000Malakoff_annual_report

notes to the consoliDateD financial statements (continued) 3 1. financial instruments (continued) 31.6 market risk (continued) 31.6.1 currency risk (continued) currency risk sensitivity analysis Foreign currency risk arises from Group entities which have functional currencies other than Ringgit Malaysia (“RM”). A 10% (2013: 10%) strengthening of the RM against the following currencies would have increased (decreased) post-tax profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of reporting period. The analysis assumes t hat all other variables, in particular interest rates, remained constant and ignores any i mpact of forecasted sales and purchases. 2014 2013 Profit Profit or loss or loss group RM’000 RM’000 AUD 143,006 143,847 CHF ( 4,656) ( 3,283) KWD ( 1,244) ( 2,157) EUR ( 11,885) 4,616 USD 61,654 22,859 138,515 165,882 A 10% (2013: 10%) weakening of RM against the above currencies at the end of the r eporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant. 31.6.2 interest rate risk The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due t o changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Short term receivables and payables are not significantly exposed to interest rate risk. Risk management objectives, policies and processes for managing the risk In managing interest rate risk, the Group maintains a balanced portfolio consisting mainly fi xed instruments. All interest rate exposures are monitored and managed proactively by t he Group’s management. 199 199

notes to the consoliDateD financial statements (continued) 3 1. financial instruments (continued) 31.6 market risk (continued) 31.6.2 interest rate risk (continued) Exposure to interest rate risk T he interest rate profile of the Group’s and the Company’s interest-bearing financial i nstruments based on carrying amounts at the end of the reporting period was: Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 fixed rate instruments – Financial assets 3,433,561 3,306,899 584,852 128,596 – Financial liabilities 17,121,942 16,650,200 1,800,000 1,800,000 floating rate instruments – Financial liabilities 1,105,537 893,185 – – Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points (“bp”) in interest rates at the end of the reporting period would have increased (decreased) equity by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant. P rofit or loss E quity 100 bps 100 bps 100 bps 100 bps i ncreases decreases i ncreases decreases RM’000 RM’000 RM’000 RM’000 2014 F loating rate instruments 11,055 ( 11,055) – – I nterest rate swaps – – 109,191 ( 111,749) Cross currency swaps – – 111,251 ( 111,251) Cash flow sensitivity (net) 11,055 ( 11,055) 220,442 ( 223,000) 2013 F loating rate instruments 8,932 ( 8,932) – – I nterest rate swaps 28,448 ( 2,728) 149,276 ( 162,133) Cross currency swaps – – 104,235 ( 104,235) Cash flow sensitivity (net) 37,380 ( 11,660) 253,511 ( 266,368) 200 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 31. financial instruments (continued) 31.7 hedging activities 31.7.1 cash flow hedge The Group has entered into various interest rate swaps and cross currency swaps in order t o hedge the interest rate risk and foreign exchange risk in relation to the variability in cash flows on the floating rate RM and USD loans of RM967,604,587 (75% of Junior Tranche L oan), RM525,000,000 (75% of Senior Tranche Loan), USD400,000,000 (100% of USD Loan) and AUD517,644,989 loan. For the interest rate swaps and cross currency swaps that held by a subsidiary in Malaysia, t he notional amount of the various swaps start with RM96,953,206 and thereafter as per s chedule for Junior IRS, RM44,273,673 and thereafter as per schedule for Senior IRS and USD33,752,607 and thereafter as per schedule for CCS. The interest rate swaps and cross currency swaps were entered into for a period of 5 years for Junior IRS, 12 years for Senior I RS and 15 years for CCS. F or the interest rate swaps that held by a subsidiary in Australia, the Group had interest r ate swaps with a notional value of AUD464 million. The interest rate swaps were entered i nto for a period of 10 to 17 years tenor. T he following table indicates the periods in which the cash flows associated with the i nterest rate swap are expected to occur and affect profit or loss: Expected More Carrying cash Under t han amount flows 1 year 1-2 years 2-5 years 5 years group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2014 financial asset Cross currency swaps 99,147 1,460 ( 66,536) ( 17,211) 6,906 78,301 financial liability I nterest rate swap ( 195,042) ( 253,449) ( 43,030) ( 34,929) ( 91,127) ( 84,362) 2013 financial assets I nterest rate swaps 16,134 17,138 ( 8,859) ( 6,671) 2,130 30,538 Cross currency swaps 64,107 32,909 ( 13,542) ( 26,139) ( 24,682) 97,272 80,241 50,047 ( 22,401) ( 32,810) ( 22,552) 127,810 financial liability I nterest rate swap ( 66,081) ( 87,601) ( 32,242) ( 25,985) ( 37,331) 7,957 During the financial year, a loss of RM78,095,000 (2013: gain of RM238,418,000) was r ecognised in other comprehensive income. 201 201

notes to the consoliDateD financial statements (continued) 3 1. financial instruments (continued) 31.7 hedging activities (continued) 31.7.1 cash flow hedge (continued) I neffectiveness gain amounting to RM5,891,000 (2013: RM44,041,000) was recognised in profit or loss during the financial year in respect of the hedge. sensitivity analysis Fair value sensitivity analysis A change of 10% strengthening/weakening of the USD at the end of the reporting period would have increased (decreased) equity by the amount shown below: Equity 10% 10% strengthening weakening of USD of USD RM’000 RM’000 2014 Cross currency swaps 100,410 ( 100,410) F air value sensitivity (net) 100,410 ( 100,410) 2013 Cross currency swaps 35,128 ( 35,128) F air value sensitivity (net) 35,128 ( 35,128) 202 MALAKOFF CORPORATION BERHAD Annual Report 2014

