SUNWAY INFRASTRUCTURE BERHAD

 
SUNWAY INFRASTRUCTURE BERHAD
LAPOR
      AN                 SUNWAY INFRASTRUCTURE BERHAD
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Contents

                                      Corporate Information           2

                                        Profile Of Directors          3–6

                  Chairman’s Statement / Penyata Pengerusi            7 – 11

                      Three-Year Group Financial Summary              12

                           Corporate Governance Statement             13 – 19

        Terms Of Reference Of Risk Management Committee               20 – 21

                                    Audit Committee Report            22 – 28

                          Statement On Internal Control               29 – 31

                                       Financial Statements           33 – 73

                         Additional Compliance Information            74 – 75

                        Recurrent Related Party Transactions          76

                Directors’ Interests In Shares, Warrants And          77
 Cumulative Non-Convertible Redeemable Preference Shares
            Of The Company And Its Subsidiary Companies

                                  Analysis Of Shareholdings           78 – 79

                               Analysis Of Warrantholdings            80 – 81

                     Notice Of 8th Annual General Meeting             82 –87

Statement Accompanying Notice Of Annual General Meeting               88

                                             Form Of Proxy

                                        SUNWAY INFRASTRUCTURE BERHAD            1
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Corporate Information

    BOARD OF DIRECTORS                                PRINCIPAL PLACE OF BUSINESS
    Chairman,                                         Plaza Tol Sungai Balak
    Non-Independent Executive Director                KM28.3A, Lebuhraya Kajang SILK
    Tan Sri Dato' Seri (Dr) Cheah Fook Ling           43000 Kajang
                                                      Selangor Darul Ehsan
    Deputy Chairman,                                  Malaysia
    Non-Independent Non-Executive Director
    Datuk Razman M Hashim                             Tel No : (03) 8921 0000
                                                      Fax No : (03) 8921 0001
    Non-Independent Non-Executive Directors
    Dato' Tan Kia Loke
    Yau Kok Seng
    Liew Kiam Woon                                    SHARE REGISTRAR
                                                      Sunway Management Sdn Bhd    (50661-X)

    Independent Non-Executive Directors               Level 16, Menara Sunway
    Dato' Seri Syed Zainol Rashid Jamalullail         Jalan Lagoon Timur
    Dato' Ir Hj Ibrahim Bin Hj Yakub                  Bandar Sunway
                                                      46150 Petaling Jaya
                                                      Selangor Darul Ehsan
                                                      Malaysia
    AUDIT COMMITTEE
    Dato' Seri Syed Zainol Rashid Jamalullail         Tel No : (03) 5639 8889
     (Chairman)                                       Fax No : (03) 5639 9507
    Dato' Ir Hj Ibrahim Bin Hj Yakub
    Yau Kok Seng
                                                      AUDITORS
                                                      Ernst & Young
    RISK MANAGEMENT COMMITTEE                         Chartered Accountants
    Dato' Tan Kia Loke (Chairman)
    Yau Kok Seng
    Mark Victor Rozario                               SOLICITORS
    Khor Wei Moon
                                                      Lee Hishammuddin Allen & Gledhill
    Ng Lai Ping

                                                      PRINCIPAL BANKERS
    COMPANY SECRETARIES                               Public Bank Berhad
    Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng   HSBC Bank Malaysia Berhad
     (MIA 5601)
    Tan Kim Aun (MAICSA 7002988)
    Lee Suan Choo (MAICSA 7017562)
                                                      STOCK EXCHANGE LISTING
                                                      Main Board of Bursa Malaysia Securities Berhad
    REGISTERED OFFICE
    Level 16, Menara Sunway
    Jalan Lagoon Timur                                WEBSITE ADDRESS
    Bandar Sunway                                     www.sunway.com.my
    46150 Petaling Jaya
    Selangor Darul Ehsan
    Malaysia

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

2   SUNWAY INFRASTRUCTURE BERHAD
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Profile Of Directors

                          Tan Sri Dato’ Seri (Dr) Cheah Fook Ling
                          Chairman, Non-Independent Executive Director

                          Tan Sri Dato’ Seri (Dr) Cheah Fook Ling, Malaysian, aged 60, is the Founder of the
                          Sunway Group and Chairman of Sunway Infrastructure Berhad (“SunInfra”),
                          Sunway Holdings Incorporated Berhad and Sunway City Berhad which are a
                          conglomerate of companies that are listed individually on the Main Board of Bursa
                          Malaysia Securities Berhad.

                           A Certified Public Accountant by profession, he was appointed a Board member
                           of the Financial Reporting Foundation by the Minister of Finance in July 1997. He
sits on the Board of The National Kidney Foundation and the Board of Trustees of the Malaysian Liver
Foundation. In 1995, he was appointed a member of the Malaysian Business Council and in 1996, he was
honoured with the Chairmanship of Malaysian Industry-Government Group for High Technology (MIGHT)
for Construction and Housing. He was appointed an EXCO member to the Malaysian Tourism Action Council
by the Minister of Tourism Malaysia. In recognition of his outstanding contribution to education, the Minister
of Education appointed him to the Higher Education Council in 1998. He was also conferred Honorary
Doctorates by 8 leading universities worldwide and was voted the Property Man of the Year (Malaysia) 1993
as well as the CEO of the Year (Malaysia) 1996.

He was appointed to the Board of SunInfra as Non-Executive Chairman on 10 June 2002 and was
subsequently appointed as Executive Chairman on 1 August 2003.

