2014 - Malakoff · PT. Teknik Janakuasa POwER gENERATION 93.75% Segari Energy Ventures Sdn Bhd 75%...

2014AnnuAl RepoRt

Malakoff Corporation berhad (731568-V)

level 10, Block 4, plaza SentralJalan Stesen Sentral 550470 Kuala lumpur, MAlAYSIA

tel : 603 2263 3388Fax : 603 2263 3333

www.malakoff.com.my

A Member of the MMC Group

2015 is a year that we will witness not only of Malakoff’s relisting and market reentrance, but the outlined dedication and commitment of our people who have made it all possible. It will take to the fore their belief, and of the extraordinary endeavour of coming together as one, and in it, powering growth against constant challenges that we have faced. In the end, their achievements speak volume above all.

The Group’s foresight as Captain of the industry, remaining the leading independent power and water producer today is at its most defined moment, a tribute to our people in upholding the corporate values of Malakoff, and their spirit as envisioned towards excellence. With this, the Group’s enduring strength as an environmentally caring company and the directional goals of sustainability continues.

C

goalTo be a premier global power and water company

Core BusinessPower generation and water desalination

CriTiCal sTrengTHs

Project development & execution•Plant operations – license to operate•Financial discipline•Strong governance structure•

MissionAspiring to become the preferred employer •of choiceDeliver superior shareholder value•Sought after as a “partner”•Sustaining “best in class” operating discipline•Earning respect as a “good corporate citizen”•

CorporaTe Values

Integrity•Teamwork•Innovation•Excellence•Harmony•

02Annual Report 2014

MALAKOFF CORPORATION BERHAD

ConTenTstable of

Business Review

Group Financial & 04Performance Highlights

Corporate Profile 07

Corporate Information 08

Malakoff’s Shareholders 09

Malakoff’s Structure 10

Management Team

Organisational Structure 30

Members of Management 32Committee

Directors’ Profile

Board of Directors 14

Board of Directors’ Profile 16

03

Corporate Performance

Chairman’s Statement 36

Performance Review 48by Chief Executive Officer

• AssetPerformance

• Operation&Maintenance

• ElectricityDistribution and Chilled Water Supply

• Ventures

CorporateResponsibility

Corporate Responsibility 76

• CommunityDevelopment

• WorkplaceDevelopment

• EnvironmentalPreservation

• MarketplaceDevelopment

Highlights

Corporate Events Highlights 82

Financial StatementsFinancial Statements 89



group FinanCial& perForManCe HigHligHTsRevenue

+18.59%

RM5,594 million

Profit After Tax & Minority Interest

+111.11%

RM342 million

Total AssetsEmployed

+4.52%

RM29,336 million

Net AssetsPer share

+1.26%

RM11.28

Shareholders’ Funds

+1.23%

RM3,964 million

Earnings Per Share

+110.87%

97 sen

FY2013 FY2014 RM’000 RM’000 Restated

Revenue 4,717,419 5,594,484

Profit before tax 84,147 595,484

PATMI 161,533 341,549

Paid-up capital 351,314 351,344

Shareholders’ funds 3,915,724 3,963,649

Total assets employed 28,068,287 29,336,072

Per share (sen) earnings 46 97

Dividend (gross) per share 42 45

Net assets per share (RM) 11.14 11.28

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

05

Revenue

Profit After Tax & Minority Interest

Shareholders’ Funds

Total Assets Employed

Earnings Per Share

Net Assets Per share

4,717

162

3,916

28,068

46

11.14

5,594

342

3,964

29,336

97

11.28

RM

Millio

nR

M M

illion

RM

Millio

nR

M M

illion

Sen

RM

07

CorporaTeproFileMalakoff’s power generation assets are held through a number of subsidiaries and associate companies:

• SEV Power Plant through a 93.75 percent equityinterest in Segari Energy Ventures Sdn Bhd(“SEV”)

• GB3 Power Plant through a 75.0 percent equityinterest in GB3 Sdn Bhd (“GB3”)

• Prai Power Plant through its wholly-ownedsubsidiary Prai Power Sdn Bhd (“PPSB”)

• Tanjung Bin Power Plant through a 90.0 percentequity interest in Tanjung Bin Power Sdn Bhd(“TBPSB”)

• Port Dickson Power Plant through a 100 percentequity interest in Port Dickson Power Berhad, viaits wholly owned subsidiary Hypergantic Sdn Bhd*

• Kapar Power Station through a 40.0 percentequity interest inKaparEnergyVenturesSdnBhd(“KEV”)

• On the international front, we own an effectivecapacity of 689.6 MW of power and 358,206 m3/day of water desalination. These projects are located in Saudi Arabia, Bahrain, Algeria and Australia.

Furthermore, Malakoff provides services through its wholly-owned subsidiary companies:

• Operation and maintenance (“O&M”) servicesthrough wholly-owned Malakoff Power Berhad (“MPower”), and Teknik Janakuasa Sdn Bhd (“TJSB”)

• Electricity distribution activities through MalakoffUtilities Sdn Bhd (“MUSB”) a wholly-owned subsidiary, that currently supplies centralised chilled water and distributes electricity to the landmark Kuala Lumpur Sentral development (“KL Sentral”)

• Project management services for in-house andexternal projects through Malakoff Engineering (“MESB”), a wholly owned subsidiary of Malakoff.

At Malakoff, we aim to work together with all stakeholders for productive partnerships. We believe that long-term partnerships re-enforce our success. As an asset-centered organisation, we maximise the value of assets we manage for our shareholders and partners. We do this by fully understanding the elements of cost, risk and performance unique to the environment inwhich we operate.

Malakoff Corporation Berhad (“Malakoff”) is one of the leading independent power and water producers based in Asia with a world-class reputation. Our core business includes power generation, water desalination and operation & maintenance services. In Malaysia, we own an effective generation capacity of 5,346 MW comprising of six power stations that run on gas, oil and coal.



CorporaTe inForMaTionDIRECTORSY.A.M. TAN SRI DATO’ SERI SYED ANwAR JAMAlullAIlIndependent Non-Executive Chairman

DATO’ SRI CHE KHAlIB BIN MOHAMAD NOHNon-Independent Non-Executive Director

DATuK MuHAMAD NOOR BIN HAMIDNon-Independent Non-Executive Director

CINDY TAN lER CHINNon-Independent Non-Executive Director

wAN KAMARuzAMAN BIN wAN AHMADNon-Independent Non-Executive Director

DATuK OOI TEIK HuATNon-Independent Non-Executive Director

TAN SRI DATO’ SERI AlAuDDIN BIN DATO’ MOHD SHERIFFIndependent Non-Executive Director

DATuK IDRIS BIN ABDullAHIndependent Non-Executive Director

DATuK DR. SYED MuHAMAD BIN SYED ABDul KADIRIndependent Non-Executive Director

KANAD SINgH VIRKNon-Independent Non-Executive Director

zAlMAN BIN ISMAIlAlternate to Wan Kamaruzaman bin Wan Ahmad

CRAIg ROBERT MARTINAlternate to Kanad SinghVirk

COMPANY SECRETARIESYEOH SOO MEI (MAICSA 7032259)

NISHAM@ABu BAKAR BIN AHMAD (MAICSA 7043879)

AuDIT COMMITEE MEMBERSDATuK DR. SYED MuHAMAD BIN SYED ABDul KADIRChairman

DATuK IDRIS BIN ABDullAH

TAN SRI DATO’ SERI AlAuDDIN BIN DATO’ MOHD SHERIFF

DATuK OOI TEIK HuAT

REMuNERATION COMMITTEE MEMBERSY.A.M. TAN SRI DATO’ SERI SYED ANwAR JAMAlullAIl Chairman

wAN KAMARuzAMAN BIN wAN AHMAD

DATuK DR. SYED MuHAMAD BIN SYED ABDul KADIR

RISK COMMITTEE MEMBERSDATuK IDRIS BIN ABDullAH Chairman

DATuK MuHAMAD NOOR BIN HAMID

DATuK DR. SYED MuHAMAD BIN SYED ABDul KADIR

CINDY TAN lER CHIN

NOMINATION COMMITTEE MEMBERSTAN SRI DATO’ SERI AlAuDDIN BIN DATO’ MOHD SHERIFFChairman

DATuK IDRIS BIN ABDullAH

DATuK MuHAMAD NOOR BIN HAMID

REgISTERED OFFICEGround Floor, Wisma BudimanPersiaran Raja Chulan, 50200 Kuala LumpurTel : +603-2071 1000Fax : +603-2026 2378

Level 12, Block 4, Plaza SentralJalan Stesen Sentral 5, 50470 Kuala LumpurTel : +603-2263 3388Fax : +603-2263 3333

AuDITORSKPMg

PRINCIPAl BANKERMAlAYAN BANKINg BERHAD

COMPANY ADDRESSLevel 10, Block 4, Plaza SentralJalan Stesen Sentral 5, 50470 Kuala LumpurTel : +603-2263 3388Fax : +603-2263 3333Website : www.malakoff.com.my

09

MalakoFF’ssHareHolders as at 28 February 2015

Employees Provident Fund (“EPF”)

MMC Corporation Berhad (“MMC”)Anglo-Oriental (Annuities) Sdn Bhd (“AOA”)** AOA is a wholly-owned subsidiary of MMC

Kumpulan wang Persaraan (Diperbadankan) (“KwAP”)

Standard Chartered Il & FS Asia Infrastructuregrowth Fund Company Pte limited (“SCI Asia”)

SEASAF Power Sdn Bhd (“SEASAF”)

30%

22.44%

28.56%

10% 6.5%2.5%

EPF

MMC

AOA

KwAP SCI ASIA

SEASAF



100% Malakoff Power Berhad

100%Tanjung Bin O&M Berhad

100%PDP O&M Sdn Bhd

100%Teknik Janakuasa Sdn Bhd

100%Natural Analysis Sdn Bhd I

100%TJSB Services Sdn Bhd

100%TJSB International Limited

100%TJSB International (Shoaiba) Limited

20% Saudi-Malaysia Operation &Maintenance Services Company Limited

20%Al-Imtiaz Operation & MaintenanceCompany Limited

100%TJSB Middle East Limited

31.5%Muscat City Desalination Operation andMaintenance Company LLC

100%TJSB Global Sdn Bhd

49%Hyflux-TJSB Algeria SPA

95%PT. Teknik Janakuasa

POwER gENERATION

93.75% SegariEnergyVenturesSdnBhd

75%GB3 Sdn Bhd

100%Prai Power Sdn Bhd

90%Tanjung Bin Power Sdn Bhd

40%KaparEnergyVenturesSdnBhd

100%Hypergantic Sdn Bhd

100%Port Dickson Power Berhad

100%Tanjung Bin Energy Sdn Bhd

100%Tanjung Bin Energy Issuer Berhad

ElECTRICITY DISTRIBuTION

100% Malakoff Utilities Sdn Bhd

OPERATION AND MAINTENANCE SERVICES

MalakoFF’s sTruCTure as at 28 February 2015

I Dormant

II Malakoff’seffectiveequity interestof20percentand 12 percent in SAMAWEC and SWEC respectively is held via MGL which holds 40 percent equity interest in MSCSB which in turnholds 50 percent equity interest in SAMAWEC.SAMAWEC holds 60 percent equity interest in SWEC.

lll Malakoff’s effective equity interest of 11.9percent in SEPCO is held via MGL which holds 40 percent equity interest in MSCSB

which in turn holds 50 percent equity interestin SAMAWEC. SAMAWEC holds 60 percent in SEHCO which in turn holds 97.5 percent equityinterest in SEPCO. SAMAWEC also holds a direct equity interest of 1 percent in SEPCO.

IV Malakoff’s effective equity interest of 43.48percent in SPHL is held via Malakoff Technical (Dhofar) Limited which holds a direct 43.48 percent equity interest in OTPL which in turnholds 100 percent equity interest in SPHL.

V Malakoff’s effective equity interest of 35.7percent in AAS is held via MADSB which holds 70 percent equity interest inTDIC which in turnholds 51 percent equity interest inAAS.

VI Malakoff’seffectiveinterestof40percent inHPCis held via MHHCL which holds 57.14 percent equity interest in MSHHCL which in turn holds70 percent equity interest in HPC.

VII MWM holds 50 percent participating interestin the unincorporated joint venture of the Macarthur Wind Farm.

11

100% Malakoff Oman Desalination Company Limited

45%Muscat City Desalination Company S.A.O.C

100%Malakoff Hidd Holding Company Limited VI

57.14%Malakoff Summit Hidd Holding Company Limited VI

40%Hidd Power Company B.S.C (c) (“HPC”) VI

100%Pacific Goldtree Sdn Bhd

100%Skyfirst Power Sdn Bhd

100%Wind Macarthur Holdings (T) Pty. Limited

100%Wind Macarthur (T) Pty. Limited

100%Wind Macarthur Finco Pty. Limited

100%Malakoff Australia Pty. Ltd.

100%Malakoff Holdings Pty. Ltd.

100%Malakoff Wind Macarthur Holdings Pty. Limited

100%Malakoff Wind Macarthur Pty. Limited(“MWM”) VII

100% Spring Assets Limited I

100%Malakoff Capital (L) Ltd I

100%Malakoff International Limited (“MIL”)

100% Malakoff Gulf Limited (“MGL”)

40%Malaysian Shoaiba Consortium Sdn Bhd (“MSCSB”)

20%Saudi-Malaysia Water & Electricity Company Limited (“SAMAWEC”) II

12% Shuaibah Water & Electricity Company Limited (“SWEC”) II

12% Shuaibah Expansion Holding Company Limited (“SEHCO”) III

11.7% 0.2% Shuaibah Expansion Project Company Limited (“SEPCO”) III

100% Malakoff Technical (Dhofar) Limited

43.48% Oman Technical Partners Limited (“OTPL”) IV

43.48% Salalah Power Holdings Limited (“SPHL”) IV

100% Malakoff AlDjazair Desal Sdn Bhd (“MADSB”)

70% Tlemcen Desalination Investment Company SAS (“TDIC”)

35.7% Almiyah Attilemcania SPA (“AAS”) V

100% Malakoff Engineering Sdn Bhd

100%MESB Project Management Sdn Bhd I

100% Tuah Utama Sdn Bhd

20%Lekir Bulk Terminal Sdn Bhd

54%Desa Kilat Sdn Bhd

100%Malakoff R&D Sdn Bhd

OFFSHOREPROJECT MANAgEMENT OTHERS

Delivering

PerformanceWith significant advances made in Malakoff’s consolidated effort to put the Group’s foundational strength well on track, we are making our mark and fully affirmed in the continuity of delivering performance.

BoardoF direCTors

Y.A.M. TAN SRI DATO’ SERI SYED ANwAR JAMAlullAIlIndependent Non-Executive Chairman

DATO’ SRI CHE KHAlIB BIN MOHAMAD NOHNon-Independent Non-Executive Director

DATuK MuHAMAD NOOR BIN HAMIDNon-Independent Non-Executive Director

MR KANAD SINgH VIRKNon-Independent Non-Executive Director

MADAM CINDY TAN lER CHINNon-Independent Non-Executive Director

DATuK OOI TEIK HuATNon-Independent Non-Executive Director

from left

DATuK DR. SYED MuHAMAD BIN SYED ABDul KADIRIndependent Non-Executive Director

DATuK IDRIS BIN ABDullAHIndependent Non-Executive Director

ENCIK wAN KAMARuzAMAN BIN wAN AHMADNon-Independent Non-Executive Director

TAN SRI DATO’ SERI AlAuDDIN BIN DATO’ MOHD SHERIFFIndependent Non-Executive Director

MR CRAIg ROBERT MARTINAlternatetoKanadSinghVirk

ENCIK zAlMAN BIN ISMAIlAlternate to Wan Kamaruzaman bin Wan Ahmad



Board oFdireCTors’ proFile

Y.A.M. TAN SRI DATO’ SERI SYED ANwAR JAMAlullAIlIndependent Non-Executive Chairman

17

Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail, aged 63, was appointed to our Board as our Independent Non-Executive Chairman on 1 December 2014. He is also the Chairman of our Remuneration Committee.

Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail holds a Bachelor of Arts degree in Accounting from Macquarie University in Sydney, Australiawhich he graduated in 1975. He is a qualifiedChartered Accountant, having qualified in 1983from the Malaysian Institute of Accountants (“MIA”) and in 1984 from Certified Practising Accountants Australia.

He commenced his career with Malaysia Airlines Systems Berhad in 1975 as a Financial Accountant, before moving on to Price Waterhouse Australia in 1980. He then joined D & C Nomura Merchant Bank Berhad for a year from 1984 to 1985 as Investment Manager. In 1986, he joined Amanah Merchant Bank Berhad where he held the position of Corporate Finance Manager. He was then appointed as a

Managing Director of Mega SPJ Sdn Bhd and Coral Land Sdn Bhd, property development companies from 1989 to 1998. He then served Amanah Capital Partners Bhd as its Group Managing Director from October 1998 to 2002. Since then, Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail was appointed as Chairman of several companies including Malaysian Resources Corporation Berhad, Media Prima Berhad, Realmild (M) Sdn Bhd, Radicare (M) Sdn Bhd, DRB-Hicom Berhad, EON Capital Berhad and EON Bank Berhad from 2002 until 2009. He was also a former Director of Maxis Communications Berhad and Bangkok Bank Berhad.

Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail was also the former Chairman of the Lembaga Tabung Haji Investment Panel and Matrix Capacity Petroleum Group Berhad. He is currently the Chairman of Nestle (M) Berhad, Pulau Indah Ventures Sdn Bhd, (a joint venture companybetween Khazanah Nasional Berhad (“Khazanah”) and Temasek Holdings (Private) Limited) and Cahya Mata Sarawak Berhad. He is also the Chancellor of SEGi University and the Chairman of the Board of Trustee of Lembaga Zakat Selangor.



Board oF direCTors’ proFile (continue)

DATO’ SRI CHE KHAlIBBIN MOHAMAD NOHNon-Independent Non-Executive Director

19

Dato’ Sri Che Khalib Mohamad Noh, aged 49, was appointed to our Board as our Managing Director on 1 July 2013. He resigned as our Managing Director on 8 December 2014 and has been redesignated as our Non-Independent Non-Executive Director on 9 December 2014.

Dato’ Sri Che Khalib Mohamad Noh is a member of the Malaysian Institute of Accountants (CA, M) and also a Fellow of the Association of Chartered Certified Accountants (FCCA, UK) United Kingdom.

He began his career with Messrs Ernst & Young in 1989 and later joined Bumiputra Merchant Bankers Berhad. Between 1992 and 1999, he served in several companies within the Renong group including Projek Lebuhraya Utara Selatan Berhad (PLUS), HBN Management Services Sdn Bhd, Renong Overseas Corporation Sdn Bhd and Marak Unggul Sdn Bhd, which is the consortium responsible for the management of the Keretapi Tanah Melayu Berhad. In June 1999, he joined Ranhill Utilities Berhad as Chief Executive Officer. He then assumed the position of Managing Director and Chief Executive Officer of KUB Malaysia Berhad in 2002.

Dato’ Sri Che Khalib Mohamad Noh was then appointed as the President/Chief Executive Officer of Tenaga Nasional Berhad (“TNB”) on 1 July 2004 where he served TNB for eight years until the completion of his contract on 30 June 2012. During his tenure at TNB, Dato’ Sri Che Khalib Mohamad Noh drove many improvement initiatives that resulted in TNB becoming one of the success stories in the Malaysia’s GLC Transformation Programme. He shaped and set the corporate strategies for TNB when he came up with its 20-year strategic plan in September 2005.

At present, Dato’ Sri Che Khalib Mohamad Noh is the Group Managing Director of MMC Corporation Berhad (“MMC”). Prior to his current role, he served as Chief Operating Officer of Finance, Strategy and Planning at DRB-Hicom Berhad. Dato’ Sri Che Khalib Mohamad Noh has also served on the Board of Directors in several of the United Engineers Malaysia Berhad group of companies, in Bank Industri & Teknologi Malaysia Berhad, and in Khazanah Nasional Berhad from 2000 to 2004, where he also served on the Executive Committee. He currently sits on the boards of MMC, Zelan Berhad, Johor Port Berhad, MMC Engineering Group Berhad, Aliran Ihsan Resources Berhad, Bank Muamalat Malaysia Berhad, Gas Malaysia Berhad, NCB Holdings Berhad and several private limited companies.

Dato’ Sri Che Khalib Mohamad Noh has received many accolades in recognition of his strong leadership including being named Malaysia’s “CEO of the Year” in 2008, organised by the New Straits Times and American Express. He was also named “CEO of the Year” at the inaugural Asia Power and Electricity Awards 2010 and was the recipient of the Lifetime Achievement Award at the Asian Utility Industry Awards 2012.



Datuk Muhamad Noor Hamid , aged 63, was appointed to our Board as our Non-Independent Non-Executive Director on 13 July 2009. He is also a member of our Nomination Committee and Risk Committee.

Datuk Muhamad Noor Hamid obtained a Bachelor of Science (Hons) in Mechanical Engineering from Sunderland Polytechnic, England in 1977 and a Post Graduate Diploma in Gas Engineering from the Institute of Gas Technology in Chicago, Illinois, USA in 1980. He has also attended the Management Program in 1992 at the Wharton Business School of Management, University of Pennsylvania, USA.

Datuk Muhamad Noor Hamid has held numerous positions during his 20 years of service in PETRONAS and PETRONAS Gas Sdn Bhd, including heading the Peninsular Gas Utilisation II project team. He also worked in OGP Technical Services Sdn Bhd,

DATuK MuHAMAD NOOR BIN HAMIDNon-IndependentNon-Executive Director

a joint venture company between PETRONAS and Novacorp Corporation of Canada, where he was the General Manager of the Pipeline Division. His expertise has taken him to overseas assignments mainly in Sudan where he was the Project Director for the Muglad Basin Oil Development Project. In 2000, he was appointed as the Chief Operating Officer of Projass Engineering Sdn Bhd, a Class A Bumiputera construction company. He joined Gas Malaysia Berhad in 2003 as Chief Operating Officer andwassubsequentlyappointedasChiefExecutiveOfficer in February 2004. On 24 April 2006, he was promoted to the position of Managing Director of Gas Malaysia Berhad. On 31 December 2013, he retired from Gas Malaysia Berhad.

He has more than 30 years of direct working experience in the oil and gas industry ranging from project planning and implementation, operation, consulting and contracting.


21

CINDY TAN lER CHINNon-IndependentNon-Executive Director

Tan ler Chin, aged 54, was appointed to our Board as our Non-Independent Non-Executive Director on 9 August 2007. She is also a member of our Risk Committee.

Tan Ler Chin obtained an Honours degree in Economics, majoring in statistics, from Universiti Kebangsaan Malaysia in 1984. In 1991, she obtained a Certified Diploma in Accounting and Finance, accorded by the Chartered Association of Certified Accountants. In 1995, she attended the Wharton-National University of Singapore Banking Programme.

Tan Ler Chin joined Employees Provident Fund (“EPF”) in 1984. Since then she has served in the Finance Department, Treasury Department, Fund Management Function and was the Head of Fixed Income Investment of EPF until June 2009, before she was appointed to her current position as the Head of Investment Compliance and Settlement of EPF.



Kanad Singh Virk, aged 48, was appointed to our Board as our Non-Independent Non-Executive Director on 16 December 2013.

KanadSinghVirkreceivedaBachelorofArtsdegreewith a joint major in Mathematical Economics and History from Pomona College, USA in 1988 and a Juris Doctor Degree (magna cum laude) from the University of Minnesota Law School, USA in 1992.

Kanad Singh Virk is the Managing Director ofStandard Chartered Private Equity Limited, based inSingapore and a Director and the Chief Operating Officer of SCI Asia. He has 20 years of experience, including private equity investing, mergers andacquisitions, project finance and financings ina broad range of industries. In his capacity as the Chief Operating Officer of SCI Asia, he leads

SCI Asia’s functions related to legal, compliance, finance and accounting. He has been actively involved in the execution, management and exit of several investments.

Prior to joining Standard Chartered in 2008, he was with Goldman Sachs for 10 years, where he held several senior positions, including the Chief Operating Officer of Private Wealth Management – Europe, the Middle East and Africa and earlier, Asia, and was a member of the Asia ex-Japan Mergers and Acquisitions group in the InvestmentBanking Division. He previously worked as a lawyer in mergers and acquisitions and energy projectfinance at Cravath, Swaine & Moore in New York and later at Skadden Arps, Slate, Meagher, Flom LLP in LosAngeles, Hong Kong, London andVienna.


KANAD SINgH VIRKNon-IndependentNon-Executive Director

23

Datuk Ooi Teik Huat, aged 55, was appointed to our Board as our Non-Independent Non-Executive Director on 1 January 2012. He is also a member of our Audit Committee.

Datuk Ooi Teik Huat obtained a Bachelor degree in Economics from Monash University, Melbourne, Australia in 1984 and is a member of the Malaysian Institute of Accountants and CPA Australia.

Datuk Ooi Teik Huat began his career with Messrs Hew & Co. (now known as Messrs Mazars), Chartered Accountants in 1984. After leaving Messrs Hew & Co in June 1989, he joined Malaysian International

Merchant Bankers Berhad (now known as Hong Leong Investment Bank Berhad) until August 1993. He subsequently joined Pengkalan Securities SdnBhd (now known as PM Securities Sdn Bhd) in August 1993 as Head of Corporate Finance, before leaving in September 1996 to set up Meridian Solutions Sdn Bhd where he is presently a director.

Datuk Ooi Teik Huat also sits on the board of directors of MMC Corporation Berhad, Tradewinds (M) Berhad, Tradewinds Plantation Berhad, DRB-HICOM Berhad, Zelan Berhad, Johor Port Berhad, Gas Malaysia Berhad, MARDEC Berhad, Padiberas Nasional Berhad and several private limited companies.

DATuK OOI TEIK HuATNon-IndependentNon-Executive Director



Tan Sri Dato’ Seri Alauddin Dato’ Md Sheriff, aged 68, was appointed to our Board as our Independent Non-Executive Director on 11 December 2012. He is also the Chairman of our Nomination Committee and a member of our Audit Committee.

Tan Sri Dato’ Seri Alauddin Dato’ Md Sheriff was admitted as an Utter Barrister of the Honourable Society of Inner Temple, London, having been called to the Bar of England & Wales in 1970.

Tan Sri Dato’ Seri Alauddin Dato’ Md Sheriff held various posts in the legal and judicial service since 1971. He started his career with the Judiciary as a Magistrate in Bukit Mertajam in 1971 and in Kangar in 1972. Thereafter, he was appointed as President of the Sessions Court in Sungai Petani, Kuantan and Taiping. In 1977, he was appointed as Senior Federal Counsel with the Income Tax Department and the Attorney General’s Chambers. In June 1979, he was seconded to PETRONAS Carigali Sdn Bhd as its Secretary cum Legal Advisor. Thereafter, he was appointed as the Legal Advisor to the State of Johor in October 1980. In April 1982, he took the office of the Legal Advisor of Negeri Sembilan. He was again appointed as the Legal Advisor to the State of Johor in June 1983. He was appointed as the Chairman of the Advisory Board in the Prime Minister’s Department since June 1989.

Tan Sri Dato’ Seri Alauddin Dato’ Md Sheriff was appointed as Judicial Commissioner of the High Court of Malaya in Kuala Lumpur on 1 February 1992 and was transferred to the High Court of Malaya in Johor in the same year. He was later elevated as the Judge of the High Court wherein he had served in the High Courts of Johor, Kangar and Alor Star before being elevated to the Court of Appeal in April 2001. After serving for about three years in the Court of Appeal, he was elevated to the Federal Court of Malaysia on 12 July 2004. During his tenure as a Judge of the Federal Court, he had the occasion of carrying out the duties and functions of the President of the Court of Appeal from 15 August 2006 until 4 September 2007. On 5 September 2007, he was appointed as the Chief Judge of Malaya and on 18 October 2008, he was appointed as the President of the Court of Appeal until his retirement in August 2011.

He also sits on the board of AFFIN Holdings Berhad andVertical Inter Circle Sdn Bhd.


TAN SRI DATO’ SERI AlAuDDIN BIN DATO’ MOHD SHERIFFIndependentNon-Executive Director

25

Datuk Idris Abdullah @ Das Murthy, aged 58, was appointed to our Board as our Independent Non-Executive Director on 11 December 2012. He is also the Chairman of our Risk Committee and a member of our Audit Committee and Nomination Committee.

Datuk Idris Abdullah @ Das Murthy graduated from Universiti Malaya in 1981 with a LLB. (Hons) degree. His career started in 1981 where he read in chambers at Messrs. Ting Tung Ming Esq in Sibu, Sarawak. In 1982, he was admitted to The Roll of Advocates of The High Court of Malaya in Sabah and Sarawak. He also served as Resident Lawyer at Ting & Company, Sibu, Sarawak from 1981 to 1983, the In-House Legal Advisor of Sarawakian Group of Companies from 1984 to 1985 and has been with Messrs. Idris & Company Advocates, Kuching, Sarawak since 1985 and is currently a Senior Partner in Messrs. Idris & Company Advocates, Kuching, Sarawak.

His experience in the corporate sector began in 1979 as a partner/shareholder in a group of Bumiputra companies in Sibu, Sarawak. From 1995 to date, he is an advisor to a number of Sarawak companies engaged in construction and building, motor trading, recreation club and educational institution. He was also a director/shareholder of a Bumiputra PKK Class A/CIDB Group 7 company engaged in a number of government building/infrastructure projects. From September 2002 to September 2005, he was the Director and Chairman of Kuantan Flourmills Berhad.

He is the former Commission Member of the Companies Commission of Malaysia (“CCM”) and is also a Commission Member of the Malaysian Communications and Multimedia Commission (SKMM).

Datuk Idris Abdullah @ Das Murthy is the Chairman of Xian Leng Holdings Berhad and also sits on the board of directors of several private limited companies.

DATuK IDRIS BIN ABDullAHIndependentNon-Executive Director



Datuk Dr. Syed Muhamad Syed Abdul Kadir, aged 68, was appointed to our Board as our Independent Non-Executive Director on 11 December 2012. He also is the Chairman of our Audit Committee and a member of our Remuneration Committee and Risk Committee.

Datuk Dr. Syed Muhamad Syed Abdul Kadir graduated with a Bachelor of Arts (Hons.) from Universiti Malaya in 1971. He obtained a Masters of Business Administration from the University of Massachusetts, USA, in 1977 and proceeded to obtain a PhD (Business Management) from Virginia Polytechnic Institute and State University,USA in 1986. In 2005, he obtained a Bachelor of Jurisprudence (Hons.) from the University of Malaya. He obtained the Certificate in Legal Practice in 2008 from the Malaysian Professional Legal Board. He was admitted as an Advocate and Solicitor of the High Court of Malaya in July 2009, and obtained the Master of Law (Corporate Law) from Universiti Teknologi MARA in December 2009. In June 2011, he became a member of the Chartered Institute of Arbitrators, United Kingdom and in May 2012, he became the fellow of the said Institute.

Datuk Dr. Syed Muhamad Syed Abdul Kadir started his career in 1973 as Senior Project Officer, School of Financial Management at the National Institute of Public Administration (INTAN) and held various positions before his final appointment as Deputy Director (Academic). In November 1988, he joined the Ministry of Education as Secretary of Higher Education and thereafter assumed the post of Deputy Secretary (Foreign and Domestic Borrowing, Debt Management), Finance Division of Federal Treasury. Between June 1993 to June 1997, he joined the board of directors of Asian Development Bank, Manila, the Philippines, first as alternate Executive Director and later as an Executive Director. In July 1997, he joined the Ministry of Finance as Secretary (Tax Division) and subsequently became theDeputy Secretary General (Operations) of Ministry of Finance. Prior to his retirement, he was Secretary General, Ministry of Human Resources from August 2000 to February 2003.

