� The existing Sitra Causeway Bridges, Bahrain with a view of Nabih Saleh Island

� Artist impression of Nam Theun 1 Hydropower Dam, Laos

� The completed Durgapur Expressway, India

� A satellite view of the NDIA site

Gulf States’ Projects - New Doha InternationalAirport (NDIA), Qatar

� One of the four wharfs serving the NDIA site

� An overview of the project site showing one of the four asphalt plants

Gulf States’ Projects - Dukhan Highway, Qatar

� Ongoing road works at Dukhan

� Excavation works in progress

� Rock breaking and trimming works

� Asphalt Plant

pg 64

Corporate Social Responsibilities

successful completion, the traineescan either further their educationat various universities or gainemployment within the Group.Following the success of thisprogram, it has now beenupgraded into a diploma programin collaboration with UniversitiTeknologi Malaysia (UTM).

Gamuda Plant OperatorSchool

To address an acute shortage ofcompetent plant operators and theneed for better safety practices inthe construction industry, theGamuda Plant Operator School(GPOS) was established in 1997 at acost of RM10 million to provideconstruction plant and heavymachinery operation skills andwork safety training.

As a non-profit organization, GPOShas, over the years, in collaborationwith CIDB, ABM Selangor, DOSH

and NIOSH, provided opportunitiesfor 15,000 unskilled and semi-skilledworkers across both rural as well asurban worksites from the generalconstruction industry to upgradetheir skills and safety practices. Lastyear, of the 1,800 GPOS traineeswho attended apprenticeship andplant operation competency andsafety programs, many foundgainful employment overseas.

Recognition for EnvironmentalPractice

The Group is the proud recipient ofmany prestigious awards, locallyand overseas, is an affirmation ofthe Group’s steadfast adherence togood environmental practices. Theawards include the :

• Malaysia Environmental andSocial Reporting Award

• Corporate Social andEnvironmental ResponsibilityAward

Gamuda Annual Scholarship &Excellence Award

Since 1996, we have awarded 84scholarships worth more than RM7million to qualified and deservingMalaysians studying at local andforeign universities. In the lastfinancial year, we increased thenumber of awards to 16scholarship and excellence awardsas evidenced by a minimum ofRM2 million commitment a year tofurthering this cause. The Group’sassociates, Litrak and SPLASH havesimilar annual scholarship awardsbased on the same principles.

Quantity SurveyingApprenticeship Program

Since 1995, the Group hassponsored 98 school-leavers as in-company trainees under theQuantity Surveying apprenticeshipprogram as an alternative pathwayto a tertiary education. Upon

At Gamuda, we are ever mindful of our responsibilities to our various stakeholders, the environment, and thecommunities in which we operate. For the 30 years that the Group has been in business, we have always beenguided by the principles of responsible corporate citizenship in the management of operations and delivery ofbusiness commitments.

The sponsorship of community and educational programs are issues that have always remained close to our heart.Towards this end, we have, over the past 10 years alone, committed RM30 million to various worthy causes.Amongst others, the following are some of the CSR programmes undertaken by us:

1

2

3

4

� Gamuda Scholarship & Excellence Award presentation 2006 �Y A M Raja Dato’ Seri Eleena with one of therecipients at the inauguration of Gamuda’smaiden Scholarship Award in 1996

pg 65

Education Program, weadopted SekolahKebangsaan Sungai Bulohfor one year and togetherwith WWF Malaysia willaid the school in thedevelopment of outdoorlearning stations, mini-gardens and schoolgreening activities.

7b Power LearningWorkshop for EmployeesChildrenIn June 2006, teenagechildren of the Group’semployees enjoyed aworkshop aimed atdeveloping their creativecapacities and team-building skills that wasfunded by the Group.

7c Encouraging EnglishProficiency incollaboration with StarEducationThe Group enabled UPSRstudents from 150primary schoolsthroughout the countryto receive complimentary

copies of The Star to helpprepare them for thetransition of Math &Science subjects fromBahasa Malaysia to theEnglish Language as theyenter Form 1.

7d Understanding TrafficSafety in collaborationwith PDRMLITRAK, in collaborationwith the Petaling Jayaand Subang Jaya TrafficPolice Division and PDRMconducted traffic safetytalks to school students.

7e Learning About WaterTreatment ProcessesSome 300 visitorsincluding school childrenand local residents touredSPLASH's Bukit BadongWater Treatment Plant togain a better insightabout water treatmentprocesses, in conjunctionwith World Water Day2005.

• Air Quality Protection ModelAward

• Planning and ImplementationAward for EnvironmentalProtection Policies

Orang Asli CommunityDevelopment

The Malaysian-Canadian BusinessCouncil “Award for GoodCorporate Citizen” to SyarikatPengeluar Air Sungai Selangor SdnBhd (SPLASH) is testament to thesuccess of our community-basedprojects in improving thelivelihood of the Orang Aslicommunity

Tsunami Disaster Relief Fund

The Group contributed generouslyto the Tsunami Disaster Relief Fundto aid the relief and re-generationprocess.

Educational Project for OurFuture Generation

7a School Greening incollaboration with WWFTo support the WWFMalaysia Environmental

6

7

5

� Practical training at the Gamuda Plant Operator School � SSP3 Project – New Kg. Pertak for resettled orang asli

� Taman Gamuda at Sekolah Kebangsaan, Sg. Buloh- a school greening project in collaboration with WWF

� School children visiting the Bukit Badong Water Treatment Plant

pg 66

Planning and ImplementationAward 2003 for EnvironmentalProtection Policies by theGovernment of Taiwanthrough The EnvironmentalProtection Administration,Executive Yuan, Republic ofChina, received by New AsiaConstruction & DevelopmentCorporation-Gamuda BerhadJoint Venture.

FIABCI Property Award ofDistinction, Best Master Plan2003 for Bandar Botanic bythe International Real EstateFederation (FIABCI)

Landscape Planning Award,International Award 2003 forKota Kemuning Wetland Parkby the Singapore Institute ofLandscape Architects, receivedby Hicom-GamudaDevelopment Sdn Bhd

Recipient of the AmericanBusiness Initiative Directions’(BID) Quality SummitInternational Award 2002,Gold Category. Held in NewYork, the BID award was extraspecial because KPGCC wasthe only Malaysian businessentity amongst 64 countriespresent at the convention.

