000Malakoff_annual_report

As the largest IPP i n the country, the Group has many strengths it can build upon to exploit emerging opportunities in t he marketplace and achieve our strategic goals.



asset performance DOMESTIC POWER GENERATION exceeding the 86.0 percent threshold under the PPA with TNB. By meeting all the required performance Malakoff is the largest Independent Power Producer ( “IPP”) in Malaysia and the Southeast Asian criteria, the plant received full capacity payments ( “SEA”) region, with an effective power generation f or the year under review. capacity of approximately 5,346 megawatts (“MW”) r epresenting a significant 24.9 percent market GB3 Power Plant share of the total installed capacity in Peninsular Malakoff’s stake in the GB3 Power Plant is held Malaysia. Our power generation assets consist of t hrough its 75.0 percent-owned subsidiary, GB3 Sdn t hree combined cycle gas turbine (“CCGT”) power Bhd. Located next to the Lumut Power Plant, GB3 is plants, an open cycle gas turbine (“OCGT”) power also a CCGT power plant. Now in its thirteenth year plant and one coal-fired thermal plant, among of operation, the plant delivered a total of 1,890 t he largest privately owned coal-fired plants in SEA GWh of electricity to the national grid, recording accounting for around 29.3 percent of Peninsular an average capacity factor of about 33.71 percent Malaysia’s total installed coal-fired generation for FY 2014. The plant’s equivalent availability factor capacity. Through our associates, we also have of 91.17 percent has improved slightly from the interest in one power plant with multi-fuel generation previous year, mostly due to the reduced number facilities. All the power generated is sold to Tenaga of forced outages. Nasional Berhad (“TNB”) under long-term Power P urchase Agreements (“PPAs”). Prai Power Plant T he Prai Power Plant is a single shaft CCGT plant with a dependable capacity of 350 MW, and is SUBSIDIARY-OWNED POWER PLANTS held through our wholly-owned subsidiary Prai SEV Power Plant Power Sdn Bhd. One of the most efficient natural gas-fuelled power plants in Malaysia, it recorded a Through our 93.75 percent-owned subsidiary, Segari Energy Ventures Sdn Bhd (“SEV”), Malakoff has a net efficiency (lower heating value) of 52.2 percent stake in the 1,303 MW Lumut Power Plant. Now in its during the year in review. nineteenth year of operation, it is the largest CCGT power plant owned by an IPP in Malaysia. In 2013, Operational since 2003, the plant delivered a total SEV was awarded a 10-year extension of the PPA to of 2,104 GWh of electricity to the national grid in continue selling electricity to TNB until June 2027. 2014, recording an average capacity factor of 68.64 percent. The plant’s equivalent availability factor i ncreased significantly to 92.12 percent for the year T hroughout FY 2014, the Lumut Power Plant maintained its high performance level in terms of i n review, in tandem with a reduced number of availability, reliability and efficiency. It achieved an planned outage days. average capacity factor of approximately 69.78 percent and delivered around 7,964 gigawatt-hours (“GWh”) of electricity to the national grid. The plant also registered an availability factor of 89.03 percent, 51

perForManCe reView By CHieF exeCuTiVe oFFiCer (continue) During the year, the plant also successfully earned certification to the ISO 27001 Information Security Management System, which is an assurance of i nformation security of the business. FY 2014 also marked the 12th year of the plant’s commercial operations without Lost Time Incident (“LTI”) with a total of 3.4 million man-hours recorded. Port Dickson Power Plant T he Port Dickson Power Plant (“PDPP”) is a 436.4 MW OCGT gas turbine power plant that supplies electricity to the national grid for peaking and emergency requirements. The Group now has a 100.0 percent stake in the plant, vested in our wholly-owned subsidiary, Hypergantic Sdn Bhd. This follows the acquisition in May 2014 of the remaining 75.0 percent equity interest in the plant. F or the past 20 years, the plant has set exemplary performance standards achieving an exceptionally high availability factor of close to 99.0 percent, forced outage rate of less than 0.1 percent and commercial starting reliability of close to 100.0 percent. I n 2014, PDPP won the National Occupational Safety and Health Excellence award 2014 from the Department of Occupational Safety and Health (DOSH). T anjung Bin Power Plant Malakoff’s interest in the Tanjung Bin Power Plant i s through our 90.0 percent subsidiary, Tanjung Bin Power Sdn Bhd. The 2100 MW power plant is the first private coal-fired plant in Malaysia and is also one of the biggest independent coal-fired power plants i n SEA. It consumes various types of bituminous and sub-bituminous coal imported from Australia, South Africa, Russia and Indonesia. 52 MALAKOFF CORPORATION BERHAD Annual Report 2014

For the year under review, the plant delivered a total All Malakoff subsidiary-owned power plants are of 15,308 GWh of electricity to the national grid in compliant to the ISO 9001 Quality Management F Y 2014, achieving an average capacity factor of System, OHSAS 18001, ISO 14001 Environment 8 3.22 percent. The plant’s equivalent availability Management System and ISO/IEC 27001 Information f actor of 83.96 percent was also recorded, which is S ecurity Management System. a marked improvement from the previous year. T anjung Bin Energy Power Plant ASSOCIATE-OWNED POWER PLANT Capitalising on the increasing role of coal-fired power Kapar Power Plant generation in Malaysia, Malakoff is constructing a Malakoff has a 40.0 percent stake in the Kapar new RM6.7 billion of 1,000 MW coal-fired plant next Power Plant vested in Kapar Energy Ventures (“KEV”). t o the existing Tanjung Bin Power Plant. The power Also known as the Sultan Salahuddin Abdul Aziz generated from the supercritical coal-fired thermal Power Plant, it is the largest power plant in Malaysia plant is expected to be sold to TNB under a 25-year contributing 15.0 percent of the country’s energy PPA that will expire in year 2041. demand. S everal project construction milestones were T he Kapar Power Plant has a total generating capacity achieved during the year under review. These of 2,420 MW comprising the following facilities: i ncluded the completion of the flue gas stack, i nstallation of high pressure (“HP”) heaters and generating Facility 1 (gF1): de-superheaters at the turbine hall, installation of 2x300 MW Dual-Fuel Firing (gas and oil) generator step-up transformer, lifting of generator s tator and completion of a new 500 kV extended generating Facility 2 (gF2): sub-station. With civil engineering works substantially 2x300 MW Triple-Fuel Firing (coal, gas and oil) undertaken, the plant achieved an overall physical completion of 84.0 percent as at end-2014. generating Facility 3 (gF3): 2x500 MW Dual-Fuel Firing (coal and gas) As the project moves progressively into the testing and commissioning phase, a dedicated Operation generating Facility 4 (gF4): and Maintenance (“O&M”) team from Malakoff 2x110 MW Open Cycle Gas Turbine Power Berhad has been mobilised to site. The t eam will be actively involved in the testing and commissioning of the plant. 53