Datuk Dr. Syed Muhamad Syed Abdul Kadir is the Chairman of CIMB Islamic Bank Berhad, CIMB Middle East B.S.C (c) and CIMB-Principal Islamic Asset Management Sdn Bhd. He is also a Director of CIMB Bank Berhad, Euro Holdings Berhad, Solution Engineering Holdings Berhad, BSL Corporation Berhad, ACR ReTakaful Berhad, Sun Life Malaysia Assurance Berhad and Sun Life Malaysia Takaful Berhad. He also holds directorships in a number of private companies.


DATuK DR. SYED MuHAMAD BIN SYED ABDul KADIRIndependentNon-Executive Director

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wan Kamaruzaman wan Ahmad , aged 55, was appointed to our Board as our Non-Independent Non-Executive Director on 21 May 2013. He is also a member of our Remuneration Committee.

Wan Kamaruzaman Wan Ahmad obtained a Bachelor of Economics degree in Analytical Economics from the University of Malaya in 1981.

Wan Kamaruzaman Wan Ahmad is currently the Chief Executive Officer of KWAP and has been serving since May 2013. Previously, he served as the General Manager of Treasury Department at the EPF from October 2007 until April 2013. He started his working career with Malayan Banking Berhad (“Maybank”) since 1981, mostly in Treasury Department with two overseas postings at Hamburg, Germany as Chief Dealer and London, United Kingdom as Treasury Manager. After leaving Maybank, he served in several companies within

the Affin bank group, as the Chief Executive Officer of Affin Moneybrokers Sdn Bhd from July 1994 to August 2003 and as the Chief Executive Officer of Affin Trust Management Sdn Bhd from September 2003 to November 2005.

He was also a board member of Affin Futures Sdn Bhd from September 1999 to December 2002 and a board member of Affin Fund Management Sdn Bhd from January 2004 to November 2005. He joined Kemuncak Facilities Management Sdn Bhd as the Executive Director-Finance and served the company till September 2006. He then joined Izoma Sdn Bhd as Executive Director-Finance from October 2006 till August 2007. He is a board member of Valuecap Sdn Bhd and Chairman ofi-VCapManagement SdnBhd.He isalsoadirectorof Prima Ekuiti (UK) Ltd, a subsidiary company of KWAP.

wAN KAMARuzAMAN BIN wAN AHMADNon-IndependentNon-Executive Director



Craig Robert Martin, aged 44, was appointed to our Board asAlternate Director to Kanad SinghVirkon 7 January 2014.

Craig Robert Martin obtained his Masters degree in Electronic Engineering from the University of York, United Kingdom and a Masters in Business Administration with distinction from INSEAD in 1992 and 2000, respectively. He has lived and worked in South East Asia for 21 years and during the last 14 years, he has been responsible for originating, structuring and executing numerous private equitydeals for institutional investors. He also developed, structured and raised funds from institutional and retail sources.

He joined Capital Advisors Partners Asia Pte Ltd (“CapAsia”) in mid-2010 where he is a Managing Director and Head of Fund for the South East Asian Strategic Assets Fund and the CapAsia ASEAN Infrastructure Fund III (“CAIF III”). He is a member of the investment committees for the South East

Asian Strategic Assets Fund and CAIF III and sits on the board of directors of the General Partner for CapAsia’s Islamic Infrastructure Fund. Prior to joining CapAsia, he was with Prudential Asset Management (Singapore) Limited (now known as Eastspring Investments (Singapore) Limited), a wholly-owned subsidiary of Prudential Plc for five years, where he served as an Investment Director of Prudential Vietnam Fund Management Companyfrom 2005 to 2009. Before joining Prudential, he was with Standard Chartered Private Equity Pte Limited,a wholly-owned subsidiary of Standard Chartered Bank Plc, from its inception where he served as an Associate Director.

He is a member of the Singapore Institute of Directors and sits on several of CapAsia’s boards and also holds a number of external non-executive director roles. He is a non-executive director of Myanmar Investments International Limited, a public company listed on the London Stock Exchange.


CRAIg ROBERT MARTINAlternate toKANAD SINgH VIRK

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zalman Ismail, aged 43, was appointed to our Board as the alternate director to Wan Kamaruzaman Wan Ahmad on 21 May 2013. Zalman Ismail was a member of our Board on 18 March 2013 before he resigned on 21 May 2013 to assume his current position as the alternate director to Wan Kamaruzaman Wan Ahmad.

Zalman Ismail obtained a Bachelor’s degree (Hons) in Business Administration (Finance) from Eastern Michigan University, United States in 1994.

He started his career in 1995 where he joined Rating Agency Malaysia as a credit analyst until 1997. He then worked as a stock broking analyst at Dresdner Kleinwort Benson Research (M) Sdn Bhd from 1997 to 1999. In 1999, he joined a telecommunication engineering company, Twin Worldwide Communication Sdn Bhd as General Manager of Finance & Operations until 2005.

He joined the Sime Darby Group in 2005 and held various positions in the Group including as Head of Value Management and Head of Investor Relationsfor the Sime Darby group and Head of Business Development for its Healthcare Division prior to leading the Strategy and Business Development Department of Sime Darby Property Berhad until 2011. He has over 19 years work experience and he also spearheaded the valuation and closing team for the mega plantation merger between Sime Darby Berhad, Kumpulan Guthrie Berhad and Golden Hope Plantations Berhad.

Zalman Ismail is currently the Director of Alternative Investment Department, KWAP, a position he held since 2011. His responsibilities include maximizing long-term returns through investments in private equity, property and infrastructure both local and overseas.

zAlMAN BIN ISMAIlAlternate towAN KAMARuzAMAN BIN wAN AHMAD



organisaTional

sTruCTureCHIEF

OPERATINgOFFICER

Information &Communications

Technology(“ICT”)

Teknik JanakuasaSdn Bhd (“TJSB”)

Maintenance,Repair & Overhaul

Department(“MRO”)

Operation &Maintenance

(“O&M”)

MalakoffUtilities Sdn Bhd

(“MUSB”)

Operation &Maintenance

Division*

Asset ManagementDivision

AssetDevelopment

Legal(Operation)

*Malakoff Power Berhad (”MPower”)

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CHIEFEXECuTIVEOFFICER

InternalAudit & Risk

Management

Group Finance and Accounts Division VenturesDivision

Corporate Affairs andExternal Relations

Department

Human Resource andAdmin Department

Legal Department(Projects)

from left

MeMBers oFManageMenT CoMMiTTeeDATO’ SRI SYED FAISAl AlBARChief Executive Officer

HABIB HuSINChief Operating Officer

NORDIN KASIMSeniorVicePresident,Operation & Maintenance Division

RuSwATI OTHMANChief Financial Officer/SeniorVicePresident,Group Finance & Accounts Division

AzHARI SulAIMANSeniorVicePresident,VenturesDivision

MOHD SHOKRI DAuDSeniorVicePresident,Asset Management Division

37

CHairMan’ssTaTeMenT

Commendable operational performance achieved the past year reinforced Malakoff’s resilience in coping with challenges. In Malaysia, many of our plants consistently performed above the Independent Power Producer (“IPP”) industry average in terms of energy availability factor and thermal efficiency. Critically, a far-reaching recovery programme for the Tanjung Bin Power Plant was completed in March 2014, with all three units of the plant operating at full capacity. Our performance on the domestic front was matched overseas, with many of our plants achieving an availability factor of more than 90.0 percent.

The good news on the operational front has translated into a robust financial performance. Revenue increased to RM5.594 billion for FY 2014, compared to RM4.717 billion posted the previous year.

The results achieved are a testament to our disciplined management approach and the dedication of our employees to deliver results. In positioning the Group for a new and dynamic

phase of growth, we have addressed a number of operational and structural issues and identified a clear path for the future. With all the fundamentals in place and riding the momentum established, Malakoff is now in a strong position to embark on a new chapter of dynamic and sustainable growth.

FINANCIAL PERFORMANCE

Despite a challenging operating environment, the Group posted revenue of RM5.594 billion for FY 2014. This was RM0.877 million or 19.0 percent higher than the RM4.717 billion recorded in FY 2013. The improved numbers were achieved on the back of the full recovery of the Tanjung Bin Power Plant and additional contribution from the Port Dickson Power Plant followingtheacquisitionof theremaining75.0percent equity interest in the plant not held by theGroup. Our 50 percent stake in the Macarthur Wind Farm in Australia also made its maiden contribution to Group revenue during the year.

Dear Stakeholders, In my inaugural message as Chairman of Malakoff Corporation Berhad (Malakoff), I am pleased to report that the Group’s performance in a challenging year underscored its fundamental strengths and the strong prospects in moving forward. At almost every front, where the year under review ended 31 December 2014 (FY 2014) was a particularly gratifying one for Malakoff.



For FY 2014, Group Profit After Tax and Minority Interest (“PATMI”) was posted at RM342 million, against RM162 million achieved previously. The improved result was mainly attributed to the successful implementation of the turnaround programme at the Tanjung Bin Power plant, which saw a significant improvement in the equivalent availability factor of 81.6percent. Overall commendable performances by all our plants also contributed towards improved profitability.

Total assets have been steadily rising over the years and as at the end of FY 2014 stood at RM29.34 billion, mainly due to the construction and development of the new Tanjung Bin Energy Power Plant. The Group has strong cash-generating ability due to the lucrative and dependable cash flows from its IPPs. According to Rating Agency Malaysia (“RAM”), Malakoff has a credit rating of at least AA3/AA at various levels in our group of companies.

DIVIDEND POLICY

The Board of Malakoff is recommending a dividend policy that will allow shareholders to participate in the Company’s profits, whilst retaining adequatereserves for working capital requirements. As partof this policy, the Company targets a dividend payout ratio of not less than 70.0 percent of its consolidated profit attributable to the owners of our Company beginning 1 January 2015.

CORPORATE DEVELOPMENTS

Malakoff was delisted in 2007, but from a new position of strength, we are now ready to open a new chapter in its ongoing transformation journey. On 27 November 2014, our parent company MMC Corporation Berhad (“MMC”) announced the proposed listing of Malakoff on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) via an Initial Public Offering (“IPO”). In mid-December 2014 Malakoff submitted applications to the various relevant authorities to undertake the proposed listing.

The approvals from the relevant authorities will pave the way for Malakoff to eventually undertake an IPO of up to 1,521,740,000 ordinary shares of RM0.10 each (“Shares”) representing approximately 30.0 percent of the enlarged issued and paid-up share capital of the Company (subject to over allotment option). This will comprise an Institutional Offering of 1,279,240,000 Shares and a Retail Offering of 242.5 million Shares. When completed, the Proposed IPO will enable Malakoff to list and quote its entire enlarged issued and paid-up sharecapital comprising 5,000,000,000 Malakoff Shares on the Main Market of Bursa Securities.

Barring any unforeseen circumstances, we have targeted the completion of the proposed IPO by the second quarter of 2015. About 90.0 percent ofthe proceeds from the IPO will be utilised to pare down debts, which will reduce Malakoff’s gearing and improve its capital structure. This will enable the Company to benefit from greater financial flexibility to optimise its capital structure to exploit emerging growth opportunities. The remaining 10.0 percent will be set aside for business expansion, working capital and expenses incurred for the IPO exercise.

AN ATTRACTIVE VALUE PROPOSITION

I am of course aware that the sharp decline in oil prices since late 2014 has changed the economic environment and investor confidence. Nevertheless, we believe that it is an opportune time to re-introduce Malakoff to the Malaysian equity market.The listing exercise is in line with our long-term business strategies and objective to position the Malakoff Group as Malaysia’s leading multinational water and power company.

The results achieved are a testament to our disciplined management approach and the dedication of our employees to deliver results. In positioning the Group for a new and dynamic phase of growth, we have addressed a number of operational and structural issues and identified a clear path for the future.

CHairMan’ssTaTeMenT (continue)

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Our shareholders already include some of the biggest Malaysian institutions and experienced local and international financial investors. The general public and astute investors will undoubtedly recognise the intrinsic value Malakoff offers and are thus able to make informed independent decisions to invest in the largest IPP in Malaysia and participate in the continuing growth of the Malakoff Group.

Since becoming a private company in 2007, we have set ourselves a series of goals, determining a clear way forward to take us to the next level and realise our corporate vision. Consider what we have achieved in a relatively short period of time:

Largest IPP in Malaysia and Southeast Asia

We have the largest effective generation capacity installed in Malaysia and Southeast Asia (“SEA”). The six IPPs owned by our subsidiaries and an associate have a total effective power generation capacity of 5,346 MW, giving us a commanding 24.9 percent market share of the total installed capacity in Peninsular Malaysia. From the time the Company was taken private, effective capacity has soared 93.9 percent from 3,128.7 MW in 2007 to 5,346.0 MW.

Growing International Independent Water Production (“IWP”) and Power Generation Portfolio

Our international expansion efforts have transformed Malakoff from a domestic player into a leading multinational power generator and water producer. In doing so, we have diversified our geographic presence from wholly within Malaysia to now having operations in Kingdom of Saudi Arabia, Algeria, Bahrain and Australia. Through our international plants, the effective power generation and water production capacity stands at around 690 MW and 358,850 cubic metres/day respectively. Recently, we were also the successful bidder for the Al Ghubrah IWP in Oman and in FY 2013, acquired a 50.0percent participating interest in the MacArthur Wind Farm, which is the largest wind farm in the southern hemisphere. The Group is therefore well positioned to benefit from an expected increase in electricity and water consumption in the MENA region in tandem with Gross Domestic Product (“GDP”) growth. Strong growth is also expected in the wind power generation business in Australia, with Renewable Energy Target of 20.0 percent of Australia’s electricity coming from renewable resources, by 2020.



Robust Financial Performance

Since 2007, our key financial metrics have improved with a 113.8 percent increase in revenue, while EBITDA grew by 9.1 percent. About 94.8 percent of the Group’s revenue is generated by the power generation business, from which it receives capacity as well as energy payments from Tenaga Nasional Berhad (“TNB”). Malakoff has the longest remaining PPA life-span amongst Malaysian IPPs and a high level of contracted revenue stream of 92.0 percent.

Sustainable Business Model

Our business model is designed to ensure sustainable growth, present and well into the future. Over the years, we have taken a conscious decision to move away from an overwhelming dependence on natural gas in our power plants to achieve a more balanced fuel mix that includes coal, multi-fuels and oil. Whilst expanding our international foot-print, we have also diversified our earnings base by venturing into new but related areas of business such as wind energy, water production, electricity and chilled water distribution, Operation and Maintenance (“O&M”) services including Power Plant training.

Well Positioned to Capitalise on the Increasing Role of Coal

Over the years, Malaysia has seen a gradual shift in its energy mix for power generation to reduce over-reliance on just one source. Coal is expected to increase its contribution to the nation’s energy mix to 49.0 percent by the year 2020. Our Tanjung Bin

Power Plant is one of the largest privately owned coal-fired power plants in SEA accounting for around 29.3 percent of Peninsular Malaysia’s total installed coal-fired generation capacity. With the completion of the Tanjung Bin Energy Power Plant in 2016, our share will increase to around 38.0 percent.

Strong Culture of Operational Excellence

A focus on operational excellence has ensured that our plants are managed and maintained efficiently and cost-effectively to meet world-class standards. This has enabled some of our plants to achieve higher than IPP industry averages, which is matched by a commendable performance in the key areas of Health, Safety and Environment (“HSE”) and plants overall performance.

Proven O&M Track Record

Malakoff has a proven track record of expansion through greenfield developments and acquisitions.We have a total O&M portfolio capacity of 8,049 MW of power and 1,421,000 m3/day of water, which includes some of the largest IWP and IWPP in the MENA region. With an average contract expiration period of 19 years, our O&M portfolio affords the Group long-term earnings visibility.

Strategic Partners

Malakoff’s standing in the industry has enabled it to forge mutually beneficial relationships, which include high-quality counter-parties in the business,suppliers and an international network of vendors and strategic partners.

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A strong and Capable Workforce

A great deal was accomplished in 2014

Whether it is our ability to consistently perform above the IPP industry average in terms of energy availability factor and thermal efficiency, or our capacity and resilience to turn around challenging conditions, one critical success factor deserves a special mention – our people. It is thanks to the relentless efforts and unwavering commitment of our company’s management and the staff that we are here today looking back at 2014 as an eminently satisfactory financial year.

Our people have been and will continue to be our strength. In addition to ensuring sufficient opportunities exist for our people to bridge any gaps they may have in technical and functional competencies, we also acknowledge the importance for our staff to forge a stronger team spirit committed to execution excellence by developing leaders at all levels.

A comprehensive learning and development plan ensures the development of not just technical and functional competencies, but also leadership skills for our people to prepare them for the present and future.

KEY BUSINESS STRATEGIES

Building on a solid platform established, we will capitalise on opportunities coming our way to further unlock the value-creating potential of our businesses. As our overriding goal is to provide long-term growth for our stakeholders, our roadmap to the future includes the following key business strategies:

Expand Power Generation Platform

The Energy Commission of Malaysia (Suruhanjaya Tenaga) has set a target to increase the power generation capacity in Peninsular Malaysia by an additional 10,923 MW to 11,323 MW between 2014 and 2020. In line with this, Malakoff plans to expand the Group’s effective power generation capacity from the current 6,036 MW to 10,000 MW by the year 2020. When commercial operations of the Tanjung Bin Energy Power Plant begin by 2016 it will add 1,000 MW to our effective power generation capacity. The Group has a significant land bank with long remaining land leases that can be



utilised for further capacity expansion or contract extension beyond the duration of existing Power Purchase Agreements (“PPA”s). Beyond national boundaries, we continue to accelerate our business development activities to expand our portfolio not only in South-East Asia and the Middle East, but also in countries with developed and matured energy markets.

In order to mitigate risks and enhance our competitive advantage in securing greenfield as well as brownfield projects, we will seek alliances with strategic partners.

Expand Renewable Energy Portfolio (“GDP”)

Under the National Renewable Energy Policy and Action Plan, the Malaysian Government is promoting the use of indigenous renewable energy (“RE”) resources. To accelerate investment in RE technologies, the Sustainable Energy Development Authority (“SEDA”) has implemented the feed-in-tariff mechanism to contribute towards the Renewable Energy Fund. We are looking at various options to expand our RE portfolio, including a waste-to-energy project in Kuala Lumpur and run-of-river hydroelectricity projects in East and West Malaysia. We are also focused on developed markets such as Australia and the United Kingdom where electricity production from RE is given high importance.

Expand O&M Business

Malakoff has a strong culture of operational excellence and a disciplined management system, ensuring that our assets are managed and maintained not only efficiently but are also cost effective. We have developed a reliable operational methodology and this has resulted in some of our plants achieving higher than IPP industry averages. On the strength of our track record, we have successfully secured and executed O&M contracts with numerous third-party clients in Malaysia and internationally.

Malakoff, via its subsidiary Teknik Janakuasa Sdn Bhd (“TJSB”) is currently operating power and/or water desalination plants in the Kingdom of Saudi Arabia, Algeria, Kuwait, Indonesia and soon Oman with the completion of the water desalination plant currently

under construction. Our total gross capacity for international O&M for power and water as at the end of the year 2014 is 2220 MW and 1,230,000 m3 per day, respectively.

The Group’s O&M expansion programme overseas also serves as an important entry point strategy, giving us the opportunity to familiarise ourselves with a new market before committing ourselves to any capital investment. We are presently exploring emerging O&M opportunities in the Middle East and South Asia, as well as other Southeast Asian countries. This will be done through our aggressive marketing activities and participation in the related power and water exhibitions and conferences. Malakoff is targeting to double the contribution from the O&M business to Group revenue by the year 2020.


43

talent the market can offer, which will be supported by development programmes and comprehensive assessments of talent. This will be supported by a team of dedicated trainers who have the expertise in power operations. On the financial front, the focus will be to optimise our asset portfolio, capital structure and cost of funding. This will be central to the overriding objective of ensuring sustainable growth and meet the expectations of our stakeholders.

Expand Electricity and Chilled Water Distribution Business

The Group is presently supplying electricity and chilled water for air conditioning to buildings in the Kuala Lumpur Sentral Development Area. There is significant potential to expand this business in similar development projects in major cities throughout Malaysia. Among projects that we are monitoring is the multi-billion Ringgit Tradewinds Square Project, which is located at the heart ofKuala Lumpur’s Central Business District and is targeted for completion by the year 2020.

Ensure Sustainable Growth

To ensure our growth is sustainable we have a two-pronged strategy to maintain strong operational capabilities whilst driving shareholder returns. Operationally, we aim to attract and retain the top




What I have presented so far is a snapshot of the strategies in place that will take us to the next level. However, the changes we have made are only the beginning. We have also taken a critical and holistic view of where we stand as an organisation to reflect our corporate strategies and goals. At a Malakoff Town Hall meeting attended by all the senior personnel, an open and frank discussion was held focusing on a proposed new organisational structure. To prepare the Group for the challenges ahead and spur business growth, we talked about the diverse organisational challenges with a view to strengthening reporting lines, harmonising business processes and policies inplace.Variousapproacheswerediscussed,whichamong others, aimed at strengthening business processes, centralising certain core activities such as the Accounts, Finance and Safety functions whilst realigning key support services.

We want to get all our employees involved in building an even stronger entity. In this regard, a whistle-blower programme has been put in place to encourage employees to report improper activities and workplace concerns. These reports will be evaluated by management and appropriate action, if any, will be taken.

Integral to the improvement process group-wide, we recognise the importance of corporate governance to protect the interest of stakeholders. The Board is committed to achieving and sustaining high standards of corporate governance. Towards realising this objective, a Board Risk Committee (“BRC”) was established during the year, whose terms of reference include among others, reviewing the processes for determining and communicating the Company’s risk appetite. The BRC reports to the

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Board and provides independent assurance on the effectiveness of the risk management processes that are in place. In addition, we have established an Internal Audit Department, which will assist the Board in monitoring, managing risks and internal controls.

AWARDS AND ACCOLADES

Capping a remarkable year of achievements, Malakoff won the Anugerah Langkawi 2014 in recognition for its commitment towards preservation of the environment. The award, organised by the Department of Environment Malaysia (“DOE”), was signed by Duli Yang Maha Mulia Seri Paduka Baginda Yang di-Pertuan Agong and presented by the Menteri Besar of Kedah, YAB Dato’ Seri Haji Mukhriz Tun Mahathir, in conjunction with the Minggu Alam Sekitar Malaysia (“MASM”) which was held in Jitra, Kedah on 3 November 2014

Our Port Dickson Power Plant (“PDPP”) won the National Occupational Safety and Health Excellence Award 2014 on 18 December from the Department of Occupational Safety and Health (“DOSH”). Vigorous audits were conducted by DOSH acrossthe country to determine the winner and Malakoff is honoured to receive this award in recognition for its health and safety practices.

Malakoff also won Silver at Global CSR Awards 2014 - Empowerment for Women on 3 April 2014 that was held in Bali, Indonesia. The prestigious accolade is aimed at Malakoff Corporate Social Responsibility (“CSR”) program, “Malakoff Empower for Life” which has been supporting Women’s Aid Organisation (“WAO”) since 2010.

On 12 November 2014, our Emergency Response Team (“ERT”) from Malakoff Power, Lumut Power Plant (“LPP”) won the Overall Champion title in the “Perak ERT Competition” organised by “Jabatan Bomba dan Penyelamat Negeri Perak”. We prospered in retaining our last year’s title consecutively which ascertained that our staff are competent in handling emergency situation.

ACKNOWLEDGEMENTS

In a challenging year, it is gratifying to see how the management and staff of Malakoff have rallied together to address the challenges as a cohesive team. They are the ones growing this Company – and we are not finished yet. We have a new addition to our Management Team with the appointment of Dato’ Sri Syed Faisal Albar as the new Chief Executive Officer (“CEO”) of Malakoff effective 1 July 2014. He takes over from Encik Habib Husin who was the Acting CEO and Chief Operating Officer from 1 March 2014.

Words cannot adequately express my gratitude toa great support group that includes our financiers, partners, business associates, various government bodies and statutory authorities, and not least of all, the members of the media. To our many stakeholders, I thank you for another year of believing in us. We could not have come this far without your support and confidence in the Company, and this has gone a long way in helping us achieve our goals and expand our horizons.

I would also like to pay tribute to Tan Sri Dato’ Wira Syed Abdul Jabbar Bin Syed Hassan, whose term of office ended on 30 November 2014. During his three-year tenure as Chairman of Malakoff he has witnessed the transformation of the Company into a truly Malaysian multi-national company. His leadership qualities and wise counsel havebeen inspiring. The Board and I thank him for his services and wish him every success in his future endeavours.

The year 2015 is shaping up to be another exciting year as we stand at the cusp of a new chapter in Malakoff’s unfolding story. I trust you will continue to give us your support as we strive to achieve our objectives.

Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail Chairman

Collaborating

SolutionsIn the constant of a changing landscape that drives Malakoff to create and bring on innovation to the most demanding of challenges, our workforce is embodied by their experience and expertise towards collaborating solutions.



perForManCe reView By CHieF exeCuTiVe oFFiCer

Although I only came on board as Chief Executive Officer of Malakoff in July 2014, what impressed me most was the Company’s performance in the face of challenges.

As the largest IPP in the country, the Group has many strengths it can build upon to exploit emerging opportunities in the marketplace and achieve our strategic goals. We have the earnings power, robust business model, expertise backed by a solid track record and an experienced work-force that will contribute greatly to our competitiveness. We also have a clear vision of where we are heading and winning strategies that will take us there. For all these cogent reasons, the Group faces the future with confidence. I personally am convinced that the best years for Malakoff are still to come.

One of the significant highlights in 2014 was the establishment of our Internal Audit Department (“IAD”) in March 2014 to take over the function previously outsourced to Ernst & Young. Reporting to the Group Chief Internal Audit Department (“GCIAD”) MMC Corporation Berhad, IAD assists the Malakoff Board via the Board Audit Committee to monitor and manage risks through independent assessments on the adequacy, effectiveness andefficiency of the internal control systems that are in place relating to governance, risk management and control processes. The monitoring process also forms the basis for continually improving a risk management culture within the Company in line with its business goals. In 2014, both IAD and GCIAD Conducted 10 audits and 3 internal control process reviews

OverviewOperationally, it was a very satisfactory year, with many significant highlights and achievements both at home and internationally.

As the largest IPP in the country, the Group has many strengths it can build upon to exploit emerging opportunities in the marketplace and achieve our strategic goals.

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DOMESTIC POWER GENERATION

Malakoff is the largest Independent Power Producer (“IPP”) in Malaysia and the Southeast Asian (“SEA”) region, with an effective power generation capacity of approximately 5,346 megawatts (“MW”) representing a significant 24.9 percent market share of the total installed capacity in Peninsular Malaysia. Our power generation assets consist of three combined cycle gas turbine (“CCGT”) power plants, an open cycle gas turbine (“OCGT”) power plant and one coal-fired thermal plant, among the largest privately owned coal-fired plants in SEA accounting for around 29.3 percent of Peninsular Malaysia’s total installed coal-fired generation capacity. Through our associates, we also have interest in one power plant with multi-fuel generation facilities. All the power generated is sold to Tenaga Nasional Berhad (“TNB”) under long-term Power Purchase Agreements (“PPAs”).

SUBSIDIARY-OWNED POWER PLANTS

SEV Power Plant

Through our 93.75 percent-owned subsidiary, Segari Energy Ventures Sdn Bhd (“SEV”), Malakoff has astake in the 1,303 MW Lumut Power Plant. Now in its nineteenth year of operation, it is the largest CCGT power plant owned by an IPP in Malaysia. In 2013, SEVwasawardeda10-yearextensionof thePPA tocontinue selling electricity to TNB until June 2027.

Throughout FY 2014, the Lumut Power Plant maintained its high performance level in terms of availability, reliability and efficiency. It achieved an average capacity factor of approximately 69.78 percent and delivered around 7,964 gigawatt-hours (“GWh”) of electricity to the national grid. The plant also registered an availability factor of 89.03 percent,

exceeding the 86.0 percent threshold under the PPA with TNB. By meeting all the required performancecriteria, the plant received full capacity payments for the year under review.

GB3 Power Plant

Malakoff’s stake in the GB3 Power Plant is held through its 75.0 percent-owned subsidiary, GB3 Sdn Bhd. Located next to the Lumut Power Plant, GB3 is also a CCGT power plant. Now in its thirteenth year of operation, the plant delivered a total of 1,890 GWh of electricity to the national grid, recording an average capacity factor of about 33.71 percent for FY 2014.The plant’s equivalent availability factorof 91.17 percent has improved slightly from the previous year, mostly due to the reduced number of forced outages.

Prai Power Plant

The Prai Power Plant is a single shaft CCGT plant with a dependable capacity of 350 MW, and is held through our wholly-owned subsidiary Prai Power Sdn Bhd. One of the most efficient natural gas-fuelled power plants in Malaysia, it recorded a net efficiency (lower heating value) of 52.2 percent during the year in review.

Operational since 2003, the plant delivered a total of 2,104 GWh of electricity to the national grid in 2014, recording an average capacity factor of 68.64 percent. The plant’s equivalent availability factorincreased significantly to 92.12 percent for the year in review, in tandem with a reduced number of planned outage days.

asset performance



During the year, the plant also successfully earned certification to the ISO 27001 Information Security Management System, which is an assurance of information security of the business. FY 2014 also marked the 12th year of the plant’s commercial operations without Lost Time Incident (“LTI”) with a total of 3.4 million man-hours recorded.

Port Dickson Power Plant

The Port Dickson Power Plant (“PDPP”) is a 436.4 MW OCGT gas turbine power plant that supplies electricity to the national grid for peaking and emergency requirements. The Group now has a100.0 percent stake in the plant, vested in our wholly-owned subsidiary, Hypergantic Sdn Bhd. This followstheacquisitioninMay2014oftheremaining75.0 percent equity interest in the plant.

For the past 20 years, the plant has set exemplary performance standards achieving an exceptionally high availability factor of close to 99.0 percent, forced outage rate of less than 0.1 percent and commercial starting reliability of close to 100.0 percent.

In 2014, PDPP won the National Occupational Safety and Health Excellence award 2014 from the Department of Occupational Safety and Health (DOSH).

Tanjung Bin Power Plant

Malakoff’s interest in the Tanjung Bin Power Plant is through our 90.0 percent subsidiary, Tanjung Bin Power Sdn Bhd. The 2100 MW power plant is the first private coal-fired plant in Malaysia and is also one of the biggest independent coal-fired power plants in SEA. It consumes various types of bituminous and sub-bituminous coal imported from Australia, South Africa, Russia and Indonesia.

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For the year under review, the plant delivered a total of 15,308 GWh of electricity to the national grid in FY 2014, achieving an average capacity factor of 83.22 percent. The plant’s equivalent availabilityfactor of 83.96 percent was also recorded, which is a marked improvement from the previous year.

Tanjung Bin Energy Power Plant

Capitalising on the increasing role of coal-fired power generation in Malaysia, Malakoff is constructing a new RM6.7 billion of 1,000 MW coal-fired plant next to the existing Tanjung Bin Power Plant. The power generated from the supercritical coal-fired thermal plant is expected to be sold to TNB under a 25-year PPA that will expire in year 2041.

Several project construction milestones were achieved during the year under review. These included the completion of the flue gas stack, installation of high pressure (“HP”) heaters and de-superheaters at the turbine hall, installation of generator step-up transformer, lifting of generator stator and completion of a new 500 kV extendedsub-station. With civil engineering works substantially undertaken, the plant achieved an overall physical completion of 84.0 percent as at end-2014.

As the project moves progressively into the testing and commissioning phase, a dedicated Operation and Maintenance (“O&M”) team from Malakoff Power Berhad has been mobilised to site. The team will be actively involved in the testing and commissioning of the plant.

All Malakoff subsidiary-owned power plants are compliant to the ISO 9001 Quality Management System, OHSAS 18001, ISO 14001 Environment Management System and ISO/IEC 27001 Information Security Management System.

