 Technology CEO of the Year (Global) awarded to YBhg Tan Sri Rozali Ismail on 28 June 2011

4. Innovative & Creative Circle (ICC) Central Region Mini Convention 2011 Malaysian Productivity Corporation: Gold Award awarded to PNSB’s ICC AIM Team on 26 April 2011

5. Innovative & Creative Circle (ICC) Central Region Mini Convention 2011 Malaysian Productivity Corporation: Gold Award awarded to PNSB’s ICC Tenaga Tengah Team on 26 April 2011

6. Innovative & Creative Circle (ICC) Central Region Mini Convention 2011 Malaysian Productivity Corporation: Gold Award awarded to PNSB’s ICC HR CREW Team on 26 April 2011

7. Innovative & Creative Circle (ICC) Central Region Mini Convention 2011 Malaysian Productivity Corporation: Silver Award awarded to PNSB’s ICC Tool Guyz Team on 26 April 2011

8. Innovative & Creative Circle (ICC) Central Region Mini Convention 2011 Malaysian Productivity Corporation: Silver Award awarded to PNSB’s ICC BRH Team on 26 April 2011

9. Innovative & Creative Circle (ICC) Central Region 2011 Malaysian Productivity Corporation: Silver Award awarded to PNSB’s ICC Tenaga Tengah Team on 25 – 26 July 2011

040 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Achievements

10. Innovative & Creative Circle (ICC) Sabah & Sarawak Region 2011 Malaysian Productivity Corporation: Gold Award awarded to PNSB’s ICC R.O.T. 11 Team on 20 - 21 July 2011

11. Innovative & Creative Circle (ICC) Central Region 2011 Malaysian Productivity Corporation: Gold Award awarded to PNSB’s ICC HR Crew Team on 25 - 26 July 2011

12. Innovative & Creative Circle (ICC) Central Region 2011 Malaysian Productivity Corporation: Gold Award awarded to PNSB’s ICC AIM Team on 25 - 26 July 2011

13. Innovative & Creative Circle (ICC) East Coast Region 2011 Malaysian Productivity Corporation: Gold Award awarded to PNSB’s ICC Tag Team on 27 – 28 June 2011

14. Innovative & Creative Circle (ICC) Central Region 2011 Malaysian Productivity Corporation: Silver Award awarded to PNSB’s ICC 3EQ Team on 25 – 26 July 2011

15. International Standard Quality (ISQ) Award 2011 - Masterclass Company Category Award awarded to PNHB on 28 July 2011

1616. InternationalInternnatationalS StandardardQ Qualityuality (I(ISQ)SQ) AwAward 2011 - Masterclass Leader Award awarded to YBhg Tan Sri Rozali Ismail on 28 July 2011

17. International Convention on Quality Creative Circle 2011 Award Yokohama, Japan – Excellent Award awarded to PNSB’s ICC Tag Team on 11 – 15 September 2011

18. Malaysia 1000 Industry Excellence Award - Water Sector awarded to PNHB on 14 September 2011

041 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Achievements

19. 11th Malaysia HR Awards 2011 Employer of Choice – Silver Award awarded to PNSB on 13 October 2011

20. Malaysian Society for Occupational Safety and Health (MSOSH) Occupational Safety & Health (“OSH”) Award 2010 - Gold (Class I) awarded to SSP2 WTP on 22 July 2011

21. Malaysian Society for Occupational Safety and Health (MSOSH) OSH Award 2010 – Gold (Class I) awarded to Wangsa Maju WTP on 22 July 2011

22.22. MalaysianMaaalayssian SoSocietyociecietyty for OcOccupationalcuppaatiionanallS SSafetyafafea ty aand Healthealthh( ((MSOSH)MSOOSH)SH) OS OSHSH AAwardward 22010010 – Goldld ((ClassClalasss I)) awarded to Cheras Mile 11 WTP on 22 July 2011

23. Malaysian Society for Occupational Safety and Health (MSOSH) OSH Award 2010 – Gold (Class I) awarded to Sg Gombak WTP on 22 July 2011

24. Malaysian Society for Occupational Safety and Health (MSOSH) OSH Award 2010 – Gold (Class II) awarded to Rantau Panjang WTP on 22 July 2011

25. ACCA Malaysia Sustainability Reporting Awards 2011 - Commendation for Integrated Reporting of Annual Report awarded to PNHB on 4 October 2011

26. National Excellence Award 2011 for Occupational Health & Safety 2011 awarded to PNSB on 21 December 2011

042 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Achievements

27. Innovative & Creative Circle (ICC) National Convention 2011 Malaysian Productivity Corporation: 3-Star Gold Award awarded to PNSB’s ICC AIM Team on 19 – 20 October 2011

28. Innovative & Creative Circle (ICC) National Convention 2011 Malaysian Productivity Corporation: 3-Star Gold Award awarded to PNSB’s ICC R.O.T. 11 Team on 19 – 20 October 2011

29. Innovative & Creative Circle (ICC) National Convention 2011 Malaysian Productivity Corporation: 2-Star Gold Award awarded to PNSB’s ICC HR Crew on 19 – 20 October 2011

30. Malaysian Society for Occupational Safety and Health (”MSOSH”) Occupational Safety & Health Award 2010 MSOSH OSH Gold (Class I) and MSOSH OSH Gold (Class II) Award (for Utilities Sector Category) on 22 July 2011: MSOSH OSH Gold (Class I) Award - SYABAS Gombak District - SYABAS Hulu Selangor District - SYABAS Kuala Selangor District - SYABAS Klang District - SYABAS Kuala Lumpur District - SYABAS Petaling District - SYABAS Sepang District

MSOSH OSH Gold (Class II) Award - SYABAS Hulu Langat District - SYABAS Kuala Langat District - SYABAS Sabak Bernam District

043 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Structure

INVESTMENT HOLDING

100% 100% 100% 100% IDEAL WATER RESOURCES PUNCAK NIAGA (M) SDN BHD PUNCAK OIL & GAS SDN BHD GOM RESOURCES SDN SDN BHD operation, maintenance, exploration for the production BHD (FORMERLY KNOWN ceased operation management, construction, of oil & gas and other AS GLOBAL OFFSHORE rehabilitation and materials and the provision MALAYSIA SDN BHD) refurbishment of water of offshore and onshore providing offshore personnel 100% treatment facilities engineering works services and renting of UNGGUL RAYA (M) SDN BHD machinery and vessels ceased operation 100% 70% KGL LTD SYARIKAT BEKALAN offshore leasing of vessels 100% AIR SELANGOR SDN BHD on bareboat basis PERBADANAN URUS AIR supply & distribution of SELANGOR BERHAD treated water within Selangor 100% ceased operation and the Federal Territories of PUNCAK RESEARCH CENTRE SDN BHD Kuala Lumpur & Putrajaya research & development and technology development for water, wastewater and 100% environment sectors PUNCAK NIAGA OVERSEAS CAPITAL PTE LTD investment in water, wastewater, solid waste, environmental and oil & gas in Asian countries 100% PUNCAK SERI (M) SDN BHD dormant 98.65% SINO WATER PTE LTD investment in water and wastewater 100% projects in China PUNCAK NIAGA (INDIA) SDN BHD dormant 100% SINO WATER ENVIRONMENTAL 100% CONSULTANCY (SHANGHAI) CO LTD NS WATER SYSTEM SDN BHD consultancy services for water and dormant wastewater projects

100% 100% XINNUO WATER (BINZHOU) CO LTD PUNCAK NIAGA INFRASTRUCTURES & treatment of wastewater and related services PROJECTS PRIVATE LIMITED carry out activities of infrastructures, 80% constructions and other projects in India HEBEI SINO PANLONG INDUSTRIAL WATER SUPPLY CO LTD ASSOCIATE COMPANY distribution of water to industrial areas 50% PURNAMA PERSADA SDN BHD 91.34% dormant LUWEI (PINGDINGSHAN) WATER CO LTD treatment and distribution of water and related services ASSOCIATE COMPANY 40% 80% OASIS WATER RESOURCES SDN BHD LUANCHENG DAYU WATER SUPPLY CO LTD dormant treatment and distribution of water and related services 044 Annual Report 2011 Puncak Niaga Holdings Berhad

Organisation Structure - PNSB

Note:

and DIV denote Division

and DEPT denote Department/Centre

BOARD OF DIRECTORS and SECT denote Section

EXECUTIVE CHAIRMAN YBhg Tan Sri Rozali Ismail

SPECIAL EXECUTIVE FUNCTIONS DIV CHAIRMAN’S OFFICE MANAGING DIRECTOR CHIEF OPERATING OFFICER/ MANAGER YBhg Dato’ Syed Danial Syed Ariffin EXECUTIVE DIRECTOR, EXECUTIVE DIRECTORS Puan Nurul-Dinah Kamarudin ENGINEERING/PROJECT DEVELOPMENT DIV YBhg Datuk Mohd Yunus Ir Tan Hui Kuan Mohd Amin Dr Abd Rahim Awang Kechik OPERATION & MAINTENANCE (O&M) DIV SENIOR GENERAL MANAGER EXECUTIVE DIRECTOR Mr Ramalingam K R Encik Abd Rashid Abd Satar Arumugam O&M DEPT RESEARCH & ENGINEERING & GENERAL MANAGER GENERAL MANAGER DEVELOPMENT PROJECT DEPT Encik Kamaruzaman Encik Johari Pawanchik (R&D) CENTRE GENERAL MANAGER Budin MANAGER Mr Tan Seng Yuan O&M SECT Encik Aminuddin Ismail GENERAL MANAGER MANAGING DIRECTOR’S OFFICE (ALL WTPS & DAMS) Encik Rajini Ramlan SENIOR MANAGER Encik Ismail Hasan INFORMATION TECHNOLOGY DEPT GENERAL MANAGER HEALTH, SAFETY Encik Azlan Shah Tan Sri Rozali & QUALITY MANAGEMENT SECT CONTRACT & PROCUREMENT DEPT SENIOR MANAGER GENERAL MANAGER Vacant Puan Hafizah Ahmat WATER QUALITY & FOOD & BEVERAGE DEPT RESEARCH SECT MANAGER MANAGER Encik Hamzah Awang Kechik Madam Teh Yeok Sien

CORPORATE BUSINESS HUMAN RESOURCES & CORPORATE STRATEGIC RESOURCE & FINANCE DIV FINANCE DIV DEVELOPMENT DIV ADMINISTRATION DIV SERVICES DIV PUBLIC RELATIONS DIV

EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR Madam Wong Ley Chan Mr Danny Ng Wah Tar YBhg Dato’ Nasir Encik Ismail Hashim Madam Tan Bee Lian YBhg Datuk Dr Khan Illadad Khan Muzahet Masruri

FINANCE & CORPORATE BUSINESS HR INTERNAL AUDIT PUBLIC ACCOUNTS DEPT FINANCE DEPT DEVELOPMENT DEPT MANAGEMENT DEPT RELATIONS DEPT (TREASURY, AR & AP) SENIOR MANAGERS ASSISTANT ASSISTANT SENIOR SENIOR GENERAL SENIOR MANAGER Mr Nicholas GENERAL MANAGER GENERAL MANAGER GENERAL MANAGER MANAGER Encik Mohd Chew Keng Meng Encik Helmi Puan Faridatulzakiah Tuan Haji Puan Siti Hajar Ismail Shahree Shamsuddin Faisal Fuad Mohd Bakhry Sonari Solor Encik Rozailan Rosli STRATEGIC FINANCE & HUMAN SECRETARIAL RESOURCE CENTRE ACCOUNTS DEPT RESOURCES DEPT SENIOR MANAGER (FINANCIAL MANAGEMENT GENERAL MANAGER Puan Raja Rozaila ACCOUNTING) DEPT Madam Jenny Raja Azman SENIOR MANAGER PROPERTY SENIOR MANAGER Lim Yew Heang Madam Winnie MANAGEMENT Encik Mohd Chia Li Koon DEPT Sofie Ismail LEGAL DEPT HEAD GENERAL MANAGER COMPENSATION Vacant INDUSTRIAL Madam Christina & BENEFITS RELATIONS DEPT Lee Chin Kee DEPT ADMINISTRATION MANAGER SENIOR MANAGER DEPT Puan Zalina Mat Encik Hairulizam HEAD Muhamad Kastawi Vacant HUMAN CAPITAL DEVELOPMENT PROTECTIVE DEPT SERVICES DEPT MANAGER SENIOR Puan Mahfuzah MANAGER Muhamad Tarmidi Encik Abdul Latif Othman

045 Annual Report 2011 Puncak Niaga Holdings Berhad

Organisation Structure - SYABAS

EXECUTIVE CHAIRMAN YBhg Tan Sri Rozali Ismail

CHIEF EXECUTIVE OFFICER (CEO) YBhg Dato’ Ruslan Hassan

SPECIAL TASK DEPT SPECIAL ASSISTANT TO EXECUTIVE CHAIRMAN / EXECUTIVE DIRECTOR, SPECIAL TASK DEPARTMENT & BUMIPUTERA ENTREPRENEUR PARTICIPATION & DEVELOPMENT Encik Mohamad Isa Mohd Yassin

GENERAL MANAGER Mejar (B) Zulkifli Bin Ishak

INTERNAL AUDIT DEPT SENIOR GENERAL MANAGER Cik Hayati Ab Wahab

SECRETARIAL DEPT ASSISTANT GENERAL MANAGER Madam Lau Pueh Geok

CORPORATE AFFAIRS DIV FINANCE DIV

EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR Encik Abdul Madam Thein Kwee Sim Halem Mat Som

DISTRICT DEPT LEGAL & CONTRACT & CORPORATE FINANCE & ASSISTANT ENFORCEMENT DEPT PROCUREMENT DEPT COMMUNICATIONS & ACCOUNTS DEPT GENERAL MANAGER GENERAL MANAGER SENIOR MANAGER PUBLIC AFFAIRS DEPT SENIOR Tuan Haji Mohd Vacant Encik Wan Abd ASSISTANT GENERAL MANAGER Yunus Othman Aziz Wan Muda GENERAL MANAGER Vacant (Acting) (Acting) Ms Priscilla Alfred

NORTHERN ZONE CENTRAL ZONE SOUTHERN ZONE SECRETARY OF WORKS CUSTOMER BILLING & SERVICE DEPT RECOVERY DEPT GENERAL MANAGER GENERAL MANAGER KUALA SELANGOR KUALA LUMPUR HULU LANGAT PETALING Encik Mohd Yaman Mohd Zin Encik Shahruddin (Category C) (Category A) (Category B) Encik Yusran Yusof Ab Rahman ASSISTANT ASSISTANT SENIOR MANAGER GOMBAK GENERAL MANAGER GENERAL MANAGER Encik Mohd Puan Sharifah Fairus Encik Abdul Mr Kelvin Siew Weng Hoe Indra Arshad Halim Ishak KLANG Syed Jaafar Encik Syamsul PETALING KUALA LANGAT Kamal Tajudin SABAK BERNAM (Category A) (Category C) KUALA LUMPUR (Category C) GENERAL MANAGER ASSISTANT Encik Izhar Zafifi Razalli ASSISTANT Encik Ahmad GENERAL MANAGER HULU LANGAT GENERAL MANAGER Suhaidin Ismail Encik Surani Naim Cik Nurul Farhana Puan Roslina Ab Lazid Kamarulzaman

SEPANG SABAK BERNAM HULU SELANGOR (Category C) Encik Mohd Azmi Md Nasir (Category C) MANAGER HULU SELANGOR SENIOR MANAGER Ir Wan Amzari Encik Ahmad Encik Ahmad Abdul Halim Sharul Ishak Fuad Zainudin (Acting)

KLANG KUALA SELANGOR GOMBAK (Category A) Puan Nur Sharlina Shaharuddin (Category A) SENIOR MANAGER KUALA LANGAT (Acting) SENIOR MANAGER Encik Khairul Puan Maizatul (Acting Head of District) Anuwar Ismail Hazariah Mahayadin Encik Mat Saman Mat Soom (Acting) SEPANG Encik Ezrul Azzim Wahid

046 Annual Report 2011 Puncak Niaga Holdings Berhad

CHIEF OPERATING OFFICER (COO) YBhg Dato’ Ir Lee Miang Koi

WATER QUALITY, HUMAN RESOURCE & TECHNICAL ASSET & STRATEGIC ADMINISTRATION DIV DEVELOPMENT DIV RESOURCES DIV OPERATION DIV PLANNING DIV PROJECT & NRW DIV

EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR Tuan Haji Zainuddin Ir V Subramaniam Puan Roowina Merican Tuan Haji Yusof Saroji Tuan Haji Sanusi Sulieman Encik Yusof Badawi Othman A Rahim Merican (Acting)

HUMAN RESOURCE TECHNICAL WATER QUALITY OPERATION & NETWORK & NON REVENUE & ADMINISTRATION DEVELOPMENT DEPT & ASSET DEPT MAINTENANCE DEPT INSTRUMENTATION WATER (NRW) DEPT DEPT GENERAL MANAGER SENIOR SENIOR MANAGER DEPT GENERAL MANAGER GENERAL MANAGER Vacant GENERAL MANAGER Encik Hussain Rusmin GENERAL MANAGER Tuan Haji Ariff Ibrahim Encik Abd Latif Ismail Tuan Haji Muhamad (Acting) Ir Dr Teoh Seng Giap Darif Haji Idris

SECURITY DEPT STRATEGIC MECHANICAL & PLANNING AND PROJECT ASSISTANT RESOURCES DEPT ELECTRICAL DEPT DESIGN MANAGEMENT DEPT GENERAL MANAGER ASSISTANT ASSISTANT DEPARTMENT GENERAL MANAGER Encik Ismail Hj Ibrahim GENERAL MANAGER GENERAL MANAGER GENERAL MANAGER Ir Ahmad Marzuki Vacant Encik Mohd Yusri Ir Khor Tse Tong Hashim Abu Samah

INFORMATION & CONTRACT COMMUNICATION ADMINISTRATION TECHNOLOGY DEPT DEPT SENIOR SENIOR MANAGER GENERAL MANAGER Puan Rohaniah Tuan Haji Mohd Mohd Danan Suhaimi Rafie

Note: DEVELOPMENT DEPARTMENT and DIV denote Division GENERAL MANAGER Puan Rosmizah Ahmad and DEPT denote Department

denotes Secretary of Works

denotes Sections

denotes District

047 Annual Report 2011 Puncak Niaga Holdings Berhad

Organisation Structure - POG

PUNCAK OIL & GAS SDN BHD (727671-P)

BOARD OF DIRECTORS

EXECUTIVE CHAIRMAN YBhg Tan Sri Rozali Ismail

PRESIDENT’S OFFICE

PRESIDENT YBhg Dato’ Hashim Mahfar

BUSINESS DEVELOPMENT DEPT ASSISTANT VICE PRESIDENT Encik Zohrab Zolkipli

HUMAN SPECIAL TENDER & FINANCE & RESOURCES & PROJECT DEPT CONTRACT DIV ACCOUNTS DEPT ADMINISTRATION DIV

HEAD VICE VICE VICE Vacant PRESIDENT PRESIDENT PRESIDENT Ir Nasir Ismail Madam Chan Yuet Leng Dato’ Mat Hairi Ismail

INFORMATION SECRETARIAL TECHNOLOGY DEPT LEGAL DEPT DEPT

SENIOR HEAD ASSISTANT MANAGER Vacant VICE PRESIDENT Encik Norazman Madam Chang Mohamad Siew Khim

Note:

and DIV denote Division

and DEPT denote Department

048 Annual Report 2011 Puncak Niaga Holdings Berhad

Organisation Structure - GOM Resources

(205375-V) (formerly known as Global Offshore Malaysia Sdn Bhd) BOARD OF DIRECTORS

CHAIRMAN’S OFFICE

CHAIRMAN YBhg Dato’ Dr Khalid Ngah YBhg Dato’ Hashim Mahfar PRESIDENT OF PUNCAK OIL & GAS SDN BHD (“POG”)

SENIOR VICE PRESIDENT Encik Angat Anum Lingoh

TENDER & CONTRACT DEPT LEGAL DEPT COMMERCIAL DIV

VICE PRESIDENT (POG) VICE PRESIDENT Ir Nasir Ismail Encik Jamel Salleh HEAD Vacant BUSINESS ESTIMATING DEVELOPMENT DEPT DEPT

HEAD HEAD Vacant Vacant

PROJECT MANAGEMENT DEPT

PROJECT MANAGER Encik Shamsul Kamal Halim

QUALITY HEALTH, SUPPLY ASSURANCE HUMAN SAFETY & PLANNING & CONTRACTS/ MARINE CHAIN QUALITY INFORMATION RESOURCES & ENVIRONMENT ENGINEERING COST CONTROL LEGAL CONSTRUCTION MANAGEMENT OPERATIONS CONTROL TECHNOLOGY ACCOUNTING ADMINSTRATION DEPT DEPT DEPT DEPT DEPT DEPT DEPT DEPT DEPT DEPT DEPT

FINANCE MANAGER MANAGER HEAD HEAD MANAGER MANAGER MANAGER MANAGER MANAGER MANAGER MANAGER Encik Itan Panyin Encik Mohd Yuzli Vacant Vacant Encik Hapiza Encik Mohd Encik Huzaimi Encik Amir Encik Mokhtar Encik Rizaini Puan Rasidah Yaacob Akmar Che Daud Zhamry Madza Amir Zakee Adnal Abd Hamid Jasman Yaacob

Note:

and DIV denote Division

and DEPT denote Department

049 Annual Report 2011 Puncak Niaga Holdings Berhad

050 Annual Report 2011 Puncak Niaga Holdings Berhad

Expanding Horizons

In a move that will provide a strong platform for us to bid for lucrative oil and gas contracts, PNHB is fast emerging as a signiﬁ cant Oil & Gas player.

During the year, our wholly-owned subsidiary, Puncak Oil & Gas Sdn Bhd acquired both GOM Resources Sdn Bhd (formerly known as Global Offshore Malaysia Sdn Bhd) and KGL Ltd with focus on construction and subsea services as well as marine support services and pipe-laying barges.

051 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

In 1989, YBhg Tan Sri Rozali set up a family-owned company and embarked into the property development sector, with involvement in several development projects in the Klang Valley, Kuantan and Johor. Under the banner of Puncak Alam Housing Sdn Bhd, he developed a new township known as Bandar Baru Puncak Alam. The family-owned company also ventured into the utility business in 1989 with the setting up of PNSB. Due to his vast experience in various ﬁ elds, 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 (effective 3 August 2009 known as Main Market of Bursa Malaysia Securities Berhad) on 8 July 1997.

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 2002 - Individual Award Category, an award YBhg Tan Sri Rozali Ismail is the founder of at Asian level, by the Regional Institute of Puncak Niaga (M) Sdn Bhd (“PNSB”), the YBHG TAN SRI Environmental Technology on 26 March 2002. Executive Chairman of Puncak Niaga Holdings ROZALI ISMAIL YBhg Tan Sri Rozali was a Top 10 Nominee for Berhad (“PNHB”) Group and substantial the Ernst & Young Entrepreneur Of The Year Aged 55 shareholder of PNHB. He was appointed to the - Malaysia 2002 and Malaysia 2003 (Master Malaysian Board of PNHB on 24 April 1997. Entrepreneur Category) Award in recognition Executive Chairman of his outstanding entrepreneurship and A Bachelor of Laws Degree holder from the of PNHB Group leadership skills. He was conferred an University of Malaya in 1981, YBhg Tan Sri Honorary Doctorate in Complementary Rozali began his career as Legal Advisor with Medicines (Humanity Services) by the Open the Urban Development Authority (“UDA”) International University for Complementary before joining Bank Islam (M) Berhad in 1983. Medicines, Colombo, Sri Lanka on Together with a few pioneer bank staff, he 24 September 2004. YBhg Tan Sri Rozali conceptualised the ﬁ rst institution of Islamic was conferred the Jaksa Pendamai (“JP”) banking in Malaysia. Subsequently, in 1987, he Award in conjunction with the 72nd birthday started his own legal practice as an Advocate of the Yang di-Pertua Negeri Melaka on and Solicitor for seven years, specialising in 9 October 2010. corporate, property and banking works. 052 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

On 30 November 2007, YBhg Tan Sri Rozali 2011. On 9 January 2012, he was recognised was bestowed the SME Platinum Award 2007 as International Distinguished Entrepreneur by the SMI Association of Malaysia for his Of The Year for the Asia Pacifi c International outstanding entrepreneurship, leadership and Brands Summit (Malaysia) 2011 by the Asia achievements in the water industry. This award Entrepreneur Alliance. signals the SMI Association of Malaysia’s recognition of YBhg Tan Sri Rozali as a role YBhg Tan Sri Rozali is a member of model for budding entrepreneurs, especially in various influential governmental and view of his rapid rise from a small and medium non-governmental associations such as business entrepreneur to becoming a Chief Malaysian Industry-Government Group for Executive Offi cer of a large listed company. On High Technology (“MIGHT”), Malaysian Institute YBhg Tan Sri Rozali is the 16 January 2009, YBhg Tan Sri Rozali received of Directors (“MID”), Malaysian-British past Deputy President of the the title of Kolonel Kehormat “60 Rejimen Business Council, Malaysia-Indonesia Business Malaysian Water Association Pakar Pengendalian Air (AW)”. In recognition Council, Corporate Malaysia Roundtable, (“MWA”) (2003/2005 Session), of his excellent services performed with Malaysia-Russia Business Council, former Board Member of the utmost dedication towards the betterment of Malaysia India Business Council (“MIBC”), Universiti Utara Malaysia the community, YBhg Tan Sri Rozali was the Commonwealth Partnership for Technology (2004-2006), and past proud recipient of the Vocational Excellence Management, FELDA Community Social Advisor of the Business and Service Award 2009, conferred by the Development Committee, Yayasan Budi Accounting Faculty Council, Paul Harris Fellow Award and inducted as Penyayang Malaysia, Malaysian Institute of the University of Malaya an Honorary Rotarian by the Rotary Club of Management (MIM) and a Trustee of Perdana (21 May 2004 to 20 April 2007) Kuala Lumpur West on 6 November 2009. On Leadership Foundation and Sekretariat Malaysia and former Trustee of 16 June 2010, YBhg Tan Sri Rozali received the Prihatin. He is the Advisor to IMM, President of Yayasan WAQAF Malaysia Anugerah Perdana (Kepimpinan), a Premier the Malay Chamber of Commerce for the State (“YWM”) (January 2008 – Award for Leadership at the Anugerah of Selangor, Pro-Chancellor of the Universiti December 2009). Usahawan Bumiputera 2010 organised by Putra Malaysia (July 2007 – June 2015), Gagasan Badan Ekonomi Melayu (“GABEM”). Governor for Malaysia of Asia Pacifi c Marketing YBhg Tan Sri Rozali is the On 20 June 2010, YBhg Tan Sri Rozali was Federation (“APMF”) Foundation, Advisor of major shareholder of one honoured with the Top Achiever Of The Year “Gabungan Persatuan Usahawan Melayu (1) listed company, namely 2009 Award at the Fourth Business Of The Selangor/Wilayah Persekutuan” (“GAPUMS”) TRIplc Berhad, a property Year Award organised by the SMI & SME and Advisor of “Persatuan Bola Sepak Melayu company. Worldwide Network. On 28 June 2011, YBhg Malaysia” (“PBSMM”). He is also the Chairman Tan Sri Rozali was honoured with Technology of Gabungan Wawasan Generasi Felda Berhad YBhg Tan Sri Rozali attended CEO of the Year-Global Award by World and Chairman of Majlis Perundingan Ekonomi 5 out of the 5 Board Meetings Finance Magazine under the World Finance Melayu (“MAPEM”). of PNHB held in the fi nancial Technology Awards 2011 in recognition of year ended 31 December 2011. his contributions towards the water sector in In November 2006, YBhg Tan Sri Rozali set Malaysia and the region over the past 15 years up the Water Association of Selangor, Kuala and commitment to continuously innovate Lumpur and Putrajaya (“SWAn”), a non-profi t and improve lives in the process. YBhg Tan organisation which represents the common Sri Rozali received the title “Brigedier Jeneral interest of all water supply and wastewater (Kehormat) Pakar Pengendalian Air-Ke-60 industries within the State of Selangor, RAJD (AW)” on 4 July 2011. On 20 July 2011, and the Federal Territories of Kuala Lumpur YBhg Tan Sri Rozali received the prestigious and Putrajaya with the aim of promoting Entrepreneur of the Year 2011 Award at the interaction with the general public, and Asia Pacifi c Entrepreneurship Awards 2011. enhancing their understanding of water On 28 July 2011, YBhg Tan Sri Rozali was resources. He is the President of SWAn for awarded the Masterclass Leader Award at the the 2011/2013 Session. International Standard Quality (“ISQ”) Award 053 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

He did his tertiary education in 1981 at the Universiti Teknologi MARA (“UiTM”) and attended the professional qualifi cation of the Institute of Chartered Secretaries and Administrators (UK). Throughout his career, YBhg Dato’ Hashim has been very much involved in the corporate services which includes legal and secretarial, contract administration, marketing and corporate fi nance. He also has extensive operational experience in the property, construction and YBhg Dato’ Hashim Mahfar was appointed to manufacturing sectors. YBHG DATO’ the Board of Puncak Niaga Holdings Berhad HASHIM MAHFAR (“PNHB”) and Puncak Niaga (M) Sdn Bhd He was with SAP Holdings Berhad from 1985 (“PNSB”) respectively on 1 January 2010. Aged 52 to 1996 where he started his working career He was appointed as the Head of PNHB’s Malaysian as an Assistant Company Secretary. Over Compliance, Internal Control and Risk Policy the years, he rose up to the rank of Group Managing Director Committee (“CICR”) and Chairman of Syarikat General Manager (Corporate Services). In of PNHB and Bekalan Air Selangor Sdn Bhd (“SYABAS”) 1996, he joined Bridgecon Holdings Berhad as President of POG Audit Committee on 1 January 2010. He was Executive Director and was made the Group appointed a Director of Puncak Oil & Gas Managing Director/Chief Executive Offi cer and Sdn Bhd (“POG”) on 3 May 2010 and he is the he was part of PNSB’s Senior Management President of POG. He also sits on the Board of team in 1998 to 1999. YBhg Dato’ Hashim was several private companies and he is a member the Managing Director of TRIplc Berhad from of the Water Association of Selangor, Kuala 2002 to December 2009 prior to joining PNSB. Lumpur and Putrajaya (“SWAn”), a non-profi t organisation which represents the common YBhg Dato’ Hashim attended 5 out of the interest of all water supply and wastewater 5 Board Meetings of PNHB held in the fi nancial industries within the State of Selangor, and year ended 31 December 2011. the Federal Territories of Kuala Lumpur and Putrajaya and to promote and advance interaction and understanding with members of the general public. He is also a member of the Malaysian Water Association (“MWA”) and the Malaysian Institute of Directors (“MID”).

054 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

YBhg Dato’ Ruslan is a member of the Industrial Court Employer Panel from 1 January 2004 till present. He is also a member of the Malaysian Institute of Directors (“MID”), Malaysian Water Association (“MWA”), Institute of Marketing Malaysia (“IMM”) and International Water Association (“IWA”).

Upon obtaining a Bachelor of Laws Degree from the University of Malaya in 1981, YBhg Dato’ Ruslan began his career as the Legal YBhg Dato’ Ruslan Hassan joined Puncak Advisor with the multinational petroleum YBHG DATO’ Niaga (M) Sdn Bhd (“PNSB”) on 1 November company, Esso Malaysia Bhd, and later as RUSLAN HASSAN 1995 as the Executive Director of Corporate the Senior Legal Counsel of ESSO Production and Legal Affairs Division. When Puncak Niaga Aged 56 Malaysia Inc. In 1985, he joined Sime Darby Holdings Berhad (“PNHB”) was set-up and Malaysian Group and was appointed as the Group Legal listed on Bursa Malaysia Securities Berhad, Advisor and Company Secretary of Pernas Non-Independent YBhg Dato’ Ruslan was appointed to its Board Sime Darby Holdings Sdn Bhd, with interests in Non-Executive on 24 April 1997 and on 6 April 1999, he was automobile, plantation and heavy machinery. Director of PNHB and appointed as the Executive Vice Chairman. YBhg Dato’ Ruslan has 4 years’ experience as Chief Executive Offi cer Together with the Executive Chairman YBhg an Advocate and Solicitor in the capacity of a of SYABAS Tan Sri Rozali Ismail, YBhg Dato’ Ruslan played partner in a medium-sized legal fi rm. In 1993, a principle role in pursuing for the privatisation he joined the securities and banking group of rights for the distribution of treated water in Rashid Hussain Berhad as the Senior General Selangor. Upon PNHB securing the water Manager of the Corporate Affairs Division distribution concession for the State of and was later appointed as an Executive Selangor and the Federal Territories of Kuala Committee Member of the RHB Group. He Lumpur and Putrajaya on 1 January 2005, YBhg was also appointed to the Boards of Rashid Dato’ Ruslan was appointed as the fi rst Chief Hussain Berhad, Rashid Hussain Securities Executive Offi cer (“CEO”) of Syarikat Bekalan Sdn Bhd as well as various subsidiaries of RHB Air Selangor Sdn Bhd (“SYABAS”) and sits on and served as an Audit Committee member of the Boards of SYABAS and Perbadanan Urus both companies. Air Selangor Berhad. With his appointment as the CEO and Director of SYABAS, YBhg Dato’ YBhg Dato’ Ruslan attended 5 out of the Ruslan was re-designated from Executive 5 Board Meetings of PNHB held in the fi nancial Vice Chairman of PNHB to Non-Independent year ended 31 December 2011. Non-Executive Director of PNHB with effect from 1 October 2005.

055 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

YBhg Dato’ Ir Lee graduated as a civil engineer from the 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 34 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 YBhg Dato’ Ir Lee Miang Koi joined Puncak the fi eld of water supply services. He was YBHG DATO’ Niaga (M) Sdn Bhd (“PNSB”) in 1995 as previously a Director of the Negeri Sembilan IR LEE MIANG KOI General Manager, Business Development. Waterworks Department. He left the Public He was subsequently appointed as a Director Aged 58 Works Department in 1991 to join Ranhill of PNSB and Puncak Niaga Holdings Berhad Malaysian Bersekutu Sdn Bhd, holding various positions (“PNHB”) on 2 February 1999 and 1 September from Senior Engineer to Vice President. Non-Independent 1999, respectively. On 1 January 2005, he Non- Executive was appointed as the Chief Operating Offi cer YBhg Dato’ Ir Lee attended 5 out of the 5 Board Director of PNHB of Syarikat Bekalan Air Selangor Sdn Bhd Meetings of PNHB held in the fi nancial year and Chief Operating (“SYABAS”). YBhg Dato’ Ir Lee resigned as ended 31 December 2011. Offi cer of SYABAS 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 2005. He is a member of the Malaysian Water Association (“MWA”), the Malaysian Institute of Directors (“MID”) and the Institute of Marketing Malaysia (“IMM”).

056 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

YBhg Dato’ Syed Danial previously worked with the Pahang Public Works Department for 10 years, holding positions from Project Engineer (1981-1983) to District Engineer for JKR Cameron Highlands (1983-1991) and the Selangor Water Works Department between 1991 to 1995, where he was the Senior Project Engineer overseeing the construction of the Sg Selangor Phase 1 Water Supply Project. YBhg Dato’ Syed Danial is a member of the Institute of Marketing Malaysia, Malaysian YBhg Dato’ Syed Danial Syed Ariffi n graduated Water Association, a Registered Engineer with YBHG DATO’ SYED in 1981 with a BSc (Hons) Degree in Civil the Board of Engineers Malaysia, a member DANIAL SYED ARIFFIN Engineering from the University of Aston in of the Universiti Teknologi Mara’s Board Birmingham, United Kingdom. He is a civil Aged 54 of Academics, Faculty of Civil Engineering engineer by profession and has been with (October 2009 - March 2014 term), Advisor to Malaysian Puncak Niaga Holdings Berhad (“PNHB”) the Institute For Infrastructure Engineering Chief Operating Offi cer Group since December 1995. He began & Sustainable Management and he also sits of PNHB, Managing his career with Puncak Niaga (M) Sdn Bhd on the Boards of several private companies. Director of PNSB and (“PNSB”) as a Manager of Operation and He is also a member of the Water Association a Director of SYABAS was subsequently promoted to Senior of Selangor, Kuala Lumpur and Putrajaya Manager, Assistant General Manager and (“SWAn”), a non-profi t organisation which General Manager of Operation. Prior to his represents the common interest of all water appointments to the Boards of PNSB and PNHB supply and wastewater industries within the on 1 March 2004, he was the Acting Executive State of Selangor, and the Federal Territories Director of the Operation Division from July of Kuala Lumpur and Putrajaya with the aim 2003 to February 2004 and subsequently re- of promoting interaction with the general designated as Executive Director, Operation I public and enhancing their understanding of Division on 1 April 2005. On 16 November 2007, water resources. On 2 May 2012, YBhg Dato’ YBhg Dato’ Syed Danial was appointed as the Syed Danial was appointed as a member of Chief Operating Offi cer of PNHB and PNSB. Universiti Putra Malaysia’s Committee of On 15 February 2012, YBhg Dato’ Syed Danial Program of Study, Faculty of Science. was appointed the Managing Director of PNSB and ceased to be the Chief Operating Offi cer YBhg Dato’ Syed Danial attended 5 out of the 5 of PNSB. He is also a Director of Syarikat Board Meetings of PNHB held in the fi nancial Bekalan Air Selangor Sdn Bhd (“SYABAS”) year ended 31 December 2011. since 3 September 2007. He was appointed as the Chairman of Sino Water Pte Ltd, PNHB’s 98.65% owned subsidiary in Singapore on 1 January 2010. 057 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

YBhg Tan Sri Dato’ Hari Narayanan YBHG TAN SRI DATO’ Govindasamy, a businessman was appointed HARI NARAYANAN to the Board of Puncak Niaga Holdings Berhad GOVINDASAMY (“PNHB”) on 1 July 1999 as an Independent Non-Executive Director. He is a member of Aged 62 PNHB’s Audit Committee, Remuneration Malaysian Committee and Nomination Committee. He Independent holds a Bachelor’s Degree in Electrical and Non-Executive Electronics Engineering from the University of Director of PNHB Northumbria, England.

YBhg Tan Sri Dato’ Hari Narayanan is a member of the Malaysian Institute of Directors and a Registered Professional Engineer with the Board of Engineers Malaysia. He has extensive experience in the ﬁ eld of electrical and electronic engineering and has held various key positions with some established companies as an engineer and entrepreneur.

YBhg Tan Sri Dato’ Hari Narayanan also sits on the Boards of Tenaga Nasional Berhad and SP Setia Berhad, both public listed companies and he is the Chairman of IEV Holdings Limited, Singapore. He also holds directorships in several other private limited companies.

YBhg Tan Sri Dato’ Hari Narayanan attended 5 out of the 5 Board Meetings of PNHB held in the ﬁ nancial year ended 31 December 2011. 058 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

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 (1988-1989), Deputy Minister in the Prime Minister’s Department (1989-1990), Minister of Housing and Local Government (1990-1999) and Secretary- General of the Malaysian Chinese Association (“MCA”) (1990-2005). He also sits on the Boards YBhg Tan Sri Dato’ Seri Dr Ting Chew Peh joined of Pan Malaysia Capital Berhad Group, Hua YBHG TAN SRI Puncak Niaga Holdings Berhad (“PNHB”) on Yang Bhd, Pan Malaysia Corporation Berhad, DATO’ SERI 15 July 2000 as an Independent Non-Executive Johan Holdings Berhad, Huaren Education DR TING CHEW PEH Director and a member of the Remuneration Foundation and also serves as a director of Committee and the Nomination Committee. Aged 69 several private companies. Currently, he is the Chairman for both Malaysian PNHB’s Audit Committee and Compliance, YBhg Tan Sri Dato’ Seri Dr Ting attended 5 out Independent Internal Control and Risk Policy Committee. of the 5 Board Meetings of PNHB held in the Non-Executive He graduated with a Bachelor of Arts Degree ﬁ nancial year ended 31 December 2011. Director of PNHB from the University of Malaya in 1970 and obtained a Master of Science Degree from the University of London in 1972. He also holds a Doctorate in Philosophy, which he obtained from the University of Warwick in 1976. YBhg Tan Sri Dato’ Seri Dr Ting is a member of the 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 the Universiti Kebangsaan Malaysia from 1974 to 1980 and was subsequently an Associate Professor at the Faculty until 1987. Between 1979 to 1986, YBhg Tan Sri Dato’ Seri Dr Ting published two books entitled “Konsep Asas Sosiologi” and “Hubungan Ras dan Etnik”.

059 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

Upon completing her degree, YAM Tengku Dato’ Rahimah started her career with the Hongkong Bank in London, England. She then joined Esso Malaysia Berhad before moving on to DJAJANTI Group, an Indonesian agriculture- based company.

YAM Tengku Dato’ Rahimah is currently the Chairman of Loh & Loh Corporation Bhd and a Director of Cosway (M) Sdn Bhd, a direct selling company dealing in consumer goods YAM Tengku Dato’ Rahimah Almarhum and services and a wholly owned subsidiary of Sultan Mahmud was appointed to the Board Cosway Corporation Berhad. She also sits on YAM TENGKU DATO’ the Board of a few private limited companies. RAHIMAH ALMARHUM of Puncak Niaga Holdings Berhad (“PNHB”) SULTAN MAHMUD on 1 August 2006 as an Independent Non-Executive Director. On 1 January 2007, YAM Tengku Dato’ Rahimah attended 5 out Aged 46 she was re-designated as Non-Independent of the 5 Board Meetings of PNHB held in the ﬁ nancial year ended 31 December 2011. Malaysian Non-Executive Director of PNHB following her appointment as the Executive Director of Non-Independent Puncak Research Centre Sdn Bhd. She was Non-Executive a past Member of PNHB’s Audit Committee, Director of PNHB Remuneration Committee and Nomination Committee for the period from 1 August 2006 to 31 December 2006. 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 in Economics and Accountancy from the City of London University, England. She is a member of the Malaysian Institute of Accountants (“MIA”).

060 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

YBhg Tan Sri Dato’ Ahmad Fuzi is currently the Secretary General of the World Islamic Economic Forum Foundation (WIEF); Chairman of Amanahraya-REIT Managers Sdn Bhd, Seremban Engineering Berhad, Worldvest Energy Sdn Bhd, Theatre Management Associates Sdn Bhd, Leisure Guide Publishing Sdn Bhd and Optima Capital Sdn Bhd; Non- Executive Chairman of Sofgen (Malaysia) Sdn Bhd and Xadacorp Sdn Bhd; Group Chairman of Ace Holdings Sdn Bhd; Deputy Chairman YBhg Tan Sri Dato’ Ahmad Fuzi Haji Abdul of Asia-Development & Investment Bank Limited (Labuan); Independent Non-Executive YBHG TAN SRI DATO’ Razak was appointed to the Board of Puncak Niaga Holdings Berhad (“PNHB”) Director, Maybank Islamic Berhad; Non- AHMAD FUZI HAJI Executive Director, Management Development ABDUL RAZAK on 6 October 2008 as an Independent Non- Executive Director. He is a member of PNHB’s Institute of Singapore; and Member, Board of Aged 63 Audit Committee and Chairman of PNHB’s Trustees, F3 Strategies Berhad. Malaysian Remuneration Committee and Nomination Committee. He holds a Bachelor of Arts Degree YBhg Tan Sri Dato’ Ahmad Fuzi is also a Independent (Honours) from the University of Malaya (1972) Distinguished Fellow, Institute of Strategic Non-Executive and a Certifi cate in Diplomacy (Foreign Service and International Studies (ISIS); Distinguished Director of PNHB Course) from the University of Oxford (1974). In Fellow, Institute of Diplomacy and Foreign recognition of his service to the nation, he was Relations; Deputy Chairman, Malaysian awarded the AMN (1979), the JSM (1999), the Member Committee of the Council for Security DSPN (1999), the DMPN (2002) and the PSM Cooperation in the Asia Pacifi c (CSCAP (2003). Malaysia); Member, Board of Trustees, MERCY, Malaysia; Member, Institute of YBhg Tan Sri Dato’ Ahmad Fuzi Haji Abdul Advanced Islamic Studies (IAIS); Member, Razak was previously the Secretary General Advisory Board, Asia Pacifi c Entrepreneurship of the Ministry of Foreign Affairs Malaysia. Award (APEA); and Advisor, High School Bukit He joined the Malaysian Diplomatic and Mertajam Alumni Malaysia. Administrative Service in 1972, and served in various capacities at the Ministry of Foreign YBhg Tan Sri Dato’ Ahmad Fuzi attended 5 out Affairs, mainly in the Political Division, and at of the 5 Board Meetings of PNHB held in the the Malaysian Missions abroad in Moscow, the fi nancial year ended 31 December 2011. Hague, Canberra, Washington and Dhaka. He also served as the Director General, Institute of Diplomacy and Foreign Relations.

061 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors’ Proﬁ le

Mr Ng has more than 25 years of working experience in various areas covering auditing, accounting, fi nance and corporate fi nance. He commenced his articleship with an accounting fi rm in 1984 and is a member of MIA, MICPA and CPA Australia. He had previously worked with United Engineers (M) Berhad (“UEM”) from 1994 to 2000 overseeing the fi nance and accounting functions of UEM.

In March 2000, Mr Ng joined PNSB as General Mr Ng Wah Tar was appointed to the Board Manager, Finance & Accounts and was promoted twice to Senior General Manager, MR NG WAH TAR of Puncak Niaga Holdings Berhad (“PNHB”) and Puncak Niaga (M) Sdn Bhd (“PNSB”) on Finance & Accounts on 1 April 2006 and Aged 48 1 January 2010 as the Executive Director, Executive Director, Corporate Finance under Malaysian Finance Division and was re-designated to the Executive Chairman’s Offi ce on 1 April 2007, Executive Director, Corporate Finance Division respectively. He left PNSB on 1 September 2007 Executive Director to assume the position of Executive Vice Corporate Finance on 1 January 2011. He was also appointed a Member of PNHB’s Remuneration Committee Chairman of WWE Holdings Bhd till Division of PNHB and the Compliance, Internal Control and 30 June 2009. Mr Ng resigned as the Executive and PNSB Risk Policy Committee (“CICR”) and Syarikat Vice Chairman of WWE Holdings Bhd and Bekalan Air Selangor Sdn Bhd’s (“SYABAS”) rejoined PNHB Group on 1 July 2009. Audit Committee on 1 January 2010, respectively. He is a member of the Water Mr Ng attended 5 out of the 5 Board Meetings Association of Selangor, Kuala Lumpur and of PNHB held in the fi nancial year ended Putrajaya (“SWAn”), a non-profi t organisation 31 December 2011. which represents the common interest of all water supply and wastewater industries within the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya with the aim of promoting interaction with the general public, and enhancing their understanding of the water resources. He is also a member of the Malaysian Water Association (“MWA”).

062 Annual Report 2011 Puncak Niaga Holdings Berhad

Board Of Directors

YBHG TAN SRI ROZALI ISMAIL YBHG DATO’ HASHIM MAHFAR Executive Chairman Managing Director of PNHB of PNHB Group and President of POG

YBHG DATO’ RUSLAN YBHG DATO’ IR LEE YBHG DATO’ SYED DANIAL YBHG TAN SRI DATO’ HASSAN MIANG KOI SYED ARIFFIN HARI NARAYANAN Non-Independent Non-Independent Chief Operating Offi cer GOVINDASAMY Non-Executive Director Non-Executive Director of PNHB, Managing Director Independent Non-Executive of PNHB and Chief Executive of PNHB and Chief of PNSB and a Director of Director of PNHB Offi cer of SYABAS Operating Offi cer of SYABAS SYABAS

YBHG TAN SRI DATO’ SERI YAM TENGKU DATO’ YBHG TAN SRI DATO’ MR NG WAH TAR DR TING CHEW PEH RAHIMAH ALMARHUM AHMAD FUZI HAJI Executive Director Independent Non-Executive SULTAN MAHMUD ABDUL RAZAK Corporate Finance Division Director of PNHB Non-Independent Independent Non-Executive of PNHB and PNSB Non-Executive Director Director of PNHB of PNHB 063 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - PNSB

Ir Tan Hui Kuan joined PNSB in August 2003 as General Manager, Operation II where he IR TAN HUI KUAN had successfully executed and completed an overseas project in Chennai, India, besides Aged 58 local projects in Sabah, Sarawak and Peninsular Malaysia. Ir Tan Hui Kuan was appointed the Chief Operating Offi cer/Executive Director, Engineering/Project Development Division on Malaysian 15 February 2012. Chief Operating Offi cer/ Executive Director, Ir Tan Hui Kuan graduated with a Bachelor of Engineering (Civil) (Hons) Degree from Engineering/Project the University of Malaya in 1979. He has 25 years of working experience in Jabatan Kerja Development Division Raya Malaysia and Lembaga Air Perak in the fi eld of production, distribution, maintenance and consumer services management of a District Waterworks Department, geotechnical investigation, maintenance of military camps, project management of military buildings and infrastructures. The last position held by Ir Tan Hui Kuan was Assistant Director for Millitary Works in Jabatan Kerja Raya, Malaysia.

Ir Tan Hui Kuan was appointed as Managing Director of Sino Water Pte Ltd on 8 June 2011. He was previously the Alternate Director to Mr Ooi Cheng Swee, the former Managing Director of Sino Water Pte Ltd. He oversees the management, operation and project implementation of all projects undertaken in the People’s Republic of China.

YBhg Dato’ Nasir Khan Illadad Khan joined PNSB on 21 February 2006 as Executive Director, Corporate Affairs Division before being appointed as the Executive Director, Business YBHG DATO’ NASIR Development Division effective from 1 January 2010. He holds a Bachelor’s Degree in Social KHAN ILLADAD KHAN Science, Political Science (Hons) from the Universiti Sains Malaysia and a Master’s Degree Aged 59 in Administration from the Pennsylvania State University, United States of America. He also Malaysian possesses a Diploma in Public Management from the National Institute of Public Administration (INTAN), and attended an Executive Management Programme at the School of Government, Executive Director, Business Development Harvard University, United States of America. YBhg Dato’ Nasir Khan has more than 32 years Division of management experience with the Government, holding various positions and covering areas of human resources, security, land development and ﬁ nance. Prior to joining PNSB, he was the Senior Assistant Director, Budget Division at the Ministry of Finance, Malaysia.

YBhg Datuk Mohd Yunus Mohd Amin joined PNSB on 7 March 2011, as Executive Director YBHG DATUK MOHD (Special Function), Executive Chairman’s Ofﬁ ce and on 1 March 2012, he was re-designated YUNUS MOHD AMIN as Executive Director, Special Functions Division. Prior to the expiration of his contract Aged 64 with PNSB on 14 November 2010, he was the Executive Director, Human Resources & Administration Division of PNSB from 15 November 2007 to 14 November 2010. He holds a Malaysian Degree in Mass Communications from the Universitas Padjajaran Bandung, Indonesia and a Executive Director, Diploma in Public Management from the National Institute of Public Administration (INTAN). Special Functions Division Prior to joining PNSB on 15 November 2007, 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 31 years of management experience during his tenure with the Government, inclusive of 27 years of experience as Diplomatic Service Ofﬁ cer.

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Key Personnel Proﬁ le - PNSB

YBhg Datuk Dr Muzahet Masruri joined PNSB on 1 January 2010 as Senior General Manager, YBHG DATUK Strategic Resource Centre. On 15 February 2012, YBhg Datuk Dr Muzahet Masruri was DR MUZAHET MASRURI promoted to Executive Director, Strategic Resource and Public Relations Division. Aged 60 He has 34 years of working experience in economics research, planning and management Malaysian during his tenure with the Government. Prior to joining PNSB, he held various senior positions Executive Director, including Secretary General in the Ministry of Unity, Culture, Arts & Heritage, Deputy Director Strategic Resource and General 1 in the Economic Planning Unit, Prime Minister’s Department, Deputy Secretary Public Relations Division General in the Ministry of Domestic Trade & Consumer Affairs, Deputy Head of Secretariat in the National Economic Action Council (NEAC), Prime Minister’s Department, Senior Assistant Director in the Socio-Economic Research Unit, Prime Minister’s Department, and Editor in Dewan Bahasa dan Pustaka. He holds a Doctorate in Economics and Masters in Development Economics, both from the University of East Anglia, United Kingdom. He obtained his Bachelor of Arts Degree from the University of Malaya, Diploma in Teaching from Sultan Idris Teachers Training College, Tanjung Malim, Perak.

Among the key strategic areas he was involved in during his working experience with the Government include the preparation of the “5-year Malaysia Development Plans”, bilateral trade negotiations with the USA and Chile, the preparation of strategic policies and stimulus packages to avert the negative impacts of the Malaysian economy from the “Asian Financial Crisis in 1997”, the tension between Iraq & the US in 2001 and SARS in 2003. He was also instrumental in drafting the national policy guidelines to promote retail and distributive trade as well as addressing the price control mechanism.

Madam Tan Bee Lian joined PNSB as Company Secretary on 7 November 1994 and was promoted thrice before assuming her current position as Executive Director, Corporate MADAM TAN BEE LIAN Services Division on 1 January 2010. As Group Company Secretary, Madam Tan is responsible Aged 46 for PNHB Group’s company secretarial and regulatory compliance. On 27 June 2008, she was appointed as a Director of Sino Water Pte Ltd. Madam Tan is a Fellow of the Malaysian Malaysian Association of the Institute of Chartered Secretaries and Administrators (“MAICSA”) and has Executive Director, more than 24 years of working experience in company secretarial practice and corporate Corporate Services work. She had previously worked with Projek Lebuhraya Utara-Selatan Berhad (“PLUS”) and Division Metramac Corporation Sdn Bhd / Metacorp Berhad. She is also the winner of the ROC-MAICSA Company Secretary Award 2001 for the Listed Company Category.

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Key Personnel Proﬁ le - PNSB

Madam Wong Ley Chan graduated with a Bachelor of Accountancy Degree from the prestigious MADAM WONG LEY CHAN National University of Singapore. Aged 52 Madam Wong is a member of Malaysian Institute of Certifi ed Public Accountant (“MICPA”) Malaysian and Malaysian Institute of Accountant (“MIA”). She has more than 27 years of working Executive Director, experience and extensive knowledge in various areas covering auditing, corporate banking Finance Division and corporate debts restructuring, corporate fi nance, accounting, taxation and strategic fi nancial management.

Madam Wong started her career in 1984 as a young auditor in an established accounting ﬁ rm. Since then, she had served diligently in several companies at senior management level, including a 6-year stint in UEM Land Group of Companies, 5 years in TRIplc Bhd and 3 years in Syarikat Bekalan Air Selangor Sdn Bhd. Prior to joining Puncak Niaga Holdings Berhad, she was the Vice President, Finance of Scomi Engineering Bhd.

On 25 November 2010, she joined PNSB as Executive Director, Finance Division. She is responsible for the overall ﬁ nance and accounting functions of Puncak Niaga Group of Companies.

Dr Abdul Rahim Awang Kechik joined PNSB on 1 December 2010 as Executive Director, Executive Chairman’s Offi ce. He holds a Doctorate of Philosophy Degree (PhD) in Management, DR ABDUL RAHIM a Bachelor of Arts (Hons) in Education, both from the Universiti Sains Malaysia. He obtained AWANG KECHIK a Master of Business Administration from the University of Wales, College of Cardiff, Aged 61 United Kingdom, a Postgraduate Diploma in Business Administration from the University Malaysian of Birmingham, United Kingdom, and a Diploma in Public Management from the National Institute of Public Administration (INTAN). He has previously worked as a General Manager Executive Director, Executive Chairman’s with PNSB (July 2003 until September 2009). He was an Administrative and Diplomatic Offi ce Offi cer with the Government of Malaysia (1983-2003) and has held various senior positions with the Ministry of Finance, the Prime Minister Department, the Ministry of International Trade and Industry (MITI), State Economics Planning Unit State of Negeri Sembilan, Ministry of Agriculture, and Ministry of Housing and Local Government. He has previously served as an Assistant Professor with the Kulliyyah of Economics and Management Sciences at the International Islamic University Malaysia , Academic Administrative Offi cer at the Universiti Sains Malaysia, and Field Assistant (Oil Palm Plantations) with the Federal Land Development Authority (FELDA).

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Key Personnel Proﬁ le - PNSB

Encik Ismail Bin Hashim joined PNSB on 3 May 2011 as Executive Director, Human Resources ENCIK ISMAIL & Administration Division. He holds a B.A (Hons) from the Universiti Kebangsaan Malaysia BIN HASHIM (UKM), Diploma In Education and Diploma in Public Management (INTAN). Prior to joining Aged 58 PNSB, he was the Director of Management Services Division Department of Polytechnic of the Ministry of Higher Education. He has more than 30 years of working experience in various Malaysian government departments from the Ministry of Information, Director General of the Ministry of Executive Director, Land and Co-operative Development, the National Registration Department of the Ministry of Human Resources & Home Affairs, the Selangor State Government, the Ministry of International Trade & Industry Administration Division and seconded to the British company under the Public Services Department/British Malaysia Industry & Trade Association Programme (BMITA).

Tuan Haji Abd Rashid Abd Satar joined PNSB on 15 February 2012 as the Executive Director, Operation & Maintenance Division. TUAN HAJI ABD RASHID ABD SATAR Tuan Haji Abd Rashid Abd Satar holds a Diploma in Civil Engineering from the Universiti Aged 52 Teknologi Malaysia and a Bachelor of Civil Engineering Degree from the University of Glasgow, Malaysian Scotland. He has 29 years of working experience in the water supply sector. He began his career in 1981 as a Technical Assistant and as a District Engineer of Kuala Selangor/Sabak Bernam Executive Director, Operation & Districts with JBAS and continued his service with PUAS from 2002 to 2005 as Senior Manager Maintenance Division of the Kuala Langat/Sepang Districts respectively. He was the General Manager of the Klang/ Shah Alam District Offi ce of SYABAS before assuming the position as General Manager of the Petaling District Offi ce from March 2007 until March 2009. He was later promoted as Senior General Manager of the Petaling District Offi ce effective from 1 April 2009. On 1 February 2011, he was appointed as Executive Director, Operation Division of SYABAS.

He was awarded the Pingat Pekerti Terpilih (PPT) and Darjah Ahli Mahkota (A.M.S) in 1998 and 2002 respectively by the DYMM Sultan of Selangor for his dedication and services to the Selangor State.

Tuan Haji Sonari Solor joined PNSB on 10 September 1998 and was appointed as Senior TUAN HAJI General Manager, Internal Audit Department of SYABAS for the period 1 September 2006 to SONARI SOLOR 15 February 2012. He re-joined PNSB on 16 February 2012 as the Senior General Manager, Aged 56 Internal Audit Department. Malaysian Tuan Haji Sonari Solor is a Chartered Accountant with the Malaysian Institute of Accountants Senior General Manager, and Fellow Member of the Association of Chartered Certiﬁ ed Accountants (U.K). He holds a Internal Audit Department, professional qualiﬁ cation from the Chartered Institute of Management Accounts (U.K). Tuan Corporate Services Division Haji Sonari Solor has more than 23 years of working experience at the managerial level in the area of accounting and auditing with several public listed companies. Prior to joining PNSB, Tuan Haji Sonari Solor held the position of Group Division Head, Internal Audit with Land & General Berhad.

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Key Personnel Proﬁ le - PNSB

Puan Siti Hajar Ismail joined PNSB on 11 Februay 2011 as the Personal Assistant (Social Affair/ PUAN SITI HAJAR ISMAIL Rural Development) to the Executive Chairman. She posseses the Certiﬁ cate of Advanced Aged 47 Vocal (Grade 8) from the Associated Board of the Royal Schools of Music. After two years, she graduated with a Bachelor’s Degree in Music from the Universiti Teknologi MARA (UiTM) Malaysian in 1988. She has more than 25 years of experience in entertainment, event management and Senior General Manager, education industry and also known as Malaysia’s Number One Vocal Teacher. She is also active Public Relations Department, in Non-Government Organisation such as being an EXCO Member for Gabungan Wawasan Strategic Resource & Generasi FELDA (GWGF) and as the Chairperson of Pertubuhan Kebudayaan dan Kesenian Public Relations Division Generasi FELDA (PERKESAN).

Madam Lim Yew Heang (Jenny) joined PNSB on 1 April 2008 as General Manager, Secretarial Department. She was appointed as the Joint Company Secretary for both PNSB and PNHB on MADAM LIM YEW HEANG 2 May 2008. She is a Chartered Secretary, a holder of the Institute of Chartered Secretaries Aged 45 & Administrators (“ICSA”) qualiﬁ cation and an Associate Member of The Malaysian Institute Malaysian of Chartered Secretaries and Administrators (“MAICSA”). She has 23 years of working experience in company secretarial practice. Prior to joining PNSB on 1 April 2008, she was a General Manager, Secretarial Department, Senior Manager in a leading secretarial consultancy company for 14 years. Corporate Services Division

Puan Hafi zah Ahmat joined a QS Consultant Company in July 1992 as a Quantity Surveyor for PUAN HAFIZAH AHMAT three years. She graduated with an Advanced Diploma in Quantity Surveying from the Universiti Aged 43 Teknologi MARA in 1992 and was bestowed the Best Student Award. Prior to joining PNSB as General Manager, Contract & Procurement Department on 4 January 2010, she worked Malaysian as a Manager with a medium sized construction company from October 1996 to December General Manager, 2009. Puan Hafi zah has more than 20 years of experience in quantity surveying works in the Contract & construction industry. Procurement Department, Managing Director’s Offi ce

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Key Personnel Proﬁ le - PNSB

Encik Johari Pawanchik joined PNSB on 9 August 2010 as General Manager for the Operation ENCIK JOHARI & Maintenance Department. He graduated with a Bachelor’s Degree in Science from the PAWANCHIK Universiti of Kebangsaan Malaysia in 1989 and pursued his study in Engineering and obtained Aged 48 his Master’s Degree in Engineering from the University of South Australia, in 2008. Malaysian He has wide exposure in Production Operation Management with various Multinational General Manager, Companies and Government Linked Company before joining PNSB. Prior to joining PNSB, Operation & he was attached to BHIC Boustead Holdings as Operations General Manager since 2008. Maintenance Department, Operation & Maintenance Division

Mr Tan Seng Yuan joined PNSB on 1 April 2011 as General Manager of Engineering & Project Department. He graduated with an Honours Degree in Bachelor of Engineering (Civil) from the MR TAN SENG YUAN University of Malaya in year 1989. Aged 48 Mr Tan has 23 years of working experience in the construction industry both in buildings and Malaysian civil engineering works. Some of the notable projects he managed were the Retail Podium & General Manager, Basement Carpark of Capital Square (Phase II) at Jalan Munshi Abdullah in Kuala Lumpur; Engineering & Government Complexes for Parcel C & Parcel D in Putrajaya; Package 3 & 5 of Sg Selangor Project Department, Engineering/Project Water Supply Scheme Phase 3 (SSP3); Stage 1 & 2 of Bukit Badong Distribution Works Phase Development Division 3 (DSS3); Telibong Water Supply Scheme in Sabah; Package 1 of New Water Supply Scheme including Upgrading & NRW Improvement Works in Terengganu; Phase II of Beaufort Water Treatment Plant in Sabah & Transmission Pipeline from Mainland Sabah to Labuan, amongst others.

Prior to joining PNSB, he was the General Manager (Project) of JAKS Sdn Bhd.

Encik Azlan Shah Tan Sri Rozali graduated with a Bachelor of Arts Degree in Business and ENCIK AZLAN SHAH Marketing from the Middlesex University, Hendon Business Campus, London, United Kingdom. TAN SRI ROZALI He joined PNSB on 1 November 2011 and is the General Manager, Information Technology Aged 26 Department of PNSB, overseeing the overall Information Technology Department of PNSB. Malaysian Encik Azlan Shah started his career in 2009 via an internship at an apparel merchandise General Manager, company and subsequently promoted to a Manager responsible for the company’s sales and Information Technology marketing, business development, inventory management and administration functions. In Department 2010, he joined SYABAS as an Executive and had exposures and experiences in the area of human resources & administration, ﬁ nance & accounts and managing SYABAS’ district ofﬁ ces.

Encik Azlan Shah is an EXCO Member of the Youth Chamber in the Malay Chamber of Commerce for the State of Selangor, Founder and Vice President of 1 Malaysia Youth Entrepreneurs Club. In 2011, he received the title of ‘Leftenan Rejimen Pakar Pengendalian Air Ke-60 RAJD (Askar Wataniah)’.

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Key Personnel Proﬁ le - SYABAS

Ir V Subramaniam is presently the Executive Director, Technical Development Division of IR V SUBRAMANIAM Syarikat Bekalan Air Selangor Sdn Bhd (“SYABAS”). He has worked with the Selangor Water Aged 62 Works Department (“JBAS”) since 1991 and continued his services with the Perbadanan Urus Air Selangor Berhad (“PUAS”) when the Water Works Department was corporatised in March Malaysian 2002 and subsequently with SYABAS as the Executive Director, Operations when the water Executive Director, supply in Selangor and the Federal Territories of Kuala Lumpur & Putrajaya was privatised on Technical Development 1 January 2005. He holds a Bachelor of Engineering (Hons) (Civil) Degree from the University Division of Malaya.

Ir V Subramaniam has served in the Public Works Department/Water Supply Department/ PUAS/SYABAS in various capacities for the past 38 years since graduation in 1974. He has vast experience in managing water supply and privatisation of water supply. Ir V Subramaniam successfully handled the unprecedented 1998 Water Crisis in Selangor and Kuala Lumpur, then as the Deputy Director of the Selangor Water Works Department and published a complete documentation on the management of the water crisis. He has written and presented more than 25 papers on Privatisation/Corporatisation of water supply and on other technical subjects on water supply at both international and national level seminars, conferences and publications including International Water Association (“IWA”), Asia Paciﬁ c Economic Corporation (“APEC”), Economic and Social Commission for Asia & Paciﬁ c (“ESCAP”) - United Nations and the Asian Development Bank (“ADB”). He has also assisted ADB in several studies on water supply in Asian cities as a domestic consultant appointed by the ADB.

For his dedication and service to the State and Nation, 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). He is also the Deputy President of SWAn, the Water Association of Selangor, Kuala Lumpur and Putrajaya. Ir V Subramaniam truly has a great passion for the water industry with vast experience in drinking water supply from source to tap. He is also a strong advocate of our piped water quality being clean and safe and believes only in drinking water direct from the tap.

Madam Thein Kwee Sim holds a professional qualifi cation from the Malaysian Institute of Certifi ed Public Accountants (“MICPA”) and has been a member of MICPA and the Malaysian MADAM THEIN KWEE SIM Institute of Accountants (“MIA”) since 1992. Madam Thein has more than 25 years of working Aged 48 experience in various areas covering auditing, group accounting, corporate debt restructuring, Malaysian corporate fi nance and consumer billing and recovery management. Executive Director, Finance Division 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 (1992 – 1997) overseeing the group fi nance and accounting functions and HBN Management Offi ce (1997 - 1999) where her role was to monitor the fi nancial 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 fi nancial crisis of 1997. In early 2000, she joined Jendela Permai Sdn Bhd, a fi nancial consultancy company prior to joining SYABAS in May 2005. Her appointment as Executive Director, Finance Division of SYABAS was with effect from 1 April 2007.

070 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - SYABAS

Tuan Haji Sanusi Sulieman graduated with a Second Class Upper Degree in Civil Engineering TUAN HAJI SANUSI from the University of Malaya in 1984, after which he started his career with the Penang Water SULIEMAN Authority in 1984 holding various positions of Project Engineer, Treatment Engineer and Aged 51 Distribution Engineer until 1993. Malaysian In 1993, he joined a consulting engineering ﬁ rm, Ranhill Bersekutu Sdn Bhd as a Senior Executive Director, Engineer involved in the Johor Baharu Water Supplies Privatisation Scheme. In 1994, he Planning Division joined Puncak Niaga (M) Sdn Bhd (“PNSB”) as the Project Manager for the RM1.3 billion Sungai Selangor Phase 2 Water Supply Scheme which involves 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. He was thereafter promoted to Chief Operating Ofﬁ cer of Ranhill Civil Sdn Bhd until 2004. Prior to joining PNSB again in 2004, he joined WWE Holdings Berhad as the Executive Director. He was involved in the task force for the privatisation of PUAS to SYABAS.

Tuan Haji Sanusi was exposed to international construction works when he was assigned for the SR408 million North Jeddah Branch Server Network Project in the Kingdom of Saudi Arabia in 2006 before he was assigned to the position of Executive Director (Project) in SYABAS since August 2007. He was appointed as the Executive Director, Network & Planning Division of SYABAS on 1 May 2011, now known as Planning Division.

Tuan Haji Zainuddin Othman joined SYABAS on 1 April 2005 as General Manager, Human Resource & Administration Division. He holds a Master of Science in Human Resource TUAN HAJI ZAINUDDIN Management from the University of Lincolnshire and Humberside, United Kingdom. Prior to OTHMAN joining SYABAS, Tuan Haji Zainuddin was the Head of Human Resource and Administration Aged 52 Department at Proton Edar Sdn Bhd (a subsidiary of Proton Berhad) for six years (1998- Malaysian 2003) and the Head of Human Resources and Administration for ﬁ ve years at PATI Sdn Bhd (a subsidiary of United Engineering (Malaysia) Berhad) (1993-1997). He has more than Executive Director, Human Resource & 23 years of working experience in the areas of human resource management and general Administration Division ofﬁ ce administration. He was promoted to Senior General Manager, Human Resource Division with effect from 1st January 2007 and he is currently holding the position of Executive Director, Human Resource & Administration Division of SYABAS which he has held since January 2008.

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Key Personnel Proﬁ le - SYABAS

Encik Abdul Halem Haji Mat Som joined PNSB in 2004 as Personal Assistant to the Executive ENCIK ABDUL HALEM Chairman before he was assigned to SYABAS as Senior Manager, Corporate Communications HAJI MAT SOM and Public Affairs Division (“CCPA”). Encik Abdul Halem was subsequently promoted to Aged 46 General Manager, CCPA on 1 January 2007. He was promoted to Executive Director, Corporate Affairs Division on 1 January 2010. He holds a Diploma in Public Administration (1987) and Malaysian a Bachelor’s Degree in Corporate Administration (1998), both from the Universiti Teknologi Executive Director, MARA (“UiTM”) and a Certiﬁ cate in Manufacturing Management from the Sanno Institute of Corporate Affairs Division Business Administration (SIBA), Tokyo (1990).

Encik Abdul Halem started his career as a Deputy Assistant Director of Immigration before joining a Japanese Manufacturing company for three years and subsequently attached to an Arab based multinational company for another two years specialising in Human Resource Management. His exposure in Corporate and PR exercise started when he was the General Manager of Lagenda Abadi Sdn Bhd, an Event Management and PR Agency. He was thereafter appointed as the Managing Director of Comiteg Berhad, a company dealing with Property Development and Investment for four years.

Prior to joining PNSB, Encik Abdul Halem was the Group Managing Director of Eeman Group of Companies, which dealt in manufacturing, trading, event consultancy, advertising and production. Encik Abdul Halem has more than 21 years’ experience in the areas of event management, ﬁ lm production, advertising manufacturing, human resource consultancy and training, administration and capital investment. He is also the President of UiTM Pahang Alumni and a committee member of Yayasan Siswazah Malaysia.

Puan Roowina Merican A Rahim Merican joined PNSB on 22 March 1997 as a Manager in the Operations Division responsible for the Environmental Unit. She was subsequently promoted PUAN ROOWINA to Senior Manager, Assistant General Manager and General Manager of the Water Resources MERICAN A RAHIM and Environmental Surveillance Department in PNSB before assuming her position as the MERICAN Senior General Manager, Water Quality Department under the Strategic Resources Division in Aged 50 SYABAS. On 1 January 2011, she was appointed as an Executive Director, Water Quality, Asset Malaysian & Strategic Resources Division of SYABAS. Executive Director, Water Quality, Asset & She graduated with a BSc (Hons) in Civil Engineering from the University of Surrey in 1984 and Strategic Resources subsequently obtained her MEng (Hons) in Water Resources Development in 1991. She began Division her career in 1985 as a Civil Engineer with the Public Works Department, Malaysia (“PWD”) and held various positions during her tenure with PWD until 1997.

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Key Personnel Proﬁ le - SYABAS

Encik Mohamad Isa Mohd Yassin joined SYABAS on 8 February 2007 as a Special Assistant to ENCIK MOHAMAD ISA the Executive Chairman/General Manager of the Bumiputera Entrepreneur Participation & MOHD YASSIN, AMS, AMK Development (“BEPD”). He was then promoted to Special Assistant to the Executive Chairman/ Aged 53 Senior General Manager of BEPD in May 2008, followed by Special Assistant to the Executive Chairman/Executive Director of BEPD in January 2011. Malaysian Special Assistant To Prior to joining SYABAS, he was attached to Matsushita Electric Co (M) Bhd as Executive of Executive Chairman/ Research & Development Department and Production Planning Department. He joined Puncak Executive Director, Special Task Department Niaga (M) Sdn Bhd (“PNSB”) in 1994 as a Special Assistant to Executive Chairman, and later & Bumiputera promoted as General Manager of Puncak Alam Housing Sdn Bhd from 2000 till 2004 and as Entrepreneur Participation Managing Director of Haluan Prisma Sdn Bhd from 2004 until 2007. & Development He was trained in Industrial & Management Training Skills in Matsushita Electric Co in Osaka, under the Look East Policy Scheme in Japan from 1986 to 1988. He has vast experience of more than 34 years in town and building development, project monitoring, public relations and manufacturing industries. He was awarded the Darjah Ahli Mahkota Selangor (“AMS”) from DYMM Sultan of Selangor in 2000, followed with Darjah Ahli Mahkota Kedah (“AMK”) from DYMM Sultan of Kedah in 2011.

Tuan Haji Yusof Saroji holds a Diploma and Advanced Diploma in Civil Engineering from the Universiti Teknologi MARA (“UiTM”). He has 23 years of working experience in the water TUAN HAJI YUSOF supply and distribution sector ranging from district water operations to revenue and collection SAROJI management. Aged 46 Malaysian Tuan Haji Yusof Saroji is also a Graduate Member, Institution of Engineer Malaysia (IEM). He began his career in 1988 as a Technical Assistant with JBAS and continued his service with Executive Director, Operation Division PUAS as Senior Manager/Head of District for Kuala Selangor and Sabak Bernam District (Acting) Offi ces. He was then promoted to General Manager/Head of Gombak District Offi ce and later assigned as General Manager of the Operations and Maintenance Department of SYABAS in January 2010. In August 2010, he joined the District Department as General Manager and he was subsequently promoted to Senior General Manager where he is responsible and accountable for overseeing the operations and management of SYABAS’ 10 District Offi ces. He is currently the Acting Executive Director, Operation Division.

Tuan Haji Yusof Saroji is also active in several non-proﬁ t organisations in the water fraternity and was the Secretary and the Chairman of the Jawatankuasa Tindakan Jurutera Air Daerah Se Malaysia (“JTJAD”) for the 2011/2013 term. He is also the Commandant for the Rejimen Pakar Pengendalian Air Ke-60 RAJD (Askar Wataniah) for the State of Selangor holding the rank of Major since 2011.

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Key Personnel Proﬁ le - SYABAS

Encik Yusof Badawi joined SYABAS on 1 May 2011 as Executive Director, Project and ENCIK YUSOF BADAWI Development Division. This Division was later renamed as Project & Non-Revenue Water Aged 50 Division. Malaysian Encik Yusof Badawi graduated with a Bachelor of Science in Engineering majoring in Civil Executive Director, Engineering and minoring in Construction and Mathematics from the Southern Illinois Project & Non-Revenue University, United States of America. He has 25 years of experience in the construction industry Water Division at various levels including senior and board level. He has been actively involved in management and implementation of various construction, infrastructure, housing development, waterworks and maintenance projects.

Encik Yusof Badawi was involved in the construction, testing and commissioning of Sungai Selangor Water Supply Scheme Phase 1 and Phase II from 1990 to 1998. He has also successfully managed the implementation of the RM500 million contract for the maintenance and upgrading of schools in Peninsular Malaysia under the umbrella concept for the Ministry of Education.

In May 2003, he was appointed as Chief Executive Ofﬁ cer of a public listed company (“PLC”). Together with the management and his staff team he managed to successfully construct and complete numerous projects and turned the PLC from a loss making company into a proﬁ table group.

Encik Yusof Badawi is a member of the Board of Engineers Malaysia, the Malaysia Institute of Management (“MIM”), the Malaysian Water Association and Dewan Perniagaan Melayu Malaysia, Selangor (professional).

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 32 years of working TUAN HAJI MOHD experience in public works and the water supply sector. He began his career in 1979 as a Civil SUHAIMI RAFIE Engineer with Jabatan Kerja Raya, holding various positions until 2001. Thereafter, he joined Aged 56 JBAS as a Senior Assistant Director and continued his service under PUAS (2002 - 2004). He Malaysian was the General Manager, Information & Communication Technology Division before he was promoted to Senior General Manager, Information & Communication Technology Department Senior General Manager, Information & on 1 January 2007. Communication Technology Department

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Key Personnel Proﬁ le - SYABAS

Tuan Haji Muhamad Darif Haji Idris joined SYABAS on 1 January 2005 when SYABAS took over TUAN HAJI MUHAMAD from PUAS as Senior Manager, Operation Division at SYABAS Headquarters. Prior to assuming DARIF HAJI IDRIS his position as General Manager of Klang District Ofﬁ ce from April 2007 till March 2009, he Aged 56 was the General Manager of SYABAS Petaling District Ofﬁ ce. On 1 April 2009, he assumed the post of Senior General Manager of SYABAS Operation & Maintenance Division. With effect from Malaysian 1 February 2011, he was transferred to Water Quality, Asset & Strategic Services Division as Senior General Manager, Senior General Manager, Water Quality & Asset Department. Water Quality & Asset Department Tuan Haji Muhamad Darif Haji Idris holds a Bachelor of Science (Engineering) (Hons) Degree from the University of Aberdeen, Scotland and Ordinary National Diploma (Building) from the Southampton Technical College, England and has 32 years of working experience in public works and the water supply sector. His career began as Civil Engineer with JKR Tampin District. He was transferred to JBAS as District Waterworks Engineer at the Hulu Langat District and continued his service with PUAS after the corporatisation of JBAS from 2002 to 2004 as Senior Manager, Operation Division.

Cik Hayati Ab Wahab is the Senior General Manager of Internal Audit Department. Previously, Cik Hayati was the Senior General Manager of Billing and Recovery Department from January CIK HAYATI AB WAHAB 2011 to September 2011 and General Manager of the Kuala Lumpur Regional Offi ce from Aged 48 2007 to 2010. She joined PNSB in July 2001 as an Internal Auditor before she was assigned to Malaysian SYABAS in 2005 as Secretary of Works for Kuala Lumpur District. Senior General Manager, Internal Audit She holds a Bachelor of Accountancy (Hons) Degree from the London Guildhall University and Department is a Certifi ed Public Accountant with MICPA, Chartered Accountant with MIA and Chartered member of the Institute of Internal Auditor, Malaysia. She has 21 years of working experience in auditing covering various types of industries (eg. construction, plantation, timber, manufacturing and government bodies), due diligence review and profi t & cash fl ow forecasts, internal audits in the areas of fi nancial, operational, risk management and investigation. She has experience working in England, Bangkok and Singapore.

075 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - SYABAS

Tuan Haji Ariff Ibrahim joined PNSB in January 2005 and was assigned to SYABAS as General TUAN HAJI ARIFF Manager, Operation & Maintenance in January 2006 and early this year, he was appointed as IBRAHIM the General Manager of NRW Department. He graduated with a Bachelor of Civil Engineering Aged 51 (Hons) Degree from the Universiti Technologi Malaysia in 1984 and subsequently obtained a Masters Degree of Business Administration from the Universiti Kebangsaan Malaysia in 2001. Malaysian Tuan Haji Ariff has more than 25 years of working experience in the water industry covering General Manager, operation and maintenance of water treatment plants, operation and maintenance of water Non-Revenue supply, construction supervision of water supply schemes, safety and health and also human Water Department resource and administrative matters. Prior to joining PNSB, he worked with Jabatan Bekalan Air Selangor for 10 years and another 10 years with CGE Utilities (M) Sdn Bhd.

Tuan Haji Ariff has been a member of the Institute of Management Malaysia (MIM) and International Water Association (IWA). He is also actively involved in the Rejimen Pakar Pengendalian Air Ke-60 (Askar Wataniah), Rejimen Askar Jurutera Diraja and is currently holding the rank of Major in the regiment.

Ir Ahmad Marzuki Hashim graduated with a Bachelor of Science Degree in Civil Engineering (Hons) from the Ohio University in Athens in 1984 and Master of Science Degree in Environmental, IR AHMAD MARZUKI Civil Engineering from the University of Liverpool, England in 1994. He is a Civil Engineer by HASHIM profession and has been with PNSB since March 1997. He began his career with PNSB as a Aged 50 Manager of the Dam Operation Department and was subsequently promoted to the positions Malaysian of Senior Manager, Assistant General Manager of the Dam Operation Department and General Manager of the Business Development Department. General Manager, Project Management Department He then joined SYABAS as General Manager in the Chief Operating Ofﬁ cer’s Ofﬁ ce in August 2009. Ir Ahmad Marzuki is currently the General Manager, Project Management Department.

Ir Ahmad Marzuki has more than 27 years’ experience in the water industry and has held various positions during his tenure with the Public Works Department’s Waterworks Branch.

076 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - SYABAS

Ir Dr Teoh Seng Giap graduated with a Bachelor of Engineering (Hons) Degree and a Doctor IR DR TEOH SENG GIAP of Philosophy (Engineering) Degree from the University of Western Australia in 1989 and 1995 Aged 46 respectively. He has 14 years of working experience with established engineering consulting ﬁ rms holding various positions. Malaysian General Manager, Ir Dr Teoh has participated in civil engineering design development, contract documentation Network & and administration, project management, proposal and concept paper preparation, and Instrumentation Department project procurement. He has played key roles in projects involving hydraulic modelling, river engineering and ﬂ ood mitigation. Ir Dr Teoh was an Associate Director at Sepakat Setia Perunding Sdn Bhd and actively involved in inception, design and implementation of Stormwater Management and Road Tunnel (SMART) Project.

He joined PNSB on 1 April 2008 as General Manager (Hydrology & Hydraulics), Chief Operating Ofﬁ cer’s Ofﬁ ce. On 1 January 2010, he assumed the position as SYABAS’ General Manager of Network and Instrumentation Department. He is a Professional Engineer registered with the Board of Engineers Malaysia and a member of the Institution of Engineers Malaysia.

En Shahruddin Ab Rahman joined SYABAS on 1 July 2009 as the General Manager of the Billing and Recovery Department. He was subsequently transferred as the General Manager ENCIK SHAHRUDDIN of the Kuala Lumpur District effective from 1 January 2011 to 15 February 2012 to familiarise AB RAHMAN himself with District Operations and thereafter re-assigned again as the General Manager of Aged 48 the Billing and Recovery Department. Malaysian He holds a Bachelor in Accounting (Advanced Diploma in Accounting) from the MARA University General Manager, of Technology. Billing And Recovery Department Prior to joining SYABAS, he served Telekom Malaysia Berhad (“TM”) for 22 years with various Divisions and subsidiary Companies of TM. He was the Chief Financial Ofﬁ cer for two TM subsidiary Companies namely Government Integrated Telecommunication Networks (“GITN”) Sdn Bhd and TM Payphone Sdn Bhd. He was also involved with the spun off of a few TM Divisions into full subsidiaries of TM such as TM Research Sdn Bhd and TM Payphone Sdn Bhd. He was also involved in the take over of GITN Sdn Bhd, a subsidiary Company of PNB Berhad, to be a full subsidiary of TM. His last project with TM was as the Business Controller for the Malaysian Emergency Response System 999 project where TM was appointed by the Kementerian Tenaga, Air and Komunikasi to develop and maintain the system which will provide emergency facilities for the public.

077 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - SYABAS

Encik Ahmad Suhaidin Ismail joined Jabatan Bekalan Air (“JBA”) as a Technical Assistant on ENCIK AHMAD 15 October 1984. On 15 August 2002, he was transferred from the Gombak District to Klang/ SUHAIDIN ISMAIL Shah Alam District as Manager. He was appointed Senior Manager (2005 – 2006). He was Aged 51 later appointed as Assistant General Manager on 1 January 2007 and subsequently as General Manager on 1 April 2009. In 2012, he was posted to his current position as General Manager Malaysian of Petaling District. General Manager, Petaling District He has worked with Jabatan Bekalan Air Selangor (“JBAS”) and had continued his services Central Zone District Department with PUAS from 2002 to 2004. Encik Ahmad Suhaidin has served JBA, PUAS and SYABAS in various capacities for the past 27 years of service.

He graduated in 1999 with a Bachelor of Engineering (Civil) Degree from the University of Technology Malaysia.

Encik Mohd Yaman Mohd Zin holds an Ordinary National Diploma in Technology (Engineering) from the Oldham College of Technology, England and graduated from the University of ENCIK MOHD YAMAN Sussex, England in 1982 with a Bachelor of Science Degree in Structural Engineering. Encik MOHD ZIN Mohd Yaman has 29 years of working experience involving engineering and environmental Aged 57 consultancy, business development, project/construction management, property development Malaysian and infrastructure/utility construction and management. General Manager, Customer Service Prior to joining SYABAS as General Manager, Water Quality Division in 2007, he had held Department various senior positions in private organisations and public listed companies, the latest being as the Construction Manager for the Jeddah Sewer Network Project with WWE Holdings Bhd. Encik Mohd Yaman Mohd Zin is currently the General Manager, Customer Service Department.

