Annual Report 2011Puncak Niaga Holdings Berhad
092
WATER TREATMENT PLANT OPERATIONS
PNSB operates, manages and maintains
29 WTPs with a combined capacity of 1,930
million litres per day. In 2011, PNSB delivered
703.48 million cubic metres of treated water,
an increase of 1.63% from 692.19 million cubic
metres of treated water produced in 2010.
The increase in the treated water production
was due to higher treated water demand
from Syarikat Bekalan Air Selangor Sdn Bhd
(“SYABAS”).
In 2011, our WTPs achieved an impressive
99.9% compliance with stipulated treated
water quality standards, based on 19,670
samples tested by both the Independent
Laboratory and our Central Laboratory.
As well as quality, we are dedicated to
providing dependability of supply. To ensure
that consumers can rely on a constant supply
of treated water, we endeavour to minimise
unscheduled WTP shutdowns. Although our
WTPs experienced 770.75 hours of shutdowns
for reasons beyond our control in 2011 (as
shown in the table below), this did not result
in interruptions to the consumers’ water
supply, and all of our WTPs consistently met
production demands.
Cause of Shutdown Hours of Shutdown
Raw water violation 531.94
TNB power supply interruption 197.31
Pipe leak/burst 41.50
Total Hours 770.75
The performance of our WTPs in 2011 was
as follows:-
The Sungai Selangor Phase 2 (“SSP2”) WTP
produced 349.92 million cubic metres of
treated water, up 0.46% on the 348.31 million
cubic metres recorded in 2010. The average
daily production increased to 958.68 million
litres from 954.28 million litres in 2010,
exceeding SSP2 WTP’s daily design capacity of
950 million litres.
The 26 WTPs under the Privatisation
Cum Concession Agreement dated
22 September 1994 (“PCCA”) produced 328.82
million cubic metres of treated water, a 3.10%
increased from the 318.92 million cubic metres
recorded in 2010. The 26 WTPs’ production of
treated water in 2011 is the highest since 2007.
The average monthly treated water production
for 2011 was 27.40 million cubic metres as
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.
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.
Periodical process control
monitoring to ensure optimisation
of water treatment process
093
Annual Report 2011Puncak Niaga Holdings Berhad
Operations Review Puncak Niaga (M) Sdn Bhd
Wangsa Maju WTP produced 16.75 million
cubic metres of treated water, an increase
of 0.18% on the 16.72 million cubic metres
recorded in the previous year. The average
daily production was 45.89 million litres as
against 45.80 million litres in 2010, exceeding
Wangsa Maju WTP’s daily design capacity of
45 million litres and daily designated quantity
of 31.5 million litres as stated in the Concession
Agreement.
Sungai (“Sg”) Sireh WTP achieved a yearly
treated water production of 6.97 million cubic
metres, 6.19% less than the 7.43 million cubic
metres produced in 2010. The average daily
production was 19.10 million litres compared
to 20.36 million litres in 2010. Sg Sireh WTP’s
daily design capacity is 27.28 million litres.
Sg Lolo (new) WTP achieved a yearly treated
water production of 1,017,998 cubic metres in
2011, 27.3% more than 799,694 cubic metres
produced in 2010. The average daily production
was 2.79 million litres compared to 2.19 million
litres in 2010. Sg Lolo (new) WTP daily design
capacity is 2.5 million litres.
Overall, our 29 WTPs performed well and met
SYABAS’ requirements for treated water as
well as the Drinking Water Quality Standards
as stipulated by the Ministry of Health (“MOH”).
PLANT IMPROVEMENT WORKS
In line with our absolute commitment to
customer satisfaction and staff well-being,
in 2011, PNSB carried out a number of plant
improvement works, focusing on health and
safety measures.
Installation of Auto Chlorine Shut-Off System
During the year, we installed an Auto Chlorine
Shut-Off System at nine of our WTPs to protect
personnel and equipment from chlorine
exposure in the event of a leak. The system is
a battery-powered fail-safe device designed
to provide safety where toxic gas cylinders
are in use. The automatic valve operator
which is mounted on each cylinder will close
the cylinder’s valve upon receiving the signal
for shut-off. The shut-off can be triggered by
sensors such as a gas leak detector, seismic
sensor, fi re alarm, or emergency panic button.
Installation of Pressure Filter System
at Sg Serai WTP
A new Pressure Filter System installed at
Sg Serai WTP addressed the issues of water
quality at this WTP in particular, on the
aluminium violation of treated water. Since
the installation of the Pressure Filter System
completed on 1 April 2011, there has been no
violation of water quality reported.
Installation of Chlorine Scrubber System
at Gombak WTP
The Gombak WTP did not install the Auto
Chlorine Shut Off System and the existing
chlorine leak detection system does not contain
the spread of chlorine gas, to ensure the safety
of the people, especially the WTP staff, in the
event of a chlorine leak. As a contingency plan,
a chlorine scrubber system was installed. The
system neutralises the chlorine gas by using
caustic soda through a random packing bed.
Electrical Load Transfer from
TNB Substation to Consumer Substation
at Rantau Panjang WTP
In response to the inconsistent quality of
the power supply to Rantau Panjang WTP,
PNSB opted to transfer its electrical load
from the existing 33kV TNB Substation
to an 11kV Consumer Substation. Since
the completion of the transfer works on
15 June 2011, Rantau Panjang WTP has
recorded no power supply interruption at all
as opposed to pre-transfer works, whereby
14.42 hours of power failure and 64 incidents
of power transience were reported between
1 January 2011 and 31 December 2011.
Preventive Maintenance:
Inspecting electrical activator
Overall, our 29 WTPs performed well and met SYABAS’ requirements for treated water as well as the Drinking Water Quality Standards as stipulated by the Ministry of Health (“MOH”).
Annual Report 2011Puncak Niaga Holdings Berhad
094
Rehabilitation and Upgrade of
Automated Filter Operation for Sg Batu WTP
Rehabilitation and upgrade works for Sg Batu
WTP’s fi ltration automation system were
carried out to enhance the system’s effi ciency,
functionality and reliability whilst increasing
Sg Batu WTP’s operation and maintenance
effi ciency. The incorporation of the SCADA
System has enabled the fi lter backwashing
process to be conducted automatically for
better process control.
WATER FILTER PERFORMANCE
We continuously and constantly monitor the
water fi lter performance by tracking each
fi lter’s running hours as fi ltration is the fi nal
step in the water treatment process, removing
fi ne suspended solids remaining after the
clarifi cation process, and further cleansing
and polishing the treated water.
Details of the Filter Performance Monitoring
are set out under “Preserving Our
Environment” section on pages 159 and 160
of this Annual Report.
Raw Water Drawn for Treatment
The following table summarises the amount of
raw water drawn from the various rivers and
dams for treatment at PNSB’s WTPs in 2011.
No. Source Volume Withdrawn (m3)
1 Sg Bernam 10,687,310
2 Sg Batang Kali 4,155,650
3 Sg Dusun 404,414
4 Sg Inki 2,284,940
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
No. Source Volume Withdrawn (m3)
13 Sg Rumput 285,045
14 Sg Langat 212,437,706
15 Sg Serai 410,244
16 Sg Lolo 1,265,321
17 Sg Pangsoon 1,402,091
18 Sg Labu 1,030,130
19 Sg Sireh 9,405,039
20 Batu Dam 41,311,879
21 Klang Gates Dam 55,780,400
22 Tasik Subang Dam 3,734,000
Total 752,987,773
DAM OPERATIONS
PNSB operates and maintains the Sg Langat,
Klang Gates and Tasik Subang Dams.
Performance in 2011 was good, and there was
no critical storage drawndown at any of the
dams. During the year, total annual rainfall at
two of the three dams’ catchments areas was
lower than the mean average rainfall (based on
data from 1998 to 2010), as shown below:-
Mean average Annual rainfall Variance rainfall 1998 – against 2011 2010 averageDam (mm) (mm) (%)
Sungai Langat
Dam 2,347.00 2,456.97 -4.48
Klang Gates
Dam 2,903.40 2,818.27 3.02
Tasik Subang
Dam 2,303.10 2,469.28 -6.73
Operations Review Puncak Niaga (M) Sdn Bhd
Korean delegates’ visit to SSP2 WTP
095
Annual Report 2011Puncak Niaga Holdings Berhad
Our operators at the Dams are guided by the
Reservoir Operations Rules Curves (“RORC”)
method to monitor, analyse and forecast
the rainfall pattern and levels in the dams’
catchment areas. This allows us to make the
right decision during critical situations and
to meet the demand from the WTPs whilst
conserving as much reservoir water as
possible.
At Sg Langat and Klang Gates Dams, the
reservoir levels were maintained above RORC
No. 1 throughout 2011 while the Tasik Subang
Dam’s reservoir level was slightly below
RORC No. 1 from the end of August 2011 until
mid-September 2011. All three dams,
with proper and effective planning on dam
management operation, met the WTPs’
demands.
With prudent, proper and effective planning on
management of the dams, PNSB ensures the
sustainability of water supply in Selangor and
the Federal Territories of Kuala Lumpur and
Putrajaya.
To ensure the safety and stability of the dams,
PNSB completed the Dam Safety Inspections
for the Tasik Subang, Klang Gates and Sg Langat
Dams. Conducted by independent consultants
in May 2011, the fi eld inspections covered all
major dam structures, M&E equipment, fl ood
routing analysis and instrumentation analysis.
In 2011, we fulfi lled our corporate social
responsibility by allowing various stakeholders
to visit the dams with the objective of giving
the visitors an educational understanding of
the function and operation of dams. Details
of the Dams CSR Visitation are set out under
“Engagement With Our Community” section
on page 170 of this Annual Report.
CERTIFICATIONS
ISO 14001 Environmental Management System
The ISO 14001 Environmental Management
System certifi cation is to ensure that the
operation and maintenance of the WTP
complies with the Environmental Guidelines
and Requirements.
SSP2 WTP became the fi rst WTP in Malaysia in
2003 to gain the Environmental Management
System accreditation and this certifi cation has
been successfully maintained until to date
without any signifi cant non-compliance.
ISO 9001: 2008 Quality Management System
In 2010, 20 WTPs and Regional Offi ces under
PNSB management were upgraded from
ISO 9001:2000 Quality Management System
(“QMS”) certifi cation to ISO 9001:2008 QMS
certifi cation, following the introduction of a
new International Standard for QMS.
In line with PNSB’s commitment and standard
to carry out the operation and maintenance
of the WTPs under PNSB management in
line with established international standards,
PNSB has initiated the process of obtaining ISO
9001:2008 QMS certifi cation for the remaining
nine WTPs. The certifi cation is expected to be
achieved in 2012.
This refl ect PNSB’s commitment to a rigorous
quality management system in managing the
WTPs.
OHSAS 18001:2007 Safety Management System
The SSP2 WTP obtained OHSAS 18001:2007
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.
Operations Review Puncak Niaga (M) Sdn Bhd
Gas Saving Tips
Drive steadily.
Slowing down or
speeding up waste fuel.
Annual Report 2011Puncak Niaga Holdings Berhad
096
Operations Review Puncak Niaga (M) Sdn Bhd
INFORMATION AND
COMMUNICATIONS TECHNOLOGY (“ICT”)
In 2011, PNSB launched various initiatives
to strengthen PNSB’s core operations via
seamless and effi cient communications and
IT systems.
Data Verifi cation
In 2011, the Operation and Maintenance
Department (“OMD”) in collaboration with the
Information Technology (“IT”) Department,
developed the e-MJC application. The e-MJC
application collects data from WTPs, analyses
it, and transmits it via the internet to PNSB’s
Headquarters. The system commenced
operation in January 2012.
This newly developed e-MJC application had
expedited the transfer of data gathered at WTP
to OMD at PNSB’s Headquarters.
PREVENTIVE MAINTENANCE
Predictive & Preventive Plant Maintenance
Throughout 2011, we undertook rigorous
monitoring and maintenance of plant
and equipment to ensure the smooth and
continuous operation of all the 29 WTPs.
Predictive and preventive maintenance
followed the annual maintenance plan, and
performance was closely monitored by two
maintenance software systems namely,
Maximo and Maintpro.
In 2011, our personnel conducted 26,240
preventive maintenance works in the areas of
mechanical, electrical and instrumentation as
compared to 25,826 preventive maintenance
works in 2010. This was a 1.6% increase in
preventive maintenance works compared to
the previous year (“Increase of Maintenance
Works”) and the Increase of Maintenance
Works was mainly due to the installation of
additional equipment into the WTP operating
systems.
Of the preventive maintenance works which
we completed in 2011, 12,226 were in the
mechanical section, 8,839 were in the electrical
section, and 5,175 were in the instrumentation
section.
Preventive IT Maintenance
Preventive IT Maintenance is important
to ensure that all systems are running
smoothly. PNSB’s IT Department continuously
supports and maintains all the 29 WTPs
via its programme of scheduled preventive
IT maintenance. For servers and critical
equipment, preventive IT maintenance is
conducted every three months while the
non-critical equipment cycle is every six
months. In addition, our computers and
printers are updated with software patches
and antivirus versions.
Using the latest technology, the IT Department
is able to achieve its Service Level Agreement
(“SLA”) standards in ensuring that all systems
are running effi ciently with minimal downtime.
INNOVATIVE AND
COST-CUTTING MEASURES
In its relentless drive to fi nd innovative
and cost-cutting measures to improve the
operations of the Company and WTPs, PNSB
on a yearly basis conducts Innovative &
Creative Circle (“ICC”) sessions to encourage
personnel to produce innovative inventions or
measures. In 2011, the Company achieved and
garnered the prestigious Excellent Award for
its cost-cutting and innovative project, namely
“Unstable micro sand in the Actifl o process”
at the International ICC Conference Quality
Creative Circle 2011 held in Yokohama, Japan
from 11 to 15 September 2011. Details of the
activities and achievement of the Company’s
ICC Programme are set out under “Quality
Policy & Report” section on page 206 of this
Annual Report.
Visit by PUSPANITA
representatives to SSP2 WTP
097
Annual Report 2011Puncak Niaga Holdings Berhad
Operations Review Syarikat Bekalan Air Selangor Sdn Bhd
CHALLENGES
Due to rapid development in Selangor and
the Federal Territories of Kuala Lumpur and
Putrajaya, the population in the Klang Valley
is expected to increase on current trend in
the coming years, and the demand for treated
water in Selangor, being the most populous
state in Malaysia, and the Federal Territories of
Kuala Lumpur and Putrajaya is also expected
to increase.
Against this backdrop, the demand for water
in Selangor and the Federal Territories of
Kuala Lumpur and Putrajaya had steadily
increased in 2011 in step with population and
development growth, but was not met by any
new water supply sources. Based on SYABAS’
data, in 2011, SYABAS distributed treated
water to about 7.5 million consumers.
In 2011, some parts of the Klang Valley already
experienced low water pressure while others
took a longer time to recover after major
breakdowns particularly during periods of
peak demand. This was due to reserve capacity
falling below 5% of the average demand,
making it diffi cult for SYABAS to meet the
peak demand which, historically had risen by
7% above average demand. This situation will
worsen in future unless additional interim and
long term water sources are developed by the
Government to avoid the impending water
crisis (“Additional Water Sources”). The delay
in the implementation of the Langat 2 WTP
project, whose completion date is uncertain,
would result in the expected shortage of
water supply commencing in 2012 unless
the Additional Water Sources are developed
quickly.
The uncertainty and delay in the Proposed
Restructuring since 2008 continued, further
adding to the constraints.
The Government’s freezing of the SYABAS
CAPEX programme, ongoing since 2008,
prevented urgently-needed investment in
the rehabilitation and upgrading of water
infrastructure in the Klang Valley although
absolutely critical works which are limited in
numbers and funding were approved by the
Government. The CAPEX freeze also inhibited
reductions in Non Revenue Water (“NRW”),
which in turn forced SYABAS to increase
its bulk purchase from water treatment
operators and reduced reserve margin.
There were frequent pipe bursts and leaks
due to the old age of infrastructure, which
increased SYABAS’ operational costs and
increased consumers’ complaints about the
many interruptions resulting from repairs to
old burst/leaking pipes. The rehabilitation and
upgrading of water infrastructure in the Klang
Valley is necessary both for the upgrading
of water services to consumers and for the
reduction of NRW.
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.
World Water Day 2011 Celebration
on 22 March 2011
Annual Report 2011Puncak Niaga Holdings Berhad
098
Operations Review Syarikat Bekalan Air Selangor Sdn Bhd
Since the refusal of the Selangor State
Government from 1 January 2009 to either
approve the implementation of the water tariff
adjustment or to pay compensation in lieu
thereof, SYABAS has suffered a consequential
loss in revenue and severe cashflow
constraints, which has resulted in SYABAS’
amassing growing debts which have also led
to legal proceedings, which are still ongoing,
for SYABAS’ inability to make full payment for
the cost of water purchased from the water
treatment operators.
Although the Federal Government has stepped
forward to assist the water industry in Selangor
in 2011 as highlighted in the Chairman’s
Message, there is no long term solution on the
table. Unless and until a unanimous solution
is reached for the water services industry in
Selangor, SYABAS will continue to face the
ever increasing challenges and adversities as
mentioned above.
Despite the many issues and challenges
faced by SYABAS, SYABAS was able to meet
the high expectations and high demand
of the consumers in Selangor and the
Federal Territories of Kuala Lumpur and
Putrajaya in 2011 mainly as a result of the
dedication, commitment and absolute sense
of responsibility to the consumers of the
Management and staff of SYABAS, and in
addition, enhancement by SYABAS of its
operational effi ciency which focused on
improvement in service level to consumers,
the details of which are set out under the
heading “Achievements” below.
ACHIEVEMENTS
Undeterred by the challenging issues which
SYABAS faced in 2011, SYABAS to the best
of its ability, continued to maintain the high
service levels as required by the Concession
Agreement dated 15 December 2004 signed
between SYABAS, the Federal Government
and the Selangor State Government (“SYABAS
Concession Agreement”) and the Ministry
of Health’s (“MOH”) National Standard for
Drinking Water Quality (2004) (“NSDWQ”),
exceeding the 2011 performance targets
which SYABAS set for itself, which were higher
than the requirements of SYABAS Concession
Agreement.
With limited funding for CAPEX investment,
SYABAS focused on operational effi ciency in a
bid to continue to supply good quality treated
water to consumers. Operational effi ciencies
such as the review and improvement of existing
standard operating procedures (“SOP”), the
introduction of new SOP, internal innovations
and cost optimization, and internal training
and motivation for the workforce focusing
on improvements in consumer service were
implemented by SYABAS during 2011.
As an interim but cost effective measure,
prior to pipe replacement, SYABAS also
implemented a pressure management
programme to reduce NRW and the frequency
of pipe bursts and leaks in Selangor and the
Federal Territories of Kuala Lumpur and
Putrajaya.
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
Undeterred by the challenging issues which SYABAS faced in 2011, SYABAS to the best of its ability, continued to maintain the high service levels as required by the Concession Agreement.
099
Annual Report 2011Puncak Niaga Holdings Berhad
Operations Review Syarikat Bekalan Air Selangor Sdn Bhd
lesser site visits required for pressure-setting
adjustments.
For the same reason, SYABAS is also currently
embarking on a consumer database drive
to allow SYABAS to send Short Messaging
Services (“SMS”) and email alerts in the event
of scheduled and/or major unscheduled water
disruptions at the affected consumers’ areas.
Customer service levels exceeded those of
2010. SYABAS responded to 99.23% of all water
quality complaints within 30 minutes, and
achieved the KPI requiring calls to be picked up
within six seconds and the call abandonment
rate to the lowest possible level. The SYABAS
Concession Agreement establishes targets for
pipe repair times, while SYABAS sets its own
targets which are even more stringent. In 2011,
the Company signifi cantly out-performed both
sets of targets.
During the year, SYABAS boosted its Billing
Collection Effi ciency to 99.9% from 98.5%
the previous year, exceeding the target rate
of 99.5%. At RM1,650.00 million, the water
purchase for 2011 refl ected an increase
over 2010’s fi gure of RM1,570.00 million but
was below the target of RM1,652.00 million.
Meanwhile, the Distribution Cost was 0.23
per m3 exceeding 2010’s fi gure of RM0.21
per m3 and well below the target of 0.27 per m3.
Despite SYABAS CAPEX freeze, the average
NRW level for Selangor and the Federal
Territories of Kuala Lumpur and Putrajaya was
computed as 32.31%, slightly lower for 2011
than the 2010’s NRW level of 32.45% and lower
than the NRW target of 33.43%. Details of NRW
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.
WATER DISTRIBUTION SERVICES
In 2011, SYABAS distributed a daily average of
4,143 MLD of treated water to about 7.5 million
residential and commercial consumers in
Selangor and the Federal Territories of Kuala
Lumpur and Putrajaya. This amounted to
80 MLD (2%) of treated water more than in 2010.
SYABAS maintains 26,145 km of water pipes;
1,469 service reservoirs, elevated water tanks
and suction tanks; and 557 booster pumping
stations. The numbers of these assets
increased by between 3%, 6% and 12% over
the previous year’s count, respectively. Water
supply coverage is 100% in urban areas and
99% in rural areas.
NON REVENUE WATER (“NRW”)
Progress to Date
In the seven years since the SYABAS
Concession Agreement took effect, SYABAS
has successfully achieved a progressive
reduction in NRW from 42.78% as at 1 January
2005 to 32.31% as at 31 December 2011, which
can be summarised as follows:-
Water Metered Input Consumption NRWPeriod (MLD) (MLD) MLD %
A 3,766 2,155 1,611 42.78
B 4,143 2,804 1,339 32.31
B-A +377 +649 - 273 -10.47
Note:
A denotes 1 January 2005
B denotes 31 December 2011
SYABAS participated in
Second IWA Development
Congress and Exhibition 2011
on 21 November 2011
Annual Report 2011Puncak Niaga Holdings Berhad
100
Operations Review Syarikat Bekalan Air Selangor Sdn Bhd
Despite a severely limited budget and approved
CAPEX, SYABAS managed to conduct a
number of NRW Reduction works in 2011, and
these NRW Reduction works contributed to the
improved water loss fi gures as shown on page
099 under NRW of this Annual Report.
NRW Reduction works in 2011
Some 454 mechanical bulk meters (2” and
above) were replaced, the NRW savings is
being evaluated.
Under an approved program of RM170.0
million, a pipe replacement programme for
210 km of pipes, is being implemented in
stages for 30 of the most critical areas in the
Klang Valley. Installation commenced in 2011
and should be completed by 2014.
NRW Phases 2 and 3 programs of SYABAS’
maintenance works on 992 DMZ, including
installation of advanced Pressure Management
and Active Leakage Detection and Control
were continued. These works realised savings
of 56 MLD in 2011 and are estimated to save a
further 28 MLD by mid-2012.
SYABAS in-house teams also engaged in a
number of NRW activities throughout 2011,
namely, reservoir overfl ow monitoring and
maintenance at 80 DMZ established under
the Kementerian Tenaga Air dan Komunikasi
(“KTAK”) DMZs and 112 Pressure Management
Zones (“PMZs”).
In 2011, Suruhanjaya Perkhidmatan Air Negara
(“SPAN”) approved the implementation of
large-area pressure management for four
zones and the installation of advance pressure
management for 20 zones in KTAK DMZs.
The expected savings from these works are
estimated at 3.5 MLD and 4 MLD, respectively.
The programs are expected to be completed in
2012 to realise the expected savings.
As there are factors outside SYABAS’ control
such as CAPEX freeze which affect its ability to
reduce the NRW, SYABAS has proposed to the
Selangor State Government and SPAN to revise
the NRW KPI target in SYABAS Concession
Agreement to allow for the impact of these
uncontrollable factors. Based on SYABAS’
evaluation, the proposed revised KPI target is
36.27% as compared to actual achievement
of 32.31% in 2011. The proposed revised
KPI target is subject to the Selangor State
Government’s consideration and approval.
CAPEX Works
Under the privatisation of water supply services
in Selangor and the Federal Territories of
Kuala Lumpur and Putrajaya, SYABAS, as the
concessionaire, planned and allocated capital
expenditure under its CAPEX programme for
the upgrading and rehabilitation works of the
distribution assets.
CAPEX program for 2011 are principally funded
from RPS 2009 (RM65.24 million) and RPS
2010 (RM131.6 million) and SYABAS internal
funding (RM187.6 million).
In year 2011, a total expenditure of RM88.54
million has been invested to upgrade and
rehabilitate the distribution infrastructure
including replacement and/or repairing of
leaking water tanks and slopes, improvement
works to low pressure areas, improvement
works for enhancement of water quality,
pumphouse upgrading and rehabilitation
works, ICT upgrading works, old pipes
replacement works, etc.
The cumulated total amount of CAPEX
expenditure from 1 January 2005 to
31 December 2011 amounted to RM2,340.56
million.
Speech by SYABAS’ CEO,
YBhg Dato’ Ruslan at the Signing
Ceremony of MOU with NIOSH
101
Annual Report 2011Puncak Niaga Holdings Berhad
Operations Review Syarikat Bekalan Air Selangor Sdn Bhd
Visit by Kumpulan Wang
Simpanan Pekerja (“KWSP”)
to SYABAS Headquarters
on 11 July 2011
As part of interim mitigation project on
expected water shortage, on 20 October
2010, SPAN and Kementerian Tenaga,
Teknologi Hijau dan Air Malaysia (“KeTTHA”)
approved RM285.0 million for the program.
Of this amount, SPAN and KeTTHA approved
RM170.0 million to SYABAS for CAPEX for pipe
replacement. Based on the CAPEX for pipe
replacement, an allocation of RM16.5 million
was approved for 2011 with the balance of
RM153.5 million for Investment from 2012
until 2014. Eight pipe replacement packages
were tendered in July 2011 and fi ve packages
were tendered in November 2011. Out of the 13
packages tendered and awarded in 2011, one
package at Jalan Sg Baru, Kg Baru has so far
been completed.
On 2 November 2011, SYABAS submitted
and presented to SPAN the fourth operating
period CAPEX programme (1 January 2012
to 31 December 2014) in which the total cost
for all new projects is RM2,325.57 million and
RM655.0 million was planned for year 2012.
However, due to the current CAPEX freeze and
cashfl ow constraint, it is expected only a very
limited amount of which would be approved for
implementation.
Operation Command Centre (“OCC”) and the
Geographical Information System (“GIS”)
The OCC, fi rst launched on 2 November 2010,
allows SYABAS to monitor, operate and manage
its water distribution network in Selangor and
the Federal Territories of Kuala Lumpur and
Putrajaya and take fast remedial action in the
event of any distribution natural abnormality.
The OCC is the primary component of the
RM27.5 million Supervisory Control and Data
Acquisition (“SCADA”) Project approved and
funded by KeTTHA. The OCC is Malaysia’s most
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.
The OCC has three key elements:
• The SCADA wireless system, which
collects real-time measured fi eld data that
normally varies with time, and remotely
controls distant machinery in real-time.
• The Geographical Information System
(“GIS”), which stores and manages
the network infrastructure database
according to geographical location.
• The hydraulic operation model, which is
a tool deployed to simulate distribution
network flow conditions between
measuring points in real-time, and hence
provide a comprehensive overview of the
network’s fl ow, pressure and reservoir
water levels.
The status of implementation of the
GIS-related works as at 31 December 2011
was as follows:-
Phase 1A – Development of GIS (Infrastructure
and Application)
The GIS captures information on pipeline and
reservoir information for all ten districts and
as of 31 December 2011, registered 26,145 km
length of pipeline, 1,469 service reservoirs and
557 booster pumping stations.
Phase 1B – Development of GIS (Geo-Coding)
2,566 major consumers (“C”) have been
geo-coded in their respective districts, as
follows: Petaling (682 C), Klang/Shah Alam
(372 C), Kuala Lumpur (669 C), Sabak Bernam
(8 C), Hulu Langat (178 C), Kuala Selangor
(48 C), Hulu Selangor (56 C), Kuala Langat
(68 C), Sepang (148 C), and Gombak (337 C).
Annual Report 2011Puncak Niaga Holdings Berhad
102
Operations Review Syarikat Bekalan Air Selangor Sdn Bhd
Phase 2 – Development of SCADA and
Integration of SCADA with GIS and Network
Modelling
The OCC receives live data on water levels,
pressure power supply trips, faulty measuring
instruments, faulty Remote Telemetry Units
(“RTUs”), incidents of vandalism, etc., from
250 RTUs. Upon receiving such alerts, SYABAS
acts accordingly to resolve the issues in the
shortest possible period.
Phase 3 – Hydraulic Model
Hydraulic models for all ten districts were
completed and are undergoing calibration
for improved accuracy. The models are being
deployed for use of planning and operations.
WATER QUALITY ENHANCEMENT
For year 2011, SYABAS complies fully with
the MOH’s NSDWQ and Quality Assurance
Programme (“QAP”), as well as maintaining
the Mandatory Level of Service (“MLS”) as
stipulated in SYABAS’ CA.
For this purpose, MOH has taken 32,408
samples from 729 sampling stations and
SYABAS has taken 21,211 samples from the
remaining 371 sampling stations.
In 2008, SYABAS initiated a Water Quality
Improvement Master Plan (“WQIM Plan”) to
ensure consumer confi dence in the water
quality, and in 2011 continued to implement
the following programmes under the
WQIM Plan.
Air Scouring Programme (“AS Programme”)
The AS Programme is designed to
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
SYABAS from installing the necessary valves
and fi ttings required before air scouring can be
carried out.
The AS Programme has contributed to the
reduction in water quality complaints.
Reservoir Cleaning and Inspection
Programme (“RCI Programme”)
In 2011, 1,028 active reservoirs were registered
under this programme to be inspected twice a
year. Ten reservoirs were cleaned manually
during the year, whilst 24 were cleaned by the
open scour fl ushing method. Target reservoirs
for cleaning were selected based on turbidity
violations identifi ed during 2011 inspections.
Immediate Response To Consumer Complaints
In 2011, SYABAS achieved an average
compliance rate of 100% response time to
attend to water quality complaints within half
an hour and to undertake remedial actions
within 24 hours.
Consumer Awareness & Education
Programme (“CAE Programme”)
The CAE Programme with media coverage
is ongoing with emphasis on consumers’
understanding of the quality of water supplied
to the premises and related issues and their
responsibility for maintaining their own
internal plumbing system and internal storage
tanks. Consumers have greatly benefi ted from
SYABAS’ efforts in the CAE Programme.
For further details of the CAE Programme,
please turn to “Preserving Our Environment”
section on pages 161 and 162 of this Annual
Report.
Briefi ng on SYABAS’ Operation
Command Centre
103
Annual Report 2011Puncak Niaga Holdings Berhad
Operations Review Syarikat Bekalan Air Selangor Sdn Bhd
BILLING & COLLECTION
SYABAS revenue and cash fl ow rely heavily upon
the effectiveness of its Billing and Recovery
Department, and efforts are constantly made
to enhance the systems and processes for peak
effi ciency. As at 31 December 2011, the total
number of active water supply accounts was
1,793,580, up 3.5% on the 1,732,193 accounts
registered in 2010.
Total billings rose 2.9% to RM1.530 billion
against the RM1.487 billion recorded in 2010.
The Table A above shows billing records
over the last seven years, demonstrating a
cumulative growth exceeding 46%.
Total bill payments collected in 2011 amounted
to RM1.529 billion, representing a 3.3%
increase on the RM1.480 billion collected
the year before. Overall, SYABAS achieved
a collection effi ciency of 99.9% in 2011 as
compared to 98.5% the previous year.
Total receivables as at 31 December 2011
stood at RM163.0 million, 2.7% lower than the
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.
Migration of Bulk Meter Accounts to Individual
Meter Accounts (“Migration”)
The Migration process is still slow and the
success rate can best be achieved by making
the process mandatory. KeTTHA and SPAN
now have the intention and are in the process
to make the Migration mandatory.
As at 31 December 2011, SYABAS had
completed the Migration of only 230 bulk meter
accounts involving 49,963 individual accounts.
The Table B below shows the Migration from
Bulk Meter Accounts to Individual Meter
Accounts up to 31 December 2011:-
2006 - 2011 2011
Approved applications 496 75
No of accounts approved 93,958 16,926
No of approved
applications migrated 230 60
No of accounts 49,963 12,440
Table B - Migration from Bulk Meter Accounts to Individual Meter Accounts
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
Water Facts
The overall amount of
water on our planet has
remained the same for
two billion years.
Annual Report 2011Puncak Niaga Holdings Berhad
104
Operations Review Syarikat Bekalan Air Selangor Sdn Bhd
INFORMATION AND COMMUNICATION
TECHNOLOGY (“ICT”)
In 2011, the Information, Communication and
Technology (“ICT”) Department continues
to provide high quality, reliable service and
support to SYABAS and create effi cient and
secure environment to increase productivity
and promote sustainability with the users, as
follows:-
(i) Maintain an up-to-date ICT infrastructure.
(ii) Upgrade for SYABAS Enterprise
Communication Backbone (SECOB)
from Streamyx to TM Premier IPVPN
Service over Metro-Ethernet technology,
enhances existing network performance
with faster access to SYABAS Integrated
Water Management System (SWIMS)
applications.
(iii) Meet the internal users’ needs from time
to time. In 2011, the ICT Department
has attended to 120 numbers of system
enhancements requests.
(iv) With SYABAS’ implementation of SAP
Electronic Financial Management Systems
(“EFMS”) in 2011, the ICT Department
has integrated the in-house applications,
namely iJob, iClaim, iRefund, iUtilities
with SAP EFMS.
The following application systems were
enhanced and completed, ready to be rolled
out in 2012:-
• The Development Plan Approval
Submission Management System
(eDPLAS) which enables online
‘development plan’ submission by
consultant and approval online by SYABAS.
• The Point of Sale (iPOS) system to replace
the current RM20.00 system to process
payment at SYABAS’ counters. It integrates
with SYABAS’ billing system to check the
consumer account status.
• The iMigrasi system which processes
online migration application.
To keep up with changing needs, early in 2011,
the ICT Department rolled out a new design
of eMesra intranet portal, a One-Stop Centre
for all electronic communication between
SYABAS’ employees, departments and district.
The new eMesra intranet portal is refreshing,
inviting and made it easier for employees
to communicate, to seek information and
accessing SYABAS’ daily operation application.
In conclusion, the ICT Department has
accomplished all of its goals for 2010-2011.
Public Awareness Programme
held at Tesco Shah Alam
on 29 October 2011
Public Awareness Programme
at Pangsapuri Bustan,
Shamelin, Cheras
on 17 December 2011
105
Annual Report 2011Puncak Niaga Holdings Berhad
Operations Review Puncak Oil & Gas Sdn Bhd GOM Resources Sdn Bhd
(formerly known as Global Offshore Malaysia Sdn Bhd)
OIL & GAS
As the Group already has tremendous
strengths in the natural resources arena, this
new venture makes excellent sense. With the
ever-increasing global demand for energy, far
from being a sunset industry, Oil & Gas is an
industry with huge potential.
The regional forecast for the oil and gas
sector is promising. At a three-day Offshore
Asia Conference in February 2012, there was
a consensus that oil is on an upward trend,
and the industry’s capital expenditure is likely
to reach record levels in the coming year. All
activities are increasing, which will present
opportunities in new frontier areas through
innovations in products, services and working
methods. Geographically diverse exploration is
on the rise; deepwater continues to dominate
short-term expenditure; and fl oating liquefi ed
natural gas is another growing niche market.
In Malaysia, experts concur that, although
the mature fi elds are in decline, the largest
producers are developing new projects that
should help to offset falling output. Analysts
forecast that Malaysia’s average output will
rise from 632,200 barrels per day in 2012 to a
new peak of 881,000 in 2017. They also predict
continuing growth in the country’s gas volumes
and exports.