ASSOCIATE-OWNED POWER PLANT

Kapar Power Plant

Malakoff has a 40.0 percent stake in the Kapar PowerPlantvestedinKaparEnergyVentures(“KEV”).Also known as the Sultan Salahuddin Abdul Aziz Power Plant, it is the largest power plant in Malaysia contributing 15.0 percent of the country’s energy demand.

The Kapar Power Plant has a total generating capacity of 2,420 MW comprising the following facilities:

generating Facility 1 (gF1):2x300 MW Dual-Fuel Firing (gas and oil)

generating Facility 2 (gF2):2x300 MW Triple-Fuel Firing (coal, gas and oil)

generating Facility 3 (gF3):2x500 MW Dual-Fuel Firing (coal and gas)

generating Facility 4 (gF4):2x110 MW Open Cycle Gas Turbine



In FY 2014, the plant recorded an availability factor of 67.37 percent and overall plant efficiency of 33.61 percent. For the year, the plant supplied 10,715.77 GWh to the national grid.

Kapar Power Plant has been equipped withElectrosatic Precipitator (“ESP”) to meet the regulatory particulate emission limits imposed by DOE and has also been certified to the ISO 14001 environmental certification. Its 300-hectare ash pond area has become a safe haven for more than 60 species of migratory birds plying the East Asian-Australian Flyway during the annual migratory season.

INTERNATIONAL ASSETS

Malakoff has a 12.0 percent effective stake in the Shuaibah Phase 3 Independent Water and Power Project (“IWPP”), which is located near Jeddah in the Kingdom of Saudi Arabia. The project is our first overseas venture and consists of a 3x300 MW crude oil-fired power plant and a 880,000 m3/day Multi-Staged Flash Distillation Unit for the desalination of sea water. The project was executed on a Build, Own and Operate (“BOO”) basis under a 20-year Power and water Purchase Agreement (“PWPA’) with the Water and Electricity Company of Saudi Arabia.

In its fourth or fifth year of operation, the plant continued to perform well in line with expectations. During the year under review, it recorded an availability factor of 92.7 percent and 89.6 percent for power generation and water production respectively.

Shuaibah Phase 3 Expansion Independent Water Project (Saudi Arabia)

We expanded our market share in the water production business with an 11.9 percent (effective) interest in the Shuaibah Expansion Project Company Ltd. The Shuaibah Phase 3 Expansion Independent Water Project has a capacity of 150,000 m3/day and deploys reverse osmosis technology to desalinate sea water. Since its commissioning in 2009, the plant has a commendable performance record achieving an availability factor of 96.4 percent in FY 2014.


Souk Tleta Independent Water Project (Algeria)

The Group made its maiden foray into the North African region with an effective 35.7 percent stake in the Souk Tleta Independent Water Project. The 200,000 m3/day plant is located in Wilaya of Tlemcen in Algeria and utilises reverse osmosis technology to desalinate sea water. Since achieving Commercial Operation Date (“COD”) in April 2011, Malakoff has invested significant resources to improve the plant’s performance. This paid off in FY 2014, when the plant achieved an availability factor of 76.9 percent, which is a notable improvement from the previous year.

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Al Hidd Power Generation and Water Desalination Plant (Bahrain)

With a 40.0 percent stake, the Al Hidd Independent Water and Power Plant stands to date as the Group’s largest overseas investment. Comprising three phases, the gas-fuelled plant has a total power generation capacity of 929 MW and water production capacity of 410,000 m3/day, using the Multi Stage Flash and Multi Effect Desalination process. During the year in review, the plant had an availability factor of 95.4 percent for power generation and 96.4 percent for water production.

Al Ghubrah Independent Water Project (Sultanate of Oman)

Malakoff is part of a consortium awarded a contract to build, own and operate the Al Ghubrah Independent Water Project in the Sultanate of Oman. In July 2013, the consortium successfully

concluded a project finance loan agreement with three Japanese financial institutions. The successful closing of the financial arrangement signals the Group’s re-entry into the Sultanate of Oman. Under a Water Purchase Agreement (“WPA”) with the Oman Power and Water Procurement Co, the project is expected to deliver up to 191,000 m3/day of water for a term of 20 years.

Macarthur Wind Farm (Australia)

The acquisition of a 50.0 percent interest in theMacarthur Wind Farm heralds the Group’s first venture into the renewable energy (“RE”) market as well as the Australian continent. The Macarthur Wind Farm is located in the state ofVictoria and isthe largest wind farm in the Southern Hemisphere. Completed in January 2013, the wind farm recorded an availability factor of 97.9 percent for the year under review.

The state-of-the-art Macarthur Wind Farm features 140VestasV112–3.0MWwind turbines, the largestinstalled in Australia. With a capacity of 420 MW, this is sufficient to power more than 220,000 average-sized homes in Victoria and reduce 1.7 milliontonnes of green house gases each year. This is in line with the Australian Government’s Renewable Energy Target of 20.0 percent of Australia’s electricity comes from renewable resources, by 2020.



operation& MaintenanceMalakoff’s portfolio of power generation and water production assets is complemented by its strong O&M capabilities. The Group offers O&M services through our wholly-owned Malakoff Power Berhad (‘MPB”) and Teknik Janakuasa Sdn Bhd (“TJSB”). MPower services the Group’s power plants in Malaysia, while TJSB’s client base includes associates, a joint-venture as well as third-party clients for both local and overseas. We have 19 years of O&M experience and a proven track record of operating different power plants, including CCGT, OCGT and coal-fired plants as well as multi-stage flash desalination plants, reverse osmosis plants and multi-effect distillation and co-generation plants. Our systematic approach to O&M performance improvement is centred on enhancing capability development as well as striving for continual improvements with the aim of propelling our asset performance towards sustainable, world-class standards.

DOMESTIC O&M BUSINESS

The Group has invested in cutting-edge O&M tools and methodology such as Reliability-Centred Maintenance (“RCM”) and Root-Cause Analysis (“RCA”) in striving for continuous improvements. Several projects were undertaken in FY 2014 to enhance the plants’ capability and reliability, which included an upgrading of the compressor, fogging system, battery charger and other components. To meet high reliability and availability targets, major maintenance and inspection activities were also undertaken.

Prai Power Plant

The Prai Power Plant is a combined cycle plant consisting of one Gas Turbine, one Heat Recovery Steam Generator and a unique single shaftconfiguration that provides reliable, efficient and low-emission power supply to the national grid. During FY 2014, an annual scheduled maintenance was carried out on critical components of the plant, including the Gas Turbine and Heat Recovery Steam Generator.

SEV and GB3 Power Plants

TheSEVandGB3powerplants,collectivelyknownasthe Lumut Power Plant, continued to demonstrate its proven reliability. Key performance indicators include theaverageequivalentavailabilityfactor,unscheduledoutage rate and average capacity factor.

Tanjung Bin Power Plant

The Tanjung Bin Power Plant continued to play a pivotal role as an anchor plant supplying power to the national grid. Improvement works were carried out at the plant’s boiler system in early 2014 to meet higher energy demand from the coal-fired plant and cope with the complexities of utilising various coal types from Indonesia, Australia, South Africa and Russia. During the year, a total of 5.89 million metric tons of coal were delivered to the plant, of which 5.98 million metric tons were consumed as fuel for energy production.

In FY 2014, the plant’s average capacity factor increased to 83.22 percent, which translated into 15,308 GWh of energy delivered to TNB. The equivalent availability factor for FY 2014 was 83.96percent, while the unscheduled outage rate was recorded at 4.0 percent.




The year in review also saw modification works carried out to increase the capacity of the coal unloading facility to improve vessel turnaround time. It will also cater to the future needs of the adjacent Tanjung Bin Energy Power Plant presently under construction.

For the coming FY 2015, a series of major scheduled overhauls involving an accumulated total of 210 days will be executed at all three boiler systems. This will include major modification and replacement works at the reheater outlets and economiser finless tubes to further enhance the reliability and performance of the plant’s boiler generating units.

INTERNATIONAL O&M BUSINESS

Starting out as a domestic player back in 2004, Malakoff has successfully secured and executed O&M contracts with numerous third-party clients, notably in the MENA region. The breadth and depth of our experience cover O&M services for coal-fired, CCGT and OCGT power plants, provision of technical, simulator and audit training and overhaul services. The expansion of the Group’s O&M business also serves as an entry strategy to familiarise ourselves with a new market or region before committing to any capital investment. The involvement of Malakoff in the O&M activities through its wholly-owned subsidiary, TJSB, continued from its

operations in Algeria, Kingdom of Saudi Arabia and Kuwait. In 2014, TJSB through its subsidiary, TJSB Middle East Limited, has successfully mobilised its personnel for the 1200 MW Azzour South CCGT, Kuwait following a newly extended O&M contract with Alghanim International General Trading and Contracting Co.W.L.L. Through another subsidiary, PT Teknik Janakuasa, the company has also mobilised personnel for the 2x60 MW CFPP in Banten, Indonesia. Personnel will soon be mobilised following progress made with our consortium partner to secure an O&M contract for the Al Ghubrah 190,000 m3 per day Water Desalination Plant in Oman.

As part of its expansionary strategy, TJSB will continue to participate in international O&M bidding exercises either independently or with its partners in the MENA, SEA and South Asia regions.

MAINTENANCE, REPAIR AND OVERHAUL SERVICES

In 2013, Malakoff announced a major alignment of its business units to consolidate its position as a leading IPP in Malaysia and the region. Resulting from the exercise, Malakoff has launched a new

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line of business, namely Maintenance, Repair and Overhaul (“MRO”) services that will be undertaken by TJSB Services, a wholly-owned subsidiary of TJSB.

TJSB Services offer maintenance and repair solutions for a wide range of power-related main equipment and its supporting auxiliaries.The rangeof services include major and minor overhaul of thermal and gas plants and engineering field services. The company also provides a cost-effective solution for customers requiring Original EquipmentManufacturer (“OEM”) support.

TECHNICAL SUPPORT GROUP

Malakoff ’s expanding O&M act ivit ies are complemented by its Technical Support Group (“TSG”), which has been tasked to review relevant internal processes and recommend improvements to achieve performance targets.

During FY 2014, one of notable achievements of TSG was the implementation of a Capital Expenditure (“CAPEX”) initiative to optimise costs. Its proposals for capacity improvements at the Lumut Power Plant have enabled it to sustain its declared capacity up to the end of its PPA in 2027. Another outcome of TSG’s CAPEX initiative is the launch of a Reverse Engineering Platform that has contributed significantly towards cost savings for maintenance works carried out at the Prai and Tanjung Bin Power Plants. TSG also contributed towards the recovery programme for the Tanjung Bin Power Plant by proposing design changes to the plant’s boiler system in areas such as burner modifications, pressure parts assessments and replacement works.



RELIABILITY AND PERFORMANCE GROUP

The primary role of the Reliability and Performance Group (“RGP”) is to provide consistent, effective and efficient support to all Malakoff locally-operated plants. This is to deliver compliance to the Group’s Policy on Health, Security, Safety and the Environment (“HSSE”), ensure operational excellence and optimise thermal and commercial performance towards attaining the overall business objectives of Malakoff.

In fulfillment of its mandate, some of the activities of RPG in FY 2014 were focused on ensuring the consistent implementation of O&M tools and methodologies such as Reliability Centred Maintenance (“RCM”), Condition Based Maintenance (“CBM”) and Root Cause Analysis (“RCA”). The thermal performance of both the Lumut and Prai Power Plants was also closely monitored by RPG deploying a Plant Performance Model based on the Gate Cycle Programme, a powerful and flexible engineering tool to understand and predict changes in a plant’s performance. RPG also assisted the HSSE Department in the ISO 14001 and OHSAS 18001 certification exercise for MPB.

RPG continued to leverage on the capabilities of MaCNet, the Information Portal servicing the Malakoff Group. Through the Action Items Management (“AIM”) integrated tool, we are able to track and manage all items related to plant operations that require action.This has contributed towards a moreefficient and timely execution of action items. AIM has also facilitated the sharing of information from safety incident reports to all relevant parties so that valuable lessons can be learnt by all and necessary action taken to prevent a recurrence.

CONTRACTS AND PROCUREMENT MANAGEMENT

The effective management of supply chain management is critical to the successful operations and management of the Group’s assets, contributing to overall profitability. This is reinforced by internal audits undertaken in-house, as well as other management audits such as those mandated by

the ISO quality certification bodies. These auditsensure the efficacy of the Group’s procurement procedures and processes, which are benchmarked against internationally accepted best practices.

The Malakoff Group Procurement and warehouse procedures have been revised and approved by the Chief Executive Officer in January 2014 to further enhance the procurement process and incorporate MCB’s requirements.

The establishment of the Group Contract and Procurement Unit (“GCPU”) under MPB has centralised some of the processes, notably those related to CAPEX procurement. Meanwhile, the year inreviewsawanewinitiativetoenhanceourVendorDocument and Management Portal (“VDMP”).Called the Procurement Request for Information(“RFI”), it allows registered vendors to know upfront via the portal of our procurement requirements.This will allow vendors to solicit information prior to submitting their quotations or proposals.

The RFI initiative will increase the pool of potential vendors for selection and make the procurement process more transparent and competitive. With the impending introduction of the Goods and Service Tax (“GST”) in April 2015, there will be some implications to the procurement process. A sub-committee for procurement has therefore been formed to look at the affected processes and to work with the main committee and the appointed consultant. This is to ensure readiness of our procurement staff and the procurement processing system come 1 April 2015.

For FY 2014, MPB procurement at plant and headquarters has resulted in savings of aroundRM35.0 million through various initiatives like price negotiations, competitive bidding, comparisons against budget, among others. Under the duty exemption initiative, we managed a cost avoidance of about RM20.0 million, whereby more than 90.0 percent of our imported materials were exempted from payment of duty.


Powering

GrowthThe emerging development of ourportfoliorequirestremendousamount of natural resources that could never surpass Malakoff’s human energy, where the spirit of our people ingenuity and teamwork is powering growth.

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electricity distribution& Chilled water supplyMalakoff’s wholly-owned subsidiary, Malakoff Utilities Sdn Bhd (“MUSB”) has been licensed by the Energy Commission to operate an electricity and chilled water business in the Kuala Lumpur Sentral (KL Sentral) Development Area for a period of 21 years. Since 2000, MUSB has been supplying electricity to all the buildings in the development hub on an exclusive basis.

MUSB supplies chilled water for air conditioning from its district cooling plant, which is located within the development area. Since November 2001, it has established an unblemished track record of supplying chilled water to the Plaza Sentral Office Towers. To meet the growing requirementsof KL Sentral, the capacity of the cooling plant has been increased to 17,000 refrigerant tons. MUSB’s customers now include the Nu Sentral Retail Mall, 348 Sentral’s Office Tower and Residential Apartments and Excellent Bonanza’s Office Towers and Hotel.

As at year-end 2014, MUSB had a customer base of 1,982 accounts for both electricity and chilled water distribution. During the year under review, power demand within KL Sentral peaked at 45.76 MW, compared to 38.57 MW recorded in the previous

year. The spike in demand was attributable mainly to increased occupation rates of buildings. With construction activities ongoing, the upward trend is projected to continue in the coming years.

In the Annual Satisfaction Survey, MUSB achieved 91.0 percent score in the Customer Satisfaction Index, surpassing the targeted 80.0 percent. The survey took into account the respondents’ experience in the critical areas of customer care, billing and payment, operational and technical competence and enquiries and complaints. From the results, MUSB ismaking every effort to redress perceived weaknesses and improve overall customer satisfaction.

MUSB is also adopting a more personalised approach to engaging its customers. To this end, a Customers’ Week was organised in June and December 2014, providing a platform for customers to raise any questions or concerns with regard totheir accounts.

Moving forward, MUSB will continue to actively explore opportunities to extend its business beyond KL Sentral. It is also weighing the prospects of embarking on new ventures as a multiple utility provider.



CorporaTe serViCesINFORMATION TECHNOLOGY

Information Technology (“IT”) permeates almost every area of the Group’s operations. Our primary focus in FY 2014 was to harness the power of IT to improve work processes, preserve data confidentiality and integrity and to automate business processes for greater efficiency. We also addressed the IT issues in readiness for transitioning to a new Goods Service Tax (“GST”) regime that will come into effect from 1 April 2015.

IT also plays an important role in the Group’s Business Continuity Planning (“BCP”) initiative, aimed at strengthening business resilience in the face of a disaster or disruption to business activities. A disaster recovery plan for the Group’s IT system remains an integral part of the BCP initiative and tests are conducted at regular intervals to ensure preparedness.

During the year, our attention was also focused on upgrading our Information Security Management System (“ISMS”), which is a systematic approach to managing sensitive data so that it remains secure. To this end, we are upgrading our ISMS to conform to the new ISO/IEC 27001:2003 standard, the best known international standard that spells out the requirements for an effective ISMS. Another area ofconcern is data redundancy, a condition created within a data base where the same data is stored in two places. A software solution has been put in place to ensure that data availability and reliability will not be compromised, especially for mobile users.

In the coming year, we will continue to explore avenues for data consolidation, analytics and security measures as an ongoing effort in ensuring business continuity.

ENTERPRISE APPLICATIONS

Enterprise Applications (“EA”) are business-oriented tools that are an integral part of the Group’s IT system. In FY 2014, EA’s key initiatives include the implementation of an IT solution to improve the efficiency of the Group’s warehouse operations. The Mobile Warehouse Management (“MWM”) application allows instant data flow on the movement of materials to the Enterprise Resource Planning (“ERP”) system through the hand-held devices of personnel at every cycle of the warehouse operations. This will include checking inventory levels, updating stock count, issuing of stock as well as transfers and returns, thereby facilitating real-time control over inventories. All inventories are bar-coded to ease data entry during stock movements.

Last year also saw the successful implementation of an Asset Tagging and Tracking System (“ATTS”), whereby each fixed asset is tagged with a bar-code to provide relevant asset information. Bar-coded tags simplify the process of asset count, taking only one-tenth of the time, besides being more accurate. ATTS also provides more efficient and cost-effective solution to track fixed asset inventories using wireless scanning devices.




With the impending introduction of the GST regime by the Malaysian Government, we are working towards the objective of having Malakoff’s Systems, Applications & Products (“SAP”) software ready by January 2015. The SAP will make it easier for the Group to fulfil GST filing requirements to the RoyalMalaysian Customs. Besides capturing GST codes and amounts, the SAP is also a database for filling in the GST-03 form, bad debt reporting, audit file reporting and line item reporting.

RISK MANAGEMENT

A Board Risk Committee (“BRC”) was set-up in November 2014 in acknowledgement of the growing importance of the risk management function in safe guarding the interests of the Company and its shareholders. The principal role of the BRC is to provide an effective oversight of the Group’s risk appetite, risk management function and practices.

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To enhance the structure of the Group’s risk management practices, a Corporate Digital Assurance module was employed in the ERMS to ensure that the score card owners, risk owners, control owners and action plan owners provide assurance with respect to the status of all material risks, controls and management actions.

At the same that the BRC was established, the Board also approved the Enterprise Risk Management Policy and Framework (“ERMPF”) which effectively supersedes the Risk Management Policy and Procedures Manual adopted in 2008. The new policy and framework is based on ISO 31000:2009 Risk Management – Principles and Guidelines codified by the International Organisation for Standardisation (“ISO”).

During the year under review, a total of 56 risk-related activities were organised which included a series of risk assessment sessions, reviews and trainings organised across the Group. As at 31 December 2014, a total of 453 risks are registered in the Enterprise Risk Management System (“ERMS”), of which 91.61 percent of these risks are rated low, meaning that they are being monitored and managed by routine procedures.

HEALTH, SAFETY, SECURITY & ENVIRONMENT (“HSSE”)

At Malakoff, we believe that a concern for HSSE issues is ultimately a good business practice and we work hard to conduct our business to ensure no harm to the health and safety of people and have no unforeseen impacts to the environment. We believe our HSSE aspirations are achievable and during the year under review, the Group extended its commitment to HSSE by raising standards in all these areas. We are continually enhancing our HSSE initiatives by integrating and strengthening existing systems and procedures.

The Group has a non-tolerance stance on safety violations, and over the years we have striven to improve our performance in Occupational Health and Safety (OSH) by inculcating a safety-oriented mindset not only among our employees but also contractors. The goal is to reduce the number of accidents and injuries at the workplace until we attain the ultimate goal of Zero Lost Time Incidents.

LOST TIME INJURY FREQUENCY RATE

YEAR LPP PPP TBPP MPB HQ MUSB T4 PROJECT

2014 55,343 3,441,648 2,762, 119 486,720 295,185 18,100, 000

Total Accumulative Safe Man Hrs worked since Last LTI 25,141, 015

LostTime Injury Frequency Rate 0.08


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Among our stable of power plants, the Prai Power Plant was the star performer in FY 2014 with a total of 3,441, 648 man-hours with no LTIs reported during the period. For the Group as a whole, we improved our Lost Time Injury (LTI) frequency in FY 2014 rateto 0.08, compared to 0.28 recorded the previous year. Since the last Lost-Time Injury (LTI) reported in February 2014, the Group recorded 25, 141, 015 million accumulative safe man-hours worked.

To drive a safety-conscious mindset, the Group’s Competency Base Assessment Modules (“CBA”) were revisited during the year. The CBA provides a comprehensive HSSE competency management reference and it is the responsibility of senior management to cascade, discuss and deliberate the various facets of process and behavioral safety down the line.

The Group also leverages on the Malakoff OHS Management System to manage HSSE risks and ensure that operations are conducted in compliance with the HSSE regulatory requirements.In ensuring the effective implementation of OHSMS, a Mandatory Control Framework has also been put in place to strengthen HSSE governance throughout the Group.

We also review the Group HSSE Risk Register on a regular basis. The Risk Register is a dynamic tool that provides an overview of the Group’s risk status, taking stock of the context of past incidents, plant modifications and amendments to the Group’s HSSE standards, among other things. It enables us to identify key risks and our capabilities to address them effectively. From time to time, a HSSE assurance exercise is also carried out by SIRIM, QHSE Internal Auditors and other agencies to provide an independent assessment on the effectiveness of HSSE controls that are in place. The findings are presented to the Management of Malakoff.

Moving forward, Malakoff will continue to focus on implementing key risk management strategies and initiatives throughout the Group. It is a moral obligation we owe our employees, customers, constituencies, the public at large and indeed to ourselves.




OUTLOOK & PROSPECTS

Several major forces will drive the global outlook for 2015. In particular, the sharp decline in oil prices since mid-2014 will support global activity and help offset some of the headwinds to growth in oil-importing countries. Overall, global growth is expected to rise moderately, to 3.0 percent in 2015. (Source : Global Economic Prospects, January 2015, World Bank) In the 2015 Budget, the Malaysian economy has been projected to expand by between 5.0 percent and 6.0 percent in 2015. (Source : Economic report 2014/2015 page 37) As Malaysia is an oil exporter, the slide in oil prices has compelled the Government to announce specific and proactive measures to align the Malaysian economy with the new developments.

While volatility persists in the economic environment, Malakoff has never been so well positioned for future dynamic growth. What I have seen since coming on board has also convinced me of the tremendous underlying strength of Malakoff and the business we are in. Looking to FY 2015 and the years ahead, our plans are in place to pursue emerging opportunities in several key markets that will take the Group to the next level.

National Electricity Consumption

Malaysia’s electricity consumption is projected to grow at a Compound Annual Growth Rate (“CAGR”) of 9.7 percent between 2014 and 2018. Among the main drivers of growth will be the nation’s expanding GDP in the ongoing transformation of Malaysia into a high-income nation by 2020. Power supply demand in the Iskandar Development Region is expected to expand at a CAGR of 4.3 percent between 2010 and 2020. The Government also plans to establish five new economic growth corridors to promote free trade. To meet the expected increase in demand, the Energy Commission of Malaysia plans to increase Peninsular Malaysia’s power generation capacity by an additional 10,923 MW to 11,323 MW between 2014 and 2020.

MENA Electricity and Water Consumption

Beyond Malaysia, electricity and water consumption in the MENA region is set to grow to keep pace with economic and population growth as well

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as increasing urbanisation. Electricity and water consumption is forecasted to expand by 9.4 percent and 2.1 percent respectively between 2014 and 2018. Saudi Arabia, Bahrain, Algeria and the Sultanate of Oman have plans to expand electricity and water capacity to meet the growing demand.

Electricity Consumption in Southeast Asia

Electricity consumption in SEA is expected to grow at a CAGR of 7.9 percent from 2014 to 2018, with increasing urbanisation, liberalisation of the power generation market and abundant availability of fuel.

Electricity Consumption in Australia

In Australia, the electricity sector will develop organically to register a CAGR of 3.1 percent between 2014 and 2018. With the Government’s emphasis on renewable energy, wind power generation is projected to grow at a CAGR of around 25.5 percent over the next seven years.

ACKNOWLEDGEMENTS

At the end of the day, the way to success is through our people. Malakoff’s prime assets are the intellectual and creative capabilities of our people. Our people are defined by a set of common values – Integrity, Teamwork, Innovation, Excellence and Harmony – qualities that differentiate us from ourindustry peers. In a challenging year, I am especially impressed by how well Malakoff people have pulled together as a team to deliver commendable growth and maintain our momentum in the marketplace.

We have come a long way, but as a Company with ambitious plans for the future, a lot remains to be done. I look forward to working with this team as together we look forward to a dynamic and brighter future for Malakoff.

I thank all of you.

DATO’ SRI SYED FAISAl AlBAR

Chief Executive Officer

Engaging

TomorrowBy actively participating to resolve community concerns that remain as relevant to our business, Malakoff stays aligned to societal needs by understanding and listening to considerations that is engaging tomorrow.



CorporaTeresponsiBiliTyMalakoff has always lived up to its long-held mission of balancing profitability with a social conscience. Our commitment to Corporate Social Responsibility (“CSR”) is underpinned by the establishment of the Malakoff Community Partnerships in 2009 as the Group’s flagship CSR platform. We have also CSR Framework to reinforce our mission to be an active and responsible participant of the community at large. Holistic CSR is something that all of us at Malakoff practise on a daily basis and we never take it for granted, investing significant resources to improve our programmes and ensure its relevance.

Our efforts to develop meaningful CSR agendas, policies and initiatives have won the Group numerous awards and accolades over the years and FY 2014 was no exception. We were the winner of two prestigious awards. The first was the Anugerah Langkawi, the most prestigious and authoritative environmental accolade in Malaysia. The Group also won the National Occupational Safety and Health Excellence Award 2014, from the Department of Occupational Safety and Health (“DOSH”)



WORKPLACE DEVELOPMENT

Our people are key elements of the Group’s strategic assets. As we open a new chapter of dynamic growth, the capacity to deliver results would rest largely on the 960 men and women that make up our workforce. For FY 2014, the human resource emphasis was aimed at sustaining the Group’s growth over the long-term in attainment of its strategic mission and vision. To achieve this objective, Malakoff has implemented a robust succession planning framework that will ensure a pipeline of talent to assume senior management positions in the future.

Talent Attraction & Retention

The Executive Development Programme has been revamped so that the development and learning process of trainees can be fast-tracked before they are absorbed into the workforce. A batch of nine promising hand-picked fresh graduates was provided with additional training, including exposure to projects and hands-on work assignments.

Training & Development

For FY 2014, a budget of RM3.5 million was allocated to enhance the soft and functional skills of our talent pool. The training calendar included

some 128 in-house programmes organised by the Training Department. A Toastmaster Programme was also introduced in November to enhance public speaking and presentation skills of employees. Owing to its resounding success, this has become a monthly feature on the training calendar.

Performance Management

In striving to be a high-performance organisation, a systematic performance management and appraisal system has been put in place for all levels of staff. A Key Performance Index (“KPI”) has been established that will gauge the performance of employees against quantifiable measures in thequest to meet strategic and operational goals.These indexes allow an employee’s performance to be assessed and rewarded accordingly, besides serving as a means to motivate employees to achieve even more.

Employee Engagement

Even as we continue to grow, we recognise the importance of communications and social events as important tools to strengthen our relationship with our employees. To this end, “People Week” was introduced during the year to proactively address employees’ concerns on Human Resource related issues. As we

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become more aware of making the right choices towards a healthy and fulfilling lifestyle, several wellness programmes were also launched. They included a “Medical Health & Wellness Programme” and “Breast Cancer Awareness Month” aimed at helping our employees reach a state of optimal well-being.

COMMUNITY DEVELOPMENT

Wherever we operate, Malakoff aims to earn the respect of the various communities in which we operate as a valued neighbor and friend. While we continue to make sizeable donations each year to many charities and worthy causes, our community outreach programmes take many forms and in recent years, have included the development of local technical expertise, facilitation of community development as well as environmental conservation and protection.

Community Engagement Programmes

At Malakoff, we recognise that local community engagement is imperative to the success of our business. Therefore, we are committed to retain this as an integral part of the way we operate and we will continue to invest in more meaningful platforms that will have positive impact on society.

Our contributions to local communities are not just donations and sponsorships, but also by actually working with them, hand-in-hand. In the year under review, Malakoff contributed to various community and educational programmes in the villages of Seberang Prai, Segari and Mukim Serkat. This includes providing financial assistance to 409 school children and varsity students, organising religious and sporting activities, supporting tuition, revision and motivational classes, providing financial and medical assistance to the needy and many more.

Malakoff also funded the construction of a RM2.6 million mosque in Kampung Sungai Dinar, MukimSerkat, Pontian, Johor which is scheduled to be completed in May 2015.



CorporaTe responsiBiliTy (continue)

Talent Development Programme

The Group’s foremost commitment has always been to education. This is in line with Malaysia’s vision to invest in human capital as a key enabler to build a knowledge-intensive and high-income nation. As part of our efforts to ensure a sustainable pipeline of new talent for the industry, Malakoff has collaborated with Universiti Tenaga Nasional (“UNITEN”) to develop the Malakoff-UNITEN Talent Acceleration Programme (“MUTAP”). For the year under review we hosted a total of 21 promising under-graduates from UNITEN. The year-long experiential programme has been designed to help undergraduates develop new skills through hands-on experience as well as coaching sessions.

During their stint in Malakoff, the students were also involved in various CSR activities and community projects. A batch of students worked closely with a Non-Governmental Organisation (“NGO”) to set up plant nurseries and built bird houses in Bangsar, Kuala Lumpur. Graduates from the Leadership Club established by Malakoff to spearhead youth leadership at UNITEN, helped raise funds for an orphanage and gave the premises a face-lift.

Flood Relief Efforts

Caring comes naturally for the people of Malakoff and this was amply demonstrated when the worst floods in decades ravaged major parts of the states in the east coast of Peninsular Malaysia in the second half of December 2014. Within the MMC Group, some 146 employees and their direct family members were also affected. Along with other operating companies within the MMC Group, we joined our parent company in the flood relief efforts. A donation drive was organised among staff of the MMC Group, raising a total of RM46,300 A team comprising some 100 volunteers from all over the country was also mobilised to distribute much-needed emergency supplies and assist in the clean-up efforts. In the post-flood assistance programme, funds collected from the staff donation drive together with a contribution of RM2.0 million from the MMC Group of Companies, will be disbursed to the flood-affected families to help them rebuild their lives.

MARKETPLACE DEVELOPMENT

M alako ff recogn ises the impor tance o f communications as a strategic tool to enhance its relationship with its various publics. Our corporate website www.malakoff.com.my provides useful information about the Company, including our organisation structure, Board of Directors and our business activities. It includes a media centre that allows access to the latest news, publications and media clippings. Malakoff also produces an annual report which provides the Group’s financial results, performance review, strategic directions and its outlook and prospects.

As a Company built on performance, we subscribe to the standards of quality in fulfillment of ourresponsibility to the market-place. In this regard all our power plants have been accredited to qualitymanagement systems endorsed by the International Standard Organisation. We are also committed to responsible HSE management practices in every aspect of our operations.