perForManCe reView By CHieF exeCuTiVe oFFiCer (continue) I n FY 2014, the plant recorded an availability factor of 67.37 percent and overall plant efficiency of 33.61 percent. For the year, the plant supplied 10,715.77 GWh to the national grid. K apar Power Plant has been equipped with Electrosatic Precipitator (“ESP”) to meet the regulatory particulate emission limits imposed by DOE and has also been certified to the ISO 14001 environmental certification. Its 300-hectare ash pond area has become a safe haven for more than 60 species of migratory birds plying the East Asian-Australian Flyway during the annual migratory season. I NTERNATIONAL ASSETS Malakoff has a 12.0 percent effective stake in the S huaibah Phase 3 Independent Water and Power Project (“IWPP”), which is located near Jeddah i n the Kingdom of Saudi Arabia. The project is our first overseas venture and consists of a 3x300 MW crude oil-fired power plant and a 880,000 m /day Multi-Staged Flash Distillation Unit for the 3 desalination of sea water. The project was executed on a Build, Own and Operate (“BOO”) basis under a 20-year Power and water Purchase Agreement (“PWPA’) with the Water and Electricity Company of S audi Arabia. I n its fourth or fifth year of operation, the plant S ouk Tleta Independent Water Project (Algeria) continued to perform well in line with expectations. During the year under review, it recorded an T he Group made its maiden foray into the North availability factor of 92.7 percent and 89.6 percent African region with an effective 35.7 percent stake f or power generation and water production i n the Souk Tleta Independent Water Project. The 3 r espectively. 200,000 m /day plant is located in Wilaya of Tlemcen in Algeria and utilises reverse osmosis technology to desalinate sea water. Since achieving Commercial S huaibah Phase 3 Expansion Independent Water P roject (Saudi Arabia) Operation Date (“COD”) in April 2011, Malakoff has invested significant resources to improve We expanded our market share in the water t he plant’s performance. This paid off in FY 2014, production business with an 11.9 percent (effective) when the plant achieved an availability factor of i nterest in the Shuaibah Expansion Project Company 76.9 percent, which is a notable improvement from L td. The Shuaibah Phase 3 Expansion Independent t he previous year. Water Project has a capacity of 150,000 m /day and 3 deploys reverse osmosis technology to desalinate s ea water. Since its commissioning in 2009, the plant has a commendable performance record achieving an availability factor of 96.4 percent in F Y 2014. 54 MALAKOFF CORPORATION BERHAD Annual Report 2014

concluded a project finance loan agreement with three Japanese financial institutions. The successful closing of the financial arrangement signals the Group’s re-entry into the Sultanate of Oman. Under a Water Purchase Agreement (“WPA”) with the Oman Power and Water Procurement Co, the project is expected to deliver up to 191,000 m /day of water 3 f or a term of 20 years. Macarthur Wind Farm (Australia) Al Hidd Power Generation and Water Desalination Plant (Bahrain) T he acquisition of a 50.0 percent interest in the Macarthur Wind Farm heralds the Group’s first With a 40.0 percent stake, the Al Hidd Independent v enture into the renewable energy (“RE”) market Water and Power Plant stands to date as the as well as the Australian continent. The Macarthur Group’s largest overseas investment. Comprising Wind Farm is located in the state of Victoria and is t hree phases, the gas-fuelled plant has a total t he largest wind farm in the Southern Hemisphere. power generation capacity of 929 MW and water Completed in January 2013, the wind farm recorded 3 production capacity of 410,000 m /day, using the an availability factor of 97.9 percent for the year Multi Stage Flash and Multi Effect Desalination under review. process. During the year in review, the plant had an availability factor of 95.4 percent for power T he state-of-the-art Macarthur Wind Farm features generation and 96.4 percent for water production. 140 Vestas V112 – 3.0 MW wind turbines, the largest installed in Australia. With a capacity of 420 MW, this Al Ghubrah Independent Water Project (Sultanate i s sufficient to power more than 220,000 average- of Oman) sized homes in Victoria and reduce 1.7 million Malakoff is part of a consortium awarded a t onnes of green house gases each year. This is in contract to build, own and operate the Al Ghubrah l i ne with the Australian Government’s Renewable I ndependent Water Project in the Sultanate of E nergy Target of 20.0 percent of Australia’s electricity Oman. In July 2013, the consortium successfully comes from renewable resources, by 2020. 55

perForManCe reView By CHieF exeCuTiVe oFFiCer (continue) operation & Maintenance Malakoff’s portfolio of power generation and Prai Power Plant water production assets is complemented by its T he Prai Power Plant is a combined cycle plant s trong O&M capabilities. The Group offers O&M consisting of one Gas Turbine, one Heat Recovery services through our wholly-owned Malakoff S team Generator and a unique single shaft P ower Berhad (‘MPB”) and Teknik Janakuasa configuration that provides reliable, efficient and Sdn Bhd (“TJSB”). MPower services the Group’s low-emission power supply to the national grid. power plants in Malaysia, while TJSB’s client base During FY 2014, an annual scheduled maintenance i ncludes associates, a joint-venture as well as was carried out on critical components of the t hird-party clients for both local and overseas. We plant, including the Gas Turbine and Heat Recovery have 19 years of O&M experience and a proven S team Generator. t rack record of operating different power plants, i ncluding CCGT, OCGT and coal-fired plants as SEV and GB3 Power Plants well as multi-stage flash desalination plants, reverse osmosis plants and multi-effect distillation and The SEV and GB3 power plants, collectively known as co-generation plants. Our systematic approach t he Lumut Power Plant, continued to demonstrate its t o O&M performance improvement is centred proven reliability. Key performance indicators include on enhancing capability development as well the average equivalent availability factor, unscheduled as striving for continual improvements with the outage rate and average capacity factor. aim of propelling our asset performance towards s ustainable, world-class standards. T anjung Bin Power Plant T he Tanjung Bin Power Plant continued to play a pivotal role as an anchor plant supplying power to DOMESTIC O&M BUSINESS t he national grid. Improvement works were carried T he Group has invested in cutting-edge O&M out at the plant’s boiler system in early 2014 to meet tools and methodology such as Reliability-Centred higher energy demand from the coal-fired plant Maintenance (“RCM”) and Root-Cause Analysis and cope with the complexities of utilising various ( “RCA”) in striving for continuous improvements. coal types from Indonesia, Australia, South Africa Several projects were undertaken in FY 2014 to and Russia. During the year, a total of 5.89 million enhance the plants’ capability and reliability, which metric tons of coal were delivered to the plant, i ncluded an upgrading of the compressor, fogging of which 5.98 million metric tons were consumed as s ystem, battery charger and other components. f uel for energy production. To meet high reliability and availability targets, major maintenance and inspection activities were I n FY 2014, the plant’s average capacity factor also undertaken. i ncreased to 83.22 percent, which translated i nto 15,308 GWh of energy delivered to TNB. The equivalent availability factor for FY 2014 was 83.96 percent, while the unscheduled outage rate was r ecorded at 4.0 percent. 56 MALAKOFF CORPORATION BERHAD Annual Report 2014



