Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) STATUTORY FINANCIAL STATEMENTS. FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 1045A9iramCompany No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) DIRECTORS’ REPORT The Directors hereby submit their report and the audited financial statements of the Company for the financial year ended 31 December 2018. DIRECTORS The Directors in office during the financial year and during the period from the end of the financial year to the date of the report are: Takashi Hayashi Kimihisa Kitamura Takashi Nishijima (Appointed on 1 June 2019) Tsuyoshi Tori (Resigned on 29 March 2019) 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 and gas engine. There have been no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS RM Net profit for the financial year 1,174,759 RESERVES AND PROVISIONS ‘All material transfers to or from reserves and provisions during the financial year are shown in the financial statements. DIRECTORS’ BENEFITS Since the end of the previous financial year, no Director has received or become entitled to receive fa benefit (other than the benefits shown under Directors’ Remuneration) by reason of a contract made by the Company or by 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 certain Directors received remuneration or benefits as executives or Directors of related corporations. Neither during nor at the end of the financial year was the Company or any of its subsidiaries a party to any arrangements whose object was to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) DIRECTORS' REPORT (CONTINUED) DIRECTORS' INTERESTS IN SHARES AND DEBENTURES ‘According to the Register of Directors’ Shareholdings required to be kept under Section 69 of the Companies Act 2016, none of the Directors who held office at the end of the financial year held any shares or debentures in the Company or its holding corporation or subsidiaries of the holding corporation during the financial year. DIVIDENDS No dividend has been proposed, declared or paid by the Company since the end of the previous financial year. The Directors do not recommend any dividends for the financial year ended 31 December 2018, DIRECTORS’ REMUNERATION Details of Directors’ remuneration are set out in Note 8 to the financial statements, ULTIMATE HOLDING CORPORATION The Directors regard Kawasaki Heavy Industries, Ltd., a corporation incorporated in Japan, es the uitimate holding corporation, OTHER STATUTORY INFORMATION (2) Before the financial statements of the Company were prepared, the Directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and (i) to ensure that any current assets, which were unlikely to be realised in the ordinary course of business including the values of current assels as shown in the accounting records of the Company had been written down to an amount which the current assets might be expected so to realise, (b) _Atthe date of this report, the Directors are not aware of any circumstances’ () which would render the amounts written off for bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent; or (i) which would render the values attributed to current assets in the financial statements of the Company misleading; or (ii) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate.‘Company No, 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) DIRECTORS' REPORT (CONTINUED) OTHER STATUTORY INFORMATION (CONTINUED) (o) (d) fe) ) At the date of this report: (i) there are no charges on the assets of the Company which have arisen since the end of the financial year which secures the liabilities of any other person; and (i) there are no contingent liabilities in the Company which have arisen since the end of the financial year. No contingent or other liability of the Company 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 affect the abil of the Company to meet its obligations when they fall due. At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Company which would render any amount stated in the financial statements misleading In the opinion of the Directors: (the results of the operations of the Company during the financial year were not substantially affected by any item, transaction or event of 2 material and unusual nature; and (ii) 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. INDEMNITY AND INSURANCE FOR DIRECTORS AND OFFICERS There were no indemnity given to or insurance effected for any Directors, officers and auditor of the Company in accordance with Section 289 of the Companies Act 2016, AUDITORS’ REMUNERATION Details of auditors’ remuneration are set out in Note 6 to the financial statements.