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11

Corporate Information 2

Profile Of Board Of Directors 3 - 7

Chairman’s Statement 8

Five-Year Group Financial Summary 9

Corporate Governance Statement 10 - 15

Terms Of Reference Of Risk Management Committee 16

Audit Committee Report 17 - 22

Statement On Internal Control 23 - 24

Enterprise Risk Management Framework 25 - 26

Financial Statements 28 - 65

Additional Compliance Information 66 - 67

Directors’ Interests In Shares, Warrants And 68Cumulative Non-Convertible Redeemable Preference

Shares (“CN-RPS”)

Analysis Of Shareholdings 69 - 71

Analysis Of Warrantholdings 72

Notice Of 10th Annual General Meeting 73 - 75

Statement Accompanying Notice Of Annual General Meeting 75

Form Of Proxy

SUNWAY INFRASTRUCTURE BERHAD(405897-V)

Contents


22

BOARD OF DIRECTORS

Executive Chairman, Non-Independent Executive DirectorTan Sri Dato’ Seri Dr Cheah Fook Ling

Deputy Chairman, Non-Independent Non-Executive DirectorDatuk Razman M Hashim

Non-Independent Non-Executive DirectorsDato’ Tan Kia LokeYau Kok Seng Liew Kiam Woon

Independent Non-Executive DirectorsDato’ Seri Syed Zainol Rashid Jamalullail Dato’ Ir Hj Ibrahim Bin Hj Yakub

AUDIT COMMITTEE

Dato’ Seri Syed Zainol Rashid Jamalullail (Chairman)Dato’ Ir Hj Ibrahim Bin Hj YakubYau Kok Seng

RISK MANAGEMENT COMMITTEE

Dato’ Tan Kia Loke (Chairman)Yau Kok SengMark Victor RozarioGoh Hai ThunNg Lai Ping

COMPANY SECRETARIES

Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng (MIA 5601)Tan Kim Aun (MAICSA 7002988) Lee Suan Choo (MAICSA 7017562)

REGISTERED OFFICE

Level 16, Menara Sunway Jalan Lagoon Timur Bandar Sunway46150 Petaling JayaSelangor Darul EhsanMalaysia

Tel No : (03) 5639 8889Fax No: (03) 5639 9507

PRINCIPAL PLACE OF BUSINESS

Plaza Tol Sungai BalakKM28.3A, Lebuhraya KAJANG SILK43000 KajangSelangor Darul EhsanMalaysia

Tel No : (03) 8921 0000Fax No: (03) 8921 0001

SHARE REGISTRAR

Sunway Management Sdn Bhd (50661-X)Level 16, Menara Sunway Jalan Lagoon Timur Bandar Sunway46150 Petaling JayaSelangor Darul EhsanMalaysia

Tel No : (03) 5639 8889Fax No: (03) 5639 9507

AUDITORS

Ernst & Young Chartered Accountants

SOLICITORS

Wong Kian Kheong

PRINCIPAL BANKERS

Public Bank BerhadHSBC Bank Malaysia Berhad

STOCK EXCHANGE LISTING

Main Board of Bursa Malaysia Securities Berhad

WEBSITE ADDRESS

www.sunway.com.my

Corporate Information

33SUNWAY INFRASTRUCTURE BERHAD

(405897-V)

Profile Of Board Of Directors

Tan Sri Dato’ Seri Dr Cheah Fook LingExecutive Chairman, Non-Independent Executive DirectorMalaysian

Founder of the Sunway Group and also the ExecutiveChairman of Sunway Holdings Incorporated Berhad(“Sunway”) and Sunway City Berhad which are aconglomerate of companies that are listed individually on the Main Board of Bursa Malaysia Securities Berhad.

Aged 62 and a Certified Practising Accountant by profession,he was appointed a Board Member of Financial ReportingFoundation by the Minister of Finance in July 1997. Sits onthe Board of The National Kidney Foundation and the Board ofTrustees of Malaysian Liver Foundation. In 1995, appointed aMember of Malaysian Business Council and in 1996, washonored with the Chairmanship of Malaysian Industry-Government Group for High Technology (MIGHT) forConstruction and Housing, besides the accolade of PropertyMan of the Year (Malaysia) in 1993 and CEO of the Year(Malaysia) in 1996. The Minister of Tourism Malaysiaappointed him an EXCO Member to Malaysian Tourism ActionCouncil. In recognition of his outstanding contribution toeducation, the Minister of Education appointed him to theHigher Education Council in 1998. Was conferred HonoraryDoctorates by 8 leading universities worldwide and inSeptember 2006, was appointed as the FoundationChancellor of Sunway University College by His RoyalHighness Sultan of Selangor.

Appointed to the Board of Sunway Infrastructure Berhad(“SunInfra”) as Non-Executive Chairman on 10 June 2002 and was subsequently appointed as Executive Chairman on 1 August 2003.

Current directorships in other public companies includeSunway, Sunway City Berhad and Federation of Public ListedCompanies Berhad.

Attended all of the 5 Board Meetings held in the financial year.


44

Profile Of Board Of Directors (Cont’d)

Aged 68 and a Member of Australian Institute ofBankers with more than 36 years of experience in thebanking industry. Joined Standard Chartered BankMalaysia Berhad in 1964 and served in various capacitiesincluding secondments to the Bank’s branches inLondon, Europe, Hong Kong and Singapore. In 1994,was appointed as Executive Director/Deputy ChiefExecutive of Standard Chartered Bank Malaysia Berhaduntil his retirement in June 1999. In the same month in1999, was appointed as Chairman of MBf FinanceBerhad by Bank Negara Malaysia as its nominee untilJanuary 2002 when the finance company was sold toArab-Malaysian Group.

Appointed to the Board of SunInfra as Non-ExecutiveDeputy Chairman on 10 June 2002.

Current directorships in other public companies includeSunway City Berhad, Ranhill Berhad, Multi-PurposeHoldings Berhad, Affin Bank Berhad, MAA HoldingsBerhad and Berjaya Land Berhad.

Attended 4 out of the 5 Board Meetings held in thefinancial year.

Datuk Razman M Hashim Deputy Chairman, Non-IndependentNon-Executive DirectorMalaysian


(405897-V)


Dato’ Tan Kia LokeNon-Independent Non-Executive Director Malaysian

Aged 57 and attained a Bachelor ofScience (Honours) Degree in CivilEngineering from the University ofStrathclyde, United Kingdom in 1977. A Registered Professional Engineer withthe Board of Engineers, Malaysia, aFellow of the Institute of Engineers,Malaysia and Honorary Advisor of theMaster Builders Association of Malaysia.Was awarded CEO of the Year 2006 byThe Malaysian Construction IndustryExcellence Awards.

Is currently the Senior Managing Directorof Sunway Construction Sdn Bhd, theconstruction arm of Sunway Group andhas more than 28 years’ experience inthe construction industry.

Appointed to the Board of SunInfra on 14 October 1996 and also serves asChairman of the Risk ManagementCommittee.

Current directorships in other publiccompanies include Sunway andMalaysian South-South CorporationBerhad.

Attended all of the 5 Board Meetingsheld in the financial year.

Yau Kok SengNon-Independent Non-Executive Director Malaysian

Aged 47 and a Chartered Accountant byprofession with more than 25 years ofexperience in auditing, accounting,corporate finance and generalmanagement. Prior to joining Sunway,was with Ernst & Young, an internationalaccounting firm, where he qualified as aCertified Public Accountant. In 1988, wasposted to its London office for 3 years.

Joined Sunway as Head of CorporateFinance in 1992 and was subsequentlypromoted as Group Finance Director in1995. In April 2001, was promoted asManaging Director of Sunway.

Appointed to the Board of SunInfra on 17 June 2002 and also serves as a Member of the Audit and RiskManagement Committees. Appointed as the Managing Director of SunInfra on 1 March 2003 and subsequentlyredesignated to Non-Independent Non-Executive Director on 10 April 2003.

Current directorships in other publiccompanies include Sunway, GopengBerhad and Federation of Public ListedCompanies Berhad.

Attended all of the 5 Board Meetingsheld in the financial year.


66


Liew Kiam WoonNon-Independent Non-Executive Director Malaysian

Aged 44 and graduated from theUniversity of Oregon, United States ofAmerica in 1987, majoring in BusinessAdministration. Started his career as aBusiness Development Executive withMBF Factors Sdn Bhd in 1987 for 2years. Joined LFE Engineering Sdn Bhd(“LFE”) in 1990 as a Project Coordinatorto oversee the projects undertaken byLoong Fuat Engineering (JB) Sdn Bhd, asubsidiary of LFE located in Johor Bahru.

In 2000, appointed as Executive Directorof LFE and assumed a more prominentand important role, that is, to securemore contracts for the LFE Group and toensure the smooth running of theoperations of the Group in Malaysia aswell as in overseas. On 15 September2003, assumed the position of ExecutiveDirector of LFE Corporation Berhad, theholding company of the LFE Group.