Builder’s Gold Medal Award1998 by the InternationalFederation of Asian & WesternPacific Contractor’s Association(IFAWPCA), received by KesasSdn Bhd for civil engineeringconstruction works on theShah Alam Expressway (SAE).

Governmentof MalaysiaLandscape Award 2005: MainRoad/Protocol Road Categoryby the Kuala Lumpur City Hall,received by Western KLDispersal Scheme (SPRINTHighway)

Merit Award of the KLSECorporate Sectoral Award2003 for Main Board,Construction Sector, receivedby Gamuda Berhad

Best Maintained Township2003 for Kota Kemuning bythe Ministry of Housing andLocal Government, received byHicom-Gamuda DevelopmentSdn Bhd

InternationalRecognitionContractor of the month :September 2006 foroutstanding ES&HPerformance for the NewDoha International AirportProject

Top Rated Residential LandedProperties - CONQUAS 21Construction QualityAssessment by the BuildingConstruction Authority (BCA)of Singapore, received byHarum Intisari Sdn Bhd forBandar Botanic in 2006

Corporate, Social andEnvironmental ResponsibilitiesAward 2004 by the BahrainMalaysia International Tradeand Investment Bureau,received by Hicom-GamudaDevelopment Sdn Bhd

Air Quality Protection ModelAward 2003 by TheEnvironmental Bureau ofKaohsiung CountyGovernment, received by NewAsia Construction &Development Corporation-Gamuda Berhad, Joint Venture

1

1

2

3

4

2 3

Awards & Achievements

pg 67

Landscape CommunityHillpark Award 2003 by theState Government of Selangor,received by Hicom-GamudaDevelopment Sdn Bhd

2.5 Million ‘ManhoursWithout A Loss Time Injury’for the construction of theSungai Selangor Water SupplyScheme Phase 3 Projectawarded in 2002 by theDepartment of OccupationalHealth and Safety (DOSH)Selangor

The Malaysian ConstructionIndustry Award 2001 by theConstruction IndustryDevelopment Board for LargeScale Project: Western KLDispersal Scheme (SPRINTHighway), received byGamuda Berhad

ProfessionalBodiesEngineering Award 2006 bythe Association of ConsultingEngineers Malaysia (ACEM),received by Harum Intisari SdnBhd, for fostering EngineeringExcellence in the BandarBotanic Development

Malaysia Environmental andSocial Reporting Award(MESRA) 2005 by theAssociation of CharteredMalaysian Accountants,received by Lingkaran TransKota Sdn Bhd (LITRAK) andSistem Penyuraian Trafik KLBarat Sdn Bhd (SPRINT), thefirst highway concessionairesto receive the award

Urban Re-Development,Conservation andRehabilitation Award 2003,Planning Excellence for KotaKemuning Wetland Park bythe Malaysian Institute ofPlanners, received by Hicom-Gamuda Development SdnBhd

National Landscape Award2004 by the MalaysianLandscape IndustryAssociation, received byHarum Intisari Sdn Bhd forBest Landscape TownshipCategory: Bandar BotanicCentral Lake

Planning, Innovation andConcept Award 2000 for KotaKemuning by the MalaysianInstituate of Planners, receivedby Hicom-GamudaDevelopment Sdn Bhd

PublicationsForbes “Best Under A Billion200 Companies” for 2002 &2005, received by GamudaBerhad

FinanceAsia’s Best Companies2002 – Categories of BestManaged Company andStrongest Commitment toEnhancing A ShareholderValue, received by GamudaBerhad

Euromoney’s Best ManagedCompanies in Asia 2000 –Construction, received byGamuda Berhad

The 2000 Reuters Survey ofGlobal Emerging Markets

• First in terms of quality ofinformation provided viaone-to-one meetings andquality of on-goingrelationship

• Second for quality ofinformation provided viaone-to-one telephone callsas well as quality ofinformation via e-mail

• Third for speed ofresponses andpreparation of one-to-one meetings

6

5

4 5 6

Gamuda Berhad and GamudaEngineering Sdn BhdUpgraded to MS ISO9001:2000 Quality Systems forthe Provision of ConstructionServices in Building and CivilEngineering Works

Gamuda Land (Hicom-GamudaDevelopment, ValenciaDevelopment Sdn Bhd, HarumIntisari Sdn Bhd)MS ISO 9001:2000 QualityManagement Systems for theProvision of PropertyDevelopment Services inResidential, Commercial,Industrial and InstitutionalProjects

Lingkaran Trans Kota HoldingsBerhad (LITRAK)MS ISO 9002:1994 QualitySystems for the Provision ofHighway Operations andMaintenance Services

Kesas Sdn BhdMS ISO 9002:1994 QualitySystem for the Managementand Operations of Shah AlamExpressway

Syarikat Pengeluar Air SungaiSelangor Sdn Bhd (SPLASH)ISO/IEC 17025 LaboratoryQuality Management for RasaWater Treatment PlantLaboratory.

Syarikat Pengeluar Air SungaiSelangor Sdn Bhd (SPLASH)ISO/IEC 17025 LaboratoryQuality Management for BukitBadong Water TreatmentPlant Laboratory

GB Kuari Sdn BhdMS ISO 9002:1994 QualityManagement Systems forManufacture of Aggregatesand Premix

MS 1SO 14001:1997Environmental ManagementSystems for the Operation of aPlant for Manufacturing ofPremix and Aggregatesincluding Quarrying

Megah Sewa Sdn BhdMS ISO 9002:1994 QualitySystems for the Provision ofRental and MaintenanceServices for Construction Plantand Equipment

Top Golf Course, Most Scenicand Most Memorable GolfCourse in Malaysia 2005/2006for Kota Permai Golf &Country Club by Golf MalaysiaPoll

Runner-up for BestMaintained Golf Course inMalaysia 2005/2006 for KotaPermai Golf & Country Club byGolf Malaysia Poll

Most Scenic, Memorable andNo. 1 Golf Course in Malaysiaby Golf Malaysia Poll2001/2002for Kota Permai Golf &Country Club by Golf MalaysiaPoll

ISOCertificationGamuda Berhad and GamudaEngineering Sdn BhdMS ISO 9002:1994 QualitySystems for the Provision ofConstruction Services inBuilding and Civil EngineeringWorks

