000Malakoff_annual_report

MALAKOFF CORPORATION BERHAD (731568-V) Level 10, Block 4, Plaza Sentral Jalan Stesen Sentral 5 50470 Kuala Lumpur, MALAYSIA Tel : 603 2263 3388 Fax : 603 2263 3333 www.malakoff.com.my A Member of the MMC Group 2014 ANNUAL REPORT

2015 is a year that we will witness not only of Malakoff’s relisting and market reentrance, but the outlined dedication and commitment of our people who have made it all possible. It will take to the fore their belief, and of the extraordinary endeavour of coming together as one, and in it, powering growth against constant challenges that we have faced. In the end, their achievements speak volume above all. T he Group’s foresight as Captain of the industry, remaining the leading independent power and water producer today is at its most defined moment, a tribute to our people in upholding the corporate values of Malakoff, and their spirit as envisioned t owards excellence. With this, the Group’s enduring strength as an environmentally caring company and the directional goals of sustainability continues.

goal T o be a premier global power and water company Core Business P ower generation and water desalination CriTiCal sTrengTHs • P roject development & execution • Plant operations – license to operate • Financial discipline • Strong governance structure Mission • Aspiring to become the preferred employer of choice • Deliver superior shareholder value • S ought after as a “partner” • Sustaining “best in class” operating discipline • E arning respect as a “good corporate citizen” CorporaTe Values • Integrity • Teamwork • I nnovation • Excellence • Harmony C

table of ConTenTs Business Review Directors’ Profile Management Team Group Financial & 0 4 Board of Directors 14 Organisational Structure 30 P erformance Highlights Board of Directors’ Profile 16 Members of Management 32 Corporate Profile 0 7 C ommittee Corporate Information 0 8 Malakoff’s Shareholders 0 9 Malakoff’s Structure 10 02 MALAKOFF CORPORATION BERHAD Annual Report 2014

Corporate Corporate Performance Responsibility Highlights Chairman’s Statement 36 Corporate Responsibility 76 Corporate Events Highlights 82 P erformance Review 48 • Community Development by Chief Executive Officer • Workplace Development Financial • Asset Performance • E nvironmental Preservation Statements • Operation & Maintenance • Marketplace Development • Electricity Distribution F inancial Statements 89 and Chilled Water Supply • Ventures 03

group FinanCial & perForManCe HigHligHTs Revenue S hareholders’ Funds Earnings Per Share +18.59% +1.23% +110.87% RM5,594 million RM3,964 million 97 sen Profit After Tax & T otal Assets Net Assets Minority Interest Employed Per share +111.11% +4.52% +1.26% RM29,336 million RM11.28 RM342 million F Y2013 F Y2014 RM’000 RM’000 Restated Revenue 4,717,419 5,594,484 Profit before tax 84,147 595,484 P ATMI 161,533 341,549 Paid-up capital 351,314 351,344 Shareholders’ funds 3,915,724 3,963,649 T otal assets employed 28,068,287 29,336,072 Per share (sen) earnings 46 97 Dividend (gross) per share 42 45 Net assets per share (RM) 11.14 11.28 04 MALAKOFF CORPORATION BERHAD Annual Report 2014

Revenue 2013 4,717 R 2014 5,594 ilo MMli n S hareholders’ Funds 2013 3,916 R 2014 3,964 ilo MMli n E arnings Per Share 2013 46 e 2014 97 Sn Profit After Tax & Minority Interest 2013 162 R 2014 342 ilo MMli n T otal Assets Employed 2013 28,068 R 2014 29,336 ilo MMli n Net Assets Per share 2013 11.14 R 2014 11.28 M 05



CorporaTe proFile Malakoff Corporation Berhad (“Malakoff”) is one of the leading i ndependent power and water producers based in Asia with a world- class reputation. Our core business includes power generation, water desalination and operation & maintenance services. In Malaysia, we own an effective generation capacity of 5,346 MW comprising of six power stations that run on gas, oil and coal. Malakoff’s power generation assets are held Furthermore, Malakoff provides services through its t hrough a number of subsidiaries and associate wholly-owned subsidiary companies: companies: • Operation and maintenance (“O&M”) services • SEV Power Plant through a 93.75 percent equity t hrough wholly-owned Malakoff Power Berhad i nterest in Segari Energy Ventures Sdn Bhd ( “MPower”), and Teknik Janakuasa Sdn Bhd (“SEV”) (“TJSB”) • GB3 Power Plant through a 75.0 percent equity • Electricity distribution activities through Malakoff i nterest in GB3 Sdn Bhd (“GB3”) Utilities Sdn Bhd (“MUSB”) a wholly-owned subsidiary, that currently supplies centralised • Prai Power Plant through its wholly-owned chilled water and distributes electricity to the subsidiary Prai Power Sdn Bhd (“PPSB”) l andmark Kuala Lumpur Sentral development (“KL Sentral”) • Tanjung Bin Power Plant through a 90.0 percent equity interest in Tanjung Bin Power Sdn Bhd • Project management services for in-house and (“TBPSB”) external projects through Malakoff Engineering (“MESB”), a wholly owned subsidiary of Malakoff. • Port Dickson Power Plant through a 100 percent equity interest in Port Dickson Power Berhad, via At Malakoff, we aim to work together with its wholly owned subsidiary Hypergantic Sdn all stakeholders for productive partnerships. Bhd* We believe that long-term partnerships re-enforce our success. As an asset-centered organisation, • Kapar Power Station through a 40.0 percent we maximise the value of assets we manage equity interest in Kapar Energy Ventures Sdn Bhd f or our shareholders and partners. We do this (“KEV”) by fully understanding the elements of cost, risk and performance unique to the environment in • On the international front, we own an effective which we operate. capacity of 689.6 MW of power and 358,206 3 m /day of water desalination. These projects are l ocated in Saudi Arabia, Bahrain, Algeria and Australia. 07

CorporaTe inForMaTion DIRECTORS Y.A.M. TAN SRI DATO’ SERI SYED TAN SRI DATO’ SERI AlAuDDIN ANwAR JAMAlullAIl BIN DATO’ MOHD SHERIFF I ndependent Non-Executive Chairman I ndependent Non-Executive Director DATO’ SRI CHE KHAlIB BIN MOHAMAD NOH DATuK IDRIS BIN ABDullAH Non-Independent Non-Executive Director I ndependent Non-Executive Director DATuK MuHAMAD NOOR BIN HAMID DATuK DR. SYED MuHAMAD BIN SYED ABDul KADIR Non-Independent Non-Executive Director I ndependent Non-Executive Director CINDY TAN lER CHIN KANAD SINgH VIRK Non-Independent Non-Executive Director Non-Independent Non-Executive Director wAN KAMARuzAMAN BIN wAN AHMAD zAlMAN BIN ISMAIl Non-Independent Non-Executive Director Alternate to Wan Kamaruzaman bin Wan Ahmad DATuK OOI TEIK HuAT CRAIg ROBERT MARTIN Non-Independent Non-Executive Director Alternate to Kanad Singh Virk COMPANY SECRETARIES NOMINATION COMMITTEE MEMBERS YEOH SOO MEI (MAICSA 7032259) TAN SRI DATO’ SERI AlAuDDIN BIN DATO’ MOHD SHERIFF NISHAM@ABu BAKAR BIN AHMAD (MAICSA 7043879) Chairman DATuK IDRIS BIN ABDullAH AuDIT COMMITEE MEMBERS DATuK MuHAMAD NOOR BIN HAMID DATuK DR. SYED MuHAMAD BIN SYED ABDul KADIR Chairman REgISTERED OFFICE DATuK IDRIS BIN ABDullAH Ground Floor, Wisma Budiman TAN SRI DATO’ SERI AlAuDDIN P ersiaran Raja Chulan, 50200 Kuala Lumpur BIN DATO’ MOHD SHERIFF T el : +603-2071 1000 DATuK OOI TEIK HuAT F ax : +603-2026 2378 Level 12, Block 4, Plaza Sentral REMuNERATION COMMITTEE MEMBERS Jalan Stesen Sentral 5, 50470 Kuala Lumpur T el : +603-2263 3388 Y.A.M. TAN SRI DATO’ SERI SYED F ax : +603-2263 3333 ANwAR JAMAlullAIl Chairman wAN KAMARuzAMAN BIN wAN AHMAD AuDITORS DATuK DR. SYED MuHAMAD BIN SYED ABDul KADIR KPMg RISK COMMITTEE MEMBERS PRINCIPAl BANKER DATuK IDRIS BIN ABDullAH MAlAYAN BANKINg BERHAD Chairman DATuK MuHAMAD NOOR BIN HAMID COMPANY ADDRESS DATuK DR. SYED MuHAMAD BIN SYED ABDul KADIR Level 10, Block 4, Plaza Sentral CINDY TAN lER CHIN Jalan Stesen Sentral 5, 50470 Kuala Lumpur T el : +603-2263 3388 F ax : +603-2263 3333 08 Website : www.malakoff.com.my MALAKOFF CORPORATION BERHAD Annual Report 2014

