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    Beyond
       Boundaries




annual report 2006
Beyond Boundaries

The point of corporate origin for Sunway

Holdings Incorporated Berhad (“SunInc”) lies

in Malaysia. To represent its expansion into

the global marketplace, a line extends

upward, intersecting another line. As the line

arcs beyond the borderline, it shows SunInc's

ascendancy as a global player and its ongoing

quest for limitless business opportunities. In

short, SunInc aims for nothing less than the

stars -- s t r i v e s f o r e x c e l l e n c e.
                                                                                                                                                       China
                                                                                                                                                         •
                                                                                                                                                Macau
                                                                                                                                                  •
                                                                                                                                                     • Hong Kong

                                                                                                                             India
                                                                                                                               •                    • Vietnam
                                     • Trinidad and Tobago


                                                                                                                                                 • Malaysia
                                                                                                                                                  • Singapore

                                                                                                                                                  • Indonesia




Sunway Holdings Incorporated Berhad’s Global Presence
REPUBLIC OF TRINIDAD                                         Sunway Xin Long (Anhui) Hydraulic Co. Ltd.   THAILAND                                              INDONESIA
AND TOBAGO                                                   Anhui
                                                             (Year of Inception 2006)                     Sunway Marketing (Thailand) Ltd.                      PT Trek Masindo
Sunway Construction Caribbean Ltd.                                                                        Bangkok, Rayong                                       Jakarta
Republic of Trinidad and Tobago                                                                           (Year of Inception 1990)                              (Year of Inception 2003)
(Year of Inception 2004)                                     HONG KONG
                                                             Sunway Global Limited                                                                              PT Sunway Marketing Indonesia
                                                                                                          VIETNAM
CHINA                                                        Hong Kong                                                                                          Jakarta
                                                             (Year of Inception 2003)                     Sunway Hatay Construction & Building Materials        (Year of Inception 2001)
Sunway Hoston (Zhuhai) Spun Pile Co. Ltd.
                                                                                                          JV Co. Ltd.
Zhuhai
                                                                                                          Hatay                                                 SINGAPORE
(Year of Inception 2006)                                     MACAU
                                                                                                          (Year of Inception 1995)
                                                             Sunway GD Foundation Engineering Co. Ltd.                                                          Sunway Marketing (S) Pte. Ltd.
Sunway Building Materials (Shanghai) Co. Ltd.
                                                             Macau                                        Sungei Way Ocean Joint Venture Ltd.                   Singapore
Shanghai
                                                             (Year of Inception 2005)                     Ho Chin Minh                                          (Year of Inception 1975)
(Year of Inception 2005)
                                                                                                          (Year of Inception 1997)
                                                                                                                                                                Sunway Concrete Products (S) Pte. Ltd.
Sunway Building Materials (Dongguan) Co. Ltd.                INDIA                                        Sunway Hotel Hanoi Joint-Venture Company              Singapore
Dongguan
                                                             Sunway Construction India Pte. Ltd.          Hanoi                                                 (Year of Inception 1995)
(Year of Inception 2005)
                                                             Karnataka, Uttar Pradesh Bihar               (Year of Inception 1992)
Sunway Marketing (Shanghai) Pte. Ltd.                        (Year of Inception 2001)
Shanghai
(Year of Inception 2003)
Table of Contents                                                                        FINANCIAL CALENDAR

Vision, Mission and Core Values                                             2            31 MAY 2005
Strategy Statement                                                          3            Announcement of the unaudited consolidated
Corporate Information                                                   4-5              results for the 1st quarter ended
Corporate Profile                                                       6-7              31 March 2005
Group Corporate Structure                                                   8
At a Glance                                                            9 - 10            6 JUNE 2005
Calendar of Significant Events                                             11            Announcement of notice of entitlement and
Chairman's Statement / Penyata Pengerusi                              12 - 16            payment of 2 sen Final Dividend less 28%
Managing Director's Review                                            17 - 18            income tax for the financial year ended
                                                                                         31 December 2004
Finance Director's Review                                             19 - 21
Economic Review                                                            22
                                                                                         7 JUNE 2005
Motivating Leadership                                                                    Issuance of notice of 27th Annual General
                                                                                         Meeting and Annual Report for the financial
Profile of Board of Directors                                         24 - 27            year ended 31 December 2004

Innovative Products and Services                                                         29 JUNE 2005
Construction                                                               29            Date of 27th Annual General Meeting
Property Development                                                       30
Trading and Manufacturing                                                  31            29 JULY 2005
Building Materials                                                         32            Date of entitlement to 2 sen Final Dividend
Quarry                                                                     33            less 28% income tax for the financial year
                                                                                         ended 31 December 2004
Our People Our Strength                                               34 - 37
                                                                                         17 AUGUST 2005
Performing Business with Integrity                                                       Announcement of the unaudited consolidated
Investor Relations                                                         39            results for the 2nd quarter ended
Corporate Social Responsibility                                            40            30 June 2005
Business Dynamics and Risk Factors                                         41
                                                                                         19 AUGUST 2005
Corporate Governance Statement                                        42 - 47
Terms of Reference of Management Committee                                 48            Announcement of the change of financial year
Terms of Reference of Nomination Committee                                 49            end from 31 December to 30 June
Terms of Reference of Remuneration Committee                               50
Terms of Reference of Employees' Share Option                                            25 AUGUST 2005
  Scheme Committee                                                    51 - 52            Date of payment of 2 sen Final Dividend less
Terms of Reference of Risk Management Committee                            53            28% income tax for the financial year ended
Terms of Reference of Strategic Direction Committee                        54            31 December 2004
Audit Committee Report                                                55 - 59            23 NOVEMBER 2005
Statement on Internal Control                                         60 - 61
Enterprise Risk Management Framework                                  62 - 63            Announcement of the unaudited consolidated
                                                                                         results for the 3rd quarter ended
Additional Compliance Information                                     64 - 65            30 September 2005

Striving Towards Excellence                                                              23 FEBRUARY 2006
Awards and Achievements                                                    66            Announcement of the unaudited consolidated
Research and Development                                                   67            results for the 4th quarter and year ended
Statement on Quality                                                       68            31 December 2005
Statement of Occupational Safety and Health                                69
                                                                                         25 MAY 2006
Financials                                                                               Announcement of the unaudited consolidated
Financial Statements                                                   71-183            results for the financial period ended
List of Properties                                                    184-194            31 March 2006
Recurrent Related Party Transactions                                  195-196
                                                                                         30 AUGUST 2006
Shareholdings' Information                                                               Announcement of the unaudited consolidated
                                                                                         results for the financial period ended
Directors' Interests in Shares, Options over Ordinary                                    30 June 2006
 Shares and Warrants                                                      197
Analysis of Shareholdings                                             198-199            8 NOVEMBER 2006
Analysis of Warrantholdings                                           200-201            Issuance of notice of 28th Annual General
                                                                                         Meeting and Annual Report for the financial
28th Annual General Meeting                                                              period ended 30 June 2006
Notice of 28th Annual General Meeting                                 202-206
                                                                                         30 NOVEMBER 2006
Statement Accompanying Notice of Annual General Meeting                   207
Form of Proxy                                                                            Date of 28th Annual General Meeting




                                Sunway Holdings Incorporated Berhad    1   annual report ‘06
                                                  Vision
                To be a leading conglomerate providing world-class and
          competitive products and services that enhance stakeholders’ value.


                                                 Mission
To provide innovative quality products and services that exceed customers’ expectation.
             To continuously attract, retain and develop Human Capital.
   To achieve market leadership and operating excellence in every business segment.


                                            Core Values
                                                 Excellence
                        We will have only one standard - EXCELLENCE!


                                                 Customers
                         We will strive to exceed customers’ expectations.


                                       Motivating Leadership
                                         We will lead by example.


                                                 Teamwork
                            We share one Vision, we work as one Team.


                                                 Innovation
             We will encourage and reward innovation, especially breakthrough ideas.


                                                   Integrity
                      We will conduct ourselves professionally and ethically.




                    Sunway Holdings Incorporated Berhad   2   annual report ‘06
Strategy Statement


                                                We go Beyond
                                                Boundaries because...
                                                                ‘   We believe growth is on the horizon.
                                                                    We go beyond the boundaries of the local
                                                                    market into the horizon.

                                                                    We are driving growth for tomorrow and
                                                                    gaining momentum.

                                                                    SunInc leaders are passionate for growth,
                                                                    passionate to provide innovative quality
                                                                    products and services that exceed
                                                                    customers’ expectation and help them to
                                                                    be more competitive in the marketplace.

                                                                    Yes, growth is coming.
                                                                    SunInc leaders are driving.
                                                                    Sunwayians will bring it home.
                                                                                                  ’

From left to right:

Yau Kok Seng
Managing Director
Mark Victor Rozario
Finance Director
Dato’ Chew Chee Kin
President




                      Sunway Holdings Incorporated Berhad   3   annual report ‘06
Corporate Information

BOARD OF DIRECTORS                                                EMPLOYEES’ SHARE OPTION
                                                                   SCHEME COMMITTEE
Executive Chairman, Non-Independent Executive
 Director                                                         Tan Sri Dato’ Seri (Dr) Cheah Fook Ling (Chairman)
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling                           Dato’ Chew Chee Kin
                                                                  Dato’ Tan Kia Loke
President, Non-Independent Executive Director                     Yau Kok Seng
Dato’ Chew Chee Kin

Managing Director, Non-Independent Executive
 Director
                                                                  RISK MANAGEMENT COMMITTEE
Yau Kok Seng
                                                                  Yau Kok Seng (Chairman)
Finance Director, Non-Independent Executive Director              Mark Victor Rozario
Mark Victor Rozario                                               Kwan Foh Kwai
                                                                  Wong Fook Chai
Non-Independent Non-Executive Directors                           Ng Boon Liang
Dato’ Tan Kia Loke                                                Leong Kai Hong
Kwan Foh Kwai                                                     Yap Chin Leong
                                                                  Teh Quen Chang
Senior Independent Non-Executive Director                         Wong Siew Hoong
Wong Chin Mun                                                     Ng Eng Lee

Independent Non-Executive Directors
Datuk Low Seng Kuan                                               STRATEGIC DIRECTION
Datuk Abdul Malek Bin Abdul Aziz                                   COMMITTEE
                                                                  Dato’ Chew Chee Kin (Chairman)
AUDIT COMMITTEE                                                   Dato’ Tan Kia Loke
                                                                  Yau Kok Seng
Wong Chin Mun (Chairman)                                          Mark Victor Rozario
Datuk Low Seng Kuan                                               Kwan Foh Kwai
Datuk Abdul Malek Bin Abdul Aziz                                  Wong Fook Chai
Yau Kok Seng                                                      Ng Boon Liang
                                                                  Leong Kai Hong
                                                                  Yap Chin Leong
MANAGEMENT COMMITTEE                                              Teh Quen Chang
                                                                  Wong Siew Hoong
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling (Chairman)
Dato’ Chew Chee Kin
Dato’ Tan Kia Loke                                                COMPANY SECRETARIES
Yau Kok Seng
Mark Victor Rozario                                               Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng
Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng                    (MIA 5601)
                                                                  Tan Kim Aun (MAICSA 7002988)
                                                                  Lee Suan Choo (MAICSA 7017562)
NOMINATION COMMITTEE
Wong Chin Mun (Chairman)                                          REGISTERED OFFICE
Datuk Low Seng Kuan
Datuk Abdul Malek Bin Abdul Aziz                                  Level 16, Menara Sunway
                                                                  Jalan Lagoon Timur
                                                                  Bandar Sunway
REMUNERATION COMMITTEE                                            46150 Petaling Jaya
                                                                  Selangor Darul Ehsan
Wong Chin Mun (Chairman)                                          Malaysia
Datuk Low Seng Kuan
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling                           Tel No : (03) 5639 8889
                                                                  Fax No: (03) 5639 9507




                        Sunway Holdings Incorporated Berhad   4   annual report ‘06
Corporate Information                                       (Cont’d)


SHARE REGISTRAR                                                     PRINCIPAL BANKERS
Sunway Management Sdn Bhd       (50661-X)                           HSBC Bank Malaysia Berhad
Level 16, Menara Sunway                                             Malayan Banking Berhad
Jalan Lagoon Timur                                                  RHB Bank Berhad
Bandar Sunway
46150 Petaling Jaya
Selangor Darul Ehsan                                                STOCK EXCHANGE LISTING
Malaysia
                                                                    Main Board of Bursa Malaysia Securities Berhad
Tel No : (03) 5639 8889
Fax No: (03) 5639 9507
                                                                    WEBSITE ADDRESS
AUDITORS                                                            www.sunway.com.my

PricewaterhouseCoopers
Chartered Accountants



SOLICITORS
David Lingam & Co.
Mah-Kamariyah & Philip Koh




                          Sunway Holdings Incorporated Berhad   5   annual report ‘06
Corporate Profile

Sunway Holdings Incorporated Berhad (“SunInc”) strives
for sustainable operational excellence.

SunInc is an investment holding company listed on the
Main Board of Bursa Malaysia Securities Berhad since
1984.

SunInc Group's major core businesses are construction,
property development, trading and manufacturing,
building materials and quarry.

These activities are mainly operated by a group of
companies namely:

    Sunway Construction Sdn Bhd ("SunCon"), one of the
    top 3 construction companies in Malaysia,
    SunwayMas Sdn Bhd ("SunwayMas"), the property
    arm of SunInc Group,
    Sunway Marketing Sdn Bhd ("Sunway Marketing"),
    has international presence with offices throughout the
    region,
    Sun-Block Sdn Bhd ("Sun-Block"), a market leader in
    building materials,
    Sunway Keramo Sdn Bhd ("Sunway Keramo"),
    manufacturer of vitrified clay pipes that also lead the
    way in the market and
    Sunway Quarry Industries Sdn Bhd ("Sunway Quarry
    Industries"), with its quarry operations in Malaysia
    whilst, Sungei Way Ocean Joint Venture Ltd. and
    Sunway Hatay Construction & Building Materials JV
    Co. Ltd. with their quarry and asphalt premix
    operations in Vietnam.

Each of SunInc's subsidiary companies that consists of
various business divisions continue to strengthen and
synergise with each other. Today SunInc is part of The
Sunway Group that is a vast, thriving conglomerate - one
fortified with the foundation of strong public listed
companies.

SunInc will always be an intrinsic part of the success of
The Sunway Group as it continues to strive for sustainable
operational excellence.




Menara Sunway
                 Building Materials                      Quarry




Construction




               Property Development   Trading and Manufacturing
                Group Corporate Structure

                                                                                                                                              Sunway
                                                                                                                                              Machinery
                                                                                                                                              Sdn Bhd
                                                                                                                                              (formerly
                                                                                                                                 Sunway       known
                                                                                                                  Sunway        Concrete      as SWC
                                                                                                                    Piling     Products (S)   Machinery
                                                                                                                                                            Sunway
                                                                      Sunway            Sunway     PT Sunway-                   Pte. Ltd.#                  Engineering Sunway
                                                                                                                 Sdn Bhd                      Sdn Bhd)
                                                                     Building          Builders Yasa PMI Pile#                                              Sdn Bhd     Construction (India)
                                                          Sunway Materials             Sdn Bhd                                                                          Pte. Ltd.#
                                                          Building (Shanghai)                                                                                                            Sunway GD
                                              Sunway
                                                         Materials Co. Ltd.#                                                                                                             Piling Sdn Bhd
                                               Hoston
                                                       (Dongguan)
                                             (Zhuhai)
                                                         Co. Ltd.#
                                                                                                        Fortuna                                                                                        Sunway Precast
                                             Spun Pile                                                 Gembira                 Sunway                                                                  Industries Sdn Bhd
                                             Co. Ltd.#                                                 Enterpris             Construction
                               Sunway GD                                                                                                                                                                          Sunway Creative
                                                                                                       Sdn Bhd                Sdn Bhd
                                Foundation                                             Gopeng                                                                                                                     Stones Sdn Bhd
                               Engineering                                            Berhad*^
                                 Co. Ltd.#                                                                                                                                                                                    Sunway
                                                                                                                                                                                                                              Construction
                                                Sunway Global
                     Sunway                                                                                                                                                                                                   Caribbean Limited.#
           Xin Long (Anhui)                           Limited#
          Hydraulic Co. Ltd.#                Sunway
                                       Infrastructure
                                            Berhad*^
                                                                                                                                                                                                             Sun-Block Sdn Bhd
                              Sunway
                          Management                                                                                                                                                                                        Sunway Keramo
                             Sdn Bhd                                                                                                                                                                                        Sdn Bhd

              Sunway Risk
              Management                                                                                                                                                                                                            Sunway
                 Sdn Bhd                                                                                                                                                                                                            Pipeplus
                                                                                                                                                                                                                                    Technology
                                                                                                                                                                                                                                    Sdn Bhd
          Sunway
  Shared Services
  Centre Sdn Bhd



            Sunway
          Holdings
         (Vietnam)
           Sdn Bhd


     Sunway Credit
         & Leasing
          Sdn Bhd


            Sunway Hotel                                                                                                                                                                                                       SunwayMas
             Hanoi Joint-                                                                                                                                                                                                      Sdn Bhd
                 Venture
              Company#
                              Sunway
   PT Sunway             Marketing (S)                                                                                                                                                                               Muhibbah
    Marketing
   Indonesia#
                            Pte. Ltd.#                                                                                                                                                                               Permai Sdn Bhd
  Sunway Marketing
(Shanghai) Pte. Ltd.#
                                                Sunway
                                              Marketing
         PT Trek Masindo#
                                               Sdn Bhd
                 Sunway Marketing
                  (Thailand) Ltd.*#                                   Sunway
                                                                    Enterprise                                                                                                    Sungei Way
                              Sunway Marketing                         (1988)                                                                                                     Ocean Joint
                        (East Malaysia) Sdn Bhd                      Sdn Bhd
                                                                                               Sunway                                                                             Venture Ltd.#
                                                                                             Hydraulic                                                    Sunway Quarry
                                    Sunway Hose Centre
                                                                                                                          Sunway Hatay                    Industries
                                              Sdn Bhd
                                                                                             Industries                   Construction &
                                                                                              Sdn Bhd                                                     Sdn Bhd
                                                  Sunway Architectural
                                                                                                                         Building Materials
                                                     Products Sdn Bhd                                                      JV Co. Ltd.#
                                                                         Buildtrend B.S.G.                                                                                           Notes:
                                                                           (M) Sdn Bhd*                                                                                              This Group Corporate Structure excludes
                                                                                                                                                                                     dormant and non-operating companies
                                                                                                                                                                                     ^ Public listed company
                                                                                                                                                                                     # Overseas company
                                                                                                                                                                                     * Associated company




                                                                    Sunway Holdings Incorporated Berhad                            8      annual report ‘06
                                                                      *2006           #
                                                                                       2004            2003            2002             2001
At a Glance                                                         RM ’000         RM ’000          RM ’000         RM ’000          RM ’000
OPERATING RESULTS
Revenue                                                           2,057,266 1,497,519              1,390,321        1,039,194         998,663
Profit/(loss) from ordinary activities before tax                    29,247    55,849                123,497         (145,535)        (64,762)
Tax expense                                                         (30,040)    1,874                (27,637)          (9,823)          1,461
(Loss)/profit after tax                                                (793)   57,723                 95,860         (155,358)        (63,301)
Minority interest                                                   (10,477)  (18,424)               (22,321)         (31,435)          7,634
Net (loss)/profit for the financial period/year                     (11,270)   39,229                 73,539         (186,793)        (55,667)

KEY BALANCE SHEET DATA
Property, plant and equipment                                       272,189         216,617          226,410          254,332         356,027
Quarry development expenditure                                        1,165               0                0                0               0
Investments                                                          52,865         108,567          117,774          106,477         133,300
ABS Notes and other investments                                       2,232           9,514           11,762           79,157          46,006
Long-term debtors                                                    10,366          38,473           76,708           83,587          86,890
Land held for property development                                   66,935          70,943           84,572           87,288               0
Goodwill                                                            114,100          77,104                0                0          42,530
Deferred tax assets                                                  12,600          11,010            6,387           11,109          16,086
Investment properties                                                     0               0                0           13,329          13,898
Current assets                                                    1,383,260       1,224,891        1,075,394          993,797       1,200,483
Total assets                                                      1,915,712       1,757,119        1,599,007        1,629,076       1,895,220
Current liabilities                                                 852,153       1,044,203        1,026,119          969,430         901,152
Non-current borrowings                                              407,964          49,009           51,538           73,380         167,867
Deferred tax liabilities                                             17,546          15,074           18,622           18,709          23,537
ABS Senior Notes                                                     89,873          89,805                0                0               0
Non-current bonds                                                         0               0           63,884          202,191         256,109
Total liabilities                                                 1,367,536       1,198,091        1,160,163        1,263,710       1,348,665
Total net assets                                                    548,176         559,028          438,844          365,366         546,555
Minority interest                                                    27,579          17,012          134,653          140,309         131,813
Shareholders’ equity                                                520,597         542,016          304,191          225,057         414,742

FINANCIAL RATIOS
Profit/(loss) from ordinary activities
  before tax to revenue                           (%)                  1.42            3.72             8.88           (14.00)          (6.48)
Basic(loss)/earnings per share                    (sen)               (2.09)           8.08            18.11           (46.12)         (13.75)
Dividends                                         (sen)                0.00            5.00             0.00             0.00            0.00
Market price                                      (RM)                 0.48            1.39             1.63             0.26            0.60
Price-earnings ratio                              (times)            (22.97)          17.20             9.00            (0.56)          (4.37)
Return on capital employed (“ROCE”)               (%)                 11.96           14.94            24.02           (10.83)          (3.60)
Gearing ratio                                     (times)              0.89            0.82             0.94             1.66            1.27
Net tangible assets per share                     (sen)               75.23           86.25            74.05            55.57           91.91
Total asset turnover                              (times)              1.07            0.85             0.87             0.64            0.53
Share capital                                                       540,367         539,029          410,812          404,985         404,985

* 18 months ended 30 June 2006
# Figures for the financial year ended 2004 have been adjusted and restated to conform to the changes in the presentation and to take into account
  the adoption of IC 112, Consolidation Special Purpose Entities




                              Sunway Holdings Incorporated Berhad       9    annual report ‘06
Segmental Performance

Revenue (RM million)
                                                                                                                             #
                                      *2006                                                                                   2004                                                                                2003
                                                   1,271                                                                          1,055                                                                                1,065
               163                                                                                   150                                                                                 72
                     312                                                                             194                                                                                    157
              103                                                                                   88                                                                                   76
               160

     0                500             1000             1500                                   0     200 400 600 800 1000 1200                                                        0     200 400 600 800 1000 1200




                                      2002                                                                                   2001                                                              Construction
                                                       683                                                                                  650
                                                                                                                                                                                               Property Development
              94                                                                                         109
                    134                                                                                   124                                                                                  Trading and Manufacturing
               105                                                                                   92                                                                                        Building Materials
                                                                                                                                                                                               Quarry
     0              200         400          600               800                            0            200         400            600          800




Profit/(Loss) from Operations (RM million)
                                                                                                                             #
                                      *2006                                                                                      2004                                                                             2003
                                        63                                                                                                  82                                                                                 89
                          36                                                                              19                                                                                  13
                    21                                                                              9                                                                                      8
          2                                                                                          14                                                                                       13
          5

     0         20         40      60         80                                               0          20      40      60           80         100                                 0         20      40        60      80    100




                                      2002                                                                                   2001                                                              Construction
              -19                                                                             -26
                                                                                                                                                                                               Property Development
                                                 10                                                                                    10
                                         6                                                                                        5                                                            Trading and Manufacturing
                                             5                                                           -17                                                                                   Building Materials
                                                                                                                                                                                               Quarry
    -30        -20        -10     0          10        20                                     -30        -20     -10     0            10         20




Financial Ratios
                                                                     Basic Earnings/(Loss) Per Share (sen)                                                                  Net Tangible Assets Per Share (sen)
                          -2.09 *2006                                                                                                                    *2006                                               75.23
                                  2004                8.08                                                                                               2004                                                    86.25
                                  2003                         18.11                                                                                     2003                                               74.05
    -46.12                        2002                                                                                                                   2002                                  55.57
                      -13.75 2001                                                                                                                        2001                                                         91.91

    -60 -50 -40 -30 -20 -10                   0       10       20    30                                                                                          0     20          40           60          80         100




                                                                     Price-Earnings Ratio (times)                                                                           Gearing Ratio (times)
    -22.97                                   *2006                                                                                                       *2006              0.89
                                             2004                                     17.20                                                              2004              0.82
                                             2003                         9.00                                                                           2003                0.94
                                 -0.56 2002                                                                                                              2002                               1.66
                                 -4.37 2001                                                                                                              2001                       1.27

    -25        -20        -15     -10        -5            0         5    10     15   20                                                                         0   0.5     1       1.5        2      2.5        3




* 18 months ended 30 June 2006
# Figures for the financial year ended 2004 have been adjusted and restated to conform to the changes in the presentation and to take into account
  the adoption of IC 112, Consolidation Special Purpose Entities

                                                           Sunway Holdings Incorporated Berhad                         10         annual report ‘06
       Calendar of Significant Events
                                                                                                                            2005/2006 Highlights
         546 days of               13/01/2005                         17/01/2005                         05/05/2005
                                   SunInc made a comeback in the      The Sunway Group was the           Sunway Construction Caribbean
         Leadership,               local quarry business via its      Platinum sponsor at the            Limited has been awarded a
         Innovation,               acquisition of the entire equity   Malaysia India Economic            contract worth RM220.8 million
                                   interest in Setia Juta Quarry      Conference 2005. SunCon has        from     Urban    Development
          Corporate                Industries Sdn Bhd (now known      4 highway projects progressing     Corporation of Trinidad and
                                   as Sunway Quarry Industries Sdn    smoothly in Belgaum Bypass         Tobago Ltd. This is for the
        Governance                 Bhd) that has a 5% market share    (18 km), Dharwad (62 km),          proposed construction of the 22-
          and Social               of the local quarry business. It
                                   operates 3 quarries and 5 pre-
                                                                      Jharkand (78 km) and Varanasi
                                                                      (72 km).
                                                                                                         storey Ministry of Legal Affairs
                                                                                                         Tower.
       Responsibility              mix plants in Malaysia.


12/05/2005                         20/05/2005                         30/06/2005                         27/07/2005
SunCon has obtained a              SunCon was awarded RM181.0         SunCon won 2 contracts in          Puan Sri Datin Seri (Dr) Susan
RM165.0 million sub-contract       million contract from Haluan       India totalling RM695.5 million    Cheah of The Sunway Group
to build part of elevated          Prisma Sdn Bhd in relation to      from the National Highways         received the Asia Human
highway in Kuala Lumpur. The       the construction of the            Authority of India, to complete,   Resource Development Congress
sub-contract is for a portion      Universiti Teknologi Mara’s        upgrade and maintain an            2005 Award in the "Contribution
of the elevated highway from       new campus.                        existing carriageway in Uttar      to Society" category, based on
Jalan Tun Razak, Kuala                                                Pradesh and Rajasthan.             contributions on human resource
Lumpur at Kampung Pandan                                                                                 development, education and
roundabout to the Putrajaya                                                                              philanthropic works.
link interchange in Putrajaya.


08/08/2005                                                            19/09/2005                         25/11/2005
YBhg Tan Sri Dato’ Seri (Dr)                                          SunCon accepted the letter of      SunCon was awarded “Builder
Cheah Fook Ling received the                                          award for a contract worth         of the Year” for the 2nd time by
prestigious award of the Most                                         RM119.2 million from Sunway        the Construction Industry
Innovative Asia-Pacific Chinese                                       City Berhad (“SunCity”) for the    Development         Board     of
Entrepreneur Award 2005 at                                            proposed construction of           Malaysia, one of the most
the Asia Pacific Chinese                                              several campus buildings for       prestigious categories among
Entrepreneurial Leaders Forum.                                        Monash University Sunway           the Malaysian Construction
                                                                      Campus Malaysia Sdn Bhd.           Industry Excellence Awards
                                                                                                         2005. The first win was in year
                                                                                                         2003.


20/12/2005                         30/12/2005                         04/01/2006                         16/01/2006                         08/02/2006
Joint venture agreement between    SunCon accepted the letter of      Joint    venture    agreement      SunCon       had     signed   a    Memorandum of Understanding
Sunway Global Limited and          award for a contract worth         between Sunway Property            construction contract worth        between Soma Developers,
Zhuhai Hoston Special Materials    RM90.3 million from Sunway         (China) Limited and Guangzhou      about RM54.9 million with          Soma Enterprise Limited,
Co. Ltd. to set up Sunway          Carnival Sdn Bhd for the           Cuihua Trade Co. Ltd. to set up    Zuellig Pharma Sdn Bhd for the     SunCity and SunCon for the
Hoston (Zhuhai) Spun Pile Co.      proposed construction of a         Sunway Cuihua (Guangzhou)          proposed design, construction,     proposed development and
Ltd. (“Sunway Hoston”) to          shopping complex at Seberang       Real    Estate   Development       completion and commissioning       construction of a parcel of land
undertake the business of          Perai Tengah.                      Co. Ltd. to undertake a real       of a distribution warehouse and    located within the city fringes of
designing, manufacturing and                                          estate development project in      associated facilities at Bukit     Bangalore, India.
sale of Pretensioned Spun                                             Huadu District, Guangzhou,         Jelutong, Shah Alam, Selangor.
Concrete Piles.                                                       Guangdong, China.


11/04/2006                                                                                               05/05/2006                         23/05/2006
Ground breaking ceremony of                                                                              SunInc entered into a strategic    YBhg Tan Sri Dato’ Seri (Dr)
Sunway Hoston in China is the                                                                            partnership with Goldman           Cheah Fook Ling received
beginning of the strong alliance                                                                         Sachs Strategic Investments        the prestigious award on
with Sunway Global Limited’s                                                                             (Asia) L.L.C. taking a 20%         the Corporate Governance
strategic    partner,   Zhuhai                                                                           stake in Sunway Global             “Malaysian Business Corporate
Hoston Special Material Co.                                                                              Limited, a maiden venture into     Governance Award 2005 –
Ltd., in spun pile technology.                                                                           building    materials      and     Merit Award” on behalf of
                                                                                                         manufacturing in China.            SunInc.




                                   28/06/2006                         15/07/2006                                                            14/08/2006
                                   SunCon accepted the letter of      Launch of The Sunway                                                  Joint venture agreement with
                                   award for a contract worth         Group’s       new     corporate                                       Wuhu Xin Long Machinery Co.
                                   RM154.9 million from Aston         identity. This event was                                              Ltd. to set up Sunway Xin Long
                                   Star Sdn Bhd for the execution     officiated by Dato’ Seri Rafidah                                      (Anhui) Hydraulic Co. Ltd. to
                                   and completion of building         Aziz. This new identity                                               undertake the business of
                                   works for basement B1 to B7        promises a vibrant, dynamic                                           production      and   sale   of
                                   for Solaris 2 Dutamas, located     and bold image.                                                       automotive parts, high pressure
                                   at Sri Hartamas, Kuala Lumpur.                                                                           hydraulic steel pipes and
                                                                                                                                            flexible pipes, coupling and
                                                                                                                                            adapter.




                                        Sunway Holdings Incorporated Berhad         11    annual report ‘06
Sunway Holdings Incorporated Berhad   12   annual report ‘06
                                           Chairman’s Statement

                                           Dear Shareholders,
                                           It is with pleasure that I report the performance of SunInc
                                           for this financial period, with income from major new
                                           contracts across our international businesses.

                                           Our investments made in 2005/2006 demonstrated our
                                           commitment to growth through regional expansions.
                                           Individual business units have developed overseas
                                           strategies and several have already established beachheads
                                           in selected Asian markets.

                                           In anticipation of rapid economic growth within these
                                           markets, there will be abundant demand for the
                                           technology and expertise provided by the Group, drawing
                                           on the wealth of experience we have accumulated over
                                           the last Malaysian construction boom period.

                                           On the local front, it has been a challenging period and we
                                           have consolidated our presence to reflect a leaner and
                                           more efficient organisation.

                                           Group Performance
                                           As a result of the change of the financial year end, the
                                           financial statements for the current financial period of the
                                           Group were drawn up for a period of 18 months ended 30
                                           June 2006 as compared to the period of 12 months in
                                           respect of the previous financial year ended 31 December
                                           2004.

                                           The Group’s revenue has surpassed the billion-ringgit
                                           mark, achieving RM2.1 billion for the 18 months'
                                           financial period. The Group achieved a revenue of RM1.5
                                           billion for the period of 12 months in 2004. The Group
                                           had registered a profit before tax of RM29.2 million in the
                                           18 months’ period, whilst the profit before tax in the
                                           prior year’s 12 months’ period was RM55.8 million. For
                                           the period under review, the revenue was mainly
                                           contributed by the construction, property development,
                                           trading and manufacturing divisions.

                                           Dividend
                                           The Company has paid an interim gross dividend of 3 sen
                                           per share less income tax of 28% and a final gross dividend
                                           of 2 sen per share less income tax of 28% for the financial
                                           year ended 31 December 2004 (on 13 January 2005 and
                                           25 August 2005 respectively). No dividend has been
                                           proposed or paid for the financial period ended 30 June
                                           2006.

                                           Nevertheless, the Company has adopted a dividend policy
                                           and endeavours to declare a minimum of 2.5% gross
                                           dividend to its shareholders subject to availability of
                                           distributable reserves and tax credits to frank the
                                           dividends as well as the Company’s future cash flow
                                           requirements.

                                           Corporate Milestones
                                           Our associated company, Sunway Infrastructure Berhad
                                           (“SunInfra”) had appointed Rating Agency Malaysia
                                           Berhad ("RAM") to undertake an independent rating on
Sunway Holdings Incorporated Berhad   13   annual report ‘06
Chairman’s Statement                                        (Cont’d)

the outstanding Al-Bai Bithaman Ajil Islamic Debt                     The Group contributes generously to charity
Securities ("BaIDs"). RAM had issued a rating of B3 on                organisations such as the Malaysian Liver Foundation,
the BaIDs. In view of the revised rating of the BaIDs                 Kiwanis, Malaysian Kidney Foundation and National
which rendered it to be a non-investment grade, SunInfra              Arthritis Foundation. Our contributions go beyond plain
has appointed CIMB Investment Bank Berhad (formerly                   financial support including volunteer manpower and the
known as Commerce International Merchant Bankers                      provision of venues for the activities.
Berhad) as its financial adviser to look at the overall
financial position of SunInfra and the possible                       We have also embarked on a job placement project in
restructuring of the BaIDs.                                           which students with learning disabilities are given on-the-
                                                                      job training over 6 months to smoothen their transition
SunCon has outstanding order book of RM2.1 billion in                 into the workforce. The schools selected were pre-
2005/2006, with close to RM900 million in overseas                    identified by the Ministry of Education.
countries. This further reinforces our reputation as a
world-class construction company for infrastructure and               In response to the Government’s call to rehabilitate our
“design and build” projects.                                          environment, the Group in partnership with Alam Flora,
                                                                      has also embarked on a recycling project that has resulted
Our core development to improve cost efficiency and                   in 313 tonnes of waste materials being processed. We are
optimise resources is the Shared Services Centre                      also credited by being the first developer to be recognised
initiative. Over the years, this division has significantly           by the Ministry of Housing for our efforts. The project was
contributed to the Group’s goal of returning maximum                  a joint effort together with the local Rotary Club, schools
value on our invested assets.                                         and resident associations.

Human capital has been further enhanced with a record                 With the hope of raising the quality of life among the less
number of trainings and human capital development                     fortunate, SunCon has carried out community
initiatives implemented throughout the year.                          refurbishment works in 3 selected homes. The recipients
                                                                      were House of Joy, Praise Emmanuel Children’s Home
Strategic Thrusts                                                     and Asrama Penyayang Nur Iman.

The Group continues to pursue contracts and establish                 The management also actively supports the in-house
enterprises in foreign countries. Early this year, the Group          recreational club’s activities to carry out philanthropic
partnered with Goldman Sachs Strategic Investments                    activities.
(Asia) L.L.C. in a company with business investments in
the building, construction and manufacturing industries in            Corporate Governance
China. With our deeper presence in the Asian growth
markets, I am confident that the Group will yield                     We are proud to maintain high standards of accountability
improved profits and returns to shareholders in the                   and corporate governance by keeping abreast with the
coming years.                                                         latest developments in corporate transparency, satisfying
                                                                      the requisites of today’s increasingly sophisticated
I envisage our widely publicised target of 40% overseas               investors.
revenue from the existing base of 10% to be realised
within the next 3 to 5 years.                                         With effect from 1 July 2006, the Group will prepare its
                                                                      accounts using Financial Reporting Standards (“FRS”).
Our success will be driven by our commitment to
excellence in delivering world-class products and services            Appreciation
within each market.
                                                                      I would like to welcome Datuk Abdul Malek Bin Abdul
Property development remains a profitable venture and                 Aziz as a member of the Board.
we will continue to seek landbanks in identified locations
that deliver value to our customers.                                  I wish to extend my gratitude to the Board of Directors
                                                                      for their commitment and contributions made
The 9th Malaysia Plan is expected to boost the                        throughout the period. I would also like to thank all of
construction sector resulting in a growth of 3% this year.            our colleagues for their untiring effort in propelling the
The allocation under the 9th Malaysia Plan is estimated to            Group forward.
be between RM150 billion and RM200 billion. Projects
initiated through privately financed initiatives are also
expected to be quite significant. The Group expects to see
                                                                      Yours Sincerely,
some new infrastructure and smaller-scale projects for
rural development, as well as the continuation of projects
initiated under the 8th Malaysia Plan.

Corporate Social Responsibility                                       Tan Sri Dato’ Seri (Dr) Cheah Fook Ling
                                                                      Executive Chairman
We remain committed to a policy of continuous
improvement in applying sound safety and social
                                                                      12 October 2006
standards in our dealings with all our stakeholders.


                           Sunway Holdings Incorporated Berhad   14   annual report ‘06
Penyata Pengerusi

                                                                     cukai bayaran dividen dan memenuhi keperluan aliran
Pemegang Saham yang Dihormati,                                       tunai Syarikat pada masa akan datang.

Dengan sukacitanya, saya ingin melaporkan prestasi                   Peristiwa Penting Korporat
SunInc bagi tempoh kewangan ini, dengan pendapatan                   Syarikat sekutu kami, Sunway Infrastructure Berhad
daripada kontrak besar yang baru bagi semua perniagaan               (“SunInfra”) telah melantik Rating Agency Malaysia
antarabangsa kami.                                                   Berhad ("RAM") untuk menjalankan penarafan bebas
                                                                     terhadap Sekuriti Hutang Islam Al-Bai Bithaman Ajil (Al-
Pelaburan yang kami buat pada tahun 2005/2006                        Bai Bithaman Ajil Islamic Debt Securities atau “BaIDs”)
membuktikan komitmen kami terhadap pertumbuhan                       yang belum lunas. RAM telah memberikan penarafan B3
melalui perluasan serantau. Unit-unit perniagaan telah               bagi BaIDs ini. Memandangkan penarafan BaIDs yang
menyusun strategi luar negeri dan beberapa unit sudah                diubah ini meletakkannya pada gred bukan pelaburan,
pun bertapak di beberapa pasaran Asia yang tertentu.                 SunInfra telah melantik CIMB Investment Bank Berhad
                                                                     (dahulu dikenali sebagai Commerce International
Dengan jangkaan pertumbuhan ekonomi yang pesat di                    Merchant Bankers Berhad) sebagai penasihat
pasaran-pasaran ini, permintaan yang tinggi turut dijangka           kewangannya untuk mengkaji kedudukan kewangan
bagi teknologi dan kepakaran yang disediakan oleh                    SunInfra pada keseluruhannya, dan kemungkinan
Kumpulan ini, yang diperoleh melalui pengalaman luas                 menyusun semula BaIDs.
yang kami kumpul sepanjang tempoh pertumbuhan pesat
yang lepas bagi sektor pembinaan di Malaysia.                        SunCon berjaya memperoleh pesanan semasa berjumlah
                                                                     RM2.1 bilion pada tahun 2005/2006, dengan hampir
Di pasaran tempatan pula, tempoh kewangan yang lepas                 RM900 juta di negara-negara asing. Ini memantapkan lagi
merupakan tempoh yang mencabar, dan kami telah                       reputasi kami sebagai syarikat pembinaan bertaraf dunia
mengukuhkan kedudukan kami untuk menampilkan                         bagi projek infrastruktur dan projek reka bentuk dan bina.
organisasi yang lebih kemas dan lebih cekap.
                                                                     Inisiatif Pusat Perkhidmatan Kongsi merupakan usaha
Prestasi Kumpulan                                                    teras kami untuk memperbaiki kecekapan dari segi kos
                                                                     dan mempergunakan sumber dengan sebaik-baiknya.
Oleh sebab tarikh bagi hujung tahun kewangan telah
                                                                     Sepanjang tahun-tahun yang berlalu, bahagian ini
diubah, penyata kewangan Kumpulan bagi tempoh
                                                                     menyumbang dengan banyaknya ke arah mencapai
kewangan ini telah disediakan bagi tempoh 18 bulan yang
                                                                     matlamat Kumpulan untuk mendapatkan pulangan
berakhir pada 30 Jun 2006, dan bukan 12 bulan seperti
                                                                     maksimum daripada aset pelaburan kami.
bagi tahun kewangan lepas yang berakhir pada 31
Disember 2004.
                                                                     Modal manusia diperkasa lagi dengan bilangan tinggi
                                                                     latihan dan inisiatif pembangunan modal manusia yang
Hasil Kumpulan berjaya melepasi aras sebilion ringgit
                                                                     dilaksanakan sepanjang tahun yang lepas.
sehingga mencapai RM2.1 bilion bagi tempoh kewangan
18 bulan ini. Sebagai bandingan, Kumpulan memperoleh
hasil RM1.5 bilion bagi tempoh 12 bulan tahun 2004.                  Teras Strategi
Kumpulan mencatatkan keuntungan sebelum cukai                        Kumpulan ini terus berusaha untuk mendapatkan kontrak
sebanyak RM29.2 bilion bagi tempoh 18 bulan ini,                     dan menubuhkan perusahaan di negara-negara asing. Pada
manakala keuntungan sebelum cukai bagi tempoh 12                     awal tahun ini, Kumpulan menjalinkan perkongsian
bulan sebelum itu ialah RM55.8 juta. Bagi tempoh yang                dengan Goldman Sachs Strategic Investments (Asia)
ditinjau ini, hasil diperoleh terutamanya daripada                   L.L.C. dalam syarikat yang membuat pelaburan
bahagian pembinaan, perdagangan dan pembangunan                      perniagaan dalam industri pembangunan, pembinaan dan
harta.                                                               perkilangan di negara China. Dengan penglibatan kami
                                                                     yang lebih ketara di pasaran-pasaran Asia yang sedang
Dividen                                                              berkembang maju, saya yakin bahawa Kumpulan ini akan
                                                                     memperoleh keuntungan yang lebih besar dan
Syarikat telah membayar dividen kasar interim sebanyak 3
                                                                     memberikan pulangan yang lebih lumayan kepada
sen sesaham ditolak cukai pendapatan sebanyak 28% dan
                                                                     pemegang saham pada tahun-tahun yang akan datang.
dividen kasar akhir sebanyak 2 sen sesaham ditolak cukai
pendapatan sebanyak 28% bagi tahun kewangan yang
                                                                     Saya menjangka bahawa sasaran kami yang telah
berakhir pada 31 Disember 2004, masing-masing pada 13
                                                                     dihebahkan dengan luasnya untuk meningkatkan hasil
Januari 2005 dan 25 Ogos 2005. Dividen tidak
                                                                     luar negeri kepada 40% daripada nilai dasar 10% pada
dicadangkan mahupun dibayar bagi tempoh kewangan
                                                                     masa ini akan dicapai dalam masa 3 hingga 5 tahun lagi.
yang berakhir pada 30 Jun 2006.
                                                                     Kejayaan kami akan didorong oleh komitmen kami
Namun demikian, Syarikat mengamalkan dasar
                                                                     terhadap kecemerlangan dalam menyediakan produk dan
pembayaran       dividen     dan    berikhtiar   untuk
                                                                     perkhidmatan bertaraf dunia di setiap pasaran.
mengisytiharkan dividen kasar sekurang-kurangnya 2.5%
kepada pemegang sahamnya, sekiranya ada rizab boleh
agih dan kredit cukai yang secukupnya untuk menjelaskan


                          Sunway Holdings Incorporated Berhad   15   annual report ‘06
Penyata Pengerusi                               (Sambungan)


Pembangunan harta tetap menjadi usaha niaga yang                     Tadbir Urus Korporat
menguntungkan, dan kami akan terus mencari simpanan
tanah di lokasi-lokasi yang telah dikenal pasti, yang                Kami berasa bangga kerana mampu mengekalkan taraf
mampu memberikan nilai kepada para pelanggan kami.                   kebertanggungjawaban dan tadbir urus korporat yang
                                                                     tinggi, dengan mengikuti perkembangan terkini dari segi
Rancangan Malaysia Ke-9 dijangka akan memajukan                      ketelusan korporat, di samping memenuhi keperluan para
sektor pembinaan sehingga mencapai pertumbuhan 3%                    pelabur yang semakin bijaksana hari ini.
pada tahun ini. Peruntukan di bawah Rancangan Malaysia
Ke-9 ini dianggarkan antara RM150 bilion hingga RM200                Mulai 1 Julai 2006, Kumpulan akan menyediakan
bilion. Agak banyak projek juga dijangka akan dijalankan             akaunnya dengan menggunakan Piawaian Pelaporan
melalui inisiatif yang dibiayai oleh pihak swasta.                   Kewangan (Financial Reporting Standards atau ‘FRS’).
Kumpulan ini berharap untuk menyaksikan beberapa
projek infrastruktur yang baru dan projek kecil-kecilan              Penghargaan
bagi pembangunan luar bandar, di samping penerusan
projek-projek yang telah dimulakan di bawah Rancangan                Saya ingin mengalu-alukan penyertaan Datuk Abdul
Malaysia Ke-8.                                                       Malek Bin Abdul Aziz dalam Lembaga Pengarah kami.

                                                                     Saya juga ingin melahirkan penghargaan saya kepada
Tanggungjawab Sosial Korporat                                        Lembaga Pengarah atas komitmen dan sumbangan
Kami tetap komited terhadap dasar peningkatan                        mereka sepanjang tempoh yang ditinjau ini. Akhir kata,
berterusan apabila mengamalkan piawaian keselamatan                  terima kasih kepada semua rakan kerja atas usaha anda
dan sosial yang baik dalam urusan kami dengan pihak-                 yang tidak mengenal penat dalam memarakan Kumpulan
pihak berkepentingan.                                                ini.

Kumpulan ini menyumbang dengan banyaknya kepada
organisasi amal seperti Yayasan Hepar Malaysia, Kiwanis,
                                                                     Yang Ikhlas,
Yayasan Buah Pinggang Malaysia dan Yayasan Artritis
Kebangsaan. Sumbangan kami tidak sekadar berupa
bantuan kewangan semata-mata, tetapi juga merangkumi
tenaga sukarelawan dan tempat untuk mengadakan
aktiviti.                                                            Tan Sri Dato’ Seri (Dr) Cheah Fook Ling
                                                                     Pengerusi Eksekutif
Kami juga telah memulakan projek penempatan
pekerjaan yang memberikan latihan sambil bekerja selama              12 Oktober 2006
6 bulan kepada para pelajar yang mempunyai daya
pembelajaran yang lemah, untuk memudahkan proses
peralihan mereka apabila menyertai tenaga kerja. Sekolah-
sekolah yang terpilih telah dikenal pasti oleh Kementerian
Pendidikan.

Sebagai menyahut seruan Kerajaan untuk memulihkan
alam sekitar kita, Kumpulan ini memulakan projek kitar
semula dengan kerjasama Alam Flora, dan melalui projek
ini, 313 tan bahan buangan telah pun diproses. Kami juga
merupakan pemaju pertama yang diiktiraf oleh
Kementerian Perumahan atas usaha kami ini. Projek ini
dijayakan melalui usaha sama dengan Kelab Rotary,
beberapa sekolah dan beberapa persatuan penduduk.

Dengan harapan untuk meningkatkan mutu hidup di
kalangan golongan yang kurang bernasib baik, SunCon
menjalankan kerja pembaharuan komuniti di 3 asrama.
Penerimanya ialah House of Joy, Praise Emmanuel
Children's Home dan Asrama Penyayang Nur Iman.

Pihak pengurusan juga menyokong kelab rekreasi Syarikat
dalam melaksanakan aktiviti derma.




                          Sunway Holdings Incorporated Berhad   16   annual report ‘06
Managing Director’s Review

The current year is an eventful one for SunInc. The            stability and a foundation for the development of
Group has acted on several initiatives in efforts to           technology, skilled expertise and operational efficiency.
reinvent its business operations while keeping true to its
core competencies. We have experienced some measure            In the current financial period, SunInc Group continued
of success in these endeavours. However, while there are       to develop its business operations with generally
many reasons to be optimistic, there remain several            satisfactory results.      Profits in the trading and
challenges to meet and hurdles to overcome.                    manufacturing and property development divisions
                                                               improved while the construction and building materials
SunInc continues to focus on its core businesses of            divisions saw a reduction in profits as a consequence of
construction, property development, trading and                the slowdown in the local construction industry. This
manufacturing, building materials and quarry which are         financial period also saw the SunInc Group back into the
synergistically linked to one another. This allows focus of    quarry industry after an absence of 6 years, with
management attention on specific areas and the further         acquisitions of 5 quarries in West Malaysia.
development of expertise in our business operations with
minimum disruption. Although the business environment          SunInc’s aim is controlled growth. It aims to offer
we operate in is rapidly changing, our extensive customer,     investors a steadily growing return over a medium term. It
supplier and partnership networks make it possible to          believes the key to this objective is controlled risk-taking
react flexibly and quickly.                                    and focused operations that will offer a basis for a stable
                                                               cash flow and a consistent ability to earn profits.
As SunInc’s main competence areas have long been
defined, it has achieved a strong position in the markets it   SunCon, SunInc’s wholly-owned subsidiary, is already
operates in. It now aims to expand this further into the       known as one of the leading construction companies in
international arena. The Group has decided to implement        Malaysia. As it is armed with an impressive track record,
a two-pronged growth strategy by organically growing its       it took the bold move of securing sizable contracts in
local operations and by investing and expanding overseas.      several countries, notably in India, Abu Dhabi and as far as
New investments overseas will be spearheaded by                Trinidad and Tobago in the Caribbean. The strategy is
businesses within our core competencies. This enables us       similarly adopted through our other business operations
to tap into burgeoning opportunities provided by high          such as the building materials division with investments in
growth economies in selected countries. At the same            trading and manufacturing operations in China.
time, our local operations will provide a measure of




Kuala Lumpur Convention Centre
Managing Director’s Review                                                            (Cont’d)


                                                                               achieving a frontrunner position quickly. SunInc needs to
                                                                               be open-minded to increase the chances of its success in
                                                                               these endeavours. Towards this objective, a strategic
                                                                               partnership with Goldman Sachs Strategic Investments
                                                                               (Asia) L.L.C. was established through its subscription of a
                                                                               20% equity stake in Sunway Global Limited. This
                                                                               positions the company for growth and expansion in China
                                                                               in the near future.

                                                                               While we plan for the continued growth for the SunInc
                                                                               Group, a major challenge continues to demand our
                                                                               attention. This being the proposed restructuring or
                                                                               settlement of the outstanding Al-Bai Bithamam Ajil
                                                                               Islamic Bonds (“BaIDs”) issued by Sistem Lingkaran-
                                                                               Lebuhraya Kajang Sdn Bhd, the wholly-owned subsidiary
                                                                               of our associated company, SunInfra. SunInfra is presently
Signing ceremony for joint venture with Wuhu Xin Long Machinery Co.            exploring various options to seek a settlement proposal for
Ltd. to set up Sunway Xin Long (Anhui) Hydraulic Co. Ltd., Anhui China.        the outstanding BaIDs that would be acceptable to all
                                                                               parties.
Particular attention is given to our businesses in India and
China as the bulk of our foreign investments have been                         SunInc intends to further develop its business operations
directed to these 2 countries. We believe that its rapid                       both locally as well as overseas with the overall objective
economic growth and huge markets offer SunInc                                  of achieving profit growth and enhancing shareholders’
tremendous opportunities for profit. To better focus our                       value. Towards this, it continues to explore new business
                                                                               ventures and markets. It will continue to seek strategic
                                                                               partnerships to invest in high growth industries and
                                                                               economies on an international scale.




                                                                               Yau Kok Seng
                                                                               Managing Director




Venetian Resorts Project Site, Macau.

operations and planning for investments in that country,
we have placed our China business operations into a
dedicated subsidiary incorporated in Hong Kong, called
Sunway Global Limited. We intend to use our knowledge
of the relevant technologies, combined with the low cost
resource environment in China and our extensive
international market network to give us an edge in




                                Sunway Holdings Incorporated Berhad       18   annual report ‘06
Finance Director’s Review
Amidst a contracting domestic construction industry,                  These include the impairment of assets held for resale
rising interest rates, escalating raw materials costs and             properties, plant and equipment of RM8.4 million and
adoption of new financial reporting guidelines, SunInc                provision for diminution in value of investment in
Group posted a net loss of RM11.3 million on revenue of               SunInfra of RM14.8 million. Notwithstanding the effect
RM2.1 billion for the 18 months’ financial period ended               of these items, the Group would have reported profit
30 June 2006. Profit from operations for the period stood             from operations of RM146.5 million.
at RM123.3 million (2004: RM98.8 million) but was
adversely affected by major non-recurring expenses.


 CONSOLIDATED INCOME STATEMENTS
                                                                                          18 months            12 months
                                                                                              2006                 2004
                                                                                          RM million           RM million
 Revenue                                                                                      2,057                1,497
 Cost of sales                                                                               (1,667)              (1,207)
 Gross profit                                                                                    390                  290
 Other operating income                                                                           48                   19
 Operating expenses                                                                             (291)                (201)
 Impairment losses                                                                               (24)                  (9)
 Profit from operations                                                                          123                    99
 Finance cost                                                                                    (54)                  (27)
 Share of results of associated companies                                                        (40)                  (16)
 Profit from ordinary activities before tax                                                       29                    56
 Tax expense                                                                                     (30)                    2
 (Loss)/profit after tax                                                                          (1)                   58
 Minority interest                                                                               (10)                  (19)
 Net (loss)/profit for the financial period/year                                                 (11)                   39

 Basic (loss)/earnings per share (sen)                                                         (2.09)                 8.08
 Operating profit margin                                                                         6%                    7%
 Profit from ordinary activities before tax over revenue                                         1%                    4%
 Net (loss)/profit over revenue                                                                 (1%)                   3%


SEGMENTAL FINANCIAL REVIEW
Year 2005 was a challenging period for the Malaysian                  The construction division’s profits were comparatively
construction industry with the sector shrinking 1.6%. The             lower than that reported in the previous financial year as
performance of the Group’s construction and building                  most of the current projects are in the early stages of
materials divisions deteriorated in tandem with the overall           completion. Therefore, profits had not been recognised as
market sentiment. Nonetheless, the Group’s construction               the percentage of completion was below the recognition
arm remained profitable and reported profit from                      threshold.
operations of RM62.8 million on the back of revenue of
RM1.3 billion (2004: RM82.3 million and RM1.1 billion).




* 18 months ended 30 June 2006

                           Sunway Holdings Incorporated Berhad   19   annual report ‘06
Finance Director’s Review                                             (Cont’d)




Despite the competitive environment, the construction                competitive domestic environment and a growing number
division had remained resilient and managed to secure                of opportunities abroad afforded by the strengthening
new projects amounting to RM2.1 billion during the                   SunCon brand.
financial period. With an outstanding order book as at 30
June 2006 of RM2.1 billion, the division is expected to              Disregarding the temporary setbacks of the 2 divisions,
continue to perform well in the coming years.                        stellar performances were exhibited by the trading and
                                                                     manufacturing as well as the property development
Due to the strong correlation with the construction                  divisions. The trading and manufacturing division
industry, the Group’s building materials division similarly          registered profits from operations of RM20.7 million on
reported lower profits of RM2.3 million on revenue of                revenue of RM312.1 million (2004: RM9.1 million and
RM102.7 million (2004: RM13.7 million and RM88.3                     RM194.0 million). On an annualised basis, profit from
million). The division suffered from a combination of                operations surged 51.6% and revenue was up by 7.3%.
lower demand due to sluggish construction activities and             The improved performance is largely the product of the
higher raw materials costs resulting from higher crude oil           division’s successful overseas market penetration strategy
prices. The Group had, in the financial period, also                 especially to Singapore, China and Indonesia with 39.5%
incurred substantial relocation costs to transfer two                of the division’s profits derived from these foreign
Interlocking Concrete Pavers (“ICP”) manufacturing                   subsidiaries.
plants to Dongguan and Shanghai as part of the Group’s
plan to diversify operations geographically. Furthermore,            Meanwhile, the property development division notched
significant costs were incurred to set up a spun pile                revenue of RM163.0 million and profit from operations of
manufacturing facility in Zhuhai, China. The Group                   RM36.4 million for financial period 2006 (2004:
opines that there is a huge untapped market for both ICP             RM149.9 million and RM18.5 million). On an annualised
and spun piles in China and the Group foresees these                 basis, the increase in profit from operations was a
operations to demonstrate robust growth in years to                  commendable 31.2% mainly riding on the success of new
come.                                                                launches in Sunway Batu Caves and Bangi Town Center.

In the nearer future, the Group anticipates performance              In the period under review, the Group had re-entered the
of both construction and building materials divisions to             quarrying industry in Malaysia via the acquisition of
improve with new construction projects being rolled out              Sunway Quarry Industries Sdn Bhd. The newly acquired
under the 9th Malaysia Plan and Private Finance                      company contributed favourably to the Group’s results by
Initiatives (“PFI”). Budget 2007 had already allocated               generating revenue of RM159.7 million and profit from
RM27.5 billion for projects under the 9th Malaysia Plan              operations of RM4.7 million. With the Group planning
with PFI projects valuing RM4.0 billion expected to take             new quarry operations both locally and abroad, this
off simultaneously. The Group eagerly awaits the                     division is expected to be a major future growth engine.
implementation of the 9th Malaysia Plan and PFI projects
as they are widely expected to be the catalysts to revive            The Group’s associated company, SunInfra incurred
the flagging construction and other related industries.              further losses for the financial period ended 2006 with the
Moving forward, it is also envisioned that a significant             Group sharing losses of RM43.9 million. As part of the
proportion of the construction division’s revenue will be            efforts to improve the performance of SunInfra, the
derived from overseas ventures in view of the increasingly           Group has hired a prominent consulting firm to advise on
                                                                     the restructuring of SunInfra and is in the final stages of
                                                                     negotiations with bondholders.




                          Sunway Holdings Incorporated Berhad   20   annual report ‘06
Finance Director’s Review                                              (Cont’d)


Early Adoption of IC 112, Consolidation-                              Under the definitions set forth in IC 112, ALP is deemed
                                                                      to have met the definition of a “Special Purpose Entity”
Special Purpose Entities                                              and is to be considered as part of the Group. Accordingly,
In accordance with the Group’s policy of promoting                    ALP’s results were consolidated and this resulted in a
better corporate governance and accountability to                     prior year adjustment of RM39.4 million arising mainly
shareholders, the Group has chosen to early adopt                     from the reversal of gains recognised on disposal of the
financial reporting guidelines that are expected to have a            assets to ALP and consolidation of prior year ALP losses.
material impact on the Group’s financial performance. A
consequence of this policy was the adoption of IC                     Investment in Sunway Global Limited by
Interpretation 112, Consolidation – Special Purpose                   Goldman Sachs Strategic Investments
Entities (“IC 112”) for the financial period 2006, in                 (Asia) L.L.C. (“Goldman Sachs”)
advance of regulatory requirements.
                                                                      A notable development in the year was the acquisition of
In 2004, the Group completed an asset-backed                          a 20% stake by Goldman Sachs, a subsidiary of Goldman
securitisation exercise involving the disposals of the entire         Sachs Group Inc. in Sunway Global Limited, the holding
equity interest of Coral White Sdn Bhd (“CWSB”), a                    company for the Group’s China investments. The alliance
wholly-owned indirect subsidiary of the Group, and a                  with Goldman Sachs, who already has a strong business
portfolio of commercial and residential properties to ABS             presence in various industries in China, would benefit the
Land & Properties Berhad (“ALP”) for a total sale                     Group by providing access to financial resources, business
consideration of RM205.6 million which was satisfied by               networks and human capital.
RM84.3 million cash and the issuance of RM121.3
million nominal value of subordinated class asset-backed
securitisation notes.