Appointed to the Board of SunInfra on 17 June 2002.

Current directorship in other publiccompany includes LFE CorporationBerhad.

Attended 4 out of the 5 Board Meetingsheld in the financial year.

Dato’ Seri Syed ZainolRashid JamalullailIndependent Non-Executive DirectorMalaysian

Aged 54 and studied Commerce andMarketing in Australia and in the UnitedKingdom. Also attained a Higher NationalDiploma in Business Studies, Marketing &Advertising from the College for theDistributive Trades, London.

Has more than 10 years of experience inInternational Business Development, beingthe Malaysian affiliate of the Larive GroupBV, Netherlands. The company specialisesin market research and businessdevelopment. Former Executive Chairmanof Enersave Water Sdn Bhd, a water andwastewater treatment company based inShah Alam, Selangor Darul Ehsan and iscurrently the President of Semada (Thai)Co. Ltd, a company which specialises intrade and business development betweenMalaysia and Thailand.

Appointed to the Board of SunInfra on 9 August 2002 and also serves asChairman of the Audit Committee.

Has no directorships in other publiccompanies.

Attended all of the 5 Board Meetings heldin the financial year.


(405897-V)


NOTES:

1. Family Relationship with Director and/or Major ShareholderNone of the Directors has any family relationship with any director and/or major shareholder of SunInfra.

2. Conflict of InterestNone of the Directors has any conflict of interest with SunInfra Group.

3. Conviction for OffencesNone of the Directors has been convicted for offences within the past 10 years other than traffic offences, if any.

4. Attendance of Board MeetingsThe attendance of the Directors at Board of Directors’ Meetings is disclosed in the Corporate GovernanceStatement.

Dato’ Ir Hj Ibrahim Bin Hj YakubIndependent Non-Executive Director Malaysian

Aged 61 and graduated from Portsmouth Polytechnics, United Kingdom with a Bachelor of Science Degreemajoring in Civil Engineering. A Member of the Institution of Engineers, Malaysia, the Board of Engineers,Malaysia and the Road Engineering Association of Malaysia. Also a Senior Director of a major engineeringconsultancy firm and Director of a few private companies in Malaysia.

Began his career with JKR, Kelantan as a Building Engineer in 1974. In 1978, held the position of DeputySuperintendent Engineer for the East-West Highway, Jeli, Kelantan before being promoted to Senior ExecutiveEngineer at JKR Seberang Prai, Penang. Subsequently in 1983, was promoted to Deputy Director of JKRKelantan. Former Director of Development of Universiti Kebangsaan Malaysia, Selangor from 1988 to 1991.

Appointed as Deputy Director of Federal Development Department, Sabah in 1991 and subsequently asDirector of Planning of JKR headquarters, Kuala Lumpur in 1996. Subsequently in 1996, appointed as Directorof JKR, Selangor and held the position until his retirement in 2001.

Appointed to the Board of SunInfra on 9 August 2002 and also serves as a Member of the Audit Committee.

Has no directorships in other public companies.

Attended all of the 5 Board Meetings held in the financial year.


88

On behalf of the Board of Directors of SunInfra, I present the Annual Report and Audited Financial Statements of theCompany and the Group for the financial year ended 30 June 2007.

FINANCIAL PERFORMANCE

The KAJANG SILK Highway completed its third year of operation by the end of financial year ended 30 June 2007.The Group reported revenue of RM28.952 million and pre-tax loss of RM82.87 million. Despite recording an averagevehicles per day of approximately 75,850 for the financial year ended 30 June 2007 as compared to 67,000 in theprevious financial period ended 30 June 2006, the Group continued to record high losses before taxation. The highlosses were mainly attributable by the high financing cost at a rate of 10.64% per annum on the Al-Bai Bithaman AjilIslamic Debt Securities (“BaIDS”) issued by the Company’s wholly-owned subsidiary, Sistem Lingkaran-LebuhrayaKajang Sdn Bhd, were not matched by revenue generated from the toll collections.

OPERATIONS REVIEW

Toll revenue from KAJANG SILK Highway is the major contributor to the Group’s bottomline. Continuous andconcerted efforts were undertaken to attract new users to use the Highway through greater public awareness anduser familiarisation programmes at different catchment areas like Putrajaya, Semenyih, Cheras, Bangi, Kajang, SungaiLong, Balakong, Seri Kembangan and etc. The excellent infrastructure at the above catchment areas has successfullyattracted prominent property developers to start developing sizeable parcels of land for residential and commercialpurposes. The spur in property development activities will no doubt attract more traffic plying the Highway.

Notwithstanding, the restructuring/refinancing of the existing BaIDS to strengthen its financial position and reducethe overall gearing and funding cost remained the top priority of the Group. The Board of Directors of the Companywas indeed glad that our existing BaIDS holders have accepted the proposal from Affin Investment Bank Berhad(“Affin”) to restructure/refinance the existing BaIDS on 17 August 2007. The proposed restructuring/refinancing istargeted to complete by end of the calendar year 2007. The proposal from Affin that seeks to enhance the matchingof cash flows derived from toll collection with debt servicing requirements will certainly put the Group into a firmerfooting to profitability in the coming years.

FUTURE OUTLOOK

Despite the drop in car sales in the first half of 2007, it is expected that the car sales for the second half to be better,stimulated by the higher disposal income of the civil servants lifted by the 7.5% to 35% pay hike recently. It is alsoexpected that the growth momentum of the economy will strengthen during the second half of 2007. The recentannouncement by the Government on the exemption from Real Property Gains Tax and initiatives to improve thedelivery system for the property industry will spur property development activities and urbanisation around the vicinityof Kajang town. In light of these positive factors, we are fairly confident that the tollable traffic plying the KAJANGSILK Highway will continue to grow in the years ahead.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, I would like to thank all our valued customers, shareholders, bankers, variousgovernment authorities and business associates for their unwavering support and confidence with the Group and alsoto our management and employees for their hard work, contributions and dedication.

Tan Sri Dato’ Seri Dr Cheah Fook LingExecutive Chairman

8 October 2007

Chairman’s Statement


(405897-V)

Five-Year Group Financial Summary

2007 *2006 2004 2003 2002

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

REVENUE 28,952 37,635 8,481 241 -

Loss before taxation (82,870) (114,101) (35,282) (4,040) (3,255)

Taxation (13) (9) (659) (478) 775

Loss after taxation (82,883) (114,110) (35,941) (4,518) (2,480)

LOSS ATTRIBUTABLE TO SHAREHOLDERS (82,883) (114,110) (35,941) (4,518) (2,480)

Other investment 17 17 17 - -

Property, plant and equipment 3,234 3,805 3,221 1,250 1,375

Expressway development expenditure 1,256,077 1,261,221 1,244,631 1,065,890 564,324

Deferred tax assets - - - 2,072 2,486

Current assets 121,114 105,759 91,504 250,009 468,127

TOTAL ASSETS 1,380,442 1,370,802 1,339,373 1,319,221 1,036,312

Current liabilities 1,066,988 24,100 14,606 116,559 87,110

Long-term borrowings 20,000 969,192 834,896 756,516 665,666

Deferred income 330,752 331,925 330,176 250,509 167,014

TOTAL LIABILITIES 1,417,740 1,325,217 1,179,678 1,123,584 919,790

TOTAL NET ASSETS/(LIABILITIES) (37,298) 45,585 159,695 195,637 116,522

SHARE CAPITAL 90,000 90,000 90,000 90,000 60,000

SHAREHOLDERS' FUNDS (37,298) 45,585 159,695 195,637 116,522

LOSS PER SHARE (SEN) (46.0) (63.4) (20.0) (3.6) (2.0)

NET TANGIBLE ASSETS/(LIABILITIES)

PER SHARE (SEN) (20.7) 25.3 88.7 108.7 97.1

* The Company changed its financial year end from 31 December to 30 June with effect from the financial period ended30 June 2006 and accordingly, the results for that financial period are for 18 months.


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Corporate Governance Statement

The Board is committed to implementing the Malaysian Code on Corporate Governance (“the Code”) whereverapplicable in the best interest of the shareholders of the Company.

A. DIRECTORS

THE BOARD AND ITS RESPONSIBILITIES

The Board leads and controls the Group. It regularly meets to perform its main functions, amongst others, as follows:-

• Setting the objectives, goals and strategic plans for the Group with a view to maximising shareholders’ value.• Adopting and monitoring progress of the Company’s strategies, budgets, plans and policies.• Overseeing the conduct of the Group’s businesses to evaluate whether the businesses are properly managed.• Identifying principal risks of the Group and ensuring the implementation of appropriate systems to mitigate and

manage these risks. The Board through the Risk Management Committee, sets, where appropriate, objectives,performance targets and policies to manage the key risks faced by the Group.