‘Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) DIRECTORS’ REPORT (CONTINUED) AUDITORS The auditors, PricewaterhouseCoopers PLT (LLPO014401-LCA & AF 1146), have expressed their willingness to accept re-appointment as auditors, This report was approved by the Board of Directors on 28 June 2019, Signed on behalf of the Board of Directors, KEE fi ; wie DIRE OR Kuala LumpurCompany No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 Note 2018 2017 RM RM Revenue 5 70,876,005 63,991,046 Cost of sales (60,744,003) (50,936,066) Gross profit 10,132,002 13,054,980 Other operating income 2,582,037 2,241,318, Administrative expenses (9,873,691) (7,816,065) Other operating expenses (1,588,937) (182,414) Profit from operations 6 4,281,411 7,297,819 Finance income 9 186,567 23,215, Profit before taxation 1,407,978 7,321,034 Taxation 10 (293,219) (9,078,604) Net profit for the financial year 1,174,759 4,245,430, Other comprehensive loss: iter that will not be reclassified subsequently to profit or loss: Exchange translation differences (968,490) (1,863,536) Total comprehensive income for the financial year 206,269 2,381,894 The accompanying notes form an integral part of these financial statements.Company No. 7ozee0 | x | KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018 Note NON-CURRENT ASSETS Plant and equipment "1 Intangible assets 12 Deferred tax assets 13 CURRENT ASSETS Inventories 14 Receivables 15 ‘Amount due from ultimate holding corporation 16 ‘Amounts due from fellow subsidiaries 7 Tax recoverable Deposit, cash and bank balances 18 LESS: CURRENT LIABILITIES Payables 19 Amounts due to fellow subsidiaries 17 Derivative financial instruments 20 Tax payable NET CURRENT ASSETS CAPITAL AND RESERVES Share capital 24 Retained earnings Foreign currency translation reserve 2 2 1,213,028 48,277 367,892 4,627,197 17,595,819 41,196,403 366,706 187,344 159,144 53,044,632 112,550,048 86,692,474 50.924 94,187 0 26,837,585 25,712,463 27,339,660 5,000,000 28,106,196 (6,766,536) 27,339,660 ‘The accompanying notes form an integral part of these financial statements. 2,966,215 220 203,081 3,169,516 13,963,913, 25,846,368 3,279,559 100,121 0 24,761,190 67,951,151 42,178,182 49,941 0 1,759,153 43,987,276 23,963,875 27,133,391 §,000,000 26,931,437 (4,798,046) 27,133,391vec'eel Lz. (ges'e98't) oer'sez'y Ler’ LSL've oso'eee'zz (o6v'a96) ese'PLt' bec'eeL Lz wy. or zev'1e6'92 0 oer'svz'y z200'920'22 961'901'87 0 esL'bLi'L Ler e692 (9p0'862'r) (ges'e98't) ° (o1s've6'z) (g¢s'992's) (o6r'e96) 0 (or0'e6z'r) ‘SaRETGUISTS “ON 000'000's 0 0 000'000's 00'000's ° 0 000'000's ‘sjuewe}e}s [eIoueUY esoy) Jo Ved jesB9qU Ue U0} seyou BuKUedwodce ay 1. 2102 s8quisceq Le Wy 420K jeroueUy au) J04 ss0} eAlsuayeldiod s0yO) seek jeRoueUY a4) 40} 4YOAd YR 2boz frenuer Ly Tie Loz Jequiscsg Le Iv Jaf Je/OUeUY Alp 10} $80] en'suayesdwI09 JeYIO seak jesueUy a4) 40} 1yOId YON loz Aienuer Lay Br0e 8102 HAGW3OA Le G30NS YWSA WIONVNIS SHL YOS ALINDA NI SAONVHO JO LNSWALVLS (e1sejey ul peyesoduoou)) GHA NGS YISV ANISYNL SVD DVSVMVy x | og9zoz ‘ON AuBaUIED‘Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 Note CASH FLOWS FROM OPERATING ACTIVITIES. Net profit for the financial year Adjustments for: Depreciation of plant and equipment Plant and equipment written off ‘Amortisation of intangible assets Net unrealised foreign exchange lossi(gain) Fair value loss/(gain) on derivative financial instruments Interest income Taxation Changes in working capital Receivables Payables Inventories Intercompany balances Tax paid Net cash flow from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment Purchase of intangible assets Interest received Net cash flow from investing activities NET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR EFFECTS ON EXCHANGE RATE CHANGES. CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR " 18 2018 RM 4,174,759 2,649,643 752 27,953 1,960,605 94,187 (156,567) 233,219 5,584,551 (16,294,523) 44,555,495 (8,631,908) 2,858,780 33,072,397 (2,316,327) 30,756,070 (824,078) (74,010) 156,567 (741,521) 30,014,549 24,761,190 (1,731,107) 53,044,632 The accompanying notes form an integral part of these financial statements. 8 4,245,430 3,209,072 341 7,694 (680,586) (11,706) (23,215) 3,075,604 9,822,634 5,865,482 10,757,779 (6.539.186) 41.277 362 24,184,071 (2,292,573) 18,891,498 (287,226) 0 23,215 (264,011) 18,627,487 7,695,440 (1,561,737) 24,761,190‘Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 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 and gas engine. There have been no significant cchanges in the nature of these activities during the financial year. ‘The Directors regard Kawasaki Heavy Industries, Ltd., a corporation incorporated in Japan, as the ultimate holding corporation. 