MALAKOFF CORPORATION BERHAD

Transcription

1 Annual Report 2011

2 Operational Efficiency & Human Capital To e v e r y m a n a n d w o m a n a t M a l a k o ff, personal background and principles shape their individuality, intrinsically binding the values of how they conduct themselves with others in their respective working environments within the Group. GOAL To be a premier global power and water company CORE BUSINESS Power generation and water desalination Their passion contributes to the enduring commitment embodied in the values of the organisation, and is central to the integral strength of a competent and well-trained workforce that is the foundation of our sustainability. By the same virtue, Malakoff sees the conservation of the environment as being at the heart of our operational efficiency along with its human capital as it grows as the nation s foremost independent power and water producer. 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

3 corporate values Integrity Teamwork Innovation Excellence Harmony

4 02 Malakoff Corporation Berhad Annual Report 2011

5 03 Contents Business Review Group Financial & Performance Highlights 04 Corporate Profile 06 Corporate Information 08 Malakoff Shareholders 09 Malakoff Structure 10 Directors Profile Board of Directors 14 Board of Directors Profile 16 Management Team Organisational Structure 21 Members of Management Committee 22 Corporate Performance Chairman s Statement 26 Performance Review by Chief Executive Officer 34 Asset Performance Operation & Maintenance Electricity Distribution & Chilled Water Supply Ventures Corporate Services Corporate Social Responsibility Malakoff Community Partnerships 62 Commitment to Community and Education Commitment to the Environment Commitment to Community Sports Highlights Corporate Events Highlights 64 financial Statements Financial Statements 69

6 04 Malakoff Corporation Berhad Annual Report 2011 Group Financial & Performance Highlights FY2010 RM 000 FY2011 RM 000 Revenue 5,174,342 5,691,778 Profit before tax 135, ,848 PATMI 127, ,825 Paid-up capital 351, ,344 Shareholders funds 3,168,461 3,452,286 Total assets employed 21,997,814 21,814,646 Dividend Paid 174, ,000 Per share (sen) earnings Net assets per share (RM) ,174 5, ,168 3,452 RM Million REVENUE RM 5,692 million 128 RM Million PROFIT AFTER TAX & MINORITY INTEREST RM 463 million RM Million SHAREHOLDERS FUNDS RM 3,452 million

7 21,998 21, RM Million TOTAL ASSETS EMPLOYED 21,815 RM million SEN EARNINGS PER SHARE 132sen RM NET ASSETS PER SHARE RM 9.83

8 06 Malakoff Corporation Berhad Annual Report 2011 Corporate Profile 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 5,020 MW comprising of 6 power stations that run on gas, oil and coal.

9 07 Malakoff s power generation assets are held through a number of subsidiaries and associate companies: Lumut Power Plant through a 93.75% equity interest in Segari Energy Ventures Sdn Bhd ( SEV ) GB3 Power Plant through a 75.0% 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% equity interest in Tanjung Bin Power Sdn Bhd ( TBPSB ) Port Dickson Power Plant through a 25.0% equity interest in Port Dickson Power Berhad, via its wholly owned subsidiary Hypergantic Sdn Bhd Kapar Power Station through a 40.0% equity interest in Kapar Energy Ventures Sdn Bhd ( KEV ) Furthermore, Malakoff provides services through its wholly-owned subsidiary companies: Operation and maintenance ( O&M ) services through wholly-owned Teknik Janakuasa Sdn Bhd ( TJSB ), one of the leading O&M service providers in Malaysia Electricity distribution activities through Wirazone Sdn Bhd ( WIRAZONE ) a wholly-owned subsidiary, that currently supplies centralised chilled water and distributes electricity to the landmark Kuala Lumpur Sentral development ( KL Sentral ), which is set to become the transportation and communication hub of Malaysia Project management services for in-house and external projects through Malakoff Engineering ( MESB ), a wholly owned subsidiary of Malakoff On the international front, we own a net capacity of 360 MW of power and 213,000 m3 /day of water desalination. These projects are located in Saudi Arabia, Jordan and Algeria. 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.

10 08 Malakoff Corporation Berhad Annual Report 2011 Corporate Information as at 30 April 2012 DIRECTORS dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman DATUK HAJI HASNI BIN HARUN Non-Independent Non-Executive Director DATUK MUHAMAD NOOR BIN HAMID Non-Independent Non-Executive Director CINDY TAN LER CHIN Non-Independent Non-Executive Director DATO AZIAN BINTI MOHD NOH Non-Independent Non-Executive Director Ooi Teik Huat Non-Independent Non-Executive Director ANDREW ROWAN IAN YEE Non-Independent Non-Executive Director VIJAY VIJENDRA SETHU Alternate Director to Andrew Rowan Ian Yee Mabel Lee Khuan Eoi Alternate Director to Datuk Haji Hasni Harun COMPANY SECRETARIES Samantha Yeoh Soo Mei (MAICSA ) Bakar BIN Ahmad (MAICSA ) AUDIT COMMITTEE MEMBERS Datuk HAJI HASNI BIN HARUN Chairman DATUK MUHAMAD NOOR BIN HAMID Andrew Rowan Ian Yee REMUNERATION COMMITTEE MEMBERS dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman Datuk HAJI Hasni BIN Harun DATO AZIAN BINTI MOHD NOH REGISTERED OFFICE Level 8, Kompleks Antarabangsa Jalan Sultan Ismail, Kuala Lumpur Tel : Fax : Website : AUDITORS KPMG PRINCIPAL BANKER MALAYAN BANKING BERHAD CORRESPONDENCE ADDRESS Level 12, Block 3B, Plaza Sentral Jalan Stesen Sentral Kuala Lumpur Tel : Fax : Website :

11 09 Malakoff Shareholders as at 30 April % Kumpulan Wang Persaraan (Diperbadankan) 6.5% Standard Chartered IL & FS Asia Infrastructure Growth Fund Company Pte Limited 2.5% SEASAF Power Sdn Bhd 30% Employees Provident Fund 22.24% Anglo-Oriental (Annuities) Sdn. Bhd.* 28.76% MMC Corporation Berhad ( MMC ) * wholly-owned subsidiary of MMC

12 10 Malakoff Corporation Berhad Annual Report 2011 Malakoff Structure as at 30 April 2012 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 25% Port Dickson Power Berhad 100% Tanjung Bin Energy Sdn. Bhd. (formerly known as Transpool Sdn. Bhd.) 100% Tanjung Bin Energy Issuer Berhad (formerly known as Powerfield Sdn. Bhd.) 100% Teknik Janakuasa Sdn Bhd 100% Natural Analysis Sdn Bhd 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 100% TJSB Global Sdn Bhd 49% Hyflux-TJSB Algeria SPA 100% Wirazone Sdn Bhd

13 11 PROJECT MANAGEMENT OFFSHORE OTHERS 100% Malakoff Engineering Sdn Bhd 100% MESB Project Management Sdn Bhd 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 Power Berhad 100% Malakoff Technical (Dhofar) Limited 43.4% Oman Technical Partners Limited ( OTPL ) lv 43.4% Salalah Power Holdings Limited ( SPHL ) lv 100% Malakoff AlDjazair Desal Sdn Bhd ( MADSB ) 70% Tlemcen Desalination Investment Company SAS ( TDIC ) 35.7% Almiyah Attilemcania SPA ( AAS ) V 100% Malakoff Ras Azzour Limited 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 ( SEHCL ) lll 11.7% Shuaibah Expansion Project Company Limited ( SEPCL ) lll 100% Malakoff R&D Sdn Bhd 100% Malakoff Jordan Generation Limited ( MJGL ) VI 25% Enara Energy Investment Company ( ENARA ) VI 12.75% Central Electricity Generating Company Limited ( CEGCO ) VI I II lll IV V VI Dormant Malakoff s effective equity interest of 20% and 12% in SAMAWEC and SWEC, respectively, is held via Malakoff Gulf Limited which holds 40% equity interest in MSCSB which in turn holds 50% equity interest in SAMAWEC. SAMAWEC holds 60% equity interest in SWEC. Malakoff s effective equity interest of 11.7% in SEPCL is held via Malakoff Gulf Limited which holds 40% equity interest in MSCSB which in turn holds 50% equity interest in SAMAWEC. SAMAWEC holds 60% in SEHCL which in turn holds 97.5% equity interest in SEPCL. Malakoff s effective equity interest of 43.4% in SPHL is held via Malakoff Technical (Dhofar) Limited which holds a direct 43.4% equity interest in OTPL which in turn holds 100% equity interest in SPHL. Malakoff s effective equity interest of 35.7% in AAS is held via MADSB which holds 70% equity interest in TDIC which in turn holds 51% equity interest in AAS. Malakoff has ceased to hold an equity interest in ENARA and CEGCO following the disposal by MIL of its entire equity interest in MJGL with effect from 29 March 2012.

14 12 Malakoff Corporation Berhad Annual Report 2011

15 13 Adaptable to Change In a contest of strength and sacrifice of one s own glory, road racing is about the support of each and every individual, in their ability and intensity of being adaptable to change, in spurring their respective team leader to win the race.

16 14 Malakoff Corporation Berhad Annual Report 2011 Board of Directors Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman, Non-Independent Non-Executive Director 02 Datuk Haji Hasni BIN Harun Non-Independent Non-Executive Director Dato Azian BINTI Mohd Noh Non-Independent Non-Executive Director

17 15 04 Ooi Teik Huat Non-Independent Non-Executive Director 05 Cindy Tan Ler Chin Non-Independent Non-Executive Director 06 Datuk Muhamad Noor BIN Hamid Non-Independent Non-Executive Director 07 Andrew Rowan Ian Yee Non-Independent Non-Executive Director 08 Mabel Lee Khuan Eoi Alternate Director to Datuk Haji Hasni Harun 09 Vijay Vijendra Sethu Alternate Director to Andrew Rowan Ian Yee

18 16 Malakoff Corporation Berhad Annual Report 2011 Board of Directors Profile Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman, Non-Independent Non-Executive Director Dato Wira Syed Abdul Jabbar Syed Hassan, a Malaysian, aged 72, was appointed to the Board of the Company on 1 January He also chairs the Remuneration Committee of the Board. Dato Wira Syed Abdul Jabbar holds a Bachelor of Economics degree from University of Western Australia and a Masters of Science degree in Marketing from University of Newcastle-Upon- Tyne, United Kingdom. Dato Wira Syed Abdul Jabbar was the Chief Executive Officer of the Kuala Lumpur Commodity Exchange from 1980 to 1996, 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 Dato Wira Syed Abdul Jabbar is currently the Chairman of MMC Corporation Berhad, Tradewinds (M) Berhad, Tradewinds Plantation Berhad, Padiberas Nasional Berhad, MARDEC Berhad, Aliran Ihsan Resources Berhad and a board member of KAF Investment Bank Berhad.

