the group’s pursuit of powering growth, echo as the nautilus shell in · 2017. 10. 27. · pt....

The nautilus shell depicts a timelessness that have remained unchanged through years of existence. Its ever evolving, and ever enlarging symmetry of chambers is a constant that is recognised by esteemed mathematicians as the finest natural example of the formulated logarithmic spiral, while its fundamental structure had stirred the imagination of renowned designers to be inspired in realising their past, present and future innovations.

The Group’s pursuit of powering growth, echo as the nautilus shell in continuously moving to the next stage. In every step, it elevates values, generates strength, delivers thrust, positions focus, and is conscious of impacts on the environment it operates in.

002 Malakoff Corporation BerhadAnnual Report 2013

insideContents

Businessreview

004GRoup FInAncIAl & peRFoRmAnce HIGHlIGHTs

006coRpoRATe pRoFIle

008coRpoRATe InFoRmATIon

009mAlAkoFF’s sHAReHoldeRs

010mAlAkoFF’s sTRucTuRe

direCtors’profile

014BoARd oF dIRecToRs

016BoARd oF dIRecToRs’ pRoFIle

ManageMentteaM

028oRGAnIsATIonAl sTRucTuRe

030memBeRs oF mAnAGemenTcommITTee

poweR GeneRATIon And wATeR desAlInATIon

goalCore Business

to Be a preMier gloBal power and water CoMpany

003

CorporateperforManCe

034cHAIRmAn’s sTATemenT

044peRFoRmAnce RevIewBy AcTInG cHIeF execuTIve oFFIceR

• Asset Performance

• Operation & Maintenance

• Electricity Distribution and chilled water supply

• Ventures

CorporateresponsiBility

074coRpoRATe ResponsIBIlITy

• Community development

• Workplace development

• Environmentalpreservation

• Marketplace development

highlights finanCial stateMents

082coRpoRATe evenTs HIGHlIGHTs

089FInAncIAl sTATemenTs

CritiCal strengths• Project development & execution

• Plant operations – license to operate

• Financial discipline

• Good governance

Mission• Aspiring to become employer of choice

• Deliver superior shareholder value

• Sought after as a “partner”

• Sustaining “best in class” operating discipline

• Staying anchored to “good governance”

• Earning respect as a “good corporate citizen”

Corporate values• Integrity

• Teamwork

• Innovation

• Excellence

• Harmony


group financial& performance highlights

FY2012RM’000 Restated

fy2013rM’000

Revenue 5,587,608 4,717,419

Profit before tax 706,093 94,214

PATMI 469,314 171,600

Paid-up capital 351,314 351,344

Shareholders’ funds 3,821,351 3,959,703

Total assets employed 26,252,163 28,112,266

Per share (sen) earnings 134 49

Dividend (gross) per share 41 42

Net assets per share (RM) 10.88 11.27

Profit After tAx & Minority interest–63.33%

RM172 million

totAl Assets eMPloyed+7.09%

RM28,112 million

net AssetsPer shAre+3.58%

RM11.27

revenue-15.59%

RM4,717 million

shAreholders’ funds+3.63%

RM3,960 million

eArning Per shAre–63.43%

49 sen

005

REVENUERM Million

5,588 4,717

PROFITAFTER TAX &

MINORITYINTEREST

RM Million

RM Million

RM Million

469 172

SHAREHOLDERS’FUNDS

3,821 3,960

TOTAL ASSETSEMPLOYED

26,252 28,112

EARNINGSPER SHARE

Sen

134 49

NET ASSETSPER SHARE

RM

10.88 11.27

2012 2013

2012 2013

2012 2013

2012 2013

2012 2013

2012 2013


Corporateprofile

MAlAkoff CorPorAtion BerhAd(“MAlAkoFF”) IS oNe oF The leADINg INDePeNDeNT PoweR AND wATeR PRoDuceRS bASeD IN ASIA wITh A woRlD-clASS RePuTATIoN. ouR coRe buSINeSS INcluDeS PoweR geNeRATIoN, wATeR DeSAlINATIoN AND oPeRATIoN & MAINTeNANce SeRvIceS. IN MAlAYSIA, we owN AN eFFecTIve geNeRATIoN cAPAcITY oF 5,350 Mw coMPRISINg oF 6 PoweR STATIoNS ThAT RuN oN gAS, oIl AND coAl.

007

Malakoff’s power generation assets are held through a nuMBer of suBsidiaries and assoCiate CoMpanies:

• SEV Power Plant through a 93.75 percent equity interestin Segari energy ventures Sdn bhd (“Sev”)

• GB3 Power Plant through a 75.0 percent equity interest ingb3 Sdn bhd (“gb3”)

• Prai Power Plant through its wholly-owned subsidiary PraiPower Sdn Bhd (“PPSB”)

• Tanjung Bin Power Plant through a 90.0 percent equityinterest in Tanjung Bin Power Sdn Bhd (“TBPSB”)

• Port Dickson Power Plant through a 100 percent equityinterest in Port Dickson Power Berhad, via its whollyowned subsidiary Hypergantic Sdn Bhd*

• Kapar Power Station through a 40.0 percent equityinterest in kapar energy ventures Sdn bhd (“kev”)

• On the international front, we own an effective capacityof 689.6 MW of power and 358,206 m3/day of waterdesalination. These projects are located in Saudi Arabia,bahrain, Algeria and Australia.

furtherMore, Malakoff provides serviCes through its wholly-owned suBsidiary CoMpanies:

• Operation and maintenance (“O&M”) services throughwholly-owned Malakoff Power Berhad (“MPower”), andTeknik Janakuasa Sdn Bhd (“TJSB”)

• Electricity distribution activities through Malakoff UtilitiesSdnBhd(“MUSB”)awholly-ownedsubsidiary,thatcurrentlysupplies centralised chilledwater anddistributes electricityto the landmark Kuala Lumpur Sentral development (“kl Sentral”)

• Project management services for in-house and externalprojects throughMalakoffEngineering (“MESB”),awhollyowned subsidiary ofMalakoff.

AtMalakoff,weaimtoworktogetherwithallstakeholdersfor productive partnerships. we believe that long-term partnerships re-enforce our success. As an asset-centered organisation,wemaximise thevalueofassetswemanagefor our shareholders and partners. we do this by fully understanding theelementsof cost, riskandperformanceunique to the environment inwhichwe operate.

* Effective 30 April 2014


Corporateinformation as at 12 February 2014

direCtorstan sri dato’ wira syed aBdul JaBBar Bin syed hassan Non-Independent Non-executive chairman

dato’ sri Che khaliB Bin MohaMad noh Managing Director

datuk MuhaMad noor Bin haMid Non-Independent Non-executive Director

Cindy tan ler Chin Non-Independent Non-executive Director

wan kaMaruzaMan Bin wan ahMadNon-Independent Non-executive Director

ooi teik huat Non-Independent Non-executive Director

tan sri dato’ seri alauddin Bin dato’ Mohd sheriffIndependent Non-executive Director

datuk idris Bin aBdullahIndependent Non-executive Director

datuk dr. syed MuhaMad Bin syed aBdul kadir Independent Non-executive Director

kanad singh virk Non-Independent Non-executive Director

zalMan Bin isMailAlternate to wan kamaruzaman bin wan Ahmad

Craig roBert Martin Alternate to Kanad Singh Virk

CoMpany seCretariesyeoh soo Mei (MAIcSA 7032259)

nishaM@aBu Bakar Bin ahMad (MAIcSA 7043879)

audit CoMMittee MeMBersdatuk dr. syed MuhaMad Bin syed aBdul kadirchairman

datuk idris Bin aBdullah

tan sri dato’ seri alauddin Bin dato’ Mohd sheriff

ooi teik huat

reMuneration CoMMittee MeMBers tan sri dato’ wira syed aBdul JaBBar Bin syed hassanchairman

wan kaMaruzaMan Bin wan ahMad

datuk dr. syed MuhaMad Bin syed aBdul kadir

noMination CoMMittee MeMBerstan sri dato’ seri alauddin Bin dato’ Mohd sheriff chairman

datuk idris Bin aBdullah

datuk MuhaMad noor Bin haMid

registered offiCeground Floor, wisma budimanPersiaran Raja Chulan, 50200 Kuala LumpurTel : +603-2071 1000Fax : +603-2026 2378

auditorskPMg

prinCipal BankerMAlAYAN bANkINg beRhAD

CoMpany addressLevel 10, Block 4, Plaza SentralJalan Stesen Sentral 5, 50470 Kuala LumpurTel : +603-2263 3388Fax : +603-2263 3333Website: www.malakoff.com.my

009

Malakoff’sshareholders as at 28 February 2014

seasaf

sCi asia

kwap

aoa

MMC

epf

2.5% seAsAf Power sdn Bhd (“seAsAf”)

6.5% standard Chartered il & fs Asia infrastructure growth fund Company Pte limited (“sCi Asia”)

10% kumpulan Wang Persaraan (diperbadankan) (“kWAP”)

22.90% Anglo-oriental (Annuities) sdn Bhd (“AoA”)*

28.10% MMC Corporation Berhad (“MMC”)

30% employees Provident fund (“ePf”)

* AOA is awholly-owned subsidiary ofMMC


Malakoff’sstructure As AT 6 mAy 2014

eleCtriCitydistriBution

100% Malakoff Utilities Sdn Bhd

operation and MaintenanCe serviCes

100% Malakoff Power Berhad

100% Tanjung Bin O&M Berhad

100% PDP o&M Sdn bhd (formerly known as Sime Darby Biofuels Sdn Bhd)

100% Teknik Janakuasa Sdn Bhd

100% Natural Analysis Sdn bhd vII

100% TJSB Services Sdn Bhd

100% TJSB International Limited

100% TJSB International (Shoaiba) Limited

20% Saudi-Malaysia operation &

Maintenance Services company limited

20% Al-Imtiaz operation & Maintenance

company limited

100% TJSBMiddle East Limited

31.5% Muscat city Desalination operation and

Maintenance company llc

100% TJSB Global Sdn Bhd

49% Hyflux-TJSB Algeria SPA

95% PT. Teknik Janakuasa

I Dormant

II Malakoff’s effective equity interest of 20percent and 12 percent in SAMAwec and SWEC respectively is held via Malakoff GulfLimited which holds 40 percent equity interestin MSCSB which in turn holds 50 percentequity interest in SAMAWEC. SAMAWEC holds60 percent equity interest in SWEC.

lll Malakoff’s effective equity interest of 11.7percent in SEPCO is held via Malakoff GulfLimited which holds 40 percent equity interest

in MSCSB which in turn holds 50 percentequity interest in SAMAWEC. SAMAWEC holds60 percent in SEHCOwhich in turn holds 97.5percent equity interest in SEPCO.

IV Malakoff’s effective equity interest of 43.4percent in SPHL is held via Malakoff Technical(Dhofar) Limited which holds a direct 43.4percent equity interest in OTPL which in turnholds 100 percent equity interest in SPHL.

V Malakoff’s effective equity interest of 35.7percent inAAS is held viaMADSBwhich holds

70percentequity interest inTDICwhichinturnholds 51 percent equity interest in AAS.

VI Malakoff’s effective interest of 40 percent inHPC is held via MHHCL which holds 57.1percent equity interest in MSHHCL which inturn holds 70 percent equity interest in HPC.

vII ceased operation.

vIII MwM holds 50% participating interest in the unincorporated joint venture of theMacarthur wind Farm.

powergeneration

93.75% Segari energy ventures Sdn bhd

75% gb3 Sdn bhd

100% Prai Power Sdn Bhd

90% Tanjung Bin Power Sdn Bhd

40% kapar energy ventures Sdn bhd

100% hypergantic Sdn bhd

100% Port Dickson Power Berhad

100% Tanjung Bin Energy Sdn Bhd

100% Tanjung Bin Energy Issuer Berhad

011

offshore

100% Spring Assets limited I

100% Malakoff Capital (L) Ltd I

100% Malakoff International Limited (“MIL”)

100% Malakoff Gulf Limited

40% Malaysian Shoaiba consortium Sdn bhd

(“MScSb”)

20% Saudi-Malaysia water & electricity

company limited (“SAMAwec”) II

12% Shuaibah water & electricity company limited (“Swec”) II

12% Shuaibah expansion holding company limited (“Sehco”) III

11.7% Shuaibah Expansion Projectcompany limited (“SePco”) III

100% Malakoff Technical (Dhofar) Limited

43.4% oman Technical Partners limited (“oTPl”) Iv

43.4% Salalah Power Holdings Limited (“SPHL”) Iv

100% Malakoff AlDjazair Desal Sdn Bhd (“MADSB”)

70% Tlemcen Desalination Investment company SAS (“TDIc”)

35.7% Almiyah Attilemcania SPA (“AAS”) v

others

100% Tuah utama Sdn bhd

20% Lekir Bulk Terminal Sdn Bhd

54% Desa kilat Sdn bhd

100% Malakoff R&D Sdn Bhd

100% Malakoff Oman Desalination Company Limited

45% Muscat city Desalination company S.A.o.c

100% Malakoff Hidd Holding Company Limited vI

57.1% Malakoff Summit Hidd Holding Company Limited vI

40% Hidd Power Company B.S.C (“HPC”) vI

100% Pacific goldtree Sdn bhd

100% Skyfirst Power Sdn Bhd

100% wind Macarthur holdings (T) Pty. limited

100% wind Macarthur (T) Pty. limited

100% wind Macarthur Finco Pty. limited

100% Malakoff Australia Pty. Ltd.

100% Malakoff Holdings Pty. Ltd.

100% MalakoffWindMacarthur Holdings

Pty. ltd.

100% MalakoffWindMacarthur Pty. Ltd.

(“MwM”) vIII

proJeCtManageMent

100% Malakoff Engineering Sdn Bhd

100% MESB ProjectManagement Sdn Bhd l

Pursuingexcellence


Boardof directors

tAn sri dAto’ WirA syed ABdul JABBAr Bin syed hAssAnnon-Independent non-executive chairman

dAto’ sri Che khAliB Bin MohAMAd nohmanaging director

Cindy tAn ler Chinnon-Independent non-executive director

ooi teik huAtnon-Independent non-executive director

dAtuk MuhAMAd noor Bin hAMid non-Independent non-executive director

kAnAd singh virknon-Independent non-executive director

seated from l to r standing from l to r

015

dAtuk idris Bin ABdullAhIndependent non-executive director

dAtuk dr. syed MuhAMAd Bin syed ABdul kAdirIndependent non-executive director

tAn sri dAto’ seri AlAuddin Bin dAto’ Mohd sheriffIndependent non-executive director

WAn kAMAruzAMAn Bin WAn AhMAdnon-Independent non-executive director

CrAig roBert MArtinAlternate to Kanad Singh Virk

zAlMAn Bin isMAilAlternate to Wan Kamaruzaman binwan Ahmad


Board ofdirectors’ profile

DATo’ SRI che khAlIb bIN MohAMAD NohmAnAGInG dIRecToR

TAN SRI DATo’ wIRA SYeD ABDUL JABBAR BIn SyED HASSAnnon-IndependenT non-execuTIve cHAIRmAn

017

tan sri dato’ wira syed aBdul JaBBar Bin syed hassan, Malaysian, aged 74, was appointed to the Board as non-Independent non-Executive Chairman on 1 January 2012.he also chairs the Remuneration committee.

he obtained a bachelor of economics degree from university of western Australia in 1963 and a Masters of Science degree in Marketing from University of newcastle-Upon-Tyne, Unitedkingdom in 1971.

He started his career on 1 January 1964 as theAssistantDistrictofficer/Assistant Development officer/Assistant land officer in KedahStateofGovernmentwherehewas tasked tohandle landmatters, supervise district development projects and assist thestate economic development planning.

A year later, he joined Bank negara Malaysia as an Economistbefore leaving to join theFederalAgriculturalMarketing (“FAM”)as an Economist on 1 January 1966. In FAM, he establishedamongstothers, thePadiandRiceMarketingBoard (“Padi&Riceboard”) and its pilot scheme for the purchase, grading, storage, milling and distribution of padi and rice in Tanjong Karang andSabak Bernam. On 1 January 1967, he joined Padi & Rice Boardas theManager of the Tanjong Karang & Sabak Bernam Padi &RiceMarketing Scheme. During his three years’ tenure in Padi &Rice board, he assisted in amongst others, the drafting of the law for the setting up of a Lembaga Padi dan Beras negara totake over the function of the Padi & Rice Board and to extendcoveragetoall states inMalaysia,with thepower to regulate themarketing of padi and rice.

on 31 December 1970, he left Padi & Rice board as its general Manager, to pursue his Masters of Science degree in marketingin the University of newcastle-Upon-Tyne, United Kingdom.

After obtaining his Masters degree, he was appointed theExecutive Secretary for the Federal Agricultural MarketingAuthority (“FAMA”) on 1 January 1972. He held that positionuntil 31 December 1973 before leaving FAMA to assume the position of Senior economist and Acting Secretary-general of the Association of Natural Rubber Producing countries (“ANRPc”), representing the government in the ANRPc. he held the position until 31 December 1979 before being appointed as the chief executive officer of the kuala lumpur commodity exchange from 1980 to 1996. he then assumed the position of the executive chairman of the Malaysia Monetary exchange from 1996 to 1998 and the executive chairman of the commodity and Monetary exchange of Malaysia from 1998 to 2000.

Tan Sri Dato’ Wira Syed Abdul Jabbar is currently the Chairmanof MMC Corporation Berhad, Tradewinds (M) Berhad, PadiberasNasional berhad and Aliran Ihsan Resources berhad. he resigned as Director/Chairman of the Board of Directors of TradewindsPlantation Berhadwith effect from 31 December 2013.

dato’ sri Che khaliB Bin MohaMad noh, Malaysian, aged 49,was appointed asManagingDirector on 1 July 2013.

Dato’ Sri che khalib is a member of the Malaysian Institute of Accountants (CA, M) and also a Fellow of the Association ofchartered certified Accountants (FccA, uk) united kingdom.

Dato’SriCheKhalibbeganhiscareerwithMessrsErnst&youngin 1989 and later joined Bumiputra Merchant Bankers Berhad.Between 1992 and 1999, he served in several companies withintheRenongGroup.This includes involvement inProjekLebuhrayautara Selatan (“PluS”), hbN Management Services Sdn bhd, Renong Overseas Corporation Sdn Bhd and Marak Unggul SdnBhd,which is theconsortium responsible for themanagementofkeretapi Tanah Melayu berhad.

In June 1999, Dato’ Sri Che Khalib joined Ranhill Utilities Berhadas chief executive officer. he then assumed the position of Managing Director and chief executive officer of kub Malaysia Berhad.Dato’SriCheKhalibwasthenappointedasthePresident/chief executive officer of Tenaga Nasional berhad (“TNb”) on 1 July 2004 where he served TnB for eight years until thecompletion of his contract on 30 June 2012. During his tenureat TNb, Dato’ Sri che khalib drove many improvement initiatives that resulted in TNb becoming one of the success stories in the glc Transformation Programme. he shaped and set the corporate strategies for TnB when he came up with its 20 yearstrategic plan in September 2005.

At present, Dato’ Sri che khalib is a group Managing Director of MMc corporation berhad. Prior to his current role, Dato’ Sri che khalib served as chief operating officer of Finance, Strategy and Planning at DRb hIcoM berhad.

Dato’ Sri Che Khalibwas previously amember of the Board andthe executive committee of khazanah Nasional berhad from year 2000 to 2004. He also served as a Board member withinthe united engineers Malaysia (“ueM”) group of companies and Bank Industri & Teknologi Malaysia Berhad. He currently sits ontheBoardofMMCCorporationBerhad,ZelanBerhad, JohorPortberhad, MMc engineering group berhad, Aliran Ihsan Resources Berhad, Pos Malaysia Berhad, Bank Muamalat (M) Berhad, Gas Malaysia Berhad, Port Dickson Power Berhad and severalprivate limited companies.

Dato’ Sri che khalib has received many accolades in recognition of his strong leadership including being named Malaysia’s “ceo of the Year” in 2008, the highest level of recognition given to corporate leaders inMalaysia,organisedbythenewStraitsTimesandAmericanExpress.Hewasalsonamed“CEOof theyear”atthe inaugural Asia Power and Electricity Awards 2010 and wasthe recipient of the Lifetime Achievement Award at the AsianUtility Industry Awards 2012.


Board of directors’ profile (continued)

cINDY TAN leR chINnon-IndependenTnon-execuTIve dIRecToR

DATuk MuhAMAD NooR bIN hAMIDnon-IndependenTnon-execuTIve dIRecToR

019

datuk MuhaMad noor Bin haMid, Malaysian, aged 63, was appointed to the Board as non-Independent non-ExecutiveDirectoron13July2009.Heisalsoamemberofthenominationcommittee.

he obtained a bachelor of Science (hons) in Mechanical engineering from Sunderland Polytechnic, england in 1977 and a Post graduate Diploma in gas engineering from the Institute of gas Technology in chicago, Illinois, uSA in 1980. he has also attended the Management Program at the wharton business School of Management, university of Pennsylvania, uSA.

he has held numerous positions during his 20 years of service in PeTRoNAS and PeTRoNAS gas Sdn bhd, including heading the Peninsular Gas Utilisation (“PGU”) II project team and Headof PGU Pipeline Operations. He also worked in OGP TechnicalServices Sdn Bhd, a joint venture company between PETROnASandnovacorpCorporationofCanada,wherehewas theGeneralManager of the Pipeline Division. His expertise has taken himto overseas assignments mainly in Sudan where he was theProject Director for the Muglad Basin Oil Development Project.In 2000, he was appointed as the Chief Operating Officer ofProjass Engineering Sdn Bhd, a Class A Bumiputera constructioncompany. He joined Gas Malaysia Berhad in 2003 as ChiefOperating Officer and was subsequently appointed as Chiefexecutive officer in February 2004. he currently sits on the board of directors of kapar energy ventures Sdn bhd.

He has more than 30 years of direct working experience inthe oil and gas industry ranging from project planning andimplementation, operation, consulting and contracting.

MadaM Cindy tan ler Chin, Malaysian, aged 54, was appointed to the Board as non-Independent non-ExecutiveDirector on 9 August 2007.

She obtained an Honours Degree in Economics, majoring instatistics, from universiti kebangsaan Malaysia in 1984. In 1991, she obtained a certified Diploma in Accounting and Finance, accorded by the chartered Association of certified Accountants. In 1995, she attended the wharton-National University of Singapore Banking Programme.

She joined the Employees Provident Fund Board (“EPF”) in1984. Since then she has served in the Finance Department, TreasuryDepartment, FundManagement FunctionandwasHeadof Fixed Income Investment for EPF until June 2009 when shewas appointed to her current position as the Chief Investmentcompliance officer of ePF.


ooI TeIk huATnon-IndependenT non-execuTIve dIRecToR

kANAD SINgh vIRknon-IndependenT non-execuTIve dIRecToR


021

Mr kanad singh virk, an American citizen, aged 48, was appointed to the Board as non-Independent non-ExecutiveDirector on 16 December 2013.

he is the Managing Director of Standard chartered Private Equity, based in Singapore and a Director and the Chiefoperating officer (“coo”) of the Standard chartered Il & FS Asia Infrastructure Growth Fund (“SCI Asia”). He has 20 yearsof experience, including private equity investing, mergers andacquisitions, project finance and financings in a broad rangeof industries. In his capacity as the coo of ScI Asia, he leads the Fund’s functions related to legal, compliance, finance and accounting, as well as being actively involved in the execution,management and exit of several investments.

PriortojoiningStandardCharteredin2008,hewaswithGoldmanSachs for 10 years, where he held several senior positions,including the coo of Private wealth Management – eMeA and earlier, Asia, and was a member of the Asia ex-Japan Mergersand Acquisitions group in the Investment Banking Division. He previously worked as a lawyer in mergers and acquisitionsand energy project finance at Cravath, Swaine &Moore in newyork and later as Skadden Arps in Los Angeles, Hong Kong,london and vienna.

Hereceiveda J.D.degree (magnacum laude) fromtheUniversityof Minnesota Law School (United States) and a B.A. degreewith a joint major in Mathematical Economics and History fromPomona college (united States).

Mr ooi teik huat,Malaysian, aged54,was appointed to theBoard as non-Independent non-Executive Director on 1 January2012. he is also a member of the Audit committee.

he obtained a bachelor Degree in economics from Monash university, Melbourne, Australia in 1984 and is a member of Malaysian Institute of Accountants and cPA Australia.

He began his career with Messrs Hew & Co. (now known asMessrs Mazars), chartered Accountants in 1984. After leaving MessrsHew&CoinJune1989,hejoinedMalaysianInternationalMerchantBankersBerhad(nowknownasHongLeongInvestmentBankBerhad)untilAugust1993.HesubsequentlyjoinedPengkalanSecurities Sdn Bhd (now known as PM Securities Sdn Bhd) inAugust 1993 as head of corporate Finance, before leaving in September1996 to setupMeridianSolutions SdnBhdwhereheis presently a director.

he also sits on the boards of MMc corporation berhad, Tradewinds (M) Berhad, Tradewinds Plantation Berhad, DRB-HICOM Berhad, Zelan Berhad, Johor Port Berhad, gas Malaysia berhad and several private limited companies.



DATuk IDRIS bIN AbDullAhIndependenT non-execuTIve dIRecToR

TAN SRI DATo’ SeRI AlAuDDIN bIN DATo’ MohD SheRIFFIndependenT non-execuTIve dIRecToR

023

tan sri dato’ seri alauddin dato’ Mohd sheriff, Malaysian, aged66,was appointed to theBoard as IndependentNon-executive Director on 11 December 2012. he is also the chairman of the Nomination committee and a member of the Audit committee.

Hewas admitted as anUtter Barrister of theHonourable Societyof Inner Temple, london, having been called to the bar of england & wales in 1970.

He held various posts in the legal and judicial service since1971. He started his career with the Judiciary as a Magistratein Bukit Mertajam in 1971 and in Kangar in 1972. Thereafter,he was appointed as President of the Sessions Court in SungaiPetani, Kuantan and Taiping. In 1977, he was appointed asSenior FederalCounselwith the IncomeTaxDepartment and theAttorneyGeneral’sChambers. In June1979,hewas seconded toPeTRoNAS carigali Sdn bhd as its Secretary cum legal Advisor. Thereafter, he was appointed as the Legal Advisor to the Stateof Johor in October 1980. In April 1982, he took the office ofthe Legal Advisor of negeri Sembilan. He was again appointedas the Legal Advisor to the state of Johor in June 1983.Hewasappointed as the chairman of the Advisory board in the Prime Minister’s Department since 1 June 1989.

TanSriDato’SeriAlauddinwasappointedasJudicialCommissionerof the high court of Malaya in kuala lumpur on 1 February 1992 and wastransferredtotheHighCourtofMalayainJohorinthesameyear. He was later elevated as the Judge of the High Court whereinhe had served in the High Courts of Johor, Kangar and AlorStar before being elevated to the court of Appeal in April 2001. After serving for about three years in the court of Appeal, he was elevated to the Federal Court ofMalaysia on 12 July 2004.During his tenure as a Judge of the Federal Court, he hadthe occasion of carrying out the duties and functions of the President of the court of Appeal from 15 August 2006 until 4September2007.On5September2007,hewasappointedasthe Chief Judge of Malaya and on 18 October 2008, he wasappointed as the President of the court of Appeal until his retirement in August 2011.

he also sits on the board of AFFIN holdings berhad.

datuk idris Bin aBdullah, Malaysian, aged 56, wasappointed to the board as Independent Non-executive Director on 11 December 2012. he is also a member of the Audit committee and Nomination committee.

He graduated fromUniversitiMalaya in 1981with a LLB. (Hons)degree.His career started in1981wherehe read in chambersatMessrs. Ting Tung Ming Esq in Sibu, Sarawak. In 1982, he wasadmitted to The Roll of Advocates of The high court of Malaya inSabahandSarawak.HealsoservedasResidentLawyeratTing& Company, Sibu, Sarawak from 1981 to 1983, the In-HouseLegal Advisor of Sarawakian Group of Companies from 1984 to1985 and has been with Messrs. Idris & Company Advocates,Kuching, Sarawak since 1985 and is currently a Senior Partner inMessrs. Idris & Company Advocates, Kuching, Sarawak.

his experience in the corporate sector began in 1979 as a partner/shareholder in a group of bumiputera companies in Sibu, Sarawak. From 1995 to date, he is an Advisor to a numberof Sarawak companies engaged in construction and building,motor trading, recreation club and educational institution. he was also a director/shareholder of a Bumiputra PKK Class A/CIDBgroup 7 company engaged in a number of government building/infrastructure projects. FromSeptember 2002 to September 2005,hewas the Director andChairman of Kuantan Flourmills Berhad.

He was appointed as a Commission Member of the CompaniesCommission ofMalaysia (“CCM”) effective July 2012 and is alsoa commission Member of the Malaysian communications and Multimedia commission.

Datuk Idris bin Abdullah also holds several key positionsin Malaysia and Singapore, namely as a chairman/Director of Magnus energy group ltd (listed on the Singapore SeSDAQ), and chairman/Director of Xian leng holdings berhad (listed on bursa Securities). he also sits on the boards of several private limited companies.



wAN kAMARuzAMAN bIN wAN AhMADnon-IndependenT non-execuTIve dIRecToR

DATuk DR. SYeD MuhAMAD bIN SYeD AbDul kADIRIndependenT non-execuTIve dIRecToR

025

datuk dr. syed MuhaMad Bin syed aBdul kadir, Malaysian, aged 67,was appointed to the Board as Independent Non-executive Director on 11 December 2012. he also is the chairman of the Audit committee of the board, and a member of the Remuneration committee of the board.

He graduated with a Bachelor of Arts (Hons) from UniversitiMalaya in 1971. he obtained a Masters of business Administration from the university of Massachusetts, uSA, in 1977 and proceeded to obtain a PhD (business Management) from virginia Polytechnic Institute and State university, uSA in 1986. In 2005, he obtained aBachelorofJurisprudence(Hons)fromtheUniversityofMalaya.he obtained the certificate in legal Practice in 2008 from the Malaysian Professional Legal Board. He was admitted asan Advocate and Solicitor of the high court of Malaya in July 2009, and obtained the Master of Law (Corporate Law)degree from Universiti Teknologi MARA in november 2009. In June2011,hebecameamemberof theChartered InstituteofArbitrators, united kingdom and in May 2012, he became the fellow of the said Institute.

He started his career in 1973 as Senior Project Officer, Schoolof Financial Management at the National Institute of Public Administration (“INTAN”) and held various positions before his final appointment as Deputy Director (Academic). In November 1988, he joined the Ministry of Education as Secretary of Highereducation and thereafter assumed the post of Deputy Secretary (Foreign and Domestic Borrowing, Debt Management), FinanceDivision of Federal Treasury. Between June 1993 to June 1997, he joined the board of directors of Asian Development Bank,Manila, Philippines, first as alternate executive Director and later as an Executive Director. In July 1997, he joined the Ministryof Finance as Secretary (Tax Analysis Division) and subsequentlybecame the Deputy Secretary general (operations) of Ministry of Finance.Prior tohis retirement,hewasSecretaryGeneral,Ministryof human Resources from August 2000 to February 2003.

He is the Chairman of CIMB Islamic Bank Berhad, CIMBMiddle east bSc and cIMb-Principal Islamic Asset Management Sdn bhd. he is also a Director of cIMb group Sdn bhd, CIMBBankBerhad,CIMBGroupHoldingsBerhad,BursaMalaysiaSecurities berhad, euro holdings berhad, Solutions engineering Holdings Berhad, BSLCorporation Berhad, ACR ReTakaful Berhad(formerlyknownasACRReTakafulSEABerhad),SunLifeMalaysiaAssurance Berhad and Sun LifeMalaysia Takaful Berhad. He alsoholds directorships in a number of private companies.

enCik wan kaMaruzaMan Bin wan ahMad, Malaysian, aged55wasappointed to theBoardon21May2013.He isalsoa member of the Remuneration committee.

he is currently the chief executive officer of kumpulan wang Persaraan(Diperbadankan)(“KWAP”)sinceMay2013.Heobtaineda Bachelor of EconomicsMajor inAnalytical Economics from theuniversity of Malaya from 1978 to 1981. Previously, he served as the general Manager of Treasury Department at employees’ Provident Fund from october 2007 until April 2013.

He started his working career with Malayan Banking Berhad(“Maybank”) since 1981, mostly in Treasury Department withtwooverseaspostingsatHamburg,GermanyasChiefDealerandLondon, UK as TreasuryManager. He resigned fromMaybank inJune 1994when hewas servingMaybank, London.

After leaving Maybank, he served in several companies withinthe Affin Group, as the CEO of Affin Moneybrokers Sdn Bhdfrom July 1994 to August 2003, as the CEO of Affin TrustManagement Sdn bhd from September 2003 to November 2005. He was also a Board member of Affin Futures Sdn Bhdfrom September 1999 to December 2002 and a board member of Affin Fund Management Sdn Bhd from January 2004 toNovember 2005.

HeleftAffinGroupinnovember2005tojoinKemuncakFacilitiesManagement Sdn bhd as executive Director-Finance and served the company briefly from December 2005 till September 2006. Hethen joined IzomaSdnBhdasExecutiveDirector-Financefromoctober 2006 till August 2007.

he is a board member of valuecap and chairman of ivcap Management Sdn Bhd. He is also a director of Prima Ekuiti UK,a subsidiary company of kwAP.



zAlMAN bIN ISMAIlAlTeRnATe To wAn kAmARuzAmAn BIn wAn AHmAd

cRAIg RobeRT MARTINAlTeRnATe To kAnAd sInGH vIRk

027

Mr Craig roBert Martin, a british citizen and a Singapore Permanent Resident, aged 44, was appointed to the Board asAlternate Director to Mr Kanad Singh Virk on 7 January 2014.Hewaspreviously theAlternateDirector toMrAndrewyee from12 December 2012 to 16 December 2013.

He has a Masters of Business Administration with distinctionfrom INSeAD and a Masters degree in electronic engineering from the University of york, United Kingdom.

He has lived and worked in South East Asia for 21 years andduring the last 14 years he has been responsible for originating, structuring and executing numerous private equity deals forinstitutional investors. he also developed, structured and raised funds from institutional and retail sources.

