000Malakoff_annual_report

o t a l T euy t qi M 00 ’0 R 4 19 16 ,3,4 43 1 5 16 ,6 7,9) (8 05 2,0) (2 68 9,2) (5 14 42 84 1,4 37 70 1,2 (9,0) 18 50 8,5) (1 70 (8,5) 20 20 4 16 66 ,7,1 c o n t r o l l i n g n e et R 2,2 1,6 Non– itrs s M 00 ’0 23 42 – – – – – 1 25 7,9 1 25 7,9 – 8,5) (1 70 8,5) (1 70 22 97 Ttl a o M 00 ’0 R 3 95 74 ,1,2 43 1 5 16 ,6 7,9) (8 05 2,0) (2 68 9,2) (5 14 31 59 4,4 26 45 4,2 (9,0) 18 50 – (9,0) 18 50 3 93 69 ,6,4 o m p a n – - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - / y srb u t D i ti c c u m u l a t e d A oss lse Hdig n eg M 00 ’0 R M 00 ’0 12 47 (7,4) 16 01 7,8 43 1 – – – – 7,9) (8 05 – 2,0) (2 68 43 1 (0,0) 10 73 31 59 4,4 – 31 92 4,6 (0,0) 10 73 (9,0) 18 50 – – – (9,0) 18 50 – 2,8) (8 95 5 38 7,7 e a b l h e C e – - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - / Rsre ee vs o a in R M 00 ’0 2,1) (0 10 – 5 16 ,6 – – 5 16 ,6 – 5 16 ,6 – – – 1,4) (4 94 t rnlt as R n e r o f s o T 80 4 – – – – – – – – – – 80 4 w C a p i t a l p in M 00 ’0 o o rdmt R e t. e t a b l a b l srb u t rfrne ee – – – – – – – – – – ls ae trb u t im u rm e ep e ec e nr P M 00 ’0 R M 00 ’0 43 71 1,4 – – – – – – – – – – 43 71 1,4 ft eefi a c a t t m ns n i /--------------------------- Ati ---------------------------- /--------------------------- N o n - d i ti ---------------------------- hr Sa tl ecpa hr ai Sa ria y O d e ec rfrne e nr P ria y R M 00 ’0 R M 00 ’0 3 12 06 ,6,9 4 19 ,7 31 34 5,4 – – – – – – – – – – – – – – – – – – – – 3 12 06 ,6,9 4 19 ,7 31 34 5,4 ato h s n r r lp n statements of changes in equity for the year ended 31 December 2014 ( c o n t i n u e d ) O d R ettd 04 fdfie end eto a in o ec rnlt as e g n nh d i g tr b t b et v epne/ O hrcmrhnie(xes) mrhnieicm o efr v no w eso h ft e n r 04 br21 0 o24aea ne r 2 g s14t e a p at1J nay21,rs a e au r esrmn Rmau e e etl a i iy b n fi i b l t g u rnyt Frincr i f rn e o oe g d f ee c sf rf ri n os o e a in prt ahflwhd e e g C s o S aeo oso fl s eevsati ua l o rs re soits a e p ees icm o h e r efrteya rfi o h e r P otfrteya p ees e r ii e d oo st Cm ay p n D i v i d e n d s t o n o n - c o n t r o l l i n g itrs s to t u r asc te o t ey a h D v d n o n e et 1 o e no h gr e o h co 99 99

statements of changes in equity for the year ended 31 December 2014 (continued) /--------------------------------------- Attributable to owners of the Company –--------------------------------/ /--------------------------------------- Non-distributable --------------------------------/ Distributable S hare capital S hare premium Reserves Capital R etained Ordinary Preference Ordinary Preference redemption profits T otal company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 at 1 January 2013 351,344 4,179 3,162,096 413,741 840 378,603 4,310,803 Remeasurement of defined benefit liability – – – – – 505 505 Other comprehensive expense for the year – – – – – 505 505 Profit for the year – – – – – 3,408,851 3,408,851 comprehensive income for the year – – – – – 3,409,356 3,409,356 Dividends to the owners of the Company – – – – – ( 191,000) (191,000) at 31 december 2013/ 1 January 2014 351,344 4,179 3,162,096 413,741 840 3,596,959 7,529,159 Remeasurement of defined benefit liability – – – – – ( 2,339) ( 2,339) Other comprehensive income for the year – – – – – ( 2,339) ( 2,339) Profit for the year – – – – – 744,090 744,090 comprehensive income for the year – – – – – 741,751 741,751 Dividends to the owners of the Company – – – – – ( 198,500) (198,500) at 31 december 2014 351,344 4,179 3,162,096 413,741 840 4,140,210 8,072,410 The notes on pages 104 to 224 are an integral part of these financial statements. 100 MALAKOFF CORPORATION BERHAD Annual Report 2014

statements of cash flows for the year ended 31 December 2014 Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Note Restated cash flows from operating activities Profit before tax 595,484 84,147 759,363 3,416,124 Adjustments for: Amortisation of prepaid lease payments 4,344 4,346 – – Amortisation of intangible assets 511,742 469,837 – – Amortisation of transaction costs of hedging instruments 12,146 12,144 – – Depreciation of property, plant and equipment 558,644 471,266 5,997 4,702 F inance costs 911,242 840,318 169,212 228,820 I mpairment loss on trade receivables 48,973 177,273 – – I nterest income ( 132,688) ( 161,052) ( 34,505) ( 81,740) L oss/(Gain) on disposal of property, plant and equipment 2,622 – ( 177) – Gain arising from change in fair value of derivative financial instruments ( 5,891) ( 44,041) – – Property, plant and equipment written off 20,897 127,126 – – E xpenses related to retirement benefit plans 11,976 13,260 3,043 4,478 Reversal of impairment loss on trade receivables ( 3,295) ( 6,079) – – Share of profit of equity-accounted associates and a joint venture entity, net of tax ( 41,667) ( 61,202) – – 2,494,529 1,927,343 902,933 3,572,384 Changes in: I nventories ( 20,291) 14,723 – – T rade and other receivables ( 2,413) 7,311 ( 336,912) 321,513 T rade and other payables 112,275 ( 422,536) 220,386 568,380 Deferred income 273,095 279,380 – – Employee benefits ( 4,484) ( 16,628) ( 3,260) ( 17,283) cash generated from operation 2,852,711 1,789,593 783,147 4,444,994 I ncome taxes paid ( 150,761) ( 152,989) ( 17,398) ( 22,873) net cash from operating activities 2,701,950 1,636,604 765,749 4,422,121 101 101

statements of cash flows for the year ended 31 December 2014 (continued) Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Note Restated cash flows from investing activities Acquisition of property, plant and equipment ( 1,614,561) (2,534,967) ( 3,002) ( 13,941) Acquisition of subsidiaries, net of cash and cash equivalents acquired ( 153,541) ( 360,151) – – Dividends received from associates 19,975 54,368 – – Decrease in other investments 844,445 1,289,623 – – I nterest received 111,997 146,440 6,351 46,242 I ncrease in investment in associates (36,755) – – – Acquisition of associates – (2,472) – – P roceeds from disposal of property, plant and equipments 215 – 215 – P roceeds from redemption of unsecured loan stocks 29,682 – 400 1,027,419 Redemption of unsecured loan stocks ( 57,625) ( 19,543) – – net cash (used in)/from investing activities ( 856,168) (1,426,702) 3,964 1,059,720 cash flows from financing activities Dividends paid to the owners of the Company ( 198,500) ( 191,000) ( 198,500) ( 191,000) Dividends paid to non-controlling interests ( 81,750) ( 190,000) – – I nterest paid ( 965,724) ( 923,463) ( 112,804) ( 195,893) Proceeds from borrowings 1,559,239 12,061,722 – – Repayment of borrowings ( 959,930) (11,289,771) – ( 5,341,439) net cash used in financing activities ( 646,665) ( 532,512) ( 311,304) (5,728,332) net increase/(decrease) in cash and cash equivalents 1,199,117 ( 322,610) 458,409 ( 246,491) cash and cash equivalents at beginning of the year 2,375,783 2,698,393 134,585 381,076 cash and cash equivalents at end of the year (i) 3,574,900 2,375,783 592,994 134,585 102 MALAKOFF CORPORATION BERHAD Annual Report 2014

statements of cash flows for the year ended 31 December 2014 (continued) ( i) cash and cash equivalents Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts: Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Note Restated Deposits with licensed banks and other licensed corporations 3,433,561 3,306,899 584,852 128,596 L ess: Other investments 13 ( 321,509) (1,165,954) – – 3,112,052 2,140,945 584,852 128,596 Cash and bank balances 14 462,848 234,838 8,142 5,989 3,574,900 2,375,783 592,994 134,585 The notes on pages 104 to 224 are an integral part of these financial statements. 103 103