His current directorships in other public companies include Sunway Holdings Incorporated Berhad, Sunway
City Berhad and Federation of Public Listed Companies Berhad.

He attended all of the 8 Board Meetings held in the financial year.

                          Datuk Razman M Hashim
                          Deputy Chairman, Non-Independent Non-Executive Director

                          Datuk Razman M Hashim, Malaysian, aged 66, is a member of the Australian
                          Institute of Bankers. He has more than 34 years of experience in the banking
                          industry. He joined the Standard Chartered Bank Malaysia Berhad in 1964 and
                          served in various capacities including secondments to the Bank’s branches in
                          London, Europe, Hong Kong and Singapore. In 1994, he was appointed as
                          Executive Director/Deputy Chief Executive of the Standard Chartered Bank
                          Malaysia Berhad.

He was appointed to the Board of SunInfra on 12 February 1996 and was subsequently appointed as Non-
Executive Deputy Chairman on 10 June 2002.

His current directorships in other public companies include Sunway City Berhad, Ranhill Berhad, Multi-
Purpose Holdings Berhad, Affin Bank Berhad and OYL Industries Berhad.

He attended 7 out of the 8 Board Meetings held in the financial year.

                                                                      SUNWAY INFRASTRUCTURE BERHAD               3
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Profile Of Directors                     (Cont’d)

                                 Dato’ Tan Kia Loke
                                 Non-Independent Non-Executive Director

                                 Dato’ Tan Kia Loke, Malaysian, aged 54, attained a Bachelor of Science (Honours)
                                 Degree in Civil Engineering from the University of Strathclyde, United Kingdom in
                                 1977. He is a Registered Professional Engineer with the Board of Engineers,
                                 Malaysia, a Fellow of the Institution of Engineers, Malaysia and Honorary Advisor
                                 of the Master Builders Association of Malaysia.

                                 He is currently the Senior Managing Director of Sunway Construction Sdn Bhd, the
                                 construction arm of Sunway Holdings Incorporated Berhad (“SunInc”) Group and
                                 has more than 28 years’ experience in the construction industry.

    He was appointed to the Board of SunInfra on 14 October 1996 and also serves as Chairman of the Risk
    Management Committee.

    His current directorships in other public companies include SunInc and Malaysian South-South Corporation
    Berhad.

    He attended all of the 8 Board Meetings held in the financial year.

                                 Yau Kok Seng
                                 Non-Independent Non-Executive Director

                                 Yau Kok Seng, Malaysian, aged 45, is an Accountant by profession with more than
                                 20 years of experience in auditing, accounting, corporate finance and general
                                 management. Prior to joining the Sunway Holdings Incorporated Berhad
                                 (“SunInc”) Group of Companies, he was with Ernst & Young, an international
                                 accounting firm, where he qualified as a Certified Public Accountant. In 1988, he
                                 was posted to its London office for 3 years.

                           He joined the SunInc Group as Head of Corporate Finance in 1992 and was
                           subsequently promoted as the Group Finance Director in 1995. In April 2001, he
    was promoted as Managing Director of SunInc.

    He was appointed to the Board of SunInfra on 17 June 2002 and also serves as a Member of the Audit and
    Risk Management Committees. He was appointed as the Managing Director of SunInfra on 1 March 2003
    and subsequently redesignated to Non-Independent Non-Executive Director on 10 April 2003.

    His current directorships in other public companies include SunInc, Sunway Medical Centre Berhad, Gopeng
    Berhad and Federation of Public Listed Companies Berhad.

    He attended all of the 8 Board Meetings held in the financial year.

4   SUNWAY INFRASTRUCTURE BERHAD
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Profile Of Directors                  (Cont’d)

                          Liew Kiam Woon
                          Non-Independent Non-Executive Director

                          Liew Kiam Woon, Malaysian, aged 41, graduated from the University of Oregon,
                          United States of America in 1987, majoring in Business Administration. He started
                          his career as a Business Development Executive with MBF Factors Sdn Bhd in
                          1987 for 2 years. He then joined LFE Engineering Sdn Bhd (“LFE”) in 1990 as a
                          Project Coordinator to oversee the projects undertaken by Loong Fuat Engineering
                          (JB) Sdn Bhd, a subsidiary of LFE located in Johor Bahru.

                          In 2000, he was appointed as Executive Director of LFE and assumed a more
prominent and important role, that is, to secure more contracts for the LFE Group and to ensure the smooth
running of the operations of the Group in Malaysia as well as in overseas.

On 15 September 2003, he assumed the position of Executive Director of LFE Corporation Berhad, the
holding company of the LFE Group.

He was appointed to the Board of SunInfra on 17 June 2002. His current directorship in other public
company includes LFE Corporation Berhad.

He attended 6 out of the 8 Board Meetings held in the financial year.

                          Dato’ Seri Syed Zainol Rashid Jamalullail
                          Independent Non-Executive Director
                          Dato’ Seri Syed Zainol Rashid Jamalullail, Malaysian, aged 52, studied Commerce
                          and Marketing in Australia and in the United Kingdom. He also attained a Higher
                          National Diploma in Business Studies, Marketing & Advertising from the College
                          for the Distributive Trades, London.

                          He has more than 10 years of experience in International Business Development,
                          being the Malaysian affiliate of the Larive Group BV, Netherlands. The company
                          specialises in market research and business development.