[Source: Business Monitor International, Malaysia Oil and
Gas Report Q2 2012]
PUNCAK OIL & GAS SDN BHD
In 2011, our initiatives started to bear fruit. As
reported in the Executive Chairman’s Message,
on 28 September 2011, PNHB’s wholly-owned
subsidiary, POG completed the acquisitions of
the total equity of both GOM Resources Sdn Bhd
(formerly known as Global Offshore Malaysia
Sdn Bhd) (“GOM Resources”) and KGL Ltd
(“KGL”) (“Acquisitions”). These Acquisitions
provided a platform for PNHB’s entry into the
Oil & Gas industry.
GOM Resources is involved in the business
of construction and subsea services and
marine support services to the offshore Oil
& Gas industry in Malaysia whilst KGL is
the registered and benefi cial owner of the
pipelaying barge “DLB 264”.
On 23 December 2011, POG was awarded
a contract from Perunding Ranhill
Worley-Muhibbah Consortium to provide a
workbarge, workboat and support vessels
for a regasifi cation facilities project at Sungai
Udang, Melaka for Petronas Gas Bhd. The
workbarge is to accomodate up to 300 persons
on board while the work boat is used for
anchor handling and towing. The contract
also includes catering for contractor’s live-in
personnel. Project is expected to be completed
by end of the year.
Looking forward, prospects for the new venture
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.
KGL’s pipelaying
Derrick Lay Barge (“DLB”) 264
Gas Saving Tips
Car pool to reduce
travel monotony and
save cost.
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
THE SECTIONS BELOW.
Annual Report 2011Puncak Niaga Holdings Berhad
106
Operations Review Puncak Oil & Gas Sdn Bhd GOM Resources Sdn Bhd
(formerly known as Global Offshore Malaysia Sdn Bhd)
GOM RESOURCES SDN BHD
(FORMERLY KNOWN AS GLOBAL OFFSHORE
MALAYSIA SDN BHD) (“GOM RESOURCES”)
GOM Resources is involved in the business of
engineering, procurement, installation and
commissioning (“EPIC”) contracting services,
subsea services and marine support services
to the offshore Oil & Gas industry in Malaysia.
GOM Resources has been awarded by
PETRONAS the Integrated Transportation
and Installation of Offshore Facilities contract
for “Pipelay Barge Package A” for Petronas
Carigali Sdn Bhd. GOM Resources had a proven
track record in undertaking oil and gas works,
both at home and abroad.
GOM Resources has a range of expertise
from simple jobs to highly complex jobs
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
provide the Group with sustainable income and
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.
POG Group are looking at off-shore pipe
laying, transportation and installation and
construction, locally and internationally. We
are actively tendering for works in these areas.
Our long term business plan is to go into
exploration and production (E&P) in Malaysia
as well as regionally. In order for us to do so,
we are looking at partnering foreign E&P
companies in marginal (Risk Service Contract)
and brownfi eld developments. We are also
looking into the potential of participating
in downstream mega projects and other
developments in Sabah.
POG Group will continue to grow its Oil & Gas
operations organically and/or by merger and
acquisition, and aims to become a worthwhile
contributor to the Group’s profi tability within
the next two years.
Pre-commissioning work carried
out by GOM Resources.
POG Group will continue to grow its Oil & Gas operations organically and/or by merger and acquisition.
107
Annual Report 2011Puncak Niaga Holdings Berhad
Business Expansion
MALAYSIA
Sarawak
Puncak Niaga Holdings Berhad (“PNHB”) extended its business activities in water related construction to Sarawak via a 40:60 unincorporated joint venture between PNHB and Quality Concrete Holdings Bhd namely, Konsortium Puncak Niaga Holdings Bhd – Quality Concrete. Konsortium Puncak Niaga Holdings Bhd – Quality Concrete clinched a RM667.32 million contract for a Rural Water Supply Project in Sarawak (“Sarawak BALB Project”) from the Rural and Regional Development Ministry.
The Sarawak BALB Project, which is part of the Federal Government’s initiative to improve the living standards of the rural population in Sarawak, will cover over 91,000 households and will increase clean water provision for rural areas from 59% to 90% by end of 2012.
To date, Konsortium Puncak Niaga Holdings Bhd – Quality Concrete has been awarded 15 work orders, the scope of which includes reticulation works, pipe-laying, the construction of three WTPs, booster pumping stations and reservoirs spread over six Divisions from Kuching to Sibu.
So far, four work orders have been successfully completed on time and the remaining work orders are expected to be completed by the end of 2012.
Kelana Jaya
In November 2011, Syarikat Prasarana Negara Bhd awarded Puncak Niaga (M) Sdn Bhd (“PNSB”) a RM15.3 million contract under the Kelana Jaya (KLJ) Line Extension Project involving the relocation works of SYABAS mains and Indah Water Konsortium Sdn Bhd (“IWK”) sewer pipes. The project is scheduled for completion by the end of June 2012.
Project Mass Rapid Transit (MRT) Lembah Klang
Through a competitive tender process, PNSB has been awarded the works for Relocation of
Existing Sewerage & Water Main For Cochrane Launching Shaft – Package D2 by Syarikat Prasarana Negara Berhad under Projek Mass Rapid Transit Lembah Kelang: Jajaran Sungai Buloh-Kajang. The scope of works is the relocation of SYABAS main pipes and to carry out cement/sand grouting for existing sewer main pipes under the existing road. The project was completed on 15 March 2012.
CHINA
In recent years, the economy of the People’s Republic of China (“PRC”) has proven its resilience in the face of fi nancial turmoil elsewhere in the world. The collapse in international export markets in 2009 initially hit the PRC economy hard, but it rebounded, quickly returning to growth. In February 2011, it overtook Japan to become the world’s second-largest economy (source: BBC).
China’s GDP in the coming decade is predicted to advance, albeit at a slower rate of 7.3%, in contrast to the average of 10.7% it has registered over the past ten years. In the coming year, Beijing plans to exercise prudent fi scal policies to hold consumer prices stable.
In 2009-2015, China has vowed to double its spending on environmental protection, and analysts state that the possible increase to CNY 3.1 trillion (USD 454 billion) will benefi t equipment manufacturers in water treatment, air pollution control, and also developers in the renewable energy sector (source: Bloomberg).
The PNHB Group entered the Chinese market in 2008, seizing the tremendous growth opportunities afforded by the PRC’s rapid rate of development. Today, our work in China, comprising both water supply and wastewater projects, is one of the linchpins of our regional expansion strategy.
Our 98.65% owned Singapore subsidiary, Sino Water Pte Ltd (“Sino Water”) is leading the campaign to capture a greater share of the Chinese market. Sino Water is collaborating with and directing a number of local Chinese provincial subsidiaries in matters of project execution.
Kelana Jaya (KLJ)
Line Extension Project
- pipe laying works
Annual Report 2011Puncak Niaga Holdings Berhad
108
Business Expansion
Lushan Water Supply Project Located in Lushan County, Pingdingshan City, Henan Province
Luwei (Pingdingshan) Water Co Ltd, a Sino Water 91.34% owned China subsidiary, currently supplies water to approximately 6,000 consumer accounts in Lushan County Township from the existing 2 million-litre-per day (“MLD”) underground pumping stations, with the daily supply ranging from 1.4 MLD to 1.8 MLD. Water is abstracted from underground and supplied directly to consumers by fi ve pumping stations.
Lushan Water Supply Project involves the rehabilitation of the existing water supply system in Lushan County Township and the construction of a new 30 MLD water treatment plant (“30 MLD WTP”) under Phase 1, together with the laying of a 14.56 km length of raw water pipeline and a new reticulation pipeline in Lushan County Township.
The construction of the 30 MLD WTP was completed in 2010. As at 31 December 2011, the laying of the raw water pipelines was 99.36% completed and was subsequently fully completed in end of February 2012. Upon completion of the pipelines, water from Zhaopingdai Reservoir will be conveyed to the 30 MLD WTP for the commencement of testing & commissioning works. The 30 MLD WTP is expected to be operational by early July 2012, supplying treated water to the consumers in Lushan County Township. With that, the private wells will be gradually closed and this will mark a new era for water supply in Lushan County.
The cost of the construction of the 30 MLD WTP and the laying of the distribution pipeline is 66% funded by a World Bank Loan.
A 30km reticulation pipeline will be laid or replaced to cover the supply of treated water for approximately 130,000 people in Lushan County Township. To date, some 24 km of the reticulation pipeline work is completed, with a further 6 km to be laid and/or replaced by August 2012. Approximately 18,000 new consumer accounts are expected to be connected to this pipeline network by 2015. In
the next two years, more effi cient systems for registering water usage, billings, collections and customer service will be established for implementation in 2012/2013 in Lushan County Township to serve the estimated 130,000 population.
Binzhou Wastewater Project Located in Yangxin County, Binzhou City, Shandong Province.
The project, headed by Sino Water’s 100% owned China subsidiary, Xinnuo Water (Binzhou) Co. Ltd., involves the construction of a 30 MLD wastewater treatment plant (“WWTP”) in two phases of 15 MLD each.
The WWTP will treat wastewater from the nearby factories that house the tanneries, building material manufacturers, and chemical producers. The wastewater pipelines from these factories have already been laid and are connected to the inlet of the WWTP. At the completion of the project, the waste from these factories, estimated at 15 MLD, will be channeled to the WWTP for further treatment before being discharged into the nearby river.
The construction of the Phase 1 15 MLD wastewater plant and the M & E works has been completed. The WWTP’s testing and commissioning is curently ongoing.
With the completion and operational commencement of the new Binzhou WWTP, the current environmental degradation caused by industrial waste will be signifi cantly reduced, resulting in a better environment for Laodian Town in general and the Chenlou Industrial Park in particular.
Luancheng Dayu Water Supply Project Located in Luancheng County, Shijiazhuang City, Hebei Province
Sino Water’s 80% owned China subsidiary, Luancheng Dayu Water Supply Co Ltd, has been supplying water to 3,493 consumers in Luancheng County Township, with the daily supply ranging from 1.8 MLD to 2.5 MLD. Water is abstracted from underground and supplied directly to consumers by ten pumping stations.
Lushan Water Supply Project
- Treated Water Pump House
Lushan Water Supply Project
- Administration Offi ce
109
Annual Report 2011Puncak Niaga Holdings Berhad
Business Expansion
Refl ecting delays in the commencement of the South-to-North Water Diversion Project by the Central Government of China, the construction of the proposed 15 MLD WTP to supply treated water for domestic use and the proposed 50 MLD WTP to supply water for industrial use, is now scheduled to begin in 2015 or 2016 and expected to be completed by 2017/2018.
Yuanshi Industrial Water Supply ProjectLocated in Yuanshi County, Shijiazhuang City, Hebei Province
Sino Water’s 80% owned China subsidiary, Hebei Sino Panlong Industrial Water Supply Co Ltd, supplies water abstracted fromBa-Yi Reservoir directly to the thermal plant in Yuanshi County by gravity fl ow via a 15.5 km pipeline. There were no major construction works in 2011.
BUSINESS DEVELOPMENT IN INDIA AND INDOCHINA
The acute need to improve water supply and sanitation in India and Indochina, and the governmental budgets allocated to these works, present the Group with immense opportunities for overseas business development.
India
After a return to trend growth in fi scal year 2010-11, India’s economic growth is likely to slow to 7-8 percent in the next two years. The slowdown is a result of uncertainties weighing down investment, tighter macroeconomic policies intended to fi ght still-high infl ation, and the base effect of the strong agricultural rebound in FY2010-11. Slow growth in core Organization for Economic Cooperation and Development (“OECD”) countries means domestic drivers for growth will have to be strengthened. This would include progress 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)
On 10 March 2011, PNHB acquired 9,999 equity shares of Rs10/- each in Puncak Niaga Infrastructures & Projects Private Limited (“PNIP Pte Ltd”), representing 99.99% of the total issued and paid-up share capital of PNIP Pte Ltd. The remaining 0.01% (one equity share of Rs10/-) was held by Puncak Niaga (India) Sdn Bhd, with a benefi cial holding vesting with PNHB. PNIP Pte Ltd was set up to facilitate PNHB’s expansion plans to pursue business development efforts to secure new business in India.
On 15 March 2011, PNHB entered into a Memorandum of Understanding (“MoU”) with Ramky Infrastructure Limited (“RIL”) to form an exclusive collaboration in the form of an unincorporated joint venture aimed at sourcing potential water and water-related projects in India. The MoU lapsed on 14 March 2012.
Vietnam
Growth for the six Southeast Asian economies, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam is projected to average 5.6% during 2012 – 2016. Global uncertainties and natural disasters shed a negative light on the growth prospects of the region but compared with sluggish OECD economies, overall Southeast Asia will have a solid growth performance through 2016.
(Source: OECD Southeast Asian Economic Outlook)
Recognising these opportunities, on 3 March 2011, PNHB set up a Representative Offi ce in Ho Chi Minh City to explore and identify potential water supply and water related projects in Vietnam. The Vietnam Representative Offi ce will also look into the possibility of collaboration with local partners in Vietnam.
On 3 March 2011, PNHB set up a Representative Offi ce in Ho Chi Minh City to explore and identify potential water supply and water related projects in Vietnam.
Water Facts
Pure water has a
neutral PH of 7
Annual Report 2011Puncak Niaga Holdings Berhad
110
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
Federal Territories of Kuala
Lumpur and Putrajaya at
SYABAS’ PUSPEL Contact Centre
Syarikat Bekalan Air Selangor Sdn Bhd
(“SYABAS”) provides its customers with quick,
courteous and excellent service through its
highly acclaimed and award winning one-stop
contact centre, Pusat Perkhidmatan Pelanggan
(“PUSPEL”). At PUSPEL, customers receive
prompt feedback on all water and water supply
related queries, reports and complaints in
Selangor and the Federal Territories of Kuala
Lumpur and Putrajaya. PUSPEL’s logo with
the service motto, “Friendly, Committed, and
Trusted” was launched on 10 January 2009 as
a symbol of our relentless efforts and ongoing
commitment to consumers.
PUSPEL operates 24 hours a day, 365 days a
year. Customers may interact with PUSPEL
staff via toll-free number, facsimile, Short
Messaging Service (“SMS”), emails and letters.
PUSPEL’s staff practise “SMART” principles
in their daily work, namely, S – Smile,
M – Manageable, A – Accessible, R – Reliable
and T – Timely.
111
Annual Report 2011Puncak Niaga Holdings Berhad
Delivering Service Excellence
PUSPEL maintains a Customer Database
Management (“CDM”) section. PUSPEL is
targeting a total of 1.6 million contacts for
the CDM, who can expect to receive water
disruption notices directly in SYABAS’ areas
of operations. As at 31 December 2011, a total
of 591,603 data of consumers’ accounts with
mobile numbers or email addresses had been
collected.
Consumers can also follow PUSPEL via social
network tools, namely Twitter and Facebook,
where users can receive information regarding
water disruptions in real-time for scheduled
and unscheduled disruptions. In addition,
PUSPEL continues to introduce workable
initiatives and innovations that are geared
towards increasing effi ciency and productivity
at the workplace, while striving to minimise
costs.
PUSPEL is a highly acclaimed and integrated
consumer contact centre established by
SYABAS as one of several consumer-oriented
efforts and initiatives for the benefi t of the
consumers and the general public. PUSPEL
has been entrusted to undertake vital roles
in ensuring that consumers and the general
public receive the highest level of services
as prescribed in the Concession Agreement.
PUSPEL is part of a Customer Service
Department within SYABAS which comprises
fi ve major integrated core functions namely
PUSPEL/Contact Centre, Counter Services,
Unit Kerjasama Informasi Pelanggan
(“YAKIN”), Industrial Consumer Unit (“ICU”),
and Customer Database Management
(“CDM”).
To ensure an immediate response to
customer complaints, our PUSPEL agents
are always ready to service consumers.
According to SYABAS’ Client Charter, all
enquiries, complaints and requests should
be acknowledged within 30 minutes after
receipt, and remedial actions should be taken
within 24 hours. Based on reports, in 2011,
PUSPEL met 100% of SYABAS’ Client Charter’s
requirements.
All cases are recorded in our complaint
management system known as the Pivotal
System. The communication between PUSPEL
and the ten SYABAS’ District Offi ces is also
via the Pivotal System to ensure diligent and
timely follow-up. Thus, Contact Centre agents
are able to update consumers on the current
status of their enquiries or complaints.
COUNTER SERVICE
PUSPEL constantly seeks to enhance its
relationship with its customers. Walk-in
customers can expect to be served within 15
minutes, in accordance with SYABAS’ Client
Charter, and all counters adhere to PUSPEL’s
code of ethics, “M.E.S.R.A.” which carries the
meaning, M – “Minat” (Interest), E – “Efi sien”
(Effi cient), S – “Sabar” (Patience), R – “Ramah”
(Friendly) and A – “Adil” (Just).
For 2011, PUSPEL achieved a Quality
Management System (“QMS”) rating of only a
three minute waiting period and a nine minute
serving time, an achievement surpassing
SYABAS’ Client Charter’s requirement.
In 2011, the ten District Offi ces served
360,954 customers over the counter. In a bid
to further improve our service, we conducted
Professional Customer Service Training to
equip our counter staff to handle customer
queries in a courteous, polite and thoughtful
manner. To further ensure our quality of
service, our Head of Unit regularly conducts
district site visits to check that all counter
staff are adequately briefed and groomed for
the smooth running of the counter services
and to provide the best of services in line with
our service motto, “Friendly, Committed and
Trusted”.
Additionally, all counter services sections
submit consumer survey forms twice a year
to PUSPEL Headquarters, giving consumer
feedback and suggesting ways to improve our
services in the future.
In 2011, the ten District Offi ces served 360,954 customers over the counter.
Annual Report 2011Puncak Niaga Holdings Berhad
112
Delivering Service Excellence
PUSPEL’s “follow@puspel” online interaction
channels on the social networks, Twitter
and Facebook which allow our customers
to connect with SYABAS and to lodge their
complaints or queries easily and effortlessly,
are progressing well and have created very
impactful experience to the consumers
since their launch on 14 January 2010. As at
25 January 2012, PUSPEL had gained a total
of 2,267 followers on Twitter and 3,497 friends
and fans on Facebook. SYABAS is continuously
seeking to make these online interaction
channels more effective and interesting for our
consumers.
Counter Service serves as a “one stop
solution center” at all ten SYABAS’ District
Offi ces. Among services provided at the
counter are: new applications, opening new
accounts, closing accounts, change of account
ownership, bill payment, checking and printing
of bills, payment of arrears, disconnection of
service on request, reconnection of service,
work order change meter, meter testing, meter
lost/faulty, refund of deposit, buying water via
tanker and renting of static tank and general
inquiries. To meet consumers’ expectations,
we seek to deliver these services in a manner
that is committed, reliable and courteous, with
our speed of response as the key indicator.
CONTACT CENTRE
PUSPEL toll free number, 1-800-88-5252,
continues to be widely publicised for the
benefi t of the consumers in Selangor and
the Federal Territories of Kuala Lumpur
and Putrajaya. Consumers are assured that
their complaints are attended to and will be
addressed immediately. In 2011, PUSPEL
recorded 290,371 cases resulting from 640,242
calls received and handled. 223,551 cases
were closed during the year. In order to deliver
service excellence, it is our policy that all calls
received must be picked up in less than 6
seconds and the handling time must be within
3 minutes. In 2011, we achieved this target with
calls answered in an average of 3.03 seconds.
Meanwhile, the average handling time per call
agent is 2 minutes and 51 seconds.
Besides contacting the call centre, consumers
are encouraged to interact via our non-voice
channels such as e-mail, letter, SMS, fax,
Facebook and Twitter. In delivering service
excellence, we are ensuring that we have
various channels available for consumers to
contact and interact with us easily and without
hassle.
PUSPEL Statistics
2006 2007 2008 2009 2010 2011
Calls received and handled 630,666 583,052 600,865 567,970 538,525 640,242Cases for investigation and remedial action 231,845 227,098 196,813 204,430 202,270 223, 551Remaining 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.
Technical visit by PUSPANITA at
SYABAS’ PUSPEL Contact Centre
113
Annual Report 2011Puncak Niaga Holdings Berhad
Delivering Service Excellence
The number of calls received and handled in 2011 increased by 18.9% to 640,242 calls compared to 538,525 calls in 2010.
The Petaling District had the highest number of cases (69,789 cases), followed by the Klang District and the Kuala Lumpur District with 52,784 and 41,819 cases, respectively.
Below is a summary of pipe leaks and pipe bursts cases reported in 2010 and 2011:
2010 2011
Pipe Leaks 84,848 72,824Pipe Bursts 4,067 5,093
All of the above cases were repaired and attended within the targeted time as shown below:-
SYABAS’Pipe Corrective internal Measurement Action target Achieved (Target) (hour) (hour)
200 mm 1 day 4 2.09201-600 mm 2 days 10 6.97601-1,200 mm 3 days 16 10.85 1,200mm 4 days 20 6.75
Breakdown of Cases for Investigation and Remedial Action in 2011
Type of Cases 2010 2011
Water Supply Problems 165,209 174,572Billing Problems 20,371 23,890Faulty Water Meters 8,043 13,024Disconnection 8,352 11,744Others 295 321
TOTAL 202,270 *223, 551
Note: * A total of 223,551 cases out of 290,371 cases were
closed for 2011.
Cases of water supply problems increased from 165,209 in 2010 to 174,572 in 2011, a rise of 5.67%. During this time, cases of billing problems also rose by 17.3% to 23,890 cases in 2011, up from 20,371 cases in 2010. The cases on faulty water meters issue also rose from 8,043 cases in 2010 to 13,024 cases in 2011.
In spite of the increase in cases for investigation and remedial action in 2011, PUSPEL received 159 calls from consumers that commended its effi ciency and initiative.
In 2011, PUSPEL acknowledged all calls and correspondences within 30 minutes after receipt. 99.23% of calls and correspondences surpassed this target. The PUSPEL Contact Centre KPIs were established to ensure that staff handle each call in the most effi cient and effective way. Below are our achievements in 2011:-
KPI
Achieved
Criteria KPI Set in 2011
% of Not 1% 0.35%abandoned calls (hourly average)Average answering 6.0 3.03time (seconds) seconds secondsAverage call 3 minutes 2 minuteshandling time 51 seconds(minutes) % of call feedback 100% 122% As illustrated above, PUSPEL’s call centre exceeded all its KPIs targets for 2011.
Calls received by PUSPEL for year 2011
Month Volume of calls
January 42,543February 42,958March 54,306April 56,630May 52,075June 71,774July 56,488August 47,051September 48,927October 56,801November 53,269December 57,420
TOTAL 640,242
Average calls received per day = 1,788
Visit by students from
Universiti Putra Malaysia to
SSP2 WTP
Technical visit by Government
Senior Offi cers from INTAN
Annual Report 2011Puncak Niaga Holdings Berhad
114
Visitors are always welcome to visit our PUSPEL
Contact Center as we encourage knowledge
sharing and exchange of information as well
as discussions about areas of common interest
in relation to treated water supply. This helps
us to improve our services, to become a quality
role model for other companies.
In 2011, SYABAS hosted the following
technical visits by various agencies at SYABAS’
Headquarters and at the PUSPEL Contact
Centre:-
Date Visitors
7 March 2011 Government Senior Offi cers
from INTAN
23 March 2011 Water, Energy Consumer
Association and Global
Environmental Centre
24 March 2011 Malaysian Environmental NGO
(MENGO)
25 March 2011 Yayasan Anak Warisan Alam
and Pusat Aduan Pengguna
Nasional
5 April 2011 Persatuan Pekilang-pekilang
Malaysia
6 April 2011 Representative of Tamil Nesan
7 April 2011 Public Utility Board, Singapore
10 May 2011 Representative from Industri
Perdagangan Zon Bebas
Utama
16 May 2011 National Water and
Wastewater Organisation
of Iran
18 May 2011 Persatuan Suri dan Anggota
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
Date Visitors
29 November Representative from
2011 Pengurusan Pusat Dialisis
Negeri Selangor and the
Federal Territories of
Kuala Lumpur and Putrajaya
6 December Representative from Pusat
2011 Dialisis Negeri Selangor,
Wilayah Persekutuan
Kuala Lumpur and Putrajaya
Unit Kerjasama Informasi Pelanggan
(“YAKIN”)
To meet the needs of customers in Selangor
and the Federal Territories of Kuala Lumpur
and Putrajaya, the SYABAS’ Customer Service
Department has a separate unit, YAKIN,
which is community based. YAKIN engages
in activities such as conducting site visits,
briefi ngs on pipe replacement programmes
and dialogue sessions to promote consumer
relationships with Residents’ Associations,
“Ketua Kampong/Ketua Taman” and various
agencies in order to give personalised service,
creating awareness on issues related to water
supply and providing educational programmes
to the community. A total of 2,922 activities and
programmes were conducted in 2011.
YAKIN also performs domestic consumer
education activities via dialogue sessions,
briefi ngs and presentations, product and
services demonstrations, public relations and
community based programmes.
Delivering Service Excellence
Sua Mesra Programme at
Little India
PUSPEL’s Call Agents attending
to telephone calls
115
Annual Report 2011Puncak Niaga Holdings Berhad
Skuad Ronda YAKIN and Sua Mesra are
two of the main programmes spearheaded
by YAKIN as its vehicles for enhancing
consumer relationships and delivering
educational activities. Sua Mesra programme
focuses on briefi ngs, dialogues and product
demonstrations and allow a free fl ow of
communication between SYABAS and the
consumers on matters related to water issues.
Skuad Ronda YAKIN programme is a customer
relationship programme comprising personnel
from YAKIN, Operation & Maintenance and
Water Quality Departments of SYABAS
together with the community leader, business
community and consumers of a particular
location randomly check the standard and
quality of water supplied by SYABAS at that
particular area. It’s an approach by SYABAS as
a form of assurance that SYABAS only supply
quality water to the consumers.
In 2011, YAKIN successfully conducted a total
of 278 consumers education and awareness
programmes/activities which involved
domestic consumers in Selangor and the
Federal Territories of Kuala Lumpur and
Putrajaya. The positive response received
from the consumers involved indicates that
consumer satisfaction is our priority.
The unit exceeded its KPI targets for 2011,
which were as follows:-
AchievementsActivity KPI in 2011
Dialogues 40 99
Social & Welfare 40 179
Visits 2280 2644
Below are the KPIs set for 2011 for consumer
educational activities (“Activities”) by area :
AchievementsArea KPI in 2011 (Average (Average per month) per month)
Gombak 8 Activities 31 Activities
Hulu Langat 8 Activities 29 Activities
Hulu Selangor 8 Activities 24 Activities
Klang 8 Activities 22 Activities
Kuala Langat 8 Activities 29 Activities
Kuala Lumpur 8 Activities 45 Activities
Kuala Selangor 8 Activities 17 Activities
Petaling Jaya 8 Activities 40 Activities
Sabak Bernam 8 Activities 19 Activities
Sepang 8 Activities 22 Activities
Total 80 278
All areas exceeded the KPI requirement for the
number of Activities that were conducted on
average per month.
Kuala Lumpur, being the area that conducted
the highest number of Activities on average per
month basis, exceeded the KPI requirement
by 462%, having 45 Activities on average per
month as compared to eight activities per
month as per the KPI requirement.
Aside from interactive programmes with the
local communities, YAKIN operates a system
to notify community leaders and residential
associations of scheduled Water Supply
Disruptions (“WSD”). YAKIN is sensitive to
resident feedback on WSDs, and sends out
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.
Delivering Service Excellence
Gas Saving Tips
Newer gas stoves
use pilot-less ignition,
which saves gas.
Annual Report 2011Puncak Niaga Holdings Berhad
116
In 2011, there were 2,326 cases of scheduled
WSDs. In the event of a scheduled water
disruption, the public will be notifi ed by
SYABAS at least two days in advance via mass
media / fl yers as stipulated in SYABAS’ Client
Charter. However, SYABAS will endeavour
to inform the public seven days in advance of
such interruptions.
During a major unscheduled water disruption
such as a burst pipe or failure of water
treatment plants which would affect a huge
number of consumers, SYABAS will activate an
Emergency Response Plan (“ERP”) to ensure
the most effective response with minimal
disruption to the consumers. In 2011, 15 cases
of ERP activation were recorded.
INDUSTRIAL CONSUMER UNIT (“ICU”)
The ICU, PUSPEL’s customer service arm for
industrial customers, provides a single point of
enquiry for all industrial consumers who have
problems with their water supply.
The unit is responsible for enhancing public
relations, building rapport with industrial
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
cases reported by trade consumers and
participating in trade programmes. A total
of 11,666 SMSes and 10,238 emails on these
notices were sent by the ICU in 2011.
Among the ICU’s other duties are disseminating
information on water disruption, collecting
data and updating the database of industrial
customer profi les, conducting awareness
programmes, and taking action on all cases
reported by industrial customers.
The ICU also actively alerts the Industrial,
Commercial and Trade Associations to water
supply related matters, as well as information
on other SYABAS’ services and products. The
unit constantly updates PUSPEL headquarters
with monthly activity reports, the data from
which is monitored, analysed and compiled.
In 2011, ICU staff visited a total of 2,590 trade
consumers and ran 163 programmes which
include:
• Dialogue/Briefi ngs (Sua Mesra)
- 81 programmes
• Public Relation Programs
(Sports, Gotong Royong etc)
- 77 programmes
• Educational Programmes
( Visits to PUSPEL, WTPs etc)
- 5 programmes
Delivering Service Excellence
SYABAS participated in
GREEN EXPO 2011 held at
Tunku Abdul Rahman College,
Setapak
117
Annual Report 2011Puncak Niaga Holdings Berhad
Water Quality surveillance
by Central Laboratory
Delivering Quality
PUNCAK NIAGA (M) SDN BHD (“PNSB”)
Water Quality Surveillance Programme
(“WQS Programme”)
PNSB has implemented via its Central
Laboratory (“CL”) a WQS Programme to ensure
it consistently delivers a high quality water
supply to its customers. Raw and treated
water at the Water Treatment Plants (“WTPs”)
is monitored through the WQS Programme to
ensure the water quality meets or surpasses
the standards stipulated by the Ministry of
Health (“MOH”) and is in accordance with
MOH’s Quality Assurance Programme (“MOH’s
QAP”).
The testing and monitoring of raw and treated
water is carried out at PNSB’s CL and is verifi ed
by an Independent Accredited Laboratory.
PNSB ensures that the water quality always
complies with MOH’s National Standard for
Drinking Water Quality (2004) (“NSDWQ”). We
also conduct bacteriological tests every day at
all our WTPs which are more stringent than
the weekly tests that are normally required.
Water Safety Plan
The World Health Organization (“WHO”), in
the third edition of its Guidelines for Drinking
Water Quality, has promoted the development
and implementation of risk management
strategies to ensure the safety of drinking
water supplies through the control of
hazardous constituents in water from source
to consumers’ taps.
WHO’s approach is termed the Water Safety
Plan (“WSP”) and involves a comprehensive
risk assessment and risk management
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.
Australia, Europe, Latin America, the
Caribbean and Singapore have adopted WSP
into their water quality management to ensure
a high standard of drinking water supplies.
In line with PNSB’s mission to consistently
provide high quality water to consumers, PNSB
has initiated plans to adopt the WSP concept
as a tool to manage drinking water quality and
launched the implementation of WSP in 2010.
In 2011, PNSB’s WSP Steering Committee
developed the required WSP manual and
procedures. Through workshops that were
held between July and October 2011, WSP was
developed for fi ve WTPs, namely Sungai (“Sg”)
Langat, Sg Batu, North Hummock, Wangsa
Maju and SSP2 WTPs. PNSB will implement
the WSP at these WTPs in 2012 through
controlling the identifi ed Critical Control
Points (“CCP”) and by monitoring and verifying
the effectiveness of the WSP.
Central Laboratory (“CL”)
PNSB’s CL, which is certifi ed for MS ISO/IEC17025,
is responsible for conducting water quality
surveillance of raw and treated water at all
WTPs operated by PNSB which adheres to the
MOH’s NSDWQ.
In June 2009, CL successfully renewed
the accreditation certifi cation with seven
additional water quality parameters, making
the total accredited water quality analysis as
24 numbers that consist of microbiological,
Group 1 (physical) and Group 2 (inorganic)
water quality parameters listed in MOH’s
NSDWQ. As part of the on-going laboratory
services enhancement, CL aims to obtain
accreditation for MS ISO/IEC17025 for all water
quality analysis conducted.
Annual Report 2011Puncak Niaga Holdings Berhad
118
Based on the water quality monitoring carried out by CL, treated water compliance achieved was 99.9% and raw water compliance achieved was 89.0%.
Delivering Quality
CL has been equipped with an Inductively
Coupled Plasma-Mass Spectrometer
(“ICP-MS”) and a Gas Chromatography-Mass
Spectrometer (“GC-MS”), which will increase
the laboratory’s capability for testing heavy
metals, pesticides and herbicides under Group
3 and Group 4 of the MOH’s NSDWQ. Currently,
the laboratory is in the process of obtaining
accreditation for 20 heavy metal parameters
analysed by the ICP-MS. CL will proceed
to obtain accreditation for these additional
GC-MS parameters once the testing methods
have been established and suffi cient data has
been collected.
CL also provides laboratory testing services for
various activities such as for Puncak Research
& Development, environmental investigations
conducted by WTPs, and process improvement
studies by the Operation & Maintenance
Department.
Other than water quality testing, CL also offers
support to ensure smooth operation of WTPs
as listed below:
• Conducting laboratory assessment for
all WTPs to ensure that the laboratory at
the WTP is maintained in good working
condition.
• Purchasing laboratory consumables and
equipment for all WTPs.
• Conducting maintenance, servicing and
calibration of laboratory equipment used
at all the WTPs to ensure uninterrupted
water quality testing.
• Assisting in the water quality monitoring at
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.
Overall, CL achieved 99.9% sampling for
both raw and treated water for all WTPs
operated by PNSB in 2011, an improvement of
approximately 0.1% as compared with 2010.
100% sampling could not be achieved due to
plant shutdown caused by raw water pollution
at Sg Sireh WTP in March 2011.
The 2011 water quality analysis breakdown
as conducted by CL in 2011 and the appointed
Independent Laboratory is as shown below:
Analysis conducted Item for PNSB’s WTP By appointed By Central Independent Laboratory Laboratory
Raw water 6,645 8,151
Treated water 11,524 8,146
Total 34,466
Based on the water quality monitoring carried
out by CL, treated water compliance achieved
was 99.9% and raw water compliance achieved
was 89.0%.
Out of 19,670 analyses conducted for treated
water, 17 cases of non-compliance were
detected, which were mainly due to aluminium
residue which are above the permissible limit
at Sg Serai and Sg Sireh WTPs.
Details of the non-compliance for treated
water at the Sg Serai and Sg Sireh WTPs are
set out under the “Research & Process Unit of
Water Quality and Research Section” below.
119
Annual Report 2011Puncak Niaga Holdings Berhad
Sample analysis for
process improvement
Delivering Quality
Research & Process Unit of Water Quality and
Research Section
There were a range of projects and studies
carried out by the Research and Process Unit
(“RPU”) of Water Quality and Research Section
(“WQRS”) in 2011 as part of PNSB’s initiatives
to improve water treatment effi ciencies and to
ensure quality of water supply. The different
categories of project undertaken by RPU
consist of process improvement, water quality,
fi lter performance monitoring and value
added projects. Descriptions of the projects
undertaken by RPU in 2011 are as follows:-
Process Improvement
Process improvement comprises the process
of fi ne-tuning at the WTPs with the objective
to improving the treatment process for
water quality enhancement and production
cost optimisation. RPU also plays the role
of providing solutions for continuous water
treatment process optimisation.
(1) Process Improvement at Sg Sireh WTP
The violation at Sg Sireh WTP was due to
raw water quality problem that normally
occurred during wet season. Numerous
studies have been conducted by PNSB to
improve its treated water quality and some
are ongoing. The treatment of raw water
at Sg Sireh WTP has always required a
high dosage of alum that subsequently
resulted in a high aluminium residue in
the treated water. This is due to the raw
water characteristics of low alkalinity
and high turbidity, and the presence of
organic matter especially aquatic humic
substances.