ENVIRONMENTAL PRESERVATION

Malakoff aims for sustainable development. In meeting our business goals, we intend to satisfy today’s requirements without eroding thelivelihoods of future generations. We continue to aggressively pursue waste minimisation and energy conservation opportunities, whilst reducing the carbon footprint of our operations. All our plants in Malaysia have earned certification to ISO 14001, the foremost internationally recognised environmental management standard.

Outside of our plant operations, Malakoff’s green agenda includes proactive measures to conserve the rich bio-diversity of Malaysia in collaboration with the relevant stakeholders. The many long-term projects we have taken under our wing are a true measure of our commitment to the environment.

Mangrove Planting Programme

Launched in 2009, the programme aims at preserving and restoring the eroding ecosystems in the coastal region around the location of the Group’s operations. Since then, some 37,000 mangrove saplings have been planted in Johor and Penang, in collaboration with Johor National Parks and Persatuan Nelayan-Nelayan Pantai Pulau Pinang, respectively.

In 2014, Malakoff participated in a replanting campaign organised by the Ministry of Natural Resources and Environment at the Tanjung Piai National Park, under the Sahabat Alam Sekitar programme.

Marine Biodiversity Rehabilitation Programmes

Together with the Ministry of Natural Resources and Environment, the Department of Marine Parks and the Department of Environment, Malakoff initiated the Coral Rehabilitation and Giant Clam Restoration programmes in a bid to preserve and rehabilitate Malaysia’s unique marine ecosystem.

The Coral Rehabilitation Programme involves the construction of artificial coral reefs to serve as marine habitats. Marine ecosystem awareness sessions were also conducted at Pulau Redang, Pulau Tioman and Pulau Mentinggi to educate hospitality service providers and local communities on the importance of coral reef conservation.

Activities under Malakoff’s Giant Clam Restoration Programme in FY 2014 were held at Pulau Mentinggi, off Johor. Going by its scientific name, the Tridacna Gigas or giant clam is the largest living bivalve mollusk and one of the most endangered clam species. They are also among the most ecologically important organisms in the coral reef, working as marine filters by taking in harmful waste nutrients and expelling clean water to the environment.

81



CorporaTeeVenTs HigHligHTs

15 FEBRUARY 2014 SAMBUTAN MAULIDUR RASUL AT TANJUNG BIN POWER PLANTMukim Serkat village folks and speaker during the occasion.

22 FEBRUARY 2014 FRIENDLY BOWLING WITH TENAGA NATIONAL BERHADBowling teams of Malakoff and TNB at the friendly game.

22 FEBRUARY 2014 MALAKOFF WINS NATIONAL OCCUPATIONAL SAFETY AND HEALTH ExCELLENT AWARD 2014 Malakoff staff with the award and certificate from Department of Occupational Safety and Health (DOSH).

83

29 MARCH 2014 MALAKOFF UNITEN TALENT ACCELERATION PROGRAM (MUTAP) GRADUATION DAYGraduates are enthusiastic with the certificate in hands.

01 APRIL 2014 MALAKOFF’S BOARD OF DIRECTORS VISIT TANJUNG BIN POWER PLANTDirectors and Malakoff staff at the coal control room during the site tour.

11 MARCH 2014 KUMPULAN WANG AMANAH PENCEN VISITS TANJUNG BIN POWER PLANTVisitorsfromKWAPweregivena site tour of Tanjung Bin plant.

10 MARCH 2014 QIBLAH DIRECTION SETTING FOR MASJID KG SG DINARRepresentatives of Malakoff and Mukim Serkat with the certificate of Qiblah direction for Masjid Sg Dina.



CorporaTe eVenTs HigHligHTs (continue)

07 APRIL 2014 SIGNING CEREMONY OF THE ACQUISITION OF PORT DICKSON POWER BERHADEncik Habib Husin and Dato’ Ir. Jauhari Hamidi exchanging the documents.

18 APRIL 2014 NORTHERN REGION FRIENDLY BOWLING TOURNAMENTBowlers receiving the winning prizes after the tournament.

06,07, 08 JUNE 2014 MALAKOFF SPORTS CARNIVAL AT LUMUT POWER PLANTThe participants cheering at the end of the game.

85

12 JUNE 2014 CERAMAH PERDANA ISRAK MIKRAJMalakoff staff and folks from Kg Segari with the speaker, Ustaz Zamri Zainurdin.

13 JUNE 2014 FRIENDLY FOOTBALL WITH ENERGY COMMISSION (EC)Teams from Malakoff and EC exchanging the friendly souvenirs before the game starts.

26 JUNE 2014 MALAKOFF GIANT CLAM RESTORATION PROJECTDeputy Minister of NRE, Dato’ Sri Dr. James Dawos Mamit handing over the giant clam to a diver to be placed in Pulau Mentinggi.




15 AUGUST 2014 MAJLIS HARI RAYA LUMUT POWER PLANTStaff and family members being served with delicious food.

20 AUGUST 2014 MAJLIS HARI RAYA PORT DICKSON POWER PLANTStaff and relatives enjoying the raya feast during the open house.

22 AUGUST 2014 MAJLIS HARI RAYA TANJUNG BIN POWER PLANTMalakoff’s guests having delightful raya feast.

87

29 AUGUST 2014 FRIENDLY BOWLING WITH ENERGY COMMISSION (EC)Bowlers of EC and Malakoff in high spirit before the start-off.

28 AUGUST 2014 MAJLIS HARI RAYA PRAI POWER PLANTMalakoff staff having a blast at the Raya open house.

06 SEPTEMBER 2014 FRIENDLY FUTSAL TOURNAMENT WITH TENAGA NASIONAL BERHAD (TNB), ENERGY COMMISSION (EC) AND ECONOMIC PLANNING UNIT (EPU)Participants posing at the end of the tournament.




11 SEPTEMBER 2014 POWERGEN 2014 TJSB participated in PowerGen 2014 held at KLCC Convention Centre.

11 NOVEMBER 2014 MALAKOFF POWER LPP WON PERAK ERT COMPETITON 2014 Malakoff staff shows excellent effort during the competition.

01 NOVEMBER 2014 MALAKOFF RECEIVES ANUGERAH LANGKAWI 2014Menteri Besar Kedah, Dato’ Seri Mukhriz Mahathir with representatives from NRE and Malakoff together with Anugerah Langkawi award.

27 NOVEMBER 2014 MANGROVE TREE PLANTING PROGRAMMalakoff, DOE and Rakan Alam Sekitar during the Mangrove Tree Planting Program at Taman Negara Tanjung Piai, Pontian.

89

FinancialStatementsDirectors’ Report 90

Statements of Financial Position 94Statements of Profit or Loss and 96 Other Comprehensive Income

Statements of Changes in Equity 98

Statements of Cash Flows 101

Notes to the Consolidated Financial Statements 104

Statement by Directors 225

Statutory Declaration 225

Independent Auditors’ Report 226


MALAKOFF CORPORATION BERHADMALAKOFF CORPORATION BERHAD

Directors’report for the year ended 31 December 2014

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2014.

PrinciPal activities

The Company is principally engaged in investment holding activities, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

results

Group Company RM’000 RM’000

Profit for the year attributable to: Owners of the Company 341,549 744,090 Non-controlling interests 71,295 –

412,844 744,090

reserves and Provisions

There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements.

dividends

Since the end of the previous financial year, the Company paid:

(i) an interim single-tier dividend of approximately 16.14 sen per ordinary share of RM1.00 each totalling RM56,707,996 in respect of the financial year ended 31 December 2014 on 8 April 2014.

(ii) an interim single-tier preference dividend of RM1.00 per share totalling RM41,792,004 in respect of the financial year ended 31 December 2014 on 8 April 2014.

(iii) an interim single-tier dividend of approximately 28.46 sen per ordinary share of RM1.00 each totalling RM100,000,000 in respect of the financial year ended 31 December 2014 on 9 September 2014.

The final single-tier dividend recommended by the Directors in respect of the financial year ended 31 December 2014 is approximately 28.46 sen per ordinary share of RM1.00 each totalling RM100,000,000.

9191

Directors’ report for the year ended 31 December 2014 (continued)

directors of the comPany

Directors who served since the date of the last report are:

director alternate director

YAM Tan Sri Dato’ Seri Syed Zainol Anwar Ibni Syed Putra Jamalullail (Chairman) (appointed on 1 December 2014) Dato’ Sri Che Khalib bin Mohamad Noh (resigned as Managing Director on 8 December 2014 and re-designated as Non-Independent Non-Executive Director on 9 December 2014)Datuk Muhamad Noor bin HamidTan Ler ChinDatuk Ooi Teik HuatTan Sri Dato’ Seri Alauddin bin Dato’ Md Sheriff Datuk Idris bin Abdullah @ Das MurthyDatuk Dr. Syed Muhamad bin Syed Abdul Kadir Wan Kamaruzaman bin Wan Ahmad Zalman bin IsmailKanad Singh Virk Craig Robert Martin (appointed on 7 January 2014)Tan Sri Dato’ Wira Syed Abdul Jabbar bin Syed Hassan (Chairman) (resigned on 30 November 2014)

directors’ interests in shares

None of the Directors holding office at 31 December 2014 had any interest in the shares of the Company and of its related corporations during the financial year.

directors’ benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related corporations) 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.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in the Company or any other body corporate.

issue of shares

There were no changes in the authorised, issued and paid-up capital of the Company during the financial year.


MALAKOFF CORPORATION BERHAD92MALAKOFF CORPORATION BERHAD

oPtions granted over unissued shares

No options were granted to any person to take up unissued shares of the Company during the financial year.

other statutory information

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:

i. all known bad debts have been written off and adequate provision made for doubtful debts, and

ii. any current assets which were unlikely to be realised in the ordinary course of business have 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:

i. that would render the amount written off for bad debts, or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

ii. that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

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

iv. not otherwise dealt with in this report or in the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading.

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

i. any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or

ii. any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

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

In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 December 2014 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.


9393

significant events

The significant events during the year are as disclosed in Note 36 to the financial statements.

subsequent events

The subsequent events during the year are as disclosed in Note 39 to the financial statements.

auditors

The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

…………………………………………………................................................yam tan sri dato’ seri syed Zainol anwar ibni syed Putra Jamalullail Chairman

………………………………………………………….............................……dato’ sri che Khalib bin mohamad nohDirector

Kuala Lumpur

Date: 6 February 2015




statements of financial position as at 31 December 2014

Group Company

31.12.2014 31.12.2013 1.1.2013 31.12.2014 31.12.2013 RM’000 RM’000 RM’000 RM’000 RM’000 Note Restated Restated

non-current assets

Property, plant and equipment 3 14,323,952 13,061,031 11,124,456 46,782 49,815Intangible assets 4 4,704,227 5,071,359 5,498,521 – –Prepaid lease payments 5 70,331 74,675 79,021 – –Investment in subsidiaries 6 – – – 8,134,741 8,134,741Investment in associates 7 1,203,319 1,294,458 1,369,667 998,400 998,800Investment in an equity accounted joint venture 8 57,885 51,230 47,433 – –Finance lease receivable 9 1,990,974 2,012,945 – – –Derivative financial assets 20 99,147 80,241 – – –Other receivables 11 114,793 126,939 139,083 – –Deferred tax assets 10 779,849 697,512 611,570 – 2,555

total non-current assets 23,344,477 22,470,390 18,869,751 9,179,923 9,185,911

current assets

Trade and other receivables 11 1,304,283 1,266,268 1,490,171 1,254,606 889,540Inventories 12 518,434 479,075 493,799 – –Current tax assets 272,469 310,817 210,560 35,889 31,209Other investments 13 321,509 1,165,954 2,455,577 – –Cash and cash equivalents 14 3,574,900 2,375,783 2,698,393 592,994 134,585

total current assets 5,991,595 5,597,897 7,348,500 1,883,489 1,055,334

total assets 29,336,072 28,068,287 26,218,251 11,063,412 10,241,245

equityShare capital 15 355,523 355,523 355,523 355,523 355,523Share premium 3,575,837 3,575,837 3,575,837 3,575,837 3,575,837Reserves 15 61,274 156,811 1,492 840 840(Accumulated losses)/ Retained profits (28,985) (172,447) (145,413) 4,140,210 3,596,959

Equity attributable to owners of the Company 3,963,649 3,915,724 3,787,439 8,072,410 7,529,159Non-controlling interests 212,967 223,422 340,297 – –

total equity 4,176,616 4,139,146 4,127,736 8,072,410 7,529,159

9595

statements of financial position as at 31 December 2014 (continued)

Group Company

31.12.2014 31.12.2013 1.1.2013 31.12.2014 31.12.2013 RM’000 RM’000 RM’000 RM’000 RM’000 Note Restated Restated

non-current liabilities

Loans and borrowings 16 17,493,217 16,611,760 14,221,261 1,800,000 1,800,000Employee benefits 17 74,907 67,415 73,216 12,347 10,225Deferred income 18 2,811,196 2,608,222 2,338,602 – –Deferred tax liabilities 10 2,721,062 2,645,445 2,750,242 – –Derivative financial liabilities 20 167,338 31,762 162,750 – –

total non-current liabilities 23,267,720 21,964,604 19,546,071 1,812,347 1,810,225

current liabilities

Trade and other payables 19 975,514 934,116 1,435,326 1,178,655 901,861Current tax liabilities 23,872 4,214 16,718 – –Loans and borrowings 16 734,262 931,625 1,041,897 – –Derivative financial liabilities 20 27,704 34,319 – – –Deferred income 18 130,384 60,263 50,503 – –

total current liabilities 1,891,736 1,964,537 2,544,444 1,178,655 901,861

total liabilities 25,159,456 23,929,141 22,090,515 2,991,002 2,712,086

total equity and liabilities 29,336,072 28,068,287 26,218,251 11,063,412 10,241,245

The notes on pages 104 to 224 are an integral part of these financial statements.



Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Note Restated

Revenue 21 5,594,484 4,717,419 991,336 3,689,158Cost of sales (3,956,082) (3,503,949) – –

gross profit 1,638,402 1,213,470 991,336 3,689,158Other income 95,343 79,082 3,038 593Administrative expenses (228,122) (265,262) (100,304) (126,547)Other operating expenses (234,231) (325,079) – –

results from operating activities 1,271,392 702,211 894,070 3,563,204

Finance income 22 132,688 161,052 34,505 81,740Finance costs 23 (911,242) (840,318) (169,212) (228,820)

net finance costs (778,554) (679,266) (134,707) (147,080)Other non-operating income 60,979 – – –Share of profit of equity-accounted associates and a joint venture, net of tax 41,667 61,202 – –

Profit before tax 595,484 84,147 759,363 3,416,124Income tax (expense)/benefit 27 (182,640) 150,511 (15,273) (7,273)

Profit for the year 24 412,844 234,658 744,090 3,408,851

other comprehensive income/ (expense), net of taxitems that will not be reclassified subsequently to profit or loss 25Remeasurement of defined benefit liability 17 413 2,433 (2,339) 505

items that may be reclassified subsequently to profit or loss 25Cash flow hedge (78,095) 238,418 – –Share of loss on hedging reserve of equity-accounted associates (22,608) (57,230) – –Foreign currency translation differences for foreign operations 5,166 (25,869) – –

(95,537) 155,319 – –

statements of profit or loss anD other comprehensive income for the year ended 31 December 2014

9797

Group Company


other comprehensive (expense)/ income for the year (95,124) 157,752 (2,339) 505

total comprehensive income for the year 317,720 392,410 741,751 3,409,356

Profit attributable to:Owners of the Company 341,549 161,533 744,090 3,408,851Non-controlling interests 71,295 73,125 – –

Profit for the year 412,844 234,658 744,090 3,408,851

total comprehensive income attributable to:Owners of the Company 246,425 319,285 741,751 3,409,356Non-controlling interests 71,295 73,125 – –

total comprehensive income for the year 317,720 392,410 741,751 3,409,356

earnings per ordinary share (rm)Basic 28 0.97 0.46Diluted 28 0.87 0.41


statements of profit or loss anD other comprehensive income for the year ended 31 December 2014 (continued)



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/--------------------------------------- Attributable to owners of the Company –--------------------------------/ /--------------------------------------- Non-distributable --------------------------------/ Distributable

Share capital Share premium Reserves

Capital Retained Ordinary Preference Ordinary Preference redemption profits Totalcompany RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

at 1 January 2013 351,344 4,179 3,162,096 413,741 840 378,603 4,310,803

Remeasurement of defined benefit liability – – – – – 505 505

Other comprehensive expense for the year – – – – – 505 505Profit for the year – – – – – 3,408,851 3,408,851comprehensive income for the year – – – – – 3,409,356 3,409,356Dividends to the owners of the Company – – – – – (191,000) (191,000)

at 31 december 2013/ 1 January 2014 351,344 4,179 3,162,096 413,741 840 3,596,959 7,529,159Remeasurement of defined benefit liability – – – – – (2,339) (2,339)

Other comprehensive income for the year – – – – – (2,339) (2,339)Profit for the year – – – – – 744,090 744,090comprehensive income for the year – – – – – 741,751 741,751Dividends to the owners of the Company – – – – – (198,500) (198,500)

at 31 december 2014 351,344 4,179 3,162,096 413,741 840 4,140,210 8,072,410


statements of changes in equity for the year ended 31 December 2014 (continued)

101101

Group Company


cash flows from operating activitiesProfit before tax 595,484 84,147 759,363 3,416,124

Adjustments for:Amortisation of prepaid lease payments 4,344 4,346 – –Amortisation of intangible assets 511,742 469,837 – –Amortisation of transaction costs of hedging instruments 12,146 12,144 – –Depreciation of property, plant and equipment 558,644 471,266 5,997 4,702Finance costs 911,242 840,318 169,212 228,820Impairment loss on trade receivables 48,973 177,273 – –Interest income (132,688) (161,052) (34,505) (81,740)Loss/(Gain) on disposal of property, plant and equipment 2,622 – (177) –Gain arising from change in fair value of derivative financial instruments (5,891) (44,041) – –Property, plant and equipment written off 20,897 127,126 – –Expenses related to retirement benefit plans 11,976 13,260 3,043 4,478Reversal of impairment loss on trade receivables (3,295) (6,079) – –Share of profit of equity-accounted associates and a joint venture entity, net of tax (41,667) (61,202) – –

2,494,529 1,927,343 902,933 3,572,384Changes in:Inventories (20,291) 14,723 – –Trade and other receivables (2,413) 7,311 (336,912) 321,513Trade and other payables 112,275 (422,536) 220,386 568,380Deferred income 273,095 279,380 – –Employee benefits (4,484) (16,628) (3,260) (17,283)

cash generated from operation 2,852,711 1,789,593 783,147 4,444,994Income taxes paid (150,761) (152,989) (17,398) (22,873)

net cash from operating activities 2,701,950 1,636,604 765,749 4,422,121

statements of cash flows for the year ended 31 December 2014



Group Company


cash flows from investing activities

Acquisition of property, plant and equipment (1,614,561) (2,534,967) (3,002) (13,941)Acquisition of subsidiaries, net of cash and cash equivalents acquired (153,541) (360,151) – –Dividends received from associates 19,975 54,368 – –Decrease in other investments 844,445 1,289,623 – –Interest received 111,997 146,440 6,351 46,242Increase in investment in associates (36,755) – – –Acquisition of associates – (2,472) – –Proceeds from disposal of property, plant and equipments 215 – 215 –Proceeds from redemption of unsecured loan stocks 29,682 – 400 1,027,419Redemption of unsecured loan stocks (57,625) (19,543) – –

net cash (used in)/from investing activities (856,168) (1,426,702) 3,964 1,059,720

cash flows from financing activities

Dividends paid to the owners of the Company (198,500) (191,000) (198,500) (191,000)Dividends paid to non-controlling interests (81,750) (190,000) – –Interest paid (965,724) (923,463) (112,804) (195,893)Proceeds from borrowings 1,559,239 12,061,722 – –Repayment of borrowings (959,930) (11,289,771) – (5,341,439)

net cash used in financing activities (646,665) (532,512) (311,304) (5,728,332)

net increase/(decrease) in cash and cash equivalents 1,199,117 (322,610) 458,409 (246,491)cash and cash equivalents at beginning of the year 2,375,783 2,698,393 134,585 381,076

cash and cash equivalents at end of the year (i) 3,574,900 2,375,783 592,994 134,585

statements of cash flows for the year ended 31 December 2014 (continued)

103103

(i) cash and cash equivalents

Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts:

Group Company


Deposits with licensed banks and other licensed corporations 3,433,561 3,306,899 584,852 128,596Less: Other investments 13 (321,509) (1,165,954) – –

3,112,052 2,140,945 584,852 128,596Cash and bank balances 14 462,848 234,838 8,142 5,989

3,574,900 2,375,783 592,994 134,585


statements of cash flows for the year ended 31 December 2014 (continued)



Malakoff Corporation Berhad is a public limited liability company, incorporated and domiciled in Malaysia. The addresses of the principal place of business and registered office of the Company are as follows:

Principal place of business registered office

Level 12, Block 4 Ground Floor, Wisma BudimanPlaza Sentral Persiaran Raja ChulanJalan Stesen Sentral 5 50200 Kuala Lumpur50470 Kuala Lumpur

This consolidated financial statements of the Company as at and for the financial year ended 31 December 2014 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interest in associates and a joint venture.

The Company is principally engaged in investment holding activities, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements.

The immediate and ultimate holding companies during the financial year were MMC Corporation Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad and Indra Cita Sdn. Bhd. respectively. Both companies were incorporated in Malaysia.

These financial statements were authorised for issue by the Board of Directors on 6 February 2015.

1. basis of PreParation

(a) statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the requirements of the Companies Act, 1965 in Malaysia.

The following are accounting standards, amendments and interpretations of the MFRS framework that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company.

mfrss, interpretations and amendments effective for annual periods beginning on or after 1 July 2014

• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2011-2013 Cycle)

• Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle)• Amendments toMFRS3,Business Combinations (Annual Improvements 2010-2012 Cycle and

2011-2013 Cycle)• Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle)• Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle

and 2011-2013 Cycle)• Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012

Cycle)• Amendments to MFRS 119, Employee Benefits – Defined Benefit Plans: Employee

Contributions

notes to the consoliDateD financial statements

105105

1. basis of PreParation (continued)

(a) statement of compliance (continued)

mfrss, interpretations and amendments effective for annual periods beginning on or after 1 July 2014 (continued)

• Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)• Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle)

mfrss, interpretations and amendments effective for annual periods beginning on or after 1 January 2016

• Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual Improvements 2012-2014 Cycle)

• Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle)

• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

• Amendments to MFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations

• MFRS 14, Regulatory Deferral Accounts• Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets –

Clarification of Acceptable Methods of Depreciation and Amortisation• Amendments to MFRS 116, Property, Plant and Equipment and MFRS 141, Agriculture –

Agriculture: Bearer Plants• Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle)• Amendments to MFRS 127, Separate Financial Statements – Equity Method in Separate

Financial Statements• Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014

Cycle)• Amendments to MFRS 101, Presentation of Financial Statements: Disclosure Initiative• Amendments toMFRS10,Consolidated Financial Statements, MFRS 12, Disclosures of Interests

in Other Entities and MFRS 128, Investments in Associates and Joint Ventures – Investment Entities: Applying the Consolidation Exception

mfrss, interpretations and amendments effective for annual periods beginning on or after 1 January 2017

• MFRS 15, Revenue from Contracts with Customers

mfrss, interpretations and amendments effective for annual periods beginning on or after 1 January 2018• MFRS 9, Financial Instruments (2014)

The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations which are applicable to the Group and the Company for annual periods beginning on or after 1 July 2014, 1 January 2016, 1 January 2017 and 1 January 2018.

notes to the consoliDateD financial statements(continued)




(a) statement of compliance (continued)

The initial application of the accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and the Company except as mentioned below:

(i) mfrs 15, revenue from contracts with customers

MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue – Barter Transactions Involving Advertising Services.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 15.

(ii) mfrs 9, financial instruments

MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities and on hedge accounting.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.

(b) basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.

(c) functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

.(d) use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.


107107


(d) use of estimates and judgements (continued)

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than the following:

(i) lease accounting

The Group has adopted IC Interpretation 4, Determining whether an Arrangement contains a Lease, which prescribes that the determination of whether an arrangement is or contains a lease shall be based on the substance of the arrangement. It requires an assessment of whether the fulfilment of the arrangement is depended on the use of specific assets and whether the arrangement conveys a right to use such assets. The adoption of IC Interpretation 4 has resulted in operating lease accounting being applied to the Group entities as lessor for the Power Purchase Agreements.

(ii) cash flow hedge accounting

The Group enters into various types of hedging contracts to hedge the interest rate risk and foreign exchange risk which both are arisen from the loan transactions. In merchant markets these contracts typically fall within the definition of derivative financial instruments and accordingly have to be marked to market. Accounting for these contracts as cash flow hedges allows, to the extent the hedge is effective, the changes in value of the derivatives to be deferred in equity. In order to achieve cash flow hedge accounting it is necessary for the Group to determine, on an ongoing basis, whether a forecast transaction is both highly probable and whether the hedge is effective. This requires both subjective and objective measures of determination.

(iii) fair value of derivatives

The Group adopted MFRS 13, Fair Value Measurement. The Group recorded its derivative contracts on its statement of financial position at fair value. Changes in the value of its derivative contracts in each period were recorded in earnings unless strict hedge accounting criteria were met which allow the movement in fair value to be recorded within equity. The Group estimated the fair value of its derivative contracts by reference to forward and discount curves. The forward curve was derived from a reputable provider of financial market data, over the short-term horizon period, and from valuation techniques over the more distant horizon period. The assumptions used during the application of valuation techniques would directly impact the shape of the forward curve. The forward curves were only estimated of future rates and thus possess inherent uncertainty and subjectivity.

(iv) residual value

The Group assesses the appropriateness of the residual values of the power plants at the end of the initial concession period. The Group considered and adopted the recoverable values of the assets based on the valuation judgement by a professional valuer and the discounted cash flow method with the assumptions as shown in Note 2(d)(iv).





(d) use of estimates and judgements (continued)

(v) impairment of loan and receivables

Management reviews its loans and receivables for objective evidence of impairment at least quarterly. Significant financial difficulties of the debtors, the probability that the debtors will enter bankruptcy, and default or significant delay in payments are considered objective evidence that the receivables are impaired. In determining this, management makes judgment as to whether there is observable data indicating that there has been a significant change in the payment ability of the debtors, or whether there have been significant changes with adverse effect in the technological, market, economic or legal environment in which the debtor operates in.

Where there is objective evidence of impairment, management makes judgments as to whether an impairment loss should be recorded as an expense. In determining this, management uses estimates based on historical loss experience for assets with similar credit risk characteristics. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between the estimated loss and actual loss experience. As at 31 December 2014, the total allowance for impairment loss was approximately RM360,627,000 (2013: RM228,288,000).

(vi) Provision for retirement benefits

The provision is determined using actuarial valuation prepared by an independent actuary. The actuarial valuation involved making assumptions about discount rate, future salary increase, mortality rates, resignation rate and normal retirement age. As such, this estimated provision amount is subject to significant uncertainty.

(vii) deferred tax

Estimating the deferred tax assets to be recognised requires a process that involves determining appropriate tax provisions, forecasting future years’ taxable income and assessing our ability to utilise tax benefits through future earnings.


109109

2. significant accounting Policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by the Group entities, unless otherwise stated.

(a) basis of consolidation

(i) subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

(ii) business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus

• the recognised amount of any non-controlling interests in the acquiree; plus

• if the business combination is achieved in stages, the fair value of the existing equityinterest in the acquiree; less

• thenetrecognisedamount(generally fairvalue)of the identifiableassetsacquiredandliabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.




2. significant accounting Policies (continued)

(a) basis of consolidation (continued)

(iii) acquisitions of non-controlling interests

The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

(iv) loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(v) associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.

Investments in associates are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.


111111


(a) basis of consolidation (continued)

(vi) Joint arrangements

Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements’ returns.

Joint arrangements are classified and accounted for as follows:

• A joint arrangement is classified as“joint operation” when the Group or the Companyhas rights to the assets and obligations for the liabilities relating to an arrangement. The Group account for each of its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the other investors, in relation to the joint operation.

• A joint arrangement is classified as“joint venture” when the Group has rights only to the net assets of the arrangements. The Group accounts for its interest in the joint venture using the equity method. Investments in joint venture are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

(vii) non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(viii) transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity-accounted associates and joint venture are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.





(b) foreign currency

(i) foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the foreign currency translation reserve (“FCTR”) in equity.

(ii) operations denominated in functional currencies other than ringgit malaysia

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combinations before 1 January 2009 (the date when the Group first adopted MFRS) which are treated as assets and liabilities of the Company. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.


113113


(c) financial instruments

(i) initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

(ii) financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

financial assets

(a) financial assets at fair value through profit or loss

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(b) loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 2(i)).





(c) financial instruments (continued)

(ii) financial instrument categories and subsequent measurement (continued)

financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(iii) hedge accounting

cash flow hedge

A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect the profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in profit or loss.

Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss in the same period or periods during which the hedged forecast cash flows affect profit or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is removed from equity and included in the initial amount of the asset or liability. However, loss recognised in other comprehensive income that will not be recovered in one or more future periods is reclassified from equity into profit or loss.

Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or loss on the hedging instrument remains in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, any related cumulative gain or loss recognised in other comprehensive income on the hedging instrument is reclassified from equity into profit or loss.


115115


(c) financial instruments (continued)

(iv) derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(d) Property, plant and equipment

(i) recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” or “other operating expenses” respectively in profit or loss.





(d) Property, plant and equipment (continued)

(ii) subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date that they are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. All spare parts including common spares, emergency spares and consumable spares which expected to be used for more than one period is classified under C-inspection costs within property, plant and equipment. Spare parts which can only be used as part of an equipment purchased or plant constructed are depreciated in the same manner of the C-inspection costs. Common spare that can be used for more than a single equipment or plant is not depreciated before use. Upon use, it is depreciated over the remaining estimated useful life of the larger equipment or plant.

The estimated useful lives for the current and comparative periods are as follows:

• Buildings 5 – 20 years• C-inspection costs 3 – 6 years• Plant and machinery 5 – 31 years• Office equipment and furniture 5 years• Motor vehicles 5 years• Computers 3 years

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.


117117



(iv) residual value

The Group charges depreciation on its depreciable property, plant and equipment based on the useful lives and residual values of the assets. Estimating the useful lives and residual values of property, plant and equipment involves significant judgement, selection of variety of methods and assumptions that are normally based on market conditions existing at the balance sheet date. The actual useful lives and residual values of the assets however, may be different from expected.

The Power Purchase Agreements (“PPAs”) provide for the disposal of the power plants at the end of the initial concession period, in the event that the PPAs are not extended. In assessing the appropriateness of the residual values adopted, management considered the recoverable values of the assets based on the following methods:

(a) valuation judgement by a professional valuer

The residual value as at 21 January 2016 of the plant and machinery assets of Port Dickson Power Berhad will be RM61.8 million.

The valuation judgement by a professional valuer was derived using the following critical assumptions:

(i) All plant and equipment will be removed only at the end of the 21 year power supply agreement;

(ii) The recoverable steel within the power house and tank farm will be sold in the local market; and

(iii) All metals of value will be recovered.

(b) the discounted cash flow method (“dcf”)

The discounted cash flows were derived using the following critical assumptions:

(1) extension of five to ten years of the PPAs at the end of the initial concession period, in view of:

(i) limited new power plants being constructed;

(ii) increase in demand for power; and

(iii) Tenaga Nasional Berhad (“TNB”)’s continued reliance on Independent Power Producers (“IPPs”).