He joinedCapAsia inmid-2010wherehe is aManagingDirectorand head of Fund for the South east Asian Strategic Assets Fund (“SeASAF”) and the capAsia ASeAN Infrastructure Fund III (“cAIF III”). he is a member of the Investment committees for SeASAF and cAIF III and sits on the board of directors of the general Partner for capAsia’s Islamic Infrastructure Fund.

Prior to CapAsia, he was with Prudential Asset Management (now known as Eastspring Investments), a wholly-ownedsubsidiary of Prudential Plc for five years, where he served asan Investment Director of Prudential vietnam Fund Management Company. Before joining Prudential, he was with StandardChartered Private Equity Pte Limited, a wholly-owned subsidiaryof Standard Chartered Bank Plc, from its inception where heserved as an Associate Director.

he is a member of the Singapore Institute of Directors and sits on several of capAsia’s boards and also holds a number of external non-executive director roles. he is a non-executive director of Myanmar Investments International limited, a public company listed on the London Stock Exchange (“AIM”).

enCik zalMan Bin isMail,Malaysian,aged43,wasappointedas the Alternate Director to Encik Wan Kamaruzaman bin WanAhmad on 21 May 2013. He was a board member since 18March 2013 before he resigned on 21 May 2013 to assume his current position on the Board as the alternate director to Encikwan kamaruzaman bin wan Ahmad.

he is currently the Director of Alternative Investment Department, KumpulanWangPersaraan(Diperbadankan)(“KWAP”)since2011. his responsibilities include maximising long term returns through investments in private equity, property and infrastructure bothlocal and overseas. He has over 16 years work experienceincluding heading Sime Darby Property’s Strategy and business Development Department. He was also the Head of ValueManagement and head of Investor Relations for the Sime Darby group. he spearheaded the valuation and closing team for the mega plantation merger between Sime Darby, Guthrie andGolden Hope. He had worked as a stock broking analyst atDresdner Kleinwort Benson and credit analyst at Rating AgencyMalaysia. he obtained a bachelor’s Degree (hons) in business Administration (Finance) from eastern Michigan university, uSA.

organisational structure028 Malakoff Corporation Berhad

Annual Report 2013

Asset development

Information & communications

Technology (“ICT”)

maintenance, Repair & overhaul

department (“MRO”)

operation & maintenance

(“O&M”)

Managing direCtor

Chief eXeCutive

offiCer

Chief operating

offiCer

Malakoffutilities sdn Bhd

(“MUSB”)

Asset management division

operation & maintenance

division*

Teknik Janakuasa Sdn Bhd (“TJSB”)

* Malakoff Power Berhad (“MPower”)

029

Internal Audit & Riskmanagement

ventures divisionGroup Finance and Accounts division

legal departmentcorporate Affairs and

external Relations department

Human Resource and Admin department


Members ofManagement Committee

031

From l to r

nordin kAsiM senior vice president, operation & maintenance division

hABiB husinActing chief executive officer and chief operating officer

rusWAti othMAn chief Financial officer/ senior vice president, Group Finance & Accounts division

AzhAri sulAiMAnsenior vice president, ventures division

Mohd shokri dAudsenior vice president, Asset management division

generating our strength


Chairman’sstatement

Corporate developMentsThe Group continued to make further inroads into the MiddleEast and north Africa (“MEnA”) market when it successfullyled a consortium comprising Sumitomo corporation of Japan (“Sumitomo”) and Cadagua SA of Spain (“Cadagua”) to undertake the development and construction of the AlGhubrah IndependentWater Project in the Sultanate ofOman(“Al Ghubrah IWP”). A joint-venture company, Muscat CityDesalination Company SAOC (“MCDC”) was incorporated on 19January 2013 to oversee the project. The financing agreements,secured from the Bank of Tokyo-Mitsubishi UFJ Ltd (“MUFG”),Sumitomo Mitsui Banking Corporation (“SMBC”)and Japan Bankfor International Cooperation (“JBIC”), were signed on 26 July2013. The Al ghubrah plant is targeted for completion by October2014andwill supplyover191,000cubicmetresof freshwater per day over the next 20 years.

On 28 June 2013, Malakoff acquired the entire share capital ofthe Meridian Wind Macarthur Pty. Ltd. (now renamed MeridianHoldings) for around A$130 million (RM382.2 million). Followingthe acquisition, Malakoff now has a 50.0 percent stake inthe Macarthur Wind Farm, with the remaining stake held byMacarthur wind Farm Pty ltd. The Macarthur wind Farm is the largestwind farm in theSouthernHemisphere,with agenerationcapacityof420MWandcomeswitha long-termpowerpurchaseagreement, thus ensuring a stable income for Malakoff. Thisis the Group’s maiden foray into the Australian market andis part of our strategic road-map to build our asset portfolio, transforming the Group into a leading multinational power andwater producer.

While we are pleased with the progress made, we are stilldetermined to improve our overall performance. Malakoff takespride in delivering consistent outstanding performance and webelievewe could have done better.

Malakoff is in the business for the long-haul. In this respect, weare fortunate to be in an industry that is still rapidly expanding and the Group is well-positioned to seize opportunities for newgrowth coming its way. For these cogent reasons, I remainconvinced that we are primed for a new and exciting phase of growth.

on behalf of the board of Directors, it is my pleasure to present thisAnnualReportandAuditedAccountsofMalakoffatGroupandcompany level for the financial year ended 31 December 2013.

finanCial perforManCeFor the FY 2013, the group recorded a turnover of RM4.717 billion, a 15.6 percent decline from RM5.56 billion registered in Fy 2012. The decline was mainly attributed to a lower dispatchfactor recorded by the Tanjung Bin coal-fired plant as well aslower coal prices .

Group Profit After Tax and Minority Interest (PATMI) was RM172million, compared with RM469 million recorded in the previousyear. The 63.3 percent drop was mainly due to lower incomegenerated by Tanjung Bin. However, commendable performancescontinued to be achieved by our gas-fired plants at lumut and Prai.

dear stakeholders,MAlAkoFF coRPoRATIoN beRhAD (“MAlAkoFF”) cloSeD The YeAR uNDeR RevIew eNDeD 31 DeceMbeR 2013 (FY 2013) oN A SATISFAcToRY NoTe. coMMeNDAble PeRFoRMANceS weRe RecoRDeD bY SeveRAl oF The PoweR PlANTS oPeRATeD bY ouR whollY-owNeD SubSIDIARIeS AS well AS ouR ASSocIATe coMPANIeS. hAvINg evolveD InTO An InTERnATIOnAL POWER AnD POWER COMPAny, THEMAJORITyoF ouR oveRSeAS INveSTMeNTS hAve PeRFoRMeD IN lINe wITh eXPecTATIoNS. oN The STReNgTh oF ouR PeRFoRMANce, MAlAkoFF wAS Able To DelIveR ReveNue oF RM4.717 bIllIoN FoR FY 2013.

035

tAn sri dAto’ WirA syed ABdul JABBAr Bin syed hAssAnchairman


Chairman’s statement (continued)

THe sTAR peRFoRmeRs weRe ouR plAnTs AT lumuT And pRAI, wITH THe FoRmeR AcHIevInG A HIGH equIvAlenT AvAIlABIlITy FAcToR oF 91.57 peRcenT, wHIle THe pRAI poweR plAnT sTAnds on RecoRd As BeInG one oF THe mosT eFFIcIenT nATuRAl GAs-Fuelled plAnTs In mAlAysIA.

037

fy 2013 highlightsgood operating results. The star performers were our plantsat Lumut and Prai, with the former achieving a high equivalentavailability factor of 91.57 percent, while the Prai Power plantstands on record as being one of the most efficient natural gas-fuelledplants inMalaysia.Ourassociate-ownedpowerplantsalsoperformed well, with Kapar Power Plant delivered some 11,770gwh to the National grid achieving commendable availability, efficiency and capacity factors and Port Dickson Power Plantachieved a high availability factor of more than 98.0 percent. our overseas assets also turned in a satisfactory performance, notably the Shuaibah Phase 3 Independent Water and PowerProject, which achieved high availability factors of 90.25 percentand 90.60 percent for power generation and water productionrespectively.

technical support group. The Technical Support group (“TSg”) is playing a key role in bolstering the Group’s operation andmaintenance(“O&M”)activities.Duringtheyearinreview,varioustechnical and assessment studies and audits were undertaken atkeyplantswithintheGroup.TSGhasalsoexpandeditsclientbaseto includeexternalparties, suchas theDhofarPowerCompany inSalalah, Oman; the Azzour north IndependentWater and PowerProject (“Azzournorth IWPP”)andSoukTleta IndependentWaterProject (“Souk Tleta IWP”).

reliability and performance group. The group has also re-established the Reliability and Performance group (“RPg”) under the o&M Division. The principal role of RPg is to provide consistent, effective and efficient support to all Malakoff locally-operated plants. It is also leading and coordinating the group’s efforts to sustain its certification to the ISo Management Systems, which include ISO 9001, ISO 14001 and OHSAS 18001. Inmoving towards a culture of excellence, one of the key enablersis through certification to internationally recognised qualitymanagement systems.

occupational health and safety.Inthekeyareaofoccupationalhealth and safety, the Group improved on its Lost Time InjuryFrequency Rate (“LTIFR”) by 100 percent, achieving zero LostTime Injuries (“LTI”) in 2013, with 8,839,322 accumulated hoursworked without LTI. All safety indicators recorded significantimprovements throughout the year, demonstrating the efficacy of the raft of measures in place.

enterprise risk Management. Integral to the improvement processes that are implemented group-wide, we recognise theimportanceof Enterprise RiskManagement toprotect our interestsand those of our stakeholders. ERM is a systematic approach toidentify, assess, report and monitor all risks associated with theGroup. All risks that have been identified are recorded, analysed,mitigated, monitored and reported to the Risk ManagementCommitteeandsubsequentlyescalatedtotheBoardfordeliberationand decision.


tanJung Bin turnaround planThe boilers improvement plan at Tanjung Bin has been activated toresolve the critical issues. The turnaround plan had been implemented and completed in March 2014. with the complet ion of the turnaround plan, Tanjung Bin is expected to meet its target capacity of 2100Mw.

we are bringing the entire resources of the group to ensure the success of the turnaround plan. Taking the lead is the O&M Division, where RPG ismonitoring the thermal performance of Tanjung Bin under Phase 1 of theturnaround plan. It is also spearheading an exercise to benchmark TanjungBin against comparable plants world-wide, the objective being to identifyoperational gaps and opportunities for plant improvements.

awards and honoursIn a challenging year, the proverbial upside is the number of awards andaccolades we continue to receive for our performance in several key areas.We kicked-off the year by winning four industry awards from variousinternational publications in recognition of the group’s innovative RM6.5 billionfinancing facilities for the1,000MWTanjungBinEnergypowerplant.Theawardswere theAsiaPacificProjectBondof theyear2012 fromProjectFinance International; Triple A Regional award for Best Project Finance Dealfrom The Asset Magazine; Asia-Pacific Power deal of the year from ProjectFinanceMagazineandTheAsset’sAAABestProjectFinanceDealfromProjectFinance Magazine; and the Best Project Financing Award from Asia Money.The financing facilitieswere the first Islamic project bonds and loan facilitiesdenominated in Ringgit Malaysia and uS Dollar granted to a Malaysian IPP andwere given a rating of AA3 by RAMHoldings Berhad.

We were gratified to win three awards for our initiatives in the areas ofcorporatesocial responsibilityandhumanresources.ThefirstwastheGreenLeadership Award under the Asia Entrepreneurship Awards programmethat aims to honour Asian businesses for championing sustainable and responsibleentrepreneurship invariouscategories.Wewerealsonamedthe“Best Employer ToWork For InAsia 2013” after one of themost scientificand extensive surveys on employee engagement and workplace practicesby HR Asia, a trade journal. Malakoff also won the “CSR Award Of Theyear” fromtheMalaysian InstituteofManagement (“MIM”),whichaims toshowcase thebest inclassexamplesofcreativityand innovativeness leadingto sustainable outcomes.

We are also proud tomention thatMalakoff’swholly owned gas-fired PraiPower Plant achieved a significant safety milestone when the power plantclocked in3millionman-hourswith zero accident recorded sinceoperationcommenced in June 2003.


039

the way forwardWe anticipate that Fy 2014 will be a year of revitalisation andpreparingforthenextthrustforward.TheoperationalimprovementofTanjungBinremainsourprimaryfocus,butwearesimultaneouslypursuing a number of forward-looking strategic priorities:

• Amajor review of our working practices and systemswill becarriedoutwiththegoalofreducingoperatingexpensesyear-on-end by two percent, without compromising on efficiencyand aspects of health, safety and the environment;

• TheGroup’sinvestmentportfoliowillbefine-tunedtomaintainits high quality andmonetise the value of our assets;

• Forge aheadwith the construction of the 1,000MWTanjungBin Energy power plant at Pontian, Johor to meet thescheduled completion date of March 2016;

• ScaleupourMaintenance,Repair andOverhaul (“MRO”)andthird party o&M businesses locally and regionally to generate a new revenue stream;

• In line with the corporate aspirations of the Group, we willcontinue to invest for the long term, exploring fresh paths to growthinattractivegeographicareaswherewehaveacompetitiveadvantage to solidify the financial strength of the group; and

• Given that our people are the ultimate source of competitiveadvantage,wewillstrivehardertoimproveemployeeretentionandoverall organisational effectiveness to achieve higher productivity.



a foCus on growthLooking forward, I am optimistic about the future of Malakoffand its prospects. In a relatively short period of time, we havetransformed ourselves from a domestic utility company into an internationalplayerwithahandfulofprojects inoneof the fastestgrowing regions in theworld.

The fundamental strength of the group remains intact and this is evidenced by the quality of our balance sheet, our earningspower supported by long-term PPAs and competitive positionin moving forward. Steps that we have taken to further unlockthe value creating potential of our businesses have also gained traction. These include the expansion of our core businesses into leading market positions and the Group’s strategic thrust towarda greater international presence, all of which point towards apromising future.

In Malaysia, we are set to further consolidate our position in thepower generation business with the successful acquisition of theremaining 75.0 percent equity stake in PortDickson Power Berhad(“PDP”) along with the O&M business of PDP from Sime DarbyEnergySdnBhd.Asat30April2014,Malakoffholdsa100percentequity interest in PDP via its wholly-owned subsidiary,Hypergantic

SdnBhd(“Hypergantic”).TheacquisitionboostsMalakoff’seffectivegenerating capacity to 5,350MW,which is about 24.0 percent ofPeninsular Malaysia’s total installed generating capacity.

Takingcognizanceofitsinherentstrengths,manyindustrywatchersrecognise the value the company offers and the positive direction it has taken to grow its businesses at home and abroad.

we have an exciting future ahead of us and building on the momentum established,Malakoff remains on course to achieve itslong-termgoal“tobeapremierglobalpowerandwatercompanyand to deliver sustained growth and value for our stakeholders”.

aCknowledgeMentsWhile Malakoff has a huge asset profile, we have alwaysacknowledged the fact that our most important asset is ourhuman capital. It also brings to mind an old axiom: that the tough gets goingwhen the going is tough. I personally feel thatthe challenges encountered in FY 2013 have brought out the very best in our people. Malakoff people have shown that they arenot only tough, but they are professional, committed and hard-working. I know I can continue to count on every one of you aswe strive to realize our goals.

041

our great support group includes our respective financiers, partners and business associates from over the globe. Adding to this list are the various government bodies and statutory authorities as well as members of the media, with whom weenjoy a close and healthy working relationship nurtured overthe years. To say the least, the close rapport and understanding that we have established with our respective stakeholders andtheir confidence in the group have made all the difference in a challengingyear. To them,wewould like toexpressourgratitudefor their on-going support and trust inMalakoff.

TheyearinreviewsawseveralchangesintheBoard’scomposition.Dato’SriCheKhalibbinMohamadnoh,whoisalsotheManagingDirector ofMalakoff,was appointed to the Board effective 1 July2013. The other new appointees are Encik Wan Kamaruzzamanbin Wan Ahmad, his alternate, Encik Zalman bin Ismail, and MrKanad Singh Virk. We welcome all of you and look forward tothe fresh insights and broad experience you bring to the board. During the year, Datuk Haji Hasni Bin Harun, Dr Mabel LeeKhuan Eoi andMr Andrew Rowan Ian yee have all vacated their

positions. The board expresses its sincere appreciation to the aforementioned for their valuable contributions. As chairman, I am proud to be a member of this present board. collectively, I believe we have the knowledge and experience to guide theGroup towards achieving evenmore.

Lastly, I believe we owe an overwhelming gratitude to En ZainalAbidin Jalil, ex-CEO of Malakoff who had served us well duringa significantly memorable tenure.

Thank you.

tAn sri dAto’ WirA syed ABdul JABBAr Bin syed hAssAnchairman

delivering our thrust


performance reviewby acting Chief executive officer

Despite the more challenging external environment, the Malaysian economy has remained largely resilient to register a real GDP growth of4.5 to 5 percent in 2013 (2012:5.6 percent). (Source : economic Report 2013/14, page 50) Growth will be underpinned by strong domesticdemand, a more diversified and balanced economy, robust financial system and pragmatic macroeconomic policies. In the country’s questto become a high income and developed nation by 2020, the demand for electricity will growin tandem with GDP growth. To achieve thisaspiration, one of the goals of the country’s Tenth Malaysia Plan, 2011-2015, is to ensure the continuous security of electricity supply withinthe country.

For the good news, I am pleased to reportthat all our other domestic assets turned in commendable performances, with our plantsat lumut and Prai being the star-performers. The Port Dickson power plant has chalkedup a commerc ia l s tart ing re l iab i l i ty of close to 100 percent for the past 16 years. The group’s overseas interests in the kingdom of Saudi Arabia, bahrain have all also performed to expectations, achieving high availability factors for both power generation andwater production.

overview2013 wAS A chAlleNgINg YeAR FoR The globAl ecoNoMY, MARkeD bY The DeePeNINg oF The euRo AReA cRISIS AND MoDeRATINg gRowTh IN eMeRgINg ecoNoMIeS leD bY chINA AND INDIA. AccoRDINg To The INTeRNATIoNAl MoNeTARY FuND (“IMF”), globAl ReAl gRoSS DoMeSTIc PRoDucT (“gDP”) wAS 2.9 PeRceNT IN 2013 (2012:3.2 PeRceNT). gRowTh IN The MIDDle eAST AND NoRTh AFRIcA (“MeNA”) RegIoN, The FocuS oF The gRouP’S oveRSeAS INveSTMeNTS, wAS loweR AT 2.1 PeRceNT (2012:4.6 PeRceNT) Due To ReDuceD oIl PRoDucTIoN AND The SPIll-oveR eFFecTS oF coNTINueD PolITIcAl uNceRTAINTY IN ceRTAIN couNTRIeS.

key lessons weRe AlSO lEARnT – THE MOSTImpoRTAnT BeInG THAT despITe All THe necessARy mITIGATInG meAsuRes THAT ARe puT In plAce, we need To Be eveR moRe vIGIlAnT In THe key AReAs oF quAlITy AssuRAnce And quAlITy conTRol.

045



performance review by acting Chief executive officer (continued)

assetperforManCe

047

doMestiC power generationMalakoff is the largest Independent Power Producer (“IPP”) in Malaysia,with an effective power generation capacity of approximately 5,350 MW,representing approximately 24.0 percent of Peninsular Malaysia’s total installed capacity.We own three combined cycle gas turbine (“CCGT”) power plants,oneopencyclegasturbine(“OCGT”)powerplantandonecoal-firedthermalplant, while through our associates, we have interests in one power plantwithmulti-fuel powergeneration facilities.All of ourpowerplants, includingthose of our associates, sell the power they generate to Tenaga nasionalBerhad (“TnB”) under long-term Power Purchase Agreement (“PPA”).

suBsidiary-owned power plantssev power plant

Celebrating more than 17 years of operation, the 1,303 MW power plantat lumut has a dependable capacity of 1,303 Mw and is the largest ccgT power plant in Malaysia. Malakoff has a 93.75 percent interest in SegariEnergy Ventures Sdn Bhd (“SEV”) with the balance held by the EmployeesProvident Fund (“ePF”). on 25 February 2013, Sev secured a 10-year extension to the PPAwith TnB, whichwill now run until June 2027.

During the year under review, the SEV power plant continued to maintainits high performance record in terms of availability, reliability and efficiency, delivering approximately 8,040 gwh of electricity to the National grid. Having met all the required performance standards set out in the PPA, SEV received full capacity payments for the period under review.

gB3 power plant

Malakoff also has a 75.0 percent interest in the GB3 Sdn Bhd (“GB3”) .With a dependable capacity of 640 MW, the GB3 power plant is locatednext to the SEVpowerplant.now in its twelfth yearofoperation, theplantdelivered 1,964 GWh of electricity to the national Grid, with an averagecapacity factorof approximately35.04percentduring the yearunder review.The power plant also recorded an equivalent availability factor of 90.95percent, which is marginally lower from the previous year due to severalmajor planned outages.

prai power plant

Through our wholly-owned subsidiary, our corporate stable includes the Prai power plant, which is a single-shaft CCGT plant with a dependablecapacity of 350 Mw. In its 11 years of operation, it has the distinction of being among themost efficient natural gas-fuelled power plants inMalaysiaand during the year under review, recorded a net efficiency (lower heatingvalue) of 52.5 percent.

In Fy 2013, the power plant delivered 1,990 GWh of electricity to theNational grid and recorded an average capacity factor of 64.9 percent. Despite 42 days of major planned outages, the power plant achieved anequivalent availability factor of 82.22 percent which is only slightly lowerthan the previous year.



tanjung Bin power plant

TanjungBinPowerPlant(“TanjungBin”)isthefirstprivately-ownedcoal-fired plant in Malaysia and is among the largest independent plants of its kind in Southeast Asia. With a generating capacityof 2,100 MW, Tanjung Bin accounts for approximately 29.0percent of Peninsular Malaysia’s IPP coal-fired generation capacity. The power plant consumes various types of bituminous andsub-bituminous coal imported from Australia, South Africa and Indonesia. The Group’s stake in the power plant is held throughour 90.0 percent-owned subsidiary, Tanjung Bin Power Sdn Bhd.

In its eighth year of operation, Tanjung Bin delivered 11,772GWhofelectricitytothenationalGrid,withanaveragecapacityfactorof63.99percentTheplant’sequivalentavailabilityfactorwasrecordedat67.78percent (2012:82.95percent) due tomaintenanceworksundertaken during the year under review.

tanjung Bin energy power plant

A new 1,000 MW coal-fired power plant is being built adjacentto the existing Tanjung Bin power plant. As at financial yearend, the Tanjung Bin Energy power plant has achieved an overall 52.0 percent completion.

Several project milestones were achieved during the year, whichinclude a ceremony held on 5 December 2013 to commemorate the successful erection of the boiler girders in December 2013, which are the first heavy lift components of the project. Other major milestones include the concrete pouring for thefoundation of the turbine hall, erection of steel structures for the coal transfer towers and progressive construction of thewindshield for the flue gas stack, which is about 50 percentcompletedwith approximately 100-metre in height.

In readiness for the power plant’s targeted commercial operationdate of March 2016, Malakoff is in the process of mobilising ateam for the operation and maintenance of the power plant.Some of the personnel have already been recruited and are presently attached to Tanjung Bin where they will undergo astructured training programme to gain hands-on experience. Thispioneer teamwill alsobe involved in the forthcoming testingand commissioning of the plant.

049

port dickson power plant

The Port Dickson power plant is a 440 MW OCGT power plant. Our wholly-ownedsubsidiary, Hypergantic Sdn Bhd holds a 100 percent equity interest in the power plant,whichsupplieselectricitytothenationalGridtomeetpeakingandemergencyrequirements.For the past 17 years, the power plant has achieved a high availability factor ofmore than98.0 percent, forced outage rate of less than 0.4 percent and commercial starting reliability factor of close to 100 percent.

assoCiate-owned power plantkapar power plant

The Kapar power plant also known as the Sultan Salahuddin Abdul Aziz Power Plant, is located at Kapar in the state of Selangor. It is the largest power plant in Malaysia witha total generating capacityof2,420MW.Malakoff’s interest in thepowerplant is by virtueofour40.0percentequity inKaparEnergyVentures,with the remaining60.0percent stakeheld by TNb.

The plant’smulti-fuel power generation facilities comprised the following:

generating Facility 1 (gF1) : 2x300 Mw Dual-Fuel Firing (gas and oil)

generating Facility 2 (gF2) : 2x300 Mw Triple-Fuel Firing (coal, gas and oil)

generating Facility 3 (gF3) : 2x500 Mw Dual-Fuel Firing (coal and gas)

generating Facility 4 (gF4) : 2x110 Mw open cycle gas Turbine

For FY 2013, the plant delivered some 11,770 gwh to the National grid achieving commendable availability, efficiency and capacity factors for the respective generating facilities as set out in the following table:

geNeRATINg FAcIlITY

AvAIl. FAcToR%

eFFIcIeNcY %

cAPAcITY FAcTPR %

gF1 82.31 32.88 50.36

gF2 88.39 33.42 84.44

gF3 74.22 34.37 73.41

gF4 70.68 27.14 12.13



international water produCtion and power generationMalakoff’s evolution fromapowergenerationcompanyoperatingwithin national boundaries into an internationalwater productionandpowergenerationhasbeennothingshortof remarkable.TheShuaibah Phase 3 Independent Water and Power Project in theKingdomofSaudiArabiamarkedMalakoff’smaidenforayintotheinternationalarena.Withthisprojectunderourbelt,webegantospread our wings to neighbouring countries, participating in verycompetitive bidding exercises alongside companies bigger and more established.Our first project in northAfrica is the 200,000cubic metres/day seawater desalination plant at Souk Tleta inAlgeria. with our brand gaining resonance and building on our track record,wewill continue tomove further down the path asan international player and a proud bearer of the Malaysian flag whereverwe operate.

shuaibah phase 3 independent water and power project (saudi arabia)

The Shuaibah Phase 3 Independent Water and Power Project(“Shuaibah Phase 3 IwPP”) is one of the largest combined power andwater plants in theworld.Malakoff has a 12 percenteffective stake in the project, which is held through an associatecompany Shuaibah water & electricity company (“Swec”). The project was executed on a build, own and operate basis undera 20-year Power andWater Purchase Agreement with theWaterand electricity company of Saudi Arabia.

Since achieving commercial operation date on 14 January 2010,the plant has continued to perform well. For the financial yearunder review, the plant recorded an availability factor of 90.25percent and 90.60 percent for power generation and waterproduction respectively.

shuaibah phase 3 expansion independent water project (saudi arabia)

Malakoffhasan11.7percentinterestinShuaibahExpansionProjectCompany Ltd, the owner of the Shuaibah Phase 3 ExpansionIndependent Water Project (“Shuaibah Phase 3 Expansion IWP”).with a capacity of 150,000 cubic metre/day, the plant uses reverseosmosis technology todesalinate seawater. Theplanthascontinued to perform satisfactorily since commercial operations began on 17 November 2009. In FY 2013, the plant achieved an availability factor of 97.73 percent.

souk tleta independent water project (algeria)

Our first project in north Africa is the Souk Tleta IWP projectlocated in wilaya of Tlemcen in Algeria. The 200,000 cubic metre/day plant uses reverse osmosis to desalinate seawater and hasbeen operational since 13 April 2011. Malakoff has an effective35.7 percent stake in the project.

THe sHuAIBAH pHAse 3 IndependenT wATeR And POWER PROJECT In THE KInGDOMoF sAudI ARABIA mARked mAlAkoFF’s mAIden FoRAy InTo THe InTeRnATIonAl ARenA.

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al hidd independent water and power plant (Bahrain)

InMay2012,Malakoffacquireda40.0percent stake in theHiddPowerCompany,which owns the Al Hidd Independent Water and Power Plant (“Al Hidd IWPP”).The Al Hidd IWPP is among the largest Independent Water and Power Plants(“IWPPs”) in Bahrain, with a total power generation capacity of 929 MW and awater production capacity of 410,000 cubic metres/day. This is sufficient to meetapproximately 39.0 percent and 62.0 percent respectively of the Kingdom’s powerand water supply requirements. During the year in review, the plant achieved anavailability factor of 89.93 percent and 94.95 percent for power generation andwater production respectively.

al ghubrah independent water project (sultanate of oman)

The Al ghubrah IwP, located in the capital city of Muscat, signals our re-entry into the Sultanate of oman and is testimony to group’s standing in a very competitive market. The project was awarded in november 2012 to a consortiumled by Malakoff International Limited (“MIL”) to build, own and operate basisutilising reverse osmosis technology.MIL is awholly owned subsidiary ofMalakoff.On 19 January 2013, Muscat City Desalination Company SAOC (“MCDC”) wasincorporated in the Sultanate by Malakoff and its consortium partners, SumitomoandCadagua as a special purpose vehicle to undertakeAlGhubrah IWP.Malakoffand Sumitomo each hold a 45.0 percent interest in MCDC, while Cadagua ownsthe remaining 10.0 percent.

On 26 July 2013, the consortium successfully closed a project finance loanagreement with the JBIC, SMBC and theMUFG to finance the project. Scheduledfor completion byOctober 2014, the plantwill supply over 190,000 cubicmetres/day of freshwater over a period of 20 years, serving the dailywater requirementsof 800,000 people.



operation & MaintenanCe

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Malakoff‘s growing portfolio of power generation and water production assetsis complemented by its strong O&M capabilities. We have two decades ofexperience in the O&M business and a proven track record of operating avarietyofpowerplants that includeCCGT,OCGTandcoal-firedplants. Inwaterproduction facilities, our range of experience includes multi-stage flash distillation plants, reverse osmosis desalination plants and co-generation plants.

Overtheyears,Malakoffhascarefullynurturedastrongcultureofoperationalexcellence with the goal of propelling our asset performance towardssustainable,world-classstandards.Thisisdemonstratedbysomeofourplantsachieving higher than IPP industry averages. In achieving high standards of efficiency and cost effectiveness, we rely on the latest specialised O&Mtools and methodologies such as computerised Maintenance Management System (“cMMS”), Reliability centred Maintenance (“RcM”), Root cause Analysis (“RcA”), Reliability based Inspection (“RbI”), Reliability centred Spares (“RCS”) and O&M and Engineering audits, just to name a few.The partnerships the Group has forged with leading players in the powergeneration and water production businesses all over the world is furthertestimony of our operational excellence and track record.

doMestiC o&M Businessprai power plant

The Prai power plant is a combined cycle plant with a total generatingcapacity of 350MW. The power plant consists of one gas turbine, one heatrecovery steam generator and one steam turbine,with a unique single shaftconfiguration that allows for reliable, efficient and low emission powersupply to the national Grid. In Fy 2013, the power plant recorded a netefficiency (lowheating value)of52.52percent. Praipowerplant registeredaslightly lower availability factor of 82.22percent,with a total of 1,990GWhdelivered to the National grid.

During the year in review, major maintenance works were carried out onthe gas turbine, steam turbine and heat recovery steam generator. A gas Turbine Compressor Enhancement Package was also successfully installedduring themaintenance period, allowing for further improvements in powerplant reliability and efficiency.

The Prai power plant is compliant to MS ISO9001 Quality ManagementSystem, ohSAS 18001 and MS722 occupational health and Safety Standards and ISo 14001 environment Management System. During the year, the plant also successfully achieved certification to the ISo 27001 Information Security Management System to ensure the integrity of the business’ information security.


sev and gB3 power plants

TheSEVandGB3powerplantsareco-located inasinglecomplexand are collectively known as the Lumut Power plant.During theyear under review, both plants continued to operatewith provenreliability to meet the requirements of the PPA. The averageequivalent availability factor stood at 91.57 percent and 90.95percent for SEV and GB3 respectively, while the unscheduledoutage ratewas 0.33percent for SEV and1.55percent forGB3.With the coming into effect of a new PPA for SEV beginningMarch, SEV has overtakenGB3 as the dominant base load plant.higher electricity demand has pushed the average capacity factor to 70.44 percent for Sev and 35.04 percent for gb3. Total energy sold to TNb for the year amounted to 8,039.974 gwh and 1,964.397 gwh for Sev and gb3 respectively.

Severalplant improvementprojectswerealso implementedduringthe year, which includes:

• Incorporationofsilicareading inthe logicofGB3’scontinuousblow down (“CBD”) valve control, resulting in further costsavings in deminwater consumption;

• Modificationof thede-heater solenoid valve (“SOV”)actuatorand improvements in the high pressure superheater outlet in the heat recovery steam generator (“hRSg”);

• Introduction of CBD closed loop control in SEV to achievesavings in deminwater consumption; and

• Implementation of HRSG phosphate auto control in SEV,resulting in savings in phosphate consumption.

To achieve the high reliability and availability targets, the year in review saw several major maintenance and inspection activitiescarried out at the various gas turbines and other key areas ofthe plants. o&M tools and methodology, such as RcM and RcA, were also applied extensively for continuous improvements.

tanjung Bin power plant

Withhigherdemandforenergyfromcoal-firedplantsnationwide,the Tanjung Bin power plant continued to be an anchor plantsupplying power to the national Grid. The plant utilises coal ofvarious grades imported from countries as diverse as Indonesia, Australia and South Africa with Russia being the latest addition.During the year in review, Tanjung Bin consumed a total of 4.7 million metric tons of coal as fuel for electricity production.

Despite the maintenance works in Fy 2013, the power plantwas still able to achieve a capacity factor of 63.99 percent,which translates into 11,772 GWh of electricity sold to TnB. The availability factor stood at 67.78 percent.

Modificationworkswerecarriedat thecoalunloading facilityandmain cooling water system, which will benefit both Tanjung Binand the new Tanjung Bin Energy power plant. With an increasein the capacity of the unloading facility, it will improve theturnaround time for vessels using the facility.


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international o&M BusinessMalakoff’s internationalO&Mbusiness involvementdatedbackto2006when it secured anO&M sub-contract for the Shuaibah Phase 3 IWPPin Saudi Arabia. Since then it has expanded its portfolio and activities to include projects in Algeria, Bahrain, Jordan, Kuwait andOman.