  CONSOLIDATED CASH FLOW STATEMENTS
                                                                                          18 months             12 months
                                                                                              2006                  2004
                                                                                          RM million            RM million
  Cash from operations                                                                          188                     (4)
  Tax paid                                                                                      (36)                   (24)
  Tax refund                                                                                       9                    22
  Interest received                                                                                4                     5
  Dividends received from other investments                                                        0                     1
  Net cash flow from operating activities                                                        165                      0
  Net cash flow from investing activities                                                       (105)                  (131)
  Net cash flow from financing activities                                                         22                    133
  Net increase in cash and cash equivalents                                                        82                     2



CASH FLOW STATEMENTS REVIEW
The increase in cash generated from operations was                    borrowings to a 6-year repayment term. In addition,
primarily due to the improved collection from customers               Goldman Sachs granted RM25 million borrowings
and settlement of long outstanding debts.                             specifically for our investments in China. As at the end of
                                                                      financial period 2006, the Group’s gearing ratio edged up
The net cash outflow from investing activities was                    to 0.89 times compared to 0.82 times in 2004, mainly as
primarily due to the acquisition of Sunway Quarry                     a consequence of reconsolidation of borrowings of ALP.
Industries with a cash consideration of RM54.9 million as
well as capital expenditure incurred for the Group’s
expansion to China.

As for financing activities, the Group obtained a
syndicated term loan facility of RM360 million from a                 Mark Victor Rozario
consortium of banks in early 2005. Proceeds from the                  Finance Director
facility were used to restructure the Group’s short-term




                           Sunway Holdings Incorporated Berhad   21   annual report ‘06
Economic Review




                                                                                         Ministry of Finance, Putrajaya


Construction Sector                                                  activities. The residential sub-sector is expected to expand
                                                                     at a moderate rate following the strong expansion in the
                                                                     last few years, while the non-residential segment would
The development expenditure in 2006 that coincides
                                                                     continue to improve, benefiting from the favourable
with the first year of the 9th Malaysia Plan has been
                                                                     business environment which has resulted in high
budgeted at RM33.5 billion, up 9.8% from RM30.5
                                                                     occupancy rates of retail and office space.
billion in 2005.
                                                                     (Source: RHB 2006 Market Outlook and Strategy)
There is a sense of gradual shift in the Government’s focus
from predominantly small-scale projects, to a combination            However, the outlook for the 9th Malaysia Plan 2006 to
of small-scale and mid-sized projects. In the 2006 Budget            2010 is much better. The construction industry is
announced in end-September 2005, for instance, a hefty               expected to grow by an average of 3.5% per annum as
sum of RM1.9 billion has been allocated for                          compared to only 0.5% in the 8th Malaysia Plan.
“environmental preservation projects consisting of works
in relation to the prevention of coastal erosion, drainage           With the RM220 billion allocated under the 9th Malaysia
and flood mitigation, improvement of river and river                 Plan for overall development, there are encouraging signs
estuaries, repair and construction of sewerage plants, and           that the construction industry will be stimulated to
solid waste management.” The mid-sized segment is                    expand at an even faster pace.
where the big boys will dominate and could walk away
with more decent margins.                                            The Government’s policy to step up the progress in the
                                                                     application of Industrial Building System will also add to
After 2 consecutive years of decline, the construction               the momentum of expansion in the construction industry.
sector is expected to turn around and register a positive            SunInc will have to be proactive and to fully utilise the
growth of 1%, led mainly by the improvement in the civil             opportunities that are provided under the 9th Malaysia
engineering sub-sector. The civil engineering sub-sector             Plan. At the same time, SunInc will have to take advantage
would be supported by higher construction activity in the            of the challenges and opportunities abroad to benefit on
oil and gas industry as well as in public projects with the          all fronts.
commencement of new projects under the 9th Malaysia
Plan. Meanwhile, the residential and non-residential sub-            Indeed, SunInc will have to increasingly think and act
sectors are expected to expand further supported by the              global in order to progress more purposefully.
attractive financing conditions and brisk business




                          Sunway Holdings Incorporated Berhad   22   annual report ‘06
   Motivating Leadership

   One of SunInc’s core values is motivating
   leadership, whereby we believe in leading by
   example, driving positive efforts and maintaining
   clear focus on excelling in all our core businesses.
   The key role of the Board of Directors is to
   motivate and lead the management to
   continuously enhance stakeholders’ value.




From left to right:   Kwan Foh Kwai, Dato' Tan Kia Loke, Yau Kok Seng, Datuk Low Seng Kuan, Wong Chin Mun, Tan Sri Dato' Seri (Dr) Cheah Fook Ling,
                      Datuk Abdul Malek Bin Abdul Aziz, Dato' Chew Chee Kin, Mark Victor Rozario.




                                   Sunway Holdings Incorporated Berhad     23   annual report ‘06
Profile of Board of Directors

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


Founder of The Sunway Group and Chairman of SunInc, SunCity and SunInfra which are a conglomerate of companies that
are listed individually on the Main Board of Bursa Malaysia Securities Berhad.

Aged 61 and a Certified Practising Accountant by profession, he was appointed a Board Member of Financial Reporting
Foundation by the Minister of Finance in July 1997. Sits on the Board of The National Kidney Foundation and the Board
of Trustees of Malaysian Liver Foundation. In 1995, appointed a Member of Malaysian Business Council and in 1996, was
honoured with the Chairmanship of Malaysian Industry-Government Group for High Technology (“MIGHT”) for
Construction and Housing, besides the accolade of Property Man of the Year (Malaysia) in 1993 and CEO of the Year
(Malaysia) in 1996. The Minister of Tourism Malaysia appointed him an EXCO Member to Malaysian Tourism Action
Council. In recognition of his outstanding contribution to education, the Minister of Education appointed him to the Higher
Education Council in 1998. Was conferred Honorary Doctorates by 8 leading universities worldwide and in September
2006, was appointed as the Foundation Chancellor of Sunway University College by His Royal Highness Sultan of Selangor.

Appointed to the Board of SunInc on 29 December 1979 and also serves as Chairman of the Management and Employees'
Share Option Scheme (“ESOS”) Committees and a Member of the Remuneration Committee.

Current directorships in other public companies include SunCity, SunInfra and Federation of Public Listed Companies
Berhad.

Attended 7 out of the 8 Board Meetings held in the financial period.


Dato' Chew Chee Kin
President, Non-Independent Executive Director
Malaysian


Aged 60 and graduated with a Bachelor of Economics (Honours) Degree from University of Malaya. Attended the Program
in Management Development (“PMD”) at the Harvard Business School in 1980.

Joined SunInc in 1981 as Group General Manager (Operations) and was promoted to Deputy Group Managing Director
(Operations) in 1989. In 1995, was promoted to Group Managing Director and to Group President in 1999. Prior to joining
SunInc, was the General Manager of UMW (Malaya) Sdn Bhd where he had first joined as a Trainee Executive. Has more
than 20 years' experience in general management, quarrying, construction, building materials, trading and manufacturing
businesses.

Appointed to the Board of SunInc on 14 July 1983 and also serves as Chairman of the Strategic Direction Committee and
a Member of the Management and ESOS Committees.

Current directorship in other public company includes Gopeng Berhad.

Attended all of the 8 Board Meetings held in the financial period.




                          Sunway Holdings Incorporated Berhad   24   annual report ‘06
Profile of Board of Directors                                                 (Cont’d)


Yau Kok Seng
Managing Director, Non-Independent Executive Director
Malaysian


Aged 46 and a Chartered Accountant by profession with more than 20 years of experience in auditing, accounting, corporate
finance and general management. Prior to joining SunInc, was with Ernst & Young, an international accounting firm, where
he qualified as a Certified Public Accountant. In 1988, was posted to its London office for 3 years.

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

Appointed to the Board of SunInc on 1 September 1995 and also serves as Chairman of the Risk Management Committee
and a Member of the Management, ESOS, Audit and Strategic Direction Committees.

Current directorships in other public companies include SunInfra, Gopeng Berhad and Federation of Public Listed
Companies Berhad.

Attended all of the 8 Board Meetings held in the financial period.


Mark Victor Rozario
Finance Director, Non-Independent Executive Director
Malaysian


Aged 42 and a Chartered Accountant by profession with 20 years of experience in auditing, accounting and corporate
finance.

After obtaining a BSc (Econs) from the London School of Economics, joined KPMG Peat Marwick, London where he
qualified as a Chartered Accountant and worked for 5 years in a Banking and Finance audit department. In 1991, joined
the internal audit division of the Paris headquarters of Schlumberger Limited, a global oilfield services group. His last
position in Schlumberger was the Financial Controller of the East Asia Division before joining SunInc in 1997.

Represents Federation of Public Listed Companies in several working groups of the Malaysian Accounting Standards Board.
A Member of the Malaysian Institute of Accountants and a Fellow of the Institute of Chartered Accountants in England and
Wales.

Prior to appointment as Finance Director of SunInc, was the Senior General Manager - Group Finance and Treasury.

Appointed to the Board of SunInc on 1 March 2002 and also serves as a Member of the Management, Risk Management
and Strategic Direction Committees.

Has no directorships in other public companies.

Attended all of the 8 Board Meetings held in the financial period.


Dato' Tan Kia Loke
Non-Independent Non-Executive Director
Malaysian


Aged 56 and attained a Bachelor of Science (Honours) Degree in Civil Engineering from University of Strathclyde, United
Kingdom in 1977. A Registered Professional Engineer with the Board of Engineers, Malaysia, a Fellow of the Institute of
Engineers, Malaysia and Honorary Advisor of the Master Builders Association of Malaysia.

Joined SunCon in 1981 as Project Manager to spearhead the formation of the construction arm within the SunInc Group
and has now more than 28 years' experience in the construction industry.

Appointed to the Board of SunInc on 15 February 1993 and also serves as a Member of the Management, ESOS and
Strategic Direction Committees.

Current directorships in other public companies include SunInfra and Malaysian South-South Corporation Berhad.

Attended all of the 8 Board Meetings held in the financial period.


                          Sunway Holdings Incorporated Berhad   25   annual report ‘06
Profile of Board of Directors                                                 (Cont’d)


Kwan Foh Kwai
Non-Independent Non-Executive Director
Malaysian


Aged 54 and holds a Bachelor of Engineering (Civil) (Honours) Degree from University of Malaya in 1977, and is the Vice
President of the Master Builders Association of Malaysia.

Began his career as a contract engineer with the Department of Public Works, Ministry of Works for 3 years and was attached
to the East-West Highway project. He then moved to Promet Construction Sdn Bhd as a Site Manager. Following this, he
joined Alam Baru Sdn Bhd, a Class "A" Contractor as General Manager. Joined Taisei Corporation of Japan in 1986 and his
last position was General Manager of Taisei (Malaysia) Sdn Bhd.

On 1 October 1996, joined SunCon as an Executive Director. In June 2001, was promoted to Managing Director of
SunCon, which has now been delisted from Bursa Malaysia Securities Berhad and converted to a private limited company.

Appointed to the Board of SunInc on 8 January 2004 and also serves as a Member of the Risk Management and Strategic
Direction Committees.

Has no directorships in other public companies.

Attended 7 out of the 8 Board Meetings held in the financial period.


Wong Chin Mun
Senior Independent Non-Executive Director
Malaysian


Aged 62 and graduated with Bachelor of Business (Accounting) Degree and Bachelor of Business (Secretarial
Administration) Degree from Curtin University, Australia in 1972. A Fellow of the Australian Society of Certified Practising
Accountants and Chartered Secretaries and Administrators (UK). Also a Member of the Malaysian Institute of Accountants.
Attended the Senior Executives Program at International Management Imede Development (“IMD”) at Lausanne,
Switzerland in 1982. Also attended JUSE International Program for TQC for Top Management in Tokyo by Japanese Union
of Scientists and Engineers in 1993.

Joined Nylex (Malaysia) Berhad ("Nylex") as the Financial Controller/Company Secretary in January 1976 and became the
first local General Manager/Director of Nylex in 1980. Was promoted to the position of Managing Director in 1985 and left
Nylex at the end of June 1994 to found TEC Asia Centre, an international organisation which aims to help Chief Executive
Officers manage change and grow their businesses. Had served on the Board of Trustees of the Malaysian Rubber Export
Promotion Council from 2000 to 2002.

Appointed to the Board of SunInc on 8 September 1994 and also serves as Chairman of the Audit, Nomination and
Remuneration Committees. Appointed as the Senior Independent Non-Executive Director on 6 August 2001.

Current directorship in other public company includes Esthetics International Group Berhad.

Attended all of the 8 Board Meetings held in the financial period.




                          Sunway Holdings Incorporated Berhad   26   annual report ‘06
Profile of Board of Directors                                                                  (Cont’d)


Datuk Low Seng Kuan
Independent Non-Executive Director
Malaysian


Aged 59 and a Chartered Accountant by profession. A Member of the professional accountants' organisation, the Malaysian
Institute of Accountants and has more than 30 years' experience in the manufacturing industry. Graduated from Footscray
Institute of Technology (Victoria University) in Business Studies (Accountancy) and the Royal Melbourne Institute of
Technology (“RMIT”) in Industrial Accountancy.

Currently, the Executive Director of Malaysian Sheet Glass Sdn Bhd. Serves on the board of a number of private and
government-linked corporations. Former President of the Federation of Malaysian Manufacturers (“FMM”) and is currently
the Vice-President. Under the FMM, he is Chairman of TradeNex.com (involving in information communication
technology) and the FMM Institute of Manufacturing (involving in the training and education). Also a Member of the
National Economic Action Council (“NEAC”), the National Economic Consultative Council II (“NECC II”) and Malaysian
Industrial Development Authority (“MIDA”).

Appointed to the Board of SunInc on 12 April 2001 and also serves as a Member of the Audit, Nomination and
Remuneration Committees.

Current directorships in other public companies include Pos Malaysia Berhad, Rosettanet Malaysia Berhad and Logos
Institute Berhad.

Attended all of the 8 Board Meetings held in the financial period.


Datuk Abdul Malek Bin Abdul Aziz
Independent Non-Executive Director
Malaysian


Aged 69 and graduated with a LLB (Honours) Degree from University of Singapore. Retired as a Superscale "A" Senior
Deputy Secretary-General in the Prime Minister's Department in the year 1991 and had recently retired as the Chairman
of Konsortium ABASS Sdn Bhd.

Appointed to the Board of SunInc on 13 March 2006 as Independent Non-Executive Director and also serves as a Member
of the Audit and Nomination Committees.

Current directorships in other public companies include Negara Properties Berhad, Linear Corporation Berhad and NCB
Holdings Berhad.

Attended 1 Board Meeting held in the financial period since his appointment.


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 SunInc.

2.   Conflict of Interest
     (a) Tan Sri Dato' Seri (Dr) Cheah Fook Ling is a Director and Major Shareholder of SunCity Group, whose principal activity is property development.
         He has deemed interest in SunwayMas and its subsidiaries via SunInc, which are involved in the similar business as SunCity Group.

     (b) Dato' Chew Chee Kin is a Director and shareholder of SunInc. He is also a Director and shareholder of Sunway Global Limited, a 60% owned
         subsidiary of SunInc, whose principal activity is investment holding and provision of management services.

     (c) Yau Kok Seng is a Director and shareholder of SunInc. He is also a Director and shareholder of Sunway Global Limited, a 60% owned subsidiary
         of SunInc, whose principal activity is investment holding and provision of management services.

     (d) Mark Victor Rozario is a Director and shareholder of SunInc. He is also a Director and shareholder of Sunway Global Limited, a 60% owned
         subsidiary of SunInc, whose principal activity is investment holding and provision of management services.

     Save as disclosed, none of the other Directors has any conflict of interest with SunInc 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.



                                  Sunway Holdings Incorporated Berhad          27    annual report ‘06
Innovative Products
and Services




                                                                         Kuala Lumpur Convention Centre
          Sunway Holdings Incorporated Berhad   28   annual report ‘06
Construction
                          SunInc's construction division, SunCon offers complete turnkey, design and construction services,
                          with prominent recognition in the fields of building construction, civil engineering, infrastructure,
                          mechanical and electrical engineering, as well as machinery and site equipment rental. Recent
                          additions to the division including precast, piling and stone materials have further strengthened its
                          capability as an integrated builder in Malaysia and the region.

                          In recognition of its excellence in construction, SunCon was awarded Builder of the Year in 2005 and
                          2003 by the Construction Industry Development Board of Malaysia.




                                                                           Revenue (RM ’000)                PBT (RM ’000)
                                                                     1,271,184
                                                                                 1,055,317 1,064,887

                                                                                                                77,910   83,846

                                                                                                       58,987




                                                                         2006*    2004      2003       2006*    2004     2003
                                                                     *18 months ended 30 June 2006


                                                                Growth Drivers:
                                                                     The commitment to the pursuit of all-rounded management
                                                                     excellence in construction from professionalism, innovation
                                                                     and dedication to responsible corporate citizenship.
Kwan Foh Kwai                  Dato’ Tan Kia Loke
Managing Director              Senior Managing Director              Despite a decline in the availability of local construction
                                                                     projects, the division had RM2.1 billion outstanding order
                                                                     book in the 18 months’ period ended 30 June 2006, of which
                                                                     RM1.2 billion was from domestic projects and RM900
"Our passion to deliver total solutions sets us apart                million from overseas projects. This is in line with the
from the competition. As we embrace an ever-changing                 division's regional expansion plan, which targets a turnover of
environment and expanding our business globally, we                  40% from overseas projects in the near future. The division is
reckon the importance of a lean learning culture to                  also set towards achieving another milestone in the 2nd half
continuously improve our business processes which                    of year 2006, with plans to secure its first project in the
ultimately translates into improved returns to our                   Middle East.
shareholders. That remains our forte in today's
challenging business world.1"                                   2006 Milestones:
                                                                     Completion of the design and construction of the RM550
                                                                     million Kuala Lumpur Convention and Exhibition Centre.
     Kuala Lumpur Convention
        and Exhibition Centre,                                       Completion of the RM193 million, 571 room Traders Hotel,
                     Malaysia.
                                                                     Kuala Lumpur.

                                                                     Construction of 83 units of high-end residential bungalows in
                                                                     Mont Kiara, Kuala Lumpur.

                                                                     Awarded contract for Package 3 of the Kuala Lumpur-
           22-storey Ministry of                                     Putrajaya Highway, valued at RM165 million.
            Legal Affairs Tower,
           Trinidad and Tobago.                                      Awarded contract for RM155 million from Aston Star Sdn
                                                                     Bhd for the construction of the 7-storey basement of a
                                                                     commercial building, Solaris 2 Dutamas, located in Sri
                                                                     Hartamas, Kuala Lumpur.

                                                                     Secured 2 highway projects from the National Highways
         4 laning of Km 495 to                                       Authority of India which form part of the East West Corridor
     Km 515 including Belgaum
    Bypass of NH-4 in the State
                                                                     India, in the States of Uttar Pradesh and Rajasthan,
            of Karnataka, India.                                     amounting to RM695 million.

                                                                     Awarded contract for RM220 million for the construction of
                                                                     the 22-storey Ministry of Legal Affairs Tower in Trinidad and
                                                                     Tobago.


                              Sunway Holdings Incorporated Berhad   29     annual report ‘06
Property Development
                     SunwayMas, the property arm of the SunInc Group aspires to expand its property development
                     business through acquiring more development lands in the Klang Valley. We will continue to focus
                     on mixed commercial and residential properties as there is strong demand for such properties in
                     strategic locations.

                     Our competitive edge would be towards developing land in strategic locations, providing good before
                     and after sales customer services and quality finished products. Our strong brand name under The
                     Sunway Group will be an added advantage when we market our products at the right timing and
                     pricing.




                                                                       Revenue (RM ’000)              PBT (RM ’000)
                                                                    162,963


                                                                              149,949

                                                                                                 35,774
                                                                                        72,007




                                                                                                          16,466


                                                                                                                   8,161




                                                                    2006*     2004      2003     2006*    2004     2003
                                                                *18 months ended 30 June 2006


                        “Providing lifestyle living to     Growth Drivers:
                        meet the needs of our
                        customers.”                             Exploring regional opportunities, looking at the feasibility of
                                                                landbanks in East Malaysia as well as in overseas countries
                        Wong Siew Hoong                         such as Vietnam and China.
                        General Manager
                                                                Focus on small parcel of lands in order to achieve speedier
                                                                new product launches and reduction of holding costs of land.

                                                           2006 Milestones:

                                                                New launches in Pusat Bandar Baru Bangi and Sunway Batu
                                                                Caves for both commercial and residential properties have
                                                                received good response from the market, with a total sales of
 Taman Teluk Gedung Indah,
                                                                RM57 million achieved out of total launched properties
 Klang – Double Storey Semi                                     worth RM97 million.
           Detached House.
                                                                Handover to purchasers of 34 units Double Storey Shops and
                                                                31 units Retail Lots, Phase 4 at SunwayMas Commercial
                                                                Centre, Kelana Jaya on October 2005, 12 months ahead of
                                                                schedule. Expected also to achieve early handover by more
                                                                than 6 months to purchasers of the 200 units low cost
   Taman Rawang Perdana 2,                                      apartment and 15 units low cost shops at Sunway Batu Caves.
    Rawang – Double Storey
              Link House.




        Pusat Bandar Bangi,
        Type C3 - 3 Storey
               Shop Office.




                         Sunway Holdings Incorporated Berhad   30     annual report ‘06
Trading and Manufacturing
                            SunInc’s trading and manufacturing division strives to be a successful market leader in providing
                            world-class products and services which comprise hoses and fittings, heavy equipment parts, heavy
                            equipments and building materials. We compete for market leadership through our vast distribution
                            network spread throughout the ASEAN countries and China. Hedging from our regional presence, we
                            have expanded our customer base to 36 countries. We established strong brand recognition through
                            our own hoses and fittings brand “Sunflex” as well as recognised and accepted brand names such as
                            TREK and FP Diesel for heavy equipment parts. Our heavy equipment division carries the Furukawa
                            and Airman brands.




                                                                              Revenue (RM ’000)               PBT (RM ’000)
                                                                           312,135




                                                                                     193,953             18,408


                                                                                               156,925            7,565

                                                                                                                          6,467




                                                                           2006*     2004      2003      2006*    2004    2003
                                                                       *18 months ended 30 June 2006


                                                                  Growth Drivers:
                                       “Providing the best
                                       value product from
                                                                       Going regional with our present range of products. We shall
                                       the best
                                                                       strive to build an extensive network of branches and
                                       manufacturer
                                                                       customers throughout the region.
                                       through our global
                                       sourcing. We will
                                                                       Established 19 distribution points in West Malaysia, East
                                       partner other
                                                                       Malaysia, Indonesia, Thailand, Singapore and China.
                                       branded products
                                       to complement the
                                                                       Actively searching for opportunities to integrate into
                                       range.”
                                                                       manufacturing of our own products.
                                       Wong Fook Chai
                                                                       Sourcing for ‘STAR’ products.
                                       Executive Director
                                                                  2006 Milestones:

                                                                       Opened 2 new branches in Pekan Baru, Indonesia and Tawau,
Our “Sunflex” brand of hydraulic                                       East Malaysia.
 and industrial hoses and fittings
      are established and widely                                       New profits recorded from Thailand, Singapore and Indonesia
 accepted in the ASEAN region.
                                                                       operations.

                                                                       Acquisition of Sunway Hydraulic Industries Sdn Bhd and
                                                                       Sunway Enterprise (1998) Sdn Bhd.

          We provide a full range
         of undercarriage, engine,
replacement and wear parts from
       established brands such as
            TREK and FP Diesel.




  Our product range of building
    materials includes steel bars,
     cement, roof and floor tiles,
concrete products, sanitary wares
      and architectural products.




                                Sunway Holdings Incorporated Berhad   31     annual report ‘06
Building Materials
                             Sun-Block strives to be a regional player in the Asia Pacific rim as a pavement and flooring solutions
                             provider and be the industry-preferred choice in the enhancement and beautification of the
                             environment. We are committed to provide innovative quality products and services that exceed our
                             customers’ expectations through economics of continual improvement and operational effectiveness.

                             Sunway Keramo is committed to provide high quality, cost effective glazed vitrified clay piping
                             systems and solutions to ensure an environmentally enlightened approach to water and waste
                             management.


                                                                                Revenue (RM ’000)              PBT (RM ’000)
                                                                             102,682



                                                                                       88,328
                                                                                                75,945             9,642
                                                                                                                           9,288




                                                                                                          87


                                                                             2006*     2004     2003     2006*    2004     2003
                                                                         *18 months ended 30 June 2006

                                                                    Growth Drivers:
                                                                         Acquisition of LAS Industries Sdn Bhd (now known as Sun-
                                                                         Block (Beranang) Sdn Bhd) in 2004 and currently a market
                                                                         leader for interlocking concrete pavers.

                                                                         Started concrete imprint business complementing our range
                                                                         of products to tailor and meet customer requirements, thus
                                                                         providing a complete range of external pavement flooring
                                                                         solutions.

                                                                         Extended its pavement business to Shanghai and Dongguan,
David Leong                            Danny Ng                          China, one of the fastest growing regions in the world.
Senior General Manager                 Executive Director
                                                                         To keep in line with comtemporary technology, Sunway
                                                                         Keramo is ready to produce high quality vitrified clay jacking
                                                                         pipes by 1st quarter of 2007.
“Our customers’ needs will determine our path,
our value will guide us, our competencies and                       2006 Milestones:
perseverance will lead us there.”
                                                                         Successfully leased a factory area of 3,988 sq m. in Nanhui,
                                                                         Shanghai for 15 years from Shanghai Yuanyau Biotechnology
                                                                         Co. Ltd. for relocation of our MASA paver plant. Alteration
 Interlocking Pavers are ideal for                                       of factory building is in progress. Plant was relocated and
external pavement for ports, road                                        installed in August 2005. Sunway Building Materials
   junctions, warehouses, housing
     internal roads with variety of
                                                                         (Shanghai) Co. Ltd., has been established to operate this
 colours to enhance the aesthetic                                        business in Nanhui, Shanghai.
                      appearances.
                                                                         Successfully leased a factory land area of approximately
                                                                         28,000 sq m. in Zhongtang, Dongguan, Guangzhou for 20
                                                                         years from Dongguan Zhongtang Assets Management Co.
     Eurotiles are ideal pavement                                        Ltd., for relocation of our Omag paver plant. Sunway
         product for both outdoor
   pavement and indoor floorings,                                        Building Materials (Dongguan) Co. Ltd. has been established
 hard landscaping usage as well as                                       to operate this business in Dongguan, Guangzhou.
         exterior and interior wall
                         claddings.                                      As for vitrified clay piping business, we successfully upgraded
                                                                         production processes and commissioned a new kiln to achieve
                                                                         higher output and yield.
     Attractive Concrete Imprint
    with natural Stone Textures,
                                                                         Installed and commissioned a new fast firing shuttle kiln.
 Sun-Crete is functional elegance
      at its best. A visual delight,                                     Extention to our range of pipes, the DN 450x2.0m in class
   Sun-Crete is ideally suited for                                       160.
  resurfacing concrete floors and
     walkways. It transforms any                                         Installed 3rd fast dryer that reduces drying time by 60%,
      space into a veritable stone
                      masterpiece.
                                                                         resulting in higher output.


                                  Sunway Holdings Incorporated Berhad   32     annual report ‘06
Quarry
                       Sunway Quarry Industries is one of the leading producers and suppliers of crushed rock aggregates
                       and asphalts in the country. The company provides comprehensive range of single sized and blended
                       aggregates to meet most of the demand of building and construction industries. The company also
                       manufactures large range of asphalts products to cater to and to comply with various agencies and
                       highway authorities’ specification. The year 2005 marked the return of the Group into the quarrying
                       business, once the country’s leading producer of aggregates and asphalts prior to the divestment in
                       1999.




                                                                  Revenue (RM ‘000)             PBT (RM ‘000)

                                                                        159,693




                                                                                                    3,871




                                                              March 2005 - June 2006       March 2005 - June 2006


                                                              Growth Drivers:

                                                                   Expanding our operations to good locations, along potential
                                                                   development corridors, within the country so as to provide a
                         “Our business is structured               comprehensive network to serve our customers better.
                         and focused to meet our
                         customers’ requirements and               Continuous and aggressive process re-engineering to cut
                         we continuously look for                  down the cost of production albeit rising fuel cost.
                         total customer satisfaction.”
                                                              2006 Milestones:
                         Teh Quen Chang
                         Executive Director                        Set-up of a new quarry operation in Bandar Sungei Long,
                                                                   Mukim Ulu Langat, Selangor.

                                                                   Relocation of a 250 tonnes per hour (“tph”) asphalt plant
                                                                   from Klang Valley to Bukit Mertajam, as a step towards
                                                                   building up market share in the northern states of Peninsular
                                                                   Malaysia.

            We provide a full                                      Undertaking quarrying and premix operations in Jhansi, Uttar
       range of crushed stone
       aggregates to meet the                                      Pradesh and Kota, Rajasthan in India – an overseas highway
     demands of building and                                       project undertaken by SunCon.
 infrastructure requirements.




    We have comprehensive
        network of asphalt
      manufacturing plants
        providing excellent
         customer support.




 Our asphalt manufacturing
  products in road surfacing
     meet and comply with
   Highway Authorities and
        JKR specifications.




                            Sunway Holdings Incorporated Berhad   33   annual report ‘06
Our People Our Strength




                                          “Growing Together”
                                          I will be graduating from the Sunway Managerial Advancement for
                                          Recruited Trainees (“SMART”) programme after 2 years. Through
                                          this program, I was given many different opportunities and
                                          extensive exposure – from risk management to corporate finance to
                                          manufacturing projects as well as events organisation. Sunway’s
                                          culture is performance-driven, but rewards passion and hard work.
                                          We work hard, but play just as hard. I have been a committee
                                          member of our very active Sunway Sports Club, organising various
                                          activities, which never fail to receive great response. All this
                                          definitely makes Sunway an exciting company to work with! In the
                                          light of this all, I believe that not only have I grown to become a
                                          better executive, but definitely also a better person.

                                          EL REGINA TAJUDIN
                                          SUNWAY MANAGERIAL ADVANCEMENT FOR RECRUITED
                                          TRAINEES
                                          2nd INTAKE (2004)
                                          SUNWAY HOLDINGS INCORPORATED BERHAD
                                          MALAYSIA
         Sunway Holdings Incorporated Berhad   34   annual report ‘06
Our People Our Strength
At SunInc, we believe that our strategies are solely                   Loose Nites, Tea Sessions (with non-executive staff),
dependent on the talent, skills and passion of our people.             Annual Managers’ Conference, e-bulletins, Sunway Portal
In turn, we are passionate about finding the best talents              and Plasma Television insertions etc., just to name a few.
and making sure they develop and grow with us.
                                                                       The results of our 2005 Organisational Climate Survey
We believe that “Our People are Our Strength”. Their                   (“OCS2005”) (which can be benchmarked with
commitment, alignment, skills, competencies and                        participating companies in Asia Pacific as well as
determination drive the Group towards excellence.                      Malaysia) were encouraging and we will continue to work
                                                                       harder to further value add to all our stakeholders.
What inspires our employees most is working in an
environment which resembles a big and happy family,
despite being in different geographical regions globally.                           OCS2005 INDEX RESULTS
                                                                                              Commitment                         Alignment                       Enablement
There are many different nationalities within our                                         The extent to which             The extent to which               The extent to which
                                                                                          employees express pride in      employees perceive that they      employees perceive that
organisation, different cultures, yet we work as one team,                                their company, describe it as
                                                                                          a good place to work,
                                                                                                                          understand their company’s
                                                                                                                          business strategies, goals, and
                                                                                                                                                            they have the right tools,
                                                                                                                                                            resource, information, and
with one vision. We face challenges together, share our                                   demonstrate a desire to stay
                                                                                          and have confidence in its
                                                                                                                          what they personally have to
                                                                                                                          do to help the company
                                                                                                                                                            support to do their jobs well


experiences as well as continuously motivate and learn                                    future success                  reach those goals


from each other.                                                                    150
                                                                                                                                             Sunway
                                                                                                                           Malaysia
                                                                                    140
                                                                                                                            Norm
As we continue to expand “glocally” (globally and locally),
                                                                                    130
we will continuously need energetic and dynamic people
with strategic and innovative ideas. Our people are the                             120
                                                                                                            Sunway
real source in pushing our competitive advantage. We                                110
                                                                                           Malaysia                                                          Malaysia
value skills and competencies and more importantly we                    Asia                                                                                                Sunway
                                                                                  ➛ 100
                                                                                            Norm                                                              Norm
                                                                        Pacific
encourage candour (speaking without fear or favour) to                  Norm
                                                                                              98              112            134               141
                                                                                     90
forge ahead of competition.
                                                                                     80
At SunInc, we listen attentively and encourage                                                                                                                  83               89
                                                                                     70
participation in the decision making process. The Group
also believes in empowering its people and providing                   Employee Development - Recognise, Nurture
them with the right tools and support to enable them to
do their jobs efficiently and effectively.                             and Support
                                                                       It is our mission to recognise, nurture and support our
Our Culture                                                            employees at every level and to continuously provide
                                                                       opportunities for them to develop their competencies and
We encourage continuous learning and development and                   to realise their full potential.
propagate the culture of candour. We encourage the
practice of knowledge management principles and we                           Training and Development
reward innovation, especially breakthrough ideas for our
products and services.                                                       The year 2005 saw a total of 37 value-based training
                                                                             and development programmes organised by Group
Communicating with Our People                                                Human Resources as well as 11 sessions of Saturday
                                                                             Seminar Series, a 3-hour short presentation on soft
We have constant communication with our employees                            skills enhancement involving between 80 and 120
through various channels, such as Coffee Sessions, Hang                      employees per session. These programmes organised




By far the most outstanding aspect of the Sunway company
culture is the sense of “Group”. It never fails to surprise or
please me the reaction I receive when walking into Menara
Sunway in Malaysia no matter how long I have been away.
From the security guard onwards, a sea of familiar and
unfamiliar faces greet me by name (embarrassingly I can
remember far fewer than those I cannot) and ask how I am
and how are the tidings in Vietnam. Likewise, by the end of
the first day back, I have been able to find out exactly the
latest on who, how and why of the Group. This care for
each other and care for the Group in my mind is the best
aspect of Sunway’s rich culture.

SCOTT STACEY
GENERAL DIRECTOR
SUNWAY HATAY CONSTRUCTION &
BUILDING MATERIALS JV CO. LTD.
VIETNAM

                            Sunway Holdings Incorporated Berhad   35   annual report ‘06
Our People Our Strength                                           (Cont’d)

    by Group Human Resources were attended by a total                The Institute of Chartered Accountants in England
    of 2,132 employees. In addition, employees were also             and Wales (“ICAEW”) Programme
    sent to external courses.
                                                                     In 2004, The Sunway Group was appointed as an
    Talent Pool Development                                          Approved Training Organisation by ICAEW to run the
                                                                     Association of Chartered Accountants (“ACA”)
    The Sunway Group has initiated the Talent                        programme. The Sunway Group is the 1st non-
    Identification and Development (“TID”) programme,                accounting related firms outside of the United
    whereby 8 sessions were conducted in the year 2005.              Kingdom to be accorded such an appointment. To
    Essentially, this programme is a systematic way of               date, 2 individuals have been recruited and offered
    identifying and assessing talents among employees.               training contracts under this programme. We will
    These identified talents are then put through a regime           continue to recruit graduates to participate in this
    of training and development programmes to close any              programme on an annual basis.
    competency gaps. One-on-one coaching is provided to
    anchor these individualised plans.                                          The “TAP” signifies a steady stream of
                                                                                  water flowing through. We use this symbol
    Succession Planning                                                           to represent what we envisage in the
    As a follow up to the TID initiative, we have rolled-                         future - a strong leadership pipeline to
    out Succession Planning for SunCon in October 2005.                         lead the future of The Sunway Group.
    Succession Planning is of crucial importance for The
    Sunway Group. It aims to fill in key positions now and        Sports and Social Activities
    in the future; develop competent people needed for
                                                                  The Sunway Group believes that sports and social
    our highly diversified and competitive environment;
                                                                  activities foster closer relationships amongst our
    and to grow and develop our key employees for future
                                                                  employees. Such activities help in building a greater sense
    leadership requirements.
                                                                  of identification and pride within The Sunway Group
    Sunway Managerial Advancement for Recruited                   thus enhancing better rapport among our employees and
    Trainees (“SMART”) Programme                                  improve quality of work.

    The SMART programme was initiated in 2002 with                The Kelab Sukan Sunway (“KSS”) Clubhouse, located at
    the aim of bringing potential talents into The Sunway         Basement 1, Menara Sunway is equipped with
    Group. Under this programme, candidates with                  recreational facilities such as a gymnasium, sauna, squash
    excellent academic results and a track record of              court, snooker table, Astro, table tennis table and carrom
    leadership capabilities, are offered an initial “Training     set, for the exclusive use of our employees.
    and Education” programme followed by job rotation
    within identified business units, thereby equipping           KSS also provides avenues for our employees to pursue
    talents with a basic operational knowledge. This will in      healthy lifestyles by organising sporting and social
    turn help fast-track their careers within The Sunway          programmes such as bowling tournaments, futsal
    Group. We are now in our 4th successful year in the           competitions, local and overseas trips, community
    running of the SMART programme. These initiatives             services, car treasure hunts, white water rafting, family
    are aimed at ensuring a succession pool for The               days, health and informative talks, as well as annual KSS
    Sunway Group.                                                 Dinner and Dance Nites.




“One Vision One Team!”
I have just completed my 7th year in SunCon as a Project
Manager. My journey with the Group has taken me to greater
horizons. I have been given responsibilities which I could only
dream of getting elsewhere. Everything we do here at
Sunway, is cutting edge. But in my opinion, the best thing
about working for this organisation, is its people and the
culture. The company has a unique culture, one in which
working together is the cornerstone of everything we do.
Sunway places a high emphasis on innovation and being
passionate about your job. I work with an incredible team
that shares my passion, my dreams and my aspirations. Hence,
I am inspired and encouraged to fulfill my dreams and lead
my team to greater heights!

GERARD SOOSAY
SENIOR MANAGER – PROJECT
SUNWAY CONSTRUCTION SDN BHD
MALAYSIA
Our People Our Strength                                       (Cont’d)

These informal get-togethers have fostered a sense of
family-like atmosphere throughout The Sunway Group.

Employee Benefits
The Sunway Group continuously encourages employees
towards performance enhancement and career
advancement by providing tuition fee discounts when
employees embark on courses offered by Sunway
University College and Monash University Malaysia. This
discount scheme is also extended to our employees’
immediate family members, which is in tandem with The
Sunway Group’s emphasis on caring for its employees’
welfare.

There is also an Employee Tuition Assistance Scheme
where employees may seek financial assistance to take
external courses which are relevant to their work, leading
to certificate, diploma, graduate degrees as well as post
graduate. This is in line with The Sunway Group’s focus
on the continuous development in our employees.

The Sunway Group Scholarship
As a responsible corporate citizen and in alignment with
The Sunway Group’s commitment to education, full
scholarships have been awarded to deserving students
with excellent academic achievements. Currently, there
are 2 students under this scholarship scheme.




The best part of SunInc’s construction division is that the
management looks at all its employees and families as its
greatest assets. The management’s relationship with its
employees is founded on a climate of mutual trust and
respect within an environment for listening and personal
expression. They involve working with and through people
and seeing them as partners, not just as costs to be
minimised or avoided. To ensure all employees be part of
the company, the management always share and
communicate, letting employees know the goals, the plans,
why we’re doing what we’re doing and how we’re doing.
This recognition for each other in my opinion is the most
productive working environment.

ERIC TAN CHEE HIN
SENIOR MANAGER - PROJECT
SUNWAY ENGINEERING SDN BHD
MALAYSIA
Performing Business with Integrity




          Sunway Holdings Incorporated Berhad   38   annual report ‘06
Investor Relations




                                                                                         Investors and analyst meet SunInc’s management.



SunInc is committed to the principles of good corporate              meetings. One of the initiatives in communicating
governance, accountability and transparency. It continues            developments and changes in SunInc was a general
to maintain its investor friendly position and consistently          presentation on 14 January 2005 to explain SunInc's re-
communicates with representatives of shareholders and                entry into the quarry business to interested investors.
members of the investment community. Its corporate
website is updated regularly to present the latest publicly          As a response to interest by investors in the future
available corporate and financial information such as                performance of SunInc, greater effort was taken to explain
announcements to Bursa Malaysia Securities Berhad and                the strategies SunInc have adopted to improve its
quarterly results.                                                   operational profitability, to address ongoing problems and
                                                                     its endeavours to expand its operations overseas. A
Directors and members of Senior Management make a                    significant number of SunInc’s shares continues to be held
point to meet with shareholders, fund managers and                   by foreign investors (6.4%), and local institutional bodies
analysts regularly at conferences and at one-on-one                  including the Employees Provident Fund (73.8%).




                          Sunway Holdings Incorporated Berhad   39   annual report ‘06
Corporate Social Responsibility

In 2005, The Sunway Group’s financial mission to                    provide young people with opportunities to excel by
produce strong returns for shareholders by leveraging on            reinvesting profits from Sunway University College for
intellectual capital to create open and new markets was a           the benefit of the students in terms of quality education
success. However, sustained success for The Sunway                  and facilities upgrade.
Group requires a long-term commitment to corporate
responsibility that reflects positively on customers,               The 3R programme also focuses on recycling and job
employees and communities where we operate. In line                 placement programme for the special students of Sekolah
with this commitment, The Sunway Group instituted a                 Menengah Bandar Sunway that have been endorsed by
formal Corporate Social Responsibility (“CSR”)                      the Ministry of Education. The Sunway Group is happy to
programme that establishes a framework of reference for             report that tremendous progress in the recycling
Education, Environmental Conservation and Socio-                    campaign in collaboration with Alam Flora and Ministry
economic activities to be implemented in a consistent               of Housing and Local Government has resulted in a
manner. The Sunway Group is committed to making                     significant increase of about 459% in the collection of
significant progress in defining and implementing the               recyclable items from all components within The Sunway
corporate responsibility programme and in executing the             Group from the year 2003 to 2005.
policy and standards in a manner that strives to
continuously improve The Sunway Group’s performance.

In 2006, The Sunway Group embarked on the 3-pronged
3R CSR programme (Reach Out, Respect, Realise) to
maximise the impact as a constructive force for the
community. In realising The Sunway Group’s vision, it is
essential to strive to make a difference in the lives of
people, social and environmental considerations into our
value system. Firmly entrenched in The Sunway Group’s
corporate value system is The Sunway Education Trust
Fund that has, to date awarded more than RM23 million
of scholarships to students. In helping the students to
realise their dreams, The Sunway Group has made a
significant contribution and remains committed to


                                                                    The Sunway Group will continue to monitor the progress
                                                                    made in all the 3 main thrust – Education, Environmental
                                                                    conservation and Socio-economic activities. The Sunway
                                                                    Group is especially proud of the CSR project with
                                                                    Sekolah Menengah Bandar Sunway because these special
                                                                    children are often left outside the mainstream as they are
                                                                    considered less productive. It is a pleasant surprise to learn
                                                                    that not only are they able to perform simple tasks
                                                                    diligently, their sunny disposition clearly shows they enjoy
                                                                    the opportunity we have helped to provide. We hope that
                                                                    this project will be held up as a model for similar
                                                                    programmes that provide opportunities for these special
                                                                    children to realise their dreams.




                         Sunway Holdings Incorporated Berhad   40   annual report ‘06
Business Dynamics and Risk Factors




                                                                 Business Risk Management is an essential discipline in our business operations.



SunInc has long recognised the importance of risk                             The high level of competition in the local market as
management as a critical part of corporate governance. In                     well as the rising raw material costs in the building
view of this, SunInc has implemented and maintained a                         materials division can significantly reduce the
comprehensive Enterprise Risk Management (“ERM”)                              profitability of this division.
Framework, which is applied across the organisation as
well as at every business unit. Proactive steps are taken to                  The increasing competition for strategic landbanks in
manage all possible risks before they occur in order to                       the local market can affect the future profitability of
minimise the financial impact to SunInc. To ensure a                          the property division.
consistent, disciplined and systematic manner in the
management and monitoring of risks, SunInc has invested                       The effectiveness in managing the cost, level and
in a risk management software known as the Corporate                          availability of funding is important to the financial
Risk Scorecard, which also functions as the permanent                         performance of SunInc and its ability to deliver
database for risks, management actions and controls.                          returns to shareholders.

The risks that have been identified to have the most
significant potential impact on SunInc are set out below.                Business and operational factors
                                                                              The loss of the services of key management staff can
Market, regulatory                      and        other                      negatively impact SunInc’s ability to implement
                                                                              business strategies.
external factors
                                                                              The low traffic volumes of SunInfra’s toll road
   SunInc’s overseas operations in the construction and
                                                                              operation will continue to erode the operating results
   building materials divisions expose SunInc to risks of
                                                                              of SunInc.
   trade or foreign exchange restrictions, increased tariffs,
   foreign currency fluctuations and other risks
                                                                              The timely completion of overseas projects is
   associated with international operations such as
                                                                              important to ensure that all contractual obligations are
   political, economical and social instability of those
                                                                              met thus enhancing SunInc’s reputation with
   countries.
                                                                              stakeholders.




                           Sunway Holdings Incorporated Berhad     41    annual report ‘06
Corporate Governance Statement

The Board is committed to ensure that good corporate                 with Paragraph 15.02 of the Listing Requirements of
governance is practised throughout the Group with the                Bursa Malaysia Securities Berhad ("Bursa Securities") and
ultimate objective of protecting and enhancing                       was granted three (3) months until 31 March 2006 to
shareholders' value and the financial performance of the             comply with the said Paragraph. Subsequently on 13
Company and of the Group.                                            March 2006, Datuk Abdul Malek Bin Abdul Aziz was
                                                                     appointed to the Board as Independent Non-Executive
The Board is committed to implementing the Malaysian                 Director. On 26 April 2006, Tan Ler Chin had resigned
Code on Corporate Governance ("the Code") wherever                   from the Board as Non-Independent Non-Executive
applicable in the best interest of the shareholders of the           Director.
Company.
                                                                     As at the financial period ended 30 June 2006, the Board
                                                                     consisted of nine (9) members, three (3) or one-third
A.   DIRECTORS                                                       (1/3) are Independent Non-Executive Directors.
THE BOARD AND ITS RESPONSIBILITIES                                   The composition reflects a balance of Executive and Non-
                                                                     Executive Directors with a mix of suitably qualified and
The Board leads and controls the Group. It regularly                 experienced professionals in the fields of accountancy,
meets to perform its main functions, amongst others, as              economics, finance, civil engineering and real estate
follows:-                                                            development. This combination of different professions
                                                                     and skills working together enables the Board to
•    Setting the objectives, goals and strategic plans for           effectively lead and control the Company. The Board
     the Group with a view to maximising shareholders'               composition also fairly reflects the investment in the
     value.                                                          Company by shareholders other than the significant
•    Adopting and monitoring progress of the                         shareholder.
     Company's strategies, budgets, plans and policies.
•    Overseeing the conduct of the Group's businesses                There is clear segregation of responsibilities between the
     to evaluate whether the businesses are properly                 Executive Chairman and the Managing Director to ensure
     managed.                                                        a balance of power and authority. The Managing Director
•    Identifying principal risks of the Group and                    is subject to the control of the Board of Directors. He is
     ensuring the implementation of appropriate systems              responsible for the day-to-day management of the
     to mitigate and manage these risks. The Board                   business in accordance with the objectives and strategies
     through the Risk Management Committee, sets,                    established by the Board.
     where appropriate, objectives, performance targets
     and policies to manage the key risks faced by the               Wong Chin Mun is the Senior Independent Non-
     Group.                                                          Executive Director, to whom concerns relating to the
•    Considering Management's recommendations on                     affairs of the Group may be conveyed.
     key issues including acquisitions, divestments,
     restructuring, funding and significant capital                  A brief profile of each Director is presented on pages 24
     expenditure.                                                    to 27 of the Annual Report.
•    Human resources planning and development.
•    Reviewing the adequacy and integrity of the
     Company's internal control systems and                          MEETINGS AND SUPPLY OF
     management information systems, including
     systems for compliance with applicable laws,
                                                                     INFORMATION
     regulations, rules, directives and guidelines.                  Unless there are urgent matters, the Board normally meets
•    The Board through the Strategic Direction                       quarterly to review financial, operational and business
     Committee, decides on the appropriate strategic                 performances. Notices and agenda of meetings duly
     direction for the Group, particularly to manage the             endorsed by the Executive Chairman together with the
     Group from a Strategy Driven Perspective, with                  relevant board papers are normally given at least one (1)
     clear objectives and targets for proactive decision-            week prior to the meetings for the Directors to study and
     making.                                                         evaluate the matters to be discussed.

The Board delegates certain responsibilities to the Board            The board papers provided include inter alia, financial
Committees, all of which operate within defined terms of             results, business plan and budget, progress report on the
reference.                                                           Company's developments, minutes of meetings of Board
                                                                     Committees, regulatory/statutory updates and other
                                                                     operational and financial issues for the Board's
BOARD COMPOSITION                                                    information and/or approval.
Following the demise of Tan Sri Dato' Seri Dr Md
Noordin Bin Md Sopiee on 29 December 2005, the                       All Directors are entitled to information pertaining the
number of independent directors has fallen below the                 Company. In addition, all Directors have direct access to
minimum size of one-third (1/3). The Board had sought                the advice and services of the Company Secretaries. They
the Exchange's approval for extension of time to comply              are also permitted to seek independent advice whenever
                                                                     deemed necessary, at the Company's expense.


                          Sunway Holdings Incorporated Berhad   42   annual report ‘06
Corporate Governance Statement                                                          (Cont’d)


There is a formal procedure approved by the Board for all           DIRECTORS' TRAINING
Directors, whether as a full Board or in their individual
capacity, to obtain independent professional advice, when           All the Directors had attended the Mandatory
necessary, at the Company's expense.                                Accreditation Programme and Continuous Education
                                                                    Programme ("CEP") as prescribed by Bursa Securities.
The Board met eight (8) times during the financial period
from 1 January 2005 to 30 June 2006 and the attendance              As the CEP has been repealed by Bursa Securities with
of the respective Directors was as follows:-                        effect from 1 January 2005, the Board will assess the
                                                                    training needs of the Directors and ensure fulfillment of
                               Number of   Percentage of            such training deemed appropriate by the Board. During
                                Meetings    Attendance              the financial period, the Directors had attended various
Name of Directors              Attended         (%)                 training programmes and seminars organised by the
Tan Sri Dato' Seri (Dr)                                             relevant regulatory authorities and professional bodies to
 Cheah Fook Ling                  7/8             88                broaden their knowledge and to keep abreast with the
Dato' Chew Chee Kin               8/8            100                relevant changes in law, regulations and the business
Yau Kok Seng                      8/8            100                environment.
Mark Victor Rozario               8/8            100
Dato' Tan Kia Loke                8/8            100                The training programmes, seminars and workshops
Kwan Foh Kwai                     7/8            88                 attended by the Directors during the financial period are,
Tan Ler Chin                      7/7*           100                inter alia, on areas relating to corporate governance, risk
 (Resigned on 26 April 2006)                                        management and financial reporting.
Wong Chin Mun                     8/8            100
Tan Sri Dato' Seri Dr Md          2/6*           33
 Noordin Bin Md Sopiee
 (Passed away on
 29 December 2005)
Datuk Low Seng Kuan               8/8            100
Datuk Abdul Malek Bin             1/1*           100
 Abdul Aziz
 (Appointed on
 13 March 2006)

 * Reflects the number of Board Meetings attended during
   the time the Director held office.


 Training Programmes, Seminars and Workshops Attended by Directors
 Course Title / Organiser                                                                              Date

 Making Corporate Boards more effective                                                                10-11 March 2005
 (Harvard Club of Malaysia)

 S&P REIT Seminar 2005 - Asian REITS : Directions, Insights and Global Context *                       15 March 2005
 (Standard & Poor's)

 2005 CFO Conference - Driving Profitability in Today's Economy                                        10-11 May 2005
 (Federation of Public Listed Companies Berhad & NTP World Forum Sdn Bhd)

 Board's Role in Risk Management and Strategy                                                          14 June 2005
 (The Institute of Internal Auditors Malaysia)

 The 2nd Annual Asia Pacific Bond Congress                                                             16-17 June 2005
 (Euromoney)

 Workshop on "Managing Country Risk"                                                                   22 June 2005
 (CPA Australia)

 Explore Latest Developments and Profitable Opportunities                                              30 June-1 July 2005
 for Real Estate Investment Trusts in Malaysia *
 (The Asia Business Forum)




                         Sunway Holdings Incorporated Berhad   43   annual report ‘06
Corporate Governance Statement                                                             (Cont’d)

 Training Programmes, Seminars and Workshops Attended by Directors                                       (Cont’d)

 Course Title / Organiser                                                                                 Date

 Strategic Brand Management                                                                               1 July 2005
 (Harvard Club of Malaysia)

 Michael E. Porter - Winning Competitive Strategies                                                       12 July 2005
 (Leading Minds)

 The 3rd Asia Economic Summit - Asia on the Move : Enhancing Competitiveness                              28-29 July 2005
 Expanding Opportunities
 (Asian Strategy & Leadership Incorporated Sdn Bhd)

 MICPA Business Forum 2005 #                                                                              5-6 September 2005
 (The Malaysian Institute of Certified Public Accountants)

 PricewaterhouseCoopers Seminar 2005 - Tax & Finance Developments                                         3 October 2005
 (PricewaterhouseCoopers)

 Strategic Positioning for Brand Power                                                                    9 March 2006
 (Dr Paul Temporal)

 Robert S. Kaplan - Live in Malaysia : Turning Execution into Competitive Advantage                       29 March 2006
 (Global Leaders)

 9th Malaysia Plan : Impact and Implications for Businesses                                               25 April 2006
 (RAM Consultancy Services Sdn Bhd & TEC Asia Centre Sdn Bhd)

 Managers' Conference                                                                                     27 April 2006
 (Sunway Construction Sdn Bhd)

 Topgrading your Organisation                                                                             2 May 2006
 (Pritchett Rummler Brache Asia)

 Conference on "Excellent in Manufacturing"                                                               27 June 2006
 (FMM Institute)

 5th Real Estate Investment World Conference                                                              27-28 June 2006
 (Terrapinn)

 * Attendance by the Finance Director as a Speaker at the Seminars held.
 # Attendance by the Finance Director as a Panelist at the Forum held.

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


RETIREMENT BY ROTATION AND                                             BOARD COMMITTEES
RE-ELECTION                                                            The Board has set up the following Committees and will
The Company's Articles of Association provides that one-               periodically review their terms of reference and operating
third (1/3) of the Board is subject to retirement by                   procedures. The Committees are required to report to the
rotation at each Annual General Meeting. Each Director                 Board on all their deliberations and recommendations and
shall retire at least once every three (3) years but shall be          such reports are incorporated in the minutes of the Board
eligible for re-election. The Directors to retire in each year         Meetings.
are those who have been longest in office since their last
election or appointment.                                               1.     Audit Committee
To assist the shareholders in their decision, sufficient                      The Audit Committee is set up to play an active role
information such as personal profile, attendance of                           in assisting the Board in discharging its governance
meetings and the shareholdings of each Director standing                      responsibilities. The composition of the Audit
for re-election are disclosed in the Statement                                Committee, its terms of reference, attendance of
Accompanying Notice of Annual General Meeting.                                meetings and a summary of its activities are set out
                                                                              on pages 55 to 59 of the Annual Report.

                            Sunway Holdings Incorporated Berhad   44   annual report ‘06
Corporate Governance Statement                                                           (Cont’d)


2.   Management Committee                                                  meetings were held to evaluate the performance of
                                                                           the Executive Directors and to determine their
     The Management Committee comprises Tan Sri                            annual increments and bonuses. The Executive
     Dato' Seri (Dr) Cheah Fook Ling, Dato' Chew                           Director of Human Resources attended the said
     Chee Kin, Dato' Tan Kia Loke, Yau Kok Seng, Mark                      meetings on the invitation of the Committee.
     Victor Rozario and Puan Sri Datin Seri (Dr) Susan
     Cheah Seok Cheng. Its primary role is to assist the            5.     Employees' Share Option Scheme
     Board in overseeing and dealing with operational                      ("ESOS") Committee
     matters of the Group. The terms of reference of the
     Management Committee are set out on page 48 of                        The ESOS Committee comprising Tan Sri Dato'
     the Annual Report.                                                    Seri (Dr) Cheah Fook Ling, Dato' Chew Chee Kin,
                                                                           Dato' Tan Kia Loke and Yau Kok Seng, is responsible
3.   Nomination Committee                                                  for implementing, allocating and administering the
                                                                           ESOS in accordance with such powers and duties
     The Nomination Committee comprises three (3)                          conferred upon it under the Bylaws of the ESOS.
     wholly Independent Non-Executive Directors. The                       The terms of reference of the ESOS Committee are
     Chairman of this Committee is Wong Chin Mun.                          set out on pages 51 and 52 of the Annual Report.
     The other members of the Committee are Datuk
     Low Seng Kuan and Datuk Abdul Malek Bin Abdul                         During the financial period, four (4) meetings were
     Aziz.                                                                 held for the following purposes:-

     The Nomination Committee is responsible for                           (a) to consider and approve the allocation of
     identifying and making recommendations for any                            options over ordinary shares to the employees
     appointments and re-election of Board members.                            of the Group;
     The Committee also assesses the effectiveness of the                  (b) to discuss on the basis for the allocation of
     Board as a whole as well as the performance of each                       options; and
     Director. The terms of reference of the Nomination                    (c) to consider and approve the applications made
     Committee are set out on page 49 of the Annual                            by employees to continue holding their options
     Report.                                                                   upon attaining retirement and due to transfer
                                                                               to a company which is outside the Group.
     During the financial period, four (4) meetings were
     held for the following purposes:-                              6.     Risk Management Committee
     (a) to endorse the proposed re-election of                            The Risk Management Committee comprises Yau
         Directors retiring by rotation at the                             Kok Seng as Chairman, Mark Victor Rozario, Kwan
         Company's Annual General Meeting, subject                         Foh Kwai, Wong Fook Chai, Ng Boon Liang, Leong
         to the approval of shareholders;                                  Kai Hong, Yap Chin Leong, Teh Quen Chang, Wong
     (b) to discuss the evaluation on the effectiveness of                 Siew Hoong and Ng Eng Lee.
         Audit      Committee       and     Management
         Committee; and                                                    The Risk Management Committee is tasked with
     (c) to recommend to the Board, the appointment                        the responsibility to oversee the risk management
         of Datuk Abdul Malek Bin Abdul Aziz as                            activities of the Group, approving appropriate risk
         Independent Non-Executive Director of the                         management procedures and measurement
         Company.                                                          methodologies across the organisation as well as
                                                                           identification and management of strategic business
4.   Remuneration Committee                                                risks of the Group. The terms of reference of the
                                                                           Risk Management Committee are set out on page
     The Remuneration Committee comprises mainly                           53 of the Annual Report.
     Non-Executive Directors namely Wong Chin Mun
     as Chairman, Datuk Low Seng Kuan and Tan Sri                          During the financial period, seven (7) meetings
     Dato' Seri (Dr) Cheah Fook Ling.                                      were held for the following purposes:-

     The Remuneration Committee recommends to the                          (a) to identify and evaluate new and existing
     Board the remuneration for Directors and the                              strategic risks;
     renewal of the terms of Employment Contracts for                      (b) to review the status of implementation of
     Executive Directors, with the aim of ensuring that                        management action plan; and
     the Company attracts and retains the Directors                        (c) to review the effectiveness of overall risk
     needed to run the Group successfully. The terms of                        management at enterprise level.
     reference of the Remuneration Committee are set
     out on page 50 of the Annual Report.                                  The Risk Management Committee reports directly
                                                                           to the Board on a quarterly basis on its deliberations
     The Remuneration Committee will meet as and                           and recommendations.
     when required. For the financial period, two (2)

                         Sunway Holdings Incorporated Berhad   45   annual report ‘06
Corporate Governance Statement                                                           (Cont’d)


7.   Strategic Direction Committee                                         (b) to establish the preferred industries for
                                                                               expansion, preferred countries for capital
     The Strategic Direction Committee which was                               investment and investment criteria;
     formed on 20 April 2005, comprises Dato' Chew                         (c) to assess the current investment portfolio of
     Chee Kin as Chairman, Dato' Tan Kia Loke, Yau                             the Group; and
     Kok Seng, Mark Victor Rozario, Kwan Foh Kwai,                         (d) to discuss on divisional divestment and growth
     Wong Fook Chai, Ng Boon Liang, Leong Kai Hong,                            strategies.
     Yap Chin Leong, Teh Quen Chang and Wong Siew
     Hoong.
                                                                     B.    DIRECTORS' REMUNERATION
     The Strategic Direction Committee has the overall               Information prepared by independent consultants and
     responsibility for deciding on appropriate strategic            survey data on the remuneration practices of comparable
     direction for the Group, particularly to manage the             companies are taken into consideration in determining the
     Group from a Strategy Driven Perspective, with                  remuneration packages for Executive and Non-Executive
     clear objectives and targets for proactive decision-            Directors. The remuneration of the Executive Directors is
     making. This is to promote transparency,                        structured on the basis of linking rewards to corporate and
     accountability and set a formal platform for                    individual performance. For Non-Executive Directors,
     communicating the Group's strategic direction in                the level of remuneration reflects the experience and level
     line with enhancing Corporate Governance within                 of responsibilities.
     the Group. The terms of reference of the Strategic
     Direction Committee are set out on page 54 of the               The Board as a whole resolves on the fees for the Non-
     Annual Report.                                                  Executive Directors with individual Directors abstaining
                                                                     from decisions in respect of their individual remuneration.
     During the financial period, four (4) meetings were             The fees payable to the Non-Executive Directors are
     held for the following purposes:-                               subject to the approval of shareholders.