notes to the consoliDateD financial statements Malakoff Corporation Berhad is a public limited liability company, incorporated and domiciled in Malaysia. The addresses of the principal place of business and registered office of the Company are as follows: Principal place of business registered office Level 12, Block 4 Ground Floor, Wisma Budiman P laza Sentral P ersiaran Raja Chulan J alan Stesen Sentral 5 50200 Kuala Lumpur 50470 Kuala Lumpur T his consolidated financial statements of the Company as at and for the financial year ended 31 December 2014 comprise the Company and its subsidiaries (together referred to as the “Group” and i ndividually referred to as “Group entities”) and the Group’s interest in associates and a joint venture. The Company is principally engaged in investment holding activities, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. T he immediate and ultimate holding companies during the financial year were MMC Corporation Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad and Indra Cita Sdn. Bhd. respectively. Both companies were incorporated in Malaysia. These financial statements were authorised for issue by the Board of Directors on 6 February 2015. 1. basis of PreParation ( a) statement of compliance The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the requirements of the Companies Act, 1965 in Malaysia. T he following are accounting standards, amendments and interpretations of the MFRS framework t hat have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company. mfrss, interpretations and amendments effective for annual periods beginning on or after 1 July 2014 • Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards ( Annual Improvements 2011-2013 Cycle) • Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle) • Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle) • Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle) • Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle) • Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle) • Amendments to MFRS 119, Employee Benefits – Defined Benefit Plans: Employee Contributions 104 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 1. basis of PreParation (continued) ( a) statement of compliance (continued) mfrss, interpretations and amendments effective for annual periods beginning on or after 1 July 2014 (continued) • Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle) • Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle) • Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle) mfrss, interpretations and amendments effective for annual periods beginning on or after 1 January 2016 • Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations ( Annual Improvements 2012-2014 Cycle) • Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle) • Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture • Amendments to MFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations • MFRS 14, Regulatory Deferral Accounts • Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortisation • Amendments to MFRS 116, Property, Plant and Equipment and MFRS 141, Agriculture – Agriculture: Bearer Plants • Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle) • Amendments to MFRS 127, Separate Financial Statements – Equity Method in Separate Financial Statements • Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014 Cycle) • Amendments to MFRS 101, Presentation of Financial Statements: Disclosure Initiative • Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosures of Interests i n Other Entities and MFRS 128, Investments in Associates and Joint Ventures – Investment Entities: Applying the Consolidation Exception mfrss, interpretations and amendments effective for annual periods beginning on or after 1 January 2017 • MFRS 15, Revenue from Contracts with Customers mfrss, interpretations and amendments effective for annual periods beginning on or after 1 January 2018 • MFRS 9, Financial Instruments (2014) T he Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations which are applicable to the Group and the Company for annual periods beginning on or after 1 July 2014, 1 January 2016, 1 January 2017 and 1 January 2018. 105 105

notes to the consoliDateD financial statements (continued) 1. basis of PreParation (continued) ( a) statement of compliance (continued) T he initial application of the accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and the Company except as mentioned below: (i) mfrs 15, revenue from contracts with customers MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and I C Interpretation 131, Revenue – Barter Transactions Involving Advertising Services. T he Group is currently assessing the financial impact that may arise from the adoption of MFRS 15. (ii) mfrs 9, financial instruments MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities and on hedge accounting. T he Group is currently assessing the financial impact that may arise from the adoption of MFRS 9. (b) basis of measurement The financial statements have been prepared on the historical cost basis other than as disclosed i n Note 2. ( c) functional and presentation currency T hese financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s f unctional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated. . ( d) use of estimates and judgements T he preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ f rom these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. 106 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 1. basis of PreParation (continued) ( d) use of estimates and judgements (continued) T here are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than the following: (i) lease accounting The Group has adopted IC Interpretation 4, Determining whether an Arrangement contains a Lease, which prescribes that the determination of whether an arrangement is or contains a lease shall be based on the substance of the arrangement. It requires an assessment of whether the fulfilment of the arrangement is depended on the use of specific assets and whether the arrangement conveys a right to use such assets. The adoption of IC I nterpretation 4 has resulted in operating lease accounting being applied to the Group entities as lessor for the Power Purchase Agreements. (ii) cash flow hedge accounting T he Group enters into various types of hedging contracts to hedge the interest rate risk and foreign exchange risk which both are arisen from the loan transactions. In merchant markets these contracts typically fall within the definition of derivative financial instruments and accordingly have to be marked to market. Accounting for these contracts as cash flow hedges allows, to the extent the hedge is effective, the changes in value of the derivatives t o be deferred in equity. In order to achieve cash flow hedge accounting it is necessary for t he Group to determine, on an ongoing basis, whether a forecast transaction is both highly probable and whether the hedge is effective. This requires both subjective and objective measures of determination. (iii) fair value of derivatives T he Group adopted MFRS 13, Fair Value Measurement. The Group recorded its derivative contracts on its statement of financial position at fair value. Changes in the value of its derivative contracts in each period were recorded in earnings unless strict hedge accounting criteria were met which allow the movement in fair value to be recorded within equity. The Group estimated the fair value of its derivative contracts by reference to forward and discount curves. The forward curve was derived from a reputable provider of financial market data, over the short-term horizon period, and from valuation techniques over the more distant horizon period. The assumptions used during the application of valuation techniques would directly impact the shape of the forward curve. The forward curves were only estimated of f uture rates and thus possess inherent uncertainty and subjectivity. (iv) residual value T he Group assesses the appropriateness of the residual values of the power plants at the end of the initial concession period. The Group considered and adopted the recoverable v alues of the assets based on the valuation judgement by a professional valuer and the discounted cash flow method with the assumptions as shown in Note 2(d)(iv). 107 107

notes to the consoliDateD financial statements (continued) 1. basis of PreParation (continued) ( d) use of estimates and judgements (continued) (v) impairment of loan and receivables Management reviews its loans and receivables for objective evidence of impairment at least quarterly. Significant financial difficulties of the debtors, the probability that the debtors will enter bankruptcy, and default or significant delay in payments are considered objective evidence that the receivables are impaired. In determining this, management makes j udgment as to whether there is observable data indicating that there has been a significant change in the payment ability of the debtors, or whether there have been significant changes with adverse effect in the technological, market, economic or legal environment in which the debtor operates in. Where there is objective evidence of impairment, management makes judgments as t o whether an impairment loss should be recorded as an expense. In determining this, management uses estimates based on historical loss experience for assets with similar credit r isk characteristics. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between t he estimated loss and actual loss experience. As at 31 December 2014, the total allowance f or impairment loss was approximately RM360,627,000 (2013: RM228,288,000). (vi) Provision for retirement benefits T he provision is determined using actuarial valuation prepared by an independent actuary. T he actuarial valuation involved making assumptions about discount rate, future salary i ncrease, mortality rates, resignation rate and normal retirement age. As such, this estimated provision amount is subject to significant uncertainty. (vii) deferred tax Estimating the deferred tax assets to be recognised requires a process that involves determining appropriate tax provisions, forecasting future years’ taxable income and assessing our ability to utilise tax benefits through future earnings. 108 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies T he accounting policies set out below have been applied consistently to the periods presented i n these financial statements and have been applied consistently by the Group entities, unless otherwise stated. (a) basis of consolidation (i) subsidiaries Subsidiaries are entities, including structured entities, controlled by the Company. The fi nancial statements of subsidiaries are included in the consolidated financial statements f rom the date that control commences until the date that control ceases. T he Group controls an entity when it is exposed, or has rights, to variable returns from its i nvolvement with the entity and has the ability to affect those returns through its power over t he entity. Potential voting rights are considered when assessing control only when such r ights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return. I nvestments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs. (ii) business combinations Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group. For new acquisitions, the Group measures the cost of goodwill at the acquisition date as: • the fair value of the consideration transferred; plus • the recognised amount of any non-controlling interests in the acquiree; plus • i f the business combination is achieved in stages, the fair value of the existing equity i nterest in the acquiree; less • t he net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. F or each business combination, the Group elects whether it measures the non-controlling i nterests in the acquiree either at fair value or at the proportionate share of the acquiree’s i dentifiable net assets at the acquisition date. Transaction costs, other than those associated with the issue of debt or equity securities, that t he Group incurs in connection with a business combination are expensed as incurred. 109 109

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (a) basis of consolidation (continued) (iii) acquisitions of non-controlling interests T he Group accounts for all changes in its ownership interest in a subsidiary that do not r esult in a loss of control as equity transactions between the Group and its non-controlling i nterest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves. ( iv) loss of control Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity r elated to the former subsidiary from the consolidated statement of financial position. Any s urplus or deficit arising on the loss of control is recognised in profit or loss. If the Group r etains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained. (v) associates Associates are entities, including unincorporated entities, in which the Group has significant i nfluence, but not control, over the financial and operating policies. I nvestments in associates are accounted for in the consolidated financial statements using t he equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant i nfluence ceases. When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate. When the Group ceases to have significant influence over an associate, any retained interest i n the former associate at the date when significant influence is lost is measured at fair v alue and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss. When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities. I nvestments in associates are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs. 110 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (a) basis of consolidation (continued) ( vi) Joint arrangements Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements’ returns. J oint arrangements are classified and accounted for as follows: • A joint arrangement is classified as “joint operation” when the Group or the Company has rights to the assets and obligations for the liabilities relating to an arrangement. T he Group account for each of its share of the assets, liabilities and transactions, i ncluding its share of those held or incurred jointly with the other investors, in relation t o the joint operation. • A joint arrangement is classified as “joint venture” when the Group has rights only to t he net assets of the arrangements. The Group accounts for its interest in the joint v enture using the equity method. Investments in joint venture are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs. (vii) non-controlling interests Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented i n the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non- controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and t he comprehensive income for the year between non-controlling interests and owners of the Company. L osses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. (viii) transactions eliminated on consolidation I ntra-group balances and transactions, and any unrealised income and expenses arising from i ntra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted associates and joint venture are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent t hat there is no evidence of impairment. 111 111