Various chemicals were tested for at the
plant such as ferric chloride, activated
carbon and sodium aluminate. Although
the laboratory scale study using ferric
chloride showed better fl oc formation
with lower dosage compared to alum,
high colour was observed in the settled
water due to residual iron. Jar tests using
activated carbon and sodium aluminate
as feed chemical were also found to be
ineffective as the use of both activated
carbon and alum resulted in higher settled
water colour and turbidity compared to
when using alum alone for coagulation.
Hence, alum was still found to be the
better coagulant at the plant.
In collaboration with Puncak’s Research
& Development Centre, the use of two
types of equipment has been studied to
optimise the treatment process at Sg Sireh
WTP. A Photometric Dispersion Analyser
(“PDA”) can determine the optimum
coagulant dosage and measure the fl oc
strength while UV 254 can measure the
level of organic matter in the raw water.
As both types of equipment can improve
the treatment process and water quality,
PNSB has plans to install both equipment
at the plant in 2012.
(2) Process Improvement at North Hummock
WTP
In 2011, North Hummock WTP experienced
short fi lter running hours with the fi lter
media cracking and the presence of
mudballs. Assessment and analysis
indicated that the surface of the fi lter
media grain showed a high level of iron
present in comparison with aluminium
and manganese.
Subsequently, a laboratory-scale study
was conducted in September 2011 to
evaluate the effectiveness of different
chemicals namely, chloride of lime,
caustic soda and oxalic acid in fi lter media
cleaning. The study found that oxalic
acid had highest removal of iron (85.2%
reduction), aluminium (92.6% reduction)
and manganese (100% reduction) in
comparison with chloride of lime and
caustic soda. The summarised test results
are as set out in Table A on page 120 of this
Annual Report.
Annual Report 2011Puncak Niaga Holdings Berhad
120
Delivering Quality
Based on these results, a plant trial using oxalic acid for fi lter media cleaning will be piloted at one of the fi lters at North Hummock WTP which is expected to commence in 2012.
(3) Ammonia Removal Studies along Sg Langat
Basin, namely Sg Langat, Cheras Mile 11,
Bukit Tampoi and Salak Tinggi WTPs
WTPs located downstream of Sg Langat such as Sg Langat Basin, Cheras Mile 11, Bukit Tampoi and Salak Tinggi WTPs are prone to ammonia pollution. At these WTPs, the ammonia level is monitored on an hourly basis so that prompt action can be taken should the plant be required to shut down due to high levels of ammonia.
Ammonia removal studies using alternative chemical, namely aluminosilicate have been conducted in case there is ever a shortage of supply due to plant shutdown as a result of ammonia pollution.
Based on monitoring of the pilot plant trial conducted at Bukit Tampoi WTP from 22 October 2009 to 1 July 2010, it was observed that the use of aluminosilicate in combination as feed chemical and fi lter medium could increase the plant’s ability to remove ammonia.
Due to the encouraging findings, implementation of aluminosilicate dosing at Salak Tinggi WTP has been considered in an effort to increase production for the plant. The proposed installation of an aluminosilicate dosing system at the plant’s intake is targeted to be initiated in 2012.
(4) Process Improvement at Sg Serai WTP
In 2008, Sg Serai WTP was once shutdown due to raw water quality deterioration in view of the landslides occurring upstream of the raw water intake. Jar tests showed that the raw water could be treated by using both soda ash and alum. Following the installation of the necessary pre-treatment system and plant trial, the plant resumed operations and again supplied water to consumers.
Since operations resumed, the plant encountered frequent treated water violations involving aluminium due to the absence of a fi ltration system to trap fi ne fl ocs escaped from the clarifi er. Plans to upgrade the plant to a full treatment plant have been submitted for approval under CAPEX works but are yet to be approved.
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.
Percentage removal, at optimum concentration Initial Chloride Caustic OxalicParameter level of lime soda acid (%) (10%) (10%) (15%)
Iron (%) 0.725 29.5 17.1 85.2
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
Water Quality testing
Pipeline Inspection
121
Annual Report 2011Puncak Niaga Holdings Berhad
Delivering Quality
(5) Process Improvement at Sg Rumput WTP
Sg Rumput WTP adopted UF membrane
technology in 1997 to produce treated
water. Since upgrading to full treatment
using membrane technology, shutdowns
due to high raw water turbidity has been
reduced. However, as the plant has been
operating for four years, a thorough
assessment was conducted to ascertain
the membrane performance.
It was found that the membrane condition
had deteriorated and the membrane had
become coated with mud, which originated
from the raw water it was treating.
Eventhough the fi lter water still meets
the required standard, PNSB is currently
considering replacing the membrane
module to improve further the treated
water quality.
Water Quality Monitoring
In order to ensure the quality of the supplied
treated water to consumers, activities such as
river water quality index programme, treated
water reservoir water quality monitoring and
the monitoring of ammonia level are being
carried out at four critical WTPs.
Water Quality Index Programme
(“WQI Programme”)
A Water Quality Index (WQI) Programme is
conducted on a monthly basis for all WTPs
to determine the cleanliness and suitability
of the raw water for drinking water supply,
aquaculture and irrigation purposes. Details
of the WQI Programme and its fi ndings in
2011 are detailed in the “Preserving Our
Environment” section on pages 152 to 166 of
this Annual Report.
Balancing Reservoir Water Quality Monitoring
Balancing Reservoir Water Quality Monitoring
is conducted on a quarterly basis to determine
whether the reservoir requires cleaning to
ensure that the treated water supply is of high
quality at all times. Details of the Balancing
Reservoir Water Quality Monitoring are set out
in the “Preserving Our Environment” section
on pages 152 to 166 of this Annual Report.
Ammonia Level Monitoring Along Sg Langat
Basin
For early detection and necessary action should
the WTPs shut down due to high ammonia
level, the ammonia level at four critical WTPs
along the Sg Langat Basin namely Sg Langat,
Cheras Mile 11, Bukit Tampoi and Salak Tinggi
WTPs are closely monitored on an hourly basis.
In 2011, a total of nine incidences of pollution
occurred where WTPs were shutdown, in
addition to three incidences of water supply
interruptions.
Based on Ammonia Level Monitoring
conducted in 2011, the Summary of Daily
Ammonia Level in the raw and treated water at
the Four WTPs along Sg Langat Basin in 2011
were as summarised below:-
Ammonia WTP Level (mg/L) Raw Water Treated Water Min - Max Min - Max (Average) (Average)
Sungai 0.00 - 0.80 (0.09) 0.00 - 0.16 ( 0.01)
Langat
Cheras 0.00 - 1.50 ( 0.30) 0.00 - 0.07 (0.00)
Mile 11
Salak 0.02 - 2.07 (0.92) 0.00 - 0.96 (0.19)
Tinggi
Bukit 0.04 - 1.50 (0.58) Old :
Tampoi 0.00 - 0.14 (0.01)
New :
0.00 - 0.24 (0.01)
Note: MOH’s standard reading for ammonia level is 1.50 mg/L for both raw and treated water.
A Water Quality Index (WQI) Programme is conducted on a monthly basis for all WTPs to determine the cleanliness and suitability of the raw water for drinking water supply, aquaculture and irrigation purposes.
Annual Report 2011Puncak Niaga Holdings Berhad
122
Launching of
World Water Day 2011
celebration
Delivering Quality
Filter Performance Monitoring
Filtration is the fi nal step in the water treatment
process, removing fi ne suspended solids
remaining after the clarifi cation process, and
further cleansing and polishing the treated
water. Monitoring fi lter performance, most
importantly tracking the running hours
headloss fi gures, is critical to ensure that the
fi lter remains in good operating condition.
When a given fi lter has reached its specifi ed
number of running hours or its headloss level,
backwashing is initiated.
Details of the Filter Performance Monitoring
are set out in the “Preserving Our Environment”
section on pages 152 to 166 of this Annual
Report.
Value-Added Project
Other value-added project carried out by
RPU in 2011 is the evaluation of various
compact WTP for use during crisis comprising
conventional treatment and membrane
treatment technology.
SYARIKAT BEKALAN AIR SELANGOR
SDN BHD (“SYABAS”)
Water Quality Improvement Master Plan
Drinking water quality has always been
SYABAS’ top priority. Water quality results
reported in the year ended 31 December 2011
indicated that SYABAS continued to meet the
high standards as set out in MOH’s NSDWQ
and Quality Assurance Programme (“QAP”).
It also complied with the requirement of
the Mandatory Level of Service specifi ed
under the Concession Agreement dated
15 December 2004 signed between SYABAS,
the Federal Government and the State
Government of Selangor (the “Concession
Agreement”).
As part of the policy to continuously improve
water quality, SYABAS has been aggressively
implementing its Water Quality Improvement
Master Plan and the results have been
excellent. The continuous water quality
monitoring at 1,100 water sampling stations
located at the WTP outlets, balancing reservoir
outlets, service reservoirs and distribution
mains has shown that water quality violations
have been greatly reduced. This has resulted
in a reduction of water quality complaints by
consumers compared to the previous years.
Of a total of water quality analyses carried
out by SYABAS and the MOH in 2011, 99.47%
complied with MOH’s NSDWQ with zero
violations for microbiological parameters.
Such compliance level are well within the
acceptable range stipulated by QAP and
stipulated by MOH. Any occurrence of
specifi c incidence of non-compliance with
the standards is taken seriously and SYABAS
investigates thoroughly and, where necessary,
does everything possible to correct any faults.
AIR SCOURING PROGRAMME (“ASP”)
The ASP is designed to systematically clean all
the reticulation pipes. This was done on a six
month cycle in 2008, on a nine month cycle in
2009 and has been done on a 12 month cycle
since 2010. A total of 29 air scouring machines
have been purchased for this purpose. In 2011,
a total of 9,150 km (data as at 31 December 2011)
of air scouring works were performed at
districts’ workable ASP Zones (for reticulation
pipes of sizes between 100 – 200 mm
diameters). The changes made to the cleaning
time period (cycle/frequency) from six months
cycle in 2008 to 12 months cycle in 2011 was
mainly due to the reduction in water quality
complaints. However, approximately 28% of
the reticulation main pipe system could not be
cleaned by the air scouring method and have
been declared as non-workable ASP Zones due
to the unavailability of facilities in the network
such as air insertion point, isolation and scour
valves in the ASP Zones. It was projected that
these facilities would be installed in stages
starting from 2008 onwards depending on the
available and approval from the authorities for
budget under CAPEX. As at 31 December 2011,
the expenditure for installation of the facilities
was RM6.5 million.
123
Annual Report 2011Puncak Niaga Holdings Berhad
Inspection at Actifl o Plant,
SSP2 WTP
Delivering Quality
The ASP cleaning of the reticulation system
has contributed to the reduction in water
quality violations and consumers’ water quality
complaints.
AIR SCOURING WORKS
FROM 2009 UNTIL 2011
* Extent of Air Scouring Works 2009 2010 2011Month (Km) (Km) (Km)
Jan 0 904.79 879.67
Feb 0 750.01 725.20
Mar 1,094.18 978.39 1,022.96
Apr 1,095.28 926.08 978.32
May 1,053.78 922.87 887.80
June 1,055.96 903.81 876.52
July 1,235.05 857.83 827.63
Aug 1,096.37 676.60 658.92
Sept 719.63 587.98 591.37
Oct 1,001.33 790.18 707.52
Nov 689.05 699.49 640.31
Dec 202.02 516.68 353.78
Grand
Total 9,242.65 9,514.71 9,150.00
* 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 2010 onwards was based on updated actual/latest information from the online system (WQMS & GIS).
RESERVOIR CLEANING &
INSPECTION PROGRAMME (“RCP”)
Under this programme all service reservoirs
are cleaned manually and thereafter inspected
every six months to test the water quality using
‘depth-samplers’. Subsequent cleaning of
the reservoirs are conducted if water quality
violations are detected.
SYABAS’ distribution system has more
than 1,100 service reservoirs but as at
31 December 2011, 1,028 reservoirs were
active. All these reservoirs have been cleaned
since 2005 except those newly brought
into service.
Under the RCP programme, water quality in
these reservoirs was inspected twice in 2011.
Following this inspection, ten reservoirs were
manually cleaned and 24 were cleaned by
scour fl ushing to remove the sediments at the
bottom of the reservoirs. Wherever possible,
SYABAS minimises water supply interruption
during the cleaning programme by using
the by-pass valves and piping system at the
reservoirs.
Annual Report 2011Puncak Niaga Holdings Berhad
124
The Concession Agreement stipulates that the quality of water supplied to consumers must comply with the limits provided by MOH’s NSDWQ.
Delivering Quality
WATER QUALITY SURVEILLANCE
PROGRAMME (“WQS PROGRAMME”)
Quality Assurance Programme by MOH
The Concession Agreement stipulates that
the quality of water supplied to consumers
must comply with the limits provided by
MOH’s NSDWQ. Water quality supplied from
WTPs into SYABAS’ distribution system is
systematically and randomly monitored by
MOH by way of sampling and testing under
QAP. Based on violations recorded by MOH for
residual chlorine, Total Coliform, E. Coli and
aluminium, the percentage violation for each
parameter was well within the QAP limits. In
2011, a monthly average of 2,816 water samples
was taken and 10,418 tests or analyses were
carried out by MOH. The samples were taken
from designated water sampling stations
located at the various WTP outlets, balancing
reservoir outlets, service reservoir outlets
and the distribution system. A total of 125,015
analyses were carried out by MOH in 2011, and
of these, 99.47% complied with MOH’s NSDWQ
with zero violations recorded for microbiological
parameters. The chemical violations
were mostly for parameters Fluoride and
Aluminium which originated from the WTPs.
This result is an improvement from 2010 when
99.21% complied with MOH’s NSDWQ, well
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
In-house Water Quality Assessment
In June 2006, SYABAS started an in-house
Water Quality Sampling and Testing
Programme based on the same frequency of
sampling and nature of parameters as listed
in MOH’s NSDWQ. In 2011, grab samples were
collected by personnel from the districts’
Water Quality Units from the designated 1,100
sampling stations to be analysed in-situ and
sent to a third party accredited laboratory
for analysis. Based on the existing number
of sampling stations and the frequency of
sampling according to NSDWQ, a monthly
average of 1,768 samples was taken and
6,327 analyses carried out. The results also
showed that the water quality was within
the requirement of MOH and the Mandatory
Level of Service, whereby 99.46% of the total
of 75,926 analyses had complied with MOH’s
NSDWQ.
The summary of the 2010 and 2011 In-House
Water Quality Assessment for all parameters
is as follows:
MOH Compliance Based on QAP Limit For 2010 - 2011 2011 2010 Nos. Of Nos. Of Compliance Compliance Tests Violations (%) (%)
75,926 407 99.46 98.91
125
Annual Report 2011Puncak Niaga Holdings Berhad
Sponsorship drive with
the Federation of Malaysian
Consumers Associations
(“FOMCA”)
Delivering Quality
IMMEDIATE RESPONSE
TO CONSUMER COMPLAINTS
The objective is to achieve a quick initial
response time on all water quality complaints
from consumers followed by resolution
of the complaint. Beginning March 2009,
the initial response time for water quality
complaints was set at half an hour and, as at
31 December 2011, compliance with this
half-hour response time was 99.23%.
The scope of work covers initial investigation
involving in-situ testing of physical parameters
and the taking of necessary remedial actions
or advice to the consumers. A Water Quality
Consumer Complaint’s Report has also to be
submitted. Consumers normally complaint
about the aesthetic aspect of the drinking
water, hence, the fi eld testing on physical
parameters (turbidity, colour, residual
chlorine and pH) using portable test-kits to
identify the level and nature of contaminants
in the distribution system. If the initial results
obtained show no water quality violation, the
consumers will be advised to check their
internal plumbing system. If violations are
detected, appropriate remedial actions are
taken and the distribution system is re-tested
to ensure the contaminants have been removed
from the system.
The main reasons for not achieving the 100%
target was that some complaints were received
at night. All complaints received are recorded
and investigated to enable improvements
to take place. The most frequent area of
consumer complaint is when long-term
suspended solids or iron deposits arising from
very fi ne sediment or corrosion in water mains
have been disturbed by fl ow fl uctuations.
The total number of consumer complaints
received from 1 January 2011 – 31 December 2011
was 2,346, of which 22.03% were due to internal
plumbing problems.
Table B below shows the number of water
quality complaints from 1 January 2011 –
31 December 2011 and the half-hour response
time achievement.
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
Response
Time (%)
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
Annual Report 2011Puncak Niaga Holdings Berhad
126
Delivering Quality
SYABAS’ event held at
GREEN EXPO 2011
Table C - Trend of Consumer Complaints from January 2007 – December 2011
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
100
200
300
400
500
600
700
TO
TA
L
Consumer Awareness &
Education Programme (“CAE Programme”)
The CAE Programme with media coverage
is ongoing with an emphasis on consumers’
understanding of the quality of water supplied
to their premises and related issues, and
their responsibility for maintaining their own
internal plumbing system and internal storage
tanks. Consumers have greatly benefi ted from
SYABAS’ efforts in the CAE Programme.
For further details of the CAE Programme,
please turn to “Preserving Our Environment”
section on pages 152 to 166 of this Annual
Report.
Research And Development (“R&D”) Centre
In 2011, the PNHB Group continued its strides
to improve the quality and reliability of water
supply by the Group and sought to collaborate
with local and international R&D institutions
and universities on projects relating to
water, wastewater and the environment with
the objective to advancing in technological
development and competencies within the
fi elds of water, wastewater, environment and
health.
Through R&D, the PNHB Group continuously
strives to improve the quality, sustainability
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.
127
Annual Report 2011Puncak Niaga Holdings Berhad
Launching of 25th Briged
Penyelamat Sungai (“BPS”)
Programme
Delivering Quality
KWI - PRC Collaboration
In this respect, in 2011, PNHB’s wholly owned
subsidiary, Puncak Research Centre Sdn Bhd
(“PRC”) engaged in a number of exchanged
visitation programmes with K-Water Institute
(“KWI”), the Republic of Korea’s leading
water specialised research institute in the
year 2011. The aim was to boost the research
and technical collaboration between the two
parties.
Among PRC’s collaborative research initiatives
with KWI pursuant to the Memorandum of
Understanding signed by PRC with KWI on
27 October 2010 for a period of three years are:
• Evaluating the treatment process for
iron and manganese, in respect of long
term water quality changes in river bank
fi ltration.
• Optimising advanced membrane water
treatment systems.
• Advancing technology for groundwater
utilisation, groundwater use of riverine
areas, assessing fi eld applications by
constructing test beds, riverbank fi ltration
and artifi cial storage and recharge.
DHI-PRC Collaboration
PRC also entered into a Collaboration
Agreement with DHI Denmark (“DHI”), a
global leader in the fi eld of water treatment
on 15 March 2007, which has since been
extended till 14 March 2013. Under the
PRC-DHI Collaboration, in 2011, PRC has
completed a full study on the effectiveness of
the in-organic coagulants on highly colored
water, which was carried out at Sg Sireh WTP.
The main coagulants studied were Alum,
Poly Aluminium Chloride (“PACl”), Acacia,
Poly Aluminium-ferric-chloride (“PAF”) and
Aluminium Chlorohydrate (“ACH”). Of these,
only ACH stand out to be the better coagulant as
compared to Alum. ACH’s residual aluminium
is lower than that of Alum. However, in term of
cost, ACH’s cost is fi ve times more expensive
than Alum, hence is less cost-effective.
UPM–PRC Collaboration
Under the UPM-PRC collaboration, which
is valid until 5 June 2013, PRC is studying
the use of natural coagulants as alternative
coagulants for the WTPs. The studies have the
ultimate objective of replacing chemical based
coagulants. In the initial stage, six natural
coagulants were found to be suitable, namely
Moringa Oleifera, Jatropha Curcas, Chitin
Chitosan, Dragonfruit foliage, Aspergillus
Flavus and Sago starch.
In June 2011, PRC completed the evaluation
on the natural coagulants. Based on
extensive evaluation, Chitin Chitosan and
Jatropha Curcas proved to be the best natural
coagulants. In terms of the performances of
the natural coagulants compared to Alum,
both Chitin Chitosan and Jatropha Curcas
achieved 4.8 and 6.2 NTU respectively versus
Alum’s 2.2 NTU. However, the Chitin Chitosan
and Jatropha Curcas natural coagulants are
ten times more expensive.
Other Research Activities
R&D Centre has also embarked on the
following research activities:-
(a) Wangsa Maju WTP – From the studies on
composting the WTPs’ residue (sludge)
using microbes via a biological treatment,
R&D’s evaluations revealed that the
sludge can be converted into a good soil
conditioner. The metal contents of the
treated sludge dropped by up to 70% while
the nutrient contents increased by up to
300%. However, the Nitrogen, Phosphorus
and Kalium (“NPK”) contents are still not
favourable for the treated sludge to be
considered as organic fertilizer.
(b) Wangsa Maju WTP - Evaluating the treated
sludge as effective micro-organism mud
balls resulted in turbidity and colour
removal of 50% and 25%, respectively.
Annual Report 2011Puncak Niaga Holdings Berhad
128
Delivering Quality
BPS Programme at
Sekolah Kebangsaan
Sijangkang, Kuala Lumpur
(c) Sg Sireh WTP - The trials performed at Sg
Sireh WTP water yielded zero addition of
Aluminium residuals.
(d) Sg Selangor WTP - Evaluating the sludge
dewatering systems using the tube
concept to conclude that the concept can
yield a space saving of up to 98.5%. It
can be used as an alternative to a Sludge
Treatment Plant, and as a quick solution to
waste issue with the authority.
(e) Wangsa Maju WTP - Based on the results
obtained via Permulab testing and Lafarge
Cement Plant’s (“Lafarge”) internal
testing, the sludge is mainly composed of
aluminium oxide, iron oxide and silica oxide
and fulfi lled Lafarge’s acceptance criteria.
With the other heavy metal content also
found to be acceptable, Lafarge concluded
that the sludge can be accepted for safe
disposal through resource recovery by
co-processing in a cement klin. Lafarge
has agreed to co-pilot the testing of ten
tons of sludge from Wangsa Maju WTP
with disposal fees to be borne by PNSB.
R&D Centre will arrange for approval for
this pilot testing.
(f) Sg Langat WTP - A Training Pilot Plant
(“TP Plant”) was developed via the
collaboration between the Operation
& Maintenance Department, the R&D
Centre, the Engineering & Project
Department and the Training Department.
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.
CRISIS MANAGEMENT AT PNSB
In delivering high quality, sustainable and
expeditious services to our customers and
stakeholders in particular during crisis
periods, we regard our capacity to deal with
crisis periods, as an important aspect of our
corporate social responsibility. To this end, we
are prepared at any time to deal and offer our
assistance with respect to issues or problems
that are related to raw water and treated water
and/or our services, within or beyond our
control. With our years of experience in the
industry, we have expeditiously solved many
crisis over the years.
PNSB initiated a Crisis Management Plan
(“CMP”) and the WTP Emergency Response
Plan (“ERP”) in 2001. The CMP and ERP are
reviewed on a yearly basis and updated, if
required. Both plans ensure the most effective
response to any form of emergency, crisis
or disaster on our premises with minimal
disruption to the Group’s business operations.
Both plans also protect the Group’s corporate
image.
We have ten intervention teams at plant level
and at various regional offi ces. These teams
are trained to handle chlorine and other
chemicals, in addition to being trained in
search and rescue.
129
Annual Report 2011Puncak 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.
Annual Report 2011Puncak Niaga Holdings Berhad
130
131
Annual Report 2011Puncak Niaga Holdings Berhad
BuildingSustainability
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.
Annual Report 2011Puncak Niaga Holdings Berhad
132
The Group recognises that our employees
are core assets of the Group. We believe in
providing not just a job but career development
and advancement for deserving, committed
and diligent employees together with a place
where everyone is given the opportunity
to grow, to mature and to nurture their
skills. We are proud of the diversity of the
workforce across all of the Group’s operations.
All employees are given equal treatment
and discrimination is never tolerated.
Due to the nature of our business and in a
rapidly-changing environment, the health
and safety of our employees and those who
are involved in our supply-chain operations is
always a priority.
An Occupational, Health and Safety (“OH&S”)
management system has been established at
Puncak Niaga (M) Sdn Bhd (“PNSB”), as have
other positive initiatives including obtaining
ISO 18001 certifi cation and garnering various
health and safety awards. As part of our effort
to promote a healthy culture at the work place,
we continue to hold employee engagement
activities to boost the spirit of solidarity,
teamwork, a sense of belonging and conducive
environment.
EMPLOYEE PROFILE
Puncak Niaga Holdings Berhad
(“PNHB”) Group
PNHB Group employed a total of 4,540
personnel as at 31 December 2011, locally
and overseas. This represented an increase
of approximately 6.9% compared to 4,245
personnel employed in 2010. We continue to
promote diversity in the workplace. Any forms
of discrimination, including discrimination
based on age, gender, ethnicity or background,
is not tolerated.
The breakdown of the Group’s employees
by ethnic group, excluding employees in the
People’s Republic of China (“PRC”) is 91.3%
Malays, 2.3% Chinese, 5.4% Indians and 1.0%
others.
As shown in Table A below, the majority of
the Group’s workforce (excluding employees
in the PRC) consists of non-executive
personnel (71.3%) with executives at 22.2%
and management at 6.5%. Due to the nature
of our work, which involves a lot of manual
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).
Valuing Our People
The Group recognises that our employees are core assets of the Group. We believe in providing not just a job but career development and advancement for deserving, committed and diligent employees.
PNHB’s participation in
Federation of Public Listed
Companies (“FPLC”)
1st Inter-Media Bowling Cup 2011
Category Gender Ethnic Group Non Management Executive Executive Male Female Malay Chinese Indian Others Total
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
133
Annual Report 2011Puncak Niaga Holdings Berhad
No
. of
Em
plo
yee
s400
350
300
250
200
150
100
50
0 30 30-39 40-49 50
Age Group
382
340
265
106
Valuing Our People
Puncak Niaga (M) Sdn Bhd (“PNSB”)
PNSB is a private limited company in the
PNHB Group of Companies. PNSB handles
the operations, maintenance, management,
construction, rehabilitation and refurbishment
of water treatment facilities. PNSB had 1,093
employees as at the end of 2011. Out of the
total number, 860 employees (78.7%) were
male and 233 (21.3%) were female.
The employment by gender ratio (men to
women) is approximately 4:1 due to the nature
of PNSB’s operations, which involve a lot of
manual labour.
PNSB Workforce Breakdown
by Ethnic Group
PNSB Workforce Breakdown
by Category
More than half (65.51%) of PNSB’s employees
were non-executives while 25.52% were
executives and the remaining 8.97% were at
the Management level.
PNSB Workforce Breakdown
by Age Group
Employee Turnover
The turnover rate in 2011 for PNSB was 7.14%
as compared with 11.0% for 2010. 91.03% of
PNSB’s employees are permanent staff, with
the remaining 8.97% being contract workers.
The tables below present PNSB’s employees
turnover for 2011.
PNSB Employee Turnover by Category
Category Turnover (%)
Management 1.43
Executive 3.17
Non-Executive 2.54
Total 7.14
PNSB Employee Turnover by Gender
Gender Turnover (%)
Female 2.14
Male 5.00
Total 7.14
Malay (987 E)
Chinese (53 E)
Indian (29 E)
Others (24 E)
Management(98 E)
Executive(279 E)
Non-Executive(716 E)
90.30%
2.20%
8.97%
25.52%
65.51%
2.65%4.85%
Total Employees (“E”) : 1,093
Total Employees (“E”) : 1,093
PEKA’s Fishing Competition 2011
Annual Report 2011Puncak Niaga Holdings Berhad
134
4.96%75.18% 19.86%
Total Employees (“E”) : 3,167
Management(157 E)
Executive(629 E)
Non-Executive(2,381 E)
6.35%1.23% 0.47%
Malay (2,912 E)
Chinese (39 E)
Indian (201 E)
Others (15 E)
91.95%
Total Employees (“E”) : 3,167
Valuing Our People
PEKA’s Walkaton
- Walk For Your Heart 2011
PNSB Employee Turnover by Ethnic Group
Ethnic Group Turnover (%)
Malay 5.23
Chinese 1.35
Indian 0.32
Others 0.24
Total 7.14
PNSB Employee Turnover by Age Group
Age Group Turnover (%)
30 2.75
30-39 2.29
40-49 1.46
50 0.64
Total 7.14
Note : Turnover rates are derived from staff terminations,
retirements and expiry of contracts.
SYARIKAT BEKALAN AIR SELANGOR
SDN BHD (“SYABAS”)
SYABAS is a private limited company in
the PNHB Group of Companies, which
carries out the distribution of treated
water within Selangor and the Federal
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
841 (26.6%) were female.
The employment by gender ratio (men to
women) is approximately 3:1 due to the nature
of SYABAS’ operations, which involve a lot of
manual labours.
SYABAS Workforce Breakdown
by Ethnic Group
SYABAS Workforce Breakdown
by Category
135
Annual Report 2011Puncak Niaga Holdings Berhad
Valuing Our People
More than half (75.18%) of SYABAS’ employees
were non-executives, while 19.86% were
executives and the remaining 4.96% were at
the Management level.
SYABAS Workforce Breakdown
by Age Group
Employee Turnover
The turnover rate in 2011 for SYABAS was
6.03% as compared with 7.9% for 2010.
95.3% of SYABAS’ employees are permanent
staff, with the remaining 4.7% being contract
workers. The tables below present SYABAS’
employees turnover for 2011.
SYABAS Employee Turnover by Category
Category Turnover (%)
Management 0.45
Executive 2.20
Non Executive 3.38
Total 6.03
SYABAS Employee Turnover by Gender
Gender Turnover (%)
Female 1.83
Male 4.20
Total 6.03
SYABAS Employee Turnover by Ethnic Group
Ethnic Group Turnover (%)
Malay 5.46
Chinese 0.33
Indian 0.16
Others 0.08
Total 6.03
SYABAS Employee Turnover by Age Group
Age Group Turnover (%)
31 3.71
31-40 1.71
40 0.61
Total 6.03
Note : Turnover rates are derived from staff terminations,
retirements and expiry of contracts.
PUNCAK OIL & GAS SDN BHD (“POG”)
POG is a private limited company in the
PNHB Group of Companies, which currently
is involved in exploration for the production
of oil and gas and other materials and the
provision of offshore and onshore engineering
works. POG had a total of 41 employees as at
31 December 2011. Out of the total number,
28 employees (68.3%) were male and
13 (31.7%) were female.
The employment by gender ratio (men to
women) is approximately 2:1.
PEKA’s Bubur Lambok 2011
during the month of Ramadhan
No
. of
Em
plo
yee
s
0
200
400
600
800
1000
1200
1400
30 30-39 40-49 50
Age Group
1,319
1,079
403366 Visit to Vitagen factory by the
children of PEKA’s members
Annual Report 2011Puncak Niaga Holdings Berhad
136
Valuing Our People
Malay (37 E)
Chinese (2 E)
Indian (2 E)
Others (0 E)
5% 5%
10% 34%
90%
56%
No
. of
Em
plo
yee
s
2
4
6
8
10
12
14
16
0 30 30-39 40-49 50
Age Group
12
15
10
Staff Expedition to Gunung Nuang
Total Employees (“E”) : 41
Total Employees (“E”) : 41
Management(14 E)
Executive(23 E)
Non-Executive(4 E)
5511
POG Workforce Breakdown
by Ethnic Group
Note: There were no employees belonging to the ‘Others’
ethnic group category.
POG Workforce Breakdown
by Category
More than half (56%) of POG’s employees were
non-executives, while 10% were executives and
the remaining 34% were at the Management
level.
POG Workforce Breakdown
by Age Group
Employee Turnover
The turnover rate in 2011 for POG was 23.07%.
60.98% of POG’s employees are permanent
staff, with the remaining 39.02% being contract
workers. The tables below present POG’s
employee turnover for 2011.
POG Employee Turnover by Category
Category Turnover (%)
Management 1.71
Executive 8.42
Non-Executive 12.94
Total 23.07
POG Employee Turnover by Gender
Gender Turnover (%)
Female 7.02
Male 16.05
Total 23.07
POG Employee Turnover by Ethnic Group
Ethnic Group Turnover (%)
Malay 20.89
Chinese 1.25
Indian 0.62
Others 0.31
Total 23.07
POG Employee Turnover by Age Group
Age Group Turnover (%)
19-30 14.18
31-40 6.55
41-58 2.34
Total 23.07
Note : Turnover rates are derived from staff terminations,
retirements and expiry of contracts.
137
Annual Report 2011Puncak Niaga Holdings Berhad
Valuing Our People
Malay (50 E)
Chinese (6 E)
Indian (2 E)
Others (6 E)
9.38% 3.12% 9.38%
78.12%
60.94%
17.19% 21.87%SYABAS participated in the
Malidur Rasul Celebration 2011
in Putrajaya
Total Employees (“E”) : 64
Total Employees (“E”) : 64
Management(14 E)
Executive(39 E)
Non-Executive(11 E)
No
. of
Em
plo
yee
s
0
5
10
15
20
25
30
30 30-39 40-49 50
Age Group
26
19
109
GOM Resources Sdn Bhd (Formerly known as Global Offshore Malaysia Sdn Bhd) (“GOM Resources”)
GOM Resources is a private limited company in the POG Group of Companies, which is involved in providing offshore personnel services and renting of machinery and vessels. GOM Resources had a total of 64 employees as at 31 December 2011. Out of the total number, 46 employees (71.9%) were male and 18 (28.1%) were female. GOM Resources also utilised third party manpower resources and project contract workers with a total workforce of approximately 159 for the Derrick Lay Barge (“DLB”) 264 barge.
The employment by gender ratio (men to women) is approximately 2:1.
GOM Resources Workforce
Breakdown by Ethnic Group
GOM Resources Workforce
Breakdown by Category
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.
GOM Resources Workforce
Breakdown by Age Group
Employee Turnover
The turnover rate in 2011 for GOM Resources
was 16.88% as compared with 14% for the year
2010. 68.75% of GOM Resources’ employees
are permanent staff, with the remaining
31.25% being contract workers. The tables
below present GOM Resources’ employees
turnover for 2011.
GOM Resources Employee Turnover
by Category
Category Turnover (%)
Management 3.78
Executive 10.71
Non Executive 2.39
Total 16.88
GOM Resources Employee Turnover
by Gender
Gender Turnover (%)
Female 5.13
Male 11.75
Total 16.88
Annual Report 2011Puncak Niaga Holdings Berhad
138
GOM Resources Employee Turnover
by Ethnic Group
Ethnic Group Turnover (%)
Malay 15.28
Chinese 0.91
Indian 0.46
Others 0.23
Total 16.88
GOM Employees Turnover by Age Group
Age Group Turnover (%)
30 years 3.89
30-39 years 9.09
40-45 years 3.90
Total 16.88
Note : Turnover rates are derived from staff terminations,
retirements and expiry of contracts.
The People’s Republic of China
(“PRC”) Operations
The Group’s operations in the PRC employ in
total 175 employees as at 31 December 2011,
all of whom were hired on a contract basis. Out
of the total number, 105 employees (60%) were
male and 70 (40%) were female.
The employment by gender ratio (men to
women) is approximately 2:1. 100% of the PRC
workforce are Chinese.
PRC Operations Workforce
Breakdown by Category
PRC Operations Workforce
By Age Group
More than half (85.71%) of PRC’s employees
were non-executives, while 5.15% were at
executive level and the remaining 9.14% were
at the Management level.
Employee Turnover
The turnover rate in 2011 for PRC Operations
was 1.4% as compared with 2.7% for 2010.
BEST PRACTICE AT THE WORKPLACE
Group Employee Benefi ts
PNSB/SYABAS/POG
The Group offers a comprehensive employee
benefi ts package which includes competitive
salary packages with insurance coverage for
the immediate family, housing and car loan
interest subsidies, interest-free assisted
education loans as well as Tabung Kebajikan,
computer, personal loans, medical benefi ts
that cover outpatient treatment, hospitalisation
and surgical, dental and maternity benefi t for a
maximum of up to fi ve surviving children. We
also contribute more than the statutory rate
of employer’s contribution to the Employees
Provident Fund (“EPF”) for employees who
have served more than two years.