He is the Executive Chairman of Enersave Water Sdn Bhd, a water and wastewater treatment company based
in Shah Alam, Selangor Darul Ehsan. He is the President of Semada (Thai) Co. Ltd, a company which
specialises in trade and business development between Malaysia and Thailand.

He was appointed to the Board of SunInfra on 9 August 2002 and also serves as Chairman of the Audit
Committee. He has no directorships in other public companies.

He attended 7 out of the 8 Board Meetings held in the financial year.

                                                                    SUNWAY INFRASTRUCTURE BERHAD              5
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Profile Of Directors                     (Cont’d)

                                 Dato’ Ir Hj Ibrahim Bin Hj Yakub
                                 Independent Non-Executive Director

                                 Dato’ Ir Hj Ibrahim Bin Hj Yakub, Malaysian, aged 59, graduated from Portsmouth
                                 Polytechnic, United Kingdom, with a Bachelor of Science Degree majoring in Civil
                                 Engineering. He is a Member of the Institution of Engineers, Malaysia, the Board
                                 of Engineers, Malaysia and the Road Engineering Association of Malaysia. He is
                                 also a Senior Director of a major engineering consultancy firm and Director of a
                                 few private companies in Malaysia.

                             He began his career with JKR, Kelantan as a Building Engineer in 1974. In 1978,
    he held the position of Deputy Superintendent Engineer for the East-West Highway, Jeli, Kelantan before
    being promoted to Senior Executive Engineer at JKR Seberang Prai, Penang. Subsequently in 1983, he was
    promoted to Deputy Director of JKR Kelantan. He was a Director of Development of Universiti Kebangsaan
    Malaysia, Selangor from 1986 to 1991.

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

    He was appointed to the Board of SunInfra on 9 August 2002 and also serves as a Member of the Audit
    Committee. He has no directorships in other public companies.

    He attended all of the 8 Board Meetings held in the financial year.

    Notes:

    1.   Family Relationship with Director and/or Major Shareholder
         None of the Directors has any family relationship with any director and/or major shareholder of
         SunInfra.

    2.   Conflict of Interest
         None of the Directors has any conflict of interest with SunInfra Group.

    3.   Conviction for Offences
         None of the Directors has been convicted for offences within the past 10 years other than traffic
         offences, if any.

    4.   Attendance of Board Meetings
         The attendance of the Directors at Board of Directors’ Meetings is disclosed in the Corporate
         Governance Statement.

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Chairman’s Statement / Penyata Pengerusi

                                                         Bagi pihak Lembaga Pengarah
                                                         Sunway Infrastructure Berhad
                                                         (“SunInfra”), saya dengan sukacitanya
                                                         membentangkan Laporan Tahunan
                                                         dan Penyata Kewangan Syarikat dan
                                                         Kumpulan bagi tahun kewangan
                                                         berakhir 31 Disember 2004.

                                                         PRESTASI KEWANGAN

                                                         Tahun Kewangan (“TK”) 2004 membawa kepada
                                                         pencapaian suatu mercutanda penting bagi
                                                         SunInfra berikutan siapnya lebuhraya bertol
                                                         pertama kami, Lebuhraya SILK KAJANG yang
On behalf of the Board of Directors of                   seterusnya memulakan operasi kutipan tol pada
Sunway Infrastructure Berhad                             Julai 2004. Lebuhraya SILK KAJANG sepanjang 37
                                                         km ini membantu melegakan kesesakan lalulintas
(“SunInfra”), I present the Annual
                                                         di     pusat     bandar     Kajang      disamping
Report and Audited Financial                             menghubungkan secara strategik beberapa pusat
Statements of the Company and the                        populasi utama di bahagian tenggara Lembah
Group for the financial year ended                       Kelang dengan rangkaian-rangkaian lebuhraya
31 December 2004.                                        lain di persekitarannya. Ianya juga turut berfungsi
                                                         sebagai suatu sistem jalanraya utama yang
                                                         menghubungkan Balakong, Sungai Long, Bangi,
FINANCIAL PERFORMANCE                                    Kajang, Semenyih, Putrajaya dan Serdang di
                                                         negeri Selangor Darul Ehsan.
Financial Year (“FY”) 2004 marks a significant
milestone for SunInfra as our first toll road, KAJANG    Namun demikian, aliran trafik bermula dengan
SILK Highway was completed and opened for tolling        agak perlahan pada TK yang diulas. Kumpulan
in July 2004. The 37km KAJANG SILK Highway               mencatatkan perolehan berjumlah RM8.481 juta
helps to alleviate traffic congestion in Kajang town     dan kerugian sebelum cukai sebanyak RM35.941
centre and strategically links major population          juta berbanding perolehan RM241,000 dan
centres in the south-eastern part of the Klang Valley    kerugian sebelum cukai RM4.04 juta pada TK
with the other highway networks in the region. It will   sebelumnya. Kerugian yang lebih tinggi ini adalah
also function as a major road linking Balakong,          disebabkan terutamanya oleh kos kewangan dan
Sungai Long, Bangi, Kajang, Semenyih, Putrajaya          perbelanjaan operasi yang tidak sepadan dengan
and Serdang in Selangor Darul Ehsan.                     perolehan daripada kutipan tol.
Nonetheless, the traffic volume was off to a slow
start during the FY under review. The Group reported
revenue of RM8.481 million and pre-tax loss of
RM35.941 million as compared to revenue of
RM241,000 and pre-tax loss of RM4.04 million in
the previous FY. The higher loss was mainly due to
finance costs and operating expenditure incurred
which were correspondingly not matched by
revenue from toll collection.

