MALAKOFF CORPORA TION BERHAD

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1 Annual Report

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3 The nautilus shell depicts a timelessness that have remained unchanged through years of existence. Its ever evolving, and ever enlarging symmetry of chambers is a constant that is recognised by esteemed mathematicians as the finest natural example of the formulated logarithmic spiral, while its fundamental structure had stirred the imagination of renowned designers to be inspired in realising their past, present and future innovations. The Group s pursuit of powering growth, echo as the nautilus shell in continuously moving to the next stage. In every step, it elevates values, generates strength, delivers thrust, positions focus, and is conscious of impacts on the environment it operates in.

4 002 Malakoff Corporation Berhad Annual Report 2013 Inside Contents BusinesS Review Directors Profile Management Team 004 Group Financial & Performance Highlights 006 Corporate Profile 014 Board of Directors 016 Board of Directors Profile 028 Organisational Structure 030 Members of Management Committee 008 Corporate Information 009 Malakoff s Shareholders 010 Malakoff s Structure To be a premier global power and water company GOAL Core Business Power generation and water desalination

5 003 Corporate Performance Corporate Responsibility Highlights Financial statements 034 Chairman s Statement 044 Performance Review by Acting Chief Executive Officer 074 Corporate Responsibility Community Development Workplace Development 082 Corporate Events Highlights 089 Financial Statements Asset Performance Operation & Maintenance Electricity Distribution and Chilled Water Supply Environmental Preservation Marketplace Development Ventures CRITICAL STRENGTHS Project development & execution Plant operations license to operate Financial discipline Good governance MISSION Aspiring to become employer of choice Deliver superior shareholder value Sought after as a partner Sustaining best in class operating discipline Staying anchored to good governance Earning respect as a good corporate citizen Corporate Values Integrity Teamwork Innovation Excellence Harmony

6 Group Financial & Performance Highlights 004 Malakoff Corporation Berhad Annual Report 2013 Revenue 15.59% RM4,717 million Shareholders Funds +3.63% RM3,960 million Earning Per Share 63.43% 49 sen Profit After Tax & Minority Interest 63.33% RM172 million Total Assets Employed +7.09% RM28,112 million Net Assets Per share +3.58% RM11.27 FY2012 RM 000 Restated FY2013 RM 000 Revenue 5,587,608 4,717,419 Profit before tax 706,093 94,214 PATMI 469, ,600 Paid-up capital 351, ,344 Shareholders funds 3,821,351 3,959,703 Total assets employed 26,252,163 28,112,266 Per share (sen) earnings Dividend (gross) per share Net assets per share (RM)

7 005 5,588 4,717 26,252 28,112 REVENUE RM Million TOTAL ASSETS EMPLOYED RM Million PROFIT AFTER TAX & MINORITY INTEREST RM Million EARNINGS PER SHARE Sen ,821 3, SHAREHOLDERS FUNDS RM Million NET ASSETS PER SHARE RM

8 Corporate Profile 006 Malakoff Corporation Berhad Annual Report 2013 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 5,350 MW comprising of 6 power stations that run on gas, oil and coal.

9 007 Malakoff s power generation assets are held through a number of subsidiaries and associate companies: SEV Power Plant through a percent equity interest in Segari Energy Ventures Sdn Bhd ( SEV ) GB3 Power Plant through a 75.0 percent equity interest in GB3 Sdn Bhd ( GB3 ) Prai Power Plant through its wholly-owned subsidiary Prai Power Sdn Bhd ( PPSB ) Tanjung Bin Power Plant through a 90.0 percent equity interest in Tanjung Bin Power Sdn Bhd ( TBPSB ) Port Dickson Power Plant through a 100 percent equity interest in Port Dickson Power Berhad, via its wholly owned subsidiary Hypergantic Sdn Bhd* Kapar Power Station through a 40.0 percent equity interest in Kapar Energy Ventures Sdn Bhd ( KEV ) On the international front, we own an effective capacity of MW of power and 358,206 m 3 /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 ) services through wholly-owned Malakoff Power Berhad ( MPower ), and Teknik Janakuasa Sdn Bhd ( TJSB ) Electricity distribution activities through Malakoff Utilities 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 and external 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 in which we operate. * Effective 30 April 2014

10 Corporate Information as at 12 February Malakoff Corporation Berhad Annual Report 2013 DIRECTORS Tan Sri Dato Wira Syed Abdul Jabbar bin Syed Hassan Non-Independent Non-Executive Chairman Dato Sri Che Khalib bin Mohamad Noh Managing Director Datuk Muhamad Noor bin Hamid Non-Independent Non-Executive Director Cindy Tan Ler Chin Non-Independent Non-Executive Director Wan Kamaruzaman bin Wan Ahmad Non-Independent Non-Executive Director Ooi Teik Huat Non-Independent Non-Executive Director Tan Sri Dato Seri Alauddin bin Dato Mohd Sheriff Independent Non-Executive Director Datuk Idris bin Abdullah Independent Non-Executive Director Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Independent Non-Executive Director Kanad Singh Virk Non-Independent Non-Executive Director Zalman bin Ismail Alternate to Wan Kamaruzaman bin Wan Ahmad Craig Robert Martin Alternate to Kanad Singh Virk COMPANY SECRETARIES Yeoh Soo Mei (MAICSA ) Bakar BIN Ahmad (MAICSA ) AUDIT COMMITTEE MEMBERS Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Chairman Datuk Idris bin Abdullah Tan Sri Dato Seri Alauddin bin Dato Mohd Sheriff Ooi Teik Huat REMUNERATION COMMITTEE MEMBERS tan Sri Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman Wan Kamaruzaman bin Wan Ahmad Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Nomination Committee Members Tan Sri Dato Seri Alauddin bin Dato Mohd Sheriff Chairman Datuk Idris bin Abdullah Datuk Muhamad Noor bin Hamid REGISTERED OFFICE Ground Floor, Wisma Budiman Persiaran Raja Chulan, Kuala Lumpur Tel : Fax : AUDITORS KPMG PRINCIPAL BANKER MALAYAN BANKING BERHAD Company Address Level 10, Block 4, Plaza Sentral Jalan Stesen Sentral 5, Kuala Lumpur Tel : Fax : Website :

11 Malakoff s Shareholders as at 28 February EPf 30% Employees Provident Fund ( EPF ) MMC 28.10% MMC Corporation Berhad ( MMC ) Aoa 22.90% Anglo-Oriental (Annuities) Sdn Bhd ( AOA )* * AOA is a wholly-owned subsidiary of MMC Kwap 10% Kumpulan Wang Persaraan (Diperbadankan) ( KWAP ) Sci Asia Seasaf 6.5% Standard Chartered IL & FS Asia Infrastructure Growth Fund Company Pte Limited ( SCI Asia ) 2.5% SEASAF Power Sdn Bhd ( SEASAF )

12 Malakoff s Structure as at 6 May Malakoff Corporation Berhad Annual Report 2013 Power Generation OPERATION AND MAINTENANCE SERVICES ELECTRICITY DISTRIBUTION 93.75% Segari Energy Ventures Sdn Bhd 75% GB3 Sdn Bhd 100% Prai Power Sdn Bhd 90% Tanjung Bin Power Sdn Bhd 40% Kapar Energy Ventures Sdn Bhd 100% Hypergantic Sdn Bhd 100% Port Dickson Power Berhad 100% Tanjung Bin Energy Sdn Bhd 100% Tanjung Bin Energy Issuer Berhad 100% Malakoff Power Berhad 100% Tanjung Bin O&M Berhad 100% PDP O&M Sdn Bhd (formerly known as Sime Darby Biofuels Sdn Bhd) 100% Teknik Janakuasa Sdn Bhd 100% Natural Analysis Sdn Bhd VII 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 & Maintenance Company Limited 100% TJSB Middle East Limited 31.5% Muscat City Desalination Operation and Maintenance Company LLC 100% TJSB Global Sdn Bhd 49% Hyflux-TJSB Algeria SPA 95% PT. Teknik Janakuasa 100% Malakoff Utilities Sdn Bhd I Dormant II Malakoff s effective equity interest of 20 percent and 12 percent in SAMAWEC and SWEC respectively is held via Malakoff Gulf Limited which holds 40 percent equity interest in MSCSB which in turn holds 50 percent equity interest in SAMAWEC. SAMAWEC holds 60 percent equity interest in SWEC. lll Malakoff s effective equity interest of 11.7 percent in SEPCO is held via Malakoff Gulf Limited which holds 40 percent equity interest in MSCSB which in turn holds 50 percent equity interest in SAMAWEC. SAMAWEC holds 60 percent in SEHCO which in turn holds 97.5 percent equity interest in SEPCO. IV Malakoff s effective equity interest of 43.4 percent in SPHL is held via Malakoff Technical (Dhofar) Limited which holds a direct 43.4 percent equity interest in OTPL which in turn holds 100 percent equity interest in SPHL. V Malakoff s effective equity interest of 35.7 percent in AAS is held via MADSB which holds VI 70 percent equity interest in TDIC which in turn holds 51 percent equity interest in AAS. Malakoff s effective interest of 40 percent in HPC is held via MHHCL which holds 57.1 percent equity interest in MSHHCL which in turn holds 70 percent equity interest in HPC. VII Ceased operation. VIII MWM holds 50% participating interest in the unincorporated joint venture of the Macarthur Wind Farm.

13 011 PROJECT MANAGEMENT OFFSHORE OTHERS 100% Malakoff Engineering Sdn Bhd 100% MESB Project Management Sdn Bhd l 100% Spring Assets Limited I 100% Malakoff Capital (L) Ltd I 100% Malakoff International Limited ( MIL ) 100% Malakoff Gulf Limited 100% Tuah Utama Sdn Bhd 20% Lekir Bulk Terminal Sdn Bhd 54% Desa Kilat Sdn Bhd 100% Malakoff R&D Sdn Bhd 100% Malakoff Oman Desalination Company Limited 45% Muscat City Desalination Company S.A.O.C 100% Malakoff Hidd Holding Company Limited VI 57.1% Malakoff Summit Hidd Holding Company Limited VI 40% Hidd Power Company B.S.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. Ltd. 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% Shuaibah Expansion Project company Limited ( SEPCO ) III 100% Malakoff Technical (Dhofar) Limited 43.4% Oman Technical Partners Limited ( OTPL ) IV 43.4% 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 Wind Macarthur Pty. Ltd. ( MWM ) VIII

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15 Pursuing Excellence

16 Board of Directors 014 Malakoff Corporation Berhad Annual Report 2013 Seated from L to R Tan Sri Dato Wira Syed Abdul Jabbar bin Syed Hassan Non-Independent Non-Executive Chairman Dato Sri Che Khalib bin Mohamad Noh Managing Director Standing from L to R Datuk Muhamad Noor bin Hamid non-independent Non-Executive Director Kanad Singh Virk Non-Independent Non-Executive Director Cindy Tan Ler Chin Non-Independent Non-Executive Director Ooi TeIk Huat Non-Independent Non-Executive Director

17 015 Datuk Idris bin Abdullah Independent Non-Executive Director Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Independent Non-Executive Director Tan Sri Dato Seri Alauddin bin Dato Mohd Sheriff Independent Non-Executive Director Wan Kamaruzaman bin Wan Ahmad Non-Independent Non-Executive Director Craig Robert Martin Alternate to Kanad Singh Virk Zalman bin Ismail Alternate to Wan Kamaruzaman bin Wan Ahmad

18 Board of Directors Profile 016 Malakoff Corporation Berhad Annual Report 2013 Tan Sri Dato Wira Syed Abdul Jabbar bin Syed Hassan Non-Independent Non-Executive Chairman Dato Sri Che Khalib bin Mohamad Noh Managing Director

19 017 Tan Sri Dato Wira Syed Abdul Jabbar bin Syed Hassan, Malaysian, aged 74, was appointed to the Board as Non-Independent Non-Executive Chairman on 1 January He also chairs the Remuneration Committee. He obtained a Bachelor of Economics degree from University of Western Australia in 1963 and a Masters of Science degree in Marketing from University of Newcastle-Upon-Tyne, United Kingdom in He started his career on 1 January 1964 as the Assistant District Officer/Assistant Development Officer/Assistant Land Officer in Kedah State of Government where he was tasked to handle land matters, supervise district development projects and assist the state economic development planning. A year later, he joined Bank Negara Malaysia as an Economist before leaving to join the Federal Agricultural Marketing ( FAM ) as an Economist on 1 January In FAM, he established amongst others, the Padi and Rice Marketing Board ( Padi & Rice Board ) and its pilot scheme for the purchase, grading, storage, milling and distribution of padi and rice in Tanjong Karang and Sabak Bernam. On 1 January 1967, he joined Padi & Rice Board as the Manager of the Tanjong Karang & Sabak Bernam Padi & Rice Marketing Scheme. During his three years tenure in Padi & Rice Board, he assisted in amongst others, the drafting of the law for the setting up of a Lembaga Padi dan Beras Negara to take over the function of the Padi & Rice Board and to extend coverage to all states in Malaysia, with the power to regulate the marketing of padi and rice. On 31 December 1970, he left Padi & Rice Board as its General Manager, to pursue his Masters of Science degree in marketing in the University of Newcastle-Upon-Tyne, United Kingdom. After obtaining his Masters degree, he was appointed the Executive Secretary for the Federal Agricultural Marketing Authority ( FAMA ) on 1 January He held that position until 31 December 1973 before leaving FAMA to assume the position of Senior Economist and Acting Secretary-General of the Association of Natural Rubber Producing Countries ( ANRPC ), representing the Government in the ANRPC. He held the position until 31 December 1979 before being appointed as the Chief Executive Officer of the Kuala Lumpur Commodity Exchange from 1980 to He then assumed the position of the Executive Chairman of the Malaysia Monetary Exchange from 1996 to 1998 and the Executive Chairman of the Commodity and Monetary Exchange of Malaysia from 1998 to Tan Sri Dato Wira Syed Abdul Jabbar is currently the Chairman of MMC Corporation Berhad, Tradewinds (M) Berhad, Padiberas Nasional Berhad and Aliran Ihsan Resources Berhad. He resigned as Director/Chairman of the Board of Directors of Tradewinds Plantation Berhad with effect from 31 December Dato Sri Che Khalib bin Mohamad Noh, Malaysian, aged 49, was appointed as Managing Director on 1 July Dato Sri Che Khalib 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. Dato Sri Che Khalib 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. This includes involvement in Projek Lebuhraya Utara Selatan ( 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 Keretapi Tanah Melayu Berhad. In June 1999, Dato Sri Che Khalib joined Ranhill Utilities Berhad as Chief Executive Officer. He then assumed the position of Managing Director and Chief Executive Officer of KUB Malaysia Berhad. Dato Sri Che Khalib 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 During his tenure at TNB, Dato Sri Che Khalib drove many improvement initiatives that resulted in TNB becoming one of the success stories in the GLC Transformation Programme. He shaped and set the corporate strategies for TNB when he came up with its 20 year strategic plan in September At present, Dato Sri Che Khalib is a Group Managing Director of MMC Corporation Berhad. Prior to his current role, Dato Sri Che Khalib served as Chief Operating Officer of Finance, Strategy and Planning at DRB HICOM Berhad. Dato Sri Che Khalib was previously a member of the Board and the Executive Committee of Khazanah Nasional Berhad from year 2000 to He also served as a Board member within the United Engineers Malaysia ( UEM ) Group of companies and Bank Industri & Teknologi Malaysia Berhad. He currently sits on the Board of MMC Corporation Berhad, Zelan Berhad, Johor Port Berhad, MMC Engineering Group Berhad, Aliran Ihsan Resources Berhad, Pos Malaysia Berhad, Bank Muamalat (M) Berhad, Gas Malaysia Berhad, Port Dickson Power Berhad and several private limited companies. Dato Sri Che Khalib has received many accolades in recognition of his strong leadership including being named Malaysia s CEO of the Year in 2008, the highest level of recognition given to corporate leaders in Malaysia, 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.

20 Board of Directors Profile (continued) 018 Malakoff Corporation Berhad Annual Report 2013 Datuk Muhamad Noor bin Hamid Non-Independent Non-Executive Director Cindy Tan Ler Chin Non-Independent Non-Executive Director

21 019 Datuk Muhamad Noor bin Hamid, Malaysian, aged 63, was appointed to the Board as Non-Independent Non-Executive Director on 13 July He is also a member of the Nomination Committee. He 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 He has also attended the Management Program at the Wharton Business School of Management, University of Pennsylvania, USA. He has held numerous positions during his 20 years of service in PETRONAS and PETRONAS Gas Sdn Bhd, including heading the Peninsular Gas Utilisation ( PGU ) II project team and Head of PGU Pipeline Operations. He also worked in OGP Technical Services Sdn Bhd, 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 and was subsequently appointed as Chief Executive Officer in February He currently sits on the board of directors of Kapar Energy Ventures Sdn Bhd. Madam Cindy Tan Ler Chin, Malaysian, aged 54, was appointed to the Board as Non-Independent Non-Executive Director on 9 August She obtained an Honours Degree in Economics, majoring in statistics, from Universiti Kebangsaan Malaysia in 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. She joined the Employees Provident Fund Board ( EPF ) in Since then she has served in the Finance Department, Treasury Department, Fund Management Function and was Head of Fixed Income Investment for EPF until June 2009 when she was appointed to her current position as the Chief Investment Compliance Officer of EPF. 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.

22 Board of Directors Profile (continued) 020 Malakoff Corporation Berhad Annual Report 2013 Kanad Singh Virk Non-Independent Non-Executive Director Ooi TeIk Huat Non-Independent Non-Executive Director

23 021 Mr Kanad Singh Virk, an American citizen, aged 48, was appointed to the Board as Non-Independent Non-Executive Director on 16 December He is the Managing Director of Standard Chartered Private Equity, based in Singapore and a Director and the Chief Operating Officer ( COO ) of the Standard Chartered IL & FS Asia Infrastructure Growth Fund ( SCI Asia ). He has 20 years of experience, including private equity investing, mergers and acquisitions, project finance and financings in a broad range of industries. In his capacity as the COO of SCI Asia, he leads the Fund s functions related to legal, compliance, finance and accounting, as well as being 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 COO of Private Wealth Management EMEA and earlier, Asia, and was a member of the Asia ex-japan Mergers and Acquisitions group in the Investment Banking Division. He previously worked as a lawyer in mergers and acquisitions and energy project finance at Cravath, Swaine & Moore in New York and later as Skadden Arps in Los Angeles, Hong Kong, London and Vienna. Mr Ooi Teik Huat, Malaysian, aged 54, was appointed to the Board as Non-Independent Non-Executive Director on 1 January He is also a member of the Audit Committee. He obtained a Bachelor Degree in Economics from Monash University, Melbourne, Australia in 1984 and is a member of Malaysian Institute of Accountants and CPA Australia. He began his career with Messrs Hew & Co. (now known as Messrs Mazars), Chartered Accountants in 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 He subsequently joined Pengkalan Securities Sdn Bhd (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. He also sits on the boards of MMC Corporation Berhad, Tradewinds (M) Berhad, Tradewinds Plantation Berhad, DRB-HICOM Berhad, Zelan Berhad, Johor Port Berhad, Gas Malaysia Berhad and several private limited companies. He received a J.D. degree (magna cum laude) from the University of Minnesota Law School (United States) and a B.A. degree with a joint major in Mathematical Economics and History from Pomona College (United States).

24 Board of Directors Profile (continued) 022 Malakoff Corporation Berhad Annual Report 2013 Tan Sri Dato Seri Alauddin bin Dato Mohd Sheriff Independent Non-Executive Director Datuk Idris bin Abdullah Independent Non-Executive Director

25 023 Tan Sri Dato Seri Alauddin Dato Mohd Sheriff, Malaysian, aged 66, was appointed to the Board as Independent Non-Executive Director on 11 December He is also the Chairman of the Nomination Committee and a member of the Audit Committee. He was admitted as an Utter Barrister of the Honourable Society of Inner Temple, London, having been called to the Bar of England & Wales in He held various posts in the legal and judicial service since He started his career with the Judiciary as a Magistrate in Bukit Mertajam in 1971 and in Kangar in 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 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 He was appointed as the Chairman of the Advisory Board in the Prime Minister s Department since 1 June Tan Sri Dato Seri Alauddin 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 After serving for about three years in the Court of Appeal, he was elevated to the Federal Court of Malaysia on 12 July 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 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 Datuk Idris bin Abdullah, Malaysian, aged 56, was appointed to the Board as Independent Non-Executive Director on 11 December He is also a member of the Audit Committee and Nomination Committee. He 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 Bumiputera 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 was appointed as a Commission Member of the Companies Commission of Malaysia ( CCM ) effective July 2012 and is also a Commission Member of the Malaysian Communications and Multimedia Commission. Datuk Idris bin Abdullah also holds several key positions in Malaysia and Singapore, namely as a Chairman/Director of Magnus Energy Group Ltd (listed on the Singapore SESDAQ), and Chairman/Director of Xian Leng Holdings Berhad (listed on Bursa Securities). He also sits on the boards of several private limited companies. He also sits on the board of AFFIN Holdings Berhad.

26 Board of Directors Profile (continued) 024 Malakoff Corporation Berhad Annual Report 2013 Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Independent Non-Executive Director Wan Kamaruzaman bin Wan Ahmad Non-Independent Non-Executive Director

27 025 Datuk Dr. Syed Muhamad bin Syed Abdul Kadir, Malaysian, aged 67, was appointed to the Board as Independent Non-Executive Director on 11 December He is also the Chairman of the Audit Committee of the Board, and a member of the Remuneration Committee of the Board. He graduated with a Bachelor of Arts (Hons) from Universiti Malaya in 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 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) degree from Universiti Teknologi MARA in November 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. He 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, Philippines, first as alternate Executive Director and later as an Executive Director. In July 1997, he joined the Ministry of Finance as Secretary (Tax Analysis Division) and subsequently became the Deputy Secretary General (Operations) of Ministry of Finance. Prior to his retirement, he was Secretary General, Ministry of Human Resources from August 2000 to February Encik Wan Kamaruzaman bin Wan Ahmad, Malaysian, aged 55, was appointed to the Board on 21 May He is also a member of the Remuneration Committee of the Board. He is currently the Chief Executive Officer of Kumpulan Wang Persaraan (Diperbadankan)( KWAP ) since May He obtained a Bachelor of Economics Major in Analytical Economics from the University of Malaya from 1978 to Previously, he served as the General Manager of Treasury Department at Employees Provident Fund from October 2007 until April 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, UK as Treasury Manager. He resigned from Maybank in June 1994 when he was serving Maybank in London. After leaving Maybank, he served in several companies within the Affin Group, as the CEO of Affin Moneybrokers Sdn Bhd from July 1994 to August 2003 and as the CEO of Affin Trust Management Sdn Bhd from September 2003 to November 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 He left Affin Group in November 2005 to join Kemuncak Facilities Management Sdn Bhd as Executive Director-Finance and served the company briefly from December 2005 till September He then joined Izoma Sdn Bhd as Executive Director-Finance from October 2006 till August He is a Board member of Valuecap and Chairman of ivcap Management Sdn Bhd. He is also a director of Prima Ekuiti UK, a subsidiary company of KWAP. He is the Chairman of CIMB Islamic Bank Berhad, CIMB Middle East BSC and CIMB-Principal Islamic Asset Management Sdn Bhd. He is also a Director of CIMB Group Sdn Bhd, CIMB Bank Berhad, CIMB Group Holdings Berhad, Bursa Malaysia Securities Berhad, Euro Holdings Berhad, Solutions Engineering Holdings Berhad, BSL Corporation Berhad, ACR ReTakaful Berhad (formerly known as ACR ReTakaful SEA Berhad), Sun Life Malaysia Assurance Berhad and Sun Life Malaysia Takaful Berhad. He also holds directorships in a number of private companies.

28 Board of Directors Profile (continued) 026 Malakoff Corporation Berhad Annual Report 2013 Craig Robert Martin Alternate to Kanad Singh Virk Zalman bin Ismail Alternate to Wan Kamaruzaman bin Wan Ahmad

29 027 Mr Craig Robert Martin, a British citizen and a Singapore Permanent Resident, aged 44, was appointed to the Board as Alternate Director to Mr Kanad Singh Virk on 7 January He was previously the Alternate Director to Mr Andrew Yee from 12 December 2012 to 16 December He has a Masters of Business Administration with distinction from INSEAD and a Masters degree in Electronic Engineering from the University of York, United Kingdom. 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 equity deals for institutional investors. He also developed, structured and raised funds from institutional and retail sources. He joined CapAsia in mid-2010 where he is a Managing Director and Head of Fund for the South East Asian Strategic Assets Fund ( SEASAF ) and the CapAsia ASEAN Infrastructure Fund III ( CAIF III ). He is a member of the Investment committees for SEASAF and CAIF III and sits on the board of directors of the General Partner for CapAsia s Islamic Infrastructure Fund. Encik Zalman bin Ismail, Malaysian, aged 43, was appointed as the Alternate Director to Encik Wan Kamaruzaman bin Wan Ahmad on 21 May He was a board member since 18 March 2013 before he resigned on 21 May 2013 to assume his current position on the Board as the alternate director to Encik Wan Kamaruzaman bin Wan Ahmad. He is currently the Director of Alternative Investment Department, Kumpulan Wang Persaraan (Diperbadankan)( KWAP ) since His responsibilities include maximising long term returns through investments in private equity, property and infrastructure both local and overseas. He has over 16 years work experience including heading Sime Darby Property s Strategy and Business Development Department. He was also the Head of Value Management and Head of Investor Relations for the Sime Darby Group. He spearheaded the valuation and closing team for the mega plantation merger between Sime Darby, Guthrie and Golden Hope. He had worked as a stock broking analyst at Dresdner Kleinwort Benson and credit analyst at Rating Agency Malaysia. He obtained a Bachelor s Degree (Hons) in Business Administration (Finance) from Eastern Michigan University, USA. Prior to CapAsia, he was with Prudential Asset Management (now known as Eastspring Investments), a wholly-owned subsidiary of Prudential Plc for five years, where he served as an Investment Director of Prudential Vietnam Fund Management Company. 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 ( AIM ).