Encik Abdul Latif Ismail joined SYABAS on 20 August 2010, as General Manager of the Human ENCIK ABDUL LATIF Resource & Administration Department. He holds a Master Degree in Science, Human ISMAIL Resources Management from the University of Lincolnshire & Humberside, United Kingdom. Aged 50 Encik Abdul Latif had the opportunity to serve an established exchange prior to him joining Malaysian SYABAS. He has extensive exposure in Resourcing, Employee Relations, Industrial Relations, General Manager, Training & Development, Performance Management, Rewards and Beneﬁ ts. He took the lead Human Resource in various human resources strategic initiatives such as job design, job evaluation, right- & Administration Department sizing, culture proﬁ ling & culture internalisation and effective employees’ communication.

078 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - SYABAS

Puan Rosmizah Ahmad joined PUAS on 2 September 2002 as an Engineer based at the PUAN ROSMIZAH AHMAD Development Department at the Head Quarters (“HQ”). On 1 January 2005, Puan Rosmizah Aged 43 continued her appointment with SYABAS based at the Development Department at SYABAS HQ. Malaysian General Manager, Upon graduating with a Bachelors Degree in Civil Engineering (Honours) from Universiti Development Department Teknologi Malaysia in 1994, Puan Rosmizah began her career as an Engineer in civil and structural engineering design. To-date, she has over 18 years of working experience in the ﬁ eld of engineering.

Prior to working at SYABAS, Puan Rosmizah joined a consultancy ﬁ rm for 8 years majoring in Structural Engineering Design. Puan Rosmizah is a Member of the Board of Engineers, Malaysian Water Association (“MWA”) and International Water Association.

Puan Hayati Abd Rahman graduated with a Degree in Social Science majoring in Computer Science from University of Waikato, Hamilton, New Zealand in 1991 and holds a Master of PUAN HAYATI ABD Science in Information Management from the University Institute Technology Mara (“UITM”) in RAHMAN 2002. She has 20 years of working experience in the computer environment from various types Aged 45 of industries (eg. plantation, properties and government agencies), system development, core system migration and implementation. She began her career in 1991 as a Programmer at Sime Malaysian Darby Plantation and later joined Rubber Research Institutes (RRI) as Analyst Programmer. General Manager, Information & In 1992, she joined TTDI Development Sdn Bhd and grew her career path from Analyst Communication Programmer to Manager heading the Management Information System Section until 2003. On Technology Department 1 April 2003, she assumed the post of Senior Manager heading the Application Development Section of Information & Communication Technology Division at Suruhanjaya Syarikat Malaysia (“SSM”) prior to joining SYABAS as a General Manager, Information & Communication Department on 15 January 2012.

079 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - SYABAS

Ir Khor Tse Tong joined SYABAS on 24 January 2011 as Assistant General Manager, Planning IR KHOR TSE TONG & Design Department (“PDD”) and was subsequently promoted in 2012 as General Manager Aged 37 of PDD. He is a Professional Engineer registered with the Board of Engineers Malaysia (“BEM”) and has more than 12 years of working experience as a Design Engineer for property Malaysian developments in the civil and structural aspects, as a contractor in a high rise building General Manager, construction, as an Engineer and Project Manager for NRW and water supply distribution Planning & network modeling projects. Design Department Ir Khor Tse Tong graduated from the Universiti Kebangsaan Malaysia (“UKM”) in 1999 with a Degree in Civil & Structural Engineering. He began his career as a Design Engineer for a civil and structural consultancy ﬁ rm. He then joined PABW in 2011 to work in the Selangor NRW Project. He joined Salcon Engineering Berhad in 2003 for an NRW project in Sandakan, Sabah. Prior to joining SYABAS, Ir Khor Tse Tong worked for Halcrow Consultant in Malaysia since 2005.

Mejar (B) Zulkifl i Ishak joined SYABAS on 3 January 2012 as the General Manager of Special Task & Bumiputera Entrepreneur Participation & Development Department (“STD”). MEJAR (B) ZULKIFLI BIN ISHAK Mejar (B) Zulkifl i obtained his Bachelor of Public Management (Hons) Degree from the Aged 48 Universiti Utara Malaysia and later obtained a Masters Degree in Public Management from the same university. Mejar (B) Zulkifl i also has a Diploma in Landscape Architecture and Malaysian Certifi cate in Town and Regional Planning from UiTM Shah Alam, Selangor and is a member General Manager, of the Malaysia Institute of Landscape Architecture (“ILAM”) and Malaysia Institute of Special Task & Planner (“MIP”). Bumiputera Entrepreneur Participation & Development Mejar (B) Zulkifl i has 28 years’ experience in Town and Regional Planning, Local Authority Department and Land Development, Urban Landscape, Entrepreneurship, Disaster and Preparedness, Defence and Strategic, Management and Training before joining SYABAS. During his service in the army, he had been entrusted to lead as an offi cer in various appointments such as Platoon Commander, Regiment and Battalion Adjutant, Aide-Camp, Staff Offi cer, Company Commander and Offi cer in Command with Training Unit, Operation Battalions, Brigade and Division Headquarters.

080 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - Sino Water Pte Ltd

YBhg Dato’ Syed Danial Syed Ariffi n was appointed to the Board of Sino Water Pte Ltd YBHG DATO’ SYED (“Sino Water”) and as the Chairman of Sino Water on 1 January 2010, respectively. DANIAL SYED ARIFFIN He is the Chief Operating Offi cer of Puncak Niaga Holdings Berhad (“PNHB”) and Aged 54 Managing Director of Puncak Niaga (M) Sdn Bhd (“PNSB”). YBhg Dato’ Syed Danial is a civil engineer by profession and has been with the PNHB Group since Malaysian December 1995. He holds a BSc (Hons) Degree in Civil Engineering from the University of Chairman, Aston in Birmingham, United Kingdom. Sino Water Pte Ltd As Chairman of Sino Water, YBhg Dato’ Syed Danial Syed Ariffi n is responsible for the stewardship of the Board of Sino Water and its subsidiaries in the People’s Republic of China.

The full details of YBhg Dato’ Syed Danial’s proﬁ le are as detailed on page 057 of this Annual Report.

Ir Tan Hui Kuan was appointed as Managing Director of Sino Water on 8 June 2011. Prior to his appointment as Managing Director of Sino Water, he was the Alternate Director to IR TAN HUI KUAN Mr Ooi Cheng Swee, the former Managing Director of Sino Water. He is the Chief Operating Aged 58 Ofﬁ cer/Executive Director, Engineering/Project Development Division of PNSB. Ir Tan Hui Kuan Malaysian graduated with a Bachelor of Engineering (Civil) (Hons) Degree from the University of Malaya in 1979. Managing Director, Sino Water Pte Ltd As the Managing Director of Sino Water, Ir Tan Hui Kuan is responsible for the day-to-day management, operations and project implementation of all projects undertaken in the People’s Republic of China including identifying potential projects, liaisons with the regulatory authorities and provincial heads of the respective government bureaus.

The full details of Ir Tan Hui Kuan’s proﬁ le are as detailed on page 064 of this Annual Report.

081 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - POG

YBhg Dato’ Hashim Mahfar was appointed to the Board of Puncak Oil & Gas Sdn Bhd (“POG”) YBHG DATO’ on 3 May 2010. He is also the President of POG and the Managing Director of Puncak Niaga HASHIM MAHFAR Holdings Berhad (“PNHB”). He did his tertiary education in 1981 at the Universiti Teknologi Aged 52 MARA (“UiTM”) and attended the professional qualiﬁ cation of the Institute of Chartered Secretaries and Administrators (UK). Throughout his career, YBhg Dato’ Hashim has been Malaysian very much involved in the corporate services which includes legal and secretarial, contract President/ Director administration, marketing and corporate ﬁ nance.

As the President of POG, YBhg Dato’ Hashim Mahfar is responsible for the operations and management of Puncak Group’s Oil & Gas Division.

The full details of YBhg Dato’ Hashim Mahfar’s proﬁ le are as detailed on page 054 of this Annual Report.

Ir Nasir Ismail joined POG on 15 February 2012 as the Vice President, Tender & Contract Division. Ir Nasir was appointed Director of POG and GOM Resources Sdn Bhd (formerly known IR NASIR ISMAIL as Global Offshore Malaysia Sdn Bhd) on 21 February 2012. Aged 49 Malaysian Ir Nasir Ismail is a member of the Board of Engineers (BEM), MWA, SWAn, IWA, IACCM and Registered Gas Engineer with the Energy Commission, Ministry of Energy, Green Technology Director/ Vice President, and Water. He holds a Bachelor of Science Degree in Civil Engineering from the Memphis State Tender & Contract University, Tennessee, USA in 1985 and MSC in Environmental Engineering from the Shimane Division University, Japan in 1992.

Prior to joining POG, Ir Nasir was one of the task force members for the privatisation of Syarikat Bekalan Air Selangor Sdn Bhd (“SYABAS”) and has served Puncak Niaga (M) Sdn Bhd (“PNSB”) since 1998 and his designation in SYABAS prior to joining POG was the Senior General Manager, Contract & Procurement Department. Ir Nasir had also served Majlis Perbandaran Seremban, Consulting Engineer ﬁ rms, contractors and Gas Malaysia Sdn Bhd.

082 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - POG

YBhg Dato’ Mat Hairi Ismail was appointed as the Vice President, Human Resources and YBHG DATO’ Administration Division of POG on 1 April 2012. He graduated from the Universiti Kebangsaan MAT HAIRI ISMAIL Malaysia in 1985 with a Bachelor in Accounting (Hons) Degree and is a member of the Aged 50 Malaysian Institute of Accountants (“MIA”). In 1985, he started his career as an Accountant at the Accountant General’s Ofﬁ ce in Labuan, and from 1989 to 1992 he served at the Malaysian Malaysian High Commission in London and from 1992 to 1994, he was attached with the Langkawi Vice President, Development Authority (“LADA”). Human Resources And Administration Division From 24 May 1994 to 3 May 2005, YBhg Dato’ Mat Hairi was the Executive Director, Finance Division of PNSB. YBhg Dato’ Mat Hairi was a Director of Triplc Berhad on 3 September 1999 and resigned as Non-Independent Non-Executive Director on 5 October 2007. YBhg Dato’ Mat Hairi was also a former Managing Director of WWE Holdings Bhd from 7 July 2003 to 1 September 2007. He was re-designated to Executive Director on 1 September 2007, before retiring from the Board of Directors at the 19th Annual General Meeting on 26 March 2008.

Prior to joining POG, YBhg Dato’ Mat Hairi was an Executive Director in Gabungan Wawasan Generasi Felda Berhad.

YBhg Dato’ Mat Hairi is the younger sibling to YBhg Tan Sri Rozali Ismail, the Executive Chairman and substantial shareholder of PNHB. YBhg Dato’ Mat Hairi is a member of Malaysian Institute of Directors (“MID”) and The Malaysian Water Association (“MWA”).

083 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - GOM Resources

YBhg Dato’ Dr Khalid Ngah was appointed to the Board of GOM Resources Sdn Bhd (formerly YBHG DATO’ known as Global Offshore Malaysia Sdn Bhd) (“GOM Resources”) on 15 December 2011. He is DR KHALID NGAH the Chairman of the Board. Aged 65, Malaysian YBhg Dato’ Dr Khalid Ngah graduated from the Carleton University in Ottawa, Canada, in Chairman 1970 with a Bachelor of Science (Hons) in Geology. After graduation, from 1970 until 1973, he served Jabatan Kajibumi Malaysia as the Negeri Sembilan State geologist. He then pursued and obtained his Master of Science degree in Geology from the Oklahoma State University, Stillwater, OK, USA, specialising in exploration for Petroleum. On his return to Malaysia in 1975, he was assigned to serve Petronas until 1987. Under the offer by Petronas, he furthered his tertiary education at the Imperial College, University of London, UK, in the ﬁ eld of Petroleum Geology. He completed his doctorate program and was awarded a PhD degree in Geology, specialising in Petroleum exploration, in 1990.

After obtaining his doctorate degree in 1990, he served Petronas as its General Manager of Exploration and Production Research Division and in 1997, YBhg Dato’ Dr Khalid Ngah opted for optional retirement.

YBhg Dato’ Dr Khalid Ngah was formerly Joint Managing Director of Kedah Cement Holdings Berhad, Executive Chairman of FPSO Tech Sdn Bhd and an Independent Director of Eastern Paciﬁ c Industrial Corporation (EPIC) Berhad. He is currently a board member of KNM Berhad, Chairman of Tubex Sdn Bhd, a subsidiary of EPIC Berhad and also a board member of Tati Production Sdn Bhd, a subsidiary of TATIUC (Tati University College of Terengganu).

He is a member of the American Association of Petroleum Geologists (AAPG) and a life member and past president of the Geological Society of Malaysia. He was awarded the Achievement Award from AAPG in 1994 for “Advancement in Malaysian Petroleum Industry and for Contribution to AAPG as Regional Advocate.

084 Annual Report 2011 Puncak Niaga Holdings Berhad

Key Personnel Proﬁ le - GOM Resources

Encik Angat Anum Lingoh was appointed as Director of GOM Resources on 21 February 2012. ENCIK ANGAT He is the Senior Vice President of GOM Resources. Prior to the acquisition of GOM Resources ANUM LINGOH by POG, he was the Country Manager and Project Director of GOM Resources. Aged 56, Malaysian Encik Angat Anum Lingoh graduated from the University of Newcastle in England with a B.Sc. Director / Senior Vice President in Mechanical Engineering. He started off as a Contract Engineer in Sarawak Shell Berhad in August 1982 after which he held various technical and senior management positions in Shell and other Installation Contractors. He now has more than 30 years of working experience in the Offshore Oil & Gas industry covering corporate ofﬁ ce, operations, project, ﬁ nance and human resource management. He also majors in offshore pipeline and platform project management, installation, repairs replacements and commissioning.

Encik Angat Anum Lingoh had working experiences in major and established Oil & Gas companies locally and internationally such as Sarawak Shell Berhad, Swiber Marine (Malaysia) Sdn Bhd, Brunei Shell Petroleum Co, Technip Engineering in Brunei, Shell Petroleum Development Company of Nigeria, Tengizchevroil Chevron in Kazakhstan and Woodside Energy Limited in Australia.

Encik Jamel Salleh was appointed as Vice President of GOM Resources on 19 July 2010. ENCIK JAMEL SALLEH Encik Jamel Salleh’s career started off with Elf Aquitaine in February 1986 and he has more Aged 53, Malaysian than 25 years of working experience in the Oil & Gas industry covering corporate ofﬁ ce, drilling operations, project, logistics and warehousing and Business Development. He was involved Vice President as a committee member set up by the Joint Customs Committee to formalize the Master Exemption List for the Malaysia Thailand Joint Development Area from 2005 – 2008.

Encik Jamel Salleh has working experiences in major and established Oil & Gas companies locally and internationally such as Idemitsu Exploration of Japan, Agip Ltd of Italy, Petronas Carigali Sdn Bhd (Baram Delta Operation), Carigali-Triton Operating Co Sdn Bhd, Carigali-Hess Operating Co Sdn Bhd and PJ Energy Services Co Ltd of Thailand.

085 Annual Report 2011 Puncak Niaga Holdings Berhad

Five-Year Financial Highlights

31 Dec 11 31 Dec 10 31 Dec 09 31 Dec 08 31 Dec 07 (Restated) (Restated) (Restated) (Restated) RM’000 RM’000 RM’000 RM’000 RM’000

KEY RESULTS Revenue 2,591,509 2,055,523 # 2,089,855 # 2,062,653 # 2,207,938 # Proﬁ t before tax (75,163) (108,658) # (303,406) # (521,915) # (435,754) # Net proﬁ t attributable to owners of the parent 9,320 (90,926) # (304,783) # (419,796) # (332,169) #

STATEMENTS OF FINANCIAL POSITION Property, plant and equipment 452,829 245,324 # 234,313 # 539,225 # 440,740 # Service concession assets 7,677,592 7,685,002 # 7,647,906 # 6,529,522 # 6,166,667 # Other non-current assets 2,742,750 1,504,548 # 1,482,787 # 1,287,723 # 1,248,470 # Current assets 1,755,098 2,395,880 1,994,738 1,388,883 1,473,942

Total assets 12,628,269 11,830,754 11,359,744 9,745,352 9,329,819

ISSUE AND PAID-UP CAPITAL Share capital 411,143 411,143 411,143 411,143 411,143 Reserves (304,038) (364,669) # (229,355) # (681,879) # (254,074) #

Equity attributable to owners of the parent 107,105 46,474 # 181,788 # (270,736) # 157,069 #

Net assets per share attributable to owners of the parent (RM) 0.26 0.11 # 0.44 # (0.66) # 0.38 #

RATIOS AND STATISTIC Net proﬁ t margin attributable to owners of the parent (%) 0.36 (4.42)# (14.58) # (20.35) # (15.04)# Basic earnings per share attributable to owners of the parent (sen) 2.28 (22.23)# (74.50) # (102.61) # (81.19)# Loans and borrowings (RM’000) 6,428,252 5,486,963 5,376,769 4,784,802 3,760,457 Service concession obligations 4,169,539 4,285,000 # 4,369,135 # 4,444,042 # 4,493,730 # Gearing ratio (%) 99 100 # 98 # 100 # 98 # Current ratio (times) 0.86 0.92 # 1.22 # 0.94 # 1.23 #

# These comparatives have been restated to take into account the effects of the adoption of IC Interpretation 12: Service Concession Arrangement.

086 Annual Report 2011 Puncak Niaga Holdings Berhad

Five-Year Group Performance

REVENUE NET PROFIT ATTRIBUTABLE BASIC EARNINGS PER SHARE RM’000 TO OWNERS OF THE PARENT ATTRIBUTABLE TO OWNERS RM’000 OF THE PARENT Sen

3,000,000 100,000 20 2.28 2,591,509 9,320 0 2,500,000 0 2,207,938 2,089,855 2,062,653 2,055,523 -20 2,000,000 -100,000

-40 (22,23)

1,500,000 -200,000 (90,926)

-60

1,000,000 -300,000 -80

500,000 -400,000 (74.50)

(304,783) -100 (81.19) (332,169)

0 -500,000 0 (102.61) (419,796) 07 08 09 10 11 07 08 09 10 11 07 08 09 10 11

EQUITY ATTRIBUTABLE TOTAL ASSETS NET ASSETS PER SHARE TO OWNERS OF THE PARENT RM’000 ATTRIBUTABLE TO RM’000 OWNERS OF THE PARENT RM

200,000 181,788 15,000,000 0.5 0.44 157,069 0.4 0.38 150,000 12,628,269 107,105

0.3 0.26 11,830,754 100,000 12,000,000 1 11,359,744

0.2 1 . 0 0.11 50,000 46,474

9,745,352 0.1 9,329,819 0 0 9,000,000

-0.1 -50,000 -0.2

-100,000 6,000,000 -0.3

-150,000 -0.4

(270,736) -0.5 -200,000 3,000,000 -0.6 -250,000 -0.7

-300,000 0 -0.8 (0.66)

07 08 09 10 11 07 08 09 10 11 07 08 09 10 11

087 Annual Report 2011 Puncak Niaga Holdings Berhad

Share Price & Volume Traded

SHARE PRICE MOVEMENT

2011 2012 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr

Volume of Shares 9,524 8,442 10,637 4,906 8,149 5,894 5,606 8,210 19,550 17,480 9,750 9,533 83,090 167,000 94,550 27,560 Traded (‘000)

PNHB Monthly 2.51 2.44 2.32 2.16 2.10 2.09 1.82 1.34 1.14 1.21 1.59 1.03 1.17 1.55 1.43 1.38 Average Closing Prices (RM)

FTSE Bursa 1,520 1,491 1,545 1,535 1,558 1,579 1,549 1,447 1,387 1,492 1,472 1,531 1,521 1,570 1,596 1,571 Malaysia Kuala Lumpur Composite Index (“KLCI”) Monthly Average Closing Prices

3.0 2,000

2.5 KLCI 2.0 1,500

1.5

1.0 SHARE PRICE (RM) 1,000

200,000 VOLUME OF SHARES TRADED (‘000)

150,000

100,000

50,000

0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr 2011 2012

Volume of Shares Traded PNHB Monthly Average Closing Prices Kuala Lumpur Composite Index (KLCI) Monthly Average Closing Prices

088 Annual Report 2011 Puncak Niaga Holdings Berhad

Financial Calendar

31 MAY 2011 25 AUGUST 2011 23 NOVEMBER 2011 2011 TUESDAY THURSDAY WEDNESDAY First Quarter Results Second Quarter Third Quarter ended 31 March 2011 Results ended Results ended with limited review 30 June 2011 30 September 2011 conducted by the Company’s External Auditors

28 FEBRUARY 2012 26 APRIL 2012 4 JUNE 2012 TUESDAY THURSDAY MONDAY 2012 Fourth Quarter Date of Audited Published Annual Results ended Financial Statements Report 2011 31 December 2011 for the ﬁ nancial year ended 26 JUNE 2012 31 December 2011 TUESDAY Fifteenth Annual General Meeting

089 Annual Report 2011 Puncak Niaga Holdings Berhad

090 Annual Report 2011 Puncak Niaga Holdings Berhad

Developing Natural Resources

Without natural resources, life is impossible. And without abundant resources, prosperity is out of reach. At PNHB, we regard ourselves as responsible for the systematic development of natural resources in the service of man; and we treat such resources as assets which must be preserved for the next generation – increased, not impaired, in value.

Nor do we forget that one of the most valuable of our natural resources is our people, and that we must – each and every one of us – must utilise our abilities and play our role towards environmental conservation and preservation to the common good of mankind.

091 Annual Report 2011 Puncak Niaga Holdings Berhad

Operations Review Puncak Niaga (M) Sdn Bhd

2011 WAS ANOTHER SUCCESSFUL YEAR FOR PUNCAK NIAGA (M) SDN BHD (“PNSB”) IN ITS OPERATIONS OF WATER TREATMENT PLANTS (“WTPS”) AND DAMS IN SPITE OF THE CHALLENGING SITUATION. PNSB IN 2011 MAINTAINED ITS CONSISTENTLY HIGH QUALITY AND SAFETY STANDARDS FOR THE WTPS WITH OPTIMUM CAPACITY, RESULTING IN A SUPPLY OF HIGH QUALITY TREATED WATER THAT SURPASSED THE PREVIOUS YEAR’S LEVELS. MEANWHILE, A RIGOROUS MAINTENANCE SCHEDULE AND SEVERAL FACILITIES UPGRADES ENSURED THE PEAK PERFORMANCE OF OUR INFRASTRUCTURE.

WATER TREATMENT PLANT OPERATIONS Cause of Shutdown Hours of Shutdown

PNSB operates, manages and maintains Raw water violation 531.94 29 WTPs with a combined capacity of 1,930 TNB power supply interruption 197.31 million litres per day. In 2011, PNSB delivered Pipe leak/burst 41.50 703.48 million cubic metres of treated water, an increase of 1.63% from 692.19 million cubic Total Hours 770.75 metres of treated water produced in 2010. The increase in the treated water production The performance of our WTPs in 2011 was was due to higher treated water demand as follows:- from Syarikat Bekalan Air Selangor Sdn Bhd (“SYABAS”). The Sungai Selangor Phase 2 (“SSP2”) WTP produced 349.92 million cubic metres of In 2011, our WTPs achieved an impressive treated water, up 0.46% on the 348.31 million 99.9% compliance with stipulated treated cubic metres recorded in 2010. The average water quality standards, based on 19,670 daily production increased to 958.68 million samples tested by both the Independent litres from 954.28 million litres in 2010, Laboratory and our Central Laboratory. exceeding SSP2 WTP’s daily design capacity of 950 million litres. As well as quality, we are dedicated to providing dependability of supply. To ensure The 26 WTPs under the Privatisation that consumers can rely on a constant supply Cum Concession Agreement dated of treated water, we endeavour to minimise 22 September 1994 (“PCCA”) produced 328.82 unscheduled WTP shutdowns. Although our million cubic metres of treated water, a 3.10% Periodical process control increased from the 318.92 million cubic metres monitoring to ensure optimisation WTPs experienced 770.75 hours of shutdowns of water treatment process for reasons beyond our control in 2011 (as recorded in 2010. The 26 WTPs’ production of shown in the table below), this did not result treated water in 2011 is the highest since 2007. in interruptions to the consumers’ water The average monthly treated water production supply, and all of our WTPs consistently met for 2011 was 27.40 million cubic metres as production demands. against 26.58 million cubic metres in 2010. The WTPs exceeded their monthly designated quantity of 26.28 million cubic metres as required in the PCCA.

092 Annual Report 2011 Puncak Niaga Holdings Berhad

Operations Review Puncak Niaga (M) Sdn Bhd

Wangsa Maju WTP produced 16.75 million are in use. The automatic valve operator cubic metres of treated water, an increase which is mounted on each cylinder will close of 0.18% on the 16.72 million cubic metres the cylinder’s valve upon receiving the signal recorded in the previous year. The average for shut-off. The shut-off can be triggered by daily production was 45.89 million litres as sensors such as a gas leak detector, seismic against 45.80 million litres in 2010, exceeding sensor, ﬁ re alarm, or emergency panic button. Wangsa Maju WTP’s daily design capacity of 45 million litres and daily designated quantity Installation of Pressure Filter System of 31.5 million litres as stated in the Concession at Sg Serai WTP Agreement. Overall, A new Pressure Filter System installed at Sungai (“Sg”) Sireh WTP achieved a yearly Sg Serai WTP addressed the issues of water our 29 WTPs treated water production of 6.97 million cubic quality at this WTP in particular, on the performed well metres, 6.19% less than the 7.43 million cubic aluminium violation of treated water. Since and met SYABAS’ metres produced in 2010. The average daily the installation of the Pressure Filter System requirements production was 19.10 million litres compared completed on 1 April 2011, there has been no for treated water to 20.36 million litres in 2010. Sg Sireh WTP’s violation of water quality reported. as well as the daily design capacity is 27.28 million litres. Drinking Water Installation of Chlorine Scrubber System Quality Standards Sg Lolo (new) WTP achieved a yearly treated at Gombak WTP as stipulated by water production of 1,017,998 cubic metres in the Ministry of 2011, 27.3% more than 799,694 cubic metres The Gombak WTP did not install the Auto Health (“MOH”). produced in 2010. The average daily production Chlorine Shut Off System and the existing was 2.79 million litres compared to 2.19 million chlorine leak detection system does not contain litres in 2010. Sg Lolo (new) WTP daily design the spread of chlorine gas, to ensure the safety capacity is 2.5 million litres. of the people, especially the WTP staff, in the event of a chlorine leak. As a contingency plan, Overall, our 29 WTPs performed well and met a chlorine scrubber system was installed. The SYABAS’ requirements for treated water as system neutralises the chlorine gas by using well as the Drinking Water Quality Standards caustic soda through a random packing bed. as stipulated by the Ministry of Health (“MOH”). Electrical Load Transfer from PLANT IMPROVEMENT WORKS TNB Substation to Consumer Substation at Rantau Panjang WTP In line with our absolute commitment to Preventive Maintenance: customer satisfaction and staff well-being, In response to the inconsistent quality of Inspecting electrical activator in 2011, PNSB carried out a number of plant the power supply to Rantau Panjang WTP, improvement works, focusing on health and PNSB opted to transfer its electrical load safety measures. from the existing 33kV TNB Substation to an 11kV Consumer Substation. Since Installation of Auto Chlorine Shut-Off System the completion of the transfer works on 15 June 2011, Rantau Panjang WTP has During the year, we installed an Auto Chlorine recorded no power supply interruption at all Shut-Off System at nine of our WTPs to protect as opposed to pre-transfer works, whereby personnel and equipment from chlorine 14.42 hours of power failure and 64 incidents exposure in the event of a leak. The system is of power transience were reported between a battery-powered fail-safe device designed 1 January 2011 and 31 December 2011. to provide safety where toxic gas cylinders

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Operations Review Puncak Niaga (M) Sdn Bhd

Rehabilitation and Upgrade of No. Source Volume Withdrawn (m3) Automated Filter Operation for Sg Batu WTP 13 Sg Rumput 285,045 Rehabilitation and upgrade works for Sg Batu 14 Sg Langat 212,437,706 WTP’s fi ltration automation system were 15 Sg Serai 410,244 carried out to enhance the system’s effi ciency, 16 Sg Lolo 1,265,321 functionality and reliability whilst increasing 17 Sg Pangsoon 1,402,091 Sg Batu WTP’s operation and maintenance 18 Sg Labu 1,030,130 effi ciency. The incorporation of the SCADA 19 Sg Sireh 9,405,039 System has enabled the fi lter backwashing 20 Batu Dam 41,311,879 process to be conducted automatically for 21 Klang Gates Dam 55,780,400 better process control. 22 Tasik Subang Dam 3,734,000

WATER FILTER PERFORMANCE Total 752,987,773

We continuously and constantly monitor the DAM OPERATIONS water fi lter performance by tracking each fi lter’s running hours as fi ltration is the fi nal PNSB operates and maintains the Sg Langat, step in the water treatment process, removing Klang Gates and Tasik Subang Dams. fi ne suspended solids remaining after the Performance in 2011 was good, and there was clarifi cation process, and further cleansing no critical storage drawndown at any of the and polishing the treated water. dams. During the year, total annual rainfall at two of the three dams’ catchments areas was Details of the Filter Performance Monitoring lower than the mean average rainfall (based on are set out under “Preserving Our data from 1998 to 2010), as shown below:- Environment” section on pages 159 and 160 of this Annual Report. Mean average Annual rainfall Variance Raw Water Drawn for Treatment rainfall 1998 – against 2011 2010 average The following table summarises the amount of Dam (mm) (mm) (%)

raw water drawn from the various rivers and dams for treatment at PNSB’s WTPs in 2011. Sungai Langat Dam 2,347.00 2,456.97 -4.48 Korean delegates’ visit to SSP2 WTP No. Source Volume Withdrawn (m3) Klang Gates 1 Sg Bernam 10,687,310 Dam 2,903.40 2,818.27 3.02 2 Sg Batang Kali 4,155,650 3 Sg Dusun 404,414 Tasik Subang 4 Sg Inki 2,284,940 Dam 2,303.10 2,469.28 -6.73 5 Sg Tengi 686,370 6 Sg Gerachi 1,806,680 7 Sg Darah 170,070 8 Sg Selangor 367,377,893 9 Sg Gombak 26,707,207 10 Sg Ampang 6,960,253 11 Sg Rangkap 3,911,735 12 Sg Kepong 773,395

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Operations Review Puncak Niaga (M) Sdn Bhd

Our operators at the Dams are guided by the CERTIFICATIONS Reservoir Operations Rules Curves (“RORC”) method to monitor, analyse and forecast ISO 14001 Environmental Management System the rainfall pattern and levels in the dams’ catchment areas. This allows us to make the The ISO 14001 Environmental Management right decision during critical situations and System certiﬁ cation is to ensure that the to meet the demand from the WTPs whilst operation and maintenance of the WTP conserving as much reservoir water as complies with the Environmental Guidelines possible. and Requirements.

At Sg Langat and Klang Gates Dams, the SSP2 WTP became the fi rst WTP in Malaysia in reservoir levels were maintained above RORC 2003 to gain the Environmental Management No. 1 throughout 2011 while the Tasik Subang System accreditation and this certifi cation has Dam’s reservoir level was slightly below been successfully maintained until to date RORC No. 1 from the end of August 2011 until without any signifi cant non-compliance. mid-September 2011. All three dams, with proper and effective planning on dam ISO 9001: 2008 Quality Management System management operation, met the WTPs’ demands. In 2010, 20 WTPs and Regional Offi ces under PNSB management were upgraded from With prudent, proper and effective planning on ISO 9001:2000 Quality Management System management of the dams, PNSB ensures the (“QMS”) certifi cation to ISO 9001:2008 QMS sustainability of water supply in Selangor and certifi cation, following the introduction of a the Federal Territories of Kuala Lumpur and new International Standard for QMS. Putrajaya. In line with PNSB’s commitment and standard To ensure the safety and stability of the dams, to carry out the operation and maintenance Gas PNSB completed the Dam Safety Inspections of the WTPs under PNSB management in Saving Tips for the Tasik Subang, Klang Gates and Sg Langat line with established international standards, Dams. Conducted by independent consultants PNSB has initiated the process of obtaining ISO Drive steadily. in May 2011, the fi eld inspections covered all 9001:2008 QMS certifi cation for the remaining Slowing down or major dam structures, M&E equipment, fl ood nine WTPs. The certifi cation is expected to be speeding up waste fuel. routing analysis and instrumentation analysis. achieved in 2012.

In 2011, we fulfi lled our corporate social This refl ect PNSB’s commitment to a rigorous responsibility by allowing various stakeholders quality management system in managing the to visit the dams with the objective of giving WTPs. the visitors an educational understanding of the function and operation of dams. Details OHSAS 18001:2007 Safety Management System of the Dams CSR Visitation are set out under “Engagement With Our Community” section The SSP2 WTP obtained OHSAS 18001:2007 on page 170 of this Annual Report. Safety Management System certifi cation in 2010.

In 2011, 27 of our WTPs and three Regional Offices had OHSAS 18001:2007 Safety Management System certiﬁ cation.

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Operations Review Puncak Niaga (M) Sdn Bhd

INFORMATION AND Of the preventive maintenance works which COMMUNICATIONS TECHNOLOGY (“ICT”) we completed in 2011, 12,226 were in the mechanical section, 8,839 were in the electrical In 2011, PNSB launched various initiatives section, and 5,175 were in the instrumentation to strengthen PNSB’s core operations via section. seamless and efﬁ cient communications and IT systems. Preventive IT Maintenance

Data Verifi cation Preventive IT Maintenance is important to ensure that all systems are running In 2011, the Operation and Maintenance smoothly. PNSB’s IT Department continuously Department (“OMD”) in collaboration with the supports and maintains all the 29 WTPs Information Technology (“IT”) Department, via its programme of scheduled preventive developed the e-MJC application. The e-MJC IT maintenance. For servers and critical application collects data from WTPs, analyses equipment, preventive IT maintenance is it, and transmits it via the internet to PNSB’s conducted every three months while the Headquarters. The system commenced non-critical equipment cycle is every six operation in January 2012. months. In addition, our computers and printers are updated with software patches This newly developed e-MJC application had and antivirus versions. expedited the transfer of data gathered at WTP to OMD at PNSB’s Headquarters. Using the latest technology, the IT Department is able to achieve its Service Level Agreement PREVENTIVE MAINTENANCE (“SLA”) standards in ensuring that all systems are running effi ciently with minimal downtime. Predictive & Preventive Plant Maintenance INNOVATIVE AND Throughout 2011, we undertook rigorous COST-CUTTING MEASURES monitoring and maintenance of plant and equipment to ensure the smooth and In its relentless drive to fi nd innovative continuous operation of all the 29 WTPs. and cost-cutting measures to improve the Predictive and preventive maintenance operations of the Company and WTPs, PNSB followed the annual maintenance plan, and on a yearly basis conducts Innovative & performance was closely monitored by two Creative Circle (“ICC”) sessions to encourage Visit by PUSPANITA maintenance software systems namely, personnel to produce innovative inventions or representatives to SSP2 WTP Maximo and Maintpro. measures. In 2011, the Company achieved and garnered the prestigious Excellent Award for In 2011, our personnel conducted 26,240 its cost-cutting and innovative project, namely preventive maintenance works in the areas of “Unstable micro sand in the Actifl o process” mechanical, electrical and instrumentation as at the International ICC Conference Quality compared to 25,826 preventive maintenance Creative Circle 2011 held in Yokohama, Japan works in 2010. This was a 1.6% increase in from 11 to 15 September 2011. Details of the preventive maintenance works compared to activities and achievement of the Company’s the previous year (“Increase of Maintenance ICC Programme are set out under “Quality Works”) and the Increase of Maintenance Policy & Report” section on page 206 of this Works was mainly due to the installation of Annual Report. additional equipment into the WTP operating systems.

096 Annual Report 2011 Puncak Niaga Holdings Berhad

Operations Review Syarikat Bekalan Air Selangor Sdn Bhd

SYARIKAT BEKALAN AIR SELANGOR SDN BHD (“SYABAS”), BEING THE SOLE WATER DISTRIBUTOR FOR SELANGOR AND THE FEDERAL TERRITORIES OF KUALA LUMPUR AND PUTRAJAYA, CONTINUED TO FACE MANY OBSTACLES AND CHALLENGES IN 2011 NAMELY, THE UNRESOLVED PROPOSED RESTRUCTURING OF THE WATER INDUSTRY IN SELANGOR AND THE FEDERAL TERRITORIES OF KUALA LUMPUR AND PUTRAJAYA (“PROPOSED RESTRUCTURING”) CONCURRENTLY WITH NO WATER TARIFF ADJUSTMENT NOR COMPENSATION IN LIEU BY THE SELANGOR STATE GOVERNMENT, AND THE FREEZE ON SYABAS CAPITAL EXPENDITURE EXCEPT FOR LIMITED CRITICAL WORKS. DESPITE THESE OBSTACLES AND CHALLENGES, THE COMMITMENT, DEDICATION AND HARD WORK OF BOTH THE MANAGEMENT AND STAFF ENABLED SYABAS TO CONTINUE TO DELIVER, EXCEEDING EXPECTATIONS PERFORMANCE IN 2011.

CHALLENGES in the implementation of the Langat 2 WTP project, whose completion date is uncertain, Due to rapid development in Selangor and would result in the expected shortage of the Federal Territories of Kuala Lumpur and water supply commencing in 2012 unless Putrajaya, the population in the Klang Valley the Additional Water Sources are developed is expected to increase on current trend in quickly. the coming years, and the demand for treated water in Selangor, being the most populous The uncertainty and delay in the Proposed state in Malaysia, and the Federal Territories of Restructuring since 2008 continued, further Kuala Lumpur and Putrajaya is also expected adding to the constraints. to increase. The Government’s freezing of the SYABAS Against this backdrop, the demand for water CAPEX programme, ongoing since 2008, in Selangor and the Federal Territories of prevented urgently-needed investment in Kuala Lumpur and Putrajaya had steadily the rehabilitation and upgrading of water increased in 2011 in step with population and infrastructure in the Klang Valley although development growth, but was not met by any absolutely critical works which are limited in new water supply sources. Based on SYABAS’ numbers and funding were approved by the data, in 2011, SYABAS distributed treated Government. The CAPEX freeze also inhibited water to about 7.5 million consumers. reductions in Non Revenue Water (“NRW”), World Water Day 2011 Celebration which in turn forced SYABAS to increase on 22 March 2011 In 2011, some parts of the Klang Valley already its bulk purchase from water treatment experienced low water pressure while others operators and reduced reserve margin. took a longer time to recover after major There were frequent pipe bursts and leaks breakdowns particularly during periods of due to the old age of infrastructure, which peak demand. This was due to reserve capacity increased SYABAS’ operational costs and falling below 5% of the average demand, increased consumers’ complaints about the making it difﬁ cult for SYABAS to meet the many interruptions resulting from repairs to peak demand which, historically had risen by old burst/leaking pipes. The rehabilitation and 7% above average demand. This situation will upgrading of water infrastructure in the Klang worsen in future unless additional interim and Valley is necessary both for the upgrading long term water sources are developed by the of water services to consumers and for the Government to avoid the impending water reduction of NRW. crisis (“Additional Water Sources”). The delay 097 Annual Report 2011 Puncak Niaga Holdings Berhad

Operations Review Syarikat Bekalan Air Selangor Sdn Bhd

Since the refusal of the Selangor State ACHIEVEMENTS Government from 1 January 2009 to either approve the implementation of the water tariff Undeterred by the challenging issues which adjustment or to pay compensation in lieu SYABAS faced in 2011, SYABAS to the best thereof, SYABAS has suffered a consequential of its ability, continued to maintain the high loss in revenue and severe cashflow service levels as required by the Concession constraints, which has resulted in SYABAS’ Agreement dated 15 December 2004 signed amassing growing debts which have also led between SYABAS, the Federal Government to legal proceedings, which are still ongoing, and the Selangor State Government (“SYABAS for SYABAS’ inability to make full payment for Concession Agreement”) and the Ministry the cost of water purchased from the water of Health’s (“MOH”) National Standard for treatment operators. Drinking Water Quality (2004) (“NSDWQ”), exceeding the 2011 performance targets Although the Federal Government has stepped which SYABAS set for itself, which were higher forward to assist the water industry in Selangor than the requirements of SYABAS Concession in 2011 as highlighted in the Chairman’s Agreement. Message, there is no long term solution on the table. Unless and until a unanimous solution With limited funding for CAPEX investment, Undeterred by is reached for the water services industry in SYABAS focused on operational effi ciency in a Selangor, SYABAS will continue to face the bid to continue to supply good quality treated the challenging ever increasing challenges and adversities as water to consumers. Operational effi ciencies issues which mentioned above. such as the review and improvement of existing SYABAS faced in standard operating procedures (“SOP”), the 2011, SYABAS Despite the many issues and challenges introduction of new SOP, internal innovations to the best of its faced by SYABAS, SYABAS was able to meet and cost optimization, and internal training ability, continued the high expectations and high demand and motivation for the workforce focusing to maintain the of the consumers in Selangor and the on improvements in consumer service were high service levels Federal Territories of Kuala Lumpur and implemented by SYABAS during 2011. as required by Putrajaya in 2011 mainly as a result of the the Concession dedication, commitment and absolute sense As an interim but cost effective measure, Agreement. of responsibility to the consumers of the prior to pipe replacement, SYABAS also Management and staff of SYABAS, and in implemented a pressure management addition, enhancement by SYABAS of its programme to reduce NRW and the frequency operational effi ciency which focused on of pipe bursts and leaks in Selangor and the improvement in service level to consumers, Federal Territories of Kuala Lumpur and the details of which are set out under the Putrajaya. heading “Achievements” below. The Intelligent Pressure Management System (“IPMS”) called i2O technology is being applied by SYABAS in 84 selected areas [District Metering Zones (“DMZ”)] using intelligent modulators including time and fl ow based pressure management. Results from 76 of these IPMS have generated additional savings of up to 196 m3/d/DMZ of water loss, as well as reducing NRW, pipe bursts and leaks, energy costs of water pumping and treatment and reduced operational activities due to

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Operations Review Syarikat Bekalan Air Selangor Sdn Bhd

lesser site visits required for pressure-setting WATER DISTRIBUTION SERVICES adjustments. In 2011, SYABAS distributed a daily average of For the same reason, SYABAS is also currently 4,143 MLD of treated water to about 7.5 million embarking on a consumer database drive residential and commercial consumers in to allow SYABAS to send Short Messaging Selangor and the Federal Territories of Kuala Services (“SMS”) and email alerts in the event Lumpur and Putrajaya. This amounted to of scheduled and/or major unscheduled water 80 MLD (2%) of treated water more than in 2010. disruptions at the affected consumers’ areas. SYABAS maintains 26,145 km of water pipes; Customer service levels exceeded those of 1,469 service reservoirs, elevated water tanks 2010. SYABAS responded to 99.23% of all water and suction tanks; and 557 booster pumping quality complaints within 30 minutes, and stations. The numbers of these assets achieved the KPI requiring calls to be picked up increased by between 3%, 6% and 12% over within six seconds and the call abandonment the previous year’s count, respectively. Water rate to the lowest possible level. The SYABAS supply coverage is 100% in urban areas and Concession Agreement establishes targets for 99% in rural areas. pipe repair times, while SYABAS sets its own targets which are even more stringent. In 2011, NON REVENUE WATER (“NRW”) the Company signiﬁ cantly out-performed both sets of targets. Progress to Date

During the year, SYABAS boosted its Billing In the seven years since the SYABAS Collection Effi ciency to 99.9% from 98.5% Concession Agreement took effect, SYABAS the previous year, exceeding the target rate has successfully achieved a progressive of 99.5%. At RM1,650.00 million, the water reduction in NRW from 42.78% as at 1 January purchase for 2011 refl ected an increase 2005 to 32.31% as at 31 December 2011, which over 2010’s fi gure of RM1,570.00 million but can be summarised as follows:- was below the target of RM1,652.00 million. Meanwhile, the Distribution Cost was 0.23 3 Water Metered per m exceeding 2010’s fi gure of RM0.21 Input Consumption NRW per m3 and well below the target of 0.27 per m3. Period (MLD) (MLD) MLD %

Despite SYABAS CAPEX freeze, the average A 3,766 2,155 1,611 42.78 NRW level for Selangor and the Federal B 4,143 2,804 1,339 32.31 SYABAS participated in Territories of Kuala Lumpur and Putrajaya was B-A +377 +649 - 273 -10.47 Second IWA Development computed as 32.31%, slightly lower for 2011 Congress and Exhibition 2011 than the 2010’s NRW level of 32.45% and lower Note: on 21 November 2011 than the NRW target of 33.43%. Details of NRW A denotes 1 January 2005 B denotes 31 December 2011 are set out under the heading “Non Revenue Water” of this Operations Review.

In 2011, SYABAS also earned a Malaysian Society for Occupational Safety & Health (“MSOSH”) Gold Awards for all its ten districts.

099 Annual Report 2011 Puncak Niaga Holdings Berhad

Operations Review Syarikat Bekalan Air Selangor Sdn Bhd

Despite a severely limited budget and approved As there are factors outside SYABAS’ control CAPEX, SYABAS managed to conduct a such as CAPEX freeze which affect its ability to number of NRW Reduction works in 2011, and reduce the NRW, SYABAS has proposed to the these NRW Reduction works contributed to the Selangor State Government and SPAN to revise improved water loss ﬁ gures as shown on page the NRW KPI target in SYABAS Concession 099 under NRW of this Annual Report. Agreement to allow for the impact of these uncontrollable factors. Based on SYABAS’ NRW Reduction works in 2011 evaluation, the proposed revised KPI target is 36.27% as compared to actual achievement Some 454 mechanical bulk meters (2” and of 32.31% in 2011. The proposed revised above) were replaced, the NRW savings is KPI target is subject to the Selangor State being evaluated. Government’s consideration and approval.

Under an approved program of RM170.0 CAPEX Works million, a pipe replacement programme for 210 km of pipes, is being implemented in Under the privatisation of water supply services stages for 30 of the most critical areas in the in Selangor and the Federal Territories of Klang Valley. Installation commenced in 2011 Kuala Lumpur and Putrajaya, SYABAS, as the and should be completed by 2014. concessionaire, planned and allocated capital expenditure under its CAPEX programme for NRW Phases 2 and 3 programs of SYABAS’ the upgrading and rehabilitation works of the maintenance works on 992 DMZ, including distribution assets. installation of advanced Pressure Management and Active Leakage Detection and Control CAPEX program for 2011 are principally funded were continued. These works realised savings from RPS 2009 (RM65.24 million) and RPS of 56 MLD in 2011 and are estimated to save a 2010 (RM131.6 million) and SYABAS internal further 28 MLD by mid-2012. funding (RM187.6 million).

SYABAS in-house teams also engaged in a In year 2011, a total expenditure of RM88.54 number of NRW activities throughout 2011, million has been invested to upgrade and namely, reservoir overﬂ ow monitoring and rehabilitate the distribution infrastructure maintenance at 80 DMZ established under including replacement and/or repairing of the Kementerian Tenaga Air dan Komunikasi leaking water tanks and slopes, improvement (“KTAK”) DMZs and 112 Pressure Management works to low pressure areas, improvement Speech by SYABAS’ CEO, Zones (“PMZs”). works for enhancement of water quality, YBhg Dato’ Ruslan at the Signing pumphouse upgrading and rehabilitation Ceremony of MOU with NIOSH In 2011, Suruhanjaya Perkhidmatan Air Negara works, ICT upgrading works, old pipes (“SPAN”) approved the implementation of replacement works, etc. large-area pressure management for four zones and the installation of advance pressure The cumulated total amount of CAPEX management for 20 zones in KTAK DMZs. expenditure from 1 January 2005 to The expected savings from these works are 31 December 2011 amounted to RM2,340.56 estimated at 3.5 MLD and 4 MLD, respectively. million. The programs are expected to be completed in 2012 to realise the expected savings.

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Operations Review Syarikat Bekalan Air Selangor Sdn Bhd

As part of interim mitigation project on The OCC has three key elements: expected water shortage, on 20 October 2010, SPAN and Kementerian Tenaga, • The SCADA wireless system, which Teknologi Hijau dan Air Malaysia (“KeTTHA”) collects real-time measured fi eld data that approved RM285.0 million for the program. normally varies with time, and remotely Of this amount, SPAN and KeTTHA approved controls distant machinery in real-time. RM170.0 million to SYABAS for CAPEX for pipe replacement. Based on the CAPEX for pipe • The Geographical Information System replacement, an allocation of RM16.5 million (“GIS”), which stores and manages was approved for 2011 with the balance of the network infrastructure database RM153.5 million for Investment from 2012 according to geographical location. until 2014. Eight pipe replacement packages were tendered in July 2011 and fi ve packages • The hydraulic operation model, which is were tendered in November 2011. Out of the 13 a tool deployed to simulate distribution packages tendered and awarded in 2011, one network flow conditions between package at Jalan Sg Baru, Kg Baru has so far measuring points in real-time, and hence been completed. provide a comprehensive overview of the network’s fl ow, pressure and reservoir On 2 November 2011, SYABAS submitted water levels. and presented to SPAN the fourth operating period CAPEX programme (1 January 2012 The status of implementation of the to 31 December 2014) in which the total cost GIS-related works as at 31 December 2011 for all new projects is RM2,325.57 million and was as follows:- RM655.0 million was planned for year 2012. However, due to the current CAPEX freeze and Phase 1A – Development of GIS (Infrastructure cashfl ow constraint, it is expected only a very and Application) limited amount of which would be approved for implementation. The GIS captures information on pipeline and reservoir information for all ten districts and Operation Command Centre (“OCC”) and the as of 31 December 2011, registered 26,145 km Geographical Information System (“GIS”) length of pipeline, 1,469 service reservoirs and 557 booster pumping stations. The OCC, fi rst launched on 2 November 2010, allows SYABAS to monitor, operate and manage Phase 1B – Development of GIS (Geo-Coding) its water distribution network in Selangor and 2,566 major consumers (“C”) have been Visit by Kumpulan Wang the Federal Territories of Kuala Lumpur and Simpanan Pekerja (“KWSP”) geo-coded in their respective districts, as Putrajaya and take fast remedial action in the to SYABAS Headquarters event of any distribution natural abnormality. follows: Petaling (682 C), Klang/Shah Alam on 11 July 2011 The OCC is the primary component of the (372 C), Kuala Lumpur (669 C), Sabak Bernam RM27.5 million Supervisory Control and Data (8 C), Hulu Langat (178 C), Kuala Selangor Acquisition (“SCADA”) Project approved and (48 C), Hulu Selangor (56 C), Kuala Langat funded by KeTTHA. The OCC is Malaysia’s most (68 C), Sepang (148 C), and Gombak (337 C). advanced and comprehensive clean water distribution operations centre. Nevertheless, this is the stage 1 SCADA Program which covers only a part of the distribution system.

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Operations Review Syarikat Bekalan Air Selangor Sdn Bhd

Phase 2 – Development of SCADA and SYABAS from installing the necessary valves Integration of SCADA with GIS and Network and ﬁ ttings required before air scouring can be Modelling carried out.

The OCC receives live data on water levels, The AS Programme has contributed to the pressure power supply trips, faulty measuring reduction in water quality complaints. instruments, faulty Remote Telemetry Units (“RTUs”), incidents of vandalism, etc., from Reservoir Cleaning and Inspection 250 RTUs. Upon receiving such alerts, SYABAS Programme (“RCI Programme”) acts accordingly to resolve the issues in the shortest possible period. In 2011, 1,028 active reservoirs were registered under this programme to be inspected twice a Phase 3 – Hydraulic Model year. Ten reservoirs were cleaned manually during the year, whilst 24 were cleaned by the Hydraulic models for all ten districts were open scour fl ushing method. Target reservoirs completed and are undergoing calibration for cleaning were selected based on turbidity for improved accuracy. The models are being violations identifi ed during 2011 inspections. deployed for use of planning and operations. Immediate Response To Consumer Complaints WATER QUALITY ENHANCEMENT In 2011, SYABAS achieved an average For year 2011, SYABAS complies fully with compliance rate of 100% response time to the MOH’s NSDWQ and Quality Assurance attend to water quality complaints within half Programme (“QAP”), as well as maintaining an hour and to undertake remedial actions the Mandatory Level of Service (“MLS”) as within 24 hours. stipulated in SYABAS’ CA. Consumer Awareness & Education For this purpose, MOH has taken 32,408 Programme (“CAE Programme”) samples from 729 sampling stations and SYABAS has taken 21,211 samples from the The CAE Programme with media coverage remaining 371 sampling stations. is ongoing with emphasis on consumers’ understanding of the quality of water supplied In 2008, SYABAS initiated a Water Quality to the premises and related issues and their Improvement Master Plan (“WQIM Plan”) to responsibility for maintaining their own ensure consumer confi dence in the water internal plumbing system and internal storage Briefi ng on SYABAS’ Operation quality, and in 2011 continued to implement Command Centre tanks. Consumers have greatly benefi ted from the following programmes under the SYABAS’ efforts in the CAE Programme. WQIM Plan. For further details of the CAE Programme, Air Scouring Programme (“AS Programme”) please turn to “Preserving Our Environment” section on pages 161 and 162 of this Annual The AS Programme is designed to Report. systematically fl ush all the reticulation pipes using compressed air. In 2011, 9,153 km were identifi ed to be cleaned out of a total of 12,644 km of reticulation pipes of diameters up to 200 mm. The remaining 3,491 km pipe length could not be cleaned due to the freeze on SYABAS CAPEX spending, which prevented 102 Annual Report 2011 Puncak Niaga Holdings Berhad

Operations Review Syarikat Bekalan Air Selangor Sdn Bhd

Year 2005 2006 2007 2008 2009 2010 2011

Billing (RM Million) 1,070.3 1,265.9 1,333.10 1,395.2 1,437.7 1487.20 1,529.53 Growth (%) 9% 18% 5% 5% 3% 3.5% 2.8% Cumulative Growth (%) 9% 27% 32% 37% 40% 43.5% 46.3%

Table A - Billing Records

BILLING & COLLECTION Migration of Bulk Meter Accounts to Individual Meter Accounts (“Migration”) SYABAS revenue and cash ﬂ ow rely heavily upon the effectiveness of its Billing and Recovery The Migration process is still slow and the Department, and efforts are constantly made success rate can best be achieved by making to enhance the systems and processes for peak the process mandatory. KeTTHA and SPAN efﬁ ciency. As at 31 December 2011, the total now have the intention and are in the process number of active water supply accounts was to make the Migration mandatory. 1,793,580, up 3.5% on the 1,732,193 accounts registered in 2010. As at 31 December 2011, SYABAS had completed the Migration of only 230 bulk meter Total billings rose 2.9% to RM1.530 billion accounts involving 49,963 individual accounts. against the RM1.487 billion recorded in 2010. The Table A above shows billing records The Table B below shows the Migration from over the last seven years, demonstrating a Bulk Meter Accounts to Individual Meter cumulative growth exceeding 46%. Accounts up to 31 December 2011:-

Total bill payments collected in 2011 amounted 2006 - 2011 2011 to RM1.529 billion, representing a 3.3% increase on the RM1.480 billion collected Approved applications 496 75 Water Facts the year before. Overall, SYABAS achieved No of accounts approved 93,958 16,926 The overall amount of a collection efﬁ ciency of 99.9% in 2011 as No of approved water on our planet has compared to 98.5% the previous year. applications migrated 230 60 remained the same for No of accounts 49,963 12,440 two billion years. Total receivables as at 31 December 2011 stood at RM163.0 million, 2.7% lower than the Table B - Migration from Bulk Meter Accounts to Individual Meter Accounts RM167.5 million posted in 2010. The debtors’ day level (accounts receivable), averaged a manageable 39 days, as compared to 41 days in 2010, due to the aggressive monitoring and control that was put in place for recovery of debts by SYABAS.

Disconnections as enforcement for collection, increased by 11.0% from 139,977 disconnections in 2010 to 155,409 disconnections in 2011.

103 Annual Report 2011 Puncak Niaga Holdings Berhad

Operations Review Syarikat Bekalan Air Selangor Sdn Bhd

INFORMATION AND COMMUNICATION The following application systems were TECHNOLOGY (“ICT”) enhanced and completed, ready to be rolled out in 2012:- In 2011, the Information, Communication and Technology (“ICT”) Department continues • The Development Plan Approval to provide high quality, reliable service and Submission Management System support to SYABAS and create efﬁ cient and (eDPLAS) which enables online secure environment to increase productivity ‘development plan’ submission by and promote sustainability with the users, as consultant and approval online by SYABAS. follows:- • The Point of Sale (iPOS) system to replace Public Awareness Programme (i) Maintain an up-to-date ICT infrastructure. the current RM20.00 system to process at Pangsapuri Bustan, payment at SYABAS’ counters. It integrates Shamelin, Cheras with SYABAS’ billing system to check the on 17 December 2011 (ii) Upgrade for SYABAS Enterprise Communication Backbone (SECOB) consumer account status. from Streamyx to TM Premier IPVPN Service over Metro-Ethernet technology, • The iMigrasi system which processes enhances existing network performance online migration application. with faster access to SYABAS Integrated Water Management System (SWIMS) To keep up with changing needs, early in 2011, applications. the ICT Department rolled out a new design of eMesra intranet portal, a One-Stop Centre (iii) Meet the internal users’ needs from time for all electronic communication between to time. In 2011, the ICT Department SYABAS’ employees, departments and district. has attended to 120 numbers of system The new eMesra intranet portal is refreshing, enhancements requests. inviting and made it easier for employees to communicate, to seek information and (iv) With SYABAS’ implementation of SAP accessing SYABAS’ daily operation application. Electronic Financial Management Systems (“EFMS”) in 2011, the ICT Department In conclusion, the ICT Department has has integrated the in-house applications, accomplished all of its goals for 2010-2011. namely iJob, iClaim, iRefund, iUtilities with SAP EFMS.

Public Awareness Programme held at Tesco Shah Alam on 29 October 2011

104 Annual Report 2011 Puncak Niaga Holdings Berhad

Operations Review Puncak Oil & Gas Sdn Bhd GOM Resources Sdn Bhd (formerly known as Global Offshore Malaysia Sdn Bhd)

IN 2009, PUNCAK NIAGA HOLDINGS BHD (“PNHB”) EXPANDED ITS CORPORATE VISION BEYOND THE WATER INDUSTRY BY DECLARING ITS INTENTION TO EMERGE AS A SIGNIFICANT PLAYER IN THE OIL & GAS SECTOR WHICH CULMINATED IN THE ACQUISITIONS OF TWO SIZEABLE OIL & GAS COMPANIES BY PUNCAK OIL & GAS SDN BHD (“POG”) AS FURTHER ELABORATED IN KGL’s pipelaying THE SECTIONS BELOW. Derrick Lay Barge (“DLB”) 264

OIL & GAS PUNCAK OIL & GAS SDN BHD

As the Group already has tremendous In 2011, our initiatives started to bear fruit. As strengths in the natural resources arena, this reported in the Executive Chairman’s Message, new venture makes excellent sense. With the on 28 September 2011, PNHB’s wholly-owned ever-increasing global demand for energy, far subsidiary, POG completed the acquisitions of from being a sunset industry, Oil & Gas is an the total equity of both GOM Resources Sdn Bhd industry with huge potential. (formerly known as Global Offshore Malaysia Sdn Bhd) (“GOM Resources”) and KGL Ltd The regional forecast for the oil and gas (“KGL”) (“Acquisitions”). These Acquisitions sector is promising. At a three-day Offshore provided a platform for PNHB’s entry into the Asia Conference in February 2012, there was Oil & Gas industry. a consensus that oil is on an upward trend, and the industry’s capital expenditure is likely GOM Resources is involved in the business to reach record levels in the coming year. All of construction and subsea services and activities are increasing, which will present marine support services to the offshore Oil opportunities in new frontier areas through & Gas industry in Malaysia whilst KGL is innovations in products, services and working the registered and benefi cial owner of the methods. Geographically diverse exploration is pipelaying barge “DLB 264”. on the rise; deepwater continues to dominate Gas short-term expenditure; and fl oating liquefi ed On 23 December 2011, POG was awarded Saving Tips natural gas is another growing niche market. a contract from Perunding Ranhill Worley-Muhibbah Consortium to provide a Car pool to reduce In Malaysia, experts concur that, although workbarge, workboat and support vessels travel monotony and the mature fi elds are in decline, the largest for a regasifi cation facilities project at Sungai save cost. producers are developing new projects that Udang, Melaka for Petronas Gas Bhd. The should help to offset falling output. Analysts workbarge is to accomodate up to 300 persons forecast that Malaysia’s average output will on board while the work boat is used for rise from 632,200 barrels per day in 2012 to a anchor handling and towing. The contract new peak of 881,000 in 2017. They also predict also includes catering for contractor’s live-in continuing growth in the country’s gas volumes personnel. Project is expected to be completed and exports. by end of the year.

[Source: Business Monitor International, Malaysia Oil and Looking forward, prospects for the new venture Gas Report Q2 2012] into the Oil & Gas industry are bright. POG is well-positioned to bid for projects in regions across the world where Petroliam Nasional Berhad (“PETRONAS”) is a player.

105 Annual Report 2011 Puncak Niaga Holdings Berhad

Operations Review Puncak Oil & Gas Sdn Bhd GOM Resources Sdn Bhd (formerly known as Global Offshore Malaysia Sdn Bhd)

GOM RESOURCES SDN BHD POG Group are looking at off-shore pipe (FORMERLY KNOWN AS GLOBAL OFFSHORE laying, transportation and installation and MALAYSIA SDN BHD) (“GOM RESOURCES”) construction, locally and internationally. We are actively tendering for works in these areas. GOM Resources is involved in the business of Our long term business plan is to go into engineering, procurement, installation and exploration and production (E&P) in Malaysia commissioning (“EPIC”) contracting services, as well as regionally. In order for us to do so, subsea services and marine support services we are looking at partnering foreign E&P to the offshore Oil & Gas industry in Malaysia. companies in marginal (Risk Service Contract) and brownﬁ eld developments. We are also GOM Resources has been awarded by looking into the potential of participating PETRONAS the Integrated Transportation in downstream mega projects and other POG Group and Installation of Offshore Facilities contract developments in Sabah. will continue for “Pipelay Barge Package A” for Petronas Carigali Sdn Bhd. GOM Resources had a proven POG Group will continue to grow its Oil & Gas to grow its track record in undertaking oil and gas works, operations organically and/or by merger and Oil & Gas both at home and abroad. acquisition, and aims to become a worthwhile operations contributor to the Group’s proﬁ tability within organically GOM Resources has a range of expertise the next two years. and/or by merger from simple jobs to highly complex jobs and acquisition. involving pipelay barge “DLB 264”. It has also successfully overcome challenging environments, obstacles and circumstances, even in the harshest conditions.

In response to the strong demand for the decommissioning of platforms, pipe-lines and other subsurface facilities, GOM Resources is building a committed team with a wealth of skills and experience so as to enable POG, GOM Resources and PNHB to deliver exceptional results for PETRONAS. The contribution from the Oil & Gas industry will Pre-commissioning work carried provide the Group with sustainable income and out by GOM Resources. proﬁ t and enable the transfer of capabilities and expertise from GOM Resources to POG and highlight any areas where our resources need to be upgraded.

106 Annual Report 2011 Puncak Niaga Holdings Berhad

Business Expansion

MALAYSIA Existing Sewerage & Water Main For Cochrane Launching Shaft – Package D2 by Syarikat Sarawak Prasarana Negara Berhad under Projek Mass Rapid Transit Lembah Kelang: Jajaran Sungai Puncak Niaga Holdings Berhad (“PNHB”) Buloh-Kajang. The scope of works is the extended its business activities in water relocation of SYABAS main pipes and to carry related construction to Sarawak via a 40:60 out cement/sand grouting for existing sewer unincorporated joint venture between PNHB main pipes under the existing road. The project and Quality Concrete Holdings Bhd namely, was completed on 15 March 2012. Konsortium Puncak Niaga Holdings Bhd – Quality Concrete. Konsortium Puncak Niaga CHINA Holdings Bhd – Quality Concrete clinched a RM667.32 million contract for a Rural In recent years, the economy of the People’s Water Supply Project in Sarawak (“Sarawak Republic of China (“PRC”) has proven its BALB Project”) from the Rural and Regional resilience in the face of fi nancial turmoil Development Ministry. elsewhere in the world. The collapse in international export markets in 2009 initially The Sarawak BALB Project, which is part of hit the PRC economy hard, but it rebounded, the Federal Government’s initiative to improve quickly returning to growth. In February the living standards of the rural population in 2011, it overtook Japan to become the world’s Sarawak, will cover over 91,000 households second-largest economy (source: BBC). and will increase clean water provision for rural areas from 59% to 90% by end of 2012. China’s GDP in the coming decade is predicted to advance, albeit at a slower rate of 7.3%, To date, Konsortium Puncak Niaga Holdings in contrast to the average of 10.7% it has Bhd – Quality Concrete has been awarded registered over the past ten years. In the 15 work orders, the scope of which includes coming year, Beijing plans to exercise prudent reticulation works, pipe-laying, the fi scal policies to hold consumer prices stable. construction of three WTPs, booster pumping stations and reservoirs spread over six In 2009-2015, China has vowed to double its Divisions from Kuching to Sibu. spending on environmental protection, and analysts state that the possible increase to So far, four work orders have been successfully CNY 3.1 trillion (USD 454 billion) will benefi t completed on time and the remaining work equipment manufacturers in water treatment, orders are expected to be completed by the air pollution control, and also developers in the end of 2012. renewable energy sector (source: Bloomberg).

Kelana Jaya The PNHB Group entered the Chinese market Kelana Jaya (KLJ) in 2008, seizing the tremendous growth Line Extension Project In November 2011, Syarikat Prasarana Negara opportunities afforded by the PRC’s rapid rate - pipe laying works Bhd awarded Puncak Niaga (M) Sdn Bhd of development. Today, our work in China, (“PNSB”) a RM15.3 million contract under comprising both water supply and wastewater the Kelana Jaya (KLJ) Line Extension Project projects, is one of the linchpins of our regional involving the relocation works of SYABAS expansion strategy. mains and Indah Water Konsortium Sdn Bhd (“IWK”) sewer pipes. The project is scheduled Our 98.65% owned Singapore subsidiary, for completion by the end of June 2012. Sino Water Pte Ltd (“Sino Water”) is leading the campaign to capture a greater share of the Project Mass Rapid Transit (MRT) Chinese market. Sino Water is collaborating Lembah Klang with and directing a number of local Chinese provincial subsidiaries in matters of project Through a competitive tender process, PNSB execution. has been awarded the works for Relocation of 107 Annual Report 2011 Puncak Niaga Holdings Berhad

Business Expansion

Lushan Water Supply Project the next two years, more effi cient systems for Located in Lushan County, Pingdingshan City, registering water usage, billings, collections Henan Province and customer service will be established for implementation in 2012/2013 in Lushan Luwei (Pingdingshan) Water Co Ltd, a County Township to serve the estimated Sino Water 91.34% owned China subsidiary, 130,000 population. currently supplies water to approximately 6,000 consumer accounts in Lushan County Binzhou Wastewater Project Township from the existing 2 million-litre-per Located in Yangxin County, Binzhou City, day (“MLD”) underground pumping stations, Shandong Province. with the daily supply ranging from 1.4 MLD to 1.8 MLD. Water is abstracted from underground The project, headed by Sino Water’s 100% and supplied directly to consumers by fi ve owned China subsidiary, Xinnuo Water pumping stations. (Binzhou) Co. Ltd., involves the construction Lushan Water Supply Project of a 30 MLD wastewater treatment plant - Administration Offi ce Lushan Water Supply Project involves the (“WWTP”) in two phases of 15 MLD each. rehabilitation of the existing water supply system in Lushan County Township and the The WWTP will treat wastewater from the construction of a new 30 MLD water treatment nearby factories that house the tanneries, plant (“30 MLD WTP”) under Phase 1, together building material manufacturers, and with the laying of a 14.56 km length of raw chemical producers. The wastewater pipelines water pipeline and a new reticulation pipeline from these factories have already been laid in Lushan County Township. and are connected to the inlet of the WWTP. At the completion of the project, the waste from The construction of the 30 MLD WTP was these factories, estimated at 15 MLD, will be completed in 2010. As at 31 December 2011, channeled to the WWTP for further treatment the laying of the raw water pipelines was before being discharged into the nearby river. 99.36% completed and was subsequently fully completed in end of February 2012. The construction of the Phase 1 15 MLD Upon completion of the pipelines, water from wastewater plant and the M & E works has Zhaopingdai Reservoir will be conveyed to the been completed. The WWTP’s testing and 30 MLD WTP for the commencement of testing commissioning is curently ongoing. & commissioning works. The 30 MLD WTP is expected to be operational by early July 2012, With the completion and operational supplying treated water to the consumers commencement of the new Binzhou WWTP, in Lushan County Township. With that, the the current environmental degradation private wells will be gradually closed and caused by industrial waste will be signifi cantly Lushan Water Supply Project this will mark a new era for water supply in reduced, resulting in a better environment - Treated Water Pump House Lushan County. for Laodian Town in general and the Chenlou Industrial Park in particular. The cost of the construction of the 30 MLD WTP and the laying of the distribution pipeline is Luancheng Dayu Water Supply Project 66% funded by a World Bank Loan. Located in Luancheng County, Shijiazhuang City, Hebei Province A 30km reticulation pipeline will be laid or replaced to cover the supply of treated water Sino Water’s 80% owned China subsidiary, for approximately 130,000 people in Lushan Luancheng Dayu Water Supply Co Ltd, has County Township. To date, some 24 km of been supplying water to 3,493 consumers in the reticulation pipeline work is completed, Luancheng County Township, with the daily with a further 6 km to be laid and/or replaced supply ranging from 1.8 MLD to 2.5 MLD. Water by August 2012. Approximately 18,000 new is abstracted from underground and supplied consumer accounts are expected to be directly to consumers by ten pumping stations. connected to this pipeline network by 2015. In 108 Annual Report 2011 Puncak Niaga Holdings Berhad

Business Expansion

Refl ecting delays in the commencement of the On 10 March 2011, PNHB acquired 9,999 South-to-North Water Diversion Project by the equity shares of Rs10/- each in Puncak Niaga Central Government of China, the construction Infrastructures & Projects Private Limited of the proposed 15 MLD WTP to supply treated (“PNIP Pte Ltd”), representing 99.99% of the water for domestic use and the proposed total issued and paid-up share capital of PNIP 50 MLD WTP to supply water for industrial Pte Ltd. The remaining 0.01% (one equity share use, is now scheduled to begin in 2015 or 2016 of Rs10/-) was held by Puncak Niaga (India) and expected to be completed by 2017/2018. Sdn Bhd, with a benefi cial holding vesting with PNHB. PNIP Pte Ltd was set up to facilitate Yuanshi Industrial Water Supply Project PNHB’s expansion plans to pursue business Located in Yuanshi County, Shijiazhuang City, development efforts to secure new business On Hebei Province in India. 3 March 2011, Sino Water’s 80% owned China subsidiary, On 15 March 2011, PNHB entered into a PNHB set up a Hebei Sino Panlong Industrial Water Supply Memorandum of Understanding (“MoU”) with Representative Co Ltd, supplies water abstracted from Ramky Infrastructure Limited (“RIL”) to form Offi ce in Ba-Yi Reservoir directly to the thermal plant an exclusive collaboration in the form of an in Yuanshi County by gravity fl ow via a 15.5 km Ho Chi Minh City unincorporated joint venture aimed at sourcing to explore and pipeline. There were no major construction potential water and water-related projects in works in 2011. India. The MoU lapsed on 14 March 2012. identify potential water supply BUSINESS DEVELOPMENT IN INDIA AND Vietnam INDOCHINA and water related projects in The acute need to improve water supply and Growth for the six Southeast Asian economies, Vietnam. sanitation in India and Indochina, and the Indonesia, Malaysia, Philippines, Singapore, governmental budgets allocated to these Thailand and Vietnam is projected to average works, present the Group with immense 5.6% during 2012 – 2016. Global uncertainties opportunities for overseas business and natural disasters shed a negative light development. on the growth prospects of the region but compared with sluggish OECD economies, Water Facts India overall Southeast Asia will have a solid growth performance through 2016. Pure water has a After a return to trend growth in fi scal year neutral PH of 7 2010-11, India’s economic growth is likely to (Source: OECD Southeast Asian Economic slow to 7-8 percent in the next two years. The Outlook) slowdown is a result of uncertainties weighing down investment, tighter macroeconomic Recognising these opportunities, on policies intended to fi ght still-high infl ation, 3 March 2011, PNHB set up a Representative and the base effect of the strong agricultural Offi ce in Ho Chi Minh City to explore and rebound in FY2010-11. Slow growth in core identify potential water supply and water Organization for Economic Cooperation and related projects in Vietnam. The Vietnam Development (“OECD”) countries means Representative Offi ce will also look into the domestic drivers for growth will have to be possibility of collaboration with local partners strengthened. This would include progress in Vietnam. on important structural reforms, and further measures to achieve fi scal consolidation and reorient government spending towards investment and growth. Even then, risks from the uncertain international environment are high. Policymakers would do well in reviewing crisis preparedness at this time.

(Source: World Bank, Economic Update) 109 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Service Excellence

SYABAS’ CLIENT CHARTER

The public will be notiﬁ ed of scheduled interruptions of water supply exceeding 24 hours through mass media at least two days in advance. However, SYABAS will endeavor to notify the public seven days in advance of such interruptions.

Walk-in consumers at SYABAS’ Districts Ofﬁ ces and Headquarters are attended to within 15 minutes.

Any enquiries or written complaints through PUSPEL, telephone, fax, e-mail, Short Messaging Services (“SMS”), Multimedia System (“MMS”) and mails will be acknowledged within 30 minutes after receipt. The company will revert within 24 hours to inform the consumers on the remedial action to be taken.

For mails received, correspondence executives will call the senders upon receiving the mails if the contact numbers are available.

In delivering service excellence, creating awareness, educating and managing the complaints response immediately, we, the customer service department, as the focal point of SYABAS will be responsible to deliver both the expectations of the consumers and the management. Consumers’ satisfaction will be our key driver towards a total consumer’s experience.

Technical visit by Pengurusan Pusat Dialisis Negeri Selangor and the Syarikat Bekalan Air Selangor Sdn Bhd a symbol of our relentless efforts and ongoing Federal Territories of Kuala (“SYABAS”) provides its customers with quick, commitment to consumers. Lumpur and Putrajaya at courteous and excellent service through its SYABAS’ PUSPEL Contact Centre highly acclaimed and award winning one-stop PUSPEL operates 24 hours a day, 365 days a contact centre, Pusat Perkhidmatan Pelanggan year. Customers may interact with PUSPEL (“PUSPEL”). At PUSPEL, customers receive staff via toll-free number, facsimile, Short prompt feedback on all water and water supply Messaging Service (“SMS”), emails and letters. related queries, reports and complaints in PUSPEL’s staff practise “SMART” principles Selangor and the Federal Territories of Kuala in their daily work, namely, S – Smile, Lumpur and Putrajaya. PUSPEL’s logo with M – Manageable, A – Accessible, R – Reliable the service motto, “Friendly, Committed, and and T – Timely. Trusted” was launched on 10 January 2009 as

110 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Service Excellence

PUSPEL maintains a Customer Database All cases are recorded in our complaint Management (“CDM”) section. PUSPEL is management system known as the Pivotal targeting a total of 1.6 million contacts for System. The communication between PUSPEL the CDM, who can expect to receive water and the ten SYABAS’ District Offi ces is also disruption notices directly in SYABAS’ areas via the Pivotal System to ensure diligent and of operations. As at 31 December 2011, a total timely follow-up. Thus, Contact Centre agents of 591,603 data of consumers’ accounts with are able to update consumers on the current mobile numbers or email addresses had been status of their enquiries or complaints. collected. COUNTER SERVICE Consumers can also follow PUSPEL via social network tools, namely Twitter and Facebook, PUSPEL constantly seeks to enhance its where users can receive information regarding relationship with its customers. Walk-in water disruptions in real-time for scheduled customers can expect to be served within 15 and unscheduled disruptions. In addition, minutes, in accordance with SYABAS’ Client PUSPEL continues to introduce workable Charter, and all counters adhere to PUSPEL’s initiatives and innovations that are geared code of ethics, “M.E.S.R.A.” which carries the towards increasing effi ciency and productivity meaning, M – “Minat” (Interest), E – “Efi sien” at the workplace, while striving to minimise (Effi cient), S – “Sabar” (Patience), R – “Ramah” costs. (Friendly) and A – “Adil” (Just).

PUSPEL is a highly acclaimed and integrated For 2011, PUSPEL achieved a Quality consumer contact centre established by Management System (“QMS”) rating of only a SYABAS as one of several consumer-oriented three minute waiting period and a nine minute efforts and initiatives for the benefi t of the serving time, an achievement surpassing consumers and the general public. PUSPEL SYABAS’ Client Charter’s requirement. In 2011, the ten has been entrusted to undertake vital roles District Offi ces in ensuring that consumers and the general In 2011, the ten District Offi ces served public receive the highest level of services 360,954 customers over the counter. In a bid served 360,954 as prescribed in the Concession Agreement. to further improve our service, we conducted customers over PUSPEL is part of a Customer Service Professional Customer Service Training to the counter. Department within SYABAS which comprises equip our counter staff to handle customer fi ve major integrated core functions namely queries in a courteous, polite and thoughtful PUSPEL/Contact Centre, Counter Services, manner. To further ensure our quality of Unit Kerjasama Informasi Pelanggan service, our Head of Unit regularly conducts (“YAKIN”), Industrial Consumer Unit (“ICU”), district site visits to check that all counter and Customer Database Management staff are adequately briefed and groomed for (“CDM”). the smooth running of the counter services and to provide the best of services in line with To ensure an immediate response to our service motto, “Friendly, Committed and customer complaints, our PUSPEL agents Trusted”. are always ready to service consumers. According to SYABAS’ Client Charter, all Additionally, all counter services sections enquiries, complaints and requests should submit consumer survey forms twice a year be acknowledged within 30 minutes after to PUSPEL Headquarters, giving consumer receipt, and remedial actions should be taken feedback and suggesting ways to improve our within 24 hours. Based on reports, in 2011, services in the future. PUSPEL met 100% of SYABAS’ Client Charter’s requirements. 111 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Service Excellence

PUSPEL’s “follow@puspel” online interaction CONTACT CENTRE channels on the social networks, Twitter and Facebook which allow our customers PUSPEL toll free number, 1-800-88-5252, to connect with SYABAS and to lodge their continues to be widely publicised for the complaints or queries easily and effortlessly, beneﬁ t of the consumers in Selangor and are progressing well and have created very the Federal Territories of Kuala Lumpur impactful experience to the consumers and Putrajaya. Consumers are assured that since their launch on 14 January 2010. As at their complaints are attended to and will be 25 January 2012, PUSPEL had gained a total addressed immediately. In 2011, PUSPEL of 2,267 followers on Twitter and 3,497 friends recorded 290,371 cases resulting from 640,242 and fans on Facebook. SYABAS is continuously calls received and handled. 223,551 cases seeking to make these online interaction were closed during the year. In order to deliver channels more effective and interesting for our service excellence, it is our policy that all calls consumers. received must be picked up in less than 6 seconds and the handling time must be within Counter Service serves as a “one stop 3 minutes. In 2011, we achieved this target with solution center” at all ten SYABAS’ District calls answered in an average of 3.03 seconds. Ofﬁ ces. Among services provided at the Meanwhile, the average handling time per call counter are: new applications, opening new agent is 2 minutes and 51 seconds. accounts, closing accounts, change of account ownership, bill payment, checking and printing Besides contacting the call centre, consumers of bills, payment of arrears, disconnection of are encouraged to interact via our non-voice service on request, reconnection of service, channels such as e-mail, letter, SMS, fax, work order change meter, meter testing, meter Facebook and Twitter. In delivering service lost/faulty, refund of deposit, buying water via excellence, we are ensuring that we have tanker and renting of static tank and general various channels available for consumers to inquiries. To meet consumers’ expectations, contact and interact with us easily and without we seek to deliver these services in a manner hassle. that is committed, reliable and courteous, with our speed of response as the key indicator.

PUSPEL Statistics

2006 2007 2008 2009 2010 2011

Technical visit by PUSPANITA at Calls received and handled 630,666 583,052 600,865 567,970 538,525 640,242 SYABAS’ PUSPEL Contact Centre Cases for investigation and remedial action 231,845 227,098 196,813 204,430 202,270 223, 551 Remaining Calls * 398,821 355,954 404,052 363,540 336,255 416,691

* The remaining calls were either repeat calls, enquires about payment and billing, reports of pipe bursts and pipe leaks, reports on water theft and other matters.

112 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Service Excellence

The number of calls received and handled In spite of the increase in cases for investigation in 2011 increased by 18.9% to 640,242 calls and remedial action in 2011, PUSPEL received compared to 538,525 calls in 2010. 159 calls from consumers that commended its efﬁ ciency and initiative. The Petaling District had the highest number of cases (69,789 cases), followed by the Klang In 2011, PUSPEL acknowledged all calls and District and the Kuala Lumpur District with correspondences within 30 minutes after 52,784 and 41,819 cases, respectively. receipt. 99.23% of calls and correspondences surpassed this target. The PUSPEL Contact Below is a summary of pipe leaks and pipe Centre KPIs were established to ensure that bursts cases reported in 2010 and 2011: staff handle each call in the most efﬁ cient and effective way. Below are our achievements in 2010 2011 2011:-

Pipe Leaks 84,848 72,824 KPI Technical visit by Government Pipe Bursts 4,067 5,093 Achieved Senior Ofﬁ cers from INTAN Criteria KPI Set in 2011 All of the above cases were repaired and attended within the targeted time as shown % of Not 1% 0.35% below:- abandoned calls (hourly average) SYABAS’ Average answering 6.0 3.03 Pipe Corrective internal Measurement Action target Achieved time (seconds) seconds seconds (Target) (hour) (hour) Average call 3 minutes 2 minutes handling time 51 seconds 200 mm 1 day 4 2.09 (minutes) 201-600 mm 2 days 10 6.97 % of call feedback 100% 122% 601-1,200 mm 3 days 16 10.85 1,200mm 4 days 20 6.75 As illustrated above, PUSPEL’s call centre exceeded all its KPIs targets for 2011. Breakdown of Cases for Investigation and Remedial Action in 2011 Calls received by PUSPEL for year 2011

Type of Cases 2010 2011 Month Volume of calls

Water Supply Problems 165,209 174,572 January 42,543 Billing Problems 20,371 23,890 February 42,958 Faulty Water Meters 8,043 13,024 March 54,306 Visit by students from Disconnection 8,352 11,744 April 56,630 Universiti Putra Malaysia to Others 295 321 May 52,075 SSP2 WTP June 71,774 TOTAL 202,270 *223, 551 July 56,488 August 47,051 Note: * A total of 223,551 cases out of 290,371 cases were September 48,927 closed for 2011. October 56,801 November 53,269 Cases of water supply problems increased December 57,420 from 165,209 in 2010 to 174,572 in 2011, a rise of 5.67%. During this time, cases of billing TOTAL 640,242 problems also rose by 17.3% to 23,890 cases in 2011, up from 20,371 cases in 2010. The cases Average calls received per day = 1,788 on faulty water meters issue also rose from 8,043 cases in 2010 to 13,024 cases in 2011. 113 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Service Excellence

Visitors are always welcome to visit our PUSPEL Date Visitors Contact Center as we encourage knowledge sharing and exchange of information as well 29 November Representative from as discussions about areas of common interest 2011 Pengurusan Pusat Dialisis in relation to treated water supply. This helps Negeri Selangor and the us to improve our services, to become a quality Federal Territories of role model for other companies. Kuala Lumpur and Putrajaya 6 December Representative from Pusat In 2011, SYABAS hosted the following 2011 Dialisis Negeri Selangor, technical visits by various agencies at SYABAS’ Wilayah Persekutuan Headquarters and at the PUSPEL Contact Kuala Lumpur and Putrajaya Centre:- Unit Kerjasama Informasi Pelanggan PUSPEL’s Call Agents attending Date Visitors (“YAKIN”) to telephone calls 7 March 2011 Government Senior Offi cers To meet the needs of customers in Selangor from INTAN and the Federal Territories of Kuala Lumpur 23 March 2011 Water, Energy Consumer and Putrajaya, the SYABAS’ Customer Service Association and Global Department has a separate unit, YAKIN, Environmental Centre which is community based. YAKIN engages 24 March 2011 Malaysian Environmental NGO in activities such as conducting site visits, (MENGO) briefi ngs on pipe replacement programmes 25 March 2011 Yayasan Anak Warisan Alam and dialogue sessions to promote consumer and Pusat Aduan Pengguna relationships with Residents’ Associations, Nasional “Ketua Kampong/Ketua Taman” and various 5 April 2011 Persatuan Pekilang-pekilang agencies in order to give personalised service, Malaysia creating awareness on issues related to water 6 April 2011 Representative of Tamil Nesan supply and providing educational programmes 7 April 2011 Public Utility Board, Singapore to the community. A total of 2,922 activities and 10 May 2011 Representative from Industri programmes were conducted in 2011. Perdagangan Zon Bebas Utama YAKIN also performs domestic consumer 16 May 2011 National Water and education activities via dialogue sessions, Wastewater Organisation briefi ngs and presentations, product and of Iran services demonstrations, public relations and Sua Mesra Programme at 18 May 2011 Persatuan Suri dan Anggota Little India community based programmes. Wanita Perkhidmatan Awam Malaysia (PUSPANITA) 21 June 2011 Persatuan Pentadbiran Industri Bangi 22 June 2011 Air Kelantan Sdn Bhd 11 July 2011 Top Management of Kumpulan Wang Simpanan Pekerja (KWSP) 18 July 2011 Tenaga Nasional Berhad (TNB) 19 July 2011 Lembaga Zakat Selangor (LZS) 21 November Delegation from the 2nd IWA 2011 Development Congress and Exhibition 2011 114 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Service Excellence

Skuad Ronda YAKIN and Sua Mesra are Below are the KPIs set for 2011 for consumer two of the main programmes spearheaded educational activities (“Activities”) by area : by YAKIN as its vehicles for enhancing consumer relationships and delivering Achievements educational activities. Sua Mesra programme Area KPI in 2011 (Average (Average focuses on brieﬁ ngs, dialogues and product per month) per month) demonstrations and allow a free ﬂ ow of communication between SYABAS and the Gombak 8 Activities 31 Activities consumers on matters related to water issues. Hulu Langat 8 Activities 29 Activities Skuad Ronda YAKIN programme is a customer Hulu Selangor 8 Activities 24 Activities relationship programme comprising personnel Klang 8 Activities 22 Activities from YAKIN, Operation & Maintenance and Kuala Langat 8 Activities 29 Activities Water Quality Departments of SYABAS Kuala Lumpur 8 Activities 45 Activities together with the community leader, business Kuala Selangor 8 Activities 17 Activities community and consumers of a particular Petaling Jaya 8 Activities 40 Activities location randomly check the standard and Sabak Bernam 8 Activities 19 Activities quality of water supplied by SYABAS at that Sepang 8 Activities 22 Activities particular area. It’s an approach by SYABAS as a form of assurance that SYABAS only supply Total 80 278 quality water to the consumers. All areas exceeded the KPI requirement for the In 2011, YAKIN successfully conducted a total number of Activities that were conducted on of 278 consumers education and awareness average per month. programmes/activities which involved domestic consumers in Selangor and the Kuala Lumpur, being the area that conducted Federal Territories of Kuala Lumpur and the highest number of Activities on average per Putrajaya. The positive response received month basis, exceeded the KPI requirement Gas from the consumers involved indicates that by 462%, having 45 Activities on average per Saving Tips consumer satisfaction is our priority. month as compared to eight activities per month as per the KPI requirement. Newer gas stoves The unit exceeded its KPI targets for 2011, use pilot-less ignition, which were as follows:- Aside from interactive programmes with the which saves gas. local communities, YAKIN operates a system Achievements Activity KPI in 2011 to notify community leaders and residential associations of scheduled Water Supply Dialogues 40 99 Disruptions (“WSD”). YAKIN is sensitive to Social & Welfare 40 179 resident feedback on WSDs, and sends out Visits 2280 2644 notices to Community Heads and Residential Associations two working days prior to the scheduled WSD so that residents in the affected areas can prepare for the temporary water shortage. A total of 35,774 notices were sent by YAKIN in 2011 comprising of 34,009 SMSes and 1,765 emails.