7

8

7 8

pg 68

Corporate Governance70 Corporate Governance Statement76 Statement on Internal Control78 Audit Committee Report81 Statement of Directors’ Interests83 Additional Compliance Information

pg 70

Corporate Governance Statement

THE BOARD

The composition of the Board hasnot changed since the last report.The Board considers that thecurrent composition of the Boardto be in line with the Code and isof the appropriate size and withthe right mix of skills andexperience. The Board’s main rolesare to create value forshareholders, to provide leadershipof the Group, to approve theGroup’s strategic objectives and toensure that the necessary financialand other resources are madeavailable to enable those

objectives to be achieved. The Non-executive Directors are a strongelement within the Board withtheir views carrying significantweight in the Board’s decision-making process. The Board metformally on six occasions during2006, of which four meetings wereheld following meetings of theAudit Committee. Additionally, theDirectors met informally on twoother occasions during the courseof the directors’ in-house trainingprogrammes. The Board has asupporting committee structure in

line with the recommendations ofthe Code. The standingcommittees of the Board are theAudit Committee, RemunerationCommittee and NominationCommittee. Directors serving onthe Board’s committees togetherwith their profiles are identified inthe Directors’ Profile beginning onpage 30. Individual attendance atmeetings of the Board and of theAudit, Remuneration andNomination committees during2006 is set out in the tables below.

Gamuda continues to uphold its commitment to high standards of corporate governance. This statement

describes how the Company has applied the main and supporting principles and best practices identified in the

Malaysian Code on Corporate Governance (the Code) throughout the financial year ended 31 July 2006 (“2006”

or the year).

Number of meetingsThe Board attended during 2006 %

Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim (Chairman) 5/6 83

Dato’ Lin Yun Ling 6/6 100

Tan Sri Dato’ Mohd Ramli bin Kushairi 5/6 83

Tan Sri Dato’ Seri Dr Haji Zainul Ariff bin Haji Hussain 6/6 100

Raja Dato’ Seri Eleena binti Raja Azlan Shah 6/6 100

Raja Dato’ Seri Abdul Aziz bin Raja Salim 5/6 83

Dato’ Ir Kamarul Zaman bin Mohd Ali 6/6 100

Dato’ Ir Haji Azmi bin Mat Nor 5/6 83

Mr Ng Kee Leen 6/6 100

Mr Goon Heng Wah 6/6 100

Ir Ha Tiing Tai 4/6 67

Ms Wong Chin Yen 5/6 83

Mr Saw Wah Theng 6/6 100

Mr Chow Chee Wah (Alternate to Dato’ Lin Yun Ling) 5/6 83

pg 71

The division of responsibilitiesbetween the Chairman and theManaging Director is clearlydefined. The Chairman is primarilyresponsible for organising thebusiness of the Board, setting itsagenda, ensuring the effectiverunning of the Board; andfacilitates the constructive relationsbetween the executive and non-executive Directors whilst theManaging Director is primarilyresponsible for managing andsupervising the day-to-daybusinesses of the Group and thedevelopment and implementationof strategy. The Company has adesignated Senior IndependentNon-executive Director. The SeniorIndependent Non-executiveDirector acts as a facilitator forcommunication between theshareholders and the Board and he

ensures that the Board is aware ofany shareholder concerns notresolved through the existingmechanisms for investorcommunication. Tan Sri Dato’Mohd Ramli bin Kushairi is theSenior Independent Non-executiveDirector appointed to this rolesince 2001. The Board considersthat it is appropriate for Tan SriDato’ Mohd Ramli bin Kushairi tocontinue to act as SeniorIndependent Non-executiveDirector.

The Board has a formal schedule ofmatters specifically reserved for itsdecision, which can only bechanged, as and when appropriate,by the Board itself. The specificresponsibilities include approval ofstrategic direction of the Groupand policy issues; approval of

quarterly results and annualfinancial statements; approval ofmajor acquisitions and disposals,and related due diligencerequirements; and approval ofmajor capital expenditure, relatedparty transactions, dividend policy,changes to membership of theBoard and its committees. To assistthe Board in performing theseresponsibilities, informationappropriate in quality andtimeliness, is received for eachBoard meeting. The Directors haveaccess to the advice and services ofthe Company Secretary and it isacknowledged that individualDirectors may wish to seekindependent professional advice inconnection with theirresponsibilities and duties. TheCompany will meet reasonableexpenses incurred in this regard.

Number of meetingsAudit Committee attended during 2006 %

Raja Dato’ Seri Abdul Aziz bin Raja Salim (Chairman) 3/4 75Tan Sri Dato’ Mohd Ramli bin Kushairi 4/4 100Ms Wong Chin Yen 4/4 100Mr Ng Kee Leen 3/4 75

Number of meetingsRemuneration Committee attended during 2006 %

Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim (Chairman) 1/1 100Dato’ Lin Yun Ling 1/1 100Raja Dato’ Seri Abdul Aziz bin Raja Salim 1/1 100

Number of meetingsNomination Committee attended during 2006 %

Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim (Chairman) 1/1 100Tan Sri Dato’ Mohd Ramli bin Kushairi 1/1 100Ms Wong Chin Yen 1/1 100

pg 72

Throughout their period in office,the Directors are continuallyupdated on the Group’s businessand environment in which itoperates, by written briefings andby meetings with senior executives,who are invited to attend andpresent at each Board meeting.They are also updated on anychanges to legal and governancerequirements of the Group andwhich affect themselves asDirectors. In-house and externaltrainings are available to allDirectors on an ongoing basis asrequired. Directors will continue toundergo relevant trainingprogrammes to keep abreast ofrelevant new legislations, financialreporting requirements, changingcommercial risks or otherdevelopments in the market place;and to aid them in the discharge oftheir duties as director moreeffectively. The Company Secretaryfacilitates the organisation of thein-house training programmes andmaintains a record of the Directors’attendances and details of all in-house and external trainingprogrammes attended by theDirectors. During the year, allDirectors had attended at least onetraining programme, with someattending all the in-house trainingprogrammes lined up for themthroughout the year, which are allone-day programmes. Theprogrammes attended by themcollectively or individually includedthe following:-

i. Finance for Non-FinanceDirectors

ii. Ernst & Young TechnicalSeminar - Financial ReportingStandards (FRS) Update

iii. Managing RegulationEnforcement & Compliance

The Board utilises a formal andinternal process for the annualevaluation of the performance ofthe Board, its committees andindividual Directors. During theyear, the Directors were presentedwith a new format ofquestionnaire for completion. Thenew format was aimed atimproving the process ofevaluation.