Valuing Our People
5.15%9.14%
85.71%
SYABAS’ Senamrobik
Perdana event
Total Employees (“E”) : 175
Management(16 E)
Executive(9 E)
Non-Executive(150 E)
No
. of
Em
plo
yee
s 50
60
40
30
20
10
0 30 30-39 40-49 50
Age Group
38
60
54
23
Employees participated in the
Earth Day 2011 celebration
139
Annual Report 2011Puncak Niaga Holdings Berhad
Valuing Our People
The Group’s competitive remuneration
packages enable us to recruit and retain
talented and productive employees. Through
the Malaysian Employers Federation (“MEF”)
and other external sources, we review the
Group’s employees’ benefi ts package from
time to time to ensure that the Group is at
least at par with the prevailing market in
terms of proposed remuneration for the
Group employees. The Group ensures that our
employees are adequately remunerated at all
times and in accordance with the prevailing
market conditions and the cost of living.
As part of our responsibility as a water treatment
and distribution Group and to ensure that we
meet the relevant requirements and criteria as
imposed by the relevant authorities, we require
our employees, especially employees on the
ground to put in long working hours round the
clock under very challenging conditions. We
ensure that our employees are provided with
the appropriate benefi t packages, facilities
and assistance to ensure that their well being
and safety are well taken care of at all times
and that they are continuously appreciated and
rewarded for their hard work.
PRC Operations
To ensure that our PRC employees are
compensated adequately for their work,
we abide by the minimum wage as set by
the PRC local authorities. Although all PRC
employees are hired on a contractual basis,
our PRC employees also receive benefi ts
such as overtime pay, leave in lieu, pension
fund contributions, unemployment fund
contributions, housing fund contributions,
medical insurance, work injury insurance
and maternity insurance, as required by PRC
Labour Laws and the Social Contribution Act.
All local PRC employees have their medical
costs covered by a PRC Medical Insurance
Contribution plan.
Expatriate staff are covered by hospitalisation,
medical and personal insurance. A subsistence
allowance is also provided to our PRC
employees for any outstation duties.
Although PRC Labour Laws allow the forming
of a union, there were no unions formed by our
PRC employees. We do not hire those below
the age of 18, which is the minimum age to
commence working under PRC Labour Laws.
None of our operations was identifi ed as having
a signifi cant risk of incidents of forced labour.
RECOGNISING EMPLOYEES’ SUPPORT
PNSB/SYABAS/POG/GOM RESOURCES/
PRC OPERATIONS
We strongly believe in rewarding our
employees for their commitment, dedication
and hard work.
To recognise good work and to motivate
productivity, employees with excellent
performances are duly awarded with merit
bonuses, salary increments and promotions.
In appreciation of the employees’ contributions,
in 2011 SYABAS held a “Majlis Penyerahan
Pampasan Kepada Kakitangan Serta Waris
Keluarga Kakitangan SYABAS” on 19 August 2011
for existing employees.
Career Development
The Group has a human capital retention
policy to retain the best employees, to provide
avenues for employee development and
advancement, and to equip the employees
with the necessary skills as they grow with
the Group.
With a structured performance evaluation
framework in place and an emphasis on
self development and career development
and advancement, we believe that we have
managed to retain and groom the best
employees in the Group.
Our employees engaging
in group discussion on operation
matters
Conduct of seminar for
our employees
Annual Report 2011Puncak Niaga Holdings Berhad
140
Valuing Our People
PNSB
Performance appraisal exercises are
conducted for all our confi rmed employees
twice a year.
The Independent Employees Performance
Review Committee (“IEPRC”) is responsible
for reviewing, evaluating and harmonising
the assessment and scoring as rated by the
Heads of Departments/Divisions. The fi nal
recommendation of the review is submitted
to the Executive Committee for approval and
decision on the appropriate rewards based on
the individual performance of the employees
and the Company’s performance. The IEPRC
also makes recommendations to the EXCO
on the appropriate actions to be taken against
those employees whose performance is not up
to the Company’s performance requirements.
Non-performing employees undergo
counselling to improve their performance and
their performance is reviewed for six months
on a monthly basis.
SYABAS
At SYABAS, employee performance appraisal
is conducted twice yearly. This involves a
discussion session on performance which
is called the ‘Challenge Session’. Following
SYABAS’ performance appraisal process in
2011, 111 employees were rewarded with
promotion effective January 2012. Through
the ‘Challenge Session’, the Company and the
Senior Management are able to constantly
monitor the employees’ performance and
address the challenges faced by the employees
in excelling at their work.
POG/GOM RESOURCES
At POG and GOM Resources, performance
appraisal exercises are conducted for all our
confi rmed employees twice a year.
PRC OPERATIONS
Our PRC operations conduct performance
appraisal exercises once a year.
Training
At PNSB and SYABAS, we are committed
to equipping our employees with the best
available resources and training to enable them
to carry out their responsibilities and prepare
them for the challenges of a knowledge-based
and demanding industry, as well as to enhance
the productivity and competitiveness of the
Group. In addition to in-house training, PNSB
and SYABAS send their employees for external
training, locally and overseas.
Details of the number of training sessions
(in-house and external) conducted for PNSB
and SYABAS in 2010 and 2011 are set out in
Table B above.
At PNSB and SYABAS, we are committed to equipping our employees with the best available resources and training.
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)
PEKA’s Volleyball Tournament 2011
141
Annual Report 2011Puncak Niaga Holdings Berhad
Valuing Our People
PNSB’s and SYABAS’ number of training
sessions increased in 2011 as compared to
2010. PNSB trained 92.2% of its employees
in 2011 while SYABAS trained 97.6% of its
employees in 2011. 4,109 employees of the
Group attended training in 2011 as shown in
Table B on page140 of this Annual Report.
Our training was conducted in fi ve broad
categories namely, personal and leadership
development, positive mindset, functional/
knowledge, supplementary knowledge, and
external training (local/overseas) (“Five Broad
Categories”). Training enabled the employees
to develop interpersonal, leadership and
language skills, plus job functional skills/
knowledge and health and safety knowledge.
Our training department also organised
motivational talks for the organisation.
New employees are required to attend a
comprehensive Induction Programme (“IP”).
At PNSB, the IP was for a duration of two days
whereas at SYABAS, the IP was for a duration
of three days.
The breakdown of PNSB’s and SYABAS’
training in the Five Broad Categories for 2011
are as set out in Table C above.
PNSB spent RM798,952.98 on training, 4.9%
up on the 2010 training cost. This amounts to
approximately RM785.60 per employee for an
average of 24 hours of training.
SYABAS spent RM640,858.64 in 2011 which
benefi ted 3,092 staff (97.6% of all SYABAS
employees).
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
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
PEKA’s Badminton Tournament
at Setia Alam
PEKA’s Motivational Programme
for the children of PEKA’s members
Annual Report 2011Puncak Niaga Holdings Berhad
142
Valuing Our People
PRC Operations
Our PRC Operations spent RM3,045.00 on
training in 2011. This equates to RM17.40 per
employee.
Listening to Our Employees
Listening to and working in tandem with
our employees is vital for the growth of our
business and our organisation. It means
building a shared vision of the business within
the competitive environment.
We constantly engage and interact with all
our employees through our Monthly Staff
Assemblies and staff meetings at Divisional
and Departmental levels. Our Senior
Management adopts a hands-on approach
and engages with our employees regularly.
Listening to our employees, acting on their
views and involving them in improving
our business are very important to us. We
encourage a two-way communication for
all levels at the workplace vis-à-vis sharing
information and knowledge.
Collective Bargaining Agreement
The Management of SYABAS and the Kesatuan
Pekerja-pekerja PUAS Berhad employees
met seven times during 2011.
Employees at our PRC operations are allowed
to form a union, in accordance with PRC Labour
Laws. However, as at 31 December 2011,
there were no unions formed by our PRC’s
employees.
Ensuring Quality and Work Ethics
In line with good corporate governance,
the Group has several Codes of Conduct
and Policies which express and support the
strategies that steer the Group to achieve its
Key Performance Indicators. These Codes are:
PNHB/PNSB
• Standard Operating Procedures
• Corporate Disclosure Policy
• Information Technology Policies (Software
Licence Policy, IT Security Policy and
Copying Software Statement)
• Investor Relations Policy
• Health, Safety & Environmental Policy
• Quality Policy
• Risk Management Policy
• Sexual Harassment Policy
SYABAS
• Standard Operating Procedures
• Quality Telephone Ethics
• Standard People Practices Handbooks
• Sexual Harassment Policy
• Corporate Responsibility Policy
• Code of Business Ethics
• Service Counter Ethical Code
• Health, Safety & Environment Policy
POG
• Standard Operating Procedures
• Quality Policy
• Health, Safety and Environment Protection
Policy
• Drug & Alcohol Abuse Policy
• Smoking Policy
• Stop Work for Safety Policy
GOM Resources
• Standard Operating Procedures
• Quality Policy
• Health, Safety and Environment Protection
Policy
• Drug & Alcohol Abuse Policy
• Smoking Policy
• Stop Work for Safety Policy
PRC Operations
We have an Anti-Corruption Policy in place in
our PRC operations. If any of our employees
are found to have violated this policy, their
employment with us will be terminated. There
were no reported incidences of corruption
in 2011.
Visit to Vitagen factory by the
children of PEKA’s members
Launching of
25th BPS Club Programme on
24 June 2011 at Sg Langat WTP
143
Annual Report 2011Puncak Niaga Holdings Berhad
Valuing Our People
Caring for Staff
PNSB and SYABAS recognise the importance
of providing staff with an adequate work-life
balance. The Association of Water Supply
Workers for Selangor, Kuala Lumpur and
Putrajaya (Persatuan Kakitangan Bekalan
Air Selangor, Wilayah Persekutuan Kuala
Lumpur dan Putrajaya) (“PEKA”) set up on
15 September 2006 is a staff association
established to provide welfare assistance and
to foster social and cultural bonds between the
Group’s employees and the community.
In 2011, PEKA organised various events that
included recreational activities, sporting
events, and cultural and religious programmes.
They were:
1. Recreational Activities
• Fraser’s Hill Photography
on 15 January 2011
• Expedition to Gunung Rajah, Pahang
on 30 April 2011 to 2 May 2011
• Visit to Langkawi, Kedah
on 2 July 2011 to 3 July 2011
• Expedition to Gunung Nuang,
Selangor on 2 July 2011 to 3 July 2011
2. Sporting Events
• PEKA International Jamboree
Mountain Bike on 26 March 2011
• PNSB and SYABAS football match
on 23 April 2011
• Bowling Competition SYABAS
Management – 4 May 2011
• Senamrobik Perdana on 14 May 2011
• “Walkathon - Walk For Your Heart”
on 28 May 2011
• Bowling Competition PEKA 2011
on 18 June 2011, 13 July 2011 and
25 November 2011
• Fishing Competition on 25 June 2011
• Launching of (1) Hari Alam Sekitar (2)
Kelab Berbasikal SYABAS
on 25 June 2011
• Volleyball Tournament
on 16 July 2011
• Futsal Competition on 30 July 2011
• Golf Tournament fund raising event
on 30 July 2011
• GYM SYABAS in conjunction with
World Heart Day on 8 October 2011
• Badminton Tournament
on 19 November 2011
3. Cultural & Religious Programmes
• Monthly Solat Hajat dan
Majlis Bacaan Yassin
• Monthly Majlis Tazkirah
• Maulidur Rasul celebration
on 15 February 2011
• Kursus Pengurusan Jenazah
on 14 May 2011
• Seminar on understanding
the value of religion and culture
on 16 June 2011
• Visit to Glass Temple, Johor
on 23 July 2011
• Religious Discussion :
Ahlan Wasahlan Ya Ramadhan
on 30 July 2011
• Bubur Lambok PEKA
on 11 August 2011
• Qiamullail Ramadhan
on 20 August 2011
• Majlis Ibadah Qurban
on 8 November 2011
• Majlis Berkhatan PEKA
on 10 December 2011
4. Other Events
• PEKA’s 5th Annual General Meeting
on 19 March 2011
• Hari Bumi Sedunia 2011 held
on 23 April 2011
• Motivational Programme for
Excellent Students on 8 June 2011
and 24 August 2011
• Seminar on Morality in a Family
on 9 July 2011
• Visit to Pusat Perlindungan Remaja
Bermasalah on 16 August 2011
• Breast Cancer Awareness
on 22 October 2011
PEKA’s International Jamboree
Mountain Bike 2011
PEKA’s Majlis Berkhatan 2011
Annual Report 2011Puncak Niaga Holdings Berhad
144
Valuing Our People
• Seminar on “Crime Prevention is
Ours” on 12 November 2011
• Breast Cancer Examination and Basic
Medical Checkup on 26 November 2011
• PEKA’s children visit to Vitagen
factory on 21 December 2011
• Monthly Assembly
Our Executive Directors and Senior
Management actively participated in
these programmes to give support and
encouragement to the employees.
ENSURING HEALTH AND SAFETY
As a responsible and caring employer, we
always ensure that our employees are treated
well and fairly. The Group takes responsibility
for preventing any work-related injuries
or illnesses. Throughout 2011, the Group
demonstrated to the best of its ability, its
business-wide commitment to improving
health and safety at our workplace.
PNSB
Occupational Health and
Safety Assessment Series (OHSAS)
As one of Malaysia’s leading water companies,
in September 2011 PNSB was awarded with the
Occupational Health And Safety Assessment
Series (“OHSAS”) 18001:2007 certifi cations for
27 Water Treatment Plants (“WTP”) and three
Regional Offi ces. This OHSAS 18001:2007
Award attests to PNSB’s compliance with
international OH&S management system
specifi cations and to the Company’s exemplary
standards in delivering a high quality potable
water supply as well as to its excellent health
and safety practices at workplace.
Prior to this prestigious accreditation, PNSB
established an OH&S management system,
which aims to eliminate or minimise risk
to employees and other parties within its
operations. Amidst the rapid expansion
throughout the region, PNSB has been
investing in establishing, maintaining and
improving OH&S across its operations. Hazard
Identifi cation, Risk Assessment and Risk
Control comprise the requirements of OHSAS
18001.
Our Occupational Health and
Safety Management Performance
PNSB provides the necessary safety and
health mechanisms for the employees who
may be exposed to hazards while performing
their duties. Apart from complying with
statutory requirements, PNSB has its own
internal controls to achieve optimum results
for OH&S at the workplace. Since 2004, PNSB
had a Corporate Health & Safety Committee,
to ensure full compliances with OH&S
requirements in the workplace.
For proper implementation of OH&S
procedures, PNSB’s employees and
permanent contractors must be adequately
trained in three categories namely, Statutory
Requirements, Competency Training and
General Training. All Water Treatment Plants
(“WTPs”) and dams staff are required to
undergo a minimum of two man-days of
training annually while permanent contractors
must undergo at least one man-day of training
a year.
In 2011, Health, Safety and Environment
(“HSE”) induction training, mock drills as well
as Emergency Response Plan (“ERP”) training
were carried out at all the 28 WTPs and the
three dams to ensure staff are responsive and
ready in the event of emergencies or crises.
ERP drills were conducted to familiarise and
to measure the level of readiness among our
employees in responding to unforeseeable
crisis situations. In addition, our Safety and
Health Offi cers conducted 31 Site Safety
Inspections at the WTPs and dams.
The objective of these programmes is to
ensure that all our WTPs and dams comply
with safety regulations and adhere to the
safety management system established within
PNSB.
Mock Safety Drill
145
Annual Report 2011Puncak Niaga Holdings Berhad
Valuing Our People
In 2011, PNSB implemented the following
OH&S programmes:-
1. Fire Fighting Training for ERP Team
Four sessions of Fire Safety Training were
held from September to December 2011 at
the Akademi Bomba & Penyelamat Kuala
Kubu Baru. The training was attended by a
total of 120 staff from various WTPs, dams
and the Headquarters.
The objective of the training was to
expose the staff to fi re safety equipment,
to enhance their knowledge of fi re safety
and to educate them on how to handle fi re
during an emergency. A knowledge of fi re
safety is useful not only at the workplace
but at home and other premises too.
2. Overhead Crane Safety Training
Pursuant to the requirements of the
Occupational Safety & Health Act (“OSHA”)
1994, Safety and Health Committee
Regulation 1997, PNSB successfully
organised Overhead Crane Safety
Training for HSE Committee members
on 17, 18 and 24 October 2011 at Central
Region, Southern Region and SSP2 WTP,
respectively.
The objective of the training was to comply
with PNSB’s OHSAS 18001 Management
System Procedure, Safe Operation of
Overhead Crane and Lifting Devices. Crane
and lifting devices are heavy machinery
and minor mistakes in handling the
equipment can cause critical situations
in many industries and construction
operations.
3. Chemical Handling and Spillage Training
Chemicals are often hazardous.
Carelessness and negligence in handling
chemicals may cause serious and even
fatal injuries. Consequently, proper
training and awareness on chemical
handling is a must for the water treatment
staff who are directly involved in handling
chemicals.
On 10 to 11 November 2011 and 15 to
16 November 2011, PNSB organised
Chemical Handling and Spillage Training
at the Southern and Central Region offi ces,
respectively. The two-day training involved
theoretical and practical sessions.
4. Emergency Preparedness and
Response Plan
PNSB’s Emergency Preparedness and
Response Plan has been continuously
implemented and improved and in 2011,
the following took place:-
• Modifi cation of the siren signal system
to better distinguish the type of alarm.
• Reorganisation and retraining of the
fi re fi ghting and rescue team and plant
support team for increased effi ciency.
• One major mock drill and three minor
mock drills were conducted at each of
the WTPs and dams, both internally
and externally, with the collaboration
of external parties such as chemical
supplier.
5. Health and Safety Management
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.
Safety and Health Training
Annual Report 2011Puncak Niaga Holdings Berhad
146
Valuing Our People
6. External Inspection
A corporate audit on health and safety
management system was performed in
2011 by the OHSAS 18001 Internal Auditors
for compliance with OH&S requirements
and improvement of the health
management system. We are pleased to
announce that PNSB is in full compliance
with the statutory requirements regulated
by Department of Occupational Safety and
Health (“DOSH”).
Lost Time Injury (“LTI”)
There was one accident that occurred in
2011, at the Northern Region, resulting in the
reduction of man-hours with zero LTI. Details
of LTI in 2011 are as set out in Table E above.
We are proud to announce that since its
commission in July 1998, SSP2 WTP has
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
18001 (Safety) Management Systems. It is
worth noting that, since September 2002, the
LTI has included contractors’ and suppliers’
man hours after they have undergone extensive
health and safety training and familiarisation
at SSP2 WTP.
The total man hours with Zero LTI are as
follows :
Million Man HoursWTP with Zero LTI
SSP2 WTP 4,129,620.81
Wangsa Maju WTP * 1,066,036.67
Sg Sireh WTP 311,503.08
Central Region 2,928,853.74
Southern Region 2,275,875.37
Northern Region 3,082,185.59
PNSB HQ 2,943,975
* Note: Wangsa Maju WTP has had zero LTI since
18 July 1998
Training for SYABAS water tanker
drivers during the ERP Operation
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
147
Annual Report 2011Puncak Niaga Holdings Berhad
Valuing Our People
ACHIEVEMENTS IN THE AREA OF
OCCUPATIONAL HEALTH AND SAFETY
AWARDS
1. Malaysian Society of Occupational Safety
& Health (“MSOSH”) Award:
At the MSOSH Excellence Award 2011 held
on 22 July 2011, fi ve of PNSB WTPs won
the following awards:-
WTP Award
SSP2 WTP Class 1 Gold Award,
Wangsa Maju WTP Class 1 Gold Award
Cheras Mile 11 WTP Class 1 Gold Award
Gombak WTP Class 1 Gold Award
Rantau Panjang WTP Class II Gold Award
2. National Council of Occupational Safety &
Health (“NCOSH”) Award:
At the NCOSH Excellence Award 2011 held
on 21 December 2011, PNSB’s SSP2 WTP
won the Gold Trophy Award under the water
utility sector. SSP2 WTP also received the
Grand Award Trophy for NCOSH from the
Minister of Human Resource, YBhg Datuk
Seri Dr S. Subramaniam.
CERTIFICATIONS
1. ISO 9001:2008 Certifi cation for Nine (9)
WTPs and Central Laboratory
In April 2010, all Regional Offi ces and
20 WTPs obtained the internationally
recognised standard ISO 9001:2008
Quality Management System (“QMS”)
Certifi cation. This ISO 9001:2008 QMS
Certifi cation was upgraded in 2008 from
the ISO 9001:2000 Certifi cation.
PNSB is in the process of applying for
the same internationally recognised
standard ISO 9001:2008 QMS Certifi cation
for the remaining nine WTPs. This is to
refl ect PNSB’s commitment to Quality
Management in managing the WTPs.
The ISO 9001:2008 QMS Certifi cation for
the nine WTPs is expected to be achieved
by the end of 2012.
The Central Laboratory has been certifi ed
for the ISO/IEC 17025:2005-General
Requirement for the Competence of
Testing and Calibration Laboratories in
June 2006. The Central Laboratory intends
to obtain ISO 9001:2008 QMS Certifi cation
to make improvements to existing systems
in terms of QMS.
SYABAS
SYABAS operates a Health, Safety &
Environment (“HSE”) Policy backed by Top
Management to provide a safe and healthy
workplace at all times, and to ensure that its
business is conducted to the highest standards.
SYABAS endeavours to:
• Recognise health, safety and environment
objectives as an integral part of its
business performance.
• Implement a continually improved HSE
management system.
• Establish and periodically review its safety
and environmental objectives and targets.
• Comply with all applicable HSE legal and
other requirements to which SYABAS
subscribes.
• Provide sufficient information,
instruction, training and supervision to
enhance employees’ health, safety and
environmental consciousness so that
work is performed in a safe manner.
• Minimise waste and continually prevent
pollution in all activities.
• Investigate any incidents whose fi ndings
can be used to develop and continually
improve health, safety and environmental
conditions and performance.
SYABAS’ Occupational Safety and Health
(“OSH”) programmes are coordinated to
ensure that we are able to harmonise and
make OSH part of the workplace culture.
PEKA International Jamboree
Mountain Bike 2011 Event
Annual Report 2011Puncak Niaga Holdings Berhad
148
Valuing Our People
In 2011, SYABAS implemented the following
OSH programmes:-
OHSAS 18001:2007 Certifi cation Programme
SYABAS has selected three Districts namely
the Petaling, Hulu Langat and Kuala
Lumpur Districts for the OHSAS 18001:2007
Certification Programme. SYABAS is
still undergoing the various stages of the
Certifi cation Programme.
The objective of the certifi cation is to assess
the safety management system that has been
implemented in SYABAS. SYABAS’ safety
management system documentation has been
established since 2008 and encompasses
procedures on maintaining a safe and healthy
working environment and controlling hazard
and risk at the workplace involving workers,
contractors and the public.
SYABAS NIOSH Safety Card (“SNSC”)
Programme
An SNSC Programme was conducted to
enhance the compliance standards under the
provisions of Section 15(2)(c) of Occupational
Safety & Health Act (“OSHA”) 1994 which
requires employers to provide information,
instruction, training and supervision to ensure
the safety and health of contractors who work
at SYABAS’ premises.
SYABAS signed a Memorandum Of
Understanding with NIOSH on 22 February 2011
and the fi rst training was conducted on
29 September 2011. As at 31 December 2011,
a total of 15 training sessions involving 430
participants had been conducted for SYABAS’
staff responsible for monitoring contractors
on site.
The training for contractors commenced on
15 January 2012 and the Safety Cards will be
provided to them one week after completing
the course and pass the test.
HSE Internal Audit
The objectives of the HSE Internal Audit are:-
• To evaluate the effectiveness and effi ciency
of the implemented documents.
• To propose corrective action and improvement
in all cases of non-conformance.
Two HSE Internal Audits each were conducted
at all District Offi ces. SYABAS appointed 50
Internal Auditors to assist in the HSE Internal
Audit exercise for 2011. The internal audit at
each District Offi ce was conducted by seven
auditors (fi ve from the District itself and two
representatives from HSE Headquarters).
A total of 249 Non-Conformance Requests
(“NCR”) had been raised from all the audits
conducted and all had been rectifi ed and
closed within the agreed timeframe.
Site Safety Inspection (“SSI”)
SSIs are conducted on a monthly basis with the
objective to ensure that all SYABAS’ premises
and contractors comply with the requirements
and provisions of the OSHA 1994 so as to
protect the safety of SYABAS’ staff.
In 2011, a total of 183 numbers of SSIs were
conducted at various locations, namely pump
houses, reservoirs, project sites, stores and
offi ce buildings. 366 NCRs were raised during
the inspection and forwarded to the respective
Districts for their corrective action. All NCRs
have since been resolved and closed.
Confi ned Space Emergency Drill
The objective of the Confi ned Space Emergency
Drill programme is to enhance the skills and the
knowledge of workmen who work in confi ned
spaces. The programme includes steps to be
taken in an emergency situation while working
in a confi ned space, and instruction on how to
operate rescue equipment.
Confi ned Space Safety training
149
Annual Report 2011Puncak Niaga Holdings Berhad
Valuing Our People
SYABAS conducted a Confined Space
Emergency Drill on 1 December 2011 to
comply with Clause 12 of the Industry Code of
Practice for Safe Working In A Confi ned Space
2010. Those who attended the programme
were competent Authorised Gas Testers,
Secretaries of Works and those who work in
confi ned space. In attendance, too, was an
expert from Hospital Kajang and his comments
have been incorporated into SYABAS’
improvement strategy.
Defensive Riding
HSE has initiated a programme in collaboration
with SYABAS, MSOSH and SOCSO to raise
awareness of the importance of road
safety, safe riding methods and emergency
preparedness. The programme provided
information about types of motorcycles and
the safety aspects of motorcycle riding,
accident statistics and actions to be taken by
motorcyclists in accident situations.
The launching ceremony for the programme
was held on 15 November 2011. The
programme consists of one theory session
and one practical session. The programme
was conducted over ten times between
31 October 2011 and 30 November 2011 for a
total of 300 staff. At the end of each session, all
participants were given a test to evaluate their
understanding of the course.
HSE Training
In 2011, SYABAS conducted 55 HSE training
sessions involving 1,734 staff, to provide
awareness of HSE matters and to equip them
with adequate information and knowledge
about safety, covering mandatory issues,
competency and general training.
Authorised Entrant and Standby Person
(“AESP”) in Confi ned Space training was
conducted at NIOSH for staff who work in
confi ned spaces. The training informs staff
of their responsibilities as AESPs, safety
measures that need to be taken while working
in a confi ned space and equipment to be used
in confi ned spaces. Authorised Gas Tester
Refresher training was also conducted for
SYABAS’ 12 Authorised Gas Testers (AGT).
SYABAS had selected 30 staff from
Headquarters and District Offi ces to act as
First Aiders and they have now been trained
by the Malaysian Red Crescent, Hulu Langat.
SYABAS also had invited external parties to
share their knowledge and give training to our
staff. There was a Health Talk by the Federal
Health Department, “Taklimat Pencegahan
Kebakaran” from the Fire Rescue Department
and many other talks and training sessions.
Blood Donation Campaign
The Blood Donation Campaign was
successfully conducted at all Districts Offi ces
involving SYABAS’ staff and the public. The
campaign is part of SYABAS’ Corporate Social
Responsibility (“CSR”) programmes to benefi t
the community.
Fire Drill Programme
The Fire Drill Programme was successfully
conducted at all District Offices with
co-operation from the Fire Rescue
Department. The main purpose of this
programme is to comply with Section 13 of
the Factories & Machinery Act 1970 (Safety,
Health Welfare).
External Inspections
In 2011, the Department of Occupational
Safety and Health (“DOSH”) inspected 29 Air
Scouring Machines in accordance with Factory
Machinery Act (“FMA”) 1967 regulations
regarding the renewal of Certifi cate of
Fitness for machinery. The inspection of the
Air Scouring Machines complied with DOSH
regulations.
Safety harnesses training
for the contractors
Annual Report 2011Puncak Niaga Holdings Berhad
150
Valuing Our People
Lost Time Injury (“LTI”)
SYABAS aspires to complete accident and
incident reports within three days to ensure
cases are resolved quickly.
As at the end of 2011, SYABAS had recorded
6,689,313 manhours without LTI. This statistic
includes the ten District Offi ces covered
by SYABAS.
PARTICIPATION IN AWARDS
National Council of Occupational Safety and
Health (“NCOSH”) Award 2011
Ten District Offi ces participated in the
NCOSH Award 2011 to gauge the level of
implementation of safety and health practices
at the workplace.
AWARDS
Malaysian Society of Occupational Safety and
Health (“MSOSH”) OSH Award 2011
The objective of the participation is to
evaluate and assess the effectiveness
and continuously improve our safety and
health management system. SYABAS has
participated in this award since 2008. On
22 July 2011, seven District Offi ces namely
Kuala Lumpur, Klang, Petaling, Gombak,
Sepang, Hulu Selangor and Kuala Selangor
obtained Gold Class I Awards and three
District Offi ces namely, Hulu Langat, Kuala
Langat and Sabak Bernam obtained Gold
Class II Awards.
CERTIFICATION
ISO 19001:2008 Certifi cation Programme
SYABAS has embarked on obtaining ISO
9001:2008 certifi cation for Human Resource
and Administration to gain recognition of the
international standard of our human resources
practices.
One Manual and 45 procedures have been
developed or improved so as to obtain
this certifi cation. The certifi cation audit is
scheduled to be conducted in May 2012.
SECURITY SERVICES
The Group’s premises are secured by the
Auxiliary Police, whose duty is to create and
maintain a safe working environment for
employees and to protect the Group’s assets
and facilities. It is therefore vital that the
Auxiliary Police project a good image to the
public as they perform the task of overseeing
the security of the Group’s premises and
employees, as well as being responsible and
be involved and investigating any breach of
security matters of the Group.
As at 31 December 2011, 342 PNHB Auxiliary
Police had undergone basic training conducted
by Polis Di Raja Malaysia (“PDRM”) at the
Police Training Centre at Jalan Semarak,
Kuala Lumpur (“PULAPOL”). Training is also
conducted annually to ensure PNHB’s Auxiliary
Police personnel are constantly equipped to
carry out their various duties. The shooting
training is conducted twice a year to ensure the
Auxiliary Police have good shooting skills and
are able to maintain fi rearms effi ciently.
The types of training conducted included the
use and maintenance of fi rearms effi ciently,
protocol for carrying out duties, training
on various laws and enactments, and the
proper protocol for arresting offenders and
approaching civilians. Additionally, members
of the Auxiliary Police team undergo physical
fi tness examinations twice a year to ensure
that they are fi t and meet the mandatory
requirement to always stay fi t and able to
perform on the job.
Golf Amal Championship PEKA 2011
Recreation Activity at Fraser’s Hill
151
Annual Report 2011Puncak Niaga Holdings Berhad
Valuing Our People
MANAGING OUR SUPPLIERS ANDCONTRACTORS
PNSB
As at 31 December 2011, PNSB had enlisted 178 contractors as panel contractors, suppliers or consultants. To ensure the quality of the contractors’ or consultants’ services, we have incorporated clauses in our contracts which state that any work done has to be of the highest quality and must conform to our standard practice. If contractors, suppliers or consultants fail to meet such desired standards, PNSB has the right to reject the goods or services provided by them.
In addition, contractors, suppliers or consultants are selected based on the following, using a scouring system:
1. Financial and operating strength.2. Past and current performance record.3. Licence or certifi cation from government
and regulatory bodies.4. History of satisfactory performance with
other companies.5. Registration with relevant government
agencies or bodies.
We do not condone contractors who are unable to provide proper services, thereby putting us and the consumers at risk by causing water supply disruptions and other inconveniences or dangers. We do not hesitate to penalise or terminate contractors who do not practise safety at the work site or who fall short of our requirements by:-
• Use of inappropriate tools/equipment at site.
• Causing road safety issues.• Late delivery.• Lack of safety measures on site.• Poor work quality. • Lack of personnel protective equipment
on site.
We are pleased to report that in 2011, there were no contractors, suppliers or consultants suspended from service.
SYABAS
There were a total of 299 contractors, suppliers and service providers registered with SYABAS. In addition to that, SYABAS has registered 148 panel contractors for pipes and meters to carry out emergency works for 10 SYABAS’ District Offi ces. Like PNSB, SYABAS has a procurement policy with which contractors, suppliers and service providers are appointed. Their appointment and selection is also based on other than commercial terms, but include sound and proven track records of their technical capability.
To ensure quality of works and services, contractors and suppliers and service providers are given the following as guidelines:
• Garis Panduan Kontraktor, Pembekal dan Penyedia Perkhidmatan.
• Garis Panduan Bagi Kerja-Kerja Penyenggaraan Paip SYABAS.
Their works are monitored and checked at all times by the respective Superintendent Offi cer (“SO”) or SO’s representatives for each work and contract. Several contractors were suspended by SYABAS in 2011 due to the following reasons:
• Failure to complete work on time.• Failure to supply goods within the agreed
schedule.• Failure to supply goods according to
SYABAS’ specifi cations.• Failure to comply with safety aspects at
construction sites.• Failure to have SPAN registrations
renewed. • Failure to renew relevant permits or
licences with statutory authorities, i.e PKK, CIDB, SPAN, MOF, ST and SSM.
• Failure to wear SYABAS T-shirts or name tags during working hours.
Gas Saving Tips
Remove excess weight
from trunk of car.
SYABAS’ Safety Handbook
for Contractors at the work site
Annual Report 2011Puncak Niaga Holdings Berhad
152
Puncak Niaga Holdings Berhad (“PNHB”)
recognises the environmental impact resulting
from its operations and continues to minimise
this effect. As we operate in the water industry,
environmental aspects are involved in every
area of our business. Our commitment to
preserving the environment is inculcated into
all relevant aspects including raw and treated
water quality, water safety and public health.
The quality of water supplied is routinely
monitored at both the Water Treatment
Plants (“WTP”) and the distribution networks
regularly. This ensures that high quality water
is continuously supplied to our consumers.
Our environmental initiatives also include
energy performance, waste and effl uents
management. Waste generated by our
activities arises from the production of residue
from our WTPs. In order to reduce stress
on the environment, Syarikat Bekalan Air
Selangor Sdn Bhd (“SYABAS”) also monitor
and incorporates consideration for carbon
footprint in programmes which are in-line with
its vision of preserving the environment.
At PNHB, our environmental commitment is
also nurtured within our workplace. This is
refl ected in various environmental initiatives
being practised at our offi ces including
reducing paper consumption, and applying 3R
(Reduce, Reuse, Recycle) activities and energy
conservation practices. We carefully monitor
our carbon footprint performance so as to
better manage the emissions derived from the
activities of the Company, and its employees,
suppliers and contractors.
SYABAS takes its corporate environmental
responsibility for the protection, conservation
and enhancement of the natural environment
very seriously. One of SYABAS’ most tangible
commitments to the sustainability of water
resources in Selangor is its Environmental
Surveillance Section (“ESS”), a division fully
responsible for monitoring issues relating
to the environment within the six water
catchment areas in Selangor.
Since the inception of ESS, SYABAS has
developed Water Resources Surveillance
Programmes through its Sanitary Surveys,
its Water Quality Index (“WQI”) Programme,
Environmental Impact Studies and
investigations of raw water quality violations.
These programme provide close and effective
monitoring of the water catchment areas, with
special focuses on:
• Preservation and/or improvement to raw
water quality
• Identifying and monitoring potential
pollution sources and activities
• Making appropriate recommendations
to stakeholder groups including water
operators, government departments,
government agencies and civil society
Various pollution sources were identifi ed as
contributing to water resources pollution,
thereby affecting water treatment and supply,
namely:
• Illegal sand mining
• Industrial activities that directly or
indirectly discharge untreated waste into
the rivers
• Untreated or partially treated sewage
discharges
• Illegal solid waste dumping
• Effl uence from landfi lls
• Land clearing
• Animal husbandry activities
• Leachate from old and existing solid waste
dumping sites
SYABAS has highlighted these concerns to
the authorities, and is working closely with
the Department of Environment (Jabatan
Alam Sekitar) (“DOE” or “JAS”) Selangor
and Selangor Water Management Authority
(Lembaga Urus Air Selangor) (“LUAS”)
and other relevant authorities at state and
federal levels to prevent pollution. Through
these relationships, SYABAS supports the
enforcement agencies’ efforts to mitigate
incidences of pollution, and to ensure
environmental care.