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (b) foreign currency ( i) foreign currency transactions T ransactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are r etranslated to the functional currency at the exchange rate at the date that the fair value was determined. F oreign currency differences arising on retranslation are recognised in profit or loss, except f or differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income. I n the consolidated financial statements, when settlement of a monetary item receivable f rom or payable to a foreign operation is neither planned nor likely to occur in the f oreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the foreign currency translation reserve (“FCTR”) in equity. (ii) operations denominated in functional currencies other than ringgit malaysia The assets and liabilities of operations denominated in functional currencies other than RM, i ncluding goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combinations before 1 January 2009 (the date when the Group first adopted MFRS) which are treated as assets and liabilities of the Company. The i ncome and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions. F oreign currency differences are recognised in other comprehensive income and accumulated i n the FCTR in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling i nterests. When a foreign operation is disposed of such that control, significant influence or j oint control is lost, the cumulative amount in the FCTR related to that foreign operation is r eclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling i nterests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, t he relevant proportion of the cumulative amount is reclassified to profit or loss. 112 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (c) financial instruments (i) initial recognition and measurement A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument. A financial instrument is recognised initially, at its fair value plus, in the case of a financial i nstrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. ( ii) financial instrument categories and subsequent measurement The Group and the Company categorise financial instruments as follows: financial assets (a) financial assets at fair value through profit or loss F air value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition. Derivatives that are linked to and must be settled by delivery of unquoted equity i nstruments whose fair values cannot be reliably measured are measured at cost. Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss. (b) loans and receivables L oans and receivables category comprises debt instruments that are not quoted in an active market. F inancial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method. All financial assets, except for those measured at fair value through profit or loss, are subject t o review for impairment (see Note 2(i)). 113 113

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (c) financial instruments (continued) ( ii) financial instrument categories and subsequent measurement (continued) financial liabilities All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss. F air value through profit or loss category comprises financial liabilities that are derivatives ( except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition. Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss. (iii) hedge accounting cash flow hedge A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable f orecast transaction and could affect the profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge i s recognised in other comprehensive income and the ineffective portion is recognised in profit or loss. Subsequently, the cumulative gain or loss recognised in other comprehensive income i s reclassified from equity into profit or loss in the same period or periods during which t he hedged forecast cash flows affect profit or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is r emoved from equity and included in the initial amount of the asset or liability. However, loss r ecognised in other comprehensive income that will not be recovered in one or more future periods is reclassified from equity into profit or loss. Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, the hedge is no longer highly effective, the forecast t ransaction is no longer expected to occur or the hedge designation is revoked. If the hedge i s for a forecast transaction, the cumulative gain or loss on the hedging instrument remains i n equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, any related cumulative gain or loss recognised in other comprehensive i ncome on the hedging instrument is reclassified from equity into profit or loss. 114 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (c) financial instruments (continued) (iv) derecognition A financial asset or part of it is derecognised when, and only when the contractual rights t o the cash flows from the financial asset expire or control of the asset is not retained or s ubstantially all of the risks and rewards of ownership of the financial asset are transferred t o another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss. A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. ( d) Property, plant and equipment ( i) recognition and measurement I t ems of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which t hey are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When significant parts of an item of property, plant and equipment have different useful l i ves, they are accounted for as separate items (major components) of property, plant and equipment. T he gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” or “other operating expenses” respectively in profit or loss. 115 115

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) ( d) Property, plant and equipment (continued) (ii) subsequent costs T he cost of replacing a component of an item of property, plant and equipment is r ecognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised t o profit or loss. The costs of the day-to-day servicing of property, plant and equipment are r ecognised in profit or loss as incurred. (iii) depreciation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from t he remainder of that asset, then that component is depreciated separately. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful l i ves of each component of an item of property, plant and equipment from the date that t hey are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by t he end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. All spare parts including common spares, emergency spares and consumable spares which expected to be used for more than one period is classified under C-inspection costs within property, plant and equipment. Spare parts which can only be used as part of an equipment purchased or plant constructed are depreciated in the same manner of the C-inspection costs. Common spare that can be used for more than a single equipment or plant is not depreciated before use. Upon use, it is depreciated over the remaining estimated useful life of the larger equipment or plant. The estimated useful lives for the current and comparative periods are as follows: • Buildings 5 – 20 years • C-inspection costs 3 – 6 years • Plant and machinery 5 – 31 years • Office equipment and furniture 5 years • Motor vehicles 5 years • Computers 3 years Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate. 116 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) ( d) Property, plant and equipment (continued) (iv) residual value T he Group charges depreciation on its depreciable property, plant and equipment based on the useful lives and residual values of the assets. Estimating the useful lives and residual values of property, plant and equipment involves significant judgement, selection of variety of methods and assumptions that are normally based on market conditions existing at the balance sheet date. The actual useful lives and residual values of the assets however, may be different from expected. T he Power Purchase Agreements (“PPAs”) provide for the disposal of the power plants at t he end of the initial concession period, in the event that the PPAs are not extended. In assessing the appropriateness of the residual values adopted, management considered the r ecoverable values of the assets based on the following methods: ( a) valuation judgement by a professional valuer T he residual value as at 21 January 2016 of the plant and machinery assets of Port Dickson Power Berhad will be RM61.8 million. T he valuation judgement by a professional valuer was derived using the following critical assumptions: ( i) All plant and equipment will be removed only at the end of the 21 year power s upply agreement; (ii) The recoverable steel within the power house and tank farm will be sold in the local market; and (iii) All metals of value will be recovered. (b) the discounted cash flow method (“dcf”) The discounted cash flows were derived using the following critical assumptions: (1) extension of five to ten years of the PPAs at the end of the initial concession period, in view of: (i) limited new power plants being constructed; (ii) increase in demand for power; and ( iii) Tenaga Nasional Berhad (“TNB”)’s continued reliance on Independent Power Producers (“IPPs”). 117 117

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) ( d) Property, plant and equipment (continued) (iv) residual value (continued) (b) the discounted cash flow method (“dcf”) (continued) The existing PPAs expire as follows: Residual Residual value value RM’million RM’million Y ear of at at PPa owner expiry 31.12.2014 31.12.2013 Segari Energy Ventures Sdn. Bhd. 2027 370 370 GB3 Sdn. Bhd. 2022 514 514 Prai Power Sdn. Bhd. 2024 315 315 T anjung Bin Power Sdn. Bhd. 2031 1,924 1,924 3,123 3,123 ( 2) an estimated Variable Operating Rate (“VOR”) during the extension period which management deems to be reasonable based on the expected demand and the VOR r ate at the end of the PPAs; ( 3) an average despatch factor of 20% and 83% to reflect the future demand for power by the industry; and (4) the pre-tax discount rate of 7.5% per annum. ( e) leased assets (i) finance lease L eases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the l eased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset i s accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the fi nance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic r ate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the l ease when the lease adjustment is confirmed. L easehold land which in substance is a finance lease is classified as property, plant and equipment. 118 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (e) leased assets (continued) (ii) operating lease (a) group as lessee leasehold land L eases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property i nterest held under operating lease, the leased assets are not recognised on the statement of financial position. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or l oss as an integral part of the total lease expense, over the term of the lease. Contingent r entals are charged to profit or loss in the reporting period in which they are incurred. L easehold land which in substance is an operating lease is classified as prepaid lease payments. (b) group as lessor Power Purchase agreement The Group adopted IC Interpretation 4, Determining whether an Arrangement contains a Lease, which prescribed that the determination of whether an arrangement is or contains a lease shall be based on the substance of the arrangement. It requires an assessment of whether the fulfillment of the arrangement is dependent on the use of s pecific asset and whether the arrangement conveys a right to use such assets. An arrangement that contains a lease is accounted for as a finance lease or an operating l ease. Payment for services and the cost of inputs of the arrangement are excluded f rom the calculation of the minimum lease payments. T he operating lease income is recognised over the term of the lease on a straight- line basis. (f) intangible assets (i) goodwill Goodwill arises on business combinations is measured at cost less any accumulated i mpairment losses. In respect of equity-accounted associates and joint venture, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment l oss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted associates and joint venture. (ii) other intangible assets I ntangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are measured at cost less any accumulated amortisation and any accumulated impairment losses. 119 119