19 17 Datuk Haji Hasni BIN Harun Non-Independent Non-Executive Director Datuk Hj Hasni Harun, a Malaysian, aged 55, was appointed to the Board of the Company on 24 May He also chairs the Audit Committee and a member of the Remuneration Committee of the Board. Datuk Hj Hasni is a member of the Malaysian Institute of Accountants. He holds a Masters degree in Business Administration from United States International University, San Diego, California and a Bachelor of Accounting (Honours) degree from University of Malaya. Datuk Hj Hasni Harun held several senior positions in the Accountant General s Office from 1980 to He was the Senior General Manager of the Investment Department at the Employees Provident Fund from 1994 to 2001, and the Managing Director of RHB Asset Management Sdn Bhd from 2001 until He then joined DRB-HICOM Berhad as the Group Chief Financial Officer until 2006 and joined MMC Corporation Berhad ( MMC ) as the Group Chief Operating Officer in January 2007 until February In March 2008, he was appointed as the Chief Executive Officer Malaysia of MMC prior to his current position as the Group Managing Director of MMC in May Datuk Hj Hasni sits on the Boards of MMC Corporation Berhad, Zelan Berhad, Aliran Ihsan Resources Berhad, Johor Port Berhad, MMC Engineering Group Berhad, Gas Malaysia Berhad and several private limited companies. Datuk Muhamad Noor BIN Hamid Non-Independent Non-Executive Director Datuk Muhamad Noor Hamid, a Malaysian, aged 61, was appointed to the Board of the Company on 13 July 2009 and is also a member of the Audit Committee of the Board. Datuk Muhamad Noor has held numerous positions in PETRONAS and PETRONAS Gas Sdn. Bhd., including heading up the PGU II project team. He also worked in OGP Technical Services Sdn., Bhd., a Petronas/Novacorp joint venture company, 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. Prior to joining Gas Malaysia Berhad in 2003 as the Chief Operating Officer and subsequently promoted to the position of Chief Executive Officer in February 2004, Datuk Muhamad Noor was the Chief Operating Officer of Projass Engineering Sdn. Bhd., a Class A bumiputra construction company. Datuk Muhamad Noor Hamid is currently the Managing Director of Gas Malaysia Berhad. Datuk Muhamad Noor comes with more than 30 years of direct working experience in the oil and gas industry ranging from project planning and implementation, operation, consulting and contracting. He has also attended the Management Program at the Wharton Business School of Management, University of Pennsylvania, USA. Datuk Muhamad Noor holds a Bachelor of Science (Hons) in Mechanical Engineering from Sunderland Polytechnic, England and Post Graduate Diploma in Gas Engineering from the Institute of Gas Technology in Chicago, Illinois, USA.

20 18 Malakoff Corporation Berhad Annual Report 2011 Board of Directors Profile Cindy Tan Ler Chin Non-Independent Non-Executive Director Dato Azian BinTi Mohd Noh Non-Independent Non-Executive Director Madam Cindy Tan Ler Chin, a Malaysian, aged 51, was appointed to the Board of the Company on 9 August She is currently the Head of Investment Compliance and Settlement of Employees Provident Fund ( EPF ), prior to which she was the Head of Treasury Department, Investment Division of EPF. She is also a Director of Malaysia Building Society Berhad, a subsidiary of EPF. She holds an Honours Degree in Economics, majoring in statistics, from Universiti Kebangsaan Malaysia. In 1991, she obtained a Certified Diploma in Accounting and Finance, accorded by the Chartered Association of Certified Accountants. Dato Azian Mohd Noh, a Malaysian, aged 59, was appointed to the Board of the Company on 9 August 2007 and is a member of the Remuneration Committee of the Board. Dato Azian started her career as a Treasury Accountant and served at the Accountant General s Department and Ministry of Public Enterprise between 1980 and She has held several senior positions in the public sector prior to her appointment as Director of Kumpulan Wang Amanah Pencen ( KWAP ). On 1 March 2007, Dato Azian was appointed as the first CEO of KWAP. Dato Azian also sits on the Board of Valuecap Sdn Bhd and is the Chairman of ivcap Management Sdn Bhd. She is a graduate of University of Malaya with a Bachelor of Economics (Honours) majoring in Accounting and has a Master in Business Administration from Universiti Kebangsaan Malaysia. She also has completed the Advanced Management Programme in Harvard Business School, Harvard University, USA. She is also a member of the Malaysian Institute of Accountants.

21 19 Ooi Teik huat Non-Independent Non-Executive Director Mr Ooi Teik Huat, a Malaysian, aged 52, was appointed to the Board of the Company on 1 January Mr Ooi is a member of Malaysian Institute of Accountants and CPA Australia, and holds a Bachelor Degree in Economics from Monash University, Australia. Mr Ooi began his career with Messrs Hew & Co. (now known as Messrs Mazars), Chartered Accountants, before joining Malaysian International Merchant Bankers Berhad (now known as MIMB Investment Bank Berhad). He subsequently joined Pengkalen Securities Sdn. Bhd. (now known as PM Securities Sdn. Bhd.) as Head of Corporate Finance, before leaving to set up Meridian Solutions Sdn. Bhd. where he is presently a director. Mr Ooi also sits on the Boards of MMC Corporation Berhad, Tradewinds (M) Berhad, Tradewinds Plantation Berhad, DRB- Hicom Berhad, Zelan Berhad and Johor Port Berhad. Andrew Rowan Ian Yee Non-Independent Non-Executive Director Mr Andrew Rowan Ian Yee, an Australian citizen, aged 47, was appointed to the Board of the Company on 1 September 2011 and is also a member of the Audit Committee of the Board. Prior to his appointment, he served on the Board as the alternate director of Mr Vijay Vijendra Sethu. He holds a Bachelor of Commerce degree, majoring in Accounting and a Bachelor of Law degree from the University of New South Wales, Sydney, Australia. He is also qualified to practice law in Australia. Mr Andrew Yee is the joint Chief Executive Officer of Standard Chartered IL & FS Asia Infrastucture Growth Fund ( SCILFS ) and is based in Singapore. He joined Standard Chartered s Principal Finance team in 2007 as a Managing Director and Global Head of infrastructure. He has 20 years of infrastructure experience gained from positions in investment banking, industry and private equity. Prior to joining Standard Chartered and launching SCILFS, he founded Renewable Energy Asia Pacific, a renewable energy fund. He was also the Head of Mergers and Acquisitions at InterGen Asia where he participated in the US$3.3 billion sale of InterGen to a partnership between AIG and the Ontario Teachers Pension Plan during 2004 and Prior to InterGen, Andrew was Head of Goldman Sachs Asia s Energy & Power advisory team, based in Hong Kong. He was also a Director of Corporate Finance at Barclays Australia which was acquired by ABN AMRO in 1997, prior to which he worked in the Corporate Finance team of Barclays in London. His deal experience includes the Initial Public Offering of British Sky Broadcasting, secondary offerings of National Power and PowerGen, acquisitions of British Coal and Powercor Australia, and the sale of Australian airports in Melbourne, Brisbane and Perth.

22 20 Malakoff Corporation Berhad Annual Report 2011 Board of Directors Profile Vijay Vijendra Sethu Non-Independent Non-Executive Director Mabel Lee Khuan Eoi Alternate Director to Datuk Hj Hasni Harun Mr Vijay Vijendra Sethu, aged 48, an Australian citizen, is the Alternate Director to Mr Andrew Rowan Ian Yee and was appointed to the Board of the Company on 1 September Mr Sethu has over 20 years of experience in investing, investment banking, Mergers and Acquisitions and project finance across Asia, Australasia, Europe, North America and Latin America. Mr Sethu began his banking career working eight years with ANZ Investment Bank in Melbourne, London and New York. His last position during that period was Head of Global Structured Finance for the Americas. Prior to joining ANZ Investment Bank in Singapore, Mr Sethu spent over 2 years as the Vice President and Head of Mergers and Acquisitions for Asia Pacific, Africa and China at Enron. During this time, he was involved in numerous oil, gas and power asset reviews. Mr Sethu then spent four years with ANZ Investment Bank (Singapore), as the Head of Power and later as Executive Director, Head of Project and Structured Finance for Asia During this period, Vijay s team advised on and arranged numerous debt transactions for high profile energy, infrastructure and resources projects, winning over 20 Deals of the Year awards. Mr Sethu then joined Capital Advisors Partners Asia ( CapAsia ) and was appointed Chief Executive Officer of CapAsia since the firm s inception in 2006 until he stepped down in August He however remains as a consultant to CapAsia. Dr Mabel Lee, 56, a Malaysian, is the alternate director to Datuk Hj Hasni Harun and was appointed to the Board on 1 January She was a board member of the Company since 11 April 2008 before she resigned on 31 December 2011 to assume her current position on the Board as the alternate director of Datuk Hj Hasni Harun. She is currently the Director of Corporate Strategy at MMC Corporation Berhad ( MMC ). Prior to joining MMC, she had worked with JP Morgan Chase s Kuala Lumpur office as Vice President of its Investment Banking Division. Dr Mabel Lee is a Chartered Financial Analyst charterholder and holds a Bachelor of Accounting (First Class Honours) degree from University of Malaya, MBA (with Distinction) from University of Hull, United Kingdom and Doctor of Business Administration degree from University of Newcastle, Australia. She is a member of the Malaysian Institute of Accountants, an Associate Member with Institut Bank-Bank Malaysia and is a Certified Business Coach. Mr Sethu is currently an Independent Director of International Medical University Malaysia, Infraco Asia, Cerahsama Sdn Bhd (Malaysian tollroad) and Don Muang Tollway plc, Thailand. Mr Sethu has a Master in Business Administration from Auckland University. He is a Fellow of the Association of Chartered Certified Accountants, an Associate of the New Zealand Society of Chartered Accountants, and he is also a graduate of the Chartered Institute of Management Accountants in the UK.