K umpulan wang Persaraan (Diperbadankan) (“KwAP”) Standard Chartered Il & FS Asia Infrastructure growth Fund Company Pte limited (“SCI Asia”) SEASAF Power Sdn Bhd (“SEASAF”) Employees Provident Fund (“EPF”) SEASAF 2.5% KwAP SCI ASIA 10% 6.5% EPF 30% AOA 28.56% MMC 22.44% MMC Corporation Berhad (“MMC”) Anglo-Oriental (Annuities) Sdn Bhd (“AOA”)* * AOA is a wholly-owned subsidiary of MMC MalakoFF’s sHareHolders as at 28 February 2015 09

MalakoFF’s sTruCTure as at 28 February 2015 POwER OPERATION AND ElECTRICITY gENERATION MAINTENANCE SERVICES DISTRIBuTION 93.75% 100% 100% Segari Energy Ventures Sdn Bhd Malakoff Power Berhad Malakoff Utilities Sdn Bhd 75% 100% GB3 Sdn Bhd Tanjung Bin O&M Berhad 100% 100% Prai Power Sdn Bhd PDP O&M Sdn Bhd 90% 100% Tanjung Bin Power Sdn Bhd T eknik Janakuasa Sdn Bhd 40% 100% Kapar Energy Ventures Sdn Bhd Natural Analysis Sdn Bhd I 100% 100% Hypergantic Sdn Bhd TJSB Services Sdn Bhd 100% 100% Port Dickson Power Berhad TJSB International Limited 100% 100% T anjung Bin Energy Sdn Bhd TJSB International (Shoaiba) Limited 100% 20% T anjung Bin Energy Issuer Saudi-Malaysia Operation & Berhad Maintenance Services Company Limited 20% Al-Imtiaz Operation & Maintenance Company Limited 100% TJSB Middle East Limited 31.5% Muscat City Desalination Operation and Maintenance Company LLC 100% TJSB Global Sdn Bhd 49% Hyflux-TJSB Algeria SPA 95% PT. Teknik Janakuasa I Dormant which in turn holds 50 percent equity interest V Malakoff’s effective equity interest of 35.7 I I Malakoff’s effective equity interest of 20 percent i n SAMAWEC. SAMAWEC holds 60 percent in percent in AAS is held via MADSB which holds and 12 percent in SAMAWEC and SWEC SEHCO which in turn holds 97.5 percent equity 70 percent equity interest in TDIC which in turn r espectively is held via MGL which holds 40 i nterest in SEPCO. SAMAWEC also holds a direct holds 51 percent equity interest in AAS. percent equity interest in MSCSB which in turn equity interest of 1 percent in SEPCO. VI Malakoff’s effective interest of 40 percent in HPC holds 50 percent equity interest in SAMAWEC. I V Malakoff’s effective equity interest of 43.48 i s held via MHHCL which holds 57.14 percent SAMAWEC holds 60 percent equity interest percent in SPHL is held via Malakoff Technical equity interest in MSHHCL which in turn holds in SWEC. ( Dhofar) Limited which holds a direct 43.48 70 percent equity interest in HPC. l l l Malakoff’s effective equity interest of 11.9 percent equity interest in OTPL which in turn VII MWM holds 50 percent participating interest percent in SEPCO is held via MGL which holds 100 percent equity interest in SPHL. i n the unincorporated joint venture of the holds 40 percent equity interest in MSCSB Macarthur Wind Farm. 10 MALAKOFF CORPORATION BERHAD Annual Report 2014

PROJECT MANAgEMENT OFFSHORE OTHERS 100% 100% 100% Malakoff Engineering Sdn Bhd Spring Assets Limited I T uah Utama Sdn Bhd 100% 100% 20% MESB Project Management Malakoff Capital (L) Ltd I Lekir Bulk Terminal Sdn Bhd S dn Bhd I 100% 54% Malakoff International Limited Desa Kilat Sdn Bhd (“MIL”) 100% 100% 100% Malakoff R&D Sdn Bhd Malakoff Oman Desalination Malakoff Gulf Limited (“MGL”) Company Limited 40% 45% Malaysian Shoaiba Consortium Sdn Bhd (“MSCSB”) Muscat City Desalination Company S.A.O.C 20% 100% Saudi-Malaysia Water & Electricity Company Limited (“SAMAWEC”) II Malakoff Hidd Holding Company 12% Limited VI Shuaibah Water & Electricity Company Limited (“SWEC”) II 57.14% 12% Malakoff Summit Hidd Holding Shuaibah Expansion Holding Company Limited (“SEHCO”) III Company Limited VI 11.7% 40% Shuaibah Expansion Project Company Limited (“SEPCO”) III 0.2% Hidd Power Company B.S.C (c) (“HPC”) VI 100% 100% Malakoff Technical (Dhofar) Limited Pacific Goldtree Sdn Bhd 43.48% 100% Oman Technical Partners Limited (“OTPL”) IV Skyfirst Power Sdn Bhd 43.48% 100% Salalah Power Holdings Limited (“SPHL”) IV Wind Macarthur Holdings (T) 100% Pty. Limited Malakoff AlDjazair Desal Sdn Bhd (“MADSB”) 100% 70% Wind Macarthur (T) Pty. Limited Tlemcen Desalination Investment Company SAS (“TDIC”) 100% 35.7% Wind Macarthur Finco Pty. Almiyah Attilemcania SPA (“AAS”) V Limited 100% Malakoff Australia Pty. Ltd. 100% Malakoff Holdings Pty. Ltd. 100% Malakoff Wind Macarthur Holdings Pty. Limited 100% Malakoff Wind Macarthur Pty. Limited(“MWM”) VII 11



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

Board oF direCTors from left Y.A.M. TAN SRI DATO’ SERI SYED DATuK MuHAMAD NOOR MADAM CINDY TAN lER CHIN ANwAR JAMAlullAIl BIN HAMID Non-Independent I ndependent Non-Executive Non-Independent Non-Executive Director Chairman Non-Executive Director DATuK OOI TEIK HuAT DATO’ SRI CHE KHAlIB BIN MR KANAD SINgH VIRK Non-Independent MOHAMAD NOH Non-Independent Non-Executive Director Non-Independent Non-Executive Director Non-Executive Director