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (f) intangible assetss (continued) (iii) subsequent expenditure S ubsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill, is recognised in profit or loss as incurred. (iv) amortisation Goodwill and intangible assets with indefinite useful lives are not amortised but are tested for i mpairment annually and whenever there is an indication that they may be impaired. Other intangible assets with a finite useful life are amortised from the date that they are available for use. Amortisation is based on straight-line basis over its useful life or using t he unit of production method. The amortisation is recognised within the “cost of sales” and “other operating expenses”, respectively in statement of profit or loss and other comprehensive income. Amortisation method, useful lives and residual values are reviewed at the end of each r eporting period and adjusted, if appropriate. (g) inventories I nventories are measured at the lower of cost and net realisable value. T he cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. ( h) cash and cash equivalents Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. 120 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (i) impairment (i) financial assets All financial assets (except for financial assets categorised as fair value through profit or l oss, investments in subsidiaries, investments in associates and joint venture) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an i nvestment in an equity instrument, a significant or prolonged decline in the fair value below i ts cost is an objective evidence of impairment. If any such objective evidence exists, then t he impairment loss of the financial asset is estimated. An impairment loss in respect of loans and receivables is recognised in profit or loss and i s measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. I f , in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised i n profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been r ecognised at the date the impairment is reversed. The amount of the reversal is recognised i n profit or loss. (ii) other assets T he carrying amounts of other assets (except for inventories and deferred tax assets) are r eviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. F or goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of t he cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing i s performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment t esting, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination. T he recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. 121 121

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (i) impairment (continued) (ii) other assets (continued) An impairment loss is recognised if the carrying amount of an asset or its related cash- generating unit exceeds its estimated recoverable amount. I mpairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce t he carrying amounts of the other assets in the cash-generating unit (groups of cash- generating units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, i mpairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss i s reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only t o the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised. (j) equity instruments I nstruments classified as equity are measured at cost on initial recognition and are not r emeasured subsequently. (i) ordinary shares Ordinary shares are classified as equity. ( ii) Preference share capital Preference share capital is classified as equity if it is non-redeemable, or is redeemable but only at the Company’s option, and any dividends are discretionary. Dividends thereon are recognised as distributions within equity. Preference share capital is classified as financial liability if it is redeemable on a specific date or at the option of the equity holders, or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense in profit or loss as accrued. 122 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) ( k) employee benefits ( i) short-term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual l eave and sick leave are measured on an undiscounted basis and are expensed as the r elated service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group or the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (ii) state plans The Group’s and the Company’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. (iii) defined benefit plans T he Group’s and the Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The calculation of defined benefit obligations is performed at regular interval by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group and the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions i n future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements. Remeasurements of the net defined benefit liability, which comprise actuarial gains and l osses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. T he Group and the Company determines the net interest expense or income on the net defined liability or asset for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability or asset, taking into account any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments. Net interest expense and other expenses relating to defined benefit plans are recognised i n profit or loss. When the benefits of a plan are changed or when a plan is curtailed, the resulting change i n benefit that relates to past service or the gain or loss on curtailment is recognised i mmediately in profit or loss. The Group and the Company recognises gains and losses on t he settlement of a defined benefit plan when the settlement occurs. 123 123

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (l) contingent liabilities Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. (m) revenue and other income ( i) energy payments, operation and maintenance charges and project management fees Revenue is measured at the fair value of the consideration received or receivable and is r ecognised in profit or loss as it accrues. (ii) capacity payment Revenue is recognised on a straight-line basis where the PPA is considered to be or to contain an operating lease. (iii) dividend income Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s r i ght to receive payment is established. (iv) interest income I nterest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically f or the purpose of obtaining a qualifying asset which is accounted for in accordance with t he accounting policy on borrowing costs. (v) lease income Lease income is recognised in profit or loss by using effective interest method over the term of the lease. ( n) deferred income Deferred income comprises the capacity payments received from Tenaga Nasional Berhad i n relation to the PPAs. The amount is credited to profit or loss on a straight-line basis over t he term of the respective PPAs under “Revenue” in the statement of profit or loss and other comprehensive income. 124 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) (o) borrowing costs Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their i ntended use or sale, are capitalised as part of the cost of those assets. The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare t he qualifying asset for its intended use or sale are interrupted or completed. I nvestment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. (p) income tax I ncome tax expense comprises current and deferred tax. Current tax and deferred tax are r ecognised in profit or loss except to the extent that it relates to a business combination or items r ecognised directly in equity or other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years. Deferred tax is recognised using the liability method, providing for temporary differences between t he carrying amounts of assets and liabilities in the statement of financial position and their t ax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax i s measured at the tax rates that are expected to be applied to the temporary differences when t hey reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current t ax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are r eviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised. 125 125

notes to the consoliDateD financial statements (continued) 2. significant accounting Policies (continued) ( q) earnings per ordinary share The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”). Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and t he weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares. ( r) operating segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to t ransactions with any of the Group’s other components. Operating segments results are reviewed r egularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available. ( s) fair value measurement F air value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market. F or non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling i t to another market participant that would use the asset in its highest and best use. When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows: L evel 1: quoted price (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. L evel 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly. Level 3: unobservable inputs for the asset or liability. T he Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers. 126 MALAKOFF CORPORATION BERHAD Annual Report 2014

Ttl a o M 00 ’0 R 5 00 33 1,7,3 2 54 97 ,3,6 (8,1) 20 59 – 7 34 71 1,2,8 71 48 8,3 1 64 51 ,1,6 (,3) 6 53 2,2) (6 29 – 9 68 08 1,8,1 3 95 87 ,4,7 41 26 7,6 (5,9) 13 33 4 23 70 ,6,5 50 70 5,0 58 64 5,4 (,9) 3 66 (,3) 532 5 34 06 ,6,6 Cmu e s ptr o M 00 ’0 R 5 52 6,8 0 51 1,6 () 4 – 6 19 7,3 1 01 ,4 5 09 ,1 (5) 15 – – 2 04 8,4 4 63 5,8 9 15 ,3 () 4 3 84 6,1 93 9 7 88 ,0 (5) 10 – 2 45 7,6 Mtr o o eils e c vh M 00 ’0 R 7 80 ,0 2 61 ,5 – – 0 41 1,5 12 4 1 19 ,6 (9) 52 – – 1 10 1,7 5 84 ,7 1 08 ,5 – 6 92 ,3 8 9 1 51 ,0 (2) 51 – 8 00 ,1 c e et ad n 1 79 7 11 9) (0 143 1 78 2 51 (,0) – 97 1 6 35 9 35 4) (0 5 70 1 42 0 48 (,9) – 5 68 O f fi qimn p u nu e tr fri M 00 ’0 R 8,1 2,9 ,6 10 23 1,8 ,0 1,2 2 19 13 30 2,2 6,9 ,5 7,1 ,3 1,8 1 92 8,3 eu nr 5 20 – – 4 48 6 66 (,4) – 3 14 – 4 29 8 09 (,3) – ln ad n at mcie y ah M 00 ’0 R 18 30 0,4 ,7 13 60 1,1 ,0 ,6 1 01 ,0 16 77 2,4 1 05 2,8 1 61 1,3 2 76 3,1 ,9 ,5 1 03 4 01 4,4 - C P in cs s ot – – – – – – – – npco Iset M 00 ’0 R 73 06 9,6 40 39 7,0 (4,1) 15 13 1 18 22 ,1,6 18 38 5,5 1 26 60 ,7,2 46 61 6,6 11 13 0,5 (2,2) 17 44 40 30 4,9 15 63 6,5 66 03 0,4 Pwr oe ln s at p M 00 ’0 R 2 13 82 1,1,4 4 59 2,9 (3,1) 15 32 2 03 19 1,0,2 64 06 7,5 3 27 5,6 (,5) 2 06 2,2) (6 29 2 72 17 1,0,6 3 34 20 ,1,2 37 41 3,6 2,2) (5 95 3 65 76 ,2,5 58 32 3,3 33 02 6,2 (,3) 532 4 51 78 ,2,7 – – – As t ( i ) se udr ne n to M 00 ’0 1 87 45 ,9,8* – (,6) 143 3 80 46 – ,7,5* (8) 50 – (,2) 4 01 5 21 76 – – – – – – – – – 13 37 00. M7,3,0) statements tu ci n sr o ns c lig ud R M 00 ’0 R ,3,9 7 71 2,9 1 94 34 2 – – ,3,1 7 73 2,9 6 03 ,8 1 35 91 1 60 ,1 – – – ,0,6 5 46 3,8 4 62 1,6 1 38 ,3 – 6 00 1,0 5 56 ,4 2 00 ,5 – – 3 56 2,9 financial d eshl Laeo Bi ad ln M 00 ’0 R 3 12 1,8 – – – 3 12 1,8 – – – – – 3 12 1,8 2 27 ,9 15 3 – 2 42 ,3 – 3 6 – – 2 45 ,9 M4,9,0 21:R 26 74 00(03 d ehl reo ad ln M 00 ’0 1 56 2,1 – – – 1 56 2,1 4 00 9,0 – – – – 15 56 1,1 – – – – – – – – – fR consolidated n qiPmn u de F R uies ns uies ns u e n e etc pasdo ie tl a i e t the ta Pl n a 03 br21/ 03 cm e 0 4 sintruhbs og o o 04 br21 cm e ac c u m u l a t e d d e p r e c i a t i o n 03 o o h e r a infrteya br21/ 03 cm e 0 4 sintruhbs og o o o h e r a infrteya 04 br21 cm e nldsitrs to d ) PoPet, ry p at1J nay21 au r d ios re o f t-f R c as fiai n e l sic t o at3 dee 1 n ay2 1 a u r Aqiio h t cm ia in n t b d ios ips l re o f t-f fia in elsic t as at3 dee 1 at1J nay21 au r Dp eit re o f t-f at3 dee 1 n ay2 1 a u r Aqiio h t cm ia in n t b Dp eit ips l at3 dee 1 Ic notes e ni u t n ( o c r 3 . u o gr cot s A din t W i 1J cu o A din t s oa D W i Rc e rc W i 1J cu o e rc s oa D Wi e o f r t- f * 127 127

