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DEFINITIONS

Except where the context otherwise requires, the following definitions shall apply throughout this Circular:-

Abridged Prospectus - An offer document to be issued in connection with the Proposed RightsIssue of Warrants

BNM - Bank Negara Malaysia

Bonds - RM400,000,000 nominal value 7-year 3% redeemable unsecured bonds2000/2007 issued by Gamuda, the principal terms of which are set out inthis Circular

Bonds Issue - Issue of the Bonds

CDS - Central Depository System

CIMB - Commerce International Merchant Bankers Berhad

Concession - The concession for 30 years commencing from 24 January 2000 granted bythe State Government to SPLASH under the terms of the PrivatisationAgreement for:-

(i) the operation and maintenance of SSP1;(ii) the design, construction, commissioning, and the subsequent

operation and maintenance of SSP3;(iii) the design and construction of the Realigned Road; and(iv) the supply and sale of treated water to the State Government

Dam - An approximately 110 metres high dam to be constructed on SungaiSelangor, located at approximately km 66.5 of the Kuala Kubu Baru -Fraser's Hill road

Date of Offer - The date inscribed on the offer letter, as described in Bye-Law 5.4 of theESOS Bye-Laws, being the date on which a Selected Employee is deemedto have been notified in writing of an Offer (including subsequent Offers)by the Option Committee

EGM - Extraordinary General Meeting

Eligible Employee - Any employee or Executive Director of the Group satisfying the conditionsstipulated in Bye-Law 3 and falling within any of the grades set out in Bye-Law 4.1 of the ESOS Bye-Laws

EPS - Earnings per share

ESOS Bye-Law(s) - Bye-Law(s) of the Proposed ESOS

Gamuda or Company - Gamuda Berhad

Gamuda Group or Group - Gamuda and its subsidiaries

GCSB - Gabungan Cekap Sdn. Bhd., a 30%-owned associated company of Gamuda

Grantee - A Selected Employee who has accepted the Offer by the Company inaccordance with the ESOS Bye-Laws

KESAS Holdings - Kesas Holdings Berhad, a 30.00%-owned associated company of Gamuda

KLSE - Kuala Lumpur Stock Exchange

LDP - Lebuhraya Damansara-Puchong

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DEFINITIONS (Cont'd)

LITRAK Holdings - Lingkaran Trans Kota Holdings Berhad, a 41.05%-owned associatedcompany of Gamuda

MCD - Malaysian Central Depository Sdn. Bhd.

MLD - Million litres per day

NTA - Net tangible assets

Offer - An offer made in writing by the Option Committee in accordance with theprovisions or in the manner indicated in the ESOS Bye-Laws to a SelectedEmployee to participate in the Proposed ESOS

Option - The right of a Grantee to subscribe for new shares pursuant to the contractconstituted by acceptance in the manner indicated in the ESOS Bye-Lawsof any Offer made in accordance with the terms of the Proposed ESOS andwhere the context so requires, means any part of the Option as shall remainunexercised

Option Committee - The committee comprising of Directors and/or employees as may beappointed by the Board of Directors of the Company, in accordance withthe provisions of the ESOS Bye-Laws to administer the Proposed ESOS

Option Period A period commencing on the Date of Offer for each Selected Employee andexpiring on a date not exceeding five (5) years from the date ofcommencement or such earlier date as the Option Committee may in itsdiscretion decide Provided That the Option Period shall not extend beyondthe duration of the Proposed ESOS (including any extension or renewalthereof)

Price-Fixing Date - A date to be determined by the Directors of Gamuda after the approval ofthe SC for the Proposals

Privatisation Agreement - The agreement dated 24 January 2000 entered into between SPLASH andthe State Government setting out the terms and conditions of theConcession

Project - The design and construction of SSP3 and the Realigned Road and theoperation and maintenance of SSP1 and SSP3, which is undertaken bySPLASH under the terms of the Privatisation Agreement

Proposals - Proposed Rights Issue of Warrants, Proposed ESOS and Proposed IASCcollectively

Proposed ESOS - Proposed new employee share option scheme for Eligible Employees

Proposed IASC - Proposed increase in the authorised share capital of Gamuda fromRM1,000,000,000 comprising 1,000,000,000 ordinary shares of RM1.00each to RM2,000,000,000 comprising 2,000,000,000 ordinary shares ofRM1.00 each

Proposed Rights Issue ofWarrants

- Proposed rights issue of up to 185,460,328 new warrants 2000/2007 at anissue price to be determined later on the basis of one (1) new warrant2000/2007 for every four (4) existing ordinary shares of RM1.00 each heldin Gamuda

RAM - Rating Agency Malaysia Berhad

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DEFINITIONS (Cont'd)

Realigned Road - The part of the road between Kuala Kubu Baru and Fraser's Hill that will berealigned due to the proposed impoundment for the construction of theDam

ROC - Registrar of Companies

SAE - Shah Alam Expressway

SC - Securities Commission

Selected Employee - An Eligible Employee who has been selected by the Option Committee andto whom an Offer has been made in writing by the Option Committee inaccordance with the ESOS Bye-Laws

SPLASH - Syarikat Pengeluar Air Sungai Selangor Sdn. Bhd. (formerly known asDanau Haluan Sdn. Bhd.) , a wholly-owned subsidiary of GCSB

SPRINT - Sistem Penyuraian Trafik KL Barat Sdn. Bhd., a wholly-owned subsidiaryof SPRINT Holdings

SPRINT Holdings - Sistem Penyuraian Trafik KL Barat Holdings Sdn. Bhd., a 30.00%-ownedassociated company of Gamuda

SSP1 - Existing Phase 1 of the Sungai Selangor water supply scheme comprisingthe water treatment works and facilities with a total design nominalcapacity of 950 MLD located at Bukit Badong

SSP3 - Phase 3 of the Sungai Selangor water supply scheme comprising Rasa andBukit Badong water treatment plants with a total design nominal capacityof 1,050 MLD, the Dam, balancing reservoirs and pipelines and associatedworks

State Government - State Government of Selangor Darul Ehsan

Warrants - Up to 185,460,328 new warrants 2000/2007 to be issued by Gamudapursuant to the Proposed Rights Issue of Warrants, the indicative terms ofwhich are set out in this Circular

WTDS - Western Kuala Lumpur Traffic Dispersal Scheme

RM and sen - Ringgit Malaysia and sen respectively

Words importing the singular shall, where applicable, include the plural and vice versa and words importing themasculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Reference topersons shall include corporations.

Any reference in this Circular to any enactment is a reference to that enactment as for the time being amendedor re-enacted.

Any reference to a time of day in this Circular shall be a reference to Malaysian time, unless otherwise stated.

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CONTENTS

LETTER TO THE SHAREHOLDERS OF GAMUDA CONTAINING:- PAGE

SECTION

1. INTRODUCTION 1

2. DETAILS OF THE PROPOSALS 3

3. UTILISATION OF PROCEEDS 7

4. RATIONALE FOR THE PROPOSALS 9

5. INVESTMENT CONSIDERATIONS 9

6. INDUSTRY REVIEW AND THE FUTURE PROSPECTS AND PLANS OF THEGAMUDA GROUP

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7. FINANCIAL EFFECTS OF THE PROPOSALS 20

8. CONDITIONS OF THE PROPOSALS 24

9. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS 24

10. FOREIGN SHAREHOLDERS 25

11. UNDERTAKINGS 25

12. RECOMMENDATION 26

13. EGM 26

14. ADDITIONAL INFORMATION 26

APPENDICES

I - INFORMATION ON GAMUDA 27

II - INFORMATION ON GCSB 34

III - INFORMATION ON SPLASH 36

IV - PROPOSED ESOS BYE-LAWS 39

V - LETTER FROM RAM 52

VI - FURTHER INFORMATION 53

NOTICE OF EXTRAORDINARY GENERAL MEETING 58

FORM OF PROXY ENCLOSED

FORM FOR CHANGE OF ADDRESS ENCLOSED

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1.3 On 10 July 2000, CIMB announced on behalf of Gamuda a revision to the maximum number ofWarrants that will be issued to 195,724,779 warrants, of which up to 185,724,779 warrants will beissued by way of a proposed rights issue and 10,000,000 warrants by way of a proposed restrictedissue. The basis of the proposed rights issue of warrants, however, remains at one (1) newwarrant for every four (4) existing ordinary shares of RM1.00 each held in Gamuda.

1.4 On 7 September 2000, CIMB announced on behalf of Gamuda that the SC had on 30 August 2000approved the aforementioned bonds issue, proposed rights issue of warrants, proposed restrictedissue and proposed employee share option scheme. BNM had also vide its letter dated 26 June2000 approved the Bonds Issue. Further details of the approvals are set out in Section 8 of thisCircular.

1.5 On 28 September 2000, CIMB also announced on behalf of Gamuda that, after deliberation on theconditions imposed by the SC and taking into account the views of the key management staff,Gamuda has decided to abort the proposed restricted issue. On the same day, it also announcedthat based on the actual number of shares issued pursuant to the exercise of Gamuda's previousemployee share option scheme which expired on 16 July 2000, a maximum number of185,460,328 Warrants will be issued pursuant to the Proposed Rights Issue of Warrants instead ofthat previously announced.

1.6 The Bonds Issue was arranged on a 'bought-deal' basis whereby all the Bonds was subscribed byCIMB, as the primary subscriber, on 29 September 2000 at a discount to the nominal value of theBonds.

The principal terms of the Bonds are as follows:-

Issue Size : RM400,000,000 nominal value

Issue Price : RM298,848,000

Issue Date : 29 September 2000

Form : The Bonds were issued in bearer form and constituted by atrust deed

Coupon : The rate is 3% per annum based on the nominal value of theBonds, payable semi-annually in arrears from the Issue Date

Tenure : Seven (7) years from and including the Issue Date

Redemption : Unless previously purchased and cancelled, all outstandingBonds will be fully redeemed by Gamuda at 100% of itsnominal value in cash on maturity date

Conversion : Not convertible into ordinary shares in Gamuda under anycircumstances

Ranking : The Bonds constituted direct, unconditional and unsecuredobligations of the Company ranking pari passu without anypreference or priority amongst themselves and at least paripassu with all other present and future unsecured obligationsof the Company from time to time outstanding (other thansubordinated obligations and priorities created by law or trustdeed)

Listing : The Bonds are not listed on any stock exchange

Governing Law : Laws of Malaysia

The Bonds Issue has been evaluated by RAM and assigned a stand-alone long-term rating of A1.

In the opinion of RAM, the A1 rating indicates that the Bonds have adequate safety of timelypayment of interest and principal. Further details of the letter from RAM are set out in AppendixV of this Circular.

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1.7 The purpose of this Circular is to provide you with the details of the Proposals and to seek yourapproval for the resolutions to be tabled at the forthcoming EGM of the Company to be convenedat the Ballroom of Kota Permai Golf and Country Club, No.1, Jalan 31/100A, Section 31, KotaKemuning, 40460 Shah Alam, Selangor Darul Ehsan on Tuesday, 31 October 2000 at 10.00 a.m.

SHAREHOLDERS ARE ADVISED TO READ THE CONTENTS OF THIS CIRCULARCAREFULLY BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THEPROPOSALS.

2. DETAILS OF THE PROPOSALS

2.1 Proposed Rights Issue of Warrants

In conjunction with the Bonds Issue, up to 185,460,328 Warrants will be issued and provisionallyallotted to the shareholders of the Company by way of a renounceable rights issue on the basis ofone (1) new Warrant for every four (4) existing ordinary shares of RM1.00 each held in Gamudaat an issue price to be determined later. The issue price per Warrant will be approximately thedifference between the aggregate nominal value of the Bonds and the total proceeds to bereceived from the placement of the Bonds divided by the number of the Warrants. Fractions of aWarrant will be dealt with in such manner as the Board of Directors of Gamuda may in itsdiscretion think expedient.

The principal indicative terms of the Warrants are as follows:-

Form : The Warrants will be issued in registered form and constituted by adeed poll

Subscription Rights : Each Warrant carries the entitlement, at any time during theExercise Period, to subscribe for one (1) new ordinary share ofRM1.00 each in the Company at the Exercise Price, subject toadjustments in accordance with the provisions of the deed poll

Exercise Period : 61/2 years commencing on and including the date of issue of theWarrants and ending on a date being 61/2 years from the date ofissue of the Warrants

Exercise Price : The exercise price of the Warrants will be fixed at a discount of notmore than 10% from the weighted average market price of theGamuda shares for five (5) consecutive trading days to a Price-Fixing Date to be determined at a later date

The Exercise Price is subject to adjustment under the terms andconditions to be set out in the deed poll and shall be satisfied in cash

Expiry : At the close of business on the maturity date of the Warrants, beinga date 6½ years from the date of issue of the Warrants, any Warrantswhich has not been exercised will lapse and cease thereafter to bevalid for any purpose

Listing : Application will be made to the KLSE for admission to the OfficialList and the listing of and quotation for the Warrants and the newordinary shares of RM1.00 each arising from the exercise of theWarrants

Board Lot : Comprising 1,000 Warrants

Ranking : The new Gamuda ordinary shares of RM1.00 each to be issuedpursuant to the exercise of the Warrants will upon issue andallotment, rank pari passu in all respects with the then existingGamuda ordinary shares of RM1.00 each save and except that theyshall not be entitled to any dividends, rights, allotments and/or otherdistributions, the entitlement date of which is prior to the date ofexercise of the Warrants

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As the securities of Gamuda are prescribed securities, the Warrants and new ordinary shares ofRM1.00 each arising from the exercise of the Warrants will be credited into the respective CDSaccounts of the entitled shareholders. No physical warrant or share certificates will be issued.However, a notice of allotment will be despatched within twenty (20) market days from theclosing date of application to the entitled shareholders.

2.2 Proposed ESOS

The Proposed ESOS involves the granting of Options to Eligible Employees of the GamudaGroup to subscribe for new ordinary shares of RM1.00 each in the Company.

Terms defined in the ESOS Bye-Laws shall have the same meanings when used here unlessotherwise defined herein.

The salient features of the Proposed ESOS (hereinafter shall be referred to as the "Scheme") areas follows:-

(i) The maximum number of ordinary shares of Gamuda which may be made available underthe Scheme shall not be more than ten per cent (10%) of the issued and paid-up sharecapital of the Company at the point in time when an Offer is made.

(ii) The Option Committee shall have the power to regulate its own procedure and to makerules with respect to the administration of the Scheme which are not covered by these ByeLaws.

(iii) The actual number of new Shares which may be offered to a Selected Employee shall be atthe discretion of the Option Committee and shall not be less than one thousand (1,000) newShares nor more than the Maximum Allowable Allotment as set out in Bye-Law 4.1 andshall always be in multiples of 1,000 Shares.

(iv) No employee or Executive Director of the Group shall participate concurrently in morethan one (1) employee share option scheme implemented by any company within theGroup.

(v) Persons who fulfil the following conditions shall be eligible to be granted options under theScheme:-

(a) be of eighteen (18) years of age on the Date of Offer;

(b) fall within any one of the grades listed in Bye-Law 4.1;

(c) employed on a full time basis by any company comprised in the Group (save forany subsidiaries which are dormant) and that they are monthly paid employees;

(d) his employment must have been confirmed and he must have been employed for acontinuous period of at least one (1) year within the Group as at the Date of Offer(including service during a probation period);

(e) if he is a contract employee, the employment contract must be for a term,including any revised term, of at least three (3) continuous years;

(f) if he is employed by a company which is acquired by the Group during theduration of the Scheme and becomes a subsidiary of the Company upon suchacquisition, he must have completed a continuous period of at least one (1) year inthe Group following the date such company becomes or is deemed to be asubsidiary; and

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(g) if an employee is not a Malaysia citizen, he must, in addition to the conditionsstipulated in paragraphs (a) to (d) above, also fulfil the following conditions:-

(i) he must be serving the Group on a full time basis and his contributionmust be vital to the Group; or

(ii) in the event that he is serving under an employment contract, thecontract should be for a duration of at least three (3) years.

(vi) Subject always to Bye Law 3.1, an employee or Executive Director who has participated inan earlier employee share option scheme shall, in addition to complying with Bye Law3.2(a), (b), (c) and (g), only be permitted to participate in the Scheme if such employee orExecutive Director shall have, as at the Date of Offer, completed at least five (5) years ofcontinuous service with the Company (or with any other company within the Group, ifapplicable).

(vii) Subject always to Bye Law 3.1, an employee or Executive Director who has participated inthe Scheme shall only be permitted to participate in a new employee share option schemeimplemented by the Company Provided That:-

(a) the new employee share option scheme is implemented by the Company after theexpiry of the Option Period and where the Scheme is renewed, after the expiry ofthe extended or renewed Option Period; and

(b) such employee or Executive Director shall have, as at the date of offer of the newemployee share option scheme, completed at least five (5) years of continuousservice in the Company.

(viii) Executive Directors who represent the Government or Government institutions agenciesand Government employees who are serving in the public service scheme as defined underArticle 132 of the Federal Constitution are not eligible to be granted Options under theScheme.

(ix) Subject to any adjustments which may be made under Bye-Law 14, the aggregate numberof Shares to be offered to a Selected Employee in accordance with the Scheme shall bedetermined at the discretion of the Option Committee after taking into consideration,amongst other factors, the position, performance, seniority and the length of service that theSelected Employee has rendered, subject to the following limits:-

GradeMaximum Allowable Allotment of Shares

for Each Eligible Employee(Number of Shares)

A1 / A2 500,000

A3 450,000

B1 350,000

B2 250,000

B3 160,000

C1 100,000

C2 60,000

C3 40,000

D1 25,000

D2 20,000

D3 15,000

E1 - E5 10,000

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(x) An Offer made by the Option Committee under Bye-Law 5 shall be valid for a period oftwenty one (21) days from the Date of Offer and may be accepted within this prescribedperiod by the Selected Employee to whom the Offer is made by written notice to theOption Committee of such acceptance accompanied by a payment to the Company of anominal non-refundable sum of Ringgit Malaysia One (RM1.00) as consideration for thegrant of the Option.

(xi) If the Offer is not accepted in the manner aforesaid, such Offer shall upon the expiry of thesaid prescribed period, automatically lapse and be null and void and of no further force andeffect.

(xii) The price at which the Grantee is entitled to subscribe for each new Share shall be based onthe weighted average market price of the Shares as shown in the daily official list issued bythe KLSE for the five (5) market days immediately preceding the Date of Offer subject to adiscount of not more than ten per cent (10%), or at the par value of the Shares, whichever isthe higher.