During the year under review, theGroup continued tomake headwayin building its portfolio of O&M contracts. In March 2013, TeknikJanakuasa Sdn Bhd (“TJSB”), a wholly subsidiary of Malakoff, wasawarded a five-yearOperation andMaintenanceManagement Services(“OMMS”) contract from PT Merak Energi Indonesia to operateand maintain its 120 MW coal-fired power plant in the District ofBanten, Indonesia. TheOMMSwas later novated by TJSB to PT TeknikJanakuasa Indonesia, a subsidiary of TJSB, in June 2013.

In november 2013, two new operations andmaintenance agreementswere secured in the MEnA region. The first was in the Sultanateof Oman, where MIL is a party to a consortium that concluded an Operations and Maintenance Agreement with MCDC to operateand maintain the 191,000 cubic metre/day Al ghubrah IwP. The mobilisation will commence in April 2014 in anticipation of plantcommissioning expected in october of the same year.

The second was the OMMS contract which was signed between TJSBMiddle east limited and Al-ghanim International general Trading and Contracting Co. Ltd, Kuwait for the Azzour South Power Plant inKuwait. The four-year contract is for the Operations andMaintenanceof newly converted 800 MW open cycle plant to a 1,200 MWcombined cycle power plant, with a targeted commercial operationdate of February 2014.


teChniCal support group

Tapping the synergy inherent in a diverse group, our o&M activities are ably supported by TSG, which is continually lookingat ways to achieve higher standards of performance acrossthe Group’s stable of power stations and water productionfacilities. TSg covers the entire spectrum of o&M activities by setting up specialised teams, eachwith its own area of expertise,related either to a particular facility or technology used in the plant. Among its many achievements, TSg’s integrated outage management and cost optimisation initiatives have contributed towards considerable cost savings for major overhauls at theLumut Power and Tanjung Bin Power Plants.

In FY 2013, TSg continued to lend its expertise to various technical studies, assessment and technical audits. These include an Operation Risk Assessment Audit at Tanjung Bin and anEngineering Risk Assessment Exercise and RCM study at theLumut and Prai power plants. As theGroup continues to expandoverseas, TSg has also diversified its client base. besides providing technical support to the group’s o&M teams at the Azzour North IWPP and Souk Tleta IWP, it also undertook a Technical Audit forthe Dhofar Power Company in Salalah, Oman.

TSG continued to play a key role in supporting the Group’sbidding exercises for new ventures such as PT Merak EnergiIndonesia’s new power plant at Banten, Indonesia.


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reliaBility and perforManCe group

TheReliabilityandPerformanceGroup (“RPG”)was re-establishedunder the o&M Division in october 2012 to provide consistent, effectiveandefficientsupporttoallMalakofflocally-operatedplants. RPG also spearheads the drive towards achieving operationalexcellence, optimised thermal and commercial performance and compliance to the group health, Safety, Security and environmental (“hSSe”) Management.

During the year under review, RPG’s focus was on achieving the following:

• Ensuring consistent implementation of O&M tools andmethodologies group-wide;

• Leadingand coordinating the sustenanceof ISOManagementSystems (ISo 9001, ISo 14001, ohSAS 18001) at all plants, RPG has embarked on the exercise to obtain ISO 9001certification forMPower headquarters;

• Leading the exercise to benchmark Tanjung Bin againstcomparable plantsworld-wide, the objective being to identifygaps and areas for improvement; and

• Championingthedrivetosowtheseedsofacostoptimisationculture across the Group by monitoring and reviewing thecost management and cost leadership initiatives at all plants.

RPg is leveraging on the capabilities of MacNet, the existing information portal within the Group, to generate online incidentreporting by the plants’ operations teams. besides the advantage of timeliness, it also facilities the sharing of safety incident information across the group so that valuable lessons can be leant and action plans can be drawn up to prevent a recurrence.

RPG has also been tasked to monitor the thermal performanceof both the Lumut and Prai power plants using the GateCycleprogramme,which isaplantperformancesoftwaretounderstandand predict changes in a plant’s performance. going into FY 2014, plans are in the pipeline for the gatecycle programme to be introduced to the SEV power plant,which has been highlydispatched since the new PPA was signed on 25 February 2013.As part of the Tanjung Bin turnaround plan, RPG will be taskedto monitor the thermal performance of the plant.

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ContraCts adMinistration & proCureMent ManageMent

Contracts administration and procurement management are keylinks in supply chain management, which can impact on theoperational efficiency of our plants and ultimately the group’s bottom line. efficient planning and management of the procurement process ensures that all materials and services are available during planned outages and day-to-day operations in order to prevent any disruptions to the plants’ operations. In a highly competitive marketplace, effective procurement management also ensuresthe cost effectiveness of all capital expenditures (“cAPeX”) and that all purchases are properly accounted for. As an example, through various procurement initiatives, we achieved cost savingsof close to RM130million for just two of our subsidiaries duringFY 2013.

At Malakoff, contracts administration and procurementmanagement comes under the ambit of the group contract and Procurement unit (“gcPu”). Apart from playing an advisory role to other operating units, gcPu also acts as an intermediary to ensure that procedures are followed as well as assist inexpediting the approval process. Some of the procurement processes, especially those dealing with large CAPEX, have alsobeen centralised and taken over by GCPU.

In the interest of transparency and for greater effectiveness, the procurement process in Malakoff is governed by a set ofpolicies, procedures and other guidelines, which are reviewedand updated from time to time. Internal audits and other management audits such as ISo 9001, ISo 14001 and ohSAS 18001 serve as important yardsticks to determine how well theGroup’s procurement process stacks up against internationallyaccepted best practices. Any non-conformances resulting from the audits are taken constructively,while recommendations are raised withManagement and considered for implementation dependingits practicality.

Since its launch in April 2012, the group’s vendor Document and Management Portal (“vDMP”) has reduced the turnaround time for the approval process. With all documentation nowelectronically managed, the issue of missing documents no longer arises. However, we acknowledge the fact that there isstill room for improvement.We are presentlyworking to improvethe vendor data base andwe are also developing a Procurementnotification, whichwill expand the vendor selection option.

Positioning our focus



eleCtriCity distriButionand Chilled water supply

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The group’s electricity distribution and district cooling business has been re-positioned as another core line of business.MalakoffUtilities Sdn Bhd (“MUSB”), our wholly-owned subsidiary, holdstheexclusiverightstodistributeelectricityandchilledwater inthekuala lumpur Sentral Development (“kl Sentral”) for a period of 21 years. leveraging on the group’s reputation for performance and service excellence, MuSb’s customer base continues to expand in tandem with the on-going development of KL Sentralas a business and transportation hub.

MUSB has been supplying chilled water to Plaza Sentral Officesince november 2001 and to meet the growing needs, it hasincreased its centralised chilled water Plant’s capacity to 17,000 refrigerant tons. Its customer base has also expanded to include Nu SentralRetailMall,348Sentral’sOfficeTower, ExcellentBonanza’sOffice Towers and Hotel as well as residential apartments in thedevelopment enclave. In total, MUSB now has 1,764 customeraccounts compared to 1,660 the previous year. As a result, the demand for electricity has also risen to 35.57 Mw from 31.2 Mw recorded previously. With more construction activities underway,the rising trend is expected to continue for the foreseeable future. In keeping pace with technology, MUSB has employedthe latest Thermal energy Storage (“TeS”) technology to improve energyefficiencywhilst reducing theenvironmental impactofour

operations. The adoption of TeS has boosted kl Sentral’s standing on the green building Index, an environmental rating system to promote sustainability.

Courtesy, care and attention to details are the pillars on whichwe build our customer experience. We gauge our performancethrough customers’ feedback at MUSB’s Customer Care Centreand through a survey. We take these surveys and customerfeedback very seriously as they provide valuable inputs in ourefforts to continually raise the bar in customer service excellence. Inthelatestsurveyundertaken,theresultshavebeenencouraging;no less than 86 percentwere satisfiedwith the services providedwhile the remaining 14 percent did not respond. Of those whoprovided feedback at our Customer Care Centre, 100 percentwere satisfiedwith their overall experience. As a customer-centricbusiness, we cannot afford to be complacent.We are constantlylooking at ways where we can give our clients the service theyexpect and deserve.

Movingforward,MUSBisactivelyexploringopportunitiestoextenditsactivitiesbeyondtheKLSentralarea.Withanestablishedtrackrecord and leveraging on the synergies inherent in being part of theGroup, it isalso studying theprospectsofembarkingonnewventures as a multiple utility provider.



ventures

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ventures

Malakoff is fortunate to operate in a thriving geographic area poised forcontinued growth. While Southeast Asia remains one of the world’s mostdynamic regions,wehavespreadourwingsand lookedafield to the thrivingMEnA region. As the world moves towards becoming a global village,Malakoff’s Ventures Division is ever alert to opportunities for new growth.

In november 2012, the state-owned Oman Power and Water ProcurementCompany S.A.O.C. awarded the contract to the Malakoff-led consortium todeveloptheAlGhubrah IWP, located inthecapitalcityofMuscat.Theawardof the projectmarks the Group’s re-entry into the Sultanate of Oman.

On 19 January 2013, MIL and its consortium partners, Sumitomo andCadagua incorporated theMCDC as a special purpose vehicle to undertaketheAlGhubrah IWP.On26 July2013, theconsortiumentered intoaprojectfinance loan agreement with the JBIC, SMBC and theMUFG to finance theAlGhubrahproject.WhencompletedbyOctober2014, theplantwill supplyover 190,000 cubic metres/day of fresh water over a period of 20 years,meeting the daily needs of 800,000 people.

Winning the AI Ghubrah IWP means a lot to Malakoff. not only was thebidding exercise very competitive, but it was held against the backdrop ofimminent changes to the Sultanate’s Electricity Sector Law toprovide for theindependent regulationof stand-alonewaterprojects inOman.Theproject isalso the first stand-alone water project in theMEnA region to benefit fromJBIC funding.With Al Ghubrah IWP on our portfolio, we are hopeful it willopen doors to other opportunities within the region.

DuringFy2013,weacquireda50percent stake inanAustralianwind farm.TheMacarthurWindFarm located in theStateofVictoria is the largestwindfarm in the southern hemisphere. It was constructed in 2011 and has beenoperatingsince January2013.Thetotal installedcapacityof thewindfarm is420MW,whichissufficienttogenerateenoughcleanenergytopowermorethan 220,000 average-sized homes in victoria, reducing 1.7 million tonnes of greenhouses gases being emitted to the atmosphere each year.

inforMation & CoMMuniCations teChnology (“iCt”)

The continuing evolution of Information & communications Technology (“IcT”) is changing the dynamics of the workplace and the way we do business. In aGroup where performance counts, our focus in Fy 2013 was to harness thepower of ICT to increase operational efficiency.

LikemostofFortune500companies,weareleveragingonMicrosoftSharepoint,to create our own intranet portal for content and data management. ThroughMaCnet, our intranet portal, we are able to store, organise, share and accessinformation relating to our operations and processes. The portal is now usedto store data relating to our incident reporting system, o&M reports, employee recruitment, among others. The platform has enabled us to improve the business process flow and thereby enhance employee productivity.



All organisations, in varying degrees, face exposure to internal as well as external threats. Such threats may take the form ofevents that could impact on operations. we are pressing ahead with the Group’s strategy to strengthen its resilience in the faceof a disaster or business disruption.

having achieved certification to ISo 27001 (Information Security Management System (“ISMS”)) from the Standard and Industrial Research Institute of Malaysia (“SIRIM”) in December 2012, wecontinuedwithefforts to improveour information security systemto protect data confidentiality, integrity and availability. The ISMS is a systematic approach in the ISo family of internationally recognised standards to manage sensitive company information by applying a risk management process. It is mandated by theMalaysian government for all organisations that are classified under the critical National Information Infrastructure (“cNII”).

Meanwhile, the wireless and video conferencing facility atgroup head office has been upgraded for increased level of authentication, improved security and wider network coverage. In the coming year, attention will be focused on email securityand prevention of leaks.

enterprise risk ManageMent

MalakoffhasadoptedEnterpriseRiskManagementasasystematicapproachtoidentify,assess,reportandmonitorallrisksassociatedwith the Group. It is an oversight function of the Managing

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Director’s/chief executive officer’s office to further strengthen the Group’s corporate governance. The following are examplesof initiatives that were launched during the year to improve riskmanagement across the group.

risk assessments

TheEngineeringRiskAssessmentProcess(“ERAP”)aimstoidentifythe levelofengineeringrisks inapowerplantandtorecommendappropriate risk reduction strategies.During the year, ERAPsweresuccessfully conducted at the Prai and Lumut power plants andthe findings indicate a low level of engineering risks.

An Operations and Management Risk Assessment (“OMA”)aims to identify the level of management and operational risksat a power plant and to recommend appropriate risk reductionand improvement strategies. When an OMA was conducted atTanjungBin inOctober2013, thefindingspointed toamoderatelevel of operations andmanagement risks.

APlantSecurityRiskAssessment (“PSRA”)aimsat identifyingandevaluating risks posed by the plant’s security management andwas carried out at Tanjung Bin in October 2013. Themain areasof concern are the site grounds, building interior and exterior and the security operations. The overall risk rating for Tanjung Bin’ssecurity was deemed to be low.



MusB risk assessment Modules

The risk assessment programme put in place across theMalakoffpowerplants has nowbeen extended toMUSB. This is to ensurethat MuSb’s District cooling System (“DcS”) and electricity Distribution System (“eDS”) all conform to the best engineering, operation and hSe practices. An intensive and comprehensive workshop was organised during the year to develop a set ofrisk assessment modules that are applicable to MUSB’s plantoperations. MUSB has undergone the audits based on these riskassessment modules in May 2013, with the findings indicating alow level of engineering risks and acceptable level of operationsandmanagement risks.

risk Monitoring and reporting

Risk monitoring within the Group is carried out throughoutthe year and is the responsibility of a dedicated eRM team. Every risk item that requires action is monitored and recordedin the Q-Radar, the Group’s Risk register and Risk ScorecardManagement System. The risks are analysed and reported to theRisk Management Committee and subsequently escalated to theboard of Directors.

new risk assurance process

In June 2013,Malakoff introduced a new Risk Assurance processby requiring all risk owners to digitally sign-off their risk profilesthrough the Q-Radar online system. The digital assurance process will provide a transparent platform for all risk owners in everybusiness unit group-wide to identify their risk exposure andensure that relevant mitigation plans have been put in place. Thiswillenablethemanagementtohaveacomprehensivepictureof the risk position of the Group at any given time.

health, safety and environMent

MalakoffaspirestohaveaHealth,SafetyandEnvironment(“HSE”)recorditcanproudof.Inourjourneytowardsexcellence,Malakoffhas always considered good HSE practices to be an integralpart of its business objectives. We consider it a responsibilityand indeed a moral obligation that we owe to our customers,employees, our constituencies and the public at large.

The group’s commitment to achieve excellence in hSe performance is a cornerstone of the group’s operational & Maintenance Excellence Framework to deliver sustainable best-in-classperformance.BuildingastrongHSEprogramme, likebuidinga good house, requires an investment of resources. Over theyears, the group has channeled considerable funds and energy for equipment and training to develop, implement, evaluate andprovide follow-up to ourmany HSE programmes and activities.

In the safety arena, empirical data suggest that our efforts are paying off. In Fy 2013, work-related accidents resulted in0.28 Lost time Injury (“LTI”) per million working hours. This isalready better than the industry average but in our vision of an injury-freeworkplace,we adopted a zero tolerance policy towardsafetymanagement. For the year under review, of the 8,839,322accumulated hours worked across the Group’s plants, involving atotal of 2,171 personnel, we achieved zero LTIs, an improvementof 100 percent, and one that exceeded the industry average, to say the least. All other safety indicators also recorded significant improvements throughout the year, pointing to the efficacy of the various interventionswe have put in place.

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locATIoNS

NuMbeR oF woRkeRS

ToTAl No. oF woRkeRS

AccuMulATeD houRS

woRkeD No. oF lTIS lTI FRSTAFFIN houSe

coNTRAcToRSouTAge

coNTRAcToRS

Tanjung Bin Power Plant 298 454 500 1252 4,088,376 0 0

Lumut Power Plant 136 106 300 542 1,434,852 0 0

Prai Power Plant 65 47 200 312 3,178,725 0 0

Malakoff Utilities Sdn Bhd 45 10 0 65 137,369 0 0

total 544 617 1000 2171 8,839,322 0 0

As the table indicates, Tanjung Bin was one of the high achievers,having accumulated more than four million man-hours without LTIas at the end of Fy 2013. The Prai power plant also scored highon the safety list, withmore than threemillionman-hours withoutlTI under its belt.



we wIll conTInue To Roll-ouT new InITIATIves And enHAnce exIsTInG ones AImed AT InTeGRATInG And sTRenGTHenInG exIsTInG sysTems And pRoceduRes.

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Having reached the magical figure of zero, we are determinedto maintain our safety record. We will continue to roll-out newinitiatives and enhance existing ones aimed at integrating and strengthening existing systems and procedures. Simultaneously, we are focusing on engaging people, employees and contractorsalike, at all levels and in all forms.

appreCiation

Dedicated employees are a vital component of any successful company and our management and staff must be commended for their high levels of dedication and professionalism. I truly believe that we have the best people the business has to offerand they embody the corporate core values setting us apart from our peers. During Fy 2013, our people were called upon to domore than ever – and they did not disappoint. Your efforts are truly appreciated.

Malakoff todaystandsat thethresholdofgreater things tocome.Let us all intensify our efforts as we strive towards attaining ourcommon goals.

I thank all of you.


impacting our environment


Corporateresponsibility

075

AtMalakoff,we have alwaysbelieved that theway to builda great enduring company is to strike a balance betweenprofitability and social conscience. Thus, even aswegrow, the one thing that hasalways remained constant isour strong commitment to fulfilling our corporate social responsibility (“cSR”). This is one of the main tenets enshrined in our Mission Statement – to be respected as a corporate citizen.

Malakoff’s CSR efforts over theyears have been recognised with a number of prestigioushonours, including the Prime Minister’s CSRAward for theenvironment category, Asia Responsible entrepreneurship Award for Social Empowermentand the Johor Stategovernment’s “Anugerah Organisasi Penyayang Johor”that aims at promoting the concept of social responsibility and community volunteerism.


Corporate responsibility (continued)

Under the Malakoff-uNITeN Talent Acceleration Programme (“MuTAP”), 24 high achievers from universiti Tenaga Nasional (uNITeN) attended a six-month leadership training programme. The intention is to create a sustainable pipeline of talent to serve an ever growing industry.

outreach programmes

By engaging the various communities in which we operate, wearebetterable tounderstand theirparticularneedsand respondappropriately throughcashor inkind.Lastyear,wechanneledfundsto selected community-based organisations in Mukim Serkat andprovided funding to build amosque in Kampung SungaiDinar.

other recipients of our corporate philanthropy programme in FY 2013 include the Tabung wira lahad Datu Media Prima, set up to honour the country’s police and armed forces personnel involved in the Lahad Datu stand-off.Malakoff was also one of themainsponsors of the National Press club’s charity Dinner in aid of the Journalist Welfare Fund, which was established in 2006 to assistdependents of journalists who died in the cause of duty.

CoMMunity developMentIn communitydevelopment,weaim tomakeapositivedifferenceto the communities and the environment in which we operate,leavingbehindapositive legacy longafterourprojectshavebeendelivered.

nurturing young talents

TheGroup’s foremostcommitmenthasalwaysbeen toeducation,because we believe that education can empower people andimprove lives. On the premise that quality education should beaccessible to all,Malakoff has contributedRM200,000 to support11 adopted schools located near the Prai, Lumut and TanjungBin Power Plants. The funds provided will assist the schools inupgrading its facilities, organise tutorial sessions and set up an incentive scheme for top performers in the public examinations.

In november, Malakoff sponsored 140 primary school childrenfrom the 11 adopted schools on a three-day educational trip to Kuala Lumpur. At the tertiary level, we collaborated with AISECMalaysia to provide funding to organise a series of nation-wideconference aimed at developing talents and improving leadership skills among its 1,000-strong members. The first conference washeld on 29 June and was attended from 220 students from allover the country.

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the spirit of giving Back

Employee volunteerism has always been a key component ofour cSR efforts. Management and staff are actively encouraged to get involved in welfare work and charity projects. Bearingtestament that the volunteerism is alive andwell throughout theGroup,Malakoff employees volunteered their time and energy toparticipateinseveral‘gotongroyong’projectsthatwereorganisedthroughout the year.

Community sports

From time to time,Malakoff has initiated various sporting eventsto strengthen ties with members of the local community andthe media. On 23 March, key media personnel were invitedto a friendly game of golf to sustain the relationship already established. A “Karnival Sukan Rakyat” was organised at MukimSerkat on 24 May bringing together Malakoff employees andalmost 1,000 local residents to participate in a host of fun-filled family-oriented games and tele-matches.

workplaCe developMentexecutive development and technician development programmes

We are collaborating with TalentcorpMalaysia and GRADUAn tohand-pick fresh new graduates for our Executive DevelopmentProgramme (“EDP”) as well as our Technician DevelopmentProgramme (“TDP”). Through the training effort, these fresh recruits acquire the necessary knowledge and skills whilst beingexposed to the real work environment. For Fy 2013, a total of17 EDP and over 50 TDP promising trainees were selected to befurther developed and eventually absorbed into ourworkforce.

performance and recognition

Performance counts at Malakoff and to achieve our objective tobe a high-performance organisation, a corporate key Performance Index is drawn up for each employee. The index allows highperformers to be rewarded accordingly and is a real motivatingfactor pushing employees to achieve or even exceed targeted goals. We also benchmark our employee remuneration packagesagainst prevailingmarket rates to ensure their competitiveness.

leadership development & succession planning

Finding the right-fit candidates for leadership positions is critical for Malakoff’s next thrust forward. We continue to focus ongrowing our own talent pool through structured leadershipand supervisory development programmes. To ensure a pipeline of suitable candidates to assume open positions, we have alsoformalised the Individual Development Plan (“IDP”). The plan enables supervisors and employees to jointly identify the specificknowledge and skills required for a particular, with the objectiveof bridging the competency gaps through the appropriate development interventions.


training & development

As part of our commitment to develop Malakoff’s talent pool,a budget of RM4.45 million was allocated in Fy 2013 for thetraining and development of our human resources in three main focus areas – human, technical and functional skills. Thetraining calendar included a total of 126 soft skills programmes, a 30.0 percent increase from the previous year. Staff also benefitted from 114 public programmes that were conductedduring the year, specifically tailored to enhance their knowledge,skills andwork attitude.

employee engagement

Since 2011, focus groups have been formed in all Malakoffdivisions and plants, their roles being to identify ways ofimproving employee engagement. Socially, the Buka Puasa andHari Raya gatherings and the frequent sporting events havebecome much anticipated staples in our calendar of events. one of the most anticipated events in Fy 2013 was the EmployeeAppreciation Retreat, a two-day event to recognise and celebrateemployee loyalty and long tenure with the organisation. The academic achievements of top-scoring children of Malakoffemployeeswere also lauded at the same event.


079

environMental preservationAs part of our strategy towards sustainable development, we have been taking proactive steps to protect the environmentand mitigate the carbon footprint of our operations. wherever feasible, eco-elements are incorporated into every stage of our operations to promote low energy consumption, high efficienciesand innovativeways of reducing emissions andwastes known tohave adverse impacts on the environment.

AtTanjungBin,forexample,cleantechnologysuchasElectrostaticPrecipitator (“eSP”) and Flue gas Desulphurisation enables the plant to maintain boiler emission levels within the limit set bythe Department of environment. Similar technology has been deployed at the coal-fired boiler units at the Sultan Salahuddin AzizPowerPlant.Allourheatrecoverysteamgeneration(“HRSG”)exhaust stackshavealsobeen installedwith continuousemissionsmonitoring systems, providing us with ongoing emission valuesfor monitoring and operational purposes.

All our plants have also earned certification to ISo 14001, theworld’smostrecognisedenvironmentalmanagementstandard.EnvironmentManagementPlanning,whichbringstogethervariousstandards and guidelines, has been implemented across all our plants to facilitate the setting of targets and interventions to minimise any adverse impact on the environment.

our green agenda includes safeguarding the environment through our rehabilitation and conservation projects. Among our flagshipprojects, the Malakoff Coral Rehabilitation Project off PulauMentinggi, Johor, is now into its third year. Saving the country’sdwindling and endangered turtle population remains high on ouragenda, and our priority is to educate members of the public on the country’s unique natural treasures. We have also embarkedon the third phase of Malakoff Mangrove Planting Project torehabilitate the eroding ecosystem in the Seberang Prai area.



MarketplaCe developMentMalakoff’s corporate website, which can be accessed at www.malakoff.com.my allows customers, stakeholders and thepublic to seek product and corporate information and services.Organised into useful categories, thewebsite is updated regularlysite with fresh new content and timely information on the latestdevelopments within Malakoff. Another important source ofinformationistheAnnualReport,whichisavailable inhardcopiesand CD-ROMS to anyone who requests for it or it can also beaccessed through thewebsite.

Quality control is a key aspect of fulfilling our responsibility tothe market place. In this regard, our power plants have earnedcertification to quality management systems endorsed by theInternational Standard organisation.

our research and development (“R&D”) efforts carried out by a wholly-owned subsidiary, Malakoff Research & Development addsanotherdimensiontoourcontributiontothemarket.Whilefocusedon improving process efficiencies at our plants, our R&D efforts also support the government’s green Agenda to develop green and renewable technology for the power generation industry.

aChieving MoreAlthough much has been accomplished, CSR is still a work-in-progress and there is always room for improvement.We need towork even harder towards embedding CSR in all facets of ouroperations so that it becomes part of our long-term strategic direction. Under our CSR platform, the Malakoff CommunityPartnerships, we recognise it is our responsibility to work closelywith the communities wherever we operate, leaving our imprintas a good corporate citizen and earning the respect of all.


Corporateevents highlights

31 January 2013friendly footBall MatCh Between Malakoff and energy CoMMissionStaff ofMalakoff and Energy Commission battled it out ina friendly football match.

06 feBruary 2013seCurities CoMMission visit to tg Bin power plantguests from Securities commission listening to a briefing at the power plant.

08 feBruary 2013friendly Bowling tournaMent with tnBWinners of theMens’ category from TnBwith their prizes.

15 feBruary 2013friendly futsal with the stakeholdersPlayers fromMalakoff and TnB, KWSP, Suruhanjaya Tenagaand MIDA during the tournament.

01 MarCh 2013friendly Bowling tournaMent with ketthaBowlers fromMalakoff and KeTTHA enjoyed themselvesduring the tournament.

09 MarCh 2013gotong royong at Maahad tarBiyah islaMiyah al-ansarMalakoff staff and residents of the school joined forces tomake the gotong royong a success.

083

15 MarCh 2013Bowling tournaMent with northern region authoritiesBowlers fromMalakoff and its northern stakeholders afterthe friendly tournament.

17 MarCh 2013Malakoff 17kM, 7kM penang runParticipants running through the scenic route at the Malakoff 17km, 7km Penang Run.

19 MarCh 2013donation to MukiM serkatMalakoff handed over RM91,700 donation to folks inMukim Serkat.

22 MarCh 2013oMMs ContraCt signing CereMony Between pt Merak energi indonesia and teknik Janakuasa sdn BhdRepresentatives fromMalakoff and PTMerak Energi duringthe signing ceremony.

23 MarCh 2013friendly golf tournaMent with MediaTan Sri Dato’Wira Syed Abdul Jabbar having a light momentwith the golfers before the gam.

25 MarCh 2013donation for taBung wira lahad datu Media priMaRM300,000 donationwas handed over for TabungWiralahad Datu Media Prima.


05 april 2013ChairMan’s visit to Malakoff’s new offiCe Tan Sri Dato’Wira Syed Abdul Jabbar officiatedMalakoff’snew office premise in Block 4, Plaza Sentral.

01 May 2013friendly footBall Between lpp and kelaB Belia sungai BatuTeams posed for a picture before the game.

11 May 2013Malakoff university duathlon series 1 - universiti pertahanan nasional MalaysiaParticipations dashed at the starting line in uPNM.

18 May 2013Malakoff university duathlon series 2 – universiti Malayawinners of the Men’s university category.

24-26 May 20138th annual Malakoff Charity ride cyclists and representatives celebrated after completing the 3-day event.

31 May 2013 – 02 June 2013Malakoff sports Carnival & long terM serviCe awards Sports Carnival winners and recipients of Long Term ServiceAwards.

Corporate events highlights (continued)

085

01 June 2013Malakoff university duathlon series 3 - universiti putra MalaysiaParticipants going head-to-head along the cycling route in uPM.

12 June 2013prograM Melentur Buluh – sk segariThe newly refurbished librarywas officiated at SK Segari.

15-16 June 2013karnival sukan rakyat MukiM serkatFolks fromMukim Serkat having a good time at the carnival.

21-23 June 2013Malakoff Coral rehaBilitation prograMDiversworked hard putting up the artificial coral framesduring the program.

01 July 2013proJek seMaian kasih – pdk sinar Bakti, pontianUnderprivileged children enjoyed playing games during the event.


Corporate events highlights (continued)

03 July 2013Malakoff Mangrove planting proJeCtParticipants braved the swamp to participate in themangrove planting activity.

06 July 2013Cintai hutan warisan kita – pulau pangkorSchool children planted a tree as a sign of their commitment to the environment.

23 July 2013MaJlis BerBuka puasa luMut power plantDonationswere handed over to residents from charityhomes.

24 July 2013MaJlis BerBuka puasa tg Bin power plantContributionswere handed over to village head ofMukimSerkat.

26 august 2013Malakoff hari raya open house Corporate guests were entertained at Malakoff KLHQopen house.

087

12 septeMBer 2013Malakoff turtle awareness prograMTurtle equippedwith satellite tracking device released tothe sea.

19-21 oCtoBer 2013Malakoff adopted sChool prograM – learning Beyond the ClassrooMStudents visited Pusat Sains Negara during the educational trip.

21 oCtoBer 2013launChing of Mutap 2013Participants all fired up to be a part of MuTAP.

27 oCtoBer 2013Malakoff powerMan asian ChaMpionshipsWinners of theMalakoff Powerman Asian Championships.

finanCial stateMents088dIRecToRs’ RepoRT

095sTATemenTs oF FInAncIAl posITIon

097sTATemenTs oF pRoFIT oR loss And oTHeR compReHensIve Income

099sTATemenTs oF cHAnGes In equITy

102sTATemenTs oF cAsH Flows

104noTes To THe consolIdATed FInAncIAl sTATemenTs

214sTATemenT By dIRecToRs

214sTATuToRy declARATIon

215IndependenT AudIToRs’ RepoRT


directors’ report for the year ended 31 december 2013

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 2013.

prinCipal aCtivities

The Company is principally engaged in investment holding activities, whilst the principal activities of the subsidiaries are asstated in Note 6 to the financial statements. There has been no significant change in the 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 171,600 3,408,851 Non-controlling interests 73,125 –

244,725 3,408,851

reserves and provisions

There were no material transfers to or from reserves and provisions during the financial year under review except as disclosedin the financial statements.

dividends

Since the end of the previous financial year, the company paid:

(i) an interim single-tier dividend of approximately 13.72 sen per ordinary share of RM1.00 each totalling RM48,207,996 in respect of the financial year ended 31 December 2013 on 20 May 2013.

(ii) an interim single-tier preference dividend of RM1.00 per share totalling RM41,792,004 in respect of the financial year ended 31 December 2013 on 20 May 2013.

(iii) an interim single-tier dividend of approximately 28.75 sen per ordinary share of RM1.00 each totalling RM101,000,000 in respect of the financial year ended 31 December 2013 on 28 August 2013.

The Directors do not recommend any final dividend for the financial year ended 31 December 2013.

091

direCtors of the CoMpany

Directorswho served since the date of the last report are:

director alternate director

Tan Sri Dato’Wira Syed Abdul Jabbar bin Syed Hassan (Chairman)Dato’ Sri Che Khalib binMohamad noh (appointed on 1 July 2013)DatukMuhamad noor bin HamidTan ler chinOoi Teik HuatTan Sri Dato’ Seri Alauddin bin Dato’ Md Sheriff Datuk Idris bin Abdullah@ DasMurthyDatuk Dr. SyedMuhamad bin Syed Abdul Kadirzalman bin Ismail (appointed on 18 March 2013, resigned on 21 May 2013)wan kamaruzaman bin wan Ahmad (appointed on 21 May 2013) za lman bin I smai l (appointed as a l ternate

director to wan kamaruzaman bin wan Ahmad on 21 May 2013)

Kanad Virk Singh (appointed on 16 December 2013) Craig Robert Martin (appointed as alternate director to Kanad Virk Singh on 7 January 2014)

Datuk Hj Hasni bin Harun (resigned on 30 June 2013) Lee Khuan Eoi (ceased as alternate director to Datuk Hj Hasni bin Harun on 30 June 2013)

Dato’ Azian binti Mohd Noh (resigned on 18 March 2013)Andrew Rowan Ian yee (resigned on 16 December 2013) Craig Robert Martin (ceased as alternate director

to Andrew Rowan Ian yee on 16 December 2013)

direCtors’ interests in shares

None of the Directors holding office at 31 December 2013 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 to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown inthe financial statements or the fixed salary of a full time employee of the company or of related corporations) by reason of a contractmade by the Company or a related corporationwith the Director or with a firm of which the Director is amember, orwith a company inwhich 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 theCompany to acquire benefits bymeans of the acquisition of shares in the Company or any other body corporate.

issue of shares

Therewere no changes in the authorised, issued and paid-up capital of the Company during the financial year.


directors’ report (continued)

options granted over unissued shares

no optionswere granted to any person to take up unissued shares of the Company during the financial year.

other statutory inforMation

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps toascertain that:

i) all known bad debts have beenwritten off and adequate provisionmade for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to anamountwhich theymight be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

i) that would render the amountwritten off for bad debts, or the amount of the provision for doubtful debts in the Groupand in the Company inadequate to any substantial extent, or

ii) thatwould render the value attributed to the current assets in the financial statements of theGroup and of theCompanymisleading, or

iii) which have arisenwhich render adherence to the existingmethod of valuation of assets or liabilities of the Group and ofthe company misleading or inappropriate, or

iv) not otherwise dealtwith in this report or in the financial statements thatwould render any amount stated in the financialstatements 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 whichsecures the liabilities of any other person, or

ii) any contingent liability in respect of the group or of the company that has arisen since the end of the financial year.

nocontingent liabilityorother liabilityofanycompany in theGrouphasbecomeenforceable,or is likely tobecomeenforceablewithin the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or maysubstantially affect the ability of the Group and of the Company tomeet their obligations as andwhen they fall due.