t a e r m rx eh C a r r y i n g a m o u n t M 00 ’0 9 17 9,4 1 90 94 ,9,7 2 00 11 ,9,2 b ya p oi p sd s l s d t g t e o , ic oe l f a i r a l u e R srao a l i g e s n l ei oa t T v M 00 ’0 R 9 17 9,4 – 1 90 94 ,9,7 2 00 11 ,9,2 orw n i a u h c a rv o t a l T M 00 ’0 R 1 90 94 ,9,7 1 90 94 ,9,7 h r emb r o l ef rw i hf o n a n c i a l i n s t r u m e n t aida fi vle u ta a r e l 3 L e v M 00 ’0 R – 1 90 94 ,9,7 1 90 94 ,9,7 aa l sa ds ottr n n e t. li sr m ns i a u ri da a rv tf ar e tc o s lp s t o . oii n n i a l u e o f fi F a i r v nt cre r o e l 2 L e v e l 1 L e v M 00 ’0 R M 00 ’0 R – – – – – – statements h r emrc ia l sa dp y b e e e v b e ahe u v l ns s ottr ft eefi a c a ntu n i aueo h s n t r dt oen h n l ea i a u ri da a rv tf ar e ffi a c a e to n ni h t t m n m u t h w nt es ae n a n c i a l i n s t r u m e n t s aida fi vle u ta a r o t a l T e l 3 L e v e l 2 M 00 ’0 R M 00 ’0 R ’0 9 17 9,4 – 9 17 – – – 9 17 9,4 – 9 17 financial q ia e t, aha dc s n u ot er l t v l h r emn m nsc t e c a ntu li sr i o nss o a l u e o f fi F a i r v cre r L e v e l 1 L e v M 00 R M 00 ’0 R 9,4 – – 9,4 – consolidated et ( c o n t i n u e d ) o r m a t i o n fc s o nso m u t t e rf i a u sd et h e aie ys ott r n ls sfi a a ye n n ari ga ry n n e fi n a n c i a l a s s e t s : e vb the nn il is rmn s a ntu a l u e i n f ari ga n h i a rv l e b eb l wa e o l iht e rf i a u sa dc w t h i a rv l e cr et fi n a n c i a l a s s e t s a t i v u rnys a s C oscr ec wp n nelaercia l iac e s ee to d ) fa i r v T ec ry h a T et h 04 21 p u o gr no-u rn n de r i v rs F notes e ni u t n ( o c 3. fiac 1 3 1 . 8 203 203

C a r r y i n g a m o u n t M 00 ’0 R (6,3) 17 38 6,5) (4 60 (5,1) 44 27 (,6,1) 1 42 29 4,5) (7 13 3,0) (0 00 (,8,7) 3 51 07 (,8,2) 3 84 47 (0,0) 40 00 (,9,0) 3 20 00 (4,0) 64 80 (6,0) 34 00 (8,6) 26 33 1,7,4) l f a i r 1,4,8) (4 66 24 oa t a l u e M 00 ’0 (6,3) 6,9) (8 20 (4,2) 5,7) (0 21 3,5) (1 22 (9,6) (8,9) (8,1) (9,4) T v R 17 38 46 65 (,4,4) 1 52 61 (,9,4) 3 93 51 (,8,8) 4 45 55 31 78 (,1,3) 3 33 02 60 81 33 50 25 00 – 1,8,4) (5 89 74 o t a l T M 00 ’0 R 6,9) (8 20 (4,2) 46 65 (,4,4) 1 52 61 5,7) (0 21 3,5) (1 22 (,9,4) 3 93 51 (,8,8) 4 45 55 (9,6) 31 78 (,1,3) 3 33 02 (8,9) 60 81 (8,1) 33 50 (9,4) 25 00 (5 62 46 n a n c i a l i n s t r u m e n t aida fi vle u ta a r e l 3 L e v M 00 ’0 R – – – – – – – – – – – – – – a l u e o f fi nt cre r e l 2 L e v M 00 ’0 R – 6,9) (8 20 (4,2) 46 65 (,4,4) 1 52 61 5,7) (0 21 3,5) (1 22 (,9,4) 3 93 51 (,8,8) 4 45 55 (9,6) 31 78 (,1,3) 3 33 02 (8,9) 60 81 (8,1) 33 50 (9,4) 25 00 1,8,4) (5 62 46 F a i r v o e l 1 – – – – – – – – – – – – – – L e v M 00 ’0 R o t a l T M 00 ’0 R (6,3) 17 38 – – – – – – – – – – – – (6,3) 17 38 statements n a n c i a l i n s t r u m e n t s aida fi vle u ta a r e l 3 L e v e l 2 M 00 ’0 R ’0 – (6,3) – – – – – – – – – – – – – – – – – – – – – – – – – (6,3) financial a l u e o f fi F a i r v cre r L e v e l 1 L e v M 00 R M 00 ’0 R 17 38 – – – – – – – – – – – – – 17 38 – consolidated et ( c o n t i n u e d ) o r m a t i o n ( c o n t i n u e d ) ns e mnts o e e imtr u o e e mnts u aaa o n o n e o wr the nn il is rmn s a ntu a l u e i n f cr et fi n a n c i a l l i a b i l i t i e s de r i v a t i v e fi n a n c i a l l i a b i l i t i e s : Itrs a es as n e etrt wp asadbr o ig o rw n s c r d: ) od sabn o n1 U e mla o n2 U e mla e mla1 o n e mla2 o n uu jrhmd a a e imtr u SkkWklh a aa eirSkkMrb h h o uu S e mla eirUDtr e mla o Mtr o n S e mla Blnecr idfr a d a r to d ) fa i r v 04 21 p u o gr no-u rn n lon (e ue ls in AIt - ADtr ADtr Mtr R Mtr R SkkI Skkmd uu uu Sn o Sn eirR Sn UDtr ac a notes e ni u t n ( o c 3. fiac 1 3 1 . 8 204 MALAKOFF CORPORATION BERHAD Annual Report 2014