     (a) to review and adopt the terms of reference;                 The breakdown of the Directors' remuneration during the
                                                                     financial period is as follows:-



                                                                    Executive           Non-Executive                   Total
                                                                     Directors              Directors
                                                                          RM                     RM                     RM
 Fees                                                                        -                84,000                 84,000
 Other Emoluments                                                            -                36,500                 36,500
 Salaries and other Remuneration                                    3,268,292              1,694,745              4,963,037
 Bonus                                                                368,391                299,280                667,671
 Benefits-in-kind                                                     275,882                 80,269                356,151
 Total:                                                             3,912,565               2,194,794             6,107,359

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

                                                                    Executive           Non-Executive                   Total
 Range of Remuneration                                              Directors               Directors
 Below RM50,000                                                             -                       4                      4
 RM700,001 to RM750,000                                                     2                       -                      2
 RM900,001 to RM950,000                                                     1                       1                      2
 RM1,100,001 to RM1,150,000                                                 -                       1                      1
 RM1,550,001 to RM1,600,000                                                 1                       -                      1
 Total:                                                                       4                      6*                   10#


 * Include Directors' Remuneration in respect of two (2) Non-Executive Directors who are Executive Directors of a subsidiary
   of the Company.
 # Include Director's Fee payable to a Non-Independent Non-Executive Director who resigned on 26 April 2006.

 The movement of Directors' options over ordinary shares during the financial period ended 30 June 2006 is set out on
 page 75 of the Annual Report.




                         Sunway Holdings Incorporated Berhad   46   annual report ‘06
Corporate Governance Statement                                                           (Cont’d)


C. SHAREHOLDERS                                                      INTERNAL CONTROL
DIALOGUE BETWEEN THE COMPANY                                         The Statement on Internal Control set out on pages 60
AND INVESTORS                                                        and 61 of the Annual Report provides an overview of the
                                                                     state of internal controls within the Group.
The Board values constant dialogue and is committed to
clear communication with its shareholders and investors.             RELATIONSHIP WITH THE AUDITORS
In this respect, as part of the Group's active investor
relations programme, discussions and dialogues are held              The Board maintains, via the Audit Committee, an active,
with fund managers, financial analysts, shareholders and             transparent and professional relationship with its
the media to convey information about the Group's                    Auditors. The role of the Audit Committee in relation to
performance, corporate strategy and other matters                    the External Auditors is disclosed in the Audit Committee
affecting shareholders' interests.                                   Report set out on pages 55 to 59 of the Annual Report.

In addition to published Annual Report and Quarterly
Reports announced to Bursa Securities, the Group has                 E.     DIRECTORS' RESPONSIBILITY
established a website at http://www.sunway.com.my from                      STATEMENT ON ANNUAL
which investors and shareholders can access for
information.
                                                                            AUDITED FINANCIAL
                                                                            STATEMENTS
While the Company endeavours to provide as much
                                                                     The Directors are responsible in the preparation of the
information as possible to its shareholders and
                                                                     Annual Audited Financial Statements to give a true and
stakeholders, it is mindful of the legal and regulatory
                                                                     fair view of the state of affairs, results and cash flows of
framework governing the release of material and price-
                                                                     the Company and of the Group at the end of the financial
sensitive information. To achieve this, the Board had
                                                                     period.
approved and adopted a Corporate Disclosure Policy
which outlines the Company's approach toward the
                                                                     In preparing the financial statements, the Directors will
determination and dissemination of material information,
                                                                     ensure that suitable accounting policies have been applied
the circumstances under which the confidentiality of
                                                                     consistently, and that reasonable and prudent judgments
information will be maintained, response to market
                                                                     and estimates have been made. All applicable approved
rumours and restrictions on insider trading. This Policy
                                                                     accounting standards and provisions of the Companies
also provides guidance and structure in disseminating
                                                                     Act, 1965 have been complied with.
corporate information to, and in dealing with, investors,
analysts, media and the investing public.
                                                                     The Directors are also responsible for ensuring that
                                                                     proper accounting and other records are kept which
ANNUAL GENERAL MEETING                                               disclose with reasonable accuracy, the financial position of
                                                                     the Company and of the Group and which enables them
The annual general meeting of the Company provides the               to ensure that the financial statements comply with the
principal forum for dialogue and interaction between the             relevant statutory requirements.
Board and the shareholders. The participation of
shareholders, both individuals and institutional at general
meetings on clarifications of pertinent and relevant                 F.     COMPLIANCE WITH THE CODE
information is encouraged.
                                                                     The Group has complied substantially with the principles
                                                                     and best practices outlined in the Code.
D. ACCOUNTABILITY AND AUDIT
                                                                     This Corporate Governance Statement was approved by
FINANCIAL REPORTING                                                  the Board of Directors on 24 August 2006.

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              Tan Sri Dato’ Seri (Dr) Cheah Fook Ling
reporting processes and the quality of its financial                 Executive Chairman
reporting.




                          Sunway Holdings Incorporated Berhad   47   annual report ‘06
Terms of Reference of Management Committee
1.    COMPOSITION                                                                  the subsequent quarterly Board of Directors’
                                                                                   Meeting.
1.1   The Management Committee shall be established
      by the Board of Directors pursuant to Article 110 of                   (b) Approve the creation of any mortgage, charge
      the Company’s Articles of Association and shall                            or other encumbrance over the Company or
      consist of not less than three (3) members.                                Group’s property or assets for amounts not
                                                                                 exceeding RM5 million. Any such approvals
1.2   The members of the Management Committee shall                              are to be reported to the Board at the
      elect a Chairman from amongst their number.                                subsequent quarterly Board of Directors’
                                                                                 Meeting.
1.3   If a member of the Management Committee resigns,
      dies or for any reason ceases to be a member with                      (c) Approve the issuing or providing or permitting
      the result that the number of members is reduced                           the Company or any of its subsidiaries to issue
      below three (3), the Board shall appoint such                              or provide any form of guarantees or
      number of new members as may be required to                                indemnities or other financial or non-financial
      make up the minimum of three (3) members.                                  support provided it is made in the ordinary
                                                                                 course of business.
2.    OBJECTIVE                                                              (d) Authorises changes in signatories in respect of
      To assist the Board in the day-to-day operations of                        accounts maintained by the Company with
      the Group.                                                                 banks and other financial institutions.

                                                                      4.3    Approval of Capital Expenditure, Commitments,
3.    MEETINGS                                                               Investment Contracts pursuant to the Group
                                                                             Credit Policies approved by the Board
3.1   The quorum for the Management Committee shall
      be at least two (2) members.                                           To approve capital expenditure, commitments and
                                                                             any investment contract (or series of contracts) or
3.2   The Management Committee shall meet as and                             any amendment to an existing contract involving
      when it thinks necessary and expedient for the                         cumulative payments up to RM5 million (or its
      despatch of its terms of reference.                                    equivalent in another currency), except as provided
                                                                             in the budget or business plan of the Company.
3.3   The Secretary to the Management Committee shall
      be the Company Secretary and shall be responsible,              4.4    Adoption of any Significant Changes in Accounting
      with the concurrence of the Chairman, for drawing                      Treatment or Policies
      up and circulating the agenda and the notice of
      meeting together with the supporting explanatory                       Approve the adoption of or any significant change
      documentation to members prior to each meeting.                        in the accounting treatment or policies of each
                                                                             Company within the Group, other than as required
3.4   The Secretary of the Management Committee shall                        by law or accounting policies generally accepted in
      be entrusted to record all proceedings and minutes                     Malaysia from time to time.
      of all meetings of the Committee.
                                                                      4.5    Human Resource
3.5   In addition to the availability of detailed minutes of
      the Management Committee meetings to all Board                         Approval of manpower plan including succession
      members, the Committee at each Board Meeting                           planning, appointing, training and fixing the
      will report a summary of significant matters and                       compensation of senior management (excluding
      resolutions.                                                           Executive Directors).

                                                                      4.6    Investors’ Relation Programme
4.    FUNCTIONS AND DUTIES
                                                                             Developing and implementing an investor relations
      The Management Committee shall be responsible                          programme including shareholder communications
      for overseeing and dealing with operational matters                    policy.
      from time to time. Such matters to include:-
                                                                      4.7    Other Matters
4.1   Investments
                                                                             To undertake such functions and all matters as may
      To deliberate and make recommendations to the                          be approved or delegated by the Board.
      Board on all transactions and matters relating to the
      Group’s core business or existing investments.
                                                                      5.     CIRCULAR RESOLUTION IN
4.2   Financial Arrangement
                                                                             WRITING
      (a) Approve financial arrangements with banks
                                                                             A circular resolution in writing signed by majority
          and other financial institutions including the
                                                                             of the members of the Management Committee
          signing of such documents for facilities
                                                                             shall be considered valid and effectual as a
          negotiated up to RM5 million. Any such
                                                                             resolution duly passed at a meeting of the
          approvals are to be reported to the Board at
                                                                             Management Committee.


                           Sunway Holdings Incorporated Berhad   48   annual report ‘06
Terms of Reference of Nomination Committee

1.   MEMBERSHIP                                                           (d) To recommend to the Board, candidates for all
                                                                              directorships to be filled by the shareholders or
     (a) The Nomination Committee shall be                                    the Board.
         appointed by the Board from among their
         number and shall comprise not fewer than                         (e) To consider in making its recommendations,
         three (3) in number.                                                 candidates for directorships proposed by the
                                                                              Chief Executive Officer and, within the
     (b) The majority of the members of the                                   bounds of practicability, by any other senior
         Committee shall be independent non-                                  executive or any Director or shareholder.
         executive Directors.
                                                                          (f)   To recommend to the Board, Directors or
     (c) The members of the Committee shall elect a                             officers of the Company to fill the seats on
         Chairman from among their number who is                                Board Committees.
         not an Executive Director of the Company.
                                                                          (g) To undertake an annual review of the required
     (d) In the event of any vacancy in the Committee                         mix of skills and experience and other qualities
         resulting in the number of members being                             of Directors, including core competencies
         reduced to below three (3), the Board shall,                         which Non-Executive Directors should bring
         within three (3) months fill the vacancy.                            to the Board and to disclose this in the Annual
                                                                              Report.
2.   AUTHORITY
                                                                          (h) To assist the Board to implement a procedure
     (a) The Nomination Committee is entrusted with                           to be carried out by the Nomination
         the task of proposing new nominees for the                           Committee annually for assessing the
         Board and for assessing existing Directors on                        effectiveness of the Board as a whole, the
         an on-going basis.                                                   Committees of the Board and for assessing the
                                                                              contributions and performance of Directors
     (b) The ultimate decision as to who shall be                             and Board of Committee members.
         nominated should be the responsibility of the
         full  Board     after    considering      the                    (i)   To introduce such regulations or guidelines,
         recommendations of such a Committee.                                   procedures to function effectively and fulfill
                                                                                the Committee’s objective.
3.   FUNCTIONS
                                                                   4.     MEETINGS
     (a) To determine the core competencies and skills
         required of Board members to best serve the                      (a) The Committee shall meet at least once a year.
         business and operations of the Group as a                            However, additional meetings may be called at
         whole and the optimum size of the Board to                           any time at the Nomination Committee
         reflect the desired skills and competencies.                         Chairman’s discretion.

     (b) To review the size of Non-Executive                              (b) The quorum for the meeting shall be two (2)
         participation, Board balance and determine if                        members.
         additional Board members are required and
         also to ensure that at least one-third (1/3) of
         the Board is independent.
                                                                   5.     REPORTING
                                                                          The Chairman of the Committee shall report on
     (c) To recommend to the Board on the                                 each meeting to the Board.
         appropriate number of Directors to comprise
         the Board which should fairly reflect the
         investments of the minority shareholders in               6.     SECRETARY
         the Company, and whether the current Board                       The Secretary to the Committee shall be the
         representation satisfies this requirement.                       Company Secretary.




                        Sunway Holdings Incorporated Berhad   49   annual report ‘06
Terms of Reference of Remuneration Committee

1.   OBJECTIVES                                                                  (iii) Share Options
                                                                                 (iv) Any other benefits
     The Remuneration Committee shall:-                                          (v) Compensation for early termination

     (a) Ensure that the Company’s Executive                               (c) Ensure that a fair differential between the
         Directors are fairly rewarded for their                               remuneration of Board members and other
         individual contributions to the Company’s                             levels of management is maintained.
         overall performance and the levels of
         remuneration should be sufficient to attract                      (d) Conduct continued assessment of individual
         and retain Directors to run the Company                               Executive Directors to ensure that
         successfully.                                                         remuneration is directly related to corporate
                                                                               and individual performance.
     (b) Demonstrate to all stakeholders in the business
         that the remuneration of the Executive                            (e) Obtain the advice and information from
         Directors of the Company is set by a                                  external source, if necessary, to compare the
         Committee of Board members who have no                                remuneration currently earned by the
         personal interest in the outcome of their                             Executive Directors and those paid to
         decisions and who will give due regard to the                         Executive Directors of other companies of a
         interests of the stakeholders and to the                              similar size in a comparable industry sector.
         financial and commercial health of the
         Company.                                                          (f)   To ensure that the base salary element is
                                                                                 competitive but fair.
2.   MEMBERSHIP
                                                                           (g) To advise on and monitor, a suitable
     (a) The Committee shall be appointed by the                               performance related formula ie. whether the
         Board from among their number and shall be                            formula is based on individual performance,
         composed of not fewer than three (3) in                               company profit performance, earnings per
         number.                                                               share, etc.

     (b) The majority of the members comprising the                        (h) To provide an objective and independent
         Committee shall be:-                                                  assessment of the benefits granted to Executive
                                                                               Directors.
          (i)  Non-Executive       Directors     of   the
               Company; or                                                 (i)   To introduce any policy or guidelines which
          (ii) any person not having a relationship                              would enable the smooth administration and
               which, in the opinion of the Board, would                         effective discharge of the Committee’s duties
               interfere with the exercise of independent                        and responsibilities.
               judgment in carrying out the functions of
               the Remuneration Committee.                                 (j)   To furnish a report to the Board of any findings
                                                                                 of the Committee.
     (c) The members of the Committee shall elect a
         Chairman from among their number who is
         not an Executive Director of the Company.
                                                                    4.     MEETINGS
                                                                           (a) The Committee shall meet at least once per
     (d) In the event of any vacancy in the Committee                          year. However, additional meetings may be
         resulting in the number of members being                              called at any time at the Remuneration
         reduced to below three (3), the Board shall,                          Committee Chairman’s discretion.
         within three (3) months fill the vacancy.
                                                                           (b) The quorum of each meeting shall be two (2)
3.   FUNCTIONS                                                                 members.

     (a) To recommend to the Board the remuneration
         of the Executive Chairman, Chief Executive
                                                                    5.     SECRETARY
         Officer and Executive Directors.                                  The Secretary to the Committee shall be the
                                                                           Company Secretary or Senior General Manager of
     (b) Assume responsibility for all elements of                         Human Resource.
         Executive Directors’ remuneration eg:

          (i) Basic salary
          (ii) Profit sharing schemes (if any)




                         Sunway Holdings Incorporated Berhad   50   annual report ‘06
Terms of Reference of Employees’ Share Option
Scheme Committee
1.    MEMBERSHIP                                                             (a) to suspend the right of any Option Holder who
                                                                                 is found to have contravened the written
      (a) The Committee shall be appointed by the                                policies and guidelines of the Group and/or the
          Board from among their number and shall be                             terms and conditions of the Option Holder’s
          composed of not fewer than four (4) in                                 employment (whether or not such
          number.                                                                contravention may give rise to a disciplinary
                                                                                 proceeding being instituted) to exercise his
      (b) The members of the Committee shall elect a                             option(s).     In addition to this right of
          Chairman from among their number.                                      suspension, the Committee may impose such
                                                                                 terms and conditions as the Committee shall
      (c) In the event of any vacancy in the Committee                           deem appropriate in its discretion, on the right
          resulting in the number of members being                               of exercise of his option(s) having regard to the
          reduced to below four (4), the Board shall,                            nature of the contravention PROVIDED
          within three (3) months fill the vacancy.                              ALWAYS that in the event such contravention
                                                                                 would result in the dismissal or termination of
      (d) The Board shall have the discretion as it deems                        service of such Option Holder, the option(s)
          fit to rescind and/or revoke the appointment of                        shall immediately cease without notice, upon
          any person(s) in the Committee.                                        pronouncement of the dismissal or termination
                                                                                 of service of such Option Holder; OR
2.    FUNCTIONS
                                                                             (b) to suspend the right of any Option Holder who
      Pursuant to Bylaw 21, the Committee shall                                  is being subjected to disciplinary proceedings
      administer the Employees’ Share Option Scheme                              (whether or not such disciplinary proceedings
      (“ESOS”) in such manner as it shall in its discretion                      may give rise to a dismissal or termination of
      deem fit and with such powers and duties as are                            service of such Option Holder) to exercise his
      conferred upon it by the Board including the                               option(s) pending the outcome of such
      powers:-                                                                   disciplinary proceedings. In addition to this
                                                                                 right of suspension, the Committee may
      (a) Subject to the provisions of the ESOS, to                              impose such terms and conditions as the
          construe and interpret the ESOS and option(s)                          Committee shall deem appropriate in its
          granted under it, to define the terms therein                          discretion, on the right of exercise of his
          and to recommend to the Board to establish,                            option(s) having regard to the nature of the
          amend and revoke rules and regulations                                 charges made or brought against such Option
          relating to the ESOS and its administration.                           Holder, PROVIDED ALWAYS that:-
          The Committee in the exercise of this power
          may correct any defect, supply any omission or                           (i)    in the event such Option Holder is found
          reconcile any inconsistency in the ESOS or in                                   not guilty of the charges which gave rise
          any agreement providing for an option(s) in a                                   to such disciplinary proceedings, the
          manner and to the extent it shall deem                                          Committee shall reinstate the right of
          necessary to expedite and make the ESOS fully                                   such Option Holder to exercise his
          effective.                                                                      option(s); or

      (b) To determine all questions of policy and                                 (ii) in the event such Option Holder is found
          expediency that may arise in the                                              guilty resulting in the dismissal or
          administration of the ESOS and generally                                      termination of service of such Option
          exercise such powers and perform such acts as                                 Holder, the option(s) shall immediately
          are deemed necessary or expedient to promote                                  cease      without     notice,      upon
          the best interests of the Company.                                            pronouncement of the dismissal or
                                                                                        termination of service of such Option
                                                                                        Holder; or
3.    POWERS AND AUTHORITY
3.1   Pursuant to Bylaw 4.1, the Committee has the                                 (iii) in the event such Option Holder is found
      discretion to offer such number of options to                                      guilty but not dismissed or termination of
      eligible employees in accordance with the Scheme                                   service is recommended, the Committee
      after taking into consideration the contribution,                                  shall have the right to determine at its
      performance, number of years of service and the                                    discretion whether or not the Option
      potential worth of the employees to the continued                                  Holder may continue to exercise his
      success of the Group.                                                              option(s) and if so, to impose such terms
                                                                                         and conditions as it deems appropriate, on
3.2   Pursuant to Bylaw 8.6, the Committee shall have                                    such exercise.
      the right at its discretion by notice in writing to that
      effect:-




                           Sunway Holdings Incorporated Berhad   51   annual report ‘06
Terms of Reference of Employees’ Share Option
Scheme Committee (Cont’d)
3.3   Bylaw 20.1 stipulates that the Committee may at                4.     MEETINGS
      any time and from time to time recommend to the
      Board, any additions or amendments to and/or                          (a) Meetings of the Committee may be called at
      deletions of the Bylaws as it shall in its absolute                       any time by the Committee Chairman.
      discretion think fit and the Board shall have the
      power by resolution to add to, amend and/or delete                    (b) The quorum for the meeting shall be three (3)
      all or any of the Bylaws upon such                                        members.
      recommendation, subject to the approval of all
      relevant authorities and all applicable laws,                         (c) Where necessary and appropriate, any decision
      regulations, directives and guidelines (if required)                      of the Committee can be made by a majority
      PROVIDED THAT no such amendment and/or                                    of the members via a Circular Resolution.
      modification shall be made which would either:-
                                                                     5.     REPORTING
      (a) prejudice the rights then accrued to any
          Option Holder who has accepted an option                          The Chairman of the Committee shall report the
          without his prior consent; or                                     proceedings of each Committee Meeting to the
                                                                            Board.
      (b) without the prior approval of the shareholders
          of the Company in general meeting alter the
          Bylaws to the advantage of any Option Holder
                                                                     6.     SECRETARY
          or group of Option Holders or all Option                          The Secretary to the Committee shall be the
          Holders.                                                          Company Secretary.

3.4   Such other authorities as governed by the Bylaws
      and/or are conferred upon the Committee by the                 .
      Board from time to time.




                          Sunway Holdings Incorporated Berhad   52   annual report ‘06
Terms of Reference of Risk Management Committee

1.   MEMBERSHIP                                                    2.1    Routine Roles and Responsibilities

     (a) The Risk Management Committee (“RMC”)                            (a) Review the effectiveness of overall risk
         shall be appointed by the Board and shall                            management at the enterprise level.
         comprise not fewer than four (4) in number.
                                                                          (b) Evaluate new risks identified by the RWC on
     (b) The members of the RMC shall elect a                                 the divisional level.
         Chairman from among their number.
                                                                          (c) Follow-up on management action plans based
     (c) In the event of any vacancy in the RMC                               on the status of implementation compiled by
         resulting in the number of members being                             the RWC.
         reduced to below four (4), the Board shall,
         within three (3) months fill the vacancy.                        (d) Identify new strategic risks including corporate
                                                                              matters eg. regulatory, business development,
     (d) The Board shall have the discretion as it deems                      etc.
         fit to rescind and/or revoke the appointment of
         any person(s) in the RMC.                                        (e) Review the enterprise risk scorecard and
                                                                              determine the risks to be escalated to the
2.   ROLES AND FUNCTIONS                                                      Board on a quarterly basis.

     The RMC has the overall responsibility for                    2.2    Ad-Hoc Roles and Responsibilities
     overseeing the risk management activities of the
     Group, approving appropriate risk management                         (a) Propose to the Board, the monetary threshold
     procedures and measurement methodologies across                          and nature of proposed investments that
     the organisation as well as identification and                           require   the    RMC’s     evaluation    and
     management of strategic business risks of the                            endorsement before submission to the Board.
     Group. Its primary roles include the following:-
                                                                          (b) Review proposals/feasibility studies prepared
     (a) To champion and promote the Enterprise Risk                          by project sponsor which meet the requisite
         Management and to ensure that the risk                               threshold before recommending to the Board
         management process and culture are                                   for final decision.
         embedded throughout the Group.

     (b) To ensure the implementation of the
                                                                   3.     MEETINGS
         objectives outlined in the Risk Management                       (a) The RMC shall meet at least quarterly in a
         Policy and compliance with them.                                     year. However, additional meetings may be
                                                                              called at any time at the RMC Chairman’s
     (c) To provide routine quarterly reporting and                           discretion.
         update the Board on key risk management
         issues as well as ad-hoc reporting and                           (b) The quorum for the meeting shall be two (2)
         evaluation on investment proposals.                                  members.

     (d) To work with the Group Financial Controller
         and Group Internal Audit Department in the                4.     REPORTING
         preparation of the Statement on Internal                         The Chairman of the RMC shall report the
         Control for inclusion in the Company’s Annual                    proceedings of each Committee Meeting to the
         Report and to recommend the same for the                         Board.
         approvals of the Audit Committee and Board.

     The Risk Working Committee (“RWC”) will assist                5.     SECRETARY
     the RMC by identifying and managing operational
                                                                          The Secretary to the RMC shall be the Company
     risks within the organisation.
                                                                          Secretary.
     The RWC provides updates on key divisional risk
     management issues to the RMC by providing
     quarterly reporting and risk management software
     reports.




                        Sunway Holdings Incorporated Berhad   53   annual report ‘06
Terms of Reference of Strategic Direction Committee

1.   MEMBERSHIP                                                            (b) To ensure all acquisitions are in line with
                                                                               strategic direction of the Group and would
     (a) The SunInc Strategic Direction Committee                              positively enhance shareholders’ value.
         (“SSDC”) shall be appointed by the Board and
         shall comprise not fewer than four (4) in                         (c) To ensure all divestments decisions are
         number.                                                               thoroughly deliberated and would positively
                                                                               enhance shareholders’ value.
     (b) The members of the SSDC shall elect a
         Chairman from among their number.                                 (d)   To ensure utilisation of all resources within the
                                                                                 Group are appropriate to meet strategic
     (c) In the event of any vacancy in the SSDC                                 objectives of the Group.
         resulting in the number of members being
         reduced to below four (4), the Board shall,
         within three (3) months fill the vacancy.                  3.     MEETINGS
                                                                           (a) The SSDC shall meet at least quarterly or half
     (d) The Board shall have the discretion as it deems                       yearly in a year. However, additional meetings
         fit to rescind and/or revoke the appointment of                       may be called at any time at the SSDC
         any person(s) in the SSDC.                                            Chairman’s discretion.

2.   ROLES AND FUNCTIONS                                                   (b) The quorum for the meeting shall be two (2)
                                                                               members.
     The SSDC has the overall responsibility for deciding
     on appropriate strategic direction for SunInc Group,
     particularly to manage the Group from a Strategy               4.     REPORTING
     Driven Perspective, with clear objectives and targets                 The Chairman of the SSDC shall report the
     for proactive decision-making.                                        proceedings of each Committee Meeting to the
                                                                           Board.
     This is to promote transparency, accountability and
     set a formal platform for communicating the
     Group’s strategic direction, in line with enhancing            5.     SECRETARY
     Corporate Governance within the Group.
                                                                           The Secretary to the SSDC shall be the Company
                                                                           Secretary.
     Its primary roles include the following:-

     (a) To assess and deliberate on all possible local
         and foreign business ventures proposed by its
         Business Units, and to decide on viability of
         business ventures so as to ensure that it is in
         line with Group strategic objectives.




                         Sunway Holdings Incorporated Berhad   54   annual report ‘06
Audit Committee Report

FORMATION                                                                     1.2 The majority of the members including the
                                                                                  Chairman of the Committee shall be
The Audit Committee was formed by the Board of                                    Independent Directors as defined in Chapter 1
Directors at its meeting on 7 March 1994.                                         of the Listing Requirements of Bursa Malaysia
                                                                                  Securities Berhad ("Bursa Securities").
The objective of the Audit Committee is to assist the
Board of Directors in fulfilling its fiduciary responsibilities               1.3 The Committee shall include at least one (1)
relating to internal controls, financial and accounting                           person:-
records and policies as well as financial reporting practices
of the Company and its subsidiaries ("the Group").                                  (a) who is a member of the Malaysian
                                                                                        Institute of Accountants; or
COMPOSITION
                                                                                    (b) who must have at least three (3) years'
The members of the Audit Committee during the                                           working experience and:-
financial period from 1 January 2005 to 30 June 2006
were as follows:-                                                                          (i)   have passed the examinations
                                                                                                 specified in Part I of the 1st
1.    Wong Chin Mun - Chairman                                                                   Schedule of the Accountants Act,
      (Senior Independent Non-Executive Director)                                                1967; or

2.    Datuk Low Seng Kuan                                                                  (ii) is a member of one (1) of the
      (Independent Non-Executive Director)                                                      Associations specified in Part II of
                                                                                                the 1st Schedule of the Accountants
3.    Datuk Abdul Malek Bin Abdul Aziz                                                          Act, 1967; or
      (Independent Non-Executive Director)
                                                                                    (c) who must have at least three (3) years'
4.    Yau Kok Seng                                                                      post   qualification    experience  in
      (Managing Director, Non-Independent Executive                                     accounting or finance and:-
      Director)
                                                                                           (i)   has a degree/masters/doctorate in
                                                                                                 accounting or finance; or
MEETINGS AND ATTENDANCE
The Audit Committee held seven (7) meetings during the                                     (ii) is a member of one (1) of the
financial period and the attendance of the Committee                                            professional         accountancy
Members was as follows:-                                                                        organisations which has been
                                                                                                admitted as a full member of the
Name of Committee Member               Number of Meetings                                       International    Federation   of
                                           Attended                                             Accountants; or
Wong Chin Mun                                 7/7
Tan Sri Dato’ Seri Dr                                                               (d) who must have at least seven (7) years'
 Md Noordin Bin Md Sopiee                                                               experience being a chief financial officer
 (Passed away on 29 December 2005)               1/5*                                   of a corporation or having the function of
Datuk Low Seng Kuan                              6/7                                    being primarily responsible for the
Datuk Abdul Malek Bin Abdul Aziz                                                        management of the financial affairs of a
 (Appointed on 13 March 2006)                    1/1*                                   corporation.
Yau Kok Seng                                     7/7
                                                                              1.4 No Alternate Director shall be appointed as a
* Reflects the number of Audit Committee Meetings attended                        member of the Committee.
  during the time the Director held office.
                                                                              1.5 The members of the Committee shall elect a
The Company Secretaries, the Internal Auditors and the                            Chairman from amongst their number.
Finance Director were present at all meetings. At three (3)
of the meetings, the External Auditors were present.                          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
TERMS OF REFERENCE                                                                below three (3), the Board shall, within three
                                                                                  (3) months appoint such number of new
1.    Membership                                                                  members as may be required to make up the
                                                                                  minimum of three (3) members.
      1.1 The Committee shall be appointed by the
          Board of Directors from amongst the Directors                       1.7 The terms of office and performance of the
          of the Company and shall consist of not less                            Committee and each of its members shall be
          than three (3) members.                                                 reviewed by the Board no less than once every



                            Sunway Holdings Incorporated Berhad   55   annual report ‘06
Audit Committee Report                                               (Cont’d)


          three (3) years. However, the appointment                         3.1 Investigate any matter within its terms of
          terminates when a member ceases to be a                               reference.
          Director.
                                                                            3.2 Have adequate resources required to perform
2.   Meetings                                                                   its duties.

     2.1 The quorum for a Committee Meeting shall be                        3.3 Have full and unrestricted access to
         at least two (2) members, the majority present                         information, records and documents relevant
         must be Independent Directors.                                         to its activities.

     2.2 The Committee shall meet at least four (4)                         3.4 Have direct communication channels with the
         times a year and such additional meetings as                           External and Internal Auditors.
         the Chairman shall decide.
                                                                            3.5 Engage, consult and obtain outside legal or
     2.3 Notwithstanding paragraph 2.2 above, upon                              other independent professional advice and to
         the request of any member of the Committee,                            secure the attendance of outsiders with
         non-member Directors, the Internal or                                  relevant experience and expertise it considers
         External Auditors, the Chairman shall convene                          necessary.
         a meeting of the Committee to consider the
         matters brought to its attention.                            4.    Functions and Duties
     2.4 The External Auditors have the right to appear                     4.1 To review and recommend for the Board's
         and be heard at any meeting of the Committee                           approval, the Internal Audit Charter which
         and shall appear before the Committee when                             defines the independent purpose, authority,
         required to do so.                                                     scope and responsibility of the internal audit
                                                                                function in the Company and the Group.
     2.5 The non-member Directors and employees of
         the Company and of the Group shall normally                        4.2 To review the following and report to the
         attend the meetings to assist in its deliberations                     Board:-
         and resolutions of matters raised. However, at
         least once a year, the Committee shall meet                              (a) With the External Auditors:-
         with the External Auditors without the
         presence of the executive members of the                                        (i)   the audit plan and audit report and
         Committee.                                                                            the extent of assistance rendered by
                                                                                               employees of the Auditee;
     2.6 The Internal Auditors shall be in attendance at
         all meetings to present and discuss the audit                                   (ii) their evaluation of the system of
         reports and other related matters as well as the                                     internal controls;
         recommendations relating thereto and to
         follow-up on all relevant decisions made.                                       (iii) the audit fee and on matter
                                                                                               concerning their suitability for
     2.7 The Company Secretary shall act as Secretary                                          nomination, appointment and re-
         of the Committee and shall be responsible,                                            appointment and the underlying
         with the concurrence of the Chairman, for                                             reasons for resignation or dismissal
         drawing up and circulating the agenda and the                                         as Auditors;
         notice of meetings together with the
         supporting explanatory documentation to                                         (iv) the  management      letter        and
         members prior to each meeting.                                                       management's response; and

     2.8 The Secretary of the Committee shall be                                         (v) issues and reservations arising from
         entrusted to record all proceedings and                                             audits.
         minutes of all meetings of the Committee.
                                                                                  (b) With the Internal Audit Department:-
     2.9 In addition to the availability of detailed
         minutes of the Committee Meetings to all                                        (i)   the adequacy and relevance of the
         Board members, the Committee at each Board                                            scope, functions and resources of
         Meeting, will report a summary of significant                                         Internal Audit and the necessary
         matters and resolutions.                                                              authority to carry out its work;

3.   Rights and Authority                                                                (ii) the audit plan of work programme
                                                                                              and results of internal audit processes
     The Committee is authorised to:-                                                         including recommendations and
                                                                                              actions taken;


                          Sunway Holdings Incorporated Berhad   56   annual report ‘06
Audit Committee Report                                          (Cont’d)


           (iii) the extent of cooperation and                               (a) the disclosure statement of the Board on:-
                 assistance rendered by employees of
                 Auditee; and                                                       (i)   the Company's applications of the
                                                                                          principles set out in Part I of the
           (iv) the appraisal of the performance of                                       Malaysian Code on Corporate
                the internal audit including that of                                      Governance; and
                the senior staff and any matter
                concerning their appointment and                                    (ii) the extent of compliance with the
                termination.                                                             best practices set out in Part II of the
                                                                                         Malaysian Code on Corporate
      (c) The quarterly results and year end                                             Governance, specifying reasons for
          financial statements prior to the approval                                     any area of non-compliance and the
          by the Board, focusing particularly on:-                                       alternative measures adopted in such
                                                                                         areas.
           (i)   changes and implementation of
                 major accounting policies and                               (b) the   statement      on     the   Board's
                 practices;                                                      responsibility for the preparation of the
                                                                                 annual audited financial statements.
           (ii) significant and unusual issues;
                                                                             (c) the disclosure statement on the state of
           (iii) going concern assumption; and                                   the internal controls system of the
                                                                                 Company and of the Group.
           (iv) compliance       with    accounting
                standards, regulatory and other legal                        (d) the statement by the Audit Committee
                requirements.                                                    on the verification of allocation of share
                                                                                 options to the Group's eligible employees
      (d) The major findings of investigations and                               in compliance with the criteria set out in
          management response.                                                   the Bylaws of the Company's Employees'
                                                                                 Share Option Scheme, at the end of each
      (e) The propriety of any related party                                     financial year.
          transaction and conflict of interest
          situation that may arise within the                                (e) other disclosures forming the contents of
          Company or the Group including any                                     annual report spelt out in Part A of
          transaction, procedure or course of                                    Appendix      9C     of    the    Listing
          conduct that raises questions of                                       Requirements of Bursa Securities.
          management integrity.
                                                                       The above functions and duties are in addition to
  4.3 To report any breaches of the Listing                            such other functions as may be agreed to from time
      Requirements which have not been                                 to time by the Committee and the Board.
      satisfactorily resolved, to Bursa Securities.
                                                                 5.    Internal Audit Department
  4.4 To prepare the Audit Committee Report for
      inclusion in the Company's Annual Report                         5.1 The Head of the Internal Audit Department
      covering:-                                                           shall have unrestricted access to the
                                                                           Committee Members and report to the
      (a) the composition of the Committee                                 Committee whose scope of responsibility
          including the name, designation and                              includes overseeing the development and the
          directorship of the members;                                     establishment of the internal audit function.

      (b) the terms of reference of the Committee;                     5.2 In respect of routine administrative matters,
                                                                           the Head of Internal Audit Department shall
      (c) the number of meetings held and details                          report to the Group Executive Chairman or
          of attendance of each member;                                    his designate.

      (d) a summary of the activities of the
          Committee in the discharge of its                      ACTIVITIES OF THE COMMITTEE
          functions and duties; and
                                                                 FOR THE FINANCIAL PERIOD
      (e) a summary of the activities of the internal            ENDED 30 JUNE 2006
          audit function.
                                                                 The summary of activities of the Committee in the
                                                                 discharge of its duties and responsibilities is as follows:-
  4.5 To review the following for publication in the
      Company's Annual Report:-



                     Sunway Holdings Incorporated Berhad   57   annual report ‘06
Audit Committee Report                                               (Cont’d)


(a)   Reviewed the adequacy and relevance of the scope,               (l)   Discussed the implications of any latest changes and
      functions, resources, risk based internal audit plan                  pronouncements on the Company and the Group,
      and results of the internal audit processes with the                  which were issued by the accountancy, statutory
      Internal Audit Department.                                            and regulatory bodies.

(b)   Reviewed the audit activities carried out by the                (m) Reported to the Board on significant issues and
      Internal Audit Department and the audit reports to                  concerns discussed during the Committee's
      ensure corrective actions were taken in addressing                  meetings        together      with       applicable
      the risk issues reported.                                           recommendations. Minutes of meetings were
                                                                          tabled, discussed and noted by all Board members.
(c)   Reviewed with the assistance of the Internal Audit
      Department and management, the adequacy,                        (n)   Reviewed and approved the Audit Committee
      appropriateness and compliance of the procedures                      Report and the statement by the Audit Committee
      established to monitor recurrent related party                        on the verification of allocation of share options to
      transactions.                                                         the Group's eligible employees in compliance with
                                                                            the criteria set out in the Bylaws of the Company's
(d)   Reviewed with the External Auditors, the audit plan                   Employees' Share Option Scheme for inclusion in
      of the Company and of the Group for the year                          the Company's 2004 Annual Report.
      (inclusive of risk and audit approach, system
      evaluation, audit fees, issues raised and management            (o)   Reviewed the disclosure statements on compliance
      responses) prior to the commencement of the                           of the Malaysian Code on Corporate Governance
      annual audit.                                                         and the state on internal controls as well as the
                                                                            Directors' Responsibility Statement on the annual
(e)   Reviewed the extent of assistance rendered by                         audited financial statements for inclusion in the
      management and issues and reservations arising                        Company's 2004 Annual Report.
      from audits with the External Auditors without the
      presence of management staff and the executive
      member of the Committee.                                        INTERNAL AUDIT ACTIVITIES
                                                                      REPORT FOR THE FINANCIAL
(f)   Reviewed the financial statements, the audit report,
                                                                      PERIOD ENDED 30 JUNE 2006
      issues and reservations arising from statutory audit
      with the External Auditors.                                     The summary of activities of the Internal Audit
                                                                      Department is as follows:-
(g)   Reviewed and discussed the Management Accounts
      with management.                                                (a)   Prepared the annual audit plan for the approval of
                                                                            the Audit Committee.
(h)   Reviewed the quarterly results and financial
      statements for the financial period ended 30 June               (b)   Regularly performed risk based audits on strategic
      2006 with management for recommendation to the                        business units of the Company and of the Group,
      Board of Directors for approval and release to Bursa                  which covered reviews of the internal control
      Securities.                                                           system, accounting and management information
                                                                            system and risk management.
(i)   Reviewed all related party transactions entered into
      by the Company and the Group at the Committee's                 (c)   Issued audit reports to the Committee and
      quarterly meetings to ensure that the transactions                    management identifying weaknesses and issues as
      entered into were at arm's length basis and on                        well as highlighting recommendations for
      normal commercial terms.                                              improvements.

(j)   Reviewed and approved the Circular to                           (d)   Acted on suggestions made by the Committee
      Shareholders and the statement by the Audit                           and/or senior management on concerns over
      Committee in respect of the proposed                                  operations or controls and significant issues
      Shareholders' Mandate for Recurrent Related Party                     pertinent to the Company and of the Group.
      Transactions.
                                                                      (e)   Followed up on management corrective actions on
(k)   Reviewed any conflict of interest situation that may                  audit issues raised by the External Auditors.
      arise within the Company or Group including any
      transaction, procedure or course of conduct that
      raises questions of management integrity and
      approved the management's policy on conflict of
      interest declaration.




                          Sunway Holdings Incorporated Berhad   58   annual report ‘06
Audit Committee Report                                              (Cont’d)


(f)   Reported to the Committee on review of the                     (h)   Attended Committee's meetings to table and
      adequacy, appropriateness and compliance with the                    discuss the audit reports and followed up on matters
      procedures established to monitor recurrent related                  raised.
      party transactions.
                                                                     (i)   Performed independent evaluation on the operation
(g)   Reviewed on the appropriateness of the disclosure                    of risk management framework focusing primarily
      statements in regard to compliance with the                          on the adequacy and effectiveness of the said
      Malaysian Code on Corporate Governance and the                       framework.
      state on internal controls as well as the Audit
      Committee Report.




                         Sunway Holdings Incorporated Berhad   59   annual report ‘06
Statement on Internal Control

INTRODUCTION                                                           The Board is responsible for setting the business direction
                                                                       and for overseeing the conduct of the Group's operations
The Malaysian Code on Corporate Governance stipulates                  through its various Board Committees and management
that the Board of Directors of public listed companies                 reporting mechanisms. Through these mechanisms, the
should maintain a sound system of internal control to                  Board is informed of all major control issues pertaining to
safeguard shareholders' investment and Group assets. Set               internal controls, regulatory compliance and risk taking.
out below is the Board of Directors ("the Board") of
SunInc’s Statement on Internal Control (“the Statement”)
as a Group, made in compliance with Paragraph 15.27 of                 Enterprise Risk Management Framework
the Listing Requirements of Bursa Malaysia Securities                  In dealing with its stewardship responsibilities, the Board
Berhad and the Statement on Internal Control: Guidance                 recognises that effective risk management is part of good
for Directors of Public Listed Companies.                              business management practice. The Board acknowledges
                                                                       that all areas of the Group's activities involve some degree
THE BOARD’S RESPONSIBILITY                                             of risk and is committed to ensuring that the Group has
                                                                       an effective risk management framework which will allow
The Board places importance on, and is committed to                    the Group to be able to identify, evaluate and manage
maintaining a sound system of internal control and                     risks that affect the achievement of the Group's business
effective risk management practices in the Group to                    objectives within defined risk parameters in a timely and
ensure good corporate governance. The Board affirms its                effective manner.
responsibility for reviewing the adequacy and integrity of
the Group's system of internal control and management                  The details on Enterprise Risk Management Framework
information systems, including systems for compliance                  are set out on pages 62 and 63 of the Annual Report.
with applicable laws, rules, directives, guidelines and risk
management practices.
                                                                       Key Elements of the Group’s System of
Notwithstanding, as with any internal control system, the              Internal Control
Group's system of internal control is designed to manage
rather than eliminate the risk of failure to achieve business          The current system of internal control in the Group has
objectives. It follows, therefore, that the system of internal         within it, the following key elements:-
control can only provide reasonable but not absolute
assurance against material misstatement or loss.                       •      Clear Group vision, mission, corporate philosophy
                                                                              and strategic direction which are communicated to
The Group has in place an on-going process of                                 employees at all levels.
identifying, evaluating, monitoring and managing the key               •      An effective Board which retains control over the
risks affecting the achievement of its business objectives                    Group with appropriate management reporting
throughout the period. The Board reviews this process on                      mechanisms which enable the Board to review the
a quarterly basis.                                                            Group's progress.
                                                                       •      Board approved annual budgets and management
In the case of associated companies, the management of                        plans prepared by each subsidiary during the
those companies manages the systems of internal controls.                     Business Plan exercise to consider the relevant
The Statement therefore does not cover these associated                       strengths, weaknesses, opportunities and threats
companies.                                                                    including competitor, market and broader
                                                                              environmental analysis.
                                                                       •      Relevant Board Committees with formal terms of
THE GROUP’S SYSTEM OF INTERNAL                                                references clearly outlining their functions and
CONTROL                                                                       duties delegated by the Board.
                                                                       •      Management meetings involving discussion on
Monitoring Mechanisms and                                                     operational issues at the respective subsidiary levels.
Management Style                                                       •      Comprehensive policies and procedures manuals
                                                                              that provide guidelines on, and authority limits over
Scheduled quarterly meetings of the Board, Board                              various operating, financial and human resources
Committees and management represent the main                                  matters.
platform by which the Group's performance and conduct                  •      A systematic performance appraisal system.
are monitored. The daily running of the business is                    •      Relevant training provided to personnel across all
entrusted to the President, Managing Director ("MD")                          functions to maintain a high level of competency
and their management team. Under the purview of the                           and capability.
President and MD, the respective heads of each operating               •      Continuous quality improvement initiatives to
subsidiary and department of the Group are empowered                          obtain accreditation for all operating subsidiaries
with the responsibility of managing their respective                          such as ISO and OHSAS certification.
operations.                                                            •      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].



                            Sunway Holdings Incorporated Berhad   60   annual report ‘06
Statement on Internal Control                                                        (Cont’d)


Assurance Mechanisms                                                   THE BOARD'S COMMITMENT
The AC is tasked by the Board with the duty of reviewing               The Board recognises that the Group operates in a
and monitoring the effectiveness of the Group's system of              dynamic business environment in which the internal
internal control. In carrying out its responsibilities, the AC         control system must be responsive in order to be able to
relies significantly on the support of the Group Internal              support its business objectives. To this end, the Board
Audit Division ("GIAD") which carries out internal audits              remains committed towards maintaining a sound system
on various operating units within the Group based on a                 of internal control and believes that a balanced
risk-based audit plan approved annually by the AC. Based               achievement of its business objectives and operational
on these audits, the GIAD provides the AC with periodic                efficiency can be attained.
reports highlighting observations, recommendations and
management action plans to improve the system of
internal control. In addition, the AC also reviews and
                                                                       REVIEW OF THE STATEMENT BY
deliberates on any matters relating to internal control                EXTERNAL AUDITORS
highlighted by the external auditors in the course of their
                                                                       As required under Paragraph 15.24 of the Listing
statutory audit of the financial statements of the Group.
                                                                       Requirements of Bursa Malaysia Securities Berhad, the
There were no major internal control weaknesses
                                                                       external auditors have reviewed the Statement. Their
identified during the financial period.
                                                                       review was performed in accordance with Recommended
                                                                       Practice Guide ("RPG") 5 issued by the Malaysian
Additionally for subsidiaries which are accredited with
                                                                       Institute of Accountants. Based on their review, the
ISO or OHSAS certification, scheduled audits are
                                                                       external auditors have reported to the Board that nothing
conducted internally as well as by SIRIM auditors. Results
                                                                       has come to their attention that causes them to believe
of the audits are reported to the Quality Management
                                                                       that the Statement is inconsistent with their
Committee and Occupational Safety and Health
                                                                       understanding of the process the Board has adopted in the
Committee respectively.
                                                                       review of the adequacy and integrity of internal control of
                                                                       the Group. RPG 5 does not require the external auditors
The AC Report is set out on pages 55 to 59 of the Annual
                                                                       to and they did not consider whether the Statement
Report.
                                                                       covers all risks and controls, or to form an opinion on the
                                                                       effectiveness of the Group's risk and control procedures.

                                                                       This Statement on Internal Control was approved by the
                                                                       Board of Directors on 24 August 2006.




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




                            Sunway Holdings Incorporated Berhad   61   annual report ‘06
Enterprise Risk Management Framework

With SunInc Group emphasising on growing its core                     RISK MANAGEMENT PROCESS
businesses to achieve greater heights, Enterprise Risk
Management (“ERM”) is utilised to identify all potential              It is the Board’s view that the Group’s objectives, its
risks that need to be addressed to ensure that the Group              internal organisation and the environment in which it
will be able to achieve its goal.                                     operates continuously evolve; and as a result, the risks that
                                                                      it faces also change. A sound system of internal control
The Group embarked on risk management initiatives in                  therefore depends on a thorough and regular evaluation of
December 2002, in line with the increasing focus of                   the nature and extent of the risks to which the Group is
shareholders on Corporate Governance. In November                     exposed to.
2003, the Board of Directors (“the Board”) adopted the
risk management oversight structure and risk                          To ensure effective risk management within the Group,
management policy.                                                    the following risk management framework has been
                                                                      identified and implemented throughout the Group. It is
The Group has an integrated ERM structure that enables                acknowledged that risks are very closely integrated with
the Group to identify, evaluate, monitor and manage all               opportunities and returns, and thus has to be managed to
key risks pertaining to the business and its environment.             ensure that the Group is able to achieve its corporate
The Group strives to maximise every opportunity, and                  strategies and objectives.
thus seeks to minimise all potential risks through
proactive management.                                                 Below is a chart that depicts the basics of the ERM
                                                                      Framework for the Group.




                                                                 Corporate
                                                                 Strategies
                                                               and Objectives




                                                                   Risk
                                                               Identification



                                     Risk
                                  Assessment




                                      Risk
                                    Response


                                                                    Control
                                                                    Activities




                                                                  Risk
                                                                Monitoring




                         Sunway Holdings Incorporated Berhad   62    annual report ‘06
Enterprise Risk Management Framework                                                                        (Cont’d)


RISK MANAGEMENT STRUCTURE                                                   In addition, the RWC is responsible to deliberate on
                                                                            risks presented by other DRMT representatives and
Strategic and effective risk management is performed                        to contribute towards identifying new risks that
through a centralised reporting and managing structure                      have yet to be brought to the attention of RWC by
that has been put into place. 4 major levels have been                      the respective divisions. Pertinent risk issues, with
identified to promote accountability and responsibility of                  proposed resolutions, are then identified and
managing risks within the Group.                                            escalated to the Risk Management Committee.



                                        Risk                                Risk
                          ➝                                     ➝                               ➝
  Divisional Risk                                                                                            Board of
   Management                          Working                           Management
                                                                                                             Directors
       Team                           Committee                          Committee


(a) Divisional Risk Management Team                                  (c) Risk Management Committee (“RMC”)
    (“DRMT”)
                                                                            The key responsibilities of the RMC are to provide
     The DRMT consists of divisional management                             routine quarterly reporting and update the Board on
     teams that work towards effective identification and                   key risk management issues as well as ad-hoc
     mitigation of the day-to-day risks at the operational                  reporting and evaluation on investment proposals.
     level. The DRMT works closely with all operational                     The RMC is also responsible to champion and
     staff and ensures that risk management techniques                      promote the ERM and to ensure that the risk
     are applied and practised in all facets of the                         management process and culture are embedded
     management and operation within the division. The                      throughout the Group.
     DRMT is also responsible for highlighting all
     foreseeable risks that could hinder the division from
     achieving its strategic objectives.
                                                                     (d) Board of Directors

     Risk reporting and management at the divisional                        The Board of Directors serves as an oversight to the
     level is integrated with the monthly management                        risk management process of the entire Group. Roles
     meetings of respective subsidiaries to ensure                          of the Board include identifying principal risks of
     effective management.                                                  the Group and ensuring the implementation of
                                                                            appropriate systems to mitigate and manage these
                                                                            risks. The Board, through the RMC sets, where
(b) Risk Working Committee (“RWC”)                                          appropriate, objectives, performance targets and
                                                                            policies to manage the key risks faced by the Group.
     The RWC consists of representatives from the
     DRMT and also includes the head of Group Internal
     Audit as the independent observer. The RWC meets
     quarterly, where representatives from the respective
     divisions have the overall responsibility to report
     key risks to the attention of the RWC.




                          Sunway Holdings Incorporated Berhad   63   annual report ‘06
Additional Compliance Information

The information set out below is disclosed in compliance            7.     VARIATION IN RESULTS
with the Listing Requirements of Bursa Malaysia
Securities Berhad:-                                                        There was a deviation of more than 10% between
                                                                           the Company’s unaudited results announced on 30
                                                                           August 2006 and the audited results for the
1.   STATUS OF UTILISATION OF
                                                                           financial period ended 30 June 2006.
     PROCEEDS RAISED FROM
     CORPORATE PROPOSAL                                                    In the unaudited results, the Company had
                                                                           announced a loss after tax and minority interest of
     The Company did not undertake any corporate                           RM23.31 million for the financial period ended 30
     proposal to raise proceeds during the financial                       June 2006. However, based on the audited results
     period ended 30 June 2006.                                            for the financial period ended 30 June 2006, the
                                                                           consolidated loss after tax and minority interest has
                                                                           decreased to RM11.27 million, representing a
2.   OPTIONS OVER ORDINARY                                                 deviation of 51.65%.
     SHARES, WARRANTS OR
                                                                           The primary reason for the said deviation is due to
     CONVERTIBLE SECURITIES                                                over provision of taxation for the financial period
     EXERCISED                                                             ended 30 June 2006. The specific reasons and
                                                                           reconciliation of the deviation are as follows:-
     The details on the exercise of options over ordinary
     shares during the financial period ended 30 June                      Consolidated loss after tax              RM million
     2006 pursuant to the Company’s Employees’ Share                        and minority interest:
     Option Scheme (“ESOS”) are disclosed in Note 28
     (iii) of the Notes to the Financial Statements. There                 Unaudited results as announced               (23.31)
     was no exercise of warrants and the Company did                        on 30 August 2006
     not issue any convertible securities during the
                                                                           Audited results                              (11.27)
     financial period.
                                                                           Deviation                                      12.04

3.   AMERICAN DEPOSITORY                                                   Percentage of deviation                     -51.65%
     RECEIPT (“ADR”) OR GLOBAL
     DEPOSITORY RECEIPT (“GDR”)                                            Reconciliation of deviation:
     PROGRAMME                                                             1. Recognition of tax recoverable            (10.02)
                                                                              under Section 110 set off at
     The Company did not sponsor any ADR or GDR                               SunInc arising from dividends
     programme during the financial period ended 30                           received from subsidiary
     June 2006.
                                                                           2. Over provision of taxation and             (1.78)
                                                                              deferred taxation for subsidiaries
4.   SANCTIONS AND/OR PENALTIES                                            3. Miscellaneous audit adjustments            (0.24)

     There were no public sanctions and/or penalties                                                                    (12.04)
     imposed on the Company and its subsidiaries,
     Directors or Management by the relevant regulatory                    The Company did not release any profit estimate,
     bodies during the financial period ended 30 June                      forecast or projection for the financial period.
     2006.

                                                                    8.     MATERIAL CONTRACTS
5.   NON-AUDIT FEES                                                        INVOLVING DIRECTORS’ AND
     The non-audit fees paid/payable to the external
                                                                           MAJOR SHAREHOLDERS’
     auditors of the Company and its subsidiaries for the                  INTERESTS
     financial period ended 30 June 2006 amounted to
     RM5,500.                                                              The material contracts (not being contracts entered
                                                                           into in the ordinary course of business) entered into
                                                                           by the Company and/or its subsidiaries involving
6.   PROFIT GUARANTEE                                                      directors’ and major shareholders’ interests during
                                                                           the financial period ended 30 June 2006 were as
     There was no profit guarantee given by the                            follows:-
     Company during the financial period ended 30 June
     2006.



                         Sunway Holdings Incorporated Berhad   64   annual report ‘06
Additional Compliance Information                                                          (Cont’d)


  (a) Sale and Purchase of Shares Agreement dated                       Relationship of Related Party for item (b) above
      1 December 2005 between Reptolink Sdn
      Bhd, Timah Sini-Sana Sdn Bhd and Active                           Tan Sri Dato' Seri (Dr) Cheah Fook Ling is a
      Builder Sdn Bhd for the acquisition of the                        Director and Major Shareholder of Active Builder
      entire equity interest in Sunway Enterprise                       Sdn Bhd.
      (1988) Sdn Bhd for a total cash consideration
      of RM6.81 million.                                                Relationship of Related Parties for items (c) to (f)
                                                                        above
  (b) Sale and Purchase of Shares Agreement dated
      1 December 2005 between Reptolink Sdn                             Dato’ Chew Chee Kin, Yau Kok Seng and Mark
      Bhd, Active Builder Sdn Bhd, Aneka Lengkap                        Victor Rozario are Directors and shareholders of
      Sdn Bhd and Datuk Razman M Hashim for the                         SunInc. They are also Directors and shareholders of
      acquisition of the entire equity interest in                      Sunway Global Limited, a 60% owned subsidiary of
      Sunway Hydraulic Industries Sdn Bhd for a                         SunInc.
      total cash consideration of RM2.35 million.
                                                                 9.     REVALUATION POLICY ON
  (c) Shareholders' Agreement dated 5 June 2006
      between SunInc, Sunway Global Limited,
                                                                        LANDED PROPERTIES
      Goldman Sachs Strategic Investments (Asia)
      L.L.C. and Key Employees for the purpose of                       The Company has not adopted a policy of regular
      setting out the rights of the respective                          revaluation of its landed properties.
      shareholders and the management of Sunway
      Global Limited.                                            10. STATEMENT BY AUDIT
  (d) "A"     Loan     Agreement     (Redeemable                     COMMITTEE IN RELATION TO
      Convertible Loan) dated 5 June 2006 between                    THE ALLOCATION OF OPTIONS
      Sunway Global Limited and Goldman Sachs                        OVER ORDINARY SHARES
      Strategic Investments (Asia) L.L.C. for the
      amount of HK$ equivalent of RMB23.85                           PURSUANT TO THE ESOS
      million (approximately RM11.925 million).
      This loan is convertible into shares in the                       In accordance with Bylaw 4.6 of the ESOS Bylaws,
      capital of Sunway Global Limited before 31                        the Company had appointed the Group Internal
      December 2011 or repayable on 31 December                         Audit to verify the allocation of options over
      2011.                                                             ordinary shares to the Group’s eligible employees in
                                                                        compliance with the criteria set out in the ESOS
  (e) "B" Loan Agreement dated 5 June 2006                              Bylaws, as part of the Company’s annual audit.
      between Sunway Global Limited and
      Goldman Sachs Strategic Investments (Asia)                        With the assistance of Group Internal Audit’s audit
      L.L.C. for the amount of HK$ equivalent of                        verification, the Audit Committee is satisfied that
      RMB26.15 million (approximately RM13.075                          the allocation of options over ordinary shares
      million) which is repayable on 31 December                        pursuant to the Company’s ESOS during the
      2011.                                                             financial period ended 30 June 2006, has complied
                                                                        with the criteria set out in the ESOS Bylaws.
  (f)   "C" Loan Agreement dated 5 June 2006
        between SunInc and Sunway Global Limited
        for the amount of HK$ equivalent of
                                                                 11. SHARE BUY-BACK
        RMB26.15 million (approximately RM13.075
                                                                        During the financial period ended 30 June 2006, the
        million) which is repayable on 31 December
                                                                        Company purchased 100,000 ordinary shares of
        2011.
                                                                        RM1.00 each from the open market and these
                                                                        shares were retained as treasury shares. None of
  Relationship of Related Party for item (a) above
                                                                        these treasury shares were resold or cancelled
                                                                        during the financial period.
  Tan Sri Dato' Seri (Dr) Cheah Fook Ling is a
  Director of Active Builder Sdn Bhd, and he has
  direct and deemed interests in Active Builder Sdn
  Bhd and Timah Sini-Sana Sdn Bhd respectively.