In the opinion of the Directors, except for those disclosed in the financial statements, the financial performance of the group and of the company for the financial year ended 31 December 2013 have not been substantially affected by any item, transaction or eventof amaterial andunusual naturenorhas any such item, transactionor eventoccurred in the interval between the endof that financial year and the date of this report.

093

signifiCant events

The significant events during the year are as disclosed in Note 36 to the financial statements.

This section has been left blank intentionally.


auditors

The auditors,Messrs KPMG, have indicated their willingness to accept re-appointment.

Signed on behalf of the Board of Directors in accordancewith a resolution of the Directors:

…………………………………………………....................tan sri dato’ wira syed abdul Jabbar bin syed hassanchairman

………………………………………………………………dato’ sri Che khalib bin Mohamad nohDirector

kuala lumpur

Date: 21 February 2014

directors’ report (continued)

095

statements of financial position for the year ended 31 december 2013

group Company

31.12.2013 31.12.2012 1.1.2012 31.12.2013 31.12.2012 1.1.2012 rM’000 RM’000 RM’000 rM’000 RM’000 RM’000 Note Restated Restated Restated Restated

non-current assetsProperty, plant and equipment 3 13,061,031 11,124,456 9,583,336 49,815 40,576 40,875Intangible assets 4 5,071,359 5,498,521 5,352,002 – – –Prepaid lease payments 5 74,675 79,021 83,364 – – –Investment in subsidiaries 6 – – – 8,134,741 8,137,395 8,131,943Investment in associates 7 1,338,437 1,403,579 1,145,582 998,800 998,800 998,800Investment in an equity accounted joint venture 8 51,230 47,433 45,504 – – –other investments 9 – – – – 1,027,419 1,130,594Finance lease receivable 10 2,012,945 – – – – –Derivative financial assets 20 80,241 – – – – –other receivables 12 126,939 139,083 – – – –Deferred tax assets 11 697,512 611,570 536,035 2,555 5,884 3,726

total non-current assets 22,514,369 18,903,663 16,745,823 9,185,911 10,210,074 10,305,938

Current assetsTrade and other receivables 12 1,266,268 1,490,171 1,441,263 889,540 1,175,555 839,724Inventories 13 479,075 493,799 483,867 – – –current tax assets 310,817 210,560 145,448 31,209 28,180 39,161Cash and cash equivalents 14 3,541,737 5,153,970 3,102,094 134,585 381,076 860,857

total current assets 5,597,897 7,348,500 5,172,672 1,055,334 1,584,811 1,739,742

total assets 28,112,266 26,252,163 21,918,495 10,241,245 11,794,885 12,045,680

equityShare capital 15 355,523 355,523 355,523 355,523 355,523 355,523Share premium 15 3,575,837 3,575,837 3,575,837 3,575,837 3,575,837 3,575,837Reserves 15 156,811 1,492 840 840 840 840(Accumulated losses)/ Retained profits (128,468) (111,501) (383,341) 3,596,959 378,603 236,261

Equity attributable to owners of the Company 3,959,703 3,821,351 3,548,859 7,529,159 4,310,803 4,168,461Non-controlling interests 223,422 340,297 301,351 – – –

total equity 4,183,125 4,161,648 3,850,210 7,529,159 4,310,803 4,168,461


group Company

31.12.2013 31.12.2012 1.1.2012 31.12.2013 31.12.2012 1.1.2012 rM’000 RM’000 RM’000 rM’000 RM’000 RM’000 Note Restated Restated Restated Restated

non-current liabilities Loans and borrowings 16 16,611,760 14,221,261 10,815,072 1,800,000 6,441,439 7,049,284employee benefits 17 67,415 73,216 53,793 10,225 23,535 14,904Deferred income 18 2,608,222 2,338,602 2,058,319 – – –Deferred tax liabilities 11 2,645,445 2,750,242 2,698,730 – 15,899 14,854Derivative financial liabilities 20 31,762 162,750 – – – –

total non-current liabilities 21,964,604 19,546,071 15,625,914 1,810,225 6,480,873 7,079,042

Current liabilities Trade and other payables 19 934,116 1,435,326 948,010 901,861 303,209 399,337current tax liabilities 4,214 16,718 10,442 – – –Loans and borrowings 16 931,625 1,041,897 1,442,802 – 700,000 398,840Derivative financial liabilities 20 34,319 – – – – –Deferred income 18 60,263 50,503 41,117 – – –

total current liabilities 1,964,537 2,544,444 2,442,371 901,861 1,003,209 798,177

total liabilities 23,929,141 22,090,515 18,068,285 2,712,086 7,484,082 7,877,219

total equity and liabilities 28,112,266 26,252,163 21,918,495 10,241,245 11,794,885 12,045,680

The notes on pages 104 to 213 are an integral part of these financial statements.

statements of financial position for the year ended 31 december 2013 (continued)

097

statements of profit or loss and other Comprehensive income for the year ended 31 december 2013

group Company

2013 2012 2013 2012 Note rM’000 RM’000 rM’000 RM’000 Restated Restated

Revenue 21 4,717,419 5,587,608 3,689,158 691,319cost of sales (3,503,949) (4,041,435) – –

gross profit 1,213,470 1,546,173 3,689,158 691,319other income 79,082 102,123 593 390Administrative expenses (265,262) (251,660) (126,547) (87,882)other operating expenses (325,079) (159,157) – –

results from operating activities 702,211 1,237,479 3,563,204 603,827

Finance income 22 161,052 159,380 81,740 220,276Finance costs 23 (840,318) (797,279) (228,820) (461,423)

net finance costs (679,266) (637,899) (147,080) (241,147)Share of profit of equity – accounted associates and a joint venture, net of tax 71,269 106,513 – –

profit before tax 94,214 706,093 3,416,124 362,680Income tax credit/(expense) 27 150,511 (156,816) (7,273) (28,710)

profit for the year 24 244,725 549,277 3,408,851 333,970

other comprehensive income/(expense), net of taxitems that will not be reclassified subsequently to profit or loss 25Remeasurement of defined benefit liability 17 2,433 (13,104) 505 (7,258)

items that may be reclassified subsequently to profit or loss 25Cash flow hedge 238,418 (5,107) – –Share of loss on hedging reserve of equity-accounted associates (57,230) – – –Foreign currency translation differences for foreign operations (25,869) 5,759 – –

155,319 652 – –


group Company

2013 2012 2013 2012 Note rM’000 RM’000 RM’000 RM’000 Restated Restated

other comprehensive income/(expense) for the year 157,752 (12,452) 505 (7,258)

total comprehensive income for the year 402,477 536,825 3,409,356 326,712

profit attributable to:Owners of the Company 171,600 469,314 3,408,851 333,970Non-controlling interests 73,125 79,963 – –

profit for the year 244,725 549,277 3,408,851 333,970

total comprehensive income attributable to:Owners of the Company 329,352 456,862 3,409,356 326,712Non-controlling interests 73,125 79,963 – –

total comprehensive income for the year 402,477 536,825 3,409,356 326,712

earnings per ordinary share (rM) 28basic 0.49 1.34Diluted 0.44 1.19


statements of profit or loss and other Comprehensive income for the year ended 31 december 2013 (continued)

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lia

bilit

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– –

– –

– –

2,43

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433

– 2,

433

Fore

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curr

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tion

diff

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ns

– –

– –

– (2

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– –

(25,

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–

(25,

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Cashflowhedge

––

––

––

238,418

–238,418

–238,418

Shar

e of

los

s in

res

erve

s

attr

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able

to

asso

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– –

– –

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–

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–

(57,

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oth

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)/

inco

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–

– –

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(25,

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18

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433

157,

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– 15

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for

the

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–

– –

– –

– –

171,

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171,

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73,1

25

244,

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Com

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181,

188

174,

033

329,

352

73,1

25

402,

477

DividendstoownersoftheCompany

––

––

––

–(191,000)

(191,000)

–(191,000)

Div

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– –

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–

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at

31 d

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The

note

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pag

es 1

04 t

o 21

3 ar

e an

int

egra

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rt o

f th

ese

finan

cial

sta

tem

ents

.

stat

emen

ts o

f C

han

ges

in

eq

uit

y fo

r th

e ye

ar e

nd

ed 3

1 d

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201

3 (c

ontin

ued)

101

/-------------------------------- Attributable to owners of the Company –-----------------------------/ /-------------------------------- Non-distributable ---------------------------/ Distributable

Share capital Share premium Reserves capital Retained ordinary Preference ordinary Preference redemption profits TotalCompany RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

at 1 January 2012, as previously stated 351,344 4,179 3,162,096 413,741 840 234,086 4,166,286Impact of changes in accounting policies (Note 39) – – – – – 2,175 2,175

at 1 January 2012, restated 351,344 4,179 3,162,096 413,741 840 236,261 4,168,461

Remeasurement of defined benefit liability – – – – – (7,258) (7,258)

other comprehensive expense for the year – – – – – (7,258) (7,258)Profit for the year – – – – – 333,970 333,970

Comprehensive income for the year – – – – – 326,712 326,712Dividends to the owners of the Company – – – – – (184,370) (184,370)

at 31 december 2012/1 January 2013, restated 351,344 4,179 3,162,096 413,741 840 378,603 4,310,803

Remeasurement of defined benefit liability – – – – – 505 505

other comprehensive income for the year – – – – – 505 505Profit for the year – – – – – 3,408,851 3,408,851

Comprehensive income for the year – – – – – 3,409,356 3,409,356Dividends to the owners of the Company – – – – – (191,000) (191,000)

at 31 december 2013 351,344 4,179 3,162,096 413,741 840 3,596,959 7,529,159



group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000 Restated Restated

Cash flows from operating activitiesProfit before tax 94,214 706,093 3,416,124 362,680

Adjustments for:Amortisation of prepaid lease payments 4,346 4,343 – –Amortisation of intangible assets 469,837 440,093 – –Amortisation of transaction costs of hedging instruments 12,144 7,327 – –Depreciation of property, plant and equipment 471,266 435,632 4,702 2,790Finance costs 840,318 797,279 228,820 461,423gain on disposal of investment in a subsidiary – (26,700) – –Impairment loss on trade receivables 177,273 16,105 – –Interest income (161,052) (159,380) (81,740) (220,276)Net fair value gain on derivatives (44,041) (912) – –Property, plant and equipmentwritten off 127,126 1,774 – –Provision for retirement benefits 13,260 8,760 4,478 2,211Reversal of impairment loss on trade receivables (6,079) (10,307) – –Share of profit of equity-accounted associates and a joint venture entity, net of tax (71,269) (106,513) – –

Operating profit before changes inworking capital 1,927,343 2,113,594 3,572,384 608,828

Inventories 14,723 (9,374) – –Trade and other receivables 7,311 (133,820) 321,513 (330,214)Trade and other payables (422,536) 11,220 568,380 (75,431)Deferred income 279,380 289,669 – –employee benefits (16,628) (2,441) (17,283) (838)

Cash generated from operation 1,789,593 2,268,848 4,444,994 202,345Income taxes paid (152,989) (226,404) (22,873) (18,842)

net cash from operating activities 1,636,604 2,042,444 4,422,121 183,503

Cash flows from investing activitiesAcquisition of assets and liabilities of Hicom Power Sdn. Bhd., net of cash and cash equivalents acquired – (76,665) – –Acquisition of property, plant and equipment (2,534,967) (1,978,304) (13,941) (2,491)Acquisition of subsidiaries, net of cash and cash equivalents acquired (360,151) – – –Dividends received from associates 54,368 62,904 – –Decrease in deposits pledged – 16,323 – 16,323Interest received 146,440 99,458 46,242 214,659Increase in investment in subsidiaries – – – (5,771)Acquisition of associates (2,472) (347,563) – –Proceeds from redemption of unsecured loan stocks – 44,735 1,027,419 103,494Proceeds from disposal of a subsidiary – 74,568 – –Redemption of unsecured loan stocks (19,543) (59,219) – –

net cash (used in)/from investing activities (2,716,325) (2,163,763) 1,059,720 326,214

statements of Cash flows 31 December 2013

103

group Company


Cash flows from financing activitiesDividends paid to the owners of the Company (191,000) (184,370) (191,000) (184,370)Dividends paid to non-controlling interests (190,000) (41,017) – –Interest paid (923,463) (644,269) (195,893) (488,805)Repayment of borrowings (11,289,771) (6,284,000) (5,341,439) (2,100,000)Proceeds from borrowings 12,061,722 9,343,174 – 1,800,000

net cash (used in)/from financing activities (532,512) 2,189,518 (5,728,332) (973,175)

net (decrease)/increase in cash and cash equivalents (1,612,233) 2,068,199 (246,491) (463,458)Cash and cash equivalents at beginning of the year 5,153,970 3,085,771 381,076 844,534

Cash and cash equivalents at end of the year 3,541,737 5,153,970 134,585 381,076

Cash and cash equivalents

Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial positionamounts:

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Deposits with licensed banks and other licensed corporations 3,306,899 5,066,330 128,596 377,956Cash and bank balances 234,838 87,640 5,989 3,120

3,541,737 5,153,970 134,585 381,076



Malakoff Corporation Berhad is a public limited liability company, incorporated and domiciled inMalaysia. The addresses of theprincipal place of business and registered office of the Company are as follows:

principal place of business registered office

Level 13, Block 4 Ground Floor,Wisma BudimanPlaza Sentral Persiaran Raja ChulanJalan Stesen Sentral 5 50200 Kuala Lumpur50470 kuala lumpur

This consolidated financial statements of the company as at and for the financial year ended 31 December 2013 comprise the company and its subsidiaries (together referred to as the “group” and individually referred to as “group entities”) and the Group’s interest in associates and a joint venture.

TheCompany isprincipallyengaged in investmentholdingactivities,whilst theprincipalactivitiesof the subsidiariesareas statedin Note 6 to the financial statements.

The immediate and ultimate holding companies during the financial year wereMMC Corporation Berhad, a company listed onthe Main Market of Bursa Malaysia Securities Berhad and Indra Cita Sdn. Bhd. respectively. Both companies were incorporatedin Malaysia.

These financial statementswere authorised for issue by the Board of Directors on 21 February 2014.

1. Basis of preparation

(a) statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with MalaysianFinancial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the companies Act, 1965 in Malaysia.

The following are accounting standards, amendments and interpretations of the MFRS framework that have beenissued by the Malaysian Accounting Standards board (“MASb”) but have not been adopted by the group and the company.

Mfrss, interpretations and amendments effective for annual periods beginning on or after 1 January 2014

• Amendments toMFRS 10,Consolidated Financial Statements: Investment Entities• Amendments toMFRS 12,Disclosure of Interests in Other Entities: Investment Entities• Amendments toMFRS 127, Separate Financial Statements (2011): Investment Entities• Amendments toMFRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities• Amendments toMFRS 136, Impairment of Assets – Recoverable Amount Disclosures for Non-Financial Assets• Amendments to MFRS 139, Financial Instruments: Recognition and Measurement – Novation of Derivatives and

Continuation of Hedge Accounting• IC Interpretation 21, Levies

notes to the Consolidated financial statements

105

1. Basis of preparation (continued)

(a) statement of compliance (continued)

Mfrss, interpretations and amendments effective for annual periods beginning on or after 1 July 2014

• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2011-2013 Cycle)

• Amendments toMFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle)• Amendments toMFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)• Amendments toMFRS 8,Operating Segments (Annual Improvements 2010-2012 Cycle)• Amendments toMFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)• Amendments toMFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)• Amendments toMFRS 119, Employee Benefits – Defined Benefit Plans: Employee Contributions• Amendments toMFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)• Amendments toMFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)• Amendments toMFRS 140, Investment Properties (Annual Improvements 2011-2013 Cycle)

Mfrss, interpretations and amendments effective for a date yet to be confirmed

• MFRS 9, Financial Instruments (2009)• MFRS 9, Financial Instruments (2010)• MFRS 9, Financial Instruments – Hedge Accounting and Amendments to MFRS 9, MFRS 7 and MFRS 139• Amendments toMFRS 7, Financial Instruments: Disclosures – Mandatory Effective Date of MFRS 9 and Transition

Disclosures

The group and the company plan to apply the abovementioned accounting standards, amendments and interpretations:

• fromtheannualperiodbeginningon1January2014forthoseaccountingstandards,amendmentsorinterpretationsthat are effective for annual periods beginning on or after 1 January 2014, except for IC Interpretation 21whichis not applicable to the group and the company.

• from the annual period beginning on 1 January 2015 for those accounting standards, amendments orinterpretations that are effective for annual periodsbeginningonor after 1 July 2014, except for amendments toMFRS 2 andMFRS 140which are not applicable to the Group and the Company.

The initial application of the abovementioned standards, amendments or interpretations are not expected to have any material impacts to the financial statements of the Group and the Company except asmentioned below:

(i) Mfrs 9, financial instruments

MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities and on hedge accounting.

The group is currently assessing the financial impact that may arise from the adoption of MFRS 9.


notes to the Consolidated financial statements (continued)


(a) statement of compliance (continued)

(ii) Mfrs 119, employee benefits

The amendments to MFRS 119 introduces a practical expedient for employee or third party contributions set out in the formal terms of the plan that are linked to service and independent of the number of years of service.

The group plans to apply the amendments to MFRS 119 retrospective from the annual period beginning on 1 January 2015, and is currently assessing the financial impact that may arise from the initial application of the amendments.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.

(c) functional and presentation currency

These financial statements are presented in Ringgit Malaysia (RM), which is the Company’s functional currency. Allfinancial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

(d) use of estimates and judgments

The preparation of the financial statements in conformity with MFRSs requires management to make judgments,estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates arerecognised in the period inwhich the estimate are revised and in any future periods affected.

Thereareno significantareasofestimationuncertaintyandcritical judgments inapplyingaccountingpolicies thathavesignificant effect on the amounts recognised in the financial statements other than the following:

(i) lease accounting

The group has adopted Ic Interpretation 4, Determining whether an Arrangement contains a Lease,whichprescribesthat the determination of whether an arrangement is or contains a lease shall be based on the substance of the arrangement. It requires an assessment of whether the fulfilment of the arrangement is depended onthe use of specific assets and whether the arrangement conveys a right to use such assets. The adoption of Ic Interpretation 4 has resulted in operating lease accounting being applied to the group entities as lessor for the Power Purchase Agreements.

(ii) Cash flow hedge accounting

The Group enters into various types of hedging contracts to hedge the interest rate risk and foreign exchangerisk which both are arisen from the loan transactions. In merchant markets these contracts typically fall withinthe definition of derivative financial instruments and accordingly have to be marked to market. Accounting forthese contracts as cash flow hedges allows, to the extent the hedge is effective, the changes in value of thederivatives to be deferred in equity. In order to achieve cash flowhedge accounting it is necessary for theGrouptodetermine,onanon-goingbasis,whetheraforecasttransactionisbothhighlyprobableandwhetherthehedgeis effective. This requires both subjective and objectivemeasures of determination.

107


(d) use of estimates and judgments (continued)

(iii) fair value of derivatives

Inthepreviousfinancialyears,theGrouppresenteditsfinancialstatements inaccordancewiththerequirementsofMFRS 132 “Financial Instruments: Presentation and Disclosure” and MFRS 139 “Financial Instruments: Recognition andMeasurement”. InaccordancewithMFRS139,theGrouprecordeditsderivativecontractson itsbalancesheetat fair value. Changes in the value of its derivative contracts in each period were recorded in earnings unlessstrict hedge accounting criteria were met which allow the movement in fair value to be recorded within equity.The Group estimated the fair value of its derivative contracts by reference to forward and discount curves. Theforwardcurvewasderived froma reputableprovideroffinancialmarketdata,over the short-termhorizonperiod,and fromvaluation techniquesover themoredistanthorizonperiod.Theassumptionsusedduring theapplicationof valuation techniques would directly impact the shape of the forward curve. The forward curves were onlyestimated of future rates and thus possess inherent uncertainty and subjectivity.

From 1 January 2013, the Group adopted MFRS 13, Fair Value Measurement. The details of the accounting policies are shown in note 2(t).

(iv) residual value

The Group assesses the appropriateness of the residual values of the power plants at the end of the initialconcession period. The group considered and adopted the recoverable values of the assets based on the discounted cash flowmethodwith the assumptions as shown in note 2(d)(iv).

(v) impairment of loan and receivables

Management reviews its loans and receivables for objective evidence of impairment at least quarterly. Significantfinancialdifficultiesof thedebtors, theprobability thatthedebtorswillenterbankruptcy,anddefaultorsignificantdelay in payments are considered objective evidence that the receivables are impaired. In determining this,managementmakes judgment as towhether there is observable data indicating that there has been a significantchange in thepayment ability of thedebtors, orwhether therehavebeen significant changeswith adverse effectin the technological,market, economic or legal environment inwhich the debtor operates in.

Where there is objective evidence of impairment, management makes judgments as to whether an impairmentloss should be recorded as an expense. In determining this, management uses estimates based on historical loss experience for assetswith similar credit risk characteristics. Themethodologyandassumptionsused for estimatingboth the amount and timing of future cash flows are reviewed regularly to reduce any differences between theestimated loss and actual loss experience. As at 31December 2013, the total allowance for impairment losswasapproximately RM177,273,000 (2012: RM16,105,000).

(vi) provision for retirement benefits

The provision is determined using actuarial valuation prepared by an independent actuary. The actuarial valuation involved making assumptions about discount rate, future salary increase, mortality rates, resignation rate andnormal retirement age. As such, this estimated provision amount is subject to significant uncertainty.



2. signifiCant aCCounting poliCies

The accountingpolicies set out belowhavebeen applied consistently to theperiods presented in thesefinancial statementsand have been applied consistently by the Group entities, unless otherwise stated.

(a) Basis of consolidation

(i) subsidiaries

Subsidiaries are entities, including structured entities, controlled by the company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The group adopted MFRS 10, Consolidated Financial Statements in the current financial year. This resulted in changes to the following policies:

• Control exists when the Group is exposed, or has rights, to variable returns from its involvement with theentity and has the ability to affect those returns through its power over the entity. In the previous financialyears, control exists when the Group has the ability to exercise its power to govern the financial andoperating policies of an entity so as to obtain benefits from its activities.

• Potential voting rights are considered when assessing control only when such rights are substantive. In theprevious financial years, potential voting rights are considered when assessing control when such rights arepresently exercisable.

• The Group considers it has de facto power over an investee when, despite not having themajority of votingrights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return. In the previous financial years, theGroup did not consider de facto power in its assessment of control.

The change in accounting policy has beenmade retrospectively and in accordancewith the transitional provisionof MFRS 10. The adoption of MFRS 10 has no significant impact to the financial statements of the group.

Investments in subsidiaries are measured in the company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.

(ii) Business combinations

Businesscombinationsareaccountedforusingtheacquisitionmethodfromtheacquisitiondate,which isthedateonwhich control is transferred to the Group.

For new acquisitions, the Groupmeasures the cost of goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus

• the recognised amount of any non-controlling interests in the acquiree; plus

• if the business combination is achieved in stages, the fair value of the existing equity interest in theacquiree; less

• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

109

2. signifiCant aCCounting poliCies (continued)

(a) Basis of consolidation (continued)

(ii) Business combinations (continued)

when the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

For eachbusiness combination, theGroupelectswhether itmeasures thenon-controlling interests in theacquireeeither at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incursin connectionwith a business combination are expensed as incurred.

(iii) acquisitions of non-controlling interests

The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of controlas equity transactions between the Group and its non-controlling interest holders. Any difference between theGroup’s share of net assets before and after the change, and any consideration received or paid, is adjusted toor against group reserves.

(iv) loss of control

upon the loss of control of a subsidiary, the group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary. Any surplusor deficit arising on the loss of control is recognised in profit or loss. If the group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it isaccounted for as an equity accounted investee or as an available-for-sale financial asset depending on the levelof influence retained.

(v) associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but notcontrol, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equitymethod lessany impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those ofthe group, from the date that significant influence commences until the date that significant influence ceases.

when the group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the group has an obligation or has made payments on behalf of the associate.

when the group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded asthe initial carrying amount of a financial asset. The difference between the fair value of any retained interestplus proceeds from the interest disposed of and the carrying amount of the investment at the datewhen equitymethod is discontinued is recognised in the profit or loss.





(v) associatess (continued)

when the group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of therelated assets or liabilities.

Investments in associates are measured in the company’s statement of financial position at cost less any impairment losses, unless it is classified as held for sale or distribution. The cost of investments includes transaction cost.

(vi) Joint arrangements

Joint arrangements are arrangements of which the Group has joint control, established by contracts requiringunanimous consent for decisions about the activities that significantly affect the arrangements’ returns.

The group adopted MFRS 11, Joint Arrangements in thecurrentfinancial year.Asa result, jointarrangementsareclassified and accounted for as follows:

• A joint arrangement is classified as “joint operation” when the Group or the Company has rights to theassets and obligations for the liabilities relating to an arrangement. The group account for each of its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the otherinvestors, in relation to the joint operation.

• A joint arrangement is classified as “joint venture”when theGroup has rights only to the net assets of thearrangements. The Group accounts for its interest in the joint venture using the equitymethod.

In the previous financial years, joint arrangementswere classified and accounted for as follows:

• For jointly controlled entity, the Group accounted for its interest using the equitymethod.

• For jointly controlledassetor jointly controlledoperation, theGroupaccounted foreach its shareof theassets,liabilities and transactions, including its share of those held or incurred jointlywith the other investors.

The change in accounting policy has beenmade retrospectively and in accordancewith the transitional provisionof MFRS 11. The adoption of MFRS 11 has no significant impact to the financial statements of the group.

111



(vii) non-controlling interests

non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributabledirectlyor indirectlytotheequityholdersoftheCompany,arepresentedintheconsolidatedstatementoffinancialposition and statement of changes in equity within equity, separately from equity attributable to the owners ofthe company. Non-controlling interests in the results of the group is presented in the consolidated statements of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company.

losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(viii) transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealisedgainsarisingfromtransactionswithequity-accountedassociatesandjointventureareeliminatedagainstthe investment to the extent of the group’s interest in the investees. unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) foreign currency

(i) foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of group entities at exchange rates at the date of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair valuewas determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge ofcurrency risk, which are recognised in other comprehensive income.




(b) foreign currency (continued)

(ii) operations denominated in functional currencies other than ringgit Malaysia

Theassetsand liabilitiesofoperationsdenominated infunctionalcurrenciesotherthanRM, includinggoodwillandfair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reportingperiod, except for goodwill and fair value adjustments arising from business combinations before 1 January 2009which are treated as assets and liabilities of the Company. The income and expenses of foreign operations,excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly-owned subsidiary, thenthe relevant proportionate share of the translation difference is allocated to the non-controlling interests. when a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulativeamount in the FcTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

when the group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. when the group disposes of only part of its investment in an associate or joint venture that includes a foreign operationwhile retaining significantinfluence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to aforeignoperation is neitherplannednor likely in the foreseeable future, foreignexchangegains and losses arisingfrom such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the FCTR in equity.

(c) financial instruments

(i) initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial positionwhen, and onlywhen,the group or the company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of thefinancial instrument.

(ii) financial instrument categories and subsequent measurement

TheGroup and the Company categorise financial instruments as follows:

financial assets

loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an activemarket.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using theeffective interest method.

All financial assets are subject to review for impairment (see note 2(i)).

113


(c) financial instruments (continued)

(ii) financial instrument categories and subsequent measurement (continued)

financial liabilities

All financial liabilities are subsequentlymeasured at amortised cost using the effective interestmethod.

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fairvaluewith the gain or loss recognised in profit or loss.

(iii) hedge accounting

Cash flow hedge

A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular riskassociatedwith a recognised asset or liability or a highly probable forecast transaction and could affect the profitor loss. In a cash flow hedge, the portion of the gain and loss on the hedging instrument that is determined tobe an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in profit or loss.

Subsequently, thecumulativegainor lossrecognised inothercomprehensive incomeisreclassifiedfromequity intoprofit or loss in the same period or periods duringwhich the hedged forecast cash flows affect profit or loss. Ifthe hedge item is a non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is removedfromequityand included inthe initialamountoftheassetor liability.However, lossrecognisedinothercomprehensive incomethatwillnotbe recovered inoneormore futureperiods is reclassified fromequityinto profit or loss.

Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold,terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or losson the hedging instrument remains in equity until the forecast transaction occurs.When the forecast transactionis no longer expected to occur, any related cumulative gain or loss recognised in other comprehensive income on the hedging instrument is reclassified from equity into profit or loss.

(iv) derecognition

A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flowsfrom the financial asset expire or the financial asset is transferred to another party without retaining control orsubstantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between thecarryingamountandthesumoftheconsiderationreceived(includinganynewassetobtainedlessanynewliabilityassumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contractis discharged or cancelled or expires.On derecognition of a financial liability, the difference between the carryingamount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.)




(d) property, plant and equipment

(i) recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and anyaccumulated impairment losses.

Cost includesexpenditures thataredirectlyattributable to theacquisitionof theassetandanyother costsdirectlyattributable to bringing the asset to working condition for its intended use, and the costs of dismantling andremoving the items and restoring the site on which they are located. The cost of self-constructed assets alsoincludesthecostofmaterialsanddirect labour.Forqualifyingassets,borrowingcostsarecapitalised inaccordancewith the accounting policy on borrowing costs. Costs alsomay include transfers from equity of any gain or losson qualifying cash flow hedges of foreign purchases of property, plant and equipment.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Thecostofproperty,plantandequipment recognisedasa resultofabusiness combination isbasedon fair valueat acquisition date. The fair value of property is the estimated amount forwhich a property could be exchangedbetween knowledgeablewilling parties in an arm’s length transaction after propermarketingwherein the partieshad each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement costswhen appropriate.

Whensignificantpartsofan itemofproperty,plantandequipmenthavedifferentuseful lives, theyareaccountedfor as separate items (major components) of property, plant and equipment.

Thegainor lossondisposalofanitemofproperty,plantandequipmentisdeterminedbycomparingtheproceedsfrom disposal with the carrying amount of property, plant and equipment and is recognised net within “otherincome” or “other operating expenses” respectively in profit or loss.

(ii) subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carryingamount of the item if it is probable that the future economic benefits embodied within the component willflow to the Group or the Company, and its cost can bemeasured reliably. The carrying amount of the replacedcomponentisderecognisedtoprofitorloss.Thecostsoftheday-to-dayservicingofproperty,plantandequipmentare recognised in profit or loss as incurred.

115


(d) property, plant and equipment

(iii) depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that assets, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease termand their useful lives unless it is reasonably certain that theGroupwill obtain ownership by the end of the leaseterm. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciateduntil the assets are ready for their intended use. All spare parts including common spares, emergency spares and consumable spares which expected to be used for more than one period is classified under C-inspection costswithin property, plant and equipment. Spare parts which can only be used as part of an equipment purchasedor plant constructed are depreciated in the same manner of the c-inspection costs. common spare that can be used for more than a single equipment or plant is not depreciated before use. Upon use, it is depreciated overthe remaining estimated useful life of the larger equipment or plant.

The estimated useful lives for the current and comparative periods are as follows:

• Buildings 5 – 20 years• C-inspection costs 3 years• Plant andmachinery 5 – 31 years• Office equipment and furniture 5 years• Motor vehicles 5 years• Computers 3 years

Depreciationmethods, useful lives and residual values are reviewed at end of the reporting period, and adjustedas appropriate.

(iv) residual value

The Group charges depreciation on its depreciable property, plant and equipment based on the useful lives andresidual values of the assets. Estimating the useful lives and residual values of property, plant and equipmentinvolvessignificant judgement,selectionofvarietyofmethodsandassumptionsthatarenormallybasedonmarketconditions existing at the balance sheet date. The actual useful lives and residual values of the assets however,may be different from expected.

The Power Purchase Agreements (“PPAs”) provide for the disposal of the power plants at the end of the initialconcession period, in the event that the PPAs are not extended. In assessing the appropriateness of the residual values adopted,management considered the recoverable values of the assets based on the discounted cash flowmethod (“DCF”). The discounted cash flowswere derived using the following critical assumptions:




(d) property, plant and equipment (continued)

(iv) residual value (continued)

(1) extension of five to ten years of the PPAs at the end of the initial concession period, in view of:

(i) limited new power plants being constructed;

(ii) increase in demand for power; and

(iii) Tenaga nasional Berhad (“TnB”)’s continued reliance on Independent Power Producers (“IPPs”).

The existing PPAs expire as follows:

residual Residual Year of value valueppa owner expiry rM’million at RM’million at 31.12.2013 31.12.2012

Segari energy ventures Sdn. bhd. (“Sev”) 2027 370 370gb3 Sdn. bhd. 2022 514 514Prai Power Sdn. Bhd. 2024 315 315Tanjung Bin Sdn. Bhd. 2031 1,924 1,924

3,123 3,123

(2) an estimatedVariableOperating Rate (“VOR”) during the extension periodwhichmanagement deems to bereasonable based on the expected demand and the voR rate at the end of the PPAs;

(3) an average despatch factor of 20% and 75% to reflect the future demand for power by the industry; and

(4) the pre-tax discount rate of 10% per annum.

(e) leased assets

(i) finance lease

Leases in termsofwhich theGroupor theCompanyassumes substantially all the risks and rewardsofownershipare classified as finance leases. Upon initial recognition, the leased asset ismeasured at an amount equal to thelower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition,the asset is accounted for in accordancewith the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and thereduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. contingent lease payments are accounted for by revising theminimum lease payments over the remaining term of the leasewhen the leaseadjustment is confirmed.

Leasehold landwhich in substance is a finance lease is classified as property, plant and equipment.