The year in review also saw modification works carried operations in Algeria, Kingdom of Saudi Arabia out to increase the capacity of the coal unloading and Kuwait. In 2014, TJSB through its subsidiary, TJSB f acility to improve vessel turnaround time. It will also Middle East Limited, has successfully mobilised its cater to the future needs of the adjacent Tanjung Bin personnel for the 1200 MW Azzour South CCGT, E nergy Power Plant presently under construction. Kuwait following a newly extended O&M contract with Alghanim International General Trading and For the coming FY 2015, a series of major scheduled Contracting Co.W.L.L. Through another subsidiary, overhauls involving an accumulated total of 210 P T Teknik Janakuasa, the company has also days will be executed at all three boiler systems. This mobilised personnel for the 2x60 MW CFPP in will include major modification and replacement Banten, Indonesia. Personnel will soon be mobilised works at the reheater outlets and economiser following progress made with our consortium fi nless tubes to further enhance the reliability and partner to secure an O&M contract for the Al performance of the plant’s boiler generating units. Ghubrah 190,000 m per day Water Desalination 3 P lant in Oman. I NTERNATIONAL O&M BUSINESS As part of its expansionary strategy, TJSB will continue Starting out as a domestic player back in 2004, to participate in international O&M bidding exercises Malakoff has successfully secured and executed either independently or with its partners in the O&M contracts with numerous third-party clients, MENA, SEA and South Asia regions. notably in the MENA region. The breadth and depth of our experience cover O&M services for coal- f i red, CCGT and OCGT power plants, provision MAINTENANCE, REPAIR of technical, simulator and audit training and AND OVERHAUL SERVICES overhaul services. The expansion of the Group’s I n 2013, Malakoff announced a major alignment O&M business also serves as an entry strategy to of its business units to consolidate its position as a f amiliarise ourselves with a new market or region leading IPP in Malaysia and the region. Resulting before committing to any capital investment. The f rom the exercise, Malakoff has launched a new involvement of Malakoff in the O&M activities through its wholly-owned subsidiary, TJSB, continued from its 58 MALAKOFF CORPORATION BERHAD Annual Report 2014

l i ne of business, namely Maintenance, Repair and During FY 2014, one of notable achievements Overhaul (“MRO”) services that will be undertaken of TSG was the implementation of a Capital by TJSB Services, a wholly-owned subsidiary of TJSB. Expenditure (“CAPEX”) initiative to optimise costs. I t s proposals for capacity improvements at the T JSB Services offer maintenance and repair L umut Power Plant have enabled it to sustain its s olutions for a wide range of power-related main declared capacity up to the end of its PPA in equipment and its supporting auxiliaries. The range 2027. Another outcome of TSG’s CAPEX initiative is of services include major and minor overhaul of t he launch of a Reverse Engineering Platform that t hermal and gas plants and engineering field has contributed significantly towards cost savings s ervices. The company also provides a cost-effective f or maintenance works carried out at the Prai and solution for customers requiring Original Equipment T anjung Bin Power Plants. TSG also contributed Manufacturer (“OEM”) support. t owards the recovery programme for the Tanjung Bin Power Plant by proposing design changes to t he plant’s boiler system in areas such as burner TECHNICAL SUPPORT GROUP modifications, pressure parts assessments and Malakoff’s expanding O&M activities are r eplacement works. complemented by its Technical Support Group ( “TSG”), which has been tasked to review relevant i nternal processes and recommend improvements t o achieve performance targets. 59

perForManCe reView By CHieF exeCuTiVe oFFiCer (continue) RELIABILITY AND PERFORMANCE GROUP the ISO quality certification bodies. These audits ensure the efficacy of the Group’s procurement The primary role of the Reliability and Performance Group (“RGP”) is to provide consistent, effective procedures and processes, which are benchmarked and efficient support to all Malakoff locally- against internationally accepted best practices. operated plants. This is to deliver compliance t o the Group’s Policy on Health, Security, Safety T he Malakoff Group Procurement and warehouse and the Environment (“HSSE”), ensure operational procedures have been revised and approved by excellence and optimise thermal and commercial the Chief Executive Officer in January 2014 to further performance towards attaining the overall business enhance the procurement process and incorporate objectives of Malakoff. MCB’s requirements. T he establishment of the Group Contract and I n fulfillment of its mandate, some of the activities of RPG in FY 2014 were focused on P rocurement Unit (“GCPU”) under MPB has ensuring the consistent implementation of O&M centralised some of the processes, notably those tools and methodologies such as Reliability r elated to CAPEX procurement. Meanwhile, the year Centred Maintenance (“RCM”), Condition Based i n review saw a new initiative to enhance our Vendor Maintenance (“CBM”) and Root Cause Analysis Document and Management Portal (“VDMP”). (“RCA”). The thermal performance of both the Lumut Called the Procurement Request for Information and Prai Power Plants was also closely monitored ( “RFI”), it allows registered vendors to know upfront by RPG deploying a Plant Performance Model via the portal of our procurement requirements. based on the Gate Cycle Programme, a powerful This will allow vendors to solicit information prior to and flexible engineering tool to understand and submitting their quotations or proposals. predict changes in a plant’s performance. RPG also assisted the HSSE Department in the ISO 14001 and The RFI initiative will increase the pool of potential OHSAS 18001 certification exercise for MPB. v endors for selection and make the procurement process more transparent and competitive. With t he impending introduction of the Goods and RPG continued to leverage on the capabilities of MaCNet, the Information Portal servicing the Malakoff Service Tax (“GST”) in April 2015, there will be some Group. Through the Action Items Management i mplications to the procurement process. A sub- ( “AIM”) integrated tool, we are able to track and committee for procurement has therefore been manage all items related to plant operations that f ormed to look at the affected processes and to r equire action. This has contributed towards a more work with the main committee and the appointed efficient and timely execution of action items. AIM consultant. This is to ensure readiness of our has also facilitated the sharing of information from procurement staff and the procurement processing s afety incident reports to all relevant parties so s ystem come 1 April 2015. t hat valuable lessons can be learnt by all and necessary action taken to prevent a recurrence. F or FY 2014, MPB procurement at plant and headquarters has resulted in savings of around RM35.0 million through various initiatives like price CONTRACTS AND PROCUREMENT negotiations, competitive bidding, comparisons MANAGEMENT against budget, among others. Under the duty exemption initiative, we managed a cost avoidance T he effective management of supply chain of about RM20.0 million, whereby more than 90.0 management is critical to the successful operations percent of our imported materials were exempted and management of the Group’s assets, contributing f rom payment of duty. to overall profitability. This is reinforced by internal audits undertaken in-house, as well as other management audits such as those mandated by 60 MALAKOFF CORPORATION BERHAD Annual Report 2014





Powering Growth T he emerging development of our portfolio requires tremendous amount of natural resources that could never surpass Malakoff’s human energy, where the spirit of our people ingenuity and teamwork is powering growth.



