Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) STATUTORY FINANCIAL STATEMENTS: FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 0466A7/ramCompany No, 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) DIRECTORS' REPORT ‘The Directors hereby submit their report together with the audited financial statements of the Company for the financial year ended 31 December 2016. PRINCIPAL ACTIVITIES ‘The Company is principally an importer and distributor for gas turbine and its spare parts and also engaged in the related installation and maintenance including local overhaul service, as well as importation and distribution of water boiler, There have been no significant changes in the nature of these activities except that the Company has commenced sales of gas engine during the financial year. FINANCIAL RESULTS: RM Net loss for the financial year 2,697,140 DIVIDEND No ulvidend has been pald, declared or proposed by the Cunpany since the end of the previous financial year. The Directors do not recommend any dividend for the financial year ended 31 December 2018. RESERVES AND PROVISIONS ‘There were no material transfers to or from reserves and provisions during the financial year other than as disclosed in the financial statements. DIRECTORS The Directors who have held office during the period since the date of the last report are: Tsuyoshi Tori ‘Takashi Hayashi Kimihisa KitamuraCompany No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) DIRECTORS’ REPORT (CONTINUED) DIRECTORS' BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Since the end of the previous financial year, no Director has received or become entitied to receive a benefit (other than as disclosed in the financial statements) by the reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest except that a certain Director received remuneration as executive of related corporations. DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES According to the register of Directors’ shareholdings, no Director in office at the end of the financial year held any interest in shares in the Company or shares in, or debentures of, its related Corporations during the financial year. ULTIMATE HOLDING CORPORATION ‘The Directors regard Kawasaki Heavy Indusities Lid., a corporation incorporated in Japan as the tukimate holding corporation. STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS Before the financial statements were made out, the Directors took reasonable steps: (@) _ toascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that ail known bad debts had been written off and that adequate allowance had been made for doubtful debts; and (b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business thelt value as shown in the accounting records of the Company had been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (2) which would rencer the amounts written off for bad debts or the amount of the allowance for Coubtful debts in the financial statements of the Company inadequate to any substantial extent; of (b) which would render the values attributed to current assets in the financial statements of the Company misleading: or () which have arisen which render adherence to the existi liabilities of the Company misleading or inappropriate. ig method of valuation of assets or 'No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the’ opinion of the Directors, will or may affeot the abilty of the Company to meet its obligations when they fall due. 2Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) DIRECTORS' REPORT (CONTINUED) ‘STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED) At the date of this report, there does not exist: (@) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liability of any other person; or (b) any contingent liability of the Company which has arisen since the end of the financial year. Atthe date of this teport, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. Inthe opinion of the Directors, (2) the results of the Company's operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and (b) there has not arisen in the interval between the end of the financial year and the date of this, report any item, transaction or event of a material and unusual nature likely to affect ‘substantially the results of the operations of the Company for the financial year in which this report is made. AUDITORS ‘The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. IN ACCORDANCE WITH A RESOLUTION OF THE BOARD OF DIRECTORS. 13 JUN 2017‘Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 Note 2016 2015 RM RM (Restated) Revenue 5 66,335,702 137,136,707 Cost of sales (61,201,429) (124,070,658) Gross profit 5,184,273 19,066,051 Other operating income 8,928,962 15,025,179 ‘Administrative expenses (7,443,301) (6,768,957) Other operating expenses (6,270,734) (2,830,454) (Loss)/profit from operations 6 (250,800) 18,681,819 Finance income (net) 8 78,693 12,538 (Loss)/profit betore taxation (171,107) 18,704,355 Taxation 10 (2,526,033) (2,710,045) Net ((oss)/profit for the financial year (2,697,140) 15,994,310 1 ( 5m Item that will nol be reclassified subsequently to profit or loss: Exchango translation differences (8,086,635) 5,182,125 Total comprehensive (loss)/income for the financial year (10,788,775) 21,146,435 ‘The notes on pages 10 to 37 form an integral part of these financial statements.Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 Note NON-CURRENT ASSETS Plant and equipment u Intangible assets 12 Other financial assets 8 Deferred tax assets 14 CURRENT ASSETS Inventories 6 Receivables 16 ‘Amount due from a fellow subsidiary 7 Derivative financial instruments 8 Cash and bank balances 19 LESS: CURRENT LIABILITIES Payables 20 ‘Amount due to ultimate holding corporation 21 ‘Amount due to fellow subsidiaries 7 Derivative financial instruments 18 Hire purchase liability 22 Tax payable NET CURRENT ASSETS LESS: NON-CURRENT LIABILITIES ‘Amount due to ultimate holding corporation 21 Hire purchase liability 22 CAPITAL AND RESERVES Share capital 23 Retained earings Foreign currency translation reserve ‘The notes on pages 100 37 form an integral part of these financial statements. 5 6,083,950 7914 ° 67.147 6,159,011 15,241,275 30,721,106 0 0 7,695,440 53,857,821 91,368,775 2,802,120 32,890 41,708 0 834,844 35,085,335 18,592,486 ° 0 0 24,751,497 5,000,000 22,686,007 (2,934,510) 24,751,497 2015 RM (Restated) 8,259,249 17,322 23,000 441,702 8,441,273 14,785,318 97,021,382 184,990 5,877,108 7,711,887 125,580,685 29,990,710 67,309,200 23,772 0 25,128 754,142, 97,502,958 28,077,727 979,560 4,188 983,728 35,535,272 5,000,000 25,383,147 5,152,125 35,535,272Lev LSL've. 