(iv) residual value (continued)

(b) the discounted cash flow method (“dcf”) (continued)

The existing PPAs expire as follows:

Residual Residual value value RM’million RM’million

Year of at atPPa owner expiry 31.12.2014 31.12.2013

Segari Energy Ventures Sdn. Bhd. 2027 370 370GB3 Sdn. Bhd. 2022 514 514Prai Power Sdn. Bhd. 2024 315 315Tanjung Bin Power Sdn. Bhd. 2031 1,924 1,924

3,123 3,123

(2) an estimated Variable Operating Rate (“VOR”) during the extension period which management deems to be reasonable based on the expected demand and the VOR rate at the end of the PPAs;

(3) an average despatch factor of 20% and 83% to reflect the future demand for power by the industry; and

(4) the pre-tax discount rate of 7.5% per annum.

(e) leased assets

(i) finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment.


119119


(e) leased assets (continued)

(ii) operating lease

(a) group as lessee

leasehold land

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.

(b) group as lessor

Power Purchase agreement

The Group adopted IC Interpretation 4, Determining whether an Arrangement contains a Lease, which prescribed that the determination of whether an arrangement is or contains a lease shall be based on the substance of the arrangement. It requires an assessment of whether the fulfillment of the arrangement is dependent on the use of specific asset and whether the arrangement conveys a right to use such assets. An arrangement that contains a lease is accounted for as a finance lease or an operating lease. Payment for services and the cost of inputs of the arrangement are excluded from the calculation of the minimum lease payments.

The operating lease income is recognised over the term of the lease on a straight-line basis.

(f) intangible assets

(i) goodwill

Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In respect of equity-accounted associates and joint venture, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted associates and joint venture.

(ii) other intangible assets

Intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are measured at cost less any accumulated amortisation and any accumulated impairment losses.





(f) intangible assetss (continued)

(iii) subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill, is recognised in profit or loss as incurred.

(iv) amortisation

Goodwill and intangible assets with indefinite useful lives are not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired.

Other intangible assets with a finite useful life are amortised from the date that they are available for use. Amortisation is based on straight-line basis over its useful life or using the unit of production method. The amortisation is recognised within the “cost of sales” and “other operating expenses”, respectively in statement of profit or loss and other comprehensive income.

Amortisation method, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

(g) inventories

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

(h) cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments.


121121


(i) impairment

(i) financial assets

All financial assets (except for financial assets categorised as fair value through profit or loss, investments in subsidiaries, investments in associates and joint venture) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated.

An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

(ii) other assets

The carrying amounts of other assets (except for inventories and deferred tax assets) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.





(i) impairment (continued)

(ii) other assets (continued)

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.

(j) equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) ordinary shares

Ordinary shares are classified as equity.

(ii) Preference share capital

Preference share capital is classified as equity if it is non-redeemable, or is redeemable but only at the Company’s option, and any dividends are discretionary. Dividends thereon are recognised as distributions within equity.

Preference share capital is classified as financial liability if it is redeemable on a specific date or at the option of the equity holders, or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense in profit or loss as accrued.


123123


(k) employee benefits

(i) short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group or the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) state plans

The Group’s and the Company’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(iii) defined benefit plans

The Group’s and the Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed at regular interval by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group and the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income.

The Group and the Company determines the net interest expense or income on the net defined liability or asset for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability or asset, taking into account any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments.

Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group and the Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.





(l) contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.

Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(m) revenue and other income

(i) energy payments, operation and maintenance charges and project management fees

Revenue is measured at the fair value of the consideration received or receivable and is recognised in profit or loss as it accrues.

(ii) capacity payment

Revenue is recognised on a straight-line basis where the PPA is considered to be or to contain an operating lease.

(iii) dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive payment is established.

(iv) interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.

(v) lease income

Lease income is recognised in profit or loss by using effective interest method over the term of the lease.

(n) deferred income

Deferred income comprises the capacity payments received from Tenaga Nasional Berhad in relation to the PPAs. The amount is credited to profit or loss on a straight-line basis over the term of the respective PPAs under “Revenue” in the statement of profit or loss and other comprehensive income.


125125


(o) borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

(p) income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.





(q) earnings per ordinary share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.

(r) operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. Operating segments results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

(s) fair value measurement

Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

Level 1: quoted price (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.

Level 3: unobservable inputs for the asset or liability.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.


127127

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4. intangible assets

Subsidiaries Associates

Interest over Power Interest Purchase over Power and Purchase Operation and Power and and Water Maintenance Purchase Goodwill Agreements Total Goodwill Agreements Totalgroup RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

cost

At 1 January 2013 8,232 7,651,870 7,660,102 265,583 939,073 1,204,656Effect of movements in exchange rate – – – 19,182 – 19,182

At 31 December 2013 8,232 7,651,870 7,660,102 284,765 939,073 1,223,838Addition – 100,739 100,739 – – –Effect of movements in exchange rate – – – 19,214 – 19,214

At 31 December 2014 8,232 7,752,609 7,760,841 303,979 939,073 1,243,052

amortisation and impairment loss

At 1 January 2013 859 2,160,722 2,161,581 – 674,802 674,802Amortisation for the year – 427,162 427,162 – 42,675 42,675

At 31 December 2013/ 1 January 2014 859 2,587,884 2,588,743 – 717,477 717,477Amortisation for the year – 467,871 467,871 – 43,871 43,871

At 31 December 2014 859 3,055,755 3,056,614 – 761,348 761,348

carrying amount

At 1 January 2013 7,373 5,491,148 5,498,521 265,583 264,271 529,854

At 31 December 2013/ 1 January 2014 7,373 5,063,986 5,071,359 284,765 221,596 506,361

At 31 December 2014 7,373 4,696,854 4,704,227 303,979 177,725 481,704


131131

4. intangible assets (continued)

intangible assets arising from interest over Power Purchase, Power and Water Purchase and operation and maintenance agreements

The Group’s revenue is substantially derived from the generation and sale of electricity energy and generating capacity in Malaysia, which is governed by the Power Purchase Agreements (“PPAs”) (together with the Independent Power Producer (“IPP Licenses”) Licence issued by the Ministry of Energy, Water and Communications) and Power and Water Purchase Agreement (“PWPA”) held by the respective power producing subsidiaries and associates. The Operation and Maintenance Agreements (“OMAs”) which held by certain subsidiaries that engaged in operation and maintenance are in associated with the specific Independent Power Producer within the Group.

The Group has determined the expected cash flows to be generated from the PPAs, OMAs (together with the IPP Licences) and PWPA as Intangible Assets.

The PPAs, the IPP Licences and OMAs held by subsidiaries in Malaysia are recognised as a single asset in accordance with MFRS 138 Intangible Assets in view that they are required for the generation, operation and maintenance, sale of electricity energy and generating capacity in Malaysia.

In 2013, there were six (6) PPAs (together with the respective IPP Licences) held respectively by the Group’s power producing subsidiaries of Segari Energy Ventures Sdn. Bhd. (“SEV”), GB3 Sdn. Bhd. (“GB3”), Prai Power Sdn. Bhd. (“PPSB”) and Tanjung Bin Power Sdn. Bhd. (“TBP”) and associates namely Kapar Energy Ventures Sdn. Bhd. (“KEV”) and Port Dickson Power Berhad (“PDP”). There were four (4) OMAs held by the Group’s operations and maintenance subsidiaries namely Malakoff Power Berhad (“MPB”) and Tanjung Bin O&M Berhad (“TBOM”). There was one (1) PWPA held by Hidd Power Company B.S.C (“HPC”), an associate company.

During the financial year, the Group has acquired 75% and 100% equity interest in Port Dickson Power Berhad (“PDP”) and PDP O&M Sdn. Bhd. (“PDP OM”), respectively. The acquisition was completed on 30 April 2014 upon which, the Group recognised an intangible asset arising from the acquisition of interest over the PPA and OMA held by PDP and PDP OM, respectively. As at 31 December 2014, there were six (6) PPAs, one (1) PWPA and five (5) OMAs held by the Group.

These PPAs, PWPA and OMAs are the key documents that govern the underlying strength of the Group’s cash flow, which provide for, inter alia, the electricity tariff, supply, operations and maintenance and all other terms to be met by the subsidiaries and associates.





measurement

The fair value of the Intangible Assets arising from the PPAs, PWPA and OMAs were measured using the Multi-Period Excess Earnings Method (“MEEM”) under the income method. The underlying rationale in the MEEM was that the fair value of an Intangible Asset represents the present value of the net income after taxes attributable to the Intangible Asset. The net income attributable to the Intangible Asset was the excess income after charging a fair return on and of all the assets that are necessary (contributory assets) to realise the net income. The contributory asset charges (“CAC”) were based on the fair value of each contributory asset and represent the return on the assets. The assumption in calculating the CAC was that the owner of the Intangible Asset “rents” or “leases” the contributory assets from a hypothetical third party in an arm’s length transaction in order to be able to derive income from the Intangible Asset. The present value of the expected income attributable to the Intangible Assets less CAC and taxes represents the value of the Intangible Asset.

The management had applied the following key assumptions in deriving the present value of the net income after taxes attributable to the Intangible Assets at the acquisition date:

• Remaining useful life of PPAs/PWPA/OMAs 2 – 25 years (in accordance with the respective PPAs, PWPA

and OMAs)

• Dependable Capacity :-Power 350 MW – 2,420 MW :-Water 17,047 m³/hour

• Capacity Factor :-Power 10% – 75% of DC :-Water 91% – 99% of DC

• Net Output :-Electrical (million kW/hour) 213 – 11,197 :-Water (thousand m³) 67,370 – 73,771

• Capacity Rate :-Power (RM/kW/month) 11.35 – 50.00 :-Water (RM/m³/month) 1,222 – 1,339

• Fixed Operating Rate under Revenue (RM/kW/month) 4.00 – 10.50

• Variable Operating Rate under Revenue :-Power (RM/kW/month) 0.013 – 4.775 :-Water (RM/m³/month) 58.20 – 116.40

• Fuel price (RM/mmBtu) 4.60 – 13.70

• CAC 17.77% – 28.00% of EBITDA


133133


measurement (continued)

In applying the MEEM valuation methodology, the expected cash flows were discounted to their present value equivalent using a rate of return that reflects the relative risk of the cash flows, as well as the time value of money. This was calculated by weighing the required returns on debt and equity in proportion to their assumed percentages. The applied pre-tax discount rate was range from 7.5% to 9% (2013: 9% to 10%) per annum.

impairment testing for cash generating units (“cgus”) containing goodwill and interest over Power Purchase, Power and Water Purchase and operation and maintenance agreements

The carrying amounts of the goodwill and the interest over Power Purchase, Power and Water Purchase and Operation and Maintenance Agreements are allocated to the following CGUs:

Carrying amount

2014 2013goodwill RM’000 RM’000

cgus – PPas

SEV – gas-fuelled generation 1,565 1,565GB3 – gas-fuelled generation 392 392PPSB – gas-fuelled generation 377 377TBP – coal-fired thermal generation 3,159 3,159

5,493 5,493

cgus – oma

MPB 1,880 1,880

cgu – PWPa

HPC – gas-fuelled and water production 303,979 284,765

Total goodwill 311,352 292,138Less: Goodwill in an associate (303,979) (284,765)

7,373 7,373





impairment testing for cash generating units (“cgus”) containing goodwill and interest over Power Purchase, Power and Water Purchase and operation and maintenance agreements (continued)

Carrying amount

2014 2013interest over PPas, omas and PWPa RM’000 RM’000

cgus – interest over PPas

SEV – gas-fuelled generation 456,518 600,979GB3 – gas-fuelled generation 206,491 230,433PPSB – gas-fuelled generation 213,684 234,860TBP – coal-fired thermal generation 2,228,448 2,357,241PDP – gas-fuelled generation 61,723 –

3,166,864 3,423,513KEV – multi-fuel power generation 110,447 149,078

3,277,311 3,572,591

cgus – interest over omas

MPB 1,037,299 1,121,061TBOM 492,690 519,412

1,529,989 1,640,473

cgu – interest over PWPa

HPC – gas-fuelled and water production 67,279 72,518

Total interest over PPAs, PWPA and OMAs 4,874,579 5,285,582 Less: Intangible assets in associates (177,725) (221,596)

4,696,854 5,063,986

The total recoverable amount of the CGUs of the subsidiaries estimated based on value in use method, was as follows:

2014 2013 RM’000 RM’000

Recoverable amount 16,390,000 15,164,000


135135



The impairment test of the above CGUs was based on the value in use, determined by discounting future cash flows to their present value equivalent using a rate of return that reflects the relative risk of the cash flows, as well as the time value of money. This is calculated by weighing the required returns on debt and equity in proportion to their assumed percentages. The applied pre-tax discount rate was 7.5% (2013: 10%) per annum. The discount rate reflects the current market assessment of the time value of money and is based on the estimated cost of capital. The management had applied the following key assumptions in deriving the present value of the net cash flow before taxes attributable to the Intangible Assets:

• It is assumed that the terms of the PPAs will remain unchanged throughout the concessionperiod. It is assumed that HPC will obtain an approval for 10 years extension to its PWPA upon expiry.

• Remaining useful life of 8 – 17 years (in accordance with the PPAs/PWPA/OMAs respective PPAs, PWPA and OMAs)

• Dependable Capacity (DC) :-Power 350MW – 2,420MW (in accordance to the specifications of the respective plants)

:-Water 17,047 m³/hour

• Capacity Factor :-Power 1% – 98% of DC :-Water 94% – 98% of DC

• Net Output :-Electrical (million kW/hour) 550 – 15,200 :-Water (thousand m³) 67,435 – 72,670

• Capacity Rate :-Power (RM/kW/month) 5.85 – 50.00 :-Water (RM/m³/month) 1,115

• Fixed Operating Rate under Revenue – Power (RM/kW/month) 4.54 – 10.50 Revenue – Water (RM/m³/month) 208 – 256

• Variable Operating Rate under Revenue :-Power (RM/kW/month) 0.0064 – 4.84 :-Water (RM/m³/month) 78 – 96

• Fuel price (RM/mmBtu) 6.07 – 63.39

• Variable Operating Rate under Cost – Power (RM/kW/month) 0.0071 – 0.0240

• Fixed Operating Rate under Cost – Power (RM/kW/month) 2.25 – 12.99






The values assigned to the key assumptions represent management’s assessment of future trends in the power and utilities industry and are based on external sources and internal sources (historical data). As at 31 December 2014 and 31 December 2013, the estimated recoverable amount of all the CGUs exceeds the carrying amount of the goodwill and interest on PPAs/PWPA/OMAs of the CGUs.

The above estimates are particularly sensitive in the following area:

An increase/(decrease) of 1 percentage point in the discount rate used would have (decreased)/increased the recoverable amounts by (RM687,000,000)/RM754,000,000.

5. PrePaid lease Payments

Unexpired periodleasehold land less than 50 yearsgroup RM’000

cost

At 1 January 2013/31 December 2013 1 January 2014/31 December 2014 109,326

amortisation

1 January 2013 30,305Amortisation for the year 4,346

At 31 December 2013/1 January 2014 34,651Amortisation for the year 4,344

At 31 December 2014 38,995

carrying amounts

At 1 January 2013 79,021

At 31 December 2013/1 January 2014 74,675

At 31 December 2014 70,331


137137

6. investment in subsidiaries

Company

2014 2013 RM’000 RM’000

Unquoted:At beginning of the year 8,134,741 8,137,395Fair value adjustment – (2,654)

At end of the year 8,134,741 8,134,741

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------(This section below has been left blank intentionally.)




6. investment in subsidiaries (continued)

Details of subsidiaries are as follows:

Principal Effective place ownership of business/ interest and Country of voting interest (%)Name of subsidiary incorporation 2014 2013 Principal activities

direct subsidiary

1. Segari Energy Ventures Malaysia 93.75 93.75 Design, construction, Sdn. Bhd. operation and maintenance

of a combined cycle power plant, generation and sale of electrical energy and generating capacity of the power plant

2. GB3 Sdn. Bhd. Malaysia 75 75 Design, construction, operation and maintenance


3. Prai Power Sdn. Bhd. Malaysia 100 100 Design, construction, operation and maintenance


4. Tanjung Bin Power Malaysia 90 90 Design, engineering, Sdn. Bhd. procurement, construction,

installation and commissioning, testing, operation and maintenance of a 2,100 MW coal-fired electricity generating facility and sale of electrical energy and generating capacity of the power plant

5. Hypergantic Sdn. Bhd. Malaysia 100 100 Investment holding

6. Tanjung Bin Energy Malaysia 100 100 Design, engineering, Sdn. Bhd. procurement, construction,

installation and commissioning, testing, operation and maintenance of a 1,000 MW coal-fired electricity generating facility


139139


Details of subsidiaries are as follows: (continued)


direct subsidiary (continued)

7. Teknik Janakuasa Malaysia 100 100 Investment holding company Sdn. Bhd. and provision of operation

and maintenance and any related services

8. Malakoff Utilities Sdn. Bhd. Malaysia 100 100 Build, own and operate an electricity distribution system

and a centralised chilled water plant system

9. Malakoff Engineering. Malaysia 100 100 Provision of engineering and Sdn. Bhd project management services

10. Spring Assets Limited British Virgin 100 100 Dormant Islands

11. Malakoff Capital (L) Federal 100 100 Dormant Limited Territory of Labuan, Malaysia

12. Malakoff International Cayman 100 100 Offshore – Investment holding Limited Islands

13. Tuah Utama Sdn. Bhd. Malaysia 100 100 Investment holding

14. Desa Kilat Sdn. Bhd. Malaysia 54 54 Land reclamation, development and/or sale of reclaimed

land

15. Malakoff Power Berhad Malaysia 100 100 Operation and maintenance of power plants

16. Malakoff R&D Sdn. Bhd. Malaysia 100 100 Promoting, developing, acquiring and enhancing

the Group’s capacity and innovation in the energy business







indirect subsidiary

held through tanjung bin energy sdn. bhd.

17. Tanjung Bin Energy Issuer Malaysia 100 100 Administer and manage the Berhad development of a 1,000

MW coal fired electricity generating facility

held through teknik Janakuasa sdn. bhd.

18. Natural Analysis Sdn. Bhd. Malaysia 100 100 Dormant

19. TJSB Services Sdn. Bhd. Malaysia 100 100 Provision of maintenance, repair and overhaul and any

related services to power plants and any other plants of similar main and auxiliary operating systems

20. TJSB International Limited Cayman 100 100 Offshore – Investment holding Islands

21. TJSB Global Sdn. Bhd. Malaysia 100 100 Investment holding

22. PT. Teknik Janakuasa^ Indonesia 95 95 Provision of operation and maintenance services to

power plant and/or other utility plants

held through tJsb international limited

23. TJSB International British Virgin 100 100 Offshore – Investment holding (Shoaiba) Limited Islands

24. TJSB Middle East Limited British Virgin 100 100 Operation and maintenance of Islands power plant held through malakoff engineering sdn. bhd.

25. MESB Project Management Malaysia 100 100 Dormant Sdn. Bhd.


141141




indirect subsidiary (continued)

held through malakoff international limited

26. Malakoff Gulf Limited British Virgin 100 100 Offshore – Investment holding Islands

27. Malakoff Technical British Virgin 100 100 Offshore – Investment holding (Dhofar) Limited Islands

28. Malakoff AlDjazair Desal. Malaysia 100 100 Investment holding Sdn. Bhd.

29. Malakoff Oman Desalination British Virgin 100 100 Offshore – Investment holding Company Limited Islands

30. Malakoff Hidd Holding Guernsey 100 100 Asset, property, investment, Company Limited intellectual property and

other holding companies

31. Pacific Goldtree Sdn. Bhd. Malaysia 100 100 Investment holding

held through malakoff aldjazair desal sdn. bhd.

32. Tlemcen Desalination France 70 70 Offshore – Investment holding Investment Company SAS* held through malakoff hidd holding company limited

33. Malakoff Summit Hidd Guernsey 57.14 57.14 Asset, property, investment,` Holding Company Limited intellectual property and

other holding companies

held through malakoff Power berhad

34. Tanjung Bin O&M Berhad Malaysia 100 100 Operation and maintenance of power plant

35. PDP O&M Sdn. Bhd. Malaysia 100 – Operation and maintenance of (formerly known as Sime power plant Darby Biofuels Sdn. Bhd.)#^







indirect subsidiary (continued)

held through hypergantic sdn. bhd.

36. Port Dickson Power Malaysia 100 – Independent power producer Berhad#^ licensed by the Government

to supply electricity exclusively to Tenaga Nasional Berhad

held through Pacific goldtree sdn. bhd.

37. Skyfirst Power Sdn. Bhd. Malaysia 100 100 Investment holding

held through skyfirst Power sdn. bhd.

38. Malakoff Australia Pty. Ltd.* Australia 100 100 Investment holding

39. Wind Macarthur Holdings Australia 100 100 Investment holding (T) Pty. Limited*

held through malakoff australia Pty. ltd.

40. Malakoff Holdings Pty. Ltd.* Australia 100 100 Investment holding

held through malakoff holdings Pty. ltd.

41. Malakoff Wind Macarthur Australia 100 100 Investment holding Holdings Pty. Limited*

held through malakoff Wind macarthur holdings Pty. limited

42. Malakoff Wind Macarthur Australia 100 100 Leasing of wind turbine assets Pty. Limited* held through Wind macarthur holdings (t) Pty. limited

43. Wind Macarthur (T) Pty. Australia 100 100 Leasing of plant and equipment Limited*

held through Wind macarthur (t) Pty. limited

44. Wind Macarthur Finco Pty. Australia 100 100 Financing operations for Limited* Macarthur wind farm project

* Audited by other member firm of KPMG International^ Audited by firms other than KPMG# Acquired during the financial year (Note 37)


143143


The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:

2014

Other Segari Tanjung subsidiaries Energy Bin with Ventures GB3 Power immaterial Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. NCI Total RM’000 RM’000 RM’000 RM’000 RM’000

NCI percentage of ownership interest and voting interest 6.25% 25% 10%

Carrying amount of NCI 45,330 132,039 37,719 (2,121) 212,967

Profit allocated to NCI 8,495 16,653 45,994 153 71,295

summarised financial information before intra-group elimination

as at 31 december

Non-current assets 1,921,664 965,029 6,133,816Current assets 925,084 305,504 2,440,401Non-current liabilities (1,885,884) (623,910) (7,607,851)Current liabilities (235,587) (118,468) (629,318)

Net assets 725,277 528,155 337,048

year ended 31 decemberRevenue 1,329,272 399,841 3,027,070Profit for the year 135,915 66,612 459,936Total comprehensive income 135,915 66,612 459,936

Cash flows from operating activities 355,636 244,930 1,542,080Cash flows from investing activities 57,109 5,415 201,287Cash flows used in financing activities (716,324) (293,137) (984,439)

Net (decrease)/increase in cash and cash equivalents (303,579) (42,792) 758,928

Dividend paid to NCI 11,250 27,500 43,000 – 81,750





The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows (continued):

2013

Other Segari Tanjung subsidiaries Energy Bin with Ventures GB3 Power immaterial Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. NCI Total RM’000 RM’000 RM’000 RM’000 RM’000

NCI percentage of ownership interest and voting interest 6.25% 25% 10%Carrying amount of NCI 48,085 142,886 34,725 (2,274) 223,422

Profit/(Loss) allocated to NCI 21,467 27,937 23,871 (150) 73,125

summarised financial information before intra-group elimination

as at 31 december

Non-current assets 2,049,393 976,095 6,205,353Current assets 1,405,620 470,180 1,847,406Non-current liabilities (2,403,032) (688,523) (7,327,993)Current liabilities (282,619) (186,209) (417,577)

Net assets 769,362 571,543 307,189

year ended 31 december

Revenue 1,373,779 412,098 2,451,698Profit for the year 343,468 111,745 238,714Total comprehensive income 343,468 111,745 238,714

Cash flows from operating activities 470,910 170,425 1,084,199Cash flows (used in)/from investing activities (226,546) 68,097 (1,345,551)Cash flows used in financing activities (354,010) (155,980) (60,907)

Net (decrease)/increase in cash and cash equivalents (109,646) 82,542 (322,259)

Dividend paid to NCI 125,000 – 65,000 – 190,000


145145

7. investment in associates

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

At cost Unquoted shares: – in Malaysia 14,400 41,475 641,770 641,770 – outside Malaysia 40,481 3,726 – – Unquoted preference shares: – in Malaysia 4,000 4,000 – – Unquoted loan stocks: – in Malaysia 356,630 357,030 356,630 357,030 – outside Malaysia 122,286 151,568 – – Pre-acquisition reserves 125,275 66,775 – – Share of post-acquisition reserves 58,543 163,523 – –

721,615 788,097 998,400 998,800

Add: Intangible assets acquired through business combination (see Note 4) – Goodwill 303,979 284,765 – – – Interest over PPA and PWPA 939,073 939,073 – –

1,243,052 1,223,838 – –

Less: Amortisation of intangible assets At 1 January (253,831) (211,156) – – Amortisation for the year (43,871) (42,675) – –

At 31 December (297,702) (253,831) – –

Less: Impairment loss on intangible assets At 1 January/31 December (463,646) (463,646) – –

Carrying amount 481,704 506,361 – –

1,203,319 1,294,458 998,400 998,800




7. investment in associates (continued)

Details of associates are as follows:

Effective Effective ownership voting interest interest Country of (%) (%)No. Name of associate incorporation 2014 2013 2014 2013 Principal activities

1. Port Dickson Power Malaysia – 25 – 25 Independent power producer Berhad# licensed by the Government

to supply electricity exclusively to Tenaga Nasional Berhad

2. Kapar Energy Ventures Malaysia 40 40 40 40 Generation and sale of Sdn. Bhd. electricity

3. Lekir Bulk Terminal Malaysia 20 20 20 20 Development, ownership and Sdn. Bhd. management of a dry bulk

terminal

4. Malaysian Shoaiba Malaysia 40 40 40 40 Investment holding Consortium Sdn. Bhd.

5. Saudi-Malaysia Water Saudi 20 20 20 20 Offshore – Investment holding & Electricity Company Arabia Limited

6. Shuaibah Water & Saudi 12 12 12 12 Design, construction, Electricity Company Arabia commissioning, testing, Limited possession, operation and

maintenance of crude oil fired power generation and water desalination plant

7. Shuaibah Expansion Saudi 12 12 12 12 Development, Holding Company Arabia construction, ownership, Limited operation and maintenance

of Shuaibah Phase 3 Expansion independent water producer (“IWP”) and transport and sale of water and undertake all works and activities related thereto, directly or through another company holding most of its shares or stock


147147


Details of associates are as follows: (continued)


8. Shuaibah Expansion Saudi 11.9 11.9 11.9 11.9 Development, construction, Project Company Arabia possession, operation and Limited maintenance of the

Shuaibah Phase 3 Expansion IWP, transfer and sell water and all relevant works and activities

9. Oman Technical British Virgin 43.4 43.4 43.4 43.4 Offshore – Investment holding Partners Limited Islands

10. Salalah Power Bermuda 43.4 43.4 43.4 43.4 Offshore – Investment holding Holdings Limited

11. Al-Imtiaz Operation Saudi 20 20 20 20 Implementation of operation and Maintenance Arabia and maintenance contracts Company Limited for stations of electrical

power generation and water desalination

12. Saudi-Malaysia Saudi 20 20 20 20 Operation and maintenance Operation and Arabia of power and water Maintenance Services desalination plant Company Limited

13. Hyflux-TJSB Algeria SPA Algeria 49 49 49 49 Operation and maintenance of water desalination plant

14. Hidd Power Company Bahrain 39.97 39.97 40 40 Building, operation and B.S.C maintenance of power and

water stations for special purposes (specific supply only)





Details of associates are as follows: (continued)


15. Muscat City Desalination Oman 31.5 31.5 31.5 31.5 Operation and maintenance Operation and of pump stations and Maintenance Company pipelines, installation and LLC repair of electric power

and transformer plants and telecommunications and radar plants, export and import offices, and laying and maintenance of all kinds of pipes

16. Muscat City Desalination Oman 45 45 45 45 Desalination of water Company S.A.O.C

# The Group has acquired additional 75% stake in Port Dickson Power Berhad during the financial year (Note 37).


149149


The following table summarises the information of the Group’s material associates, adjusted for any differences in the accounting policies and reconciles the information to the carrying amount of the Group’s interest in the associates.

2014

Shuaibah Kapar Water & Hidd Energy Electricity Power Ventures Company Company Sdn. Bhd. Limited B.S.C RM’000 RM’000 RM’000

summarised financial information

as at 31 december

Non-current assets 2,860,229 6,739,485 3,375,084Current assets 1,519,584 429,755 317,601Non-current liabilities (3,235,750) (5,337,201) (3,106,649)Current liabilities (952,954) (538,611) (418,414)

Net assets 191,109 1,293,428 167,622

year ended 31 december(Loss)/Profit for the year (128,789) 269,492 104,130Other comprehensive income – 13,800 (59,423)

Total comprehensive (expense)/income (128,789) 283,292 44,707






2014

Shuaibah Kapar Water & Hidd Other Energy Electricity Power individually Ventures Company Company immaterial Sdn. Bhd. Limited B.S.C associates Total RM’000 RM’000 RM’000 RM’000 RM’000

included in the total comprehensive income/(expense) is:

Revenue 1,973,405 947,910 1,039,970Depreciation and amortisation (241) (241,788) (160,454)Interest income 18,277 – 13Interest expense (187,406) (320,412) (155,233)Income tax expense (42,801) – –

reconciliation of net assets to carrying amount

as at 31 december

Group’s share of net assets 76,444 155,212 67,050 66,279 364,985Goodwill – – 303,979 – 303,979Intangible assets 110,447 – 67,278 – 177,725Redeemable unsecured loan stocks 356,630 – – – 356,630

Carrying amount in the statement of financial position 543,521 155,212 438,307 66,279 1,203,319

group’s share of result


Group’s share of (loss)/profit for the year (51,515) 32,339 41,652 12,536 35,012Group’s share of other comprehensive income/(expense) – 1,656 (23,769) (495) (22,608)

Group’s share of total comprehensive (expense)/income (51,515) 33,995 17,883 12,041 12,404

other information

Dividend received – – (16,975) (3,000) (19,975)


151151



2013

Shuaibah Port Kapar Water & Hidd Dickson Energy Electricity Power Power Ventures Company Company Berhad Sdn. Bhd. Limited B.S.C RM’000 RM’000 RM’000 RM’000


as at 31 december

Non-current assets 134,949 3,002,390 6,531,350 3,257,531Current assets 152,386 1,733,204 429,933 293,508Non-current liabilities (15,387) (3,387,729) (5,294,617) (2,985,281)Current liabilities (35,461) (1,027,965) (553,766) (414,676)

Net assets 236,487 319,900 1,112,900 151,082


Profit/(Loss) for the year 78,500 (44,097) 237,302 69,916Other comprehensive income – – – 263,751

Total comprehensive income/(expense) 78,500 (44,097) 237,302 333,667






2013

Shuaibah Port Kapar Water & Hidd Other Dickson Energy Electricity Power individually Power Ventures Company Company immaterial Berhad Sdn. Bhd. Limited B.S.C associates Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

included in the total comprehensive income/(expense) is:

Revenue 321,602 2,622,256 902,163 976,116Depreciation and amortisation (22,937) (244) (232,130) (165,311)Interest income 1,713 16,937 – 13Interest expense (1,314) (288,523) (324,195) (156,318)Income tax expense (26,548) (35,775) – –reconciliation of net assets to carrying amount

as at 31 december

Group’s share of net assets 59,122 127,960 124,344 60,388 59,253 431,067Goodwill – – – 284,765 – 284,765Intangible assets – 149,078 – 72,518 – 221,596Redeemable unsecured loan stocks – 357,030 – – – 357,030

Carrying amount in the statement of financial position 59,122 634,068 124,344 417,671 59,253 1,294,458


153153



2013

Shuaibah Port Kapar Water & Hidd Other Dickson Energy Electricity Power individually Power Ventures Company Company immaterial Berhad Sdn. Bhd. Limited B.S.C associates Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000



Group’s share of profit/ (loss) for the year 19,625 (17,639) 28,476 27,945 (1,002) 57,405Group’s share of other comprehensive (expense)/income – – (106,987) 71,873 (22,116) (57,230)

Group’s share of total comprehensive income/(expense) 19,625 (17,639) (78,511) 99,818 (23,118) 175

other informationDividend received 27,750 – – 23,947 2,671 54,368

8. investment in an equity accounted Joint venture

2014 2013group RM’000 RM’000

at cost

Unquoted shares, outside Malaysia 64,118 64,118 Share of post-acquisition reserves (6,233) (12,888)

57,885 51,230

Almiyah Attilemcania SPA (“AAS”), a joint arrangement which is principally engaged in the construction, operation and maintenance of a sea water desalination plant and marketing of desalinated water produced in Algeria. AAS is structured as a separate vehicle and provides the Group rights to the net assets of the entity. Accordingly, the Group has classified the investment in AAS as an equity accounted joint venture.