                                                                    SUNWAY INFRASTRUCTURE BERHAD               7
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Chairman’s Statement / Penyata Pengerusi                                       (Cont’d)

            Official Opening of KAJANG SILK Highway

    OPERATIONS REVIEW                                       ULASAN OPERASI
    3 out of the 4 toll plazas were opened for tolling in   3 daripada 4 plaza tol telah dibuka untuk operasi
    July 2004 and the remaining toll plaza at Sungai        kutipan pada Julai 2004 dan plaza tol di Sungai
    Long was still undergoing toll-free period as at 31     Long masih sedang menjalani tempoh tol percuma
    December 2004. The KAJANG SILK Highway,                 pada 31 Disember 2004. Lebuhraya KAJANG SILK
    despite the slow start, has registered a traffic        telah mencatatkan pertumbuhan aliran trafik
    volume growth of 30% since its opening. With the        sehingga 30% sejak pembukaannya. Dengan
    commencement of tolling operations of the               bermulanya operasi kutipan tol di Lebuhraya
    KAJANG SILK Highway in July 2004, the Group has         KAJANG SILK tersebut pada Julai 2004, Kumpulan
    focused and geared up its resources towards             telah menumpu dan menjanakan penggunaan
    meeting the objectives to be a service orientated       sumber-sumbernya bagi mencapai objektif untuk
    toll highway concessionaire that is acknowledged        menjadi sebuah syarikat konsesi lebuhraya tol
    as an efficient and safe highway network operator.      berorientasikan perkhidmatan yang dapat diiktiraf
    To this end, the Group has devoted much attention       sebagai pengendali rangkaian lebuhraya yang
    to ensure the convenience, comfort and safety of        efisien dan selamat. Sehingga kini, Kumpulan telah
    commuters travelling along the KAJANG SILK
                                                            memberikan banyak tumpuan bagi memastikan
    Highway. Public facilities such as rest areas, petrol
                                                            kemudahan, keselesaan dan keselamatan para
    kiosks, “surau”, public telephones, toilets and
                                                            pengguna di Lebuhraya KAJANG SILK.
    parking bays are provided at the 5 lay-bys along the
                                                            Kemudahan-kemudahan awam seperti kawasan
    KAJANG SILK Highway whilst additional petrol
                                                            rehat, stesen petrol, surau, telefon awam dan
    kiosks and recreational facilities are being planned
                                                            tempat letak kereta disediakan di 5 lokasi
    and constructed.
                                                            sepanjang Lebuhraya KAJANG SILK dan lebih
    The KAJANG SILK Highway was installed with              banyak lagi stesen petrol dan kemudahan rekreasi
    various state-of-the-art equipment and Intelligent      sedang dirancang dan dibina.
    Transport System (ITS) applications. Variable
    message signs, surveillance cameras, congestion

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Chairman’s Statement / Penyata Pengerusi                                          (Cont’d)

detector system, enhanced variable actuation             Lebuhraya KAJANG SILK telah dilengkapi dengan
system and Traffic Control and Surveillance System       pelbagai peralatan canggih dan terkini serta
were some of the ITS features installed to maintain      aplikasi Sistem Pengangkutan Pintar atau
effective traffic control and safety. Informative        “Intelligent Transport System” (ITS). Papantanda
signages and road markings were also installed to        pelbagai pesanan, kamera pengawasan, sistem
clearly display and guide the commuters through          pengesan kesesakan, sistem penggerak “enhanced
their journey. For added comfort and security to         variable actuation” dan Sistem Kawalan dan
stranded motorists who require assistance, a             Pemantauan Trafik adalah antara beberapa ciri ITS
24-hour surveillance team patrols the entire             yang digunakan untuk memastikan kawalan dan
KAJANG SILK Highway and on standby to respond            keselamatan trafik dijalankan dengan berkesan.
promptly to motorists during emergencies.                Papantanda maklumat dan petanda-petanda
                                                         jalanraya yang mencukupi telah turut dipasang
Toll revenue from the KAJANG SILK Highway is the         untuk memberikan maklumat dan panduan yang
major contributor to the Group’s bottom line. The        jelas kepada para pengguna sepanjang perjalanan
Group will continue to explore options available to      mereka. Untuk keselesaan dan keselamatan
strengthen its financial position and reduce the         tambahan khususnya bagi pengguna yang
overall gearing and funding cost of the Group            memerlukan bantuan, suatu pasukan peronda 24-
which will put it on a firmer footing to profitability   jam ditugaskan untuk menjalankan rondaan
in the coming years. Prudent management with             sepanjang Lebuhraya KAJANG SILK dan bersedia
focus given on improving service levels and use of       memberikan bantuan segera kepada para pengguna
the KAJANG SILK Highway, enhancing operational           pada waktu kecemasan.
efficiency and cost effectiveness are high on the list
of     priorities  for    the   immediate       term.    Perolehan dari kutipan tol Lebuhraya KAJANG SILK
Notwithstanding, continuous and concerted efforts        ini adalah penyumbang utama terhadap untungrugi
were undertaken to attract new users to use the          operasi Kumpulan. Pengurusan yang teliti dengan
KAJANG SILK Highway through greater public               tumpuan untuk memperbaiki tahap perkhidmatan
awareness and user familiarisation programmes at         dan penggunaan Lebuhraya KAJANG SILK ini,
different catchment areas like Putrajaya, Semenyih,      meningkatkan efisiensi operasi dan keberkesanan
Cheras, Bangi, Kajang, Sungai Long, Balakong, etc.       kos adalah antara perkara utama yang ditekankan
                                                         untuk jangkamasa terdekat ini. Sambil itu, usaha-
                                                         usaha berterusan dan padu sedang diambil untuk
                                                         menarik pengguna-pengguna baru Lebuhraya
                                                         KAJANG SILK menerusi peningkatan tahap
                                                         kesedaran awam dan program-program suaikenal
                                                         pengguna di kawasan-kawasan tumpuan lain
                                                         seperti Putrajaya, Semenyih, Cheras, Bangi, Kajang,
                                                         Sungai Long, Balakong dan lain-lain.