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(455,957) (67,535,664) 8,088,908 0 (2,359,072) 0 5,709,836 23,000 79,693 (25,004) (398,175) (820,486) 2015 RM (Restated) 15,994,310 3,374,896 110 13,148 783,408 0 4,910,031 (5,877,108) (14,953) 2.417 2,710,045 18,896,302 (60,478,482) 2,504,708 (124,322) 40,813,977 1,612,183 (2.417) (1,208,000) 3,099 404,865, 0 14,953 (13,570) (47,010) (45,627)Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) STATEMENT OF CASH FLOWS: FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 (CONTINUED) Note FINANCING ACTIVITY Repayment of hire purchase liability Net cash flow from financing activity NET CHANGE IN CASH AND CASH EQUIVALENTS: CASH AND GASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR EFFECTS ON EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR, The notes on pages 10 to 37 form an integral part of these financial statements. 49 2016 RM (29,296) (29,296) 5,360,054 7,711,887 (6,376,501) 7,898,440 2018 RM (25,128) (25,128) 334,110 8,829,132 (1,451,355) 7,711,887Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 GENERAL INFORMATION ‘The Company is principally an importer and distributor for gas turbine and its spare parts and also engaged in the related installation and maintenance including local overhaul service, as well as importation and distribution of water boiler. There have been no significant changes in the nature of these activities except that the Company has commenced sales of gas engine during the financial, year. ‘The immediate holding corporation and the ultimate holding corporation is Kawasaki Heavy Industries Ltd., a corporation incorporated in Japan. ‘The Company is a private limited liability company, incorporated and domiciled in Malaysia. ‘The address of the registered office of the Company is as follows: Level 8, Symphony House Block 013, Pusat Dagangan Dana 1 Jalan PJU1A/46 47301 Petaling Jaya ‘The address of the principal place of business of the Company is as follows: No 12A, Jalan Tiang U8/92 ‘Seksyen UB, Bukit Jelutong Industrial Park 40150 Stal Alain Selangor BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS. ‘The financial statements of the Company have been prepared in accordance with the Malaysian Private Entities Reporting Standard (MPERS) and the requirements of the Companies Act, 1965 in Malaysia. The Company has also early adopted the Amendments to MPERS issued by the Malaysian Accounting Standards Board in 2015, The financial statements have been prepared under the historical cost convention as modified by the financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. The financial statements of the Company for the financial year ended 31 December 2016 are the first sot of financial statements prepared in accordance with the MPERS, including Section 35, “Transition to the MPERS". The Company have consistently applied the same accounting policies, in its opening MPERS statement of financial position as at 1 January 2016 (transition date) and throughout all years presented, as if these policies had always been in effect. Comparative figures for 2015 in these financial statements have been restated to give effect to these changes. Noto 28 to the financial statements discloses the impact of the transition to MPERS on the Company's reported financial position, financial performance and cash flows. ‘The preparation of financial statements in conformity with the MPERS requires the use of certain critical accounting estimates. It also requires Directors to exercise its judgment in the process of applying the Company's accounting policies. Although these estimates are based on the Directors’ best knowledge of current events and actions, actual results may differ from these estimates. There are no critical assumptions or estimates involving higher degree of judgment or complexity use the preparation of these financial statements. 10Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES @ Plant and equipment Plant and equipment are initially stated at cost, net of amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the government, When 'the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of acquisition of the plant and equipment, The cost of an item of plant and equipment initially recognised comprises its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be ‘capable of operating in the manner intended by Directors. After initial recognition, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. The Company adds to the carrying amount of an item of plant and equipment the cost of replacing parts of such an itera when that cost is incurred if the replacement partis expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the period in which they are incurred. All plant and equipment are depreciated using the straight line method to allocate the cost of assets less their residual values over their estimated useful lives. The estimated useful lives ranged as follows: Fixtures Syears Motor vehicles Byears Office equipment Byears Furniture and fitings Syears ‘Workshop equipment Byears Demo equipment Byears Renovation 2years The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, if there is an indication of a significant change since the last annual reporting date, ‘At each reporting date, the Company assesses whether there is any indication of impairment. If such indication exists, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. An asset's carrying amounts written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (see Note 3(c) on impairment of non-financial assets other than Inventories). Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are included in profit or loss. 1‘Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ) © @ Intangible assets ‘Acquired computer software licences are capitalised as intangible assets and measured at cost, net of amount of GST, except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of acquisition of the computer software licences Acquired computer software and licences are amortised using the straight-line method over their estimated useful lives of twenty-four months, Impairment of non-financial assets other than inventories, Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the essets may be impaired. If such Indication exists, the asset is tested for impairment. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash generating unit (CGU)). The recoverable amount is the higher of an. asset's (or CGU's) fair value less costs to sell and its value in use. An impairment loss is recognised when the carrying amount of the asset (CGU) exoeeds its recoverable amount ‘The impairment loss is recognised to profit or loss. Non-financial assets that suffered an Impaitment are reviewed tor possibie reversal ot ine impairment at each reporting date. Any subsequent increase in recoverable amount is recognised in profit or loss. Other financial asset - Investment in corporate memberships in hotel ecognition and initial measurement ‘The Company recognises a financial asset in the statement of financial position when, and only when, it becomes a party to the contractual provisions of the instrument. On initial recognition, al financial assets are recognised at fair value which is generally the transaction price, plus transaction costs if the financial asset is not measured at fair value through profit or loss. ‘Subsequent measurement ‘Afinancial asset is measured at cost less impairment. = Impairment of financi All financial assets (except for financial assets measured at fair value through profit or loss) are assessed at each reporting date whether there is any objective evidence of Impairment. A financial asset ot a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one of more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Derecognition of financial instruments AA financial asset or part of itis derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or ate settled, or control of the asset is not retained or substantially all the risks and rewards of ownership of the financial asset are transterred to another party. On derecognition of a financial asset, the difference between the cartying amount of the financial asset derecognised and the consideration received, Including ant newly created rights and obligations, is recognised in profit or loss. 12Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) @ 0 Current and deferred taxes: The tax expense for the period comprises current and deferred income tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. in this case, the tax is also recognised in other ‘comprehensive income or directly in equity, respectively. The current income tax charge is caloulated using the tax rates (and tax laws) enacted or substantively enacted at the end of the reporting date in the country where the Company operates and generates taxable income. Deferred tax is provided on all taxable temporary differences. However, deferred tax is not ‘accounted for if it arises from initial recognition of an asset or ably ina transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax assets are recognised to the extent that itis probable that taxable profit will be available against which the decuctible temporary differences, unused tax losses or unused tax oredits can be utilised. Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when lie related deferred bax esse fs realised oF thie Ueterred! lax billy is setlled. Current and deferred assets and liabilities are offset when there is a legally enforceable tight to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilties relate to taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances ona net basis. Inventories. Inventories are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method. Cost of inventories includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and concition, Costs of purchased inventory are determined after deducting rebates and trade discounts and the amounts of GST, except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of purchased inventory. ‘At each reporting date, inventories are assessed for impairment. I inventory is impaired, the carrying amount is reduced to its selling price less costs to complete and sell the impairment loss is recognised immediately in profit or loss. When the impairment indicators no longer exist, the impairment loss is reversed and the new carrying amount is the lower of the cost. and the revised selling prices less costs to complete and sell 13Company No. 702680 |.X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) @ th) oO Trade receivables Trade receivables are recognised intially at the transaction prices, with the amount of GST included. The net amount of GST recoverable from government is presented as ‘Receivables’ in the statement of financial position. Cash flows are inctuded in the statement of cash flows on a gross basis. The GST components of cash flows which are recoverable from, or payable to, the government are classified es operating cash flows. Trade receivables’ are subsequently measured at the undiscounted amount of cash ‘expected to be received, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Impairment loss is the difference between the carrying amount of the receivables and the present value of estimated cash flows discounted at the receivables’ original effective interest rate and is recognised in profit or loss. Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered nto and are subsequently re-measured at tnelr fair Vaiue, at each reporing date witn the changes in fair value recognised in profit or loss, Cash and cash equivalents For the purpose of the statement of cash flows, cash equivalents are held to meet short term ‘cash commitments instead of for investment or other purposes. Cash and cash equivalents ‘comprise cash on hand, demand deposits and other short-term highly liquid investments \with original maturities of three months or less that are readily convertible to known amounts, of cash and that are subject to insignificant risk of changes in value. Trade payables Trade payables are recognised initially at the transaction prices, with the amount of GST included. They are subsequently measured at the undiscounted amount of cash expected to be paid, Cash flows are included in the statement of cash flows on a gross basis. The GST ‘components of cash flows which are recoverable from, or payable to, the government are classified as operating cash flows. 14Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (kK) wo Hire purchase liability Plant and equipment acquired under hire purchase terms are capitalised in the financial statements and are depreciated according to the policy set out in Note 3(a) above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the balance outstanding. The corresponding ‘outstanding obligations due under hire purchase agreement after deducting finance expenses ‘are recognised as liabilties in the financial statements. Finance charges are recognised over the period of the hirs purchase agreements. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable for the sale of goods. Revenue is shown net of GST, returns, rebates and discounts. 