115 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Service Excellence

In 2011, there were 2,326 cases of scheduled Among the ICU’s other duties are disseminating WSDs. In the event of a scheduled water information on water disruption, collecting disruption, the public will be notifi ed by data and updating the database of industrial SYABAS at least two days in advance via mass customer profi les, conducting awareness media / fl yers as stipulated in SYABAS’ Client programmes, and taking action on all cases Charter. However, SYABAS will endeavour reported by industrial customers. to inform the public seven days in advance of such interruptions. The ICU also actively alerts the Industrial, Commercial and Trade Associations to water During a major unscheduled water disruption supply related matters, as well as information such as a burst pipe or failure of water on other SYABAS’ services and products. The treatment plants which would affect a huge unit constantly updates PUSPEL headquarters number of consumers, SYABAS will activate an with monthly activity reports, the data from Emergency Response Plan (“ERP”) to ensure which is monitored, analysed and compiled. the most effective response with minimal disruption to the consumers. In 2011, 15 cases In 2011, ICU staff visited a total of 2,590 trade of ERP activation were recorded. consumers and ran 163 programmes which include: INDUSTRIAL CONSUMER UNIT (“ICU”) • Dialogue/Briefi ngs (Sua Mesra) The ICU, PUSPEL’s customer service arm for - 81 programmes industrial customers, provides a single point of • Public Relation Programs enquiry for all industrial consumers who have (Sports, Gotong Royong etc) problems with their water supply. - 77 programmes • Educational Programmes The unit is responsible for enhancing public ( Visits to PUSPEL, WTPs etc) relations, building rapport with industrial - 5 programmes customers and creating business visibility through relationships with various industrial bodies. The ICU team is responsible for promoting good public relations, rapport and visibility through visits to individual consumers and trade associations by sending advance notice on scheduled maintenance, handle SYABAS participated in cases reported by trade consumers and GREEN EXPO 2011 held at participating in trade programmes. A total Tunku Abdul Rahman College, of 11,666 SMSes and 10,238 emails on these Setapak notices were sent by the ICU in 2011.

116 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

PUNCAK NIAGA (M) SDN BHD (“PNSB”) Australia, Europe, Latin America, the Caribbean and Singapore have adopted WSP Water Quality Surveillance Programme into their water quality management to ensure (“WQS Programme”) a high standard of drinking water supplies.

PNSB has implemented via its Central In line with PNSB’s mission to consistently Laboratory (“CL”) a WQS Programme to ensure provide high quality water to consumers, PNSB it consistently delivers a high quality water has initiated plans to adopt the WSP concept supply to its customers. Raw and treated as a tool to manage drinking water quality and water at the Water Treatment Plants (“WTPs”) launched the implementation of WSP in 2010. is monitored through the WQS Programme to In 2011, PNSB’s WSP Steering Committee ensure the water quality meets or surpasses developed the required WSP manual and the standards stipulated by the Ministry of procedures. Through workshops that were Health (“MOH”) and is in accordance with held between July and October 2011, WSP was MOH’s Quality Assurance Programme (“MOH’s developed for fi ve WTPs, namely Sungai (“Sg”) QAP”). Langat, Sg Batu, North Hummock, Wangsa Maju and SSP2 WTPs. PNSB will implement The testing and monitoring of raw and treated the WSP at these WTPs in 2012 through water is carried out at PNSB’s CL and is verifi ed controlling the identifi ed Critical Control by an Independent Accredited Laboratory. Points (“CCP”) and by monitoring and verifying PNSB ensures that the water quality always the effectiveness of the WSP. complies with MOH’s National Standard for Drinking Water Quality (2004) (“NSDWQ”). We Central Laboratory (“CL”) also conduct bacteriological tests every day at all our WTPs which are more stringent than PNSB’s CL, which is certifi ed for MS ISO/IEC17025, the weekly tests that are normally required. is responsible for conducting water quality surveillance of raw and treated water at all Water Safety Plan WTPs operated by PNSB which adheres to the MOH’s NSDWQ. The World Health Organization (“WHO”), in the third edition of its Guidelines for Drinking In June 2009, CL successfully renewed Water Quality, has promoted the development the accreditation certifi cation with seven and implementation of risk management additional water quality parameters, making strategies to ensure the safety of drinking the total accredited water quality analysis as Water Quality surveillance water supplies through the control of 24 numbers that consist of microbiological, by Central Laboratory hazardous constituents in water from source Group 1 (physical) and Group 2 (inorganic) to consumers’ taps. water quality parameters listed in MOH’s NSDWQ. As part of the on-going laboratory WHO’s approach is termed the Water Safety services enhancement, CL aims to obtain Plan (“WSP”) and involves a comprehensive accreditation for MS ISO/IEC17025 for all water risk assessment and risk management quality analysis conducted. approach with built-in Hazard Analysis and Critical Control Point (“HACCP”) principles that encompass all steps in water supply from catchment to consumer to ensure the safety of our drinking water supplies. The WSP concept was fully endorsed by the International Water Association’s Bonn Charter for Safe Drinking Water. 117 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

CL has been equipped with an Inductively Overall, CL achieved 99.9% sampling for Coupled Plasma-Mass Spectrometer both raw and treated water for all WTPs (“ICP-MS”) and a Gas Chromatography-Mass operated by PNSB in 2011, an improvement of Spectrometer (“GC-MS”), which will increase approximately 0.1% as compared with 2010. the laboratory’s capability for testing heavy 100% sampling could not be achieved due to metals, pesticides and herbicides under Group plant shutdown caused by raw water pollution 3 and Group 4 of the MOH’s NSDWQ. Currently, at Sg Sireh WTP in March 2011. the laboratory is in the process of obtaining accreditation for 20 heavy metal parameters The 2011 water quality analysis breakdown analysed by the ICP-MS. CL will proceed as conducted by CL in 2011 and the appointed to obtain accreditation for these additional Independent Laboratory is as shown below: GC-MS parameters once the testing methods have been established and suffi cient data has Analysis conducted been collected. Item for PNSB’s WTP By appointed By Central Independent CL also provides laboratory testing services for Laboratory Laboratory various activities such as for Puncak Research & Development, environmental investigations Raw water 6,645 8,151 conducted by WTPs, and process improvement Treated water 11,524 8,146 Based on the studies by the Operation & Maintenance water quality Department. Total 34,466 monitoring carried Other than water quality testing, CL also offers out by CL, treated Based on the water quality monitoring carried support to ensure smooth operation of WTPs out by CL, treated water compliance achieved water compliance as listed below: was 99.9% and raw water compliance achieved achieved was 99.9% was 89.0%. and raw water • Conducting laboratory assessment for compliance all WTPs to ensure that the laboratory at Out of 19,670 analyses conducted for treated achieved was the WTP is maintained in good working water, 17 cases of non-compliance were 89.0%. condition. detected, which were mainly due to aluminium • Purchasing laboratory consumables and residue which are above the permissible limit equipment for all WTPs. at Sg Serai and Sg Sireh WTPs. • Conducting maintenance, servicing and calibration of laboratory equipment used Details of the non-compliance for treated at all the WTPs to ensure uninterrupted water at the Sg Serai and Sg Sireh WTPs are water quality testing. set out under the “Research & Process Unit of • Assisting in the water quality monitoring at Water Quality and Research Section” below. affected WTPs during plant shutdown due to raw water pollution. • Providing training for WTP staff in relation to water quality testing and maintenance of laboratory and testing equipment. • Conducting analysis of WTP process chemical supplied to ensure compliance with specifi cations so as not to affect plant production and quality. • Conducting sieve analysis of fi lter media for compliance with specifi cation prior to usage at the WTPs. 118 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

Research & Process Unit of Water Quality and water due to residual iron. Jar tests using Research Section activated carbon and sodium aluminate as feed chemical were also found to be There were a range of projects and studies ineffective as the use of both activated carried out by the Research and Process Unit carbon and alum resulted in higher settled (“RPU”) of Water Quality and Research Section water colour and turbidity compared to (“WQRS”) in 2011 as part of PNSB’s initiatives when using alum alone for coagulation. to improve water treatment effi ciencies and to Hence, alum was still found to be the ensure quality of water supply. The different better coagulant at the plant. categories of project undertaken by RPU consist of process improvement, water quality, In collaboration with Puncak’s Research fi lter performance monitoring and value & Development Centre, the use of two added projects. Descriptions of the projects types of equipment has been studied to undertaken by RPU in 2011 are as follows:- optimise the treatment process at Sg Sireh WTP. A Photometric Dispersion Analyser Process Improvement (“PDA”) can determine the optimum Process improvement comprises the process coagulant dosage and measure the fl oc of fi ne-tuning at the WTPs with the objective strength while UV 254 can measure the to improving the treatment process for level of organic matter in the raw water. water quality enhancement and production As both types of equipment can improve cost optimisation. RPU also plays the role the treatment process and water quality, of providing solutions for continuous water PNSB has plans to install both equipment treatment process optimisation. at the plant in 2012.

(1) Process Improvement at Sg Sireh WTP (2) Process Improvement at North Hummock WTP The violation at Sg Sireh WTP was due to In 2011, North Hummock WTP experienced raw water quality problem that normally short fi lter running hours with the fi lter occurred during wet season. Numerous media cracking and the presence of studies have been conducted by PNSB to mudballs. Assessment and analysis improve its treated water quality and some indicated that the surface of the fi lter are ongoing. The treatment of raw water media grain showed a high level of iron at Sg Sireh WTP has always required a present in comparison with aluminium high dosage of alum that subsequently Sample analysis for and manganese. resulted in a high aluminium residue in process improvement the treated water. This is due to the raw Subsequently, a laboratory-scale study water characteristics of low alkalinity was conducted in September 2011 to and high turbidity, and the presence of evaluate the effectiveness of different organic matter especially aquatic humic chemicals namely, chloride of lime, substances. caustic soda and oxalic acid in fi lter media cleaning. The study found that oxalic Various chemicals were tested for at the acid had highest removal of iron (85.2% plant such as ferric chloride, activated reduction), aluminium (92.6% reduction) carbon and sodium aluminate. Although and manganese (100% reduction) in the laboratory scale study using ferric comparison with chloride of lime and chloride showed better fl oc formation caustic soda. The summarised test results with lower dosage compared to alum, are as set out in Table A on page 120 of this high colour was observed in the settled Annual Report. 119 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

Percentage removal, at optimum concentration Initial Chloride Caustic Oxalic Parameter level of lime soda acid (%) (10%) (10%) (15%)

Iron (%) 0.725 29.5 17.1 85.2 Pipeline Inspection Aluminium (%) 0.269 24.9 75.1 92.6 Manganese (%) 0.003 0 33.3 100

Note: The study was conducted using sand media sample from Filter No. 7 of North Hummock WTP

Table A - Summary of Findings for Filter Media Cleaning Study at North Hummock WTP

Based on these results, a plant trial using Due to the encouraging findings, oxalic acid for ﬁ lter media cleaning will be implementation of aluminosilicate dosing piloted at one of the ﬁ lters at North Hummock at Salak Tinggi WTP has been considered WTP which is expected to commence in 2012. in an effort to increase production for the plant. The proposed installation of (3) Ammonia Removal Studies along Sg Langat an aluminosilicate dosing system at the Basin, namely Sg Langat, Cheras Mile 11, plant’s intake is targeted to be initiated in Bukit Tampoi and Salak Tinggi WTPs 2012.

WTPs located downstream of Sg Langat (4) Process Improvement at Sg Serai WTP such as Sg Langat Basin, Cheras Mile 11, Bukit Tampoi and Salak Tinggi WTPs In 2008, Sg Serai WTP was once shutdown are prone to ammonia pollution. At these due to raw water quality deterioration WTPs, the ammonia level is monitored on in view of the landslides occurring an hourly basis so that prompt action can upstream of the raw water intake. Jar be taken should the plant be required to tests showed that the raw water could be shut down due to high levels of ammonia. treated by using both soda ash and alum. Following the installation of the necessary Ammonia removal studies using alternative pre-treatment system and plant trial, chemical, namely aluminosilicate have the plant resumed operations and again been conducted in case there is ever a supplied water to consumers. shortage of supply due to plant shutdown as a result of ammonia pollution. Since operations resumed, the plant Water Quality testing encountered frequent treated water Based on monitoring of the pilot plant violations involving aluminium due to the trial conducted at Bukit Tampoi WTP from absence of a fi ltration system to trap fi ne 22 October 2009 to 1 July 2010, it was fl ocs escaped from the clarifi er. Plans to observed that the use of aluminosilicate upgrade the plant to a full treatment plant in combination as feed chemical and fi lter have been submitted for approval under medium could increase the plant’s ability CAPEX works but are yet to be approved. to remove ammonia. Consequently, a pressure fi lter was installed as a temporary measure to complete the treatment process and solve the violation problem. Since the operation commenced in April 2011, the plant has been able to supply treated water that complies with the MOH’s NSDWQ.

120 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

(5) Process Improvement at Sg Rumput WTP quality at all times. Details of the Balancing Reservoir Water Quality Monitoring are set out Sg Rumput WTP adopted UF membrane in the “Preserving Our Environment” section technology in 1997 to produce treated on pages 152 to 166 of this Annual Report. water. Since upgrading to full treatment using membrane technology, shutdowns Ammonia Level Monitoring Along Sg Langat due to high raw water turbidity has been Basin reduced. However, as the plant has been operating for four years, a thorough For early detection and necessary action should assessment was conducted to ascertain the WTPs shut down due to high ammonia the membrane performance. level, the ammonia level at four critical WTPs along the Sg Langat Basin namely Sg Langat, It was found that the membrane condition Cheras Mile 11, Bukit Tampoi and Salak Tinggi had deteriorated and the membrane had WTPs are closely monitored on an hourly basis. become coated with mud, which originated In 2011, a total of nine incidences of pollution from the raw water it was treating. occurred where WTPs were shutdown, in Eventhough the ﬁ lter water still meets addition to three incidences of water supply the required standard, PNSB is currently interruptions. A Water Quality considering replacing the membrane Index (WQI) module to improve further the treated Based on Ammonia Level Monitoring water quality. Programme is conducted in 2011, the Summary of Daily conducted on a Ammonia Level in the raw and treated water at monthly basis Water Quality Monitoring the Four WTPs along Sg Langat Basin in 2011 were as summarised below:- for all WTPs to In order to ensure the quality of the supplied determine the treated water to consumers, activities such as Ammonia cleanliness and river water quality index programme, treated WTP Level (mg/L) suitability of the water reservoir water quality monitoring and Raw Water Treated Water Min - Max Min - Max raw water for the monitoring of ammonia level are being (Average) (Average) carried out at four critical WTPs. drinking water supply, aquaculture Sungai 0.00 - 0.80 (0.09) 0.00 - 0.16 ( 0.01) Water Quality Index Programme and irrigation Langat (“WQI Programme”) purposes.

Cheras 0.00 - 1.50 ( 0.30) 0.00 - 0.07 (0.00) A Water Quality Index (WQI) Programme is Mile 11 conducted on a monthly basis for all WTPs to determine the cleanliness and suitability of the raw water for drinking water supply, Salak 0.02 - 2.07 (0.92) 0.00 - 0.96 (0.19) aquaculture and irrigation purposes. Details Tinggi of the WQI Programme and its ﬁ ndings in 2011 are detailed in the “Preserving Our Bukit 0.04 - 1.50 (0.58) Old : Environment” section on pages 152 to 166 of Tampoi 0.00 - 0.14 (0.01) this Annual Report. New : 0.00 - 0.24 (0.01) Balancing Reservoir Water Quality Monitoring Note: MOH’s standard reading for ammonia level is 1.50 Balancing Reservoir Water Quality Monitoring mg/L for both raw and treated water. is conducted on a quarterly basis to determine whether the reservoir requires cleaning to ensure that the treated water supply is of high

121 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

Filter Performance Monitoring excellent. The continuous water quality monitoring at 1,100 water sampling stations Filtration is the fi nal step in the water treatment located at the WTP outlets, balancing reservoir process, removing fi ne suspended solids outlets, service reservoirs and distribution remaining after the clarifi cation process, and mains has shown that water quality violations further cleansing and polishing the treated have been greatly reduced. This has resulted water. Monitoring fi lter performance, most in a reduction of water quality complaints by importantly tracking the running hours consumers compared to the previous years. headloss fi gures, is critical to ensure that the fi lter remains in good operating condition. Of a total of water quality analyses carried When a given fi lter has reached its specifi ed out by SYABAS and the MOH in 2011, 99.47% number of running hours or its headloss level, complied with MOH’s NSDWQ with zero backwashing is initiated. violations for microbiological parameters. Such compliance level are well within the Details of the Filter Performance Monitoring acceptable range stipulated by QAP and are set out in the “Preserving Our Environment” stipulated by MOH. Any occurrence of section on pages 152 to 166 of this Annual specifi c incidence of non-compliance with Report. the standards is taken seriously and SYABAS investigates thoroughly and, where necessary, Value-Added Project does everything possible to correct any faults.

Other value-added project carried out by AIR SCOURING PROGRAMME (“ASP”) RPU in 2011 is the evaluation of various compact WTP for use during crisis comprising The ASP is designed to systematically clean all conventional treatment and membrane the reticulation pipes. This was done on a six treatment technology. month cycle in 2008, on a nine month cycle in 2009 and has been done on a 12 month cycle SYARIKAT BEKALAN AIR SELANGOR since 2010. A total of 29 air scouring machines SDN BHD (“SYABAS”) have been purchased for this purpose. In 2011, a total of 9,150 km (data as at 31 December 2011) Water Quality Improvement Master Plan of air scouring works were performed at districts’ workable ASP Zones (for reticulation Drinking water quality has always been pipes of sizes between 100 – 200 mm SYABAS’ top priority. Water quality results diameters). The changes made to the cleaning reported in the year ended 31 December 2011 time period (cycle/frequency) from six months indicated that SYABAS continued to meet the cycle in 2008 to 12 months cycle in 2011 was Launching of high standards as set out in MOH’s NSDWQ mainly due to the reduction in water quality World Water Day 2011 celebration and Quality Assurance Programme (“QAP”). complaints. However, approximately 28% of It also complied with the requirement of the reticulation main pipe system could not be the Mandatory Level of Service speciﬁ ed cleaned by the air scouring method and have under the Concession Agreement dated been declared as non-workable ASP Zones due 15 December 2004 signed between SYABAS, to the unavailability of facilities in the network the Federal Government and the State such as air insertion point, isolation and scour Government of Selangor (the “Concession valves in the ASP Zones. It was projected that Agreement”). these facilities would be installed in stages starting from 2008 onwards depending on the As part of the policy to continuously improve available and approval from the authorities for water quality, SYABAS has been aggressively budget under CAPEX. As at 31 December 2011, implementing its Water Quality Improvement the expenditure for installation of the facilities Master Plan and the results have been was RM6.5 million.

122 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

The ASP cleaning of the reticulation system RESERVOIR CLEANING & has contributed to the reduction in water INSPECTION PROGRAMME (“RCP”) quality violations and consumers’ water quality complaints. Under this programme all service reservoirs are cleaned manually and thereafter inspected AIR SCOURING WORKS every six months to test the water quality using FROM 2009 UNTIL 2011 ‘depth-samplers’. Subsequent cleaning of the reservoirs are conducted if water quality * Extent of Air Scouring Works violations are detected. 2009 2010 2011 Month (Km) (Km) (Km) SYABAS’ distribution system has more Jan 0 904.79 879.67 than 1,100 service reservoirs but as at Feb 0 750.01 725.20 31 December 2011, 1,028 reservoirs were Mar 1,094.18 978.39 1,022.96 active. All these reservoirs have been cleaned Apr 1,095.28 926.08 978.32 since 2005 except those newly brought May 1,053.78 922.87 887.80 into service. June 1,055.96 903.81 876.52 July 1,235.05 857.83 827.63 Under the RCP programme, water quality in Aug 1,096.37 676.60 658.92 these reservoirs was inspected twice in 2011. Sept 719.63 587.98 591.37 Following this inspection, ten reservoirs were Oct 1,001.33 790.18 707.52 manually cleaned and 24 were cleaned by Nov 689.05 699.49 640.31 scour ﬂ ushing to remove the sediments at the Dec 202.02 516.68 353.78 bottom of the reservoirs. Wherever possible, SYABAS minimises water supply interruption Grand during the cleaning programme by using Total 9,242.65 9,514.71 9,150.00 the by-pass valves and piping system at the reservoirs. * Notes: I. 2009 (data as at 31 December 2009) – Air Scouring frequency is on a nine month cycle. Air scouring work started in March 2009). II. 2010 (data as at 31 December 2010) - Air Scouring frequency is on a 12 month cycle. Air scouring work started in January 2010). III. 2011 (data as at 31 December 2011) - Air Scouring frequency is on a 12 month cycle. Air scouring work started in January 2011). IV. Total Air Scouring data (workable/non-workable) for Inspection at Actiﬂ o Plant, 2010 onwards was based on updated actual/latest SSP2 WTP information from the online system (WQMS & GIS).

123 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

WATER QUALITY SURVEILLANCE In-house Water Quality Assessment PROGRAMME (“WQS PROGRAMME”) In June 2006, SYABAS started an in-house Quality Assurance Programme by MOH Water Quality Sampling and Testing Programme based on the same frequency of The Concession Agreement stipulates that sampling and nature of parameters as listed the quality of water supplied to consumers in MOH’s NSDWQ. In 2011, grab samples were must comply with the limits provided by collected by personnel from the districts’ MOH’s NSDWQ. Water quality supplied from Water Quality Units from the designated 1,100 WTPs into SYABAS’ distribution system is sampling stations to be analysed in-situ and systematically and randomly monitored by sent to a third party accredited laboratory MOH by way of sampling and testing under for analysis. Based on the existing number QAP. Based on violations recorded by MOH for of sampling stations and the frequency of residual chlorine, Total Coliform, E. Coli and sampling according to NSDWQ, a monthly aluminium, the percentage violation for each average of 1,768 samples was taken and parameter was well within the QAP limits. In 6,327 analyses carried out. The results also 2011, a monthly average of 2,816 water samples showed that the water quality was within was taken and 10,418 tests or analyses were the requirement of MOH and the Mandatory carried out by MOH. The samples were taken Level of Service, whereby 99.46% of the total from designated water sampling stations of 75,926 analyses had complied with MOH’s located at the various WTP outlets, balancing NSDWQ. The Concession reservoir outlets, service reservoir outlets Agreement and the distribution system. A total of 125,015 The summary of the 2010 and 2011 In-House stipulates that analyses were carried out by MOH in 2011, and Water Quality Assessment for all parameters of these, 99.47% complied with MOH’s NSDWQ is as follows: the quality of with zero violations recorded for microbiological water supplied to parameters. The chemical violations MOH Compliance Based on consumers must QAP Limit For 2010 - 2011 were mostly for parameters Fluoride and 2011 2010 comply with the Aluminium which originated from the WTPs. Nos. Of Nos. Of Compliance Compliance limits provided by Tests Violations (%) (%) MOH’s NSDWQ. This result is an improvement from 2010 when 99.21% complied with MOH’s NSDWQ, well 75,926 407 99.46 98.91 within the MOH’s QAP levels for each of the parameters.

The summary of 2010 and 2011 MOH’s Water Quality Assessment for all parameters is as follows:

MOH Results For 2010 - 2011 2011 2010 Nos. Of Nos. Of Compliance Compliance Tests Violations (%) (%)

125,015 667 99.47 99.21

124 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

IMMEDIATE RESPONSE detected, appropriate remedial actions are TO CONSUMER COMPLAINTS taken and the distribution system is re-tested to ensure the contaminants have been removed The objective is to achieve a quick initial from the system. response time on all water quality complaints from consumers followed by resolution The main reasons for not achieving the 100% of the complaint. Beginning March 2009, target was that some complaints were received the initial response time for water quality at night. All complaints received are recorded complaints was set at half an hour and, as at and investigated to enable improvements 31 December 2011, compliance with this to take place. The most frequent area of half-hour response time was 99.23%. consumer complaint is when long-term suspended solids or iron deposits arising from The scope of work covers initial investigation very fi ne sediment or corrosion in water mains involving in-situ testing of physical parameters have been disturbed by fl ow fl uctuations. and the taking of necessary remedial actions or advice to the consumers. A Water Quality The total number of consumer complaints Consumer Complaint’s Report has also to be received from 1 January 2011 – 31 December 2011 submitted. Consumers normally complaint was 2,346, of which 22.03% were due to internal about the aesthetic aspect of the drinking plumbing problems. water, hence, the fi eld testing on physical parameters (turbidity, colour, residual Table B below shows the number of water chlorine and pH) using portable test-kits to quality complaints from 1 January 2011 – identify the level and nature of contaminants 31 December 2011 and the half-hour response in the distribution system. If the initial results time achievement. obtained show no water quality violation, the consumers will be advised to check their internal plumbing system. If violations are

ITEM Jan Feb Mar April May June July Aug Sept Oct Nov Dec

*No. of 123 147 202 130 124 185 166 145 151 120 123 213 complaints received

1 Hour 99.4 99.5 99.6 100 100 99.5 99.1 98.83 99.42 99.38 100 98.9 Sponsorship drive with Response the Federation of Malaysian Time (%) Consumers Associations (“FOMCA”) Half Hour 99.4 98.6 99.6 100 99.4 99.5 99.1 98.2 99.4 99.4 100 98.5 Response Time (%)

Total 180 208 240 167 163 221 232 171 173 161 157 273 No. of Complaints

* Note: Excluding complaints due to Internal Plumbing and carried forward violation from WTPs.

Table B - Water Quality Complaints 2011

125 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

Table C - Trend of Consumer Complaints from January 2007 – December 2011

700

600

500

400 TOTAL 300

200

100 MONTH

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

2007 337 292 291 262 321 207 300 327 247 201 284 210 2008 310 212 224 233 430 271 212 210 240 227 199 138 2009 212 355 180 189 305 338 318 407 182 275 320 254 2010 218 358 415 300 203 290 217 348 175 638 179 173 2011 180 208 240 167 163 221 232 171 173 161 157 273

Consumer Awareness & Research And Development (“R&D”) Centre Education Programme (“CAE Programme”) In 2011, the PNHB Group continued its strides The CAE Programme with media coverage to improve the quality and reliability of water is ongoing with an emphasis on consumers’ supply by the Group and sought to collaborate understanding of the quality of water supplied with local and international R&D institutions to their premises and related issues, and and universities on projects relating to their responsibility for maintaining their own water, wastewater and the environment with internal plumbing system and internal storage the objective to advancing in technological tanks. Consumers have greatly benefi ted from development and competencies within the SYABAS’ event held at SYABAS’ efforts in the CAE Programme. fi elds of water, wastewater, environment and GREEN EXPO 2011 health. For further details of the CAE Programme, please turn to “Preserving Our Environment” Through R&D, the PNHB Group continuously section on pages 152 to 166 of this Annual strives to improve the quality, sustainability Report. and reliability of Malaysia’s water supply through various projects to modernize and advance the nation’s water technology. Our R&D Team actively brainstorm and develops ideas to further improve water operational effi ciency and cost control at the WTPs.

126 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

KWI - PRC Collaboration UPM–PRC Collaboration

In this respect, in 2011, PNHB’s wholly owned Under the UPM-PRC collaboration, which subsidiary, Puncak Research Centre Sdn Bhd is valid until 5 June 2013, PRC is studying (“PRC”) engaged in a number of exchanged the use of natural coagulants as alternative visitation programmes with K-Water Institute coagulants for the WTPs. The studies have the (“KWI”), the Republic of Korea’s leading ultimate objective of replacing chemical based water specialised research institute in the coagulants. In the initial stage, six natural year 2011. The aim was to boost the research coagulants were found to be suitable, namely and technical collaboration between the two Moringa Oleifera, Jatropha Curcas, Chitin parties. Chitosan, Dragonfruit foliage, Aspergillus Flavus and Sago starch. Among PRC’s collaborative research initiatives with KWI pursuant to the Memorandum of In June 2011, PRC completed the evaluation Understanding signed by PRC with KWI on on the natural coagulants. Based on 27 October 2010 for a period of three years are: extensive evaluation, Chitin Chitosan and Jatropha Curcas proved to be the best natural • Evaluating the treatment process for coagulants. In terms of the performances of iron and manganese, in respect of long the natural coagulants compared to Alum, term water quality changes in river bank both Chitin Chitosan and Jatropha Curcas fi ltration. achieved 4.8 and 6.2 NTU respectively versus • Optimising advanced membrane water Alum’s 2.2 NTU. However, the Chitin Chitosan treatment systems. and Jatropha Curcas natural coagulants are • Advancing technology for groundwater ten times more expensive. utilisation, groundwater use of riverine areas, assessing fi eld applications by Other Research Activities constructing test beds, riverbank fi ltration and artifi cial storage and recharge. R&D Centre has also embarked on the following research activities:- DHI-PRC Collaboration (a) Wangsa Maju WTP – From the studies on PRC also entered into a Collaboration composting the WTPs’ residue (sludge) Agreement with DHI Denmark (“DHI”), a using microbes via a biological treatment, global leader in the fi eld of water treatment R&D’s evaluations revealed that the on 15 March 2007, which has since been sludge can be converted into a good soil extended till 14 March 2013. Under the conditioner. The metal contents of the th PRC-DHI Collaboration, in 2011, PRC has treated sludge dropped by up to 70% while Launching of 25 Briged Penyelamat Sungai (“BPS”) completed a full study on the effectiveness of the nutrient contents increased by up to Programme the in-organic coagulants on highly colored 300%. However, the Nitrogen, Phosphorus water, which was carried out at Sg Sireh WTP. and Kalium (“NPK”) contents are still not The main coagulants studied were Alum, favourable for the treated sludge to be Poly Aluminium Chloride (“PACl”), Acacia, considered as organic fertilizer. Poly Aluminium-ferric-chloride (“PAF”) and Aluminium Chlorohydrate (“ACH”). Of these, (b) Wangsa Maju WTP - Evaluating the treated only ACH stand out to be the better coagulant as sludge as effective micro-organism mud compared to Alum. ACH’s residual aluminium balls resulted in turbidity and colour is lower than that of Alum. However, in term of removal of 50% and 25%, respectively. cost, ACH’s cost is fi ve times more expensive than Alum, hence is less cost-effective.

127 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

(c) Sg Sireh WTP - The trials performed at Sg CRISIS MANAGEMENT AT PNSB Sireh WTP water yielded zero addition of Aluminium residuals. In delivering high quality, sustainable and expeditious services to our customers and (d) Sg Selangor WTP - Evaluating the sludge stakeholders in particular during crisis dewatering systems using the tube periods, we regard our capacity to deal with concept to conclude that the concept can crisis periods, as an important aspect of our yield a space saving of up to 98.5%. It corporate social responsibility. To this end, we can be used as an alternative to a Sludge are prepared at any time to deal and offer our Treatment Plant, and as a quick solution to assistance with respect to issues or problems waste issue with the authority. that are related to raw water and treated water and/or our services, within or beyond our (e) Wangsa Maju WTP - Based on the results control. With our years of experience in the obtained via Permulab testing and Lafarge industry, we have expeditiously solved many Cement Plant’s (“Lafarge”) internal crisis over the years. testing, the sludge is mainly composed of aluminium oxide, iron oxide and silica oxide PNSB initiated a Crisis Management Plan and fulﬁ lled Lafarge’s acceptance criteria. (“CMP”) and the WTP Emergency Response With the other heavy metal content also Plan (“ERP”) in 2001. The CMP and ERP are found to be acceptable, Lafarge concluded reviewed on a yearly basis and updated, if that the sludge can be accepted for safe required. Both plans ensure the most effective disposal through resource recovery by response to any form of emergency, crisis co-processing in a cement klin. Lafarge or disaster on our premises with minimal has agreed to co-pilot the testing of ten disruption to the Group’s business operations. tons of sludge from Wangsa Maju WTP Both plans also protect the Group’s corporate with disposal fees to be borne by PNSB. image. R&D Centre will arrange for approval for this pilot testing. We have ten intervention teams at plant level and at various regional ofﬁ ces. These teams (f) Sg Langat WTP - A Training Pilot Plant are trained to handle chlorine and other (“TP Plant”) was developed via the chemicals, in addition to being trained in collaboration between the Operation search and rescue. & Maintenance Department, the R&D BPS Programme at Centre, the Engineering & Project Sekolah Kebangsaan Department and the Training Department. Sijangkang, Kuala Lumpur The TP Plant will be used in training for new operators, as a refresher for senior operators, and as exposure for new water engineers as well as for staff competency assessment. The development of the plant was assisted by a research study done in collaboration with Universiti Putra Malaysia. The study involved the testing of the natural coagulants on a pilot scale at Sg Langat WTP.

128 Annual Report 2011 Puncak Niaga Holdings Berhad

Delivering Quality

The CMP was activated ten times in 2011 due to the following incidents:-

Date Incident

2 February 2011 Bukit Tampoi WTP (old) shutdown due to treated water pipe burst

11 February 2011 Bukit Tampoi WTP (new) shutdown due to treated water pipe burst

26 March 2011 – 3 April 2011 Sg Sireh WTP shutdown due to raw water pollution

7 May 2011 Cheras Mile 11 WTP shutdown due to raw water pollution

14 May 2011 Gombak WTP shutdown due to raw water pollution

18 May 2011 Cheras Mile 11 WTP shutdown due to raw water pollution

1 June 2011 Sg Langat WTP shutdown for upgrading, maintenance and asset replacement works

22 November 2011 Cheras Mile 11 WTP shutdown due to raw water pollution

25 November 2011 SSP2 WTP reduced water production due to failure of Transformer No. 1

5 December 2011 SSP2 WTP reduced water production due to raw water high turbidity

Water Facts 97% of the earth’s water is in the oceans.

129 Annual Report 2011 Puncak Niaga Holdings Berhad

130 Annual Report 2011 Puncak Niaga Holdings Berhad

Building Sustainability

As with our business operations, the fundamental aim of our CSR activities is to build sustainability. Quality, value, service, innovation and trust lie at the heart of our commitment both to our stakeholders and to society at large. Our people are engaged in our CSR activities, frequently taking initiatives as well as implementing those activities launched by the Group.

Education – particularly for the young in environmental awareness and responsibility, remain as a key pillar and success story of our CSR initiatives.

131 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

The Group recognises that our employees EMPLOYEE PROFILE are core assets of the Group. We believe in providing not just a job but career development Puncak Niaga Holdings Berhad and advancement for deserving, committed (“PNHB”) Group and diligent employees together with a place where everyone is given the opportunity PNHB Group employed a total of 4,540 to grow, to mature and to nurture their personnel as at 31 December 2011, locally skills. We are proud of the diversity of the and overseas. This represented an increase workforce across all of the Group’s operations. of approximately 6.9% compared to 4,245 The Group All employees are given equal treatment personnel employed in 2010. We continue to recognises that and discrimination is never tolerated. promote diversity in the workplace. Any forms our employees are Due to the nature of our business and in a of discrimination, including discrimination core assets of the rapidly-changing environment, the health based on age, gender, ethnicity or background, Group. We believe and safety of our employees and those who is not tolerated. in providing not are involved in our supply-chain operations is always a priority. The breakdown of the Group’s employees just a job but career by ethnic group, excluding employees in the development and An Occupational, Health and Safety (“OH&S”) People’s Republic of China (“PRC”) is 91.3% advancement management system has been established at Malays, 2.3% Chinese, 5.4% Indians and 1.0% for deserving, Puncak Niaga (M) Sdn Bhd (“PNSB”), as have others. committed and other positive initiatives including obtaining diligent employees. ISO 18001 certiﬁ cation and garnering various As shown in Table A below, the majority of health and safety awards. As part of our effort the Group’s workforce (excluding employees to promote a healthy culture at the work place, in the PRC) consists of non-executive we continue to hold employee engagement personnel (71.3%) with executives at 22.2% activities to boost the spirit of solidarity, and management at 6.5%. Due to the nature teamwork, a sense of belonging and conducive of our work, which involves a lot of manual environment. labour, our total employment by gender ratio is approximately 3:1 (3,260 Men: 1,105 Women). At executive and management levels, the gender ratio is closed to 3:1 (970 men: 283 women).

Category Gender Ethnic Group Non PNHB’s participation in Management Executive Executive Male Female Malay Chinese Indian Others Total Federation of Public Listed Companies (“FPLC”) 1st Inter-Media Bowling Cup 2011 PNSB 98 279 716 860 233 987 53 29 24 1,093 SYABAS 157 629 2,381 2,326 841 2,912 39 201 15 3,167 GOM 14 39 11 46 18 50 6 2 6 64 POG 14 23 4 28 13 37 2 2 0 41 PRC 16 9 150 105 70 0 175 0 0 175

Note: PNSB denotes Puncak Niaga (M) Sdn Bhd SYABAS denotes Syarikat Bekalan Air Selangor Sdn Bhd GOM denotes GOM Resources Sdn Bhd (formerly known as Global Offshore Malaysia Sdn Bhd) POG denotes Puncak Oil & Gas Sdn Bhd PRC denotes The People’s Republic of China

Table A - Breakdown of the Group’s Employees by category, gender and ethnic group

132 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

Puncak Niaga (M) Sdn Bhd (“PNSB”) More than half (65.51%) of PNSB’s employees were non-executives while 25.52% were PNSB is a private limited company in the executives and the remaining 8.97% were at PNHB Group of Companies. PNSB handles the Management level. the operations, maintenance, management, construction, rehabilitation and refurbishment PNSB Workforce Breakdown of water treatment facilities. PNSB had 1,093 by Age Group employees as at the end of 2011. Out of the 400 382 total number, 860 employees (78.7%) were 350 340 male and 233 (21.3%) were female. 300 265 250 The employment by gender ratio (men to 200 150 women) is approximately 4:1 due to the nature 106

No. of Employees 100 of PNSB’s operations, which involve a lot of 50 manual labour. 0 30 30-39 40-49 50 PNSB Workforce Breakdown Age Group by Ethnic Group Employee Turnover 4.85% 2.65% 2.20% Malay (987 E) The turnover rate in 2011 for PNSB was 7.14% Chinese (53 E) as compared with 11.0% for 2010. 91.03% of Indian (29 E) PNSB’s employees are permanent staff, with Others (24 E) the remaining 8.97% being contract workers. The tables below present PNSB’s employees turnover for 2011. 90.30% PNSB Employee Turnover by Category Total Employees (“E”) : 1,093

Category Turnover (%)

PNSB Workforce Breakdown Management 1.43 by Category Executive 3.17 8.97% Non-Executive 2.54 Management (98 E) Total 7.14 PEKA’s Fishing Competition 2011 Executive (279 E) PNSB Employee Turnover by Gender Non-Executive (716 E) Gender Turnover (%) 25.52% 65.51% Female 2.14 Male 5.00 Total Employees (“E”) : 1,093 Total 7.14

133 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

PNSB Employee Turnover by Ethnic Group The employment by gender ratio (men to women) is approximately 3:1 due to the nature Ethnic Group Turnover (%) of SYABAS’ operations, which involve a lot of Malay 5.23 manual labours. Chinese 1.35 Indian 0.32 SYABAS Workforce Breakdown Others 0.24 by Ethnic Group 1.23%6.35% 0.47% Total 7.14 Malay (2,912 E) Chinese (39 E) PNSB Employee Turnover by Age Group Indian (201 E) Age Group Turnover (%) Others (15 E)

30 2.75 30-39 2.29 91.95%

40-49 1.46 Total Employees (“E”) : 3,167 50 0.64

Total 7.14 SYABAS Workforce Breakdown by Category Note : Turnover rates are derived from staff terminations, retirements and expiry of contracts. 75.18%4.96% 19.86% Management SYARIKAT BEKALAN AIR SELANGOR (157 E) Executive SDN BHD (“SYABAS”) (629 E) Non-Executive SYABAS is a private limited company in (2,381 E) the PNHB Group of Companies, which carries out the distribution of treated water within Selangor and the Federal Total Employees (“E”) : 3,167 Territories of Kuala Lumpur and Putrajaya. SYABAS had a total of 3,167 employees as at 31 December 2011. Out of the total number, 2,326 employees (73.4%) were male and PEKA’s Walkaton 841 (26.6%) were female. - Walk For Your Heart 2011

134 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

More than half (75.18%) of SYABAS’ employees SYABAS Employee Turnover by Ethnic Group were non-executives, while 19.86% were executives and the remaining 4.96% were at Ethnic Group Turnover (%) the Management level. Malay 5.46 SYABAS Workforce Breakdown Chinese 0.33 by Age Group Indian 0.16 Others 0.08 1,319 1400 1,079 1200 Total 6.03 1000 800 SYABAS Employee Turnover by Age Group 600 403 366 400 Age Group Turnover (%) Visit to Vitagen factory by the No. of Employees children of PEKA’s members 200 0 31 3.71 30 30-39 40-49 50 31-40 1.71 Age Group 40 0.61 Employee Turnover Total 6.03 The turnover rate in 2011 for SYABAS was Note : Turnover rates are derived from staff terminations, 6.03% as compared with 7.9% for 2010. retirements and expiry of contracts. 95.3% of SYABAS’ employees are permanent staff, with the remaining 4.7% being contract PUNCAK OIL & GAS SDN BHD (“POG”) workers. The tables below present SYABAS’ employees turnover for 2011. POG is a private limited company in the PNHB Group of Companies, which currently SYABAS Employee Turnover by Category is involved in exploration for the production of oil and gas and other materials and the Category Turnover (%) provision of offshore and onshore engineering works. POG had a total of 41 employees as at Management 0.45 31 December 2011. Out of the total number, Executive 2.20 28 employees (68.3%) were male and Non Executive 3.38 13 (31.7%) were female. PEKA’s Bubur Lambok 2011 Total 6.03 The employment by gender ratio (men to during the month of Ramadhan women) is approximately 2:1. SYABAS Employee Turnover by Gender

Gender Turnover (%)

Female 1.83 Male 4.20

Total 6.03

135 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

POG Workforce Breakdown Employee Turnover by Ethnic Group 5% 5% The turnover rate in 2011 for POG was 23.07%. Malay (37 E) 60.98% of POG’s employees are permanent staff, with the remaining 39.02% being contract Chinese (2 E) workers. The tables below present POG’s Indian (2 E) employee turnover for 2011. Others (0 E) POG Employee Turnover by Category

90% Category Turnover (%)

Total Employees (“E”) : 41 Management 1.71 Executive 8.42 Note: There were no employees belonging to the ‘Others’ ethnic group category. Non-Executive 12.94

Total 23.07 POG Workforce Breakdown by Category POG Employee Turnover by Gender 10% 34% Management Gender Turnover (%) (14 E) Executive Female 7.02 (23 E) Male 16.05 Non-Executive (4 E) Total 23.07 56% POG Employee Turnover by Ethnic Group Total Employees (“E”) : 41 Ethnic Group Turnover (%) More than half (56%) of POG’s employees were non-executives, while 10% were executives and Malay 20.89 the remaining 34% were at the Management Chinese 1.25 level. Indian 0.62 Others 0.31 POG Workforce Breakdown Total 23.07 Staff Expedition to Gunung Nuang by Age Group

16 1155 POG Employee Turnover by Age Group 14 12 12 Age Group Turnover (%) 10 10 8 19-30 14.18 6 31-40 6.55

No. of Employees 4 2 41-58 2.34 0 30 30-39 40-49 50 Total 23.07 Age Group Note : Turnover rates are derived from staff terminations, retirements and expiry of contracts.

136 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

GOM Resources Sdn Bhd (Formerly known GOM Resources Workforce as Global Offshore Malaysia Sdn Bhd) (“GOM Breakdown by Age Group Resources”) 30 26 GOM Resources is a private limited company in 25 the POG Group of Companies, which is involved 20 19 in providing offshore personnel services 15 10 and renting of machinery and vessels. GOM 9 Resources had a total of 64 employees as at 10 No. of Employees 31 December 2011. Out of the total number, 46 5 employees (71.9%) were male and 18 (28.1%) 0 were female. GOM Resources also utilised 30 30-39 40-49 50 third party manpower resources and project Age Group contract workers with a total workforce of approximately 159 for the Derrick Lay Barge Employee Turnover (“DLB”) 264 barge. The turnover rate in 2011 for GOM Resources The employment by gender ratio (men to was 16.88% as compared with 14% for the year women) is approximately 2:1. 2010. 68.75% of GOM Resources’ employees are permanent staff, with the remaining GOM Resources Workforce 31.25% being contract workers. The tables Breakdown by Ethnic Group below present GOM Resources’ employees 9.38% 3.12% 9.38% turnover for 2011. Malay (50 E) Chinese (6 E) GOM Resources Employee Turnover Indian (2 E) by Category Others (6 E) Category Turnover (%)

78.12% Management 3.78 Executive 10.71 Total Employees (“E”) : 64 Non Executive 2.39

Total 16.88 GOM Resources Workforce Breakdown by Category GOM Resources Employee Turnover 17.19% 21.87% SYABAS participated in the by Gender Malidur Rasul Celebration 2011 Management (14 E) in Putrajaya Gender Turnover (%) Executive (39 E) Non-Executive Female 5.13 (11 E) Male 11.75

60.94% Total 16.88

Total Employees (“E”) : 64

More than half (60.94%) of GOM Resources’ employees were executives, while 17.19% were non-executives and the remaining 21.87% were Management level. 137 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

GOM Resources Employee Turnover PRC Operations Workforce by Ethnic Group By Age Group 60 Ethnic Group Turnover (%) 60 54 50 Malay 15.28 38 40 Chinese 0.91 Indian 0.46 30 23 Others 0.23 20 No. of Employees 10

Total 16.88 0 30 30-39 40-49 50 GOM Employees Turnover by Age Group Age Group Employees participated in the More than half (85.71%) of PRC’s employees Earth Day 2011 celebration Age Group Turnover (%) were non-executives, while 5.15% were at 30 years 3.89 executive level and the remaining 9.14% were 30-39 years 9.09 at the Management level. 40-45 years 3.90 Employee Turnover Total 16.88 The turnover rate in 2011 for PRC Operations Note : Turnover rates are derived from staff terminations, was 1.4% as compared with 2.7% for 2010. retirements and expiry of contracts. BEST PRACTICE AT THE WORKPLACE The People’s Republic of China (“PRC”) Operations Group Employee Beneﬁ ts

The Group’s operations in the PRC employ in PNSB/SYABAS/POG total 175 employees as at 31 December 2011, all of whom were hired on a contract basis. Out The Group offers a comprehensive employee of the total number, 105 employees (60%) were benefi ts package which includes competitive male and 70 (40%) were female. salary packages with insurance coverage for the immediate family, housing and car loan The employment by gender ratio (men to interest subsidies, interest-free assisted women) is approximately 2:1. 100% of the PRC SYABAS’ Senamrobik education loans as well as Tabung Kebajikan, Perdana event workforce are Chinese. computer, personal loans, medical benefi ts that cover outpatient treatment, hospitalisation PRC Operations Workforce and surgical, dental and maternity benefi t for a Breakdown by Category maximum of up to fi ve surviving children. We 9.14% 5.15% also contribute more than the statutory rate Management of employer’s contribution to the Employees (16 E) Provident Fund (“EPF”) for employees who Executive (9 E) have served more than two years. Non-Executive (150 E)

85.71%

Total Employees (“E”) : 175 138 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

The Group’s competitive remuneration Expatriate staff are covered by hospitalisation, packages enable us to recruit and retain medical and personal insurance. A subsistence talented and productive employees. Through allowance is also provided to our PRC the Malaysian Employers Federation (“MEF”) employees for any outstation duties. and other external sources, we review the Group’s employees’ benefi ts package from Although PRC Labour Laws allow the forming time to time to ensure that the Group is at of a union, there were no unions formed by our least at par with the prevailing market in PRC employees. We do not hire those below terms of proposed remuneration for the the age of 18, which is the minimum age to Group employees. The Group ensures that our commence working under PRC Labour Laws. employees are adequately remunerated at all None of our operations was identifi ed as having times and in accordance with the prevailing a signifi cant risk of incidents of forced labour. market conditions and the cost of living. Conduct of seminar for RECOGNISING EMPLOYEES’ SUPPORT our employees As part of our responsibility as a water treatment and distribution Group and to ensure that we PNSB/SYABAS/POG/GOM RESOURCES/ meet the relevant requirements and criteria as PRC OPERATIONS imposed by the relevant authorities, we require our employees, especially employees on the We strongly believe in rewarding our ground to put in long working hours round the employees for their commitment, dedication clock under very challenging conditions. We and hard work. ensure that our employees are provided with the appropriate benefi t packages, facilities To recognise good work and to motivate and assistance to ensure that their well being productivity, employees with excellent and safety are well taken care of at all times performances are duly awarded with merit and that they are continuously appreciated and bonuses, salary increments and promotions. rewarded for their hard work. In appreciation of the employees’ contributions, PRC Operations in 2011 SYABAS held a “Majlis Penyerahan Pampasan Kepada Kakitangan Serta Waris To ensure that our PRC employees are Keluarga Kakitangan SYABAS” on 19 August 2011 compensated adequately for their work, for existing employees. we abide by the minimum wage as set by the PRC local authorities. Although all PRC Career Development employees are hired on a contractual basis, Our employees engaging our PRC employees also receive benefi ts The Group has a human capital retention in group discussion on operation such as overtime pay, leave in lieu, pension policy to retain the best employees, to provide matters fund contributions, unemployment fund avenues for employee development and contributions, housing fund contributions, advancement, and to equip the employees medical insurance, work injury insurance with the necessary skills as they grow with and maternity insurance, as required by PRC the Group. Labour Laws and the Social Contribution Act. All local PRC employees have their medical With a structured performance evaluation costs covered by a PRC Medical Insurance framework in place and an emphasis on Contribution plan. self development and career development and advancement, we believe that we have managed to retain and groom the best employees in the Group.

139 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

Category PNSB SYABAS Total 2010 2011 2010 2011 2010 2011

Management (including Directors) 87 102 149 157 236 259 Executive 205 265 511 617 716 882 Non-Executive 508 650 2,175 2,318 2,683 2,968

Total personnel trained 800 1,017 2,835 3,092 3,635 4,109 77.1% 92.2% 92.9% 97.6% 85.6% 96.4%

Note: For both companies, the majority of training was provided to non-executive employees.

Table B - Conduct of 2011 Training Sessions (in-house and external) At PNSB and SYABAS, we are committed PNSB the ‘Challenge Session’, the Company and the Senior Management are able to constantly to equipping our Performance appraisal exercises are monitor the employees’ performance and employees with conducted for all our confi rmed employees address the challenges faced by the employees the best available twice a year. in excelling at their work. resources and training. The Independent Employees Performance POG/GOM RESOURCES Review Committee (“IEPRC”) is responsible for reviewing, evaluating and harmonising At POG and GOM Resources, performance the assessment and scoring as rated by the appraisal exercises are conducted for all our Heads of Departments/Divisions. The fi nal confi rmed employees twice a year. recommendation of the review is submitted to the Executive Committee for approval and PRC OPERATIONS decision on the appropriate rewards based on the individual performance of the employees Our PRC operations conduct performance and the Company’s performance. The IEPRC appraisal exercises once a year. also makes recommendations to the EXCO on the appropriate actions to be taken against Training those employees whose performance is not up to the Company’s performance requirements. At PNSB and SYABAS, we are committed PEKA’s Volleyball Tournament 2011 to equipping our employees with the best Non-performing employees undergo available resources and training to enable them counselling to improve their performance and to carry out their responsibilities and prepare their performance is reviewed for six months them for the challenges of a knowledge-based on a monthly basis. and demanding industry, as well as to enhance the productivity and competitiveness of the SYABAS Group. In addition to in-house training, PNSB and SYABAS send their employees for external At SYABAS, employee performance appraisal training, locally and overseas. is conducted twice yearly. This involves a discussion session on performance which Details of the number of training sessions is called the ‘Challenge Session’. Following (in-house and external) conducted for PNSB SYABAS’ performance appraisal process in and SYABAS in 2010 and 2011 are set out in 2011, 111 employees were rewarded with Table B above. promotion effective January 2012. Through 140 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

Category PNSB SYABAS No of No of No of No of Programmes Participants Programmes Participants

Personal & Leadership Development 20 128 4 120 Positive Mindset 17 190 17 1,147 Functional/ Knowledge 118 1,380 102 4,171 Supplementary Knowledge 41 427 329 8,001 External Training (Local/ Overseas) 100 246 71 125

TOTAL 296 2,371 523 13,564

Note: Employees may attend more than one training session.

Table C - Breakdown of PNSB’s and SYABAS’ training in Five Broad Categories for 2011 PEKA’s Motivational Programme for the children of PEKA’s members

Category PNSB (RM) SYABAS (RM) 2010 2011 2010 2011

In-house 377,643.61 RM250,604.32 366,921.12 271,278.31 External 382,323.61 RM436,086.66 228,691.87 369,580.33

TOTAL 759,967.22 RM798,952.98 595,612.99 640,858.64

Table D - Cost of Training for PNSB and SYABAS for 2010 and 2011

PNSB’s and SYABAS’ number of training New employees are required to attend a sessions increased in 2011 as compared to comprehensive Induction Programme (“IP”). 2010. PNSB trained 92.2% of its employees At PNSB, the IP was for a duration of two days in 2011 while SYABAS trained 97.6% of its whereas at SYABAS, the IP was for a duration employees in 2011. 4,109 employees of the of three days. Group attended training in 2011 as shown in Table B on page140 of this Annual Report. The breakdown of PNSB’s and SYABAS’ training in the Five Broad Categories for 2011 Our training was conducted in ﬁ ve broad are as set out in Table C above. PEKA’s Badminton Tournament categories namely, personal and leadership at Setia Alam development, positive mindset, functional/ PNSB spent RM798,952.98 on training, 4.9% knowledge, supplementary knowledge, and up on the 2010 training cost. This amounts to external training (local/overseas) (“Five Broad approximately RM785.60 per employee for an Categories”). Training enabled the employees average of 24 hours of training. to develop interpersonal, leadership and language skills, plus job functional skills/ SYABAS spent RM640,858.64 in 2011 which knowledge and health and safety knowledge. beneﬁ ted 3,092 staff (97.6% of all SYABAS Our training department also organised employees). motivational talks for the organisation.

141 Annual Report 2011 Puncak Niaga Holdings Berhad

Valuing Our People

PRC Operations PNHB/PNSB • Standard Operating Procedures Our PRC Operations spent RM3,045.00 on • Corporate Disclosure Policy training in 2011. This equates to RM17.40 per • Information Technology Policies (Software employee. Licence Policy, IT Security Policy and Copying Software Statement) Listening to Our Employees • Investor Relations Policy • Health, Safety & Environmental Policy Listening to and working in tandem with • Quality Policy our employees is vital for the growth of our • Risk Management Policy business and our organisation. It means • Sexual Harassment Policy building a shared vision of the business within Launching of the competitive environment. SYABAS 25th BPS Club Programme on • Standard Operating Procedures 24 June 2011 at Sg Langat WTP We constantly engage and interact with all • Quality Telephone Ethics our employees through our Monthly Staff • Standard People Practices Handbooks Assemblies and staff meetings at Divisional • Sexual Harassment Policy and Departmental levels. Our Senior • Corporate Responsibility Policy Management adopts a hands-on approach • Code of Business Ethics and engages with our employees regularly. • Service Counter Ethical Code Listening to our employees, acting on their • Health, Safety & Environment Policy views and involving them in improving our business are very important to us. We POG encourage a two-way communication for • Standard Operating Procedures all levels at the workplace vis-à-vis sharing • Quality Policy information and knowledge. • Health, Safety and Environment Protection Policy Collective Bargaining Agreement • Drug & Alcohol Abuse Policy • Smoking Policy The Management of SYABAS and the Kesatuan • Stop Work for Safety Policy Pekerja-pekerja PUAS Berhad employees met seven times during 2011. GOM Resources • Standard Operating Procedures Employees at our PRC operations are allowed • Quality Policy to form a union, in accordance with PRC Labour • Health, Safety and Environment Protection Laws. However, as at 31 December 2011, Policy Visit to Vitagen factory by the there were no unions formed by our PRC’s • Drug & Alcohol Abuse Policy children of PEKA’s members employees. • Smoking Policy • Stop Work for Safety Policy Ensuring Quality and Work Ethics PRC Operations In line with good corporate governance, the Group has several Codes of Conduct We have an Anti-Corruption Policy in place in and Policies which express and support the our PRC operations. If any of our employees strategies that steer the Group to achieve its are found to have violated this policy, their Key Performance Indicators. These Codes are: employment with us will be terminated. There were no reported incidences of corruption in 2011.

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Caring for Staff • Futsal Competition on 30 July 2011 • Golf Tournament fund raising event PNSB and SYABAS recognise the importance on 30 July 2011 of providing staff with an adequate work-life • GYM SYABAS in conjunction with balance. The Association of Water Supply World Heart Day on 8 October 2011 Workers for Selangor, Kuala Lumpur and • Badminton Tournament Putrajaya (Persatuan Kakitangan Bekalan on 19 November 2011 Air Selangor, Wilayah Persekutuan Kuala Lumpur dan Putrajaya) (“PEKA”) set up on 3. Cultural & Religious Programmes 15 September 2006 is a staff association established to provide welfare assistance and • Monthly Solat Hajat dan to foster social and cultural bonds between the Majlis Bacaan Yassin Group’s employees and the community. • Monthly Majlis Tazkirah • Maulidur Rasul celebration PEKA’s International Jamboree In 2011, PEKA organised various events that on 15 February 2011 Mountain Bike 2011 included recreational activities, sporting • Kursus Pengurusan Jenazah events, and cultural and religious programmes. on 14 May 2011 They were: • Seminar on understanding the value of religion and culture 1. Recreational Activities on 16 June 2011 • Visit to Glass Temple, Johor • Fraser’s Hill Photography on 23 July 2011 on 15 January 2011 • Religious Discussion : • Expedition to Gunung Rajah, Pahang Ahlan Wasahlan Ya Ramadhan on 30 April 2011 to 2 May 2011 on 30 July 2011 • Visit to Langkawi, Kedah • Bubur Lambok PEKA on 2 July 2011 to 3 July 2011 on 11 August 2011 • Expedition to Gunung Nuang, • Qiamullail Ramadhan Selangor on 2 July 2011 to 3 July 2011 on 20 August 2011 • Majlis Ibadah Qurban 2. Sporting Events on 8 November 2011 • Majlis Berkhatan PEKA • PEKA International Jamboree on 10 December 2011 Mountain Bike on 26 March 2011 • PNSB and SYABAS football match 4. Other Events on 23 April 2011 • Bowling Competition SYABAS • PEKA’s 5th Annual General Meeting PEKA’s Majlis Berkhatan 2011 Management – 4 May 2011 on 19 March 2011 • Senamrobik Perdana on 14 May 2011 • Hari Bumi Sedunia 2011 held • “Walkathon - Walk For Your Heart” on 23 April 2011 on 28 May 2011 • Motivational Programme for • Bowling Competition PEKA 2011 Excellent Students on 8 June 2011 on 18 June 2011, 13 July 2011 and and 24 August 2011 25 November 2011 • Seminar on Morality in a Family • Fishing Competition on 25 June 2011 on 9 July 2011 • Launching of (1) Hari Alam Sekitar (2) • Visit to Pusat Perlindungan Remaja Kelab Berbasikal SYABAS Bermasalah on 16 August 2011 on 25 June 2011 • Breast Cancer Awareness • Volleyball Tournament on 22 October 2011 on 16 July 2011

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• Seminar on “Crime Prevention is Identifi cation, Risk Assessment and Risk Ours” on 12 November 2011 Control comprise the requirements of OHSAS • Breast Cancer Examination and Basic 18001. Medical Checkup on 26 November 2011 • PEKA’s children visit to Vitagen Our Occupational Health and factory on 21 December 2011 Safety Management Performance • Monthly Assembly PNSB provides the necessary safety and Our Executive Directors and Senior health mechanisms for the employees who Management actively participated in may be exposed to hazards while performing these programmes to give support and their duties. Apart from complying with encouragement to the employees. statutory requirements, PNSB has its own internal controls to achieve optimum results ENSURING HEALTH AND SAFETY for OH&S at the workplace. Since 2004, PNSB had a Corporate Health & Safety Committee, As a responsible and caring employer, we to ensure full compliances with OH&S always ensure that our employees are treated requirements in the workplace. well and fairly. The Group takes responsibility for preventing any work-related injuries For proper implementation of OH&S or illnesses. Throughout 2011, the Group procedures, PNSB’s employees and demonstrated to the best of its ability, its permanent contractors must be adequately business-wide commitment to improving trained in three categories namely, Statutory health and safety at our workplace. Requirements, Competency Training and General Training. All Water Treatment Plants PNSB (“WTPs”) and dams staff are required to undergo a minimum of two man-days of Occupational Health and training annually while permanent contractors Safety Assessment Series (OHSAS) must undergo at least one man-day of training a year. As one of Malaysia’s leading water companies, in September 2011 PNSB was awarded with the In 2011, Health, Safety and Environment Occupational Health And Safety Assessment (“HSE”) induction training, mock drills as well Series (“OHSAS”) 18001:2007 certifi cations for as Emergency Response Plan (“ERP”) training 27 Water Treatment Plants (“WTP”) and three were carried out at all the 28 WTPs and the Regional Offi ces. This OHSAS 18001:2007 three dams to ensure staff are responsive and Award attests to PNSB’s compliance with ready in the event of emergencies or crises. Mock Safety Drill international OH&S management system ERP drills were conducted to familiarise and specifi cations and to the Company’s exemplary to measure the level of readiness among our standards in delivering a high quality potable employees in responding to unforeseeable water supply as well as to its excellent health crisis situations. In addition, our Safety and and safety practices at workplace. Health Offi cers conducted 31 Site Safety Inspections at the WTPs and dams. Prior to this prestigious accreditation, PNSB established an OH&S management system, The objective of these programmes is to which aims to eliminate or minimise risk ensure that all our WTPs and dams comply to employees and other parties within its with safety regulations and adhere to the operations. Amidst the rapid expansion safety management system established within throughout the region, PNSB has been PNSB. investing in establishing, maintaining and improving OH&S across its operations. Hazard 144 Annual Report 2011 Puncak Niaga Holdings Berhad

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In 2011, PNSB implemented the following 3. Chemical Handling and Spillage Training OH&S programmes:- Chemicals are often hazardous. 1. Fire Fighting Training for ERP Team Carelessness and negligence in handling chemicals may cause serious and even Four sessions of Fire Safety Training were fatal injuries. Consequently, proper held from September to December 2011 at training and awareness on chemical the Akademi Bomba & Penyelamat Kuala handling is a must for the water treatment Kubu Baru. The training was attended by a staff who are directly involved in handling total of 120 staff from various WTPs, dams chemicals. and the Headquarters. On 10 to 11 November 2011 and 15 to 16 November 2011, PNSB organised The objective of the training was to Chemical Handling and Spillage Training expose the staff to fi re safety equipment, at the Southern and Central Region offi ces, to enhance their knowledge of fi re safety respectively. The two-day training involved and to educate them on how to handle fi re theoretical and practical sessions. during an emergency. A knowledge of fi re safety is useful not only at the workplace 4. Emergency Preparedness and but at home and other premises too. Response Plan

2. Overhead Crane Safety Training PNSB’s Emergency Preparedness and Response Plan has been continuously Pursuant to the requirements of the implemented and improved and in 2011, Occupational Safety & Health Act (“OSHA”) the following took place:- 1994, Safety and Health Committee Regulation 1997, PNSB successfully • Modifi cation of the siren signal system organised Overhead Crane Safety to better distinguish the type of alarm. Training for HSE Committee members on 17, 18 and 24 October 2011 at Central • Reorganisation and retraining of the Region, Southern Region and SSP2 WTP, fi re fi ghting and rescue team and plant respectively. support team for increased effi ciency.

The objective of the training was to comply • One major mock drill and three minor with PNSB’s OHSAS 18001 Management mock drills were conducted at each of System Procedure, Safe Operation of the WTPs and dams, both internally Safety and Health Training Overhead Crane and Lifting Devices. Crane and externally, with the collaboration and lifting devices are heavy machinery of external parties such as chemical and minor mistakes in handling the supplier. equipment can cause critical situations in many industries and construction 5. Health and Safety Management operations. Improvement for Contractors

PNSB has implemented a clear health and safety management policy for its contractors by conducting contractors HSE brieﬁ ngs at Headquarters’ level. The system was put in place to enhance the health and safety performance of contractors working in or for PNSB. 145 Annual Report 2011 Puncak Niaga Holdings Berhad

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Accidents/Incidents Occurred in 2011 Wangsa Sg SSP2 Maju Sireh Central Southern Northern PNSB Type of Incident WTP WTP WTP Region Region Region HQ

LTI 0 0 0 0 0 1 0 Medical Treatment 0 0 0 0 0 0 0 First Aid 0 0 0 0 0 0 0 Near Miss 0 0 0 0 0 0 0 Property Damage 0 0 0 0 0 0 0 Spillage 0 0 0 0 0 0 0 Fire 0 0 0 0 0 0 0 Dangerous Occurrence 0 0 0 0 0 0 0 Chemical Release 0 0 0 0 0 0 0 Explosion 0 0 0 0 0 0 0

Total 0 0 0 0 0 1 0

Table E - Breakdown of Loss Time Injury in 2011

6. External Inspection 18001 (Safety) Management Systems. It is worth noting that, since September 2002, the A corporate audit on health and safety LTI has included contractors’ and suppliers’ management system was performed in man hours after they have undergone extensive 2011 by the OHSAS 18001 Internal Auditors health and safety training and familiarisation for compliance with OH&S requirements at SSP2 WTP. and improvement of the health management system. We are pleased to The total man hours with Zero LTI are as announce that PNSB is in full compliance follows : with the statutory requirements regulated Million Man Hours by Department of Occupational Safety and WTP with Zero LTI Health (“DOSH”). SSP2 WTP 4,129,620.81 Lost Time Injury (“LTI”) Wangsa Maju WTP * 1,066,036.67 Training for SYABAS water tanker Sg Sireh WTP 311,503.08 drivers during the ERP Operation There was one accident that occurred in Central Region 2,928,853.74 2011, at the Northern Region, resulting in the Southern Region 2,275,875.37 reduction of man-hours with zero LTI. Details Northern Region 3,082,185.59 of LTI in 2011 are as set out in Table E above. PNSB HQ 2,943,975

We are proud to announce that since its * Note: Wangsa Maju WTP has had zero LTI since commission in July 1998, SSP2 WTP has 18 July 1998 demonstrated a high level of commitment to health and safety standards at the workplace and its practices and procedures have constantly followed the Integrated Management System covering ISO 9001 (Quality), ISO 14001 (Environment) and OHSAS 146 Annual Report 2011 Puncak Niaga Holdings Berhad

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ACHIEVEMENTS IN THE AREA OF The ISO 9001:2008 QMS Certifi cation for OCCUPATIONAL HEALTH AND SAFETY the nine WTPs is expected to be achieved by the end of 2012. AWARDS The Central Laboratory has been certifi ed 1. Malaysian Society of Occupational Safety for the ISO/IEC 17025:2005-General & Health (“MSOSH”) Award: Requirement for the Competence of Testing and Calibration Laboratories in At the MSOSH Excellence Award 2011 held June 2006. The Central Laboratory intends on 22 July 2011, fi ve of PNSB WTPs won to obtain ISO 9001:2008 QMS Certifi cation the following awards:- to make improvements to existing systems in terms of QMS. WTP Award SYABAS SSP2 WTP Class 1 Gold Award, Wangsa Maju WTP Class 1 Gold Award SYABAS operates a Health, Safety & Cheras Mile 11 WTP Class 1 Gold Award Environment (“HSE”) Policy backed by Top Gombak WTP Class 1 Gold Award Management to provide a safe and healthy Rantau Panjang WTP Class II Gold Award workplace at all times, and to ensure that its business is conducted to the highest standards. 2. National Council of Occupational Safety & Health (“NCOSH”) Award: SYABAS endeavours to:

At the NCOSH Excellence Award 2011 held • Recognise health, safety and environment on 21 December 2011, PNSB’s SSP2 WTP objectives as an integral part of its won the Gold Trophy Award under the water business performance. utility sector. SSP2 WTP also received the • Implement a continually improved HSE Grand Award Trophy for NCOSH from the management system. Minister of Human Resource, YBhg Datuk • Establish and periodically review its safety Seri Dr S. Subramaniam. and environmental objectives and targets. • Comply with all applicable HSE legal and CERTIFICATIONS other requirements to which SYABAS subscribes. 1. ISO 9001:2008 Certifi cation for Nine (9) • Provide sufficient information, WTPs and Central Laboratory instruction, training and supervision to enhance employees’ health, safety and In April 2010, all Regional Offi ces and environmental consciousness so that PEKA International Jamboree Mountain Bike 2011 Event 20 WTPs obtained the internationally work is performed in a safe manner. recognised standard ISO 9001:2008 • Minimise waste and continually prevent Quality Management System (“QMS”) pollution in all activities. Certifi cation. This ISO 9001:2008 QMS • Investigate any incidents whose fi ndings Certifi cation was upgraded in 2008 from can be used to develop and continually the ISO 9001:2000 Certifi cation. improve health, safety and environmental conditions and performance. PNSB is in the process of applying for the same internationally recognised SYABAS’ Occupational Safety and Health standard ISO 9001:2008 QMS Certifi cation (“OSH”) programmes are coordinated to for the remaining nine WTPs. This is to ensure that we are able to harmonise and refl ect PNSB’s commitment to Quality make OSH part of the workplace culture. Management in managing the WTPs.

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In 2011, SYABAS implemented the following HSE Internal Audit OSH programmes:- The objectives of the HSE Internal Audit are:- OHSAS 18001:2007 Certifi cation Programme • To evaluate the effectiveness and effi ciency of the implemented documents. SYABAS has selected three Districts namely • To propose corrective action and improvement the Petaling, Hulu Langat and Kuala in all cases of non-conformance. Lumpur Districts for the OHSAS 18001:2007 Certification Programme. SYABAS is Two HSE Internal Audits each were conducted still undergoing the various stages of the at all District Offi ces. SYABAS appointed 50 Certifi cation Programme. Internal Auditors to assist in the HSE Internal Audit exercise for 2011. The internal audit at The objective of the certifi cation is to assess each District Offi ce was conducted by seven the safety management system that has been auditors (fi ve from the District itself and two implemented in SYABAS. SYABAS’ safety representatives from HSE Headquarters). management system documentation has been established since 2008 and encompasses A total of 249 Non-Conformance Requests procedures on maintaining a safe and healthy (“NCR”) had been raised from all the audits working environment and controlling hazard conducted and all had been rectifi ed and and risk at the workplace involving workers, closed within the agreed timeframe. contractors and the public. Site Safety Inspection (“SSI”) SYABAS NIOSH Safety Card (“SNSC”) Programme SSIs are conducted on a monthly basis with the objective to ensure that all SYABAS’ premises An SNSC Programme was conducted to and contractors comply with the requirements enhance the compliance standards under the and provisions of the OSHA 1994 so as to provisions of Section 15(2)(c) of Occupational protect the safety of SYABAS’ staff. Safety & Health Act (“OSHA”) 1994 which requires employers to provide information, In 2011, a total of 183 numbers of SSIs were instruction, training and supervision to ensure conducted at various locations, namely pump the safety and health of contractors who work houses, reservoirs, project sites, stores and at SYABAS’ premises. offi ce buildings. 366 NCRs were raised during the inspection and forwarded to the respective Confi ned Space Safety training SYABAS signed a Memorandum Of Districts for their corrective action. All NCRs Understanding with NIOSH on 22 February 2011 have since been resolved and closed. and the fi rst training was conducted on 29 September 2011. As at 31 December 2011, Confi ned Space Emergency Drill a total of 15 training sessions involving 430 participants had been conducted for SYABAS’ The objective of the Confi ned Space Emergency staff responsible for monitoring contractors Drill programme is to enhance the skills and the on site. knowledge of workmen who work in confi ned spaces. The programme includes steps to be The training for contractors commenced on taken in an emergency situation while working 15 January 2012 and the Safety Cards will be in a confi ned space, and instruction on how to provided to them one week after completing operate rescue equipment. the course and pass the test.

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SYABAS conducted a Confined Space measures that need to be taken while working Emergency Drill on 1 December 2011 to in a confi ned space and equipment to be used comply with Clause 12 of the Industry Code of in confi ned spaces. Authorised Gas Tester Practice for Safe Working In A Confi ned Space Refresher training was also conducted for 2010. Those who attended the programme SYABAS’ 12 Authorised Gas Testers (AGT). were competent Authorised Gas Testers, Secretaries of Works and those who work in SYABAS had selected 30 staff from confi ned space. In attendance, too, was an Headquarters and District Offi ces to act as expert from Hospital Kajang and his comments First Aiders and they have now been trained have been incorporated into SYABAS’ by the Malaysian Red Crescent, Hulu Langat. improvement strategy. SYABAS also had invited external parties to share their knowledge and give training to our Defensive Riding staff. There was a Health Talk by the Federal Health Department, “Taklimat Pencegahan HSE has initiated a programme in collaboration Kebakaran” from the Fire Rescue Department with SYABAS, MSOSH and SOCSO to raise and many other talks and training sessions. awareness of the importance of road safety, safe riding methods and emergency Blood Donation Campaign preparedness. The programme provided information about types of motorcycles and The Blood Donation Campaign was the safety aspects of motorcycle riding, successfully conducted at all Districts Offi ces accident statistics and actions to be taken by involving SYABAS’ staff and the public. The motorcyclists in accident situations. campaign is part of SYABAS’ Corporate Social Responsibility (“CSR”) programmes to benefi t The launching ceremony for the programme the community. was held on 15 November 2011. The programme consists of one theory session Fire Drill Programme and one practical session. The programme was conducted over ten times between The Fire Drill Programme was successfully 31 October 2011 and 30 November 2011 for a conducted at all District Offices with total of 300 staff. At the end of each session, all co-operation from the Fire Rescue participants were given a test to evaluate their Department. The main purpose of this understanding of the course. programme is to comply with Section 13 of the Factories & Machinery Act 1970 (Safety, HSE Training Health Welfare). Safety harnesses training for the contractors In 2011, SYABAS conducted 55 HSE training External Inspections sessions involving 1,734 staff, to provide awareness of HSE matters and to equip them In 2011, the Department of Occupational with adequate information and knowledge Safety and Health (“DOSH”) inspected 29 Air about safety, covering mandatory issues, Scouring Machines in accordance with Factory competency and general training. Machinery Act (“FMA”) 1967 regulations regarding the renewal of Certifi cate of Authorised Entrant and Standby Person Fitness for machinery. The inspection of the (“AESP”) in Confi ned Space training was Air Scouring Machines complied with DOSH conducted at NIOSH for staff who work in regulations. confi ned spaces. The training informs staff of their responsibilities as AESPs, safety

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Lost Time Injury (“LTI”) One Manual and 45 procedures have been developed or improved so as to obtain SYABAS aspires to complete accident and this certifi cation. The certifi cation audit is incident reports within three days to ensure scheduled to be conducted in May 2012. cases are resolved quickly. SECURITY SERVICES As at the end of 2011, SYABAS had recorded 6,689,313 manhours without LTI. This statistic The Group’s premises are secured by the includes the ten District Offi ces covered Auxiliary Police, whose duty is to create and by SYABAS. maintain a safe working environment for employees and to protect the Group’s assets PARTICIPATION IN AWARDS and facilities. It is therefore vital that the Auxiliary Police project a good image to the National Council of Occupational Safety and public as they perform the task of overseeing Recreation Activity at Fraser’s Hill Health (“NCOSH”) Award 2011 the security of the Group’s premises and employees, as well as being responsible and Ten District Offi ces participated in the be involved and investigating any breach of NCOSH Award 2011 to gauge the level of implementation of safety and health practices security matters of the Group. at the workplace. As at 31 December 2011, 342 PNHB Auxiliary AWARDS Police had undergone basic training conducted by Polis Di Raja Malaysia (“PDRM”) at the Malaysian Society of Occupational Safety and Police Training Centre at Jalan Semarak, Health (“MSOSH”) OSH Award 2011 Kuala Lumpur (“PULAPOL”). Training is also conducted annually to ensure PNHB’s Auxiliary The objective of the participation is to Police personnel are constantly equipped to evaluate and assess the effectiveness carry out their various duties. The shooting and continuously improve our safety and training is conducted twice a year to ensure the health management system. SYABAS has Auxiliary Police have good shooting skills and participated in this award since 2008. On are able to maintain fi rearms effi ciently. 22 July 2011, seven District Offi ces namely Kuala Lumpur, Klang, Petaling, Gombak, The types of training conducted included the Sepang, Hulu Selangor and Kuala Selangor use and maintenance of fi rearms effi ciently, obtained Gold Class I Awards and three protocol for carrying out duties, training District Offi ces namely, Hulu Langat, Kuala Golf Amal Championship PEKA 2011 on various laws and enactments, and the Langat and Sabak Bernam obtained Gold proper protocol for arresting offenders and Class II Awards. approaching civilians. Additionally, members of the Auxiliary Police team undergo physical CERTIFICATION fi tness examinations twice a year to ensure that they are fi t and meet the mandatory ISO 19001:2008 Certifi cation Programme requirement to always stay fi t and able to SYABAS has embarked on obtaining ISO perform on the job. 9001:2008 certifi cation for Human Resource and Administration to gain recognition of the international standard of our human resources practices.

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MANAGING OUR SUPPLIERS AND We are pleased to report that in 2011, there CONTRACTORS were no contractors, suppliers or consultants suspended from service. PNSB SYABAS As at 31 December 2011, PNSB had enlisted 178 contractors as panel contractors, There were a total of 299 contractors, suppliers SYABAS’ Safety Handbook suppliers or consultants. To ensure the quality and service providers registered with SYABAS. for Contractors at the work site of the contractors’ or consultants’ services, In addition to that, SYABAS has registered we have incorporated clauses in our contracts 148 panel contractors for pipes and meters which state that any work done has to be of to carry out emergency works for 10 SYABAS’ the highest quality and must conform to our District Offi ces. Like PNSB, SYABAS has a standard practice. If contractors, suppliers procurement policy with which contractors, or consultants fail to meet such desired suppliers and service providers are appointed. standards, PNSB has the right to reject the Their appointment and selection is also based goods or services provided by them. on other than commercial terms, but include sound and proven track records of their In addition, contractors, suppliers or technical capability. consultants are selected based on the following, using a scouring system: To ensure quality of works and services, contractors and suppliers and service 1. Financial and operating strength. providers are given the following as guidelines: 2. Past and current performance record. 3. Licence or certifi cation from government • Garis Panduan Kontraktor, Pembekal and regulatory bodies. dan Penyedia Perkhidmatan. 4. History of satisfactory performance with • Garis Panduan Bagi Kerja-Kerja other companies. Penyenggaraan Paip SYABAS. 5. Registration with relevant government agencies or bodies. Their works are monitored and checked at all times by the respective Superintendent Gas We do not condone contractors who are unable Offi cer (“SO”) or SO’s representatives for Saving Tips to provide proper services, thereby putting us each work and contract. Several contractors and the consumers at risk by causing water were suspended by SYABAS in 2011 due to the Remove excess weight supply disruptions and other inconveniences following reasons: from trunk of car. or dangers. We do not hesitate to penalise or terminate contractors who do not practise • Failure to complete work on time. safety at the work site or who fall short of our • Failure to supply goods within the agreed requirements by:- schedule. • Failure to supply goods according to • Use of inappropriate tools/equipment SYABAS’ specifi cations. at site. • Failure to comply with safety aspects at • Causing road safety issues. construction sites. • Late delivery. • Failure to have SPAN registrations • Lack of safety measures on site. renewed. • Poor work quality. • Failure to renew relevant permits or • Lack of personnel protective equipment licences with statutory authorities, on site. i.e PKK, CIDB, SPAN, MOF, ST and SSM. • Failure to wear SYABAS T-shirts or name tags during working hours.

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Puncak Niaga Holdings Berhad (“PNHB”) Since the inception of ESS, SYABAS has recognises the environmental impact resulting developed Water Resources Surveillance from its operations and continues to minimise Programmes through its Sanitary Surveys, this effect. As we operate in the water industry, its Water Quality Index (“WQI”) Programme, environmental aspects are involved in every Environmental Impact Studies and area of our business. Our commitment to investigations of raw water quality violations. preserving the environment is inculcated into These programme provide close and effective all relevant aspects including raw and treated monitoring of the water catchment areas, with water quality, water safety and public health. special focuses on: The quality of water supplied is routinely monitored at both the Water Treatment • Preservation and/or improvement to raw Plants (“WTP”) and the distribution networks water quality regularly. This ensures that high quality water • Identifying and monitoring potential is continuously supplied to our consumers. pollution sources and activities • Making appropriate recommendations Our environmental initiatives also include to stakeholder groups including water energy performance, waste and effl uents operators, government departments, management. Waste generated by our government agencies and civil society activities arises from the production of residue from our WTPs. In order to reduce stress Various pollution sources were identifi ed as on the environment, Syarikat Bekalan Air contributing to water resources pollution, Selangor Sdn Bhd (“SYABAS”) also monitor thereby affecting water treatment and supply, and incorporates consideration for carbon namely: footprint in programmes which are in-line with its vision of preserving the environment. • Illegal sand mining • Industrial activities that directly or At PNHB, our environmental commitment is indirectly discharge untreated waste into also nurtured within our workplace. This is the rivers refl ected in various environmental initiatives • Untreated or partially treated sewage being practised at our offi ces including discharges reducing paper consumption, and applying 3R • Illegal solid waste dumping (Reduce, Reuse, Recycle) activities and energy • Effl uence from landfi lls conservation practices. We carefully monitor • Land clearing our carbon footprint performance so as to • Animal husbandry activities better manage the emissions derived from the • Leachate from old and existing solid waste Earth Day 2011 celebration activities of the Company, and its employees, dumping sites suppliers and contractors. SYABAS has highlighted these concerns to SYABAS takes its corporate environmental the authorities, and is working closely with responsibility for the protection, conservation the Department of Environment (Jabatan and enhancement of the natural environment Alam Sekitar) (“DOE” or “JAS”) Selangor very seriously. One of SYABAS’ most tangible and Selangor Water Management Authority commitments to the sustainability of water (Lembaga Urus Air Selangor) (“LUAS”) resources in Selangor is its Environmental and other relevant authorities at state and Surveillance Section (“ESS”), a division fully federal levels to prevent pollution. Through responsible for monitoring issues relating these relationships, SYABAS supports the to the environment within the six water enforcement agencies’ efforts to mitigate catchment areas in Selangor. incidences of pollution, and to ensure environmental care. 152 Annual Report 2011 Puncak Niaga Holdings Berhad

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SYABAS is also a member of various Selangor Pengeluar Air Sungai Selangor Sdn Bhd State Government committees, namely: (“SPLASH”) and Konsortium ABASS Sdn Bhd (“Konsortium ABASS”). For the 27 water • Jawatankuasa Tetap Alam Sekitar Negeri intakes operated by PNSB, the water quality Selangor data is compiled based on the monthly Water • Jawatankuasa Tetap Infrastruktur dan Quality Reports. Kemudahan Awam Negeri Selangor • Jawatankuasa Pengurusan Lembangan The raw water quality is monitored according Sungai (“Sg”) Negeri Selangor to the parameters set out under the • Pasukan Petugas Lembangan Sg Selangor Recommended Raw Water Quality Limit of the • Pasukan Petugas Lembangan Sg Langat Ministry of Health’s (“MOH”) National Standard • Pasukan Petugas Lembangan Sg Klang for Drinking Water Quality (2004) (“NSDWQ”) which are categorised into:- Raw Water Quality and Violations 1. Microbiological Raw water pollution is one of the leading 2. Group I (Physical) causes of WTP shutdowns and operational 3. Group II (Inorganic matter) interruptions. 4. Group III (Heavy metals) 5. Group IV (Pesticides) To determine pollutant levels in raw water 6. Group V (Radioactivity) sources, we monitor raw water quality violations at 31 water intakes located within The following Chart A illustrates the annual raw six water catchment areas operated by water quality violations and plant shutdown Puncak Niaga (M) Sdn Bhd (“PNSB”), Syarikat cases from 1995 until 2011. Raw water 1485 pollution is one of 1400 1319 the leading causes 1268 of WTP shutdowns 1200 1085 and operational 1044 1008 957 1000 909 interruptions. 804 802 810 796 830 800 658 600 511 522 400

Frequency of Plant Shutdown Frequency 273 277 225 247

No. of Raw Water Quality Violation & No. of Raw Water 171 166 164 200 123 87 76 75 99 102 0 85 21 7 9 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total Raw Water Quality Violations Plant Shutdown Due to Raw Water Quality Violations

Chart A - Annual Raw Water Quality Violations & Plant Shutdowns (1995-2011)

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Preserving Our Environment

Based on the raw water quality data from PNSB As mentioned earlier, raw water pollution is in 2011, the number of violations decreased by one of the leading causes of WTP shutdowns 17.7% to 1,085 from 1,319 in 2010. and water supply interruptions. When such incidences occur, an environmental The breakdown of the violated parameters in investigation is conducted to identify the 2010 and 2011 is as shown below: source of the raw water pollution.