30 Organisational Structure 028 Malakoff Corporation Berhad Annual Report 2013 Managing Director CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER Teknik Janakuasa Sdn Bhd ( TJSB ) Operation & Maintenance Division* Asset Management Division Information & Communications Technology ( ICT ) Maintenance, Repair & Overhaul Department ( MRO ) Operation & Maintenance ( O&M ) Malakoff Utilities Sdn Bhd ( MUSB ) Asset Development * Malakoff Power Berhad ( MPower )

31 029 Internal Audit & Risk Management Group Finance and Accounts Division Ventures Division Corporate Affairs and External Relations Department Human Resource and Admin Department Legal Department

32 Members of Management Committee 030 Malakoff Corporation Berhad Annual Report 2013

33 031 From L to R Nordin Kasim senior Vice President, Operation & Maintenance Division Habib Husin Acting Chief Executive Officer and Chief Operating Officer Ruswati Othman chief Financial Officer/ Senior Vice President, Group Finance & Accounts Division Azhari Sulaiman Senior Vice President, Ventures Division Mohd Shokri Daud Senior Vice President, Asset Management Division

34

35 Generating our Strength

36 Chairman s Statement 034 Malakoff Corporation Berhad Annual Report 2013 Dear Stakeholders, Malakoff Corporation Berhad ( Malakoff ) closed the year under review ended 31 December 2013 (FY 2013) on a satisfactory note. Commendable performances were recorded by several of the power plants operated by our wholly-owned subsidiaries as well as our associate companies. Having evolved into an international power and power company, the majority of our overseas investments have performed in line with expectations. On the strength of our performance, Malakoff was able to deliver revenue of RM4.717 billion for FY While we are pleased with the progress made, we are still determined to improve our overall performance. Malakoff takes pride in delivering consistent outstanding performance and we believe we could have done better. Malakoff is in the business for the long-haul. In this respect, we are fortunate to be in an industry that is still rapidly expanding and the Group is well-positioned to seize opportunities for new growth coming its way. For these cogent reasons, I remain convinced that we are primed for a new and exciting phase of growth. On behalf of the Board of Directors, it is my pleasure to present this Annual Report and Audited Accounts of Malakoff at Group and Company level for the financial year ended 31 December FINANCIAL PERFORMANCE For the FY 2013, the Group recorded a turnover of RM4.717 billion, a 15.6 percent decline from RM5.56 billion registered in FY The decline was mainly attributed to a lower dispatch factor recorded by the Tanjung Bin coal-fired plant as well as lower coal prices. Group Profit After Tax and Minority Interest (PATMI) was RM172 million, compared with RM469 million recorded in the previous year. The 63.3 percent drop was mainly due to lower income generated by Tanjung Bin. However, commendable performances continued to be achieved by our gas-fired plants at Lumut and Prai. CORPORATE DEVELOPMENTS The Group continued to make further inroads into the Middle East and North Africa ( MENA ) market when it successfully led a consortium comprising Sumitomo Corporation of Japan ( Sumitomo ) and Cadagua SA of Spain ( Cadagua ) to undertake the development and construction of the Al Ghubrah Independent Water Project in the Sultanate of Oman ( Al Ghubrah IWP ). A joint-venture company, Muscat City Desalination Company SAOC ( MCDC ) was incorporated on 19 January 2013 to oversee the project. The financing agreements, secured from the Bank of Tokyo-Mitsubishi UFJ Ltd ( MUFG ), Sumitomo Mitsui Banking Corporation ( SMBC )and Japan Bank for International Cooperation ( JBIC ), were signed on 26 July The Al Ghubrah plant is targeted for completion by October 2014 and will supply over 191,000 cubic metres of fresh water per day over the next 20 years. On 28 June 2013, Malakoff acquired the entire share capital of the Meridian Wind Macarthur Pty. Ltd. (now renamed Meridian Holdings) for around A$130 million (RM382.2 million). Following the acquisition, Malakoff now has a 50.0 percent stake in the Macarthur Wind Farm, with the remaining stake held by Macarthur Wind Farm Pty Ltd. The Macarthur Wind Farm is the largest wind farm in the Southern Hemisphere, with a generation capacity of 420 MW and comes with a long-term power purchase agreement, thus ensuring a stable income for Malakoff. This is the Group s maiden foray into the Australian market and is part of our strategic road-map to build our asset portfolio, transforming the Group into a leading multinational power and water producer.

37 Tan Sri Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman 035

38 Chairman s Statement (continued) 036 Malakoff Corporation Berhad Annual Report 2013 The star performers were our plants at Lumut and Prai, with the former achieving a high equivalent availability factor of percent, while the Prai Power plant stands on record as being one of the most efficient natural gas-fuelled plants in Malaysia.

39 037 FY 2013 HIGHLIGHTS Good Operating Results. The star performers were our plants at Lumut and Prai, with the former achieving a high equivalent availability factor of percent, while the Prai Power plant stands on record as being one of the most efficient natural gas-fuelled plants in Malaysia. Our associate-owned power plants also performed well, with Kapar Power Plant delivered some 11,770 GWh to the National Grid achieving commendable availability, efficiency and capacity factors and Port Dickson Power Plant achieved a high availability factor of more than 98.0 percent. Our overseas assets also turned in a satisfactory performance, notably the Shuaibah Phase 3 Independent Water and Power Project, which achieved high availability factors of percent and percent for power generation and water production respectively. Technical Support Group. The Technical Support Group ( TSG ) is playing a key role in bolstering the Group s operation and maintenance ( O&M ) activities. During the year in review, various technical and assessment studies and audits were undertaken at key plants within the Group. TSG has also expanded its client base to include external parties, such as the Dhofar Power Company in Salalah, Oman; the Azzour North Independent Water and Power Project ( Azzour North IWPP ) and Souk Tleta Independent Water Project ( Souk Tleta IWP ). Reliability and Performance Group. The Group has also re-established the Reliability and Performance Group ( RPG ) under the O&M Division. The principal role of RPG is to provide consistent, effective and efficient support to all Malakoff locally-operated plants. It is also leading and coordinating the Group s efforts to sustain its certification to the ISO Management Systems, which include ISO 9001, ISO and OHSAS In moving towards a culture of excellence, one of the key enablers is through certification to internationally recognised quality management systems. Occupational Health and Safety. In the key area of occupational health and safety, the Group improved on its Lost Time Injury Frequency Rate ( LTIFR ) by 100 percent, achieving zero Lost Time Injuries ( LTI ) in 2013, with 8,839,322 accumulated hours worked without LTI. All safety indicators recorded significant improvements throughout the year, demonstrating the efficacy of the raft of measures in place. Enterprise Risk Management. Integral to the improvement processes that are implemented group-wide, we recognise the importance of Enterprise Risk Management to protect our interests and those of our stakeholders. ERM is a systematic approach to identify, assess, report and monitor all risks associated with the Group. All risks that have been identified are recorded, analysed, mitigated, monitored and reported to the Risk Management Committee and subsequently escalated to the Board for deliberation and decision.

40 Chairman s Statement (continued) 038 Malakoff Corporation Berhad Annual Report 2013 TANJUNG BIN TURNAROUND PLAN The boilers improvement plan at Tanjung Bin has been activated to resolve the critical issues. The turnaround plan had been implemented and completed in March With the completion of the turnaround plan, Tanjung Bin is expected to meet its target capacity of 2100MW. We are bringing the entire resources of the Group to ensure the success of the turnaround plan. Taking the lead is the O&M Division, where RPG is monitoring the thermal performance of Tanjung Bin under Phase 1 of the turnaround plan. It is also spearheading an exercise to benchmark Tanjung Bin against comparable plants world-wide, the objective being to identify operational gaps and opportunities for plant improvements. AWARDS AND HONOURS In a challenging year, the proverbial upside is the number of awards and accolades we continue to receive for our performance in several key areas. We kicked-off the year by winning four industry awards from various international publications in recognition of the Group s innovative RM6.5 billion financing facilities for the 1,000 MW Tanjung Bin Energy power plant. The awards were the Asia Pacific Project Bond of the Year 2012 from Project Finance International; Triple A Regional award for Best Project Finance Deal from The Asset Magazine; Asia-Pacific Power deal of the Year from Project Finance Magazine and The Asset s AAA Best Project Finance Deal from Project Finance Magazine; and the Best Project Financing Award from Asia Money. The financing facilities were the first Islamic project bonds and loan facilities denominated in Ringgit Malaysia and US Dollar granted to a Malaysian IPP and were given a rating of AA3 by RAM Holdings Berhad. We were gratified to win three awards for our initiatives in the areas of corporate social responsibility and human resources. The first was the Green Leadership Award under the Asia Entrepreneurship Awards programme that aims to honour Asian businesses for championing sustainable and responsible entrepreneurship in various categories. We were also named the Best Employer To Work For In Asia 2013 after one of the most scientific and extensive surveys on employee engagement and workplace practices by HR Asia, a trade journal. Malakoff also won the CSR Award Of The Year from the Malaysian Institute of Management ( MIM ), which aims to showcase the best in class examples of creativity and innovativeness leading to sustainable outcomes. We are also proud to mention that Malakoff s wholly owned gas-fired Prai Power Plant achieved a significant safety milestone when the power plant clocked in 3 million man-hours with zero accident recorded since operation commenced in June 2003.

41 039 THE WAY FORWARD We anticipate that FY 2014 will be a year of revitalisation and preparing for the next thrust forward. The operational improvement of Tanjung Bin remains our primary focus, but we are simultaneously pursuing a number of forward-looking strategic priorities: A major review of our working practices and systems will be carried out with the goal of reducing operating expenses year-on-end by two percent, without compromising on efficiency and aspects of health, safety and the environment; The Group s investment portfolio will be fine-tuned to maintain its high quality and monetise the value of our assets; Forge ahead with the construction of the 1,000 MW Tanjung Bin Energy power plant at Pontian, Johor to meet the scheduled completion date of March 2016; Scale up our Maintenance, Repair and Overhaul ( MRO ) and third party O&M businesses locally and regionally to generate a new revenue stream; In line with the corporate aspirations of the Group, we will continue to invest for the long term, exploring fresh paths to growth in attractive geographic areas where we have a competitive advantage to solidify the financial strength of the Group; and Given that our people are the ultimate source of competitive advantage, we will strive harder to improve employee retention and overall organisational effectiveness to achieve higher productivity.

42 Chairman s Statement (continued) 040 Malakoff Corporation Berhad Annual Report 2013 A FOCUS ON GROWTH Looking forward, I am optimistic about the future of Malakoff and its prospects. In a relatively short period of time, we have transformed ourselves from a domestic utility company into an international player with a handful of projects in one of the fastest growing regions in the world. The fundamental strength of the Group remains intact and this is evidenced by the quality of our balance sheet, our earnings power supported by long-term PPAs and competitive position in moving forward. Steps that we have taken to further unlock the value creating potential of our businesses have also gained traction. These include the expansion of our core businesses into leading market positions and the Group s strategic thrust toward a greater international presence, all of which point towards a promising future. In Malaysia, we are set to further consolidate our position in the power generation business with the successful acquisition of the remaining 75.0 percent equity stake in Port Dickson Power Berhad ( PDP ) along with the O&M business of PDP from Sime Darby Energy Sdn Bhd. As at 30 April 2014, Malakoff holds a 100 percent equity interest in PDP via its wholly-owned subsidiary,hypergantic Sdn Bhd ( Hypergantic ). The acquisition boosts Malakoff s effective generating capacity to 5,350 MW, which is about 24.0 percent of Peninsular Malaysia s total installed generating capacity. Taking cognizance of its inherent strengths, many industry watchers recognise the value the Company offers and the positive direction it has taken to grow its businesses at home and abroad. We have an exciting future ahead of us and building on the momentum established, Malakoff remains on course to achieve its long-term goal to be a premier global power and water company and to deliver sustained growth and value for our stakeholders. Acknowledgements While Malakoff has a huge asset profile, we have always acknowledged the fact that our most important asset is our human capital. It also brings to mind an old axiom: that the tough gets going when the going is tough. I personally feel that the challenges encountered in FY 2013 have brought out the very best in our people. Malakoff people have shown that they are not only tough, but they are professional, committed and hard-working. I know I can continue to count on every one of you as we strive to realise our goals.

43 041 Our great support group includes our respective financiers, partners and business associates from over the globe. Adding to this list are the various government bodies and statutory authorities as well as members of the media, with whom we enjoy a close and healthy working relationship nurtured over the years. To say the least, the close rapport and understanding that we have established with our respective stakeholders and their confidence in the Group have made all the difference in a challenging year. To them, we would like to express our gratitude for their on-going support and trust in Malakoff. The year in review saw several changes in the Board s composition. Dato Sri Che Khalib bin Mohamad Noh, who is also the Managing Director of Malakoff, was appointed to the Board effective 1 July The other new appointees are Encik Wan Kamaruzzaman bin Wan Ahmad, his alternate, Encik Zalman bin Ismail, and Mr Kanad Singh Virk. We welcome all of you and look forward to the fresh insights and broad experience you bring to the Board. During the year, Datuk Haji Hasni Bin Harun, Dr Mabel Lee Khuan Eoi and Mr Andrew Rowan Ian Yee have all vacated their positions. The Board expresses its sincere appreciation to the aforementioned for their valuable contributions. As Chairman, I am proud to be a member of this present Board. Collectively, I believe we have the knowledge and experience to guide the Group towards achieving even more. Lastly, I believe we owe an overwhelming gratitude to En Zainal Abidin Jalil, ex-ceo of Malakoff who had served us well during a significantly memorable tenure. Thank you. TAN SRI DATO WIRA SYED ABDUL JABBAR BIN SYED HASSAN Chairman

44

45 Delivering our Thrust

46 Performance Review by Acting Chief Executive Officer 044 Malakoff Corporation Berhad Annual Report 2013 Overview 2013 was a challenging year for the global economy, marked by the deepening of the Euro area crisis and moderating growth in emerging economies led by China and India. According to the International Monetary Fund ( IMF ), global real gross domestic product ( GDP ) was 2.9 percent in 2013 (2012:3.2 percent). Growth in the Middle East and North Africa ( MENA ) region, the focus of the Group s overseas investments, was lower at 2.1 percent (2012:4.6 percent) due to reduced oil production and the spill-over effects of continued political uncertainty in certain countries. Despite the more challenging external environment, the Malaysian economy has remained largely resilient to register a real GDP growth of 4.5 to 5 percent in 2013 (2012:5.6 percent). (Source : Economic Report 2013/14, page 50) Growth will be underpinned by strong domestic demand, a more diversified and balanced economy, robust financial system and pragmatic macroeconomic policies. In the country s quest to become a high income and developed nation by 2020, the demand for electricity will grow in tandem with GDP growth. To achieve this aspiration, one of the goals of the country s Tenth Malaysia Plan, , is to ensure the continuous security of electricity supply within the country. For the good news, I am pleased to report that all our other domestic assets turned in commendable performances, with our plants at Lumut and Prai being the star-performers. The Port Dickson power plant has chalked up a commercial starting reliability of close to 100 percent for the past 16 years. The Group s overseas interests in the Kingdom of Saudi Arabia, Bahrain have all also performed to expectations, achieving high availability factors for both power generation and water production. Key lessons were also learnt the most important being that despite all the necessary mitigating measures that are put in place, we need to be ever more vigilant in the key areas of quality assurance and quality control.

47 Habib Husin Acting Chief Executive Officer and Chief Operating Officer 045

48 Performance Review by Acting Chief Executive Officer (continued) 046 Malakoff Corporation Berhad Annual Report 2013 Asset Performance

49 047 DOMESTIC POWER GENERATION Malakoff is the largest Independent Power Producer ( IPP ) in Malaysia, with an effective power generation capacity of approximately 5,350 MW, representing approximately 24.0 percent of Peninsular Malaysia s total installed capacity. We own three combined cycle gas turbine ( CCGT ) power plants, one open cycle gas turbine ( OCGT ) power plant and one coal-fired thermal plant, while through our associates, we have interests in one power plant with multi-fuel power generation facilities. All of our power plants, including those of our associates, sell the power they generate to Tenaga Nasional Berhad ( TNB ) under long-term Power Purchase Agreement ( PPA ). SUBSIDIARY-OWNED POWER PLANTS SEV Power Plant Celebrating more than 17 years of operation, the 1,303 MW power plant at Lumut has a dependable capacity of 1,303 MW and is the largest CCGT power plant in Malaysia. Malakoff has a percent interest in Segari Energy Ventures Sdn Bhd ( SEV ) with the balance held by the Employees Provident Fund ( EPF ). On 25 February 2013, SEV secured a 10-year extension to the PPA with TNB, which will now run until June During the year under review, the SEV power plant continued to maintain its high performance record in terms of availability, reliability and efficiency, delivering approximately 8,040 GWh of electricity to the National Grid. Having met all the required performance standards set out in the PPA, SEV received full capacity payments for the period under review. GB3 Power Plant Malakoff also has a 75.0 percent interest in the GB3 Sdn Bhd ( GB3 ). With a dependable capacity of 640 MW, the GB3 power plant is located next to the SEV power plant. Now in its twelfth year of operation, the plant delivered 1,964 GWh of electricity to the National Grid, with an average capacity factor of approximately percent during the year under review. The power plant also recorded an equivalent availability factor of percent, which is marginally lower from the previous year due to several major planned outages. Prai Power Plant Through our wholly-owned subsidiary, our corporate stable includes the Prai power plant, which is a single-shaft CCGT plant with a dependable capacity of 350 MW. In its 11 years of operation, it has the distinction of being among the most efficient natural gas-fuelled power plants in Malaysia and during the year under review, recorded a net efficiency (lower heating value) of 52.5 percent. In FY 2013, the power plant delivered 1,990 GWh of electricity to the National Grid and recorded an average capacity factor of 64.9 percent. Despite 42 days of major planned outages, the power plant achieved an equivalent availability factor of percent which is only slightly lower than the previous year.

50 Performance Review by Acting Chief Executive Officer (continued) 048 Malakoff Corporation Berhad Annual Report 2013 Tanjung Bin Power Plant Tanjung Bin Power Plant ( Tanjung Bin ) is the first privatelyowned coal-fired plant in Malaysia and is among the largest independent plants of its kind in Southeast Asia. With a generating capacity of 2,100 MW, Tanjung Bin accounts for approximately 29.0 percent of Peninsular Malaysia s IPP coal-fired generation capacity. The power plant consumes various types of bituminous and sub-bituminous coal imported from Australia, South Africa and Indonesia. The Group s stake in the power plant is held through our 90.0 percent-owned subsidiary, Tanjung Bin Power Sdn Bhd. In its eighth year of operation, Tanjung Bin delivered 11,772 GWh of electricity to the National Grid, with an average capacity factor of percent The plant s equivalent availability factor was recorded at percent (2012: percent) due to maintenance works undertaken during the year under review. Tanjung Bin Energy Power Plant A new 1,000 MW coal-fired power plant is being built adjacent to the existing Tanjung Bin power plant. As at financial year end, the Tanjung Bin Energy power plant has achieved an overall 52.0 percent completion. Several project milestones were achieved during the year, which include a ceremony held on 5 December 2013 to commemorate the successful erection of the boiler girders in December 2013, which are the first heavy lift components of the project. Other major milestones include the concrete pouring for the foundation of the turbine hall, erection of steel structures for the coal transfer towers and progressive construction of the windshield for the flue gas stack, which is about 50 percent completed with approximately 100-metre in height. In readiness for the power plant s targeted commercial operation date of March 2016, Malakoff is in the process of mobilising a team for the operation and maintenance of the power plant. Some of the personnel have already been recruited and are presently attached to Tanjung Bin where they will undergo a structured training programme to gain hands-on experience. This pioneer team will also be involved in the forthcoming testing and commissioning of the plant.

51 049 Port Dickson Power Plant The Port Dickson power plant is a 440 MW OCGT power plant. Our wholly-owned subsidiary, Hypergantic Sdn Bhd holds a 100 percent equity interest in the power plant, which supplies electricity to the National Grid to meet peaking and emergency requirements. For the past 17 years, the power plant has achieved a high availability factor of more than 98.0 percent, forced outage rate of less than 0.4 percent and commercial starting reliability factor of close to 100 percent. ASSOCIATE-OWNED POWER PLANT Kapar Power Plant The Kapar power plant also known as the Sultan Salahuddin Abdul Aziz Power Plant, is located at Kapar in the state of Selangor. It is the largest power plant in Malaysia with a total generating capacity of 2,420 MW. Malakoff s interest in the power plant is by virtue of our 40.0 percent equity in Kapar Energy Ventures, with the remaining 60.0 percent stake held by TNB. The plant s multi-fuel power generation facilities comprised the following: 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 For FY 2013, the plant delivered some 11,770 GWh to the National Grid achieving commendable availability, efficiency and capacity factors for the respective generating facilities as set out in the following table: Generating Facility Avail. Factor % Efficiency % Capacity Factor % GF GF GF GF

52 Performance Review by Acting Chief Executive Officer (continued) 050 Malakoff Corporation Berhad Annual Report 2013 INTERNATIONAL WATER PRODUCTION AND POWER GENERATION Malakoff s evolution from a power generation company operating within national boundaries into an international water production and power generation has been nothing short of remarkable. The Shuaibah Phase 3 Independent Water and Power Project in the Kingdom of Saudi Arabia marked Malakoff s maiden foray into the international arena. With this project under our belt, we began to spread our wings to neighbouring countries, participating in very competitive bidding exercises alongside companies bigger and more established. Our first project in North Africa is the 200,000 cubic metres/day seawater desalination plant at Souk Tleta in Algeria. With our brand gaining resonance and building on our track record, we will continue to move further down the path as an international player and a proud bearer of the Malaysian flag wherever we operate. Shuaibah Phase 3 Independent Water and Power Project (Saudi Arabia) The Shuaibah Phase 3 Independent Water and Power Project ( Shuaibah Phase 3 IWPP ) is one of the largest combined power and water plants in the world. Malakoff has a 12 percent effective stake in the project, which is held through an associate company Shuaibah Water & Electricity Company ( SWEC ). The project was executed on a build, own and operate basis under a 20-year Power and Water Purchase Agreement with the Water and Electricity Company of Saudi Arabia. Since achieving commercial operation date on 14 January 2010, the plant has continued to perform well. For the financial year under review, the plant recorded an availability factor of percent and percent for power generation and water production respectively. Shuaibah Phase 3 Expansion Independent Water Project (Saudi Arabia) Malakoff has an 11.7 percent interest in Shuaibah Expansion Project Company Ltd, the owner of the Shuaibah Phase 3 Expansion Independent Water Project ( Shuaibah Phase 3 Expansion IWP ). With a capacity of 150,000 cubic metre/day, the plant uses reverse osmosis technology to desalinate sea water. The plant has continued to perform satisfactorily since commercial operations began on 17 November In FY 2013, the plant achieved an availability factor of percent. Souk Tleta Independent Water Project (Algeria) Our first project in North Africa is the Souk Tleta IWP project located in Wilaya of Tlemcen in Algeria. The 200,000 cubic metre/ day plant uses reverse osmosis to desalinate seawater and has been operational since 13 April Malakoff has an effective 35.7 percent stake in the project. The Shuaibah Phase 3 Independent Water and Power Project in the Kingdom of Saudi Arabia marked Malakoff s maiden foray into the international arena.

53 051 Al Hidd Independent Water and Power Plant (Bahrain) In May 2012, Malakoff acquired a 40.0 percent stake in the Hidd Power Company, which owns the Al Hidd Independent Water and Power Plant ( Al Hidd IWPP ). The Al Hidd IWPP is among the largest Independent Water and Power Plants ( IWPPs ) in Bahrain, with a total power generation capacity of 929 MW and a water production capacity of 410,000 cubic metres/day. This is sufficient to meet approximately 39.0 percent and 62.0 percent respectively of the Kingdom s power and water supply requirements. During the year in review, the plant achieved an availability factor of percent and percent for power generation and water production respectively. Al Ghubrah Independent Water Project (Sultanate of Oman) The Al Ghubrah IWP, located in the capital city of Muscat, signals our re-entry into the Sultanate of Oman and is testimony to Group s standing in a very competitive market. The project was awarded in November 2012 to a consortium led by Malakoff International Limited ( MIL ) to build, own and operate basis utilising reverse osmosis technology. MIL is a wholly owned subsidiary of Malakoff. On 19 January 2013, Muscat City Desalination Company SAOC ( MCDC ) was incorporated in the Sultanate by Malakoff and its consortium partners, Sumitomo and Cadagua as a special purpose vehicle to undertake Al Ghubrah IWP. Malakoff and Sumitomo each hold a 45.0 percent interest in MCDC, while Cadagua owns the remaining 10.0 percent. On 26 July 2013, the consortium successfully closed a project finance loan agreement with the JBIC, SMBC and the MUFG to finance the project. Scheduled for completion by October 2014, the plant will supply over 190,000 cubic metres/ day of fresh water over a period of 20 years, serving the daily water requirements of 800,000 people.

54 Performance Review by Acting Chief Executive Officer (continued) 052 Malakoff Corporation Berhad Annual Report 2013 Operation & Maintenance

55 053 Malakoff s growing portfolio of power generation and water production assets is complemented by its strong O&M capabilities. We have two decades of experience in the O&M business and a proven track record of operating a variety of power plants that include CCGT, OCGT and coal-fired plants. In water production facilities, our range of experience includes multi-stage flash distillation plants, reverse osmosis desalination plants and co-generation plants. Over the years, Malakoff has carefully nurtured a strong culture of operational excellence with the goal of propelling our asset performance towards sustainable, world-class standards. This is demonstrated by some of our plants achieving higher than IPP industry averages. In achieving high standards of efficiency and cost effectiveness, we rely on the latest specialised O&M tools and methodologies such as Computerised Maintenance Management System ( CMMS ), Reliability Centred Maintenance ( RCM ), Root Cause Analysis ( RCA ), Reliability Based Inspection ( RBI ), Reliability Centred Spares ( RCS ) and O&M and Engineering audits, just to name a few. The partnerships the Group has forged with leading players in the power generation and water production businesses all over the world is further testimony of our operational excellence and track record. DOMESTIC O&M BUSINESS Prai Power Plant The Prai power plant is a combined cycle plant with a total generating capacity of 350MW. The power plant consists of one gas turbine, one heat recovery steam generator and one steam turbine, with a unique single shaft configuration that allows for reliable, efficient and low emission power supply to the National Grid. In FY 2013, the power plant recorded a net efficiency (low heating value) of percent. Prai power plant registered a slightly lower availability factor of percent, with a total of 1,990 GWh delivered to the National Grid. During the year in review, major maintenance works were carried out on the gas turbine, steam turbine and heat recovery steam generator. A Gas Turbine Compressor Enhancement Package was also successfully installed during the maintenance period, allowing for further improvements in power plant reliability and efficiency. The Prai power plant is compliant to MS ISO9001 Quality Management System, OHSAS and MS722 Occupational Health and Safety Standards and ISO Environment Management System. During the year, the plant also successfully achieved certification to the ISO Information Security Management System to ensure the integrity of the business information security.