117


(e) leased assets (continued)

(ii) operating lease

(a) group as lessee

leasehold land

Leases, where the Group or the Company does not assume substantially all the risks and rewards ofownership are classified as operating leases and, except for property interest held under operating lease, theleased assets are not recognised in the statement of financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold landwhich in substance is an operating lease is classified as prepaid lease payments.

(b) group as lessor

power purchase agreement

The group adopted Ic Interpretation 4, Determining whether an Arrangement contains a Lease, whichprescribed that the determination of whether an arrangement is or contains a lease shall be based on thesubstance of the arrangement. It requires an assessment of whether the fulfillment of the arrangement isdependent on the use of specific asset and whether the arrangement conveys a right to use such assets.An arrangement that contains a lease is accounted for as a finance lease or an operating lease. Payment for services and the cost of inputs of the arrangement are excluded from the calculation of the minimum lease payments.

The operating lease income is recognised over the term of the lease on a straight-line basis.

(f) intangible assets

(i) goodwill

Goodwill arises on business combinations ismeasured at cost less any accumulated impairment losses. In respectof equity-accounted associates, the carrying amount of goodwill is included in the carrying amount of theinvestment and an impairment loss on such an investment is not allocated to any asset, including goodwill, thatforms part of the carrying amount of the equity accounted associates.

(ii) other intangible assets

Intangibleassets,otherthangoodwill, thatareacquiredbytheGroup,whichhavefiniteuseful lives,aremeasuredat cost less any accumulated amortisation and any accumulated impairment losses.

The fair value of other intangible assets is based on the discounted cash flows expected to be derived from theuse and eventual sale of the assets.




(f) intangible assets (continued)

(iii) subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in thespecific assets towhich it relates.All other expenditure, including expenditureon internally generatedgoodwill, isrecognised in profit or loss as incurred.

(iv) amortisation

Goodwill are not amortised but are tested for impairment annually andwhenever there is an indication that theymay be impaired.

other intangible assets are amortised from the date that they are available for use.

Amortisation of intangible asset is recognised in profit or loss based on the estimated net electrical output and fixed operation and maintenance income over the finite useful lives of the intangible assets.

Amortisation method and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

(g) inventories

Inventories aremeasured at the lower of cost and net realisable value.

The cost of inventories is measured based on weighted average cost formula, and includes expenditure incurred inacquiring the inventories, production or conversion cost and other cost incurred in bringing them to their existinglocation and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs completion and the estimated costs necessary tomake the sale.

In the current financial year, the group adopted the amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle) and classified spare parts as inventories unless the item of spare part is held for own use and expected to be used during more than one period in which it is classified as property, plant andequipment. In thepreviousfinancial years, all sparepartswere classifiedas inventories.Uponadoptionofamendmentsto MFRS 116, the group reclassified retrospectively emergency spare parts previously accounted for under inventories to “C-inspection” under property, plant and equipment. The effects from the adoption of the amendments to MFRS116 are disclosed in Note 39.

(h) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investmentswhich have an insignificant risk of changes in fair valuewith originalmaturities of threemonths or less, and are usedby the group and the company in the management of their short term commitments.

119


(i) impairment

(i) financial assets

All financial assets (except for financial assets categorised as investments in subsidiaries, investments in associates and investment in an equity accounted joint venture) are assessed at each reporting date whether there is anyobjective evidence of impairment as a result of one or more events having an impact on the estimated futurecash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised.For an investment in anequity instrument, a significantorprolongeddecline in the fair valuebelow its cost is anobjective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financialasset is estimated.

An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discountedat the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

If, inasubsequentperiod, thefairvalueofadebt instrument increasesandthe increasecanbeobjectively relatedto an event occurring after the impairment losswas recognised in profit or loss, the impairment loss is reversed,to the extent that the asset’s carrying amount does not exceed what the carrying amount would have beenhad the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

(ii) other assets

The carrying amounts of other assets (except for inventories and deferred tax assets) are reviewed at the end ofeach reporting period to determine whether there is any indication of impairment. If any such indication exists,then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite usefullives or that are not yet available for use, the recoverable amount is estimated each period at the same time.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assetsor cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairmenttesting, cash-generating units to which goodwill has been allocated are aggregated so that the level at whichimpairment testing is performed reflects the lowest level at which goodwill is monitored for internal repostingpurposes. Thegoodwill acquired in abusiness combination, for thepurposeof impairment testing, is allocated togroup of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their presentvalue using a pre-tax discount rate that reflects currentmarket assessments of the time value ofmoney and therisks specific to the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.




(i) impairment (continued)

(ii) other assets (continued)

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group ofcash-generating units) and then to reduce the carrying amount of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

An impairment loss in respectofgoodwill isnot reversed. In respectofotherassets, impairment losses recognisedin prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment losswas recognised.An impairment loss is reversedonly to theextent that the asset’s carrying amount does not exceed the carrying amount thatwould have been determined,net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the year inwhich the reversals are recognised.

(j) equity instruments

Instruments classified as equity aremeasured at cost on initial recognition and are not remeasured subsequently.

(i) ordinary shares

Ordinary shares are classified as equity.

(ii) preference share capital

Preference share capital is classified as equity if it is non-redeemable, or is redeemablebutonly at theCompany’soption, and any dividends are discretionary. Dividends thereon are recognised as distributionswithin equity.

Preference share capital is classified as financial liability if it is redeemable on a specific date or at the option of the equity holders, or if dividend payments are not discretionary. Dividends thereon are recognised as interestexpense in profit or loss as accrued.

(k) employee benefits

(i) short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leaveare measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the group or the company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) state plans

The group’s and the company’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cashrefund or a reduction in future payments is available.

121


(k) employee benefits (continued)

(iii) defined benefit plans

As a result of adopting MFRS 119 (2011), Employee Benefits, the group has changed its accounting policy in respect of the basis for determining the income or expense relating to its post employment defined benefit plans.

The group’s and the company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation is performed at regular interval by a qualified actuary using the projected unit credit method.when the calculation results in a potential asset for the group and the company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicableminimum funding requirements.

Remeasurementsof thenet definedbenefit liability,which comprise actuarial gains and losses, the returnonplanassets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income.

The group and the company determines the net interest expense or income on the net defined liability or asset for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability or asset, taking into account any changes inthe net defined benefit liability or asset during the period as a result of contributions and benefit payments. Previously, the group and the company determined interest income on plan assets based on their long-term rate of expected return.

Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.

When thebenefits of a plan are changedorwhenaplan is curtailed, the resulting change inbenefit that relatesto past service or the gain or loss on curtailment is recognised immediately in profit or loss. The group and the Company recognises gains and losses on the settlement of a defined benefit planwhen the settlement occurs.

The change in accounting policy has been made retrospectively. The effects from the adoption of MFRS 119 (2011) are disclosed in Note 39.

(l) provisions

A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle theobligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflectscurrentmarket assessments of the time value ofmoney and the risks specific to the liability.




(m) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimatedreliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.

Possibleobligations,whoseexistencewillonlybeconfirmedbytheoccurrenceornon-occurrenceofoneormorefutureevents, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(n) revenue and other income

(i) energy payments, operation and maintenance charges and project management fees

Revenue is measured at the fair value of the consideration received or receivable and is recognised in profit or loss as it accrues.

(ii) Capacity payment

Revenue is recognised on a straight-line basiswhere the PPA is considered to be or to contain an operating lease.

(iii) dividend income

Dividend income is recognised in profit or loss on the date that the group’s or the company’s right to receive payment is established.

(iv) interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining aqualifying asset which is accounted for in accordancewith the accounting policy on borrowing costs.

(v) lease income

lease income is recognised in profit or loss by using effective interest method over the term of the lease.

(o) deferred income

Deferred income comprises the capacity payments received from Tenaga Nasional berhad in relation to the PPAs. The amount is credited to profit or loss on a straight-line basis over the term of the respective PPAs under “Revenue” in the statement of proft or loss and other comprehensive income.

123


(p) Borrowing costs

Borrowingcosts thatarenotdirectlyattributable to theacquisition,constructionorproductionofaqualifyingassetarerecognised in profit or loss using the effective interest method.

Borrowingcostsdirectlyattributable to theacquisition, constructionorproductionofqualifyingassets,whichareassetsthat necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part ofthe cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for theasset is being incurred, borrowing costs arebeing incurred and activities that arenecessary toprepare the asset for itsintendeduseor saleare inprogress.Capitalisationofborrowingcosts is suspendedorceaseswhensubstantiallyall theactivities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

(q) income tax

Income tax expense comprises current and deferred tax. current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or othercomprehensive income.

current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect ofprevious years.

Deferredtax is recognisedusingthe liabilitymethod,providingfor temporarydifferencesbetweenthecarryingamountsof assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporarydifferences: the initial recognitionofgoodwill, the initial recognitionof assetsor liabilities in atransaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax ismeasuredat the tax rates thatareexpected tobeapplied to the temporarydifferenceswhen they reverse,basedon the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profitswill be available againstwhich the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting periodand are reduced to the extent that it is no longer probable that the related tax benefitwill be realised.




(r) earnings per ordinary share

The group presents basic and diluted earnings per share data for its ordinary shares (“ePS”).

basic ePS is calculated by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potentialordinary shares.

(s) operating segments

An operating segment is a component of the Group that engages in business activities from which it may earnrevenuesand incurexpenses, including revenuesandexpenses that relate to transactionswithanyof theGroup’sothercomponents. All operating segment’s operating results are reviewed regularly by the chief operating decision maker,which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated tothe segment and to assess its performance, and forwhich discrete financial information is available.

(t) fair value measurement

From 1 January 2013, the Group adopted MFRS 13, Fair Value Measurement which prescribed that fair value of anasset or a liability, except for share-basedpayment and lease transactions if any, is determinedas theprice thatwouldbe received to sell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants at themeasurement date. Themeasurement assumes that the transaction to sell the asset or transfer the liability takes placeeither in the principalmarket or in the absence of a principalmarket, in themost advantageousmarket.

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generateeconomic benefits by using the asset in its highest and best use or by selling it to another market participant thatwould use the asset in its highest and best use.

In accordance with the transitional provision ofMFRS 13, the Group applied the new fair valuemeasurement guidanceprospectively,andhasnotprovidedanycomparative fair value information fornewdisclosures.TheadoptionofMFRS13has not significantly affected the measurements of the group’s assets or liabilities other than the additional disclosures.

125

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126

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At31December2013,certainoftheGroup’spropertieswithacarryingamountofRM12,261,679,000(31December2012:RM10,664,800,000)werechargedas

securitiesfordebtsecuritiesissuedbythesubsidiaries(seenote16–loansandborrowings).



4. intangiBle assets

Subsidiaries Associates Interest over Interest over Power Purchase Power Purchase andOperation and Power and and Maintenance water Purchase Goodwill Agreements Total Goodwill Agreements Totalgroup RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost

At 1 January 2012 8,232 7,103,796 7,112,028 – 857,970 857,970Addition – 548,074 548,074 265,583 81,103 346,686

At 31 December 2012 8,232 7,651,870 7,660,102 265,583 939,073 1,204,656effect of movements in exchange rate – – – 19,182 – 19,182

At 31 December 2013 8,232 7,651,870 7,660,102 284,765 939,073 1,223,838

amortisation and impairment loss

At 1 January 2012 859 1,759,167 1,760,026 – 636,264 636,264Amortisation for the year – 401,555 401,555 – 38,538 38,538

At 31 December 2012/1 January 2013 859 2,160,722 2,161,581 – 674,802 674,802Amortisation for the year – 427,162 427,162 – 42,675 42,675

At 31 December 2013 859 2,587,884 2,588,743 – 717,477 717,477

Carrying amount

At 1 January 2012 7,373 5,344,629 5,352,002 – 221,706 221,706

At 31 December 2012/1 January 2013 7,373 5,491,148 5,498,521 265,583 264,271 529,854

At 31 December 2013 7,373 5,063,986 5,071,359 284,765 221,596 506,361

129

4. intangiBle assets (continued)

intangible assets arising from interest over power purchase, power and water purchase and operation and Maintenance agreements

The group’s revenue is substantially derived from the generation and sale of electricity energy and generating capacity in Malaysia, which is governed by the Power Purchase Agreements (“PPAs”) (together with the Independent Power Producer(“IPP Licenses”) Licence issued by the Ministry of Energy, Water and Communications) and Power and Water PurchaseAgreement (“PWPA”) held by the respective power producing subsidiaries and associates. TheGroup’s revenue is also fromtheoperationsandmaintenance services,which isgovernedby theOperationandMaintenanceAgreements (“OMAs”)heldby the operations and maintenance subsidiaries.

TheGroup has determined the expected cash flows to be generated from the PPAs (togetherwith the IPP Licences), PWPAand the oMAs as Intangible Assets.

ThePPAs, and the IPP Licences are recognisedas a single asset in accordancewithMFRS138 Intangible Assets in view thatboth are required for the generation and sale of electricity energy and generating capacity inMalaysia.

In2012, thereweresix (6)PPAs (togetherwiththerespective IPPLicences)heldrespectivelybytheGroup’spowerproducingsubsidiaries of Segari Energy Ventures Sdn. Bhd. (“SEV”), GB3 Sdn. Bhd. (“GB3”), Prai Power Sdn. Bhd. (“PPSB”) andTanjung Bin Power Sdn. Bhd. (“TBP”) and associates namely Kapar Energy Ventures Sdn. Bhd. (“KEV”) and Port DicksonPower Berhad (“PDP”); PWPA is held byHidd PowerCompany B.S.C (“HPC”), an associate company;whilst four (4)OMAsheld by the Group’s operations andmaintenance subsidiaries namely Teknik Janakuasa Sdn. Bhd. (“TJSB”), natural AnalysisSdn. Bhd. (“nASB”) and Tanjung Bin O&M Berhad (“TBOM”).

In 2013, theOMAs held by TJSB andnASBwere transferred toMalakoff Power Berhad (“MPB”), awholly owned subsidiaryof the Companywith the completion of theGroup and the Company’s internal reorganisation exercise on 18 January 2013.

These PPAs, PWPA andOMAs are the key documents that govern the underlying strength of theGroup’s cash flow,whichprovide for, inter alia, the electricity tariff, supply, operations and maintenance and all other terms to be met by the subsidiaries and associates.

Measurement

The fairvalueof the IntangibleAssetsarising fromthePPAs,PWPAandOMAsweremeasuredusing theMulti-PeriodExcessEarnings Method (“MEEM”) under the income method. The underlying rationale in the MEEM was that the fair value ofan Intangible Asset represents the present value of the net income after taxes attributable to the Intangible Asset. The net incomeattributable to the IntangibleAssetwas the excess incomeafter charging a fair returnon andof all the assets thatarenecessary (contributoryassets) to realise thenet income.Thecontributoryasset charges (“CAC”)werebasedon the fairvalue of each contributory asset and represent the return on the assets. The assumption in calculating the CAC was thatthe owner of the Intangible Asset “rents” or “leases” the contributory assets from a hypothetical third party in an arm’slength transaction in order to be able to derive income from the Intangible Asset. The present value of the expected income attributable to the Intangible Assets less cAc and taxes represents the value of the Intangible Asset.




Measurement (continued)

Themanagement had applied the following key assumptions in deriving the present value of the net income after taxes attributable to the Intangible Assets at the acquisition date:

• Remaining useful life of PPAs/PWPA/OMAs 12 – 25 years (in accordance with the respective PPAs, PwPA and oMAs)

• Dependable Capacity :-Power 350MW – 2,420MW :-water 17,047 m³/hour • Capacity Factor :-Power 45% – 75% of DC :-water 91% – 99% of Dc

• net Output :-Electrical (million kW/hour) 2,017 – 11,197 :-water (thousand m³) 67,370 – 73,771

• Capacity Rate :-Power (RM/kW/month) 11.35 – 50.00 :-water (RM/m³/month) 1,222 – 1,339

• FixedOperating Rate under Revenue (RM/kW/month) 4.00 – 10.50

• Variable Operating Rate under Revenue :-Power (RM/kW/month) 0.013 – 4.775 :-water (RM/m³/month) 58.20 – 116.40

• Fuel price (RM/mmBtu) 4.60 – 10.50

• CAC 17.77% – 28.00% of EBITDA

In applying the MEEM valuation methodology, the expected cash flows were discounted to their present value equivalentusingarateofreturnthatreflectstherelativeriskofthecashflows,aswellasthetimevalueofmoney.Thiswascalculatedby weighing the required returns on debt and equity in proportion to their assumed percentages. The applied pre-taxdiscount ratewas range from 9% to 10% (2012: 9% to 10%) per annum.

amortisation

The Intangible Assets with finite useful lives are amortised based on the net Electrical Output generated from the PPAcompanies and Fixed operation and Maintenance income generated from the oMA companies as management is of the view that this basis best represents the pattern in which the Intangible Assets’ future economic benefits are expected tobe consumed by the Group. The amortisation is recognised within the “cost of sales” and “other operating expenses”respectively in statement of profit or loss and other comprehensive income.

131


impairment testing for cash generating units (“Cgus”) containing goodwill and interest over power purchase, power and water purchase and operation and Maintenance agreements

The carryingamountsof thegoodwill and the interest over Power Purchase, Power andWater Purchase andOperationandMaintenance Agreements are allocated to the following CGUs:

Impairment Allocated loss for carrying amount amount the year 2013 2012goodwill RM’000 RM’000 rM’000 RM’000

ppa Companies

gb3 392 – 392 392PPSb 377 – 377 377Sev 1,565 – 1,565 1,565TbP 3,159 – 3,159 3,159

5,493 – 5,493 5,493

pwpa Company

hPc 284,765 – 284,765 265,583

oMa Companies

TJSB(i) – – – 1,577NASb(i) – – – 303MPb(i) 1,880 – 1,880 –

1,880 – 1,880 1,880

Total goodwill 292,138 – 292,138 272,956Less: Goodwill in an associate (284,765) – (284,765) (265,583)

7,373 – 7,373 7,373




impairment testing for cash generating units (“Cgus”) containing goodwill and interest over power purchase, power and water purchase and operation and Maintenance agreements (continued)

interest over ppas, pwpa and oMas

Allocated Impairment loss carrying amount amount 2013 2012 2013 2012 RM’000 rM’000 RM’000 rM’000 RM’000

ppa Companies

gb3 230,433 – – 230,433 254,374PPSb 234,860 – – 234,860 256,037Sev 600,979 – – 600,979 745,441TbP 2,357,241 – – 2,357,241 2,486,035kev 149,078 – – 149,078 186,513

3,572,591 – – 3,572,591 3,928,400

pwpa Company

hPc 72,518 – – 72,518 77,758

oMa Companies

TJSB(i) – – – – 1,171,805NASb(i) – – – – 31,587MPb(i) 1,121,061 – – 1,121,061 –TboM 519,412 – – 519,412 545,869

1,640,473 – – 1,640,473 1,749,261

Total interest over PPAs, PwPA and oMAs 5,285,582 – – 5,285,582 5,755,419less: Intangible assets in associates (221,596) – – (221,596) (264,271)

5,063,986 – – 5,063,986 5,491,148

(i) On 18 January 2013, the Group and the Company completed the internal reorganisation exercise which had resultedthe creation of a Malaysia centric operation and maintenance (“O&M”) entity, MPB through acquisition of the O&Mbusiness of TJSB and nASB. Consequently, the intangible assets from the interest over the OMAs held by TJSB andnASB were transferred to MPB. The internal reorganisation exercise did not entail any acquisition of new companiesor disposal of any existing companies within the Group. As such, the Company’s effective interest on its subsidiariesand associates remain unchanged.

133


impairment testing for cash generating units (“Cgus”) containing goodwill and interest over power purchase, power and water purchase and operation and Maintenance agreements (continued)

The impairment testof theaboveCGUswasbasedon theexpectedcashflowsdiscounted to theirpresent valueequivalentusing a rate of return that reflects the relative risk of the cashflows, aswell as the time valueofmoney. This is calculatedby weighing the required returns on debt and equity in proportion to their assumed percentages. The applied pre-taxdiscount rate was 10% per annum. The management had applied the following key assumptions in deriving the present value of the net cash flow before taxes attributable to the Intangible Assets:

• It is assumed that the terms of the PPAswill remain unchanged throughout the concession period. It is assumed thatHPCwill obtain an approval for 10 year extension to its PWPA upon expiry.

• Remaining useful life of PPAs/PWPA/OMAs 9 – 24 years (in accordance with the respective PPAs, PwPA and oMAs)

• Dependable Capacity (DC) :-Power 350MW – 2,420MW (in accordance to the specifications of the respective plants)

:-water 17,047 m³/hour

• Capacity Factor :-Power 1% – 99% of DC :-water 95% – 98% of Dc

• net Output :-Electrical (million kW/hour) 735 – 15,864 :-water (thousand m³) 67,370 – 73,238

• Capacity Rate :-Power (RM/kW/month) 5.85 – 50.00 :-water (RM/m³/month) 1,117 – 1,241 • FixedOperating Rate under Revenue – Power (RM/kW/month) 4.75 – 10.50

• Variable Operating Rate under Revenue :-Power (RM/kW/month) 0.0064 – 5.12 :-water (RM/m³/month) 77.25 – 111.58

• Fuel price (RM/mmBtu) 6.07 – 57.07

• Variable Operating Rate under Cost – Power (RM/kW/month) 0.0071 – 0.0240

• FixedOperating Rate under Cost – Power (RM/kW/month) 2.16 – 12.99

As at 31 December 2013 and 31 December 2012, the estimated recoverable amount of all the cgus exceeds the carrying amount of the goodwill and interest on PPAs/PWPA/OMAs.



5. prepaid lease payMents

leasehold land

unexpired period less than 50 yearsgroup RM’000

CostAt 1 January 2012/31 December 2012/ 1 January 2013/31 December 2013 109,326

amortisation1 January 2012 25,962Amortisation for the year 4,343

At 31 December 2012/1 January 2013 30,305Amortisation for the year 4,346

At 31 December 2013 34,651

Carrying amountsAt 1 January 2012 83,364

At 31 December 2012/1 January 2013 79,021

At 31 December 2013 74,675

6. investMent in suBsidiaries

Company

2013 2012 rM’000 RM’000

Unquoted:At beginning of the year 8,137,395 8,131,943Addition – 5,771Fair value adjustment (2,654) (319)

At end of the year 8,134,741 8,137,395

135

6. investMent in suBsidiaries (continued)

Details of subsidiaries are as follows:

effective Principal place ownership of business/ interest and country of voting interest (%)Name of subsidiary incorporation 2013 2012 Principal activities

direCt suBsidiary

1. Segari energy ventures Sdn. bhd. Malaysia 93.75 93.75 Design, construction, operation and maintenance of a combined cycle power plant, generation and saleof electrical energy and generating capacity of the power plant

2. gb3 Sdn. bhd. Malaysia 75 75 Design, construction, operation and maintenance of a combined cycle power plant, generation and saleof electrical energy and generating capacity of the power plant

3. Prai Power Sdn. Bhd. Malaysia 100 100 Design, construction, operation and maintenance of a combined cycle power plant, generation and saleof electrical energy and generating capacity of the power plant

4. Tanjung Bin Power Sdn. Bhd. Malaysia 90 90 Design, engineering, procurement, construction, installation and

commissioning, testing, operation and maintenance of a 2,100 Mw coal-fired electricity generating facility and sale of electrical energy and generating capacity of the power plant

5. hypergantic Sdn. bhd. Malaysia 100 100 Investment holding

6. Tanjung Bin Energy Sdn. Bhd. Malaysia 100 100 Design, engineering, procurement, construction, installation and

commissioning, testing, operation and maintenance of a 1,000 Mw coal fired electricity generating facility

7. Teknik Janakuasa Sdn. Bhd. Malaysia 100 100 Investment holding company and provision of operations and maintenance and any related services

8. Malakoff Utilities Sdn. Bhd. Malaysia 100 100 Build, own and operate an electricity distribution system and a centralised chilledwater plant system

9. Malakoff Engineering Sdn. Bhd. Malaysia 100 100 Provision of engineering and projectmanagement services




Details of subsidiaries are as follows: (continued)


direCt suBsidiary (continued)

10. Spring Assets limited british virgin 100 100 Dormant Islands

11. Malakoff Capital (L) Limited Malaysia 100 100 Dormant

12. Malakoff International Limited Cayman 100 100 offshore – Investment holding Islands

13. Tuah utama Sdn. bhd. Malaysia 100 100 Investment holding

14. Desa kilat Sdn. bhd. Malaysia 54 54 land reclamation, development and/ or sale of reclaimed land

15. Malakoff Power Berhad Malaysia 100 100 Operations andmaintenance of power plants

16. Malakoff R&D Sdn. Bhd. Malaysia 100 100 Promoting, developing, acquiring and enhancing the group’s capacity

and innovation in the energy business

indireCt suBsidiary

held through tanjung Bin energy sdn. Bhd.

17. Tanjung Bin Energy Issuer Berhad Malaysia 100 100 Administer and manage the development of a 1,000 Mw coal fired electricity

generating facilityheld through teknik Janakuasa sdn. Bhd.

18. Natural Analysis Sdn. bhd. Malaysia 100 100 Dormant

19. TJSB Services Sdn. Bhd. Malaysia 100 100 Provision of maintenance, repair and overhaul and any related services to power plants and any other plants ofsimilar main and auxiliary operating systems

20. TJSB International Limited Cayman 100 100 offshore – Investment holding Islands

21. TJSB Global Sdn. Bhd. Malaysia 100 100 Investment holding

22. PT. Teknik Janakuasa# Indonesia 95 – Provision of operations and maintenance services to power plant and/or other

utility plants

137




indireCt suBsidiary (continued)

held through tJsB international limited

23. TJSB International (Shoaiba) Limited British Virgin 100 100 offshore – Investment holding Islands

24. TJSBMiddle East Limited British Virgin 100 100 operation and maintenance of Islands power plant

held through Malakoff engineering sdn. Bhd.

25. MESB ProjectManagement Sdn. Bhd. Malaysia 100 100 Dormant

held through Malakoff international limited

26. Malakoff Gulf Limited British Virgin 100 100 offshore – Investment holding Islands

27. Malakoff Technical (Dhofar) Limited British Virgin 100 100 offshore – Investment holding Islands 28. Malakoff AlDjazair Desal Sdn. Bhd. Malaysia 100 100 Investment holding

29. Malakoff Oman Desalination British Virgin company limited Islands 100 100 offshore – Investment holding

30. Malakoff Hidd Holding Company Limited Guernsey 100 100 Asset, property, investment, intellectual property and other holding companies

31. Pacific Goldtree Sdn. Bhd.# Malaysia 100 – Investment holding

held through Malakoff aldjazair desal sdn. Bhd.

32. Tlemcen Desalination Investment France 70 70 offshore – Investment holding Company SAS*

held through Malakoff hidd holding Company limited

33. Malakoff Summit Hidd Holding Guernsey 57.14 57.14 Asset, property, investment, intellectual company limited property and other holding companies

held through Malakoff power Berhad

34. Tanjung Bin O&M Berhad Malaysia 100 100 Operation andmaintenance of power plant






indireCt suBsidiary (continued)

held through pacific goldtree sdn. Bhd.

35. Skyfirst Power Sdn. Bhd.# Malaysia 100 – Investment holding

held through skyfirst power sdn. Bhd.

36. Malakoff Australia Pty. Ltd.#* Australia 100 – Investment holding

37. WindMacarthur Holdings (T) Pty. Limited#* Australia 100 – Investment holding

held through Malakoff australia pty. ltd.

38. Malakoff Holdings Pty. Ltd.#* Australia 100 – Investment holding

held through Malakoff holdings pty. ltd.

39. MalakoffWindMacarthur Holdings Australia 100 – Investment holding Pty. Ltd. (formerly known asMeridian WindMacarthur Holdings Pty. Ltd.)#*

held through Malakoff wind Macarthur holdings pty. ltd.

40. MalakoffWindMacarthur Pty. Ltd. Australia 100 – Leasing ofwind turbine assets (formerly known asMeridianWind Macarthur Pty Ltd)#*

held through wind Macarthur holdings (t) pty. limited

41. WindMacarthur (T) Pty. Limited#* Australia 100 – Leasing of plant and equipment

held through wind Macarthur (t) pty. limited

42. WindMacarthur Finco Pty. Limited#* Australia 100 – Financing operations forMacarthurwind farm project

* Audited by othermember firm of KPMG International# Incorporated/Acquired during the financial year (note 37)

139


TheGroup’s subsidiaries that havematerial non-controlling interests (“nCI”) are as follows:

<-------------------------------------------2013--------------------------------------->

Segari other Energy Tanjung Bin individually Ventures GB3 Power immaterial Sdn. bhd. Sdn. bhd. Sdn. bhd. subsidiaries Total RM’000 RM’000 RM’000 RM’000 RM’000

nCi percentage of ownership interest and voting interest 6.25% 25% 10%

carrying amount of NcI 48,085 142,886 34,725 (2,274) 223,422

Profit/(loss) allocated to NcI 21,467 27,937 23,871 (150) 73,125

summarised financial information before intra-group eliminationas at 31 decemberNon-current assets 2,049,393 976,095 6,205,353current assets 1,405,620 470,180 1,847,406Non-current liabilities (2,403,032) (688,523) (7,327,993)current liabilities (282,619) (186,209) (417,577)

Net assets 769,362 571,543 307,189

year ended 31 decemberRevenue 1,373,779 412,098 2,451,698Profit for the year 343,468 111,745 238,714Total comprehensive income 343,468 111,745 238,714

Cash flows from operating activities 470,910 170,425 1,084,199Cash flows from investing activities (88,807) (35,470) (1,071,255)Cash flows from financing activities (354,010) (155,980) (60,907)

net increase/(decrease) in cash and cash equivalents 28,093 (21,025) (47,963)

Dividend paid to NcI 125,000 – 65,000 – 190,000




TheGroup’s subsidiaries that havematerial non-controlling interests (“nCI”) are as follows:

<-------------------------------------------2012--------------------------------------->

Segari other Energy Tanjung Bin individually Ventures GB3 Power immaterial Sdn. bhd. Sdn. bhd. Sdn. bhd. subsidiaries Total RM’000 RM’000 RM’000 RM’000 RM’000

nCi percentage of ownership interest and voting interest 6.25% 25% 10%carrying amount of NcI 151,618 114,950 75,854 (2,125) 340,297

Profit/(loss) allocated to NcI 26,997 23,641 29,329 (4) 79,963

summarised financial information before intra-group eliminationas at 31 decemberNon-current assets 2,117,678 987,592 6,144,540current assets 1,166,903 572,081 2,044,363Non-current liabilities (666,678) (807,006) (6,701,136)current liabilities (192,009) (292,869) (766,730)

Net assets 2,425,894 459,798 721,037

year ended 31 decemberRevenue 1,125,292 583,593 3,352,972Profit for the year 431,952 94,562 293,289Total comprehensive income 431,952 94,562 293,289

Cash flows from operating activities 536,117 173,555 1,038,082Cash flows from investing activities 29,223 6,887 (7,863)Cash flows from financing activities (486,689) (187,078) (700,051)

net increase/(decrease) in cash and cash equivalents 78,651 (6,636) 330,168

Dividend paid to NcI 11,817 – 29,200 – 41,017

141

7. investMent in assoCiates

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

group Restated Restated

At cost Unquoted shares: – in Malaysia 41,475 41,475 641,770 641,770 – outside Malaysia 3,726 1,254 – – Unquoted preference shares: – in Malaysia 4,000 4,000 – – Unquoted loan stocks: – in Malaysia 357,030 357,030 357,030 357,030 – outside Malaysia 151,568 151,568 – – Pre-acquisition reserves 66,775 66,775 – – Share of post-acquisition reserves 207,502 251,623 – –

832,076 873,725 998,800 998,800

Add: Intangible assets acquired through business combination (see Note 4) – Goodwill 284,765 265,583 – – – Interest over PPA and PwPA 939,073 939,073 – –

1,223,838 1,204,656 – –

less: Amortisation of intangible assets At 1 January (211,156) (172,618) – – Amortisation for the year (42,675) (38,538) – –

At 31 December (253,831) (211,156) – –

less: Impairment loss on intangible assets At 1 January/31 December (463,646) (463,646) – –

carrying amount 506,361 529,854 – –

1,338,437 1,403,579 998,800 998,800



7. investMent in assoCiates (continued)

Details of associates are as follows:

effective effective ownership voting interest interest country of (%) (%)No. Name of associate incorporation 2013 2012 2013 2012 Principal activities

1. Port Dickson Power Berhad Malaysia 25 25 25 25 Supply of electricity exclusively to TNb

2. kapar energy ventures Sdn. bhd. Malaysia 40 40 40 40 generation and sale of electricity

3. Lekir Bulk Terminal Sdn. Bhd. Malaysia 20 20 20 20 Development, ownership and management dry bulk terminal

4. Malaysian Shoaiba consortium Malaysia 40 40 40 40 Investment holding Sdn. bhd.

5. Saudi-Malaysia water & Saudi 20 20 20 20 offshore – Investment holding electricity company limited Arabia

6. Shuaibah water & electricity Saudi 12 12 12 12 Design, construction, commissioning, company limited Arabia testing, possession, operation and

maintenance of crude oil fired power generation andwaterdesalination plant

7. Shuaibah expansion holding Saudi 12 12 12 12 Development, construction, Company Limited Arabia ownership, operation and

maintenance of Shuaibah Phase 3 Expansion independentwaterproducer (“IwP”) and transport and sale of water and undertakeall works and activities relatedthereto, directly or through another company holding most of its shares or stock

8. Shuaibah Expansion Project Saudi 11.7 11.7 11.7 11.7 Development, construction, company limited Arabia possession, operation and

maintenance of the Shuaibah Phase 3 expansion IwP, transfer and sell water and all relevantworks andactivities

9. oman Technical Partners british virgin 43.4 43.4 43.4 43.4 offshore – Investment holding limited Islands

10. Salalah Power Holdings Limited Bermuda 43.4 43.4 43.4 43.4 offshore – Investment holding

143


Details of associates are as follows (continued):

effective effective ownership voting interest interest country of (%) (%)No. Name of associate incorporation 2013 2012 2013 2012 Principal activities

11. Al-Imtiaz operation and Saudi 20 20 20 20 Implementation of operation and Maintenance company Arabia maintenance contracts for stations Limited of electrical power generation and

water desalination

12. Saudi-Malaysia operation and Saudi 20 20 20 20 operation and maintenance of Maintenance Services Arabia power andwater desalination company limited plant 13. Hyflux-TJSB Algeria SPA Algeria 49 49 49 49 operation and maintenance of

water desalination plant

14. Hidd Power Company B.S.C Bahrain 39.97 39.97 40 40 building, operation and maintenance of power andwater stations for

special purposes (specific supply only)

15. Muscat city Desalination oman 31.5 – 31.5 – operations and maintenance of operation and Maintenance pump stations and pipelines, Company LLC# installation and repair of electric

power and transformer plants andtelecommunications and radar plants, export and import offices, and laying and maintenance of all kinds of pipes

16. Muscat city Desalination oman 45 – 45 – Development, financing, Company S.A.O.C# procurement, construction,

ownership, operations andmaintenance ofwater desalinationplants at ghubrah in the governorate of Muscat, together with all associatedwater extraction,pumping, storage and distribution systems and equipment andassociated electricity generating systems and equipment and thedelivery and sale of portablewaterin the Sultanate of oman

# Incorporated/Acquired during the financial year (note 36)




The following table summarises the information of the Group’s material associates, adjusted for any differences in theaccounting policies and reconciles the information to the carrying amount of the group’s interest in the associates.