Preserving Our Environment
Earth Day 2011 celebration
153
Annual Report 2011Puncak Niaga Holdings Berhad
Preserving Our Environment
SYABAS is also a member of various Selangor
State Government committees, namely:
• Jawatankuasa Tetap Alam Sekitar Negeri
Selangor
• Jawatankuasa Tetap Infrastruktur dan
Kemudahan Awam Negeri Selangor
• Jawatankuasa Pengurusan Lembangan
Sungai (“Sg”) Negeri Selangor
• Pasukan Petugas Lembangan Sg Selangor
• Pasukan Petugas Lembangan Sg Langat
• Pasukan Petugas Lembangan Sg Klang
Raw Water Quality and Violations
Raw water pollution is one of the leading
causes of WTP shutdowns and operational
interruptions.
To determine pollutant levels in raw water
sources, we monitor raw water quality
violations at 31 water intakes located within
six water catchment areas operated by
Puncak Niaga (M) Sdn Bhd (“PNSB”), Syarikat
Pengeluar Air Sungai Selangor Sdn Bhd
(“SPLASH”) and Konsortium ABASS Sdn
Bhd (“Konsortium ABASS”). For the 27 water
intakes operated by PNSB, the water quality
data is compiled based on the monthly Water
Quality Reports.
The raw water quality is monitored according
to the parameters set out under the
Recommended Raw Water Quality Limit of the
Ministry of Health’s (“MOH”) National Standard
for Drinking Water Quality (2004) (“NSDWQ”)
which are categorised into:-
1. Microbiological
2. Group I (Physical)
3. Group II (Inorganic matter)
4. Group III (Heavy metals)
5. Group IV (Pesticides)
6. Group V (Radioactivity)
The following Chart A illustrates the annual raw
water quality violations and plant shutdown
cases from 1995 until 2011.
Raw water pollution is one of the leading causes of WTP shutdowns and operational interruptions.
Chart A - Annual Raw Water Quality Violations & Plant Shutdowns (1995-2011)
Total Raw Water Quality ViolationsPlant Shutdown Due to Raw Water Quality Violations
0
273
0
511
8587 76 75 99 102
171 166 164123
225277 247
21 7 9
522
658
804
1044957
909
802 810 796 830
1008
12681319
1085
1485
200
400
600
800
1000
1200
1400
No
. of
Ra
w W
ate
r Q
ua
lity
Vio
lati
on
&
Fre
qu
en
cy
of
Pla
nt
Sh
utd
ow
n
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Annual Report 2011Puncak Niaga Holdings Berhad
154
Based on the raw water quality data from PNSB
in 2011, the number of violations decreased by
17.7% to 1,085 from 1,319 in 2010.
The breakdown of the violated parameters in
2010 and 2011 is as shown below:
Total Raw Water Quality ViolationsParameter group Recorded 2010 2011
Microbiological 556 496
Group I - Physical 511 409
Group II - Inorganic matter 240 176
Group III - Heavy metals 11 1
Group IV - Pesticides 0 0
Group V - Radioactivity 1 3
Total 1,319 1,085
Based on the analysis conducted, most of the
raw water quality violations had occurred in
the Sg Langat, Sg Selangor and Sg Bernam
River basins as illustrated below:-
Total Raw Water Quality Violations Total RecordedCatchment Area WTP(s) 2010 2011
Sg Langat 8 512 416
Sg Selangor 6 325 286
Sg Bernam 4 217 188
Sg Kelang 8 44 27
Sg Buluh 2 27 20
Sg Tengi 1 194 148
Total 29 1,319 1,085
As mentioned earlier, raw water pollution is
one of the leading causes of WTP shutdowns
and water supply interruptions. When
such incidences occur, an environmental
investigation is conducted to identify the
source of the raw water pollution.
As soon as the source is identifi ed, authorities
such as the National Water Services
Commission (“Suruhanjaya Perkhidmatan Air
Negara”) (“SPAN”), JAS Selangor and LUAS
will be informed for further action. Following
this, full investigation reports are forwarded
to these authorities and other government
agencies such as the Ministry of Energy, Green
Technology and Water (“Kementerian Tenaga,
Teknologi Hijau dan Air”) (“KeTTHA”), the
Selangor State Government and the respective
municipal councils.
Cooperation from these authorities is
necessary for action to be taken against
the perpetrators of the pollution.
Recommendations and solutions are also
put forward to ensure that such incidences of
pollution will not occur again.
In 2011, a total of nine incidences of pollution
occurred where WTPs were shutdown, in
addition to numerous incidences of water
supply interruptions. The details of these
incidences are as set out in Table A on page 155
of this Annual Report.
Preserving Our Environment
2011 BPS Membership
Recruitment Drive at Sekolah
Menengah Kebangsaan
Darul Ehsan
155
Annual Report 2011Puncak Niaga Holdings Berhad
Preserving Our Environment
Shutdown Type of Probable sourceNo. 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
Selangor-Pahang border
due to heavy rainfall
Table A - Record of Plant Shutdown Cases Due to Raw Water Pollution in 2011
“Misi Bantuan Bekalan Air Bersih”
to fl ood victims in Johor
Annual Report 2011Puncak Niaga Holdings Berhad
156
Shutdown Type of Probable sourceNo. 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 2011WQI No. of No. ofClass 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,
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
Preserving Our Environment
Launching of World Water Day 2011
157
Annual Report 2011Puncak Niaga Holdings Berhad
Year 2010 Year 2011WQI No. of No. ofClass 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
Preserving Our Environment
The raw water quality at four water intakes
was found to be improving, namely Sg Rangkap
WTP (Class II to Class I), SSP2 WTP, SSP3-
Badong WTP and Semenyih WTP (Class III to
Class II). Meanwhile, four water intakes were
downgraded from Class I to Class II quality,
namely Kuala Kubu Bharu WTP, Kalumpang
WTP, Sg Serai WTP and Gombak WTP; and one
intake, namely Rantau Panjang deteriorated
from Class II to Class III.
Ammonia Level Monitoring
Ammonia Level Monitoring was conducted on
an hourly basis at four critical WTPs along the
Sg Langat Basin, namely Sg Langat, Cheras
Mile 11, Bukit Tampoi and Salak Tinggi WTPs to
ensure early preparation and necessary action
should the WTPs be required to shutdown due
to high ammonia levels.
Details of the Ammonia Level Monitoring
along the Sg Langat Basin are as set out in the
“Delivering Quality” section on pages 117 to 129
of this Annual Report.
SANITARY SURVEYS
The sanitary survey is a programme conducted
to assess the general impact that human
activities have on raw water resources and
their corresponding quality. It is also carried
out to assess the effi ciency of the WTPs’
treatment process corresponding to the raw
water components as well as the treated water
quality in the distribution lines.
In 2011, a total of nine sanitary surveys were
jointly conducted with MOH and WTP operators
at the following study areas and the surveys
covered the WTP processes and distribution
area:-
I. North Hummock WTP
II. Rantau Panjang WTP and SSP2 WTP
III. Sg Selangor Distribution Area
(Sabak Bernam)
IV. Salak Tinggi WTP
V. Sg Serai WTP
VI. Sg Selangor Distribution Area (Petaling)
VII. Bukit Tampoi WTP
VIII. Sg Batu WTP
IX. Kalumpang WTP
Technical visit by
Persatuan Pekilang-pekilang
Malaysia (FMM) to SSP2 WTP
Annual Report 2011Puncak Niaga Holdings Berhad
158
Based on these surveys, several human
activities that might have raw water pollution
impacts were identifi ed such as land clearing,
illegal sand mining, stone quarries, open
landfi lls and illegal waste dumping sites
with no leachate treatment facilities. These
surveys facilitate early detection and provide
a general idea about the potential sources of
contamination and plant shutdown during the
occurrence of pollution events.
The fi ndings of the surveys together with
recommendations thereon are highlighted
to the relevant agencies and authorities to
mitigate pollution incidents and manage
environmental risk before any of the WTP’s
operation and water supply are jeopardised.
ENVIRONMENTAL IMPACT STUDY (“EIS”)
In 2011, land use assessment for the EIS was
carried out for Sg Selangor, Sg Langat, Sg
Bernam, Sg Klang, Sg Tengi and Sg Buloh
catchment areas.
Land use within the water catchments refers
to various natural or human activities that may
result in contamination of raw water and cause
deterioration to its quality. The pollution may
affect the raw water quality to the point where
water treatment processes are unable to cope,
consequently leading to a disruption in the
drinking water supply.
In addition to land use assessment, raw water
quality monitoring and WQI assessment were
also carried out for the water intakes in 2011
on a monthly basis in order to determine the
current raw water quality.
The EIS programme provides information on
the current condition of the raw water quality
and pollution issues faced within the water
catchments.
Treated Water Quality
The Water Quality Surveillance Monitoring
Programme for all the 29 WTPs managed by
PNSB is conducted by the Central Laboratory
as well as an independent accredited laboratory
appointed by PNSB. The programme is carried
as per requirement stated in the Concession
Agreements and MOH’s NSDWQ.
Based on the water quality surveillance
monitoring programme carried out for
January – December 2011, treated water
compliance achieved was 99.9% as against
MOH’s NSDWQ as depicted below:
Number Number of of % of Period analysis compliances compliances
January –
December
2011 19,366 19,349 99.9
Note: The above is based on analysis by Central Laboratory and Independent Laboratory
In addition to the above, treated water quality
performance was also gauged using the
indicators for Quality Assurance Programme
(“QAP”) by MOH. Based on the monitoring
conducted for January – December 2011 by
Central Laboratory, Independent Laboratory
appointed by PNSB and WTPs, treated water
quality produced by all the 29 WTPs complied
with MOH’s requirement as shown below:
Parameter QAP (% violation) 2011
E. Coli 0.4 0
Free residual
chlorine (FRC) 2.3 0.001
E. Coli & FRC 0.2 0
Turbidity 2.0 0.0004
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.
Preserving Our Environment
“Misi Bantuan Bekalan Air Bersih”
to fl ood victims in Johor
159
Annual Report 2011Puncak Niaga Holdings Berhad
Reservoir Water Quality Monitoring
The treated water from WTPs will be stored in
reservoirs prior to distribution by SYABAS to
consumers.
In order to ensure that high quality water is
continuously supplied to consumers, routine
Reservoir Water Quality Monitoring at different
depths is conducted on quarterly basis.
The status of water quality in the reservoir
is monitored through the analysis of water
quality parameters such as pH, turbidity,
colour, aluminium, iron and manganese. The
monitoring results are used to determine
whether the reservoir requires fl ushing or
cleaning.
Based on the monitoring conducted in 2011,
a total of seven reservoirs were identifi ed and
cleaned either manually or by using a robotic
method. These reservoirs were:
1. Sg Sireh
2. Sg Buaya
3. North Hummock
4. Gombak
5. Cheras Mile 11
6. Sg Serai
7. Sg Lolo (Old)
Filter Performance Monitoring
Filtration is the fi nal step in the water
treatment process, removing fi ne suspended
solids remaining after the clarifi cation
process. Monitoring fi lter performance, most
importantly tracking the running hours is
critical to ensure that the fi lter remains in good
operating condition. When a given fi lter has
reached its specifi ed number of running hours
or its headloss level, backwashing is initiated.
The Research & Process Unit (“R&P”)
constantly monitors fi lter performance by
tracking each fi lter’s running hours. Based on
the monthly statistics for a total of 174 fi lters
operating at our 29 WTPs, the breakdown
of the fi lter running hours is as tabulated in
Table D above.
Since PNSB assumed the management of the
29 WTPs in 2005, it has implemented various
initiatives which have resulted in tremendously
improved fi lter running hours. As a result,
there were no fi lters with short running hours
in 2011 (less than 30 hours).
Firstly, R&P conducted treatment process
studies at the Sg Rangkap, Cheras, Bukit
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.
Preserving Our Environment
BPS activities at
“Karnival Sayangi Selangor”
held at I-City Shah Alam
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.
Annual Report 2011Puncak Niaga Holdings Berhad
160
Secondly, PNSB initiated plant improvement
works which included refurbishing some of
the older fi lters and installing fi lter monitoring
instruments. 14 of the WTPs namely, Sg Buaya,
Batang Kali, KKB, Sg Tengi, Sg Selisek, Rantau
Panjang Old, Rantau Panjang New, North
Hummock, Bukit Nanas, Sg Rangkap, Bukit
Tampoi Old, Bukit Tampoi New, Sg Langat
and Cheras Mile 11 WTPs have recorded more
effective fi lter performance following this
initiative.
PNSB continues to carry out filter
refurbishment works as the need arises, and
the Gombak and Sg Batu WTPs’ fi lters were
refurbished in 2011.
R&P will continue to monitor and perform
studies to further improve the running hours
with the objective to achieving a backwashing
cycle of 72 hours, or whenever fi lter headloss
reaches 1.8 metres, whichever occurs fi rst.
PUBLIC AWARENESS PROGRAMME
ON ENVIRONMENTAL PROTECTION
AND CONSERVATION
The Group successfully organised
and/or participated in various environmental
awareness campaigns and activities in 2011 in
a bid to highlight the impact of environmental
pollution, and the need to preserve and
conserve our water resources (“Activities”).
The Activities were as follows:-
1. Delivering environmental talk and
facilitating demonstration of river water
quality testing with students and the public
at the 25th River Rescue Brigade (“Briged
Penyelamat Sungai”) (“BPS”) Club
Programme with the theme “1 Sungai
1 Tanggungjawab 1 Kita” at Sg Langat
WTP on 24 June 2011, offi ciated by the
Deputy Prime Minister’s wife, YAB Puan
Sri Noorainee Abdul Rahman. The details
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.
2. Delivering a talk on PNSB’s and
SYABAS’ operations with activities and
demonstrations including members’
recruitment drive for BPS as part of
the Educational Outreach Programme
(“Program Pelestarian Pendidikan”) (“3P”)
at schools. The details 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.
3. The 2011 BPS Membership Recruitment
Drive were conducted by BPS at schools.
The details of the participating schools
are set out in the “Engagement with Our
Community” section on pages 167 to 174
of this Annual Report.
4. Setting up and manning a World Water
Day 2011 exhibition booth at SYABAS’
Headquarters from 22 March 2011 to
26 March 2011. The details 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.
5. SYABAS’ Exhibition in conjunction with an
Offi cial Visit by the Deputy Prime Minister,
YAB Tan Sri Muhyiddin Hj Mohd Yassin, at
Sekolah Kebangsaan Sijangkang, Kuala
Langat on 29 March 2011.
6. BPS facilitation of activities in conjunction
with the World Water Day 2011 celebration
by the Selangor State Government and
LUAS at Dataran Kemerdekaan, Shah
Alam on 2 April 2011.
7. Public Awareness Programme for the
public, the details are as set out in the
“Engagement with Our Community”
section on pages 167 to 174 of this
Annual Report.
Preserving Our Environment
World Water Day 2011
celebration in Shah Alam
161
Annual Report 2011Puncak Niaga Holdings Berhad
8. Official Visits from the following
authorities, bodies and the public:-
a. Persatuan Pekilang-pekilang
Malaysia (FMM) at SSP2 WTP on
5 April 2011.
b. Public Utility Board, Singapore at
Operation Command Centre on
7 April 2011.
c. TYT Mohamed Saheb Al-Daragi,
Menteri Perumahan dan Pembinaan
Iraq at Wangsa Maju WTP on
25 April 2011.
d. Representative from Industri
Perdagangan Zon Bebas Utama at
Auditorium, SYABAS Head Offi ce on
10 May 2011.
e. National Water and Wastewater
Organisation of Iran at SYABAS’
Auditorium on 16 May 2011.
f. Persatuan Suri dan Anggota Wanita
Perkhidmatan Awam Malaysia
(PUSPANITA) to SYABAS Head Offi ce
at PUSPEL, Command Centre and
Auditorium on 18 May 2011.
g. Persatuan Pentadbiran Industri
Bangi at SYABAS Auditorium,
Command Centre and PUSPEL on
21 June 2011.
h. Air Kelantan Sdn Bhd at SYABAS
Auditorium on 22 June 2011.
i. Top Management of KWSP to Klang
Gates Dam, Wangsa Maju WTP and
SYABAS on 11 July 2011.
j. Tenaga Nasional Berhad to SYABAS
Head Offi ce on 18 July 2011.
k. Lembaga Zakat Selangor to SYABAS
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.
m. Representative from Pengurusan
Pusat Dialisis Negeri Selangor
and the Federal Territories of
Kuala Lumpur and Putrajaya at
Auditorium, Command Centre and
PUSPEL on 29 November 2011 and
6 December 2011.
Consumer Awareness and
Education Programme (“CAE Programme”)
The Consumer Awareness Programme (“CAP”)
is an education campaign that was initiated
by SYABAS in early 2008 to create immediate
consumer awareness of water quality issues.
It exposes consumers to the stringent
water quality monitoring activities carried
out by MOH and SYABAS. In a bid to educate
consumers, the CAE Programme with media
coverage includes educational events, as well
as issuing print and electronic advertisements
and infomercials on SYABAS. The programme
also emphasises the role of consumers in
enhancing water quality, such as by inspecting
and maintaining internal piping systems and
internal storage tanks and engaging licensed
plumbers to ensure that inspections and
cleaning are carried out professionally. It
also counters misconceptions about using
household water fi lters, which can sometimes
contribute to the deterioration of water quality
at the consumers’ premises. Besides this,
the programme educates the consumers to
actively fulfi l their roles and responsibilities
in preserving the quality of water supplied to
their premises by maintaining the internal
plumbing system.
Preserving Our Environment
Launching of World Water Day 2011
Annual Report 2011Puncak Niaga Holdings Berhad
162
Since 2010, CAPs have been carried out on
a bigger scale than in previous years at both
the headquarters and district levels. The
knowledge to be imparted is also delivered in
a more interactive atmosphere in the form of
educational talks, dialogues, exhibitions and
demonstrations, which are not only limited to
water quality issues. Thus, the programme
also touches on other water supply issues
such as low water pressure, pipe bursts/leaks,
billing problems, etc. Demonstrations of the
quality of water supplied were also carried out
at consumers’ premises, including residential
areas, commercial areas and at organisations
such as educational and medical institutions.
To ensure continuous improvement of the
programme, Guidelines for Consumer
Awareness and Education Programme were
developed in 2010, together with the consumer
feedback survey to evaluate the impact and
effectiveness of the programme. Comments
and suggestions received from consumers
have enabled SYABAS to further enhance our
efforts in ensuring that the supply of treated
water is always clean and safe for consumption.
Summary of CAP organised by Headquarters
and Districts from Year 2007 to 2011
YEAR 2007 2008 2009 2010 2011
CAP 5 16 3 15 20
events
organised
by
Headquarters
CAP NA 532 957 185 179
events
organised
by
Districts
Note: NA – Not Available. CAP at districts level was only introduced in 2008.
Waste Management
Waste generated by our activities is generally
residue (from our water treatment facilities),
paper waste, and construction waste (from our
projects and maintenance programme). Our
biggest waste issues arise from the generation
of residue from our WTPs.
In 2011,
1. SSP2 WTP produced a total of 335,124
metric tonnes (“MT”) of treatment residue.
2. Wangsa Maju WTP produced a total of
32.26 MT of treatment residue.
WTP Residue Treatment
SSP2 and Wangsa Maju WTPs are equipped
with sludge treatment facilities (“STF”) to treat
the residue.
DOE has approved our application for special
management of scheduled waste for the Bukit
Badong Depository Area to be developed for
the residues from the SSP2 and Wangsa Maju
WTPs. The construction of the depository area
is ongoing and is expected to be completed
by 2012.
Reducing Paper Usage
In 2011, PNSB’s paper usage increased by
24.5% as compared to 2010. This increase was
attributed to the increase in the Company’s
tender submissions, business proposals and
the increased in staff recruitment.
At SYABAS, we utilise paper for our daily
operations. Based on internal records, our
paper consumption rose from 2009 until 2011.
In 2009, the A4 paper consumption stood at
52.28 ton which is equivalent to 14.11 ton of
carbon dioxide (“CO2”). In 2010, the paper
consumption increased by 2.68 ton (5.13%),
and this increasing trend continued in 2011,
with paper consumption increasing by 5.01 ton
(9.12%).
Preserving Our Environment
Visit by the students from
Universiti Putra Malaysia to
SSP2 WTP
Visit by the students from
Chin Hock Methodist Sunday School
to SSP2 WTP
163
Annual Report 2011Puncak Niaga Holdings Berhad
SYABAS Paper Consumption (A4)
from 2009 to 2011
2009 2010 2011
Paper 52.28 54.96 59.97
Consumption (ton)
Carbon Emission 14.11 14.84 16.19
(ton of CO2)*
*Note : Office paper produces 0.27 metric ton of carbon equivalent (“MTCE”) per ton of paper (Source: The US EPA report, Solid Waste Management and Greenhouse Gases A :Life-Cycle Assessment of Emission and Sinks 3rd Edition, 2006)
The Group will continue to intensify efforts to
reduce paper consumption by adopting green
practices. As a start, we have encouraged the
dissemination of information electronically.
Reducing Construction Waste
SYABAS requires all its contractors to clean up
waste generated from maintenance activities.
These contractors are monitored frequently to
ensure full compliance.
Further information is provided in the
section entitled “Managing Our Suppliers
And Contractors under “Valuing Our People”
section on page 151 of this Annual Report.
Use of Resources
Raw Water Drawn for Treatment
The following table summarises the amount of
raw water drawn from the various rivers and
dams for treatment at PNSB’s WTPs in 2011.
Source of VolumeNo. raw water Withdrawn (m3)
1. Sg Bernam 10,687,310
2. Sg Batang Kali 4,155,650
3. Sg Dusun 404,414
4. Sg Inki 2,284,940
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
13. Sg Rumput 285,045
14. Sg Langat 212,437,706
15. Sg Serai 410,244
16. Sg Lolo 1,265,321
17. Sg Pangsoon 1,402,091
18. Sg Labu 1,030,130
19. Sg Sireh 9,405,039
20. Batu Dam 41,311,879
21. Klang Gates Dam 55,780,400
22. Tasik Subang Dam 3,734,000
TOTAL 752,987,773
The current climate changes make weather
patterns harder to predict, making it more
important than ever to continuously plan and
monitor the fl ow and volume of water in the
rivers from which we obtain raw water so as to
ensure optimisation of raw water abstraction
from the rivers.
Water Utilization
Water is used for cleaning and maintenance
works such as WTP fi lter backwashing,
reservoir and storage tank cleaning, cleaning
of pipelines, and fl ushing.
Preserving Our Environment
SYABAS’ participation at
the Green EXPO 2011 held at
Tunku Abdul Rahman College,
Setapak
Annual Report 2011Puncak Niaga Holdings Berhad
164
We constantly endeavour to fi nd new ways to
further reduce water usage. Already, we have
cut plant water losses by adopting wash water
recovery and by increasing the fi lter backwash
cycle to 72 hours. In addition, to clean the
pipelines, since 2007, SYABAS has used air
scouring technology instead of conventional
fl ushing, which has resulted in less water
usage in cleaning the pipelines. In 2011,
operational water usage at SYABAS decreased
by 19.08% compared to the fi gures reported
in 2010.
Reducing water losses makes for more
effective utilisation of precious water
resources. Between 2005, when it started
operations, and 31 December 2011, SYABAS
has managed to reduce water losses from
42.78% in 2005 to 32.31% in 2011, a reduction
of about 10.47%. This has resulted in a saving
of about 273 MLD of water in physical losses.
SYABAS’ water consumption across all
its offi ces saw a 27.89% increase in 2011
(55,663m3) compared to the previous fi gure of
43,522 m3 in 2010.
In 2011, water usage at PNSB increased
by 6.78% (1,054m3) compared to the usage
amount of 15,555 m3 in 2010.
The Group also provides technical advice
to the authorities on rainwater harvesting
and presented various technical papers on
environmental issues and protection.
Electricity Consumption
The water industry is electricity-intensive. At
PNSB, the WTPs’ pumping systems account
for the highest electricity consumption, while
SYABAS requires electricity to drive its 498
pumping stations.
The Group’s electricity consumption in 2011
was as set out below:-
• At the Wisma Rozali (headquarters),
electricity consumption was successfully
reduced by 1.75% from 2010 to 2011.
• At the WTPs, electricity consumption
increased by 0.92% from 2010 to 2011. The
increase resulted from a 1.63% increase in
the volume of water produced.
• At SYABAS, further measures were
taken and continue to be taken to reduce
electricity usage at booster pumping
stations and offi ce buildings.
Although our electricity optimisation
programme is ongoing at the WTPs, only
relatively small reductions in electricity
consumption are possible as the WTPs are
operating at optimal effi ciency in terms of
electricity consumption.
Energy Effi ciency Initiatives
However, in order to make savings wherever
possible, in 2011, PNSB conducted a few
initiatives at SSP2 WTP, and the initiatives
were as follows:-
1) Replacement of Fluorescent Light to Low
Bay Light at Lime Plant Stream C & D
• Estimated saving =
RM3,286.62 per year
Preserving Our Environment
We constantly endeavour to fi nd new ways to further reduce water usage.
0
10000
20000
30000
40000
50000
6000046,300
14,22415,555
16,609
55,663
43,522
Wa
ter
Co
ns
um
pti
on
(m
3)
Company
SYABAS PNSB
Our Water Consumption
(2009-2011)
2009 2010 2011
Visit by the students from
Universiti Putra Malaysia to
SSP2 WTP
165
Annual Report 2011Puncak Niaga Holdings Berhad
2) Reuse Sampling Water for WTP usage at
Filtration Plant
• Estimated saving =
RM127,334.00 per year
3) Decommission Coagulation Mixers at
Coagulation process Actifl o Plant
• Estimated saving =
RM80,210.00 per year
4) Refurbishment of Treated Water Pump P2
at TWPS
• Estimated saving =
RM30,576.00 per year
Use of Raw Materials
We are also pleased to report that PNSB
utilised a total of 42,923.96 MT of chemicals in
the water production process in 2011.
As at 31 December 2011, total production
of treated water at all 29 WTPs was
703,477,920 m3 and about 0.061058 kg of
chemicals were required to treat 1 m3 of water.
The amount of chemical usage for 2011 is
equivalent to the amount of chemicals usage
last year.
Carbon Emissions
The fi rst time we reported our Carbon
Emissions based on the Green House Gas
(“GHG”) Protocol was in 2009.
Concerned with global environmental issues,
especially climate change, Malaysia has
adopted a voluntary target of a reduction
of up to 40 per cent in the ratio of its carbon
emissions to gross domestic product (“GDP”)
to be achieved between 2005 and 2020. The
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.
To play its role in reducing environmental
stress, SYABAS is also planning to position the
company on a low-carbon path, which in is line
with our vision to ensure the preservation of
the environment. In May 2010, SYABAS initiated
the Carbon Footprint Initiative Programme
(“CFIP”) setting a baseline for carbon
emissions arising from SYABAS operations
starting in 2010.
Emission quantifi cation was based on the 2006
Intergovernmental Panel on Climate Change
(“IPCC”) Guidelines for National Greenhouse
Gas Inventories, the UNEP Tool and Guidelines
for Calculating Greenhouse Gas Emissions for
Businesses & Non-Commercial Organisations
and the Department for Environment, Food
and Rural Affairs UK (“DEFRA”).
The Table E below summarises the carbon
emissions by source and quantity for 2010
and 2011. Based on the information gathered
in 2011, the electricity consumption (Scope 2)
contributed 97% (103,653 t CO2) to SYABAS’
carbon footprint and the fuel consumption by
the company’s vehicles (Scope 1) contributed
3% (3,557 t CO2).
GHG Source Unit 2010 2011
Electricity
(Scope 2) t CO2 103,539 103,653
Transport
(Scope 1) t CO2 3,475 3,557
Total t CO2 107,014 107,210
Note: SYABAS Carbon Footprint is based on emission factor published by GreenTech Malaysia for electricity in Malaysia (0.683 t CO
2 /Mwh)
Table E - SYABAS CO2 Emission in 2010 and 2011
Preserving Our Environment
Water Facts
A person consumes
more than 16,000 Gallons
of water in his life time.
Annual Report 2011Puncak Niaga Holdings Berhad
166
To ensure that SYABAS’ staff are collectively
committed to the CFIP, an integrated working
group was formed in December 2011. The main
task of the working group are to ensure that
all relevant stakeholders are consulted and
involved in the programme, to conduct studies
on proposed carbon reduction measures and
to develop a SYABAS Climate Change Policy.
The SYABAS’ CFIP includes short
term programmes that promote green
habits/culture among staff, suppliers and
contractors, to medium term programmes
which emphasise increasing energy effi ciency,
and long term programmes that include
studies on the potential to generate renewable
energy.
In summary, SYABAS’ CFIP is a voluntary
programme that embodies SYABAS’
environmental aspirations which will
encourage economic development and
positively contribute to the mitigation of
climate change.
Compared with estimated carbon emissions
arising from electricity consumption in 2010,
in 2011 Scope 2’s estimated carbon emissions
declined by 1.75%.
2010 2011
Locations MT CO2 -eq MT CO
2 -eq
Wisma Rozali 1,249.52 1,227.61
WTPs 158,260.07 159,708.37
SYABAS 107,014.00 107,210.00
Total 266,523.59 268,145.98
Preserving Our Environment
2011 BPS Membership
Recruitment Drive at
Sekolah Kebangsaan St Mary
0
2010 2011
50
100
150
200
Scope 2 Emissions Arising from
Electricity Usage in 2010 and 2011
SYABASWTPsWisma Rozali
MT
CO
2-E
Q (
‘00
0)
Year
107.0
158.3 159.7
107.2
1.21.2
167
Annual Report 2011Puncak Niaga Holdings Berhad
For Puncak Niaga Holdings Berhad (“PNHB”),
Corporate Social Responsibility (“CSR”)
comprises activities that safeguard the
interests of the environment, communities,
employees, shareholders and other affected
parties as an integral part of the Group’s
strategy for long-term, sustainable value
creation.
We have a policy that specifi cally addresses
various areas, including:
• The environment
To promote and carry out activities
to minimise the risk of pollution and
degradation of our environment.
• Employees
To respect the rights and diversity of our
employees by providing conducive working
conditions and equal opportunities.
• Ethics
To promote high standards of integrity and
professionalism.
• Relationship with consumers, suppliers
and partners
To satisfy consumers’, suppliers’ and
partners’ needs and provide a high quality
of customer service and business practice.
• Community involvement
To support philanthropic and charitable
giving and encourage our employees to
help local communities.
• Engagement with stakeholders
To listen to and engage with local
communities in a responsible and caring
manner.
Saving, protecting and nurturing the diversity
of life on earth while helping to protect our
sources of clean drinking water is fundamental
to our CSR. For this purpose, Syarikat
Bekalan Air Selangor Sdn Bhd (“SYABAS”)
has developed the tagline “Nurturing
Relationships” to represent its commitment to
environmental preservation as a core element
in its CSR efforts. We continue to contribute
to maintain our recognition as a caring
organization towards our community.
COMMUNITY INVESTMENT
As a caring organisation, Puncak Group
contributes to community initiatives each
year. In 2011, Puncak Niaga (M) Sdn Bhd
(“PNSB”) and SYABAS contributed a total
amount of RM2,793,454.00 to various
causes, via sponsorship and community
care. Some of these included the “Turun Ke
Padang” Programme, donations to charitable
organisations, sponsorship of community
events, and of educational programmes and
events organised for the Group’s employees.
River Rescue Brigade
(“Briged Penyelamat Sungai”) (“BPS”)
In 2011, our River Rescue Brigade (“BPS”)
held various events involving educational
and entertainment activities, such as
dramatic and choral performances, poetry
readings, colouring contests, IQ tests, BPS
presentations, jungle trekking, cycling,
gotong-royong to clean the river, and water
related talks and exhibitions to educate the
public and students from primary, secondary
and tertiary levels on water in general and on
the importance of conserving and protecting
our water resources, in particular.
Engagement With Our Community
“Misi Bantuan Bekalan Air Bersih”
to the fl ood victims in Malacca
Annual Report 2011Puncak Niaga Holdings Berhad
168
Engagement With Our Community
These events were:
1. World Water Day 2011 on 22 March 2011 to
26 March 2011 at SYABAS’ Headquarters
and District Offi ces.
1,500 students from the following schools,
polytechnic and universities participated
in the event:-
1. SMK Taman Dato’ Harun,
Jalan Klang Lama
2. SK USJ 2, Subang Jaya
3. SMK Jeram, Kuala Selangor
4. Politeknik Shah Alam
5. SK Bangsar, Kuala Lumpur
6. SJK (T) Jalan Bangsar, Kuala Lumpur
7. SMK Gombak Setia, Gombak
8. SMK Aminuddin Baki, Kuala Lumpur
9. SM Teknik, Kuala Selangor
10. SK Gombak Utara, Gombak
11. SMK Seri Puteri, Cyberjaya
12. SMK Bandar Tun Razak,
Kuala Lumpur
13. SK Pendidikan Khas, Shah Alam
14. SJK (C) Onn Pong 2, Ampang
15. SK Taman Tun Dr. Ismail 1,
Kuala Lumpur
16. SMK Raja Lumu, Klang
17. SK Seksyen 13, Shah Alam
18. Politeknik Shah Alam
19. UiTM, Shah Alam
20. UiTM, Melaka
21. Universiti Malaya
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
2. World Water Day 2011 celebration on
2 April 2011 launched by the Selangor
State Government and Lembaga Urus
Air Selangor at Dataran Kemerdekaan,
Shah Alam.
BPS facilitated activities such as quiz,
exhibitions and membership drive at
the event.
3. Launching of the 25th BPS Club
Programme with the Deputy Prime
Minister’s wife, YAB Puan Sri Noorainee
Abdul Rahman on 24 June 2011 at Sungai
(“Sg”) Langat WTP with the theme
“1 Sungai 1 Tanggungjawab 1 Kita”.
300 students from the following schools
participated in the event:-
1. SK Cheras Jaya
2. SJK (C) Sungai Chua
3. SJK (T) Ampang
4. SMK Tinggi Kajang
5. SMK Abdul Jalil
6. SMJK (C) Yu Hua
7. SK Lembah Jaya, Ampang
Note:
SJK (T) denotes Sekolah Jenis Kebangsaan Tamil
SJK (C) denotes Sekolah Jenis Kebangsaan Cina
SK denotes Sekolah Kebangsaan
SMK denotes Sekolah Menengah Kebangsaan
SMJK (C) denotes Sekolah Menengah Jenis
Kebangsaan Cina
World Water Day 2011
World Water Day 2011
169
Annual Report 2011Puncak Niaga Holdings Berhad
4. The 2011 BPS Membership Recruitment
Drive.
In an effort to increase students’
knowledge of conservation and protection
of the environment especially river water
which is a source of drinking water, BPS
conducted the 2011 BPS Membership
Recruitment Drive by setting up a BPS
Club as a co-curriculum club at the
following schools:-
1. SK Batu Belah, Klang on 14 May 2011
(fi rst school to set up a BPS Club)
2. SJK (C) Sungai Chua, Kajang
on 4 October 2011.
3. SK Cheras Jaya on 7 October 2011.
4. SK Bangsar on 12 October 2011.
5. SMK Tinggi Kajang on 13 October 2011.
6. SK St Mary on 2 November 2011.
7. SK Gombak Utara on 3 November 2011.
8. SMK Darul Ehsan on 9 November 2011.
9. SK Seri Tiram, Kuala Selangor
on 17 November 2011.