electricity distribution & Chilled water supply Malakoff’s wholly-owned subsidiary, Malakoff Utilities y ear. The spike in demand was attributable mainly Sdn Bhd (“MUSB”) has been licensed by the Energy t o increased occupation rates of buildings. With Commission to operate an electricity and chilled construction activities ongoing, the upward trend is water business in the Kuala Lumpur Sentral (KL projected to continue in the coming years. Sentral) Development Area for a period of 21 years. Since 2000, MUSB has been supplying electricity to I n the Annual Satisfaction Survey, MUSB achieved all the buildings in the development hub on an 91.0 percent score in the Customer Satisfaction Index, exclusive basis. surpassing the targeted 80.0 percent. The survey took i nto account the respondents’ experience in the MUSB supplies chilled water for air conditioning critical areas of customer care, billing and payment, from its district cooling plant, which is located operational and technical competence and within the development area. Since November 2001, enquiries and complaints. From the results, MUSB is i t has established an unblemished track record making every effort to redress perceived weaknesses of supplying chilled water to the Plaza Sentral and improve overall customer satisfaction. Office Towers. To meet the growing requirements of KL Sentral, the capacity of the cooling plant MUSB is also adopting a more personalised has been increased to 17,000 refrigerant tons. approach to engaging its customers. To this end, MUSB’s customers now include the Nu Sentral Retail a Customers’ Week was organised in June and Mall, 348 Sentral’s Office Tower and Residential December 2014, providing a platform for customers Apartments and Excellent Bonanza’s Office Towers t o raise any questions or concerns with regard to and Hotel. their accounts. As at year-end 2014, MUSB had a customer base of Moving forward, MUSB will continue to actively explore 1,982 accounts for both electricity and chilled water opportunities to extend its business beyond KL Sentral. distribution. During the year under review, power I t is also weighing the prospects of embarking on demand within KL Sentral peaked at 45.76 MW, new ventures as a multiple utility provider. compared to 38.57 MW recorded in the previous 65

perForManCe reView By CHieF exeCuTiVe oFFiCer (continue) CorporaTe serViCes I NFORMATION TECHNOLOGY I n the coming year, we will continue to explore avenues for data consolidation, analytics and I nformation Technology (“IT”) permeates almost every area of the Group’s operations. Our primary security measures as an ongoing effort in ensuring f ocus in FY 2014 was to harness the power of IT to business continuity. i mprove work processes, preserve data confidentiality and integrity and to automate business processes ENTERPRISE APPLICATIONS f or greater efficiency. We also addressed the IT i ssues in readiness for transitioning to a new Goods Enterprise Applications (“EA”) are business-oriented Service Tax (“GST”) regime that will come into effect t ools that are an integral part of the Group’s IT f rom 1 April 2015. s ystem. In FY 2014, EA’s key initiatives include the i mplementation of an IT solution to improve the I T also plays an important role in the Group’s efficiency of the Group’s warehouse operations. Business Continuity Planning (“BCP”) initiative, T he Mobile Warehouse Management (“MWM”) aimed at strengthening business resilience in the application allows instant data flow on the f ace of a disaster or disruption to business activities. movement of materials to the Enterprise Resource A disaster recovery plan for the Group’s IT system P lanning (“ERP”) system through the hand- r emains an integral part of the BCP initiative and held devices of personnel at every cycle of the t ests are conducted at regular intervals to ensure warehouse operations. This will include checking preparedness. inventory levels, updating stock count, issuing of s tock as well as transfers and returns, thereby During the year, our attention was also focused on facilitating real-time control over inventories. All i upgrading our Information Security Management nventories are bar-coded to ease data entry during System (“ISMS”), which is a systematic approach to s tock movements. managing sensitive data so that it remains secure. T o this end, we are upgrading our ISMS to conform Last year also saw the successful implementation t o the new ISO/IEC 27001:2003 standard, the best of an Asset Tagging and Tracking System (“ATTS”), k nown international standard that spells out the whereby each fixed asset is tagged with a bar-code r equirements for an effective ISMS. Another area of t o provide relevant asset information. Bar-coded concern is data redundancy, a condition created t ags simplify the process of asset count, taking only within a data base where the same data is stored in one-tenth of the time, besides being more accurate. two places. A software solution has been put in place ATTS also provides more efficient and cost-effective to ensure that data availability and reliability will not solution to track fixed asset inventories using wireless be compromised, especially for mobile users. s canning devices. 66 MALAKOFF CORPORATION BERHAD Annual Report 2014



p perForManCe reView By CHieF erForManCe reView By CHieF e exeCuTiVe oFFiCer (continue)xeCuTiVe oFFiCer (continue) With the impending introduction of the GST regime by the Malaysian Government, we are working t owards the objective of having Malakoff’s Systems, Applications & Products (“SAP”) software ready by J anuary 2015. The SAP will make it easier for the Group to fulfil GST filing requirements to the Royal Malaysian Customs. Besides capturing GST codes and amounts, the SAP is also a database for filling i n the GST-03 form, bad debt reporting, audit file reporting and line item reporting. RISK MANAGEMENT A Board Risk Committee (“BRC”) was set-up in November 2014 in acknowledgement of the growing i mportance of the risk management function in s afe guarding the interests of the Company and i ts shareholders. The principal role of the BRC is to provide an effective oversight of the Group’s risk appetite, risk management function and practices. 68 MALAKOFF CORPORATION BERHAD Annual Report 2014

At the same that the BRC was established, the Board T o enhance the structure of the Group’s risk also approved the Enterprise Risk Management Policy management practices, a Corporate Digital and Framework (“ERMPF”) which effectively supersedes Assurance module was employed in the ERMS to t he Risk Management Policy and Procedures Manual ensure that the score card owners, risk owners, adopted in 2008. The new policy and framework control owners and action plan owners provide i s based on ISO 31000:2009 Risk Management – assurance with respect to the status of all material Principles and Guidelines codified by the International r i sks, controls and management actions. Organisation for Standardisation (“ISO”). During the year under review, a total of 56 risk- r elated activities were organised which included a series of risk assessment sessions, reviews and t rainings organised across the Group. As at 31 December 2014, a total of 453 risks are registered i n the Enterprise Risk Management System (“ERMS”), of which 91.61 percent of these risks are rated l ow, meaning that they are being monitored and managed by routine procedures. 69

perForManCe reView By CHieF exeCuTiVe oFFiCer (continue) HEALTH, SAFETY, SECURITY & ENVIRONMENT (“HSSE”) At Malakoff, we believe that a concern for HSSE issues is ultimately a good business practice and we work hard to conduct our business to ensure no harm to the health and safety of people and have no unforeseen i mpacts to the environment. We believe our HSSE aspirations are achievable and during the year under r eview, the Group extended its commitment to HSSE by raising standards in all these areas. We are continually enhancing our HSSE initiatives by integrating and strengthening existing systems and procedures. The Group has a non-tolerance stance on safety violations, and over the years we have striven to improve our performance in Occupational Health and Safety (OSH) by inculcating a safety-oriented mindset not only among our employees but also contractors. The goal is to reduce the number of accidents and i njuries at the workplace until we attain the ultimate goal of Zero Lost Time Incidents. L OST TIME INJURY FREQUENCY RATE YEAR L PP PPP T BPP MPB HQ MUSB T4 PROJECT 2014 55,343 3,441,648 2,762, 119 486,720 295,185 18,100, 000 T otal Accumulative Safe Man Hrs worked since Last LTI 25,141, 015 L ost Time Injury Frequency Rate 0.08