C a r r y i n g a m o u n t M 00 ’0 R 1,7,4) (,5,6) 1 08 04 (,0,0) 1 80 00 (2,4) 16 27 (,8,1) 2 94 31 1,6,5) (,0,0) 1 80 00 l f a i r 1,4,8) (4 66 24 1,5,9) (7 60 55 oa t a l u e M 00 ’0 (1,8) T v R (,1,7) 1 14 76 (,7,4) 1 86 96 17 08 (,0,1) 3 18 80 (,7,4) 1 86 96 1,8,4) (5 89 74 1,9,5) (8 98 54 o t a l T M 00 ’0 R (5 62 46 (,1,7) 1 14 76 (,7,4) 1 86 96 (1,8) 17 08 (,0,1) 3 18 80 (,7,4) 1 86 96 n a n c i a l i n s t r u m e n t aida fi vle u ta a r e l 3 L e v M 00 ’0 R – – – (1,8) 17 08 (1,8) 17 08 (1,8) (8 71 26 17 08 – a l u e o f fi nt cre r e l 2 L e v M 00 ’0 R 1,8,4) (5 62 46 (,1,7) 1 14 76 (,7,4) 1 86 96 – (,9,2) 2 91 72 1,7,6) (8 64 18 (,7,4) 1 86 96 F a i r v o e l 1 – – – – – – – L e v M 00 ’0 R o t a l T M 00 ’0 R (6,3) 17 38 – – – – (6,3) 17 38 – statements n a n c i a l i n s t r u m e n t s aida fi vle u ta a r e l 3 L e v e l 2 M 00 ’0 R ’0 – – – – – – – – – – – – financial a l u e o f fi F a i r v cre r L e v e l 1 L e v M 00 R M 00 ’0 R (6,3) 17 38 – – – – – (6,3) 17 38 – – consolidated et ( c o n t i n u e d ) o r m a t i o n ( c o n t i n u e d ) ns o n o e ns the nn il is rmn s a ntu a l u e i n f cr et Blneb ogtfr a d ru h o wr fi n a n c i a l l i a b i l i t i e s asadbr o ig o rw n u s c r d: ) o B e mla e uirSkk o uu Msa aa uh rkh Sbria e o nnts n tdla fi n a n c i a l l i a b i l i t y asadbr o ig o rw n u s c r d: ) e uirSkk o uu Msa aa uh rkh to d ) fa i r v 04 21 p u o gr no-u rn n ac a lon ( ne ue uirELtr Jn UrtdJn a n u o d m ay p n co lon ( ne ue UrtdJn a n notes e ni u t n ( o c 3. fiac 1 3 1 . 8 205 205

C a r r y i n g a m o u n t M 00 ’0 R 6 14 1,3 4 17 6,0 2 02 95 ,1,4 2 03 16 ,9,8 l f a i r oa t a l u e M 00 ’0 6 14 1,3 4 17 6,0 T v R 2 02 95 ,1,4 2 03 16 ,9,8 – – o t a l T M 00 ’0 R 2 02 95 ,1,4 2 02 95 ,1,4 n a n c i a l i n s t r u m e n t aida fi vle u ta a r e l 3 L e v M 00 ’0 R – – 2 02 95 ,1,4 2 02 95 ,1,4 a l u e o f fi nt cre r e l 2 L e v M 00 ’0 R – – – – F a i r v o e l 1 – – – – L e v M 00 ’0 R o t a l T M 00 ’0 R 6 14 1,3 4 17 6,0 – 0 21 8,4 statements n a n c i a l i n s t r u m e n t s aida fi vle u ta a r e l 3 L e v e l 2 M 00 ’0 R ’0 – 6 14 – 4 17 – – – 0 21 financial a l u e o f fi F a i r v cre r L e v e l 1 L e v M 00 R M 00 ’0 R 1,3 – 6,0 – – 8,4 – consolidated et ( c o n t i n u e d ) o r m a t i o n ( c o n t i n u e d ) e vb the nn il is rmn s a ntu a l u e i n f cr et fi n a n c i a l a s s e t s de r i v a t i v e fi n a n c i a l a s s e t s : Itrs a es a s n e etrt wp u rnys a s C oscr ec wp n nelaercia l iac e s ee to d ) fa i r v 03 21 p u o gr no-u rn n rs F notes e ni u t n ( o c 3. fiac 1 3 1 . 8 206 MALAKOFF CORPORATION BERHAD Annual Report 2014

C a r r y i n g a m o u n t M 00 ’0 R 3,6) (1 72 (2,9) 19 45 (2,0) 45 58 1 51 34 3,2) (9 20 (,4,6) 3 54 05 (,4,3) 4 24 38 (5,0) 40 00 (,9,0) 3 20 00 (7,0) 27 17 1,3,1) l f a i r 1 62 87 (,0,2) 1,7,1) (3 92 89 oa t a l u e M 00 ’0 3,6) (1 72 (0,5) (4,5) 3,2) (2 78 (6,3) (8,6) 32 T v R 24 76 45 45 (,5,0) 4 01 25 (,7,1) 5 42 69 44 87 (,5,7) 3 35 54 21 59 93 – 1 62 87 (,3,0) o t a l T M 00 ’0 R (0,5) 24 76 (4,5) 45 45 (,3,0) 3,2) (2 78 (,5,0) 4 01 25 (,7,1) 5 42 69 (6,3) 44 87 (,5,7) 3 35 54 (8,6) 21 59 1,4,5) (5 (5 91 50 n a n c i a l i n s t r u m e n t aida fi vle u ta a r e l 3 L e v M 00 ’0 R – – – – – – – – – – – a l u e o f fi nt cre r e l 2 L e v M 00 ’0 R – (0,5) 24 76 (4,5) 45 45 1 62 87 (,3,0) 3,2) (2 78 (,5,0) 4 01 25 (,7,1) 5 42 69 (6,3) 44 87 (,5,7) 3 35 54 (8,6) 21 59 1,4,5) (5 91 50 F a i r v o e l 1 – – – – – – – – – – – L e v M 00 ’0 R o t a l T M 00 ’0 R 3,6) (1 72 – – – – – – – – – 3,6) (1 72 statements n a n c i a l i n s t r u m e n t s aida fi vle u ta a r e l 3 L e v e l 2 M 00 ’0 R ’0 – 3,6) – – – – – – – – – – – – – – – – – – – 3,6) financial a l u e o f fi F a i r v cre r L e v e l 1 L e v M 00 R M 00 ’0 R (1 72 – – – – – – – – – – (1 72 – consolidated et ( c o n t i n u e d ) o r m a t i o n ( c o n t i n u e d ) ns e mnts o e e imtr u o e e mnts u a aa e o wr the nn il is rmn s a ntu a l u e i n f cr et fi n a n c i a l l i a b i l i t i e s de r i v a t i v e fi n a n c i a l l i a b i l i t i e s : Itrs a es a s n e etrt wp asadbr o ig o rw n s c r d: ) od sabn o n1 U e mla o n2 U e mla o n e mla uu jrhmd a a e imtr u SkkWklh a aa eirSkkMrb h h o uu o n S e mla Blnec r idfr a d a r to d ) fa i r v 03 21 p u o gr no-u rn n lon (e ue ls in AIt - ADtr ADtr Mtr R SkkI Skkmd uu uu Sn UDtr ac a notes e ni u t n ( o c 3. fiac 1 3 1 . 8 207 207