DATuK DR. SYED MuHAMAD ENCIK wAN KAMARuzAMAN MR CRAIg ROBERT MARTIN B IN SYED ABDul KADIR B IN wAN AHMAD Alternate to Kanad Singh Virk I ndependent Non-Independent Non-Executive Director Non-Executive Director ENCIK zAlMAN BIN ISMAIl Alternate to Wan Kamaruzaman DATuK IDRIS BIN ABDullAH TAN SRI DATO’ SERI AlAuDDIN bin Wan Ahmad I ndependent BIN DATO’ MOHD SHERIFF Non-Executive Director I ndependent Non-Executive Director

Board oF direCTors’ proFile Y.A.M. TAN SRI DATO’ SERI SYED ANwAR JAMAlullAIl I ndependent Non-Executive Chairman 16 MALAKOFF CORPORATION BERHAD Annual Report 2014

Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail, Managing Director of Mega SPJ Sdn Bhd and Coral aged 63, was appointed to our Board as our L and Sdn Bhd, property development companies I ndependent Non-Executive Chairman on f rom 1989 to 1998. He then served Amanah Capital 1 December 2014. He is also the Chairman of our Partners Bhd as its Group Managing Director from Remuneration Committee. October 1998 to 2002. Since then, Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail was appointed as Y .A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail Chairman of several companies including Malaysian holds a Bachelor of Arts degree in Accounting R esources Corporation Berhad, Media Prima Berhad, from Macquarie University in Sydney, Australia R ealmild (M) Sdn Bhd, Radicare (M) Sdn Bhd, DRB- which he graduated in 1975. He is a qualified Hicom Berhad, EON Capital Berhad and EON Bank Chartered Accountant, having qualified in 1983 Berhad from 2002 until 2009. He was also a former f rom the Malaysian Institute of Accountants (“MIA”) Director of Maxis Communications Berhad and and in 1984 from Certified Practising Accountants B angkok Bank Berhad. Australia. Y .A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail He commenced his career with Malaysia Airlines was also the former Chairman of the Lembaga S ystems Berhad in 1975 as a Financial Accountant, T abung Haji Investment Panel and Matrix Capacity before moving on to Price Waterhouse Australia in P etroleum Group Berhad. He is currently the 1980. He then joined D & C Nomura Merchant Bank Chairman of Nestle (M) Berhad, Pulau Indah Berhad for a year from 1984 to 1985 as Investment Ventures Sdn Bhd, (a joint venture company Manager. In 1986, he joined Amanah Merchant Bank between Khazanah Nasional Berhad (“Khazanah”) Berhad where he held the position of Corporate and Temasek Holdings (Private) Limited) and Cahya F inance Manager. He was then appointed as a Mata Sarawak Berhad. He is also the Chancellor of SEGi University and the Chairman of the Board of T rustee of Lembaga Zakat Selangor. 17

Board oF direCTors’ proFile (continue) DATO’ SRI CHE KHAlIB BIN MOHAMAD NOH Non-Independent Non-Executive Director 18 MALAKOFF CORPORATION BERHAD Annual Report 2014

Dato’ Sri Che Khalib Mohamad Noh, aged 49, was At present, Dato’ Sri Che Khalib Mohamad Noh is appointed to our Board as our Managing Director on t he Group Managing Director of MMC Corporation 1 July 2013. He resigned as our Managing Director Berhad (“MMC”). Prior to his current role, he served on 8 December 2014 and has been redesignated as Chief Operating Officer of Finance, Strategy and as our Non-Independent Non-Executive Director on Planning at DRB-Hicom Berhad. Dato’ Sri Che Khalib 9 December 2014. Mohamad Noh has also served on the Board of Directors in several of the United Engineers Malaysia Dato’ Sri Che Khalib Mohamad Noh is a member Berhad group of companies, in Bank Industri & of the Malaysian Institute of Accountants (CA, M) T eknologi Malaysia Berhad, and in Khazanah and also a Fellow of the Association of Chartered Nasional Berhad from 2000 to 2004, where he also Certified Accountants (FCCA, UK) United Kingdom. s erved on the Executive Committee. He currently s its on the boards of MMC, Zelan Berhad, Johor He began his career with Messrs Ernst & Young Port Berhad, MMC Engineering Group Berhad, Aliran i n 1989 and later joined Bumiputra Merchant I hsan Resources Berhad, Bank Muamalat Malaysia Bankers Berhad. Between 1992 and 1999, he served B erhad, Gas Malaysia Berhad, NCB Holdings Berhad i n several companies within the Renong group and several private limited companies. i ncluding Projek Lebuhraya Utara Selatan Berhad (PLUS), HBN Management Services Sdn Bhd, Renong Dato’ Sri Che Khalib Mohamad Noh has received Overseas Corporation Sdn Bhd and Marak Unggul many accolades in recognition of his strong Sdn Bhd, which is the consortium responsible for the leadership including being named Malaysia’s “CEO management of the Keretapi Tanah Melayu Berhad. of the Year” in 2008, organised by the New Straits In June 1999, he joined Ranhill Utilities Berhad T imes and American Express. He was also named as Chief Executive Officer. He then assumed the “ CEO of the Year” at the inaugural Asia Power and position of Managing Director and Chief Executive Electricity Awards 2010 and was the recipient of Officer of KUB Malaysia Berhad in 2002. the Lifetime Achievement Award at the Asian Utility I ndustry Awards 2012. Dato’ Sri Che Khalib Mohamad Noh was then appointed as the President/Chief Executive Officer of Tenaga Nasional Berhad (“TNB”) on 1 July 2004 where he served TNB for eight y ears until the completion of his contract on 30 June 2012. During his tenure at TNB, Dato’ Sri Che K halib Mohamad Noh drove many improvement initiatives that resulted in TNB becoming one of the success stories in the Malaysia’s GLC Transformation P rogramme. He shaped and set the corporate strategies for TNB when he came up with its 20-year strategic plan in September 2005. 19

Board oF direCTors’ proFile (continue) DATuK MuHAMAD NOOR BIN HAMID Non-Independent Non-Executive Director Datuk Muhamad Noor Hamid, aged 63, a joint venture company between PETRONAS and was appointed to our Board as our Non-Independent Novacorp Corporation of Canada, where he was Non-Executive Director on 13 July 2009. He is also t he General Manager of the Pipeline Division. a member of our Nomination Committee and His expertise has taken him to overseas assignments Risk Committee. mainly in Sudan where he was the Project Director f or the Muglad Basin Oil Development Project. In Datuk Muhamad Noor Hamid obtained a Bachelor 2000, he was appointed as the Chief Operating of Science (Hons) in Mechanical Engineering from Officer of Projass Engineering Sdn Bhd, a Class A S underland Polytechnic, England in 1977 and a Bumiputera construction company. He joined Gas Post Graduate Diploma in Gas Engineering from Malaysia Berhad in 2003 as Chief Operating Officer the Institute of Gas Technology in Chicago, Illinois, and was subsequently appointed as Chief Executive USA in 1980. He has also attended the Management Officer in February 2004. On 24 April 2006, he was Program in 1992 at the Wharton Business School of promoted to the position of Managing Director Management, University of Pennsylvania, USA. of Gas Malaysia Berhad. On 31 December 2013, he retired from Gas Malaysia Berhad. Datuk Muhamad Noor Hamid has held numerous positions during his 20 years of service in PETRONAS He has more than 30 years of direct working and PETRONAS Gas Sdn Bhd, including heading experience in the oil and gas industry ranging from t he Peninsular Gas Utilisation II project team. He project planning and implementation, operation, also worked in OGP Technical Services Sdn Bhd, consulting and contracting. 20 MALAKOFF CORPORATION BERHAD Annual Report 2014