As set out in the Code and theCompany’s Articles of Association,each director must stand for re-election every three years. Anydirector who has attained the ageof seventy, is required to stand forre-appointment annually at theAnnual General Meeting (AGM) inaccordance with the CompaniesAct, 1965 (the Act). The Board ispleased to inform that all Directorswho are required to seek re-appointment at the 2007 AGMhave indicated their willingness tostand for re-appointment.

AUDIT COMMITTEE

The membership of the Committeehas not changed since the lastreport. The Committee isconstituted in accordance with therelevant requirements of theListing Requirements of BursaMalaysia Securities Berhad. TheCommittee undertakes a detailedreview of the Group’s quarterlyresults and annual financialstatements, and is responsible formonitoring accounting policies;internal controls compliance andinternal and external audit

functions including theindependence and objectivity ofthe auditors. The Committee meetsat least four times a year, generallybefore the Board meetings atwhich the quarterly results andannual financial statements wereapproved. During the year, theCommittee met on four occasions.In addition, the Independent Non-executive Directors have metprivately with the externalauditors, without their Executivecolleagues present, andadditionally without theManagement present. The meetingenables the external auditors to, inconfidence, raise issues or concernsin matters of financial reporting.The external auditors attended oneAudit Committee meeting duringthe year, during which theypresented the proposed natureand scope of their work and areasof audit emphasis before the auditcommenced, raised mattersrequiring consideration inparticular as regards the Group’saccounting policies and auditapproach. During one of itsmeetings, in the month ofSeptember, the Committeeconducted a verification of theallocation of share options toeligible Directors and employees ofthe Group for the financial yearended 31 July 2006 to ascertainwhether or not it complied withthe criteria of allocation set out inthe By-laws of the Company’sEmployees Share Option Scheme.The Committee is satisfied that theallocation of share options is incompliance and will continue toconduct such verification on anannual basis.

Corporate Governance Statement

pg 73

January. During the meeting, theCommittee reviewed theremuneration packages of theDirectors on the basis of marketsurvey information received fromGroup Human Resources &Administration Division andWatson Wyatt. The ExecutiveDirectors received certain benefitsin kind, principally in the provisionof car benefit, fuel or equivalentcash allowance, private health careand life assurance. Fees are paid toNon-executive Directors with theapproval of shareholders at theAGM. Details of the Directors’remuneration are shown on pages112 and 113.

NOMINATION COMMITTEE

The membership of the Committeehas not changed since the lastreport. The Committee isconstituted in line with therecommendations of the Code. TheCommittee met on one occasion in2006 and there were no absentees.During the meeting, theCommittee reviewed a new formatof questionnaire for the evaluationof the Board’s performance;identified suitable in-housetraining programmes for theDirectors for the new financial yearcommencing 1 August 2006 forrecommendation to the Board; andidentified Directors who are tostand for re-election and re-appointment at the Company’s2007 AGM for recommendation tothe Board, after they wereevaluated to be eligible to standfor re-election and re-appointmentrespectively.

INTERNAL CONTROL

The Board is responsible for theGroup’s system of control and forreviewing its effectiveness. Such asystem is designed to managerather than eliminate the risk offailure to achieve businessobjectives and can only providereasonable and not absoluteassurance against materialmisstatement or loss. There is anongoing process for identifying,evaluating and managingsignificant risks across the Group.The Audit Committee receivesreports setting out key riskindicators of each business unitand considers possible controlissues brought to its attention byearly warning mechanisms whichare embedded within the businessunits and reinforced by riskawareness training. The AuditCommittee also receives reportsfrom the internal audit functionand, where appropriate,recommendations for improvementare considered. The Board’s agendaincludes consideration of risk mapsand controls, and it receivesreports thereon from the AuditCommittee. The emphasis is onobtaining the relevant degree ofassurance and not merelyreporting by exception. The workundertaken by the internal auditfunction and the Audit Committeehelps to enable the Board to makethe statement relating to internalcontrol in the Statement onInternal Control.

The work of this committee during2006 is described at greater lengthin the Audit Committee Reportbeginning on page 78.

REMUNERATIONCOMMITTEE

The membership of the Committeehas not changed since the lastreport. The Committee isconstituted in line with therecommendations of the Code.The Committee makesrecommendations to the Board onstructuring directors’ remunerationpackages. No director plays a partin any discussion or decision on hisor her own remuneration.Remuneration packages of theDirectors are prudently designed toattract, motivate and retaindirectors of the calibre required toensure the continued success anddevelopment of the Group’sbusinesses. The Committeecontinues to view the EmployeesShare Option Scheme as anappropriate method to incentiviseexecutive directors and seniormanagement; and to attract andretain capable individuals to act asnon-executive directors needed torun the Company successfully. Indeciding the appropriate level ofthe executive and non-executivedirectors’ remuneration, theCommittee relies on objectivemarket survey, from internal andexternal sources, with as up-to-date information as possible on acomparator group of companies.The Committee met on oneoccasion in 2006 and there wereno absentees. The meeting isordinarily held in the month of

Corporate Governance Statement

pg 74

FINANCIAL REPORTING &CONTROL

The Group has a detailedbudgeting system and acomprehensive system for reportingfinancial results to the Board. Eachbusiness unit maintains financialcontrols and prepares monthlyresults with a comparison againstbudget. There are clearly definedguidelines for the review andapproval of capital expenditureprojects. These include annualbudgets and designated levels ofauthority. The Group’s centralisedinternal audit function reviews thesystems and procedures in allbusiness units and reports regularlyto the Audit Committee whoreports to the Board.

STATEMENT OFDIRECTORS’RESPONSIBILITIES

The Directors are required by theAct to prepare financial statementsfor each financial year which havebeen made out in accordance withthe applicable approvedaccounting standards and give atrue and fair view of the state ofaffairs of the Group and Companyat the end of the financial yearand of the results and cash flowsof the Group and Company for thefinancial year.

In preparing the financialstatements, the Directors have:

• applied appropriateaccounting policies andapplied them consistently;

• made judgements andestimates that are reasonableand prudent;

• ensured that all applicableaccounting standards havebeen followed; and

• prepared financial statementson the going concern basis asthe Directors have areasonable expectation,having made enquiries, thatthe Group and Company haveadequate resources tocontinue in operationalexistence for the foreseeablefuture.