C a r r y i n g a m o u n t M 00 ’0 R 1,3,1) (2,0) 76 95 (,0,0) 1 80 00 (8,9) 13 78 (,1,0) 2 70 73 1,4,2) (,0,0) 1 80 00 l f a i r 1,7,1) (3 92 89 1,2,3) (6 63 52 oa t a l u e M 00 ’0 (2,3) (4,3) T v R 79 01 (,7,6) 1 88 82 17 93 (,5,2) 2 75 86 (,7,6) 1 88 82 1,4,5) (5 93 32 1,9,7) (8 79 18 o t a l T M 00 ’0 R (5 91 50 (2,3) 79 01 (,7,6) 1 88 82 (4,3) 17 93 (,5,2) 2 75 86 (,7,6) 1 88 82 n a n c i a l i n s t r u m e n t aida fi vle u ta a r e l 3 L e v M 00 ’0 R – – – (4,3) 17 93 (4,3) 17 93 (4,3) (8 67 36 17 93 – a l u e o f fi nt cre r e l 2 L e v M 00 ’0 R 1,4,5) (5 91 50 (2,3) 79 01 (,7,6) 1 88 82 – (,0,9) 2 67 83 1,4,4) (8 59 43 (,7,6) 1 88 82 F a i r v o e l 1 – – – – – – – L e v M 00 ’0 R o t a l T M 00 ’0 R 3,6) (1 72 – – – – 3,6) (1 72 – statements n a n c i a l i n s t r u m e n t s aida fi vle u ta a r e l 3 L e v e l 2 M 00 ’0 R ’0 – 3,6) – – – – – – – – – 3,6) – – financial a l u e o f fi F a i r v cre r L e v e l 1 L e v M 00 R M 00 ’0 R (1 72 – – – – – (1 72 – – consolidated et ( c o n t i n u e d ) o r m a t i o n ( c o n t i n u e d ) ns o e ns the nn il is rmn s a ntu a l u e i n f cr et Blneb ogtfr a d ruh o wr fi n a n c i a l l i a b i l i t i e s asadbr o ig o rw n u s c r d: ) on o B e mla e uirSkk o uu Msa aa uhrkh Sbria e onnts ntdla fi n a n c i a l l i a b i l i t y asadbr o ig o rw n u s c r d: ) e uirSkk o uu Msa aa uhrkh to d ) fa i r v 03 21 p u o gr no-u rn n ac a lon ( ne ue uirELtr Jn UrtdJn a n uo d may pn co lon ( ne ue UrtdJn a n notes e ni u t n ( o c 3. fiac 1 3 1 . 8 208 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 31. financial instruments (continued) 31.8 fair value information (continued) level 2 fair value derivatives T he interest rate swaps and cross currency swaps instruments that held by the subsidiary in Malaysia are not actively traded therefore market-based prices are not readily available. The f air values of the instruments are calculated based on the present value of future principal and i nterest cash flows. The spot rates, forward rates and foreign exchange rates used to calculate present value are directly observable from the market. For the interest rate swaps that held by the subsidiary in Australia, the fair value of interest rate s waps are based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market i nterest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take into account of the credit risk of the Group and counterparty where appropriate. non-derivative financial liabilities F air value of the long term borrowings is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. transfers between level 1 and level 2 fair values There has been no transfer between Level 1 and 2 fair values during the financial year (2013: no transfer in either directions). level 3 fair value Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities. The following table shows the valuation techniques used in the determination of fair values within Level 3, as the key unobservable inputs used in the valuation models. a) financial instruments not carried at fair value type description of valuation technique and inputs used F inance lease receivable Discounted cash flows using a rate based on current market rate of borrowing of the Group S ubordinated loan notes Discounted cash flows using a rate based on the weighted average cost of capital of the Company at the reporting date valuation process applied by the group for level 3 fair value The Group has an established control framework in respect to the measurement of fair values of financial instruments. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Chief Financial Officer. The valuation team regularly reviews significant unobservable inputs and v aluation adjustments. 209 209