23 21 Organisational Structure CHIEF EXECUTIVE OFFICER chief OPERATING OFFICER ASSET MANAGEMENT DIVISION OPERATION & MAINTENANCE DIVISION GROUP FINANCE & ACCOUNTS DIVISION VENTURES I DIVISION VENTURES II DIVISION CORPORATE SERVICES DIVISION LEGAL SERVICES DEPARTMENT COMPANY SECRETARIAL DEPARTMENT CORPORATE AFFAIRS & External Relations DEPARTMENT

24 22 Malakoff Corporation Berhad Annual Report 2011 Members of Management Committee

25 from L to R Zainal Abidin Jalil Chief Executive Officer Habib Husin Chief Operating Officer Nordin Kasim Senior Vice President, Operation & Maintenance Division Azhari Sulaiman Senior Vice President, Ventures I Division Bani Zainal Azmian Senior Vice President, Corporate Services Division Ruswati Othman Chief Financial Officer / Senior Vice President, Group Finance & Accounts Division Jainuddin Mohayat Senior Vice President, Asset Management Division 23

26 24 Malakoff Corporation Berhad Annual Report 2011

27 25 Positioned for Performance As the race progresses at the absolute limits of physical endurance, the spirit of strategic competition comes to play, building the edge in being prepared and positioned for performance and thus to continuously stay ahead.

28 26 Malakoff Corporation Berhad Annual Report 2011 Chairman s Statement Dear Stakeholders, Our Vision and Mission The Board has recently taken stock of what we have achieved and revisited our vision for Malakoff Corporation, sharpening the focus. While we have the aspiration to go regional and global, we champion our métier as a niche power player. The Malaysian market contributes 95% of the Corporation s revenue, and overseas ventures the balance. In the foreseeable future the Malaysian home market will endure as our primary market. Our freshly revised goal therefore is to be a leading Malaysian multi national power company with the core business of power generation and water desalination. We have identified the critical strengths we possess that we can leverage upon. They are in project development and execution, plant operations, financial discipline, and good governance. Our mission is to become the employer of choice, delivering superior shareholder value, sought after as a partner, while sustaining best-in-class operating skills, and earning the respect of society as a good corporate citizen. Group Turnover increase 3.9% RM5,474.5 million Profit After Tax increase 32.6% RM323.2 million

29 While we have the aspiration to go regional and global, we champion our métier as a niche power player. 27

30 28 Malakoff Corporation Berhad Annual Report 2011 Chairman s Statement Financial Results A commendable performance by all the operating units, particularly from Tanjong Bin and SEV power plants, in the financial year ended 31 December 2011, delivered revenue of RM5.7 billion, up 10% from RM5.2 billion in the prior year. An almost fivefold increase in profit before tax to RM633.8 million from RM135.7 million was mainly attributable to lower operating expenses and financing costs and the turnaround of Kapar Energy Ventures Sdn Bhd to a profit this year, which also allowed for a lesser impairment provision for intangibles. The financing for the Tanjung Bin expansion project (I shall cover the award of the contract in more detail in a moment) will be by a combination of senior and junior debt facilities, comprising a combination of bonds and loans denominated in Malaysian Ringgit and US Dollars, with a combined value of over RM6.3 billion. We are very pleased that recently, the Rating Agency of Malaysia assigned a preliminary AA3 rating for Tanjung Bin Energy s Sukuk, which reflects Malakoff s high reliability and creditworthiness. Shareholders funds rose to RM3.4 billion from RM3.2 billion during the financial period under review, a more than satisfactory increase of RM283.8 million or 9%. Our Winning Bid for the Tanjong Bin Extension The highlight of the year was our winning the competitive bidding process, overseen by the Energy Commission, for a new 1,000 MW supercritical coal-fired power plant which will be built adjacent to our existing operations at Tanjung Bin in Pontian, Johor. With the addition of the new power facility, Tanjung Bin s generating capacity will be ramped up to a total combined capacity of 3,100 MW. We are very excited about securing this project. The win underscores Malakoff s track-record and capability in this business, thus reinforcing our position as the leading independent power producer, not just in Malaysia, but in the ASEAN region. We are also pleased that this project has brought together a group of reputable international commercial banks, clearly demonstrating the financial community s confidence in us, and the overall prospects for Malaysia s growth, in the years to come. We expect that the Tanjong Bin extension project will make a handsome contribution to the Group s earnings growth. Sterling Performance During the year under review, the Group maintained its position as the leading independent power producer in the country with a total effective generation capacity, from 6 power plants, totalling 5,020 MW. We currently have 23% of the power generation market in Peninsular Malaysia, based on the installed capacity totalling 21,817 MW. (Note: Page 10, Electricity Supply Industry in Malaysia, Performance Information and Statistics my/v4/phocadownload/statistik2010.pdf)

31 29 Our achievements in 2011, with the win of the Tanjong Bin extension project, returning Kapar power station to profitability, and the establishment of a joint venture partnership with Petronas, reflect the strength of our assets and success of our business strategy. Already holding the premier position in the domestic power generation sector, Malakoff has begun expanding overseas. In the international arena, we own a net capacity of 360 MW of power and 213,000 m3/day of water desalination. These projects are located in Saudi Arabia, Jordan, Oman and Algeria. Our investments in Shuaibah Water & Electricity Company in Saudi Arabia and Central Generating Electricity Company Ltd (CEGCO) in Jordan have contributed profits to the Group. Our first investment (35.7%) project in the Northern Africa region is in Almiyah Attilemcania SPA, a 200,000 m3/day sea water desalination through reverse osmosis project, located in Tlemcen, Algeria. The project achieved its Commercial Operation Date on 13 April In its maiden year of operations, from 13 April to 31 December 2011, the plant recorded an 82.35% availability factor, somewhat lower than targeted, due to higher suspended solids deposited during a particularly heavy storm. Following technical adjustments we expect a much better performance by the plant in Our promotion of a culture of performance, focus and discipline has improved risk management, driven talent management initiatives and inculcated a learning tradition. The core strength of Malakoff is that we are a reliable operator of an established network of power and desalination plants with a stable workforce and a strong reputation with excellent branding, ready and willing to put our expertise to work in the nation s interest. Corporate Social Responsibility There is a growing public recognition of the value of our Corporate Social Responsibility (CSR) activities that manifest our combined commitment to profit with the public good, under our CSR platform, the Malakoff Community Partnerships. Malakoff was awarded the following recognitions during the year: the Asia Responsible Entrepreneurship Awards 2011 in the Social Empowerment category; and, the State Level CSR Award for Johor In as much as we are humbled by the opportunity to contribute to the nation s growing power needs with the award of the Tanjong Bin extension, we are also excited about the socioeconomic growth prospect that this project will open up. We foresee that the development of this project will spin off more community benefits including jobs and business opportunities in the economic corridor, especially for people within the vicinity.

32 30 Malakoff Corporation Berhad Annual Report 2011 Chairman s Statement Malakoff s open and transparent business practices are based on ethical values and a respect for the community, our employees, the environment and other stakeholders. Our purpose and operations are designed to deliver sustainable value to society at large. Malakoff is committed to being a responsible and active participant of the local communities, where our operations are based. Our CSR initiatives focus on three specific areas, Community and Education, the Environment and Community Sports. Under our Sports for Charity banner of concept-based events, the Malakoff Annual Charity Ride and Malakoff Interstate Fellowship Ride raised funds for the underprivileged in the community. Key conservation initiatives undertaken in the year to raise awareness and educate the public were the Save Our Mangroves programme in which 10,000 saplings of mangroves were planted along the coastline of Tanjung Piai National Park and the Know Turtles, Love Turtles programme in To educate students on the importance of Green Energy, Malakoff has initiated Project Sunshine with support from the Ministry of Energy, Green Technology and Water. The project involves the installation of grid-connected photovoltaic systems in selected schools to enable solar energy to be generated for the premises. Through this initiative, students are provided with an opportunity to learn and appreciate the capture and application of alternative energy sources first-hand. As part of our continuing sponsorship of numerous community sporting events to unite people of various backgrounds, Powerman Malaysia was organised for the tenth consecutive time attracting professionals from 28 countries. The Fifth Malakoff 17km & 7km Penang Run opened to runners of various age groups and levels of fitness drew 900 participants eclipsed only by the 3,000 strong field for the Malakoff 12km & 8km Kuala Lumpur Run. From the diary of our CSR events this year, the image of cyclists in a road race passing a power plant provides the cover design, and lends the theme Operational Efficiency & Human Capital, for this year s annual report. Long distance cycling, the wheels in motion a paragon of energy efficiency, is an endurance sport that has long been supported by Malakoff for its exemplary values of leadership, strategy, focus, teamwork, discipline and perseverance, that inspires us at work, at home and in the community. Prospects We are well on our way to making the new 1,000 MW extension to the Tanjong Bin power plant a reality. The construction of this project is expected to take four years with a set Commercial Operation Date of 1 March 2016, after which we will be making the generating capacity available to the off-taker, Tenaga Nasional Berhad, under a 25-year Power Purchase Agreement.