10. SK Kajang on 18 November 2011.
Note:
SJK (C) denotes Sekolah Jenis Kebangsaan Cina
SK denotes Sekolah Kebangsaan
SMK denotes Sekolah Menengah Kebangsaan
BPS Club’s activities are conducted in
these schools every week for two hours
per week. The activities include drawing
and colouring competitions and essay
writing.
5. 2011 BPS Exploration Programme.
The 2011 BPS Exploration Programme was
offi cially launched by the Deputy Prime
Minister’s wife, YAB Puan Sri Noorainee
Abdul Rahman during the 25th BPS Club
Programme held at Sg Langat WTP on
24 June 2011.
The second 2011 BPS Exploration
Programme was held on 30 July 2011
together with 36 BPS Club members and
four teachers from Sekolah Kebangsaan
Batu Belah, Klang. The BPS Exploration
Programme exposed the students to the
in-depth processes for water treatment
conducted by PNSB. Students interacted
with organisers via questions and answers
on the water treatment processes during
the programme.
6. Educational Outreach Programme
(“Program Pelestarian Pendidikan”) (“3P”).
We organised monthly 3P programmes,
conducted in collaboration with the BPS
Club, to help educating children in primary,
secondary and tertiary schools about the
importance of preserving rivers and the
environment. A membership drive for the
BPS Club was also conducted during the
3P programmes. Many schools within the
area of our operations have benefi ted from
this programme. The participating schools
for the 3P programmes in 2011 were as
follows:-
1. SK Selayang Baru (1), Gombak
on 29 June 2011.
2. SK Bukit Bangkong (A), Sepang
on 30 June 2011.
3. SJK (T) Ladang Glenmarie,
Shah Alam on 18 July 2011.
4. SK Batu Belah, Klang on 26 July 2011
5. SK Kajang, Hulu Langat
on 28 July 2011.
6. SK Olak Lempit, Kuala Langat
on 13 October 2011.
Note:
SJK (T) denotes Sekolah Jenis Kebangsaan Tamil
SK denotes Sekolah Kebangsaan
Engagement With Our Community
We organised monthly 3P programmes, conducted in collaboration with the BPS Club, to help educating children in primary, secondary and tertiary schools about the importance of preserving rivers and the environment.
Annual Report 2011Puncak Niaga Holdings Berhad
170
Engagement With Our Community
7. Public Awareness Programme.
In 2011, BPS also facilitated activities such
as drawing and colouring competitions,
exhibitions and membership drive for the
public at the following venue:-
1. Tesco, Puchong on 30 April 2011.
2. Tesco, Shah Alam on 29 October 2011.
3. Pangsapuri Kenari Court,
Pandan Indah on 12 November 2011.
4. Pangsapuri Laksamana,
Batu Caves on 10 December 2011.
5. Pangsapuri Bustan Shamelin,
Cheras on 17 December 2011.
8. Exhibitions.
In conjunction with the offi cial visit by
the Deputy Prime Minister, YAB Tan Sri
Muhyiddin Hj Mohd Yassin, to Sekolah
Kebangsaan Sijangkang, Kuala Langat
on 29 March 2011, BPS took part in an
exhibition designed to raise awareness
of the need to preserve and conserve our
water resources.
In conjunction with the “Karnival Sayangi
Selangor” organised by Barisan Nasional
Selangor at I-City Shah Alam, from
28 December 2011 to 31 December 2011
to promote the spirit of 1Malaysia amongst
the people of Selangor, BPS also took
part in an exhibition to raise awareness
of issues relating to water resources and
conducted a BPS membership drive.
9. Program Jalinan Mesra BPS 2011.
For “Program Jalinan Mesra BPS 2011”,
BPS held Majlis Berbuka Puasa during
the month of Ramadhan with offi cers
from the Ministry of Education (“MOE”) at
Putrajaya International on 5 August 2011,
with offi cers from the Selangor Education
Department at Shah Alam Convention
Centre on 12 August 2011 and with
offi cers from the Wilayah Persekutuan
Education Department at Quality Hotel,
Kuala Lumpur on 18 August 2011. The
Programme aims to strengthen the
relationship between the Company and
MOE and the Education Departments,
and to show our appreciation and to thank
them for approving our BPS programmes.
10. Visits to Dams, PNSB’s WTPs, SYABAS’
Auditorium, Operation Command Centre
and PUSPEL.
School Venue Date
Kolej Empangan 16 March
Komuniti Klang Gates, 2011
Temerloh Hulu Klang
Sekolah SSP2 WTP 30 July
Kebangsaan & Batang 2011
Batu Belah, Berjuntai
Klang Intake
Faculty of SSP2 29
Architecture, WTP November
Universiti 2011
Putra
Malaysia
Chin Hock SSP2 8
Methodist WTP December
Sunday 2011
School,
Perak
Public Awareness Programme
at Tesco Shah Alam
171
Annual Report 2011Puncak Niaga Holdings Berhad
As at December 2011, there were 4,630 BPS
club members, comprising students from
218 primary/secondary/tertiary schools in
Selangor and the Federal Territories of Kuala
Lumpur and Putrajaya, an increase of 426
students on the 2010 fi gure.
TABUNG BUDI
Tabung Budi was founded on 24 August 2010
by SYABAS’ and PNSB’s staff. The “Program
Bantuan Bekalan Air Tabung Budi” was
launched by PEKA at the Headquarters of
SYABAS, Jalan Pantai Bahru, Kuala Lumpur
on 22 October 2010. This programme as
inspired by YBhg Tan Sri Rozali Ismail, our
Executive Chairman, focuses on helping the
poor, homeless, single parents, disabled
and those in need. Contributions received
from PEKA members, employees of SYABAS/
PNSB, individuals and corporate bodies
are used to help these people. As at end
December 2011, a total of RM1,721,771.41
had been used to fi nance the extension and
installation of water pipes, repair leaks and pay
outstanding water bills. As of December 2011,
a total of 187 families had benefi ted from the
“Program Bantuan Bekalan Air Tabung Budi”.
The Tabung Budi team has introduced “Majlis
Turun Padang Tabung Budi” whereby a
presentation ceremony is held at recipients’
residence. The event is usually headed by
the PEKA President together with SYABAS’
management representatives accompanied
by contributors. During this event, which
happens on a weekly basis, water meters are
re-installed at the recipients’ residences.
In 2011, the Tabung Budi team held several
auspicious events namely, ”Majlis Pemimpin
Bersama Rakyat 1Malaysia” held on
29 March 2011 at Sijangkang, Selangor
whereby the Deputy Prime Minister, YAB Tan
Sri Muhyiddin Yassin, delivered Tabung Budi
water supplies to eight recipients. Other events
included ”Program Khas Ihsan Ramadhan
Tabung Budi” which was held on 26 August
2011 at the Fishermen’s Village Teluk Gong,
Klang and ”Program Kayuhan Amal Tabung
Budi Satu SYABAS” on 24 September 2011
at Kuala Selangor in conjunction with World
Heart Day and Kuala Selangor Independence
Month.
OTHER CORPORATE
RESPONSIBILITY EVENTS
1. Sponsorship and Donations 2011
We receive hundreds of requests for
contributions and initiatives every year.
While we review and respond to all external
requests for sponsorship, the emphasis of
our sponsorship is on creating or pursuing
activities that provide the most effective
contribution to, and are best aligned with,
our business objectives. We follow a set of
guidelines to help us determine where to
best place our resources:
• Events that enhance relations between
us and the government
• Events that strengthen our brand and
reputation
• Events that promote a greater
awareness, understanding and
appreciation of our services
• Events that augment educational
standards, especially to the benefi t 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
• Events or activities that enable us to
connect to consumer groups
Engagement With Our Community
Tabung Budi Programmes
extended to the needy
Annual Report 2011Puncak Niaga Holdings Berhad
172
Engagement With Our Community
• Events or activities that leverage
opportunities associated with the
sponsorship
• Events or activities by individuals
or organisations that are able to
demonstrate effective community
support and involvement
• Events or activities that offer value
propositions across all segments of
society
• Events or activities that are able
to account effectively for how the
investment is to be spent and the
outcome of the event /activities
The communities that benefi ted from
our 2011 sponsorship and donation drive
included:-
1. Federation of Malaysian Consumers
Associations (FOMCA)
on 18 January 2011
2. Persatuan Bekas Polis Malaysia
on 11 February 2011
3. Malaysian Environmental NGO
(MENGO) on 5 April 2011
4. Majlis Belia Hindu Malaysia
on 13 April 2011
5. Pejabat Pelajaran Bangsar Dan Pudu
on 7 June 2011
6. Sekolah Kebangsaan Kajang
on 7 June 2011
7. Kawasan Rukun Tetangga, Taman
Pantai Sepang Putra on 8 June 2011
8. Pengakap Malaysia Daerah Hulu
Selangor on 14 June 2011
9. Menara Kuala Lumpur on 6 July 2011
10. Pusat Latihan Polis Kuala Lumpur
on 6 July 2011
11. Breast Cancer Welfare Association
Malaysia on 21 July 2011
12. Majlis Sukan India Selangor (SISC)
on 4 August 2011
13. Pusat Khidmat Ahli Parlimen Hulu
Selangor on 19 October 2011
2. Social Responsibilities for 2011
(1) On 22 March 2011, in conjunction with
the World Water Day 2011 celebration,
we organised a programme
simultaneously at SYABAS’
Headquarters, at the District Offi ces in
Selangor and the Federal Territories
of Kuala Lumpur and at PNSB’s WTPs.
(2) As of December 2011, a total of
187 families had benefi ted from
the Program Bantuan Bekalan Air
Tabung Budi. Auspicious events were
organised by the Tabung Budi Team as
elaborated above under the headline
“Tabung Budi”.
(3) We organised ‘Gotong-Royong’
activities with the following parties in
2011:-
(a) On 22 January 2011, with
Kementerian Wilayah Persekutuan
dan Kesejahteraan Bandar at
Bukit Bintang, Kuala Lumpur.
(b) On 22 January 2011, with MBPJ
and Residents of Seksyen 5,
Petaling Jaya in conjunction with
‘Program Mesra Alam’.
(c) On 29 January 2011, with orphans
at Rumah Anak-anak Yatim Pure
Life Society, Puchong.
(d) On 12 March 2011, with JKKP at
Meru, Klang.
(e) On 13 March 2011, with KRT Jalan
Reko at Jalan Reko, Kajang.
(f) On 13 March 2011, with residents
of Apartment Teratai, Hulu
Selangor.
(g) On 19 March 2011, with residents
of Seksyen 6, Wangsa Maju.
(h) On 8 May 2011, with residents of
Kampung Melayu Ampang, Zon 9.
(i) On 4 October 2011, with
Businessman Association at
Rawang.
(j) On 12 November 2011, with Bukit
Bintang Central Committee.
Breast Cancer Awareness Talk
at Tropicana Medical Centre
Biro Hawa’s visit to
Pusat Perlindungan Wanita
Baitul Ehsan
173
Annual Report 2011Puncak Niaga Holdings Berhad
(4) On 2 February 2011, we launched a
‘Misi Bantuan Bekalan Air Bersih’ at
SYABAS’ Headquarters and together
with Rejimen Pakar Pengendalian
Air Ke-60 RAJD, we reached out by
supplying clean potable water to the
fl ood victims in Johor.
(5) On 8 February 2011, we organised a
presentation of a donation to Palm
Grove’s Resident Association, Klang.
(6) On 8 February 2011, we launched a
second ‘Misi Bantuan Bekalan Air
Bersih’ at SYABAS’ Operation and
Maintenance Offi ce, Sg Besi, Kuala
Lumpur to supply clean potable water
to the fl ood victims in Johor.
(7) We organised ‘Gotong-Royong’
activities in conjunction with our
‘Program Tanggungjawab Social
Korporat Wilayah Selangor’ as
follows:-
(a) At Surau As-Sakinah, Kuala Kubu
Bharu on 12 February 2011.
(b) At Tanah Perkuburan Islam
Bukit Lagong, Selayang on
28 February 2011.
(c) At Surau Imam Jalal, Kampung
Sungai Gulang-gulang on
9 April 2011.
(d) At Rumah Amal Chesire, Selayang
on 23 April 2011.
(e) At Rumah PPRT Batu 11,
Kuala Langat on 30 April 2011.
(f) At Tanah Perkuburan Kampung
Sg Apong and Kampung Teluk
Rhu on 20 May 2011.
(g) At the residence of Tabung Budi’s
candidate, Encik Kamarulzaman
Bin Ahmad on 31 May 2011.
(8) We participated in the blood donation
programmes during the year.
(9) On 26 February 2011, we participated
in the launching ceremony of
‘1Malaysia Youth Entrepreneurs
Club’ held at the Memorial Tunku
Abdul Rahman.
(10) On 1 March 2011, we launched
a ‘Misi Bantuan Bekalan Air
Bersih’ at SYABAS’ Operation and
Maintenance Offi ce, Sg Besi, Kuala
Lumpur to supply clean potable
water to the fl ood victims in Malacca.
(11) On 23 April 2011, in conjunction with
Earth Day 2011, we held senamrobik
activities at SYABAS’ District Offi ces.
(12) On 23 April 2011, we organised a
“Program Mengecat” at Rumah
Pam Bukit Jugra with the residents
of Kampung Permatang Pasir, Bukit
Jugra.
(13) On 28 May 2011, PEKA organised
a walkathon, ‘Walk For Your Heart
Peka 2011’ at Wisma Rozali, Shah
Alam.
(14) On 31 July 2011, we launched a
‘Misi Bantuan Bekalan Air Bersih’
at SYABAS’ Headquarters to supply
clean potable water to the fl ood
victims in Port Dickson.
(15) In conjunction with the month of
Ramadhan, on 5 August 2011,
PEKA organised a charity
programme for Rumah
Amal Anak Yatim Yayasan
Pembangunan Insan Nasional,
Kuala Langat.
(16) On 9 August 2011, we participated
in a ‘Gotong-Royong’ in conjunction
with ‘Program Berbuka Puasa’ with
DYMM Sultan Selangor at Masjid
DiRaja Alauddin Kampung Bandar.
Engagement With Our Community
Educational Outreach Programme
at Sekolah Jenis Kebangsaan
(Tamil) Ladang Glenmarie,
Shah Alam
Water Facts
A small drip of water
can add up to 25 gallons
per day
Annual Report 2011Puncak Niaga Holdings Berhad
174
Engagement With Our Community
(17) In conjunction with the month of
Ramadhan:-
(a) On 16 August 2011 and
23 August 2011, we organised
‘Program Jejak Fakir’ at 8 and
7 locations in Petaling and
Gombak Districts, respectively.
(b) We organised ‘Program
Memasak Bubur Lambuk Dan
Penyerahan Bubur Lambuk’
and donations contributions.
(c) On 23 August 2011 and
25 August 2011, we organised
‘Program Sumbangan Ihya
Ramadhan’ at Wilayah Kuala
Langat and Wilayah Kuala
Selangor, respectively giving
donations to the poor.
(18) On 24 September 2011, we organised
‘Program Kayuhan Amal Satu
SYABAS Tabung Budi’ in conjunction
with ‘Bulan Kemerdekaan & Hari
Jantung Sedunia 2011’.
(19) On 8 October 2011, we participated
in ‘Program Nurani Rakyat Sayangi
Selangor Bersama the Prime
Minister YAB Datuk Seri Mohd Najib
Tun Haji Abdul Razak’.
(20) On 29 November 2011, we
participated in the ‘Majlis
Pelancaran dan Persiapan Misi
Bantuan Banjir’ organised by
Rejimen Pakar Pengendalian Air
ke-60 RAJD (AW).
(21) On 3 December 2011, together with
Majlis Perbandaran Kajang, we
contributed our workforce to clean
up Kajang Town which was affected
by a fl ash fl ood.
(22) On 12 December 2011, we
participated in the Programme,
Green EXPO 2011 which was held
in Tunku Abdul Rahman College,
Setapak.
(23) SYABAS hosted visits by various
agencies, both local and overseas,
at SYABAS’ Headquarters and
at PUSPEL Contact Centre, as
detailed in the “Delivering Service
Excellence” section on page 114 of
this Annual Report.
(24) PNSB also hosted visits by various
agencies, both local and overseas
at PNSB’s Headquarters, dams and
WTPs, as follows:-
Date Visitors
5 April Persatuan
2011 Pekilang-pekilang
Malaysia
25 April TYT Mohamed
2011 Saheb Al-Daragi,
Menteri Perumahan
dan Pembinaan Iraq
18 May 2011 Persatuan Suri Dan
Anggota Wanita
Perkhidmatan Awam
(PUSPANITA)
19 May 2011 JKKK Mukim Bagan
Nakhoda Oman
11 July 2011 Top Management of
Kumpulan Wang
Simpanan Pekerja
(KWSP)
21 Delegation from the
November 2nd IWA Development
2011 Congress And
Exhibition 2011
(25) We celebrated the major festivals in
Malaysia with the less fortunate by
giving them donations.
Program Kayuhan Amal Satu
SYABAS Tabung Budi
175
Annual Report 2011Puncak Niaga Holdings Berhad
12 JAN 2011
SYABAS’ Ramah Mesra
Programme with the
President of Federation
of Malaysian Consumers
Associations (FOMCA), YBhg
Datuk Marimuthu Nadason
24 JAN 2011
Consumer Awareness
Programme on Water
Quality Kuala Lumpur
2 FEB 2011
Launched a mission of
supplying clean water
to fl ood victims in Johor
together with Rejimen
Pakar Pengendalian
Air Ke-60 RAJD (AW)
22 FEB 2011
Signing Ceremony of
the Memorandum of
Understanding (MOU)
with NIOSH for Safety
Card Training Modules
SYABAS-NIOSH
4 MAY 2011
Providing assistance to
fl ood victims in Sg Serai,
Hulu Langat
18 MAY 2011
Technical Visit by
Persatuan Suri dan Anggota
Wanita Perkhidmatan Awam
Malaysia (PUSPANITA)
1-3 JUNE 2011
POG’s participation
at Oil and Gas Asia
Pacifi c Conference 2011
(“OGA 2011”)
24 JUNE 2011
Launching of 25th
BPS Club Programme
27 JUNE 2011
PNHB’s 14th Annual
General Meeting held at
Concorde Hotel Shah Alam
Corporate Events
22 FEB 2011
Technical Visit by
Sri Lanka Water Board
15-17 MAR 2011
PNSB’s & SYABAS’
Exhibition in conjunction
with the Opening
Ceremony of the 2nd Asia
Pacifi c Regional Water
Conference and Exhibition
(APRWC 2011)
22 MAR 2011
Launching Ceremony of
PNSB’s & SYABAS’ World
Water Day 2011 celebration
29 MAR 2011
Tabung Budi event on
“Majlis Pepimpin Bersama
Rakyat 1Malaysia” at
Sijangkang offi ciated by
YAB Tan Sri Muhyiddin Hj
Mohd Yassin, Timbalan
Perdana Menteri Malaysia
7 APR 2011
Technical Visit by Public
Utility Board, Singapore
23 APR 2011
Perdana SYABAS’ aerobics
session in conjunction with
Hari Bumi 2011 – ‘1 Bumi,
1 SYABAS, 1 Semangat’
25 APR 2011
Offi cial Visit by TYT
Mohamed Saheb Al-Daragi,
Housing and Construction
Minister of Iraq
28 JUNE 2011
PNHB Group’s Executive
Chairman, YBhg Tan Sri
Rozali Ismail was awarded
the “Technology CEO
of the Year – Global” Award
4 JUL 2011
PNHB Group’s
Executive Chairman,
YBhg Tan Sri Rozali Ismail
received the title “Brigedier
Jeneral (Kehormat)
Pakar Pengendalian
Air-Ke-60 RAJD (AW)”
11 JUL 2011
Technical Visit by
Kumpulan Wang Simpanan
Pekerja (KWSP)22 FEB
2 FEB
18 MAY
24 JUNE
4 JUL
28 JUNE
27 JUNE
28 JUL 2011
PNHB Group’s Executive
Chairman, YBhg Tan Sri
Rozali Ismail was awarded
the “Masterclass Leader”
Award at the International
Standard Quality (“ISQ”)
Award 2011
23 AUG 2011
Programme “Sebening
Kasih Aidilfi tri” together
with the orphanage from
Yatim Tengku Ampuan
Rahimah (RACTAR), Klang
14 SEP 2011
PNHB was awarded
the “Industry Excellence
Award – Water Sector” at
the launching ceremony of
5th Edition Malaysia 1000
24 SEP 2011
Programme “Kayuhan Amal
Satu SYABAS Tabung Budi”
in conjunction with Malaysia
Independent month &
World Heart Day 2011
4 OCT 2011
PNHB received a
Commendation for
Integrated Reporting
at the ACCA Malaysia
Sustainability Reporting
Awards (MaSRA) 2011
Annual Report 2011Puncak Niaga Holdings Berhad
176
29 NOV 2011
‘Majlis Pelancaran
dan Persiapan
Misi Bantuan Banjir’
organised by
Rejimen Pakar
Pengendalian Air
ke-60 RAJD (AW)
29 NOV 2011
Study Visit by
Faculty of Architecture,
Universiti Putra Malaysia
12-14 DEC 2011
SYABAS’ exhibition
in conjunction with
“Green EXPO 2011” at
Kolej Tunku Abdul Rahman
28-31 DEC 2011
SYABAS’ exhibition
in conjunction with
“Karnival Sayangi Selangor”
8 OCT 2011
Programme “Nurani
Rakyat Sayangi Selangor”
together with
YAB Datuk Seri Mohd Najib
Tun Haji Abdul Razak,
the Prime Minister
13 OCT 2011
PNSB was awarded the
“11th Malaysia HR Awards
2011 Employer of
Choice – Silver Award”
20 OCT 2011
Tabung Budi programme for
the needy in Kuala Selangor
2 NOV 2011
Technical Visit by P’ohang
Municipal Assembly, Korea
21 NOV 2011
Technical Visit by the
delegation from
2nd IWA Development
Congress & Exhibition
Corporate Events
14 JUL 2011
PNHB’s visit to the
GHKL’s Radiotherapy
and Oncology Wards
19 JUL 2011
Technical Visit by
Lembaga Zakat Selangor
to SYABAS
20 JUL 2011
PNHB Group’s
Executive Chairman,
YBhg Tan Sri Rozali
Ismail was awarded the
prestigious “Entrepreneur
of the Year 2011” Award
at the Asia Pacifi c
Entrepreneurship
Awards 2011
22 JUL 2011
PNSB received fi ve gold
awards and SYABAS
received ten gold awards
at MSOSH Award Ceremony
held at One World Hotel
14 JUL
8 OCT
29 NOV
14 SEP
20 OCT
2 NOV
20 JUL
Accountability
178Corporate Disclosure Policy
179Statement On Corporate Governance
193Statement On Internal Control
195Audit Committee Report
201Risk Management Policy & Report
204Investor Relations Policy & Report
206Quality Policy & Report
207Health, Safety And Environmental Policy
208SyAbAS’ Corporate Responsibility Policy
209Statement Of Directors’ ResponsibilityFor Preparation Of Financial Statements
Annual Report 2011Puncak Niaga Holdings Berhad
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Annual Report 2011Puncak Niaga Holdings Berhad
Corporate Disclosure Policy
As a responsible corporate citizen, Puncak Niaga is totally committed to upholding the highest standards of transparency, accountability and integrity in the disclosure of all material information on the Company to the investing public in an accurate, clear, complete and timely manner in accordance with the corporate disclosure requirements as set out in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).
The primary objectives of Puncak Niaga’s Corporate Disclosure Policy are:-
1. To promote and maintain market integrity and investor confidence.
2. To provide equal access to the Company’s material information in an accurate, clear, timely and complete manner and to avoid selective disclosure to the investing public.
3. To exercise due diligence such that information disseminated to the investing public will be as far as possible accurate, clear, timely and complete.
4. To put in place an efficient management of information procedure that promotes accountability for the dissemination of material information to the investing public.
5. To build good investor relations with the investing public based on the principles of trust, honesty, openness, transparency and sound understanding of the Company.
To achieve its objectives, the Company will endeavour to undertake the following:-
1. ESTAbLISH POLICIES AND PROCEDURES
• Ensure written policies and procedures of the Company (“Puncak Niaga’s Corporate Disclosure Policy and Procedure”) that encompass the Corporate Disclosure Policy and other requirements relating to corporate disclosure as set out in the Main Market Listing Requirements of Bursa Securities.
• Appoint a senior officer of the Company to oversee and coordinate disclosures to ensure the Company complies with the Main Market Listing Requirements of Bursa Securities.
• Ensure that only designated persons are the Company’s spokespersons.
• Ensure due compliance with Puncak Niaga’s Corporate Disclosure Policy And Procedure.
2. EXERCISE DUE DILIGENCE AND PREPARATION
• Ensure that the persons responsible for disseminating material information to the investing public, exercise due diligence in ensuring that information to be released is accurate, clear, timely and complete.
• Ensure that due care is observed when briefing and responding to analysts, institutional investors, the media and the investing public.
3. USE OF INFORMATION TECHNOLOGy
• Take advantage of current information technology to disseminate information to the investing public.
Our commitment to the above Policy is driven by the Board of Directors of the PNHB Group and implemented by the Management.
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Statement On Corporate Governance
COMPLIANCE STATEMENT
The Board of Puncak Niaga is pleased to state that Puncak Niaga is in compliance with the Best Practices in Corporate Governance as set out in Part 2 of the Malaysian Code on Corporate Governance (Revised 2007) (“Code”) and has subscribed and remain firmly committed to the principles of good corporate governance as set out in Part 1 of the Code to strive for highest standards of corporate governance within the Group. The Group believes that the principles of good corporate governance are integral to Puncak Niaga’s growth and ability to promote the confidence of its stakeholders and enhancing long-term shareholders value through improving corporate performance and accountability of Puncak Niaga whilst taking into account the interest of all stakeholders. The Board is therefore committed to ensure that the Principles and Best Practices of Corporate Governance are applied throughout Puncak Niaga Group in the best interests of all stakeholders.
Since 2003, the Board has adopted a Board Charter, which provides guidance on how business is to be conducted in line with international best practices and standards of good corporate governance. In 2004, the Board has also adopted a Corporate Disclosure Policy and Procedure, which was formulated in line with the ‘Guide On Best Practices In Corporate Disclosure’ issued by the Task Force on Corporate Disclosure Best Practices established by Bursa Malaysia Securities Berhad (“Bursa Securities”). From time to time, the Group continues to monitor, refine and revamp its financial objectives, goals, policies and procedures, controls and risk management framework to meet the evolving corporate environment.
The 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.
bOARD OF DIRECTORS
(a) THE bOARD The Group is helmed by an effective and experienced
Board, comprising individuals of caliber and credibility with necessary skills and experience from a diverse blend of professional backgrounds. With the adoption of the Board Charter, the Board members, whether acting in their individual capacities or as a whole, share the common objective of ensuring that the Vision and Mission of the Company as set out in this Annual Report, are achieved and the Group meets its responsibilities to its stakeholders.
Each Board member is fully aware of the fiduciary duties and responsibilities and the various legislations and regulations affecting his conduct as Director of the Company, and as such, takes full responsibility for the performance of the Company and of the Group.
The role of the Executive Chairman is separate from that of the Managing Director. The Board Charter sets out the specific responsibilities to be discharged by the Board members collectively and the individual roles expected from the Executive Chairman, Managing Director, Executive Directors and Non-Executive Directors.
YBhg Tan Sri Dato’ Seri Dr Ting Chew Peh is the Company’s Senior Independent Non-Executive Director, to whom shareholders’ concerns may be conveyed. His profile is set out on page 059 of this Annual Report.
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Statement On Corporate Governance
(b) bOARD COMPOSITION
For compliances with Paragraph 15.02 of the Main Market Listing Requirements of Bursa Securities and the Code, the Company, through the Nomination Committee of the Company, annually reviewed the required mix of skills, experience and competencies and other qualities of the Board of the Company.
The Board of Puncak Niaga comprises ten (10) Members, of whom four (4) are Executive Directors and six (6) are Non-Executive Directors. The current composition of the Board of Puncak Niaga is in compliance with Paragraph 15.02 of the Main Market Listing Requirements of Bursa Securities with one-third of the Board being independent and of which the Company feels is a balanced Board and appropriate to constitute an effective Board.
The three (3) Independent Non-Executive Directors of the Company fulfil the criteria of independence as set out in the definition of “Independent Director” under Paragraph 1.01 (Definitions) of the Main Market Listing Requirements of Bursa Securities.
The Independent Non-Executive Directors are persons of caliber and credibility and exercise independent and sound judgement and act in the best interests of the Company and its shareholders, in particular the minority shareholders since they do not engage in the day-to-day management of the Company and do not participate in any business dealings and are not involved in any other relationship with the Company to ensure that they discharge their duties and responsibilities effectively, void of conflict of interests situations. The Independent Non-Executive Directors provide the relevant checks and balances and ensuring that high standards of corporate governance are sustained.
The composition of the Board brings to the Group a diverse wealth of skills, knowledge as well as a balanced mix of experience and expertise to effectively discharge the Board’s responsibilities for competent stewardship of the Group. Together, the Board spearheads the Group’s growth and future direction.
The profile of the Board Members are set out on pages 052 to 062 of this Annual Report.
None of the Directors has any convictions for any offences within the past ten (10) years (other than traffic offences, if any) or has any conflict of interests with the Company or has any family relationship with any Director and/or major shareholder of the Company.
(c) bOARD MEETINGS
The Board met five (5) times in 2011, all at the Board Room on 12th Floor, Wisma Rozali, No. 4, Persiaran Sukan, Seksyen 13, 40100 Shah Alam, Selangor Darul Ehsan, details of which are as follows:-
Day Date Time Thursday 24 February 2011 12.00 noon Tuesday 26 April 2011 12.15 p.m. Tuesday 31 May 2011 12.10 p.m. Thursday 25 August 2011 11.30 a.m. Wednesday 23 November 2011 12.40 p.m.
The details of the respective Director’s attendance at the above Board Meetings are as follows:-
No. of Name Meetings of Director Designation attended %
Tan Sri Executive 5 out of 5 100 Rozali Ismail Chairman
Dato’ Hashim Managing 5 out of 5 100 Mahfar Director
Dato’ Ruslan Non-Independent 5 out of 5 100 Hassan Non-Executive Director
Dato’ Ir Non-Independent 5 out of 5 100 Lee Miang Koi Non-Executive Director
Tan Sri Dato’ Independent 5 out of 5 100 Hari Narayanan Non-Executive Govindasamy Director
Tan Sri Dato’ Independent 5 out of 5 100 Seri Dr Non-Executive Ting Chew Peh Director
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Statement On Corporate Governance
No. of Name Meetings of Director Designation attended %
Dato’ Syed Chief Operating 5 out of 5 100 Danial Syed Officer Ariffin
Tengku Non-Independent 5 out of 5 100 Dato’ Rahimah Non-Executive Almarhum Director Sultan Mahmud
Tan Sri Dato’ Independent 5 out of 5 100 Ahmad Fuzi Non-Executive Haji Abdul Razak Director
Ng Wah Tar Executive Director 5 out of 5 100 Corporate Finance
Board meetings are scheduled to be held regularly, at least five times in a financial year with sufficient notice for all Board Meetings of issues to be discussed. The dates for Board Meetings for the ensuing financial year are scheduled well in advance and the Board has formal schedule of matters specifically reserved for the Board’s discussion and/or approval. All issues discussed and all decisions made during the Board Meetings will be properly recorded by the Company Secretaries and reviewed by the Board for completeness and accuracy.
Additional Board Meetings may be called as and when significant issues arise and which require the Board’s decision.
In between Board Meetings, approvals on matters requiring the sanction of the Board are sought by way of circular resolutions enclosing all relevant information to enable the Board to make informed decisions. All circular resolutions approved by the Board will be tabled for notation and confirmation at the next Board Meeting.
(d) DIRECTORS’ CODE OF ETHICS
The Directors continue to observe a code of ethics based on the code of conduct expected of Directors of companies as set out in the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia.
(e) SUPPLy OF INFORMATION AND ACCESS TO ADVICE
The Directors are familiar and aware of their duties and responsibilities as well as the implementation of good corporate governance and compliance practices in the Group.
Each Board member is supplied with full, adequate, unrestricted and quality information on a timely basis to enable them to effectively discharge their duties and responsibilities. Except under exceptional circumstances, Board members are given at least seven days’ notice before any Board Meeting is held and the comprehensive Board papers are circulated to the Board members at least two (2) working days prior to the date of the Meeting to facilitate the Directors to peruse the Board papers and to review the issues to be deliberated at the Board Meeting well ahead of the meeting date. Where necessary, the Company’s personnel will be called upon by the Board during the Board Meetings to present and to clarify any Board papers presented.
All Board members are expected to participate actively in Board deliberations and to bring the benefit of their particular knowledge, skills and abilities to the Board. Where a potential conflict with his duties or of interests as Director arises, it is mandatory for the Director concerned to declare the fact and nature of his interests and extent of the conflict at a Board Meeting and abstain from the deliberation and decision-making process. In the event the proposal requires shareholders’ approval, the interested Board members will abstain from voting on the resolution at the General Meeting and will ensure that persons 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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Statement On Corporate Governance
The Board is regularly updated and kept informed by the Company Secretaries and the Management of the requirements such as restriction in dealing with the securities of the Company and updates as issued by the various regulatory authorities including the latest developments in the legislations and regulatory framework affecting the Group. The Board has unrestricted and constant access to and interaction with the Senior Management of the Company. Each Board member also has full access to the advice and services of the full time Company Secretaries.
Where necessary, the Directors may, whether collectively as a Board or in their individual capacities, seek external and independent professional advice from experts on any matter in furtherance of their duties as they may deem necessary and appropriate at the Company’s expense.
(f) COMPANy SECRETARIES The Company Secretaries ensure that Board procedures
are both followed and reviewed regularly and have the responsibilities in law to ensure that each Board member is made aware of and provided with guidance as to their duties, responsibilities and powers. They are also responsible for ensuring the Group’s compliance with the relevant statutory and regulatory requirements.
(g) APPOINTMENT OF DIRECTORS
All Board appointments and removals (if any) thereof are approved by the Board upon the recommendation of the Nomination Committee. The Board, through the Nomination Committee, has established a formal and transparent procedure in relation to the assessment of candidates for Board appointments as well as for assessing the effectiveness of the Board as a whole, the Committees of the Board and the contributions of each individual Director, including the Independent Non-Executive 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.
(h) EVALUATION OF bOARD EFFECTIVENESS
As in the previous years, the Board has, with the assistance of the Company Secretaries, conducted an annual peer evaluation of the Board’s effectiveness in the following key areas:-
(i) Compliance; (ii) Board Meetings; (iii) Board Functions; (iv) Board Structure; (v) Board Committees; (vi) Board Operations; (vii) Board Chairman’s Roles and Responsibilities; (viii) Financial and Operational Reporting; (ix) Planning and Objectives; (x) Risk Assessment; (xi) New Business Opportunities and Projects; (xii) Human Resources; and (xiii) Directors’ Observations and Additional Comments.
The 2011 performance evaluation of the Board has been structured to ensure a balanced and objective review by the Directors for the above key areas.
Following the evaluation, the Board concluded that the Board as a whole and its committees had performed well, were effective and had all the necessary skills, experience and qualities to lead the Company.
(i) bOARD COMMITTEES
The Board has delegated specific responsibilities to the Board Committees whose functions and authorities are spelt out in their respective terms of reference. The Board Committees will observe the same rules of conduct and procedures as the Board, unless otherwise determined by the Board. A summary of the various Board Committees at PNHB level and their composition are as follows:-
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Annual Report 2011Puncak Niaga Holdings Berhad
Statement On Corporate Governance
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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Statement On Corporate Governance
The Board Committees exercise transparency and full disclosure in their proceedings. Where applicable, issues are reported to the Board with the appropriate recommendations by the Board Committees.