56 Performance Review by Acting Chief Executive Officer (continued) 054 Malakoff Corporation Berhad Annual Report 2013 SEV and GB3 Power Plants The SEV and GB3 power plants are co-located in a single complex and are collectively known as the Lumut Power plant. During the year under review, both plants continued to operate with proven reliability to meet the requirements of the PPA. The average equivalent availability factor stood at percent and percent for SEV and GB3 respectively, while the unscheduled outage rate was 0.33 percent for SEV and 1.55 percent for GB3. With the coming into effect of a new PPA for SEV beginning March, SEV has overtaken GB3 as the dominant base load plant. Higher electricity demand has pushed the average capacity factor to percent for SEV and percent for GB3. Total energy sold to TNB for the year amounted to 8, GWh and 1, GWh for SEV and GB3 respectively. Several plant improvement projects were also implemented during the year, which includes: Incorporation of silica reading in the logic of GB3 s continuous blow down ( CBD ) valve control, resulting in further cost savings in demin water consumption; Modification of the de-heater solenoid valve ( SOV ) actuator and improvements in the high pressure superheater outlet in the heat recovery steam generator ( HRSG ); Introduction of CBD closed loop control in SEV to achieve savings in demin water consumption; and Implementation of HRSG phosphate auto control in SEV, resulting in savings in phosphate consumption. To achieve the high reliability and availability targets, the year in review saw several major maintenance and inspection activities carried out at the various gas turbines and other key areas of the plants. O&M tools and methodology, such as RCM and RCA, were also applied extensively for continuous improvements. Tanjung Bin Power Plant With higher demand for energy from coal-fired plants nationwide, the Tanjung Bin power plant continued to be an anchor plant supplying power to the National Grid. The plant utilises coal of various grades imported from countries as diverse as Indonesia, Australia and South Africa with Russia being the latest addition. During the year in review, Tanjung Bin consumed a total of 4.7 million metric tons of coal as fuel for electricity production. Despite the maintenance works in FY 2013, the power plant was still able to achieve a capacity factor of percent, which translates into 11,772 GWh of electricity sold to TNB. The availability factor stood at percent. Modification works were carried at the coal unloading facility and main cooling water system, which will benefit both Tanjung Bin and the new Tanjung Bin Energy power plant. With an increase in the capacity of the unloading facility, it will improve the turnaround time for vessels using the facility.

57 055 INTERNATIONAL O&M BUSINESS Malakoff s international O&M business involvement dated back to 2006 when it secured an O&M sub-contract for the Shuaibah Phase 3 IWPP in Saudi Arabia. Since then it has expanded its portfolio and activities to include projects in Algeria, Bahrain, Jordan, Kuwait and Oman. During the year under review, the Group continued to make headway in building its portfolio of O&M contracts. In March 2013, Teknik Janakuasa Sdn Bhd ( TJSB ), a wholly subsidiary of Malakoff, was awarded a five-year Operation and Maintenance Management Services ( OMMS ) contract from PT Merak Energi Indonesia to operate and maintain its 120 MW coal-fired power plant in the District of Banten, Indonesia. The OMMS was later novated by TJSB to PT Teknik Janakuasa Indonesia, a subsidiary of TJSB, in June In November 2013, two new operations and maintenance agreements were secured in the MENA region. The first was in the Sultanate of Oman, where MIL is a party to a consortium that concluded an Operations and Maintenance Agreement with MCDC to operate and maintain the 191,000 cubic metre/day Al Ghubrah IWP. The mobilisation will commence in April 2014 in anticipation of plant commissioning expected in October of the same year. The second was the OMMS contract which was signed between TJSB Middle East Limited and Al-Ghanim International General Trading and Contracting Co. Ltd, Kuwait for the Azzour South Power Plant in Kuwait. The four-year contract is for the Operations and Maintenance of newly converted 800 MW open cycle plant to a 1,200 MW combined cycle power plant, with a targeted commercial operation date of February 2014.

58 Performance Review by Acting Chief Executive Officer (continued) 056 Malakoff Corporation Berhad Annual Report 2013 TECHNICAL SUPPORT GROUP Tapping the synergy inherent in a diverse Group, our O&M activities are ably supported by TSG, which is continually looking at ways to achieve higher standards of performance across the Group s stable of power stations and water production facilities. TSG covers the entire spectrum of O&M activities by setting up specialised teams, each with its own area of expertise, related either to a particular facility or technology used in the plant. Among its many achievements, TSG s integrated outage management and cost optimisation initiatives have contributed towards considerable cost savings for major overhauls at the Lumut Power and Tanjung Bin Power Plants. In FY 2013, TSG continued to lend its expertise to various technical studies, assessment and technical audits. These include an Operation Risk Assessment Audit at Tanjung Bin and an Engineering Risk Assessment Exercise and RCM study at the Lumut and Prai power plants. As the Group continues to expand overseas, TSG has also diversified its client base. Besides providing technical support to the Group s O&M teams at the Azzour North IWPP and Souk Tleta IWP, it also undertook a Technical Audit for the Dhofar Power Company in Salalah, Oman. TSG continued to play a key role in supporting the Group s bidding exercises for new ventures such as PT Merak Energi Indonesia s new power plant at Banten, Indonesia.

59 057 RELIABILITY AND PERFORMANCE GROUP The Reliability and Performance Group ( RPG ) was re-established under the O&M Division in October 2012 to provide consistent, effective and efficient support to all Malakoff locally-operated plants. RPG also spearheads the drive towards achieving operational excellence, optimised thermal and commercial performance and compliance to the Group Health, Safety, Security and Environmental ( HSSE ) Management. During the year under review, RPG s focus was on achieving the following: Ensuring consistent implementation of O&M tools and methodologies group-wide; Leading and coordinating the sustenance of ISO Management Systems (ISO 9001, ISO 14001, OHSAS 18001) at all plants, RPG has embarked on the exercise to obtain ISO 9001 certification for MPower headquarters; Leading the exercise to benchmark Tanjung Bin against comparable plants world-wide, the objective being to identify gaps and areas for improvement; and Championing the drive to sow the seeds of a cost optimisation culture across the Group by monitoring and reviewing the cost management and cost leadership initiatives at all plants. RPG is leveraging on the capabilities of MaCNet, the existing information portal within the Group, to generate online incident reporting by the plants operations teams. Besides the advantage of timeliness, it also facilitates the sharing of safety incident information across the Group so that valuable lessons can be learnt and action plans can be drawn up to prevent a recurrence. RPG has also been tasked to monitor the thermal performance of both the Lumut and Prai power plants using the GateCycle programme, which is a plant performance software to understand and predict changes in a plant s performance. Going into FY 2014, plans are in the pipeline for the GateCycle programme to be introduced to the SEV power plant, which has been highly dispatched since the new PPA was signed on 25 February As part of the Tanjung Bin turnaround plan, RPG will be tasked to monitor the thermal performance of the plant.

60 Performance Review by Acting Chief Executive Officer (continued) 058 Malakoff Corporation Berhad Annual Report 2013

61 059 CONTRACTS ADMINISTRATION & PROCUREMENT MANAGEMENT Contracts administration and procurement management are key links in supply chain management, which can impact on the operational efficiency of our plants and ultimately the Group s bottom line. Efficient planning and management of the procurement process ensures that all materials and services are available during planned outages and day-to-day operations in order to prevent any disruptions to the plants operations. In a highly competitive marketplace, effective procurement management also ensures the cost effectiveness of all capital expenditures ( CAPEX ) and that all purchases are properly accounted for. As an example, through various procurement initiatives, we achieved cost savings of close to RM130 million for just two of our subsidiaries during FY At Malakoff, contracts administration and procurement management comes under the ambit of the Group Contract and Procurement Unit ( GCPU ). Apart from playing an advisory role to other operating units, GCPU also acts as an intermediary to ensure that procedures are followed as well as assist in expediting the approval process. Some of the procurement processes, especially those dealing with large CAPEX, have also been centralised and taken over by GCPU. In the interest of transparency and for greater effectiveness, the procurement process in Malakoff is governed by a set of policies, procedures and other guidelines, which are reviewed and updated from time to time. Internal audits and other management audits such as ISO 9001, ISO and OHSAS serve as important yardsticks to determine how well the Group s procurement process stacks up against internationally accepted best practices. Any non-conformances resulting from the audits are taken constructively, while recommendations are raised to the Management and considered for implementation depending on its practicality. Since its launch in April 2012, the Group s Vendor Document and Management Portal ( VDMP ) has reduced the turnaround time for the approval process. With all documentation now electronically managed, the issue of missing documents no longer arises. However, we acknowledge the fact that there is still room for improvement. We are presently working to improve the vendor data base and we are also developing a Procurement Notification, which will expand the vendor selection option.

62

63 Positioning our Focus

64 Performance Review by Acting Chief Executive Officer (continued) 062 Malakoff Corporation Berhad Annual Report 2013 Electricity Distribution and Chilled Water Supply

65 063 The Group s electricity distribution and district cooling business has been re-positioned as another core line of business. Malakoff Utilities Sdn Bhd ( MUSB ), our wholly-owned subsidiary, holds the exclusive rights to distribute electricity and chilled water in the Kuala Lumpur Sentral Development ( KL Sentral ) for a period of 21 years. Leveraging on the Group s reputation for performance and service excellence, MUSB s customer base continues to expand in tandem with the on-going development of KL Sentral as a business and transportation hub. MUSB has been supplying chilled water to Plaza Sentral Office since November 2001 and to meet the growing needs, it has increased its Centralised Chilled Water Plant s capacity to 17,000 refrigerant tons. Its customer base has also expanded to include Nu Sentral Retail Mall, 348 Sentral s Office Tower, Excellent Bonanza s Office Towers and Hotel as well as residential apartments in the development enclave. In total, MUSB now has 1,764 customer accounts compared to 1,660 the previous year. As a result, the demand for electricity has also risen to MW from 31.2 MW recorded previously. With more construction activities underway, the rising trend is expected to continue for the foreseeable future. In keeping pace with technology, MUSB has employed the latest Thermal Energy Storage ( TES ) technology to improve energy efficiency whilst reducing the environmental impact of our operations. The adoption of TES has boosted KL Sentral s standing on the Green Building Index, an environmental rating system to promote sustainability. Courtesy, care and attention to details are the pillars on which we build our customer experience. We gauge our performance through customers feedback at MUSB s Customer Care Centre and through a survey. We take these surveys and customer feedback very seriously as they provide valuable inputs in our efforts to continually raise the bar in customer service excellence. In the latest survey undertaken, the results have been encouraging; no less than 86 percent were satisfied with the services provided while the remaining 14 percent did not respond. Of those who provided feedback at our Customer Care Centre, 100 percent were satisfied with their overall experience. As a customer-centric business, we cannot afford to be complacent. We are constantly looking at ways where we can give our clients the service they expect and deserve. Moving forward, MUSB is actively exploring opportunities to extend its activities beyond the KL Sentral area. With an established track record and leveraging on the synergies inherent in being part of the Group, it is also studying the prospects of embarking on new ventures as a multiple utility provider.

66 Performance Review by Acting Chief Executive Officer (continued) 064 Malakoff Corporation Berhad Annual Report 2013 Ventures

67 065 Ventures Malakoff is fortunate to operate in a thriving geographic area poised for continued growth. While Southeast Asia remains one of the world s most dynamic regions, we have spread our wings and looked afield to the thriving MENA region. As the world moves towards becoming a global village, Malakoff s Ventures Division is ever alert to opportunities for new growth. In November 2012, the state-owned Oman Power and Water Procurement Company S.A.O.C. awarded the contract to the Malakoff-led consortium to develop the Al Ghubrah IWP, located in the capital city of Muscat. The award of the project marks the Group s re-entry into the Sultanate of Oman. On 19 January 2013, MIL and its consortium partners, Sumitomo and Cadagua incorporated the MCDC as a special purpose vehicle to undertake the Al Ghubrah IWP. On 26 July 2013, the consortium entered into a project finance loan agreement with the JBIC, SMBC and the MUFG to finance the Al Ghubrah project. When completed by October 2014, the plant will supply over 190,000 cubic metres/day of fresh water over a period of 20 years, meeting the daily needs of 800,000 people. Winning the AI Ghubrah IWP means a lot to Malakoff. Not only was the bidding exercise very competitive, but it was held against the backdrop of imminent changes to the Sultanate s Electricity Sector Law to provide for the independent regulation of stand-alone water projects in Oman. The project is also the first stand-alone water project in the MENA region to benefit from JBIC funding. With Al Ghubrah IWP on our portfolio, we are hopeful it will open doors to other opportunities within the region. During FY 2013, we acquired a 50 percent stake in an Australian wind farm. The Macarthur Wind Farm located in the State of Victoria is the largest wind farm in the southern hemisphere. It was constructed in 2011 and has been operating since January The total installed capacity of the wind farm is 420 MW, which is sufficient to generate enough clean energy to power more than 220,000 average-sized homes in Victoria, reducing 1.7 million tonnes of greenhouses gases being emitted to the atmosphere each year. Information & Communications Technology ( ICT ) The continuing evolution of Information & Communications Technology ( ICT ) is changing the dynamics of the workplace and the way we do business. In a Group where performance counts, our focus in FY 2013 was to harness the power of ICT to increase operational efficiency. Like most of Fortune 500 companies, we are leveraging on Microsoft Sharepoint, to create our own intranet portal for content and data management. Through MaCNet, our intranet portal, we are able to store, organise, share and access information relating to our operations and processes. The portal is now used to store data relating to our incident reporting system, O&M reports, employee recruitment, among others. The platform has enabled us to improve the business process flow and thereby enhance employee productivity.

68 Performance Review by Acting Chief Executive Officer (continued) 066 Malakoff Corporation Berhad Annual Report 2013 All organisations, in varying degrees, face exposure to internal as well as external threats. Such threats may take the form of events that could impact on operations. We are pressing ahead with the Group s strategy to strengthen its resilience in the face of a disaster or business disruption. Having achieved certification to ISO (Information Security Management System ( ISMS )) from the Standard and Industrial Research Institute of Malaysia ( SIRIM ) in December 2012, we continued with efforts to improve our information security system to protect data confidentiality, integrity and availability. The ISMS is a systematic approach in the ISO family of internationally recognised standards to manage sensitive company information by applying a risk management process. It is mandated by the Malaysian Government for all organisations that are classified under the Critical National Information Infrastructure ( CNII ). Meanwhile, the wireless and video conferencing facility at Group Head Office has been upgraded for increased level of authentication, improved security and wider network coverage. In the coming year, attention will be focused on security and prevention of leaks. ENTERPRISE RISK MANAGEMENT Malakoff has adopted Enterprise Risk Management as a systematic approach to identify, assess, report and monitor all risks associated with the Group. It is an oversight function of the Managing

69 067 Director s/chief Executive Officer s Office to further strengthen the Group s corporate governance. The following are examples of initiatives that were launched during the year to improve risk management across the Group. Risk Assessments The Engineering Risk Assessment Process ( ERAP ) aims to identify the level of engineering risks in a power plant and to recommend appropriate risk reduction strategies. During the year, ERAPs were successfully conducted at the Prai and Lumut power plants and the findings indicate a low level of engineering risks. An Operations and Management Risk Assessment ( OMA ) aims to identify the level of management and operational risks at a power plant and to recommend appropriate risk reduction and improvement strategies. When an OMA was conducted at Tanjung Bin in October 2013, the findings pointed to a moderate level of operations and management risks. A Plant Security Risk Assessment ( PSRA ) aims at identifying and evaluating risks posed by the plant s security management and was carried out at Tanjung Bin in October The main areas of concern are the site grounds, building interior and exterior and the security operations. The overall risk rating for Tanjung Bin s security was deemed to be low.

70 Performance Review by Acting Chief Executive Officer (continued) 068 Malakoff Corporation Berhad Annual Report 2013 MUSB Risk Assessment Modules The risk assessment programme put in place across the Malakoff power plants has now been extended to MUSB. This is to ensure that MUSB s District Cooling System ( DCS ) and Electricity Distribution System ( EDS ) all conform to the best engineering, operation and HSE practices. An intensive and comprehensive workshop was organised during the year to develop a set of risk assessment modules that are applicable to MUSB s plant operations. MUSB has undergone the audits based on these risk assessment modules in May 2013, with the findings indicating a low level of engineering risks and acceptable level of operations and management risks. Risk Monitoring and Reporting Risk monitoring within the Group is carried out throughout the year and is the responsibility of a dedicated ERM team. Every risk item that requires action is monitored and recorded in the Q-Radar, the Group s Risk register and Risk Scorecard Management System. The risks are analysed and reported to the Risk Management Committee and subsequently escalated to the Board of Directors. New Risk Assurance Process In June 2013, Malakoff introduced a new Risk Assurance process by requiring all risk owners to digitally sign-off their risk profiles through the Q-Radar online system. The digital assurance process will provide a transparent platform for all risk owners in every business unit group-wide to identify their risk exposure and ensure that relevant mitigation plans have been put in place. This will enable the management to have a comprehensive picture of the risk position of the Group at any given time. HEALTH, SAFETY AND ENVIRONMENT Malakoff aspires to have a Health, Safety and Environment ( HSE ) record it can proud of. In our journey towards excellence, Malakoff has always considered good HSE practices to be an integral part of its business objectives. We consider it a responsibility and indeed a moral obligation that we owe to our customers, employees, our constituencies and the public at large. The Group s commitment to achieve excellence in HSE performance is a cornerstone of the Group s Operational & Maintenance Excellence Framework to deliver sustainable best-inclass performance. Building a strong HSE programme, like buiding a good house, requires an investment of resources. Over the years, the Group has channeled considerable funds and energy for equipment and training to develop, implement, evaluate and provide follow-up to our many HSE programmes and activities. In the safety arena, empirical data suggest that our efforts are paying off. In FY 2013, work-related accidents resulted in 0.28 Lost time Injury ( LTI ) per million working hours. This is already better than the industry average but in our vision of an injury-free workplace, we adopted a zero tolerance policy toward safety management. For the year under review, of the 8,839,322 accumulated hours worked across the Group s plants, involving a total of 2,171 personnel, we achieved zero LTIs, an improvement of 100 percent, and one that exceeded the industry average, to say the least. All other safety indicators also recorded significant improvements throughout the year, pointing to the efficacy of the various interventions we have put in place.

71 069 LocationS Staff Number of workers In house Contractors Outage Contractors Total no. of workers Accumulated hours worked No. of LTIs LTI FR Tanjung Bin Power Plant ,088, Lumut Power Plant ,434, Prai Power Plant ,178, Malakoff Utilities Sdn Bhd , Total ,839, As the table indicates, Tanjung Bin was one of the high achievers, having accumulated more than four million man-hours without LTI as at the end of FY The Prai power plant also scored high on the safety list, with more than three million man-hours without LTI under its belt.

72 Performance Review by Acting Chief Executive Officer (continued) 070 Malakoff Corporation Berhad Annual Report 2013 We will continue to roll-out new initiatives and enhance existing ones aimed at integrating and strengthening existing systems and procedures.

73 071 Having reached the magical figure of zero, we are determined to maintain our safety record. We will continue to roll-out new initiatives and enhance existing ones aimed at integrating and strengthening existing systems and procedures. Simultaneously, we are focusing on engaging people, employees and contractors alike, at all levels and in all forms. APPRECIATION Dedicated employees are a vital component of any successful company and our management and staff must be commended for their high levels of dedication and professionalism. I truly believe that we have the best people the business has to offer and they embody the corporate core values setting us apart from our peers. During FY 2013, our people were called upon to do more than ever and they did not disappoint. Your efforts are truly appreciated. Malakoff today stands at the threshold of greater things to come. Let us all intensify our efforts as we strive towards attaining our common goals. I thank all of you. Habib Husin Acting Chief Executive Officer and Chief Operating Officer

74

75 Impacting our Environment

76 Corporate Responsibility 074 Malakoff Corporation Berhad Annual Report 2013

77 075 At Malakoff, we have always believed that the way to build a great enduring company is to strike a balance between profitability and social conscience. Thus, even as we grow, the one thing that has always remained constant is our strong commitment to fulfilling our corporate social responsibility ( CSR ). This is one of the main tenets enshrined in our Mission Statement to be respected as a corporate citizen. Malakoff s CSR efforts over the years have been recognised with a number of prestigious honours, including the Prime Minister s CSR Award for the Environment Category, Asia Responsible Entrepreneurship Award for Social Empowerment and the Johor State Government s Anugerah Organisasi Penyayang Johor that aims at promoting the concept of social responsibility and community volunteerism.

78 Corporate Responsibility (continued) 076 Malakoff Corporation Berhad Annual Report 2013 COMMUNITY DEVELOPMENT In community development, we aim to make a positive difference to the communities and the environment in which we operate, leaving behind a positive legacy long after our projects have been delivered. Nurturing Young Talents The Group s foremost commitment has always been to education, because we believe that education can empower people and improve lives. On the premise that quality education should be accessible to all, Malakoff has contributed RM200,000 to support 11 adopted schools located near the Prai, Lumut and Tanjung Bin Power Plants. The funds provided will assist the schools in upgrading its facilities, organise tutorial sessions and set up an incentive scheme for top performers in the public examinations. In November, Malakoff sponsored 140 primary school children from the 11 adopted schools on a three-day educational trip to Kuala Lumpur. At the tertiary level, we collaborated with AISEC Malaysia to provide funding to organise a series of nation-wide conference aimed at developing talents and improving leadership skills among its 1,000-strong members. The first conference was held on 29 June and was attended from 220 students from all over the country. Under the Malakoff-Uniten Talent Acceleration Programme ( MUTAP ), 24 high achievers from Universiti Tenaga Nasional (UNITEN) attended a six-month leadership training programme. The intention is to create a sustainable pipeline of talent to serve an ever growing industry. Outreach Programmes By engaging the various communities in which we operate, we are better able to understand their particular needs and respond appropriately through cash or in kind. Last year, we channeled funds to selected community-based organisations in Mukim Serkat and provided funding to build a mosque in Kampung Sungai Dinar. Other recipients of our corporate philanthropy programme in FY 2013 include the Tabung Wira Lahad Datu Media Prima, set up to honour the country s police and armed forces personnel involved in the Lahad Datu stand-off. Malakoff was also one of the main sponsors of the National Press Club s Charity Dinner in aid of the Journalist Welfare Fund, which was established in 2006 to assist dependents of journalists who died in the cause of duty.

79 077 The Spirit Of Giving Back Employee volunteerism has always been a key component of our CSR efforts. Management and staff are actively encouraged to get involved in welfare work and charity projects. Bearing testament that the volunteerism is alive and well throughout the Group, Malakoff employees volunteered their time and energy to participate in several gotong-royong projects that were organised throughout the year. Community Sports From time to time, Malakoff has initiated various sporting events to strengthen ties with members of the local community and the media. On 23 March, key media personnel were invited to a friendly game of golf to sustain the relationship already established. A Karnival Sukan Rakyat was organised at Mukim Serkat on 24 May bringing together Malakoff employees and almost 1,000 local residents to participate in a host of fun-filled family-oriented games and telematches. WORKPLACE DEVELOPMENT Executive Development and Technician Development Programmes We are collaborating with Talentcorp Malaysia and GRADUAN to hand-pick fresh new graduates for our Executive Development Programme ( EDP ) as well as our Technician Development Programme ( TDP ). Through the training effort, these fresh recruits acquire the necessary knowledge and skills whilst being exposed to the real work environment. For FY 2013, a total of 17 EDP and over 50 TDP promising trainees were selected to be further developed and eventually absorbed into our workforce. Performance and Recognition Performance counts at Malakoff and to achieve our objective to be a high-performance organisation, a corporate Key Performance Index is drawn up for each employee. The index allows high performers to be rewarded accordingly and is a real motivating factor pushing employees to achieve or even exceed targeted goals. We also benchmark our employee remuneration packages against prevailing market rates to ensure their competitiveness. Leadership Development & Succession Planning Finding the right-fit candidates for leadership positions is critical for Malakoff s next thrust forward. We continue to focus on growing our own talent pool through structured leadership and supervisory development programmes. To ensure a pipeline of suitable candidates to assume open positions, we have also formalised the Individual Development Plan ( IDP ). The plan enables supervisors and employees to jointly identify the specific knowledge and skills required for a particular, with the objective of bridging the competency gaps through the appropriate development interventions.

80 Corporate Responsibility (continued) 078 Malakoff Corporation Berhad Annual Report 2013 Training & Development As part of our commitment to develop Malakoff s talent pool, a budget of RM4.45 million was allocated in FY 2013 for the training and development of our human resources in three main focus areas human, technical and functional skills. The training calendar included a total of 126 soft skills programmes, a 30.0 percent increase from the previous year. Staff also benefitted from 114 public programmes that were conducted during the year, specifically tailored to enhance their knowledge, skills and work attitude. Employee Engagement Since 2011, focus groups have been formed in all Malakoff divisions and plants, their roles being to identify ways of improving employee engagement. Socially, the Buka Puasa and Hari Raya gatherings and the frequent sporting events have become much anticipated staples in our calendar of events. One of the most anticipated events in FY 2013 was the Employee Appreciation Retreat, a two-day event to recognise and celebrate employee loyalty and long tenure with the organisation. The academic achievements of top-scoring children of Malakoff employees were also lauded at the same event.