CINDY TAN lER CHIN Non-Independent Non-Executive Director Tan ler Chin, aged 54, was appointed to our Board T an Ler Chin joined Employees Provident Fund as our Non-Independent Non-Executive Director ( “EPF”) in 1984. Since then she has served in the on 9 August 2007. She is also a member of our F inance Department, Treasury Department, Fund Risk Committee. Management Function and was the Head of Fixed I ncome Investment of EPF until June 2009, before T an Ler Chin obtained an Honours degree in s he was appointed to her current position as the Economics, majoring in statistics, from Universiti Head of Investment Compliance and Settlement Kebangsaan Malaysia in 1984. In 1991, she of EPF. obtained a Certified Diploma in Accounting and F inance, accorded by the Chartered Association of Certified Accountants. In 1995, she attended t he Wharton-National University of Singapore Banking Programme. 21

Board oF direCTors’ proFile (continue) KANAD SINgH VIRK Non-Independent Non-Executive Director Kanad Singh Virk, aged 48, was appointed to S CI Asia’s functions related to legal, compliance, our Board as our Non-Independent Non-Executive f i nance and accounting. He has been actively Director on 16 December 2013. i nvolved in the execution, management and exit of s everal investments. K anad Singh Virk received a Bachelor of Arts degree with a joint major in Mathematical Economics and P rior to joining Standard Chartered in 2008, History from Pomona College, USA in 1988 and a he was with Goldman Sachs for 10 years, where Juris Doctor Degree (magna cum laude) from the he held several senior positions, including the Chief University of Minnesota Law School, USA in 1992. Operating Officer of Private Wealth Management – Europe, the Middle East and Africa and earlier, Kanad Singh Virk is the Managing Director of Asia, and was a member of the Asia ex-Japan S tandard Chartered Private Equity Limited, based in Mergers and Acquisitions group in the Investment Singapore and a Director and the Chief Operating Banking Division. He previously worked as a lawyer Officer of SCI Asia. He has 20 years of experience, i n mergers and acquisitions and energy project including private equity investing, mergers and fi nance at Cravath, Swaine & Moore in New York acquisitions, project finance and financings in and later at Skadden Arps, Slate, Meagher, Flom LLP a broad range of industries. In his capacity as i n Los Angeles, Hong Kong, London and Vienna. t he Chief Operating Officer of SCI Asia, he leads 22 MALAKOFF CORPORATION BERHAD Annual Report 2014

DATuK OOI TEIK HuAT Non-Independent Non-Executive Director Datuk Ooi Teik Huat, aged 55, was appointed to Merchant Bankers Berhad (now known as Hong our Board as our Non-Independent Non-Executive L eong Investment Bank Berhad) until August 1993. Director on 1 January 2012. He is also a member He subsequently joined Pengkalan Securities Sdn of our Audit Committee. Bhd (now known as PM Securities Sdn Bhd) in August 1993 as Head of Corporate Finance, before Datuk Ooi Teik Huat obtained a Bachelor degree l eaving in September 1996 to set up Meridian i n Economics from Monash University, Melbourne, Solutions Sdn Bhd where he is presently a director. Australia in 1984 and is a member of the Malaysian I nstitute of Accountants and CPA Australia. Datuk Ooi Teik Huat also sits on the board of directors of MMC Corporation Berhad, Tradewinds Datuk Ooi Teik Huat began his career with Messrs ( M) Berhad, Tradewinds Plantation Berhad, Hew & Co. (now known as Messrs Mazars), Chartered DRB-HICOM Berhad, Zelan Berhad, Johor Port Accountants in 1984. After leaving Messrs Hew & Co B erhad, Gas Malaysia Berhad, MARDEC Berhad, i n June 1989, he joined Malaysian International P adiberas Nasional Berhad and several private limited companies. 23

Board oF direCTors’ proFile (continue) TAN SRI DATO’ SERI AlAuDDIN BIN DATO’ MOHD SHERIFF I ndependent Non-Executive Director T an Sri Dato’ Seri Alauddin Dato’ Md Sheriff, aged T an Sri Dato’ Seri Alauddin Dato’ Md Sheriff was 68, was appointed to our Board as our Independent appointed as Judicial Commissioner of the High Non-Executive Director on 11 December 2012. He is Court of Malaya in Kuala Lumpur on 1 February also the Chairman of our Nomination Committee 1992 and was transferred to the High Court of and a member of our Audit Committee. Malaya in Johor in the same year. He was later elevated as the Judge of the High Court wherein T an Sri Dato’ Seri Alauddin Dato’ Md Sheriff was he had served in the High Courts of Johor, Kangar admitted as an Utter Barrister of the Honourable and Alor Star before being elevated to the Court of Society of Inner Temple, London, having been called Appeal in April 2001. After serving for about three t o the Bar of England & Wales in 1970. years in the Court of Appeal, he was elevated to the Federal Court of Malaysia on 12 July 2004. During his T an Sri Dato’ Seri Alauddin Dato’ Md Sheriff held t enure as a Judge of the Federal Court, he had the various posts in the legal and judicial service since occasion of carrying out the duties and functions of 1971. He started his career with the Judiciary as a t he President of the Court of Appeal from 15 August Magistrate in Bukit Mertajam in 1971 and in Kangar 2006 until 4 September 2007. On 5 September 2007, i n 1972. Thereafter, he was appointed as President he was appointed as the Chief Judge of Malaya of the Sessions Court in Sungai Petani, Kuantan and on 18 October 2008, he was appointed as the and Taiping. In 1977, he was appointed as Senior President of the Court of Appeal until his retirement F ederal Counsel with the Income Tax Department i n August 2011. and the Attorney General’s Chambers. In June 1979, he was seconded to PETRONAS Carigali Sdn Bhd as He also sits on the board of AFFIN Holdings Berhad i t s Secretary cum Legal Advisor. Thereafter, he was and Vertical Inter Circle Sdn Bhd. appointed as the Legal Advisor to the State of Johor i n October 1980. In April 1982, he took the office of t he Legal Advisor of Negeri Sembilan. He was again appointed as the Legal Advisor to the State of Johor i n June 1983. He was appointed as the Chairman of t he Advisory Board in the Prime Minister’s Department s ince June 1989. 24 MALAKOFF CORPORATION BERHAD Annual Report 2014

DATuK IDRIS BIN ABDullAH I ndependent Non-Executive Director Datuk Idris Abdullah @ Das Murthy, aged 58, His experience in the corporate sector began was appointed to our Board as our Independent i n 1979 as a partner/shareholder in a group of Non-Executive Director on 11 December 2012. Bumiputra companies in Sibu, Sarawak. From 1995 He is also the Chairman of our Risk Committee and t o date, he is an advisor to a number of Sarawak a member of our Audit Committee and Nomination companies engaged in construction and building, C ommittee. motor trading, recreation club and educational i nstitution. He was also a director/shareholder of Datuk Idris Abdullah @ Das Murthy graduated from a Bumiputra PKK Class A/CIDB Group 7 company Universiti Malaya in 1981 with a LLB. (Hons) degree. engaged in a number of government building/ His career started in 1981 where he read in chambers i nfrastructure projects. From September 2002 to at Messrs. Ting Tung Ming Esq in Sibu, Sarawak. September 2005, he was the Director and Chairman I n 1982, he was admitted to The Roll of Advocates of of Kuantan Flourmills Berhad. The High Court of Malaya in Sabah and Sarawak. He also served as Resident Lawyer at Ting & Company, He is the former Commission Member of the Sibu, Sarawak from 1981 to 1983, the In-House Legal Companies Commission of Malaysia (“CCM”) and Advisor of Sarawakian Group of Companies from i s also a Commission Member of the Malaysian 1984 to 1985 and has been with Messrs. Idris & Communications and Multimedia Commission Company Advocates, Kuching, Sarawak since 1985 (SKMM). and is currently a Senior Partner in Messrs. Idris & Company Advocates, Kuching, Sarawak. Datuk Idris Abdullah @ Das Murthy is the Chairman of Xian Leng Holdings Berhad and also sits on t he board of directors of several private limited companies. 25