The Directors have responsibilityfor ensuring that the Companykeeps accounting records, whichdisclose with reasonable accuracythe financial position of theCompany and the Group, whichenable them to ensure thatfinancial statements comply withthe requirements of the Act. TheDirectors have overallresponsibilities for taking suchsteps as are reasonably open tothem to safeguard the assets ofthe Group to prevent and detectfraud and other irregularities.

RELATIONS WITHSHAREHOLDERS &INVESTORS

The Board as a whole is responsiblefor ensuring that there is effectivedialogue with shareholders andinvestors. The Company has anactive investor relationsprogramme with the Managing

Director and/or the Group SeniorGeneral Manager, BusinessDevelopment & Corporate Financehosting events enablingcommunication with institutionalinvestors, analysts and the media,in the periods following theannouncement of the quarterlyresults and new projects; and atother appropriate times during theyear. The Company reportsformally to shareholders four timesa year when its quarterly resultsare announced and another timewhen its Annual Report is issued toshareholders. The Board considersthe Quarterly Results Report andthe Annual Report including theChairman’s Perspective and Reviewof Operations present a balancedand clear assessment of theGroup’s position and prospects.These information together withother information about the Groupare also posted on the Company’swebsite at www.gamuda.com.my.Notice of the Company’s AGM andthe Annual Report are sent toshareholders at least twenty-onedays before the meeting, andseparate resolutions are proposedon each special issue withexplanatory notes given on thespecial issue. The Company allowsproxy voting for all shareholders.To ensure effective two-waycommunication, the Chairmantogether with his fellow Directorsalso meets with shareholdersduring the AGM. The Boardwelcomes all shareholders to theAGM to discuss appropriate topicsduring the meeting or with theDirectors after the formalproceedings have ended.

pg 75

CODE OF PRACTICE

The Company has a written codeon business practices/ethics,applicable Group-wide, which setsout guidelines for all staff toenable the Group to meet thehighest standards of conduct inbusiness dealings including thosewith overseas clients and partners.

CORPORATE SOCIALRESPONSIBILITY

The Group is aware of itsresponsibilities to the communitiesin which it operates and iscommitted to progressivelyembedding Corporate SocialResponsibility best practice intoevery aspect of the Group’soperations. Environmental risk ismonitored across all our operationsand there is a system in place toensure that all plants and facilitiescomply with relevant environmentalmanagement standards. TheCompany’s contribution to the “Golffor Nature 2005” a fundraising golftournament organised by WWF-Malaysia, has led to its adoption ofa school, Sekolah KebangsaanSungai Buloh, for one year. It is apartnership approach with WWF-Malaysia, to aid the school in thedevelopment of outdoor learningstations, mini gardens and schoolgreening activities (“SchoolGreening Programme”). Theprogramme is part of the WWF-Malaysia Environmental EducationProgramme. The winning of manyprestigious awards, locally andoverseas, is an affirmation of theGroup’s good environmentally-responsible practice. The awardsincluded:-

• “Malaysia Environmental andSocial Reporting Award” bythe Association of CharteredMalaysian Accountant,received by Lingkaran TransKota Sdn Bhd (LITRAK) andSistem Penyuraian Trafik KLBarat Sdn Bhd (SPRINT), thefirst highway concessionairesto be awarded the Award;

• “Corporate, Social andEnvironmental ResponsibilityAward” by the BahrainMalaysia International Trade &Investment Bureau, receivedby Hicom-GamudaDevelopment Sdn Bhd;

• “Air Quality Protection ModelAward” by The EnvironmentalBureau of Kaohsiung CountyGovernment, received by NewAsia Construction &Development Corporation-Gamuda Berhad Joint Venture;

• “Planning andImplementation Award forEnvironmental ProtectionPolicies” by the Governmentof Taiwan through TheEnvironmental ProtectionAdministration, ExecutiveYuan, Republic of China,received by New AsiaConstruction & DevelopmentCorporation-Gamuda BerhadJoint Venture.

The Group is dedicated to helpingdeserving students to continuetheir studies at universities throughits annual GAMUDA ScholarshipAward, LITRAK Scholarship Awardand SPLASH Scholarship Award(open to the aboriginal/’Orang Asli’

community). The Group employsthe scholarship students upon theirgraduation. In addition, ourrecruitment team went on a roadshow to conduct a series ofinterviews at a few publicuniversities. The road show resultedin the employment of fifteengraduates from these universities.The success of our community-based project in improving thelivelihood of the Orang Aslicommunity has been recognised bythe award to Syarikat Pengeluar AirSungai Selangor Sdn Bhd (SPLASH)of the “Malaysian-CanadianBusiness Council Award for GoodCorporate Citizen”. When lives andcommunities were destroyed by atsunami that devastated large areasof Asian and African coastline, theGroup contributed generously tothe Tsunami Disaster Relief Fund toaid the relief and regenerationprocess. During the year, teenagechildren of the Group’s employeesenjoyed a workshop aimed atdeveloping their creative capacitiesand team building skills during thestart of the June semester holidays,funded by the Group. Employees ofthe Group are also encouraged tobecome involved with and tosupport local community projects,schools, charities and other causes.Underpinning the Group’s healthand safety policies, appropriateprocedures to safeguard the healthand safety of its employees,customers and visitors to itspremises and others affected by itactivities have been adopted withineach of the Group’s operations,with business unit headsresponsible for theirimplementation, supported by theGroup’s centralised Health & SafetyCommittee.

pg 76

Statement on Internal Control

BOARD’S RESPONSIBILITY

The Board of Directors (the Board)affirms the overall responsibilityfor maintaining a sound system ofinternal control to safeguardshareholders’ investment and theGroup’s assets. However, thesystem of internal control isdesigned to manage rather than toeliminate the risk of failure toachieve business objectives.Accordingly, the internal controlsystem can only provide reasonableand not absolute assurance againstmaterial misstatement or losses.The system of internal controlcovers inter alia, financial,operational and compliance systemcontrols and risk management.The Board confirms that there is anon-going process of identifying,evaluating and managing allsignificant risks faced by theGroup, that has been in place forthe year and up to the date ofapproval of the Annual Report andFinancial Statements, and that thisprocess is regularly reviewed by theBoard so as to be in accordancewith the Internal ControlGuidelines.