s e, n , e e l Ttl a o M 00 ’0 R 3 01 01 1,6,3 4 33 92 1,2,5 ev c r i mS s g ei ed e t ot eEC P h e h sc nr c,t e o ta t 4 3% t8.6 u 0 4d b r2 1 a p w r o n ay at e tt M2 21 69 00 1,6,7,0) Cmu e s ptr o M 00 ’0 R 2 35 1,2 9 59 ,7 mP w rA so lt e, o o h i t df rt o ne amn st h e ins o da o to e 1D c m e e s dm ihi ce aenwsbtn i l u s o ni s r n ec a mw t ep c o ihr s l i Mtr o o eils e c vh M 00 ’0 R 3 59 ,1 3 10 ,6 gA so lt p p na e e a tTep y h l n . c i v d U d rt i n . c lc m lt p o f3 so usw t n r ae o r ath v l n br21:R 03 c e et ad n 4 53 7 62 rs n pii aeb v e hs r gesa r s a e otep aea nua c s l i ee s. i g) O f fi qimn p u nu e tr fri M 00 ’0 R 3,7 3,8 m o cosh t r ft eTEsPwrP o ’ o ta tb i ga h ee e n rh21. 06 c u lpyia ci npo i gw ri gh ok n k ii aea yc a m. n M3 35 98 00(1Dcm e or w n eu cosc r t ta ac t o t ln ad n at mcie y ah M 00 ’0 R 0 84 8,9 2 76 8,0 ta nr o eE Cc P e i no h BI y1M ru h tteata o i get n l ym t g 6–l a sa db r o n nr nr o ntu sr x e d n ne igwrsrl tdt h o k e x e t om 1,3,5,0 3 n - C P in cs s ot eE Cc P t h o p e h n D)b ” O ft ec %o h n r u s a t a l o npco Iset M 00 ’0 R 67 82 7,7 60 57 7,7 t db h yt c,t ta nr o ae(C t “ aerp r e oteG opta h c n l d n n ier leg ef rh rr d c dT eGo pep cst h i ls bt ni fR muto oe1 Pwr oe ln s at p M 00 ’0 8 37 33 ,7,7 8 10 39 ,8,8 ce ntu sr o e h sc i rt o iga dc m lt n n nc ra nm l so e p c fi du d rt ec nr c e ie eai nD ae y9 t l r x m poi u np a ei c u l v ii h . u e sw l u on r e s eN t statements As t ( i ) se udr ne n to tu ci n sr o R M 00 ’0 R 3 80 46 ,3,1 5 21 76 ,0,6 o gc en i n sb ti c.U d n t ta nr o si n is m o n , i et n ss i et p r t o lO ec a m r i ath v e otdt h l n p fa eo c n r a e n ur nl ac. dvr l tt ei s r n epo e d r c e a riga n rpr iswhac r y t i s d ai s(e i yt es bi financial d eshl Laeo ns c lig ud Bi ad ln M 00 ’0 R M 00 ’0 R 1 73 1,9 0 70 1,5 1 80 1,9 0 67 1,8 ’ “B I)P w rP a l e o d s(T E” BIE CC P eT E tt h n ot a o s r c i n is aa i n ts ig c m et o , l t nt l o , s do ae o ta taeb r sC m o oa h eet ep a t l n’ c i v h fteTEsP os rc ino h BI ’ o 27 % r s li gi ai nv eu t n , f9 . 2 tt ep a ts t . consoliDateD e t ( c o n t i n u e d ) n qiPmn u de d ehl reo F ad ln M 00 ’0 R 1 56 2,1 15 56 1,1 a eh r rB e eg su yIs r n ru us aaap y j d u dM n ia a rc rm n ,c nt u t e t e h BIECC nr c P u r dt r e TeECc n r c o sfrtec nt ut ot atr o h p ei no l t o m o l dc u e d l oc v le g n ei gw rsa h ok P e i v h l t d a dt eGo pb l r u h notes to the ( c o n t i n u e d ) ta Pl n a PoPet, ry r p u o gr mut on ca riga n r y br21/ A 1Dcme 03 ee t3 au r 04 1Jna y21 A 1Dcme 04 br21 ee t3 gB nE i n nu j a eT i h T () d h nEes n v re i S n e ig p ou e n , n ier e g c nr cosu d rt eT E n o ta t r ECc nr cosaer q i e o ta t r P P h c e a ntas h i s g a i e r n n ii t adrsu csb h n eo 128 3 . MALAKOFF CORPORATION BERHAD Annual Report 2014

Ttl a o M 00 ’0 R 6 32 6,2 3 91 1,4 – 0 23 8,6 3 02 ,0 (,7) 2 15 – 1 00 8,9 5 76 2,4 4 72 ,0 0 48 3,4 5 97 ,9 (,3) 2 17 – 4 38 3,0 9 85 4,1 6 72 4,8 e s 2 06 – ,5 – 2 5 9 25 1 10 ,9 – 1) (0 2 37 ,9 ptr Cmu M 00 ’0 R 0 66 1,9 ,6 2 72 1,6 2 28 1,4 5 05 ,0 ,6 0 35 1,6 1 71 1,4 2 16 ,9 2 89 o – 5 – 6 – Mtr o o eils e c vh M 00 ’0 R 1 85 ,2 29 2 2 04 ,5 53 (5) 40 ,5 2 17 1 26 ,5 27 2 1 43 ,8 20 (1) 42 ,3 1 31 51 7 2 86 q i m n e u p u nu fri R c e e t n ad e 8 08 1 43 9 11 2) (5 6 25 2 47 8 72 ,8 1 0 ,6 O f fi tr M 00 ’0 ,9 1 66 1,4 ,6 1 27 2,0 (,2) 1 75 1,4 9 68 ,5 ,5 ,1 3 08 (,2) 1 75 1,8 0 05 2 45 1,9 9 53 lnad n at mcie y nr ah M 00 ’0 R 5 5 14 5 5 14 14 – – 14 – – – 5 14 – 14 – – – 5 – – P – – – – – – ses As t udr ne rc in o M 00 ’0 R 1 43 ,6 (,6) 1 43 – – – – – – – – – osut cnt ns lig ud M 00 ’0 R 7 05 1,5 7 05 1,5 – – – 1,5 7 05 7 93 ,9 80 0 8 73 ,9 0 80 – – ,9 9 53 8 22 ,6 ,6 7 42 – – d Bi ad ln 5 55 – – 5 55 – – – ,1 83 8 8 5 91 4 5 8 – – 9 99 4 54 ,1 statements eshl Laeo d ehl reo ad ln M 00 ’0 R M 00 ’0 ,1 1 56 2,1 – – ,1 1 56 2,1 – – – 5 55 2,1 1 56 – – – – – – – ,7 1 56 2,1 4 56 2,1 1 56 financial e t ( c o n t i n u e d ) F R 04 04 consolidated n qiPmn u de 031J na y21 br21/ au r 04 e c i a t i o n 031J na y21 br21/ au r r 04 br21/ au r 04 the ta Pl n a 03 fia in o cm e t o br21 cm e e d d e p r 03 o o h e r a infrteya cm e r c ai nf rt ey a t o o h e t o br21 cm e mut on A 1Dcm e 031Jna y21 A 1Dcm e 04 br21 to d ) PoPet, ry m ay p n at1J na y21 au r d ios A din t el sic t as at3 dee 1 d t o s ii n l oa R c as fi ai n e l sic at3 dee 1 u l a t at1J na y21 au r Dp ei t at3 dee 1 l oa R c as fi ai n e l sic at3 dee 1 ca riga n r y ee ee notes e ni u t n ( o c r 3 . co cot s Rc d A ip s D s ac c u m e rc D pe i e ip s D s t3 t3 129 129