• Considering Management’s recommendations on key issues including acquisitions, divestments, restructuring,funding and significant capital expenditure.

• Human resources planning and development.• Reviewing the adequacy and integrity of the Company’s internal control systems and management information

systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.

The Board delegates certain responsibilities to the Board Committees, all of which operate within defined terms ofreference.

BOARD COMPOSITION

During the year under review, the Board consists of 7 members, 2 or 1/3 are Independent Non-Executive Directors.The composition reflects a balance of Executive and Non-Executive Directors with a mix of suitably qualified andexperienced professionals in the fields of construction and building materials, civil engineering, accountancy, finance,banking, business administration and development. This combination of different professions and skills workingtogether enables the Board to effectively lead and control the Company. The Board composition also fairly reflectsthe investment in the Company by shareholders other than the significant shareholder.

A brief profile of each Director is presented on pages 3 to 7 of the Annual Report.

MEETINGS AND SUPPLY OF INFORMATION

Unless there are urgent matters, the Board normally meets quarterly to review financial, operational and businessperformances. Notices and agenda of meetings duly endorsed by the Executive Chairman together with the relevantboard papers are normally given at least 1 week prior to the meetings for the Directors to study and evaluate thematters to be discussed.

The board papers provided include inter alia, financial results, business plan and budget, progress report on theCompany’s developments, minutes of meetings of Board Committees, regulatory/statutory updates and otheroperational and financial issues for the Board’s information and/or approval.

All Directors are entitled to information pertaining to the Company. In addition, all Directors have direct access to theadvice and services of the Company Secretaries. They are also permitted to seek independent advice wheneverdeemed necessary, at the Company’s expense.

There is a formal procedure approved by the Board for all Directors, whether as a full Board or in their individualcapacity, to obtain independent professional advice, when necessary, at the Company’s expense.


(405897-V)

Corporate Governance Statement (Cont’d)

The Board met 5 times during the financial year ended 30 June 2007 and the attendance of the respective Directorswas as follows:-

Number of Percentage ofName of Directors Meetings Attended Attendance (%)_______________________________________________________________________________________________________Tan Sri Dato’ Seri Dr Cheah Fook Ling 5/5 100Datuk Razman M Hashim 4/5 80Dato’ Tan Kia Loke 5/5 100Yau Kok Seng 5/5 100Liew Kiam Woon 4/5 80Dato’ Seri Syed Zainol Rashid Jamalullail 5/5 100Dato’ Ir Hj Ibrahim Bin Hj Yakub 5/5 100

DIRECTORS’ TRAINING

During the financial year, the Directors had attended various training programmes and seminars organised by therelevant regulatory authorities and professional bodies to broaden their knowledge and to keep abreast with therelevant changes in law, regulations and the business environment.

The training programmes, seminars and workshops attended by the Directors during the financial year were, interalia, on areas relating to corporate leadership and governance, risk management and financial reporting.

Training Programmes, Seminars and Workshops attended by Directors_______________________________________________________________________________________________________

Course Title / Organiser Date_______________________________________________________________________________________________________

Global Leadership Forum 2006 – Leadership, Innovation 1-2 August 2006and Competitiveness: Challenges and Opportunities(Global Leadership Forum)

Leadership Excellence – Managing Change for Success 2 August 2006by Carly Fiorina and Tom Peters (Global Leaders)

Understanding Takaful 7 September 2006(Trace Management Services Sdn Bhd)

MAA Orientation and Education Program 27 September 2006(Malaysian Assurance Alliance Berhad)

Innovation and Branding 6 October 2006(Trace Management Services Sdn Bhd)

Improving Budgeting Process 1 November 2006(Bursatra Sdn Bhd)

Improving Board of Directors’ Performance, Leadership and Governance 4 December 2006(Knowledge Group Consulting Sdn Bhd)

Basel Capital Accord II, Economic Value Management 6 February 2007and Banking Trends Workshop (KPMG)

2007 Bursa Malaysia - CIMB Breakfast Series: Post-Merger 4 May 2007Integration – A Practical Insight to Value Creation(Bursa Malaysia Berhad and CIMB Investment Bank Berhad)

Regional Capital Markets Conference 20-21 June 2007(Malaysian Investment Banking Association and Pinnacle Group)

_______________________________________________________________________________________________________

All Directors were also constantly updated by the Company Secretary on changes to the relevant guidelines on theregulatory and statutory requirements.


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RETIREMENT BY ROTATION AND RE-ELECTION

The Company’s Articles of Association provides that 1/3 of the Board is subject to retirement by rotation at eachAnnual General Meeting. Each Director shall retire at least once every 3 years but shall be eligible for re-election. TheDirectors to retire in each year are those who have been longest in office since their last election or appointment.

To assist the shareholders in their decision, sufficient information such as personal profile, attendance of meetingsand the shareholdings of each Director standing for re-election are disclosed in the Statement Accompanying Noticeof Annual General Meeting.

BOARD COMMITTEES

The Board has set up the following Committees and will periodically review their terms of reference and operatingprocedures. The Committees are required to report to the Board on all their deliberations and recommendations andsuch reports are incorporated in the minutes of the Board Meetings.

1. Audit Committee

The Audit Committee comprising Dato’ Seri Syed Zainol Rashid Jamalullail as Chairman, Dato’ Ir Hj Ibrahim BinHj Yakub and Yau Kok Seng is set up to play an active role in assisting the Board in discharging its governanceresponsibilities. The composition of the Audit Committee, its terms of reference, attendance of meetings anda summary of its activities are set out on pages 17 to 22 of the Annual Report.

2. Risk Management Committee

The Risk Management Committee comprises Dato’ Tan Kia Loke as Chairman, Yau Kok Seng, Mark VictorRozario, Goh Hai Thun and Ng Lai Ping.

The Risk Management Committee is tasked with the responsibility to oversee the risk management activitiesof the Group, approving appropriate risk management procedures and measurement methodologies across theorganisation as well as identification and management of strategic business risks of the Group. The terms ofreference of the Risk Management Committee are set out on page 16 of the Annual Report.

During the financial year, 4 meetings were held for the following purposes:-

(a) to identify and evaluate new and existing strategic risks;(b) to review the current controls and status of implementation of management action plans to manage the

identified risks;(c) to review the effectiveness of overall risk management at enterprise level; and(d) to monitor the Company’s financial risks.

The Risk Management Committee reports directly to the Board on a quarterly basis on its deliberations andrecommendations.

B. DIRECTORS’ REMUNERATION

The remuneration of the Executive Director is structured on the basis of linking rewards to corporate and individualperformance. For Non-Executive Directors, the level of remuneration reflects the experience and level ofresponsibilities.

The Board as a whole resolves on the fees for the Non-Executive Directors with individual Directors abstaining fromdecisions in respect of their individual remuneration. The fees payable to the Non-Executive Directors are subject tothe approval of shareholders.


(405897-V)


The breakdown of the Directors’ remuneration during the financial year is as follows:-

Executive Non-Executive TotalDirector Directors

RM RM RM

Fees - 36,000 36,000

Other Emoluments - 21,000 21,000

Salaries and other Remuneration 340,500 - 340,500

Bonus 37,500 - 37,500

Benefits-in-kind 23,950 - 23,950___________________________________________________________

Total: 401,950 57,000 458,950 ___________________________________________________________ ___________________________________________________________

The number of Directors whose remuneration falls under the following bands:-

Executive Non-Executive TotalDirector Directors

Range of Remuneration

Below RM50,000 - 3 3

RM400,001 to RM450,000 1 - 1___________________________________________________________

Total: 1 3* 4___________________________________________________________ ___________________________________________________________

* No Director’s Fee will be paid to 3 Non-Independent Non-Executive Directors.

C. SHAREHOLDERS

DIALOGUE BETWEEN THE COMPANY AND INVESTORS

The Board values constant dialogue and is committed to clear communication with its shareholders and investors. Inthis respect, as part of the Group’s active investor relations programme, discussions and dialogues are held with fundmanagers, financial analysts and shareholders to convey information about the Group’s performance, corporatestrategy and other matters affecting shareholders’ interests.

In addition to published Annual Report and Quarterly Reports announced to Bursa Securities, the Group hasestablished a website at http://www.sunway.com.my from which investors and shareholders can access for information.

While the Company endeavours to provide as much information as possible to its shareholders and stakeholders, itis mindful of the legal and regulatory framework governing the release of material and price-sensitive information. Toachieve this, the Board had approved and adopted a Corporate Disclosure Policy which outlines the Company’sapproach toward the determination and dissemination of material information, the circumstances under which theconfidentiality of information will be maintained, response to market rumours and restrictions on insider trading. ThisPolicy also provides guidance and structure in disseminating corporate information to, and in dealing with, investors,analysts, media and the investing public.