notes to the consoliDateD financial statements (continued) 3 2. caPital management T he Group’s objectives when managing capital are to maintain a strong capital base and to safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with debt covenants. 32.1 abba bonds issued by gb3 sdn. bhd. (“gb3”) I n 2013, GB3’s strategy was to maintain a debt-to-equity ratio of not more than 9:1 and a debt s ervice cover ratio of at least 1.25 times. The following shows the debt-to-equity ratio and debt service cover ratio at the end of the financial years: 2014 2013 Debt-to-equity ratio – 0.20:1 Debt service cover ratio – 40.52:1 ABBA bonds have been fully redeemed during the financial year. 32.2 al-istisna bonds issued by Prai Power sdn. bhd. (“PPsb”) PPSB’s strategy is to maintain a debt-to-equity ratio of not more than 4:1 and an annual finance service ratio of at least 1.4 times. The following shows the debt-to-equity ratio and annual finance service ratio at the end of the financial years: 2014 2013 Debt-to-equity ratio 0.25:1 0.39:1 Annual finance service ratio 2.48:1 2.00:1 32.3 sukuk ijarah medium term notes issued by tanjung bin Power sdn. bhd. (“tbP”) TBP’s strategy is to maintain a debt-to-equity ratio of not more than 80:20 and a finance service cover ratio of at least 1.25 times. The following shows the debt-to-equity ratio and finance service cover ratio at the end of the financial years: 2014 2013 Debt-to-equity ratio 3.34:1 2.87:1 F inance service cover ratio 8.87:1 4.13:1 210 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 3 2. caPital management (continued) 32.4 senior sukuk murabahah, senior usd term loan and senior rm term loan issued by tanjung bin energy issuer berhad (“tbei”) TBEI’s strategy is to maintain a debt-to-equity ratio of not more than 80:20 and a finance service cover ratio of at least 1.05 times. The first of such finance service cover ratio is to be computed f or the first full calculation period ending after the commencement date of the power plants. The f ollowing shows the debt-to-equity ratio at the end of the financial years: 2014 2013 Debt-to-equity ratio 3.58:1 3.57:1 The first finance service cover ratio is not presented until the completion date of the project. 32.5 rm term loan 1 drawdown by malakoff utilities sdn. bhd. (“musb”) MUSB’s strategy is to maintain a debt-to-equity ratio of not more than 1.50:1 and a debt service cover ratio of at least 1.20 times. T he following shows the debt-to-equity ratio and debt service cover ratio at the end of the fi nancial year: 2014 2013 Debt-to-equity ratio 0.68:1 0.71:1 Debt service cover ratio 27.5:1 22.5:1 32.6 rm term loan 2 drawdown by Port dickson Power berhad (“PdP”) I n 2014, PDP’s strategy is to maintain a finance service coverage ratio of at least 1.10 times. The following shows the finance service coverage ratio as at the end of the financial year: 2014 F inance service cover ratio 5.33:1 211 211

notes to the consoliDateD financial statements (continued) 3 2. caPital management (continued) 32.7 sukuk Wakalah issued by tanjung bin o&m berhad (“tbom”) TBOM’s strategy is to maintain a debt-to-equity ratio of not more than 80:20 and a finance service cover ratio of at least 1.25 times. The first debt-to-equity ratio is to be computed 24 months after t he issue date. The following shows the finance service cover ratio at the end of the financial years: 2014 2013 Finance service cover ratio 3.33:1 9.44:1 The first debt-to-equity ratio is not presented until 24 months after the issue date. 32.8 aud term loan 2 drawdown by Wind macarthur finco Pty limited (“mWf”) MWF’s strategy is to maintain a minimum projected debt service cover ratio of 1.10:1 on any two consecutive calculation date. The following shows the projected debt service cover ratio as at the end of the financial years: 2014 2013 Debt service cover ratio 1.42:1 1.24:1 32.9 the company debt-to-equity ratio is applied to the following loans and borrowings: 32.9.1 a) sukuk medium term notes issued by malakoff Power berhad (“mPb”) b) commercial papers issued by mPb c) Junior ebl term loan for tbei For the Sukuk medium term notes issued by MPB, the Company is required to maintain an aggregated debt-to-equity ratio of the Company of not more than 1:1. For the commercial papers issued by MPB and Junior EBL term loan for TBEI, the Company i s required to maintain an aggregated company debt-to-equity ratio of the Company of not more than 1.25:1. Commercial papers have been fully redeemed during the financial year. The following shows the debt-to-equity ratios as at the end of the financial years: 2014 2013 Debt-to-equity ratio 0.74:1 0.84:1 212 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 3 2. caPital management (continued) 3 2.9 the company debt-to-equity ratio is applied to the following loans and borrowings (continued): 32.9.2 a) usd term loan for malakoff international limited (“mil”) b) aud term loan 1 for mil For the USD term loan and AUD Term Loan 1 obtained by MIL, the Company is required to maintain its debt-to-equity ratio of the Company of not more than 1.25:1. The following shows the debt-to-equity ratio as at the end of following years: 2014 2013 Company debt-to-equity ratio 0.73:1 0.84:1 32.10 the group debt-to-equity ratio is applied to the following loans and borrowings: a) sukuk medium term notes issued by malakoff Power berhad (“mPb”) b) commercial papers issued by mPb c) usd term loan for malakoff international limited (“mil”) d) aud term loan 1 for mil e) Junior ebl term loan for tbei F or the Sukuk medium term notes issued by MPB, the Group is required to maintain its debt-to-equity ratio of not more than 5.5:1. For the commercial papers issued by MPB, USD term loan and AUD term loan 1 obtained by MIL and Junior EBL term loan for TBEI, the Group is required to maintain its debt-to-equity ratio of not more than 7:1. Commercial papers have been fully redeemed during the financial year. The following shows the debt-to-equity ratio as at the end of following years: 2014 2013 Group debt-to-equity ratio 3.00:1 2.92:1 213 213