     KAJANG SILK Highway’s Operation Office

                                                              Official Opening of KAJANG SILK Highway

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10   SUNWAY INFRASTRUCTURE BERHAD
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Chairman’s Statement / Penyata Pengerusi                                      (Cont’d)

FUTURE OUTLOOK                                         TINJAUAN MASA HADAPAN
The Malaysian economy expanded by an average           Ekonomi Malaysia telah berkembang secara
of 7.1% for 2004 and the growth prospect remains       puratanya pada kadar 7.1% dalam 2004 dan
favourable in 2005. Demand for properties and          prospek pertumbuhan ini dijangka menggalakkan
passenger cars is expected to remain firm supported    pada 2005. Permintaan terhadap sektor hartanah
by stable employment conditions and rising             dan kenderaan penumpang dijangka akan kekal
disposable income coupled with favourable              kukuh, disokong oleh keadaan-keadaan pekerjaan
financing conditions, low inflation and interest       yang stabil serta peningkatan lebihan pendapatan
rates. The interchanges at Jalan Balakong-Mines        untuk dibelanjakan disamping keadaan-keadaan
Resort junction to ease traffic congestion at the      kewangan yang menggalakkan serta kadar inflasi
existing Balakong traffic light junction when          dan kadar faedah yang rendah. Persimpangan di
completed in 2006 will provide shorter and more        sekitar kawasan Jalan Balakong-Mines Resort yang
efficient access to Sungei Besi Highway from the       sedang dibangunkan untuk melegakan kesesakan
KAJANG SILK Highway. The KAJANG SILK                   lalulintas di persimpangan lampu isyarat Balakong
Highway functions as a major road linking              sekarang ini akan menyediakan akses yang lebih
Balakong, Sungai Long, Cheras, Bangi, Kajang,          mudah dan efisien untuk ke Lebuhraya Sungei Besi
Semenyih, Putrajaya and Serdang. It offers high        dari Lebuhraya KAJANG SILK ini apabila siap pada
travel convenience, accessibility and would spur       tahun 2006. Lebuhraya KAJANG SILK berfungsi
commercial development and urbanisation around         sebagai jalanraya utama yang menghubungkan
the vicinity of the KAJANG SILK Highway in the         Balakong, Sungai Long, Cheras, Bangi, Kajang,
years ahead. Such economic activity along the          Semenyih, Putrajaya dan Serdang. Ianya
KAJANG SILK corridor will generate higher daily        menyediakan kemudahan perjalanan, kemudahan
traffic volume on the KAJANG SILK Highway.             akses serta akan memangkin aktiviti pembangunan
                                                       komersial dan urbanisasi di sekitar kawasan
ACKNOWLEDGEMENT                                        Lebuhraya KAJANG SILK pada tahun-tahun akan
                                                       datang. Aktiviti-aktiviti ekonomi sedemikian
On behalf of the Board of Directors, I would like to   sepanjang koridor KAJANG SILK pastinya akan
thank all our valued customers, shareholders,          meningkatkan kepesatan trafik harian di Lebuhraya
bankers, various government authorities and            KAJANG SILK.
business associates for their unwavering support
and confidence with the Group and also to our          PENGHARGAAN
employees for their hard work, contributions and
dedications.                                           Bagi pihak Lembaga Pengarah, saya ingin
                                                       mengucapkan terima kasih kepada para pelanggan,
                                                       para pemegang saham, bank-bank, pihak-pihak
                                                       berkuasa kerajaan serta rakan-rakan perniagaan
                                                       kami yang dihargai di atas sokongan dan keyakinan
                                                       padu mereka kepada Kumpulan disamping ucapan
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling                penghargaan kepada kesemua kakitangan kami di
Executive Chairman                                     atas segala usaha, sumbangan dan sikap penuh
                                                       dedikasi mereka.
13 May 2005

                                                       Tan Sri Dato’ Seri (Dr) Cheah Fook Ling
                                                       Pengerusi Eksekutif
                                                       13 Mei 2005

                                                                  SUNWAY INFRASTRUCTURE BERHAD             11
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Three-Year Group Financial Summary

                                              2004         2003         2002
                                            RM ‘000      RM ‘000      RM ‘000

     REVENUE                                  8,481          241             –
     Loss before taxation                    (35,282)      (4,040)      (3,255)
     Taxation                                  (659)         (478)        775
     Loss after taxation                     (35,941)      (4,518)      (2,480)
     LOSS ATTRIBUTABLE TO SHAREHOLDERS       (35,941)      (4,518)      (2,480)

     Property, plant and equipment            3,221        1,250        1,375
     Expressway development expenditure    1,244,631    1,065,890     564,324
     Deferred tax assets                           –       2,072        2,486
     Current assets                          91,504      250,009      468,127
     TOTAL ASSETS                          1,339,356    1,319,221    1,036,312