notes to the consoliDateD financial statements (continued) 4. intangible assets Subsidiaries Associates Interest over P ower I nterest Purchase over Power and P urchase Operation and Power and and Water Maintenance Purchase Goodwill Agreements Total Goodwill Agreements Total group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 cost At 1 January 2013 8,232 7,651,870 7,660,102 265,583 939,073 1,204,656 Effect of movements in exchange rate – – – 19,182 – 19,182 At 31 December 2013 8,232 7,651,870 7,660,102 284,765 939,073 1,223,838 Addition – 100,739 100,739 – – – Effect of movements in exchange rate – – – 19,214 – 19,214 At 31 December 2014 8,232 7,752,609 7,760,841 303,979 939,073 1,243,052 amortisation and impairment loss At 1 January 2013 859 2,160,722 2,161,581 – 674,802 674,802 Amortisation for the year – 427,162 427,162 – 42,675 42,675 At 31 December 2013/ 1 January 2014 859 2,587,884 2,588,743 – 717,477 717,477 Amortisation for the year – 467,871 467,871 – 43,871 43,871 At 31 December 2014 859 3,055,755 3,056,614 – 761,348 761,348 carrying amount At 1 January 2013 7,373 5,491,148 5,498,521 265,583 264,271 529,854 At 31 December 2013/ 1 January 2014 7,373 5,063,986 5,071,359 284,765 221,596 506,361 At 31 December 2014 7,373 4,696,854 4,704,227 303,979 177,725 481,704 130 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 4. intangible assets (continued) intangible assets arising from interest over Power Purchase, Power and Water Purchase and operation and maintenance agreements T he Group’s revenue is substantially derived from the generation and sale of electricity energy and generating capacity in Malaysia, which is governed by the Power Purchase Agreements (“PPAs”) ( together with the Independent Power Producer (“IPP Licenses”) Licence issued by the Ministry of E nergy, Water and Communications) and Power and Water Purchase Agreement (“PWPA”) held by the r espective power producing subsidiaries and associates. The Operation and Maintenance Agreements ( “OMAs”) which held by certain subsidiaries that engaged in operation and maintenance are in associated with the specific Independent Power Producer within the Group. The Group has determined the expected cash flows to be generated from the PPAs, OMAs (together with the IPP Licences) and PWPA as Intangible Assets. T he PPAs, the IPP Licences and OMAs held by subsidiaries in Malaysia are recognised as a single asset in accordance with MFRS 138 Intangible Assets in view that they are required for the generation, operation and maintenance, sale of electricity energy and generating capacity in Malaysia. I n 2013, there were six (6) PPAs (together with the respective IPP Licences) held respectively by the Group’s power producing subsidiaries of Segari Energy Ventures Sdn. Bhd. (“SEV”), GB3 Sdn. Bhd. ( “GB3”), Prai Power Sdn. Bhd. (“PPSB”) and Tanjung Bin Power Sdn. Bhd. (“TBP”) and associates namely Kapar Energy Ventures Sdn. Bhd. (“KEV”) and Port Dickson Power Berhad (“PDP”). There were f our (4) OMAs held by the Group’s operations and maintenance subsidiaries namely Malakoff Power Berhad (“MPB”) and Tanjung Bin O&M Berhad (“TBOM”). There was one (1) PWPA held by Hidd Power Company B.S.C (“HPC”), an associate company. During the financial year, the Group has acquired 75% and 100% equity interest in Port Dickson Power Berhad (“PDP”) and PDP O&M Sdn. Bhd. (“PDP OM”), respectively. The acquisition was completed on 30 April 2014 upon which, the Group recognised an intangible asset arising from the acquisition of i nterest over the PPA and OMA held by PDP and PDP OM, respectively. As at 31 December 2014, there were six (6) PPAs, one (1) PWPA and five (5) OMAs held by the Group. T hese PPAs, PWPA and OMAs are the key documents that govern the underlying strength of the Group’s cash flow, which provide for, inter alia, the electricity tariff, supply, operations and maintenance and all other terms to be met by the subsidiaries and associates. 131 131

notes to the consoliDateD financial statements (continued) 4. intangible assets (continued) measurement T he fair value of the Intangible Assets arising from the PPAs, PWPA and OMAs were measured using t he Multi-Period Excess Earnings Method (“MEEM”) under the income method. The underlying rationale i n the MEEM was that the fair value of an Intangible Asset represents the present value of the net i ncome after taxes attributable to the Intangible Asset. The net income attributable to the Intangible Asset was the excess income after charging a fair return on and of all the assets that are necessary ( contributory assets) to realise the net income. The contributory asset charges (“CAC”) were based on the fair value of each contributory asset and represent the return on the assets. The assumption i n calculating the CAC was that the owner of the Intangible Asset “rents” or “leases” the contributory assets from a hypothetical third party in an arm’s length transaction in order to be able to derive i ncome from the Intangible Asset. The present value of the expected income attributable to the I ntangible Assets less CAC and taxes represents the value of the Intangible Asset. T he management had applied the following key assumptions in deriving the present value of the net i ncome after taxes attributable to the Intangible Assets at the acquisition date: • Remaining useful life of PPAs/PWPA/OMAs 2 – 25 years (in accordance with the respective PPAs, PWPA and OMAs) • Dependable Capacity :-Power 350 MW – 2,420 MW : -Water 17,047 m³/hour • Capacity Factor : -Power 10% – 75% of DC : -Water 91% – 99% of DC • Net Output : -Electrical (million kW/hour) 213 – 11,197 : -Water (thousand m³) 67,370 – 73,771 • Capacity Rate : -Power (RM/kW/month) 11.35 – 50.00 : -Water (RM/m³/month) 1,222 – 1,339 • Fixed Operating Rate under Revenue (RM/kW/month) 4.00 – 10.50 • Variable Operating Rate under Revenue : -Power (RM/kW/month) 0.013 – 4.775 : -Water (RM/m³/month) 58.20 – 116.40 • Fuel price (RM/mmBtu) 4.60 – 13.70 • CAC 17.77% – 28.00% of EBITDA 132 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 4. intangible assets (continued) measurement (continued) I n applying the MEEM valuation methodology, the expected cash flows were discounted to their present value equivalent using a rate of return that reflects the relative risk of the cash flows, as well as the time value of money. This was calculated by weighing the required returns on debt and equity i n proportion to their assumed percentages. The applied pre-tax discount rate was range from 7.5% t o 9% (2013: 9% to 10%) per annum. impairment testing for cash generating units (“cgus”) containing goodwill and interest over Power Purchase, Power and Water Purchase and operation and maintenance agreements The carrying amounts of the goodwill and the interest over Power Purchase, Power and Water Purchase and Operation and Maintenance Agreements are allocated to the following CGUs: Carrying amount 2014 2013 goodwill RM’000 RM’000 cgus – PPas SEV – gas-fuelled generation 1,565 1,565 GB3 – gas-fuelled generation 392 392 PPSB – gas-fuelled generation 377 377 T BP – coal-fired thermal generation 3,159 3,159 5,493 5,493 cgus – oma MPB 1,880 1,880 cgu – PWPa HPC – gas-fuelled and water production 303,979 284,765 T otal goodwill 311,352 292,138 L ess: Goodwill in an associate ( 303,979) ( 284,765) 7,373 7,373 133 133

notes to the consoliDateD financial statements (continued) 4. intangible assets (continued) impairment testing for cash generating units (“cgus”) containing goodwill and interest over Power Purchase, Power and Water Purchase and operation and maintenance agreements (continued) Carrying amount 2014 2013 interest over PPas, omas and PWPa RM’000 RM’000 cgus – interest over PPas SEV – gas-fuelled generation 456,518 600,979 GB3 – gas-fuelled generation 206,491 230,433 PPSB – gas-fuelled generation 213,684 234,860 T BP – coal-fired thermal generation 2,228,448 2,357,241 PDP – gas-fuelled generation 61,723 – 3,166,864 3,423,513 KEV – multi-fuel power generation 110,447 149,078 3,277,311 3,572,591 cgus – interest over omas MPB 1,037,299 1,121,061 T BOM 492,690 519,412 1,529,989 1,640,473 cgu – interest over PWPa HPC – gas-fuelled and water production 67,279 72,518 T otal interest over PPAs, PWPA and OMAs 4,874,579 5,285,582 L ess: Intangible assets in associates ( 177,725) ( 221,596) 4,696,854 5,063,986 T he total recoverable amount of the CGUs of the subsidiaries estimated based on value in use method, was as follows: 2014 2013 RM’000 RM’000 Recoverable amount 16,390,000 15,164,000 134 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 4. intangible assets (continued) impairment testing for cash generating units (“cgus”) containing goodwill and interest over Power Purchase, Power and Water Purchase and operation and maintenance agreements (continued) The impairment test of the above CGUs was based on the value in use, determined by discounting f uture cash flows to their present value equivalent using a rate of return that reflects the relative risk of t he cash flows, as well as the time value of money. This is calculated by weighing the required returns on debt and equity in proportion to their assumed percentages. The applied pre-tax discount rate was 7.5% (2013: 10%) per annum. The discount rate reflects the current market assessment of the time value of money and is based on the estimated cost of capital. The management had applied the following key assumptions in deriving the present value of the net cash flow before taxes attributable t o the Intangible Assets: • I t is assumed that the terms of the PPAs will remain unchanged throughout the concession period. It is assumed that HPC will obtain an approval for 10 years extension to its PWPA upon expiry. • Remaining useful life of 8 – 17 years (in accordance with the PPAs/PWPA/OMAs respective PPAs, PWPA and OMAs) • Dependable Capacity (DC) :-Power 350MW – 2,420MW (in accordance to the specifications of the respective plants) : -Water 17,047 m³/hour • Capacity Factor : -Power 1% – 98% of DC : -Water 94% – 98% of DC • Net Output :-Electrical (million kW/hour) 550 – 15,200 : -Water (thousand m³) 67,435 – 72,670 • Capacity Rate : -Power (RM/kW/month) 5.85 – 50.00 : -Water (RM/m³/month) 1,115 • Fixed Operating Rate under Revenue – Power (RM/kW/month) 4.54 – 10.50 Revenue – Water (RM/m³/month) 208 – 256 • Variable Operating Rate under Revenue : -Power (RM/kW/month) 0.0064 – 4.84 : -Water (RM/m³/month) 78 – 96 • Fuel price (RM/mmBtu) 6.07 – 63.39 • Variable Operating Rate under Cost – Power (RM/kW/month) 0.0071 – 0.0240 • Fixed Operating Rate under Cost – Power (RM/kW/month) 2.25 – 12.99 135 135