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 D13, Pusat Dagangan Dana 1 Jalan PJU 14/46 47301 Petaling Jaya The address of the principal place of business of the Company is as follows: No 12A, Jalan Tiang U8/92 Seksyen U8, Bukit Jelutong Industrial Park ‘40150 Shah Alam 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 2016 in Malaysia 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 preparation of financial statements in conformity with the MPERS requires the use of certain critical accounting estimates. It also requires Directors to exercise its judgement 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. The areas involving higher degree of judgement or complexity, over areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4 to the financial statements,Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) 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 fo 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 item when that cost Is incurred if the replacement part is 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. 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 5 years Office equipment 5 years Furniture and ftings 5 years Workshop and demo equipment 5 years Renovation 2 years Depreciation on assets under construction commences when the assets are ready for their intended use 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 amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (see accounting policy Note 3(b) 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. 10Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) (ec) (a) 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 assets 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) exceeds its recoverable amount The impairment loss is recognised to profit or loss. Non-financial assets thet suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Any subsequent increase in recoverable amount is recognised in profit or loss. Intangible assets Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Intangible assets are amortised using the straight line method to allocate the cost of assets to their residual values over their estimated useful lives at the following annual rates: Computer software 2year The residual value of intangible assets are assumed to be zero unless there is a commitment by a third party to purchase the asset at the end of its useful life or there is an active market for the asset and residual value can be determined by reference to the market and itis probable that such a market will exist at the end of the asset's useful life. ‘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 amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. See accounting policy Note 3(b) on impairment of non- financial assets other than inventories. Receivables Trade and other receivables are recognised initially 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 financiel position. 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. "1Company No. 702880 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) (e) ) (9) Receivables (continued) They are subsequently measured at the undiscounted amount of cash expected to be received, less provision for impairment. If the arrangement constitute a financing transaction, ie. if the payment is financed at a rate of interest that is not a market rate, the financial assets are measured initially at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. These assets are subsequently measured at amortised cost using the effective interest method. 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 Impaitment 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. 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-n, 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 condition. 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. Where necessary, allowance is made for obsolete, slow-moving or defective inventories, ‘At each reporting date, inventories are assessed for impairment. If 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 Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value, at each reporting date with 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. 12Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h) i) Payables Trade and other payables are recognised initially at the transaction prices, with the amount of GST included. These 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. Current and deferred income tax The tax expense for the period comprises current and deferred income tax. Tax is recognised in profit or loss, except fo 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 calculated 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 deductible temporary differences. However, deferred tax is, not accounted for if it arises from initial recognition of an asset or liability in a 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 it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses or unused tax credits 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 the related deferred tax asset is realised or the deferred tax liability is settled Current and deferred assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred Income tax assets and liabilities 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 on a net basis. Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that a transfer of economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of the amount expected to be requited to seitle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense, 13Company No. 702680 x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (ky ) Share capital 0 (i) Classification Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources. received or receivable, net of transaction costs. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis, Dividend distribution Dividend distribution to the Company's shareholders is recognised directly in equity and as a liability in the Company's financial statements in the period in ‘which the dividends are approved by the Company's shareholders, 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. w 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 campletion method, the stage of completion is determined using the proportion that costs incurred for work performed 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 incurred and recognised profits (less recognised losses) exceed progress. billings, the balance is shown as ‘Amounts due from customers on construction contracts’ under ‘Receivables’. Where progress billings exceed costs incurred plus recognised profits (less recognised losses), balance is shown as ‘Amounts due to customers on construction contracts’ under ‘Payables’ 14Company No. 702680 x KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) w (m) Revenue recognition (continued) (ii) i) (iv) (vy) 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 contracis 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. Employee benefit obligations wo i) Short term employee benefits Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits that are expected to be settled 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 liabilties are settled. The liabilities are presented as a part of ‘Payables’ in the statement of financial position, Post-employment benefits Defined contribution plans ‘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 benefits 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, 15‘Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ) (0) Foreign currencies () Functional and presentation currency lems 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 assets and ies from functional currency into presentation currency using the following procedures: () Assets and liabilties are translated at the closing rate at the reporting date; (ii) Income and expenses are translated at average rates for a period (unless the exchange rates fluctuate significantly, in which case income and expenses are transiated at the rates at the dates of the transactions); and (il) 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. (i) Transaction and balances Foreign currency transactions are translated into the functional currency using the ‘exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlemient 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 loss. Foreign exchange gains and losses that relate to cash and cash equivalents are presented in profit or loss. 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 increase in line with expected general inflation based on published indexes to compensate for the lessor's expected inflationary cost increases, 16Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENT IN APPLYING ACCOUNTING POLICIES (a) (b) (c) Current and deferred tax The Company is subject to income tax whereby significant judgement is required in determining the capital allowance and deductibility of certain expenses during the estimation Of the provision for income tax. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises deferred tax assets to the extent that itis probable that future taxable profit will be available against which temporary differences or unutilised tax losses and tax Credits can be utilised. This involves judgement regarding future taxable profits for which the deferred tax asset has been recognized. Estimating the future taxable profits involved significant assumptions, especialy in respect of future revenue and operating cash flows. Allowance for slow moving inventories The Company estimate the allowance for slow moving inventories based on the inventory days. Allowance for slow moving inventories is recorded where events or changes in circumstances indicate that the carrying cost of inventories will not be fully realised. The quantification of inventory allowances requires the use of estimated and judgments. Where the outcomes are different from the original estimates, such differences will impact the carrying value of inventories and allowances for inventory in the years which such estimates have been charged. Provision for Impairment of trade receivables The Company makes impairment of trade receivables based on an assessment of the recoverability of trade receivables. Impairment is applied to trade receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses historical bad debt, customer concentration, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgment to evaluate the adequacy of impairment of trade receivables. Where expectations differ from the original estimates, the differences would impact the carrying amount of trade receivables, REVENUE Revenue consists of: 2018 2017 RM RM Equipment contract, 24,405,144 32,048,514 Local overhaul services 20,481,366 4,652,398 ‘Maintenance contract 16,962,192 2,651,249, Sales of spare parts and accessories 8,354,338 24,492,000 Sales of water boiler 380,793 146,885 Sales of gas engine 282,172 0 70,876,005 63,991,046 7‘Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) PROFIT FROM OPERATIONS 2018 2017 RM RM The following items have been chargedi(crecited) in arriving at profit from operations: Construction contract cost recognised as cost of sales ~ Equipment contract 24,628,887 25,565,896 - Maintenance contract 9,208,278 1,552,044 Cost of spare parts and accessories recognised as cost of sales 5,790,637 14,558,183 Overhaul cost recognised as cost of sales 12,539,122 2,281,020 Cost of water boiler recognised as cost of sales 204,748, 129,434 Cost of gas engine recognised as cost of sales 224,639 0 ‘Auditors’ remuneration 55,000 55,000 Depreciation of plant and equipment 2,649,643 3,209,072 Plant and equipment written off 752 341 ‘Amortisation of intangible assets 27.953 7,694 Staff costs (Note 7) 8,277,332 6,423,847 Fair value loss/(gain) on derivative financial instruments 94,187 (11,708) Rental of premises 767,345 767,654 Technical fee 524,669 1,018,698 Net realised foreign exchange gain (133,826) (120,956) Net unrealised foreign exchange loss/(gain) 1,560,605 (680,586) Consultation service income (711,913) (799,60) Sales and marketing service income (1,676,245) (1,345,483) STAFF COSTS Salaries, wages and bonus 7,061,501 5,356,693, Defined contribution plan 589,005 557,664 Staff benefits 197,008 69.615 Directors’ remuneration (Note 8) 429,818 439,875, 8,277,932 6,423,847 DIRECTORS’ REMUNERATION The aggregate amount of emoluments received or receivable by the Directors from the Company during the financial year is as follows: 2018 2017 RM RM Salaries and other emoluments (Note 7) 429,818 439,875 Estimated monetary value of benefits-in-kind 53,540 40,600 18Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) FINANCE INCOME 2018 2017 RM RM Interest income 156,567 23,215, TAXATION Malaysian income tax: ~ in respect of current financial year 1,149,856 3,089,985 + in respect of prior financial year (751,826) 121,553 308,030 3,211,538 Deferred taxation (Note 13) ~ in respect of current financial year (164,811) (136,934) 233,219 3,075,604 The explanation of the relationship between profit before taxation and taxation is as follows: Profit before taxation 1,407,978 7,321,034 Tax calculated at the Malaysian statutory tax rate of 24% (2017: 24%) 337,915 1,757,048 Tax effects of: - expenses not deductible for tax purposes 211,548 232,401 - income not subject to tax 0 (19,732) (Over)'under accrual of taxation in prior year (751,826) 121,553, Movement in tax benefits on unrecognised tax losses. ‘and deductible temporary differences for business under Pioneer Status 427,281 1,643,370 (Over/(under) accrual deferred taxation in prior year 8,301 (659,036) Taxation 233,219 3,075,604 The application for the Pioneer Status under the Promotion of Investment Act, 1986 for the ‘refurbishment of gas turbines’ 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’ for 5 years of assessment, starting from 1 October 2074 to 30 September 2019. 