81 079 ENVIRONMENTAL PRESERVATION As part of our strategy towards sustainable development, we have been taking proactive steps to protect the environment and mitigate the carbon footprint of our operations. Wherever feasible, eco-elements are incorporated into every stage of our operations to promote low energy consumption, high efficiencies and innovative ways of reducing emissions and wastes known to have adverse impacts on the environment. At Tanjung Bin, for example, clean technology such as Electrostatic Precipitator ( ESP ) and Flue Gas Desulphurisation enables the plant to maintain boiler emission levels within the limit set by the Department of Environment. Similar technology has been deployed at the coal-fired boiler units at the Sultan Salahuddin Aziz Power Plant. All our heat recovery steam generation ( HRSG ) exhaust stacks have also been installed with continuous emissions monitoring systems, providing us with ongoing emission values for monitoring and operational purposes. All our plants have also earned certification to ISO 14001, the world s most recognised environmental management standard. Environment Management Planning, which brings together various standards and guidelines, has been implemented across all our plants to facilitate the setting of targets and interventions to minimise any adverse impact on the environment. Our green agenda includes safeguarding the environment through our rehabilitation and conservation projects. Among our flagship projects, the Malakoff Coral Rehabilitation Project off Pulau Mentinggi, Johor, is now into its third year. Saving the country s dwindling and endangered turtle population remains high on our agenda, and our priority is to educate members of the public on the country s unique natural treasures. We have also embarked on the third phase of Malakoff Mangrove Planting Project to rehabilitate the eroding ecosystem in the Seberang Prai area.

82 Corporate Responsibility (continued) 080 Malakoff Corporation Berhad Annual Report 2013 MARKETPLACE DEVELOPMENT Malakoff s corporate website, which can be accessed at allows customers, stakeholders and the public to seek product and corporate information and services. Organised into useful categories, the website is updated regularly site with fresh new content and timely information on the latest developments within Malakoff. Another important source of information is the Annual Report, which is available in hard copies and CD-ROMS to anyone who requests for it or it can also be accessed through the website. Quality control is a key aspect of fulfilling our responsibility to the market place. In this regard, our power plants have earned certification to quality management systems endorsed by the International Standard Organisation. Our research and development ( R&D ) efforts carried out by a wholly-owned subsidiary, Malakoff Research & Development adds another dimension to our contribution to the market. While focused on improving process efficiencies at our plants, our R&D efforts also support the Government s Green Agenda to develop green and renewable technology for the power generation industry. ACHIEVING MORE Although much has been accomplished, CSR is still a work-inprogress and there is always room for improvement. We need to work even harder towards embedding CSR in all facets of our operations so that it becomes part of our long-term strategic direction. Under our CSR platform, the Malakoff Community Partnerships, we recognise it is our responsibility to work closely with the communities wherever we operate, leaving our imprint as a good corporate citizen and earning the respect of all.

83 081

84 Corporate Events Highlights 082 Malakoff Corporation Berhad Annual Report January 2013 Friendly football match between Malakoff and Energy Commission Staff of Malakoff and Energy Commission battled it out in a friendly football match. 15 February 2013 Friendly futsal with the stakeholders Players from Malakoff and TNB, KWSP, Suruhanjaya Tenaga and MIDA during the tournament. 06 February 2013 Securities Commission Visit to Tg Bin Power Plant Guests from Securities Commission listening to a briefing at the power plant. 01 March 2013 Friendly bowling tournament with KeTTHA Bowlers from Malakoff and KeTTHA enjoyed themselves during the tournament. 08 February 2013 Friendly bowling tournament with TNB Winners of the Mens category from TNB with their prizes. 09 March 2013 Gotong Royong at Maahad Tarbiyah Islamiyah Al-Ansar Malakoff staff and residents of the school joined forces to make the gotong royong a success.

85 March 2013 Bowling tournament with Northern region authorities Bowlers from Malakoff and its northern stakeholders after the friendly tournament. 22 March 2013 OMMS contract signing ceremony between PT Merak Energi Indonesia and Teknik Janakuasa Sdn Bhd Representatives from Malakoff and PT Merak Energi during the signing ceremony. 17 March 2013 Malakoff 17km, 7km Penang Run Participants running through the scenic route at the Malakoff 17km, 7km Penang Run. 23 March 2013 Friendly Golf Tournament with Media Tan Sri Dato Wira Syed Abdul Jabbar having a light moment with the golfers before the game. 19 March 2013 Donation to Mukim Serkat Malakoff handed over RM91,700 donation to folks in Mukim Serkat. 25 March 2013 Donation for Tabung Wira Lahad Datu Media Prima RM300,000 donation was handed over for Tabung Wira Lahad Datu Media Prima.

86 Corporate Events Highlights (continued) 084 Malakoff Corporation Berhad Annual Report April 2013 Chairman s Visit to Malakoff s new office Tan Sri Dato Wira Syed Abdul Jabbar officiated Malakoff s new office premise in Block 4, Plaza Sentral. 18 May 2013 Malakoff University Duathlon Series 2 Universiti Malaya Winners of the Men s University category. 01 May 2013 Friendly football between LPP and KELAB Belia Sungai Batu Teams posed for a picture before the game May th Annual Malakoff Charity Ride Cyclists and representatives celebrated after completing the 3-day event. 11 May 2013 Malakoff University Duathlon Series 1 Universiti Pertahanan Nasional Malaysia Participants dashed at the starting line in UPNM. 31 May June 2013 Malakoff Sports Carnival & Long Term Service Awards Sports Carnival winners and recipients of Long Term Service Awards.

87 June 2013 Malakoff University Duathlon Series 3 Universiti Putra Malaysia Participants going head-to-head along the cycling route in UPM June 2013 Malakoff Coral Rehabilitation Program Divers worked hard putting up the artificial coral frames during the program. 12 June 2013 Program Melentur Buluh SK Segari The newly refurbished library was officiated at SK Segari. 01 July 2013 Projek Semaian Kasih PDK Sinar Bakti, Pontian Underprivileged children enjoyed playing games during the event June 2013 Karnival Sukan Rakyat Mukim Serkat Folks from Mukim Serkat having a good time at the carnival.

88 Corporate Events Highlights (continued) 086 Malakoff Corporation Berhad Annual Report July 2013 Malakoff Mangrove Planting Project Participants braved the swamp to participate in the mangrove planting activity. 23 July 2013 Majlis Berbuka Puasa Lumut Power Plant Donations were handed over to residents from charity homes. 06 July 2013 Cintai Hutan Warisan Kita Pulau Pangkor School children planted a tree as a sign of their commitment to the environment. 24 July 2013 Majlis Berbuka Puasa Tg Bin Power Plant Contributions were handed over to village head of Mukim Serkat. 26 August 2013 Malakoff Hari Raya Open House Corporate guests were entertained at Malakoff KLHQ open house.

89 September 2013 Malakoff Turtle Awareness Program Turtle equipped with satellite tracking device released to the sea. 21 October 2013 Launching of MUTAP 2013 Participants all fired up to be a part of MUTAP. 27 October 2013 Malakoff Powerman Asian Championships Winners of the Malakoff Powerman Asian Championships October 2013 Malakoff Adopted School Program Learning Beyond the Classroom Students visited Pusat Sains Negara during the educational trip.

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91 Financial statements 090 Directors Report 095 Statements of Financial Position 097 Statements of Profit or Loss and Other Comprehensive Income 099 Statements of Changes in Equity 104 Notes to the Consolidated Financial Statements 214 Statement by Directors 214 Statutory Declaration 215 Independent Auditors Report 102 Statements of Cash Flows

92 Directors Report for the year ended 31 December Malakoff Corporation Berhad Annual Report 2013 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 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 RM 000 Company RM 000 Profit for the year attributable to: Owners of the Company 171,600 3,408,851 Non-controlling interests 73, ,725 3,408,851 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) (ii) an interim single-tier dividend of approximately sen per ordinary share of RM1.00 each totalling RM48,207,996 in respect of the financial year ended 31 December 2013 on 20 May an interim single-tier preference dividend of RM1.00 per share totalling RM41,792,004 in respect of the financial year ended 31 December 2013 on 20 May (iii) an interim single-tier dividend of approximately sen per ordinary share of RM1.00 each totalling RM101,000,000 in respect of the financial year ended 31 December 2013 on 28 August The Directors do not recommend any final dividend for the financial year ended 31 December 2013.

93 091 Directors of the Company Directors who served since the date of the last report are: Director alternate Director Tan Sri Dato Wira Syed Abdul Jabbar bin Syed Hassan (Chairman) Dato Sri Che Khalib bin Mohamad Noh (appointed on 1 July 2013) Datuk Muhamad Noor bin Hamid Tan Ler Chin Ooi Teik Huat Tan Sri Dato Seri Alauddin bin Dato Md Sheriff Datuk Idris bin Das Murthy Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Zalman bin Ismail (appointed on 18 March 2013, resigned on 21 May 2013) Wan Kamaruzaman bin Wan Ahmad (appointed on 21 May 2013) zalman bin Ismail (appointed as alternate director to Wan Kamaruzaman bin Wan Ahmad on 21 May 2013) Kanad Virk Singh (appointed on 16 December 2013) Craig Robert Martin (appointed as alternate director to Kanad Virk Singh on 7 January 2014) Datuk Hj Hasni bin Harun (resigned on 30 June 2013) Lee Khuan Eoi (ceased as alternate director to Datuk Hj Hasni bin Harun on 30 June 2013) Dato Azian binti Mohd Noh (resigned on 18 March 2013) Andrew Rowan Ian Yee (resigned on 16 December 2013) Craig Robert Martin (ceased as alternate director to Andrew Rowan Ian Yee on 16 December 2013) Directors interests in shares None of the Directors holding office at 31 December 2013 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.

94 Directors Report (continued) 092 Malakoff Corporation Berhad Annual Report 2013 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) iii) iv) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or 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 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, except for those disclosed in the financial statements, the financial performance of the Group and of the Company for the financial year ended 31 December 2013 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.

95 093 Significant events The significant events during the year are as disclosed in Note 36 to the financial statements. This section has been left blank intentionally.

96 Directors Report (continued) 094 Malakoff Corporation Berhad Annual Report 2013 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:... Tan Sri Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman Dato Sri Che Khalib bin Mohamad Noh Director Kuala Lumpur Date: 21 February 2014

97 Statements of Financial Position for the year ended 31 December Group Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Note Restated Restated Restated Restated Non-current assets Property, plant and equipment 3 13,061,031 11,124,456 9,583,336 49,815 40,576 40,875 Intangible assets 4 5,071,359 5,498,521 5,352,002 Prepaid lease payments 5 74,675 79,021 83,364 Investment in subsidiaries 6 8,134,741 8,137,395 8,131,943 Investment in associates 7 1,338,437 1,403,579 1,145, , , ,800 Investment in an equity accounted joint venture 8 51,230 47,433 45,504 Other investments 9 1,027,419 1,130,594 Finance lease receivable 10 2,012,945 Derivative financial assets 20 80,241 Other receivables , ,083 Deferred tax assets , , ,035 2,555 5,884 3,726 Total non-current assets 22,514,369 18,903,663 16,745,823 9,185,911 10,210,074 10,305,938 Current assets Trade and other receivables 12 1,266,268 1,490,171 1,441, ,540 1,175, ,724 Inventories , , ,867 Current tax assets 310, , ,448 31,209 28,180 39,161 Cash and cash equivalents 14 3,541,737 5,153,970 3,102, , , ,857 Total current assets 5,597,897 7,348,500 5,172,672 1,055,334 1,584,811 1,739,742 Total assets 28,112,266 26,252,163 21,918,495 10,241,245 11,794,885 12,045,680 Equity Share capital , , , , , ,523 Share premium 15 3,575,837 3,575,837 3,575,837 3,575,837 3,575,837 3,575,837 Reserves ,811 1, (Accumulated losses)/ Retained profits (128,468) (111,501) (383,341) 3,596, , ,261 Equity attributable to owners of the Company 3,959,703 3,821,351 3,548,859 7,529,159 4,310,803 4,168,461 Non-controlling interests 223, , ,351 Total equity 4,183,125 4,161,648 3,850,210 7,529,159 4,310,803 4,168,461

98 Statements of Financial Position for the year ended 31 December 2013 (continued) 096 Malakoff Corporation Berhad Annual Report 2013 Group Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Note Restated Restated Restated Restated Non-current liabilities Loans and borrowings 16 16,611,760 14,221,261 10,815,072 1,800,000 6,441,439 7,049,284 Employee benefits 17 67,415 73,216 53,793 10,225 23,535 14,904 Deferred income 18 2,608,222 2,338,602 2,058,319 Deferred tax liabilities 11 2,645,445 2,750,242 2,698,730 15,899 14,854 Derivative financial liabilities 20 31, ,750 Total non-current liabilities 21,964,604 19,546,071 15,625,914 1,810,225 6,480,873 7,079,042 Current liabilities Trade and other payables ,116 1,435, , , , ,337 Current tax liabilities 4,214 16,718 10,442 Loans and borrowings ,625 1,041,897 1,442, , ,840 Derivative financial liabilities 20 34,319 Deferred income 18 60,263 50,503 41,117 Total current liabilities 1,964,537 2,544,444 2,442, ,861 1,003, ,177 Total liabilities 23,929,141 22,090,515 18,068,285 2,712,086 7,484,082 7,877,219 Total equity and liabilities 28,112,266 26,252,163 21,918,495 10,241,245 11,794,885 12,045,680 The notes on pages 104 to 213 are an integral part of these financial statements.

99 Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December Group Company Note RM 000 RM 000 RM 000 RM 000 Restated Restated Revenue 21 4,717,419 5,587,608 3,689, ,319 Cost of sales (3,503,949) (4,041,435) Gross profit 1,213,470 1,546,173 3,689, ,319 Other income 79, , Administrative expenses (265,262) (251,660) (126,547) (87,882) Other operating expenses (325,079) (159,157) Results from operating activities 702,211 1,237,479 3,563, ,827 Finance income , ,380 81, ,276 Finance costs 23 (840,318) (797,279) (228,820) (461,423) Net finance costs (679,266) (637,899) (147,080) (241,147) Share of profit of equity accounted associates and a joint venture, net of tax 71, ,513 Profit before tax 94, ,093 3,416, ,680 Income tax credit/(expense) ,511 (156,816) (7,273) (28,710) Profit for the year , ,277 3,408, ,970 Other comprehensive income/(expense), net of tax Items that will not be reclassified subsequently to profit or loss 25 Remeasurement of defined benefit liability 17 2,433 (13,104) 505 (7,258) Items that may be reclassified subsequently to profit or loss 25 Cash flow hedge 238,418 (5,107) Share of loss on hedging reserve of equity-accounted associates (57,230) Foreign currency translation differences for foreign operations (25,869) 5, ,

100 Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2013 (continued) 098 Malakoff Corporation Berhad Annual Report 2013 Group Company Note RM 000 RM 000 RM 000 RM 000 Restated Restated Other comprehensive income/(expense) for the year 157,752 (12,452) 505 (7,258) Total comprehensive income for the year 402, ,825 3,409, ,712 Profit attributable to: Owners of the Company 171, ,314 3,408, ,970 Non-controlling interests 73,125 79,963 Profit for the year 244, ,277 3,408, ,970 Total comprehensive income attributable to: Owners of the Company 329, ,862 3,409, ,712 Non-controlling interests 73,125 79,963 Total comprehensive income for the year 402, ,825 3,409, ,712 Earnings per ordinary share (RM) 28 Basic Diluted The notes on pages 104 to 213 are an integral part of these financial statements.

101 Statements of Changes in Equity for the year ended 31 December / Attributable to owners of the Company / / Non-distributable / Distributable Share capital Share premium Reserves Noncapital Accumulated controlling Total Ordinary Preference Ordinary Preference redemption Translation Hedging losses Total interests equity Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January 2012, as previously stated 351,344 4,179 3,162, , (379,791) 3,552, ,351 3,853,760 Impact of changes in accounting policies (Note 39) (3,550) (3,550) (3,550) At 1 January 2012, restated 351,344 4,179 3,162, , (383,341) 3,548, ,351 3,850,210 Remeasurement of defined benefit liability (13,104) (13,104) (13,104) Foreign currency translation differences for foreign operations 5,759 5,759 5,759 Cash flow hedge (5,107) (5,107) (5,107) Other comprehensive income/ (expense) for the year 5,759 (5,107) (13,104) (12,452) (12,452) Profit for the year 469, ,314 79, ,277 Comprehensive income for the year 5,759 (5,107) 456, ,862 79, ,825 Dividends to owners of the Company (184,370) (184,370) (184,370) Dividends to non-controlling interests (41,017) (41,017) Total distribution to owners (184,370) (184,370) (41,017) (225,387) At 31 December 2012, restated 351,344 4,179 3,162, , ,759 (5,107) (111,501) 3,821, ,297 4,161,648

102 Statements of Changes in Equity for the year ended 31 December 2013 (continued) 100 / Attributable to owners of the Company / / Non-distributable / Distributable Share capital Share premium Reserves Noncapital Accumulated controlling Total Ordinary Preference Ordinary Preference redemption Translation Hedging losses Total interests equity Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January 2013, restated 351,344 4,179 3,162, , ,759 (5,107) (111,501) 3,821, ,297 4,161,648 Remeasurement of defined benefit liability 2,433 2,433 2,433 Foreign currency translation differences for foreign operations (25,869) (25,869) (25,869) Cash flow hedge 238, , ,418 Share of loss in reserves attributable to associates (57,230) (57,230) (57,230) Other comprehensive (expense)/ income for the year (25,869) 181,188 2, , ,752 Profit for the year 171, ,600 73, ,725 Comprehensive income for the year (25,869) 181, , ,352 73, ,477 Dividends to owners of the Company (191,000) (191,000) (191,000) Dividends to non-controlling interests (190,000) (190,000) Total distribution to owners (191,000) (191,000) (190,000) (381,000) At 31 December ,344 4,179 3,162, , (20,110) 176,081 (128,468) 3,959, ,422 4,183,125 The notes on pages 104 to 213 are an integral part of these financial statements.

103 101 / Attributable to owners of the Company / / Non-distributable / Distributable Share capital Share premium Reserves capital Retained ordinary Preference Ordinary Preference redemption profits Total Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January 2012, as previously stated 351,344 4,179 3,162, , ,086 4,166,286 Impact of changes in accounting policies (Note 39) 2,175 2,175 At 1 January 2012, restated 351,344 4,179 3,162, , ,261 4,168,461 Remeasurement of defined benefit liability (7,258) (7,258) Other comprehensive expense for the year (7,258) (7,258) Profit for the year 333, ,970 Comprehensive income for the year 326, ,712 Dividends to the owners of the Company (184,370) (184,370) At 31 December 2012/1 January 2013, restated 351,344 4,179 3,162, , ,603 4,310,803 Remeasurement of defined benefit liability Other comprehensive income for the year Profit for the year 3,408,851 3,408,851 Comprehensive income for the year 3,409,356 3,409,356 Dividends to the owners of the Company (191,000) (191,000) At 31 December ,344 4,179 3,162, , ,596,959 7,529,159 The notes on pages 104 to 213 are an integral part of these financial statements.

104 Statements of Cash Flows 31 December Malakoff Corporation Berhad Annual Report 2013 Group Company RM 000 RM 000 RM 000 RM 000 Restated Restated Cash flows from operating activities Profit before tax 94, ,093 3,416, ,680 Adjustments for: Amortisation of prepaid lease payments 4,346 4,343 Amortisation of intangible assets 469, ,093 Amortisation of transaction costs of hedging instruments 12,144 7,327 Depreciation of property, plant and equipment 471, ,632 4,702 2,790 Finance costs 840, , , ,423 Gain on disposal of investment in a subsidiary (26,700) Impairment loss on trade receivables 177,273 16,105 Interest income (161,052) (159,380) (81,740) (220,276) Net fair value gain on derivatives (44,041) (912) Property, plant and equipment written off 127,126 1,774 Provision for retirement benefits 13,260 8,760 4,478 2,211 Reversal of impairment loss on trade receivables (6,079) (10,307) Share of profit of equity-accounted associates and a joint venture entity, net of tax (71,269) (106,513) Operating profit before changes in working capital 1,927,343 2,113,594 3,572, ,828 Inventories 14,723 (9,374) Trade and other receivables 7,311 (133,820) 321,513 (330,214) Trade and other payables (422,536) 11, ,380 (75,431) Deferred income 279, ,669 Employee benefits (16,628) (2,441) (17,283) (838) Cash generated from operation 1,789,593 2,268,848 4,444, ,345 Income taxes paid (152,989) (226,404) (22,873) (18,842) Net cash from operating activities 1,636,604 2,042,444 4,422, ,503 Cash flows from investing activities Acquisition of assets and liabilities of Hicom Power Sdn. Bhd., net of cash and cash equivalents acquired (76,665) Acquisition of property, plant and equipment (2,534,967) (1,978,304) (13,941) (2,491) Acquisition of subsidiaries, net of cash and cash equivalents acquired (360,151) Dividends received from associates 54,368 62,904 Decrease in deposits pledged 16,323 16,323 Interest received 146,440 99,458 46, ,659 Increase in investment in subsidiaries (5,771) Acquisition of associates (2,472) (347,563) Proceeds from redemption of unsecured loan stocks 44,735 1,027, ,494 Proceeds from disposal of a subsidiary 74,568 Redemption of unsecured loan stocks (19,543) (59,219) Net cash (used in)/from investing activities (2,716,325) (2,163,763) 1,059, ,214

105 103 Group Company RM 000 RM 000 RM 000 RM 000 Restated Restated Cash flows from financing activities Dividends paid to the owners of the Company (191,000) (184,370) (191,000) (184,370) Dividends paid to non-controlling interests (190,000) (41,017) Interest paid (923,463) (644,269) (195,893) (488,805) Repayment of borrowings (11,289,771) (6,284,000) (5,341,439) (2,100,000) Proceeds from borrowings 12,061,722 9,343,174 1,800,000 Net cash (used in)/from financing activities (532,512) 2,189,518 (5,728,332) (973,175) Net (decrease)/increase in cash and cash equivalents (1,612,233) 2,068,199 (246,491) (463,458) Cash and cash equivalents at beginning of the year 5,153,970 3,085, , ,534 Cash and cash equivalents at end of the year 3,541,737 5,153, , ,076 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 RM 000 RM 000 RM 000 RM 000 Deposits with licensed banks and other licensed corporations 3,306,899 5,066, , ,956 Cash and bank balances 234,838 87,640 5,989 3,120 3,541,737 5,153, , ,076 The notes on pages 104 to 213 are an integral part of these financial statements.

106 Notes to the Consolidated Financial Statements 104 Malakoff Corporation Berhad Annual Report 2013 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 Level 13, Block 4 Plaza Sentral Jalan Stesen Sentral Kuala Lumpur registered office Ground Floor, Wisma Budiman Persiaran Raja Chulan Kuala Lumpur This consolidated financial statements of the Company as at and for the financial year ended 31 December 2013 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 21 February 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 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 January 2014 Amendments to MFRS 10, Consolidated Financial Statements: Investment Entities Amendments to MFRS 12, Disclosure of Interests in Other Entities: Investment Entities Amendments to MFRS 127, Separate Financial Statements (2011): Investment Entities Amendments to MFRS 132, Financial Instruments: Presentation Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 136, Impairment of Assets Recoverable Amount Disclosures for Non-Financial Assets Amendments to MFRS 139, Financial Instruments: Recognition and Measurement Novation of Derivatives and Continuation of Hedge Accounting IC Interpretation 21, Levies

107 Basis of preparation (continued) (a) Statement of compliance (continued) 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 Cycle) Amendments to MFRS 2, Share-based Payment (Annual Improvements Cycle) Amendments to MFRS 3, Business Combinations (Annual Improvements Cycle and Cycle) Amendments to MFRS 8, Operating Segments (Annual Improvements Cycle) Amendments to MFRS 13, Fair Value Measurement (Annual Improvements Cycle and Cycle) Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements Cycle) Amendments to MFRS 119, Employee Benefits Defined Benefit Plans: Employee Contributions Amendments to MFRS 124, Related Party Disclosures (Annual Improvements Cycle) Amendments to MFRS 138, Intangible Assets (Annual Improvements Cycle) Amendments to MFRS 140, Investment Properties (Annual Improvements Cycle) MFRSs, Interpretations and amendments effective for a date yet to be confirmed MFRS 9, Financial Instruments (2009) MFRS 9, Financial Instruments (2010) MFRS 9, Financial Instruments Hedge Accounting and Amendments to MFRS 9, MFRS 7 and MFRS 139 Amendments to MFRS 7, Financial Instruments: Disclosures Mandatory Effective Date of MFRS 9 and Transition Disclosures The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations: from the annual period beginning on 1 January 2014 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2014, except for IC Interpretation 21 which is not applicable to the Group and the Company. from the annual period beginning on 1 January 2015 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 July 2014, except for amendments to MFRS 2 and MFRS 140 which are not applicable to the Group and the Company. The initial application of the abovementioned standards, amendments or interpretations are not expected to have any material impacts to the financial statements of the Group and the Company except as mentioned below: (i) 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.

108 Notes to the Consolidated Financial Statements (continued) 106 Malakoff Corporation Berhad Annual Report Basis of preparation (continued) (a) Statement of compliance (continued) (ii) MFRS 119, Employee benefits The amendments to MFRS 119 introduces a practical expedient for employee or third party contributions set out in the formal terms of the plan that are linked to service and independent of the number of years of service. The Group plans to apply the amendments to MFRS 119 retrospective from the annual period beginning on 1 January 2015, and is currently assessing the financial impact that may arise from the initial application of the amendments. (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 judgments The preparation of the financial statements in conformity with MFRSs requires management to make judgments, 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 estimate are revised and in any future periods affected. There are no significant areas of estimation uncertainty and critical judgments 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 on-going basis, whether a forecast transaction is both highly probable and whether the hedge is effective. This requires both subjective and objective measures of determination.

109 Basis of preparation (continued) (d) Use of estimates and judgments (continued) (iii) Fair value of derivatives In the previous financial years, the Group presented its financial statements in accordance with the requirements of MFRS 132 Financial Instruments: Presentation and Disclosure and MFRS 139 Financial Instruments: Recognition and Measurement. In accordance with MFRS 139, the Group recorded its derivative contracts on its balance sheet 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. From 1 January 2013, the Group adopted MFRS 13, Fair Value Measurement. The details of the accounting policies are shown in Note 2(t). (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 discounted cash flow method with the assumptions as shown in Note 2(d)(iv). (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 2013, the total allowance for impairment loss was approximately RM177,273,000 (2012: RM16,105,000). (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.