In order to expedite the Board’s decision-making process at the operating companies’ level, an Executive Committee (“EXCO”) was established at Puncak Niaga (M) Sdn Bhd (“PNSB”), Syarikat Bekalan Air Selangor Sdn Bhd (“SYABAS”) and Puncak Oil & Gas Sdn Bhd (“POG”). PNSB’s and POG’s EXCO comprise of Executive Directors and Senior Management whereas SYABAS’ EXCO comprise of only Executive Directors. Both PNSB’s and SYABAS’ EXCO Meetings are scheduled to be held on weekly basis to deliberate on matters requiring the Board’s mandate in between the Board Meetings. POG’s EXCO Meetings are scheduled to be held every fortnight. The Board of Directors of Sino Water Pte Ltd (“Sino Water”), the Company’s 98.65% owned Singapore subsidiary company meets in Malaysia to deliberate on operational matters.
The Board has also established the Limits of Authority (“LOA”) for the Group’s operational management matters with the relevant level of authority accorded to the Management. The LOA is continuously reviewed to ensure adequacy, efficiency and integrity in the Group’s internal control systems and management information systems. The Board provides the leadership necessary to enable the Group’s business objectives to be met, whilst ensuring that the Company’s obligations to its stakeholders are met.
(j) RE-ELECTION OF DIRECTORS
Articles 98 and 99 of the Company’s Articles of Association (“Articles”) provide that one third of the Directors shall retire from office by rotation at each Annual General Meeting and all Directors shall retire from office at least once every three (3) years but, shall be eligible and may offer themselves for re-election.
Upon the recommendation of the Nomination Committee, the following Directors shall retire at the forthcoming Fifteenth Annual General Meeting of the Company and being eligible, had offered themselves for re-election :-
i. YBhg Dato’ Hashim Bin Mahfar, retiring pursuant to Article 98 of the Articles;
ii. YBhg Dato’ Ir Lee Miang Koi, retiring pursuant to Article 98 of the Articles; and
iii. Mr Ng Wah Tar, retiring pursuant to Article 98 of the Articles.
The information on the Directors standing for re-election at the forthcoming Fifteenth Annual General Meeting is contained in the Statement Accompanying the Notice of Annual General Meeting.
DIRECTORS’ REMUNERATION
(a) PROCEDURE, LEVEL AND MAKE UP OF REMUNERATION
The Company has a formal procedure to determine the remuneration of each Board member which are reviewed, from time to time, against market practices. In the case of the Executive Directors, their remuneration are structured so as to link rewards to corporate and individual performance and their remuneration packages comprise a salary, allowances, bonuses and other benefits as normally accorded to similar positions in other comparable companies and sufficiently attractive to retain persons of high calibre. Performance is measured against profits and other targets set from the Company’s annual budget and business plans as well as achievements of targeted returns to shareholders. In the case of the Independent Non-Executive Directors, their remunerations reflect their experience, level of responsibilities and contributions and the time spent attending to the Group’s affairs and they are paid a fixed monthly allowance, leave passage and meeting allowances for each Board and Board Committee meeting that they attend.
The Remuneration Committee is responsible for recommending the remuneration packages of the Directors to the Board. The Board, as a whole, determines the remuneration of the Non-Executive Directors. Individual Directors shall abstain from discussing and voting on their own remuneration at the Board and Remuneration Committee Meetings.
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Annual Report 2011Puncak Niaga Holdings Berhad
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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Statement On Corporate Governance
There is no Directors’ Share Options Scheme in the Company during the financial year ended 31 December 2011.
(d) DIRECTORS’ TRAINING
The Directors keep themselves abreast on the latest regulatory and corporate governance developments, besides enhancing professionalism and knowledge to enable them to discharge their duties effectively.
For the financial year ended 31 December 2011, the Directors have attended training programmes, seminars and conferences organised by the Company and the various training providers covering areas such as :-
• 2nd Asia Pacific Regional Water Conference And Exhibition 2011
• Program Taklimat Khas & Forum ETP & Teraju Bersempena Mesyuarat Agung DPMMS
• Taklimat Media Inisiatif Penjanna Kekayaan Baru & Pembangunan Eko-Sistem Negara Melangkaui 2021
• Acquaterra International Water Week Conference On Integrated Acqua Solution
• Singapore International Water Week Water Convention 2011
• 4th Annual Offshore Convention South East Asia 2011
• 2nd Asia Pacific Regional Water Conference & Exhibition
• Board Development Program 2011 “Corporate Governance Program”
• The Board’s Responsibility For Corporate Culture – Selected Governance Concerns And Tools For Addressing Corporate Culture And Board Performance
• Corporate Frauds – Detection And Prevention • Sustainable Leadership – Standing Apart From Others • “Corporate Social Responsibility – Value-creation that
goes beyond compliance and philanthropic activities” • Islamic Trade & Finance : The Way Ahead • Khazanah Global Lectures • Business Opportunities In Kazakhstan & Empowering
SMEs In Far Eastern Markets & Impact Of Globalisation On SMEs
• Business Opportunities In Halal Industry & Islamic Banking And Finance : Seeking New Markets
• 7th World Islamic Economic Forum • CFO Show Asia 2011 • Corporate Hedging Seminar – Managing Your Risks
In addition, the Executive Chairman and some Directors have also presented papers at seminars and forums on water-related subjects.
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
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Annual Report 2011Puncak Niaga Holdings Berhad
Statement On Corporate Governance
SHAREHOLDERS’ COMMUNICATION AND INVESTOR RELATIONS POLICy
The Board acknowledges the need for the Company’s shareholders and investors to be informed of all material business and corporate developments concerning the Group in a timely manner. In addition to various announcements made during the year, the timely release of the Group’s consolidated financial results on quarterly basis provides the shareholders and investors with an overview of the Group’s financial and operational performances.
The Company maintains regular and effective communication with its shareholders and stakeholders through one-to-one or group dialogues, participation in investor conferences organised by local and foreign institutional houses, attending to shareholders’ and investors’ e-mails and phone calls enquiries, Company General Meetings and other Company events.
The Annual Report of Puncak Niaga which is produced in line with best corporate governance practices also serves as a key channel of communication with shareholders and investors.
Another communication tool to reach shareholders and investors is via our corporate website, www.puncakniaga.com.my with a direct link to SYABAS’ website, www.syabas.com.my, which can be accessed easily and promptly for information on the Group as an ongoing commitment to provide more easily accessible information to the shareholders and investors.
The Company’s Investor Relations Policy & Report is set out on pages 204 to 205 of this Annual Report.
ACCOUNTAbILITy AND AUDIT
(a) FINANCIAL REPORTING
The Board is responsible for the quality and completeness of publicly disclosed financial reports. In presenting the annual financial statements, quarterly reports and the annual reports to the shareholders of the Company, the Board takes appropriate steps to present a clear and balanced assessment of the Group’s position and prospects. This also applies to other price-sensitive public announcements and reports to the regulatory authorities.
The Group’s financial statements and quarterly announcements, prepared using appropriate accounting policies, consistently and supported by reasonable and prudent judgements and estimates, will be reviewed and deliberated by the Audit Committee in the presence of the External Auditors, Internal Auditors of the Company and the Executive Director of Finance Division prior to recommending them for adoption by the Board. The Audit Committee ensures that the information to be disclosed are accurate, adequate and in compliance with the various disclosure requirements imposed by the relevant authorities. The Board discusses and reviews the recommendations proposed by the Audit Committee prior to its adoption. The Board also ensures accurate and timely release of the Group’s quarterly and annual financial results to Bursa Securities.
The Statement of Directors’ Responsibility in respect of the preparation of the Annual Audited Financial Statements of the Group is set out on page 209 of this Annual Report.
(b) RELATIONSHIP WITH EXTERNAL AUDITORS
The Board maintains a transparent and professional relationship with the Group’s External Auditors. The External Auditors attended four out of five Audit Committee meetings of the Company held during the financial year. These quarterly meetings enabled the exchange of views on issues requiring attention.
A formal mechanism has been established by the Audit Committee to ensure there is frank and candid dialogue with the External Auditors. The Audit Committee will meet the External Auditors twice a year (April and November) without the presence of the Executive Directors and Management. This allows the Audit Committee and the External Auditors the exchange of free and honest views and opinions in matters related to External Auditors’ audit and findings.
A report by the Audit Committee together with its Summarised Terms of Reference is set out on pages 195 to 200 of this Annual Report.
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Statement On Corporate Governance
(c) INTERNAL CONTROL
The Board acknowledges its overall responsibility for maintaining a sound system of internal controls, which provides reasonable assurance in ensuring the effectiveness and efficiency of the Group’s operations and to safeguard shareholders’ investment and its assets and interests in compliance with the relevant laws and regulations as well as the internal financial administration procedures and guidelines.
The Group’s Statement on Internal Control is set out on pages 193 to 194 of this Annual Report.
(d) CORPORATE SOCIAL RESPONSIbILITy
Appendix 9C (Part A, Paragraph 29) of the Main Market Listing Requirements of Bursa Securities requires a listed company to provide a description in its annual report of the corporate social responsibility activities and practices undertaken by the listed company and its subsidiaries.
The Group’s Report on Environmental Issues, Social Accountability and Sustainability Report are set out in “Valuing Our People" section on pages 132 to 151 of this Annual Report, in “Engagement With Our Community” section on pages 167 to 174 of this Annual Report and in “Preserving Our Environment” section on pages 152 to 166 of this Annual Report.
OTHER COMPLIANCE INFORMATION
(a) SHARE bUy bACK The Company did not implement any share buy back or
resale or cancel any of the Company’s treasury shares during the financial year ended 31 December 2011. As at 31 December 2011, the total number of the Company’s treasury shares remained at 2,036,800 ordinary shares of RM1.00 each.
(b) OPTIONS, WARRANTS OR CONVERTIbLE SECURITIES
There were no options, warrants or convertible securities exercised during the financial year ended 31 December 2011 as the options and warrants had expired, lapsed and became void and ceased to be exercisable after the expiry date or the exercisable period respectively.
(c) AMERICAN DEPOSITORy RECEIPT (ADR)/GLObAL DEPOSITORy RECEIPT (GDR)
The Company does not sponsor any ADR or GDR
programme.
(d) SANCTIONS AND/OR PENALTIES
The Company and its subsidiaries, Directors and Management have not been imposed with any sanctions and/or penalties by the relevant regulatory bodies for the financial year ended 31 December 2011.
(e) NON-AUDIT FEES
During the financial year ended 31 December 2011, the Group paid the following non-audit fees to the External Auditors:-
(i) Tax advisory and compliance work – RM187,441.00 (ii) Other non-audit related service – RM392,545.00
Non-audit fees payable to the External Auditors, Messrs Ernst & Young relates to the review of the Statement of Internal Control and other professional services including tax compliance, tax planning and advisory services.
(f) VARIATIONS IN RESULTS
There was no material variation in the Audited Financial Statements for the financial year ended 31 December 2011 contained in this Annual Report as compared with the unaudited consolidated results of the Group for the financial year ended 31 December 2011 which was announced to Bursa Securities on 28 February 2012.
(g) PROFIT GUARANTEE
The Company does not provide any profit guarantee to any parties.
(h) RECURRENT RELATED PARTy TRANSACTION
The Company did not enter into any recurrent related party transaction, which requires the shareholders’ mandate during the financial year ended 31 December 2011.
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Statement On Corporate Governance
(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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Statement On Corporate Governance
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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Statement On Corporate Governance
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
The Malaysian Code on Corporate Governance (Revised 2007) requires listed companies to maintain a sound system of internal control to safeguard shareholders’ investments and the Group’s assets. The Main Market Listing Requirements of Bursa Malaysia Securities Berhad requires Directors of listed companies to include a statement in their annual reports on the state of their internal controls.
RESPONSIbILITy
The Boards of the PNHB Group are responsible for maintaining sound systems of internal control and for reviewing their adequacy and integrity so as to safeguard the shareholders’ investments and the Group’s assets. The Boards and Management have implemented a control system designed to identify and manage risks facing the Group in pursuit of its business objectives. This internal control system, by its nature, can only provide reasonable and not absolute assurance against material misstatement or loss.
The Group has in place ongoing processes for identifying, evaluating, monitoring and managing significant risks faced by the Group during the year. The Management is responsible for the identification and evaluation of significant risks applicable to their respective areas of business and to formulate suitable internal controls. This process is reviewed by the Board of PNHB via a specific Board Committee, namely the Compliance, Internal Control and Risk Policy Committee, which dedicates its time at periodic intervals throughout the year for discussion on this matter. RISK MANAGEMENT FRAMEWORK
Risk Management is firmly embedded in the Group’s management system and is every employee’s responsibility. In October 2001, the Board of PNHB formally approved a systematic risk management structure and process for the Group. Since then, the structure and process have been fully implemented by the Management and employees of the PNHB Group. The Group’s risk management framework is explained in detail in the Risk Management Policy & Report set out on pages 201 to 203 of the Annual Report.
INTERNAL CONTROL SySTEM
The key elements of the Group’s internal control system and assurance processes, inter alia, encompass the following:-
• All major decisions require the final approval of the respective Boards/Executive Committees within the Group (PNHB/PNSB/SYABAS/Sino Water Pte Ltd/POG Group) are only made after appropriate in-depth analysis. The respective Boards/Executive Committees receive regular and comprehensive information covering all Divisions/Departments/Districts in the respective companies within the Group.
• All Divisions and Departments of PNSB and POG Group have clearly documented Procedure Manuals and/or Policies whilst SYABAS has Standard Operating Procedures and/or Polices incorporating control procedures and the scopes of responsibilities and authorities. The Procedure Manuals/Standard Operating Procedures/Policies are updated from time to time to incorporate all elements necessitated by changes in the legislation, industry best practices and business dynamics.
• The Internal Audit Department of PNSB independently reviews the control processes implemented by the Management from time to time and periodically reports on its findings and recommendations to the Audit Committee of PNHB. The duties and responsibilities of PNHB’s Audit Committee are detailed in the Terms of Reference of PNHB’s Audit Committee. The Audit Committee, by consideration of both Internal and External Audit Reports, is able to gauge the effectiveness and adequacy of the internal control system, for presentation of its findings to the Board. The Internal Audit Department of PNSB extends a copy of its Final Internal Audit Reports to the Executive Chairman and Managing Director and summarised Status Reports on its activities are regularly submitted to the Management Committee Meetings.
• The Board of SYABAS established an Audit Committee with its own Terms of Reference on 3 August 2007. The Internal Audit Division of SYABAS extends a copy of its Internal Audit Reports to the Executive Chairman and summarised Status Reports on its activities are regularly submitted to the Management of SYABAS.
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Statement On Internal Control
• The Compliance, Internal Control and Risk Policy Committee, which is chaired by YBhg Tan Sri Dato’ Seri Dr Ting Chew Peh, an Independent Non-Executive Director of PNHB was established in October 2001. This Committee closely monitors the Risk Management process within the Group and the extent of compliance with the Statement on Internal Control requirements.
• The Tender and Contracts Committee of PNSB/POG Group and the Tender Committees of SYABAS ensure transparency and competitive pricing in the award of contracts within the Group.
• A detailed budgeting process has been established for PNSB, SYABAS, Sino Water Pte Ltd and POG Group requiring all Divisions/Departments/Districts to prepare their respective budgets annually. These budgets are then reviewed and approved by the respective Boards/Executive Committees prior to actual implementation each year. The monitoring of actual performance versus budget 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, where necessary.
• 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 procedures), have been developed for all Departments of PNSB. With effect from 31 March 2008, all Departments are required to submit a quarterly declaration to the Internal Audit Department as to whether all the key procedures have been complied with.
Guidance for Directors of Public Listed Companies
Since the issuance of the “Statement on Internal Control: Guidance for Directors of Public Listed Companies” (Guidance) in December 2000, the Group has monitored its level of readiness with the Guidance. The Group aims to not just achieve full compliance, but also to improve on the Group’s processes by implementing best business practices in line with international best practice standards. Throughout the year 2011, the Compliance, Internal Control and Risk Policy Committee has closely monitored the Group’s level of readiness with the Guidance.
This Statement on Internal Control has been prepared in accordance with the Guidance and has been approved by the Board of PNHB and reviewed by the external auditors.
For and on behalf of the board of Puncak Niaga Holdings berhad
TAN SRI DATO’ SERI DR TING CHEW PEHChairmanCompliance, Internal Control and Risk Policy Committee
26 APRIL 2012
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Audit Committee Report
The Board of Directors of Puncak Niaga Holdings Berhad (“PNHB”) is pleased to present the report of the Audit Committee for the financial year 2011.
1. MEMbERSHIPS AND MEETINGS
The Audit Committee comprises the following members and details of attendance of each member at the Audit Committee Meetings held during the financial year 2011 were as follows:
Number Number of of Composition Meetings Meetings Percentage of Committee Held Attended (%)
ybhg Tan Sri Dato’ 5 5 100% Seri Dr Ting Chew Peh Chairman/Independent Non-Executive Director
ybhg Tan Sri Dato’ 5 5 100% Hari Narayanan Govindasamy Member/Independent Non-Executive Director yAM Tengku Dato’ 5 5 100% Rahimah Almarhum Sultan Mahmud Member/Non-Independent Non- Executive Director
ybhg Tan Sri Dato’ 5 5 100% Ahmad Fuzi Haji Abdul Razak Member/Independent Non-Executive Director
The Executive Director (Finance Division), Senior Manager/Manager (Internal Audit Department), General Manager (Operation & Maintenance Department) and other members of Senior Management attended these meetings upon the invitation by the Chairman of the Audit Committee. The Group’s external auditors were also invited to attend these meetings where matters relating to the audit of the statutory accounts and/or the external auditors are to be discussed. The Company Secretaries, Madam Tan Bee Lian and Madam Lim Yew Heang are the Secretaries to the Audit Committee.
2. SUMMARy OF ACTIVITIES
During the financial year 2011, the Audit Committee carried out its duties as set out in the Terms of Reference. The main activities carried out by the Audit Committee during the financial year included the following:-
Financial Results
• Reviewed the quarterly and year-to-date unaudited financial results of the Group before tabling to the Board for consideration and approval.
• Reviewed the reports and the audited financial statements of the Company and of the Group together with the external auditors prior to tabling to the Board for approval.
• Reviewed the Group’s Action Plan to address the Practice Note 17 issue.
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External Audit
• Reviewed the external auditors’ scope of work and audit plan for the year and made recommendations to the Board on their appointment and remuneration.
• Reviewed and discussed the external auditors’ audit report and areas of concern highlighted in the management letter, including management’s response to the concerns raised by the external auditors.
• Discussed on significant accounting and auditing issues, impact of new or proposed changes in accounting standards and regulatory requirements.
• Met with the external auditors without the presence of the Management.
Internal Audit
• Reviewed the Internal Audit Plan, programme of resource requirement for the year and assessed the performance of the Internal Audit Department.
• Reviewed the Internal Audit reports, which highlighted the audit issues, recommendations and the Management’s responses and directed action to be taken by the Management to rectify and improve the system of internal control.
• Monitored the implementation of recommendations made by the Internal Audit Department arising from its audits in order to obtain assurances that all key risks and control concerns have been fully addressed.
Related Party Transactions
Reviewed all related party transactions entered into by the Company and the Group.
3. INTERNAL AUDIT FUNCTIONS
Puncak Niaga Holdings berhad (“PNHb”)/Puncak Niaga (M) Sdn bhd (“PNSb”)
PNHB/PNSB has an established independent Internal Audit Department reporting directly to the Audit Committee. The Internal Audit Department assists the Audit Committee in the discharge of its duties and responsibilities. The Internal Audit Department’s primary responsibility is to provide an independent assurance on the adequacy and effectiveness of risk management, governance and internal control.
The Internal Audit Department focuses on regular and systematic review and has conducted evaluation on the internal control, management information systems, and compliance with established procedures including the system for compliance with applicable laws, regulations, rules, directives and guidelines.
The Annual Internal Audit Plan 2011 of the Internal Audit
Department (which was developed based on a risk based approach), was approved by the Audit Committee at the 66th Audit Committee Meeting of the Company held on 25 November 2010. The Internal Audit reports, which highlights internal control weaknesses, were deliberated by the Audit Committee and the recommendations were duly acted upon by the Management.
In 2011, the Internal Audit Department completed a total of 66 major audit assignments covering all the Water Treatment Plants, high-risk areas identified by the Risk Management Scorecard Working Group and adhoc assignments requested by the Senior Management. Examples of key areas audited by the Internal Audit Department during the Financial Year 2011 were Klang Gates, Tasik Subang and Sg Langat Dam Operation, Review of Related Party Transactions, Fixed Assets at Wisma 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 in relation to the conduct of the internal audit function of PNHB/PNSB during the Financial Year 2011 was about RM1.08 million.
As at 31 December 2011, the Internal Audit Department had nine staff (three Accountants, four Engineers and two support staff). Training attended by the Internal Audit Department’s staff in 2011 included the Risk Compliance Summit 2011, Raising Bar on Corporate Governance, Business Writing Skills, ISO 19001,18001,14001 and Risk Based Auditing on Projects.
SyAbAS
Due to the complexity of its water distribution operations which are dissimilar to that of PNSB’s water treatment operations, the Board of SYABAS formally ratified the establishment of the Internal Audit Division on 1 September 2006 and an Audit Committee with its own Terms of Reference was formed on 3 August 2007.
At SYABAS, the audit emphasis for the Financial Year 2011 was to determine whether the financial and other controls were in place to ensure the integrity and accuracy of information in the “Review Documents” submitted for the purpose of tariff adjustment for the 4th Operating Period from 2012 to 2014. Reports on individual components of the tariff review adjustment include the review on revenue – billings and collections, certified amount of program of works, amount spent on purchase of treated water, distribution costs and non-revenue water. Besides the above, the Internal Audit Department also conducted other audits e.g., Bulk Meter and sub meter reading, Administration of Leave and e-leave, Procedures of Cash Float for Report refund, stay-back allowance claims by 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.
4. SUMMARISED TERMS OF REFERENCE OF PNHb’S AUDIT COMMITTEE
A. Composition
The Board shall elect an Audit Committee from amongst themselves (pursuant to a resolution of the Board of Directors), comprising of at least three (3) Directors which fulfils the following requirements:
i. All the members of the Audit Committee must be Non-Executive Directors of the Company (and excluding Alternate Directors) with a majority of them being Independent Directors; and
ii. At least one (1) member of the Audit Committee:
a. must be a member of the Malaysian Institute of Accountants;
b. if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience and:
1. he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or
2. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or
3. fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.
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The members of the Audit Committee shall elect a Chairman from amongst themselves who shall be an Independent Director. It would be advantageous if the Chairman possesses a strong personality, have knowledge and experience in financial reporting, good leadership skills and is keen to get financial reporting and controls right.
The Chairman of the Audit Committee will maintain
continuous engagement with the Board Members and Senior Management of the Company and the external auditors in order to be kept abreast of matters affecting the Company. All members of the Audit Committee should be financially literate.
If the members of the Audit Committee for any reason be reduced to below three (3), the Board of Directors shall within three (3) months of the event, appoint such number of new members as may be required to make up the minimum number of three (3) members.
b. Duties And Responsibilities
In fulfilling its primary objectives, the Audit Committee will need to undertake the following duties and responsibilities:
b.1 Oversee All Matters Relating to External and Internal Audits
i. The Committee shall meet with the external auditors prior to the commencement of the annual audit to review and discuss:
• The Annual Audit Plan with the external auditors, including the scope, nature and areas of audit of the Group;
• The extent of any planned reliance on the work of the internal auditors and the anticipated effect of this reliance on the examination.
• Any significant accounting and auditing problems that the auditors can foresee and impact on the financial statements of any new or proposed changes in accounting standards or regulatory requirements.
Following its review of the plan, the Audit
Committee may request the external auditors to perform additional audit work directed to specific areas of concern to the Committee.
ii. Oversee the Internal Audit Department. The Audit Committee in overseeing the Internal Audit Department will:
• Review the audit programme, scope, performance and findings of the internal auditors.
• Monitor the implementation of the programme so that sufficient internal audit coverage is accorded.
• Assess the capacity of the Internal Audit Department to fulfil its responsibilities by considering, amongst other things, the adequacy of the scope of the Department’s authority as presented in the Department’s charter, the competency, qualifications and experience level of its employees, the degree to which internal auditors are independent of the activities they audit and the reporting relationship between the Head of Internal Audit and Senior Management.
• Review any appraisal or assessment of the performance of the staff of the Internal Audit Department and approve any appointment or termination of senior internal audit staff.
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iii. Review the assistance and cooperation given by the Company’s officers to the external and internal auditors.
iv. Consider the appointment of the external auditors, the audit fee and any questions of resignation or dismissal.
v. The external and/or internal auditors shall have the right to appear and be heard at any meeting of the Audit Committee and shall appear before the Audit Committee when required to do so by the Audit Committee.`
vi. Upon the request of the external and/or internal auditors, the Chairman of the Audit Committee shall convene a meeting of the Committee to consider any matters the auditors believe should be brought to the attention of the Committee.
vii. The Audit Committee may convene meetings with the external auditors and/or internal auditors, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary.
b.2 Evaluate the Standards of Internal Control and Financial Reporting
i. Hold specific discussions with Senior Corporate Management to discuss the overall adequacy of the internal control system.
ii. Meet with the internal and external auditors concerning their evaluation of the system of internal accounting controls.
iii. Consider the nature and disposition of the relevant comments appearing in the reports prepared by the internal auditors and in the external auditors’ management letter.
b.3 Review of Financial Statements
i. Meet with the Management and the external auditors to discuss the annual financial statements of the Company or Group and the results of the audit before recommending approval by the Board.
ii. Review the changes in or implementation of major accounting policy changes, the nature and resolution of any significant accounting and auditing problems encountered during the examination.
iii. It is good practice for the Audit Committee to meet the Management at a regular interval to review the results of the Company or Group, such as quarterly review of the results.
iv. Review the nature of any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of the Management’s integrity.
v. Review the nature of any significant adjustments and unusual events, reclassifications or additional disclosures proposed by the external auditors that are currently significant or may become significant in the future.
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Audit Committee Report
vi. Review the adequacy of disclosure of the impact of any changes during the year in accounting policies, standards and/or regulatory requirements.
vii. Review the reasons for the major fluctuations in financial statement balances for the current year compared to prior years.
viii. Review for any unusual circumstances or situations reflected in the financial statements, including identifying any marginal operations.
ix. Review the nature of any unusual or significant commitments or contingent liabilities.
x. Review of any significant differences between the annual report and other reports, such as reports to the regulatory agencies.
xi. Review for any significant differences in format or disclosure from industry norms.
b.4 Additional Duties and Responsibilities
i. Act upon the Board of Directors’ request to investigate and report on any issues or concerns in regard to the management of the Company.
ii. Such other functions as may be agreed to by the Audit Committee and the Board of Directors.
C. Access To Records
In carrying out their duties and responsibilities, the Audit Committee will in principle have full, free and unrestricted access to all Company records, property and personnel.
D. Meetings and Minutes
i. It is good practice for the Audit Committee to hold a minimum of four (4) meetings a year, although additional meetings may be called at any time at the Chairman’s discretion.
ii. In addition to the Committee members, the Executive Director of Finance Division and the Head of Internal Audit Department will normally be in attendance at the meetings. Representative of the external auditors are to be in attendance at meetings where matters relating to the audit of the statutory accounts and/or the external auditors are to be discussed.
iii. The Chief Executive Officer, other Board Members and/or other appropriate officers may be invited to attend, except for those portions of the meetings where their presence is considered inappropriate, as determined by the Committee Chairman.
iv. The Audit Committee will meet with the external auditors without the Executive Directors present at least twice a year.
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
The Board of Puncak Niaga Holdings Berhad has approved the following Group’s Risk Management Policy Statement:-
“The PNHB Group’s Risk Management Policy is to identify, measure and control risks that may prevent the Group from achieving its objectives.
Our challenge is to apply risk management to all parts of our business to ensure business risks are minimised and opportunities enhanced.
We will achieve, maintain and review a proper risk management system which is implemented by the Management and extended to all employees of the Group. This is the commitment of the Board of Directors.
This policy statement assigns responsibility for risk management to all PNHb Group employees and acknowledges that corporate responsibility lies with the board of Directors of the PNHb Group.” RISK MANAGEMENT REPORT
There are risks faced by all companies in the various facets of their corporate lives. The nature of such risks including systemic, market, employees, economic, legislation, financial and others, need to be identified and managed to reduce the possibility and impact of any adverse effects. Puncak Niaga recognises this and has initiated risk management programmes to ensure its business risks are minimised and opportunities enhanced.
The following steps were taken by the Board of Puncak Niaga in October 2001, for the management of the Group’s corporate risks:-
1. The preparation of the Group’s Risk Management Policy Statement.
2. The formation of the Compliance, Internal Control and Risk Policy Committee (“CICR”) with its own Terms of Reference.
3. The setting up of a Risk Management Section, which reports to the CICR.
As a follow-up from the Strategic Corporate Risk Management Workshop held for the Board and Senior Management in August 2001, information on Risk Management has been fully disseminated to all employees in the form of posters and through the Group’s internal communications network.
In addition, the risk management framework which was established in October 2001 has since then been fully implemented by the Management and employees of Puncak Niaga.
A second Strategic Enterprise-Wide Risk Management Workshop was conducted for Directors and Senior Management staff, by an external consultant on 11 September 2008. COMPLIANCE, INTERNAL CONTROL AND RISK POLICy COMMITTEE (CICR)
The establishment of the CICR was formalised by the Board in October 2001. The members of the CICR comprise the following:-
Chairman : ybhg Tan Sri Dato’ Seri Dr Ting Chew Peh (Independent Non-Executive Director)
Members : ybhg Dato’ Hashim Mahfar Managing Director (Head of Compliance, Internal Control and Risk Policy Committee) Mr Danny Ng Wah Tar Executive Director, Corporate Finance Division Madam Tan bee Lian Executive Director, Corporate Services Division Madam Wong Ley Chan Executive Director, Finance Division Tuan Haji Sonari Solor Senior General Manager, Internal Audit Department Cik Hayati Ab Wahab Senior General Manager, Internal Audit Division - SYABAS
Secretary : Madam Johty Priyatharashani Manager, Internal Audit Department
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A) TERMS OF REFERENCE OF THE CICR
The CICR shall provide assistance to the Board of Directors of Puncak Niaga in discharging its fiduciary responsibilities relating to safeguarding shareholders’ investment and the Group’s assets through a structured approach to Risk Management. The primary responsibilities of the CICR are:-
• Formulating strategies to manage the overall risks associated with the Group’s activities. This entails decisions on:-
• Long-term and short-term strategies. • Justifiable capital allocation based on return per
unit of risk.
• Recommending the appropriate risk management policies and procedures, which shall be reviewed frequently to ensure consistency with fundamental changes in the economy, market conditions and regulations.
• Reviewing periodically the Group’s overall objectives by assessing the current risk portfolio composition and determining the desired exposures of each major area of risk.
• Monitoring and assessing the risk portfolio composition of significant activities of the Group.
• Keeping abreast of both current risk management techniques and theories, and any possible or actual changes in the regulatory environment, and recommending the appropriate action.
b) CICR ACTIVITIES
MEETINGS HELD AND ISSUES COVERED
During the year 2011, the CICR held eight (8) meetings, of which four (4) were chaired by YBhg Tan Sri Dato’ Seri Dr Ting Chew Peh (Chairman of CICR) and four (4) were chaired by YBhg Dato’ Hashim Mahfar (Head of CICR).
At its meetings, the CICR reviewed in detail, the Status Reports prepared by the Risk Management Section. The issues covered include the following:-
1. The level of readiness of PNSB and the respective Divisions and Departments with regards to the “Statement on Internal Control” requirements.
2. The progress of the risk assessment and risk monitoring exercises at Departmental/Divisional and Enterprise-Wide levels. The main risks, controls and management actions are highlighted for the CICR to deliberate.
3. The effective utilisation of the Q-RADAR Corporate Risk Scorecard software to identify, measure and monitor all corporate risks identified within PNSB, Sino Water Pte Ltd and POG Group.
4. Other relevant risk issues affecting the Group, from time to time.
RISK MANAGEMENT SCORECARD WORKING GROUP AND ENTERPRISE-WIDE RISKS
The Group recognises that Risk Management involves a structured approach, combining the efforts of all functions within the Group, to minimise the possibility and impact of unexpected damages so as to contribute towards greater efficiency and better decision-making. The Group’s Enterprise-Wide Risk Profile is reviewed annually to take into consideration changes in the business environment, strategies and functional activities of the Group.
In 2011, given the Group’s venture into the oil & gas industry via its wholly owned subsidiary, POG which acquired 100% equity interests in GOM Resources Sdn Bhd (formerly known as Global Offshore Malaysia Sdn Bhd) and KGL Ltd respectively, a Risk Management Scorecard Working Group (“RMSWG”) Meeting was held on 17 November 2011 among the Executive Directors of PNSB and Senior Management of POG Group to deliberate on the Enterprise-Wide Risk Profile of the Group’s oil & gas business.
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Risk Management Policy & Report
Subsequently, the RMSWG was held at Group level, comprising all Executive Directors of PNSB and Senior Management of PNSB and POG Group on 16 January 2012 to deliberate on the risks highlighted by the different business sectors and determine the Puncak Niaga Group’s Enterprise-Wide Risk Profile for 2012.
The deliberations of the RMSWG were reviewed by the CICR on 10 February 2012. Subsequently, a detailed Board Paper on the Group’s “Top Twelve Enterprise Wide Risks Facing the Puncak Niaga Group for 2012” was tabled during PNHB’s Board of Directors’ Meeting that was held on 28 February 2012.
The Group’s Enterprise-Wide Risk Profile will be re-assessed by the RMSWG on a yearly basis.
QUARTERLy RISK SCORECARD REPORTING (PNSb, SINO WATER PTE LTD AND POG GROUP)
The respective Heads of Divisions and Departments of PNSB, the Managing Director of Sino Water Pte Ltd and the Senior Management of POG Group are responsible for assessing and managing their respective risks. Using the Q-RADAR Corporate Risk Scorecard software, the respective Heads of Divisions and Departments of PNSB, the Managing Director of Sino Water Pte Ltd and the Senior Management of POG Group submit their detailed risk scorecard reports to the Risk Management Section every quarter.
Risk Management Section analyses and summarises the risk scorecard reports received for further deliberation by the CICR.
Q-RADAR CORPORATE RISK SCORECARD SOFTWARE
PNHB, PNSB, Sino Water Pte Ltd and POG Group utilise a risk management tool namely, the Q-RADAR Corporate Risk Scorecard (“CRS”) software to identify, measure and manage all corporate risks affecting PNSB. The CRS software offers a systematic approach to the management of enterprise-wide risks facing corporations and assists the Management of Puncak Niaga to successfully achieve their corporate objectives. The software is web-based and allows authorised users to monitor their respective risks on-line from any location.
In June 2011, the Q-RADAR CRS software (Version 7.3) was upgraded to Version 8.0. Effective quarter ended 30 June 2011, a Corporate Digital Assurance module was implemented to all Risk Scorecard owners whereby they are required to validate and positively assure each individual risk, strength of control and management action. The status of this validation and assurance is reported to the CICR on quarterly basis.
As at 31 December 2011, the Q-RADAR CRS software had 128 authorised users covering 23 Departments /Divisions, including POG Group and Sino Water Pte Ltd.
The Q-RADAR CRS software is administered by the Risk Management Section. RISK MANAGEMENT AT SyAbAS
A Risk Management Workshop was conducted for all relevant Heads (or their representatives) of Divisions and Departments by the Internal Audit Division on 11 August 2009.
Broadly, the topics covered during the Workshop were:
1. Risk Management Awareness.2. Risk Management Thought Process.3. Risk Management Scorecard Software (Q-RADAR).
The Risk Management Working Group (comprising all Heads of Divisions and Departments) deliberated upon the “Enterprise-Wide Risks Facing SYABAS For 2011/2012” on 16 August 2011.
Matters discussed included:
1. Likelihood of risk events happening.2. Evaluation of the consequences of the risk events
happening.3. Confirmation as to whether controls are in place and are
being used to manage the risks.4. Risks ranking from the highest to the lowest to produce a
priority list.