<------------------------------ 2013 –--------------------------->

Shuaibah Port kapar water & hidd Dickson Energy Electricity Power Power Ventures Company Company berhad Sdn. bhd. limited b.S.c RM’000 RM’000 RM’000 RM’000

summarised financial informationas at 31 decemberNon-current assets 134,949 3,002,390 6,531,350 3,257,531current assets 152,386 1,733,203 429,933 293,508Non-current liabilities (15,387) (3,277,784) (5,294,617) (2,985,281)current liabilities (35,461) (1,027,967) (553,766) (414,676)

Net assets 236,487 429,842 1,112,900 151,082

year ended 31 decemberProfit/(loss) for the year 78,500 (18,930) 237,302 69,916other comprehensive income – – – 263,751

Total comprehensive income/(expense) 78,500 (18,930) 237,302 333,667

145


The following table summarises the information of theGroup’smaterial associates, adjusted for any differences in the accountingpolicies and reconciles the information to the carrying amount of the group’s interest in the associates.

<----------------------------------------------- 2013 –---------------------------------------------------->

Shuaibah Port kapar water & hidd other Dickson Energy Electricity Power individually Power ventures company company immaterial berhad Sdn. bhd. limited b.S.c associates Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

included in the total comprehensive income/(expense) is:Revenue 321,602 2,622,256 902,163 976,116Depreciation and amortisation (22,937) (244) (232,130) (165,311)Interest income 1,713 16,937 – 13Interest expense (1,314) (288,523) (324,195) (156,318)Income tax expense (26,548) (10,608) – –

reconciliation of net assets to carrying amountas at 31 decembergroup’s share of net assets 59,122 171,939 124,344 60,388 59,253 475,046goodwill – – – 284,765 – 284,765Intangible assets – 149,078 – 72,518 – 221,596Redeemable unsecured loan stocks – 357,030 – – – 357,030

carrying amount in the statement of financial position 59,122 678,047 124,344 417,671 59,253 1,338,437

group’s share of resultyear ended 31 decembergroup’s share of profit/(loss) for the year 19,625 (7,572) 28,476 27,945 (1,002) 67,472group’s share of other comprehensive (expense)/income – – (106,987) 71,873 (22,116) (57,230)

group’s share of total comprehensive income/(expense) 19,625 (7,572) (78,511) 99,818 (23,118) 10,242

other informationDividend received 27,750 – – 23,947 2,671 54,368





<-------------------------------- 2012 –----------------------------->

Shuaibah Port kapar water & hidd Dickson Energy Electricity Power Power Ventures Company Company berhad Sdn. bhd. limited b.S.c RM’000 RM’000 RM’000 RM’000

summarised financial informationas at 31 decemberNon-current assets 116,988 3,462,526 6,193,650 3,154,110current assets 223,670 1,296,217 388,962 270,757Non-current liabilities (23,210) (3,039,952) (5,763,543) (3,196,221)current liabilities (48,461) (1,290,314) (172,816) (354,610)

Net assets 268,987 428,477 646,253 (125,964)

year ended 31 decemberProfit for the year 107,581 53,168 248,586 68,655other comprehensive income – – 33,112 20,562

Total comprehensive income 107,581 53,168 281,698 89,217

.

147



<----------------------------------------------- 2012 –---------------------------------------------------->

Shuaibah Port kapar water & hidd other Dickson Energy Electricity Power individually Power ventures company company immaterial berhad Sdn. bhd. limited b.S.c associates Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

included in the total comprehensive income/(expense) is:Revenue 239,148 3,086,729 881,066 951,779Depreciation and amortisation (25,226) (269) (225,301) (150,590)Interest income 2,005 13,205 – 13Interest expense (1,024) (287,587) (317,508) (161,509)Income tax expense (36,127) 15,923 – –

reconciliation of net assets to carrying amountas at 31 decembergroup’s share of net assets 67,247 171,391 77,550 50,348 150,159 516,695Goodwill – – – 265,583 – 265,583Intangible assets – 186,513 – 77,758 – 264,271Redeemable unsecured loan stocks – 357,030 – – – 357,030

carrying amount in the statement of financial position 67,247 714,934 77,550 393,689 150,159 1,403,579

group’s share of resultyear ended 31 decembergroup’s share of profit/(loss) for the year 26,895 21,267 29,830 27,441 (849) 104,584group’s share of other comprehensive income – – – – – –

group’s share of total comprehensive income/(expense) 26,895 21,267 29,830 27,441 (849) 104,584

other informationDividend received 18,937 – 5,125 35,842 3,000 62,904



8. investMent in an equity aCCounted Joint venture

2013 2012group rM’000 RM’000

at cost Unquoted shares, outsideMalaysia 64,118 64,118 Share of post-acquisition reserves (12,888) (16,685)

51,230 47,433

Almiyah Attilemcania SPA (“AAS”), a joint arrangement which is principally engaged in the construction, operation andmaintenance of a seawater desalination plant andmarketing of desalinatedwater produced in Algeria.

AAS is structured as a separate vehicle and provides the group rights to the net assets of the entity. Accordingly, the group has classified the investment in AAS as an equity accounted joint venture.

The following tables summarise the financial information ofAAS, as adjusted for any differences in accounting policies andreconcile the information to the carrying amount of the group’s interest in AAS.

2013 2012 rM’000 RM’000

Percentage of ownership interest 35.7% 35.7%Percentage of voting interest 40.0% 40.0%

summarised financial informationAs at 31 DecemberNon-current assets 535,944 477,103current assets 192,352 236,535Non-current liabilities (511,791) (509,702)current liabilities (73,004) (71,070)

143,501 132,866

year ended 31 decemberProfit for the year 10,636 5,402

included in the profit for the year are:Revenue 121,082 111,170Depreciation and amortisation (23,156) (20,576)Interest expense (19,752) (20,455)

149

8. investMent in an equity aCCounted Joint venture (continued)

2013 2012group rM’000 RM’000

summarised financial information (continued)reconciliation of net assets to carrying amountas at 31 decembergroup’s share of net assets 51,230 47,433

carrying amount in the statement of financial position 51,230 47,433

group’s share of resultyear ended 31 decembergroup’s share of profit for the year 3,797 1,929

9. other investMents

2013 2012Company rM’000 RM’000

non-currentUnquoted loan stocks in subsidiaries, unsecured – 1,027,419

During the financial year, theCompany’s unquoted loan stocks issued by the subsidiarieswere fully transferred toMalakoffPower Berhad (“MPB”), a wholly-owned subsidiary of the Company following the completion of the Group and thecompany’s internal reorganisation exercise. Information on the internal reorganisation exercise is disclosed in Note 36 to the financial statements.



10. finanCe lease reCeivaBle

The finance lease receivable relates to the 25-year lease agreement for the right to use and occupy 3 parcels of land, substation and assets.

The future minimum lease payments under finance lease together with the present value of the net minimum leasepayments are as follows:

2013 2012group rM’000 RM’000

Minimum lease payments:

within one year 141,499 –1-2 years 146,452 –2-5 years 492,726 –over 5 years 4,166,757 –

gross investment in finance lease 4,947,434 –less: unearned finance income (2,934,489) –

Present value of minimum lease payments 2,012,945 –

analysed as:

within one year – –1-2 years – –2-5 years – –over 5 years 2,012,945 –

Total finance lease receivable 2,012,945 –

Comprising:

current – –Non-current 2,012,945 –

2,012,945 –

For the financial year ended 31 December 2013, the group recognised a finance lease income of RM80,268,000 as disclosed in Note 21.

151

11. deferred taX assets and liaBilities

Deferred tax assets and liabilities are attributable to the following:

Assets liabilities Net

2013 2012 2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000 rM’000 RM’000group Restated Restated

Property, plant and equipment – – (2,093,386) (2,165,541) (2,093,386) (2,165,541)Provisions 147,053 70,814 – – 147,053 70,814Intangibles – – (1,183,274) (1,293,661) (1,183,274) (1,293,661)unutilised tax losses 38,143 – – – 38,143 –Unutilised capital allowances 518,904 650,196 – – 518,904 650,196Deferred income 641,928 597,276 – – 641,928 597,276Deferred expense – – (19,545) – (19,545) –others 2,244 2,244 – – 2,244 2,244

Tax assets/(liabilities) 1,348,272 1,320,530 (3,296,205) (3,459,202) (1,947,933) (2,138,672)Set-off of tax (650,760) (708,960) 650,760 708,960 – –

Net tax assets/(liabilities) 697,512 611,570 (2,645,445) (2,750,242) (1,947,933) (2,138,672)

Assets liabilities Net

2013 2012 2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000 rM’000 RM’000Company Restated Restated

Provisions 2,555 5,884 – (15,899) 2,555 (10,015)



11. deferred taX assets and liaBilities (continued)

Movements in temporary differences during the year:

Recognised Recognised in profit at in profit At or loss 31.12.2012/ or loss at 1.1.2012 (Note 27) 1.1.2013 (Note 27) 31.12.2013 RM’000 RM’000 rM’000 RM’000 rM’000group Restated Restated restated

deferred tax assetsProvisions 61,408 9,406 70,814 76,239 147,053unutilised tax losses – – – 38,143 38,143Unutilised capital allowances 750,059 (99,863) 650,196 (131,292) 518,904Deferred income 524,860 72,416 597,276 44,652 641,928others 2,244 – 2,244 – 2,244

Tax assets 1,338,571 (18,041) 1,320,530 27,742 1,348,272Set-off of tax (802,536) 93,576 (708,960) 58,200 (650,760)

Net tax assets 536,035 75,535 611,570 85,942 697,512

deferred tax liabilitiesProperty, plant and equipment (2,098,125) (67,416) (2,165,541) 72,155 (2,093,386)Intangibles (1,403,141) 109,480 (1,293,661) 110,387 (1,183,274)Deferred expense – – – (19,545) (19,545)

Tax liabilities (3,501,266) 42,064 (3,459,202) 162,997 (3,296,205)Set-off of tax 802,536 (93,576) 708,960 (58,200) 650,760

Net tax liabilities (2,698,730) (51,512) (2,750,242) 104,797 (2,645,445)

Recognised Recognised in profit at in profit At or loss 31.12.2012/ or loss at 1.1.2012 (Note 27) 1.1.2013 (Note 27) 31.12.2013 RM’000 RM’000 rM’000 RM’000 rM’000Company Restated Restated restated

deferred tax assetsProvisions 3,726 2,158 5,884 (3,329) 2,555

deferred tax liabilitiesProvisions (14,854) (1,045) (15,899) 15,899 –

153

12. trade and other reCeivaBles

group Company

2013 2012 2013 2012 Note rM’000 RM’000 rM’000 RM’000

non-currentother receivables 12.1 126,939 139,083 – –

CurrenttradeTrade receivables 12.2 922,631 1,041,886 – –Less: Allowance for impairment loss (228,288) (57,094) – –

694,343 984,792 – –

non-tradeAmount due from subsidiaries – – 582,255 891,344Amount due from an associate 12.3 293,960 268,558 293,960 268,558other receivables 136,456 136,408 7,133 11,963Deposits 105,783 65,475 6,192 3,690Prepayments 35,726 34,938 – –

571,925 505,379 889,540 1,175,555

1,266,268 1,490,171 889,540 1,175,555

1,393,207 1,629,254 889,540 1,175,555

12.1 other receivables

Other receivables represent the transaction costs which arose from derivative instruments, which will be amortisedsystematically over the tenure of the hedged item.

12.2 trade receivables

Included in trade receivables of the Group is amount owing from an entity that is under common control by thegovernment of Malaysia (a party that has direct or indirect significant influence on the group) as at the reporting period as follows:

gross balance outstanding

2013 2012 rM’000 RM’000

Tenaga Nasional berhad 886,743 1,035,038

12.3 amount due from an associate

The amount due from an associate relates to interest receivable subject to the existing terms of the unsecured loan stocks.



13. inventories

2013 2012 rM’000 RM’000group Restated

At costSpares and consumables 235,076 227,164coal 173,724 193,619Diesel fuel 70,275 73,016

479,075 493,799

14. Cash and Cash equivalents

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Deposits with licensed banks and other licensed corporations 3,306,899 5,066,330 128,596 377,956Cash and bank balances 234,838 87,640 5,989 3,120

3,541,737 5,153,970 134,585 381,076

Included in cash and cash equivalents of theGroup and of theCompany are amounts that are placedwith licensed bankswhich are under common control by the Government of Malaysia (a party that has direct or indirect significant influenceon the Group and on the Company) as at the reporting periods as follows:

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Deposits with licensed banks and other licensed corporations 2,459,581 3,632,052 134,579 381,070

155

15. Capital and reserves

15.1 share capital

2013 2012

number Number amount of shares Amount of sharesgroup and Company rM’000 ’000 RM’000 ‘000

authorised:

ordinary shares of RM1 each 490,000 490,000 490,000 490,000

Redeemable convertible non-cumulative preference shares of RM0.10 each 10,000 100,000 10,000 100,000

issued and fully paid:

ordinary shares of RM1 each:At beginning/end of the year 351,344 351,344 351,344 351,344

Redeemable convertible non-cumulative preference shares of RM0.10 each:At beginning/end of the year 4,179 41,792 4,179 41,792

355,523 393,136 355,523 393,136

15.2 ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the company.

15.3 redeemable convertible non-cumulative preference shares

holders of redeemable convertible (at the option of the company in the event the company is listed on bursa Malaysia) non-cumulative preference shares receive a non-cumulative gross dividend of RM1 per share at the company’s discretion and are distributed in priority to all dividends declared and payable to the company’s ordinary shareholders. They do not have the right to participate in any additional dividends declared for ordinary shareholders. Preference shares do notcarry the right tovoteexcept forvariationofholders’ rights to theclassofshares,proposal towindupandduringthe winding up of the Company, proposal to reduce the share capital of the Company and on the proposal for thedisposal of the whole Company’s property, business or undertaking. The preference shares shall rank equally amongthemselves in all respects and shall rank in senior to the ordinary shares but junior to the Junior Sukuk.

15.4 foreign currency translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of theGroup entitieswith functional currencies other thanRM, aswell as from the translationof liabilities that hedgethe company’s net investment in a foreign subsidiary.



15. Capital and reserves (continued)

15.5 Capital redemption reserve

The company had on 1 october 2009 redeemed 8,400,000 Redeemable convertible Preference Shares (“RcPS”) at a redemption price of RM10.00 per share comprising the nominal amount of RM0.10 each and premium of RM9.90 each to the RCPS holders registered in the Company’s Register of Members. The redemption of the RCPS was madeproportionately in respect of each holding of RcPS, fully paid out from the retained profits and share premium account of the company.

Inaccordancewith the requirementofSection67Aof theCompaniesAct,1965,anamountequivalent to thenominalvalue of the RCPS totalling RM840,000was transferred from the retained profits to the capital redemption reserve.

15.6 hedging reserve

Thehedgingreservecomprises theeffectiveportionof thecumulativenetchange in the fairvalueofcashflowhedgesrelated transactions that have not yet occurred.

16. loans and Borrowings

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

non-currentsecuredAl-Bai Bithaman Ajil (“ABBA”) bonds – 130,000 – –Al-Istisna bond 129,495 193,231 – –AuD term loan 1 425,508 – – –AuD term loan 2 1,501,324 – – –RM term loan 39,220 – – –Sukuk Ijarahmedium term notes 3,544,065 3,508,439 – –Sukukmedium term notes 1 – 4,641,439 – 4,641,439Sukukmedium term notes 2 4,244,338 – – –SukukWakalah 450,000 – – –Senior SukukMurabahah 3,290,000 3,290,000 – –uSD term loan 277,107 266,989 – –

unsecuredJunior EBL term loan 726,905 330,103 – –Subordinated loan notes 183,798 61,060 – –Unrated Junior Sukuk Musharakah 1,800,000 1,800,000 1,800,000 1,800,000

16,611,760 14,221,261 1,800,000 6,441,439

157

16. loans and Borrowings (continued)

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Currentsecuredcommercial papers 198,173 – – –AbbA bonds 130,000 120,000 – –Al-Istisna bonds 63,736 63,639 – –AuD term loan 2 10,872 – – –Sukuk Ijarahmedium term notes – 150,000 – –Sukukmedium term notes 1 – 700,000 – 700,000Sukukmedium term notes 2 500,000 – – –SukukWakalah 20,000 – – –uSD term loan 8,844 8,258 – –

931,625 1,041,897 – 700,000

17,543,385 15,263,158 1,800,000 7,141,439

security

a) As at 31 December 2013, the commercial papers, bonds, medium term and loan notes of the Group were securedover property, plant and equipmentwith a carrying amount of RM12,261,679,000 (2012: RM10,664,800,000).

b) Asat31December2013,SukukWakalahwassecuredovertheOperationandMaintenanceAgreement,SubOperationandMaintenanceAgreementandAssetSalesAgreementheldbya subsidiary,TanjungBinO&MBerhad (“TBOM”)andall the balances in the Revenue Account, operating Account, Finance Service Reserve Account, Maintenance Reserve Account and overhaul Reserve Account of TboM.

significant covenants

The borrowings are subject to the fulfillment of the following significant covenants:

i) AbbA bonds issued by gb3 Sdn. bhd. (“gb3”)

GB3 is required tomaintain a debt-to-equity ratio of notmore than 9:1 during post-completion (of the power plant)period and a debt service cover ratio of at least 1.25 times commencing from the commercial operation date.

ii) Al-Istisna bonds issued by Prai Power Sdn. Bhd. (“PPSB”)

PPSB is required tomaintainadebt-to-equity ratioofnotmore than4:1andanannualfinanceservice ratioofat least1.4 times commencing from the third year of the first issuance of the bonds.




significant covenants

iii) Sukuk Ijarahmedium term notes issued by Tanjung Bin Power Sdn. Bhd. (“TBP”)

TBP is required tomaintain a debt-to-equity ratio of notmore than80:20 and a finance service cover ratio of at least1.25 times.

iv) Sukukmedium term notes 1 issued by the Company

In2012,theCompanywasrequiredtomaintainadebt-to-equityratioofnotmorethan1.25:1andtheGroupdebt-to-equity ratio of notmore than 7:1. Sukukmedium term notes 1 have been fully redeemed during the financial year.

v) USD term loan drawdown byMalakoff International Limited (“MIL”)

MIL is required to maintain a debt-to-equity ratio of the Guarantor (the Company) of not more than 1.25:1 and aGroup debt-to-equity ratio of notmore than 7:1.

vi) Junior EBL term loan facility drawdown by Tanjung Bin Energy Issuer Berhad (“TBEI”)

TBEI is required tomaintainadebt-to-equity ratioof theOriginalSponsor (theCompany)ofnotmore than1.25:1anda Group debt-to-equity ratio of notmore than 7:1.

vii) Senior SukukMurabahah issued by Tanjung Bin Energy Issuer Berhad (“TBEI”)

TBEI is required to maintain a debt-to-equity ratio of not exceed 80:20 and a finance service cover ratio of not lessthan 1.05:1.

viii) AUD term loan 1 drawdown byMalakoff International Limited (“MIL”)

AUD term loan 1was drawdown byMIL during the financial year. The subsidiary is required tomaintain a total debtto equity ratio of the parent (the Company) of not more than 1.25:1 and a Group total debt to equity ratio of notmore than 7:1.

ix) AUD term loan 2 drawdown byWindMacarthur Finco Pty Limited (“MWF”)

AUDterm loan2wasdrawdownbyMWFduring thefinancial year.MWF is required tomaintainaminimumprojecteddebt service cover ratio of 1.10:1 on any two consecutive calculation date.

x) SukukWakalah issued by Tanjung Bin O&M Berhad (“TBOM”)

SukukWakalahwas issued by TBOMduring the financial year. TBOM is required tomaintain a debt-to-equity ratio ofnot more than 80:20 commencing 24 months after the issue date until the final maturity and a finance service cover ratio of at least 1.25 times.

xi) Sukukmedium term notes 2 issued byMalakoff Power Berhad (“MPB”)

Sukukmedium termnotes 2was issued byMPB during the financial year.MPB is required tomaintain an aggregateddebt-to-equity of notmore than 1.0:1 and the Group debt-to-equity of not more than 5.5:1.

159


xii) Commercial papers issued byMalakoff Power Berhad (“MPB”)

Commercialpaperswere issuedbyMPBduring thefinancial year.MPB is required tomaintaina consolidated companydebt-to-equity ratio of notmore than 1.25:1 and a Group debt-to-equity ratio of notmore than 7:1.

xiii) RM term loan drawndown byMalakoff Utilities Sdn. Bhd. (“MUSB”)

RM term loanwasdrawndownbyMUSBduring thefinancial year.MUSB is required tomaintainadebt-to-equity ratioof not more than 1.50:1 and a debt service cover ratio of not less than 1.20 times.

terms and debt repayment schedule

carrying under 1 1-2 2-5 over 5 Year of amount years years years yearsgroup maturity RM’000 RM’000 RM’000 RM’000 RM’000

2013 securedAbbA bonds 2014 130,000 130,000 – – –Al-Istisna bonds 2014-2016 193,231 63,736 64,845 64,650 –AuD term loan 1 2016 425,508 – – 425,508 –AuD term loan 2 2014-2030 1,512,196 10,872 16,233 1,082,255 402,836RM term loan 2015-2024 39,220 – 1,089 13,073 25,058commercial papers 2014 198,173 198,173 – – –Sukuk Ijarahmedium term notes 2019-2029 3,544,065 – – – 3,544,065Sukukmedium term notes 2 2014-2031 4,744,338 500,000 440,000 430,000 3,374,338SukukWakalah 2014-2029 470,000 20,000 50,000 110,000 290,000Senior SukukMurabahah 2017-2032 3,290,000 – – 145,000 3,145,000uSD term loan 2014-2017 285,951 8,844 8,844 268,263 –

unsecuredJunior EBL term loan 2017 726,905 – – 726,905 –Subordinated loan notes 2022-2031 183,798 – – – 183,798Unrated Junior SukukMusharakah 2042 1,800,000 – – – 1,800,000

17,543,385 931,625 581,011 3,265,654 12,765,095




terms and debt repayment schedule (continued)

carrying under 1 1-2 2-5 over 5 Year of amount years years years yearsgroup maturity RM’000 RM’000 RM’000 RM’000 RM’000

2012 securedAbbA bonds 2013-2014 250,000 120,000 130,000 – –Al-Istisna bonds 2013-2016 256,870 63,639 63,736 129,495 –Sukuk Ijarahmedium term notes 2013 –2029 3,658,439 150,000 – – 3,508,439Sukukmedium term notes 1 2013-2025 5,341,439 700,000 700,000 2,100,000 1,841,439Senior SukukMurabahah 2017-2032 3,290,000 – – 85,000 3,205,000uSD term loan 2017 275,247 8,258 8,258 258,731 –

unsecuredJunior EBL term loan 2017 330,103 – – 330,103 –Subordinated loan notes 2013-2031 61,060 – – – 61,060Unrated Junior SukukMusharakah 2042 1,800,000 – – – 1,800,000

15,263,158 1,041,897 901,994 2,903,329 10,415,938

carrying under 1 1-2 2-5 over 5 Year of amount years years years yearsCompany maturity RM’000 RM’000 RM’000 RM’000 RM’000

2013unsecuredUnrated Junior SukukMusharakah 2042 1,800,000 – – – 1,800,000

1,800,000 – – – 1,800,000

2012securedSukukmedium term notes 1 2013-2025 5,341,439 700,000 700,000 2,100,000 1,841,439

unsecuredUnrated Junior SukukMusharakah 2042 1,800,000 – – – 1,800,000

7,141,439 700,000 700,000 2,100,000 3,641,439

161


16.1 unrated Junior sukuk Musharakah

Pursuant to the terms and conditions of the unrated Junior Sukuk Musharakah (“Instrument”), the Instrument willeither expire on 3 September 2042 or when the Group and the Company trigger the special event, whichever isearlier. Special event is the date of listing of the company’s entire and issued paid-up share capital on bursa Malaysia Securities Berhad or such other stock exchanges. In determining the effective interest rate to account for the presentvalue of the Instrument at the end of the reporting period, the group and the company considered all contractual terms of the Instrument, including the timing and probability of triggering the special event.

The Company’s intention to list the entire issued and paid-up share capital on the Main Market of Bursa MalaysiaSecurities Berhad remained unchanged and is expected to crystallise within 18 months from the current reportingperiod.Accordingly,anestimatedcashflows isusedtocomputethepresentvalue insteadofusingthecontractualcashflowover the full contractual termof the Instrument. Thepresent value of the Instrument at the endof the reportingperiodwere approximate its carrying amount due to the short term nature of the Instrument.

17. eMployee Benefits

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Restated Restated

Defined benefit obligations 84,203 75,101 24,317 24,122Fair value of plan assets (16,788) (1,885) (14,092) (587)

Net defined benefit liabilities 67,415 73,216 10,225 23,535

The company’s Staff Retirement benefits Scheme (“Scheme”) provides pension benefits for the eligible employees upon retirement. Five entities within the Group, namely Malakoff Corporation Berhad, Teknik Janakuasa Sdn. Bhd., MalakoffUtilities Sdn. Bhd., Malakoff Engineering Sdn. Bhd. (“MESB”) andMalakoff Power Berhad (“MPB”) participated in makingcontributions to the Scheme. In 2012,MESB andMPBwere not adhered to the Scheme.



17. eMployee Benefits (continued)

Thefollowingtableshowsthe reconciliation fromtheopeningbalance to theclosingbalance fornetdefinedbenefit liabilityand its components.

Movement in defined benefit obligations

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Restated Restated

Defined benefit obligations at beginning of the year 75,101 55,905 24,122 15,581

included in profit or losscurrent service cost 8,555 5,881 2,521 1,654Interest cost 3,943 3,587 1,182 993other service cost 834 – 792 –

13,332 9,468 4,495 2,647

included in other comprehensive incomeActuarial (gain)/loss arising from:– (gain)/loss due to financial assumption changes (2,265) 9,696 (610) 2,666– loss due to experience – 2,856 – 4,439

(2,265) 12,552 (610) 7,105

otherbenefits paid directly by the employer (990) (1,016) (579) (314)benefits paid by the plan (975) (1,808) (107) (897)Intercompany employee transfers – – (3,004) –

(1,965) (2,824) (3,690) (1,211)

Defined benefit obligations at end of the year 84,203 75,101 24,317 24,122

163


Movement in fair value of plan assets

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Restated Restated

Plan assets at beginning of the year (1,885) (2,112) (587) (677)

included in profit or lossInterest income (72) (708) (17) (436)

(72) (708) (17) (436)

included in other comprehensive incomeReturn on scheme assets (greater)/lesser than discount rate (168) 552 105 153

(168) 552 105 153

otherbenefits paid by the plan 975 1,808 107 897employer contribution (15,638) (1,425) (13,700) (524)

(14,663) 383 (13,593) 373

Plan assets at end of the year end of the year (16,788) (1,885) (14,092) (587)




Movement in net defined benefit liabilities

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Restated Restated

Net defined benefit liabilities at beginning of the year 73,216 53,793 23,535 14,904

included in profit or losscurrent service cost 8,555 5,881 2,521 1,654Interest cost 3,871 2,879 1,165 557other service cost 834 – 792 –

13,260 8,760 4,478 2,211

included in other comprehensive incomeActuarial (gain)/loss arising from:– (gain)/loss due to financial assumption changes (2,265) 9,696 (610) 2,666– loss due to experience – 2,856 – 4,439Return on scheme assets (greater)/lesser than discount rate (168) 552 105 153

(2,433) 13,104 (505) 7,258

otherbenefits paid directly by the employer (990) (1,016) (579) (314)employer contribution (15,638) (1,425) (13,700) (524)Intercompany employee transfer – – (3,004) –

(16,628) (2,441) (17,283) (838)

Net defined benefit liabilities at end of the year 67,415 73,216 10,225 23,535

The group expects to pay RM4,733,000 in contributions to the defined benefit plans in 2014.

165


plan assets

Themajor categories of plan assets are as follows:

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Restated Restated

Equity instruments 8,237 925 6,915 288Malaysian government securities 3,492 392 2,931 122Foreign investments 2,965 333 2,489 104Cash and cash equivalents 1,847 207 1,550 64others 247 28 207 9

16,788 1,885 14,092 587

actuarial assumptions

Principal actuarial assumptions at the end of the reporting period:

group Company

2013 2012 2013 2012 Restated Restated

Discount rate 5.3% 5.0% 5.3% 5.0%Salary inflation 7.9% 7.9% 7.9% 7.9%

As at 31 December 2013, the Scheme duration is estimated to be around 12 years (2012: 12 years).

sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

group Company

2013 2013 rM’000 rM’000

impact on the aggregate service and interest costsdiscount rateone percentage point increase (784) (199)one percentage point decrease 892 226

salary inflationone percentage point increase 1,818 501one percentage point decrease (1,541) (429)




sensitivity analysis (continued)

group Company

2013 2013 rM’000 rM’000

impact on the defined benefit obligationdiscount rateone percentage point increase (9,517) (2,575)one percentage point decrease 11,244 2,996

salary inflationone percentage point increase 11,852 3,189one percentage point decrease (10,196) (2,785)

Although the analysis does not account to the full distribution of cash flows expected under the plan, it does provide anapproximation of the sensitivity of the assumptions shown.

18. deferred inCoMe

2013 2012group rM’000 RM’000

At beginning of the year 2,389,105 2,099,436Additions 329,882 330,786credited to profit or loss (50,502) (41,117)

At end of the year 2,668,485 2,389,105

Non-current 2,608,222 2,338,602current 60,263 50,503

2,668,485 2,389,105

167

19. trade and other payaBles

group Company

2013 2012 2013 2012 Notes rM’000 RM’000 rM’000 RM’000

tradeTrade payables 19.1 223,161 340,081 – –

non-tradeother payables 19.2 370,943 596,425 10,406 5,474Accrued expenses 19.2 340,012 498,820 38,206 142,888Amounts due to subsidiaries 19.3 – – 853,249 154,847

710,955 1,095,245 901,861 303,209

934,116 1,435,326 901,861 303,209

19.1 trade payables

Included in trade payables of the Group are amounts owing to entities that are under common control by thegovernment of Malaysia (a party that has direct or indirect significant influence on the group) as at the reporting period as follows:

Net balance outstanding

2013 2012 rM’000 RM’000

Petroliam Nasional berhad 68,445 41,768TNb Fuel Services Sdn. bhd. 99,391 280,936Tenaga Nasional berhad 4,995 3,866

172,831 326,570

19.2 accrued expenses

Asat31December2013, included inaccruedexpensesoftheGroupwere interestexpensepayableofRM193,196,000(2012: RM276,341,000) and provision for ceSS fund of RM26,480,000 (2012: RM30,398,000).

19.3 amounts due to subsidiaries

The amounts due to subsidiaries are unsecured, interest free and repayable on demand.



20. derivative finanCial assets/(liaBilities)

2013 2012

Assets liabilities Assets liabilitiesgroup RM’000 RM’000 RM’000 RM’000

non-currentDerivatives used for hedging – Interest rate swaps 16,134 (31,762) – (17,501) – Cross currency swaps 64,107 – – (145,249)

80,241 (31,762) – (162,750)

CurrentDerivatives used for hedging – Interest rate swaps – (34,319) – –

– (34,319) – –

80,241 (66,081) – (162,750)

Interest rate swap and cross currency swap are used to achieve an appropriate mix of fixed and floating interest rateexposure within the Group’s policy. The Group entered into interest rate swaps and cross currency swaps, to hedge theinterest rate riskandforeignexchange risk.The interest rateswapsandcrosscurrencyswapswereentered into foraperiodof 5 years to 25 years tenure.