Total Raw As soon as the source is identiﬁ ed, authorities Water Quality such as the National Water Services Violations Parameter group Recorded Commission (“Suruhanjaya Perkhidmatan Air 2010 2011 Negara”) (“SPAN”), JAS Selangor and LUAS will be informed for further action. Following Microbiological 556 496 this, full investigation reports are forwarded Group I - Physical 511 409 to these authorities and other government Group II - Inorganic matter 240 176 agencies such as the Ministry of Energy, Green Group III - Heavy metals 11 1 Technology and Water (“Kementerian Tenaga, Group IV - Pesticides 0 0 Teknologi Hijau dan Air”) (“KeTTHA”), the Group V - Radioactivity 1 3 Selangor State Government and the respective municipal councils. Total 1,319 1,085 Cooperation from these authorities is Based on the analysis conducted, most of the necessary for action to be taken against raw water quality violations had occurred in the perpetrators of the pollution. the Sg Langat, Sg Selangor and Sg Bernam Recommendations and solutions are also River basins as illustrated below:- put forward to ensure that such incidences of pollution will not occur again. Total Raw Water Quality In 2011, a total of nine incidences of pollution Violations Total Recorded occurred where WTPs were shutdown, in Catchment Area WTP(s) 2010 2011 addition to numerous incidences of water supply interruptions. The details of these Sg Langat 8 512 416 incidences are as set out in Table A on page 155 Sg Selangor 6 325 286 of this Annual Report. Sg Bernam 4 217 188 2011 BPS Membership Sg Kelang 8 44 27 Recruitment Drive at Sekolah Sg Buluh 2 27 20 Menengah Kebangsaan Sg Tengi 1 194 148 Darul Ehsan Total 29 1,319 1,085

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Shutdown Type of Probable source No. Date WTP hours pollution of pollution

1. 6 January 2011 Sg Rumput 3 hrs High raw High loading of silt water turbidity due to heavy rainfall

2. 26 March 2011 Sg Sireh 171.5 hrs High raw Problematic raw water colour water quality requiring very high alum dosage

3. 7 May 2011 Cheras 7.75 hrs Diesel spillage Domestic and Mile 11 industrial efﬂ uent

4. 14 May 2011 Gombak 3.25 hrs Diesel spillage Source of pollution could not be identiﬁ ed

5. 18 May 2011 Cheras 7.25 hrs Diesel spillage Domestic and Mile 11 industrial efﬂ uent

6. 21 November Cheras 9 hrs Diesel spillage Suspected efﬂ uent 2011 Mile 11 discharge from industrial area

7. 22 November Cheras 9 hrs Diesel spillage Suspected efﬂ uent 2011 Mile 11 discharge from industrial area

8. 29 November Sg Rumput 3 hrs High raw High loading of silt 2011 water turbidity due to heavy rainfall

9. 5 December Rantau 8 hrs High raw River bank collapse 2011 Panjang water turbidity at upstream of Sg Kerling, near the “Misi Bantuan Bekalan Air Bersih” Selangor-Pahang border to ﬂ ood victims in Johor due to heavy rainfall

Table A - Record of Plant Shutdown Cases Due to Raw Water Pollution in 2011

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Shutdown Type of Probable source No. Date WTP hours pollution of pollution

1. Monthly Sg Langat - High raw Discharge from sand water turbidity mining area near Sg Sub, and colour tributary of Sg Langat

2. 8 April 2011 SSP2 - High ﬂ uoride Suspected efﬂ uent level in raw water discharge from upstream industrial area

3. 5 December SSP2 - High raw River bank collapse 2011 water turbidity upstream of Sg Kerling, near the Selangor-Pahang border due to heavy rainfall

Table B - Record of Water Supply Interruptions due to Raw Water Pollution in 2011

Upon a detailed breakdown and evaluation of the Water Quality Index (“WQI”) of the 31 intakes for 2010 and 2011 as below, 5 stations (16.1%) were categorized under Class I in 2011, 21 stations (67.8%) fell under Class II, and 5 stations (16.1%) under Class III. Compared to 2010, generally, the number of water intakes that were categorised under Classes I and III decreased in 2011, hence, resulting in more water intakes being classiﬁ ed under Class II.

Table C - Record of WQI of the 31 Intakes for Year 2010 and 2011

Year 2010 Year 2011 WQI No. of No. of Class WTP WTP WTP WTP

I 8 Kuala Kubu Bharu, Kalumpang, 5 Sg Pangsoon, Sg Pangsoon, Sg Lolo, Sg Lolo, Ampang Intake, Sg Serai, Gombak, Sg Rangkap, Sg Rumput Ampang Intake, Sg Rumput

II 16 Bernam River Headworks, 21 Bernam River Headworks, Launching of World Water Day 2011 Rantau Panjang, North North Hummock, Batang Kali, Hummock, Batang Kali, Kuala Kubu Bharu, Sg Selisek, Sg Dusun, Kalumpang, Sg Selisek, Sg Tengi, Sg Buaya, Sg Dusun, Sg Tengi, Sg Langat, Bukit Nanas, Sg Buaya, SSP2, Sg Batu, Sg Rangkap, Sg Langat, Sg Serai, Kepong, Wangsa Maju, Bukit Nanas, Sg Batu, SSP1, SSP3-Rasa Gombak, Kepong, Wangsa Maju, SSP1, SSP3- Badong, SSP3- Rasa, Semenyih

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Year 2010 Year 2011 WQI No. of No. of Class WTP WTP WTP WTP

III 7 SSP2, Sg Sireh, Bukit Tampoi, 5 Rantau Panjang, Sg Sireh, Cheras Mile 11, Salak Tinggi, Bukit Tampoi, Cheras Mile 11, SSP3-Badong, Semenyih Salak Tinggi

IV 0 None 0 None

V 0 None 0 None

Total 31 31

Note : • The WQI was derived from water quality data obtained from Monthly Reports submitted by PNSB (27 intakes) and monthly raw water sampling carried out by SYABAS (SSP1, SSP3- Badong, SSP3-Rasa and Semenyih intakes) in 2010 and 2011 • Name of WTP in bold – The WTP fell into a lower class compared to the previous year • Name of WTP in bold italic – The WTP improved to higher class compared to the previous year

The raw water quality at four water intakes SANITARY SURVEYS was found to be improving, namely Sg Rangkap WTP (Class II to Class I), SSP2 WTP, SSP3- The sanitary survey is a programme conducted Badong WTP and Semenyih WTP (Class III to to assess the general impact that human Class II). Meanwhile, four water intakes were activities have on raw water resources and downgraded from Class I to Class II quality, their corresponding quality. It is also carried namely Kuala Kubu Bharu WTP, Kalumpang out to assess the efﬁ ciency of the WTPs’ WTP, Sg Serai WTP and Gombak WTP; and one treatment process corresponding to the raw intake, namely Rantau Panjang deteriorated water components as well as the treated water from Class II to Class III. quality in the distribution lines.

Ammonia Level Monitoring In 2011, a total of nine sanitary surveys were jointly conducted with MOH and WTP operators Ammonia Level Monitoring was conducted on at the following study areas and the surveys an hourly basis at four critical WTPs along the covered the WTP processes and distribution Sg Langat Basin, namely Sg Langat, Cheras area:- Technical visit by Mile 11, Bukit Tampoi and Salak Tinggi WTPs to Persatuan Pekilang-pekilang ensure early preparation and necessary action I. North Hummock WTP Malaysia (FMM) to SSP2 WTP should the WTPs be required to shutdown due II. Rantau Panjang WTP and SSP2 WTP to high ammonia levels. III. Sg Selangor Distribution Area (Sabak Bernam) Details of the Ammonia Level Monitoring IV. Salak Tinggi WTP along the Sg Langat Basin are as set out in the V. Sg Serai WTP “Delivering Quality” section on pages 117 to 129 VI. Sg Selangor Distribution Area (Petaling) of this Annual Report. VII. Bukit Tampoi WTP VIII. Sg Batu WTP IX. Kalumpang WTP

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Based on these surveys, several human Treated Water Quality activities that might have raw water pollution impacts were identifi ed such as land clearing, The Water Quality Surveillance Monitoring illegal sand mining, stone quarries, open Programme for all the 29 WTPs managed by landfi lls and illegal waste dumping sites PNSB is conducted by the Central Laboratory with no leachate treatment facilities. These as well as an independent accredited laboratory surveys facilitate early detection and provide appointed by PNSB. The programme is carried a general idea about the potential sources of as per requirement stated in the Concession contamination and plant shutdown during the Agreements and MOH’s NSDWQ. occurrence of pollution events. Based on the water quality surveillance The fi ndings of the surveys together with monitoring programme carried out for recommendations thereon are highlighted January – December 2011, treated water to the relevant agencies and authorities to compliance achieved was 99.9% as against mitigate pollution incidents and manage MOH’s NSDWQ as depicted below: environmental risk before any of the WTP’s operation and water supply are jeopardised. Number Number of of % of Period analysis compliances compliances ENVIRONMENTAL IMPACT STUDY (“EIS”) January – In 2011, land use assessment for the EIS was December carried out for Sg Selangor, Sg Langat, Sg 2011 19,366 19,349 99.9 Bernam, Sg Klang, Sg Tengi and Sg Buloh catchment areas. Note: The above is based on analysis by Central Laboratory and Independent Laboratory Land use within the water catchments refers to various natural or human activities that may In addition to the above, treated water quality result in contamination of raw water and cause performance was also gauged using the deterioration to its quality. The pollution may indicators for Quality Assurance Programme affect the raw water quality to the point where (“QAP”) by MOH. Based on the monitoring water treatment processes are unable to cope, conducted for January – December 2011 by consequently leading to a disruption in the Central Laboratory, Independent Laboratory drinking water supply. appointed by PNSB and WTPs, treated water quality produced by all the 29 WTPs complied In addition to land use assessment, raw water with MOH’s requirement as shown below: quality monitoring and WQI assessment were “Misi Bantuan Bekalan Air Bersih” also carried out for the water intakes in 2011 Parameter QAP (% violation) 2011 to fl ood victims in Johor on a monthly basis in order to determine the current raw water quality. E. Coli 0.4 0 Free residual The EIS programme provides information on chlorine (FRC) 2.3 0.001 the current condition of the raw water quality E. Coli & FRC 0.2 0 and pollution issues faced within the water Turbidity 2.0 0.0004 catchments. Aluminium 10.2 1.18

Note: The above is based on analysis by Central Laboratory, Independent Laboratory and WTPs

The above show that treated water produced by PNSB has high percentage of compliances as well as meeting MOH’s requirements.

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Filter Run Time Per Month As December 2010 As December 2011 (hours) No. of filters % No. of filters %

60 - 72 78 45.6 79 46.7 40 - 60 69 40.4 72 42.6 30 - 40 18 10.5 18 10.7 30 6 3.5 0 0

Total 171 100 169 100

Table D - Breakdown of the filter running hours.

* Note : Some of the filters were not in operation as they were either under repair or on standby.

Reservoir Water Quality Monitoring Filter Performance Monitoring

The treated water from WTPs will be stored in Filtration is the fi nal step in the water reservoirs prior to distribution by SYABAS to treatment process, removing fi ne suspended consumers. solids remaining after the clarifi cation process. Monitoring fi lter performance, most In order to ensure that high quality water is importantly tracking the running hours is continuously supplied to consumers, routine critical to ensure that the fi lter remains in good Reservoir Water Quality Monitoring at different operating condition. When a given fi lter has depths is conducted on quarterly basis. reached its specifi ed number of running hours The status of water quality in the reservoir or its headloss level, backwashing is initiated. is monitored through the analysis of water quality parameters such as pH, turbidity, The Research & Process Unit (“R&P”) colour, aluminium, iron and manganese. The constantly monitors fi lter performance by monitoring results are used to determine tracking each fi lter’s running hours. Based on whether the reservoir requires fl ushing or the monthly statistics for a total of 174 fi lters cleaning. operating at our 29 WTPs, the breakdown of the fi lter running hours is as tabulated in Based on the monitoring conducted in 2011, Table D above. a total of seven reservoirs were identifi ed and cleaned either manually or by using a robotic Since PNSB assumed the management of the BPS activities at method. These reservoirs were: 29 WTPs in 2005, it has implemented various “Karnival Sayangi Selangor” initiatives which have resulted in tremendously held at I-City Shah Alam 1. Sg Sireh improved fi lter running hours. As a result, 2. Sg Buaya there were no fi lters with short running hours 3. North Hummock in 2011 (less than 30 hours). 4. Gombak 5. Cheras Mile 11 Firstly, R&P conducted treatment process 6. Sg Serai studies at the Sg Rangkap, Cheras, Bukit 7. Sg Lolo (Old) Nanas and Rantau Panjang Old WTPs, to ensure effi ciency and other treatment process prior to the fi ltration process, as ineffi cient treatment would burden the fi lters. The results of the studies have also resulted in the review of fi lter operation procedures. 159 Annual Report 2011 Puncak Niaga Holdings Berhad

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Secondly, PNSB initiated plant improvement 2. Delivering a talk on PNSB’s and works which included refurbishing some of SYABAS’ operations with activities and the older fi lters and installing fi lter monitoring demonstrations including members’ instruments. 14 of the WTPs namely, Sg Buaya, recruitment drive for BPS as part of Batang Kali, KKB, Sg Tengi, Sg Selisek, Rantau the Educational Outreach Programme Panjang Old, Rantau Panjang New, North (“Program Pelestarian Pendidikan”) (“3P”) Hummock, Bukit Nanas, Sg Rangkap, Bukit at schools. The details of the participating Tampoi Old, Bukit Tampoi New, Sg Langat schools at the event are set out in the and Cheras Mile 11 WTPs have recorded more “Engagement with Our Community” effective fi lter performance following this section on pages 167 to 174 of this initiative. Annual Report.

PNSB continues to carry out filter 3. The 2011 BPS Membership Recruitment refurbishment works as the need arises, and Drive were conducted by BPS at schools. the Gombak and Sg Batu WTPs’ fi lters were The details of the participating schools refurbished in 2011. are set out in the “Engagement with Our Community” section on pages 167 to 174 R&P will continue to monitor and perform of this Annual Report. studies to further improve the running hours with the objective to achieving a backwashing 4. Setting up and manning a World Water cycle of 72 hours, or whenever fi lter headloss Day 2011 exhibition booth at SYABAS’ reaches 1.8 metres, whichever occurs fi rst. Headquarters from 22 March 2011 to 26 March 2011. The details of the PUBLIC AWARENESS PROGRAMME participating schools at the event are ON ENVIRONMENTAL PROTECTION set out in the “Engagement with Our AND CONSERVATION Community” section on pages 167 to 174 of this Annual Report. The Group successfully organised and/or participated in various environmental 5. SYABAS’ Exhibition in conjunction with an awareness campaigns and activities in 2011 in Offi cial Visit by the Deputy Prime Minister, a bid to highlight the impact of environmental YAB Tan Sri Muhyiddin Hj Mohd Yassin, at pollution, and the need to preserve and Sekolah Kebangsaan Sijangkang, Kuala conserve our water resources (“Activities”). Langat on 29 March 2011. The Activities were as follows:- World Water Day 2011 6. BPS facilitation of activities in conjunction celebration in Shah Alam 1. Delivering environmental talk and with the World Water Day 2011 celebration facilitating demonstration of river water by the Selangor State Government and quality testing with students and the public LUAS at Dataran Kemerdekaan, Shah th at the 25 River Rescue Brigade (“Briged Alam on 2 April 2011. Penyelamat Sungai”) (“BPS”) Club Programme with the theme “1 Sungai 7. Public Awareness Programme for the 1 Tanggungjawab 1 Kita” at Sg Langat public, the details are as set out in the WTP on 24 June 2011, offi ciated by the “Engagement with Our Community” Deputy Prime Minister’s wife, YAB Puan section on pages 167 to 174 of this Sri Noorainee Abdul Rahman. The details Annual Report. of the participating schools at the event are set out in the “Engagement with Our Community” section on pages 167 to 174 of this Annual Report. 160 Annual Report 2011 Puncak Niaga Holdings Berhad

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8. Official Visits from the following m. Representative from Pengurusan authorities, bodies and the public:- Pusat Dialisis Negeri Selangor and the Federal Territories of a. Persatuan Pekilang-pekilang Kuala Lumpur and Putrajaya at Malaysia (FMM) at SSP2 WTP on Auditorium, Command Centre and 5 April 2011. PUSPEL on 29 November 2011 and b. Public Utility Board, Singapore at 6 December 2011. Operation Command Centre on 7 April 2011. Consumer Awareness and c. TYT Mohamed Saheb Al-Daragi, Education Programme (“CAE Programme”) Menteri Perumahan dan Pembinaan Iraq at Wangsa Maju WTP on The Consumer Awareness Programme (“CAP”) 25 April 2011. is an education campaign that was initiated d. Representative from Industri by SYABAS in early 2008 to create immediate Perdagangan Zon Bebas Utama at consumer awareness of water quality issues. Auditorium, SYABAS Head Offi ce on It exposes consumers to the stringent 10 May 2011. water quality monitoring activities carried e. National Water and Wastewater out by MOH and SYABAS. In a bid to educate Organisation of Iran at SYABAS’ consumers, the CAE Programme with media Auditorium on 16 May 2011. coverage includes educational events, as well f. Persatuan Suri dan Anggota Wanita as issuing print and electronic advertisements Perkhidmatan Awam Malaysia and infomercials on SYABAS. The programme (PUSPANITA) to SYABAS Head Offi ce also emphasises the role of consumers in at PUSPEL, Command Centre and enhancing water quality, such as by inspecting Auditorium on 18 May 2011. and maintaining internal piping systems and g. Persatuan Pentadbiran Industri internal storage tanks and engaging licensed Bangi at SYABAS Auditorium, plumbers to ensure that inspections and Command Centre and PUSPEL on cleaning are carried out professionally. It 21 June 2011. also counters misconceptions about using h. Air Kelantan Sdn Bhd at SYABAS household water fi lters, which can sometimes Auditorium on 22 June 2011. contribute to the deterioration of water quality i. Top Management of KWSP to Klang at the consumers’ premises. Besides this, Gates Dam, Wangsa Maju WTP and the programme educates the consumers to SYABAS on 11 July 2011. actively fulfi l their roles and responsibilities j. Tenaga Nasional Berhad to SYABAS in preserving the quality of water supplied to Head Offi ce on 18 July 2011. their premises by maintaining the internal Launching of World Water Day 2011 k. Lembaga Zakat Selangor to SYABAS plumbing system. Head Offi ce on 19 July 2011. l. Delegation from the 2nd IWA Development Congress and Exhibition 2011 at Wangsa Maju WTP and SYABAS Head Offi ce on 21 November 2011.

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Since 2010, CAPs have been carried out on Waste Management a bigger scale than in previous years at both the headquarters and district levels. The Waste generated by our activities is generally knowledge to be imparted is also delivered in residue (from our water treatment facilities), a more interactive atmosphere in the form of paper waste, and construction waste (from our educational talks, dialogues, exhibitions and projects and maintenance programme). Our demonstrations, which are not only limited to biggest waste issues arise from the generation water quality issues. Thus, the programme of residue from our WTPs. also touches on other water supply issues such as low water pressure, pipe bursts/leaks, In 2011, billing problems, etc. Demonstrations of the 1. SSP2 WTP produced a total of 335,124 quality of water supplied were also carried out metric tonnes (“MT”) of treatment residue. Visit by the students from at consumers’ premises, including residential 2. Wangsa Maju WTP produced a total of Chin Hock Methodist Sunday School areas, commercial areas and at organisations 32.26 MT of treatment residue. to SSP2 WTP such as educational and medical institutions. WTP Residue Treatment To ensure continuous improvement of the programme, Guidelines for Consumer SSP2 and Wangsa Maju WTPs are equipped Awareness and Education Programme were with sludge treatment facilities (“STF”) to treat developed in 2010, together with the consumer the residue. feedback survey to evaluate the impact and effectiveness of the programme. Comments DOE has approved our application for special and suggestions received from consumers management of scheduled waste for the Bukit have enabled SYABAS to further enhance our Badong Depository Area to be developed for efforts in ensuring that the supply of treated the residues from the SSP2 and Wangsa Maju water is always clean and safe for consumption. WTPs. The construction of the depository area is ongoing and is expected to be completed Summary of CAP organised by Headquarters by 2012. and Districts from Year 2007 to 2011 Reducing Paper Usage YEAR 2007 2008 2009 2010 2011 In 2011, PNSB’s paper usage increased by CAP 5 16 3 15 20 24.5% as compared to 2010. This increase was events attributed to the increase in the Company’s organised tender submissions, business proposals and Visit by the students from by Universiti Putra Malaysia to the increased in staff recruitment. SSP2 WTP Headquarters At SYABAS, we utilise paper for our daily CAP NA 532 957 185 179 operations. Based on internal records, our events paper consumption rose from 2009 until 2011. organised In 2009, the A4 paper consumption stood at by 52.28 ton which is equivalent to 14.11 ton of Districts carbon dioxide (“CO2”). In 2010, the paper Note: NA – Not Available. CAP at districts level was only consumption increased by 2.68 ton (5.13%), introduced in 2008. and this increasing trend continued in 2011, with paper consumption increasing by 5.01 ton (9.12%).

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SYABAS Paper Consumption (A4) Source of Volume from 2009 to 2011 No. raw water Withdrawn (m3)

2009 2010 2011 1. Sg Bernam 10,687,310 2. Sg Batang Kali 4,155,650 Paper 52.28 54.96 59.97 3. Sg Dusun 404,414 Consumption (ton) 4. Sg Inki 2,284,940 5. Sg Tengi 686,370 Carbon Emission 14.11 14.84 16.19 6. Sg Gerachi 1,806,680

(ton of CO2)* 7. Sg Darah 170,070 8. Sg Selangor 367,377,893 *Note : Office paper produces 0.27 metric ton of carbon 9. Sg Gombak 26,707,207 equivalent (“MTCE”) per ton of paper (Source: The US EPA report, Solid Waste Management and 10. Sg Ampang 6,960,253 Greenhouse Gases A :Life-Cycle Assessment of 11. Sg Rangkap 3,911,735 Emission and Sinks 3rd Edition, 2006) 12. Sg Kepong 773,395 13. Sg Rumput 285,045 The Group will continue to intensify efforts to 14. Sg Langat 212,437,706 reduce paper consumption by adopting green 15. Sg Serai 410,244 practices. As a start, we have encouraged the 16. Sg Lolo 1,265,321 dissemination of information electronically. 17. Sg Pangsoon 1,402,091 18. Sg Labu 1,030,130 Reducing Construction Waste 19. Sg Sireh 9,405,039 20. Batu Dam 41,311,879 SYABAS requires all its contractors to clean up 21. Klang Gates Dam 55,780,400 waste generated from maintenance activities. 22. Tasik Subang Dam 3,734,000 These contractors are monitored frequently to ensure full compliance. TOTAL 752,987,773

Further information is provided in the The current climate changes make weather section entitled “Managing Our Suppliers patterns harder to predict, making it more And Contractors under “Valuing Our People” important than ever to continuously plan and section on page 151 of this Annual Report. monitor the fl ow and volume of water in the rivers from which we obtain raw water so as to Use of Resources ensure optimisation of raw water abstraction from the rivers. Raw Water Drawn for Treatment SYABAS’ participation at the Green EXPO 2011 held at Water Utilization Tunku Abdul Rahman College, The following table summarises the amount of Setapak raw water drawn from the various rivers and Water is used for cleaning and maintenance dams for treatment at PNSB’s WTPs in 2011. works such as WTP fi lter backwashing, reservoir and storage tank cleaning, cleaning of pipelines, and fl ushing.

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We constantly endeavour to fi nd new ways to The Group also provides technical advice further reduce water usage. Already, we have to the authorities on rainwater harvesting cut plant water losses by adopting wash water and presented various technical papers on recovery and by increasing the fi lter backwash environmental issues and protection. cycle to 72 hours. In addition, to clean the pipelines, since 2007, SYABAS has used air Electricity Consumption scouring technology instead of conventional fl ushing, which has resulted in less water The water industry is electricity-intensive. At usage in cleaning the pipelines. In 2011, PNSB, the WTPs’ pumping systems account operational water usage at SYABAS decreased for the highest electricity consumption, while by 19.08% compared to the fi gures reported SYABAS requires electricity to drive its 498 in 2010. pumping stations.

Reducing water losses makes for more The Group’s electricity consumption in 2011 effective utilisation of precious water was as set out below:- resources. Between 2005, when it started operations, and 31 December 2011, SYABAS • At the Wisma Rozali (headquarters), We constantly has managed to reduce water losses from electricity consumption was successfully endeavour to 42.78% in 2005 to 32.31% in 2011, a reduction reduced by 1.75% from 2010 to 2011. fi nd new ways of about 10.47%. This has resulted in a saving • At the WTPs, electricity consumption to further reduce of about 273 MLD of water in physical losses. increased by 0.92% from 2010 to 2011. The increase resulted from a 1.63% increase in water usage. SYABAS’ water consumption across all the volume of water produced. its offi ces saw a 27.89% increase in 2011 • At SYABAS, further measures were (55,663m3) compared to the previous fi gure of taken and continue to be taken to reduce 43,522 m3 in 2010. electricity usage at booster pumping stations and offi ce buildings. In 2011, water usage at PNSB increased by 6.78% (1,054m3) compared to the usage Although our electricity optimisation amount of 15,555 m3 in 2010. programme is ongoing at the WTPs, only relatively small reductions in electricity Our Water Consumption consumption are possible as the WTPs are (2009-2011) operating at optimal effi ciency in terms of electricity consumption. 60000 55,663

) 46,300 3 Energy Efﬁ ciency Initiatives Visit by the students from 50000 43,522 Universiti Putra Malaysia to 40000 SSP2 WTP However, in order to make savings wherever 30000 16,609 possible, in 2011, PNSB conducted a few 15,555 20000 14,224 initiatives at SSP2 WTP, and the initiatives 10000 were as follows:-

Water Consumption (m Water 0 SYABAS PNSB 1) Replacement of Fluorescent Light to Low Company Bay Light at Lime Plant Stream C & D 2009 2010 2011 • Estimated saving = RM3,286.62 per year

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2) Reuse Sampling Water for WTP usage at To play its role in reducing environmental Filtration Plant stress, SYABAS is also planning to position the • Estimated saving = company on a low-carbon path, which in is line RM127,334.00 per year with our vision to ensure the preservation of the environment. In May 2010, SYABAS initiated 3) Decommission Coagulation Mixers at the Carbon Footprint Initiative Programme Coagulation process Actiﬂ o Plant (“CFIP”) setting a baseline for carbon • Estimated saving = emissions arising from SYABAS operations RM80,210.00 per year starting in 2010.

4) Refurbishment of Treated Water Pump P2 Emission quantiﬁ cation was based on the 2006 at TWPS Intergovernmental Panel on Climate Change • Estimated saving = (“IPCC”) Guidelines for National Greenhouse RM30,576.00 per year Gas Inventories, the UNEP Tool and Guidelines for Calculating Greenhouse Gas Emissions for Use of Raw Materials Businesses & Non-Commercial Organisations and the Department for Environment, Food We are also pleased to report that PNSB and Rural Affairs UK (“DEFRA”). utilised a total of 42,923.96 MT of chemicals in the water production process in 2011. The Table E below summarises the carbon emissions by source and quantity for 2010 As at 31 December 2011, total production and 2011. Based on the information gathered of treated water at all 29 WTPs was in 2011, the electricity consumption (Scope 2) 703,477,920 m3 and about 0.061058 kg of contributed 97% (103,653 t CO2) to SYABAS’ chemicals were required to treat 1 m3 of water. carbon footprint and the fuel consumption by The amount of chemical usage for 2011 is the company’s vehicles (Scope 1) contributed equivalent to the amount of chemicals usage 3% (3,557 t CO2). last year. Water Facts GHG Source Unit 2010 2011 Carbon Emissions A person consumes Electricity more than 16,000 Gallons (Scope 2) t CO 103,539 103,653 The ﬁ rst time we reported our Carbon 2 of water in his life time. Emissions based on the Green House Gas Transport (“GHG”) Protocol was in 2009. (Scope 1) t CO2 3,475 3,557

Concerned with global environmental issues, Total t CO 107,014 107,210 especially climate change, Malaysia has 2 adopted a voluntary target of a reduction Note: SYABAS Carbon Footprint is based on emission of up to 40 per cent in the ratio of its carbon factor published by GreenTech Malaysia for electricity in Malaysia (0.683 t CO /Mwh) emissions to gross domestic product (“GDP”) 2 to be achieved between 2005 and 2020. The Table E - SYABAS CO2 Emission in 2010 and 2011 commitment was announced by our Prime Minister, YAB Datuk Seri Mohd Najib Tun Haji Abdul Razak during the United Nations Climate Change Conference held in Copenhagen in December 2009.

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To ensure that SYABAS’ staff are collectively 2010 2011 committed to the CFIP, an integrated working

group was formed in December 2011. The main Locations MT CO2 -eq MT CO2 -eq task of the working group are to ensure that Wisma Rozali 1,249.52 1,227.61 all relevant stakeholders are consulted and WTPs 158,260.07 159,708.37 involved in the programme, to conduct studies SYABAS 107,014.00 107,210.00 on proposed carbon reduction measures and to develop a SYABAS Climate Change Policy. Total 266,523.59 268,145.98

The SYABAS’ CFIP includes short term programmes that promote green Scope 2 Emissions Arising from habits/culture among staff, suppliers and Electricity Usage in 2010 and 2011 contractors, to medium term programmes 200 which emphasise increasing energy efﬁ ciency, 158.3 159.7 and long term programmes that include 150

studies on the potential to generate renewable 107.0 107.2

-EQ (‘000) 100 energy. 2

50 In summary, SYABAS’ CFIP is a voluntary MT CO 1.2 1.2 programme that embodies SYABAS’ 0 environmental aspirations which will 2010 2011 encourage economic development and Year positively contribute to the mitigation of SYABAS WTPs climate change. Wisma Rozali

Compared with estimated carbon emissions arising from electricity consumption in 2010, in 2011 Scope 2’s estimated carbon emissions declined by 1.75%.

2011 BPS Membership Recruitment Drive at Sekolah Kebangsaan St Mary

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Engagement With Our Community

For Puncak Niaga Holdings Berhad (“PNHB”), Saving, protecting and nurturing the diversity Corporate Social Responsibility (“CSR”) of life on earth while helping to protect our comprises activities that safeguard the sources of clean drinking water is fundamental interests of the environment, communities, to our CSR. For this purpose, Syarikat employees, shareholders and other affected Bekalan Air Selangor Sdn Bhd (“SYABAS”) parties as an integral part of the Group’s has developed the tagline “Nurturing strategy for long-term, sustainable value Relationships” to represent its commitment to creation. environmental preservation as a core element in its CSR efforts. We continue to contribute We have a policy that speciﬁ cally addresses to maintain our recognition as a caring various areas, including: organization towards our community.

• The environment COMMUNITY INVESTMENT To promote and carry out activities to minimise the risk of pollution and As a caring organisation, Puncak Group degradation of our environment. contributes to community initiatives each year. In 2011, Puncak Niaga (M) Sdn Bhd • Employees (“PNSB”) and SYABAS contributed a total To respect the rights and diversity of our amount of RM2,793,454.00 to various employees by providing conducive working causes, via sponsorship and community conditions and equal opportunities. care. Some of these included the “Turun Ke Padang” Programme, donations to charitable • Ethics organisations, sponsorship of community To promote high standards of integrity and events, and of educational programmes and professionalism. events organised for the Group’s employees.

• Relationship with consumers, suppliers River Rescue Brigade and partners (“Briged Penyelamat Sungai”) (“BPS”) To satisfy consumers’, suppliers’ and partners’ needs and provide a high quality In 2011, our River Rescue Brigade (“BPS”) of customer service and business practice. held various events involving educational and entertainment activities, such as • Community involvement dramatic and choral performances, poetry To support philanthropic and charitable readings, colouring contests, IQ tests, BPS giving and encourage our employees to presentations, jungle trekking, cycling, “Misi Bantuan Bekalan Air Bersih” help local communities. gotong-royong to clean the river, and water to the ﬂ ood victims in Malacca related talks and exhibitions to educate the • Engagement with stakeholders public and students from primary, secondary To listen to and engage with local and tertiary levels on water in general and on communities in a responsible and caring the importance of conserving and protecting manner. our water resources, in particular.

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These events were: 2. World Water Day 2011 celebration on 2 April 2011 launched by the Selangor 1. World Water Day 2011 on 22 March 2011 to State Government and Lembaga Urus 26 March 2011 at SYABAS’ Headquarters Air Selangor at Dataran Kemerdekaan, and District Ofﬁ ces. Shah Alam.

1,500 students from the following schools, BPS facilitated activities such as quiz, polytechnic and universities participated exhibitions and membership drive at in the event:- the event.

1. SMK Taman Dato’ Harun, 3. Launching of the 25th BPS Club Jalan Klang Lama Programme with the Deputy Prime 2. SK USJ 2, Subang Jaya Minister’s wife, YAB Puan Sri Noorainee 3. SMK Jeram, Kuala Selangor World Water Day 2011 Abdul Rahman on 24 June 2011 at Sungai 4. Politeknik Shah Alam (“Sg”) Langat WTP with the theme 5. SK Bangsar, Kuala Lumpur “1 Sungai 1 Tanggungjawab 1 Kita”. 6. SJK (T) Jalan Bangsar, Kuala Lumpur 7. SMK Gombak Setia, Gombak 300 students from the following schools 8. SMK Aminuddin Baki, Kuala Lumpur participated in the event:- 9. SM Teknik, Kuala Selangor 10. SK Gombak Utara, Gombak 1. SK Cheras Jaya 11. SMK Seri Puteri, Cyberjaya 2. SJK (C) Sungai Chua 12. SMK Bandar Tun Razak, 3. SJK (T) Ampang Kuala Lumpur 4. SMK Tinggi Kajang 13. SK Pendidikan Khas, Shah Alam 5. SMK Abdul Jalil 14. SJK (C) Onn Pong 2, Ampang 6. SMJK (C) Yu Hua 15. SK Taman Tun Dr. Ismail 1, 7. SK Lembah Jaya, Ampang Kuala Lumpur 16. SMK Raja Lumu, Klang Note: 17. SK Seksyen 13, Shah Alam SJK (T) denotes Sekolah Jenis Kebangsaan Tamil SJK (C) denotes Sekolah Jenis Kebangsaan Cina 18. Politeknik Shah Alam SK denotes Sekolah Kebangsaan 19. UiTM, Shah Alam SMK denotes Sekolah Menengah Kebangsaan 20. UiTM, Melaka SMJK (C) denotes Sekolah Menengah Jenis 21. Universiti Malaya Kebangsaan Cina World Water Day 2011 22. Universiti KL

Note: SJK (T) denotes Sekolah Jenis Kebangsaan Tamil SJK (C) denotes Sekolah Jenis Kebangsaan Cina SK denotes Sekolah Kebangsaan SMK denotes Sekolah Menengah Kebangsaan SM denotes Sekolah Menengah UiTM denotes Universiti Teknologi MARA

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4. The 2011 BPS Membership Recruitment The second 2011 BPS Exploration Drive. Programme was held on 30 July 2011 together with 36 BPS Club members and In an effort to increase students’ four teachers from Sekolah Kebangsaan knowledge of conservation and protection Batu Belah, Klang. The BPS Exploration of the environment especially river water Programme exposed the students to the which is a source of drinking water, BPS in-depth processes for water treatment conducted the 2011 BPS Membership conducted by PNSB. Students interacted Recruitment Drive by setting up a BPS with organisers via questions and answers Club as a co-curriculum club at the on the water treatment processes during following schools:- the programme.

1. SK Batu Belah, Klang on 14 May 2011 6. Educational Outreach Programme (fi rst school to set up a BPS Club) (“Program Pelestarian Pendidikan”) (“3P”). 2. SJK (C) Sungai Chua, Kajang on 4 October 2011. We organised monthly 3P programmes, We organised conducted in collaboration with the BPS 3. SK Cheras Jaya on 7 October 2011. monthly 3P 4. SK Bangsar on 12 October 2011. Club, to help educating children in primary, programmes, 5. SMK Tinggi Kajang on 13 October 2011. secondary and tertiary schools about the 6. SK St Mary on 2 November 2011. importance of preserving rivers and the conducted in 7. SK Gombak Utara on 3 November 2011. environment. A membership drive for the collaboration 8. SMK Darul Ehsan on 9 November 2011. BPS Club was also conducted during the with the BPS Club, 9. SK Seri Tiram, Kuala Selangor 3P programmes. Many schools within the to help educating on 17 November 2011. area of our operations have benefi ted from children in 10. SK Kajang on 18 November 2011. this programme. The participating schools primary, secondary for the 3P programmes in 2011 were as and tertiary Note: follows:- schools about SJK (C) denotes Sekolah Jenis Kebangsaan Cina SK denotes Sekolah Kebangsaan the importance 1. SK Selayang Baru (1), Gombak SMK denotes Sekolah Menengah Kebangsaan of preserving on 29 June 2011. rivers and the 2. SK Bukit Bangkong (A), Sepang BPS Club’s activities are conducted in environment. these schools every week for two hours on 30 June 2011. per week. The activities include drawing 3. SJK (T) Ladang Glenmarie, and colouring competitions and essay Shah Alam on 18 July 2011. writing. 4. SK Batu Belah, Klang on 26 July 2011 5. SK Kajang, Hulu Langat 5. 2011 BPS Exploration Programme. on 28 July 2011. 6. SK Olak Lempit, Kuala Langat The 2011 BPS Exploration Programme was on 13 October 2011. offi cially launched by the Deputy Prime Note: Minister’s wife, YAB Puan Sri Noorainee SJK (T) denotes Sekolah Jenis Kebangsaan Tamil th Abdul Rahman during the 25 BPS Club SK denotes Sekolah Kebangsaan Programme held at Sg Langat WTP on 24 June 2011.

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7. Public Awareness Programme. 9. Program Jalinan Mesra BPS 2011.

In 2011, BPS also facilitated activities such For “Program Jalinan Mesra BPS 2011”, as drawing and colouring competitions, BPS held Majlis Berbuka Puasa during exhibitions and membership drive for the the month of Ramadhan with offi cers public at the following venue:- from the Ministry of Education (“MOE”) at Putrajaya International on 5 August 2011, 1. Tesco, Puchong on 30 April 2011. with offi cers from the Selangor Education 2. Tesco, Shah Alam on 29 October 2011. Department at Shah Alam Convention 3. Pangsapuri Kenari Court, Centre on 12 August 2011 and with Pandan Indah on 12 November 2011. offi cers from the Wilayah Persekutuan 4. Pangsapuri Laksamana, Education Department at Quality Hotel, Batu Caves on 10 December 2011. Kuala Lumpur on 18 August 2011. The 5. Pangsapuri Bustan Shamelin, Programme aims to strengthen the Cheras on 17 December 2011. relationship between the Company and MOE and the Education Departments, 8. Exhibitions. and to show our appreciation and to thank them for approving our BPS programmes. In conjunction with the offi cial visit by the Deputy Prime Minister, YAB Tan Sri 10. Visits to Dams, PNSB’s WTPs, SYABAS’ Muhyiddin Hj Mohd Yassin, to Sekolah Auditorium, Operation Command Centre Kebangsaan Sijangkang, Kuala Langat and PUSPEL. on 29 March 2011, BPS took part in an exhibition designed to raise awareness School Venue Date of the need to preserve and conserve our water resources. Kolej Empangan 16 March Komuniti Klang Gates, 2011 In conjunction with the “Karnival Sayangi Temerloh Hulu Klang Selangor” organised by Barisan Nasional Selangor at I-City Shah Alam, from Sekolah SSP2 WTP 30 July 28 December 2011 to 31 December 2011 Kebangsaan & Batang 2011 to promote the spirit of 1Malaysia amongst Batu Belah, Berjuntai the people of Selangor, BPS also took Klang Intake part in an exhibition to raise awareness Public Awareness Programme of issues relating to water resources and Faculty of SSP2 29 at Tesco Shah Alam conducted a BPS membership drive. Architecture, WTP November Universiti 2011 Putra Malaysia

Chin Hock SSP2 8 Methodist WTP December Sunday 2011 School, Perak

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As at December 2011, there were 4,630 BPS In 2011, the Tabung Budi team held several club members, comprising students from auspicious events namely, ”Majlis Pemimpin 218 primary/secondary/tertiary schools in Bersama Rakyat 1Malaysia” held on Selangor and the Federal Territories of Kuala 29 March 2011 at Sijangkang, Selangor Lumpur and Putrajaya, an increase of 426 whereby the Deputy Prime Minister, YAB Tan students on the 2010 figure. Sri Muhyiddin Yassin, delivered Tabung Budi water supplies to eight recipients. Other events TABUNG BUDI included ”Program Khas Ihsan Ramadhan Tabung Budi” which was held on 26 August Tabung Budi was founded on 24 August 2010 2011 at the Fishermen’s Village Teluk Gong, by SYABAS’ and PNSB’s staff. The “Program Klang and ”Program Kayuhan Amal Tabung Bantuan Bekalan Air Tabung Budi” was Budi Satu SYABAS” on 24 September 2011 launched by PEKA at the Headquarters of at Kuala Selangor in conjunction with World SYABAS, Jalan Pantai Bahru, Kuala Lumpur Heart Day and Kuala Selangor Independence on 22 October 2010. This programme as Month. inspired by YBhg Tan Sri Rozali Ismail, our Executive Chairman, focuses on helping the OTHER CORPORATE poor, homeless, single parents, disabled RESPONSIBILITY EVENTS and those in need. Contributions received from PEKA members, employees of SYABAS/ 1. Sponsorship and Donations 2011 PNSB, individuals and corporate bodies are used to help these people. As at end We receive hundreds of requests for December 2011, a total of RM172,177.41 contributions and initiatives every year. had been used to finance the extension and While we review and respond to all external installation of water pipes, repair leaks and pay requests for sponsorship, the emphasis of outstanding water bills. As of December 2011, our sponsorship is on creating or pursuing a total of 187 families had benefited from the activities that provide the most effective “Program Bantuan Bekalan Air Tabung Budi”. contribution to, and are best aligned with, our business objectives. We follow a set of The Tabung Budi team has introduced “Majlis guidelines to help us determine where to Turun Padang Tabung Budi” whereby a best place our resources: presentation ceremony is held at recipients’ residence. The event is usually headed by • Ev ents that enhance relations between the PEKA President together with SYABAS’ us and the government • E vents that strengthen our brand and management representatives accompanied Tabung Budi Programmes by contributors. During this event, which reputation extended to the needy happens on a weekly basis, water meters are • Events that promote a greater re-installed at the recipients’ residences. awareness, understanding and appreciation of our services • Events that augment educational standards, especially to the benefit of the underprivileged • Events or activities that provide assistance to individuals to start up small businesses that are aligned with the company’s business strategy • Ev ents or activities that enable us to connect to consumer groups

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• Events or activities that leverage 2. Social Responsibilities for 2011 opportunities associated with the sponsorship (1) On 22 March 2011, in conjunction with • Events or activities by individuals the World Water Day 2011 celebration, or organisations that are able to we organised a programme demonstrate effective community simultaneously at SYABAS’ support and involvement Headquarters, at the District Offi ces in • Events or activities that offer value Selangor and the Federal Territories propositions across all segments of of Kuala Lumpur and at PNSB’s WTPs. society • Events or activities that are able (2) As of December 2011, a total of to account effectively for how the 187 families had benefi ted from Biro Hawa’s visit to investment is to be spent and the the Program Bantuan Bekalan Air Pusat Perlindungan Wanita outcome of the event /activities Tabung Budi. Auspicious events were Baitul Ehsan organised by the Tabung Budi Team as The communities that benefi ted from elaborated above under the headline our 2011 sponsorship and donation drive “Tabung Budi”. included:- (3) We organised ‘Gotong-Royong’ 1. Federation of Malaysian Consumers activities with the following parties in Associations (FOMCA) 2011:- on 18 January 2011 2. Persatuan Bekas Polis Malaysia (a) On 22 January 2011, with on 11 February 2011 Kementerian Wilayah Persekutuan 3. Malaysian Environmental NGO dan Kesejahteraan Bandar at (MENGO) on 5 April 2011 Bukit Bintang, Kuala Lumpur. 4. Majlis Belia Hindu Malaysia (b) On 22 January 2011, with MBPJ on 13 April 2011 and Residents of Seksyen 5, 5. Pejabat Pelajaran Bangsar Dan Pudu Petaling Jaya in conjunction with on 7 June 2011 ‘Program Mesra Alam’. 6. Sekolah Kebangsaan Kajang (c) On 29 January 2011, with orphans on 7 June 2011 at Rumah Anak-anak Yatim Pure 7. Kawasan Rukun Tetangga, Taman Life Society, Puchong. Pantai Sepang Putra on 8 June 2011 (d) On 12 March 2011, with JKKP at 8. Pengakap Malaysia Daerah Hulu Meru, Klang. Breast Cancer Awareness Talk Selangor on 14 June 2011 (e) On 13 March 2011, with KRT Jalan at Tropicana Medical Centre 9. Menara Kuala Lumpur on 6 July 2011 Reko at Jalan Reko, Kajang. 10. Pusat Latihan Polis Kuala Lumpur (f) On 13 March 2011, with residents on 6 July 2011 of Apartment Teratai, Hulu 11. Breast Cancer Welfare Association Selangor. Malaysia on 21 July 2011 (g) On 19 March 2011, with residents 12. Majlis Sukan India Selangor (SISC) of Seksyen 6, Wangsa Maju. on 4 August 2011 (h) On 8 May 2011, with residents of 13. Pusat Khidmat Ahli Parlimen Hulu Kampung Melayu Ampang, Zon 9. Selangor on 19 October 2011 (i) On 4 October 2011, with Businessman Association at Rawang. (j) On 12 November 2011, with Bukit Bintang Central Committee. 172 Annual Report 2011 Puncak Niaga Holdings Berhad

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(4) On 2 February 2011, we launched a (9) On 26 February 2011, we participated ‘Misi Bantuan Bekalan Air Bersih’ at in the launching ceremony of SYABAS’ Headquarters and together ‘1Malaysia Youth Entrepreneurs with Rejimen Pakar Pengendalian Club’ held at the Memorial Tunku Air Ke-60 RAJD, we reached out by Abdul Rahman. supplying clean potable water to the fl ood victims in Johor. (10) On 1 March 2011, we launched a ‘Misi Bantuan Bekalan Air (5) On 8 February 2011, we organised a Bersih’ at SYABAS’ Operation and presentation of a donation to Palm Maintenance Offi ce, Sg Besi, Kuala Grove’s Resident Association, Klang. Lumpur to supply clean potable water to the fl ood victims in Malacca. Educational Outreach Programme (6) On 8 February 2011, we launched a at Sekolah Jenis Kebangsaan (Tamil) Ladang Glenmarie, second ‘Misi Bantuan Bekalan Air (11) On 23 April 2011, in conjunction with Shah Alam Bersih’ at SYABAS’ Operation and Earth Day 2011, we held senamrobik Maintenance Offi ce, Sg Besi, Kuala activities at SYABAS’ District Offi ces. Lumpur to supply clean potable water to the fl ood victims in Johor. (12) On 23 April 2011, we organised a “Program Mengecat” at Rumah (7) We organised ‘Gotong-Royong’ Pam Bukit Jugra with the residents activities in conjunction with our of Kampung Permatang Pasir, Bukit ‘Program Tanggungjawab Social Jugra. Korporat Wilayah Selangor’ as follows:- (13) On 28 May 2011, PEKA organised a walkathon, ‘Walk For Your Heart (a) At Surau As-Sakinah, Kuala Kubu Peka 2011’ at Wisma Rozali, Shah Bharu on 12 February 2011. Alam. (b) At Tanah Perkuburan Islam Water Facts Bukit Lagong, Selayang on (14) On 31 July 2011, we launched a A small drip of water 28 February 2011. ‘Misi Bantuan Bekalan Air Bersih’ can add up to 25 gallons (c) At Surau Imam Jalal, Kampung at SYABAS’ Headquarters to supply per day Sungai Gulang-gulang on clean potable water to the fl ood 9 April 2011. victims in Port Dickson. (d) At Rumah Amal Chesire, Selayang on 23 April 2011. (15) In conjunction with the month of (e) At Rumah PPRT Batu 11, Ramadhan, on 5 August 2011, Kuala Langat on 30 April 2011. PEKA organised a charity (f) At Tanah Perkuburan Kampung programme for Rumah Sg Apong and Kampung Teluk Amal Anak Yatim Yayasan Rhu on 20 May 2011. Pembangunan Insan Nasional, (g) At the residence of Tabung Budi’s Kuala Langat. candidate, Encik Kamarulzaman Bin Ahmad on 31 May 2011. (16) On 9 August 2011, we participated in a ‘Gotong-Royong’ in conjunction (8) We participated in the blood donation with ‘Program Berbuka Puasa’ with programmes during the year. DYMM Sultan Selangor at Masjid DiRaja Alauddin Kampung Bandar.

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(17) In conjunction with the month of (23) SY ABAS hosted visits by various Ramadhan:- agencies, both local and overseas, at SYABAS’ Headquarters and (a) On 16 August 2011 and at PUSPEL Contact Centre, as 23 August 2011, we organised detailed in the “Delivering Service ‘Program Jejak Fakir’ at 8 and Excellence” section on page 114 of 7 locations in Petaling and this Annual Report. Gombak Districts, respectively. (24) PNSB also hosted visits by various (b) We organised ‘Program agencies, both local and overseas Memasak Bubur Lambuk Dan at PNSB’s Headquarters, dams and Penyerahan Bubur Lambuk’ WTPs, as follows:- and donations contributions. Date Visitors (c) On 23 August 2011 and 25 August 2011, we organised 5 April Persatuan ‘Program Sumbangan Ihya 2011 Pekilang-pekilang Ramadhan’ at Wilayah Kuala Malaysia Langat and Wilayah Kuala Selangor, respectively giving 25 April TYT Mohamed donations to the poor. 2011 Saheb Al-Daragi, (18) On 24 September 2011, we organised Menteri Perumahan ‘Program Kayuhan Amal Satu dan Pembinaan Iraq SYABAS Tabung Budi’ in conjunction with ‘Bulan Kemerdekaan & Hari 18 May 2011 Persatuan Suri Dan Jantung Sedunia 2011’. Anggota Wanita Perkhidmatan Awam (19) On 8 October 2011, we participated (PUSPANITA) in ‘Program Nurani Rakyat Sayangi Selangor Bersama the Prime 19 May 2011 JKKK Mukim Bagan Minister YAB Datuk Seri Mohd Najib Nakhoda Oman Tun Haji Abdul Razak’. 11 July 2011 Top Management of (20) On 29 November 2011, we Kumpulan Wang participated in the ‘Majlis Simpanan Pekerja Pelancaran dan Persiapan Misi (KWSP) Bantuan Banjir’ organised by Rejimen Pakar Pengendalian Air 21 Delegation from the Program Kayuhan Amal Satu ke-60 RAJD (AW). November 2nd IWA Development SYABAS Tabung Budi 2011 Congress And (21) On 3 December 2011, together with Exhibition 2011 Majlis Perbandaran Kajang, we contributed our workforce to clean (25) We celebrated the major festivals in up Kajang Town which was affected Malaysia with the less fortunate by by a ﬂ ash ﬂ ood. giving them donations. (22) On 12 December 2011, we participated in the Programme, Green EXPO 2011 which was held in Tunku Abdul Rahman College, Setapak.

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Corporate Events

12 JAN 2011 22 FEB 2011 4 MAY 2011 SYABAS’ Ramah Mesra Technical Visit by Providing assistance to Programme with the Sri Lanka Water Board fl ood victims in Sg Serai, President of Federation Hulu Langat of Malaysian Consumers 15-17 MAR 2011 Associations (FOMCA), YBhg PNSB’s & SYABAS’ Datuk Marimuthu Nadason 28 JUNE Exhibition in conjunction 24 JAN 2011 with the Opening Ceremony of the 2nd Asia 28 JUNE 2011 Consumer Awareness Pacifi c Regional Water PNHB Group’s Executive Programme on Water Conference and Exhibition Chairman, YBhg Tan Sri Quality Kuala Lumpur (APRWC 2011) 18 MAY Rozali Ismail was awarded the “Technology CEO 22 MAR 2011 18 MAY 2011 of the Year – Global” Award Launching Ceremony of Technical Visit by PNSB’s & SYABAS’ World Persatuan Suri dan Anggota Water Day 2011 celebration Wanita Perkhidmatan Awam Malaysia (PUSPANITA) 29 MAR 2011 2 FEB Tabung Budi event on 1-3 JUNE 2011 “Majlis Pepimpin Bersama POG’s participation Rakyat 1Malaysia” at 2 FEB 2011 at Oil and Gas Asia 4 JUL Sijangkang offi ciated by Pacifi c Conference 2011 Launched a mission of YAB Tan Sri Muhyiddin Hj (“OGA 2011”) 4 JUL 2011 supplying clean water Mohd Yassin, Timbalan to fl ood victims in Johor Perdana Menteri Malaysia PNHB Group’s together with Rejimen Executive Chairman, Pakar Pengendalian 7 APR 2011 YBhg Tan Sri Rozali Ismail Air Ke-60 RAJD (AW) received the title “Brigedier Technical Visit by Public Jeneral (Kehormat) Utility Board, Singapore Pakar Pengendalian Air-Ke-60 RAJD (AW)” 23 APR 2011 24 JUNE Perdana SYABAS’ aerobics 11 JUL 2011 session in conjunction with 24 JUNE 2011 Technical Visit by Hari Bumi 2011 – ‘1 Bumi, Kumpulan Wang Simpanan 1 SYABAS, 1 Semangat’ Launching of 25th 22 FEB Pekerja (KWSP) BPS Club Programme 25 APR 2011 22 FEB 2011 27 JUNE 2011 Offi cial Visit by TYT Signing Ceremony of Mohamed Saheb Al-Daragi, PNHB’s 14th Annual the Memorandum of Housing and Construction General Meeting held at Understanding (MOU) Minister of Iraq Concorde Hotel Shah Alam with NIOSH for Safety Card Training Modules SYABAS-NIOSH 27 JUNE 175 Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Events

28 JUL 2011 8 OCT 2011 PNHB Group’s Executive Programme “Nurani Chairman, YBhg Tan Sri Rakyat Sayangi Selangor” Rozali Ismail was awarded together with the “Masterclass Leader” YAB Datuk Seri Mohd Najib Award at the International Tun Haji Abdul Razak,

14 JUL Standard Quality (“ISQ”) the Prime Minister 29 NOV Award 2011 14 JUL 2011 29 NOV 2011 23 AUG 2011 PNHB’s visit to the ‘Majlis Pelancaran Programme “Sebening GHKL’s Radiotherapy dan Persiapan Kasih Aidilﬁ tri” together and Oncology Wards Misi Bantuan Banjir’ with the orphanage from organised by Yatim Tengku Ampuan 19 JUL 2011 Rejimen Pakar Rahimah (RACTAR), Klang 8 OCT Pengendalian Air Technical Visit by ke-60 RAJD (AW) Lembaga Zakat Selangor 14 SEP 2011 to SYABAS 13 OCT 2011 29 NOV 2011 PNHB was awarded the “Industry Excellence PNSB was awarded the Study Visit by 20 JUL 2011 Award – Water Sector” at “11th Malaysia HR Awards Faculty of Architecture, PNHB Group’s the launching ceremony of 2011 Employer of Universiti Putra Malaysia Executive Chairman, 5th Edition Malaysia 1000 Choice – Silver Award” YBhg Tan Sri Rozali 12-14 DEC 2011 Ismail was awarded the 20 OCT 2011 SYABAS’ exhibition prestigious “Entrepreneur Tabung Budi programme for in conjunction with of the Year 2011” Award the needy in Kuala Selangor “Green EXPO 2011” at at the Asia Paciﬁ c Kolej Tunku Abdul Rahman Entrepreneurship Awards 2011 28-31 DEC 2011 14 SEP SYABAS’ exhibition in conjunction with 24 SEP 2011 “Karnival Sayangi Selangor”

Programme “Kayuhan Amal 20 OCT Satu SYABAS Tabung Budi” in conjunction with Malaysia 20 JUL Independent month & 2 NOV 2011 World Heart Day 2011 Technical Visit by P’ohang 22 JUL 2011 Municipal Assembly, Korea 4 OCT 2011 PNSB received ﬁ ve gold PNHB received a 2 NOV awards and SYABAS 21 NOV 2011 Commendation for received ten gold awards Technical Visit by the Integrated Reporting at MSOSH Award Ceremony delegation from at the ACCA Malaysia held at One World Hotel 2nd IWA Development Sustainability Reporting Congress & Exhibition Awards (MaSRA) 2011 176

Accountability

178 207 Corporate Health, Safety And Disclosure Policy Environmental Policy 179 208 Statement On Syabas’ Corporate Corporate Governance Responsibility Policy 193 209 Statement On Statement Of Internal Control Directors’ Responsibility For Preparation Of 195 Financial Statements Audit Committee Report 201 Risk Management Policy & Report 204 Investor Relations Policy & Report 206 Quality Policy & Report Annual Report 2011 Puncak Niaga Holdings Berhad

Corporate Disclosure Policy

As a responsible corporate citizen, Puncak Niaga is To achieve its objectives, the Company will endeavour to totally committed to upholding the highest standards of undertake the following:- transparency, accountability and integrity in the disclosure of all material information on the Company to the investing 1. ESTABLISH POLICIES AND PROCEDURES public in an accurate, clear, complete and timely manner in accordance with the corporate disclosure requirements as • Ensure written policies and procedures of the set out in the Main Market Listing Requirements of Bursa Company (“Puncak Niaga’s Corporate Disclosure Malaysia Securities Berhad (“Bursa Securities”). Policy and Procedure”) that encompass the Corporate Disclosure Policy and other requirements relating to The primary objectives of Puncak Niaga’s Corporate corporate disclosure as set out in the Main Market Disclosure Policy are:- Listing Requirements of Bursa Securities.

1. To promote and maintain market integrity and investor • Appoint a senior officer of the Company to oversee confidence. and coordinate disclosures to ensure the Company complies with the Main Market Listing Requirements 2. To provide equal access to the Company’s material of Bursa Securities. information in an accurate, clear, timely and complete manner and to avoid selective disclosure to the investing • Ensure that only designated persons are the public. Company’s spokespersons.

3. To exercise due diligence such that information • Ensure due compliance with Puncak Niaga’s disseminated to the investing public will be as far as Corporate Disclosure Policy And Procedure. possible accurate, clear, timely and complete. 2. EXERCISE DUE DILIGENCE AND PREPARATION 4. To put in place an efficient management of information procedure that promotes accountability for the • Ensure that the persons responsible for disseminating dissemination of material information to the investing material information to the investing public, exercise public. due diligence in ensuring that information to be released is accurate, clear, timely and complete. 5. To build good investor relations with the investing public based on the principles of trust, honesty, openness, • Ensure that due care is observed when briefing and transparency and sound understanding of the Company. 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.

178 Annual Report 2011 Puncak Niaga Holdings Berhad

Statement On Corporate Governance

COMPLIANCE STATEMENT BOARD OF DIRECTORS

The Board of Puncak Niaga is pleased to state that Puncak (a) THE BOARD Niaga is in compliance with the Best Practices in Corporate Governance as set out in Part 2 of the Malaysian Code on The Group is helmed by an effective and experienced Corporate Governance (Revised 2007) (“Code”) and has Board, comprising individuals of caliber and credibility subscribed and remain firmly committed to the principles of with necessary skills and experience from a diverse blend good corporate governance as set out in Part 1 of the Code to of professional backgrounds. With the adoption of the strive for highest standards of corporate governance within the Board Charter, the Board members, whether acting in Group. The Group believes that the principles of good corporate their individual capacities or as a whole, share the common governance are integral to Puncak Niaga’s growth and ability objective of ensuring that the Vision and Mission of the to promote the confidence of its stakeholders and enhancing Company as set out in this Annual Report, are achieved and long-term shareholders value through improving corporate the Group meets its responsibilities to its stakeholders. performance and accountability of Puncak Niaga whilst taking into account the interest of all stakeholders. The Board is Each Board member is fully aware of the fiduciary therefore committed to ensure that the Principles and Best duties and responsibilities and the various legislations Practices of Corporate Governance are applied throughout and regulations affecting his conduct as Director of the Puncak Niaga Group in the best interests of all stakeholders. Company, and as such, takes full responsibility for the performance of the Company and of the Group. Since 2003, the Board has adopted a Board Charter, which provides guidance on how business is to be conducted in The role of the Executive Chairman is separate from that line with international best practices and standards of good of the Managing Director. The Board Charter sets out the corporate governance. In 2004, the Board has also adopted specific responsibilities to be discharged by the Board a Corporate Disclosure Policy and Procedure, which was members collectively and the individual roles expected formulated in line with the ‘Guide On Best Practices In Corporate from the Executive Chairman, Managing Director, Executive Disclosure’ issued by the Task Force on Corporate Disclosure Directors and Non-Executive Directors. Best Practices established by Bursa Malaysia Securities Berhad (“Bursa Securities”). From time to time, the Group YBhg Tan Sri Dato’ Seri Dr Ting Chew Peh is the Company’s continues to monitor, refine and revamp its financial objectives, Senior Independent Non-Executive Director, to whom goals, policies and procedures, controls and risk management shareholders’ concerns may be conveyed. His profile is set framework to meet the evolving corporate environment. out on page 059 of this Annual Report.

The Company’s governance framework enables the Board to provide strategic guidance and effective oversight of management, clarifies the role and responsibilities of the Board and Management and ensure a balance of authority.

The Board of Puncak Niaga is therefore pleased to report on how the Group has subscribed and applied the principles as set out in Part 1 of the Code and the Best Practices in Corporate Governance as set out in Part 2 of the Code and the extent to which it has complied with the Best Practices during the year 2011.

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Statement On Corporate Governance

(b) bOARD COMPOSITION None of the Directors has any convictions for any offences within the past ten (10) years (other than traffic offences, For compliances with Paragraph 15.02 of the Main Market if any) or has any conflict of interests with the Company or Listing Requirements of Bursa Securities and the Code, has any family relationship with any Director and/or major the Company, through the Nomination Committee of the shareholder of the Company. Company, annually reviewed the required mix of skills, experience and competencies and other qualities of the (c) bOARD MEETINGS Board of the Company. The Board met five (5) times in 2011, all at the Board Room The Board of Puncak Niaga comprises ten (10) Members, on 12th Floor, Wisma Rozali, No. 4, Persiaran Sukan, of whom four (4) are Executive Directors and six (6) are Seksyen 13, 40100 Shah Alam, Selangor Darul Ehsan, Non-Executive Directors. The current composition of the details of which are as follows:- Board of Puncak Niaga is in compliance with Paragraph 15.02 of the Main Market Listing Requirements of Bursa Day Date Time Securities with one-third of the Board being independent and of which the Company feels is a balanced Board and Thursday 24 February 2011 12.00 noon appropriate to constitute an effective Board. Tuesday 26 April 2011 12.15 p.m. Tuesday 31 May 2011 12.10 p.m. The three (3) Independent Non-Executive Directors of the Thursday 25 August 2011 11.30 a.m. Company fulfil the criteria of independence as set out in Wednesday 23 November 2011 12.40 p.m. the definition of “Independent Director” under Paragraph 1.01 (Definitions) of the Main Market Listing Requirements The details of the respective Director’s attendance at the of Bursa Securities. above Board Meetings are as follows:-

The Independent Non-Executive Directors are persons of No. of Name Meetings caliber and credibility and exercise independent and sound of Director Designation attended % judgement and act in the best interests of the Company and its shareholders, in particular the minority shareholders Tan Sri Executive 5 out of 5 100 since they do not engage in the day-to-day management Rozali Ismail Chairman of the Company and do not participate in any business dealings and are not involved in any other relationship with Dato’ Hashim Managing 5 out of 5 100 the Company to ensure that they discharge their duties Mahfar Director and responsibilities effectively, void of conflict of interests situations. The Independent Non-Executive Directors Dato’ Ruslan Non-Independent 5 out of 5 100 provide the relevant checks and balances and ensuring that Hassan Non-Executive high standards of corporate governance are sustained. Director

The composition of the Board brings to the Group a diverse Dato’ Ir Non-Independent 5 out of 5 100 wealth of skills, knowledge as well as a balanced mix of Lee Miang Koi Non-Executive experience and expertise to effectively discharge the Director Board’s responsibilities for competent stewardship of the Group. Together, the Board spearheads the Group’s growth Tan Sri Dato’ Independent 5 out of 5 100 and future direction. Hari Narayanan Non-Executive Govindasamy Director The profile of the Board Members are set out on pages 052 to 062 of this Annual Report. Tan Sri Dato’ Independent 5 out of 5 100 Seri Dr Non-Executive Ting Chew Peh Director

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No. of (d) DIRECTORS’ CODE OF ETHICS Name Meetings of Director Designation attended % The Directors continue to observe a code of ethics based on the code of conduct expected of Directors of companies Dato’ Syed Chief Operating 5 out of 5 100 as set out in the Company Directors’ Code of Ethics Danial Syed Officer established by the Companies Commission of Malaysia. Ariffin (e) SUPPLY OF INFORMATION AND ACCESS TO ADVICE Tengku Non-Independent 5 out of 5 100 Dato’ Rahimah Non-Executive The Directors are familiar and aware of their duties and Almarhum Director responsibilities as well as the implementation of good Sultan Mahmud corporate governance and compliance practices in the Group. Tan Sri Dato’ Independent 5 out of 5 100 Ahmad Fuzi Non-Executive Each Board member is supplied with full, adequate, Haji Abdul Razak Director unrestricted and quality information on a timely basis to enable them to effectively discharge their duties and Ng Wah Tar Executive Director 5 out of 5 100 responsibilities. Except under exceptional circumstances, Corporate Finance Board members are given at least seven days’ notice before any Board Meeting is held and the comprehensive Board Board meetings are scheduled to be held regularly, at papers are circulated to the Board members at least two least five times in a financial year with sufficient notice (2) working days prior to the date of the Meeting to facilitate for all Board Meetings of issues to be discussed. The the Directors to peruse the Board papers and to review the dates for Board Meetings for the ensuing financial year issues to be deliberated at the Board Meeting well ahead are scheduled well in advance and the Board has formal of the meeting date. Where necessary, the Company’s schedule of matters specifically reserved for the Board’s personnel will be called upon by the Board during the discussion and/or approval. All issues discussed and all Board Meetings to present and to clarify any Board decisions made during the Board Meetings will be properly papers presented. recorded by the Company Secretaries and reviewed by the Board for completeness and accuracy. All Board members are expected to participate actively in Board deliberations and to bring the benefit of their Additional Board Meetings may be called as and when particular knowledge, skills and abilities to the Board. significant issues arise and which require the Board’s Where a potential conflict with his duties or of interests as decision. Director arises, it is mandatory for the Director concerned to declare the fact and nature of his interests and extent In between Board Meetings, approvals on matters requiring of the conflict at a Board Meeting and abstain from the the sanction of the Board are sought by way of circular deliberation and decision-making process. In the event the resolutions enclosing all relevant information to enable the proposal requires shareholders’ approval, the interested Board to make informed decisions. All circular resolutions Board members will abstain from voting on the resolution approved by the Board will be tabled for notation and at the General Meeting and will ensure that persons confirmation at the next Board Meeting. connected to them also abstain from voting on the proposal.

The Company Secretaries organise and attend all Board Meetings and ensure that all issues discussed with the conclusions are minuted accurately in the minutes of each meeting and that all records are kept properly at the registered office of the Company.

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The Board is regularly updated and kept informed by (h) EVALUATION OF BOARD EFFECTIVENESS the Company Secretaries and the Management of the requirements such as restriction in dealing with the As in the previous years, the Board has, with the assistance securities of the Company and updates as issued by of the Company Secretaries, conducted an annual peer the various regulatory authorities including the latest evaluation of the Board’s effectiveness in the following developments in the legislations and regulatory framework key areas:- affecting the Group. The Board has unrestricted and constant access to and interaction with the Senior (i) Compliance; Management of the Company. Each Board member also (ii) Board Meetings; has full access to the advice and services of the full time (iii) Board Functions; Company Secretaries. (iv) Board Structure; (v) Board Committees; Where necessary, the Directors may, whether collectively (vi) Board Operations; as a Board or in their individual capacities, seek external (vii) Board Chairman’s Roles and Responsibilities; and independent professional advice from experts on any (viii) Financial and Operational Reporting; matter in furtherance of their duties as they may deem (ix) Planning and Objectives; necessary and appropriate at the Company’s expense. (x) Risk Assessment; (xi) New Business Opportunities and Projects; (f) COMPANY SECRETARIES (xii) Human Resources; and (xiii) Directors’ Observations and Additional Comments. The Company Secretaries ensure that Board procedures are both followed and reviewed regularly and have the The 2011 performance evaluation of the Board has been responsibilities in law to ensure that each Board member structured to ensure a balanced and objective review by the is made aware of and provided with guidance as to Directors for the above key areas. their duties, responsibilities and powers. They are also responsible for ensuring the Group’s compliance with the Following the evaluation, the Board concluded that the relevant statutory and regulatory requirements. Board as a whole and its committees had performed well, were effective and had all the necessary skills, experience (g) APPOINTMENT OF DIRECTORS and qualities to lead the Company.

All Board appointments and removals (if any) thereof (i) bOARD COMMITTEES are approved by the Board upon the recommendation of the Nomination Committee. The Board, through the The Board has delegated specific responsibilities to the Nomination Committee, has established a formal and Board Committees whose functions and authorities are transparent procedure in relation to the assessment of spelt out in their respective terms of reference. The Board candidates for Board appointments as well as for assessing Committees will observe the same rules of conduct and the effectiveness of the Board as a whole, the Committees procedures as the Board, unless otherwise determined by of the Board and the contributions of each individual the Board. A summary of the various Board Committees at Director, including the Independent Non-Executive PNHB level and their composition are as follows:- Directors and the Managing Director. 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. During the financial year under review, there were no changes to the Board composition.

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Compliance, Internal Control and Risk Policy Audit Remuneration Nomination Committee Name of Director Committee Committee Committee (CICR)

Tan Sri Rozali Ismail Executive Chairman

Dato’ Hashim Mahfar Head 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 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

Tengku Dato’ Rahimah Member Almarhum Sultan Mahmud Non-Independent Non-Executive Director

Tan Sri Dato’ Ahmad Member Chairman Chairman Fuzi Haji Abdul Razak Independent Non-Executive Director

Mr Ng Wah Tar Member Member Executive Director, Corporate Finance

Note :

(1) The Audit Committee comprises non-executive directors, a majority of whom are independent directors (compliance with Paragraph 15.09 of the Main Market Listing Requirements of Bursa Securities) (2) The Remuneration Committee comprises wholly or mainly of non-executive directors (as recommended in the Code) (3) The Nomination Committee comprises wholly of non-executive directors, a majority of whom are independent (as recommended in the Code)

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The Board Committees exercise transparency and i. YBhg Dato’ Hashim Bin Mahfar, retiring pursuant to full disclosure in their proceedings. Where applicable, Article 98 of the Articles; issues are reported to the Board with the appropriate ii. YBhg Dato’ Ir Lee Miang Koi, retiring pursuant to Article recommendations by the Board Committees. 98 of the Articles; and iii. Mr Ng Wah Tar, retiring pursuant to Article 98 of the In order to expedite the Board’s decision-making Articles. process at the operating companies’ level, an Executive Committee (“EXCO”) was established at Puncak Niaga The information on the Directors standing for re-election (M) Sdn Bhd (“PNSB”), Syarikat Bekalan Air Selangor Sdn at the forthcoming Fifteenth Annual General Meeting is Bhd (“SYABAS”) and Puncak Oil & Gas Sdn Bhd (“POG”). contained in the Statement Accompanying the Notice of PNSB’s and POG’s EXCO comprise of Executive Directors Annual General Meeting. and Senior Management whereas SYABAS’ EXCO comprise of only Executive Directors. Both PNSB’s and SYABAS’ DIRECTORS’ REMUNERATION EXCO Meetings are scheduled to be held on weekly basis to deliberate on matters requiring the Board’s mandate in (a) PROCEDURE, LEVEL AND MAKE UP OF REMUNERATION between the Board Meetings. POG’s EXCO Meetings are scheduled to be held every fortnight. The Board of Directors The Company has a formal procedure to determine the of Sino Water Pte Ltd (“Sino Water”), the Company’s 98.65% remuneration of each Board member which are reviewed, owned Singapore subsidiary company meets in Malaysia to from time to time, against market practices. In the deliberate on operational matters. case of the Executive Directors, their remuneration are structured so as to link rewards to corporate and individual The Board has also established the Limits of Authority performance and their remuneration packages comprise (“LOA”) for the Group’s operational management matters a salary, allowances, bonuses and other benefits as with the relevant level of authority accorded to the normally accorded to similar positions in other comparable Management. The LOA is continuously reviewed to ensure companies and sufficiently attractive to retain persons of adequacy, efficiency and integrity in the Group’s internal high calibre. Performance is measured against profits control systems and management information systems. and other targets set from the Company’s annual budget The Board provides the leadership necessary to enable the and business plans as well as achievements of targeted Group’s business objectives to be met, whilst ensuring that returns to shareholders. In the case of the Independent the Company’s obligations to its stakeholders are met. Non-Executive Directors, their remunerations reflect their experience, level of responsibilities and contributions and (j) RE-ELECTION OF DIRECTORS the time spent attending to the Group’s affairs and they are paid a fixed monthly allowance, leave passage and meeting Articles 98 and 99 of the Company’s Articles of Association allowances for each Board and Board Committee meeting (“Articles”) provide that one third of the Directors shall that they attend. retire from office by rotation at each Annual General Meeting and all Directors shall retire from office at least The Remuneration Committee is responsible for once every three (3) years but, shall be eligible and may recommending the remuneration packages of the Directors offer themselves for re-election. to the Board. The Board, as a whole, determines the remuneration of the Non-Executive Directors. Individual Upon the recommendation of the Nomination Committee, Directors shall abstain from discussing and voting on the following Directors shall retire at the forthcoming their own remuneration at the Board and Remuneration Fifteenth Annual General Meeting of the Company and Committee Meetings. being eligible, had offered themselves for re-election :-

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Statement On Corporate Governance

(b) DISCLOSURE OF DIRECTORS’ REMUNERATION

The details of the remuneration received and receivable by the Company’s Directors from the Company for the financial year ended 31 December 2011 are as follows:-

Employees Leave Provident Name of Director Fees Salaries bonuses Passage Allowance Fund Total (RM) (RM) (RM) (RM) (RM) (RM) (RM)

Tan Sri Rozali Ismail ------

Dato’ Hashim Mahfar ------

Dato’ Ruslan Hassan ------

Dato’ Ir Lee Miang Koi ------

Dato’ Syed Danial Syed Ariffin ------

Tan Sri Dato’ Hari - - - 50,000 74,000 - 124,000 Narayanan Govindasamy

Tan Sri Dato’ Seri Dr - - - 50,000 100,000 - 150,000 Ting Chew Peh

Tengku Dato’ Rahimah - - - - 8,000 - 8,000 Almarhum Sultan Mahmud

Tan Sri Dato’ Ahmad Fuzi - - - 50,000 74,000 - 124,000 Haji Abdul Razak

Ng Wah Tar ------

The remuneration packages of the Directors of the Company received and receivable from the Group for the financial year ended 31 December 2011 are categorised into the appropriate components as follows:-

Executive Directors Non-Executive Directors (RM) (RM) Fees - - Salaries 8,255,460 - Bonuses 2,396,175 - Benefits-in-kind 405,646 - Employees Provident Fund 1,777,361 - Leave Passage 663,582 150,000 Other staff expenses 3,754,200 256,000

Total 17,252,424 406,000

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Details of the Directors’ Remuneration at Company and Group levels for the financial year ended 31 December 2011, in bands of RM50,000 are tabulated as follows:-

Company Level Group Level No. of No. of Executive Non-Executive Range of Remuneration per annum Directors Directors No. of Directors

RM1 to RM50,000 – 1 – RM100,001 to RM150,000 – 3 3 RM300,001 to RM350,000 – – 1 RM750,001 to RM800,000 – – 1 RM1,000,001 to RM1,050,000 – – 1 RM1,100,001 to RM1,150,000 – – 1 RM1,800,001 to RM1,850,000 – – 1 RM3,750,001 to RM3,800,000 – – 1 RM8,350,001 to RM8,400,000 – – 1

(c) DIRECTORS’ SHARE OPTIONS • 2nd Asia Pacific Regional Water Conference & There is no Directors’ Share Options Scheme in the Company Exhibition during the financial year ended 31 December 2011. • Board Development Program 2011 “Corporate Governance Program” (d) DIRECTORS’ TRAINING • The Board’s Responsibility For Corporate Culture – Selected Governance Concerns And Tools For The Directors keep themselves abreast on the latest Addressing Corporate Culture And Board Performance regulatory and corporate governance developments, • Corporate Frauds – Detection And Prevention besides enhancing professionalism and knowledge to • Sustainable Leadership – Standing Apart From Others enable them to discharge their duties effectively. • “Corporate Social Responsibility – Value-creation that goes beyond compliance and philanthropic activities” For the financial year ended 31 December 2011, the • Islamic Trade & Finance : The Way Ahead Directors have attended training programmes, seminars • Khazanah Global Lectures and conferences organised by the Company and the various • Business Opportunities In Kazakhstan & Empowering training providers covering areas such as :- SMEs In Far Eastern Markets & Impact Of Globalisation On SMEs • 2nd Asia Pacific Regional Water Conference And • Business Opportunities In Halal Industry & Islamic Exhibition 2011 Banking And Finance : Seeking New Markets • Program Taklimat Khas & Forum ETP & Teraju • 7th World Islamic Economic Forum Bersempena Mesyuarat Agung DPMMS • CFO Show Asia 2011 • Taklimat Media Inisiatif Penjanna Kekayaan Baru & • Corporate Hedging Seminar – Managing Your Risks Pembangunan Eko-Sistem Negara Melangkaui 2021 • Acquaterra International Water Week Conference On In addition, the Executive Chairman and some Directors Integrated Acqua Solution have also presented papers at seminars and forums on • Singapore International Water Week Water Convention water-related subjects. 2011 • 4th Annual Offshore Convention South East Asia 2011

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SHAREHOLDERS’ COMMUNICATION AND The Group’s financial statements and quarterly INVESTOR RELATIONS POLICY announcements, prepared using appropriate accounting policies, consistently and supported by reasonable and The Board acknowledges the need for the Company’s prudent judgements and estimates, will be reviewed and shareholders and investors to be informed of all material deliberated by the Audit Committee in the presence of business and corporate developments concerning the Group in the External Auditors, Internal Auditors of the Company a timely manner. In addition to various announcements made and the Executive Director of Finance Division prior to during the year, the timely release of the Group’s consolidated recommending them for adoption by the Board. The financial results on quarterly basis provides the shareholders Audit Committee ensures that the information to be and investors with an overview of the Group’s financial and disclosed are accurate, adequate and in compliance with operational performances. the various disclosure requirements imposed by the relevant authorities. The Board discusses and reviews The Company maintains regular and effective communication the recommendations proposed by the Audit Committee with its shareholders and stakeholders through one-to-one prior to its adoption. The Board also ensures accurate and or group dialogues, participation in investor conferences timely release of the Group’s quarterly and annual financial organised by local and foreign institutional houses, attending to results to Bursa Securities. shareholders’ and investors’ e-mails and phone calls enquiries, Company General Meetings and other Company events. The Statement of Directors’ Responsibility in respect of the preparation of the Annual Audited Financial Statements of The Annual Report of Puncak Niaga which is produced in line the Group is set out on page 209 of this Annual Report. with best corporate governance practices also serves as a key channel of communication with shareholders and investors. (b) RELATIONSHIP WITH EXTERNAL AUDITORS

Another communication tool to reach shareholders and investors The Board maintains a transparent and professional is via our corporate website, www.puncakniaga.com.my relationship with the Group’s External Auditors. The with a direct link to SYABAS’ website, www.syabas.com.my, External Auditors attended four out of five Audit Committee which can be accessed easily and promptly for information on meetings of the Company held during the financial year. the Group as an ongoing commitment to provide more easily These quarterly meetings enabled the exchange of views accessible information to the shareholders and investors. on issues requiring attention.

The Company’s Investor Relations Policy & Report is set out on A formal mechanism has been established by the Audit pages 204 to 205 of this Annual Report. Committee to ensure there is frank and candid dialogue with the External Auditors. The Audit Committee will meet ACCOUNTABILITY AND AUDIT the External Auditors twice a year (April and November) without the presence of the Executive Directors and (a) FINANCIAL REPORTING Management. This allows the Audit Committee and the External Auditors the exchange of free and honest views The Board is responsible for the quality and completeness and opinions in matters related to External Auditors’ audit of publicly disclosed financial reports. In presenting the and findings. annual financial statements, quarterly reports and the annual reports to the shareholders of the Company, A report by the Audit Committee together with its the Board takes appropriate steps to present a clear Summarised Terms of Reference is set out on pages 195 to and balanced assessment of the Group’s position and 200 of this Annual Report. prospects. This also applies to other price-sensitive public announcements and reports to the regulatory authorities.

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(c) INTERNAL CONTROL (c) AMERICAN DEPOSITORY RECEIPT (ADR)/GLOBAL DEPOSITORY RECEIPT (GDR) The Board acknowledges its overall responsibility for maintaining a sound system of internal controls, The Company does not sponsor any ADR or GDR which provides reasonable assurance in ensuring the programme. effectiveness and efficiency of the Group’s operations and to safeguard shareholders’ investment and its assets (d) SANCTIONS AND/OR PENALTIES and interests in compliance with the relevant laws and regulations as well as the internal financial administration The Company and its subsidiaries, Directors and procedures and guidelines. Management have not been imposed with any sanctions and/or penalties by the relevant regulatory bodies for the The Group’s Statement on Internal Control is set out on financial year ended 31 December 2011. pages 193 to 194 of this Annual Report. (e) NON-AUDIT FEES (d) CORPORATE SOCIAL RESPONSIBILITY During the financial year ended 31 December 2011, the Appendix 9C (Part A, Paragraph 29) of the Main Market Group paid the following non-audit fees to the External Listing Requirements of Bursa Securities requires a listed Auditors:- company to provide a description in its annual report of the corporate social responsibility activities and practices (i) Tax advisory and compliance work – RM187,441.00 undertaken by the listed company and its subsidiaries. (ii) Other non-audit related service – RM392,545.00

The Group’s Report on Environmental Issues, Social Non-audit fees payable to the External Auditors, Messrs Accountability and Sustainability Report are set out in Ernst & Young relates to the review of the Statement of “Valuing Our People" section on pages 132 to 151 of this Internal Control and other professional services including Annual Report, in “Engagement With Our Community” tax compliance, tax planning and advisory services. section on pages 167 to 174 of this Annual Report and in “Preserving Our Environment” section on pages 152 to 166 (f) VARIATIONS IN RESULTS of this Annual Report. There was no material variation in the Audited Financial OTHER COMPLIANCE INFORMATION Statements for the financial year ended 31 December 2011 contained in this Annual Report as compared with the (a) SHARE BUY BACK unaudited consolidated results of the Group for the financial year ended 31 December 2011 which was announced to The Company did not implement any share buy back or Bursa Securities on 28 February 2012. resale or cancel any of the Company’s treasury shares during the financial year ended 31 December 2011. As at (g) PROFIT GUARANTEE 31 December 2011, the total number of the Company’s treasury shares remained at 2,036,800 ordinary shares of The Company does not provide any profit guarantee to RM1.00 each. any parties.

(b) OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES (h) RECURRENT RELATED PARTY TRANSACTION

There were no options, warrants or convertible securities The Company did not enter into any recurrent related party exercised during the financial year ended 31 December 2011 transaction, which requires the shareholders’ mandate as the options and warrants had expired, lapsed and during the financial year ended 31 December 2011. became void and ceased to be exercisable after the expiry date or the exercisable period respectively.