33 31 The operation and maintenance (O&M) for the new power plant will be provided by Teknik Janakuasa Sdn Bhd, a wholly-owned subsidiary of Malakoff, under a long-term O&M agreement. We believe there are opportunities for further growth locally and certainly internationally in the medium term. We venture into places where we understand the risks, taking a systematic approach to penetrating new markets, at a deliberate and measured pace. Over the next 8 years we are targeting to add another 4,000 MW to scale up to a total generating capacity of 10,000 MW, either through green field ventures or by merger and acquisition. We also plan to double our water desalination capacity and develop 300 MW of renewable energy sources. Towards this goal, we have recently announced the acquisition of a 40% stake in Bahrain s largest independent power generation and water desalination plant, Hidd Power Company B.S.C. c (HPC), held through IP Middle East Holding Company. HPC is the owner and operator of a build, own and operate power generation and water desalination plant in Bahrain with a total capacity of 929 MW of power and 90 MIGD (million imperial gallons per day) of water desalination. The facility supplies Bahrain with 39% and 62% of its power and water supplies, respectively. Our move to expand Malakoff s presence into Bahrain will further solidify our position as the leading independent water and power producer in the region. We will continue to review other worthwhile business opportunities on the international front as part of our investment and development strategy for the future. We are particularly interested in the Asian and Middle East regions. However, we will only venture into overseas projects if we are satisfied that these projects meet our risk-return profile. We are currently exploring opportunities in several countries and undertaking feasibility studies in Pakistan, besides bidding for a water desalination project in Oman. We are also making inroads into the fast-growing Southeast Asian markets. Looking ahead to next year, on the operational level, we must ensure we meet our Power Purchase Agreement (PPA) requirements. Re-training and process improvement of the Performance Management System and measuring Key Performance Indicators will deliver greater productivity. A key objective is to improve our safety performance in everything we do, targeting zero Loss Time Incidences will be the year of execution when we lock in our new growth catalysts such as the recently secured 1,000 MW project and forge a global mindset to pursue business opportunities on the international front. We will strengthen and maintain our CSR visibility as part and parcel of our investment and development strategy. The outlook for the domestic power sector in general over the next few years is positive due to strong demand for electricity, which is expected to increase in the region of 8% annually until Growth in the nation s manufacturing sector and the increasing urbanisation of the country will continue to drive up the demand for power. On the corporate development side we will be implementing financial exercises to create a more tax efficient structure and to save on interest cost. In the medium to long term plan we will increase our income and profits by pursuing our growth strategy. Within this scenario, the Group is expected to continue to post steady earnings. As an announcement has been made to the media, I should mention that Malakoff Corporation may revert to being a public company in the near future. Malakoff was taken private in 2007 when its value was RM9 billion. The process to relist, expected to begin in mid year 2012 and to take six to twelve months, would help us to raise new capital to bring the company to greater heights. Acknowledgements Before I conclude, let me confide that the journey so far has not been the success of Malakoff alone. We are grateful for the trust that the Government has in Malakoff s capabilities. We are also extremely appreciative of our partnership with our business associates and suppliers. My appreciation also goes to all our employees who, with their dedication and commitment, have helped us to maintain our leading position in the power sector. Last but not the least, we extend our heartfelt gratitude to our financiers and of course our stakeholders, whose faith and continued confidence in the Malakoff Group are crucial to our development. I would not have been able to fulfil my responsibilities to the Group without the support and contributions of my fellow board members, to whom I extend my sincere thanks for their wisdom and advice. In this regard, I wish to record my appreciation, and that of the Board of Directors, to my predecessor, our outgoing Chairman, Yang Berbahagia Tan Sri Abdul Halim Ali, who has so ably led the corporation for the last 4 years. I would also like to take this opportunity to warmly welcome our new member Mr Ooi Teik Huat who joined the Board on 1 January Malakoff will continue to play a key role in the nation s industrialisation drive, offering specialised services in power generation, operations and maintenance, electricity distribution and project management. By fostering a culture of continuous improvement, we have worked to strengthen the results-based focus of the organisation. By managing our business and affairs in a transparent and accountable manner we will continue to win financial backing to build new capacity. I have no doubt that our commitment to excellence and intelligent planning will deliver the ultimate objective of achieving our vision and enhancing long-term shareholder value. Thank you. Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman

34 32 Malakoff Corporation Berhad Annual Report 2011

35 33 Strength in Synergy Form and fitness are benchmarks of achieving success for all road racing formats. The collective synergistic strength of any team is decisively single minded in their roles, as vital components of the whole goal driven efforts.

36 34 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer On a highly significant note, our interests in a number of power plants gave us a total effective generation capacity during the period under review of 5,020 MW. We are therefore responsible for approximately 23% of the power generation in Peninsular Malaysia, based on a total installed capacity of 21,817 MW. In 2011, the power plants we managed at Lumut (SEV and GB3), Prai and Tanjung Bin exceeded the previous year s achievement by delivering a combined 21,558 GWh of electricity to the National Grid. The average availability factors at the plants are 95.64%, 91.29%, 89.24% and 89.79%, respectively. Generating approximately 23% of power in Peninsular Malaysia Plants Delivered Combined 21,558 GWh of electricity to the National Grid

37 We will continue to contribute towards the nation s pulsating economic development through our core business activity of generating power. 35

38 36 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer Riding on the wave and momentum of our pioneering overseas ventures, the year 2011 saw our foray in the Northern Africa region, where the Almiyah Attilemcania SPA (AAS), a subsidiary company is undertaking the development of the 200,000 m3/ day sea water desalination through reverse osmosis project, which is located in Tlemcen, Algeria. During the year, we had announced that the plant achieved its Commercial Operation Date on 13 April The Shuaibah Phase 3 Independent Water and Power Project located near Jeddah in the Kingdom of Saudi Arabia performed exceptionally well, achieving an availability factor of 93.17% and 94.93%, for power and water, respectively. Meanwhile the Shuaibah Expansion Independent Water Project desalination plant recorded its equally impressive availability factor of 94.62%. We continue to review business prospects on the international front, exploring opportunities for future growth. In Jordan, however, we have initiated a process to divest our 12.75% interest in the Central Electricity Generating Company Ltd (CEGCO). Our interests on the local shores saw Malakoff winning an IPP tender held by the Malaysian Government. We have been succesfully awarded through our efforts, a contract to build a 1,000 MW super-critical coal-fired power plant next to the existing power plant in Tanjung Bin, Johor. The plant will have a 25-year concessionary period to sell electricity to Tenaga Nasional Berhad. We hold pride that the Malakoff Group has the distinct advantage of being the only IPP in Malaysia that operates and maintains its own power plants, through its wholly-owned subsidiary Teknik Janakuasa Sdn Bhd (TJSB). Being in operation since 1993, TJSB maintains and operates the Lumut, GB3 and Tanjung Bin power plants. TJSB s 100%-owned subsidiary Natural Analysis Sdn Bhd (NASB), maintains and operates the Prai Power Plant. Integrated outage management and cost optimisation contributed to considerable cost savings on several major overhauls undertaken during the year at the Lumut and Tanjung Bin plants. As we race ahead to compete on new levels of challenges, TJSB International has developed an Operations & Maintenance (O&M) portfolio overseas in Kuwait, Saudi Arabia and Algeria, either as a principal, sub-contractor or in partnerships, and continue to pursue opportunities for new contracts. We foresee that climatic change concerns, coupled with high oil prices, peak oil and growing Government support, are the driving catalyst that is increasing renewable energy legislation, incentives and commercialisation. The Feed in Tariff to be introduced by the Malaysian Government will encourage development of Renewable Energy (RE) in the country by making it possible for anyone to generate green renewable electricity and sell it back to the national power grid. By responding to the cause during the year, we defined Malakoff s Green Technology Initiative (GTI), and embarked upon identifying RE prospects in Malaysia, notably, in the pivotal fields of biogas, biomass and waste to energy aspects.

39 37

40 38 Malakoff Corporation Berhad Annual Report 2011

41 39 Platform of Power Road racing is as tactical as it is physically demanding, requiring timing on a platform of power to launch a breakaway as one or as a group, where co-operating strategically as a team plays an important part in determining the results.

42 40 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer Asset Performance LocaL ASSETS (Subsidiaries) Segari Energy Ventures With the experience and expertise amassed in its operations for more than fifteen years, Lumut Power Plant, with a dependable capacity of 1,303 MW remains the largest combined cycle power plant in Malaysia. The plant is held through our subsidiary, Segari Energy Ventures Sdn Bhd (SEV), in which we owned percent. During the financial year under review, Lumut Power Plant maintained its high performance in terms of availability, reliability and efficiency. Delivering approximately 2,559 GWh of electricity to the National Grid, with an average capacity factor of approximately percent, notwithstanding its availability of percent, the plant exceeded the 86.0 percent threshold under the Power Purchase Agreement (PPA) with Tenaga Nasional Berhad (TNB). Having met all the required performance standards set out in the PPA, SEV therefore received full capacity payments for the period under review. GB3 Power Plant Another one of our power plants that is part of the vital components of our thrust is the GB3 Power Plant, which is also a combined cycle power plant with a dependable capacity of 640 MW, and is held through our 75 percent-owned subsidiary, GB3 Sdn Bhd. The power plant is in its tenth year of operation, and is located adjacent to the Lumut Power Plant owned by SEV. The plant delivered a total of 3,080 GWh of electricity to the National Grid, with an average capacity factor of approximately percent during the financial year under review. The plant s availability was percent, and meeting the PPA Contracted Average Availability Target of 91.5 percent for Contract Year Block 2009 until Prai Power Plant Our Prai Power Plant, on its ninth year of operation, is a singleshaft combined cycle power plant with a dependable capacity of 350 MW, and is geared to deliver a total of 2,075 GWh of electricity to the National Grid. During the financial year under review, the plant recorded an average capacity factor of percent and availability of percent. As the plant had to undergo a scheduled major inspection in November 2009 to January 2010, it did not meet the PPA Contracted Average Availability Target of 93 percent for the Contract Year Block 2009 until 2011, as it achieved only 91.5 percent.. Nonetheless, being one of the most efficient power plants in Malaysia, Prai Power Plant recorded a net efficiency (LHV) of percent during the financial year under review. One of our finest enduring achievements, Tanjung Bin Power Plant is the first private coal-fired power plant in Malaysia, and one of the largest independent coal-fired power plants in Southeast Asia.