8. investment in an equity accounted Joint venture (continued)

The following tables summarise the financial information of AAS, as adjusted for any differences in accounting policies and reconcile the information to the carrying amount of the Group’s interest in AAS.

2014 2013group RM’000 RM’000

Percentage of ownership interest 35.7% 35.7%Percentage of voting interest 40.0% 40.0%


as at 31 december

Non-current assets 492,250 535,944Current assets 232,888 192,352Non-current liabilities (485,737) (511,791)Current liabilities (77,258) (73,004)

162,143 143,501


Profit for the year 18,641 10,636

included in the profit for the year are:

Revenue 120,755 121,082Depreciation and amortisation (21,463) (23,156)Interest expense (17,139) (19,752)

reconciliation of net assets to carrying amount

as at 31 december

Group’s share of net assets 57,885 51,230

Carrying amount in the statement of financial position 57,885 51,230



Group’s share of profit for the year 6,655 3,797


155155

9. finance lease receivable

The finance lease receivable relates to the 25-year lease agreement for the right to use and occupy 3 parcels of land, substation and assets.

The future minimum lease payments under finance lease together with the present value of the net minimum lease payments are as follows:

2014 2013group RM’000 RM’000

minimum lease payments:

Within one year 143,629 141,4991-2 years 157,675 146,4522-5 years 495,574 492,726Over 5 years 3,916,436 4,166,757

Gross investment in finance lease 4,713,314 4,947,434Less : Unearned finance income (2,722,340) (2,934,489)

Present value of minimum lease payments 1,990,974 2,012,945

analysed as:

Within one year – –1-2 years 211 –2-5 years 24,960 –Over 5 years 1,965,803 2,012,945

Total finance lease receivable 1,990,974 2,012,945

comprising:

Current – –Non-current 1,990,974 2,012,945

1,990,974 2,012,945

For the financial year ended 31 December 2014, the Group recognised a finance lease income of RM160,161,000 (2013: RM80,268,000) as disclosed in Note 21.




10. deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

2014 2013 2014 2013 2014 2013group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment – – (1,989,694) (2,093,386) (1,989,694) (2,093,386)Provisions 216,594 147,053 – – 216,594 147,053Intangibles – – (1,087,657) (1,183,274) (1,087,657) (1,183,274)Unutilised tax losses 21,467 38,143 – – 21,467 38,143Unutilised capital allowances 229,829 518,904 – – 229,829 518,904Deferred income 707,283 641,928 – – 707,283 641,928Deferred expense – – (41,279) (19,545) (41,279) (19,545)Others 2,244 2,244 – – 2,244 2,244

Tax assets/(liabilities) 1,177,417 1,348,272 (3,118,630) (3,296,205) (1,941,213) (1,947,933)Set-off of tax (397,568) (650,760) 397,568 650,760 – –

Net tax assets/(liabilities) 779,849 697,512 (2,721,062) (2,645,445) (1,941,213) (1,947,933)

Assets Liabilities Net

2014 2013 2014 2013 2014 2013company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Provisions – 2,555 – – – 2,555


157157

10. deferred tax assets and liabilities (continued)

Movements in temporary differences during the year:

Recognised Arising Recognised Recognised in other from in profit At in profit comprehensive business At or loss 31.12.2013/ or loss income combination At 1.1.2013 (Note 27) 1.1.2014 (Note 27) (Note 25) (Note 37) 31.12.2014group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

deferred tax assets

Provisions 70,814 76,239 147,053 19,168 39,715 10,658 216,594Unutilised tax losses – 38,143 38,143 (16,676) – – 21,467Unutilised capital allowances 650,196 (131,292) 518,904 (289,075) – – 229,829Deferred income 597,276 44,652 641,928 65,355 – – 707,283Others 2,244 – 2,244 – – – 2,244

Tax assets 1,320,530 27,742 1,348,272 (221,228) 39,715 10,658 1,177,417Set-off of tax (708,960) 58,200 (650,760) 253,192 – – (397,568)

Net tax assets 611,570 85,942 697,512 31,964 39,715 10,658 779,849

deferred tax liabilities

Property, plant and equipment (2,165,541) 72,155 (2,093,386) 130,041 – (26,349) (1,989,694)Intangibles (1,293,661) 110,387 (1,183,274) 120,802 – (25,185) (1,087,657)Deferred expense – (19,545) (19,545) (21,734) – – (41,279)

Tax liabilities (3,459,202) 162,997 (3,296,205) 229,109 – (51,534) (3,118,630)Set-off of tax 708,960 (58,200) 650,760 (253,192) – – 397,568

Net tax liabilities (2,750,242) 104,797 (2,645,445) (24,083) – (51,534) (2,721,062)

Recognised Recognised in profit At in profit At or loss 31.12.2013/ or loss At 1.1.2013 (Note 27) 1.1.2014 (Note 27) 31.12.2014company RM’000 RM’000 RM’000 RM’000 RM’000

deferred tax assets

Provisions 5,884 (3,329) 2,555 (2,555) –

deferred tax liabilities

Provisions (15,899) 15,899 – – –




11. trade and other receivables

Group Company

2014 2013 2014 2013 Notes RM’000 RM’000 RM’000 RM’000

non-current

Other receivables 11.1 114,793 126,939 – –

current

trade

Trade receivables 11.2 905,118 922,631 – –Less: Allowance for impairment loss (360,627) (228,288) – –

544,491 694,343 – –

non-trade

Amount due from subsidiaries – – 921,736 582,255Amount due from an associate 11.3 320,370 293,960 320,554 293,960Other receivables 297,619 136,456 7,930 7,133Deposits 107,150 105,783 4,386 6,192Prepayments 34,653 35,726 – –

759,792 571,925 1,254,606 889,540

1,304,283 1,266,268 1,254,606 889,540

1,419,076 1,393,207 1,254,606 889,540

11.1 other receivables

Other receivables represent the transaction costs which arose from derivative instruments, which will be amortised systematically over the tenure of the hedged item.


159159

11. trade and other receivables (continued)

11.2 trade receivables

Included in trade receivables of the Group is amount owing from an entity that is under common control by the Government of Malaysia (a party that has an indirect significant influence on the Group) as at the reporting period as follows:

Gross balance outstanding

2014 2013 RM’000 RM’000

Tenaga Nasional Berhad 876,984 886,743

11.3 amount due from an associate

The amount due from an associate relates to interest receivable subject to the existing terms of the unsecured loan stocks.

12. inventories

Group

2014 2013 RM’000 RM’000

at cost

Spares and consumables 269,848 235,076Coal 161,345 173,724Diesel fuel 87,241 70,275

518,434 479,075




13. other investments

Group

2014 2013 RM’000 RM’000 Restated

loans and receivables:

Deposits with licensed banks and other licensed corporations 321,509 1,165,954

The carrying amount of fixed deposits is assumed to reasonably approximate their fair values.

Included in other investments of the Group are amounts that are placed with licensed banks which are under common control by the Government of Malaysia (a party that has an indirect significant influence on the Group or the Company) as at the reporting periods as follows:

Group

2014 2013 RM’000 RM’000 Restated

Deposits with licensed banks and other licensed corporations 170,360 681,542

14. cash and cash equivalents

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Restated

Deposits with licensed banks and other licensed corporations 3,112,052 2,140,945 584,852 128,596Cash and bank balances 462,848 234,838 8,142 5,989

3,574,900 2,375,783 592,994 134,585


161161

14. cash and cash equivalents (continued)

Included in cash and cash equivalents of the Group and of the Company are amounts that are placed with licensed banks and other licensed corporations which are under common control by the Government of Malaysia (a party that has an indirect significant influence on the Group and on the Company) as at the reporting periods as follows:

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Restated

Deposits with licensed banks and other licensed corporations 2,763,796 1,778,039 586,569 134,579

15. caPital and reserves

15.1 share capital

2014 2013

Number Number Amount of shares Amount of shares

group and company RM’000 ’000 RM’000 ‘000

authorised:

Ordinary shares of RM1 each 490,000 490,000 490,000 490,000

Redeemable convertible non-cumulative preference shares of RM0.10 each 10,000 100,000 10,000 100,000

issued and fully paid:

Ordinary shares of RM1 each:At beginning/end of the year 351,344 351,344 351,344 351,344

Redeemable convertible non-cumulative preference shares of RM0.10 each:At beginning/end of the year 4,179 41,792 4,179 41,792

355,523 393,136 355,523 393,136




15. caPital and reserves (continued)

15.2 ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.

15.3 redeemable convertible non-cumulative preference shares

Holders of redeemable convertible (at the option of the Company in the event the Company is listed on Bursa Malaysia) non-cumulative preference shares receive a non-cumulative gross dividend of RM1 per share at the Company’s discretion and are distributed in priority to all dividends declared and payable to the Company’s ordinary shareholders. They do not have the right to participate in any additional dividends declared for ordinary shareholders. Preference shares do not carry the right to vote except for variation of holders’ rights to the class of shares, proposal to wind up and during the winding up of the Company, proposal to reduce the share capital of the Company and on the proposal for the disposal of the whole Company’s property, business or undertaking. The preference shares shall rank equally among themselves in all respects and shall rank in senior to the ordinary shares but junior to the Junior Sukuk.

15.4 foreign currency translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of the Group entities with functional currencies other than RM, as well as from the translation of liabilities that hedge the Company’s net investment in a foreign subsidiary.

15.5 capital redemption reserve

The Company had on 1 October 2009 redeemed 8,400,000 Redeemable Convertible Preference Shares (“RCPS”) at a redemption price of RM10.00 per share comprising the nominal amount of RM0.10 each and premium of RM9.90 each to the RCPS holders registered in the Company’s Register of Members. The redemption of the RCPS was made proportionately in respect of each holding of RCPS, fully paid out from the retained profits and share premium account of the Company.

In accordance with the requirement of Section 67A of the Companies Act, 1965, an amount equivalent to the nominal value of the RCPS totalling RM840,000 was transferred from the retained profits to the capital redemption reserve.

15.6 hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedges related transactions that have not yet occurred.


163163

16. loans and borroWings

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

non-current

secured

Al-Istisna bond 64,650 129,495 – –AUD term loan 1 454,217 425,508 – –AUD term loan 2 1,462,219 1,501,324 – –RM term loan 1 47,153 39,220 – –RM term loan 2 30,000 – – –Sukuk Ijarah medium term notes 3,581,077 3,544,065 – –Sukuk medium term notes 3,884,427 4,244,338 – –Sukuk Wakalah 400,000 450,000 – –Senior Sukuk Murabahah 3,290,000 3,290,000 – –Senior RM term loan 364,000 – – –Senior USD term loan 644,800 – – –USD term loan 286,363 277,107 – –

unsecuredJunior EBL term loan 1,058,064 726,905 – –Subordinated loan notes 126,247 183,798 – –Unrated Junior Sukuk Musharakah 1,800,000 1,800,000 1,800,000 1,800,000

17,493,217 16,611,760 1,800,000 1,800,000

current

secured

Commercial papers – 198,173 – –Al-Bai Bithaman Ajil bonds – 130,000 – –Al-Istisna bonds 64,845 63,736 – –AUD term loan 2 13,629 10,872 – –RM term loan 1 1,347 – – –RM term loan 2 155,000 – – –Sukuk medium term notes 440,000 500,000 – –Sukuk Wakalah 50,000 20,000 – –USD term loan 9,441 8,844 – –

734,262 931,625 – –

18,227,479 17,543,385 1,800,000 1,800,000




16. loans and borroWings (continued)security

a) As at 31 December 2014, the bonds, medium term and loan notes of the Group were secured over property, plant and equipment with a carrying amount of RM13,335,958,000 (2013: RM12,261,679,000).

b) As at 31 December 2014, Sukuk Wakalah was secured over the Operation and Maintenance Agreement, Sub Operation and Maintenance Agreement and Asset Sales Agreement held by a subsidiary, Tanjung Bin O&M Berhad (“TBOM”) and all the balances in the Revenue Account, Operating Account, Finance Service Reserve Account, Maintenance Reserve Account and Overhaul Reserve Account of TBOM.

significant covenants

The borrowings are subject to the fulfillment of the following significant covenants:

i) ABBA bonds issued by GB3 Sdn. Bhd. (“GB3”)

In 2013, GB3 was required to maintain a debt-to-equity ratio of not more than 9:1 during post-completion (of the power plant) period and a debt service cover ratio of at least 1.25 times commencing from the commercial operation date. The ABBA bonds was fully redeemed during the year.

ii) Al-Istisna bonds issued by Prai Power Sdn. Bhd. (“PPSB”)

PPSB is required to maintain a debt-to-equity ratio of not more than 4:1 and an annual finance service ratio of at least 1.4 times commencing from the third year of the first issuance of the bonds.

iii) Sukuk Ijarah medium term notes issued by Tanjung Bin Power Sdn. Bhd. (“TBP”)

TBP is required to maintain a debt-to-equity ratio of not more than 80:20 and a finance service cover ratio of at least 1.25 times.

iv) USD term loan drawdown by Malakoff International Limited (“MIL”)

MIL is required to maintain a debt-to-equity ratio of the Guarantor (the Company) of not more than 1.25:1 and a Group debt-to-equity ratio of not more than 7:1.

v) Junior EBL term loan facility drawdown by Tanjung Bin Energy Issuer Berhad (“TBEI”)

TBEI is required to maintain a debt-to-equity ratio of the Original Sponsor (the Company) of not more than 1.25:1 and a Group debt-to-equity ratio of not more than 7:1.

vi) Senior Sukuk Murabahah issued by Tanjung Bin Energy Issuer Berhad (“TBEI”)

TBEI is required to maintain a debt-to-equity ratio of not exceed 80:20 and a finance service cover ratio of not less than 1.05:1.


165165

16. loans and borroWings (continued)

significant covenants (continued)

vii) Senior USD term loan drawdown by Tanjung Bin Energy Issuer Berhad (“TBEI”)

Senior USD term loan was drawndown by TBEI during the financial year. TBEI is required to maintain a debt-to-equity ratio of not exceed 80:20 and a finance service cover ratio of not less than 1.05:1.

viii) Senior RM term loan drawdown by Tanjung Bin Energy Issuer Berhad (“TBEI”)

Senior RM term loan was drawndown by TBEI during the financial year. TBEI is required to maintain a debt-to-equity ratio of not exceed 80:20 and a finance service cover ratio of not less than 1.05:1.

ix) AUD term loan 1 drawdown by Malakoff International Limited (“MIL”)

MIL is required to maintain a total debt-to-equity ratio of the parent (the Company) of not more than 1.25:1 and a Group total debt-to-equity ratio of not more than 7:1.

x) AUD term loan 2 drawdown by Wind Macarthur Finco Pty Limited (“MWF”)

MWF is required to maintain a minimum projected debt service cover ratio of 1.10:1 on any two consecutive calculation date.

xi) Sukuk Wakalah issued by Tanjung Bin O&M Berhad (“TBOM”)

TBOM is required to maintain a debt-to-equity ratio of not more than 80:20 commencing 24 months after the issue date until the final maturity and a finance service cover ratio of at least 1.25 times.

xii) Sukuk medium term notes issued by Malakoff Power Berhad (“MPB”)

MPB was required to maintain an aggregated debt-to-equity ratio of not more than 1:1 and the Group debt-to-equity ratio of not more than 5.5:1.

xiii) Commercial papers issued by Malakoff Power Berhad (“MPB”)

In 2013, MPB was required to maintain a consolidated company debt-to-equity ratio of not more than 1.25:1 and a Group debt-to-equity ratio of not more than 7:1. Commercial paper was fully redeemed during the financial year.

xiv) RM term loan 1 drawdown by Malakoff Utilities Sdn. Bhd. (“MUSB”)

MUSB is required to maintain a debt-to-equity ratio of not more than 1.50:1 and a debt service cover ratio of not less than 1.20 times.

xv) RM term loan 2 drawdown by Port Dickson Power Berhad (“PDP”)

RM term loan 2 was drawndown by PDP during the financial year. PDP is required to maintain a finance service coverage ratio of at least 1.10 times.






terms and debt repayment schedule

Carrying Under 1 1-2 2-5 Over 5 Year of amount year years years yearsgroup maturity RM’000 RM’000 RM’000 RM’000 RM’000

2014

secured

Al-Istisna bond 2015 – 2016 129,495 64,845 64,650 – –AUD term loan 1 2016 454,217 – 454,217 – –AUD term loan 2 2015 – 2030 1,475,848 13,629 22,109 1,055,505 384,605RM term loan 1 2015 – 2024 48,500 1,347 5,389 16,167 25,597RM term loan 2 2015 – 2016 185,000 155,000 30,000 – –Sukuk Ijarah medium term notes 2019 – 2029 3,581,077 – – 525,000 3,056,077Sukuk medium term notes 2015 – 2031 4,324,427 440,000 100,000 1,000,000 2,784,427Sukuk Wakalah 2015 – 2029 450,000 50,000 55,000 55,000 290,000Senior Sukuk Murabahah 2017 – 2032 3,290,000 – – 210,000 3,080,000Senior RM term loan 2017 – 2024 364,000 – – 182,420 181,580Senior USD term loan 2017 – 2027 644,800 – – 164,300 480,500USD term loan 2015 – 2017 295,804 9,441 15,734 270,629 –

unsecured

Junior EBL term loan 2017 1,058,064 – – 1,058,064 –Subordinated loan notes 2022 – 2032 126,247 – – – 126,247Unrated Junior Sukuk Musharakah 2042 1,800,000 – – – 1,800,000

18,227,479 734,262 747,099 4,537,085 12,209,033


167167



terms and debt repayment schedule (continued)

Carrying Under 1 1-2 2-5 Over 5 Year of amount year years years yearsgroup maturity RM’000 RM’000 RM’000 RM’000 RM’000

2013

secured

ABBA bonds 2014 130,000 130,000 – – –Al-Istisna bonds 2014 – 2016 193,231 63,736 64,845 64,650 –AUD term loan 1 2016 425,508 – – 425,508 –AUD term loan 2 2014 – 2030 1,512,196 10,872 16,233 1,082,255 402,836RM term loan 2015 – 2024 39,220 – 1,089 13,073 25,058Commercial papers 2014 198,173 198,173 – – –Sukuk Ijarah medium term notes 2019 – 2029 3,544,065 – – – 3,544,065Sukuk medium term notes 2014 – 2031 4,744,338 500,000 440,000 430,000 3,374,338Sukuk Wakalah 2014 – 2029 470,000 20,000 50,000 110,000 290,000Senior Sukuk Murabahah 2017 – 2032 3,290,000 – – 145,000 3,145,000USD term loan 2014 – 2017 285,951 8,844 8,844 268,263 –

unsecured

Junior EBL term loan 2017 726,905 – – 726,905 –Subordinated loan notes 2022 – 2031 183,798 – – – 183,798Unrated Junior Sukuk Musharakah 2042 1,800,000 – – – 1,800,000

17,543,385 931,625 581,011 3,265,654 12,765,095






terms and debt repayment schedule (continued)

Carrying Under 1 1-2 2-5 Over 5company Year of amount year years years years maturity RM’000 RM’000 RM’000 RM’000 RM’000

2014

unsecured

Unrated Junior Sukuk Musharakah 2042 1,800,000 – – – 1,800,000

1,800,000 – – – 1,800,000

2013

unsecured

Unrated Junior Sukuk Musharakah 2042 1,800,000 – – – 1,800,000

1,800,000 – – – 1,800,000

16.1 unrated Junior sukuk musharakah

Pursuant to the terms and conditions of the unrated Junior Sukuk Musharakah (“Instrument”), the Instrument will either expire on 3 September 2042 or when the Group and the Company trigger the special event, whichever is earlier. Special event is the date of listing of the Company’s entire and issued paid-up share capital on Bursa Malaysia Securities Berhad or such other stock exchanges. In determining the effective interest rate to account for the present value of the Instrument at the end of the reporting period, the Group and the Company considered all contractual terms of the Instrument, including the timing and probability of triggering the special event.

The Company’s intention to list the entire issued and paid-up share capital on the Main Market of Bursa Malaysia Securities Berhad remained unchanged and is expected to crystallise within 12 months from the current reporting period. Accordingly, an estimated cash flows is used to compute the present value instead of using the contractual cash flow over the full contractual term of the Instrument. The present value of the Instrument at the end of the reporting period were approximate its carrying amount due to the short term nature of the Instrument.


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17. emPloyee benefits

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Defined benefit obligations 90,526 84,203 26,322 24,317Fair value of plan assets (15,619) (16,788) (13,975) (14,092)

Net defined benefit liabilities 74,907 67,415 12,347 10,225

The Company’s Staff Retirement Benefits Scheme (“Scheme”) provides pension benefits for the eligible employees upon retirement. Five entities within the Group, namely Malakoff Corporation Berhad, Teknik Janakuasa Sdn. Bhd., Malakoff Utilities Sdn. Bhd., Malakoff Engineering Sdn. Bhd. and Malakoff Power Berhad participated in making contributions to the Scheme.

The following table shows the reconciliation from the opening balance to the closing balance for net defined benefit liability and its components:

movement in defined benefit obligations

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Defined benefit obligations at beginning of the year 84,203 75,101 24,317 24,122

included in profit or lossCurrent service cost 8,459 8,555 2,501 2,521Interest cost 4,499 3,943 1,371 1,182Other service cost (54) 834 – 792

12,904 13,332 3,872 4,495

included in other comprehensive incomeActuarial (gain)/loss arising from: – Demographic assumptions (1,160) – (233) – – Financial assumptions 1,238 (2,265) 149 (610) – Experience adjustments (872) – 2,630 – – Others – – (152) –

(794) (2,265) 2,394 (610)

othersBenefits paid directly by the employer (3,069) (990) (147) (579)Benefits paid by the plan (2,718) (975) (2,261) (107)Intercompany employee transfers – – (1,853) (3,004)

(5,787) (1,965) (4,261) (3,690)

Defined benefit obligations at end of the year 90,526 84,203 26,322 24,317




17. emPloyee benefits (continued)

movement in fair value of plan assets

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Plan assets at beginning of the year (16,788) (1,885) (14,092) (587)

included in profit or loss

Interest income (928) (72) (829) (17)

(928) (72) (829) (17)

included in other comprehensive income

Return on scheme assets lesser/ (greater) than discount rate 782 (168) 928 105Others – – (983) –

782 (168) (55) 105

others

Benefits paid by the plan 2,718 975 2,261 107Employer contribution (1,403) (15,638) (1,260) (13,700)

1,315 (14,663) 1,001 (13,593)

Plan assets at end of the year end of the year (15,619) (16,788) (13,975) (14,092)


171171


movement in net defined benefit liabilities

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Net defined benefit liabilities at beginning of the year 67,415 73,216 10,225 23,535

included in profit or loss

Current service cost 8,459 8,555 2,501 2,521Interest cost 3,571 3,871 542 1,165Other service cost (54) 834 – 792

11,976 13,260 3,043 4,478

included in other comprehensive income

Actuarial (gain)/loss arising from: – Demographic assumptions (1,160) – (233) – – Financial assumptions 1,238 (2,265) 149 (610) – Loss due to experience (872) – 2,630 –Return on scheme assets lesser/(greater) than discount rate 782 (168) 928 105Others – – (1,135) –

(12) (2,433) 2,339 (505)

other

Benefits paid directly by the employer (3,069) (990) (147) (579)Employer contribution (1,403) (15,638) (1,260) (13,700)Intercompany employee transfer – – (1,853) (3,004)

(4,472) (16,628) (3,260) (17,283)

Net defined benefit liabilities at end of the year 74,907 67,415 12,347 10,225

The Group expects to pay RM1,868,000 in contributions to the defined benefit plans in 2015.





Plan assets

The major categories of plan assets are as follows:

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Equity instruments 8,981 8,237 8,036 6,915Malaysian government securities 3,998 3,492 3,578 2,931Corporate bonds 500 – 447 –Foreign investments 1,234 2,965 1,104 2,489Cash and cash equivalents 609 1,847 545 1,550Others 297 247 265 207

15,619 16,788 13,975 14,092

actuarial assumptions

Principal actuarial assumptions at the end of the reporting period:

Group Company

2014 2013 2014 2013

Discount rate 5.4% 5.3% 5.4% 5.3%Salary inflation 7.9% 7.9% 7.9% 7.9%

As at 31 December 2014, the Scheme duration is estimated to be around 11 years (2013: 12 years).

sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

Group Company

2014 2014 RM’000 RM’000

impact on the aggregate service and interest costs

discount rate

One percentage point increase (522) (112)One percentage point decrease 559 116

salary inflation

One percentage point increase 1,610 438One percentage point decrease (1,392) (383)


173173


sensitivity analysis (continued)

Group Company

2014 2014 RM’000 RM’000

impact on the defined benefit obligation

discount rate

One percentage point increase (8,680) (2,212)One percentage point decrease 10,147 2,548

salary inflation

One percentage point increase 9,884 2,485One percentage point decrease (8,637) (2,203)

Group Company

2013 2013 RM’000 RM’000

impact on the aggregate service and interest costs

discount rate

One percentage point increase (784) (199)One percentage point decrease 892 226

salary inflation

One percentage point increase 1,818 501One percentage point decrease (1,541) (429)

impact on the defined benefit obligation

discount rate

One percentage point increase (9,517) (2,575)One percentage point decrease 11,244 2,996

salary inflation

One percentage point increase 11,852 3,189One percentage point decrease (10,196) (2,785)

Although the analysis does not account to the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.




18. deferred income

2014 2013group RM’000 RM’000

At beginning of the year 2,668,485 2,389,105Additions 333,359 329,882Credited to profit or loss (60,264) (50,502)

At end of the year 2,941,580 2,668,485

Non-current 2,811,196 2,608,222Current 130,384 60,263

2,941,580 2,668,485

19. trade and other Payables

Group Company

2014 2013 2014 2013 Notes RM’000 RM’000 RM’000 RM’000

trade

Trade payables 19.1 407,152 223,161 – –

non-trade

Other payables 19.2 148,847 370,943 6,591 10,406Accrued expenses 19.2 419,515 340,012 37,611 38,206Amounts due to subsidiaries 19.3 – – 1,134,453 853,249

568,362 710,955 1,178,655 901,861

975,514 934,116 1,178,655 901,861


175175

19. trade and other Payables (continued)

19.1 trade payables

Included in trade payables of the Group are amounts owing to entities that are under common control by the Government of Malaysia (a party that has an indirect significant influence on the Group) as at the reporting period as follows:

Net balance outstanding

2014 2013 RM’000 RM’000

Petroliam Nasional Berhad 26,339 68,445Petronas Dagangan Berhad 33,641 –TNB Fuel Services Sdn. Bhd. 315,992 99,391Tenaga Nasional Berhad 6,219 4,995

382,191 172,831

19.2 other payables and accrued expenses

As at 31 December 2014, included in accrued expenses of the Group were interest expense payable of RM171,865,000 (2013: RM193,196,000) and provision for CESS fund of RM45,582,000 (2013: RM26,480,000).

19.3 amounts due to subsidiaries

The amounts due to subsidiaries are unsecured, interest free and repayable on demand.




20. derivative financial assets/(liabilities)

2014 2013

Assets Liabilities Assets Liabilitiesgroup RM’000 RM’000 RM’000 RM’000

non-current

Derivatives used for hedging – Interest rate swaps – (167,338) 16,134 (31,762) – Cross currency swaps 99,147 – 64,107 –

99,147 (167,338) 80,241 (31,762)

current

Derivatives used for hedging – Interest rate swaps – (27,704) – (34,319)

– (27,704) – (34,319)

99,147 (195,042) 80,241 (66,081)

Interest rate swap and cross currency swap are used to achieve an appropriate mix of fixed and floating interest rate exposure within the Group’s policy. The Group entered into interest rate swaps and cross currency swaps, to hedge the interest rate risk and foreign exchange risk. The interest rate swaps and cross currency swaps were entered into for a period of 5 years to 25 years tenure.