ANNUAL GENERAL MEETING

The Annual General Meeting of the Company provides the principal forum for dialogue and interaction between theBoard and the shareholders. The participation of shareholders, both individuals and institutional at general meetingson clarifications of pertinent and relevant information is encouraged.


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D. ACCOUNTABILITY AND AUDIT

FINANCIAL REPORTING

In presenting the annual financial statements, annual report and quarterly announcement of results to shareholders,the Board aims to provide a balanced and understandable assessment of the Group’s financial position, performanceand prospects. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processesand the quality of its financial reporting.

INTERNAL CONTROL

The Statement on Internal Control set out on pages 23 and 24 of the Annual Report provides an overview of the stateof internal controls within the Group.

RELATIONSHIP WITH THE AUDITORS

The Board maintains, via the Audit Committee, an active, transparent and professional relationship with its Auditors.The role of the Audit Committee in relation to the External Auditors is disclosed in the Audit Committee Report setout on pages 17 to 22 of the Annual Report.

E. DIRECTORS’ RESPONSIBILITY STATEMENT ON ANNUAL AUDITED FINANCIAL STATEMENTS

The Directors are responsible in the preparation of the Annual Audited Financial Statements to give a true and fairview of the state of affairs, results and cash flows of the Company and of the Group at the end of the financial year.

In preparing the financial statements, the Directors will ensure that suitable accounting policies have been appliedconsistently, and that reasonable and prudent judgments and estimates have been made. All applicable approvedaccounting standards and provisions of the Companies Act, 1965 have been complied with.

The Directors are also responsible for ensuring that proper accounting and other records are kept which disclose withreasonable accuracy, the financial position of the Company and of the Group and which enables them to ensure thatthe financial statements comply with the relevant statutory requirements.

F. COMPLIANCE WITH THE CODE

The Group has complied substantially with the principles and best practices outlined in the Code except for thefollowing:-

1. Appointment of Senior Independent Non-Executive Director

The Board has not found it necessary to identify a Senior Independent Non-Executive Director to whomconcerns relating to the affairs of the Group may be conveyed, as there are a number of experienced andcompetent senior independent directors on the Board. In addition, the Executive Chairman encourages fulldeliberation of issues affecting the Group by all members of the Board.


(405897-V)

2. Formation of Nomination Committee

The Code endorses as a good practice, a formal procedure for appointment to the Board based on therecommendation of a Nomination Committee. The Code, however, states that this procedure may beperformed by the Board as a whole.

In place of a Nomination Committee, the suitability of candidates for appointment to the Board will beconsidered and approved by the entire Board to ensure that the resulting mix of experience and expertise ofmembers of the Board is sufficient to address the issues affecting the Group. During the financial year, therewere no new appointments to the Board.

The Board will also undertake the role of a Nomination Committee to assess the effectiveness of the Board asa whole and the Committees of the Board as well as to assess the contribution of each individual Director. TheBoard will be implementing a process to carry out this role.

3. Formation of Remuneration Committee

Following a review of the need to establish a Remuneration Committee as recommended by the Code, theBoard concluded that the determination of Directors’ remuneration is a matter for the Board as a whole.However, Directors will not participate in decisions concerning their own remuneration packages and Directors’fees must be approved by the shareholders at the Annual General Meeting of the Company.

This Corporate Governance Statement was approved by the Board of Directors on 27 August 2007.




1166

1. MEMBERSHIP

(a) The Risk Management Committee (“RMC”) shall be appointed by the Board and shall comprise not fewerthan 3 in number.

(b) The members of the RMC shall elect a Chairman from among their number.

(c) In the event of any vacancy in the RMC resulting in the number of members being reduced to below 3,the Board shall, within 3 months fill the vacancy.

(d) The Board shall have the discretion as it deems fit to rescind and/or revoke the appointment of anyperson(s) in the RMC.

2. ROLES AND FUNCTIONS

The RMC has the overall responsibility for overseeing the risk management activities of the Group, approvingappropriate risk management procedures and measurement methodologies across the organisation as well asidentification and management of strategic business risks of the Group. Its primary roles include the following:-

(a) To champion and promote the Enterprise Risk Management and to ensure that the risk managementprocess and culture are embedded throughout the Group.

(b) To ensure the implementation of the objectives outlined in the Risk Management Policy and compliancewith them.

(c) To provide routine quarterly reporting and update the Board on key risk management issues as well as adhoc reporting and evaluation on investment proposals.

(d) To work with the Group Financial Controller and Group Internal Audit Department in the preparation of theStatement on Internal Control for inclusion in the Company’s Annual Report and to recommend the same for the approvals of the Audit Committee and Board.

2.1 Routine Roles and Responsibilities

(a) Review the effectiveness of overall risk management at the enterprise level.

(b) Follow-up on management action plans based on the status of implementation compiled by the management.

(c) Identify new strategic risks including corporate matters eg. regulatory, business development, etc.

(d) Review the enterprise risk scorecard and determine the risks to be escalated to the Board on a quarterly basis.

2.2 Ad hoc Roles and Responsibilities

(a) Propose to the Board, the monetary threshold and nature of proposed investments that require the RMC’sevaluation and endorsement before submission to the Board.

(b) Review proposals/feasibility studies prepared by project sponsor which meet the requisite thresholdbefore recommending to the Board for final decision.

3. MEETINGS

(a) The RMC shall meet at least quarterly in a year. However, additional meetings may be called at any timeat the RMC Chairman’s discretion.

(b) The quorum for the meeting shall be 2 members.

4. REPORTING

The Chairman of the RMC shall report the proceedings of each Committee Meeting to the Board.

5. SECRETARY

The Secretary to the RMC shall be the Company Secretary.

Terms Of Reference Of Risk Management Committee


(405897-V)

Audit Committee Report

FORMATION

The Audit Committee was formed by the Board of Directors at its meeting on 16 August 2002.

The objective of the Audit Committee is to assist the Board of Directors in fulfilling its fiduciary responsibilities relatingto internal controls, financial and accounting records and policies as well as financial reporting practices of theCompany and its subsidiaries (“the Group”).

COMPOSITION

The members of the Audit Committee during the financial year ended 30 June 2007 were as follows:-

1. Dato’ Seri Syed Zainol Rashid Jamalullail - Chairman (Independent Non-Executive Director)

2. Dato’ Ir Hj Ibrahim Bin Hj Yakub(Independent Non-Executive Director)

3. Yau Kok Seng(Non-Independent Non-Executive Director)

MEETINGS AND ATTENDANCE

The Audit Committee held 5 meetings during the financial year and the attendance of the Committee Members wasas follows:-

Name of Committee Member Number of Meetings Attended_______________________________________________________________________________________________________

Dato’ Seri Syed Zainol Rashid Jamalullail 5/5

Dato’ Ir Hj Ibrahim Bin Hj Yakub 5/5

Yau Kok Seng 4/5

The Company Secretaries, the Internal Auditors and the Chief Financial Officer were present at all meetings. At 3 ofthe meetings, the External Auditors were present.

TERMS OF REFERENCE

1. Membership

1.1 The Committee shall be appointed by the Board of Directors from amongst the Directors of the Companyand shall consist of not less than 3 members.

1.2 The majority of the members including the Chairman of the Committee shall be Independent Directors asdefined in Chapter 1 of the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).

1.3 The Committee shall include at least 1 person:-

(a) who is a member of the Malaysian Institute of Accountants; or

(b) who must have at least 3 years’ working experience and:-

(i) have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act,1967; or

(ii) is a member of 1 of the Associations specified in Part II of the 1st Schedule of the AccountantsAct, 1967; or


1188

Audit Committee Report (Cont’d)

(c) who must have at least 3 years’ post qualification experience in accounting or finance and:-

(i) has a degree/masters/doctorate in accounting or finance; or

(ii) is a member of 1 of the professional accountancy organisations which has been admitted as afull member of the International Federation of Accountants; or

(d) who must have at least 7 years’ experience being a chief financial officer of a corporation or having thefunction of being primarily responsible for the management of the financial affairs of a corporation.

1.4 No Alternate Director shall be appointed as a member of the Committee.

1.5 The members of the Committee shall elect a Chairman from amongst their number.

1.6 If a member of the Committee resigns, dies or for any reason ceases to be a member with the result thatthe number of members is reduced below 3, the Board shall, within 3 months appoint such number ofnew members as may be required to make up the minimum of 3 members.

1.7 The terms of office and performance of the Committee and each of its members shall be reviewed by theBoard no less than once every 3 years. However, the appointment terminates when a member ceases tobe a Director.