110 Notes to the Consolidated Financial Statements (continued) 108 Malakoff Corporation Berhad Annual Report 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 adopted MFRS 10, Consolidated Financial Statements in the current financial year. This resulted in changes to the following policies: Control exists when the Group 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. In the previous financial years, control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Potential voting rights are considered when assessing control only when such rights are substantive. In the previous financial years, potential voting rights are considered when assessing control when such rights are presently exercisable. The Group 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. In the previous financial years, the Group did not consider de facto power in its assessment of control. The change in accounting policy has been made retrospectively and in accordance with the transitional provision of MFRS 10. The adoption of MFRS 10 has no significant impact to the financial statements of the Group. 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 investments 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 equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

111 Significant accounting policies (continued) (a) Basis of consolidation (continued) (ii) Business combinations (continued) 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. (iii) Acquisitions of non-controlling interests The Group treats 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. 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.

112 Notes to the Consolidated Financial Statements (continued) 110 Malakoff Corporation Berhad Annual Report Significant accounting policies (continued) (a) Basis of consolidation (continued) (v) Associatess (continued) When the Group s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. 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 it is classified as held for sale or distribution. The cost of investments includes transaction cost. (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. The Group adopted MFRS 11, Joint Arrangements in the current financial year. As a result, joint arrangements are classified and accounted for as follows: A joint arrangement is classified as joint operation when the Group or the Company has 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. In the previous financial years, joint arrangements were classified and accounted for as follows: For jointly controlled entity, the Group accounted for its interest using the equity method. For jointly controlled asset or jointly controlled operation, the Group accounted for each its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the other investors. The change in accounting policy has been made retrospectively and in accordance with the transitional provision of MFRS 11. The adoption of MFRS 11 has no significant impact to the financial statements of the Group.

113 Significant accounting policies (continued) (a) Basis of consolidation (continued) (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 statements 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 the 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 date 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.

114 Notes to the Consolidated Financial Statements (continued) 112 Malakoff Corporation Berhad Annual Report Significant accounting policies (continued) (b) Foreign currency (continued) (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 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 foreign currency translation reserve ( 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. In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely 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 FCTR in equity. (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 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 are subject to review for impairment (see Note 2(i)).

115 Significant accounting policies (continued) (c) Financial instruments (continued) (ii) Financial instrument categories and subsequent measurement (continued) Financial liabilities All financial liabilities are subsequently measured at amortised cost using the effective interest method. 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 value 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 and 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. (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 the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. 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 or 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.)

116 Notes to the Consolidated Financial Statements (continued) 114 Malakoff Corporation Berhad Annual Report Significant accounting policies (continued) (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. Costs also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign 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. The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement costs when appropriate. 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. (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.

117 Significant accounting policies (continued) (d) Property, plant and equipment (continued) (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 assets, 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. 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 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. (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 discounted cash flow method ( DCF ). The discounted cash flows were derived using the following critical assumptions:

118 Notes to the Consolidated Financial Statements (continued) 116 Malakoff Corporation Berhad Annual Report Significant accounting policies (continued) (d) Property, plant and equipment (continued) (iv) Residual value (continued) (1) extension of five to ten years of the PPAs at the end of the initial concession period, in view of: (i) (ii) limited new power plants being constructed; increase in demand for power; and (iii) Tenaga Nasional Berhad ( TNB ) s continued reliance on Independent Power Producers ( IPPs ). The existing PPAs expire as follows: Residual Residual Year of value value PPA Owner expiry RM million at RM million at Segari Energy Ventures Sdn. Bhd. ( SEV ) GB3 Sdn. Bhd Prai Power Sdn. Bhd Tanjung Bin Sdn. Bhd ,924 1,924 3,123 3,123 (e) Leased assets (i) (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 75% to reflect the future demand for power by the industry; and (4) the pre-tax discount rate of 10% per annum. 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.

119 Significant accounting policies (continued) (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 in 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, 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. (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. The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

120 Notes to the Consolidated Financial Statements (continued) 118 Malakoff Corporation Berhad Annual Report Significant accounting policies (continued) (f) Intangible assets (continued) (iii) Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific assets to which it relates. All other expenditure, including expenditure on internally generated goodwill, is recognised in profit or loss as incurred. (iv) Amortisation Goodwill are not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired. Other intangible assets are amortised from the date that they are available for use. Amortisation of intangible asset is recognised in profit or loss based on the estimated net electrical output and fixed operation and maintenance income over the finite useful lives of the intangible assets. Amortisation method 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 measured based on weighted average cost formula, and includes expenditure incurred in acquiring the inventories, production or conversion cost and other cost 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 completion and the estimated costs necessary to make the sale. In the current financial year, the Group adopted the amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements Cycle) and classified spare parts as inventories unless the item of spare part is held for own use and expected to be used during more than one period in which it is classified as property, plant and equipment. In the previous financial years, all spare parts were classified as inventories. Upon adoption of amendments to MFRS 116, the Group reclassified retrospectively emergency spare parts previously accounted for under inventories to C-inspection under property, plant and equipment. The effects from the adoption of the amendments to MFRS 116 are disclosed in Note 39. (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.

121 Significant accounting policies (continued) (i) Impairment (i) Financial assets All financial assets (except for financial assets categorised as investments in subsidiaries, investments in associates and investment in an equity accounted 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 reposting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to 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. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

122 Notes to the Consolidated Financial Statements (continued) 120 Malakoff Corporation Berhad Annual Report Significant accounting policies (continued) (i) Impairment (continued) (ii) Other assets (continued) 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 amount 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 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. (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.

123 Significant accounting policies (continued) (k) Employee benefits (continued) (iii) Defined benefit plans As a result of adopting MFRS 119 (2011), Employee Benefits, the Group has changed its accounting policy in respect of the basis for determining the income or expense relating to its post employment 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 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. Previously, the Group and the Company determined interest income on plan assets based on their long-term rate of expected return. 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. The change in accounting policy has been made retrospectively. The effects from the adoption of MFRS 119 (2011) are disclosed in Note 39. (l) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

124 Notes to the Consolidated Financial Statements (continued) 122 Malakoff Corporation Berhad Annual Report Significant accounting policies (continued) (m) 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. (n) 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. (o) 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 proft or loss and other comprehensive income.

125 Significant accounting policies (continued) (p) 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. (q) 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 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.

126 Notes to the Consolidated Financial Statements (continued) 124 Malakoff Corporation Berhad Annual Report Significant accounting policies (continued) (r) 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. (s) (t) 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. All operating segment s operating 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. Fair value measurement From 1 January 2013, the Group adopted MFRS 13, Fair Value Measurement which prescribed that fair value of an asset or a liability, except for share-based payment and lease transactions if any, 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. In accordance with the transitional provision of MFRS 13, the Group applied the new fair value measurement guidance prospectively, and has not provided any comparative fair value information for new disclosures. The adoption of MFRS 13 has not significantly affected the measurements of the Group s assets or liabilities other than the additional disclosures.

127 3. Property, plant and equipment office Asset C- equipment Freehold Leasehold under Power Inspection Plant and and Motor land land Buildings construction plants costs machinery furniture vehicles Computers Total Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Cost At 1 January 2012, restated 21,516 13,182 27,789 27,514 12,100, ,560 52,170 76,227 6,723 60,853 13,093,581 Additions 2 1,834,163 13,795 85,506 33,762 5,492 1,077 4,729 1,978,526 Write-off (1,774) (1,774) Reclassification (22,408) 22,408 At 31 December 2012/ 1 January 2013, restated 21,516 13,182 27,791 1,837,495 12,113, , ,340 81,719 7,800 65,582 15,070,333 Additions 2 1,994,384* 24, ,309 5,270 27,191 2,651 10,561 2,534,967 Write-off (135,312) (145,113) (90) (4) (280,519) Reclassification (1,463) 1,463 At 31 December ,516 13,182 27,793 3,830,416 12,003,129 1,118, , ,283 10,451 76,139 17,324,781 Accumulated depreciation At 1 January ,161 13,324 2,966, ,092 18,381 57,047 5,253 47,079 3,510,245 Depreciation for the year 136 1, ,312 66,569 2,704 9, , ,632 At 31 December 2012/1 January ,297 14,662 3,314, ,661 21,085 66,395 5,874 54,683 3,945,877 Depreciation for the year 135 1, , ,153 11,631 9,355 1,058 9, ,266 Write-off (25,925) (127,424) (40) (4) (153,393) At 31 December ,432 16,000 3,625, ,390 32,716 75,710 6,932 63,814 4,263,750 *Includes interest capitalised of RM173,337,000 (2012: RM96,355,000). 125

128 Notes to the Consolidated Financial Statements (continued) Property, plant and equipment (continued) office Asset C- equipment Freehold Leasehold under Power Inspection Plant and and Motor land land Buildings construction plants costs machinery furniture vehicles Computers Total Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Carrying amount At 31 December 2012/ 1 January 2013, restated 21,516 10,885 13,129 1,837,495 8,799, ,405 87,255 15,324 1,926 10,899 11,124,456 At 31 December ,516 10,750 11,793 3,830,416 8,377, ,872 80,894 34,573 3,519 12,325 13,061,031 office Assets equipment Freehold Leasehold under Plant and and Motor land land Buildings construction machinery furniture vehicles Computers Total Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Cost At 1 January ,516 5,515 17, ,014 1,825 9,752 63,831 Additions 1, ,491 At 31 December 2012/1 January ,516 5,515 17,055 1, ,098 1,825 10,696 66,322 Additions 11, ,066 13,941 Reclassification (1,463) 1,463 At 31 December ,516 5,515 17, ,207 2,054 12,762 80,263

129 Property, plant and equipment (continued) office Assets equipment Freehold Leasehold under Plant and and Motor land land Buildings construction machinery furniture vehicles Computers Total Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Accumulated depreciation At 1 January , ,344 1,045 8,395 22,956 Depreciation for the year ,790 At 31 December 2012/1 January , ,255 1,256 9,205 25,746 Depreciation for the year , ,160 4,702 At 31 December , ,712 1,483 10,365 30,448 Carrying amount At 31 December 2012/1 January ,516 4,632 9,062 1,463 1, ,491 40,576 At 31 December ,516 4,574 8,262 12, ,397 49,815 Securities At 31 December 2013, certain of the Group s properties with a carrying amount of RM12,261,679,000 (31 December 2012: RM10,664,800,000) were charged as securities for debt securities issued by the subsidiaries (see Note 16 loans and borrowings).

130 Notes to the Consolidated Financial Statements (continued) 128 Malakoff Corporation Berhad Annual Report Intangible assets Subsidiaries Associates Interest over Interest over Power Purchase Power Purchase and Operation and Power and and Maintenance water Purchase Goodwill Agreements Total Goodwill Agreements Total Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Cost At 1 January ,232 7,103,796 7,112, , ,970 Addition 548, , ,583 81, ,686 At 31 December ,232 7,651,870 7,660, , ,073 1,204,656 Effect of movements in exchange rate 19,182 19,182 At 31 December ,232 7,651,870 7,660, , ,073 1,223,838 Amortisation and impairment loss At 1 January ,759,167 1,760, , ,264 Amortisation for the year 401, ,555 38,538 38,538 At 31 December 2012/1 January ,160,722 2,161, , ,802 Amortisation for the year 427, ,162 42,675 42,675 At 31 December ,587,884 2,588, , ,477 Carrying amount At 1 January ,373 5,344,629 5,352, , ,706 At 31 December 2012/1 January ,373 5,491,148 5,498, , , ,854 At 31 December ,373 5,063,986 5,071, , , ,361

131 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 Group s revenue is also from the operations and maintenance services, which is governed by the Operation and Maintenance Agreements ( OMAs ) held by the operations and maintenance subsidiaries. The Group has determined the expected cash flows to be generated from the PPAs (together with the IPP Licences), PWPA and the OMAs as Intangible Assets. The PPAs, and the IPP Licences are recognised as a single asset in accordance with MFRS 138 Intangible Assets in view that both are required for the generation and sale of electricity energy and generating capacity in Malaysia. In 2012, 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 ); PWPA is held by Hidd Power Company B.S.C ( HPC ), an associate company; whilst four (4) OMAs held by the Group s operations and maintenance subsidiaries namely Teknik Janakuasa Sdn. Bhd. ( TJSB ), Natural Analysis Sdn. Bhd. ( NASB ) and Tanjung Bin O&M Berhad ( TBOM ). In 2013, the OMAs held by TJSB and NASB were transferred to Malakoff Power Berhad ( MPB ), a wholly owned subsidiary of the Company with the completion of the Group and the Company s internal reorganisation exercise on 18 January 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.

132 Notes to the Consolidated Financial Statements (continued) 130 Malakoff Corporation Berhad Annual Report Intangible assets (continued) Measurement (continued) 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 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 45% 75% of DC :-Water 91% 99% of DC Net Output :-Electrical (million kw/hour) 2,017 11,197 :-Water (thousand m³) 67,370 73,771 Capacity Rate :-Power (RM/kW/month) :-Water (RM/m³/month) 1,222 1,339 Fixed Operating Rate under Revenue (RM/kW/month) Variable Operating Rate under Revenue :-Power (RM/kW/month) :-Water (RM/m³/month) Fuel price (RM/mmBtu) CAC 17.77% 28.00% of EBITDA 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 9% to 10% (2012: 9% to 10%) per annum. Amortisation The Intangible Assets with finite useful lives are amortised based on the Net Electrical Output generated from the PPA companies and Fixed Operation and Maintenance income generated from the OMA companies as management is of the view that this basis best represents the pattern in which the Intangible Assets future economic benefits are expected to be consumed by the Group. The amortisation is recognised within the cost of sales and other operating expenses respectively in statement of profit or loss and other comprehensive income.

133 Intangible assets (continued) 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: Allocated Impairment loss for Carrying amount amount the year Goodwill RM 000 RM 000 RM 000 RM 000 PPA Companies GB PPSB SEV 1,565 1,565 1,565 TBP 3,159 3,159 3,159 5,493 5,493 5,493 PWPA Company HPC 284, , ,583 OMA Companies TJSB (i) 1,577 NASB (i) 303 MPB (i) 1,880 1,880 1,880 1,880 1,880 Total goodwill 292, , ,956 Less: Goodwill in an associate (284,765) (284,765) (265,583) 7,373 7,373 7,373

134 Notes to the Consolidated Financial Statements (continued) 132 Malakoff Corporation Berhad Annual Report Intangible assets (continued) Impairment testing for cash generating units ( CGUs ) containing goodwill and interest over Power Purchase, Power and Water Purchase and Operation and Maintenance Agreements (continued) Interest over PPAs, PWPA and OMAs PPA Companies Allocated Impairment loss Carrying amount amount RM 000 RM 000 RM 000 RM 000 RM 000 GB3 230, , ,374 PPSB 234, , ,037 SEV 600, , ,441 TBP 2,357,241 2,357,241 2,486,035 KEV 149, , ,513 PWPA Company 3,572,591 3,572,591 3,928,400 HPC 72,518 72,518 77,758 OMA Companies TJSB (i) 1,171,805 NASB (i) 31,587 MPB (i) 1,121,061 1,121,061 TBOM 519, , ,869 1,640,473 1,640,473 1,749,261 Total interest over PPAs, PWPA and OMAs 5,285,582 5,285,582 5,755,419 Less: Intangible assets in associates (221,596) (221,596) (264,271) 5,063,986 5,063,986 5,491,148 (i) On 18 January 2013, the Group and the Company completed the internal reorganisation exercise which had resulted the creation of a Malaysia centric operation and maintenance ( O&M ) entity, MPB through acquisition of the O&M business of TJSB and NASB. Consequently, the intangible assets from the interest over the OMAs held by TJSB and NASB were transferred to MPB. The internal reorganisation exercise did not entail any acquisition of new companies or disposal of any existing companies within the Group. As such, the Company s effective interest on its subsidiaries and associates remain unchanged.

135 Intangible assets (continued) Impairment testing for cash generating units ( CGUs ) containing goodwill and interest over Power Purchase, Power and Water Purchase and Operation and Maintenance Agreements (continued) The impairment test of the above CGUs was based on the expected cash flows 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 is calculated by weighing the required returns on debt and equity in proportion to their assumed percentages. The applied pre-tax discount rate was 10% per annum. 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 concession period. It is assumed that HPC will obtain an approval for 10 year extension to its PWPA upon expiry. Remaining useful life of PPAs/PWPA/OMAs 9 24 years (in accordance with the 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% 99% of DC :-Water 95% 98% of DC Net Output :-Electrical (million kw/hour) ,864 :-Water (thousand m³) 67,370 73,238 Capacity Rate :-Power (RM/kW/month) :-Water (RM/m³/month) 1,117 1,241 Fixed Operating Rate under Revenue Power (RM/kW/month) Variable Operating Rate under Revenue :-Power (RM/kW/month) :-Water (RM/m³/month) Fuel price (RM/mmBtu) Variable Operating Rate under Cost Power (RM/kW/month) Fixed Operating Rate under Cost Power (RM/kW/month) As at 31 December 2013 and 31 December 2012, the estimated recoverable amount of all the CGUs exceeds the carrying amount of the goodwill and interest on PPAs/PWPA/OMAs.

136 Notes to the Consolidated Financial Statements (continued) 134 Malakoff Corporation Berhad Annual Report Prepaid lease payments Leasehold land Group unexpired period less than 50 years RM 000 Cost At 1 January 2012/31 December 2012/ 1 January 2013/31 December ,326 Amortisation 1 January ,962 Amortisation for the year 4,343 At 31 December 2012/1 January ,305 Amortisation for the year 4,346 At 31 December ,651 Carrying amounts At 1 January ,364 At 31 December 2012/1 January ,021 At 31 December , Investment in subsidiaries Company RM 000 RM 000 Unquoted: At beginning of the year 8,137,395 8,131,943 Addition 5,771 Fair value adjustment (2,654) (319) At end of the year 8,134,741 8,137,395

137 Investment in subsidiaries (continued) Details of subsidiaries are as follows: E effective Principal place ownership of business/ interest and C country of voting interest (%) Name of subsidiary incorporation Principal activities DIRECT SUBSIDIARY 1. Segari Energy Ventures Sdn. Bhd. Malaysia Design, construction, 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 Design, construction, operation and maintenance of a combined cycle power plant, generation and sale of electrical energy and generating capacity of the power plant 3. Prai Power Sdn. Bhd. Malaysia Design, construction, operation and maintenance of a combined cycle power plant, generation and sale of electrical energy and generating capacity of the power plant 4. Tanjung Bin Power Sdn. Bhd. Malaysia Design, engineering, 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 Investment holding 6. Tanjung Bin Energy Sdn. Bhd. Malaysia Design, engineering, procurement, construction, installation and commissioning, testing, operation and maintenance of a 1,000 MW coal fired electricity generating facility 7. Teknik Janakuasa Sdn. Bhd. Malaysia Investment holding company and provision of operations and maintenance and any related services 8. Malakoff Utilities Sdn. Bhd. Malaysia Build, own and operate an electricity distribution system and a centralised chilled water plant system 9. Malakoff Engineering Sdn. Bhd. Malaysia Provision of engineering and project management services

138 Notes to the Consolidated Financial Statements (continued) 136 Malakoff Corporation Berhad Annual Report Investment in subsidiaries (continued) Details of subsidiaries are as follows: (continued) E effective Principal place ownership of business/ interest and C country of voting interest (%) Name of subsidiary incorporation Principal activities DIRECT SUBSIDIARY (continued) 10. Spring Assets Limited british Virgin Dormant Islands 11. Malakoff Capital (L) Limited Malaysia Dormant 12. Malakoff International Limited Cayman offshore Investment holding Islands 13. Tuah Utama Sdn. Bhd. Malaysia Investment holding 14. Desa Kilat Sdn. Bhd. Malaysia land reclamation, development and/ or sale of reclaimed land 15. Malakoff Power Berhad Malaysia Operations and maintenance of power plants 16. Malakoff R&D Sdn. Bhd. Malaysia 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 Berhad Malaysia Administer and manage the development of a 1,000 MW coal fired electricity generating facility Held through Teknik Janakuasa Sdn. Bhd. 18. Natural Analysis Sdn. Bhd. Malaysia Dormant 19. TJSB Services Sdn. Bhd. Malaysia 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 Offshore Investment holding Islands 21. TJSB Global Sdn. Bhd. Malaysia Investment holding 22. PT. Teknik Janakuasa# Indonesia 95 Provision of operations and maintenance services to power plant and/or other utility plants

139 Investment in subsidiaries (continued) Details of subsidiaries are as follows: (continued) E effective Principal place ownership of business/ interest and C country of voting interest (%) Name of subsidiary incorporation Principal activities INDIRECT SUBSIDIARY (continued) Held through TJSB International Limited 23. TJSB International (Shoaiba) Limited British Virgin Offshore Investment holding Islands 24. TJSB Middle East Limited British Virgin operation and maintenance of Islands power plant Held through Malakoff Engineering Sdn. Bhd. 25. MESB Project Management Sdn. Bhd. Malaysia Dormant Held through Malakoff International Limited 26. Malakoff Gulf Limited British Virgin Offshore Investment holding Islands 27. Malakoff Technical (Dhofar) Limited British Virgin Offshore Investment holding Islands 28. Malakoff AlDjazair Desal Sdn. Bhd. Malaysia Investment holding 29. Malakoff Oman Desalination British Virgin Company Limited Islands Offshore Investment holding 30. Malakoff Hidd Holding Company Limited Guernsey Asset, property, investment, intellectual property and other holding companies 31. Pacific Goldtree Sdn. Bhd.# Malaysia 100 Investment holding Held through Malakoff AlDjazair Desal Sdn. Bhd. 32. Tlemcen Desalination Investment France Offshore Investment holding Company SAS* Held through Malakoff Hidd Holding Company Limited 33. Malakoff Summit Hidd Holding Guernsey Asset, property, investment, intellectual Company Limited property and other holding companies Held through Malakoff Power Berhad 34. Tanjung Bin O&M Berhad Malaysia Operation and maintenance of power plant

140 Notes to the Consolidated Financial Statements (continued) 138 Malakoff Corporation Berhad Annual Report Investment in subsidiaries (continued) Details of subsidiaries are as follows: (continued) E effective Principal place ownership of business/ interest and C country of voting interest (%) Name of subsidiary incorporation Principal activities INDIRECT SUBSIDIARY (continued) Held through Pacific Goldtree Sdn. Bhd. 35. Skyfirst Power Sdn. Bhd.# Malaysia 100 Investment holding Held through Skyfirst Power Sdn. Bhd. 36. Malakoff Australia Pty. Ltd.#* Australia 100 Investment holding 37. Wind Macarthur Holdings (T) Pty. Limited#* Australia 100 Investment holding Held through Malakoff Australia Pty. Ltd. 38. Malakoff Holdings Pty. Ltd.#* Australia 100 Investment holding Held through Malakoff Holdings Pty. Ltd. 39. Malakoff Wind Macarthur Holdings Australia 100 Investment holding Pty. Ltd. (formerly known as Meridian Wind Macarthur Holdings Pty. Ltd.)#* Held through Malakoff Wind Macarthur Holdings Pty. Ltd. 40. Malakoff Wind Macarthur Pty. Ltd. Australia 100 Leasing of wind turbine assets (formerly known as Meridian Wind Macarthur Pty Ltd)#* Held through Wind Macarthur Holdings (T) Pty. Limited 41. Wind Macarthur (T) Pty. Limited#* Australia 100 Leasing of plant and equipment Held through Wind Macarthur (T) Pty. Limited 42. Wind Macarthur Finco Pty. Limited#* Australia 100 Financing operations for Macarthur wind farm project * Audited by other member firm of KPMG International # Incorporated/Acquired during the financial year (Note 37)

141 Investment in subsidiaries (continued) The Group s subsidiaries that have material non-controlling interests ( NCI ) are as follows: < > Segari other Energy Tanjung Bin individually Ventures GB3 Power immaterial Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. subsidiaries 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, ,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, ,095 6,205,353 Current assets 1,405, ,180 1,847,406 Non-current liabilities (2,403,032) (688,523) (7,327,993) Current liabilities (282,619) (186,209) (417,577) Net assets 769, , ,189 Year ended 31 December Revenue 1,373, ,098 2,451,698 Profit for the year 343, , ,714 Total comprehensive income 343, , ,714 Cash flows from operating activities 470, ,425 1,084,199 Cash flows from investing activities (88,807) (35,470) (1,071,255) Cash flows from financing activities (354,010) (155,980) (60,907) Net increase/(decrease) in cash and cash equivalents 28,093 (21,025) (47,963) Dividend paid to NCI 125,000 65, ,000

142 Notes to the Consolidated Financial Statements (continued) 140 Malakoff Corporation Berhad Annual Report Investment in subsidiaries (continued) The Group s subsidiaries that have material non-controlling interests ( NCI ) are as follows: < > Segari other Energy Tanjung Bin individually Ventures GB3 Power immaterial Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. subsidiaries 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 151, ,950 75,854 (2,125) 340,297 Profit/(Loss) allocated to NCI 26,997 23,641 29,329 (4) 79,963 Summarised financial information before intra-group elimination As at 31 December Non-current assets 2,117, ,592 6,144,540 Current assets 1,166, ,081 2,044,363 Non-current liabilities (666,678) (807,006) (6,701,136) Current liabilities (192,009) (292,869) (766,730) Net assets 2,425, , ,037 Year ended 31 December Revenue 1,125, ,593 3,352,972 Profit for the year 431,952 94, ,289 Total comprehensive income 431,952 94, ,289 Cash flows from operating activities 536, ,555 1,038,082 Cash flows from investing activities 29,223 6,887 (7,863) Cash flows from financing activities (486,689) (187,078) (700,051) Net increase/(decrease) in cash and cash equivalents 78,651 (6,636) 330,168 Dividend paid to NCI 11,817 29,200 41,017

143 Investment in associates Group Company RM 000 RM 000 RM 000 RM 000 Group Restated Restated At cost Unquoted shares: in Malaysia 41,475 41, , ,770 outside Malaysia 3,726 1,254 Unquoted preference shares: in Malaysia 4,000 4,000 Unquoted loan stocks: in Malaysia 357, , , ,030 outside Malaysia 151, ,568 Pre-acquisition reserves 66,775 66,775 Share of post-acquisition reserves 207, , , , , ,800 Add: Intangible assets acquired through business combination (see Note 4) Goodwill 284, ,583 Interest over PPA and PWPA 939, ,073 1,223,838 1,204,656 Less: Amortisation of intangible assets At 1 January (211,156) (172,618) Amortisation for the year (42,675) (38,538) At 31 December (253,831) (211,156) Less: Impairment loss on intangible assets At 1 January/31 December (463,646) (463,646) Carrying amount 506, ,854 1,338,437 1,403, , ,800