(xiii) Upon acceptance of an Offer, the Grantee may during the Option Period exercise hisOptions in full or in part on such time and working day(s) as the Option Committee mayfrom time to time notify the Grantee in the manner as follows:-

Year 1 Year 2 Year 3 Year 4 Year 5

Percentage of Options exercisable (%) 20 20 20 20 20

Notes:-

1. The percentage of the Options exercisable in a particular year but not exercised can becarried forward to the subsequent years within the Option Period.

2. For non-Malaysian Grantees, the Options can only be exercised up to a maximum of 20%of the Shares comprised therein in each year. Any remaining unexercised percentage ofthe Options can be exercised upon expiry of the employment contract during the OptionPeriod or in the last year of the Scheme, whichever is earlier.

3. For Malaysian Grantees who are serving under an employment contract, any remainingunexercised percentage of the Options can be exercised upon expiry of the employmentcontract during the Option Period or in the last year of the Scheme, whichever is earlier.

4. In the case of a Selected Employee who was offered an Option in a year other than Year 1,the maximum percentage of the Options exercisable will be according to the sequence inthe table set out above as if the Options had been offered in Year 1, subject to Bye-Law 20and any remaining unexercised percentage of the Options can be exercised in full in thelast year of the Scheme.

All unexercised or partially exercised Options shall become null and void after the Date ofExpiry unless the duration of the Scheme has been extended or renewed in accordance withBye-Law 20.1 but in no event shall an Option be exercisable five (5) years from the datethe Option was first offered.

(xiv) The new Shares to be allotted and issued upon any exercise of the Options will upon suchallotment and issuance, rank pari passu in all respects with the then issued and fully paid-up Shares except that the Shares so issued will not rank for any dividends, rights,allotments or other distributions, the entitlement date (namely the date as at the close ofbusiness on which shareholders must be registered in order to be entitled to any dividends,rights, allotments or other distributions) of which is prior to the date of allotment of thenew Shares and will be subject to all the provisions of the Articles of Association relatingto transfer, transmission and otherwise of the Shares.

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(xv) Subject to the approvals of the SC, KLSE and/or any other regulatory authorities, theOption Committee may recommend to the Board who shall have the power at any time andfrom time to time by resolution to amend and/or modify all or any part of the provisions ofthe Scheme Provided That no such amendment and/or modification shall be made whichwould either prejudice the rights then accrued to any Grantee who has accepted an Optionwithout his prior consent or, without the prior approval of the Company in general meeting,alter to the advantage of any Grantee the provisions of the Scheme.

(xvi) The Scheme shall commence from the date of the letter to be submitted by the adviser tothe SC confirming that the Company has :-

(a) fulfilled the SC's conditions for approval of the Scheme, and that the Bye-Lawsdo not contravene the guidelines on employee share option scheme as stipulatedunder the SC's Policies and Guidelines on Issue/Offer of Securities; and

(b) obtained other relevant approvals for the Scheme and fulfilled all conditionsimposed therein;

and shall thereafter continue for a period of five (5) years from the Date of Commencement(the "Initial Scheme Period") subject however to any extension or renewal for a furtherperiod of not exceeding five (5) years commencing from the day after the date of expirationof the original five (5) years period as may be approved by all relevant parties.

Further details of the ESOS Bye-Laws are set out in Appendix IV of this Circular.

2.3 Proposed IASC

In order to accommodate the increase in the issued and paid-up share capital of Gamuda upon fullexercise of the Warrants and Proposed ESOS options, Gamuda proposes to increase its authorisedshare capital from RM1,000,000,000 comprising 1,000,000,000 ordinary shares of RM1.00 eachto RM2,000,000,000 comprising 2,000,000,000 ordinary shares of RM1.00 each. TheMemorandum of Association of the Company will be duly amended to reflect the increase.

3. UTILISATION OF PROCEEDS

The gross proceeds arising from the Bonds Issue and the Proposed Rights Issue of Warrants amounts toapproximately RM400 million. Details of the utilisation of proceeds are as follows:-

Note RM'000Core business activities

Repayment of borrowings 1 115,000

Land acquisition 3 60,000Working capital 4 70,700

Estimated expenses of the Bonds Issue and the Proposals 4,300

250,000Non-core business activities

Investment in GCSB 2 150,000

400,000

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Notes:-

1. Details of the borrowings as at 30 September 2000 to be repaid from the proceeds of the Bonds Issue andthe Proposed Rights Issue of Warrants are as follows:-

Type of Repayment Maturity Purpose ofborrowings amount date facility

RM'000

Nominal amount of 4%Redeemable UnsecuredBonds 1996/2001

115,000 29.12.01 (i) Investments in LITRAK Holdings andKESAS Holdings

(ii) Purchase of construction equipment(iii) Part finance of construction cost of

Gamuda's corporate building(iv) Investment in SPRINT Holdings(v) Estimated expenses and working capital

The Bonds 1996/2001 carry a fixed coupon rate of 4% per annum payable annually in arrears. Redemptionof the Bonds 1996/2001, if made prior to its maturity date, would be based on market price of the Bonds1996/2001. The last transacted price for the Bonds 1996/2001 as at 10 October 2000 (being the latestpracticable date prior to the printing of this Circular) is 99.11 sen. On the assumption that Gamuda is ableto redeem the Bonds 1996/2001 at 99.11 sen, interest savings would be approximately RM1.2 million perannum (net of the 3% coupon of the Bonds) . However, Gamuda may resort to redeeming the Bonds1996/2001 only on its maturity if the cost of buying back the Bonds 1996/2001 prior to its maturity date doesnot result in any interest savings to the Group.

In the event the amount required to redeem the Bonds 1996/2001 is less than RM115 million, the excessproceeds will be utilised for its working capital purposes.

The total borrowings of the Gamuda Group as at 31 July 2000 is approximately RM125.691 million.

2. Gamuda currently has a 30% equity interest in GCSB, the holding company of SPLASH. The amount will beused to subscribe for shares in GCSB to be issued pursuant to rights issues, which GCSB will in turn lendthe amount to SPLASH to part finance the cost of the Project. Further details of GCSB and SPLASH are asset out in Appendices II and III respectively. Gamuda anticipates that utilisation of proceeds for thispurpose will be over a period of 5 years from the completion of the Proposals.

3. The Group plans to expand its property development activities, and hence intends to expand its land bank. Itproposes to utilise the proceeds for this purpose within 1 year from the completion of the Proposals. Avaluation report will be extended to the SC for their record or approval, if required.

4. The working capital will be used for the core activities of the Group, which is mainly construction-related.

5. Utilisation of the proceeds as aforementioned is subject to the following conditions as imposed by the SC:-

(i) SC's approval is required for any changes in the aforementioned utilisation of proceeds if thechanges involved utilisation for non-core business activities of Gamuda;

(ii) Approval of the shareholders of Gamuda are required for the aforementioned utilisation ofproceeds and for any deviation by 25% or more from the aforementioned utilisation. Should thedeviation be less than 25%, relevant disclosures are required to be made to the shareholders ofGamuda;

(iii) Any extension of time for the utilisation must be approved by a clear resolution by the Board ofDirectors of Gamuda and should be communicated to the KLSE; and

(iv) Relevant disclosures on the status of the utilisation must be made in its quarterly and annualreports until the proceeds have been fully utilised.

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4. RATIONALE FOR THE PROPOSALS

The proceeds of the Bonds Issue and the Proposed Rights Issue of Warrants will be utilised mainly tofinance the Company's investment in SPLASH (via GCSB), repayment of borrowings of the Group,increasing its land bank and working capital for the Group.

SPLASH is the company that has been granted the Concession to undertake the Project. The Companyhas a 30% equity interest in GCSB, which in turn holds the entire ordinary shares issued of SPLASH.Further details on GCSB and SPLASH are as set out in Appendices II and III of this Circular respectively.

The acquisition of land bank is in line with the Group's expansion plans in the property sector, whilst therepayment of its existing borrowings will enable the Group to reduce its borrowing costs.

The Proposed Rights Issue of Warrants will give shareholders an option to decide whether they wish totake up further equity in the Company at a predetermined price over its tenure. In addition, whilstminimising the immediate dilution of EPS, the Warrants, when exercised, will provide the Group with thenecessary funds for repayment of the Bonds.

The Proposed ESOS is to reward and retain Eligible Employees whose services are vital to the operationsand growth of the Group.

The Proposed IASC is to accommodate the increase in the issued and paid-up share capital of theCompany pursuant to the full exercise of the Warrants and options pursuant to the Proposed ESOS as wellas to facilitate future capital expansion.

5. INVESTMENT CONSIDERATIONS

Shareholders should carefully consider, in addition to other information contained herein, the followinginformation (which may not be exhaustive) before voting on the resolutions pertaining to the Proposals :-

5.1 Business risks

The Gamuda Group is subject to risks inherent in the construction and property sector. Theseinclude changes in general economic conditions such as, but not limited to, governmentregulations, inflation, taxation, interest rates and exchange rates of foreign currencies; andchanges in business conditions such as, but not limited to, deterioration in prevailing marketconditions, labour and construction material shortages, increase in costs of labour and materials,non-performance or unsatisfactory performance of sub-contractors, property financing issues,satisfactory sales level of its projects and risk of purchaser defaults.

As regards its tolling operations, the Group has interests in LDP, SAE and WTDS. Tollcollections have commenced in LDP and SAE, whilst construction is still in progress with respectto WTDS. The risks associated to toll operations include, inter-alia, lower traffic volume thananticipated, lowering of toll rates, the availability of parallel routes, alternative means of transportand increase in operating costs relating to the maintenance of the roads. As for the constructionof WTDS which is still in progress, the risks associated to it include, inter-alia, timing and costsof land acquisition, costs overruns, delay in completion, commencement of toll collection andfinancing risks.

Although the Gamuda Group seeks to limit these risks through, inter-alia, careful contractualterms, close project supervision and planning, prudent financial policy and effective humanresource management, no assurance can be given that any change to these factors will not have amaterial adverse effect on the Gamuda Group's business.

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5.2 Traffic volume

Gamuda has equity interest in Kesas Sdn. Bhd., Lingkaran Trans Kota Sdn. Bhd. and SPRINT(the "Concessionaires") via KESAS Holdings, LITRAK Holdings and SPRINT Holdings, whichderives or will derive almost all of their revenue from collecting toll from vehicles using the SAE,LDP and the soon-to-be-completed WTDS ("Expressways"). Their revenue growth depends onthe number of vehicles using the Expressways and the toll rates that can be charged for suchjourneys. The number of vehicles using the Expressways are dependent on factors outsideGamuda's control including, most notably:-

(i) the level of economic activity in Malaysia, and in particular, along the corridors of theExpressways;

(ii) the level of commercial, industrial and residential developments in such corridors;

(iii) the price of petrol;

(iv) alternative competing roads or expressways which are or may become available; and

(v) alternative transport modes, such as rail.

There can be no assurance that any changes to these factors will not have a material adverse effecton the Group's revenue.

5.3 Toll rates

Future toll rates (including increments) which the Concessionaires may charge have been agreedwith the Government. However, the Government may still vary those rates throughout theconcession period. In the event the Government sets tolls at below the agreed rates, it is thenobliged to pay the Concessionaires compensation calculated according to a formula. In the past,the Government had made changes to the agreed toll rate of concessions owned by othercompanies. There can be no assurance that the Government will not in the future impose a lowertoll rate than the agreed toll rate for the Expressways.

5.4 Competition

The Group faces competition from other construction companies and property managers anddevelopers in the Klang Valley where the Group is currently operating. No assurance is giventhat the Group will be able to maintain its existing market position in the future.

Traffic volumes on the Expressways may be affected by the availability of parallel routes oralternative means of transport such as rail. For example, a short section of the North KlangValley Expressway ("NKVE") runs parallel to, and a short distance to the west of, the northernsection of the LDP. However, the NKVE is an inter-urban expressway with relatively fewinterchanges while the LDP is designed as an intra-urban road with closely spaced interchangesand access roads targeted at vehicles travelling relatively short distances within the Klang Valley.It is in this light that the Company does not consider the Expressways as having any competitor.However, there is still a possibility that competition from alternative means of transport oralternative routes may affect the Concessionaires' operations.

5.5 Termination of concession agreements

Under the terms of the concession agreements, the respective concessions may be terminated inthe event of a breach or default by the respective Concessionaires of the concession agreementsincluding various insolvency proceedings against the Concessionaires or if they fail to pay anypayments liable to be made by the Concessionaires to the Government when due. Terminationmay also be invoked by the Concessionaires if the Government fails to fulfil its obligations underthe concession agreements which affect the Concessionaires' ability to collect tolls and failure bythe Government to pay amounts due to the Concessionaires under the concession agreements.There can be no assurance that the concessions may not be terminated if any of theaforementioned events occur.

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5.6 Accounting policies

Upon completion of the construction of a project by a company, the International AccountingStandard No. 23 ("IAS 23") requires interest charges incurred on borrowings for the financing ofthat project to be charged to the profit and loss account of that company. The Concessionaires areof the opinion that interest charges incurred after completion of the construction of theExpressways until full repayment of these borrowings should not be charged to the profit and lossaccount for the relevant years such interest charges were incurred but should instead becapitalised and deferred via an Interest Equalisation Account which is amortised over the totalprojected future toll revenue. The Concessionaires are of the opinion that this accounting policyenables the interest charges incurred on borrowings for the construction of the Expressways to bematched more appropriately with the revenues from the concessions. Having regard to theforegoing, the auditors of the Concessionaires concurred with the opinion of the Concessionairesthat the accounting policy more appropriately matches the interest charges incurred on borrowingsobtained for the construction of the Expressways, with the revenues from the concessions.Furthermore, IAS 23 is not an approved accounting standard issued by the Malaysian AccountingStandard Board.

5.7 Project risks associated to the Concession (SSP1 and SSP3)

5.7.1 Construction period

Under the terms of the Privatisation Agreement, the State Government shall ensure thatthe land required for the Project be available to SPLASH within 3 to 12 months aftersubmission of the accepted land acquisition plan, with the most recent being made inMay 2000. If the State Government delays in making available the land, there will be anappropriate extension of time for the commencement and completion of all the worksnecessary to implement, construct and complete SSP3 and the Realigned Road inaccordance with the Privatisation Agreement. Any delay in the provision of the land bythe State Government may result in a consequent delay in the commencement ofoperations by SPLASH.

SPLASH will bear the costs of land which is compulsorily acquired under the LandAcquisition Act, 1960 including associated legal costs and costs of removal or resettlingof squatters or occupiers, if any. However, SPLASH will not be liable to pay for anyland cost arising from the resettlement of orang asli or relocation of the Peretak YouthTraining Centre. If the land acquisition costs exceed RM150 million, the StateGovernment will provide a soft loan to SPLASH to meet any land costs in excess ofRM150 million on terms and conditions to be mutually agreed upon by the parties. Ifactual land acquisition costs incurred are less than RM150 million, upon full and finaldisposal of all claims pursuant to the Land Acquisition Act, 1960, SPLASH will pay tothe State Government the difference between RM150 million and the actual landacquisition costs.

SPLASH has entered into a contract with the EPC Contractor, a joint venture formed byGamuda, Kumpulan Darul Ehsan Bhd. and The Sweet Water Alliance Sdn. Bhd., for thedesign, engineering and construction of all works necessary to implement, construct andcomplete SSP3 and the Realigned Road in accordance with the Privatisation Agreement("EPC Contract"). The EPC Contract dated 24 January 2000 is on a fixed price basiswith a defined completion schedule, in which the EPC Contractor assumes responsibilityand all risks associated with the completion of the SSP3 and the Realigned Road in fullcompliance with the EPC Contract. Cost increase under the EPC Contract is onlypossible if the State Government requests for variation or additional works and SPLASHreceives compensation from the State Government under the Privatisation Agreement.

If there is a delay to the completion not exceeding 6 months (from the expectedcompletion date) due to the State Government's delay in making available land inaccordance with the time schedule under the Privatisation Agreement, the EPCContractor will absorb any consequential costs arising from such delay. If the delayextends beyond 6 months, any cost overrun after the 6 months delay period will be borne

12

by SPLASH. The construction works are broken into 5 distinct packages, requiringapproximately 66 months to complete. Construction works began in January 2000 afterthe signing of the Privatisation Agreement. As a result, the risk of delay is partlymitigated to the extent delay in land affecting one package will not necessarily impactthe completion of the other packages. A land survey has been conducted which showsthat approximately 86% of the required land comprises State land that would not need tobe acquired for the purposes of the Project. Of the required land, only 8% is critical forthe timely completion of the construction works.

An Environment Impact Assessment Report has been prepared by SMHB Sdn. Bhd. inrespect of the Dam construction. The State Government has reviewed and approved thestudy subject to certain terms and conditions that must be complied with by SPLASH inthe implementation of the construction. The EPC Contractor must perform theconstruction of the Dam in full compliance with the environmental requirements.Failure of the EPC Contractor to comply will result in a default of the EPC Contract.

5.7.2 Operating period

The principal technical risks during the operating period relate to the ability of the watertreatment plants and the Dam to perform to the required specification.

Under the Privatisation Agreement, SPLASH will be required to produce and supplytreated water that complies with the quality standards referred to in the PrivatisationAgreement (so long as the raw water quality meets that specified in the PrivatisationAgreement). However, SPLASH will be liable to pay liquidated damages if it is unableto produce treated water to the designated treated water quality except where such failureis not due to SPLASH's negligence or default or the raw water quality is lower than thatspecified. As such, in relation to SSP1, SPLASH contracted with Perangsang WaterManagement Sdn. Bhd. ("PWM") to undertake the operation and maintenance servicesfor the entire period of the Concession. PWM has been responsible for operating andmaintaining SSP1 over the last 6 years since commissioning. In respect of SSP3,SPLASH contracted with The Sweet Water Management Sdn. Bhd. (formerly known asIdeas & Images Sdn. Bhd.) to undertake the same. It has been provided in the respectivecontracts that SPLASH will be able to pass on the aforementioned liquidated damages tothe contractors under specific situations as stated in the respective contracts. SPLASHalso intends to engage the services of a Technical Assistance Operator in themanagement and supervision of the operation and maintenance of SSP3. A TechnicalAssistance Operator is defined as a suitably qualified firm intended to be appointed toprovide technical assistance and management for the operation and maintenance ofSSP3.