Board oF direCTors’ proFile (continue) DATuK DR. SYED MuHAMAD B IN SYED ABDul KADIR I ndependent Non-Executive Director Datuk Dr. Syed Muhamad Syed Abdul Kadir, aged Datuk Dr. Syed Muhamad Syed Abdul Kadir started 68, was appointed to our Board as our Independent his career in 1973 as Senior Project Officer, School Non-Executive Director on 11 December 2012. of Financial Management at the National Institute He also is the Chairman of our Audit Committee of Public Administration (INTAN) and held various and a member of our Remuneration Committee positions before his final appointment as Deputy and Risk Committee. Director (Academic). In November 1988, he joined t he Ministry of Education as Secretary of Higher Datuk Dr. Syed Muhamad Syed Abdul Kadir E ducation and thereafter assumed the post of graduated with a Bachelor of Arts (Hons.) from Deputy Secretary (Foreign and Domestic Borrowing, Universiti Malaya in 1971. He obtained a Masters Debt Management), Finance Division of Federal of Business Administration from the University of T reasury. Between June 1993 to June 1997, he joined Massachusetts, USA, in 1977 and proceeded t he board of directors of Asian Development Bank, t o obtain a PhD (Business Management) from Manila, the Philippines, first as alternate Executive Virginia Polytechnic Institute and State University, Director and later as an Executive Director. In July USA in 1986. In 2005, he obtained a Bachelor of 1997, he joined the Ministry of Finance as Secretary Jurisprudence (Hons.) from the University of Malaya. ( Tax Division) and subsequently became the He obtained the Certificate in Legal Practice in Deputy Secretary General (Operations) of Ministry 2008 from the Malaysian Professional Legal Board. of Finance. Prior to his retirement, he was Secretary He was admitted as an Advocate and Solicitor General, Ministry of Human Resources from August of the High Court of Malaya in July 2009, and 2000 to February 2003. obtained the Master of Law (Corporate Law) from Universiti Teknologi MARA in December 2009. Datuk Dr. Syed Muhamad Syed Abdul Kadir is the I n June 2011, he became a member of the Chairman of CIMB Islamic Bank Berhad, CIMB Chartered Institute of Arbitrators, United Kingdom Middle East B.S.C (c) and CIMB-Principal Islamic and in May 2012, he became the fellow of the Asset Management Sdn Bhd. He is also a Director of said Institute. CIMB Bank Berhad, Euro Holdings Berhad, Solution Engineering Holdings Berhad, BSL Corporation B erhad, ACR ReTakaful Berhad, Sun Life Malaysia Assurance Berhad and Sun Life Malaysia Takaful Berhad. He also holds directorships in a number of 26 private companies. MALAKOFF CORPORATION BERHAD Annual Report 2014

wAN KAMARuzAMAN B IN wAN AHMAD Non-Independent Non-Executive Director wan Kamaruzaman wan Ahmad, aged 55, t he Affin bank group, as the Chief Executive Officer was appointed to our Board as our Non-Independent of Affin Moneybrokers Sdn Bhd from July 1994 to Non-Executive Director on 21 May 2013. He is also a August 2003 and as the Chief Executive Officer of member of our Remuneration Committee. Affin Trust Management Sdn Bhd from September 2003 to November 2005. Wan Kamaruzaman Wan Ahmad obtained a Bachelor of Economics degree in Analytical He was also a board member of Affin Futures Economics from the University of Malaya in 1981. Sdn Bhd from September 1999 to December 2002 and a board member of Affin Fund Management Wan Kamaruzaman Wan Ahmad is currently the Sdn Bhd from January 2004 to November 2005. Chief Executive Officer of KWAP and has been He joined Kemuncak Facilities Management Sdn s erving since May 2013. Previously, he served as Bhd as the Executive Director-Finance and served t he General Manager of Treasury Department t he company till September 2006. He then joined at the EPF from October 2007 until April 2013. I zoma Sdn Bhd as Executive Director-Finance He started his working career with Malayan f rom October 2006 till August 2007. He is a board Banking Berhad (“Maybank”) since 1981, mostly in member of Valuecap Sdn Bhd and Chairman of Treasury Department with two overseas postings at i -VCap Management Sdn Bhd. He is also a director Hamburg, Germany as Chief Dealer and London, of Prima Ekuiti (UK) Ltd, a subsidiary company United Kingdom as Treasury Manager. After leaving of KWAP. Maybank, he served in several companies within 27

Board oF direCTors’ proFile (continue) CRAIg ROBERT MARTIN Alternate to KANAD SINgH VIRK Craig Robert Martin, aged 44, was appointed to Asian Strategic Assets Fund and CAIF III and sits our Board as Alternate Director to Kanad Singh Virk on the board of directors of the General Partner on 7 January 2014. f or CapAsia’s Islamic Infrastructure Fund. Prior to joining CapAsia, he was with Prudential Asset Craig Robert Martin obtained his Masters degree Management (Singapore) Limited (now known in Electronic Engineering from the University of as Eastspring Investments (Singapore) Limited), Y ork, United Kingdom and a Masters in Business a wholly-owned subsidiary of Prudential Plc for five Administration with distinction from INSEAD in 1992 y ears, where he served as an Investment Director of and 2000, respectively. He has lived and worked in P rudential Vietnam Fund Management Company South East Asia for 21 years and during the last f rom 2005 to 2009. Before joining Prudential, he was 14 years, he has been responsible for originating, with Standard Chartered Private Equity Pte Limited, s tructuring and executing numerous private equity a wholly-owned subsidiary of Standard Chartered deals for institutional investors. He also developed, Bank Plc, from its inception where he served as an s tructured and raised funds from institutional and Associate Director. retail sources. He is a member of the Singapore Institute of He joined Capital Advisors Partners Asia Pte Ltd Directors and sits on several of CapAsia’s boards ( “CapAsia”) in mid-2010 where he is a Managing and also holds a number of external non-executive Director and Head of Fund for the South East Asian director roles. He is a non-executive director of S trategic Assets Fund and the CapAsia ASEAN Myanmar Investments International Limited, a public Infrastructure Fund III (“CAIF III”). He is a member company listed on the London Stock Exchange. of the investment committees for the South East 28 MALAKOFF CORPORATION BERHAD Annual Report 2014

zAlMAN BIN ISMAIl Alternate to wAN KAMARuzAMAN BIN wAN AHMAD zalman Ismail, aged 43, was appointed to our Board He joined the Sime Darby Group in 2005 and held as the alternate director to Wan Kamaruzaman various positions in the Group including as Head of Wan Ahmad on 21 May 2013. Zalman Ismail V alue Management and Head of Investor Relations was a member of our Board on 18 March 2013 f or the Sime Darby group and Head of Business before he resigned on 21 May 2013 to assume his Development for its Healthcare Division prior to current position as the alternate director to Wan l eading the Strategy and Business Development K amaruzaman Wan Ahmad. Department of Sime Darby Property Berhad until 2011. He has over 19 years work experience and Z alman Ismail obtained a Bachelor’s degree (Hons) he also spearheaded the valuation and closing in Business Administration (Finance) from Eastern t eam for the mega plantation merger between Michigan University, United States in 1994. S ime Darby Berhad, Kumpulan Guthrie Berhad and Golden Hope Plantations Berhad. He started his career in 1995 where he joined R ating Agency Malaysia as a credit analyst until Zalman Ismail is currently the Director of Alternative 1997. He then worked as a stock broking analyst I nvestment Department, KWAP, a position he held at Dresdner Kleinwort Benson Research (M) Sdn since 2011. His responsibilities include maximizing Bhd from 1997 to 1999. In 1999, he joined a l ong-term returns through investments in private telecommunication engineering company, Twin equity, property and infrastructure both local Worldwide Communication Sdn Bhd as General and overseas. Manager of Finance & Operations until 2005. 29