CURRENT RISKMANAGEMENTFRAMEWORK

The risk management frameworkhas been embedded in thecompany’s management systems.Authority and accountability havebeen clearly defined to implementthe risk management process andinternal control system. TheManagement assists the Board toimplement the process ofidentifying, evaluating, andmanaging significant risksapplicable to their respective areasof business and to formulatesuitable internal controls tomitigate and control these risks.

Assessment and evaluation of risksthat have an impact on newinvestments are undertaken by therespective project task force. Forexisting business operations, riskassessment and evaluation is anintegral part of the annualbusiness planning and budgetingprocess. The Management of eachbusiness unit, in establishing itsbusiness objectives, is required toidentify and document all possiblerisks that can affect theirachievements together with theassociated controls that are

capable of mitigating such risks.By this process, each business unit’sidentified risks, the controls andprocesses for managing them aretabulated in a risk assessmentreport. Significant risks of businessunits are summarised into riskmaps and presented annually tothe Audit Committee for theirconsideration.

KEY INTERNAL CONTROLFEATURES

Key features of the processesestablished within the Groupwhich can contribute to a soundsystem of internal control are asfollows:

• Clearly defined operatingstructure, lines ofresponsibilities and delegatedauthority. Various Board andManagement Committeeshave been established to assistthe Board in discharging itsduties. Among thecommittees are:

– Audit Committee– Nomination Committee– Remuneration Committee– Budget Committee

INTRODUCTION

The Malaysian Code of Corporate Governance stipulates that the Board of Directors of listed companies should

maintain a sound system of internal control to safeguard shareholders’ investments and the Group’s assets and

for reviewing the adequacy and integrity of the system. The Listing Requirements of the Bursa Malaysia

Securities Berhad require the Board of Directors of listed companies to include an Internal Control Statement in

their Annual Reports about the state of internal control in their Companies.

pg 77

• Internal control activities havebeen established in allbusiness units with clearlydefined lines ofresponsibilities, authoritylimits for major capitalexpenditure, contract awardsand other significanttransactions, segregation ofduties, performancemonitoring and safeguardingof assets.

• Policies, Procedures andStandard OperatingProcedures which aresystematically documentedhave been made available toguide staff in their day-to-daywork. These policies andprocedures are reviewedregularly and updated whennecessary.

• A detailed budgeting processwhere operating units preparetheir annual budgets, businessplans and control measures tomitigate identified risk forconsideration by the BudgetCommittee before beingpresented to Directors forapproval.

• A comprehensive informationsystem comprising budgets,key business indicators andperformance results onoperations are reported toManagement and theDirectors. The presence ofcomprehensive informationsystem allows theManagement and Directors toreview business unit’sperformance against budgetsand performance indicator onmonthly basis.

• An ISO 9001:2000 QualityManagement System, which issubject to regular review andimprovement, continuouslymanages and controls thequality requirement of theCompany’s products andservices.

• A Performance ManagementSystem which assistsemployees in planning theirtargets to achieve businessobjectives. Employees’performances are monitoredon a half-yearly basis and areappraised and rewardedaccording to the achievementof targets set.

• Training and developmentprogrammes are identifiedand scheduled for employeesto acquire the necessaryknowledge and competencyto meet their performanceand job expectations.

• An adequately resourcedInternal Audit function whichreports directly to the AuditCommittee, conducts regularreviews on integrity andeffectiveness of the Group’ssystem of internal controls.

• Board representation in itsassociated companies.Information on the financialperformance of theseassociated companies isprovided regularly to themanagement of the Companyvia Group managementreporting procedures.

• Visits to business units bymembers of the Board andSenior Management.

• In respect of joint venturesentered into by the Group,the management of the jointventures, which consist ofrepresentations from theGroup and other joint venturepartners are responsible tooversee the administration,operation, performance andexecutive management of thejoint venture. Financial andoperational information ofthese joint ventures areprovided regularly to theManagement of the Company.

The Board confirms that theGroup’s system of internal controlwas generally satisfactorythroughout the financial year andup to the date of approval of theAnnual Report. There were nomajor internal control weaknessesthat require disclosure in theAnnual Report and correctiveactions have been taken on controlexceptions identified.

REVIEW OF THESTATEMENT BYEXTERNAL AUDITORS

The External Auditors havereviewed the Statement onInternal Control and reported tothe Board that nothing has cometo their attention that cause themto believe the statement isinconsistent with theirunderstanding of the processadopted by the Board in reviewingthe adequacy and integrity of thesystem of internal controls.Management continues to takemeasures to strengthen the controlenvironment.

This statement is made inaccordance with the resolution ofthe Board.

pg 78

TERMS OF REFERENCE

Membership

The Audit Committee shall beappointed by the Board ofDirectors from amongst itsDirectors and shall consist of notless than three (3) members. Themajority of the Audit Committeemust be independent Directors.An Alternate Director must not beappointed as a member of theAudit Committee. The members ofan Audit Committee shall elect achairman from among theirnumber who shall be anIndependent Director.

At least one member of the AuditCommittee:

i. must be a member of theMalaysian Institute ofAccountants (MIA); or

ii. if he is not a member of MIA :

a. he must have passed theexaminations specified inPart I of the 1st Scheduleof the Accountants Act,1967 and have at leastthree years’ workingexperience; or

b. he must be a member ofone of the associations ofaccountants specified inPart II of the 1st Scheduleof the Accountants Act,1967 and have at leastthree years’ workingexperience; or

c. he must have a degree /masters / doctorate inaccounting or financeand has at least 3 years’post qualificationexperience in accountingor finance; or

d. he must have at least 7years’ experience as achief financial officer of acorporation or having thefunction of beingprimarily responsible forthe management of thefinancial affairs of acorporation.

In the event of any vacancy in theAudit Committee resulting in non-compliance with Bursa MalaysiaSecurities Berhad’s ListingRequirements, the Board must fillthe vacancy within three (3)months.

The Board Audit Committee of Gamuda Berhad is pleased to present the Audit Committee Report for the yearended 31 July 2006.