The tariff structure, which is split into Capacity Charge (a fixed monthly charge) andSupply Charge (the variable charge payable by the State Government for each cubicmetre of treated water supplied to the State Government) under the PrivatisationAgreement will provide SPLASH with reasonably certain net revenues which will notvary materially with the quantity of water supplied and sold to the State Government.The State Government is responsible for the sale and distribution of treated water to endconsumers.

5.7.3 Other risks

Uninsurable risks

Under the EPC Contract, all insurable risks will be insured against under the constructionand operation all risks policies. In the event a force majeure has delayed, interrupted oraffected the construction works or the operation of the water treatment plants or thesupply of treated water by SPLASH to the State Government for a continuous period of6 months, SPLASH and the State Government may mutually agree to terminate thePrivatisation Agreement.

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The EPC Contractor will not be relieved of any obligations solely due to increased costsor other economic consequences that may result as a result of a force majeure event. Ifthe EPC Contractor incurs a loss or additional costs due to delay or interruption arisingfrom a force majeure, the EPC Contractor and SPLASH will negotiate to redress suchloss, subject to SPLASH successfully negotiating with the State Government for suchsimilar compensation and remedy. However, the risk of loss of revenue due to a delaycaused by force majeure afffecting the construction works is substantially mitigated bythe existing revenue streams from SSP1 that will continue to be paid by the StateGovernment regardless of the force majeure.

Termination risks

The Privatisation Agreement may be terminated if any of the following events occurs:-

(i) a failure by SPLASH to commence physical construction of SSP3 within 9months from signing the Privatisation Agreement. As at 30 September 2000,physical construction of SSP3 has already commenced;

(ii) a failure by SPLASH to complete the works in accordance with the schedule;

(iii) a default by SPLASH, for example, failure to show satisfactory progress of theworks, breach of material obligations in the Privatisation Agreement;

(iv) any order or resolution is made for the winding up of SPLASH, liquidation orappointment of a receiver over SPLASH's assets;

(v) a failure by the State Government to perform or fulfil any of its materialobligation which adversely affects the rights and authority of SPLASH tocollect the Capacity Charge and Supply Charge;

(vi) a failure by the State Government to make payment of the Capacity Charge orthe Supply Charge to SPLASH under the Privatisation Agreement;

(vii) an event of force majeure occurring and continuing for a period of 6 months;and

(viii) an expropriation of the Concession by the State Government.

5.8 Delay in completion

Property development projects are subject to various regulatory approvals and the timelycompletion of a development project is dependent on many external factors such as obtainingapprovals as scheduled, securing construction materials in adequate quantity, favourable creditterms and satisfactory performance of sub-contractors which may be appointed to completecertain portions of the development project. There can be no assurance that these factors will notlead to delays in the completion of a project. These delays may have a direct impact on theGroup's future profitability.

5.9 Political, economic and regulatory considerations

Like all other business entities, changes in political, economic and regulatory conditions in Malaysiaand elsewhere could materially and adversely affect the financial and business prospects of theGamuda Group and the markets of their end products, in particular, the development properties.Amongst the political, economic and regulatory uncertainties are the changes in government policies,expropriation, nationalisation, re-negotiation or nullification of existing sales orders and contracts,changes in interest rates and methods of taxation and currency exchange rules and contracts.

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5.10 Dependence on key personnel

The Gamuda Group believes that its continuing success depends, to a significant extent, upon theabilities and continuing efforts of its key personnel. The loss of any of the key personnel couldadversely affect the Group's continuing ability to compete in the industry. As such, the Group's futuresuccess will depend upon its ability to attract and retain skilled personnel. In this regard, the Grouphas proposed to implement the Proposed ESOS as an incentive to attract and retain skilled personnel.This proposed incentive, along with other human resources policies, are expected to provide thenecessary incentive to retain the key personnel of the Group.

5.11 Redemption of the Bonds

The Bonds are due to be redeemed in the year 2007 with funds from the exercise of the Warrants.However, inherent in instruments of this nature, in the event that the share price of the Companyis not attractive in the prevailing market during the exercise period of the Warrants, the Warrantholders might opt not to exercise the Warrants. Under such circumstances, the Company mayhave to source for alternative funding to redeem the Bonds and this may result in additionalinterest expense for the Company. Shareholders should also note that in the event the Warrantsare not exercised during the exercise period, the Warrants will become void and will not have anyvalue.

5.12 No prior market for the Warrants

Prior to this Proposed Rights Issue of Warrants, there was no public market for the Warrants.There can be no assurance that an active market for the Warrants will develop upon its listing onthe KLSE or, if developed, that such market could be sustained. The basis for fixing the issueprice of the Warrants has been set out in Section 2.1 of this Circular. There is no assurance thatthe market price of the Warrants upon or subsequent to their listing will remain at or above thesaid issue price of the Warrant. Furthermore, there is also no assurance that the performance ofits existing warrants 1996/2006 is reflective of the performance of the Warrants, upon their listingon the KLSE.

5.13 Future prospects

Certain statements in this Circular are based on historical data which may not be reflective of thefuture results, and others are forward-looking in nature which are subject to uncertainties andcontingencies. All forward-looking statements are based on estimates and assumptions made bythe Company, and although believed to be reasonable, are subject to known and unknown risks,uncertainties and other factors which may cause the actual results, performance or achievementsto differ materially from the future results, performance or achievements expressed or implied insuch forward-looking statements. Such factors include, inter-alia, general economic and businessconditions, competition, the impact of new laws and regulations affecting the Gamuda Group andthe industry, changes in interest rates, changes in foreign exchange rates and technologicalobsolescence. In the light of these and other uncertainties, the inclusion of a forward lookingstatement in this Circular should not be regarded as a representation or warranty by the Companyor its advisers that the plans and objectives of the Gamuda Group will be achieved.

6. INDUSTRY REVIEW AND THE FUTURE PROSPECTS AND PLANS OF THE GAMUDAGROUP

6.1 Industry review

Gamuda is principally involved in investment holding and civil engineering construction. Theprincipal activities of its subsidiaries and associated companies are in civil engineering and earthworkconstruction, manufacture, supply and laying of road surfacing materials, manufacture and sale ofpaper and paper related products, investment holding and trading, hire and rental of plant andmachinery, information technology services, civil engineering and building contracting, insuranceagency, property development, operation of quarry and road laying, manufacturing and trading ofbitumen emulsion products, provision of management services and concession holding.

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Based on the audited accounts of the Group for the year ended 31 July 1999, the turnover, profitbefore taxation and tangible assets employed are segmented as follows:-

TurnoverProfit before

taxationTangible assets

employedRM'000 RM'000 RM'000

Construction 266,362 63,031 1,037,130

Manufacturing, quarrying and others 49,152 6,192 118,573

315,514 69,223 1,155,703

Group's share of associated companies'results

- Property development 157,666 42,992 - Tolling and others 37,248 30,818

194,914 73,810

510,428 143,033

The prospects of the Group can therefore be linked to the growth of the following:-

(i) The Malaysian economy;

(ii) The construction sector;

(iii) The property sector; and

(iv) The infrastructure and utilities sector.

6.1.1 The Malaysian economy

In 1999, economic activity in Malaysia rebounded from a contraction of 7.5% in 1998 torecord a strong positive growth of 5.4% in 1999. More importantly, overallmacroeconomic fundamentals have strengthened. Remaining selective exchangecontrols and the fixed exchange rate continued to ensure stability in the financialmarkets. The policy measures implemented by the Government have been successful inaddressing immediate-term issues without undermining medium-term growth potential.Despite a strong rebound in domestic economic activities, inflation moderated further.The balance of payments position strengthened further and the build-up of externalreserves reflected the strong net inflows in both the current and long-term capitalaccounts. Total external debt, which has traditionally remained low, declined further.

Malaysia's economic recovery is expected to gather further momentum in the year 2000.Underlying this positive outlook is an economy that is becoming increasingly moreresilient to external shocks and systemic risks, made possible by recent policy measuresimplemented to strengthen the nation's external reserves position, financial system andthe corporate sector. In addition, the prevailing low rate of inflation and the nation'slarge surplus resource position allow further demand stimulus measures to be taken inyear 2000 to sustain the economic recovery process within the context of maintainingmacroeconomic stability. Barring any major downside risks that could affect the worldeconomic environment, these developments should provide the necessary impetus forMalaysia's real GDP to expand at a faster rate of 5% in the year 2000.

(Source : Economic Report 1999/2000 and Bank Negara Malaysia Annual Report 1999)

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6.1.2 The construction sector

The performance of the construction industry improved to record a smaller decline of5.6% in 1999 compared to a dip of 23.0% in 1998. The improvement in constructionactivities was supported by the increase in government spending in public sector projectssuch as roads, utilities and housing as well as revival of several critical privatisedprojects. Policy measures introduced since May 1998 focused mainly on reducingexcess stocks through home ownership campaigns and increasing access to finance byproviding special housing fund for low and medium-cost houses, while lower interestrates also helped to revive activities in the residential sector. As a result, value addedactivities in the construction industry registered a positive growth of 1.8% in the secondhalf-year of 1999, after declining 12.3% in the first half-year of 1999.

Recovery was most evident in the civil engineering sector. The Bank Negara MalaysiaSurvey of the Construction Sector, 1999 showed that most companies surveyed reportedan increase in construction activity in the civil engineering sector in 1999. Growth wassupported by higher allocation for infrastructure projects and on-going projects related topower plants, roads, rail, water, port, sewerage and waste disposal. The 1999 Budgetallocated RM4 billion for development of infrastructure, particularly for the constructionof roads, bridges, rail, ports and civil aviation facilities. The resumption of constructionwork on the New Pantai Expressway as well as rail projects, including the Express RailLink and the People-Mover Rapid Transit System, provided further impetus to thegrowth of this sector.

(Source: Bank Negara Malaysia Annual Report 1999)

6.1.3 The property sector

Judging from the overall transaction activity, the property market of 1999 had reboundedfrom its bottom performance in 1998. After the significant 32.3% and 47.6%contractions registered for 1998, the overall volume and value of transactions in 1999were on the uptrend again, showing 21.4% and 23.3% improvements respectively. Thepopularity of lower-priced properties continued to feature in 1999's transactions withproperties priced below RM150,000 accounting for 75.8% of the total transactionvolume in 1999 compared to 76.3% in 1998. At the same time, some renewed interest inhigher-priced properties was noted, particularly in the RM250,000 to RM500,000category, as evident from the increased transaction volume as well as its increased sharerelative to those of other property categories. Again, the residential sector featureddominantly in this increase.

The most improved sector was the industrial sector with a 71.3% growth. This resultedfrom significant activity jumps in states such as Kedah Darul Aman and Selangor DarulEhsan. The most dominant sector, however, was still the residential sector with a 69.5%share of the total volume. Next were the agricultural, commercial, industrial anddevelopment land sectors. In terms of market share, the residential, commercial andindustrial sectors strengthened their contributions to the total transactions relative to theagricultural and development land sectors. This meant that within the scenario of overallimprovement in transaction activity, agricultural and development land sectors weredeclining relative to the other three sectors.

On prices, if average values are any indicator as to movements in property prices, thenthe figures suggest that the residential and development land property prices moved up inprice in 1999 after taking a fall in 1998, while the commercial and industrial sectorsdeclined further and the agricultural sector maintained the level of 1998. While thepositive price movement in the residential sector was attributable to the general positivemovement in the majority of the states, the movement in the development land sectorwas influenced mainly by the positive movements in Selangor Darul Ehsan and JohorDarul Takzim, the two major states for development land. In the majority of other states,average price movement was still in the negative for development land sector.

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In terms of geography, almost all states registered improvements in transaction volume.Perak Darul Ridzuan and Kelantan Darul Naim were the only exceptions but, even so,their transaction declines narrowed to 5.1% and 6.2% respectively from 29.3% to 8.9%before. Kedah Darul Aman and Negeri Sembilan Darul Khusus were particularlyoutstanding in their overall transaction activity improvements but it was in SelangorDarul Ehsan where balanced sectoral improvements were most obvious.

Following an expectation of further recovery in the Malaysian economy, the propertymarket is expected to pick up further ahead. Underlying this optimistic outlook is aneconomy that is becoming increasingly more resilient to external shocks and risksthrough recent policy initiatives to strengthen the nation's external reserves, financialsystem and corporate sector. For the year 2000, improvements in the property marketare not likely to be similar for every individual sector. The residential sector,particularly for the landed property, will probably enjoy the best growth of all. Althoughan oversupply exists in certain areas, this may not come as a serious cause for concern.As the economy gathers momentum, demand will pick up the slack and address theoversupply.

The retail property sector, which is still stuck with gross oversupply, has still some wayto go though. As this sector thrives very much on business prosperity, the massiveoversupply in this sector will not be easy to clear in the short term, and will take evenlonger if the economy moves at a slow pace. A similar situation confronts the purpose-built office sectors. The amount of excess space in this sector will be difficult to resolveunder the present economic scenario.

(Source: 1999 Property Market Report, Valuation and Property Services Department,Ministry of Finance Malaysia)

6.1.4 Infrastructure and utilities sector

During the mid-term review period of the Seventh Malaysia Plan, capacity expansion ofinfrastructure and utilities network was accelerated under a high growth economicscenario. This expansion was achieved through privatisation and the application of newand adapted technologies as well as fast-track implementation processes. In addition, thequality of services was further improved through the adoption of productivity andefficiency enhancing measures. However, the pace of development could not besustained, particularly by the private sector, due to the financial crisis beginning July1997.

Recognising the contribution of infrastructure and utility projects in reviving theeconomy through linkages and spillovers, the expansion through public sector financingcontinued to be pursued, albeit, selectively. Hence, during the remaining SeventhMalaysia Plan period, focus will be given to the completion of critical infrastructureprojects, which have an impact on the efficiency, productivity and competitiveness ofother sectors of the economy. Emphasis will also be given to improve the quality of lifeby ensuring accessibility, adequacy and quality of supply in basic amenities such aswater and electricity, especially to the rural areas.

Roads

During the first 2 years of the mid-term review period, the implementation of road andhighway projects was rapid in response to demand for road network emanating from thehigh level of trading and commercial activities consonant with the robust economicgrowth. A total of RM7,824.3 million was spent on various road developmentprogrammes, representing 84.9% of the total Seventh Malaysia Plan allocation for roads.In addition, the private sector also expended a total of RM7,062 million or 45.3% of theplanned private investment for the development of privatised highways.

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The national road network increased by 3,742 kilometres or 6.1% during the mid-termreview period. Of this total, the share of paved roads increased from 74.3% to 74.9% in1995 and 1998, respectively. With the completion of 8 privatised highways, the totallength of privatised highways increased from 927 kilometres to 1,206 kilometres. Theseprojects included the SAE providing direct access to West Port of Port Klang, North-South Central Link Expressway serving the Kuala Lumpur International Airport("KLIA") at Sepang, Seremban-Port Dickson Highway, Butterworth-Kulim Expressway,Second Link to Singapore and the Kuala Lumpur-Karak Highway. Beside theseprivatised highways, other major road links completed during the mid-term reviewperiod included the Berungis-Kota Belud Road, Eastern Access to KLIA from Nilai andthe access road to Kulim Hi-Tech Industrial Park as well as Kota Tinggi Bypass. At thesame time, several road projects also commenced construction. These road projectsincluded the construction of several new privatised highways such as the LDP, NewPantai Highway and the upgrading of the Sungai Besi Highway. In line with the policyof the Government of encouraging private sector participation, particularly in theprovision of infrastructure, a total of 14 new concession agreements was signed forprivatised highways.

During the remaining Seventh Malaysia Plan period, focus will be given to accelerate theimplementation of road projects employing fast-track methods, in line with the thrust tojump-start and revive the economy. Priority will be given to complete privatised roadand highway projects that are affected by the economic downturn and tight liquiditysituation such as the New Pantai Highway and the New North Klang Straits Bypass.Privatised projects, which are of critical and strategic importance such as the East CoastHighway, will be implemented upon positive public response. The Government, throughBank Pembangunan dan Infrastruktur, will assist in financing some privatised roadprojects. At the same time, the concessionaires are encouraged to seek innovativefinancing methods such as raising funds through the issue of private debt securities andlistings on the stock market.

Water supply

The development of water supply focused on the accelerated completion of on-going aswell as expansion of existing projects to meet high water demand resulting from robusteconomic activities during the first 2 years of the mid-term review period. Water supplygrew at 5% per annum to meet domestic and industrial requirements. Due to theunanticipated prolonged dry spell from March to August 1998, water supply wasinsufficient in some parts of the country, particularly the Klang Valley.

As part of the efforts of the Government to increase the reliability of supplying safepotable water to households and also meet demand from the industrial sector in theKlang Valley, the Sungai Buloh Dam in Selangor was completed in 1997. In addition, afast-track project for the construction of the Wangsa Maju Treatment Plant with aproduction capacity of 45 MLD, and the transfer of raw water from the Klang GatesDam to the plant were completed in 6 months, in July 1998, to ease the water crisis in theKlang Valley. Another fast-track project initiated in July 1998, the transfer of raw waterfrom Sungai Gombak to the Wangsa Maju Treatment Plant as an alternative raw watersource, was completed in December 1998. The Sungai Selangor Phase II Stage I Project,with a capacity of 475 MLD, was also completed in December 1998 to help meetincreasing water demand in the Klang Valley. The Langkawi Submarine Pipelineproject was completed in 1997 to meet long-term water demand in Langkawi. With thecompletion of these projects as well as the Melaka Water Supply and Kulim WaterSupply projects, production capacity increased by 952 MLD in 1998. These projectsincreased the total national production capacity from 9,476 MLD in 1995 to 10,428MLD in 1998 compared with demand which grew from 7,623 MLD to 8,609 MLD,respectively. Consequently, the national water supply coverage increased to 90% in1998.

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During the remaining Seventh Malaysia Plan period, emphasis will be given to theexpansion of capacities to meet increasing demand, especially in water-stressed areas inorder to prevent occurrences of insufficient water supply. In addition to theimplementation of new projects which will expand capacity, steps will be taken to findnew sources of supply. At the same time, efforts will be made to conserve catchmentand watershed areas to ensure long-term sustainability of water resources. These will beconducted through greater cooperation and coordination via federal-state dialogue andpartnerships.