2. Meetings

2.1 The quorum for a Committee Meeting shall be at least 2 members, the majority present must beIndependent Directors.

2.2 The Committee shall meet at least 4 times a year and such additional meetings as the Chairman shalldecide.

2.3 Notwithstanding paragraph 2.2 above, upon the request of any member of the Committee, non-memberDirectors, the Internal or External Auditors, the Chairman shall convene a meeting of the Committee toconsider the matters brought to its attention.

2.4 The External Auditors have the right to appear and be heard at any meeting of the Committee and shallappear before the Committee when required to do so.

2.5 The non-member Directors and employees of the Company and of the Group shall normally attend themeetings to assist in its deliberations and resolutions of matters raised. However, at least once a year,the Committee shall meet with the External Auditors without the presence of the executive members ofthe Committee.

2.6 The Internal Auditors shall be in attendance at all meetings to present and discuss the audit reports andother related matters as well as the recommendations relating thereto and to follow-up on all relevantdecisions made.

2.7 The Company Secretary shall act as Secretary of the Committee and shall be responsible, with theconcurrence of the Chairman, for drawing up and circulating the agenda and the notice of meetingstogether with the supporting explanatory documentation to members prior to each meeting.

2.8 The Secretary of the Committee shall be entrusted to record all proceedings and minutes of all meetingsof the Committee.

2.9 In addition to the availability of detailed minutes of the Committee Meetings to all Board members, theCommittee at each Board Meeting, will report a summary of significant matters and resolutions.


(405897-V)


3. Rights and Authority

The Committee is authorised to:-

3.1 Investigate any matter within its terms of reference.

3.2 Have adequate resources required to perform its duties.

3.3 Have full and unrestricted access to information, records and documents relevant to its activities.

3.4 Have direct communication channels with the External and Internal Auditors.

3.5 Engage, consult and obtain outside legal or other independent professional advice and to secure theattendance of outsiders with relevant experience and expertise it considers necessary.

4. Functions and Duties

4.1 To review and recommend for the Board’s approval, the Internal Audit Charter which defines theindependent purpose, authority, scope and responsibility of the internal audit function in the Company andthe Group.

4.2 To review the following and report to the Board:-

(a) With the External Auditors:-

(i) the audit plan and audit report and the extent of assistance rendered by employees of the Auditee;

(ii) their evaluation of the system of internal controls;

(iii) the audit fee and on matter concerning their suitability for nomination, appointment and re-appointment and the underlying reasons for resignation or dismissal as Auditors;

(iv) the management letter and management’s response; and

(v) issues and reservations arising from audits.

(b) With the Internal Audit Department:-

(i) the adequacy and relevance of the scope, functions and resources of Internal Audit and thenecessary authority to carry out its work;

(ii) the audit plan of work programme and results of internal audit processes includingrecommendations and actions taken;

(iii) the extent of cooperation and assistance rendered by employees of Auditee; and

(iv) the appraisal of the performance of the internal audit including that of the senior staff and anymatter concerning their appointment and termination.

(c) The quarterly results and year end financial statements prior to the approval by the Board, focusingparticularly on:-

(i) changes and implementation of major accounting policies and practices;

(ii) significant and unusual issues;

(iii) going concern assumption; and

(iv) compliance with accounting standards, regulatory and other legal requirements.


2200


(d) The major findings of investigations and management response.

(e) The propriety of any related party transaction and conflict of interest situation that may arise withinthe Company or the Group including any transaction, procedure or course of conduct that raisesquestions of management integrity.

4.3 To report any breaches of the Listing Requirements which have not been satisfactorily resolved, to BursaSecurities.

4.4 To prepare the Audit Committee Report for inclusion in the Company’s Annual Report covering:-

(a) the composition of the Committee including the name, designation and directorship of the members;

(b) the terms of reference of the Committee;

(c) the number of meetings held and details of attendance of each member;

(d) a summary of the activities of the Committee in the discharge of its functions and duties; and

(e) a summary of the activities of the internal audit function.

4.5 To review the following for publication in the Company’s Annual Report:-

(a) the disclosure statement of the Board on:-

(i) the Company’s applications of the principles set out in Part I of the Malaysian Code onCorporate Governance; and

(ii) the extent of compliance with the best practices set out in Part II of the Malaysian Code onCorporate Governance, specifying reasons for any area of non-compliance and the alternativemeasures adopted in such areas.

(b) the statement on the Board’s responsibility for the preparation of the annual audited financial statements.

(c) the disclosure statement on the state of the internal controls system of the Company and of the Group.

(d) the statement by the Audit Committee on the verification of allocation of share options to theGroup’s eligible employees in compliance with the criteria set out in the Bye-Laws of the Company’sEmployees’ Share Option Scheme, at the end of each financial year.

(e) other disclosures forming the contents of annual report spelt out in Part A of Appendix 9C of theListing Requirements of Bursa Securities.

The above functions and duties are in addition to such other functions as may be agreed to from time to timeby the Committee and the Board.

5. Internal Audit Department

5.1 The Head of the Internal Audit Department shall have unrestricted access to the Committee Members andreport to the Committee whose scope of responsibility includes overseeing the development and theestablishment of the internal audit function.

5.2 In respect of routine administrative matters, the Head of Internal Audit Department shall report to theGroup Executive Chairman or his designate.


(405897-V)


ACTIVITIES OF THE COMMITTEE FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

The summary of activities of the Committee in the discharge of its duties and responsibilities is as follows:-

(a) Reviewed the adequacy and relevance of the scope, functions, resources, risk based internal audit plan andresults of the internal audit processes with the Internal Audit Department.

(b) Reviewed the audit activities carried out by the Internal Audit Department and the audit reports to ensurecorrective actions were taken in addressing the risk issues reported.

(c) Reviewed with the assistance of the Internal Audit Department and management, the adequacy,appropriateness and compliance of the procedures established to monitor recurrent related party transactions.

(d) Reviewed with the External Auditors, the audit plan of the Company and of the Group for the year (inclusive ofrisk and audit approach, system evaluation, audit fees, issues raised and management responses) prior to thecommencement of the annual audit.

(e) Reviewed the extent of assistance rendered by management and issues and reservations arising from auditswith the External Auditors without the presence of management staff and the executive member of theCommittee.

(f) Reviewed the financial statements, the audit report, issues and reservations arising from statutory audit withthe External Auditors.

(g) Reviewed and discussed the Management Accounts with management.

(h) Reviewed the quarterly results and financial statements for the financial year ended 30 June 2007 withmanagement and the External Auditors for recommendation to the Board of Directors for approval and releaseto Bursa Securities.

(i) Reviewed all recurrent related party transactions entered into by the Company and the Group at theCommittee’s quarterly meetings to ensure that the transactions entered into were at arm’s length basis and onnormal commercial terms.

(j) Reviewed and approved the Circular to Shareholders and the statements by the Audit Committee in respect ofthe Proposed Shareholders’ Mandate for Recurrent Related Party Transactions.

(k) Reviewed any conflict of interest situation that may arise within the Company or Group including anytransaction, procedure or course of conduct that raises questions of management integrity.

(l) Discussed the implications of any latest changes and pronouncements on the Company and the Group issuedby the statutory and regulatory bodies.

(m) Reported to the Board on significant issues and concerns discussed during the Committee’s meetings togetherwith applicable recommendations. Minutes of meetings were tabled, discussed and noted by all Boardmembers.

(n) Reviewed and approved the Audit Committee Report for inclusion in the Company’s 2006 Annual Report.

(o) Reviewed the disclosure statements on compliance of the Malaysian Code on Corporate Governance and thestate on internal controls as well as the Directors’ Responsibility Statement on the annual audited financialstatements for inclusion in the Company’s 2006 Annual Report.


2222


INTERNAL AUDIT ACTIVITIES REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

The summary of activities of the Internal Audit Department is as follows:-

(a) Prepared the annual audit plan for the approval of the Audit Committee.

(b) Regularly performed risk based audits on strategic business units of the Company and of the Group, whichcovered reviews of the internal control system, accounting and management information system and riskmanagement.

(c) Issued audit reports to the Committee and management identifying weaknesses and issues as well ashighlighting recommendations for improvements.

(d) Acted on suggestions made by the Committee and/or senior management on concerns over operations orcontrols and significant issues pertinent to the Company and of the Group.

(e) Followed up on management corrective actions on audit issues raised by the External Auditors.

(f) Reported to the Committee on review of the adequacy, appropriateness and compliance with the proceduresestablished to monitor recurrent related party transactions.

(g) Reviewed on the appropriateness of the disclosure statements in regard to compliance with the MalaysianCode on Corporate Governance and the state on internal controls as well as the Audit Committee Report.

(h) Attended Committee’s meetings to table and discuss the audit reports and followed up on matters raised.

(i) Conducted unplanned special audit assignments on an ad hoc basis upon the request of management and theCommittee.