notes to the consoliDateD financial statements (continued) 3 3. caPital commitments Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Plant and equipment Contracted but not provided for 1,297,372 2,101,576 – – Authorised but not contracted for 457,522 340,373 2,223 5,216 1,754,894 2,441,949 2,223 5,216 3 4. contingencies a) guarantees Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Guarantees – secured 368,166 382,573 176,066 213,889 These guarantees mainly consist of guarantees for bid bonds, performance bonds and security deposits for projects. b) material litigation The status of material litigation of the Group are as follows: ( i) Arbitration proceedings between Port Dickson Power Berhad (“PDP”) (“Claimant”) and T enaga Nasional Berhad (“TNB”) (“Respondent”) On 26 March 2013, PDP commenced arbitration proceedings against TNB in relation to the following: a) a claim by PDP against TNB of an amount of RM56,642,029 for the outstanding FOR and VOR adjustments for the period from February 1999 to November 2011 together with i nterest thereon; and b) a claim that PDP is entitled to bill and be paid by TNB for the capacity payments and energy payments from September 2013 onwards based on the adjusted FOR and VOR of RM7.05/kW/month and RM0.0204/kWh, respectively, pursuant to the PDP’s PPA. 214 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 3 4. contingencies (continued) b) material litigation (continued) ( i) Arbitration proceedings between Port Dickson Power Berhad (“PDP”) (“Claimant”) and T enaga Nasional Berhad (“TNB”) (“Respondent”) (continued) PDP and TNB (“Parties”) have filed their joint expert’s report and the list of issues on 12 November 2014. The hearing proceeded before the tribunal from 26 to 30 January 2015 at t he Kuala Lumpur Regional Centre for Arbitration before the three-member tribunal, consisting of Dr. Eun Young Park, Mr. James Spigelman and Mr. Andrew Jeffries (“Tribunal”). Subsequently, the Tribunal has directed the Parties to provide the latest calculation of the claims. PDP is required to submit the calculations and revised remedies on 13 February 2015, while TNB is to provide its comments on the calculations before 6 March 2015. As the Tribunal’s award would include an award on the costs incurred for this arbitration proceeding, the Tribunal has directed Parties to file their costs submissions. PDP’s solicitors will prepare the submissions, including the total legal costs and disbursements incurred by PDP. Both Parties are to exchange their respective costs submissions on 13 March 2015, and subsequently both Parties may reply each other’s Costs Submissions on 27 March 2015. I t is expected that the arbitration award from the Tribunal will be rendered within a month after the costs submission are delivered by the both parties to the Tribunal. No amounts have been recognised in these financial statements for this gain contingency. (ii) Proceedings by the Public Prosecutor of Algeria against Almiyah Attilemcania SPA (“AAS”) On 4 September 2014, a joint venture of the Group, AAS, was charged in the Court of Ghazouet in the district of Tlemcen, Algeria, for an alleged breach of foreign exchange r egulations concerning a sum of USD26.9 million. The Group holds an indirect effective i nterest of 35.7% in AAS via Tlemcen Desalination Investment Company SAS (“TDIC”), an indirect subsidiary of Malakoff International Limited. During the financial year 2009, it was discovered that there was a considerable gap between t he value of the delivered equipment received as per the invoices declared to the customs and the value of the milestone payments made by AAS to the supplier cum contractor (“Invoice Gap”). AAS wrote to the supplier cum contractor requesting for clarifications as they are responsible to resolve tax and customs issues. The Invoice Gap however was not resolved by the supplier cum contractor and the Algerian Customs then initiated investigations and t hereafter a charge was brought against AAS. It was alleged that AAS has failed to repatriate a sum of USD26.9 million. The lower court of Ghazouet (“Court”) in the district of Tlemchen has on 24 December 2014 convicted AAS and has subsequently imposed a penalty of AD3,929,038,151 (approximately RM157.2 million at the exchange rate of RM1: AD25) (“Penalty”). The Group’s liability arising f rom the Penalty, in proportion to the Group’s 35.7% effective interest in AAS via TDIC, which may impact the profit of the Group, amounts to AD1,402,666,620 (approximately RM56.1 million). 215 215

notes to the consoliDateD financial statements (continued) 3 4. contingencies (continued) b) material litigation (continued) ( ii) Proceedings by the Public Prosecutor of Algeria against Almiyah Attilemcania SPA (“AAS”) (continued) Notwithstanding, AAS has been advised by its solicitor, Maitre Ahcene Bouskia, an attorney admitted to the Algerian Supreme Court, that the Penalty would not be enforced until t he exhaustion of all rights to appeal by AAS in respect of the proceedings. AAS has on 29 December 2014 filed an appeal against the decision of the Court to the Algerian Court of Appeal. I n the opinion of the Directors, after taking appropriate legal advice, it is not probable an outflow of resources embodying economic benefits will be required to resolve this matter. T herefore no provisions have been made in the financial statements. ( iii) Request for arbitration proceedings by International Water Treatment LLC (“IWT”) and Muscat City Desalination Company SAOC (“MCDC”) The arbitration arose pursuant to an EPC contract dated 10 April 2013 in relation to the Al Ghubrah IWP (“Al Ghubrah EPC Contract”). Under the Al Ghubrah EPC Contract, MCDC is t he owner of the works to be constructed and IWT is the contractor. The arbitration commenced on 2 October 2014, when IWT filed a request for arbitration with the London Court of International Arbitration (“LCIA”), alleging the following claims: i ) IWT has sought to challenge the delay liquidated damages clause under the Al Ghubrah EPC Contract (“LD Clause”) on the bases that it is a “penalty”, and is therefore unenforceable; and ii) failing MCDC’s ability to provide IWT with an extension of time, IWT is entitled to complete within a reasonable period of time. However, IWT has failed to particularise the grounds on which its claims are based in t he arbitration. MCDC has filed a response to request for arbitration on 30 October 2014, defending its position as to the enforceability of the LD Clause and has required IWT to f urther particularise its claims. MCDC and IWT are currently waiting for the LCIA to appoint the Tribunal, after which a procedural timetable will be put in place. I n the opinion of the Directors, after taking appropriate legal advice, it is not probable an outflow of resources embodying economic benefits will be required to resolve this matter. T herefore no provisions have been made in the financial statements. 216 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 35. related Parties For the purposes of these financial statements, parties are considered to be related to the Group or t he Company if the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group or the Company either directly or indirectly. The key management personnel include all the Directors of the Group, and certain members of senior management of the Group. The Group has related party relationship with its holding companies, significant investors, subsidiaries and associates, Directors and key management personnel. Related party transactions have been entered into the normal course of business under normal trade terms. The significant related party transactions of the Group and of the Company are as follows: significant related party transactions Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 i . Associates: – Interest income on unsecured subordinated loan notes 26,410 65,402 26,410 65,402 – Project management fees 1,701 967 1,701 967 ii. Subsidiaries – Interest income on unsecured subordinated loan notes – – – 10,905 – Management fees – – 26,418 26,553 – Dividends – – 958,876 3,658,000 – Interest expense on advances to subsidiary – – (55,812) ( 52,152) iii. Entities that are under common control by the Government of Malaysia (a party that has direct or indirect significant influence on the Group and the Company): T enaga Nasional Berhad: Sales of capacity and energy 5,457,407 4,726,492 – – Purchase of electricity bulk supply ( 79,670) ( 56,856) – – 217 217