Among our stable of power plants, the Prai Power Plant was the star performer in FY 2014 with a total of 3,441, 648 man-hours with no LTIs reported during t he period. For the Group as a whole, we improved our Lost Time Injury (LTI) frequency in FY 2014 rate t o 0.08, compared to 0.28 recorded the previous y ear. Since the last Lost-Time Injury (LTI) reported i n February 2014, the Group recorded 25, 141, 015 million accumulative safe man-hours worked. T o drive a safety-conscious mindset, the Group’s Competency Base Assessment Modules (“CBA”) were revisited during the year. The CBA provides a comprehensive HSSE competency management r eference and it is the responsibility of senior management to cascade, discuss and deliberate t he various facets of process and behavioral safety down the line. T he Group also leverages on the Malakoff OHS Management System to manage HSSE risks and ensure that operations are conducted in compliance with the HSSE regulatory requirements. I n ensuring the effective implementation of OHSMS, a Mandatory Control Framework has also been put i n place to strengthen HSSE governance throughout the Group. We also review the Group HSSE Risk Register on a r egular basis. The Risk Register is a dynamic tool t hat provides an overview of the Group’s risk status, t aking stock of the context of past incidents, plant modifications and amendments to the Group’s HSSE standards, among other things. It enables us to identify key risks and our capabilities to address them effectively. From time to time, a HSSE assurance exercise is also carried out by SIRIM, QHSE I nternal Auditors and other agencies to provide an i ndependent assessment on the effectiveness of HSSE controls that are in place. The findings are presented to the Management of Malakoff. Moving forward, Malakoff will continue to focus on i mplementing key risk management strategies and initiatives throughout the Group. It is a moral obligation we owe our employees, customers, constituencies, the public at large and indeed to ourselves. 71

perForManCe reView By CHieF exeCuTiVe oFFiCer (continue) OUTLOOK & PROSPECTS Several major forces will drive the global outlook for 2015. In particular, the sharp decline in oil prices s ince mid-2014 will support global activity and help offset some of the headwinds to growth in National Electricity Consumption oil-importing countries. Overall, global growth is Malaysia’s electricity consumption is projected to expected to rise moderately, to 3.0 percent in 2015. grow at a Compound Annual Growth Rate (“CAGR”) (Source : Global Economic Prospects, January 2015, of 9.7 percent between 2014 and 2018. Among the World Bank) In the 2015 Budget, the Malaysian main drivers of growth will be the nation’s expanding economy has been projected to expand by GDP in the ongoing transformation of Malaysia between 5.0 percent and 6.0 percent in 2015. i nto a high-income nation by 2020. Power supply ( Source : Economic report 2014/2015 page 37) As demand in the Iskandar Development Region is Malaysia is an oil exporter, the slide in oil prices has expected to expand at a CAGR of 4.3 percent compelled the Government to announce specific between 2010 and 2020. The Government also plans and proactive measures to align the Malaysian t o establish five new economic growth corridors to economy with the new developments. promote free trade. To meet the expected increase i n demand, the Energy Commission of Malaysia While volatility persists in the economic environment, plans to increase Peninsular Malaysia’s power Malakoff has never been so well positioned for generation capacity by an additional 10,923 MW f uture dynamic growth. What I have seen since t o 11,323 MW between 2014 and 2020. coming on board has also convinced me of the t remendous underlying strength of Malakoff and MENA Electricity and Water Consumption t he business we are in. Looking to FY 2015 and t he years ahead, our plans are in place to pursue Beyond Malaysia, electricity and water consumption emerging opportunities in several key markets that i n the MENA region is set to grow to keep pace will take the Group to the next level. with economic and population growth as well 72 MALAKOFF CORPORATION BERHAD Annual Report 2014

ACKNOWLEDGEMENTS At the end of the day, the way to success is t hrough our people. Malakoff’s prime assets are the intellectual and creative capabilities of our people. Our people are defined by a set of common values – Integrity, Teamwork, Innovation, Excellence and Harmony – qualities that differentiate us from our i ndustry peers. In a challenging year, I am especially impressed by how well Malakoff people have pulled t ogether as a team to deliver commendable growth and maintain our momentum in the marketplace. as increasing urbanisation. Electricity and water consumption is forecasted to expand by 9.4 percent and 2.1 percent respectively between 2014 We have come a long way, but as a Company and 2018. Saudi Arabia, Bahrain, Algeria and the with ambitious plans for the future, a lot remains to Sultanate of Oman have plans to expand electricity be done. I look forward to working with this team and water capacity to meet the growing demand. as together we look forward to a dynamic and brighter future for Malakoff. Electricity Consumption in Southeast Asia Electricity consumption in SEA is expected to grow at a CAGR of 7.9 percent from 2014 to 2018, with increasing urbanisation, liberalisation of the power I thank all of you. generation market and abundant availability of fuel. Electricity Consumption in Australia In Australia, the electricity sector will develop organically to register a CAGR of 3.1 percent between 2014 and 2018. With the Government’s emphasis on renewable energy, wind power DATO’ SRI SYED FAISAl AlBAR generation is projected to grow at a CAGR of around 25.5 percent over the next seven years. Chief Executive Officer 73



E ngaging T omorrow B y actively participating to resolve community concerns that remain as relevant to our business, Malakoff stays aligned to societal needs by understanding and listening to considerations that is engaging tomorrow.

CorporaTe responsiBiliTy Malakoff has always lived up to its long-held mission of balancing profitability with a social conscience. Our commitment to Corporate Social Responsibility (“CSR”) is underpinned by the establishment of the Malakoff Community Partnerships in 2009 as the Group’s flagship CSR platform. We have also CSR Framework to reinforce our mission t o be an active and responsible participant of the community at l arge. Holistic CSR is something that all of us at Malakoff practise on a daily basis and we never take it for granted, investing significant resources to improve our programmes and ensure its relevance. Our efforts to develop meaningful CSR agendas, policies and i nitiatives have won the Group numerous awards and accolades over the years and FY 2014 was no exception. We were the winner of two prestigious awards. The first was the Anugerah Langkawi, the most prestigious and authoritative environmental accolade in Malaysia. T he Group also won the National Occupational Safety and Health E xcellence Award 2014, from the Department of Occupational S afety and Health (“DOSH”) 76 MALAKOFF CORPORATION BERHAD Annual Report 2014



WORKPLACE DEVELOPMENT s ome 128 in-house programmes organised by the T raining Department. A Toastmaster Programme was Our people are key elements of the Group’s s trategic assets. As we open a new chapter of also introduced in November to enhance public dynamic growth, the capacity to deliver results s peaking and presentation skills of employees. would rest largely on the 960 men and women that Owing to its resounding success, this has become make up our workforce. For FY 2014, the human a monthly feature on the training calendar. r esource emphasis was aimed at sustaining the Group’s growth over the long-term in attainment Performance Management of its strategic mission and vision. To achieve this I n striving to be a high-performance organisation, objective, Malakoff has implemented a robust a systematic performance management and s uccession planning framework that will ensure a appraisal system has been put in place for all pipeline of talent to assume senior management l evels of staff. A Key Performance Index (“KPI”) has positions in the future. been established that will gauge the performance of employees against quantifiable measures in the Talent Attraction & Retention quest to meet strategic and operational goals. T hese indexes allow an employee’s performance T he Executive Development Programme has been r evamped so that the development and learning t o be assessed and rewarded accordingly, besides process of trainees can be fast-tracked before s erving as a means to motivate employees to t hey are absorbed into the workforce. A batch of achieve even more. nine promising hand-picked fresh graduates was provided with additional training, including exposure E mployee Engagement t o projects and hands-on work assignments. Even as we continue to grow, we recognise the i mportance of communications and social events as Training & Development i mportant tools to strengthen our relationship with our employees. To this end, “People Week” was introduced F or FY 2014, a budget of RM3.5 million was allocated to enhance the soft and functional skills during the year to proactively address employees’ of our talent pool. The training calendar included concerns on Human Resource related issues. As we 78 MALAKOFF CORPORATION BERHAD Annual Report 2014