21. revenue

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

electricity generation and distribution 4,612,563 5,452,073 – –Projectmanagement fees 967 – 967 –Rental income from estate 3,638 5,206 3,638 5,206operation and maintenance fees 19,983 130,329 – –Finance lease income 80,268 – – –Dividends from subsidiaries – – 3,658,000 659,053Management fees from subsidiaries – – 26,553 27,060

4,717,419 5,587,608 3,689,158 691,319

169

22. finanCe inCoMe

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Interest income of financial assets that are not at fair value through profit or loss 203,267 222,341 81,740 220,276

Recognised in profit or loss 161,052 159,380 81,740 220,276Capitalised on qualifying assets as a reduction of borrowing costs: – Property, plant and equipment 42,215 62,961 – –

203,267 222,341 81,740 220,276

23. finanCe Costs

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Interest expense of financial liabilities that are not at fair value through profit or loss: – Loans and borrowings 1,055,870 956,595 228,820 461,423

Recognised in profit or loss 840,318 797,279 228,820 461,423Capitalised on qualifying assets: – Property, plant and equipment 215,552 159,316 – –

1,055,870 956,595 228,820 461,423



24. profit for the year

group Company


profit for the year is arrived at after charging:Amortisation of intangible assets 469,837 440,093 – –Amortisation of prepaid payments 4,346 4,343 – –Amortisation of transaction costs of hedging instruments 12,144 7,327 – –Auditors’ remuneration: Audit fees – kPMg Malaysia 500 463 100 100 – Affiliates of kPMg Malaysia 315 – 315 – Non-audit fees – kPMg Malaysia 1,895 1,526 1,695 1,160 – Affiliates of kPMg Malaysia 2,644 1,137 703 524 – other audit firms 1,386 707 1,301 707contribution and corporate SocialResponsibility activities 12,000 55,000 – –Depreciation of property, plant and equipment 471,266 435,632 4,702 2,790Impairment loss on trade receivables 177,273 16,105 – –Net foreign exchange loss 6,139 – – –Personnel expenses (including keymanagement personnel):contribution to employeesProvident Fund 12,823 14,359 3,853 3,888expenses related to retirement benefit plans 13,260 8,760 4,478 2,211wages, salaries and others 96,513 107,498 28,040 31,384Property, plant and equipmentwritten off 127,126 1,774 – –

and after crediting:Dividend income from subsidiaries – – 3,658,000 659,053Inter-companies’ management fees – – 26,553 27,060gain arising from change in fair value of derivative financial instruments 44,041 912 – –gain on disposal of investment in a subsidiary – 26,700 – –Reversal of impairment loss on trade receivables 6,079 10,307 – –

171

25. other CoMprehensive inCoMe

2013

before tax Tax expense Net of taxgroup RM’000 RM’000 RM’000

items that will not be reclassified subsequently to profit or lossRemeasurement of defined benefit liability 3,245 (812) 2,433

items that may be reclassified subsequently to profit or lossCash flow hedge– gain arising during the year 238,418 – 238,418Foreign currency translation differences for foreign operations– loss arising during the year (25,869) – (25,869)Share of losses of equity-accounted associates (57,230) – (57,230)

155,319 – 155,319

2012

before tax Tax benefit Net of taxgroup RM’000 RM’000 RM’000

items that will not be reclassified subsequently to profit or lossRemeasurement of defined benefit liability (17,472) 4,368 (13,104)

items that may be reclassified subsequently to profit or lossCash flow hedge– loss arising during the year (5,107) – (5,107)Foreign currency translation differences for foreign operations– gain arising during the year 5,759 – 5,759

652 – 652

2013

before tax Tax expense Net of taxCompany RM’000 RM’000 RM’000

items that will not be reclassified subsequently to profit or lossRemeasurement of defined benefit liability 673 (168) 505

2012

before tax Tax benefit Net of taxCompany RM’000 RM’000 RM’000

items that will not be reclassified subsequently to profit or lossRemeasurement of defined benefit liability (9,677) 2,419 (7,258)



26. key ManageMent personnel CoMpensation

The keymanagement personnel compensations are as follows:

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

Directors – Fees 915 404 915 404 –Meeting allowances 331 117 329 114 – Other allowances 639 35 639 35 – other emoluments 238 104 238 104

Total short term employee benefits 2,123 660 2,121 657

27. inCoMe taX (Credit)/eXpense

recognised in profit or loss

group Company


Total income tax (credit)/expense (150,511) 156,816 7,273 28,710

Major components of income tax expense include:Current tax expense

Malaysian – current year 35,509 161,957 19,808 30,610under/(over) provision in prior years 4,719 18,882 35 (787)

40,228 180,839 19,843 29,823deferred tax expense

origination and reversal of temporary differences (196,367) (37,767) (12,570) (1,113)under provision in prior years 5,628 13,744 – –

(190,739) (24,023) (12,570) (1,113)


173

27. inCoMe taX (Credit)/eXpense (continued)

recognised in profit or loss (continued)

group Company


reconciliation of tax expense

Profit for the year 244,725 549,277 3,408,851 333,970Total income tax (credit)/expense (150,511) 156,816 7,273 28,710

Profit excluding tax 94,214 706,093 3,416,124 362,680

Tax at Malaysian tax rate of 25% 23,554 176,523 854,031 90,670Non-taxable income – – (914,500) (164,763)Non-deductible expenses 103,899 154,084 67,707 103,590Tax incentives (119,200) (120,000) – –Tax paid arising from previous unrecognised temporary difference – (38,412) – –effect of deduction on c-inspection costs (114,606) (21,377) – –Effect of corporate tax rate reduction on deferred tax* (36,688) – – –effect of share of results of associates (17,817) (26,628) – –under/(over) provision in prior years – current tax 4,719 18,882 35 (787) – deferred tax 5,628 13,744 – –


* A reduction in the corporate tax rate from 25% to 24% was proposed in the 2014 budget. For the Group,managementhasused judgementwithregardstodeterminingtemporarydifferencesexpectedtoreverseandestimatedthe temporary difference. The effect of any change is recognised in the profit or loss. The reduction will be effective1 January 2016.



28. earnings per share

group

2013 2012 rM’000 RM’000

basic and diluted earnings per share are based on:

Net profit attributable to ordinary shareholders a 171,600 469,314

a) Basic earnings per share

Number of ordinary shares B 351,344 351,344 basic earnings per share (RM) a/B 0.49 1.34

b) diluted earnings per share

The Company will undertake a conversion of the RCPS in conjunction with and as an integral part of the proposedlisting andquotation for the entire enlarged issuedandpaid-up share capital.As at 31December2013, theCompanyhad a total of 41,792,004 RCPS issuedwith a par value of RM0.10. The Companywill issue one (1) additional RCPShaving a par value of RM0.90 for each RcPS issued in the company. The total issue of 83,584,008 RcPS in the Company will be consolidated into 41,792,004 RCPS with a par value of RM1.00 each and thereafter converted bythe shareholders of the Company into 41,792,004 new ordinary shares.

For the diluted earnings per share calculation, theweighted average number of ordinary shares in issue is adjusted toassume conversion of all RcPS as mentioned above.

group

2013 2012 rM’000 RM’000

weighted average number of ordinary shares of RM1.00 each in issue 351,344 351,344Adjustment for the conversion of the RCPS 41,792 41,792

C 393,136 393,136

Diluted earnings per share (RM) a/C 0.44 1.19

175

29. dividends

Dividends recognised by the company:

Sen per share Total (net of tax) amount Date of payment RM’000

2013Interim 2013 ordinary 13.72 48,208 20 May 2013Interim 2013 preference 100.00 41,792 20 May 2013Interim 2013 ordinary 28.75 101,000 28 August 2013

Total amount 191,000

2012Final 2011 ordinary 24.19 85,000 2 April 2012Interim 2012 ordinary 16.39 57,578 11 September 2012Interim 2012 preference 100.00 41,792 11 September 2012

Total amount 184,370

The Directors do not recommend any final dividend for the financial year ended 31 December 2013.

30. operating segMents

The Group has two reportable segments, as described below, which are the Group’s strategic business units. The strategicbusiness units offer different products and services, and are managed separately because they require different technologyandmarketing strategies. For each of the strategic business units, the Group’s Chief Executive Officer (the chief operatingdecision maker) reviews internal management reports at least on a quarterly basis. The following summary describes theoperations in each of the group’s reportable segments:

• Asset management

Asset management division is responsible for managing assets to achieve the greatest return, and the process of monitoring and maintaining facilities systems.

• operations and maintenance (“o&M”)

Operationandmaintenancedivision is responsible forproviding repairandmaintenanceservices forall thepowerplantequipmentswithin the Group.

Performance is measured based on segment results and total segment revenue, as included in the internal management reports that are reviewed by the Group’s Chief Executive Officer (the chief operating decision maker). Segment profit isused to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operatewithin these industries.



30. operating segMents (continued)

segment assets

The total of segment assets is measured based on all assets (including goodwill) of a segment, as included in the internalmanagement reports that are reviewed by theGroup’sChief ExecutiveOfficer. Segment total assets is used tomeasure thereturn of assets of each segment.

segment liabilities

The total of segment liabilities is measured based on all liabilities of a segment, as included in the internal management reports that are reviewed by the Group’s Chief Executive Officer.

segment capital expenditure

Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant and equipment,and intangible assets other than goodwill.

Asset management o&M eliminations consolidated

2013 2012 2013 2012 2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000 rM’000 RM’000 rM’000 RM’000

Business segmentsRevenue from external customers 4,697,436 5,457,279 19,983 130,329 – – 4,717,419 5,587,608Inter-segment revenue 3,799,413 766,330 896,993 459,160 (4,696,406) (1,225,490) – –

total segment revenue 8,496,849 6,223,609 916,976 589,489 (4,696,406) (1,225,490) 4,717,419 5,587,608

segment results 4,934,077 2,176,746 530,036 254,335 (4,761,902) (1,193,602) 702,211 1,237,479

Result from operating activities 702,211 1,237,479Interest income 161,052 159,380Finance costs (840,318) (797,279)Share of profit of equity-accounted associates and a joint venture, net of tax 71,269 106,513Income tax credit/(expense) 150,511 (156,816)

profit/total comprehensive income for the year 244,725 549,277

177


Asset management o&M consolidated

2013 2012 2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000 rM’000 RM’000

segment assets 24,403,617 22,370,203 2,370,212 2,478,381 26,773,829 24,848,584Investment in associates 1,338,437 1,403,579 – – 1,338,437 1,403,579

Total assets 28,112,266 26,252,163

segment liabilities 17,972,278 21,105,780 5,956,863 984,735 23,929,141 22,090,515

Capital expenditureDepreciation (468,728) (432,049) (2,538) (3,583) (471,266) (435,632)

Amortisation of intangible assets (361,049) (356,911) (108,788) (83,182) (469,837) (440,093)

Non-cash expenses other than depreciation and amortisation (275,550) (17,315) (8,479) (5,083) (284,029) (22,398)

geographical segments

TheAssetManagementandO&Msegmentsaremanagedonaworldwidebasis,butoperatefacilities inMalaysia, Indonesia,Middle east, Australia and North America.

In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customers. Segment assets are based on the geographical location of the assets. The amounts of non-current assets do not include financial instruments (including investments in associates) and deferred tax assets.

group

Non-current Revenue assets RM’000 RM’000

geographical information2013Malaysia 4,617,842 18,207,065Indonesia 3,059 –Middle east 16,250 –Australia 80,268 –

4,717,419 18,207,065

2012Malaysia 5,576,269 16,701,998Middle east 11,339 –

5,587,608 16,701,998




Major customer

The following ismajor customerwith revenue equal ormore than 10% of the Group’s total revenue:

Revenue

2013 2012 rM’000 RM’000

all common control company of:Tenaga Nasional berhad 4,726,492 5,665,095

31. finanCial instruMents

31.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(a) loans and receivables (l&R);

(b) Financial liabilities measured at amortised cost (Fl); and

(c) Fair value through profit or loss (FvTPl) – Designated upon initial recognition (DuIR)

carrying l&R/ FvTPl- amount (Fl) DuIRgroup RM’000 RM’000 RM’000

2013financial assetsTrade and other receivables* 1,230,542 1,230,542 –Finance lease receivable 2,012,945 2,012,945 –Cash and cash equivalents 3,541,737 3,541,737 –Derivatives financial assets 80,241 – 80,241

6,865,465 6,785,224 80,241

financial liabilitiesLoans and borrowings (17,543,385) (17,543,385) –Trade and other payables (934,116) (934,116) –Derivative financial liabilities (66,081) – (66,081)

(18,543,582) (18,477,501) (66,081)

179

31. finanCial instruMents (continued)

31.1 Categories of financial instruments (continued)

carrying l&R/ FvTPl- amount (Fl) DuIRgroup RM’000 RM’000 RM’000

2012financial assetsTrade and other receivables* 1,455,233 1,455,233 –Cash and cash equivalents 5,153,970 5,153,970 –

6,609,203 6,609,203 –

financial liabilitiesLoans and borrowings (15,263,158) (15,263,158) –Trade and other payables (1,435,326) (1,435,326) –Derivative financial liabilities (162,750) – (162,750)

(16,861,234) (16,698,484) (162,750)

* Excludes non-financial instruments

carrying l&R/ amount (Fl)

Company RM’000 RM’000

2013 financial assetsTrade and other receivables* 889,540 889,540Cash and cash equivalents 134,585 134,585

1,024,125 1,024,125

financial liabilitiesLoans and borrowings (1,800,000) (1,800,000)Trade and other payables (901,861) (901,861)

(2,701,861) (2,701,861)




31.1 Categories of financial instruments (continued)

carrying l&R/ amount (Fl)

Company RM’000 RM’000

2012financial assetsother investments 1,027,419 1,027,419Trade and other receivables* 1,175,555 1,175,555Cash and cash equivalents 381,076 381,076

2,584,050 2,584,050

financial liabilitiesLoans and borrowings (7,141,439) (7,141,439)Trade and other payables (303,209) (303,209)

(7,444,648) (7,444,648)

31.2 net gains and losses arising from financial instruments

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

loans and receivables 161,052 159,380 81,740 220,276Financial liabilities measured at amortised cost (840,318) (797,279) (228,820) (461,423)Fair value through profit or loss– Designated upon initial recognition 44,041 912 – –

(635,225) (636,987) (147,080) (241,147)

31.3 financial risk management

TheGroup has exposure to the following risks from its use of financial instruments:

• Credit risk• Liquidity risk• Market risk

181


31.4 Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails tomeet itscontractualobligations.TheGroup’sexposuretocreditriskarisesprincipallyfromitsreceivablesfromcustomersand investment debt securities. The Company’s exposure to credit risk arises principally from loans and advances tosubsidiaries and financial guarantees given.

receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. normallyfinancialguaranteesofbanks,shareholdersordirectorsofcustomersareobtained,andcreditevaluationsareperformedon customers requiring credit over a certain amount.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, themaximum exposure to credit risk arising from receivables is represented bythe carrying amounts in the statements of financial position.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Creditevaluationsareperformedonsignificantcustomersrequiringcreditoveracertainamount.TheGroupandtheCompanydoes not require collateral in respect of financial assets.

Investmentsareallowedonly in liquidsecuritiesandonlywithcounterpartiesthathaveacreditratingequaltoorbetterthan the group and the company. given their high credit ratings, management does not expect any counterparty to fail to meet their obligations.

At the end of the reporting period, theGroup has a concentration of credit risk in the form of trade debts due fromTenaga Nasional berhad (TNb), representing approximately 55% (2012: 66%) of the total receivables of the group. The maximum exposures to credit risk for the Group and the Company are represented by the carrying amount ofeach financial asset.

Impairment losses

The ageing of trade receivables as at the end of the reporting periodwas:

gross Impairment Netgroup RM’000 RM’000 RM’000

2013Not past due 345,520 (20,058) 325,462Past due 0 – 30 days 365,162 (20,983) 344,179Past due 31 – 120 days 1,955 (186) 1,769Past due more than 120 days 209,994 (187,061) 22,933

922,631 (228,288) 694,343




31.4 Credit risk (continued)

receivables (continued)

Impairment losses (continued)

gross Impairment Netgroup RM’000 RM’000 RM’000

2012Not past due 472,781 – 472,781Past due 0 – 30 days 428,582 – 428,582Past due 31 – 120 days 20,556 (14,473) 6,083Past due more than 120 days 119,967 (42,621) 77,346

1,041,886 (57,094) 984,792

At the endof the reportingperiod, trade receivableswith a carrying amountof RM24,702,000 (2012: RM83,429,000)were past due but not considered impaired. These trade receivables relate to customers forwhom there has not beensignificant change in credit quality and the amounts are considered recoverable.

Themovements in the allowance for impairment loss on trade receivables during the financial yearwere:

2013 2012 group rM’000 RM’000

At beginning of the year 57,094 56,450Impairment loss recognised 177,273 16,105Impairment loss reversed (6,079) (10,307)Impairment losswritten off – (5,154)

At end of the year 228,288 57,094

The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group issatisfied that recovery of the amount is probable, the amount considered irrecoverable is written off against thereceivable directly.

31.5 liquidity risk

Liquidity risk is the risk that theGroupwill not be able tomeet its financial obligations as they fall due. TheGroup’sexposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Groupmaintains a level of cash and cash equivalents deemed adequate by the management to ensure, as faras possible, that it will have sufficient liquidity tomeet its liabilities when they fall due.

183


31.5 liquidity risk (continued)

Maturity analysis

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the endof the reporting period based on undiscounted contractual payments:

carrying contractual contractual under More than amount interest cash flows 1 year 1-2 years 2-5 years 5 yearsgroup RM’000 rate % RM’000 RM’000 RM’000 RM’000 RM’000

2013financial liabilities

secured

AbbA bonds 130,000 8.00 140,400 140,400 – – –Al-Istisna bonds 193,231 8.90-9.20 220,573 78,678 73,905 67,990 –AuD term loan 1 425,508 BBsy + 475,878 20,137 20,137 435,604 – margin 1.85 AuD term loan 2 1,512,196 5.50 2,228,048 121,695 126,057 1,364,963 615,333RM term loan 39,220 6.67 55,905 2,625 3,705 19,504 30,071commercial papers 198,173 3.65 200,000 200,000 – – –Sukuk Ijarahmedium term notes 3,544,065 4.54-5.45 6,230,608 201,539 201,539 604,617 5,222,913Sukukmedium term notes 2 4,744,338 4.10-6.25 10,391,182 782,751 722,751 1,202,819 7,682,861SukukWakalah 470,000 3.95-5.60 668,737 42,439 71,530 161,931 392,837Senior SukukMurabahah 3,290,000 4.65-6.20 6,122,562 190,889 190,889 712,914 5,027,870uSD term loan 285,951 libor + 313,717 17,331 17,065 279,321 – margin 2.50

unsecured

Junior EBL term loan 726,905 klibor + 837,904 34,875 35,037 767,992 – margin 1.50 Subordinated loan notes 183,798 9.00-12.00 237,556 12,423 23,583 19,906 181,644Unrated Junior Sukuk Musharakah 1,800,000 6.30-9.30 6,603,811 113,400 167,400 502,659 5,820,352Trade and other payables 934,116 – 934,116 934,116 – – –

18,477,501 35,660,997 2,893,298 1,653,598 6,140,220 24,973,881





Maturity analysis (continued)


carrying contractual contractual under More than amount interest cash flows 1 year 1-2 years 2-5 years 5 yearsgroup RM’000 rate % RM’000 RM’000 RM’000 RM’000 RM’000

2012


secured

AbbA bonds 250,000 8.00 280,400 140,000 140,400 – –Al-Istisna bonds 256,870 8.70-9.20 304,883 84,310 78,678 141,895 –Sukuk Ijarahmedium term notes 3,658,439 3.85-5.45 6,587,922 357,314 201,539 604,617 5,424,452Sukukmedium term notes 1 5,341,439 5.78-6.98 7,476,195 1,029,424 988,592 2,714,054 2,744,125Senior SukukMurabahah 3,290,000 4.65-6.20 6,312,926 190,365 190,888 657,630 5,274,043uSD term loan 275,247 libor + 312,171 16,534 16,534 279,103 – margin 2.5

unsecured

Junior EBL term loan 330,103 Klibor + 380,513 15,515 15,515 349,483 – margin 1.5Subordinated loan notes 61,060 12.00-16.00 146,563 41,251 33,744 71,568 –Unrated Junior Sukuk Musharakah 1,800,000 6.30-9.30 6,717,210 113,400 113,400 503,117 5,987,293Trade and other payables 1,435,326 – 1,435,326 1,435,326 – – –

16,698,484 29,954,109 3,423,439 1,779,290 5,321,467 19,429,913

185



Maturity analysis (continued)


carrying contractual contractual under More than amount interest cash flows 1 year 1-2 years 2-5 years 5 yearsCompany RM’000 rate % RM’000 RM’000 RM’000 RM’000 RM’000

2013


unsecured

Unrated Junior SukukMusharakah 1,800,000 6.30-9.30 6,603,811 113,400 167,400 502,659 5,820,352other payables and accruals 901,861 – 901,861 901,861 – – –

2,701,861 7,505,672 1,015,261 167,400 502,659 5,820,352

carrying contractual contractual under More than amount interest cash flows 1 year 1-2 years 2-5 years 5 yearsCompany RM’000 rate % RM’000 RM’000 RM’000 RM’000 RM’000

2012


secured

Sukukmedium term notes 5,341,439 5.78-6.98 7,476,195 1,029,424 988,592 2,714,054 2,744,125

unsecured

Unrated Junior SukukMusharakah 1,800,000 6.30-9.30 6,717,210 113,400 113,400 503,117 5,987,293other payables and accruals 303,209 – 303,209 303,209 – – –

7,444,648 14,496,614 1,446,033 1,101,992 3,217,171 8,731,418




31.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other priceswill affect the Group’s financial position or cash flows.

31.6.1 Currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in acurrency other than the respective functional currencies of Group entities. The currencies giving rise to this riskare primarily Swiss Franc (CHF), Kuwait Dinar (KWD), Euro (EUR), US Dollar (USD) and Australian Dollar (AUD).

exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency which is other than the currency of the Group entities)risk, based on carrying amounts as at the end of the reporting periodwas:

AuD chF kwD euR uSD RM’000 RM’000 RM’000 RM’000 RM’000

2013Deposits with licensed banks 42,751 43,767 23,368 – 28,647Trade and other receivables – – 5,396 – 405,746Loans and borrowings (1,937,704) – – – (285,951)Trade and other payables (23,013) – – (61,538) (58,729)

Net exposure (1,917,966) 43,767 28,764 (61,538) (89,713)

2012Deposits with licensed banks – – 11,298 – 36,329Trade and other receivables – – – – 585Loans and borrowings – – – – (275,247)Trade and other payables – (744) – (26,516) (40,003)

Net exposure – (744) 11,298 (26,516) (278,336)

187


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% (2012: 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 currencyexchange rate variances that the group considered to be reasonably possible at the end of reporting period. The analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

2013 2012 profit or Profit orgroup loss loss rM’000 RM’000

AuD (143,848) –chF 3,283 (56)kwD 2,157 848euR (4,616) (1,989)uSD 6,728 (20,876)

(136,296) (22,073)

A 10% (2012: 10%)weakening of RM against the above currencies at the end of the reporting periodwouldhave had equal but opposite effect on the above currencies to the amounts shown above, on the basis that allother variables remained constant.

31.6.2 interest rate risk

TheGroup’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interestrates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes ininterest 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 fixed instruments. All interest rate exposures are monitored and managed proactively by the group’s management.




31.6 Market risk (continued)

31.6.2 interest rate risk (continued)

Exposure to interest rate risk

The interest rate profile of the group’s and the company’s interest-bearing financial instruments based on carrying amounts at the end of the reporting periodwas:

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

fixed rate instruments– Financial assets 3,306,899 5,066,330 128,596 377,956– Financial liabilities 16,105,021 14,657,808 1,800,000 7,141,439

floating rate instruments– Financial liabilities 1,438,364 605,350 – –

Most of the group’s financial assets and liabilities are fixed rate instruments measured at amortised cost. The change in floating rate instruments is hedged via derivatives (refer to 31.7.1). hence possible changes in interest rates are not expected to have a material impact on the group’s profit or loss except for the derivative financial instruments as below:

Cash flow sensitivity analysis for variable rate instuments

A change of 100 basis points (“bp”) in interest rates at the end of the reporting periodwould have increased(decreased) equity by the amounts shown below. This analysis assumes that all other variables, in particularforeign currency rates, remained constant.

Profit or loss Equity

100 bps 100 bps 100 bps 100 bps increases decreases increases decreases RM’000 RM’000 RM’000 RM’000

2013Interest rate swaps 28,448 (2,728) 149,276 (162,133)Cross currency swaps – – 104,235 (104,235)

Cash flow sensitivity (net) 28,448 (2,728) 253,511 (266,368)

2012Interest rate swaps – – 57,842 (57,842)Cross currency swaps – – 100,772 (100,772)

Cash flow sensitivity (net) – – 158,614 (158,614)

189


31.7 hedging activities

31.7.1 Cash flow hedge

TheGroup has entered into various interest rate swaps and cross currency swaps in order to hedge the interestrate risk and foreign exchange risk in relation to the variability in cash flows on the floating rate RM andUSD loans of RM967,604,587 (75% of Junior Tranche Loan), 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 inMalaysia, the notional amountof the various swaps start with RM96,953,206 and thereafter as per schedule for Junior IRS, RM44,273,673and 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 swapswere entered into for a period of 5 years for Junior IRS, 12 yearsfor Senior IRS and 15 years for ccS.

Forthe interest rateswapsthatheldbyasubsidiary inAustralia, theGrouphad interest rateswapswithanotionalvalue of AUD464million. The interest rate swapswere entered into for a period of 10 to 17 years tenor.

The following table indicates the periods in which the cash flows associated with the interest rate swap areexpected to occur and affect profit or loss:

carrying expected under 1-2 2-5 More than amount cash flows 1 year years years 5 yearsgroup RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2013financial assetsInterest rate swaps 16,134 17,138 (8,859) (6,671) 2,130 30,538Cross 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 liabilityInterest rate swap (66,081) (87,601) (32,242) (25,985) (37,331) 7,957

2012financial liabilitiesInterest rate swaps (17,501) (18,806) (1,957) (4,870) (12,547) 568Cross currency swaps (145,249) (485,862) – (21,269) (156,667) (307,926)

(162,750) (504,668) (1,957) (26,139) (169,214) (307,358)

During the financial year, a gain of RM238,418,000 (2012: loss of RM5,107,000) was recognised in othercomprehensive income.

Ineffectivenessgainamounting toRM44,041,000 (2012:RM912,000)was recognised inprofitor lossduring thefinancial year in respect of the hedge.




31.7 hedging activities (continued)

31.7.1 Cash flow hedge (continued)

sensitivity analysis

Fair value sensitivity analysis

Achangeof10%strengthening/weakeningof theUSDat theendof the reportingperiodwouldhave increased(decreased) equity by the amount shown below:

Equity

10% 10% strengthening weakening of uSD of uSD RM’000 RM’000

2013Cross currency swaps 35,128 (35,128)

Fair value sensitivity (net) 35,128 (35,128)

2012Cross currency swaps 22,994 (22,994)

Fair value sensitivity (net) 22,994 (22,994)

31.8 fair value information

The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowingsreasonably approximate their fair values due to the relatively short term nature of these financial instruments.

The table below analyses financial instruments carried at fair value and those not carried at fair value for which fairvalue is disclosed, togetherwith their fair values and carrying amounts shown in the statement of financial position.

191

31.

fin

an

Cia

l in

str

uM

ents

(co

ntin

ued)

31.8

fai

r va

lue

info

rmat

ion (

cont

inue

d)

Fa

ir va

lue

of fi

nanc

ial

inst

rum

ents

Fa

ir va

lue

of fi

nanc

ial

inst

rum

ents

ca

rrie

d at

fai

r va

lue

not

carr

ied

at f

air

valu

e To

tal

car

ryin

g

leve

l 1

leve

l 2

leve

l 3

Tota

l le

vel

1 le

vel

2 le

vel

3 To

tal

fair

valu

e am

ount

2013

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

gro

up

non

-cur

rent

fina

ncia

l as

sets

der

ivat

ive

fina

ncia

l as

sets

:Interestrateswaps

– 16

,134

–

16,1

34

– –

– –

16,1

34

16,1

34Crosscurrencyswaps

– 64

,107

–

64,1

07

– –

– –

64,1

07

64,1

07Fi

nanc

e le

ase

rece

ivab

le

– –

– –

– –

2,01

2,94

5 2,

012,

945

2,01

2,94

5 2,

012,

945

–

80,2

41

– 80

,241

–

– 2,

012,

945

2,01

2,94

5 2,

093,

186

2,09

3,18

6

fina

ncia

l lia

bilit

ies

der

ivat

ive

fina

ncia

l lia

bilit

ies:

Interestrateswaps

– (3

1,76

2)

– (3

1,76

2)

– –

– –

(31,

762)

(3

1,76

2)lo

ans

and

borr

owin

gs (

secu

red)

:A

l-Ist

isna

bond

–

– –

– –

(204

,756

) –

(204

,756

) (2

04,7

56)

(193

,231

)A

uD

ter

m l

oan

1 –

– –

– –

(445

,455

) –

(445

,455

) (4

45,4

55)

(425

,508

)A

uD

ter

m l

oan

2 –

– –

– –

(1,6

32,8

07)

–

(1,6

32,8

07)

(1,

632,

807)

(1

,512

,196

)RM

ter

m l

oan

– –

– –

– (3

2,72

8)

– (3

2,72

8)

(32,

728)

(3

9,22

0)SukukIjarahmediumtermnotes

– –

– –

– (4

,051

,205

) –

(4,0

51,2

05)

(4,0

51,2

05)

(3,5

44,0

65)

Sukukmediumtermnotes2

– –

– –

– (5

,472

,619

) –

(5,4

72,6

19)

(5,4

72,6

19)

(4,7

44,3

38)

SukukWakalah

– –

– –

– (4

64,8

37)

– (4

64,8

37)

(464

,837

) (4

70,0

00)

SeniorSukukMurabahah

– –

– –

– (3

,355

,574

) –

(3,3

55,5

74)

(3,3

55,5

74)

(3,2

90,0

00)

uSD

ter

m l

oan

– –

– –

– (2

81,5

69)

– (2

81,5

69)

(281

,569

) (2

85,9

51)

–

(31,

762)

–

(31,

762)

–

(15,

941,

550)

–

(15,

941,

550)

(15

,973

,312

) (1

4,53

6,27

1)

192

no

tes

to t

he

Co

nso

lidat

ed f

inan

cial

sta

tem

ents

(co

ntin

ued)

31.

fin

an

Cia

l in

str

uM

ents

(co

ntin

ued)

31.8

fai

r va

lue

info

rmat

ion (

cont

inue

d)

Fa

ir va

lue

of fi

nanc

ial

inst

rum

ents

Fa

ir va

lue

of fi

nanc

ial

inst

rum

ents

ca

rrie

d at

fai

r va

lue

not

carr

ied

at f

air

valu

e To

tal

car

ryin

g

leve

l 1

leve

l 2

leve

l 3

Tota

l le

vel

1 le

vel

2 le

vel

3 To

tal

fair

valu

e am

ount

2013

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

gro

up

non

-cur

rent

fina

ncia

l lia

bilit

ies

loan

s an

d bo

rrow

ings

(uns

ecur

ed):

JuniorEBLtermloan

– –

– –

– (7

29,0

31)

– (7

29,0

31)

(729

,031

) (7

26,9

05)

UnratedJuniorSukukMusharakah

– –

– –

– (1

,878

,862

) –

(1,8

78,8

62)

(1,8

78,8

62)

(1,8

00,0

00)

Subo

rdin

ated

loa

n no

tes

–

– –

– –

– (1

47,9

33)

(147

,933

) (1

47,9

33)

(183

,798

)

–

– –

– –

(2,6

07,8

93)

(147

,933

) (2

,755

,826

) (2

,755

,826

) (2

,710

,703

)

–

(31,

762)

–

(31,

762)

–

(18,

549,

443)

(1

47,9

33)

(18,

697,

376)

(18

,729

,138

) (1

7,24

6,97

4)

Co

mp

any

fina

ncia

l lia

bilit

ylo

ans

and

borr

owin

gs(u

nsec

ured

):UnratedJuniorSukukMusharakah

– –

– –

– (1

,878

,862

) –

(1,8

78,8

62)

(1,8

78,8

62)

(1,8

00,0

00)

193


31.8 fair value information (continued)

Fair value of financial instruments Fair value of financial instruments not carried carried at fair value at fair value* Total carrying level 1 level 2 level 3 Total Total fair value amount2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

group non-current

financial liabilitiesderivative financial liabilities:Interest rate swaps – (17,501) – (17,501) – (17,501) (17,501)Cross currency swaps – (145,249) – (145,249) – (145,249) (145,249)loans and borrowings(secured):AbbA bonds – – – – (265,724) (265,724) (250,000)Al-Istisna bond – – – – (277,995) (277,995) (256,870)Sukuk Ijarahmedium term notes – – – – (4,160,319) (4,160,319) (3,658,439)Sukukmedium term notes 1 – – – – (5,964,070) (5,964,070) (5,341,439)Senior Sukuk Murabahah – – – – (3,243,700) (3,243,700) (3,290,000)uSD Term loan – – – – (279,372) (279,372) (275,247)

– (162,750) – (162,750) (14,191,180) (14,353,930) (13,234,745)

financial liabilities loans and borrowings(unsecured):Junior EBL term loan – – – – (330,960) (330,960) (330,103)Unrated Junior SukukMusharakah – – – – (1,878,862) (1,878,862) (1,800,000)Subordinated loan notes – – – – (146,563) (146,563) (61,060)

– – – – (2,356,385) (2,356,385) (2,191,163)

– (162,750) – (162,750) (16,547,565) (16,710,315) (15,425,908)

* Comparative figures have not been analysed by levels, by virtue of transitional provision given in Appendix C2 of MFRS 13.





Fair value of financial instruments Fair value of financial instruments not carried carried at fair value at fair value* Total carrying2012 level 1 level 2 level 3 Total Total fair value amount RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Company non-current

financial liabilitiesloans and borrowings(secured):Sukukmedium term notes 1 – – – – (5,964,070) (5,964,070) (5,341,439)

loans and borrowings(unsecured):Unrated Junior SukukMusharakah – – – – (1,878,862) (1,878,862) (1,800,000)

– – – – (7,842,932) (7,842,932) (7,141,439)

* Comparative figures have not been analysed by levels, by virtue of transitional provision given in Appendix C2 of MFRS 13.

policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change incircumstances that caused the transfer.

level 1 fair value

Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or liabilitiesthat the entity can access at the measurement date.

level 2 fair value

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable forthe financial assets or liabilities, either directly or indirectly.

derivatives

The interest rate swaps and cross currency swaps instruments that held by the subsidiary inMalaysia are not activelytraded thereforemarket-based prices are not readily available. The fair values of the instruments are calculated basedon the present value of future principal and interest cash flows. The spot rates, forward rates and foreign exchangerates used to calculate present value are directly observable from themarket.

For the interest rate swaps that held by the subsidiary in Australia, the fair value of interest rate swaps are based onbroker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on thetermsandmaturityof each contract andusingmarket interest rates for a similar instrumentat themeasurementdate.Fair values reflect the credit risk of the instrument and include adjustments to take into account of the credit risk ofthe Group and counterpartywhere appropriate.