notes to the consoliDateD financial statements (continued) 35. related Parties (continued) T he significant related party transactions of the Group and of the Company are as follows (continued): significant related party transactions (continued) Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 iii. Entities that are under common control by the Government of Malaysia (a party that has direct or indirect significant influence on the Group and the Company): (continued): P etroliam Nasional Berhad: Purchase of gas ( 596,983) ( 567,051) – – P etronas Dagangan Berhad: Purchase of diesel ( 32,060) ( 42,206) – – TNB Fuel Services Sdn. Bhd.: Purchase of coal ( 1,608,691) (1,311,467) – – Purchase of diesel ( 42,847) – – – Financial institutions and other corporations: Interest income 84,777 74,774 4,980 4,824 Interest expense ( 50,400) ( 50,400) (50,400) ( 50,400) Energy Commission: CESS fund contribution ( 11,847) ( 29,598) – – Malaysian Resources Corporation Berhad: Sales of centralised chilled water and electricity 26,703 32,753 – – L embaga Tabung Haji: Interest expense ( 63,000) ( 63,000) (63,000) ( 63,000) 218 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 36. significant events during the year During the financial year, the Group undertook the following corporate activities: ( i) Acquired 75% equity interest in Port Dickson Power Berhad, comprising 112,500 ordinary shares of RM1.00 each and 112,500 redeemable preference shares of RM1.00 each through a wholly owned subsidiary, Hypergantic Sdn. Bhd. for a cash consideration of RM289,000,000. (ii) Acquired 100% equity interest in PDP O&M Sdn. Bhd. (formerly known as Sime Darby Biofuels Sdn. Bhd.) comprising 2 ordinary shares of RM1.00 each through a wholly owned subsidiary, Malakoff Power Berhad for a cash consideration of RM11,000,000. 37. acquisition of subsidiaries 37.1 acquisition of subsidiaries – Port dickson Power berhad and PdP o&m sdn. bhd. (formerly known as sime darby biofuels sdn. bhd.) On 30 April 2014, the Group acquired 112,500 ordinary shares of RM1.00 each and 112,500 r edeemable preference shares of RM1.00 each in Port Dickson Power Berhad for RM289,000,000, r epresenting 75% of the total issued and paid up share capital of Port Dickson Power Berhad. Prior t o the acquisition, Port Dickson Power Berhad was an equity accounted investee with 25% equity i nterest held by the Group. Arising from the acquisition, Port Dickson Power Berhad becomes a wholly owned subsidiary of the Group. On 30 April 2014, in connection with the above acquisition, the Group also acquired 2 ordinary s hares of RM1.00 each in PDP O&M Sdn. Bhd. for RM11,000,000, representing 100% of the total i ssued and paid up share capital of PDP O&M Sdn. Bhd. Arising from the acquisition, PDP O&M Sdn. Bhd. becomes a wholly owned subsidiary of the Group. T he total purchase consideration for the acquisition is RM300,000,000, satisfied in cash. The companies are engaged in generating, operating and maintaining a gas-fuelled generation power plant in Port Dickson, Negeri Sembilan. In the eighth months to 31 December 2014, the s ubsidiaries contributed revenue of RM223,534,000 and profit of RM75,715,000. If the acquisition had occurred on 1 January 2014, management estimates that consolidated revenue would have been RM5,719,608,000 and consolidated profit for the financial year would have been RM400,299,000. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2014. 219 219

notes to the consoliDateD financial statements (continued) 37. acquisition of subsidiaries (continued) 37.1 acquisition of subsidiaries – Port dickson Power berhad and PdP o&m sdn. bhd. (formerly known as sime darby biofuels sdn. bhd.) (continued) T he following summarises the recognised amount of assets and liabilities assumed at the acquisition date:– identifiable assets acquired and liabilities assumed Note RM’000 Property, plant and equipment 3 230,738 I ntangible assets 4 100,739 Deferred tax assets 10 10,658 I nventories 19,068 T rade and other receivables 38,616 Cash and cash equivalents 146,459 T rade and other payables ( 46,767) Current tax liabilities (18,246) Deferred tax liabilities 10 ( 51,534) T otal identifiable net assets 429,731 net cash outflow arising from acquisition of subsidiaries RM’000 P urchase consideration settled in cash and cash equivalents ( 300,000) L ess: cash and cash equivalents acquired 1 46,459 ( 153,541) bargain purchase Bargain purchase was recognised as a result of the acquisition as follows: RM’000 Purchase consideration 300,000 Fair value of existing interest in the acquiree 96,333 Fair value of identifiable assets, liabilities and contingent liabilities (429,731) ( 33,398) T he remeasurement to fair value of the Group’s existing 25% interest in the acquiree resulted in a gain of RM27,581,000 (RM96,333,000 less RM68,752,000 carrying value of equity-accounted i nvestee at acquisition date), which has been recognised in other non-operating income in the statement of profit or loss and other comprehensive income. 220 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 37. acquisition of subsidiaries (continued) 37.1 acquisition of subsidiaries – Port dickson Power berhad and PdP o&m sdn. bhd. (formerly known as sime darby biofuels sdn. bhd.) (continued) acquisition-related costs The Group incurred acquisition-related costs of RM736,000 related to external legal fees and due diligence costs. The legal fees and due diligence costs have been included in administrative expenses in the Group’s consolidated statement of profit or loss and other comprehensive income. 37.2 acquisition of subsidiary – malakoff Wind macarthur holdings Pty. ltd. (formerly known as meridian Wind macarthur holdings Pty. ltd.) On 28 June 2013, the Group acquired the entire issued and paid up share capital of Malakoff Wind Macarthur Holdings Pty. Ltd. (“MWMH”) for a cash consideration approximately of RM383,164,000. As a result of the acquisition, MWMH has an indirect 50% participating interest in an unincorporated joint venture of the Macarthur Wind Farm, through its wholly-owned subsidiary, Malakoff Wind Macarthur Pty. Ltd. (“MWM”) (formerly known as Meridian Wind Macarthur Pty. Ltd.). The completion of the construction of the Macarthur Wind Farm was on 31 January 2013. T he following summarises the recognised amount of assets and liabilities acquired at the acquisition date: identifiable assets acquired and liabilities assumed RM’000 F inance lease receivables 2,021,035 Cash and cash equivalents 2 3,013 L oans and borrowings ( 1,527,819) Derivative financial liabilities (110,052) Other payables and accruals ( 23,013) 383,164 221 221