                             No. of Shares              Purchase Price
                            Purchased and                 Per Share                  Average Cost
         Monthly              Retained as                    RM                       Per Share             Total Cost
        Breakdown           Treasury Shares           Lowest     Highest                 RM                    RM

        August 2005             100,000                0.53            0.55              0.54                 54,501


                      Sunway Holdings Incorporated Berhad   65   annual report ‘06
Striving Towards Excellence

Awards and Achievements




        “Builder of the Year 2005", one of the
        most prestigious titles in the Malaysian
        Construction Industry Excellence Awards
        (“MCIEA”), awarded by the Construction
        Industry Development Board of Malaysia
        (“CIDB”). SunCon won this prestigious
        award for the 2nd time since 2003 for
        demonstrating all-round management
        excellence in construction and for
        professionalism,      innovation    and
        dedication shown to the community as a
        responsible corporate company



SunInc believes in the importance of good corporate governance practices and the
value it gives to the stakeholders. SunInc’s achievement in this area was rewarded by:

   Winning the Malaysian Business Corporate Governance 2005 Merit Award

As for SunInc’s strongest arm SunCon, the achievements and quest for excellence of
SunCon, has, over the years, earned SunCon several awards and certifications. These
include:




   OHSAS 18001 (Occupational Health and Safety                               Construction Industry IT Award 2001, by the
   Assessment System) Certification by SIRIM QAS,                            Construction Industry Development Board (“CIDB”),
   received in 2000 in recognition of its ability to manage                  in recognition of SunCon’s capability to effectively
   its Occupational Health and Safety risks.                                 utilise IT in its construction projects.

   International Federation of Asian and Western Pacific                     MS ISO 9001:2000 for SunCon’s Quality
   Contractors’ Association (“IFAWPCA”) Gold Medal                           Management System, a certification which assures
   for Building Construction, received in 1998 for its                       customers that every aspect of the design and
   excellent performance and many contributions                              construction, through to the delivery of its projects,
   towards advancing the construction industry.                              are carried out in full compliance with accredited
                                                                             specifications (SunCon has been SIRIM-certified since
                                                                             1997).



                             Sunway Holdings Incorporated Berhad   66   annual report ‘06
Research and Development
Ongoing research and development has been recognised                  With its passion to deliver, SunCon did not rest on its
as the cornerstone to the growth of SunInc as a leading               laurels and continued to utilise the innovative
conglomerate. We envision a world of possibilities and                methodology in high-rise residential building. From the 5-
opportunities where there are always breakthroughs and                storey Teachers’ Quarters to the 10-storey Kajang
innovations to be pursued in order to drive the business              SuteraMas Apartments, SunCon had portrayed significant
forward.                                                              advancement in the deployment of IBS with a wider range
                                                                      of prefabricated components such as load bearing walls,
                                                                      half planks, precast staircases etc.
Industrialised Building Systems (“IBS”)
In recent years, the construction industry has witnessed              In addition to standard prefabricated components such as
the prevalence of IBS as it exemplifies the principles of             pre-stressed planks, columns, hollow core slabs, facades,
innovation and automation that overcome the challenges                and beams, SunCon continues to reach greater height
imposed by the current labour intensive method. Being a               when its subsidiary in Singapore, Sunway Concrete
construction process that utilises techniques, products,              Products (S) Pte. Ltd., proves its capability in producing
components, or building systems, which involve                        volumetric precast components such as prefabricated
prefabricated components and on-site installation, IBS                toilets and lift shafts. These complicated and heavyweight
sets itself apart from the conventional construction                  prefabricated components are being widely used in the
methods by capitalising on its extensive capabilities in              Main Upgrading (“MUP”) and Lift Upgrading (“LUP”) of
ensuring cost savings through shorter construction period,            public housing projects launched by the Housing and
better quality control and reduction of construction                  Development Board (“HDB”) of Singapore.
waste.
                                                                      Smart Equip Technology
                                                                      Continuous research and development effort has also
                                                                      been undertaken in the area of advanced technologies and
                                                                      cutting-edge information technology. Research in
                                                                      innovative technology and futuristic homes has led to the
                                                                      development of the proprietary Smart Equip. Developed
                                                                      by Sunway Engineering Sdn Bhd, a subsidiary of SunCon,
                                                                      Smart Equip offers homeowners with convenience,
                                                                      familiarity and flexibility to transform an ordinary home
                                                                      into a smart home.




SunCon, the construction division, is proud to embark on
the journey of IBS with its maiden project involving the
construction of a total of 2,200 units of living quarters for
teachers in prefabricated 5-storey blocks located in 17
project sites in Selangor, Pahang and Kuala Lumpur. Being
the 1st project of this size and nature which utilised
innovative IBS methodology, the project witnessed the                 Smart living has now become a lifestyle with an
use of prefabricated columns, beams and slab systems,                 automated central controller being the mastermind of all
precast lightweight internal walls and precast facades.               devices and equipment of a house. Interfacing with user-
Such building systems had significantly improved                      familiar switches, Smart Equip is capable of masterminding
productivity and efficiency of the entire construction                and monitoring any sophisticated system, from multi-
process with the standardisation of 77,000 precast                    faceted scene lighting control, home entertainment
components.                                                           system, security system, air conditioning to ventilation
                                                                      system etc.

                                                                      In addition to providing long-term benefits of energy
                                                                      savings, the Smart Equip system is flexible enough to cater
                                                                      for both new construction and retrofit applications,
                                                                      customised to users’ needs and budgets at any stage of the
                                                                      home’s life span.

                                                                      At SunInc, we believe that our strength to master
                                                                      sophisticated business challenges lies in our capabilities of
                                                                      reinforcing our technical expertise and innovative
                                                                      prowess. As such, research and development will continue
                                                                      to be an unassailable priority in our constant pursuit of
                                                                      the next breakthrough.

                           Sunway Holdings Incorporated Berhad   67   annual report ‘06
Statement on Quality

SunInc has built a strong reputation with its high quality             SunInc believes staff and workers’ competencies are vital
commitment on products and services delivered. SunInc                  in ensuring the delivery of quality products and services.
believes that excellence in teamwork is essential in                   As a result, SunInc aims to continually upgrade its quality
managing and cultivating the quality work culture as                   performance through training and education. All
deeply rooted in the motto “Quality is a Shared                        members (staff and workers) are involved in some aspects
Commitment”. With the support and commitment from                      of the training programme. At the lower level, the focus is
all of our staff and business associates, we will continue to          mainly on skills development – for example, the Quality
ensure that the highest levels of quality standards are                Conformance Awareness Training (“QCAT”) to further
adhered to in SunInc’s work culture.                                   improve workmanship quality standards for various
                                                                       aspects of building and civil construction. At the upper
                                                                       level, the emphasis is more on the development of the
Managing Quality                                                       person to be a more effective manager or future manager
Quality management in SunInc is presently being                        in ensuring the subordinates are doing the right things
implemented in a 2-pronged approach, i.e. the ‘Systems                 right the first time, every time.
Approach’ and the ‘Process Approach’.
                                                                       Quality is emphasised in our day-to-day work through the
a)    Systems Approach                                                 continuous improvement of our products and services to
                                                                       strive towards consistency of performance and efficiency.
      The approach covers the implementation of the                    In addition, quality is also emphasised through awareness
      ISO 9001 requirements, i.e. formal Quality                       and implementation trainings conducted at the project
      Management System (“QMS”). As to date, the                       sites as well as the head office.
      following companies within the Group have been
      certified the ISO 9001:2000 standard:-                           Furthermore, SunInc is exploring quality related systems
                                                                       which would assist in enhancing the quality of its
         i)     Sunway Construction Sdn Bhd                            products and services. For example, the Construction
         ii)    Sunway Engineering Sdn Bhd                             Quality Assessment System (“CONQUAS”) which has
         iii)   Sunway Concrete Products (S) Pte. Ltd.                 been developed by Singapore’s Building and Construction
         iv)    Sun-Block Sdn Bhd                                      Authority (“BCA”), has been adopted to monitor the
                                                                       quality of some of SunInc’s medium to high-end
      The other subsidiaries, namely Sunway Piling Sdn                 residential projects.
      Bhd and Sunway Precast Industries Sdn Bhd are in
      the process of obtaining the certification.

      The QMS, which is based on Deming’s Plan-Do-
      Check-Action (“PDCA”) improvement cycle, has
      helped the companies to consistently deliver high
      quality products and services to customers.

b)    Process Approach

      In order to continually control and improve the
      quality performance, the process approach has been
      adopted by all companies within the Group.

      For example, a Small Group Activity (“SGA”) is
      formed to study the existing process and identify                Customer Focus
      the weak areas in it. Subsequently, the SGA will
      propose an improved/revised process to be                        All the above initiatives indicate that SunInc places great
      implemented throughout the organisation as its best              emphasis on meeting customers’ requirements and
      practices. These SGAs or Task Forces have been                   expectations. Total customer satisfaction is always a
      practised at SunInc to enhance the effectiveness and             fundamental concept within SunInc and is the driving
      efficiency of its work processes.                                force that guides the business activities.

                                                                       Targets on customer satisfaction, zero defect, superior
Continual Improvement                                                  quality, competitive prices and timely delivery are being
                                                                       reviewed regularly to gauge SunInc’s quality performance.
As SunInc extends its presence across the nation and                   Total involvement from its staff, customers, authorities
region, a key value that makes a difference in its success is          and business associates is the key factor in SunInc’s
the strong belief and keen desire to seek continual                    initiative to achieve total customer satisfaction.
improvement in every business aspect.




                            Sunway Holdings Incorporated Berhad   68   annual report ‘06
Statement of Occupational Safety and Health

SunInc is committed to provide employees with a safe                 The implementation of Job Safety Analysis is now widely
and healthy workplace. In order to achieve this objective,           accepted by subcontractors and it is successfully enforced
SunInc takes all measures to identify, assess, manage and            at the projects sites. In its effort to comply with the
mitigate the hazards faced by employees and stakeholders.            applicable OSH legislation of the country, a systematic
In its effort and determination to inculcate a safe work             site inspection procedure is implemented. The Project
culture, it was certified with the OHSAS 18001:1999                  Managers, Safety and Health Officers conduct regular
standard in 2001 and it has successfully maintained its              inspection at sites to achieve the desired results. SunInc
certification and was re-certified in 2004 successfully.             has a comprehensive inspection checklist with a score of
                                                                     70% and above to be achieved company wide and at
                                                                     project levels.

                                                                     All project sites have a well represented Safety and Health
                                                                     Committee, which is chaired by the Person In Charge. The
                                                                     participation of the subcontractors and employee
                                                                     representatives are of paramount importance to identify
                                                                     the unsafe acts and conditions at the site. Proactive
                                                                     decisions are made to achieve a continuous improvement
                                                                     at the sites.

                                                                     In its endeavour towards achieving OSH excellence,
                                                                     employees and subcontractors are exposed to the OSH
                                                                     management system training. All workers are safety
The main objective towards Occupational Safety and                   inducted, and subcontractors are provided with specific
Health (“OSH”) excellence is to achieve “Nil Fatality”. All          courses like Scaffolding Erection, First Aid, Electrical
work activities are carried out after hazard identification          Safety and Heavy Machinery Operation.
and risk assessment. Subcontractors are exposed to the
Hazard Identification, Risk Assessment and Risk Control              During the year, the OSH Department conducted a
(“HIRARC”) procedure and active participation is carried             HIRARC course for the Project Managers and
out to manage control measures by implementing Job                   Supervisors. SunCon received the prestigious National
Safety Analysis.                                                     OSH Excellence Award for the construction sector for
                                                                     2005 and the Malaysian Society for Occupational Safety
                                                                     and Health Gold Award (Class II) for 2004.




                          Sunway Holdings Incorporated Berhad   69   annual report ‘06
Sun-Block’s Pavers used on Persiaran Lagoon, Bandar Sunway
FINANCIAL STATEMENTS


Directors’ Report                                                    72 - 78

Income Statements                                                         79

Balance Sheets                                                       80 - 81

Consolidated Statement of Changes in Equity                          82 - 83

Company Statement of Changes in Equity                               84 - 85

Cash Flow Statements                                                 86 - 88

Summary of Significant Accounting Policies                           89 - 97

Notes to the Financial Statements                                   98 - 181

Statement by Directors                                                  182

Statutory Declaration                                                   182

Report of the Auditors                                                  183




                         Sunway Holdings Incorporated Berhad   71    annual report ‘06
DIRECTORS’ REPORT

The Directors submit their report to the members together with the audited financial statements of the Group and Company
for the eighteen months ended 30 June 2006.


PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services. The principal activities
of the Group consist of construction of building and civil works, manufacturing and trading of building materials, trading and
distribution of construction related products, quarrying and property development.

There was no significant change in the principal activities of the Group and Company during the financial period.


CHANGE OF FINANCIAL YEAR END

The financial year end of the Company was changed from 31 December to 30 June.


FINANCIAL RESULTS



                                                                                                  Group           Company
                                                                                                 RM’000            RM’000

Loss after tax                                                                                       (793)          (76,730)

Minority interest                                                                                (10,477)                  0

Net loss for the financial period                                                                (11,270)           (76,730)



DIVIDENDS

The dividends on ordinary shares paid by the Company since 31 December 2004 were as follows:


                                                                                                                    RM’000

In respect of the financial year ended 31 December 2004, reported in the directors’ report of that year:

  Interim gross dividend of 3 sen per share on 539,013,879 ordinary shares,
   less income tax of 28%, paid on 13 January 2005.                                                                  11,643

  Final gross dividend of 2 sen per share on 540,366,879 ordinary shares,
   less income tax of 28%, paid on 25 August 2005.                                                                    7,781

                                                                                                                     19,424

The Directors do not recommend the payment of any dividends for the financial period ended 30 June 2006.




                           Sunway Holdings Incorporated Berhad   72   annual report ‘06
DIRECTORS’ REPORT (CONT’D)

RESERVES AND PROVISIONS

All material transfers to or from reserves and provisions during the financial period are shown in the financial statements.


ISSUE OF SHARES

During the financial period, 1,333,000 and 5,000 new ordinary shares of RM1.00 each were issued by the Company for
cash by virtue of the exercise of options over ordinary shares pursuant to the Company’s Employees’ Share Option Scheme
(“ESOS”) at exercise prices of RM1.00 per share and RM1.21 per share respectively.

The new ordinary shares issued during the financial period ranked pari passu in all respects with the existing ordinary shares
of the Company.


SHARE BUYBACK

During the financial period, the Company bought back 100,000 of its issued shares of RM1.00 each from the open market at
an average price of RM0.54 per share. The shares bought back were financed by internally generated funds and were retained
as treasury shares.


EMPLOYEES’ SHARE OPTION SCHEME

On 7 November 2002, the Company implemented an ESOS to the eligible employees (including Executive Directors) of
the Company and its subsidiary companies. The ESOS is governed by the bylaws which were approved by the shareholders
on 3 October 2002.

Details of the ESOS are set out in Note 28(iii) to the financial statements.

The Company has been granted exemption by the Companies Commission of Malaysia pursuant to Section 169 (11) of the
Companies Act 1965 from having to disclose the names of Directors and persons to whom options over ordinary shares have
been granted during the financial period and details of their holdings except for those Directors and persons who have options
over ordinary shares of 600,000 and above, which are as follows:


                                                         Options over ordinary shares of RM1.00 each

                                          Exercise
                                       price/share                 At                                                    At
Name of employees                              RM            1.1.2005                Granted    Exercised         30.6.2006

Yap Chin Leong                                1.00               700,000                   0             0          700,000

Lee Yu Ban                                    1.00               670,000                   0             0          670,000

Wong Fook Chai                                1.00               660,000                   0             0          660,000

Ng Boon Liang                                 1.00               600,000                   0             0          600,000

Phang Koon Tuck                               1.58               600,000                   0             0          600,000

Mok Sew Wah                                   1.58               600,000                   0             0          600,000




                           Sunway Holdings Incorporated Berhad    73   annual report ‘06
DIRECTORS’ REPORT (CONT’D)

DIRECTORS

The Directors who have held office during the period since the date of the last report are as follows:

Tan Sri Dato’ Seri (Dr) Cheah Fook Ling
Dato’ Chew Chee Kin
Yau Kok Seng
Mark Victor Rozario
Dato’ Tan Kia Loke
Kwan Foh Kwai
Tan Ler Chin                                                          (resigned on 26.4.2006)
Wong Chin Mun
Tan Sri Dato’ Seri Dr Md Noordin Bin Md Sopiee                        (passed away on 29.12.2005)
Datuk Low Seng Kuan
Datuk Abdul Malek Bin Abdul Aziz                                      (appointed on 13.3.2006)

In accordance with Article 114 of the Company’s Articles of Association, Dato’ Chew Chee Kin, Wong Chin Mun and Datuk
Low Seng Kuan retire by rotation at the forthcoming Annual General Meeting of the Company and, being eligible, offer
themselves for re-election.

In accordance with Article 120 of the Company’s Articles of Association, Datuk Abdul Malek Bin Abdul Aziz, who was
appointed during the period, retires at the forthcoming Annual General Meeting of the Company and, being eligible, offers
himself for election.


DIRECTORS’ BENEFITS

During and at the end of the financial period, no arrangements subsisted to which the Company is a party, being arrangements
with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares
in, or debentures of, the Company or any other body corporate, except for options over ordinary shares granted to certain
Directors of the Company pursuant to the Company’s ESOS as disclosed in Note 7 to the financial statements.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than
Directors’ remuneration disclosed in Note 7 to the financial statements) by reason of a contract made by the Company
or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which
the Director has a substantial financial interest except for any deemed benefits that may accrue to a Director by virtue of
transactions negotiated between the Group and companies in which the Director has significant equity interests as disclosed
in Note 37 to the financial statements.




                           Sunway Holdings Incorporated Berhad   74   annual report ‘06
DIRECTORS’ REPORT (CONT’D)

DIRECTORS’ INTERESTS IN SHARES, OPTIONS OVER ORDINARY SHARES AND WARRANTS

According to the register of Directors’ shareholdings, particulars of interests of Directors who held office at the end of the
financial period in shares, options over ordinary shares and warrants in the Company are as follows:


                                                                       Number of ordinary shares of RM1.00 each
                                                                As at
                                                           1.1.2005/
                                                              Date of                                                     As at
Direct interest                                          appointment                   Bought          Sold          30.6.2006

Tan Sri Dato’ Seri (Dr) Cheah
 Fook Ling                                                  5,702,094                      0              0          5,702,094

Dato’ Chew Chee Kin                                              730,000              180,000             0           910,000

Yau Kok Seng                                                     510,000              390,000      (210,000)          690,000

Mark Victor Rozario                                               20,000                   0              0             20,000

Dato’ Tan Kia Loke                                               275,000                   0              0           275,000

Kwan Foh Kwai                                                    660,000                   0              0           660,000

Wong Chin Mun                                                     10,000                   0              0             10,000

Datuk Abdul Malek Bin Abdul Aziz                                   3,000                   0              0              3,000



Deemed interest

Tan Sri Dato’ Seri (Dr) Cheah
 Fook Ling1                                              200,637,777              20,640,900              0       221,278,677

Dato’ Chew Chee Kin3                                             450,000                   0              0           450,000



                                                                       Options over ordinary shares of RM1.00 each

                                                                 As at                                                    As at
                                                             1.1.2005                Granted      Exercised          30.6.2006

Tan Sri Dato’ Seri (Dr) Cheah
 Fook Ling                                                  2,500,000                      0              0          2,500,000

Dato’ Chew Chee Kin                                         1,000,000                      0              0          1,000,000

Dato’ Tan Kia Loke                                          1,000,000                      0              0          1,000,000

Yau Kok Seng                                                1,000,000                      0              0          1,000,000

Mark Victor Rozario                                              700,000                   0              0           700,000




                           Sunway Holdings Incorporated Berhad    75   annual report ‘06
DIRECTORS’ REPORT (CONT’D)

DIRECTORS’ INTERESTS IN SHARES, OPTIONS OVER ORDINARY SHARES AND WARRANTS (CONT’D)


                                                                                    Warrants 2004/2008
                                                               As at
                                                          1.1.2005/
                                                             Date of                                                  As at
Direct interest                                         appointment                   Bought             Sold    30.6.2006

Tan Sri Dato’ Seri (Dr) Cheah
 Fook Ling                                                 2,870,732                      0                0     2,870,732

Yau Kok Seng                                                    228,500                   0        (228,500)             0

Mark Victor Rozario                                             102,000                   0                0      102,000

Dato’ Tan Kia Loke                                              446,455                   0                0      446,455

Kwan Foh Kwai                                                   210,000                   0        (210,000)             0

Wong Chin Mun                                                     3,500                   0                0         3,500

Datuk Low Seng Kuan                                              59,500                   0         (59,500)             0

Datuk Abdul Malek Bin Abdul Aziz                                  1,050                   0                0         1,050



Deemed interest

Tan Sri Dato’ Seri (Dr) Cheah
 Fook Ling2                                              77,000,607               8,705,800                0    85,706,407


Footnote

1
    Deemed interest by virtue of his substantial shareholdings in Active Equity Sdn Bhd, Timah Dunia Dredging Sdn Bhd
    and Sungei Way Corporation Sdn Bhd pursuant to Section 6A of the Companies Act 1965 and him being associated to
    his spouse and children.

2
    Deemed interest by virtue of his substantial shareholdings in Active Equity Sdn Bhd, Timah Dunia Dredging Sdn Bhd
    and Sungei Way Corporation Sdn Bhd pursuant to Section 6A of the Companies Act 1965 and him being associated to
    his children.

3
    Deemed interest by virtue of him being associated to his spouse.

By virtue of Tan Sri Dato’ Seri (Dr) Cheah Fook Ling’s interests in the Company as shown above, he is deemed to have
interest in the shares of the subsidiary companies and associated companies to the extent that those shares are held by the
Company.




                          Sunway Holdings Incorporated Berhad    76   annual report ‘06
DIRECTORS’ REPORT (CONT’D)

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the income statements and balance sheets were made out, the Directors took reasonable steps:

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

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their
    values as shown in the accounting records of the Group and Company had been written down to an amount which they
    might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the
    financial statements of the Group and Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and Company
    misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and
    Company misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve
months after the end of the financial period which, in the opinion of the Directors, will or may affect the ability of the Group
or Company to meet their obligations when they fall due.

At the date of this report, there does not exist:

(a) any charge on the assets of the Group or Company which has arisen since the end of the financial period which secures
    the liability of any other person; or

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

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the
financial statements which would render any amount stated in the financial statements misleading.




                            Sunway Holdings Incorporated Berhad   77   annual report ‘06
DIRECTORS’ REPORT (CONT’D)

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONT’D)

In the opinion of the Directors:

(a) the results of the Group’s and Company’s operations during the financial period were not substantially affected by any
    item, transaction or event of a material and unusual nature except as disclosed in the income statement and Note 5,
    Note 33 and Note 35 to the financial statements; and

(b) except as disclosed in Note 39 to the financial statements, there has not arisen in the interval between the end of the
    financial period and the date of this report any item, transaction or event of a material and unusual nature likely to affect
    substantially the results of the operations of the Group or Company for the financial year in which this report is made.


SIGNIFICANT EVENTS SUBSEQUENT TO BALANCE SHEET DATE

The significant event that occurred subsequent to balance sheet date is disclosed in Note 39 to the financial statements.


AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.


Signed on behalf of the Board of Directors in accordance with their resolution dated 19 October 2006.




DATO’ CHEW CHEE KIN                                                                       MARK VICTOR ROZARIO
PRESIDENT                                                                                 FINANCE DIRECTOR




                           Sunway Holdings Incorporated Berhad   78   annual report ‘06
INCOME STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006



                                                                         Group                              Company

                                                           18 months                                  18 months
                                                               ended               Year ended             ended       Year ended
                                                           30.6.2006               31.12.2004         30.6.2006       31.12.2004
                                              Note           RM’000                   RM’000            RM’000           RM’000

Revenue                                           3         2,057,266               1,497,519            65,953          29,843

Cost of sales                                     4        (1,667,041)             (1,207,202)                0                0

Gross profit                                                     390,225               290,317           65,953          29,843

Other operating income                                            47,909                18,783           59,024           8,514

Distribution costs                                               (37,652)              (23,582)               0                0

Administrative expenses                                      (225,166)                (156,449)         (22,745)         (11,821)

Other operating expenses                                         (28,243)              (21,332)         (33,849)              (1)

(Impairment losses)/reversal of
  impairment losses                               5              (23,760)                   (8,946)    (110,077)            403

Profit from operations                            6              123,313                98,791          (41,694)         26,938

Finance cost                                      8              (54,228)              (26,968)         (34,848)         (21,247)

Share of results of associated companies                         (39,838)              (15,974)               0                0

Profit/(loss) from ordinary
 activities before tax                                            29,247                55,849          (76,542)          5,691

Tax expense:

- Company and subsidiary companies                               (29,604)                   2,469         (188)          15,638

- Associated companies                                                 (436)                 (595)            0                0

                                                  9              (30,040)                   1,874         (188)          15,638

(Loss)/profit after tax                                                (793)            57,723          (76,730)         21,329

Minority interest                                                (10,477)              (18,424)               0                0

Net (loss)/profit for the financial
 period/year                                                     (11,270)               39,299          (76,730)         21,329

(Losses)/Earnings per share (sen):

 - basic                                      10(a)                (2.09)                     8.08

 - diluted                                    10(b)                    N/A                    7.92

Dividend per ordinary share in
 respect of the financial
 period/year (sen)                               11                       0                     5             0                5




                           Sunway Holdings Incorporated Berhad    79    annual report ‘06
BALANCE SHEETS
AS AT 30 JUNE 2006



                                                                       Group                           Company

                                                           30.6.2006             31.12.2004       30.6.2006      31.12.2004
                                             Note            RM’000                 RM’000          RM’000          RM’000

NON-CURRENT ASSETS

Property, plant and equipment                   12              272,189              216,617           261             269

Quarry development expenditure                  13                1,165                      0           0                0

Investments in subsidiary companies             14                     0                     0     679,852         527,023

Investments in associated companies             15               52,865              108,567        16,497          82,022

ABS Notes and other investments                 16                2,232                   9,514      2,229            3,664

Long term debtors                               17               10,366               38,473        12,188            1,356

Land held for property development           18(a)               66,935               70,943             0                0

Goodwill                                        19              114,100               77,104             0                0

Deferred tax assets                             26               12,600               11,010             0                0

                                                                532,452              532,228       711,027         614,334

CURRENT ASSETS

Property development costs                   18(b)               18,011               13,657             0                0

Assets held for resale                          20               21,335               21,537           320                0

Inventories and completed
 development properties                         21              312,158              275,114             0                0

Tax recoverable                                                  14,002               13,852         9,924            8,457

Debtors                                         22              816,997              776,460        65,757         165,868

Deposits, bank and cash balances                23              200,757              124,271        22,478            4,062

                                                           1,383,260              1,224,891         98,479         178,387

CURRENT LIABILITIES

Creditors                                       24              647,582              588,449        85,453         149,168

Borrowings:

- bank overdrafts                               25               17,301               22,154             0                0

- others                                        25              170,892              422,142        72,800         205,460

Current tax liabilities                                          16,378               11,458             0                0

                                                                852,153           1,044,203        158,253         354,628

NET CURRENT ASSETS/ (LIABILITIES)                               531,107              180,688       (59,774)        (176,241)




                          Sunway Holdings Incorporated Berhad    80   annual report ‘06
BALANCE SHEETS
AS AT 30 JUNE 2006 (CONT’D)



                                                                        Group                             Company


                                                            30.6.2006             31.12.2004         30.6.2006      31.12.2004
                                              Note            RM’000                 RM’000            RM’000          RM’000

NON-CURRENT LIABILITIES

Borrowings                                       25              407,964               49,009         296,400                0

Deferred tax liabilities                         26               17,546               15,074               0                0

ABS Senior Notes                                 27               89,873               89,805               0                0

                                                                 515,383              153,888         296,400                0

                                                                 548,176              559,028         354,853         438,093

CAPITAL AND RESERVES

Share capital                                    28              540,367              539,029         540,367         539,029

Warrants                                         29                8,777                   8,791        8,777            8,791

Treasury shares                                                        (54)                    0          (54)               0

Share premium                                                    195,112              195,111         195,112         195,111

Capital reserves                                                  34,137               34,137               0                0

Merger relief reserve                                             49,615               49,615          49,615          49,615

Foreign currency reserve                                         (12,160)                  (8,521)          0                0

Accumulated losses                                           (295,197)               (276,146)       (438,964)        (354,453)

Shareholders’ equity                                             520,597              542,016         354,853         438,093

MINORITY INTEREST                                                 27,579               17,012               0                0

                                                                 548,176              559,028         354,853         438,093




                           Sunway Holdings Incorporated Berhad    81   annual report ‘06
                                                                              Issued and fully paid
                                                                                ordinary shares of
                                                                                  RM1.00 each
                                                                                                                                         **Merger      Foreign
                                                                              Number      Nominal                    Share    *Capital       relief   currency    ***Revaluation   Accumulated
                                                                              of shares     value     Warrants    premium     reserves     reserve      reserve         reserves        losses      Total
                                                                       Note        ’000   RM’000      RM’000       RM’000     RM’000      RM’000       RM’000           RM’000         RM’000     RM’000
                                      At 1 January 2004
                                      (as previously stated)                  410,812      410,812          0     171,948      34,137            0      (9,088)          12,612       (316,230)   304,191
                                      - prior year adjustment           35           0            0         0           0           0            0           0                0           (184)      (184)
                                      At 1 January 2004
                                      (as restated)                           410,812      410,812          0     171,948      34,137            0      (9,088)          12,612       (316,414)   304,007
                                      Currency translation
                                      differences                                    0            0         0           0           0            0         567                0              0       567
                                      Revaluation reserves
                                      written off                                    0            0         0           0           0            0           0          (12,612)        12,612          0
                                      Net gain/(loss) not recognised
                                      in income statement                            0            0         0           0           0            0         567          (12,612)        12,612       567




Sunway Holdings Incorporated Berhad
                                      Issue of shares:




   82
                                      - exercise of options
                                         over ordinary shares           28       6,001       6,001          0           1           0            0           0                0              0      6,002
                                                                                                                                                                                                                                                OF CHANGES IN EQUITY




                                      - private placement               28      41,229      41,229          0      24,738           0            0           0                0              0     65,967
                                                                                                                                                                                                             FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006




                                      - acquisition of a




annual report ‘06
                                         subsidiary company             28      80,987      80,987          0           0           0      51,022            0                0              0    132,009
                                                                                                                                                                                                                                                CONSOLIDATED STATEMENT




                                      - share issue cost                             0            0         0       (1,576)         0      (1,407)           0                0              0     (2,983)
                                      Issue of warrants:
                                      - renounceable rights issue       29           0            0      9,354          0           0            0           0                0              0      9,354
                                      - restricted issue                29           0            0       495           0           0            0           0                0              0       495
                                      - warrants issue cost             29           0            0     (1,058)         0           0            0           0                0              0     (1,058)
                                      Net profit for the
                                      financial year                                 0            0         0           0           0            0           0                0         39,299     39,299
                                      Dividends for the
                                      financial year ended
                                      31 December 2004 (payable)        11           0            0         0           0           0            0           0                0        (11,643)   (11,643)

                                      At 31 December 2004                     539,029      539,029       8,791    195,111      34,137      49,615       (8,521)               0       (276,146)   542,016
                                                                                           Issued and fully paid
                                                                                             ordinary shares of
                                                                                               RM1.00 each
                                                                                                                                                                                                     **Merger            Foreign
                                                                                           Number           Nominal           Treasury                               Share          *Capital             relief         currency       Accumulated
                                                                                           of shares          value             shares         Warrants           premium           reserves           reserve            reserve           losses             Total
                                                                                Note            ’000        RM’000            RM’000           RM’000              RM’000           RM’000            RM’000             RM’000            RM’000            RM’000
                                      At 1 January 2005
                                      (as previously stated)                                539,029          539,029                    0           8,791          195,111            34,137            49,615             (8,521)           (236,779)       581,383
                                      - prior year adjustment                      35                 0               0                 0                 0                 0                 0                 0                 0            (39,367)      (39,367)
                                      At 1 January 2005
                                      (as restated)                                         539,029          539,029                    0           8,791          195,111            34,137            49,615             (8,521)           (276,146)       542,016
                                      Currency translation
                                      differences                                                     0               0                 0                 0                 0                 0                 0          (3,639)                       0    (3,639)
                                      Net loss not recognised
                                      in income statement                                             0               0                 0                 0                 0                 0                 0          (3,639)                       0    (3,639)
                                      Issue of shares:




Sunway Holdings Incorporated Berhad
                                      - exercise of options




   83
                                         over ordinary shares                      28          1,338            1,338                   0                 0                 1                 0                 0                 0                      0     1,339
                                      Repurchase of shares                         28            (100)                0              (54)                 0                 0                 0                 0                 0                      0       (54)
                                                                                                                                                                                                                                                                                                                   OF CHANGES IN EQUITY




                                      Issue of warrants:
                                      - warrant issue cost                         29                 0               0                 0              (14)                 0                 0                 0                 0                      0       (14)




annual report ‘06
                                      Net loss for the
                                      financial period                                                0               0                 0                 0                 0                 0                 0                 0            (11,270)      (11,270)
                                                                                                                                                                                                                                                                                                                   CONSOLIDATED STATEMENT




                                      Dividends for the
                                      financial year ended
                                                                                                                                                                                                                                                                        FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)




                                      31 December 2004 (paid)                      11                 0               0                 0                 0                 0                 0                 0                 0             (7,781)       (7,781)

                                      At 30 June 2006                                       540,267          540,367                 (54)           8,777          195,112            34,137            49,615           (12,160)            (295,197)       520,597


                                         * Capital reserves represents Group’s share of post acquisition capital reserves in associated companies and accretion in the value of investments in subsidiary company arising from internal restructuring.

                                        ** Merger relief reserve represents premium on the issue of shares for the acquisition of the remaining shares in Sunway Construction Sdn Bhd (“SunCon”) in accordance with Section 60(4) of Companies Act 1965.

                                       *** Revaluation reserves represent fair value adjustment arising from acquisition of a subsidiary company.
                                                                                          Issued and fully paid
                                                                                            ordinary shares of
                                                                                              RM1.00 each                                 Non-distributable
                                                                                                                                             *Merger
                                                                                          Number       Nominal                   Share          relief   **Revaluation   Accumulated
                                                                                          of shares      value    Warrants    premium         reserve         reserves        losses      Total
                                                                                   Note        ’000    RM’000     RM’000       RM’000        RM’000           RM’000         RM’000     RM’000

                                      At 1 January 2004                                   410,812      410,812          0     171,948               0             129       (364,268)   218,621

                                      Revaluation reserves written off                           0            0         0           0               0            (129)          129           0

                                      Net (loss)/gain not recognised in
                                                                                                 0            0         0           0               0            (129)          129           0
                                      income statement
                                      Issue of shares:
                                      - exercise of options over ordinary shares    28       6,001        6,001         0           1               0               0              0      6,002
                                      - private placement                           28      41,229       41,229         0      24,738               0               0              0     65,967
                                      - acquisition of a subsidiary company         28      80,987       80,987         0           0         51,022                0              0    132,009




Sunway Holdings Incorporated Berhad
                                                                                                                                                                                                                                      CHANGES IN EQUITY




   84
                                      - share issue cost                                         0            0         0       (1,576)       (1,407)               0              0     (2,983)
                                      Issue of warrants:
                                      - renounceable rights issue                   29           0            0      9,354          0               0               0              0      9,354
                                                                                                                                                                                                   FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006




                                      - restricted issue                            29           0            0       495           0               0               0              0       495
                                                                                                                                                                                                                                      COMPANY STATEMENT OF




annual report ‘06
                                      - warrants issue cost                         29           0            0     (1,058)         0               0               0              0     (1,058)

                                      Net profit for the financial year                          0            0         0           0               0               0         21,329     21,329
                                      Dividends for the financial year ended
                                       31 December 2004 (payable)                   11           0            0         0           0               0               0        (11,643)   (11,643)

                                      At 31 December 2004                                 539,029      539,029       8,791    195,111         49,615                0       (354,453)   438,093
                                                                                                                       Issued and fully paid
                                                                                                                         ordinary shares of
                                                                                                                           RM1.00 each                                                                     Non-distributable
                                                                                                                                                                                                                *Merger
                                                                                                                       Number            Nominal         Treasury                              Share               relief     Accumulated
                                                                                                                       of shares           value           shares         Warrants          premium              reserve           losses                    Total
                                                                                                           Note             ’000         RM’000          RM’000           RM’000             RM’000             RM’000            RM’000                   RM’000

                                      At 1 January 2005                                                                 539,029          539,029                  0            8,791         195,111             49,615            (354,453)               438,093

                                      Issue of shares:
                                      - exercise of options over ordinary shares                              28           1,338             1,338                0                 0                  1                 0                    0              1,339
                                      Repurchase of shares                                                    28            (100)                   0          (54)                 0                  0                 0                    0                (54)
                                      Issue of warrants:
                                      - warrants issue cost                                                   29                 0                  0             0               (14)                 0                 0                    0                (14)
                                      Net loss for the financial period                                                          0                  0             0                 0                  0                 0           (76,730)              (76,730)




Sunway Holdings Incorporated Berhad
                                      Dividends for the financial year ended
                                                                                                                                                                                                                                                                                                                 CHANGES IN EQUITY




                                      31 December 2004 (paid)                                                 11                 0                  0             0                 0                  0                 0             (7,781)              (7,781)




   85
                                      At 30 June 2006                                                                   540,267          540,367               (54)            8,777         195,112             49,615            (438,964)               354,853


                                         * Merger relief reserve represents premium on the issue of shares for the acquisition of the remaining shares in Sunway Construction Sdn Bhd (“SunCon”) in accordance with Section 60(4) of Companies Act 1965.
                                                                                                                                                                                                                                                                                                                 COMPANY STATEMENT OF




annual report ‘06
                                        ** Revaluation reserves represent fair value adjustment arising from acquisition of a subsidiary company.
                                                                                                                                                                                                                                                                      FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)
CASH FLOW STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006



                                                                       Group                              Company
                                                          18 months                                 18 months
                                                              ended              Year ended             ended       Year ended
                                                          30.6.2006              31.12.2004         30.6.2006       31.12.2004
                                             Note           RM’000                  RM’000            RM’000           RM’000

CASH FLOWS FROM
OPERATING ACTIVITIES

Cash receipts from customers                               2,070,650              1,480,043            20,188           4,728

Cash paid to suppliers and employees                      (1,882,418)            (1,483,575)          (25,471)         (15,342)

Cash from operations                                            188,232                   (3,532)      (5,283)         (10,614)

Tax paid                                                        (36,015)             (24,463)             (31)           (535)
Tax refund                                                        8,978               22,373            8,396          22,373

Interest received                                                 3,631                   4,354             0                0
Dividends received from
other investments                                                     141                 1,493             0           2,717
Dividends received from
subsidiary companies                                                   0                      0             0           3,803

Net cash flow from operating activities                         164,967                     225         3,082          17,744


CASH FLOWS FROM
INVESTING ACTIVITIES

Proceeds from dilution in stake of
 subsidiary companies                                             1,801                       0         1,801                0
Proceeds from disposal of other
 investments                                                      7,736                   7,357         1,244           4,990
Proceeds from disposal of
 property, plant and equipment                                    4,963                   2,006             0                0
Purchase of property, plant and
                                                                (71,497)             (32,503)               0                0
 equipment (1)
Purchase of additional shares in
                                                33                     0             (89,086)         (59,967)         (89,086)
 subsidiary companies
Purchase of subsidiary companies                33              (48,266)                  (6,987)           0                0
Purchase of additional shares in
                                                                       0                  (6,736)           0           (6,144)
 associated companies
Purchase of other investments                                          0                  (4,856)         (55)          (7,734)

Net cash flow from investing activities                     (105,263)               (130,805)         (56,977)         (97,974)




                          Sunway Holdings Incorporated Berhad    86   annual report ‘06
CASH FLOW STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)



                                                                       Group                              Company
                                                          18 months                                 18 months
                                                              ended              Year ended             ended       Year ended
                                                          30.6.2006              31.12.2004         30.6.2006       31.12.2004
                                              Note          RM’000                  RM’000            RM’000           RM’000

CASH FLOWS FROM
FINANCING ACTIVITIES

Repayment of hire purchase and lease                            (22,795)                  (1,686)           0                0
Share issue cost                                                        0                 (2,983)           0           (2,983)
Warrants issue cost                                                   (14)                (1,058)         (14)          (1,058)
Proceeds from issue of shares:
- exercise of options over ordinary shares                        1,339               17,956            1,339            6,002
- private placement                                                     0             65,967                0          65,967
Proceeds from issue of warrants:
- renounceable rights issue                                             0                 9,354             0            9,354
- restricted issue                                                      0                   495             0             495
Proceeds from issue of Notes                                            0             98,992                0                0
Advances from shareholder of a
 subsidiary company                                               3,920                       0             0                0
Subscription of shares by minority interest                       1,396                       0             0                0
Dividends paid to minority interest                              (2,825)                      0             0                0
Dividends paid to shareholders                                  (19,424)                      0       (19,424)               0
Bank borrowings drawdown                                        739,648              252,966          436,000         185,760
Repayment of bank borrowings                                (637,278)               (132,766)        (272,260)         (56,083)
Repayment of Bonds                                                      0           (127,769)               0         (127,769)
Repayment of Notes                                               (1,527)                      0             0                0
Purchase of Bonds                                                       0                     0             0                0
Repurchase of Shares                                                  (54)                    0             0                0
Redemption of Notes                                                    0             (10,450)               0                0
Advances from subsidiary companies                                     0                      0       154,200          55,595
Repayment of advances from
subsidiary companies                                                   0                      0        43,239          18,057
Advances to subsidiary companies                                       0                      0      (107,109)         (36,303)
Repayment of advances to
subsidiary companies                                                   0                      0      (135,101)         (16,924)
Interest received                                                 4,179                   1,601         1,587            1,420
Interest paid                                                   (44,517)             (27,154)         (30,146)         (18,291)
Deposits pledged as security
for ABS Senior Notes                                                   0             (10,394)               0                0

Net cash flow from financing activities                          22,048              133,071           72,311          83,239




                          Sunway Holdings Incorporated Berhad    87   annual report ‘06
CASH FLOW STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)



                                                                            Group                              Company
                                                              18 months                                  18 months
                                                                  ended               Year ended             ended       Year ended
                                                              30.6.2006               31.12.2004         30.6.2006       31.12.2004
                                                 Note           RM’000                   RM’000            RM’000           RM’000


 NET INCREASE IN CASH AND
  CASH EQUIVALENTS                                                   81,752                    2,491        18,416           3,009


 CASH AND CASH EQUIVALENTS
  AT BEGINNING OF FINANCIAL
  PERIOD/YEAR                                                        91,723                90,134            4,062           1,053


 FOREIGN CURRENCY RESERVE                                                 (413)                 (902)           0                0
 CASH AND CASH EQUIVALENTS
      AT END OF FINANCIAL
      PERIOD/YEAR                                   23              173,062                91,723           22,478           4,062



(1)
      Additions of property, plant and equipment during the financial period/year were acquired by way of:


                                                                            Group                              Company
                                                              18 months                                  18 months
                                                                  ended               Year ended             ended       Year ended
                                                              30.6.2006               31.12.2004         30.6.2006       31.12.2004
                                                 Note           RM’000                   RM’000            RM’000           RM’000

 Cash                                                                71,497                32,503               0                0
 Hire purchase and finance lease
  arrangements                                                       13,931                    5,625            0                0

 Movement in property, plant and
  equipment creditor                                                         0                 (4,016)          0                0

 Acquisition of subsidiary companies
 - hire-purchase                                                      9,791                        0            0                0
 - non hire-purchase                                                 18,635                    8,822            0                0
                                                                    113,854                42,934               0                0




                              Sunway Holdings Incorporated Berhad    88    annual report ‘06
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
A   BASIS OF PREPARATION

    The financial statements of the Group and Company have been prepared under the historical cost convention except as
    disclosed in this summary of significant accounting policies.

    The financial statements comply with the MASB approved accounting standards in Malaysia and the provisions of the
    Companies Act 1965.

    During the financial period, the Group adopted IC Interpretations 112 “Consolidation Special Purpose Entities” (“IC
    112”) which led to the consolidation of ABS Land and Properties Sdn Bhd, an entity which is in substance controlled by
    the Group. The Directors are of the view that this adoption which is in advance of the effective date of IC 112 provides
    true and fair reflection of the financial statements of the Group. This change in accounting policy has been applied
    retrospectively and thus comparatives have been restated as disclosed in Note 35.

    The preparation of financial statements in conformity with the provisions of the Companies Act 1965 and the MASB
    approved accounting standards in Malaysia requires the use of estimates and assumptions that affect the reported
    amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements,
    and the reported amounts of revenues and expenses during the reported financial year. Although these estimates are
    based on the Directors’ best knowledge of current events and actions, actual results may differ from those estimates.


B   BASIS OF CONSOLIDATION

    (i)   Subsidiary companies

          The consolidated financial statements include the financial statements of the Company and all its subsidiary
          companies made up to the end of the financial year. Subsidiary companies are those corporations in which the
          Group has power to exercise control over the financial and operating policies so as to obtain benefits from their
          activities.

          Subsidiary companies are consolidated from the date on which control is transferred to the Group and are no
          longer consolidated from the date that control ceases. Subsidiary companies are consolidated using the acquisition
          method of accounting.

          Under the acquisition method of accounting, the results of subsidiary companies acquired or disposed of are
          included from the date of acquisition up to the date of disposal. The cost of an acquisition is the amount of cash
          paid and the fair value at the date of acquisition of other purchase consideration given by the acquirer, together with
          directly attributable expenses of the acquisition (other than costs of issuing shares and other capital instruments –
          see accounting policy Notes R (ii) and T (i)). At the date of acquisition, the fair values of the subsidiary companies’
          net assets are determined and these values are reflected in the consolidated financial statements. The difference
          between the cost of acquisition over the Group’s share of the fair value of the subsidiary companies’ identifiable
          net assets is reflected as goodwill or negative goodwill. See accounting policy Note E on goodwill.

          Minority interest is measured at the minorities’ share of the post acquisition fair values of the identifiable assets and
          liabilities of the acquiree. Separate disclosure is made of minority interest.

          All intragroup transactions, balances and unrealised profits on transactions are eliminated; unrealised losses are also
          eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of
          subsidiary companies to ensure consistency of accounting policies with those adopted by the Group.

          The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the
          Group’s share of its net assets together with any unamortised balance of goodwill and exchange differences which
          were not previously recognised in the consolidated income statement.




                           Sunway Holdings Incorporated Berhad   89   annual report ‘06
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
B   BASIS OF CONSOLIDATION (CONT’D)

    (ii) Associates

         Associates are those corporations, partnerships or other entities in which the Group exercises significant influence,
         but which it does not control. Significant influence is the power to participate in the financial and operating policy
         decisions of the associates but not the power to exercise control over those policies. Investments in associates are
         accounted for in the consolidated financial statements by the equity method of accounting.

         Equity accounting involves recognising the Group’s share of the post acquisition results of associates in the income
         statement and its share of post acquisition movements within reserves in reserves. The cumulative post acquisition
         movements are adjusted against the cost of the investment and include goodwill on acquisition (net of accumulated
         amortisation). Equity accounting is discontinued when the carrying amount of the investment in an associate
         reaches zero, unless the Group has incurred obligations or made payments on behalf of the associate.

         Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s
         interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on
         impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the
         financial statements of associates to ensure consistency of accounting policies with those adopted by the Group.


C   PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses.

    Freehold land is not depreciated as it has an infinite life. The lease period for short term leasehold land is less than 50
    years. The lease periods for long term leasehold land range from 50-99 years. Leasehold land is amortised on a straight-
    line basis over the periods of the respective leases.

    All other property, plant and equipment are depreciated on the straight-line basis to write off the cost of the assets, to
    their residual values over their estimated useful lives, summarised as follows:

    Buildings                                                                               2% to 33%
    Plant and machinery                                                                  6.25% to 20%
    Motor vehicles                                                                                20%
    Furniture, fittings and office equipment                                                5% to 20%

    Depreciation on capital work-in-progress commences when the assets are ready for their intended use.

    At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indications exist,
    an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if
    the carrying amount exceeds the recoverable amount. See accounting policy Note Q on impairment of assets.

    Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in profit/
    loss from operations.

    Repairs and maintenance are charged to the income statement during the financial year in which they are incurred.


D   INVESTMENTS

    Investments in subsidiary companies and associated companies are shown at cost. Where an indication of impairment
    exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See
    accounting policy Note Q on impairment of assets.

    Investments in other non-current investments are shown at cost and an allowance for diminution in value is made where,
    in the opinion of the Directors, there is a decline other than temporary in the value of such investments. Where there
    has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the
    financial year in which the decline is identified.

    On disposal of an investment, the difference between the net disposal proceeds and its carrying amount is charged/
    credited to the income statement.


                          Sunway Holdings Incorporated Berhad   90   annual report ‘06
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
E   GOODWILL

    Goodwill represents the excess of the cost of acquisition of subsidiary companies and associated companies over the
    Group’s share of the fair value of their identifiable net assets at the date of acquisition.

    Goodwill is recognised at cost less any accumulated impairment losses. The carrying value of goodwill is subject to
    annual impairment review and whenever events or changes in circumstances indicate that it may not be recoverable. An
    impairment charge will be recognised in the income statement when the results of such impairment review indicate that
    the carrying value of goodwill is impaired. See accounting policy Note Q on impairment of assets.

    Negative goodwill represents the excess of the Group’s interest in the fair value of identifiable net assets and liabilities
    over cost of acquisition, and is recognised directly in the income statement at the date of acquisition.

    Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity disposed of.


F   QUARRY DEVELOPMENT EXPENDITURE

    Quarry development expenditure is stated at cost less accumulated amortisation and impairment losses.

    Expenses incurred on the development of quarry face are capitalised and written off based on actual production volume
    over the estimated reserves available from the quarry face developed.

    Where an indication of impairment exists, the carrying value of the asset is assessed and written down immediately to
    its recoverable amount. See accounting policy Note Q on impairment of assets.


G   INVENTORIES, COMPLETED DEVELOPMENT PROPERTIES AND ASSETS HELD FOR RESALE

    (i)   Inventories

          Inventories consist of raw materials, work in progress, finished goods, trading goods, consumable stocks and spare
          parts. Inventories are stated at the lower of cost and net realisable value. Cost includes, where relevant, appropriate
          proportions of overheads and is determined on the weighted average method. Net realisable value of finished
          goods, trading goods, consumable stocks and spare parts is the estimated selling price in the ordinary course of
          business, less the costs of completion and selling expenses.

    (ii) Completed development properties

          Completed development properties are stated at the lower of cost and net realisable value. The cost of completed
          development properties comprises cost associated with the acquisition of land, direct costs and an appropriate
          proportion of allocated costs attributable to property development activities. The net realisable value of completed
          development properties is based on the estimated selling price in the ordinary course of business, less selling
          expenses.

    (iii) Assets held for resale

          Assets held for resale are stated at the lower of cost and net realisable value. Cost for assets held for resale is
          determined on a specific identification basis. The net realisable value of assets held for resale is based on Directors’
          appraisal at open market value based on appropriate information and indices that are available.


H   CONSTRUCTION CONTRACTS

    A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets
    that are closely interrelated or interdependent in terms of their design, technology and functions or their ultimate
    purpose or use.

    When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised
    by using the stage of completion method. The stage of completion is measured by reference to the proportion of the
    value of work performed to date as certified by the architects over total contract revenue.



                           Sunway Holdings Incorporated Berhad   91   annual report ‘06
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
H   CONSTRUCTION CONTRACTS (CONT’D)

    When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the
    extent of contract costs incurred that is probable will be recoverable; contract costs are recognised when incurred.

    Irrespective whether the outcome of a construction contract can be estimated reliably, when it is probable that total
    contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

    The aggregate of the costs incurred and the profit or loss recognised on each contract is compared against the progress
    billings up to the financial year end. Where costs incurred and recognised profits (less recognised losses) exceed progress
    billings, the balance is shown as amounts due from customers on construction contracts under debtors (within current
    assets). Where progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is
    shown as amounts due to customers on construction contracts under creditors (within current liabilities).


I   PROPERTY DEVELOPMENT ACTIVITIES

    (i)   Land held for property development

          Land held for property development consists of land held for future development and where no significant
          development has been undertaken and where development activities are not expected to be completed within
          the normal operating cycle. Such land is classified as non-current asset and is stated at cost less accumulated
          impairment losses.

          Costs associated with the acquisition of land includes the purchase price of the land, incidental costs of acquisition,
          development expenditure and interest costs to put the land in a condition ready for development. Where an
          indication of impairment exists, the carrying amount of the assets is assessed and written down immediately to its
          recoverable amount. See accounting policy Note Q on impairment of assets.

          Land held for property development is transferred to property development costs (under current assets) when
          significant development activities has been undertaken and are expected to be completed within the normal
          operating cycle.

    (ii) Property development costs

          Property development costs comprise costs associated with the acquisition of land and all costs directly attributable
          to development activities or that can be allocated on a reasonable basis to these activities.

          When the outcome of the development activity can be estimated reliably, property development revenue
          and expenses are recognised by using the stage of completion method based on architect certification to end
          purchasers.

          When the outcome of the development activity cannot be reliably estimated, property development revenue is
          recognised only to the extent of property development costs incurred that is probable will be recoverable; property
          development costs on the development units sold are recognised when incurred.

          Irrespective of whether the outcome of a property development activity can be estimated reliably, when it is
          probable that total property development costs (including expected defect liability expenditure) will exceed total
          property development revenue, the expected loss is recognised as an expense immediately.

          Property development costs not recognised as an expense is recognised as an asset and is stated at the lower of cost
          and net realisable value.

          When revenue recognised in the income statement exceeds billings to purchasers, the balance is shown as accrued
          billings under debtors (under current assets). Where billings to purchasers exceed revenue recognised in the income
          statement, the balance is shown as progress billings under creditors (under current liabilities).




                           Sunway Holdings Incorporated Berhad   92   annual report ‘06
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
J   DEBTORS

    Debtors are carried at anticipated realisable value. Bad debts are written off in the financial year in which they are
    identified. An estimate is made for doubtful debtors based on a review of all outstanding amounts at the financial year
    end.


K   LEASES

    (i)   Accounting by lessee

          Finance leases

          Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of
          ownership are classified as finance leases.

          Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property and
          the present value of the minimum lease payments.

          Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate
          of interest on the balance outstanding. The corresponding rental obligations, net of finance charges, are included in
          borrowings. The interest element of the finance charge is charged to the income statement over the lease period.

          Property, plant and equipment acquired under finance leases is depreciated over the useful life of the asset. If there
          is no reasonable certainty that the ownership will be transferred to the Group, the asset is depreciated over the
          shorter of the estimated useful life and the lease term.

          Operating leases

          Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are
          classified as operating leases. Payments made under operating leases are charged to the income statement on a
          straight-line basis over the lease period.

    (ii) Accounting by lessor

          Finance leases

          When assets are leased out under a finance lease, the present value of the lease payments is recognised as a debtor.
          The difference between the gross receivable and the present value of the receivable is recognised as unearned
          finance income. Lease income is recognised over the term of the lease using the net investment method so as to
          reflect a constant periodic rate of interest on the outstanding balance.


L   CASH AND CASH EQUIVALENTS

    For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand, bank balances, demand
    deposits, other short term, highly liquid investments that are readily convertible to known amounts of cash and which are
    subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are included within borrowings
    in current liabilities on the balance sheet.


M   FOREIGN CURRENCIES

    (i)   Foreign entities

          The Group’s foreign entities are those operations that are not an integral part of the operations of the Company.
          Income statements of foreign entities are translated into Ringgit Malaysia at average exchange rates for the financial
          year and the balance sheets are translated at exchange rates ruling at the balance sheet date. Exchange differences
          arising from the retranslation of the net investment in foreign entities and of borrowings that hedge such investments
          are taken to ‘Foreign currency reserve’ in shareholders’ equity. On disposal of the foreign entity, such translation
          differences are recognised in the income statement as part of the gain or loss on disposal.



                             Sunway Holdings Incorporated Berhad   93   annual report ‘06
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
M   FOREIGN CURRENCIES (CONT’D)

    (i)   Foreign entities (cont’d)

          Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities
          of the Company and are translated accordingly at the exchange rate ruling at the date of the transaction.

    (ii) Foreign currency transactions and balances

          Foreign currency transactions in Group companies are accounted for at exchange rates prevailing at the transaction
          dates, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward
          contracts are used. Foreign currency monetary assets and liabilities are translated at exchange rates prevailing at the
          balance sheet date, unless hedged by forward foreign exchange contracts, in which case the rates specified in such
          forward contracts are used. Exchange differences arising from the settlement of foreign currency transactions and
          from the translation of foreign currency monetary assets and liabilities are included in the income statement.

    (iii) Closing rates

          The principal closing rates used in translation of foreign currency amounts are as follows:

                                                                                                  30.6.2006         31.12.2004
          Foreign currency                                                                              RM                 RM
          1 US Dollar                                                                                3.6800              3.8000
          1 Euro                                                                                     4.6878              5.2551
          1 Renminbi                                                                                 0.4606              0.4591
          1 Hong Kong Dollar                                                                         0.4782              0.4940
          1 Thai Baht                                                                                0.1001              0.1013
          1 Singapore Dollar                                                                         2.3322              2.3566
          1 Sterling Pound                                                                           6.7553              7.3901
          1 Trinidad and Tobago Dollar                                                               0.5795                 N/A
          1 Macau Pataca                                                                             0.4596                 N/A
          100 Japanese Yen                                                                           3.1963                 N/A
          100 Indian Rupee                                                                           8.0218              8.9430
          1000 Vietnam Dong                                                                          0.2484              0.2518
          1000 Indonesian Rupiah                                                                     0.4150              0.4240


N   REVENUE RECOGNITION

    Revenue comprises the invoiced value for the sale of goods and services, net of sales taxes, rebates and discounts, and
    after eliminating sales within the Group.

    (i)   Revenue on construction contracts is recognised based on stage of completion. The stage of completion is measured
          by reference to the proportion of the value of work performed to date as certified by the architects over total
          contract revenue.

    (ii) Sales of goods are recognised upon delivery of goods and customer acceptance, net of sales taxes and discounts.

    (iii) Revenue from development properties is recognised on the percentage of completion method based on architects’
          certification to end purchasers.

    (iv) Interest on lease and hire purchase are recognised as income on the “Rule of 78” basis.

    (v) Dividend income from investments is recognised when the shareholders’ right to receive payment is established.

    (vi) Management fees and rental income from completed development properties and assets held for resale is recognised
         on an accrual basis.

    (vii) Interest income is recognised on an accrual basis, unless collectibility is in doubt.



                           Sunway Holdings Incorporated Berhad   94   annual report ‘06
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
O   BLOCK DISCOUNTING CHARGES

    Block discounting charges are dealt with through the income statement on the “Rule of 78” basis.


P   FINANCIAL INSTRUMENTS

    A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or
    equity instrument of another enterprise.

    A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another
    enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are
    potentially favourable, or an equity instrument of another enterprise.

    A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another
    enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially
    unfavourable.

    Financial instruments recognised on the balance sheet

    The recognition method adopted for financial instruments recognised on balance sheet is disclosed in the individual
    policy statements associated with each item.

    Fair value estimation for disclosure purposes

    In assessing the fair value of financial instruments, the Group uses a variety of methods and makes assumptions that are
    based on market conditions existing at each balance sheet date.

    The fair value of quoted investments is based on quoted market prices at the balance sheet date and the fair value of
    other unquoted investments is based on a combination of projected future cash flow and realisable net assets value.

    The fair values of financial assets and liabilities are estimated by discounting the future contractual cash flows at the
    current market interest rate available to the Group for similar financial instruments.

    The face values of financial assets (less any estimated credit adjustments) and financial liabilities with a maturity period
    of less than one year are assumed to approximate their fair values.


Q   IMPAIRMENT OF ASSETS

    Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Property,
    plant and equipment and other non-current assets, are reviewed for impairment losses whenever events or changes in
    circumstances indicate that the carrying amount may not be recoverable. Impairment loss is recognised for the amount
    by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an
    asset’s net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest level
    for which there is separately identifiable cash flows.

    Impairment losses are charged to the income statement.

    Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment
    losses recognised for the asset no longer exist or have decreased. The reversal is recognised to the extent of the carrying
    amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss
    been recognised. The reversal is recognised to the income statement.


R   SHARE CAPITAL

    (i)   Classification

          Ordinary shares are classified as equity.

          Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity.


                           Sunway Holdings Incorporated Berhad   95   annual report ‘06
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
R   SHARE CAPITAL (CONT’D)

    (ii) Share issue costs

          External costs directly attributable to the issue of new shares are shown as a deduction from the proceeds.

    (iii) Dividends to shareholders of the Company

          Dividends on ordinary shares are recognised as liabilities when declared.


S   WARRANTS

    Warrants are classified as equity.

    The issue of ordinary shares upon exercise of the warrants are treated as new subscriptions of ordinary shares for the
    consideration equivalent to the warrants exercise price.


T   BORROWINGS

    (i)   Classification

          Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. In subsequent
          periods, borrowings are stated at amortised cost using the effective yield method; any difference between proceeds
          (net of transaction costs) and the redemption value is recognised in the income statement over the period of the
          borrowings.

          Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as a liability is
          reported within finance cost in the income statement.

    (ii) Capitalisation of borrowing cost

          Borrowing costs incurred to finance property development activities and construction contracts are capitalised as
          part of the cost of the asset during the period of time that is required to complete and prepare the asset for its
          intended use. All other borrowing costs are expensed.


U   INCOME TAXES

    Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and
    includes all taxes based upon the taxable profits, including withholding taxes payable by a foreign subsidiary company
    or associated company on distributions of retained earnings to companies in the Group, and real property gains taxes
    payable on disposal of properties.

    Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts
    attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.

    Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the
    deductible temporary differences or unused tax losses can be utilised.

    Deferred tax is recognised on temporary differences arising on investments in subsidiary companies and associated
    companies except where the timing of the reversal of the temporary difference can be controlled and it is probable that
    the temporary difference will not reverse in the foreseeable future.

    Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred tax.




                           Sunway Holdings Incorporated Berhad   96   annual report ‘06
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
V   EMPLOYEE BENEFITS

    (i)   Short term employee benefits

          Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in
          which the associated services are rendered by employees (including Executive Directors) of the Group.

    (ii) Post-employment benefits

          Companies incorporated in Malaysia contribute to the Employees Provident Fund (“EPF”), the national defined
          contribution plan. The Group’s contributions to the EPF are charged to the income statement in the financial period
          to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

    (iii) Equity compensation benefits

          Details of the Group’s ESOS are set out in Note 28(iii) to the financial statements. The Group does not make a
          charge to the income statement in connection with options over ordinary shares granted. When the options over
          ordinary shares are exercised, the proceeds received, net of any transaction costs, are credited to share capital and
          share premium.


W   SEGMENT REPORTING

    Segment reporting is presented for enhanced assessment of the Group’s risks and returns. Business segments provide
    products or services that are subject to risk and returns that are different from those of other business segments.
    Geographical segments provide products or services within a particular economic environment that is subject to risks
    and returns that are different from those components operating in other economic environments.

    Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment
    that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the
    segment. Segment revenue, expense, assets and liabilities are determined before intragroup balances and intragroup
    transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and
    transactions are between group enterprises within a single segment.


X   CONTINGENT LIABILITIES AND CONTINGENT ASSETS

    The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent
    liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events
    beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow
    of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance
    where there is a liability that cannot be recognised because it cannot be measured reliably.

    A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future
    events beyond the control of the Group. The Group does not recognise contingent assets but discloses its existence
    where inflows of economic benefits are probable, but not virtually certain.




                          Sunway Holdings Incorporated Berhad   97   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006


1   GENERAL INFORMATION

    The principal activities of the Company are investment holding and provision of management services. The principal
    activities of the Group consist of construction of building and civil works, manufacturing and trading of building
    materials, trading and distribution of construction related product, quarrying and property development.

    The number of employees of the Group and Company at the end of the financial period was 2,572 (2004: 2,243) and
    111 (2004: 35) persons respectively.

    The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main
    Board of Bursa Malaysia Securities Berhad.

    The address of the principal place of business and registered office of the Company is as follows:

    Level 16, Menara Sunway
    Jalan Lagoon Timur
    Bandar Sunway
    46150 Petaling Jaya
    Selangor Darul Ehsan

    The financial year end of the Company was changed from 31 December to 30 June. Accordingly, comparative amounts
    for the income statement, changes in equity, cash flows and related notes are not comparable.


2   FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

    The Group’s activities expose it to a variety of financial risks, including:

    •    foreign currency exchange risk - risk that the value of a financial instrument will fluctuate due to changes in foreign
         exchange rates
    •    interest rate risk - risk that the value of a financial instrument will fluctuate due to changes in market interest
         rates
    •    credit risk - risk that one party to a financial instrument will fail to discharge an obligation and cause the other party
         to incur a financial loss
    •    cash flow risk - risk that future cash flows associated with a financial instrument will fluctuate. In the case of a
         floating rate debt instrument, such fluctuations result in a change in the effective interest rate of the financial
         instrument, usually without a corresponding change in its fair value
    •    liquidity risk (funding risk) - risk that an enterprise will encounter difficulty in raising funds to meet commitments
         associated with financial instruments

    The Group’s overall financial risk management objective is to ensure that the Group creates value for its shareholders.
    Financial risk management is carried out through risk reviews, internal control systems and adherence to Group financial
    management policies. The Board of Directors regularly reviews these risks and approves the treasury policies, which
    covers the management of these risks.

    Foreign currency exchange risk

    The Group is exposed to foreign currency exchange risk as a result of foreign currency transactions entered into in
    currencies other than its functional currency. The Group limits its exposure on foreign currency debtors and creditors
    by entering into forward exchange rate contracts. The Group has a natural hedge to the extent that payments for foreign
    currency payables is matched against receivables denominated in the same foreign currency or whenever possible, by
    intragroup arrangements and settlements.

    Interest rate risk

    The Group and Company’s income and operating cash flows are substantially independent of changes in the market
    interest rates. Interest rate exposure arises from the Group’s borrowings and deposits and is managed through the use of
    fixed and floating rate debt financial instruments. Short term debt instruments are used, where appropriate, to generate
    a desired interest rate profile.




                          Sunway Holdings Incorporated Berhad   98   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


2   FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

    Credit risk

    The Group manages its credit risk through adherence to the Group’s established policies on credit control which involve
    a comprehensive credit evaluation, setting up appropriate credit limits, obtaining adequate security in support of the
    credit exposure, ensuring that sales are made to customers with good credit history and regular review of customers’
    outstanding balances and payment trends. The Group considers the risk of material loss in the event of non-performance
    by a financial counterparty to be unlikely.

    The Group generally has no significant concentrations of credit risk and the Group’s historical experience in collection
    of trade receivables falls within the recorded allowances. Due to these factors, management believes that no additional
    credit risk beyond amounts allowed for collection losses is inherent in the Group’s trade receivables.

    The Company has given guarantees to certain subsidiary companies and related companies for banking facilities. The
    Directors are of the view that such credit risk is minimal in view of the stability of the subsidiary companies’ financial
    position.

    Liquidity risk

    Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
    adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group
    aims at maintaining flexibility in funding by keeping committed credit lines available.


3   REVENUE


                                                                       Group                            Company
                                                          18 months                               18 months
                                                              ended              Year ended           ended       Year ended
                                                          30.6.2006              31.12.2004       30.6.2006       31.12.2004
                                                            RM’000                  RM’000          RM’000           RM’000

    Construction contracts                                 1,271,184              1,055,317              0                 0
    Sale of goods and properties                                576,960              282,281             0                 0
    Property development                                        162,963              133,659             0                 0
    Lease and hire purchase                                       3,770                   5,044          0                 0
    Dividend income (gross) from:
    - subsidiary companies                                             0                     0       54,000          26,953
    - other investments                                           1,280                   1,493          0                 0
    Management fees, rental income and
     rendering of services                                       41,109               19,725         11,953           2,890

                                                           2,057,266              1,497,519          65,953          29,843




                          Sunway Holdings Incorporated Berhad    99   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


4   COST OF SALES

                                                                        Group                            Company
                                                          18 months                                18 months
                                                              ended               Year ended           ended       Year ended
                                                          30.6.2006               31.12.2004       30.6.2006       31.12.2004
                                                            RM’000                   RM’000          RM’000           RM’000

    Construction contracts                                 1,068,665                  885,558                 0            0
    Cost of goods and properties sold                           479,606               231,229                 0            0
    Property development cost                                   101,888                82,766                 0            0
    Lease and hire purchase                                       1,341                    1,576              0            0
    Cost of services rendered                                    15,541                    6,073              0            0

                                                           1,667,041               1,207,202                  0            0



5   IMPAIRMENT LOSSES

                                                                        Group                            Company
                                                          18 months                                18 months
                                                              ended               Year ended           ended       Year ended
                                                          30.6.2006               31.12.2004       30.6.2006       31.12.2004
                                                            RM’000                   RM’000          RM’000           RM’000

    Impairment losses/(reversal of impairment
     losses) in respect of investments in:
      - Subsidiary companies (Note 14)
       - Unquoted investments                                           0                     0     44,552(1)              0
       - Quoted warrants (Note 15)                               10,773                       0       4,753  (2)
                                                                                                                           0
      - Associated Companies (Note 15)
        - Unquoted investments                                    9,565                       0     10,000(3)              0
        - Quoted investments                                     (5,141)                      0     50,772 (4)
                                                                                                                           0
      - Other investments (Note 16)
        - Unquoted investments                                         86                  (403)              0         (403)
        - Quoted investments                                            0                   296               0            0
      - Assets held for resale and inventories                    6,637                    6,908              0            0
      - Property, plant and equipment                             1,840                    2,145              0            0

                                                                 23,760                    8,946     110,077            (403)

    The Company’s carrying value of investment in associated company, Sunway Infrastructure Berhad (“SunInfra”) indicated
    a shortfall when compared to its recoverable amount. As such, the Company has impaired its investments in SunInfra
    shares(4), warrants(2) and redeemable preference shares(3). The Company has also impaired its investment in a subsidiary
    company(1) due to history of losses.

    The provision for impairment in SunInfra warrants and redeemable preference shares have also been reflected in the
    financial statements of the Group.

    In addition, there is a shortfall in carrying value of certain properties held by its subsidiary companies when compared
    to the prevailing market value. This led to the recognition of impairment losses for assets held for resale.

    During the financial period, the Group made an impairment loss provision of RM1.8 million (2004: RM Nil) for
    buildings of a subsidiary company operating in the building materials segment, which has ceased operations in its
    Beranang plant.


                          Sunway Holdings Incorporated Berhad    100   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


6   PROFIT FROM OPERATIONS

                                                                        Group                            Company
                                                          18 months                                18 months
                                                              ended               Year ended           ended       Year ended
                                                          30.6.2006               31.12.2004       30.6.2006       31.12.2004
                                                            RM’000                   RM’000          RM’000           RM’000

    Profit from operations is arrived at:

    After charging:
     Auditors’ remuneration:
     - fees for statutory audits
      - Company’s auditors                                             610                  494          77               67
      - other auditors                                                 267                  122           0                0
     - fees for other services
      - Company’s auditors                                               6                   46           6                6
      - other auditors                                                   0                   15           0                0
     Allowance for doubtful debts:
     - trade                                                     17,238                    3,833          0                0
     - amounts due from subsidiary companies                             0                    0       32,792               0
     Allowance for inventory obsolescence                         1,494                    1,292          0                0
     Bad debts written off:
     - trade                                                      1,058                      80         524                0
     - amount due from an associated company                            0                     5           0                0
     Directors’ fees (Note 7)                                          84                   117          84               63
     Exchange losses:
     - unrealised                                                      540                  409           0                0
     - realised                                                         0                   895         325                0
     Hire of plant and machinery                                  7,215                    3,593        187               94
     Inventories written off                                      2,119                      83           0                0
     Loss on disposal of investment properties                          0                    18           0                0
     Loss on disposal of warrants in an
      associated company                                          1,073                       0           0                0
     Property, plant and equipment:
     - depreciation (Note 12)                                    48,664                27,791             8                6
     - written off (Note 12)                                      3,658                      45           0                0
     - loss on disposal                                                92                    70           0                0
     Rental of land and buildings                                12,052                    3,312        962              262
     Staff costs (including Directors’
      Remuneration (Note 7)):
     - wages, salaries and bonuses                              155,078                92,489         12,755           4,307
     - national defined contribution plan                        11,131                    7,969       1,117             390
     - social security fund                                       3,620                     724          42                6
     - other employee benefits                                   12,997                    6,770        917              257




                          Sunway Holdings Incorporated Berhad    101   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


6     PROFIT FROM OPERATIONS (CONT’D)


                                                                                       Group                                      Company
                                                                           18 months                                     18 months
                                                                               ended              Year ended                 ended              Year ended
                                                                           30.6.2006              31.12.2004             30.6.2006              31.12.2004
                                                                             RM’000                  RM’000                RM’000                  RM’000

       And crediting:

         Bad debts recovered                                                     2,138                      337                      0                       0
         Exchange gain:
         - unrealised                                                                 169                     43                  129                        0
         - realised                                                              1,352                      263                      0                       0
         Gain on dilution of interest in a
          subsidiary company                                                          398                       0                    0                       0
         Gain on disposal of a
          subsidiary company *                                                         0                        0             12,284                         0
         Gain on disposal of ABS Notes and
          other investments                                                           590                   124                   349                     124
         Gain on disposal of property, plant
          and equipment                                                          2,962                    2,598                      0                       0
         Gain on prior year’s disposal of a
          subsidiary company **                                                        0                  2,284                      0                 2,284
         Gain on disposal of assets held for resale                                   30                        0                    0                       0
         Interest income from:
         - advances to subsidiary companies                                            0                        0              5,029                   5,723
         - others                                                               11,871                  13,051                    595                     356
         Negative goodwill arising from acquisition
          of a subsidiary company (Note 33)                                      3,120                      782                      0                       0
         Rental income from land and buildings                                   2,747                    4,570                      0                       0
         Write back of allowance for doubtful
          debts:
         - amount due from a subsidiary company                                        0                        0             13,637                         0
         - trade                                                                 3,943                    1,228                      0                       0
         Write back of provision for rock reserves                               4,001                          0              4,001                         0
         Waiver of debt by subsidiary company                                          0                        0             23,000                         0


    * Disposal proceed of a subsidiary company is satisfied by way of set-off with amounts due to subsidiary company.

    ** The additional gain represents subsequent recovery of debts outstanding at the date of disposal of Sunway-Pioneer Quarry Sdn Bhd to Hanson Quarry Products
       (Holdings) Sdn Bhd.




                                  Sunway Holdings Incorporated Berhad           102   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


7    DIRECTORS’ REMUNERATION


                                                                                      Group                                         Company
                                                                          18 months                                        18 months
                                                                              ended              Year ended                    ended              Year ended
                                                                          30.6.2006              31.12.2004                30.6.2006              31.12.2004
                                                                            RM’000                  RM’000                   RM’000                  RM’000

      The aggregate amount of emoluments
       received/receivable by Directors of the
       Company during the financial period/
       year were as follows:

      Non-executive Directors*:
      - salaries and bonuses                                                     1,675                   1,196                         0                   0
      - estimated money value of benefits-in-kind                                     80                     30                        0                   0
      - national defined contribution plan                                           214                    158                        0                   0
      - other benefits                                                               105                    125                        0                   0

      Non-executive Directors:
      - fees (Note 6)                                                                84                     117                       84                  63
      - other emoluments                                                             37                      34                       37                  29

      Executive Directors:
      - salaries and bonuses                                                     3,088                   2,422                   3,088                2,422
      - estimated money value of benefits-in-kind                                    276                    274                     276                 274
      - national defined contribution plan                                           390                    324                     390                 324
      - other benefits                                                               159                    278                     159                 278

                                                                                 6,108                   4,958                   4,034                3,390

    * Directors’ remuneration in respect of certain Non-executive Directors who are Executive Directors of a subsidiary company of the Company.



     Executive Directors of the Company have been granted options over ordinary shares under the ESOS on the same terms
     and conditions of those offered to other employees of the Group (see Note 28(iii)) as follows:


                                                                                            Number of options over ordinary shares
                                                                                 At start of                                                       At end of
                                                            Exercise              financial                                                         financial
                                                               price                 period              Granted              Exercised               period
             Grant date            Expiry date             RM/share                    ’000                 ’000                   ’000                 ’000

              30.6.2006

              7.11.2002             6.11.2012                     1.00                 6,200                       0                       0          6,200




                                  Sunway Holdings Incorporated Berhad          103   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


7   DIRECTORS’ REMUNERATION (CONT’D)


                                                                             Number of options over ordinary shares
                                                                  At start of                                             At end of
                                                Exercise           financial                                               financial
                                                   price                year               Granted         Exercised           year
            Grant date     Expiry date         RM/share                 ’000                  ’000              ’000           ’000

        31.12.2004

            7.11.2002       6.11.2012                1.00               6,200                        0               0        6,200




                                                                                                          30.6.2006      31.12.2004
                                                                                                                ’000            ’000

    Number of options over ordinary shares vested at balance sheet date                                       6,200           6,200




8   FINANCE COST


                                                                        Group                                  Company
                                                            18 months                                    18 months
                                                                ended             Year ended                 ended       Year ended
                                                            30.6.2006             31.12.2004             30.6.2006       31.12.2004
                                                              RM’000                 RM’000                RM’000           RM’000

    Interest expense on:
    - Bank borrowings                                            40,452                13,934               32,279            4,228
    - Bonds                                                             0                  6,479                 0            6,479
    - Advances from subsidiary companies                                0                      0             2,568            9,666
    - Advances from related companies                                   0                      0                 0              616
    - ABS Notes                                                   9,357                    5,769                 0                0
    - Others                                                      4,419                    3,752                 1              258
                                                                 54,228                29,934               34,848           21,247

    Less:
    Interest capitalised into property
     development costs (Note 18(b))                                     0                  (2,966)               0                0

                                                                 54,228                26,968               34,848           21,247




                           Sunway Holdings Incorporated Berhad   104   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


9   TAX EXPENSE


                                                                      Group                              Company
                                                         18 months                                 18 months
                                                             ended              Year ended             ended       Year ended
                                                         30.6.2006              31.12.2004         30.6.2006       31.12.2004
                                                           RM’000                  RM’000            RM’000           RM’000

    Current tax:
    - Malaysian tax                                            25,784                    5,266          188           (15,638)
    - Foreign tax                                               5,494                    1,031            0                 0
    Deferred tax (Note 26)                                     (1,238)                   (8,171)          0                 0

                                                               30,040                    (1,874)        188           (15,638)

    Current tax:
    - Current financial period/year                            31,999                25,006             132              516
    - Benefit from previously unrecognised
       tax losses                                                (418)                   (1,156)          0                 0
    - (Over)/under accrual in prior financial
       years (net)                                               (303)              (17,553)             56           (16,154)

    Deferred tax:
    - Origination and reversal of temporary
       differences                                             (2,314)                   (8,171)          0                 0
    - Under accrual in prior financial year                     1,076                        0            0                 0

                                                               30,040                    (1,874)        188           (15,638)




                         Sunway Holdings Incorporated Berhad   105   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


9   TAX EXPENSE (CONT’D)

    The explanation of the relationship between tax expense and profit/(loss) from ordinary activities before tax is as
    follows:


                                                                      Group                             Company
                                                         18 months                                18 months
                                                             ended              Year ended            ended       Year ended
                                                         30.6.2006              31.12.2004        30.6.2006       31.12.2004
                                                                 %                       %                %                %

    Numerical reconciliation between the
     average effective tax rate and the
     Malaysian tax rate

    Malaysian tax rate                                                28                   28           28               28
    Tax effects of:
    - small and medium enterprises tax rate
       of 20%/ foreign tax rate                                        3                    (1)           0               0
    - expenses not deductible for tax purposes                        90                     6          (37)             27
    - income not subject to tax                                      (86)                  (12)         27               (46)
    - current period/year tax loss not recognised                     63                     6            0               0
    - temporary differences not recognised                             7                     2          (18)              0
    - previously unrecognised tax losses                              (1)                   (9)          0                0
    - previously unrecognised temporary
       differences                                                    (3)                   (5)          0                0
    - over accrual in prior financial
       years (net)                                                    2                    (18)          0             (284)

    Average effective tax rate                                       103                    (3)          0             (275)



                                                                      Group                             Company
                                                         18 months                                18 months
                                                             ended              Year ended            ended       Year ended
                                                         30.6.2006              31.12.2004        30.6.2006       31.12.2004
                                                           RM’000                  RM’000           RM’000           RM’000

    Tax losses

    Tax savings from the utilisation of tax
     losses brought forward from previous
     years for which the related credit is
     recognised during the financial
     period/year                                                     418                 1,156           0                0

    During the financial period, the Company received RM8.3 million, being the total tax refund covering the years of
    assessment from 2003 to 2004 from the Inland Revenue Board. The tax refund consists of tax credits arising from
    Section 110 of the Income Tax Act, 1967 on dividend income received from subsidiary companies and/or overpayment
    of tax liabilities for the said years.




                         Sunway Holdings Incorporated Berhad   106   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


10   EARNINGS PER SHARE

     (a) Basic earnings per share

         Basic earnings per share of the Group is calculated by dividing the net profit for the financial period/year by the
         weighted average number of ordinary shares in issue during the financial period/year.


                                                                                                        Group
                                                                                               18 months
                                                                                                   ended         Year ended
                                                                                               30.6.2006         31.12.2004


          Net (loss)/profit for the financial period/year (RM’000)                                (11,270)            39,299
          Weighted average number of ordinary shares
           in issue (’000)                                                                       540,144            486,020
          Basic (losses)/earnings per share (sen)                                                   (2.09)              8.08


     (b) Diluted earnings per share

         For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue is adjusted
         to assume conversion of all dilutive potential ordinary shares. The Group has two categories of dilutive potential
         ordinary shares: options over ordinary shares granted to employees and warrants. The terms of the options
         over ordinary shares and unexercised warrants are set out in Note 28(iii) and 29 to the financial statements
         respectively.

         In the current financial period, the options and warrants are deemed non-dilutive since their exercise prices
         are above the fair value of the Company’s shares. As such, in accordance with FRS 133 “Earnings Per Share”,
         presentation of diluted earnings per share is not required.

         For financial year ended 31 December 2004, in respect of options over ordinary shares granted to employees, a
         calculation was done to determine the number of shares that could had been issued at market price (determined as
         the average share price of the Company’s shares) based on the consideration that would had been received on the
         exercise of the dilutive options over ordinary shares. The difference between the number of shares assumed to be
         issued on exercise of the dilutive options over ordinary shares and the number of shares that would had been issued
         at fair value were treated as an issue of ordinary shares for no consideration. The shares issued for no consideration
         were added to the ordinary shares outstanding for the purpose of computing the dilution. No adjustment was made
         to net profit for the financial year for options over ordinary shares calculation.




                          Sunway Holdings Incorporated Berhad   107   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


10   EARNINGS PER SHARE

     (b) Diluted earnings per share (cont’d)

                                                                                                                     Group
                                                                                                                 Year ended
                                                                                                                 31.12.2004

          Net profit for the financial year (RM’000)                                                                39,299
          Weighted average number of ordinary shares
           in issue (’000)                                                                                         486,020
          Adjustment for:
          - options over ordinary shares (’000)                                                                       9,082
          - warrants (’000)                                                                                              841

          Weighted average number of ordinary shares
           for diluted earnings per share (’000)                                                                   495,943

          Diluted earnings per share (sen)                                                                               7.92

          Comparative earnings per share information has been restated to take into account the effect on net profit for the
          year of the change in accounting policy as disclosed in Note 35 to the financial statements.


11   DIVIDENDS

     Dividends declared or proposed in respect of ordinary shares for the financial period/year is as follows:

                                                                                    Group and Company
                                                         18 months ended 30.6.2006               Year ended 31.12.2004
                                                                                  Amount of                      Amount of
                                                                                   dividend,                      dividend,
                                                                Gross                  net of        Gross            net of
                                                             per share              28% tax       per share        28% tax
                                                                   Sen              RM’000              Sen        RM’000

     Interim dividend declared                                          0                  0             3          11,643
     Final dividend proposed                                            0                  0             2            7,781
                                                                        0                  0             5          19,424




                           Sunway Holdings Incorporated Berhad   108   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


12   PROPERTY, PLANT AND EQUIPMENT

                                                               Foreign
                                                        At    currency                                                                      At
                                                  1.1.2005      reserve Written off Additions            Disposals Reclassifications 30.6.2006
                                                   RM’000      RM’000     RM’000     RM’000               RM’000           RM’000      RM’000

     Group

     Cost

     Purchased assets

     Freehold land                                  30,230              0         (832)             0        (498)               0     28,900
     Long term leasehold land                       10,543              0             0           571        (655)               0     10,459
     Short term leasehold land                       5,959            (57)            0          1,936          0                0      7,838
     Buildings                                     106,908        (682)         (4,709)      10,528        (1,291)            (525)   110,229

     Total land and buildings                      153,640        (739)         (5,541)      13,035        (2,444)            (525)   157,426

     Plant and machinery                           246,653        (533)         (1,310)      56,777        (8,880)           3,017    295,724
     Motor vehicles                                 45,402        (291)               0          4,962     (5,080)            (304)    44,689
     Furniture, fittings and office equipment       35,462            (77)        (381)          7,863       (193)            (401)    42,273
     Capital work-in-progress                        1,028              0             0          7,497          0           (1,985)     6,540

                                                   482,185      (1,640)         (7,232)      90,134       (16,597)            (198)   546,652

     Assets acquired under finance lease
      and hire purchase agreements

     Plant and machinery                             6,833            (56)        (799)      18,068             0              (44)    24,002
     Motor vehicles                                  2,786             (2)            0          3,720        (19)             242      6,727
     Furniture, fittings and office equipment        5,138              0             0          1,932          0                0      7,070

                                                    14,757            (58)        (799)      23,720           (19)             198     37,799

                                                   496,942      (1,698)         (8,031)    113,854        (16,616)               0    584,451




                                Sunway Holdings Incorporated Berhad    109   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


12   PROPERTY, PLANT AND EQUIPMENT (CONT’D)

                                                             Foreign                       Charge for       Released
                                                      At    currency                      the financial           on                           At
                                                1.1.2005      reserve Written off               period      disposals Reclassifications 30.6.2006
                                                 RM’000      RM’000     RM’000                RM’000         RM’000           RM’000      RM’000

     Group (cont’d)

     Accumulated depreciation

     Purchased assets

     Long term leasehold land                        896              0               0              253       (655)                0        494
     Short term leasehold land                     2,010         (18)                 0             1,154          0                0      3,146
     Buildings                                    32,593        (209)           (2,310)             4,206     (1,468)               0     32,812

     Total land and buildings                     35,499        (227)           (2,310)             5,613     (2,123)               0     36,452

     Plant and machinery                         167,218        (399)             (885)         25,877        (5,144)               0    186,667
     Motor vehicles                               37,870        (224)                 0             3,908     (4,124)           (146)     37,284
     Furniture, fittings and office equipment     26,881         (73)             (379)             5,278      (847)                0     30,860
     Capital work-in-progress                          0              0               0                0           0                0          0

                                                 267,468        (923)           (3,574)         40,676       (12,238)           (146)    291,263

     Assets acquired under finance lease
      and hire purchase agreements
     Plant and machinery                           6,351         (56)             (799)             3,367      (393)                0      8,470
     Motor vehicles                                1,505          (1)                 0             1,410      (583)             146       2,477
     Furniture, fittings and office equipment      1,255              0               0             3,211          0                0      4,466

                                                   9,111         (57)             (799)             7,988      (976)             146      15,413

                                                 276,579        (980)           (4,373)         48,664       (13,214)               0    306,676

     Accumulated impairment losses

     Long term leasehold land                      1,601              0               0                0           0                0      1,601
     Buildings                                         0              0               0             1,840          0                0      1,840
     Plant and machinery                           1,300              0               0                0           0                0      1,300
     Capital work-in-progress                        845              0               0                0           0                0        845

                                                   3,746              0               0             1,840          0                0      5,586




                                Sunway Holdings Incorporated Berhad       110   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


12   PROPERTY, PLANT AND EQUIPMENT (CONT’D)

                                                               Foreign
                                                        At    currency                                                                       At
                                                  1.1.2004      reserve Written off Additions            Disposals Reclassifications 31.12.2004
                                                   RM’000      RM’000     RM’000     RM’000               RM’000           RM’000       RM’000

     Group

     Cost

     Purchased assets

     Freehold land                                  30,230              0             0             0           0                 0     30,230
     Long term leasehold land                        3,208            (71)            0          7,885       (479)                0     10,543
     Short term leasehold land                       4,674            (40)            0          1,325          0                 0      5,959
     Buildings                                     121,447            221             0          9,814    (24,574)                0    106,908

     Total land and buildings                      159,559            110             0      19,024       (25,053)                0    153,640

     Plant and machinery                           235,171        (185)              (4)     12,360        (1,580)             891     246,653
     Motor vehicles                                 46,311            262          (62)          1,907     (2,182)            (834)     45,402
     Furniture, fittings and office equipment       31,781             36         (156)          3,927       (105)              (21)    35,462
     Capital work-in-progress                          973              0             0            91           0               (36)     1,028

                                                   473,795            223         (222)      37,309       (28,920)                0    482,185

     Assets acquired under finance lease
      and hire purchase agreements

     Plant and machinery                             7,439        (606)               0             0           0                 0      6,833
     Motor vehicles                                  2,648            (86)            0           487        (263)                0      2,786
     Furniture, fittings and office equipment            0              0             0          5,138          0                 0      5,138

                                                    10,087        (692)               0          5,625       (263)                0     14,757

                                                   483,882        (469)           (222)      42,934       (29,183)                0    496,942




                                Sunway Holdings Incorporated Berhad    111   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


12   PROPERTY, PLANT AND EQUIPMENT (CONT’D)

                                                             Foreign                        Charge for      Released
                                                      At    currency                       the financial          on                            At
                                                1.1.2004      reserve Written off                  year     disposals Reclassifications 31.12.2004
                                                 RM’000      RM’000     RM’000                 RM’000        RM’000           RM’000       RM’000

     Group (cont’d)

     Accumulated depreciation

     Purchased assets

     Long term leasehold land                        122              0               0              774           0                0         896
     Short term leasehold land                     1,353         (10)                 0              667           0                0       2,010
     Buildings                                    32,437         175                  0             3,210     (3,229)               0      32,593

     Total land and buildings                     33,912         165                  0             4,651     (3,229)               0      35,499

     Plant and machinery                         151,769          30                 (1)        16,031        (1,335)             724     167,218
     Motor vehicles                               38,135         (39)               (62)            2,518     (1,961)            (721)     37,870
     Furniture, fittings and office equipment     24,072          48              (114)             2,960        (82)               (3)    26,881

                                                 247,888         204              (177)         26,160        (6,607)               0     267,468

     Assets acquired under finance lease
      and hire purchase agreements

     Plant and machinery                           6,597        (246)                 0                0           0                0       6,351
     Motor vehicles                                1,386         (39)                 0              376        (218)               0       1,505
     Furniture, fittings and office equipment          0              0               0             1,255          0                0       1,255

                                                   7,983        (285)                 0             1,631       (218)               0       9,111

                                                 255,871         (81)             (177)         27,791        (6,825)               0     276,579

     Accumulated impairment losses

     Long term leasehold land                      1,601              0               0                0           0                0       1,601
     Plant and machinery                               0              0               0             1,300          0                0       1,300
     Capital work-in-progress                          0              0               0              845           0                0         845

                                                   1,601              0               0             2,145          0                0       3,746




                                Sunway Holdings Incorporated Berhad       112   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


12   PROPERTY, PLANT AND EQUIPMENT (CONT’D)


                                                                                           30.6.2006     31.12.2004
                                                                                             RM’000         RM’000

     Group (cont’d)

     Net book value

     Purchased assets

     Freehold land                                                                           28,900          30,230
     Long term leasehold land                                                                 8,364            8,046
     Short term leasehold land                                                                4,692            3,949
     Buildings                                                                               75,577          74,315

     Total land and buildings                                                               117,533         116,540

     Plant and machinery                                                                    107,757          78,135
     Motor vehicles                                                                           7,405            7,532
     Furniture, fittings and office equipment                                                11,413            8,581
     Capital work-in-progress                                                                 5,695             183

                                                                                            249,803         210,971

     Assets acquired under finance lease and hire purchase agreements

     Plant and machinery                                                                     15,532             482
     Motor vehicles                                                                           4,250            1,281
     Furniture, fittings and office equipment                                                 2,604            3,883

                                                                                            272,189         216,617



     Freehold land with net book value of RM25,024,000 (2004: RM30,230,000) at the end of the financial period are
     pledged as security for term loan facilities (Note 25).

     Leasehold land with net book value of RM6,915,000 (2004: RM7,128,000) at the end of the financial period are
     pledged as security for term loan facilities (Note 25).

     Buildings with net book value of RM29,139,000 (2004: RM33,103,000) at the end of the financial period are pledged
     as security for term loan facilities (Note 25).

     Plant and machinery with net book value of RM27,555,000 (2004: RM17,570,000) at the end of the financial period
     are pledged as security for term loan facilities (Note 25).




                           Sunway Holdings Incorporated Berhad   113   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


12   PROPERTY, PLANT AND EQUIPMENT (CONT’D)


                                                                                                               At 1.1.2005/
     Company                                                                                                     30.6.2006
                                                                                                                    RM’000

     Cost

     Building                                                                                                          280
     Furniture, fittings and office equipment                                                                            3

                                                                                                                       283



                                                                                                Charge for
                                                                                          At   the financial            At
     Company
                                                                                    1.1.2005         period      30.6.2006
                                                                                     RM’000        RM’000          RM’000

     Accumulated depreciation

     Building                                                                             12              8             20
     Furniture, fittings and office equipment                                              2              0              2

                                                                                          14              8             22



                                                                                                               At 1.1.2004/
     Company                                                                                                    31.12.2004
                                                                                                                    RM’000

     Cost

     Building                                                                                                          280
     Furniture, fittings and office equipment                                                                            3

                                                                                                                       283



                                                                                                Charge for
                                                                                          At   the financial            At
     Company
                                                                                    1.1.2004           year     31.12.2004
                                                                                     RM’000        RM’000          RM’000

     Accumulated depreciation

     Building                                                                             6               6             12
     Furniture, fittings and office equipment                                             2               0              2

                                                                                          8               6             14




                          Sunway Holdings Incorporated Berhad   114   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


12   PROPERTY, PLANT AND EQUIPMENT (CONT’D)


                                                                                          30.6.2006      31.12.2004
                                                                                            RM’000          RM’000

     Company

     Net book value

     Building                                                                                  260             268
     Furniture, fittings and office equipment                                                    1               1

                                                                                               261             269




13   QUARRY DEVELOPMENT EXPENDITURE


                                                                                                 Group

                                                                                          30.6.2006      31.12.2004
                                                                                            RM’000          RM’000

     Cost

     At beginning of financial period/year                                                       0               0
     Acquisition of subsidiary company                                                         268               0
     Incurred during the financial period/year                                               1,017               0

     At end of financial period/year                                                         1,285               0



     Accumulated amortisation

     At beginning of financial period/year                                                       0               0
     Charge for the financial period/year                                                      120               0

     At end of financial period/year                                                           120               0

     Net book value at end of financial period/year                                          1,165               0




                          Sunway Holdings Incorporated Berhad   115   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES


                                                                                              Company

                                                                                         30.6.2006      31.12.2004
                                                                                           RM’000          RM’000

     Non-current

     Unquoted shares, at cost
     At 1 January                                                                         552,068         251,598
     Acquired during the financial period/year                                            197,881            9,918
     Transferred from Quoted shares                                                             0         290,552
     Disposal                                                                                (500)               0

     At 30 June/31 December                                                               749,449         552,068


     Less: Accumulated impairment losses                                                  (69,597)         (25,045)

                                                                                          679,852         527,023



     Quoted shares, at cost
     At 1 January                                                                               0          79,376
     Acquired during the financial period/year                                                  0         211,176
     Transferred to Unquoted shares                                                             0         (290,552)

     At 30 June/31 December                                                                     0                0

     Total                                                                                679,852         527,023



     Unquoted shares of a subsidiary company with carrying value of RM223,882,232 (2004: RM221,131,000) at the end
     of the financial period/year are pledged as security for term loan facilities (Note 25).




                         Sunway Holdings Incorporated Berhad   116   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)

     Details of the subsidiary companies are as follows:


                                                                 Group’s effective interest

                                          Country of             30.6.2006          31.12.2004
     Name                                 incorporation                  %                   %     Principal activities

     Sunway Construction                  Malaysia                    100.00              100.00   Construction of building
      Sdn Bhd                                                                                      and civil works

     SunwayMas Sdn Bhd                    Malaysia                    100.00              100.00   Property and housing
                                                                                                   development

     Sunway Juarasama                     Malaysia                    100.00              100.00   Construction of building
      Sdn Bhd **                                                                                   and civil works

     Sunway Keramo                        Malaysia                    100.00              100.00   Marketing, manufacturing
      Sdn Bhd                                                                                      and sale of vitrified clay
                                                                                                   pipes and other similar
                                                                                                   clay products

     Sunway Marketing                     Malaysia                    100.00              100.00   Marketing, distribution and
      Sdn Bhd                                                                                      sale of construction related
                                                                                                   products

     Sunway Marketing (S)                 Singapore                   100.00              100.00   Import, export and
      Pte. Ltd. *                                                                                  wholesale of building
                                                                                                   materials, heavy equipment
                                                                                                   and industrial hardware

     Sunway Credit &                      Malaysia                    100.00              100.00   Lease and hire purchase
      Leasing Sdn Bhd                                                                              financing

     Sunway Risk                          Malaysia                    100.00              100.00   General insurance
      Management Sdn Bhd                                                                           underwriting and
                                                                                                   consultancy services

     Sunway Management                    Malaysia                    100.00              100.00   Share registration and
      Sdn Bhd                                                                                      secretarial services

     Sunway Land Sdn Bhd                  Malaysia                    100.00              100.00   Investment holding

     Sunway Holdings                      Malaysia                    100.00              100.00   Investment holding
      (Vietnam) Sdn Bhd **

     Amalan Insaf (M) Sdn Bhd *           Malaysia                      82.50              82.50   Investment holding

     Reptolink Sdn Bhd                    Malaysia                     100.00             100.00   Investment holding

     Sunway Property (China) Ltd.         Hong Kong                    100.00             100.00   Investment holding
      (formerly known as
      Ubundi Ltd.)*

     Shahawan (M) Sdn Bhd **              Malaysia                     100.00             100.00   Property investment




                          Sunway Holdings Incorporated Berhad   117   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)


                                                                  Group’s effective interest

                                           Country of             30.6.2006          31.12.2004
     Name                                  incorporation                  %                   %     Principal activities

     Galaxy Avenue Sdn Bhd **              Malaysia                     100.00             100.00   Investment holding

     Sunway Orient Sdn Bhd **              Malaysia                     100.00             100.00   Investment holding

     Sunway Global Limited                 Hong Kong                     60.00               0.00   Investment holding and
                                                                                                    provision of management
                                                                                                    services

     Sunway BPO Sdn Bhd                    Malaysia                     100.00             100.00   Provision of finance and
                                                                                                    accounting services

     Sunway Shared                         Malaysia                     100.00             100.00   Provision of financial and
      Services Centre Sdn Bhd **                                                                    accounting services to its
                                                                                                    related companies

     City Leader Sdn Bhd **                Malaysia                     100.00             100.00   Investment holding

     Myanmar Sungei Way                    Myanmar                       99.90              99.90   Dormant
      Holdings Limited *^

     Synergy Quarry and                    Malaysia                      70.00               0.00   Dormant
      Asphalt Industries Sdn Bhd *

     Splendid Era Sdn Bhd                  Malaysia                     100.00              50.00   Dormant

     ABS Land & Properties                 Malaysia                     100.00             100.00   Implementation of
      Berhad*                                                                                       securitisation transactions

     Sunway Quarry                         Malaysia                     100.00               0.00   Manufacturing and
      Industries Sdn Bhd                                                                            supplying of premix, quarry
                                                                                                    operations to carry out
                                                                                                    contract works for civil
                                                                                                    projects

     Sunway Pipeplus                       Malaysia                     100.00             100.00   Production of concrete pipes
      Technology Sdn Bhd **

     Sun-Block Sdn Bhd **                  Malaysia                     100.00             100.00   Manufacturing and sale of
                                                                                                    concrete blocks, pavers and
                                                                                                    compressed concrete tiles;
                                                                                                    manufacturing and sale of
                                                                                                    precast micro injection piles
                                                                                                    and reinforced concrete
                                                                                                    piles; undertaking of piling
                                                                                                    contracts; and hire of heavy
                                                                                                    machineries




                           Sunway Holdings Incorporated Berhad   118   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)


                                                                Group’s effective interest

                                         Country of             30.6.2006          31.12.2004
     Name                                incorporation                  %                   %     Principal activities

     Subsidiary companies of
      Sunway Construction
      Sdn Bhd:

     - Sunway Innopave Sdn Bhd           Malaysia                     100.00             100.00   Construction of civil and
                                                                                                  building works and provision
                                                                                                  of project management

     - Sunway M&E Sdn Bhd                Malaysia                     100.00             100.00   Provision of mechanical and
                                                                                                  electrical works

     - Sunway Machinery Sdn Bhd          Malaysia                     100.00             100.00   Renting of machinery and
        (formerly known as                                                                        site equipment and
        SWC Machinery Sdn Bhd)**                                                                  undertaking sub-contract
                                                                                                  work

     - Binajelata (M) Sdn Bhd **         Malaysia                     100.00             100.00   Project management and
                                                                                                  providing technical advisory
                                                                                                  services

     - Identiti Jelata (M) Sdn Bhd       Malaysia                     100.00             100.00   Project management,
                                                                                                  technical advisory services
                                                                                                  and property management

     - Sunway Engineering                Malaysia                      74.70              74.70   Provision of mechanical and
        Sdn Bhd                                                                                   engineering works

     - Sunway Builders                   Malaysia                     100.00             100.00   Construction of building
        Sdn Bhd                                                                                   and civil works

     - Sunway Piling Sdn Bhd **          Malaysia                     100.00             100.00   Manufacturing of concrete
                                                                                                  bricks and pavers;
                                                                                                  manufacturing and sales of
                                                                                                  precast micro injection piles
                                                                                                  and reinforced concrete
                                                                                                  piles; undertaking of piling
                                                                                                  contracts; and hire of heavy
                                                                                                  machineries

     - Sunspan Sdn Bhd                   Malaysia                     100.00             100.00   Construction
                                                                                                  of building and civil works

     - Muhibbah Permai                   Malaysia                      80.00              80.00   Property development
        Sdn Bhd**

     - Target Beam (M)                   Malaysia                     100.00             100.00   Project management,
        Sdn Bhd**                                                                                 technical advisory services
                                                                                                  and property management




                         Sunway Holdings Incorporated Berhad   119   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)


                                                                 Group’s effective interest

                                          Country of             30.6.2006          31.12.2004
     Name                                 incorporation                  %                   %     Principal activities

     Subsidiary companies of
      Sunway Construction
      Sdn Bhd: (cont’d)

     - Baramatics Sdn Bhd                 Malaysia                     100.00             100.00   Project management and
                                                                                                   technical advisory services

     - Classvest Realty                   Malaysia                     100.00             100.00   Property investment, project
        Sdn Bhd **                                                                                 management and providing
                                                                                                   technical advisory services

     - Crosside Realty Sdn Bhd **         Malaysia                     100.00             100.00   Property investment, project
                                                                                                   management and providing
                                                                                                   technical advisory services

     - Sunway Industrial                  Malaysia                     100.00             100.00   Investment holding
        Products Sdn Bhd **

     - Sunway Machineries                 Malaysia                     100.00             100.00   Investment holding
        Services Sdn Bhd**

     - Sunway Construction                India                        100.00             100.00   Construction of civil and
        (India) Pte. Ltd. *                                                                        building works

     - PT Sunway-Yasa                     Indonesia                     65.00              65.00   Design, manufacture, supply
        PMI Pile                                                                                   and installation of concrete
                                                                                                   based foundation and other
                                                                                                   concrete products

     - Sunway Creative                    Malaysia                      51.00              51.00   Trading of construction
        Stones Sdn Bhd                                                                             materials and general
                                                                                                   contract work

     - Sunway GD Piling                   Malaysia                      60.00               0.00   Piling and foundation works
        Sdn Bhd

     - Sunway Construction                Trinidad and                 100.00               0.00   Construction of civil and
        (Caribbean) Limited               Tobago                                                   building works

     - Sunway Precast                     Malaysia                     100.00             100.00   Manufacturing precast
        Industries Sdn Bhd **                                                                      concrete building
                                                                                                   components, undertaking
                                                                                                   of precast concrete building
                                                                                                   contracts and renting
                                                                                                   of machineries




                          Sunway Holdings Incorporated Berhad   120   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)


                                                                 Group’s effective interest

                                          Country of             30.6.2006          31.12.2004
     Name                                 incorporation                  %                   %     Principal activities

     Subsidiary company of
      Sunway Industrial
      Products Sdn Bhd:

     - Sunway Concrete                    Singapore                    100.00             100.00   Manufacturing and sale of
        Products (S) Pte. Ltd. *                                                                   precast concrete building
                                                                                                   components

     Subsidiary company of
      Sunway Creative
      Stones Sdn Bhd:

     - Sunway Dimension                   Malaysia                      51.00             100.00   Dormant
        Stones Sdn Bhd

     Subsidiary companies
      of Sunway Machineries
      Services Sdn Bhd:

     - Sunway PMI-Pile                    Malaysia                      99.42              99.42   Manufacturing and sale of
        Construction Sdn Bhd **                                                                    precast micro injection
                                                                                                   piles and reinforced
                                                                                                   concrete piles;
                                                                                                   undertaking of piling
                                                                                                   contracts; and hire of heavy
                                                                                                   machineries

     - Sunway SK Sdn Bhd                  Malaysia                     100.00             100.00   Dormant
        (formerly known as
        Sunway Utama Sdn Bhd)

     - Amona Sunway                       Malaysia                     100.00             100.00   Dormant
        Construction
        Consortium Sdn Bhd
        (formerly known as
        Sunway Modular
        Construction Sdn Bhd)**

     - Sun-Block (Batang Kali)            Malaysia                     100.00             100.00   Dormant
        Sdn Bhd **

     - Eternal Reserves Sdn               Malaysia                     100.00             100.00   Investment holding
        Bhd (In liquidation)




                          Sunway Holdings Incorporated Berhad   121   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)


                                                                   Group’s effective interest

                                            Country of             30.6.2006          31.12.2004
     Name                                   incorporation                  %                   %     Principal activities

     Subsidiary companies
      of Sunway Machineries
      Services Sdn Bhd: (cont’d)

     - Gold Kinetic Sdn Bhd                 Malaysia                     100.00             100.00   Investment holding
       (In liquidation)

     - Sunway Building                      Malaysia                     100.00             100.00   Dormant
        Technology
        (Vietnam) Sdn Bhd
        (In liquidation)

     Subsidiary company of
      Sunway SK Sdn Bhd
      (formerly known as
      Sunway Utama Sdn Bhd)

     - Sunway Form-Eze                      Malaysia                     100.00             100.00   Dormant
        Sdn Bhd
        (In liquidation)

     Subsidiary company of
      Eternal Reserves Sdn Bhd

     - Sunway Slag Cement                   Malaysia                     100.00             100.00   Dormant
        Sdn Bhd
        (In liquidation)

     Subsidiary companies
      of SunwayMas Sdn Bhd:

     - Ikaz Engineering Sdn Bhd             Malaysia                     100.00              94.00   Property development

     - Mujurmas Sdn Bhd                     Malaysia                     100.00             100.00   Property development

     - Pembangunan Risjaya                  Malaysia                     100.00             100.00   Property development
        Sdn Bhd

     - Usaha Arahmanz Sdn Bhd               Malaysia                     100.00             100.00   Property development

     - Zafarra Corporation                  Malaysia                     100.00             100.00   Property development
        Sdn Bhd

     - Eaglefield Sdn Bhd                   Malaysia                     100.00             100.00   Dormant

     - Reliance Outline (M)                 Malaysia                     100.00             100.00   Dormant
        Sdn Bhd (In liquidation)




                            Sunway Holdings Incorporated Berhad   122   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)


                                                                  Group’s effective interest

                                           Country of             30.6.2006          31.12.2004
     Name                                  incorporation                  %                   %     Principal activities

     Subsidiary companies
      of Sunway Marketing
      Sdn Bhd:

     - Sunway Marketing                    Malaysia                      85.00              85.00   General trading
        (East Malaysia) Sdn Bhd

     - Sunway Hose Centre Sdn Bhd ** Malaysia                            85.00              85.00   General trading

     - Sunway Architectural                Malaysia                      85.00              85.00   Dormant
        Products Sdn Bhd **

     Subsidiary companies
      of Sunway Marketing
      (S) Pte Ltd:

     - PT Sunway Marketing                 Indonesia                    100.00             100.00   Trading in hydraulic hoses,
        Indonesia *                                                                                 fittings and industrial
                                                                                                    products

     - Sunway Marketing                    China                        100.00             100.00   Manufacturing and trading
        (Shanghai) Pte. Ltd. *                                                                      of pipes, hoses and
                                                                                                    related components

     - PT Trek Masindo *                   Indonesia                    100.00             100.00   Sale of heavy equipment
                                                                                                    and related components

     Subsidiary companies
      of Sunway Credit &
      Leasing Sdn Bhd:

     - SWL Nominees                        Malaysia                     100.00             100.00   Provision of share nominee
        (Tempatan) Sdn Bhd                                                                          services

     - Sunway Elite Sdn Bhd                Malaysia                     100.00             100.00   Property investment for
        (formerly known as                                                                          rental income
        Eternal Elite Sdn Bhd)**

     - SWL Factoring Sdn Bhd               Malaysia                     100.00             100.00   Dormant

     Subsidiary companies
      of Sunway Land Sdn Bhd:

     - Sungei Way Resources                Malaysia                     100.00             100.00   Property investment
        Sdn Bhd **

     - Fortuna Gembira                     Malaysia                     100.00             100.00   Property investment
        Enterpris Sdn Bhd **                                                                        and investment holding




                           Sunway Holdings Incorporated Berhad   123   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)


                                                                  Group’s effective interest

                                           Country of             30.6.2006          31.12.2004
     Name                                  incorporation                  %                   %     Principal activities

     Subsidiary companies
      of Reptolink Sdn Bhd

     - Sunway Enterprise                   Malaysia                     100.00               0.00   Trading and hiring of
        (1988) Sdn Bhd*                                                                             heavy machinery and spares

     - Sunway Hydraulic                    Malaysia                     100.00               0.00   Manufacturing of couplings
        Industries Sdn Bhd*                                                                         and assembly of
                                                                                                    hydraulic hoses

     Subsidiary companies
      of Sunway Holdings
      (Vietnam) Sdn Bhd:

     - Sunway Hatay                        Vietnam                       86.00              86.00   Quarrying and
        Construction &                                                                              manufacturing of
        Building Materials                                                                          ready-mixed concrete
        JV Co. Ltd. *

     - Hochimex Nominee                    Hong Kong                    100.00             100.00   Investment holding
        Company Limited *

     - Sungei Way Ocean                    Vietnam                       70.00              70.00   Quarrying and production
        Joint Venture Ltd. *                                                                        of building stones

     - Realty Investments (HB) Inc. *      Panama                       100.00             100.00   Investment holding

     Subsidiary company of
      Hochimex Nominee
      Company Limited:

     - Sunway Hotel Hanoi                  Vietnam                       71.00              71.00   Hotel operations
        Joint-Venture Company *

     Subsidiary company of
      Realty Investments (HB) Inc.:

     - Hang Bai Office                     Vietnam                       74.00              74.00   Property investment
        Complex JVC *

     Subsidiary company of
      Amalan Insaf (M) Sdn Bhd:

     - Sunway Property Sdn Bhd *           Malaysia                      82.50              82.50   Dormant




                           Sunway Holdings Incorporated Berhad   124   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14   INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)


                                                                  Group’s effective interest

                                           Country of             30.6.2006          31.12.2004
     Name                                  incorporation                  %                   %     Principal activities

     Subsidiary company of
      Sunway Keramo Sdn Bhd:

     - Sunway Pipe Inspection              Malaysia                     100.00             100.00   Dormant
        and Repair Services
        Centre Sdn Bhd **

     Subsidiary companies
      of Sun-Block Sdn Bhd:

     - Sun-Block (Senai)                   Malaysia                     100.00             100.00   Manufacture and sale of
        Sdn Bhd                                                                                     roofing tiles

     - Sun-Block (Beranang)                Malaysia                     100.00             100.00   Property holding and rental
        Sdn Bhd                                                                                     of property

     Subsidiary of company Synergy
      Quarry & Asphalt Industries
      Sdn Bhd

     - Synergy Quarry &                    Malaysia                      70.00               0.00   Dormant
        Asphalt (Penang) Sdn Bhd*

     Subsidiary company of
      ABS Land & Properties Berhad

     - Coral-White Sdn Bhd*                Malaysia                     100.00             100.00   Property investment and
                                                                                                    investment holding

     Subsidiary companies of Sunway
      Global Limited

     - Sunway Building                     China                         60.00               0.00   Manufacturing, sales and
        Materials (Shanghai)                                                                        marketing of interlocking
        Co. Ltd.*                                                                                   pavers

     - Sunway Building                     China                         60.00               0.00   Manufacturing, sales and
        Materials (Dongguan)                                                                        marketing of interlocking
        Co. Ltd.*                                                                                   pavers

     - Sunway Hoston                       China                         30.60               0.00   Design, manufacture and
        (Zhuhai) Spun Pile Co. Ltd.*                                                                sale of pretensioned spun
                                                                                                    concrete piles

     - Sunway GD Foundation                Macau                         36.00               0.00   To carry out foundation and
        Engineering Co. Ltd.*                                                                       construction works




                           Sunway Holdings Incorporated Berhad   125   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


14      INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)


                                                                                      Group’s effective interest

                                                           Country of                30.6.2006             31.12.2004
         Name                                              incorporation                     %                      %            Principal activities

         Subsidiary companies of Sunway
          Enterprise (1988) Sdn Bhd

         - Heng Ngai Knitting                              Malaysia                        100.00                    0.00        Property rental
            Manufacturer Sdn Bhd *

         - SWE Rental Sdn Bhd *                            Malaysia                        100.00                    0.00        Dormant
            (In liquidation)

         - SWE Trading Sdn Bhd *                           Malaysia                        100.00                    0.00        Dormant
            (In liquidation)

         - Sungei Way Enterprise                           Singapore                       100.00                    0.00        Sale of heavy machinery
            (1988) Singapore Pte. Ltd. *                                                                                         and machinery spare parts


      * Not audited by PricewaterhouseCoopers, Malaysia.

     ** The auditors’ reports on the financial statements of these subsidiary companies have drawn attention to the notes in the respective subsidiary companies’ financial
        statements concerned as the continuation of these subsidiary companies as a going concern is dependent on the continuing financial support of the Company.

     ^ Myanmar Sungei Way Holdings Limited (“MSHL”) has been placed under members’ voluntary liquidation on 28 June 2001 by a special resolution passed at the
       Extraordinary General Meeting of MSHL held in June 2001. MSHL was incorporated in Myanmar to carry out general trading but has remained dormant since
       its inception. The voluntary liquidation of MSHL is undertaken as there is no immediate and foreseeable investment plans in Myanmar in the future.




                                     Sunway Holdings Incorporated Berhad            126   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


15   INVESTMENTS IN ASSOCIATED COMPANIES


                                                                          Group                             Company

                                                             30.6.2006              31.12.2004         30.6.2006      31.12.2004
                                                               RM’000                  RM’000            RM’000          RM’000

     Quoted:
      Shares at cost                                              258,132               257,636          67,269          67,269
      Warrants at cost                                              4,753                32,762           4,753           4,753
      Share of post-acquisition losses                            (61,205)              (20,066)              0               0
      Share of non-distributable reserves                            (829)                    (829)           0               0

      Elimination of unrealised profit on
       contract service rendered                                   (2,156)                   (2,808)          0               0

                                                                  198,695               266,695          72,022          72,022



      Less: Accumulated impairment losses
      - shares (Note 5)                                       (144,998)                (144,219)        (50,772)              0
      - warrants (Note 5)                                          (4,753)              (26,530)          (4,753)             0

                                                                   48,944                95,946          16,497          72,022



     Unquoted:
      Shares at cost                                               15,276                15,276          13,406          13,406
      Share of post-acquisition profits                             2,051                    1,186            0               0

                                                                   17,327                16,462          13,406          13,406

      Less: Accumulated impairment losses
            (Note 5)                                              (13,406)                   (3,841)    (13,406)          (3,406)

                                                                    3,921                12,621               0          10,000



                                                                   52,865               108,567          16,497          82,022



     Market value of quoted investments:
     - shares                                                      29,826                61,851          10,415          42,960
     - warrants                                                          699                 1,416          699           1,071

                                                                   30,525                63,267          11,114          44,031




                            Sunway Holdings Incorporated Berhad    127   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


15   INVESTMENTS IN ASSOCIATED COMPANIES (CONT’D)


                                                                                                    Group

                                                                                            30.6.2006        31.12.2004
                                                                                              RM’000            RM’000

     Represented by:

      Group’s share of net assets other than goodwill of
       associated companies                                                                    53,005            96,864
      Premium on acquisition                                                                  144,998           143,671
      Reserve on acquisition                                                                     (140)             (140)
      Less: Accumulated impairment losses
      - quoted                                                                               (144,998)         (144,219)
      - unquoted                                                                                     0           (3,841)

                                                                                               52,865            92,335



     Quoted investments:
     - warrants                                                                                 4,753            32,762
     Less: Accumulated impairment losses                                                       (4,753)          (26,530)

                                                                                                     0            6,232



     Unquoted investments:
     - redeemable preference shares                                                            10,000            10,000
     Less: Accumulated impairment losses                                                      (10,000)                 0

                                                                                                     0           10,000

                                                                                               52,865           108,567



     The Group’s share in losses of certain associated companies have been recognised to the extent of the carrying amount
     of the investments. The cumulative and current year’s unrecognised share of losses amounted to RM27,737,000 (2004:
     RM27,737,000) and RM Nil (2004: RM Nil) respectively.




                          Sunway Holdings Incorporated Berhad   128   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


15    INVESTMENTS IN ASSOCIATED COMPANIES (CONT’D)

      Details of the associated companies are as follows:

                                                                        Group’s effective interest
                                                     Country of          30.6.2006          31.12.2004
       Name                                          incorporation               %                   %   Principal activities

       Sunway Infrastructure Berhad *                Malaysia                  36.16             36.16   Investment holding

       Sungei Way-Saigon-                            Vietnam                   42.30             42.30   Dormant
        Pilecon Engineering Company *

       Associated company of
        Fortuna Gembira
        Enterpris Sdn Bhd:

       Gopeng Berhad *                               Malaysia                  19.33             19.33   Produce and process natural
                                                                                                         rubber, cultivation of palm oil
                                                                                                         and investment holding

       Associated company of
        Sunway Marketing (S) Pte Ltd:

       Sunway Marketing                              Thailand                  47.00             47.00   Import, export and
        (Thailand) Ltd. *                                                                                wholesale of building
                                                                                                         materials, heavy equipment
                                                                                                         and industrial hardware

       Associated company of
       Sunway Machineries Services
       Sdn Bhd

       Suntech Industries                            Malaysia                  30.00             30.00   Dormant
        Sdn Bhd (In liquidation)

       Associated company of
        Sunway Juarasama Sdn Bhd:

       Sungei Way Construction                       Singapore                 50.00             50.00   Dormant
        (S) Pte. Ltd. *

       Associated company of
        SunwayMas Sdn Bhd:

       Varich Industries Sdn Bhd *                   Malaysia                  50.00             50.00   Dormant

       Associated company of
        Sunway Marketing Sdn Bhd:

       Buildtrend B.S.G. (M) Sdn Bhd *               Malaysia                  30.00             30.00   Distribution of architectural
                                                                                                         building products

     * Not audited by PricewaterhouseCoopers, Malaysia




                                 Sunway Holdings Incorporated Berhad   129   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


16   ABS NOTES AND OTHER INVESTMENTS


                                                                       Group                             Company

                                                           30.6.2006             31.12.2004         30.6.2006      31.12.2004
                                                             RM’000                 RM’000            RM’000          RM’000

     At cost:

     ABS Notes (unquoted):

     - Senior Notes                                                    0                      0        2,035           3,003



     Other investments:
      Unquoted investments                                       4,625                    5,211        2,447           2,706
      Quoted investments:
      - shares                                                         0                  7,359            0               0
      - warrants                                                       0                    208            0             208

                                                                 4,625                12,778           2,447           2,914



     Less: Accumulated impairment losses:
           - Unquoted investments (Note 5)                      (2,393)                   (2,968)      (2,253)         (2,253)
           - Quoted investments (Note 5)                               0                   (296)           0               0

                                                                 2,232                    9,514          194             661

                                                                 2,232                    9,514        2,229           3,664



     At market value:

      Quoted investments:
      - shares                                                         0                  7,771            0               0
      - warrants                                                       0                    313            0             313

                                                                       0                  8,084            0             313

     Quoted warrants in Malaysia are in respect of warrants to subscribe for new ordinary shares in Dolomite Berhad.