43 41 Tanjung Bin Power Plant One of our finest enduring achievements, Tanjung Bin Power Plant is the first private coal-fired power plant in Malaysia, and one of the largest independent coal-fired power plants in Southeast Asia. The plant consumed various types of bituminous and sub-bituminous coals imported from Australia, South Africa and Indonesia. The plant is held through our subsidiary, Tanjung Bin Power Sdn Bhd, in which we owned a 90 percent interest. In its sixth contractual year of operation, Tanjung Bin Power Plant, with a generating capacity of 2100 MW had delivered a total of 13,844 GWh of electricity to the National Grid, with an average capacity factor of percent and recorded an availability of percent. The plant is expected to meet the PPA Availability Target of 91 percent for the Contract Year Block ending December The plant utilises clean coal technology equipment such as Electrostatic Precipitator (ESP), and Flue Gas Desulphurization (FGD) that allows the plant to maintain boiler emission levels within limits, set by the Department of Environment (DOE). LocaL ASSETS (Associates) Kapar Energy Ventures Our Sultan Salahuddin Abdul Aziz Power Plant is the largest power plant in Malaysia with a total generating capacity of 2,420 MW, which comprises of the following generating facilities: Generating Facility 1 (GF1): 2x300 MW Dual-Fuel Firing (Gas and Oil) Generating Facility 2 (GF2): 2x300 MW Dual-Fuel Firing (Coal and Oil) Generating Facility 3 (GF3): 2x500 MW Triple-Fuel Firing (Coal, Gas and Oil) Generating Facility 4 (GF4): 2x110 MW Open Cycle Gas Turbine

44 42 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer As can be seen in our performance, Malakoff s interest is held through its 40 percent equity in Kapar Energy Ventures Sdn Bhd. For the financial year under review, the plant delivered approximately 13,230 GWh to the National Grid. The average availability factor, efficiency and unplanned outage rate (UOR) for the respective Generating Facility are tabulated in the table below: Generating Facility Avail. Factor, % Efficiency, % UOR, % GF GF GF GF All the coal fired boiler units (GF2 & GF3) utilised clean coal technology equipment, namely Electrostatic Precipitator (ESP) which enabled the boiler emission levels to be maintained within limits set by the Department of Environment (DOE). The plant s 300 hectares ash pond area is also well-known as the sanctuary for migratory birds, as it becomes host to thousands of waterbirds of more than 60 different species, which has created a natural transitional landmark for the East Asian Australian Flyway flight path during the annual migratory season. PD Power Our Port Dickson Power Plant is a 440 MW open cycle peaking power plant, where Malakoff, through its wholly owned subsidiary, Hypergantic Sdn Bhd holds a 25% equity interest in the plant. The plant is operating according to the open cycle gas turbine mode, and is in a strategic position to supply electricity to the National Grid for peaking and emergency requirements. By virtue of its distinction in having maintained an exceptionally high availability of more than 99% forced outage rate of less than 0.2%, and commercial starting reliability of close to 100% for the past 15 years, the plant continues to demonstrate its winning edge of staying ahead. International Assets Shuaibah Water & Electricity Company LTD From the pace of our expanding global ventures, we recorded our first project overseas in the Shuaibah Phase 3 Independent Water and Power Project located near Jeddah, in the Kingdom of Saudi Arabia. The Project consists of 3x300 MW crude oil fired power plant and a 880,000m3/day multi staged flash distillation for desalination of sea water. The project was executed on a Build, Own and Operate (BOO) basis with a 20 year Power and Water Purchase Agreement (PWPA) with the Water and Electricity Company of Saudi Arabia.

45 43 Almiyah Attilemcania Spa Being our first project in the Northern Africa region, the 200,000m3/day sea water desalination project through reverse osmosis is located in Wilaya of Tlemcen, Algeria. The project achieved its Commercial Operation Date on 13 April For the first operating year of 2011 (from 13 April Dec 2011), the plant recorded an 82.35% availability factor, which was lower than targeted, as it was hampered due to unforeseen circumstances in the state of higher suspended solids, during heavy storms there. With a 35.7% effective stake, Malakoff is putting a lot of effort to overcome the initial technical problems, and we expect a much better performance of the plant in Financial Year Enterprise Risk Management The Enterprise Risk Management ( ERM ) has been treated as a coordinated approach in assessing and responding to all identified risks within the Group. After successfully achieving the Plant Commercial Operation Date on 14 January 2010, the Plant continued to perform commendably. In FY2011, the Plant recorded an availability factor of 93.17% and 94.93% for power and water respectively, which is a strong reflection on Malakoff s performance, as it has a 12% effective stake in this project. Shuaibah Expansion Project Company Ltd We are also involved in the Shuaibah Expansion Independent Water Project, which uses the reverse Osmosis technology to desalinate sea water. The capacity of the plant is 150,000m3/ day, and after successfully achieving the Plant Commercial Operation Date on 17 November 2009, the Plant maintained consistent performances with an availability factor of 94.62% in FY2011. Malakoff continues to have an 11.7% effective stake in this project. Central Electricity Generating Company Ltd As we begin to expand our portfolio on the overseas frontier, we are poised to tap into the Central Electricity Generating Company Ltd of Jordan, which has 4 major power plants under 4 separate Power Purchase Agreements. The fifth PPA governs the balance of generation capacity from 4 other small power plants. The overall availability factor for CEGCO is 94.30%, above the 93% targeted for Financial Year As Malakoff has a 12.75% stake in CEGCO, we have initiated the process of divestment in this asset. ERM was reflected in the broad policies and procedures, which are carried out by the Group on a periodic basis in order to facilitate a more integrated risk management approach aligning strategy, processes, people, technology and knowledge with the purpose of managing the risks that the Group faces. In 2011, several initiatives have been conducted in order to enhance the existing ERM process. These initiatives are as per below: a. Risk Synchronization This initiative is conducted by Risk Consult, and is in collaboration with Primary Risk Management Unit ( PRMU ).The initiative tightens the risk control and mitigation, and proactively prevents plant from potential risk impacts b. Risk Assessment Workshops The divisional risk assessment workshops has been conducted for Wirazone Sdn Bhd, Asset Management Division and Operations and Maintenance Division. The workshops has identified and assessed the potential risks based on each division c. Assessors Training These trainings have been successfully conducted at all plants. The training educates and demonstrates the right ways of doing audit including audit etiquette, audit execution and risk evaluation. It is treated as an additional improvement initiative towards performing a risk assessment audit

46 44 Malakoff Corporation Berhad Annual Report 2011 Operation & Maintenance Performance Review by Chief Executive Officer Being one of our major subsidiaries, Teknik Janakuasa Sdn. Bhd. ( TJSB ) is wholly-owned by Malakoff Corporation Berhad ( MCB ), Malaysia s leading Independent Power Producer ( IPP ). It was incorporated in 1993 as an Engineering Services Company specialising in the provision of Operations & Maintenance ( O&M ) services for the power generation sector. Proving its stellar track-record, TJSB was awarded an Operation and Maintenance ( O&M ) Contract in 1993, for the Lumut Power Plant ( LPP ), which is Malaysia s largest combined-cycle gas turbine ( CCGT ) power plant, that is harnessed by a 1303MW power plant utilising Alstom 13E2 Gas Turbines. In 2001, another 640 MW CCGT was added into TJSB s portfolio when it was awarded a 21year O&M contract for GB3 Power Plant, which is located nearby to the LPP. Backed by an impeccable track record, the O&M s expertise of the LPP, GB3 and Prai Power Plant has been well recognised and acknowledged by other plant operators in the country. In 1999, the company was awarded a 5-year contract for its Operations Management Services ( OMS ) with the Centralised Utility Facilities ( CUF ). Owned by PETRONAS Gas Berhad ( PGB ), the facilities are based at Gebeng and Kerteh, serving two whole regions of petrochemical plants. The contract was to operate, maintain and train PGB s personnel to take over the O&M program at the end of the contract period. This contract was successfully completed in Through its acquisition in 2004 for the remaining 49% stake in Natural Analysis Sdn Bhd, the O&M Company for Prai Power Plant and TJSB were successful in adding to its services, a range of contracts that included a 350 MW CCGT power plant into its portfolio. The list continues when it was awarded the 25-year contract in 2006, to operate and maintain a 2100 MW coalfired power plant, in Pontian, Johor, located in the southern corridor of Malaysia. In the meantime, TJSB continues to provide support and expertise to the group, ensuring that the assets are not only managed and maintained efficiently, but cost effectively through the implementation of the latest O&M tools and methodologies, together with the strength and capabilities of the technical support team.

47 45 As a long term commitment towards the implementation of safety, quality and environmental protection initiatives, the plants operational and maintenance standards continue to be certified by the OHSAS 18001, ISO 9001 and EMS management systems. In line with the Company s core values of achieving excellence and to ensure continuous improvements, the O&M tools and methodology, such as Reliability-Centred Maintenance (RCM), Root-Cause Analysis (RCA) and Risk-Based Inspection (RBI) had been used extensively. Lumut Power Plant Moving ahead, the SEV and GB3 power plants continued with its proven reliability to dispatch power as demanded, despite the challenging scarcity of fuel gas supply faced nationwide, during the financial year under review. The Availability Factor (AF) achieved stands at 95.68% and 91.29% for SEV and GB3 respectively, with the Unscheduled Outage Rate (UOR) at 0.93% for SEV, and 0.89% for GB3 plant. The higher electricity demands had pushed the Capacity Factor (CF) to a higher level as compared to previous years to 22.31% for SEV, and 54.94% for GB3 plant, translated into total energy sold to Offtakers were at 2,559 GWh, and 3,080 GWh for SEV and GB3 respectively. During the scarcity of fuel gas supplies from Petronas, the plant continued to operate on distillated fuel which contributed to 393 GWh, and 293 GWh for the SEV and GB3 plants respectively. Aligned with the company s policy towards environmental friendly practices, the plant was successfully certified as a recipient of the ISO14001 Environmental Management System in Besides that, recertification exercises for MS ISO9001 Quality Management System, OHSAS and MS1722 Occupational Health and Safety Standards were also completed successfully. In-house and external training to enhance staff competency were also the main focus of our human capital investment. Several projects for plant improvements continued, and have been carried out in this reporting financial year. Among others were the automatic dynamic combustion optimisation on unit start-up, interblock auxiliary power sharing facility, and minimising the make-up of water consumption. Backed by an impeccable track record, the O&M s expertise of the LPP, GB3 and Prai Power Plant has been well recognised and acknowledged by other plant operators in the country.