notes to the consoliDateD financial statements (continued) 4. intangible assets (continued) impairment testing for cash generating units (“cgus”) containing goodwill and interest over Power Purchase, Power and Water Purchase and operation and maintenance agreements (continued) The values assigned to the key assumptions represent management’s assessment of future trends in t he power and utilities industry and are based on external sources and internal sources (historical data). As at 31 December 2014 and 31 December 2013, the estimated recoverable amount of all the CGUs exceeds the carrying amount of the goodwill and interest on PPAs/PWPA/OMAs of the CGUs. The above estimates are particularly sensitive in the following area: An increase/(decrease) of 1 percentage point in the discount rate used would have (decreased)/ i ncreased the recoverable amounts by (RM687,000,000)/RM754,000,000. 5. PrePaid lease Payments Unexpired period leasehold land l ess than 50 years group RM’000 cost At 1 January 2013/31 December 2013 1 January 2014/31 December 2014 109,326 amortisation 1 January 2013 30,305 Amortisation for the year 4,346 At 31 December 2013/1 January 2014 34,651 Amortisation for the year 4,344 At 31 December 2014 38,995 carrying amounts At 1 January 2013 79,021 At 31 December 2013/1 January 2014 74,675 At 31 December 2014 70,331 136 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 6. investment in subsidiaries Company 2014 2013 RM’000 RM’000 Unquoted: At beginning of the year 8,134,741 8,137,395 F air value adjustment – ( 2,654) At end of the year 8,134,741 8,134,741 ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (This section below has been left blank intentionally.) 137 137

notes to the consoliDateD financial statements (continued) 6. investment in subsidiaries (continued) Details of subsidiaries are as follows: Principal Effective place ownership of business/ i nterest and Country of voting interest (%) Name of subsidiary incorporation 2014 2013 Principal activities direct subsidiary 1. Segari Energy Ventures Malaysia 93.75 93.75 Design, construction, Sdn. Bhd. operation and maintenance of a combined cycle power plant, generation and sale of electrical energy and generating capacity of the power plant 2. GB3 Sdn. Bhd. Malaysia 75 75 Design, construction, operation and maintenance of a combined cycle power plant, generation and sale of electrical energy and generating capacity of t he power plant 3. Prai Power Sdn. Bhd. Malaysia 100 100 Design, construction, operation and maintenance of a combined cycle power plant, generation and sale of electrical energy and generating capacity of the power plant 4. T anjung Bin Power Malaysia 90 90 Design, engineering, Sdn. Bhd. procurement, construction, installation and commissioning, testing, operation and maintenance of a 2,100 MW coal-fired electricity generating facility and sale of electrical energy and generating capacity of t he power plant 5. Hypergantic Sdn. Bhd. Malaysia 100 100 I nvestment holding 6. T anjung Bin Energy Malaysia 100 100 Design, engineering, Sdn. Bhd. procurement, construction, installation and commissioning, testing, operation and maintenance of a 1,000 MW coal-fired electricity generating facility 138 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 6. investment in subsidiaries (continued) Details of subsidiaries are as follows: (continued) Principal Effective place ownership of business/ i nterest and Country of voting interest (%) Name of subsidiary incorporation 2014 2013 Principal activities direct subsidiary (continued) 7 . T eknik Janakuasa Malaysia 1 00 1 00 I nvestment holding company Sdn. Bhd. and provision of operation and maintenance and any r elated services 8 . Malakoff Utilities Sdn. Bhd. Malaysia 1 00 1 00 B uild, own and operate an electricity distribution system and a centralised chilled water plant system 9. Malakoff Engineering. Malaysia 100 100 Provision of engineering and Sdn. Bhd project management services 10. Spring Assets Limited British Virgin 100 100 Dormant I slands 11. Malakoff Capital (L) F ederal 100 100 Dormant Limited Territory of L abuan, Malaysia 12. Malakoff International Cayman 100 100 Offshore – Investment holding Limited Islands 13. Tuah Utama Sdn. Bhd. Malaysia 100 100 I nvestment holding 1 4. Desa Kilat Sdn. Bhd. Malaysia 5 4 5 4 Land reclamation, development and/or sale of reclaimed land 1 5. Malakoff Power Berhad Malaysia 1 00 1 00 Operation and maintenance of power plants 16. Malakoff R&D Sdn. Bhd. Malaysia 100 100 Promoting, developing, acquiring and enhancing t he Group’s capacity and i nnovation in the energy business 139 139

notes to the consoliDateD financial statements (continued) 6. investment in subsidiaries (continued) Details of subsidiaries are as follows: (continued) Principal Effective place ownership of business/ nterest and i Country of voting interest (%) Name of subsidiary incorporation 2014 2013 Principal activities indirect subsidiary held through tanjung bin energy sdn. bhd. 17. Tanjung Bin Energy Issuer Malaysia 100 100 Administer and manage the Berhad development of a 1,000 MW coal fired electricity generating facility held through teknik Janakuasa sdn. bhd. 18. Natural Analysis Sdn. Bhd. Malaysia 100 100 Dormant 19. TJSB Services Sdn. Bhd. Malaysia 100 100 Provision of maintenance, repair and overhaul and any r elated services to power plants and any other plants of similar main and auxiliary operating systems 20. TJSB International Limited Cayman 100 100 Offshore – Investment holding I slands 21. TJSB Global Sdn. Bhd. Malaysia 100 100 I nvestment holding 2 2. PT. Teknik Janakuasa^ I ndonesia 9 5 9 5 P rovision of operation and maintenance services to power plant and/or other utility plants held through tJsb international limited 23. TJSB International British Virgin 100 100 Offshore – Investment holding (Shoaiba) Limited I slands 24. TJSB Middle East Limited British Virgin 100 100 Operation and maintenance of I slands power plant held through malakoff engineering sdn. bhd. 25. MESB Project Management Malaysia 100 100 Dormant Sdn. Bhd. 140 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 6. investment in subsidiaries (continued) Details of subsidiaries are as follows: (continued) Principal Effective place ownership i of business/ nterest and Country of voting interest (%) Name of subsidiary incorporation 2014 2013 Principal activities indirect subsidiary (continued) held through malakoff international limited 26. Malakoff Gulf Limited British Virgin 100 100 Offshore – Investment holding I slands 27. Malakoff Technical British Virgin 100 100 Offshore – Investment holding (Dhofar) Limited I slands 28. Malakoff AlDjazair Desal. Malaysia 100 100 Investment holding Sdn. Bhd. 29. Malakoff Oman Desalination British Virgin 100 100 Offshore – Investment holding Company Limited I slands 30. Malakoff Hidd Holding Guernsey 100 100 Asset, property, investment, Company Limited intellectual property and other holding companies 31. Pacific Goldtree Sdn. Bhd. Malaysia 100 100 I nvestment holding held through malakoff aldjazair desal sdn. bhd. 32. Tlemcen Desalination F rance 70 70 Offshore – Investment holding Investment Company SAS* held through malakoff hidd holding company limited 33. Malakoff Summit Hidd Guernsey 57.14 57.14 Asset, property, investment,` Holding Company Limited intellectual property and other holding companies held through malakoff Power berhad 34. Tanjung Bin O&M Berhad Malaysia 100 100 Operation and maintenance of power plant 3 5. PDP O&M Sdn. Bhd. Malaysia 1 00 – Operation and maintenance of (formerly known as Sime power plant Darby Biofuels Sdn. Bhd.)#^ 141 141