organisaTional sTruCTure CHIEF OPERATINg OFFICER Operation & T eknik Janakuasa Maintenance Asset Management Asset Legal Sdn Bhd (“TJSB”) Division Development (Operation) Division* Maintenance, Malakoff Operation & Repair & Overhaul Maintenance Utilities Sdn Bhd Department (“O&M”) (“MUSB”) (“MRO”) I nformation & Communications T echnology (“ICT”) *Malakoff Power Berhad (”MPower”) 30 MALAKOFF CORPORATION BERHAD Annual Report 2014

CHIEF EXECuTIVE OFFICER I nternal Audit & Risk Management Corporate Affairs and Group Finance and Ventures Division External Relations Human Resource and Accounts Division Admin Department Department L egal Department (Projects) 31



MeMBers oF ManageMenT CoMMiTTee from left DATO’ SRI SYED FAISAl AlBAR RuSwATI OTHMAN Chief Executive Officer Chief Financial Officer/ S enior Vice President, HABIB HuSIN Group Finance & Accounts Division Chief Operating Officer AzHARI SulAIMAN NORDIN KASIM S enior Vice President, S enior Vice President, Ventures Division Operation & Maintenance Division MOHD SHOKRI DAuD S enior Vice President, Asset Management Division



Defining Sustainability Our achievements as a recognised i ndependent power and water producer have been due to the infinite v alue chain of our people, and that we at Malakoff are compelled to meet t oday’s business demands in defining sustainability



CHairMan’s sTaTeMenT Dear Stakeholders, I n my inaugural message as Chairman of Malakoff Corporation B erhad (Malakoff), I am pleased to report that the Group’s performance in a challenging year underscored its fundamental strengths and the strong prospects in moving forward. At almost every front, where the year under review ended 31 December 2014 (FY 2014) was a particularly gratifying one for Malakoff. Commendable operational performance achieved phase of growth, we have addressed a number of t he past year reinforced Malakoff’s resilience in operational and structural issues and identified a coping with challenges. In Malaysia, many of clear path for the future. With all the fundamentals our plants consistently performed above the in place and riding the momentum established, I ndependent Power Producer (“IPP”) industry Malakoff is now in a strong position to embark on a average in terms of energy availability factor and new chapter of dynamic and sustainable growth. thermal efficiency. Critically, a far-reaching recovery programme for the Tanjung Bin Power Plant was F completed in March 2014, with all three units of the INANCIAL PERFORMANCE plant operating at full capacity. Our performance Despite a challenging operating environment, the on the domestic front was matched overseas, with Group posted revenue of RM5.594 billion for FY 2014. many of our plants achieving an availability factor T his was RM0.877 million or 19.0 percent higher of more than 90.0 percent. t han the RM4.717 billion recorded in FY 2013. The i mproved numbers were achieved on the back of The good news on the operational front has translated t he full recovery of the Tanjung Bin Power Plant and i nto a robust financial performance. Revenue increased additional contribution from the Port Dickson Power t o RM5.594 billion for FY 2014, compared to RM4.717 Plant following the acquisition of the remaining 75.0 billion posted the previous year. percent equity interest in the plant not held by the Group. Our 50 percent stake in the Macarthur Wind T he results achieved are a testament to our Farm in Australia also made its maiden contribution disciplined management approach and the t o Group revenue during the year. dedication of our employees to deliver results. In positioning the Group for a new and dynamic 37

CHairMan’s The results achieved are a sTaTeMenT (continue) testament to our disciplined management approach and the dedication of our employees to deliver results. F or FY 2014, Group Profit After Tax In positioning the Group for a and Minority Interest (“PATMI”) was new and dynamic phase of posted at RM342 million, against RM162 million achieved previously. The growth, we have addressed improved result was mainly attributed a number of operational and to the successful implementation of t he turnaround programme at the structural issues and identified T anjung Bin Power plant, which saw a clear path for the future. a significant improvement in the equivalent availability factor of 81.6 percent. Overall commendable performances by T he approvals from the relevant authorities will all our plants also contributed towards improved pave the way for Malakoff to eventually undertake profitability. an IPO of up to 1,521,740,000 ordinary shares of RM0.10 each (“Shares”) representing approximately T otal assets have been steadily rising over the years 3 0.0 percent of the enlarged issued and paid-up and as at the end of FY 2014 stood at RM29.34 billion, s hare capital of the Company (subject to over mainly due to the construction and development allotment option). This will comprise an Institutional of the new Tanjung Bin Energy Power Plant. The Offering of 1,279,240,000 Shares and a Retail Group has strong cash-generating ability due to Offering of 242.5 million Shares. When completed, t he lucrative and dependable cash flows from its t he Proposed IPO will enable Malakoff to list and IPPs. According to Rating Agency Malaysia (“RAM”), quote its entire enlarged issued and paid-up share Malakoff has a credit rating of at least AA3/AA at capital comprising 5,000,000,000 Malakoff Shares various levels in our group of companies. on the Main Market of Bursa Securities. Barring any unforeseen circumstances, we have DIVIDEND POLICY t argeted the completion of the proposed IPO by T he Board of Malakoff is recommending a dividend t he second quarter of 2015. About 90.0 percent of policy that will allow shareholders to participate in t he proceeds from the IPO will be utilised to pare the Company’s profits, whilst retaining adequate down debts, which will reduce Malakoff’s gearing r eserves for working capital requirements. As part and improve its capital structure. This will enable the of this policy, the Company targets a dividend Company to benefit from greater financial flexibility payout ratio of not less than 70.0 percent of its to optimise its capital structure to exploit emerging consolidated profit attributable to the owners of our growth opportunities. The remaining 10.0 percent Company beginning 1 January 2015. will be set aside for business expansion, working capital and expenses incurred for the IPO exercise. CORPORATE DEVELOPMENTS AN ATTRACTIVE VALUE PROPOSITION Malakoff was delisted in 2007, but from a new position of strength, we are now ready to open a I am of course aware that the sharp decline in oil new chapter in its ongoing transformation journey. prices since late 2014 has changed the economic On 27 November 2014, our parent company environment and investor confidence. Nevertheless, MMC Corporation Berhad (“MMC”) announced we believe that it is an opportune time to re- t he proposed listing of Malakoff on the Main i ntroduce Malakoff to the Malaysian equity market. Market of Bursa Malaysia Securities Berhad The listing exercise is in line with our long-term (“Bursa Securities”) via an Initial Public Offering business strategies and objective to position the (“IPO”). In mid-December 2014 Malakoff submitted Malakoff Group as Malaysia’s leading multinational applications to the various relevant authorities to water and power company. undertake the proposed listing. 38 MALAKOFF CORPORATION BERHAD Annual Report 2014