     Current liabilities                     14,606      116,559       87,110
     Long-term borrowings                   834,896      756,516      665,666
     Deferred income                        330,176      250,509      167,014
     TOTAL LIABILITIES                     1,179,678    1,123,584     919,790

     TOTAL NET ASSETS                       159,678      195,637      116,522

     SHARE CAPITAL                           90,000       90,000       60,000

     SHAREHOLDERS’ FUNDS                    159,695      195,637      116,522

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

     NET TANGIBLE ASSETS PER SHARE (SEN)        88.7       108.7          97.1

12   SUNWAY INFRASTRUCTURE BERHAD
                      (405897-V)
Corporate Governance Statement

The Board is committed to ensure that good corporate governance is practised throughout the Group with
the ultimate objective of protecting and enhancing shareholders’ value and the financial performance of the
Company and of the Group.

The Board is committed to implementing the Malaysian Code on Corporate Governance (“the Code”)
wherever applicable 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 of reference.

BOARD COMPOSITION

The Board currently consists of seven (7) members, two (2) or one-third (1/3) are Independent Non-Executive
Directors. The composition reflects a balance of Executive and Non-Executive Directors with a mix of
suitably qualified and experienced 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 working together enables the Board to effectively lead and
control the Company. The Board composition also fairly reflects the investment in the Company by
shareholders other than the significant shareholder.

A brief profile of each Director is presented on pages 3 to 6 of the Annual Report.

                                                                     SUNWAY INFRASTRUCTURE BERHAD              13
                                                                                      (405897-V)
Corporate Governance Statement                                    (Cont’d)

     MEETINGS AND SUPPLY OF INFORMATION

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

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

     All Directors are entitled to information pertaining the Company. In addition, all Directors have direct access
     to the advice and services of the joint Company Secretaries. They are also permitted to seek independent
     advice whenever deemed 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
     individual capacity, to obtain independent professional advice, when necessary, at the Company’s expense.

     The Board met eight (8) times for the financial year ended 31 December 2004 and the attendance of the
     respective Directors is as follows:-

                                                                             Total No. of           Percentage of
                                                                              Meetings               Attendance
     Name of Directors                                                        Attended                   (%)

     Tan Sri Dato’ Seri (Dr) Cheah Fook Ling (Executive Chairman)                 8/8                   100

     Datuk Razman M Hashim                                                        7/8                    88

     Dato' Tan Kia Loke                                                           8/8                   100

     Yau Kok Seng                                                                 8/8                   100

     Liew Kiam Woon                                                               6/8                    75

     Dato' Seri Syed Zainol Rashid Jamalullail                                    7/8                    88

     Dato' Ir Hj Ibrahim Bin Hj Yakub                                             8/8                   100

14   SUNWAY INFRASTRUCTURE BERHAD
                     (405897-V)
Corporate Governance Statement                                     (Cont’d)

DIRECTORS’ TRAINING

All the Directors had attended the Mandatory Accreditation Programme prescribed by Bursa Malaysia
Securities Berhad (“Bursa Securities”). During the year under review, the Directors had also attended various
continuing education programmes and seminars organised by the relevant regulatory authorities and
professional bodies in order to equip themselves to effectively discharge their duties as Directors.

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

RETIREMENT BY ROTATION AND RE-ELECTION

The Company’s Articles of Association provides that one-third (1/3) of the Board are subject to retirement by
rotation at each Annual General Meeting. Each Director shall retire at least once every three (3) years but
shall be eligible for re-election. The Directors 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
meetings and the shareholdings of each Director standing for re-election are disclosed in the Statement
Accompanying the Notice of the Annual General Meeting.

BOARD COMMITTEES

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

1.   Audit Committee

     The Audit Committee is set up to play an active role in assisting the Board in discharging its governance
     responsibilities. The composition of the Audit Committee, its terms of reference, attendance of meetings
     and a summary of its activities are set out on pages 22 to 28 of the Annual Report.

                                                                        SUNWAY INFRASTRUCTURE BERHAD                15
                                                                                          (405897-V)
Corporate Governance Statement                                  (Cont’d)

     2.   Risk Management Committee

          The Risk Management Committee comprises Dato’ Tan Kia Loke as Chairman, Yau Kok Seng, Mark
          Victor Rozario, Khor Wei Moon and Ng Lai Ping.

          The Risk Management Committee is tasked with the responsibility to oversee the risk management
          activities of the Group, approving appropriate risk management procedures and measurement
          methodologies across the organisation as well as identification and management of strategic business
          risks of the Group. The terms of reference of the Risk Management Committee are set out on pages 20
          and 21 of the Annual Report.

          During the year under review, a meeting was held to adopt the terms of reference, to discuss and
          consider the risk measurement parameters and the preliminary risk assessment.

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

     B.   DIRECTORS’ REMUNERATION

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

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

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

                                                                   Executive      Non-Executive          Total
                                                                    Director          Directors
                                                                         RM                 RM             RM

     Fees                                                                 –              36,000        36,000
     Other Emoluments                                                     –              24,500        24,500
     Salaries and Other Remuneration                                336,000                   –       336,000

     Total:                                                         336,000              60,500       396,500

16   SUNWAY INFRASTRUCTURE BERHAD
                     (405897-V)
Corporate Governance Statement                                    (Cont’d)

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

Range of Remuneration                                           Executive      Non-Executive           Total
                                                                 Director          Directors
Below RM50,000                                                          –                  3               3
RM300,001 to RM350,000                                                  1                  –               1

Total:                                                                  1                       3          4

C. SHAREHOLDERS

DIALOGUE BETWEEN THE COMPANY AND INVESTORS

The Board values constant dialogue and is committed to clear communication with its shareholders and
investors. In this respect, as part of the Group’s active investor relations program, discussions and dialogues
are held with fund managers, financial analysts, shareholders and the media to convey information about the
Group’s performance, corporate strategy and other matters affecting shareholders’ interests.