19oz ezoelz't = S067 eis'sz soe'zve eez'sz 86L'rvz ez’ sor'sy ‘anjea yooq oN, (gze'evy'zt) 0 (ty6'L9s) —(Lez'e6r'st) (Le9'60e) —(sez's6e) (e162) (o4z'089) uone1audep payeinwinooy yse'z99'8t S067. esy'z8S = ze0'LE'OL§~—bav'see 285'0V9 961'6 sou's7 109 BlOze eqUNIOT TEE SY Szo'elz't —-s06'zz gis'sz, boe'zve eez'sz 86L'rbe euz'b ser'sy 8102 Jequiooog Le sy oeL'ex 919 989 g9s'6s 891 eaz'6 s9 rez soueseyip uone|sues (evo'6ra'z) 0 (zuz'8) (gez‘oas'z) — (piz's) (e29'v2) (636) (620'r2) ‘a61eyo uoneoesdeg (zs2) 0 0 0 0 (zsz) 0 0 40-31 gL0've eaz'zz 9oL'ee g1z‘089 oeo'rz, see'eo 0 0 suonippy siz'sg'z 0 e loe'eso'z ers’ o1e'z6r zz oge'z9 sLoz Avenuer | sy TOR[EA YOO 18U Ul S|USUIOAO we we. we we we wa wel Teor, SseoM — Uoyencuey juSUNINDS —SouyypUe TSUMINDS §=—SSpIA. ‘owep pue = aunyluuny e910 J010/ vuojnsjsuog, doyssiom ANSWINDA ONY LNVId (GANNILNOO) 810% H3EWSOS LE - SLNSWALVLS TIONVNI4 SHL OL SSLON (e1sKeyey ut peyeioduoou)) GH@ NGS VIS SNISYNL SVS VSM x | ogezoz ‘ON AueduioD bble sive woe'seo'z —ara's ous'z6, ze o8e'z9 ‘anjen 4009 TEN, (966'008'1) (r9a'ess) (s6r'zo6'z1) (zzr'voe) (ozz'zze)(6s6'9) ~—(4¢1'959) onerpoidop poyeinuunooy Hiz'z92'2b 499'693 —96z'009'S: —szo're © go's ~—ste'a losteze W809 Toe TeqWsv8G TE SY sizisez ok lor'ess'z —6ys's o'er zub'z ove'z9 Lb0z oqwioseg te iy (gvs's8t) 0 (ose'ze) (682) (ese'eH) (Sri) (ssb'v) eouevoyip uonesuesL (zz0'e0z'e) 0 (seo'ee6'z) (g6z'o») —(ezv'ae) ~—(e60'L) (2 '6z) ‘261eyo uoreioeidoq (ve) 0 o 0 (uve) 0 0 O-OWAA gez'isz 0 Lus'ee) Wes‘ vee’ 0 oaz's9 SuOnIPPY ose'eao'sg szo'sz's S60'1ls_——wra'izz ool’ exrzel Lb0z Arenuer jy ‘STEN FOOT TOU UT STSTSTO wa Wa we was wa wa was ror ToREROUSy ueUTaS §=— SUT PUE SWOMOS «SOIR © SOIT oweppue aiming eyo 20101" doysiom, (G3NNLLNOD) LNSWNINO’ GNV LNVId (GaNNLNOO) 840% HASWAOAC LE - SLNAWALVLS IVIONVNIS SHL OL SSLON (eyshejew ul peyesodioou)) GHG NGS VISV SNIGYNL SV9 INVSVMV x | osszo. ON ATBGUIOD bb12 13 ‘Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) INTANGIBLE ASSETS Intangible assets comprise software cost: At the beginning of the financial year Additions Amortisation At the end of the financial year Representing: Cost Accumulated amortisation Net book value DEFERRED TAX ASSETS 220 74,010 (27,953) 46,277 310,895 (264,618) 46,277 7.914 (7,694) 220 227,418 (227,198) 220 The following amounts, determined after appropriate offsetting, are shown in the statement of financial position: Deferred tax assets (before and after offsetting) ~ Plant and equipment - Acoruals: - Foreign exchange differences The movement in deferred taxation during the financial year are shown as follows: At January Credited to profit or loss (Note 10) ~ Pant and equipment = Accruals ~ Foreign exchange differences ‘At31 December 22 2018 2017 RM RM 82,395, 68,547, 144,409 30.274 1411088 404,260 367,892 203,081 e747 70,947 (69,183) 134,170 164,811 135,934 367,882 203,081Company No, 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) INVENTORIES 2018 2017 RM RM Spare parts and consumables 17,595,819 13,963,913 Cost of inventories recognised ‘as an expense during the financial year 52,596,311 44,039,599 RECEIVABLES 2018 2017 RM RM Trade receivables 31,176,469 17,198,542 Other receivables 506,023 987,886, Deposits 487,943 416,728 Prepayments 79,803 66,177 Amounts due from customers on contracts (Note 22) 8,946,165 7,207,035 41,196,403 25,846,368 Credit terms of trade receivables range from payment in advance to 90 days (2017: 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 Companys trade receivables. The currency exposure profile of trade receivables is as follows: 2018 2017 RM RM. - Japanese Yen 17,505,623 6,000,488 - US Dollar 8,702,070 = Ringgit Malaysia 495,984 31,176,469, 17,198,642 23Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) AMOUNT DUE FROM ULTIMATE HOLDING CORPORATION ‘The net amount due from ultimate holding corporation is classified as follows: 2018 2017 RM RM Current 366,706 3,279,559 The net amount due from ultimate holding corporation consists of: Receivable 1,174,548 1,179,653, Payable (28,160,736) (2,463,293) Down payment for purchases 27,352,894 4,563,199 366,706 3,279,559 The currency profile of net amount due from ultimate holding corporation is as follows: - US Dollar 28,073 242,971 - Japanese Yen (510,895) 2,538,633 Ringgit Malaysia 849,528 515,533 - Indonesian Rupiah 0 13,122 366,708 3,279,559 Other than the amount payable for purchase of equipment, the net amount due from ultimate holding corporation is mainly trade in nature, unsecured, interest free and with credit terms ranging from 30 days to 150 days (2017: 30 days to 150 days). 