notes to the consoliDateD financial statements (continued) 37. acquisition of subsidiaries (continued) 37.2 acquisition of subsidiary – malakoff Wind macarthur holdings Pty. ltd. (formerly known as meridian Wind macarthur holdings Pty. ltd.) (continued) net cash outflow arising from acquisition of subsidiary RM’000 P urchase consideration settled in cash and cash equivalents ( 383,164) L ess: cash and cash equivalents acquired 2 3,013 ( 360,151) The Group incurred acquisition-related costs of RM6,146,000 related to arranger fees. The arranger f ee had been included in administrative expenses in the Group’s consolidated statements of profit or loss and other comprehensive income. F rom the date of acquisition, MWM contributed approximately RM80,000,000 to the revenue and RM59,000,000 to profit before tax of the consolidated entity. If the acquisition had occurred on 1 January 2013, management estimates that consolidated revenue would have been RM4,786,683,000 and consolidated profit for the financial year would have been RM218,487,000. I n determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2013. 38. comParative figures (i) explanation of prior years adjustments on an associate During the financial year, the Group’s associate, Kapar Energy Ventures Sdn. Bhd. has reassessed t he deferred tax computation and revised the breakdown between qualifying and non-qualifying expenditure. As a result, the deferred tax and retained earnings balances in prior years have been restated. Accordingly, the Group has restated the carrying amount of investment in associates and the accumulated losses. (ii) explanation of reclassification During the financial year, the Group reclassified its fixed deposits that have maturity of more than 3 months with licensed banks and other licensed corporations to other investments in accordance to the guidance in FRSIC Consensus 22, Classification of Fixed Deposits and Similar I nstruments as Cash and Cash Equivalents. In the previous financial years, all deposits with l icensed banks and other licensed corporations that have maturity of more than 3 months were classified as cash and cash equivalents. 222 MALAKOFF CORPORATION BERHAD Annual Report 2014

notes to the consoliDateD financial statements (continued) 38. comParative figures (continued) (ii) explanation of reclassification (continued) These are now applied retrospectively and the affects are as follows: statement of financial position 31.12.2013 1.1.2013 As As previously As previously As stated restated stated restated group RM’000 RM’000 RM’000 RM’000 I nvestment in associates 1,338,437 1,294,458 1,403,579 1,369,667 Other investments – 1,165,954 – 2,455,577 Cash and cash equivalents 3,541,737 2,375,783 5,153,970 2,698,393 Accumulated losses ( 128,468) ( 172,447) ( 111,501) ( 145,413) statement of profit or loss and other comprehensive income for the year ended 31 december 2013 As previously As stated restated group RM’000 RM’000 Share of profit of equity-accounted associates and a joint venture, net of tax 71,269 61,202 Profit for the year 244,725 234,658 statement of cash flows for the year ended 31 december 2013 As previously As stated restated group RM’000 RM’000 Cash and cash equivalents at 1 January 5,153,970 2,698,393 Cash and cash equivalents at 31 December 3,541,737 2,375,783 223 223

notes to the consoliDateD financial statements (continued) 39. subsequent events a) On 13 January 2015, a wholly-owned subsidiary of the Group, Malakoff Oman Desalination Company Limited (“MODC”) subscribed new issuance of shares of 3,643,839 at a nominal value of Omani Riyal (“RO”) 1 (equivalent to RM9.15) each, representing 45% of its portion of existing i nterest in an associate, Muscat City Desalination Company S.A.O.C (“MCDC”) share capital at a subscription price of RO 1.35 (equivalent to RM12.3536) each. The total value of subscription amount is RO 4,919,183 (equivalent to RM45,015,000). b) On 6 February 2015, the Directors of the Company recommended the final single-tier dividend of approximately 28.46 sen per ordinary share of RM1.00 each totalling RM100,000,000 in respect of t he financial year ended 31 December 2014. 224 MALAKOFF CORPORATION BERHAD Annual Report 2014

statement by Directors pursuant to section 169(15) of the companies act, 1965 I n the opinion of the Directors, the financial statements set out on pages 94 to 224 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the fi nancial position of the Group and of the Company as of 31 December 2014 and of their financial performance and cash flows for the year then ended. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors: …………………………………………………........ …………………………………………………........ yam tan sri dato’ seri syed Zainol dato’ sri che Khalib bin mohamad noh anwar ibni syed Putra Jamalullail Director Chairman K uala Lumpur Date: 6 February 2015 statutory Declaration pursuant to section 169(16) of the companies act, 1965 I, ho chee sheong, the officer primarily responsible for the financial management of Malakoff Corporation Berhad, do solemnly and sincerely declare that the financial statements set out on pages 94 to 224 are, to t he best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing t he same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the above named in Kuala Lumpur on 6 February 2015. ………………………………………… ho chee sheong Before me: 225 225

inDepenDent auDitors’ report to the members of malakoff corporation berhad ( Company No. 731568-V) ( Incorporated in Malaysia) rePort on the financial statements We have audited the financial statements of Malakoff Corporation Berhad, which comprise the statements of financial position as at 31 December 2014 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 94 to 224. Directors’ Responsibility for the Financial Statements T he Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also r esponsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in t he financial statements. The procedures selected depend on our judgement, including the assessment of r isks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion I n our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2014 and of their financial performance and cash flows for the year t hen ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. 226 MALAKOFF CORPORATION BERHAD Annual Report 2014

inDepenDent auDitors’ report to the members of malakoff corporation berhad ( Company No. 731568-V) ( Incorporated in Malaysia) (continued) rePort on other legal and regulatory requirements I n accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: a) In our opinion, the accounting and other records and the registers required by the Act to be kept by t he Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements. c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory i nformation and explanations required by us for those purposes. d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act. other matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of t he Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. …………………………………………………........ …………………………………………………........ KPmg muhammad azman bin che ani F irm Number: AF 0758 Approval Number: 2922/04/16(J) Chartered Accountants Chartered Accountant Petaling Jaya Date: 6 February 2015 227 227

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