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(i) MATERIAL CONTRACTS INVOLVING DIRECTORS AND MAJOR SHAREHOLDERS

Material contracts entered into by the Company and 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 2011, are as follows:-

Consideration/ Relationship Nature Mode of with Director/ Date of Contract Parties Satisfaction Major Shareholder

15 December 2004 Concession Syarikat Bekalan Not Applicable YBhg Tan Sri Rozali Ismail Agreement Air Selangor Sdn Bhd (”TSRI”) is a major (“SYABAS”), shareholder of PNHB the State Government held directly under his of Selangor Darul Ehsan name and indirectly held and the Government through his 100% equity of Malaysia interest in Central Plus (M) (“Federal Government”) Sdn Bhd (“CPlus”) and Corporate Line (M) Sdn Bhd (“CLine”). PNHB in turn, holds 70% equity interest in SYABAS.

31 December 2004 Shareholders’ PNHB, Kumpulan Not Applicable TSRI is a major shareholder Agreement Darul Ehsan Berhad of PNHB held directly under (KDEB) and SYABAS his name and indirectly held through his 100% equity interest in CPlus and CLine. PNHB in turn, holds 70% equity interest in SYABAS.

23 February 2006 Subscription PNHB, KDEB Not applicable TSRI is a major shareholder Agreement In and SYABAS of PNHB held directly Relation To The under his name and indirectly Subscription For held through his 100% equity Up To RM1.045 interest in CPlus and CLine. Billion Nominal PNHB in turn, holds 70% Value Of equity interest in SYABAS. Redeemable Cumulative Unsecured Loan Stocks Of SYABAS (RCULS)

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Consideration/ Relationship Nature Mode of with Director/ Date of Contract Parties Satisfaction Major Shareholder

8 December 2006 Subscription Puncak Niaga (M) Not applicable TSRI is a major Agreement In Sdn Bhd (“PNSB”) shareholder of PNHB held Relation To The (as the Issuer), directly under his name Issue Of RM435.0 United Overseas Bank and indirectly held through Million Nominal (Malaysia) Bhd his 100% equity interest Value Of (as the Facility Agent in CPlus and CLine. Redeemable and the Issue Agent) PNHB in turn, holds 100% Unsecured and PNHB equity interest in PNSB. Bonds To PNHB

16 August 2007 Sungai Lolo The State Government Not applicable TSRI is a major Water Treatment of Selangor Darul shareholder of PNHB held Plant (Extension) Ehsan and PNSB directly under his name Operation And and indirectly held through Maintenance his 100% equity interest Agreement in CPlus and CLine. PNHB in turn, holds 100% equity interest in PNSB.

16 August 2007 Novation The State Government Not applicable TSRI is a major Agreement In of Selangor Darul Ehsan, shareholder of PNHB held Relation To The PNSB and SYABAS directly under his name Sungai Lolo and indirectly held through Water Treatment his 100% equity interest Plant (Extension) in CPlus and CLine. Operation and PNHB in turn, holds 100% Maintenance and 70% equity interests Agreement in PNSB and SYABAS, respectively.

7 March 2008 Sg Sireh Water The State Government Not applicable TSRI is a major Treatment Plant of Selangor Darul Ehsan shareholder of PNHB held (Extension) and PNSB directly under his name Operation and and indirectly held through Maintenance his 100% equity interest Agreement in CPlus and CLine. PNHB in turn, holds 100% equity interest in PNSB.

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Consideration/ Relationship Nature Mode of with Director/ Date of Contract Parties Satisfaction Major Shareholder

7 March 2008 Novation The State Government Not applicable TSRI is a major Agreement To of Selangor Darul Ehsan, shareholder of PNHB held The Sg Sireh PNSB and SYABAS directly under his name Water Treatment and indirectly held through Plant (Extension) his 100% equity interest Operation and in CPlus and CLine. Maintenance PNHB in turn, holds 100% Agreement and 70% equity interests in PNSB and SYABAS, respectively.

20 February 2009 Supplemental PNHB, KDEB, SYABAS Not applicable TSRI is a major Shareholders’ and Kumpulan shareholder of PNHB held Agreement Perangsang Selangor directly under his name (Transfer of 15% Berhad (KPSB) and indirectly held through equity interest his 100% equity interest in SYABAS in CPlus and CLine. comprising PNHB in turn, holds 70% 750,000 ordinary equity interest in SYABAS. shares of RM1.00 each from KDEB to KPSB)

16 December 2009 Loan Facility SYABAS (Borrower) Not applicable TSRI is a major Agreement and the Federal shareholder of PNHB held (in respect of a Government (Lender) directly under his name loan facility of and indirectly held through RM320,800,000.00 his 100% equity interest only). The details in CPlus and CLine. are set out in the PNHB in turn, holds 70% Audited Financial equity interest in SYABAS. Statements of the Group and the Company for the financial year ended 31 December 2011 on page 320 of this Annual Report

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Consideration/ Relationship Nature Mode of with Director/ Date of Contract Parties Satisfaction Major Shareholder

17 October 2011 Loan Facility SYABAS (Borrower) Not applicable TSRI is a major Agreement and the Federal shareholder of PNHB held (in respect of a Government directly under his name loan facility of (Lender) and indirectly held through RM110,000,000.00 his 100% equity interest only). The details in CPlus and CLine. PNHB are as set out in in turn, holds 70% equity the Audited Financial interest in SYABAS. Statements of the Group and the Company for the financial year ended 31 December 2011 on pages 320 and 321 of this Annual Report.

Deed of SYABAS (as the Assignment Assignor) and the Federal Government (as Assignee)

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 26 April 2012.

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Statement On Internal Control

INTRODUCTION INTERNAL CONTROL SYSTEM

The Malaysian Code on Corporate Governance (Revised 2007) The key elements of the Group’s internal control system and requires listed companies to maintain a sound system of assurance processes, inter alia, encompass the following:- internal control to safeguard shareholders’ investments and the Group’s assets. The Main Market Listing Requirements of • All major decisions require the final approval of the Bursa Malaysia Securities Berhad requires Directors of listed respective Boards/Executive Committees within the Group companies to include a statement in their annual reports on the (PNHB/PNSB/SYABAS/Sino Water Pte Ltd/POG Group) state of their internal controls. are only made after appropriate in-depth analysis. The respective Boards/Executive Committees receive regular RESPONSIBILITY and comprehensive information covering all Divisions/ Departments/Districts in the respective companies within The Boards of the PNHB Group are responsible for maintaining the Group. sound systems of internal control and for reviewing their adequacy and integrity so as to safeguard the shareholders’ • All Divisions and Departments of PNSB and POG Group have investments and the Group’s assets. The Boards and clearly documented Procedure Manuals and/or Policies Management have implemented a control system designed whilst SYABAS has Standard Operating Procedures and/or to identify and manage risks facing the Group in pursuit of its Polices incorporating control procedures and the scopes of business objectives. This internal control system, by its nature, responsibilities and authorities. The Procedure Manuals/ can only provide reasonable and not absolute assurance against Standard Operating Procedures/Policies are updated from material misstatement or loss. time to time to incorporate all elements necessitated by changes in the legislation, industry best practices and The Group has in place ongoing processes for identifying, business dynamics. evaluating, monitoring and managing significant risks faced by the Group during the year. The Management is responsible for • The Internal Audit Department of PNSB independently the identification and evaluation of significant risks applicable reviews the control processes implemented by the to their respective areas of business and to formulate suitable Management from time to time and periodically reports on internal controls. This process is reviewed by the Board of its findings and recommendations to the Audit Committee PNHB via a specific Board Committee, namely the Compliance, of PNHB. The duties and responsibilities of PNHB’s Internal Control and Risk Policy Committee, which dedicates Audit Committee are detailed in the Terms of Reference its time at periodic intervals throughout the year for discussion of PNHB’s Audit Committee. The Audit Committee, by on this matter. consideration of both Internal and External Audit Reports, is able to gauge the effectiveness and adequacy of the RISK MANAGEMENT FRAMEWORK internal control system, for presentation of its findings to the Board. The Internal Audit Department of PNSB extends Risk Management is firmly embedded in the Group’s a copy of its Final Internal Audit Reports to the Executive management system and is every employee’s responsibility. Chairman and Managing Director and summarised Status In October 2001, the Board of PNHB formally approved a Reports on its activities are regularly submitted to the systematic risk management structure and process for the Management Committee Meetings. Group. Since then, the structure and process have been fully implemented by the Management and employees of the PNHB • The Board of SYABAS established an Audit Committee with Group. The Group’s risk management framework is explained its own Terms of Reference on 3 August 2007. The Internal in detail in the Risk Management Policy & Report set out on Audit Division of SYABAS extends a copy of its Internal pages 201 to 203 of the Annual Report. Audit Reports to the Executive Chairman and summarised Status Reports on its activities are regularly submitted to the Management of SYABAS.

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Statement On Internal Control

• The Compliance, Internal Control and Risk Policy Guidance for Directors of Public Listed Companies Committee, which is chaired by YBhg Tan Sri Dato’ Seri Dr Ting Chew Peh, an Independent Non-Executive Director of Since the issuance of the “Statement on Internal Control: PNHB was established in October 2001. This Committee Guidance for Directors of Public Listed Companies” (Guidance) closely monitors the Risk Management process within the in December 2000, the Group has monitored its level of Group and the extent of compliance with the Statement on readiness with the Guidance. The Group aims to not just Internal Control requirements. achieve full compliance, but also to improve on the Group’s processes by implementing best business practices in line • The Tender and Contracts Committee of PNSB/POG with international best practice standards. Throughout the Group and the Tender Committees of SYABAS ensure year 2011, the Compliance, Internal Control and Risk Policy transparency and competitive pricing in the award of Committee has closely monitored the Group’s level of readiness contracts within the Group. with the Guidance.

• A detailed budgeting process has been established This Statement on Internal Control has been prepared in for PNSB, SYABAS, Sino Water Pte Ltd and POG Group accordance with the Guidance and has been approved by the requiring all Divisions/Departments/Districts to prepare Board of PNHB and reviewed by the external auditors. 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 for PNSB, SYABAS, Sino Water Pte Ltd and POG Group, with major variances being followed up, is done on a monthly basis and Management action is taken to rectify any shortcomings, For and on behalf of the Board of Puncak Niaga Holdings where necessary. Berhad

• PNSB, SYABAS, Sino Water Pte Ltd and POG Group have their own Limits of Authorities that have been approved by their respective Boards.

• Self Assessment Audit Forms (which list all key Tan Sri Dato’ Seri Dr Ting Chew Peh procedures), have been developed for all Departments of Chairman PNSB. With effect from 31 March 2008, all Departments are Compliance, Internal Control and Risk Policy Committee required to submit a quarterly declaration to the Internal Audit Department as to whether all the key procedures have been complied with. 26 April 2012

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Audit Committee Report

The Board of Directors of Puncak Niaga Holdings Berhad The Executive Director (Finance Division), Senior Manager/ (“PNHB”) is pleased to present the report of the Audit Manager (Internal Audit Department), General Manager Committee for the financial year 2011. (Operation & Maintenance Department) and other members of Senior Management attended these meetings 1. MEMBERSHIPS AND MEETINGS upon the invitation by the Chairman of the Audit Committee. The Group’s external auditors were also invited to attend The Audit Committee comprises the following members these meetings where matters relating to the audit of the and details of attendance of each member at the Audit statutory accounts and/or the external auditors are to be Committee Meetings held during the financial year 2011 discussed. The Company Secretaries, Madam Tan Bee Lian were as follows: and Madam Lim Yew Heang are the Secretaries to the Audit Committee. Number Number of of 2. SUMMARY OF ACTIVITIES Composition Meetings Meetings Percentage of Committee Held Attended (%) During the financial year 2011, the Audit Committee carried ybhg Tan Sri Dato’ 5 5 100% out its duties as set out in the Terms of Reference. The main Seri Dr Ting Chew Peh activities carried out by the Audit Committee during the Chairman/Independent financial year included the following:- Non-Executive Director Financial Results ybhg Tan Sri Dato’ 5 5 100% Hari Narayanan • Reviewed the quarterly and year-to-date unaudited Govindasamy financial results of the Group before tabling to the Member/Independent Board for consideration and approval. Non-Executive Director • Reviewed the reports and the audited financial yAM Tengku Dato’ 5 5 100% statements of the Company and of the Group together Rahimah Almarhum with the external auditors prior to tabling to the Board Sultan Mahmud for approval. Member/Non-Independent Non- Executive Director • Reviewed the Group’s Action Plan to address the Practice Note 17 issue. ybhg Tan Sri Dato’ 5 5 100% Ahmad Fuzi Haji Abdul Razak Member/Independent Non-Executive Director

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External Audit 3. INTERNAL AUDIT FUNCTIONS

• Reviewed the external auditors’ scope of work and Puncak Niaga Holdings Berhad (“PNHB”)/Puncak Niaga audit plan for the year and made recommendations to (M) Sdn Bhd (“PNSB”) the Board on their appointment and remuneration. PNHB/PNSB has an established independent Internal Audit • Reviewed and discussed the external auditors’ Department reporting directly to the Audit Committee. The audit report and areas of concern highlighted in the Internal Audit Department assists the Audit Committee in management letter, including management’s response the discharge of its duties and responsibilities. The Internal to the concerns raised by the external auditors. Audit Department’s primary responsibility is to provide an independent assurance on the adequacy and effectiveness • Discussed on significant accounting and auditing of risk management, governance and internal control. issues, impact of new or proposed changes in accounting standards and regulatory requirements. The Internal Audit Department focuses on regular and systematic review and has conducted evaluation on the • Met with the external auditors without the presence of internal control, management information systems, and the Management. compliance with established procedures including the system for compliance with applicable laws, regulations, Internal Audit rules, directives and guidelines.

• Reviewed the Internal Audit Plan, programme of The Annual Internal Audit Plan 2011 of the Internal Audit resource requirement for the year and assessed the Department (which was developed based on a risk based performance of the Internal Audit Department. approach), was approved by the Audit Committee at the 66th Audit Committee Meeting of the Company held on • Reviewed the Internal Audit reports, which highlighted 25 November 2010. The Internal Audit reports, which the audit issues, recommendations and the highlights internal control weaknesses, were deliberated Management’s responses and directed action to be by the Audit Committee and the recommendations were taken by the Management to rectify and improve the duly acted upon by the Management. system of internal control. In 2011, the Internal Audit Department completed a total • Monitored the implementation of recommendations of 66 major audit assignments covering all the Water made by the Internal Audit Department arising from its Treatment Plants, high-risk areas identified by the audits in order to obtain assurances that all key risks Risk Management Scorecard Working Group and adhoc and control concerns have been fully addressed. assignments requested by the Senior Management. Examples of key areas audited by the Internal Audit Related Party Transactions Department during the Financial Year 2011 were Klang Gates, Tasik Subang and Sg Langat Dam Operation, Review Reviewed all related party transactions entered into by the of Related Party Transactions, Fixed Assets at Wisma Company and the Group. Rozali, Selected Regional Offices and WTPs, Compliance with Tendering Process and Plant Audits of all Water Treatment Plants etc. All audits were performed in-house.

The Internal Audit Department’s role with regards to the Group’s risk management framework is explained in the Risk Management Policy & Report set out on pages 201 to 203 of the Annual Report.

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Audit Committee Report

The total cost incurred by the Internal Audit Department 4. SUMMARISED TERMS OF REFERENCE OF PNHB’S AUDIT in relation to the conduct of the internal audit function of COMMITTEE PNHB/PNSB during the Financial Year 2011 was about RM1.08 million. A. Composition

As at 31 December 2011, the Internal Audit Department The Board shall elect an Audit Committee from had nine staff (three Accountants, four Engineers and amongst themselves (pursuant to a resolution of the two support staff). Training attended by the Internal Audit Board of Directors), comprising of at least three (3) Department’s staff in 2011 included the Risk Compliance Directors which fulfils the following requirements: Summit 2011, Raising Bar on Corporate Governance, Business Writing Skills, ISO 19001,18001,14001 and Risk i. All the members of the Audit Committee must Based Auditing on Projects. be Non-Executive Directors of the Company (and excluding Alternate Directors) with a majority of SYABAS them being Independent Directors; and

Due to the complexity of its water distribution operations ii. At least one (1) member of the Audit Committee: which are dissimilar to that of PNSB’s water treatment operations, the Board of SYABAS formally ratified a. must be a member of the Malaysian Institute the establishment of the Internal Audit Division on of Accountants; 1 September 2006 and an Audit Committee with its own Terms of Reference was formed on 3 August 2007. b. if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) At SYABAS, the audit emphasis for the Financial Year years’ working experience and: 2011 was to determine whether the financial and other controls were in place to ensure the integrity and accuracy 1. he must have passed the examinations of information in the “Review Documents” submitted for specified in Part I of the st1 Schedule of the the purpose of tariff adjustment for the 4th Operating Period Accountants Act 1967; or from 2012 to 2014. Reports on individual components of the tariff review adjustment include the review on 2. he must be a member of one of the revenue – billings and collections, certified amount of associations of accountants specified program of works, amount spent on purchase of treated in Part II of the 1st Schedule of the water, distribution costs and non-revenue water. Besides Accountants Act 1967; or the above, the Internal Audit Department also conducted other audits e.g., Bulk Meter and sub meter reading, 3. fulfils such other requirements as Administration of Leave and e-leave, Procedures of Cash prescribed or approved by Bursa Malaysia Float for Report refund, stay-back allowance claims by Securities Berhad. security Executives, Accuracy of meter in and meter out at DMZ, Internet Perimeter control, effectiveness and management of virus protection and Administration of migration process. Altogether, Internal Audit Department conducted 70 assignments in 2011.

The cost incurred by the Internal Audit Department in relation to the conduct of internal audit function of SYABAS during the year was about RM1.1 million.

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Audit Committee Report

The members of the Audit Committee shall elect a • Any significant accounting and auditing Chairman from amongst themselves who shall be problems that the auditors can foresee and an Independent Director. It would be advantageous if impact on the financial statements of any new the Chairman possesses a strong personality, have or proposed changes in accounting standards knowledge and experience in financial reporting, good or regulatory requirements. leadership skills and is keen to get financial reporting and controls right. Following its review of the plan, the Audit Committee may request the external auditors to The Chairman of the Audit Committee will maintain perform additional audit work directed to specific continuous engagement with the Board Members and areas of concern to the Committee. Senior Management of the Company and the external auditors in order to be kept abreast of matters affecting ii. Oversee the Internal Audit Department. The the Company. All members of the Audit Committee Audit Committee in overseeing the Internal Audit should be financially literate. Department will:

If the members of the Audit Committee for any reason • Review the audit programme, scope, be reduced to below three (3), the Board of Directors performance and findings of the internal shall within three (3) months of the event, appoint such auditors. number of new members as may be required to make up the minimum number of three (3) members. • Monitor the implementation of the programme so that sufficient internal audit coverage is B. Duties And Responsibilities accorded.

In fulfilling its primary objectives, the Audit Committee • Assess the capacity of the Internal Audit will need to undertake the following duties and Department to fulfil its responsibilities by responsibilities: considering, amongst other things, the adequacy of the scope of the Department’s B.1 Oversee All Matters Relating to External and Internal authority as presented in the Department’s Audits charter, the competency, qualifications and experience level of its employees, the degree i. The Committee shall meet with the external to which internal auditors are independent auditors prior to the commencement of the annual of the activities they audit and the reporting audit to review and discuss: relationship between the Head of Internal Audit and Senior Management. • The Annual Audit Plan with the external auditors, including the scope, nature and • Review any appraisal or assessment of the areas of audit of the Group; performance of the staff of the Internal Audit Department and approve any appointment or • The extent of any planned reliance on the work termination of senior internal audit staff. of the internal auditors and the anticipated effect of this reliance on the examination.

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iii. Review the assistance and cooperation given by b.3 Review of Financial Statements the Company’s officers to the external and internal auditors. i. Meet with the Management and the external auditors to discuss the annual financial iv. Consider the appointment of the external auditors, statements of the Company or Group and the the audit fee and any questions of resignation or results of the audit before recommending dismissal. approval by the Board.

v. The external and/or internal auditors shall have ii. Review the changes in or implementation of the right to appear and be heard at any meeting major accounting policy changes, the nature of the Audit Committee and shall appear before and resolution of any significant accounting the Audit Committee when required to do so by the and auditing problems encountered during the Audit Committee.` examination.

vi. Upon the request of the external and/or internal iii. It is good practice for the Audit Committee to auditors, the Chairman of the Audit Committee meet the Management at a regular interval to shall convene a meeting of the Committee to review the results of the Company or Group, such consider any matters the auditors believe should as quarterly review of the results. be brought to the attention of the Committee. iv. Review the nature of any related party transaction vii. The Audit Committee may convene meetings with and conflict of interest situation that may arise the external auditors and/or internal auditors, within the Company or the Group including any excluding the attendance of other Directors and transaction, procedure or course of conduct that employees of the Company, whenever deemed raises questions of the Management’s integrity. necessary. v. Review the nature of any significant adjustments B.2 Evaluate the Standards of Internal Control and and unusual events, reclassifications or Financial Reporting additional disclosures proposed by the external auditors that are currently significant or may i. Hold specific discussions with Senior Corporate become significant in the future. Management to discuss the overall adequacy of the internal control system.

ii. Meet with the internal and external auditors concerning their evaluation of the system of internal accounting controls.

iii. Consider the nature and disposition of the relevant comments appearing in the reports prepared by the internal auditors and in the external auditors’ management letter.

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vi. Review the adequacy of disclosure of the C. Access To Records impact of any changes during the year in accounting policies, standards and/or regulatory In carrying out their duties and responsibilities, the Audit requirements. Committee will in principle have full, free and unrestricted access to all Company records, property and personnel. vii. Review the reasons for the major fluctuations in financial statement balances for the current year D. Meetings and Minutes compared to prior years. i. It is good practice for the Audit Committee to hold viii. Review for any unusual circumstances or a minimum of four (4) meetings a year, although situations reflected in the financial statements, additional meetings may be called at any time at the including identifying any marginal operations. Chairman’s discretion.

ix. Review the nature of any unusual or significant ii. In addition to the Committee members, the Executive commitments or contingent liabilities. Director of Finance Division and the Head of Internal Audit Department will normally be in attendance at x. Review of any significant differences between the the meetings. Representative of the external auditors annual report and other reports, such as reports are to be in attendance at meetings where matters to the regulatory agencies. relating to the audit of the statutory accounts and/or the external auditors are to be discussed. xi. Review for any significant differences in format or disclosure from industry norms. iii. The Chief Executive Officer, other Board Members and/or other appropriate officers may be invited to b.4 Additional Duties and Responsibilities attend, except for those portions of the meetings where their presence is considered inappropriate, as i. Act upon the Board of Directors’ request to determined by the Committee Chairman. investigate and report on any issues or concerns in regard to the management of the Company. iv. The Audit Committee will meet with the external auditors without the Executive Directors present at ii. Such other functions as may be agreed to by the least twice a year. Audit Committee and the Board of Directors. v. 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.

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Risk Management Policy & Report

RISK MANAGEMENT POLICY As a follow-up from the Strategic Corporate Risk Management Workshop held for the Board and Senior Management in The Board of Puncak Niaga Holdings Berhad has approved the August 2001, information on Risk Management has been following Group’s Risk Management Policy Statement:- fully disseminated to all employees in the form of posters and through the Group’s internal communications network. “The PNHB Group’s Risk Management Policy is to identify, measure and control risks that may prevent the Group from In addition, the risk management framework which was achieving its objectives. established in October 2001 has since then been fully implemented by the Management and employees of Puncak Our challenge is to apply risk management to all parts of Niaga. our business to ensure business risks are minimised and opportunities enhanced. A second Strategic Enterprise-Wide Risk Management Workshop was conducted for Directors and Senior Management We will achieve, maintain and review a proper risk management staff, by an external consultant on 11 September 2008. system which is implemented by the Management and extended to all employees of the Group. This is the commitment of the COMPLIANCE, INTERNAL CONTROL Board of Directors. AND RISK POLICY COMMITTEE (CICR)

This policy statement assigns responsibility for risk The establishment of the CICR was formalised by the Board management to all PNHB Group employees and acknowledges in October 2001. The members of the CICR comprise the that corporate responsibility lies with the Board of Directors of following:- the PNHB Group.” Chairman : ybhg Tan Sri Dato’ Seri Dr Ting Chew Peh RISK MANAGEMENT REPORT (Independent Non-Executive Director)

There are risks faced by all companies in the various facets Members : ybhg Dato’ Hashim Mahfar of their corporate lives. The nature of such risks including Managing Director systemic, market, employees, economic, legislation, financial (Head of Compliance, Internal Control and and others, need to be identified and managed to reduce Risk Policy Committee) the possibility and impact of any adverse effects. Puncak Mr Danny Ng Wah Tar Niaga recognises this and has initiated risk management Executive Director, Corporate Finance Division programmes to ensure its business risks are minimised and Madam Tan Bee Lian opportunities enhanced. Executive Director, Corporate Services Division Madam Wong Ley Chan The following steps were taken by the Board of Puncak Niaga Executive Director, Finance Division in October 2001, for the management of the Group’s corporate Tuan Haji Sonari Solor risks:- Senior General Manager, Internal Audit Department 1. The preparation of the Group’s Risk Management Policy Cik Hayati Ab Wahab Statement. Senior General Manager, 2. The formation of the Compliance, Internal Control and Risk Internal Audit Division - SYABAS Policy Committee (“CICR”) with its own Terms of Reference. 3. The setting up of a Risk Management Section, which Secretary : Madam Johty Priyatharashani reports to the CICR. Manager, Internal Audit Department

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Risk Management Policy & Report

A) TERMS OF REFERENCE OF THE CICR At its meetings, the CICR reviewed in detail, the Status Reports prepared by the Risk Management Section. The The CICR shall provide assistance to the Board of Directors issues covered include the following:- of Puncak Niaga in discharging its fiduciary responsibilities relating to safeguarding shareholders’ investment and 1. The level of readiness of PNSB and the respective the Group’s assets through a structured approach to Divisions and Departments with regards to the Risk Management. The primary responsibilities of the “Statement on Internal Control” requirements. CICR are:- 2. The progress of the risk assessment and risk • Formulating strategies to manage the overall risks monitoring exercises at Departmental/Divisional and associated with the Group’s activities. This entails Enterprise-Wide levels. The main risks, controls and decisions on:- management actions are highlighted for the CICR to deliberate. • Long-term and short-term strategies. • Justifiable capital allocation based on return per 3. The effective utilisation of the Q-RADAR Corporate Risk unit of risk. Scorecard software to identify, measure and monitor all corporate risks identified within PNSB, Sino Water • Recommending the appropriate risk management Pte Ltd and POG Group. policies and procedures, which shall be reviewed frequently to ensure consistency with fundamental 4. Other relevant risk issues affecting the Group, from changes in the economy, market conditions and time to time. regulations. RISK MANAGEMENT SCORECARD WORKING GROUP • Reviewing periodically the Group’s overall objectives by AND ENTERPRISE-WIDE RISKS assessing the current risk portfolio composition and determining the desired exposures of each major area The Group recognises that Risk Management involves a of risk. structured approach, combining the efforts of all functions within the Group, to minimise the possibility and impact • Monitoring and assessing the risk portfolio composition of unexpected damages so as to contribute towards of significant activities of the Group. greater efficiency and better decision-making. The Group’s Enterprise-Wide Risk Profile is reviewed annually to take into • Keeping abreast of both current risk management consideration changes in the business environment, strategies techniques and theories, and any possible or and functional activities of the Group. actual changes in the regulatory environment, and recommending the appropriate action. In 2011, given the Group’s venture into the oil & gas industry via its wholly owned subsidiary, POG which acquired 100% equity B) CICR ACTIVITIES interests in GOM Resources Sdn Bhd (formerly known as Global Offshore Malaysia Sdn Bhd) and KGL Ltd respectively, a Risk MEETINGS HELD AND ISSUES COVERED Management Scorecard Working Group (“RMSWG”) Meeting was held on 17 November 2011 among the Executive Directors During the year 2011, the CICR held eight (8) meetings, of PNSB and Senior Management of POG Group to deliberate of which four (4) were chaired by YBhg Tan Sri Dato’ Seri on the Enterprise-Wide Risk Profile of the Group’s oil & gas Dr Ting Chew Peh (Chairman of CICR) and four (4) were business. chaired by YBhg Dato’ Hashim Mahfar (Head of CICR).

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Subsequently, the RMSWG was held at Group level, comprising In June 2011, the Q-RADAR CRS software (Version 7.3) was all Executive Directors of PNSB and Senior Management of upgraded to Version 8.0. Effective quarter ended 30 June 2011, PNSB and POG Group on 16 January 2012 to deliberate on a Corporate Digital Assurance module was implemented to all the risks highlighted by the different business sectors and Risk Scorecard owners whereby they are required to validate determine the Puncak Niaga Group’s Enterprise-Wide Risk and positively assure each individual risk, strength of control Profile for 2012. and management action. The status of this validation and assurance is reported to the CICR on quarterly basis. The deliberations of the RMSWG were reviewed by the CICR on 10 February 2012. Subsequently, a detailed Board Paper on the As at 31 December 2011, the Q-RADAR CRS software had 128 Group’s “Top Twelve Enterprise Wide Risks Facing the Puncak authorised users covering 23 Departments /Divisions, including Niaga Group for 2012” was tabled during PNHB’s Board of POG Group and Sino Water Pte Ltd. Directors’ Meeting that was held on 28 February 2012. The Q-RADAR CRS software is administered by the Risk The Group’s Enterprise-Wide Risk Profile will be re-assessed Management Section. by the RMSWG on a yearly basis. RISK MANAGEMENT AT SYABAS QUARTERLY RISK SCORECARD REPORTING (PNSB, SINO WATER PTE LTD AND POG GROUP) A Risk Management Workshop was conducted for all relevant Heads (or their representatives) of Divisions and Departments The respective Heads of Divisions and Departments of PNSB, by the Internal Audit Division on 11 August 2009. the Managing Director of Sino Water Pte Ltd and the Senior Management of POG Group are responsible for assessing and Broadly, the topics covered during the Workshop were: managing their respective risks. Using the Q-RADAR Corporate Risk Scorecard software, the respective Heads of Divisions and 1. Risk Management Awareness. Departments of PNSB, the Managing Director of Sino Water 2. Risk Management Thought Process. Pte Ltd and the Senior Management of POG Group submit 3. Risk Management Scorecard Software (Q-RADAR). their detailed risk scorecard reports to the Risk Management Section every quarter. The Risk Management Working Group (comprising all Heads of Divisions and Departments) deliberated upon the Risk Management Section analyses and summarises the risk “Enterprise-Wide Risks Facing SYABAS For 2011/2012” on scorecard reports received for further deliberation by the CICR. 16 August 2011.

Q-RADAR CORPORATE RISK SCORECARD SOFTWARE Matters discussed included:

PNHB, PNSB, Sino Water Pte Ltd and POG Group utilise a 1. Likelihood of risk events happening. risk management tool namely, the Q-RADAR Corporate Risk 2. Evaluation of the consequences of the risk events Scorecard (“CRS”) software to identify, measure and manage happening. all corporate risks affecting PNSB. The CRS software offers a 3. Confirmation as to whether controls are in place and are systematic approach to the management of enterprise-wide being used to manage the risks. risks facing corporations and assists the Management of 4. Risks ranking from the highest to the lowest to produce a Puncak Niaga to successfully achieve their corporate objectives. priority list. The software is web-based and allows authorised users to monitor their respective risks on-line from any location.

203 Annual Report 2011 Puncak Niaga Holdings Berhad

Investor Relations Policy & Report

As a responsible corporate citizen, Puncak Niaga is totally • To provide high quality, meaningful and timely committed to upholding the highest standards of transparency, information over and above that is required by law accountability and integrity in the conduct of our business in order to improve the shareholders’ and investors’ activities in the best interest of our shareholders as well as understanding of our Company. to allow potential investors to make careful and informed • To strive for key competence in the area of professional investment decisions based on full and transparent disclosure investor relations vide adequate resources and of information. capabilities. • To earn the trust, respect and confidence of our existing Puncak Niaga’s Investor Relations Policy aims to build shareholders and investors. long-term relationships and credibility with our shareholders • To build and maintain long-term relationships with our and potential investors based on trust, honesty, openness, existing shareholders and investors. transparency and sound understanding of the Company. • To initiate long-term relationship building with potential shareholders and investors. To achieve its objectives, the Company will endeavour to undertake the following:- Our commitment to the above Policy is driven by the Board of Directors of PNHB Group and implemented by the 1. CREATING QUALITY DIALOGUE Management.

• To create an environment where the effective bilateral INVESTOR RELATIONS REPORT communication between the Company and our shareholders and investors both inform and educate Investor relations is the means by which listed companies through regular, open and transparent provision maintain dialogue with their existing shareholders of relevant and invaluable information over the and potential investors. It is a strategic management long-term, which will build mutually beneficial responsibility to present an accurate picture of corporate long-term relationships vis-à-vis to foster a clearer performance and prospects, thus enabling the investment understanding of the shareholders’ and investors’ community, through an informed market, to determine expectations of the Company. a realistic share price. As a result, investor relations can have a positive impact on the Company’s market value and • To engage in quality dialogue with our shareholders cost of capital relative to its industry sector and the overall and investors whereby the relationship is based on the economic climate. principles of honesty, openness and transparency and to foster mutual understanding between the Company The year 2011 had been challenging amidst Puncak Niaga’s and our shareholders and investors. relentless pursuit to gain leadership in the water industry and to remain focused in achieving our Vision and Mission. • To reap the benefits of engaging in quality dialogue:- The Board is therefore pleased to report on Puncak Niaga’s - Perception on our Company’s risk is reduced; investor relations activities during 2011 as follows:- - Enhance feedback of our Company’s performance; - Our Company’s share valuation becomes more DIALOGUES WITH INVESTORS realistic; - Develop confidence in our Management team and The Top Management of the Group actively engages management style; and in meetings, dialogues and briefing sessions with - Works as a guide in the evaluation of our Company’s local and foreign institutional groups. In 2011, business strategy. 14 dialogues and group briefing sessions were conducted with existing and potential investors, local 2. INVESTOR COMMUNICATIONS STATEMENT and foreign fund managers and financial analysts from research and asset management houses. • To implement an efficient and effective Investor Relations Programme as part of our ongoing shareholders’ and investors’ communication obligations. 204 Annual Report 2011 Puncak Niaga Holdings Berhad

Investor Relations Policy & Report

INVESTORS’ ACCESS TO INFORMATION Since 2007, we have set up the PUSPEL customer service counter at a secretariat room at the AGM venue to enable our In line with our Investor Relations Policy, Puncak Niaga ensures shareholders to gain online access to SYABAS’ water related timely disclosure of information over and above the regulatory enquiries. In view of our role as a water services provider, authorities’ disclosure requirements so as to enable the we will continue with this practice at our future AGMs for the investment community to make careful and informed investment benefit of our shareholders. decisions on the Company’s securities. Shareholders and investors can contact us at [email protected] and The 2012 AGM will be held on Tuesday, 26 June 2012 at the access the Group’s information and corporate announcements Concorde Hotel Shah Alam. The Notice of AGM is enclosed with at our website, www.puncakniaga.com.my (with a direct link this Annual Report. The results of all resolutions proposed at to www.syabas.com.my) or www.bursamalaysia.com. All the 2012 AGM will be posted on Bursa Securities’ website and announcements made to Bursa Malaysia Securities Berhad the Company’s website on the evening of 26 June 2012. (“Bursa Securities”) are published shortly after the same is released on Bursa Securities’ website. All shareholders’ INVESTOR RELATIONS UNIT queries will be received by the Group Company Secretary who will provide feedback and responses to shareholders’ The Investor Relations Unit (“IRU”) maintains a database of queries where such information can be made available shareholders and investors who wish to be updated on the to the public. Group’s corporate developments and performances via e-mail.

Since 22 October 2004, in our efforts to meet disclosure Kindly e-mail us your contact details to the attention obligations towards our shareholders, investors and of Madam Tan Bee Lian, Group Company Secretary at stakeholders, the Group had adopted and implemented the [email protected] or by mail at Investor Puncak Niaga Corporate Disclosure Policy (as set out on page Relations Unit, c/o Secretarial Department, Puncak Niaga 178 of this Annual Report), formulated in line with the ‘Guide Holdings Berhad, 10th Floor, Wisma Rozali, No. 4, Persiaran On Best Practices In Corporate Disclosure’ issued by Bursa Sukan, Seksyen 13, 40100 Shah Alam, Selangor Darul Ehsan, Securities’ Task Force on Corporate Disclosure Best Practices. should you wish to be included in our database.

ANNUAL GENERAL MEETING (“AGM”) Similarly, to enable us to further improve our level of services to the community and our stakeholders, kindly The Board of Puncak Niaga firmly believes that the AGM is forward your comments, views and concerns to us at the best forum to promote a closer relationship with our [email protected] for public enquiries and shareholders, enabling us to continue our engagement process [email protected] for investors’ enquiries. with them. All water-related enquiries in the State of Selangor and the Since 2003, our AGMs have been preceded by a Company Federal Territories of Kuala Lumpur and Putrajaya, such Presentation followed by a Question and Answer Session. as complaints on water disruptions, pipe bursts or low Our shareholders are updated on the Group’s corporate and water pressure, may be addressed to SYABAS Customer financial performances, latest developments and issues of Service Centre, [email protected] or the toll-free line, concern to the shareholders. This is especially important as 1-800-88-5252 or SMS ‘PUSPEL space your complaints/ we are the water services provider in the State of Selangor and feedback ’ to 39222 or the social networks on Twitter and the Federal Territories of Kuala Lumpur and Putrajaya and Facebook, follow@PUSPEL. 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’ feedbacks, which are relevant to our operations, are taken into consideration in our business decisions. PNHB’s Annual Report in the form of CD-ROM is sent to the entitled shareholders of the Company at least 21 days prior to the AGM as required by the Companies Act, 1965 and the Main Market Listing Requirements of Bursa Securities. 205 Annual Report 2011 Puncak Niaga Holdings Berhad

Quality Policy & Report

QUALITY POLICY For the year 2010-2011 ICC Programme, a total of 13 teams initially participated in the ICC Programme. They comprised It is the Policy of Puncak Niaga to provide quality services and 2 teams from the Head Office and 11 teams from the products to meet the customer requirements and satisfaction. Water Treatment Plants.

Puncak Niaga shall strive to consistently adopt and maintain Based on the criteria set by the Malaysian Productivity Corporation a quality management system based on all regulated (“MPC”) and after careful consideration, the ICC Secretariat requirements, internationally recognised standard which will shortlisted 8 teams, with the following 8 projects for final ensure a planned, systematic, and proactive approach to quality presentation:- in all aspects of our work. 1. Poly pipe burst Puncak Niaga is also committed in providing a safe, harmonious 2. Down time at chlorine plant and conducive working environment and continuously equips 3. Choking of lime dosing pipe our employees with knowledge and skill to improve our quality 4. Wash water pipe at sludge plant not functioning systematically. 5. Choking of micro strainer 6. Optimising alum dosing Puncak Niaga Quality Management will be characterised by:- 7. In-efficient and unsystematic ways of managing staff personal file • A culture of continual improvement and teamwork. 8. Cost reduction of lead washer for chlorination system • Pro-activeness at all levels. • The consistent application of ‘Right First Time Every Time’ The 2010-2011 ICC Programme’s final presentation was held on principle. 14 April 2011 at Wisma Rozali and the winning projects were:- • Empowerment of personnel to solve problems expeditiously. 1. Down time at chlorine plant All employees shall share the responsibility to understand and 2. Poly pipe burst diligently implement the Quality Policy. 3. Choking of lime dosing pipe

INNOVATIVE & CREATIVE CIRCLE (ICC) PROGRAMME PNSB received a total of 19 ICC Awards in 2011. At the MPC Mini ICC 2011 held on 26 April 2011, five of our teams won three Gold The ICC Programme is a platform to measure staff capability in Awards and two Silver Awards. At the MPC Regional Conventions maximising their knowledge and experience to extend creative 2011 held on 27 to 28 June 2011, 20 to 21 July 2011 and ideas in solving work-related issues to increase the Company’s 25 to 26 July 2011, six of our teams received four Gold productivity and cost-benefit. Awards and two Silver Awards, and two teams achieved 3 Gold Star Awards and one team achieved 2 Gold Star PNSB’s ICC Secretariat (“the Secretariat”) had successfully Award from the MPC National ICC Convention 2011 held on conducted its sixth ICC Programme. The ICC Programme does 19 to 20 October 2011. At the International ICC not only support productivity enhancement, it is also designed Conference Quality Creative Circle 2011 held in as a channel in developing a customer-centric workforce. Yokohama, Japan from 11 to 15 September 2011 The ICC Programme may contribute towards the supply of our Tag Team succeeded in garnering the prestigious Excellent technically skilled, knowledgeable and innovative workforce Award for its cost-cutting and innovative project, namely who possesses important generic skills such as leadership ‘Unstable micro sand in the Actiflo process’. skills, interpersonal effectiveness, thinking skills, personal and professional effectiveness and effective communication skills. The company’s achievement in ICC activities for 2010~2011 was The ICC Programme is a reflection of the Company’s continuous outstanding and excellent. efforts in enhancing productivity and competitiveness.

206 Annual Report 2011 Puncak Niaga Holdings Berhad

Health, Safety And Environmental Policy

It is the policy of Puncak Niaga Holdings Berhad Without prejudice to the generality of the above statement, the Policy of Puncak Niaga Group is:- and its subsidiaries (Puncak Niaga Group) to provide, so far as is practicable healthy, safe • to provide and maintain a healthy, safe and environmental friendly workplace and system of work, and to continually and environmental friendly workplace for all improve its environment and safety performance; employees, contractors, visitors, interested members of society and others, and in the spirit • to continuously emphasise on the prevention of injury, ill health and pollution in all activities; of consultation and cooperation, the Management and employees will together strive to achieve • to ensure environmental and safety objectives and targets are set and reviewed; goals and objectives of this Policy. • to ensure all employees are informed, instructed, trained and supervised on how to perform their jobs safely and without risk to health and without any harm to the environment;

• to investigate all occupational health, safety and environment incidents, and to make corrective measures to ensure the incidents will not recur;

• to comply with all legal and other requirements on health, safety and environment and other good practices which the Group subscribes;

• to review this policy as and when appropriate and to ensure it is understood by all employees and is available to all interested parties.

207 Annual Report 2011 Puncak Niaga Holdings Berhad

SYABAS’ Corporate Responsibility Policy

At Syarikat Bekalan Air Selangor Sdn Bhd (“SYABAS”), there is an underlying and long standing commitment to ethical practice based upon the belief that business can be both profitable and responsible. We have always believed that building meaningful long term relationships with employees, suppliers, and communities is good business practice for us and is what our stakeholders expect of us. This is, and always has been, the founding principle of our commitment to Corporate Responsibility (“CR”). SYABAS recognises both the business imperative and the moral obligation to carry out our activities in a socially responsible and environmentally sustainable manner. Leveraging on our long history of social awareness and charitable work, SYABAS’ aim is to contribute to a sustainable future through:-

ENVIRONMENTAL IMPACTS: SUPPLIERS AND PARTNERS: We shall manage development activities in order to minimise We shall treat all our suppliers fairly whilst delivering the risk of pollution and waste; enhanced value and social improvements in partnership with them. We will operate in a way that safeguard against EMPLOYEES: unfair business practices and shall encourage suppliers and contractors to adopt responsible business policies and We shall respect the rights and diversity of employees, practices for mutual benefit; providing good conditions of work and equal opportunities, improving employee satisfaction, whilst enhancing the COMMUNITY INVOLVEMENT: intellectual capital of SYABAS continuously through training and development; We shall support philanthropic and charitable giving, support for and active engagement with local communities through ETHICS: volunteering and other programmes. We shall also support and encourage our employees to help local community We shall encourage high standards of integrity and organisations and activities in the areas where we operate in; professionalism throughout SYABAS and providing a framework to manage the risk of unethical behaviour; ENGAGEMENT WITH STAKEHOLDERS: RELATIONSHIPS WITH CONSUMERS: We shall listen and engage with local communities and responding positively to request for information from our We shall anticipate and satisfy consumers’ needs and stakeholders in a timely and accurate manner. providing a high quality of customer service by registering and resolving consumers’ complaints in accordance to our published Client Charter, Mandatory Level of Services and Concession Agreement;

208 Annual Report 2011 Puncak Niaga Holdings Berhad

Statement Of Directors’ Responsibility For Preparation Of Financial Statements

The financial statements of the Group and Company have been drawn up in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965. The Directors 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 2011 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 Company and which enables them to ensure that the financial statements comply with the provisions of the Companies Act, 1965.

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.

209

Financial Statements

212 226 Definitions Statements of Changes in Equity 214 Directors’ Report 231 Statements of Cash Flows 219 Statement by Directors 233 Notes to the 219 Financial Statements Statutory Declaration 380 220 Supplementary Independent Information Auditors’ Report 222 Income Statements 223 Statements of Comprehensive Income 224 Statements of Financial Position Annual Report 2011 Puncak Niaga Holdings Berhad

Definitions

Except where the context otherwise requires, the following definitions shall apply throughout this Directors’ Report and Audited Financial Statements for the financial year ended 31 December 2011:

“ABASS” : Konsortium ABASS Sdn Bhd “BACP” : Bai Bithaman Ajil Commercial Papers “BAIDS” : RM1,020,000,000 10-Year Al-Bai’ Bithaman Ajil Islamic Debt Securities Primary Bonds together with Non-Detachable Secondary Bonds “BAMTN” : Bai Bithaman Ajil Medium Term Notes “BIMB” : Bank Islam Malaysia Berhad “BOT” : Build Operate Transfer “BPMB” : Bank Pembangunan Malaysia Berhad “Bursa Securities” : Bursa Malaysia Securities Berhad “BSR” : Bulk Supply Rate “CCOA” : Construction Cum Operation Agreement “CGU” : Cash Generating Unit “CIMB” : Commerce International Merchant Bankers Berhad “CIMB Bank” : CIMB Bank Berhad “CLMSB” : Corporate Line (M) Sdn Bhd “Company” : Puncak Niaga Holdings Berhad “CPMSB” : Central Plus (M) Sdn Bhd “Distribution Area” : the State of Selangor, the Federal Territories of Kuala Lumpur and Putrajaya “DSRA” : Debt Service Reserve Account “EHPL” : Environmental Holding Pte Ltd “EPF” : Employees Provident Fund “Federal Government” : Government of Malaysia “FRS” : Financial Reporting Standards “GESL” : Global Environmental Solutions Ltd “GOM Resources” : GOM Resources Sdn Bhd (formally known as Global Offshore (Malaysia) Sdn Bhd) “Group” : Puncak Niaga Holdings Berhad Group of Companies “Hebei Sino” : Hebei Sino Panlong Industrial Water Supply Co Ltd “HSBC” : HSBC Bank Malaysia Berhad “IRB” : Inland Revenue Board “JAKS-KDEB” : JAKS-KDEB Consortium Sdn Bhd “JNA” : Junior Notes A, the 2001/2016 15-Year Redeemable Unconvertible Junior Notes issued by PNSB “JVA” : Joint Venture Agreement “KDEB” : Kumpulan Darul Ehsan Berhad “KGL” : KGL Ltd “KHEC” : Kris Heavy Engineering & Construction Sdn Bhd “Konajaya” : Konajaya Sdn Bhd “KeTTHA” : Kementerian Tenaga, Teknologi Hijau dan Air “Luancheng” : Luancheng Dayu Water Supply Co Ltd “LUWEI” : Luwei (Pingdingshan) Water Co Ltd

212 Annual Report 2011 Puncak Niaga Holdings Berhad

Definitions

“MCPs” : Al-Murabahah Commercial Papers “MMTNs” : Al-Murabahah Medium Term Notes “MOF” : Minister of Finance, Incorporated “MoU” : Memorandum of Understanding “NA” : Not Applicable “NBV” : Net Book Value “NRW” : Non Revenue Water Works “O&M” : Operations & Maintenance “Oasis Water” : Oasis Water Resources Sdn Bhd “PCCA” : Privatisation Cum Concession Agreement “PNOC” : Puncak Niaga Overseas Capital Pte Ltd “PNSB” : Puncak Niaga (M) Sdn Bhd “POG” : Puncak Oil & Gas Sdn Bhd “PRC” : People’s Republic of China “PUAS” : Perbadanan Urus Air Selangor Berhad “RCULS” : Redeemable Convertible Unsecured Loan Stocks of SYABAS “RM” : Ringgit Malaysia “RMB” : Chinese Renminbi “RPS” : Redeemable Cumulative Preference Shares of SYABAS “RUBs” : RM435,000,000 Nominal Value Ten (10)-Year Redeemable Unsecured Bonds of PNSB “RUN” : 2001/2016 15-Year Redeemable Unconvertible Junior Notes issued pursuant to the RUN issue “RZ Management” : RZ Management Services Sdn Bhd “Serba Tiara” : Serba Tiara Sdn Bhd “SGD” : Singapore Dollar “SINO” : Sino Water Pte Ltd “Sino Water (Shanghai)” : Sino Water Environmental Consultancy (Shanghai) Co. Ltd “SPLASH” : Syarikat Pengeluar Air Sungai Selangor Sdn Bhd “SSP 2” : Sungai Selangor Water Supply Scheme Phase 2, Stages I and II “State Government” : State Government of Selangor “SYABAS” : Syarikat Bekalan Air Selangor Sdn Bhd “SYABAS Concession Agreement“ : Concession Agreement dated 15 December 2004 between SYABAS, the Federal Government and the State Government “USD” : United States Dollar “XINNUO” : Xinnuo Water (Binzhou) Co. Ltd

213 Annual Report 2011 Puncak Niaga Holdings Berhad

Directors’ Report

directors’ report

The directors present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2011.

Principal activities

The Group is primarily engaged in the treatment and distribution of treated water to consumers in the State of Selangor, the Federal Territories of Kuala Lumpur and Putrajaya, and in the PRC. During the current financial year, the Group principal activities diversified to the provision of marine spread, onshore and offshore services and engineering works for the oil and gas sector. The principal activity of the Company is investment holding.

The principal activities of the subsidiaries are disclosed in Note 17 to the financial statements.

There have been no other significant changes in the nature of the principal activities during the financial year other than those arising from the acquisition of subsidiaries as disclosed in Note 17.

Results

Group Company RM RM

(Loss)/profit net of tax (83,722,201) 3,525,567

Profit/(loss) attributable to: Owners of the parent 9,319,631 3,525,567 Non-controlling interest (93,041,832) –

(83,722,201) 3,525,567

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the following:

(i) the effects arising from the changes in accounting policies due to the adoption of IC Interpretation 12 Service Concession Arrangement (“IC 12”), as disclosed in Note 2.2(iii);

(ii) gain arising from the extinguishment of debt in regards to JNA of RM155,554,087 as disclosed in Note 31(d);

(iii) surplus arising from the revaluation of freehold land, leasehold land and buildings of RM69,087,946 net of deferred tax which was recognised in other comprehensive income as disclosed in Note 13;

(iv) loss arising from the impairment allowance on the amount due from the State Government of tariff compensation of RM75,259,744 as disclosed in Note 6(b); and

(v) gain arising from adjustment for changes in estimate arising from the revision in the estimates of cashflows of long term payables as disclosed in Note 6(a) amounting to RM19,680,001.

214 Annual Report 2011 Puncak Niaga Holdings Berhad

Directors’ Report

Dividends

No dividend has been paid or declared by the Company since the end of previous financial year. The directors do not propose to declare any dividends in respect of the current financial year.

Directors

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Tan Sri Rozali bin Ismail Dato’ Hashim bin Mahfar Dato’ Ruslan bin Hassan Dato’ Ir Lee Miang Koi Dato’ Syed Danial bin Syed Ariffin Ng Wah Tar Tan Sri Dato’ Hari Narayanan a/l Govindasamy Tan Sri Dato’ Seri Dr Ting Chew Peh Tengku Dato’ Rahimah binti Almarhum Sultan Mahmud Tan Sri Dato’ Ahmad Fuzi bin Haji Abdul Razak

In accordance with Article 98 of the Company’s Articles of Association, YBhg Dato’ Hashim bin Mahfar, YBhg Dato’ Ir Lee Miang Koi and Mr. Ng Wah Tar shall retire from office by rotation at the forthcoming Fifteenth Annual General Meeting of the Company and, being eligible, had offered themselves for re-election.

Directors’ benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debenture of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full- time employee of the Company as shown in Note 9 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except for Tan Sri Rozali bin Ismail who has deemed interests in a related party, RZ Management, which provides corporate secretarial services to the Group.

215 Annual Report 2011 Puncak Niaga Holdings Berhad

Directors’ Report

Directors’ interests

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares and RUN in the Company and its related corporations during the financial year were as follows:

Number of ordinary shares of RM1.00 Each Name of director 1.1.2011 Acquired Sold 31.12.2011

Direct Interest: Ordinary shares of the Company Tan Sri Rozali bin Ismail 1,729,000 – – 1,729,000 Dato’ Ir Lee Miang Koi 10,000 – – 10,000

Deemed Interest: Ordinary shares of the Company Tan Sri Rozali bin Ismail 167,037,114 * – – 167,037,114 * Tan Sri Dato’ Seri Dr Ting Chew Peh 42,000 ** – – 42,000 **

RUN in RM 1.1.2011 Acquired Redeemed 31.12.2011

Direct Interest: RUN of the Company Dato’ Ruslan bin Hassan 708,125 – (708,125)*** – Dato’ Ir Lee Miang Koi 39,900 – (39,900)*** –

Deemed Interest: RUN of the Company Tan Sri Rozali bin Ismail 5,145,087 ^^ – (5,145,087) ^^ *** –

* Deemed interest by virtue of 100% shareholding interest in both CPMSB, a substantial corporate shareholder, and in CLMSB, a substantial corporate shareholder of the Company, of which 92.5% is held in his own name and 7.5% in his children’s names. ** Deemed interest by virtue of shares held by spouse, Tay Boon Ling pursuant to Section 134 of the Companies Act, 1965. *** Exercise of Rights via the Put Option Exercise implemented pursuant to the Trust Deed dated 5 September 2001 constituting the Notes(“Trust Deed”) as set out in the Company’s Notice Of Reminder To The Holders Of The RM546,875,000 Nominal Value Of 15-Year Redeemable Unconvertible Notes (“Notes”) On Their Rights To Exercise The Put Option Pursuant To The Trust Deed dated 13 September 2011. The completion for the Put Option Exercise was on 18 November 2011. ^^ Deemed interest by virtue of 100% shareholding interest in CLMSB, of which 92.5% is held in his own name and 7.5% in his children’s names.

None of the other directors in office at the end of the financial year had any interest in shares and RUN in the Company or its related corporations during the financial year.

Holding company

The Company has no corporate shareholder being regarded by the directors of the Company as the ultimate holding company nor as the holding company.

216 Annual Report 2011 Puncak Niaga Holdings Berhad

Directors’ Report

Other statutory information

(a) Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:

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

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

(f) In the opinion of the directors:

(i) except as disclosed in Note 49, no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

217 Annual Report 2011 Puncak Niaga Holdings Berhad

Directors’ Report

Significant events

In addition to significant events disclosed elsewhere in this report, other significant events are disclosed in Note 47 to the financial statements.

Subsequent events

Details of subsequent events are disclosed in Note 48 to the financial statements.

Auditors

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 26 April 2012.

Dato’ Hashim bin Mahfar Dato’ Syed Danial bin Syed Ariffin

218 Annual Report 2011 Puncak Niaga Holdings Berhad

Statement by Directors Pursuant to Section 169 (15) of the Companies Act, 1965

We, Dato’ Hashim bin Mahfar and Dato’ Syed Danial bin Syed Ariffin, being two of the directors of Puncak Niaga Holdings Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 222 to 379 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and the Company as at 31 December 2011 and of its financial performance and cash flows for the year then ended.

The information set out in Note 52 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 26 April 2012.

Dato’ Hashim bin Mahfar Dato’ Syed Danial bin Syed Ariffin

Statutory Declaration Pursuant to Section 169 (16) of the Companies Act, 1965

I, Wong Ley Chan, being the officer primarily responsible for the financial management of Puncak Niaga Holdings Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 222 to 380 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Wong Ley Chan at Shah Alam in the State of Selangor on 26 April 2012. Wong Ley Chan

Before me,

219 Annual Report 2011 Puncak Niaga Holdings Berhad

Independent Auditors’ Report to the members of Puncak Niaga Holdings Berhad (Incorporated in Malaysia)

Report on the financial statements

We have audited the financial statements of Puncak Niaga Holdings Berhad, which comprise the statements of financial position as at 31 December 2011 of the Group and of the Company, and the income statements and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 222 to 379.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2011 and of their financial performance and cash flows for the year then ended.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Notes 3.2, Note 49(g) and Note 49(i) to the financial statements which describes the uncertainty relating to the outcome of the lawsuit filed by a subsidiary of the Company, SYABAS against the Selangor State Government for the recovery of the water tariff compensation.

220 Annual Report 2011 Puncak Niaga Holdings Berhad

Independent Auditors’ Report to the members of Puncak Niaga Holdings Berhad (Incorporated in Malaysia)

Report on other legal and regulatory requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of the subsidiaries which we have not acted as auditors, which are indicated in Note 17 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

Other matters

The supplementary information set out in Note 52 on page 380 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Kua Choo Kai AF: 0039 No.2030/03/14(J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia 26 April 2012

221 Annual Report 2011 Puncak Niaga Holdings Berhad

Income Statements For the financial year ended 31 December 2011

Group Company Note 2011 2010 2011 2010 (Restated) RM RM RM RM

Revenue 5 2,591,509,091 2,055,523,094 – –

Other income 6(a) 320,099,478 122,565,748 79,980,819 72,337,380

Items of expense Raw materials, consumables and maintenance (1,083,109,917) (1,005,538,884) – – Construction contract expense (277,484,524) (138,625,147) – – Cost of providing oil & gas services (236,135,068) – – – Employee benefits expense 8 (269,916,051) (235,461,868) – – Other expenses 6(b) (319,160,429) (148,893,623) (21,204,991) (12,190,488) Depreciation and amortisation expense 6(c) (176,305,767) (165,148,466) (774,562) (850,844) Finance costs 10 (624,459,577) (593,001,037) (49,806,510) (55,602,036)

Share of results - Associates 18 3,172 (1,921) – – - Joint venture 19 (203,235) (76,234) – –

(Loss)/profit before tax 6 (75,162,827) (108,658,338) 8,194,756 3,694,012 Income tax expense 11 (8,559,374) 17,068,782 (4,669,189) (3,877,209)

(Loss)/profit net of tax (83,722,201) (91,589,556) 3,525,567 (183,197)

Profit/(loss) attributable to: Owners of the parent 9,319,631 (90,925,524) 3,525,567 (183,197) Non-controlling interest (93,041,832) (664,032) – –

(83,722,201) (91,589,556) 3,525,567 (183,197)

Earnings per share attributable to owners of the parent Basic 12 0.02 (0.22)

Diluted 12 N/A N/A

222 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Comprehensive Income For the financial year ended 31 December 2011

Group Company Note 2011 2010 2011 2010 (Restated) RM RM RM RM

(Loss)/profit net of tax (83,722,201) (91,589,556) 3,525,567 (183,197)

Other comprehensive income/expenses: Foreign currency translation 2,165,771 (3,652,314) – – Revaluation surplus on land and buildings 13 92,117,262 – 12,108,879 – Transfer to deferred tax 36 (23,029,316) – (3,027,220) – Revaluation reserves 69,087,946 – 9,081,659 –

Total comprehensive(loss)/income for the year (12,468,484) (95,241,870) 12,607,226 (183,197)

Total comprehensive income/(loss) attributable to: Owners of the parent 80,393,762 (94,403,838) 12,607,226 (183,197) Non-controlling interest (92,862,246) (838,032) – –

(12,468,484) (95,241,870) 12,607,226 (183,197)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 223 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Financial Position As at 31 December 2011

Group Company As at Note 2011 2010 1.1.2010 2011 2010 (Restated) (Restated) RM RM RM RM RM Assets

Non-current assets Property, plant and equipment 13 452,829,031 245,323,870 234,313,312 19,600,000 7,620,310 Investment property 14 – – – 8,913,870 9,559,243 Operating financial assets 15 6,584,625 2,475,910 731,654 – – Service concession assets 16 7,677,592,186 7,685,002,446 7,647,906,242 – – Investment in subsidiaries 17 – – – 463,118,040 463,110,960 Investment in associates 18 43,986 39,738 40,504 45,415 44,339 Investment in joint venture 19 1,641,971 5,634,957 5,659,878 – 2,476,927 Held-to-maturity financial assets 20 – – – 265,958,665 254,152,376 DSRA 22 306,891,601 297,271,081 278,605,809 – – Goodwill 23 532,493,313 514,873,012 515,312,455 – – Trade and other receivables 24 1,469,883,064 284,706,684 321,216,439 – – Deferred tax assets 36 425,211,092 399,546,108 361,219,704 – –

10,873,170,869 9,434,873,806 9,365,005,997 757,635,990 736,964,155

Current assets Inventories 26 9,483,743 9,887,761 8,915,340 – – Held-to-maturity financial assets 20 – – – – 285,568,993 Trade and other receivables 24 361,639,078 1,148,918,467 740,550,969 194,628,490 63,763,440 Other current assets 25 105,841,260 21,118,036 22,002,853 86,217 8,912,100 Available-for-sales investments 27 9,408,793 – 4,601,661 – – Tax recoverable 639,110 653,790 2,135,308 – – Short term funds 28 36,281 35,231 30,329,949 – – Cash and bank balances 30 1,268,050,147 1,215,266,678 1,186,201,882 270,325,861 180,088,126

1,755,098,412 2,395,879,963 1,994,737,962 465,040,568 538,332,659

Total assets 12,628,269,281 11,830,753,769 11,359,743,959 1,222,676,558 1,275,296,814

Equity and liabilities

Current liabilities Provision for retirement benefits 33 2,283,854 1,539,853 1,193,187 – – Loans and borrowings 31 471,168,322 806,392,097 395,665,240 – 285,568,993 Trade and other payables 32 1,387,291,014 1,662,607,522 1,117,677,436 249,872,615 35,872,702 Other current liabilities 34 – 6,546,029 4,161,411 – – Service concession obligations 16 145,497,500 114,760,000 85,597,500 – – Tax payable 27,434,086 14,155,744 26,447,964 590,847 228,041

2,033,674,776 2,606,001,245 1,630,742,738 250,463,462 321,669,736

Net current (liabilities)/assets (278,576,364) (210,121,282) 363,995,224 214,577,106 216,662,923

224 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Financial Position As at 31 December 2011

Group Company As at Note 2011 2010 1.1.2010 2011 2010 (Restated) (Restated) RM RM RM RM RM

Non–current liabilities Provision for retirement benefits 33 20,475,716 19,224,022 17,482,118 – – Loans and borrowings 31 5,040,961,074 4,680,571,099 4,981,104,072 – – Trade and other payables 32 1,205,760,654 9,794,600 11,427,033 – – Government grant 35 285,933,999 282,626,078 237,069,909 – – Deferred tax liabilities 36 – – – 16,516,886 10,538,094 Service concession obligations 16 4,024,041,173 4,170,240,532 4,283,537,529 – –

10,577,172,616 9,162,456,331 9,530,620,661 16,516,886 10,538,094

Total liabilities 12,610,847,392 11,768,457,576 11,161,363,399 266,980,348 332,207,830

Net assets 17,421,889 62,296,193 198,380,560 955,696,210 943,088,984

Equity attributable to owners of the parent Share capital 37 411,142,895 411,142,895 411,142,895 411,142,895 411,142,895 Share premium 37 102,878,221 102,878,221 102,878,221 102,878,221 102,878,221 Treasury shares 37 (5,940,688) (5,940,688) (5,940,688) (5,940,688) (5,940,688) Foreign currency translation reserve 37 (1,108,129) (3,094,314) 384,165 – – Revaluation reserve 37 69,087,946 – – 9,081,659 – Other reserve 37 (19,762,784) – – – – Retained earnings 38 (449,192,735) (458,512,366) (326,676,398) 438,534,123 435,008,556

107,104,726 46,473,748 181,788,195 955,696,210 943,088,984 Non-controlling interest (89,682,837) 15,822,445 16,592,365 – –

Total equity 17,421,889 62,296,193 198,380,560 955,696,210 943,088,984

Total equity and liabilities 12,628,269,281 11,830,753,769 11,359,743,959 1,222,676,558 1,275,296,814

The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 225 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Changes in Equity For the financial year ended 31 December 2011

Attributable to owners of the parent Non-distributable distributable Equity a Attributable Foreign to owners of currency Equity, the parent, Share Share Treasury translation Revaluation Other Retained Non-controlling Note total total capital premium shares reserve reserve reserve earnings interests RM RM RM RM RM RM RM RM RM RM

2011 Group

Opening balance at 1 January 2011, restated 62,296,193 46,473,748 411,142,895 102,878,221 (5,940,688) (3,094,314) – – (458,512,366) 15,822,445

Total comprehensive (loss)/income (12,468,484) 80,393,762 – – – 1,986,185 69,087,946 – 9,319,631 (92,862,246)

Transactions with owners Net premium paid on acquisition of non-controlling interests 17 (19,762,784) (19,762,784) – – – – – (19,762,784) – – Acquisition of non-controlling interests 17 (34,224,947) – – – – – – – – (34,224,947) Acquisition of subsidiaries 17 21,581,911 – – – – – – – – 21,581,911

Total transactions with owners (32,405,820) (19,762,784) – – – – – (19,762,784) – (12,643,036)

Closing balance at 31 December 2011 17,421,889 107,104,726 411,142,895 102,878,221 (5,940,688) (1,108,129) 69,087,946 (19,762,784) (449,192,735) (89,682,837)

226 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Changes in Equity For the financial year ended 31 December 2011

2011 Group

Opening balance at 1 January 2011, restated 62,296,193 46,473,748 411,142,895 102,878,221 (5,940,688) (3,094,314) – – (458,512,366) 15,822,445

Total comprehensive (loss)/income (12,468,484) 80,393,762 – – – 1,986,185 69,087,946 – 9,319,631 (92,862,246)

Total transactions with owners (32,405,820) (19,762,784) – – – – – (19,762,784) – (12,643,036)

Closing balance at 31 December 2011 17,421,889 107,104,726 411,142,895 102,878,221 (5,940,688) (1,108,129) 69,087,946 (19,762,784) (449,192,735) (89,682,837)

227 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Changes in Equity For the financial year ended 31 December 2011

2010 Group

Opening balance at 1 January 2010 1,738,643,837 1,473,801,422 411,142,895 102,878,221 (5,940,688) 384,165 – – 965,336,829 264,842,415 Effects of adopting IC 12 2.2(iii) (1,493,513,716) (1,245,263,666) – – – – – – (1,245,263,666) (248,250,050)

245,130,121 228,537,756 411,142,895 102,878,221 (5,940,688) 384,165 – – (279,926,837) 16,592,365 * Effects of adopting FRS 139 as previously reported (46,749,561) (46,749,561) – – – – – – (46,749,561) –

Opening balance at 1 January 2010, restated 198,380,560 181,788,195 411,142,895 102,878,221 (5,940,688) 384,165 – – (326,676,398) 16,592,365

Total comprehensive income, as previously reported 185,134,900 115,290,243 – – – (4,221,355) – – 119,511,598 69,844,657 Effects of adopting IC 12 2.2(iii) (280,376,770) (209,694,081) – – – 742,876 (210,436,957) (70,682,689) Total comprehensive loss, restated (95,241,870) (94,403,838) – – – (3,478,479) – – (90,925,359) (838,032)

Transactions with owners Acquisition of additional equity interests in subsidiary 68,112 – – – – – – – – 68,112 Dividends on ordinary shares 45 (40,910,609) (40,910,609) – – – – – – (40,910,609) –

Total transactions with owners (40,842,497) (40,910,609) – – – – – – (40,910,609) 68,112

Closing balance at 31 December 2010, restated 62,296,193 46,473,748 411,142,895 102,878,221 (5,940,688) (3,094,314) – – (458,512,366) 15,822,445

228 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Changes in Equity For the financial year ended 31 December 2011

2010 Group

Opening balance at 1 January 2010, restated 198,380,560 181,788,195 411,142,895 102,878,221 (5,940,688) 384,165 – – (326,676,398) 16,592,365

Total transactions with owners (40,842,497) (40,910,609) – – – – – – (40,910,609) 68,112

Closing balance at 31 December 2010, restated 62,296,193 46,473,748 411,142,895 102,878,221 (5,940,688) (3,094,314) – – (458,512,366) 15,822,445

229 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Changes in Equity For the financial year ended 31 December 2011

Non-Distributable Distributable Equity, Share Share Treasury Revaluation retained total capital premium shares reserve earnings RM RM RM RM RM RM

2011 Company

Opening balance at 1 January 2011 943,088,984 411,142,895 102,878,221 (5,940,688) – 435,008,556

Total comprehensive income 12,607,226 – – – 9,081,659 3,525,567

Closing balance at 31 December 2011 955,696,210 411,142,895 102,878,221 (5,940,688) 9,081,659 438,534,123

Non-Distributable Distributable Equity, Share Share Treasury Revaluation retained Note total capital premium shares reserve earnings RM RM RM RM RM RM

2010 Company

Opening balance at 1 January 2010 984,182,790 411,142,895 102,878,221 (5,940,688) – 476,102,362

Total comprehensive loss (183,197) – – – – (183,197)

Transaction with owners Dividends on ordinary shares 45 (40,910,609) – – – – (40,910,609)

Closing balance at 31 December 2010 943,088,984 411,142,895 102,878,221 (5,940,688) – 435,008,556

The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 230 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Cash Flows For the financial year ended 31 December 2011

Group Company Note 2011 2010 2011 2010 (restated) RM RM RM RM

Operating activities

Receipts from customers 1,918,420,162 1,544,046,826 – – Other income 75,586,861 63,059,024 – 60,000 Payments to water treatment operators (395,739,973) (415,382,482) – – Payments to service consession obligations (190,430,00) (165,427,500) – – Payments for operating expenses (619,928,751) (628,465,430) (4,122,385) (5,299,909) Payments to contractors (301,842,316) (18,800,074) – – Net cash generated from/ (used in) operations 486,065,983 379,030,364 (4,122,385) (5,239,909)

Net deposits received 25,852,252 8,376,843 – – Interest paid (216,208,730) (212,480,639) (7,408,244) (9,544,092) Tax paid (44,089,652) (31,986,409) (1,354,811) (1,284,261) Interest received 44,519,034 29,454,923 26,152,673 14,587,384 (189,927,096) (206,635,282) 17,389,618 3,759,031 Net cash inflow/(outflow) from operating activities 296,138,887 172,395,082 13,267,233 (1,480,878)

Investing activities

Acquisition of subsidiaries 17(b) & (c) (49,066,343) – (7,080) (900,002) Acquisition of non-controlling interest 17(b) & (c) (114,207,000) – – – Purchase of property, plant and equipment (14,196,927) (28,620,212) – – Purchase of investment property – – – (42,473) Additions of service concession assets (140,079,491 ) (174,524,923) – – Net advances from/(to) subsidiaries – – 82,990,614 (14,770,000) Net advance to associate (1,076) (1,155) (1,076) (1,155) Net advance to joint venture (239,267) (601,313) (239,267) (1,134,808) Cash flows from investing activities carried forward (317,790,104) (203,747,603) 82,743,191 (16,848,438)

231 Annual Report 2011 Puncak Niaga Holdings Berhad

Statements of Cash Flows For the financial year ended 31 December 2011

Group Company Note 2011 2010 2011 2010 (restated) RM RM RM RM

Investing activities Cash flows from investing activities brought forward (317,790,104) (203,747,603) 82,743,191 (16,848,438) Purchase of unquoted investments 27 (10,000,000) (80,000,000) – – Proceeds from redemption of Junior Notes A – – – 54,687,500 Proceeds from disposal of BAIDS 336,740,180 – 336,740,180 – Acquisition of BAIDS (342,512,869) – (342,512,869) – Proceeds from disposal of held-to-maturity investment – – 327,967,259 – Disposal of unquoted investments 27 – 86,509,434 – – Proceeds from disposal of property, plant and equipment 230,690 571,552 – – Net cash (outflow)/inflow from investing activities (333,332,103) (196,666,617) 404,937,761 37,839,062 Financing activities

Proceeds from loan and borrowings 444,848,500 11,919,867 – – Issuance of RPS – 131,600,000 – – Dividend paid – (40,910,609) – (40,910,609) Repayment of loan and borrowings (335,141,667) (61,499,798) (327,967,259) (54,687,500) Repayment of obligation under finance leases (8,388,357) (6,042,069) – – Net cash inflow/(outflow) from financing activities 101,318,476 35,067,391 (327,967,259) (95,598,109) Net increase/(decrease) in cash and cash equivalents 64,125,260 10,795,856 90,237,735 (59,239,925) Effects of exchange rate changes on cash and cash equivalents (1,720,221) (4,260,506) – – Cash and cash equivalents at 1 January 1,215,301,909 1,216,531,831 180,088,126 239,328,051 Transfer to DSRA 22 (9,620,520) (7,765,272) – – Deposits held in trust 30 (186,955,104) (162,150,214) – – Cash and cash equivalents at 31 December 1,081,131,324 1,053,151,695 270,325,861 180,088,126 Cash and cash equivalents comprise: Deposits with licensed banks 1,108,293,684 1,151,081,295 231,152,547 172,211,766 Less: Deposits held in trust 30 (186,955,104) (162,150,214) – – 921,338,580 988,931,081 231,152,547 172,211,766 Cash and bank balances 159,756,463 64,185,383 39,173,314 7,876,360 Short term funds 28 36,281 35,231 – – 1,081,131,324 1,053,151,695 270,325,861 180,088,126

The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 232 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

1. Corporate information

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Securities. The registered office of the Company is located at 10th Floor, Wisma Rozali, No. 4, Persiaran Sukan, Seksyen 13, 40100 Shah Alam, Selangor Darul Ehsan.

The Company has no corporate shareholder being regarded by the directors of the Company as the ultimate holding company nor as the holding company.

The Group is primarily engaged in the treatment and distribution of treated water to consumers in the State of Selangor, the Federal Territories of Kuala Lumpur and Putrajaya and in the PRC. In the current financial year, the Group ventures into oil & gas sector. The principal activity of the Company is investment holding.

The principal activities of the subsidiaries are disclosed in Note 17.

There have been no other significant changes in the nature of the principal activities during the financial year other than those arising from the acquisition of two subsidiaries as disclosed in Note 17.

2. Summary of significant accounting policies

2.1 bASIS of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginning on or after 1 January 2011 as described fully in Note 2.2.

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below. The financial statements are presented in Ringgit Malaysia (RM).

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2011, the Group and the Company adopted the following new and amended FRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 January 2011.

Effective for ann ANNual periods beginning on DESCRIPtion or after

• FRS 1: First-time Adoption of Financial Reporting Standards 1 July 2010 • Amendments to FRS 2: Share-based Payment 1 July 2010 • FRS 3: Business Combinations 1 July 2010 • Amendments to FRS 5: Non-current Assets Held for Sale and Discontinued Operations 1 July 2010

233 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.2 Changes in accounting policies (cont’d)

Effective for ann ANNual periods beginning on DESCRIPtion or after

• Amendments to FRS 127: Consolidated and Separate Financial Statements 1 July 2010 • Amendments to FRS 138: Intangible Assets 1 July 2010 • Amendments to IC Interpretation 9: Reassessment of Embedded Derivatives 1 July 2010 • IC Interpretation 12: Service Concession Arrangements 1 July 2010 • IC Interpretation 16: Hedges of a Net Investment in a Foreign Operation 1 July 2010 • IC Interpretation 17: Distributions of Non-cash Assets to Owners 1 July 2010 • Amendments to FRS 132: Classification of Rights Issues 1 March 2010 • IC Interpretation 18: Transfers of Assets from Customers 1 January 2011 • Amendments to FRS 7: Improving Disclosures about Financial Instruments 1 January 2011 • Amendments to FRS 1: Limited Exemptions for First-time Adopters 1 January 2011 • Amendments to FRS 1: Additional Exemptions for First-time Adopters 1 January 2011 • IC Interpretation 4: Determining Whether an Arrangement Contains a Lease 1 January 2011 • Improvements to FRS issued in 2010 * 1 January 2011

* Improvements to FRS issued in 2010

The Improvements to FRS issued in 2010 comprise amendments to the following FRS that are effective for annual periods beginning on or after 1 January 2011:

FRS 1 First –time Adoption of Financial Reporting Standards FRS 3 Business Combinations FRS 7 Financial Instruments: Disclosures FRS 101 Presentation of Financial Statements FRS 121 The Effects of Changes in Foreign Exchange Rates FRS 128 Investments in Associates FRS 131 Interests in Joint Ventures FRS 132 Financial Instruments: Presentation FRS 134 Interim Financial Reporting FRS 139 Financial Instruments: Recognition and Measurement IC Interpretation 13 Customer Loyalty Programmes

234 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.2 Changes in accounting policies (cont’d)

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and of the Company except for those discussed below:

(i) Revised FRS 3 Business Combinations and Amendments to FRS 127 Consolidated and Separate Financial Statements

The revised standards are effective for annual periods beginning on or after 1 July 2010. The revised FRS 3 introduces a number of changes in accounting for business combinations occurring after 1 July 2010. These changes impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results.

The revised FRS 3 continues to apply the acquisition method to business combinations but with some significant changes. All payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently remeasured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs are expensed.

On 28 September 2011, the Group’s subsidiary company, Puncak Oil and Gas Sdn Bhd, acquired additional 60% equity interest in GOM Resources Sdn Bhd and KGL Ltd respectively from their non-controlling interest of which details are disclosed in Note 17(b) & 17(c).

The amendments to FRS 127 require that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary.

(ii) Amendments to FRS 7: Improving Disclosures about Financial Instruments

The amended standard requires enhanced disclosure about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by source of inputs using a three level fair value hierarchy (Level 1, Level 2 and Level 3), by class, for all financial instruments recognised at fair value. A reconciliation between the beginning and ending balance for Level 3 fair value measurements is required. Any significant transfers between levels of the fair value hierarchy and the reasons for those transfers need to be disclosed. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value measurement disclosures are presented in Note 42. The liquidity risk disclosures are not significantly impacted by the amendments and are presented in Note 43(b).

235 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.2 Changes in accounting policies (cont’d)

(iii) IC Interpretation 12 Service Concession Arrangements

IC Interpretation 12 - Service concession arrangements (“IC12”) is effective from 1 July 2010. The change in accounting method was applied restropectively in accordance with FRS 108 on changes in accounting method. As such, the Group consolidated financial statements for the year ended 31 December 2010 were adjusted for the retrospective application of IC 12.

A substantial portion of the Group’s assets is used within the framework of concession or affermage contract granted by certain governing bodies, State Government and Government (“grantors”) on full privatisation. The characteristics of these contracts vary significantly depending on the country and activity concerned.

IC 12 is applicable to concession arrangements comprising a public service obligation and satisfying all of the following criteria:

- the concession grantor controls or regulates the services to be provided by the operator using the asset, the infrastructure, the beneficiaries of the services and prices applied;

- the grantor controls the significant residual interest in the infrastructure at the end of the term of the arrangement.

Pursuant to IC 12, such infrastructures are not recognised in assets of the operator as property, plant and equipment but in financial assets (“financial asset model”) and/or intangible assets (“intangible asset model”) depending on the remuneration commitments given by the grantor.

Financial asset model

The financial asset model applies when the operator has an unconditional right to receive cash or another financial asset from the grantor. In the case of concession services, the operator has such an unconditional right if the grantor contractually guarantees the payment of:

- amounts specified or determined in the contract or

- the shortfall, if any, between amounts received from users of the public service and amounts specified or determined in the contract.

Financial assets resulting from the application of IC 12 are recorded in the Statement of Financial Position under the heading of “Operating financial assets” and recognised at amortised cost.

Pursuant to FRS 139, an impairment loss is recognised if the carrying amount of these assets exceeds the recoverable amount, as estimated during impairment tests. Fair value is estimated based on the recoverable amount, calculated by discounting future cash flows (value in use method).

236 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.2 Changes in accounting policies (cont’d)

(iii) IC Interpretation 12 Service Concession Arrangements (cont’d)

Revenue associated with this financial model includes:

(i) Revenue determined on a completion basis in the case of construction operating financial assets (in accordance with FRS 111);

(ii) The remuneration of the operating financial asset recorded in revenue from operating financial assets (excluding principal payments);

(iii) Service remuneration.

Intangible asset model

The intangible asset model applies where the operator is paid by the users or where the concession grantor has not provided a contractual guarantee in respect of the recoverable amount. The intangible asset corresponds to the right granted by the concession grantor to the operator to charge users of the public service.

Intangible assets resulting from the application of IC 12 are recorded in the Statement of Financial Position under the heading of “Service concession assets” and are amortised on the water revenue method over the concession period.

Under the intangible asset model, revenue includes:

(i) Revenue recorded on a completion basis, in the case of construction operating financial assets (in accordance with FRS 111);

(ii) Service remuneration.

The Group amortises its intangible asset contained in the concession arrangement by reference to revenue method over the concession period, consistent with the method adopted for the annual financial statements for the financial year ended 31 December 2010. During the financial year under review, it has come to the knowledge of the Group that there are differing views within the accounting fraternity regarding the appropriateness of certain methods in amortising intangible asset contained in a concession arrangement, and the deliberation over this matter is currently ongoing. Pending the finalisation of any consensus by the accounting fraternity over this matter, the Group continues to amortise its intangible asset contained in the concession arrangement by reference to revenue method. The Group will continue to monitor the progress and outcome of the ongoing deliberation, and will review the appropriateness of the existing amortisation method should such need arise in future.

237 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.2 Changes in accounting policies (cont’d)

(iii) IC Interpretation 12 Service Concession Arrangements (cont’d)

The following shows the impact of the adoption of IC Interpretation 12 to the Group’s financial statements as of and for the year ended 31 December 2010 and 2009:

Increase/(decrease) 2010 2009 Rm rm

GROUP

Statements of financial position Property, plant and equipment (1,364,389,459) (1,362,927,652) Project development expenditure (4,497,424,223) (3,994,674,341) Service concession assets 7,685,002,446 7,647,906,242 Operating financial assets 2,475,910 731,654 Deferred tax assets 679,980,256 584,294,307 Inventories (6,624,585) (4,943,386) Other current assets 5,846,231 71,444 Trade and other payables (current) (1,539,853) (1,193,187) Other payables (non-current) (19,224,022) (17,482,118) Service concession obligations (current) 114,760,000 85,597,500 Service concession obligations (non-current) 4,170,240,532 4,283,537,529 Government grant (6,243,470) (5,163,045) Foreign currency translation reserve 742,876 – Accumulated losses (1,455,700,623) (1,245,263,666)

Statements of comprehensive income Revenue 144,008,895 178,005,325 Other income 1,141,098 2,792,963 Raw materials, consumables and maintenance expenses (532,308,281) (531,681,833) Construction contract expenses (131,175,852) (159,375,216) Depreciation and amortisation expenses 360,025,642 324,093,720 Finance costs (218,717,960) (222,079,999) Loss before tax (377,026,458) (408,245,040) Income tax expense 95,836,962 112,800,860 Loss net of tax (281,189,496) (295,444,180)

238 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.3 mAlaysian Financial Reporting Standards (MFRS Framework)

On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer.

The Group will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 December 2012. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.

The Group is currently assessing the financial effects of the differences between Financial Reporting Standards and accounting standards under the MFRS Framework. Accordingly, the financial performance and financial position as disclosed in these financial statements for the year ended 31 December 2011 could be different if prepared under the MFRS Framework.

The Group considers that it is achieving its scheduled milestones and expects to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 December 2012.

2.4 bASIS of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Acquisition Method

Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the business combination.

239 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.4 bASIS of consolidation (cont’d)

Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the statement of financial position. The accounting policy for goodwill is set out in Note 2.11. Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract.

Merger Method

Acquisition of subsidiaries with agreement dated prior to 1 January 2006 that meets the conditions of merger are accounted for using the merger method. Under the merger method of accounting, the results of subsidiaries are presented as if the merger had been effected throughout the current and previous years. In the consolidated financial statements, the cost of the merger is cancelled with the nominal values of the shares received. Any resulting credit difference is classified as equity and regarded as a non-distributable reserve. Any resulting debit difference is adjusted against any suitable reserve.

2.5 tRANSACtions with non-controlling interest

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the owners of the Company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

2.6 Foreign currency

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

240 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.6 Foreign currency (cont’d)

(b) Foreign Currency Transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

241 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.7 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, plant and equipment and furniture and fixtures are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

During the current financial year, the Group changed from the cost model to the revaluation model for its freehold land, leasehold land and buildings.

Freehold and leasehold land and buildings are measured at fair value less accumulated depreciation on leasehold land and buildings and impairment losses recognised after the date of valuation. Valuations are performed with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value of the freehold land, leasehold land and buildings at the reporting date.

Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.

During the financial year, upon adopting IC 12, certain classes of property, plant and equipment i.e. freehold land, water meters and concession assets which comprise structures, land and buildings, water treatment plants and equipment, reservoirs, dams and distribution pipes operated and maintained by the Group under the concession agreements were reclassified as infrastructure and construction assets within service concession assets.

242 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.7 Property, plant and equipment (cont’d)

Freehold land has an unlimited useful life and therefore it is not depreciated. Depreciation of other property, plant and equipment is computed on a straight-line basis over the estimated useful lives of the assets as follows:

- Buildings: 10 to 50 years - Plant and equipment: 4 to 25 years - Office equipment: 4 to 10 years - Furniture and fittings: 5 to 10 years - Motor vehicles: 3 to 10 years - Computers and software: 3 to 5 years - Renovation: 3 to 10 years - Signage: 5 to 10 years - Pipelines: 10 years - Vessel: 15 years - Long term leasehold land: over the leasehold period

Assets under construction included in plant and equipment are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

2.8 Investment properties

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value which reflects market conditions at the reporting date. Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.