(405897-V)

INTRODUCTION

The Malaysian Code on Corporate Governance stipulates that the Board of Directors of public listed companies shouldmaintain a sound system of internal control to safeguard shareholders’ investment and Group assets. Set out belowis the Board of Directors (“the Board”) of SunInfra’s (“the Group”) Statement on Internal Control as a Group, madein compliance with Paragraph 15.27 of the Listing Requirements of Bursa Malaysia Securities Berhad and theStatement on Internal Control: Guidance for Directors of Public Listed Companies.

THE BOARD’S RESPONSIBILITY

The Board places importance on, and is committed to maintaining a sound system of internal control and effectiverisk management practices in the Group to ensure good corporate governance. The Board affirms its responsibilityfor reviewing the adequacy and integrity of the Group’s system of internal control and management informationsystems, including systems for compliance with applicable laws, rules, directives, guidelines and risk managementpractices.

Notwithstanding, as with any internal control system, the Group’s system of internal control is designed to managerather than eliminate the risk of failure to achieve business objectives. It follows, therefore, that the system of internalcontrol can only provide reasonable but not absolute assurance against material misstatement or loss.

The Group has in place an on-going process of identifying, evaluating, monitoring and managing the key risks affectingthe achievement of its business objectives throughout the year. The Board reviews this process on a quarterly basis.

THE GROUP’S SYSTEM OF INTERNAL CONTROL

Monitoring Mechanisms and Management Style

Scheduled periodic meetings of the Board, Board Committees and management represent the main platform bywhich the Group’s performance and conduct are monitored. The daily running of the business is entrusted to theChief Operating Officer and his management team. Under the purview of the Chief Operating Officer, the heads ofdepartment are empowered with the responsibility of managing their respective operations. The Chief OperatingOfficer actively communicates the Board’s expectations to management at the management meetings as well asthrough attendance at various operations meetings. At these meetings, operational and financial risks are discussedand dealt with.

The Board is responsible for setting the business direction and for overseeing the conduct of the Group’s operationsthrough various management reporting mechanisms. Through these mechanisms, the Board is informed of all majorcontrol issues pertaining to internal controls, regulatory compliance and risk taking.

Enterprise Risk Management Framework

In dealing with its stewardship responsibilities, the Board recognises that effective risk management is part of goodbusiness management practice. The Board acknowledges that all areas of the Group’s activities involve some degreeof risk and is committed to ensuring that the Group has an effective risk management framework which will allowthe Group to be able to identify, evaluate and manage risks that affect the achievement of the Group’s businessobjectives within defined risk parameters in a timely and effective manner.

The details on Enterprise Risk Management Framework are set out on pages 25 and 26 of the Annual Report.

Statement On Internal Control


2244

Key Elements of the Group’s System of Internal Control

The current system of internal control in the Group has within it, the following key elements:-

• Clear Group vision, mission, corporate philosophy and strategic direction which are communicated toemployees at all levels.

• An effective Board which retains control over the Group with appropriate management reporting mechanismswhich enable the Board to review the Group’s progress.

• Board approved annual budgets and management plans prepared by the subsidiary during the Business Planexercise to consider the relevant strengths, weaknesses, opportunities and threats including competitor, marketand broader environmental analysis.

• Management meetings involving discussion on operational issues at the subsidiary level.• Comprehensive policies and procedures manuals that provide guidelines on, and authority limits over various

operating, financial and human resources matters.• The use of the intranet as an effective means of communication and knowledge sharing.• Communication of policies and guidelines in relation to human resources matters to all employees through a

staff handbook which is also available on the intranet. • A systematic performance appraisal system for all levels of staff.• Relevant training provided to personnel across all functions to maintain a high level of competency and

capability. • An internal audit function which carries out internal audits based on an annual risk-based audit plan approved by

the Audit Committee (“AC”) [see also Assurance Mechanisms below].

Assurance Mechanisms

The AC is tasked by the Board with the duty of reviewing and monitoring the effectiveness of the Group’s system ofinternal control. In carrying out its responsibilities, the AC relies significantly on the support of the Group Internal AuditDivision (“GIAD”) which carries out internal audits based on a risk-based audit plan approved annually by the AC.

Based on these audits, the GIAD provides the AC with periodic reports highlighting observations, recommendationsand management action plans to improve the system of internal control. In addition, the AC also reviews anddeliberates on any matters relating to internal control highlighted by the External Auditors in the course of theirstatutory audit of the financial statements of the Group. There were no major internal control weaknesses identifiedduring the financial year.

The AC Report is set out on pages 17 to 22 of the Annual Report.

THE BOARD’S COMMITMENT

The Board recognises that the Group operates in a dynamic business environment in which the internal controlsystem must be responsive in order to be able to support its business objectives. To this end, the Board remainscommitted towards maintaining a sound system of internal control and believes that a balanced achievement of itsbusiness objectives and operational efficiency can be attained.

This Statement on Internal Control was approved by the Board of Directors on 27 August 2007.


Statement On Internal Control (Cont’d)


(405897-V)

With SunInfra Group (“the Group”) emphasising on growing its core businesses to achieve greater heights,Enterprise Risk Management (“ERM”) is utilised to identify all potential risks that need to be addressed to ensurethat the Group will be able to achieve its goal.

The Group has an integrated ERM structure that enables the Group to identify, evaluate, monitor and manage all keyrisks pertaining to the business and its environment. The Group strives to maximise every opportunity, and thus seeksto minimise all potential risks through proactive management.

RISK MANAGEMENT PROCESS

It is the Board’s view that the Group’s objectives, its internal organisation and the environment in which it operatescontinuously evolve; and as a result, the risks that it faces also change. A sound system of internal control thereforedepends on a thorough and regular evaluation of the nature and extent of the risks to which the Group is exposed to.

To ensure effective risk management within the Group, the following risk management framework has beenidentified and implemented throughout the Group. It is acknowledged that risks are very closely integrated withopportunities and returns, and thus has to be managed to ensure that the Group is able to achieve its corporatestrategy and objectives.

THE GROUP’S ERM FRAMEWORK

Enterprise Risk Management Framework

Corporate Strategies and Objectives

Risk Identification

Control Activities

Risk Monitoring

Risk Assessment

Risk Response


2266

RISK MANAGEMENT STRUCTURE

Strategic and effective risk management is performed through a centralised reporting and managing structure thathas been put into place. 3 major levels have been identified to promote accountability and responsibility of managingrisks within the Group.

(a) Risk Working Committee (“RWC”)

The RWC consists of representatives from the divisional heads. The RWC meets quarterly, whererepresentatives from the respective divisions have the overall responsibility to report key risks to the attentionof the RWC.

In addition, the RWC is responsible to deliberate on risks presented by other divisional heads and to contributetowards identifying new risks that have yet to be brought to the attention of RWC by the respective divisions.Pertinent risk issues, with proposed resolutions are then identified and escalated to the Risk ManagementCommittee.

(b) Risk Management Committee (“RMC”)

The key responsibilities of the RMC are to provide routine quarterly reporting and update the Board on key riskmanagement issues as well as ad hoc reporting and evaluation on investment proposals. The RMC is alsoresponsible to champion and promote the ERM and to ensure that the risk management process and cultureare embedded throughout the Group. The head of Group Internal Audit attends the RMC meetings as anindependent observer.

(c) Board of Directors

The Board of Directors serves as an oversight to the risk management process of the entire Group. Roles ofthe Board include identifying principal risks of the Group and ensuring the implementation of appropriatesystems to mitigate and manage these risks. The Board through the RMC sets, where appropriate, objectives,performance targets and policies to manage the key risks faced by the Group.

Enterprise Risk Management Framework (Cont’d)

Risk Working Committee

Risk ManagementCommittee

Board of Directors

2277

Directors' Report 28 - 32

Statement By Directors 33

Statutory Declaration 33

Report Of The Auditors 34

Balance Sheets 35

Income Statements 36

Statements Of Changes In Equity 37

Consolidated Cash Flow Statement 38 - 39

Cash Flow Statement 40

Notes To The Financial Statements 41 - 65


Contents


2288

The directors present their report together with the audited financial statements of the Group and of the Companyfor the year ended 30 June 2007.

PRINCIPAL ACTIVITIES AND AFFECTED LISTED ISSUER STATUS

The principal activity of the Company is investment holding. The principal activities of the subsidiary company aredisclosed in Note 6. There have been no significant changes in the nature of these activities during the financial year.

Pursuant to the amendments to the Listing Requirements ("LR") of Bursa Malaysia Securities Berhad ("BursaSecurities") in relation to Practice Note No. 17/2005 ("Amended PN17") which is effective from 5 May 2006, theCompany on 28 November 2006 announced ("First Announcement") that the Company is deemed an Affected ListedIssuer as defined in the Amended PN17 as the auditors have expressed a modified opinion with emphasis on theCompany's going concern in the Company's latest audited financial statements for the period ended 30 June 2006and the unaudited shareholders' equity of approximately RM26.702 million based on its quarterly results for theperiod ended 30 September 2006 is less than 50% of its issued and paid up capital of RM90 million.