144 Notes to the Consolidated Financial Statements (continued) 142 Malakoff Corporation Berhad Annual Report Investment in associates (continued) Details of associates are as follows: E effective effective ownership voting interest interest C country of (%) (%) No. Name of associate incorporation Principal activities 1. Port Dickson Power Berhad Malaysia Supply of electricity exclusively to TNB 2. Kapar Energy Ventures Sdn. Bhd. Malaysia Generation and sale of electricity 3. Lekir Bulk Terminal Sdn. Bhd. Malaysia Development, ownership and management dry bulk terminal 4. Malaysian Shoaiba Consortium Malaysia Investment holding Sdn. Bhd. 5. Saudi-Malaysia Water & Saudi Offshore Investment holding Electricity Company Limited Arabia 6. Shuaibah Water & Electricity Saudi Design, construction, commissioning, Company Limited Arabia testing, possession, operation and maintenance of crude oil fired power generation and water desalination plant 7. Shuaibah Expansion Holding Saudi Development, construction, Company Limited Arabia ownership, 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 8. Shuaibah Expansion Project Saudi Development, construction, Company Limited Arabia possession, operation and maintenance of the Shuaibah Phase 3 Expansion IWP, transfer and sell water and all relevant works and activities 9. Oman Technical Partners British Virgin Offshore Investment holding Limited Islands 10. Salalah Power Holdings Limited Bermuda Offshore Investment holding

145 Investment in associates (continued) Details of associates are as follows (continued): E effective effective ownership voting interest interest C country of (%) (%) No. Name of associate incorporation Principal activities 11. Al-Imtiaz Operation and Saudi Implementation of operation and Maintenance Company Arabia maintenance contracts for stations Limited of electrical power generation and water desalination 12. Saudi-Malaysia Operation and Saudi Operation and maintenance of Maintenance Services Arabia power and water desalination Company Limited plant 13. Hyflux-TJSB Algeria SPA Algeria operation and maintenance of water desalination plant 14. Hidd Power Company B.S.C Bahrain building, operation and maintenance of power and water stations for special purposes (specific supply only) 15. Muscat City Desalination Oman Operations and maintenance of Operation and Maintenance pump stations and pipelines, Company LLC# installation and 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 Development, financing, Company S.A.O.C# procurement, construction, ownership, operations and maintenance of water desalination plants at Ghubrah in the Governorate of Muscat, together with all associated water extraction, pumping, storage and distribution systems and equipment and associated electricity generating systems and equipment and the delivery and sale of portable water in the Sultanate of Oman # Incorporated/Acquired during the financial year (Note 36)

146 Notes to the Consolidated Financial Statements (continued) 144 Malakoff Corporation Berhad Annual Report Investment in associates (continued) 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. < > 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 Summarised financial information As at 31 December Non-current assets 134,949 3,002,390 6,531,350 3,257,531 Current assets 152,386 1,733, , ,508 Non-current liabilities (15,387) (3,277,784) (5,294,617) (2,985,281) Current liabilities (35,461) (1,027,967) (553,766) (414,676) Net assets 236, ,842 1,112, ,082 Year ended 31 December Profit/(Loss) for the year 78,500 (18,930) 237,302 69,916 Other comprehensive income 263,751 Total comprehensive income/(expense) 78,500 (18,930) 237, ,667

147 Investment in associates (continued) 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. < > 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, , ,116 Depreciation and amortisation (22,937) (244) (232,130) (165,311) Interest income 1,713 16, Interest expense (1,314) (288,523) (324,195) (156,318) Income tax expense (26,548) (10,608) Reconciliation of net assets to carrying amount As at 31 December Group s share of net assets 59, , ,344 60,388 59, ,046 Goodwill 284, ,765 Intangible assets 149,078 72, ,596 Redeemable unsecured loan stocks 357, ,030 Carrying amount in the statement of financial position 59, , , ,671 59,253 1,338,437 Group s share of result Year ended 31 December Group s share of profit/(loss) for the year 19,625 (7,572) 28,476 27,945 (1,002) 67,472 Group 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 (7,572) (78,511) 99,818 (23,118) 10,242 Other information Dividend received 27,750 23,947 2,671 54,368

148 Notes to the Consolidated Financial Statements (continued) 146 Malakoff Corporation Berhad Annual Report Investment in associates (continued) 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. < > 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 Summarised financial information As at 31 December Non-current assets 116,988 3,462,526 6,193,650 3,154,110 Current assets 223,670 1,296, , ,757 Non-current liabilities (23,210) (3,039,952) (5,763,543) (3,196,221) Current liabilities (48,461) (1,290,314) (172,816) (354,610) Net assets 268, , ,253 (125,964) Year ended 31 December Profit for the year 107,581 53, ,586 68,655 Other comprehensive income 33,112 20,562 Total comprehensive income 107,581 53, ,698 89,217.

149 Investment in associates (continued) 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. < > 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 239,148 3,086, , ,779 Depreciation and amortisation (25,226) (269) (225,301) (150,590) Interest income 2,005 13, Interest expense (1,024) (287,587) (317,508) (161,509) Income tax expense (36,127) 15,923 Reconciliation of net assets to carrying amount As at 31 December Group s share of net assets 67, ,391 77,550 50, , ,695 Goodwill 265, ,583 Intangible assets 186,513 77, ,271 Redeemable unsecured loan stocks 357, ,030 Carrying amount in the statement of financial position 67, ,934 77, , ,159 1,403,579 Group s share of result Year ended 31 December Group s share of profit/(loss) for the year 26,895 21,267 29,830 27,441 (849) 104,584 Group s share of other comprehensive income Group s share of total comprehensive income/(expense) 26,895 21,267 29,830 27,441 (849) 104,584 Other information Dividend received 18,937 5,125 35,842 3,000 62,904

150 Notes to the Consolidated Financial Statements (continued) 148 Malakoff Corporation Berhad Annual Report Investment in an equity accounted joint venture Group RM 000 RM 000 At cost Unquoted shares, outside Malaysia 64,118 64,118 Share of post-acquisition reserves (12,888) (16,685) 51,230 47,433 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. 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 RM 000 RM 000 Percentage of ownership interest 35.7% 35.7% Percentage of voting interest 40.0% 40.0% Summarised financial information As at 31 December Non-current assets 535, ,103 Current assets 192, ,535 Non-current liabilities (511,791) (509,702) Current liabilities (73,004) (71,070) 143, ,866 Year ended 31 December Profit for the year 10,636 5,402 Included in the profit for the year are: Revenue 121, ,170 Depreciation and amortisation (23,156) (20,576) Interest expense (19,752) (20,455)

151 Investment in an equity accounted joint venture (continued) Group RM 000 RM 000 Summarised financial information (continued) Reconciliation of net assets to carrying amount As at 31 December Group s share of net assets 51,230 47,433 Carrying amount in the statement of financial position 51,230 47,433 Group s share of result Year ended 31 December Group s share of profit for the year 3,797 1, Other investments Company RM 000 RM 000 Non-current Unquoted loan stocks in subsidiaries, unsecured 1,027,419 During the financial year, the Company s unquoted loan stocks issued by the subsidiaries were fully transferred to Malakoff Power Berhad ( MPB ), a wholly-owned subsidiary of the Company following the completion of the Group and the Company s internal reorganisation exercise. Information on the internal reorganisation exercise is disclosed in Note 36 to the financial statements.

152 Notes to the Consolidated Financial Statements (continued) 150 Malakoff Corporation Berhad Annual Report 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: Group RM 000 RM 000 Minimum lease payments: Within one year 141, years 146, years 492,726 Over 5 years 4,166,757 Gross investment in finance lease 4,947,434 Less: Unearned finance income (2,934,489) Present value of minimum lease payments 2,012,945 Analysed as: Within one year 1-2 years 2-5 years Over 5 years 2,012,945 Total finance lease receivable 2,012,945 Comprising: Current Non-current 2,012,945 2,012,945 For the financial year ended 31 December 2013, the Group recognised a finance lease income of RM80,268,000 as disclosed in Note 21.

153 Deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Assets liabilities Net RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Group Restated Restated Property, plant and equipment (2,093,386) (2,165,541) (2,093,386) (2,165,541) Provisions 147,053 70, ,053 70,814 Intangibles (1,183,274) (1,293,661) (1,183,274) (1,293,661) Unutilised tax losses 38,143 38,143 Unutilised capital allowances 518, , , ,196 Deferred income 641, , , ,276 Deferred expense (19,545) (19,545) Others 2,244 2,244 2,244 2,244 Tax assets/(liabilities) 1,348,272 1,320,530 (3,296,205) (3,459,202) (1,947,933) (2,138,672) Set-off of tax (650,760) (708,960) 650, ,960 Net tax assets/(liabilities) 697, ,570 (2,645,445) (2,750,242) (1,947,933) (2,138,672) Assets liabilities Net RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Company Restated Restated Provisions 2,555 5,884 (15,899) 2,555 (10,015)

154 Notes to the Consolidated Financial Statements (continued) 152 Malakoff Corporation Berhad Annual Report Deferred tax assets and liabilities (continued) Movements in temporary differences during the year: Recognised Recognised in profit At in profit At or loss / or loss At (Note 27) (Note 27) RM 000 RM 000 RM 000 RM 000 RM 000 Group Restated Restated Restated Deferred tax assets Provisions 61,408 9,406 70,814 76, ,053 Unutilised tax losses 38,143 38,143 Unutilised capital allowances 750,059 (99,863) 650,196 (131,292) 518,904 Deferred income 524,860 72, ,276 44, ,928 Others 2,244 2,244 2,244 Tax assets 1,338,571 (18,041) 1,320,530 27,742 1,348,272 Set-off of tax (802,536) 93,576 (708,960) 58,200 (650,760) Net tax assets 536,035 75, ,570 85, ,512 Deferred tax liabilities Property, plant and equipment (2,098,125) (67,416) (2,165,541) 72,155 (2,093,386) Intangibles (1,403,141) 109,480 (1,293,661) 110,387 (1,183,274) Deferred expense (19,545) (19,545) Tax liabilities (3,501,266) 42,064 (3,459,202) 162,997 (3,296,205) Set-off of tax 802,536 (93,576) 708,960 (58,200) 650,760 Net tax liabilities (2,698,730) (51,512) (2,750,242) 104,797 (2,645,445) Recognised Recognised in profit At in profit At or loss / or loss At (Note 27) (Note 27) RM 000 RM 000 RM 000 RM 000 RM 000 Company Restated Restated Restated Deferred tax assets Provisions 3,726 2,158 5,884 (3,329) 2,555 Deferred tax liabilities Provisions (14,854) (1,045) (15,899) 15,899

155 Trade and other receivables Group Company Note RM 000 RM 000 RM 000 RM 000 Non-current Other receivables , ,083 Current Trade Trade receivables ,631 1,041,886 Less: Allowance for impairment loss (228,288) (57,094) 694, ,792 Non-trade Amount due from subsidiaries 582, ,344 Amount due from an associate , , , ,558 Other receivables 136, ,408 7,133 11,963 Deposits 105,783 65,475 6,192 3,690 Prepayments 35,726 34, , , ,540 1,175,555 1,266,268 1,490, ,540 1,175,555 1,393,207 1,629, ,540 1,175, 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 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 direct or indirect significant influence on the Group) as at the reporting period as follows: gross balance outstanding RM 000 RM 000 Tenaga Nasional Berhad 886,743 1,035, 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.

156 Notes to the Consolidated Financial Statements (continued) 154 Malakoff Corporation Berhad Annual Report Inventories Group RM 000 RM 000 Restated At cost Spares and consumables 235, ,164 Coal 173, ,619 Diesel fuel 70,275 73, , , Cash and cash equivalents group Company RM 000 RM 000 RM 000 RM 000 Deposits with licensed banks and other licensed corporations 3,306,899 5,066, , ,956 Cash and bank balances 234,838 87,640 5,989 3,120 3,541,737 5,153, , ,076 Included in cash and cash equivalents of the Group and of the Company are amounts that are placed with licensed banks which are under common control by the Government of Malaysia (a party that has direct or indirect significant influence on the Group and on the Company) as at the reporting periods as follows: Group Company RM 000 RM 000 RM 000 RM 000 Deposits with licensed banks and other licensed corporations 2,459,581 3,632, , ,070

157 Capital and reserves 15.1 Share capital Number Number Amount of shares Amount of shares Group and Company RM RM Authorised: Ordinary shares of RM1 each 490, , , ,000 Redeemable convertible non-cumulative preference shares of RM0.10 each 10, ,000 10, ,000 Issued and fully paid: Ordinary shares of RM1 each: At beginning/end of the year 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, , , , , 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 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 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.

158 Notes to the Consolidated Financial Statements (continued) 156 Malakoff Corporation Berhad Annual Report Capital and reserves (continued) 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 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. 16. Loans and borrowings Group Company RM 000 RM 000 RM 000 RM 000 Non-current Secured Al-Bai Bithaman Ajil ( ABBA ) bonds 130,000 Al-Istisna bond 129, ,231 AUD term loan 1 425,508 AUD term loan 2 1,501,324 RM term loan 39,220 Sukuk Ijarah medium term notes 3,544,065 3,508,439 Sukuk medium term notes 1 4,641,439 4,641,439 Sukuk medium term notes 2 4,244,338 Sukuk Wakalah 450,000 Senior Sukuk Murabahah 3,290,000 3,290,000 USD term loan 277, ,989 Unsecured Junior EBL term loan 726, ,103 Subordinated loan notes 183,798 61,060 Unrated Junior Sukuk Musharakah 1,800,000 1,800,000 1,800,000 1,800,000 16,611,760 14,221,261 1,800,000 6,441,439

159 Loans and borrowings (continued) Group Company RM 000 RM 000 RM 000 RM 000 Current Secured Commercial papers 198,173 ABBA bonds 130, ,000 Al-Istisna bonds 63,736 63,639 AUD term loan 2 10,872 Sukuk Ijarah medium term notes 150,000 Sukuk medium term notes 1 700, ,000 Sukuk medium term notes 2 500,000 Sukuk Wakalah 20,000 USD term loan 8,844 8, ,625 1,041, ,000 17,543,385 15,263,158 1,800,000 7,141,439 Security a) As at 31 December 2013, the commercial papers, bonds, medium term and loan notes of the Group were secured over property, plant and equipment with a carrying amount of RM12,261,679,000 (2012: RM10,664,800,000). b) As at 31 December 2013, 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 ) GB3 is 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. 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.

160 Notes to the Consolidated Financial Statements (continued) 158 Malakoff Corporation Berhad Annual Report Loans and borrowings (continued) Significant covenants 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) Sukuk medium term notes 1 issued by the Company In 2012, the Company was required to maintain a debt-to-equity ratio of not more than 1.25:1 and the Group debt-toequity ratio of not more than 7:1. Sukuk medium term notes 1 have been fully redeemed during the financial year. v) 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. vi) 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. vii) 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. viii) AUD term loan 1 drawdown by Malakoff International Limited ( MIL ) AUD term loan 1 was drawdown by MIL during the financial year. The subsidiary 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. ix) AUD term loan 2 drawdown by Wind Macarthur Finco Pty Limited ( MWF ) AUD term loan 2 was drawdown by MWF during the financial year. MWF is required to maintain a minimum projected debt service cover ratio of 1.10:1 on any two consecutive calculation date. x) Sukuk Wakalah issued by Tanjung Bin O&M Berhad ( TBOM ) Sukuk Wakalah was issued by TBOM during the financial year. 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. xi) Sukuk medium term notes 2 issued by Malakoff Power Berhad ( MPB ) Sukuk medium term notes 2 was issued by MPB during the financial year. MPB is required to maintain an aggregated debt-to-equity of not more than 1.0:1 and the Group debt-to-equity of not more than 5.5:1.

161 Loans and borrowings (continued) xii) Commercial papers issued by Malakoff Power Berhad ( MPB ) Commercial papers were issued by MPB during the financial year. MPB is 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. xiii) RM term loan drawndown by Malakoff Utilities Sdn. Bhd. ( MUSB ) RM term loan was drawndown by MUSB during the financial year. 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. Terms and debt repayment schedule carrying Under Over 5 Year of amount years years years years Group maturity RM 000 RM 000 RM 000 RM 000 RM Secured ABBA bonds , ,000 Al-Istisna bonds ,231 63,736 64,845 64,650 AUD term loan , ,508 AUD term loan ,512,196 10,872 16,233 1,082, ,836 RM term loan ,220 1,089 13,073 25,058 Commercial papers , ,173 Sukuk Ijarah medium term notes ,544,065 3,544,065 Sukuk medium term notes ,744, , , ,000 3,374,338 Sukuk Wakalah ,000 20,000 50, , ,000 Senior Sukuk Murabahah ,290, ,000 3,145,000 USD term loan ,951 8,844 8, ,263 Unsecured Junior EBL term loan , ,905 Subordinated loan notes , ,798 Unrated Junior Sukuk Musharakah ,800,000 1,800,000 17,543, , ,011 3,265,654 12,765,095

162 Notes to the Consolidated Financial Statements (continued) 160 Malakoff Corporation Berhad Annual Report Loans and borrowings (continued) Terms and debt repayment schedule (continued) carrying Under Over 5 Year of amount years years years years Group maturity RM 000 RM 000 RM 000 RM 000 RM Secured ABBA bonds , , ,000 Al-Istisna bonds ,870 63,639 63, ,495 Sukuk Ijarah medium term notes ,658, ,000 3,508,439 Sukuk medium term notes ,341, , ,000 2,100,000 1,841,439 Senior Sukuk Murabahah ,290,000 85,000 3,205,000 USD term loan ,247 8,258 8, ,731 Unsecured Junior EBL term loan , ,103 Subordinated loan notes ,060 61,060 Unrated Junior Sukuk Musharakah ,800,000 1,800,000 15,263,158 1,041, ,994 2,903,329 10,415,938 carrying Under Over 5 Year of amount years years years years Company maturity RM 000 RM 000 RM 000 RM 000 RM Unsecured Unrated Junior Sukuk Musharakah ,800,000 1,800,000 1,800,000 1,800, Secured Sukuk medium term notes ,341, , ,000 2,100,000 1,841,439 Unsecured Unrated Junior Sukuk Musharakah ,800,000 1,800,000 7,141, , ,000 2,100,000 3,641,439

163 Loans and borrowings (continued) 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 18 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. 17. Employee benefits Group Company RM 000 RM 000 RM 000 RM 000 Restated Restated Defined benefit obligations 84,203 75,101 24,317 24,122 Fair value of plan assets (16,788) (1,885) (14,092) (587) Net defined benefit liabilities 67,415 73,216 10,225 23,535 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. ( MESB ) and Malakoff Power Berhad ( MPB ) participated in making contributions to the Scheme. In 2012, MESB and MPB were not adhered to the Scheme.

164 Notes to the Consolidated Financial Statements (continued) 162 Malakoff Corporation Berhad Annual Report Employee benefits (continued) 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 RM 000 RM 000 RM 000 RM 000 Restated Restated Defined benefit obligations at beginning of the year 75,101 55,905 24,122 15,581 Included in profit or loss Current service cost 8,555 5,881 2,521 1,654 Interest cost 3,943 3,587 1, Other service cost ,332 9,468 4,495 2,647 Included in other comprehensive income Actuarial (gain)/loss arising from: (Gain)/Loss due to financial assumption changes (2,265) 9,696 (610) 2,666 Loss due to experience 2,856 4,439 (2,265) 12,552 (610) 7,105 Other Benefits paid directly by the employer (990) (1,016) (579) (314) Benefits paid by the plan (975) (1,808) (107) (897) Intercompany employee transfers (3,004) (1,965) (2,824) (3,690) (1,211) Defined benefit obligations at end of the year 84,203 75,101 24,317 24,122

165 Employee benefits (continued) Movement in fair value of plan assets Group Company RM 000 RM 000 RM 000 RM 000 Restated Restated Plan assets at beginning of the year (1,885) (2,112) (587) (677) Included in profit or loss Interest income (72) (708) (17) (436) (72) (708) (17) (436) Included in other comprehensive income Return on scheme assets (greater)/lesser than discount rate (168) (168) Other Benefits paid by the plan 975 1, Employer contribution (15,638) (1,425) (13,700) (524) (14,663) 383 (13,593) 373 Plan assets at end of the year end of the year (16,788) (1,885) (14,092) (587)

166 Notes to the Consolidated Financial Statements (continued) 164 Malakoff Corporation Berhad Annual Report Employee benefits (continued) Movement in net defined benefit liabilities Group Company RM 000 RM 000 RM 000 RM 000 Restated Restated Net defined benefit liabilities at beginning of the year 73,216 53,793 23,535 14,904 Included in profit or loss Current service cost 8,555 5,881 2,521 1,654 Interest cost 3,871 2,879 1, Other service cost ,260 8,760 4,478 2,211 Included in other comprehensive income Actuarial (gain)/loss arising from: (Gain)/Loss due to financial assumption changes (2,265) 9,696 (610) 2,666 Loss due to experience 2,856 4,439 Return on scheme assets (greater)/lesser than discount rate (168) (2,433) 13,104 (505) 7,258 Other Benefits paid directly by the employer (990) (1,016) (579) (314) Employer contribution (15,638) (1,425) (13,700) (524) Intercompany employee transfer (3,004) (16,628) (2,441) (17,283) (838) Net defined benefit liabilities at end of the year 67,415 73,216 10,225 23,535 The Group expects to pay RM4,733,000 in contributions to the defined benefit plans in 2014.

167 Employee benefits (continued) Plan assets The major categories of plan assets are as follows: Group Company RM 000 RM 000 RM 000 RM 000 Restated Restated Equity instruments 8, , Malaysian government securities 3, , Foreign investments 2, , Cash and cash equivalents 1, , Others ,788 1,885 14, Actuarial assumptions Principal actuarial assumptions at the end of the reporting period: Group Company Restated Restated Discount rate 5.3% 5.0% 5.3% 5.0% Salary inflation 7.9% 7.9% 7.9% 7.9% As at 31 December 2013, the Scheme duration is estimated to be around 12 years (2012: 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 RM 000 RM 000 Impact on the aggregate service and interest costs Discount rate One percentage point increase (784) (199) One percentage point decrease Salary inflation One percentage point increase 1, One percentage point decrease (1,541) (429)

168 Notes to the Consolidated Financial Statements (continued) 166 Malakoff Corporation Berhad Annual Report Employee benefits (continued) Sensitivity analysis (continued) Group Company RM 000 RM 000 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 3,189 One 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 Group RM 000 RM 000 At beginning of the year 2,389,105 2,099,436 Additions 329, ,786 Credited to profit or loss (50,502) (41,117) At end of the year 2,668,485 2,389,105 Non-current 2,608,222 2,338,602 Current 60,263 50,503 2,668,485 2,389,105

169 Trade and other payables Group Company Notes RM 000 RM 000 RM 000 RM 000 Trade Trade payables , ,081 Non-trade Other payables , ,425 10,406 5,474 Accrued expenses , ,820 38, ,888 Amounts due to subsidiaries , , ,955 1,095, , , ,116 1,435, , , 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 direct or indirect significant influence on the Group) as at the reporting period as follows: Net balance outstanding RM 000 RM 000 Petroliam Nasional Berhad 68,445 41,768 TNB Fuel Services Sdn. Bhd. 99, ,936 Tenaga Nasional Berhad 4,995 3, , , Accrued expenses As at 31 December 2013, included in accrued expenses of the Group were interest expense payable of RM193,196,000 (2012: RM276,341,000) and provision for CESS fund of RM26,480,000 (2012: RM30,398,000) Amounts due to subsidiaries The amounts due to subsidiaries are unsecured, interest free and repayable on demand.