48 46 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer The maintenance teams had been busy in 2011 with 2 major gas turbine inspections, its associated boiler and auxiliaries among others. Furthermore, 6 minor gas turbine inspections were also carried out, with 2 of these inspections done due to accelerated firing hours during distillated fuel operations. As we look forward, there will be 1 major gas turbine inspection, major and minor steam turbine inspections, 4 minor gas turbine inspections, with a minor steam turbine inspection that has been planned to be carried out, within the financial year of Prai Power Plant Regarded as one of the most efficient power plant in Malaysia, the Prai Power Plant recorded a net efficiency (Low Heating Value) of 53.50% during FY2011. The Prai Power Plant achieved a Capacity Factor (CF) of 67.75%, with the total 2,075 GWh of electricity delivered to the National Grid. With its unique incorporation of the fuel gas compressor systems linked to the combined cycle plant, the Prai Power Plant is capable of operating at low fuel gas pressure. The flexible operating regime ensures that Prai Power Plant is continually functioning in its fuel gas operations, barring any unforeseen shortage of fuel gas supplies. The Prai Power Plant has successfully obtained certifications on MS ISO9001 Quality Management System, OHSAS and MS1722 Occupational Health and Safety Standards, and the ISO14001 Environment Management System. Prai Power Plant has been in operation without any Loss Time Injury (LTI) incurred since its Commercial Operation Date (2003). Tanjung Bin Power Plant Our Tanjung Bin Power Plant recorded a capacity factor of 75% and availability target of 88% for the year The coal unloading throughput was 5.7 million tons with 79 coal shipments. There were 3 minor overhauls for boiler Certificate of Fitness (CF), renewals and other related equipment statutory inspections. During the minor overhauls, plant reliability and performance improvement projects with total CAPEX RM24 million were implemented. One of the main achievements was the 30% particulate emission reduction after implementing the upgrade of transformer rectifiers, and the installation of air sonic horns at the Electrostatic Precipitator(ESP) for 2 units of boilers, to improve the collection efficiency. Furthermore, a boiler auto tuning system with on line flame data input was also installed for one of the boilers, which achieved an increase in boiler efficiency. The NOx and CO2 reduction with lower boiler metal temperatures bear the mark of improved productivity through combustion optimisation. Technical Support Group ( TSG ) While evaluating the year under review, TSG continued to enhance its operations with the objective of improving levels of technical support provided to Malakoff s O&M activities, within and away from Malaysia. The effort saw the formation of specialised teams to provide greater support to facilities of different technologies, namely Thermal Plant and CCGT Plants. In addition to that, TSG had also strengthened the Water technology team in view of the increased participation in Water production within the Group. As what we have evidently witnessed, TSG has started to reap the benefits of its intensified efforts, in the areas related to plant improvement initiatives. Integrated outage management and cost optimisation has contributed to considerable cost savings for several major overhauls, undertaken during the years in Lumut and Tanjung Bin. TSG continues to make its presence felt at international levels, including delivering the Technical Audit for Dhofar Power Company in Salalah Oman, and providing technical support to the Operation & Maintenance teams in Algeria for its Commercial Operations. TSG has also successfully conducted and led various assessments and audit activities within MCB s portfolio, including Operation Risk Assessment Audits in Tanjung Bin, and Engineering Risk Assessments in Lumut and Prai.

49 47

50 48 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer O&M International TJSB has an equity of 20% in SAMAOMCO, the O&M operator of Shuaibah Phase III plant, in Saudi Arabia, which was awarded in Recognized as the world s largest independent water and power plant, the total length and breadth of the project holds a record capacity of 900 MW of power, and 880,000m3/ day of water. In the succeeding year, TJSB together with Hyflux Limited of Singapore secured a new project of O&M contract for a 200,000m3/day Sea Water Desalination Plant in Algeria. As at 2011, they have managed to achieve the availability factor of up to 87.6 % for the plant. Several audits and due diligence studies had also been carried out, to provide better innovative solutions for the operations and maintenance of the plant, in the years to come. At the present moment, TJSB has completed its Operation and Maintenance Management Services ( OMMS ) contract with Petronas Gas Berhad s COGEN plants since Leveraging on the OMMS contract with Petronas, TJSB was awarded with another 5 years OMMS contract to operate the Azzour Emergency Power Plant in Kuwait, in early Currently, TJSB s manpower strength at the Kuwait site stands at 16 personnel, encompassing all key personnel and engineers. From day one, the plant was able to sustain its high availability factor of more than 99.5%, for the critical summer period. The plant also recorded 1,383,476 Safe Man Hours for 2011, having no LTI (Lost Time Injury) since the beginning of the O&M project in This experience is accredited to the endurance of our teamwork, that has further solidified TJSB s strength in the O&M business. Beyond that, TJSB had also successfully completed a 12 Months Manpower Supply contract with Aluminium Bahrain (ALBA) in the Kingdom of Bahrain in The project entailed considerable specialisation in major overhaul works for Alstom gas turbine 13DM and the 13E2 machine. TJSB was also involved in the O&M for Water Expansion Project in Shuaibah III Plant Saudi Arabia in 2009, which utilised the Reverse Osmosis technology with a capacity of 150,000 m3/day. TJSB International O&M portfolio can be referred in the table below: TJSB O&M PORTFOLIO Plant Name Configuration Generating Capacity Generation Type Contract Type O&M Term Az Zour, Kuwait 5 x 160 (GT) 800 MW OCGT Fixed Fee 5 O&M via Subcontracting Shuaibah III Water and Electricity 3x300 (thermal) 900 MW, Lump Sum IWPP Company, Saudi Arabia 880,000m 3 /day (sub contract) 20 Shuaibah III Water Desalination 10 Train Expansion, Saudi Arabia Reverse Osmosis 150,000m 3 /day IWPP 20 O&M via Partnership Souk Tleta, Algeria 13 x RO Train 200,000m 3 /day IWP Lump Sum 20

51 49 Group Health, Safety and Environment As a good corporate citizen, Malakoff is committed to responsible HSE management practices in every aspect of our operations. Cultivating a culture of HSE Excellence is central to the company s long-term sustainability. In the year under review, Malakoff continued to place strong emphasis on HSE in all aspects of our operations, by integrating essential practices into our business activities, in line with international standards and practices. The Lost Time Incident at Tanjung Bin Power Plant and Lumut Power Plant is an important reminder for us to be constantly on guard, in observing HSE Standards and best practices. The key lessons from such incidents are systematically shared group wide, to ensure that we understand the impact to business, as well as reputation, and address key HSE concerns by taking preventive measures, at all levels of our operations. At the same time, we continue to ensure that our operations are governed by HSE environmental standards, that are based on industry best practices. To safeguard our people, contractors, environment, assets and reputation, Malakoff s HSE strategies are focused on strengthening HSE leadership, culture and mindset, and enhancing HSE risk management and HSE governance. There is a Group Health, Safety and Environment Policy which drives various HSE sustainable initiatives, and defines the framework that exemplifies the Group s effort to continuously meet legal compliance and industry best practices. HSE also drives strategies, and monitors and reports performance to the senior management, to ensure HSE risks are reduced to as low as reasonably practicable.

52 50 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer

53 51 Initiatives To strengthen and elevate a commitment to HSE among Malakoff mid and senior management, HSE Key Performance Indicators (KPI S) have been incorporated into their scorecards. Mid and Senior management will be assessed based on the performance of their respective sites Lost Time Injury incidents. The inclusion of these KPIs will help drive improvement in the Group s Safety, sustainable development, capability and performance. Procurement Practices The Procurement and Warehouse working group, which was formed earlier to review and recommend a revision to the Group Procurement and Warehouse Procedures has been disbanded. This is after all, the procedures that have been approved, and road shows were made to all plants and Head Quarters staff. Our trusted auditors Ernst & Young s internal audit findings and reports for all 3 plants are satisfactory, whereby there are no major or high ratings or non-conformance, in terms of adhering to the Malakoff Group Procurement Procedures and Policies. Functioning as a supporting department for the O&M of the plants, we were able to ensure the availability of materials and services for the day to day, and especially outages most of the times. We ve also met the target of completing more than 80% of the CAPEX request for Long Term Price Agreement (LTPA) and Long Term Service Agreement (LTSA) have been signed between TJSB (LPP) and Alstom, for the purchase of major parts and services. Meanwhile for Prai, the same agreement is signed with GE Engineering. For Tanjung Bin plant, the target is to sign a LTSA with IHI Power Sdn Bhd in the year The tax exemption savings under the cost leadership initiatives for the year ending 2011, for all the 3 plants is about RM7 million. The working group had recommended two new initiatives which were as follows: i. Vendor Invoice Management System (VIMS) has been completed and is presently being used now. The process will expedite the processing of invoices and payments, whereby everything will be done electronically. ii. Vendor and Document Management Portal (VDMP) is coming towards the end of its development stage, whereas User Acceptance Test (UAT) is being carried out now. The VDMP will expedite and enhance our current procurement processes, that are also done electronically. Besides that, a Centralised Vendor Data base will make use of the VDMP Portal. The intention is that, TJSB HQ will carry out the process of qualifying and registration of current and new Vendors. We are excited to announce that the TJSB Group Procurement and Contract Department has finally been set up at its HQ, where some of the functions are to ensure adequacy to the Group Procurement Policy & Procedure, and to carry out the procurement processes for Plant Improvements under the CAPEX budget.