As an Affected Listed Issuer, the Company is required pursuant to paragraph 3.1(a)(ii) of the Amended PN17 tocomply with the following conditions:

(a) submit a Regularisation Plan as defined in paragraph 8.14C(3) of Bursa Securities LR to the SecuritiesCommission ("SC") and other relevant authorities for approval (collectively referred to as the "ApprovingAuthority") within 8 months from the date of the First Announcement ("Submission Timeframe");

(b) implement the Regularisation Plan within the timeframe stipulated by the relevant Approving Authority("Implementation Timeframe");

(c) announce the status of its plan to regularize its condition on monthly basis until further notice from BursaSecurities;

(d) announce its compliance or non-compliance with a particular obligation imposed pursuant to the AmendedPN17 on an immediate basis; and

(e) announce details of the Regularisation Plan as referred to in paragraph 8.14C(3) of the LR which announcementmust fulfill the requirements set out in paragraph 3.1A of the LR.

In the event that the Company fails to comply with the obligation to regularize its condition, all of its listed securitiesshall be suspended from trading on the 5th market day after expiry of the Submission Timeframe or ImplementationTimeframe, as the case may be, and de-listing procedures shall then commence against the Company.

The Company is currently in the process of preparing the Regularisation Plan that falls within the ambit of Section 32of the Securities Commission Act 1993 to regularize its financial condition and the Requisite Announcement will bemade once the Regularisation Plan has been finalized.

Subsequent to the balance sheet date, Bursa Securities has via letter dated 26 July 2007, granted the Company anextension of time until 27 December 2007 ("the Extended Timeframe") to submit its Regularisation Plan to the SC andother relevant authorities for approval.

RESULTSGroup Company

RM RM

Loss for the year (82,883,151) (951,124)

There were no material transfers to or from reserves or provisions during the financial year.

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial yearwere not substantially affected by any item, transaction or event of a material and unusual nature.

Directors' Report

2299

DIRECTORS

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

Tan Sri Dato' Seri Dr Cheah Fook LingDatuk Razman M Hashim Dato' Tan Kia LokeDato' Seri Syed Zainol Rashid JamalullailDato' Ir Hj Ibrahim bin Hj YakubYau Kok SengLiew Kiam Woon

DIRECTORS' BENEFITS

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

Since the end of the previous financial period, no director has received or become entitled to receive a benefit (otherthan benefits included in the aggregate amount of emoluments received or due and receivable by the directors or thefixed salary of a full time employee of the Company as shown in Note 19 to the financial statements) by reason of acontract made by the Company or a related corporation with any director or with a firm of which he is a member, orwith a company in which he has a substantial financial interest, except as disclosed in Note 22 to the financialstatements.

DIRECTORS' INTERESTS

According to the register of directors' shareholdings, the interests of directors in office at the end of the financial yearin shares in the Company during the financial year were as follows:

Number of ordinary shares of RM0.50 each

1.7.2006 Acquired Sold 30.6.2007 Direct interest

Tan Sri Dato' Seri Dr CheahFook Ling 100,000 - - 100,000

Datuk Razman M Hashim 1,975,000 - 200,000 1,775,000

Dato' Tan Kia Loke 1,075,000 - - 1,075,000

Liew Kiam Woon 25,000 - - 25,000

Dato' Seri Syed Zainol RashidJamalullail 75,000 - - 75,000

Dato' Ir Hj Ibrahim bin Hj Yakub 75,000 - - 75,000

Deemed interest

Tan Sri Dato' Seri Dr Cheah

Fook Ling # 65,392,402 - - 65,392,402

Datuk Razman M Hashim + 31,827,001 - 116,000 31,711,001


Directors' Report (Cont’d)


3300

DIRECTORS' INTERESTS (CONTD.)

Number of unexercised Warrants 2003/2008

1.7.2006 Acquired Sold 30.6.2007

Direct interest

Tan Sri Dato' Seri Dr CheahFook Ling 50,000 - - 50,000

Datuk Razman M Hashim 987,500 - 300,000 687,500

Dato' Tan Kia Loke 537,500 - - 537,500

Dato' Seri Syed Zainol RashidJamalullail 37,500 - - 37,500

Dato' Ir Hj Ibrahim bin Hj Yakub 37,500 - - 37,500

Deemed interest

Tan Sri Dato' Seri Dr CheahFook Ling # 8,228,600 - - 8,228,600

Datuk Razman M Hashim + 7,452,600 - 1,778,000 5,674,600

Number of CN-RPS of RM0.10 each

1.7.2006 Acquired Sold 30.6.2007

Deemed interest

Tan Sri Dato' Seri Dr CheahFook Ling # 10,000,000 - - 10,000,000

Datuk Razman M Hashim @ 5,100,000 - - 5,100,000

# By virtue of his interest in shares of Sunway Holdings Incorporated Berhad ("Sunway"), Tan Sri Dato' Seri DrCheah Fook Ling is deemed to have an interest in the shares, warrants and CN-RPS of the Company to theextent Sunway has an interest.

+ By virtue of his interest in shares of Petroforce (M) Sdn. Bhd. ("PMSB"), Dekon Holdings Sdn. Bhd. ("DHSB") andDekon Sdn. Bhd. ("DSB"), Datuk Razman M Hashim is deemed to have an interest in the shares and warrantsof the Company to the extent PMSB, DHSB and DSB have an interest.

@ By virtue of his interest in shares of PMSB, Datuk Razman M Hashim is deemed to have an interest in CN-RPSof the Company to the extent PMSB has an interest.

By virtue of their interests in the shares of the Company, Tan Sri Dato' Seri Dr Cheah Fook Ling and Datuk RazmanM Hashim are also deemed to have interests in the shares of the subsidiary of the Company to the extent that theCompany has an interest.

Except for the above, none of the other directors in office at the end of the financial year had any interest in sharesin the Company or its related corporation during the financial year.


3311

WARRANTS

The Warrants 2003/2008 were constituted under a Deed Poll dated 25 August 2003 in conjunction with theCompany's Public Issue and Renounceable Rights Issue in December 2003. The salient features of the warrants areas follows:

(a) each warrant entitles its registered holder to subscribe for one new ordinary share of RM0.50 each at theexercise price during the exercise period;

(b) the exercise price is RM1.50 per share subject to adjustments thereto in accordance with conditions of theDeed Poll;

(c) the exercise period of the warrants is for five years from their issue date; and

(d) the new ordinary shares of RM0.50 each to be issued pursuant to the exercise of the warrants will rank paripassu in all respects with the existing ordinary shares of the Company.

During the financial year, no warrants were converted to ordinary shares. The number of outstanding warrants as at30 June 2007 was 30,000,000.

OTHER STATUTORY INFORMATION

(a) Before the balance sheets and income statements of the Group and of the Company were made out, thedirectors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the makingof provision for doubtful debts and satisfied themselves that there were no known bad debts and that noprovision for doubtful debts was necessary; and

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

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

(i) it necessary to write off any bad debts or to make any provision for doubtful debts in respect of thefinancial statements of the Group and of the Company; and

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

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

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

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

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

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




3322

OTHER STATUTORY INFORMATION (CONTD.)

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within theperiod of twelve months after the end of the financial year which will or may affect the ability of the Groupor of the Company to meet their obligations when they fall due except as disclosed in Notes 15 and 25 tothe financial statements; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the endof the financial year and the date of this report which is likely to affect substantially the results of theoperations of the Group or of the Company for the financial year in which this report is made except asdisclosed in Notes 15 and 25 to the financial statements.

SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

Significant events subsequent to the balance sheet date are disclosed in Note 25 to the financial statements.

AUDITORS

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

Signed on behalf of the Board in accordance with a resolution of the directors dated 8 October 2007.

TAN SRI DATO' SERI DR CHEAH FOOK LING DATO' TAN KIA LOKE


3333

PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

We, TAN SRI DATO' SERI DR CHEAH FOOK LING and DATO' TAN KIA LOKE, being two of the directors of SUNWAYINFRASTRUCTURE BERHAD, do hereby state that, in the opinion of the directors, the accompanying financialstatements set out on pages 35 to 65 are drawn up in accordance with the provisions of the Companies Act, 1965and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position ofthe Group and of the Company as at 30 June 2007 and of the results and the cash flows of the Group and of theCompany for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 8 October 2007.