A property interest under an operating lease is classified and accounted for as an investment property on a property- by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

243 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.8 Investment properties (cont’d)

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.7 up to the date of change in use.

2.9 Service concession assets and obligations

The Group accounts for its service concession arrangement (“SCA”) with the governing bodies, State Government and Federal Government under the Intangible Asset model as it receives the right (license) to charge users of public service. Under the Group’s Concession agreements, the Group is granted the sole and exclusive right and discretion during the concession period to manage, occupy, operate, repair, maintain, decommission and refurbish the identified facilities required to provide water services. The legal title to these assets shall remain with the governing bodies, State Government and Federal Government at the end of the concession period.

Actual water revenue for the year X Accumulated cost of infrastructure Actual water revenue for the year + and construction assets at Projected total water revenue for the beginning of the year subsequent years to the end of the Concession + Additions for the year

The rationale for using the unit of water revenue method is in line with the pattern in which the assets’ economic benefits are consumed by the Group.

The SCA pertain to the fair value of the service concession obligations at drawdown date and construction costs related to the rehabilitation works performed by the Group.

In addition, the Group recognises and measures revenue in accordance with FRS 111, Construction Contracts and FRS 118, Revenue Recognition for the services it performs.

244 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.10 oPERAting financial assets

The Group constructs or upgrades infrastructure (construction or upgrade services) used to provide a public service and operates and maintains that infrastructure (operation services) for a specified period of time. These arrangements may include infrastructure used in a public-to-private service concession arrangement for its entire useful life.

The financial asset model is used when the Group has an unconditional contractual right to receive cash or another financial asset from or at the direction of the grantor for the construction services.

In the financial asset model, the amount due from the grantor meets the definition of a receivable which is measured at fair value. It is subsequently measured at amortised cost. The amount initially recognised plus the cumulative interest on that amount is calculated using the effective interest method.

Any asset carried under concession arrangement is derecognised on disposal or when no future economic benefits are expected from its future use or disposal or when the contractual rights to the financial asset expire.

2.11 Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.6.

Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition.

245 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.12 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (“CGU”).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

2.13 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

246 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.14 Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.

The financial statements of the associates are prepared as of the same reporting date as the Company. Where the date of the audited financial statements used are not coterminous with those of the Group, the share of results is derived at from the last audited financial statements available and management financial statements to the end of the accounting period. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

2.15 Joint venture

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, where the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The Group recognises its interest in joint venture using equity method of accounting as described in Note 2.14.

Adjustments are made in the Group’s consolidated financial statements to eliminate the Group’s share of intragroup balances, income and expenses and unrealised gains and losses on transactions between the Group and its joint venture.

247 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.15 Joint venture (cont’d)

The financial statements of the joint venture are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies into line with those of the Group.

In the Company’s separate financial statements, its investment in joint venture is stated at cost less impairment losses. On disposal of such investment, the difference between net disposal proceeds and the carrying amount is included in profit or loss.

2.16 Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, andthe categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

(a) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling inthe near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured atfair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

(b) loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

248 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.16 Financial assets (cont’d)

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

(d) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

249 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.17 Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(a) trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(b) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

250 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.17 Impairment of financial assets (cont’d)

(b) Available-for-sale financial assets (cont’d)

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

2.18 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

2.19 Construction contracts

Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable. Contract costs are recognised as expense in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

When the total of costs incurred on construction contracts plus recognised profits (less recognised losses) exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.

251 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.20 Inventories

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

2.21 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.22 Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all conditions attached will be met. Where the grant relates to an asset, the fair value is recognised as deferred capital grant in the statement of financial position and is amortised to profit or loss over the expected useful life of the relevant asset by equal annual instalments.

Grants that compensate the Group for the cost of asset are recognised as income on a systematic basis over the useful life of asset, using the unit of water revenue method as disclosed in Note 2.9. The cost of assets to which the grants relate to are capitalised as project development expenditure.

2.23 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

Financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

252 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.23 Financial liabilities (cont’d)

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.24 borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

2.25 RCULS

The RCULS are regarded as compound instruments, consisting of a liability component and an equity component.

At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar instrument. The difference between the proceeds of issue of the convertible loan stocks and the fair value assigned to the liability component, representing the conversion option is included in equity. The liability component is subsequently stated at amortised cost using the effective interest rate method until extinguished on conversion or redemption, whilst the value of the equity component is not adjusted in subsequent periods. Attributable transaction costs are apportioned and deducted directly from the liability and equity component based on their carrying amounts at the date of issue.

2.26 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the EPF in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed. The Group’s foreign subsidiaries also make contributions to their respective countries’ statutory pension schemes.

253 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.26 Employee benefits (cont’d)

(b) Defined benefit plans

The Group operates an unfunded, defined benefit Retirement Benefit Scheme (the “Scheme”) for its eligible employees. The Group’s obligation under the Scheme, calculated using the Projected Unit Credit Method, is determined based on actuarial computations by independent actuaries, through which the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted in order to determine its present value. Actuarial gains and losses are recognised directly in equity immediately. Past service costs are recognised immediately to the extent that the benefits are already vested, and otherwise are amortised on a straight-line basis over the average period until the amended benefits become vested.

The amount recognised in statement of financial position represents the present value of the defined benefit obligation adjusted for unrecognised actuarial gains and losses and unrecognised past service costs.

2.27 lEASES

(a) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.28(f).

254 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.28 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(a) Supply and distribution of treated water to consumers

Water revenue are recognised when the related water is rendered. Water and sewerage are billed every month according to the bill cycles of the customers. As a result of bill cycle cut-off, monthly service revenue earned but not yet billed at the end of the month are estimated and accrued. These estimated are based on historical consumption of the customers.

(b) Dividend income

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

Revenue from construction contracts is accounted for by the stage of completion method as describe in Note 2.19.

(d) Rehabilitation works

Revenue from rehabilitation works is recognised and measured by the Group in accordance with FRS 111 and FRS 118 for the services it performs. Costs related to rehabilitation works is recorded as part of SCA.

(e) Interest income

Interest income is recognised using the effective interest method.

(f) Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

(g) Oil and gas income

Service income is recognised upon rendering of services and income from renting of vessels is recognised on an accrual basis by reference to the underlying rental agreements.

Revenue relating to contracts is accounted for based on the percentage of completion method as determined by the proportion of cost incurred todate against the total estimated costs on contracts where the outcome of the contracts can be reliably estimated. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with customer. Accrued contract revenue attributable to the progress of work performed up to the reporting date for which progress billings have not been rendered is accounted for as unbilled revenue in the statements of financial position.

255 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.29 Raw materials, consumables and maintenance expenses

Raw materials, consumables and maintenance expenses represent costs incurred in the production of treated water and maintenance works. These costs are recognised as an expense in the income statement in the year in which the expenses are incurred.

2.30 Income taxes

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

256 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.30 Income taxes (cont’d)

(b) Deferred tax (cont’d)

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

2.31 Segment reporting

For management purposes, the Group is organised into operating segments based on their services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 46 , including the factors used to identify the reportable segments and the measurement basis of segment information.

2.32 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.33 tREASury shares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

257 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

2. Summary of significant accounting policies (cont’d)

2.34 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

2.35 FINANCIAl gurantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognized initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

2.36 Adjustments, restatements and reclassification of previously issued financial statements

IC Interpretation 12: Service Concession Arrangements

The adoption of IC 12 is applied retrospectively and accordingly the comparatives are restated as described in detail in Note 2.2(iii).

A summary of effects of adoption of new accounting standards is disclosed in Note 50.

3. Significant accounting judgements and estimates

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Service Concession Arrangement (“SCA”)

In applying IC Interpretation 12, the Group has made a judgment that the Agreements as discussed in Note 4(b), qualifies under the Intangible Asset model. Refer to the accounting policy on the Company’s SCA for the discussion of Intangible Asset model (see Note 2.2(iii)).

258 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

3. Significant accounting judgements and estimates (cont’d)

3.1 Key sources of estimation uncertainty (cont’d)

(b) Water tariff compensation

Pursuant to the SYABAS Concession Agreement, and as disclosed in Note 4(b), SYABAS is entitled to impose a water tariff review effective from 1 January 2009 based on a formula contained in the SYABAS Concession Agreement. The revised water tariff rates are to be submitted by SYABAS to the State Government to be gazetted. On 31 March 2008, the revised water tariff was submitted by SYABAS but as at the date of the reporting date, the State Government has not gazetted the revised rates. The directors of SYABAS, in consultation with their solicitors, are of the opinion that SYABAS is entitled to the water tariff compensation recognised in the financial statement of RM1,311,051,925 as disclosed in Note 24.

Determining the estimated useful life of the vessel involves considerable amount of judgement in assessing the time length over which future economic benefits embodied in the vessel is to be consumed by the Group. In making such assessment, the directors of the Group have sought professional valuation from industry valuer.

(d) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires estimation of the “value in use” of the CGUs to which the goodwill is allocated. Estimating a value in use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill as at 31 December 2011 was RM532,493,313 (2010: RM514,873,012 ). Further details are disclosed in Note 23.

(e) Deferred tax

Deferred tax assets are recognised for all unused tax losses and capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that canbe recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

The total carrying value of deferred tax assets recognised by the Group as at 31 December 2011 is RM425,211,092 (2010: RM399,546,108).

259 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

3. Significant accounting judgements and estimates (cont’d)

3.1 Key sources of estimation uncertainty (cont’d)

(f) Impairment allowance on trade receivables

The Group evaluates the collectability of trade receivables and records provisions for doubtful receivables based on historical collection pattern. These provisions are based on, amongst other things, comparisons of the relative age of accounts and consideration of actual write-off history. The actual level of receivables collected may differ from the estimated levels of recovery, which could impact operating results positively or negatively. As at 31 December 2011, the Group’s gross trade receivables were RM1,863,241,601 (2010: RM1,395,753,186) and the provision for doubtful receivables was RM6,617,704 (2010: RM6,058,089).

During the financial year, the tariff compensation amounting to RM1,311,051,925 were reclassified tolong term receivable based on the Group’s estimated timeframe to conclude the litigation and the recovery of the receivables for the State Government that had an allowance for impairment of RM75,259,744.

(g) Government grant

Government grant is recognised as income to compensate the Group for the cost of an asset over the useful life of the asset. The assets to which the grant relate to are amortised over the concession period using the unit of water revenue method as disclosed in Note 2.22. Similarly, the grant is amortised over the same basis to compensate the Group for the expenses incurred.

Due to the long remaining concession period, the Group does not expect a significant risk of changes in the projected water revenue which may cause a material adjustment to the amortisation of government grant in the future financial periods.

(h) material litigations

The Group determines whether a present obligation in relation to a material litigation exists at the reporting date by taking into account all available evidence, including, the opinion of the solicitors. The evidence considered includes any additional evidence provided by events after the reporting date. On the basis of such evidence, the Group evaluates if a provision needs to be recognised in the financial statements. Further details of the material litigations involving the Group are disclosed in Note 49.

(i) Percentage of completion of long-term projects

Revenue and costs of projects with extended duration are recognised by reference to the stage of completion of the contract activity as of the reporting date, based on the ratio of project costs incurred to date to the total estimated costs, taking into account the level of physical completion. This percentage of completion method requires management to make reasonably dependable estimates of progress towards completion of projects.

260 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

3. Significant accounting judgements and estimates (cont’d)

3.2 Significant judgement

Recoverability of amount due from State Government

Included in trade receivables is RM1,311,051,925 being the water tariff compensation owing from the State Government for the years 2009, 2010 and 2011 cumulatively. During the financial year 2010, the Directors have instituted legal action claiming for the sum of RM471,642,916 being the compensation due for the period from 1 January 2009 to 31 December 2009 and at the case management held on 28 June 2011, the Kuala Lumpur High Court allowed SYABAS’ application to withdraw with liberty to file afresh by way of a writ of summons with no order as to costs as further disclosed per Note 49(g). As disclosed in Note 49(i), on 8 September 2011, SYABAS filed a Writ and Statement of Claim at the Kuala Lumpur High Court for RM1,054,208,382 being compensation from 1 January 2009 to 31 March 2011. The Directors in assessing the recoverability of this receivables and in consultation with their solicitors, are of the opinion that their case is substantiated by evidence and has merit and hence the amount is likely recoverable from the State Government.

4. Award of concessions

(a) PNSB was awarded the following concessions by the State Government:

(i) under the PCCA dated 22 September 1994, to take over, operate, maintain, manage, rehabilitate and refurbish existing water treatment plants located in Selangor and Federal Territories of Kuala Lumpur from the date of the PCCA to 31 December 2020;

(ii) under the CCOA dated 22 March 1995, to design, construct, operate, maintain and manage the new water treatment facilities, namely SSP 2 from the date of the CCOA to 31 December 2020; and

(iii) On 17 January 1998, PNSB was given the rights by the Federal Government to develop a water treatment plant and its related facilities in Wangsa Maju. The construction work commenced in January 1998 and was completed in July 1998. Subsequent to the completion, PNSB has been managing, operating and maintaining the water treatment plant. The Concession Agreement in relation to this water treatment plant for a period of 30 years ending 17 July 2028 was finalised and executed with the State Government on 31 December 2004 (“Wangsa Maju WTP Concession Agreement”).

On 31 December 2004, PNSB executed the following agreements in relation to the privatisation of the water supply services in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya:

(i) Novation Agreement to the PCCA and the CCOA between the State Government, PNSB and SYABAS, whereby SYABAS shall assume the State Government’s obligations under the PCCA and CCOA in relation to the following, with effect from 1 January 2005:

- purchase and payment of treated water to PNSB;

- the quality of treated water; and

- all operational matters relating to such purchase, payment and quality of treated water.

261 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

4. Award of concessions (cont’d)

(a) PNSB was awarded the following concessions by the State Government: (cont’d)

(ii) Novation Agreement to the Wangsa Maju WTP Concession Agreement between the State Government, PNSB and SYABAS, whereby SYABAS shall assume the State Government’s obligations under the Wangsa Maju WTP Concession Agreement in relation to the following with effect from 1 January 2005:

- purchase and payment of treated water to PNSB;

- the quality of treated water; and

- all operational matters relating to such purchase, payment and quality of treated water.

(iii) Supplemental Agreement (in relation to the PCCA dated 22 September 1994) between the State Government and PNSB. PNSB agrees to a two percent (2%) reduction in the amounts outstanding and owing to PNSB under the PCCA as at 30 June 2004. PNSB further agrees to an eight percent (8%) reduction, with effect from 1 July 2004 in the monthly billings to the State Government under the PCCA.

In addition, PNSB shall be responsible for the management and operation of the Klang Gates, Tasik Subang and Sungai Langat Dams.

(iv) Supplemental Agreement (in relation to the CCOA dated 22 March 1995) between the State Government and PNSB. PNSB agrees to a two percent (2%) reduction in the amounts outstanding and owing to PNSB under the CCOA as at 30 June 2004. PNSB further agrees to an eight percent (8%) reduction, with effect from 1 July 2004 in the monthly billings to the State Government under the CCOA.

PNSB and SYABAS had on 16 August 2007, entered into the following two (2) agreements:

(i) Sungai Lolo Water Treatment Plant (Extension) O&M Agreement [“Sg Lolo WTP (Extension) O&M Agreement”] between the State Government and PNSB in relation to the appointment of PNSB as the Operator to operate, manage, maintain and refurbish the raw water intake and the extended treatment plant situated on a 0.5 acre piece of land located in the District of Hulu Langat, Selangor Darul Ehsan and associated works as more fully described in “Appendix 2” of the Sg Lolo WTP (Extension) O&M Agreement, for a concession period commencing on 1 December 2006 and expiring on 31 December 2034; and

(ii) Novation Agreement to the Sg Lolo WTP (Extension) O&M Agreement between the State Government, PNSB and SYABAS (“Novation Agreement”) in relation to the assumption of all the State Government’s rights, benefits, liabilities and obligations under the Sg Lolo WTP (Extension) O&M Agreement by SYABAS (except on matters relating to land and the maintenance of the raw water quality including matters which are not or are incapable of being exercised by or conferred on SYABAS under the law).

On 7 March 2008, PNSB and SYABAS entered into the following two (2) agreements:

(i) Sungai Sireh Water Treatment Plant O&M Agreement [“Sg Sireh WTP O&M Agreement”] between the State Government and PNSB in relation to the appointment of PNSB as the Operator to operate, manage and maintain the raw water intake and the treatment plant situated on a 6.72 acres piece of land located beside a canal near Sungai Sireh, Tanjung Karang in the District of Kuala Selangor, Selangor Darul Ehsan and associated works pursuant to Clause 3(a) (vi) of the Concession Agreement dated 15 December 2004 between the Federal Government, the State Government and SYABAS, for a concession period of twenty seven (27) years, commencing on 1 April 2007 and expiring on 30 April 2034; and 262 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

4. Award of concessions (cont’d)

(a) PNSB was awarded the following concessions by the State Government: (cont’d)

On 7 March 2008, PNSB and SYABAS entered into the following two (2) agreements: (cont’d)

(ii) Novation Agreement to the Sg Sireh WTP O&M Agreement between the State Government, PNSB and SYABAS in relation to the assumption of all the State Government’s rights, benefit, liabilities and obligations under the Sg Sireh WTP O&M Agreement by SYABAS (save and except on matters related to land and the maintenance of the raw water quality including matters which are not or are incapable of being exercised by or conferred on SYABAS under the law).

(b) On 15 December 2004, SYABAS executed a Concession Agreement with the Federal Government and the State Government in relation to the privatisation of the water supply services in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya. SYABAS is granted the right and authority by the Federal Government and the State Government to undertake the following:

(i) the supply and distribution of treated water to consumers in the Distribution Area;

(ii) the purchase of treated water from the three (3) water treatment operators, namely PNSB, SPLASH and ABASS;

(iii) the taking over, upgrading, management, maintenance and protection of all water supply facilities within the Distribution Area;

(iv) the design, construction and completion of new water supply facilities works and the operation, maintenance and protection of the same; and

(v) the right to demand, collect and retain tariff for the supply and distribution of treated water and charges for the sale, rental or installation of water supply facilities, as gazetted by the Federal Government or the State Government.

This Concession Agreement took effect on 1 January 2005, for a period of 30 years ending 31 December 2034.

(c) LUWEI was incorporated on 28 January 2005 to undertake the Lushan County Water Supply Project for a concession period of 30 years commencing from 1 May 2009. Under the concession, LUWEI is to invest, finance, construct, design, operate and maintain a 50,000 m3 per day water treatment plant in Lushan County, Henan Province, China. The Group completed the acquisition of LUWEI on 19 August 2008.

(d) XINNUO was incorporated on 7 April 2008 to undertake the Yangxin County Trade Centre Wastewater Treatment Project for a concession period of 28 years commencing from 8 November 2007. Under the concession, XINNUO is to invest, finance, construct, design, operate and maintain a 30,000 m3 per day wastewater treatment plant in Laodian Village, Yangxin County, Shandong Province, China. The Group completed the acquisition of XINNUO on 2 July 2008.

(e) Hebei Sino was incorporated on 16 September 2009 to undertake the Yuanshi County Industrial Water Supply Project for a concession period of 30 years commencing from 31 December 2009. Under the concession, Hebei Sino is to invest, finance, design, construct, operate and maintain a 10,000 m3 per day distribution of water to the Industrial Water Supply Construction, and to provide services and charge fee to the users.

263 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

5. Revenue

Group Company 2011 2010 2011 2010 (restated) RM RM RM RM

Supply and distribution of treated water to consumers 1,532,897,384 1,488,384,376 – – Water tariff compensation 458,150,923 418,717,266 – – Oil & gas revenue 289,529,044 – – – Construction revenue 310,931,740 148,421,452 – –

2,591,509,091 2,055,523,094 – –

(a) Supply and distribution of treated water to consumers

Mainly consist of the supply and distribution of treated water to consumers in the Distribution Area by SYABAS, with effect from 1 January 2005.

(b) Water tariff compensation

The amount relates to water tariff compensation for the revised water tariff effective from 1 January 2009. The amount is determined by the directors of SYABAS based on the terms of the SYABAS Concession Agreement as disclosed in Note 3.1(b).

The claim for water tariff compensation had been included as amount owing by the State Government under trade receivables as at 31 December 2011.

Oil and gas revenue relates to service income from renting vessels and revenue from contracts and recognised in accordance with note 2.28 (g).

(d) Construction revenue

Construction revenue relates to revenue recognised in accordance with FRS 111 in respect of service under the concession arrangements. Construction revenue is recognised based on the percentage of completion method during the construction phase.

264 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

6. Profit before tax

The following items have been included in arriving at profit before tax:

(a) other income

Group Company 2011 2010 2011 2010 (restated) RM RM RM RM

Amortisation of: - deferred government grant (Note 35(a)) (4,199,561) (4,029,203) – – - government grant (Note 35(b) & (c)) (3,667,198) (2,715,478) – – Accretion of interest on long term receivable (Note 24(e)) (12,134,199) (13,690,245) – – Interest income: - Junior Notes A – – (49,792,877) (55,534,206) - RCULS (Note 21) – – (11,806,289) (10,912,812) - BAIDS – – (8,895,000) – Finance income from operating financial asset (188,978) (16,297) – – Profit earned from deposits (44,289,735) (37,435,956) (5,451,384) (4,886,716) Income from liquidated ascertained damages from contractors (109,200) (257,424) – – Rental income from land and building (325,700) (242,430) – – Rental income from investment property – – (900,056) (817,176) Unrealised foreign exchange gain – – (3,135,213) (185,247) Income from property developers (Note 6(a)(i)) (43,780,035) (42,688,047) – – Gain on extinguishment of debts in regards to JNA (Note 31(d)) (155,554,087) – – – Adjustment on trade and other payables (Note 32(f)) (19,680,001) – – – Negative goodwill (Note 17(c)) (5,333,824) – – – (Gain)/loss on disposal of BAIDS (6,740,180) – 5,772,689 – Reconnection charges (7,092,172) (6,087,660) – –

(i) Income from property developers represents contributions by developers to improve and upgrade the distribution system.

265 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

6. Profit before tax (cont’d)

The following items have been included in arriving at profit before tax:

(b) other expenses

Group Company 2011 2010 2011 2010 (restated) RM RM RM RM

Auditors’ remuneration (Note 7) Auditors of the Company - Statutory audit 521,000 475,000 42,000 42,000 - Others 572,860 505,881 14,000 156,650

Other auditors - Statutory audit 470,929 377,387 – – - Others 7,126 9,297 – –

1,571,915 1,367,565 56,000 198,650 others Concession fees 1,000,000 1,000,000 – – Non-Executive Directors’ remuneration (Note 9) 406,000 395,000 406,000 395,000 Impairment loss on other receivables (Note 24) 9,142,903 – 9,130,501 – Bad debt written off 14,919,957 3,847,013 – – Gain from disposal of available-for-sales investments (Note 27) – (1,907,773) – – Bad debts recovered (4,008,696) (5,638,887) – – Reversal of allowance for impairment of trade receivables (Note 24(a)) (518,244) (7,900) – – Property, plant and equipment written off 114,541 55,143 – – Impairment loss on: - property, plant and equipment (Note 13) 7,472,794 461,748 – – - investment property (Note 14) – – – 452,543 - joint venture (Note 19) 4,029,018 550,000 2,716,194 550,000 - goodwill (Note 23) 4,137,344 – – – Impairment of available-for-sales investments (Note 27) 591,207 – – –

266 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

6. Profit before tax (cont’d)

(b) other expenses (cont’d)

Group Company 2011 2010 2011 2010 (restated) RM RM RM RM

others (cont’d) Operating lease: - minimum lease payments on buildings 5,097,927 4,648,649 101,357 – - minimum lease payments on motor vehicle and equipment 6,859,786 7,268,115 – – Unrealised foreign exchange loss 9,001,163 322,229 – 6,509,712 Impairment of long term trade receivables (Note 24) 75,259,744 – – – Provision for foreseeable losses on construction contracts – 3,325,994 – – Realised foreign exchange loss 2,783,180 109,286 – 22,799 Inventory written off 2,422,802 44,510 – – Water royalty 15,785,655 15,522,023 – – Loss/(gain) on disposal of property, plant and equipment 991,439 (251,299) – –

Group Company 2011 2010 2011 2010 RM RM RM RM Restated Restated

Depreciation of property, plant and equipment (Note 13) - Others 26,791,482 30,242,079 129,189 211,369 - Depreciation of investment property (Note 14) – – 645,373 639,475

26,791,482 30,242,079 774,562 850,844

Amortisation of Service concession assets (Note 16) 149,514,285 134,906,387 – –

176,305,767 165,148,466 774,562 850,844

267 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

7. Auditors’ remuneration

Group 2011 2010 RM RM

Auditors of the Company (Note 6(b)) Statutory audit 521,000 475,000 Fees for tax compliance work 180,315 112,600 Other non-audit related services 392,545 393,281

1,093,860 980,881

other auditors (Note 6(b))

Statutory audit 470,929 377,387 Fees for tax compliance work 7,126 9,297

478,055 386,684

1,571,915 1,367,565

Company 2011 2010 RM RM

Auditors of the Company (Note 6(b)) Statutory audit 42,000 42,000 Fees for tax advisory compliance work 14,000 15,000 Other non-audit related services – 141,650

56,000 198,650

8. Employee benefits expense

Group 2011 2010 RM RM

Wages, salaries and bonuses 192,081,515 172,612,442 Defined contribution retirement plan (Note 8(a)) 26,827,452 22,317,983 Defined benefit plan (Note 33) 4,030,312 3,645,421 Other staff related expenses 46,976,772 36,886,022

269,916,051 235,461,868

Included in employee benefits expenses of the Group are the Executive Directors’ remuneration (excluding benefits-in- kind) amounting to RM16,846,778 (2010: RM15,400,524) as further disclosed in Note 9.

268 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

8. Employee benefits expense (cont’d)

The number of persons, including the Company’s Executive Directors, employed by the Group at the end of the financial year was 4,427 (2010: 4,266).

(a) The Group contributes to EPF, the national defined contribution plan. When the contributions have been paid, the Group has no further payment obligations.

9. Directors’ remuneration

The details of remuneration receivable by directors of the Company during the year are as follows:

Group Company 2011 2010 2011 2010 RM RM RM RM

Executive: Wages, salaries and bonus 10,651,635 11,199,975 – – Defined contribution retirement plan 1,777,361 1,802,413 – – Leave passage 663,582 739,768 – – Other staff related expenses 3,754,200 1,658,368 – –

Total executive directors’ remuneration (excluding benefits-in-kind) (Note 8) 16,846,778 15,400,524 – – Estimated money value of benefits-in-kind 405,646 180,348 – –

Total executive directors’ remuneration (including benefits-in-kind) 17,252,424 15,580,872 – –

Non-Executive: Allowances 256,000 245,000 256,000 245,000 Leave passage 150,000 150,000 150,000 150,000

Total non-executive directors’ remuneration (Note 6(b)) 406,000 395,000 406,000 395,000

Total directors’ remuneration (Note 39 (b)) 17,658,424 15,975,872 406,000 395,000

269 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

9. Directors’ remuneration (cont’d)

The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:

Number of directors 2011 2010

RM100,001 to RM200,000 3 3 RM300,001 to RM400,000 1 1 RM500,001 to RM600,000 – 1 RM700,001 to RM800,000 1 1 RM900,001 to RM1,000,000 – 1 RM1,000,001 to RM1,100,000 1 – RM1,100,001 to RM1,200,000 1 – RM1,800,001 to RM1,900,000 1 – RM1,900,001 to RM2,000,000 – 1 RM2,300,001 to RM2,400,000 – 1 RM3,700,000 to RM3,800,000 1 – RM6,800,001 to RM6,900,000 – 1 RM8,300,001 to RM8,400,000 1 –

10. Finance costs

Group Company 2011 2010 2011 2010 (restated) RM RM RM RM

Finance cost on Islamic banking borrowings - BAIDS 50,046,183 57,069,114 – – - BAMTN 126,806,474 125,875,247 – – Finance cost on conventional borrowings - Government Support Loan 1,454,353 1,670,060 – – - RUN 49,987,557 56,284,659 49,792,877 55,552,384 - JNA 4,156,562 – – – - RM410 million and RM250 million Term Loans 37,308,502 37,260,875 – – - RUBs 38,603,249 38,168,877 – – - RCULS 1,720,324 1,585,402 – – - RPS 19,326,865 18,423,375 – – - MOF loan RM110 million 52,497 – – – - USD31 million term loan 894,764 – – – - Accretion of finance costs in RPS (Note 31(m)) 6,381,330 4,521,490 – –

270 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

10. Finance costs (cont’d)

Group Company 2011 2010 2011 2010 (restated) RM RM RM RM

Accretion of interest on service concession obligations 211,930,000 218,710,000 – – Late payment interest to water treatment operators 72,652,309 31,551,478 – – Interest expense on obligation under finance leases 874,807 733,594 – – Bank charges 2,253,009 1,008,591 13,633 49,652 Other interest expenses 10,792 138,275 – –

Total finance costs 624,459,577 593,001,037 49,806,510 55,602,036

11. Income tax expense

Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2011 and 2010 are:

Group Company 2011 2010 2011 2010 (restated) RM RM RM RM

Income statements:

Current income tax - Current financial year 58,463,114 24,359,989 1,762,427 1,134,208 - Foreign income tax 78,966 110,941 76,758 61,558 - Overprovision in respect of previous years (1,159,406) (3,213,308) (121,568) (46,760)

57,382,674 21,257,622 1,717,617 1,149,006

Deferred income tax (Note 36) - Origination and reversal of temporary differences (46,707,820) (36,255,049) 2,951,572 2,728,203 - Over provision in respect of previous years (2,115,480) (2,071,355) – –

(48,823,300) (38,326,404) 2,951,572 2,728,203

Income tax recognised in profit or loss 8,559,374 (17,068,782) 4,669,189 3,877,209

271 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

11. Income tax expense (cont’d)

Reconciliation between tax expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2011 and 2010 are as follows:

Group Company 2011 2010 2011 2010 (restated) RM RM RM RM

(Loss)/profit before tax (75,162,827) (108,658,338) 8,194,756 3,694,012

Taxation at Malaysian statutory tax rate of 25% (2010: 25%) (18,790,707) (27,164,585) 2,048,689 923,503 Different tax rates in other jurisdictions (5,709,941) (270,066) 36,121 28,968 Income not subject to tax (1,392,917) – – – Expenses not deductible for tax purposes 34,819,000 14,901,315 2,705,947 2,971,498 Over provision of current tax in prior years (1,159,406) (3,213,308) (121,568) (46,760) Over provision of deferred tax in prior years (2,115,480) (2,071,355) – – Deferred tax assets not recognised 2,908,825 749,217 – –

Income tax expense recognised in profit or loss 8,559,374 (17,068,782) 4,669,189 3,877,209

The corporate tax rate applicable to the Singapore subsidiary of the Group was reduced to 17% for the year of assessment 2010 onwards from 18% for the year of assessment 2009. Under the relevant PRC income tax law, the PRC companies of the Group are subject to corporate income tax rate of 25% on their respective taxable income.

272 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

12. Earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. However, there is no dilution in earnings per share.

The following tables reflect the profit and share data used in the computation of basic earnings per share for the years ended 31 December:

Group 2011 2010 (restated) RM RM

Profit/(loss) net of tax attributable to owners of the parent 9,319,631 (90,925,524)

Weighted average number of ordinary shares 409,106,095 409,106,095

Basic earnings per share 0.02 (0.22)

273 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

13. Property, plant and equipment

Long term Plant Computers, Furniture Construction Freehold leasehold and software and and Motor in land land Buildings vESSEl equipment equipment fittings vehicles Renovations Signage PRogress Total RM RM RM RM RM RM RM RM RM RM RM RM

Cost or valuation: At valuation At cost

Group

At 1 January 2010, restated 2,557,700 79,250,223 41,413,344 – 13,726,873 60,303,997 13,367,739 55,421,901 92,828,142 12,837,844 7,447,285 379,155,048 Additions – 14,803,891 2,849,624 – 3,696,987 3,371,036 1,525,965 14,507,979 1,402,358 18,060 – 42,175,900 Reclassification – – – – – (21,375) 21,375 – – – – – Disposals – – – – (30,400) (250,218) – (472,128) – – – (752,746) Write off – – – – – (260,542) – (17,837) – – – (278,379) Exchange difference – – (14,335) – (40,261) (16,137) (11,498) (20,420) (6,865) – – (109,516)

At 31 December 2010 2,557,700 94,054,114 44,248,633 – 17,353,199 63,126,761 14,903,581 69,419,495 94,223,635 12,855,904 7,447,285 420,190,307

At 1 January 2011 As restated 2,557,700 94,054,114 44,248,633 – 17,353,199 63,126,761 14,903,581 69,419,495 94,223,635 12,855,904 7,447,285 420,190,307 Additions – – – – 6,728,783 4,592,685 983,364 11,656,300 279,798 2,480 1,013,290 25,256,700 Acquisition of subsidiaries – – – 146,970,752 – 747,267 128,000 127,795 476,688 – – 148,450,502 Reclassification – – – – – 13,670 – – (13,670) – – – Disposals – – – – – (64,151) – (3,225,761) – – – (3,289,912) Write off – – – – (38,790) (1,514,989) (8,118) – – – – (1,561,897) Revaluation surplus 242,300 91,869,250 5,712 – – – – – – – – 92,117,262 Elimination of accumulated depreciation on revaluation – (5,263,364) (2,247,924) – – – – – – – – (7,511,288) Exchange difference – – (5,190) 1,592,724 (46) (5,167) 4,008 25,236 11,395 – – 1,622,960

At 31 December 2011 2,800,000 180,660,000 42,001,231 148,563,476 24,043,146 66,896,076 16,010,835 78,003,065 94,977,846 12,858,384 8,460,575 675,274,634

274 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

13. Property, plant and equipment

Cost or valuation: At valuation At cost

Group

At 31 December 2010 2,557,700 94,054,114 44,248,633 – 17,353,199 63,126,761 14,903,581 69,419,495 94,223,635 12,855,904 7,447,285 420,190,307

At 31 December 2011 2,800,000 180,660,000 42,001,231 148,563,476 24,043,146 66,896,076 16,010,835 78,003,065 94,977,846 12,858,384 8,460,575 675,274,634

275 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

13. Property, plant and equipment (cont’d)

Cost or valuation: At valuation At cost

Group

Accumulated Depreciation & Accumulated Impairment:

At 1 January 2010, restated – 3,355,407 1,954,034 – 7,842,915 47,548,471 7,460,245 27,032,251 45,982,158 3,666,255 – 144,841,736 Depreciation charge for the year (Note 6(c)) – 908,328 991,600 – 1,349,487 7,007,795 2,251,342 6,700,141 9,701,760 1,331,626 – 30,242,079 Impairment (Note 6(b)) – – 452,543 – 9,205 – – – – – – 461,748 Reclassification – – – – – (15,676) 15,676 – – – – – Disposals – – – – (5,259) (204,357) – (222,877) – – – (432,493) Write off – – – – – (216,961) – (6,275) – – – (223,236) Exchange difference – – (2,066) – (8,541) (4,886) (2,494) (4,579) (831) – – (23,397)

At 31 December 2010 – 4,263,735 3,396,111 – 9,187,807 54,114,386 9,724,769 33,498,661 55,683,087 4,997,881 – 174,866,437

At 1 January 2011 As restated – 4,263,735 3,396,111 – 9,187,807 54,114,386 9,724,769 33,498,661 55,683,087 4,997,881 – 174,866,437 Depreciation charge for the year (Note 6(c)) – 999,629 1,048,963 91,931 1,168,203 6,400,546 2,106,155 4,828,674 8,814,739 1,332,642 – 26,791,482 Acquisition of subsidiaries – – – 23,114,778 – 455,680 9,840 115,016 476,688 – – 24,172,002 Reclassification – – – – – (2,506) – – 2,506 – – – Disposals – – – – – (58,022) – (2,009,761) – – – (2,067,783) Write off – – – – (38,622) (1,401,888) (6,846) – – – – (1,447,356) Impairment (Note 6(b)) – – – – – – – – – – 7,472,794 7,472,794 Elimination of accumulated depreciation on revaluation – (5,263,364) (2,247,924) – – – – – – – – (7,511,288) Exchange difference – – (16,838) 251,491 (64,361) (9,697) (1,633) 8,240 2,113 – – 169,315

At 31 December 2011 – – 2,180,312 23,458,200 10,253,027 59,498,499 11,832,285 36,440,830 64,979,133 6,330,523 7,472,794 222,445,603

Net carrying amount:

At 31 December 2010 2,557,700 89,790,379 40,852,522 – 8,165,392 9,012,375 5,178,812 35,920,834 38,540,548 7,858,023 7,447,285 245,323,870

At 31 December 2011 2,800,000 180,660,000 39,820,919 125,105,276 13,790,119 7,397,577 4,178,550 41,562,235 29,998,713 6,527,861 987,781 452,829,031

276 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

13. Property, plant and equipment (cont’d)

Cost or valuation: At valuation At cost

Group

Accumulated Depreciation & Accumulated Impairment:

At 31 December 2010 – 4,263,735 3,396,111 – 9,187,807 54,114,386 9,724,769 33,498,661 55,683,087 4,997,881 – 174,866,437

At 31 December 2011 – – 2,180,312 23,458,200 10,253,027 59,498,499 11,832,285 36,440,830 64,979,133 6,330,523 7,472,794 222,445,603

Net carrying amount:

At 31 December 2010 2,557,700 89,790,379 40,852,522 – 8,165,392 9,012,375 5,178,812 35,920,834 38,540,548 7,858,023 7,447,285 245,323,870

At 31 December 2011 2,800,000 180,660,000 39,820,919 125,105,276 13,790,119 7,397,577 4,178,550 41,562,235 29,998,713 6,527,861 987,781 452,829,031

277 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

13. Property, plant and equipment (cont’d)

Long term leasehold land Renovations Total RM RM RM At valuation At cost

Company

At 1 January 2010 and 31 December 2010 8,716,411 892,010 9,608,421

At 1 January 2011 8,716,411 892,010 9,608,421 Revaluation surplus 12,108,879 – 12,108,879 Elimination of accumulated depreciation on revaluation (1,225,290) – (1,225,290)

At 31 December 2011 19,600,000 892,010 20,492,010

Accumulated depreciation:

At 1 January 2010 1,049,201 727,541 1,776,742 Depreciation charge for the year (Note 6(c)) 88,045 123,324 211,369

At 31 December 2010 1,137,246 850,865 1,988,111

At 1 January 2011 1,137,246 850,865 1,988,111 Depreciation charge for the year (Note 6(c)) 88,044 41,145 129,189 Elimination of accumulated depreciation on revaluation (1,225,290) – (1,225,290)

At 31 December 2011 – 892,010 892,010

Net carrying amount:

At 31 December 2010 7,579,165 41,145 7,620,310

At 31 December 2011 19,600,000 – 19,600,000

278 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

13. Property, plant and equipment (cont’d)

Assets pledged as security

Property, plant and equipment of the subsidiaries, PNSB, SYABAS and SINO, with total carrying amount of RM270,713,952 (2010: RM207,081,803) and RM40,158,346 (2010: RM47,600,740) respectively have been charged as security for borrowings as disclosed in Note 31(b), Note 31(e) and Note 31(f).

Leasehold land of the Group with a carrying value of RM161,060,000 (2010: RM82,211,214) has been charged as security for borrowings as disclosed in Note 31(b).

Assets held under finance leases

During the financial year, the Group acquired property, plant and equipment at aggregate costs of RM25,256,700 (2010: RM42,175,900) of which RM11,059,773 (2010: RM13,555,688) were acquired by means of finance leases.

The carrying amount of property, plant and equipment of the Group held under finance leases at the reporting date were:

Group 2011 2010 RM RM

Motor vehicles Cost 35,221,816 33,938,118 Accumulated depreciation (7,223,189) (9,650,949)

Net carrying amount 27,998,627 24,287,169

Impairment of property, plant and equipment

In the previous financial year, the Group impaired the value of the building in Singapore with a carrying amountof RM10,011,786 by RM452,543 and plant and equipment in China carried at RM7,320,301 by RM9,205. Impairment provided for building in Singapore is in accordance with the external valuer’s report dated 28 December 2010 that valued the building using Direct Comparison Method at RM9,559,243.

During the current financial year, the Group has assessed its construction in progress in relation to the proposed 30–storey building. The cost in relation to this consist of preliminary and planning expenses. The Group does not have any concrete plans in the near future for the said construction yet. Hence the Group has decided to recognise an impairment loss of RM7,472,794 (2010: RMNil) in “other expenses” line item of Consolidated Income Statement for the financial year ended 31 December 2011.

279 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

13. Property, plant and equipment (cont’d)

Revaluation of freehold land, leasehold land and buildings

Freehold land, leasehold land and buildings have been revalued at 31 December 2011 based on valuations performed by accredited independent valuers. The valuations are based on the comparison and cost or contractor’s method that makes reference to similar properties which have been sold.

Details of the values is disclosed in Note 47(r).

If the freehold, leasehold and buildings were measured using the cost model, the carrying amounts would have been as follows:

Group 2011 2010 RM RM

Freehold land at 31 December: - Cost and net carrying amount 2,557,700 2,557,700

Leasehold land at 31 December: - Cost 94,054,114 94,054,114 - Accumulated depreciation (5,263,364) (4,263,730)

- Net carrying amount 88,790,750 89,790,384

Buildings at 31 December: - Cost 32,982,213 32,982,213 - Accumulated depreciation (2,247,924) (1,850,548)

- Net carrying amount 30,734,289 31,131,665

122,082,739 123,479,749

Company 2011 2010 RM RM

Leasehold land at 31 December: - Cost 8,716,411 8,716,411 - Accumulated depreciation (1,225,290) (1,137,245)

- Net carrying amount 7,491,121 7,579,166

280 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

14. Investment property

Company 2011 2010 RM RM

building At net carrying value: At 1 January 9,559,243 10,608,788 Addition – 42,473 Impairment (Note 6(b)) – (452,543) Depreciation charge for the year (Note 6(c)) (645,373) (639,475)

At 31 December 8,913,870 9,559,243

Fair value 10,000,000 9,559,243

Direct operating expenses in relation to the investment property are immaterial to the Group.

Fair value of investment property

Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued.

In the previous financial year, the Group impaired the value of the building in Singapore rented to Sino was carried at RM10,011,786 by RM452,543. Impairment provided is in accordance with the external valuer’s report dated 28 December 2010 that valued the building using Direct Comparison Method at RM9,559,243.

15. oPERAting financial assets

The Group has concession arrangements with the various governing bodies or agencies of the government of the People’s Republic of China (the “grantor”) to operate water/wastewater treatment plants. Under the concession agreements, the Group will construct and operate the plants and water distribution networks for Concession Periods of between 25 to 30 years and transfer the plants to the grantors at the end of the Concession Periods. Such concession arrangements fall within the scope of IC Interpretation 12, Service Concession Arrangements. Under IC 12, the revenue for the construction services provided under the arrangements and the corresponding financial assets and/or intangible assets arising are recognised based on the percentage of completion method during the construction phase. The costs for the construction services are included in the “Construction contract expenses” line item in the profit or loss.

281 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

16. Service concession assets and obligations

Service Concession Assets

The movements in this account follow:

Group 2011 2010 (restated) RM RM

Cost At 1 January,restated 8,271,004,036 8,099,103,738 Additions 140,079,491 174,524,923 Written off (34,411) – Net exchange differences 2,177,387 (2,624,625)

At 31 December 8,413,226,503 8,271,004,036

Accumulated amortisation At 1 January,restated 586,001,590 451,197,496 Charge for the year (Note 6(c)) 149,514,285 134,906,387 Written off (14,156) – Net exchange differences 132,598 (102,293)

At 31 December 735,634,317 586,001,590

Net carrying amount 7,677,592,186 7,685,002,446

Service concession assets consist of the fair value of the service concession obigations at drawdown date and construction costs related to rehabilitation works performed by the Group pursuant to the Concession Agreement.

Capital work in progress of rehabilitation work comprise fair value of the consideration receivable for the service delivered during the constuction stage, at 5% mark-up and 14% mark-up on the costs incurred for projects involve consultants and in-house projects respectively.

The Group’s service concession assets include borrowing costs arising from the borrowings for the purpose of the NRW projects. Details of borrowings are disclosed in Note 31. During the financial year, the net borrowing costs capitalised in capital work-in progress amounted to RM414,219 (2010: RM103,719).

Service Concession Obligations

Service concession obligations of the sum of the following:

(a) Annual charges and land use charges payable to State Government; and

(b) fixed capacity charges payable to water treatment operators.

282 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

16. Service concession assets and obligations (cont’d)

Service Concession Obligations (cont’d)

Service concession obligations are analysed as follows:

Group 2011 2010 (restated) RM RM Analysed as: Current 145,497,500 114,760,000

Non-current: Later than 1 year but not later than 2 years 177,594,814 145,497,500 Later than 2 years but not later than 5 years 688,002,319 793,334,110 Later than 5 years 3,158,444,040 3,231,408,922

4,024,041,173 4,170,240,532

4,169,538,673 4,285,000,532

17. Investment in subsidiaries

Company 2011 2010 RM RM

unquoted shares, at costs At 1 January 463,110,960 453,907,005 Acquisition of subsidiary – 2 Subscription of additional equity interest in SINO (Note 17(a)) – 3,303,953 Subscription of additional equity interest in POG (Note 17(e)) – 5,900,000 Incorporation of PNIPPL (Note 17(d)) 7,080 –

At 31 December (Note 46) 463,118,040 463,110,960

283 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

17. Investment in subsidiaries (cont’d) Proportion (%) of ownership interest Name Principal Activities 2011 2010

Incorporated in Malaysia PNSB # *** Operation, maintenance, management, 100 100 construction, rehabilitation and refurbishment of water treatment facilities

SYABAS *** Supply and distribution of treated water 70 70 within Selangor and the Federal Territories of Kuala Lumpur and Putrajaya

Puncak Niaga (India) Sdn Bhd * Dormant 100 100

Puncak Research Centre Sdn Bhd * Research and development and technology 100 100 development for water, wastewater and environment sectors

Puncak Seri (M) Sdn Bhd * Dormant 100 100

NS Water System Sdn Bhd * Dormant 100 100

Puncak Oil & Gas Sdn Bhd *** Exploration for the production of oil and 100 100 gas and other materials and the provision of offshore and onshore engineering works

Incorporated in Singapore SINO ** Investment in water and wastewater 98.65 98.65 projects in PRC

PNOC ** Investment in water, wastewater, 100 100 solid waste, environmental and oil and gas in the Asian countries

Incorporated in India Puncak Niaga Infrastructures Carry out activities of infrastructures, 100 – and Projects Private Limited * constructions and other projects in India

PNIP Pte Ltd * Dormant 99.99 – Incorporated in Malaysia Subsidiaries of PNSB Ideal Water Resources Sdn Bhd * Ceased operations 100 100 Unggul Raya (M) Sdn Bhd * Ceased operations 100 100 Incorporated in Malaysia Subsidiary of SYABAS PUAS *** Ceased operations 70 70

284 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

17. Investment in subsidiaries (cont’d) Proportion (%) of ownership interest Name Principal Activities 2011 2010

Incorporated in PRC Subsidiaries of SINO LUWEI ** Treatment and distribution of water 90.11 86.73 and related services XINNUO ** Treatment of wastewater and 98.65 98.65 related services Sino Water (Shanghai) ** Consultancy services for water and 98.65 98.65 wastewater projects Luancheng** Treatment and distribution of water 78.92 78.92 and related services Hebei Sino** Distribution of water to industrial areas 78.92 78.92 Incorporated in Malaysia Subsidiary of POG GOM Resources Sdn Bhd* Provide offshore personnel services and renting of machinery and vessels 100 – KGL Ltd * Offshore leasing of vessels on bareboat basis 100 –

# Subsidiary consolidated using merger accounting method * Audited by firms other than Ernst & Young ** Audited by member firms of Ernst & Young Global in the respective countries *** Audited by Ernst & Young, Malaysia

(a) Subscription of additional equity interest in subsidiary, LUWEI by SINO

Sino had invested an additional amount of USD1,120,000 in LUWEI, its 83% owned limited liabilty subsidiary incorporated in Lushan County, Henan Province, PRC under the China Company Law.

The Company was notified on 5 August 2010 by LUWEI that the regulatory authorities of the PRC had issued the “Enterprise Legal Representative Business Licence” dated 23 July 2010 approving the increase of the paid up registered capital of LUWEI to USD3,870,000 from USD2,750,000 previously.

Accordingly, LUWEI became a 87.92% owned subsidiary of Sino with a total investment totalling USD3,402,500.

The additional investment by SINO had thus diluted the equity interest of the minority interest in LUWEI. The dilution has resulted in an additional goodwill on consolidation or RM68,112.

The Company was notified on 26 July 2011 by Luwei Co. Ltd that the regulatory authorities of the People’s Republic of China had issued the “Enterprise Legal Representative Business Licence” dated 25 July 2011 approving the increase of the paid up registered capital of Luwei Co. Ltd to USD5,400,000.00 from USD3,870,000.00 previously.

Accordingly, Luwei became a 91.34% owned subsidiary of Sino Water Pte Ltd on 25 July 2011 with a total investment of USD4,932,500.

285 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

17. Investment in subsidiaries (cont’d)

(b) Acquisition of GOM Resources, by POG

On 23 May 2011, POG had entered into a Sale and Purchase Agreement with Global International Vessels Ltd (“GIVL”) to acquire 40% interest in GOM Resources for a purchase consideration of RM24,035,760.

On the same date, GIVL and Global Asia Pacific Industries Sdn. Bhd. (“GAPI”) who hold 11% and 49% respectively of the remaining interest in GOM Resources have unconditionally and irrevocably granted to POG the rights to purchase from GIVL and GAPI the remaining shares of GOM Resources at the exercise price during the option period. The option period is one (1) year commencing from 1 July 2011.

The option granted to POG to purchase the remaining interest in GOM Resources equates to POG having a control and the option gives a potential voting rights to POG. Hence, upon completion of the acquisition on 30 June 2011, GOM Resources became a subsidiary of POG.

The fair value of identifiable assets and liabilities of GOM Resources as at date of acquisition were:

Carrying Fair valuE Amount RM RM

Property, plant and equipment 438,000 438,000 Trade and other receivables 2,641,430 2,641,430 Other current assets 149,405,609 149,405,609 Inventories 5,320,418 5,320,418 Cash and cash equivalents 19,536,076 19,536,076

177,341,533 177,341,533

Trade and other payables (168,591,480) (168,591,480) Deferred tax liabilities (129,000) (129,000) Income tax payable (1,956,860) (1,956,860)

(170,677,340) (170,677,340)

Net assets 6,664,193 6,664,193

Total cost of business combination

The total cash of the business combination is as follows: RM

Cash paid 24,035,760 Less: Cash and cash equivalents of subsidiary acquired (19,536,076)

Net cash outflow on acquisition 4,499,684

286 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

17. Investment in subsidiaries (cont’d)

(b) Acquisition of GOM Resources, by POG (cont’d)

Goodwill arising on acquisition

Net identifiable assets 6,664,193 Less: Non-controlling interests (3,998,516)

Group’s interest in fair value of net identifiable assets 2,665,677 Goodwill on acquisition (Note 23) 21,370,083

Cost of business combination 24,035,760

Goodwill on acquisition is attributable to the significant revenue stream that is expected to arise subsequent to the acquisition as well as the oil and gas contracts awarded to GOM Resources. At the date of this report, it has yet to be determined whether the oil and gas contracts do meet the criteria for recognition as a seperable intangible asset under FRS 138.

POG has established a project team to carry out the Purchase Price Allocation (“PPA”) exercise in compliance with FRS3 Business Combinations. The one year period for the PPA exercise ends on 29 June 2012 (one year from the date on completion of the acquisition, i.e. 30 June 2011).The determination of the oil and gas contracts which meet the criteria for recognition as an intangible asset under FRS 138 will only be known upon completion of the PPA exercise.

Impact of acquisition in Statement of comprehensive income

From the date of acquisition, GOM Resources has contributed, before elimination of intragroup transactions, RM283,860,112 and RM5,260,390 respectively to the Group’s revenue and profit net of tax. If the combination had taken place at the beginning of the financial year, revenue and profit net of tax contributed by GOM Resources, before elimination of intragroup transactions would have been RM484,540,928 and RM10,384,862.

Provisional accounting of acquisition

As at 31 December 2011, the fair value of GOM Resources’ identifiable assets and liabilities were determined on a provisional basis as the results of the PPA exercise have not been finalised. Goodwill arising from this acquisition will be adjusted accordingly on a retrospective basis when the purchase price allocation exercise is finalised.

Acquisition of non-controlling interest in GOM Resources

On 23 September 2011, POG exercised its option to purchase the remaining 11% and 49% equity interest in GOM Resources from GIVL and GAPI respectively for a total consideration of RM41,475,000 and the transaction was completed on 28 September 2011. As a result of this acquisition, GOM Resources became a wholly-owned subsidiary of POG.

287 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

17. Investment in subsidiaries (cont’d)

(b) Acquisition of GOM Resources, by POG (cont’d)

Acquisition of non-controlling interest in GOM Resources (cont’d)

The difference between the consideration and the book value of the interest acquired is reflected in equity as premium paid on acquisition of non-controlling interest as follow:

Additional interest acquired 9,935,383 Less: Consideration paid (41,475,000)

Premium paid on acquisition of non-controlling interest (31,539,617)

On 23 May 2011, POG had entered into a Sale and Purchase Agreement with GIVL to acquire 40% interest in KGL for a purchase consideration of RM45,811,280. Upon completion of the acquisition, GIVL assigned 40% of the shareholder’s loan (RM39,422,841) to POG.

On the same date, GIVL who holds the remaining 60% interest in KGL has unconditionally and irrevocably granted to POG the rights to purchase from GIVL the remaining shares of KGL at the exercise price during the option period. The option period is one (1) year commencing from 1 July 2011.

The option granted to POG to purchase the remaining interest in KGL equates to POG having a control and the option gives a potential voting rights to POG. Hence, upon completion of the acquisition on 30 June 2011, KGL became a subsidiary of POG.

The fair value of identifiable assets and liabilities of KGL as at date of acquisition were:

Carrying Fair valuE Amount RM RM

Property, plant and equipment 123,840,500 108,178,479 Trade and other receivables 1,188,717 1,188,717 Cash and cash equivalents 1,244,621 1,244,621

126,273,838 110,611,817

Trade and other payables (96,952,038) (96,952,038) Income tax payable (16,142) (16,142)

(96,968,180) (96,968,180)

Net assets 29,305,658 13,643,637

288 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

17. Investment in subsidiaries (cont’d)

The effect of the acquisition on cash flows is as follows:

Total cost of the business combination/consideration settled in cash 45,811,280 Less: Cash and cash equivalents of subsidiary acquired (1,244,621)

Net cash outflow on acquisition 44,566,659

Negative goodwill arising on acquisition

Net identifiable assets 29,305,658 Less: Non-controlling interest (17,583,395)

Group’s interest in fair value of net identifiable assets 11,722,263 Negative goodwill on acquisition (Note 6(a)) (5,333,824)

Cost of business combination 6,388,439 Assumption of shareholder’s loan 39,422,841

Consideration paid 45,811,280

Impact of acquisition in Statement of comprehensive income

From the date of acquisition, KGL has contributed, before elimination of intragroup transactions, RM21,174,473 and RM20,846,095 respectively to the Group’s revenue and profit net of tax. If the combination had taken place atthe beginning of the financial year, revenue and profit net of tax contributed by KGL, before elimination of intragroup transactions, would have been RM42,004,200 and RM28,154,270 respectively.

Provisional accounting of acquisition

As at 31 December 2011, the fair value of KGL’s identifiable assets, except for property, plant and equipment, and identifiable liabilities were determined on a provisional basis as the results of the purchase price allocation exercise have been not finalised. Goodwill and negative goodwill arising from this acquisition will be adjusted accordingly on a retrospective basis when the purchase price allocation exercise is finalised.

Acquisition of non-controlling interest in KGL

On 23 September 2011, POG exercised its option to purchase the remaining 60% equity interest in KGL from GIVL with a total consideration of RM72,732,000 and the transaction was completed on 28 September 2011. Upon completion of this acquisition, GIVL assigned the remaining 60% of shareholder’s loan (RM60,219,269) to POG. As a result of this acquisition, KGL became a wholly-owned subsidiary of POG.

289 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

17. Investment in subsidiaries (cont’d)

(c) Acquisition of KGL Ltd (“KGL”), by POG (cont’d) Acquisition of non-controlling interest in KGL (cont’d) The difference between the consideration, the book value of the interest acquired and the loan assumed is reflected in equity as discount on acquisition of non-controlling interest. RM Additional interest acquired 24,289,564 Assumption of shareholder’s loan 60,219,269 Consideration paid (72,732,000)

Discount on acquisition of non-controlling interest 11,776,833 (d) Incorporation of PNIPPL PNIP Pte Ltd was incorporated on 10 March 2011 as a private company limited by shares in India under the Indian Companies Act, 1956 (No 1 of 1956). PNIP Pte Ltd is currently dormant and has a paid up share capital of Rs. 1,00,000 (Rupees One Lakh) only divided into 10,000 (Ten Thousand) Equity shares of Rs.10/- each (Rupees Ten) only. With the Acquisition, PNIP Pte Ltd has become a 99.99% owned subsidiary of Puncak on 10 March 2011 with the remaining 0.01% being held by Ir Tan Hui Kuan, with beneficial holding vesting with the Company. The intended activities of PNIP Pte Ltd is to carry out activities of infrastructures, constructions and other projects in India. (e) Subscription of additional equity interest in subsidiary, POG The Company had on 6 May 2012 subscribed an additional 1,900,000 new ordinary shares of RM1.00 each in the capital of POG, a wholly owned subsidiary of the Company by way of cash and set off against the amount owing by POG to the Company. The Company had on 30 December 2012 subscribed an additional 4,000,000 new ordinary shares of RM1.00 each in the capital of POG by way of set off against the amount owing by POG to the Company. 18. Investment in associates Group Company 2011 2010 2011 2010 RM RM RM RM Unquoted shares, at cost 42,501 42,501 42,501 42,501 Advance 2,914 1,838 2,914 1,838 Share of post-acquisition reserves (1,429) (4,601) – – 43,986 39,738 45,415 44,339

Proportion (%) of ownership interest Name Principal Activities 2011 2010

Incorporated in Malaysia

Oasis Water * Dormant 40 40 Purnama Persada Sdn Bhd * Dormant 50 50 * Audited by a firm other than Ernst & Young

290 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

18. Investment in associates (cont’d)

The summarised financial information of the associates are as follows:

Group 2011 2010 RM RM Assets and liabilities Current assets 92,298 93,341

Current liabilities (17,290) (26,620)

Results Revenue 11,513 – Expenses (3,226) (2,603)

Profit/(loss) for the year 8,287 (2,603)

19. Investment in joint venture

Group Company 2011 2010 2011 2010 RM RM RM RM

Advances to joint venture 8,152,788 7,913,521 6,449,964 6,210,697 Less: Accumulated impairment losses (4,579,018) (550,000) (6,449,964) (3,733,770)

3,573,770 7,363,521 – 2,476,927 Share of net liabilities of the joint venture (1,931,799) (1,728,564) – –

1,641,971 5,634,957 – 2,476,927

Participation i INterest held (%) Name Principal Activities 2011 2010

PNHB-Lanco-KHEC Operation and maintenance 70 70 Joint Venture (Unincorporated) * of water supply augmentation

POG-ATSB JV (Unincorporated) * Provision of offshore and 50 50 onshore engineering works

PED-PNSB JV (Unincorporated) * Construction of water treatment facilities 40 40

* Audited by a firm other than Ernst & Young ** No monetary cost was involved in the investment of the joint venture

291 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

19. Investment in joint venture (cont’d)

The aggregate amounts of the current assets, non-current assets, current liabilities, income and expenses related to the Group’s interests in the investment in joint venture are as follows:

Group 2011 2010 RM RM

Assets and liabilities: Non-current assets 37,665 105,779 Current assets 2,135,436 4,926,247

Total assets 2,173,101 5,032,026

Current liabilities (4,104,900) (6,760,590)

Income and expenses: Income 886,554 2,713,439

Expenses excluding taxation (1,110,875) (2,762,212)

20. hEld-to-maturity financial assets

company 2011 2010 RM RM

Current Junior Notes A (Note 20(a)) – 285,568,993

Non-current RCULS (Note 21) 265,958,665 254,152,376

Total held-to-maturity financial assets 265,958,665 539,721,369

(a) Junior Notes A

company 2011 2010 RM RM

Nominal value 546,875,000 546,875,000 Less: Yield to maturity (370,781,250) (370,781,250)

At cost 176,093,750 176,093,750 Cumulative redemption (full/partial) (546,717,259) (218,750,000) Cumulative accretion of yield to maturity 370,623,509 328,225,243

– 285,568,993

Analysed as: Redeemable within 12 months – 285,568,993

292 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

20. hEld-to-maturity financial assets (cont’d)

(a) Junior Notes A (cont’d)

The Company had subscribed for RM546,875,000 nominal value of JNA issued on 20 November 2001 by its subsidiary, PNSB, at an issue price of RM0.322 per RM1.00 nominal value of JNA. The JNA are redeemable, unconvertible, unsecured and substantially mirror the structure of the RUN issued by the Company. The proceeds of the JNA was utilised to repay RM168,000,000 of PNSB’s MCPs with the remaining balance utilised for its working capital purposes.

The main features of the JNA are as follows:

(a) The JNA carries a coupon rate of 2.5% per annum receivable semi-annually for the immediate ten (10) years from the date of issue of the JNA and 3.5% per annum receivable semi-annually thereafter for the next five (5) years.

(b) PNSB shall redeem the JNA in ten (10) equal installments each comprising 10% of the aggregate nominal value of all outstanding JNA commencing on the sixth (6th) anniversary of the date of issue of the JNA. On the tenth (10th) anniversary of the date of issue of the JNA, PNSB has the option to redeem the JNA by paying the principal amount outstanding on that date. On the same day, the holders of the JNA also have the option to sell the JNA back to PNSB for a consideration equivalent to the principal amount outstanding on that day.

(c) The JNA was issued back-to-back with the RUN. Proceeds from the RUN was immediately utilised to subscribe for the JNA by the Company. Accordingly, the proceeds from the coupon payments and redemptions of the JNA would be utilised by the Company for coupon payments and redemptions of the RUN.

On 19 November 2010, PNSB undertook the fourth (4th) mandatory partial redemption of RM54,687,500 nominal value of the outstanding RM382,812,500 nominal value of JNA from the Company. Concurrently, the Company utilised the proceeds from the redemption of JNA to undertake a fourth (4th) mandatory partial redemption of RM54,687,500 nominal value of the outstanding RM382,812,500 nominal value of RUN.

On 1 November 2011, the Company entered into a conditional Sale and Purchase Agreement with Acqua SPV Berhad (”Acqua”) and PNSB to sell its entire holdings of PNSB Redeemable, Unsecured, Coupon Bearing Notes of up to RM328,125,000 of nominal outstanding value at a total consideration of RM328,125,000 (”Sale”). The outstanding principal amount includes in the fifth mandatory partial redemption of RM54,687,500. The sale was completed on 18 November 2011. The sale proceeds were utilised to redeem the RUN as disclosed in note 31(c).

The effective interest rate applicable to the JNA at the reporting date was Nil (2010: 16.93%) per annum.

293 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

21. RCULS

Company 2011 2010 RM RM

Nominal value 212,000,000 212,000,000 Accretion of finance costs 53,958,665 42,152,376

At amortised cost (Note 20) 265,958,665 254,152,376

On 23 February 2006, SYABAS entered into a Subscription Agreement with the Company and KDEB in relation to the issue of up to RM1,045 million nominal value of RCULS by SYABAS. The RCULS will be issued progressively to the Company and KDEB over the next four (4) years from 2006 to 2009 to finance the operations and capital expenditure requirements of SYABAS under SYABAS Concession Agreement. The commitment by the Company and KDEB to subscribe for the RCULS are up to RM731.5 million (70%) and RM313.5 million (30%) respectively and KDEB’s portion of the commitment were subsequently varied pursuant to a Deed of Ratification and Accession dated 22 January 2009 given by Kumpulan Perangsang Selangor Berhad in favour of the Company and KDEB to 15% each between KDEB and Kumpulan Perangsang Selangor Berhad.

SYABAS had on 9 March 2006, issued RM135.0 million of the RCULS to the Company. Call options were given to KDEB by the Company to purchase RM40.5 million of the RCULS from the Company at an Option Premium of RM0.1035 for every RM1.00 of the RCULS and was payable on 22 February 2007. Interest at the rate of 7% per annum on the nominal value of the RCULS was charged to KDEB and is payable to the Company on the date of purchase of the RCULS by KDEB or on 22 February 2007, whichever is the earlier.

On 22 May 2007, SYABAS issued a further RM77 million of RCULS to the Company.

The RCULS will be redeemed in full by SYABAS on the 21st anniversary of the first issue date at their nominal value.

Each RCULS holder is entitled to exercise its conversion rights to convert the RCULS into new shares in SYABAS at the Conversion Price of RM1 payable for every new share to be issued pursuant to the conversion of the RCULS or such other price as may be agreed between SYABAS and the relevant RCULS holder prior to the Conversion Date.

Until the RCULS have been redeemed or converted into shares of SYABAS, SYABAS shall pay to the RCULS holders, coupon on the nominal value of the RCULS outstanding at a fixed rate of 7% per annum.

Company 2011 2010 RM RM

Interest on RCULS receivable from SYABAS (Note 6(a)) 11,806,289 10,912,812

294 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

22. DSRA

Group 2011 2010 RM RM

DSRA maintained in relation to: - RM1,020,000,000 10-Year BAIDS 244,116,849 236,379,735 - BAMTN Programme and RM410 million and RM250 million Term Loans 62,774,752 60,891,346

306,891,601 297,271,081

(i) RM1,020,000,000 10-Year BAIDS

Under the terms of the agreement for the issue of the RM1,020,000,000 10-Year BAIDS Issuance Facility by its subsidiary, PNSB, a deposit equivalent to twelve (12) months projected payment obligations under the BAIDS that are outstanding at any point in time is required to be placed in a DSRA. This DSRA is maintained with licensed financial institutions. PNSB is not entitled to withdraw any money from the DSRA without prior written consent of the Security Trustee except on condition that the BAIDS have been fully redeemed (Note 31(b)).

The deposits held in the DSRA is maintained for long-term until the full redemption and expiry of the BAIDS on 27 October 2016 (Note 31(b)) and is presently yielding interest income at market interest rates.

The weighted average effective interest rate applicable to the deposits held in the DSRA at the reporting date was 3.16% (2010: 3.14%) per annum.

(ii) bAMTN programme and RM410 million and RM250 million Term Loans

Under the terms of the BAMTN Programme and RM410 million and RM250 million Term Loans facility, SYABAS shall ensure that funds are deposited in the DSRA until the balance held in the DSRA is at least equivalent to the aggregate of profit in relation to the BAMTN and the facilities under the RM410 million and RM250 million Term Loans which will become due and payable in the next six (6) months and the outstanding principal of the BAMTN and the facilities under the RM410 million and RM250 million Term Loans which will become due and payable in the next twelve (12) months (to be built up in twelve (12) equal monthly installments during the preceding twelve (12) months on a straight line basis). This DSRA is maintained with licensed financial institutions.

The deposits are held for long-term until the full redemption/repayment and expiry of the BAMTN Programme and RM410 million and RM250 million Term Loans.

The weighted average effective interest rate applicable to the deposits held in the DSRA for this purpose at the reporting date was 3.18% (2010: 2.98%) per annum.

At the reporting date, the carrying amount of the deposits held in the DSRA approximated its fair value.

295 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

23. Goodwill

Group 2011 2010 RM RM

Net carrying amount: At 1 January 514,873,012 515,312,455 Acquisition of subsidiary - GOM Resources (Note 17(b)) 21,370,083 – Subscription of additional equity interest in subsidiary – 68,112 Impairment (Note 6(b)) (4,137,344) – Exchange differences 387,562 (507,555)

At 31 December 532,493,313 514,873,012

(a) SYABAS

The goodwill arising from the acquisitions of SYABAS and PUAS was completed on 15 December 2004 and 1 January 2005 respectively. SYABAS assumed the operations of PUAS following the privatisation of the water supply services in Selangor and Federal Territories of Kuala Lumpur and Putrajaya to SYABAS on 1 January 2005.

SYABAS and PUAS are identified as one combined CGU. The recoverable amount of this CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by Management covering the entire concession period of thirty (30) years commencing 1 January 2005 to 31 December 2034. A cash flow projection of more than five (5) years is used as the Directors are of the opinion that there are no reasonable possible changes in key assumptions which could cause the carrying value of goodwill on consolidation to exceed its recoverable amount.

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

(i) tariff increase

The annual rate of tariff increase used in the projections is based on the scheduled tariff and tariff adjustment formula, as set out in the SYABAS Concession Agreement. It is assumed that the agreed tariff will be gazetted and shall take effect for the applicable operating period on the relevant tariff adjustment dates.

(ii) Water purchase costs

The assumptions on the water purchase are made based on the existing agreements with the water treatment operators and water purchase in the future which have been assessed by the Independent Valuers which will be updated by new studies when historical water demand varies significantly from the projected water demand.

For the purpose of the cash flow projections, SYABAS has incorporated escalation rates ranging from 1.5% to 2.5% per annum of the bulk supply rate and fixed capacity payment respectively for projection of the cost of purchasing water from the respective water treatment operators.

296 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

23. Goodwill (cont’d)

(a) SYABAS (cont’d)

(iii) NRW

The NRW rate is projected to reduce based on the targets set in the SYABAS Concession Agreement.

(iv) Capital expenditure

The assumptions on capital expenditure for development and upgrading of distribution system, asset management and replacement programme and NRW reduction programme have been made based on the planned programmes as set out in the Concession Agreement.

(v) Discount rate

The discount rate used in the cash flow projections is 7% per annum.

(vi) Sensitivity to changes in assumptions

There are no reasonable possible changes in key assumptions which could cause the carrying value of goodwill on consolidation to exceed its recoverable amount.

(b) PNSB

This goodwill arose from the acquisition of 17.5% equity interest in PNSB which was completed on 22 October 2008.

The recoverable amount of this CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering the entire Concession Period as disclosed in Note 4. Cash flow projections of more than five (5) years is used as the directors are of the opinion that there are no reasonable possible changes in key assumptions which could cause the carrying value of goodwill on consolidation to exceed its recoverable amount.

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

(i) Production volume

The production volume is based on the actual production or minimum designated quantity as specified under the concession agreements. The production is based on the current capacities and it is assumed that the same capacities apply in the future.

(ii) bSR

BSR used in the projections is based on the scheduled BSR and adjusted by a BSR adjustment formula which accounts for increases in cost components based on expected market rates both of which are, as set out in the respective concession and privatisation agreements. The expected market rates are based on escalation rates of 0.7% to 3%.

297 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

23. Goodwill (cont’d)

(b) PNSB (cont’d)

(iii) Capital expenditure

The assumptions on capital expenditure for operational and maintenance of water treatment facilities are based on operational and maintenance requirements set out in the concession and privatisation agreements.

(iv) Discount rate

The discount rate used in the cash flow projections is 11% per annum.

(v) Sensitivity to changes in assumptions

There are no reasonable possible changes in key assumptions which could cause the carrying value of goodwill on consolidation to exceed its recoverable amount.

This goodwill arose from the acquisitions of 83% and 80% equity interest in LUWEI and Luancheng respectively which were completed on 19 August 2008 and 27 July 2009.

Carrying amount of goodwill allocated to the Group’s CGU is as follows:

Water and Wastewater treatment and distribution of water 2011 2010 RM RM

Net carrying amount: At 1 January 7,219,936 7,727,491 Less: Impairment (4,137,344) – Add: Net exchange difference 387,562 (507,555)

At 31 December 3,470,154 7,219,936

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

(i) tariff adjustment

The tariff adjustment used in the projection is based on stated applicable law in PRC. The Concession Agreement allows water tariffs to be adjusted subject to relevant approvals of the relevant authorities. These adjustments will consider factors affecting the operating costs.

298 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

23. Goodwill (cont’d)

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill: (cont’d)

(ii) Growth rate

The average daily throughput capacity is expected to increase gradually to full capacity for the period between financial year 2012 and financial year 2021. The water treatment plant is expected to maintain 100% throughput capacity starting from financial year 2019 to the end of the concession period.

(iii) Discount rate

The discount rate used in the cash flow projection is 10% to 11% per annum.

(iv) Sensitivity to changes in assumptions

There are no reasonable possible changes in key assumptions which could cause the carrying value of goodwill on consolidation to exceed its recoverable amount.

During the financial year, impairment loss was recognised to write down the carrying amount of goodwill attributed to Luancheng due to the protracted time to finalise the Concession Agreement.

(d) GOM Resources

This goodwill arose from the acquisition of 40% equity interest in GOM Resources which was completed on 30 June 2011.

The recoverable amount of this CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management. Cash flow projections of three (3) years is used as the directors are of the opinion that there are no reasonable possible changes in key assumptions which could cause the carrying value of goodwill on consolidation to exceed its recoverable amount.

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

(i) budget gross margins and growth

Management determined budgeted gross margin and result based on its secured contracts and its expected order book in line with its expectations of revelant market developments.

(ii) Discount rate

The discount rate used in the cash flow projection is 11% per annum

299 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

23. Goodwill (cont’d)

(d) GOM Resources (cont’d)

(iii) Sensitivity to changes in assumptions

There are no reasonable possible changes in key assumptions which could cause the carrying value of goodwill on consolidation to exceed its recoverable amount.

24. tRADE and other receivables

Group Company 2011 2010 2011 2010 RM RM RM RM

Current

trade receivables Third parties 231,839,291 204,936,019 – – Amount due from State Government - free water (Note 24(f)) 11,670,038 22,985,926 – – Amount due from State Government - tariff compensation (Note 24(b)) – 852,901,002 – – Progress billings receivable 74,589,465 30,223,555 – –

318,098,794 1,111,046,502 – – Less: Allowance for impairment (6,617,704) (6,058,089) – –

Trade receivables, net 311,481,090 1,104,988,413 – –

other receivables Advances and loans to staff 1,519,800 1,056,577 – – Amounts due from subsidiaries (Note 24(c)) – – 194,168,340 63,428,853 Advance to project contractors (Note 24(d)) 13,303,640 6,506,239 – – Interest receivable 3,787,230 4,016,529 184,395 219,205 Amount due from collection agencies 9,393,308 6,796,275 – – Sundry receivables 22,170,701 16,968,991 9,213,520 111,527 Deposits 9,126,212 8,585,443 192,736 3,855

59,300,891 43,930,054 203,758,991 63,763,440 Less: Allowance for impairment (Note 6(b)) (9,142,903) – (9,130,501) –

50,157,988 43,930,054 194,628,490 63,763,440

361,639,078 1,148,918,467 194,628,490 63,763,440

300 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

24. tRADE and other receivables (cont’d)

Group Company 2011 2010 2011 2010 RM RM RM RM

Non-current

trade receivables Long-term receivables 234,090,883 284,706,684 – – Amount due from State Government - tariff compensation (Note 24(b)) 1,311,051,925 – – – Less: Allowance for impairment (Note 6(b)) (75,259,744) – – –

1,469,883,064 284,706,684 – –

Total trade and other receivables (current and non-current) 1,831,522,142 1,433,625,151 194,628,490 63,763,440 Add: Cash and bank balances (Note 30) 1,268,050,147 1,215,266,678 270,325,861 180,088,126 Short term funds (Note 28) 36,281 35,231 – – Tax recoverable 639,110 653,790 – –

Total loans and receivables 3,100,247,680 2,649,580,850 464,954,351 243,851,566

(a) trade receivables

Trade receivables are non-interest bearing and are generally on 30 day (2010: 30 day) terms. Other credit terms are assessed and approved on a case-by-case basis. The credit term for the amount due from State Government is 90 days. They are recognised at their original invoiced amounts which represent their fair values on initial recognition.

The balance included an amount due from Serba Tiara amounting to RM62,750,000 (2010: RM50,2000,000) in respect of the supply of bulk quantity of treated water to the State Government as disclosed in Note 24(e).

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables excluding the amount due from State Government is as follows:

Group 2011 2010 RM RM

Neither past due nor impaired 226,589,002 183,942,132 1 to 30 days past due not impaired 22,982,373 17,641,744 31 to 154 days past due not impaired 17,320,327 19,238,530 More than 155 days past due not impaired 44,589,387 31,265,005 84,892,087 68,145,279 Impaired 6,617,704 6,058,089

318,098,793 258,145,500

301 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

24. tRADE and other receivables (cont’d)

(a) trade receivables (cont’d)

Receivables that are neither past due nor impaired

The above trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. More than 74.3% (2010: 74.4%) of the Group’s trade receivables arise from customers with more than four (4) years of experience with the Group and losses have occurred infrequently.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM84,892,088 (2010: RM68,145,279) that are past due at the reporting date but not impaired.

Receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group 2011 2010 RM RM

Individually impaired: Trade receivables–nominal amounts 6,617,704 6,058,089 Less: Allowance for impairment (6,617,704) (6,058,089)

– –

Movement in allowance accounts:

Group 2011 2010 RM RM

At 1 January 6,058,089 7,081,875 Reversal of impairment losses (Note 6(b)) (518,244) (7,900) (Utilisation)/Reversal of deposit from customers (Note 32(d)) 1,077,859 (1,015,886)

At 31 December 6,617,704 6,058,089

302 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

24. tRADE and other receivables (cont’d)

(b) Amount due from the State Government - tariff compensation

This represents cumulative water tariff compensation receivable for the years ended 31 December 2011 and 2010 respectively arising from the new water tariff as disclosed in Note 3.1(b) and 3.2. During the financial year, the water tariff compensation was reclassified to long term receivable and impaired due to change in the estimated time frame of collection.

Impairment allowance of RM75,259,744 (2010: RMNil) was made in the current financial year. The details are disclosed in Note 3.1(f).

The amount due from subsidiaries are interest free, unsecured and repayable on demand.

(d) Advance to project contractors

Advance to project contractors represents advance made for the purchase of construction materials and will be repaid through contra against progress billings by the project contractors. The amount is unsecured and interest free.

(e) long-term receivables - Serba Tiara

The long-term receivables represent an amount due from the State Government, in respect of the supply of bulk quantity of treated water supplied. On 3 February 2005, the State Government entered into a Novation Agreement with Serba Tiara, whereby Serba Tiara shall assume and take over the State Government’s obligations to pay to PNSB RM518.566 million in ten (10) annual installments commencing year 2006.

Group 2011 2010 RM RM

At 1 January 334,906,684 405,616,000 Long-term receivable repaid (50,200,000) (37,650,000) Effect of adoption FRS 139 – (46,749,561) Accretion of interest on long-term receivable (Note 6(a)) 12,134,199 13,690,245

At 31 December 296,840,883 334,906,684

Maturity of loans and receivables: Due within 1 year included in trade receivables (Note 24(a)) 62,750,000 50,200,000 Due more than 1 year 234,090,883 284,706,684

296,840,883 334,906,684

303 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

24. tRADE and other receivables (cont’d)

(f) Amount due from the State Government - free water

This represents the amount due from State Government on the quantum of free water usage granted by State Government to certain of the Company’s water account holders.

25. other current assets

Group Company 2011 2010 2011 2010 (Restated) RM RM RM RM

Amount due from customer on construction contract (Note 29) 17,987,617 7,574,711 – – Unbilled revenue 74,780,225 – – – Prepayment for project – 8,912,100 – 8,912,100 Prepayments 13,073,418 4,631,225 86,217 –

105,841,260 21,118,036 86,217 8,912,100

(a) unbilled revenue

This amount is accrued contract revenue attributable to the progress of work performed up to the reporting date for which progress billings have not been rendered.

(b) Prepayment for project

The balance relate to the cash consideration paid to GESL amounting to RM Nil (2010: RM8,912,100) for the acquisition of the Agreed Projects in China. The balance has been expensed during the current financial year.

26. Inventories

Group 2011 2010 (Restated) RM RM

Cost Water treatment chemicals 2,602,586 2,828,800 Spare parts and equipment 3,354,384 2,369,961 Fuel 1,182,273 – Mild steel pipe 2,344,500 4,689,000

9,483,743 9,887,761

During the year, the amount of inventories recognised as an expense in cost of sales of the Group was RM30,291,748 (2010: RM29,621,880).

304 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

27. Available-for-sales investments

Group 2011 2010 Carrying Market Carrying Market amount value amount value RM RM RM RM

unquoted At 1 January – 4,601,661 Addition 10,000,000 80,000,000 Impairment (Note 6(b)) (591,207) – Gain from disposal of investment (Note 6(b)) – 1,907,773 Disposal – (86,509,434)

At 31 December 9,408,793 9,408,793 – –

Available-for-sale investments represents fund placements in the RHB Asia Pacific MAQASID fund.

28. Short term funds

Group 2011 2010 RM RM

At 1 January 35,231 30,329,949 Placement 1,050 – Withdrawal – (30,294,718)

At 31 December 36,281 35,231

Short term funds represents fund placement in the Aiman Cash Fund.

305 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

29. Gross amount due from/(to) customers for construction contracts

Group 2011 2010 RM RM

Construction contracts costs incurred to date 503,568,297 356,199,630 Attributable profits 15,870,246 702,235 Less: Provision for foreseeable losses – (5,200,062)

519,438,543 351,701,803 Less: Progress billings (501,450,926) (350,673,121)

17,987,617 1,028,682

Presented as: Due from customers on construction contract (Note 25) 17,987,617 7,574,711 Due to customers on construction contract (Note 34) – (6,546,029)

17,987,617 1,028,682

The construction contract undertaken by the Group in relation to design and implementation of various water supply scheme.

30. Cash and bank balances

Group COMPANY 2011 2010 2011 2010 RM RM RM RM

Deposits with licensed banks 1,108,293,684 1,151,081,295 231,152,547 172,211,766 Cash and bank balances 159,756,463 64,185,383 39,173,314 7,876,360

1,268,050,147 1,215,266,678 270,325,861 180,088,126

Included in cash and bank balances of the Group is an amount of RM1,955,104 (2010: RM1,932,339), being deposits held in trust for consumer deposits.

Included in the deposits with licensed banks of the Group are monies of RM185,000,000 (2010: RM160,217,875), representing consumers’ deposits collected by SYABAS with effect from 1 January 2005 following the privatisation of water supply services in Selangor and the Federal Territories of Kuala Lumpur and Putrajaya.

Included in cash and bank balances of the Group, are monies of RM1,832 (2010: RM314,978) arising from government grant, which are only available for NRW works and not for other operational use. NRW refers to such part of the works undertaken by SYABAS for the purpose of reducing non-income generating unaccountable water loss.

306 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

30. Cash and bank balances (cont’d)

Included in the deposits with licensed banks of the Group, are monies of RM1,896,052 (2010: RM1,540,768) arising from government grants.

Included in cash and bank balances of the Group, are monies of RM40,509 (2010: RM Nil) arising from government loan of RM110 million for water supply mitigation programmes ie Selangor, Kuala Lumpur and Putrajaya.

Included in the deposits with licensed banks of the Group, are monies of RM18,500,000 (2010: RM Nil) arising from government loan of RM110 million.

In prior year, included in the deposits with the licensed banks of the Group is an amount of RM326.8 million which is placed with a third party as disclosed in Note 31(b) and are restricted from use in other operations. During the year, the deposits with licensed bank were uplifted by the Group in connection with the restructuring of the BAIDS Series 4 and 6.

The weighted average effective return applicable to deposits with licensed banks at the reporting date was 3.17% (2010: 2.89%) per annum.

Deposits of the Group with licensed banks have an average maturity of 58 days (2010: 80 days).