The implementation of approved water supply projects will be accelerated to furtherimprove demand and supply balance and reduce the gap in urban and rural coverage.These will include 32 treatment plants, reservoirs as well as intake points. In line withthe policy of the Government to increase accessibility to safe pipe water in the ruralareas, a total of 1,190 distribution works, mainly the installation of reticulation systemand laying of pipes, will be implemented. The completion of 10 of the treatment plantsincluding the Sungai Selangor Phase II Stage II, Kemaman Water Supply Phase II,Pelubang Water Supply Phase II and Teluk Bahang/Batu Feringhi Water Supply as wellas Temerloh/Mentakab Water Supply Phase III will increase production capacity to12,813 MLD compared with demand of 10,399 MLD.

Given the experience of the recent water crisis in the Klang Valley, efforts will be takento improve monitoring and surveillance as a water management technique which will actas an early warning system. Such measures include closer monitoring of damcharacteristics such as hydrological yield, storage volume, critical level and mode ofrelease of water for better balancing of supply and demand, particularly during thedrought season. In this respect, the construction of more storage bunds will beconsidered while publicity campaigns and education on increasing awareness on optimaluse of water as well as the use of water-saving devices will be intensified. Thefeasibility and commercial viability of the use of ground water as a source will be furtherexplored while detailed contingency plans will be drawn up to enable prompt response tooccurrences of water crisis.

(Source: Mid-Term Review of the Seventh Malaysia Plan 1996-2000)

6.2 Future prospects and plans of the Gamuda Group

The Group is expected to focus and further develop its core business in construction, highwaytolling and property and infrastructure development. With the recent award of the Project toSPLASH, it has enabled the Group to venture into water treatment as the next growth area aswell.

The construction of the Project is expected to complete in year 2005 and will supply 2,000 MLDto the Klang Valley residents, and is expected to generate constant earnings for the Group overthe thirty (30) years period of the Concession. The Project is expected to cost more than RM2billion to develop and Gamuda's share of the equity amounts to RM150 million, which will beraised from the Proposals. The balance of the funding requirements will be met by a combinationof shareholders' equity, borrowings and internally generated funds from SSP1 and the respectivecompleted SSP3 water treatment plant during the construction phase.

Construction is expected to remain as the main contributor to the Group in the future. Existingon-going construction projects in the WTDS and the SSP3 will ensure construction earnings overthe next five (5) years.

In property development, the Group expects to acquire additional land banks for development tocomplement its existing projects undertaken by Hicom Gamuda Development Sdn. Bhd., a 50%-owned associated company of Gamuda, in Kota Kemuning and Valencia Development Sdn. Bhd.(formerly known as Seni Pasifik Sdn. Bhd.), a 80%-owned subsidiary of Gamuda, in SungaiBuloh. The Group is proposing to utilise RM60 million from the proceeds arising from theProposals for this purpose.

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In addition, the Group also expects to secure additional road infrastructure projects in the future toensure that contributions from construction as well as highway tolling activities remains asignificant contributor to the Group's earnings.

Furthermore, in order to complement to sustaining the earnings growth of the Group, it recentlyacquired a 43.87% equity stake in Dyna Plastics Sdn. Bhd., a company involved in thedevelopment and manufacturing of high technology batteries, namely the polymer lithium ion("PLi-Ion") rechargeable batteries. PLi-Ion batteries are a new generation of rechargeablebatteries that are set to replace the lithium-ion batteries. This is because PLi-Ion batteries arelighter and thinner, have higher energy density and a longer life cycle. They are also durable andnon-explosive

7. FINANCIAL EFFECTS OF THE PROPOSALS

The financial effects of the Proposals are set out below depicting a minimum scenario (based on theassumption that no warrants 1999/2006 are being exercised after 30 September 2000) and the maximumscenario (based on the assumption that all warrants 1996/2006 will be exercised prior to the books closuredate for the Proposed Rights Issue of Warrants):-

7.1 Share capital

Upon completion of the Proposals, the issued and paid-up share capital of the Company willincrease as follows:-

No. of ordinary shares of RM1.00 eachMinimum

scenarioMaximum

scenario'000 '000

As at 30 September 2000 665,191 665,191

To be issued pursuant to the exercise of the existing warrants1996/2006

- 76,651

665,191 741,842

To be issued pursuant to the full exercise of the Warrants 166,298 185,460

To be issued pursuant to the full exercise of the optionsavailable under the Proposed ESOS *

66,519 74,184

Resultant share capital 898,008 1,001,486

Note:-

* The maximum number of shares to be offered under the Proposed ESOS will not exceed 10% of theissued share capital of Gamuda at the point in time when an offer is made.

7.2 Substantial shareholding

The Proposals will not have any immediate effect on the shareholdings of the substantialshareholders until such time when the Warrants and Proposed ESOS options are exercised intonew ordinary shares of Gamuda.

Based on the Register of Substantial Shareholders and Record of Depositors as at 30 September2000, the effects of the Proposals on the shareholdings of the substantial shareholders of Gamudaas at 30 September 2000, assuming full exercise of the Warrants and Proposed ESOS options, areas follows:-

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Minimum scenario

As at 30 September 2000After full exercise of the Warrants and

Proposed ESOS options <------Direct ------> <-- Indirect ----> <------Direct ------> <----- Indirect ----->

No. ofordinary

shares held %

No. ofordinary

shares held %

No. ofordinary

shares held %

No. ofordinary

shares held %'000 '000 '000 '000

Generasi Setia (M)Sdn. Bhd.

92,487 13.90 - - 115,609 12.87 - -

Y.A.M. Raja Dato'Seri Eleena AzlanShah

- - 92,487* 13.90 - - 115,609* 12.87

EmployeesProvident Fund

69,980 10.52 - - 87,475 9.74 - -

Y. Bhg. Dato' LinYun Ling

56,849 8.55 - - 71,561^ 7.97 - -

Great Eastern LifeAssurance(Malaysia) Berhad

20,750 3.12 - - 25,937 2.89 - -

Chan Kuan Nam @Chan Yong Foo

18,178 2.73 - - 23,223^ 2.59 - -

Heng Teng Kuang 14,675 2.21 - - 18,843^ 2.10 - -

Ng Kee Leen 14,516 2.18 - - 18,645^ 2.08 - -

Ha Tiing Tai 13,448 2.02 - - 17,310^ 1.93 - -

Note:-

* Deemed interested through Generasi Setia (M) Sdn. Bhd.

^ Assuming Y. Bhg. Dato ' Lin Yun Ling, Chan Kuan Nam @ Chan Yong Foo, Heng Teng Kuang, Ng Kee Leenand Ha Tiing Tai, the Executive Directors of Gamuda, will each be entitled to the options to subscribe for500,000 new Gamuda ordinary shares of RM1.00 each pursuant to the Proposed ESOS.

Maximum scenario

As at 30 September 2000+After full exercise of the Warrants and

Proposed ESOS options <------Direct ------> <-- Indirect ----> <------Direct ------> <----- Indirect ----->

No. ofordinary

shares held %

No. ofordinary

shares held %

No. ofordinary

shares held %

No. ofordinary

shares held %'000 '000 '000 '000

Generasi Setia (M)Sdn. Bhd.

106,211 14.32 - - 132,764 13.26 - -

Y.A.M. Raja Dato'Seri Eleena AzlanShah

- - 106,211* 14.32 - - 132,764* 13.26

EmployeesProvident Fund

70,015 9.44 - - 87,519 8.74 - -

Y. Bhg. Dato' LinYun Ling

64,902 8.75 - - 81,628^ 8.15 - -

Chan Kuan Nam @Chan Yong Foo

22,136 2.98 - - 28,170^ 2.81 - -

Great Eastern LifeAssurance(Malaysia) Berhad

20,750 2.80 - - 25,937 2.59 - -

Heng Teng Kuang 18,228 2.46 - - 23,285^ 2.33 - -

Ng Kee Leen 16,804 2.27 - - 21,505^ 2.15 - -

Ha Tiing Tai 15,152 2.04 - - 19,440^ 1.94 - -

22

As at 30 September 2000+After full exercise of the Warrants and

Proposed ESOS options <------Direct ------> <-- Indirect ----> <------Direct ------> <----- Indirect ----->

No. ofordinary

shares held %

No. ofordinary

shares held %

No. ofordinary

shares held %

No. ofordinary

shares held %'000 '000 '000 '000

Chung Koon Yee @Shang Yong

15,266 2.06 - - 19,083 1.91 - -

Notes:-

* Deemed interested through Generasi Setia (M) Sdn. Bhd.

+ Assuming all existing warrants 1996/2006 are exercised prior to the Proposed Rights Issue of Warrants.

^ Assuming Y. Bhg. Dato ' Lin Yun Ling, Chan Kuan Nam @ Chan Yong Foo, Heng Teng Kuang, Ng Kee Leenand Ha Tiing Tai, the Executive Directors of Gamuda, will each be entitled to the options to subscribe for500,000 new Gamuda ordinary shares of RM1.00 each pursuant to the Proposed ESOS.

7.3 NTA

The Proposals will not have any immediate effect on the NTA per share of the Group until suchtime when the Warrants and Proposed ESOS options are exercised into new ordinary shares ofGamuda. In the event the exercise price is above Gamuda's consolidated NTA per share at thattime, the Gamuda Group's NTA per share will increase, and vice-versa.

Based on the audited consolidated accounts of Gamuda as at 31 July 1999, the effect of theProposals on the NTA per share of the Gamuda Group is illustrated below:-

Minimum scenario

A B C D ERM'000 RM'000 RM'000 RM'000 RM'000

Share capital 295,904 665,191 665,191 665,191 898,008Share premium 189,833 39,290 39,290 39,290 644,614Retained profits 326,142 274,920 270,620* 270,620* 270,620*Shareholders' funds 811,879 979,401 975,101 975,101 1,813,242Less:-Net goodwill arising on consolidation (5,459) (5,459) (5,459) (5,459) (5,459)Discount on the Bonds - - (101,152) - -NTA 806,420 973,942 868,490 969,642 1,807,783

No. of shares in issue ('000) 295,904 665,191 665,191 665,191 898,008NTA per share (RM) 2.73 1.46 1.31 1.46 2.01

Notes:-

A Audited consolidated accounts of Gamuda for the financial year ended 31 July 1999.

B After taking into consideration the ordinary shares of Gamuda issued up to 30 September 2000(including the bonus issue which was completed on 3 March 2000).

C After B and the Bonds Issue.D After C and the Proposed Rights Issue of Warrants.E After D and the full exercise of the Warrants and Proposed ESOS options and assuming that the

exercise price is RM3.60 per share based on a discount of approximately 10% over the 5-dayweighted average price to 29 September 2000 of RM4.00 per share.

* After setting off the estimated expenses of RM4.3 million for the Proposals.

23

Maximum scenario

A B C D E FRM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Share capital 295,904 665,191 741,842 741,842 741,842 1,001,486Share premium 189,833 39,290 292,237 292,237 292,237 967,311Retained profits 326,142 274,920 274,920 270,620* 270,620* 270,620*Shareholders' funds 811,879 979,401 1,308,999 1,304,699 1,304,699 2,239,417Less:-Net goodwill arising onconsolidation

(5,459) (5,459) (5,459) (5,459) (5,459) (5,459)

Discount on the Bonds - - - (101,152) - -

NTA 806,420 973,942 1,303,540 1,198,088 1,299,240 2,233,958

No. of shares in issue ('000) 295,904 665,191 741,842 741,842 741,842 1,001,486NTA per share (RM) 2.73 1.46 1.76 1.62 1.75 2.23

Notes:-A Audited consolidated accounts of Gamuda for the financial year ended 31 July 1999.

B After taking into consideration the ordinary shares of Gamuda issued up to 30 September 2000(including the bonus issue which was completed on 3 March 2000).

C After B and the exercise of all its existing warrants 1996/2006 at the exercise price of RM4.30.

D After C and the Bonds Issue.E After D and the Proposed Rights Issue of Warrants.F After E and the full exercise of the Warrants and Proposed ESOS options and assuming that the

exercise price is RM3.60 per share based on a discount of approximately 10% over the 5-dayweighted average price to 29 September 2000 of RM4.00 per share.

* After setting off the estimated expenses of RM4.3 million for the Proposals.

7.4 Earnings

The Bonds Issue is expected to result in interest savings for the Gamuda Group for the financialyear ending 31 July 2001. However, the quantum of interest savings will depend on the price onwhich Gamuda is able to redeem its Bonds 1996/2001 at. Details of the interest savings werementioned in Section 3 of this Circular.

The Proposed Rights Issue of Warrants and Proposed ESOS are not expected to have any effecton the earnings of the Gamuda Group until such time the Warrants and/or Options are exercised.The proceeds to be derived from the exercise of the Warrants and/or Options are expected tocontribute positively to the earnings of the Gamuda Group.

7.5 Dividend

A gross dividend of 8% was proposed for the financial year ended 31 July 2000. Barring anyunforeseen circumstances, the Board of Directors of Gamuda expects to be able to declare a grossdividend for the financial year ending 31 July 2001, the quantum of which will not be less thanthat declared for the financial year ended 31 July 2000.

24

8. CONDITIONS OF THE PROPOSALS

The Proposals are subject to the approvals being obtained from the following:-

(i) SC, for the Bonds Issue, Proposed Rights Issue of Warrants and Proposed ESOS, which wasobtained on 30 August 2000, subject to, inter alia, the following:-

(a) Gamuda is to disclose details on the total Warrants exercised and utilisation of theproceeds arising from the exercise of the Warrants in its annual report for the entireperiod of the Warrants; and

(b) The exercise price of the Warrants must be set at a discount of not more than 10% fromthe 5-day weighted average market price of Gamuda's shares at a price-fixing date to bedetermined. The price-fixing date is a date between 30 August 2000 (being the date ofapproval of the SC) and the books closure date.

(ii) BNM (Bank Regulation Department), for the Bonds Issue, which was obtained on 26 June 2000,subject to the following:-

(a) The Bonds must be rated at least BBB by an approved rating agency. In this regard,RAM has assigned a long term rating of A1 to the Bonds Issue. The rating assignedindicates adequate safety of timely payment of interest and principal;

(b) Gamuda must create a sinking fund for the purposes of redeeming the Bonds. This hasbeen provided for in the trust deed constituting the Bonds Issue;

(c) Prior approval from BNM must be obtained for any revisions to the terms and conditionsof the Bonds Issue, including the utilisation of proceeds and earlyredemption/cancellation of the Bonds; and

(d) Gamuda must comply with all conditions stated by the Exchange Control Department ofBNM via its circular dated 24 April 2000 (Ref: KL.EC.100/7/1) in connection withprivate debt securities.

(iii) BNM (Exchange Control Department), for the Proposed Rights Issue of Warrants;

(iv) KLSE, for the admission of the Warrants to the Official List of KLSE and the listing of andquotation for the Warrants and the new Gamuda ordinary shares arising from the exercise of theWarrants and the Proposed ESOS options; and

(v) shareholders of Gamuda at an EGM to be convened.

The Proposed ESOS is not conditional to the Proposed Rights Issue of Warrants.

The Proposed IASC is conditional to the Proposed Rights Issue of Warrants and Proposed ESOS.

9. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS

Y. Bhg. Dato' Lin Yun Ling, Chan Kuan Nam @ Chan Yong Foo, Heng Teng Kuang, Ng Kee Leen, GoonHeng Wah, Ha Tiing Tai, Y. Bhg. Dato' Ir. Kamarul Zaman bin Mohd. Ali and Saw Wah Theng, beingfull-time Executive Directors, whose shareholdings in Gamuda are disclosed in Section 4 of Appendix I ofthis Circular, would be entitled to participate in the Proposed ESOS up to a maximum of 500,000 newordinary shares of RM1.00 each in Gamuda respectively. They are, therefore, deemed interested in theirrespective entitlement pursuant to the Proposed ESOS. Accordingly, they have abstained and willcontinue to abstain from voting at the relevant Board meetings of Gamuda held to consider their respectiveentitlement pursuant to the Proposed ESOS.

25

The aforementioned Directors will also abstain from voting in respect of their direct and/or indirectshareholdings on the resolutions in respect of their respective entitlement pursuant to the Proposed ESOSto be tabled at the forthcoming EGM.

Save as disclosed above, none of the other Directors or substantial shareholders of Gamuda has anyinterest, direct and/or indirect, in the Proposals apart from that derived as shareholders pursuant to theProposed Rights Issue of Warrants. Based on the records of the Company, no person connected with theDirectors and substantial shareholders of Gamuda has declared to Gamuda his/her interest, direct orindirect, in the Proposals.

10. FOREIGN SHAREHOLDERS

An Abridged Prospectus, which will be issued in connection with the Proposed Rights Issue of Warrants,including its accompanying documents, will not be registered under any applicable securities legislation ofany jurisdiction (except Malaysia) and the Proposed Rights Issue of Warrants will not be offered forsubscription in any country other than Malaysia.

Accordingly, the documents relating to the Proposed Rights Issue of Warrants will not be sent toshareholders of the Company who do not have a registered address in Malaysia ("Foreign Shareholders'").Such Foreign Shareholders who wish to change their address may do so by depositing the Form forChange of Address enclosed in this Circular prior to the close of business on a date to be determined andannounced later by the Directors of the Company as the day for determination of the entitlement ofshareholders of the Company to the Proposed Rights Issue of Warrants.

Alternatively, such Foreign Shareholders may collect the Abridged Prospectus from the Registrars of theCompany, in which event, the Registrars of the Company shall be entitled to request for such evidence asthey deem necessary to satisfy themselves as to the identity and authority of the person collecting theAbridged Prospectus.

A shareholder of the Company may only exercise his/her rights in respect of the Proposed Rights Issue ofWarrants to the extent that it would be lawful to do so under, and the Company would not, in connectionwith the Proposed Rights Issue of Warrants, be in breach of the laws of any jurisdiction to which theshareholder of the Company might be subject to. The shareholders of the Company shall be solelyresponsible to seek advice as to the laws of any jurisdiction to which they may be subject of, and aparticipation by a shareholder of the Company in the Proposed Rights Issue of Warrants shall be on thebasis of a warranty by the shareholder of the Company that he/she may lawfully so participate without theCompany being in breach of the laws of any jurisdiction.

Foreign Shareholders will have no claims whatsoever against the Company in respect of their rights,entitlements or to any net proceeds thereof.