In addition to published Annual Report and Quarterly Reports announced to Bursa Securities, the Group has
established 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, it is mindful of the legal and regulatory framework governing the release of material and price-
sensitive information.

ANNUAL GENERAL MEETING

The annual general meeting of the Company provides the principal forum for dialogue and interaction
between the Board and the shareholders. The participation of shareholders, both individuals and institutional
at general meetings on clarifications of pertinent and relevant information is encouraged.

                                                                      SUNWAY INFRASTRUCTURE BERHAD                17
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Corporate Governance Statement                                    (Cont’d)

     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, performance and prospects. The Board is assisted by the Audit Committee to oversee the Group’s
     financial reporting processes and the quality of its financial reporting.

     INTERNAL CONTROL

     The Statement on Internal Control set out on pages 29 to 31 of the Annual Report provides an overview of
     the state of 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 set out on pages 22 to 28 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 fair view 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
     applied consistently, and that reasonable and prudent judgments and estimates have been made. All
     applicable approved accounting 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 with reasonable accuracy, the financial position of the Company and of the Group and which
     enables them to ensure that the financial statements comply with the relevant statutory requirements.

18   SUNWAY INFRASTRUCTURE BERHAD
                     (405897-V)
Corporate Governance Statement                                    (Cont’d)

F.   COMPLIANCE WITH THE CODE

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

1.   Appointment of Senior Independent Non-Executive Director

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

2.   Formation of Nomination Committee

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

     In place of a Nomination Committee, the suitability of candidates for appointment to the Board will be
     considered and approved by the entire Board to ensure that the resulting mix of experience and
     expertise of members of the Board is sufficient to address the issues affecting the Group. During the year
     under review, there were no new appointments to the Board.

     The Board will also undertake the role of a Nomination Committee to assess the effectiveness of the
     Board as a whole and the Committees of the Board as well as to assess the contribution of each
     individual Director. The Board 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,
     the Board 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.

                                                                      SUNWAY INFRASTRUCTURE BERHAD                19
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Terms Of Reference Of Risk Management Committee

     1.   MEMBERSHIP

          (a)   The Risk Management Committee (“RMC”) shall be appointed by the Board and shall comprise
                not fewer than three (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 three (3), the Board shall, within three (3) months fill the vacancy.

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

     2.   ROLES AND FUNCTIONS

          The RMC has the overall responsibility for overseeing the risk management activities of the
          Group, approving appropriate risk management procedures and measurement methodologies
          across the organisation as well as identification 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
                 management process and culture are embedded throughout the Group.

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

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

          (d)   To work with the Group Financial Controller and Group Internal Audit Department in the
                preparation of the Statement 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.

20   SUNWAY INFRASTRUCTURE BERHAD
                    (405897-V)
Terms Of Reference Of Risk Management Committee                                                     (Cont’d)

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’s evaluation and endorsement before submission to the Board.

     (b)   Review proposals/feasibility studies prepared by project sponsor which meet the requisite
           threshold before 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 time at the RMC Chairman’s discretion.

     (b)   The quorum for the meeting shall be two (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 Group Financial Controller/Chief Financial Officer.

                                                                    SUNWAY INFRASTRUCTURE BERHAD            21
                                                                                     (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 relating to internal controls, financial and accounting records and policies as well as financial
     reporting practices of the Company and its subsidiaries (“the Group”).

     COMPOSITION

     The members of the Audit Committee during the financial year were:-

     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 five (5) meetings during the financial year. The attendance of the Committee
     members was as 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                                                           5/5

     The Company Secretaries, the Internal Auditors and the Chief Financial Officer were present at all meetings.
     At three (3) of the 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
                 Company and shall consist of not less than three (3) members.

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

22   SUNWAY INFRASTRUCTURE BERHAD
                      (405897-V)
Audit Committee Report                          (Cont’d)

     1.3   The Committee shall include at least one (1) person:-

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

           (b) who must have at least three (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 one (1) of the Associations specified in Part II of the 1st Schedule of the
                     Accountants Act, 1967; or

           (c) who must have at least three (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 one (1) of the professional accountancy organisations which has been
                     admitted as a full member of the International Federation of Accountants; or

           (d) who must have at least seven (7) years’ experience being a chief financial officer of a
               corporation or having the function 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 that the number of members is reduced below three (3), the Board shall, within three (3)
           months appoint such number of new members as may be required to make up the minimum of
           three (3) members.

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

2.   Meetings

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

     2.2   The Committee shall meet at least four (4) times a year and such additional meetings as the
           Chairman shall decide.

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

                                                                      SUNWAY INFRASTRUCTURE BERHAD                23
                                                                                        (405897-V)
Audit Committee Report                          (Cont’d)

            2.4   The External Auditors have the right to appear and be heard at any meeting of the Committee and
                  shall appear 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 the meetings 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 of the Committee.

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

            2.7   The Company Secretary shall act as Secretary of the Committee and shall be responsible, with the
                  concurrence of the Chairman, for drawing up and circulating the agenda and the notice of
                  meetings together 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
                  meetings of the Committee.