For the purpose of the cash flow statements, cash and cash equivalents comprise the following as at the reporting date:

Group COMPANY 2011 2010 2011 2010 RM RM RM RM

Deposits with licensed banks 1,108,293,684 1,151,081,295 231,152,547 172,211,766 Cash and bank balances 159,756,463 64,185,383 39,173,314 7,876,360

1,268,050,147 1,215,266,678 270,325,861 180,088,126 Held in trust (186,955,104) (162,150,214) – – Short term funds (Note 28) 36,281 35,231 – –

Total cash and cash equivalents 1,081,131,324 1,053,151,695 270,325,861 180,088,126

307 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings

Group Company 2011 2010 2011 2010 RM RM RM RM

Current Secured: Government Support Loan 7,227,167 7,016,667 – – BAIDS 360,000,000 510,000,000 – – RUN – 284,875,086 – 285,568,993 USD31 million term loan 98,223,500 – – – Obligation under finance leases (Note 40(c)) 5,168,006 4,500,344 – –

470,618,673 806,392,097 – 285,568,993

Unsecured: Lushan MOF Novated World Bank Loan 549,649 – – –

549,649 – – –

471,168,322 806,392,097 – 285,568,993

Non-current Secured: Government Support Loan 39,521,114 46,748,281 – – BAIDS 656,379,299 506,311,210 – – BAMTN 2,049,007,301 2,038,214,663 – – RM410 million and RM250 million Term Loans 659,974,712 659,974,712 – – Government Loan RM320.8 million 320,800,000 320,800,000 – – Government Loan RM110.0 million 7,377,817 – – – Obligation under finance leases (Note 40(c)) 11,966,556 9,962,802 – – RPS 611,593,249 605,211,919 – –

4,356,620,048 4,187,223,587 – –

Unsecured: RUBs 479,216,984 465,745,909 – – RCULS 22,477,060 20,756,736 – – JNA 173,981,676 – – – Lushan MOF Novated World Bank Loan 8,665,306 6,844,867 – –

684,341,026 493,347,512 – –

5,040,961,074 4,680,571,099 – –

Total loans and borrowings 5,512,129,396 5,486,963,196 – 285,568,993

308 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

The remaining maturities of the loans and borrowings as at 31 December 2011 are as follows:

Group COMPANY 2011 2010 2011 2010 RM RM RM RM

On demand or within one year 471,168,322 806,392,097 – 285,568,993 More than 1 year and less than 2 years 469,647,492 191,401,206 – – More than 2 year and less than 5 years 1,903,767,350 913,145,789 – – 5 years or more 2,667,546,232 3,576,024,104 – –

5,512,129,396 5,486,963,196 – 285,568,993

The BAIDS, RUN, BAMTN, JNA and RUBs are further analysed as follows:

Group COMPANY BAIDS RUN 2011 2010 2011 2010 RM RM RM RM

Nominal value 1,020,000,000 1,020,000,000 546,875,000 546,875,000 Less: Yield to maturity * (15,085,005) (15,085,005) (376,629,915) (376,629,915)

Net proceeds 1,004,914,995 1,004,914,995 170,245,085 170,245,085 Redemption (180,000,000) (150,000,000) (546,023,352) (218,750,000) Issuance 180,000,000 150,000,000 – – Accreted finance cost 11,464,304 11,396,215 375,778,267 333,380,001

1,016,379,299 1,016,311,210 – 284,875,086

Group COMPANY BAMTN RUBs 2011 2010 2011 2010 RM RM RM RM

Nominal value 2,125,000,000 2,125,000,000 435,000,000 435,000,000 Less: Yield to maturity * (125,176,289) (125,176,289) (19,704,683) (19,704,683)

Net proceeds 1,999,823,711 1,999,823,711 415,295,317 415,295,317 Accumulative accreted finance cost 49,183,590 38,390,952 63,921,667 50,450,592

2,049,007,301 2,038,214,663 479,216,984 465,745,909

309 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

Group JNA 2011 2010 RM RM

Nominal value 328,125,000 – Gain on extinguishment of debt (155,554,087) –

172,570,913 – Accreted finance cost 1,410,763 –

173,981,676 –

Company rUN 2011 2010 RM RM

Nominal value 546,875,000 546,875,000 Less: Yield to maturity * (370,781,250) (370,781,250)

Proceeds from issue 176,093,750 176,093,750 Redemption (546,717,259) (218,750,000) Accreted finance cost 370,623,509 328,225,243

– 285,568,993

* Include debt issuance expenses.

(a) Government Support Loan

The Government Support Loan from the Federal Government in 1998 was to finance the construction of the Wangsa Maju Water Treatment Plant and its related facilities. It is secured on all money standing to the credit of the Special Project Account. The Government Support Loan was originally repayable in equal annual installments over a period of twenty (20) years commencing on 11 April 1999. Interest was originally accrued and payable to the Government at the fixed rate of 8% per annum.

On 11 April 2004, the Federal Government restructured the Government Support Loan by reducing the interest rate to 3% per annum retrospectively and accordingly revised the repayment schedule of the loan.

(b) bAIDS/MCPs/MMTNs

On 12 October 2000, PNSB entered into several agreements with United Overseas Bank (Malaysia) Bhd and various parties to raise RM1,020,000,000 10-Year BAIDS and RM350,000,000 MCPs/MMTNs Issuance Facility. Subsequently, on 28 October 2000, PNSB issued the entire BAIDS and RM120,000,000 of the MCPs, the proceeds of which were utilised mainly to repay in full the Revolving Underwriting Facility of RM800,000,000 and Term Loan of RM300,000,000.

310 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(b) bAIDS/MCPs/MMTNs (cont’d)

On 19 October 2005, the holders of the BAIDS approved the proposed extension of the BAIDS with the following variations to the BAIDS:

(i) extension of the tenure of the BAIDS with a put and call option for redemptions attached, exercisable on the original maturity dates of the BAIDS as follows:

Nominal valuE Series RM mAturity datES

Series 1 180,000,000 From 27 October 2005 to 27 October 2015 Series 2 180,000,000 From 27 October 2006 to 27 October 2016 Series 3 180,000,000 From 27 October 2007 to 27 October 2011 Series 4 180,000,000 From 27 October 2008 to 27 October 2012 Series 5 150,000,000 From 27 October 2009 to 27 October 2013 Series 6 150,000,000 From 27 October 2010 to 27 October 2014

1,020,000,000

(ii) revision of the profit payment in respect of the BAIDS for the extended tenures.

(iii) allowing PNSB to apply monies in the DSRA for undertaking certain forms of permitted investments.

PNSB has obtained the approval from the Securities Commission on 19 December 2005 to revise the tenure of the BAIDS.

On 24 October 2008, PNSB exercised its call option for the extension of the tenure of Series 4 with nominal value of RM180,000,000 to 27 October 2012. Pursuant to the extension, Series 4 have been placed with a third party over a period of 90 days from 24 October 2008 to 22 January 2009. Subsequently the placement has been rolled over three (3) 90 day periods from 22 January 2009 to 22 April 2009, 22 April 2009 to 22 July 2009, 22 July 2009 to 22 October 2009, one (1) 187 days period from 22 October 2009 to 27 April 2010, one (1) 183 days period from 22 April 2010 to 22 October 2010, one (1) 183 days period from 22 October 2010 to 22 April 2011 respectively. The third party has been granted a put option to redeem Series 4 at anytime during the respective 183 days periods (“Option Periods”).

On 24 October 2010, PNSB exercised the option to extend the tenure of Series 6 with nominal value of RM150,000,000 to 27 October 2014. Pursuant to the extension, Series 6 have been placed with a third party over a period of 92 days from 27 October 2010 to 27 January 2011. Subsequently the placement has been rolled over 32 day periods from 27 January 2011 to 27 February 2011, 27 February 2011 to 27 March 2011, 27 March 2011 to 27 April 2011. The third party has been granted a put option to redeem Series 6 at anytime during the respective 31 days periods (“Option Periods”).

311 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(b) bAIDS/MCPs/MMTNs (cont’d)

As disclosed in Note 30, deposits of RM326.8 million have been placed with the third party during the Option Periods and will be set-off against the BAIDS Series 4 and 6 with nominal value of RM180 million and RM150 million respectively should the put option be exercised by the third party. These put options were exercised by the third party on 1 April 2011 and taken up by the Group.

The facilities for the BAIDS are secured by way of deposit of an aggregate sum in the DSRA equivalent to twelve (12) months projected payment obligations under the BAIDS that are outstanding at any point in time. PNSB is not entitled to withdraw any money from the DSRA without prior consent from the Security Trustee except on condition that the BAIDS have been fully redeemed. In addition, the facilities are also secured by fixed charges over all assets of PNSB, the rights of PNSB under the Concession Agreements, construction contracts and project agreements undertaken by PNSB.

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

(a) the outstanding balance in the DSRA is less than 1.0 time of the aggregate quantum of the Issuer’s payment obligations under the BAIDS for a period of twelve (12) months commencing from the date on which the dividend is contemplated; or

(b) the Annual Debt Service Cover Ratio and the Forward Debt Service Cover Ratio are less than 1.7 times.

PNSB will also be required to maintain the following financial ratios, which will be measured annually commencing on 31 December 2001:

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

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

(iii) Annual Debt Service Cover Ratio of at least 1.25 times.

On 24 June 2011, Acqua SPV Berhad has acquired 100% of BAIDS from all the noteholders.

312 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(b) bAIDS/MCPs/MMTNs (cont’d)

On 20 October 2011, the Company has obtained the indulgence from the noteholder (Acqua SPV Berhad) to extend the maturity date of the series 3 from 27 October 2011 to 27 April 2012. Acqua had granted an extension of BAIDS Series 3 from 27 April 2012 to 27 October 2012 on 13 April 2012.

Acqua has also issued a letter dated 16 April 2012 offering to restructure all outstanding bonds (including BAIDS, RUBs and Junior Notes A), pending the finalisation of detail terms and conditions and legal documentation for the restructuring of all outstanding bonds.

On 20 November 2001, the Company issued RM546,875,000 Nominal Value 15-Year RUN with 109,374,869 free detachable warrants at an issue price of RM0.322 per RM1.00 nominal value of the RUN on the basis of RM5.00 nominal value of the RUN with one (1) free warrant for every four (4) existing ordinary shares of RM1.00 each held in the Company. The RUN was offered to the entitled shareholders and is constituted by a Trust Deed dated 5 September 2001. The RM176,093,750 proceeds (excluding debt issuance expenses) from the RUN issue was immediately utilised to subscribe for the JNA issued by PNSB. PNSB subsequently, utilised the proceeds to repay RM168,000,000 of its MCPs with the remaining balance utilised for its working capital purposes.

The main features of the RUN and the warrants are as follows:

(a) The RUN carries a coupon rate of 2.5% per annum payable semi-annually for the immediate ten (10) years from the date of the issue of the RUN and 3.5% per annum payable semi-annually thereafter for the next five (5) years.

(b) The Company shall redeem the RUN in ten (10) equal installments each comprising 10% of the aggregate nominal value of all outstanding RUN commencing on the sixth (6th) anniversary of the date of issue of the RUN. On the tenth (10th) anniversary of the date of issue of the RUN, the Company has the option to redeem the RUN by paying the principal amount outstanding on that date. On the same day, the holders of the RUN also have the option to sell the RUN back to the Company for a consideration equivalent to the principal amount outstanding on that day.

(d) The RUN is secured on the JNA issued by PNSB. The Company is required to create a security account to receive only proceeds from coupon payment and redemption of the JNA by PNSB, and thereafter to pay the coupon payment and redemption of the RUN.

(e) Holders of the warrants have the right to subscribe for new ordinary shares of the Company in cash at any time during the period commencing one (1) day after the date of issue of the warrants and ending on the date being five (5) years from the date of the issue of the warrants (“Exercise Period”). The exercise price of the warrants is RM2.62 per new ordinary share of the Company subject to adjustments under certain circumstances in accordance with the provisions of the Deed Poll dated 5 September 2001.

(f) The warrants that are not exercised during the Exercise Period will lapse and become void thereafter.

313 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

The main features of the RUN and the warrants are as follows: (cont’d)

(g) The new ordinary shares issued arising from the exercise of the warrants during the Exercise Period shall rank pari-passu in all respects with the then existing ordinary shares of the Company except that they shall not be entitled to any dividends, rights, allotments and/or distributions, the entitlement date of which is prior to the date of allotment of the said new ordinary shares.

The Company is restricted from declaring and paying any dividends:

(i) if there is any amount due but not paid under the RUN; or

(ii) in the event a default has occurred or is continuing and has not been waived.

On 19 November 2010, PNSB undertook the fourth mandatory partial redemption of RM54,687,500 nominal value of the outstanding RM382,812,500 nominal value of JNA from the Company. Concurrently, the Company utilised the proceeds from the redemption of JNA to undertake a fourth mandatory partial redemption of RM54,687,500 nominal value of the outstanding RM382,812,500 nominal value of RUN.

Following the issuance by the Company of the Notice of Reminder to the Noteholders on Their Rights To Exercise The Put Option Pursuant To The Trust Deed dated 5 September 2001 (“Trust Deed”) Constituting The Notes on 13 September 2011 (“Put Option Exercise”) and based on the outcome of the Put Option Exercise whereby as at 18 October 2011, 468 Noteholders holding 515,488,256 Notes (94.26%) have exercised the Put Option Exercise as set out in the Reminder Notice:-

(i) On 24 October 2011, the Company had issued a Circular to Noteholders In Relation To The Suspension Of Trading For The Notes And The Withdrawal Of The Notes From The Official List of Bursa Malaysia Securities Bhd Upon The Completion Of The Call Option Exercise (As Provided Pursuant To Clause 7.2 of the Trust Deed.)

(ii) On 2 November 2011, the Company had issued the Notice of Call Option to the Noteholders of the RM546,875,000 nominal value of 15-Years Redeemable Unconvertible Notes (“Notes”) (“Noteholders”) on the Company’s intention and rights to exercise the call option to redeem the outstanding notes amounting to 31,386,744 Notes (5.74%) which are not already the subject of the exercise by the Noteholders pursuant to the Put Option Exercise.

(iii) Upon completion of the Put Option and Call Option Exercise on 18 November 2011, the Company’s Notes had been withdrawn from the Official List of Bursa Malaysia Securities Berhad on Monday, 21 November 2011 at 9.00 am.

314 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(d) JNA

As per Notes 20(a) Acqua has acquired the entire holdings of PNSB JNA from the Company. The terms remain unchanged save and except for the following:

(i) PNSB has agreed to amend, vary and replace Clause 6.9 of the JNA Subscription Agreement dated 5 September 2001 and between PNSB (as issuer); CIMB Investment Bank Berhad (as advisor); and PNHB (as noteholders) (“PNSB Subscription Agreement”)

(ii) The JNA carries a coupon rate of 5.68% per annum and terms of the JNA are set out as follows:

Nominal Value Redemption date RM

18 November 2016 54,687,500 20 November 2017 109,375,000 20 November 2018 109,375,000 20 November 2019 54,687,500

Gross carrying amount 328,125,000 Gain on extinguishment of debts (Note 6(a)) (155,554,087) Accretion of interest 1,410,763

Fair value of the “New” JNA 173,981,676

Fair value is measured in accordance with FRS 139. The fair value is computed based on the future cash outflows discounted using the current interest rate of similar financial liability with similar terms as at 18 November 2011 obtainable from the bond market. This has given rise of a gain on extinguishment of debts of RM155,540,087 recognised in profit or loss.

(e) bACP Programme/BAMTN Programme

On 19 September 2005, SYABAS entered into several agreements with a consortium of banks comprising BIMB, CIMB Bank, CIMB and HSBC in respect of the issue of up to RM200 million nominal value BACP Programme and up to RM3 billion nominal value BAMTN Programme.

On 30 September 2005, SYABAS completed the first issuance of the BAMTN with an aggregate nominal value of RM1.03 billion comprising:

(i) An eight-year RM310 million nominal value tranche;

(ii) A nine-year RM200 million nominal value tranche;

(iii) A ten-year RM200 million nominal value tranche; and

(iv) An eleven-year RM320 million nominal value tranche.

315 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(e) bACP Programme/BAMTN Programme (cont’d)

The BAMTN issued on 30 September 2005 will mature beginning 30 September 2013 and on an annual basis, for each series issued. Redemptions will be made at nominal value.

On 18 May 2007, SYABAS further issued BAMTN with an aggregate nominal value of RM365 million, which will mature beginning 18 May 2017 and on an annual basis, for each series issued as follows:

(i) A ten-year RM125 million nominal value tranche;

(ii) An eleven-year RM120 million nominal value tranche;

(iii) A twelve-year RM120 million nominal value tranche; and

On 7 September 2007, SYABAS completed the first issuance of the BACP with an aggregate nominal value of RM10 million, which was fully repaid on 5 October 2007.

On 20 February 2008, SYABAS issued BAMTN with an aggregate nominal value of RM230 million, which will mature beginning 20 February 2020 and on an annual basis, for each series issued as follows:

(i) A twelve-year RM70 million nominal value tranche;

(ii) A thirteen-year RM60 million nominal value tranche;

(iii) A fourteen-year RM50 million nominal value tranche; and

(iv) A fifteen-year RM50 million nominal value tranche.

On 31 October 2008, SYABAS further issued BAMTN with an aggregate nominal value of RM500 million, which will mature beginning 31 October 2016 and on an annual basis, for each series issued as follows:

(i) An eight-year RM125 million nominal value tranche;

(ii) A ten-year RM125 million nominal value tranche;

(iii) A twelve-year RM125 million nominal value tranche; and

(iv) A fifteen-year RM125 million nominal value tranche

SYABAS is required to maintain the following financial ratios:

(i) Debt to Equity Ratio of not more than 75:25 from 2005 to 2008, both years inclusive and not more than 70:30 from and including 2009 until the expiry of the BAMTN Programme; and

(ii) Finance Service Cover Ratio of not less than 1.25 times from 2005 to 2008, both years inclusive and not less than 1.50 times from and including 2009 until the expiry of the BAMTN Programme.

316 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(e) bACP Programme/BAMTN Programme (cont’d)

BACP/BAMTN are sharing the same securities as listed in Note 31(f). In addition, the BACP/BAMTN are also secured by way of the rights over the Escrow Account and the monies standing to the credit thereof.

SYABAS is restricted from declaring and paying any dividends, whereupon:

(i) an Event of Default has occurred, is continuing and has not been waived, or if following such payment or distribution an Event of Default would occur; or

(ii) the Finance Service Cover Ratio is breached or will be breached if calculated immediately following such payment or distribution; or

(iii) the Debt to Equity Ratio is breached or will be breached if calculated immediately following such payment or distribution; or

(iv) the balance outstanding to the credit of the DSRA both before and after the payment is less than the Minimum Required Balance;

provided that conditions (ii) and (iv) shall not be applicable to dividends paid on RPS from year 2015 onwards.

(f) RM410 million and RM250 million Term Loans

SYABAS obtained Term Loan facilities of up to RM410 million and RM250 million from BPMB to part finance the capital expenditure and the Non-Revenue Water reduction programmes (including the operation, maintenance, development and upgrading of the water distribution system over a period of thirty (30) years) respectively.

These Term Loan are repayable as follows from the date of the first drawdown:

RM410 million RM250 million tERm Loan Term Loan RM RM

Month 204 (17 years) 73,240,000 50,000,000 Month 216 (18 years) 77,380,000 50,000,000 Month 228 (19 years) 81,750,000 50,000,000 Month 240 (20 years) 86,370,000 50,000,000 Month 252 (21 years) 91,260,000 50,000,000

410,000,000 250,000,000

317 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(f) RM410 million and RM250 million Term Loans (cont’d)

The above Term Loans are secured via the following:

- A debenture incorporating fixed and floating charges over all present and future assets of SYABAS, both movable and immovable;

- Assignment of all rights, titles and benefits under the SYABAS Concession Agreement;

- Assignment of all contractual rights, titles and benefits under the Construction Contract (excluding the performance bonds); and

- Assignment over the Designated Accounts (Collection Account, Operating Account, BPMB Disbursement Account, DSRA and Land Use Charges Reserve Account).

Interest is payable annually at the rate of 5.65% (2010: 5.65%) per annum.

(g) RUBs

During the financial year ended 31 December 2006, PNSB restructured RM320,000,000 shareholders’ advances owing to the Company into a new marketable security via the issuance of RM435,000,000 nominal value of RUBs to the Company.

Following the above, the Company sold the RUBs to ATSB for a total consideration of RM418,969,134 (excluding debt issuance expenses), satisfied via a cash consideration of RM132,719,134 and the balance being satisfied via the issuance of 286,250,000 preference shares with par value of RM0.01 in ATSB at an issue price of RM1.00 each. The disposal of the RUBs to ATSB effectively resulted in the Group raising additional borrowings of RM418,969,134 on initial recognition, which will be subsequently measured at amortised cost using the effective interest method.

The maturity date of the RUBs is ten (10) years from the issue date. The RUBs shall bear the following coupon rate payable semi-annually in arrears on the amounts outstanding:

From issue date to Year 5 : 5.50% per annum After Year 5 to Year 10 : 11.00% per annum

Unless previously redeemed, purchased and cancelled, the RUBs shall be redeemed by the issuer at par or at its respective nominal value on the maturity date.

(h) RCULS

318 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(h) RCULS (cont’d)

In the event that any party is unable to subscribe for its portion of the relevant RCULS in full on the issue date, the other party shall thereupon be entitled, but not obliged to subscribe for all, or a portion only, of such RCULS as are unable to be subscribed for. SYABAS had on 9 March 2006 issued RM135.0 million of the RCULS to the Company. Interest at the rate of 7% per annum on the nominal value of the RCULS is payable by SYABAS to the RCULS holders.

On 22 May 2007 and 29 May 2007, SYABAS issued a further RM77 million and RM33 million of RCULS to the Company and KDEB respectively.

The RCULS will be redeemed in full by SYABAS on the 21st anniversary of the first issue date at their nominal value.

Each RCULS holder is entitled to exercise its conversion rights to convert the RCULS into new shares in SYABAS at the Conversion Price of RM1.00 payable for every new share to be issued pursuant to the conversion of the RCULS or such other price as may be agreed between SYABAS and the relevant RCULS holder prior to the Conversion Date.

Until the RCULS have been redeemed or converted into shares of SYABAS, SYABAS shall pay to the RCULS holders, coupon on the nominal value of the RCULS outstanding at a fixed rate of 7% per annum. The RCULS are regarded as compound instruments, consisting of a liability component and an equity component.

The proceeds received from the issue of the RCULS to KDEB have been splitted between the liability component and equity component, representing the fair value of the conversion option. The RCULS issued to KDEB are accounted for in the statement of financial position of the Group as follows:

Group 2011 2010 RM RM

liability component Nominal value of RCULS 33,000,000 33,000,000 Equity component, net of deferred taxation (held by non-controlling interest) (Note 37) (13,130,387) (13,130,387) Deferred taxation (4,376,796) (4,376,796)

Liability component as at date of issuance 15,492,817 15,492,817 Accretion of finance costs 6,984,243 5,263,919

Liability component as at 31 December (held by non-controlling interest) 22,477,060 20,756,736

319 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(i) lushan MOF Novated World Bank Loan

This is the loan granted to the PRC government by the World Bank to fund the Water Supply Project in Henan Province, which was novated to LUWEI to finance the construction of a water treatment plant and upgrading of existing pipe network. The total loan amount is USD3,830,000 subject to actual drawdown amount approved by the local PRC government. The loan is unsecured and is repayable quarterly commencing on 31 December 2011 and ending on 31 March 2020.

(j) Government Loan RM320.8 million

On 16 December 2009, SYABAS had entered into a Government Loan Agreement with the Federal Government in respect of a loan facility of RM320.8 million (“Government Loan”) granted to SYABAS by the Federal Government.

The salient terms of the Government Loan Agreement are as follows:

i) Facility Amount : RM320.8 million.

ii) Purpose of Loan : Payment for water purchased from the water treatment operators namely, PNSB, ABASS and SPLASH.

iii) Repayment : The Facility Amount to be repayable over sixteen (16) years beginning on the fifth (5th) year from first (1st) drawdown i.e. grace period of four (4) years.

iv) Default Interest : Eight percent (8.00%) per annum on any overdue principal repayment amount.

v) Events of Default : The Federal Government has the right to call on an event of default without securing or referring to the existing Noteholders and Lenders of SYABAS.

The Government Loan was fully utilised by SYABAS to pay water treatment operators, namely, PNSB, ABASS and SPLASH for water purchased.

(k) Government Loan RM110 million

On 17 October 2011, the Company had entered into a Loan Facility Agreement and Deed of Assignment with the Federal Government in respect of a loan facility of RM110.0 million (“Government Loan”) granted to the Company by the Federal Government.

The salient terms of the Government Loan Agreement are as follows: -

i) Facility Amount : RM110.0 million.

ii) Purpose of Loan : To finance capital expenditure works on old pipe replacement project and upgrading of water supply system upgrading of water supply system project.

iii) Tenure : Twenty (20) years

320 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(k) Government Loan RM110 million (cont’d)

The salient terms of the Government Loan Agreement are as follows: - (cont’d)

iv) Drawdown period : Year RM

2011 18,500,000 2012 63,000,000 2013 28,500,000

110,000,000

2011 2010 RM RM

At 1 January – – Drawdown during the year 18,500,000 – Effect of adoption FRS 120 (Note 35(c)) (11,174,680) – Accretion of finance costs 52,497 –

At 31 December 7,377,817 –

v) Repayment : The Facility amount to be repayables over eighteen (18) years, commencing on the third (3rd) year from the first drawdown date.

yEAR RM per annum

2014 - 2019 550,000 2020 - 2023 1,100,000 2024 - 2027 1,650,000 2028 13,200,000 2029 22,000,000 2030 27,500,000 2031 33,000,000

vi) Special Loan : Deed of Assignment over a Special Loan Account and the credit balances therein. Account and Security

vii) Interest : Three percent (3.0%) per annum.

viii) Default Interest : Five percent (5.0%) per annum on any overdue principal repayment amount.

ix) Other Terms : As privately agreed with the Federal Government.

321 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(l) obligation under finance leases

These obligations are secured by a charge over the leased assets (Note 13). The average discount rate implicit in the leases is 3.01% per annum (2010: 3.24% per annum).

(m) RPS

On 6 May 2005, SYABAS entered into a Subscription Agreement with the MOF in relation to the subscription of 655 million RPS to be issued by SYABAS at a total subscription price of RM655 million. MOF has agreed to subscribe for a total of 655 million RPS of RM0.01 each of SYABAS, to be issued at an issue price of RM1.00 per RPS (a premium of RM0.99 per RPS) within a period of four (4) years, commencing from year 2007 until 2011. The RPS is not convertible into ordinary shares of SYABAS but may be redeemed by SYABAS commencing on 31 December 2021 until 31 December 2025 in five (5) equal tranches of RM131 million nominal value for each of the years.

The subscriptions of the total number of 655 million RPS of RM0.01 each of SYABAS shall be made as follows:

Subscription Period Subscription Number of Price RPS R M

15 January 2007 to 14 January 2008 125,400,000 125,400,000 15 January 2008 to 14 January 2009 184,200,000 184,200,000 15 January 2009 to 14 January 2010 213,800,000 213,800,000 15 January 2010 to 14 January 2011 131,600,000 131,600,000

655,000,000 655,000,000

2011 2010 RM RM

At 1 January 605,211,919 523,400,000 Subscription during the year – 131,600,000 Effect of adoption FRS 120 (Note 35(b)) – (54,309,571) Accretion of finance costs (Note 10) 6,381,330 4,521,490

At 31 December 611,593,249 605,211,919

On 8 May 2007, SYABAS issued 125.4 million of RPS of RM0.01 each at an issue price of RM1.00 per RPS (a premium of RM0.99 per RPS) to MOF.

On 11 March 2008, SYABAS has further issued 184.2 million RPS of RM0.01 each at an issue price of RM1.00 per RPS (a premium of RM0.99 per RPS) to MOF.

On 30 March 2009, SYABAS has further issued 213.8 million RPS of RM0.01 each at an issue price of RM1.00 per RPS (a premium of RM0.99 per RPS) to MOF.

On 26 March 2010, SYABAS has further issued 131.6 million RPS of RM0.01 each at an issue price of RM1.00 per RPS (a premium of RM0.99 per RPS) to MOF.

322 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(m) RPS (cont’d)

Each RPS shall confer on its holder(s) the following rights:

(i) A fixed cumulative net dividend of 3% per annum on each RPS, payable in cash on a date falling in the financial year ending not earlier than 31 December 2015 (which date is to be determined at the sole discretion of SYABAS), out of profits of SYABAS available for distribution in respect of each financial year or other accounting period of SYABAS prior to such date provided always that no dividend shall be declared or be due and payable except in accordance with the priority of payments set out in the Assignment and Charge I dated 19 January 2005 between SYABAS and the Security Agent.

Net dividend declared for each financial year from the date of issue up to the financial year ending 31 December 2014 shall, once declared be payable in 11 equal installments commencing in the year 2015 and ending in the year 2025. Such installment shall be in addition to the payment of any net dividend declared for the relevant financial year 31 December 2015 and any financial year thereafter.

(ii) Each RPS shall not confer on the holder thereof any right to participate on a return in excess on liquidation, winding up or otherwise of SYABAS, other than redemption, up to the paid-up value of RM1 for each RPS with a par value of RM0.01 and a premium of RM0.99.

(iii) The RPS shall carry no right to receive notice of or to attend or vote at any general meeting of SYABAS other than on a resolution to amend or vary the rights of holders of the RPS.

(iv) SYABAS shall redeem each RPS on the following dates and in the following proportions:

Date RM

31 December 2021 131,000,000 31 December 2022 131,000,000 31 December 2023 131,000,000 31 December 2024 131,000,000 31 December 2025 131,000,000

655,000,000

(v) No RPS shall be convertible into ordinary shares of SYABAS.

(vi) The RPS shall not be transferable in whole or in part and they shall not be listed in Bursa Securities or any other stock exchange.

The RPS shall rank ahead of all other shares issued or to be issued by SYABAS, be it preference, ordinary or otherwise. In addition, SYABAS shall ensure that all advances or loans from shareholders of SYABAS shall, to the extent permissible by law, rank behind the RPS in terms of payment in a winding-up of SYABAS.

323 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(n) uSD31 million term loan

POG has obtained a short term loan of USD 31 million to part finance the acquisition of the remaining 60% interest in GOM Resources and KGL respectively as disclosed in Note 17(b) and 17(c).

The above term loan is secured via the following:

- Charge over all KGL Ltd and GOM Resources shares owned by POG;

- Debenture incorporating a fixed and floating charge over all present and future assets of the POG; and

- Corporate guarantee from the Company for USD 31 million together with interest thereon.

The loan was repayable on 27 October 2011 and had been extended, on a monthly basis, to 27 April 2012. Interest is payable monthly at the rate of 1.75% above one month’s cost of funds.

(o) Effective interest rates

The effective interest rates per annum applicable to the borrowings at the reporting date were as follows:

Effective interest RAte per annum 2011 2010 % %

Group Government Support Loan 3.00 3.00 BAIDS 5.00 - 5.60 4.65 - 8.20 RUN – 16.93 JNA 5.68 – BAMTN 5.00 - 8.24 5.00 - 8.24 RM410 million and RM250 million Term Loans 5.65 5.65 RUBs 8.25 8.25 RCULS 8.02 - 8.50 8.02 - 8.50 Lushan MOF Novated World Bank Loan 1.38 1.38 USD31 million term loan 3.35 – Obligation under finance lease 3.01 3.24

324 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

31. loans and borrowings (cont’d)

(o) Effective interest rates (cont’d)

The effective interest rates per annum applicable to the borrowings at the reporting date were as follows:

Effective interest RAte per annum 2011 2010 % %

Company RUN – 16.93

32. tRADE and other payables

Group Group 2011 2010 2011 2010 (restated) RM RM RM RM

Current trade payables Third parties 489,472,586 958,054,408 – – Amounts due to contractors 39,490,131 24,885,814 – –

528,962,717 982,940,222 – –

other payables Amount due to a subsidiary – – 249,260,364 34,586,342 Finance cost payable 117,349,151 94,363,566 – 943,921 Deposit from consumers 403,239,351 380,325,879 – – Accruals 337,739,795 204,977,855 612,251 342,439

858,328,297 679,667,300 249,872,615 35,872,702

1,387,291,014 1,662,607,522 249,872,615 35,872,702

325 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

32. tRADE and other payables (cont’d)

Group COMPANY 2011 2010 2011 2010 (restated) RM RM RM RM

Non-current trade payables Third parties 1,102,557,144 – – –

other payables Long-term payable (Note 32(e)) 8,162,167 9,794,600 – – Accruals (Note 32(c)) 114,721,344 – – –

122,883,511 9,794,600 – –

Less: Adjustment (Note 6(a), Note 32(f)) (19,680,001) – – –

103,203,510 9,794,600 – –

1,205,760,654 9,794,600 – –

Total trade and other payables 2,593,051,668 1,672,402,122 249,872,615 35,872,702 Add: Loan and borrowings (Note 31) 5,512,129,396 5,486,963,196 – 285,568,993

Total financial liabilities carried at amortised cost 8,105,181,064 7,159,365,318 249,872,615 321,441,695

(a) trade payables

These amounts are non-interest bearing. Trade payables are normally settled on 30-90 days (2010: 30-90 days) terms.

Included within the trade payables payable to third parties are RM1,525,365,656 (2010: RM923,786,651) being the amounts payable by SYABAS to its external water suppliers. These amounts are under litigation as disclosed in Note 49(f) and Note 49(h) respectively.

(b) Amount due to a subsidiary

This amounts is unsecured, non-interest bearing and are repayable on demand.

Included in accruals of the Group is an amount of RM42,400 (2010: RM21,000), which is amount due to a subsidiary of CPMSB, a substantial corporate shareholder of the Company.

326 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

32. tRADE and other payables (cont’d) (d) Deposit from water consumers Group 2011 2010 RM RM As at 1 January 380,325,879 375,029,777 Addition during the year 47,589,047 49,842,088 Transfer (from)/to trade receivables (Note 24(a)) (1,077,859) 1,015,886 Refund (23,586,082) (45,539,192) Bad debt writen off (11,634) (22,680) As at 31 December 403,239,351 380,325,879 (e) long-term payable This refers to the interests payable pursuant to the Supplemental Agreement to the Government Support Loan Agreement. The interest payable as at 11 April 2004 is to be paid over a period of one hundred and fourty four (144) months commencing April 2005. Long-term payable is analysed as follows: Group 2011 2010 RM RM Analysed as: Current 1,632,433 1,632,433 Non Curent: Later than 1 year but not later than 2 years 1,632,433 1,632,433 Later than 2 years but not later than 5 years 6,529,734 6,529,734 Later than 5 years – 1,632,433 8,162,167 9,794,600 9,794,600 11,427,033 (f) Adjustment for changes in estimate During the financial year ended 31 December 2011, SYABAS revised its estimates of cash outflows for payments to its trade payables resulting from the Court of Appeal’s decision on the SPLASH (Kuala Lumpur High Court Civil Suit No. D-22ND-398-2009) litigation (see Note 49(f)). SYABAS anticipates that the total amount outstanding to its third parties trade payables of RM1,592,029,730 (2010:RM958,054,408) is likely to be paid in the following timeframe: within next 12 - 24 12 months months RM RM Trade payables carried at amortised cost 489,472,586 1,102,557,144 Accruals – 114,721,344

Arising from the revision in the estimates of cash flows, the previous amounts carried at amortised cost have been adjusted as follows: tRADE payables other payables car CARRIED at CARRIED at Amortised cost amortised cost Total RM RM RM Amortised carrying amount before revision 1,102,557,144 114,721,344 1,217,278,488 Adjustment for changes in estimate recognised in profit or loss (Note 6(a)) (139,180,927) 119,500,926 (19,680,001) Amortised carrying amount after revision 963,376,217 234,222,270 1,197,598,487

327 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

33. Provision for retirement benefits

The Group operates unfunded, defined benefit Retirement Benefit Schemes (the “Scheme”) for its eligible employees. Under the Scheme, eligible employees are entitled to retirement benefits of either 0.75 or 1.25 month of their final salary for every year of service with the Group on the attainment of their retirement age of 56 or voluntary retirement age of 50.

movement of provision of retirement benefits is as follows:

Group 2011 2010 RM RM

At 1 January 20,763,875 18,675,305 Add: Provision for the year (Note 8) 4,030,312 3,645,421 Less: Payment made during the year (2,034,617) (1,556,851)

At 31 December 22,759,570 20,763,875

Maturity of provision: Not later than 1 year 2,283,854 1,539,853 Later than 1 year but not later than 2 years 3,269,880 1,823,754 Later than 2 years 17,205,836 17,400,268

22,759,570 20,763,875

The amounts recognised in the profit or loss are as follows:

Group 2011 2010 RM RM

Current service cost 2,751,615 2,677,740 Interest cost 1,278,697 967,681

Total 4,030,312 3,645,421

The principal actuarial assumptions used are as follows:

Group 2011 2010 % %

Discount rate 6.50 6.50 Rate of compensation increase 6.00 6.00

328 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

34. Other current liabilities

Group 2011 2010 RM RM

Amount due to customer on construction contract (Note 29) – 6,546,029

35. Government grant

(a) A government grant of RM250,000,000 was received by SYABAS in consideration of SYABAS performing its obligations under the SYABAS Concession Agreement. This grant is used solely for the purpose of financing the costs and expenditure of the NRW. NRW refers to such part of the works undertaken by SYABAS for the purpose of reducing non- income generating unaccountable water loss.

Group 2011 2010 (restated) RM RM

Net carrying amount At 1 January 231,031,985 237,069,909 Less: Repayment – (2,008,721) Amortisation (Note 6(a)) (4,199,561) (4,029,203)

At 31 December 226,832,424 231,031,985

(b) On 26 March 2010, the Company has completed the RPS issuance of RM131.6 million by issuing 131.6 million units of RPS with a nominal of RM0.01 each at an issue price of RM1.00 per RPS (a premium of RM0.99 per RPS) to MOF for cash consideration of RM131.6 million. The amendments to FRS 120 removed the exemption to impute interests on government loan at below market interest rate. RM54,309,571 being the difference between the amount received and the present value of estimated cash flows discounted at market interest rate is accounted for as government grants.

Group 2011 2010 RM RM

Net carrying amount At 1 January 51,594,093 – Add: Effect of adoption FRS 120 for the RPS (Note 31(m)) – 54,309,571 Less: Amortisation (Note 6(a)) (3,620,638) (2,715,478)

At 31 December 47,973,455 51,594,093

329 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

35. Government grant (cont’d)

(c) On 17 October 2011, the Company had entered into a Loan Facility Agreement and Deed of Assignment with the Federal Government in respect of a loan facility of RM110.0 million granted to the Company by the Federal Government.The amendments to FRS 120 removed the exemption to impute interests on government loan at below market interest rate. RM11,174,680 being the difference between the amount received and the present value of estimated cash flows discounted at market interest rate is accounted for as government grants.

Group 2011 2010 (restated) RM RM

Net carrying amount At 1 January – – Add: Effect of adoption of FRS 120 (Note 31(k)) 11,174,680 – Less: Amortisation (Note 6(a)) (46,560) –

At 31 December 11,128,120 –

Total net carrying amount (a) + (b) + (c) 285,933,999 282,626,078

36. Deferred tax

Deferred income tax as at 31 December relates to the following:

As at Recognised As at 31 Recognised As at 1 January in profit December Acquisition in profit Recognised 31 December 2010 or loss 2010 of subsidiary or loss in Equity 2011 (Restated) (Restated) (Restated) RM RM RM RM RM RM RM

Group

Deferred tax liabilities: Loans & Borrowings – – – – 38,535,831 – 38,535,831 Trade Payable – – – – 10,145,744 – 10,145,744 Interest receivable 7,809,891 2,728,203 10,538,094 – – – 13,489,666 RCULS (1,391,528) (3,124,554) (4,516,082) – (3,381,652) – (7,897,734) Revaluation Reserve – – – – – 23,029,316 23,029,316 Service concession obligations 1,063,351,423 (88,006,488) 975,344,935 – (83,189,678) – 892,155,257 Fair value adjustments on acquisitions of subsidiaries 2,134,202 (281,970) 1,852,232 – (171,194) – 1,681,038

1,071,903,988 (88,684,809) 983,219,179 – (38,060,949) 23,029,316 971,139,118

330 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

36. Deferred tax (cont’d)

Deferred income tax as at 31 December relates to the following: (cont’d)

Group (cont’d)

Deferred tax assets: Tax losses (496,465,830) (74,805,440) (571,271,270) – (105,468,577) – (676,739,847) Property, Plant and Equipment (153,078,427) (34,527,896) (187,606,323) 129,000 (41,905,810) – (229,383,133) Service concession assets (697,046,639) 115,893,481 (581,153,158) – 133,693,165 – (447,459,993) Trade receivables (1,770,469) 255,948 (1,514,521) – (24,180,586) – (25,695,107) Reinvestment allowance (77,153,479) 41,793,847 (35,359,632) – 35,359,632 – – Other payables (7,584,794) 1,793,063 (5,791,731) – (8,437,592) – (14,229,323) Others (24,054) (44,598) (68,652) – (2,774,155) – (2,842,807)

(1,433,123,692) 50,358,405 (1,382,765,287) 129,000 (13,713,923) – (1,396,350,210)

(361,219,704) (38,326,404) (399,546,108) 129,000 (51,774,872) 23,029,316 (425,211,092)

Company

Deferred tax liabilities: Interest receivable 7,809,891 2,728,203 10,538,094 – 2,951,572 3,027,220 16,516,886

Group company 2011 2010 2011 2010 RM RM RM RM

Presented after appropriate offsetting as follows: Deferred tax assets: (1,396,350,210) (1,382,765,287) – – Deferred tax liabilities: 971,139,118 983,219,179 16,516,886 10,538,094

(425,211,092) (399,546,108) 16,516,886 10,538,094

331 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

36. Deferred tax (cont’d)

Deferred tax assets are recognised for unabsorbed capital allowances, unutilised tax losses and unutilised reinvestment allowances carried forward to the extent that the realisation of the related tax benefit through the future taxable profits is available. The directors are of the opinion that the Group will be able to reduce tax payable in view of future profits and benefits accruing to the Group from the existing water concessions which have been awarded to the Group (Note 4) to which the deferred tax asset relates. The unabsorbed capital allowances, unutilised tax losses and unutilised reinvestment allowances are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.

Deferred tax assets have not been recognised as follows:

Group 2011 2010 RM RM

Tax losses and capital allowances 13,906,455 2,035,628

37. Sh are capital, share premium, treasury shares, foreign currency translation reserve, other reserve and RCULS

Number of ordinar Amount shares of RM1.00 each Share Share total cap CAPItal capital Share Foreign (Issued (Issued CAPItal Currency and an d and AND Reva- tran- fully Treasury Fully ShARE Shares tREASury luatioN Slation other RCULS pai PAID) ShARES PAID) PREmium PREmium ShARES RESERvE RESERvE RESERve (Note31(h)) RM RM RM RM RM RM RM RM At 1 January 2010 411,142,895 (2,036,800) 411,142,895 102,878,221 514,021,116 (5,940,688) – 384,165 – 13,130,387

Exchange differences – – – – – – – (3,478,479) – –

At 31 December 2010 411,142,895 (2,036,800) 411,142,895 102,878,221 514,021,116 (5,940,688) – (3,094,314) – 13,130,387

At 1 January 2011 411,142,895 (2,036,800) 411,142,895 102,878,221 514,021,116 (5,940,688) – (3,094,314) – 13,130,387

Revaluation surplus – – – – – – 69,087,946 – – – Exchange differences – – – – – – – 1,986,185 – – other reserve – – – – – – – – 19,762,784 –

At 31 December 2011 411,142,895 (2,036,800) 411,142,895 102,878,221 514,021,116 (5,940,688) 69,087,946 (1,108,129) 19,762,784 13,130,387 332 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

37. Share capital, share premium, treasury shares, foreign currency translation reserve, other reserve and RCULS (cont’d) Number of Ordinary Shares of RM1.00 Each Amount 2011 2010 2011 2010 RM RM Authorised: At 1 January/31 December 1,300,000,000 1,300,000,000 1,300,000,000 1,300,000,000 (a) Share capital

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company residual assets. (b) treasury shares

Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount consists of the acquisition costs of treasury shares net of the proceeds received on their subsequent sale or issuance.

The directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares. (c) RCULS

This represents the residual amount of RCULS after deducting the fair value of the liability component. This amount is presented net of transaction costs and deferred tax liability arising from RCULS. (d) Revaluation reserves

The asset revaluation reserve represents increases in the fair value of freehold and leasehold land and buildings, net of tax. (e) Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. (f) other reserves

This represents the premium paid in acquisition of non-controlling interests in GOM Resources and KCL. 38. Retained earnings

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six (6) years, expiring on 31 December 2013, to allow companies to frank dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the Section 108 balance of the Income Tax Act, 1967 (“S.108 balance”) and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the S.108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

333 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

38. Retained earnings (cont’d)

The Company has elected for the irrevocable option to disregard the S.108 balance as at 31 December 2007. Hence, the Company will be able distribute dividends out of its entire retained earnings under the single tier system.

As at 31 December 2011, the Company has tax exempt profits available for distribution of approximately RM1,077,959 (2010: RM1,077,959), subject to the agreement of the Inland Revenue Board.

39. Related party transactions

(a) transactions with related parties

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:

Group COMPANY 2011 2010 2011 2010 RM RM RM RM

Advances from PNSB – – 644,177,620 9,483,951 Advance to PNSB – – 501 17,097 Repayment to PNSB – – 429,759,100 – Advances to POG – – 105,326,830 2,652,038 Repayment from POG – – – 533,794 Advance to SINO – – 22,175,017 22,823,653 Rental from SINO – – 840,056 757,176 Advances to PNOC – – 1,072,528 – RCULS interest receivable from SYABAS – – 11,806,288 10,912,812 Coupon and discounts on JNA from PNSB – – 49,792,877 55,534,206

Group COMPANY 2011 2010 2011 2010 RM RM RM RM

Principal repayment of JNA from PNSB – – – 54,687,500 Secretarial fees charged by RZ Management 240,000 240,000 – – Consultancy work charged by WWE Holdings Bhd 1,296,000 – – –

RZ Management and WWE Holdings Bhd are director related corporation. 334 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

39. Related party transactions (cont’d)

(b) Compensation of key management personnel

Group COMPANY 2011 2010 2011 2010 RM RM RM RM

Short-term employee benefits 14,948,574 14,225,041 256,000 245,000 Defined contribution plan 2,451,781 2,216,734 – – Other staff related expenses 7,524,418 5,374,824 150,000 150,000

24,974,723 21,816,599 406,000 395,000

Included in the total key management personnel are:

Group COMPANY 2011 2010 2011 2010 RM RM RM RM

Directors’ remuneration (Note 9) 17,658,424 15,975,872 406,000 395,000

40. Commitments

(a) Capital commitments

Capital expenditure as at the reporting date is as follows:

Group 2011 2010 (RESTATED) RM RM

Capital expenditure: Contracts approved and contracted for 21,354,709 48,607,515

Commitment under the terms of the Concession Agreement: - Concession fees 23,000,000 24,000,000 - Contracts approved and contracted for 216,276,962 278,438,035

239,276,962 302,438,035

335 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

40. Commitments (cont’d)

(b) operating lease commitments – as lessee

Future minimum rentals payable for premises under non-cancellable operating leases at the reporting date are as follows:

Group 2011 2010 RM RM

Payable within one year 1,429,795 1,546,554 Payable between one and five years 1,822,195 934,145 Payable after five years 761,807 –

4,013,797 2,480,699

Group 2011 2010 RM RM

minimum lease payments: Not later than 1 year 5,840,720 5,110,666 Later than 1 year but not later than 2 years 4,903,214 4,060,067 Later than 2 years but not later than 5 years 8,248,888 6,922,710

18,992,822 16,093,443 Less: Amounts representing finance charges (1,858,260) (1,630,297)

Present value of minimum lease payables 17,134,562 14,463,146

Group 2011 2010 RM RM

Present value of payments: Not later than 1 year 5,168,006 4,500,344 Later than 1 year but not later than 2 years 4,347,746 3,636,244 Later than 2 years but not later than 5 years 7,618,810 6,326,558

Present value of minimum lease payables 17,134,562 14,463,146 Less: Amount due within 12 months (Note 31) (5,168,006) (4,500,344)

Amount due after 12 months (Note 31) 11,966,556 9,962,802

336 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

41. FINANCIAl gurantees and Contingent liabilities

Group COMPANY 2011 2010 2011 2010 RM RM RM RM

unsecured Trade and performance guarantees extended to third parties 742,933,608 98,750,951 11,221,899 – Corporate gurantee(a) 98,223,500 – 98,223,500 –

172,517,108 98,750,951 109,445,399 –

(a) The Company has assessed the financial gurantee contract of RM98,223,500 and concluded that the gurantee is more likely not be called upon by the banks and accordingly not recognised as financial liability as at 31 December 2011. This is because the gurantee is collateralised by charges over its investments in its subsidiaries, GOM and KGL as disclosed in Note 31.

42. Fair value of financial instruments

A. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

Carrying Fair Note amount value RM RM

At 31 December 2011

Group

Financial assets: Amount due from State Government 24 1,235,792,181 1,113,064,385 Long-term receivables 24 234,090,883 233,339,254

Financial liabilities: Loans and borrowings - Obligations under finance lease 31 (17,134,562) (17,186,292) - Government Support Loan 31 (46,748,281) (40,136,884) - BAIDS 31 (1,016,379,299) (806,854,526) - JNA 31 (173,981,676) (159,173,702) - BAMTN 31 (2,049,007,301) (2,048,352,107) - RM410 million and RM250 million Term Loans 31 (659,974,712) (520,679,585) - Government Loan RM320.8 million 31 (320,800,000) (89,340,172) - Government Loan RM110.0 million 31 (7,377,817) (7,400,778) - RUBs 31 (479,216,984) (258,193,388) - RCULS 31 (22,477,060) (21,376,093) - Lushan MOF Novated World Bank Loan 31 (9,214,955) (8,697,637) - RPS 31 (611,593,249) (671,097,732) Trade and other payables - Long-term payables 32 (8,162,167) (7,952,094) Service concession obligations 16 (4,024,041,173) (1,772,887,494)

337 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

42. Fair value of financial instruments (cont’d)

A. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value (cont’d)

Carrying Fair Note amount value RM RM

At 31 December 2011

Company

Financial assets: RCULS 20 265,958,665 139,875,761

At 31 December 2010

Group

Financial assets: Long-term receivables 24 284,706,684 285,858,351

Financial liabilities: Loans and borrowings - Obligations under finance lease 31 (14,463,146) (14,845,629) - Government Support Loan 31 (53,764,948) (45,237,940) - BAIDS 31 (1,016,311,210) (965,852,486) - RUN 31 (284,875,086) (358,921,644) - BAMTN 31 (2,038,214,663) (2,039,033,053) - RM410 million and RM250 million Term Loans 31 (659,974,712) (539,714,429) - Government Loan 31 (320,800,000) (89,789,364) - RUBs 31 (465,745,909) (338,106,289) - RCULS 31 (20,756,736) (21,921,205) - Lushan MOF Novated World Bank Loan 31 (6,844,867) (6,346,741) - RPS 31 (605,211,919) (563,773,516) Trade and other payables - Long-term payables 32 (9,794,600) (9,016,490) Service concession obligations 16 (4,170,240,532) (1,831,160,231)

Company

Financial assets: Junior Notes A 20 285,568,993 359,795,916 RCULS 21 254,152,376 140,827,136

Financial liabilities: Loans and borrowings (non-current) - RUN 31 (285,568,993) (359,795,916)

338 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

42. Fair value of financial instruments (cont’d)

b. Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Other receivables (non-current) - Loans to associates 18 - Loans to fellow subsidiaries 24 Trade and other receivables (current) 24 Trade and other payables (current) 32 Trade and other payable (non-current) 32 Loans and borrowings (current) 31 Loans and borrowings (non-current) 31

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The carrying amounts of the current portion of loans and borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.

The fair values of current loans and borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

C. Fair value hierarchy

Fair value of unquoted available-for-sale financial assets is estimated using appropriate valuation techniques.

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2 : other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3 : techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data

339 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

42. Fair value of financial instruments (cont’d)

C. Fair value hierarchy (cont’d)

As at 31 December 2011, the Group held the following financial instrument at fair value in the statement of financial position:

31 December 2011 lEvel 1 lEvel 2 lEvel 3 RM RM RM RM

Assets measured at fair value

Available-for-sale investment 9,408,793 – 9,408,793 –

43. Financial risk management objectives and policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

The Board of Directors regularly reviews and agrees policies and procedures for the management of these risks.

The following sections provide details on the Group’s and Company’s exposure to the above mentioned financial risks and the objectives and policies for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from Group’s receivables from water consumers and other receivables.

The Group’s exposure to credit risk is mainly by the individual characteristics of each customers. The Group has set up credit policies which monitors the outstanding balances owing by its water consumers.

For other financial assets (including other investments, cash and bank balances and short term fund) theGroup minimises credit risk by dealing exclusively with high credit rated counterparties.

Credit risk concentration profile

At the reporting date, approximately:

- 80% (2010: 77%) of the Group’s trade and other receivables were due from 1 major customer.

As disclosed in Note 3.1(b), the Group has an amount owing by State Government in respect of tariff compensation in lieu of a tariff hike which was to take place with effect from 1 January 2009. Any late or non-repayment by the State Government may have an adverse impact on the cash flows and/or profit of the Group. SYABAS has taken legal action against the State Government as disclosed in Note 49(g) and Note 49(i).

In addition, the Group and its solicitors monitors closely on the status of legal proceedings against the Selangor State Government pertaining to water tariff compensation with the objective to expedite the lengthy process and to resolve the matter amicably, if possible.

340 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

43. Financial risk management objectives and policies (cont’d)

(a) Credit risk (cont’d)

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 24. Deposits with banks and other financial institutions, other investment securities and short term funds that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 24.

(b) liquidity risk

Liquidity risk is the risk that the Group or Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities.

The Group manages its liquidity risk by establishing budget with the view to ensuring that sufficient bank balances together with stand-by credit facilities to meet the obligations. In addition, the Group negotiate with financial institutions to reschedule and/or restructure the existing credit facilities to coincide with the present operating environment.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2011 On demand or within One to Over five one year FIve years years Total Group RM RM RM RM

Financial liabilities: Trade and other payables 1,387,291,014 1,395,858,364 1,632,433 2,784,781,811 Loans and borrowings 471,168,322 2,355,378,990 2,940,173,698 5,766,721,010 Service concession obligations 354,307,500 1,440,230,000 4,861,930,000 6,656,467,500

Total undiscounted financial liabilities 2,212,766,836 5,191,467,354 7,803,736,131 15,207,970,321

341 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

43. Financial risk management objectives and policies (cont’d)

(b) liquidity risk (cont’d)

Analysis of financial instruments by remaining contractual maturities (cont’d)

2011 On demand or within One to Over five one year FIve years years Total RM RM RM RM

Company

Financial liabilities: Trade and other payables 249,872,615 – – 249,872,615

Total undiscounted financial liabilities 249,872,615 – – 249,872,615

2010 On demand or within One to Over five one year FIve years years Total RM RM RM RM

Group

Financial liabilities: Trade and other payables 1,662,607,522 6,529,733 3,264,867 1,672,402,122 Loans and borrowings 849,770,479 1,087,711,165 3,715,006,869 5,652,488,513 Service concession obligations 329,310,000 1,560,230,000 5,096,237,500 6,985,777,500

Total undiscounted financial liabilities 2,841,688,001 2,654,470,898 8,814,509,236 14,310,668,135

Company

Financial liabilities: Trade and other payables 35,872,702 – – 35,872,702 Loans and borrowings 285,568,993 – – 285,568,993

Total undiscounted financial liabilities 321,441,695 – – 321,441,695

342 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

43. Financial risk management objectives and policies (cont’d)

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

As at 31 December 2011, 99.9% (2010: 99.9%) of the Group’s borrowings carry fixed interest rates. The Group’s income and operating cash flows are therefore substantially independent of changes in market interest rates.

At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant, the Group’s profit net of tax would have been RM25,632(2010: RM708) higher/lower, arising mainly as a result of higher/ lower interest expense on floating rate loans and borrowings, higher/lower interest income from floating rate loans to related parties. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(d) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group operates primarily in Malaysia but have operations in PRC. Thus, it is exposed to various currencies, mainly USD, SGD and RMB. Foreign currency denominated assets and liabilities together with expected cash flows from probable purchases and sales give rise to foreign exchange exposures.

Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level.

The net unhedged financial assets and financial liabilities of the Group companies that are not denominated in their functional currencies are as follows:

Net Financial Assets Held in Non-Functional Currencies SGD USD Total Functional Currency of Group Companies RM RM RM

At 31 December 2011 USD 81,846 1,542,499 1,624,345 RMB – 9,240,808 9,240,808

81,846 10,783,307 10,865,153

343 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

43. Financial risk management objectives and policies (cont’d)

(d) Foreign currency risk (cont’d)

Net Financial Assets Held in Non-Functional Currencies SGD USD Total Functional Currency of Group Companies RM RM RM

At 31 December 2010

RM 8,940,945 – 8,940,945 USD 208,669 1,751,777 1,960,446 RMB – 6,939,228 6,939,228

9,149,614 8,691,005 17,840,619

Sensitivity analysis for foreign currency risk

Profit/(loss) net of tax Group Company 2011 2011 RM RM

SGD/USD - strengthened 2.8% (2,358) – - weakened 2.8% 2,358 – RMB/USD - strengthened 0.03% 1,970 – - weakened 0.03% (1,970) – USD/RM - strengthened 3.38% (2,975,574) 376,545 - weakened 3.38% 2,975,574 (376,545)

(e) market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of change in market prices (other than interest or exchange rates). The objective of market risk management is to manage and control market risk exposure within the acceptable parameters, while optimising the return.

The Group is exposed to non equity price risk arising from its investment in unit trust instruments. These instruments are classified as short term funds.

344 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

44. Capital management

The primary objective of the Group’s capital management is to support the Group’s growth strategy and maximise shareholder value with optimal capital structure.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To adjust the capital structure, the Group does not recommend any dividend for the financial year ended 31 December 2011 with the view to conserve its financial resources.

From time to time, the Group purchases its own shares from the market, the timing of these purchase depends on market prices and availability of financial resources.

The Company and its subsidiaries are not subject to externally imposed capital requirements other than certain subsidiaries which are required to maintain certain ratios for the purpose of declaring and payment of dividend.

The Group manages capital using a gearing ratio, which is net debt divided by total capital being the equity attributable to equity holders of the Company plus net debt. The Group includes with in net debts, loans and borrowings, trade and other payables and service concession obligations less cash and bank balance.

At year end, the Group has a net debt of RM11,006,669,590 (2010: RM10,232,830,747) and a total capital of RM11,113,774,316 (2010: RM10,279,304,495) giving rise to a gearing ratio of approximately 99% (2010: 100%).

45. Dividends

Group and Company 2011 2010 RM RM

Recognised during the financial year:

Dividends on ordinary shares: - Final single tier dividend for 2011: 10 sen (2010: 10 sen) per share – 40,910,609

The directors do not recommend any payment of dividend for the current financial year.

345 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

46. Segment information

Segmental analysis is not presented as the Group is primarily involved in the operation, maintenance, construction, rehabilitation and refurbishment of water treatment facilities and the supply and distribution of treated water to consumers in the Distribution Area. The Group operates principally in Malaysia and the overseas business segments are insignificant to the Group.

p er c Consolidated WAtER WAter holding oil con- FINANCIAl DIStribution treatment Company AND GAS Struction othERS Elimination NOTES Statement 2011 2011 2011 2011 2011 2011 2011 2011 Rm rm rm rm rm rm rm rm

operating Revenue

Sales to external customers 1,991,048,307 – – 289,529,044 310,931,740 – – 2,591,509,091 Inter-segment sales – 522,891,400 – – 198,249 – (523,089,649) A –

1,991,048,307 522,891,400 – 289,529,044 311,129,989 – (523,089,649) 2,591,509,091

Other income 135,049,092 303,969,840 79,980,818 5,597,181 – 252,369 (204,749,822) A 320,099,478

2,126,097,399 826,861,240 79,980,818 295,126,225 311,129,989 252,369 2,911,608,569 Operating expenses (1,838,928,990) (309,693,940) (21,204,990) (275,332,873) (277,683,709) 549,876,684 A (2,172,967,818)

Share of results - Associates 3,172 3,172 - Joint venture (203,235) (203,235)

Depreciation and amortisation (160,764,339) (14,143,616) (774,563) (212,407) – (410,842) (176,305,767)

Segment results 126,404,070 503,023,684 58,001,265 19,580,945 33,446,280 (358,536) 562,134,921

Finance cost (624,459,577)

Profit before tax (62,324,656)

Assets and Liabilities

Investment in associates 45,415 (1,429) 43,986 Segment assets 10,148,772,446 3,301,778,708 1,222,631,143 309,073,227 – 28,481,961 (2,808,362,393) B 12,202,375,092

10,148,772,446 3,301,778,708 1,222,676,558 309,073,227 – 28,481,961 12,202,419,078 Unallocated assets 425,850,203

Total assets 12,628,269,281

Segment liabilities 12,672,701,129 1,824,494,408 249,872,615 321,206,467 – 195,363,154 (2,680,224,467) C 12,583,413,306 Unallocated liabilities 27,434,086

Total liabilities 12,610,847,392

346 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

46. Segment information (cont’d)

p er c Consolidated WAtER WAter holding oil con- FINANCIAl DIStribution treatment Company AND GAS Struction othERS Elimination NOTES Statement 2010 2010 2010 2010 2010 2010 2010 2010 (restated) (restated) (restated) (restated) (restated) (restated) Rm rm rm rm rm rm rm rm

operating Revenue

Sales to external customers 1,907,101,643 – – – 148,421,451 – – 2,055,523,094 Inter-segment sales - 507,406,516 – – 689,074 – (508,095,590) A –

1,907,101,643 507,406,516 – – 149,110,525 – (508,095,590) 2,055,523,094

Other income 84,875,990 119,207,225 72,337,380 – – 89,930 (153,944,777) A 122,565,748

1,991,977,633 626,613,741 72,337,380 – 149,110,525 89,930 2,178,088,842 Operating expenses (1,634,938,568) (257,014,474) (12,190,488) – (138,586,650) (11,718,170) 525,928,828 A (1,528,519,522)

Share of results - Associates (1,921) (1,921) - Joint venture (76,234) (76,234)

Depreciation and amortisation (150,878,209) (12,977,728) (850,844) – – (441,685) (165,148,466)

Segment results 206,160,856 356,621,539 59,296,048 – 10,523,875 (12,148,080) 484,342,699

Finance cost (593,001,037)

Profit before tax (108,658,338)

Assets and Liabilities

Investment in associates – – 44,339 – – - (4,601) 39,738 Segment assets 9,586,116,247 2,939,701,412 1,275,252,477 – – 27,942,276 (2,398,498,283) B 11,430,514,129

9,586,116,247 2,939,701,412 1,275,296,816 – – 27,942,276 11,430,553,867 Unallocated assets 400,199,902

Total assets 11,830,753,769

Segment liabilities 11,658,161,513 1,861,492,811 321,441,695 – – 174,333,486 (2,261,127,673) C 11,754,301,832 Unallocated liabilities 14,155,744

Total liabilities 11,768,457,576

347 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

46. Segment information (cont’d)

Nature of adjustments and elimination to arrive at amounts reported in the Notes consolidated financial statements

A Inter-segment revenues and expenses are eliminated on consolidation.

B The following items are added to/(deducted from) segment assets to arrive at total assets reported in the consolidated statement of financial position:

2011 2010 (Restated) Note RM RM

Investment in RCULS 21 (265,958,665) (254,152,376) Inter group intercompany balances elimination (2,588,190,736) (1,904,774,237) Investment in subsidiaries 17 (463,118,040) (463,110,960) Goodwill on consolidation 507,653,077 507,653,077 Investment in Junior Notes A 20(a) – (285,568,993) Reversal of impairment loss in joint venture at group level 1,251,971 1,455,206

(2,808,362,393) (2,398,498,283)

C The following items are added to/(deducted from) segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2011 2010 Note RM RM

Investment in Junior Notes A 20(a) – (285,568,993) Investment in RCULS (156,093,250) (144,286,962) Inter group intercompany balances (2,588,190,736) (1,904,774,237) Investment in RUBs 64,059,519 73,502,519

(2,680,224,467) (2,261,127,673)

47. Significant events

(a) Both PNSB and SYABAS had each received new conditional offers from State Government on 6 January 2011 as follows:

i) PNSB

- Offer price for each ordinary share is RM64.62 per share

- Offer price for each Cumulative Convertible Redeemable Preference Share (“CCRPS”) is RM1.00 for each CCRPS

- Based on the above, the total value offered for the ordinary share and CCRPS in issue as at 31 December 2009 is RM646.2 million and RM48 million respectively.

348 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

47. Significant events (cont’d)

(a) Both PNSB and SYABAS had each received new conditional offers from State Government on 6 January 2011 as follows: (cont’d)

ii) SYABAS

- Offer price for each ordinary share is RM20.78 per share

- Offer price for each RCULS is RM1.00 for each RCULS

- Based on the above, the total value offered for the ordinary share and RCULS in issue as at 31 December 2009 is RM103.91 million and RM245.0 million respectively.

The offers include the take over of all liabilities of PNSB and SYABAS as at 31 December 2009 subject to negotiation and due diligence.

The Company had sought clarification and confirmation on certain terms. The contents of the reply by State Government did not fully address the issues and concerns raised by PNSB and SYABAS.

The Conditional Offer for PNSB and Conditional Offer for SYABAS (“Conditional Offers”) are, inter alia, conditional upon the Menteri Besar Selangor Incorporated (“MBI”) having, by virtue of acceptance of the Concurrent Offers, acquired or unconditionally contracted to acquire:

i) no less than 100% of the voting shares in SPLASH and ABASS; and

ii) no less than 100% of the ABASS RCPS.

Following the decision made by SPLASH not to accept the Conditional Offer from MBI to acquire all the voting shares in SPLASH, the Company is of the opinion that the Conditional Offers are therefore deemed to have lapsed with no further action to be taken by PNSB and SYABAS respectively.

(b) SYABAS had on 22 February 2011 entered into a MoU with National Institute of Occupational Safety and Health (“NIOSH”) to establish an arrangement to develop a comprehensive safety training and assessment programme, namely the Occupational Safety and Health – SYABAS NIOSH Safety Card (“OSH - SNSC”) training for SYABAS’ Contractors’ Workers, leading to the award of SYABAS NIOSH Safety Card for SYABAS’ Contractors’ Workers.

The MoU sets out the guidelines on the collaboration between SYABAS and NIOSH on OSH - SNSC training and assessment programmes for SYABAS Contractors’ Workers and will enable SYABAS to comply with the provision of Section 15(2)(e) of the Occupational Safety & Health Act 1994.

The MoU is valid for a period of two (2) years from the date of execution and may be extended for another two (2) years or terminated by mutual consent of SYABAS and NIOSH.

349 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

47. Significant events (cont’d)

(c) SYABAS entered into a MoU dated 26 February 2009 with Construction Industry Development Board (“CIDB”) in respect of the provision of training and development programmes by CIDB to the Bumiputra contractors, suppliers and consultants registered with SYABAS for a period of two (2) years. On 7 March 2011, both parties mutually agreed to extend the duration of the MoU for a further period of two (2) years from 26 February 2011 to 25 February 2013 and all other terms and conditions of the MoU remain unchanged.

(d) The Company had on 10 March 2011, acquired Nine Thousand Nine Hundred and Ninety Nine (9,999) Equity shares of Rs.10/- each (Rupees Ten) only in Puncak Niaga Infrastructures & Projects Private Limited [Corporate Identity Number : U45200TN2011PTC079556] (“PNIP Pte Ltd”), representing 99.99% of the total issued and paid-up share capital of PNIP Pte Ltd at a cash consideration of Rs.99,990/- (Rupees Ninety Nine Thousand Nine Hundred and Ninety) only (the “Acquisition”).

PNIP Pte Ltd was incorporated on 10 March 2011 as a private company limited by shares in India under the Indian Companies Act, 1956 (No 1 of 1956). PNIP Pte Ltd is currently dormant and has a paid up share capital of Rs. 1,00,000 (Rupees One Lakh) only divided into 10,000 (Ten Thousand) Equity shares of Rs.10/- each (Rupees Ten) only.

With the Acquisition, PNIP Pte Ltd has become a 99.99% owned subsidiary of Puncak on 10 March 2011 with the remaining 0.01% being held by Ir Tan Hui Kuan, with beneficial holding vesting with the Company. The intended activities of PNIP Pte Ltd is to carry out activities of infrastructures, constructions and other projects in India.

The Acquisition is to facilitate the Group’s future expansion plans to pursue business developments efforts to secure new businesses in India.

(e) Pursuant to the Collaboration Agreement dated 15 March 2007, Puncak Research and DHI have mutually agreed to extend the Collaboration Agreement for a further period of two (2) years, commencing 15 March 2011 until 14 March 2013 (“Extension”) and that save and except for the Extension, all other terms and conditions of the Collaboration Agreement remain unchanged.

(f) The Company had on 15 March 2011 entered into a MoU with an Indian company namely, Ramky Infrastructure Limited (“RIL”) (the Company and RIL to be collectively referred to as “the Parties”) to collaborate with each other on the basis of mutual exclusivity in an unincorporated joint venture to source for potential water and water related projects in India.

The salient terms of the MoU are as follows:

(i) Purpose Of MoU

The MoU sets out the Parties’ respective rights and obligations in the joint participation on the basis of mutual exclusivity in an unincorporated joint venture known as RIL-PNHB Joint Venture (“JV”) with RIL being the Lead Partner, to source for potential water and water related projects in India, to submit the relevant proposal for the Project(s) and to jointly implement the Project(s) if awarded the same by the relevant authorities.

The actual percentage of participation and interest of the JV to be decided mutually on a case to case basis for each individual Project.

350 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

47. Significant events (cont’d)

The salient terms of the MoU are as follows: (cont’d)

(ii) Validity

The MoU takes immediate effect and is valid for a period of twelve (12) months from the date of the MoU thereof, unless extended by mutual agreement of the Parties.

The MoU with RIL had lapsed on 14 March 2012.

(g) SYABAS had on 15 March 2011 entered into a Software Maintenance and Support Agreement (“SMSA”) with Crowder & Co. Ltd (“Crowder”), a UK based company whereby Crowder will supply and license SYABAS to use the Netbase Water Distribution Management System software as well as to provide maintenance and support services (“the Netbase Management System”).

The salient information of the SMSA:

(i) Purpose of SMSA

The SMSA sets out the terms and conditions for Crowder to supply to SYABAS the Netbase Management System together with a License to use the Netbase Management System and for the provision of maintenance and support services, CrowderCover.

(ii) Validity

The SMSA shall commence on 15 March 2011 and expires on 31 December 2013.

The SMSA enables SYABAS to employ the latest leading edge technology in monitoring and managing the non revenue water (“NRW”) for the benefit of the consumers in Selangor and the Federal Territories of Kuala Lumpur and Putrajaya.

351 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

47. Significant events (cont’d)

(h) On 6 April 2011, Malaysian Rating Corporation Berhad (“MARC”) had taken various rating actions on the Selangor water sector issuers, including the rating actions against the Company and its wholly owned and 70% owned subsidiaries, namely PNSB and SYABAS respectively (the Company, PNSB and SYABAS to be hereinafter collectively referred to as the “Group”) which had resulted in the following changes to the ratings for the Group’s debt:-

Minimum Previous Current Rating in Issuer Issue Rating Rating trust

The Company RM546.88 million Redeemable, Secured, A- BB+ BBB- Coupon Bearing Notes 2001/2016 (“RUNs”)

PNSB RM1.02 billion Bai Bithaman Ajil Islamic A+ BBB A- Debt Securities (“BaIDS”)

RM546.88 million Redeemable Unsecured A- BB+ N/A Coupon Bearing Notes 2001/2016 (“A Notes”)

RM435.0 million Redeemable Unsecured A- BB+ BBB- Bonds (“RUBS”)

SYABAS RM3.0 billion Bai Bithaman Ajil Medium A+ BBB N/A Term Notes (“BBA MTN”)

The rating actions by MARC had resulted in the rating of some of the Group’s debt to fall below the minimum rating under their respective trust deeds. While the current rating prevails, an Event of Default (as defined in the respective trust deeds) exists on some of the Group’s debt wherein the revised rating is below the minimum level. If allowed to remain, further action (if any) by the respective bondholders could result in a default on the Group’s debt obligations.

The Management of the Group had upon consultation with its legal counsel and certain major bondholders of the Group, decided to call for the respective bondholders meeting of the Company and PNSB to seek for certain waivers from the bondholders to address the current situation. The bondholders has agreed to waive the rating requirements for PNSB’s BAIDS and RUBS.

On 10 August 2011, via special resolution passed, Acqua has agreed to waive their right to declare an Event Default and also to remove the rating requirement for the Bonds to be rated by MARC or any other rating agencies.

(i) Puncak Oil & Gas Sdn Bhd (“POG”), a wholly owned subsidiary of the Company, had on 23 May 2011 entered into two (2) separate Sale and Purchase Agreements with Global International Vessels Ltd (“GIVL”), a corporation incorporated in Cayman Islands for the acquisition of 40% equity interest in GOM Resources (“GOM SPA”) and KGL (“KGL SPA”) respectively represented by 300,000 ordinary shares of RM1.00 each in GOM and 80,000 ordinary shares of USD1.00 each in KGL for a cash consideration of USD8,400,000.00 (equivalent to approximately RM25,200,000) and USD15,200,000.00 (equivalent to approximately RM45,600,000) respectively (“Acquisition”). The acquisition were completed on 30 June 2011.

352 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

47. Significant events (cont’d)

Under the GOM-Global Asia Pacific Industries Sdn Bhd (“GAPI”) Option, GOM-GIVL Option and KGL-GIVL Option respectively, POG shall have a call option to purchase the remaining sixty percent (60%) of the equity interest in GOM from GAPI and GIVL and in KGL from GIVL, respectively (the “60% Shares”), within one (1) year from the completion of POG’s acquisition of the 40% Shares (“POG Call Option Period”) at the same price per share as the 40% Shares, which in total amount to United States Dollars Thirty Five Million Four Hundred Thousand only (USD35,400,000) (equivalent to approximately RM106.2 million).

On 23 September 2011, POG exercised the call option agreement to acquire the remaining 60% equity interest in GOM Resources and KGL respectively which were completed on 28 September 2011. With the completion, both GOM Resources and KGL are now wholly-owned subsidiaries of POG. The acquisitions have been completed in the current financial year as further described in Note 17(b) and Note 17(c) to the financial statements.

(j) The Company via a 40 : 60 unincorporated joint venture with Quality Concrete Holdings Berhad, namely “Konsortium Puncak Niaga Holdings Bhd – Quality Concrete” had on 23 May 2011 signed a contract for “Rural Water Supply Project In The State Of Sarawak For Years 2010 To 2012” with the Government of Malaysia (“Contract”) at a contract sum of RM667,320,000.

(k) The Company had on 19 April 2011 acquired a 55% stake in Reputable Collection Sdn Bhd (Company No. 927127-M) (“RCSB”) via a subscription of fifty five (55) new ordinary shares of RM1.00 each in RCSB for a total cash consideration of Ringgit Malaysia Fifty Five (RM55.00) only thereby resulting in RCSB becoming a 55% owned subsidiary of the Company on 19 April 2011. RCSB was incorporated on 27 December 2010.

Concurrently, RCSB had acquired a 62.5% stake in Jalinan Handal Sdn Bhd (Company No. 939200-M) (“JHSB”) via a subscription of six hundred and twenty five (625) new ordinary shares of RM1.00 each in JHSB for a total cash consideration of Ringgit Malaysia Six Hundred And Twenty Five (RM625.00) only thereby resulting in JHSB becoming a subsidiary of RCSB on 19 April 2011. JHSB was incorporated on 5 April 2011.

The Company had on 2 June 2011 disposed its entire 55% stake in RCSB comprising fifty five (55) ordinary shares of RM1.00 each in RCSB at a cash consideration of Ringgit Malaysia Fifty Five (RM55.00) only to Rides Star Sdn Bhd (Company No. 232275-H) (“Disposal”).

Following the Disposal on 2 June 2011, JHSB, a 62.5% subsidiary of RCSB also ceased to be a subsidiary of RCSB.

(l) The Company was notified on 26 July 2011 by Luwei Co. Ltd that the regulatory authorities of the People’s Republic of China had issued the “Enterprise Legal Representative Business Licence” dated 25 July 2011 approving the increase of the paid up registered capital of Luwei Co. Ltd to USD5,400,000.00 from USD3,870,000.00 previously. Luwei Co. Ltd is now a 91.34% owned subsidiary of SINO Water with a total investment of USD4,932,500.

(m) On 23 September 2011, the Company’s wholly-owned subsidiary, Puncak Oil & Gas Sdn Bhd accepted a Syndicated 1-month Foreign Currency Term Loan amounting to USD31.0 million from OCBC Bank (Malaysia) Bhd and Hong Leong Bank Bhd (“Lenders”) which was subsequently extended on monthly basis, up to 27 April 2012.

353 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

47. Significant events (cont’d)

(n) On 17 October 2011, SYABAS entered into the Loan Facility Agreement and Deed of Assignment with the Government of Malaysia (“Federal Government”) in respect of a loan facility of RM110.0 million granted to SYABAS by the Federal Government (“Government Loan”).

(o) Following the issuance by the Company of the Notice of Reminder to the Noteholders on Their Rights To Exercise The Put Option Pursuant To The Trust Deed dated 5 September 2001 (“Trust Deed”) Constituting The Notes on 13 September 2011 (“Put Option Exercise”) and based on the Outcome of the Put Option Exercise whereby as at 18 October 2011, 468 Noteholders holding 515,488,256 Notes (94.26%) have exercised the Put Option Exercise as set out in the Reminder Notice:-

(ii) On 2 November 2011, the Company had issued the Notice of Call Option to the Noteholders of the RM546,875,000 nominal value of 15-Years Redeemable Unconvertible Notes (“Notes”) (Noteholders”) on the Company’s intention and rights to exercise the call option to redeem the outstanding notes amounting to 31,386,744 Notes (5.74%) which are not already the subject of the exercise by the Noteholders pursuant to the Put Option.

(p) On 1 November 2011, the POG’s wholly-owned subsidiary, GOM Resources had accepted the Credit Facilities from OCBC Bank (Malaysia) Bhd and Hong Leong Bank Bhd comprising:-

(i) USD Revolving Credit (“RC”) Facility and Letter of Credit (“LC”) Facility, collectively up to USD43,887,147 only (with a sub-limit of RM20,000,000 in respect of the LC Facility);

(ii) Bank Guarantee (“BG”) Facility, up to RM50.0 million; and

(iii) Foreign Currency Exchange Line (“FX”) Facility, up to RM95.0 million (which is reflected as credit risk equivalent of RM9.95 million as per the Facility Agreement).

(q) On 1 November 2011, the Company entered into a conditional Sales & Purchase Agreement with Acqua SPV Berhad (“Aqua”) and PNSB to sell its entire holdings of PNSB Redeemable, Unsecured, Coupon Bearing Notes of up to RM328,125,000 of nominal outstanding value at a total consideration of RM328,125,000 (“Sale”). The outstanding principal amount includes in the fifth mandatory partial redemption repayment of RM54,687,500. The sale was completed on 18 November 2011.

(r) Freehold land, leasehold land and buildings have been revalued at 31 December 2011 based on valuations performed by First Pacific Valuers Property Consultants Sdn Bhd. The valuations are based on the comparison or contractor’s method that makes reference to similar properties which have been sold.

354 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

48. Events occurring after the reporting date

(a) On 8 February 2012, the Companies Commission of Malaysia had approved the change of name of the POG’s subsidiary, Global Offshore Malaysia Sdn Bhd.

(b) On 29 February 2012, KGL had secured a syndicated term loan facility of USD36 million from two local licensed banks. The loan is scheduled to be drawndown in April 2012.

The said loan is to be secured by first ship mortgage over the Group’s construction vessel, a corporate guarantee from the Company and a letter of undertaking by a director of the Company to provide a personal guarantee subject to certain terms and conditions

(c) On 16 April 2012, Acqua’ a special purpose vehicle set up by Pengurusan Aset Air Bhd (“PAAB”) made an offer to restructure the outstanding borrowings of PNSB which comprise:-

(i) RM1,020,000,000 nominal value Al’ Bai Bithaman Ajil secured serial primary bonds together with non-detachable secondary bonds (“BAIDS”);

(ii) RM435,000,000 nominal value redeemable unsecured bonds (“RUBs”); and

(iii) RM546,875,000 nominal value redeemable unsecured coupon bearing notes (“Junior Notes A”)

On 26 April 2012, PNSB has approved the acceptance of the offer and has authorised management to negotiate the yield spreads on the Bonds on a best effort as well as to execute all relevant documents.

49. mAterial litigations

(a) Konajaya

On 2 July 2003, Konajaya filed a suit against PUAS. PUAS called on a bank guarantee and demanded the bank (the issuer of the guarantee) to pay PUAS a sum of RM4,895,160 being the amount of a bank guarantee associated to a contract. On 12 March 2004, an inter-partes injunction was granted to Konajaya to stop the bank from honouring the bank guarantee.

The Court of Appeal had on 10 November 2008 directed that the Originating Summons be heard and disposed off as the appeal to the Court of Appeal is now academic and hearing the merits of the grant of the interim injunction will not resolve the issue at hand. The parties had been directed to proceed to apply to the High Court for a date for the hearing and final disposal of the Originating Summons.

The High Court had fixed and heard the matter inter-partes on 4 February 2009 as directed by the Court of Appeal for purpose of deciding on the setting-aside or the vacating of the interim injunction order of the High Court dated 12 March 2004 restraining PUAS from calling on the Bank Guarantee given by Konajaya. The High Court had delivered its decision by awarding a permanent injunction in place of the interim injunction restraining PUAS from calling on the Guarantee.

355 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(a) Konajaya (cont’d)

Pursuant to the solicitors’ advice, PUAS had instructed its solicitors to file an appeal on the decision of 4 February 2009 and to consolidate this with the previous appeal. The Notice of Appeal had been filed in the Court of Appeal on 25 February 2009 and the Record of Appeal had been filed in the Court of Appeal on 28 April 2009.

The Court of Appeal had on 29 October 2009 dismissed PUAS’s appeals with cost.

PUAS’s application for leave to appeal to the Federal Court against the decision of the Court of Appeal in dismissing PUAS’s appeals with costs and the case management for the second appeal on the declaration in the Originating Summons was fixed for hearing on 5 April 2010. At the hearing on 5 April 2010, PUAS’s application was dismissed with cost of RM15,000.00.

The legal process had therefore been exhausted with the decision made by the Federal Court on 5 April 2010.

(b) KHEC

(i) The First Arbitration Proceedings

KHEC, a sub-contractor for the Chennai Water Supply Augmentation Project 1 - Package III (“Chennai Project”), has initially referred certain disputed claims totalling Rs8,44,26,981 (equivalent to approximately RM6.75 million) against PNHB-LANCO-KHEC JV (“the Consortium”), a jointly controlled entity of the Company in India.

Arising from the arbitration proceedings initiated by KHEC, both KHEC and the Consortium have each appointed a qualified civil engineer as their arbitrator respectively, and both arbitrators have selected a retired Judge of the High Court in Chennai, India as the third arbitrator who will also act as the presiding arbitrator of the arbitral tribunal. The arbitral tribunal was officially constituted on 24 September 2005. On 28 September 2005, the Company was informed that the arbitral tribunal has fixed the following dates for the filing of the arbitration cause papers as part of the preliminary procedural formalities:

(i) claim by the claimant, KHEC to be filed before 4 October 2005;

(ii) rejoinder by the respondent, the Consortium to be filed before 18 November 2005; and

(iii) reply rejoinder by the claimant, KHEC to be filed before 5 December 2005.

The Consortium had on 2 January 2006, filed its counter-claim amounting to Rs13,61,61,931 (equivalent to approximately RM10.89 million) against KHEC’s claim of Rs8,44,26,981 (equivalent to approximately RM6.75 million) to the arbitral tribunal in India.

The Statement of Claim lodged by KHEC had subsequently been revised from Rs8,44,26,981 (equivalent to approximately RM6.75 million) to Rs9,84,58,245 (equivalent to approximately RM7.88 million) whilst the counterclaim submitted by the Consortium, had also been revised as per the rejoinder, from Rs13,61,61,931 (equivalent to approximately RM10.89 million) to Rs13,63,39,505 (equivalent to approximately RM10.91 million).

356 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(b) KHEC (cont’d)

(i) The First Arbitration Proceedings (cont’d)

The Company was notified on 4 March 2009 by solicitors acting on behalf of Consortium that the Arbitration Panel had at its meeting held on 26 February 2009 accepted the letter of withdrawal from the Arbitration Panel dated 18 February 2009 from the arbitrator nominated by KHEC. As such, the date for further meeting of the Arbitration Panel was a to communicated after the appointment of the substitute arbitrator to be nominated by KHEC under Section 15(2) of the Arbitration and Conciliation Act, 1996 of India.

The Company was notified on 25 June 2009 that the first sitting of the newly formed Arbitration Panel for the First Arbitration Proceedings comprising the Presiding Arbitrator, the arbitrator nominated by the Consortium and the substitute arbitrator nominated by KHEC was held on 20 June 2009.

Based on legal advice, the Consortium is of the view that the claim by KHEC is not sustainable. The Arbitration proceedings is currently ongoing in India.

(ii) The Second Arbitration Proceedings

KHEC had commenced a second arbitration proceedings against the PNHB-Lanco members of the Consortium (“the Second Arbitration”) on the basis of the terms of the JVA dated 13 February 2003 and the Supplemental Agreement to the JVA dated 26 March 2003 respectively, entered into between the Company, Lanco Infratech Limited and KHEC whereby KHEC is claiming for loss of profit (inclusive of interest and other cost) amounting to Rs5,44,32,916 (equivalent to approximately RM4.35 million) as they allege that they, despite being a 10% shareowner, received only 4.31% out of the total value of the contract works of the Chennai Project.

The Second Arbitration is being heard by a single arbitrator.

Based on legal advice, PNHB-Lanco members of the Consortium are of the view that it has a good case of defending the claim. The Second Arbitration proceedings is currently ongoing in India.

High Court Summons No: D-24NCC-41: 2009

On 5 October 2009, the solicitors of SYABAS were served with an Originating Summons dated 5 October 2009 (“Originating Summons”) from the solicitors acting for ABASS on 8 October 2009.

In the Originating Summons, ABASS sought for, inter alia, the following:

(i) A declaration that the Schedule of Bulk Supply Rates (“BSR”) as set out in the Table of Appendix 1 of the First Supplemental Agreement dated 10 February 2001 (“First Supplemental Agreement”) is to substitute the Schedule of BSR as set out in Table 1 at page 3 of Appendix 5 of the PCCA dated 9 December 2000;

357 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

High Court Summons No: D-24NCC-41: 2009 (cont’d)

(ii) A declaration that save for the substitution above to Appendix 5 of the PCCA, the Principles on the Bulk Supply Charge Payment Mechanism (“BSC”), the formulas and calculations of BSC by taking into account of any variable costs of chemicals and electricity tariff and any additional costs as set out at pages 1 to 15 of Appendix 5 of the PCCA remain applicable and are valid, binding and effectual between the parties;

(iii) A declaration that the Addendum to the First Supplementary Agreement executed between the State Government and ABASS on 3 July 2008 is valid, binding and effectual between the parties;

(iv) A declaration that SYABAS is liable to pay to ABASS the full amount of the invoices relating to electricity cost for the period from June 2006 until December 2008 and that judgement be entered for ABASS for the total sum of RM7,410,113.25;

(v) A declaration that SYABAS is liable to pay to ABASS the short payment for electricity cost and purchase of water invoices for the period from January 2009 to April 2009 and that judgement be entered for Konsortium ABASS for the total sum of RM55,691,717.73;

(vi) General damages, interest, costs and such further or other order as deemed fit by the Court.