247 18 Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) AMOUNTS DUE FROMI(TO) FELLOW SUBSIDIARIES ‘The amounts due from a fellow subsiciaries are trade in nature, interest free, and had credit term ranging from 30 days to 90 days (2017: 30 days to 90 days). The amounts due from fellow subsidiaries are 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 (2017: 30 days to 90 days). The currency exposure profile of amounts due to fellow subsidiaries is as follows’ 2018 2017 RM. RM + Singapore Dollar 0 (49,941) - Japanese Yen (60,924) 0 (50,924) (49,941) DEPOSIT, CASH AND BANK BALANCES/CASH AND CASH EQUIVALENTS 2018 2017 RM RM Cash and bank balances 52,285,258 24,761,190 Deposit with a licensed bank 759,374 0 53,044,632 24,761,190 Bank balances are deposits held at call with licensed banks and bear no interest. Deposit with a licensed bank has a maturity period of 39 days (2017: N/A) and the effective interest rate at reporting date is 6.72% (2017: N/A) per annum. The currency exposure profile of deposit, cash and bank balances are as follows: 2018 2017 RM RM - Japanese Yen 23,323,681 16,288,641 - US Dollar 17,658,120 3,195,514 ~ Ringgit Malaysia 11,079,801 5,277,035 = Indonesian Rupiah 983,030 0 53,044,632 24,761,190 2519 20 Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) PAYABLES 2018 2017 RM RM Trade payables 1,018,883 189,297 Other payables 554,766 2,697,885 Accruals 17,440,710 4,147,856 Amounts due to customers on contracts (Note 22) 67,678,115 (35,143,144, 86,692,474 42,178,182 The currency exposure profie of trade payables is as follows: - Japanese Yen 710,737 1,212 = Ringgit Malaysia 149,232 195,032 - US Dollar 148,703 25,821 - Indonesian Rupiah 10,211 7,232 1,018,883, 189,297 Credit term of trade payables ranged from 7 days to 30 days (2017: 7 days to 30 days) DERIVATIVE FINANCIAL INSTRUMENTS ‘The movement during the financial year in the amounts recognised is as follows: 2018 2017 RM RM Att January 0 (14,708) (Charged)/credited to profit or loss (Note 6) (94,187) 11,706 At31 December (24,187) o Forward foreian exchange contracts The Company had contracted to buy the following amounts under forward foreign currency contracts as at the end of the reporting period: Weighted average Ringgit Malaysia Contracted amount contracted rate equivalent RM. 2018 JPY 134,000,000 0.03705 4,958,670 1017 Ni Nil Nil ‘At the end of reporting period, the settlement date on the open forward contract ranges from 22 days to 45 days (2017: Nil) 262 22 23 Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) SHARE CAPITAL 2018 2017 RM RM Issued and fully paid! 5,000,000 ordinary shares ‘At beginningend ofthe financial year 5,000,000 5,000,000 PROJECT CONTRACTS 2018 2018 RM RM ‘Aggregate costs incurred and recognised profits 262,365,572 214,308,352 Less: Progress billings (821,097,522) (242:244,461) (58,731,950) (27,936,109) ‘Amounts due from customers (Note 15) 8,946,165 7,207,085 ‘Amounts due to customers (Note 19) (67,678,115) (38,143,144) (68,731,950) (27,936,109) SIGNIFICANT RELATED PARTY DISCLOSURES: In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other related party disclosures: (a) Related parties and relationshio The related parties of and relationships with the Company are as follows: Related parties Relationship Kawasaki Heavy Industries, Ltd Ultimate holding corporation Kawasaki Heavy Industries (Singapore) Pte. Ltd. Fellow subsidiary Kawasaki Thermal Engineering Co., Ltd Fellow subsidiary ar23 Company No. 702680 | X KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (CONTINUED) SIGNIFICANT RELATED PARTY DISCLOSURE (CONTINUED) (b) (co) Significant related party transaction The significant related party transactions described below were carried out on terms and conditions negotiated and agreed between the Company and the related parties. 2018 2017 RM RM Reimbursement of operating expenses by: - Ustimate holding corporation (769,133) (1,182,648) Purchase of spare parts and consumables from: - Ultimate holding corporation 28,972,768 17,251,479 Purchase of equipment from: - Ultimate holding corporation 35,601,967 20,961,192 - Afellow subsidiary 126,478 54,916 Purchase of plant and equipment from Ultimate holding corporation 547,453 0 A fellow subsidiary 0 86,627 Service income charged to: - Ultimate holding corporation (2,897,784) (762,815) - Afellow subsidiary (39,197) 0 Down payment for gas turbines paid to: - Ultimate holding corporation 19,417,632 4,863,198 Technical fee charged by: - Afellow subsidiary 524,669, 1,018,698 Sales and marketing service income charged to: = Ultimate holding corporation (1,876,245) (1,345,483) Consultation service income charged to: ~ A fellow subsidiary (711,913) (799,604) ‘Training cost charged by: - Ultimate holding corporation 384,432 0 Key management personnel compensation Key management personnel are defined 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 are disclosed in Note 8 to the financial statements 28‘Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2018 (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: 2018 2017 RM RM Future minimum lease payment - Not later than 1 year 4,284,485 4,076,896 - Later than 1 year but not later than 5 years 2,784,655 3,423,245 4,069,140 4,500,141 FINANCIAL INSTRUMENTS BY CATEGORY 2018 2017 RM RM Financial assets measured at amortised costs Receivables (excludes prepayments) 41,116,600 25,780,191 Amount due from uitimate holding corporation 366,706 3,279,559 Amounts due from fellow subsidiaries 187,344 “100,121 Deposit, cash and bank balances 53,044,632 24,761,190 Total financial assets 94,715,282 53,921,061 Financial liabilities measured at amortised cost: Payables 86,692,474 42,178,182 ‘Amounts due to fellow subsidiaries 50,024 49,941 86,743,398 42,228,123 Financial liabilities measured at fair value through profit or loss: Derivative financial instruments 94,187 o Total financial liabilities 86,837,585 42,228,123 APPROVAL OF FINANCIAL STATEMENTS The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 28 June 2019. 