0 Construction contracts Revenue from a construction contract is recognised by reference to the stage of completion of the contract activity at the end of the reporting period when the outcome of a construction contract can be estimated reliably (or “percentage of completion” method). Under the percentage of completion method, the stage of ‘completion 1s determined using the proportion that costs incurred tor work performad to date bear to the estimated total costs. ‘When the outcome of a construction contract cannot be estimated reliably, revenue will be recognised only to the extent of contact costs incurred that are recoverable. ‘The contract costs is recognised as an expense in the period in which they are incurred. ‘When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. if circumstances arise that may change the original estimates of revenues, costs or extent of progress toward completion, estimates are revised. These revisions may result in Increases or decreases in estimated revenues, or costs and are reflected in income in the period in which the circumstances that give rise to the revision become known by Directors. ‘The aggregate of the costs incurred and the profit or loss recognised on each contract is compared against the progress billings up to the period end. When costs inourred and recognised profits (Iess recognised losses) exceed progress bilings, the balance is shown as ‘Amounts due from customers on construction contracts” under ‘Receivables’, Where progress billings exooed costs incurred plus recognised profits (less recognised losses), balance is shown as ‘Amounts due to customers. ‘on construction contracts’ under ‘Payables’ 15Company No. 702680 x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) ‘SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) w (my Revenue recognition (continued) i) “i (iy wy Revenue from sales of spare parts and accessories, gas engine and water boiler Revenue from sales of spare parts and accessories, gas engine and water boiler are recognised when significant risks and rewards of ownership of goods are transferred to the buyer. Revenue on maintenance contracts Revenue relating to maintenance contracts is recognised upon performance of the services. Revenue on local overhaul services Revenue relating to local overhaul services is recognised upon an exchange of overhauled gas turbine equipment to customers, Interest income Interest income is recognised using the effective interest method. Empluyee bereMt obligations o @ Short term employee benefits Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits that are expected to be sattled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as ‘Payables’ in the statement of financial position. Post-employment benefits Defined cont ution. ‘A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity (a fund) and has no legal or constructive obligations to pay further contributions or to make direct benefit payments to employees if the fund does not hold sufficient assets to pay all employees benetits relating to employee service in the current and prior periods. Contributions are recognised as employee benefit expense when they are due Unless they formed part of the costs of an asset such as inventories or plant and equipment. If contribution payments exceed the contribution due for service, the excess is recognised as an asset to the extent that the prepayment will reduce future payments, 16Company No. 702680 x KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n) Leases - Accounting by lessee @ Operating lease Leases of assets in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease, unless the Payments to the lessor are structured to inorease in line with expected general inflation based on published indexes to compensate for the lessor's expected inflationary ost increases. (0) Foreign currencies 0 qi) Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (‘the functional currency’). The functional currency of the Company is Japanese Yen (JPY), The financial statements are presented in Ringgit Malaysia, which is the Company's presentation currency. ‘The Company translate its Items of Income and expense as well as Its assers and liabilities trom functional currency into presentation currency using the following procedures: () Assets and liabilities are translated at the closing rate at the reporting date; (i) ~ Income and expenses are translated at average rates for a period (unless the exchange rates fluctuate significantly, in which case income and ‘expenses are translated at the rates at the dates of the transactions); and (i) All resulting exchange differences are recognised in other comprehensive income and reported as a component of equity. They are not subsequently reclassified to profit or loss, ‘Transaction and balances Foreign currency transactions are translated into the functional currenoy using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or oss. Foreign exchange gains and losses that relate to cash and cash equivalents are presented in profit or loss. 7Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD {incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES ‘The Company's activities expose it to certain financial risk that includes liquidity risk, credit risk and. foreign currency exchange risk. 0 O) Liquidity risk The Company's polioy on liquidity risk management is to maintain sufficient cash and bank balances and to ensure the availabilty of funding from the ultimate holding corporation. Credit risk The Company has policies in place to ensure that rendering of services are made to customers with appropriate credit worthiness. The Company has significant concentration of crecit risk, as a significant portion of receivables is due from a few main customers. However, management of the Company is of the view that the risk of material loss due to non-performance by the customers is negligible. (il) Foreign ourreney exchange risk ‘The Company is exposed to foreign exchange risk primarily with respect to US Dollar, Japanese Yen and Singapore Dollar. However, the Company tries to minimise its exposure by having a flexible arrangement of settlement on amount due to ultimate holding corporation and uses forward contracts to minimise the exposure on fluctuation arising from forelgn exchange rates, REVENUE Revenue consists of: 2016 2015 RM RM Equipment contract 34,090,768 86,422,389 Sales of spare parts and accessories 17,980,299 24,187,426 Maintenance contract 10,603,995 22,696,085 Local overhaul services 9,110,032 3,731,404 Sales of gas engine 374,595 0 Sales of water boiler 66,335,702 187,136,707 18Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31: DECEMBER 2016 (CONTINUED) 6 (LOSS/PROFIT FROM OPERATIONS: 2016 2015 RM RM The following items have been charged/(credited) in arriving at (loss)/oroft from operations: Construction contract cost recognised as cost of sales = Equipment contract 84,892,848 = Maintenance contract 15,773,568 Cost of spare parts and accessories recognised as cost of sales 14,254,530 Overhaul cost recognised as cost of sales 3,181,301 Cost of water boiler recognised as cost of sales 140,336 Cost of gas engine recognised as cost of sales 0 Auditors’ remuneration 55,000 Depreciation of plant and equipment 3,874,696 Plant and equipment written off 140 Amortisation of intangible assets 13,146 Bad-dobts written off 783,408 Provision for impairment of trade receivables 0 Staff costs (Note 7) 6,404,010, 5,883,045 Fair value loss/(gain) on derivative financial instruments 5,888,814 (6,877,108) Rental of premises 745,003 767,256 Technical fee 942,959 892,428 Net realised foreign exchange gain (7,118,227) (6,673,348) Net unrealised foreign exchange (gain)/loss (136,685) 1,910,031 Consultation service income (671,498) (836,845) Sales and marketing service income (422,962) (656,748) 7 STAFF COSTS 2016 2015 RM RM Salaries, wages and bonus 5,425,981 4,814,354 Defined contribution plan 457,548 523,018 Staff benefits 97,493 136,342 Directors’ remuneration (Note 8) 423,048 409,331 6,404,010 5,883,045, 8 DIRECTORS’ REMUNERATION ‘The aggregate amount of emoluments received or receivable by the Directors from the Company during the financial year is as follows: 2016 2015 RM RM Salaries and other emoluments (Note 7) 423,048 409,331 Estimated monetary value of benefits-in-kind 40,600 40,600 19‘Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) FINANCE INCOME (NET) 2016 2015 RM RM Interest income 79,693 14,953 Less: Interest expense 0 (417) 79,693 12,536 ‘TAXATION 2016 2018 RM RM (Restated) ‘The taxation for the financial year comprises: In respect of Malaysian income tax: ~ Current year 1,348,240 1,962,142 = Prior year 7,103,238 2,077 2,451,478 1,964,219 In respect of deferred tax = Current year (Note 14) 74,555 745,826 ‘The explanation of the relationship between taxation and ((088)/profit before taxation is as follows: (Loss)/proft before taxation (171,107) 18,704,355 ‘Tax expense calculated at Malaysian tax rate ‘of 24% (2015: 25%) (41,068) 4,676,089 Tax effects of: - expenses not deductible for tax purposes 271,198 207,557 = income not subject to tax (68,269) (2,187,631) - expenses qualified for double deductions 0 (70,608) = changes in tax rate 0 5,904 Under accrual of taxation in prior year 1,103,298 2,077 Deferred tax benefits not recognised 1,235,362 0 Origination of temporary differences 13,570 48,658 Taxation 2,526,033 2,710,045 ‘The application for the Ploneer Status under the Promotion of Investments Act, 1986 for the refurbishment of gas turbines activity has been approved by Malaysian Investment Development ‘Authority ("MIDA") on 10 October 2012. Under the Pioneer Status, the Company will be exempted from 70% of statutory income for the refurbishment of gas turbines activity for 5 years of assessment. Accordingly, no deferred tax assets are recognised for the potential tax benefits resulted from pioneer business. 20os6‘e80'9 € g29'sz9'S s60'Ls vve'lee our'e ezb eet ‘enjea 4009 N (vzi‘ees'11) (zas'6es) —(osa’ete's) (e/9'zs2) (go's) ~—(6zz'9) (e90'zes) uoyetaidep payeinwinooy YLO'LL'ZL O6S'SSS == SBY'GAS'SL © PLL'BDE ©~——OSL"6D eer'or sez'es9 3809 BIOs TOqUBTST TE oss'eso's € seo'sis's 80'S eat Laz owe exizet 9102 seqwesed 1¢ 12 sy erties 2 eze'osy 28'S see'sob sel ols'rh sousteyyp uowe|sue, (age'a0z"e) (ve) (ose'z96'2) (opl'zs) (0b) (0001) (oez'ee1) (esa'h) 0 0 0 (ese’l) 0 0 SLr'88E 0 og6'ise Lee's ‘989'6e ger o suopppy Gre'ese's Ge seg'ore'L = LISLE zes'z9 680'¢ eas'ssz 910g Arenuer 1 1e sy :BTER FOOT TOU UT TOSSA wes wy we WH wa Wet ww OL UoTexOUH © |USUES © © SDUINFPUE juSuMNDS © SOSA BEINN owiep aimyuny 240 2010141 -g dousniom, ANAWNdINDS GNY LNVId (GANNLLNOO) 9.02 HAGWSIOAC LE - SLNSWALVLS TVIONWNI4 SH1 OL SALON (eiskejew ut pareiodioou)) GH NGS VISV ANIGHNL SVD DIVSVMWY x | o8szoz "ON AaeTwODa erz'esz’s Se ceg'ove'L = uee'tezec'z9 680° exs'scz ‘enyea3ooq 8N (6z'oss'a) (eso'6ss) —(chr'e66'9) (685‘002) —_(96s"96e) (oez's) (ze8'e8e) uonejaidep parejnuinose pareysey ees'ves 0 00°90 ° ° 0 oe6'8 ‘SH3AWN 0} Butonisuen jo 19993 (zez'se1'6) (ess'6ss) (ovr'szo'z)(6es‘00z) —_(96s"96e) (oez's) (ezz'z68) uonejaidep pereinuinooy Zy0'oLe's: gao'sss —OZ0'OrS'yL © OL6'Z6z «LESH eis's sev'vv9 1809 pereisey (ozr'ser'}) 0 (ces'ver't) 0 o 0 (zes' ‘SHEA 0} Buluonisues Jo OO) Zor‘6re'8L eag'sss §—e0s'y9z'9L © 9L6'Z6z = L'EGH ei8's e10'6s9 1809 ‘Sy0e TeqUETSC TE Wa wa we Wa we TOL WoneRouY WewaNoS TWeUdAS an owiep eo 20101 'g doyonion (G3NNILNOO) LNAWdINO’ ONV LNWId (GANNILNOO) 9102 HAGWSOAC LE - SLNAWSLVLS TVIONVNIS SHL OL SALON (exsherey ut poyeiodioou)) GH NGS VISY SNIGUNL SVD DIVSYMy x | o89zoz “ON Auedwuog, ry12 13 Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) INTANGIBLE ASSETS 2016 2015 RM RM Intangible assets comprise software cost: ‘At the beginning of the financial year 17,322 16,898 ‘Additions 25,004 13,570 ‘Amortisation (34,412) (13,148) ‘Atthe ond of the financial year 7914 17,322 Representing: Cost 259,583 234,579 Accumulated amortisation (251,669) (217,257) Net book value 17,322 OTHER FINANCIAL ASSETS 2016 2015 RM RM Club membership ° During the financial year, the investment was disposed of with a consideration of RM23,000. 2314 Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD. (incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) DEFERRED TAXATION Deferred tax assets and abilities are offset when there isa legally enforceabie,right to set off current tax assets against current tax libilties when the deferred taxes relate to the same authority. The following amounts, determined after appropriate offsetting, are shown in the statement of financial posit Deferred fax assets Att January Credited to profit or loss (Note 10) ~ Plant and equioment = Accruals ~ Foreign exchange At 81 December Deferred tax aasets (before offsetting) Accruals Foreign exchange ditferences Offsetting Deferred tax assets (after offsetting) Plant and equipment Foreign exchange differences Offsetting Deferred tax liabilities (after offsetting) 24 2016 2015 RM RM 67,147 141,702 141,702 887,528 525,079 (1,165,829) (14,700) 81,773 (684,934) 938,230 (74,555) (745,826) 67.147 441,702 99,457 114,157 0 555,024 99,457 659,161 (82,310) (527,479) 67,147 141,702 (2,400) (627,479) (29.910) 0 (32,310) (627,479) 32,310 527,479 0 014 15 16 ‘Company No. ‘702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) DEFERRED TAXATION (CONTINUED) Deferred tax assets have not been re inised for the following amount at the reporting date as it {is not practicable to project the probabilty of future realisabilty of the potential tax benefits: 2016 RM Deduetible temporary differences 5,147,341 Potential deferred tax asset not recognised at 24% (2015: nil) 1,235,362 INVENTORIES, 2016 RM Spare parts and consumables 15,241,275 RECEIVABLES 2016 RM Trade receivables 10,973,207 Less: Provision for impairment of trade receivabies (854,742) 9,518,465 ‘Other receivables 4,736,021 Deposits 437,927 Prepayments 85,145 ‘Amounts due from customers on contracts (Note 24) 18,943,548 30,721,106 2015 RM 0 2015 RM 14,785,318 2015 RM 42,582,608 0 42,532,606 6,501,408, 381,353 261,420 47,844,595 97,021,382 Credit terms of trade receivables range from payment in advance to 90 days (201: Payment in advance to 90 days). ‘The Company's historical experience in collection of trade receivables fall within the recorded allowances. Due to these factors, management believes that no credit risk for collection losses is inherent in the Company's trade receivables. ‘The currency exposure profile of trade receivables is as