54 52 Malakoff Corporation Berhad Annual Report 2011 Electricity Distribution and Chilled Water Supply Performance Review by Chief Executive Officer Another one of our subsidiaries, Wirazone Sdn Bhd ( Wirazone ), a wholly-owned subsidiary by Malakoff, is licensed by the Energy Commission to distribute electricity in the Kuala Lumpur Sentral ( KL Sentral ) development area, for a period of 21 years. It also supplies chilled water to the Plaza Sentral Office Complex for air conditioning purposes, from a centralised chilled water system. During the year under review, Wirazone served a customer base of 1,660 accounts for electricity distribution. The highest recorded maximum power demands increased to 29.5 MW compared to 28 MW recorded last year. The increase in electricity demand is attributable principally to the increase in occupation of buildings in the development area. With construction activities going on unabated in the enclave, Wirazone expects this trend to continue, thus paving the way for brighter prospects in the coming years. Wirazone s annual survey continues to indicate favourable customer satisfaction. This is a direct result of continuous improvement efforts in its services, where the focus is on customer-centric service excellence. Results of the 2011 Customer Survey showed it had garnered more than 85% of satisfied customers. To strengthen customer bond, our Customers Day has been a popular, annual event for Wirazone. It is a gesture of appreciation, of gratitude for the strong support received from its many loyal customers. And it also gives both the hard working staff of Wirazone and their equally busy customers an opportunity to unwind as friends, after the many long hours put in at work & caring for their homes. During the year under review, Wirazone brought its customers into the lush greenery of the famous Forest Research Institute of Malaysia or better known as FRIM over in Kepong. Activities included a Treasure Hunt involving jungle trekking, Sand Art and a fun Telematch for children, with games and karaoke sessions for the adults. There were also 40 specially invited guests orphans from Rumah Amal Peribadi Mulia, Kajang who joined in the outing. Wirazone takes pride in providing excellent electricity distribution services within the KL Sentral area. This is evident where KL Sentral customers only experienced less than 1.0 minute of electricity interruption per customer for the year, compared to 7.7 minutes in the previous year. This impeccable trend was also apparent when there were NO interruptions of chilled water supply for the year. Wirazone also began the project to convert its existing plant to a thermal energy storage plant, which is in line with our energy efficiency development programme. Upon completion, this will more than double Wirazone s district cooling capacity within the KL Sentral area. Looking forward to tomorrow, Wirazone is actively exploring opportunities to extend its business beyond the KL Sentral development area, as well as the prospect of embarking on ventures as a multiple utility provider.

55 53

56 54 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer Ventures Malakoff is keen to work with suitable partners to provide competitive energy and water supply solutions. VENTURES I In Malaysia, the Company had participated in the first ever IPP tender held by the Government, and have successfully been awarded the concession to build a 1,000 MW super-critical coal-fired power plant on its existing power plant site in Tanjung Bin, Johor. The plant will have a concession to sell electricity to Tenaga Nasional Berhad through a 25-year PPA. Ventures is also closely monitoring on the announcements by the Energy Commission of Malaysia (EC), on the opportunity for 4,500 MW power generation, to replace the capacity of the first-generation power purchase agreements (PPAs) between 2015 and 2017, and to cater to new demands beyond VENTURES II In a generally favourable 2011, Malakoff continued in its growth initiatives by focusing on power and water related projects, and actively pursuing opportunities for development of greenfield and brownfield assets in South Asia, Middle East & the North Africa regions. Malakoff is keen to work with suitable partners to provide competitive energy and water supply solutions. We develop these infrastructures with a long term goal of benefiting the stakeholders of the project. Malakoff intends to become a major player in both the industries, and look forward to many successful projects in the future with our partners. Initiatives are put in place to keep abreast with the latest development and projects, in all aspects of the power and water industries. Additional efforts are established to closely gather, monitor and assess this intelligence in our quest to seek the leading edge, of potential opportunities that arises. Pushing forward to greater opportunities, Malakoff will focus on expansion of existing assets, by leveraging on its power & water desalination capabilities. The Company will also continue to foster effective institutional relations to improve its brand recognition in the target investment countries, particularly in the Middle East & North Africa region. GREEN TECHNOLOGY INITIATIVE In year 2011, Green Technology Initiative (GTI) has outlined renewable energy (RE) development strategy for Malakoff towards building RE portfolio of 300 MW by In anticipation of the new Feed in Tariff that will be introduced by the Malaysian

57 55 government towards promoting development of Renewable Energy in the country, Malakoff has embarked in identifying RE projects in Malaysia. Notably, some of the projects of interest pursued by Malakoff in 2011 MOU with Indah Water Konsortium to conduct a deskstop study on the feasibility of biogas codigestion in the KL area. Running the project viability on setting up a biomass plant in Sabah. Exploring the feasibility of developing biogas plant at palm oil mills. Conducting the feasibility study for the development of Waste to Energy proposal in Johor. Development of biogas project based on animal waste at one of the chicken farms.

58 56 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer Corporate Services Human Resource Development Looking ahead, the Company is poised for exponential growth this year, and the next few years, taking advantage of local and regional opportunities. With the expansion of operations, there have been an increased emphasis in strengthening existing human capital management systems and processes to support the Company s growth. With the mission to grow the Company, training and development in Malakoff has become increasingly important in the last few years. Malakoff was awarded the Human Resources Development Award or Anugerah Pembangunan Sumber Manusia for 2011 in recognition of efforts in this area. From 94 programs in 2007, there were 463 programs in 2011; a total budget of RM7.1million was allocated for training in There have also been efforts to ensure development of core competencies in the Group to support the pipeline of new projects. The Project Management Office is made up of employees with the experience and right skills set to drive new projects, whilst ensuring continuous knowledge transfer takes place to the less experienced and developing employees. Technical, commercial, business acumen and market analysis are some of the core competencies that the Company is focused in developing its people. Another key focus for the Company is to move towards a more effective performance management system for the Company. In line with this, there has been a concerted effort to differentiate high performing and poor performing employees. The objective is to reward employees who truly exhibit high performance and manage poor performers more effectively saw a more stringent process applied for the purpose of bonus distribution. Employees who demonstrated high performance were differentiated from average employees at exponentially higher bonus distributions, whilst poor performers went unrewarded and were counselled to improve performance. Attracting the right talent with the right competencies is critical to support our growth plans for the future. A main stay of external talent for new projects are fresh graduates. Malakoff has actively engaged with student associations, university student affairs bodies, GRADUAN and TalentCorp Malaysia to promote Malakoff as a preferred employer. Malakoff has also engaged with reputable foreign universities, the likes of Imperial College of London, University College London (UCL), Vanderbilt University, University of Melbourne, Royal Melbourne Institute of Technology (RMIT) as well as local universities including Universiti Tenaga Nasional (UNITEN), Universiti Teknologi Malaysia (UTM), Universiti Teknologi Petronas (UTP) and Universiti Malaya (UM) to promote the Company to graduating students.

59 57 Organisational Development ( OD ) is consistently looking at new and innovative ways in the area of talent management to steer Malakoff to even greater heights. At Malakoff, we execute on our belief that our people represent our most valuable assets. Organisational Development ( OD ) is consistently looking at new and innovative ways in the area of talent management to steer Malakoff to even greater heights. As a testament to the Company s Management commitment towards talent management and employee engagement, the year under review saw parallel and aggressive movements of various OD initiatives. Aware of safely sustaining the talent flow, the Succession Planning program, launched in 2011, aims to ensure a continuous pipeline of talent to undertake key and business critical positions for growth and sustainability of the Company. The program is supported by a targeted Talent Management program to develop selected candidates with the right skills set through leadership programs and on-the job learning, including coaching and mentoring programs. The Senior Leadership Development Program ( SLDP ) and Leadership Development Program ( LDP ) were launched in The Talent Management programs are part of development efforts, to prepare current talent for future leadership positions in the Company. The Company undertook its third round of Employee Engagement Survey in The objective being to continuously evaluate workplace practices and understand gaps for improvement initiatives, (where 85% of the employees participated in the survey). The Employee Engagement Index which indicates overall employee satisfaction with the Company was 76%. This is on par with the national norm of companies in Malaysia, and comparable with global high performing companies. Action planning is underway to further understand the reasons behind items that were evaluated poorly and ensure sustainability of items that were looked upon favourably by employees. Malakoff s human capital mission is to become an Employer of Choice to existing staff who choose to stay with us, and external talent who choose to join us. Information TECHNOLOGY Technology convergence trends normally presents a dilemma to organisations on embracing change, as users demand their maintainence of security. Nevertheless, information technology will remain as business enablers for business organisations, to perform at an optimum level with increased efficiency. Among the initiatives accomplished throughout the year includes an online Sharepoint project workspace, for project collaborations and project tracking purposes. This workspace can be easily duplicated for future projects of the same intention and purpose.

60 58 Malakoff Corporation Berhad Annual Report 2011 Performance Review by Chief Executive Officer

61 59 Manual forms that are cumbersome to manage are converted to automated forms, in order to ease and speed up user experience and effectiveness. Maintaining a level of 99.9% server availability and targeting even higher, disaster recovery systems will remain part and parcel of the on-going business continuity initiatives, in which regular tests are being conducted. Business Continuity Planning is another potential initiative that we will explore in the near future. An ongoing buzz word is Virtualisation technology, a fast adopted and emerging trend for effective server consolidation that promotes the benefits we have realised in energy savings, reduced maintenance costs and ease of management. An IT assessment exercise was also conducted to assess current IT infrastructure to come out with the IT Strategic Plan for the next 3 years. Since the advent of Internet technology, all network perimeters, including the wireless have to be secured. With this in mind, an enterprise-wide wireless assessment was performed, specifically taking into consideration the performance, scalability and future requirements. For the year ahead, one of the initiatives that is still on-going, is the implementation of a content management system, that does full document functionality for an effective data information retrieval. Enterprise Application ( EA ) The number of companies in Malakoff s SAP servers have increased to a growing total of 57, with one new addition in year 2011 of MMC Petroleum Sdn Bhd, which further enhances our reputation in the industry. Year 2011 saw the implementation of SAP Adobe for HR Modules, that has enabled MCB SAP users to submit claim forms, leave applications and appraisals (Performance Management) online. Users can also update their personal information into the SAP system at anytime of the day, as well as self print the EA Forms and Pay-Slips. In the same year, SAP Vendor Invoice Management System (VIMS) was successfully implemented to gain complete realtime visibility into the purchase to pay (P2P) processes, which minimises invoice handlings and movements of physical invoices in the Malakoff Group of Companies. EA endeavors to put into practice a Mobile Workflow solution to provide anywhere, anytime access to SAP from a mobile device that is still under way. This solution ensures that the velocity of business is not affected when employees step away from their desk, as instant response to business processes requiring immediate action can be executed via a mobile device. As we head towards a fruitful 2012, one of EA s key initiatives include implementing business intelligence for high level analysis, reporting, score-carding and dashboards in compliance with International Financial Reporting Standards (IFRS). EA also looks for real-time online solutions that interface directly with SAP R/3, to update and validate information utilising Mobile Radio Frequency (RF) devices to improve business processes in plants. With Mobile Plant Maintenance, Mobile Warehouse and Mobile Asset Management, we hope to increase accuracy and efficiency, and on top of that minimise or eliminate keying errors transcribing from paper, and maintaining optimal tracking through real time visibility.