170 Notes to the Consolidated Financial Statements (continued) 168 Malakoff Corporation Berhad Annual Report Derivative financial assets/(liabilities) Assets Liabilities Assets Liabilities Group RM 000 RM 000 RM 000 RM 000 Non-current Derivatives used for hedging Interest rate swaps 16,134 (31,762) (17,501) Cross currency swaps 64,107 (145,249) 80,241 (31,762) (162,750) Current Derivatives used for hedging Interest rate swaps (34,319) (34,319) 80,241 (66,081) (162,750) 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 RM 000 RM 000 RM 000 RM 000 Electricity generation and distribution 4,612,563 5,452,073 Project management fees Rental income from estate 3,638 5,206 3,638 5,206 Operation and maintenance fees 19, ,329 Finance lease income 80,268 Dividends from subsidiaries 3,658, ,053 Management fees from subsidiaries 26,553 27,060 4,717,419 5,587,608 3,689, ,319

171 Finance income Group Company RM 000 RM 000 RM 000 RM 000 Interest income of financial assets that are not at fair value through profit or loss 203, ,341 81, ,276 Recognised in profit or loss 161, ,380 81, ,276 Capitalised on qualifying assets as a reduction of borrowing costs: Property, plant and equipment 42,215 62, , ,341 81, , Finance costs Group Company 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 1,055, , , ,423 Recognised in profit or loss 840, , , ,423 Capitalised on qualifying assets: Property, plant and equipment 215, ,316 1,055, , , ,423

172 Notes to the Consolidated Financial Statements (continued) 170 Malakoff Corporation Berhad Annual Report Profit for the year group Company RM 000 RM 000 RM 000 RM 000 Restated Restated Profit for the year is arrived at after charging: Amortisation of intangible assets 469, ,093 Amortisation of prepaid payments 4,346 4,343 Amortisation of transaction costs of hedging instruments 12,144 7,327 Auditors remuneration: Audit fees KPMG Malaysia Affiliates of KPMG Malaysia Non-audit fees KPMG Malaysia 1,895 1,526 1,695 1,160 Affiliates of KPMG Malaysia 2,644 1, Other audit firms 1, , Contribution and Corporate Social Responsibility activities 12,000 55,000 Depreciation of property, plant and equipment 471, ,632 4,702 2,790 Impairment loss on trade receivables 177,273 16,105 Net foreign exchange loss 6,139 Personnel expenses (including key management personnel): Contribution to Employees Provident Fund 12,823 14,359 3,853 3,888 Expenses related to retirement benefit plans 13,260 8,760 4,478 2,211 Wages, salaries and others 96, ,498 28,040 31,384 Property, plant and equipment written off 127,126 1,774 and after crediting: Dividend income from subsidiaries 3,658, ,053 Inter-companies management fees 26,553 27,060 Gain arising from change in fair value of derivative financial instruments 44, Gain on disposal of investment in a subsidiary 26,700 Reversal of impairment loss on trade receivables 6,079 10,307

173 Other comprehensive income Before tax Tax expense Net of tax Group RM 000 RM 000 RM 000 Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit liability 3,245 (812) 2,433 Items that may be reclassified subsequently to profit or loss Cash flow hedge Gain arising during the year 238, ,418 Foreign currency translation differences for foreign operations Loss arising during the year (25,869) (25,869) Share of losses of equity-accounted associates (57,230) (57,230) , ,319 before tax Tax benefit Net of tax Group RM 000 RM 000 RM 000 Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit liability (17,472) 4,368 (13,104) Items that may be reclassified subsequently to profit or loss Cash flow hedge Loss arising during the year (5,107) (5,107) Foreign currency translation differences for foreign operations Gain arising during the year 5,759 5, Before tax Tax expense Net of tax Company RM 000 RM 000 RM 000 Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit liability 673 (168) before tax Tax benefit Net of tax Company RM 000 RM 000 RM 000 Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit liability (9,677) 2,419 (7,258) 2012

174 Notes to the Consolidated Financial Statements (continued) 172 Malakoff Corporation Berhad Annual Report Key management personnel compensation The key management personnel compensations are as follows: Group Company RM 000 RM 000 RM 000 RM 000 Directors Fees Meeting allowances Other allowances Other emoluments Total short term employee benefits 2, , Income tax (credit)/expense Recognised in profit or loss Group Company RM 000 RM 000 RM 000 RM 000 Restated Restated Total income tax (credit)/expense (150,511) 156,816 7,273 28,710 Major components of income tax expense include: Current tax expense Malaysian current year 35, ,957 19,808 30,610 Under/(Over) provision in prior years 4,719 18, (787) 40, ,839 19,843 29,823 Deferred tax expense Origination and reversal of temporary differences (196,367) (37,767) (12,570) (1,113) Under provision in prior years 5,628 13,744 (190,739) (24,023) (12,570) (1,113) Total income tax (credit)/expense (150,511) 156,816 7,273 28,710

175 Income tax (credit)/expense (continued) Recognised in profit or loss (continued) Group Company RM 000 RM 000 RM 000 RM 000 Restated Restated Reconciliation of tax expense Profit for the year 244, ,277 3,408, ,970 Total income tax (credit)/expense (150,511) 156,816 7,273 28,710 Profit excluding tax 94, ,093 3,416, ,680 Tax at Malaysian tax rate of 25% 23, , ,031 90,670 Non-taxable income (914,500) (164,763) Non-deductible expenses 103, ,084 67, ,590 Tax incentives (119,200) (120,000) Tax paid arising from previous unrecognised temporary difference (38,412) Effect of deduction on C-inspection costs (114,606) (21,377) Effect of corporate tax rate reduction on deferred tax* (36,688) Effect of share of results of associates (17,817) (26,628) Under/(Over) provision in prior years current tax 4,719 18, (787) deferred tax 5,628 13,744 Total income tax (credit)/expense (150,511) 156,816 7,273 28,710 * 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 regards 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.

176 Notes to the Consolidated Financial Statements (continued) 174 Malakoff Corporation Berhad Annual Report Earnings per share Group RM 000 RM 000 Basic and diluted earnings per share are based on: Net profit attributable to ordinary shareholders A 171, ,314 a) Basic earnings per share Number of ordinary shares B 351, ,344 Basic earnings per share (RM) A/B 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 2013, 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 RM 000 RM 000 Weighted average number of ordinary shares of RM1.00 each in issue 351, ,344 Adjustment for the conversion of the RCPS 41,792 41,792 C 393, ,136 Diluted earnings per share (RM) A/C

177 Dividends Dividends recognised by the Company: Sen per share Total (net of tax) amount Date of payment RM Interim 2013 ordinary , May 2013 Interim 2013 preference , May 2013 Interim 2013 ordinary , August 2013 Total amount 191, Final 2011 ordinary ,000 2 April 2012 Interim 2012 ordinary , September 2012 Interim 2012 preference , September 2012 Total amount 184,370 The Directors do not recommend any final dividend for the financial year ended 31 December Operating segments The Group has two reportable 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 reportable 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. Performance is measured based on segment results and total segment revenue, as included in the internal management reports that are reviewed by the Group s Chief Executive Officer (the chief operating decision maker). Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

178 Notes to the Consolidated Financial Statements (continued) 176 Malakoff Corporation Berhad Annual Report Operating segments (continued) Segment assets The total of segment assets is measured based on all assets (including goodwill) of a segment, as included in the internal management reports that are reviewed by the Group s Chief Executive Officer. Segment total assets is used to measure the return of assets of each segment. Segment liabilities The total of segment liabilities is measured based on all liabilities of a segment, as 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, and intangible assets other than goodwill. Asset management o&m eliminations consolidated RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Business segments Revenue from external customers 4,697,436 5,457,279 19, ,329 4,717,419 5,587,608 Inter-segment revenue 3,799, , , ,160 (4,696,406) (1,225,490) Total segment revenue 8,496,849 6,223, , ,489 (4,696,406) (1,225,490) 4,717,419 5,587,608 Segment results 4,934,077 2,176, , ,335 (4,761,902) (1,193,602) 702,211 1,237,479 Result from operating activities 702,211 1,237,479 Interest income 161, ,380 Finance costs (840,318) (797,279) Share of profit of equity-accounted associates and a joint venture, net of tax 71, ,513 Income tax credit/(expense) 150,511 (156,816) Profit/Total comprehensive income for the year 244, ,277

179 Operating segments (continued) Asset management o&m consolidated RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Segment assets 24,403,617 22,370,203 2,370,212 2,478,381 26,773,829 24,848,584 Investment in associates 1,338,437 1,403,579 1,338,437 1,403,579 Total assets 28,112,266 26,252,163 Segment liabilities 17,972,278 21,105,780 5,956, ,735 23,929,141 22,090,515 Capital expenditure Depreciation (468,728) (432,049) (2,538) (3,583) (471,266) (435,632) Amortisation of intangible assets (361,049) (356,911) (108,788) (83,182) (469,837) (440,093) Non-cash expenses other than depreciation and amortisation (275,550) (17,315) (8,479) (5,083) (284,029) (22,398) Geographical segments 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. In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customers. Segment assets are based on the geographical location of the assets. The amounts of non-current assets do not include financial instruments (including investments in associates) and deferred tax assets. Group Revenue RM 000 Non-current assets RM 000 Geographical information 2013 Malaysia 4,617,842 18,207,065 Indonesia 3,059 Middle East 16,250 Australia 80,268 4,717,419 18,207, Malaysia 5,576,269 16,701,998 Middle East 11,339 5,587,608 16,701,998

180 Notes to the Consolidated Financial Statements (continued) 178 Malakoff Corporation Berhad Annual Report Operating segments (continued) Major customer The following is major customer with revenue equal or more than 10% of the Group s total revenue: Revenue RM 000 RM 000 All common control company of: Tenaga Nasional Berhad 4,726,492 5,665, Financial instruments 31.1 Categories of financial instruments The table below provides an analysis of financial instruments categorised as follows: (a) (b) (c) Loans and receivables (L&R); Financial liabilities measured at amortised cost (FL); and Fair value through profit or loss (FVTPL) Designated upon initial recognition (DUIR) carrying L&R/ FVTPLamount (FL) DUIR Group RM 000 RM 000 RM Financial assets Trade and other receivables* 1,230,542 1,230,542 Finance lease receivable 2,012,945 2,012,945 Cash and cash equivalents 3,541,737 3,541,737 Derivatives financial assets 80,241 80,241 6,865,465 6,785,224 80,241 Financial liabilities 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)

181 Financial instruments (continued) 31.1 Categories of financial instruments (continued) carrying L&R/ FVTPLamount (FL) DUIR Group RM 000 RM 000 RM Financial assets Trade and other receivables* 1,455,233 1,455,233 Cash and cash equivalents 5,153,970 5,153,970 6,609,203 6,609,203 Financial liabilities Loans and borrowings (15,263,158) (15,263,158) Trade and other payables (1,435,326) (1,435,326) Derivative financial liabilities (162,750) (162,750) * Excludes non-financial instruments (16,861,234) (16,698,484) (162,750) carrying L&R/ amount (FL) Company RM 000 RM Financial assets Trade and other receivables* 889, ,540 Cash and cash equivalents 134, ,585 1,024,125 1,024,125 Financial liabilities Loans and borrowings (1,800,000) (1,800,000) Trade and other payables (901,861) (901,861) (2,701,861) (2,701,861)

182 Notes to the Consolidated Financial Statements (continued) 180 Malakoff Corporation Berhad Annual Report Financial instruments (continued) 31.1 Categories of financial instruments (continued) carrying L&R/ amount (FL) Company RM 000 RM Financial assets Other investments 1,027,419 1,027,419 Trade and other receivables* 1,175,555 1,175,555 Cash and cash equivalents 381, ,076 2,584,050 2,584,050 Financial liabilities Loans and borrowings (7,141,439) (7,141,439) Trade and other payables (303,209) (303,209) (7,444,648) (7,444,648) 31.2 Net gains and losses arising from financial instruments Group Company RM 000 RM 000 RM 000 RM 000 Loans and receivables 161, ,380 81, ,276 Financial liabilities measured at amortised cost (840,318) (797,279) (228,820) (461,423) Fair value through profit or loss Designated upon initial recognition 44, (635,225) (636,987) (147,080) (241,147) 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

183 Financial instruments (continued) 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 55% (2012: 66%) 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. Impairment losses The ageing of trade receivables as at the end of the reporting period was: gross Impairment Net Group RM 000 RM 000 RM Not past due 345,520 (20,058) 325,462 Past due 0 30 days 365,162 (20,983) 344,179 Past due days 1,955 (186) 1,769 Past due more than 120 days 209,994 (187,061) 22, ,631 (228,288) 694,343

184 Notes to the Consolidated Financial Statements (continued) 182 Malakoff Corporation Berhad Annual Report Financial instruments (continued) 31.4 Credit risk (continued) Receivables (continued) Impairment losses (continued) gross Impairment Net Group RM 000 RM 000 RM Not past due 472, ,781 Past due 0 30 days 428, ,582 Past due days 20,556 (14,473) 6,083 Past due more than 120 days 119,967 (42,621) 77,346 1,041,886 (57,094) 984,792 At the end of the reporting period, trade receivables with a carrying amount of RM24,702,000 (2012: RM83,429,000) 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: Group RM 000 RM 000 At beginning of the year 57,094 56,450 Impairment loss recognised 177,273 16,105 Impairment loss reversed (6,079) (10,307) Impairment loss written off (5,154) At end of the year 228,288 57,094 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 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.

185 Financial instruments (continued) 31.5 Liquidity risk (continued) 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: C carrying Contractual Contractual Under More than amount interest cash flows 1 year 1-2 years 2-5 years 5 years Group RM 000 rate % RM 000 RM 000 RM 000 RM 000 RM Financial liabilities Secured ABBA bonds 130, , ,400 Al-Istisna bonds 193, ,573 78,678 73,905 67,990 AUD term loan 1 425,508 BBSY + 475,878 20,137 20, ,604 margin 1.85 AUD term loan 2 1,512, ,228, , ,057 1,364, ,333 RM term loan 39, ,905 2,625 3,705 19,504 30,071 Commercial papers 198, , ,000 Sukuk Ijarah medium term notes 3,544, ,230, , , ,617 5,222,913 Sukuk medium term notes 2 4,744, ,391, , ,751 1,202,819 7,682,861 Sukuk Wakalah 470, ,737 42,439 71, , ,837 Senior Sukuk Murabahah 3,290, ,122, , , ,914 5,027,870 USD term loan 285,951 Libor + 313,717 17,331 17, ,321 margin 2.50 Unsecured Junior EBL term loan 726,905 Klibor + 837,904 34,875 35, ,992 margin 1.50 Subordinated loan notes 183, ,556 12,423 23,583 19, ,644 Unrated Junior Sukuk Musharakah 1,800, ,603, , , ,659 5,820,352 Trade and other payables 934, , ,116 18,477,501 35,660,997 2,893,298 1,653,598 6,140,220 24,973,881

186 Notes to the Consolidated Financial Statements (continued) 184 Malakoff Corporation Berhad Annual Report Financial instruments (continued) 31.5 Liquidity risk (continued) 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: C carrying Contractual Contractual Under More than amount interest cash flows 1 year 1-2 years 2-5 years 5 years Group RM 000 rate % RM 000 RM 000 RM 000 RM 000 RM Financial liabilities Secured ABBA bonds 250, , , ,400 Al-Istisna bonds 256, ,883 84,310 78, ,895 Sukuk Ijarah medium term notes 3,658, ,587, , , ,617 5,424,452 Sukuk medium term notes 1 5,341, ,476,195 1,029, ,592 2,714,054 2,744,125 Senior Sukuk Murabahah 3,290, ,312, , , ,630 5,274,043 USD term loan 275,247 Libor + 312,171 16,534 16, ,103 margin 2.5 Unsecured Junior EBL term loan 330,103 Klibor + 380,513 15,515 15, ,483 margin 1.5 Subordinated loan notes 61, ,563 41,251 33,744 71,568 Unrated Junior Sukuk Musharakah 1,800, ,717, , , ,117 5,987,293 Trade and other payables 1,435,326 1,435,326 1,435,326 16,698,484 29,954,109 3,423,439 1,779,290 5,321,467 19,429,913

187 Financial instruments (continued) 31.5 Liquidity risk (continued) 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: C carrying Contractual Contractual Under More than amount interest cash flows 1 year 1-2 years 2-5 years 5 years Company RM 000 rate % RM 000 RM 000 RM 000 RM 000 RM Financial liabilities Unsecured Unrated Junior Sukuk Musharakah 1,800, ,603, , , ,659 5,820,352 Other payables and accruals 901, , ,861 2,701,861 7,505,672 1,015, , ,659 5,820,352 C carrying Contractual Contractual Under More than amount interest cash flows 1 year 1-2 years 2-5 years 5 years Company RM 000 rate % RM 000 RM 000 RM 000 RM 000 RM Financial liabilities Secured Sukuk medium term notes 5,341, ,476,195 1,029, ,592 2,714,054 2,744,125 Unsecured Unrated Junior Sukuk Musharakah 1,800, ,717, , , ,117 5,987,293 Other payables and accruals 303, , ,209 7,444,648 14,496,614 1,446,033 1,101,992 3,217,171 8,731,418

188 Notes to the Consolidated Financial Statements (continued) 186 Malakoff Corporation Berhad Annual Report Financial instruments (continued) 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 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 Swiss Franc (CHF), Kuwait Dinar (KWD), Euro (EUR), US Dollar (USD) and Australian Dollar (AUD). 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 Deposits with licensed banks 42,751 43,767 23,368 28,647 Trade and other receivables 5, ,746 Loans 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) (89,713) 2012 Deposits with licensed banks 11,298 36,329 Trade and other receivables 585 Loans and borrowings (275,247) Trade and other payables (744) (26,516) (40,003) Net exposure (744) 11,298 (26,516) (278,336)

189 Financial instruments (continued) 31.6 Market risk (continued) 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% (2012: 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 Profit or Profit or Group loss loss RM 000 RM 000 AUD (143,848) CHF 3,283 (56) KWD 2, EUR (4,616) (1,989) USD 6,728 (20,876) (136,296) (22,073) A 10% (2012: 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 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.

190 Notes to the Consolidated Financial Statements (continued) 188 Malakoff Corporation Berhad Annual Report Financial instruments (continued) 31.6 Market risk (continued) 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 RM 000 RM 000 RM 000 RM 000 Fixed rate instruments Financial assets 3,306,899 5,066, , ,956 Financial liabilities 16,105,021 14,657,808 1,800,000 7,141,439 Floating rate instruments Financial liabilities 1,438, ,350 Most of the Group s financial assets and liabilities are fixed rate instruments measured at amortised cost. The change in floating rate instruments is hedged via derivatives (refer to ). Hence possible changes in interest rates are not expected to have a material impact on the Group s profit or loss except for the derivative financial instruments as below: Cash flow sensitivity analysis for variable rate instuments 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 Interest rate swaps 28,448 (2,728) 149,276 (162,133) Cross currency swaps 104,235 (104,235) Cash flow sensitivity (net) 28,448 (2,728) 253,511 (266,368) 2012 Interest rate swaps 57,842 (57,842) Cross currency swaps 100,772 (100,772) Cash flow sensitivity (net) 158,614 (158,614)

191 Financial instruments (continued) 31.7 Hedging activities 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: carrying Expected Under More than amount cash flows 1 year years years 5 years Group RM 000 RM 000 RM 000 RM 000 RM 000 RM Financial assets Interest rate swaps 16,134 17,138 (8,859) (6,671) 2,130 30,538 Cross 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, Financial liabilities Interest rate swaps (17,501) (18,806) (1,957) (4,870) (12,547) 568 Cross currency swaps (145,249) (485,862) (21,269) (156,667) (307,926) (162,750) (504,668) (1,957) (26,139) (169,214) (307,358) During the financial year, a gain of RM238,418,000 (2012: loss of RM5,107,000) was recognised in other comprehensive income. Ineffectiveness gain amounting to RM44,041,000 (2012: RM912,000) was recognised in profit or loss during the financial year in respect of the hedge.

192 Notes to the Consolidated Financial Statements (continued) 190 Malakoff Corporation Berhad Annual Report Financial instruments (continued) 31.7 Hedging activities (continued) Cash flow hedge (continued) 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 Cross currency swaps 35,128 (35,128) Fair value sensitivity (net) 35,128 (35,128) 2012 Cross currency swaps 22,994 (22,994) Fair value sensitivity (net) 22,994 (22,994) 31.8 Fair value information The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings reasonably approximate their fair values due to the relatively short term nature of these financial instruments. The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statement of financial position.

193 Financial instruments (continued) 31.8 Fair value information (continued) Fair value of financial instruments Fair value of financial instruments carried at fair value not carried at fair value Total Carrying level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total fair value amount 2013 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Group Non-current Financial assets Derivative financial assets: Interest rate swaps 16,134 16,134 16,134 16,134 Cross currency swaps 64,107 64,107 64,107 64,107 Finance lease receivable 2,012,945 2,012,945 2,012,945 2,012,945 80,241 80,241 2,012,945 2,012,945 2,093,186 2,093,186 Financial liabilities Derivative financial liabilities: Interest rate swaps (31,762) (31,762) (31,762) (31,762) Loans and borrowings (secured): Al-Istisna bond (204,756) (204,756) (204,756) (193,231) AUD term loan 1 (445,455) (445,455) (445,455) (425,508) AUD term loan 2 (1,632,807) (1,632,807) (1,632,807) (1,512,196) RM term loan (32,728) (32,728) (32,728) (39,220) Sukuk Ijarah medium term notes (4,051,205) (4,051,205) (4,051,205) (3,544,065) Sukuk medium term notes 2 (5,472,619) (5,472,619) (5,472,619) (4,744,338) Sukuk Wakalah (464,837) (464,837) (464,837) (470,000) Senior Sukuk Murabahah (3,355,574) (3,355,574) (3,355,574) (3,290,000) USD term loan (281,569) (281,569) (281,569) (285,951) (31,762) (31,762) (15,941,550) (15,941,550) (15,973,312) (14,536,271)

194 Notes to the Consolidated Financial Statements (continued) Financial instruments (continued) 31.8 Fair value information (continued) Fair value of financial instruments Fair value of financial instruments carried at fair value not carried at fair value Total Carrying level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total fair value amount 2013 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Group Non-current Financial liabilities Loans and borrowings (unsecured): Junior EBL term loan (729,031) (729,031) (729,031) (726,905) Unrated Junior Sukuk Musharakah (1,878,862) (1,878,862) (1,878,862) (1,800,000) Subordinated loan notes (147,933) (147,933) (147,933) (183,798) (2,607,893) (147,933) (2,755,826) (2,755,826) (2,710,703) (31,762) (31,762) (18,549,443) (147,933) (18,697,376) (18,729,138) (17,246,974) Company Financial liability Loans and borrowings (unsecured): Unrated Junior Sukuk Musharakah (1,878,862) (1,878,862) (1,878,862) (1,800,000)

195 Financial instruments (continued) 31.8 Fair value information (continued) Fair value of financial instruments Fair value of financial instruments not carried carried at fair value at fair value* Total Carrying 2012 level 1 Level 2 Level 3 Total Total fair value amount RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Group Non-current Financial liabilities Derivative financial liabilities: Interest rate swaps (17,501) (17,501) (17,501) (17,501) Cross currency swaps (145,249) (145,249) (145,249) (145,249) Loans and borrowings (secured): ABBA bonds (265,724) (265,724) (250,000) Al-Istisna bond (277,995) (277,995) (256,870) Sukuk Ijarah medium term notes (4,160,319) (4,160,319) (3,658,439) Sukuk medium term notes 1 (5,964,070) (5,964,070) (5,341,439) Senior Sukuk Murabahah (3,243,700) (3,243,700) (3,290,000) USD Term loan (279,372) (279,372) (275,247) (162,750) (162,750) (14,191,180) (14,353,930) (13,234,745) Financial liabilities Loans and borrowings (unsecured): Junior EBL term loan (330,960) (330,960) (330,103) Unrated Junior Sukuk Musharakah (1,878,862) (1,878,862) (1,800,000) Subordinated loan notes (146,563) (146,563) (61,060) (2,356,385) (2,356,385) (2,191,163) (162,750) (162,750) (16,547,565) (16,710,315) (15,425,908) * Comparative figures have not been analysed by levels, by virtue of transitional provision given in Appendix C2 of MFRS 13.

196 Notes to the Consolidated Financial Statements (continued) 194 Malakoff Corporation Berhad Annual Report Financial instruments (continued) 31.8 Fair value information (continued) Fair value of financial instruments Fair value of financial instruments not carried carried at fair value at fair value* Total Carrying 2012 level 1 Level 2 Level 3 Total Total fair value amount RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Company Non-current Financial liabilities Loans and borrowings (secured): Sukuk medium term notes 1 (5,964,070) (5,964,070) (5,341,439) Loans and borrowings (unsecured): Unrated Junior Sukuk Musharakah (1,878,862) (1,878,862) (1,800,000) (7,842,932) (7,842,932) (7,141,439) * Comparative figures have not been analysed by levels, by virtue of transitional provision given in Appendix C2 of MFRS 13. Policy on transfer between levels The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer. Level 1 fair value Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or liabilities that the entity can access at the measurement date. Level 2 fair value Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the financial assets or liabilities, either directly or indirectly. 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.

197 Financial instruments (continued) 31.8 Fair value information (continued) Level 2 fair value (continued) 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 in 2013 and 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 Significant Inter-relationship between unobservable unobservable inputs and Type Valuation technique inputs fair value measurement Finance lease receivable Discounted cash flows Not applicable Not applicable Subordinated loan notes Discounted cash flows Not applicable Not applicable Sensitivity analysis for Level 3 Profit or loss other comprehensive income, net of tax Increase Decrease Increase Decrease 2013 RM 000 RM 000 RM 000 RM 000 Interest rate (1% movement) 4,271 (4,271) 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.

198 Notes to the Consolidated Financial Statements (continued) 196 Malakoff Corporation Berhad Annual Report 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 ABBA bonds issued by GB3 Sdn. Bhd. ( GB3 ) 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 ratios and debt service cover ratios at the end of the financial years: (i) Debt-to-equity ratios RM 000 RM 000 ABBA bonds 130, ,000 Deemed total debts of GB3 [A] 130, ,000 Redeemable Unsecured Loan Stocks 12,000 78,300 Redeemable Unsecured Murabahah Stocks 58,725 GB3 s share capital 1,000 1,000 GB3 s retained profits 570, ,798 Deemed total equity of GB3 [B] 642, ,098 Debt-to-equity ratios [A:B] 0.20:1 0.46:1 (ii) Debt service cover ratios RM 000 RM 000 Total net cash available of GB3 [A] 210, ,993 GB3 s interest payable [B] 5,186 9,973 Debt service cover ratios [A:B] 40.52: :1 There were no changes in GB3 s approach to capital management during the financial year.

199 Capital management (continued) 32.2 Al-Istisna bonds issued by Prai Power Sdn. Bhd. ( PPSB ) PPSB s strategy was 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 ratios and annual finance service ratios at the end of the financial years: (i) Debt-to-equity ratios RM 000 RM 000 Al-Istisna bonds 193, ,870 Deemed total debts of PPSB [A] 193, ,870 Redeemable Unsecured Loan Stocks 199,475 Redeemable Unsecured Murabahah Stocks 199,475 PPSB s share capital 1,000 1,000 PPSB s retained profits 296, ,426 Deemed total equity of PPSB [B] 497, ,901 Debt-to-equity ratios [A:B] 0.39:1 0.59:1 (ii) Annual finance service ratios RM 000 RM 000 Total net cash available of PPSB [A] 229, ,114 PPSB s principle and interest payable [B] 114, ,319 Annual finance service ratios [A:B] 2.00:1 1.70:1 There were no changes in PPSB s approach to capital management during the financial year.

200 Notes to the Consolidated Financial Statements (continued) 198 Malakoff Corporation Berhad Annual Report Capital management (continued) 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 year: (i) Debt-to-equity ratios RM 000 RM 000 Sukuk Ijarah medium term notes (Principal outstanding) 4,045,000 4,195,000 Deemed total debts of TBP [A] 4,045,000 4,195,000 Redeemable Unsecured Loan Stocks 29, ,705 Redeemable Unsecured Murabahah Stocks 771,873 Redeemable convertible unsecured Islamic debt securities ( RCUIDS ) 270,000 Redeemable convertible unsecured loan stocks ( RCULS ) 30,000 TBP s share capital 5,000 5,000 TBP s retained profit 302, ,036 Deemed total equity of TBP [B] 1,408,225 1,531,741 Debt-to-equity ratios [A:B] 2.87:1 2.74:1 (ii) Finance service cover ratio RM 000 RM 000 Total net available cash at 31 December [A] 1,117,018 Total finance service 357,314 1,474,332 Total finance service paid between January to December:- Sukuk Ijarah medium term notes [B] 357,314 Finance service cover ratio [A:B] 4.13:1 The finance service cover ratio is not applicable to the subsidiary as at 31 December 2012 as there was no distribution made in any 12 months period between one principal payment date and the next principal date during that financial year.