                          Sunway Holdings Incorporated Berhad   130   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


16   ABS NOTES AND OTHER INVESTMENTS (CONT’D)

     On 2 April 2004, the Group completed an asset-backed securitisation exercise (“ABS exercise”) involving the disposals
     of the entire equity interest in Coral-White Sdn Bhd, a wholly owned indirect subsidiary company of the Company
     and a portfolio of commercial and residential properties to ABS Land & Properties Berhad (“ALP”) for a total sale
     consideration of RM230.252 million which was satisfied by RM93.651 million cash and the issuance of RM136.601
     million nominal value of subordinated class asset-backed securitisation notes (“Subordinated Notes”).

     Pursuant to the ABS exercise, ALP also issued senior asset-backed securitisation notes (“Senior Notes”) to investors in
     the domestic debt capital markets to finance the cash settlement of the abovementioned acquisitions.

     On 4 October 2004, the Company announced that the sale of certain office lots located within Plaza Pantai (“Plaza
     Pantai”); and certain office units within Subang Square Corporate Tower, Subang Business Park and Subang Square
     Shopping Gallery (“Subang Offices”) had not been completed. Accordingly, an amount of RM10.45 million Senior
     Notes issued by ALP for the ABS exercise was repaid to the holders of the Senior Notes. Additionally, an amount of
     RM15.33 million Subordinated Notes issued by ALP to part finance the acquisition of Plaza Pantai and Subang Offices
     was also cancelled.

     The Subordinated Notes will mature in six years from the date of issue and bear a coupon rate of 12% per annum.
     The Subordinated Notes will be redeemed, upon maturity, at par plus an accrued interest of 12% per annum on each
     RM1.00 nominal value of the Subordinated Notes.

     The carrying values of ABS Notes and unquoted investments approximated their fair values. The fair values of these ABS
     Notes and unquoted investments were calculated using the discounted cash flow method. The discount rate used was
     determined by reference to the weighted cost of funds of the respective assets.




                          Sunway Holdings Incorporated Berhad   131   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


17   LONG TERM DEBTORS


                                                                       Group                                Company

                                                           30.6.2006             31.12.2004            30.6.2006      31.12.2004
                                                             RM’000                 RM’000               RM’000          RM’000


     Long term loan to a subsidiary company                            0                     0           12,188               0

     Amount due from a company related by
      common directors:
       - trade                                                         0              25,374                  0               0
       - non-trade                                                     0                  1,356               0           1,356
     Finance lease debtors (Note 22)                             7,472                    9,111               0               0
     Hire purchase debtors (Note 22)                             2,894                    2,632               0               0

                                                                10,366                38,473             12,188           1,356

     Long term loan which was granted to a subsidiary company during the financial period is unsecured, carries interest at
     6% per annum and is repayable by 4 annual instalments commencing 31 December 2008.

     Long term trade debtors due from a company related by common directors were unsecured and carried an interest rate
     of 7.0% per annum in the previous financial year.

     Long term non-trade debtors due from a company related by common directors were unsecured and interest free in the
     previous financial year.

     The fair values of long term debtors at balance sheet date were as follows:


                                                                                           30.6.2006
                                                                       Group                                Company
                                                            Carrying                    Fair            Carrying           Fair
                                                             amount                    value             amount           value
                                                            RM’000                   RM’000             RM’000          RM’000

     Long term loan to a subsidiary company                            0                     0           12,188          11,257

     Amount due from a company related by
      common directors:
       - trade                                                         0                     0                0               0
       - non-trade                                                     0                     0                0               0
     Finance lease debtors                                       7,472                    7,168               0               0
     Hire purchase debtors                                       2,894                    2,729               0               0




                          Sunway Holdings Incorporated Berhad   132   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


17   LONG TERM DEBTORS (CONT’D)


                                                                                           31.12.2004
                                                                       Group                                 Company

                                                            Carrying                    Fair             Carrying           Fair
                                                             amount                    value              amount           value
                                                            RM’000                   RM’000              RM’000          RM’000


     Amount due from a company related by
      common directors:
      - trade                                                   25,374                24,121                   0                0
      - non-trade                                                1,356                    1,234            1,356           1,234
     Finance lease debtors                                       9,111                    6,678                0                0
     Hire purchase debtors                                       2,632                    2,131                0                0

     The carrying amounts of long term debtors were not reduced to their estimated fair values as the Directors are of the
     opinion that the amounts will be repaid in full on the due date.

     Long term debtors are denominated in Ringgit Malaysia.


18   PROPERTY DEVELOPMENT ACTIVITIES

     (a) Land held for property development


                                                                                                               Group

                                                                                                        30.6.2006      31.12.2004
                                                                                                          RM’000          RM’000


     Freehold land, at cost                                                                               62,516          64,356
     Leasehold land, at cost                                                                               4,272           2,587
     Development expenditure                                                                                 147           4,000

                                                                                                          66,935          70,943



     At beginning of financial period/year                                                                70,943          84,572

     Development expenditure incurred during the
      financial period/year                                                                               12,455           4,392
     Transfer to property development costs (Note 18(b))                                                 (12,463)          (5,382)
     Disposed during the financial period/year                                                             (4,000)        (12,639)

     At end of financial period/year                                                                      66,935          70,943




                          Sunway Holdings Incorporated Berhad   133   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


18   PROPERTY DEVELOPMENT ACTIVITIES (CONT’D)

     (b) Property development costs


                                                                                            Group
                                                                        30.6.2006                       31.12.2004
                                                                 RM’000                RM’000       RM’000           RM’000

          At beginning of financial period/year:
          - land                                                  39,528                             47,825
          - development costs                                    248,460                            289,679
          - accumulated cost charged
             to income statement                             (274,331)                  13,657      (302,913)        34,591


          Costs incurred during the
           financial period/year:

            - transfer from land held for
               property development
               (Note 18(a))                                       12,463                               2,451
            - transfer of land from subsidiary
               company                                                    0                            2,931
            - acquisition of land held for
               property development                               14,014                                   0
            - development costs                                   62,756                89,233       72,961          78,343

          Costs charged to income statement                                            (84,879)                      (99,277)
          Reversal of completed projects:
          - land                                                    (677)                            (13,679)
          - development costs                                     (8,041)                           (114,180)
          - accumulated cost charged to
              income statement                                     8,718                    0       127,859                0

          At end of financial period/year:
          - land                                                  65,328                             39,528
          - development costs                                    303,175                            248,460
          - accumulated cost charged
             to income statement                             (350,492)                              (274,331)

                                                                                        18,011                       13,657

     Borrowing costs of RM2,966,000, arising from funds borrowed generally for property development activities, were
     capitalised in the previous financial year (Note 8). The weighted average interest rate that was effective as at balance
     sheet date was 5.18% per annum.




                           Sunway Holdings Incorporated Berhad    134   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


19   GOODWILL


                                                                                                         Group

                                                                                                  30.6.2006      31.12.2004
                                                                                                    RM’000          RM’000


     At beginning of the financial period/year                                                      77,104               0
     Acquisition of subsidiary companies (Note 33)                                                  36,996          77,104

     At end of the financial period/year                                                           114,100          77,104

     The Group’s goodwill as at 30 June 2006, arises from the acquisition of additional shares in Sunway Construction Sdn
     Bhd, a 100% owned subsidiary company and the acquisition of business by Sunway Creative Stones Sdn Bhd, a 51%
     owned subsidiary company and the acquisition of 100% shares in Sunway Quarry Industries Sdn Bhd.


20   ASSETS HELD FOR RESALE


                                                                       Group                           Company

                                                           30.6.2006             31.12.2004       30.6.2006      31.12.2004
                                                             RM’000                 RM’000          RM’000          RM’000

     At cost:

      Properties                                                19,334                11,060             0               0


     At net realisable value:

      Properties                                                       0                  7,976        320               0
      Plant and machinery                                        2,001                    2,501          0               0

                                                                 2,001                10,477           320               0

                                                                21,335                21,537           320               0

     Properties held for resale with carrying value of RM803,000 (2004: RM2,707,000) at end of financial period have been
     pledged as security for term loan facilities (Note 25).

     Plant and machinery held for resale with carrying value of RM2,001,000 (2004: RM2,501,000) at end of financial
     period have been pledged as security for term loan facilities (Note 25).




                          Sunway Holdings Incorporated Berhad   135   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


21   INVENTORIES AND COMPLETED DEVELOPMENT PROPERTIES


                                                                                                   Group

                                                                                            30.6.2006      31.12.2004
                                                                                              RM’000          RM’000

     At cost:

      Completed development properties                                                        44,387         168,918
      Raw materials                                                                            6,918           3,562
      Spare parts                                                                              2,577           2,007
      Finished goods                                                                          33,514          11,279
      Work in progress                                                                         3,043           3,330
      Trading inventories                                                                     38,378          24,960

                                                                                             128,817         214,056

     At net realisable value

      Completed development properties                                                       136,026          19,290
      Raw materials                                                                              575           3,272
      Spare parts                                                                              7,172           1,979
      Finished goods                                                                          20,527          24,087
      Trading inventories                                                                     19,041          12,430

                                                                                             183,341          61,058

                                                                                             312,158         275,114

     The Group’s completed development properties comprise leasehold land of RM49,210,000 (2004: RM49,560,000) of
     which the land titles are yet to be transferred to the respective subsidiary companies.




                            Sunway Holdings Incorporated Berhad   136   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


22   DEBTORS


                                                                         Group                           Company

                                                            30.6.2006              31.12.2004       30.6.2006      31.12.2004
                                                              RM’000                  RM’000          RM’000          RM’000

     Trade debtors (net of allowance
      for doubtful debts of RM77,262,000
      (2004: RM80,756,849) of the Group)                         555,202               565,623             0               0
     Retention sums (Note 30)                                     65,406                65,936             0               0
                                                                 620,608               631,559             0               0
     Finance lease debtors                                         4,401                    4,794          0               0
     Hire purchase debtors                                         2,997                    2,337          0               0
     Amounts due from customers on
      contracts (Note 30)                                        122,165                77,951             0               0
     Deposits                                                     12,194                    5,272        579              74
     Other debtors                                                37,081                34,341         1,506           9,963
     Deposit for land held for property
      development                                                         0                 4,000          0               0
     Prepayments                                                  12,449                    8,001      4,346           1,549
     Amounts due from subsidiary companies
      (non-trade) (net of allowance for
      doubtful debts of RM44,345,000
      (2004: RM25,190,000) of the Company)                                0                    0      59,243         154,282
     Amounts due from associated companies                         5,102                    8,205         83               0

                                                                 816,997               776,460        65,757         165,868



     The currency exposure profile of trade
      debtors is as follows:

     - Ringgit Malaysia                                          508,630               539,465             0               0
     - Singapore Dollar                                           11,192                11,724             0               0
     - Vietnam Dong                                               17,684                10,813             0               0
     - Indonesian Rupiah                                           6,360                    2,385          0               0
     - US Dollar                                                        849                  768           0               0
     - Renminbi                                                         312                  447           0               0
     - Euro                                                               2                   21           0               0
     - Trinidad and Tobago Dollar                                  9,943                       0           0               0
     - Macau Pataca                                                     230                    0           0               0

                                                                 555,202               565,623             0               0




                           Sunway Holdings Incorporated Berhad    137   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


22   DEBTORS (CONT’D)


                                                                         Group                           Company

                                                            30.6.2006              31.12.2004       30.6.2006      31.12.2004
                                                              RM’000                  RM’000          RM’000          RM’000

     The currency exposure profile of amounts
      due from customers on contracts is
      as follows:

     - Ringgit Malaysia                                           53,429                77,951             0               0
     - Singapore Dollar                                            5,118                       0           0               0
     - India Rupees                                               49,002                       0           0               0
     - Trinidad and Tobago Dollar                                 14,616                       0           0               0

                                                                 122,165                77,951             0               0


     The currency exposure profile of deposits
      is as follows:

     - Ringgit Malaysia                                            9,382                    4,475        579              74
     - Singapore Dollar                                                 432                  774           0               0
     - US Dollar                                                          9                    0           0               0
     - Vietnam Dong                                                     812                    6           0               0
     - Indonesian Rupiah                                                 17                   17           0               0
     - India Rupees                                                       2                    0           0               0
     - Trinidad and Tobago Dollar                                  1,128                       0           0               0
     - Renminbi                                                         412                    0           0               0

                                                                  12,194                    5,272        579              74


     The currency exposure profile of other
      debtors is as follows:

     - Ringgit Malaysia                                           19,009                30,520         1,506           9,963
     - Singapore Dollar                                            2,087                     226           0               0
     - US Dollar                                                   9,307                    1,144          0               0
     - Vietnam Dong                                                1,375                    1,199          0               0
     - Indonesian Rupiah                                                952                 1,249          0               0
     - India Rupees                                                4,014                       0           0               0
     - Trinidad and Tobago Dollar                                       129                    0           0               0
     - Renminbi                                                         186                    3           0               0
     - Hong Kong Dollar                                                  6                     0           0               0
     - Macau Pataca                                                     16                     0           0               0

                                                                  37,081                34,341         1,506           9,963



                           Sunway Holdings Incorporated Berhad    138   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


22   DEBTORS (CONT’D)


                                                                                                    Group

                                                                                            30.6.2006       31.12.2004
                                                                                              RM’000           RM’000

     Finance lease debtors:
      Not later than 1 year                                                                      5,093          5,925
      Later than 1 year and not later than 5 years                                               8,438         10,322
                                                                                                13,531         16,247
      Less: Unearned interest                                                                   (1,658)         (2,342)

                                                                                                11,873         13,905



     Representing finance lease debtors:
      Not later than 1 year                                                                      4,401          4,794
      Later than 1 year and not later than 5 years (Note 17)                                     7,472          9,111

                                                                                                11,873         13,905

     Hire purchase debtors:
      Not later than 1 year                                                                      3,307          2,626
      Later than 1 year and not later than 5 years                                               3,170          2,981
                                                                                                 6,477          5,607
      Less: Unearned interest                                                                    (586)           (638)

                                                                                                 5,891          4,969



     Representing hire purchase debtors:
      Not later than 1 year                                                                      2,997          2,337
      Later than 1 year and not later than 5 years (Note 17)                                     2,894          2,632

                                                                                                 5,891          4,969

     Amounts due from subsidiary companies (non-trade) are denominated in Ringgit Malaysia, unsecured and have no fixed
     terms of repayment. The weighted average interest rate that was effective as at balance sheet date was 2.54% (2004:
     1.96%) per annum.

     Amounts due from associated companies (trade and non-trade) are denominated in Ringgit Malaysia, unsecured, have
     no fixed terms of repayment and bear no interest.

     Credit terms of trade debtors range from 30 days to 120 days (2004: 30 days to 90 days).




                          Sunway Holdings Incorporated Berhad   139   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


23   CASH AND CASH EQUIVALENTS


                                                                         Group                           Company

                                                            30.6.2006              31.12.2004       30.6.2006      31.12.2004
                                                              RM’000                  RM’000          RM’000          RM’000

     Deposits with:
     - licensed banks                                             58,865                35,712         9,562               0
     - other licensed financial institutions                      27,988                24,365        12,435               0
                                                                  86,853                60,077        21,997               0

     Bank and cash balances                                      113,904                64,194           481           4,062

     Deposits, bank and cash balances                            200,757               124,271        22,478           4,062
     Bank overdrafts (Note 25)                                   (17,301)              (22,154)            0               0
                                                                 183,456               102,117        22,478           4,062
     Deposits pledged as security for
      ABS Senior Notes                                           (10,394)              (10,394)            0               0

                                                                 173,062                91,723        22,478           4,062

     Deposits pledged as security for ABS Senior Notes represent proceeds deposited into a Liquidity Reserves Account as
     well as Expenses and Maintenance Reserves Account in accordance with the terms and conditions of the ABS Senior
     Notes.


                                                                         Group                           Company

                                                            30.6.2006              31.12.2004       30.6.2006      31.12.2004
                                                              RM’000                  RM’000          RM’000          RM’000

     The currency exposure profile of deposits,
      bank and cash balances and bank overdrafts
      are as follows:

     - Ringgit Malaysia                                          139,918               105,050        22,421           4,058
     - Singapore Dollar                                           (5,229)              (10,596)            0               0
     - US Dollar                                                  14,379                    3,660         48               4
     - Indonesian Rupiah                                           4,594                    1,731          0               0
     - Vietnam Dong                                                3,564                    1,621          0               0
     - Renminbi                                                   24,919                     427           9               0
     - Indian Rupee                                                2,414                     171           0               0
     - Euro                                                             (21)                  48           0               0
     - Hong Kong Dollar                                                 30                     5           0               0
     - Japanese Yen                                                     (21)                   0           0               0
     - Trinidad and Tobago Dollar                                 (1,091)                      0           0               0

                                                                 183,456               102,117        22,478           4,062




                           Sunway Holdings Incorporated Berhad    140   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


23   CASH AND CASH EQUIVALENTS (CONT’D)

     The weighted average interest rates per annum of deposits and bank overdrafts that was effective as at balance sheet date
     were as follows:


                                                                          Group                           Company

                                                            30.6.2006               31.12.2004       30.6.2006      31.12.2004
                                                                    %                        %               %               %


     Deposits with licensed banks                                       3.04                  3.00        2.80            N/A
     Deposits with other licensed financial
      institutions                                                      2.95                  3.09        2.95            N/A

     Bank overdrafts                                                    7.03                  6.81        N/A             N/A

     Bank balances are deposits held at call with banks and are non-interest bearing.

     Deposits, bank and cash balances of the Group at the balance sheet date include bank balances held under Housing
     Development Account (opened and maintained under Section 7A of the Housing Development (Control and Licensing)
     Act 1966) of RM24,553,000 (2004: RM6,125,000) that may only be used in accordance with the said Act.

     Deposits of the Group have an average maturity of 39 days (2004: 30 days).


24   CREDITORS


                                                                          Group                           Company

                                                            30.6.2006               31.12.2004       30.6.2006      31.12.2004
                                                              RM’000                   RM’000          RM’000          RM’000

     Trade creditors                                             393,111                343,133             0               0
     Accruals                                                     74,576                 33,397         6,213            2,178
     Other creditors                                              66,193                 64,932           108            4,031
     Interim dividend payable                                             0              11,643             0          11,643
     Amounts due to customers on contracts
      (Note 30)                                                  103,767                121,466             0               0
     Progress billings in respect of
      property development                                         2,029                     1,422          0               0
     Amounts due to:
     - subsidiary companies (non-trade)                                   0                     0      79,132         131,316
     - associated companies (trade)                                3,997                 12,456             0               0
     Advance from shareholder of a subsidiary
      company                                                      3,909                        0           0               0

                                                                 647,582                588,449        85,453         149,168




                           Sunway Holdings Incorporated Berhad    141    annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


24   CREDITORS (CONT’D)


                                                                         Group                           Company

                                                            30.6.2006              31.12.2004       30.6.2006      31.12.2004
                                                              RM’000                  RM’000          RM’000          RM’000

     The currency exposure profile of trade
      creditors is as follows:

     - Ringgit Malaysia                                          324,469               317,755             0               0
     - Singapore Dollar                                            9,615                13,600             0               0
     - US Dollar                                                   1,672                    5,452          0               0
     - Vietnam Dong                                                8,412                    4,284          0               0
     - Euro                                                             145                  899           0               0
     - Indonesian Rupiah                                           1,289                     898           0               0
     - Sterling Pound                                                     0                  245           0               0
     - Thai Baht                                                         (1)                   0           0               0
     - Japanese Yen                                                     126                    0           0               0
     - India Rupee                                                24,748                       0           0               0
     - Trinidad and Tobago Dollar                                 22,636                       0           0               0

                                                                 393,111               343,133             0               0



     The currency exposure profile of
      accruals is as follows:

     - Ringgit Malaysia                                           67,799                27,671         6,213           2,178
     - Singapore Dollar                                            4,822                    3,813          0               0
     - Vietnam Dong                                                     568                 1,128          0               0
     - Indonesian Rupiah                                                890                  704           0               0
     - Trinidad and Tobago Dollar                                        21                    0           0               0
     - Renminbi                                                           0                   81           0               0
     - Hong Kong Dollar                                                 476                    0           0               0

                                                                  74,576                33,397         6,213           2,178




                           Sunway Holdings Incorporated Berhad    142   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


24   CREDITORS (CONT’D)


                                                                        Group                           Company

                                                            30.6.2006             31.12.2004       30.6.2006      31.12.2004
                                                              RM’000                 RM’000          RM’000          RM’000


     The currency exposure profile
      for other creditors is as follows:

     - Ringgit Malaysia                                          15,761                59,226           108           4,031
     - Singapore Dollar                                           2,204                    3,113          0               0
     - US Dollar                                                  1,148                     110           0               0
     - Vietnam Dong                                                    898                 (314)          0               0
     - Euro                                                              8                    0           0               0
     - Indonesian Rupiah                                          9,938                    3,137          0               0
     - India Rupee                                               30,633                    (340)          0               0
     - Trinidad and Tobago Dollar                                      488                    0           0               0
     - Renminbi                                                  (1,571)                      0           0               0
     - Hong Kong Dollar                                           6,686                       0           0               0

                                                                 66,193                64,932           108           4,031

     Amounts due to customers on contracts are denominated in Ringgit Malaysia.

     Included in trade and other creditors of the Group are amounts due to companies connected to certain Directors
     amounting to RM1,218,000 (2004: RM2,686,000) and RM2,131,000 (2004: RM7,247,000) respectively.

     Amounts due to subsidiary companies are denominated in Ringgit Malaysia, unsecured and have no fixed terms of
     repayment. The weighted average interest rate that was effective as at balance sheet date was 4.46% (2004: 4.83%) per
     annum.

     Amounts due to associated companies are denominated in Ringgit Malaysia, unsecured, interest free and have no fixed
     terms of repayment.

     The shareholder advance from the Group’s joint venture partner for Sunway GD Foundation Engineering Co. Ltd.
     which amounts to RM3,909,694 (2004:RM Nil) is denominated in Chinese Renminbi, unsecured, interest free and have
     no fixed terms of repayment.

     Credit terms of trade creditors granted to the Group range from 30 days to 120 days (2004: 30 days to 90 days).




                           Sunway Holdings Incorporated Berhad   143   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS


                                                                       Group                           Company

                                                          30.6.2006              31.12.2004       30.6.2006      31.12.2004
                                                            RM’000                  RM’000          RM’000          RM’000

     Current

     Secured

     Bank overdrafts (Note 23)                                   8,362                       0           0               0
     Term loans                                                  5,275                26,999             0          12,500
     Finance lease and hire purchase
      obligations                                                2,150                    1,986          0               0
                                                                15,787                28,985             0          12,500
     Unsecured

     Bank overdrafts (Note 23)                                   8,939                22,154             0               0
     Bridging loan                                                     0              63,880             0          63,880
     Term loans                                                 60,402                65,880        57,600          63,880
     Bankers’ acceptances                                       55,065                41,938             0               0
     Revolving credits                                          42,874               219,084        15,200          65,200
     Block discount creditors                                    5,126                    2,375          0               0
                                                               172,406               415,311        72,800         192,960
                                                               188,193               444,296        72,800         205,460
     Non-current

     Secured

     Term loans                                                 36,166                35,730             0               0
     Finance lease and hire purchase
      obligations                                                1,437                    2,682          0               0
                                                                37,603                38,412             0               0
     Unsecured

     Term loans                                                336,714                    6,112    273,600               0
     Block discount creditors                                   10,848                    4,485          0               0
     Revolving credits                                          22,799                       0      22,800               0
                                                               370,361                10,597       296,400               0
                                                               407,964                49,009       296,400               0

     Total borrowings                                          596,157               493,305       369,200         205,460




                         Sunway Holdings Incorporated Berhad    144   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)


                                                                       Group                           Company

                                                          30.6.2006              31.12.2004       30.6.2006      31.12.2004
                                                            RM’000                  RM’000          RM’000          RM’000

     Current

     Bank overdrafts (Note 23)                                  17,301                22,154             0               0
     Term loans                                                 65,677                92,879        57,600          76,380
     Finance lease and hire purchase
      obligations                                                2,150                    1,986          0               0
     Bridging loan                                                     0              63,880             0          63,880
     Bankers’ acceptances                                       55,065                41,938             0               0
     Revolving credits                                          42,874               219,084        15,200          65,200
     Block discount creditors                                    5,126                    2,375          0               0

                                                               188,193               444,296        72,800         205,460



     Non-current

     Term loans                                                372,880                41,842       273,600               0
     Finance lease and hire purchase
      obligations                                                1,437                    2,682          0               0
     Block discount creditors                                   10,848                    4,485          0               0
     Revolving credits                                          22,799                       0      22,800               0

                                                               407,964                49,009       296,400               0



     Total borrowings

     Bank overdrafts (Note 23)                                  17,301                22,154             0               0
     Term loans                                                438,557               134,721       331,200          76,380
     Finance lease and hire purchase
      obligations                                                3,587                    4,668          0               0
     Bridging loan                                                     0              63,880             0          63,880
     Bankers’ acceptances                                       55,065                41,938             0               0
     Revolving credits                                          65,673               219,084        38,000          65,200
     Block discount creditors                                   15,974                    6,860          0               0

                                                               596,157               493,305       369,200         205,460




                         Sunway Holdings Incorporated Berhad    145   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     Secured bank borrowings of the Group are secured by fixed and floating charges over unquoted shares of a subsidiary
     company (Note 14), freehold and leasehold land, buildings, plant and machinery (Note 12), and assets held for resale
     (Note 20) of the Group.

     The RM360 million syndicated term loan of the Group and Company with an outstanding amount of RM331,200,000
     (2004: RM Nil) at the balance sheet date contains covenants which require the Group and Company to maintain
     minimum net gearing ratio, net debt to earnings before interest, tax, depreciation and amortisation and debt service
     cover ratio. As a consequence of an early adoption of financial reporting guideline of IC 112 by the Group, which led
     to the consolidation of the results of ABS Land and Properties Berhad (“ALP”) as disclosed in Note 35 to the financial
     statements, the financial ratios imposed on the syndicated term loan have been breached as at 30 June 2006 and as such,
     the lenders could declare all outstanding term loans under these facilities be immediately due and payable. Nevertheless,
     should the ALP’s results be deconsolidated, the Group and the Company will still be within the permitted ratios.

     The Group and the Company has sought agreement in principle from the lenders of the syndicated term loan for the
     Group and the Company to deconsolidate ALP’s results for the purpose of calculating the financial ratios for the current
     financial period and future financial years.

     As ALP is currently in the process of disposing one of the main assets in which the proceeds will reduce substantially
     the outstanding liabilities of ALP and thus enhance the security position of the lenders, the Directors therefore do
     not foresee any difficulty in obtaining such agreement. Accordingly, no reclassification has been made to reflect the
     outstanding amount as current liability.

     The weighted average interest rates per annum of borrowings that was effective as at balance sheet date were as
     follows:


                                                                        Group                          Company

                                                           30.6.2006              31.12.2004      30.6.2006      31.12.2004
                                                                   %                       %              %               %

     Bridging loan                                                    N/A                  4.85        N/A             4.85
     Term loans                                                       6.01                 5.38        5.67            5.16
     Finance lease and hire purchase obligations                      3.64                 3.71        N/A             N/A
     Revolving credits                                                5.85                 5.04        5.74            4.85
     Bankers’ acceptances                                             4.69                 3.69        N/A             N/A
     Block discount creditors                                         6.55                 8.93        N/A             N/A

     The Company has entered into interest swap contracts to hedge the floating rate interest payable on its long term
     borrowings. The contracts entitle the Company to pay interest at fixed rates on notional principal amounts and oblige it
     to receive interest at floating rates on the same amounts. Under the swaps, the Company agrees with the other parties
     to exchange, the difference between fixed rate and floating rate interest amounts calculated by reference to the agreed
     notional principal amounts.




                          Sunway Holdings Incorporated Berhad   146    annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     The floating rates of the Company’s interest rate swap contracts are linked to the Kuala Lumpur Inter Bank Offer Rate
     (“KLIBOR”). The weighted average effective interest rate of the Company floating rate borrowings during the period is
     5.23% (2004: Nil) per annum. After the interest rate swaps, the Company’s weighted average effective rate during the
     period is 5.71% (2004: Nil) per annum.

     The remaining terms, notional principal amounts and fair value of the outstanding interest rate swap contracts of the
     Company at the balance sheet date, which are denominated in Ringgit Malaysia, were as follows:

                                                                                                                    Fair value
                                                                                                     Amount                loss
     Duration                          Floating rate                                 Fixed rate      RM’000          RM’000

     11.04.06 – 10.07.06               3 month KLIBOR + 1.75%                               5.80%     18,400                 3
     11.04.06 – 10.07.06               3 month KLIBOR + 1.75%                               5.70%     18,400                 2
     11.04.06 – 10.07.06               3 month KLIBOR + 1.75%                               5.60%     18,400                 2
     11.04.06 – 10.07.06               3 month KLIBOR + 1.75%                               5.65%     27,600                 3
     11.04.06 – 10.07.06               3 month KLIBOR + 1.75%                               5.79%     27,600                 4
     11.04.06 – 10.07.06               3 month KLIBOR + 1.75%                               5.90%     27,600                 5
     11.04.06 – 10.07.06               3 month KLIBOR + 1.75%                               6.00%     36,800                 8

                                                                                                                            27

     Fair value losses are computed using the difference between the floating rates and fixed rates applied to the principal
     amounts over the duration of swap expiring subsequent to year end.


                                                                         Group                           Company

                                                            30.6.2006              31.12.2004       30.6.2006      31.12.2004
                                                              RM’000                  RM’000          RM’000          RM’000

     The currency exposure profile of
      borrowings is as follows:
     - Ringgit Malaysia                                          487,672               473,874       369,200         205,460
     - Singapore Dollar                                            9,150                18,074             0                 0
     - Vietnam Dong                                                2,074                    1,348          0                 0
     - Indonesian Rupiah                                                 74                    9           0                 0
     - Renminbi                                                   22,941                       0           0                 0
     - Japanese Yen                                                     225                    0           0                 0
     - US Dollar                                                  44,123                       0           0                 0
     - Indian Rupee                                               26,293                       0           0                 0
     - Euro                                                        1,232                       0           0                 0
     - Trinidad and Tobago Dollar                                  2,373                       0           0                 0

                                                                 596,157               493,305       369,200         205,460




                           Sunway Holdings Incorporated Berhad    147   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     The carrying amounts of borrowings of the Group and Company at the balance sheet date approximated their fair
     values except as set out below:



                                                                      30.6.2006                        31.12.2004
                                                                       Group                             Group
                                                            Carrying                    Fair       Carrying            Fair
                                                             amount                    value        amount            value
                                                            RM’000                   RM’000        RM’000           RM’000

     Finance lease and hire purchase obligations                 3,587                    3,770      4,668            4,287
     Block discount creditors                                   15,974                16,478         6,860            4,079



                                                                                                         Group

                                                                                                  30.6.2006      31.12.2004
                                                                                                    RM’000          RM’000

     Finance lease and hire purchase obligations are repayable
      in the following periods:
     - Not later than 1 year                                                                         2,316            2,208
     - Later than 1 year and not later than 5 years                                                  1,539            2,821
                                                                                                     3,855            5,029
     Less: Future finance charges                                                                     (268)           (361)

                                                                                                     3,587            4,668



     Representing finance lease and hire purchase obligations:
     - Not later than 1 year                                                                         2,150            1,986
     - Later than 1 year and not later than 5 years                                                  1,437            2,682

                                                                                                     3,587            4,668




                          Sunway Holdings Incorporated Berhad   148   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     The net exposure of the borrowings of the Group and Company to interest rate cash flow risk (after taking into account
     the effects of interest rate swaps described above) and the period in which the borrowings mature or reprice (whichever
     is earlier) are as follows:

     Group

     At 30 June 2006


                               Effective
                                 interest
                               rate as at      Total            Floating interest rate                 Fixed interest rate
                                30 June     carrying
     Functional                     2006     amount      < 1 year       1-5 years    > 5 years   < 1 year   1-5 years   > 5 years
     currency                      % p.a.   RM’000       RM’000          RM’000       RM’000     RM’000      RM’000      RM’000

     Secured

     Term loans:

     RM                             7.50       6,700        1,675           5,025           0          0           0            0
     RM                             6.75      11,800        3,600           8,200           0          0           0            0
     RMB                            4.00      10,943              0              0          0          0           0      10,943
     RMB                            6.00      11,998              0              0          0          0       8,399         3,599

                                              41,441        5,275         13,225            0          0       8,399      14,542



     Bank overdrafts:

     SGD                            6.00       2,146        2,146                0          0          0           0            0
     SGD                            6.25       2,061        2,061                0          0          0           0            0
     SGD                            6.50       1,782        1,782                0          0          0           0            0
     TT$                           10.50       2,373        2,373                0          0          0           0            0

                                               8,362        8,362                0          0          0           0            0


     Finance lease
      and hire
      purchase
      obligations:

     RM                      2.30 – 4.61       3,452              0              0          0      2,073       1,379            0
     SGD                     3.00 – 4.25           61             0              0          0         35          26            0
     IDR                            8.26           74             0              0          0         42          32            0

                                               3,587              0              0          0      2,150       1,437            0




                          Sunway Holdings Incorporated Berhad   149   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     Group

     At 30 June 2006


                             Effective
                               interest
                             rate as at      Total            Floating interest rate                 Fixed interest rate
                              30 June     carrying
     Functional                   2006     amount      < 1 year       1-5 years    > 5 years   < 1 year   1-5 years   > 5 years
     currency                    % p.a.   RM’000       RM’000          RM’000       RM’000     RM’000      RM’000      RM’000

     Unsecured

     Term loans:

     RM                           5.59      46,000        8,000         38,000            0          0           0           0
     RM                           5.51    161,000       28,000         133,000            0          0           0           0
     RM                           6.25      13,800        2,400         11,400            0          0           0           0
     RM                           5.97      36,800        6,400         30,400            0          0           0           0
     RM                           5.70      18,400        3,200         15,200            0          0           0           0
     RM                           5.36       9,200        1,600           7,600           0          0           0           0
     RM                           6.44      46,000              0              0          0      8,000     38,000            0
     RM                           8.35       1,954              0              0          0      1,954           0           0
     RM                           6.75         799              0              0          0        799           0           0
     SGD                          3.00           49            49              0          0          0           0           0
     USD                          7.10      36,821                      36,821            0          0           0           0
     IDR                          8.30      26,293              0              0          0          0     26,293            0

                                          397,116       49,649         272,421            0     10,753     64,293            0



     Bank overdrafts:

     RM                           8.30         141            141              0          0          0           0           0
     RM                           8.80       2,557        2,557                0          0          0           0           0
     RM                           8.25       2,029        2,029                0          0          0           0           0
     RM                           6.38           97            97              0          0          0           0           0
     RM                           8.75         290            290              0          0          0           0           0
     RM                           8.00         297            297              0          0          0           0           0
     RM                           8.50         500            500              0          0          0           0           0
     RM                           8.25         833            833              0          0          0           0           0
     RM                           8.50       1,238        1,238                0          0          0           0           0
     SGD                          6.00         957            957              0          0          0           0           0

                                             8,939        8,939                0          0          0           0           0




                        Sunway Holdings Incorporated Berhad   150   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     Group

     At 30 June 2006


                               Effective
                                 interest
                               rate as at      Total            Floating interest rate                 Fixed interest rate
                                30 June     carrying
     Functional                     2006     amount      < 1 year       1-5 years    > 5 years   < 1 year   1-5 years   > 5 years
     currency                      % p.a.   RM’000       RM’000          RM’000       RM’000     RM’000      RM’000      RM’000

     Unsecured

     Revolving credits:

     RM                             5.74      37,999      15,200          22,799            0          0           0           0
     RM                             5.76       9,800        9,800                0          0          0           0           0
     RM                             5.50       2,000        2,000                0          0          0           0           0
     RM                             5.49       1,300        1,300                0          0          0           0           0
     RM                             5.75       2,500              0              0          0      2,500           0           0
     RM                             5.50      10,000              0              0          0     10,000           0           0
     VND                           11.00       2,074        2,074                0          0          0           0           0

                                              65,673      30,374          22,799            0     12,500           0           0



     Bankers’
      acceptance:

     RM                     4.27 – 6.50       44,212      44,212                 0          0          0           0           0
     SGD                            6.50       2,094        2,094                0          0          0           0           0
     USD                            6.25       7,302        7,302                0          0          0           0           0
     EUR                            6.25       1,232        1,232                0          0          0           0           0
     YEN                            4.73         225            225              0          0          0           0           0

                                              55,065      55,065                 0          0          0           0           0



     Block discount
      creditors:

     RM                             6.55      15,974        5,126         10,848            0          0           0           0

                                              15,974        5,126         10,848            0          0           0           0




                          Sunway Holdings Incorporated Berhad   151   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     Group

     At 31 December 2004


                           Effective
                             interest
                           rate as at       Total            Floating interest rate                 Fixed interest rate
                       31 December       carrying
     Functional                 2004      amount      < 1 year       1-5 years    > 5 years   < 1 year   1-5 years   > 5 years
     currency                  % p.a.    RM’000       RM’000          RM’000       RM’000     RM’000      RM’000      RM’000

     Secured

     Term loans:

     RM                          8.00         593              0              0          0        517          76           0
     RM                          6.75      12,500      12,500                 0          0          0           0           0
     RM                          7.75       5,932        5,932                0          0          0           0           0
     RM                          7.30      28,304              0              0          0      6,250     22,054            0
     RM                          6.10      15,400        1,800         13,600            0          0           0           0

                                           62,729      20,232          13,600            0      6,767     22,130            0


     Finance lease
      and hire
      purchase
      obligations:

     RM                    3.02 – 4.08      4,277              0              0          0      1,740       2,537           0
     SGD                   3.00 – 4.26        382              0              0          0        237         145           0
     IDR                         8.26            9             0              0          0          9           0           0

                                            4,668              0              0          0      1,986       2,682           0



     Unsecured

     Term loans:

     RM                          4.85      63,880      63,880                 0          0          0           0           0
     RM                          7.75       8,112        2,000           6,112           0          0           0           0

                                           71,992      65,880            6,112           0          0           0           0




                       Sunway Holdings Incorporated Berhad   152   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     Group

     At 31 December 2004


                              Effective
                                interest
                              rate as at       Total            Floating interest rate                 Fixed interest rate
                          31 December       carrying
     Functional                    2004      amount      < 1 year       1-5 years    > 5 years   < 1 year   1-5 years   > 5 years
     currency                     % p.a.    RM’000       RM’000          RM’000       RM’000     RM’000      RM’000      RM’000

     Unsecured

     Bank overdraft:

     RM                             7.25       3,213        3,213                0          0          0           0           0
     RM                             7.50       3,836        3,836                0          0          0           0           0
     RM                             8.00       4,460        4,460                0          0          0           0           0
     SGD                            6.00       9,870        9,870                0          0          0           0           0
     SGD                            6.25         775            775              0          0          0           0           0

                                              22,154      22,154                 0          0          0           0           0



     Revolving credits:

     RM                             4.85      65,200      65,200                 0          0          0           0           0
     RM                             5.10       2,200        2,200                0          0          0           0           0
     RM                             5.05      11,600      11,600                 0          0          0           0           0
     RM                             4.85      43,400      43,400                 0          0          0           0           0
     RM                             5.25      55,000      55,000                 0          0          0           0           0
     RM                             5.60      13,000      13,000                 0          0          0           0           0
     RM                             7.15       2,336        2,336                0          0          0           0           0
     RM                             4.85      14,000      14,000                 0          0          0           0           0
     RM                             4.60       2,000        2,000                0          0          0           0           0
     RM                             5.80       1,000        1,000                0          0          0           0           0
     RM                             4.90       3,800        3,800                0          0          0           0           0
     RM                             4.60       4,200                             0          0      4,200           0           0
     VND                           10.90       1,348        1,348                0          0          0           0           0

                                            219,084      214,884                 0          0      4,200           0           0




                          Sunway Holdings Incorporated Berhad   153   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     Group

     At 31 December 2004


                           Effective
                             interest
                           rate as at       Total            Floating interest rate                 Fixed interest rate
                       31 December       carrying
     Functional                 2004      amount      < 1 year       1-5 years    > 5 years   < 1 year   1-5 years   > 5 years
     currency                  % p.a.    RM’000       RM’000          RM’000       RM’000     RM’000      RM’000      RM’000

     Unsecured

     Bridging loan:

     RM                          4.85      63,880      63,880                 0          0          0           0           0



     Bankers’
      acceptance:

     RM                    2.07 – 3.69     34,891      34,891                 0          0          0           0           0
     SGD                         6.18       7,047        7,047                0          0          0           0           0

                                           41,938      41,938                 0          0          0           0           0

     Block discount
      creditors:

     RM                          8.93       6,860        2,375           4,485           0          0           0           0




                       Sunway Holdings Incorporated Berhad   154   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     Company

     At 30 June 2006


                               Effective
                                 interest
                               rate as at      Total            Floating interest rate                 Fixed interest rate
                                30 June     carrying
     Functional                     2006     amount      < 1 year       1-5 years    > 5 years   < 1 year   1-5 years   > 5 years
     currency                      % p.a.   RM’000       RM’000          RM’000       RM’000     RM’000      RM’000      RM’000

     Unsecured

     Term loans:

     RM                             5.59      46,000        8,000         38,000            0          0           0           0
     RM                             5.51    161,000       28,000         133,000            0          0           0           0
     RM                             6.25      13,800        2,400         11,400            0          0           0           0
     RM                             5.97      36,800        6,400         30,400            0          0           0           0
     RM                             5.70      18,400        3,200         15,200            0          0           0           0
     RM                             5.36       9,200        1,600           7,600           0          0           0           0
     RM                             6.44      46,000              0              0          0      8,000     38,000            0

                                            331,200       49,600         235,600            0      8,000     38,000            0

     Revolving credits:

     RM                             5.74      38,000      15,200          22,800            0          0           0           0




                          Sunway Holdings Incorporated Berhad   155   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


25   BORROWINGS (CONT’D)

     Company

     At 31 December 2004


                              Effective
                                interest
                              rate as at       Total            Floating interest rate                 Fixed interest rate
                          31 December       carrying
     Functional                    2004      amount      < 1 year       1-5 years    > 5 years   < 1 year   1-5 years   > 5 years
     currency                     % p.a.    RM’000       RM’000          RM’000       RM’000     RM’000      RM’000      RM’000

     Secured

     Term loans:

     RM                             6.75      12,500      12,500                 0          0          0           0           0



     Unsecured

     Bridging loan:

     RM                             4.85      63,880      63,880                 0          0          0           0           0



     Term loan:

     RM                             4.85      63,880      63,880                 0          0          0           0           0



     Revolving credits:

     RM                             4.85      65,200      65,200                 0          0          0           0           0




                          Sunway Holdings Incorporated Berhad   156   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


26   DEFERRED TAX

     Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
     current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined
     after appropriate offsetting, are shown in the balance sheet:


                                                                         Group                             Company

                                                             30.6.2006             31.12.2004         30.6.2006      31.12.2004
                                                               RM’000                 RM’000            RM’000          RM’000

     Deferred tax assets                                          12,600                11,010               0                  0
     Deferred tax liabilities                                     (17,546)             (15,074)              0                  0

                                                                   (4,946)                  (4,064)          0                  0



     The movement in deferred tax is
      shown as follows:

     At beginning of the financial period/year                     (4,064)             (12,235)              0                  0
     Credited/(charged) to income statement
      (Note 9):
       - property, plant and equipment                              1,119                   3,086            0                  0
       - debtors and inventories                                         27                   757            0                  0
       - lease rental receivables                                   (586)                       0            0                  0
       - tax losses                                                     (99)                3,337            0                  0
       - others                                                         777                   991            0                  0


                                                                    1,238                   8,171            0                  0



     Acquisition of subsidiary companies                           (2,120)                      0            0                  0

     At end of the financial period/year                           (4,946)                  (4,064)          0                  0



     Subject to income tax:

     Deferred tax assets

     Property, plant and equipment                                  5,654                   9,145            0                  0
     Debtors and inventories                                        4,180                   3,742            0                  0
     Tax losses                                                     4,965                   5,320            0                  0
     Others                                                         1,927                   1,536            0                  0

     Deferred tax assets (before offsetting)                      16,726                19,743               0                  0

     Offsetting                                                    (4,126)                  (8,733)          0                  0

     Deferred tax assets (after offsetting)                       12,600                11,010               0                  0




                            Sunway Holdings Incorporated Berhad   157   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


26   DEFERRED TAX (CONT’D)


                                                                         Group                             Company

                                                            30.6.2006              31.12.2004         30.6.2006      31.12.2004
                                                              RM’000                  RM’000            RM’000          RM’000

     Deferred tax liabilities


     Property, plant and equipment                                (8,096)              (20,297)              0               0
     Lease rental receivables                                     (3,889)                   (3,303)          0               0
     Others                                                       (9,687)                    (207)           0               0

     Deferred tax liabilities (before offsetting)                (21,672)              (23,807)              0               0

     Offsetting                                                    4,126                    8,733            0               0

     Deferred tax liabilities (after offsetting)                 (17,546)              (15,074)              0               0

     Deferred tax assets arising from temporary differences (which have no expiry date) and unused tax losses (expiry date
     as disclosed) not recognised in the balance sheets are as follows:


                                                                         Group                             Company

                                                            30.6.2006              31.12.2004         30.6.2006      31.12.2004
                                                              RM’000                  RM’000            RM’000          RM’000

     Deductible temporary differences                             57,412                51,342               0               0


     Tax losses
      - No expiry date                                           249,388               190,591          13,578          13,578
      - expiring in 2006                                                 0              10,616               0               0
      - expiring in 2007                                          17,519                17,347               0               0
      - expiring in 2008                                           6,265                    6,204            0               0
      - expiring in 2009                                           4,414                    4,308            0               0
      - expiring in 2010                                           5,059                        0            0               0

     Tax losses                                                  282,645               229,066          13,578          13,578

     As at 30 June 2006, the temporary differences associated with unremitted earnings of subsidiary companies for which
     deferred tax liabilities have not been recognised amounted to approximately RM36,000,000 (2004: RM33,000,000).




                           Sunway Holdings Incorporated Berhad    158   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


27   ABS SENIOR NOTES


                                                                                                        Group

                                                                                               30.6.2006        31.12.2004
                                                                                                 RM’000            RM’000

     Secured Class A Senior Notes                                                                 47,210             49,702
     Secured Class B Senior Notes                                                                 21,688             21,688
     Secured Class C Senior Notes                                                                 20,433             20,434
     Secured Class D Senior Notes                                                                   4,189             3,223

                                                                                                  93,520             95,047

     Unamortised discount (Note a)                                                                 (3,647)           (5,242)

                                                                                                  89,873             89,805



     Maturity of the Notes

     Within 2 to 5 years                                                                          93,520             95,047

     Fair value                                                                                   94,420             98,048

     Discount pertaining to Senior Notes is amortised on a straight line basis over the tenure of the Senior Notes of 6 years.

     The terms of the Senior Notes are as follows:

     (a) All outstanding Senior Notes will be mandatorily redeemed in full, together with all accrued and unpaid interest
         by ABS Land and Properties Berhad, who is a subsidiary company and the Notes issuer, on 4 April 2010.

     (b) The Senior Notes bear the following interest rate per annum payable half-yearly in arrears on 4 April and 4
         October each year:

                                                                                                                Interest rate
                                                                                                                 per annum
                                                                                                                           %

          Secured Class A Senior Notes                                                                                  4.75
          Secured Class B Senior Notes                                                                                  5.50
          Secured Class C Senior Notes                                                                                  7.00
          Secured Class D Senior Notes                                                                                  7.50

     (c) The Senior Notes are secured over certain inventories of the Group.

     (d) The Senior Notes may be repaid before its maturity if the secured inventories are disposed.




                           Sunway Holdings Incorporated Berhad   159   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


28   SHARE CAPITAL


                                                                                                 Group/Company

                                                                                              30.6.2006        31.12.2004
                                                                                                RM’000            RM’000

     Authorised:
      Ordinary shares of RM1.00 each


           At beginning and end of the financial period/year                                  1,000,000         1,000,000

     Issued and fully paid:
       Ordinary shares of RM1.00 each

           At beginning of financial period/year                                                539,029           410,812
           Issued during the financial period/year
           - exercise of options over ordinary shares                                             1,338             6,001
           - private placement                                                                         0           41,229
           - acquisition of a subsidiary company (Note 33)                                             0           80,987

                                                                                                  1,338           128,217

           At end of financial period/year                                                      540,367           539,029

     (i)    During the financial period, the issued and paid up ordinary share capital of the Company was increased from
            RM539,029,000 to RM540,367,000 by way of the issuance of 1,333,000 and 5,000 new ordinary shares of RM1.00
            for cash by virtue of the exercise of options over ordinary shares pursuant to the Company’s Employees’ Share
            Option Scheme at exercise prices of RM1.00 per share and RM1.21 per share respectively.

     (ii) Treasury shares

            During the financial period, the Company repurchased 100,000 of its issued share capital from the open market
            on Bursa Malaysia Securities Berhad for RM54,501 at an average price of RM0.54 per share. None of the treasury
            shares repurchased has been sold as at 30 June 2006. At the balance sheet date, the number of outstanding shares
            in issue after setting treasury shares off against equity is 540,267,000.




                             Sunway Holdings Incorporated Berhad   160   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


28   SHARE CAPITAL (CONT’D)

     (iii) Employees’ Share Option Scheme (“ESOS”)

         On 7 November 2002, the Company implemented an ESOS to the eligible employees (including Executive
         Directors) of the Company and subsidiary companies. The ESOS is governed by the bylaws which were approved
         by the shareholders on 3 October 2002.

         The main features of the ESOS are:

         (a) The total number of ordinary shares to be issued by the Company under the ESOS shall not exceed 10% of
             the total issued and paid-up ordinary share capital of the Company at any point in time during the duration
             of the ESOS;

         (b) Eligible employees are those who have been in the service of the Group on a full time basis for a continuous
             period of at least one year (including any full time executive director of any company in the Group) or such
             categories and of such criteria that the ESOS Committee may from time to time decide;

         (c) The ESOS shall continue to be in force for a period of ten years from 7 November 2002;

         (d) The options over ordinary shares can be exercised by notice in writing on any working day for the duration of
             the option period;

         (e) The price at which the employees are entitled to take up shares under the ESOS shall be the higher of:

               (i)   the five (5) day weighted average market price of the underlying shares at the time of the option is
                     granted, with a discount of not more than ten percent (10%) if deemed appropriate; or

               (ii) the par value of the shares;

         (f)   The persons to whom the options over ordinary shares have been granted have no right to participate by
               virtue of the options over ordinary shares in any share issue of any other Company within the Group; and

         (g) Options over ordinary shares granted under the ESOS carry no dividend or voting rights. Upon exercise of the
             options over ordinary shares, shares issued rank pari passu in all respects with existing ordinary shares of the
             Company.




                           Sunway Holdings Incorporated Berhad   161   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


28   SHARE CAPITAL (CONT’D)

     (iii) Employees’ Share Option Scheme (“ESOS”) (cont’d)

         Set out below are details of options over the ordinary shares of the Company granted under the ESOS:


                                                                          Number of options over ordinary shares
                                                         At start of                                                  At end of
                                           Exercise       financial                                                    financial
                                              price          period          Granted         Exercised   Cancelled       period
          Grant date    Expiry date       RM/share             ’000             ’000              ’000       ’000          ’000

          30.6.2006

          7.11.2002     6.11.2012               1.00           23,270                    0     (1,333)       (359)      21,578
           9.9.2004     6.11.2012               1.21            4,244                    0         (5)       (403)       3,836
          31.1.2004     6.11.2012               1.58            1,230                    0          0           (5)      1,225
          13.3.2004     6.11.2012               1.75            3,228                    0          0        (518)       2,710
          7.10.2005     6.11.2012               1.00                  0          3,459              0           0        3,459

                                                               31,972            3,459         (1,338)      (1,285)     32,808



          31.12.2004

          7.11.2002     6.11.2012               1.00           29,643                    0     (5,998)       (375)      23,270
           9.9.2004     6.11.2012               1.21                  0          4,247             (3)          0        4,244
          31.1.2004     6.11.2012               1.58                  0          1,230              0           0        1,230
          13.3.2004     6.11.2012               1.75                  0          3,413              0        (185)       3,228

                                                               29,643            8,890         (6,001)       (560)      31,972



                                                                                                         30.6.2006 31.12.2004
                                                                                                               ’000      ’000


          Number of options over ordinary shares vested at
           balance sheet date                                                                              32,808       31,972




                         Sunway Holdings Incorporated Berhad   162   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


28   SHARE CAPITAL (CONT’D)

     (iii) Employees’ Share Option Scheme (ESOS”) (cont’d)

         Details relating to options over ordinary shares exercised during the financial period are as follows:


                                                           Fair value                             Number of options over
                                                            of shares                             ordinary shares issued
                                                              at share               Exercise
                                                           issue date                   price     30.6.2006       31.12.2004
          Exercise date                                    RM/share                 RM/share           ’000              ’000

          02.01.2004                                                  1.69                 1.00           0                161
          06.01.2004                                                  1.70                 1.00           0                138
          16.01.2004                                                  1.65                 1.00           0                281
          03.02.2004                                                  1.65                 1.00           0                107
          06.02.2004                                                  1.65                 1.00           0                 88
          10.02.2004                                                  1.73                 1.00           0                 92
          16.02.2004                                                  1.73                 1.00           0                202
          24.02.2004                                                  1.89                 1.00           0                413
          02.03.2004                                                  1.79                 1.00           0                684
          08.03.2004                                                  1.75                 1.00           0                425
          12.03.2004                                                  1.76                 1.00           0                136
          22.03.2004                                                  1.82                 1.00           0                213
          01.04.2004                                                  1.82                 1.00           0                 70
          02.04.2004                                                  1.88                 1.00           0                669
          09.04.2004                                                  1.99                 1.00           0                207
          16.04.2004                                                  1.86                 1.00           0                449
          23.04.2004                                                  1.89                 1.00           0                109
          30.04.2004                                                  1.77                 1.00           0                320
          14.05.2004                                                  1.56                 1.00           0                110
          20.05.2004                                                  1.54                 1.00           0                 20
          01.06.2004                                                  1.61                 1.00           0                 10
          07.06.2004                                                  1.55                 1.00           0                 90
          15.06.2004                                                  1.58                 1.00           0                 20
          01.07.2004                                                  1.55                 1.00           0                 15
          14.07.2004                                                  1.48                 1.00           0                  1
          17.07.2004                                                  1.50                 1.00           0                 32
          26.07.2004                                                  1.36                 1.00           0                 35
          29.07.2004                                                  1.32                 1.00           0                  4
          03.08.2004                                                  1.28                 1.00           0                  5
          11.08.2004                                                  1.36                 1.00           0                 35
          16.08.2004                                                  1.30                 1.00           0                  2
          20.09.2004                                                  1.23                 1.00           0                 15
          22.09.2004                                                  1.22                 1.00           0                 50
          20.10.2004                                                  1.22                 1.00           0                 25
          02.11.2004                                                  1.25                 1.00           0                 20
          05.11.2004                                                  1.21                 1.00           0                 58
          19.11.2004                                                  1.26                 1.00           0                 27
          01.12.2004                                                  1.29                 1.00           0                275
          01.12.2004                                                  1.29                 1.21           0                  3
          06.12.2004                                                  1.33                 1.00           0                200
          Balance carried forward                                                                         0            5,816



                          Sunway Holdings Incorporated Berhad   163    annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


28   SHARE CAPITAL (CONT’D)

     (iii) Employees’ Share Option Scheme (“ESOS”) (cont’d)


                                                           Fair value                             Number of options over
                                                            of shares                             ordinary shares issued
                                                              at share               Exercise
                                                           issue date                   price     30.6.2006      31.12.2004
          Exercise date                                    RM/share                 RM/share           ’000             ’000

          Balance brought forward                                                                         0           5,816
          10.12.2004                                                  1.33                 1.00           0                170
          20.12.2004                                                  1.32                 1.00           0                  5
          27.12.2004                                                  1.37                 1.00           0                 10
          03.01.2005                                                  1.39                 1.00         175                  0
          08.01.2005                                                  1.39                 1.00           5                  0
          08.01.2005                                                  1.39                 1.21           5                  0
          14.01.2005                                                  1.42                 1.00          42                  0
          01.02.2005                                                  1.40                 1.00          45                  0
          03.02.2005                                                  1.40                 1.00         195                  0
          07.02.2005                                                  1.39                 1.00          12                  0
          21.02.2005                                                  1.45                 1.00         204                  0
          01.03.2005                                                  1.46                 1.00          30                  0
          07.03.2005                                                  1.39                 1.00          33                  0
          14.03.2005                                                  1.43                 1.00          82                  0
          18.03.2005                                                  1.40                 1.00          12                  0
          25.03.2005                                                  1.40                 1.00         150                  0
          15.04.2005                                                  1.33                 1.00           7                  0
          25.04.2005                                                  1.24                 1.00          34                  0
          03.05.2005                                                  1.22                 1.00          20                  0
          14.05.2005                                                  1.12                 1.00         270                  0
          20.05.2005                                                  1.14                 1.00          10                  0
          06.06.2005                                                  0.90                 1.00           7                  0
          Total                                                                                       1,338           6,001



                                                                                                  30.6.2006      31.12.2004
                                                                                                    RM’000          RM’000

          Ordinary share capital – at par                                                             1,338           6,001
          Share premium                                                                                   1                  1

          Proceeds received on exercise of options
           over ordinary shares                                                                       1,339           6,002



          Fair value at exercise date of shares issued                                                1,795          10,228

         The fair value of shares issued on the exercise of options over ordinary shares is the closing market price at which
         the Company’s share were traded on the Bursa Malaysia Securities Berhad (“Bursa Malaysia”) on the day the
         options over ordinary shares were exercised.




                          Sunway Holdings Incorporated Berhad   164    annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


29   WARRANTS


                                                                                 Number of warrants 2004/2008
                                                                 At start of                                        At end of
                                               Exercise           financial                                          financial
     Issue             Expiry                     price              period               Issued    Exercised          period
     date              date                  RM/warrant                ’000                 ’000         ’000            ’000

     30.6.2006

     18.10.2004        17.10.2008                   1.30              196,989                 0                0     196,989



                                                                                                   Group and Company

                                                                                                   30.6.2006       31.12.2004
                                                                                                     RM’000           RM’000

     At beginning of financial period/year                                                            8,791                 0
     Issued during the financial period/year:
     - rights issue                                                                                       0            9,354
     - renounceable rights issue                                                                          0              495
                                                                                                          0            9,849
     Less: Warrants issue cost                                                                          (14)           (1,058)

     At end of financial period/year                                                                  8,777            8,791

     The new warrants are transferable and listed on Bursa Malaysia. Each new warrant entitles its registered holder, at any
     time from the date of its issue up to and including 18 October 2008, to subscribe for one new ordinary share of RM1.00
     each in the Company at an exercise price of RM1.30 per share which is subject to adjustments under the terms set out
     in the Deed Poll.