follows: 2016 RM Japanese Yen 4,318,728 ~ Ringgit Malaysia 3,100,499 - US Dollar 2,953,982 10,873,207 25 2015 RM. 15,416,509 18,773,883 8,343,214 42,532,6067 18 ‘Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) AMOUNTS DUE FROM/(TO) FELLOW SUBSIDIARIES ‘The amount due from a fellow subsidiary is trade in nature, interest free, and had credit term ranging from 30 days to 90 days (2015: 30 days to 90 days). The amount due from a fellow subsidiary is denominated in Ringgit Malaysia. ‘The’ amounts due to fellow subsidiaries are mainly trade in nature, unsecured, interest free, and had credit term ranging from 30 days to 90 days (2014: 30 days to 90 days). The currency exposure profile of amount due to fellow subsidiaries is as follows: 2016 2015 RM RM = Singapore Doliar (14,735) (23,772) - Japanese Yen (143,700) 0 - Ringgit Malaysia 122,545, (82,890) (23,772) DERIVATIVE FINANCIAL INSTRUMENTS ‘The movement during the financial year in the amounts recognised is aa follows: 2016 2015 RM RM (Restated) Att January 5,877,108 0 (Charged)/credited to profit or loss (Note 6) (6,888,814) 5,877,108 ‘At 31 December (11,708) 5,877,10818 19 ‘Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) Forward foreign exchange contracts ‘The Company had contracted to buy the following amounts under forward foreign currency ‘contracts as at the end of the reporting period: 2016 Weighted average Contracted amount PY 182,200,000 100 JPY = 3.8299 2015 Weighted average Contracted amount contracted rate UPY 1,216,647,094 100 JPY = 3.5984 Ringgit Malaysia -Squivalent RM 5,829,072 Ringgit Malaysia ‘equivalent RM 43,779,308 ‘At the end of the reporting period, the settlement date on the open forward contract range from 31 days to 181 days (2015: 41 days to 298 days). CASH AND BANK BALANCES/CASH AND CASH EQUIVALENTS Bank balances are deposits held at call with banks. The currency exposure profile of cash and. bank balances are as follows: 2018 RM - Japanese Yen 5,225,238 = Ringgit Malaysia 2,201,188 - US Dollar 259,771 ~~ Singapore Dollar 9,273 7,695,440, 2015 RM 4,634,252 2,318,864 735,143 23,628 7,711,88720 Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) PAYABLES Trade payables Other payables, Accruals Amounts due to customers on contracts (Note 24) 2016 RM. 643,015, 3,891,312 7,330,681 20,018,767 31,383,775 ‘The currency exposure profile of trade payables is as follows: + Ringgit Malaysia Thai Baht = US Dollar ~ Japanese Yen 47 2at 171,74 ° 0 643,015, 2015 RM 1,024,875 2,343,439 14,440,080 11,582,922 29,890,716 433,151 0 321,632 270,092 1,024,875 Credit term of tracie payables ranged from 7 days to 30 days (2015: 7 days to 30 days). 2821 Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) AMOUNT DUE TO ULTIMATE HOLDING CORPORATION ‘The net amount due to ultimate holding corporation is classified as follows: 2016 2015 RM RM Current (2,802,120) (67,809,200) Non-current 0 (979,560) (2,802,120) (68,288,760) The net amount due to ultimate holding corporation consists 2016 2015 RM RM Receivable 2,702,191 876,319 Payable (12,836,020) (72,850,170) Payable on purchase of equipment by instalments 0 (2,837,430) Down payment for purchases 6,891,709, 6,522,521 (2,802,120) (68,288,760) ‘The currency profile of net amount due to ultimate holding corporation is as follows: 2016 2015 RM RM + US Dollar (9,880,111) (14,188,383) - Japanese Yen 5,990,632, (65,122,484) - Ringgit Malaysia 1,217,034 11,222,882 - Indonesia Ruppiah 399,922 9 = Euro 21,003 (17,003) ~ Singapore Dollar 0 (23,72) (2,802,120) (68,288,760) Other than the amount payable for purchase of equipment, the net amount due to ultimate holding corporation is mainly trade in nature, unsecured, interest free and with credit terms ranging from. 30 days to 150 days (2015: 30 days to 150 days).‘Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) HIRE PURCHASE LIABILITY 2016 2015 RM RM Hire purchase liability: Minimum hire purchase payment = Not later than 1 year 0 26,239 Later than 1 year and not later than 5 years 0 4,200 ° 30,499 Less: Future finance charges 0 (1,143) Present value ° 29,296 Representing hire purchase liability: - Current 0 25,128 = Non-current : 0 4,168 0 29,206 ‘The weighted average effective interest rate of the hire purchase liability at 31 December 2015 was 8.55% per annum ‘SHARE CAPITAL 2016 2015 RM RM Ordinary shares of RM1.00 each: Authorised: 5,000,000 ordinary shares ‘At the beginning/ the end of the 5,000,000 5,000,000 Issued and fully paid up: 5,000,000 ordinary shares {At the beginning/ the end of the 5,000,000 5,000,000 3024 25 Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) PROJECT CONTRACTS 2016 2015 RM RM Aggregate costs incurred and recognised profits 167,345,891 212,720,873 Less: Progress billings (168,421,110) (176,958,600) (1,075,219) 95,762,273 ‘Amounts due from customers (Note 16) 18,943,548 47,344,595 ‘Amounts due to customers (Note 20) (20,018,767) (11,582,322) (1,075,219) 36,762,273 SIGNIFICANT RELATED PARTY INFORMATION In addition to related party disclosures mentioned elsewhere in the financial statements, other significant related party information is set out below: nship (@) Related parties and rel The related parties and their rel jonship with the Company are as follows: Rolated parties Relationship Kawasaki Heavy indusiries Ltd, Utimate holding corporation Kawasaki Heavy industries (Singapore) Pte. Ltd. Fellow subsidiary Kawasaki Thermal Engineering Co. Ltd. Fellow subsiciary at25 Company No. 702880 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) SIGNIFICANT RELATED PARTY INFORMATION (CONTINUED) (©) Significant related party transaction The significant related party transactions described below were carried out on terms and concitions negotiated and agreed between the Company and the related parties. 2016 RM Reimbursement of operating expenses by: - Ultimate holding corporation (698,625) Purchase of spare parts and consumables from: ~ Utimate holding corporation 21,931,340 Purchase of equipment from: - Ultimate holding corporation 30,973,482 = Afellow subsidiary 96,845, Purchase of plant and equipment from: ~ Utimate holding corporation 44,17 Service income charged to: = Unimate holding corporation (723,521) Down payment for gas turbines paid to: ~ Utimate holding corporation 6,831,707 ‘Technical fee charged by: - Afellow subsidiary 942,959 Sales and marketing service income charged to: Ultimate holding corporation (422,962) Consultation service income charged to: - Afellow subsidiary (671,498) (©) Remuneration of key management personne! 2015, RM (788,223) 31,812,119 78,984,792 0 ert (879,016) 7,312,525 892,428 (656,748) (336,845) Key management personnel are defiend as those persons having authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel of the Company are Directors of the Company. The aggregate amounts of compensation received or receivable by key management personnel of the Company during the financial year is disclosed in Note 8 to the financial statements. 