29Company No. 702680 | x KAWASAKI GAS TURBINE ASIA SDN BHD. (Incorporated in Malaysia) STATEMENT BY DIRECTORS PURSUANT TO SECTION 251(2) OF THE COMPANIES ACT 2016 We, Takashi Hayashi and Takashi Nishijima, two of the Directors of Kawasaki Gas Turbine Asia Sdn Bhd, do hereby state that, in the opinion of the Directors, the accompanying financial statements set out on pages 5 to 29 are drawn up so as to give a true and fair view ofthe financial position of the Company as at 31 December 2018 and financial performance of the Company for the financial year ended 31 December 2018 in accordance with the Malaysian Private Entities Reporting Standard and the requirements of the Companies Act 2016 in Malaysia. Signed on behaif of the Board of Directors in accordance with a resolution of the Directors dated 28 June 2019, pf Z Zs FAKAS \YASHI TAKASHHNI; A DIRECTOR DIRE; Kuala Lumpur STATUTORY DECLARATION PURSUANT TO. SECTION 251(1) OF THE COMPANIES ACT 2016 |, Takashi Hayashi, the Director primarily responsible for the financial management of Kawasaki Gas Turbine Asia Sdn Bhd, do solemnly and sincerely declare that, the financial statements set out on pages § to 29 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. AEE ‘AKASHHAAYASHI DIgeCTOR ‘Subscribed and solemnly declared by the above named, Takashi Hayashi at: KUALALUMPUR on: 28 JUN 2019 before me: W607 GURDEEP SINGH AIL JAG SINGH o1/o12018-31/12/2021 }y } 58, JALAN RAKYAT (JALAN TRAVERS ) BRICKFIELDS 50470 KUALA LUMPURkh 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 SI 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 2018, and of its financial performance and its cash flows for the financial year then ended in accordance with Malaysian Private Entities Reporting Standard and the requirements of the Companies Act 2016 in Malaysia. What we have audited We have audited the financial statements of the Company, which comprise the statement of financial position as at 31 December 2018, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 5 to 29. 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 appropriate to provide a basis for our opinion. Indepen ‘We are independent of the Company in accordance with the By-Laws (on Professional Ethies, Conduet 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 fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. information other than the financial statements and auditors’ report thereon ‘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 PricewaterhouseCoopers PLT (LLPoor4401-LCA & AF 1146), Chartered Accountants, Level 10, 1 Sentral, Jalan Rakyat, Kuala Lumpur Sentral, P.O. Box 10192, 50706 Kuala Lumpur, Malaysia T: 460 (3) 2173 188, F: +60 (3) 2179 1288, www.pwe.com/my a- pwe INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF KAWASAKI GAS TURBINE ASIA SDN BHD (CONTINUED) ineorporated in Malaysia) (Company No. 702680 X) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Information other than the financial statements and auditors’ report thereon (continued) 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 2016 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 or error. 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 or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements, 32kk 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’ responsibilit the financial statements (continued) ‘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 eireumstanees, 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, estimates 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, ‘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, 33| pwe INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF KAWASAKI GAS TURBINE ASIA SDN BHD. (CONTINUED) (Incorporated in Malaysia) (Company No, 702680 X) OTHER MATTERS This report is made solely to the member of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Pee dAGe fut i PRICEWATERHOUSECOOPERS PLT GAN WEE FONG LLPoo14401-LCA & AF 1146 03253/01/2021 0 Chartered Accountants Chartered Accountant Kuala Lumpur 28 June 2019 34