MEMBERSHIP AND MEETINGS

The Audit Committee (AC) was formed by the Board and currently the AC comprises four (4) directors as follows:

1. YM Raja Dato’ Seri Abdul Aziz bin Raja SalimChairman / Independent Non-Executive Director

2. YBhg Tan Sri Dato’ Mohd Ramli bin KushairiMember / Senior Independent Non-Executive Director

3. Ms Wong Chin YenMember / Independent Non-Executive Director

4. Mr Ng Kee LeenMember / Non-independent Executive Director

The AC met four (4) times during the financial year ended 31 July 2006. Meeting attendance record of themembers is as follows:

Number of MeetingsName of Directors Held Attend

YM Raja Dato’ Seri Abdul Aziz bin Raja Salim 4 3

YBhg Tan Sri Dato’ Mohd Ramli bin Kushairi 4 4

Ms Wong Chin Yen 4 4

Mr Ng Kee Leen 4 3

Audit Committee Report

pg 79

The Board of Directors must reviewthe term of office and performanceof the Audit Committee and eachof its members at least once everythree (3) years to determinewhether the Audit Committee andmembers have carried out theirduties in accordance with theirterms of reference.

MEETINGS AND MINUTES

Meetings

Meetings shall be held not lessthan four (4) times a year.Additional meetings may be heldupon request by any AuditCommittee member, theManagement, Internal or ExternalAuditors. The Finance Director andHead of Internal Audit normallyattend the meetings. Otherdirectors, employees and theexternal auditors may attendmeetings upon the invitation ofthe Audit Committee. At leastonce a year, the Audit Committeeshall meet with the externalauditors without the presence ofany executive officer of the Group.

Quorum

A quorum shall consist of amajority of Independent Directorsand shall not be less than two (2).

Secretary

The Company Secretary shall act assecretary of the Audit Committee.

Reporting Procedure

The minutes of each meeting shallbe circulated to the AuditCommittee members and to allBoard members. Key issuesdiscussed are reported by theChairman of the Audit Committeeto the Board.

AUTHORITY AND DUTIES

Authority

In carrying out their duties andresponsibilities, the AuditCommittee shall:

i. have the authority toinvestigate any matter withinits terms of reference;

ii. have full and unrestrictedaccess to any informationpertaining to the Group;

iii. have direct communicationchannels with the externaland internal auditors, as wellas employees of the Group;and

iv. be able to obtain independentprofessional or other advice ifit deems necessary.

Duties

The duties of the Audit Committeeshall include a review of thefollowing:

i. the effectiveness ofmanagement informationsystem and other systems ofinternal control within theCompany and the Group.

ii the management’s compliancewith laws, regulations,established policies, plans andprocedures.

iii. with the assistance of theManagement, the quarterlyfinancial results and year-endfinancial statements prior todeliberation and approval bythe Board, focusingparticularly on :

a. changes in majoraccounting policies;

b. significant and unusualevents;

c. the going concernassumption;

d. compliance withaccounting standards andother legal requirements.

iv. independence of the ExternalAuditors and the frameworkwithin which the ExternalAuditors can assert theirindependence.

v. together with the ExternalAuditors, the scope of theiraudit plan, their evaluation ofthe system of internal controland the audit reports on thefinancial statements.

vi. the selection, remunerationand resignation or dismissal ofthe External Auditors.

vii. the scope, function andresources of Internal Auditfunction and authoritynecessary to carry out itsduties.

viii. the Internal Auditprogramme, processes andresults of the audit work,process of investigationundertaken and whether ornot appropriate action istaken on therecommendations of theInternal Audit function.

ix. any related party transactionand conflict of interestsituation that may ariseincluding any transaction,procedure or course ofconduct concerningManagement’s integrity.

x. allocation of options duringthe year under the EmployeeShare Option Scheme (ESOS) isin accordance with the criteriadetermined by the ESOScommittee and in compliancewith the ESOS by-laws.

xi. matters conveyed to the Boardthat have not beensatisfactorily resolved resultingin a breach of the ListingRequirements of BursaMalaysia Securities Berhad arepromptly reported to BursaMalaysia Securities Berhad.

xii. any other matters as may bedirected by the Board fromtime to time.

Audit Committee Report

pg 80

INTERNAL AUDITFUNCTION

The Company has an adequatelyresourced Internal AuditDepartment which adopts a risk-based audit approach whenestablishing its audit plan andstrategy. The Internal AuditDepartment’s main role is toprovide reasonable assurance thatthe internal control systemscontinue to operate satisfactorilyand effectively. During the year,the Internal Audit Department hadundertaken independent andobjective reviews of the system ofinternal controls that includedgovernance, risk management andinformation system of major areaswithin the Group operations. TheInternal Audit reports weredeliberated by the AuditCommittee and therecommendations were dulyimplemented by management.

Regular risk assessment reports,arising from risk evaluationsundertaken by the management,were summarised by Internal AuditDepartment for consideration ofthe Audit Committee.

SUMMARY OF ACTIVITIES

Activities carried out by the AuditCommittee during the financialyear ended 31 July 2006 includedthe deliberation and review of :

i. the unaudited quarterlyfinancial results of the Groupprior to submission to theBoard for consideration andapproval; matters arising fromthe audit of the Group in ameeting with the externalauditors without the presenceof the management;

ii. the audited year-end financialresults of the Group prior tosubmission to the Board forconsideration and approval;

iii. the Audit Committee Reportand its recommendation tothe Board for inclusion in theAnnual Report;

iv. the Statement on InternalControl and Statement ofCorporate Governance and itsrecommendation to the Boardfor inclusion in the AnnualReport;

v. the audit plan of the ExternalAuditors in terms of theirscope of audit prior tocommencement of theirannual audit;

vi. the audit reports of theExternal Auditors in relationto audit and accounting issuesarising from the audit;

vii. new development andupdates on FinancialReporting Standards issued byMalaysian AccountingStandards Board and theirimpact on the Group;

viii. the performance of theExternal Auditors and therecommendations to theBoard on their reappointmentand remuneration;

ix. related party transactions asrequired under the BursaMalaysia Securities Berhad’sListing Requirements toascertain that transactions areconducted at arm’s lengthprior to submission for theBoard’s consideration andwhere appropriate,shareholders’ approval;

x. the summaries of riskassessment results arising fromrisk evaluations conducted bythe Management prior totheir submission to the Boardfor their consideration;

xi. the risk-based annual auditplan presented by the InternalAuditors for the Group;

xii. the audit reports presented bythe Internal Auditors on majorfindings, recommendationsand Management’s responsesthereto;

xiii. options allocation pursuant tothe ESOS of the companyduring the Financial YearEnded 31 July 2006 that wasverified by the InternalAuditors, was found to thesatisfaction of the AuditCommittee to be consistentwith the ESOS by-laws and thecriteria set out by the ESOSCommittee;

xiv. the results of follow-up auditsconducted by the InternalAuditors on theManagement’simplementation of auditrecommendations.

pg 81

Statement of Directors’ Interestsas at 27 November 2006

As shown in the Register of Directors’ Shareholdings.