11. UNDERTAKINGS

The following shareholders of Gamuda have given their irrevocable undertakings on 6 July 2000 tosubscribe for their respective entitlement to the Warrants pursuant to the Proposed Rights Issue ofWarrants:-

Shareholdingsas at 30 September 2000+

Maximum Warrantsentitlement

No. of shares held % No. of Warrants %

Generasi Setia (M) Sdn. Bhd. 106,210,928 14.32 26,552,732 14.32

Y. Bhg. Dato' Lin Yun Ling 64,902,260 8.75 16,225,565 8.75

Chan Kuan Nam @ Chan Yong Foo 22,135,794 2.98 5,533,948 2.98

Heng Teng Kuang 18,227,870 2.46 4,556,967 2.46

Ng Kee Leen 16,804,114 2.27 4,201,028 2.27

Ha Tiing Tai 15,151,938 2.04 3,787,984 2.04

26

Shareholdingsas at 30 September 2000+

Maximum Warrantsentitlement

No. of shares held % No. of Warrants %

Chung Koon Yee @ Shang Yong 15,266,320 2.06 3,816,580 2.06

Goon Heng Wah 13,259,316 1.79 3,314,829 1.79

Chan Kok Wah 8,363,096 1.13 2,090,774 1.13

Y. Bhg. Dato' Ir. Kamarul Zaman binMohd. Ali

1,518,000 0.20 379,500 0.20

Y. Bhg. Tan Sri Dato' Ir. Talha binHaji Mohd. Hashim

935,938 0.13 233,984 0.13

282,775,574 38.13 70,693,891 38.13

Note:-

+ Assuming all existing warrants 1996/2006 held by them as at 30 September 2000 are exercised prior to theProposed Rights Issue of Warrants.

The remaining 114,766,437 Warrants to be issued pursuant to the Proposed Rights Issue of Warrants willbe underwritten by the underwriters to be sourced later at an estimated underwriting commission of at least1.0% on the issue price.

The underwriting commission for the Warrants will be fully borne by the Company.

12. RECOMMENDATION

Your Directors, after careful deliberation, are of the opinion that the Proposals are in the best interest of theCompany. Accordingly, your Directors, save for Y. Bhg. Dato' Lin Yun Ling, Chan Kuan Nam @ ChanYong Foo, Heng Teng Kuang, Ng Kee Leen, Goon Heng Wah, Ha Tiing Tai, Y. Bhg. Dato' Ir. KamarulZaman bin Mohd. Ali and Saw Wah Theng who are deemed interested in respect of their respectiveentitlement pursuant to the Proposed ESOS, recommend that shareholders vote in favour of the resolutionsto be tabled at the forthcoming EGM to give effect to the Proposals.

13. EGM

An EGM, the Notice of which is enclosed in this Circular, will be held at the Ballroom of Kota PermaiGolf and Country Club, No.1, Jalan 31/100A, Section 31, Kota Kemuning, 40460 Shah Alam, SelangorDarul Ehsan on Tuesday, 31 October 2000 at 10.00 a.m. to seek your approval for the Proposals.

If you are unable to attend the EGM in person, please complete the enclosed Form of Proxy and forward itto the Registered Office of Gamuda at No.55 - 61, Jalan SS22/23, Damansara Jaya, 47400 Petaling Jaya,Selangor Darul Ehsan so as to arrive not less than forty-eight (48) hours before the time set for holding theEGM or at any adjournment thereof. The lodging of the Form of Proxy will not preclude you fromattending the EGM and voting in person should you subsequently wish to do so.

14. ADDITIONAL INFORMATION

Shareholders are requested to refer to the attached appendices for additional information.

Yours faithfullyfor and on behalf of the Board

Y. Bhg. Tan Sri Dato' Ir. Talha bin Haji Mohd. HashimChairman

27

APPENDIX I

INFORMATION ON GAMUDA

1. History and business

Gamuda was incorporated in Malaysia as a private limited company under the name of Gamuda Sdn. Bhd.on 6 October 1976. It was subsequently converted into a public limited company on 19 December 1991and adopted its present name. Gamuda was listed on the Main Board of KLSE on 10 August 1992.

Gamuda is principally involved in investment holding and civil engineering construction. The principalactivities of its subsidiaries and associated companies are set out in Section 5 below.

Over the past 10 years, Gamuda has achieved rapid growth and established itself firmly in the constructionindustry. In 1985, Gamuda was registered as a Class "A" Contractor with the Pusat Khidmat KontraktorMalaysia. Upon its registration as a Class "A" Contractor, the Company moved to established itself in theconstruction of roads and highways, construction of industrial factories, water treatment plants andreservoirs, education and health establishments, major turnkey projects and other piling and foundationworks.

In recent years, Gamuda has diversified into infrastructure development with the award of the concessionson a build, operate and transfer basis for the SAE and the LDP via its associated companies, Kesas Sdn.Bhd. and Lingkaran Trans Kota Sdn. Bhd. respectively. In 1997, the concession on a build, operate andtransfer basis for the WTDS was granted to SPRINT. SPRINT is a wholly-owned subsidiary of SPRINTHoldings. In January 2000, GCSB, via SPLASH, was awarded the Concession for the privatisation of theProject.

Currently, the activities of Gamuda and its stable of companies are divided into five broad categories,namely infrastructure development, property development, civil engineering and construction, quarryoperations and manufacturing operations.

2. Share capital

The authorised, issued and fully paid-up share capital of Gamuda as at 30 September 2000 were asfollows:-

RMAuthorised:-

1,000,000,000 ordinary shares of RM1.00 each 1,000,000,000

Issued and fully paid-up:-665,190,672 ordinary shares of RM1.00 each 665,190,672

Details of the changes in the issued and paid-up share capital of Gamuda since incorporation are asfollows:-

Date ofallotment

No. of ordinaryshares of RM1.00

each allotted Consideration

Resultant issuedand fully paid-up

share capitalRM

06.10.1976 2 Cash; Subscribers' shares 2

26.11.1976 199,998 Cash 200,000

10.10.1977 200,000 Cash 400,000

30.07.1981 100,000 Cash 500,000

21.07.1984 500,000 Cash 1,000,000

24.07.1985 250,000 Cash 1,250,000

28

Date ofallotment

No. of ordinaryshares of RM1.00

each allotted Consideration

Resultant issuedand fully paid-up

share capitalRM

29.07.1985 500,000 Issued as consideration for the acquisition of severalcompanies

1,750,000

31.07.1986 750,000 Cash 2,500,000

30.07.1987 750,000 Bonus issue of 3 for 10 3,250,000

31.07.1988 1,750,000 Bonus issue of 7 for 10 5,000,000

30.06.1990 3,000,000 Bonus issue of 3 for 5 8,000,000

29.04.1992 11,000,000 Bonus issue of 1,375 for 1,000 19,000,000

29.04.1992 23,976,667 Issued as consideration for the acquisition of GammauConstruction Sdn. Bhd. and Ganaz Bina Sdn. Bhd. atpar

42,976,667

05.06.1992 19,086,333 Rights issue of approximately 2,386 for 1,000 atRM1.20 per share based on the issued capital ofRM8,000,000

62,063,000

18.01.1995 20,687,667 Bonus issue of 1 for 3 82,750,667

20.03.1995 7,757,875 Rights issue of 1 for 8 at RM6.45 per share 90,508,542

24.01.1996 to31.12.1996

2,554,000 Issued pursuant to the exercise of an ESOS 93,062,542

08.07.1996 to31.12.1996

21,993,169 Issued pursuant to the exercise of warrants 1995/2000 115,055,711

16.01.1997 153,407,614 Bonus issue of 4 for 3 268,463,325

22.01.1997 to06.03.1997

231,000 Issued pursuant to the exercise of an ESOS 268,694,325

12.03.1997 19,175,951 Rights issue of 1 for 6 at RM5.50 per share 287,870,276

20.03.1997 to31.12.1997

1,201,800 Issued pursuant to the exercise of an ESOS 289,072,076

02.07.1997 to31.12.1997

624,333 Issued pursuant to the exercise of warrants 1995/2000and 1996/2006

289,696,409

01.01.1998 to31.12.1998

99,000 Issued pursuant to the exercise of an ESOS 289,795,409

01.01.1999 to31.12.1999

7,526,000 Issued pursuant to the exercise of an ESOS 297,321,409

01.01.1999 to31.12.1999

8,453,428 Issued pursuant to the exercise of warrants 1995/2000and 1996/2006

305,774,837

01.01.2000 to02.03.2000

5,061,000 Issued pursuant to the exercise of an ESOS 310,835,837

01.01.2000 to02.03.2000

12,185,999 Issued pursuant to the exercise of warrants 1995/2000and 1996/2006

323,021,836

03.03.2000 322,213,836 Bonus issue of 1 for 1 645,235,672

09.03.2000 to31.07.2000

19,955,000 Issued pursuant to the exercise of an ESOS 665,190,672

29

3. Substantial shareholders

The substantial shareholders of Gamuda, according to the Register of Substantial Shareholders and Recordof Depositors, as at 30 September 2000 were as follows:-

<----------------------Shareholdings---------------------->Direct % Indirect %

Generasi Setia (M) Sdn. Bhd. 92,486,928 13.90 - -

Y.A.M. Raja Dato' Seri Eleena Azlan Shah - - 92,486,928* 13.90

Employees Provident Fund 69,980,250 10.52 - -

Y. Bhg. Dato' Lin Yun Ling 56,848,818 8.55 - -

Great Eastern Life Assurance (Malaysia) Berhad 20,749,998 3.12 - -

Chan Kuan Nam @ Chan Yong Foo 18,178,462 2.73 - -

Heng Teng Kuang 14,674,794 2.21 - -

Ng Kee Leen 14,516,114 2.18 - -

Ha Tiing Tai 13,447,938 2.02 - -

Note:-

* Deemed interested through Generasi Setia (M) Sdn. Bhd.

4. Directors

The Directors of Gamuda, all of whom are Malaysians, and their respective shareholdings according to theRegister of Directors' Shareholdings and Record of Depositors, as at 30 September 2000 were as follows:-

<----------------------Shareholdings---------------------->Name Direct % Indirect %

Y. Bhg. Tan Sri Dato' Ir. Talha bin Haji Mohd. Hashim 825,828 0.12 - -

Y. Bhg. Dato' Lin Yun Ling 56,848,818 8.55 - -

Y.A.M. Raja Dato' Seri Eleena Azlan Shah - - 92,486,928* 13.90

Chan Kuan Nam @ Chan Yong Foo 18,178,462 2.73 - -

Heng Teng Kuang 14,674,794 2.21 - -

Ng Kee Leen 14,516,114 2.18 - -

Goon Heng Wah 11,471,158 1.72 - -

Y. Bhg. Dato' Ir. Kamarul Zaman bin Mohd. Ali 1,346,000 0.20 - -

Ha Tiing Tai 13,447,938 2.02 - -

Wong Chin Yen - - - -

Saw Wah Theng 540,000 0.08 - -

Note:-

* Deemed interested through Generasi Setia (M) Sdn. Bhd.

30

5. Subsidiaries and associated companies

Details of the subsidiaries and associated companies of Gamuda as at 30 September 2000 were as follows:-

Name

Date andcountry of

incorporationIssued and

paid-up capitalRM

Effectiveequity

interest held%

Principal activities

Subsidiaries

Gammau Construction Sdn.Bhd.

12.08.1974;Malaysia

6,000,000 100.00 Civil engineering andearthwork construction

Masterpave Sdn. Bhd. 27.02.1988;Malaysia

2,500,000 100.00 Manufacture, supply and layingof road surfacing materials

Gamuda Paper IndustriesSdn. Bhd.

04.01.1991;Malaysia

18,000,000 95.00 Manufacture and sale of paperand paper related products

Ganaz Bina Sdn. Bhd. 28.02.1987;Malaysia

3,000,000 100.00 Civil engineering construction

Megah Capital Sdn. Bhd. 02.04.1997;Malaysia

2 100.00 Investment holding and trading

Megah Sewa Sdn. Bhd. 31.03.1997;Malaysia

2 ordinaryshares; 100,000

redeemablepreference

shares

100.00 Hire and rental of plant andmachinery

Gamuda OverseasInvestment Ltd.

10.12.1996;BritishVirginIslands

USD100,000 100.00 Investment holding

GIT Services Sdn. Bhd. 05.05.1998;Malaysia

100,000 100.00 Information technologyservices and trading

Gamuda Engineering Sdn.Bhd.

02.03.2000;Malaysia

750,000ordinary shares;

20,000redeemablepreference

shares

100.00 Civil engineering and buildingcontractors

Gamuda Trading Sdn. Bhd.(formerly known as Cita-Tiara Corporation Sdn.Bhd.)

07.12.1999;Malaysia

100,000ordinary shares;

9,000redeemablepreference

shares

100.00 Trading of constructionmaterials

Megah ManagementServices Sdn. Bhd.(formerly known asMarcal Sdn. Bhd.)

06.11.1998;Malaysia

50,000 100.00 Insurance agency

Valencia Development Sdn.Bhd. (formerly known asSeni Pasifik Sdn. Bhd.)

17.12.1998;Malaysia

300,000 80.00 Property development

Reka Strategi Sdn. Bhd. 12.02.1999;Malaysia

2 100.00 Dormant

Subsidiary of Ganaz Bina Sdn. Bhd.

G.B. Kuari Sdn. Bhd. 07.09.1989;Malaysia

500,000 70.00 Operation of quarry and roadlaying

31

Name

Date andcountry of

incorporationIssued and

paid-up capitalRM

Effectiveequity

interest held%

Principal activities

Subsidiary of Gamuda Paper Industries Sdn. Bhd.

GPI Trading Sdn. Bhd.(formerly known asInisiatif Bakat Sdn. Bhd.)

14.06.1999;Malaysia

2 95.00 Trading of paper and paperrelated products

Associated companies

KESAS Holdings 30.09.1993;Malaysia

5,000,000ordinary shares;

465,914,840redeemablepreference

shares

30.00 Investment holding

Hicom GamudaDevelopment Sdn. Bhd.

04.01.1994;Malaysia

5,000,000ordinary shares;

1,053,004redeemablepreference

shares

50.00 Property development

Sussen (M) Sdn. Bhd. 19.06.1991;Malaysia

200,000ordinary shares;

400,000redeemablecumulativepreference

shares

50.00 Manufacturing and trading ofbitumen emulsion products

LITRAK Holdings 09.03.1995;Malaysia

451,891,000 41.05 Investment holding andprovision of managementservices

Madang Permai Sdn. Bhd. 20.04.1994;Malaysia

5,000,000 36.00 Concession holder

SPRINT Holdings 27.03.1997;Malaysia

800,002ordinary shares;4,999,998 non-

cumulativeredeemablepreference

shares("NCRPS")

Class A;2,560,000

NCRPS Class B

30.00 Investment holding

GCSB 07.05.1999;Malaysia

50,000,000 30.00 Investment holding

Dyna Plastics Sdn. Bhd. 30.09.1997;Malaysia

40,434,000ordinary shares;

4,473,552irredeemable

convertibleunsecuredpreference

shares

43.87 Development andmanufacturing of hightechnology batteries

32

6. Profit and dividend record

The following table summarises the audited consolidated results of Gamuda for the five (5) financial yearsended 31 July 1995 to 1999 and the unaudited consolidated results for the year ended 31 July 2000:-

--------------------------------------- Audited ------------------------ UnauditedFinancial year ended 31 July 1995 1996 1997 1998 1999 2000

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Turnover 368,724 585,743 792,187 681,175 510,428 815,833

Profit before taxation 52,030 82,618 131,033 110,033 143,033 206,062

Taxation (16,837) (26,283) (40,034) (30,390) (2,002) (57,321)

Profit after taxation 35,193 56,335 90,999 79,643 141,031 148,741Minority interests (705) (855) (1,810) (2,081) (2,703) (1,926)

Profit after taxation and minority interest 34,488 55,480 89,189 77,562 138,328 146,815

No. of shares in issue ('000) 90,509 91,682 289,083 289,696 295,904 665,191^

Weighted average no. of shares in issue('000) *

405,510 450,332 536,152 579,224 581,498 639,494

Net EPS (RM) # 0.09 0.12 0.17 0.13 0.24 0.23

Gross dividend (%) 10.00 12.00 12.00 12.00 12.00 4.0+

Notes:-

^ The increase in the issued and paid-up share capital was due to a 1 for 1 bonus issue implemented duringthe year, exercise of warrants 1995/2000, warrants 1996/2006 and the previous employee share options.

* The weighted average number of shares in issue has been adjusted to take into account the issuance of bonusshares in the financial years ended 31 July 1995, 1997 and 2000.

# Net EPS is computed based on profit after taxation and minority interest divided by the weighted averagenumber of shares in issue for the respective financial years.

+ Interim dividend (tax exempted) declared and paid. The Company has proposed a final dividend of 4% (taxexempted) for the financial year ended 31 July 2000.

(i) Turnover increased by approximately 57% for the financial year ended 31 July 1995 and approximately59% for the financial year ended 31 July 1996, mainly due to the contribution from the Gamuda-PerconJoint Venture which was awarded a RM1.1 billion turnkey contract for the construction of the SAE, of whichPackage A (from Sri Petaling to Subang West) was accelerated. Profit before taxation increased for thesefinancial years as well mainly due to the securing of more contracts, in particular the contribution from theGamuda-Percon Joint Venture and corresponding increase in turnover.

(ii) Turnover for the financial year ended 31 July 1997 increased by approximately 35% whilst profit beforetaxation increased by approximately 59%. This was mainly due to the construction of the LDP and thesecond package of the SAE, and the commencement of tolling operations of SAE in December 1996.

(iii) The onset of the Asian economic turmoil in late 1997 affected the business operations of Gamuda for thefinancial year ended 31 July 1998. Turnover decreased by approximately 14% whilst profit before taxationdecreased by approximately 16%. The decline was also attributed to the delay in construction of the WTDS.

(iv) For the financial year ended 31 July 1999, profit before taxation increased by 30% despite a 25% fall inturnover, due to the completion of the LDP and higher contributions from the highway tolling activities.

(v) Turnover for the financial year ended 31 July 2000 increased by approximately 60% whilst profit beforetaxation increased by approximately 44%. This was mainly the result of better performance by theconstruction, tolling, water treatment and manufacturing activities of the Group, which include inter-alia, afull year impact of WTDS construction, commencement of revenue recognition from the sale of treated waterfrom SSP1 and higher traffic volume achieved by the toll concessions.

(vi) There was no exceptional or extraordinary item during the financial years under review.