Our shareholders already include some of the biggest Growing International Independent Water Production Malaysian institutions and experienced local and (“IWP”) and Power Generation Portfolio i nternational financial investors. The general public Our international expansion efforts have transformed and astute investors will undoubtedly recognise the Malakoff from a domestic player into a leading i ntrinsic value Malakoff offers and are thus able to multinational power generator and water producer. make informed independent decisions to invest in I n doing so, we have diversified our geographic t he largest IPP in Malaysia and participate in the presence from wholly within Malaysia to now having continuing growth of the Malakoff Group. operations in Kingdom of Saudi Arabia, Algeria, Bahrain and Australia. Through our international Since becoming a private company in 2007, we plants, the effective power generation and water have set ourselves a series of goals, determining a production capacity stands at around 690 MW and clear way forward to take us to the next level and 358,850 cubic metres/day respectively. Recently, we r ealise our corporate vision. Consider what we have were also the successful bidder for the Al Ghubrah achieved in a relatively short period of time: I WP in Oman and in FY 2013, acquired a 50.0 percent participating interest in the MacArthur Largest IPP in Malaysia and Southeast Asia Wind Farm, which is the largest wind farm in the We have the largest effective generation capacity s outhern hemisphere. The Group is therefore well i nstalled in Malaysia and Southeast Asia (“SEA”). positioned to benefit from an expected increase T he six IPPs owned by our subsidiaries and an i n electricity and water consumption in the MENA associate have a total effective power generation r egion in tandem with Gross Domestic Product capacity of 5,346 MW, giving us a commanding ( “GDP”) growth. Strong growth is also expected in 24.9 percent market share of the total installed t he wind power generation business in Australia, capacity in Peninsular Malaysia. From the time the with Renewable Energy Target of 20.0 percent Company was taken private, effective capacity has of Australia’s electricity coming from renewable s oared 93.9 percent from 3,128.7 MW in 2007 to r esources, by 2020. 5,346.0 MW. 39

Robust Financial Performance Power Plant is one of the largest privately owned Since 2007, our key financial metrics have improved coal-fired power plants in SEA accounting for around with a 113.8 percent increase in revenue, while 29.3 percent of Peninsular Malaysia’s total installed EBITDA grew by 9.1 percent. About 94.8 percent coal-fired generation capacity. With the completion of the Group’s revenue is generated by the power of the Tanjung Bin Energy Power Plant in 2016, our generation business, from which it receives capacity share will increase to around 38.0 percent. as well as energy payments from Tenaga Nasional Berhad (“TNB”). Malakoff has the longest remaining Strong Culture of Operational Excellence P PA life-span amongst Malaysian IPPs and a high A focus on operational excellence has ensured that l evel of contracted revenue stream of 92.0 percent. our plants are managed and maintained efficiently and cost-effectively to meet world-class standards. Sustainable Business Model T his has enabled some of our plants to achieve Our business model is designed to ensure higher than IPP industry averages, which is matched sustainable growth, present and well into the future. by a commendable performance in the key areas Over the years, we have taken a conscious decision of Health, Safety and Environment (“HSE”) and plants t o move away from an overwhelming dependence overall performance. on natural gas in our power plants to achieve a more balanced fuel mix that includes coal, multi- Proven O&M Track Record f uels and oil. Whilst expanding our international Malakoff has a proven track record of expansion foot-print, we have also diversified our earnings t hrough greenfield developments and acquisitions. base by venturing into new but related areas of We have a total O&M portfolio capacity of 8,049 business such as wind energy, water production, MW of power and 1,421,000 m /day of water, which 3 electricity and chilled water distribution, Operation i ncludes some of the largest IWP and IWPP in the and Maintenance (“O&M”) services including MENA region. With an average contract expiration Power Plant training. period of 19 years, our O&M portfolio affords the Group long-term earnings visibility. Well Positioned to Capitalise on the Increasing Role of Coal Strategic Partners Over the years, Malaysia has seen a gradual shift in Malakoff’s standing in the industry has enabled i ts energy mix for power generation to reduce over- it to forge mutually beneficial relationships, which r eliance on just one source. Coal is expected to include high-quality counter-parties in the business, i ncrease its contribution to the nation’s energy mix s uppliers and an international network of vendors t o 49.0 percent by the year 2020. Our Tanjung Bin and strategic partners. 40 MALAKOFF CORPORATION BERHAD Annual Report 2014

A strong and Capable Workforce A great deal was accomplished in 2014 Whether it is our ability to consistently perform above the IPP industry average in terms of energy availability factor and thermal efficiency, or our capacity and resilience to turn around challenging conditions, one critical success factor deserves a s pecial mention – our people. It is thanks to the r elentless efforts and unwavering commitment of our company’s management and the staff that we are here today looking back at 2014 as an eminently satisfactory financial year. Our people have been and will continue to be our strength. In addition to ensuring sufficient opportunities exist for our people to bridge any gaps they may have in technical and functional competencies, we also acknowledge the importance f or our staff to forge a stronger team spirit committed t o execution excellence by developing leaders at all levels. A comprehensive learning and development plan ensures the development of not just technical and functional competencies, but also leadership skills for our people to prepare them for the present and future. KEY BUSINESS STRATEGIES Building on a solid platform established, we will capitalise on opportunities coming our way to further unlock the value-creating potential of our businesses. As our overriding goal is to provide long-term growth f or our stakeholders, our roadmap to the future includes the following key business strategies: Expand Power Generation Platform T he Energy Commission of Malaysia (Suruhanjaya T enaga) has set a target to increase the power generation capacity in Peninsular Malaysia by an additional 10,923 MW to 11,323 MW between 2014 and 2020. In line with this, Malakoff plans to expand t he Group’s effective power generation capacity f rom the current 6,036 MW to 10,000 MW by the y ear 2020. When commercial operations of the Tanjung Bin Energy Power Plant begin by 2016 it will add 1,000 MW to our effective power generation capacity. The Group has a significant land bank with long remaining land leases that can be 41

CHairMan’s sTaTeMenT (continue) utilised for further capacity expansion or contract extension beyond the duration of existing Power P urchase Agreements (“PPA”s). Beyond national boundaries, we continue to accelerate our business development activities to expand our portfolio not only in South-East Asia and the Middle East, but also in countries with developed and matured energy markets. I n order to mitigate risks and enhance our competitive advantage in securing greenfield as well as brownfield projects, we will seek alliances with strategic partners. Expand Renewable Energy Portfolio (“GDP”) Under the National Renewable Energy Policy and Action Plan, the Malaysian Government is promoting the use of indigenous renewable energy ( “RE”) resources. To accelerate investment in RE t echnologies, the Sustainable Energy Development Authority (“SEDA”) has implemented the feed-in-tariff mechanism to contribute towards the Renewable Energy Fund. We are looking at various options t o expand our RE portfolio, including a waste-to- energy project in Kuala Lumpur and run-of-river hydroelectricity projects in East and West Malaysia. We are also focused on developed markets such as Australia and the United Kingdom where electricity production from RE is given high importance. Expand O&M Business under construction. Our total gross capacity for Malakoff has a strong culture of operational i nternational O&M for power and water as at the excellence and a disciplined management system, end of the year 2014 is 2220 MW and 1,230,000 m 3 ensuring that our assets are managed and per day, respectively. maintained not only efficiently but are also cost effective. We have developed a reliable operational T he Group’s O&M expansion programme overseas methodology and this has resulted in some of our also serves as an important entry point strategy, plants achieving higher than IPP industry averages. giving us the opportunity to familiarise ourselves On the strength of our track record, we have with a new market before committing ourselves to s uccessfully secured and executed O&M contracts any capital investment. We are presently exploring with numerous third-party clients in Malaysia and emerging O&M opportunities in the Middle East internationally. and South Asia, as well as other Southeast Asian countries. This will be done through our aggressive Malakoff, via its subsidiary Teknik Janakuasa Sdn Bhd marketing activities and participation in the related ( “TJSB”) is currently operating power and/or water power and water exhibitions and conferences. desalination plants in the Kingdom of Saudi Arabia, Malakoff is targeting to double the contribution Algeria, Kuwait, Indonesia and soon Oman with the f rom the O&M business to Group revenue by the completion of the water desalination plant currently y ear 2020. 42 MALAKOFF CORPORATION BERHAD Annual Report 2014