Other than disclosed below, there is no other Director of the Company who has interest in the shares, warrantsand options over shares in Gamuda Berhad and its related corporations.

GAMUDA BERHAD

NO. OF ORDINARY SHARES OF RM1.00 EACH

Name of Director Direct % Deemed %

Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim 325,828 0.04 – –Dato’ Lin Yun Ling – – 46,848,818^ 6.13Raja Dato’ Seri Eleena binti Raja Azlan Shah – – 76,000,000* 9.95Dato’ Ir Kamarul Zaman bin Mohd Ali 667,000 0.09 – –Ng Kee Leen 12,636,114 1.65 – –Goon Heng Wah 10,000,000 1.31 – –Ha Tiing Tai 11,907,938 1.56 – –

Notes:

^ Through HSBC (Malaysia) Trustee Berhad

* Through Generasi Setia (M) Sdn Bhd and

include ordinary shares held by Generasi Setia (M) Sdn Bhd through a nominee company

NO. OF WARRANTS 1996/2006

Name of Director Direct % Deemed %

Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim 110 # – –Dato’ Lin Yun Ling – – 8,053,442^ 13.18Ng Kee Leen 2,168,000 3.55 – –Goon Heng Wah 1,000,058 1.64 – –

Notes:

# Less than 0.01%

^ Through HSBC (Malaysia) Trustee Berhad

pg 82

NO. OF WARRANTS 2001/2007

Name of Director Direct % Deemed %

Dato’ Lin Yun Ling – – 12,240,551^ 9.59Raja Dato’ Seri Eleena binti Raja Azlan Shah – – 8,800,000* 6.89Dato’ Ir Kamarul Zaman bin Mohd Ali 271,500 0.21 – –Ng Kee Leen 4,308,335 3.37 – –Goon Heng Wah 2,996,000 2.35 – –Ha Tiing Tai 3,477,000 2.72 – –

Notes:

^ Through HSBC (Malaysia) Trustee Berhad

* Through Generasi Setia (M) Sdn Bhd

EMPLOYEES’ SHARE OPTION SCHEME OF GAMUDA BERHAD

Name of Director No. of option shares

Tan Sri Dato’ Ir Talha bin Haji Mohd Hashim 100,000Dato’ Lin Yun Ling 1,500,000Tan Sri Dato’ Mohd Ramli bin Kushairi 100,000Tan Sri Dato’ Seri Dr Haji Zainul Ariff bin Haji Hussain 100,000Raja Dato’ Seri Eleena binti Raja Azlan Shah 100,000Raja Dato’ Seri Abdul Aziz bin Raja Salim 100,000Dato’ Ir Kamarul Zaman bin Mohd Ali 630,000Dato’ Ir Haji Azmi bin Mat Nor 715,000Ng Kee Leen 900,000Goon Heng Wah 900,000Ha Tiing Tai 900,000Wong Chin Yen 100,000Saw Wah Theng 825,000Chow Chee Wah 715,000(Alternate Director to Dato’ Lin Yun Ling)

pg 83

Additional Compliance Information

STATUS OF UTILISATION OF PROCEEDS FROM THE BONDS ISSUE AND RIGHTS ISSUEOF WARRANTS

The status of utilisation of the proceeds from the 3% Redeemable Unsecured Bonds 2000/2007 and Rights Issue ofWarrants as at 31 July 2006 was as follows:

Description Approved Utilisation Actual UtilisedRM’000 RM’000

Repayment of borrowings 115,000 115,000Part payment for land acquisition 60,000 60,000Working capital 100,700 100,700Expenses of bonds issue 4,300 4,300Investment in Syarikat Pengeluar Air SelangorHoldings Berhad 120,000 120,000(Holding company of SPLASH)

Total 400,000 400,000

RECURRENT RELATED PARTY TRANSACTION

The recurrent related party transaction conducted pursuant to Shareholders’ Mandate during the financial year2006 was as follows:

Nature of Party Transacting with Gamuda Transacted Value Relationship of InterestedTransaction Engineering Sdn Bhd (“GESB”)* (RM‘000) Related Party

Design and Lingkaran Trans Kota 844 Dato’ Lin Yun Ling andconstruction Sdn Bhd (“LTKSB”)# Mr Ng Kee Leen are commonfor upgrading directors of Gamuda and Litrak.works on Dato’ Lin Yun Ling is also a majorLebuh Raya shareholder of Gamuda and aDamansara– shareholder of Litrak.Puchong Mr Ng Kee Leen is also a

shareholder of Gamuda andLitrak.

* GESB is a wholly-owned subsidiary of Gamuda Berhad (“Gamuda”).# LTKSB is a wholly-owned subsidiary of Lingkaran Trans Kota Holdings Berhad (“Litrak”).

NON-AUDIT FEES

The amount of non-audit fees paidto external auditors by theCompany and its subsidiaries forthe financial year 2006 wasRM218,000.

SHARES BUY-BACK

The Company did not purchase anyof its own shares during thefinancial year 2006.

EXERCISE OF OPTIONS,WARRANTS ORCONVERTIBLE SECURITIES

During the financial year 2006,

i) 3,580,000 options wereexercised in relation to theEmployees’ Share OptionScheme;

ii) 80,000 Warrants 2001/2007were exercised and convertedinto ordinary shares.

MATERIAL CONTRACTSINVOLVING DIRECTORS’/MAJOR SHAREHOLDERS’INTERESTS

Other than as disclosed in Note 38of the Financial Statements, therewere no material contracts enteredinto by the Company or itssubsidiaries involving Directors’and major shareholders’ interestssince 1 August 2005.

REVALUATION POLICY ONLANDED PROPERTIES

The Group does not adopt a policyof regular revaluation.

IMPOSITION OFSANCTIONS OR PENALTIES

There were no material sanctionsor penalties imposed by therelevant regulatory bodies on theCompany or its subsidiaries,directors or management duringthe financial year 2006.