195



level 2 fair value (continued)

non-derivative financial liabilities

Fair value of the long term borrowings is calculated based on the present value of future principal and interest cashflows, discounted at themarket 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 in 2013 and 2012.

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 valueswithin Level 3, as the keyunobservable inputs used in the valuation models.

a) financial instruments not carried at fair value

Significant Inter-relationship between unobservable unobservable inputs andType Valuation technique inputs fair valuemeasurement

Finance lease receivable Discounted cash flows not applicable not applicableSubordinated loan notes Discounted cash flows not applicable not applicable

sensitivity analysis for level 3

other comprehensive Profit or loss income, net of tax

Increase Decrease Increase Decrease2013 RM’000 RM’000 RM’000 RM’000

interest rate (1% movement) 4,271 (4,271) – –

valuation process applied by the group for level 3 fair value

TheGrouphas anestablished control framework in respect to themeasurementof fair valuesoffinancial 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 reviewssignificant unobservable inputs and valuation adjustments.



32. Capital ManageMent

TheGroup’sobjectiveswhenmanaging capital are tomaintain a strong capital base and to safeguard theGroup’s ability tocontinue as a going concern, so as tomaintain investor, creditor andmarket confidence and to sustain futuredevelopmentof the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies withdebt covenants.

32.1 aBBa bonds issued by gB3 sdn. Bhd. (“gB3”)

GB3’sstrategywastomaintainadebt-to-equity ratioofnotmorethan9:1andadebtservicecover ratioofat least1.25times. The following shows the debt-to-equity ratios and debt service cover ratios at the end of the financial years:

(i) debt-to-equity ratios

2013 2012 rM’000 RM’000

AbbA bonds 130,000 250,000

Deemed total debts of gb3 [A] 130,000 250,000

Redeemable Unsecured Loan Stocks 12,000 78,300Redeemable UnsecuredMurabahah Stocks 58,725gb3’s share capital 1,000 1,000gb3’s retained profits 570,544 458,798

Deemed total equity of GB3 [B] 642,269 538,098

Debt-to-equity ratios [A:B] 0.20:1 0.46:1

(ii) debt service cover ratios

2013 2012 rM’000 RM’000

Total net cash available of gb3 [A] 210,160 311,993gb3’s interest payable [b] 5,186 9,973Debt service cover ratios [A:b] 40.52:1 31.28:1

Therewere no changes in GB3’s approach to capitalmanagement during the financial year.

197

32. Capital ManageMent (continued)

32.2 al-istisna bonds issued by prai power sdn. Bhd. (“ppsB”)

PPSB’s strategy was to maintain a debt-to-equity ratio of not more than 4:1 and an annual finance service ratio ofat least 1.4 times. The following shows the debt-to-equity ratios and annual finance service ratios at the end of thefinancial years:


2013 2012 rM’000 RM’000

Al-Istisna bonds 193,231 256,870

Deemed total debts of PPSb [A] 193,231 256,870

Redeemable Unsecured Loan Stocks – 199,475Redeemable UnsecuredMurabahah Stocks 199,475 –PPSb’s share capital 1,000 1,000PPSb’s retained profits 296,720 238,426

Deemed total equity of PPSB [B] 497,195 438,901


(ii) annual finance service ratios

2013 2012 rM’000 RM’000

Total net cash available of PPSb [A] 229,673 233,114PPSb’s principle and interest payable [b] 114,575 137,319Annual finance service ratios [A:b] 2.00:1 1.70:1

Therewere no changes in PPSB’s approach to capitalmanagement during the financial year.




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 atleast 1.25 times. The following shows the debt-to-equity ratio and finance service cover ratio at the end of thefinancial year:


2013 2012 rM’000 RM’000

Sukuk Ijarahmedium term notes (Principal outstanding) 4,045,000 4,195,000

Deemed total debts of TbP [A] 4,045,000 4,195,000

Redeemable Unsecured Loan Stocks 29,163 810,705Redeemable UnsecuredMurabahah Stocks 771,873 –Redeemable convertible unsecured Islamic debt securities (“RcuIDS”) 270,000 –Redeemable convertible unsecured loan stocks (“RCULS”) 30,000 –TbP’s share capital 5,000 5,000TbP’s retained profit 302,189 716,036

Deemed total equity of TBP [B] 1,408,225 1,531,741


(ii) finance service cover ratio

2013 2012 rM’000 RM’000

Total net available cash at 31 December [A] 1,117,018 –Total finance service 357,314 –

1,474,332 –

Total finance service paid between January to December:-Sukuk Ijarahmedium term notes [B] 357,314 –

Finance service cover ratio [A:b] 4.13:1 –

The finance service cover ratio is not applicable to the subsidiary as at 31 December 2012 as there was nodistribution made in any 12 months period between one principal payment date and the next principal dateduring that financial year.

199


32.4 senior sukuk Murabahah 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 atleast 1.05 times. The first of such finance service cover ratio is to be computed for the first full calculation period ending after the commencement date of the power plants. The following shows the debt-to-equity ratio at the endof the financial year:


2013 2012 rM’000 RM’000

Senior SukukMurabahah (Drawdown amount) 2,945,283 1,337,510

outstanding principal obligation [A] 2,945,283 1,337,510

TbeI’s share capital 100 100Tbe’s share capital 5,000 5,000Shareholder loan – TbeI 94,159 42,759Junior EBL Term Loan 726,905 330,103

Deemed total equity of TBEI [B] 826,164 377,962

Debt-to-equity ratio [A:B] 3.57:1 3.54:1

The first finance service cover ratio is not presented until the completion date of the project.

32.5 rM term loan 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 atleast 1.20 times.

The following shows the debt-to-equity ratio and debt service cover ratio at the end of the financial year:


2013 2012 rM’000 RM’000

Term loan 39,220 –

Deemed total debts of MuSb [A] 39,220 –

MuSb’s share capital 10,000 –MuSb’s retained profit 44,943 –

Deemed total equity ofMUSB [B] 54,943 –

Debt-to-equity ratios [A:B] 0.71:1 –




32.5 rM term loan drawdown by Malakoff utilities sdn. Bhd. (“MusB”) (continued)

(ii) debt service cover ratio

2013 2012 rM’000 RM’000

Total net cash available of MuSb [A] 59,082 –MuSb’s interest payable [b] 2,624 –Debt service cover ratio [A:b] 22.5:1 –

32.6 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 atleast 1.25 times. The first debt-to-equity ratio is to be computed 24months after the issue date.

The following shows the finance service cover ratio at the end of the financial year:

(i) finance service cover ratio

2013 2012 rM’000 RM’000

Total net cash available of TboM [A] 105,890 –TboM’s principle and interest payable [b] 11,220 –Finance service cover ratio [A:b] 9.44:1 –

The first debt-to-equity ratio is not presented until 24months after the issue date.

32.7 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 consecutivecalculation date.

The following shows the projected debt service cover at the end of the financial year:

(ii) debt service cover ratio

2013 2012 rM’000 RM’000

Total cash available for debt service [A] 86,028 –Debt services [b] 69,459 –Debt service cover ratio [A:b] 1.24:1 –

201


32.8 the aggregated debt-to-equity ratio of the Company and its subsidiary is applied to the following loans and borrowings:

a) sukuk medium term notes 2 issued by Malakoff power Berhad (“MpB”)

b) Commercial papers issued by MpB

For the Sukuk medium term notes 2 issued byMPB, the Company is required to maintain an aggregated debt-to-equity ratio of the Company and its subsidiary of notmore than 1:1.

For the commercial papers issuedbyMPB, theCompany is required tomaintain an aggregated companydebt-to-equity ratio of the Company and its subsidiary of notmore than 1.25:1.

2013 2012 rM’000 RM’000

contingencies 213,889 –

Deemed total debts of the company 213,889 –

commercial papers 198,173 –Sukukmedium term notes 2 4,744,338 –contingencies 48,400 –

Deemed total debts of MPb 4,990,911 –

Deemed aggregated debts [A] 5,204,800 –

ordinary share capital 351,344 –Redeemable convertible non-cumulative preference shares 4,179 –Share premium 3,575,837 –Reserve 840 –Retained profits 3,596,959 –Unrated Junior SukukMusharakah 1,800,000 –

Deemed total equity of the Company 9,329,159 –

Reserve (599,606) –Retained profits 32,046 –

Deemed total equity ofMPB (567,560) –

Deemed aggregated equity [B] 8,761,599 –

Debt-to-equity ratios [A:B] 0.59:1 –




32.9.1 the Company debt-to-equity ratio is applied to the following loans and borrowings:

a) sukuk medium term notes 1 issued by the Company

b) usd term loan for Malakoff international limited (“Mil”)

c) Junior eBl term loan for tBei

d) aud term loan 1 for Mil

For the Sukukmedium term notes 1, the Company’s strategy remains unchanged from 2012,was tomaintaina debt-to-equity ratio of not more than 1.25:1 and Group debt-to-equity ratio of not more than 7:1. TheCompany has settled the Sukukmedium term notes 1 during the financial year.

For the USD term loan obtained by MIL, the Company is required to maintain its debt-to-equity ratio of notmore than 1.25:1 andGroup debt-to-equity ratio of notmore than 7:1.

For the Junior EBL term loan obtained by TBEI, the Company is required tomaintain its debt-to-equity ratio ofnotmore than 1.25:1 andGroup debt-to-equity ratio of notmore than 7:1.

For theAUD term loan 1 obtained byMIL, theCompany is required tomaintain its debt-to-equity ratio of notmore than 1.25:1 andGroup debt-to-equity ratio of notmore than 7:1.

The following shows the debt-to-equity ratios for the following years:

(i) Company debt-to-equity ratios

2013 2012 rM’000 RM’000

Restated

Sukukmedium term notes 1 – 5,341,439contingencies 213,889 270,835

Deemed total debts [A] 213,889 5,612,274

ordinary share capital 351,344 351,344Redeemable convertible non-cumulative preference shares 4,179 4,179Share premium 3,575,837 3,575,837Reserve 840 840Retained profits 3,596,959 378,603Unrated Junior SukukMusharakah 1,800,000 1,800,000

Deemed total equity [B] 9,329,159 6,110,803


203


32.9.1 the Company debt-to-equity ratio is applied to the following loans and borrowings:

a) sukuk medium term notes 1 issued by the Company

b) usd term loan for Malakoff international limited (“Mil”)

c) Junior eBl term loan for tBei

d) aud term loan 1 for Mil

(ii) group debt-to-equity ratios

2013 2012 rM’000 RM’000 Restated

commercial papers 198,173 –Sukukmedium term notes 1 – 5,341,439Sukukmedium term notes 2 4,744,338 –Al-Bai Bithaman Ajil bond 130,000 250,000Al-Istisna bonds 193,231 256,870Sukuk Ijarahmedium term notes 3,544,065 3,658,439Junior EBL term loan 726,905 330,103Senior SukukMurabahah (Drawdown amount) 2,945,283 1,337,510Senior SukukMurabahah (Unutilised amount) 344,717 1,952,490uSD Term loan 285,951 275,247SukukWakalah 470,000 –AuD Term loan 1 425,508 –AuD Term loan 2 1,512,196 –RM Term loan 1 39,220 –contingencies 382,573 440,441

Deemed total debts [A] 15,942,160 13,842,539

ordinary share capital 351,344 351,344Redeemable convertible non-cumulative preference shares 4,179 4,179Share premium 3,575,837 3,575,837capital redemption reserve 840 840Reserve 155,971 652Subordinated loan notes 183,798 61,060Accumulated losses (128,468) (111,501)Non-controlling interest 223,422 –Unrated Junior SukukMusharakah 1,800,000 1,800,000

Deemed total equity [B] 6,166,923 5,682,411




33. Capital CoMMitMents

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

plant and equipmentcontracted but not provided for 2,101,576 4,592,430 – –Authorised but not contracted for 340,373 304,011 5,216 5,749

2,441,949 4,896,441 5,216 5,749

34. ContingenCies

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

guarantees– secured 382,573 440,441 213,889 270,835

These guaranteesmainly consist of guarantees for bid bonds, performance bonds and security deposits for projects.

35. related parties

For the purposes of these financial statements, parties are considered to be related to the group or the 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 aresubject to common control or common significant influence. Related partiesmay be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibilityfor planning, directing and controlling the activities of the Group or the Company either directly or indirectly. The keymanagement 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 keymanagement personnel. Related party transactions have been entered into the normal course of businessunder normal trade terms.

205

35. related parties (continued)

The significant related party transactions of the Group and of the Company are as follows:

significant related party transactions

group Company

2013 2012 2013 2012 rM’000 RM’000 rM’000 RM’000

i. Associates:– Interest income on unsecured subordinated loan notes 65,402 59,922 65,402 59,922– Projectmanagement fees 967 – 967 –

ii. Subsidiaries– Interest income on unsecured subordinated loan notes – – 10,905 140,286– Management fees – – 26,553 27,060– Dividends – – 3,658,000 659,053– Interest expense on advances to subsidiary – – (52,152) –

iii. An entity that is under common control by a party that controls the group and the company: Hicom Power Sdn. Bhd.:

operation and maintenance subcontract fee income – 109,633 – – operation and maintenance subcontract fee expense – (277,947) – –

iv. 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):

Tenaga Nasional berhad:Sales of capacity and energy 4,726,492 5,665,095 – –Purchase of electricity bulk supply (56,856) (47,232) – –

iv. 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):Petroliam Nasional berhad: Purchase of gas (608,471) (398,263) – –Petronas Dagangan berhad: Purchase of diesel (42,206) (75,431) – –TNb Fuel Services Sdn. bhd.: Purchase of coal (1,311,467) (2,045,174) – –Financial institutions and other corporations: Interest income 74,774 61,917 4,824 15,027 Interest expense (50,400) (16,570) (50,400) (16,570)energy commission: ceSS fund contribution (29,598) (29,486) – –Malaysian Resources corporation berhad: Sales of centralised chilledwater and electricity 32,753 29,654 – –Lembaga Tabung Haji: Interest expense (63,000) (20,712) (63,000) (20,712)



36. signifiCant events during the year

1. internal reorganisation exercise

On 18 January 2013, the Group and the Company completed an internal reorganisation exercise. The internalreorganisation involved, amongst others:

(i) The issuance of Sukuk Medium Term notes of RM5,600 million and Commercial Papers of RM200 million byMalakoff Power Berhad (“MPB”), awholly-owned subsidiary of the Company;

(ii) The issuance of Redeemable convertible unsecured Islamic Debt Securities (“RcuIDS”) of RM270 million and Redeemable Convertible Unsecured Loan Stocks (“RCULS”) of RM30 million by Tanjung Bin Power Sdn. Bhd.(“TBP”), a 90% owned subsidiary of the Company;

(iii) The issuance of RcuIDS of RM1,687.50 million and RculS of RM112.5 million by Segari energy ventures Sdn. Bhd. (“SEV”), a 93.75% owned subsidiary of the Company;

(iv) The issuance of Redeemable Unsecured Murabahah Stocks (“RUMS”) of RM58.73 million by GB3 Sdn Bhd(“GB3”), a 75% owned subsidiary of the Company;

(v) The issuance of RUMS of RM199.48million by Prai Power Sdn. Bhd. (“PPSB”), awholly-owned subsidiary of thecompany;

(vi) The issuance of RuMS of RM771.87 million by TbP;

(vii) The replacementofexisting redeemableunsecured loan stocks issuedbyTBP,GB3,PPSB in theaggregateamountofRM1,030.08million innominal valueheldby theCompanywithRUMSand transferredofownershipofRUMSheld by the company to MPb;

(viii) The acquisition of the domestic operation and maintenance business by MPB from the subsidiaries of theCompany, namely Teknik Janakuasa Sdn Bhd and natural Analysis Sdn Bhd, a wholly-owned subsidiary of thecompany; and

(ix) creation of theMurabahah inter-company financing betweenMCB andMPB.

The internal reorganisation exercise did not entail any acquisition of new companies or disposal of any existingcompanies within the Group. As such, the Company’s effective interests in the subsidiaries and associates remainunchanged.

2. proposed listing of the Company on the Main Market of Bursa Malaysia securities Berhad

On22 January2013, theCompany submitted toBursaMalaysia SecuritiesBerhad (“BursaMalaysia“) the initial listingapplicationinrelationtotheadmissionoftheCompanytotheOfficialListandthelistingofandquotationfortheentireenlarged issued and paid-up ordinary share capital of MCB on the Main Market of Bursa Securities. The applicationwas approved by the Securities Commissions and BursaMalaysia on 7March 2013 and 19March 2013, respectively.on 6 September 2013, the company made a public announcement through its immediate holding company, MMc Corporation Berhad to Bursa Malaysia that it decided to allow the approval of the Securities Commissions for theProposed Listingwhich is valid until 6 September 2013 to lapse.

207

36. signifiCant events during the year (continued)

3. extension of the term of the current ppa of sev

On 20 February 2013, SEV accepted the conditional awardmade by theGovernment ofMalaysia through the EnergyCommission. On 25 February 2013, SEV executed the following agreements:-

(i) A Supplemental Power Purchase Agreement (“PPA”) to the current PPA (“Supplemental PPA”) with TenagaNasional berhad (“TNb”) dated 16 october 1993 (as amended and supplemented) for the generation and sale of electricity and to make generating capacity available to TnB from its 1,303MW combined cycle power plantlocated at Lumut, Perak.

The Supplemental PPA shall be effective from the date of the signing until the expiry of the existing PPA on 30 June 2017with the commencement of the competitive tariffs beginning 1March 2013.

(ii) A new PPAwith TnB (“new PPA”) for the extension of the term of the current PPA. Thenew PPA is for a termof ten (10) years and shall be effective from 1 July 2017 to 30 June 2027.

4. incorporation of a new subsidiary

On 19 April 2013, TJSB incorporated a subsidiary, PT. Teknik Janakuasa in Indonesia. TJSB has 95% equity interestin PT. Teknik Janakuasa and the remaining 5% equity interest is held by Madam Meutia Hidayati Besila of Messrs.Oen Choennah & Co of Bekasi, Jalan Kaveling BnI Kp. Cakung, Rukun Tetangga 004, RukunWarga 002, KelurahanJatikramat, Kecamatan Jatiasih, Kota Bekasi, Indonesia in accordance with company law in Indonesia. The authorisedand paid-up share capital of PT. Teknik Janakuasa comprising 526,300 shares of IDR9,723 each (approximately ofRM1,708,000).

5. Duringthefinancialyear,Malakoff InternationalLimited (“MIL”),awholly-ownedsubsidiaryof theCompanyundertookthe following corporate activities:

(i) Acquiredtheentire issuedandpaid-upcapitalofPacificGoldtreeSdn.Bhd.(“PacificGoldtree”)withanauthorisedshare capital of 400,000 ordinary shares of RM1.00 each and an issued and paid-up share capital of 2 ordinary shares of RM1.00 each through MIl for a cash consideration of RM2.00; and

(ii) Acquired the entire issued and paid-up capital of Skyfirst Power Sdn. Bhd. (“Skyfirst Power”) with an authorisedshare capital of 400,000 ordinary shares of RM1.00 each and an issued and paid-up share capital of 2 ordinary shares of RM1.00 each through Pacific goldtree for a cash consideration of RM2.00; and

(iii) IncorporatedMalakoffAustraliaPtyLtd (“MAPL”),an indirectwholly-ownedsubsidiary inAustralia throughSkyfirstPowerwith 1 fully paid-up ordinary share issued for AUD1.00; and

(iv) IncorporatedMalakoffHoldings Pty Ltd (“MHPL”), an indirectwholly-owned subsidiary inAustralia throughMAPLwith 1 fully paid-up ordinary share issued for AUD1.00; and

(v) Acquired the entire issuedandpaid-up capital ofMalakoffWindMacarthurHoldings Pty Limited (formerly knownas Meridian Wind Macarthur Holdings Pty Limited), a company incorporated in Australia with 174,330,816 fullypaid-up ordinary shares throughMHPL for a cash consideration of AUD130,328,000 (equivalent to approximatelyof RM383 million).

6. On1 July 2013, TanjungBinO&MBerhad, an indirectwholly-owned subsidiary of theCompany issuedRM470millionin nominal value of SukukWakalah.



36. signifiCant events during the year (continued)

7. On 17 December 2013,MPB issued RM5,380million in nominal value of SukukMurabahah.

8. On21August2013,TJSBInternationalLimited(“TJSBIL”),anindirectwholly-ownedsubsidiaryoftheCompany,togetherwith SumishoCapitalManagement (“SCMC”),CadaguaS.A. (“CSA”) andAl-Barij International Limited (“ABIL”) jointlyincorporated a limited company, Muscat city Desalination operation and Maintenance company (“McDoMc”) in Muscat, oman. McDoMc has authorised and paid up capital of 150,000 shares of Ro1 each.

37. aCquisition and disposal of suBsidiaries

group

1. acquisition of subsidiaries

(i) On 28 June 2013, the Company through its indirect wholly owned subsidiary, Malakoff Holdings Pty Ltd(“MHPL”) acquired the entire issued and paid up share capital of Malakoff Wind Macarthur Holdings Pty.Ltd. (“MWMH”) (formerly known as Meridian Wind Macarthur Holdings Pty. Ltd.) for a cash considerationapproximately of RM383million.As a result of the acquisition,MHPLhas an indirect 50%participating interestin the unincorporated joint venture (“UJV”) of theMacarthurWind Farm through its wholly-owned subsidiary,MWMH, which wholly owns Malakoff Wind Macarthur Pty. Limited (“MWM”) (formerly known as MeridianWind Macarthur Pty. Limited), the holder of 50% of the UJV. The completion of the construction of theMacarthurWind Farmwas on 31 January 2013.

The following summaries the recognized amount of assets and liabilities acquired at the acquisition date:

Fair value Acquiree’s recognized on carrying acquisition amount date RM’000 RM’000

Finance lease receivables 2,021,035 2,021,035Cash and cash equivalent 23,013 23,013Loans and borrowings (1,527,819) (1,527,819)Derivative financial liabilities (110,052) (110,052)other payables and accruals (23,013) (23,013)

383,164 383,164

Purchase consideration 383,164Less: Cash and cash equivalents (23,013)

Cash outflow on acquisition, net of cash and cash equivalents acquired 360,151

The Group incurred acquisition-related costs of RM6,146,000 related to arranger fees. The arranger fee hasbeen included in administrative expenses in the group’s consolidated statements of profit or loss and other comprehensive income.

From thedate of acquisition,MWMcontributed approximately RM80million to the revenue andRM59million toprofitbefore taxof the consolidated entity. It is considered impracticable to estimatewhat the revenue andprofitbefore tax of the consolidated entity would have been if the acquisition had been effect at 1 January 2013.

209

37. aCquisition and disposal of suBsidiaries (continued)

1. acquisition of subsidiaries (continued)

.(ii) In 2012, Malakoff International Limited (“MIL”), a wholly-owned subsidiary of the Company acquired 100%and 57.1% of the equity interest inMalakoff Hidd Holding Company Limited (formerly known as IPMiddle EastHoldingCompany Limited) (“MHHCL”) andMalakoff Summit HiddHoldingCompany Limited (formerly known asIPSuM hidd holding company limited), respectively for a total cash consideration of RM347,563,000. both the subsidiaries are principally engaged in investment holding activities. As a result of the acquisition, the Group hasaneffectiveequity interestof39.97%onHiddPowerCompanyB.S.C. (“HPC”)and itbecameanassociateof theGroup.no revenuewas contributed by the subsidiaries acquired during the year. From the acquisition date to 31December2012, theGroup sharedof profitofHPCamounting toRM20,357,000. If the acquisitionhadoccurredon 1 January 2012, management estimates that the consolidated profit for the financial year would have beenRM555,259,000.

Intangible asset and goodwill arising from the acquisition amounting to RM81,103,000 and RM266,460,000,respectively which have been measured and accounted for using the Multi-Period Excess Earning Method underthe incomemethod as disclosed in note 4 to the financial statements. The following summarises the recognisedamounts of intangible asset and goodwill acquired at the acquisition date of the subsidiaries:


Property, plant and equipment 3,082,618 3,082,618Receivables 306,109 306,109Inventories 47,140 47,140Cash and cash equivalents 54,217 54,217Bank borrowings (2,643,294) (2,643,294)Derivative financial instruments (611,695) (611,695)Deferred revenue (111,940) (111,940)other liabilities (290,614) (290,614)

Net liabilities (167,459) (167,459)

Intangible asset arising from acquisition 370,369

Net intangible asset 202,910

group share of intangible asset 81,103Purchase consideration/Cash outflow on acquisition (347,563)

Goodwill 266,460

As at 31 December 2012, the goodwill arising on the acquisition of HPCwas translated at the year-end closingrate. As a result, the exchange difference of RM877,000was recognised as part of the translation reserve in theconsolidated statements of changes in equity.



37. aCquisition and disposal of suBsidiaries (continued)

2. disposal of a subsidiary

(iii) In2012,awholly-ownedsubsidiaryof theCompany,Malakoff International Limited (“MIL”)disposedoffMalakoffJordan Generation Limited (“MJGL”), a wholly-owned subsidiary of MIL to a third party for a consideration sumof RM74,568,000. As a result, Malakoff ceased to hold an indirect equity interest in Enara Energy Investmentcompany (“enara”) and central electricity generating company limited (“cegco”), associates of the group.

The disposal had the following effect on the financial position of the Group as follows:

RM’000

Investment in a subsidiary –*Investment in associates (47,868)

Net assets (47,868)Total disposal proceeds, settled by cash 74,568

gain on disposal recognised in statements of profit or loss and other comprehensive income 26,700

* Denotes RM2

38. aCquisition of assets and liaBilities

(i) In2012,TanjungBinO&MBerhad(formerlyknownasSterlingAsiaBerhad),awholly-ownedsubsidiaryoftheCompanyentered intoaconditionalasset saleagreementwithHicomPowerSdn.Bhd. (“HPSB”) for theacquisitionof the rights,assets and liabilities of HPSB for a total cash consideration of RM575,000,000. The acquisition was completed on 17December 2012.

Intangible asset arising from the acquisition amounting to RM548,074,000 has beenmeasured and accounted for usingthe Multi-Period excess earning Method under the income method as disclosed in Note 4 to the financial statements.

211

38. aCquisition of assets and liaBilities

(i) The following summarises the recognised amounts of assets and liabilities acquired at the acquisition date:


Property, plant and equipment 222 222Trade and other receivables 67,296 67,296Cash and cash equivalents 38,335 38,335Inventories 558 558Trade and other payables (79,485) (79,485)

Net assets 26,926 26,926

Purchase consideration (575,000)

Intangible asset (Note 4) 548,074

net cash outflow arising from the acquisitionCash and cash equivalents acquired 38,335Less: Total deposit paid as at acquisition date (115,000)

Cash outflow on acquisition, net of cash and cash equivalents acquired (76,665)

acquisition-related costs

TheGroup incurred acquisition-related cost of RM18million related to stamp duty. The stamp duty has been includedin other operating expenses in group’s consolidated statements of profit or loss and other comprehensive income.

39. CoMparative figures

(i) explanation of adoption of Mfrs 119 (2011) – employee Benefits

During the financial year, the group and the company have adopted MFRS 119 (2011), employee benefits. As a result, the group and the company have changed its accounting policy in respect of the basis for determining the income or expense relating to its post employment defined benefits plans. The change in accounting policy has been made retrospectively.

(ii) explanation of adoption amendments to Mfrs 116, property, plant and equipment (annual improvements 2009-2011 Cycle)

Duringthefinancialyear,theGrouphasadoptedtheamendmentstoMFRS116,Property,PlantandEquipment(AnnualImprovements 2009-2011Cycle) and classified spare parts as inventories unless the itemof spare part is held for ownuseandexpectedtobeusedduringmore thanoneperiod inwhich it isclassifiedasproperty,plantandequipment. Inthepreviousfinancial years, all sparepartswere classifiedas inventories.Uponadoptionofamendments toMFRS116,the group reclassified retrospectively emergency spare parts previously accounted for under inventories to “c-inspection” under property, plant and equipment. The change in accounting policy has been applied retrospectively.



39. CoMparative figures (continued)

(iii) explanation of change in classification of impairment loss on trade receivables

The impairment loss on trade receivables of RM5,798,000 was reclassified from cost of sales to other operatingexpenses to conformwith the current year presentation.

An explanation of how these changes have affected the Group’s and the Company’s financial position is set out as follows:

statement of financial position as at 31 december 2012

effect of effect of As adoption adoption of previously of MFRS amendments As restated 119 (2011) to MFRS 116 restated

RM’000 RM’000 RM’000 RM’000

group Property, plant and equipment 10,909,160 – 215,296 11,124,456Deferred tax assets 605,686 5,884 – 611,570Inventories 709,095 – (215,296) 493,799employee benefits (51,780) (21,436) – (73,216)Accumulated losses 95,949 15,552 – 111,501

CompanyDeferred tax assets – 5,884 – 5,884employee benefits (14,888) (8,647) – (23,535)Retained profits (381,366) 2,763 – (378,603)

statement of profit or loss and other comprehensive income for the year ended 31 december 2012

effect of effect of As adoption adoption of previously of MFRS amendment As restated 119 (2011) to MFRS 116 Reclassification restated

RM’000 RM’000 RM’000 RM’000 RM’000

group cost of sales (4,047,233) – – 5,798 (4,041,435)Administrative expenses (250,604) (1,056) – – (251,660)other operating expenses (153,359) – – (5,798) (159,157)Income tax expense (158,974) 2,158 – – (156,816)other comprehensive expense – (13,104) – – (13,104)

CompanyAdministrative expenses (88,044) 162 – – (87,882)Income tax expense (30,868) 2,158 – – (28,710)other comprehensive expense – (7,258) – – (7,258)

213

39. CoMparative figures (continued)

statement of cash flows for the year ended 31 december 2012


RM’000 RM’000 RM’000 RM’000

group Cash flows from operating activitiesProvision for retirement benefits 5,944 2,816 – 8,760Changes in working capitalInventories (11,126) – 1,752 (9,374)employee benefits (681) (1,761) – (2,442)

Cash flows from investing activitiesAcqusition of property, plant and equipments (1,976,552) – (1,752) (1,978,304)

CompanyCash flows from operating activitiesProvision for retirement benefits 1,745 466 – 2,211Changes in working capitalemployee benefits (210) (628) – (838)

statement of financial position as at 1 January 2012


RM’000 RM’000 RM’000 RM’000

group Property, plant and equipment 9,369,792 – 213,544 9,583,336Deferred tax assets 532,309 3,726 – 536,035Inventories 697,411 – (213,544) 483,867employee benefits (46,517) (7,276) – (53,793)Accumulated losses 379,791 3,550 – 383,341

CompanyDeferred tax assets – 3,726 – 3,726employee benefits (13,353) (1,551) – (14,904)Retained profits (234,086) (2,175) – (236,261)


In theopinionof theDirectors, thefinancial statements setoutonpages95 to213aredrawnup inaccordancewithMalaysianFinancial Reporting Standards, International Financial Reporting Standards and the companies Act, 1965 in Malaysia so as to give a true and fair viewof the financial position of theGroup and of theCompany as of 31December 2013 and of their financialperformance and cash flows for the year then ended.

Signed on behalf of the Board of Directors in accordancewith a resolution of the Directors:

................................................................................... ..............................................................................tan sri dato’ wira syed abdul Jabbar bin syed hassan dato’ sri Che khalib bin Mohamad nohchairman Director

kuala lumpur


I, ho Chee sheong, theofficerprimarily responsible for thefinancialmanagementofMalakoffCorporationBerhad,dosolemnlyand sincerely declare that the financial statements set out on pages 95 to 213 are, to the best of my knowledge and belief,correct and Imake this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of theStatutory Declarations Act, 1960.

Subscribed and solemnly declared by the above named in kuala lumpur on 21 February 2014.

...................................................................................ho Chee sheong

before me:

statement by

directors pursuant to Section 169(15) of the Companies Act, 1965

statutory

declaration pursuant to Section 169(16) of the Companies Act, 1965

215

report on the finanCial stateMents

WehaveauditedthefinancialstatementsofMalakoffCorporationBerhad,whichcomprisethestatementsoffinancialpositionasat 31 December 2013 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 significantaccounting policies and other explanatory information, as set out on pages 95 to 213.

Directors’ Responsibility for the Financial Statements

TheDirectors of theCompany are responsible for thepreparationof financial statements so as to give a true and fair view inaccordancewithMalaysian Financial Reporting Standards, International Financial Reporting Standards, and the requirements ofthe companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free frommaterialmisstatement,whether due to fraudor error.

Auditors’ Responsibility

our responsibility is to express an opinion on these financial statements based on our audit. we conducted our audit in accordancewith approved standards on auditing inMalaysia. Those standards require thatwe complywith ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether the financial statements are free frommaterialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financialstatements,whetherdue to fraudor error. Inmaking those risk assessments,we consider internal control relevant to the entity’spreparationof financial statements that give a true and fair view inorder todesign audit procedures that are appropriate in thecircumstances, 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, aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair viewof the financial position of theGroup andof theCompany asof 31December 2013 and of their financial performance and cash flows for the year then ended in accordancewithMalaysianFinancial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

independent

auditors’ report to the members of Malakoff Corporation Berhad (Incorporated in Malaysia)



report on other legal and regulatory requireMents

In accordancewith the requirements of the Companies Act, 1965 inMalaysia, we also report the following:

a) In our opinion, the accounting andother records and the registers requiredby theAct to be kept by theCompany and itssubsidiaries of whichwe have acted as auditors have been properly kept in accordancewith the provisions of the Act.

b) We have considered the accounts and the auditors’ reports of all the subsidiaries ofwhichwe 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 consolidatedwith theCompany’s financial statementsare in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group andwe have received satisfactory information and explanations required by us for those purposes.

d) Theaudit reportson theaccountsof the subsidiariesdidnotcontainanyqualificationoranyadversecommentmadeunderSection 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 the CompaniesAct, 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 aniFirm number: AF 0758 Approval number: 2922/04/14(J)chartered Accountants chartered Accountant

Petaling Jaya


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