21. revenue

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Electricity generation and distribution 5,398,177 4,612,563 – –Project management fees 1,701 967 1,701 967Rental income from estate 4,341 3,638 4,341 3,638Operation and maintenance fees 30,104 19,983 – –Finance lease income 160,161 80,268 – –Dividends from subsidiaries – – 958,876 3,658,000Management fees from subsidiaries – – 26,418 26,553

5,594,484 4,717,419 991,336 3,689,158


177177

22. finance income

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Interest income of financial assets that are not at fair value through profit or loss 140,354 203,267 34,505 81,740

Recognised in profit or loss 132,688 161,052 34,505 81,740Capitalised on qualifying assets as a reduction of borrowing costs: – Property, plant and equipment 7,666 42,215 – –

140,354 203,267 34,505 81,740

23. finance costs

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Interest expense of financial liabilities that are not at fair value through profit or loss: – Loans and borrowings 1,165,702 1,055,870 169,212 228,820

Recognised in profit or loss 911,242 840,318 169,212 228,820Capitalised on qualifying assets: – Property, plant and equipment 254,460 215,552 – –

1,165,702 1,055,870 169,212 228,820




24. Profit for the year

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Profit for the year is arrived at after charging:a. expenses by nature

Amortisation of intangible assets 473,110 432,403 – –Amortisation of prepaid lease payments 4,344 4,346 – –Amortisation of transaction costs of hedging instruments 12,146 12,144 – –Auditors’ remuneration: Audit fees – KPMG Malaysia 500 500 100 100 – Affiliates of KPMG Malaysia 779 315 377 315 – Other audit firms 146 – – – Non-audit fees – KPMG Malaysia 702 1,895 660 1,695 – Affiliates of KPMG Malaysia 2,127 2,644 1,361 703 – Other audit firms 1,395 1,386 633 1,301Changes in inventories of spares and consumables (20,291) 14,723 – –Contribution and Corporate Social Responsibility activities 5,350 12,000 – –Depreciation of property, plant and equipment 558,644 471,266 5,997 4,702Fuel costs 2,497,586 2,158,800Net foreign exchange loss – 6,139 – –Personnel expenses (including key management personnel):Contribution to EmployeesProvident Fund 17,401 12,823 4,644 3,853Expenses related to retirement benefit plans 11,976 13,260 3,043 4,478Wages, salaries and others 133,769 96,513 37,943 28,040Plant and equipment written off 20,897 127,126 – –Others 463,623 400,928 45,546 81,360

total cost of sales and administrative expenses 4,184,204 3,769,211 100,304 126,547

b. other operating expensesAmortisation of intangible assets 38,632 37,434 – –Net impairment loss on trade receivables 45,678 171,194 – –Others 149,921 116,451 – –

total other operating expenses 234,231 325,079 – –


179179

24. Profit for the year (continued)

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

and after crediting:

c. revenueDividends from subsidiaries – – 958,876 3,658,000Management fees from subsidiaries – – 26,418 26,553

d. other incomeNet foreign exchange gain 13,787 – 100 –Gain arising from change in fair value of derivative financial instruments 5,891 44,041 – –Others 75,665 35,041 2,938 593

total other income 95,343 79,082 3,038 593

e. other non-operating incomeBargain purchase gain 33,398 – – –Fair value gain of existing interest in the acquiree (Port Dickson Power Berhad) 27,581 – – –

total other non-operating income 60,979 – – –

25. other comPrehensive income

2014

group Before tax Tax benefit Net of tax RM’000 RM’000 RM’000

items that will not be reclassified subsequently to profit or lossRemeasurement of defined benefit liability 12 401 413

items that may be reclassified subsequently to profit or lossCash flow hedge – Loss arising during the year (117,409) 39,314 (78,095)Foreign currency translation differences for foreign operations– Gain arising during the year 5,166 – 5,166Share of losses on hedging reserve of equity– accounted associates (22,608) – (22,608)

(134,851) 39,314 (95,537)




25. other comPrehensive income (continued)

2013

Before tax Tax benefit Net of taxgroup RM’000 RM’000 RM’000

items that will not be reclassified subsequently to profit or lossRemeasurement of defined benefit liability 3,245 (812) 2,433

items that may be reclassified subsequently to profit or lossCash flow hedge – Gain arising during the year 238,418 – 238,418Foreign currency translation differences for foreign operations– Loss arising during the year (25,869) – (25,869)Share of losses on hedging reserve of equity– accounted associates (57,230) – (57,230)

155,319 – 155,319

2014

Before tax Tax benefit Net of taxcompany RM’000 RM’000 RM’000

items that will not be reclassified subsequently to profit or lossRemeasurement of defined benefit liability (2,339) – (2,339)

2013 Before tax Tax benefit Net of taxcompany RM’000 RM’000 RM’000

items that will not be reclassified subsequently to profit or lossRemeasurement of defined benefit liability 673 (168) 505


181181

26. Key management Personnel comPensation

The key management personnel compensations are as follows:

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Directors – Salary 563 – 563 – – Fees 893 915 893 915 – Meeting allowances 317 331 315 329 – Other allowances 292 639 292 639 – Other emoluments 281 238 239 238 – Estimated monetary value of benefit-in-kind 3 – 3 –

Total short term employee benefits 2,349 2,123 2,305 2,121

27. income tax exPense/(benefit)

recognised in profit or loss

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Total income tax expense/(benefit) 182,640 (150,511) 15,273 7,273

Major components of income tax expense include:current tax expenseMalaysian – current year 180,874 35,509 7,810 19,808Overseas – current year 3,711 – – –Under provision in prior years 5,936 4,719 4,908 35

190,521 40,228 12,718 19,843deferred tax expenseOrigination and reversal of temporary differences (6,177) (196,367) – (12,570)(Over)/Under provision in prior years (1,704) 5,628 2,555 –

(7,881) (190,739) 2,555 (12,570)





27. income tax exPense/(benefit) (continued)

recognised in profit or loss (continued)

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

reconciliation of tax expenseProfit for the year 412,844 234,658 744,090 3,408,851Total income tax expense/(benefit) 182,640 (150,511) 15,273 7,273

Profit excluding tax 595,484 84,147 759,363 3,416,124

Tax at Malaysian tax rate of 25% 148,871 21,037 189,841 854,031Non-taxable income – – (239,719) (914,500)Non-deductible expenses 84,277 103,899 57,688 67,707Tax incentives – (119,200) – –Effect of tax rates in foreign jurisdictions 170 – – –Effect of deduction on C-inspection costs (40,216) (114,606) – –Effect of corporate tax rate reduction on deferred tax* (5,159) (36,688) – –Effect of share of results of associates (10,417) (15,300) – –Current year losses for which no deferred tax asset was recognised 882 – – –Under/(Over) provision in prior years – current tax 5,936 4,719 4,908 35 – deferred tax (1,704) 5,628 2,555 –


* A reduction in the corporate tax rate from 25% to 24% was proposed in the 2014 budget. For the Group, management has used judgement with regard to determining temporary differences expected to reverse and estimated the temporary difference. The effect of any change is recognised in the profit or loss. The reduction will be effective 1 January 2016.


183183

28. earnings Per share

Group

2014 2013 RM’000 RM’000

Basic and diluted earnings per share are based on:

Net profit attributable to ordinary shareholders a 341,549 161,533

a) basic earnings per share

Number of ordinary shares b 351,344 351,344Basic earnings per share (RM) a/b 0.97 0.46

b) diluted earnings per share

The Company will undertake a conversion of the RCPS in conjunction with and as an integral part of the proposed listing and quotation for the entire enlarged issued and paid-up share capital. As at 31 December 2014, the Company had a total of 41,792,004 RCPS issued with a par value of RM0.10. The Company will issue one (1) additional RCPS having a par value of RM0.90 for each RCPS issued in the Company. The total issue of 83,584,008 RCPS in the Company will be consolidated into 41,792,004 RCPS with a par value of RM1.00 each and thereafter converted by the shareholders of the Company into 41,792,004 new ordinary shares.

For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all RCPS as mentioned above.

Group

2014 2013 RM’000 RM’000

Weighted average number of ordinary shares of RM1.00 each in issue 351,344 351,344Adjustment for the conversion of the RCPS 41,792 41,792

c 393,136 393,136

Diluted earnings per share (RM) a/c 0.87 0.41




29. dividends

Dividends recognised by the Company:

Sen per share Total (net of tax) amount Date of payment RM’000

2014

Interim 2014 ordinary 16.14 56,708 8 April 2014Interim 2014 preference 100.00 41,792 8 April 2014Interim 2014 ordinary 28.46 100,000 9 September 2014

Total amount 198,500

2013

Interim 2013 ordinary 13.72 48,208 20 May 2013Interim 2013 preference 100.00 41,792 20 May 2013Interim 2013 ordinary 28.75 101,000 28 August 2013

Total amount 191,000

After the end of the reporting period the following dividend was proposed by the Directors. This dividend will be recognised in subsequent financial year upon approval by the owners of the Company.

Sen per share Total (net of tax) amount RM’000

Final 2014 ordinary 28.46 100,000


185185

30. oPerating segments, geograPhical and customer information

The Group has two operating segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group’s Chief Executive Officer (the chief operating decision maker) reviews internal management reports at least on a quarterly basis. The following summary describes the operations in each of the Group’s operating segments:

• Asset management

Asset management division is responsible for managing assets to achieve the greatest return and the process of monitoring and maintaining facilities systems.

• Operations and maintenance (“O&M”)

Operation and maintenance division is responsible for providing repair and maintenance services for all the power plant equipments within the Group.

Segment profit and loss is measured based on profit before taxes, finance costs, interest income and share of profit of equity-accounted associates and a joint venture, net of tax as included in the internal management reports that are reviewed by the Group’s Chief Executive Officer (the chief operating decision maker).

segment assets

The segment assets consist of property, plant and equipment, intangible assets, prepaid lease payments, investment in an equity accounted joint venture, finance lease receivable, derivative financial assets, other receivables, deferred tax assets, trade and other receivables, inventories, current tax assets, other investments and cash and cash equivalents of the segment. Investment in associates is excluded from the segment assets. The segment assets is included in the internal management reports that are reviewed by the Group’s Chief Executive Officer.

segment liabilities

The segment liabilities consist of loans and borrowings, employee benefits, deferred income, deferred tax liabilities, derivative financial liabilities, trade and other payables and current tax liabilities of the segment. The segment liabilities is included in the internal management reports that are reviewed by the Group’s Chief Executive Officer.

segment capital expenditure

Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant and equipment.




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30. oPerating segments, geograPhical and customer information (continued)

Asset management O&M Consolidated

2014 2013 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

segment assets 25,809,779 24,403,617 2,322,974 2,370,212 28,132,753 26,773,829Investment in associates 1,203,319 1,294,458 – – 1,203,319 1,294,458

Total assets 29,336,072 28,068,287

segment liabilities 19,905,755 17,972,278 5,253,701 5,956,863 25,159,456 23,929,141

capital expenditure 1,608,583 2,530,522 5,978 4,445 1,614,561 2,534,967

non-cash expenses items:

Amortisation of intangible assets (401,261) (361,049) (110,481) (108,788) (511,742) (469,837)Amortisation of prepaid lease payments (4,344) (4,346) – – (4,344) (4,346)Amortisation of transaction costs of hedging instruments (12,146) (12,144) – – (12,146) (12,144)Depreciation (555,876) (468,728) (2,768) (2,538) (558,644) (471,266)Expenses related to retirement benefit plans (3,844) (4,831) (8,132) (8,429) (11,976) (13,260)Impairment loss on trade receivables (48,973) (177,273) – – (48,973) (177,273)Property, plant and equipment written off (20,897) (127,076) – (50) (20,897) (127,126)

(1,047,341) (1,155,447) (121,381) (119,805) (1,168,722) (1,275,252)




30. oPerating segments, geograPhical and customer information (continued)

geographical information

The Asset Management and O&M segments are managed on a worldwide basis, but operate facilities in Malaysia, Indonesia, Middle East, Australia and North America.

Geographic revenue information is based on geographical location of the customers. Geographic non-current asset is based on the geographical location of the assets. The amounts of non-current assets do not include financial instruments (including investments in associates and investment in an equity accounted joint venture) and deferred tax assets.

Group

Non-current Revenue assetsgeographical information RM’000 RM’000

2014

Malaysia 5,404,240 19,098,510Indonesia 14,823 –Middle East 15,260 –Australia 160,161 –

5,594,484 19,098,510

2013

Malaysia 4,617,842 18,207,065Indonesia 3,059 –Middle East 16,250 –Australia 80,268 –

4,717,419 18,207,065

major customer

The following is major customer with revenue equal or more than 10% of the Group’s total revenue:

Revenue

2014 2013 RM’000 RM’000

all common control company of:

Tenaga Nasional Berhad 5,457,407 4,726,492


189189

31. financial instruments

31.1 categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

a) Loans and receivables (L&R);b) Financial liabilities measured at amortised cost (FL); andc) Fair value through profit or loss (FVTPL) – Designated upon initial recognition (DUIR)

Carrying L&R/ FVTPL– amount (FL) DUIR

group RM’000 RM’000 RM’000

2014

financial assets

Trade and other receivables* 1,257,485 1,257,485 –Finance lease receivable 1,990,974 1,990,974 –Other investments 321,509 321,509 –Cash and cash equivalents 3,574,900 3,574,900 –Derivatives financial assets 99,147 – 99,147

7,244,015 7,144,868 99,147


Loans and borrowings (18,227,479) (18,227,479) –Trade and other payables (975,514) (975,514) –Derivative financial liabilities (195,042) – (195,042)

(19,398,035) (19,202,993) (195,042)

2013

financial assets, restated

Trade and other receivables* 1,218,397 1,218,397 –Finance lease receivable 2,012,945 2,012,945 –Other investments 1,165,954 1,165,954 –Cash and cash equivalents 2,375,783 2,375,783 –Derivatives financial assets 80,241 – 80,241

6,853,320 6,773,079 80,241


Loans and borrowings (17,543,385) (17,543,385) –Trade and other payables (934,116) (934,116) –Derivative financial liabilities (66,081) – (66,081)

(18,543,582) (18,477,501) (66,081)

* Excludes non-financial instruments




31. financial instruments (continued)

31.1 categories of financial instruments (continued)

Company

Carrying L&R/ amount (FL) company RM’000 RM’000

2014

financial assets

Trade and other receivables 1,254,606 1,254,606Cash and cash equivalents 592,994 592,994

1,847,600 1,847,600


Loans and borrowings (1,800,000) (1,800,000)Trade and other payables (1,178,655) (1,178,655)

(2,978,655) (2,978,655)

2013

financial assets

Trade and other receivables 889,540 889,540Cash and cash equivalents 134,585 134,585

1,024,125 1,024,125


Loans and borrowings (1,800,000) (1,800,000)Trade and other payables (901,861) (901,861)

(2,701,861) (2,701,861)

31.2 net gains and losses arising from financial instruments

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Loans and receivables 132,688 161,052 34,505 81,740Financial liabilities measured at amortised cost (911,242) (840,318) (169,212) (228,820)Fair value through profit or loss– Designated upon initial recognition 5,891 44,041 – –

(772,663) (635,225) (134,707) (147,080)


191191


31.3 financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk• Liquidity risk• Market risk

31.4 credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers and investment debt securities. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given.

receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally financial guarantees of banks, shareholders or directors of customers are obtained, and credit evaluations are performed on customers requiring credit over a certain amount.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statements of financial position.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on significant customers requiring credit over a certain amount. The Group and the Company does not require collateral in respect of financial assets.

Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal to or better than the Group and the Company. Given their high credit ratings, management does not expect any counterparty to fail to meet their obligations.

At the end of the reporting period, the Group has a concentration of credit risk in the form of trade debts due from Tenaga Nasional Berhad (TNB), representing approximately 40% (2013: 55%) of the total receivables of the Group. The maximum exposures to credit risk for the Group and the Company are represented by the carrying amount of each financial asset.





31.4 credit risk (continued)

receivables (continued)

Impairment losses

The ageing of trade receivables as at the end of the reporting period was:

Gross Impairment Netgroup RM’000 RM’000 RM’000

2014

Not past due 532,275 – 532,275Past due 0 – 30 days 7,433 – 7,433Past due 31 – 120 days 4,402 – 4,402Past due more than 120 days 361,008 (360,627) 381

905,118 (360,627) 544,491

2013

Not past due 345,520 (20,058) 325,462Past due 0 – 30 days 365,162 (20,983) 344,179Past due 31 – 120 days 1,955 (186) 1,769Past due more than 120 days 209,994 (187,061) 22,933

` 922,631 (228,288) 694,343

At the end of the reporting period, trade receivables with a carrying amount of RM4,783,000 (2013: RM24,702,000) were past due but not considered impaired. These trade receivables relate to customers for whom there has not been significant change in credit quality and the amounts are considered recoverable.

The movements in the allowance for impairment loss on trade receivables during the financial year were:

2014 2013group RM’000 RM’000

At beginning of the year 228,288 57,094Impairment loss recognised 48,973 177,273Impairment loss reversed (3,295) (6,079)Acquisition through business combination 86,661 –

At end of the year 360,627 228,288

The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is probable, the amount considered irrecoverable is written off against the receivable directly.


193193


31.5 liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group maintains a level of cash and cash equivalents deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

Maturity analysis

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments (including interest):

Contractual More Carrying interest Contractual Under than amount rate cash flows 1 year 1 – 2 years 2 – 5 years 5 years

group RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

2014


secured

Al-Istisna bonds 129,495 9.00-9.20 141,895 73,905 67,990 – –AUD term loan 1 454,217 BBSY + 472,133 20,373 451,760 – – margin 1.85 AUD term loan 2 1,475,848 5.72-7.90 2,068,357 121,282 128,153 1,256,673 562,249RM term loan 1 48,500 6.67-6.84 65,624 4,598 8,421 23,112 29,493RM term loan 2 185,000 4.45 191,147 160,837 30,310 – –Sukuk Ijarah medium term notes 3,581,077 4.54-5.45 6,029,069 201,539 201,539 1,129,617 4,496,374Sukuk medium term notes 4,324,427 4.30-6.25 9,608,431 722,751 381,769 1,794,549 6,709,362Sukuk Wakalah 450,000 3.95-5.60 626,299 71,530 74,628 102,228 377,913Senior Sukuk Murabahah 3,290,000 4.65-6.20 5,931,672 190,889 192,456 768,234 4,780,093Senior RM term loan 364,000 5.23-5.80 503,833 19,510 19,564 239,294 225,465Senior USD term loan 644,800 5.80 795,785 15,607 14,325 211,122 554,731USD term loan 295,804 Libor + 308,707 12,820 21,541 274,346 – margin 2.50

Balance carried forward 15,243,168 26,742,952 1,615,641 1,592,456 5,799,175 17,735,680





31.5 liquidity risk (continued)

Maturity analysis (continued)




2014

financial liabilities (continued)

Balance brought forward 15,243,168 26,742,952 1,615,641 1,592,456 5,799,175 17,735,680

unsecuredJunior EBL term loan 1,058,064 5.15-5.23 1,181,588 56,557 56,868 1,068,163 –Subordinated loan notes 126,247 9.00-12.00 182,010 30,505 20,241 33,734 97,530Unrated Junior Sukuk Musharakah 1,800,000 6.30-9.30 6,436,410 113,400 168,776 501,283 5,652,951Trade and other payables 975,514 – 975,514 975,514 – – –

19,202,993 35,518,474 2,791,617 1,838,341 7,402,355 23,486,161

.


195195







2013


secured

ABBA bonds 130,000 8.00 140,400 140,400 – – –Al-Istisna bonds 193,231 8.90-9.20 220,573 78,678 73,905 67,990 –AUD term loan 1 BBSY + margin 425,508 1.85 475,878 20,137 20,137 435,604 –AUD term loan 2 1,512,196 5.50 2,228,048 121,695 126,057 1,364,963 615,333RM term loan 39,220 6.67 55,905 2,625 3,705 19,504 30,071Commercial papers 198,173 3.65 200,000 200,000 – – –Sukuk Ijarah medium term notes 3,544,065 4.54-5.45 6,230,608 201,539 201,539 604,617 5,222,913Sukuk medium term notes 4,744,338 4.10-6.25 10,391,182 782,751 722,751 1,202,819 7,682,861Sukuk Wakalah 470,000 3.95-5.60 668,737 42,439 71,530 161,931 392,837Senior Sukuk Murabahah 3,290,000 4.65-6.20 6,122,562 190,889 190,889 712,914 5,027,870USD term loan 285,951 Libor + 313,717 17,331 17,065 279,321 – margin 2.50

Balance carried forward 14,832,682 27,047,610 1,798,484 1,427,578 4,849,663 18,971,885






Maturity analysis (continued)The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments (including interest):



2013

financial liabilities (continued)

Balance brought forward 14,832,682 27,047,610 1,798,484 1,427,578 4,849,663 18,971,885

unsecured

Junior EBL term loan 726,905 5.15 – 5.23 837,904 34,875 35,037 767,992 –Subordinated loan notes 183,798 9.00-12.00 237,556 12,423 23,583 19,906 181,644Unrated Junior Sukuk Musharakah 1,800,000 6.30-9.30 6,603,811 113,400 167,400 502,659 5,820,352Trade and other payables 934,116 – 934,116 934,116 – – –

18,477,501 35,660,997 2,893,298 1,653,598 6,140,220 24,973,881


197197






company RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

2014


unsecured

Unrated Junior Sukuk Musharakah 1,800,000 6.30-9.30 6,436,410 113,400 168,776 501,283 5,652,951Other payables and accruals 1,178,655 – 1,178,655 1,178,655 – – –

2,978,655 7,615,065 1,292,055 168,776 501,283 5,652,951

2013


unsecured

Unrated Junior Sukuk Musharakah 1,800,000 6.30-9.30 6,603,811 113,400 167,400 502,659 5,820,352Other payables and accruals 901,861 – 901,861 901,861 – – –

2,701,861 7,505,672 1,015,261 167,400 502,659 5,820,352





31.6 market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices will affect the Group’s financial position or cash flows.

31.6.1 currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily Australian Dollar (AUD), Swiss Franc (CHF), Kuwait Dinar (KWD), Euro (EUR) and US Dollar (USD).

exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency which is other than the currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was:

AUD CHF KWD EUR USD RM’000 RM’000 RM’000 RM’000 RM’000

2014

Deposits with licensed banks 23,317 – 9,610 161,377 114,583Trade and other receivables 17,399 63,334 6,982 – 7,114Loans and borrowings (1,930,064) – – – (940,604)Trade and other payables (17,393) (1,249) – (2,909) (3,149)

Net exposure (1,906,741) 62,085 16,592 158,468 (822,056)

2013

Deposits with licensed banks 42,751 43,767 23,368 – 28,647Trade and other receivables – – 5,396 – 11,245Loans and borrowings (1,937,704) – – – (285,951)Trade and other payables (23,013) – – (61,538) (58,729)

Net exposure (1,917,966) 43,767 28,764 (61,538) (304,788)


199199


31.6 market risk (continued)

31.6.1 currency risk (continued)

currency risk sensitivity analysis

Foreign currency risk arises from Group entities which have functional currencies other than Ringgit Malaysia (“RM”). A 10% (2013: 10%) strengthening of the RM against the following currencies would have increased (decreased) post-tax profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of reporting period. The analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

2014 2013 Profit Profit or loss or lossgroup RM’000 RM’000

AUD 143,006 143,847CHF (4,656) (3,283)KWD (1,244) (2,157)EUR (11,885) 4,616USD 61,654 22,859

138,515 165,882

A 10% (2013: 10%) weakening of RM against the above currencies at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant.

31.6.2 interest rate risk

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Short term receivables and payables are not significantly exposed to interest rate risk.

Risk management objectives, policies and processes for managing the risk

In managing interest rate risk, the Group maintains a balanced portfolio consisting mainly fixed instruments. All interest rate exposures are monitored and managed proactively by the Group’s management.





31.6 market risk (continued)

31.6.2 interest rate risk (continued)

Exposure to interest rate risk

The interest rate profile of the Group’s and the Company’s interest-bearing financial instruments based on carrying amounts at the end of the reporting period was:

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

fixed rate instruments

– Financial assets 3,433,561 3,306,899 584,852 128,596– Financial liabilities 17,121,942 16,650,200 1,800,000 1,800,000

floating rate instruments

– Financial liabilities 1,105,537 893,185 – –

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points (“bp”) in interest rates at the end of the reporting period would have increased (decreased) equity by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.

Profit or loss Equity

100 bps 100 bps 100 bps 100 bps increases decreases increases decreases RM’000 RM’000 RM’000 RM’000

2014

Floating rate instruments 11,055 (11,055) – –Interest rate swaps – – 109,191 (111,749)Cross currency swaps – – 111,251 (111,251)

Cash flow sensitivity (net) 11,055 (11,055) 220,442 (223,000)

2013

Floating rate instruments 8,932 (8,932) – –Interest rate swaps 28,448 (2,728) 149,276 (162,133)Cross currency swaps – – 104,235 (104,235)

Cash flow sensitivity (net) 37,380 (11,660) 253,511 (266,368)


201201


31.7 hedging activities

31.7.1 cash flow hedge

The Group has entered into various interest rate swaps and cross currency swaps in order to hedge the interest rate risk and foreign exchange risk in relation to the variability in cash flows on the floating rate RM and USD loans of RM967,604,587 (75% of Junior Tranche Loan), RM525,000,000 (75% of Senior Tranche Loan), USD400,000,000 (100% of USD Loan) and AUD517,644,989 loan.

For the interest rate swaps and cross currency swaps that held by a subsidiary in Malaysia, the notional amount of the various swaps start with RM96,953,206 and thereafter as per schedule for Junior IRS, RM44,273,673 and thereafter as per schedule for Senior IRS and USD33,752,607 and thereafter as per schedule for CCS. The interest rate swaps and cross currency swaps were entered into for a period of 5 years for Junior IRS, 12 years for Senior IRS and 15 years for CCS.

For the interest rate swaps that held by a subsidiary in Australia, the Group had interest rate swaps with a notional value of AUD464 million. The interest rate swaps were entered into for a period of 10 to 17 years tenor.

The following table indicates the periods in which the cash flows associated with the interest rate swap are expected to occur and affect profit or loss:

Expected More Carrying cash Under than amount flows 1 year 1-2 years 2-5 years 5 years

group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2014

financial asset

Cross currency swaps 99,147 1,460 (66,536) (17,211) 6,906 78,301

financial liability

Interest rate swap (195,042) (253,449) (43,030) (34,929) (91,127) (84,362)

2013

financial assets

Interest rate swaps 16,134 17,138 (8,859) (6,671) 2,130 30,538Cross currency swaps 64,107 32,909 (13,542) (26,139) (24,682) 97,272

80,241 50,047 (22,401) (32,810) (22,552) 127,810

financial liability

Interest rate swap (66,081) (87,601) (32,242) (25,985) (37,331) 7,957

During the financial year, a loss of RM78,095,000 (2013: gain of RM238,418,000) was recognised in other comprehensive income.





31.7 hedging activities (continued)

31.7.1 cash flow hedge (continued)

Ineffectiveness gain amounting to RM5,891,000 (2013: RM44,041,000) was recognised in profit or loss during the financial year in respect of the hedge.

sensitivity analysis

Fair value sensitivity analysis

A change of 10% strengthening/weakening of the USD at the end of the reporting period would have increased (decreased) equity by the amount shown below:

Equity

10% 10% strengthening weakening of USD of USD RM’000 RM’000

2014

Cross currency swaps 100,410 (100,410)

Fair value sensitivity (net) 100,410 (100,410)

2013

Cross currency swaps 35,128 (35,128)

Fair value sensitivity (net) 35,128 (35,128)


203203

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erm

bo

rro

win

gs

rea

son

ab

ly a

pp

roxi

ma

te

the

ir fa

ir va

lue

s d

ue

to

th

e r

ela

tive

ly s

ho

rt t

erm

na

ture

of

the

se fi

na

nc

ial

inst

rum

en

ts.

The

ta

ble

be

low

an

aly

ses

fina

nc

ial

inst

rum

en

ts c

arr

ied

at

fair

valu

e a

nd

th

ose

no

t c

arr

ied

at

fair

valu

e f

or

wh

ich

fa

ir va

lue

is

dis

clo

sed

, to

ge

the

r w

ith t

he

ir fa

ir va

lue

s a

nd

ca

rryi

ng

am

ou

nts

sh

ow

n i

n t

he

sta

tem

en

t o

f fin

an

cia

l p

osi

tion

.

Fa

ir va

lue

of

fina

nc

ial

inst

rum

en

ts

Fair

valu

e o

f fin

an

cia

l in

stru

me

nt

To

tal

c

arr

ied

at

fair

valu

e

no

t c

arr

ied

at

fair

valu

e

fa

ir C

arr

yin

g

Le

vel

1 Le

vel

2 Le

vel

3 To

tal

Leve

l 1

Leve

l 2

Leve

l 3

Tota

l va

lue

a

mo

un

t20

14

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

gro

up

no

n-c

urr

en

t

fin

an

cia

l a

sse

ts

de

riva

tive

fin

an

cia

l a

sse

ts:

Cro

ss c

urr

en

cy

swa

ps

– 99

,147

–

99,1

47

– –

– –

99,1

47

99,1

47Fi

na

nc

e l

ea

se r

ec

eiv

ab

le

– –

– –

– –

1,99

0,97

4 1,

990,

974

1,99

0,97

4 1,

990,

974

– 99

,147

–

99,1

47

– –

1,99

0,97

4 1,

990,

974

2,09

0,12

1 2,

090,

121



not

es t

o th

e co

nsol

ida

ted

fina

ncia

l sta

tem

ents

(co

ntin

ue

d)

31.

fin

an

cia

l in

str

um

ents

(c

on

tinu

ed

)

31.8

fa

ir va

lue

in

form

atio

n (

co

ntin

ue

d)

Fa

ir va

lue

of

fina

nc

ial

inst

rum

en

ts

Fair

valu

e o

f fin

an

cia

l in

stru

me

nt

To

tal

c

arr

ied

at

fair

valu

e

no

t c

arr

ied

at

fair

valu

e

fa

ir C

arr

yin

g

Le

vel

1 Le

vel

2 Le

vel

3 To

tal

Leve

l 1

Leve

l 2

Leve

l 3

Tota

l va

lue

a

mo

un

t20

14

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

gro

up

non

-cur

rent

fina

ncia

l lia

bili

ties

der

iva

tive

fina

ncia

l lia

bili

ties:

Inte

rest

rat

e sw

aps

– (1

67,3

38)

– (1

67,3

38)

– –

– –

(167

,338

) (1

67,3

38)

loa

ns a

nd b

orro

win

gs

(s

ecur

ed):

Al-I

stisn

a bo

nd

–

– –

– –

(68,

290)

–

(68,

290)

(6

8,29

0)

(64,

650)

AUD

ter

m lo

an 1

–

– –

– –

(446

,625

) –

(446

,625

) (4

46,6

25)

(454

,217

)AU

D t

erm

loan

2

– –

– –

– (1

,542

,641

) –

(1,5

42,6

41)

(1,5

42,6

41)

(1,4

62,2

19)

RM t

erm

loan

1

– –

– –

– (5

0,27

1)

– (5

0,27

1)

(50,

271)

(4

7,15

3)RM

ter

m lo

an2

–

– –

– –

(31,

252)

–

(31,

252)

(3

1,25

2)

(30,

000)

Suku

k Ija

rah

med

ium

ter

m n

otes

–

– –

– –

(3,9

93,5

41)

– (3

,993

,541

) (3

,993

,541

) (3

,581

,077

)Su

kuk

med

ium

ter

m n

otes

–

– –

– –

(4,4

85,5

85)

– (4

,485

,585

) (4

,485

,585

) (3

,884

,427

)Su

kuk

Wak

alah

– –

– –

– (3

91,7

68)

– (3

91,7

68)

(391

,768

) (4

00,0

00)

Seni

or S

ukuk

Mur

abah

ah

– –

– –

– (3

,313

,032

) –

(3,3

13,0

32)

(3,3

13,0

32)

(3,2

90,0

00)

Seni

or U

SD t

erm

loan

–

– –

– –

(680

,891

) –

(680

,891

) (6

80,8

91)

(644

,800

)Se

nior

RM

ter

m lo

an

– –

– –

– (3

83,5

10)

– (3

83,5

10)

(383

,510

) (3

64,0

00)

USD

ter

m lo

an

–

– –

– –

(295

,040

) –

(295

,040

) (2

95,0

40)

(286

,363

)

Bala

nce

carri

ed f

orw

ard

– (1

67,3

38)

– (1

67,3

38)

– (1

5,68

2,44

6)

– (1

5,68

2,44

6) (

15,8

49,7

84)

(14,

676,

244)

205205

not

es t

o th

e co

nsol

ida

ted

fina

ncia

l sta

tem

ents

(co

ntin

ue

d)

31.

fin

an

cia

l in

str

um

ents

(c

on

tinu

ed

)

31.8

fa

ir va

lue

in

form

atio

n (

co

ntin

ue

d)

Fa

ir va

lue

of

fina

nc

ial

inst

rum

en

ts

Fair

valu

e o

f fin

an

cia

l in

stru

me

nt

To

tal

c

arr

ied

at

fair

valu

e

no

t c

arr

ied

at

fair

valu

e

fa

ir C

arr

yin

g

Le

vel

1 Le

vel

2 Le

vel

3 To

tal

Leve

l 1

Leve

l 2

Leve

l 3

Tota

l va

lue

a

mo

un

t20

14

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

gro

up

non

-cur

rent

Bala

nce

bro

ught

for

wa

rd

– (1

67,3

38)

– (1

67,3

38)

– (1

5,68

2,44

6)

– (1

5,68

2,44

6) (1

5,84

9,78

4) (1

4,67

6,24

4)

fina

ncia

l lia

bili

ties

loa

ns a

nd b

orro

win

gs

(u

nsec

ured

):Ju

nior

EBL

ter

m l

oan

– –

– –

– (1

,114

,776

) –

(1,1

14,7

76)

(1,1

14,7

76)

(1,0

58,0

64)

Unra

ted

Jun

ior

Suku

k

Mus

hara

kah

– –

– –

– (1

,876

,946

) –

(1,8

76,9

46)

(1,8

76,9

46)

(1,8

00,0

00)

Sub

ord

ina

ted

loa

n no

tes

–

– –

– –

– (1

17,0

88)

(117

,088

) (1

17,0

88)

(126

,247

)

– –

– –

– (2

,991

,722

) (1

17,0

88)

(3,1

08,8

10)

(3,1

08,8

10)

(2,9

84,3

11)

– (1

67,3

38)

– (1

67,3

38)

– (1

8,67

4,16

8)

(117

,088

) (18

,791

,256

) (18

,958

,594

) (17

,660

,555

)

com

pa

ny

fina

ncia

l lia

bili

ty

loa

ns a

nd b

orro

win

gs

(u

nsec

ured

):

Unra

ted

Jun

ior

Suku

k

Mus

hara

kah

– –

– –

– (1

,876

,946

) –

(1,8

76,9

46)

(1,8

76,9

46)