                          Sunway Holdings Incorporated Berhad   165   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


30   CONSTRUCTION CONTRACTS


                                                                                                           Group

                                                                                                   30.6.2006       31.12.2004
                                                                                                     RM’000           RM’000

     Costs incurred to date                                                                        6,463,508        5,503,145
     Accrued profits to date                                                                         776,295         621,121
     Recognised losses to date                                                                         (7,505)         (7,506)

     Total costs and accrued profits (less losses) to date                                         7,232,298        6,116,760

     Progress billings to date                                                                     (7,213,900)     (6,160,275)

                                                                                                      18,398          (43,515)
     Amounts due from customers on contracts (Note 22)                                              (122,165)         (77,951)
     Amounts due to customers on contracts (Note 24)                                                 103,767         121,466

                                                                                                           0                0

     Advances received on contracts
      (included in amounts due to associated companies (Note 24))                                      1,380           4,664


     Retention sums (Note 22)                                                                         65,406          65,936



31   CAPITAL COMMITMENTS

     Capital expenditure authorised by Directors but not provided for in the financial statements are as follows:


                                                                                                           Group

                                                                                                   30.6.2006       31.12.2004
                                                                                                     RM’000           RM’000

     In respect of property, plant and equipment:
       Contracted                                                                                      2,177             796
       Not contracted                                                                                  9,320          10,104

                                                                                                      11,497          10,900



32   NON-CANCELLABLE OPERATING LEASE COMMITMENTS


                                                                        Group                            Company

                                                             30.6.2006            31.12.2004       30.6.2006       31.12.2004
                                                               RM’000                RM’000          RM’000           RM’000

     Not later than 1 year                                        1,412                    2,841          63              10
     Later than 1 year and not later than 5 years                      382                 1,779           0                0

                                                                  1,794                    4,620          63              10




                           Sunway Holdings Incorporated Berhad   166   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


33   ACQUISITION OF SUBSIDIARY COMPANIES

     The Company had, during the financial period, acquired:

     (a) the entire equity interest in Sunway Quarry Industries Sdn Bhd (“SQI”) (formerly known as Setia Juta Quarry
         Industries Sdn Bhd) comprising 9,000,000 ordinary shares of RM1.00 each for a total cash consideration of
         RM55.115 million, on 24 February 2005,

     (b) the entire equity interest in Sunway Enterprise Sdn Bhd (“SWE”) comprising 4,038,000 ordinary shares of RM1.00
         each for a total cash consideration of RM0.716 million, on 24 March 2006,

     (c) the entire equity interest in Sunway Hydraulic Industries Sdn Bhd (“SHI”) comprising 1,500,000 ordinary shares
         of RM1.00 each for a total cash consideration of RM0.245 million, on 22 February 2006, and

     (d) 70% equity in Synergy Quarry and Asphalt Industries Sdn Bhd (“SQAI”) comprising 350,000 ordinary shares of
         RM1.00 each for a total cash consideration of RM0.194 million, on 25 July 2005.

     The effect of the acquisitions on net profit of the Group was as follows:

                                                                                                           18 months
                                                                                                               ended
                                                                                                           30.6.2006
                                                                                                             RM’000

     Revenue                                                                                                 118,478

     Cost of sales                                                                                          (103,657)

     Gross profit                                                                                             14,821
     Other operating income                                                                                     5,666
     Distribution expenses                                                                                     (3,256)
     Administrative expenses                                                                                   (6,244)
     Other operating expenses                                                                                   (766)

     Finance costs                                                                                             (2,233)

     Profit from ordinary activities before tax                                                                 7,988

     Tax expense                                                                                               (1,381)

     Profit from ordinary activities after tax                                                                  6,607
     Minority interest                                                                                              4

     Net profit for the financial period                                                                        6,611




                           Sunway Holdings Incorporated Berhad   167   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


33   ACQUISITION OF SUBSIDIARY COMPANIES (CONT’D)

     The effect of the acquisitions on the financial position of the Group was as follows:

                                                                                                    At
                                                                                             30.6.2006
                                                                                               RM’000

     Goodwill                                                                                  36,996
     Property, plant and equipment                                                             29,861
     Quarry development expenditure                                                             1,165
     Other Investments                                                                             11

     Non-current assets                                                                        68,033

     Inventories                                                                               33,440
     Debtors                                                                                   47,336
     Tax recoverable                                                                              286
     Cash and bank balances                                                                     1,866
     Deposits                                                                                   1,000

     Current assets                                                                            83,928

     Creditors                                                                                (55,451)
     Current tax liabilities                                                                        0
     Bank borrowings                                                                            (8,929)

     Current liabilities                                                                      (64,380)
     Long term borrowings                                                                     (12,366)
     Deferred tax liabilities                                                                   (3,257)

     Total liabilities                                                                        (80,003)

     Net assets                                                                                71,958




                           Sunway Holdings Incorporated Berhad   168   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


33   ACQUISITION OF SUBSIDIARY COMPANIES (CONT’D)

     Details of net assets and cash flow arising from the acquisitions were as follows:

                                                                                              At date of
                                                                                            acquisitions
                                                                                              30.6.2006
                                                                                                RM’000

     Property, plant and equipment                                                              28,426
     Other Investments                                                                               11
     Quarry development expenditure                                                                 704
     Inventories                                                                                27,265
     Receivables, deposits and prepayments                                                      38,763
     Cash and bank balances                                                                       8,887
     Creditors                                                                                 (47,432)
     Current tax liabilities                                                                          0
     Deferred tax liabilities                                                                    (2,120)
     Long term creditors                                                                       (18,221)
     Bank borrowings - others                                                                    (4,683)
     Bank borrowings – bank overdrafts                                                             (879)
     Minority interest                                                                              (79)

     Fair value of net assets arising from the acquisitions of
      SQI, SWE and SHI                                                                          30,642

     Fair value of net assets arising from the acquisition of
      Sun-Block (Beranang) Sdn Bhd, Sun-Block (Senai) Sdn Bhd
      and businesses of Creative Stone Sdn Bhd and
      Creative Stone Marketing Sdn Bhd                                                                0
     Fair value of net assets arising from the acquisition of SunCon                                  0

     Total fair value of net assets acquired                                                    30,642



     Goodwill (Note 19)                                                                         36,996
     Negative goodwill (Note 6)                                                                  (3,120)

     Cost of acquisitions                                                                       64,518

     Total purchase consideration                                                               64,518
     Less: Purchase consideration discharged by shares issued                                         0
     Less: Purchase consideration yet to be paid                                                 (8,244)
     Less: Cash and cash equivalents of subsidiary acquired                                      (8,008)

     Net cash outflow of the Group on acquisitions                                              48,266




                            Sunway Holdings Incorporated Berhad   169   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


34   SEGMENT REPORTING

     The Group is organised into six main business segments:

     (a) Construction                     -   Construction of building and civil works and provision of mechanical, electrical
                                              and piling works.

     (b) Property development             -   Development of housing and commercial properties.

     (c) Trading and manufacturing        -   Trading and manufacturing of construction and industrial products and building
                                              materials.

     (d) Building materials               -   Manufacturing of vitrified clay pipes, concrete pipes, interlocking pavers,
                                              pretensioned spun concrete piles, precast micro injection piles, reinforced
                                              concrete piles, eurotiles, blocks and concrete products.

     (e) Quarry                           -   Quarrying, manufacturing and supplying of premix, manufacturing of ready-
                                              mixed concrete and production of building stones.

     (f)   Financial services             -   Lease and hire purchase financing.

     (g) Investment holding               -   Investment in properties, management and letting of properties and hotel
                                              operator as well as holding of investment in the shares of subsidiary companies,
                                              associated companies and other investments.

     (h) Others                           -   Provision of secretarial and share registration services, provision of management
                                              services, underwriting of insurance, tolling operations and implementation of
                                              securitisation transaction.

     Other operations of the Group mainly comprise general insurance underwriting, share registration and provision of
     secretarial services, tolling operations and implementation of securitisation transaction none of which are of a sufficient
     size to be reported separately.

     Intersegment revenue comprise rendering of construction, mechanical and electrical works, trading of building materials,
     provision of secretarial and share registration services, provision of management services, underwriting of insurance and
     implementation of securitisation transaction. These transactions are conducted on an arms-length basis under terms,
     conditions and prices not materially different from transactions with unrelated parties.

     During the financial year, segment presentation of certain subsidiary companies has been included in the “quarry”
     segment to better reflect the nature of the business operation. In the previous financial year, the segment presentation
     of these subsidiary companies was included in the “building materials” segment.




                            Sunway Holdings Incorporated Berhad   170   annual report ‘06
                                      34   SEGMENT REPORTING (CONT’D)

                                           (a) Primary reporting format – business segment

                                                                                                Property    Trading and    Building               Financial   Investment
                                                                               Construction development    manufacturing   materials    Quarry     services      holding    Others      Group
                                           30.6.2006                               RM’000       RM’000          RM’000     RM’000      RM’000      RM’000        RM’000    RM’000      RM’000

                                           Revenue

                                           Total revenue                         1,271,184      162,963         372,270    109,198     163,017       5,469       30,601     39,430    2,154,132
                                           Intersegment revenue                          0            0         (60,135)     (6,516)    (3,324)     (1,699)     (14,504)   (10,688)    (96,866)

                                           External revenue                      1,271,184      162,963         312,135    102,682     159,693       3,770       16,097     28,742    2,057,266
                                                                                                                                                                                                                                             NOTES TO THE




                                           Results

                                           Profit from operations                   62,842       36,406          20,660       2,290      4,722      (2,358)     (14,553)    13,304     123,313




Sunway Holdings Incorporated Berhad
                                           Finance cost                                                                                                                                (54,228)




   171
                                           Share of results of associated
                                            companies                                    0            0           1,320           0         0            0            0    (41,158)    (39,838)
                                                                                                                                                                                                                                             FINANCIAL STATEMENTS




                                           Profit from ordinary activities
                                            before tax                                                                                                                                  29,247




annual report ‘06
                                           Tax expense                                                                                                                                 (30,040)

                                           Loss after tax                                                                                                                                 (793)
                                           Minority interest                                                                                                                           (10,477)
                                                                                                                                                                                                  FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)




                                           Net loss for the financial period                                                                                                           (11,270)
                                      34   SEGMENT REPORTING (CONT’D)

                                           (a) Primary reporting format – business segment (cont’d)

                                                                                             Property        Trading and    Building              Financial   Investment
                                                                            Construction development        manufacturing   materials    Quarry    services      holding    Others     Group
                                           30.6.2006                            RM’000       RM’000              RM’000     RM’000      RM’000     RM’000        RM’000    RM’000     RM’000

                                           Net assets

                                           Segment assets                        779,744        276,748          161,305    170,961      97,659     29,162      253,568     67,098   1,836,245

                                           Associated companies                         0               0          3,912           0         0           0            0     48,953     52,865
                                           Unallocated assets                                                                                                                          26,602
                                                                                                                                                                                                                                            NOTES TO THE




                                           Total assets                                                                                                                              1,915,712

                                           Segment liabilities                   514,359         48,650          124,679      30,306     56,734     18,666      435,854    104,364   1,333,612
                                           Unallocated liabilities                                                                                                                     33,924




Sunway Holdings Incorporated Berhad
                                           Total liabilities                                                                                                                         1,367,536




   172
                                           Other information
                                                                                                                                                                                                                                            FINANCIAL STATEMENTS




                                           Capital expenditure                    41,330               79         14,432      26,324     28,575          5           99      3,010    113,854




annual report ‘06
                                           Depreciation and amortisation          16,450              563          2,663      12,445      9,599         97        2,463      4,504     48,784
                                           Impairment                                   0               0              0       1,840         0           0            0         0       1,840
                                                                                                                                                                                                 FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)
                                      34   SEGMENT REPORTING (CONT’D)

                                           (a) Primary reporting format – business segment (cont’d)

                                                                                                           Property    Trading and     Building    Financial   Investment
                                                                                          Construction development    manufacturing    materials    services      holding    Others      Group
                                           31.12.2004                                         RM’000       RM’000          RM’000      RM’000       RM’000        RM’000    RM’000      RM’000

                                           Revenue

                                           Total revenue                                     1,087,615     149,949         212,708       94,028       5,098       20,111      (377)    1,569,132
                                           Intersegment revenue                                (32,298)          0          (18,755)     (5,700)        (54)     (11,166)    (3,640)     (71,613)

                                           External revenue                                  1,055,317     149,949         193,953       88,328       5,044        8,945     (4,017)   1,497,519
                                                                                                                                                                                                                                               NOTES TO THE




                                           Results

                                           Profit from operations                               82,283      18,524           9,051       13,665       1,257        5,447    (31,436)     98,791




Sunway Holdings Incorporated Berhad
                                           Finance cost                                                                                                                                  (26,968)




   173
                                           Share of results of associated companies                   0          0             624       (3,733)          0            0    (12,865)     (15,974)

                                           Profit from ordinary activities before tax                                                                                                    55,849
                                                                                                                                                                                                                                               FINANCIAL STATEMENTS




                                           Tax expense                                                                                                                                    1,874




annual report ‘06
                                           Profit after tax                                                                                                                              57,723
                                           Minority interest                                                                                                                             (18,424)

                                           Net profit for the financial year                                                                                                             39,299
                                                                                                                                                                                                    FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)
                                      34   SEGMENT REPORTING (CONT’D)

                                           (a) Primary reporting format – business segment (cont’d)

                                                                                                             Property        Trading and        Building      Financial   Investment
                                                                                            Construction development        manufacturing       materials      services      holding        Others        Group
                                           31.12.2004                                           RM’000       RM’000              RM’000         RM’000         RM’000        RM’000        RM’000        RM’000

                                           Net assets

                                           Segment assets                                        830,205         252,603           107,555       169,114        53,674       142,652        67,887     1,623,690

                                           Associated companies                                          0              0            2,613        33,324              0             0       72,630       108,567
                                           Unallocated assets                                                                                                                                             24,862
                                                                                                                                                                                                                                                                 NOTES TO THE




                                           Total assets                                                                                                                                                1,757,119

                                           Segment liabilities                                   516,510         175,491            89,830        39,836        19,820       225,104       104,968     1,171,559
                                           Unallocated liabilities                                                                                                                                        26,532




Sunway Holdings Incorporated Berhad
                                           Total liabilities                                                                                                                                           1,198,091




   174
                                           Other information
                                                                                                                                                                                                                                                                 FINANCIAL STATEMENTS




                                           Capital expenditure                                      4,684            124             1,146        29,902            31            35         7,012        42,934




annual report ‘06
                                           Depreciation and amortisation                            9,798            401             1,150        12,701            81         1,706         1,954        27,791

                                           Segment assets consist primarily of property, plant and equipment, other investments, assets held for resale, inventories and completed development properties, property
                                           development costs, operating receivables and cash, and mainly exclude current and deferred tax assets. Segment liabilities comprise operating liabilities and exclude
                                                                                                                                                                                                                      FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)




                                           items such as current and deferred tax liabilities.
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


34   SEGMENT REPORTING (CONT’D)

     (b) Secondary reporting format – geographical segments

         The Group operates in these main geographical areas:

         Malaysia            -   construction, property development, trading and manufacturing, building materials, quarry,
                                 financial services, investment holdings and tolling operations
         Singapore           -   trading and manufacturing and building materials
         Vietnam             -   building materials, quarry and investment holding
         Other countries     -   investment holding, trading and manufacturing, construction


                                                    Revenue                         Total assets         Capital expenditure

                                            30.6.2006 31.12.2004             30.6.2006 31.12.2004       30.6.2006 31.12.2004
                                              RM’000     RM’000                RM’000     RM’000          RM’000     RM’000

          Malaysia                          1,761,856      1,346,171         1,610,099      1,496,199     89,040       40,927
          Singapore                           158,385            85,855          66,288        71,323        584          359
          Vietnam                               67,993           35,889          72,546        30,673      2,033          888
          Other countries                       69,032           29,604         113,914        50,357     22,197          760

                                            2,057,266      1,497,519         1,862,847      1,648,552    113,854       42,934

          Associated companies                                                   52,865       108,567

          Total assets                                                       1,915,712      1,757,119




                           Sunway Holdings Incorporated Berhad   175   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


35   CHANGE IN ACCOUNTING POLICY

     On 2 April 2004, the Group completed an asset-backed securitisation exercise (“ABS exercise”) involving the disposals
     of the entire equity interest in Coral White Sdn Bhd, a wholly owned indirect subsidiary of the Company and a portfolio
     of commercial and residential properties to ABS Land and Properties Berhad (“ALP”) for a total sale consideration of
     RM214.92 million which was satisfied by RM93.65 million cash and the issuance of RM121.271 million nominal value
     of subordinated class asset-backed securitisation notes (“Subordinated Notes”).

     In accordance with IC Interpretation 112, which is effective for annual period beginning on or after 1 January 2006, ALP
     has been consolidated with the Group since the substance of the relationship between the Group and ALP indicates that
     ALP is controlled by the Group.

     The early adoption of IC 112 has the effect of increasing the Group’s net loss for the 18 months ended 30 June 2006 by
     RM712,000. The other effects of the change on the Group’s financial statements are as follows:

                                                                               As previously       Prior year            As
                                                                                   reported      adjustments       restated
                                                                                    RM’000           RM’000        RM’000

     As At 31 December 2003

     Accumulated losses                                                              (316,230)          (184)     (316,414)

     As At 31 December 2004

     Non-current assets

     Property, plant and equipment                                                    218,755              7       218,762
     ABS notes and other investments                                                  131,661      (122,147)         9,514


     Current assets

     Inventories and completed development properties                                 108,205       166,909        275,114
     Tax recoverable                                                                   13,759             93        13,852
     Debtors                                                                          776,094            366       776,460
     Deposits, bank and cash balances                                                 113,340         10,931       124,271


     Current liabilities

     Creditors                                                                        630,830          5,721       636,551


     Non-current liabilities

     ABS Senior Notes                                                                       0         89,805        89,805

     Accumulated losses                                                              (236,779)       (39,367)     (276,146)

     Net profit for the financial year                                                 78,482        (39,183)       39,299




                           Sunway Holdings Incorporated Berhad   176   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


36   CONTINGENT LIABILITIES


                                                                         Group                        Company

                                                            30.6.2006              31.12.2004    30.6.2006      31.12.2004
                                                              RM’000                  RM’000       RM’000          RM’000

     Guarantees given to bankers for
      facilities obtained and utilised by:
     - subsidiary companies                                              0                  0     217,139         204,585


     Guarantees given to third parties in respect
      of contracts and trade performance of:
      - Group                                                    901,624               799,230          0                0
      - subsidiary companies                                             0                  0     818,690         730,764

                                                                 901,624               799,230   1,035,829        935,349



     (a) Provision of funds to Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd (“SILK”)

         Pursuant to the concession agreement entered into between SILK, a wholly-owned subsidiary of SunInfra, which in
         turn is an associated company of the Company, and the Government of Malaysia on 8 October 1997 as amended
         by a supplemental concession agreement dated 1 August 2001, the Government of Malaysia has awarded to SILK
         the design, construction, operation and maintenance of the Kajang traffic dispersal ring road including the related
         toll equipment and ancillary facilities.

         For the purposes of part-financing the Project by SunInfra, SILK had entered into an arrangement pursuant to the
         financing procedures in accordance with the Syariah principle of Al-Bai Bithaman Ajil in relation to which, the
         Company had undertaken to ensure that SILK maintains the required Annual Debt Service Cover (“DSCR”) Ratio
         and the required minimum balances in the Debt Service Reserve Account (“DSRA”). The provision of any funds to
         make up the above DSCR and DSRA, should the needs arise, would constitute a related party transaction which
         requires the approval of the minority shareholders of the Company.

     (b) Financial support to subsidiary companies

         As disclosed in Note 14 to the financial statements, the Company has indicated its present intention to continue
         to provide the necessary financial support to enable certain subsidiary companies within the Group to meet their
         liabilities as they fall due and to continue their businesses without any significant curtailment of operations.




                           Sunway Holdings Incorporated Berhad    177   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


36   CONTINGENT LIABILITIES (UNSECURED) (CONT’D)

     (c) Material outstanding litigations

         (i)   A claim was brought by Proselesa Sdn Bhd (“Proselesa”) against the Company and its subsidiary companies,
               SWL Factoring Sdn Bhd (“SWLF”) and Sunway Credit & Leasing Sdn Bhd for damages and specific
               performance in respect of an alleged breach/wrongful termination of a sale and purchase agreement. In the
               event the specific performance of the said agreement is granted by the Court, the subsidiary company will
               be liable to pay the sum of RM77,766,000 on the execution of the sale and purchase agreement or to pay
               general damages of a sum that the Court may order. On 30 June 2004, the court dismissed both the Plaintiff’s
               and the Defendant’s application for costs, of which all the parties have filed in notices of appeal against the
               decision. After the hearing of the appeals on 2 September 2004, the Judge held on 15 September 2004 that
               the Defendant’s appeal be allowed with costs and that the Plaintiffs are to pay the security into Court. The
               Court has fixed trial dates on the 6 April 2005 (vacated) and 29 April 2005 for the Plaintiff’s case and the
               Defendant’s case on the 7, 8 and 21 July 2005.

               The said suit was partly heard on 7 October 2005 with the latest hearing dates fixed on 12, 13 and 15
               September 2006, which have been adjourned pending payment of the security costs by Proselesa. On 29
               September 2006, the Judge has fixed a new mention date for the above matter on 16 November 2006.

               The Directors of SWLF had been advised by the case lawyer that there was no unlawful termination of the
               said sale and purchase agreement or any breach of the same as alleged by Proselesa.

         (ii) A claim was brought by Boon Wah Engineering (“Boon Wah”) against the Company and its subsidiary, Sunway
              Construction Sdn Bhd (“SunCon”) for the sum of RM2,070,969 being the outstanding payment for the
              commissioning of air conditioning and ventilation system for the Plaza Pantai project.

               Boon Wah obtained a judgement vide Order 14 of the Rules of the High Court. SunCon filed an appeal
               against this judgement. The said appeal came up for hearing on 21 August 2006 but the same was adjourned
               to 13 September 2006 and is now fixed for Mention on 17 November 2006.

               Whilst the appeal against the Order 14 Judgement is pending, Boon Wah commenced Winding Up proceedings
               against SunCon. The hearing of the Winding Up Petition is fixed on 21 September 2006, and subsequently
               adjourned to 13 February 2007. In the interim, SunCon has filed an application to strike off the said petition
               on the grounds that the said petition is filed on frivolous grounds and the same is an abuse of the court’s
               process.

         (iii) On 9 January 1999, L’ Grande Development Sdn Bhd (“L’ Grande”) had appointed Sunway PMI-Pile
               Construction Sdn Bhd (“SPMI”) to perform work and supply of labour, materials, plants and equipments
               from the pile design for the construction of 331 units of double store terrace houses. A legal suit was filed by
               L’ Grande against Bukit Cerakah Development Sdn Bhd (“BC”) for the sum of RM5,862,612 due under the
               interim certificates. BC has filed a counterclaim against the plaintiff for damages suffered by them in the sum
               of RM46,210,925 for demolishing, rebuilding and carrying out rectifying works to the double storey houses
               that were structurally damaged and ancillary losses due to failure to complete the piling works in accordance
               with specifications and drawings. L’ Grande has issued third party notice on 26 May 2004 against SPMI for
               indemnity against the failure of the piling works that was carried out. L’ Grande has filed and served the
               Statement of Claim against SPMI. SPMI has accordingly filed the Statement of Defence against L’ Grande’s
               statement of claim. The case was fixed for case management on 3 March 2005 and further case management
               on 5 December 2005 and subsequently to 18 April 2006. The Learned Judge gave directions to the parties
               to file their Agreed and Non-Agreed Bundles, before the next case management on 14 August 2006. The
               Learned Judge had also set the trial dates as 25 to 29 January 2010 and 8 to 12 February 2010.

               SPMI’s solicitors had put in place a defence, which in the solicitors’ opinion covered and explained all aspect
               of SPMI’s contractual obligations and mitigating liability. Although the counterclaim against the Plaintiff was
               RM46,210,924.68, it was unlikely that the final judgement would be for this sum as the claimant had the
               onerous task of proving his claim. In the solicitors’ opinion, the defence suffices and was more than adequate
               and should justice prevail, the solicitors were confident that this matter should be dismissed.

               The Directors are of the opinion, after taking appropriate legal advice, that no provision for the abovementioned
               claims is necessary.




                          Sunway Holdings Incorporated Berhad   178   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


37   SIGNIFICANT RELATED PARTY DISCLOSURES

     Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd, Sunway City Berhad and its subsidiary companies are deemed to be
     related to the Company by virtue of Tan Sri Dato’ Seri (Dr) Cheah Fook Ling being the common director of the related
     parties and the Company as well as by virtue of Tan Sri Dato’ Seri (Dr) Cheah Fook Ling’s mutual interest in both the
     related parties and the Company.

     In previous financial year, Sunway Hydraulic Industries Sdn Bhd, a subsidiary newly acquired in the current financial
     period, was deemed to be related to the Company or its subsidiary companies by virtue of Tan Sri Dato’ Seri (Dr) Cheah
     Fook Ling’s mutual interest in both the related parties and the Company.

     In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other
     significant related party transactions. The related party transactions described below were carried out on terms and
     conditions negotiated among the parties.

                                                                                            18 months
                                                                                                ended         Year ended
                                                                                            30.6.2006         31.12.2004
                                                                                              RM’000             RM’000

      (a) Contract revenue from:

          Subsidiary company of an associated company:
          - Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd                                           18,003           134,580


          Companies connected to a major shareholder/common
           directors (Sunway City Berhad and its subsidiary companies):
          - Sunway City Berhad                                                                  79,712            24,545
          - Sunway City (Ipoh) Sdn Bhd                                                          18,091               996
          - Sunway D’Mont Kiara Sdn Bhd                                                         80,735            20,240
          - Sunway Semenyih Sdn Bhd                                                                281             1,616
          - Sunway Damansara Sdn Bhd                                                             1,841            16,645
          - Sunway Kinrara Sdn Bhd                                                               2,356             6,395
          - Sunway Pyramid Sdn Bhd                                                             112,605            38,357
          - Sunway Tunas Sdn Bhd                                                                 3,004               593
          - Sunway City (Penang) Sdn Bhd                                                        21,131                  0
          - Sunway City Properties Sdn Bhd                                                       2,803                  0
          - Sunway Bukit Gambier Sdn Bhd                                                         3,642                  0


      (b) Sales of goods to:

          Associated company:
          - Sunway Marketing (Thailand) Ltd                                                      3,999             4,507




                          Sunway Holdings Incorporated Berhad   179   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


37   SIGNIFICANT RELATED PARTY DISCLOSURES (CONT’D)



                                                                                          18 months
                                                                                              ended    Year ended
                                                                                          30.6.2006    31.12.2004
                                                                                            RM’000        RM’000

      (c) Purchase of goods and services from:

          Company connected to a major shareholder:
          - Sunway Hydraulic Industries Sdn Bhd                                                  0           3,931


      (d) Rental of office space:

          Company connected to a major shareholder/
           common directors (Sunway City Berhad and its subsidiary companies) :
          - Menara Sunway Sdn Bhd                                                             4,913          2,549


      (e) Interest income:

          Companies connected to a major shareholder/
           common directors (Sunway City Berhad and its subsidiary companies) :
          - Sunway City Berhad                                                                1,524            888
          - Sunway Pyramid Sdn Bhd                                                            1,190          1,520
          - Sunway Resort Hotel Sdn Bhd                                                       2,536          6,900


38   FINANCIAL INSTRUMENTS

     There were no open and outstanding forward foreign currency contracts entered by the Group at the balance sheet
     date.




                          Sunway Holdings Incorporated Berhad   180   annual report ‘06
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2006 (CONT’D)


39   SIGNIFICANT EVENTS SUBSEQUENT TO BALANCE SHEET DATE

     The Group had on 14 August 2006, entered into a Joint Venture Agreement (“JVA”) with Wuhu Xin Long Machinery
     Co. Ltd. (“Wuhu Xin Long”) to set up a joint venture company known as Sunway Xin Long (Anhui) Hydraulic Co. Ltd.
     (“Sunway Xin Long”).

     The total planned investment and registered capital of Sunway Xin Long were RMB41.000 million (equivalent to
     RM18.880 million) and RMB27.000 million (equivalent to RM12.430 million) respectively. The Group will hold 78%
     equity interest in Sunway Xin Long via capital injection amounting to RMB21.060 million (RM9.700 million).

     The Group will fund its share of equity participation in Sunway Xin Long through internally generated funds and
     borrowing. The capital will be injected in the following manner:

     (i)   first installment of RMB4.539 million (equivalent to RM2.090 million) will be paid within 30 days from issuance
           of business license of Sunway Xin Long;

     (ii) second installment of RMB9.358 million (equivalent to RM4.310 million)will be paid within 60 days from issuance
          of business license of Sunway Xin Long; and

     (iii) third installment of RMB7.162 million (equivalent to RM3.298 million) will be paid within 60 days from issuance
           of business license of Sunway Xin Long.

     Sunway Xin Long had on 14 August 2006, entered into an agreement with Wuhu Xin Long to purchase certain identified
     equipment and assets at the relevant specified purchase consideration after the issuance of business license to Sunway
     Xin Long.

     The Proposed JVA does not require approval from the shareholders of the Company but is subject to approval of the
     relevant authorities in China. Sunway Xin Long had obtained the business license for the commencement of business
     operations on 23 August 2006 from the relevant authority in China.

     The Group had on 7 April 2006, entered into a Share Sale Agreement with Tan Kim Heng, Tan Kim Tai, Tan Kim Whatt
     and Tan Soo Bing @ Tan Thiam Swee (“the Vendors”) for the acquisition of 120,000 ordinary shares of RM1.00 each
     representing the entire equity interest in Kualiti Klasik Sdn Bhd (“KK”) from the Vendors for a total cash consideration
     of RM3.80 million.

     KK was incorporated on 24 July 1991 and has an authorised and paid-up share capital of RM500,000 and RM120,000
     respectively. KK is currently dormant but its intended principal activity is to operate quarries in Kuala Kangsar, Perak.
     The acquisition has been completed on 3 October 2006 upon payment of the balance purchase consideration of RM3.42
     million to the Vendors.


40   APPROVAL OF FINANCIAL STATEMENTS

     The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 19
     October 2006.


41   COMPARATIVES

     Certain comparative figures have been adjusted and restated to conform to the changes in the presentation and to take
     into account the effect of the change in accounting policy as disclosed in Note 35 to the financial statements.




                           Sunway Holdings Incorporated Berhad   181   annual report ‘06
STATEMENT BY DIRECTORS
PURSUANT TO SECTION 169(15)
OF THE COMPANIES ACT 1965


We, Dato’ Chew Chee Kin and Mark Victor Rozario, two of the Directors of Sunway Holdings Incorporated Berhad, state
that, in the opinion of the Directors, the financial statements set out on pages 79 to 181 are drawn up so as to give a true and
fair view of the state of affairs of the Group and Company as at 30 June 2006 and of the results and cash flows of the Group
and Company for the 18 months ended on that date in accordance with the provisions of the Companies Act 1965 and the
MASB approved accounting standards in Malaysia.


In accordance with a resolution of the Board of Directors dated 19 October 2006.




DATO’ CHEW CHEE KIN                                                                        MARK VICTOR ROZARIO
PRESIDENT                                                                                  FINANCE DIRECTOR


Petaling Jaya




STATUTORY DECLARATION
PURSUANT TO SECTION 169(16)
OF THE COMPANIES ACT 1965


I, Mark Victor Rozario, the Director primarily responsible for the financial management of Sunway Holdings Incorporated
Berhad, do solemnly and sincerely declare that the financial statements set out on pages 79 to 181 are, to the best of my
knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue
of the provisions of the Statutory Declarations Act 1960.




MARK VICTOR ROZARIO


Subscribed and solemnly declared by the abovenamed Mark Victor Rozario at Petaling Jaya in the State of Selangor Darul
Ehsan on 19 October 2006, before me.




COMMISSIONER FOR OATHS



                           Sunway Holdings Incorporated Berhad   182   annual report ‘06
REPORT OF THE AUDITORS
TO THE MEMBERS OF
SUNWAY HOLDINGS INCORPORATED BERHAD (COMPANY NO. 37465 A)


We have audited the financial statements set out on pages 79 to 181. These financial statements are the responsibility of
the Company’s Directors. It is our responsibility to form an independent opinion, based on our audit, on these financial
statements and to report our 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 approved auditing standards in Malaysia. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by Directors, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been prepared in accordance with the provisions of the Companies Act 1965 and MASB
    approved accounting standards in Malaysia so as to give a true and fair view of:

      (i)   the matters required by Section 169 of the Companies Act 1965 to be dealt with in the financial statements; and

      (ii) the state of affairs of the Group and Company as at 30 June 2006 and of the results and cash flows of the Group
           and Company for the financial period ended on that date;

and

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

The names of the subsidiary companies of which we have not acted as auditors are indicated in Note 14 to the financial
statements. We have considered the financial statements of these subsidiary companies and the auditors’ reports thereon.

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

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




PRICEWATERHOUSECOOPERS                                                                      ERIC OOI LIP AUN
(No. AF: 1146) (No. 1517/06/08 (J))
Chartered Accountants                                                                       Partner of the firm


Kuala Lumpur
19 October 2006




                            Sunway Holdings Incorporated Berhad   183   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006


                                                                                                              Approximate
                                                                                                                 age of     Net book value
                                                                                 Site / Floor     Existing     Building     as at 30.6.2006      Date of
Location / Address                                Description     Tenure             area           use         (Years)         RM’000         acquisition


Lot 25, H.S.(D) 74606,                            Bungalow        99 years           24,273        Vacant          -             466          18-Aug-1999
P.T.No 543,                                          lot         leasehold            sq. ft.
Mukim of Bukit Raja,                                              expiring
Daerah Petaling, Selangor                                       14-Feb-2092

Lot 16, H.S.(D) 74606,                            Bungalow        99 years           24,784        Vacant          -             476          18-Aug-1999
P.T.No 543,                                          lot         leasehold            sq. ft.
Mukim of Bukit Raja,                                              expiring
Daerah Petaling, Selangor                                       14-Feb-2092

Lot 15, H.S.(D) 74606,                            Bungalow        99 years           26,700        Vacant          -             513          18-Aug-1999
P.T.No 543,                                          lot         leasehold            sq. ft.
Mukim of Bukit Raja,                                              expiring
Daerah Petaling, Selangor                                       14-Feb-2092

Subang Square,                                   Commercial       Freehold           103,132     Rented out       7             17,699            N/A
Commercial Complex, Off Jalan Balakong,           building                            sq. ft.
Jalan SS 15/4G, Subang Jaya,
Selangor

No. 2 Jalan Kasturi 3,                              4 storey       99 years          10,752      Rented out       7             1,424         7-Dec-1999
Kasturi Plaza,                                    shop office     leasehold           sq. ft.
Batu 11, Cheras,                                                   expiring
43200 Kuala Lumpur                                              27-Oct-2093

No. 22 Jalan Kasturi 3,                            4 storey        99 years           5,912        Vacant         7              659          7-Dec-1999
Kasturi Plaza, Off Jalan Balakong,                shop office     leasehold           sq. ft.
Batu 11, Cheras,                                                 expiring on
43200 Kuala Lumpur                                              27-Oct-2093

Suite A-3-4, Tower A, Plaza Pantai,              Commercial       Freehold            1,002      Rented out       5              282          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,        building                            sq. ft.
59200 Kuala Lumpur

Suite A-5-6, Tower A, Plaza Pantai,              Commercial       Freehold            2,760      Rented out       5              738          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,        building                            sq. ft.
59200 Kuala Lumpur

Suite A-6-6, Tower A, Plaza Pantai,              Commercial       Freehold            2,760      Rented out       5              738          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,        building                            sq. ft.
59200 Kuala Lumpur

Suite A-9-9, Tower A, Plaza Pantai,              Commercial       Freehold             979       Rented out       5              276          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,        building                            sq. ft.
59200 Kuala Lumpur

Suite A-13-1, Tower A, Plaza Pantai,             Commercial       Freehold            1,222        Vacant         5              344          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,        building                            sq. ft.
59200 Kuala Lumpur

Suite A-14-5, Tower A, Plaza Pantai,             Commercial       Freehold             836       Rented out       5              235          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,        building                            sq. ft.
59200 Kuala Lumpur




                                     Sunway Holdings Incorporated Berhad       184   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                       Approximate
                                                                                                          age of     Net book value
                                                                          Site / Floor     Existing     Building     as at 30.6.2006     Date of
Location / Address                             Description    Tenure          area           use         (Years)         RM’000        acquisition


Suite A-15-9, Tower A, Plaza Pantai,          Commercial     Freehold          979          Vacant         5              276          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite A-18-6, Tower A, Plaza Pantai,          Commercial     Freehold         2,355       Rented out       5              630          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite A-19-1(b), Tower A, Plaza Pantai,       Commercial     Freehold         2,622       Rented out       5              701          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite B-5-5, Tower B, Plaza Pantai,           Commercial     Freehold         1,210         Vacant         5              341          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite B-14-3, Tower B, Plaza Pantai,          Commercial     Freehold          784        Rented out       5              221          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite B-13-7, Tower B, Plaza Pantai,          Commercial     Freehold         1,329         Vacant         5              374          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite C-4-4, Tower C, Plaza Pantai,           Commercial     Freehold         1,371         Vacant         5              386          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite C-5-4, Tower C, Plaza Pantai,           Commercial     Freehold         1,327         Vacant         5              374          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite C-7-3, Tower C, Plaza Pantai,           Commercial     Freehold         1,056         Vacant         5              297          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite C-7-6, Tower C, Plaza Pantai,           Commercial     Freehold         1,303         Vacant         5              367          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite C-7-4, Tower C, Plaza Pantai,           Commercial     Freehold         1,327         Vacant         5              374          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite C-10-1, Tower C, Plaza Pantai,          Commercial     Freehold         1,275         Vacant         5              359          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur

Suite C-13-4, Tower C, Plaza Pantai,          Commercial     Freehold         1,327         Vacant         5              374          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,     building                       sq. ft.
59200 Kuala Lumpur




                                  Sunway Holdings Incorporated Berhad   185   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                                Approximate
                                                                                                                   age of     Net book value
                                                                                   Site / Floor     Existing     Building     as at 30.6.2006      Date of
Location / Address                               Description         Tenure            area           use         (Years)         RM’000         acquisition


Suite C-11-6, Tower C, Plaza Pantai,            Commercial          Freehold           1,303         Vacant         5              458          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,       building                              sq. ft.
59200 Kuala Lumpur

Suite C-11-5, Tower C, Plaza Pantai,            Commercial          Freehold           1,058         Vacant         5              372          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,       building                              sq. ft.
59200 Kuala Lumpur

Suite C-16-3, Tower C, Plaza Pantai,            Commercial          Freehold           1,056         Vacant         5              371          2-Sep-2000
No. 5, Jalan 4/83A, Off Jalan Pantai Baru,       building                              sq. ft.
59200 Kuala Lumpur

31, Jln Selatan 6/5,                          1 1/2 Storey light    Freehold           2,330         Vacant         2              260          28-Aug-2002
Taman Perindustrian,                           industry factory                        sq. ft.
Bukit Kempas,
81200 Johor Bahru

Lot 18141 No.9, Jalan Watan 8,               3 Storey shophouse Leasehold              143m3         Vacant         20             320          30-Mar-2006
Taman Sri Watan Ampang,
Selangor

21, Senoko Drive,                                 Industrial          30 years          6,560      Warehouse        25            2,043         9-Jun-1982
Singapore 758208                                   building          leasehold         sq. mtr.
                                                                      expiring
                                                                   30-Aug-2011

55 Cairnhill Road,                                Freehold          Leasehold            265        Residence       31            2,932         15-Dec-1992
#30-06 Cairnhill Plaza, Singapore                 property                              sq. ft

Palmville Condo Unit 10-02 Block B,              Residential         99 years          2,147        Residence       9              578          16-Jul-1998
HS (D) 59436 P.T. No 9311,                      condominium         leasehold          sq. ft.
HS (D) 23565 P.T. No 9313,                                           expiring
Mukim of Damansara,                                                1-Apr-2097
District of Petaling

No 1, Jalan PJS 11/11, Bandar Sunway,             Industrial          99 years         32,464      Office and       0.3           1,739         1-Mar-2006
46150 Petaling Jaya, Selangor                      building          leasehold          sq. ft     warehouse
                                                                      expiring
                                                                   28-Dec-2096

Lot 361, 1257 and 1259,                            Quarry           Freehold              8        Rented out        -            3,876         4-May-1999
Mukim 20, Province Wellesley Central,               land                                acres
Penang

Parcel no D-11-2, Block Rengas,                  Residential        Freehold             175         Vacant         6              270          18-Sep-1999
Amansari Resort Condominium,                    condominium                            sq. mtr.
Taman Seri Alam, Johor Bahru

PTD 87896 HS(D) 273869                          Double storey       Freehold           2,048         Vacant         3              268          17-Dec-2003
                                                terrace house                          sq. ft.




                                    Sunway Holdings Incorporated Berhad          186   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                 Approximate
                                                                                                    age of     Net book value
                                                                     Site / Floor     Existing    Building     as at 30.6.2006     Date of
Location / Address                     Description      Tenure           area           use        (Years)         RM’000        acquisition


PTD87901 HS(D) 273874                 Double storey     Freehold         1,923         Vacant        3              200          17-Dec-2003
                                      terrace house                      sq. ft.

PTD 87916 HS(D) 273889                Single storey     Freehold         1,150         Vacant        3              200          17-Dec-2003
                                      terrace house                      sq. ft.

PTD 116878 HS(D) 354561               Single storey     Freehold         1,150         Vacant        3              145          17-Dec-2003
                                      terrace house                      sq. ft.

PTD 116821 HS(D) 354504               Single storey     Freehold         1,150         Vacant        3              145          17-Dec-2003
                                      terrace house                      sq. ft.

PTD 116822 HS(D) 354505               Single storey     Freehold         1,150         Vacant        3              145          17-Dec-2003
                                      terrace house                      sq. ft.

PTD 116823 HS(D) 354506               Single storey     Freehold         1,150         Vacant        3              145          17-Dec-2003
                                      terrace house                      sq. ft.

PTD 116851 HS(D) 354534               Single storey     Freehold         1,150         Vacant        3              145          17-Dec-2003
                                      terrace house                      sq. ft.

No 15 Jln Beladau 7,                 2 storey shoplot   Freehold         1,738         Vacant        6              220          2-Sep-1999
Taman Puteri Wangsa,                                                     sq. ft.
Ulu Tiram

PTD 116824                            Single storey     Freehold           156         Vacant        2              145          20-Jun-2005
                                      terrace house                      sq. mtr.

PTD 116841                            Single storey     Freehold           688         Vacant        2              346          20-Jun-2005
                                      terrace house                      sq. mtr.

PTD 116857                            Single storey     Freehold           299         Vacant        2              222          20-Jun-2005
                                      terrace house                      sq. mtr.

PTD 116858                            Single storey     Freehold           299         Vacant        2              212          20-Jun-2005
                                      terrace house                      sq. mtr.

PTD 116872                            Single storey     Freehold           376         Vacant        2              305          20-Jun-2005
                                      terrace house                      sq. mtr.

PTD 116825                            Single storey     Freehold           299         Vacant        2              213          20-Jun-2005
                                      terrace house                      sq. mtr.

PTD 116834                            Single storey     Freehold           299         Vacant        2              190          20-Jun-2005
                                      terrace house                      sq. mtr.

PTD 116886                            Single storey     Freehold           299         Vacant        2              200          20-Jun-2005
                                      terrace house                      sq. mtr.

PTD 116817                            Single storey     Freehold           221         Vacant        2              172          20-Jun-2005
                                      terrace house                      sq. mtr.

PTD 116873                            Single storey     Freehold           297         Vacant        2              212          20-Jun-2005
                                      terrace house                      sq. mtr.



                          Sunway Holdings Incorporated Berhad      187   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                      Approximate
                                                                                                         age of     Net book value
                                                                          Site / Floor     Existing    Building     as at 30.6.2006      Date of
Location / Address                         Description      Tenure            area           use        (Years)         RM’000         acquisition


PTD 116805                                Single storey    Freehold             422         Vacant        2              246          20-Jun-2005
                                          terrace house                       sq. mtr.

PTD 116842                                Single storey    Freehold             321         Vacant        2              195          1-Sep-2005
                                          terrace house                       sq. mtr.

No. 721, Jalan S 2A 16,                       Semi         Freehold           1,330         Vacant        5              190          31-Jul-2004
Greenstreet Homes,                          detached                          sq. ft.
Seremban                                     single
                                             storey

No. PT 1089,                                Industrial      99 years          2,000         Vacant        14             158          5-Oct-1999
Taman Perindustrian Lukut,                   building      leasehold          sq. ft.
71010 Lukut Port Dickson,                                   expiring
Seremban                                                  20-Sep-2003

No. 1356 Jln Semarak 36,                  Single storey     99 years            256         Vacant        9              105          10-Nov-1999
Taman Panchor Jaya,                      semi-detached     leasehold          sq. mtr.
70400 Seremban                            cluster house     expiring
                                                          27-Sep-2095

E-6-4 Block Mawar (E),                     Residential     Freehold             947         Vacant        8              158          10-Nov-1999
Anjung Seri Condominium,                  condominium                          sq. ft.
Persiaran Seri Alam,
Bandar Seri Alam,
81750 Masai, Johor

No. 15, Jalan Karunmas 11,                 2 1/2 storey    Freehold           1,400         Vacant        6              185          13-Sep-2000
Taman Karunmas Ehsan,                     Terrace house                       sq. ft.
43300 Selangor

No. 607, Jalan Karunmas 11,                2 1/2 storey    Freehold           1,300         Vacant        6              175          13-Sep-2000
Taman Karunmas Ehsan,                     Terrace house                       sq. ft.
43300 Selangor

No. 608, Jalan Karunmas 11,                2 1/2 storey    Freehold           1,300         Vacant        6              175          13-Sep-2000
Taman Karunmas Ehsan,                     Terrace house                       sq. ft.
43300 Selangor

No. 58, Unit A-1-2,                        Office lot        99 years         1,284         Vacant        6               0           12-Sep-2000
Sunway Business Park,                                       leasehold         sq. ft.
Jln Todak 4, Pusat Bandar,                                   expiring
Seberang Jaya Perai,                                      21-Oct-2092
13700 Seberang Jaya, Penang

No. 58, Unit A-1-3,                        Office lot        99 years         1,284         Vacant        6               0           12-Sep-2000
Sunway Business Park,                                       leasehold         sq. ft.
Jln Todak 4 Pusat Bandar,                                    expiring
Seberang Jaya Perai,                                      21-Oct-2092
13700 Seberang Jaya, Penang




                              Sunway Holdings Incorporated Berhad       188   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                               Approximate
                                                                                                                  age of     Net book value
                                                                                Site / Floor     Existing       Building     as at 30.6.2006      Date of
Location / Address                             Description        Tenure            area           use           (Years)         RM’000         acquisition


No. 58, Unit A-1-9,                             Office lot         99 years         1,284         Vacant           6               0           12-Sep-2000
Sunway Business Park,                                             leasehold         sq. ft.
Jln Todak 4 Pusat Bandar,                                          expiring
Seberang Jaya Perai,                                            21-Oct-2092
13700 Seberang Jaya, Penang

No. 58, Unit A-1-10,                            Office lot         99 years         1,284         Vacant           6               0           12-Sep-2000
Sunway Business Park,                                             leasehold         sq. ft.
Jln Todak 4 Pusat Bandar,                                          expiring
Seberang Jaya Perai,                                            21-Oct-2092
13700 Seberang Jaya, Penang

No. 58, Unit A-1-11,                            Office lot         99 years         2,012         Vacant           6               0           12-Sep-2000
Sunway Business Park,                                             leasehold         sq. ft.
Jln Todak 4 Pusat Bandar,                                          expiring
Seberang Jaya Perai ,                                           21-Oct-2092
13700 Seberang Jaya, Penang

No. 58, Unit B-G-3,                             Office lot         99 years         1,023         Vacant           6               0           12-Sep-2000
Sunway Business Park,                                             leasehold         sq. ft.
Jln Todak 4 Pusat Bandar,                                          expiring
Seberang Jaya Perai,                                            21-Oct-2092
13700 Seberang Jaya, Penang

No. 58, Unit C-G-5,                             Office lot        99 years          1,023         Vacant           6               0           12-Sep-2000
Sunway Business Park,                                            Leasehold          sq. ft.
Jln Todak 4 Pusat Bandar,                                         expiring
Seberang Jaya Perai,                                            21-Oct-2092
13700 Seberang Jaya, Penang

No. 58, Unit C-G-6,                             Office lot        99 years          1,023         Vacant           6               0           12-Sep-2000
Sunway Business Park,                                            Leasehold          sq. ft.
Jln Todak 4 Pusat Bandar,                                         expiring
Seberang Jaya Perai,                                            21-Oct-2092
13700 Seberang Jaya, Penang

Lot 2788, 2796 & 2797, Lorong Industrial 3,   Industrial land    Freehold           5,907      Block-making        11            5,843         11-Aug-1994
Kawasan Perindustrian Bukit Panchor,           and building                         acres          plant
Mukim 7 Nibong Tebal,
Seberang Perai Selatan, Pulau Pinang

Lot 2396, Title No. 10140,                    Industrial land    Freehold             44       Manufacturing       9             24,820         9-Jul-1996
Mukim of Batang Kali,                          and building                          acres      of concrete
Daerah Ulu Selangor                                                                              products

Lot No P/A/1/12, 1st Floor,                     Industrial       Freehold           1,268         Office           10              0           8-Dec-1996
Block A, PJ Industrial Park,                     building                           sq. ft.
Jln Kemajuan,
46200 Petaling Jaya,
Selangor Darul Ehsan




                                 Sunway Holdings Incorporated Berhad          189   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                                       Approximate
                                                                                                                          age of     Net book value
                                                                                    Site / Floor       Existing         Building     as at 30.6.2006      Date of
Location / Address                                Description         Tenure            area             use             (Years)         RM’000         acquisition


Lot 2564 Jln 39, Kawasan 16,                       Industrial        24 years              6        Block & paver          26              2           1-Apr-1993
Off Jalan Connaught Brighe,                         building        leasehold            acres        plant, and
41300 Klang, Selangor                                                expiring                        pile casting
                                                                   30-Apr-2004                           yard

Lot 550, Off 15th Mile,                            Industrial         27 years            19       Pile casting yard       12              0           1-Mar-1994
Jln Puchong, Daerah Sepang,                         building         leasehold           acres       and batching
Kuala Lumpur                                                          expiring                       and concrete
                                                                    1-Jan-2021                        pipe plant

Lot 2, Jalan Perusahaan 2,                         Industrial       Leasehold              7       Manufacturing of        9             7,617         30-Jun-2004
Kawasan Perusahaan,                                 land and         expiring            acres     concrete products
Beranang,                                           building       20-Jun-2043
43700 Beranang Selangor

PL06, Jln Lapangan Terbang,                        Industrial        Leasehold             7       Manufacturing of        18            7,855         30-Jun-2004
Fasa 1 Kawasan Perindustrian,                       land and          expiring           acres     concrete products
Senai,                                              building        20-Jul-2083
81400 Senai Johor

Lot 6489 & 6590, Off 6th Mile,                     Factory           Freehold           10,800     Manufacturing of        13            7,690         1-Oct-1992
Jalan Kapar, 42100 Klang, Selangor                 building                             sq. mtr.     clay pipes

                                              Clay & Grog Shelter                        6,000 Clay & Grog Storage         4              827          1-Dec-2001
                                                                                        sq. mtr.

                                               Factory Extension                         3,000        GFC Kiln             1             2,859         30-Sep-2005
                                                                                        sq. mtr.

Lot 6489 & 6590, Off 6th Mile,                       Land            Freehold           40,500     Manufacturing of        15            3,573         3-Sep-1990
Jalan Kapar, 42100 Klang, Selangor                                                      sq. mtr.     clay pipes

Kemuncak Shah Alam Condominium,                   Residential       Leasehold           22,626          Vacant             8              622          30-Nov-1995
Jalan Tengku Ampuan Rahimah,                     condominium         99 years            sq. ft.
9/20, Section 9,                                    2 units          expiring
40100 Shah Alam, Selangor Darul Ehsan                              29-Aug-2094

No. 11, 23 , 25, Jalan J9/J,                     3 1/2 storey         99 years          22,828        Rented out           5             2,043         22-Oct-1996
No. 28, Jalan K9/K,                              shop office         leasehold           sq. ft.
Section 9, 40100 Shah Alam,                        4 units            expiring
Selangor Darul Ehsan                                               20-Dec-2100

Geran No 26156, Lot 1219,                          Land for          Freehold             98       Future property          -            3,139         11-May-1994
Mukim Rawang, District of Hulu Selangor,         development                             acres      development
Selangor Darul Ehsan

HSD No 25423 PT No 11894,                          Land for         Leasehold             220      Future property          -            11,018        5-Mar-1997
HSD No 26690 PT No 12139,                        development         99 years            acres      development
No Pendaftaran 7363, Lot 14256, Section 19,                          expiring
Mukim of Rawang, District of Gombak,                               16 July 2094
Selangor Darul Ehsan




                                 Sunway Holdings Incorporated Berhad              190   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                             Approximate
                                                                                                                age of     Net book value
                                                                              Site / Floor     Existing       Building     as at 30.6.2006      Date of
Location / Address                           Description        Tenure            area           use           (Years)         RM’000         acquisition


Lot 10903, Lot 10904,                         Land for         Leasehold            102        Property           -            33,983        15-Nov-2002
Lot 4756 and land adjacent to Lot 4756      development         99 years           acres     development
& Lot 10903, Mukim of Batu, District of                         expiring
Gombak, State of Selangor Darul Ehsan                         22 Dec 2102

No 003 & 007 Jln RP 7/6,                   2 pieces of land    Freehold           19,200        Vacant            -              0           31-Dec-1996
Taman Rawang Perdana,                                                              sq. ft.
48000 Rawang, Selangor.

Lot 1361 & 1362,                              Land for         Freehold             0.4         Vacant            -              87             1994
Rawang                                      development                            acres

Unit 4-5-15, Block 4,                        Apartment         Freehold            750        Staff hostel       8               80          10-Dec-2001
Jalan 31/42, Seksyen 31,                                                          sq. ft.
40460 Shah Alam

Unit 4-5-13, Block 4,                        Apartment         Freehold            750        Staff hostel       8               80          10-Dec-2001
Jalan 31/42, Seksyen 31,                                                          sq. ft.
40460 Shah Alam

Unit 4-5-16, Block 4,                        Apartment         Freehold            750          Vacant           8               80          10-Dec-2001
Jalan 31/42, Seksyen 31,                                                          sq. ft.
40460 Shah Alam

Unit 4-5-9, Block 4,                         Apartment         Freehold            750          Vacant           8               80          10-Dec-2001
Jalan 31/42, Seksyen 31,                                                          sq. ft.
40460 Shah Alam

Unit 4-5-11, Block 4,                        Apartment         Freehold            750          Vacant           8               80          10-Dec-2001
Jalan 31/42, Seksyen 31,                                                          sq. ft.
40460 Shah Alam

Unit 4-5-18, Block 4,                        Apartment         Freehold            750          Vacant           8               80          10-Dec-2001
Jalan 31/42, Seksyen 31,                                                          sq. ft.
40460 Shah Alam

PTD 87888 HS (D) 273861                     Double storey      Freehold           1,764         Vacant           3              314          17-Dec-2003
                                            terrace house                         sq. ft.

PTD 87894 HS (D) 273867                     Double storey      Freehold           1,870         Vacant           3              467          17-Dec-2003
                                            terrace house                         sq. ft.

PTD 87899 HS (D) 273872                     Double storey      Freehold           1,923         Vacant           3              344          17-Dec-2003
                                            terrace house                         sq. ft.

PTD 87900 HS (D) 273873                     Double storey      Freehold           1,923         Vacant           3              344          17-Dec-2003
                                            terrace house                         sq. ft.

PTD 87904 HS (D) 273877                     Double storey      Freehold           1,923         Vacant           3              344          17-Dec-2003
                                            terrace house                         sq. ft.

PTD 87907 HS (D) 273880                     Double storey      Freehold           1,923         Vacant           3              344          17-Dec-2003
                                            terrace house                         sq. ft.




                                Sunway Holdings Incorporated Berhad         191   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                                  Approximate
                                                                                                                     age of     Net book value
                                                                                  Site / Floor      Existing       Building     as at 30.6.2006      Date of
Location / Address                               Description        Tenure            area            use           (Years)         RM’000         acquisition


PTD 87944 HS (D) 273917                         Double storey      Freehold            1,923        Vacant            3              344          17-Dec-2003
                                                terrace house                          sq. ft.

PTD 116820 HS (D) 354503                        Single storey      Freehold            1,150        Vacant            3              245          17-Dec-2003
                                                terrace house                          sq. ft.

PTD 87903 HS (D) 273876                         Double storey      Freehold            1,923        Vacant            3              344          17-Dec-2003
                                                terrace house                          sq. ft.

19 Pham Dinh Ho,                               Hotel - 10 floors 30 years              9,840         Hotel            8             24,939         3-Jan-1998
Hanoi, Vietnam                                   2 basement      leasehold            sq. mtr.     operation
                                                (No. of rooms:    expiring
                                                     143)       14-Sep-2027

Lui Dinh, Long Huong Village,                    Quarry land        25 years           44         Quarry land          -             579             1997
Baria Town, Baria-Vung Tau Province,                               leasehold          hectar
Vietnam                                                             expiring
                                                                     2021

17C, Bala, Hadong,                             Batching plant       45 years           4,000     Batching plant        -            1,063            1995
Hatay Province, Vietnam                                            leasehold          sq. mtr.     and office
                                                                    expiring
                                                                  4 Oct 2039

Hoa Thach Commune, Xuan Mai,                     Quarry land        45 years           49         Quarry land          -             627             1995
Hatay Province, Vietnam                                            leasehold          hectar
                                                                    expiring
                                                                  4 Oct 2039

Kawasan Pergudangan Mutiara Kosambi I,             1 storey         30 years            450       Office and          5               48          10-Sep-2001
Blok C5 No. 7,                                    warehouse        leasehold          sq. mtr.    warehouse
Jl. Raya Perancis No.188,                       2 storey office     expiring
Dadap - Tangerang, Jakarta                                        12-Jul-2031

HSD 28616 PT14345, Bandar of Serendah,             1 storey        Freehold            2,364        Vacant            6               80          10-Mar-2005
District of Ulu Selangor, Selangor.             terrace house                          sq. ft.

HSD 36923 PT13786, Bandar of Serendah,          Double storey      Freehold            2,826        Vacant            6               85          10-Mar-2005
District of Ulu Selangor, Selangor.             terrace house                          sq.ft.

Lot 2989, Mukim of Dengkil,                      Agricultural      Freehold            26.55        Vacant             -             262          24-Sep-1984
District of Hulu Langat, Selangor                   land                              hectares

No 30 Jalan Dagangan SB/42,                        4 storey          99 years     2,200/8,263     Rented out          11             800          13-May-1996
Taman Sungei Besi Indah,                         shop office        leasehold        sq. ft.
43300 Sri Kembangan, Selangor                                        expiring
                                                                  12 Nov 2088

No 32 Jalan Dagangan SB/42,                        4 storey          99 years     2,200/8,338     Rented out          11             800          13-May-1996
Taman Sungei Besi Indah,                         shop office        leasehold        sq. ft.
43300 Sri Kembangan, Selangor                                        expiring
                                                                  12 Nov 2088




                                    Sunway Holdings Incorporated Berhad         192   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                             Approximate
                                                                                                                age of     Net book value
                                                                                Site / Floor     Existing     Building     as at 30.6.2006     Date of
Location / Address                              Description        Tenure           area           use         (Years)         RM’000        acquisition


No. 10, Jalan PJS7/3A,                            3 storey         99 years     3,750/11,250    Rented out       11            1,900         10-Apr-1997
Bandar Sunway,                                  shop office       leasehold         sq. ft.
46150 Petaling Jaya, Selangor                                      expiring

Subang Square,                                   Car park         Freehold          287,635      Car park        7             10,341           N/A
Commercial Complex,                                                                  sq. ft.
Jalan SS15/4G,
Subang Jaya, Selangor

Subang Square,                                 Commercial         Freehold          41,897      Rented out       7             13,548           N/A
Commercial Complex,                             building                             sq. ft.
Jalan SS 15/4G,
Subang Jaya, Selangor

No. 33, Jalan Seri Putra 1/2,                     3 storey        Freehold           2,235        Vacant         6              390          19-Apr-1999
Bandar Seri Putra, Bangi,                       shop office                          sq. ft.
43000 Kajang, Selangor

Parcel No. 1 Storey No. 23,                     Apartment         Freehold            700         Vacant         8              100          9-Nov-1998
Block No. B, Desa Bistari Phase II,                                                  sq. ft.
Lot No. 147, Sec DTL, Mukim 13,
District of North East Penang

Unit 6-8-1, Storey No.8, Building No.6,         Residential       99 years           1,400        Vacant         7              250          12-Sep-1999
Cloud View Tower Condo,                        condominium       leasehold           sq. ft.
Lorong Jintan Tiga,                                               expiring
Taman Supreme Cheras,                                            Apr 2076
Kuala Lumpur

Prangin Mall Komtar,                              Shoplot         Freehold            405         Vacant          -             200          20-Jul-2001
Parcel 1-30, 1st Floor, Penang                                                       sq. ft.