32‘Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) NON-CANCELLABLE OPERATING LEASE COMMITMENTS. Non-cancellable operating lease commitments undertaken by the Company for rental of an industrial building and motor vehicles are as follows: 2016 201s RM RM Future minimum lease payment: - Payable within one year. 943,637 445,842 ~ Payable within two to five years 4,200,498 3,467,220 - Payable more than five years: 0 1,555,260 5,144,135 5,468,322 FINANCIAL INSTRUMENTS BY CATEGORY Financial assets at amortised costs: Other financial assets 0 Receivables (Exclude prepayment) 30,446,968 ‘Amount due trom a feliow subsidiary 0 ‘Cash and bank balances, 7,695,440 38,142,409 104,879,839 Financial assets at fair value through profit or loss: Derivative financial instruments o 5,877,108 Total financial assets 110,856,947 3327 28 Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) FINANCIAL INSTRUMENTS BY CATEGORY (CONTINUED) 2016 2015 RM RM Financial liabilities at amortised cost: Payables 31,383,775 29,390,716 Amount due to a fellow subsidiary 32,890 23,72 Amount due to ultimate holding corporation, 2,802,120 68,288,760 Hire purchase liabilities, 0 29,298 34,218,785 97,732,544 Einancial liabilities at fair value through profit or loss: Derivative financial instruments 11,706 ° Total financial liabilities 34,230,491 97,792,544 TRANSITION TO MPERS 28.1 Basis of transition to the MPERS Application of the MPERS. ‘The transition date of the Company is 1 January 2015. The Company prepared its opening MPERS. statement of financial position as that date. In preparing the financial statements in accordance with the MPERS, the Company has applied all the mandatory exceptions from full retrospective application of the MPERS. ‘The transition to the MPERS has resulted in a number of changes in the Company's accounting policies compared to those policies when applying Private Entities Reporting Standards (PERS). 28.2 Reconciliation The Company have prepared the previously reported financial statements in accordance with PERS. The following reconciliations show the effects on the Company's equity on the transition from PERS to MPERS as at 1 January 2015 and 31 December 2015, and the Company's profit for the financial year ended 31 December 2015.Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) ‘TRANSITION TO MPERS (CONTINUED) 28.2 Reconciliation (Continued) (a) Beconelliation of equity 41 January 2015 (Date cf 31 December transition) — _2015 RM RM Equity as reported under PERS. 10,499,952 26,860,913 Add/(less) effects of transitioning Recognition of derivative financial instruments ° 5,877,108. Effeot of change in functional ourreney (4,110,515) 2,797,251 GtT0,515) 8,674,359 Equity reported under MPERS. 14,388,837 35,535,272 ©) lation of profi 31 December 2015 RM Profit reported under PERS 0,901,501 ‘Add: effects of transitioning Fair value change in derivative financial instruments 5,877,108 Effect of change in functional currency 4,755,641 7,632,749 Profit reported under MPERS: 15,994,310 28.3 Effects to the financial statements As previously As reported Effects of restated under transition to under PERS MPERS MPERS, RM RM RM (a) Effects on the statement of ‘financial position Asat 31 December 2015 Plant and equipment 9,063,730 (804,481) 8,259,249 Inventories 14,545,944 239,374 14,785,318 Receivables 93,924,731 3,096,651 97,021,382 Derivative financial instruments, 0 5,877,108 5,877,108 Cash and bank balances 7,446,180 265,707 7,711,887 Retained eamings (21,860,913) (8,674,359) (30,535,272) 3528 Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) TRANSITION TO MPERS (CONTINUED) 28.3 Effects to the financial statements (Continued) (b) © Effects on the statement of comprehensive income As previously reported under PERS RM For the financial year 31 December 2015 Revenue 141,954,740 Cost of sales (128,268,932) Other operating income 6,897,512 ‘Administrative expenses (6,672,501) Other operating expenses (2,789,298) Finance income (net) 10,083, Effects on the statement of cash flows Effects of transition to RM (4,818,033) 4,198,276 8,187,667 (96,456) 158,842 2,453 restated under RM 187,136,707 (124,070,656) 15,025,178 (6,768,957) (2,630,454) 12,536 The transition from PERS to MPERS had no significant impact on cash flows generated by the Company except as follows. ‘As previously reported under PERS RM Forthe fhanck ‘81 December 2015 Net profit for the financial year 8,361,581 Fair value gain on derivative financial instruments 0 7,632,749, 5,877,108 As restated under MPERS RM 15,994,310 5,877,10828 29 Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2016 (CONTINUED) TRANSITION TO MPERS (CONTINUED) 28.4 Explanation of transition to the MPERS (Continued) The transition to MPERS has resulted in a number of changes in the Company's accounting policies to conform with the requitements in MPERS. The nature of these changes in accounting policies is explained below. (a) (b) Derivative financial instruments Under PERS, derivative financial instruments were not recognised until they were settled. ‘The policy has been changed to recognising all derivative financial instruments at fair value at contract dates. At the reporting date, the derivative financial statements are re- measured at fair value, Foreign currency Transiation of for Under PERS, foreign currency monetary assets and liabilities with matching forward contracts are translated at the reporting date using contracted forward rate. Under the MPERS, these iterns must be translated at reporting date using the olosing rate. AS a result, the Company recognised an addtional foreign currency translation gain/ioss of approximately RM4,110,515 as at the date of transition and RM2,797,251 forthe financial year endad 31 December 2015 respectively. Ihese amounts were adjusted to retained earnings as at the date of transition and profit or loss for the financial year ended 31 December 2015, respectively. Funct ron Under PERS, currencies other than Ringgit Malaysia ("RM") are considered foreign currencies. Under MPERS, currencies other than the Company's functional currency are considered foreign currencies. As a result, the Company's financial statements have been prepared based on its functional currency in Japanese Yen and retranslated to the resentation currency in RM for each reporting period. Refer to Note 3(0)(i) to the financial statements for explanations on the method used to translate foreign currencies into functional currency of the Company and the method used to translate the functional currency into presentation currency. The effect of the adoption of functional currency approach in preparing financial statements under MPERS was illustrated in the reconciliations of equity and profit or loss in Note 28 to the financial statements. APPROVAL OF FINANCIAL STATEMENTS ‘The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 13 June 2017. 