(1,8

00,0

00)



not

es t

o th

e co

nsol

ida

ted

fina

ncia

l sta

tem

ents

(co

ntin

ue

d)

31.

fin

an

cia

l in

str

um

ents

(c

on

tinu

ed

)

31.8

fa

ir va

lue

in

form

atio

n (

co

ntin

ue

d)

Fa

ir va

lue

of

fina

nc

ial

inst

rum

en

ts

Fair

valu

e o

f fin

an

cia

l in

stru

me

nt

To

tal

c

arr

ied

at

fair

valu

e

no

t c

arr

ied

at

fair

valu

e

fa

ir C

arr

yin

g

Le

vel

1 Le

vel

2 Le

vel

3 To

tal

Leve

l 1

Leve

l 2

Leve

l 3

Tota

l va

lue

a

mo

un

t20

13

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

gro

up

non

-cur

rent

fina

ncia

l a

sset

s

der

iva

tive

fina

ncia

l a

sset

s:

Inte

rest

ra

te s

wa

ps

– 16

,134

–

16,1

34

– –

– –

16,1

34

16,1

34C

ross

cur

renc

y sw

ap

s –

64,1

07

– 64

,107

–

– –

– 64

,107

64

,107

Fina

nce

lea

se r

ecei

vab

le

– –

– –

– –

2,01

2,94

5 2,

012,

945

2,01

2,94

5 2,

012,

945

– 80

,241

–

80,2

41

– –

2,01

2,94

5 2,

012,

945

2,09

3,18

6 2,

093,

186

207207

not

es t

o th

e co

nsol

ida

ted

fina

ncia

l sta

tem

ents

(co

ntin

ue

d)

31.

fin

an

cia

l in

str

um

ents

(c

on

tinu

ed

)

31.8

fa

ir va

lue

in

form

atio

n (

co

ntin

ue

d)

Fa

ir va

lue

of

fina

nc

ial

inst

rum

en

ts

Fair

valu

e o

f fin

an

cia

l in

stru

me

nt

To

tal

c

arr

ied

at

fair

valu

e

no

t c

arr

ied

at

fair

valu

e

fa

ir C

arr

yin

g

Le

vel

1 Le

vel

2 Le

vel

3 To

tal

Leve

l 1

Leve

l 2

Leve

l 3

Tota

l va

lue

a

mo

un

t20

13

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

gro

up

non

-cur

rent

fina

ncia

l lia

bili

ties

der

iva

tive

fina

ncia

l lia

bili

ties:

Inte

rest

ra

te s

wa

ps

– (3

1,76

2)

– (3

1,76

2)

– –

– –

(31,

762)

(3

1,76

2)lo

ans

and

bor

row

ing

s

(sec

ured

):

Al-I

stisn

a b

ond

– –

– –

– (2

04,7

56)

– (2

04,7

56)

(204

,756

) (1

29,4

95)

AUD

ter

m l

oan

1

– –

– –

– (4

45,4

55)

– (4

45,4

55)

(445

,455

) (4

25,5

08)

AUD

ter

m l

oan

2

– –

– –

– (1

,632

,807

)

– (1

,632

,807

) (

1,63

2,80

7)

(1,5

01,3

24)

RM t

erm

loa

n

– –

– –

– (3

2,72

8)

– (3

2,72

8)

(32,

728)

(3

9,22

0)Su

kuk

Ijara

h m

ediu

m t

erm

not

es

– –

– –

– (4

,051

,205

) –

(4,0

51,2

05)

(4,0

51,2

05)

(3,5

44,0

65)

Suku

k m

ediu

m t

erm

not

es

– –

– –

– (5

,472

,619

) –

(5,4

72,6

19)

(5,4

72,6

19)

(4,2

44,3

38)

Suku

k W

aka

lah

–

– –

– –

(464

,837

) –

(464

,837

) (4

64,8

37)

(450

,000

)Se

nior

Suk

uk M

ura

ba

hah

– –

– –

– (3

,355

,574

) –

(3,3

55,5

74)

(3,3

55,5

74)

(3,2

90,0

00)

USD

ter

m l

oan

–

– –

– –

(281

,569

) –

(281

,569

) (2

81,5

69)

(277

,107

)

Bala

nce

carri

ed f

orw

ard

–

(31,

762)

–

(31,

762)

–

(15,

941,

550)

–

(15,

941,

550)

(15

,973

,312

) (13

,932

,819

)



not

es t

o th

e co

nsol

ida

ted

fina

ncia

l sta

tem

ents

(co

ntin

ue

d)

31.

fin

an

cia

l in

str

um

ents

(c

on

tinu

ed

)

31.8

fa

ir va

lue

in

form

atio

n (

co

ntin

ue

d)

Fa

ir va

lue

of

fina

nc

ial

inst

rum

en

ts

Fair

valu

e o

f fin

an

cia

l in

stru

me

nt

To

tal

c

arr

ied

at

fair

valu

e

no

t c

arr

ied

at

fair

valu

e

fa

ir C

arr

yin

g

Le

vel

1 Le

vel

2 Le

vel

3 To

tal

Leve

l 1

Leve

l 2

Leve

l 3

Tota

l va

lue

a

mo

un

t20

13

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

gro

up

non

-cur

rent

Bala

nce

brou

ght

forw

ard

– (3

1,76

2)

– (3

1,76

2)

– (1

5,94

1,55

0)

– (1

5,94

1,55

0) (

15,9

73,3

12)

(13,

932,

819)

fina

ncia

l lia

bilit

ies

loa

ns a

nd b

orro

win

gs

(u

nsec

ured

):

Juni

or E

BL t

erm

loan

–

– –

– –

(729

,031

) –

(729

,031

) (7

29,0

31)

(726

,905

)Un

rate

d Ju

nior

Suk

uk

Mus

hara

kah

– –

– –

– (1

,878

,862

) –

(1,8

78,8

62)

(1,8

78,8

62)

(1,8

00,0

00)

Subo

rdin

ated

loan

not

es

– –

– –

– –

(147

,933

) (1

47,9

33)

(147

,933

) (1

83,7

98)

– –

– –

– (2

,607

,893

) (1

47,9

33)

(2,7

55,8

26)

(2,7

55,8

26)

(2,7

10,7

03)

– (3

1,76

2)

– (3

1,76

2)

– (1

8,54

9,44

3)

(147

,933

) (1

8,69

7,37

6) (

18,7

29,1

38)

(16,

643,

522)

com

pany

fina

ncia

l lia

bilit

y

loa

ns a

nd b

orro

win

gs

(u

nsec

ured

):

Unra

ted

Juni

or S

ukuk

M

usha

raka

h

–

– –

– –

(1,8

78,8

62)

– (1

,878

,862

) (1

,878

,862

) (1

,800

,000

)

209209


31.8 fair value information (continued)

level 2 fair value

derivatives

The interest rate swaps and cross currency swaps instruments that held by the subsidiary in Malaysia are not actively traded therefore market-based prices are not readily available. The fair values of the instruments are calculated based on the present value of future principal and interest cash flows. The spot rates, forward rates and foreign exchange rates used to calculate present value are directly observable from the market.

For the interest rate swaps that held by the subsidiary in Australia, the fair value of interest rate swaps are based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take into account of the credit risk of the Group and counterparty where appropriate.

non-derivative financial liabilities

Fair value of the long term borrowings is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period.

transfers between level 1 and level 2 fair values

There has been no transfer between Level 1 and 2 fair values during the financial year (2013: no transfer in either directions).

level 3 fair value

Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.

The following table shows the valuation techniques used in the determination of fair values within Level 3, as the key unobservable inputs used in the valuation models.

a) financial instruments not carried at fair value

type description of valuation technique and inputs used

Finance lease receivable Discounted cash flows using a rate based on current market rate of borrowing of the Group

Subordinated loan notes Discounted cash flows using a rate based on the weighted average cost of capital of the Company at the reporting date

valuation process applied by the group for level 3 fair value

The Group has an established control framework in respect to the measurement of fair values of financial instruments. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Chief Financial Officer. The valuation team regularly reviews significant unobservable inputs and valuation adjustments.




32. caPital management

The Group’s objectives when managing capital are to maintain a strong capital base and to safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with debt covenants.

32.1 abba bonds issued by gb3 sdn. bhd. (“gb3”)

In 2013, GB3’s strategy was to maintain a debt-to-equity ratio of not more than 9:1 and a debt service cover ratio of at least 1.25 times. The following shows the debt-to-equity ratio and debt service cover ratio at the end of the financial years:

2014 2013

Debt-to-equity ratio – 0.20:1Debt service cover ratio – 40.52:1

ABBA bonds have been fully redeemed during the financial year.

32.2 al-istisna bonds issued by Prai Power sdn. bhd. (“PPsb”)

PPSB’s strategy is to maintain a debt-to-equity ratio of not more than 4:1 and an annual finance service ratio of at least 1.4 times. The following shows the debt-to-equity ratio and annual finance service ratio at the end of the financial years:

2014 2013

Debt-to-equity ratio 0.25:1 0.39:1Annual finance service ratio 2.48:1 2.00:1

32.3 sukuk ijarah medium term notes issued by tanjung bin Power sdn. bhd. (“tbP”)

TBP’s strategy is to maintain a debt-to-equity ratio of not more than 80:20 and a finance service cover ratio of at least 1.25 times. The following shows the debt-to-equity ratio and finance service cover ratio at the end of the financial years:

2014 2013

Debt-to-equity ratio 3.34:1 2.87:1Finance service cover ratio 8.87:1 4.13:1


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32. caPital management (continued)

32.4 senior sukuk murabahah, senior usd term loan and senior rm term loan issued by tanjung bin energy issuer berhad (“tbei”)

TBEI’s strategy is to maintain a debt-to-equity ratio of not more than 80:20 and a finance service cover ratio of at least 1.05 times. The first of such finance service cover ratio is to be computed for the first full calculation period ending after the commencement date of the power plants. The following shows the debt-to-equity ratio at the end of the financial years:

2014 2013

Debt-to-equity ratio 3.58:1 3.57:1

The first finance service cover ratio is not presented until the completion date of the project.

32.5 rm term loan 1 drawdown by malakoff utilities sdn. bhd. (“musb”)

MUSB’s strategy is to maintain a debt-to-equity ratio of not more than 1.50:1 and a debt service cover ratio of at least 1.20 times.

The following shows the debt-to-equity ratio and debt service cover ratio at the end of the financial year:

2014 2013

Debt-to-equity ratio 0.68:1 0.71:1Debt service cover ratio 27.5:1 22.5:1

32.6 rm term loan 2 drawdown by Port dickson Power berhad (“PdP”)

In 2014, PDP’s strategy is to maintain a finance service coverage ratio of at least 1.10 times.

The following shows the finance service coverage ratio as at the end of the financial year:

2014

Finance service cover ratio 5.33:1





32.7 sukuk Wakalah issued by tanjung bin o&m berhad (“tbom”)

TBOM’s strategy is to maintain a debt-to-equity ratio of not more than 80:20 and a finance service cover ratio of at least 1.25 times. The first debt-to-equity ratio is to be computed 24 months after the issue date.

The following shows the finance service cover ratio at the end of the financial years:

2014 2013

Finance service cover ratio 3.33:1 9.44:1

The first debt-to-equity ratio is not presented until 24 months after the issue date.

32.8 aud term loan 2 drawdown by Wind macarthur finco Pty limited (“mWf”)

MWF’s strategy is to maintain a minimum projected debt service cover ratio of 1.10:1 on any two consecutive calculation date.

The following shows the projected debt service cover ratio as at the end of the financial years:

2014 2013

Debt service cover ratio 1.42:1 1.24:1

32.9 the company debt-to-equity ratio is applied to the following loans and borrowings:

32.9.1 a) sukuk medium term notes issued by malakoff Power berhad (“mPb”)

b) commercial papers issued by mPb

c) Junior ebl term loan for tbei

For the Sukuk medium term notes issued by MPB, the Company is required to maintain an aggregated debt-to-equity ratio of the Company of not more than 1:1.

For the commercial papers issued by MPB and Junior EBL term loan for TBEI, the Company is required to maintain an aggregated company debt-to-equity ratio of the Company of not more than 1.25:1. Commercial papers have been fully redeemed during the financial year.

The following shows the debt-to-equity ratios as at the end of the financial years:

2014 2013

Debt-to-equity ratio 0.74:1 0.84:1


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32.9 the company debt-to-equity ratio is applied to the following loans and borrowings (continued):

32.9.2 a) usd term loan for malakoff international limited (“mil”)

b) aud term loan 1 for mil

For the USD term loan and AUD Term Loan 1 obtained by MIL, the Company is required to maintain its debt-to-equity ratio of the Company of not more than 1.25:1.

The following shows the debt-to-equity ratio as at the end of following years:

2014 2013

Company debt-to-equity ratio 0.73:1 0.84:1

32.10 the group debt-to-equity ratio is applied to the following loans and borrowings:

a) sukuk medium term notes issued by malakoff Power berhad (“mPb”)

b) commercial papers issued by mPb

c) usd term loan for malakoff international limited (“mil”)

d) aud term loan 1 for mil

e) Junior ebl term loan for tbei

For the Sukuk medium term notes issued by MPB, the Group is required to maintain its debt-to-equity ratio of not more than 5.5:1.

For the commercial papers issued by MPB, USD term loan and AUD term loan 1 obtained by MIL and Junior EBL term loan for TBEI, the Group is required to maintain its debt-to-equity ratio of not more than 7:1. Commercial papers have been fully redeemed during the financial year.

The following shows the debt-to-equity ratio as at the end of following years:

2014 2013

Group debt-to-equity ratio 3.00:1 2.92:1




33. caPital commitments

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Plant and equipment

Contracted but not provided for 1,297,372 2,101,576 – –Authorised but not contracted for 457,522 340,373 2,223 5,216

1,754,894 2,441,949 2,223 5,216

34. contingencies

a) guarantees

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Guarantees – secured 368,166 382,573 176,066 213,889

These guarantees mainly consist of guarantees for bid bonds, performance bonds and security deposits for projects.

b) material litigation

The status of material litigation of the Group are as follows:

(i) Arbitration proceedings between Port Dickson Power Berhad (“PDP”) (“Claimant”) and Tenaga Nasional Berhad (“TNB”) (“Respondent”)

On 26 March 2013, PDP commenced arbitration proceedings against TNB in relation to the following:

a) a claim by PDP against TNB of an amount of RM56,642,029 for the outstanding FOR and VOR adjustments for the period from February 1999 to November 2011 together with interest thereon; and

b) a claim that PDP is entitled to bill and be paid by TNB for the capacity payments and energy payments from September 2013 onwards based on the adjusted FOR and VOR of RM7.05/kW/month and RM0.0204/kWh, respectively, pursuant to the PDP’s PPA.


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34. contingencies (continued)

b) material litigation (continued)

(i) Arbitration proceedings between Port Dickson Power Berhad (“PDP”) (“Claimant”) and Tenaga Nasional Berhad (“TNB”) (“Respondent”) (continued)

PDP and TNB (“Parties”) have filed their joint expert’s report and the list of issues on 12 November 2014. The hearing proceeded before the tribunal from 26 to 30 January 2015 at the Kuala Lumpur Regional Centre for Arbitration before the three-member tribunal, consisting of Dr. Eun Young Park, Mr. James Spigelman and Mr. Andrew Jeffries (“Tribunal”).

Subsequently, the Tribunal has directed the Parties to provide the latest calculation of the claims. PDP is required to submit the calculations and revised remedies on 13 February 2015, while TNB is to provide its comments on the calculations before 6 March 2015.

As the Tribunal’s award would include an award on the costs incurred for this arbitration proceeding, the Tribunal has directed Parties to file their costs submissions. PDP’s solicitors will prepare the submissions, including the total legal costs and disbursements incurred by PDP. Both Parties are to exchange their respective costs submissions on 13 March 2015, and subsequently both Parties may reply each other’s Costs Submissions on 27 March 2015.

It is expected that the arbitration award from the Tribunal will be rendered within a month after the costs submission are delivered by the both parties to the Tribunal. No amounts have been recognised in these financial statements for this gain contingency.

(ii) Proceedings by the Public Prosecutor of Algeria against Almiyah Attilemcania SPA (“AAS”)

On 4 September 2014, a joint venture of the Group, AAS, was charged in the Court of Ghazouet in the district of Tlemcen, Algeria, for an alleged breach of foreign exchange regulations concerning a sum of USD26.9 million. The Group holds an indirect effective interest of 35.7% in AAS via Tlemcen Desalination Investment Company SAS (“TDIC”), an indirect subsidiary of Malakoff International Limited.

During the financial year 2009, it was discovered that there was a considerable gap between the value of the delivered equipment received as per the invoices declared to the customs and the value of the milestone payments made by AAS to the supplier cum contractor (“Invoice Gap”). AAS wrote to the supplier cum contractor requesting for clarifications as they are responsible to resolve tax and customs issues. The Invoice Gap however was not resolved by the supplier cum contractor and the Algerian Customs then initiated investigations and thereafter a charge was brought against AAS. It was alleged that AAS has failed to repatriate a sum of USD26.9 million.

The lower court of Ghazouet (“Court”) in the district of Tlemchen has on 24 December 2014 convicted AAS and has subsequently imposed a penalty of AD3,929,038,151 (approximately RM157.2 million at the exchange rate of RM1: AD25) (“Penalty”). The Group’s liability arising from the Penalty, in proportion to the Group’s 35.7% effective interest in AAS via TDIC, which may impact the profit of the Group, amounts to AD1,402,666,620 (approximately RM56.1 million).




34. contingencies (continued)

b) material litigation (continued)

(ii) Proceedings by the Public Prosecutor of Algeria against Almiyah Attilemcania SPA (“AAS”) (continued)

Notwithstanding, AAS has been advised by its solicitor, Maitre Ahcene Bouskia, an attorney admitted to the Algerian Supreme Court, that the Penalty would not be enforced until the exhaustion of all rights to appeal by AAS in respect of the proceedings. AAS has on 29 December 2014 filed an appeal against the decision of the Court to the Algerian Court of Appeal.

In the opinion of the Directors, after taking appropriate legal advice, it is not probable an outflow of resources embodying economic benefits will be required to resolve this matter. Therefore no provisions have been made in the financial statements.

(iii) Request for arbitration proceedings by International Water Treatment LLC (“IWT”) and Muscat City Desalination Company SAOC (“MCDC”)

The arbitration arose pursuant to an EPC contract dated 10 April 2013 in relation to the Al Ghubrah IWP (“Al Ghubrah EPC Contract”). Under the Al Ghubrah EPC Contract, MCDC is the owner of the works to be constructed and IWT is the contractor.

The arbitration commenced on 2 October 2014, when IWT filed a request for arbitration with the London Court of International Arbitration (“LCIA”), alleging the following claims:

i) IWT has sought to challenge the delay liquidated damages clause under the Al Ghubrah EPC Contract (“LD Clause”) on the bases that it is a “penalty”, and is therefore unenforceable; and

ii) failing MCDC’s ability to provide IWT with an extension of time, IWT is entitled to complete within a reasonable period of time.

However, IWT has failed to particularise the grounds on which its claims are based in the arbitration. MCDC has filed a response to request for arbitration on 30 October 2014, defending its position as to the enforceability of the LD Clause and has required IWT to further particularise its claims. MCDC and IWT are currently waiting for the LCIA to appoint the Tribunal, after which a procedural timetable will be put in place.

In the opinion of the Directors, after taking appropriate legal advice, it is not probable an outflow of resources embodying economic benefits will be required to resolve this matter. Therefore no provisions have been made in the financial statements.


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35. related Parties

For the purposes of these financial statements, parties are considered to be related to the Group or the Company if the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group or the Company either directly or indirectly. The key management personnel include all the Directors of the Group, and certain members of senior management of the Group.

The Group has related party relationship with its holding companies, significant investors, subsidiaries and associates, Directors and key management personnel. Related party transactions have been entered into the normal course of business under normal trade terms.

The significant related party transactions of the Group and of the Company are as follows:

significant related party transactions

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

i. Associates: – Interest income on unsecured subordinated loan notes 26,410 65,402 26,410 65,402 – Project management fees 1,701 967 1,701 967

ii. Subsidiaries – Interest income on unsecured subordinated loan notes – – – 10,905 – Management fees – – 26,418 26,553 – Dividends – – 958,876 3,658,000 – Interest expense on advances to subsidiary – – (55,812) (52,152)

iii. Entities that are under common control by the Government of Malaysia (a party that has direct or indirect significant influence on the Group and the Company): Tenaga Nasional Berhad: Sales of capacity and energy 5,457,407 4,726,492 – – Purchase of electricity bulk supply (79,670) (56,856) – –




35. related Parties (continued)

The significant related party transactions of the Group and of the Company are as follows (continued):

significant related party transactions (continued)

Group Company

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

iii. Entities that are under common control by the Government of Malaysia (a party that has direct or indirect significant influence on the Group and the Company): (continued):

Petroliam Nasional Berhad: Purchase of gas (596,983) (567,051) – –

Petronas Dagangan Berhad: Purchase of diesel (32,060) (42,206) – –

TNB Fuel Services Sdn. Bhd.: Purchase of coal (1,608,691) (1,311,467) – – Purchase of diesel (42,847) – – –

Financial institutions and other corporations: Interest income 84,777 74,774 4,980 4,824 Interest expense (50,400) (50,400) (50,400) (50,400)

Energy Commission: CESS fund contribution (11,847) (29,598) – –

Malaysian Resources Corporation Berhad: Sales of centralised chilled water and electricity 26,703 32,753 – –

Lembaga Tabung Haji: Interest expense (63,000) (63,000) (63,000) (63,000)


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36. significant events during the year

During the financial year, the Group undertook the following corporate activities:

(i) Acquired 75% equity interest in Port Dickson Power Berhad, comprising 112,500 ordinary shares of RM1.00 each and 112,500 redeemable preference shares of RM1.00 each through a wholly owned subsidiary, Hypergantic Sdn. Bhd. for a cash consideration of RM289,000,000.

(ii) Acquired 100% equity interest in PDP O&M Sdn. Bhd. (formerly known as Sime Darby Biofuels Sdn. Bhd.) comprising 2 ordinary shares of RM1.00 each through a wholly owned subsidiary, Malakoff Power Berhad for a cash consideration of RM11,000,000.

37. acquisition of subsidiaries

37.1 acquisition of subsidiaries – Port dickson Power berhad and PdP o&m sdn. bhd. (formerly known as sime darby biofuels sdn. bhd.)

On 30 April 2014, the Group acquired 112,500 ordinary shares of RM1.00 each and 112,500 redeemable preference shares of RM1.00 each in Port Dickson Power Berhad for RM289,000,000, representing 75% of the total issued and paid up share capital of Port Dickson Power Berhad. Prior to the acquisition, Port Dickson Power Berhad was an equity accounted investee with 25% equity interest held by the Group. Arising from the acquisition, Port Dickson Power Berhad becomes a wholly owned subsidiary of the Group.

On 30 April 2014, in connection with the above acquisition, the Group also acquired 2 ordinary shares of RM1.00 each in PDP O&M Sdn. Bhd. for RM11,000,000, representing 100% of the total issued and paid up share capital of PDP O&M Sdn. Bhd. Arising from the acquisition, PDP O&M Sdn. Bhd. becomes a wholly owned subsidiary of the Group.

The total purchase consideration for the acquisition is RM300,000,000, satisfied in cash. The companies are engaged in generating, operating and maintaining a gas-fuelled generation power plant in Port Dickson, Negeri Sembilan. In the eighth months to 31 December 2014, the subsidiaries contributed revenue of RM223,534,000 and profit of RM75,715,000. If the acquisition had occurred on 1 January 2014, management estimates that consolidated revenue would have been RM5,719,608,000 and consolidated profit for the financial year would have been RM400,299,000. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2014.




37. acquisition of subsidiaries (continued)

37.1 acquisition of subsidiaries – Port dickson Power berhad and PdP o&m sdn. bhd. (formerly known as sime darby biofuels sdn. bhd.) (continued)

The following summarises the recognised amount of assets and liabilities assumed at the acquisition date:–

identifiable assets acquired and liabilities assumed

Note RM’000

Property, plant and equipment 3 230,738Intangible assets 4 100,739Deferred tax assets 10 10,658Inventories 19,068Trade and other receivables 38,616Cash and cash equivalents 146,459Trade and other payables (46,767)Current tax liabilities (18,246)Deferred tax liabilities 10 (51,534)

Total identifiable net assets 429,731

net cash outflow arising from acquisition of subsidiaries

RM’000

Purchase consideration settled in cash and cash equivalents (300,000)Less: cash and cash equivalents acquired 146,459

(153,541)

bargain purchase

Bargain purchase was recognised as a result of the acquisition as follows:

RM’000

Purchase consideration 300,000Fair value of existing interest in the acquiree 96,333Fair value of identifiable assets, liabilities and contingent liabilities (429,731)

(33,398)

The remeasurement to fair value of the Group’s existing 25% interest in the acquiree resulted in a gain of RM27,581,000 (RM96,333,000 less RM68,752,000 carrying value of equity-accounted investee at acquisition date), which has been recognised in other non-operating income in the statement of profit or loss and other comprehensive income.


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37.1 acquisition of subsidiaries – Port dickson Power berhad and PdP o&m sdn. bhd. (formerly known as sime darby biofuels sdn. bhd.) (continued)

acquisition-related costs

The Group incurred acquisition-related costs of RM736,000 related to external legal fees and due diligence costs. The legal fees and due diligence costs have been included in administrative expenses in the Group’s consolidated statement of profit or loss and other comprehensive income.

37.2 acquisition of subsidiary – malakoff Wind macarthur holdings Pty. ltd. (formerly known as meridian Wind macarthur holdings Pty. ltd.)

On 28 June 2013, the Group acquired the entire issued and paid up share capital of Malakoff Wind Macarthur Holdings Pty. Ltd. (“MWMH”) for a cash consideration approximately of RM383,164,000. As a result of the acquisition, MWMH has an indirect 50% participating interest in an unincorporated joint venture of the Macarthur Wind Farm, through its wholly-owned subsidiary, Malakoff Wind Macarthur Pty. Ltd. (“MWM”) (formerly known as Meridian Wind Macarthur Pty. Ltd.). The completion of the construction of the Macarthur Wind Farm was on 31 January 2013.

The following summarises the recognised amount of assets and liabilities acquired at the acquisition date:

identifiable assets acquired and liabilities assumed

RM’000

Finance lease receivables 2,021,035Cash and cash equivalents 23,013Loans and borrowings (1,527,819)Derivative financial liabilities (110,052)Other payables and accruals (23,013)

383,164





37.2 acquisition of subsidiary – malakoff Wind macarthur holdings Pty. ltd. (formerly known as meridian Wind macarthur holdings Pty. ltd.) (continued)

net cash outflow arising from acquisition of subsidiary

RM’000

Purchase consideration settled in cash and cash equivalents (383,164)Less: cash and cash equivalents acquired 23,013

(360,151)

The Group incurred acquisition-related costs of RM6,146,000 related to arranger fees. The arranger fee had been included in administrative expenses in the Group’s consolidated statements of profit or loss and other comprehensive income.

From the date of acquisition, MWM contributed approximately RM80,000,000 to the revenue and RM59,000,000 to profit before tax of the consolidated entity. If the acquisition had occurred on 1 January 2013, management estimates that consolidated revenue would have been RM4,786,683,000 and consolidated profit for the financial year would have been RM218,487,000. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2013.

38. comParative figures

(i) explanation of prior years adjustments on an associate

During the financial year, the Group’s associate, Kapar Energy Ventures Sdn. Bhd. has reassessed the deferred tax computation and revised the breakdown between qualifying and non-qualifying expenditure. As a result, the deferred tax and retained earnings balances in prior years have been restated. Accordingly, the Group has restated the carrying amount of investment in associates and the accumulated losses.

(ii) explanation of reclassification

During the financial year, the Group reclassified its fixed deposits that have maturity of more than 3 months with licensed banks and other licensed corporations to other investments in accordance to the guidance in FRSIC Consensus 22, Classification of Fixed Deposits and Similar Instruments as Cash and Cash Equivalents. In the previous financial years, all deposits with licensed banks and other licensed corporations that have maturity of more than 3 months were classified as cash and cash equivalents.


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38. comParative figures (continued)

(ii) explanation of reclassification (continued)

These are now applied retrospectively and the affects are as follows:

statement of financial position

31.12.2013 1.1.2013

As As previously As previously As stated restated stated restated

group RM’000 RM’000 RM’000 RM’000

Investment in associates 1,338,437 1,294,458 1,403,579 1,369,667Other investments – 1,165,954 – 2,455,577Cash and cash equivalents 3,541,737 2,375,783 5,153,970 2,698,393Accumulated losses (128,468) (172,447) (111,501) (145,413)

statement of profit or loss and other comprehensive income for the year ended 31 december 2013

As previously As stated restated

group RM’000 RM’000

Share of profit of equity-accounted associates and a joint venture, net of tax 71,269 61,202 Profit for the year 244,725 234,658

statement of cash flows for the year ended 31 december 2013

As previously As stated restated

group RM’000 RM’000

Cash and cash equivalents at 1 January 5,153,970 2,698,393Cash and cash equivalents at 31 December 3,541,737 2,375,783




39. subsequent events

a) On 13 January 2015, a wholly-owned subsidiary of the Group, Malakoff Oman Desalination Company Limited (“MODC”) subscribed new issuance of shares of 3,643,839 at a nominal value of Omani Riyal (“RO”) 1 (equivalent to RM9.15) each, representing 45% of its portion of existing interest in an associate, Muscat City Desalination Company S.A.O.C (“MCDC”) share capital at a subscription price of RO 1.35 (equivalent to RM12.3536) each. The total value of subscription amount is RO 4,919,183 (equivalent to RM45,015,000).

b) On 6 February 2015, the Directors of the Company recommended the final single-tier dividend of approximately 28.46 sen per ordinary share of RM1.00 each totalling RM100,000,000 in respect of the financial year ended 31 December 2014.


225225

In the opinion of the Directors, the financial statements set out on pages 94 to 224 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2014 and of their financial performance and cash flows for the year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

…………………………………………………........ …………………………………………………........yam tan sri dato’ seri syed Zainol dato’ sri che Khalib bin mohamad noh anwar ibni syed Putra Jamalullail DirectorChairman

Kuala Lumpur


statutory Declaration pursuant to section 169(16) of the companies act, 1965

I, ho chee sheong, the officer primarily responsible for the financial management of Malakoff Corporation Berhad, do solemnly and sincerely declare that the financial statements set out on pages 94 to 224 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.

Subscribed and solemnly declared by the above named in Kuala Lumpur on 6 February 2015.

…………………………………………ho chee sheong

Before me:

statement by Directors pursuant to section 169(15) of the companies act, 1965



rePort on the financial statements

We have audited the financial statements of Malakoff Corporation Berhad, which comprise the statements of financial position as at 31 December 2014 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 94 to 224.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

inDepenDent auDitors’ report to the members of malakoff corporation berhad(Company No. 731568-V)(Incorporated in Malaysia)

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inDepenDent auDitors’ report to the members of malakoff corporation berhad(Company No. 731568-V)(Incorporated in Malaysia)(continued)

rePort on other legal and regulatory requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements.

c) We are satisfied that the accounts of the subsidiaries 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 financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

other matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

…………………………………………………........ …………………………………………………........KPmg muhammad azman bin che aniFirm Number: AF 0758 Approval Number: 2922/04/16(J)Chartered Accountants Chartered Accountant

Petaling Jaya


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2014AnnuAl RepoRt

Malakoff Corporation berhad (731568-V)

level 10, Block 4, plaza SentralJalan Stesen Sentral 550470 Kuala lumpur, MAlAYSIA

tel : 603 2263 3388Fax : 603 2263 3333

www.malakoff.com.my

A Member of the MMC Group

2014 - Malakoff · PT. Teknik Janakuasa POwER gENERATION 93.75% Segari Energy Ventures Sdn Bhd 75%...

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