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7. Historical share prices

The monthly high and low market prices of Gamuda shares for the past twelve (12) months from October1999 to September 2000 were as follows:-

HighRM

LowRM

1999October 8.05 6.70November 8.00 7.15December 8.60 7.55

2000January 10.50 8.55February 12.00 *5.15March 6.10 4.98April 5.80 4.922000May 5.45 4.96June 5.25 4.06July 4.66 4.18August 4.48 4.16September 4.34 3.96

The last transacted price of Gamuda shares on 4 April 2000, being the day prior to thedate of announcement of the Proposals

RM5.60

The last transacted price of Gamuda shares on 10 October 2000, being the latestpracticable date prior to the printing of this Circular

RM3.88

(Source : Investors' Digest and KLSE Daily Diary)

Note:-

* Gamuda implemented a bonus issue of one (1) new ordinary share for every one (1) existingordinary share held, which was completed on 3 March 2000. The February low market price ofGamuda shares were quoted ex-bonus.

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APPENDIX II

INFORMATION ON GCSB

1. History and business

GCSB was incorporated as a private limited company in Malaysia under the Companies Act, 1965 on 7May 1999. It is principally involved in investment holding and the provision of management services.Currently, its sole investment is its 100% holding of ordinary shares in SPLASH.

2. Share capital

The authorised, issued and fully paid-up share capital of GCSB as at 30 September 2000 were as follows:-

RMAuthorised:-

1,000,000,000 ordinary shares of RM1.00 each 1,000,000,000

Issued and fully paid-up:-50,000,000 ordinary shares of RM1.00 each 50,000,000

Details of the changes in the issued and paid-up share capital of GCSB since incorporation are as follows:-

Date ofallotment

No. of ordinaryshares of RM1.00

each allotted Consideration

Resultant issuedand fully paid-up

share capitalRM

07.05.1999 2 Cash; Subscribers' shares 2

30.07.1999 8 Cash 10

10.12.1999 4,999,990 Cash 5,000,000

10.05.2000 15,000,000 Cash 20,000,000

07.07.2000 30,000,000 Cash 50,000,000

3. Substantial shareholders

The substantial shareholders of GCSB, according to the Register of Members, as at 30 September 2000were as follows:-

<----------------------Shareholdings---------------------->Direct % Indirect %

The Sweet Water Alliance Sdn. Bhd. 20,000,000 40.00 - -

Kumpulan Darul Ehsan Berhad 15,000,000 30.00 - -

Gamuda 15,000,000 30.00 - -

Y. Bhg. Tan Sri Nik Awang @ Wan Azmi bin WanHamzah

- - 20,000,000* 40.00

Note:-

* Deemed interested through The Sweet Water Alliance Sdn. Bhd.

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4. Directors

The Directors of GCSB, all of whom are Malaysians, and their respective shareholdings according to theRegister of Directors' Shareholdings, as at 30 September 2000 were as follows:-

<----------------------Shareholdings---------------------->Name Direct % Indirect %

Y. Bhg. Tan Sri Nik Awang @ Wan Azmi bin WanHamzah

- - 20,000,000* 40.00

Y. Bhg. Dato' Hj. Zabir bin Bajuri - - - -

Y. Bhg. Dato' Lin Yun Ling - - - -

Note:-

* Deemed interested through The Sweet Water Alliance Sdn. Bhd.

5. Subsidiary and associated company

Details of the subsidiary of GCSB as at 30 September 2000 were as follows:-

Name

Date andcountry of

incorporation

Issued andpaid-upcapital

RM

Effectiveequity

interestheld

%Principal activities

SPLASH 30.04.1999;Malaysia

50,000,001 100.00 Operation, maintenance, management,construction and undertaking therehabilitation and refurbishment of watertreatment facilities and also operation,management, maintenance and monitoringthe operation of Sungai Selangor Dam

GCSB does not have any associated company as at 30 September 2000.

6. Profit and dividend record

The following table summarises the audited consolidated results of GCSB from 7 May 1999 (its date ofincorporation) to 31 March 2000:-

Financial period ended 31 March 2000RM'000

Turnover 33,074

Profit before taxation 9,527Taxation (2,863)Profit after taxation 6,664

No. of shares in issue ('000) 5,000Weighted average no. of shares in issue ('000) 1,717Net EPS (RM) 4.30*Gross dividend (%) -

Note:-

* Annualised.

(i) There was no exceptional or extraordinary item during the financial period under review.

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APPENDIX III

INFORMATION ON SPLASH

1. History and business

SPLASH is a single purpose company created specifically to undertake the Project and will not engage inany business other than the Project in accordance with the terms of the Privatisation Agreement. SPLASHwas incorporated in Malaysia as a private limited company under the Companies Act, 1965 on 30 April1999 under the name of Danau Haluan Sdn. Bhd. On 10 August 1999, it changed to its present name.

The Project forms part of the expansion of the Sungai Selangor water supply scheme. It involves theprivatisation of the treatment, supply and sale of bulk water to the State Government over a concessionperiod of 30 years based on an agreed tariff structure commencing 24 January 2000. The supply area ofthe Project covers northern Selangor Darul Ehsan and the Klang Valley. The Project comprises thefollowing principal components :-

SSP1

• The State Government has handed over an existing water treatment facility located at Bukit Badong("SSP1") to SPLASH in accordance with the Privatisation Agreement. SPLASH will thereafterundertake the operation and maintenance of SSP1 and to sell treated water to the State Government.

SSP3 and the Realigned Road

• SPLASH will undertake the design and construction of:-

(i) a regulating dam (the "Dam") over Sungai Selangor (near Kuala Kubu Baru) to facilitateadditional sourcing of raw water from Sungai Selangor;

(ii) a new water treatment facility of a nominal capacity of 250 MLD to be located at Rasa (to beconstructed in two stages of 125 MLD each);

(iii) a new water treatment facility of a nominal capacity of 800 MLD to be located at BukitBadong (to be constructed in two stages of 400 MLD each); and

(iv) the Realignment Road which is required due to the proposed impoundment of the Dam;

• SSP3 will be constructed and completed in stages over a period of 5 years.

• The Realignment Road will be handed over to the Federal Government at no cost once it has beencompleted.

• SPLASH will undertake the operation and maintenance of the completed new water treatment plantsand the Dam in respect of SSP3 and sell treated water to the State Government.

2. Share capital

The authorised, issued and fully paid-up share capital of SPLASH as at 30 September 2000 were asfollows:-

RMAuthorised:-

1 special rights redeemable preference share of RM1.00 each 199,999,999 ordinary shares of RM1.00 each 99,999,999

Issued and fully paid-up:-1 special rights redeemable preference share of RM1.00 each 150,000,000 ordinary shares of RM1.00 each 50,000,000

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Details of the changes in the issued and paid-up share capital of SPLASH since incorporation are asfollows:-

Date ofallotment

No. of ordinaryshares of RM1.00

each allotted Consideration

Resultant issuedand fully paid-up

share capitalRM

30.04.1999 2 Cash; Subscribers' shares 2

10.12.1999 4,999,998 Cash 5,000,000

10.05.2000 15,000,000 Cash 20,000,000

07.07.2000 30,000,000 Cash 50,000,000

Note:- The aforementioned special rights redeemable preference share of RM1.00 each was issued toMenteri Besar Selangor Incorporated on 9 May 2000.

3. Substantial shareholders

As at 30 September 2000, the entire issued ordinary shares of RM1.00 each in SPLASH is held by GCSB.

4. Directors

The Directors of SPLASH, all of whom are Malaysians, and their respective shareholdings according tothe Register of Directors' Shareholdings, as at 30 September 2000 were as follows:-

<----------------------Shareholdings---------------------->Name Direct % Indirect %

Y. Bhg. Tan Sri Nik Awang @ Wan Azmi bin WanHamzah

- - 20,000,000* 40.00

Y. Bhg. Dato' Hj. Zabir bin Bajuri - - - -

Y. Bhg. Dato' Lin Yun Ling - - - -

Note:-

* Deemed interested through The Sweet Water Alliance Sdn. Bhd.

5. Subsidiary and associated company

As at 30 September 2000, SPLASH does not have any subsidiary or associated company.

6. Profit and dividend record

The following table summarises the audited results of SPLASH from 30 April 1999 (its date ofincorporation) to 31 March 2000:-

Financial period ended 31 March 2000RM'000

Turnover 33,074

Profit before taxation 9,598

Taxation (2,863)

Profit after taxation 6,735

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Financial period ended 31 March 2000

No. of shares in issue ('000) 5,000

Weighted average no. of shares in issue ('000) 1,677

Net EPS (RM) 4.35*

Gross dividend (%) -

Note:-

* Annualised.

(i) There was no exceptional or extraordinary item during the financial period under review.

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APPENDIX IV

PROPOSED ESOS BYE-LAWS

1. DEFINITIONS AND INTERPRETATIONS

1.1 In these Bye-Laws, unless otherwise specified, the following definitions shall, where the context soadmits be deemed to have the following meanings:-

Articles : Articles of Association of the Company

Board : The Board of Directors of the Company for the time being

Bye-Law(s) : The term(s) and condition(s) of the Scheme

CDS Account : A Central Depository System account established by theMalaysian Central Depository Sdn. Bhd. (165570-W) forthe recording of dealing in securities by a depositor

Date of Commencement : The date of commencement of the Scheme being the date ofthe letter to be submitted by the adviser to the SC as statedin Bye-Law 20.1

Date of Expiry : The last day of an Option Period as defined in Bye-Law 20

Date of Offer : The date inscribed on the offer letter, as described in Bye-Law 5.4, being the date on which a Selected Employee isdeemed to have been notified in writing of an Offer(including subsequent Offers) by the Option Committee

Duration of the Scheme : The duration of the Scheme as defined in Bye-Law 20 andincludes any extension or renewal thereof

Eligible Employee : Any employee or Executive Director of the Groupsatisfying the conditions stipulated in Bye-Law 3 andfalling within any of the grades set out in Bye-Law 4.1

Gamuda Group or Group : The Company and its subsidiaries incorporated in Malaysiaas defined in Section 5 of the Companies Act, 1965

Gamuda or Company : Gamuda Berhad (29579-T)

Grantee : A Selected Employee who has accepted the Offer inaccordance with the provisions of Bye-Law 6

KLSE : Kuala Lumpur Stock Exchange (30632-P)

Market Day : Any day between Monday and Friday, both days inclusive,which is a trading day on the KLSE

Maximum AllowableAllotment

: The maximum number of new Shares that can be allotted inaccordance with the provisions of Bye-Law 4 to a SelectedEmployee to participate in the Scheme

Offer : An offer made in writing by the Option Committee inaccordance with the provisions or in the manner indicatedin Bye-Law 5 to a Selected Employee to participate in theScheme

Option : The right of a Grantee to subscribe for Shares pursuant tothe contract constituted by acceptance in the mannerindicated in Bye-Law 6 of any Offer made in accordancewith the terms of the Scheme and where the context sorequires, means any part of the Option as shall remainunexercised

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Option Committee : The committee comprising of Directors and/or employeesas may be appointed by the Board, in accordance with theprovisions of Bye-Law 16 to administer the Scheme

Option Period : A period commencing on the Date of Offer for eachSelected Employee and expiring on a date not exceedingfive (5) years from the Date of Commencement or suchearlier date as the Option Committee may in its discretiondecide Provided That the Option Period shall not extendbeyond the Duration of the Scheme (including anyextension or renewal thereof)

Option Price : The price at which the Grantee shall be entitled to subscribefor a new Share as set out in Bye-Law 7

SC : Securities Commission of Malaysia

Scheme : The employee share option scheme for the granting ofOptions to Selected Employees which will upon theiracceptance thereof entitle them to subscribe for new Sharesin the Company in accordance with the provisions of theseBye-Laws and such employee share option scheme to beknown as the "Gamuda Group Employee Share OptionScheme"

Selected Employee : An Eligible Employee who has been selected by the OptionCommittee and to whom an Offer has been made in writingby the Option Committee in accordance with Bye-Law 5

Share(s) : Ordinary share(s) of RM1.00 each in the Company

1.2 In these Bye-Laws:-

(a) any reference to a statutory provision shall include any subordinate legislation made fromtime to time under that provision and any listing requirements, policies and/or guidelines ofthe KLSE and/or SC respectively (in each case, whether or not having the force of law but,if not having the force of law, the compliance with which is in accordance with thereasonable commercial practice of persons to whom such requirements, policies and/orguidelines are addressed to by the KLSE and/or SC);

(b) any reference to a statutory provision shall include that provision as from time to timemodified or re-enacted whether before or after the date of these Bye-Laws so far as suchmodification or re-enactment applies or is capable of applying to any Options offered andaccepted prior to the Date of Expiry and shall include also any past statutory provision (asfrom time to time modified or re-enacted) which such provision has directly or indirectlyreplaced;

(c) words importing the singular meaning where the context so admits include the pluralmeaning and vice versa;

(d) words of the masculine gender include the feminine genders and all such words shall beconstrued interchangeably in that manner; and

(e) any liberty or power which may be exercised or any determination which may be madehereunder by the Option Committee may be exercised in the Option Committee'sdiscretion.

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2. MAXIMUM NUMBER OF NEW SHARES AVAILABLE UNDER THE SCHEME

2.1 The maximum number of new Shares which may be made available under the Scheme shall not bemore than ten per cent (10%) of the issued and paid-up share capital of the Company at the point intime when an Offer is made.

2.2 The Company will for the Duration of the Scheme make available sufficient number of new Sharesin the unissued share capital of the Company to satisfy all outstanding Options which may beexercisable from time to time.

3. ELIGIBILITY

3.1 No employee or Executive Director of the Group shall participate concurrently in more than one (1)employee share option scheme implemented by any company within the Group.

3.2 Persons who fulfil the following conditions shall be eligible to be granted options under theScheme:-

(a) be of eighteen (18) years of age on the Date of Offer;

(b) fall within any one of the grades listed in Bye-Law 4.1;

(c) employed on a full time basis by any company comprised in the Group (save for anysubsidiaries which are dormant) and that they are monthly paid employees;

(d) his employment must have been confirmed and he must have been employed for acontinuous period of at least one (1) year within the Group as at the Date of Offer(including service during a probation period);

(e) if he is a contract employee, the employment contract must be for a term, including anyrevised term, of at least three (3) continuous years;

(f) if he is employed by a company which is acquired by the Group during the duration of theScheme and becomes a subsidiary of the Company upon such acquisition, he must havecompleted a continuous period of at least one (1) year in the Group following the date suchcompany becomes or is deemed to be a subsidiary; and

(g) if an employee is not a Malaysia citizen, he must, in addition to the conditions stipulated inparagraphs (a) to (d) above, also fulfil the following conditions:-

(i) he must be serving the Group on a full time basis and his contribution must bevital to the Group; or

(ii) in the event that he is serving under an employment contract, the contract shouldbe for a duration of at least three (3) years.

3.3 Subject always to Bye Law 3.1, an employee or Executive Director who has participated in anearlier employee share option scheme shall, in addition to complying with Bye Law 3.2(a), (b), (c)and (g), only be permitted to participate in the Scheme if such employee or Executive Director shallhave, as at the Date of Offer, completed at least five (5) years of continuous service with theCompany (or with any other company within the Group, if applicable).

42

3.4 Subject always to Bye Law 3.1, an employee or Executive Director who has participated in theScheme shall only be permitted to participate in a new employee share option scheme implementedby the Company Provided That:-

(a) the new employee share option scheme is implemented by the Company after the expiry ofthe Option Period and where the Scheme is renewed, after the expiry of the extended orrenewed Option Period; and

(b) such employee or Executive Director shall have, as at the date of offer of the newemployee share option scheme, completed at least five (5) years of continuous service inthe Company.

3.5 Executive Directors who represent the Government or Government institutions agencies andGovernment employees who are serving in the public service scheme as defined under Article 132of the Federal Constitution are not eligible to be granted Options under the Scheme.

3.6 Eligibility, however, does not confer on an Eligible Employee a claim or right to participate in theScheme unless an offer has been made in writing by the Option Committee to the Eligible Employeeunder Bye-Law 5.

4. BASIS OF ALLOTMENT AND MAXIMUM ALLOWABLE ALLOTMENT OF SHARES

4.1 Subject to any adjustments which may be made under Bye-Law 14, the aggregate number of Sharesto be offered to a Selected Employee in accordance with the Scheme shall be determined at thediscretion of the Option Committee after taking into consideration, amongst other factors, theposition, performance, seniority and the length of service that the Selected Employee has rendered,subject to the following limits:-

GradeMaximum Allowable Allotment of Shares

for Each Eligible Employee(Number of Shares)

A1 / A2 500,000

A3 450,000

B1 350,000

B2 250,000

B3 160,000

C1 100,000

C2 60,000

C3 40,000

D1 25,000

D2 20,000

D3 15,000

E1 - E5 10,000

4.2 In the event that a Selected Employee is promoted, such promoted Selected Employee may beeligible for consideration for additional new Shares to be decided by the Option Committee at itsdiscretion subject to the following:-

4.2.1 That the promoted Selected Employee be offered new Shares up to the MaximumAllowable Allotment for the grade to which he/she has been promoted, less the number ofOptions already granted to him prior to his promotion;

4.2.2 That the additional offer shall be from the balance of new Shares available under theScheme.

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4.2.3 In the event that the balance of the new Shares available are insufficient to offer the fulladditional Shares to the promoted Selected Employee, the available balance shall beoffered on a proportionate basis according to the additional allotment for which they areeligible.

4.2.4 The Option Committee has the discretion not to make further additional offer in the eventthat the balance of the new Shares available is inadequate to make a meaningful additionalallotment.

4.3 A Selected Employee who is demoted to a lower grade for whatsoever reason shall only be entitledto the allocation of that lower grade unless an Offer has been made and accepted by him before suchdemotion and where he has accepted an Offer which exceeds his Maximum Allowable Allotmentunder that lower grade, he shall not be entitled to any further allocation for that lower grade.

5. OFFER

5.1 Upon implementation of the Scheme, the Option Committee may at its discretion at any time andfrom time to time from the Date of Commencement, as it deems fit, make offers to a SelectedEmployee based on the criteria for allotment as set forth in Bye-Law 4.

5.2 The actual number of new Shares which may be offered to a Selected Employee shall be at thediscretion of the Option Committee and shall not be less than one thousand (1,000) new Shares normore than the Maximum Allowable Allotment as set out in Bye-Law 4.1 and shall always be inmultiples of 1,000 Shares.

5.3 No Options will be granted to any full-time Executive Director of the Company unless specific grantof Options to that Executive Director shall have previously been approved by the shareholders of theCompany in a general meeting.

5.4 The Option Committee will in its offer letter ("Offer Letter") to a Selected Employee state, inter alia,the number of Shares that can be subscribed under the Offer, the Option Price determined inaccordance with the provisions of Bye-Law 7, the closing date for acceptance of the Offer and themanner of exercise of the Options.