SYABAS’ solicitors had, on behalf of SYABAS, filed the Memorandum of Appearance to the Kuala Lumpur High Court on 14 October 2009.

The solicitors of SYABAS had, on 5 November 2009, filed an Affidavit in Reply to the Affidavit filed by ABASS in support of their Originating Summons.

SYABAS disputed the amount due and owing in the total sum of RM63,101,830.98 as claimed by ABASS in the Originating Summons.

SYABAS had been advised by its solicitors that the claim by Konsortium ABASS is without basis in law and on the facts and have accordingly prayed that the Originating Summons be dismissed with costs.

The High Court had on 7 May 2010 allowed ABASS’ Originating Summons on the following terms:

i) Judgment is entered in favour of ABASS against SYABAS in the amount of RM70,137,915.21 as at 31 March 2010 with judgment interest at 8% per annum on that amount from the date of judgment to the date of full settlement; and

ii) SYABAS to pay costs of RM20,000 to ABASS.

358 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

SYABAS had, on 11 May 2010, filed the Notice of Appeal for the appeal to the Court of Appeal against the decision of the High Court made on 7 May 2010 against SYABAS. The Court of Appeal had on 6 August 2010 allowed SYABAS’ appeal with costs of RM20,000 and the Order of the High Court dated 7 May 2010 was set aside. At the mention held on 24 August 2010, the High Court had struck off SYABAS’ stay application with no order as to costs since the Court of Appeal had allowed SYABAS’ appeal on 6 August 2010.

Pursuant to the decision made by the Court of Appeal in allowing SYABAS’ appeal on 6 August 2010, Abass had not applied for leave to appeal to the Federal Court within thirty (30) days from the said decision and as such, the case is closed.

(d) JAKS-KDEB

Kuala Lumpur High Court Suit No. D4-22-1452-2006

Both PUAS and SYABAS had been served with:

(i) A Writ of Summons and Statement of Claim dated 6 October 2006;

(ii) Ex-Parte Summons-in-Chambers dated 6 October 2006 (“Ex-Parte SIC”) and its supporting Affidavit affirmed on 6 October 2006;

(iii) Amended Statement of Claim filed on 18 October 2006; and

(iv) An Ex-Parte Injunction Order dated 18 October 2006 (“Ex-Parte Order”);

(hereinafter referred to as “the Suit”) in respect of the Suit, by the solicitors of JAKS-KDEB (the “Plaintiff”) on 19 October 2006.

JAKS-KDEB had commenced legal action against PUAS and SYABAS in respect of an agreement dated 25 October 2001 entered into between JAKS-KDEB and the State Government pertaining to the supply of pipes and fittings in the State of Selangor Darul Ehsan and the Federal Territories of Kuala Lumpur and Putrajaya.

Vide the Ex-Parte SIC, the Plaintiff prayed for the following:

(i) An order to immediately restrain PUAS and/or SYABAS whether by themselves, their agents, servants, directors, contractors, nominees and/or all related parties to PUAS and/or SYABAS and/or assignees and/or successors-in- title or otherwise howsoever by injunction, be restrained from purchasing and/or obtaining and/or being given and/ or dealing with and/or receiving all its requirements for the pipes (which includes straight pipes whether whole or in cut lengths of any material including but not limited to mild steel pipes) and fittings (which includes tees, bends, tapes, tapers, collars, flange adaptors, blank flanges, mechanical joints and similar accessories) in respect of all water projects being carried out or to be carried out in the State of Selangor including the Federal Territories of Kuala Lumpur and Putrajaya from any other entities except from the Plaintiff until the disposal of the Plaintiff’s inter-parte application for an injunction;

359 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(d) JAKS-KDEB (cont’d)

Kuala Lumpur High Court Suit No. D4-22-1452-2006 (cont’d)

Vide the Ex-Parte SIC, the Plaintiff prayed for the following: (cont’d)

(ii) An order to immediately restrain PUAS and/or SYABAS whether by themselves, their agents, servants, directors, contractors, nominees and/or all related parties to PUAS and/or SYABAS and/or assignees and/or successors-in- title or otherwise howsoever by injunction, be restrained from taking any further steps in supplying and/or dealing with all of the above pipes and fittings and/or including negotiations and/or award of contracts with any other entities arising out of and in connection with the purchasing and/or obtaining and/or being given and/or receiving all of its requirements for pipes and fittings in respect of all water projects being carried out or to be carried out in the State of Selangor including the Federal Territories of Kuala Lumpur and Putrajaya until the disposal of the Plaintiff’s inter-parte application for an injunction;

(iii) Costs to be costs in the cause;

(iv) That a date be fixed for the inter-partes hearing of the Plaintiff’s application therein within 21 days from the date of the Ex-Parte Order; and

(v) Such further and other relief as the High Court deems fit.

The above prayers were allowed by the High Court on the application of the Plaintiff’s Ex-Parte SIC in the absence of PUAS and SYABAS or their Solicitors being present in High Court on 18 October 2006. The Plaintiff’s Ex-Parte Order was effective for a period of twenty-one (21) days from 18 October 2006 until the date of the inter-partes hearing which has been fixed on 7 November 2006.

PUAS and SYABAS deny and refute all allegations raised by the Plaintiff in the Suit and have instructed their Solicitors to file an application vide Summons in Chambers dated 1 November 2006 to set aside the Ex-Parte Order and to vigorously defend themselves against the Plaintiff’s claim on the day of the inter-partes hearing fixed on 7 November 2006.

At the hearing on 7 November 2006 (the “Hearing”), the High Court on the application of the Plaintiff’s Solicitors, allowed an adjournment of the Hearing to 17 November 2006 to enable the Plaintiff to prepare a reply affidavit to the affidavit filed by the State Government, the 3rd Defendant to the Suit. Subsequently, the Hearing was adjourned to 20 November 2006.

At the hearing on 20 November 2006, the High Court fixed 22 November 2006 as the date to give its decision on the Inter-Partes application for injunction. The High Court also ordered that no ad-interim order extending the Ex-Parte injunction would be granted for the period from 20 November until 22 November 2006. This means that for this period, SYABAS was free to obtain its pipe supply from any source.

At the hearing on 22 November 2006, the High Court did not grant the injunction order applied for by JAKS-KDEB and instead proceeded to fix a date for the Case Management on 15 January 2007. However, the High Court had postponed the Case Management to 13 February 2007 and subsequently to 22 March 2007.

360 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(d) JAKS-KDEB (cont’d)

Kuala Lumpur High Court Suit No. D4-22-1452-2006 (cont’d)

On 22 March 2007, the High Court fixed the Case Management for mention on 4 April 2007. The application by JAKS- KDEB for Discovery against PUAS and SYABAS and Inspection of SYABAS Concession Agreement was also heard on 22 March 2007 and a decision was fixed for hearing on 4 April 2007. At the hearing on 4 April 2007, the High Court allowed the application for Discovery by JAKS-KDEB against PUAS and SYABAS and accordingly, ordered the discovery and inspection of SYABAS Concession Agreement.

Upon consultation with its solicitors on the prospect of filing an appeal, SYABAS has instructed its solicitors to proceed to file an appeal with the Court of Appeal. The appeal was subsequently filed in the Court of Appeal on 3 May 2007. At the hearing on 15 July 2008 at the Court of Appeal, the Court of Appeal has dismissed SYABAS’ appeal against the Order for Discovery by the High Court dated 4 April 2007 ordering disclosure of the Concession Agreement with costs. SYABAS had instructed its solicitors not to proceed with further appeal to the Federal Court. The decision was based primarily on the fact that the Federal Government and State Government did not object to the disclosure of the Concession Agreement at the High Court.

At the hearing on 3 October 2007, the High Court had allowed the application to amend the Statement of Defence, with costs and ancillary costs to be borne by PUAS and SYABAS.

In view of the dissolution of Jabatan Kawalselia Air Selangor (“JKAS”) previously being the recipient of the written notification and written report as stated in High Court Order dated 22 November 2006, SYABAS had instructed its solicitors to file an application in the High Court to amend the said Order by replacing JKAS as the recipient with Suruhanjaya Perkhidmatan Air Negara (“SPAN”) and the said application which was fixed for Hearing on 20 April 2009 was subsequently postponed to 19 May 2009 and 25 June 2009.

The High Court had on 6 July 2009 fixed the Hearing of the First and Second Defendants’ application to amend the High Court Order dated 22 November 2006 to 22 July 2009. The High Court had directed the Plaintiff to file a further Affidavit to state that the Plaintiff intends to add the State Government in the Order in view that the application is only in respect of amending the entity to SPAN.

On 22 July 2009, the High Court had at the Hearing of the First and Second Defendants’ application to amend the High Court Order dated 22 November 2006 allowed the addition of the words “dan/atau Kerajaan Negeri Selangor” to be added in the Order together with the word “SPAN”. The addition was requested by the Plaintiff and consented by the Selangor State Legal Advisor, representing the 3rd Defendant.

The High Court had subsequently adjourned the matter for Hearing on 30 October 2009 as the 3rd Defendant intends to oppose the Plaintiff’s application to amend the Statement of Claim. The Hearing was adjourned to 12 November 2009 to enable the 3rd Defendant to file its Affidavit in Reply to the Plaintiff’s Affidavit in Reply. At the Hearing held on 12 November 2009 for the Plaintiff’s application to amend the Statement of Claim, the High Court had fixed the matter for decision on 18 November 2009. At the Case Management held on 18 November 2009, the High Court had allowed the Plaintiff’s application to amend the Statement of Claim and fixed the matter for further Case Management on 12 January 2010. In response, SYABAS has then filed the Amended Statement of Defence on 22 January 2010 and the matter was fixed for further Case Management on 25 March 2010.

361 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(d) JAKS-KDEB (cont’d)

Kuala Lumpur High Court Suit No. D4-22-1452-2006 (cont’d)

At the Case Management held on 25 March 2010, the High Court adjourned the matter to 5 April 2010 for mention to ascertain whether the matter can proceed by the way of mediation. On 5 April 2010, the High Court had adjourned the matter to 10 May 2010 for Case Management to enable the parties to comply with the High Court’s directions and to fix the matter for trial since the parties were not agreeable to mediate. Further Case Management was held on 4 June 2010 and 4 August 2010 and the next Case Management was fixed on 29 September 2010. The High Court had subsequently adjourned the matter for Hearing on 12 October 2010 with trial date been tentatively fixed on 16 October 2010 and 17 October 2010 subject to reconfirmation at the next Case Management date. At the Case Management held on 12 October 2010, the High Court had fixed the trial dates on 16 December 2010, 17 December 2010, 20 January 2011 and 21 January 2011. The oral submissions will be heard on 24 January 2011 and 25 January 2011.

At the hearing on 17 December 2010, the High Court had vacated the trial date on 20 January 2011 and fixed new trial dates on 28 March 2011 to 31 March 2011. The trial date fixed on 21 January 2011 and the oral submissions dates fixed on 24 January 2011 and 25 January 2011 remain unchanged.

At the trial held on 21 January 2011, the High Court had vacated the dates previously fixed for the oral submissions on 24 January 2011 and 25 January 2011 and fixed additional dates for continued trials on 24 January 2011, 25 January 2011 and 26 January 2011. The trial dates previously fixed on 28 March 2011 to 31 March 2011 remain unchanged. At the trial held on 28 March 2011, the High Court vacated the dates on 30 March 2011 and 31 March 2011. The trial dates on 28 March 2011 and 29 March 2011 remain unchanged. The matter was fixed for further full trial on 5 May 2011, 6 May 2011, 20 May 2011, 8 June 2011, 9 June 2011 and 10 June 2011. Since the trial concluded on 9 June 2011, the trial fixed for 10 June 2011 was vacated and the matter was fixed for decision on 12 September 2011.

The High Court had on 12 Sept 2011 postponed the decision date for the matter to 5 October 2011 as post-trial submissions only closed on 9 September 2011. On 5 October 2011, the High Court had dismissed the plaintiff’s claim against the Defendants which include PUAS and SYABAS. On 3 November 2011, JAKS-KDEB had filed a Notice of Appeal to the Court of Appeal against the decision by the High Court on 5 October 2011.

(e) ADP-PJI Joint Venture (“ADP-PJI JV”)

On 27 February 2009, PNSB was notified by its solicitors on the Points of Claim dated 25 February 2009 served by ADP- PJI JV on 26 February 2009 for arbitration proceedings against PNSB.

The details of the arbitration are as follows:

(i) By way of a Letter of Award dated 5 August 2004, PNSB awarded the design, construction, completion and commissioning of a water treatment plant (“the Works”) for the “Projek Pembinaan Loji/Kolam Takungan dan Paip Utama Telibong dan Telipok, Sabah” (“Sabah Project”) to an unincorporated joint venture known as ADP-PJI JV for a fixed price lump sum of RM65,161,515.01.

362 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(e) ADP-PJI Joint Venture (“ADP-PJI JV”) (cont’d)

(ii) On 26 December 2007, upon the advice of its solicitors, PNSB issued a notice determining the employment of ADP-PJI JV for, inter alia, a failure to proceed regularly and diligently with the Works. ADP-PJI JV disputed the termination and referred the matter to the Superintending Officer (‘S.O.’) under the contract for a decision. Following the reference to the S.O. for a decision and being dissatisfied with the same, ADP-PJI JV had referred the disputes surrounding the termination of their employment to arbitration.

(iii) ADP-PJI JV via its solicitors had served a Points of Claim dated 25 February 2009 in the arbitration against PNSB via PNSB’s solicitors on 26 February 2009.

(iv) The Points of Claim seeks various reliefs arising from the alleged wrongful determination of ADP-PJI JV’s employment. ADP-PJI JV is claiming for the sum of RM10,080,201.31 for loss, expense and damages, disruption to progress of employment works, failure to pay the amounts certified and for works completed which have not been certified and other breaches of contract or such other sum as ADP-PJI JV may be found entitled to recover from PNSB arising from the alleged wrongful determination of ADP-PJI JV’s employment.

(v) On 27 April 2009, PNSB had served its Points of Defence and Counter Claim in the arbitration stating, among others, that PNSB has rightfully determined the employment of ADP-PJI JV due to ADP-PJI JV’s breaches of the contract for the “Projek Pembinaan Loji/Kolam Takungan dan Paip Utama Telibong dan Telipok, Sabah” and the failure to meet the completion date for the Sabah Project.

PNSB’s Counter Claim involves amongst others, the additional costs incurred in completing the works for the Sabah Project (“Works”), additional costs in respect of the maintenance obligations, management and staff costs, damages, liquidated or general damages by reason of the delay in completion of the Works and overtime claim by the engineers for the purposes of construction supervision.

(vi) PNSB was notified on 1 June 2009 by its solicitors that the latter had been served with ADP-PJI JV’s Reply and Defence to Counterclaim dated 28 May 2009 by the solicitors acting for ADP-PJI JV, which in substance joins issue with PNSB’s Points of Defence and Counterclaim dated 27 April 2009 and reiterates ADP-PJI JV’s earlier position vide its Points of Claim dated 25 February 2009.

(vii) PNSB had on 4 November 2010 closed their case and the Arbitrator had directed for written submissions to be filed by ADP-PJI JV and PNSB by 29 January 2011 and 1 April 2011 respectively and reply, if any, by 2 May 2011.

(viii) The Arbitrator had subsequently allowed PNSB’s solicitors to file in their written submission by 3 May 2011 and correspondingly, ADP-PJI JV’s solicitors is required to submit their reply by 3 June 2011.

(ix) The Respondent’s written submission had been filed with the Arbitrator on 3 May 2011.

(x) The award has yet to be released by the Arbitrator as of to date.

363 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(f) SPLASH

Kuala Lumpur High Court Civil Suit No. D-22ND-398-2009

On 19 November 2009, SYABAS was served with a Writ and Statement of Claim (“Statement of Claim”) dated 30 October 2009 from the solicitors acting for SPLASH.

SPLASH’s claim is for alleged outstanding amount due and owing in respect of the Supply Charge and Capacity Charge from SYABAS under the Privatisation Agreement dated 24 January 2000, Supplemental Agreement dated 3 February 2005 and the Novation Agreement dated 3 February 2005.

In the Statement of Claim, SPLASH sought for, inter alia, the following:

(i) The sum of RM196,343,723.99 being payment for the invoices;

(ii) Interest on the sum of RM22,495,131.18 which is the Capacity Charge for the month of October 2008 at the rate of one percent (1%) per annum plus the Base Lending Rate of Malayan Banking Berhad on a daily basis from 1 February 2009 until the date of full realisation;

(iii) Interest on the sum of RM23,103,687.43 which is the Capacity Charge for the month of November 2008 at the rate of one percent (1%) per annum plus the Base Lending Rate of Malayan Banking Berhad on a daily basis from 1 March 2009 until the date of full realisation;

(iv) Interest on the sum of RM19,387,068.61 which is the Capacity Charge for the month of December 2008 at the rate of one percent (1%) per annum plus the Base Lending Rate of Malayan Banking Berhad on a daily basis from 1 April 2009 until the date of full realisation;

(v) Interest on the sum of RM28,283,988.12 which is the Capacity Charge for the month of January 2009 at the rate of one percent (1%) per annum plus the Base Lending Rate of Malayan Banking Berhad on a daily basis from 1 May 2009 until the date of full realisation;

(vi) Interest on the sum of RM26,653,975.96 which is the Capacity Charge for the month of February 2009 at the rate of one percent (1%) per annum plus the Base Lending Rate of Malayan Banking Berhad on a daily basis from 1 June 2009 until the date of full realisation;

(vii) Interest on the sum of RM27,268,760.61 which is the Capacity Charge for the month of March 2009 at the rate of one percent (1%) per annum plus the Base Lending Rate of Malayan Banking Berhad on a daily basis from 1 July 2009 until the date of full realisation;

(viii) Interest on the sum of RM24,797,813.57 which is the Capacity Charge for the month of April 2009 at the rate of one percent (1%) per annum plus the Base Lending Rate of Malayan Banking Berhad on a daily basis from 1 August 2009 until the date of full realisation;

364 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(f) SPLASH (cont’d)

Kuala Lumpur High Court Civil Suit No. D-22ND-398-2009 (cont’d)

(ix) Interest on the sum of RM24,353,298.51 which is the Capacity Charge for the month of May 2009 at the rate of one percent (1%) per annum plus the Base Lending Rate of Malayan Banking Berhad on a daily basis from 1 September 2009 until the date of full realisation; and

(x) Costs.

SYABAS had instructed its solicitors to defend the above claims. The solicitors of SYABAS had on 6 January 2010, filed and served SYABAS’ Defence to the claim filed by SPLASH dated 30 October 2009. The High Court had on 26 January 2010 fixed the case for mention on 22 February 2010 and for further case management on 25 March 2010 for SPLASH to amend the Statement of Claim. The High Court had on 30 April 2010 allowed the Plaintiff’s application to amend their Writ of Summons and Statement of Claim by consent. The solicitors of SYABAS had on 18 May 2010 filed and served the Amended Defence dated 18 May 2010.

On 20 August 2010, the High Court adjourned the hearing to 29 September 2010 and allowed the parties to exchange affidavits in the meantime. At the hearing on 29 September 2010, the High Court postponed the hearing for SPLASH’s application under Order 33 Rule 2 for the High Court to determine preliminary issues on the construction of the proportionate payment clauses in the Novation Agreement with SYABAS, to 29 October 2010 whilst SYABAS’ application to reamend the Amended Defence was allowed with costs.

At the hearing on 29 October 2010, the High Court had reserved decision of SPLASH’s application to 12 November 2010.

SPLASH’s application under Order 33 Rule 2 to hear the preliminary issues were allowed by the High Court on 12 November 2010 and the matter was fixed for Hearing on 10 January 2011.

At the Hearing held on 29 November 2010 of the Plaintiff’s application to reamend the Amended Writ of Summons and the Statement of Claim, the High Court fixed the matter for decision on 3 December 2010. The hearing date of the Writ of Summons and the preliminary issues under SYABAS’ application under Order 33 Rule 2 which was originally fixed on 10 January 2011 was vacated and the matter was fixed for hearing on 7 January 2011. At the hearing on 3 December 2010, the High Court had allowed the Application by the Plaintiff to reamend the Amended Statement of Claim and the matter was fixed for hearing on 7 January 2011. The solicitors of SYABAS had filed a notice of appeal against the decision of the High Court dated 12 November 2010 which allowed SPLASH’s Application under Order 33 Rule 2 for the preliminary issues to be heard.

At the hearing held on 7 January 2011 on the Writ of Summons and preliminary issues (Order 33 Rule 2 of the High Court), the High Court fixed the matter for decision on 16 February 2011 which was subsequently fixed for decision on 21 February 2011. The Court of Appeal had fixed the appeal for case management on 17 February 2011. The case management originally fixed on 17 February 2011 by the Court of Appeal for the appeal had been postponed to be fixed on 25 February 2011 upon application by SYABAS’ solicitors pending decision by the High Court on the plaintiff’s claim which had been fixed on 21 February 2011.

365 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(f) SPLASH (cont’d)

Kuala Lumpur High Court Civil Suit No. D-22ND-398-2009 (cont’d)

The SYABAS’ appeal against the Order of the High Court on the Plaintiff’s application pursuant to Order 33 of the Rules of the High Court 1980 for the hearing of the preliminary issues had been fixed for Case Management on 22 March 2011. The High Court had brought forward the hearing date of the oral application for stay of the order pending appeal from 6 April 2011 to 29 March 2011. SYABAS’ appeal against the Order of the High Court on the Plaintiff’s application pursuant to Order 33 of the Rules of the High Court 1980 had been adjourned to 5 April 2011.

On 30 June 2011, the Court of Appeal decided in respect of SYABAS’ appeal as follows:

(i) Order of the High Court dated 11 December 2010 allowing the Plaintiff’s application pursuant to Order 33 of the Rules of the High Court 1980 (“1st Appeal”) was not allowed; and

(i) SYABAS’ appeal against the Order of the High Court SYABAS’ dated 21 February 2011 (Civil Appeal W-02 (NCC) 504-2011) (“2nd Appeal”) was allowed in part.

At the hearing of SYABAS’ application for a stay of execution of the Order of the High Court dated 21 February 2011 (“Order”) on 29 March 2011, the High Court extended the order for stay of execution of the Order (excluding the taking of accounts) until the disposal of the appeal. SPLASH was granted liberty by consent to apply to set aside the stay should there be any delay in the disposal of the appeal beyond 7 May 2011. The stay of execution does not prevent SPLASH from applying for accounts of all payments due before the Registrar as there is no stay of the proceedings.

The High Court had 21 February 2011 declared that SYABAS must pay in full and not proportionately and subsequently ordered an account of all payments due to SPLASH in respect of invoices issued after the date of the writ to be taken before the Deputy Registrar of the New Commercial Court on a date to be fixed. The High Court had ordered SYABAS to pay lump sum costs of RM30,000.00 in respect of the Reamended Writ of Summons and the Statement of Claim in lieu of taxation to the plaintiff and also granted SYABAS an interim stay on enforcement of the Judgement until 6 April 2011 pending full argument on stay on merits. The solicitors of SYABAS filed a Notice of Appeal on 22 February 2011 at the Court of Appeal against the decision of the High Court dated 21 February 2011.

The matter which came up for Case Management on 25 February 2011 at the Court of Appeal, was fixed for further Case Management on 22 March 2011, pending the filing of the Records of Appeal for the appeal dated 22 February 2011 against the Decision of the High Court dated 21 February 2011. The appeal against the Decision of the High Court on 21 February 2011 fixed for Case Management on 29 March 2011 was subsequently adjourned to 5 April 2011. The Court of Appeal had fixed the hearing of SYABAS’ appeals against the Orders of the Rules of High Court and the decision of the High Court on 21 February 2011, on 30 May 2011 and the written submissions to be filed by 16 May 2011. The written submissions date was changed from 16 May 2011 to 14 June 2011.

The earlier hearing date fixed on 30 May 2011 was vacated.

366 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(f) SPLASH (cont’d)

Kuala Lumpur High Court Civil Suit No. D-22ND-398-2009 (cont’d)

On 27 May 2011, a sealed copy of the Plaintiff’s Summon in Chambers for the hearing of the taking of the accounts pursuant to the Decision of the High Court dated 21 February 2011 was served on Syabas’ solicitors and the matter was fixed for hearing on 9 June 2011. On 8 June 2011, SYABAS’ solicitors was informed by the Plaintiff’s solicitors that the High Court had approved the Plaintiff’s application to adjourn the hearing for the taking of accounts pursuant to the Decision of the High Court of 21 February 2011 to 24 June 2011. The original hearing date fixed on 9 June 2011 was vacated. The hearing for the taking of accounts pursuant to the Decision of the High Court of 21 February 2011 was adjourned to 1 July 2011 for continuation of hearing. At the High Court hearing held on 1 July 2011 of the Plaintiff’s application for the taking of accounts of all payments due from the Defendant on all invoices issued after the date of the amended Writ of Summons, the Plaintiff’s application was withdrawn with no order as to costs in view of the decision of the Court of Appeal on 30 June 2011.

At the mention on 15 July 2011 at the High Court, the Plaintiff withdrew the application to remove the stay of execution of the Order dated 21 February 2011 with no order as to costs. In respect of the application for interim payment, after hearing counsel for both parties, the Judge fixed the said application and any other application that may be filed for hearing on 22 July 2011. On 20 July 2011, SYABAS’ solicitors was served with a Summons in Chambers dated 19 July 2011 (“SIC”) by the Plaintiff’s solicitors, an application by the Plaintiff for a consequential order for the taking of accounts pursuant to the Decision of the High Court of 21 February 2011. SYABAS had on 21 July 2011 filed its Affidavit pursuant to the SIC. At the hearing held on 22 July 2011, the High Court fixed the mention on 19 August 2011 for the parties to seek clarification from the Court of Appeal on the Court of Appeal’s decision dated 30 June 2011.

The matter was fixed for further mention on 20 September 2011 pending the disposal of the motion of SPLASH to the Court of Appeal (filed on 2 August 2011) for clarification of the Order of the Court of Appeal dated 30 June 2011. On 28 July 2011, SYABAS’ solicitors were notified by SPLASH’s solicitors that the latter intend to file a Notice of Motion for leave to appeal to the Federal Court against the part of decision of the Court of Appeal which was not in their favour. Counsels have perused the Notice of Motion have filed the affidavit to oppose SPLASH’s application. At the case management on SPLASH’s Notice of Motion held on 11 August 2011, the Federal Court fixed the matter for hearing on 17 October 2011. The hearing of SPLASH’s application for leave to appeal to the Federal Court against the decision of the Court of Appeal of 30 June 2011 which was fixed for 17 October 2011 was vacated. The court has fixed the application for case management on 3 November 2011. At the case management held on 3 November 2011 and upon the request of SPLASH’s solicitors, the Federal Court had fixed the next case management on 6 December 2011 pending the hearing and disposal of the two (2) motions of SPLASH in the Court of Appeal (for clarification and to amend the Order dated 30 June 2011).

The Federal Court had at the case management held on 6 December 2011 fixed the matter for further case management on 30 January 2012 pending the hearing and disposal of the two (2) motions of SPLASH in the Court of Appeal (for clarification and to amend the Order dated 30 June 2011).

At the case management held on 30 January 2012, the Federal Court had fixed the matter for further case management on 23 February 2012 pending the hearing and disposal of the two (2) motions of SPLASH in the Court of Appeal (for clarification and to amend the Order dated 30 June 2011).

367 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(f) SPLASH (cont’d)

Kuala Lumpur High Court Civil Suit No. D-22ND-398-2009 (cont’d)

On 13 February 2011, the Plaintiff’s solicitors informed the Court of Appeal that the Plaintiff’s applications for motion for clarification and to amend the Order of the Court of Appeal dated 30 June 2011 was fixed for hearing on 20 February 2012.

At the hearing held on 20 February on the Plaintiff’s applications for motion for clarification and to amend the Order of the Court of Appeal dated 30 June 2011 (“Order”), the Court of Appeal had :-

(i) allowed the Order to be amended so that the relevant parts of the Order will read as :-

“Appeal is allowed in part. Order of the High Court is set aside except the declaration in paragraph 1 of the Order is affirmed subject to the deletion of the words “tanpa mengambil kira keupayaan Defendan untuk membayar kepada Plaintiff jumlah secara penuh”, with no order as to costs”.

(ii) not made any Order on the Motion by SPLASH for clarification.

At the hearing held on 21 February 2011 on the Plaintiff’s two (2) Motions namely, the applications for Interim Payment and Consequential Orders, the Plaintiff had withdrawn their motion for the Interim Payment. The High Court had fixed the hearing for the Consequential Order on 29 March 2012.

At the hearing held on 29 March 2012, the High Court had allowed the plaintiff to withdraw its application and ordered for the application to be struck out with cost of RM15,000 to be awarded to the Company.

On 29 August 2011, SYABAS’ solicitors served a sealed copy of SPLASH’s Notice of Motion and Affidavit in Support which was affirmed on 3 August 2011. The motion for clarification of the decision of the Court of Appeal on 30 June 2011 fixed for hearing on 22 September 2011 has been adjourned to 27 October 2011, pending the clarification at the Court of Appeal and hearing of the notice of motion for leave to appeal to the Federal Court. The matter was fixed for mention on 27 October 2011. The Kuala Lumpur High Court allowed the application by Splash to adjourn the hearing on 27 October 2011, pending the clarification at the Court of Appeal and hearing of the notice of motion for leave to appeal to the Federal Court. The applications by SPLASH’s for Consequential Orders and Interim Payment was fixed for hearing on 27 October 2011. On 27 October 2011, the Court has fixed both SPLASH’s application for Consequential Orders and Interim Payment for Mention on 31 October 2011 to fix a new hearing date. SPLASH’s applications for Consequential Orders and Interim Payment came up for Mention on 31 October 2011 and is now fixed for Hearing on 21 February 2012.

On 21 November 2011, SYABAS’ solicitors informed that the Court of Appeal had fixed the Case Management for the motion for clarification and to amend the Order of the Court of Appeal and Decision dated 30 June 2011 on 22 November 2011. At the Case Management held on 22 November 2011 for the Plaintiff’s application on the motion for clarification and to amend the Order of the Court of Appeal and Decision dated 30 June 2011, the Court of Appeal had informed that the Court will write to the parties once the hearing date is fixed.

368 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(f) SPLASH (cont’d)

Kuala Lumpur High Court Civil Suit No. D-22ND-398-2009 (cont’d)

(ii) not made any Order on the Motion by SPLASH for clarification. (cont’d)

At the case management held on 23 February 2012 pursuant to the motion by SPLASH for leave to appeal to the Federal Court, the Federal Court had fixed the matter for hearing on 10 May 2012.

At the hearing held on 29 March 2012 on the Plaintiff’s application for a Consequantial Order, the High Court had allowed the Plaintiff to withdraw its application and order for the application with loss of RM15,000 to be awarded to SYABAS.

(g) Kerajaan Negeri Selangor (“ State Government”)

Kuala Lumpur High Court Originating Summons No. D-24NCC-388-2010

On 10 November 2010, SYABAS has instituted legal proceedings against Kerajaan Negeri Selangor (“State Government”) at the High Court in Kuala Lumpur vide Originating Summons No: D-24NCC-388-2010 which was supported by an affidavit in support dated 9 November 2010. In the said Originating Summons, SYABAS is seeking the following relief:

(i) A declaration that upon a true construction of the Concession Agreement dated 15 December 2004, there is a sum of RM471,642,916.00 due and owing from the State Government to SYABAS for the period from 1 January 2009 to 31 December 2009;

(ii) That the State Government do pay the said sum of RM471,642,916.00 to SYABAS forthwith upon making of this Order;

(iii) Costs of the action to be paid by the State Government to SYABAS in any event; and

(iv) Such further or other relief or remedy as the Court shall deem just.

On 18 November 2010, the Originating Summons and the Affidavit in Support were served on the State Government. On 25 November 2010, the State Government’s solicitors entered appearance on behalf of the State Government. The matter came up for case management on 2 December 2010 where the High Court allowed the State Government’s solicitors’ request for a 2 week extension of time to file the State Government’s affidavit in reply and thereafter adjourned the matter for further case management on 16 December 2010. On the case management dated 16 December 2010, the State Government’s affidavit in reply dated 15 December 2010 was served on SYABAS’ solicitors. The High Court then directed SYABAS to file its affidavit in reply by 31 December 2010 and further fixed the matter for Hearing on 11 February 2011. The High Court also directed parties to file their respective submissions by 8 February 2011. The High Court also informed that parties may agree between themselves any extension of time for filing of affidavits provided that the hearing date is not affected. In this regard, the State Government’s solicitors agreed to SYABAS filing the affidavit in reply by 10 January 2011.

369 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(g) Kerajaan Negeri Selangor (“ State Government”) (cont’d)

Kuala Lumpur High Court Originating Summons No. D-24NCC-388-2010 (cont’d)

On 10 January 2011, SYABAS’ solicitors filed SYABAS’ Affidavit in Reply dated 10 January 2011 in the High Court and served a copy of the same on the State Government’s solicitors. On 24 January 2011, the State Government’s affidavit in reply dated 24 January 2011 was served on SYABAS’ solicitors. On 2 February 2011, SYABAS’ solicitors filed SYABAS’ affidavit (3) dated 28 January 2011 in the High Court and served a copy of the same on the State Government’s solicitors. On 7 February 2011, the State Government’s solicitors served on SYABAS’ solicitors a summons in chambers dated 7 February 2011 (“State Government’s application”) for inter alia, an Order to convert the Originating Summons into a writ action or alternatively that the State Government be given leave to cross-examine the deponent of SYABAS’ affidavits, which was fixed for hearing on 11 February 2011. On 8 February 2011, SYABAS’ solicitors filed the written submission for the Originating Summons. On 10 February 2011, SYABAS’ solicitors filed SYABAS’ affidavit dated 10 February 2011 in Court and served a copy of the same on the State Government’s solicitors to oppose the State Government’s application. On 23 February 2011, the State Government filed their Affidavit in Reply dated 23 February 2011 and served a copy of the same on Syabas’ solicitors, in reply to Syabas’ Affidavit dated 10 February 2011 in relation to the State Government’s application.

On 11 February 2011, the High Court decided to hear the State Government’s application first and fixed it for clarification/ decision on 28 February 2011. As for the Originating Summons, the High Court fixed the matter for case management on 28 February 2011 immediately after the clarification and/or decision in respect of the State Government’s application.

On 28 February 2011, the High Court allowed the State Government’s application to convert the Originating Summons into a writ action. The matter was fixed for case management on 16 March 2011. The matter was fixed for further Case Management on 30 March 2011 pending the State Government’s official response on its stand in respect of SYABAS’ claim for compensation and tariff adjustment. The current judge for the case had recused himself from hearing the case any further. The matter was fixed for case management before a new judge on 11 April 2011 which subsequently upon written request by SYABAS’ solicitors, was rescheduled to 12 April 2011.

The matter came up for Case Management for the first time before NCCI High Court Judge on 12 April 2011. The parties informed the learned Judge that they are working out the mechanics of the proposed hearing. The learned Judge then fixed a further case management date on 6 May 2011.

The Court has fixed the matter for further case management on 10 May 2011 to enable the defendant’s leading counsel to attend the same. The Court has further fixed the case management on 27 May 2011 pending the defendant’s filing of an application to join the Federal Government as a party to the proceedings. As the defendant had decided not to bring in the Federal Government as a party to the proceedings, the case management on 27 May 2011 was fixed for further case management on 28 June 2011 for Syabas to take instruction on the mode of action and pleadings.

370 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(g) Kerajaan Negeri Selangor (“ State Government”) (cont’d)

Kuala Lumpur High Court Originating Summons No. D-24NCC-388-2010 (cont’d)

At the case management held on 28 June 2011, the High Court allowed SYABAS’ application to withdraw with liberty to file afresh by way of a writ of summons with no order as to costs. The withdrawal of the suit by SYABAS with liberty to file afresh with no order as to costs are for the following reasons:-

(i) It was the defendant’s application to convert the originating summons to a writ;

(ii) It will be more appropriate in the circumstances to have proper pleadings rather than the present affidavit form;

(iii) The plaintiff still intend to proceed with the claim by way of a fresh writ action.

On 17 April 2012, the Kuala Lumpur High Court has re-scheduled the case management to 27 April 2012.

(h) ABASS

Kuala Lumpur High Court Writ Summons No: 22NCC-543-2011

SYABAS has been served with a Writ and Statement of Claim (“Statement of Claim”) dated 28 March 2011 from the solicitors acting for Abass on 30 March 2011.

In the Statement of Claim, ABASS is claiming against SYABAS for, inter alia, the following:-

i) A declaration that SYABAS is liable to make full payment on all invoices issued by ABASS pursuant to the Privatization Cum Concession Agreement dated 9 December 2000, the Supplemental Agreements dated 10 February 2001, 28 August 2001 and 15 February 2005 and the Novation Agreement dated 15 February 2005 particularly in accordance to Section 4.04 (c) of the Novation Agreement and that SYABAS’ liability to make payment in full is not in any way diminished or mitigated by reason of its right to make proportionate payment to the water concessionaires;

ii) Judgment for the sum of RM149,478,553.02;

iii) An account of all payments due to ABASS in respect of invoices issued after the date of the Writ herein be taken by the Honourable Court and an order that SYABAS do pay ABASS all such sums found to be due on the taking of such account;

iv) Interest on the outstanding amount of the invoices for the months from January 2010 to October 2010 at the rate of 1 % per annum plus the base lending rate of Malayan Banking Berhad calculated on daily basis until the date of full payment by SYABAS;

v) Interest on the outstanding amount of the previous outstanding invoices for the months from June 2006 to December 2009 in the sum of RM6,218,522.57;

371 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(h) ABASS (cont’d)

Kuala Lumpur High Court Writ Summons No: 22NCC-543-2011 (cont’d)

vi) Alternative to prayers (3) and (4) above, interest at the rate of 8 % per annum on the outstanding amount of each of the outstanding invoices to be calculated from the respective due date until the date of full payment by SYABAS;

vii) Damages for breach of contract; and

viii) Costs.

SYABAS is required to enter appearance within 8 days from 30 March 2011 and the Court fixed the matter for Case Management on 12 April 2011.

SYABAS’ solicitors filed the Memorandum of Appearance in relation to the Suit on 4 April 2011 and the same had been served on the Plaintiff’s solicitors on 5 April 2011.

The High Court fixed the matter for Case Management on 12 April 2011. At the Case Management on 12 April 2011, the High Court fixed a further Case Management on 30 May 2011 in order for SYABAS to file its Defence latest by 6 May 2011 and for ABASS to file its reply (if any).

SYABAS’ Defence and Counterclaim had been filed in Court and a copy thereof served on the solicitors of Konsortium Abass respectively, on 6 May 2011.

The matter came up for Case Management on 30 May 2011 and the Court has fixed 7 July 2011 for Mention pending SYABAS’ reply to the Plaintiff’s Reply & Defence to counterclaim.

At the Case Management held on 7 July 2011, the Court fixed the next Case Management on 29 July 2011 for the defendant to file a reply affidavit to the plaintiff’s application pursuant to Order 33 Rule 2 Rules of the High Court 1980 for certain preliminary issues to be heard before the trial of other questions or issues in the action, and also for the defendant to serve the application for leave to issue a third party notice on the relevant parties.

At the Case Management on 29 July 2011 the High Court fixed a further Case Management date on 26 August 2011 to fix a hearing date for the plaintiff’s application pursuant to Order 33 Rule 2 Rules of the High Court 1980 for certain preliminary issues to be heard before the trial of other questions or issues in the action, and also for the defendant’s application for leave to issue a third party notice on the relevant parties.

On 29 July 2011, SYABAS had filed a reply affidavit to the plaintiff’s application pursuant to Order 33 Rule 2 Rules of the High Court 1980 for certain preliminary issues to be heard before the trial of other questions or issues in the action, and had served the application for leave to issue a Third Party Notice on the relevant parties.

372 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(h) ABASS (cont’d)

Kuala Lumpur High Court Writ Summons No: 22NCC-543-2011 (cont’d)

The High Court has further fixed 19 August 2011 for the plaintiff to file a reply affidavit and for SYABAS to reply, if any, on 26 August 2011. The High Court has also fixed a further Case Management date on 26 August 2011 for the High Court to fix a hearing date and on 11 August 2011, the High Court also fixed 26 August 2011 for the plaintiff to file its reply affidavit in respect of the plaintiff’s application pursuant to Order 33 Rule 2 and also the defendant’s application for leave to issue a third party notice. On the same case management date, the defendant is to inform the High Court whether it wishes to file any further affidavits in respect of the three applications.

At the case management held on 26 August 2011, the High Court has fixed the next case management on 26 September 2011 for the defendant to file its reply affidavits and for the parties to exhaust all their affidavits in respect of the plaintiff’s application pursuant to Order 33 Rule 2, the defendant’s application for leave to issue a third party notice and also the defendant’s application to amend the Defence and Counterclaim.

At the case management held on 26 September 2011, the High Court has fixed the next case management on 5 October 2011 to fix a hearing date in respect of the plaintiff’s application pursuant to Order 33 Rule 2, the defendant’s application for leave to issue a third party notice and also the defendant’s application to amend the Defence and Counterclaim.

At the case management held on 5 October 2011, the High Court has fixed the hearing on 21 October 2011 in respect of the defendant’s application for leave to issue a third party notice and also the defendant’s application to amend the Defence and Counterclaim and further fixed the hearing on 21 November 2011 in respect of the plaintiff’s application pursuant to Order 33 Rule 2.

On 21 October 2011, the High Court has fixed 31 October 2011 for Decision in respect of the defendant’s application for leave to issue a third party notice and the defendant’s application to amend the Defence and Counterclaim. On 31 October 2011, the Court was postponed the Decision in respect of the defendant’s application for leave to issue a third party notice and the application to amend the Defence and Counterclaim to 3 November 2011. The High Court had on 3 November 2011 allowed both the defendant’s application for leave to issue a third party notice and the application to amend the Defence and Counterclaim. The High Court fixed a further case management date on 17 November 2011 to enable the defendant to serve the third party notice on the State Government of Selangor and to deliver the Amended Defence and Counterclaim. The plaintiff had appealed to the Judge in chambers against the decisions of the High Court to allow SYABAS’ application for leave to issue a third party notice and application to amend the Defence and Counterclaim. The Court has fixed both appeals for hearing on 23 November 2011.

Pursuant to the Third Party (Selangor State Government) filing the memorandum of appearance on 17 November 2011, the matter is now fixed for further case management on 23 November 2011 for SYABAS to file the Summons for Third Party Directions. On 21 November 2011, the High Court had adjourned the hearing for the Plaintiff’s application pursuant to Order 33 Rule 2 to 13 January 2012.

At the hearing held on 13 January 2012, pursuant to the Plaintiff’s application for trial of the preliminary issues pursuant to Order 33 Rule 2, the High Court had adjourned the matter pending the disposal of the hearing of the motion for clarification by SPLASH at the Court of Appeal and the leave to appeal at the Federal Court. The case was fixed for mention on 13 February 2012.

373 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(h) ABASS (cont’d)

Kuala Lumpur High Court Writ Summons No: 22NCC-543-2011 (cont’d)

The plaintiff’s Notices of Appeal to the Judge in chambers against the decisions of the High Court on 3 November 2011 came up for hearing on 23 November 2011. After hearing submission from the counsel, the High Court adjourned the matter for decision on 8 December 2011. At the case management held on 23 November 2011, the High Court was informed that the Summons for Third Party Directions was filed on 23 November 2011 and the matter was fixed for hearing on 30 November 2011.

At the hearing held on 30 November 2011, for the Summons for Third Party Directions, the Kuala Lumpur High Court ordered that:-

i) The defendant serve its Statement of Claim on the Third Party within fourteen (14) days from 30 November 2011, who shall plead thereto within fourteen (14) days;

ii) The Third Party be at liberty to appear at the trial of this action and take such part as the Judge shall direct, and be bound by the result of the trial;

iii) The question of liability of the Third Party to indemnify the defendant be tried at the trial of this action, but subsequent thereto; and

iv) The costs of this application be costs in the cause and in the Third Party proceedings.

The High Court had fixed a further case management on 5 January 2012.

On 8 December 2011, the High Court had dismissed the plaintiff’s Notices of Appeal against the decisions dated 3 November 2011 in allowing the defendant’s application to issue a third party notice and to amend the Defence and Counterclaim, with costs awarded to the defendant.

SYABAS’ Statement of Claim on the Third Party was filed in Court and served on the plaintiff’s and Third Party’s solicitors on 14 December 2011.

At the case management held on 5 January 2012, the Court had fixed the next case management on 20 January 2012 for the defendant to file a reply to the Third Party’s defence.

At the case management held on 20 January 2012, the High Court had fixed the trial dates tentatively on 19 March 2012 to 21 March 2012. The High Court also fixed the case management for the matter on 13 February 2012, 5 March 2012 and 12 March 2012, pending the outcome of the Plaintiff’s application for trial of preliminary issues pursuant to Order 33 Rule 2 which was fixed for mention on 13 February 2012.

The Defendant had been served with a sealed copy of the State Government’s application to set aside the Third Party notice and statement of claim by the Defendant on 2 February 2012. The application was fixed for case management on 13 February 2012.

374 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(h) ABASS (cont’d)

Kuala Lumpur High Court Writ Summons No: 22NCC-543-2011 (cont’d)

At the case management held on 13 February 2012 in relation to the State Government’s application to set aside the Third Party notice and Statement of Claim by the Defendant, the High Court had fixed the matter for further case management on 5 March 2012.

At the case management held on 13 February 2012 in relation to the State Government of Selangor’s application to set aside the Third Party notice and Statement of Claim by the Defendant, the High Court had fixed the matter for further case management on 5 March 2012. At the case management held on 5 March 2012, as the Judge had recused himself, the High Court would transfer the matter to another court and inform the Parties once new dates are fixed for the said matter. The Company’s solicitors had on 15 March 2012 informed that the High Court had by way of letter dated 14 March 2012 informed the Parties that the case would be heard by a new Judge and the matter was fixed for case management on 16 March 2012. At the case management held on 16 March 2012, the High Court had fixed the matter for further case management on 20 April 2012.

In the PNHB’s earlier separate announcements on the SPLASH case (KL High Court Civil Suit No. D-22NCC-398-2009), the Court of Appeal had fixed 20 February 2012 for clarification of its decision dated 30 June 2011 and that the application for leave by SPLASH to appeal to the Federal Court arising from the decision of the Court of Appeal dated 30 June 2011 had been fixed for case management on 23 February 2012 at the Federal Court.

At the mention held on 13 February 2012, the High Court had adjourned the matter in relation to the Plaintiff’s application for trial of preliminary issues pursuant to Order 33 Rule 2 to 5 March 2012, pending the clarification at the Court of Appeal and the case management at the Federal Court in the SPLASH case. On 5 March 2012, the learned Judge recused himself from hearing the matter in relation to the Plaintiff’s application for trial of preliminary issues pursuant to Order 33 Rule 2. Accordingly, the case will be referred for transfer to another court and a new date to be advised by the High Court Registry in due course. The trial dates tentatively fixed from 19 to 21 March 2012 had been vacated.

The High Court had by way of a letter dated 14 March 2012 informed the Parties that the case would be heard by a new Judge and the matter is fixed for Case Management on 16 March 2012 which was subsequently further fixed to 20 April 2012.

On 20 April 2012, the parties informed the Court that they have no objection that the learned Judge is hearing the matter. The Court directed as follows:

(a) The application by the Third Party Notice and the Statement of Claim against the Third Party is fixed for Hearing on 28 June 2012 with submissions in reply (if any) to be filed on or before 15 June 2012; and

375 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(h) ABASS (cont’d)

Kuala Lumpur High Court Writ Summons No: 22NCC-543-2011 (cont’d)

On 20 April 2012, the parties informed the Court that they have no objection that the learned Judge is hearing the matter. The Court directed as follows: (cont’d)

(b) The Plaintiff’s application for Trial of Preliminary Issues pursuant to Order 33 Rule 2 is fixed for Hearing on 10 August 2012.

The Plaintiff’s application for Interim Payment is fixed for Mention on 10 August 2012.

(i) Kerajaan Negeri Selangor (“ State Government”)

Kuala Lumpur High Court Suit No: 22NCC-1478-09/2011 - SYABAS vs State Government

On 8 September 2011, SYABAS has instituted legal proceedings against the State Government via the filing of a Writ and Statement of Claim at the High Court for a sum of RM1,054,208,382 being compensation from 1 January 2009 to 31 March 2011 from the State Government under the term of the Concession Agreement dated 15 December 2004 between SYABAS, the Federal Government and the State Government.

In the Statement of Claim, SYABAS is praying for the following Orders:-

i) A declaration that upon a true construction of the Concession Agreement dated 15 December 2004, there is a sum of RM1,054,208,382.00 due and owing from the State Government to SYABAS for the period from 1 January 2009 to 31 March 2011;

ii) That the State Government do pay the said sum of RM1,054,208,382.00 to SYABAS forthwith upon making of the Order;

iii) Costs of the action be paid by the State Government to SYABAS in any event; and

vi) Such further or other relief or remedy as the Court shall deem just.

At the case management held on 10 October 2011, the State Government’s solicitors informed the High Court that the Memorandum of Appearance was filed on 30 September 2011 and an application for leave to file Defence was filed in the Kuala Lumpur High Court on 10 October 2011. The Court then fixed a further case management on 4 November 2011 for further directions. On 14 October 2011, the Court allowed the defendant to file the Defence latest by 4 November 2011 and the plaintiff to file the Reply latest by 18 November 2011. The Court maintained the case management scheduled on 4 November 2011 to monitor the progress of the suit. On 4 November 2011, the State Government’s solicitors informed the Court that the Defence was filed on 4 November 2011. The Court directed Syabas to file the notice to attend pre-trial case management after filing the Reply by 18 November 2011.The Court fixed the next case management on 29 November 2011.

376 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(i) Kerajaan Negeri Selangor (“ State Government”) (cont’d)

Kuala Lumpur High Court Suit No: 22NCC-1478-09/2011 - SYABAS vs State Government (cont’d)

On 21 November 2011, SYABAS’ Reply had been filed in the High Court and served on the defendant’s solicitors on 18 November 2011.

At the case management held on 29 November 2011, the High Court had fixed a further case management on 14 December 2011 for SYABAS to file the notice to attend pre-trial case management upon the close of pleadings and for the State Government to apply for leave to issue a third party notice against the Federal Government.

The matter which came up for case management on 14 December 2011 was fixed for mention on 23 December 2011 in order to fix a hearing date for the defendant’s application for leave to issue a Third Party Notice against the Federal Government, which was filed in Court on 14 December 2011.

At the mention held on 23 December 2011, the Federal Government had objected to the defendant’s application for leave to issue a Third Party Notice against the Federal Government. The High Court had fixed the matter for another case management on 26 January 2012 and hearing on 16 February 2012.

At the case management held on 26 January 2012 for the defendant’s application to issue a third party notice (in Enclosure 13), the High Court had fixed 8 February 2012 for the plaintiff to file in an affidavit in reply to the defendant’s affidavit dated 25 January 2012 and further fixed 13 February 2012 for parties to file their respective submissions simultaneously. The hearing date previously fixed on 16 February 2012 was maintained.

At the hearing held on 16 February 2012, the Defendant’s application for leave to issue a Third Party Notice against the Federal Government (“Application”), the High Court had allowed the Defendant’s Application with no order as to cost and had further fixed the matter for case management for Third Party Direction on 5 March 2012, and Trial of the main Suit on 29 May 2012 and 30 May 2012, respectively.

On 5 March 2012, the Kuala Lumpur High Court had fixed the matter for case management on 28 March 2012 to allow the State Government and the Federal Government to file and serve their respective pleadings in the third party proceedings.

On 28 March 2012, the Kuala Lumpur High Court had fixed the matter for further case management on 17 April 2012 to allow the parties to finalise the issues to be tried, bundle of documents and list of witnesses. The High Court had also fixed two (2) further trial dates for the matter on 14 and 15 June 2012 in addition to the 29 and 30 May 2012 which had been fixed earlier. The High Court had rescheduled the call management for application of the Defendant to 27 April 2012.

377 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

49. mAterial litigations (cont’d)

(j) SPLASH vs State Government

Shah Alam High Court Civil Suit No : 21NCVC-34-2011 - SPLASH vs State Government

On 28 October 2011, the Company received a Third Party Notice issued by the State Government.

In the suit, SPLASH had commenced action against the State Government for the sum of RM563,732,669.62 together with costs and interest. The State Government claims against the Company in the event of the State Government’s liability to SPLASH, an indemnity for the said sum together with costs and interest. The company is required to enter appearance to the Third Party Notice within twelve (12) days of the service of the Notice and has appointed solicitors to act on its behalf in the matter.

On 1 November 2011, the SYABAS’s solicitors had filed the memorandum of appearance to the Third Party Notice at the Shah Alam High Court and served on the State Government’s solicitor.

The Plaintiff had withdrawn the Writ of Summons dated 8 March 2012 with liberty to file afresh. As such, the Third Party Notice dated 3 October 2011 filed by the Defendant against SYABAS to join SYABAS as third party in the main suit is now rendered academic.

50. EFFECts if adoption of new accounting standards

(a) Impact on the Group’s statement of financial position as at 31 December 2010.

As previously Adjustment/Re- reported classification As restated RM RM RM

Statement of financial position Property, plant & equipment 1,609,713,329 (1,364,389,459) 245,323,870 Project development expenditure 4,497,424,223 (4,497,424,223) – Service concession assets – 7,685,002,446 7,685,002,446 Operating financial assets – 2,475,910 2,475,910 Deferred tax assets/(liabilities) (280,434,148) 679,980,256 399,546,108 Inventories 16,512,346 (6,624,585) 9,887,761 Other current assets 15,271,805 5,846,231 21,118,036 Trade and other payables (current) 1,664,147,375 (1,539,853) 1,662,607,522 Other payables (non-current) 29,018,622 (19,224,022) 9,794,600 Service concession obligations (current) – 114,760,000 114,760,000 Service concession obligations (non-current) – 4,170,240,532 4,170,240,532 Government grant 288,869,548 (6,243,470) 282,626,078 Foreign currency translation reserve (3,837,190) 742,876 (3,094,314) Retained earnings/ (Accumulated losses) 997,188,257 (1,455,700,623) (458,512,366)

378 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

50. EFFECts if adoption of new accounting standards (cont’d)

(b) Impact on the Group’s income statement for the financial year ended 31 December 2010.

As previously Adjustment/Re- reported classification As restated RM RM RM

Income statements Revenue 1,911,514,199 144,008,895 2,055,523,094 Other income 121,424,650 1,141,098 122,565,748 Raw materials, consumables and maintenance expenses (473,230,603) (532,308,281) (1,005,538,884) Construction contract expenses (7,449,295) (131,175,852) (138,625,147) Depreciation and amortisation expenses (525,174,108) 360,025,642 (165,148,466) Finance costs (374,283,077) (218,717,960) (593,001,037) Profit/(Loss) before tax 268,368,120 (377,026,458) (108,658,338) Taxation (78,768,180) 95,836,962 17,068,782

As previously Adjustment/Re- reported classification As restated RM RM RM

Statement of financial position Property, plant & equipment 1,597,240,964 (1,362,927,652) 234,313,312 Project development expenditure 3,994,674,341 (3,994,674,341) – Service concession assets – 7,647,906,242 7,647,906,242 Financial assets – 731,654 731,654 Deferred tax assets/(liabilities) (223,074,603) 584,294,307 361,219,704 Inventories 13,858,726 (4,943,386) 8,915,340 Other current assets 21,931,409 71,444 22,002,853 Trade and other payables (current) 1,118,870,623 (1,193,187) 1,117,677,436 Other payables (non-current) 28,909,151 (17,482,118) 11,427,033 Service concession obligations (current) – 85,597,500 85,597,500 Service concession obligations (non-current) – 4,283,537,529 4,283,537,529 Government grant 242,232,954 (5,163,045) 237,069,909 Retained earnings/ (Accumulated losses) 918,587,268 (1,245,263,666) (326,676,398)

51. Authorisation of financial statements for issue

The financial statements for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of the directors on 26 April 2012.

379 Annual Report 2011 Puncak Niaga Holdings Berhad

Notes to the Financial Statements For the financial year ended 31 December 2011

52. Supplementary information – breakdown of retained earnings into realised and unrealised

The breakdown of the retained earnings of the Group and of the Company as at 31 December 2011 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Securities Main Market Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company RM RM

Total retained earnings of the Company and its subsidiaries - Realised (264,358,880) 416,456,222 - Unrealised (395,177,082) 22,077,901

(659,535,962) 438,534,123 Total share of retained earnings/(accumulated losses) from associated companies: - Realised (1,429) – - Unrealised – –

Total share of retained earnings/(accumulated losses) from jointly controlled entities: - Realised 1,251,971 – - Unrealised – –

(658,285,420) 438,534,123 Less: Consolidation adjustments 209,092,685 –

Total group (accumulated losses)/retained earnings as per consolidated accounts (449,192,735) 438,534,123

380 Annual Report 2011 Puncak Niaga Holdings Berhad

Distribution Schedule Of Equity Securities As At 26 April 2012

ANALYSIS OF SHAREHOLDINGS

Authorised Share Capital : RM1,300,000,000.00 Issued and Paid-Up Share Capital : RM411,142,895.00 comprising 411,142,895 ordinary shares of RM1.00 each Class of Shares : Ordinary shares of RM1.00 each Voting Rights : One vote per ordinary share

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholders No. of Shares held ShareholDINGS mAlaysian FoREIGNER total Malaysian Foreigner Total No % No % No % No % No % No %

Less than 100 458 4.54 3 0.03 461 4.57 12,210 * 84 * 12,294 * 100 – 1,000 1,409 13.96 14 0.14 1,423 14.10 1,049,975 0.26 8,945 * 1,058,920 0.26 1,001 – 10,000 6,252 61.96 85 0.84 6,337 62.80 25,220,054 6.16 345,261 0.08 25,565,315 6.24 10,001 – 100,000 1,568 15.54 62 0.61 1,630 16.15 49,159,939 12.02 2,388,370 0.58 51,548,309 12.60 100,001 – 20,455,303 213 # 2.11 # 22 0.22 235 # 2.33 # 158,959,077 # 38.86 # 33,090,395 8.09 192,049,472 # 46.95 # (less than 5% of the issued share capital) 20,455,304 (5% of 5 0.05 0 0 5 0.05 138,871,785 33.95 0 0 138,871,785 33.95 the issued share capital) and above

TOTAL 9,905 # 98.16 # 186 1.84 10,091 # 100.00 # 373,273,040 # 91.25 # 35,833,055 8.75 409,106,095 # 100.00 #

Notes: * Negligible # Excluding a total of 2,036,800 PNHB shares bought back by PNHB and retained as treasury shares as at 26 April 2012.

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 39,000,000 9.53 Pledged Securities Account For Corporate Line (M) Sdn Bhd (WWE Holdings)

2. RHB Capital Nominees (Tempatan) Sdn Bhd 33,000,700 8.07 Pledged Securities Account For Central Plus (M) Sdn Bhd (681055)

3. Lembaga Tabung Haji 23,476,000 5.74

4. AmSec Nominees (Tempatan) Sdn Bhd 21,920,000 5.36 Pledged Securities Account – AmBank (M) Berhad For Central Plus (M) Sdn Bhd

Note : # Excluding a total of 2,036,800 PNHB shares bought back by PNHB and retained as treasury shares as at 26 April 2012.

381 Annual Report 2011 Puncak Niaga Holdings Berhad

Distribution Schedule Of Equity Securities As At 26 April 2012

% of Issued AND Paid-Up No. Name of Shareholder No. of Shares Held Share Capital #

5. Citigroup Nominees (Tempatan) Sdn Bhd 21,475,085 5.25 Employees Provident Fund Board

6. HSBC Nominees (Asing) Sdn Bhd 20,112,450 4.92 Exempt An For JPMorgan Chase Bank, National Association (Bermuda)

7. UOBM Nominees (Tempatan) Sdn Bhd 19,900,000 4.86 Pledged Securities Account For Central Plus (M) Sdn Bhd (PCB)

8. HLG Nominee (Tempatan) Sdn Bhd 18,015,000 4.40 Pledged Securities Account For Central Plus (M) Sdn Bhd (CCTS)

9. Central Plus (M) Sdn Bhd 15,441,337 3.77

10. AmanahRaya Trustees Berhad 15,339,440 3.75 Amanah Saham Wawasan 2020

11. AmSec Nominees (Tempatan) Sdn Bhd 11,918,200 2.91 AmTrustee Berhad For Central Plus (M) Sdn Bhd (CS-CPLUS)

12. hSBC Nominees (Asing) Sdn Bhd 6,173,300 1.51 BNY Brussels For Powershares Global Water Portfolio

13. Citigroup Nominees (Tempatan) Sdn Bhd 4,812,800 1.18 Exempt An For Eastspring Investments Berhad

14. HLG Nominee (Tempatan) Sdn Bhd 3,585,000 0.88 Pledged Securities Account For Corporate Line (M) Sdn Bhd

15. ECML Nominees (Tempatan) Sdn Bhd 2,979,600 0.73 Pledged Securities Account For Ng Yim Hoo (001)

16. Maybank Nominees (Tempatan) Sdn Bhd 2,500,000 0.61 Pledged Securities Account For Corporate Line (M) Sdn Bhd (41210162038A)

17. Citigroup Nominees (Tempatan) Sdn Bhd 2,341,700 0.57 Employees Provident Fund Board (RHB INV)

18. Maybank Nominees (Tempatan) Sdn Bhd 2,000,000 0.49 Etiqa Insurance Berhad (Life Par Fund)

Note : # Excluding a total of 2,036,800 PNHB shares bought back by PNHB and retained as treasury shares as at 26 April 2012.

382 Annual Report 2011 Puncak Niaga Holdings Berhad

Distribution Schedule Of Equity Securities As At 26 April 2012

% of Issued AND Paid-Up No. Name of Shareholder No. of Shares Held Share Capital #

19. Maybank Nominees (Tempatan) Sdn Bhd 1,838,000 0.45 Etiqa Takaful Berhad (Family PRF EQ)

20. Central Plus (M) Sdn Bhd 1,738,250 0.42

21. Rozali Bin Ismail 1,729,000 0.42

22. KAF Trustee Berhad KAF Fund Management Sdn Bhd For KAF Seagroatt & Campbell Berhad 1,660,040 0.41

23. Employees Provident Fund Board 1,494,000 0.37

24. ECML Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Leong Kam Chee (002) 1,370,000 0.33

25. HSBC Nominees (Asing) Sdn Bhd Exempt An For BSI SA (BSI BK SG-NR) 1,300,000 0.32

26. Lim Twee Yong 1,083,200 0.26

27. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB Bank For Mak Ngia Ngia @ Mak Yoke Lum (MM0749) 1,040,000 0.25

28. maybank Nominees (Tempatan) Sdn Bhd Etiqa Insurance Berhad (Par Fund 2) 1,000,000 0.24

29. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB For Yap Lim Sen (PB) 993,000 0.24

30. Abdul Aziz Bin Hashim 944,800 0.23

TOTAL 280,180,902 68.47

Note : # Excluding a total of 2,036,800 PNHB shares bought back by PNHB and retained as treasury shares as at 26 April 2012.

383 Annual Report 2011 Puncak Niaga Holdings Berhad

Distribution Schedule Of Equity Securities As At 26 April 2012

DIRECTORS’ INTEREST IN ORDINARY SHARES AS PER REGISTER OF DIRECTORS’ SHAREHOLDINGS

No. of Shares Held in the Company Direct Indirect No Name of Director Interest %# Interest %#

1. YBhg Tan Sri Rozali Bin Ismail 1,729,000 0.42 167,037,114 + 40.83 + 2. YBhg Dato’ Hashim Bin Mahfar – – – – 3. YBhg Dato’ Ruslan Bin Hassan – – – – 4. YBhg Dato’ Ir Lee Miang Koi 10,000 ** – – 5. YBhg Dato’ Syed Danial Bin Syed Ariffin – – – – 6. YBhg Tan Sri Dato’ Hari Narayanan Govindasamy – – – – 7. YBhg Tan Sri Dato’ Seri Dr Ting Chew Peh – – 42,000 ^ 0.01 ^ 8. Mr Ng Wah Tar – – – – 9. YAM Tengku Dato’ Rahimah Binti Almarhum Sultan Mahmud – – – – 10. YBhg Tan Sri Dato’ Ahmad Fuzi Bin Haji Abdul Razak – – – –

Notes : + Deemed interest by virtue of 100% equity interest each in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd of which 92.5% is held in own name and 7.5% is held in his children’s names, respectively. ^ Deemed interest by virtue of shares held by spouse, Tay Boon Ling pursuant to Section 134 of the Companies Act, 1965. # Excluding a total of 2,036,800 PNHB Shares bought back and retained as treasury shares as at 26 April 2012. ** 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 Bin Ismail 1,729,000 0.42 167,037,114 + 40.83 + 2. Central Plus (M) Sdn Bhd 17,179,587 4.20 104,753,900 * 25.61 * 3. Corporate Line (M) Sdn Bhd 18,627 ** 45,085,000 * 11.02 * 4. Employees Provident Fund Board 1,494,000 0.37 23,816,785 ^ 5.82 ^ 5. Lembaga Tabung Haji 23,476,000 5.74 – –

Notes : + Deemed interest by virtue of 100% equity interest each in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd of which 92.5% is held in own name and 7.5% is held in his children’s names, respectively. * Held in nominee name(s). ^ Shares held and managed by Portfolio Managers. # Excluding a total of 2,036,800 PNHB Shares bought back and retained as treasury shares as at 26 April 2012. ** Negligible

384 Annual Report 2011 Puncak Niaga Holdings Berhad

List of Properties As At 31 December 2011

Date of Acquisition/ Net Book Remaining Description & date of VALUATION (V) Value lEASEhold Existing Location (iF APPLICABLE) lAND Area (RM) tENure (Expiry Date) Use

Building & Adjacent Land Wisma Rozali 01/08/2005/ 12,952 sq.m 54,000,000 99 years 91 years Office No. 4 & 6, Persiaran Sukan 31/12/2011 (V) Leasehold expiring on Premises Seksyen 13 22/01/2102 and 40100 Shah Alam Vacant Land Selangor Darul Ehsan

Office Lots No. 8 Eu Tong Sen Street 03/10/2008/ 86 sq.m 99 years 88 years Office # 22-85, The Central N/A (V) Leasehold expiring on Premises Singapore 059818 8,913,871 01/01/2100

No. 8 Eu Tong Sen Street 26/09/2008 60 sq.m 99 years 88 years Office # 22-86, The Central N/A (V) Leasehold expiring on Premises Singapore 059818 01/01/2100

Vacant Land H.S.(D) 142037 14/02/1998/ 10,364 sq.m 19,600,000 99 years 88 years Rented out PT 32, Seksyen 14 31/12/2011 (V) 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) 226605, PT 332 06/04/2006 691 sq.m H.S.(D) 226606, PT 333 06/04/2006 711 sq.m 1,267,188 Freehold N/A None H.S.(D) 226607, PT 334 06/04/2006/ 862 sq.m Mukim Pekan N/A (V) Subang Jaya Daerah Petaling Selangor Darul Ehsan

Vacant Land H.S.(D) 6163, PT 10653 16/02/2007/ 331,438 sq.m 99 years 90 years None 31/12/2011 (V) Leasehold expiring on 24/10/2101 119,000,000

H.S.(D) 6164, PT 10654 213,092 sq.m None H.S.(D) 6165, PT 10655 # 229,299 sq.m Rented out H.S.(D) 6166, PT 10656 229,733 sq.m None Mukim Of Ijok District Of Kuala Selangor Selangor Darul Ehsan # Included a single storey building complete with parking facilities 385 Annual Report 2011 Puncak Niaga Holdings Berhad

List of Properties As At 31 December 2011

Date of Acquisition/ Net Book Remaining Description & date of VALUATION (V) Value lEASEhold Existing Location (iF APPLICABLE) lAND Area (RM) tENure (Expiry Date) Use

4 Storey Shophouse No. 12, Jalan Todak 5 21/03/2007/ 238 sq.m 1,900,000 99 years 81 years Office Pusat Bandar Seberang Jaya 31/12/2011 (V) Leasehold expiring on Premises 13700 Perai 21/10/2092 Pulau Pinang

Office Lot No. 20-1 & 20-2 01/02/2008/ 164 sq.m 1,900,000 Freehold N/A Office Jalan Presiden F U1/F 31/12/2011 (V) Premises Accentra Business Park Glenmarie, Seksyen U1 40150 Shah Alam (Lot 63191, H.S. (D) 224581 No. hakmilik 211790 District Of Petaling Selangor Darul Ehsan)

Vacant Land No. 8, Jalan Sultan Mahmud 02/07/2008/ 2,058 sq.m 1,300,000 Freehold N/A None 21080 Kuala Terengganu 31/12/2011 (V) Terengganu (Lot 2119, Mukim of Batu Buruk District Of Kuala Terengganu Terengganu Darul Iman)

Vacant Land H.S. (D) 2605, PT 1563 01/08/2010/ 159,996 sq.m 16,500,000 99 years 84 years None Mukim Jeram 31/12/2011 (V) Leasehold expiring on District Of Kuala Selangor 1/12/2095 Selangor Darul Ehsan

386 Annual Report 2011 Puncak Niaga Holdings Berhad

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PROFILE DISCLOSURES

Strategy and Analysis

1.1 Statement from the most senior decision-maker of the organisation 16-24 1.2 Description of key impacts, risks, and opportunities 22-23

Organisational Profile

2.1 Name of the organisation Front Cover 2.2 Primary brands, products, and/or services 44-49 2.3 Operational structure of the organisation 44-49 2.4 Location of organisation’s headquarters 28 2.5 Number of countries where the organisation operates 28-29 2.6 Nature of ownership and legal form 44-49 2.7 Markets served 28-29 2.8 Scale of the reporting organisation 25 2.9 Significant changes during the reporting period 16-24 2.10 Awards received in the reporting period 40-43

Report Parameters

3.1 Reporting period 25 3.2 Date of most recent previous report 25 3.3 Reporting cycle As and when required 3.4 Contact point for questions regarding the report or its contents 28 3.5 Process for defining report content 25 3.6 Boundary of the report 25 3.7 Specific limitations on the scope or boundary of the report 25 3.8 Basis for reporting on joint ventures, subsidiaries, etc 25, 44-49 3.9 Data measurement techniques and the bases of calculations 163-164 3.10 Explanation of the effect of any re-statements of information 16-24 3.11 Significant changes from previous reporting period 16-24 3.12 Table identifying the location of the Standard Disclosures GRI G3.1 Content Index 3.13 Policy and current practice with regard to seeking external assurance for the report 25

Governance, Commitments, and Engagement

4.1 Governance structure of the organisation 180-181 4.2 Indicate whether the Chair of the highest governance body is also an executive officer X 4.3 Independent and/or non-executive members of the Board 180 4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body 180-181 4.5 Linkage between compensation and the organisation’s performance 184-186 4.6 Processes in place to ensure conflicts of interest are avoided 180, 199 4.7 Qualifications and expertise of the Board 52-85, 182

387 Annual Report 2011 Puncak Niaga Holdings Berhad

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PROFILE DISCLOSURES

4.8 Internally developed statements of mission or values, codes of conduct, and principles Our Vision and Mission 4.9 Identification and management of economic, environmental, and social performance, conduct, and principles 188 4.10 Processes for evaluating the highest governance body’s own performance 182, 184 4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation 201 4.12 Externally developed economic, environmental, and social charters, principles. 167 4.13 Memberships in associations 32 4.14 List of stakeholder groups engaged by the organisation 152,167 4.15 Basis for identification and selection of stakeholders with whom to engage 23-24 4.16 Approaches to stakeholder engagement 167-170 4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics 23, 98

Performance Indicators : ECONOMIC

Economic Performance

EC1 Direct economic value generated and distributed 87-88 EC2 Financial implications and other risks and opportunities for the organisation’s activities due to climate change 163, 165 EC3 Coverage of the organisation’s defined benefit plan obligations 138-139 EC4 Significant financial assistance received from government 21, 128, 171

Market Presence

EC5 Standard entry level wage vs. local minimum wage 138-139 EC6 Policy, practices, and proportion of spending on locally-based suppliers 151 EC7 Procedures for local hiring 132

Indirect economic impacts

EC8 Development and impact of infrastructure investments and services provided primarily for public benefit 167-174 EC9 Understanding and describing significant indirect economic impacts 65, 100, 112

Performance Indicators : ENVIRONMENTAL

Materials

EN1 Materials used by weight or volume 165 EN2 Percentage of materials used that are recycled input materials 165

388 Annual Report 2011 Puncak Niaga Holdings Berhad

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Energy

EN3 Direct energy consumption by primary energy source 164-165 EN4 Indirect energy consumption by primary source 164-165 EN5 Energy saved due to conservation and efficiency improvements 164-165 EN6 Initiatives to provide energy-efficient or renewable energy 166 EN7 Initiatives to reduce indirect energy consumption and reductions achieved 164-166

Water

EN8 Total water withdrawal by source 164-165 EN9 Significant impact of withdrawal of water 164-165 EN10 Percentage and total volume of water recycled and reused 164-165

Biodiversity

EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas X EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas X EN13 Habitats protected or restored X EN14 Strategies, current actions, and future plans for managing impacts on biodiversity X EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations X

Emissions, Effluents and Waste

EN16 Total direct and indirect greenhouse gas emissions by weight 165-167 EN17 Other relevant indirect greenhouse gas emissions by weight 165-167 EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 165-167 EN19 Emissions of ozone-depleting substances by weight N/A EN20 NOx, SOx, and other significant air emissions by type and weight X EN21 Total water discharge by quality and destination 164-165 EN22 Total weight of waste by type and disposal method 162-163 EN23 Total number and volume of significant spills 155 EN24 Weight of transported, imported, exported, or treated waste deemed hazardous 117 EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organisation’s discharges of water and runoff Operations Review

Products and Services

EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation 152-167 EN27 Percentage of products sold and their packaging materials that are reclaimed by category N/A

Compliance

EN28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations 123-144

389 Annual Report 2011 Puncak Niaga Holdings Berhad

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Transport

EN29 Significant environmental impacts of transporting products and other goods and materials used for the organisation’s operations, and transporting members of the workforce 165

Overall

EN30 Total environmental protection expenditures and investments by type 164-165

Performance Indicators : SOCIAL - Labour Practices and Decent Work

Employment

LA1 Total workforce by employment type, employment contract, and region 133-138 LA2 Total number and rate of employee turnover by age group, gender, and region 133-138 LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations 138-139 LA15 Return to work and retention rates after parental leave, by gender X

Labour/Management Relations

LA4 Percentage of employees covered by collective bargaining agreements 142 LA5 Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements 4,115,116

Occupational Health and Safety

LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs 144 LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region 146 LA8 Education, training, counselling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases 145-146 LA9 Health and safety topics covered in formal agreements with trade unions 145-146

Training and Education

LA10 Average hours of training per year per employee by employee category 140-141 LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings X LA12 Percentage of employees receiving regular performance and career development reviews 140

390 Annual Report 2011 Puncak Niaga Holdings Berhad

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Diversity and Equal Opportunity

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity 133-138 LA14 Ratio of basic salary of men to women by employee category 138-139

Performance Indicators : SOCIAL - Human Rights

Diversity and Equal Opportunity

HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening 138-140 HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken 151 HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained 140-141

Non-Discrimination

HR4 Total number of incidents of discrimination and actions taken 132

Freedom of Association and Collective Bargaining

HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights 142

Child Labour

HR6 Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour 139

Forced and Compulsory Labour

HR7 Operations identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of forced or compulsory labour 139

Security Practices

HR8 Percentage of security personnel trained in the organisation’s policies or procedures concerning aspects of human rights that are relevant to operations 150

Indigenous Rights

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken N/A

391 Annual Report 2011 Puncak Niaga Holdings Berhad

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Assessment

HR10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments 132

Remediation

HR11 Number of grievances related to human rights filed, addressed, and resolved through formal grievance mechanism 142

Performance Indicators : SOCIETY

Local Community

SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting 167-174 SO9 Operations with significant potential or actual negative impacts on local communities 167-174, 113 SO10 Prevention and mitigation measured implemented in operations with significant potential or actual negative impacts on local community 115-121

Corruption

SO2 Percentage and total number of business units analysed for risks related to corruption 142 SO3 Percentage of employees trained in organisation’s anti-corruption policies and procedures 142 SO4 Actions taken in response to incidents of corruption 142

Public Policy

SO5 Public policy positions and participation in public policy development and lobbying X SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country X

Anti-competitive Behaviour

SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes X

Compliance

SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations 123-144

392 Annual Report 2011 Puncak Niaga Holdings Berhad

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Performance Indicators : PRODUCT RESPONSIBILITY

Customer Health and Safety

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures 34 PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes 112-113

Product and Service Labelling

PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements 111-112, 114-116 PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes 112-113 PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction 110

Marketing Communications

PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship X PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes X

Customer Privacy

PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data 111

Compliance

PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services X

Note : The disclosed GRI indicators above refer to fully or partially disclosed data.

X : Not Available. We will continue to improve our data collection and monitoring processes for improved disclosure levels in future reports. N/A : Not Applicable. These indicators have been found to be irrelevant or not directly related to our nature of operations.

393

Notes

Proxy Form Number of shares held Please fill in CDS Account No.

I/We (full name of shareholders as per NRIC, in CAPITAL LETTERS) NRIC No./ Company No. (new) (old) of (full address) being a Member/Members of Puncak Niaga Holdings Berhad hereby appoint (full name of proxy as per NRIC, in CAPITAL LETTERS) NRIC No. (new) (old) of (full address) or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us and on my/our behalf at the Fifteenth Annual General Meeting of Puncak Niaga Holdings Berhad to be held at Concorde I, Concorde Hotel Shah Alam, Level 2, No. 3, Jalan Tengku Ampuan Zabedah C9/C, 40100 Shah Alam, Selangor Darul Ehsan on Tuesday, 26 June 2012 at 10.00 a.m. and at any adjournment thereof, as indicated below:- No. Resolution For Against 1. To receive the Audited Financial Statements of the Group and of the Company for the financial year ended 31 December 2011 together with the Reports of the Directors and Auditors thereon. 2. To re-elect YBhg Dato’ Hashim bin Mahfar as Director of the Company. 3. To re-elect YBhg Dato’ Ir Lee Miang Koi as Director of the Company. 4. To re-elect Mr Ng Wah Tar as Director of the Company. 5. To re-appoint Messrs Ernst & Young as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration. special business 6. Ordinary Resolution: To empower the Directors of the Company to issue shares pursuant to Section 132D of the Companies Act, 1965. 7. Special Resolution: To approve the Proposed Amendments to the Articles of Association of the Company.

Please indicate with a cross (X) how you wish your votes to be cast in respect of each Resolution. In the absence of specific directions, your proxy will vote or abstain as he thinks fit.

Signed this day of 2012

Signature(s)/Common Seal of Shareholder NRIC/Company No. : Tel. No. :

Notes: 1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 18 June 2012 (General Meeting Record of Depositors) shall be entitled to attend, speak and vote at this Fifteenth Annual General Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint another person to attend and vote in his stead. 3. A proxy need not be a Member of the Company and the provision of Section 149(1)(b) of the Act shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. 4. A Member shall not be entitled to appoint more than two (2) proxies to attend and vote at the Meeting provided that, (a) where a Member is an authorised nominee as defined in the Central Depositories Act, 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. (b) where a Member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account namely, Omnibus Securities Account, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Securities Account it holds with ordinary shares of the Company standing to the credit of the said Omnibus Securities Account. Where a Member appoints two (2) or more proxies (as the case maybe), the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 5. 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 underan 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. 6. 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. 7. The instrument appointing the proxy must be deposited at the Office of the Company’s Share Registrar, Tricor Investor Services Sdn Bhd at Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia not less than 48 hours before the time set for holding the Meeting or any adjournment thereof. Please fold here

stamp

Share Registrar for Puncak Niaga Holdings Berhad (416087-U) Tricor Investor Services Sdn Bhd (118401-V) Level 17, The Gardens North Tower Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur Malaysia

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PUNCAK NIAGA Sarikei Site Offi ce PUNCAK RESEARCH XINNUO WATER HOLDINGS BERHAD 1st Floor, No. 82C CENTRE SDN BHD (BINZHOU) CO. LTD Wisma Rozali Wisma CS Kua Wisma Rozali Chenlou Industrial & No. 4, Persiaran Sukan Jalan Masjid Lama No. 4, Persiaran Sukan Commerce Park Seksyen 13, 40100 Shah Alam 96100 Sarikei, Sarawak Seksyen 13, 40100 Shah Alam Laodian Village Selangor Darul Ehsan Tel : +6084-656 206 Selangor Darul Ehsan Yangxin County Tel : +603-5522 8589 Fax : +6084-656 208 Tel : +603-5522 8589 Shandong Province Fax : +603-5522 8598 Fax : +603-5522 8598 251802 e-mail (general): SUBSIDIARY People’s Republic of China [email protected] OFFICES In Labuan e-mail (investors): LUANCHENG DAYU [email protected] In Malaysia KGL LTD. WATER SUPPLY CO. LTD Website: c/o Lot 1, 2nd Floor No. 17, Xinyuan Road www.puncakniaga.com.my SYARIKAT BEKALAN AIR Wisma Siamloh Luancheng County SELANGOR SDN BHD Jalan Kemajuan Hebei Province PUNCAK NIAGA (M) (SYABAS) 87007 Federal Territory 051430 SDN BHD SYABAS Head Offi ce of Labuan People’s Republic of China Wisma Rozali Jalan Pantai Baharu Tel : +608-741 7810 Tel/Fax : +86-311-8803 1652 No. 4, Persiaran Sukan 59200 Kuala Lumpur Fax : +608-742 4220 Seksyen 13, 40100 Shah Alam Tel : +603-2282 6244/ HEBEI SINO PANLONG Selangor Darul Ehsan +603-2088 5400 In Singapore INDUSTRIAL WATER SUPPLY Tel : +603-5522 8589 Fax : +603-2282 7976 CO. LTD Fax : +603-5522 8598 e-mail: [email protected] SINO WATER PTE LTD No. 117, Renmin Road Website: www.syabas.com.my PUNCAK NIAGA OVERSEAS Yuanshi County BRANCH OFFICES CAPITAL PTE LTD Hebei Province PUSAT PERKHIDMATAN No. 8, Eu Tong Sen Street 051130 Kuala Terengganu Offi ce PELANGGAN (PUSPEL) #22-85 & #22-86, The Central People’s Republic of China 201B Toll Free Helpline: Singapore 059818 Tel/Fax : +86-311-8463 8813 Jalan Sultan Zainal Abidin 1-800-88-5252 Tel : +65-6224 9220 (Main Line) 20000 Kuala Terengganu Fax : +603-2295 5168 +65-6222 6936/ In India Terengganu Darul Iman SMS to 39222 type +65-6222 7926 Tel : +609-623 8589 PUSPEL space Fax : +65-6222 6812 PUNCAK NIAGA Fax : +609-624 8589 your complaints/feedback INFRASTRUCTURES & e-mail: [email protected] In China PROJECTS PRIVATE LIMITED Penang Offi ce Network: follow@puspel 1, Kutchery Road, Mylapore No. 12, Jalan Todak 5 (on Twitter and Facebook) SINO WATER Chennai - 600004 Pusat Bandar Seberang Jaya ENVIRONMENTAL Tamil Nadu, India 13700 Perai, Pulau Pinang PUNCAK OIL & GAS SDN BHD CONSULTANCY (SHANGHAI) Tel : +91-44-4210 2058 Tel : +604-397 8589 Unit 12-1, Level 12 CO. LTD Fax : +91-44-4210 2028 No. 11, Jalan 16/11 Unit 301, No. 398, City Gateway Sarawak Offi ce Pusat Dagang Seksyen 16 Caoxi (North) Road REPRESENTATIVE Lot 10864 & 10865 46350 Petaling Jaya Xuhui District OFFICE Section 64 Selangor Darul Ehsan 200030 Shanghai KTLD, Jalan Mendu Tel : +603-7958 5533 People’s Republic of China In Vietnam 93200 Kuching, Sarawak Fax : +603-7956 7375 Tel : +86-21-6090 5282 Tel : +6082-332 589 Fax : +86-21-6090 5281 16F, Saigon Tower Fax : +6082-337 589 GOM RESOURCES SDN BHD 29, Le Duan Street (formerly known as Global LUWEI (PINGDINGSHAN) District 1, Ho Chi Minh City Sri Aman Site Offi ce Offshore Malaysia Sdn Bhd) WATER CO. LTD Saigon, Vietnam 1st Floor, Lot 440 Level 4 & 17, Tower 1 No. 6, ShunCheng Road (East) Tel : +84-8-3520 7701 Block 3, Jalan Council ETIQA Twin Towers Lushan County, Henan Province Fax : +84-8-3823 6288 95000 Sri Aman, Sarawak 11, Jalan Pinang 467300 Tel : +6083-320 335 50450 Kuala Lumpur People’s Republic of China Fax : +6083-320 340 Tel : +603-2177 4600 Tel/Fax : +86-375-589 1036 Fax : +603-2166 8867 Puncak Niaga Holdings Berhad (416087-U)

Wisma Rozali, No 4, Persiaran Sukan, Seksyen 13, 40100 Shah Alam, Selangor Darul Ehsan, Malaysia T +603 5522 8589 F +603 5522 8598 E [email protected]

www.puncakniaga.com.my/investors.html

[email protected] follow@puspel on