TAN SRI DATO' SERI DR CHEAH FOOK LING DATO' TAN KIA LOKE

Statutory Declaration PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

I, NG LAI PING, being the officer primarily responsible for the financial management of SUNWAY INFRASTRUCTUREBERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 35 to 65are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and byvirtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed NG LAI PINGat Kuala Lumpur in the FederalTerritory on 8 October 2007 NG LAI PING

Before me,

SOH AH KAUCommissioner for Oaths


Statement By Directors


3344

REPORT OF THE AUDITORS TO THE MEMBERS OF SUNWAY INFRASTRUCTURE BERHAD(Incorporated in Malaysia)

We have audited the financial statements set out on pages 35 to 65. These financial statements are the responsibilityof the Company’s directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to reportour opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose.We do not assume responsibility to any other person for the content of this report.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by the directors, as well as evaluating the overall presentation of the financial statements. Webelieve that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act,1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of:

(i) the financial position of the Group and of the Company as at 30 June 2007 and of the results and the cashflows of the Group and of the Company for the year then ended; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financialstatements; and

(b) the accounting and other records and the registers required by the Act to be kept by the Company and by itssubsidiary of which we have acted as auditor have been properly kept in accordance with the provisions of the Act.

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

The auditors’ report on the financial statements of the subsidiary was not subject to any qualification material to theconsolidated financial statements and did not include any comment required to be made under Section 174(3) of the Act.

Without qualifying our opinion, we draw attention to Note 2.1 to the financial statements which indicates that the Groupand the Company recorded losses after taxation of RM82,883,151 and RM951,124 respectively for the financial yearended 30 June 2007 and, as at that date, the Group's and the Company's net current liabilities exceeded their net currentassets by RM945,874,283 and RM1,126,181 respectively and the Group shareholders' deficit was RM37,298,046. Asfurther disclosed in Note 2.1 to the financial statements, during the year, the Group breached one of the debt covenants.Subsequent to year end, the BaIDS holders approved a restructuring/refinancing scheme which is subject to such furtherapprovals as indicated in Notes 15 and 25 to the financial statements. These conditions indicate the existence of a materialuncertainty which may cast doubt about the Group's and the Company's ability to continue as going concerns. The abilityof the Group and the Company to continue as going concerns is dependent on the timely and successful completion ofthe above restructuring/refinancing scheme and the ability of the Group to generate future positive cash flows to meettheir financial obligations. The financial statements of the Group and the Company do not include any adjustments relatingto the amount and classification of assets and liabilities that might be necessary should the Group and the Company beunable to continue as going concerns.

ERNST & YOUNG Leong Chooi MayAF : 0039 No. 1231/03/09(J)Chartered Accountants Partner

Ipoh, Malaysia8 October 2007

Report Of The Auditors

3355

AS AT 30 JUNE 2007

Group Company2007 2006 2007 2006

Note RM RM RM RM ASSETSNon-current assetsProperty, plant and equipment 3 3,233,666 3,804,279 - - Expressway Development

Expenditure 4 1,256,077,157 1,261,221,006 - - Investment in subsidiary 6 - - 160,000,000 160,000,000 Intangible asset 7 17,500 17,500 - -

1,259,328,323 1,265,042,785 160,000,000 160,000,000

Current assetsReceivables 8 3,722,636 2,953,823 2,472 26,079 Short term deposits

with financial institutions 9 116,555,000 102,419,114 340,000 890,000 Cash and bank balances 825,520 372,561 70,463 40,439 Tax recoverable 10,538 13,795 10,538 13,795

121,113,694 105,759,293 423,473 970,313

TOTAL ASSETS 1,380,442,017 1,370,802,078 160,423,473 160,970,313

EQUITY AND LIABILITIESEquity attributable to equityholders of the CompanyShare capital 10 90,000,002 90,000,002 90,000,002 90,000,002 Share premium 11 53,632,520 53,632,520 53,632,520 53,632,520 Merger reserve 60,000,000 60,000,000 - - Accumulated losses (240,930,568) (158,047,417) (4,758,703) (3,807,579)Total equity (37,298,046) 45,585,105 138,873,819 139,824,943

Non-current liabilitiesBorrowings 12 20,000,000 969,191,689 20,000,000 20,000,000 Deferred income 13 330,752,086 331,925,094 - -

350,752,086 1,301,116,783 20,000,000 20,000,000

Current liabilitiesPayables 14 18,728,809 24,100,190 1,549,654 1,145,370 Borrowings 12 1,048,259,168 - - -

1,066,987,977 24,100,190 1,549,654 1,145,370 Total liabilities 1,417,740,063 1,325,216,973 21,549,654 21,145,370 TOTAL EQUITY AND

LIABILITIES 1,380,442,017 1,370,802,078 160,423,473 160,970,313


Balance Sheets

The accompanying notes form an integral part of the financial statements.


3366

FOR THE YEAR ENDED 30 JUNE 2007

Group Company

1.7.2006 1.1.2005 1.7.2006 1.1.2005

to to to to

30.6.2007 30.6.2006 30.6.2007 30.6.2006

Note RM RM RM RM

Revenue 17 28,952,363 37,634,658 31,922 42,709

Direct costs (10,588,087) (14,119,953) - -

Gross profit 18,364,276 23,514,705 31,922 42,709

Other income 5,641,163 4,699,962 - -

Administrative expenses (7,407,719) (7,419,682) (569,654) (922,978)

Operating profit/(loss) 16,597,720 20,794,985 (537,732) (880,269)

Finance costs 18 (99,467,479) (134,895,726) (400,000) (600,000)

Loss before tax 19 (82,869,759) (114,100,741) (937,732) (1,480,269)

Income tax expense 20 (13,392) (9,401) (13,392) (9,401)

Loss for the year/period (82,883,151) (114,110,142) (951,124) (1,489,670)

Loss per share (sen)

- basic 21 46.0 63.4

- diluted 21 46.0 63.4

The accompanying notes form an integral part of the financial statements.

Income Statements


(405897-V)

Statements Of Changes In EquityFO

R T

HE

YE

AR

EN

DE

D 3

0 JU

NE

200

7

Sh

are

Sh

are

Mer

ger

A

ccu

mu

late

d

Cap

ital

P

rem

ium

R

eser

ve

Loss

es

Tota

l

RM

R

M

RM

R

M

RM

Gro

up

At

1 Ja

n 2

005

90,0

00,0

02

53,6

32,5

20

60,0

00,0

00

(43,

937,

275)

159,

695,

247

Loss

for

the

per

iod

- -

- (1

14,1

10,1

42)

(114

,110

,142

)

At

30 J

un

e 20

0690

,000

,002

53

,632

,520

60

,000

,000

(1

58,0

47,4

17)

45,5

85,1

05

Loss

for

the

yea

r-

- -

(82,

883,

151)

(82,

883,

151)

At

30 J

un

e 20

0790

,000

,002

53

,632

,520

60

,000

,000

(2

40,9

30,5

68)

(37,

298,

046)

Co

mp

any

At

1 Ja

n 2

005

90,0

00,0

02

53,6

32,5

20

- (2

,317

,909

)14

1,31

4,61

3

Loss

for

the

per

iod

- -

- (1

,489

,670

)(1

,489

,670

)

At

30 J

un

e 20

0690

,000

,002

53

,632

,520

-

(3,8

07,5

79)

139,

824,

943

Loss

for

the

yea

r-

- -

(951

,124

)(9

51,1

24)

At

30 J

un

e 20

0790

,000

,002

53

,632

,520

-

(4,7

58,7

03)

138,

873,

819

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of

the

fin

anci

al s

tate

men

ts.


3388

FOR THE YEAR ENDED 30 JUNE 2007

1.7.2006 1.1.2005

to to

30.6.2007 30.6.2006

Note RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before tax (82,869,759) (114,100,741)

Adjustments for:

Dividend payable on 20% Cumulative

Non-Convertible Redeemable Preference Shares 400,000 600,000

Depreciation of property, plant and equipment 656,855 1,130,603

Interest expense 99,067,479 134,295,726

Interest income (3,880,677) (3,695,114)

Amortisation of Expressway Development Expenditure 4,455,579 6,451,558

Amortisation of deferred income (1,173,008) (1,697,206)

Gain on disposal of property, plant and equipment (53,860) (52,465)

Operating profit before working capital changes 16,602,609 22,932,361

Receivables (768,813) (293,614)

Payables (5,771,381) 8,894,028

Net cash generated from operations 10,062,415 31,532,775

Taxes paid (10,135) (21,345)

Net cash generated from operating activities 10,052,280 31,511,430

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of

property, plant and equipment 88,760 240,907

Additions of property, plant and equipment (a) (121,142) (1,902,679)

Expressway Development Expenditure 688,270 (25,234,809)

Net cash generated from/(used in) investing activities 655,888 (26,896,581)

Consolidated Cash Flow Statement

3399

FOR THE YEAR ENDED 30 JUNE 2007 (CONTD.)

1.7.2006 1.1.2005

to to

30.6.2007 30.6.2006

Note RM RM

CASH FLOWS FROM FINANCING ACTIVITIES

Gover

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