become more aware of making the right choices Our contributions to local communities are not just towards a healthy and fulfilling lifestyle, several wellness donations and sponsorships, but also by actually programmes were also launched. They included a working with them, hand-in-hand. In the year under “ Medical Health & Wellness Programme” and “Breast review, Malakoff contributed to various community Cancer Awareness Month” aimed at helping our and educational programmes in the villages employees reach a state of optimal well-being. of Seberang Prai, Segari and Mukim Serkat. This includes providing financial assistance to 409 school children and varsity students, organising religious COMMUNITY DEVELOPMENT and sporting activities, supporting tuition, revision Wherever we operate, Malakoff aims to earn the and motivational classes, providing financial and r espect of the various communities in which we medical assistance to the needy and many more. operate as a valued neighbor and friend. While we continue to make sizeable donations each year to Malakoff also funded the construction of a RM2.6 many charities and worthy causes, our community million mosque in Kampung Sungai Dinar, Mukim outreach programmes take many forms and in Serkat, Pontian, Johor which is scheduled to be r ecent years, have included the development of completed in May 2015. local technical expertise, facilitation of community development as well as environmental conservation and protection. C ommunity Engagement Programmes At Malakoff, we recognise that local community engagement is imperative to the success of our business. Therefore, we are committed to retain this as an integral part of the way we operate and we will continue to invest in more meaningful platforms that will have positive impact on society. 79

CorporaTe responsiBiliTy (continue) T alent Development Programme T he Group’s foremost commitment has always been to education. This is in line with Malaysia’s vision to invest in human capital as a key enabler t o build a knowledge-intensive and high-income nation. As part of our efforts to ensure a sustainable pipeline of new talent for the industry, Malakoff has collaborated with Universiti Tenaga Nasional ( “UNITEN”) to develop the Malakoff-UNITEN Talent Acceleration Programme (“MUTAP”). For the year under review we hosted a total of 21 promising under-graduates from UNITEN. The year-long experiential programme has been designed to help undergraduates develop new skills through hands- MARKETPLACE DEVELOPMENT on experience as well as coaching sessions. Malakoff recognises the importance of During their stint in Malakoff, the students were also communications as a strategic tool to enhance its involved in various CSR activities and community relationship with its various publics. Our corporate projects. A batch of students worked closely with a website www.malakoff.com.my provides useful Non-Governmental Organisation (“NGO”) to set up information about the Company, including our plant nurseries and built bird houses in Bangsar, organisation structure, Board of Directors and our K uala Lumpur. Graduates from the Leadership business activities. It includes a media centre that Club established by Malakoff to spearhead youth allows access to the latest news, publications and l eadership at UNITEN, helped raise funds for an media clippings. Malakoff also produces an annual orphanage and gave the premises a face-lift. r eport which provides the Group’s financial results, performance review, strategic directions and its Flood Relief Efforts outlook and prospects. Caring comes naturally for the people of Malakoff As a Company built on performance, we subscribe and this was amply demonstrated when the worst t o the standards of quality in fulfillment of our f l oods in decades ravaged major parts of the responsibility to the market-place. In this regard all s tates in the east coast of Peninsular Malaysia our power plants have been accredited to quality i n the second half of December 2014. Within the management systems endorsed by the International MMC Group, some 146 employees and their direct S tandard Organisation. We are also committed to f amily members were also affected. Along with r esponsible HSE management practices in every other operating companies within the MMC Group, aspect of our operations. we joined our parent company in the flood relief efforts. A donation drive was organised among staff of the MMC Group, raising a total of RM46,300 ENVIRONMENTAL PRESERVATION A team comprising some 100 volunteers from all over the country was also mobilised to distribute Malakoff aims for sustainable development. much-needed emergency supplies and assist in I n meeting our business goals, we intend to t he clean-up efforts. In the post-flood assistance satisfy today’s requirements without eroding the programme, funds collected from the staff donation livelihoods of future generations. We continue to drive together with a contribution of RM2.0 million aggressively pursue waste minimisation and energy f rom the MMC Group of Companies, will be conservation opportunities, whilst reducing the disbursed to the flood-affected families to help carbon footprint of our operations. All our plants in them rebuild their lives. Malaysia have earned certification to ISO 14001, the f oremost internationally recognised environmental management standard. 80 MALAKOFF CORPORATION BERHAD Annual Report 2014

Outside of our plant operations, Malakoff’s green Marine Biodiversity Rehabilitation Programmes agenda includes proactive measures to conserve T ogether with the Ministry of Natural Resources and the rich bio-diversity of Malaysia in collaboration Environment, the Department of Marine Parks and with the relevant stakeholders. The many long-term the Department of Environment, Malakoff initiated projects we have taken under our wing are a true the Coral Rehabilitation and Giant Clam Restoration measure of our commitment to the environment. programmes in a bid to preserve and rehabilitate Malaysia’s unique marine ecosystem. Mangrove Planting Programme L aunched in 2009, the programme aims at T he Coral Rehabilitation Programme involves the preserving and restoring the eroding ecosystems construction of artificial coral reefs to serve as i n the coastal region around the location of marine habitats. Marine ecosystem awareness t he Group’s operations. Since then, some 37,000 s essions were also conducted at Pulau Redang, mangrove saplings have been planted in Johor P ulau Tioman and Pulau Mentinggi to educate and Penang, in collaboration with Johor National hospitality service providers and local communities P arks and Persatuan Nelayan-Nelayan Pantai Pulau on the importance of coral reef conservation. Pinang, respectively. Activities under Malakoff’s Giant Clam Restoration I n 2014, Malakoff participated in a replanting Programme in FY 2014 were held at Pulau Mentinggi, campaign organised by the Ministry of Natural off Johor. Going by its scientific name, the Tridacna Resources and Environment at the Tanjung Piai Gigas or giant clam is the largest living bivalve National Park, under the Sahabat Alam Sekitar mollusk and one of the most endangered clam programme. species. They are also among the most ecologically i mportant organisms in the coral reef, working as marine filters by taking in harmful waste nutrients and expelling clean water to the environment. 81

CorporaTe eVenTs HigHligHTs 15 FEBRUARY 2014 SAMBUTAN MAULIDUR RASUL AT TANJUNG BIN POWER PLANT Mukim Serkat village folks and speaker during the occasion. 22 FEBRUARY 2014 FRIENDLY BOWLING WITH TENAGA NATIONAL BERHAD B owling teams of Malakoff and TNB at the friendly game. 22 FEBRUARY 2014 MALAKOFF WINS NATIONAL OCCUPATIONAL SAFETY AND HEALTH ExCELLENT AWARD 2014 Malakoff staff with the award and certificate from Department of Occupational Safety and Health (DOSH). 82 MALAKOFF CORPORATION BERHAD Annual Report 2014

10 MARCH 2014 QIBLAH DIRECTION SETTING FOR MASJID KG SG DINAR R epresentatives of Malakoff and Mukim Serkat with the certificate of Qiblah direction for Masjid Sg Dina. 11 MARCH 2014 KUMPULAN WANG AMANAH PENCEN VISITS TANJUNG BIN POWER PLANT Visitors from KWAP were given a site tour of Tanjung Bin plant. 29 MARCH 2014 MALAKOFF UNITEN TALENT ACCELERATION PROGRAM (MUTAP) GRADUATION DAY Graduates are enthusiastic with the certificate in hands. 01 APRIL 2014 MALAKOFF’S BOARD OF DIRECTORS VISIT TANJUNG BIN POWER PLANT Directors and Malakoff staff at t he coal control room during the site tour. 83