5.5 Nothing herein shall prevent the Option Committee from making more than one Offer during theDuration of the Scheme to each Selected Employee after the first Offer was made Provided Alwaysthe total aggregate number of Options to be granted to each Selected Employee (including Optionsalready granted, if any) shall not exceed the Maximum Allowable Allotment of such SelectedEmployee.

5.6 The Company shall keep and maintain at its expense a register of Grantees and shall enter in thatregister the names and addresses of the Grantees, the Maximum Allowable Allotment, the numberof Options granted, the number of Options exercised, the Date of Offer and the Option Price.

6. ACCEPTANCE OF OFFER

6.1 An Offer made by the Option Committee under Bye-Law 5 shall be valid for a period of twenty one(21) days from the Date of Offer and may be accepted within this prescribed period by the SelectedEmployee to whom the Offer is made by written notice to the Option Committee of such acceptanceaccompanied by a payment to the Company of a nominal non-refundable sum of Ringgit MalaysiaOne (RM1.00) as consideration for the grant of the Option.

6.2 If the Offer is not accepted in the manner aforesaid, such Offer shall upon the expiry of the saidprescribed period, automatically lapse and be null and void and of no further force and effect.

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7. OPTION PRICE

The price at which the Grantee is entitled to subscribe for each new Share shall be based on the weightedaverage market price of the Shares as shown in the daily official list issued by the KLSE for the five (5)market days immediately preceding the Date of Offer subject to a discount of not more than ten per cent(10%), or at the par value of the Shares, whichever is the higher.

8. NON-ASSIGNABLE

An Option is personal to the Grantee. Save and except as provided in Bye-Law 18.4, an Option shall be non-assignable and non-transferable.

9. EXERCISE OF OPTION

9.1 An Option granted to a Grantee under the Scheme is, subject to the provisions of Bye-Laws 18.1and 18.4, exercisable only by that Grantee during his lifetime and whilst he is in the employment ofthe Group and within the Option Period.

9.2 Upon acceptance of an Offer, the Grantee may during the Option Period exercise his Options in fullor in part on such time and working day(s) as the Option Committee may from time to time notifythe Grantee in the manner as follows:-

Year 1 Year 2 Year 3 Year 4 Year 5

Percentage of Options exercisable (%) 20 20 20 20 20

Notes:-1. The percentage of the Options exercisable in a particular year but not exercised can be

carried forward to the subsequent years within the Option Period.

2. For non-Malaysian Grantees, the Options can only be exercised up to a maximum of 20%of the Shares comprised therein in each year. Any remaining unexercised percentage ofthe Options can be exercised upon expiry of the employment contract during the OptionPeriod or in the last year of the Scheme, whichever is earlier.

3. For Malaysian Grantees who are serving under an employment contract, any remainingunexercised percentage of the Options can be exercised upon expiry of the employmentcontract during the Option Period or in the last year of the Scheme, whichever is earlier.

4. In the case of a Selected Employee who was offered an Option in a year other than Year 1,the maximum percentage of the Options exercisable will be according to the sequence inthe table set out above as if the Options had been offered in Year 1, subject to Bye-Law 20and any remaining unexercised percentage of the Options can be exercised in full in thelast year of the Scheme.

All unexercised or partially exercised Options shall become null and void after the Date of Expiryunless the duration of the Scheme has been extended or renewed in accordance with Bye-Law 20.1but in no event shall an Option be exercisable five (5) years from the date the Option was firstoffered.

9.3 The Grantee shall notify the Company in writing of his intention to exercise an Option in such formas the Option Committee may prescribe or approve ("Notice of Exercise") . An Option may beexercised in respect of such lesser number of new Shares as the Grantee may decide to exerciseProvided That the number shall be in multiples of and not less than one thousand (1,000) newShares. Such partial exercise of an Option shall not preclude the Grantee from exercising the Optionas to the balance of any new Shares, if any, which he is entitled to subscribe under the Scheme.

45

9.4 The Grantee shall state his CDS Account number in the Notice of Exercise and the Company shallwithin fourteen (14) Market Days after the receipt of the Notice of Exercise and remittance from theGrantee allot the relevant number of Shares to the Grantee upon and subject to the provisions of theArticles. No share certificates will be delivered to the Grantee.

9.5 Any failure to comply with the foregoing provisions and/or to state the CDS Account number in theNotice of Exercise or inaccuracy in the CDS Account number shall result in the Notice of Exercisebeing rejected.

9.6 Notwithstanding anything to the contrary herein contained in these Bye-Laws, the OptionCommittee shall have the right at its discretion by notice in writing to that effect to suspend the rightof any Grantee who is being subjected to disciplinary proceedings (whether or not such disciplinaryproceedings may give rise to a dismissal or termination of service of such Grantee) to exercise hisOption pending the outcome of such disciplinary proceedings. In addition to this right of suspension,the Option Committee may impose such terms and conditions as the Option Committee shall deemappropriate in its discretion, on the right of exercise of his Option having regard to the nature of thecharges made or brought against such Grantee, PROVIDED ALWAYS that:-

(a) in the event such Grantee is found not guilty of the charges which gave rise to suchdisciplinary proceedings, the Option Committee shall reinstate the right of such Grantee toexercise his Option; or

(b) in the event such Grantee is found guilty resulting in the dismissal or termination of serviceof such Grantee, the Option shall immediately cease without notice, upon pronouncementof the dismissal or termination of service of such Grantee; or

(c) in the event such Grantee is found guilty but not dismissed or termination of service isrecommended, the Option Committee shall have the right to determine at its discretionwhether or not the Grantee may continue to exercise his Option and if so, to impose suchterms and conditions as it deems appropriate, on such exercise.

10. RIGHTS OF A GRANTEE

10.1 The Options shall not carry any right to vote at any general meeting of the Company.

10.2 A Grantee shall not be entitled to any dividends, right or other entitlements on his unexercis edOptions.

11. RIGHTS ATTACHING TO SHARES

The new Shares to be allotted and issued upon any exercise of the Options will upon such allotment andissuance, rank pari passu in all respects with the then issued and fully paid-up Shares except that the Shares soissued will not rank for any dividends, rights, allotments or other distributions, the entitlement date (namelythe date as at the close of business on which shareholders must be registered in order to be entitled to anydividends, rights, allotments or other distributions) of which is prior to the date of allotment of the new Sharesand will be subject to all the provisions of the Articles relating to transfer, transmission and otherwise of theShares.

12. RETENTION PERIOD

The Shares to be issued and allotted to a Grantee pursuant to the exercise of an Option under the Scheme willnot be subject to any retention period or restriction on transfer. However, the Grantees are encouraged tohold the Shares as a long term investment and not for any speculative and/or realisation of immediate gain.

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13. TAKEOVER AND COMPULSORY ACQUISITION

13.1 In the event of a takeover offer being made for the Company by a general offer or otherwise andsuch offer becoming or being declared unconditional, notwithstanding Bye-Law 9.2, the Granteeshall also be entitled within three (3) months of the date on which such offer becomes or isdeclared unconditional to exercise in full or in part any Option as yet unexercised within theOption Period.

13.2 In the event a person becomes entitled or bound to exercise rights of compulsory acquisition of theShares under the provisions of the Companies Act, 1965 or the Securities Commission Act, 1993and gives notice to the Grantee that it intends to exercise such rights on a specific date ("SpecificDate"), the Option shall remain exercisable by the Grantee until the expiry of the Specific Date. Inthe foregoing circumstance if the Grantee fails to exercise his Option or elects to exercise only inrespect of a portion of such Shares by the Specific Date, then the Option, or as the case may be theOption in relation to the balance thereof, shall automatically lapse after the Specific Date and be nulland void.

14. ALTERATION OF SHARE CAPITAL AND ADJUSTMENT

14.1 In the event of any alteration in the capital structure of the Company during the Option Period,whether by way of capitalisation of profits or reserves, rights issues, consolidation of shares, sub-division of shares, reduction of capital or otherwise howsoever taking place, such correspondingadjustments (if any) shall be made in:-

(a) the number of new Shares relating to the Option so far as unexercised; and/or

(b) the Option Price;

to be determined by a merchant bank licensed to carry on merchant banking business in Malaysia("Merchant Bank") and/or an approved Company Auditors as defined under Section 8 of theCompanies Act, 1965 (acting as experts and not as arbitrators) and certified either generally or asregards any particular Grantee to be in their opinion fair and reasonable and such certification shallbe final and binding on all parties upon the approval of the Option Committee, Provided Always thatsuch adjustments should give a Grantee the same proportion of the issued share capital of theCompany and at the same total cost to subscribe for those Shares as to which he was entitled prior tosuch alterations and Provided That no adjustment to the Option Price shall be made which wouldresult in new Shares issued on the exercise of Options being issued at less than the par value of theShares, and if such an adjustment would but for this provision result in the Option Price being lessthan the par value, the Option Price payable shall be at the par value.

14.2 The provisions of Bye-Law 14.1 shall not apply where the alteration in the capital structure of theCompany arises from:-

(a) an issue of new Shares or other securities convertible into or securities with rights toacquire or subscribe for Shares, and in any such case, in consideration or part considerationfor an acquisition of any other securities, assets or business;

(b) a special issue of new Shares to Bumiputera investors nominated by the Ministry ofInternational Trade and Industry, Malaysia and/or any other government authority tocomply with Government policy on Bumiputera capital participation;

(c) a private placement of new Shares by the Company;

(d) a share buy-back arrangement by the Company under Section 67A of the Companies Act,1965;

(e) an issue of new Shares arising from the exercise of any conversion rights attached tosecurities convertible to Shares or upon exercise of any other rights including warrants (ifany) issued by the Company; and

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(f) an issue of new Shares upon the exercise of Options pursuant to the Scheme.

14.3 Upon any adjustments being made pursuant to this Bye-Law, the Option Committee shall within ten(10) Market Days notify the Grantee (or his legal or personal representatives where applicable) inwriting informing him of the adjusted Option Price thereafter in effect and/or the number of newShares thereafter that the Grantee may subscribe upon his exercise of the Option.

14.4 Notwithstanding anything to the contrary contained in the Scheme, in the event that a fraction of aShare arising from the adjustments referred to in this Bye-Law would otherwise be required to beissued upon the exercise of an Option by the Grantee, the Grantee's entitlement shall be roundeddown to the nearest whole number of Shares.

15. LISTING AND QUOTATION OF SHARES

15.1 Whereupon the Grantee exercised his Options in accordance with the provisions of Bye-Law 9, theCompany shall apply to the KLSE for the listing of and quotation for such new Shares, and shall useits best endeavour to obtain such approval.

15.2 The Company and the Option Committee shall not under any circumstances be held liable for anycosts, losses and damages whatsoever and however relating to the delay on the part of the Companyin allotting and issuing the Shares or in procuring the KLSE to list the Shares for which the Granteeis entitled to subscribe.

16. ADMINISTRATION OF THE SCHEME

16.1 The Option Committee shall have the power to regulate its own procedure and to make rules withrespect to the administration of the Scheme which are not covered by these Bye Laws.

16.2 The Option Committee shall, at its discretion (but taking into account, amongst other factors,position, performance, seniority and length of service of an Eligible Employee) makerecommendations to the Board from time to time on the making of Offers to Eligible Employees.

16.3 The Board shall have power from time to time to rescind the appointment of any person in theOption Committee where the Board deems fit.

17. AMENDMENT AND/OR MODIFICATION TO THE SCHEME

Subject to the approvals of the SC, KLSE and/or any other regulatory authorities, the Option Committee mayrecommend to the Board who shall have the power at any time and from time to time by resolution to amendand/or modify all or any part of the provisions of the Scheme Provided That no such amendment and/ormodification shall be made which would either prejudice the rights then accrued to any Grantee who hasaccepted an Option without his prior consent or, without the prior approval of the Company in generalmeeting, alter to the advantage of any Grantee the provisions of the Scheme.

18. TERMINATION OF OPTIONS

18.1 In the event of cessation or termination of employment or appointment of a Grantee with the Groupfor whatever reason prior to the exercise of his Options or prior to full exercise of his Options, suchOption shall cease immediately on the date of such cessation or termination without any claimagainst the Company Provided Always that, subject to the written approval of the Option Committeein its discretion, where the Grantee ceases his employment or appointment with the Group by reasonof:-

(a) his retirement at or after attaining normal retirement age; or

(b) retirement before that age with the consent of the Option Committee; or

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(c) ill-health, injury or disability; or

(d) redundancy; or

(e) transfer to an associated company of the Group; or

(f) divestment of any subsidiary from the Group at the instance of the Company; and/or

(g) any other reasons which are acceptable to the Option Committee,

a Grantee may exercise his unexercised Options within the relevant Option Period.

18.2 If a Grantee ceases his employment or appointment with the Group by reason of his resignation(other than those stated in the Bye-Law 18.1) his remaining unexercised Options shall cease withimmediate effect on the date of such cessation of employment.

18.3 An Option shall immediately become void and of no further force and effect upon the Grantee beingadjudicated a bankrupt.

18.4 In the event where a Grantee dies before the expiration of the Option Period and at the time of hisdeath held unexercised Options, such unexercised Options may be exercised not later than twentyfour (24) months by the legal or personal representative(s) of the Grantee after the date of his deathprovided that such exercise shall be within the Option Period.

18.5 Any Offer which have been made by the Option Committee but have not been accepted in themanner prescribed in Bye-Law 6.1 arising from a Selected Employee's death or the cessation ortermination of his employment with the Group, as the case may be, shall become null and void andof no further force and effect.

19. LIQUIDATION OF THE COMPANY

In the event of the liquidation of the Company, all unexercised or partially exercised Options shall cease andbe null and void.

20. DURATION OF THE SCHEME

20.1 The Scheme shall commence from the date of the letter to be submitted by the adviser to the SCconfirming that the Company has :-

(a) fulfilled the SC's conditions for approval for the Scheme, and that the Bye-Laws do notcontravene the guidelines on employee share option scheme as stipulated under the SC'sPolicies and Guidelines on Issue/Offer of Securities; and

(b) obtained other relevant approvals for the Scheme and fulfilled all conditions imposedtherein;

and shall thereafter continue for a period of five (5) years from the Date of Commencement (the"Initial Scheme Period") subject however to any extension or renewal for a further period of notexceeding five (5) years commencing from the day after the date of expiration of the original five (5)years period as may be approved by all relevant parties.

20.2 No further Options will be granted upon the expiration of the Initial Scheme Period unless theCompany in general meeting agrees to continue the Scheme with or without variations and ProvidedFurther That the prior approvals of the SC, KLSE, and/or any other relevant authorities have beenobtained to or for such continuance.

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21. DISPUTES/DIFFERENCES

In case any dispute or difference shall arise between the Option Committee and a Grantee as to anyprovisions contained in the Bye-Laws, the Option Committee shall determine such dispute or difference by awritten decision given to the Grantee. The said decision shall be final and binding on the parties unless theEligible Employee and/or Selected Employee within fourteen (14) days of the receipt thereof by writtennotice to the Option Committee, disputes the same in which case such dispute or difference shall be referredto the decision of the Merchant Bank and/or Company Auditors for the time being of the Company (acting asexperts and not as arbitrators) whose decision shall be final and binding in all respects.

22. COSTS AND EXPENSES

All fees, costs and expenses incurred in relation to preparation and/or operation of the Scheme including butnot limited to the fees, costs and expenses relating to the allotment and issue of new Shares pursuant to theexercise of any Option shall be borne by the Company.

23. TRANSFER FROM OTHER COMPANIES TO THE GROUP

In the event:-

(a) an employee or an Executive Director who was employed in:-

(i) a corporation which is related to the Company pursuant to Section 6 of the CompaniesAct, 1965 (but excluding any subsidiaries of the Company); or

(ii) a corporation which is an associated company of the Company; or

(iii) a corporation in which the Company is an associated company; or

(iv) a corporation which is a subsidiary of the first mentioned corporation referred to in subBye-Law (a)(iii) above;

and is subsequently transferred from such corporation to any company within the Group; or

(b) an employee or Executive Director who was in the employment of a corporation referred to in subBye-Law (a) above which subsequently becomes a member of the Group as a result of arestructuring or divestment exercise or otherwise involving the Company and/or any companywithin the Group;

(the corporation in sub-Bye-Law (a) and (b) above are hereinafter referred to as the "Previous Company"),such an employee or Executive Director of the Previous Company (the "Affected Employee") will, if theAffected Employee satisfies all the conditions of these Bye-Laws, be eligible to participate in the SchemeProvided That the Affected Employee:-

(i) shall have fully exercised or renounced all such option(s) which were granted to him under theemployee share option scheme (if any) which he was participating (the "Previous ESOS") whilst theAffected Employee was in the employment of the Previous Company in accordance with the bye-laws of such Previous ESOS;

(ii) will only be eligible to participate in the Scheme for its full or remaining duration from the date oftransfer to the Group or on full exercise or renunciation of all such options mentioned in paragraph(i) above, as the case may be; and

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(iii) if the Affected Employee has participated in a Previous ESOS, the number of new Shares to beoffered to such Affected Employee under the Scheme shall be ALWAYS SUBJECT to the solediscretion of the Option Committee after taking into consideration, amongst others,

- the number of Shares as shall be equivalent to the difference between the AffectedEmployee's total Share entitlement (subject to the Maximum Allowable Allotment) underthe Scheme and the total number of shares which were offered to the Affected Employeeunder the Previous ESOS;

OR

- the number of Shares as shall be equivalent to the difference between the AffectedEmployee's total Share entitlement (subject to the Maximum Allowable Allotment) underthe Scheme and the total number of shares which were exercised by the Affected Employeeunder the previous ESOS if the Affected Employee has opted not to exercise the remainingunexercised options which were granted to him in the Previous ESOS on the basis that hisemployment with the Previous Company has ceased.

24. DIVESTMENT FROM THE GROUP

If a Grantee who was in the employment of a company in the Group which was subsequently divested fromthe Group, then such employee:-

(a) will notwithstanding such divestment and notwithstanding the provision of Bye-Law 9 but subject tothe provisions of Bye-Law 18 be entitled to continue to exercise all such unexercised Option(s)which were granted to him under the Scheme within a period of three (3) months from the date ofsuch divestment and within the Option Period, failing which the right of such employee to subscribefor the number of new Shares or any part thereof granted under such unexercised Options shallautomatically lapse upon the expiration of the said three (3) months period and be null and void andof no further force and effect; and

(b) shall not be granted further Options under the Scheme.