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

       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
                  the attendance 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 the
                  independent purpose, authority, scope and responsibility of the internal audit function in the
                  Company and the Group.

24   SUNWAY INFRASTRUCTURE BERHAD
                   (405897-V)
Audit Committee Report                       (Cont’d)

  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
                  the necessary authority to carry out its work;

            (ii) the audit plan of work programme and results of internal audit processes including
                 recommendations 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 any matter concerning their appointment and termination.

        (c) The quarterly results and year end financial statements prior to the approval by the Board,
            focusing particularly 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.

        (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
            within the Company or the Group including any transaction, procedure or course of conduct
            that raises questions of management integrity.

                                                                   SUNWAY INFRASTRUCTURE BERHAD                25
                                                                                     (405897-V)
Audit Committee Report                          (Cont’d)

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

         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 on
                           Corporate Governance; and

                   (ii) the extent of compliance with the best practices set out in Part II of the Malaysian Code
                        on Corporate Governance, specifying reasons for any area of non-compliance and the
                        alternative measures 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 the
                   Group’s eligible employees in compliance with the criteria set out in the Bylaws of the
                   Company’s Employees’ 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
                   the Listing Requirements of Bursa Securities.

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

26   SUNWAY INFRASTRUCTURE BERHAD
                   (405897-V)
Audit Committee Report                           (Cont’d)

5.    Internal Audit Department

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

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

ACTIVITIES OF THE COMMITTEE FOR YEAR 2004

The summary of the activities of the Committee in the discharge of its duties and responsibilities included the
following:-

(a)   Reviewed the adequacy and relevance of the scope, functions, resources, risk based internal audit plan
      and results 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
      ensure corrective 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 Internal Audit Department, the Internal Audit Strategic Plan which encompassed its
      vision, mission, strategies and action plan towards building a robust and focused internal audit team.

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

(f)   Reviewed the extent of assistance rendered by management and issues and reservations arising from
      audits with the External Auditors without the presence of management staff and the executive member
      of the Committee.

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

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

(i)   Reviewed the quarterly results and year end financial statements with management for recommendation
      to the Board of Directors for approval and release to Bursa Securities.

(j)   Reviewed all related party transactions entered into by the Company and the Group at the Committee’s
      quarterly meetings to ensure that the transactions entered into were at arm’s length basis and on normal
      commercial terms.

                                                                       SUNWAY INFRASTRUCTURE BERHAD               27
                                                                                        (405897-V)
Audit Committee Report                          (Cont’d)

     (k)   Reviewed and approved the Circular to Shareholders and the statement by the Audit Committee in
           respect of the proposed Shareholders’ Mandate for Recurrent Related Party Transactions.

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

     (m) Discussed the implications of any latest changes and pronouncements on the Company and the Group,
         which were issued by the accountancy, statutory and regulatory bodies.

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

     (o)   Reviewed and approved the Audit Committee Report for inclusion in the Company’s 2003 Annual
           Report.

     (p)   Reviewed the disclosure statements on compliance of the Malaysian Code on Corporate Governance
           and the state on internal controls as well as the Directors’ Responsibility Statement on the annual
           audited financial statements for inclusion in the Company’s 2003 Annual Report.

     INTERNAL AUDIT ACTIVITIES REPORT FOR YEAR 2004
     The summary of the activities of the Internal Audit Department was 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,
           which covered reviews of the internal control system, accounting and management information system
           and risk management.

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

     (d)   Acted on suggestions made by the Committee and/or senior management on concerns over operations
           or controls.

     (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
           procedures established to monitor recurrent related party transactions.

     (g)   Reviewed on the appropriateness of the disclosure statements in regard to compliance with the
           Malaysian Code 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.

28   SUNWAY INFRASTRUCTURE BERHAD
                      (405897-V)
Statement On Internal Control

INTRODUCTION
The Malaysian Code on Corporate Governance stipulates that the Board of Directors of listed companies
should maintain a sound system of internal control to safeguard shareholders' investment and Group assets.
Set out below is the Board of Directors ("the Board") of Sunway Infrastructure Berhad's ("the Group")
Statement on Internal Control as a Group, made in compliance with Paragraph 15.27 of the Listing
Requirements of Bursa Malaysia Securities Berhad and the Statement 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
effective risk management practices in the Group to ensure good corporate governance. The Board affirms
its responsibility for reviewing the adequacy and integrity of the Group's system of internal control and
management information systems, including systems for compliance with applicable laws, rules, directives,
guidelines and risk management practices.

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

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
by which the Group's performance and conduct is monitored.

The daily running of the business is entrusted to the Chief Operating Officer and his management team.
Under the purview of the Chief Operating Officer, the heads of department are empowered with the
responsibility of managing their respective operations. The Chief Operating Officer actively communicates
the Board's expectations to management at management meetings as well as through attendance at various
operations meetings. At these meetings, operational and financial risks are discussed and dealt with.

The Board is responsible for setting the business direction and for overseeing the conduct of the Group's
operations. Through these mechanisms the Board is informed of all major control 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
good business management practice. The Board acknowledges that all areas of the Group's activities involve
some degree of risks and is committed to ensuring that the Group has an effective risk management
framework which will allow the Group to be able to identify, evaluate and manage risks that affect the
achievement of the Group's business objectives within defined risk parameters in a timely and effective
manner.

                                                                       SUNWAY INFRASTRUCTURE BERHAD                29
                                                                                         (405897-V)
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