CorporaTe eVenTs HigHligHTs (continue) 07 APRIL 2014 SIGNING CEREMONY OF THE ACQUISITION OF PORT DICKSON POWER BERHAD Encik Habib Husin and Dato’ Ir. Jauhari Hamidi exchanging the documents. 18 APRIL 2014 NORTHERN REGION FRIENDLY BOWLING TOURNAMENT Bowlers receiving the winning prizes after the tournament. 06,07, 08 JUNE 2014 MALAKOFF SPORTS CARNIVAL AT LUMUT POWER PLANT The participants cheering at the end of the game. 84 MALAKOFF CORPORATION BERHAD Annual Report 2014

12 JUNE 2014 CERAMAH PERDANA ISRAK MIKRAJ Malakoff staff and folks from Kg Segari with the speaker, Ustaz Zamri Zainurdin. 13 JUNE 2014 FRIENDLY FOOTBALL WITH ENERGY COMMISSION (EC) T eams from Malakoff and EC exchanging the friendly souvenirs before the game starts. 26 JUNE 2014 MALAKOFF GIANT CLAM RESTORATION PROJECT Deputy Minister of NRE, Dato’ Sri Dr. James Dawos Mamit handing over the giant clam to a diver to be placed in Pulau Mentinggi. 85

CorporaTe eVenTs HigHligHTs (continue) 15 AUGUST 2014 MAJLIS HARI RAYA LUMUT POWER PLANT Staff and family members being served with delicious food. 20 AUGUST 2014 MAJLIS HARI RAYA PORT DICKSON POWER PLANT Staff and relatives enjoying the raya feast during the open house. 22 AUGUST 2014 MAJLIS HARI RAYA TANJUNG BIN POWER PLANT Malakoff’s guests having delightful raya feast. 86 MALAKOFF CORPORATION BERHAD Annual Report 2014

28 AUGUST 2014 MAJLIS HARI RAYA PRAI POWER PLANT Malakoff staff having a blast at the Raya open house. 29 AUGUST 2014 FRIENDLY BOWLING WITH ENERGY COMMISSION (EC) Bowlers of EC and Malakoff in high spirit before the start-off. 06 SEPTEMBER 2014 FRIENDLY FUTSAL TOURNAMENT WITH TENAGA NASIONAL BERHAD (TNB), ENERGY COMMISSION (EC) AND ECONOMIC PLANNING UNIT (EPU) Participants posing at the end of the tournament. 87

CorporaTe eVenTs HigHligHTs (continue) 11 SEPTEMBER 2014 POWERGEN 2014 T JSB participated in PowerGen 2014 held at KLCC Convention Centre. 01 NOVEMBER 2014 MALAKOFF RECEIVES ANUGERAH LANGKAWI 2014 Menteri Besar Kedah, Dato’ Seri Mukhriz Mahathir with representatives from NRE and Malakoff together with Anugerah L angkawi award. 11 NOVEMBER 2014 MALAKOFF POWER LPP WON 27 NOVEMBER 2014 PERAK ERT COMPETITON 2014 MANGROVE TREE PLANTING PROGRAM Malakoff staff shows excellent effort Malakoff, DOE and Rakan Alam Sekitar during the during the competition. Mangrove Tree Planting Program at Taman Negara T anjung Piai, Pontian. 88 MALAKOFF CORPORATION BERHAD Annual Report 2014

Financial Statements Directors’ Report 90 Statements of Financial Position 94 Statements of Profit or Loss and 96 Other Comprehensive Income Statements of Changes in Equity 98 Statements of Cash Flows 101 Notes to the Consolidated Financial Statements 1 04 Statement by Directors 225 S tatutory Declaration 2 25 I ndependent Auditors’ Report 226 89

Directors’ report for the year ended 31 December 2014 The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2014. PrinciPal activities The Company is principally engaged in investment holding activities, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. There has been no significant change in t he nature of these activities during the financial year. results Group Company RM’000 RM’000 Profit for the year attributable to: Owners of the Company 341,549 744,090 Non-controlling interests 71,295 – 412,844 744,090 reserves and Provisions There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements. dividends Since the end of the previous financial year, the Company paid: (i) an interim single-tier dividend of approximately 16.14 sen per ordinary share of RM1.00 each totalling RM56,707,996 in respect of the financial year ended 31 December 2014 on 8 April 2014. (ii) an interim single-tier preference dividend of RM1.00 per share totalling RM41,792,004 in respect of the fi nancial year ended 31 December 2014 on 8 April 2014. (iii) an interim single-tier dividend of approximately 28.46 sen per ordinary share of RM1.00 each totalling RM100,000,000 in respect of the financial year ended 31 December 2014 on 9 September 2014. T he final single-tier dividend recommended by the Directors in respect of the financial year ended 31 December 2014 is approximately 28.46 sen per ordinary share of RM1.00 each totalling RM100,000,000. 90 MALAKOFF CORPORATION BERHADALAKOFF CORPORATION BERHAD M Annual Report 2014

Directors’ report for the year ended 31 December 2014 (continued) directors of the comPany Directors who served since the date of the last report are: director alternate director YAM Tan Sri Dato’ Seri Syed Zainol Anwar Ibni Syed Putra Jamalullail (Chairman) (appointed on 1 December 2014) Dato’ Sri Che Khalib bin Mohamad Noh (resigned as Managing Director on 8 December 2014 and re-designated as Non-Independent Non-Executive Director on 9 December 2014) Datuk Muhamad Noor bin Hamid T an Ler Chin Datuk Ooi Teik Huat T an Sri Dato’ Seri Alauddin bin Dato’ Md Sheriff Datuk Idris bin Abdullah @ Das Murthy Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Wan Kamaruzaman bin Wan Ahmad Z alman bin Ismail K anad Singh Virk Craig Robert Martin (appointed on 7 January 2014) T an Sri Dato’ Wira Syed Abdul Jabbar bin Syed Hassan (Chairman) (resigned on 30 November 2014) directors’ interests in shares None of the Directors holding office at 31 December 2014 had any interest in the shares of the Company and of its related corporations during the financial year. directors’ benefits Since the end of the previous financial year, no Director of the Company has received nor become entitled t o receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest. There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in the Company or any other body corporate. issue of shares T here were no changes in the authorised, issued and paid-up capital of the Company during the fi nancial year. 91 91

Directors’ report for the year ended 31 December 2014 (continued) oPtions granted over unissued shares No options were granted to any person to take up unissued shares of the Company during the fi nancial year. other statutory information Before the financial statements of the Group and of the Company were made out, the Directors took r easonable steps to ascertain that: i . all known bad debts have been written off and adequate provision made for doubtful debts, and i i . any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: i . that would render the amount written off for bad debts, or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or i i. that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or iii. which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or i v. not otherwise dealt with in this report or in the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading. At the date of this report, there does not exist: i . any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or i i. any contingent liability in respect of the Group or of the Company that has arisen since the end of t he financial year. No contingent liability or other liability of any company in the Group has become enforceable, or is likely t o become enforceable within the period of twelve months after the end of the financial year which, in t he opinion of the Directors, will or may substantially affect the ability of the Group and of the Company t o meet their obligations as and when they fall due. I n the opinion of the Directors, the financial performance of the Group and of the Company for the fi nancial year ended 31 December 2014 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the i nterval between the end of that financial year and the date of this report. 92 92 MALAKOFF CORPORATION BERHADALAKOFF CORPORATION BERHAD M Annual Report 2014