25. SCHEME NOT A TERM OF EMPLOYMENT

This Scheme does not form part of or constitute or shall in any way to be construed as a term or condition ofemployment of an Eligible Employee.

26. COMPENSATION

26.1 Notwithstanding any provisions of these Bye-Laws:-

(i) this Scheme shall not form part of any contract of employment between any company ofthe Group and any employee or Executive Director of the Group and the rights of anyGrantee under the terms of his office and employment with the Company or any companyof the Group shall not be affected by his participation in the Scheme or afford such Granteeany additional rights to compensation or damages in consequence of the termination ofsuch office or employment for any reason; and

(ii) this Scheme shall not confer on any person any legal or equitable rights (other than thoseconstituting the Option themselves) against the Company or any company of the Groupdirectly or indirectly or give rise to any cause of action at law or in equity against theCompany or the Group.

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26.2 No Grantee or his legal or personal representatives shall be entitled to any claim, action orproceedings against the Company or the Option Committee or any party for compensation, loss ordamages whatsoever and howsoever arising from the suspension of his rights to exercise his Optionsor his Options ceasing to be valid pursuant to the provisions of these Bye-Laws as may be amendedfrom time to time in accordance with Bye-Law 17.

27. ARTICLES OF ASSOCIATION OF THE COMPANY

Notwithstanding the terms and conditions contained herein, if a situation of conflict should arise between theScheme and the Articles, the provisions of the Articles shall at all times prevail.

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APPENDIX VI

FURTHER INFORMATION

1. Directors' responsibility statement

This Circular has been seen and approved by the Directors of Gamuda and they collectively andindividually accept full responsibility for the accuracy and correctness of the information contained hereinand confirm that, after having made all reasonable enquiries, to the best of their knowledge and belief,there are no other material facts the omission of which would make any statement herein misleading.

2. Consents

The written consents of CIMB and RAM to the inclusion in this Circular of their names and letter in theform and context in which they appear have been given before the issue of this Circular and have notsubsequently been withdrawn.

3. Material contracts

Gamuda Group

Save as disclosed below, Gamuda and its subsidiaries have not entered into any material contracts, notbeing contracts entered in the ordinary course of business, during the two (2) years preceding the date ofthis Circular:-

(i) Subscription and Investment Agreement dated 6 January 1999 between Gamuda, Mujur MinatSdn. Bhd. ("MMSB"), Midawasa Sdn. Bhd. ("Midawasa"), LITRAK Holdings and SPRINTHoldings to regulate the proportionate subscription in cash by MMSB (30%), Gamuda (30%) andMidawasa (40%) for up to RM455 million of new equity in SPRINT Holdings for the purpose ofproviding the additional investment contribution required from the shareholders of SPRINTHoldings to meet SPRINT Holdings' financing contribution for the total project costs of theWTDS. The subscription for new equity shall comprise 999,999 ordinary shares of RM1.00 eachat par, 10 non-cumulative redeemable preference shares Class A ("NCRPS-A") at par and up to4,540,000 non-cumulative redeemable preference shares Class B ("NCRPS-B") at RM100 perNCRPS-B. The Subscription and Investment Agreement were subsequently revoked by way of aDeed of Revocation dated 20 October 1999 between the parties.

(ii) A Second Supplemental Deed Poll dated 2 August 1999 to amend the Deed Poll dated 23December 1996 and Supplemental Deed Poll dated 23 May 1997 so as to extend the subscriptionperiod of the outstanding warrants 1996/2006 issued by Gamuda on 30 December 1996, from aperiod of five (5) years to a period of ten (10) years, to 29 December 2006.

(iii) Sale and Purchase Agreement dated 8 September 1999 between Uniden (Malaysia) Bhd.("UMB"), Uniden Development (M) Sdn. Bhd. ("UD") and Valencia Development Sdn. Bhd.(formerly known as Seni Pasifik Sdn. Bhd.) ("Valencia"), a 80%-owned subsidiary of Gamuda,for the purchase of 285 acres of freehold and leasehold land for a purchase consideration of RM86million.

(iv) Sale and Purchase Agreement dated 8 September 1999 between UMB and Valencia for thepurchase of all the equipment as set out in the said agreement for a purchase consideration ofRM2 million.

(v) Supplemental Sale and Purchase Agreement dated 4 October 1999 between UMB and Valencia tovary the payment terms of the purchase consideration under the Sale and Purchase Agreementmentioned in (iv) above.

(vi) Shareholders Agreement dated 10 December 1999 between Gamuda, The Sweet Water AllianceSdn. Bhd. ("TSWA") and Kumpulan Darul Ehsan Bhd. ("KDE") to form SPLASH.

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(vii) Joint Venture Agreement dated 10 December 1999 between Gamuda, TSWA and KDE to jointlynegotiate and undertake the complete design, engineering, procurement, construction, installation,testing and commissioning of the Package 1B, 2, 3, 4 and 5 and the design and construction ofPackage 1A of the Project.

(viii) Supplemental Joint Venture Agreement dated 21 December 1999 between Gamuda, TSWA andKDE to further provide for allocation of the works to be undertaken under the Joint VentureAgreement referred to in (vii) above.

(ix) Joint Venture Agreement dated 24 January 2000 between Gamuda and KDE to form a jointventure, on a 60:40 basis, to undertake the sub-contract to complete engineering, procurement,construction, installation, testing, commissioning and the interim operation and maintenance ofPackage 3 and Package 5 of the Project.

(x) Custodian Agreement dated 3 February 2000 between Gamuda and Amsec Nominees (Tempatan)Sdn. Bhd. ("Amsec"), whereby Gamuda and its various parties (the "Beneficial Owners") hasagreed to appoint Amsec to act as the Authorised Nominee and to further appoint Amsec to holdand administer the Securities and the Other Assets (as defined in the said Custodian Agreement)on behalf of Gamuda and the relevant Beneficial Owners. It is noted that under the agreementthat Arab-Malaysian Securities Sdn. Bhd. ("AMS") is the appointed broker to transact in alldealings in securities quoted in the KLSE and in the Malaysian Exchange of Securities Dealingand Automated Quotation Berhad and any other recognised Malaysian stock exchange with theapproval of AMS on behalf of the Beneficial Owners.

(xi) Subscription and Investment Agreement dated 22 February 2000 between Gamuda, Midawasa,KDE, Rampai Dedikasi Sdn. Bhd. ("RDSB"), LITRAK Holdings and SPRINT Holdings toregulate the proportionate subscription in cash by Gamuda (30%), Midawasa (30%), KDE (20%)and RDSB (20%) for up to RM410 million of new equity in SPRINT Holdings for the purpose ofproviding the additional investment contribution required from the shareholders of SPRINTHoldings to meet SPRINT Holdings' financing contribution for the total project cost of theWTDS. The subscription for new equity shall comprise 999,990 ordinary shares of RM1.00 eachat par, 10 NCRPS-A at par and up to 3,640,000 NCRPS-B at RM100 per NCRPS-B.

(xii) A Third Supplemental Deed Poll dated 24 February 2000 to replace the subscription form in theDeed Poll dated 23 December 1996.

(xiii) Sale and Purchase Agreement dated 30 May 2000 between Dyna Prestasi Sdn. Bhd. and Gamudafor the purchase 2,435,000 ordinary shares of RM1.00 each in Dyna Plastics Sdn. Bhd. ("DPSB")for a cash consideration of RM28 million.

(xiv) Shareholders' Agreement dated 30 May 2000 between Dyna Prestasi Sdn. Bhd. and Gamuda forthe subscription by Gamuda of 3,478,000 new ordinary shares of RM1.00 each in DPSB forRM39,997,000, at a subscription price of RM11.50 per share.

(xv) Trust Deed dated 13 September 2000 between Gamuda and Malaysian Trustees Bhd. ("MTB")whereby MTB agreed to act as trustee for the benefit of the holders of the Bonds.

(xvi) Bond Subscription Agreement dated 13 September 2000 between Gamuda and CIMB wherebyCIMB agreed to act as the primary subscriber for the Bonds.

(xvii) Agency Agreement dated 13 September 2000 between Gamuda and CIMB whereby CIMB agreedto act as the issue agent and facility agent in relation to the Bonds Issue and the operation of theescrow account respectively.

(xviii) Depository and Paying Agency Agreement dated 19 September 2000 between Gamuda, BNM,Malaysian Trustees Berhad and CIMB whereby BNM will act as depository and paying agent inrespect of the Bonds.

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5. Documents available for inspection

Copies of the following documents are available for inspection at the Company's registered office at No.55- 61, Jalan SS22/23, Damansara Jaya, 47400 Petaling Jaya, Selangor Darul Ehsan during office hours fromthe date of this Circular (except public holidays) up to and including the date of the EGM :-

(i) Memorandum and Articles of Association of Gamuda, GCSB and SPLASH;

(ii) Audited consolidated accounts of Gamuda for the five (5) financial years ended 31 July 1995 to1999 and the unaudited consolidated results of Gamuda for the year ended 31 July 2000;

(iii) Audited consolidated accounts of GCSB for the period from incorporation to 31 March 2000;

(iv) Audited accounts of SPLASH for the period from incorporation to 31 March 2000;

(v) Letter from RAM as set out in Appendix V of this Circular;

(vi) Draft deed poll constituting the Warrants ;

(vii) Letters of consent referred to in paragraph 2 above; and

(viii) Material contracts referred to in paragraph 3 above.

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(f) allot and issue the appropriate number of new ordinary shares of RM1.00 each in the Company ("NewShares"), credited as fully paid-up, to holders of the Warrants who may have exercised their rights tosubscribe for the New Shares in accordance with (a) above and such appropriate number of newordinary shares arising from the exercise of subscription rights represented by such further Warrants asmay be required to be issued pursuant to any adjustment under the terms of the deed poll constitutingthe Warrants AND THAT the New Shares and such further new ordinary shares to be issued upon theexercise of any further Warrants hereinbefore referred to will upon issue and allotment, rank pari passuin all respects with the then existing ordinary shares of Gamuda save and except that they shall not beentitled to any dividends, rights, allotments and/or other distributions, the entitlement date (namely thedate as at the close of business on which the shareholders must be registered in order to be entitled toany dividends, rights, allotments and/or other distributions) of which is prior to the date of exercise ofthe Warrants or the further Warrants as the case may be; and

(g) to take all steps to enter into agreements, deeds, arrangements, indemnities and guarantees to giveeffect to the aforesaid issuance of Warrants with full power to assent to any conditions, variations,modifications and/or amendments in any manner as may be required by any relevant authorities."

ORDINARY RESOLUTION 2 - PROPOSED EMPLOYEE SHARE OPTION SCHEME

"THAT, subject to obtaining approval-in-principle of the KLSE for the listing of and quotation for the newordinary shares to be issued upon exercise of the options to be granted hereunder and the lodgement of theESOS Bye-Laws with the Registrar of Companies, the Directors of the Company be and are hereby authorised:-

(a) to establish and administer an employee share option scheme for the benefit of eligible confirmedemployees, eligible full-time salaried executive directors and eligible contract employees under whichoptions will be granted to such employees and executive directors to subscribe for new ordinary sharesin the share capital of the Company ("Scheme") AND THAT all new Gamuda ordinary shares to beissued upon any exercise of the options will, upon issue and allotment, rank pari passu in all respectswith the then existing issued ordinary shares of the Company except that the new ordinary shares willnot be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date(namely the date as at the close of business on which shareholders must be registered in order to beentitled to any dividends, rights, allotments and/or other distributions) of which is prior to the date ofallotment of the said shares and will be subject to all the provisions of the Articles of Associationrelating to transfer, transmission and otherwise and subject to such amendments to the Scheme as maybe made or required by the relevant authorities and acceptable to the Directors;

(b) to modify and/or amend the Scheme from time to time provided that such modification and/oramendment is effected in accordance with the provisions of the Scheme relating to the modificationand/or amendment and to do all such acts and to enter into all such transactions, arrangements andagreements as may be necessary or expedient in order to give full effect to the Scheme;

(c) to allot and issue from time to time such number of new ordinary shares in the share capital of theCompany as may be required to be issued in accordance with the provision of the Scheme providedthat the aggregate number of shares to be allotted and issued pursuant to this Resolution shall notexceed ten per centum (10%) of the total issued and paid-up ordinary share capital of the Company atthe time of the offer; and

(d) to consent to and to adopt, if they so deem fit and expedient, such conditions, modifications and/orvariations as may be required or imposed by the relevant authorities in respect of the Scheme."

ORDINARY RESOLUTION 3 - PROPOSED ISSUE OF OPTIONS TO Y. BHG. DATO' LIN YUNLING

"THAT, subject to the passing of Ordinary Resolution 2 above, the Board of Directors be and is herebyauthorised to offer and grant to Y. Bhg. Dato' Lin Yun Ling, being a full-time Executive Director of Gamuda,options to subscribe for up to a maximum of 500,000 new ordinary shares of the Company under the Scheme."

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ORDINARY RESOLUTION 4 - PROPOSED ISSUE OF OPTIONS TO CHAN KUAN NAM @CHAN YONG FOO

"THAT, subject to the passing of Ordinary Resolution 2 above, the Board of Directors be and is herebyauthorised to offer and grant to Chan Kuan Nam @ Chan Yong Foo, being a full-time Executive Director ofGamuda, options to subscribe for up to a maximum of 500,000 new ordinary shares of the Company under theScheme."

ORDINARY RESOLUTION 5 - PROPOSED ISSUE OF OPTIONS TO HENG TENG KUANG

"THAT, subject to the passing of Ordinary Resolution 2 above, the Board of Directors be and is herebyauthorised to offer and grant to Heng Teng Kuang, being a full-time Executive Director of Gamuda, options tosubscribe for up to a maximum of 500,000 new ordinary shares of the Company under the Scheme."

ORDINARY RESOLUTION 6 - PROPOSED ISSUE OF OPTIONS TO NG KEE LEEN

"THAT, subject to the passing of Ordinary Resolution 2 above, the Board of Directors be and is herebyauthorised to offer and grant to Ng Kee Leen, being a full-time Executive Director of Gamuda, options tosubscribe for up to a maximum of 500,000 new ordinary shares of the Company under the Scheme."

ORDINARY RESOLUTION 7 - PROPOSED ISSUE OF OPTIONS TO GOON HENG WAH

"THAT, subject to the passing of Ordinary Resolution 2 above, the Board of Directors be and is herebyauthorised to offer and grant to Goon Heng Wah, being a full-time Executive Director of Gamuda, options tosubscribe for up to a maximum of 500,000 new ordinary shares of the Company under the Scheme."

ORDINARY RESOLUTION 8 - PROPOSED ISSUE OF OPTIONS TO HA TIING TAI

"THAT, subject to the passing of Ordinary Resolution 2 above, the Board of Directors be and is herebyauthorised to offer and grant to Ha Tiing Tai, being a full-time Executive Director of Gamuda, options tosubscribe for up to a maximum of 500,000 new ordinary shares of the Company under the Scheme."

ORDINARY RESOLUTION 9 - PROPOSED ISSUE OF OPTIONS TO Y. BHG. DATO' IR.KAMARUL ZAMAN BIN MOHD. ALI

"THAT, subject to the passing of Ordinary Resolution 2 above, the Board of Directors be and is herebyauthorised to offer and grant to Y. Bhg. Dato' Ir. Kamarul Zaman bin Mohd. Ali, being a full-time ExecutiveDirector of Gamuda, options to subscribe for up to a maximum of 500,000 new ordinary shares of the Companyunder the Scheme."

ORDINARY RESOLUTION 10 - PROPOSED ISSUE OF OPTIONS TO SAW WAH THENG

"THAT, subject to the passing of Ordinary Resolution 2 above, the Board of Directors be and is herebyauthorised to offer and grant to Saw Wah Theng, being a full-time Executive Director of Gamuda, options tosubscribe for up to a maximum of 500,000 new ordinary shares of the Company under the Scheme."

ORDINARY RESOLUTION 11 - PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

"THAT, subject to the passing of Ordinary Resolutions 1 and 2, approval be and is hereby given to the Directors toincrease the authorised share capital of the Company from RM1,000,000,000 comprising 1,000,000,000 ordinaryshares of RM1.00 each to RM2,000,000,000 comprising 2,000,000,000 ordinary shares of RM1.00 each by thecreation of an additional 1,000,000,000 new ordinary shares of RM1.00 each and that as a consequence Clause 5 ofthe Company's Memorandum of Association be deemed amended accordingly."

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ORDINARY RESOLUTION 12 - PROPOSED UTILISATION OF PROCEEDS

"THAT approval be and is hereby given to the Directors of the Company to utilise the proceeds derived/to bederived from the Bonds Issue and the Proposed Rights Issue of Warrants for such purposes as set out in theCircular to the shareholders of the Company dated 16 October 2000.

By Order of the Board

Lim Soo LyeYeo Phek HiahCompany Secretaries

Petaling Jaya16 October 2000

Notes:-

1. A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint a proxy orproxies to attend and vote in his stead. A proxy need not be a member of the Company.

2. In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under thehand of its attorney.

3. The instrument appointing a proxy must be deposited at the Company's Registered Office situated at No.55-61,Jalan SS22/23, Damansara Jaya, 47400 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight(48) hours before the time appointed for holding the meeting or at any adjournment thereof.

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Notes:-1. A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint a proxy or proxies to attend and

vote in his stead. A proxy need not be a member of the Company.

2. In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of itsattorney.

3. This instrument appointing a proxy must be deposited at the Company's Registered Office situated at No.55-61, Jalan SS22/23,Damansara Jaya, 47400 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight (48) hours before the timeappointed for holding the meeting or at any adjournment thereof.

To: Share Registrar's officeInsurban Corporate Services Sdn. Bhd.149-B, Jalan Aminuddin BakiTaman Tun Dr. Ismail60000 Kuala Lumpur

FORM FOR CHANGE OF ADDRESS

I/We hereby request you to change my/our address in the Record of Depositors of Gamuda Berhad to the followingMalaysian address, at which all notices and documents to be served on or delivered to me/us by Gamuda Berhad inmy/our capacity as a Shareholder shall be served on or delivered to:-

Full particulars of address

Usual signature(s) of Shareholder(s) ………………………………………………………………………..…………

Name(s) of Shareholders(s) …………………………………………………………………………………...……….

Current address appearing in the Record of Depositors ……………………………………………………….………

………………………………………………………………………………………………………………….………

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