3 Jalan 241, Section 51A,                     Semi-detached        99 years         59,595      Rented out       21            7,000         15-Oct-1984
Petaling Jaya, Selangor                         office and        leasehold          sq.ft.
                                                warehouse          expiring
                                                                 9 Aug 2072

43, Jln Jejarum 2,                           Single storey light Freehold             186         Vacant         8               95          29-Mar-1999
Section BB9,                                 industrial terrace                     sq. mtr.
Bandar Bukit Beruntung ,                           factory
48300 Rawang

No. 23 Jln Berlian 3,                         2 storey shoplot    Freehold           1,540        Vacant         5              160          25-Mar-1999
Taman Rengam Jaya,                                                                   sq. ft.
86200 Simpang Rengam

No 43, Lorong Mutiara Galla 1/1,              2 storey shoplot    Freehold           1,400        Vacant         5              180          11-Mar-1999
Taman Mutiara Galla,                                                                 sq. ft.
Seremban, Negeri Sembilan

No. 24 Jln Gunung 4,                          4 storey shoplot    Freehold           1,920        Vacant         6              410          3-Sep-1998
Taman Seri Alam,                                                                     sq. ft.
81750 Masai Johor




                                   Sunway Holdings Incorporated Berhad        193   annual report ‘06
LIST OF PROPERTIES HELD
AS AT 30 JUNE 2006 (CONT’D)


                                                                                                                    Approximate
                                                                                                                       age of     Net book value
                                                                                   Site / Floor      Existing        Building     as at 30.6.2006      Date of
Location / Address                                Description        Tenure            area            use            (Years)         RM’000         acquisition


18 Jalan Kasturi 3, Plaza Kasturi,              4 storey shoplot     99 years          11,827         Vacant            8             1,080         10-Feb-1998
Off Jalan Balakong Batu 11,                                         leasehold           sq. ft.
43200 Cheras,                                                        expiring
Selangor Darul Ehsan                                               27 Oct 2093

20 Jalan Kasturi 3, Plaza Kasturi,              4 storey shoplot     99 years          11,827         Vacant            8             1,080         10-Feb-1998
Off Jalan Balakong Batu 11,                                         leasehold           sq. ft.
43200 Cheras,                                                        expiring
Selangor Darul Ehsan                                               27 Oct 2093

28 Jalan Kasturi 3, Plaza Kasturi,              4 storey shoplot     99 years          11,165         Vacant            8             1,050         10-Feb-1998
Off Jalan Balakong Batu 11,                                         leasehold           sq. ft.
43200 Cheras,                                                        expiring
Selangor Darul Ehsan                                               27 Oct 2093

B4-1-2 Block 4,                                   Residential       Freehold            1,141       Rented out          9              150          23-Jul-1998
Evergreen Park Kondo,                            condominium                            sq. ft.
Bandar Sungai Long,
43000 Cheras,
Selangor Darul Ehsan

Unit 35-14-01,                                    Residential       Leasehold           7,579         Vacant            10             674          30-Nov-1995
Sri Kemunchak Condominium,                       condominium         99 years           sq. ft.
Jalan Tengku Ampuan Rahimah,                                         expiring
9/20, Section 9,                                                   29 Aug 2094
40100 Shah Alam, Selangor Darul Ehsan

Unit 36-14-01,                                    Residential       Leasehold           7,579         Vacant            10             674          30-Nov-1995
Sri Kemunchak Condominium,                       condominium         99 years           sq. ft.
Jalan Tengku Ampuan Rahimah,                                         expiring
9/20, Section 9,                                                   29 Aug 2094
40100 Shah Alam, Selangor Darul Ehsan

Plaza Masalam,                                    16 storey         Leasehold          109,022 Office/rented out/       10            20,450        30-Dec-1995
No 2, Jalan Tengku Ampuan Zabedah E9/E,          office tower        99 years           sq. ft.      vacant
40100 Shah Alam, Selangor Darul Ehsan                                expiring
                                                                   29 Aug 2094

Wisma Masalam,                                     20 storey        Leasehold          158,008     Rented out/          10            46,000        2-Sep-1995
Lot 1, Jalan Tengku Ampuan Zabedah C 9/C,       office building      99 years           sq. ft.      vacant
Section 9, 40100 Shah Alam,                                          expiring
Selangor Darul Ehsan                                               29 Aug 2094

Plaza Shah Alam,                                    4 storey         99 years          145,000    Shopping mall         10            42,836        31-Dec-1995
No. 2, Jalan Tengku Ampuan Zabedah E9/E,         shopping mall      leasehold           sq. ft.
40100 Shah Alam, Selangor Darul Ehsan                                expiring
                                                                   29 Aug 2094

Geran No 28698, Lot 1858,                          Land for         Freehold             100      Future property        -            13,300        25-Jan-1996
Mukim Serendah, District of Hulu Selangor,       development                            acres      development
Selangor Darul Ehsan




                                     Sunway Holdings Incorporated Berhad         194   annual report ‘06
RECURRENT RELATED
PARTY TRANSACTIONS

Pursuant to Chapter 10, Paragraph 10.09(1)(b) of the Listing Requirements of Bursa Malaysia Securities Berhad, the details
of the Recurrent Related Party Transactions of a revenue or trading nature of SunInc Group with values exceeding RM1
million, conducted pursuant to the Shareholders' Mandate during the financial period ended 30 June 2006 are as follows:-



      Classes of Mandated                           Nature of Transactions                        Purchases          Sales
         Related Parties                                                                           RM'000           RM'000

    (a) SunInfra Group             - Construction of highways, roads and tolls including                  -          18,003
                                     infrastructure work.


    (b) SunCity Group              - Contract works*.                                                    -          363,984
                                   - Hospitality, travel, recreational club facilities, time         1,504                -
                                     sharing services and medical related services.
                                   - Rental of office space/premises and properties^,                5,192                  -
                                     office equipment, motor vehicles, plant & machineries
                                     and other related services.
                                   - Management services.                                            1,819            1,335

    (c) Sunway Technology          - Computer products, software support, maintenance                1,530                  -
        Sdn Bhd Group                and consultancy services for IT software and
                                     hardware.

    (d) Sungei Way                 - Advertising and related services.                               1,503                  -
        Corporation Sdn Bhd
        Group



NOTES:
*  Include construction of civil & building works, contracting in mechanical, electrical & engineering works, prefabricated
   construction of building & civil works, precast concrete building contracts and piling contracts.
^      The addresses/locations of the office space/premises and properties are Lot 1157 Off Jalan SS13/8, Subang Jaya Industrial
       Estate, 47500 Petaling Jaya, Selangor; Menara Annexe and Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150
       Petaling Jaya, Selangor; Lot 656, Jalan Subang 1, Persiaran Subang, Petaling Jaya, Selangor; HS(D) 23567 PT Lot 9315,
       Mukim Damansara, Jalan PJS 11/26, Bandar Sunway, Petaling Jaya, Selangor and Jalan PJS 7/16, Bandar Sunway,
       46150 Petaling Jaya, Selangor.




      Classes of Mandated                      Provision of Financial Assistance                                    RM'000
         Related Parties

    (a) SunCity Group              Provision of guarantee, indemnity or such other collateral to or in favour        26,908
                                   of another person which is necessary in order to procure a contract or
                                   secure work from the other person to commence and/or complete a
                                   contract or work for the SunInc Group.

    (b) SunCity Group              Provision of leasing and hire purchase facilities.                                 8,166




                            Sunway Holdings Incorporated Berhad   195   annual report ‘06
RECURRENT RELATED
PARTY TRANSACTIONS                                                        (CONT’D)


Relationship of Related Parties with SunInc Group

(a)   SunInfra Group

      Tan Sri Dato' Seri (Dr) Cheah Fook Ling and Dato' Tan Kia Loke are Directors of SunInc Group and SunInfra Group.
      Dato' Tan Kia Loke is a shareholder of SunInc and SunInfra. Tan Sri Dato' Seri (Dr) Cheah Fook Ling has direct and
      deemed interests in SunInc and SunInfra via corporations where he has more than 15% shareholding. Puan Sri Datin
      Seri (Dr) Susan Cheah Seok Cheng, the spouse of Tan Sri Dato' Seri (Dr) Cheah Fook Ling, is a Director of Sunway
      Management Sdn Bhd (a wholly-owned subsidiary of SunInc) and a shareholder of SunInc. Sarena Cheah Yean Tih
      and Evan Cheah Yean Shin, the children of Tan Sri Dato' Seri (Dr) Cheah Fook Ling, have direct and deemed interests
      in SunInc by virtue of their parents' direct and deemed interests in SunInc. SunInc is a Major Shareholder of SunInfra.

(b)   SunCity Group

      Tan Sri Dato' Seri (Dr) Cheah Fook Ling is a Director and Major Shareholder of SunInc Group and SunCity Group.
      Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng who is a Director of Sunway Management Sdn Bhd and a
      shareholder of SunInc, is also a Director of Sunway Lagoon Club Berhad (a 84% owned subsidiary of SunCity) and a
      shareholder of SunCity. Sarena Cheah Yean Tih is a Director of Sunway Lagoon Club Berhad as well as a shareholder
      of SunInc and SunCity. Evan Cheah Yean Shin is an Alternate Director of Sunway Lagoon Club Berhad and a
      shareholder of SunInc.

(c)   Sunway Technology Sdn Bhd Group

      Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng and Sarena Cheah Yean Tih are Directors of Sunway Technology
      Sdn Bhd Group. Tan Sri Dato' Seri (Dr) Cheah Fook Ling who is a Director and Major Shareholder of SunInc Group,
      has deemed interest in Sunway Technology Sdn Bhd via corporations where he has more than 15% shareholding. Puan
      Sri Datin Seri (Dr) Susan Cheah Seok Cheng has deemed interest in Sunway Technology Sdn Bhd by virtue of her
      deemed interest as well as her spouse's and child's deemed interests in Sunway Technology Sdn Bhd. Sarena Cheah
      Yean Tih has deemed interest in Sunway Technology Sdn Bhd by virtue of her deemed interest as well as her parents'
      deemed interests in Sunway Technology Sdn Bhd.

(d)   Sungei Way Corporation Sdn Bhd Group

      Tan Sri Dato' Seri (Dr) Cheah Fook Ling and Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng have deemed
      interests in Sungei Way Corporation Sdn Bhd via corporations where they have more than 15% shareholdings. Sarena
      Cheah Yean Tih is a Director of Sungei Way Corporation Sdn Bhd Group and she has deemed interest in Sungei Way
      Corporation Sdn Bhd by virtue of her deemed interest as well as her parents' deemed interests in Sungei Way
      Corporation Sdn Bhd.




                          Sunway Holdings Incorporated Berhad   196   annual report ‘06
DIRECTORS’ INTERESTS IN SHARES, OPTIONS
OVER ORDINARY SHARES AND WARRANTS
AS AT 25 SEPTEMBER 2006


                                                                                             Ordinary Shares of RM1.00 each
Direct Interest                                                                                   No.                     %

Tan Sri Dato’ Seri (Dr) Cheah Fook Ling                                                      5,702,094                  1.06
Dato’ Chew Chee Kin                                                                            910,000                  0.17
Yau Kok Seng                                                                                   690,000                  0.13
Mark Victor Rozario                                                                             20,000                     #
Dato’ Tan Kia Loke                                                                             275,000                  0.05
Kwan Foh Kwai                                                                                  660,000                  0.12
Wong Chin Mun                                                                                   10,000                     #
Datuk Abdul Malek Bin Abdul Aziz                                                                 3,000                     #

Deemed Interest

Tan Sri Dato’ Seri (Dr) Cheah Fook Ling1                                                  221,278,677                  40.95
Dato’ Chew Chee Kin2                                                                          450,000                   0.08


                                                                                 Options over Ordinary Shares of RM1.00 each
Direct Interest                                                                                                          No.

Tan Sri Dato’ Seri (Dr) Cheah Fook Ling                                                                           2,500,000
Dato’ Chew Chee Kin                                                                                               1,000,000
Yau Kok Seng                                                                                                      1,000,000
Mark Victor Rozario                                                                                                 700,000
Dato’ Tan Kia Loke                                                                                                1,000,000


                                                                                                         Warrants 2004/2008
Direct Interest                                                                                   No.                     %

Tan Sri Dato’ Seri (Dr) Cheah Fook Ling                                                      2,870,732                  1.46
Mark Victor Rozario                                                                            102,000                  0.05
Dato’ Tan Kia Loke                                                                             446,455                  0.23
Wong Chin Mun                                                                                    3,500                     #
Datuk Abdul Malek Bin Abdul Aziz                                                                 1,050                     #

Deemed Interest

Tan Sri Dato’ Seri (Dr) Cheah Fook Ling3                                                   85,706,407                  43.51


By virtue of Tan Sri Dato’ Seri (Dr) Cheah Fook Ling’s substantial interest in the shares of SunInc, he is also deemed to have
a substantial interest in shares of the subsidiaries of SunInc to the extent SunInc has an interest.


NOTES:
1  Deemed interest by virtue of his substantial shareholdings in Active Equity Sdn Bhd, Timah Dunia Dredging Sdn Bhd and
   Sungei Way Corporation Sdn Bhd pursuant to Section 6A of the Companies Act, 1965 and him being associated to his
   spouse and children
2    Deemed interest by virtue of him being associated to his spouse
3    Deemed interest by virtue of his substantial shareholdings in Active Equity Sdn Bhd, Timah Dunia Dredging Sdn Bhd and
     Sungei Way Corporation Sdn Bhd pursuant to Section 6A of the Companies Act, 1965 and him being associated to his
     children
#    Negligible




                          Sunway Holdings Incorporated Berhad   197   annual report ‘06
ANALYSIS OF SHAREHOLDINGS
AS AT 25 SEPTEMBER 2006


Authorised Share Capital            -   RM1,000,000,000
Issued and Paid-up Share Capital    -   RM540,366,879
Class of Shares                     -   Ordinary Shares of RM1.00 each
Voting Rights                       -   One vote per share

DISTRIBUTION OF SHAREHOLDINGS

                                                          No. of                  % of          No. of            % of
Size of Shareholdings                                  Shareholders           Shareholders    Shares Held     Shareholdings

Less than 100                                                    171                   1.43         4,976             0.00
100 - 1,000                                                    3,992                  33.41     3,857,587             0.71
1,001 - 10,000                                                 5,945                  49.75    26,074,524             4.83
10,001 - 100,000                                               1,578                  13.21    49,215,896             9.11
100,001 - 27,018,343 (Less than 5% of issued shares)             260                   2.18   214,839,503            39.76
27,018,344 (5%) and above                                          2                   0.02   246,374,393            45.59
                                                           11,948                    100.00   540,366,879           100.00



THIRTY LARGEST SHAREHOLDERS AS PER RECORD OF DEPOSITORS

     Name of Shareholders                                       Name of Beneficial Owners           No. of Shares        %

1    Sungei Way Corporation Sdn Bhd                                              -                   207,766,193     38.45

2    Employees Provident Fund Board                                              -                    38,608,200      7.15

3    Oriental Dragon Enterprises Inc.                                            -                    11,125,500      2.06

4    Citigroup Nominees (Tempatan) Sdn Bhd                       Employees Provident Fund             11,000,000      2.04
     - CMS Dresdner Asset Management Sdn Bhd

5    Teng Yew Huat                                                               -                     9,985,000      1.85

6    Sharp Ventures Sdn Bhd                                                      -                     9,875,200      1.83

7    Cimsec Nominees (Tempatan) Sdn Bhd                                   Oh Kim Sun                   9,648,500      1.79
     - CIMB

8    Malaysia Nominees (Tempatan) Sdn Bhd          Great Eastern Life Assurance (Malaysia) Berhad 9,498,300           1.76

9    ABB Nominee (Tempatan) Sdn Bhd                        Sungei Way Corporation Sdn Bhd              8,500,000      1.57

10   Lembaga Tabung Haji                                                         -                     7,958,700      1.47

11   Amanah Raya Nominees (Tempatan) Sdn Bhd                   Sekim Amanah Saham Nasional             7,351,500      1.36

12   Cimsec Nominees (Tempatan) Sdn Bhd                               Dato’ Lim Say Chong              5,434,500      1.01
     - CIMB

13   HSBC Nominees (Tempatan) Sdn Bhd                                  CMS Premier Fund                5,000,000      0.93
     - HSBC (Malaysia) Trustee Bhd

14   Citigroup Nominees (Tempatan) Sdn Bhd               Prudential Assurance Malaysia Berhad          4,362,900      0.81
     - Exempt AN

15   Citigroup Nominees (Asing) Sdn Bhd                        DFA Emerging Markets Fund               3,973,600      0.74
     - CBNY




                         Sunway Holdings Incorporated Berhad    198   annual report ‘06
ANALYSIS OF SHAREHOLDINGS
AS AT 25 SEPTEMBER 2006 (CONT’D)


THIRTY LARGEST SHAREHOLDERS AS PER RECORD OF DEPOSITORS (cont’d)

     Name of Shareholders                                       Name of Beneficial Owners          No. of Shares           %

16   Pertubuhan Keselamatan Sosial                                              -                      3,863,500        0.72

17   HSBC Nominees (Tempatan) Sdn Bhd                  Tan Sri Dato’ Seri (Dr) Cheah Fook Ling         3,264,506        0.60

18   AMMB Nominees (Tempatan) Sdn Bhd                     Tenaga Nasional Berhad Retirement            3,000,000        0.56
     - CMS Dresdner Asset Management Sdn Bhd                      Benefit Trust Fund

19   HSBC Nominees (Tempatan) Sdn Bhd                            Amanah Saham Sarawak                  2,745,600        0.51
     - HSBC (Malaysia) Trustee Bhd

20   Citigroup Nominees (Asing) Sdn Bhd                              Kenno Hayashi Ltd                 2,723,000        0.50
     - UBS AG Singapore

21   PB Securities Nominees (Asing) Sdn Bhd                     Jefferson Agencies Limited             2,700,000        0.50
     - JCG Securities Limited

22   HSBC Nominees (Tempatan) Sdn Bhd                                    Oh Kim Sun                    2,127,900        0.39

23   Citigroup Nominees (Asing) Sdn Bhd                DFA Emerging Markets Small Cap Series           2,059,000        0.38
     - CBNY

24   HSBC Nominees (Tempatan) Sdn Bhd                      Sungei Way Corporation Sdn Bhd              2,000,000        0.37

25   HLB Nominees (Tempatan) Sdn Bhd                                       Lau Kwai                    2,000,000        0.37

26   SBB Nominees (Tempatan) Sdn Bhd                       Employees Provident Fund Board              2,000,000        0.37

27   Wistaria Holdings Sdn Bhd                                                  -                      1,974,000        0.37

28   CIMB Nominees (Tempatan) Sdn Bhd                            CIMB Sharetech Sdn Bhd                1,855,000        0.34

29   HDM Nominees (Tempatan) Sdn Bhd                                       Lau Kwai                    1,750,000        0.32

30   AM Nominees (Tempatan) Sdn Bhd                            Pertubuhan Keselamatan Sosial           1,643,000        0.30


SUBSTANTIAL SHAREHOLDERS

     Name of Shareholders                                                                          No. of Shares           %

1    Tan Sri Dato’ Seri (Dr) Cheah Fook Ling
     - Direct interest                                                                                5,702,094         1.06
     - Deemed interest #a                                                                           221,278,677        40.95
2    Sungei Way Corporation Sdn Bhd                                                                 219,875,393        40.70
3    Timah Dunia Dredging Sdn Bhd #b                                                                219,875,393        40.70
4    Active Equity Sdn Bhd #c                                                                       219,875,393        40.70
5    Employees Provident Fund Board                                                                  52,574,700         9.73

NOTES:
#a Deemed interest by virtue of his substantial shareholdings in Active Equity Sdn Bhd, Timah Dunia Dredging Sdn Bhd and
   Sungei Way Corporation Sdn Bhd pursuant to Section 6A of the Companies Act, 1965 and him being associated to his
   spouse and children
#b   Deemed interest by virtue of its substantial shareholding in Sungei Way Corporation Sdn Bhd pursuant to Section 6A of the
     Companies Act, 1965
#c   Deemed interest by virtue of its substantial shareholding in Timah Dunia Dredging Sdn Bhd and Sungei Way Corporation
     Sdn Bhd pursuant to Section 6A of the Companies Act, 1965

                         Sunway Holdings Incorporated Berhad   199   annual report ‘06
ANALYSIS OF WARRANTHOLDINGS
AS AT 25 SEPTEMBER 2006


DISTRIBUTION OF WARRANTHOLDINGS

                                                          No. of                 % of             No. of             % of
Size of Warrantholdings                               Warrantholders         Warrantholders    Warrants Held    Warrantholdings

Less than 100                                                 467                     10.58          18,706              0.01
100 - 1,000                                                 1,095                     24.80         604,783              0.31
1,001 - 10,000                                              1,741                     39.43       6,967,753              3.54
10,001 - 100,000                                              932                     21.11      33,372,907             16.94
100,001 - 9,849,431 (Less than 5% of warrants in issue)       179                      4.06      72,578,573             36.84
9,849,432 (5%) and above                                        1                      0.02      83,445,921             42.36
                                                            4,415                 100.00        196,988,643         100.00


THIRTY LARGEST WARRANTHOLDERS AS PER RECORD OF DEPOSITORS

      Name of Warrantholders                                     Name of Beneficial Owners          No. of Warrants             %

1     Sungei Way Corporation Sdn Bhd                                              -                     83,445,921         42.36

2     Oriental Dragon Enterprises Inc.                                            -                      5,224,700          2.65

3     Sungei Way Corporation Sdn Bhd                                              -                      4,455,686          2.26

4     Cimsec Nominees (Tempatan) Sdn Bhd                                   Oh Kim Sun                    3,348,075          1.70
      - CIMB

5     Tay Teck Ho                                                                 -                      3,100,000          1.57

6     ABB Nominee (Tempatan) Sdn Bhd                         Sungei Way Corporation Sdn Bhd              2,975,000          1.51

7     Cimsec Nominees (Tempatan) Sdn Bhd                               Dato’ Lim Say Chong               1,902,075          0.97
      - CIMB

8     Sharp Ventures Sdn Bhd                                                      -                      1,605,000          0.81

9     Wong Soo See                                                                -                      1,600,000          0.81

10    Citigroup Nominees (Tempatan) Sdn Bhd                Prudential Assurance Malaysia Berhad          1,527,015          0.78
      - Exempt AN

11    A.A. Assets Nominees (Tempatan) Sdn Bhd                              Tai Eng Huat                  1,400,000          0.71

12    Tan Peng Nguang                                                             -                      1,397,100          0.71

13    HSBC Nominees (Tempatan) Sdn Bhd                    Tan Sri Dato’ Seri (Dr) Cheah Fook Ling        1,142,577          0.58

14    Tan Tee Heong                                                               -                      1,129,500          0.57

15    Cimsec Nominees (Tempatan) Sdn Bhd                                  Lim Guat Kee                   1,100,000          0.56
      - CIMB Bank

16    TA Nominees (Tempatan) Sdn Bhd                                       Liew Yam Fee                  1,000,000          0.51

17    PB Securities Nominees (Asing) Sdn Bhd                      Jefferson Agencies Limited                  945,000       0.48
      - JCG Securities Limited

18    Mayban Securities Nominees (Tempatan) Sdn Bhd                      San Chin Choon                       905,000       0.46




                           Sunway Holdings Incorporated Berhad   200   annual report ‘06
ANALYSIS OF WARRANTHOLDINGS
AS AT 25 SEPTEMBER 2006 (CONT’D)


THIRTY LARGEST WARRANTHOLDERS AS PER RECORD OF DEPOSITORS (cont’d)

     Name of Warrantholders                                   Name of Beneficial Owners     No. of Warrants     %

19   Tan Sri Dato’ Seri (Dr) Cheah Fook Ling                                    -                  878,500    0.45

20   Cheong Teng Why                                                            -                  870,000    0.44

21   HDM Nominees (Tempatan) Sdn Bhd                                  Wong Chung Ming              817,995    0.42

22   Tan Wee Seng                                                               -                  800,000    0.41

23   HSBC Nominees (Tempatan) Sdn Bhd                     Sungei Way Corporation Sdn Bhd           700,000    0.36

24   Wistaria Holdings Sdn Bhd                                                  -                  690,900    0.35

25   HDM Nominees (Tempatan) Sdn Bhd                                     Tai Yam Kooi              600,000    0.30

26   Tan Pak Nang                                                               -                  550,000    0.28

27   Mak Ngia Ngia @ Mak Yoke Lum                                               -                  525,200    0.27

28   Tan Sri Dato’ Seri (Dr) Cheah Fook Ling                                    -                  525,000    0.27

29   Malacca Equity Nominees (Tempatan) Sdn Bhd                         Ho Kok Kiang               500,000    0.25

30   SJ Securities Nominees (Tempatan) Sdn Bhd                      Michael Lee Fook Soon          500,000    0.25




                        Sunway Holdings Incorporated Berhad   201    annual report ‘06
NOTICE OF 28TH
ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the 28th Annual General Meeting of SUNWAY HOLDINGS INCORPORATED
BERHAD (37465-A) will be held at Grand Caymans, Level 10, Sunway Resort Hotel & Spa, Persiaran Lagoon, Bandar
Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan on Thursday, 30 November 2006 at 4.30 p.m. for the following
purposes:-

AS ORDINARY BUSINESS

1.   To receive the Audited Financial Statements for the financial period ended 30 June
     2006 together with the Directors' and Auditors' Reports thereon.                         (Ordinary Resolution 1)

2.   To approve the payment of Directors' fees amounting to RM84,000 for the
     financial period ended 30 June 2006.                                                     (Ordinary Resolution 2)

3.   To re-elect the following Directors:-

     3.1     Dato' Chew Chee Kin retires by rotation pursuant to Article 114 of the
             Company's Articles of Association and being eligible, offers himself for
             re-election.                                                                     (Ordinary Resolution 3)

     3.2     Wong Chin Mun retires by rotation pursuant to Article 114 of the Company's
             Articles of Association and being eligible, offers himself for re-election.      (Ordinary Resolution 4)

     3.3     Datuk Low Seng Kuan retires by rotation pursuant to Article 114 of the
             Company's Articles of Association and being eligible, offers himself for
             re-election.                                                                     (Ordinary Resolution 5)

     3.4     Datuk Abdul Malek Bin Abdul Aziz retires pursuant to Article 120 of the
             Company's Articles of Association and being eligible, offers himself for
             re-election.                                                                     (Ordinary Resolution 6)

4.   To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company for the
     ensuing year and to authorise the Directors to fix their remuneration.                   (Ordinary Resolution 7)

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following Resolutions:-

5.   ORDINARY RESOLUTION:
     Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965

     "THAT subject always to the Companies Act, 1965, the Company's Articles of
     Association and the approvals of the relevant government and/or regulatory
     authorities, the Directors be and are hereby authorised pursuant to Section 132D of
     the Companies Act, 1965 to allot and issue not more than ten per cent (10%) of the
     issued share capital of the Company at any time upon such terms and conditions and
     for such purposes as the Directors in their absolute discretion deem fit and that the
     Directors be and are also empowered to obtain the approval from Bursa Malaysia
     Securities Berhad for the listing of and quotation for the additional shares so issued
     and that such authority shall continue to be in force until the conclusion of the next
     Annual General Meeting of the Company."                                                  (Ordinary Resolution 8)




                          Sunway Holdings Incorporated Berhad   202   annual report ‘06
NOTICE OF 28TH
ANNUAL GENERAL MEETING                                                                    (CONT’D)


6.   ORDINARY RESOLUTION:
     Proposed Shareholders' Ratification and Shareholders' Mandate for Recurrent
     Related Party Transactions of a Revenue or Trading Nature

     "THAT all the recurrent related party transactions entered into by the Company and
     its subsidiaries from 29 September 2006 to the date of this 28th Annual General
     Meeting ("AGM") as set out in Section 2D of the Circular to Shareholders dated 8
     November 2006 which were necessary for the day-to-day operations and carried out
     in the ordinary course of business on terms not more favourable to the related parties
     than those generally available to the public and are not detrimental to the minority
     shareholders of the Company, be and are hereby approved and ratified.

     THAT approval be and is hereby given to the Company and its subsidiaries to enter
     into recurrent related party transactions from time to time, which are necessary for
     the day-to-day operations as set out in Section 2D of the Circular to Shareholders
     dated 8 November 2006 which are of a revenue or trading nature and carried out in
     the ordinary course of business and are on terms not more favourable to the related
     parties than those generally available to the public and are not detrimental to the
     minority shareholders of the Company, subject to the compliance with the Listing
     Requirements of Bursa Malaysia Securities Berhad, Companies Act, 1965 ("the Act"),
     the Company's Memorandum and Articles of Association and all other applicable
     laws, guidelines, rules and regulations.

     THAT such authority shall commence upon the passing of this resolution and shall
     continue to be in force until:-

     (a)    the conclusion of the next AGM of the Company to be held in 2007 at which
            time the mandate will lapse, unless by a resolution passed at the next AGM,
            the mandate is renewed; or

     (b)    the expiration of the period within which the next AGM of the Company is
            required to be held pursuant to Section 143(1) of the Act (but shall not
            extend to such extension as may be allowed pursuant to Section 143(2) of the
            Act); or

     (c)    revoked or varied by resolution passed by the shareholders in general meeting,

     whichever is the earlier.

     THAT authority be and is hereby given to the Directors of the Company to complete
     and do all such acts and things (including executing such documents as may be
     required) to give effect to the transactions contemplated and/or authorised by this
     Ordinary Resolution."                                                                           (Ordinary Resolution 9)

7.   ORDINARY RESOLUTION:
     Proposed Authority for the Purchase of Own Shares by the Company

     "THAT subject to the Companies Act, 1965 ("the Act"), rules, regulations and orders
     made pursuant to the Act, provisions of the Company's Memorandum and Articles
     of Association, the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa
     Securities") and any other relevant authorities, the Company be and is hereby
     authorised to purchase such amount of ordinary shares of RM1.00 each in the
     Company as may be determined by the Directors of the Company from time to time
     through Bursa Securities upon such terms and conditions as the Directors may deem
     fit and expedient in the interest of the Company PROVIDED THAT:-




                          Sunway Holdings Incorporated Berhad   203   annual report ‘06
NOTICE OF 28TH
ANNUAL GENERAL MEETING                                                                    (CONT’D)


     (a)    the aggregate number of ordinary shares of RM1.00 each in the Company
            ("SunInc Shares") which may be purchased and/or held by the Company shall
            not exceed ten per cent (10%) of the issued and paid-up share capital of the
            Company at any point of time, subject to a restriction that the issued and
            paid-up share capital of the Company does not fall below the applicable
            minimum share capital requirements of the Listing Requirements of Bursa
            Securities;

     (b)    the maximum funds to be allocated by the Company for the purpose of
            purchasing the SunInc Shares shall not exceed the Company's audited
            retained profits and/or share premium account at any point of time;

     (c)    the authority conferred by this resolution will commence immediately upon
            passing of this ordinary resolution and will continue to be in force until:-

            (i)   the conclusion of the next Annual General Meeting ("AGM") at which
                  time it shall lapse unless by ordinary resolution passed at the meeting,
                  the authority is renewed, either unconditionally or subject to conditions;
                  or

            (ii) the expiration of the period within which the next AGM after that date
                 is required by law to be held; or

            (iii) revoked or varied by ordinary resolution passed by the shareholders of
                  the Company in a general meeting,

            whichever occurs first; and

     (d)    upon completion of the purchase(s) of the SunInc Shares by the Company,
            the Directors of the Company be and are hereby authorised to cancel the
            SunInc Shares so purchased or to retain the SunInc Shares so purchased as
            treasury shares (of which may be distributed as dividends to shareholders
            and/or resold on Bursa Securities and/or subsequently cancelled), or to retain
            part of the SunInc Shares so purchased as treasury shares and cancel the
            remainder and in any other manner as prescribed by the Act, rules, regulations
            and orders made pursuant to the Act, the Listing Requirements of Bursa
            Securities and any other relevant authorities for the time being in force.

     AND THAT the Directors of the Company be and are hereby authorised to take all
     such steps as are necessary or expedient to implement, finalise or to effect the
     purchase(s) of the SunInc Shares with full powers to assent to any conditions,
     modifications, variations and/or amendments as may be required or imposed by the
     relevant authorities and to do all such acts and things (including executing all
     documents) as the Directors may deem fit and expedient in the best interest of the
     Company."                                                                                       (Ordinary Resolution 10)

8.   SPECIAL RESOLUTION:
     Proposed Amendment to Article 106(g) of the Company's Articles of Association

     "THAT the existing Article 106(g) of the Company's Articles of Association which
     states that "if he is absent for more than fifty per cent (50%) of the total Board of
     Directors' meetings held during a financial year of the Company" be hereby amended
     (as highlighted in bold below) and Article 106 shall now read as follows:-




                          Sunway Holdings Incorporated Berhad   204   annual report ‘06
NOTICE OF 28TH
ANNUAL GENERAL MEETING                                                                     (CONT’D)


      Article 106
      The office of Director shall be vacated:-

      (a)    if he becomes a bankrupt, or he makes any arrangement or composition with
             his creditors generally;

      (b)    if he is found lunatic or becomes of unsound mind;

      (c)    if he ceases to hold the number of shares required to qualify him for office or
             does not acquire the same within two (2) months after election or
             appointment;

      (d)    if by notice in writing to the Company he resigns his office;

      (e)    if he ceases to be a director by virtue of the Act;

      (f)    if he becomes prohibited from being a Director by reason of any order made
             under the Act; or

      (g)    if he is absent from more than fifty per cent (50%) of the total Board of
             Directors' Meetings held during a financial year of the Company PROVIDED
             THAT the Exchange may, on application by the Company, allow such
             Director to continue holding his office on such circumstances as may be
             approved by the Exchange."                                                                  (Special Resolution 1)


By Order of the Board


PUAN SRI DATIN SERI (DR) SUSAN CHEAH SEOK CHENG (MIA 5601)
TAN KIM AUN (MAICSA 7002988)
LEE SUAN CHOO (MAICSA 7017562)
Company Secretaries

Petaling Jaya
8 November 2006


NOTES:
1. A member of the Company entitled to attend and vote, is entitled to appoint a proxy or proxies to attend and vote in his
   stead. A proxy need not be a member of the Company.
2. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in
   writing, or if the appointer is a corporation, either under the corporation's seal, or under the hand of an officer or attorney
   duly authorised.
3. If a member appoints 2 proxies, the appointment will be invalid unless he states the percentage of his shareholding to be
   represented by each proxy.
4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 16, Menara Sunway,
   Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than 48 hours before
   the time appointed for holding the meeting or any adjournment thereof, either by hand, post, electronic mail or fax to 03-
   5639 9507. In the case where the member is a corporation and the proxy form is delivered by fax or electronic mail, the
   original form shall also be deposited at the Registered Office, either by hand or post not less than 48 hours before the time
   appointed for holding the meeting or any adjournment thereof.




                           Sunway Holdings Incorporated Berhad   205   annual report ‘06
NOTICE OF 28TH
ANNUAL GENERAL MEETING                                                                   (CONT’D)


EXPLANATORY NOTES ON SPECIAL BUSINESS:

1.   Ordinary Resolution 8 - Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965

     The Company is always on the look out for investment opportunities to enhance the earnings potential of the
     Company. If any investment opportunities involve the issue of new shares, the Directors, under present circumstances,
     would have to convene a general meeting to approve the issue of new shares even though the number involved may
     be less than ten per cent (10%) of the issued capital.

     In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus
     considered appropriate that the Directors be empowered to issue shares in the Company, up to an amount not
     exceeding in total ten per cent (10%) of the issued share capital of the Company at any time, for such purpose. This
     authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the
     Company.


2.   Ordinary Resolution 9 - Proposed Shareholders' Ratification and Shareholders' Mandate for Recurrent Related Party
     Transactions of a Revenue or Trading Nature

     The details on the proposed shareholders' ratification and shareholders' mandate for recurrent related party
     transactions of a revenue or trading nature are set out in the Circular to Shareholders dated 8 November 2006.


3.   Ordinary Resolution 10 - Proposed Authority for the Purchase of Own Shares by the Company

     The details on the proposed authority for the purchase of own shares by the Company are set out in the Circular to
     Shareholders dated 8 November 2006.


4.   Special Resolution 1 - Proposed Amendment to Article 106(g) of the Company's Articles of Association

     The proposed Special Resolution 1, if passed, will allow a Director who is absent from more than fifty per cent (50%)
     of the total Board of Directors' Meetings held during a financial year, to continue holding his office provided that
     Bursa Malaysia Securities Berhad, on application by the Company, allows such Director to continue holding his office
     on such circumstances as may be approved by Bursa Malaysia Securities Berhad, such as medical reasons.




                         Sunway Holdings Incorporated Berhad   206   annual report ‘06
STATEMENT ACCOMPANYING NOTICE
OF ANNUAL GENERAL MEETING

1.   DIRECTORS WHO ARE STANDING FOR RE-ELECTION

     (a)    Dato' Chew Chee Kin
     (b)    Wong Chin Mun
     (c)    Datuk Low Seng Kuan
     (d)    Datuk Abdul Malek Bin Abdul Aziz

     The details of the above Directors who are standing for re-election are set out on pages 24 to 27 of the Annual Report.
     Their shareholdings in the Company are set out on page 197 of the Annual Report.


2.   DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS

     Eight (8) Board Meetings were held during the financial period ended 30 June 2006. The details of attendance of the
     Directors are set out on page 43 of the Annual Report.


3.   DATE, TIME AND PLACE OF THE ANNUAL GENERAL MEETING

     Date                                                  Time                          Place

     Thursday, 30 November 2006                            4.30 p.m.                     Grand Caymans, Level 10
                                                                                         Sunway Resort Hotel & Spa
                                                                                         Persiaran Lagoon
                                                                                         Bandar Sunway
                                                                                         46150 Petaling Jaya
                                                                                         Selangor Darul Ehsan




                         Sunway Holdings Incorporated Berhad   207   annual report ‘06
                  This page is intentionally left blank.

Sunway Holdings Incorporated Berhad   208   annual report ‘06
FORM OF PROXY                                                                                                                                      SUNWAY HOLDINGS INCORPORATED
                                                                                                                                                    BERHAD (37465-A)
                                                                                                                                                   (Incorporated in Malaysia)
28th Annual General Meeting
                                                                                                                                                   Registered Office:
                                                                                                                                                   Level 16, Menara Sunway, Jalan Lagoon Timur
                                                                                                                                                   Bandar Sunway, 46150 Petaling Jaya
                                                                                                                                                   Selangor Darul Ehsan, Malaysia
                                                                                                                                                   Tel : 03-5639 8889 / 5639 8845
  Number of share(s) held                                                                                                                          Fax : 03-5639 9507
  CDS Account No.

PROXY “A”

I/We ……………….…………………….……….......................................….......…… *NRIC No./Passport No./Company No .…....….…….......………...............................
                                                     (Please use Block Letters)
of …….……………………………….……………………..................…......……..…........................................................................................................................................

being a member of SUNWAY HOLDINGS INCORPORATED BERHAD and entitled to vote hereby appoint .....………………….........................................................

*NRIC No./Passport No …….……….....….……...............…….... of ……………………………………………………………..……...………………………….........................

.................................................................................................... or failing him/her, the Chairman of the Meeting as my/our 1st proxy to attend and vote for me/us on
my/our behalf at the 28th Annual General Meeting of the Company to be held at Grand Caymans, Level 10, Sunway Resort Hotel & Spa, Persiaran Lagoon, Bandar
Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan on Thursday, 30 November 2006 at 4.30 p.m. and at any adjournment thereof.

WHERE THE MEMBER DESIRES TO APPOINT A 2ND PROXY, THIS SECTION MUST ALSO BE COMPLETED, OTHERWISE IT SHOULD BE DELETED.

PROXY “B”

I/We ……………….…………………….……….......................................….......…… *NRIC No./Passport No./Company No .…....….…….......………...............................
                                                     (Please use Block Letters)
of …….……………………………….……………………..................…......……..…........................................................................................................................................

being a member of SUNWAY HOLDINGS INCORPORATED BERHAD and entitled to vote hereby appoint .....………………….........................................................

*NRIC No./Passport No …….……….....….……...............…….... of ……………………………………………………………..……...………………………….........................

.................................................................................................... or failing him/her, the Chairman of the Meeting as my/our 2nd proxy to attend and vote for me/us on
my/our behalf at the 28th Annual General Meeting of the Company to be held at Grand Caymans, Level 10, Sunway Resort Hotel & Spa, Persiaran Lagoon, Bandar
Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan on Thursday, 30 November 2006 at 4.30 p.m. and at any adjournment thereof.

The proportions of my/our holding to be represented by my/our proxies are as follows:-

1st Proxy “A”          :   100 % (to be completed)
2nd Proxy “B”          :   100 % (to be completed)
               Total :     100 %

In case of a vote taken by a show of hands, *1st Proxy “A” / *2nd Proxy “B” shall vote on my/our behalf.

* Delete if inapplicable

My/our proxy/proxies shall vote as follows:-
(Please indicate with an “X” in the space below how you wish your votes to be cast. If no specific direction as to voting is given, the proxy/proxies will vote or abstain
from voting on the resolutions at his/their discretion)
                                                                                                                                                         1ST PROXY “A”                       2ND PROXY “B”
   NO.                                                     ORDINARY RESOLUTIONS
                                                                                                                                                       FOR            AGAINST               FOR           AGAINST
   01.         To receive the Audited Financial Statements for the financial period ended 30 June 2006 together with the
               Directors’ and Auditors’ Reports thereon
   02.         To approve the payment of Directors’ fees
               To re-elect the following Directors:-
   03.         Dato' Chew Chee Kin
   04.         Wong Chin Mun
   05.         Datuk Low Seng Kuan
   06.         Datuk Abdul Malek Bin Abdul Aziz
   07.         To re-appoint Messrs PricewaterhouseCoopers as Auditors and to authorise the Directors to fix their
               remuneration
   08.         To authorise the issue of shares pursuant to Section 132D of the Companies Act, 1965
   09.         To approve the Proposed Shareholders' Ratification and Shareholders' Mandate for Recurrent Related Party
               Transactions of a Revenue or Trading Nature
   10.         To authorise the purchase of own shares by the Company
                                                              SPECIAL RESOLUTION
   01.         To approve the Proposed Amendment to Article 106(g) of the Company's Articles of Association



Dated this …………... day of ……................……………. 2006


                                                                                                                                                                                Common
                                                                                                                                                                                  Seal


Signature of Member ………………………………………………….

NOTES:
1. A member of the Company entitled to attend and vote, is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy need not be a member of the Company.
2. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing, or if the appointer is a corporation, either under the corporation's seal, or under
   the hand of an officer or attorney duly authorised.
3. If a member appoints 2 proxies, the appointment will be invalid unless he states the percentage of his shareholding to be represented by each proxy.
4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan, Malaysia
   not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof, either by hand, post, electronic mail or fax to 03-5639 9507. In the case where the member is a corporation
   and the proxy form is delivered by fax or electronic mail, the original form shall also be deposited at the Registered Office, either by hand or post not less than 48 hours before the time appointed for holding the
   meeting or any adjournment thereof.
PLEASE FOLD HERE




                                                             STAMP



                   THE COMPANY SECRETARY
                   SUNWAY HOLDINGS INCORPORATED BERHAD (37465-A)
                   LEVEL 16, MENARA SUNWAY
                   JALAN LAGOON TIMUR
                   BANDAR SUNWAY, 46150 PETALING JAYA
                   SELANGOR DARUL EHSAN, MALAYSIA

                   TEL : 03-5639 8889 / 5639 8845
                   FAX : 03-5639 9507




PLEASE FOLD HERE
Corporate Directory
BUILDING MATERIALS DIVISION                                      PT SUNWAY-YASA PMI PILE                                                   Tawau: Lot 4, Building No. 7744, Mile 3.5, Jalan Sungai Tajong,
                                                                 Jl. Opak 10, Surabaya 60231, Jawa Timur, Indonesia                               91000 Tawau, Sabah, Malaysia
                                                                 Tel: (6231) 561 6170, 563 4285 Fax: (6231) 563 4241                              Tel: (6089) 920 437/922 134/715 070
SUNWAY KERAMO SDN BHD (205881-A)
                                                                                                                                                  Fax: (6089) 715 881
(Manufacturer Of Vitrified Clay Pipes)
                                                                 Jakarta:                                                                         E-mail: iptawau@sunway.com.my
Lot 6489 & 6490, Off 6th Mile, Jalan Kapar,
                                                                 P.P. Plaza, 2nd Floor, Jl. LetJend. TB. Simatupang,
42100 Klang, Selangor Darul Ehsan, Malaysia
                                                                 No. 57, Pasar Rebo, Jakarta, Indonesia                                    SUNWAY ARCHITECTURAL PRODUCTS SDN BHD*                   (146551-W)
Tel: (603) 3291 5288 Fax: (603) 3291 5388
                                                                 Tel: (6221) 840 3970 Fax: (6221) 840 3971                                 Main Office: Level 11. Tel: (603) 5639 9997
Website: www.sunway.com.my/sunwaykeramo/
                                                                                                                                                                  Fax: (603) 5639 9522
SUNWAY PIPEPLUS TECHNOLOGY SDN BHD                  (411837-T)   HIGHWAY PAVEMENT
                                                                                                                                           SUNWAY HYDRAULIC INDUSTRIES SDN BHD (103260-H)
(Manufacturer Of Concrete Pipes)
                                                                                                                                           Factory: No. 1- 4, Jalan SR 4/20, Serdang Raya,
Lot 6489 & 6490, Off 6th Mile, Jalan Kapar,                      SUNWAY BUILDERS SDN BHD* (285205-T)
                                                                                                                                                    43300 Sri Kembangan, Selangor Darul Ehsan, Malaysia
42100 Klang, Selangor Darul Ehsan, Malaysia                      Level 9. Tel: (603) 5639 9333 Fax: (603) 5639 9526
                                                                                                                                                    Tel: (603) 8948 2622 Fax: (603) 8948 2637
Tel: (603) 3291 5288 Fax: (603) 3291 5002
                                                                                                                                                    Website: www.sunway.com.my/sunflex
                                                                 MACHINERY / EQUIPMENT RENTAL                                                       E-mail: alanl@sunway.com.my
SUN-BLOCK SDN BHD* (77490-W)
(Manufacturer Of Eurotiles & Interlocking Concrete Pavers)       SUNWAY MACHINERY SDN BHD (389253-P)                                       SUNWAY MARKETING (S) PTE. LTD. (197501497R)
#3.2, Level 3, Menara Sunway, Jalan Lagoon Timur,                (formerly known as SWC Machinery Sdn Bhd)                                 21 Senoko Drive, Singapore 758208
Bandar Sunway, 46150 Petaling Jaya,                              Lot 656, Jalan Subang-2, Off Persiaran Subang,                            Tel: (02) 6758 5454 Fax: (02) 6257 8759
Selangor Darul Ehsan, Malaysia                                   47500 Petaling Jaya, Selangor Darul Ehsan, Malaysia                       E-mail: ipsales@sunway.com.my
                                                                 Tel: (603) 5633 6499 Fax: (603) 5631 2387
KL Sales Office: Tel: (603) 5639 8282 (General Line)
                                                                                                                                           SUNWAY MARKETING (THAILAND) LTD.
                 Fax: (603) 5639 9600 (Sales)
                                                                 MARBLE AND GRANITE                                                        53/8 Moo 8 Prayasurane Road, Samwatawantok, Klongsamwa,
                                                                                                                                           Bangkok 10510, Thailand
SUNWAY BUILDING MATERIALS (SHANGHAI) CO. LTD.                                                                                              Tel: (662) 908 0818 Fax: (662) 908 0810
No. 3 Hangtou Road, Damaiwan Industrial Park Hangtou,            SUNWAY CREATIVE STONES SDN BHD (429140-M)
                                                                 Lot 3798, Jalan 3D, Subang New Village,                                   E-mail: ipsales@sunway.com.my
Nanhui, Shanghai, China
Zip: 201316                                                      40150 Shah Alam, Selangor Darul Ehsan, Malaysia
                                                                 Tel: (603) 7846 7662 (Hunting line) Fax: (603) 7846 7708                  SUNWAY MARKETING (THAILAND) LTD. - Rayong Branch
Tel: (8621) 6822 1118 Fax: (8621) 6822 1113                                                                                                267/107 Sukhumvit Road, Mabtapud, Muang Rayong,
                                                                 Website: www.creative-stone.com.my
                                                                                                                                           Rayong 21150, Thailand
SUNWAY BUILDING MATERIALS (DONGGUAN) CO. LTD.                                                                                              Tel: (663) 860 8426-8 Fax: (663) 860 8425
Chajiao Industrial Park, Yuanzhou District, Zhongtang Town,      MECHANICAL AND ELECTRICAL                                                 E-mail: ipsales@sunway.com.my
Dongguan City, Guangdong, China
                                                                 ENGINEERING AND SMARTHOMES
                                                                                                                                           PT SUNWAY MARKETING INDONESIA
SUNGEI WAY OCEAN JOINT-VENTURE LTD.                                                                                                        Kawasan Pergudangan Mutiara Kosambi 1,
                                                                 SUNWAY ENGINEERING SDN BHD* (341887-W)
(Quarrying)                                                                                                                                Blok C-5/7 Kelurahan Kosambi Timur,
                                                                 Level 9. Tel: (603) 5639 9999 Fax: (603) 5639 9531
Nui Dinh Quarry, Long Huang Village, Ba Ria Town,                                                                                          Tangerang Propinsi Banten, Jakarta 15211, Indonesia
Ba Ria-Vung Tau Province, Vietnam                                                                                                          Tel: (6221) 5595 5445/5446 Fax: (6221) 5595 5447
Tel: (84-64) 828 079 Fax: (84-64) 827 889                        PRECAST PRODUCTS AND
                                                                 INDUSTRALIZED SYSTEMS                                                     PT TREK MASINDO - Jakarta Branch
SUNWAY HATAY CONSTRUCTION & BUILDING MATERI-                                                                                               Kawasan Pergudangan Mutiara Kosambi 1,
ALS JV CO. LTD.                                                                                                                            Block C – 5/7 Kelurahan Kosambi Timur, Tangerang,
                                                                 SUNWAY PRECAST INDUSTRIES SDN BHD* (231775-X)
(Quarrying & Manufacturer Of Ready Mixed Concrete)                                                                                         Propinsi Banten, Jakarta 15211, Indonesia
                                                                 Level 8. Tel: (603) 5639 9333 Fax: (603) 5639 9529
Head Office: 17C, Ba La, Ha Dong Town, Hatay Province,                                                                                     Tel: (6221) 5595 5445/5446 Fax: (6221) 5595 5447
Vietnam                                                                                                                                    E-mail: ipsales@sunway.com.my
                                                                 Factory:
Tel: 00 (84-34) 827 298 Fax: 00 (84-34) 827 299
                                                                 Batang Kali:   Lot 2396, Seksyen 5, Mukim Batang Kali
Quarry: Xuan Mai, Hatay Province, Vietnam                                                                                                  PT TREK MASINDO - Balikpapan Branch
                                                                                Daerah Hulu Selangor, Selangor Darul Ehsan,
Tel: (84-34) 676 498 Fax: (84-34) 676 499                                                                                                  JL. M.T. Haryono Rukun Tetangga (RT) 33,
                                                                                Malaysia
                                                                                Tel: (603) 6057 2462/6057 9118                             82 Kelurahan Batu Ampar, Kecamatan Balikpapan Utara,
SUNWAY QUARRY INDUSTRIES SDN BHD (110401-A)                                                                                                76126 Indonesia
                                                                                Fax: (603) 6057 9117
7, Jalan PJS 9/5, Bandar Sunway, 46150 Petaling Jaya,                                                                                      Tel: (62) 542 861 457 / 542 7020 587/ 542 7020 589
Selangor Darul Ehsan, Malaysia                                                                                                             Fax: (62) 542 861 458
Tel: (603) 5621 5035 Fax: (603) 5621 4596                        SUNWAY CONCRETE PRODUCTS (S) PTE LTD                   (199409213Z)
                                                                                                                                           E-mail: ipsales@sunway.com.my
                                                                 4, Tampines Industrial Street 62, Singapore 528817
SUNWAY HOSTON (ZHUHAI) SPUN PILE CO. LTD.                        Tel: (02) 6582 8089 Fax: (02) 6581 0482
                                                                                                                                           PT TREK MASINDO - Pekanbaru Branch
Block 1 No. 103, QunCui Court, HuaJing Graden, 54 ShiHua East                                                                              Komplex Pergudangan Avian Blok B-01, JL. Arengka 11,
Road, ZhuHai City, Guangdong Province, China                     PROPERTY DEVELOPMENT AND                                                  Pekanbaru – Riau, 28292 Indonesia
                                                                 INVESTMENT                                                                Tel: (62) 0761 883 833 / 0761 863 832 Fax: (62) 0761 863 836
FOUNDATION ENGINEERING                                                                                                                     E-mail: ipsales@sunway.com.my
                                                                 SHAHAWAN (M) SDN BHD* (454336-K)
SUNWAY GD FOUNDATION ENGINEERING CO. LTD. (22950 SO)             SUNGEI WAY RESOURCES SDN BHD* (120068-A)                                  SUNWAY MARKETING (SHANGHAI) PTE. LTD.
Alameda Dr. Carlos D’Assumpcao, No. 180, 10 Andar, I10 Edif,     Level 16. Tel: (603) 5639 8889 Fax: (603) 5639 9507                       Blk B, Gr Flr No. 155, Fu Te Xi Yi Road,
Centro Com, Tong Nam Ah, Macau                                                                                                             Wai Gao Qiao Free Trade Zone, Shanghai 200131, China
Tel: (853) 723 428 Fax: (853) 723 429                            SUNWAYMAS SDN BHD* (130027-K)                                             Tel: (8621) 5868 2705 Fax: (8621) 5868 2710
                                                                 Level 5. Tel: (603) 5639 9998 Fax: (603) 5639 9552                        E-mail: ipsales@sunway.com.my
DESIGN AND BUILD, TURNKEY, CIVIL                                                                                                           SUNWAY ENTERPRISE (1988) SDN BHD (62711-M)
                                                                 IKAZ ENGINEERING SDN BHD* (215920-W)
ENGINEERING AND BUILDING                                         MUJURMAS SDN BHD* (206849-D)                                              Lot 656, Jalan Subang 2, Off Persiaran Subang, Subang Jaya,
CONSTRUCTION                                                     PEMBANGUNAN RISJAYA SDN BHD* (258922-A)                                   P.O. Box 8800, Kelana Jaya, 46798 Petaling Jaya,
                                                                 Level 5. Tel: (603) 5639 9998 Fax: (603) 5639 9552                        Selangor Darul Ehsan, Malaysia
                                                                                                                                           Tel: (603) 5633 1909 Fax: (603) 5633 1908
SUNWAY CONSTRUCTION SDN BHD* (27175-V)
Head Office: Level 8.                                            PROPERTY MANAGEMENT AND                                                   SUNWAY XIN LONG (ANHUI) HYDRAULIC CO. LTD.
Tel: (603) 5639 9333 Fax: (603) 5639 9533
Website: www.sunway.com.my/suncon
                                                                 INVESTMENT                                                                Anhui Wuhu City Industries Park Xu Township. 242401 China
                                                                                                                                           Tel: 0086 553 6277999 Fax: 0086 553 6279666
SUNWAY CONSTRUCTION INDIA PVT. LTD.                              BINAJELATA (M) SDN BHD* (355335-X)
(U45203KA2001PTC029947)                                          IDENTITI JELATA (M) SDN BHD* (354314-T)                                   FINANCIAL AND INSURANCE SERVICES
C4/54, 1st Floor, Safdarjung Development Area,                   TARGET BEAM (M) SDN BHD* (355669-H)
New Delhi 110-016, India                                         Level 7. Tel: (603) 5639 9333 Fax: (603) 5639 9530                        SUNWAY CREDIT & LEASING SDN BHD* (35433-X)
Tel: (0091) 11 2653 6200 Fax: (0091) 11 2653 2959                                                                                          SUNWAY ELITE SDN BHD* (433853-H)
E-mail: info@sunwayindia.com                                     TRADING AND MANUFACTURING                                                 (Formerly known as Eternal Elite Sdn Bhd)
                                                                                                                                           SWL NOMINEES (TEMPATAN) SDN BHD* (388808-U)
SUNWAY CONSTRUCTION CARIBBEAN LTD. (S4276 (95))                  SUNWAY MARKETING SDN BHD* (110342-X)                                      Level 15. Tel: (603) 5639 8899 Fax: (603) 5639 9608
29 Cornelio Street, Woodbrook, Port-of-Spain,Trinidad, W.I.      SUNWAY HOSE CENTRE SDN BHD* (350617-H)
Tel: (868) 622 1193 Fax: (868) 622 1652                          Main Office: Level 11. Tel: (603) 5639 9997                               SUNWAY RISK MANAGEMENT SDN BHD* (130211-V)
E-mail: admin@sunwaycaribbean.com                                                       Fax: (603) 5639 9522                               Level 15. Tel: (603) 5639 9988 Fax: (603) 5639 9609
                                                                                                                                           E-mail: financialdivision@sunway.com.my
GEOTECHNICAL ENGINEERING                                         SUNWAY MARKETING (EAST MALAYSIA) SDN BHD                     (353248-U)

                                                                 Bintulu: Lot 689, Block 31, 2 1/2 Miles, Light Industrial Estate,         SECRETARIAL, SHARE REGISTRATION
SUNWAY PILING SDN BHD* (414014-W)                                         97000 Bintulu, Sarawak, Malaysia                                 AND MANAGEMENT SERVICES
Level 8. Tel: (603) 5639 9933 Fax: (603) 5639 9533                        Tel: (6086) 313 778/313 779 Fax: (6086) 313 772
                                                                          E-mail: ipbintulu@sunway.com.my
                                                                                                                                           SUNWAY MANAGEMENT SDN BHD* (50661-X)
Factory:                                                                                                                                   Level 16. Tel: (603) 5639 8889 Fax: (603) 5639 9507
Batang Kali:      Lot 2396, Seksyen 5, Mukim Batang Kali         Sibu: No. 13, Lorong 6, Jalan Ding Lik Kwong,
                  Daerah Hulu Selangor, Selangor Darul Ehsan,          96000 Sibu, Sarawak
                  Malaysia                                             Tel: (6084) 333 759/325 759/328 759                                 SHARED SERVICES
                  Tel: (603) 6057 2462/6057 9118                       Fax: (6084) 312 759
                  Fax: (603) 6057 9117                                 E-mail: ipsibu@sunway.com.my                                        SUNWAY SHARED SERVICES CENTRE SDN BHD                 (603026-A)
                                                                                                                                           Finance SSC: Level 10. Tel: (603) 5639 8989
SUNWAY GD PILING SDN BHD (693303-X)                              Miri: Lot 2186, Jalan Piasau Utara 4, Piasau Industrial Estate,                          Fax: (603) 5639 9524
47C, Jalan SS 21/60, Damansara Utama, 47400 Petaling Jaya,             98000 Miri, Sarawak, Malaysia.                                                     Menara Annexe Tel: (603) 5639 8989
Selangor Darul Ehsan, Malaysia                                         Tel: (6085) 656 354/656 292/659 197                                                Fax: (603) 5639 9586
Tel: (603) 7722 3959 Fax: (603) 7722 3961                              Fax: (6085) 656 431                                                 IT SSC:        Level 4.1 & 4.2 Tel: (603) 5639 8822
                                                                       E-mail: ipmiri@sunway.com.my                                                       Fax: (603) 5639 9293
                                                                                                                                           Client Services & Support Management:
                                                                                                                                                          Level 4.2 Tel: (603) 5639 8822
                                                                                                                                                          Fax: (603) 5639 9293

COMPANIES MARKED WITH ASTERISK (*) ARE LOCATED AT MENARA SUNWAY
Sunway Holdings Incorporated Berhad   (37465-A)

Level 16, Menara Sunway
Jalan Lagoon Timur
Bandar Sunway
46150 Petaling Jaya
Selangor Darul Ehsan
Malaysia

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posted:8/6/2011
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