7‘Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD ((ncorporated in Malaysia) STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965 We, Takashi Hayashi and Tsuyoshi Tori, being two of the Directors of Kawasaki Gas Turbine Asia ‘Sdn Bhd, state that, in the opinion of the Directors, the financial statements set cut on pages 4 to 87 ate properly drawn up s0 as to give a true and fair view of the state of affairs of the Company as at 31 December 2016 and of its results and cash flows of the Company for the financial year ‘ended on that date in accordance with Malaysian Private Entities Reporting Standard and the requirements of the Companies Act, 1965 in Malaysia, IN ACCORDANCE WITH A RESOLUTION OF THE BOARD OF DIRECTORS DIREGYOR 13 JUN 2017 STATUTORY DECLARATION PURSUANT TO ‘SECTION 169(16) OF THE COMPANIES ACT, 1985 4, Takachi Hayachi, tho Director primarily roeponciblo for tho financial managoment of Kawaccki Gas Turbine Asia Sdn Bhd, do solemnly and sincerely declare that the financial statements set out on pages 4 to 37 are, in my opinion, correct and | make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. iAYASHI ‘STOR ‘Subscribed and solemnly declared by the ebovenamed Takashi Hayashi, KUALALUMPUR on 13 JUN 2017 5B, JALAN RAKYAT (JALAN TRAVERS ) BRICKFIELDS 50470 KUALA LUMPURKk pwe INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) (Company No. 702680 X) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of Kawasaki Gas Turbine Asia Sdn. Bhd.. (“the Company”) give a true and fair view of the financial position of the Company as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Private Entities Reporting Standard and the requirements of the Companies Act, 1965 in Malaysia, ‘What we have andited ‘We have audited the financial statements of the Company, which comprise the statement of financial position as at 31 December 2026, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 4 to 37. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the financial statements” section of our report. ‘We believe that the audit evidence we have obtained is sufficient and appropriste to provide a basis for our opinion. Independence and other ethical responsibilities ‘We are independent of the Company in accordance with the By-Laws (on Professional Bthics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics ‘Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code"), and we have fulfilied our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. PrivewaterhouseCoopers (AF 1146), Chartered Accountants, Level 10,1 Sentral, Jalan Rakyat, Kuala Lumpur Sentral, P.O. Box 10192, 50706 Kuala Lumpur, Malaysia T: +60 (3) 2173 188, F: +60 (3) 2173 1288, wun pwe.com/my 39. pwe INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF KAWASAKI GAS TURBINE ASIA SDN BHD (CONTINUED) Incorporated in Malaysia) (Company No. 702680 X) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Information other than the ial statement ‘The directors of the Company are responsible for the other information. The other information comprises Directors’ Report but does not include the financial statements of the Company and our auditors’ report thereon, Our opinion on the financial statements of the Company does not cover the Directors’ Report and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Company, our responsibility is to read the Directors’ Report and, in doing so, consider whether the Directors’ Report is materially inconsistent with the financial statements of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Directors’ Report. we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial statements ‘The directors of the Company are responsible for the preparation of the financial statements of the Company that give a true and fair view in accordance with Malaysian Private Entities Reporting Standard and the requirements of the 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 of the Company that are free from material misstatement, whether due to fraud orerror. In preparing the financial statements of the Company, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company ot to cease operations, or have no realistic alternative but to do so. 40-k pwe INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF KAWASAKI GAS TURBINE ASIA SDN BHD (CONTINUED) ncorporated in Malaysia) (Company No. 702680 X) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Auditors’ responsibilities for the audit of the financial statements Our objectives are to cbtain reasonable assurance about whether the financial statements of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion, Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the gregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (@) Identify and assess the risks of material misstatement of the financial statements of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. () Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. (©) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting and related disclosures made by the directors. (@) Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern. () Evaluate the overall presentation, structure and content of the financial statements of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. a2 pwe INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF KAWASAKI GAS TURBINE ASIA SDN BHD. (CONTINUED) (Incorporated in Malaysia) (Company No. 702680 X) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Auditors’ responsibilities for the audit ofthe financial statements (continued) We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that, in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. OTHER MATTERS 1. _Asstated in Note 2 to the financial statements, the Company adopted Malaysian Private Entities Reporting Standard on 1 January 2016 with a transition date of 1 January 2025. This standard was applied retrospectively by the directors to the comparative information in these financial statements, including the statement of financial position of the Company as at 31 December 2015, and the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Company for the year ended gi December 2015 and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Company for the year ended 31 December 2016, in these circumstances, include obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2016 do not contain misstatements that materially affect the financial position as at 31 December 2016 and financial performance and cash flows for the year then ended. 2. This report is madesolely to the members of the Company, asa body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Ce PRICEWATERHOUSECOOPERS ‘YEE WALYIN (No. AF: 1146) 02081/08/2018 J Chartered Accountants Chartered Accountant Kuala Lumpur 33 June 2017