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Investor Relations Policy & Report
As a responsible corporate citizen, Puncak Niaga is totally committed to upholding the highest standards of transparency, accountability and integrity in the conduct of our business activities in the best interest of our shareholders as well as to allow potential investors to make careful and informed investment decisions based on full and transparent disclosure of information.
Puncak Niaga’s Investor Relations Policy aims to build long-term relationships and credibility with our shareholders and potential investors based on trust, honesty, openness, transparency and sound understanding of the Company.
To achieve its objectives, the Company will endeavour to undertake the following:-
1. CREATING QUALITy DIALOGUE
• To create an environment where the effective bilateral communication between the Company and our shareholders and investors both inform and educate through regular, open and transparent provision of relevant and invaluable information over the long-term, which will build mutually beneficial long-term relationships vis-à-vis to foster a clearer understanding of the shareholders’ and investors’ expectations of the Company.
• To engage in quality dialogue with our shareholders and investors whereby the relationship is based on the principles of honesty, openness and transparency and to foster mutual understanding between the Company and our shareholders and investors.
• To reap the benefits of engaging in quality dialogue:-
- Perception on our Company’s risk is reduced; - Enhance feedback of our Company’s performance; - Our Company’s share valuation becomes more
realistic; - Develop confidence in our Management team and
management style; and - Works as a guide in the evaluation of our Company’s
business strategy.
2. INVESTOR COMMUNICATIONS STATEMENT
• To implement an efficient and effective Investor Relations Programme as part of our ongoing shareholders’ and investors’ communication obligations.
• To provide high quality, meaningful and timely information over and above that is required by law in order to improve the shareholders’ and investors’ understanding of our Company.
• To strive for key competence in the area of professional investor relations vide adequate resources and capabilities.
• To earn the trust, respect and confidence of our existing shareholders and investors.
• To build and maintain long-term relationships with our existing shareholders and investors.
• To initiate long-term relationship building with potential shareholders and investors.
Our commitment to the above Policy is driven by the Board of Directors of PNHB Group and implemented by the Management.
INVESTOR RELATIONS REPORT
Investor relations is the means by which listed companies maintain dialogue with their existing shareholders and potential investors. It is a strategic management responsibility to present an accurate picture of corporate performance and prospects, thus enabling the investment community, through an informed market, to determine a realistic share price. As a result, investor relations can have a positive impact on the Company’s market value and cost of capital relative to its industry sector and the overall economic climate.
The year 2011 had been challenging amidst Puncak Niaga’s relentless pursuit to gain leadership in the water industry and to remain focused in achieving our Vision and Mission.
The Board is therefore pleased to report on Puncak Niaga’s investor relations activities during 2011 as follows:-
DIALOGUES WITH INVESTORS
The Top Management of the Group actively engages in meetings, dialogues and briefing sessions with local and foreign institutional groups. In 2011, 14 dialogues and group briefing sessions were conducted with existing and potential investors, local and foreign fund managers and financial analysts from research and asset management houses.
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INVESTORS’ ACCESS TO INFORMATION
In line with our Investor Relations Policy, Puncak Niaga ensures timely disclosure of information over and above the regulatory authorities’ disclosure requirements so as to enable the investment community to make careful and informed investment decisions on the Company’s securities. Shareholders and investors can contact us at [email protected] and access the Group’s information and corporate announcements at our website, www.puncakniaga.com.my (with a direct link to www.syabas.com.my) or www.bursamalaysia.com. All announcements made to Bursa Malaysia Securities Berhad (“Bursa Securities”) are published shortly after the same is released on Bursa Securities’ website. All shareholders’ queries will be received by the Group Company Secretary who will provide feedback and responses to shareholders’ queries where such information can be made available to the public.
Since 22 October 2004, in our efforts to meet disclosure obligations towards our shareholders, investors and stakeholders, the Group had adopted and implemented the Puncak Niaga Corporate Disclosure Policy (as set out on page 178 of this Annual Report), formulated in line with the ‘Guide On Best Practices In Corporate Disclosure’ issued by Bursa Securities’ Task Force on Corporate Disclosure Best Practices.
ANNUAL GENERAL MEETING (“AGM”)
The Board of Puncak Niaga firmly believes that the AGM is the best forum to promote a closer relationship with our shareholders, enabling us to continue our engagement process with them.
Since 2003, our AGMs have been preceded by a Company Presentation followed by a Question and Answer Session. Our shareholders are updated on the Group’s corporate and financial performances, latest developments and issues of concern to the shareholders. This is especially important as we are the water services provider in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya and our shareholders are our consumers. It is Puncak Niaga’s way of saying ‘We value your views’ and ‘We are here to serve you better’. At the same time, our shareholders’ 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.
Since 2007, we have set up the PUSPEL customer service counter at a secretariat room at the AGM venue to enable our shareholders to gain online access to SYABAS’ water related enquiries. In view of our role as a water services provider, we will continue with this practice at our future AGMs for the benefit of our shareholders.
The 2012 AGM will be held on Tuesday, 26 June 2012 at the Concorde Hotel Shah Alam. The Notice of AGM is enclosed with this Annual Report. The results of all resolutions proposed at the 2012 AGM will be posted on Bursa Securities’ website and the Company’s website on the evening of 26 June 2012.
INVESTOR RELATIONS UNIT
The Investor Relations Unit (“IRU”) maintains a database of shareholders and investors who wish to be updated on the Group’s corporate developments and performances via e-mail.
Kindly e-mail us your contact details to the attention of Madam Tan Bee Lian, Group Company Secretary at [email protected] or by mail at Investor Relations Unit, c/o Secretarial Department, Puncak Niaga Holdings Berhad, 10th Floor, Wisma Rozali, No. 4, Persiaran Sukan, Seksyen 13, 40100 Shah Alam, Selangor Darul Ehsan, should you wish to be included in our database.
Similarly, to enable us to further improve our level of services to the community and our stakeholders, kindly forward your comments, views and concerns to us at [email protected] for public enquiries and [email protected] for investors’ enquiries.
All water-related enquiries in the State of Selangor and the Federal Territories of Kuala Lumpur and Putrajaya, such as complaints on water disruptions, pipe bursts or low water pressure, may be addressed to SYABAS Customer Service Centre, [email protected] or the toll-free line, 1-800-88-5252 or SMS ‘PUSPEL space your complaints/feedback ’ to 39222 or the social networks on Twitter and Facebook, follow@PUSPEL.
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Quality Policy & Report
QUALITy POLICy
It is the Policy of Puncak Niaga to provide quality services and products to meet the customer requirements and satisfaction.
Puncak Niaga shall strive to consistently adopt and maintain a quality management system based on all regulated requirements, internationally recognised standard which will ensure a planned, systematic, and proactive approach to quality in all aspects of our work.
Puncak Niaga is also committed in providing a safe, harmonious and conducive working environment and continuously equips our employees with knowledge and skill to improve our quality systematically.
Puncak Niaga Quality Management will be characterised by:-
• A culture of continual improvement and teamwork.• Pro-activeness at all levels.• The consistent application of ‘Right First Time Every Time’
principle.• Empowerment of personnel to solve problems expeditiously.
All employees shall share the responsibility to understand and diligently implement the Quality Policy.
INNOVATIVE & CREATIVE CIRCLE (ICC) PROGRAMME
The ICC Programme is a platform to measure staff capability in maximising their knowledge and experience to extend creative ideas in solving work-related issues to increase the Company’s productivity and cost-benefit.
PNSB’s ICC Secretariat (“the Secretariat”) had successfully conducted its sixth ICC Programme. The ICC Programme does not only support productivity enhancement, it is also designed as a channel in developing a customer-centric workforce. The ICC Programme may contribute towards the supply of technically skilled, knowledgeable and innovative workforce who possesses important generic skills such as leadership skills, interpersonal effectiveness, thinking skills, personal and professional effectiveness and effective communication skills. The ICC Programme is a reflection of the Company’s continuous efforts in enhancing productivity and competitiveness.
For the year 2010-2011 ICC Programme, a total of 13 teams initially participated in the ICC Programme. They comprised 2 teams from the Head Office and 11 teams from the Water Treatment Plants.
Based on the criteria set by the Malaysian Productivity Corporation (“MPC”) and after careful consideration, the ICC Secretariat shortlisted 8 teams, with the following 8 projects for final presentation:-
1. Poly pipe burst2. Down time at chlorine plant3. Choking of lime dosing pipe4. Wash water pipe at sludge plant not functioning5. Choking of micro strainer6. Optimising alum dosing7. In-efficient and unsystematic ways of managing staff
personal file8. Cost reduction of lead washer for chlorination system
The 2010-2011 ICC Programme’s final presentation was held on 14 April 2011 at Wisma Rozali and the winning projects were:-
1. Down time at chlorine plant2. Poly pipe burst3. Choking of lime dosing pipe
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 Awards and two Silver Awards. At the MPC Regional Conventions 2011 held on 27 to 28 June 2011, 20 to 21 July 2011 and 25 to 26 July 2011, six of our teams received four Gold Awards and two Silver Awards, and two teams achieved 3 Gold Star Awards and one team achieved 2 Gold Star Award from the MPC National ICC Convention 2011 held on 19 to 20 October 2011. At the International ICC Conference Quality Creative Circle 2011 held in Yokohama, Japan from 11 to 15 September 2011 our Tag Team succeeded in garnering the prestigious Excellent Award for its cost-cutting and innovative project, namely ‘Unstable micro sand in the Actiflo process’.
The company’s achievement in ICC activities for 2010~2011 was outstanding and excellent.
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Health, Safety And Environmental Policy
It is the policy of Puncak Niaga Holdings Berhad and its subsidiaries (Puncak Niaga Group) to provide, so far as is practicable healthy, safe and environmental friendly workplace for all employees, contractors, visitors, interested members of society and others, and in the spirit of consultation and cooperation, the Management and employees will together strive to achieve goals and objectives of this Policy.
Without prejudice to the generality of the above statement, the Policy of Puncak Niaga Group is:-
• to provide and maintain a healthy, safe and environmental friendly workplace and system of work, and to continually improve its environment and safety performance;
• to continuously emphasise on the prevention of injury, ill health and pollution in all activities;
• to ensure environmental and safety objectives and targets are set and reviewed;
• 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.
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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:
We shall manage development activities in order to minimise the risk of pollution and waste;
EMPLOyEES:
We shall respect the rights and diversity of employees, providing good conditions of work and equal opportunities, improving employee satisfaction, whilst enhancing the intellectual capital of SYABAS continuously through training and development;
ETHICS:
We shall encourage high standards of integrity and professionalism throughout SYABAS and providing a framework to manage the risk of unethical behaviour;
RELATIONSHIPS WITH CONSUMERS:
We shall anticipate and satisfy consumers’ needs and 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;
SUPPLIERS AND PARTNERS:
We shall treat all our suppliers fairly whilst delivering enhanced value and social improvements in partnership with them. We will operate in a way that safeguard against unfair business practices and shall encourage suppliers and contractors to adopt responsible business policies and practices for mutual benefit;
COMMUNITy INVOLVEMENT:
We shall support philanthropic and charitable giving, support for and active engagement with local communities through volunteering and other programmes. We shall also support and encourage our employees to help local community organisations and activities in the areas where we operate in;
ENGAGEMENT WITH STAKEHOLDERS:
We shall listen and engage with local communities and responding positively to request for information from our stakeholders in a timely and accurate manner.
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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.
Statement Of Directors’ Responsibility For Preparation Of Financial Statements
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.
Financial Statements
212Definitions
214Directors’ Report
219Statement by Directors
219Statutory Declaration
220Independent Auditors’ Report
222Income Statements
223Statements of Comprehensive Income
224Statements of Financial Position
226Statements of Changes in Equity
231Statements of Cash Flows
233Notes to the Financial Statements
380Supplementary Information
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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
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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
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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.
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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 IsmailDato’ Hashim bin MahfarDato’ Ruslan bin HassanDato’ Ir Lee Miang KoiDato’ Syed Danial bin Syed AriffinNg Wah TarTan Sri Dato’ Hari Narayanan a/l GovindasamyTan Sri Dato’ Seri Dr Ting Chew PehTengku Dato’ Rahimah binti Almarhum Sultan MahmudTan 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.
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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 EAChNAmE oF DIRECtoR 1.1.2011 ACquIRED SolD 31.12.2011
Direct Interest:Ordinary shares of the CompanyTan 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 CompanyTan 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 CompanyDato’ Ruslan bin Hassan 708,125 – (708,125)*** –Dato’ Ir Lee Miang Koi 39,900 – (39,900)*** –
Deemed Interest:RUN of the CompanyTan 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.
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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.
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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
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Annual Report 2011Puncak Niaga Holdings Berhad
Statement by DirectorsPursuant 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 DeclarationPursuant 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 declaredby the abovenamed Wong Ley Chanat Shah Alam in the State of Selangoron 26 April 2012. WoNG lEy ChAN
Before me,
Annual Report 2011Puncak Niaga Holdings Berhad
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Independent Auditors’ Reportto 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.
221
Annual Report 2011Puncak Niaga Holdings Berhad
Independent Auditors’ Reportto 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, Malaysia26 April 2012
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Income StatementsFor 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 parentBasic 12 0.02 (0.22)
Diluted 12 N/A N/A
223
Annual Report 2011Puncak Niaga Holdings Berhad
Statements of Comprehensive IncomeFor the financial year ended 31 December 2011
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
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)
Annual Report 2011Puncak Niaga Holdings Berhad
224
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 assetsProperty, 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 assetsInventories 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 liabilitiesProvision 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
225
Annual Report 2011Puncak 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 liabilitiesProvision 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.
Annual Report 2011Puncak Niaga Holdings Berhad
Statements of Changes in EquityFor the financial year ended 31 December 2011
226
AttRIbutAblE to oWNERS oF thE PARENt NoN-DIStRIbutAblE DIStRIbutAblE EquIty 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
2011Group
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 ownersNet 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)
Annual Report 2011Puncak Niaga Holdings Berhad
Statements of Changes in EquityFor the financial year ended 31 December 2011
227
AttRIbutAblE to oWNERS oF thE PARENt NoN-DIStRIbutAblE DIStRIbutAblE EquIty 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
2011Group
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 ownersNet 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)
Annual Report 2011Puncak Niaga Holdings Berhad
Statements of Changes in EquityFor the financial year ended 31 December 2011
228
AttRIbutAblE to oWNERS oF thE PARENt NoN-DIStRIbutAblE DIStRIbutAblE EquIty 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
2010Group
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
Annual Report 2011Puncak Niaga Holdings Berhad
Statements of Changes in EquityFor the financial year ended 31 December 2011
229
AttRIbutAblE to oWNERS oF thE PARENt NoN-DIStRIbutAblE DIStRIbutAblE EquIty 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
2010Group
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
Annual Report 2011Puncak Niaga Holdings Berhad
230
Statements of Changes in EquityFor 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
2011Company
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
2010Company
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 ownersDividends 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.
231
Annual Report 2011Puncak 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)
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Statements of Cash Flows For the financial year ended 31 December 2011
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
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) – – 921,338,580 988,931,081 231,152,547 172,211,766Cash 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
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Annual Report 2011Puncak 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 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
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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 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
235
Annual Report 2011Puncak 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).
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236
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).
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Annual Report 2011Puncak 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.
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238
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)
239
Annual Report 2011Puncak 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.
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240
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.
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Annual Report 2011Puncak 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.
(c) Foreign operations
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.
Annual Report 2011Puncak Niaga Holdings Berhad
242
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.
243
Annual Report 2011Puncak 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.
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244
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.
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 as follows:
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.
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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.
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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.
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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.
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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, and the 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 in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair 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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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2. SummARy oF SIGNIFICANt ACCouNtING PolICIES (cont’d)
2.16 FINANCIAl ASSEtS (cont’d) (c) held-to-maturity investments
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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).
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
(c) Construction contracts
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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)).
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
(c) Estimated useful life of construction vessel
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 can be 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).
Notes to the Financial Statements For the financial year ended 31 December 2011
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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 to long 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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
(c) oil and gas revenue
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.
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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 – – –
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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) – –
(c) Depreciation and amortisation expense 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
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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.
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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
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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 – –
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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
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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.
273
Annual Report 2011Puncak 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)
274
Annual Report 2011Puncak 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
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Annual Report 2011Puncak 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
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Annual Report 2011Puncak 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 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
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
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Annual Report 2011Puncak 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 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
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
Annual Report 2011Puncak Niaga Holdings Berhad
278
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
279
Annual Report 2011Puncak 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 amount of 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.
Annual Report 2011Puncak Niaga Holdings Berhad
280
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
281
Annual Report 2011Puncak 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.
Annual Report 2011Puncak Niaga Holdings Berhad
282
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.
283
Annual Report 2011Puncak 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
Annual Report 2011Puncak Niaga Holdings Berhad
284
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
285
Annual Report 2011Puncak 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.
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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17. INvEStmENt IN SubSIDIARIES (cont’d)
(b) Acquisition of Gom Resources, by PoG (cont’d)
Goodwill arising on acquisition
Rm
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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:
Rm Additional interest acquired 9,935,383 Less: Consideration paid (41,475,000)
Premium paid on acquisition of non-controlling interest (31,539,617)
(c) Acquisition of KGl ltd (“KGl”), by PoG
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
Notes to the Financial Statements For the financial year ended 31 December 2011
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17. INvEStmENt IN SubSIDIARIES (cont’d)
(c) Acquisition of KGl ltd (“KGl”), by PoG (cont’d)
The effect of the acquisition on cash flows is as follows: Rm 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
Rm
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 at the 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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
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Annual Report 2011Puncak 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 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
Annual Report 2011Puncak Niaga Holdings Berhad
292
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
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Annual Report 2011Puncak Niaga Holdings Berhad
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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294
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
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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.
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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.
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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%.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
(c) luWEI and luancheng
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.
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.
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.
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23. GooDWIll (cont’d)
(c) luWEI and luancheng (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
Notes to the Financial Statements For the financial year ended 31 December 2011
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300
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
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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
Annual Report 2011Puncak Niaga Holdings Berhad
302
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
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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).
(c) Amount due from subsidiaries
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
Annual Report 2011Puncak Niaga Holdings Berhad
304
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).
305
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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.
Annual Report 2011Puncak Niaga Holdings Berhad
306
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.
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Annual Report 2011Puncak 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
Annual Report 2011Puncak Niaga Holdings Berhad
308
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
Notes to the Financial Statements For the financial year ended 31 December 2011
309
Annual Report 2011Puncak Niaga Holdings Berhad
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
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
310
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.
311
Annual Report 2011Puncak Niaga Holdings Berhad
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”).
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
313
Annual Report 2011Puncak Niaga Holdings Berhad
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.
(c) RuN
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.
(c) The RUN and the warrants are transferable and are quoted on Bursa Securities.
(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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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314
31. loANS AND boRRoWINGS (cont’d)
(c) RuN (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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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Annual Report 2011Puncak Niaga Holdings Berhad
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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 Rm
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
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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.
(c) Accruals
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.
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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 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
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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
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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
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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
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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)
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 (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
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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. ShARE 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 CAPItAl CAPItAl ShARE FoREIGN (ISSuED (ISSuED CAPItAl CuRRENCy AND AND AND REvA- tRAN- Fully tREASuRy Fully ShARE ShARES tREASuRy luAtIoN SlAtIoN othER RCulS PAID) ShARES PAID) PREmIum PREmIum ShARES RESERvE RESERvE RESERvE (NotE 31(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
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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.
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Notes to the Financial Statements For the financial year ended 31 December 2011
38. REtAINED EARNINGS (cont’d)
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.
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.
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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
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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
(c) Finance lease commitments 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
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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)
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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)
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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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) the Group 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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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43. FINANCIAl RISK mANAGEmENt obJECtIvES AND PolICIES (cont’d) (c) Interest rate risk
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
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
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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.
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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.
PER 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
Notes to the Financial Statements For the financial year ended 31 December 2011
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Annual Report 2011Puncak Niaga Holdings Berhad
Notes to the Financial Statements For the financial year ended 31 December 2011
46. SEGmENt INFoRmAtIoN (cont’d)
PER 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
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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.
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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:-
(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.
(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.
(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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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 counter-claim 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).
Notes to the Financial Statements For the financial year ended 31 December 2011
357
Annual Report 2011Puncak Niaga Holdings Berhad
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.
(c) AbASS
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;
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
358
49. mAtERIAl lItIGAtIoNS (cont’d)
(c) AbASS (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.
Notes to the Financial Statements For the financial year ended 31 December 2011
359
Annual Report 2011Puncak Niaga Holdings Berhad
49. mAtERIAl lItIGAtIoNS (cont’d)
(c) AbASS (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;
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
360
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
361
Annual Report 2011Puncak Niaga Holdings Berhad
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
362
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
363
Annual Report 2011Puncak Niaga Holdings Berhad
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
364
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;
Notes to the Financial Statements For the financial year ended 31 December 2011
365
Annual Report 2011Puncak Niaga Holdings Berhad
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
366
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
367
Annual Report 2011Puncak Niaga Holdings Berhad
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).
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
368
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
369
Annual Report 2011Puncak Niaga Holdings Berhad
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
370
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
371
Annual Report 2011Puncak Niaga Holdings Berhad
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;
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
372
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
373
Annual Report 2011Puncak Niaga Holdings Berhad
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
374
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
375
Annual Report 2011Puncak Niaga Holdings Berhad
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
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
376
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
377
Annual Report 2011Puncak Niaga Holdings Berhad
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
Annual Report 2011Puncak Niaga Holdings Berhad
378
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)
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
(c) Impact on the Group’s statement of financial position as at 1 January 2010.
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.
Notes to the Financial Statements For the financial year ended 31 December 2011
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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
Notes to the Financial Statements For the financial year ended 31 December 2011
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ANAlySIS oF ShAREholDINGS
Authorised Share Capital : RM1,300,000,000.00Issued 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 eachVoting 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 0.261,001 – 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 6.2410,001 – 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 12.60100,001 – 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 33.95the 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.
Distribution Schedule Of Equity Securities As At 26 April 2012
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% 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.
Distribution Schedule Of Equity Securities As At 26 April 2012
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% 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.
Distribution Schedule Of Equity Securities As At 26 April 2012
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DIRECtoRS’ INtERESt IN oRDINARy ShARES AS PER REGIStER oF DIRECtoRS’ ShAREholDINGS
No. oF ShARES hElD IN thE ComPANy DIRECt INDIRECtNo 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 INDIRECtNo 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
Distribution Schedule Of Equity Securities As At 26 April 2012
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DAtE oF ACquISItIoN/ NEt booK REmAINING DESCRIPtIoN & DAtE oF vAluAtIoN (v) vAluE lEASEholD ExIStINGloCAtIoN (IF APPlICAblE) lAND AREA (Rm) tENuRE (ExPIRy DAtE) uSE
building & Adjacent landWisma 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 PremisesSeksyen 13 22/01/2102 and40100 Shah Alam Vacant LandSelangor Darul Ehsan
office lotsNo. 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 PremisesSingapore 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 PremisesSingapore 059818 01/01/2100
vacant landH.S.(D) 142037 14/02/1998/ 10,364 sq.m 19,600,000 99 years 88 years Rented outPT 32, Seksyen 14 31/12/2011 (v) Leasehold expiring on to a car parkBandar Shah Alam 17/12/2099 operatorDistrict of PetalingSelangor Darul Ehsan
vacant landH.S.(D) 226605, PT 332 06/04/2006 691 sq.mH.S.(D) 226606, PT 333 06/04/2006 711 sq.m 1,267,188 Freehold N/A NoneH.S.(D) 226607, PT 334 06/04/2006/ 862 sq.mMukim Pekan N/A (v)Subang JayaDaerah PetalingSelangor Darul Ehsan
vacant landH.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 NoneH.S.(D) 6165, PT 10655 # 229,299 sq.m Rented outH.S.(D) 6166, PT 10656 229,733 sq.m NoneMukim Of Ijok District Of Kuala SelangorSelangor Darul Ehsan# Included a single storey building complete with parking facilities
List of Properties As At 31 December 2011
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DAtE oF ACquISItIoN/ NEt booK REmAINING DESCRIPtIoN & DAtE oF vAluAtIoN (v) vAluE lEASEholD ExIStINGloCAtIoN (IF APPlICAblE) lAND AREA (Rm) tENuRE (ExPIRy DAtE) uSE
4 Storey ShophouseNo. 12, Jalan Todak 5 21/03/2007/ 238 sq.m 1,900,000 99 years 81 years OfficePusat Bandar Seberang Jaya 31/12/2011 (v) Leasehold expiring on Premises13700 Perai 21/10/2092Pulau Pinang
office lotNo. 20-1 & 20-2 01/02/2008/ 164 sq.m 1,900,000 Freehold N/A OfficeJalan Presiden F U1/F 31/12/2011 (v) PremisesAccentra Business ParkGlenmarie, Seksyen U140150 Shah Alam(Lot 63191, H.S. (D) 224581No. hakmilik 211790District Of PetalingSelangor Darul Ehsan)
vacant landNo. 8, Jalan Sultan Mahmud 02/07/2008/ 2,058 sq.m 1,300,000 Freehold N/A None21080 Kuala Terengganu 31/12/2011 (v)Terengganu(Lot 2119, Mukim of Batu BurukDistrict Of Kuala TerengganuTerengganu Darul Iman)
vacant landH.S. (D) 2605, PT 1563 01/08/2010/ 159,996 sq.m 16,500,000 99 years 84 years NoneMukim Jeram 31/12/2011 (v) Leasehold expiring onDistrict Of Kuala Selangor 1/12/2095Selangor Darul Ehsan
List of Properties As At 31 December 2011
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GRI Index
GRI G3.1 INDEx PAGES
PRoFIlE DISCloSuRES
Strategy and Analysis
1.1 Statement from the most senior decision-maker of the organisation 16-241.2 Description of key impacts, risks, and opportunities 22-23
organisational Profile
2.1 Name of the organisation Front Cover2.2 Primary brands, products, and/or services 44-492.3 Operational structure of the organisation 44-492.4 Location of organisation’s headquarters 282.5 Number of countries where the organisation operates 28-292.6 Nature of ownership and legal form 44-492.7 Markets served 28-292.8 Scale of the reporting organisation 252.9 Significant changes during the reporting period 16-242.10 Awards received in the reporting period 40-43
Report Parameters
3.1 Reporting period 253.2 Date of most recent previous report 253.3 Reporting cycle As and when required3.4 Contact point for questions regarding the report or its contents 283.5 Process for defining report content 253.6 Boundary of the report 253.7 Specific limitations on the scope or boundary of the report 253.8 Basis for reporting on joint ventures, subsidiaries, etc 25, 44-493.9 Data measurement techniques and the bases of calculations 163-1643.10 Explanation of the effect of any re-statements of information 16-243.11 Significant changes from previous reporting period 16-243.12 Table identifying the location of the Standard Disclosures GRI G3.1 Content Index3.13 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 180-1814.2 Indicate whether the Chair of the highest governance body is also an executive officer X4.3 Independent and/or non-executive members of the Board 1804.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body 180-1814.5 Linkage between compensation and the organisation’s performance 184-1864.6 Processes in place to ensure conflicts of interest are avoided 180, 1994.7 Qualifications and expertise of the Board 52-85, 182
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PRoFIlE DISCloSuRES
4.8 Internally developed statements of mission or values, codes of conduct, and principles Our Vision and Mission4.9 Identification and management of economic, environmental, and social performance, conduct, and principles 1884.10 Processes for evaluating the highest governance body’s own performance 182, 1844.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation 2014.12 Externally developed economic, environmental, and social charters, principles. 1674.13 Memberships in associations 324.14 List of stakeholder groups engaged by the organisation 152,1674.15 Basis for identification and selection of stakeholders with whom to engage 23-244.16 Approaches to stakeholder engagement 167-1704.17 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 87-88EC2 Financial implications and other risks and opportunities for the organisation’s activities due to climate change 163, 165EC3 Coverage of the organisation’s defined benefit plan obligations 138-139EC4 Significant financial assistance received from government 21, 128, 171
market Presence
EC5 Standard entry level wage vs. local minimum wage 138-139EC6 Policy, practices, and proportion of spending on locally-based suppliers 151EC7 Procedures for local hiring 132
Indirect economic impacts EC8 Development and impact of infrastructure investments and services provided primarily for public benefit 167-174EC9 Understanding and describing significant indirect economic impacts 65, 100, 112
PERFoRmANCE INDICAtoRS : ENvIRoNmENtAl
materials
EN1 Materials used by weight or volume 165EN2 Percentage of materials used that are recycled input materials 165
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GRI G3.1 INDEx PAGES
Energy
EN3 Direct energy consumption by primary energy source 164-165EN4 Indirect energy consumption by primary source 164-165EN5 Energy saved due to conservation and efficiency improvements 164-165EN6 Initiatives to provide energy-efficient or renewable energy 166EN7 Initiatives to reduce indirect energy consumption and reductions achieved 164-166
Water
EN8 Total water withdrawal by source 164-165EN9 Significant impact of withdrawal of water 164-165EN10 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 XEN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas XEN13 Habitats protected or restored XEN14 Strategies, current actions, and future plans for managing impacts on biodiversity XEN15 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 165-167EN17 Other relevant indirect greenhouse gas emissions by weight 165-167EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 165-167EN19 Emissions of ozone-depleting substances by weight N/AEN20 NOx, SOx, and other significant air emissions by type and weight XEN21 Total water discharge by quality and destination 164-165EN22 Total weight of waste by type and disposal method 162-163EN23 Total number and volume of significant spills 155EN24 Weight of transported, imported, exported, or treated waste deemed hazardous 117EN25 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 152-167EN27 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
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GRI G3.1 INDEx PAGES
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 133-138LA2 Total number and rate of employee turnover by age group, gender, and region 133-138LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations 138-139LA15 Return to work and retention rates after parental leave, by gender X
labour/management Relations
LA4 Percentage of employees covered by collective bargaining agreements 142LA5 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 144LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region 146LA8 Education, training, counselling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases 145-146LA9 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 140-141LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings XLA12 Percentage of employees receiving regular performance and career development reviews 140
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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 133-138LA14 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 138-140HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken 151HR3 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
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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 167-174SO9 Operations with significant potential or actual negative impacts on local communities 167-174, 113SO10 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 142SO3 Percentage of employees trained in organisation’s anti-corruption policies and procedures 142SO4 Actions taken in response to incidents of corruption 142
Public Policy
SO5 Public policy positions and participation in public policy development and lobbying XSO6 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
GRI Index
393
Annual Report 2011Puncak Niaga Holdings Berhad
GRI Index
GRI G3.1 INDEx PAGES
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 34PR2 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, 114-116PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes 112-113PR5 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 XPR7 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.
Notes
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 AGAINSt1. 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 buSINESS6. 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 ShareholderNRIC/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 under an Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under a power of attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the power of attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form.
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.
Number of shares held Please fill in CDS Account No.
Proxy Form
Share Registrar forPuncak Niaga holdings berhad (416087-u)
Tricor Investor Services Sdn Bhd (118401-V)
Level 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurMalaysia
PlEASE FolD hERE
PlEASE FolD hERE
StAmP
Corporate Directory
PUNCAK NIAGAHOLDINGS BERHAD Wisma RozaliNo. 4, Persiaran Sukan Seksyen 13, 40100 Shah Alam Selangor Darul Ehsan Tel : +603-5522 8589 Fax : +603-5522 8598e-mail (general): [email protected] (investors):[email protected]:www.puncakniaga.com.my
PUNCAK NIAGA (M) SDN BHDWisma RozaliNo. 4, Persiaran Sukan Seksyen 13, 40100 Shah Alam Selangor Darul Ehsan Tel : +603-5522 8589 Fax : +603-5522 8598
BRANCH OFFICES
Kuala Terengganu Offi ce 201BJalan Sultan Zainal Abidin20000 Kuala TerengganuTerengganu Darul ImanTel : +609-623 8589Fax : +609-624 8589
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Sarawak Offi ceLot 10864 & 10865Section 64KTLD, Jalan Mendu93200 Kuching, SarawakTel : +6082-332 589Fax : +6082-337 589
Sri Aman Site Offi ce1st Floor, Lot 440Block 3, Jalan Council95000 Sri Aman, SarawakTel : +6083-320 335Fax : +6083-320 340
Sarikei Site Offi ce1st Floor, No. 82CWisma CS KuaJalan Masjid Lama96100 Sarikei, SarawakTel : +6084-656 206Fax : +6084-656 208
SUBSIDIARY OFFICES
In Malaysia
SYARIKAT BEKALAN AIRSELANGOR SDN BHD(SYABAS) SYABAS Head Offi ceJalan Pantai Baharu59200 Kuala LumpurTel : +603-2282 6244/ +603-2088 5400Fax : +603-2282 7976e-mail: [email protected]: www.syabas.com.my
PUSAT PERKHIDMATANPELANGGAN (PUSPEL)Toll Free Helpline:1-800-88-5252Fax : +603-2295 5168SMS to 39222 type PUSPEL space
your complaints/feedbacke-mail: [email protected]: follow@puspel (on Twitter and Facebook)
PUNCAK OIL & GAS SDN BHDUnit 12-1, Level 12No. 11, Jalan 16/11Pusat Dagang Seksyen 1646350 Petaling JayaSelangor Darul EhsanTel : +603-7958 5533Fax : +603-7956 7375
GOM RESOURCES SDN BHD(formerly known as Global Offshore Malaysia Sdn Bhd)Level 4 & 17, Tower 1 ETIQA Twin Towers 11, Jalan Pinang50450 Kuala Lumpur Tel : +603-2177 4600Fax : +603-2166 8867
PUNCAK RESEARCH CENTRE SDN BHDWisma RozaliNo. 4, Persiaran Sukan Seksyen 13, 40100 Shah AlamSelangor Darul EhsanTel : +603-5522 8589Fax : +603-5522 8598
In Labuan
KGL LTD.c/o Lot 1, 2nd FloorWisma SiamlohJalan Kemajuan87007 Federal Territory of LabuanTel : +608-741 7810Fax : +608-742 4220
In Singapore
SINO WATER PTE LTDPUNCAK NIAGA OVERSEASCAPITAL PTE LTDNo. 8, Eu Tong Sen Street#22-85 & #22-86, The CentralSingapore 059818Tel : +65-6224 9220 (Main Line) +65-6222 6936/ +65-6222 7926Fax : +65-6222 6812
In China
SINO WATERENVIRONMENTALCONSULTANCY (SHANGHAI) CO. LTDUnit 301, No. 398, City GatewayCaoxi (North) RoadXuhui District200030 ShanghaiPeople’s Republic of ChinaTel : +86-21-6090 5282Fax : +86-21-6090 5281
LUWEI (PINGDINGSHAN) WATER CO. LTD No. 6, ShunCheng Road (East)Lushan County, Henan Province467300People’s Republic of ChinaTel/Fax : +86-375-589 1036
XINNUO WATER (BINZHOU) CO. LTDChenlou Industrial &Commerce ParkLaodian VillageYangxin CountyShandong Province251802People’s Republic of China
LUANCHENG DAYU WATER SUPPLY CO. LTD No. 17, Xinyuan RoadLuancheng CountyHebei Province051430People’s Republic of ChinaTel/Fax : +86-311-8803 1652
HEBEI SINO PANLONG INDUSTRIAL WATER SUPPLYCO. LTDNo. 117, Renmin RoadYuanshi CountyHebei Province051130People’s Republic of ChinaTel/Fax : +86-311-8463 8813
In India
PUNCAK NIAGAINFRASTRUCTURES &PROJECTS PRIVATE LIMITED1, Kutchery Road, MylaporeChennai - 600004Tamil Nadu, IndiaTel : +91-44-4210 2058Fax : +91-44-4210 2028 REPRESENTATIVE OFFICE
In Vietnam 16F, Saigon Tower29, Le Duan StreetDistrict 1, Ho Chi Minh CitySaigon, VietnamTel : +84-8-3520 7701Fax : +84-8-3823 6288
[email protected]@puspel on
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
www.puncakniaga.com.my/investors.html
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