Expand Electricity and Chilled Water Distribution t alent the market can offer, which will be supported Business by development programmes and comprehensive T he Group is presently supplying electricity and assessments of talent. This will be supported chilled water for air conditioning to buildings in by a team of dedicated trainers who have the t he Kuala Lumpur Sentral Development Area. There expertise in power operations. On the financial front, is significant potential to expand this business t he focus will be to optimise our asset portfolio, in similar development projects in major cities capital structure and cost of funding. This will be throughout Malaysia. Among projects that we are central to the overriding objective of ensuring monitoring is the multi-billion Ringgit Tradewinds s ustainable growth and meet the expectations of Square Project, which is located at the heart of our stakeholders. K uala Lumpur’s Central Business District and is t argeted for completion by the year 2020. E nsure Sustainable Growth T o ensure our growth is sustainable we have a two- pronged strategy to maintain strong operational capabilities whilst driving shareholder returns. Operationally, we aim to attract and retain the top 43

CHairMan’s sTaTeMenT (continue) What I have presented so far is a snapshot of We want to get all our employees involved in t he strategies in place that will take us to the building an even stronger entity. In this regard, a next level. However, the changes we have made whistle-blower programme has been put in place to are only the beginning. We have also taken a encourage employees to report improper activities critical and holistic view of where we stand as an and workplace concerns. These reports will be organisation to reflect our corporate strategies and e valuated by management and appropriate action, goals. At a Malakoff Town Hall meeting attended if any, will be taken. by all the senior personnel, an open and frank discussion was held focusing on a proposed new I ntegral to the improvement process group-wide, we organisational structure. To prepare the Group r ecognise the importance of corporate governance f or the challenges ahead and spur business t o protect the interest of stakeholders. The Board growth, we talked about the diverse organisational is committed to achieving and sustaining high challenges with a view to strengthening reporting s tandards of corporate governance. Towards lines, harmonising business processes and policies realising this objective, a Board Risk Committee i n place. Various approaches were discussed, which ( “BRC”) was established during the year, whose among others, aimed at strengthening business t erms of reference include among others, reviewing processes, centralising certain core activities such t he processes for determining and communicating as the Accounts, Finance and Safety functions t he Company’s risk appetite. The BRC reports to the whilst realigning key support services. 44 MALAKOFF CORPORATION BERHAD Annual Report 2014

B oard and provides independent assurance on the ACKNOWLEDGEMENTS effectiveness of the risk management processes I n a challenging year, it is gratifying to see how t hat are in place. In addition, we have established t he management and staff of Malakoff have rallied an Internal Audit Department, which will assist the t ogether to address the challenges as a cohesive Board in monitoring, managing risks and internal t eam. They are the ones growing this Company – controls. and we are not finished yet. We have a new addition t o our Management Team with the appointment of Dato’ Sri Syed Faisal Albar as the new Chief AWARDS AND ACCOLADES Executive Officer (“CEO”) of Malakoff effective 1 July Capping a remarkable year of achievements, 2014. He takes over from Encik Habib Husin who Malakoff won the Anugerah Langkawi 2014 in was the Acting CEO and Chief Operating Officer recognition for its commitment towards preservation f rom 1 March 2014. of the environment. The award, organised by the Department of Environment Malaysia (“DOE”), Words cannot adequately express my gratitude to was signed by Duli Yang Maha Mulia Seri Paduka a great support group that includes our financiers, B aginda Yang di-Pertuan Agong and presented partners, business associates, various government by the Menteri Besar of Kedah, YAB Dato’ Seri bodies and statutory authorities, and not least of all, Haji Mukhriz Tun Mahathir, in conjunction with the the members of the media. To our many stakeholders, Minggu Alam Sekitar Malaysia (“MASM”) which was I thank you for another year of believing in us. We held in Jitra, Kedah on 3 November 2014 could not have come this far without your support and confidence in the Company, and this has Our Port Dickson Power Plant (“PDPP”) won the gone a long way in helping us achieve our goals National Occupational Safety and Health Excellence and expand our horizons. Award 2014 on 18 December from the Department of Occupational Safety and Health (“DOSH”). I would also like to pay tribute to Tan Sri Dato’ Vigorous audits were conducted by DOSH across Wira Syed Abdul Jabbar Bin Syed Hassan, whose t he country to determine the winner and Malakoff t erm of office ended on 30 November 2014. During i s honoured to receive this award in recognition for his three-year tenure as Chairman of Malakoff he i t s health and safety practices. has witnessed the transformation of the Company i nto a truly Malaysian multi-national company. Malakoff also won Silver at Global CSR Awards 2014 His leadership qualities and wise counsel have - Empowerment for Women on 3 April 2014 that was been inspiring. The Board and I thank him for his held in Bali, Indonesia. The prestigious accolade is s ervices and wish him every success in his future aimed at Malakoff Corporate Social Responsibility endeavours. (“CSR”) program, “Malakoff Empower for Life” which has been supporting Women’s Aid Organisation The year 2015 is shaping up to be another exciting ( “WAO”) since 2010. year as we stand at the cusp of a new chapter in Malakoff’s unfolding story. I trust you will continue On 12 November 2014, our Emergency Response t o give us your support as we strive to achieve our Team (“ERT”) from Malakoff Power, Lumut Power Plant objectives. (“LPP”) won the Overall Champion title in the “Perak E RT Competition” organised by “Jabatan Bomba dan Penyelamat Negeri Perak”. We prospered in r etaining our last year’s title consecutively which ascertained that our staff are competent in handling emergency situation. Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail Chairman 45



Collaborating S olutions I n the constant of a changing l andscape that drives Malakoff to create and bring on innovation to the most demanding of challenges, our workforce i s embodied by their experience and e xpertise towards collaborating solutions.

perForManCe reView By CHieF exeCuTiVe oFFiCer Overview Operationally, it was a very satisfactory year, with many significant highlights and achievements both at home and internationally. Although I only came on board as Chief Executive One of the significant highlights in 2014 was the Officer of Malakoff in July 2014, what impressed me establishment of our Internal Audit Department most was the Company’s performance in the face ( “IAD”) in March 2014 to take over the function of challenges. previously outsourced to Ernst & Young. Reporting t o the Group Chief Internal Audit Department As the largest IPP in the country, the Group has many ( “GCIAD”) MMC Corporation Berhad, IAD assists s trengths it can build upon to exploit emerging t he Malakoff Board via the Board Audit Committee opportunities in the marketplace and achieve our t o monitor and manage risks through independent strategic goals. We have the earnings power, robust assessments on the adequacy, effectiveness and business model, expertise backed by a solid track efficiency of the internal control systems that are r ecord and an experienced work-force that will i n place relating to governance, risk management contribute greatly to our competitiveness. We also and control processes. The monitoring process have a clear vision of where we are heading and also forms the basis for continually improving a winning strategies that will take us there. For all r isk management culture within the Company in t hese cogent reasons, the Group faces the future l i ne with its business goals. In 2014, both IAD and with confidence. I personally am convinced that GCIAD Conducted 10 audits and 3 internal control t he best years for Malakoff are still to come. process reviews 48 MALAKOFF CORPORATION BERHAD Annual Report 2014