Directors’ report for the year ended 31 December 2014 (continued) significant events The significant events during the year are as disclosed in Note 36 to the financial statements. subsequent events The subsequent events during the year are as disclosed in Note 39 to the financial statements. auditors The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors: …………………………………………………................................................ yam tan sri dato’ seri syed Zainol anwar ibni syed Putra Jamalullail Chairman ………………………………………………………….............................…… dato’ sri che Khalib bin mohamad noh Director K uala Lumpur Date: 6 February 2015 93 93

statements of financial position as at 31 December 2014 Group Company 31.12.2014 31.12.2013 1.1.2013 31.12.2014 31.12.2013 RM’000 RM’000 RM’000 RM’000 RM’000 Note Restated Restated non-current assets P roperty, plant and equipment 3 14,323,952 13,061,031 11,124,456 46,782 49,815 I ntangible assets 4 4,704,227 5,071,359 5,498,521 – – Prepaid lease payments 5 70,331 74,675 79,021 – – I nvestment in subsidiaries 6 – – – 8,134,741 8,134,741 I nvestment in associates 7 1,203,319 1,294,458 1,369,667 998,400 998,800 I nvestment in an equity accounted joint venture 8 57,885 51,230 47,433 – – F inance lease receivable 9 1,990,974 2,012,945 – – – Derivative financial assets 20 99,147 80,241 – – – Other receivables 11 114,793 126,939 139,083 – – Deferred tax assets 10 779,849 697,512 611,570 – 2,555 total non-current assets 23,344,477 22,470,390 18,869,751 9,179,923 9,185,911 current assets T rade and other receivables 11 1,304,283 1,266,268 1,490,171 1,254,606 889,540 I nventories 12 518,434 479,075 493,799 – – Current tax assets 272,469 310,817 210,560 35,889 31,209 Other investments 13 321,509 1,165,954 2,455,577 – – Cash and cash equivalents 14 3,574,900 2,375,783 2,698,393 592,994 134,585 total current assets 5,991,595 5,597,897 7,348,500 1,883,489 1,055,334 total assets 29,336,072 28,068,287 26,218,251 11,063,412 10,241,245 equity Share capital 15 355,523 355,523 355,523 355,523 355,523 Share premium 3,575,837 3,575,837 3,575,837 3,575,837 3,575,837 Reserves 15 61,274 156,811 1,492 840 840 (Accumulated losses)/ Retained profits ( 28,985) ( 172,447) ( 145,413) 4,140,210 3,596,959 Equity attributable to owners of the Company 3,963,649 3,915,724 3,787,439 8,072,410 7,529,159 Non-controlling interests 212,967 223,422 340,297 – – total equity 4,176,616 4,139,146 4,127,736 8,072,410 7,529,159 94 MALAKOFF CORPORATION BERHAD Annual Report 2014

statements of financial position as at 31 December 2014 (continued) Group Company 31.12.2014 31.12.2013 1.1.2013 31.12.2014 31.12.2013 RM’000 RM’000 RM’000 RM’000 RM’000 Note Restated Restated non-current liabilities L oans and borrowings 16 17,493,217 16,611,760 14,221,261 1,800,000 1,800,000 Employee benefits 17 74,907 67,415 73,216 12,347 10,225 Deferred income 18 2,811,196 2,608,222 2,338,602 – – Deferred tax liabilities 10 2,721,062 2,645,445 2,750,242 – – Derivative financial liabilities 20 167,338 31,762 162,750 – – total non-current liabilities 23,267,720 21,964,604 19,546,071 1,812,347 1,810,225 current liabilities T rade and other payables 19 975,514 934,116 1,435,326 1,178,655 901,861 Current tax liabilities 23,872 4,214 16,718 – – L oans and borrowings 16 734,262 931,625 1,041,897 – – Derivative financial liabilities 20 27,704 34,319 – – – Deferred income 18 130,384 60,263 50,503 – – total current liabilities 1,891,736 1,964,537 2,544,444 1,178,655 901,861 total liabilities 25,159,456 23,929,141 22,090,515 2,991,002 2,712,086 total equity and liabilities 29,336,072 28,068,287 26,218,251 11,063,412 10,241,245 The notes on pages 104 to 224 are an integral part of these financial statements. 95 95

statements of profit or loss anD other comprehensive income for the year ended 31 December 2014 Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Note Restated Revenue 21 5,594,484 4,717,419 991,336 3,689,158 Cost of sales ( 3,956,082) (3,503,949) – – gross profit 1,638,402 1,213,470 991,336 3,689,158 Other income 95,343 79,082 3,038 593 Administrative expenses ( 228,122) ( 265,262) ( 100,304) ( 126,547) Other operating expenses ( 234,231) ( 325,079) – – results from operating activities 1,271,392 702,211 894,070 3,563,204 F inance income 22 132,688 161,052 34,505 81,740 F inance costs 23 ( 911,242) ( 840,318) ( 169,212) ( 228,820) net finance costs ( 778,554) ( 679,266) ( 134,707) ( 147,080) Other non-operating income 60,979 – – – Share of profit of equity-accounted associates and a joint venture, net of tax 41,667 61,202 – – Profit before tax 595,484 84,147 759,363 3,416,124 I ncome tax (expense)/benefit 27 ( 182,640) 150,511 ( 15,273) ( 7,273) Profit for the year 24 412,844 234,658 744,090 3,408,851 other comprehensive income/ (expense), net of tax items that will not be reclassified subsequently to profit or loss 25 Remeasurement of defined benefit liability 17 413 2,433 ( 2,339) 505 items that may be reclassified subsequently to profit or loss 25 Cash flow hedge ( 78,095) 238,418 – – Share of loss on hedging reserve of equity-accounted associates ( 22,608) ( 57,230) – – F oreign currency translation differences for foreign operations 5,166 ( 25,869) – – ( 95,537) 155,319 – – 96 MALAKOFF CORPORATION BERHAD Annual Report 2014

statements of profit or loss anD other comprehensive income for the year ended 31 December 2014 (continued) Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Note Restated other comprehensive (expense)/ income for the year ( 95,124) 157,752 ( 2,339) 505 total comprehensive income for the year 317,720 392,410 741,751 3,409,356 Profit attributable to: Owners of the Company 341,549 161,533 744,090 3,408,851 Non-controlling interests 71,295 73,125 – – Profit for the year 412,844 234,658 744,090 3,408,851 total comprehensive income attributable to: Owners of the Company 246,425 319,285 741,751 3,409,356 Non-controlling interests 71,295 73,125 – – total comprehensive income for the year 317,720 392,410 741,751 3,409,356 earnings per ordinary share (rm) Basic 28 0.97 0.46 Diluted 28 0.87 0.41 The notes on pages 104 to 224 are an integral part of these financial statements. 97 97

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