62 60 Malakoff Corporation Berhad Annual Report 2011

63 61 Defined by Direction Strong climbing abilities defined by direction provides crucial gains in a full length race, as inclines are the most likely point at which time may be lost or gained for a team, and is instrumental in their momentum and finish.

64 62 Malakoff Corporation Berhad Annual Report 2011 Corporate Social Responsibility Malakoff Community Partnerships Malakoff recognises the importance of engaging with its stakeholders to ensure business and operational sustainability. From its time of inception in 1975, the Company has taken proactive measures to embed Corporate Social Responsibility (CSR) into every aspect of its operations. The Malakoff Community Partnerships (MCP) was established in 2009 as the Company s flagship CSR platform to streamline and solidify its CSR initiatives. Guided by an Advisory Panel of eminent Malaysians, the MCP reinforces Malakoff s commitment to being a responsible and active participant of the local community, where its operations are based. Malakoff s CSR strategy and initiatives focus on three core areas, namely: Commitment to Community and Education Commitment to the Environment Commitment to Community Sports Towards this end, Malakoff invested approximately RM4 million towards its CSR initiatives for the year under review. In recognition of the impact of its CSR initiatives, Malakoff was awarded the following: Prime Minister s CSR Award 2010 under the Environment category Asia Responsible Entrepreneurship Awards 2011 under the Social Empowerment category Anugerah Organisasi Penyayang (Swasta) Johor 2011 COMMITMENT TO COMMUNITY AND EDUCATION Malakoff is committed to invest in local communities through philanthropy and education, in playing its part to support those around its operations. Under its Education Fund, Malakoff allocated RM200,000 to continue funding its 10 adopted schools to improve infrastructure facilities, conduct additional tuition classes, provide cash rewards for UPSR top achievers and organise educational trips. Malakoff also initiated the Share Us Your Love programme for the second time in collaboration with 50 student leaders from Universiti Tenaga Nasional. During the two-day programme held from 25 June, over 200 students at Sekolah Agama Rakyat Al-Ansar were mentored on self-development and religious education. On 30 July, over 30 employees from Malakoff visited Maahad Tarbiyah Islamiyah Al-Ansar as part of the Company s annual gotong-royong project. Apart from contributing their time and effort, a dozen computers and laptops were installed in addition to the RM50,000 donated. On 16 November, Malakoff kick started its Programme Melentur Buluh at Sekolah Rendah Kebangsaan Andek Mori in Johor, one of its 10 adopted schools. The employee-driven CSR programme aims to instil positive values among students from an early age through a variety of social activities. In addition, Malakoff continued to organise Sports for Charity concept-based events such as the Malakoff Annual Charity Ride and Malakoff Interstate Fellowship Ride to raise funds for the underprivileged. During the Malakoff Annual Charity Ride organised from 30 April to 2 May, RM170,000 was raised for six welfare organisations, namely Bulan Sabit Merah Malaysia Cabang Sepang, Selangor,

65 63 Jawatankuasa PDK Pantai Remis, Rumah Nur Kasih Bestari, Persatuan Kebajikan Al-Furqan Manjung, Maahad Tahfiz Al Ansar and Persatuan Sindrom Down Malaysia. As for the two-day Malakoff Interstate Fellowship Ride which started on 31 December, over 1,100 cyclists participated in the event, successfully raising RM50,000 for St. John Ambulance Malaysia. COMMITMENT TO THE ENVIRONMENT Malakoff has invested considerable efforts and resources to to its part towards conservation of the environment. Among key initiatives undertaken in the year under review was the Mangrove Initiative in which 10,000 mangroves saplings were planted along the coastal line of Tanjung Piai National Park and Pulau Kukup National Park on 29 November. On 9 July, Malakoff embarked on Project Aware to raise funds to maintain the delicate marine ecosystem adjacent to its Lumut power plant. Additionally, Malakoff also rolled out the Kenali Penyu, Sayangi Penyu programme on 12 November involving students from its nearby adopted schools to raise awareness and educate the public on the importance of conserving turtles. Malakoff also organised the inaugural Eco Run at Universiti Teknologi Malaysia on 26 November to raise awareness on environmental conservation and healthy lifestyles among participants. To educate students on the importance of Green Energy, Malakoff has initiated Project Sunshine with the support from the Ministry of Energy, Green Technology and Water. The project involves the installation of a grid-connected photovoltaic system in selected schools to enable solar energy to be generated for the premises. Through this initiative, the students are provided an opportunity to learn and appreciate the use of alternative energy first-hand. COMMITMENT TO COMMUNITY SPORTS Malakoff is committed towards the development of community sports as these events successfully unite people of various backgrounds notwithstanding their diversity in race, religion, gender and status. This belief has driven the Company to continue organising and sponsoring numerous community sporting events. In the year under review, Malakoff continued to promote the growth of the duathlete community through the international Powerman Malaysia and local Malakoff University Duathlon Series. Powerman Malaysia was organised for the tenth consecutive time on 13 November, and attracted a record participation of 1,035 professionals from 28 countries, given that it is the only Asian qualifier for the annual Powerman World Championships in Zofingen, Switzerland. As for the University Duathlon Series which is specifically designed for beginners and amateurs, 621 amateurs participated in the challenge. The three-legged series was hosted at Universiti Pertahanan Nasional Malaysia on 24 September, followed by the second leg at Universiti Putra Malaysia on 1 October, while the grand finale at Universiti Malaya was held on 15 October. Apart from these, Malakoff also encouraged the passion for running through sponsorship of Run with Family and Friends events such as the Malakoff 26km & 8km Penang Run (Penang Run) and the Malakoff 12km & 7km Kuala Lumpur Run (KL Run). The Penang Run which was introduced in 2008 was organised for the fifth consecutive time on 27 March with close to 900 participants from across Malaysia. On the other hand, close to 3,000 runners participated in the KL Run which was organised on 18 December. Both Runs were opened to runners of various age groups and fitness levels.

66 64 Malakoff Corporation Berhad Annual Report 2011 Corporate Events Highlights april 30 may 2, th Annual Malakoff Charity Ride Mock Cheque presentation to recipients Mar 27, 2011 Malakoff 26km Penang Run jun 3 5, 2011 Malakoff Sports Carnival Staff revved up before the start of the game May 15, 2011 Malakoff Corporate Golf (Authorities) july 8 10, 2011 Get together with village folks in Kawasan 1 Mukim Serkat, Johor Staff and village folks painting the exterior of a house during the gotong royong jun 25 26, 2011 Malakoff-UNITEN PRS Share Us Your Love program at Maahad Tarbiyah Islamiyah Al-Ansar Facilitators and students during one of the modules of the program

67 65 july 9 11, 2011 Malakoff Environment Conservation Project Aware 2011 Participants removing sea urchins from the reef Jul 30, 2011 Gotong Royong with Maahad Tarbiyah Islamiyah Al-Ansar Staff setting up the computers donated to the school Aug 4, 2011 Malakoff KL HQ Buka Puasa Function Donations were presented to orphans at the function Aug 9, 2011 Prai Power Plant Buka Puasa Function En Zainal presenting tokens of apprreciation to senior citizens at the function Aug 10, 2011 Lumut Power Plant Buka Puasa Function En Zainal presenting keys of a van donated to Masjid Segari Aug 16, 2011 Tg Bin Power Plant Buka Puasa Function En Zainal presenting donations to a ketua kampung in Mukim Serkat

68 66 Malakoff Corporation Berhad Annual Report 2011 Corporate Events Highlights Sep 11, 011 Malakoff KL HQ Hari Raya Open House Tan Sri Halim and En Zainal chatting with orphans at the function Sep 14, 2011 Prai Power Plant Hari Raya Open House Guests enjoying festive delicacies at the Hari Raya open house Sep 15, 2011 Lumut Power Plant Hari Raya Open House En Jainuddin presenting duit raya to underpriliveged children at the function Sep 19, 2011 Tg Bin Power Plant Hari Raya Open House Locals from Mukim Serkat enjoying food at the Hari Raya Open house Sep 24, 2011 Malakoff University Duathlon Series 1 (MUDS 1) Universiti Pertahanan Nasional Malaysia Participant crossing the finish line Oct 1, 2011 Malakoff University Duathlon Series 2 (MUDS 2) Universiti Putra Malaysia Participants flagged off for the race

69 67 Oct 8, 2011 Wirazone s Customers Day at FRIM, Kepong Treasure hunters listening to a briefing before the start of race Oct 9, 2011 Malakoff Corporate Golf (Business Associates) Oct 13, 2011 Malakoff WAO You Can Make A Difference Now! En Bani and En Yusop with volunteers at WAO headquarters Oct 15, 2011 Malakoff University Duathlon Series 3 (MUDS 3) Universiti Malaya Participants finishing the cycling leg before entering the transition area oct 15 17, 2011 Malakoff Learning Beyond the Classroom Adopted School Educational Trip Students watching the exhibition in awe at Pusat Sains Negara Oct 29, 2011 Malakoff Appreciation Ride - Putrajaya to Port Dickson Staff and media partners cycling from Putrajaya to Port Dickson

70 68 Malakoff Corporation Berhad Annual Report 2011 Corporate Events Highlights Nov 12, 2011 Program Kenali Penyu, Sayangi Penyu 2011 Students releasing baby turtles to the sea Nov 13, 2011 Powerman Malaysia 2011 Winners of the Womens Elite category Nov 16, 2011 Program Melentur Buluh 2011 Students and staff posing in front of the school after the program Nov 29, 2011 Malakoff Johor Parks Save Our Mangroves Representatives planting mangrove saplings at the park Nov 26, 2011 Malakoff UTM Eco Run 2011 Runners participating in the race Dec 18, 2011 Malakoff 12km, 7km Kuala Lumpur 2011 Winners of Men s Open category Dec 31, 2011 Malakoff Interstate Fellowship Ride 2011 Cyclists participating in the ride that covered Penang, Perak and Kedah

71 69 Financial statements Directors Report 70 Statements of Financial Position 74 Statements of Comprehensive Income 76 Statements of Changes in Equity 77 Statements of Cash Flows 79 Notes to the Financial Statements 81 Statement by Directors 148 Statutory Declaration 148 Independent Auditors Report 149