notes to the consoliDateD financial statements (continued) 6. investment in subsidiaries (continued) Details of subsidiaries are as follows: (continued) Principal Effective place ownership of business/ nterest and i Country of voting interest (%) Name of subsidiary incorporation 2014 2013 Principal activities indirect subsidiary (continued) held through hypergantic sdn. bhd. 36. Port Dickson Power Malaysia 100 – Independent power producer Berhad#^ licensed by the Government to supply electricity exclusively t o Tenaga Nasional Berhad held through Pacific goldtree sdn. bhd. 37. Skyfirst Power Sdn. Bhd. Malaysia 100 100 I nvestment holding held through skyfirst Power sdn. bhd. 38. Malakoff Australia Pty. Ltd.* Australia 100 100 I nvestment holding 39. Wind Macarthur Holdings Australia 100 100 I nvestment holding (T) Pty. Limited* held through malakoff australia Pty. ltd. 40. Malakoff Holdings Pty. Ltd.* Australia 100 100 I nvestment holding held through malakoff holdings Pty. ltd. 41. Malakoff Wind Macarthur Australia 100 100 I nvestment holding Holdings Pty. Limited* held through malakoff Wind macarthur holdings Pty. limited 4 2. Malakoff Wind Macarthur Australia 1 00 1 00 L easing of wind turbine assets Pty. Limited* held through Wind macarthur holdings (t) Pty. limited 4 3. Wind Macarthur (T) Pty. Australia 1 00 1 00 L easing of plant and equipment Limited* held through Wind macarthur (t) Pty. limited 44. Wind Macarthur Finco Pty. Australia 100 100 F inancing operations for Limited* Macarthur wind farm project * Audited by other member firm of KPMG International ^ Audited by firms other than KPMG # Acquired during the financial year (Note 37) 142 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 6. investment in subsidiaries (continued) The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows: 2014 Other Segari Tanjung subsidiaries Energy Bin with Ventures GB3 P ower i mmaterial S dn. Bhd. S dn. Bhd. S dn. Bhd. NCI T otal RM’000 RM’000 RM’000 RM’000 RM’000 NCI percentage of ownership interest and voting interest 6.25% 25% 10% Carrying amount of NCI 45,330 132,039 37,719 ( 2,121) 212,967 Profit allocated to NCI 8,495 16,653 45,994 153 71,295 summarised financial information before intra-group elimination as at 31 december Non-current assets 1,921,664 965,029 6,133,816 Current assets 925,084 305,504 2,440,401 Non-current liabilities ( 1,885,884) ( 623,910) (7,607,851) Current liabilities ( 235,587) ( 118,468) ( 629,318) Net assets 725,277 528,155 337,048 year ended 31 december Revenue 1,329,272 399,841 3,027,070 Profit for the year 135,915 66,612 459,936 T otal comprehensive income 135,915 66,612 459,936 Cash flows from operating activities 355,636 244,930 1,542,080 Cash flows from investing activities 57,109 5,415 201,287 Cash flows used in financing activities ( 716,324) ( 293,137) ( 984,439) Net (decrease)/increase in cash and cash equivalents ( 303,579) ( 42,792) 758,928 Dividend paid to NCI 11,250 27,500 43,000 – 81,750 143 143

notes to the consoliDateD financial statements (continued) 6. investment in subsidiaries (continued) The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows (continued): 2013 Other Segari Tanjung subsidiaries Energy Bin with Ventures GB3 P ower i mmaterial S dn. Bhd. S dn. Bhd. S dn. Bhd. NCI T otal RM’000 RM’000 RM’000 RM’000 RM’000 NCI percentage of ownership interest and voting interest 6.25% 25% 10% Carrying amount of NCI 48,085 142,886 34,725 ( 2,274) 223,422 Profit/(Loss) allocated to NCI 21,467 27,937 23,871 ( 150) 73,125 summarised financial information before intra-group elimination as at 31 december Non-current assets 2,049,393 976,095 6,205,353 Current assets 1,405,620 470,180 1,847,406 Non-current liabilities ( 2,403,032) ( 688,523) (7,327,993) Current liabilities ( 282,619) ( 186,209) ( 417,577) Net assets 769,362 571,543 307,189 year ended 31 december Revenue 1,373,779 412,098 2,451,698 Profit for the year 343,468 111,745 238,714 T otal comprehensive income 343,468 111,745 238,714 Cash flows from operating activities 470,910 170,425 1,084,199 Cash flows (used in)/from investing activities ( 226,546) 68,097 ( 1,345,551) Cash flows used in financing activities ( 354,010) ( 155,980) ( 60,907) Net (decrease)/increase in cash and cash equivalents ( 109,646) 82,542 ( 322,259) Dividend paid to NCI 125,000 – 65,000 – 190,000 144 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 7. investment in associates Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 At cost Unquoted shares: – in Malaysia 14,400 41,475 641,770 641,770 – outside Malaysia 40,481 3,726 – – Unquoted preference shares: – in Malaysia 4,000 4,000 – – Unquoted loan stocks: – in Malaysia 356,630 357,030 356,630 357,030 – outside Malaysia 122,286 151,568 – – Pre-acquisition reserves 125,275 66,775 – – Share of post-acquisition reserves 58,543 163,523 – – 721,615 788,097 998,400 998,800 Add: Intangible assets acquired through business combination (see Note 4) – Goodwill 303,979 284,765 – – – Interest over PPA and PWPA 939,073 939,073 – – 1,243,052 1,223,838 – – Less: Amortisation of intangible assets At 1 January ( 253,831) ( 211,156) – – Amortisation for the year ( 43,871) ( 42,675) – – At 31 December ( 297,702) ( 253,831) – – Less: Impairment loss on intangible assets At 1 January/31 December ( 463,646) ( 463,646) – – Carrying amount 481,704 506,361 – – 1,203,319 1,294,458 998,400 998,800 145 145

notes to the consoliDateD financial statements (continued) 7. investment in associates (continued) Details of associates are as follows: E ffective E ffective ownership voting interest i nterest Country of (%) (%) No. Name of associate i ncorporation 2014 2013 2014 2013 Principal activities 1. P ort Dickson Power Malaysia – 25 – 25 I ndependent power producer Berhad# licensed by the Government to supply electricity exclusively to Tenaga Nasional Berhad 2. Kapar Energy Ventures Malaysia 40 40 40 40 Generation and sale of Sdn. Bhd. electricity 3. L ekir Bulk Terminal Malaysia 20 20 20 20 Development, ownership and Sdn. Bhd. management of a dry bulk terminal 4. Malaysian Shoaiba Malaysia 40 40 40 40 I nvestment holding Consortium Sdn. Bhd. 5. Saudi-Malaysia Water Saudi 20 20 20 20 Offshore – Investment holding & Electricity Company Arabia Limited 6. Shuaibah Water & Saudi 12 12 12 12 Design, construction, Electricity Company Arabia commissioning, testing, Limited possession, operation and maintenance of crude oil fi red power generation and water desalination plant 7. Shuaibah Expansion Saudi 12 12 12 12 Development, Holding Company Arabia construction, ownership, Limited operation and maintenance of Shuaibah Phase 3 E xpansion independent water producer (“IWP”) and transport and sale of water and undertake all works and activities related thereto, directly or through another company holding most of its shares or stock 146 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 7. investment in associates (continued) Details of associates are as follows: (continued) E ffective E ffective ownership voting interest i nterest Country of (%) (%) No. Name of associate i ncorporation 2014 2013 2014 2013 Principal activities 8. Shuaibah Expansion Saudi 11.9 11.9 11.9 11.9 Development, construction, Project Company Arabia possession, operation and Limited maintenance of the S huaibah Phase 3 E xpansion IWP, transfer and sell water and all relevant works and activities 9. Oman Technical British Virgin 43.4 43.4 43.4 43.4 Offshore – Investment holding Partners Limited I slands 10. Salalah Power Bermuda 43.4 43.4 43.4 43.4 Offshore – Investment holding Holdings Limited 11. Al-Imtiaz Operation Saudi 20 20 20 20 I mplementation of operation and Maintenance Arabia and maintenance contracts Company Limited for stations of electrical power generation and water desalination 1 2. Saudi-Malaysia S audi 2 0 2 0 2 0 2 0 Operation and maintenance Operation and Arabia of power and water Maintenance Services desalination plant Company Limited 13. Hyflux-TJSB Algeria SPA Algeria 49 49 49 49 Operation and maintenance of water desalination plant 14. Hidd Power Company Bahrain 39.97 39.97 40 40 Building, operation and B.S.C maintenance of power and water stations for special purposes (specific supply only) 147 147

notes to the consoliDateD financial statements (continued) 7. investment in associates (continued) Details of associates are as follows: (continued) E ffective E ffective ownership voting interest i nterest Country of (%) (%) No. Name of associate i ncorporation 2014 2013 2014 2013 Principal activities 15. Muscat City Desalination Oman 31.5 31.5 31.5 31.5 Operation and maintenance Operation and of pump stations and Maintenance Company pipelines, installation and LLC repair of electric power and transformer plants and telecommunications and radar plants, export and import offices, and l aying and maintenance of all kinds of pipes 16. Muscat City Desalination Oman 45 45 45 45 Desalination of water Company S.A.O.C # The Group has acquired additional 75% stake in Port Dickson Power Berhad during the financial year (Note 37). 148 MALAKOFF CORPORATION BERHAD Annual Report 2014