201 Capital management (continued) 32.4 Senior Sukuk Murabahah 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 year: (i) Debt-to-equity ratios RM 000 RM 000 Senior Sukuk Murabahah (Drawdown amount) 2,945,283 1,337,510 Outstanding principal obligation [A] 2,945,283 1,337,510 TBEI s share capital TBE s share capital 5,000 5,000 Shareholder loan TBEI 94,159 42,759 Junior EBL Term Loan 726, ,103 Deemed total equity of TBEI [B] 826, ,962 Debt-to-equity ratio [A:B] 3.57:1 3.54:1 The first finance service cover ratio is not presented until the completion date of the project RM Term loan 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: (i) Debt-to-equity ratios RM 000 RM 000 Term loan 39,220 Deemed total debts of MUSB [A] 39,220 MUSB s share capital 10,000 MUSB s retained profit 44,943 Deemed total equity of MUSB [B] 54,943 Debt-to-equity ratios [A:B] 0.71:1

202 Notes to the Consolidated Financial Statements (continued) 200 Malakoff Corporation Berhad Annual Report Capital management (continued) 32.5 RM Term loan drawdown by Malakoff Utilities Sdn. Bhd. ( MUSB ) (continued) (ii) Debt service cover ratio RM 000 RM 000 Total net cash available of MUSB [A] 59,082 MUSB s interest payable [B] 2,624 Debt service cover ratio [A:B] 22.5: 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 year: (i) Finance service cover ratio RM 000 RM 000 Total net cash available of TBOM [A] 105,890 TBOM s principle and interest payable [B] 11,220 Finance service cover ratio [A:B] 9.44:1 The first debt-to-equity ratio is not presented until 24 months after the issue date 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 at the end of the financial year: (ii) Debt service cover ratio RM 000 RM 000 Total cash available for debt service [A] 86,028 Debt services [B] 69,459 Debt service cover ratio [A:B] 1.24:1

203 Capital management (continued) 32.8 The aggregated debt-to-equity ratio of the Company and its subsidiary is applied to the following loans and borrowings: a) Sukuk medium term notes 2 issued by Malakoff Power Berhad ( MPB ) b) Commercial papers issued by MPB For the Sukuk medium term notes 2 issued by MPB, the Company is required to maintain an aggregated debtto-equity ratio of the Company and its subsidiary of not more than 1:1. For the commercial papers issued by MPB, the Company is required to maintain an aggregated company debt-toequity ratio of the Company and its subsidiary of not more than 1.25: RM 000 RM 000 Contingencies 213,889 Deemed total debts of the Company 213,889 Commercial papers 198,173 Sukuk medium term notes 2 4,744,338 Contingencies 48,400 Deemed total debts of MPB 4,990,911 Deemed aggregated debts [A] 5,204,800 Ordinary share capital 351,344 Redeemable convertible non-cumulative preference shares 4,179 Share premium 3,575,837 Reserve 840 Retained profits 3,596,959 Unrated Junior Sukuk Musharakah 1,800,000 Deemed total equity of the Company 9,329,159 Reserve (599,606) Retained profits 32,046 Deemed total equity of MPB (567,560) Deemed aggregated equity [B] 8,761,599 Debt-to-equity ratios [A:B] 0.59:1

204 Notes to the Consolidated Financial Statements (continued) 202 Malakoff Corporation Berhad Annual Report Capital management (continued) The Company debt-to-equity ratio is applied to the following loans and borrowings: a) Sukuk medium term notes 1 issued by the Company b) USD term loan for Malakoff International Limited ( MIL ) c) Junior EBL term loan for TBEI d) AUD term loan 1 for MIL For the Sukuk medium term notes 1, the Company s strategy remains unchanged from 2012, was to maintain a debt-to-equity ratio of not more than 1.25:1 and Group debt-to-equity ratio of not more than 7:1. The Company has settled the Sukuk medium term notes 1 during the financial year. For the USD term loan obtained by MIL, the Company is required to maintain its debt-to-equity ratio of not more than 1.25:1 and Group debt-to-equity ratio of not more than 7:1. For the Junior EBL term loan obtained by TBEI, the Company is required to maintain its debt-to-equity ratio of not more than 1.25:1 and Group debt-to-equity ratio of not more than 7:1. For the AUD term loan 1 obtained by MIL, the Company is required to maintain its debt-to-equity ratio of not more than 1.25:1 and Group debt-to-equity ratio of not more than 7:1. The following shows the debt-to-equity ratios for the following years: (i) Company debt-to-equity ratios RM 000 RM 000 Restated Sukuk medium term notes 1 5,341,439 Contingencies 213, ,835 Deemed total debts [A] 213,889 5,612,274 Ordinary share capital 351, ,344 Redeemable convertible non-cumulative preference shares 4,179 4,179 Share premium 3,575,837 3,575,837 Reserve Retained profits 3,596, ,603 Unrated Junior Sukuk Musharakah 1,800,000 1,800,000 Deemed total equity [B] 9,329,159 6,110,803 Debt-to-equity ratios [A:B] 0.02:1 0.92:1

205 Capital management (continued) The Company debt-to-equity ratio is applied to the following loans and borrowings: a) Sukuk medium term notes 1 issued by the Company b) USD term loan for Malakoff International Limited ( MIL ) c) Junior EBL term loan for TBEI d) AUD term loan 1 for MIL (ii) Group debt-to-equity ratios RM 000 RM 000 Restated Commercial papers 198,173 Sukuk medium term notes 1 5,341,439 Sukuk medium term notes 2 4,744,338 Al-Bai Bithaman Ajil bond 130, ,000 Al-Istisna bonds 193, ,870 Sukuk Ijarah medium term notes 3,544,065 3,658,439 Junior EBL term loan 726, ,103 Senior Sukuk Murabahah (Drawdown amount) 2,945,283 1,337,510 Senior Sukuk Murabahah (Unutilised amount) 344,717 1,952,490 USD Term Loan 285, ,247 Sukuk Wakalah 470,000 AUD Term Loan 1 425,508 AUD Term Loan 2 1,512,196 RM Term Loan 1 39,220 Contingencies 382, ,441 Deemed total debts [A] 15,942,160 13,842,539 Ordinary share capital 351, ,344 Redeemable convertible non-cumulative preference shares 4,179 4,179 Share premium 3,575,837 3,575,837 Capital redemption reserve Reserve 155, Subordinated loan notes 183,798 61,060 Accumulated losses (128,468) (111,501) Non-controlling interest 223,422 Unrated Junior Sukuk Musharakah 1,800,000 1,800,000 Deemed total equity [B] 6,166,923 5,682,411 Debt-to-equity ratios [A:B] 2.59:1 2.44:1

206 Notes to the Consolidated Financial Statements (continued) 204 Malakoff Corporation Berhad Annual Report Capital commitments Group Company RM 000 RM 000 RM 000 RM 000 Plant and equipment Contracted but not provided for 2,101,576 4,592,430 Authorised but not contracted for 340, ,011 5,216 5,749 2,441,949 4,896,441 5,216 5, Contingencies Group Company RM 000 RM 000 RM 000 RM 000 Guarantees secured 382, , , ,835 These guarantees mainly consist of guarantees for bid bonds, performance bonds and security deposits for projects. 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.

207 Related parties (continued) The significant related party transactions of the Group and of the Company are as follows: Significant related party transactions Group Company RM 000 RM 000 RM 000 RM 000 i. Associates: Interest income on unsecured subordinated loan notes 65,402 59,922 65,402 59,922 Project management fees ii. iii. iv. iv. Subsidiaries Interest income on unsecured subordinated loan notes 10, ,286 Management fees 26,553 27,060 Dividends 3,658, ,053 Interest expense on advances to subsidiary (52,152) An entity that is under common control by a party that controls the Group and the Company: Hicom Power Sdn. Bhd.: Operation and maintenance subcontract fee income 109,633 Operation and maintenance subcontract fee expense (277,947) 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 4,726,492 5,665,095 Purchase of electricity bulk supply (56,856) (47,232) 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 (608,471) (398,263) Petronas Dagangan Berhad: Purchase of diesel (42,206) (75,431) TNB Fuel Services Sdn. Bhd.: Purchase of coal (1,311,467) (2,045,174) Financial institutions and other corporations: Interest income 74,774 61,917 4,824 15,027 Interest expense (50,400) (16,570) (50,400) (16,570) Energy Commission: CESS fund contribution (29,598) (29,486) Malaysian Resources Corporation Berhad: Sales of centralised chilled water and electricity 32,753 29,654 Lembaga Tabung Haji: Interest expense (63,000) (20,712) (63,000) (20,712)

208 Notes to the Consolidated Financial Statements (continued) 206 Malakoff Corporation Berhad Annual Report Significant events during the year 1. Internal reorganisation exercise On 18 January 2013, the Group and the Company completed an internal reorganisation exercise. The internal reorganisation involved, amongst others: (i) (ii) The issuance of Sukuk Medium Term Notes of RM5,600 million and Commercial Papers of RM200 million by Malakoff Power Berhad ( MPB ), a wholly-owned subsidiary of the Company; The issuance of Redeemable Convertible Unsecured Islamic Debt Securities ( RCUIDS ) of RM270 million and Redeemable Convertible Unsecured Loan Stocks ( RCULS ) of RM30 million by Tanjung Bin Power Sdn. Bhd. ( TBP ), a 90% owned subsidiary of the Company; (iii) The issuance of RCUIDS of RM1, million and RCULS of RM112.5 million by Segari Energy Ventures Sdn. Bhd. ( SEV ), a 93.75% owned subsidiary of the Company; (iv) The issuance of Redeemable Unsecured Murabahah Stocks ( RUMS ) of RM58.73 million by GB3 Sdn Bhd ( GB3 ), a 75% owned subsidiary of the Company; (v) The issuance of RUMS of RM million by Prai Power Sdn. Bhd. ( PPSB ), a wholly-owned subsidiary of the Company; (vi) The issuance of RUMS of RM million by TBP; (vii) The replacement of existing redeemable unsecured loan stocks issued by TBP, GB3, PPSB in the aggregate amount of RM1, million in nominal value held by the Company with RUMS and transferred of ownership of RUMS held by the Company to MPB; (viii) The acquisition of the domestic operation and maintenance business by MPB from the subsidiaries of the Company, namely Teknik Janakuasa Sdn Bhd and Natural Analysis Sdn Bhd, a wholly-owned subsidiary of the Company; and (ix) creation of the Murabahah inter-company financing between MCB and MPB. The internal reorganisation exercise did not entail any acquisition of new companies or disposal of any existing companies within the Group. As such, the Company s effective interests in the subsidiaries and associates remain unchanged. 2. Proposed Listing of the Company on the Main Market of Bursa Malaysia Securities Berhad On 22 January 2013, the Company submitted to Bursa Malaysia Securities Berhad ( Bursa Malaysia ) the initial listing application in relation to the admission of the Company to the Official List and the listing of and quotation for the entire enlarged issued and paid-up ordinary share capital of MCB on the Main Market of Bursa Securities. The application was approved by the Securities Commissions and Bursa Malaysia on 7 March 2013 and 19 March 2013, respectively. On 6 September 2013, the Company made a public announcement through its immediate holding company, MMC Corporation Berhad to Bursa Malaysia that it decided to allow the approval of the Securities Commissions for the Proposed Listing which is valid until 6 September 2013 to lapse.

209 Significant events during the year (continued) 3. Extension of the term of the current PPA of SEV On 20 February 2013, SEV accepted the conditional award made by the Government of Malaysia through the Energy Commission. On 25 February 2013, SEV executed the following agreements:- (i) A Supplemental Power Purchase Agreement ( PPA ) to the current PPA ( Supplemental PPA ) with Tenaga Nasional Berhad ( TNB ) dated 16 October 1993 (as amended and supplemented) for the generation and sale of electricity and to make generating capacity available to TNB from its 1,303 MW combined cycle power plant located at Lumut, Perak. The Supplemental PPA shall be effective from the date of the signing until the expiry of the existing PPA on 30 June 2017 with the commencement of the competitive tariffs beginning 1 March (ii) A new PPA with TNB ( New PPA ) for the extension of the term of the current PPA. The New PPA is for a term of ten (10) years and shall be effective from 1 July 2017 to 30 June Incorporation of a new subsidiary On 19 April 2013, TJSB incorporated a subsidiary, PT. Teknik Janakuasa in Indonesia. TJSB has 95% equity interest in PT. Teknik Janakuasa and the remaining 5% equity interest is held by Madam Meutia Hidayati Besila of Messrs. Oen Choennah & Co of Bekasi, Jalan Kaveling BNI Kp. Cakung, Rukun Tetangga 004, Rukun Warga 002, Kelurahan Jatikramat, Kecamatan Jatiasih, Kota Bekasi, Indonesia in accordance with company law in Indonesia. The authorised and paid-up share capital of PT. Teknik Janakuasa comprising 526,300 shares of IDR9,723 each (approximately of RM1,708,000). 5. During the financial year, Malakoff International Limited ( MIL ), a wholly-owned subsidiary of the Company undertook the following corporate activities: (i) Acquired the entire issued and paid-up capital of Pacific Goldtree Sdn. Bhd. ( Pacific Goldtree ) with an authorised share capital of 400,000 ordinary shares of RM1.00 each and an issued and paid-up share capital of 2 ordinary shares of RM1.00 each through MIL for a cash consideration of RM2.00; and (ii) Acquired the entire issued and paid-up capital of Skyfirst Power Sdn. Bhd. ( Skyfirst Power ) with an authorised share capital of 400,000 ordinary shares of RM1.00 each and an issued and paid-up share capital of 2 ordinary shares of RM1.00 each through Pacific Goldtree for a cash consideration of RM2.00; and (iii) Incorporated Malakoff Australia Pty Ltd ( MAPL ), an indirect wholly-owned subsidiary in Australia through Skyfirst Power with 1 fully paid-up ordinary share issued for AUD1.00; and (iv) Incorporated Malakoff Holdings Pty Ltd ( MHPL ), an indirect wholly-owned subsidiary in Australia through MAPL with 1 fully paid-up ordinary share issued for AUD1.00; and (v) Acquired the entire issued and paid-up capital of Malakoff Wind Macarthur Holdings Pty Limited (formerly known as Meridian Wind Macarthur Holdings Pty Limited), a company incorporated in Australia with 174,330,816 fully paid-up ordinary shares through MHPL for a cash consideration of AUD130,328,000 (equivalent to approximately of RM383 million). 6. On 1 July 2013, Tanjung Bin O&M Berhad, an indirect wholly-owned subsidiary of the Company issued RM470 million in nominal value of Sukuk Wakalah.

210 Notes to the Consolidated Financial Statements (continued) 208 Malakoff Corporation Berhad Annual Report Significant events during the year (continued) 7. On 17 December 2013, MPB issued RM5,380 million in nominal value of Sukuk Murabahah. 8. On 21 August 2013, TJSB International Limited ( TJSBIL ), an indirect wholly-owned subsidiary of the Company, together with Sumisho Capital Management ( SCMC ), Cadagua S.A. ( CSA ) and Al-Barij International Limited ( ABIL ) jointly incorporated a limited company, Muscat City Desalination Operation and Maintenance Company ( MCDOMC ) in Muscat, Oman. MCDOMC has authorised and paid up capital of 150,000 shares of RO1 each. 37. Acquisition and disposal of subsidiaries Group 1. Acquisition of subsidiaries (i) On 28 June 2013, the Company through its indirect wholly owned subsidiary, Malakoff Holdings Pty Ltd ( MHPL ) acquired the entire issued and paid up share capital of Malakoff Wind Macarthur Holdings Pty. Ltd. ( MWMH ) (formerly known as Meridian Wind Macarthur Holdings Pty. Ltd.) for a cash consideration approximately of RM383 million. As a result of the acquisition, MHPL has an indirect 50% participating interest in the unincorporated joint venture ( UJV ) of the Macarthur Wind Farm through its wholly-owned subsidiary, MWMH, which wholly owns Malakoff Wind Macarthur Pty. Limited ( MWM ) (formerly known as Meridian Wind Macarthur Pty. Limited), the holder of 50% of the UJV. The completion of the construction of the Macarthur Wind Farm was on 31 January The following summaries the recognized amount of assets and liabilities acquired at the acquisition date: Fair value Acquiree s recognized on carrying acquisition amount date RM 000 RM 000 Finance lease receivables 2,021,035 2,021,035 Cash and cash equivalent 23,013 23,013 Loans and borrowings (1,527,819) (1,527,819) Derivative financial liabilities (110,052) (110,052) Other payables and accruals (23,013) (23,013) 383, ,164 Purchase consideration 383,164 Less: Cash and cash equivalents (23,013) Cash outflow on acquisition, net of cash and cash equivalents acquired 360,151 The Group incurred acquisition-related costs of RM6,146,000 related to arranger fees. The arranger fee has 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 million to the revenue and RM59 million to profit before tax of the consolidated entity. It is considered impracticable to estimate what the revenue and profit before tax of the consolidated entity would have been if the acquisition had been effect at 1 January 2013.

211 Acquisition and disposal of subsidiaries (continued) 1. Acquisition of subsidiaries (continued).(ii) In 2012, Malakoff International Limited ( MIL ), a wholly-owned subsidiary of the Company acquired 100% and 57.1% of the equity interest in Malakoff Hidd Holding Company Limited (formerly known as IP Middle East Holding Company Limited) ( MHHCL ) and Malakoff Summit Hidd Holding Company Limited (formerly known as IPSUM Hidd Holding Company Limited), respectively for a total cash consideration of RM347,563,000. Both the subsidiaries are principally engaged in investment holding activities. As a result of the acquisition, the Group has an effective equity interest of 39.97% on Hidd Power Company B.S.C. ( HPC ) and it became an associate of the Group. No revenue was contributed by the subsidiaries acquired during the year. From the acquisition date to 31 December 2012, the Group shared of profit of HPC amounting to RM20,357,000. If the acquisition had occurred on 1 January 2012, management estimates that the consolidated profit for the financial year would have been RM555,259,000. Intangible asset and goodwill arising from the acquisition amounting to RM81,103,000 and RM266,460,000, respectively which have been measured and accounted for using the Multi-Period Excess Earning Method under the income method as disclosed in Note 4 to the financial statements. The following summarises the recognised amounts of intangible asset and goodwill acquired at the acquisition date of the subsidiaries: Fair value Acquiree s recognized on carrying acquisition amount date RM 000 RM 000 Property, plant and equipment 3,082,618 3,082,618 Receivables 306, ,109 Inventories 47,140 47,140 Cash and cash equivalents 54,217 54,217 Bank borrowings (2,643,294) (2,643,294) Derivative financial instruments (611,695) (611,695) Deferred revenue (111,940) (111,940) Other liabilities (290,614) (290,614) Net liabilities (167,459) (167,459) Intangible asset arising from acquisition 370,369 Net intangible asset 202,910 Group share of intangible asset 81,103 Purchase consideration/cash outflow on acquisition (347,563) Goodwill 266,460 As at 31 December 2012, the goodwill arising on the acquisition of HPC was translated at the year-end closing rate. As a result, the exchange difference of RM877,000 was recognised as part of the translation reserve in the consolidated statements of changes in equity.

212 Notes to the Consolidated Financial Statements (continued) 210 Malakoff Corporation Berhad Annual Report Acquisition and disposal of subsidiaries (continued) 2. Disposal of a subsidiary (iii) In 2012, a wholly-owned subsidiary of the Company, Malakoff International Limited ( MIL ) disposed off Malakoff Jordan Generation Limited ( MJGL ), a wholly-owned subsidiary of MIL to a third party for a consideration sum of RM74,568,000. As a result, Malakoff ceased to hold an indirect equity interest in Enara Energy Investment Company ( Enara ) and Central Electricity Generating Company Limited ( CEGCO ), associates of the Group. The disposal had the following effect on the financial position of the Group as follows: RM 000 Investment in a subsidiary * Investment in associates (47,868) Net assets (47,868) Total disposal proceeds, settled by cash 74,568 Gain on disposal recognised in statements of profit or loss and other comprehensive income 26,700 * Denotes RM2 38. Acquisition of assets and liabilities (i) In 2012, Tanjung Bin O&M Berhad (formerly known as Sterling Asia Berhad), a wholly-owned subsidiary of the Company entered into a conditional asset sale agreement with Hicom Power Sdn. Bhd. ( HPSB ) for the acquisition of the rights, assets and liabilities of HPSB for a total cash consideration of RM575,000,000. The acquisition was completed on 17 December Intangible asset arising from the acquisition amounting to RM548,074,000 has been measured and accounted for using the Multi-Period Excess Earning Method under the income method as disclosed in Note 4 to the financial statements.

213 Acquisition of assets and liabilities (i) The following summarises the recognised amounts of assets and liabilities acquired at the acquisition date: Fair value Acquiree s recognized on carrying acquisition amount date RM 000 RM 000 Property, plant and equipment Trade and other receivables 67,296 67,296 Cash and cash equivalents 38,335 38,335 Inventories Trade and other payables (79,485) (79,485) Net assets 26,926 26,926 Purchase consideration (575,000) Intangible asset (Note 4) 548,074 Net cash outflow arising from the acquisition Cash and cash equivalents acquired 38,335 Less: Total deposit paid as at acquisition date (115,000) Cash outflow on acquisition, net of cash and cash equivalents acquired (76,665) Acquisition-related costs The Group incurred acquisition-related cost of RM18 million related to stamp duty. The stamp duty has been included in other operating expenses in Group s consolidated statements of profit or loss and other comprehensive income. 39. Comparative figures (i) Explanation of adoption of MFRS 119 (2011) Employee Benefits During the financial year, the Group and the Company have adopted MFRS 119 (2011), Employee Benefits. As a result, the Group and the Company have changed its accounting policy in respect of the basis for determining the income or expense relating to its post employment defined benefits plans. The change in accounting policy has been made retrospectively. (ii) explanation of adoption amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements Cycle) During the financial year, the Group has adopted the amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements Cycle) and classified spare parts as inventories unless the item of spare part is held for own use and expected to be used during more than one period in which it is classified as property, plant and equipment. In the previous financial years, all spare parts were classified as inventories. Upon adoption of amendments to MFRS 116, the Group reclassified retrospectively emergency spare parts previously accounted for under inventories to C-inspection under property, plant and equipment. The change in accounting policy has been applied retrospectively.

214 Notes to the Consolidated Financial Statements (continued) 212 Malakoff Corporation Berhad Annual Report Comparative figures (continued) (iii) Explanation of change in classification of impairment loss on trade receivables The impairment loss on trade receivables of RM5,798,000 was reclassified from cost of sales to other operating expenses to conform with the current year presentation. An explanation of how these changes have affected the Group s and the Company s financial position is set out as follows: Statement of financial position as at 31 December 2012 effect of Effect of As adoption adoption of previously of MFRS amendments As restated 119 (2011) to MFRS 116 restated RM 000 RM 000 RM 000 RM 000 Group Property, plant and equipment 10,909, ,296 11,124,456 Deferred tax assets 605,686 5, ,570 Inventories 709,095 (215,296) 493,799 Employee benefits (51,780) (21,436) (73,216) Accumulated losses 95,949 15, ,501 Company Deferred tax assets 5,884 5,884 Employee benefits (14,888) (8,647) (23,535) Retained profits (381,366) 2,763 (378,603) Statement of profit or loss and other comprehensive income for the year ended 31 December 2012 Effect of Effect of As adoption adoption of previously of MFRS amendment As restated 119 (2011) to MFRS 116 Reclassification restated RM 000 RM 000 RM 000 RM 000 RM 000 Group Cost of sales (4,047,233) 5,798 (4,041,435) Administrative expenses (250,604) (1,056) (251,660) Other operating expenses (153,359) (5,798) (159,157) Income tax expense (158,974) 2,158 (156,816) Other comprehensive expense (13,104) (13,104) Company Administrative expenses (88,044) 162 (87,882) Income tax expense (30,868) 2,158 (28,710) Other comprehensive expense (7,258) (7,258)

215 Comparative figures (continued) Statement of cash flows for the year ended 31 December 2012 effect of Effect of As adoption adoption of previously of MFRS amendments As restated 119 (2011) to MFRS 116 restated RM 000 RM 000 RM 000 RM 000 Group Cash flows from operating activities Provision for retirement benefits 5,944 2,816 8,760 Changes in working capital Inventories (11,126) 1,752 (9,374) Employee benefits (681) (1,761) (2,442) Cash flows from investing activities Acqusition of property, plant and equipments (1,976,552) (1,752) (1,978,304) Company Cash flows from operating activities Provision for retirement benefits 1, ,211 Changes in working capital Employee benefits (210) (628) (838) Statement of financial position as at 1 January 2012 effect of Effect of As adoption adoption of previously of MFRS amendments As restated 119 (2011) to MFRS 116 restated RM 000 RM 000 RM 000 RM 000 Group Property, plant and equipment 9,369, ,544 9,583,336 Deferred tax assets 532,309 3, ,035 Inventories 697,411 (213,544) 483,867 Employee benefits (46,517) (7,276) (53,793) Accumulated losses 379,791 3, ,341 Company Deferred tax assets 3,726 3,726 Employee benefits (13,353) (1,551) (14,904) Retained profits (234,086) (2,175) (236,261)

216 Statement by Directors pursuant to Section 169(15) of the Companies Act, Malakoff Corporation Berhad Annual Report 2013 In the opinion of the Directors, the financial statements set out on pages 95 to 213 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and 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 2013 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: Tan Sri Dato Wira Syed Abdul Jabbar bin Syed Hassan dato Sri Che Khalib bin Mohamad Noh Chairman Director Kuala Lumpur Date: 21 February 2014 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 95 to 213 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, Subscribed and solemnly declared by the above named in Kuala Lumpur on 21 February Ho Chee Sheong Before me: