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Tenaga Nasional Berhad Annual Report 2007

Nerve and Drive 

The electricity business had its humble beginnings as Central 

Electricity Board in 1949 with an initial generation capacity of 

40 MW and 2,466 employees serving 45,000 customers. Over 

the last five decades, this has grown to a formidable proportion 

with Tenaga Nasional Berhad (TNB) established and having 

today, over 11,200 MW in installed generation capacity, more 

than RM67 billion in assets, over 28,000 employees, and a 

customer base of more than seven million. Our infrastructure 

is a complete generation, transmission and distribution system 

that forms the driving nucleus powering the nation’s progress, 

lighting up commerce and the lives of Malaysians. 

Today the electrical pulse rendered by TNB is indeed felt 

here, there and everywhere. As the nerve and drive of 

human mankind’s development, TNB through its workforce, 

places its commitment to all touchpoints with full fervour 

and dedication. From the break of dawn as reflected on the 

front cover of our annual report, TNB remains constant in 

its delivery of electricity, serving 24/7 throughout Peninsular 

Malaysia and Sabah. And as the country rises to the challenges 

of tomorrow, you can be assured that we are always there to 

help communities thrive. 

 


Corporate 

Profile 

Tenaga Nasional Berhad (TNB) is the largest electricity utility in Malaysia with more than RM67.0 billion in assets. 

The Company is listed on the main board of Bursa Malaysia and employs approximately 28,000 people to serve a 

customer base of over seven million in Peninsular Malaysia and Sabah. TNB plays an integral role in the national, 

economic and social prosperity of the country by providing reliable and efficient services. 

The Company has earned a reputation for outstanding performance, regionally and globally. TNB is the only Asian 

energy company short-listed as one of five finalists for the “Power Company of the Year” in the 2007 Platts Global 

Energy Awards. 

TNB’s core businesses are in the generation, transmission and distribution of electricity. It has a total installed 

generation capacity of about 11,200 MW (including SESB and Kapar Energy Ventures). In Peninsular Malaysia, TNB 

contributes to 55 per cent of the total industry capacity through six thermal stations and three major hydroelectric 

schemes. TNB also manages and operates a comprehensive transmission network, the National Grid. Spanning the 

peninsula, the grid links TNB power stations and IPPs to the distribution network. The grid is also interconnected 

to Thailand’s transmission system in the North and Singapore’s transmission system in the South. TNB’s distribution 

network is managed through a comprehensive distribution system, customer service centres and call management 

centres. 

Today, TNB is also involved in diversified activities linked to the power industry. Through subsidiaries, the Company is 

in the manufacture of transformers, high voltage switchgears and cables; the provision of professional consultancy 

services; architectural, civil and electrical engineering works and services, repair and maintenance; as well as in 

research and development; property development; and project management services. 

In advancing human capital, Universiti Tenaga Nasional (UNITEN) has been established to produce well-rounded 

competent individuals in various fields. A major part of the Company’s corporate social responsibility in education, 

sponsorships and contributions, is channeled through our trust foundation - Yayasan Tenaga Nasional. 

To ensure the Company’s continued service excellence and to support its strategic vision of global leadership, 

employee competencies are continuously enhanced through structured programmes. As a responsible corporate 

citizen, TNB also places great emphasis on its engagement with the community to ensure society gains and benefits 

from our efforts. 

 


Key Financial 

Highlights 

RM FY06 FY07 

Revenue 20,384.2 23,320.4 

Operating Expenses (16,916.9) (18,371.4) 

Other Operating Income 489.3 593.7 

Operating Surplus 3,956.6 5,542.7 

Finance Cost (1,539.3) (1,305.0) 

Transaction Gain/(Loss) (166.4) 33.5 

Profit Before Tax & Translation Gain/(Loss) 2,265.5 4,313.6 

Net Profit Before Translation Gain 1,635.6 3,608.8 

Translation Gain 491.3 452.3 

Profit for the period 2,161.7 4,067.6 

Profit Attributable to: 

Equity Holders 2,126.9 4,061.1 

Minority Interests 34.8 6.5 

2,161.7 4,067.6 

 


Key Corporate 

Highlights 

Unit Demand Growth + 5.3% - Group 

+ 5.5% - TNB 

Revenue Growth + 14.4% 

Operating Expenses + 8.6% i) 22.5% increase in IPP cost principally 

from the additional capacity payments 

to Tg. Bin upon commissioning of Units 

1 & 2 (Sep’06 and Feb’07 respectively) 

ii) Increase in provisions made under 

FRS119 for staff benefits 

Core Profits + 29.8% Excluding new tariff, forex, deferred tax 

writeback and one-off provisions 

EBITDA Margin 37.6% 35.7% last year 

ROA 6.3% Based on adjusted net profit 

Total Debt RM 24.0 bn Reduction from RM27.1 bn as at 31st Agt 

2006 

Capex RM 5.2 bn i) Completion of carried forward projects 

from FY2006 

ii) Finalisation of project accounts 

iii) Acceleration of projects (especially the 

Central Area Reinforcement project) 

Iv) System improvement as pledged under 

the tariff increase 

 


Five-Year Performance 

Highlights 

2007 2006 2005 2004 2003 

Group 

Finance (RM’ million) 

Total Revenue 23,320.4 20,384.2 18,977.5 17,712.1 16,457.8 

Profit Before Taxation and Zakat# 4,765.9 2,756.8 1,818.9 1,482.7 1,648.5 

Property, Plant and Equipment 57,382.9 55,201.3 54,721.0 53,443.7 51,768.4 

Generation 

Group Installed Capacity (MW) 11,514.5* 11,464.8 11,497.8 11,137.5 10,854.5 

Sales Of Electricity 

Total Units Sold (GWh) 86,545.0 82,214.8 78,933.4 72,921.4 68,254.3 

Sales Revenue (RM’ million) 22,384.0 19,707.4 18,326.4 17,219.4 15,973.9 

Customers 

Total Number of Customers 7,068,329 6,814,523 6,582,374 6,323,719 6,069,561 

Employees (Group) 

Total Number of Employees 28,822 28,067 27,727 26,989 27,238 

Shareholders 

Total Number of Bumiputera Shareholders 5,865 5,943 5,971 6,526 6,778 

Total Number of Non-Bumiputera Shareholders 17,516 17,318 14,935 15,726 16,471 

Total Number of Institutional Shareholders 539 586 577 497 612 

Total Number of Foreign Shareholders 1,242 1,067 1,379 715 702 

Total Number of Government Agency Shareholders 26 28 35 42 43 

Total Number of Nominee Company Shareholders 3,656 3,814 6,080 4,717 2,499 

Dividends (Gross) 36.3 sen 14.8 sen 16.2 sen 18.2 sen 12.0 sen 

Financial Ratios 

Debt-Equity (Net of Cash) Ratio 0.78 1.19 1.69 1.94 2.11 

Earnings Per Share - Basic (sen) 94.92 52.52 32.01 26.1 34.1 

Net Assets Per Share (sen) 554 470 499 460 449 

# The financials for 2003 to 2005 have not been adjusted for the adoption of FRS 101-Presentation of Financial Statements 

*(Figure includes TNB, Sabah Electricity Sdn Bhd and Liberty Power Limited) 

 


Corporate Award 

Highlights 

During FY2007, Tenaga Nasional Berhad was recognised with numerous 

accolades, awards and honours conferred by both national and international 

organisations as well as by leading publications. Here is our Top 20 - 

1. TNB, the only Asian energy company short-listed 

as one of five finalists for the “Power Company 

of the Year” in the 2007 Platts Global Energy 

Awards 

2. Asiamoney Awards - 

• TNB - Best Investor Relations, Malaysia 

• TNB - Second Best For Corporate Governance 

• TNB - Third Best Asian Investor Relations 

Company (excluding Japan) 

3. Silver Award presented to Ir Haji Sazali P Abdul 

Karim at the International Product and New 

Technique Exhibition in Geneva, Switzerland on 

22 April 2007 

4. IABC Malaysia Silver Quill Awards 2007 by 

the International Association of Business 

Communicators Malaysia Chapter for TNB’s 

Annual Report 2006 awarded in April 2007 - 

• Silver Quill for Publication 

• Excellence Award for Communication Skills 

• Merit Award for Publication Design 

5. FinanceAsia’s Best Managed Companies Poll 2007 

- TNB among Malaysia’s Top Ten 

6. Best Brand Award under Energy and Utility 

Corporate Branding at The Brand Laureate on 8 

January 2007 

7. Occupational Safety and Health Gold Award 

2005 to Connaught Bridge Power Station on 8 

September 2006 

8. Dato’ Izzaddin Idris declared Second Best CFO in 

Malaysia by FinanceAsia on 3 September 2007 

9. National Annual Corporate Report Awards 

(NACRA) Silver Award for Best Design for TNB 

Annual Report 2005 awarded on 30 November 

2006 

10. Gold Award for Best Emerging Contact Center 

(Category GLC) for CMC 15454 presented by the 

Contact Centre Association of Malaysia on 8 


11. National Labour Day Celebrations 2007 - 

• Anugerah Harapan Majikan Berdaya Saing 

kategori Industri Besar 

• Anugerah Tokoh Pekerja Lelaki (Bukan 

Eksekutif) 

• Anugerah Harapan Tokoh Pekerja Lelaki 

(Eksekutif) 

• Anugerah Harapan Tokoh Pekerja Lelaki 

(Bukan Eksekutif) 

12. Silver and Bronze Awards at Pecipta ’07 for UNITEN 

on 12 August 2007 

13. Best Theme Booth Award at the 50 th Merdeka 

Expo on 30 August – 2 September 2007 at Putra 

World Trade Centre, Kuala Lumpur 

14. League Champion in the TNB-Malaysia Hockey 

League 2007 

15. MECD Award - Ministry of Entrepreneur and Cooperative 

Development on 26 August 2007 

16. Ministry of Human Resource 2007 Award for 

Institut Latihan TNB-ILSAS for Best Training 

Provider category 

17. Champion in the National ICC Convention 2006 

from 19-21 September 2006 

18. 5S certification awarded to Yayasan Tenaga 

Nasional (YTN) by National Productivity Council 

(NPC) 

19. National 5S Practice Award 2006 under Open 

Category (Service) awarded to SJ Tuanku Ja’afar, 

Port Dickson on 29 November 2006 

20. 5S certification from NPC to SJ Connaught Bridge 

(SJJC), Klang on 18 September 2006 

 


Corporate Report 

Contents 

3Corporate Profile 

TNB’s core businesses are in 

the generation, transmission 

and distribution of electricity 

16 

Statement 

Accompanying Notice of 

AGM 

Four Directors are seeking 

re-election at the 17 th 

Annual General Meeting 

78 

Group Corporate Structure 

A quick display of Associated/ 

Investment Companies, Trust 

Foundation and Subsidiaries 

as at October 2007 

104 

Group Executive 

Council Committee 

The Group Executive Council 

Committee (GECC) plays a 

key role in reviewing the 

Group’s policies, strategies 

and procedures, overall 

performance of the Group 

214 

Corporate Calendar 

A summary of the corporate 

activities at TNB during 

FY2007 

4Key Financial Highlights 

Profit Before Tax and 

Translation Gain/(loss) 

reported in RM4,313.6 

million for FY2007 compared 

with RM2,265.5 million in 

FY2006 

17 

Operational Statistics 

Statistics provided for Sales 

of Electricity, Number of 

Customers by Classification 

Group, TNB Generation Mix, 

TNB Installed Capacity, and 

more 

80 

Organisational Structure 

TNB’s Corporate Social 

Responsibility (CSR) policy is 

founded on philanthropy in 

key areas such as education, 

sports, the environment and 

helping the underprivileged 

105 

Energy Supply 

Committee 

This Committee endorses 

and approves all power 

system development plans 

and proposals for TNB in 

Peninsular Malaysia, and 

for SESB in Sabah, prior to 

submission to TNB Board 

222 

Financial Calendar 

Financial activities during 

the year under review 

5Key Corporate Highlights 

Total Debt reduced to 

RM24.0 billion from 

RM27.1 billion as at 31 

August 2006 

18 

Corporate Performance 

Charts 

Charts displaying Profit 

Before Tax and Net Profit 

for both Group and 

Company; Property, Plant and 

Equipment for the Group 

82 

Corporate Information 

Details of Board of Directors, 

Board Audit Committee, 

Board Nomination and 

Remuneration Committee, 

Company Secretaries, Share 

Registrar, Principal Bankers, 

etc 

106 


Management Committee 

The Group Executive 


(GEMC) facilitates better 

coordination and effective 

interaction between the 

Company and its group of 

companies. 

6Five-Year Performance 

Highlights 

Clear analysis from 2003- 

2007 covering Finance, 

Generation, Sales of Electricity, 

Customers, Employees (Group), 

Shareholders, Dividends and 


22 

Chairman’s Letter To 

Shareholders 

Achievements are testament 

of our commitment to 

the GLC Transformation 

efforts advocated by the 

Government 

84 

Board of Directors 

Pictorial Portfolio of the 

Board of Directors of TNB 

110 

Operations Review 

FY2007 was a great year that 

saw our 28,000 employees 

living the brand through our 

T7 and SE 10/10 strategies 

Part II 

Financial Statements 

Analysis of Shareholdings 

Analysis of Convertible Redeemable Income Securities 

2004-2009 (“CRIS”) Holdings 

Share Price Tracking 

Properties List 

Proxy Form 

 


Corporate Report Contents 

7Corporate Award Highlights 

TNB was recognised with 

numerous accolades, awards 

and honours conferred 

by both national and 

international organisations 

38 

President/CEO Review 

Our meaningful progress in 

operations and financials for 

FY2007, has us well positioned 

to continue to perform in this 

culture and to accelerate our 

efforts 

86 

Profile of Board of 

Directors 

Detailed essays of the 

profile of TNB’s Board of 

Directors 

190 

Other Services 

TNB executes a major 

part of its corporate social 

responsibility through a 

trust body, Yayasan Tenaga 

Nasional (YTN), mainly in 

education sponsorships and 

welfare contributions 

10 

Vision and Mission 

To be among the leading 

corporations in energy and 

related businesses globally 

54 

Corporate Social 

Responsibility 

Our meaningful progress in 

operations and financials 

for FY2007, has us well 

positioned to continue to 

perform in this culture and 

to accelerate our efforts 

91 

Board Audit Committee 

Report 

The BAC Chairman submits 

a report on matters 

deliberated to the Board 

of Directors after each 

BAC meeting 

198 

Statement of Occupational 

Safety and Health 

TNB has put in place 

a comprehensive OSH 

management system base 

which resulted in certain 

stations being recognised 

and awarded prestigious 

OSH awards 

11 

FY2007 Core Revenue 

Revenue at RM23,320.4 

million for FY2007 compared 

with RM20,384.2 million for 

FY2006 

62 

Statement of Corporate 

Governance 

During the year, the Board 

had announced a dividend 

policy for the Company for 

the purpose of providing 

a stable and sustainable 

dividends to shareholders 

94 

Terms of Reference of the 


The function and authority 

of the BAC extends to TNB 

and all its subsidiaries, 

joint-ventures and associates 

where management 

responsibility is vested 

204 

Statement of Environment 

TNB is committed to 

achieving excellence in 

environmental management. 

12 

Notice of 17 th Annual 

General Meeting 

Thursday, 13 December 

2007, at 10.00 am at Dewan 

Serbaguna, Kompleks Sukan 

TNB, Jalan Pantai Baru, 59200 

Kuala Lumpur 

76 

Recurrent Related Party 

Transactions 

At the 16 th AGM of TNB held on 

14-12-2006, the shareholders 

had approved and ratified 

all recurrent related party 

transactions (RRPT) of a 

revenue or trading nature 

100 

Statement of Internal 

Control 

The Board has established 

an appropriate framework 

and on-going processes for 

identifying, evaluating and 

managing the significant 

risks faced by the Group 

208 

Enterprise-Wide Risk 

Management 

TNB recognises that 

effective risk management 

is the key element in the 

Company’s overall strategy 

with a focus on the ongoing 

implementation of 

an Enterprise-Wide-Risk 

Management (EWERM) 

framework 

 


Vision 

To be among the leading corporations in 

energy and related businesses globally 

Mission 

We are committed to excellence 

in our products and services 

10 

Tenaga Annual Nasional Report 2007 Berhad Tenaga Annual Nasional Report Berhad 2007

FY2007 

Core Revenue 

Peninsular Malaysia 88.7% 

Deferred Income 1.4% 

SESB 3.5% 

EGAT 1.8% 

Goods & Services 2.6% 

LPL 2.0% 

} 

3.8% 

FY2007 Total RM23,320.4 million 

FY2006 Total RM20,384.2 million 

11 


Notice Of 

17 th Annual General Meeting 

NOTICE IS HEREBY GIVEN THAT the Seventeenth Annual General 

Meeting of Tenaga Nasional Berhad will be held on Thursday, 13 

December 2007, at 10.00 a.m. at Dewan Serbaguna, Kompleks 

Sukan TNB, Jalan Pantai Baru, 59200 Kuala Lumpur to transact 

the following businesses: 

AS ORDINARY BUSINESS:- 

1. To lay before the meeting the Audited Financial 

Statements together with the reports of the 

Directors and Auditors thereon for the Financial 

Year ended 31 August 2007. 

Ordinary Resolution 1 

2. To approve the declaration of final gross dividend 

of 16.3 sen per ordinary share less tax for the 

Financial Year ended 31 August 2007. 


3. To approve the payment of Directors’ fees for the 

Financial Year ended 31 August 2007. 


4. To re-elect the following Directors who retire in 

accordance with Article 135 of the Company’s 

Articles of Association:- 

(i) Dato’ Sri Che Khalib bin Mohamad Noh; 


(ii) Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng. 


5. To re-elect the following Directors who retire in 

accordance with Article 133 of the Company’s 

Articles of Association:- 

(i) Dato’ Fuad bin Jaafar; 


(ii) Mohammad Zainal bin Shaari. 


6. To re-appoint Messrs PricewaterhouseCoopers, 

having consented to act, as Auditors of the 

Company, to hold office until the conclusion of 

the next Annual General Meeting (“AGM”) and to 

authorise the Directors to fix their remuneration. 


AS SPECIAL BUSINESS:- 

To consider and if thought 

fit, to pass the following 

Ordinary Resolutions:- 

7. PROPOSED RENEWAL OF SHAREHOLDERS’ 

MANDATE FOR RECURRENT RELATED PARTY 

TRANSACTIONS (“RRPT”) OF A REVENUE OR 

TRADING NATURE ENTERED WITH PERSONS 

CONNECTED TO A MAJOR SHAREHOLDER OF TNB, 

DETAILS OF WHICH ARE SET OUT IN APPENDIX II 

OF THE CIRCULAR TO SHAREHOLDERS. 

“THAT the mandate granted by the shareholders 

of the Company at the AGM of the Company held 

on 14 December 2006 pursuant to paragraph 10.09 

of the Listing Requirements of Bursa Securities 

(“Listing Requirements”) be and is hereby renewed 

to authorise the Company and its subsidiaries 

(“the Group”) to enter into the specified RRPT as 

set out in Section 1 of Appendix II of the Circular 

to Shareholders with persons connected to a 

Major Shareholder of TNB as mentioned therein 

which are necessary for the Group’s day-to-day 

operations subject to the following: 

12 


Notice Of 17 th Annual General Meeting 

(i) 

the transactions are in the ordinary course 

of business and are on terms not more 

favourable to the related parties than those 

generally available to the public and are not 

to the detriment of the minority shareholders; 

and 

(ii) disclosure of the aggregate value of 

transactions relating to the proposed 

renewal of shareholders’ mandate for RRPT 

of a revenue or trading nature entered with 

persons connected to a Major Shareholder of 

TNB conducted during a Financial Year will 

be made in the annual report for the said 

Financial Year. 

AND THAT such authority 

conferred by the renewed 

mandate shall continue to 

be in force until: 

(i) 

the conclusion of the Eighteenth AGM of the 

Company following the forthcoming AGM at 

which the proposed renewal of shareholders’ 

mandate for RRPT of a revenue or trading 

nature entered with persons connected to 

a Major Shareholder of TNB is approved, at 

which time it will lapse, unless the mandate 

is renewed by a resolution passed at the 

Eighteenth AGM; 

(ii) the expiration of the period within which the 

Eighteenth AGM after that date is required 

to be held pursuant to Section 143(1) of the 

Companies Act, 1965 (“Act”) [but shall not 

extend to such extension as may be allowed 

pursuant to Section 143(2) of the Act]; or 

(iii) revoked or varied by a resolution passed 

by the shareholders in a general meeting, 

whichever is the earlier. 

AND THAT the Board be and is hereby authorised 

to complete and do all such acts and things as they 

may consider expedient or necessary to give effect 

to the proposed renewal of shareholders’ mandate 

for RRPT of a revenue or trading nature entered 

with persons connected to a Major Shareholder of 

TNB.” 


8. PROPOSED SHAREHOLDERS’ MANDATE FOR RRPT 

OF A REVENUE OR TRADING NATURE ENTERED 

WITH PERSONS CONNECTED TO A DIRECTOR 

AND A MAJOR SHAREHOLDER OF TNB, DETAILS 

OF WHICH ARE SET OUT IN APPENDIX II OF THE 

CIRCULAR TO SHAREHOLDERS. 

“THAT the Group be and is hereby authorised to 

enter into the specified RRPT as set out in Section 

2 of Appendix II of the Circular to Shareholders 

with the persons connected to a Director and a 

Major Shareholder of TNB as mentioned therein 

which are necessary for the Group’s day-to-day 

operations subject to the following: 

(i) 

the transactions are in the ordinary course 

of business and are on terms not more 

favourable to the related parties than those 

generally available to the public and are not 

to the detriment of the minority shareholders; 

and 

(ii) disclosure of the aggregate value of 

transactions relating to the proposed 

shareholders’ mandate for RRPT of a 

revenue or trading nature entered with 

persons connected to a Director and a Major 

Shareholder of TNB conducted during a 

Financial Year will be made in the annual 

report for the said Financial Year. 

AND THAT such authority 

conferred by the above 

mandate shall continue to 

be in force until: 

(i) 

the conclusion of the Eighteenth AGM of the 

Company following the forthcoming AGM at 

which the proposed shareholders’ mandate 

for RRPT of a revenue or trading nature 

entered with persons connected to a Director 

and a Major Shareholder of TNB is approved, 

at which time it will lapse, unless the mandate 

is renewed by a resolution passed at the 

Eighteenth AGM; 

(ii) the expiration of the period within which the 

Eighteenth AGM after that date is required 

to be held pursuant to Section 143(1) of the 

Act [but shall not extend to such extension as 

may be allowed pursuant to Section 143(2) of 

the Act]; or 

(iii) revoked or varied by resolution passed by the 

shareholders in a general meeting whichever 

is the earlier. 

AND THAT the Board be and is hereby authorised 

to complete and do all such acts and things as 

they may consider expedient or necessary to give 

effect to the proposed shareholders’ mandate 

for RRPT of a revenue or trading nature entered 

with persons connected to a Director and a Major 

Shareholder of TNB.” 


13 



9. Specific authority for the Directors to issue shares 

pursuant to the Employees’ Share Option Scheme 

II 

“THAT pursuant to the TNB Employees’ Share 

Option Scheme II (“ESOS II”) as approved at the 

Extraordinary General Meeting (“EGM”) of the 

Company held on 29 May 2003, approval be and is 

hereby given to the Directors to issue shares in the 

Company at any time and in accordance with the 

terms and conditions of the said scheme.” 


10. General authority for the Directors to issue shares 

pursuant to Section 132D, Companies Act, 1965 

“THAT pursuant to Section 132D of the Act, full 

authority is hereby given to the Directors to issue 

shares in the capital of the Company at any time 

until the conclusion of the next AGM and upon 

such terms and conditions and for such purposes 

as the Directors may, in their absolute discretion, 

deem fit provided that the aggregate number of 

shares to be issued pursuant to this Resolution 

does not exceed ten per cent (10%) of the issued 

share capital of the Company for the time being, 

subject to the provision of the Act, Articles of 

Association of the Company and approval from 

the Bursa Malaysia Securities Berhad and all the 

relevant regulatory bodies where such approval is 

necessary.” 


AND THAT the Board be and is hereby authorised to 

do all such acts, deeds and things as are necessary 

and/or expedient in order to give full effect to 

the Proposed Amendments with full powers to 

assent to any conditions, modifications and/or 

amendments as may be required by any relevant 

authorities or third parties.” 

Special Resolution 1 

12. To transact any other business of which due notice 

shall have been given in accordance with the Act. 

BY ORDER OF THE BOARD 

NOR ZAKIAH BINTI ABDUL GHANI (LS 0008795) 

WAN MARZIMIN BIN WAN MUHAMMAD (LS 0009013) 

Company Secretaries 

Kuala Lumpur 

21 November 2007 

To consider and if thought 

fit, to pass the following 

Special Resolution:- 

11. PROPOSED AMMENDMENTS TO THE COMPANY’S 

ARTICLES OF ASSOCIATION:- 

“THAT the Company’s Articles of Association be 

altered, modified, added and deleted:- 

(a) in the form and manner as set out in the 

Appendix I of the Circular to Shareholders 

dated 21 November 2007; 

(b) by the re-arrangement of the definitions set 

out in Article 1(2) of the Articles of Association 

(as altered, modified, added and deleted), in 

alphabetical order; and 

(c) 

by the substitution throughout the Articles 

of Association, of the defined term “Bursa 

Securities”, with the defined term “the 

Exchange” as appropriate (“Proposed 

Amendments”); 

14 



EXPLANATORY NOTES ON SPECIAL BUSINESS 

(i) 

Ordinary Resolution 9 and 10 : Details on the Proposed Renewal of Shareholders’ Mandate and Proposed 

Shareholders’ Mandate for RRPT of a revenue or trading nature which are in the ordinary course of business as 

mentioned above are set out in the Circular to Shareholders dated 21 November 2007. 

(ii) Ordinary Resolution 11 : Power for the Directors to issue shares pursuant to the ESOS II. 

The proposed Ordinary Resolution, if passed, is to empower the Directors to issue shares in the Company 

pursuant to the terms and conditions of the ESOS II, which was approved at the EGM of the Company held on 

29 May 2003. 

(iii) Ordinary Resolution 12 : Power to issue shares pursuant to Section 132D, of the Act. 

The proposed Ordinary Resolution, if passed, is to give the Directors of the Company flexibility to issue and 

allot shares for such purposes as the Directors in their absolute discretion consider to be in the interest of the 

Company, without having to convene a general meeting. This authority will expire at the next AGM of the 

Company. 

(iv) Special Resolution 1: Details on the Proposed Amendments to the Articles of Association as mentioned above 

are set out in the Circular to Shareholders dated 21 November 2007. 

Notes:- 

Registration of Members/Proxies 

Registration of Members/Proxies attending the Meeting will be from 7.00 a.m. on the day of the Meeting. Members/ 

Proxies are required to produce identification documents for registration. 

Proxy 

(i) 

Any member entitled to attend and vote at this Meeting of the Company is entitled to appoint a proxy to 

attend and vote in his stead. A proxy need not be a member of the Company. 

(ii) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly 

appointed under a power of attorney. Where the instrument appointing a proxy/proxies is executed by a 

corporation, it shall be executed either under its common seal or under the hand of any officer or attorney duly 

appointed under a power of attorney. 

(iii) Pursuant to Article 105(4) of the Company’s Articles of Association, a member is entitled to appoint not more 

than two proxies, and where a member appoints two proxies, the appointment shall be invalid unless the 

percentage of the holding to be represented by each proxy is specified. 

(iv) A corporation which is a member, may by resolution of its Directors or other governing body authorise such 

person as it thinks fit to act as its representative at the Meeting, in accordance with Article 107(6) of the 

Company’s Articles of Association. 

(v) 

The instrument appointing a proxy/proxies must be deposited at Symphony Share Registrars Sdn. Bhd., Level 

26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than 

forty-eight (48) hours before the time set for the Meeting. 

Additional Information on Ordinary Resolutions 4 to 6 

Additional Information on the Particulars of the retiring Directors, as required under Appendix 8A of the Listing 

Requirements are detailed out in the Annual Report. 

15 


Statement Accompanying 

Notice Of Annual General Meeting 

Pursuant To Paragraph 8.28 (2) Of The Listing Requirements Of 

Bursa Malaysia Securities Berhad 

The Directors Who Are Standing For Re-election At The 17 th 

Annual General Meeting 

(a) 

(b) 

Directors retiring pursuant to Article 135 of the 

Company’s Articles of Association:- 

• Dato’ Sri Che Khalib bin Mohamad Noh; 

• Tan Sri Dato Lau Yin Pin @ Lau Yen Beng. 

Directors retiring pursuant to Article 133 of the 

Company’s Articles of Association:- 

• Dato’ Fuad bin Jaafar; 

• Encik Mohammad Zainal bin Shaari. 

The details of the four (4) Directors seeking re-election 

are set out in their respective profiles which appear in 

the Directors’ profiles on pages 86 to 90 of this Annual 

Report. 

The details of any interest in the securities of the 

Company or its subsidiaries (if any) held by the said 

Directors are stated on page 4 of the Audited Financial 

Statements of the Annual Report. 

16 


Operational 

Statistics 

Sales Of Electricity (GWh) Group 

Sales Of Electricity (RM’ Million) Group 

Number Of Customers By 

Classification Group 

Industrial 45.40% (39,289.1 GWh) 

Commercial 30.42% (26,323.3 GWh) 

Domestic 18.55% (16,051.8 GWh) 

Agriculture 0.19% (165.6 GWh) 

Mining 0.04% (34.4 GWh) 

Public Lighting 1.07% (926.9 GWh) 

Export 2.82% (2,443.7 GWh) 

Others (TNB LPL) 1.51% (1,310.2 GWh) 

Industrial 41.44% (RM9,275.3 million) 

Commercial 36.08% (RM8,075.5 million) 

Domestic 17.58% (RM3,935.0 million) 

Agriculture 0.22% (RM49.7 million) 

Mining 0.02% (RM5.6 million) 

Public Lighting 0.73% (RM162.4 million) 

Export 1.84% (RM412.4 million) 

Others (TNB LPL) 2.09% (RM468.1 million) 

Industrial 0.3906% (27,613 ) 

Commercial 15.7637% (1,114,230 ) 

Domestic 83.1915% (5,880,250 ) 

Agriculture 0.0111% (782 ) 

Mining 0.0002% (14 ) 

Public Lighting 0.6429% (45,440 ) 

TNB Generation Mix 

(National Grid) 

TNB Installed Capacity (National Grid) 

TNB Installed Capacity including IPPs 

(National Grid) 

Hydro 10.9% (4,945.9 GWh) 

Conventional Thermal (Coal) 36.9% (16,816.3 GWh) 

Conventional Thermal (Oil & Gas) 7.4% (3,361.3 GWh) 

Combined Cycle 41.0% (18,650.4 GWh) 

Gas Turbine 3.8% (1,740.0 GWh) 

Hydro 17.6% (1,910.5 MW) 

Conventional Thermal (Coal) 33.9% (3,670 MW) 

Conventional Thermal (Oil and Gas) 7.7% (840 MW) 

Combined Cycle 25.5% (2,762 MW) 

Gas Turbine 15.3% (1,653 MW ) 

Hydro 9.7% (1,910.5 MW) 

Conventional Thermal (Coal) 18.6% (3,670 MW) 

Conventional Thermal (Oil and Gas) 4.2% (840 MW) 

Combined Cycle 14.0% (2,762 MW) 

Gas Turbine 8.4% (1,653 MW ) 

IPPs 45.1% (8,887.4 MW ) 

17 


Corporate Performance 

Charts 

Profit Before Tax# And Net Profit (Group) 

Profit Before Tax And Net Profit (Company) 

Property, Plant and Equipment (Group) 

# The financials for 2003 to 2005 have not been adjusted for the adoption of FRS 101-Presentation of Financial Statements 

18 


Corporate Performance Charts 

Productivity (Group) 

Maximum Demand Trend 

15,000 

12,000 

19 


20 


Generating National, Economic 

and Social Progress 

21 


We are 

strenghtening 

our initiatives and 

constantly looking at 

ways to improve our 

customer services 

TAN SRI LEO MOGGIE 

Chairman 

22 


Chairman’s Letter 

To Shareholders 

On behalf of the Board of Directors of Tenaga Nasional Berhad 

(TNB), I take great pride in reporting that Financial Year 2007 

was a year of notable achievements for the Group. Despite 

the many challenges faced by the local energy industry for the 

year under review, TNB rose to the occasion. The Group posted a 

record net profit of RM3,608.8 million before foreign exchange 

translation gains. We also exceeded most of our targeted Headline 

Key Performance Indicators (KPIs) and company-wide initiatives. 

These achievements are testament of our commitment to the 

GLC Transformation efforts advocated by the Government. 

The year under review saw TNB recording our best ever Unplanned Outage Rate at 2.2 per cent, 

which surpassed the global industry’s benchmark of 4.0 per cent. Gearing was reduced to 49.9 per 

cent, while Transmission and Distribution losses narrowed to 10.0 per cent. Our Distribution SAIDI 

reduced to a double-digit of 83 minutes, an achievement which deservedly positions TNB amongst 

the best utility companies in the world. 

Our accomplishments in FY2007 will help us maintain our operational and financial performance 

next year as expected by our stakeholders. We shall remain focused on strengthening our financial 

fundamentals, improving our operational performance and providing high quality and reliable 

services to all our customers. 

23 


Chairman’s Letter To Shareholders 

“Lighting up retail malls” 

24 



Financials 

The Group recorded a 14.4 per cent growth in revenue to RM23,320.4 million in 

FY2007 from RM20,384.2 million in FY2006. This was driven by various factors 

such as the implementation of the new tariff structure which took effect in 

the middle of last year, foreign exchange translation gains and a 5.3 per cent 

increase in electricity demand. EBITDA increased to 37.6 per cent compared 

to 35.7 per cent last year while net profit increased by 90.9 per cent from 

RM2,126.9 million to RM4,061.1 million. 

During the year, the Board announced a dividend policy for the purpose of 

providing stable and sustainable dividends to shareholders while maintaining 

an efficient capital structure and ensuring sufficient funding for future growth. 

Under this policy, TNB will distribute 40-60 per cent of the Company’s annual 

free cash flow as dividends. As such, the Board of Directors is recommending 

a final gross dividend of 16.3 sen per ordinary share less income tax of 26 per 

cent to shareholders of the Company. Together with the interim dividend of 

RM632 million, the total dividend declared for this Financial Year amounts to 

an estimated RM1,154.5 million. 

Customer Focus 

Customers being our priority, TNB is proud of our role in providing an integral 

service to the more than seven million households and business customers 

across the country. We are strengthening our initiatives and constantly looking 

at ways to improve our services. 

One of the efforts being taken to improve customer service is by enhancing the 

image and quality of our service outlets, currently known as “Kedai Tenaga”. 

Meanwhile, on-going initiatives are undertaken to train our front line 

employees to be more professional, efficient, courteous and friendly. These 

include our “Service with a Smile” campaign and the introduction of new 

corporate uniforms for our counter staffs. 

An FAQ booklet was also produced to assist and guide our counter staffs 

on prompt and proper response to customers’ enquiries. Access to our 

Call Management Centre (CMC) has also been further expanded with the 

introduction of TNB’s SMS CareLine 15454 which provides another quick and 

easy channel to submit reports on electricity breakdowns to our call center. 

25 



“Lighting up the city” 

Industry Development 

In view of the rising cost of fuels and the challenges facing the power industry, TNB will continue to work closely and 

strategically with the Government and relevant regulatory bodies on the gradual unwinding of the cross-subsidy 

embedded in the tariff structure. This includes the setting up of a mechanism to pass through uncontrollable costs, 

in order to ensure that the impact to the general consumers will be gradual and minimal. 

The Financial Year saw a new Independent Power Producer (IPP) Tanjung Bin joining the energy industry with a 

capacity of 2,100 MW. As the sole purchaser and grid operator in Peninsular Malaysia, TNB will maintain a strategic 

relationship with all IPPs to ensure reliability of supply to customers. 

An equity stake has been offered to TNB to participate in the company involved in the transmission of electricity 

generated from Bakun in Sarawak. Any consideration of TNB’s involvement will be made based on the additional 

capacity requirement in Peninsular Malaysia and also subject to further feasibility studies. 

The Company will continue to support the Government’s target of achieving 500 MW capacity from renewable energy 

sources and to conform with the Kyoto Protocol’s Clean Development Mechanism to promote efficient renewable 

energy development. TNB has agreed to pay a higher price for the renewable energy it purchases. Nevertheless, 

renewable energy purchase agreements will be structured in such a way to ensure fairness and commercial viability 

to all parties. 

26 



Energy Efficiency 

Increasing energy efficiency is one of the efforts undertaken by TNB to reduce wastage and help meet the demand 

for electricity in the country. A continuous and reliable supply of electricity is essential for Malaysia to achieve 

its economic goals under the 9 th Malaysian Plan. Although currently TNB has an excess reserve margin, in time 

this margin will quickly diminish to a figure more reflective of our prudent utility practice. Hence, even though 

encouraging customers to be efficient in their energy usage conflicts with the Company’s earning goals, TNB will 

continue to engage and educate our customers on the importance of using electricity wisely and efficiently. 

Within this context, Demand Side Management (DSM) has become an increasingly important component of the 

resource mix that TNB can apply to meet growing system requirements. Constant dialogues are also conducted with 

our industrial customers on the intelligent use of energy through the adoption of smart energy systems such as 

energy efficient lightings and programmable thermostats. Strategic conservation will help reduce power fluctuations 

and increase stability of the system. 

27 



Corporate Governance 

TNB remains committed to improving our corporate governance practices 

and to ensuring that the highest standards of governance culture are 

practiced throughout the Group. Risk management initiatives within 

TNB will be strengthened continuously to ensure TNB is able to respond 

effectively to the constantly changing business environment and thus 

able to protect and enhance our stakeholders’ value. 

The Code of Ethics, which was launched in July 2007, further enhanced the 

existing framework for effective corporate governance. It encompasses 

best practices, which set the manner in which the Company is governed, 

expressly with high ethical standards and uncompromising integrity. 

The Limits of Authority (LOA) Manual was also established. The LOA 

Manual, which is a fundamental and integral component of TNB’s Group 

Financial Control and Risk Management Framework, contains both 

the monetary and non-monetary limits of authority. The manual will 

promote greater managerial discipline, accountability and transparency 

in the performance of identified operational and management decisionmaking 

activities. 

A whistle blowing procedure has also been established to act as a 

mechanism for internal and external parties to channel their complaints 

or to provide information on fraud, wrongdoings or non-compliance 

to any rules or procedures by an employee of TNB. This procedure also 

functions as an internal control mechanism, allowing for effective action 

to be taken and providing preventive measures to ensure that the 

integrity of the Company is maintained. 

28 



“As we grow, 

we are staying 

true to our roots 

as a company 

embedded in the 

communities we 

serve” 

29 



Prospects and Challenges 

Of late, the price of fuels has increased significantly, increasing the cost for TNB to 

maintain surplus plant capacity, including those operated by IPPs. This scenario poses a 

challenge for us to maintain a high level of service quality demanded by our customers, 

and at the same ensure a fair return to shareholders. TNB will strive to balance this dual 

expectation for the benefit of our customers, our shareholders and the country. 

Our energy reserve margin currently stands at about 44 per cent. This margin will 

comfortably cater to the growth in demand for at least the next three years, without 

needing additional capacity to be connected to the system. This provides an opportunity 

for TNB to focus its initiative on capital expenditure to improve or upgrade our transmission 

and distribution networks. It will also allow for planned outages to be carried out for 

aging generation plants such as Paka and Pasir Gudang. 

In today’s globalised environment, it is no longer sufficient to operate in a single market. 

TNB has diversified its earnings base abroad to help spread business risks and create new 

sources of income. However such ventures will be carefully studied with considerations 

given on its feasibility and the country risk involved. 

30 



Our strategy will also be on adding value to TNB’s core compentencies rather than as an 

equity investor. 

TNB intends to leverage our repair and maintenance skills under TNB Repair and 

Maintenance Sdn Bhd (REMACO) by penetrating promising markets abroad, especially 

in the emerging markets of the Middle East and Asia. 

In Saudi Arabia, TNB’s investment through the consortium Saudi-Malaysia Water and 

Electricity Company Limited (SAMAWEC) in the Shuaibah III Independent Water and 

Power Project (IWPP) is progressing well, as scheduled. It is expected to commence 

commercial operations in July 2009. SAMAWEC is also set to undertake a special project 

to expand the Shuaibah III IWPP’s desalination plant. 

Our wholly-owned subsidiary in Pakistan - TNB Liberty Power Limited - continues to be 

profitable and has already repatriated sponsored loans to TNB. In the Philippines, TNB is 

a making a bid with our partner to operate the Philippines’ power grid. A successful bid 

would allow TNB to have a foothold in the country for more lucrative power generation 

projects in the future. 

TNB’s 20-Year Strategic Plan initiatives to position the Company at the pinnacle of 

global service excellence is backed by our human resource master plan to maximise the 

Company’s human capital potential. One of the key features of the plan is our talent 

pool programme which serves to support succession management. Meanwhile, the ‘SE 

10/10’ acts as a guideline and benchmark to measure our growth. 

31 



32 



Corporate Social Responsibility 

As a leading corporate entity, TNB takes our Corporate Social Responsibility (CSR) very seriously. As we grow, we 

are staying true to our roots as a company embedded in the communities we serve. Our CSR policy is founded on 

supporting initiatives in key areas such as education, arts and culture, sports, the environment and helping the 

underprivileged. For Financial Year 2007, TNB invested RM1.4 billion to uphold our CSR commitments. What I will 

share with you here are just a few of the CSR initiatives that we have undertaken. A comprehensive presentation 

can be found on pages 54 to 61 of this Annual Report. 

TNB continues to support the Government’s plans to enhance the quality of life in rural areas. Under the Rural Street 

Lighting Programme, TNB has embarked on Phase III of the programme which involves the installation of 26,408 

units of 150W streetlights throughout Peninsular Malaysia. This programme helps improve public safety and assists 

in the prevention of social ills and accidents. 

Our solar and wind hybrid power plant projects in remote islands have also made a positive impact on the quality 

of life of the respective communities. In places like Pulau Sibu, off Mersing, Johor, the electricity supply provided 

allows for internet connection, enabling this once remote village to be now connected to the rest of the world. 

These efforts which promote the use of renewable energy to produce electricity, are recognised worldwide. 

Our commitment to the environment has prompted TNB to undertake a long-term project on the funding, 

rehabilitation and preservation of the firefly colony in Kuala Selangor, Selangor Darul Ehsan. TNB’s participation in 

this project through the infrastructures we have built will also help develop the area into a tourist haven, which in 

turn will assist in improving the economic well-being of the local community. 

In sports, the Company is recognised not just for our social role but more importantly for our contribution as a 

catalyst in the development of past and future champions. We are the main supporter for hockey, which is one of 

the few sports where the Malaysian team is highly ranked, internationally. We also take pride in the fact that there 

are six TNB players in the national team. 

In celebrating Malaysia’s 50 th Independence Anniversary, TNB, in the true style of a patriot, was the sponsor of a 

national patriotic song and an accompanying video clip entitled - “Malaysiaku Gemilang, Kibarkan Jalur Gemilang”- 

specially created to commemorate the historic occasion. The song is our way of helping to instil national patriotism 

and of saying Thank You to the nation. 

In TNB, we encourage our employees to be actively involved in voluntary and welfare activities such as gotongroyong 

and special visits to orphanages and welfare homes, besides making charitable donations. This concept 

of doing things together and helping each other in the spirit of goodwill is our culture of giving back to the 

communities in which we operate. 

“TNB continues to support the 

Government’s plans to enhance the 

quality of life in rural areas” 

33 



Recognition and Awards 

TNB takes pride in the various national and international excellence awards that we have received. Asiamoney, in 

its Corporate Governance Poll 2006, recognised TNB as the overall Second Best Company in Malaysia for Corporate 

Governance, the Best Company in Malaysia for Investor Relations and Third Best in Asia (excluding Japan). In addition, 

our Chief Financial Officer (CFO) was named the Second Best CFO in Malaysia. In FinanceAsia’s Best Managed 

Companies Poll 2007, TNB was among the Top Ten in the Best Managed Companies in Malaysia. 

TNB’s Call Management Centre (TNB CareLine 15454) was the recipient of the Gold Award from the Ministry of 

Science, Technology and Innovation, Malaysia in the Best Emerging Contact Centre for the GLC Category, while 

our Institut Latihan TNB–ILSAS was awarded the Human Resource Ministry Award 2007 in the Training Provider 

Category. 

It was also a momentous occasion for TNB when five of our generation stations received awards in the Utilities Sector 

Category at the Malaysian Society of Occupational Safety and Health Award 2006. The stations awarded the Gold 

Award (Class II) were Stesen Janaelektrik Putrajaya, Stesen Janaelektrik Sultan Iskandar, Stesen Janaelektrik Tuanku 

Jaafar and Stesen Janaelektrik Jambatan Connaught, while Stesen Janaelektrik Gelugor received the Silver Award. 

Adding further to the list of accolades received during the year was the National Award for OSH Excellence 2006 

which saw four stations, namely Stesen Janaelektrik Chenderoh and Stesen Janaelektrik Sultan Ismail Petra receiving 

the Gold Award, and Stesen Janaelektrik Tuanku Jaafar and Tenaga National Distribution Division (Johore) receiving 

the Silver Award. 

The Malaysia Chapter of the International Association of Business Communicators also awarded TNB three honours 

in the IABC Silver Quill Awards 2007 for best annual reporting and publication. 

At the time of publishing this report, TNB received another accolade in being shortlisted as one of five finalists for 

the “Power Company of the Year” in the 2007 Platts Global Energy Awards. 

Appreciations 

I would like to thank our shareholders, affiliates, partners and our esteemed customers for their continued support 

and confidence in TNB. My appreciation also goes to the Government of Malaysia and the various regulatory bodies, 

particularly the Ministry of Energy, Water and Communications, and the Energy Commission, for their support and 

assistance. 

My sincere gratitude also goes to the Management led by Dato’ Sri Che Khalib Mohamad Noh and all employees of 

TNB for their striving efforts, dedication and contributions, which have enabled the Company to fulfill its obligations 

to all stakeholders by delivering a record performance for this Financial Year. 

Tan Sri Leo Moggie 

Chairman 

34 



“TNB takes pride in the various national and international 

excellence awards that we have received” 

35 


Ready To Serve 24/7 

36 


37 


What is also 

delightful news is 

that the Group has for 

the past three years, 

reduced its loan 

from RM32.4 billion 

to RM23.9 billion, 

reflecting a RM8.5 

billion or 26.2 per 

cent reduction 

DATO’ SRI CHE KHALIB BIN 

MOHAMAD NOH 

President/Chief Executive Officer 

38 


President / CEO’s 

Review 

For Tenaga Nasional Berhad (TNB), “Powering the Nation” is not just a 

clarion call but an expectation that society and stakeholders expect of us to 

deliver. Our meaningful progress in operations and financials for Financial 

Year 2007 (FY2007), have us well positioned to continue to perform 

in this culture and to accelerate our efforts. TNB will remain focused 

on strengthening our financial fundamentals, improving operational 

performance and efficiency, and providing a high quality and reliable 

service to our customers. 

For the Financial Year under review, the Company has 

exceeded the targets for most of its Key Performance 

Indicators. For the first time, our Distribution’s System 

Average Interruption Duration Index (SAIDI) has been 

reduced to a double-digit of 83 minutes, from 104 

minutes the previous year. This remarkable achievement 

has ranked the Company as one of the best utility 

companies in the world. TNB also achieved Generation 

Unplanned Outage Rate (UOR) figure of 2.2 per cent, 

which places us at par with or better than some power 

producers internationally. 

Despite the many challenges confronting the local 

energy sector, the Company’s financial performance 

improved considerably for FY2007. Our outcomes were 

boosted by profits due to the tariff review, unrealised 

forex gains and improved collections. 

As a result, the Group’s revenue increased to RM23,320.4 

million in FY2007 compared to RM20,384.2 million 

recorded in FY2006, reflecting an increase of 14.4 per 

cent. With the increase, the Group also chalked in a 

profit after tax of RM4,061.1 million, almost double 

from the previous year’s figure of RM2,126.9 million. 

Apart from registering its highest profit ever, what 

is also delightful news is that the Group has for the 

past three years, reduced its loan from RM32.4 billion 

to RM23.9 billion, reflecting a RM8.5 billion or 26.2 

per cent reduction. During the same period, we have 

also managed to collect RM553 million from our major 

delinquent debtors. Due to the various cost management 

initiatives undertaken by the Management, the 

Company has realised around RM2.4 billion in terms 

of value creation since 2004. TNB also saw increasing 

foreign investors’ interest in its shares, when foreign 

shareholding reached 28.4 per cent in May 2007, its 

highest since the Company’s privatisation. 

Given the continued strong financial outcomes, the 

Company is poised to undertake appropriate growth 

opportunities within its core business areas. 

39 


President / CEO’s Review 

Financial Performance 

Revenue 

Operating 

Expenses 

EBITDA 

Net Profit ex 

Forex Trans. 

32.1 

33.7 

31.2 

35.7 

37.6 


Gearing ROA Interest 

Coverage 

Basic EPS 

80.8% 

40 



Strategising Towards Service Excellence 

There is a big picture to the future of TNB. We have a well-focused 20-year strategic action plan to realise 

our goals and aspirations. When the T7 Strategy was first implemented in 2002, it was designed for the 

purpose of transforming and inculcating an effective goal-oriented culture. T7 laid the foundations for 

TNB to be amongst the best performing companies in Malaysia. That phase was successfully completed by 

the close of our Financial Year ended 31 August 2007. Now the excitement and momentum of our next 

phase continues with the ‘Service Excellence 10/10 (SE 10/10)’ programme roll-out. In this stage, the SE 

10/10 aims to position TNB not only as the nation’s best, but the region’s as well, by 2010. Our long-term 

goal by 2025 is to command global leadership in the relevant business areas, and to establish a reputation 

as a strong business partner and shareholder value creator. Ultimately, TNB desires to be acknowledged 

as amongst the most admired companies in the world. 

Three strategic themes underpin the SE 10/10. The first is by building customer and stakeholder loyalty, 

the second by building a strong foundation for service excellence and operations effectiveness, and the 

third by building a strong platform for business expansion, locally and globally. 

TNB’s drive to reach its goals is not a sprint to a destination. Ours is a strategic plan that requires 

perseverance and a focused and unwavering commitment to continuously improve, to become even 

stronger and to deliver on results that our stakeholders expect of us. 

41 



42 



Focusing on Customer Satisfaction 

Delighting customers is a key priority in TNB. Companies with satisfied customers consistently 

perform better. They also attain a more positive image in the eyes of society. It is with this in 

mind and following the 2006 tariff review that TNB is intensifying efforts in the upgrading 

and maintenance of its existing infrastructure for the purpose of ensuring supply reliability to 

customers. Networks will be improved by replacing old cables, switchgears and transformers; 

building new substations, upgrading transmission systems; building new regional control 

centres and installing the Geographical Information System (GIS) to assist in asset maintenance 

and security. 

The implementation of the RM399 million Supervisory Control and Data Acquisition and 

Distribution Automation (SCADA/DA) Project is expected to improve and reduce SAIDI to a 

lower double-digit. This is achievable through the system’s ability to identify fault location, 

isolate the fault and mobilise technical staff or carry out remote switching to restore supply to 

our customers. 

TNB is constantly evolving with new technologies to automate the various processes within 

the Company. These include the Enhanced Customer Information Billing System (e-CIBS) which 

enhances our customer management and billing systems, and an e-Application System which 

allows our customers to make online applications for the new supply of electricity. Other 

customer-related applications currently in use are the Customer Feedback System or Sistem 

Maklumbalas Pelanggan (SMP), Enterprise Wide Resource Management System (EWRM), e- 

Payment Service and the TNB Outage Management System (TOMS). 

The Customer Feedback System (SMP) has also been upgraded to provide an automated tool 

in handling customer complaints. In addition, our Call Management Centre (CMC), Electric 

Eyes and the Prime Customer Management Programmes are interfacing with SMP to form 

a structured web-based customer complaints handling system. The PQMS (Power Quality 

Monitoring System), meanwhile, identifies real time power quality incidents on the system and 

the information is accessible nationwide to allow for remedial action as and when required. 

Seminars and dialogues with leaders and representatives of industries, businesses and 

Government Agencies, also form part of the whole process of handling customer complaints. 

By managing the three different channels of customer complaints through the PAP, we are able 

to monitor, report and evaluate the feedback. Integrating customer information on a single 

platform is a step towards achieving better Customer Relationship Management (CRM). 

TNB is working closely with the Ministry of Energy, Water and Communications and the relevant 

regulatory agencies to establish a Customer Charter. This is aimed at improving the quality of 

services rendered by TNB and further strengthening our commitment in fulfilling customer 

needs, expectations and satisfaction. 

43 


Ensuring Supply Reliability 

In order to ensure adequate system capacity and supply reliability, TNB continues to make huge 

investments in electricity supply systems. At the same time we will continue to ensure that additional 

generation capacity is integrated into the system in a timely and efficient manner. 

In 2007, there were two major on-going Generation projects- the PD2 Combined Cycle Gas Turbine 

Project and the Cameron Highlands Rehabilitation Project. The PD 2 project at Tuanku Jaafar Power 

Station, which will see the installation of a 750 MW gas-fired combined cycle plant, is scheduled for 

completion by December 2008. Currently, 85 per cent of the project has been completed. The Cameron 

Highlands Rehabilitation Project is meant to rehabilitate a 40-year hydro scheme. Works being done 

involve the de-silting of the Ringlet Lake to recover live storage volume and the project is scheduled for 

completion in December 2008. 

Currently, TNB is also implementing system improvements to strengthen its network and improve 

supply security in Kuala Lumpur and Selangor Darul Ehsan. The ongoing RM400 million Central Area 

Reinforcement Project (CAR) is aimed at upgrading transmission and distribution systems within the Klang 

Valley. The Chubadak 275 kV substation near Gombak, which is part of the Central Area Reinforcement 

44 



(CAR) Project, was completed and commissioned in May 2007. The CAR Project, which will strengthen 

the electricity transmission systems around Kuala Lumpur and the Klang Valley, continues in progress 

and is targeted for completion in December 2007. The 500 kV transmission line, which connects the 

Jimah IPP Coal Fired Power Station to Lenggeng Substation and to Olak Lempit Substation is well under 

construction and is targeted for completion by December 2007. 

In addition, other system improvement projects that are underway include the replacement and 

upgrading of the Perak 22 kV distribution system, and the replacement of old distribution switchgears 

and transformers across Peninsular Malaysia. These projects are expected to be ready within the next 

few years. 

With fossil fuel cost increasing significantly over the last few years, TNB needs to continuously identify 

and harness all possible hydro power potential in Peninsular Malaysia and Sarawak. 

In preparation for the near future, TNB has also embarked on the engineering design for two new 

hydro power plants in Ulu Jelai (372 MW) and Hulu Terengganu (212 MW). These two hydro power 

plants are projected for completion in year 2013/2014. 

45 



Benchmarking Performance 

In an effort to enhance performance measurement, Divisional Accounting was introduced within TNB in FY2007 

by creating separate financial statements for TNB’s core businesses (Generation, Transmission and Distribution). 

The Divisional Accounting framework ensures that costs are allocated in a consistent and equitable basis to the 

respective units and also helps to identify enhancements, where applicable. In addition, this framework makes it 

possible for TNB to benchmark with other utilities, in terms of cost allocation amongst our power plants. The cost 

and revenue elements used for the benchmarking have to be comparable in common units of measurement. 

TNB has always recognised that proactive supervision of power plant performance is essential towards the success of 

TNB’s business objectives. As a pivotal player in the power industry, it has been in the Company’s commercial interest 

to monitor the performance of all our power plants and to ensure that electricity supply is delivered with optimum 

efficiency and economy without compromising on service quality. TNB has established benchmarks for our power 

plants and is systematically keeping track of outage rates and monitoring the availability of each generating unit. 

Detailed procedures to encourage professionalism and efficient operations that will support our business discipline 

are therefore imperative. 

Towards this end, TNB’s Transmission and Generation Divisions have resorted to Service Level Agreements (SLAs) 

for the purchase of power. SLAs would be utilised as benchmarks for all power plants owned by TNB with each of 

our thermal power stations committing to clear performance targets. These SLAs – with concepts and conditions 

typical of Malaysian Power Purchase Agreements – reinforce TNB’s commitment to high performance standards 

and transparency. Today, all thermal power plants in the TNB Generation network are measured not only by their 

technical achievements, but by their financial performance as well. 

As is typical in Power Purchase Agreements with IPPs, the performance of each power plant will be closely monitored. 

The technical and financial performance of the power plants will be assessed, thus providing valuable input for 

decision making and resource allocation. 

46 



Capacity Building 

Capability development is crucial for TNB. As we explore new frontiers globally, the Company will require an abundant 

pool of able leaders to carry the torch for its long-term strategic plans and to keep TNB on par with the competition. 

The talents assessed under the succession management initiative in 2006, were reviewed in 2007. Currently, a total 

of 188 talents from a group of 227 assessed have been formally included in the talent pool. An additional 103 

executives were evaluated for entry into the pool. Altogether, there are now 330 executive candidates in the talent 

pool for consideration into key leadership positions. 

In our effort to further build the Company’s human capital and retain technical expertise, a Technical Expert was 

promoted to Specialist, whilst 16 new Technical Experts were appointed under the Specialist Career Path (SCP) 

programme in FY2007. This brings the total number of expertise in our SCP pool to date, to two Specialists and 20 

Technical Experts. A similar scheme, known as the Specialised Technician Career Path, was introduced for the nonexecutives, 

resulting in the creation of 38 Specialised Technician positions. 

In increasing TNB’s competency levels, 123 Development Programmes and 1,227 Mandatory Training Programmes 

were organised for both Executives and Non-Executives. During the year under review, the Company spent more 

than RM72 million for staff training and developmental programmes, including sponsorship for further studies 

locally and abroad. 

47 



Prioritising Safety and Health 

Safety is a priority at TNB. As such, the Company has 

established a comprehensive Occupational Safety and 

Health (OSH) Management System, aptly known as 

the Safety Excellence Management System (SEMS). 

We have increased the number of qualified Safety 

and Health Officers to ensure TNB’s readiness for 

any crisis or emergency situation. Second level Safety 

Inspectors and third level Safety Representatives were 

also appointed to ensure OSH performance at the far 

end of the job chain is monitored and reported to the 

management. 

Alertness and readiness for any crisis and emergency 

situation is a key factor in the effort to preserve life and 

assets. Priority has therefore been given to planning 

for eventualities. New risks were identified and efforts 

were taken to ensure that an immediate response is 

readily available should any disaster arises. 

All staff are required to be exposed to OSH and to attend 

training while practitioners are required to impart 

OSH knowledge. Continuous training programmes, 

seminars, conferences, symposiums and workshops 

were identified for all levels. This is to ensure that 

participants gain exposure on new developments in 

OSH. Contractors working in TNB are also educated on 

the importance of OSH. An NIOSH-TNB Safety Passport 

was developed in a joint effort with the National 

Institute of Occupational Safety and Health (NIOSH) to 

ensure contractors are aware of the basic requirements 

of occupational safety. 

Equally important was electrical safety education for 

members of the public. Assistance was provided to 

schools, non-governmental organisations, industries 

and various associations following their requests for 

safety information on the proper use of electricity. 

Safety campaigns were also carried out in our effort to 

optimise information dissemination. 

“Ensuring safety at work” 

48 



Enhancing Research and 

Development 

TNB continued to enhance on our intellectual capacity 

and core businesses through TNB Research (TNBR), an 

approved Research and Development (R&D) company 

and the research arm of TNB. The key role of TNBR 

is to enhance TNB’s core businesses through R&D, 

consultancy services, laboratory testing and quality 

assurance. Its research and development findings are 

widely applied to improve efficiency, availability and 

reliability of TNB’s electricity supply network. 

During the year under review, 26 research and 

development projects worth RM30.5 million were 

completed for TNB’s core businesses and support 

divisions, including SESB. The projects addressed 

different areas of impact such as reliability, efficiency, 

environment, technological evaluation, quality 

assurance and cost savings. As the Quality Assurance 

agent for the Company, TNBR was also responsible for 

ensuring that all equipments supplied to TNB met with 

the necessary technical and functional standards. 

TNBR is registered with the Department of Environment, 

Malaysia, as an approved body to conduct Environment 

Impact Assessment studies. TNBR is also engaged as 

a consultant in energy-related works, especially on 

Renewable Energy, by the Ministry of Energy, Water 

and Communications, the Malaysia Energy Centre and 

universities. Scientific services are a revenue earner and 

the biggest contribution comes from laboratory testing 

and research works. TNBR has successfully taken over 

some of the technical works previously undertaken 

by foreign consultants. In areas such as Material 

Engineering, High Voltage Diagnostics, Lightning and 

Hydro Plant Optimisation, TNBR has developed its 

own intellectual capital to meet the technology and 

engineering challenges faced by the core divisions in 

TNB. 

49 



Towards Geographical Expansion 

TNB will continue to explore opportunities abroad. Our wholly-owned subsidiary, TNB REMACO Sdn Bhd has entered 

into a synergistic alliance with Turbocare SpA of Italy to collaborate technically and commercially in order to serve 

local and regional market demands for services related to our products. Through this alliance, we are working 

together to offer better service at a competitive price to the target market. This alliance will also enhance TNB 

REMACO Repair Centre’s capabilities and hence reduce production costs through localisation of advance technology 

repair procedures. This collaboration is an important achievement for TNB in our quest to expand our business 

within Malaysia and in the region. 

TNB is continuously exploring other opportunities that could potentially lead to partnerships and cooperation 

with international counterparts in utility services around the region. In building relationships with other utility 

companies, TNB plans to sign an MOU with the Korea Electric Power Corporation. This MOU will encompass technical 

cooperation activities in identified areas, including the exchange of information and personnel on subject areas 

mutually agreed by both parties. 

During the year under review, TNB, through its Sultan Ahmad Shah Training Institute (ILSAS), successfully completed 

its training services and cooperation activities with power utility companies in Vietnam, Yemen and Mongolia. This 

is an added plus to ILSAS’ track record of providing training services to various utilities in this region, including Laos, 

Indonesia, Thailand, Vietnam, Nepal, Egypt and Pakistan. 

In Saudi Arabia, TNB’s investment through the consortium undertaken by Saudi-Malaysia Water and Electricity 

Company Limited (SAMAWEC) in Shuaibah III Independent Water and Power Project (IWPP), is progressing well as 

scheduled. As of August 2007, 68.9 per cent of the overall construction of Shuaibah III has been completed. The 

USD2.5 billion project is scheduled to commence commercial operation in July 2009. 

Following the success of Shuaibah III, the Government of Saudi Arabia has requested SAMAWEC to undertake a 

special project to expand the Shuaibah III IWPP’s desalination plant by 150,000 m 3 /day over the planned capacity of 

880,000 m 3 /day. The USD232 million expansion project, which utilises the reverse osmosis desalination technology, 

is located at a site adjacent to the main project and is expected to commence commercial operation in February 

2009. 

50 



51 



Looking Ahead 

The journey ahead will be rough but we are up for the challenge. Profitability 

for the coming year will be affected by additional IPP capacity payments from 

new plants coming on-stream and increasing fuel, metal and equipment prices. 

In this respect, TNB will continue to adapt to changing market demands and 

challenges, and to find solutions to counter balance possible erosion on its 

revenue. 

Managing fuel costs in the future will be the biggest challenge for TNB. For 

instance, coal prices in the international market have rocketed for the past few 

years and is expected to continue to increase. It is unrealistic to expect local gas 

prices to remain as cost of production has been rising while local sources are 

depleting. At the same time, there is a continuing need to invest in the system’s 

improvement to ensure reliability and security of supply. 

For the year under review, our coal consumption amounted to 8.7 million 

metric tons. This figure is estimated to be higher in the coming year at 14.1 

million metric tons. Nevertheless, we have managed to hedge 49 per cent of 

the requirements for 2008. TNB will continue to discuss and negotiate with the 

relevant parties/authorities on any issues relating to any potential increment in 

the price of gas and to develop solutions to gradually unwind the cross-subsidy 

embedded in the tariff structure. We see this possibility through a proposed 

new tariff framework that will allow the passing of any increase in fuel costs to 

consumers. We will also actively pursue the use of alternative energy sources, 

new technology and practices to keep costs down, while remaining alert for 

new opportunities, locally and globally. 

Several value-creation initiatives are already in place to enhance the Company’s 

profitability in 2008. We see our strategy continuing to produce long-term 

growth to create significant value to our shareholders. We have set the target 

to be amongst the most admired companies globally by 2025. It is a tall order, 

but we are up to the challenge and we are making good progress. 

Acknowledgements 

Our appreciation goes to the Government of Malaysia, Ministry of Energy, 

Water and Communications, Ministry of Finance, Ministry of International Trade 

and Industry, Energy Commission, Malaysian Industrial Development Authority 

(MIDA) and other agencies for all assistance rendered. Our thanks must also go 

to our valued shareholders and customers for their loyalty and trust, which we 

very much appreciate. 

Our record performance this year would not have been achieved without the 

dedication of our employees and the pride they have in their work. Hence, I 

would like to record my deepest appreciation and gratitude to the Board of 

Directors and staff of TNB for their dedication and constant hard work that has 

kept us in the forefront of Corporate Malaysia. We’ve Got the Power – to serve, 

to deliver, to excel. 

DATO’ SRI CHE KHALIB BIN MOHAMAD NOH 


52 


53 


Corporate Social 

Responsibility 

54 




Tenaga Nasional Berhad (TNB) has powered the length and breadth of the nation for decades 

through the generation, transmission and distribution of electricity but its social responsibility 

has been equally far reaching to the public. 

TNB’s Corporate Social Responsibility (CSR) policy is founded on philanthropy in key areas such 

as education, sports, the environment and helping the underprivileged. As a leader in the 

country’s power industry, we realise this position requires TNB to be the catalyst for change 

when it comes to CSR. Because of this, TNB has always demonstrated a diligent response to offer 

its commitment to philanthropic causes and corporate sponsorships. For the Financial Year, TNB 

spent RM1.4 billion to uphold its CSR policy, which made it one of the largest contributors in 

the country. 

The far reaching impact of TNB’s CSR policy was acknowledged by the Government who has 

singled out our policy as the basis for the pilot study on CSR initiatives for the Silver Book on 

GLCs, launched in September last year. 

It is important to note that our CSR efforts lie deep beyond philanthropic or sponsorship 

activities. The major CSR contribution is in fact not easily visible to the eyes of the public. TNB’s 

integral role to deliver electricity to the public efficiently and at the lowest rate possible is by 

far a single most important CSR activity undertaken by the Company. Providing a reliable and 

competitive electricity supply, which require tremendous effort and resources by the Company, 

benefit all Malaysians regardless of where they live or whatever level of their income. 

TNB also recognises the need and the relevance of the Government’s policy for the country’s 

ongoing development, and the various initiatives we have undertaken to deliver safe, reliable 

and secure electricity to customers for their private and economic needs, are testament to our 

commitment to ensure society will gain and benefit from these developments. With this in 

mind, TNB strongly supports government driven policies such as the 9 th Malaysian Plan and its 

aims to continue powering the country’s vision of becoming a fully developed nation by the 

year 2020. 

The need to support the Government has been translated into the Company’s battle cry of 

“Powering the Nation”, which sets the tone for our CSR activities. 

55 



Powering Business Excellence 

As a major player in the energy sector and a responsible corporate citizen, TNB is committed 

to play an important role in nation building. TNB’s most integral CSR policy is in its core 

businesses and operations where it ensures delivery of adequate, safe, reliable and continuous 

power supply that is critical to the nation. To deliver this commitment, TNB must have reliable 

transmission and distribution systems that can fulfill the demand of electricity at the highest 

level of consumption or peak demand. 

This is done through having a reasonable reserve margin, which could sustain demand for 

electricity for industries, commercial operations as well as residences. Reserve margin is important 

to ensure that factories, shopping complexes continue to have its electricity supply despite 

the country experiencing the hottest month or any factors that may increase the demand for 

electricity. 

To ensure this delivery, TNB has also on the average invested some RM4 billion annually for new 

infrastructures such as the building of new transmission lines, power plants or substations. 

56 



Powering Communities 

Despite TNB’s efforts to deliver electricity to every nook and hidden corner of the country, there 

are some areas which remain unreachable to the common electricity grids which traverse the 

nation. In these remote places, the only means to reach them is through an independent solar 

hybrid power plant that runs on diesel in addition to sun rays tapped from solar panels. 

TNB is responsible for the maintenance and operations of these stations in remote areas as 

well as offshore islands at a subsidised rate. Besides providing electricity to the rural areas, 

our efforts are recognised world wide for promoting the use of renewable energy to produce 

electricity. 

More recently, TNB added a wind turbine technology to the hybrid plant, the first project 

being the Wind/Solar Hybrid plant installed in Pulau Perhentian Kecil in Terengganu. The plant 

harnesses the strong wind presence on the island to power its two 100 kW wind turbines. The 

technology not only makes the plant more efficient, it also consumes less diesel, thus reducing 

possible pollution sources from fossil fuel. 

These efforts have made a positive impact on the quality of life for those in the community 

it serves. In places like Pulau Sibu off Mersing, round the clock electricity supply allows for 

internet connections that connects the once remote village to the rest of the world. In some 

of the islands including Pulau Perhentian, the availability of 24-hour electricity has allowed 

tourism activities to thrive. Electricity enables tourism operators to upgrade their chalets into 

full-scale resorts, thus allowing more high-end tourist arrivals and bringing more income to the 

local community. 

Other CSR activities for the communities are also prevalent in all TNB divisions and subsidiaries. 

These activities include raising funds for flood victims, providing tuition for underprivileged 

children, and visiting homes for the disabled and orphanages. In addition, each of the respective 

departments and units in TNB implement CSR initiatives through direct contacts with the public. 

These initiatives are either structured, or built in into their daily activities, or taken by the group 

on an ad-hoc basis to help needy causes. 

57 



Powering Education 

TNB believes that education can turn dreams into 

realities. TNB has a very strong tradition in producing 

world-class scholars and researchers through its 

education and scholarship programmes. Many of the 

current business leaders in the country are TNB scholars 

and have enjoyed the education provided by the 

Company under its scholarship programmes. 

Over the years, TNB has strengthened this role and is 

now actively involved in not only providing scholarships, 

but also in providing education through Universiti 

Tenaga Nasional (UNITEN) and Institut Latihan Sultan 

Ahmad Shah (ILSAS). 

As an institute of higher learning, UNITEN has an 

immense and important responsibility in helping the 

Government produce well rounded individuals. The 

University also gives primary focus on research and 

development activities which encourage and develop 

the culture of innovation and competition among 

the academic staff as well as its students. Strategic 

cooperation between UNITEN and the industrial sector 

provides access and opportunities for students and 

academic staff to master knowledge as well as scientific 

and technical expertise that are relevant with industrial 

and market place needs. 

Yayasan Tenaga Nasional (YTN) as a trust body for TNB, 

provides sponsorships through scholarships and study 

loans to deserving students. For FY2007, YTN provided 

loans amounting to RM47 million for top students to 

pursue their tertiary education at local and worldrenowned 

universities overseas as an effort to build a 

pool of good scholars for TNB and the country. 

YTN was also involved in community welfare 

development projects, such as the Track to Excellence 

Programme (Program Jejak Kegemilangan) and the 

Smart Youth Camps Programme (Program Kem Remaja 

Bistari). In the Track to Excellence Programme, 140 

good students from rural areas and underprivileged 

families from across Malaysia got an unprecedented 

chance to visit UNITEN, exposing them to campus life 

and inspiring them to seek great achievements. The 

Smart Youth Camps are essentially education camps for 

the children of TNB employees as well as orphans. 

TNB also embarked on various initiatives to improve 

language proficiency among the students in rural areas 

throughout the country by supplying, for example, 

mainstream newspapers to the schools. All these 

activities were undertaken to increase the performance 

of students in an effort towards making Malaysia a 

Knowledge Nation. 

58 



Powering Champions 

TNB regards sports in not just its social role but more importantly as a catalyst to develop future champions. 

TNB’s involvement in sports through the years is in line with the Government’s aspiration to produce top 

athletes and for Malaysia to be a top-notch sporting nation. 

TNB is the main supporter for hockey, which is one of the few sports which the Malaysian team is highly 

ranked in the world. For FY2007, TNB contributed RM1.1 million to the Malaysian Olympic Council which 

was channeled to the Malaysian Hockey Federations (MHF), the body tasked to develop hockey in the 

country. 

TNB is the main sponsor for the Sultan Azlan Shah Cup hockey tournament, which feature top hockey 

teams from around the world. TNB is also the title sponsor for the TNB-MHL Hockey League, which is 

organised by the MHF. The TNB team which competed in the Division 1 of the League emerged as Overall 

Champion and won the inaugural TNB Cup in 2007. Six TNB players have also been selected to play for 

the national team. 

To strengthen its involvement in hockey, TNB is working with several state hockey bodies to develop the 

sports further. It has set up a Special Sports Unit, to conduct specialised hockey skills to rising hockey stars. 

The project is expected to teach at least 2,000 talents and is aimed at exposing specific hockey skills that 

are important for the development of the game. 

Besides hockey, TNB will also be the major sponsor for the 2008 Malaysian Game (SUKMA) which will be 

held in Terengganu. TNB is also the main sponsor for cricket in the country. 

59 



Powering a Green Nation 

As a power producer and distributor, TNB’s nature of operations requires the Company to take 

great interest in its environment. As a principle, TNB embraces the notion that any project or 

development undertaken by TNB must blend and not be in conflict with the environment it 

operates in. 

TNB takes pride of its corporate responsibility in ensuring that its projects comply with the 

strictest world environment standard. A recent example was the construction of the coal 

powered Stesen Janakuasa Sultan Azlan Shah, which has adopted a clean coal technology. 

This technology ensures that the plant does not emit harmful discharge to the environment, 

thus helping to conserve nature in the surrounding areas. The grounds of TNB’s associate 

independent power producers, Kapar Energy Ventures, has also now become one of the main 

stops for migratory birds which are attracted to the warm water and abundance of food in the 

plant’s ash pond. 

In the protection and conservation of environment, TNB’s major contribution can be seen in 

the Company’s efforts in the preservation of the firefly colony in Kampung Kuantan in Kuala 

Selangor. This species of firefly flickers in unison creating a natural lightshow after dark along 

the Kuala Selangor riverbank. Over the years, TNB has contributed around RM1.5 million to 

help in the protection of the fireflies. 

TNB’s contribution to the conservation of the area goes beyond monetary value. Visitors who 

come provide a sustainable livelihood to the boatmen, and if the boatmen could live comfortably 

on the income derived from tourism activities, there is a strong chance that TNB’s conservation 

efforts would be sustained. 

In the firefly conservation project, TNB’s subsidiary, TNB Research has been involved in conducting 

studies on the lampyridae firefly. The research will cover the study of the entire ecology of the 

insects and when completed, is expected to provide a scientific basis for future conservation 

efforts of the species and its environment. 

60 



61 


Statement Of 

Corporate Governance 

Building a strong governance foundation and undertaking continuous 

efforts in it’s improvement, remain the focus of the Board of Directors 

(the Board) of Tenaga Nasional Berhad (TNB or the Company) 

to safeguard and promote the interest of all stakeholders. This 

improvement begins with the board structure itself, as for the year 

under review an additional member with a technical engineering 

background was brought onto the Board. His knowledge and 

experience would serve the Board well in assessing and evaluating 

technical issues before decisions are made. 

The existing framework for effective corporate 

governance is further enhanced with the introduction 

of the Code of Ethics which was launched on 23 July 

2007. It encompasses best practices which set the 

manner in which the Company is governed, expressly 

with high ethical standards and uncompromising 

integrity. The Code of Ethics also served to complement 

the Company’s current policies and procedures. In 

order to ensure its effective application, the Code 

is incorporated in the Integrity and Ethics Training 

Module conducted in house by the Company’s training 

centre, ILSAS. 

A Whistle Blowing Procedure was established to provide 

a platform and to act as a mechanism for internal and 

external parties to channel their complaints or to 

provide information on fraud, wrongdoings or noncompliance 

to any rules/procedures by the employee 

or management of the Company. An appropriately 

managed whistle blowing system functions as an 

internal control mechanism allowing for effective 

action to be taken and to provide preventive measures 

in order to ensure that the integrity of the Company is 

maintained. 

A compilation of the existing Limits of Authority 

(LOA) for ease of reference and compliance was 

made. The LOA which is updated from time to time 

contains both the monetary and non-monetary limits 

of authority for recommending and approving the 

Company’s operational and management decision 

making activities prior to execution. The LOA is the 

fundamental and integral component of the Company’s 

Group Financial Control and Risk Management 

Framework. As a pivotal internal control mechanism, 

the LOA will promote greater managerial discipline, 

accountability and transparency in the performance of 

the identified operational and management decisionmaking 

activities. 

Initiatives that were identified under the Government 

Linked Companies Transformation Programme 

continues to progress throughout the year under 

review. For example, procurement guidelines and 

best practices as well as the TNB Procurement Code 

of Conduct were put in place as recommended by the 

“Red Book”. The improved procurement method will 

have the potential to realise value with significant 

savings and to also provide quality products, hence the 

ability to deliver better quality services. 

62 


Statement Of Corporate Governance 

During the year, the Board had announced a dividend policy for the Company for the 

purpose of providing stable and sustainable dividends to shareholders while maintaining 

an efficient capital structure and ensuring sufficient of funding for future growth. This 

commitment can be realised by the Company through efficient financial management 

coupled with quality and reliable services. 

The Company has earned recognition from Asiamoney in its Corporate Governance 

Poll 2006 as the overall second best company in Malaysia for Corporate Governance, 

the best company in Malaysia for Investor Relations and third best in Asia. In addition, 

the Chief Financial Officer (CFO) has also been proclaimed as the second best CFO in 

Malaysia. 

To add to the list of accolades that TNB has received, a recent FinanceAsia Best Managed 

Companies Poll 2007 has voted TNB as among the top ten (10) best managed companies 

in Malaysia. 

Essentially, the good governance culture in TNB begins with an effective Board and 

Management team which are transparent in their action and accountable throughout 

the Company. Both teams are firmly grounded in sound business ethics particularly in 

implementing the strategic business initiatives. Sufficient checks and balances in the 

management structures, particularly in finance and operations, provide an effective 

system of internal controls while risk management systems and actions help to mitigate 

potential risks. 

The Board of Directors of TNB remains committed to improving corporate governance 

practices to ensure that the highest standards of corporate culture are practiced 

throughout the Group in the interest of shareholders. The Board is pleased to report to 

the shareholders on the manner TNB has strengthened its application of the principles 

of corporate governance and on the adoption of corporate governance best practices 

laid down in the Malaysian Code on Corporate Governance (the Code). 

63 



(A) 

THE BOARD OF DIRECTORS 

Roles and Responsibilities 

The Board remains resolute and upholds its responsibility 

in governing, guiding and monitoring the direction of 

the Company with the eventual objective of enhancing 

long term sustainable value creation aligned with the 

interests of shareholders, while taking into account the 

interests of other stakeholders. The Board is committed 

to ensuring good corporate governance practices 

are well applied inline with the six (6) principal 

responsibilities outlined in the Code that operate 

within a set of governance as set out below:- 

Composition of the Board 

The Board of Directors of TNB consists of ten (10) 

members comprising of one (1) Non-Executive 

Chairman, one (1) Executive Director, seven (7) Non- 

Executive Directors and one (1) Alternate Director. 

The diverse background of members in various fields 

such as financial, legal, engineering, management and 

public administration provide considerable depth and 

wisdom of knowledge, expertise and experience to the 

Board of TNB. A brief profile of each Director is set out 

on pages 86 to 90 of this Annual Report. 

Process of Appointment to the 

Board 

Appointment to the Board of TNB is made either by 

the Special Shareholder pursuant to Article 5(2) of the 

Company’s Articles of Association or by the Board of 

Directors pursuant to Article 133 of the Company’s 

Articles of Association. 

The Board Nomination & Remuneration Committee 

(BNRC) scrutinises the sourcing and nomination of 

suitable candidates for appointment as Director in TNB 

and its subsidiary companies. This Committee will ensure 

the selection of Board members with the right skill set, 

expertise and industry knowledge thus strengthen the 

composition of the Board and contribute significantly 

to the effectiveness of the Board. 

The Board puts in place long term strategic plans and 

reviews the short and medium term performance on an 

annual basis. This is to align the long term strategic plans 

and directions with current demand of the customers 

and change in the economic outlook. Monitoring by 

the Board on the achievement of the business targets is 

made quarterly with monthly management reporting 

on financial and technical performance updates. 

The roles and responsibilities of the Chairman of the 

Board and the President/Chief Executive Officer are 

distinct and separated. The Chairman is responsible for 

the conduct of the Board and ensures that the Board’s 

discussions are conducted in a manner that all views 

are taken into account before a decision is made. 

The President/Chief Executive Officer has the general 

responsibility for running the business on a day-to-day 

basis thus ensuring a balance of power and authority 

so as to provide a safeguard against the exercise of 

unfettered powers in decision-making. 

Accountability is part and parcel of governance in TNB. 

The Board is accountable to the shareholders, and the 

Management is accountable to the Board. The Board 

ensures that the Management acts in the best interests 

of the Company and its shareholders by working to 

enhance the Company’s performance. 

There is a clear division of responsibilities between 

the Board and the Management. The President/Chief 

Executive Officer supported by his team of Management 

through Committees namely the Group Executive 

Council Committee, Group Executive Management 

Committee, Group Management Tender Committee, 

Energy Supply Committee and Group Risk Management 

Committee. These Committees are responsible for 

the implementation of Board resolutions, overall 

responsibilities over the day-to-day operations of the 

Group’s business and operational efficiency. 

64 



Operation of the Board 

The Board has established five (5) Board Committees. The Board has entrusted certain responsibilities to the Board 

Committees, which operate within clearly defined written terms of references on which the Committees deliberate 

the issues on a broad and in depth basis before putting up any recommendation to the Board. A diagram outlining 

the main Committees involved in the decision making process is set out below :- 

Board of Directors 

Board Committees 

Management Committees 

Board 

Audit 

Committee 

Board 

Tender 

Committee 

Group 

Executive 



Management 

Committee 

Board 

Disciplinary 

Committee 

Group 

Risk 

Management 

Committee 

Board 

Nomination 

and 

Remuneration 

Committee 

Board 

Finance 

and 

Investment 

Committee 

Group 

Management 

Tender Committee 

Energy Supply 

Committee 

The Board Meetings 

The Board meetings are scheduled in advance and during the Financial Year ended 31 August 2007, 17 Board 

Meetings were convened to deliberate and consider a variety of significant matters. These include reviews on business 

plans, budgets, quarterly financial results, risk assessments, key performance indicators of the Senior Management, 

debt restructuring and other corporate proposals such as foreign investment exercise, overall performance of the 

Company and the subsidiary companies as well as other related business matters that require the Board’s deliberation 

and due approval. 

Minutes of proceedings and resolutions passed at each Board and Board Committees Meetings are kept in the 

statutory register at the registered office of the Company. In the event of a potential conflict of interest, the 

Director in such a position will make a declaration to that effect as soon as practicable. The Director concerned will 

then abstain from any decision-making process in which he/she has an interest in. 

65 


Attendance Details of Board Members 

Directors 

Tan Sri Leo Moggie (Chairman) 

Meeting Attendance 

17/17 

Dato’ Sri Che Khalib bin Mohamad Noh 

17/17 

Dato’ Puteh Rukiah binti Abd Majid (Appointed w.e.f. 13 September 2006) 

15/17 

Datuk Zalekha binti Hassan 

(Alternate Director to Dato’ Puteh Rukiah binti Abd Majid) 

(Appointed w.e.f. 13 September 2006) 

2/2 

Encik Mohammad Zainal bin Shaari (Appointed w.e.f. 31 March 2007) 

5/7 

Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng 

16/17 

Tan Sri Dato’ Hari Narayanan a/l Govindasamy 

16/17 

Dato’ Zainal Abidin bin Putih 

13/17 

Datuk Mohd Zaid bin Ibrahim 

14/17 

Dato’ Fuad bin Jaafar (Appointed w.e.f. 15 March 2007) 

8/8 

(Note:- Attendance record of Alternate Director must be read in concurrence with attendance record of the Principal 

Director) 

Supply of Information to the Board 

The Board and its Committees have full and unrestricted access to all information within TNB pertaining to the 

Group’s business and affairs. 

The Board Meetings are held regularly, on a monthly basis and special meetings will be convened as warranted by 

specific circumstances. The Board is provided in advance with the agenda for every Board meeting, together with 

comprehensive management reports which includes proposal analysis, risk evaluation and supporting documents 

for the Board’s perusal. Before decisions are made, consideration is given to the adequacy of information available 

to the Board and, if necessary, decisions are deferred if further information is required. 

All Directors have the right and duty to make further enquiries when necessary. In most instances, the Senior 

Management of the Company as well as external advisors are invited to be in attendance at Board Meetings to 

provide insights and to furnish clarification on issues that may be raised by the Board. Whether as a full board or 

in their individual capacities, Directors are also at liberty to take independent professional advice on any matter 

connected with the discharge of their responsibilities as they may deem necessary and appropriate. 

The Board is also notified of any disclosures/announcements made to Bursa Malaysia. 

66 



Board Effectiveness 

The present composition, size, modus operandi, strength of relationship with the 

Management and functional Board Committees, contribute to an effective Board. 

Apart from the convening of Board Meetings on a frequent basis, deliberation and 

discussion at a Board Meeting are conducted in a comprehensive and in depth manner 

before arriving at any decision, as recommended by the Management. 

A Board and Management interactive session or internally known as Board and 

Management Break Out Session, held twice a year, provides the Board with an additional 

formal platform outside the Boardroom to scrutinise the performance, business plan 

and budget of the Company in greater detail, thus enabling the Board to chart the 

strategic direction for the Company and to provide effective control linking the business 

plan to the key performance indicators. 

Board Balance and Independence 

The requirement of the Code for a board balance is fulfilled with Independent Directors 

forming more than one third of the Board. The classification for independence is 

in accordance with paragraph 1.01 (Definition and Interpretations) of the Listing 

Requirements of Bursa Malaysia Securities Berhad. 

The present Board consists of four (4) Independent Non-Executive Directors namely Y. 

Bhg. Tan Sri Dato’ Lau Yin Pin, Y. Bhg. Tan Sri Dato’ Hari Narayanan a/l Govindasamy ,Y. 

Bhg. Dato’ Zainal Abidin bin Putih and Y.Bhg. Dato’ Fuad bin Jaafar who are independent 

of Management and free from any business relationship that could materially interfere 

with the exercise of their independent judgement. The presence of Independent 

Directors assures an additional element of balance to the Board as they provide 

unbiased and independent views, advice and judgement to all Board deliberations. 

Y. Bhg. Tan Sri Dato’ Lau Yin Pin is the Senior Independent Non-Executive Director. 

He is the Company’s longest-serving Director and as such has significant knowledge 

of the Company and its business. Any concerns on or related to the Company may be 

conveyed to him by shareholders and the public through e-mail. 

Re-election 

Pursuant to Article 133 of the Company’s Articles of Association, newly appointed 

Directors are subject to re-election by shareholders at the first opportunity after their 

appointment and the retiring Directors may offer themselves for re-election by the 

shareholders. In accordance with Article 135 of the Company’s Articles of Association all 

Directors are required to retire from office at least once in every three (3) years. 

The BNRC reviews the appointment of new Director to the Company and its subsidiaries 

taking into consideration the required mix of skills and experience before making 

recommendations to the Board for approval. 

Further information concerning the Directors standing for re-election at the Annual 

General Meeting is included in the Statement Accompanying Notice of Annual General 

Meeting. The detailed profiles of Directors standing for re-election are provided in 

order to enable shareholders to make an informed decision in re-electing them. 

67 



Continuing Board Development 

Recognising the ever increasing demands of their role as Directors of a leading Public Listed Company, the Directors 

of TNB continue to equip themselves with the relevant professional advancement programmes particularly in 

corporate regulatory development and current development in the industry. 

All Directors have attended and successfully completed the Mandatory Accreditation Programme in compliance with 

the Listing Requirements of Bursa Malaysia Securities Berhad. The Directors have also been advised and encouraged 

to attend various professional programmes organised by various professional bodies. During the Financial Year 

under review, a Director has been nominated to attend the Malaysian Directors Academy (MINDA) – Programme 

for Building High Performance Director organized by Khazanah Nasional Berhad in collaboration with IMD. The 

programme is deployed through three (3) modules, namely what makes a Board perform, the strategic dimensions 

of work and external dimensions. The Chairman of TNB has also been invited and attended the Chairman’s Forum 

organized by MINDA. 

Apart from attending various conferences and seminars organised by the external organisers, the Board also 

benefited from an in-house Board Development Programme. The topic on transformation of an organisation was 

presented at the in-house Board Development Programme 2007. The training for the Directors also included site 

visits to power stations where presentations were conducted by power plant managers to explain the operational 

aspects of power plants. 

Directors’ Remuneration Procedure 

The BNRC will recommend to the Board on the framework and the remuneration package for the Executive Director 

and Senior Management. In determining the framework, the Committee has engaged professional advice from 

internal as well as external sources. 

The Level and Make-Up of Remuneration 

(a) The remuneration package of the Executive Director comprises of a fixed and variable pay which is linked to 

the key performance indicator as follows:- 

(i) Basic Salary 

The basic salary (which include the statutory contributions to the Employee Provident Fund Board) for 

Executive Director is recommended by the BNRC, taking into account the individual performance and 

information obtained from independent sources on the rates of salary for similar positions in a selected 

group of comparable companies in the market. 

(ii) Reward Scheme 

The Group operates a bonus scheme for all employees, including the Executive Director. The criteria set in 

determining the quantum of bonus is the level of profit achieved by the Company through the Group’s 

business activities as compared against the targets. It is also coupled with an assessment of each individual’s 

performance and competencies. Meanwhile, the Executive Director is provided with a Contractual bonus 

based on performance. 

(b) The remuneration package of Non-Executive Directors comprises of the following elements:- 

(i) Fees 

The Directors are paid fixed monthly fees and Meeting allowances for each Board and Board Committee 

meeting attended during the year. Such fees are tabled to the shareholders of the Company for approval. 

(ii) Benefits-in-kind 

Other benefits in the form of coverage on electricity bills and reimbursements are made available as 

appropriate. 

68 



Disclosure on Directors’ Remuneration 

The details on the aggregate remuneration received by the Directors for the Financial Year ended 31 August 2007 

are as follows:- 

Executive 

Dato’ Sri Che Khalib 

bin Mohamad Noh 

Basic Salary 

(RM) 

Bonus 

(RM) 

Contribution 

to EPF 

(RM) 

Car 

Allowance 

(RM) 

Flexible 

Benefits 

(RM) 

600,000.00 302,000.00 113,280.00 42,000.00 50,000.00 

Total 

(RM) 

1,107,280.00 

Non-Executive 

Fees & Allowances 

(RM) 

Benefits in kind 

(RM) 

Total 

(RM) 


127,500.00 (TNB) 

98,000.00 

(Subsidiaries) 

11,747.96 

237,247.96 

Dato’ Puteh Rukiah binti 

Abd Majid 

59,950.00 (TNB) 

6,790.00 

66,740.00 

Mohammad Zainal bin 

Shaari 

*38,825.00 (TNB) 

18,591.23 

57,416.23 

Tan Sri Dato’ Lau Yin Pin 

@ Lau Yen Beng 

66,850.00 (TNB) 

6,481.98 

73,331.98 

Tan Sri Dato’ Hari 

Narayanan a/l 

Govindasamy 

58,475.00 (TNB) 

12,500.00 


26,328.84 

97,303.84 

Dato’ Zainal Abidin bin 

Putih 

55,700.00 (TNB) 

12,165.25 

67,865.25 

Datuk Mohd Zaid bin 

Ibrahim 

49,000.00 (TNB) 

16,500.00 


34,448.18 

99,948.18 

Dato’ Fuad bin Jaafar 

27,746.00 (TNB) 

16,500.00 


3,748.64 

47,994.64 

Datuk Zalekha bin Hassan 

3,200.00 (TNB) 

5,338.00 

8,538.00 

Dato’ Azman bin Mokhtar 

(resigned w.e.f. 31 March 

2007) 

*23,500.00 (TNB) 

11,415.89 

34,915.89 

*Paid to Khazanah Nasional Berhad in respect of Directors Fees and Meeting Allowance provided for Dato’ 

Azman bin Mokhtar and Mohammad Zainal bin Shaari for the Financial Year ended 31 August. 

69 



(B) 

SHAREHOLDERS 

TNB is committed to maintaining a constructive 

relationship with its shareholders, pursuing its ongoing 

commitment to sustain the highest standards 

of corporate governance practices throughout the 

Group with full appreciation of its impact on longterm 

corporate performance and optimal shareholder 

value. 

Relations Between the Company 

and Investors 

The Board and Management of TNB recognise the 

importance of transparency and accountability to its 

shareholders and investors, thereby its pursuit of the 

highest standards of corporate governance practices 

throughout the Group. 

Whilst various channels of communication are 

optimised to provide shareholders and investors with 

a balanced and comprehensive view of the Group’s 

performance and the issues faced by the Group in light 

of the challenging environment, the role of investor 

relations is entrenched as the communications platform 

between the Group and the investor at large. In this 

regard, the Investor Relations & Management Reporting 

Unit (IRMU), a dedicated unit under the Finance 

Division has been entrusted with the responsibility 

of coordinating and responding to all queries and 

information raised by shareholders, research analysts 

and investors. An equal level of importance is placed 

on the need for investor relations to channel the views 

of the investment community back to the Management 

and the Board of Directors. 

Under the annual investor relations programme, 

TNB participated in 11 utility conferences arranged 

by leading investment banks both in Malaysia and 

overseas. This provided the platform to meet with fund 

managers and investors, both existing and potential, 

to update them on the Company’s performance and 

to address any issues and concerns that they may 

have regarding the Company. During the year TNB 

attended 4 investor conferences held in Kuala Lumpur 

and 4 international conferences held in Singapore, 

Hong Kong, Japan and the United States. In July 2007, 

the TNB Management met with its local shareholders 

under a domestic roadshow programme arranged by 

the Company, whilst in November 2006, TNB accepted 

the invitation to go on a non-deal roadshow covering 

parts of Europe and the United Kingdom to meet with 

investors and fund managers. 

In FY2007, TNB met with a total of 200 fund managers 

and investors during the conferences and roadshows 

attended. 

The attendance of the financial community and news 

media to TNB’s quarterly financial result presentations, 

have been good. The presentations were attended by 

research analysts covering TNB, credit-rating agencies, 

and media news reporters. Fund managers on the other 

hand, were invited to teleconferences for the sessions. 

On the average, a total of 85 research analysts, several 

news media reporters and fund managers attended 

or were teleconferenced in for these quarterly 

presentations. 

In FY2007, TNB had approximately 68 meetings 

with equity research analysts, fund managers and 

investors who had requested to meet with company 

officials (excluding investors that were seen at 

conferences, roadshows and quarterly financial result 

presentations). 

TNB is a participant in the CMDF-Bursa Research 

Scheme (CBRS) which was initiated by Bursa Malaysia 

Securities Berhad in 2005. CBRS is aimed at ensuring 

a wider research coverage of Bursa Listed companies 

and to provide a platform for research to be made 

available to retail investors as the research coverage 

under CBRS is posted on Bursa’s website. 

The company’s website at www.tnb.com.my also 

provides easy and quick access to financial, corporate 

and other pertinent information on the Group’s 

various activities. 

70 



Constructive Use of the Annual General Meeting 

The Annual General Meeting (AGM) is the principal avenue for shareholders to communicate and 

engage in dialogue with the Board and Management of TNB. The highlights of the Company’s 

technical and financial performance which is made via visual presentation is made by the Chairman 

and President/Chief Executive Officer at the AGM. The turnout of shareholders at AGMs of TNB 

has always been high. A total of 2,942 shareholders and proxies attended the Sixteenth AGM 

held in 2006. 

Constructive dialogue between the Board and the shareholders are encouraged whereby at 

the AGM, shareholders are given the opportunity to raise questions on issues pertaining to the 

Company’s financial and operational performance. At the AGM, the shareholders can exercise 

their voting rights and the meeting is convened in strict compliance with the laws and procedures 

of general meeting. Separate resolutions are proposed for separate motions and the Chairman 

will declare the outcome of each resolution after a proposal and a secondment are done by the 

shareholders. Each item of ordinary and special business in the notice of the AGM would be 

accompanied by a full explanation of the effects of the proposed resolution. Shareholders are 

also given the opportunity to put forward their questions on the proposed resolutions and on the 

Company’s operations. The Chairman will provide sufficient time for shareholder questions on 

matters pertaining to the Company’s performance and would seek to explain to the shareholders 

with regard to their concerns. 

Immediately after the AGM, the Chairman and the President/Chief Executive Officer will address 

all issues raised by the media and analysts through a news conference and analyst briefing in the 

course of providing all stakeholders with the latest update on the Company. 

Continuing Disclosure of Material Information 

TNB firmly observed the continuing disclosure obligation imposed upon a listed issuer by Bursa 

Malaysia. The Company has in place Corporate Disclosure Policy and Procedures since 1994, which 

provides for adoption of Best Practices in Corporate Disclosure laid down by Bursa Malaysia in July 

2004. As required under the said Best Practice, the Company Secretary is identified as “Corporate 

Disclosure Manager” within the context of the aforementioned Best Practice. 

Timely and accurate disclosure is made on all material information and throughout the Financial 

Year under review, material information and material development thereof on acquisition, 

disposal, divestment, issuance of notes, proposed financing facility, conversion of bonds, related 

party transaction, employees’ share option scheme, notice of book closure, change in boardroom 

are among the material information released to Bursa Malaysia via Bursa Link. 

Confidentiality of Information 

In the conduct of briefings or presentations, the Company takes care to ensure that any information 

regarded as undisclosed material information about the Company and its operations will not be 

given to any single shareholder or shareholder group. 

71 



(C) ACCOUNTABILITY AND AUDIT 

Financial Reporting 

The Directors are responsible for ensuring that financial statements are drawn up in accordance with the requirements 

of the Companies Act, 1965 and in line with approved accounting standards in Malaysia so as to present an objective 

and understandable assessment of the Group’s financial position and prospects. TNB publishes quarterly financial 

reports so that its shareholders can monitor the Company’s financial position regularly. In this Annual Report, an 

assessment is provided in the Directors’ Report of the Audited Financial Statements. 

On behalf of the Board, the Board Audit Committee (BAC) scrutinises the quarterly financials, statutory compliance 

aspects of the Audited Financial Statements, and the Company’s policies and procedures prior to full deliberation 

at the Board level. The Board ensures the integrity of the Company’s financial reporting and fully recognises that 

accountability in financial disclosure forms an integral part of good corporate governance practices. 

Relationship with the Auditors 

The Board has, through the BAC, established a formal, transparent and appropriate relationship with the Group’s 

Auditors, both external and internal. A report by the BAC is provided on page 91 and its Terms of Reference is 

provided from pages 94 to 99. 

The BAC meets regularly with the external and internal auditors to discuss and review the audit plan, quarterly 

financial results, annual financial statements and the audit findings and makes recommendations for the Board’s 

approval. 

Internal Control 

The Board acknowledges that they are responsible for maintaining a sound system of internal control to safeguard 

shareholders’ investment and the Company’s assets as required by the Code. TNB adheres to Bursa Malaysia 

guidelines on the Statement on Internal Control: Guidance for Directors of Public Listed Companies, as guidance for 

compliance with these requirements. 

On 16 July 2007, the Board Audit Committee met with the External Auditors without the presence of the Executive 

Director and the Management. 

Information on the Group’s internal control is presented in the Statement on Internal Control, pursuant to paragraph 

15.27(b) of the Bursa Malaysia Listing Requirements as set out from pages 100 to 103. 

72 



RESPONSIBILITY STATEMENT IN 

RESPECT OF THE FINANCIAL YEAR 

UNDER REVIEW 

(Pursuant to paragraph 15.27(a) of the Bursa Malaysia 

Listing Requirements) 

The Board is fully accountable to ensure that the 

financial statements are prepared in accordance with 

the provisions of the Companies Act, 1965 and the 

applicable approved accounting standards set by the 

Malaysian Accounting Standards Board so as to present 

a true and fair view, balanced and understandable 

assessment of the Group’s financial position and 

prospects. In this Annual Report, an assessment is 

provided in the Directors’ Report of the Audited 

Financial Statement. 

The BAC reviews the statutory compliance and 

scrutinises the financial aspects of the Audited Financial 

Statement prior to full deliberation at the Board level. 

ADDITIONAL COMPLIANCE 

STATEMENT 

Apart from providing the shareholders and the 

stakeholders with an overview of the state of corporate 

governance in the Company, TNB is also pleased to 

disclose the following information: 

(1) Utilisation of Proceeds Raised from any Corporate 

Proposal 

During the Financial Year 2007, the proceeds 

from the disposal of TNB shares in Malaysian 

Technology Development Corporation Sdn. Bhd. 

and the exercise of the Employees’ Share Option 

Scheme were utilised to finance the Company’s 

working capital and capital expenditure. 

(2) Share Buy-Back for the Financial Year 

There was no share buy-back exercise carried out 

by the Company for the Financial Year ended 31 

August 2007. 

(3) Options, Warrants or Convertible Securities 

Exercised 

The status on Options, Warrants or Convertible 

Securities exercised by the Company are as 

follows:- 

(a) The Company launched the second Employees’ 

Share Option Scheme (ESOS II) in July 2003 

and as at August 2007, eight (8) offers have 

been made to eligible employees where:- 

(i) under the First Offer, options 

representing 199,994,000 shares were 

offered at an option price of RM8.39 

(being the 5 day weighted average 

price from 30 June 2003 to 4 July 2003 

net of 10% discount) to 22,815 eligible 

employees. Options representing a 

total of 199,347,000 shares were taken 

up by the grantees and the options 

exercised until August 2007 represented 

176,718,764 shares. Under the First Offer 

an additional 6,000 shares options were 

also offered and taken up by 1 eligible 

employee and until August 2007, 6,000 

shares were exercised; 

(ii) under the Second Offer, options 



(being the 5 day weighted average price 

from 17 February 2004 to 24 February 

2004 net of 10% discount) to 2,927 

eligible employees. Options representing 

a total of 16,838,000 shares were taken 

up and until August 2007, 13,674,112 


(iii) under the Third Offer, options 



(being the 5 day weighted average price 

from 21 February 2005 to 25 February 

2005 net of 10% discount) to 2,209 

eligible employees. Options representing 

a total of 13,192,000 shares were taken 

up and until August 2007, 8,520,045 


73 



(iv) under the additional Offer, 450,000 shares options were offered at an option price of RM9.69 (being 

the 5 day weighted average price from 18 January 2005 to 25 January 2005 net of 10% discount) 

and RM9.75 (being the 5 day weighted average price from 10 June 2005 to 16 June 2005 net of 10% 

discount) to 2 eligible employees. The total shares of 450,000 were taken up and until August 2007, 

70,000 shares were exercised; 

(v) under the fourth, fifth, sixth and seventh Offers, options representing 17,267,000 shares were offered 

at an option price of RM9.17 (being the 5 day weighted average price from 18 January 2006 to 

24 January 2006 net of 10% discount) to 4,055 eligible employees. Options representing a total of 

16,843,000 shares were taken up and until August 2007, 9,887,115 shares were exercised; 

(vi) under the Performance Stock Options for Senior Management employees, options representing 

1,336,000 shares were offered at an option price of RM9.189 (being the 5 day weighted average 

price from 18 August 2006 and 21 August 2006 to 24 August 2006) to 16 eligible employees. Options 

representing a total of 1,336,000 shares were taken up and until August 2007, 30,000 shares were 

exercised; 

(vii) under the eighth Offer, options representing 15,751,000 shares were offered at an option price of 

RM11.07 (being the 5 day weighted average price from 15 February 2007 to 16 February 2007 and 

21 February 2007 to 23 February 2007 net of 10% discount) to 2,853 eligible employees. Options 

representing a total of 14,806,000 shares were taken up and until August 2007, 18,000 shares were 

exercised. 

(4) American Depository Receipts (“ADR”) 

In January 1994, TNB launched its Level 1 American Depository Receipts (ADR) in New York, the United States 

of America. Each ADR carries an equivalent of four underlying TNB shares. The only custodian bank for TNB’s 

ADR programme is Malayan Banking Berhad. The Bank of New York in the USA is the Depository Bank and 

the ADRs are traded over the counter. As at 31 August 2007, the total number of ordinary shares held through 

these ADRs was 2,008,825 which represented less than five per cent of the issued and paid-up capital of the 

4,331,709,068 shares of TNB. 

(5) Sanctions/Penalties 

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management 

by the relevant regulatory bodies during the Financial Year ended 31 August 2007. 

(6) Non Audit Fees 

Apart from the annual audit fees, the Group had paid non audit fees to the external auditors. The amounts 

paid for the Financial Year ended 31 August 2007 are as follows:- 

External Auditor 

Total Paid 

PricewaterhouseCoopers 

RM1,305,000.00 

PT Prima Wahana Caraka, 

PricewaterhouseCoopers, Jakarta 

USD78,648.90 

74 



(7) Variation in Results 

The Company did not issue any profit forecast for 

the Financial Year ended 31 August 2007. As such, 

no commentary is made on variation in results. 

(8) Profit Guarantee 

The Company did not issue any profit guarantee 

for the Financial Year ended 31 August 2007. 

(9) Material Contracts 

Save as disclosed below, there is no other contracts 

which may be material that have been entered 

into by TNB or its subsidiaries in the Financial 

Year under review, apart from material contracts 

concerning borrowings as follows:- 

(i) On 9 February 2006, TNB executed 4 sets of 

Term Loan Agreements for a total combined 

term loan facility of RM1.0 billion with 

Malayan Banking Berhad. The term loans were 

structured into 4 tranches of RM250 million, 

each with varying tenors ranging from 7 to 10 

years from the date of drawndown. 

(ii) On 24 August 2006, TNB had entered into a 

Novation and Amendment Agreement with 

TNB Janamanjung Sdn. Bhd., TNB Capital (L) 

Ltd. and HSBC Bank PLC to effect the novation 

of the outstanding ECA Loan equivalent to 

US$503,003,321 from TNB Janamanjung Sdn. 

Bhd. to TNB Capital (L) Ltd. The novation 

forms part of the restructuring of the ECA 

Loan which entails a re-pricing of the interest 

rate and unification of the currencies into a 

single currency namely from USD, € and £ into 

USD. 

(10) Revaluation Policy 

The revaluation policy of the Company in relation 

to its landed properties is set out in Note 2(f) of 

the Notes to the Financial Statements set out on 

page 17 of this Annual Report. 

2006 until the forthcoming AGM. Such approval 

will expire at the conclusion of the forthcoming 

Seventeenth AGM thus compelling the Board to 

propose to seek the shareholders’ mandate for 

the renewal of the same, together with a new 

mandate on recurrent transactions of a revenue 

or trading nature with the new related parties. 

Pursuant to paragraph 4.1.5 of Practice 

Note 12/2001 of the Listing Requirements, 

a breakdown of the aggregate value of the 

Recurrent Transactions together with the type 

of the Recurrent Transactions, the related parties 

involved and the nature of their relationship with 

TNB in each type of the Recurrent Transaction 

made during the Financial Year are set out on 

page 76 of this Annual Report. 

STATEMENT ON COMPLIANCE 

WITH THE REQUIREMENTS OF 

BURSA MALAYSIA IN RELATION TO 

APPLICATION OF PRINCIPLES AND 

ADOPTION OF BEST PRACTICES LAID 

DOWN IN THE MALAYSIAN CODE 

OF CORPORATE GOVERNANCE 

(Pursuant to paragraph 15.26 of the Bursa Malaysia 

Listing Requirements) 

The Board is pleased to report to shareholders that 

the Company has applied the principles of corporate 

governance and is in compliance with Part 1 of the 

Code. Further to that, the Board remains committed 

to attain the highest possible standard of corporate 

governance through continuous adoption of best 

practices as recommended in Part 2 of the Code. 

Signed on behalf of the Board of Directors in accordance 

with their resolution dated 25 October 2007. 

(11) Recurrent Related Party Transactions of a Revenue 

or Trading Nature 

At the Extraordinary General Meeting of the 

Company held on 14 December 2006, the 

shareholders of TNB had approved and ratified 

all recurrent transactions of a revenue or trading 

nature, which are necessary for the day-to-day 

operations of the Group, entered into by the 

Company and/or its subsidiaries with certain 

classes of related parties from 14 December 

TAN SRI DATO’ LAU YIN PIN @ LAU YEN BENG 

SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR 

75 


Recurrent Related Party 

Transactions 

At the Sixteenth Annual General Meeting of TNB which was held on 

14 December 2006, the shareholders had approved and ratified all 

recurrent related party transactions (RRPT) of a revenue or trading 

nature, which are necessary for the day-to-day operations of the 

Group, entered into by the Company and/or its subsidiaries with 

certain classes of related parties from 15 December 2006 until the 

forthcoming AGM. In accordance with paragraph 4.1.5 of Practice 

Note 12/2001 of the Listing Requirements, a breakdown of the 

aggregate value of the recurrent transactions together with the 

type of the recurrent transactions, the related parties involved 

and the nature of their relationship with TNB in each type of the 

recurrent transaction made during the Financial Year are tabulated 

below:- 

(1) RENEWAL OF SHAREHOLDERS’ MANDATE FOR RRPT OF A REVENUE OR TRADING NATURE 

Transacting 

Company in 

TNB Group 

Persons 

Connected 

to Major 

Shareholder 

(Related 

Parties 

Involved) 

Interested 

Major 

Shareholder 

Nature of Relationship 

Nature of 

Recurrent 

Transactions 

Aggregate 

Value (RM) of 

the Transaction 

during the 

validity of the 

Mandate 

TNB 

Edaran 

Otomobil 

Nasional 

Berhad 

Khazanah 

Nasional Berhad 

Khazanah Nasional 

Berhad being a major 

shareholder of TNB 

has 6.27% interest in 

EON, making the latter 

person connected to 

the Major Shareholder. 

i) Purchase of 

Vehicle 

ii) Repair of 

vehicle 

346,312.60 

14,498.41 

TNB 

Putrajaya 

Holdings Sdn. 

Bhd. 

Khazanah 



Berhad being a major 

shareholder of TNB 

has 15.59% interest 

in Putrajaya Holdings 

Sdn. Bhd., making 

the latter person 

connected to the 

Major Shareholder. 

Payment on 

office rental 

1,209,423.85 

76 


Recurrent Related Party Transactions 

(2) SHAREHOLDERS’ MANDATE FOR RRPT OF REVENUE OR TRADING NATURE 

Transacting 

Companies 

in TNB 

Group 

Persons 

Connected 

to Major 

Shareholder 

(Related 

Parties 

Involved) 

Interested Major 

Shareholder 

Nature of 

Relationship 

Nature of 

Recurrent 

Transactions 

Aggregate 

Value (RM) of 

the Transactions 

during the validity 

of the Mandate 

Bangsar 

Energy 

Systems Sdn. 

Bhd. 

Telekom 

Malaysia 


Khazanah 



Berhad being a 

major shareholder 

of TNB has 40.13% 

interest in Telekom 

Malaysia Berhad, 

making the latter a 

person connected 

to the Major 

Shareholder. 

Supply of 

chilled water 

7,474,644.36 

TNB 

UDA Holdings 


Khazanah 



Berhad being a 

major shareholder 

of TNB has 50.01% 

interest in UDA 

Holdings Berhad, 

making the latter a 

person connected 

to the Major 

Shareholder. 

Payment on 

office rental 

44,640.00 

AGGREGATE VALUE OF THE TRANSACTIONS 9,089,519.22 

77 


Group 

Corporate Structure 

(As at October 2007) 

Associate/Investment 

Companies 

Trust Foundation 

Subsidiaries 

FIBRECOMM NETWORK 

(M) SDN. BHD. (49%) 

TEKNOLOGI TENAGA PERLIS 

CONSORTIUM 

SDN. BHD. (20%) 

PERUSAHAAN OTOMOBIL 

ELEKTRIK (MALAYSIA) 

SDN. BHD. (20%) 

GB3 

SDN. BHD. (20%) 

LABUAN REINSURANCE (L) 

LTD. (10%) 

FEDERAL POWER 

SDN. BHD. (8.91%) 

BAKUN HYDRO-ELECTRIC 

CORPORATION SDN. BHD. 

(6.67%) 

ELECTROSTORM 

INC. (1.58%) 

Dormant 

Subsidiaries: 

TNB DISTRIBUTION SDN. BHD. (100%) 

SUMBER HIDRO MANAGEMENT 

SDN. BHD. (100%) 

TNB GENERATION SDN. BHD. (100%) 

- TNBG POWER SERVICES 

SDN. BHD. (100%) 

TNB HIDRO SDN. BHD. (100%) 

TNB-IT SDN. BHD. (100%) 

TNB KAPAR SDN. BHD. (100%) 

TNB KEKAL SDN. BHD. (100%) 

TNB LOGISTICS SDN. BHD. (100%) 

TNB PAKA SDN. BHD. (100%) 

TNB METERING SERVICES 

SDN. BHD. (100%) 

TNB RISK MANAGEMENT 

SDN. BHD. (100%) 

TNB PRAI SDN. BHD. (100%) 

TNB WORKSHOP SERVICES 

SDN. BHD. (100%) 

TNB TRANSMISSION NETWORK 

SDN. BHD. (100%) 

YAYASAN TENAGA NASIONAL 

RETIREMENT BENEFIT 

TRUST FUND 

TNB ENGINEERING CORP. 

SDN. BHD. (100%) 

TNB ENGINEERS 

SDN. BHD. (100%) 

TNB ENERGY SERVICES 

SDN. BHD. (100%) 

TNB FUEL SERVICES 

SDN. BHD. (100%) 

TNB JANAMANJUNG 

SDN. BHD. (100%) 

TNB POWER DAHARKI 

LTD. (100%) 

TNB PROPERTIES 

SDN. BHD. (100%) 

TNB REPAIR AND 

MAINTENANCE 

SDN. BHD. (100%) 

TNB RESEARCH 

SDN. BHD. (100%) 

UNIVERSITI 

TENAGA NASIONAL 

SDN. BHD. (100%) 

TNB CAPITAL (L) 

LTD. (100%) 

TNB VENTURES 

SDN. BHD. (100%) 

POWER AND ENERGY 

INTERNATIONAL 

(MAURITIUS) 

LTD. (100%) 

TNB KULIM DISTRIBUTION 

SDN. BHD. (100%) 

TNB KULIM GENERATION 

SDN. BHD. (100%) 

TNB COAL INTERNATIONAL 

LIMITED. (92.5%) 

SABAH ELECTRICITY 

SDN. BHD. (80%) 

MALAYSIA TRANSFORMER 

MANUFACTURING 

SDN. BHD. (100%) 

SEPANG POWER 

SDN. BHD. (70%) 

TENAGA SWITCHGEAR 

SDN. BHD. (60%) 

KAPAR ENERGY VENTURES 

SDN. BHD. (60%) 

78 


Group Corporate Structure 

TNEC CONSTRUCTION 

SDN. BHD. (100%) 

TNEC OPERATIONS AND 

MAINTENANCE SDN. BHD. (100%) 

BANGSAR ENERGY SYSTEMS 

SDN. BHD. (100%) 

JANA LANDFILL SDN. BHD. (70%) 

TOMEST ENERGY MANAGEMENT 

SDN. BHD. (51%) 

SELESA ENERGY SYSTEMS 

SDN. BHD. (100%) 

OASIS PARADE 

SDN. BHD. (100%) 

MALAYSIAN SHOAIBA CONSORTIUM 

SDN. BHD. (20%) 

TNB LIBERTY POWER 

LIMITED (100%) 

TNP CONSTRUCTION 

SDN. BHD. (100%) 

* 

P.T. DASA EKA 

JASATAMA (99%) 

HICOM-TNB PROPERTIES 

SDN. BHD. (40%) 

INDERA-TNB PROPERTIES 

SDN. BHD. (40%) 

KM METRO-TNB PROPERTIES 

SDN. BHD. (40%) 

TNB PROPERTIES-JB CITYTOWERS 

SDN. BHD. (40%) 

ZEUS-TNB PROPERTIES 

SDN. BHD. (40%) 

TNB OPERATIONS & MAINTENANCE 

INTERNATIONAL LTD (100%) 

TRICHY POWER 


TRICHY ENERGY 


TENAGA MICROWAVE TECHNOLOGIES 

SDN. BHD. (In the process of liquidation) 

TENAGA CABLE INDUSTRIES 

SDN. BHD. (76%) 

NORTHERN UTILITY RESOURCES 

SDN. BHD. (20%) 

LEGEND 

SUBSIDIARY 

SUB-SUBSIDIARY 

SUBSIDIARY OF SUB-SUBSIDIARY 

ASSOCIATE COMPANY OF SUBSIDIARY 

ASSOCIATE COMPANY 

INVESTMENT COMPANY 

ASSOCIATE COMPANY OF SUB-SUBSIDIARY 

TRUST FOUNDATION 

INDEPENDENT POWER INTERNATIONAL 

LTD. (100%) 

DYNAMIC ACRES 

SDN. BHD. (100%) 

Note : 

* In the process of disposal. 

79 


Organisational 

Structure 

Chief 

Internal 

Auditor 

Board 

Of 

Directors 

Board 

Committees 

Company 

Secretary 


Senior Vice President 

(Operations & Technical) 

Vice 

President 

Generation 

Division 

Vice 

President 

Transmission 

Division 

Vice 

President 

Distribution 

Division 

Chief 

Financial 

Officer 

Finance 

Division 

Vice 

President 

Corporate 

Services 

Division 

Vice 

President 

Human 

Resource 

Division 

Chief 

Information Officer 

Information and 

Communication 

Technology Division 

Vice 

President 

Investment 

Management 

Division 

Core Business Management Services Non-core Business 

Functional Reporting 

Direct Reporting 

80 


81 


Corporate 

Information 

Board Of Directors 


(Non-Independent Non-Executive Chairman) 


(President/Chief Executive Officer) 

(Non-Independent Executive Director) 

Dato’ Puteh Rukiah binti Abd Majid 

(Non-Independent Non-Executive Director) 

Mohammad Zainal bin Shaari 


(Appointed w.e.f. 31.3.2007) 

(Resigned as Alternate Director to Dato’ Azman 

bin Mokhtar on 31.3.2007) 


(Senior Independent Non-Executive Director) 


(Independent Non-Executive Director) 









(Alternate Director to Dato’ Puteh Rukiah 

binti Abd Majid) 


Dato’ Azman bin Mokhtar 


(Resigned on 31.3.2007) 



(Chairman of the Committee) 




Board Nomination And 

Remuneration Committee 


(Chairman of the Committee) 




Company Secretaries 

Nor Zakiah binti Abdul Ghani 

(LS 0008795) 

Wan Marzimin bin Wan Muhammad 

(LS 0009013) 

Share Registrar 

Symphony Share Registrars Sdn. Bhd. 

Level 26, Menara Multi-Purpose 

Capital Square 

No. 8, Jalan Munshi Abdullah 

50100 Kuala Lumpur, Malaysia 

82 


Corporate Information 

Principal Bankers 

Malayan Banking Berhad 

Level 1, Tower A, Dataran Maybank 

No.1, Jalan Maarof 


CIMB Bank Berhad 

No. 21 & 23, Lorong Ara Kiri 1 

Lucky Garden, Bangsar 


Bank Islam Malaysia Berhad 

Cawangan KL Sentral 

Tingkat Bawah, No. CS/3B/G 

Block 3B, Plaza Sentral, KL Sentral 


External Auditor 

Stock Exchange Listing 

Main Board 

Bursa Malaysia Securities Berhad 

Malaysia 

Ratings 

Baa1 

BBB 

AA1 

AA+ 

(Moody’s) 

(Standard & Poor’s) 

(Rating Agency Malaysia) 

(Malaysian Rating Agency 

Corporation Berhad) 

American Depository Receipts 

Programme (ADR) 

ADR Level 1 

Messrs PricewaterhouseCoopers (No. AF: 1146) 

Level 10, 1 Sentral 

Jalan Travers 

Kuala Lumpur Sentral 

P.O Box 10192 


Registered Office 

And Head Office 

Tenaga Nasional Berhad 

No. 129, Jalan Bangsar 


Telephone : 603- 2296 5566 

Facsimile : 603-2296 3686 

Website : www.tnb.com.my 

E-mail : CoSec@tnb.com.my 

lauyp@tnb.com.my 

(Tan Sri Dato’ Lau Yin Pin @ Lau Yen 

Beng) 

(Senior Independent Non-Executive 

Director) 

83 


Board Of 

Directors’ 

11 10 12 

8 

4 

3 

1. Tan Sri Leo Moggie 

(Non-Independent Non-Executive Chairman) 

2. Dato’ Sri Che Khalib bin Mohamad Noh 

(President/Chief Executive Officer) 

(Non-Independent Executive Director) 

3. Dato’ Puteh Rukiah binti Abd Majid 


4. Mohammad Zainal bin Shaari 



5. Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng 


6. Tan Sri Dato’ Hari Narayanan a/l Govindasamy 


84 


Board Of Directors’ 

5 7 2 6 9 

1 

7. Dato’ Zainal Abidin bin Putih 


8. Datuk Mohd Zaid bin Ibrahim 


9. Dato’ Fuad bin Jaafar 



10. Datuk Zalekha binti Hassan 

(Alternate Director to Dato’ Puteh Rukiah binti Abd 

Majid) 


11. Nor Zakiah binti Abdul Ghani 

Company Secretary 

12. Wan Marzimin bin Wan Muhammad 

Company Secretary 

85 


Profile Of Board Of 

Directors 


Chairman 

Non-Independent Non-Executive Director 

Tan Sri Leo Moggie, 66 years of age and a Malaysian 

was appointed as Non-Independent Non-Executive 

Chairman of Tenaga Nasional Berhad on 12 April 

2004. He is the Chairman of the Board Nomination 

& Remuneration Committee and Board Finance & 

Investment Committee. Tan Sri Leo Moggie also sits on 

the Board of Digi.Com Berhad. 

Tan Sri Leo Moggie holds a Master of Arts in History 

from University of Otago, New Zealand and a Masters 

in Business Administration from Pennsylvania State 

University, USA. 

He held several senior ministerial posts both at the 

federal and state levels prior to his appointment 

as Chairman of Tenaga Nasional Berhad. Tan Sri 

Leo Moggie was the former Minister of Energy, 

Communications and Multimedia (1998–2004), 

Minister of Works (1989–1995), Minister of Energy, 

Telecommunications and Posts (1978–1989 and 1995- 

1998) in the Federal Cabinet and Minister of Local 

Government (1977–1978) and Minister of Welfare 

Services (1976–1977) in the State Government of 

Sarawak. 

He began his career as a Civil Servant and held various 

positions in the Sarawak State Civil Service from 1966 to 

1974. He was also a member of Council Negeri Sarawak 

(1974–1978) and a member of Parliament (1974–2004). 

Tan Sri Leo Moggie attended all the 17 Board Meetings 

held in the Financial Year. 



Non-Independent Executive Director 

Dato’ Sri Che Khalib bin Mohamad Noh, 42 years of age 

and a Malaysian, was appointed as a Non-Independent 

Executive Director of Tenaga Nasional Berhad on 1 July 

2004. He sits on the Board Disciplinary Committee. 

He is a Fellow of the Association of Chartered Certified 

Accountants (United Kingdom) and also a member of 

the Malaysian Institute of Accountants. 

Dato’ Sri Che Khalib has held several key positions in 

the private sector. He started his career with Messrs 

Ernst & Young and later joined Bumiputra Merchant 

Bankers Berhad. Between 1992 and 1999, he served 

in several companies within Renong Group, including 

Projek Lebuhraya Utara-Selatan, HBN Management 

Services Sdn. Bhd., Renong Overseas Corporation Sdn. 

Bhd. and Marak Unggul Sdn. Bhd., the consortium 

company responsible for the management of Keretapi 

Tanah Melayu Berhad. In June 1999, he joined Ranhill 

Utilities Berhad as the Chief Executive Officer. He was 

the Managing Director and Chief Executive Officer 

of KUB Malaysia Berhad prior to his appointment as 

President/Chief Executive Officer of Tenaga Nasional 

Berhad. 

Prior to joining Tenaga Nasional Berhad, Dato’ Sri Che 

Khalib served as a member of the Board and Executive 

Committee of Khazanah Nasional Berhad from 2000 till 

2004. He also served as Board member on several of the 

United Engineers Malaysia Berhad Group of Companies 

and Bank Industri & Teknologi Malaysia Berhad. 

He attended all the 17 Board Meetings held in the 

Financial Year. 

86 


Profile Of Board Of Directors 

DATO’ PUTEH RUKIAH BINTI ABD MAJID 


MOHAMMAD ZAINAL BIN SHAARI 


Dato’ Puteh Rukiah binti Abd Majid, 54 years of age and 

a Malaysian, was appointed as Non-Independent Non- 

Executive Director of Tenaga Nasional Berhad on 13 

September 2006. She is the Chairman of Board Tender 

Committee and a member of the Board Disciplinary 

Committee. 

She is a holder of a Bachelor of Economics (Hons) from 

University Malaya, Malaysia and Masters (Economy) 

from Western Michigan University, USA. 

She has held various posts in the Government such 

as the Deputy Under Secretary, Minister of Finance 

(Incorporated), Privatisation and Public Enterprise 

Division (2000 – 2004) and later as Under Secretary, 

Investment, Minister of Finance (Incorporated) and 

Privatisation Division (2004 – August 2006). At present, 

she is the Deputy Secretary General (Systems and 

Controls), Ministry of Finance. 

She sits on the Boards of Perbadanan Usahawan Nasional 

Berhad, Pengurusan Aset Air Berhad, Malaysia Airlines 

System Berhad (as an Alternate Director), Penerbangan 

Malaysia Berhad and Pelaburan Hartanah Bumiputera 


She attended 15 out of the 17 Board Meetings held in 

the Financial Year. 

Mohammad Zainal bin Shaari, 44 years of age and a 

Malaysian. He was appointed as Non-Independent 

Non-Executive Director of Tenaga Nasional Berhad on 

31 March 2007. He sits on the Board Tender Committee, 

Board Audit Committee, Board Finance & Investment 

Committee and Board Nomination & Remuneration 

Committee. 

Mohammad Zainal is a Fellow of the Institute of 

Chartered Accountants in England & Wales and the 

Association of Chartered Certified Accountants (ACCA) 

of the United Kingdom. He is also a member of the 

Malaysian Institute of Accountants and the Malaysian 

Institute of Certified Public Accountants. 

He has extensive experience in the field of 

accounting and has held various positions in a Public 

Accounting Firm in the United Kingdom (1984-1990), 

PricewaterhouseCoopers (1990-2002) and BinaFikir 

Sdn. Bhd. (January 2003-October 2004). Currently, 

he is an Executive Director/Chief Operating Officer of 

Khazanah Nasional Berhad. 

He is also a Director of Proton Holdings Berhad and 

serves as a member of its Board Audit Committee. On 1 

September 2006, he was appointed to be a member of 

the Financial Reporting Foundation. 

Mohammad Zainal has attended 5 out of the 7 

Board Meetings held in the Financial Year since his 

appointment on 31 March 2007. 

87 



TAN SRI DATO’ LAU YIN PIN @ LAU YEN BENG 

Senior Independent Non- Executive Director 

TAN SRI DATO’ HARI NARAYANAN 

A/L GOVINDASAMY 

Independent Non- Executive Director 

Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng, 58 years of 

age and a Malaysian, is the Senior Independent Non- 

Executive Director of Tenaga Nasional Berhad. He 

chairs the Board Audit Committee and sits on the Board 

Tender Committee. 

He is a Chartered Accountant of the Malaysian Institute 

of Accountants (MIA) since 1979, a Fellow Member of 

the Chartered Association of Certified Accountants 

(ACCA), United Kingdom since 1981 and also a 

graduate of the Institute of Chartered Secretaries and 

Administrators (ICSA), United Kingdom. He obtained 

his Diploma in Commerce (with Distinction), from Kolej 

Tunku Abdul Rahman. 

He is the Chairman of Star Publications (Malaysia) 

Berhad and a Director of YTL Power International 

Berhad and Nanyang Press Holdings Bhd. 

He attended 16 out of the 17 Board Meetings held in 

the Financial Year. 

Tan Sri Dato’ Hari Narayanan, 57 years of age and a 

Malaysian, is an Independent Non-Executive Director 

of Tenaga Nasional Berhad. He was appointed to the 

Board of Tenaga Nasional Berhad on 1 March 1995. He 

is a member of the Board Audit Committee and Board 

Nomination & Remuneration Committee. 

Tan Sri Dato’ Hari Narayanan’s directorships in other 

public companies are S P Setia Berhad and Puncak 

Niaga Holdings Berhad. He also sits on the board of 

Lembaga Lebuhraya Malaysia (The Malaysian Highway 

Authority). 

He holds a Bachelor degree in Electrical and Electronics 

Engineering from the University of Northumbria, 

England. 

He has vast experience in the field of electrical and 

electronics engineering and has held key positions at 

Inchcape Berhad and Tamco Cutler-Hammer Sdn. Bhd. 

He is currently the Chairman of Noblemax Resources 

Sdn. Bhd., Chairman of IEV Group Sdn. Bhd., Deputy 

Chairman of Emrail Sdn. Bhd., Deputy Chairman of 

Leighton Contractors (M) Sdn. Bhd. and Director of 

several other private companies. 

He has attended 16 out of the 17 Board Meetings held 

in the Financial Year. 

88 



DATO’ ZAINAL ABIDIN BIN PUTIH 

Independent Non- Executive Director 

DATUK MOHD ZAID BIN IBRAHIM 


Dato’ Zainal Abidin bin Putih, 61 years of age and a 

Malaysian. He was appointed as Independent Non- 

Executive Director of Tenaga Nasional Berhad on 1 

May 2003. He serves as a member of the Board Audit 

Committee as well as the Board Finance & Investment 

Committee. 

He is presently the Chairman of the Malaysian 

Accounting Standards Board (MASB), Mobile 

Money International Sdn. Bhd. and a Trustee of IJN 

Foundation. 

He is a qualified Chartered Accountant from the 

England and Wales Institute. He has extensive 

experience in Public Accounting Practice and has held 

various positions such as Partner, Executive Director, 

Country Managing Partner and Chairman in the firm 

of Hanafiah Raslan & Mohamed , which merged with 

Ernst & Young in 2002. 

He was also the past Chairman of Mentakab Rubber 

Company Berhad, Pengurusan Danaharta Nasional 

Berhad, a past President of Malaysian Institute of 

Certified Public Accountant (MICPA), a past member of 

Multimedia & Communication Commission of Malaysia 

and a past Advisor to Ernst & Young Malaysia. 

Datuk Mohd Zaid bin Ibrahim, 56 years of age and 

a Malaysian, was appointed as a Non-Independent 

Non-Executive Director of Tenaga Nasional Berhad 

on 15 June 2004. He chairs the Board Disciplinary 

Committee and a member of Board Finance & 

Investment Committee. 

He has wide and extensive experience in legal matters 

which covers corporate, administrative, constitutional, 

construction, financing and commercial law. He has 

served as an advocate and solicitor of the High Court 

of Malaya and as a Notary Public. Datuk Mohd Zaid is 

also the Chairman of Messrs. Zaid Ibrahim & Co. 

He is a qualified Barrister-at-Law from the Inner Temple, 

United Kingdom and a holder of Bachelor of Laws 

(Hons) from University of London, United Kingdom. 

Datuk Mohd Zaid attended 14 out of the 17 Board 

Meetings held in the Financial Year. 

He also sits on the Board of Bumiputra-Commerce 

Holdings Berhad, ESSO Malaysia Berhad, CIMB 

Investment Bank Berhad and CIMB Bank Berhad. 

Dato’ Zainal Abidin bin Putih attended 13 out of the 17 

Board Meetings held in the Financial Year. 

89 



DATO’ FUAD BIN JAAFAR 

Independent Non-Executive Director 

Dato’ Fuad bin Jaafar, 64 years of age and a Malaysian, 

was appointed as Independent Non-Executive Director 

of Tenaga Nasional Berhad on 15 March 2007. He sits 

on the Board Tender Committee, Board Disciplinary 

Committee and Board Nomination & Remuneration 

Committee. 

He is a holder of a Diploma in Technology from Brighton 

University, United Kingdom. 

He has served in various capacities during his tenure 

with Tenaga Nasional Berhad holding positions such 

as Assistant Distribution Engineer, Senior District 

Manager, Construction Engineer, Assistant Senior 

Construction Engineer, Senior Construction Engineer, 

Deputy Chief Engineer/Assistant General Manager 

and Deputy General Manager. In January 1994, Dato’ 

Fuad bin Jaafar became the General Manager for 

Transmission Division and later became the Senior 

General Manager for Energy Supply. On 4 September 

1997, he was appointed as TNB’s Chief Operating 

Officer and Executive Director and subsequently on 16 

October 2000 he was appointed as the President/Chief 

Executive Officer of Tenaga Nasional Berhad. 

He attended all the 8 Board Meetings held in the 

Financial Year since his appointment on 15 March 

2007. 

DATUK ZALEKHA BINTI HASSAN 


(Alternate Director to Dato’ Puteh Rukiah 

binti Abd Majid) 

Datuk Zalekha binti Hassan, 54 years of age and 

a Malaysian. She was appointed as the Alternate 

Director to Dato’ Puteh Rukiah binti Abd Majid on 13 

September 2006. 

She is a holder of Bachelor of Arts (Hons) from University 

of Malaya, Malaysia. 

She has held various key positions in the civil service 

among others, as Deputy Under Secretary in the 

Government Procurement Management of the 

Ministry of Finance, Senior Assistant Director with the 

Budget Division of the Ministry of Finance, Principal 

Assistant Secretary with the Ministry of National 

Unity and Community Development, Principal 

Assistant Secretary with the Ministry of Welfare, 

Principal Assistant Secretary with the Public Services 

Department, Assistant Secretary with the Ministry of 

Health and Assistant Director with the Public Services 

Department. She is currently the Under Secretary for 

the Government Procurement Management Division, 

Ministry of Finance. 

She also sits on the Board of Konsortium Baja Nasional 


Datuk Zalekha attended 2 out of 2 Board Meetings held 

in the Financial Year on behalf of Dato’ Puteh Rukiah 

binti Abd Majid. 

90 



Report 

The Board Audit Committee (BAC) was established on 9 December 1990 

by the Board of Directors, to assist them to carry out their responsibilities. 

The BAC is guided by their Terms of Reference which is set out in pages 94 

to 103 of the Annual Report. 

Membership And Meetings 

The details of the BAC members and the number of meetings which they attended during the financial year 

were as follows: 

No. 

Name 

Status of 

Directorship 

Independent 

No. of Meetings 

Attended 

1. 

Tan Sri Dato’ Lau Yin Pin @Lau 

Yen Beng (Chairman) 

Non-Executive 

Director 

Yes 17/17 

2. 

Tan Sri Dato’ Hari Narayanan 

a/l Govindasamy 

Non-Executive 

Director 

Yes 16/17 

3. Dato’ Zainal Abidin bin Putih 

Non-Executive 

Director 

Yes 17/17 

4. 

Encik Mohammad Zainal bin 

Shaari 

Non-Executive 

Director 

No 13/17 

On 1 April 2007, Encik Mohammad Zainal bin Shaari who was previously an alternate director, was appointed 

as a member of the BAC to replace Dato’ Azman bin Mokhtar who retired on 31 March 2007. 

According to the BAC’s Terms of Reference, the Committee shall convene meetings as and when required, 

and at least six (6) times during the financial year. The Committee met seventeen (17) times, and five (5) of 

the meetings were held at station offices. The meetings at the station offices enabled the BAC members and 

operating management to interact and facilitated feedback to improve systems and performance. 

The Chief Internal Auditor, and Company Secretary who is also the secretary to the BAC, were in attendance 

during the meetings. The President/Chief Executive Officer was present during the meetings at the invitation 

of the BAC to provide feedback on strategic and operational matters, and also expedite the implementation 

and monitoring of corrective actions by operating management. Officers of the Company were also invited 

to attend the meetings on the matters requiring their attention, feedback and corrective actions. 

The BAC Chairman submits a report on matters deliberated to the Board of Directors after each BAC 

meeting. 

91 


Board Audit Committee Report 

SUMMARY OF ACTIVITIES OF THE 

BOARD AUDIT COMMITTEE 

A summary of the activities performed by the BAC 

during the financial year is set out below. 

Risk Management 

• Reviewed the adequacy of the Group’s risk 

management system for identifying and managing 

the Group’s risks. 

• Reviewed the Group’s Bi-annual Strategic 

and Operating Risk Profiles, and the activities 

undertaken by the Enterprise Wide Risk 

Management Department to promote and improve 

risk management awareness and processes. 

• Reviewed revisions made to the Enterprise Wide 

Risk Management Policy to extend the scope of risk 

management activities and enhance accountability 

over risk management processes. 

Internal Audit 

• Reviewed and approved Group Internal Audit 

(GIA)’s Budget and Annual Audit Plan to ensure 

adequacy of resources and coverage on auditable 

entities with significant and high risks. 

• Reviewed internal audit reports issued by GIA and 

external parties on the effectiveness and adequacy 

of risk management, operational, compliance and 

governance processes. 

• Reviewed the adequacy and effectiveness of 

corrective actions taken by management on all 

significant matters raised. 

• Reviewed the results of ad-hoc investigations 

performed and confirmed that appropriate actions 

are taken to correct the weaknesses. 

• Reviewed and approved the revised GIA Charter 

which was updated to incorporate professional 

practices and standards. 

External Audit 

• Reviewed and approved the External Audit Plan 

and the scope for the annual audit. 

• Deliberated and reported the results of the annual 

audit to the Board of Directors. 

• Recommended to the Board of Directors the 

appointment and remuneration of the Group 

External Auditor. 

• Met with the Group External Auditor without the 

presence of management to discuss any matters 

that they may wish to present. 

Financial Results 

• Reviewed the Quarterly and Annual Financial 

statements of the Company and Group including 

announcements, and recommended them to the 

Board for their approval. 

Related Party Transactions 

• Reviewed the system for identifying, monitoring 

and disclosing related party transactions for TNB 

and its subsidiaries. 

Annual Reporting 

• Reviewed and recommended the Statement on 

Corporate Governance, Statement on Internal 

Control, Board Audit Committee Report and Circular 

to Shareholders on Related Party Transactions to 

the Board for approval. 

GROUP INTERNAL AUDIT 

The internal audit function of the Group is carried 

out by the GIA Department. GIA is independent and 

reports directly to the BAC. 

GIA provides independent, objective assurance on areas 

of operations reviewed, and advice on best practices 

that will improve and add value to the Group. 

• Reviewed the performance of the GIA 

Department. 

92 


Board Audit Committee Report 

A systematic and disciplined approach is adopted to evaluate the adequacy 

and effectiveness of the risk management, financial, operational, compliance 

and governance processes. Internal audit activities are aligned to the strategic 

plan/objectives of the company. A risk-based methodology is adopted to 

ensure that the relevant controls addressing risks are reviewed regularly. 

During the Financial Year, a total of 45 reports covering 109 assignments 

were issued. The areas of coverage includes generation, transmission, 

distribution, procurement, projects, finance, human resource, logistics, 

information and communication technology, investments in subsidiaries and 

risk management. 

The reports issued provide independent and objective assessment of the 

following: 

• Existence, effectiveness and adequacy of the internal control systems to 

manage operations and safeguard the Group’s assets. 

• Adequacy and effectiveness of the risk management operations, 

governance and compliance functions to manage and anticipate potential 

risks over key business processes. 

The internal audit reports arising from the assignments were issued to 

management for their response and corrective actions. Deadlines to complete 

the relevant preventive and corrective actions were also provided. The reports 

were subsequently tabled to the BAC for their deliberation. Management 

staff was present during the deliberation of the reports to ensure that they 

undertake the responsibility of carrying out preventive and corrective actions 

on the weaknesses reported. 


Chairman 


Tenaga Nasional Berhad 


93 


Terms Of Reference 

Of The Board Audit Committee 

1. CONSTITUTION 

1.1 The Board of Directors of Tenaga Nasional Berhad (TNB), in accordance with Article 146 of the 

Memorandum and Articles of Association of TNB, has established a Committee of the Board, 

known as the Board Audit Committee (BAC), vide Minute No. 39/90 on 9 October 1990. 

1.2 The function and authority of the BAC extends to TNB and all its subsidiaries, joint ventures and 

associates where management responsibility is vested in TNB or subsidiaries of TNB (collectively 

referred to as the Group). 

2. COMPOSITION OF THE COMMITTEE 

2.1 The members of the BAC shall be appointed by the Board of Directors of TNB and shall consist of 

not less than three (3) members, the majority of whom shall be independent in accordance with 

the definition in Bursa Malaysia Listing Requirements. 

2.2 Where the members for any reason are reduced to less than three (3), that Board shall within 

one (1) month of the event, appoint such number of new members as may be required to make 

up the minimum number of three (3) members. 

2.3 At least one (1) member of the Committee must meet the criteria set by the Bursa Malaysia 

Listing Requirements, i.e.:- 

i) must be a member of the Malaysian Institute of Accountants; or 

ii) if he/she is not a member of the Malaysian Institute of Accountants; he must have at least 

three (3) years working experience, and: 

a) he/she must have passed the examinations specified in Part 1 of the 1st Schedule of the 

Accountants Act 1967; or 

b) he/she must be a member of one of the associations of accountants specified in Part II of 

the 1st Schedule of the Accountants Act 1967. 

2.4 The Board shall elect a Chairman from the Committee who shall be an independent director as 

set out in the Bursa Malaysia Listing Requirements. 

2.5 All members shall hold office only for as long as they serve as directors of TNB. 

2.6 No alternate Directors shall be appointed to the BAC. 

94 


Terms Of Reference Of The Board Audit Committee 

3. CHAIRMAN OF THE COMMITTEE 

3.1 The following are the main duties and responsibilities of the Chairman of the Committee: 

3.1.1 to steer the Committee to achieve its objectives; 

3.1.2 to provide leadership to the Committee and ensure proper flow of information to the 

Committee, review adequacy and timing of documentation; 

3.1.3 to provide a reasonable time for discussion at the Committee meetings. Organise and 

present the agenda for Committee meetings based on input from Members and ensure 

that all relevant issues are on the agenda. In addition, the Chairman should encourage 

a healthy level of skepticism and independence; 

3.1.4 to ensure that consensus is reached on every Committee resolution and where considered 

necessary, call for a vote and the decision will be made by simple majority. Dissenting 

opinions should be captured; 

3.1.5 to manage the process and working of the Committee and ensure that the Committee 

discharges its responsibilities; 

3.1.6 to ensure that all members participate in the discussion to enable effective decisions to 

be made; and 

3.1.7 the Chairman of the BAC shall be available to answer questions about the Committee’s 

work at the Annual General Meeting of the Company. 

4. COMMITTEE MEMBERS 

4.1 Each Committee Member is expected to: 

4.1.1 provide independent opinions to the factfinding, analysis and decision making process 

of the Committee, based on their experience and knowledge; 

4.1.2 consider viewpoints of the other committee members; and make decisions and 

recommendations for the best interest of the Group; 

4.1.3 keep abreast of the latest corporate governance guidelines in relation to the Committee 

and the Board as a whole; and 

4.1.4 continuously seek out best practices in terms of the processes utilised by the Committee, 

following which these should be discussed with the rest of the Committee for possible 

adoption. 

5. OBJECTIVES OF THE COMMITTEE 

The objectives of the Committee are: 

5.1 to ensure transparency, integrity and accountability in the Group’s activities so as to safeguard 

the rights and interests of the shareholders; 

5.2 to provide assistance to the Board in fulfilling its fiduciary responsibilities relating to corporate 

accounting and reporting practices; 

5.3 to improve the Group’s business efficiency, the quality of the accounting and audit function and 

to strengthen public confidence in the Group’s reported financial results; 

95 


Terms Of Reference Board Audit Comittee Report 

5.4 to maintain, through regularly scheduled meetings, a direct line of communication between the 

Board and the External and Internal Auditors; 

5.5 to ensure the independence of the external and internal audit functions; and 

5.6 to create a climate of discipline and control which will reduce the opportunity for fraud. 

6. AUTHORITY OF THE COMMITTEE 

The Committee is authorised by the Board to: 

6.1 investigate any activity within its Terms of Reference; or as directed by the Board of Directors; 

6.2 determine and obtain the resources required to perform its duties, including approving the budget 

for the external and internal audit functions; 

6.3 have full and unrestricted access to all employees, the Group’s properties and works, to all books, 

accounts, records and other information of the Group in whatever form; 

6.4 have direct communication channels with external auditors and person(s) carrying out the internal 

audit function or activity for the Group; 

6.5 direct the Internal Audit Function in the Group; 

6.6 approve the appointment of the Head of Internal Audit; 

6.7 engage independent advisers and to secure the attendance of outsiders with relevant experience 

and expertise if it considers this necessary; and 

6.8 to review the adequacy of the structure and Terms of Reference of the Board Committees, including 

the BAC. 

7. FUNCTIONS OF THE COMMITTEE 

The functions and responsibilities are as follows: 

7.1 Corporate Financial Reporting 

7.1.1 To review and recommend acceptance or otherwise of accounting policies, principles and 

practices. 

7.1.2 To review the quarterly results and annual financial statements of the Company and 

Group before submission to the Board. The review should focus primarily on: 

i. any changes in existing or implementation of new accounting policies; 

ii. major judgement areas, significant and unusual events; 

iii. significant adjustments resulting from audit; 

iv. the going concern assumptions; 

v. compliance with accounting standards; and 

vi. compliance with Bursa Malaysia Listing Requirements and other legal and statutory 

requirements. 

7.1.3 To review with management and the external auditors, the results of the audit including 

any difficulties encountered. 

96 



7.2 Enterprise-Wide Risk Management 

7.2.1 To review the adequacy of and to provide independent assurance to the Board of the 

effectiveness of risk management functions in the TNB Group. 

7.2.2 To ensure that the principles and requirements of managing risk are consistently adopted 

throughout the TNB Group. 

7.2.3 To deliberate on the key risk issues highlighted by Group Risk Management Committee in 

their reports to BAC. 

7.3 Internal Control 

7.3.1 To assess the quality and effectiveness of the systems of internal control and the efficiency 

of the Group’s operations. 

7.3.2 To review the findings on internal control in the Group by internal and external auditors. 

7.3.3 To review and approve the Statement on Internal Control for the Annual Report as required 

under Bursa Malaysia Listing Requirements. 

7.4 Internal Audit 

7.4.1 To approve the Corporate Audit Charters of internal audit functions in the Group. 

7.4.2 To ensure that the internal audit functions have appropriate standing in the Group and 

have the necessary authority and resources to carry out their work. This includes a review 

of the organisational structure, resources, budgets and qualifications of the internal audit 

personnel. 

7.4.3 To review internal audit reports and management’s response and actions taken in respect 

of these. Where actions are not taken within an adequate time frame by management, the 

BAC will report the matter to the Board. 

7.4.4 To review the adequacy of internal audit plans and the scope of audits, and ensure that the 

internal audit functions are carried out without any hindrance. 

7.4.5 To appraise the performance of Head of Internal Audit. 

7.4.6 To be informed of resignations and transfers of senior internal audit staff and provide 

resigning/transferred staff an opportunity to express their views. 

7.4.7 To direct any special investigation to be carried out by Internal Audit. 

7.5 External Audit 

7.5.1 To nominate the External Auditors together with such other functions as may be agreed to 

by the Board and recommend for approval of the Board the external audit fee, and consider 

any questions of resignation or termination. 

7.5.2 To review external audit reports and management’s response and actions taken in respect 

of these. Where actions are not taken within an adequate timeframe by management, the 

BAC will report the matter to the Board. 

7.5.3 To review external audit plans and scope of work. 

7.5.4 To meet the external auditors at least twice a year to discuss problems and reservations 

arising out of external audits and any matters the auditors may wish to discuss, in the absence 

of management, Executive Directors or non-independent Directors where necessary. 

97 



7.6 Corporate Governance 

7.6.1 To review the effectiveness of the system for monitoring compliance with laws and 

regulations and the results of management’s investigation and follow up (including 

disciplinary action) of any instances of noncompliance. 

7.6.2 To review the findings of any examinations by regulatory authorities. 

7.6.3 To review any related party transaction and conflict of interest situation that may arise 

within the Group including any transaction, procedure or course of conduct that raises 

questions of integrity. 

7.6.4 To review and approve the Statement of Corporate Governance for the Annual Report as 

required under Bursa Malaysia Listing Requirements. 

7.6.5 To review the investor relations programme and shareholder communications policy for the 

company. 

7.6.6 To examine instances and matters that may have compromised the principles of corporate 

governance and report back to the Board. 

7.6.7 To develop and regularly review TNB’s Code of Corporate Governance and Business Ethics. 

7.6.8 Where the BAC is of the view that a matter reported by it to the Board has not been 

satisfactorily resolved, resulting in a breach of Bursa Malaysia Listing Requirements, the BAC 

must promptly report such matters to Bursa Malaysia. 

8. COMMITTEE MEETINGS 

8.1 The Committee shall convene meetings as and when required, and at least six (6) times during the 

financial year of TNB. 

8.2 The number of Committee meetings held a year and the details of attendance of each individual 

member in respect of meetings held should be disclosed in the annual report. 

8.3 The Chairman of the Committee, or the Secretary on the requisition of any member, the Head of 

Internal Audit or the External Auditors, shall at any time summon a meeting of the Committee by 

giving reasonable notice. It shall not be necessary to give notice of a Committee meeting to any 

member for the time being absent from Malaysia. 

8.4 No business shall be transacted at any meeting of the Committee unless a quorum is present. The 

quorum for each meeting shall be three (3) members. 

8.5 The Chairman of the Committee shall chair the Committee meetings and in his absence, the 

members present shall elect one amongst themselves to be the Chairman of the meeting. 

8.6 In appropriate circumstances, the Committee may deal with matters by way of circular reports and 

resolution in lieu of convening a formal meeting. 

8.7 Officers of the Group or others as necessary may be invited to attend meetings where the Committee 

considers their presence necessary. 

8.8 All recommendations of the Committee shall be submitted to the Board for approval. 

98 



8.9 A Committee member shall excuse himself/herself from the meeting during discussions or 

deliberations of any matter which gives rise to an actual or perceived conflict of interest situation 

for the member. Where this causes insufficient Directors to make up a quorum, the Committee has 

the right to appoint another Director(s), which meets the membership criteria. 

8.10 The Committee, through its Chairman, shall report to the Board after each meeting. 

8.11 Subject to the provisions of this Terms of Reference and Memorandum and Articles of Association 

of TNB, the Committee shall establish its own procedures for meetings. 

9. SECRETARY OF THE COMMITTEE 

9.1 The Secretary of the Committee shall be the Company Secretary. 

9.2 The Secretary shall draw up an agenda for each meeting, in consultation with the Chairman of the 

Committee. The Agenda shall be sent to all members of the Committee and the Head of Internal 

Audit at least three (3) working days before each meeting together with the relevant papers. 

9.3 The Secretary shall promptly prepare the written minutes of the meeting and distribute it to each 

member. The minutes of the Committee meeting shall be confirmed and signed by the Chairman of 

the meeting at the next succeeding meeting. 

9.4 The minutes of each meeting shall be entered into the minutes book kept at the registered office 

of the Company under the custody of the Company Secretary. The minutes shall be available for 

inspection by the members of the Board, external auditors, internal auditors, and other persons 

deemed appropriate by the Company Secretary. 

10. DISCLOSURE 

10.1 The Committee shall assist the Board in making disclosures concerning the activities of the 

Committee, in the Report of the Board Audit Committee, to be issued in the Annual Report. 

10.2 The Board requires all Directors to submit a Disclosure of Interest to avoid any conflict between 

their personal interests and the interests of the Company. In the event of a conflict, either perceived 

or actual, this Disclosure of Interest shall be submitted to the Chairman of the Committee with a 

copy to the Company Secretary. 

11. REVISION OF THE TERMS OF REFERENCE 

11.1 Any revision or amendment to the Terms of Reference, as proposed by the Committee or any third 

party, shall be presented to the Board for its approval. 

11.2 Upon the Board’s approval, the said revision or amendment shall form part of this Terms of Reference 

and this Terms of Reference shall be considered duly revised or amended. 

99 


Statement On 

Internal Control 

BOARD RESPONSIBILITY 

The Board of Directors (Board) is responsible for Tenaga Nasional 

Berhad’s Group (“the Group”) system of internal control. The 

system is designed to meet the Group’s business objectives and 

safeguard shareholders’ investments, the interest of customers, 

regulators and employees, and the Group’s assets. The internal 

control system covers the areas of risk management, finance, 

operations, management information systems and compliance 

with the relevant laws, regulations, rules, directives and guidelines. 

The system provides a reasonable but not an absolute assurance, 

against material misstatement, loss or fraud. 

The Board has established an appropriate framework and on-going processes for identifying, 

evaluating and managing the significant risks faced by the Group. The process is regularly 

reviewed by the Board and is in accordance with the Statement on Internal Control: Guidance 

for Directors of Public Listed Companies. 

RISK MANAGEMENT 

The Board has put in place an Enterprise Wide Risk Management (EWRM) System to identify, 

assess, treat, report and monitor strategic and operational risks in the Group. This process is 

one of the Group’s key support processes and forms a part of TNB’s Corporate Office Quality 

Management System. The Board Audit Committee (BAC) reviews the effectiveness of this 

system bi-annually and is assisted by management in the review, treatment and monitoring 

of the Group’s strategic and operating risks. These reviews are presented to the Board for 

approval. Apart from these, the following activities/initiatives were reviewed by the BAC/ 

Board during the year: 

• Revision of the EWRM Policy to extend the applicability of the Policy to include major 

projects and new business ventures; establish Divisional Risk Management Committees; 

incorporate the roles and responsibilities of the Group Risk Management Working 

Committee and risk officers; and identify the approval authority of risk management 

matters at the management level. 

• Development and implementation of the Code of Ethics, Procurement Code of Conduct, 

Fraud Policy and Whistle Blowing Procedures to promote higher integrity and transparency 

as well as provide a feedback mechanism to further improve accountability and 

responsibility. 

• Development of an EWRM Training Module by Institut Latihan Sultan Ahmad Shah for 

the Group’s executive staff to promote risk awareness and improve employees’ risk 

management skills. 

100 


Statement On Internal Control 

CONTROL STRUCTURES 

The Board is committed to maintaining an effective 

control structure and environment for the proper 

conduct of the Group’s business operations. The 

following key internal control structures were 

implemented to ensure an effective control 

environment: 

Board and Management 

Committees 

To promote corporate governance and transparency, 

Board and Management Committees (the Committees) 

were established by the Board. The roles of the 

Committees are to assist the Board to ensure the 

effectiveness of the Group’s operations and that the 

Group’s actions and operations are in accordance 

with approved strategies, objectives, business plans, 

and policies. The responsibilities and authority of 

the Committees are governed by specific terms of 

reference. These Committees report to the Board and 

make recommendations for the Board’s approval. The 

Committees are: 

Board Committees 

• Audit Committee 

• Tender Committee 

• Disciplinary Committee 

• Nomination & Remuneration Committee 

• Finance & Investment Committee 

Management Committees 

• Group Executive Council Committee 

• Group Executive Management Committee 

• Energy Supply Committee 

• Tender Committees 

• Group Risk Management Committee 

Organisation Structure 

The Board has approved a divisional structure for the 

Group. The divisional structure enables the division 

heads to focus on their assigned core areas of the 

Group’s operations or support functions. Additionally, 

with each division and operating entity, clear lines 

of accountability and responsibilities have been 

established. Limits of authority are also established to 

govern the management of financial and non financial 

approval limits. 

Management Information Systems 

The Board recognises the importance of the use of 

information and communication technology to provide 

efficient and effective control over business operations, 

and timely and accurate reporting to stakeholders. 

During the year, the systems and projects undertaken/ 

embarked on were as follows: 

• Supervisory Control and Data Acquisition (SCADA) 

– Distribution Division. The system enables control 

and monitoring of the remote supply of electricity 

for the Distribution Division network from a 

centralised location. The project covers the whole 

of Peninsular Malaysia. Presently, the Metro Region 

SCADA covering Wilayah Persekutuan, Selangor 

and Petaling Jaya, has been completed. 

• Remote Meter Reading System (RMR). This system 

allows the reading of Large Power Customers’ (LPC) 

meters at remote locations. The High Voltage LPCs 

have already been installed with remote meters. 

The current project is aimed at installing RMR 

Systems for identified Low Voltage LPCs at the 

Northern, Central, Eastern and Southern Regions. 

• Distribution Network Information Management. 

This system provides a central engineering database 

and a suite of applications which can improve the 

areas of distribution planning, development and 

design; construction; operations and maintenance; 

asset management; customer service and workforce 

efficiency. 

• Electronic Banking Facilities. The e-banking 

platforms, Bizchannel and Maybank2e were 

implemented to increase the efficiency of the 

payment processing system with enhanced security 

features. 

• Electronic Document Management System. This 

system promotes a paperless mode of transmitting, 

storing and retrieving documents, and is being 

implemented in phases. 

The Board also reviews and refines the effectiveness 

of the Group and control structures to ensure that the 

Group’s strategic and operational requirements are 

met. 

101 



Group Policies and Procedures 

The Board has approved policies and procedures to 

govern the financial and operational functions of the 

Group. The objectives of the policies and procedures 

are to ensure that internal control principles/ 

mechanisms are embedded in operations. This enables 

the organisation to respond quickly to evolving risks 

and immediately report on any significant control 

failure. Amongst others, the policies and procedures 

implemented are: 

• Internal Control Guidelines 

• Group Financial Policies & Procedures 

• Safety & Health Policy 

• Environmental Policy 

• Investment Policy 

• Procurement Policy 

• Fraud Policy 

• Disciplinary Policy & Procedures 

• Information & Communication Technology Security 

Policy & Codes of Practice 

• Enterprise Wide Risk Management Policy & 

Guidelines 

• Limits of Authority 

• Code of Ethics 

• Procurement Code of Conduct 

• Whistle Blowing Procedures 

Revenue Maximisation Unit 

(RMU) 

During the financial year, the RMU was formed to 

reinforce the initiative to curb non-technical losses 

by the Special Engagement Against Losses (SEAL) 

Teams. RMU’s focus is to improve billing and collection 

processes especially for theft of electricity cases. 

MONITORING & REVIEW 

Business Planning & Budgeting 

Review 

Business plans, budgets and Key Performance Indicators 

(KPI)s are aligned to the Group’s 20 Year Strategic Plan, 

which guide the organisation in achieving its vision of 

becoming among the leading corporations in energy 

and related businesses globally. 

Based on strategies identified in the Strategic Plan, 

5 Year Business Plans and Annual Operation Plans 

together with KPIs are drawn up and approved by the 

Board. This is to ensure accountability and achievement 

of the Group’s objectives and strategies. Strategies 

are also revised based on the changes in business 

and operating environments. Inputs from the Board 

Breakout Sessions are used to develop the Five-Year 

and Annual Operating Plans. 

The Five-Year Business Plan and Annual Operating Plan 

also contain the budget of the Company, to enable the 

Company to direct its resources toward the achievement 

of its financial objectives. Effective utilisation of the 

budget is attained through regular monitoring by 

management. 

Financial and Operational 

Review 

Quarterly financial statements and the Group’s 

performance are reviewed by the BAC, who subsequently 

presents them to the Board for their review, 

consideration and approval. Monthly management 

accounts containing key financial results, operational 

performance indicators and budget comparisons are 

also issued to the Board and senior management to 

enable them to have regular and updated information 

of the Group’s performance. 

Board Interactions With 

Management via Board Break 

Out Sessions 

The Board plays an active role in breakout sessions 

held with management to discuss and review the plans, 

strategies, performance and risks faced by the Group. 

During the year, two breakout sessions were conducted. 

Strategic concerns were deliberated. Strategies and 

action plans were then reviewed and mandates were 

given to management by the Board to carry out the 

agreed strategies and action plans. 

102 



Group Internal Audit (GIA) 

The Board established the GIA Department to provide independent assurance on the adequacy 

of risk management, internal control and governance systems. GIA reports to the BAC. Regular 

reviews are carried out on the business processes to monitor compliance with the Group’s 

procedures, assess the effectiveness of internal controls and highlight significant risks impacting 

the Group. The BAC holds regular meetings to review internal audit reports, management 

actions and monitor the implementation of preventive and corrective actions for areas with 

significant and high risks. The scope of coverage by GIA includes the areas of generation, 

transmission, distribution, procurement and projects, finance, human resource, information and 

communication technology, investment in subsidiaries, and risk management and compliance. 

Annual Audit Plans are presented to the BAC for their review and approval. The review is to 

ensure adequacy of resources and sufficient coverage on significant and high risk areas. The 

audits in the Annual Audit Plans are mostly done internally, with some being outsourced or cosourced. 

Outsourcing and co-sourcing of internal audits are done to enable adequate coverage 

and the transfer of knowledge from external consultants through co-sourcing. 

CONCLUSION 

For the financial year under review, some weaknesses in internal control were identified. 

However, after due and careful inquiry and based on the information and assurance provided, 

the Board is satisfied that there were no material losses as a result of weaknesses in the system 

of internal control, that would require separate disclosure in Tenaga Nasional Berhad’s Annual 

Report. Nevertheless, for areas requiring attention, measures have been and are being taken to 

ensure ongoing adequacy and effectiveness of internal controls and to safeguard shareholders’ 

investments and the Group’s assets. 

This statement is made in accordance with the resolution of the Board of Directors dated 25 

October 2007. 

103 




2 1 3 

The Group Executive Council Committee (GECC) is the highest 

executive forum of the organisation and plays a key role in reviewing 

the Group’s policies, strategies and procedures, overall performance 

of the Group as well as the promotions of executives. 

GECC responsibilities range from coordinating business planning 

strategies and Group wide policies to the monitoring and overseeing 

of the effective implementation of activities and performance of other 

Group Management Committees which cover the appointments of 

members of the respective committees. 

During the Financial Year review, the Committee held nine 

meetings. 


President / Chief Executive Officer 

3. Dato’ Izzaddin Idris 

Chief Financial Officer 

2. Datuk Wira Md. Sidek bin Ahmad 

Senior Vice President, Operations & Technical 

104 


Energy Supply 

Committee 

This Committee is the highest management forum having the 

authority to endorse and approve all power system development 

plans and proposals for TNB in Peninsular Malaysia, and for SESB in 

Sabah, prior to submission to the TNB Board. The Committee also 

makes decisions related to major TNB’s core business operational 

issues as well as issues related to the expedition of on-going 

generation, transmission and primary distribution development 

projects in Peninsular Malaysia. 

1 2 3 4 5 6 

During the Financial Year under review, the Committee held four 

meetings. 

1. Dato’ Sri Che Khalib 

bin Mohamad Noh 



Senior Vice President, 

Operations & Technical 

3. Dato’ Abdul Razak 

bin Abdul Majid 

Vice President, Generation 

4. Ir. Ab’llah 

bin Haji Mohd Salleh 

Vice President, Transmission 

5. Dato’ Ir. Aishah 

binti Dato’ Haji Abdul Rauf 

Vice President, Distribution 

6. Ir. Baharin bin Din 

Managing Director, 

Sabah Electricity Sdn. Bhd. 

105 




The Group Executive Management Committee (GEMC) 

provides an avenue for the Senior Management to facilitate 

better coordination and effective interaction between the 

Company and its group of companies. 

2 3 1 4 5 

The GEMC is primarily responsible for formulating policies, 

procedures, strategies and undertaking operational decisions 

pertaining to operational matters, corporate issues, finance, 

human resource, corporate affairs and entrepreneur 

development. 

During the Financial Year review, the Committee held 14 

meetings. 




Senior Vice President, Operations & Technical 

4. Dato’ Abdul Razak bin Abdul Majid 

Vice President, Generation 

5. Dato’ Ir. Aishah binti Dato’ Haji Abdul Rauf 

Vice President, Distribution 

3. Dato’ Izzaddin Idris 


106 


Group Executive Management Committee 

10 

8 7 9 

6 

6. Ir. Ab’llah bin Haji Mohd Salleh 

Vice President, Transmission 

7. Dato’ Nik Ibrahim bin Nik Mohamed 

Vice President, Investment Management 

9. Dato’ Che Zurina binti Zainul Abidin 

Vice President, Corporate Services 

10. Razali bin Awang 

Chief Information Officer 

8. Dato’ Kamaruzzaman bin Jusoh 

Vice President, Human Resource 

107 


Switchgears Safeguarding 

Your Assets 

108 


109 


Operations 

Review 

110 


Datuk Wira Md Sidek bin Ahmad 

Senior Vice President 

(Operations & Technical) 

“ 

FY2007 was a great year that saw our 

28,000 employees living the brand 

through our T7 and SE 10/10 strategies. 

As a result, our operational and technical 

competence elevated and TNB was able to 

deliver on our credible KPIs. 

“ 

111 


Operations 

Review 

Dato’ Abdul Razak bin Majid 

Vice President 

Generation 

“ 

Towards World Class Generation Performance - 

As our operational performance improves year 

after year, our confidence grows. We are aligning 

our resources to expand our services to be among 

the top players globally. We strive on quality and 

excellence in every aspect of our operations. We 

seek to satisfy our customers and all stakeholders 

using technology through a committed and trained 

workforce. 

“ 

112 


Generation 

Highlights of Achievements: 

• Best Equivalent Unplanned Outage Factor (EUOF) ever achieved 

of 2.15 per cent. Better than the global industry benchmark of 

four per cent 

• Further improvement of the power plant Equivalent Availability 

Factor (EAF) exceeding 90 per cent and comparable to 

international benchmarks 

• Further improvement in thermal efficiency achieved 

• Our engineers are playing a key role in the planning and 

construction of Shuaibah Independent Water and Power Project 

in partnership with a group of Malaysian and Saudi Arabian 

companies 

• Four out of six finalists in TNB President’s Quality Award (AKP) 

this year are from Generation Division power stations 

• All power stations and Generation Division headquarters are 

MS ISO 9001:2000 certified. All power stations are MS ISO 14001 

certified and some stations have won many other national 

awards e.g. Malaysian Society for Occupational Safety and 

Health (MSOSH), 5S, Innovative and Creative Circle Convention 

(ICC Convention), etc 

113 


Generation 

The Generation Division not only operates and 

maintains TNB’s portfolio of power plant assets, but 

it is also involved in procuring and developing new 

power plant projects and giving utility-related technical 

services to customers at home and abroad. The Division 

is one of the three core divisions in TNB being headed 

by a Vice President (Generation). 

Generation Division’s main activity is operating and 

maintaining six thermal power stations and three 

major hydroelectric schemes in Peninsular Malaysia. 

The Division also gives support to the operation and 

maintenance of two IPPs (a wholly-owned and a 

majority-owned namely, Sultan Azlan Shah Power 

Station and Sultan Salahuddin Abdul Aziz Shah Power 

Station respectively). REMACO Sdn. Bhd., a business 

unit under this Division, provides maintenance and 

workshop services to fulfil the requirements of our 

generating fleet comprising of conventional thermal, 

open cycle and combined cycle gas turbines steam 

turbines and hydroelectric power plants. Currently 

REMACO is under contract to operate and maintain 

the power plant owned by TNB Liberty Power Limited 

of Pakistan, which currently is the only IPP fully owned 

by TNB overseas. The thermal power stations above use 

natural gas, coal, or oil as fuel. The Generation Division 

also provides technical expertise in other power plant 

ventures undertaken locally and overseas. 

For FY2007, the Division’s overall performance can 

be summarised by the Key Performance Indicators as 

shown in the chart below: - 

Generation Division Key 

Performance Indicators FY2007 

Sales 

(%GWh) 

FY06 

FY07 

90% 

FY07 

101.6% 

98% 

NI ME EE 

NI ME EE 

90% 

98% 

FY06 

104% 

Availability 

(%) 

FY06 

90.22% 

FY06 

91.15% 

FY06 

FY07 

84% 

86.5% 

NI ME EE 

NI ME EE 

86% 88% 

Unplanned 

Outage(%) 

FY06 

3.07% 

FY07 

2.14% 

FY06 

FY07 

6.0% 

4.0% 

NI ME EE 

NI ME EE 

4.5% 4.0% 

EE - Exceeds Expectations 

ME - Meets Expectations 

NI - Needs Improvement 

114 


Generation 

Operational Summary 

TNB’s total installed capacity remains at 8,416 MW (excluding KEV). It comprises of 6,505 MW 

thermal and 1,911 MW hydroelectric power plants. With an additional capacity of 2,400 MW 

from KEV, TNB contributes 56.96 per cent of the total installed capacity in Peninsular Malaysia. 

KEV 

12.72% 

TNB 

44.24% 

MNJG 

5.97% 

PAKA 

5.97% 

CBPS 

4.37% 

PGPS 

3.83% 

GLGR 

2.09% 

IPPs 

43.04% 

HYDRO 

10.05% 

TJPS 

3.76% 

PJPS 

3.29% 

TNB Fuel Mix (%) 

MEDIUM FUEL OIL 

(MFO) 

0.04% 

DISTILLATE 

0.10% 

HYDRO 

30.62% 

GAS 

55.84% 

COAL 

30.62% 

The maximum power demand in Peninsular Malaysia for the period under review was 13,620 

MW, recorded on 8 August 2007. The year-on-year capacity demand growth rate of 4.85 per 

cent indicates a rise from last year’s 3.98 per cent. The Division’s total energy sales is 35,973 GWh 

of the system total sales of 92,144 GWh. With the additional sales of 9,482 GWh from KEV, TNB’s 

market share is 49.33 per cent. 

115 


Generation 

4,500 

4,000 

TNB USO - GWh 

TNB 

Target 

3,500 

3,000 

GWh 

2,500 

2,000 

1,500 

3,133 3,308 3,056 2,760 3,088 2,633 2,958 2,736 2,995 3,820 2,872 3,033 

1,000 

500 

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 

IPPs 

50.67% 

Overall Generation Market Share 

by Energy FY07 

KEV 

10.29% 

TNB 

39.04% 

MNJG 

11.94% 

PAKA 

8.04% 

HYDRO 

5.27% 

CBPS 

2.32% 

TJPS 

5.98% 

PGPS 

2.34% 

GLGR 

2.13% 

PJPS 

1.02% 

116 


Generation 

Continued efforts to improve plant thermal efficiency and cost management resulted in further 

reduction of our generation operating cost. The above cost reduction was achieved in spite of 

the volatility and surge in the world delivered coal and oil price. The price of natural gas from 

Petronas, however, remained fixed. Generation from natural gas as fuel contributed to 55.8 per 

cent of the total energy sent out by Generation Division, followed by coal at 30.6 per cent and 

hydro at 15.4 per cent. TNB plants’ generation fuel mix for the period under review has not 

changed compared to the last Financial Year. 

After surging past the 90 per cent mark last year, TNB Generation’s Equivalent Availability Factor 

(EAF) this year improved further from 90.2 per cent last year to 91.2 per cent. All the stations 

in the Division exceeded 90 per cent EAF except one. Benchmarked against North America 

Realiability Council (NERC), 10 units operated and maintained by the Division performed better 

than the median of NERC peer group of 92.06 per cent. The equivalent unplanned outage rates 

(EUOR) of the same 10 units are also better than the top quartile in comparison with NERC peer 

group. 

100.0 

Trending of Equivalent Availability Factor 

95.0 

Percentage 

90.0 

85.0 

85.7 

87.6 

87.2 

85.0 

85.6 

90.2 

91.2 

80.0 

83.2 

83.3 

80.4 

81.7 

75.0 

97 98 99 00 01 02 03 04 05 06 07 

Financial Year 

117 


Generation 

16 

14 

Trends of Equivalent Unplanned Outage Factor 

14.2 

12 

EUOF (%) 

10 

8 

6 

9.8 

9.0 

9.5 

6.1 

4 

2 

3.1 

2.1 

0 

FY01 

FY02 FY03 FY04 FY05 FY06 FY07 


TNB’s overall net thermal efficiency rose to 37.58 per cent from the previous year’s 36.15 per 

cent and against a target of 36.2 per cent. Targets set for the power stations were exceeded by 

most, thanks to the high output factor of the plants. 

38 

37 

36 

THERMAL EFFICIENCY (FY03 - FY07) 

Thermal Efficiency (%) 

Higher plant efficiency is due 

to higher sales from combined 

cycle plant and less from OCGT, 

and availability 

36.9 

36.22 

37.58 

EUOF (%) 

35 

34 

33 

33.7 

35.4 

32 

31 

FY03 

FY04 FY05 FY06 FY07 


118 


Generation 

Improvement Initiatives 

FY2007 saw the end of TNB’s T7 Programme. In 2007, Generation Division had four key initiatives 

to deliver, namely: 

1. Reduce Equivalent Unplanned Outage Rate 

2. Optimise Maintenance and Management of Planned Outage 

3. Project on Time and Within Budget 

4. Improve Technical Competency of Staff 

In summary, Generation Division concluded its T7 Programme with success and contributed to 

the overall technical performance. 

Reduce Equivalent Unplanned Outage Rate (EUOR) 

For the Reduce Unplanned Equivalent Outage Rate (EUOR) Initiative, Generation Division 

achieved EUOR figures of 2.05 per cent for Combined Cycle plants and 1.90 per cent for Coal 

plants, against the target of four per cent and three per cent for Combined Cycle plants and 

Coal plants respectively. Generation Division is very proud that all power stations managed to 

achieve their EUOR target for this Financial Year. 

Optimise Maintenance and Management of Planned Outage 

For FY2007, Generation Division successfully implemented Reliability Centred Maintenance 

(RCM) modules in all its power stations with the Risk-Based Inspection (RBI) implementation 

ongoing. These programmes have already started showing results with planned outage overrun 

contained at 0.27 per cent and (EAF) improved to 91.2 per cent, both showing improvements 

over the previous year. The performance is a result of better understanding of the power plants 

through systematic and detailed discussions amongst experienced engineers and technicians 

in producing policies on plant failures prevention by the implemention through correct 

maintenance at the right time on each sub-system and component of the power plant. RCM 

and RBI not only improve the plant reliability, but have also reduced the maintenance cost 

considerably. 

To enhance RBI and RCM the Division has embarked on another improvement programme by 

procuring the Generation Plant Management System (GPMS) to be installed in all the power 

plants and those linked to the Division headquarters. The pilot project was commissioned 

in Sultan Azlan Shah Power Station, Manjung in January 2007. Phase 2 of the project is 

currently undertaken to link real time data from all the other power stations to Generation 

headquarters. 

119 


Generation 

Project on Time and Within Budget 

Two major projects were ongoing in 2007 – the Cameron Highlands Rehabilitation Project and 

the PD 2 Combined Cycle Gas Turbine Project. The PD 2 project at Tuanku Jaafar Power Station is 

to install a 750 MW gas-fired combined cycle plant. It is expected to be completed by December 

2008 and currently 85 per cent of the project has been completed. In Cameron Highlands the 

project is to rehabilitate a 40 year scheme including de-silting of the Ringlet Lake to recover live 

storage volume. Work is scheduled for completion in December 2008. 

Besides the above, new projects are currently being initiated or acquired in this Financial Year. 

Preliminary engineering work, including detailed Environmental Impact Assessment (EIA) studies 

are being undertaken at Ulu Jelai 372 MW and Ulu Terengganu 212 MW Hydroelectric Projects. 

The studies are prerequisite for the final plant configuration and design. The projects are due 

for completion in the year 2013-2014. Generation Division, through REMACO, successfully won 

the bid for a 300 MW coal-fired conventional power plant in Sabah, against stiff competition 

from well established organisations. It is the first power plant project in Malaysia offered 

through a public tender exercise. 

The Division also provides the technical lead in the development of Shuaibah Independent 

Water and Power Project in Saudi Arabia. The project is a joint venture between a few Malaysian 

companies with local Saudi Arabian partners. 

Improve Technical Competency of Staff 

For FY2007, Generation Division had achieved an average of 10.3 training man-days per staff 

per year. The competency measurement done for non-executives showed a competency level 

of 89.18 per cent against the target of 87 per cent. This capacity and technical competency 

building initiatives are to ensure that staff meets the competency requirement of theirs job. 

Plant operation and maintenance staff clocked a minimum of seven training man-days in the 

year, while all categories of staff clocked a minimum of three. In the effort to improve plant 

reliability, RM450,000.00 was spent to train 300 power station personnel on RCM. Staff members 

were also sent to courses organised by SIRIM, NIOSH and NPC for other skills. Emphasis is given 

on mandatory job skills, training and high-impact training for specialist groups. 

Generation Division is very proud of its T7 success, indicating that continuous efforts at 

improvement are bearing results, and is confident that new initiatives to be undertaken in the 

SE 10/10 Programme will lead to a world class performance. 

120 


121 


Generation 

Quality Initiatives - Awards and Achievements 

Generation Division has been the trend setter in the AKP initiative since it was introduced in 

2001. This year, again four out of the six finalists selected for FY2007 AKP Award were from 

Generation Division. Led by Putrajaya Power Station with 810 points, on average, Generation 

Division received 755.31 points for AKP 2007. Eleven out of 12 business units exceeded the 

700 points mark to qualify as “sportsmen” or as “professional sportsmen” status (above 800 

points). 

Generation Division endeavours to create employees who are multi-skilled. Therefore, activities 

such as 5S and Work Improvement Teams are seriously implemented. Tuanku Jaafar Power 

Station won National 5S Competition (Open Category) in November 2006. Sultan Iskandar 

Power Station received their 5S Certification from the National Productivity Corporation in Mac 

2007. 

In our quest to achieve ‘World Class Generation Performance’, Generation Division has 

implemented various Total Quality Management (TQM) initiatives such as MS ISO 9001:2000, 

MS ISO 14001 (Environment) and OHSAS 18001 (Safety). All power stations have obtained MS 

ISO 9001:2000 and MS ISO 14001. Besides this, two power stations have received OHSAS 18001 

led by Putrajaya Power Station in year 2000 followed by Sultan Mahmud Power Station, Kenyir 

in 2001. The Generation Division headquarters got its MS ISO 9001:2000 certification last year. 

Other awards won by various power stations and units within the Divisions are as follows: 

2006 National Safety and Health Excellence Award 

• Tuanku Jaafar Power Station 

• Chenderoh Power Station 

• Ismail Petra Power Station 

2006 National Innovative and Creative Circle (ICC) Convention 

• P-Power, Sultan Iskandar Power Station: Emas 3 Bintang 

• EG, Sultan Iskandar Power Station: Emas 3 Bintang 

• Elegen, Gelugor Power Station: Emas 3 Bintang 

Malaysian Society of Occupational Safety and Health Award - 2006 

• Connaught Bridge Power Station, Tuanku Jaafar Power Station, Putrajaya Power 

Station, Sultan Iskandar Power Station: Gold Award Class 2 

• Gelugor Power Station: Silver Award 

122 


Generation 

Challenges and Prospects 

The electricity demand forecast for Peninsula Malaysia shows a healthy growth of more than 

five per cent per annum. Generation Division will endeavour to maintain a high level of 

performance whilst maintaining the least generation cost. Availability of a continuous supply 

of the normal fossil fuel currently in use by the power plants, as well as their fluctuating prices, 

will remain a major concern. In the meantime, the Division is fully engaged in the effort to use 

an optimum energy mix including alternative fuels, especially from renewable sources. 

The Division will also focus on expanding the services provided by REMACO i.e. in the field and 

repair shop services. Appropriate resources will be allocated to facilitate the expansion within 

the country and regional market. A state of the art workshop is being implemented to provide 

high quality services. 

123 


Operations 

Review 

Ir. Ab’llah bin Haji Mohd Salleh 


Transmission 

“ 

Transmission Division aims to be the 

region’s leading transmission entity and 

the centre of ASEAN Power Grid. All our 

strategies are geared towards these 

goals and our commitment in providing 

a safe, secure and reliable supply of 

electricity to the nation 

“ 

124 


Transmission 

Highlights of Achievements. 

• Maintains single digit System Minutes for two 

consecutive years. 

• Completed major refurbishment works of the KL 

Region’s assets (switchgears). 

• Completed upgrading of the Kinta Valley 66 kV network 

with 132 kV network. 

• Added 2,130 MVA transformer capacity into the system 

upon completion of 13 substation projects. 

• Reduced transmission system losses from 3.02 per cent 

to 2.32 per cent. 

125 


Transmission 

Divisional Goals 

The Division manages and operates the 132 kV, 

275 kV and 500 kV transmission grid of Peninsular 

Malaysia, known as the National Grid. The National 

Grid consists of approximately 17,836 circuit-km 

of overhead transmission lines, 741 circuit-km of 

underground transmission cables and 385 substations 

with transformation capacity of 75,828 MVA. During 

the year under review, 31 power stations, made up of 

TNB power stations and IPPs, are connected to the grid 

and maximum electricity demand of the system was 

recorded at 13,620 MW on 8 August 2007. 

The National Grid is interconnected to Thailand’s 

transmission system operated by Electricity Generating 

Authority of Thailand (EGAT) in the North via a 

HVDC interconnection with a transmission capacity 

of 300 MW and a 132 kV HVAC overhead line with 

maximum transmission capacity of 90 MW. In the 

South, the National Grid is connected to Singapore 

Power’s transmission system at Senoko via two 230 kV 

submarine cables with a firm transmission capacity of 

200 MW. 

The National Grid allows electricity generated at 

various power stations to be transmitted to main intake 

substations located at load centers. The objective of 

Transmission is towards “safe, reliable and economic” 

operation of the Electricity Supply. It plays an important 

role in ensuring reliable and sustainable electricity 

supply which is priced competitively as compared with 

utilities in the Region. 

In going forward, the Transmission Division is committed 

to be the region’s leading transmission entity and the 

center of ASEAN Power Grid, and therefore all our 

future efforts are geared towards these goals. 

Transmission system equipment database is as below:- 

Types of Lines 

Length/Capacity/No. 

500 kV Overhead Lines 890 (circuit-km) 

275 kV Overhead Lines 6,666 (circuit-km) 

132 kV Overhead Lines 10,280 (circuit-km) 

Total Overhead Lines Length 17,836 (circuit-km) 

275 kV Underground Cable 61 (circuit-km) 

132 kV Underground Cable 680 (circuit-km) 

Total Underground Cable Length 741 (circuit-km) 

Transfomer of 500 kV 

6,750 MVA 

Transformer of 275 kV 

27,273 MVA 

Transformer of 132 kV 

41,805 MVA 

Total Transformer Capacity 

75,828 MVA 

Substations of 500 kV 5 



Total Number of Substation 385 

- As of August 2007 

126 


Transmission 

Operation Summary 

Transmission Division closely aligns its core activities to support the goals and objectives of TNB. 

High priority was placed on the development of a safe, reliable and economical grid system in 

line with Transmission’s goal to be a major player in the ASEAN Grid network. 

The strategies are as follows: 

• Addressing Existing Vulnerabilities 

To cater for future demand growth and plant-up of new power station, new projects 

are being developed. TNB also developed new projects to reinforce transmission 

lines and substations to enhance supply reliability. In the efforts to ensure the system 

security, System Operations focuses on system voltage within limits, transmission 

equipment within limits and security criteria with the used of state-of-the-art on-line 

real time reliability assessment tools. On the Maintenance side, the Division focuses on 

condition monitoring technology, vigilant rentice management and replacement of 

aging equipment. 

• Gearing up For Excellence 

In line with the T7 strategy of Defend our Core, Transmission Division’s immediate 

focus would be gearing up for excellence in technical competency, infrastructure, 

work processes and capabilities. One of the key initiatives towards excellence is the 

development of an Intelligent Grid Network. 

• Exploring Beyond Our Borders 

Transmission Division intends to explore beyond our borders and participate in regional 

markets of ASEAN to improve revenue and to be a leading player in the ASEAN region. 

Malaysia is well placed to benefit from the ASEAN power grid via participation in the 

regional power markets. By participating in other regional markets TNB can expand its 

customer base to include other ASEAN countries. 

In the journey to support TNB towards Service Excellence in 2010 (SE 10/10), the Division is 

implementing two additional initiatives: 

• Zero tripping with load loss 

• Project excellence 

The focus in human resource management excellence and managing stakeholder relationships 

will enhance and complement the efforts in raising the effectiveness of the Division. 

127 


Transmission 

System Improvements 

The Division takes initiatives to ensure that transmission projects are completed on time and 

within budget. These initiatives include improvement of the procurement approach and 

practice; improve project specifications and BQ; and ensuring accurate project scoping together 

with enhanced QA/QC process. 

The Chubadak 275 kV substation near Gombak which is part of the Central Area Reinforcement 

(CAR) Project was completed and commissioned in May 2007. With the CAR Project being close 

to its completion date of December 2007, it would further strengthen the security of supply 

around Kuala Lumpur and the Klang Valley. 

The 500 kV transmission line that connects the Jimah IPP Coal Fired Power Station to Lenggeng 

Substation and to Olak Lempit Substation is progressing to be completed by December 2007. A 

total of 30 projects were fully completed and commissioned during the year in review. Out of 

these projects, 13 were substation projects that contribute to additional 2,130 MVA transformer 

capacity in the system. 

Improvement are not restricted to the Central region alone. In the North, the Division has 

upgraded the Kinta Valley 66 kV with the 132 kV system. This is a milestone in the achievement 

of supply reliability in Perak, yet marking another milestone in Transmission history whereby 

the whole of 66 kV system is now de-commissioned in the National Grid, with the exception of 

only one dedicated feeder connected for a particular customer. 

Major rehabilitation of the Skudai substation was completed to strengthen the electricity 

supply in the Southern region which also caters for the development of Wilayah Pembangunan 

Iskandar. 

In the Eastern region, the re-configuration of the Tanah Merah-Kenyir 275 kV transmission line 

into Kandis would strengthen the electricity supply to Kelantan. 

The upgrading of the National Load Despatch Center (NLDC) project has progressed satisfactorily 

and is scheduled for completion by 2008. Through this project TNB will acquire a state-of-theart 

SCADA system and Energy Management System (EMS) to meet the future needs of TNB, 

providing the technological support for secure operation and the development of an intelligent 

grid system. 

128 


Transmission 

Key Performance Indicators 

The Transmission Division applied the Balanced Scorecard approach in developing the Key 

Performance Indicators (KPIs). The Division is pleased to report that all major indicators are 

healthy. 

Technical performance was captured under the Customer and Internal Process perspectives. In 

addressing the Customer perspective, the Division achieved positive lower indices as against a 

set of stretched targets. The System Average Interruption Frequency Index (SAIFI) scored 0.16 

(namely, number per delivery point) against a target 0.25 – 0.29 whilst the System Average 

Interruption Index (SAIDI) stood at 14.93 minutes against a target of 20 – 25 minutes. 

From the Internal Process perspective, the achievements were the System Average Restoration 

Index (SARI) at 71 minutes per interruption against 75 – 90 minutes; the Monthly Delay Index 

(MDI) reduced to 5.99 months from 6.87 months in the last Financial Year; and the System 

Minutes remained a single digit at 9.34 minutes against the target of 7 – 10 minutes. 

However, for System Minutes, it should be noted that for equitable comparison and international 

benchmark, tripping of 132 kV transformers (which are considered Distribution transformers) 

and under-frequency tripping due to tripping of large generators usually are not included in the 

calculation of system minutes. With the exclusion of these two elements, the System Minutes 

for the 132 kV and above 275 kV transmission systems would be 3.2 minutes and 0.5 minutes 

respectively. 

Other than that, the other two major contributors towards the System Minutes were the total 

shutdown of one main intake due to fire and failure of the Paper Insulated (PILC) transformer 

cable tails. The PILC cables are being replaced in phases with XLPE cables. 

System Minutes 

25.00 

Minutes 

20.00 

15.00 

10.00 

5.00 

19 

17 

20 

14 

18 

14 

7 

9 

0.00 

00 01 02 03 04 05 06 07 


129 


Transmission 

Minutes 

DP SAIDI (Delivery Point 

System Average Interruption 

Duration Index) 

80 

70 

60 

50 

40 

30 

20 

10 

0 

70 

42 

42 

45 

00 01 02 03 04 05 06 07 

38 


27 

16 

15 

Ilos 

DP SAIFI (Delivery Point 


Frequency Index) 

0.7 

0.6 

0.5 

0.4 

0.3 

0.2 

0.1 

0 

0.62 

0.39 

0.53 

0.34 

0.50 

00 01 02 03 04 05 06 07 


0.29 

0.22 

0.16 

Achievement of Project T7 

The Division’s T7 initiatives, that include enhancement of procurement process, specifications 

and project scooping, are targeted to improve project delivery. Despite the challenging 254 

projects executed during the reporting period, the Division has managed to reduce the project’s 

Monthly Delay Index (MDI) from 12.74 months in FY2003 to the current 5.99 months. 

The implementation of the initiatives which started in Financial Year 2003 and ended in 

Financial Year 2007, contributed to accumulated cost savings of approximately RM934 million. 

The savings were RM224 million from management of project specifications, RM129 million 

from improving asset utilisation and avoided cost of RM581 million in variation orders. 

Additional cost savings of RM70 million was also achieved in FY2007 from the reduction of 

transmission system losses. 

Monthly Delay Index 

Months 

14 

12 

10 

8 

6 

4 

2 

0 

12.74 

03 

10.35 

8.85 

6.87 

5.99 

04 05 06 07 


130 


Transmission 

Implementation of Process Standardisation 

Improvement (PSI) 

The Transmission Division is continuously committed to ensure that excellence in the services 

provided are sustained through continual improvement efforts, in particular, via the Process 

Standardisation Improvement (PSI) initiative and MS ISO certification process. The Division 

maintained its MS ISO 9001:2000 certification for the second year. 

Shared Values 

The Division is proud to embrace “Gung Ho!” as a culture towards organisational excellence. 

It emphasises on the importance of shared goals and values; achievement of stretched targets 

and goals and the power of positive reinforcement. Gung Ho! has become a way of life in 

Transmission. This is communicated to all levels of the workforce symbolised as ways of the 

squirrel, beaver and goose. The “Spirit of the Squirrel” ensures the staff know their work is 

worthwhile, the “Way of the Beaver” ensures the staff are in control of achieving the goal 

whilst the “Gift of the Goose” ensures the staff are cheering each other on. 

131 


Transmission 

Challenges and Prospects 

The year under review proved challenging to the Division. During the second quarter of the 

Financial Year the flood in the southern states affected high voltage installations and the 

division vigilantly managed the system to supply electricity to parts of the states that were not 

affected by the flood. Tilted transmission towers were replaced with the Emergency Restoration 

System’s towers. Flooded high voltage substations were closely monitored for rising water levels 

that would endanger the operation of the high voltage switchgear. 

The Transmission Division has proven that it was able to manage the security of operations and 

keeping the system healthy whilst catering the major rehabilitation of key substations such as 

Paka 275 kV and KL East 275 kV. The longest ever gas curtailment period of 50 days starting 

from August 2007 was successfully managed without any interruption of supply and without 

resorting to the use of expensive distillate fuel. 

Project implementation was not without any problems. Public protests on the transmission line 

corridor and EMF was among the factors that prevented smooth implementation of project 

execution, especially for parts of the transmission line route under the CAR project. 

In the midst of exploring beyond the Malaysian border and gaining experience in the energy 

consultancy field, the Transmission Division is actively involved in the Group’s business ventures. 

The team from the Division plays a leading role in assessing the technical due diligence for the 

Bidding of the Philippines’ Transco. Utilising its experience in managing PPAs, the Transmission 

Division was engaged by the Group to finalise the Liberty Power Station upgrading proposal 

to the Pakistani authority. The improvements incorporated by the Transmission Division in 

finalising the SESB’s Tuaran PPA has benefited SESB in terms of reduced project cost and tax and 

fuel savings. Transmission Division was also engaged actively in the technical system studies for 

the Bakun interconnection. 

With the linking of the ASEAN countries’ electricity grids, the Transmission Division is placed in 

the center of the ASEAN Grid. The High Voltage Direct Current (HVDC) interconnection between 

Malaysia and Thailand has been fully utilised for the consecutive three years. The same scenario 

of interconnection and maximising power transactions with other neighbouring countries such 

as Indonesia would pave the prospect of TNB playing a role as a major player in the region. 

132 


Human Resource Management 

To achieve the main objective of a safe, reliable and economic electricity supply, the Division 

requires a competent, committed and business-oriented workforce. This was achieved by 

developing competency-based training plans and implementation. From the TNA/TNI process, 

training plans were implemented to ensure all level of employees have identified and received 

appropriate training. Each staff was allocated with five man-days training, and staff were 

encouraged to work in cross-functional teams either at the Divisional or Group level. Innovation 

and creativity were channeled via the formation of Work Improvement Teams (WIT). 

The Division exercised empowerment in line with the “Way of The Beaver” Gung Ho! principle. 

Appropriate Authorisation and Competency enable the staff to make decisions in their area of 

expertise. As an example, the control engineer at the National Load Despatch Center is fully 

responsible to manage the security of the National Grid. In term of Specialist development, 

the Division has expanded the post of experts in switchgear, transformer and power system 

analysis. 

133 


Transmission 

Customer Focus 

The Division pleased a heavy emphasis on being 

customer-focused. In fact, it is the major driving force 

that create the incentives or pressures for change in the 

Division. At the macro level, the Division’s customers 

are the electricity supply customers, electricity supply 

industry players, Generators (IPPs and TNB Generation 

Division), TNB Distribution Division and the various 

Stakeholders. 

In line with TNB’s effort to meet its customers’ 

expectations, the Division is committed to ensuring a 

high standard of supply reliability which can be achieved 

through improvement of equipment availability and 

a quick response to transmission equipment tripping. 

Efforts have been put in place to enhance a healthier 

maintenance culture via RCM which has changed the 

maintenance philosophy from time-based to conditionbased. 

Vegetation management has been a key focus 

for the Division to ensure that tripping caused by 

vegetation are eliminated thus reducing outages and 

lowering System Minutes. These efforts have paid off, 

for two consecutive Financial Years, TNB maintained a 

single digit transmission System Minutes. 

Economic transfer of power from the efficient power 

plants to load the centers was facilitated with the 

completion of high capacity transmission lines, 

namely the Tanjung Bin Power Station-Bukit Batu 500 

kV transmission line and the Tuanku Jaafar Power 

Station-Olak Lempit 1000 MVA 275 kV transmission 

line. The completion of these two lines, which remove 

the constraint of bulk power transfer, together with 

the improvement of system via completion of other 

projects further improve the system’s load-flow. The 

transmission system losses have improved to 2.32 per 

cent as compare to 3.02 per cent in Financial Year 

2006. This improvement translates to value creation of 

approximately RM70 million. 

The Malaysian industry requires a very high standard 

of power quality supply. High-tech industries such as 

electronics, chemical and cement manufacturing are 

not condoned to voltage dip, even if it is only for a 

fraction of a second. The Division has analysed the 

root cause and found ways to control the frequency 

of occurrence. Thereupon voltage dips have reduced 

from thirty numbers in Financial Year 2002 to thirteen 

in Financial Year 2007, mainly as a result of the 25 

initiatives embodied in the SE 10/10. 

Customer requirements, expectations and needs are 

usually obtained during meetings, such as the Project 

Implementation Committee (PIC) meeting and posttripping 

meeting. In addition, customer communications 

are established through contacts at regular meetings 

and coordination platforms, such as EGAT(Thailand)/ 

TNB/PLN(Indonesia) Joint Maintenance Cooperation 

Committee (JMCC), Joint Operation Committee (JOC) 

and ASEAN Transmission’s Sub-Working Group No.2 

– Operation & Maintenance (HAPUA SWG2 – O&M). 

Regular pre-arranged dialogues with local authorities, 

vendors and contractors are also conducted by the 

Division to acquire customers’ needs and expectations. 

The Operations Coordination Committee (OCC) meeting 

is one of the platforms in obtaining Distribution Division 

requirements. Transmission participates and supports 

the TNB Group’s programmes in Exhibitions, Campaigns 

and Dialogues such as Community Leadership Outreach 

Programme (CLOP) to disseminate information and to 

obtain feedback from customers. 

The Division utilised the online “Pengurusan Aduan 

Pelanggan (PAP)” in the TNB Webpage to capture and 

process customer complaints. The feedback received 

via customer complaints were translated into actions 

for improvement by the Division. 

134 


Transmission 

135 


Transmission 

Quality Management and Initiatives 

The Division supports QCS-WIT (Work Improvement Teams) with 58 teams which involves more 

than 500 staff that have embarked on 64 projects. During the reporting period the Division 

held a Quality Convention for the WIT groups to showcase their quality initiatives. Team “Pro 

Tech” from the Division represented TNB at the National Productivity Centre (NPC) convention, 

and had received the gold award. For the AKP Award, all 16 business units were assessed. 10 

business units had achieved scoring above the 700 marks, putting them in the “sportsman” 

category whilst six other units remained “ordinary man” with scoring in the range of 600s. The 

Divisional average improved to 702.07 from 658.47 in the Financial Year 2006. Transmission also 

implements 5S division-wide and planned for certification in Financial Year 2008. 

Awards 

Some of the more significant achievements by the Transmission Division staff both at national 

and international forums are as follows: 

• Ir. Sazali P Abdul Karim, a Senior Technical Expert, won a Silver Medal for his design of an 

analytical software at the 35th International Exhibition Inventions, New Techniques and 

Products on April 2007 at Geneva, Switzerland. The software identifies the root cause of 

transmission tripping and analyse protection failure using fault disturbance recorder. His 

innovation has been trademarked as IPSAZ TM and TNB is holding the patent, trademark 

and copyrights for this innovation. 

• En. Shariffudin K Abdullah, Senior Technician Live Line Unit, received 'Anugerah Harapan 

Tokoh Pekerja Lelaki' for Non-Executive Group of National Level during the Labour Day 

Celebration (National) at Stadium Putra Bukit Jalil on 5 May 2007. 

136 


137 


TEWA 

KCMT 

UMKA 

TPAU 

PULAU 

LANGKAWI 

PULAU 

PINANG 

PERLIS 

CIMA 

BKTR 

KGAR BKHM 

KPLS PLPS 

CPNG 

ASTR 

KSTR 

KSSM 

GCPD 

To SDAO 

PAUH 

MGON 

Khlong Ngae 

(HVDC link) 

300kV DC line 100km 

KEDAH 

PFTZ 

JENG 

GRUN 

PWGR 

SPID 

BDNG 

INTN 

GNRE BSBU 

SPTN 

TKBU 

AJYA 

BWTN 

SJAY 

ATJN SKSP 

BMJM BLIN 

FLIM SPNGPRAI 

KLIM 

GLGR BTGH 

SSTL KKTL 

BBRU JURU PRID 

INTL 

PRGS 

BLPS 

BTBN NTBL 

SKCL 

VDOR 

JJNG 

PBTR 

TENAGA 

NASIONAL 

THERMAL 

BSRI 

SGRI 

PERAK 

BMRH 

KMTG PKCB 

SSPT 

TPNG SBGS 

TPID PHCT KKSR APMC 

KJWA NKAN 

GTWN KLBG 

LMTM 

LMUT 

JMJG 

GRIK 

KGJH 

HMLG 

KVRT 

GPRD 

PAPN 

PKLN 

BGJH 

KMPR 

SIKD 

ATWR 

CEND 

BSIA 

KNRG 

TINT SMNK 

SBSR 

LPIA 

TASK 

TMOH 

SIHY 

SYPS 

SELANGOR 

BTRK 

BTAI 

KSGR 

BBDG 

KPAR 

PKLG 

TMGR 

UPIA 

SKAI 

SRVR 

CBPS 

BDOR 

KSKI 

BTIN 

PCTY 

PMRN 

TPGR 

BTNG 

KELANTAN 

JTUT 

N. SEMBILAN 

PAHANG 

KPNG 

KKPG 

KRYG 

BSTA 

MNID 

KTRI 

BNTG 

JBRS MTKB SONG 

RSID GHLD 

KRAK TMID 

KAWA 

BBTG GTNG 

BTRT 

JBRS(T) 

ATNI 

KULE 

SRYA 

KULN 

2007 

NATIONAL GRID 

System Planning, Transmission Division 

HYDRO 

500 kV Overhead Line 



132 kV Cable 

Power Station 

PGAU 

RBDR 

RPJG 

GMSG 

KLIP 

BNTA 

LMAL 

TMRH 

KKRI 

KBRU 

PCOR 

PPTH 

SJTH 

JNKA 

KNYR 

BRKT 

GBDK 

KBRG 

KTGU 

CHRG 

TERENGGANU 

MRAN 

MECC 

MECC 

PRJA 

RNGT 

DGID 

STNG 

DGUN 

PGPP 

EMSB PAKA 

YPKA 

KTIH 

CUFK 

HTXD RPTS 

HTSS 

PKAN 

TJBU 

TKLG 

PWSM 

KMAN 

ECML 

CUFG 

ECSS 

GBNG 

GBID AMCO 

MTBE TGLN 

PCMT JDSI 

KCTL SMBU 

KTNN BIMK 

PULU 

KULS 

BMSH 

KKWG 

SRDG 

SRDR(T) 

SPTG 

KBBR AMID 

BCHG 

NLAI 

PJAM PROI 

SLTI HLNN 

NSCI BAHA 

MTIN 

BKPY 

KPLH 

TJID 

PBSR 

RTAU 

GMAS 

PDPS 

CMBG 

LKUT 

SGMT BSPT 

TJPS SHELL 

MELAKA 

TJGS TKMG PTEK KGDK 

MSNG 

MTNH 

MCOP(T) 

KLMK 

JOHORE 

MFDR 

JSIN TKID 

BKPG CAAH 

AKRH 

JMTH 

MPSS 

TKAK 

ONST MCOP 

BKPG 

MCCA 

MMAU 

SBOK 

MUAR 

SMTI 

YGPE KLGN 

KLID 

TMAS 

GRSK 

TAGS 

SABG 

PGOH 

YPGN 

KLUG 

PJML AHMJ PSLG YGPG 

MKBL 

PYSF TPCH BPHE 

SRGM 

SSLG 

BPHT TLBH 

RNGM JTGH 

SGAD 

PSRI 

KTAN 

KLAI KTGI 

PUBB 

BBTU 

SLNG 

SELG UTRM 

PSAK 

TUNI GPTH 

TLTP 

PONT 

PNWR 

SDAI 

MAJD PLTG TLST 

PNAS TKPG 

DSRU 

PLNG PMJY CBRU 

KKUP PBJB 

PGGS 

PGPS 

TBIN 

TRMN 

SNKO 

138 


HMLG 

JMJG 

BGJH 

KPNG 

SELANGOR 

BTRK 

SBSR 

RSID 

BTAI 

BBTG 

BSTA 

KSGR 

BARG 

BBDG 

KSBG 

HKCK 

RWSS 

KRWG 

NRWG 

SRYA 

KULE 

KAWA 

KPAR 

PKLG 

PIDH 

BJTG 

SDAM 

KLJT 

KULN 

BCVS 

LKDG 

SGBT 

TWSA LJTK 

BKPR 

KLCC 

SDCA 

DWGI 

PTAI 

DMHT 

MERU MHTA KULW 

GWAY 

TNHQ 

ASMB 

AMPG 

SHAN 

MSWK 

BFLD 

PMJU 

BRGS 

BRAJ BTGA 

NSPK 

MVLY 

PULU 

MOXY SHAS 

SHAE 

KULS 

BTRZ DDSA 

PROT NSDA KSLS BJLL 

IGBK CBPS KSAS 

BKMG PJST SRDR(T) 

NKST 

HCOM 

CBJN 

BLKG 

PMRN 

TPGR 

MGST 

AHTM 

OLPT 

KLPP 

ERLA 

SRDG 

ABBA 

CBDK 

NUNI 

KJNG 

SSWW 

SMYH 

BRNG 

BTIN 

BCHG 

SLTI 

NLAI 

KLIA 

INTERNATIONAL 

SEPANG AIRPORT 

TJGS 

139 


Operations 

Review 

Dato’ Ir. Aishah Binti 

Dato’ Haji Abdul Rauf 


Distribution 

“ 

We strive to improve the technical efficiency 

of the system network operations and in 

resolving Power Quality concerns with the 

aim of providing high quality power supply 

to relevant consumers. 

“ 

140 


Distribution 

Highlights of Achievements 

• TNB’s Call Management Centre (TNB CareLine 15454) - recipient 

of the 2007 Gold Award for the Best Emerging Contact Centre 

(Category GLC) from Customer Relationship Management and 

Contact Centre Association of Malaysia (CCAM) in partnership with 

Multimedia Development Corporation (MDEC) 

• Collection of backbillings amounting to RM54.07 million for the 

period from September 2006 until August 2007 

• Significant reduction of electricity theft from four per cent in 

FY2005 to 1.2 per cent currently 

• Improvement in System Average Interruption Duration Index 

(SAIDI) to 83 minutes and Average Collection Period (ACP) 

to 23 days 

• Improved customer service through enhancement of Kedai Tenaga, 

Call Management Centre and introduction of new payment modes 

namely Mobile Money 

• Introduction of integrated application programme for power 

breakdown management known as TNB Outage Management 

System (TOMS) 

• Setting up of Iskandar Development Region’s office in Nusa Jaya, 

Johor 

To ensure a secure and reliable supply, TNB is currently undergoing system improvements to 

strengthen the system and improve supply security in Kuala Lumpur and Selangor. The ongoing 

RM400 million Central Area Reinforcement Project (CAR) is aimed at upgrading transmission 

and distribution systems within the Klang Valley. 

In addition to that, other system improvement projects which are well underway include the 

replacement and upgrading of the Perak 22 kV distribution system and the replacement of old 

distribution switchgears and transformers across the Peninsular. These projects are expected to 

be completed within the next several years. 

The implementation of the RM399 million Supervisory Control and Data Acquisition and 

Distribution Automation (SCADA/DA) project is expected to improve and reduce SAIDI to that 

of other world class utilities over the next few years. This is achievable through the system’s 

ability to identify fault location, isolate the fault and mobilise technical staffs or perform remote 

switching to restore supply to the customers. 

141 


Distribution 

Electricity Distribution Network 

From Main Intake (PMU/PPU) to customer points 

(From 33 kV down to 240 V) 

The Network Operations component of the Division plans, designs, constructs, operates 

and maintains the system that delivers supply of electricity to the customers. 

Distribution Division connects all the 6.8 million customers from the National Grid 

through a distribution system web at voltage levels of 

33 kV, 22 kV, 11 kV, 6.6 kV and 415/240 V. 

“To provide timely and continuous 

supply of electricity and related products 

and services that meet customers’ 

expectations, and effectively act as a key 

agent for national developments, whilst 

meeting our shareholders’ expectations” 

142 


Operational Improvements 

For Supply Reliability and Quality initiative, we have put in efforts to improve our System 

Average Interruption Duration Index (SAIDI) by reducing our response time and security of our 

Distribution system. We have also implemented the Power Quality (PQ) Management system 

to monitor and improve power quality. 

For the initiative to improve “Connect Supply on Time”, TNB Distribution has developed a new 

project monitoring system called Distribution Project Monitoring System (DPMS) to assist our 

project personnel to improve their projects implementation and management. 

TNB Distribution is constantly striving to improve our material availability and quality. We 

have constant review with our customers, vendors and project personnel so as to establish 

close coordination between supply and demand of our materials. Suppliers’ delivery dates 

are tracked and total number of projects served by TNB Distribution warehouses have been 

measured to ensure we deliver the best service to the customers. 

We have set up a Special Engagement Against Losses (SEAL) team to curb cases of Non-Technical 

Losses. We are also continuously improving our Distribution system so as to reduce system 

technical losses. 

The achievement of T7 key initiatives are measured by their KPIs and milestones. As at 31 

August 2007, Distribution Division has achieved an overall result of 87.5 per cent as against the 

set target. 

Faces behind Customer CareLine 15454 

143 


Distribution 

Summary of Operations 

Distribution has successfully retained its MS ISO 

9001:2000 certification after undergoing the 

Surveillance Audit by SIRIM QAS International in April 

2007. Using its “Continual Improvement Plan” (CIP), 

Distribution continues its effort to internalise the ISO 

9001:2000 framework into its work culture and this 

framework shall be one of the foundations to help the 

division achieve Service Excellence by 2010. 

Delighting customers is a key priority in TNB. Ordinary 

Power Customers (OPCs) constitutes the majority of 

our almost 6.8 million customers which are mainly 

Malaysian households. Large Power Customers (LPCs), 

while small in number, account for almost 80 per cent 

of the total sales of electricity in the country. LPC is also 

further categorised into the commercial and industrial 

categories, with the industrial customers being further 

classified into different industries. 

The direct undertaking for the customers’ needs and 

expectations fall within the jurisdiction of Distribution 

Division. Hence it is imperative for TNB to identify 

these needs and expectations through a structured 

and focused data and information gathering exercise. 

Feedbacks from customers are channeled through a 

combination of a structured Customer Satisfaction 

Index (CSI) survey, feedback forms available at TNB 

retail outlets – the Kedai Tenaga and surveys done 

through the Call Management Centre (CMC). 

Another method of information gathering is through 

the Power Quality (PQ) survey conducted on all LPCs. 

This enables TNB to assess the LPC knowledge on PQ, 

sensitive loads within the premises and requirements 

for PQ solutions. This is in line with the increasing 

thrust by the government agencies through MIDA/MITI 

to woo more high-tech industries to Malaysia where 

PQ is a critical issue to some of the manufacturing 

processes. 

For the convenience of customers, they are offered 

a myriad of payment channel options which include 

payment via Direct Debit, phone banking, Auto-Pay 

(payment via credit card), payment at various local 

banking institutions, Mobile Money and many more. 

TNB Distribution strives to improve the technical 

efficiency of the system network operations and 

in resolving Power Quality concerns with the aim 

of providing high quality power supply to relevant 

consumers. A major effort made this year was the 

SCADA/DA project which reduces restoration time after 

the occurrence of a fault in the medium voltage (MV) 

distribution network. The Control Centre is alerted 

immediately when tripping occurs and especially in 

remotely monitored substations – it expedites fault 

detection. Furthermore, remote switching can be 

performed which will reduce travelling time. 

At intervals, the Distribution management meets up 

with industry leaders and representatives from both 

Government Agencies like MITI and MIDA and private 

sectors such as FOMCA, FMM and REHDA. These 

dialogues and meetings are high-level discussions that 

also include the participation of the Company’s Top 

Management members. 

144 


Materials availability and quality is of high importance to TNB’s infrastructure development. 

This has been identified as a key initiative to boost TNB’s service delivery. TNB Distribution is 

committed to this effort in order to ensure on-time completion of supply projects and longer 

lifespan of street lighting through better quality products. 

The highest TNB management council Executive Management Committee spearheaded by the 

President/CEO meets regularly to ensure participation and commitment from all Divisions and 

support services to our customers. Furthermore, at Distribution Division, department heads 

and executives organise regular meetings, cross functional initiatives, continuous and close 

monitoring of projects, implement service level agreements between departments to obtain 

regular feedback on pertinent issues (e.g. poor quality of materials). 

A comprehensive Customer Feedback Programme (Sistem Maklumbalas Pelanggan – SMP) has 

been introduced and upgraded to provide an automated tool in handling customer complaints. 

In addition, CMC, Electric Eyes and the PRIME Management Programmes are interfacing with 

SMP to form a structured web-based customer complaint handling system. 

PQMS (PQ Monitoring System) meanwhile identify real time power quality incidents on the 

system and the information is accessible by Distribution nationwide to allow for remedial action 

as and when it is required. Seminars and dialogues with leaders and representatives of industries, 

businesses and Government Agencies, also form part of the whole process in handling customer 

complaints. By managing the three different channels of customer complaints via an in-house 

developed software called SMP, we are able to track, escalate, monitor, report and evaluate the 

feedback. Integrating customer information on a single platform is a step towards achieving a 

Customer Relationship Management (CRM) programme. 

145 


Distribution 

To ensure complaints and comments are captured; TNB has developed a customer repository of 

all its 6.8 million customers and is able to view its customer feedback on a single platform. The 

customer repository is developed to enhance customers’ experience as they deal with TNB. 

The PRIME Management Programme generates a quarterly report that gives management 

insight into areas of concern that might prevail or explore new initiatives that can be introduced 

to improve TNB’s products and services. 

Meanwhile, conducted on a daily basis through CMC, weekly through media and monthly 

through SMP, the analysis focuses on complaints received from the general public through 

various customer touch points. 

Distribution Division continuously improves its products and services as well as some of the 

programmes and activities undertaken over recent months. They include enhanced awareness 

programme on Power Quality, street lighting, renewable energy and energy efficiency. Apart 

from the new integrated software developed to make processes between the calls, service and 

control centre seamless, CMC services have also been experiencing another wave of enhancement 

as Short Message Service (SMS) is now added onto Distribution’s 15454 TNB CareLine. The SMS 

service now allows subscribers of Celcom, Maxis and Digi to send information on electricity 

breakdown and streetlights breakdown report via SMS to 15454. The centralised CMC is also 

equipped with Interactive Voice Recorder (IVR) and IP Telephony and CTI (integration of 

computer and the telephone). 

As a whole, compilation of performance data is captured through SMP, CMC and PRIME 

Management Programmes supplemented by information derived from dialogues and regional 

managers handling of media reports. Information available on the systems where these are 

recorded and managed accordingly is accessible to all levels of management. 

Kedai Tenaga being the customers’ service centre for TNB is currently undergoing service and 

image enhancement. Ongoing initiatives to boost TNB service levels include the “Service with 

a Smile” campaign whereby front liners are encouraged to smile when rendering their service. 

On top of that, counter staff are given new corporate uniforms that will project a professional 

image. A FAQ booklet has also been developed to assist counter staff in responding to customer 

enquiries in a proper and consistent manner. 

TNB is always striving to provide the highest quality service to its customers. As such, Kedai 

Tenaga centres are equipped with a new queue system to facilitate better tracking and 

monitoring of response and waiting time of the counter service. 

146 


Distribution 

Relationship with Stakeholders 

TNB is working closely with the regulatory and the Ministry groups to introduce a Customer 

Charter that reflects the growing demands of the customers. The Division’s Customer Charter 

will further strengthen Distribution’s compliance to the terms and conditions of the TNB License 

(Syarat 15) in fulfilling customer needs, satisfaction and expectation. This is also in line with 

TNB’s strategic mission to become the preferred power provider by 2010. 

TNB has established a Strategic Supplier Relation Management framework in January 2007 

with the objective to develop a stable and competitive supplier base that has direct impact on 

quality products and services procured. This will improve reliability of supply, quality products 

and services whilst developing competent and capable local suppliers in achieving the national 

objective. There are three main groups of suppliers: 

the Strategic Supplier Programme refers to vendors that supply products and services 

which are critical to core operations and significant annual spending 

the Supplier Management Programme focuses on vendors that have been awarded 

contracts which contributed to 80 per cent of the total procurement spending 

the Bumiputera Vendor Development Programme refers to a special programme 

to develop Bumiputera companies in medium and high technology industries and 

knowledge based on the field of manufacturing, works and services. 

TNB is also committed to support the national objective of “developing Bumiputera companies”. 

Tremendous emphasis was given to enhance the development of Bumiputera companies in 

ensuring quality products and services based on TNB’s requirements. Additionally, as part of 

the initiative to enhance quality and as a feedback mechanism for vendors, several dialogues 

and training programmes were conducted throughout the country to educate vendors on 

recent development and enhancement in TNB’s procurement and quality assurance practice. 

147 


Distribution 

Several initiatives have been undertaken to maintain and enhance existing ties with the media. 

Among the programmes conducted include goodwill games such as golf and bowling as well 

as media luncheon. 

TNB continues to support the Government through various means. Under the Rural Street 

Lighting programme administered by the Rural and Federal Ministry, TNB has embarked on 

Phase III of the programme which sees a total of 26,408 approved units of 150W streetlights 

to be installed throughout the Peninsular Malaysia. The Phase III project is scheduled for 

completion in December 2007. 

To enhance the quality of life through the provision of electricity supply to remote and 

rural areas, TNB together with the Rural and Federal Ministry also worked hand-in-hand in 

implementing the Rural Area Electricity Supply project that is funded by the AAIBE (Akaun 

Amanah Industri Bekalan Elektrik). 

Two Solar Hybrid electrification projects, each in Pulau Kapas and Pulau Perhentian, Terengganu 

were also completed and launched in June 2007 and September 2007 respectively. These efforts 

are in line with the Government’s initiative in identification and utilisation of renewable energy 

sources. 

148 


149 


Operations 

Review 

Dato’ Izzaddin Idris 


Finance 

“ 

Finance division sees its role as a 

business partner to the core business 

divisions and to align business strategies 

to enhance shareholders’ value 

“ 

150 


Finance Division 


• Formulation of a progressive 

dividend policy comparable with 

international peers 

• Implementation of Divisional 

Accounting (DA) within TNB 

• Implementation of an Investment 

Evaluation Framework for Budget 

Planning 

• Establishment of TNB Economic 

Council (TNB-ECouncil) 

• Excercised the Call Option of the 

Guaranteed Exchangeable Bonds 

thereby improving the gearing 

position 

• Initiation of the process to remove 

foreign shareholding restrictions 

• Signing of the Memorandum of 

Understanding for the ASEAN 

Power Grid in August 2007 

• Implementation of a 

comprehensive Policy Manual for 

the Limits of Authority to enhance 

the effectiveness of existing 

internal control systems 

In recent years the Finance Division’s responsibilities 

has extended beyond the conventional boundaries 

of financial and management reporting, corporate 

finance as well as treasury operations, to include 

investor relations, strategic and financial planning, 

business development and risk management. The role 

of the Finance Division has moved away from just being 

responsible for the traditional accounting aspects of 

an organisation to a role that has been increasingly 

linked with the strategic and operational aspects of the 

business as well as value creation through:- 

• Strengthening internal reporting systems and 

aligning them with the Company’s strategy 

• Exploring new business and growth 

opportunities 

• Being stewards of value preservation 

• Aligning the Group’s business strategies to 

enhance shareholder value and improve return 

on assets 

• Promoting discipline in cost management 

• Proactively managing investor relations 

151 



The key activities of the Finance 

Division during the year under 

review are summarised below:- 

Progressive Development of the 

Malaysian Electricity Supply Industry 

During the year under review, the Division submitted 

a report titled “Recommendations for a Malaysian 

Power Exchange-Issues and Options” to the Ministry 

of Energy, Water and Communications. This has been 

viewed as a proactive effort by TNB to contribute to 

the progressive development of the electricity supply 

industry. A paper titled “The National Energy and 

Electricity Sector: Towards 2020: Energy Policies and 

Strategies” was presented by TNB’s President and 

Chief Executive Officer at the 4 th National Energy 

Summit in Kuala Lumpur on 29 August 2007. The paper 

highlighted several major considerations which need to 

be addressed for a smooth transition of the industry, 

if that was the direction. Discussions with Ministry 

officials and the Energy Commission are still ongoing. 

Formulation of Corporate Strategies 

With the increasing utilisation of coal as a fuel source 

for power generation in Peninsular Malaysia, the 

Division has commissioned and completed a study 

on the ‘Coal Supply Security Issues and Mitigation 

Strategies’ during the year under review. The study 

highlighted the key problems and issues related to coal 

supply and recommended several additional mitigating 

actions to address these issues. The recommendations, 

include amongst others, lobbying for fuel cost passthrough 

mechanism, identify opportunities to establish 

long term supplier relationships with credible mine 

operators or coal suppliers and building internal 

expertise to manage the coal supply chain. 

Service Excellence 2010 (SE10/10) - First 

milestone in TNB’s 20-Year Strategic Plan 

Formulated in 2005, the TNB 20-Year Strategic Plan 

seeks to guide the organisation in achieving its vision 

of becoming amongst the leading corporations in 

the energy and related businesses globally. The first 

destination in this 20-year journey, encapsulated under 

‘Service Excellence 2010 (SE 10/10),’ is essentially to build 

a solid foundation for the future growth and business 

expansion of the organisation. The primary focus of 

this SE 10/10 programme is not only to be amongst 

the best-run corporations in Malaysia, but also in the 

region. As a testimony to this, TNB aims to achieve the 

Prime Minister’s Industrial Excellence Award by 2010. 

152 


Prudent Debt Liability Management to Achieve Optimal Capital 

Leverage and Debt Mix 

During the year under review, the Group did not embark on any significant funding exercise 

as its cash flow from operations and healthy cash position was more than adequate to meet its 

capital expenditure and debt repayments. 

To ensure efficient utilisation of the Group’s capital, TNB has initiated a capital management 

programme, in line with Government Linked Companies (GLCs) Purple Book Transformation 

Programme Guidelines. TNB’s capital management program involves establishing an optimum 

capital structure and capital efficiency (encompassing capital expenditure, working capital and 

disposal programme for non-core assets). 

On 12 September 2006, TNB exercised its call option to exchange the balance outstanding on 

its 2.625 per cent Guaranteed Exchangeable Bonds with new TNB shares. With the expiry of the 

right to exchange the bonds, a total of USD398,960,000 nominal value in bonds were exchanged 

at the close of business on 6 October 2006. As a result of the exchange, the paid-up ordinary 

share capital of TNB increased by a total of 187,155,756 new TNB shares. 

In April 2007, the Board approved and announced a progressive dividend policy for TNB 

effective from FY2007. Under the newly formulated policy, TNB intends to distribute 40-60 

per cent of TNB’s annual free cash flow (defined as operating cash flow less normalised capital 

expenditure and interest servicing) as dividends. This will enable TNB to provide stable and 

sustainable dividends to shareholders, while maintaining an efficient capital structure and 

ensuring sufficient funding for future growth. The new payout structure is comparable with 

other international peers and meets overall market expectations. 

As part of Central Treasury Management’s efforts to manage and reduce TNB’s exposure to 

foreign exchange risk, TNB entered into a Cross Currency and Interest Rate Swap in October 

2006 for a notional amount of JPY 7.7 billion. The swap transaction had the effect of partially 

reducing TNB’s exposure to losses that may arise from adverse fluctuations on exchange rates 

and interest rates in relation to the underlying Yen loan. 

153 



Financial Ratios and Headline KPIs 

With the new tariff accorded to TNB effective from June 2006 and together with the various initiatives 

undertaken for cost management and value creation, there has been a significant improvement in 

TNB’s financial ratios and Headline Key Performance Indicators (KPIs) as shown below:- 



2003 2004 2005 2006 2007 

Self-Financing Ratio 40:60 25:75 51:49 68:32 118:-18 

Effective Weighted Average 

Cost of Funds* 4.9% 5.3% 5.4% 5.9% 5.9% 

Currency Mix (RM:Foreign) 49:51 51:49 50:50 52:48 55:45 

Debt Service Cover Ratio 2.0x 1.6x 1.4x 1.8x 2.5x 

Debt-Equity (Net of Cash) Ratio 2.11# 1.94# 1.69# 1.19# 0.78# 

* reflective of RM equivalent of currency exposure 

# after FRS 112-Income Taxes and FRS 119-Employee Benefits 

For the Financial Year under review, TNB had arguably achieved the targeted Headline KPIs which 

were stretched, showing a strong commitment to the GLC Transformation efforts of the Government. 

TNB’s Headline KPIs performance over the past few years are set out below:- 

KPIs 


Actual Actual Actual Target Actual 

2004 2005 2006 2007 2007 

Return on Assets (ROA) 1 2.6% 2.2% 3.3% 6.5% 6.3% 

Gearing 68.6% 64.9% 58.1% 50.0-55.0% 49.9% 

Unplanned Outage Rate (UOR) 9.4% 6.1% 4.7% 4.4% 2.2% 

T&D Losses 10.8% 10.5% 11.0% 10.5% 10.0% 

Transmission System Minutes (mins) 18.0 14.0 7.3


Processes and Procedures to Improve Cash Flow and Effective Cost 

Management 

The year under review saw an overall reduction in the cost of insurance premium payments and 

brokerage fees, resulting from lower loss ratios for most of the policies, improved perception 

of TNB’s operational risk by the insurance market and improved risk management through 

creating awareness and sharing of information/knowledge on risk management. 

In line with the objectives of ensuring timely payment, the Division embarked on an internet 

based payment method via Maybank2e.net (Malayan Banking) and BizChannel (CIMB Bank) 

initially to cover payroll (and related payments), with plans to include third party payments in 

the immediate future. For the current Financial Year under review, the application has been 

extended to staff claims and vendors/suppliers with Maybank accounts. 

The focus of Group Tax Unit is to manage all taxation matters, both direct and indirect taxes, 

relating to the TNB Group. In this regard, the Unit has to ensure that the Group plans its 

operations and investments in a tax - efficient manner whilst complying with all relevant tax 

legislation. The Group Tax unit focuses on achieving tax efficiencies through maximising tax 

relief and incentives wherever possible in structuring new investments locally and abroad and 

assisting subsidiaries in tax audits, to minimise tax exposure and liabilities. In FY2007, tax savings 

amounting to RM70 million was achieved in the form of custom duty and sales tax exemption. 

Removal of foreign shareholding restrictions 

On 5 February 2007, the level of foreign shareholding in TNB exceeded 25 per cent reaching a 

peak of 28.4 per cent on 30 May 2007. On 16 February 2007, the Division initiated an application 

to the Authorities for the removal of foreign shareholding restrictions and received approval of 

the Ministry of Finance on 19 April 2007. TNB has convened an Extraordinary General Meeting in 

December 2007 to seek shareholders approval for the amendments to the Articles of Association 

to remove the limit. The removal will provide an opportunity for more foreign shareholders to 

invest in TNB and lead to further diversification of the profile of the shareholders of TNB. 

155 



Diversifying Earnings Base and 

Establishing International Partnerships 

and Cooperation 

The progress of TNB’s investment through the 

consortium undertaken by Saudi-Malaysia Water And 

Electricity Company Limited (SAMAWEC) in Shuaibah 

III Independent Water and Power Project (IWPP) in 

Saudi Arabia is progressing as scheduled. As of August 

2007 the overall construction progress of Shuaibah III 

has reached 68.9 per cent. The USD2.5 billion project 

is scheduled to commence Commercial Operations in 

July 2009. 

Following the success of Shuaibah III, the Government 

of Saudi Arabia has requested SAMAWEC to 

undertake a special project to expand the Shuaibah 

III IWPP’s desalination plant by 150,000 m 3 /day over 

the planned capacity of 880,000 m 3 /day. The USD232 

million Expansion Project, utilising Reverse Osmosis 

desalination technology is located at a site adjacent to 

the main project. The Project is expected to commence 

Commercial Operation on 28 February 2009. 

Other opportunities are continuously being explored 

by the Business Development team which could 

potentially lead to partnerships and cooperation with 

international counterparts in the utility services around 

the region. In building relationship with other utilities, 

TNB plans to sign an MOU with the Korea Electric 

Power Corporation, KEPCO. This MOU will encompass 

technical cooperation activities in identified areas, 

including the exchanging of information and personnel 

on the subject matters mutually agreed by both 

Parties. The year saw the completion of cooperation 

activities with Vietnam, Yemen and Mongolia whilst 

there is an on-going technical services arrangement 

with Yemen. The inter-connection project across the 

Straits of Malacca reached another milestone with the 

completion of the joint commercial feasibility study by 

TNB and its Indonesian counterpart in January 2007, 

covering legal, financial and tax perspectives. The final 

report was presented to the Joint Steering Committee 

(JSC) comprising representatives from both utilities as 

an input to the realisation of the ASEAN Power Grid. 

The Division continues its role as TNB’s secretariat 

for ASEAN and HAPUA activities. The year’s activities 

include the participation of TNB in the HAPUA Working 

Committee meeting in Feb 2007 and Council Meeting 

in June 2007 in Yangon Myanmar. The meetings 

deliberated on the next course of action by HAPUA 

upon the signing of the MOU on the ASEAN Power 

Grid by the respective ASEAN Governments and the 

activities of the eight HAPUA working groups. The key 

milestone of HAPUA/ASEAN activity this year was the 

signing of the Memorandum of Understanding (MOU) 

for the ASEAN Power Grid MOU in August 2007. 

Formation of TNB Economic Council 

The first inaugural meeting of the TNB Economic 

Council (TNB-ECouncil) was initiated in January 2007, 

followed by the second meeting held in July 2007. The 

main objective of the council is to assess and formulate 

a view on Malaysia’s economic growth and to assist 

in preparing the electricity demand forecasts. The 

meetings have generated constructive deliberations on 

matters relating to the economic direction/growth of 

the industry as well as structural changes to facilitate 

internal planning activities within TNB especially on 

the electricity demand forecast and capacity planning. 

Following the formation of the TNB-ECouncil, the 

Division has been entrusted with the responsibility 

to maintain a Long-Term Economic Model for input 

to TNB’s internal planning requirements. A shortterm 

Quarterly Sectoral Model is also currently being 

developed together with Rating Agency of Malaysia 

Consultancy Services to further assist TNB in its shortterm 

planning activities. 

156 


157 



Implementation of Divisional Accounting 

In an effort to enhance performance measurement, TNB has implemented Divisional Accounting by 

creating separate financial statements for the core businesses namely (Generation (G), Transmission 

(T) and Distribution Business (D) as well as for each power station and Distribution state levels. Their 

Divisional Accounts serves as a platform for an objective and transparent performance measurement 

of each Division. The framework will ensure that all financial statement items are allocated in a 

consistent and equitable basis to the respective divisions, power stations and state levels and also 

to identify enhancements where applicable. The Divisional Accounting framework will enable TNB 

to benchmark with Independent Power Producers in terms of cost of production amongst its power 

plants. 

Investment Evaluation Framework for Capital Budgeting 

In the continuous efforts to improve the alignment between the Group’s business and policy objectives, 

the Finance Division has developed an investment evaluation framework for capital budgeting. This 

is expected to facilitate the creation of a more structured and disciplined process for approving 

and managing TNB’s annual capital expenditure with the aim of improving the return on capital 

investments. The framework would further enhance TNB’s capital efficiency programme in line with 

the objectives of the GLC Purple Book. 

The evaluation framework which will be implemented in 2008, will ensure that consistent cost benefit 

analyses are carried out in assessing the viability of electricity supply projects. This is also to meet TNB’s 

investment objectives as follows; 

• Minimising the risk of stranded assets and poor return on investment; 

• Ensuring that investment proposals or projects have gone through a rigorous process of 

assessment and evaluation; 

• Ensuring a consistent financial approach or indicators are used by planners in planning for 

capital expenditure projects; and 

• Ensuring a fair return on investment for capital expenditure projects where appropriate. 

158 



Improved Financial Governance 

The Policy Manual for the Limits of Authority (LOA) was officially rolled out on 1 January 

2007 as part of management’s effort to enhance the effectiveness of the Company’s existing 

internal control system. The implementation and enforcement of the LOA ensures an improved 

management accountability structure through the assignment of a clear, practicable and 

uniform set of both monetary and non-monetary limits in support of the management role 

and decision making function. Since then, the LOA has also been introduced to the respective 

subsidiaries within the Group. Designed to be a user friendly internal control instrument, the 

continuous updating of the LOA will ensure its relevancy and effectiveness in line with the 

dynamic requirements of the business. 

Investor Relations 

Being one of the largest companies (in terms of market capitalisation) listed on Bursa Malaysia, 

TNB views the role of investor relations as a strategic management responsibility that combines 

the disciplines of finance, communication and marketing to manage the content and flow of 

information to financial markets, investors, brokerage firms and other constituencies so as to 

provide an accurate portrayal of the Group’s performance and prospects. An equal level of 

importance is placed on the need for investor relations to channel the views of the investment 

community back to Management and the Board of Directors. 

During the year under review, TNB participated in several utility conferences arranged by leading 

investment banks, as this provides the platform to meet with fund managers and investors, both 

existing and potential, to provide them with an update on the Company’s performance and to 

address any issues and concerns they may have regarding the Company. In November 2006, TNB 

participated in a non-deal roadshow covering parts of Europe and the United Kingdom to meet 

investors and fund managers, whilst on the domestic front, Management went on a domestic 

roadshow to meet key local shareholders. During the Financial Year under review TNB met a 

total of 200 fund managers and investors during the conferences and roadshows. 

The response from the financial community and media to attend TNB’s quarterly financial results 

announcement has always been encouraging. These are attended by the research analysts 

covering TNB, the credit rating agencies and media reporters, whilst fund managers are invited 

to be teleconferenced in for the sessions. On average, a total of 85 research analysts, fund 

managers and media attend or conference in for these quarterly presentations. 

In FY2007, TNB had 68 meetings with equity research analysts, fund managers and investors 

who had requested for meeting officials apart from those investors at conferences, roadshows 

and quarterly financial results presentations. 

On 21 June 2007, Bursa Malaysia launched the establishment of the Malaysian Investor Relations 

Association (“MIRA”), with the key objective to spearhead the development and raise the 

standard and level of IR in practice in Malaysia and assist listed companies in initiating and 

implementing their IR programs. Following the launch, TNB accepted the invitation by Bursa 

Malaysia to be an inaugural member as well as to nominate a representative on the Board of 

Directors of MIRA. 

159 



Improving Human Capital Development 

During the year under review, TNB has been accredited as a training organisation by several 

professional accounting bodies. In November 2006, TNB received authorisation from the 

Institute of Chartered Accountants of England and Wales (ICAEW) to be the Authorised Training 

Provider. TNB is also recently certified under the Association of Certified Chartered Accountants 

(ACCA) Approved Training Scheme. In June 2007, TNB held a Professional Bodies (accountancy) 

Open Day for TNB accountants which involved all the accounting professional bodies present 

in Malaysia. 

Moving Forward 

The Finance Division has achieved much in the last few years, particularly in terms of its 

primary responsibility to improve cashflow management and effective debt liability and capital 

management. Underpinning these achievements is the desire for continuous improvement and 

a commitment towards achieving “Service Excellence”. 

For Financial Year ending 31 August 2008, we will continue to exploit synergies within the Group 

and strive to create greater shareholder value through financial and operational efficiencies. 

The value creation drive is entrenched within the Division and more efforts have been devoted 

to improving staff communications and nurturing a culture of continuous improvement. Key 

initiatives for FY2008 include the followings:- 

• Strengthening the Business Development Unit of the Division and aggressively 

identifying, exploring and supporting new business opportunities. 

• Achieving Balance Sheet efficiency through effective working capital management and 

the improvement of the payment process and procedures. 

• Developing in-house capability in the management of coal supply, in light of the 

significant increase in the utilisation of coal as fuel for power generation. The study 

will, amongst others look into the coal supply and demand dynamics, issues with 

respect to coal logistics and, factors affecting coal and coal freight prices. 

• TNB is also striving towards transforming itself into a Gulf Cooperation Council (GCC) 

Syariah compliant company, to support the Malaysian Government’s aspiration to be 

an Islamic financing hub outside the Middle East. One of the initiatives to achieve such 

objective is to source new funds using Middle East Syariah compliant structures. 

• Implementation of the Investment Evaluation Framework for Budget Planning to 

ensure an efficient and effective review that supports the budgeting process and 

ensures the regular monitoring and management of the Group’s investments. 

• Providing a supporting role in the various issues and challenges related to the current 

review of the electricity tariff-setting mechanism and pricing studies. 

• The continuous review of the Group’s Financial Policies and Procedures, with particular 

regard to improving workflow and processes and moving towards a “paperless” 

environment. 

160 


161 


Operations 

Review 

Investment 

Management 

“ 

162 

Tenaga Nasional Berhad Annual Report 2007 

Dato’ Nik Ibrahim bin 

Nik Mohamed 


These initiatives taken have shown positive 

overall financial performance. For FY2007, 

ROI was higher at 79.2 per cent against 

more than 60 per cent targeted; EVA was 

higher at RM420.33 million against more 

than RM250 million targeted; stranded cost 

lower at RM23.7 milion against less than 

RM40 million targeted. 

“

Investment Management Division 


• Price-benchmarking report prepared to ensure all 

investments are providing products and services with 

good value-for-money to TNB 

• Positive overall financial performance, such as Return 

on Investment (ROI) and Economic Value Added (EVA) 

• Costing and price benchmarking exercise for 

products/services 


The main focus of the Investment Management Division (IMD) is to ensure that all investments 

bring positive value to TNB. All TNB investments whether in the form of subsidiaries, associates 

or other long-term investments, are closely monitored. The investment equity value under 

its purview is worth RM577.17 million for 17 active operating companies. The Division also 

monitors other subsidiaries which are dormant, inactive and facing litigation proceedings. 

IMD’s main responsibilities include monitoring and supervision of Malaysia Transformer 

Manufacturing Sdn Bhd, Tenaga Cable Industries Sdn Bhd and Tenaga Switchgear Sdn Bhd that 

operate in the manufacturing sector; Liberty Power Limited in Pakistan which is involved in 

the electricity generation business; Fibrecomm Network (M) Sdn Bhd in the communication 

and IT related business; University Tenaga Nasional (UNITEN) in education and knowledge 

development; TNB Engineering Corporation Sdn. Bhd. in district cooling, engineering advisory 

and consultancy services and related functions; and TNB Fuel Services Sdn Bhd in the supply of 

fuel and coal for the power generation sector. 

163 


Investment Management Division 

In monitoring the business performance of the investments which include the financial and 

operating performance, the Division has taken up various initiatives to reduce subsidiaries’ 

issues, giving emphasis on the financial health. Tools and systems have also been developed for 

evaluation and monitoring of all investments. Strategic plans for identified investments have 

been developed and implemented. 

These initiatives taken have shown positive overall financial performance. For FY2007, ROI was 

higher at 79.2 per cent against more than 60 per cent targeted; EVA was higher at RM420.33 

million against more than RM250 million targeted; stranded cost lower at RM23.7 milion against 

less than RM40 million targeted. 

The Division consistently monitors subsidiaries, contract compliance to ensure subsidiaries 

comply with their contract agreements. These impacted many areas within the organisation 

and can significantly influence inventory, operations, customer satisfaction, reduced costs and 

wastage, project management and corporate image. 

In its effort to improve the performance of the investments, IMD has also prepared a pricebenchmarking 

report to ensure that the investments are providing good value-for-money 

products and services to TNB. 

IMD participated in the AKP and implemented the PSI, 5S, IMD Best Employee Award, and 

Work Improvement Team (WIT) framework as approaches to bring efficiency improvement to 

the Division. 

For continuous improvement in process standardisation and to promote transparency, IMD 

adopted MS ISO 9001:2000 and acquired certification under Corporate TNB in January 2006. 

Subsidiaries under the purview of IMD also have gone through the same exercise for their own 

individual certification, namely TNB Engineering Corporation Sdn Bhd, Bangsar Energy System 

Sdn Bhd, TNB Properties Sdn Bhd, UNITEN, Tenaga Switchgear Sdn Bhd and TNB Fuel Sdn Bhd. 

Key initiatives implemented by IMD towards becoming customer oriented and to resolve 

feedbacks promptly and effectively, are done through Customer Satisfaction Index (CSI) 

surveys used to provide a consistent framework and platform for ongoing improvement and 

measurement; Suggestion Box for customers to give their feedback to help improve IMD services 

further; Subsidiaries Performance Review, conducted with subsidiaries and with the President/ 

Chief Executive to promote direct communication. 

From the CSI survey carried out, about 68 per cent of the respondents are satisfied with the 

services provided, an improvement of 1.1 per cent from previous surveys. 

164 


165 


Operations 

Review 

Razali bin Awang 

Chief Information Officer 

ICT Division 

“ 

ICT Division continues to subscribe to three 

main objectives towards supporting TNB’s 

overall Vision and Mission, i.e. effectively 

govern and consolidate the use of ICT in TNB, 

E-enabling critical TNB processes to drive 

corporate efficiencies higher and providing 

the digital infrastructure to enable intelligent 

power delivery system. 

“ 

166 


ICT Division 


• Implementation of Mobile Field Force Automation (MFFA) 

Phase One to improve communication and breakdown 

response time between TNB’s Call Management Centre 

and its field crew 

• E-Application for housing developers to apply for new 

electric supply via online 

• Enhancement of the PRIME system to better manage 

TNB’s major customers 

• Implementation of Electronic Document Management 

System (EDMS) and Properties Information System to 

improve internal processes 

• Enhancement of TNB telecommunication network to 

increase network availability for TNB operations and 

administration 

In this Financial Year, ICT Division has completed a number of major ICT projects to help 

spearhead TNB towards excellence in the areas of customer services and internal operations 

and administration. 

During the year under review, ICT Division was selected as recipient of “Anugerah Khas Jabatan 

yang Menggunakan Sistem SEMS” during the Kecemerlangan Keselamatan dan Kesihatan 

Pekerjaan TNB 2006 held in May 2007. In July 2007, the Division received another recognition 

of two SEMS stars in its first year of SEMS implementation. 

167 


ICT Division 


ICT Division has been entrusted to effectively govern and consolidate the use of ICT in TNB. 

To date, this has been realised through the enforcement of ICT policies, codes of practice and 

guidelines endorsed by TNB Management. 

The Division’s core operational focus is to ensure TNB’s telecommunication network and IT 

system’s are always available. This is a prerequisite to indirectly assist TNB’s core operations in 

providing a secure, reliable and continous electricity supply to the customers. 

Besides this, the Division has also been entrusted to put in place security features to assure TNB 

stakeholders and customers that data integrity is not compromised. It is with this in mind that 

ICT has prepared a security framework and implemented security upgrades at critical areas. 

The Division is in the midst of upgrading and expanding its data centre to host critical TNB ICT 

services. 

Our network infrastructure serves both corporate and operational needs of TNB’s businesses. 

ICT Division provides peripheral support service that covers both ends of the spectrum, from the 

simplest user personal computers to the most state-of-the-art, high-end servers. The Division 

also offers consultation and project management services to TNB divisions and subsidiaries. 

ICT Division has implemented the Mobile Field Force Automation Project in Selangor and Kuala 

Lumpur that provides an integrated communication platform between TNB’s Call Management 

Centre, Supply Recovery Centre , the Distribution Network Information Management (DNIM) 

System and field workers which comprise of Maintenance and Repair Teams and Fault Finder 

Teams. This communication platform utilises mobile devices to enable supervisors to effectively 

determine crew location and enable efficient dispatching of teams. This has directly improved 

TNB’s response time to breakdown calls, thereby reducing interruption time. 

The Division is also expanding the scope of this project to include other Distribution teams 

located in Peninsular Malaysia such as Johor and Pulau Pinang. ICT Division also intends to roll 

out this project to the Transmission Division in the near future. 

ICT Division also provided its expertise in the successful roll out of the Distribution Network 

Information Management (DNIM) System in Shah Alam, which involves mapping of all TNB’s 

Distribution Infrastructure on a single platform. This project is expected to improve Distribution’s 

capability in network planning and outage restoration. 

The Division has also upgraded its telecommunication network and commissioned TNB’s 

telecommunication Customer Premises Equipment at critical sites to provide the much needed 

bandwidth to transmit data for DNIM, video and desktop conferencing and operational 

transactions. 

ICT recently embarked on a realignment of business operations to provide efficient and effective 

end-to-end ICT products and services. This is in line with TNB’s Service Excellence initiative. 

168 


ICT Division 

Internal Process Standardisation 

and Improvement 

ICT Division heavily utilises the Process Standardisation and Improvement (PSI) platform to 

improve its internal services. At the same time, this platform has enabled the Division to study 

and propose improvement systems in line with its main objective of E-enabling critical TNB 

processes to drive corporate efficiencies higher. 

In this Financial Year itself, ICT Division consolidated and simplified a number of processes to 

enhance its internal effectiveness. This initiative has seen the Division’s number of processes 

reduced from 38 to 23 process control documents. This was successfully conducted through 

work improvement and Cross Functional Teams throughout the Division. Besides using Online 

PSI System, ICT Division also administers the PSI. 

Quality Management and Initiatives 

ICT Division has also embarked on several other quality initiatives such as: 

• Developed improvements in the Enterprise Resource Planning System; 

• Established Work Improvement Teams (WIT); 

• Implemented 5S programme; 

• Conducted the Safety and Environment Management System (SEMS) baseline audit. 

In FY2006, ICT Division has introduced the WIT and 5S practice among the staff. The objectives 

are to inculcate teamwork, continual improvement and safety culture at workplace. 

Four WITs have been set up. A total of 49 ICT Division staff took part in proposing ways to 

improve their day-to-day work. Several proposals were approved and have been implemented 

in the Division. 

In line with TNB’s call for increasing safety awareness amongst staff, ICT Division has undertaken 

the SEMS baseline audit initiative to determine the safety level of all operational units in the 

four regions of Peninsular Malaysia. Overall, ICT Division received two SEMS stars in July 2007. 

169 


ICT Division 

The Way Forward 

ICT Division faces a challenging year ahead to meet the ever increasing business demands of 

TNB. The Division will be implementing a total of 29 plans and initiatives; 19 of which to cater 

for system expansion and 10 productivity improvement systems for TNB Group. 

The 19 upgrading plans include security improvement initiatives, storage virtualisation, 

enhancement of TNB’s digital transmission and protection network, provision of network 

connectivity for TNB’s Integrated Security Management System and upgrading its Data Centre. 

The 10 productivity improvement systems include the implementation of the Mobile Field 

Force Automation for other locations in Peninsular Malaysia, Radio Frequency Identification for 

warehouse and implementation of an Integrated Fleet Management System. 

ICT Division has adopted ITIL, the globally accepted best practice framework in IT Service 

Management towards improving its service delivery. Phase One of Customer Management 

System (CMS) is implemented in line with ITIL. ICT Division is also in the midst of a collaboration 

with UNITEN in drafting a comprehensive best practices adoption roadmap for ICT Division. 

With the objective of enhancing staff competency and engagement, ICT has conducted 

knowledge sharing sessions to impart knowledge to all levels of staff, developed a comprehensive 

TNI/TNA report to develop executives according to job requirements and established succession 

plan for critical posts in ICT. 

ICT Division has adopted 

ITIL, the globally accepted 

best practice framework in IT 

Service Management towards 

improving its service delivery 

170 


171 


Operations 

Review 

Dato’ Kamaruzzaman bin Jusoh 


Group Human 

Resource 

“ 

The Code of Ethics & Whistle Blowing 

procedure were launched to uphold 

and further strengthen the Company’s 

integrity and reputation. 

“ 

172 


Group Human Resource 


• Succession Management - Current Talent Pool size stands 

at 188. An additional 103 executives were evaluated for 

consideration to be included into the Talent Pool. 

• Specialist Career Path - One technical expert was promoted 

to the rank of Specialist whilst 16 new Technical Experts were 

appointed. Currently in total there are two Specialists and 21 

Technical Experts. 

• The Policy for managing Low Performers which was launched 

in May 2007 provides the guidelines and comprehensive 

programmes for staff deemed as ‘low performers’ to increase 

their productivity towards achieving their target set. 

• Institut Latihan TNB - ILSAS was awarded the Human 

Resource Ministry Award 2007 (Training Provider Category) 


An external consultant was engaged to conduct a study on Employee Engagement. The level 

of engagement attained was 83 per cent fairly close to the 87 per cent for The Best Employer 

in Asia. 

The succession management initiative in 2007 reviewed the talents assessed in 2006. One 

hundred and eighty-eight talents from 227 have now been formally included in the talent 

pool. The management team had also outlined the career plan for top talents during the 

management break out session. In talent development effort, five Progem (Programme for 

General Managers) involving 166 talents had been conducted in this Financial Year. Cross 

functional team projects has been assigned to all Progem participants. Concurrently, new 

talents, totalling 103 executives, have been identified and assessed in August 2007. The new 

group of talents has a higher percentage of executives in the lower/middle management group. 

To date, almost 10 per cent of the executive population had been assessed for their potential. 

The Succession Management activities will prepare talents for Key Leadership Positions (KLP). 

173 



In building the human resource capacity and retaining 

technical expertise, one Technical Expert was promoted 

as Specialist and 16 were appointed as Technical 

Experts in the Specialist Career Path (SCP) scheme for 

the Financial Year, bringing to date two Specialists and 

21 Technical Experts to be in the SCP. 

A similar scheme, known as the Specialised Technician 

Career Path, was introduced for the non-executives 

with creation of thirty-eight Specialised Technician 

positions. 

A new policy on managing low performers had been 

established to provide a platform for line management 

to manage the low-performers. At the same time nonperformers 

were provided an opportunity for selfimprovement 

through a programme called Performance 

Improvement Programme with a maximum period of 

six months for executives and nine months for nonexecutives. 

This past year has seen the Counseling Services Unit 

actively giving talks to educate and create awareness 

towards improving the mental and emotional well-being 

of TNB employees. The unit is also currently embarking 

on recruiting and training more “Pembimbing Rakan 

Sekerja TNB” throughout Peninsular Malaysia with 

expectations to provide employee with a more positive 

and harmonious working environment for a greater 

work-life balance. 

The Company continues its efforts to contain medical 

cost throughout the year 2007. Preventive programmes 

were initiated by implementing Wellness Programmes 

in all divisions. The programmes give high emphasis on 

early detection of common diseases. Health awareness 

talks were also given. More audits were conducted on 

panel clinics throughout the year. 

System Improvement 

In Phase 3 of the Competency Based Performance 

Management System (CbPMS), further enhancement 

to the Employee Performance Appraisal process was 

made in an effort to improve efficiency and reduce 

time as well as to create a more transparent process. 

The Appeal and Employee Development Plan module 

(EDF) can be done online starting this financial year. The 

online Appeal would enable employees to register their 

appeal, in which the management is able to identify the 

number of appeals made during the appeal period and 

understand which element of the ratings or results is 

being appealed by employees. While EDF online would 

allow the training unit to plan and carry out training 

programmes, particularly in new skills as identified by 

employees, this enables the staffing department to 

plan future emplacement of executives. 

Customer Service 

The HR Division engaged UNITEN to conduct 

a Customer Satisfaction Survey (CSS) to garner 

information pertaining to the services being provided. 

With this information, corrective action is taken to 

further improve services given. The level of satisfaction 

attained this year was 68.6 per cent compared to 67.9 

per cent in 2006 and 66.8 in 2005. 

The Customer Complaint Procedure for the Human 

Resource Division was certified MS ISO 9001:2000. The 

certification would enable appropriate action to be 

taken based on feedbacks from HR customers/clients. 

174 



Training and Development 

The TNB Training Institute - ILSAS has close partnerships with leading local and international 

training providers such as Turbo Welding Institute (TWI), Institut Kemahiran Belia Negara (IKBN), 

Energy Commission, Institute of Engineers Malaysia (IEM) and Universiti Kebangsaan Malaysia. 

In an effort to increase competency levels, a total of 102 Development and 1227 Mandatory Training 

Programmes were organised for Executives and Non-Executives respectively. Institut Latihan TNB- 

ILSAS have hosted several state-of-the-art training workshops and technical lab sessions to allow 

the trainees to get practical experience so that they may apply what they have learnt in class, at 

work. 

Heavy Mechanical Workshop 

300MW Simulator 

Overhead Lines Workshop 

Electrical Wiring Workshops 

Protection Workshop 

Basic Mechanical Workshop 

175 


Operations 

Review 

Dato’ Hajah Che Zurina binti Zainul Abidin 


Corporate 

Services 

“ 

The Corporate Services Division provides 

support services to TNB Group in areas it 

specialises in i.e. procurement, property, 

legal, logistics, research, security and 

intelligence services. 

“ 

176 


Corporate Services 


• Completion of Integrity and Ethics Awareness Programme for 

Generation and Support services 

• Successful implementation of first year Procurement 

Transformation Plan 

• Implementation of various Customer Relationship Management activities, 

resulting in improved CSI rating in PSD 

• Implementation of Integrated Fleet Management by Logistics Department 

Procurement 

The Procurement Department is responsible for 

formulating the Company’s procurement policy, 

providing advisory services, enforcing compliance 

and driving procurement-related activities in line 

with corporate strategic directions. The Department 

is also responsible for promoting and implementing 

the National Procurement Policy, in particular the 

Entrepreneur Development Programme that supports 

the National Economic Policy. 

FY2007 is the first year of implementation of the 

procurement transformation programme. Hence the 

focus of the department is to continue all initiatives 

that drive and add value to the Company. Five key focus 

areas are the promotion of the use of local content 

and ensuring Bumiputera equity shares, realising value 

creation, enhancing procurement process transparency, 

integrity and effectiveness, enhancing supplier 

management and strengthening our procurement 

organisation by transforming it into a more strategic 

function. 

A trade mission to the Middle East, “The Asian Showcase 

and Exhibition” in Doha, Qatar was organised in order 

to build the Company’s brand at international level 

and to support entrepreneur development under the 

Entrepreneur Development Programme. The trade was 

held from January 12 – 19, 2007 at the Sheraton Doha 

Convention Centre. 

During the year under review, the Department 

had aggressively conducted various procurement 

dissemination sessions throughout the Company. The 

department had also introduced “Info Perolehan” in 

the TNB webpage as a channel for customer information 

and developed a customer complaint management 

platform and began to produce bulletins. 

In response to the Company’s strategic plan to achieve 

“Service Excellence” by 2010, the Department will 

continue to drive the Company’s procurement initiatives 

through its Transformation Plan which includes short 

and long-term initiatives. 

177 



Legal Services 

The Legal Services Department (LSD) aims to be the central provider of quality legal services 

within TNB and amongst its subsidiaries with the goal of supporting TNB’s core business, noncore 

business and management services. The Department is divided into three units, namely 

Corporate Advisory, Regulatory and Legal Documentation and Litigation. 

During the year under review, the first and second phase of the Litigation and Corporate Advisory 

Modules were successfully implemented. Under the litigation module, the system allows for 

tracking and managing reports of litigation matters effectively. Judgement and legal opinions 

prepared by the Legal Department and panel lawyers are constantly uploaded for future 

references. Similarly, the Corporate Advisory, Regulatory and Legal Documentation module also 

provides an avenue for executives to track and better manage opinions and agreements. 

For FY2007, several roadshows were carried out as a continuance of the awareness programme. 

They were held in several states by the Regulatory and Legal Documentation Unit to executives 

and non executives of the Distribution Division regarding the legal issues on land matters, 

trespassing and acquisition of land for TNB installations, rechargeable job order, housing loan 

for TNB’s staff and supply matters. 

During the year under review, a legal forum was held on commercial contracts, legal perpectives 

organised by the Corporate Advisory Unit. A total of 80 participants attended the forum 

from the various divisions within TNB. The Department had also participated in the PSI 

Programmes supporting TNB for MS ISO 9001:2000 certification in 2006. Focus on human 

resource development saw comprehensive training programmes for all legal executives. Legal 

Services also contributes articles for the Company’s inhouse bulletin i.e. “Tenagawan” and also 

produces its own Legal Services Department Bulletin. 

178 



Property Services 

The Property Services Department (PSD) provides property support services to the core business 

of TNB, in the form of property planning and development, land procurement, project 

management, property management and property maintenance. 

Some of the major achievements recorded during the year are:- 

• Customer Satisfaction Index rating further improved from 69 per cent in FY2006 to 76 

per cent in 2007 due to continuous effort to improve services. 

• Continuation of Service Level Agreement (SLA) with other divisions for better customer 

services and better understanding of work scope and roles and responsibilities. This 

leads to better work efficiency. 

Other initiatives implemented were: 

1. Full implementation of 5S initiatives throughout the department and coming out first in 

the division during audit. 

2. Successful roll out of Phase 1 and Phase 2 of the Property Information System. 

3. Various quick win initiatives implemented for better efficiency and services such as 

confirmation of ownership of land through official search for registered lease and land 

vesting application. These quick win initiatives are for completion in 30, 60 and 90 days. 

4. Electronic Document Management System (EDMS) which is currently still under discussion 

with ICT Division. 

5. Use of data for better management and efficiency such as quit rent and assessment, TNB 

office buildings throughout the country, rented office space in Klang Valley, property 

projects and holiday bungalows throughout the country. 

179 



Logistics Services 

The Logistics Services Department (LSD) consists of 

three operational units, namely Freight Management, 

Fleet Management and Generator Set Services. LSD 

aims to become the most cost-effective one-stop 

logistics centre and the most improved service provider 

targeting 800 AKP points by 2010. The department aims 

to provide cost-effective logistics services to customers 

and providing new value added services by the Group. 

LSD’s objective is to manage total logistics requirements 

in order to meet customer expectation. 

LSD provided cost-efficient and effective logistics 

services with high customer satisfaction comprising 

freight, fleet and generator set services to support 

TNB’s core business. Major jobs handled during the year 

under review include vehicle repair and maintenance, 

vehicles sent for PUSPAKOM inspection, supply 

of generator sets, freight shipments and customs 

clearance, transportation of general cargo and heavy 

lift. 

Among the highlights and achievement for FY2007 

are: 

1. Integrated Fleet Management (IFM) e.g. 

appointment of panel workshops, establishment 

of schedule rate, savings from implementation 

of IFM, centralised vehicle resale and disposal. 

2. Taking over all generator sets from Distribution 

Division. 

3. New generator sets operating bases set up in 

Chain Ferry, Penang. 

4. More than 50 per cent engine driver certified. 

5. Expansion of feeder pillar repair – increase of 

requests by Distribution Division. 

Security and Intelligence Services 

Security and Intelligence Services (SSID) is one of the 

important support services provided for the Company. 

The Department’s functions cover Operations, Planning 

and Crisis Management, including Investigation and 

Intelligence. Services provided are to safeguard TNB’s 

key installations from damage, vandalism and theft. 

Security forces are stationed at various critical locations 

such as power stations, substations and regional 

warehouses and offices throughout Peninsular 

Malaysia. As an auxilliary police force, close links 

are being maintained with the nation’s police force, 

which enables the latter to respond swiftly during 

emergencies. 

Some of the major achievements during FY2007 were: 

• TNB Fraud Policy Statement was approved for 

implementation. 

• A joint council meeting between TNB/GLCs 

and Second-hand Dealer Association Malaysia 

was held to discuss issues relating to thefts at 

TNB installation and to procure cooperation 

from the above association in overcoming the 

problem. 

• Formation of task force for GLCs where SSID 

is the chairman. The purpose behind the 

formation of this task force is mainly to get 

cooperation and understanding between the 

various GLC companies on security issues. 

• Arrest of 117 persons from September 06 to 

August 07 through cooperation with various 

Government Agencies in cases involving 

trespassing, thefts and other crimes related to 

TNB. 

6. Expansion of hydraulic repair to southern area. 

180 



TNB Research 

As an approved Research and Development (R&D) company and the research arm of TNB, TNBR’s main role is 

to enhance the core businesses of TNB through its Research and Development, Consultancy Services, Laboratory 

Testing and Quality Assurance units. TNBR aims to be the point of reference for new technological developments in 

the electricity industry by leveraging on its technical consultancy and advisory strengths. 

Research and development findings are widely applied to improve efficiency, availability and reliability of our 

electricity supply network. Through its pilot projects, TNBR is able to demonstrate the best approach in applying 

new technologies and processes and to guide its customers, both internally and externally, to make critical decisions 

on technical specifications and standard operating procedures. 

A total of 26 research and development projects worth RM30.5 million were completed for TNB’s core business 

and support divisions including SESB. The projects addressed different areas of impact such as reliability, efficiency, 

environment, technological evaluation, quality assurance and cost savings. As the Quality Assurance (QA) agent for 

TNB, TNBR is responsible for ensuring that all equipment supplied to TNB meets necessary technical and functional 

standards through measures like product inspection, product certification and second-party quality systems audit. 

TNBR also provides consultancy services in the areas of environmental assessment and energy. The department is 

registered with the Department of Environment, Malaysia as an approved body to conduct Environment Impact 

Assessment (EIA) studies. TNBR is also engaged as a consultant in energy-related works, especially renewable energy, 

by the Ministry of Energy, Water and Communications, Malaysia Energy Centre and universities. Scientific services 

are a revenue centre and the biggest contribution comes from laboratory testing and scientific services. TNBR 

clients are mainly from TNB core divisions, vendors as well as industries. TNBR has secured several SLAs due to its 

remarkable service performance. TNBR has successfully displaced some of the technical work previously done by 

foreign consultants. In areas such as Material Engineering, High Voltage Diagnostics, Lightning and Hydro Plant 

Optimisation, TNBR has developed its intellectual capital to meet the technology and engineering challenges faced 

by TNB core divisions. Specialists and technical experts are placed on a separate career path to ensure they can retain 

their technical expertise as they climb up the corporate ladder. 

181 


Group Internal 

Audit 

“ 

A total of 109 planned and ad-hoc 

assignments were completed and 45 

reports were issued during the year 

“ 

182 


Group Internal Audit 

The Group Internal Audit (GIA) function was established 

by the Board and reports functionally to the Board 

Audit Committee (BAC) and administratively to the 

President/Chief Executive Officer. 

GIA’s mission is to provide objective and independent 

assurance on the system of internal controls in the 

Group. 

The main functions carried out by GIA to fulfill the 

mission are: 

• Preparing a strategic risk-based audit plan and 

performing planned audits to ensure adequate 

coverage of all auditable entities. 

• Reviewing the adequacy and effectiveness of 

risk management, compliance and governance 

processes established by the Group to manage 

its risks and operations. 

• Establishing the existence, effectiveness and 

adequacy of internal control processes designed 

to manage operations and safeguard the assets 

of the Group. 

The GIA function is structured into units that focus on 

generation, transmission, distribution, procurement, 

projects, group corporate services, core business support 

services, information and communication technology, 

investment management and risk management 

functions. 

As at 31 August 2007, GIA had 78 staff. A total of 109 

planned and ad-hoc assignments were completed and 

45 reports were issued during the year by both GIA and 

external consultants. The processes reviewed include 

the following: 

• Project procurement and implementation 

• Group Corporate Services covering the areas 

of finance, human resource, procurement, 

asset management, vehicle management and 

training school 

• Management Information System covering 

project implementation review, security and 

access, data integrity, SAP R/3 applications, 

business process controls 

• Operational systems of subsidiaries owned by 

the Group 

• Risk management systems and activities 

undertaken to manage risks 

During the year, the following activities were undertaken 

by GIA to continuously improve its performance: 

• Implementation of Customer Satisfaction 

Surveys to obtain feedback for enhancing 

internal audit services. 

• Implementation of Board Audit Committee 

Satisfaction Survey to seek feedback to achieve 

a higher level of performance. 

• Introduction of a Key Performance Indicator to 

measure customer satisfaction. 

• Revision of the GIA Charter to improve and 

align internal audit practices and processes to 

best practices. 

• Provision of in-house training courses to 

enhance staff competencies. 

• Generation plant performance, maintenance 

processes, fuel and resource management 

• Transmission asset maintenance including 

wayleave, engineering practices and warehouse 

management 

• Distribution revenue assurance, customer 

services and network services 

183 


Operations 

Review 

Sabah Electricity 

Sdn. Bhd. 

“ 

Eight T7 programmes implemented 

aggressively 

“ 

184 



Highlights of Achievements 

• Turnaround of Sabah Electricity Sdn Bhd sees sales rise to 

RM807 million in FY2007 compared to RM703.5 million 

in FY2006 

• Distribution SAIDI was reduced to 1,850 minutes 

from 2,581 minutes 

• System losses were improved to 11.74 per cent 

from 13.79 per cent 

Sales of electricity at Sabah Electricity Sdn Bhd (SESB) registered RM807 million in FY2007 

compared to RM703.5 million recorded in FY2006. 

During the year under review, SESB implemented the T7 programmes aggressively. There were 

eight T7 key initiatives that included - 

1. Reducing generation cost 

2. Ensuring State Grid Interconnection projects were completed on 

time and within budget (Transmission) 

3. Improving transmission supply reliability - West Coast Grid (WCG) 

4. Improving transmission Supply Reliability - East Coast Grid (ECG) 

5. Reducing distribution system loss 

6. Improving distribution supply reliability & quality 

7. Improving revenue collection (ACP) 

8. Developing staff competency 

185 



During the year, Generation capacity was at 791 MW with maximum demand from throughout 

Sabah at 605MW. Generation fuel mix at SESB as at 31 August 2007 is depicted here – 

Gas IPP 

9.80% 

Diesel IPP (Sutra) 

3.00% Biomass IPP (THS) 

1.50% 

SESB Hydro 

13.90% 

Diesel (SESB) 

12.80% 

Gas (SESB) 

15.10% 

The total cost per unit, ie CPU, for all SESB and IPP plants in FY2007 was 17.1 cent/kWh (at 

corrected diesel price of RM0.495/litre and MFO price of RM0.420/litre). The overall units 

generated and expenses incurred were 3,908 GWh and RM670 million respectively. From these 

total figures, minor and rural stations contributed 1.6 per cent of the total units generated and 

2.3 per cent from the total expenses incurred. In order to reduce the overall generation cost, 

the key initiative for the Generation Division is to focus on SESB major stations, all the IPP plants 

as well as the SESB mini hydro plants. The key steps to reducing generation cost have been to 

focus on the following:- 

(a) 

(b) 

Optimising power generation from hydro and gas plants. 

Completion of IPP projects on time (SPBC and Powertron) 

The IPP project Sepanggar Bay Power Corporation Phase 1 (66MW) was completed in November 

2006 while the East-West Interconnection was completed in July 2007. This allows energy from 

the West Coast to be exported to the East Coast, thus reducing units generated from the 

expensive gas turbine operations (running on diesel) at Tawau and Sandakan. The Kundasang 

power station was decommissioned in June 2007. On 28 July 2007, the East-West grid project 

was completed with the commissioning of the 275 kV lines from Kolopis substation to Segaluid 

substation. With the commissioning of the 246 km double circuit 275 kV lines, the state-wide 

Sabah Grid was formed linking the West Coast Grid (WCG) and the East Coast Grid (ECG). With 

this completion of the Sabah Grid, the system reliability will be improved and the production 

cost per unit lowered. This project is financed under the Eight Malaysian Plan. 

186 



SESB is also undertaking new projects, one of which is the Kota Kinabalu outer-ring connecting 

Northern Town to Kepayan Substation that is expected to complete by the end of 2007. Another 

new project is the extension of the transmission lines from Inanam substation to the Minintod 

substation expected to be commission by the middle of 2008. 

During FY2007, SESB’s Transmission Division achieved the following - 

Targets and Objectives 

Key Performance 

Indicators / 

Measures 

Target 

WCG 

01/9/06 to 

27/7/07 

Achievement 

ECG 

01/9/06 to 

27/7/07 

Sabah Grid 

28/7/07 to 

31/8/07 

Delivery Point Unreliability 

Index (DPUI) 

System minutes 46 

21.02 68.56 18.99 


Frequency Index (SAIFI) 

Interruption 

/Delivery Point 

0.37 

0.347 0.642 0.176 

SESB also completed the timely upgrading of transformer capacity from 2 x 7.5 MVA to 2 x 30/45 

MVA at the Papar Substation on 4 February 2007. 

During the year, a state control centre in Penampang Substation – State Load Despatch Centre 

(SCADA/EMS Systems) was completed in February 2007 has improved supply reliability. Under 

the key initiative to reduce system loss, Strike Force operations have been carried out in all 

twenty areas to check metering installations for Ordinary Power Consumers (OPC), mainly 

commercial, industrial and residential. Of the 12,646 covered by the operations in FY2007, 

1,780 installations were found tampered. Random checking of Large Power Consumer (LPC) 

installations was also undertaken. With the combined measures, losses were reduced from 

13.79 per cent to 11.74 per cent. 

187 



The key initiative to improve supply reliability saw several major 33 kV projects implemented 

to strengthen the distribution networks. The new 33/11 kV substations have provided new 

injection points to strengthen 11 kV distribution network. The major projects commissioned 

were - 

Projects 

33/11 kV ABC System for Kalumpang – Balung – Wakuba, Tawau 

Completion Date 

19 May 2007 

PPU Sim Sim, Sandakan 

Supply Erection Testing and commissioning of new 33 kV ABC from 

PMU Segaliud 

Erection Testing and Commissioning double circuit 33 kV U/G Cable 

& Optical Cable from SSU Sibuga to PPU Permai, Sandakan 

26 July 2007 

12 April 2007 

28 July 2007 

The 11 kV projects such as the installation of auto-reclosers and the changing from bare to 

aerial cables, have also been implemented to improve supply reliability. A major maintenance 

exercise was carried out for all the PPUs. Distribution SAIDI was reduced from 2,581 to 1,850 

minutes in spite of having more scheduled shut-downs during the year for more maintenance 

and system upgrades. 

Today with a resource of 2,326 employees, SESB continues to develop its staff competency in 

order to enhance the productivity of the company. During FY 2007, the company conducted 

several workshops and training such as 5S, Management Tools, SWOT, AKP Assessor Course and 

many more for both the executives and non-executives. SESB also facilitated the opportunity 

for employees to be involved in quality improvement activities such as 5S, CFT and WIT. The 

company also conducted the Acid Test in June 2007 to evaluate the effectiveness of employee 

involvement. The AKP Score for SESB in this Financial Year is 700. The achievement in AKP will 

be the prime mover for SESB to move forward to achieve service excellence in the year 2012. 

188 


189 



190 



Yayasan Tenaga Nasional 

TNB executes a major part of its corporate social responsibility through a trust body, Yayasan 

Tenaga Nasional (YTN), mainly in education sponsorship and welfare contributions. 

For FY2007, YTN provided scholarships and study loans amounting to RM47.3 million to top and 

deserving students to pursue their tertiary education at local and world-renowned universities 

abroad. This is a direct contribution towards the development of professional manpower for 

TNB and the country. Since its inception, YTN has provided education sponsorship to more than 

6,300 students. 

YTN had also contributed RM1.36 million in FY2007 to community programmes such as the 

annual “Program Jejak Kegemilangan” and “Program Kem Remaja Bestari”. 

During “Program Jejak Kegemilangan” held this Financial Year, 142 students with good academic 

results from rural areas and underprivileged families from all over Malaysia were selected for a 

study visit to Kuala Lumpur, including University Tenaga Nasional (UNITEN). The objective is to 

give exposure and inspire them to continuously achieve academic excellence. 

“Program Kem Remaja Bestari” is essentially an educational camp programme for children of 

TNB employees as well as orphans. It is intended to guide and inspire participating students 

to perform well in public examinations such as the UPSR, PMR and SPM. About 1,550 students 

attended these annual camps, which were held simultaneously in four regional zones - North, 

South, East and Central, with the assistance of local TNB management. This programme 

implemented since 2001 has a yearly budget of RM500,000. 

To further its cause, other contributions made during the year included RM250,000 to the 

Ministry of Education for the setting up of Pusat Pendidikan Khas, Putrajaya for handicapped 

children RM250,000 to Institut Jantung Negara (IJN) Foundation to sponsor infant/young heart 

patients requiring surgery, RM200,000 to National Cancer Council (MAKNA) the Mobile Cancer 

Screening Programme (MCSP) and RM100,000 for the supply of selected electrical appliances to 

various orphanages with the purpose of improving their living conditions. 

191 



Corporate 

Communications 

Corporate Communications as the custodian of TNBs 

image, branding and relationship management plays 

an important support services role to the Company. The 

Department drives various initiative to enhance TNB as 

an ethical, caring and highly respected energy provider 

in Malaysia. It also implements various initiatives to 

foster a positive image among our stakeholders, in 

particular the Government, the media and the general 

public. 

The Department is restructured into two units, Internal 

and External, streamlined with the goal of delivering 

effective communications in the most relevant 

manner. Internal Communication is responsible for 

communications with regards to TNB’s internal publics, 

events and sports management services, publications 

and website management. External Communications 

deals with media relations, branding as well as 

Government and Community Relations. 

In support of the strategic initiatives undertaken 

by the Company such as T7 and SE 10/10, about 30 

internal communication roadshows were held with 

the objective of creating awareness and of instilling 

commitment to all citizens of TNB to ensure the success 

and achievement of these strategic plans. These efforts 

were undertaken as all employees plays an important 

role as flagbearers of the Company, hence contributing 

towards strengthening the corporate image of the 

Company in the various roles that they play. 

A total of 13 major corporate events such as opening 

ceremonies of TNB plants and premises were held during 

the year with the purpose of improving corporate 

image besides fostering relationships with the various 

stakeholders. The Department also organised various 

exhibitions which acted as a platform to improve 

networking and to support the business expansion 

strategy. Some of the exhibitions that we participated 

have won the Company a number of awards such as:- 

• Best Show Award for Best New Services at ACM 

Expo and Exhibition 2006 held in September 

2006 

• Best Themed Booth for The 50 th Merdeka held 

from 30 August to 2 September 2007 in Putra 

World Trade Centre, Kuala Lumpur 

The Corporate Communications Department also made 

TNB proud with some achievements that included: 

• NACRA Silver Award for TNB Annual Report 

2005 (adjucated in 2006) 

• Three IABC Malaysia Silver Quill Awards 2007 

for the TNB Annual Report 2007 

The Corporate Communications also oversees and 

implements the various processes deemed mandatory 

for the MS ISO 2001:9000 certification received by TNB 

in 2006. Beyond that it acts the corporate complaints 

management centre, handling issues at the corporate 

level. 

In essence, Corporate Communications continues 

to play an active role in supporting TNB’s strategic 

initiatives, adding intangibles values in terms of 

improved corporate image and relationship with 

important stakeholders. 

192 


193 


194 



Productivity And 

Quality Management 

The Productivity and Quality Management Department 

(PQM) is responsible for improving TNB’s overall 

productivity and quality. 

After five years of effort in bringing about change 

through it’s 32 key initiatives under the T7 strategy 

which ends on 31 st August, 2007 this unit is currently 

developing a strategy called Service Excellence 10/10 . 

Throughout the year there are ongoing efforts to 

review and improve existing processes. In addition to 

that PMU has embarked on steps to assist SESB in their 

efforts to obtain MS ISO 9000:2000 certification. 

The AKP initiative continues to be carried out this year. 

Satisfactory results where the average achievement 

rose from 687 points to 728 points as compared to the 

previous year were recorded. Apart from using the AKP 

initiative to improve the business units, these results 

were also used as a benchmark in preparation for TNBs’ 

participation in the upcoming Prime Minister Industry 

Excellence Award. 

So far TNB still continues it’s tradition towards 

excellence especially through WIT activities. The 

following are records of some WIT’s achievement 

throughout FY2007: 

1. The “Anugerah Panca Satya” award – for the 

continued participation in the Indonesian Quality 

Convention since 2002. 

2. “Anugerah Prisma Kategori 1” award– Gold Medal 

was conferred to the WIT named P-Power of SJ 

Pasir Gudang, Johor at the Indonesian Quality 

Convention 2006 in Bali Indonesia. 

3. The “Johan Sektor Perkhidmatan” was conferred 

to a WIT named K-Power from TNBD Kuala Lipis 

Pahang at the National ICC Convention 2006 held 

at Genting Highlands from 19-21 September, 2006. 

4. “Johan Sektor Perkhidmatan” and “Johan 

Keseluruhan” was awarded to a WIT named Circle 

Point, a WIT from TNBD Kuantan, Pahang at the 

National ICC Convention 2007. 

5. Silver Award was awarded to K-Power, a WIT from 

TNBD Kuala Lipis Pahang at the International 

Convention of Quality Control Circles (ICQCC) 2007 

in Beijing on 23-26 October, 2007. 

Beginning this year, TNB also implemented 5S initiative 

which was launched throughout the organisation in 

June 2007. 

195 



Internal Affairs 

Internal Affairs at TNB has the key objective of reducing misconduct in the Company through 

managing, conducting and monitoring of disciplinary actions taken against employees. 

Reporting direct to the Board of Directors’ Disciplinary Committee, Internal Affairs is tasked 

with investigating, deciding prima facie, prosecution, conciliation, defending cases in industrial 

courts, research and development as well as educating and training TNB employees on matters 

of discipline. 

During the year under review, the Whistle Blowing Procedure was introduced. The process for 

“caught red-handed cases” was also introduced. As a result of the various initiatives and efforts 

in FY2007, disciplinary cases at prosecution level were reduced to 109 from 158, reflecting a 

drop by 31 per cent. 

196 



197 


Occupational Safety 

& Health Report 

198 


Occupational Safety Review & Health Report 

Introduction 

The ever-changing environment of the workplace and the diversity of tasks to be undertaken 

especially during breakdowns and emergency situations, pose a great challenge to the Company 

and its personnels to ensure immediate restoration of electrical supply while making sure that 

safety issues are at the same time prioritised. Hence, as a saying goes, “No job so important, no 

task so urgent, that time cannot be taken to do the job safely“, means striking a balance which 

have to be met without compromise. In trying to meet all these challenges, the management 

of Occupational Safety and Health (OSH) has, within the operational processes, been able to 

effectively reduce losses due to unnecessary accident. TNB has put in place a comprehensive 

OSH management system base which resulted in certain stations being recognised and awarded 

prestigious OSH awards by governmental and non-governmental institutions. 

Service Quality Enhancement 

Management of OSH with the new structure within the divisions of TNB (that has been approved 

by the management since reported in the previous Financial Year) has brought tremendous 

improvement in OSH across the board. The numbers of qualified Safety and Health Officers 

(SHO) has been increased to ensure TNB’s readiness to accept and adopt any changes in the 

requirements of the government enforcement agencies. Second level Safety Inspectors (SI) and 

third level Safety Representatives (SR), were appointed to ensure OSH performance at the far 

end of the job chain, are monitored and reported to the management. 

MS ISO 9001:2000 documents are being scrutinised further to ensure OSH requirements in 

processes and procedures are being incorporated in the OSH framework to ensure transparency 

of the management on these issues. 

199 



OSH Management System 

The OSH Management System, aptly known as, the “Safety Excellence Management System, 

(SEMS)”, has gone a long way in managing OSH in TNB. Challenges from certification bodies to 

ensure best OSH performance, saw SEMS being further enhanced to meet these requirements. 

The system has been fine-tuned to meet the requirements of the OHSAS 18001:2000 and the MS 

1722, and various programmes are in place to adapt to new challenges. 

Trainings are conducted continuously for all personnel requiring competency in managing, 

implementing and auditing as required by the system. ICT Division and TNB Engineering 

Corporation Sdn Bhd, has started their paces to achieve excellence, Tenaga Switchgear Sdn Bhd, 

has been handed their Baseline Report after a Baseline Audit conducted by the Occupational 

Safety, Health and Environment Department (OSHED), under the Group Human Resource 

Division. 

OSH Excellence Award 

In recognition of the diligent OSH management by TNB, the prestigious “Anugerah 

Kecemerlangan Keselamatan Pekerjaan”, was awarded to the best three ranking stations in 

the respective core divisions, the best in terms of over-all performance in distribution state and 

several best performance awarded to sub-division station. The standard of OSH management 

performance has continuously been reviewed to ensure new requirements of the law are always 

being incorporated into the system. 

The National Award for OSH Excellence 2006 saw four stations being awarded comprising of 

three generation and one distribution stations. The stations are Stesen Janaelektrik Chenderoh 

and Stesen Janaelektrik Sultan Ismail Petra, received Gold Award while Stesen Janaelektrik 

Tuanku Jaafar and TNB Distribution (Johore), Silver Award. 

The Malaysian Society of Occupational Safety and Health Award 2006, saw, five generation 

stations being awarded in the utilities sector. Gold (Class II) Award was received by; Serdang 

Power Station (now known as Putrajaya Power Station), Stesen Janaelektrik Sultan Iskandar, 

Stesen Janaelektrik Tuanku Jaafar and Stesen Janaelektrik Jambatan Connaught and Silver 

Award was received by Stesen Janaelektrik Gelugor. 

200 


201 



Emergency Response 

In the effort to preserve life and assets, alertness and readiness for any crisis and emergency 

is the key factor. Planning for eventualities takes center stage with new threats coming from 

unexpected angles. New risks were identified and efforts were taken to ensure immediate 

response can be exercised should any threat arises. Emergency Response Plan were reviewed 

and the latest techniques were sought from the market to ensure immediate response. 

Emergency Response Personnel were trained by the best available training facility in the country 

and other personnel were trained to act safely during crisis. 

OSH Awareness and Training 

Top level management at the helm of TNB were given continuous exposure on OSH management 

knowledge by CEO’s and experts of leading OSH organisation. The commitment to drive TNB 

to world OSH excellence requires maximum effort on resources available. Thus, charting 

TNB’s course towards world’s best will be fully supported with the knowledge and experience 

gained. 

All staffs are required to attend at least one day of training and exposure each on OSH while 

OSH practitioners were required to impart OSH knowledge. Continuous trainings, seminars, 

conferences, symposiums and workshops are identified for all levels, for participants to gain 

exposure on new developments in OSH. Trainers were also identified to assist the National 

Institute of Occupational Safety and Health (NIOSH) in their programmes that are related to 

the electrical utility industry. 

Contractors working in TNB are made aware on the importance of OSH. NIOSH-TNB Safety 

Passport was developed in a joint effort with NIOSH to ensure contractors are aware of the 

basic requirements of OSH. This programme will later be made compulsory to all contractors 

working in TNB. This programme is also conducted for field supervisors, to ensure cognisance 

and coordination of TNB’s efforts to eradicate ignorance of contractors on OSH matters. 

The public was not forgotten in the quest to impart electrical safety knowledge. Schools, nongovernment 

organisation, industries and various associations were assisted on their request, 

to ensure safety in the use of electricity. Safety Campaigns were also carried out by divisions 

to involve all staffs as well as the public in the effort to discharge TNB’s corporate social 

responsibility. 

202 


203 


Statement of 

Environment 

“ 

TNB is committed to achieving excellence 

in environmental management. This is thus 

part of our Corporate Social Responsibility in 

preserving the environment for the benefit of 

future generations 

“ 

204 



TNB’s Environmental Policy 

• Protect, conserve and improve the environment in all of its operations and decision-making 

• Comply with all applicable laws and regulations, and establish standards that will lead to 

continuous improvement of its environmental performance 

• Implement an Environmental Management System (EMS) that will ensure that all impacts on 

the environment from its operations are eliminated or minimised 

• Carry out environmental audits at required intervals to ensure compliance with its 

Corporate Environmental commitments, and implement environmental training 

programmes for our employees to develop a high level of competency 

• Promote environmental awareness amongst contractors, the public and other stakeholders 

and to make available the environmental policy to them 

Some of the initiatives implemented during the year:- 

A. Recycling Programme 

The waste recycling and reduction programme is included in the EMS initiatives within 

respective divisions. Currently, most of the power stations are implementing an Environmental 

Management programme to minimise wastage and reduce consumption of resources. Some of 

the stations have also assigned Recycling Centres at strategic places in the station. Continuous 

staff awareness programmes were undertaken via staff monthly gatherings. 

(i) Condition Monitoring Programme (CMP) : Transmission Division is continuously implementing 

CMP. 

(ii) Recycling old power cables : Recycling old power cables is implemented via the Scrap 

Committee at each region. The recycling process of old power cables can be conducted upon 

approval from this committee. Usually, the committee will appoint a recycling company to 

handle the scrap materials for further processing. 

205 



B. Scheduled Waste Disposal 

TNB Scheduled Waste Management programme has been implemented to comply with the 

Environmental Quality (Scheduled Wastes) Regulation 2005. Scheduled wastes include all waste 

generated periodically that requires disposal by DoE-registered contractors. 

All scheduled wastes generated are notified to DoE and temporarily stored at Scheduled Waste 

Store prior to disposal. EMR is responsible to record, monitor, and manage wastes generated 

at their respective units. 

C. Environmental Management Plan 

i) Environment Monitoring Programme 

The Environmental Management Plan was conducted as per requirements for licences under 

the Environmental Quality Act, 1974 or in accordance with the specific DoE’s Detailed EIA or EIA 

approval conditions for the respective power stations. In general, the monitoring programme 

focused on monitoring the air quality, water quality and boundary noise level. 

TNB is continuously installing efficient and environmentally friendly equipment as well as the 

Continuous Emission Monitoring System (CEMS) in the new power stations. 

ii) Coal Dust Study 

TNB Research Sdn. Bhd. has designed and developed a Laboratory Scale Gasifier and is currently 

performing tests on coal gasification using various types of coal in the gasifier. The results of 

gasification can help researchers increase their understanding and knowledge of the gasification 

process in general. 

D. Halon Replacement 

The halon replacement programme is among the key focus areas of the Network Maintenance 

(NM) Department of Transmission Division. Gradual halon gas replacement with new approved 

gas in the existing fire fighting system is implemented under the NM department’s 2004 - 2008 

Business Plan. 

206 


E. Environmental Audits And MS ISO Certification 

All the power stations have a complete set of MS ISO 14001 documentation and are currently 

implementing EMS based on the standards. Recently, Manjung PS also received MS ISO 

14001 certification from SIRIM QAS. It was the 11 th power station to achieve MS ISO 14001 

certification. 

Annual Environmental Management Audits or EMS based on MS ISO 14001 are conducted at 

all power stations by TNB Generation Division auditors (GRMU). The EMS reassessment audit is 

conducted once per year by SIRIM QAS International. 

F. Crisis Management 

The Disaster Team is represented by the Emergency Response Team which is the main 

component of the TNB Safety Excellence Management System (SEMS) which is implemented at 

all divisions. 

SEMS will identify every possible emergency that can happen in the division business activities 

and consequently an Emergency Response Plan is developed as mitigation measures. 

All divisions also conduct an annual ERP exercise that involves all staff and relevant authorities 

and agencies. 

207 


Enterprise 

Wide Risk 

Management 

TNB recognises that effective risk management is the key element in the Company’s 

overall strategy with a focus on the on-going implementation of an Enterprise-Wide Risk 

Management (EWRM) framework to ensure that the major areas of risks are managed and 

controlled effectively. 

The EWRM framework ensures a uniform application of risk management across the 

Group through standardised risk management processes and Group-wide exchange of risk 

information. 

Enterprise-Wide Risk Management Framework 

The TNB EWRM framework sets the foundation for a structured risk management 

framework that consists of a complete cycle involving risk assessment, reporting, treatment, 

monitoring and review of the business risks within the Group. 

208 


Enterprise-Wide Risk Management 

Risk Management Policy 

The TNB EWRM Policy has been reviewed and amended accordingly to further enhance the effectiveness 

of the framework. This policy that has been approved by the BAC aims at achieving the following: 

• simplifying the Content Structure and the EWRM Policy Summary; 

• incorporating the Group Risk Management Working Committee (GRMWC) Roles and 

Responsibilities, Risk Manager and Risk Coordinator Roles and Responsibilities; 

• extending the applicability of the Policy to major projects and all new business ventures other 

than operations; 

• establishing of the Divisional Risk Management Committee or utilisation of existing Divisional 

Management Committee to discuss risk management issues at the Operating Divisional level; 

• Approving authority on amendments of the EWRM policy and procedures at the Group Risk 

Management Committee (GRMC) and the Group Risk Management Working Committee 

(GRMWC); 

• revising the regularity of reporting for GRMWC. 

Risk Management Structure 

The EWRM framework requires that a risk management structure be adopted to ensure that roles, 

responsibilities and accountabilities for managing risk are clearly defined and communicated. The risk 

management structure comprises various levels of authority in the Group i.e. the Board of Directors, 

Board Audit Committee, Group Risk Management Committee (GRMC), Group Risk Management Working 

Committee (GRMWC), Enterprise-Wide Risk Management (EWRM) Department and TNB Operating 

Divisions. 

BOARD OF DIRECTORS 

BOARD AUDIT COMMITTEE 

Group Risk 

Management Committee (GRMC) 

EWRM Department 

Group Internal Audit 

Group Risk Management Working 

Committee (GRMWC) 

Core 

Business 

Management 

Services 

Non-Core 

Business 

209 



Risk Assessment Process 

In supporting the framework, the Group Wide Risk Assessment Process was also established 

to standardise the risk management methodology used throughout the Group which 

focuses on risk assessment, risk treatment, risk reporting as well as risk monitoring and 

review. 

In order to ensure the comprehensiveness of the risk assessment process and that the 

principal risks that may materially affect the business are considered, several broad 

risks areas which comprise of Governance, Operational, Financial, Technology, Integrity, 

Compliance, Preparedness, Environment, Reputation, Human Resources and Management 

Information are evaluated. 

Risk Profile Review and Verification 

Risk profile review and verification sessions for the TNB’s operating divisions have been 

carried out to validate the changes made to the operating risks as well as to ensure that 

all risk profiles remain aligned with the present TNB’s business strategies and objectives 

in the Financial Year. More than 30 sessions analysing more than 75 risk profiles were 

carried out by the EWRM Department together with the relevant Risk Managers and Risk 

Coordinators as well as Risk Owners. 

In addition, risk profile development activities are carried out continuously to be consistent 

with the objectives of EWRM framework to ensure that comprehensive risk identification 

and assessment efforts are carried out across the Group. 

Risk Communication 

Risk communication, being one of the important elements in the EWRM framework as it 

focuses on the dissemination of risk information at all levels, forms an integral part of the 

risk management activities in TNB. 

210 



Risk Coordinators Forum 

Two Risk Coordinator Forums were organised and used as a platform to communicate decisions 

made by GRMWC, GRMC and BAC to the risk managers and risk coordinators, brainstorm the 

way forward on risk related issues and highlight as well as resolve issues faced in the process of 

implementing the EWRM framework. The forums held in this Financial Year were attended by 

risk managers and risk coordinators as well as senior management across the Group. External 

speakers from other GLCs were invited to share their experiences on the implementation of 

enterprise risk management. 

EWRM Website 

The EWRM website has now been integrated into the revamped Group Finance website and 

currently being finalised to be published. 

Risk Analysis 

A risk analysis was carried out on risk of accidents in TNB focusing on areas causing fatality and 

bodily injury to TNB personnel. The recommendations had been presented and approved by 

GRMWC, GRMC and BAC and are being implemented at various levels. The risk analysis paper 

had also been presented at two safety conferences in TNB. 

As for the risk analysis that has been previously carried out i.e. legal and fraud risks in 

TNB, the implementation of the recommendations are at a mature stage and some of the 

recommendations have been completed i.e. TNB Code of Ethics and Whistle Blowing procedures 

are currently being communicated down to all levels in TNB while the legal risks taskforce has 

identified the top three contributing factors to TNB’s legal risks exposures. 

TNB Risk Information System 

TNB Risk Information System Phase 2 involving enhancement to the system has been successfully 

rolled out to all divisions and relevant trainings was provided to all. 

211 



Streamlining of Risk Management Activities 

with Key Activities/ Processes 

The approved process of streamlining the risk management activities with business 

planning and budgeting has been implemented to ensure that controls and 

mitigation plans for risk management are built into the business plans, budgets and 

key performance indicators of the Group. 

Development of Curriculum for Risk Management 

To further enhance and inculcate the risk management culture in TNB, EWRM has 

developed the first EWRM Awareness Module with guidance and cooperation 

from our trainning centre, ILSAS. In view of this, a few Divisional Risk Managers/ 

Coordinators and EWRM personnel had been trained as Certified Trainers. The 

module will officially be made a part of the training module in ILSAS and is targeted 

to be implemented in FY2008. 

212 



Corporate Emergency Response 

Plan (CERP) 

Preparedness 

The TNB CERP Steering Committee deliberated on 

several matters including the compilation, printing 

and distribution of the TNB CERP Document – System 

Related which has been printed and distributed to 

critical personnel within TNB. An awareness training 

programme was also carried out for the relevant 

personnel throughout TNB and SESB. The training 

programme would be extended to all wholly-owned 

subsidiaries in Peninsular Malaysia by the next Financial 

Year. 

Collaboration with External Parties / 

Government Agencies 

As an essential service and crucial towards TNB 

ensuring a potent state of National Security, continues 

to collaborate with external parties and various 

Government Agencies in particular the National 

Security Department and the National Security Council 

in the Prime Minister’s Department and the Ministry of 

Health. 

TNB participated in the “Pameran Sempena Seminar 

Sasaran Penting” organised by the Chief Government 

Security Officer with the Ministry of Internal Security 

Malaysia, aimed at creating awareness and furnishing 

information on all government and private agencies 

that are listed as Critical Installations. 

Generation Division had activated their annual 

‘OPSTRANG’ exercise aimed to:- 

• ensure that all black start diesel generators are 

able to run and synchronised to bars 

• assess the Power Stations readiness in 

responding to emergency or crisis situations 

• test the communication system for all power 

stations, and 

• test the activation of the operations rooms at 

all power stations. 

TNB also participated in the Chemical, Biological, 

Radiation and Nuclear Awareness Programme which 

was organised by the Crisis and Disaster Management 

Division, National Security Council, Prime Minister’s 

Department following which a mock drill was carried 

out at the KLCC LRT Station. 

Transmission Division, with Generation and 

Distribution Division had successful conducted two 

Blackstart test Communication drills at KLPP in January 

2007 and at Putrajaya in July 2007. The purpose was 

to ensure good coordination with all parties especially 

power stations,Transmission Division and Distribution 

Division. 

Most of the generation power stations have carried 

out scheduled mock drills and as the secretariat of TNB 

CERP, EWRM has participated in these exercises. 

The TNB Chief Financial Officer/ Chief Risk 

Officer delivering the welcoming address at 

the TNB Risk Coordinators’ Forum. 

213 


Corporate 

Calendar 



1. 4 September 

TNB held the TNB Staff Gathering 

in conjunction with its 57 th 

Anniversary at TNB Headquarters. 

2. 6 September 

TNB honoured the top 

management retirees at a 

special function “Majlis Jasamu 

Dikenang” at KL Hilton Hotel, 

Kuala Lumpur. 

1 

2 

October 2006 

October 2006 

1. 3 October 

TNB organised “Majlis Berbuka 

Puasa 2006” at the Balai Islam, 

TNB Headquarters. 

2. 19 October 

Launching of TNB Hari Raya 

Television Commercial 2006 

- “Majlis Semanis-manis Dodol 

Manis Lagi Dibuat Bersama” at TNB 

Headquarters. 

1 

2 

214 



November 2006 

November 2006 

1. 4 November 

TNB held the 2006 Deepavali 

Celebration at the TNB Sports 

Complex, Kuala Lumpur. 

2. 16 November 

TNB held the 2006 Hari Raya 

Aidilfitri Celebration at the TNB 

Sports Complex, Kuala Lumpur. 

1 

3. 21 - 23 November 

TNB participated in the Asia 

Pacific Regional Conference & 

Exhibition at Sunway Convention 

Centre, Petaling Jaya, Selangor. 

2 

3 

December 2006 

December 2006 

1. 12 December 

4 th T7 Review Session held at 

Hotel Armada, Petaling Jaya, 

Selangor. 

2. 14 December 

TNB held its 2006 Annual General 

Meeting at the TNB Sports 

Complex, Kuala Lumpur. 

1 

2 

215 



January 2007 

January 2007 

1. 17 January 

TNB’s Connaught Bridge Power 

Station celebrates its achievement 

of 200,000 Equivalent Operating 

Hours (EOH) on two SIEMENS 

branded V94.2 gas turbines at 

Connaught Bridge Power Station. 

2. 19 January 

TNB held the 2007 New Year Staff 

Gathering at TNB Sports Complex, 

Kuala Lumpur. 

3. 24 - 25 January 

SIRIM conducted MS ISO 9001: 

2000 Surveillance Audit for 

TNB Corporate Level, at TNB 

Headquarters. 

1 

2 

3 

February 2007 

February 2007 

1. 5 February 

TNB held Occupational, Health 

and Safety Seminar for TNB Top 

Management at Holiday Villa, 

Subang Jaya, Selangor. 

2. 23 February 

“Soft Launching and Awareness 

Session” of Prime Minister’s 

Industry Excellence Award at Bilik 

Kenyir, TNB Headquarters. 

1 

3. 26 February 

TNB held the 2007 Chinese New 

Year Celebration at the TNB 

Sports Complex, Kuala Lumpur. 

2 

3 

216 



March 2007 

March 2007 

1. 9 - 11 March 

TNB-Singapore Power Friendly 

Games held in Kuala Lumpur. 

2. 20 - 21 March 

TNB participated in the Vendor 

Network Programme organised 

by the Ministry of Entrepreneur 

and Cooperative Development 

(MECD) at Kuala Lumpur 


1 

2 

April 2007 

April 2007 

1. 5 April 

TNB Switchgear Factory was officiated 

by Y.Bhg. Dato’ Seri Rafidah Aziz, 

Minister of International Trade and 

Industry. 

2. 30 April 

Official Opening Ceremony of Sultan 

Azlan Power Station, Manjung by 

DYMM Sultan Perak. 

1 

2 

217 



May 2007 

May 2007 

1. 5 May 

TNB won four awards - the 

“Anugerah Harapan Majikan 

Berdaya Saing kategori Industri 

Besar”, “Anugerah Tokoh Pekerja 

Lelaki (Bukan Eksekutif)”, “Anugerah 

Tokoh Pekerja Lelaki (Eksekutif)” 

and “Anugerah Harapan Tokoh 

Pekerja Lelaki (Bukan Eksekutif)” 

at the National Labour Day 2007 

celebration held in Putra Stadium, 

Bukit Jalil, Kuala Lumpur 

2. 15 May 

TNB recognised 471 long serving 

staff at the Long Service Award 

Ceremony for Eastern Region at 

Hotel Grand Riverview, Kota Bharu, 

Kelantan. 

June 2007 

June 2007 

1. 1 - 3 June 

TNB participated in the 4 th 

International Trade Exhibition 

& Conference ‘Enterprise Asia 

2007’ at Putra World Trade Centre 

(PWTC), Kuala Lumpur. 

2. 5 - 8 June 

TNB participated in SMIDEX 

2007 Exhibition at Kuala Lumpur 


218 



July 2007 

July 2007 

1. 14 July 

TNB announced its Third Quarter 

Financial Results for FY 2007 

at the Analyst Briefing at TNB 

Headquarters. 

2. 14 July 

TNB organised Corporate TNB Family 

Day 2007 at TNB Sports Complex, 

Kuala Lumpur. 

3. 23 July 

Launching of TNB Code of Ethics and 

Whistle Blowing Initiative at TNB 

Headquarters. 

August 2007 

August 2007 

1. 4 August 

TNB participated in the “Majlis 

Bersama TNB/GLC dan Persatuan 

Pekedai Barang-Barang Lusuh 

Malaysia” at TNB Sports Complex, 

Kuala Lumpur. 

2. 23 - 25 August 

“Majlis Tilawah Al-Quran TNB 

Peringkat Kebangsaan” held at 

Intekma Hotel @ UITM Shah Alam, 

Selangor. 

3. 30 August - 2 September 

TNB participated in the 50 th Merdeka 

Expo at Putra World Trade Centre 

(PWTC), Kuala Lumpur. 

219 


220 


221 


Financial 

Calendar 

Quarterly Results 

First Quarter 

ended 30 November 2006 

Announcement Date 

25 January 2007 

Second Quarter 

ended 28 February 2007 

16 April 2007 

Third Quarter 

ended 31 May 2007 

13 July 2007 

Fourth Quarter 

ended 31 August 2007 

25 October 2007 

Distribution of Annual Report 21 November 2007 

Seventeenth Annual General Meeting 13 December 2007 

222 


PART II 

Financial Report 

TNB revenue, profit hit record highs 

New Straits Times 

TNB profit soars 88% 

The Star 

Tenaga post record net profit of 

RM4b in FY07 

Malaysian Reserve 

Tenaga FY07 net profit soars 91 % 

to RM4.1b 

The Edge FinancialDaily 

Directors’ Report 2 - 5 

Income Statements 6 

Balance Sheets 7 - 8 

Statements of Changes in Equity 9 - 10 

Cash Flow Statements - 12 

Notes to the Financial Statements 3 - 89 

Statement by Directors 90 

Statutory Declaration 91 

Auditors’ Report to the Members of Tenaga Nasional Berhad 92 - 93 

Analysis of Shareholdings 94 - 96 

Analysis of Convertible Redeemable Income Securities 

2004-2009 (“CRIS”) Holdings 97 - 99 


00 

Property List 01 - 104 

Proxy Form 

 


Directors’ Report 

Tenaga Nasional Berhad (Incorporated in Malaysia) 

DIRECTORS’ REPORT 

The Directors have pleasure in submitting their Report with the audited financial statements of the Group and the 

Company for the financial year ended 31 August 2007. 

PRINCIPAL ACTIVITIES 

The Group and the Company are primarily involved in the business of the generation, transmission, distribution and 

sale of electricity and those tabulated in Note 16 to the financial statements. 

There have been no significant changes in these activities during the financial year under review. 

FINANCIAL RESULTS 

Group Company 

RM’million RM’million 

Profit for the year attributable to 

- Equity holders of the Company 4,061.1 3,514.5 

- Minority interests 6.5 0 

Profit for the year 4,067.6 3,514.5 

DIVIDENDS 

The dividends paid or declared since 31 August 2006 were as follows: 

In respect of the financial year ended 31 August 2006 

as shown in the Directors’ Report for that financial year: 

RM’million 

Final dividend of 12.0 sen gross per ordinary share, less income tax 

at 27% and 2.0 sen per ordinary share, tax exempt, paid on 4 January 2007 459.7 

In respect of the financial year ended 31 August 2007: 

First interim dividend of 10.0 sen gross per ordinary share, less 

income tax at 27%, paid on 7 June 2007 315.8 

Second interim dividend of 10.0 sen gross per ordinary share, less 

income tax at 27%, paid on 30 August 2007 316.2 

For the financial year ended 31 August 2007, the Directors had on 25 October 2007 recommended the payment 

of a final dividend of 16.3 sen gross per ordinary share, less income tax at 26%, subject to the approval of the 

shareholders at the forthcoming Annual General Meeting of the Company. The Books Closure and Payment dates 

will be announced in due course. 

RESERVES AND PROVISIONS 

All material transfers to or from reserves and provisions during the financial year are shown in the financial 

statements. 

 


Directors’ Report (Continued) 

ISSUE OF SHARES 

During the financial year, 196,538,731 new ordinary shares of RM1.00 each were issued by the Company 

comprising:- 

(a) 

(b) 

(c) 

66,736,312 ordinary shares of RM1.00 each in TNB pursuant to the Employees’ Share Option Scheme II 

(‘ESOS II’) at exercise prices of RM6.71, RM6.99, RM7.42, RM7.33, RM7.75, RM7.80, RM9.189 or RM11.07 

per share, 

114,699,925 ordinary shares of RM1.00 each in TNB pursuant to the exchange of Guaranteed Exchangeable 

Bonds at the exercise price of RM8.10 per share, and 

15,102,494 ordinary shares of RM1.00 each in TNB pursuant to the conversion of Unsecured Convertible 

Redeemable Income Securities at the price of RM9.18 per share. 

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary 

shares of the Company. 

EMPLOYEES’ SHARE OPTION SCHEME (‘ESOS’) 

Options under the ESOS were granted to eligible Directors, employees and retirees of the Group to subscribe for 

ordinary shares of RM1.00 each in TNB. The first ESOS expired on 11 May 2002. 

The Company implemented a new Employees’ Share Option Scheme II (‘ESOS II’) on 8 July 2003 for a period of 

10 years. The ESOS II is governed by the bye-laws, which were approved by the shareholders at the Extraordinary 

General Meeting (‘EGM’) held on 29 May 2003 and amended at the EGM held on 15 December 2005. 

The main features and movement during the financial year in the number of options over the shares of the Company 

is set out in Note 35 to the financial statements. 

The Company has been granted an exemption by the Companies Commission of Malaysia via a letter dated 26 

September 2007 from having to disclose in this Report the name of the persons to whom options have been granted 

during the year and details of their holdings pursuant to Section 169 (11) of the Companies Act, 1965 except for 

information on employees who were granted options representing 450,000 ordinary shares and above. 

The list of employees of the Company who were granted options representing 450,000 ordinary shares and above 

under ESOS II are as follows:- 

No. of 

No. of ordinary 

ordinary shares shares 

granted exercised 

and acquired under the 

Name Designation under the options options 

Datuk Wira Md Sidek 

Senior Vice President, 

bin Ahmad Operations and Technical 515,000 470,000 

Dato’ Abdul Razak 

Vice President, 

bin Abdul Majid Generation 575,000 100,000 

Dato’ Mohd Izzaddin bin Idris Chief Financial Officer 490,000 0 

Dato’ Ir Aishah 


binti Dato’ Haji Abdul Rauf Distribution 555,000 152,500 

Dato’ Hjh. Che Zurina binti Zainul Abidin Vice President, Corporate Services 530,000 230,000 

Dato’ Haji Nik Ibrahim 


bin Nik Mohamed Investment Management 537,500 310,000 

Dato’ Kamaruzzaman bin Jusoh Vice President, Human Resource 554,000 186,500 

None of the subsidiaries’ employees were granted options representing 450,000 ordinary shares and above under 

ESOS II. 

 



DIRECTORS 

The Directors who have held office during the period since the date of the last Report are: 



Dato’ Puteh Rukiah binti Abd Majid 


(Resigned as alternate director to Dato’ Azman 

bin Mokhtar on 31 March 2007. 

Reappointed as Director on 31 March 2007) 





Dato’ Fuad bin Jaafar (Appointed on 15 March 2007) 


(Alternate Director to Dato’ Puteh Rukiah binti Abd Majid) 

Dato’ Azman bin Mokhtar (Resigned on 31 March 2007) 

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, except for the options granted 

to the President/Chief Executive Officer pursuant to the ESOS II. 

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other 

than benefits disclosed as Directors’ remuneration and benefits in Note 5 to the financial statements) by reason of 

a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a 

partner, or with a company in which the Director has a substantial financial interest. 

DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES 

According to the Register of Directors’ shareholdings, particulars of the interests of Directors who held office as at 

the end of the financial year in shares in the Company are as follows: 

Number of ordinary shares of RM1.00 each 

As at 

As at 

1.9.2006 Acquired Disposed 31.8.2007 

Tan Sri Leo Moggie 0 40,000 0 40,000 

Dato’ Zainal Abidin bin Putih 1,250 0 0 1,250 

Dato’ Fuad bin Jaafar 62,500 0 0 62,500 

Options over ordinary shares of RM1.00 each 

As at 

As at 

1.9.2006 Granted Exercised 31.8.2007 

Dato’ Sri Che Khalib bin Mohamad Noh 375,000 360,000 0 735,000 

According to the Register of Directors, none of the other Directors held any options over shares in the Company. 

No other Directors in office at the end of the financial year held any other interest in shares and debentures of the 

Company and its related corporations. 

 



STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS 

Before the income statements and balance sheets of the Group and of the Company were made out, the Directors 

took reasonable steps: 

(a) 

(b) 

to ascertain 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 all known bad debts had been written off 

and that adequate allowance had been made for doubtful debts; and 

to ensure that any current assets, other than debts, which were unlikely to be realised in the ordinary 

course of business their values as shown in the accounting records of the Group and of the Company had 

been written down to an amount which they might be expected to be realised. 

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

(a) 

(b) 

(c) 

which would render the amounts written off for bad debts or the amount of the allowance for doubtful 

debts in the financial statements of the Group and of the Company inadequate to any substantial extent; 

or 

which would render the values attributed to current assets in the financial statements of the Group and 

of the Company misleading; or 

which have arisen which render adherence to the existing method of valuation of assets or liabilities of 

the Group and of the Company misleading or inappropriate. 

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 affect the ability 

of the Group or of the Company to meet their obligations when they fall due. 

At the date of this Report, there does not exist: 

(a) 

(b) 

any charge on the assets of the Group and of the Company which has arisen since the end of the financial 

year which secures the liability of any other person; or 

any contingent liability of the Group and of the Company which has arisen since the end of the financial 

year. 

OTHER STATUTORY INFORMATION 

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 which would render any amount stated in the financial statements misleading. 

In the opinion of the Directors, 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 Group or 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. 

Signed on behalf of the Board of Directors, in accordance with their resolution dated 31 October 2007. 


CHAIRMAN 


PRESIDENT/CHIEF EXECUTIVE OFFICER 

 


Income Statements 

for the financial year ended 31 August 2007 

Group 

Company 

Note 2007 2006 2007 2006 

RM’million RM’million RM’million RM’million 

Revenue 4 23,320.4 20,384.2 21,400.6 18,815.1 

Operating expenses 5 (18,371.4) (16,916.9) (17,441.8) (16,601.6) 

Other operating income 7 593.7 489.3 793.9 691.0 

Operating profit 5,542.7 3,956.6 4,752.7 2,904.5 

Foreign exchange gain 8 485.8 324.9 341.2 197.3 

Share of results of associates 42.4 14.6 0 0 

Profit before finance cost 6,070.9 4,296.1 5,093.9 3,101.8 

Finance cost 9 (1,305.0) (1,539.3) (969.5) (1,101.2) 

Profit before taxation and zakat 4,765.9 2,756.8 4,124.4 2,000.6 

Taxation and Zakat 10 (698.3) (595.1) (609.9) (464.7) 

Profit for the year 4,067.6 2,161.7 3,514.5 1,535.9 

Attributable to: 

Equity holders of the Company 4,061.1 2,126.9 3,514.5 1,535.9 

Minority interests 6.5 34.8 0 0 


Sen Sen 

Earnings per share 

- basic 11(a) 94.92 52.52 

- diluted 11(b) 93.00 50.44 

Dividends per share: Sen Sen 

Interim dividends (gross) 12 20.0 0 

Final dividend (gross) 12 0 12.0 

Final dividend (tax exempt) 12 0 2.0 

Proposed final dividend (gross) 12 16.3 0 

The notes set out on pages 13 to 89 form an integral part of these financial statements 

 


Balance Sheets 

as at 31 August 2007 

Group 

Company 

Note 2007 2006 2007 2006 


NON-CURRENT ASSETS 

Property, plant and equipment 13 56,405.3 54,344.5 46,332.8 44,136.2 

Prepaid operating leases 14 852.6 856.8 693.4 690.2 

Coal mining rights 15 0 279.9 0 0 

Subsidiaries 16 0 0 4,581.1 743.1 

Associates 17 233.0 200.6 125.8 135.8 

Investments 18 38.0 38.0 97.4 56.8 

Long term receivables 19 0 0 703.1 841.8 

CURRENT ASSETS 

57,528.9 55,719.8 52,533.6 46,603.9 

Non-current assets held for sale 20 125.0 0 55.8 0 

Inventories 21 1,769.5 1,931.8 1,115.4 1,113.4 

Receivables, deposits and prepayments 22 2,921.8 3,415.4 2,204.6 2,501.4 

Current tax assets 11.6 10.0 0 0 

Amount due from subsidiaries 23 0 0 1,250.1 5,445.9 

Amount due from associates 45.3 43.6 34.6 30.7 

Short term investments 24 12.6 12.6 12.6 12.6 

Marketable securities 25 10.6 9.2 10.6 9.2 

Deposits, bank and cash balances 26 5,299.3 3,949.7 4,524.3 3,124.7 

CURRENT LIABILITIES 

10,195.7 9,372.3 9,208.0 12,237.9 

Payables 27 4,301.6 3,733.5 3,132.7 2,394.9 

Amount due to subsidiaries 23 0 0 1,403.4 1,781.2 

Amount due to associates 226.1 212.4 224.5 212.4 

Current taxation 226.1 184.6 221.3 175.1 

Short term borrowings 28 2,015.5 2,534.7 1,452.7 1,964.5 

6,769.3 6,665.2 6,434.6 6,528.1 

NET CURRENT ASSETS 3,426.4 2,707.1 2,773.4 5,709.8 

TOTAL ASSETS LESS 

CURRENT LIABILITIES 60,955.3 58,426.9 55,307.0 52,313.7 


 


Balance Sheets 

as at 31 August 2007 (Continued) 

Group 

Company 

Note 2007 2006 2007 2006 


NON-CURRENT LIABILITIES 

Borrowings 29 (21,963.9) (24,580.9) (14,898.8) (16,101.0) 

Amount due to subsidiaries 23 0 0 (3,621.1) (3,829.3) 

Consumer deposits 30 (2,319.6) (2,147.7) (2,186.0) (2,029.6) 

Employee benefits 31 (2,730.6) (2,314.1) (2,627.4) (2,221.3) 

Other liabilities (145.9) (72.3) (63.7) (72.2) 

Deferred taxation 32 (6,274.4) (6,424.6) (5,524.8) (5,758.4) 

Deferred income 33 (2,803.5) (2,675.8) (2,504.7) (2,400.6) 

Government development grants 34 (620.5) (665.0) 0 0 

(36,858.4) (38,880.4) (31,426.5) (32,412.4) 

TOTAL NET ASSETS 24,096.9 19,546.5 23,880.5 19,901.3 

CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY 

HOLDERS OF THE COMPANY 

Share capital 35 4,331.7 4,135.2 4,331.7 4,135.2 

Share premium 36 5,242.0 3,912.9 5,242.0 3,912.9 

Revaluation and other reserves 37 894.9 843.6 1,021.3 1,017.6 

Retained profits 38 13,530.0 10,533.5 13,285.5 10,835.6 

23,998.6 19,425.2 23,880.5 19,901.3 

MINORITY INTERESTS 98.3 121.3 0 0 

TOTAL EQUITY 24,096.9 19,546.5 23,880.5 19,901.3 

Sen 

Sen 

NET ASSETS PER SHARE* 554.0 470.0 

* The net assets per share attributable to ordinary equity holders of the Company. 


 


Statement of Changes in Equity 


Attributable to equity holders of the Company 

Employees’ 

Ordinary 

Share 

shares of 

Option Revaluation 

RM1.00 Share Scheme and other Retained Minority Total 

Note each premium reserve reserves profits interests equity 

RM’million RM’million RM’million RM’million RM’million RM’million RM’million 

Group 

At 1 September 2006 4,135.2 3,912.9 0 843.6 10,533.5 121.3 19,546.5 

Currency translation differences 0 0 0 42.7 0 0 42.7 

Realisation of revaluation reserve 37 0 0 0 (27.1) 27.1 0 0 

Income and expense recognised 

directly in equity 0 0 0 15.6 27.1 0 42.7 

Profit for the year 0 0 0 0 4,061.1 6.5 4,067.6 

Total recognised income and 

expense for the year 0 0 0 15.6 4,088.2 6.5 4,110.3 

Transaction with minority interests 

in subsidiaries 0 0 0 0 0 (29.5) (29.5) 

Dividends paid for the year ended 

- 31.08.2006 12 0 0 0 0 (459.7) 0 (459.7) 

- 31.08.2007 12 0 0 0 0 (632.0) 0 (632.0) 

Employees’ Share Option Scheme 

- options granted 0 0 35.7 0 0 0 35.7 

Issuance of share capital 

- share options, 

GEB and CRIS 35, 36 196.5 1,329.1 0 0 0 0 1,525.6 

At 31 August 2007 4,331.7 5,242.0 35.7 859.2 13,530.0 98.3 24,096.9 

At 1 September 2005 3,220.7 3,989.6 0 844.7 8,030.5 115.3 16,200.8 

Currency translation differences 0 0 0 5.8 0 0 5.8 

Disposal of subsidiary 0 0 0 0 0 (30.4) (30.4) 

Realisation of revaluation reserve 37 0 0 0 (6.9) 6.9 0 0 


directly in equity 0 0 0 (1.1) 6.9 (30.4) (24.6) 

Profit for the year 0 0 0 0 2,126.9 34.8 2,161.7 


expense for the year 0 0 0 (1.1) 2,133.8 4.4 2,137.1 

Transaction with minority interests 

in subsidiaries 0 0 0 0 0 1.6 1.6 


- 31.08.2005 12 0 0 0 0 (279.4) 0 (279.4) 

Goodwill written back 0 0 0 0 5.7 0 5.7 



GEB and CRIS 35, 36 105.8 732.0 0 0 0 0 837.8 

- bonus shares 35, 36 808.7 (808.7) 0 0 0 0 0 

Waiver of term loan by 

Government of Malaysia 0 0 0 0 642.9 0 642.9 

At 31 August 2006 4,135.2 3,912.9 0 843.6 10,533.5 121.3 19,546.5 


 


Statement of Changes in Equity 

for the financial year ended 31 August 2007 (Continued) 

Non-distributable Distributable 

Employees’ 

Ordinary 

Share 

shares of Option Revaluation 

RM1.00 Share Scheme and other Retained Total 

Note each premium reserve reserves profits equity 

RM’million RM’million RM’million RM’million RM’million RM’million 

Company 

At 1 September 2006 4,135.2 3,912.9 0 1,017.6 10,835.6 19,901.3 

Realisation of revaluation reserve 37 0 0 0 (27.1) 27.1 0 


directly in equity 0 0 0 (27.1) 27.1 0 

Profit for the year 0 0 0 0 3,514.5 3,514.5 


expense for the year 0 0 0 (27.1) 3,541.6 3,514.5 


- 31.08.2006 12 0 0 0 0 (459.7) (459.7) 

- 31.08.2007 12 0 0 0 0 (632.0) (632.0) 

Employees’ Share Option Scheme 

- options granted 0 0 30.8 0 0 30.8 



GEB and CRIS 35, 36 196.5 1,329.1 0 0 0 1,525.6 

At 31 August 2007 4,331.7 5,242.0 30.8 990.5 13,285.5 23,880.5 

At 1 September 2005 3,220.7 3,989.6 0 1,028.7 9,568.0 17,807.0 

Realisation of revaluation reserve 37 0 0 0 (11.1) 11.1 0 


directly in equity 0 0 0 (11.1) 11.1 0 

Profit for the year 0 0 0 0 1,535.9 1,535.9 


expense for the year 0 0 0 (11.1) 1,547.0 1,535.9 


- 31.08.2006 12 0 0 0 0 (279.4) (279.4) 



GEB and CRIS 35, 36 105.8 732.0 0 0 0 837.8 

- bonus shares 35, 36 808.7 (808.7) 0 0 0 0 

At 31 August 2006 4,135.2 3,912.9 0 1,017.6 10,835.6 19,901.3 


10 


Cash Flow Statements 


Group 

Company 

2007 2006 2007 2006 

Note RM’million RM’million RM’million RM’million 

CASH FLOWS FROM OPERATING ACTIVITIES 


Adjustments for: 

Taxation and Zakat 698.3 595.1 609.9 464.7 

Depreciation 3,199.9 3,298.7 2,595.2 2,648.4 

Amortisation of prepaid 

operating leases 22.1 21.8 14.7 14.4 

Amortisation of coal mining rights 10.7 10.8 0 0 

Provision for employee benefits 649.2 295.1 638.0 285.8 

Provision for share options 35.7 0 30.8 0 

Translation gain (452.3) (491.3) (288.2) (324.1) 

Release of deferred income (326.9) (340.4) (291.8) (277.1) 

Gain on disposal of property, 

plant and equipment (29.1) (13.2) (29.0) (12.7) 

Gain on disposal of prepaid 

operating leases (4.0) 0 (4.0) 0 

Loss on disposal of subsidiaries 0 1.2 0 1.2 

Share of results of associates (42.4) (14.6) 0 0 

Dividend income (4.4) (2.5) (4.8) (2.9) 

Interest income (201.6) (134.5) (463.0) (385.6) 

Interest on borrowings 1,196.0 1,443.6 866.7 1,005.5 

Property, plant and equipment 

written off 5.3 170.3 0 94.8 

Release of Government development 

grants (44.5) (47.3) 0 0 

Allowance for diminution in value 

of coal mining rights 200.0 0 0 0 


of subsidiaries 0 0 0 71.9 

(Write-back)/allowance for diminution 

in value of marketable securities (1.4) 0.2 (1.4) 0.2 

Allowance for/(write-back) diminution 

in value of investments 0.1 1.7 (40.6) 42.3 

Allowance for/(write-back) 

inventory obsolescence 5.9 (34.5) 5.9 (34.5) 

Inventories written off 34.3 47.8 33.9 47.8 

Goodwill written off (3.4) 0 0 0 

9,015.1 6,969.7 7,186.8 5,176.0 

Inventories 128.0 (101.4) (41.8) (124.5) 

Receivables 561.4 244.7 326.7 622.8 

Payables 553.7 267.8 822.2 (64.4) 

Amount due from/to subsidiaries 0 0 (73.6) 81.2 

Amount due from/to associates 12.0 (27.4) 8.2 (16.4) 

Cash generated from operations 10,270.2 7,353.4 8,228.5 5,674.7 

Employee benefits paid (232.7) (229.2) (231.9) (227.4) 

Consumer contributions received 454.6 510.3 395.9 406.7 

Consumer deposits received 171.8 195.4 156.4 184.3 

Taxation and Zakat paid (798.7) (198.9) (797.2) (196.9) 

Taxation refund received 0 1.9 0 0 

Net cash flow from operating activities 9,865.2 7,632.9 7,751.7 5,841.4 


11 


Cash Flow Statements 


CASH FLOWS FROM INVESTING ACTIVITIES 

Group 

Company 

2007 2006 2007 2006 


Additional investment in subsidiaries (26.1) 0 (42.2) 0 

Proceeds from disposal of associates 0 0.1 0 7.4 

Proceeds from redemption of 

unsecured loan notes in a subsidiary 4.2 0 4.2 0 

Proceeds from redemption 

of unsecured loan notes in an associate 10.0 0 10.0 0 

Proceeds from redemption 

of redeemable preference 

shares in an associate 0 16.0 0 16.0 

Dividend income received 3.9 0.4 3.9 1.6 

Interest income received 253.7 241.8 232.2 218.7 

Purchase of property, plant and equipment (5,063.6) (3,982.2) (4,574.0) (3,612.2) 

Payments for prepaid operating leases (16.6) (7.3) (16.6) (7.3) 

Proceeds from disposal of property, 

plant and equipment 47.6 21.8 47.6 21.8 

Proceeds from disposal of prepaid 

operating leases 8.5 0 8.5 0 

Net cash flow from investing activities (4,778.4) (3,709.4) (4,326.4) (3,354.0) 

CASH FLOWS FROM FINANCING ACTIVITIES 

Government development grants received 0 26.3 0 0 

Proceeds from issuance of shares 1,525.6 837.8 1,525.6 837.8 

Proceeds from long term borrowings 782.1 3,600.8 622.0 1,495.1 

Repayments of long term borrowings (3,446.0) (5,087.2) (2,072.8) (2,050.5) 

Interest paid (1,483.7) (1,658.5) (1,008.8) (1,108.7) 

Dividends paid to shareholders (1,091.7) (279.4) (1,091.7) (279.4) 

Proceeds from short term borrowings 32.4 164.0 0 0 

Repayments of short term borrowings (48.9) (424.1) 0 (244.3) 

Issue of shares to minority interests 0 1.6 0 0 

Net cash flow from financing activities (3,730.2) (2,818.7) (2,025.7) (1,350.0) 

NET INCREASE IN CASH AND 

CASH EQUIVALENTS 1,356.6 1,104.8 1,399.6 1,137.4 

EFFECT OF CHANGES IN 

FOREIGN CURRENCY (7.0) (4.5) 0 0 

CASH AND CASH EQUIVALENTS 

AT BEGINNING OF THE FINANCIAL YEAR 3,949.7 2,849.4 3,124.7 1,987.3 

CASH AND CASH EQUIVALENTS 

AT END OF THE FINANCIAL YEAR 26 5,299.3 3,949.7 4,524.3 3,124.7 

Deposits, held in trust* 0 (0.6) 0 0 

Cash at bank, held in trust* (65.6) (12.4) 0 0 

CASH AVAILABLE 5,233.7 3,936.7 4,524.3 3,124.7 

* Deposits and cash at bank held in trust are in respect of a grant given to a subsidiary by the Government for a 

designated capital project. 


12 


Notes to the Financial Statements 


1 GENERAL INFORMATION 

The Group and the Company are primarily involved in the business of the generation, transmission, distribution 

and sale of electricity and those tabulated in Note 16 to these financial statements. 

There have been no significant changes in these activities during the financial year. 

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the 

Main Board of Bursa Malaysia Securities Berhad. 

The address of the registered office of the Company is 129, Jalan Bangsar, 59200 Kuala Lumpur, Malaysia. 

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items 

that are considered material in relation to the financial statements. These policies have been consistently applied 

to all the years presented, unless otherwise stated. 

(a) 

Basis of preparation 

The financial statements of the Group and the Company have been prepared in accordance with the 

provisions of the Companies Act 1965 and Financial Reporting Standards (‘FRS’), the MASB Approved 

Accounting Standards in Malaysia for Entities Other than Private Entities. 

The financial statements have been prepared under the historical cost convention except as disclosed in 

this summary of significant accounting policies. 

The preparation of financial statements in conformity with FRS requires the use of certain critical accounting 

estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of 

contingent assets and liabilities at the date of the financial statements, and the reported amounts of 

revenues and expenses during the reported period. It also requires Directors to exercise their judgement 

in the process of applying the Group’s accounting policies. Although these estimates and judgement are 

based on the Directors’ best knowledge of current events and actions, actual results may differ. 

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates 

are significant to the financial statements, are disclosed in Note 3 to these financial statements. 

(i) Standards, amendments to published standards and interpretations that are effective 

The new accounting standards, amendments to published standards and interpretations 

to existing standards effective and applicable for the Group’s and the Company’s financial periods 

beginning on or after 1 September 2006 are as follows: 

FRS 2 

FRS 3 

FRS 5 

FRS 101 

FRS 102 

FRS 108 

FRS 110 

FRS 116 

FRS 121 

FRS 127 

FRS 128 

FRS 132 

FRS 133 

FRS 136 

FRS 138 

FRS 140 

Share-based Payment 

Business Combinations 

Non-current Assets Held for Sale and Presentation of Discontinued Operations 

Presentation of Financial Statements 

Inventories 

Accounting Policies, Changes in Accounting Estimates and Errors 

Events After the Balance Sheet Date 

Property, Plant and Equipment 

The Effect of Changes in Foreign Exchange Rates 

Consolidated and Separate Financial Statements 

Investments in Associates 

Financial Instruments: Disclosure and Presentation 

Earnings Per Share 

Impairment of Assets 

Intangible Assets 

Investment Property 

Amendment to FRS 119 2004 

Employee Benefits – Actuarial Gains and Losses, Group Plans and 

Disclosures – in relation to the “asset ceiling” test. 

13 




2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 

(a) 

Basis of preparation (Continued) 

(i) Standards, amendments to published standards and interpretations that are effective 

(Continued) 

All changes in accounting policies have been made in accordance with the transition 

provisions in the respective standards and amendments to published standards. All standards, 

amendments and interpretations adopted by the Group and the Company require retrospective 

application other than: 

FRS 2 – retrospective application for all equity instruments granted after 31 December 

2004 and not vested at 1 September 2006; 

FRS 3 – prospectively for business combinations for which the agreement date is on or 

after 1 September 2006; 

FRS 5 – prospectively to non-current assets (or disposal groups) that meet the criteria 

to be classified as non-current assets held for sale and to operations that meet 

the criteria to be classified as discontinued on or after 1 September 2006; 

FRS 116 – the exchange of property, plant and equipment is accounted at fair value 

prospectively; 

FRS 121 – prospective accounting for goodwill and fair value adjustments as part of 

foreign operations; 

FRS 136 – applies to goodwill and intangible assets acquired in business combinations 

& 138 

for which the agreement date is on or after 1 September 2006 and all other 

assets prospectively from 1 September 2006. 

A summary of the impact of the new accounting standards, amendments to published 

standards and interpretations to existing standards on the financial statements of the Group and the 

Company is set out in Note 44 to these financial statements. 

(ii) Standards, amendments to published standards and interpretations to existing standards 

that are not yet effective and have been early adopted 

FRS 117 – retrospective application for leasehold land reclassified as prepaid operating 

leases. 

(iii) Standards, amendments to published standards and interpretations to existing standards 

that are not yet effective and have not been early adopted 

The new standards, amendments to published standards and interpretations that are 

mandatory for the Group’s and the Company’s financial periods beginning on or after 1 September 

2007 or later periods, but which the Group and the Company have not early adopted are as follows: 

FRS 124 – Related Party Disclosures (effective for accounting periods beginning on or 

after 1 October 2006). This standard will affect the identification of related 

parties and certain other related party disclosures. The Group will apply this 

standard from financial periods beginning 1 September 2007. 

FRS 139 - Financial Instruments: Recognition and Measurement (effective date yet to 

be determined by Malaysian Accounting Standards Board). This new standard 

establishes principles for recognising and measuring financial assets, financial 

liabilities and certain contracts to buy and sell non-financial items. Hedge 

accounting is permitted only under strict circumstances. The Group and the 

Company will apply this standard when it becomes effective. 

14 



Notes to the Financial Statements (Continued) 

(a) 

Basis of preparation (Continued) 

(iii) Standards, amendments to published standards and interpretations to existing standards 

that are not yet effective and have not been early adopted (Continued) 

Amendment to FRS 119 2004 

Employee Benefits – Actuarial Gains and Losses, Group Plans and 

Disclosures (effective for accounting periods beginning on or after 1 January 2007). This 

amendment introduces the option of an alternative recognition approach for actuarial gains 

and losses. It may impose additional recognition requirements for multi-employer plans where 

insufficient information is available to apply defined benefit accounting. It may add new 

disclosure requirements. 

MASB also issued the following revised standards, amendments to published 

standards and interpretations which are only effective for annual periods on or after 1 July 2007. 

The Group and the Company will apply these standards and interpretations from financial periods 

beginning 1 September 2007. 

FRS 107 - Cash Flow Statements 

FRS 111 - Construction Contracts 

FRS 112 - Income Taxes 

FRS 118 - Revenue 

FRS 120 - Accounting for Government Grants and Disclosure of Government Assistance 

FRS 134 - Interim Financial Reporting 

FRS 137 - Provisions, Contingent Liabilities and Contingent Assets 

Amendments to FRS 121 The Effects of Changes in Foreign Rates – Net Investment in Foreign 

Operations 

IC Interpretation 8 – Scope of FRS 2 

With the exception of FRS 139, the above standards, amendments to published 

standards and interpretations to existing standards are not anticipated to have any significant impact 

to the financial position of both the Group and the Company. 

(iv) Standards, amendments to published standards and interpretations to existing 

standards that are not yet effective and will not be relevant or material for the Group’s operations 

FRS 6 - Exploration for and Evaluation of Mineral Resources (effective for 

accounting periods beginning on or after 1 January 2007). 

IC Interpretation 1 - 





Changes in Existing Decommissioning, Restoration and Similar Liabilities 

(effective for accounting periods beginning on or after 1 July 2007). 

Members’ Shares in Co-operative Entities and Similar Instruments 

(effective for accounting periods beginning on or after 1 July 2007). 

Rights to Interests arising from Decommissioning, Restoration and 

Environment Rehabilitation Funds (effective for accounting periods 

beginning on or after 1 July 2007). 

Liabilities arising from Participating in a Specific Market – Waste 

Electrical and Electronic Equipment (effective for accounting periods 

beginning on or after 1 July 2007). 

Applying the Restatement Approach under FRS 129 2004 

Financial 

Reporting in Hyperinflationary Economies (effective for accounting 

periods beginning on or after 1 July 2007). 

15 





(b) 

Subsidiaries 

Subsidiaries are those corporations or other entities (including special purpose entities) in which the 

Group has power to exercise control over the financial and operating policies so as to obtain benefits from 

their activities, generally accompanying a shareholding of more than one half of the voting rights. The 

existence and effect of potential voting rights that are currently exercisable or convertible are considered 

when assessing whether the Group controls another entity. 

Subsidiaries are consolidated using the purchase method of accounting. 

Under the purchase method of accounting, subsidiaries are fully consolidated from the date on which 

control is transferred to the Group and are de-consolidated from the date that control ceases. The cost 

of an acquisition is measured as fair value of the assets given, equity instruments issued and liabilities 

incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. 

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination 

are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority 

interests. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net 

assets acquired at the date of acquisition is reflected as goodwill (see Note 2(e)). If the cost of acquisition 

is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly 

in the income statement. 

Minority interests represent that portion of the profit or loss and net assets of a subsidiary attributable 

to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. It is 

measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at 

the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since that date. 

Where more than one exchange transaction is involved, any adjustment to the fair values of the subsidiary’s 

identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is 

accounted for as a revaluation. 

Intragroup transactions, balances and unrealised gains or losses on transactions between Group companies 

are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset 

transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency 

with the policies adopted by the Group. 

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s 

share of the subsidiaries net assets as of the date of disposal including the cumulative amount of any 

exchange differences that relate to the subsidiary is recognised in the Consolidated Income Statement. 

(c) 

Transactions with minority interests 

The Group applies a policy of treating transactions with minority interests as transactions with equity 

owners of the Group. For purchases from minority interests, the difference between any consideration 

paid and the relevant share of the carrying value of net assets of the subsidiary acquired is deducted 

from equity. Gains or losses on disposals to minority interests are also recorded in equity. For disposals to 

minority interests, differences between any proceeds received and the relevant share of minority interests 

are also recorded in equity. 

(d) 

Associates 

Associates are enterprises in which the Group exercises significant influence. Significant influence is the 

power to participate in the financial and operating policy decisions of the associates but not control over 

those policies. 

Investments in associates are accounted for in the Consolidated Financial Statements using the equity 

method of accounting and are initially recognised at cost. The Group’s investment in associates includes 

goodwill identified on acquisition, net of any accumulated impairment loss (see Note 2(e)). 

16 




(d) 

Associates (Continued) 

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the Consolidated 

Income Statement, and its share of post-acquisition movements in reserves is recognised in reserves. The 

cumulative post-acquisition movements are adjusted against the carrying amount of the investment. 

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including 

any other unsecured receivables, the Group’s interest is reduced to nil and recognition of further losses is 

discontinued except to the extent that the Group has incurred legal or constructive obligations or made 

payments on behalf of the associate. 

Unrealised profits on transactions between the Group and the associates are eliminated partially to the 

extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction 

provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, 

adjustments are made to the financial statements of associates to ensure consistency of accounting policies 

with those of the Group. 

Dilution of gains and losses in associates are recognised in the Consolidated Income Statement. 

For incremental interest in an associate, the date of acquisition is date at which significant influence is 

obtained. Goodwill is calculated at each purchase date based on the fair value of assets and liabilities 

identified. The previously acquired stake is stepped up to fair value and the share of profits and equity 

movements for the previously acquired stake are not recognised since they are embedded in the step up. 

(e) 

Goodwill 

Goodwill represents the excess of the cost of the acquisition over the Group share of the fair value of the 

identifiable net assets including contingent liabilities of subsidiaries, associates and joint ventures at the 

date of the acquisition. 

Capitalised goodwill is tested for impairment at least annually, or if events or circumstances occur indicating 

that impairment may exist. 

Goodwill and fair value adjustment arising from the acquisition from a foreign entity are treated as assets 

and liabilities of the acquiring entity and are recorded at the exchange rate at the date of acquisition. 

(f) 

Property, plant and equipment 

Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment 

losses. Cost includes expenditure that is directly attributable to the construction or acquisition of the items 

and bringing them to the location and condition so as to render them operational in the manner intended 

by the Group. The Group allocates the cost of an item of property, plant and equipment to its significant 

system and component parts. 

The Directors have applied the transitional provisions of International Accounting Standard No. 16 

(Revised) “Property, Plant and Equipment” as adopted by the Malaysian Accounting Standards Board 

which allow the freehold land, buildings and civil works to be stated at their previous years’ valuations 

less depreciation. 

Surpluses arising on revaluation are credited to the revaluation reserve account. Any deficit arising from 

revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the 

revaluation reserve for the same asset. In all other cases, a decrease in the carrying amount is charged to 

the income statement. 

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, 

only when it is probable that future economic benefits associated with the item will flow to the Group and 

the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. 

The cost of major overhaul/inspection is recognised in the asset’s carrying amount as a replacement and 

the remaining carrying amount of the previous major overhaul/inspection is derecognised. 

17 





(f) 

Property, plant and equipment (Continued) 

Major spare parts and standby equipment are recognised as assets when the Group expects to use them 

during more than one period. Similarly, if the spare parts and servicing equipment can be used only in 

connection with an item of property, plant and equipment, they are accounted for as property, plant and 

equipment. 

Gains and losses on disposal of property, plant and equipment are determined by reference to their 

carrying amount and are taken into account in determining profit/(loss) before taxation. On disposal of 

revalued assets, the amount in revaluation reserve relating to those property, plant and equipment are 

transferred to retained profits. 

Freehold land and capital project-in-progress are not depreciated. 

Depreciation is provided on all other categories of property, plant and equipment on a straight line basis 

which reflects the estimated useful lives of the assets. 

The estimated useful lives of property, plant and equipment are as follows: 

Buildings and civil works 

Plant and machinery 

Lines and distribution mains 

Distribution services 

Meters 

Public lighting 

Furniture, fittings and office equipment 

Motor vehicles 

10 to 60 years 



20 years 

15 years 


3 to 10 years 

5 to 10 years 

Where an indication of impairment exists, the carrying amount of the asset is assessed and written down 

immediately to its recoverable amount (see Note 2(n)). 

(g) 

Prepaid operating leases 

The Directors have applied the transitional provisions of FRS No. 117 “Leases”, treating the leasehold land 

as prepaid operating leases which was previously classified within property, plant and equipment and 

allow the Group to retain the unamortised revalued amount of the previously revalued leasehold land 

as the surrogate carrying amount of prepaid operating leases and such prepaid operating leases shall be 

amortised on a straight line basis over the lease term. 

Leasehold land is amortised over the remaining period of the respective leases ranging from 5 to 99 years 

on a straight line basis. 

(h) 

Non-current assets held for sale 

The Group shall classify a non-current asset as held for sale if its carrying amount will be recovered 

principally through a sale transaction rather than through continuing use. 

The assets classified as non-current assets held for sale will be measured at the lower of its carrying amount 

and fair value less costs to sell. 

No depreciation or amortisation is provided against the assets while it is classified as non-current assets 

held for sale. 

The assets shall be derecognised on disposal and the difference between the net disposal proceeds and the 

carrying amount is recognised as profit or loss in the period of disposal. 

An asset that ceases to be classified as non-current assets held for sale shall be measured at the lower of 

its carrying amount before the asset was classified as non-current assets held for sale, adjusted for any 

depreciation, amortisation or revaluations that would be recognised had the asset not be classified as 

non-current assets held for sale, and its recoverable amount at the date of the subsequent decision not to 

sell. 

18 




(i) 

Intangible assets 

Expenditure on acquired rights, patents, trademarks and licenses is capitalised and amortised using the 

straight line method over their estimated useful lives. Intangible assets are not revalued. 

(j) 

Research and development 

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical 

knowledge and understanding, is recognised in the income statement as an expense as incurred. 

Expenditure on development activities, whereby research findings are applied to a plan or design for 

the production of new or substantially improved products and processes, is capitalised if the product or 

process is technically and commercially feasible and the Group has sufficient resources to complete the 

development. 

Capitalised development costs are recognised as intangible assets and amortised from the point at which 

the asset is ready for use on a straight-line basis over its useful life. 

(k) 

Capitalisation of interest 

Interest incurred on external borrowings related to long term projects-in-progress is capitalised until the 

assets are ready for their intended use. 

(l) 

Investments 

Investments in subsidiaries and associates held for long term are stated at cost, less allowance for any 

diminution in their value. Diminution in the value of an investment is recognised as an expense in the 

financial year in which the diminution is identified. 

Investments in other non-current investments are shown at cost and an allowance for diminution in value 

is made where, in the opinion of the Directors, there is a decline other than temporary in the value of such 

investments. Where there has been a decline other than temporary in the value of an investment, such a 

decline is recognised as an expense in the financial year. 

On disposal of an investment, the difference between net disposal proceeds and the carrying amount is 

charged or credited to the income statement, as the case may be. 

(m) 

Marketable securities and short term investments 

Marketable securities and short term investments are stated at the lower of cost and market value on an 

aggregate portfolio basis. Cost is derived at on the weighted average basis. Market value is calculated by 

reference to the relevant stock exchange quoted selling prices at the close of business at the balance sheet 

date. Any write downs to the market value of investments or subsequent write backs to cost are dealt with 

through the income statement. 

(n) 

Impairment of assets 

Property, plant and equipment and other non-current assets, including intangible assets, are reviewed 

for impairment losses whenever events or changes in circumstances indicate that the carrying amount 

may not be recoverable. Impairment loss is recognised for the amount by which the carrying amount of 

the asset exceeds its recoverable amount. The recoverable amount is the higher of fair value less cost to 

sell. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are 

separately identifiable cash flows. 

Impairment loss is charged to the income statement unless it reverses a previous revaluation in which case 

it is charged to the revaluation surplus. Any subsequent increase in recoverable amount is recognised in 

the income statement unless it reverses an impairment loss on a revalued asset in which case it is taken to 

revaluation surplus. 

(o) 

Deferred income 

Contributions received from customers to defray the cost of capital projects are credited to the deferred 

income account. The amount in this account is released to the income statement on a straight line basis 

over 15 years, being the average useful life of such projects. 

19 





(p) 

Operating leases 

Assets leased out as operating leases are included within property, plant and equipment in the balance 

sheet and they are depreciated over their expected useful lives on a basis consistent with similar assets. 

(q) 

Inventories 

Inventories are stated at the lower of cost and net realisable value. 

Cost of work-in-progress and finished goods comprise raw materials, direct labour and a proportion of the 

production overheads. Cost is determined on the weighted average and first-in-first-out basis. 

Net realisable value is the estimated selling price in the ordinary course of business, less the costs of 

completion and selling expenses. 

(r) 

Trade receivables 

Trade receivables are carried at anticipated realisable value. Bad debts are written off in the period in which 

they are identified. An allowance is made for doubtful receivables based on review of all outstanding 

amounts at the financial year end. 

(s) 

Trade payables 

Trade payables are stated at cost, which is the fair value of the consideration to be paid in the future for 

the goods and services received. 

(t) 

Cash and cash equivalents 

For the purpose of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits held 

at call with banks, bank overdrafts and short term, highly liquid investments that are readily convertible 

to known amounts of cash and which are subject to an insignificant risk of changes in value. 

(u) 

Share capital 

(i) Classification 

Ordinary shares and non-redeemable preference shares with discretionary dividends 

are classified as equity. Other shares are classified as equity and/or liability according to the economic 

substance of the particular instrument. 

The portion of a convertible bond representing the value of the conversion option 

at the time of issue is included in equity (see Note 2(v) on borrowings). The value of the conversion 

option is not changed in subsequent periods. Upon conversion of the bond to equity shares, the 

amount credited to share capital and share premium is the aggregate of the amounts classified within 

liability and equity at the time of conversion. No gain or loss is recognised. If the bond is redeemed, 

the conversion option is transferred to retained earnings. 

Distributions to holders of a financial instrument classified as an equity instrument are 

charged directly to equity. 

(ii) Share issue costs 

Incremental external costs directly attributable to the issuance of new shares or options 

are shown in equity as a deduction, net of tax, from the proceeds. 

(iii) Dividends to shareholders of the Company 

Dividends on redeemable preference shares are recognised as a liability and expressed on 

an accrual basis. Other dividends are recognised as a liability in the period in which they are declared. 

20 




(v) 

Borrowings 

Borrowings are initially recognised based on the proceeds received. The costs of issuing debt instruments 

are expensed as and when incurred. 

Interest and dividends on financial instruments deemed as borrowings are reported within finance cost in 

the income statement. 

(w) 

Income tax 

Current tax expense is determined according to Malaysia’s tax laws. 

Deferred tax is recognised in full, using the liability method, on temporary differences arising between the 

amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial 

statements. 

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 and unutilised tax credits can be 

utilised. 

Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and 

joint ventures except where the timing of the reversal of the temporary difference can be controlled and 

it is probable that the temporary difference will not reverse in the foreseeable future. 

Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred tax. 

(x) 

Employee benefits 

(i) Short term employee benefits 

Wages, salaries, paid annual leave, bonuses, and non-monetary benefits are accrued 

in the financial year in which the services are rendered by employees of the Group. 

(ii) Post-employment benefits 

The Group has various post-employment benefit schemes which are either defined 

contribution or defined benefit plans. 

Defined contribution plans 

The Group’s contributions to defined contribution plans are charged to the income 

statement in the financial year to which they relate. Once the contributions have been paid, the 

Group has no further payment obligations. 

Defined benefit plans 

The Group makes contributions to the Company’s Retirement Benefit Plan, a defined 

benefit plan and approved fund independent of the Company’s finances. A book provision is also 

provided by the Company as the contribution rate required to fund the benefits under the said plan 

is in excess of the Inland Revenue maximum limit. The Group and the Company also provide for a post 

retirement medical plan for certain employees. 

The liability in respect of a defined benefit plan is the present value of the defined 

benefit obligation at the balance sheet date minus the fair value of plan assets, together with 

adjustments for actuarial gains/losses and past service cost. The Group determines the present value 

of the defined benefit obligation and the fair value of any plan assets with sufficient regularity such 

that the amounts recognised in the financial statements do not differ materially from the amounts 

that would be determined at the balance sheet date. 

The defined benefit obligation, calculated using the Projected Unit Credit Method, is 

determined by an independent actuarial firm, considering the estimated future cash outflows using 

market yields at balance sheet date of Government securities which have currency and terms to maturity 

approximating the terms of the related liability. The last revaluation was done in February 2007. 

21 





(x) 

Employee benefits (Continued) 

(ii) Post-employment benefits (Continued) 

Defined benefit plans (Continued) 

The amount of net actuarial gains and losses are credited or charged to the income 

statement, as the case may be, over the expected average remaining service lives of the participating 

employees. 

(iii) Share-based compensation 

The Group has applied the provision of FRS 2 to all equity instruments granted after 

31 December 2004 but not yet vested as at 1 September 2006, the effective date the Group adopted 

this FRS. 

The Group operates an equity-settled, share-based compensation plan for the 

employees of the Group. Employee services received in exchange for the grant of the share options 

is recognised as an expense in the income statement over the vesting periods of the grant with a 

corresponding increase in equity. 

The total amount to be expensed over the vesting period is determined by reference 

to the fair value of the share options granted, excluding the impact of any non-market vesting 

conditions (for example, profitability and sales growth targets). Non-market vesting conditions are 

included in assumptions about the number of options that are expected to be vested. At each balance 

sheet date, the Group revises its estimates of the number of share options that are expected to be 

vested. It recognises the impact of the revision of original estimates, if any, in the income statement, 

with a corresponding adjustment to equity. 

The proceeds received net of any directly attributable transaction costs are credited 

to share capital (nominal value) and share premium when the options are exercised. 

(y) 

Government development grants 

Government development grants relating to the construction of property, plant and equipment are included 

in long term liabilities and are credited to the income statement on a straight line basis over 15 years. 

(z) 

Contingent liabilities 

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A 

contingent liability is a possible obligation that arises from past events whose existence will be confirmed 

by uncertain future events beyond the control of the Group or a present obligation that is not recognised 

because it is not probable that an outflow of resources will be required to settle the obligation. 

(aa) 

Revenue recognition 

Sales are recognised upon invoiced value of services delivered net of billing adjustments. 

Other operating income earned by the Group and the Company comprises interest and leasing income 

as well as dividend income. Leasing income is accrued, unless collectibility is in doubt. Dividend income is 

recognised when the shareholders’ rights to receive payment is established. 

Interest income is recognised on a time proportion basis that takes into account the effective yield on the 

asset. 

(ab) 

Foreign currencies 

22 


(i) Functional and presentation currency 

Items included in the financial statements of each of the Group’s entities are 

measured using the currency of the primary economic environment in which the entity operates 

(the ’functional currency’). The financial statements are presented in Ringgit Malaysia, which is the 

Company’s functional and presentation currency.



(ab) 

Foreign currencies (Continued) 

(ii) Transactions and balances 

Foreign currency transactions are translated into the functional currency using the 

exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities in foreign 

currencies are translated at exchange rates ruling at the balance sheet date. All exchange differences 

are dealt with through the income statement. 

(iii) Group companies 

The results and financial position of all the group entities (none of which has 

the currency of a hyperinflationary economy) that have functional currencies different from the 

presentation currency are translated into the presentation currency as follows: 

• assets and liabilities for each balance sheet presented are translated at the closing 

rate at the date of that balance sheet; 

• income and expenses for each income statement are translated at average 

exchange rates (unless this average is not a reasonable approximation of the cumulative effect of 

the rates prevailing on the transaction dates, in which case income and expenses are translated at 

the rate on the dates of the transactions); and 

• all resulting exchange differences are recognised as a separate component of 

equity. 

On consolidation, exchange differences arising from the translation of the net investment in foreign 

operations are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, 

exchange differences that were recorded in equity are recognised in the income statement as part of the 

gain or loss on sale. 

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and 

liabilities of the foreign entity and translated at the closing rate. 

The principal closing rates used in translation of foreign currency amounts were as follows: 

Foreign currency 2007 2006 

RM RM 

1 US Dollar 3.5090 3.6795 

100 Japanese Yen 3.0370 3.1448 

1 Sterling Pound 7.0582 6.9938 

100 Pakistani Rupee 5.7749 6.0909 

1 EURO 4.7843 4.7221 

(ac) 

Financial instruments 

(i) Description 

Financial instruments carried on the balance sheet include cash and bank balances, 

investments, receivables, payables, leases and borrowings. The particular recognition methods 

adopted are disclosed in the individual policy statements associated with each item. 

The Group and the Company are also parties to financial instruments that manage 

exposure to fluctuations in foreign currency exchange and interest rate. These financial instruments, 

which mainly comprise foreign currency forward contracts, cross currency swap contracts and interest 

rate swap contracts, are not recognised in the financial statements. Derivative financial instruments 

are used in the Group and the Company’s risk management of foreign currency and interest rate risk 

exposure of its financial liabilities. 

23 





(ac) 

Financial instruments (Continued) 

(ii) Financial instruments not recognised on the balance sheet 

Foreign currency forward contracts 

The Group enters into foreign currency forward contracts to protect the Group from 

movements in exchange rates by establishing the rate at which a foreign currency asset or liability will 

be settled. 

Exchange gains and losses on contracts are recognised in the income statement at 

time of settlement. 

Cross currency swap contracts 

Cross currency swaps are entered into to manage exposure to movements in exchange 

rates by establishing the currency at which a foreign currency liability will be settled. 

The notional principal of these contracts are off balance sheet. Any differential in 

terms of exchange gains or losses are recognised in the income statement in the same period as the 

exchange differences on the underlying hedged items. 

Currency Options 

Currency options are designed to manage the Group’s exposure to protect the 

Group from movements in foreign currency. The notional principal of the contract is off balance 

sheet. The premium paid is expensed to the income statement when it is incurred. Gains or losses on 

early termination of currency options or on repayment of the borrowing are taken to the income 

statement. 

Interest rate swap contracts 

Interest rate swaps, collars and caps agreements are designed to manage the Group’s 

exposure to protect the Group from movements in interest rates. The notional principal of these 

contracts are off balance sheet. Any differential to be paid or received on an interest rate swap 

contract is recognised as a component of interest income or expense over the period of the contract. 

Gains and losses on early termination of interest rate swaps or on repayment of the borrowing are 

taken to the income statement. 

(iii) Fair value estimation for disclosure purposes 

In assessing the fair value of financial instruments, the Group and the Company make 

certain assumptions and apply the discounted cash flow method to discount future cash flows to 

determine the fair value of financial instruments. The fair values of financial liabilities are estimated 

by discounting future cash flows at current market interest rate available to the Group and the 

Company. 

Fair value of publicly traded derivatives and securities is based on quoted market 

prices at balance sheet date whereas the fair value of foreign currency forward contracts is calculated 

using spot rates, as published by Reuters, at balance sheet date. 

The fair value of cross currency swaps and currency options are calculated as the 

present value of the estimated future cash flows and/or valuation from the banks. 

The carrying amount for financial assets and liabilities with a maturity of less than 

one year are assumed to approximate their fair values. 

24 




(ad) 

Rural electrification and projects under the Malaysia Plan 

(i) Rural electrification projects are capitalised as property, plant and equipment. 

(ii) The costs of the projects under the Malaysia Plan in the State of Sabah are only 

capitalised and accounted for as property, plant and equipment upon receipt of formal handover 

documentation. The corresponding amounts are recorded as Government development grants and 

such grants are credited to the income statement on a straight line basis over the same period as the 

expected economic life of the projects. 

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS 

Estimates and judgements are continually evaluated by the Directors and are based on historical experience 

and other factors, including expectations of future events that are believed to be reasonable under the 

circumstances. 

(a) 

Critical judgement in applying the Group’s accounting policies 

In determining and applying accounting policies, judgement is often required in respect of items where the 

choice of specific policy could materially affect the reported results and financial position of the Group. The 

accounting policy to classify between investment properties and property, plant and equipment requires 

subjective judgements, often as a result of the need to make estimates about the effect of matters that 

are inherently uncertain. 

Investment property is a property held to earn rentals or for capital appreciation or both. 

Several properties comprise a portion that is held to earn rentals or for capital appreciation and another 

portion that is held for use in the production or supply of goods or services or for administrative purposes. 

If these portions could be sold (or leased out under a finance lease) separately, then these portions would 

be accounted separately by the Group. 

If the portions could not be sold separately, the property is an investment property only if an insignificant 

portion is held for use in the production or supply of goods or services or for administrative purposes. 

Judgement is made on an individual property basis to determine whether ancillary services are so significant 

that a property does not qualify as an investment property. 

During the year, the Group has leased out several land and office space but these do not meet the 

definition of an investment property either due to immateriality or classification. Accordingly, these 

properties continue to be classified as property, plant and equipment. 

(b) 

Critical accounting estimates and assumptions 

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates 

will, by definition, rarely equate to the related actual results. To enhance the information content of the 

estimates, certain key variables that are anticipated to have a material impact on the Group’s results and 

financial position are tested for sensitivity to changes in the underlying parameters. The estimates and 

assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets 

and liabilities within the next financial year are outlined below. 

(i) Impairment of Property, Plant and Equipment 

The Group assesses impairment of assets whenever the events or changes in 

circumstances indicate that the carrying amount of an asset may not be recoverable i.e. the carrying 

amount of the asset is more than the recoverable amount. 

25 




3 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (Continued) 

(b) 

Critical accounting estimates and assumptions (Continued) 

(i) Impairment of Property, Plant and Equipment (Continued) 

Recoverable amount is measured at the higher of the fair value less cost to sell for that 

asset and its value-in-use. The value-in-use is the net present value of the projected future cash flow 

derived from that asset discounted at an appropriate discount rate. Projected future cash flows are 

based on Group’s estimates calculated based on historical, sector and industry trends, general market 

and economic conditions, changes in technology and other available information. The assumptions 

used, results and conclusion of the impairment assessment are stated in the Note 13 to these financial 

statements. 

(ii) Estimated Useful Lives of Property, Plant and Equipment 

The Group regularly reviews the estimated useful lives of property, plant and 

equipment based on factors such as business plan and strategies, expected level of usage and future 

technological developments. Future results of operations could be materially affected by changes 

in these estimates brought about by changes in the factors mentioned above. A reduction in the 

estimated useful lives of property, plant and equipment would increase the recorded depreciation 

and decrease the value of property, plant and equipment. 

(iii) Share-based Payment 

Equity settled share-based payment (share options) is measured at fair values at the 

date they are granted. The assumptions used in the valuation to determine these fair values are 

explained in Note 35 to these financial statements. 

(iv) Contingent Liabilities 

Determination of the treatment of contingent liabilities is based on management’s 

view of the expected outcome of the contingencies after consulting legal counsel for litigation cases 

and internal and external experts to the Group for matters in the ordinary course of business. 

(v) Allowance for Receivables 

The allowance is established when there is objective evidence that the Group will not 

be able to collect all amount dues according to the original term of receivables. This is determined 

based on the ageing profile and collection patterns. 

4 REVENUE 

Group 

Company 

2007 2006 2007 2006 


Sale - electricity 22,384.0 19,707.4 21,108.8 18,538.0 

- goods and services 609.5 336.4 0 0 

Release of deferred income (Note 33) 326.9 340.4 291.8 277.1 

23,320.4 20,384.2 21,400.6 18,815.1 

26 



5 OPERATING EXPENSES 

Group 

Company 

2007 2006 2007 2006 


Energy cost 12,198.6 11,153.3 12,705.5 11,794.3 

Transmission cost 980.9 922.0 979.6 921.1 

Distribution cost 2,712.4 2,935.1 2,708.2 2,924.5 

Administrative expenses 1,340.2 901.1 854.4 479.1 

Other operating expenses 1,139.3 1,005.4 194.1 482.6 

Operating expenses include the following 

items: 

18,371.4 16,916.9 17,441.8 16,601.6 

Directors’ remuneration 

- fees 0.6 0.6 0.4 0.5 

- other emoluments 0.2 0.9 0.2 0.9 

Auditors remuneration – 

PricewaterhouseCoopers 

- statutory audit fees 

- Malaysia 1.2 1.1 0.6 0.5 

- Malaysia’s affiliates** 0 0 0 0 

- audit related fees 

- Malaysia 0.2 0.2 0.2 0.2 

- non-audit fees 

- Malaysia 1.3 1.1 1.3 1.1 

- Malaysia’s affiliates 0.3 0 0.3 0 

Allowance for doubtful debts 66.6 321.7 52.0 318.7 

Amortisation of coal mining rights 10.7 10.8 0 0 

Depreciation 3,199.9 3,298.7 2,595.2 2,648.4 

Amortisation of prepaid operating leases 22.1 21.8 14.7 14.4 

Rental of land and buildings 51.5 50.9 39.0 36.5 

Rental of plant and machinery 22.2 15.9 21.9 15.9 

Research and development expenses 17.0 63.0 16.7 63.0 

Property, plant and equipment written off 5.3 170.3 0 94.8 

Inventories written off 34.3 47.8 33.9 47.8 

(Write-back)/ allowance for diminution 

in value of marketable securities (1.4) 0.2 (1.4) 0.2 


of coal mining rights 200.0 0 0 0 

Allowance for diminution in 

value of amount due from a subsidiary 0 0 35.6 59.4 

(Write-back)/allowance for diminution 

in value of investment (0.1) 1.7 (40.6) 42.3 

(Write-back) of allowance for doubtful debts (213.4) (178.6) (207.7) (178.1) 

Allowance /(write-back) for inventory 

obsolescence 5.9 (34.5) 5.9 (34.5) 

Receipt of Government subsidies* (435.7) (599.2) 0 0 

Staff cost (Note 6) 2,392.1 1,952.0 2,104.4 1,690.9 

* This represents the subsidies that Sabah Electricity Sdn. Bhd. (‘SESB’) received for diesel and medium fuel oil 

from the Government of Malaysia. The total amount credited in the current year was RM435.7 million (2006: 

RM599.2 million) and it has been offset against energy cost. 

** This represents the audit fees for Liberty Power Ltd amounting to RM42,956 (2006 : RM41,808). 

The estimated monetary value of benefits-in-kind received by the Directors was RM180,806 (2006: RM174,223) 

for the Group and the Company. 

The estimated monetary value of amounts paid and payable to a firm, of which a Director is a partner, for 

professional services rendered to the Group and the Company was RM673,864 (2006: RM228,404). 

27 




6 STAFF COSTS 

Group 

Company 

2007 2006 2007 2006 


Wages, salaries and bonuses 1,429.1 1,393.0 1,207.1 1,190.8 

Defined contribution retirement plan 152.0 144.4 124.6 120.8 

Retirement benefit plan 249.0 199.8 246.2 198.8 

Retirement medical plan 400.2 95.3 391.8 87.0 

Employees’ Share Option Scheme II 35.7 0 30.8 0 

Other employee benefits 126.1 119.5 103.9 93.5 

2,392.1 1,952.0 2,104.4 1,690.9 

Details of the retirement benefit and retirement medical plans of the Group and the Company are set out in 

Note 31 to these financial statements. 

7 OTHER OPERATING INCOME 

Group 

Company 

2007 2006 2007 2006 


Dividend income from investments in: 

- quoted shares 0.7 0 0.7 0 

- unquoted shares 3.7 2.5 4.1 2.9 

Leasing income 1.1 1.1 1.1 4.6 

Interest income 201.6 134.5 463.0 385.6 

Rental income 8.8 12.1 20.2 20.6 

Release of Government development 

grants (Note 34) 44.5 47.3 0 0 

Gain on disposal of property, plant 

and equipment 29.1 13.2 29.0 12.7 

Gain on disposal of prepaid 

operating leases 4.0 0 4.0 0 

Interest on late payments 72.4 184.9 72.4 184.9 

Minimum make up charges 36.0 32.6 36.0 32.6 

Other income 191.8 61.1 163.4 47.1 

593.7 489.3 793.9 691.0 

8 FOREIGN EXCHANGE GAIN 

Foreign exchange gain comprises: 

Group 

Company 

2007 2006 2007 2006 


Translation gain – foreign currency 

denominated term loans 427.4 481.4 263.2 358.0 

Translation gain/(loss) – others 24.9 9.9 25.0 (33.9) 

Transaction gain/(loss) 33.5 (166.4) 53.0 (126.8) 

485.8 324.9 341.2 197.3 

28 



9 FINANCE COST 

Group 

Company 

2007 2006 2007 2006 


Interest on borrowings 1,505.5 1,705.9 1,176.2 1,267.8 

Less: Amount capitalised into property, 

plant and equipment (309.5) (262.3) (309.5) (262.3) 

1,196.0 1,443.6 866.7 1,005.5 

Interest on consumer deposits 109.0 95.7 102.8 95.7 

1,305.0 1,539.3 969.5 1,101.2 

10 TAXATION AND ZAKAT 

Group 

Company 

2007 2006 2007 2006 


Current tax: 

- Malaysian corporate income tax 815.1 160.3 810.1 154.8 

Deferred tax (Note 32) (150.2) 426.8 (233.6) 301.9 

Real Property Gains Tax 1.3 0 1.3 0 

Tax expense 666.2 587.1 577.8 456.7 

Zakat 32.1 8.0 32.1 8.0 

The analysis of the tax expense is as follows: 

698.3 595.1 609.9 464.7 

Current tax: 

Current year 806.2 258.4 799.5 252.9 

Under/(over) accrual in prior years 8.9 (98.1) 10.6 (98.1) 

815.1 160.3 810.1 154.8 

Deferred tax: 

(Reversal)/origination of temporary differences (150.2) 426.8 (233.6) 301.9 


666.2 587.1 577.8 456.7 

29 




10 TAXATION AND ZAKAT (Continued) 

The explanation of the relationship between tax expense and profit before taxation is as follows: 

Group 

Company 

2007 2006 2007 2006 


Profit before taxation 4,765.9 2,756.8 4,124.4 2,000.6 

Tax calculated at the Malaysian 

corporate income tax rate of 27% (2006: 28%) 1,286.8 771.9 1,113.6 560.2 

Tax effects of: 

- change in corporate income tax rate (456.3) 0 (450.3) 0 

- share of results of associates 4.9 0.9 0 0 

- income not subject to tax (286.8) (234.0) (186.3) (148.7) 

- expenses not deductible for tax purpose 116.3 161.2 94.6 158.8 

- current year’s tax loss not recognised 4.3 4.0 0 0 

- expenses qualifying for double deduction (6.0) (15.5) (5.7) (15.5) 

Under/(over) provision of current tax in prior years 8.9 (98.1) 10.6 (98.1) 

Benefits from previously unrecognised tax 

losses 0 (3.3) 0 0 

Current year unrecognised temporary differences (7.2) 0 0 0 


Zakat 32.1 8.0 32.1 8.0 

Tax and zakat charge 698.3 595.1 609.9 464.7 

Average effective tax rate (%) 14.7 21.6 14.8 23.2 

The Malaysian corporate income tax rate for the year of assessment 2008 will be 26%. For year of assessment 2009 

the Malaysian corporate income tax rate will be 25% as announced by the Government in the Budget Speech on 

7 September 2007 and the effect of the reduction, estimated at about RM200.0 million will be effected in the 

first quarter results for the financial year ending 31 August 2008. 

11 EARNINGS PER SHARE 

(a) 

Basic earnings per share 

Basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the 

Company for the financial year by the weighted average number of ordinary shares in issue during the 

financial year. 

Group 

2007 2006 

Profit attributable to ordinary equity holders of the Company (RM’million) 4,061.1 2,126.9 

Weighted average number of ordinary shares in issue (’000) 4,278,527 4,049,544 

Basic earnings per share (sen) 94.92 52.52 

30 



11 EARNINGS PER SHARE (Continued) 

(b) 

Diluted earnings per share 

Group 

2007 2006 


Profit attributable to ordinary equity holders 

of the Company 4,061.1 2,126.9 

Elimination of interest expense on: 

Guaranteed Exchangeable Bonds, net of tax effect (6.8) 34.3 

Unsecured Convertible Redeemable Income Securities 4.5 6.0 

Profit used to determine diluted earnings per share 4,058.8 2,167.2 

’000 ’000 

Weighted average number of ordinary shares in issue 4,278,527 4,049,544 

Adjustment for share options 53,272 45,934 

Adjustment for Guaranteed Exchangeable Bonds 17,988 179,374 

Adjustment for Unsecured Convertible Redeemable 

Income Securities 14,359 21,786 

Weighted average number of ordinary shares for diluted 

earnings per share 4,364,146 4,296,638 

Diluted earnings per share (sen) 93.00 50.44 

As at 31 August 2007, the Guaranteed Exchangeable Bonds had been fully exchanged for new ordinary 

shares of the Company wherein the terms of conversion are set out in Note 29(b)(i). 

12 DIVIDENDS 

Company 

2007 2006 


First interim dividend of 10.0 sen gross per ordinary share, 315.8 0 

less income tax at 27% 

Second interim dividend of 10.0 sen gross per ordinary share, 

less income tax at 27% 316.2 0 

Proposed: 

Proposed final dividend of 16.3 sen gross per ordinary share, 

less income tax at 26% (2006: final dividend of 12.0 sen gross 

per ordinary share, less income tax at 27%, 

and 2.0 sen per ordinary share, tax exempt) 522.5 459.7 

Dividends recognised as distribution to ordinary equity holders 

of the Company 1,154.5 459.7 

Interim dividends are paid and accounted for in shareholders’ equity as an appropriation of retained profits in 

the financial year. 

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 August 

2007 of 16.3 sen gross per ordinary share less income tax at 26%, will be proposed for shareholders’ approval. 

This final dividend will be accrued as a liability in the financial year ending 31 August 2008 when approved by 

the shareholders. 

In respect of the financial year ended 31 August 2006, a final dividend of 12.0 sen gross per ordinary share, less 

income tax at 27% and 2.0 sen per ordinary share, tax exempt was declared and approved by the shareholders 

in the Annual General Meeting held on 14 December 2006. 

31 




13 PROPERTY, PLANT AND EQUIPMENT 

Group 

2007 

Cost/valuation 

At 1984 and earlier valuations: 

Exchange 

Transfers/ 

As at rate reclassi- As at 

1.9.2006 adjustment Additions Disposals fication 31.8.2007 


Buildings and civil works 5.6 0 0 0 0 5.6 

At 1994 valuation: 

5.6 0 0 0 0 5.6 

Freehold land 680.4 0 0 (16.4) (55.4) 608.6 

Buildings and civil works 439.5 0 0 (2.5) 9.0 446.0 

At cost: 

1,125.5 0 0 (18.9) (46.4) 1,060.2 

Freehold land 305.0 (0.2) 88.9 (0.1) (34.7) 358.9 

Buildings and civil works 11,200.8 (0.2) 336.2 (0.2) (1.6) 11,535.0 

12,631.3 (0.4) 425.1 (19.2) (82.7) 12,954.1 

Plant and machinery 33,938.7 (52.3) 2,397.6 0 107.9 36,391.9 

Lines and distribution 

mains 21,523.8 0 1,284.8 0 80.6 22,889.2 

Distribution services 2,221.6 0 124.2 0 4.7 2,350.5 

Meters 1,118.3 0 148.7 0 0 1,267.0 

Public lighting 265.5 0 10.6 0 0 276.1 

Furniture, fittings and 

office equipment 1,015.5 (0.3) 89.2 (3.6) (0.1) 1,100.7 

Motor vehicles 233.1 (0.3) 37.3 (13.2) (1.1) 255.8 

72,947.8 (53.3) 4,517.5 (36.0) 109.3 77,485.3 

Capital project-in-progress 6,610.9 (0.1) 5,395.0 0 (4,699.5) 7,306.3 

79,558.7 (53.4) 9,912.5 (36.0) (4,590.2) 84,791.6 

32 



13 PROPERTY, PLANT AND EQUIPMENT (Continued) 

Charged Released on 

As at for the disposals/ As at 

1.9.2006 financial year transfers 31.8.2007 


Group 

2007 

Accumulated depreciation 


Buildings and civil works 3.4 0 0 3.4 


Freehold land 0 0 0 0 

Buildings and civil works 172.1 14.0 3.9 190.0 

At cost: 

175.5 14.0 3.9 193.4 


Buildings and civil works 2,510.2 306.1 6.8 2,823.1 

2,685.7 320.1 10.7 3,016.5 

Plant and machinery 11,525.5 1,638.3 (15.9) 13,147.9 

Lines and distribution mains 7,909.3 930.0 (6.9) 8,832.4 

Distribution services 1,085.2 100.9 0 1,186.1 

Meters 545.4 71.0 0.2 616.6 

Public lighting 135.0 13.3 0.3 148.6 

Furniture, fittings and office equipment 707.2 106.5 0.3 814.0 

Motor vehicles 180.7 19.8 (16.5) 184.0 

Accumulated impairment losses 

24,774.0 3,199.9 (27.8) 27,946.1 

Plant and machinery 440.2 0 0 440.2 

33 





Group 

2006 



Exchange 

Transfers/ 

As at rate reclassi- As at 

1.9.2005 adjustment Additions Disposals fication 31.8.2006 


Buildings and civil works 5.6 0 0 0 0 5.6 


Freehold land 687.1 0 0 (6.7) 0 680.4 

Buildings and civil works 440.1 0 0 (1.7) 1.1 439.5 

At cost: 

1,132.8 0 0 (8.4) 1.1 1,125.5 

Freehold land 274.4 (0.1) 2.7 (1.2) 29.2 305.0 

Buildings and civil works 10,812.3 (0.2) 479.1 (42.0) (48.4) 11,200.8 

12,219.5 (0.3) 481.8 (51.6) (18.1) 12,631.3 

Plant and machinery 32,782.2 (37.7) 964.2 (420.7) 650.7 33,938.7 


mains 20,384.8 0 1,106.2 0 32.8 21,523.8 

Distribution services 2,086.0 0 131.7 0 3.9 2,221.6 

Meters 975.4 0 142.4 0 0.5 1,118.3 

Public lighting 257.8 0 7.7 0 0 265.5 


office equipment 895.2 (0.1) 129.0 (10.9) 2.3 1,015.5 

Motor vehicles 220.6 0 17.7 (5.2) 0 233.1 

69,821.5 (38.1) 2,980.7 (488.4) 672.1 72,947.8 

Capital project-inprogress 

6,226.6 0.3 4,178.4 (215.4) (3,579.0) 6,610.9 

76,048.1 (37.8) 7,159.1 (703.8) (2,906.9) 79,558.7 

34 








Group 

2006 



Buildings and civil works 3.3 0.1 0 3.4 


Buildings and civil works 157.1 16.0 (1.0) 172.1 

At cost: 

160.4 16.1 (1.0) 175.5 

Buildings and civil works 2,264.9 300.1 (54.8) 2,510.2 

2,425.3 316.2 (55.8) 2,685.7 


Lines and distribution mains 7,034.9 874.4 0 7,909.3 

Distribution services 988.9 96.3 0 1,085.2 

Meters 482.7 62.7 0 545.4 

Public lighting 122.2 12.8 0 135.0 

Furniture, fittings and office equipment 614.8 100.9 (8.5) 707.2 


21,736.2 3,298.7 (260.9) 24,774.0 

Accumulated impairment losses 

Plant and machinery 462.2 0 (22.0) 440.2 

35 





Company 

2007 



Transfers/ 

As at reclassi- As at 

1.9.2006 Additions Disposals fication 31.8.2007 

RM’million RM’million RM’million RM’million RM’million 

Freehold land 680.4 0 (16.4) (55.4) 608.6 

Buildings and civil works 439.4 0 (2.5) 9.0 445.9 

At cost: 

1,119.8 0 (18.9) (46.4) 1,054.5 

Freehold land 254.2 89.0 (0.1) (36.8) 306.3 

Buildings and civil works 9,753.6 321.5 0 (11.8) 10,063.3 

11,127.6 410.5 (19.0) (95.0) 11,424.1 

Plant and machinery 24,007.6 2,160.5 0 (28.7) 26,139.4 


mains 20,876.3 1,270.9 0 34.9 22,182.1 

Distribution services 2,115.7 124.0 0 0 2,239.7 

Meters 1,097.0 145.8 0 0 1,242.8 

Public lighting 265.6 10.5 0 0 276.1 


office equipment 913.6 75.0 (0.2) (2.6) 985.8 

Motor vehicles 188.7 35.1 (12.0) (0.2) 211.6 

60,592.1 4,232.3 (31.2) (91.6) 64,701.6 

Capital project-in-progress 5,888.1 4,906.7 0 (4,248.9) 6,545.9 

66,480.2 9,139.0 (31.2) (4,340.5) 71,247.5 

36 








Company 

2007 




At cost: 

172.1 14.0 3.8 189.9 


Buildings and civil works 2,306.4 245.9 7.2 2,559.5 

2,478.5 259.9 11.0 2,749.4 



Distribution services 1,013.8 96.6 0 1,110.4 

Meters 536.5 69.2 0 605.7 




22,344.0 2,595.2 (24.5) 24,914.7 

37 





Company 

2006 



Transfers/ 

As at reclassi- As at 

1.9.2005 Additions Disposals fication 31.8.2006 

RM’million RM’million RM’million RM’million RM’million 

Freehold land 687.1 0 (6.7) 0 680.4 

Buildings and civil works 440.1 0 (1.7) 1.0 439.4 

At cost: 

1,127.2 0 (8.4) 1.0 1,119.8 

Freehold land 252.6 2.7 (1.1) 0 254.2 

Buildings and civil works 9,387.8 464.2 (42.0) (56.4) 9,753.6 

10,767.6 466.9 (51.5) (55.4) 11,127.6 

Plant and machinery 23,274.8 907.2 (233.7) 59.3 24,007.6 

Lines and distribution mains 19,781.0 1,094.3 0 1.0 20,876.3 

Distribution services 1,984.6 131.1 0 0 2,115.7 

Meters 957.6 139.4 0 0 1,097.0 

Public lighting 257.8 7.8 0 0 265.6 


office equipment 792.7 120.0 (0.4) 1.3 913.6 

Motor vehicles 178.9 13.0 (4.3) 1.1 188.7 

57,995.0 2,879.7 (289.9) 7.3 60,592.1 

Capital project-in-progress 5,021.0 3,881.7 (24.8) (2,989.8) 5,888.1 

63,016.0 6,761.4 (314.7) (2,982.5) 66,480.2 

38 








Company 

2006 



Buildings and civil works 157.1 16.0 (1.0) 172.1 

At cost: 

Buildings and civil works 2,118.2 242.9 (54.7) 2,306.4 

2,275.3 258.9 (55.7) 2,478.5 



Distribution services 923.0 90.8 0 1,013.8 

Meters 475.5 61.0 0 536.5 




Net book value 


19,900.0 2,648.4 (204.4) 22,344.0 

Group 

Company 

2007 2006 2007 2006 


Buildings and civil works 2.2 2.2 0 0 


Freehold land 608.6 680.4 608.6 680.4 


At cost: 

866.8 950.0 864.6 947.7 

Freehold land 358.9 305.0 306.3 254.2 

Buildings and civil works 8,711.9 8,690.6 7,503.8 7,447.2 

Total land and buildings 9,937.6 9,945.6 8,674.7 8,649.1 

Plant and machinery 22,803.8 21,973.0 15,297.9 14,295.9 

Lines and distribution mains 14,056.8 13,614.5 13,596.8 13,184.3 

Distribution services 1,164.4 1,136.4 1,129.3 1,101.9 

Meters 650.4 572.9 637.1 560.5 

Public lighting 127.5 130.5 127.8 130.6 


Motor vehicles 71.8 52.4 61.7 39.2 

49,099.0 47,733.6 39,786.9 38,248.1 

Capital project-in-progress 7,306.3 6,610.9 6,545.9 5,888.1 

56,405.3 54,344.5 46,332.8 44,136.2 

39 





Had the revalued property, plant and equipment been included in the financial statements at cost less 

depreciation, the net book value of the revalued property, plant and equipment would have been as follows: 

Group 

Company 

2007 2006 2007 2006 


Freehold land 50.7 51.7 43.8 44.8 


161.2 170.4 154.3 163.5 

The valuations of freehold land, buildings and civil works of the Company was based on an independent valuation 

by a professional firm of valuers on the open market value basis in 1994. The net surplus on revaluation was 

incorporated into the financial statements at 31 August 1996 and transferred to revaluation reserve. 

The valuations of buildings of a subsidiary were carried out in 1982 and 1984 respectively based on independent 

valuations by professional firms of valuers on the open market value basis. The net surplus on revaluation was 

transferred to revaluation reserve. 

The title deeds of certain land are in the process of being registered in the name of the Company and certain 

subsidiaries. 

Included in transfers/reclassification in 2007 for the Group and the Company was RM54.3 million being the 

carrying amount of land and building reclassified as non-current assets held for sale (see Note 20). 

Interest capitalised during the financial year in capital project-in-progress amounted to RM309.5 million (2006: 

RM262.3 million) for the Group and the Company. 

The capitalisation rate used to determine the amount of borrowing cost eligible for capitalisation is 5.63% 

(2006: 5.84%) for the Group and the Company. 

Impairment test for property, plant and equipment 

During the year, a subsidiary company, TNB Liberty Power Limited, undertook an assessment of the provision 

for impairment totalling RM440.2 million recognised in prior years. The assessment showed that no further 

impairment loss is required for the carrying amount of property, plant and equipment assessed, including where 

realistic variations are applied to key assumptions. The carrying value of the property, plant and equipment of 

the subsidiary company at balance sheet date is RM725.2 million (2006: RM777.2 million). 

40 



14 PREPAID OPERATING LEASES 

Group 

Company 

2007 2006 2007 2006 


Cost/Valuation 

As at the beginning of the financial year 1,029.6 1,022.3 825.5 818.2 

Additions 16.6 7.3 16.6 7.3 

Disposals (5.4) 0 (5.4) 0 

Reclassified to non-current assets 

held for sale (Note 20) (2.7) 0 (2.7) 0 

Reclassification 5.7 0 5.6 0 

As at the end of the financial year 1,043.8 1,029.6 839.6 825.5 

Accumulated amortisation 

As at the beginning of the financial year 172.8 151.0 135.3 120.9 

Charged for the financial year 22.1 21.8 14.7 14.4 

Released on disposals (0.9) 0 (0.9) 0 

Released on reclassification to 

non-current assets held for sale(Note 20) (1.2) 0 (1.2) 0 

Released on reclassification (1.6) 0 (1.7) 0 

As at the end of the financial year 191.2 172.8 146.2 135.3 

Net book value as at the end 

of the financial year 852.6 856.8 693.4 690.2 

Prepaid operating leases were previously classified as leasehold land within property, plant and equipment. 

The prepaid operating leases comprise long leasehold land and short leasehold land. 

The last revaluation of the leasehold land was in 1994. 

15 COAL MINING RIGHTS 

Cost 

Group 

2007 2006 


As at the beginning and the end of the financial year 323.0 323.0 

Accumulated amortisation 

As at the beginning of the financial year 43.1 32.3 

Charged during the financial year 10.7 10.8 

As at the end of the financial year 53.8 43.1 

269.2 279.9 

Less : allowance for diminution in value (200.0) 0 

Reclassified to non-current assets held for sale (Note 20) (69.2) 0 

Net book value as at the end of the financial year 0 279.9 

41 




15 COAL MINING RIGHTS (Continued) 

On 30 April 2007, TNB announced that Dynamic Acres Sdn. Bhd. (‘DASB’) has entered into a Share Sale Agreement 

with PT Pamapersada Nusantara in relation to the divestment of DASB’s entire 99% shareholding in PT Dasa Eka 

Jasatama. Consequently, the coal mining rights that was recorded in the books of DASB has been reclassified as 

non-current assets held for sale. 

16 SUBSIDIARIES 

Company 

2007 2006 


Unquoted ordinary shares, at cost 296.7 254.5 

Redeemable unsecured loan stocks, at cost 570.3 574.5 

Redeemable preference shares, at cost 4,300.2 500.2 

5,167.2 1,329.2 

Less: allowance for diminution in value (586.1) (586.1) 

4,581.1 743.1 

During the financial year, TNB Janamanjung Sdn Bhd issued Redeemable Preference Shares (‘RPS’) amounting 

to RM3,800.0 million to the Company. The issuance of this RPS does not involve any cash transaction. The main 

features of the RPS are as follows: 

• No fixed dividends attached to RPS; 

• There shall not be any cumulative rights to dividends or any other preference in respect of profits or 

dividend; and 

• TNB Janamanjung Sdn. Bhd. at its absolute discretion may at any time and from time to time redeem at 

a premium of minimum Ringgit Malaysia thirteen only (RM13.00) of the issued price per share, the whole 

or any portion or portions of the RPS issues upon giving to the holders fourteen (14) days notice of such 

redemption. 

Group’s interest 

Country of 

Name of subsidiary 2007 2006 Principal activities incorporation 

TNB Janamanjung Sdn Bhd 100% 100% Operation of power plant Malaysia 

and generation of electricity 

TNB Power Daharki Ltd* 100% 100% Investment holding Mauritius 

TNB Fuel Services Sdn Bhd 100% 100% Purchase and supply of Malaysia 

fuel and coal for power generation 

TNB Energy Services Sdn Bhd 100% 100% Generation and supply of various Malaysia 

energy sources and provision of 

related technical services 

TNB Research Sdn Bhd 100% 100% Research and development, Malaysia 

consultancy and other services 

TNB Ventures Sdn Bhd 100% 100% Investment holding for domestic Malaysia 

and international ventures 

TNB Properties Sdn Bhd 100% 100% Property management services Malaysia 

42 



16 SUBSIDIARIES (Continued) 


Country of 


TNB Engineering Corporation 100% 100% Project management and Malaysia 

Sdn Bhd 

consultancy, engineering 

works and energy project 

development services 

TNB Repair and 100% 100% Repair, maintenance Malaysia 

Maintenance Sdn Bhd 

and testing of power plants 

TNB Engineers Sdn Bhd 100% 100% Providing engineering, procurement Malaysia 

and construction services 

for power related projects 

TNB Capital (L) Ltd 100% 100% Investment holding Malaysia 

Universiti Tenaga Nasional Sdn Bhd 100% 100% Providing higher education Malaysia 

TNB Generation Sdn Bhd 100% 100% Dormant Malaysia 

TNB Transmission Network 100% 100% Dormant Malaysia 

Sdn Bhd 

TNB Distribution Sdn Bhd 100% 100% Dormant Malaysia 

TNB Risk Management Sdn Bhd 100% 100% Dormant Malaysia 

TNB Logistics Sdn Bhd 100% 100% Dormant Malaysia 

TNB - IT Sdn Bhd 100% 100% Dormant Malaysia 

TNB Workshop Services 100% 100% Dormant Malaysia 

Sdn Bhd 

TNB Kekal Sdn Bhd** 100% 100% Dormant Malaysia 

TNB Metering Services 100% 100% Dormant Malaysia 

Sdn Bhd 

TNB Hidro Sdn Bhd 100% 100% Dormant Malaysia 

Sumber Hidro Management 100% 100% Dormant Malaysia 

Sdn Bhd** 

TNB Kapar Sdn Bhd** 100% 100% Dormant Malaysia 

TNB Prai Sdn Bhd 100% 100% Dormant Malaysia 

TNB Paka Sdn Bhd** 100% 100% Dormant Malaysia 

Sabah Electricity Sdn Bhd 80% 80% Generation, transmission, distribution Malaysia 

and sale of electricity in Sabah 

Malaysia Transformer 100% 73% Manufacturing, selling Malaysia 

Manufacturing Sdn Bhd 

and repairing of transformers 

TNB Coal International Ltd* 92.5% 92.5% Investment holding Mauritius 

43 






Country of 


Tenaga Switchgear Sdn Bhd 60% 60% Assemble and manufacture Malaysia 

high voltage switchgears 

Kapar Energy Ventures 60% 60% Generate and deliver electricity Malaysia 

Sdn Bhd 

energy and generating capacity to TNB 

Power and Energy 100% 100% Investment holding Mauritius 

International (Mauritius) Ltd* 

Sepang Power Sdn Bhd 70% 70% Dormant Malaysia 

TNB Kulim Generation Sdn Bhd 100% 100% Dormant Malaysia 

TNB Kulim Distribution Sdn Bhd 100% 100% Dormant Malaysia 

Subsidiaries of TNB Engineering Corporation Sdn Bhd 

Bangsar Energy Systems 100% 100% Operating an integrated Malaysia 

Sdn Bhd 

district cooling system for 

air conditioning systems 

of office buildings 

TNEC Construction Sdn Bhd 100% 100% Construction contractors Malaysia 

TNEC Operations and 100% 100% Operations and maintenance Malaysia 

Maintenance Sdn Bhd 

of cooling and power plants 

Subsidiary of Power and Energy International (Mauritius) Ltd 

Independent Power 100% 100% Investment holding Mauritius 

International Ltd* 

Subsidiary of Bangsar Energy Systems Sdn Bhd 

Selesa Energy Systems Sdn Bhd 100% 100% Dormant Malaysia 

Subsidiary of TNEC Operations and Maintenance Sdn Bhd 

Tomest Energy Management 51% 51% Dormant Malaysia 

Sdn Bhd 

Subsidiary of TNB Generation Sdn Bhd 

TNBG Power Services Sdn Bhd** 100% 100% Dormant Malaysia 

Subsidiary of TNB Power Daharki Ltd 

TNB Liberty Power Limited# 100% 100% Operation of power plant Pakistan 

and generation of electricity 

Subsidiary of TNB Properties Sdn Bhd 

TNP Construction Sdn Bhd 100% 100% Construction contractors Malaysia 

Subsidiary of TNB Research Sdn Bhd 

Tenaga Microwave 70% 70% Supplier and manufacturer Malaysia 

Technologies Sdn Bhd*^ 

of electrical components 

44 





Country of 


Subsidiary of TNB Energy Services Sdn Bhd 

Jana Landfill Sdn Bhd 70% 70% Generation and distribution of heat Malaysia 

and electricity using landfill gas 

and/or other renewable energy 

resources in Peninsular Malaysia 

and/or elsewhere 

Subsidiaries of TNB Repair and Maintenance Sdn Bhd 

Trichy Power Limited* 100% 100% Dormant India 

Trichy Energy Limited* 100% 100% Dormant India 

TNB Operations & Maintenance 100% 100% Investment holding Mauritius 

International Ltd (TOMIL) 

Subsidiary of TNB Operations & Maintenance International Ltd (TOMIL) 

Oasis Parade Sdn Bhd 100% 100% Investment holding Malaysia 

Subsidiary of TNB Ventures Sdn Bhd 

Tenaga Cable Industries 76% 76% Manufacturing and distribution Malaysia 

Sdn Bhd 

of power and general cables, 

aluminium rods and related activities 

Subsidiary of TNB Coal International Limited 

Dynamic Acres Sdn Bhd* 100% 100% Coal trading Malaysia 

Subsidiary of Dynamic Acres Sdn Bhd 

P.T. Dasa Eka Jasatama* (i) 99% 99% Coal mining and trading Indonesia 

* Not audited by PricewaterhouseCoopers 

(i) In respect of P.T. Dasa Eka Jasatama, Dynamic Acres Sdn. Bhd. (‘DASB’) has entered into a Share Sale 

Agreement with PT Pamapersada Nusantara in relation to the divestment of DASB’s entire 99% 

shareholding in PT Dasa Eka Jasatama as disclosed in Note 15. 

# Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and 

independent legal entity from PricewaterhouseCoopers Malaysia. 

^ On 23 August 2002, the High Court has granted the liquidation petition of Tenaga Microwave Technologies 

Sdn Bhd brought by the Company and TNB Research Sdn Bhd. The liquidation process is still in progress as 

at 31 August 2007. 

** These companies are in the process of being wound up. 

45 




17 ASSOCIATES 

Group 

2007 2006 


Share of net assets of associates 233.0 200.6 

Company 

2007 2006 


Unquoted shares, at cost 59.2 59.2 

Less: allowance for diminution in value (9.6) (9.6) 

49.6 49.6 

Redeemable preference shares, at cost 34.0 34.0 

Unsecured loan notes 42.2 52.2 

125.8 135.8 

The Group’s share of revenue, profit, assets and liabilities of associates are as follows: 

2007 2006 


Revenue 224.3 211.1 

Profit after taxation 42.4 14.6 

Non-current assets 606.8 600.8 

Current assets 270.8 273.1 

Current liabilities (137.9) (178.9) 

Non-current liabilities (506.7) (494.4) 

Net assets 233.0 200.6 

Details of the associates are as follows: 


Country of 

Name of associate 2007 2006 Principal activities incorporation 

Teknologi Tenaga Perlis 20% 20% Ownership, operation, maintenance Malaysia 

Consortium Sdn Bhd 

of electricity generating plant 

Perusahaan Otomobil Elektrik 20% 20% Dormant Malaysia 

(Malaysia) Sdn Bhd 

GB3 Sdn Bhd 20% 20% Design, develop, construction, Malaysia 

operation and maintenance 

of electricity generating facility 

Fibrecomm Network (M) Sdn Bhd 49% 49% Provision of fibre optic Malaysia 

transmission network 

Associate of TNB Energy Services Sdn Bhd 

Pendinginan Megajana Sdn Bhd 0% 49% District cooling system Malaysia 

46 



17 ASSOCIATES (Continued) 


Country of 

Name of associate 2007 2006 Principal activities incorporation 

Associates of TNB Properties Sdn Bhd 

HICOM-TNB Properties Sdn Bhd 40% 40% Construction contractors Malaysia 

INDERA-TNB 40% 40% Property development Malaysia 

Properties Sdn Bhd 

and construction 

KM Metro-TNB 40% 40% Property development Malaysia 

Properties Sdn Bhd 


TNB Properties-JB 40% 40% Property development Malaysia 

Citytowers Sdn Bhd 


ZEUS-TNB Properties Sdn Bhd 40% 40% Property development and construction Malaysia 

Associate of TNB Ventures Sdn Bhd 

Northern Utility Resources Sdn Bhd 20% 20% Operation of power plant, Malaysia 

(Receivers and Managers appointed) 

generation and supply of electricity 

Associate of Independent Power International Ltd 

Malaysian Shoaiba 20% 20% Investment holding Malaysia 

Consortium Sdn Bhd 

18 INVESTMENTS 

Group 

Company 

2007 2006 2007 2006 


Unquoted shares, at cost 75.7 75.7 75.7 79.5 

Unquoted unsecured loan stocks, at cost 0 3.8 59.4 59.4 

75.7 79.5 135.1 138.9 

Allowance for diminution in value: 

- unquoted shares (37.7) (37.7) (37.7) (41.5) 

- unquoted unsecured loan stocks 0 (3.8) 0 (40.6) 

38.0 38.0 97.4 56.8 

19 LONG TERM RECEIVABLES 

Company 

2007 2006 


Amounts due from subsidiaries 703.1 841.8 

The amounts due from subsidiaries comprise advances and other receivables from TNB Liberty Power Limited 

(‘TLPL’) and TNB Power Daharki Ltd (‘TPD’) amounting to RM54.6 million (2006: RM57.2 million) and RM648.5 

million (2006: RM784.6 million) respectively. 

These amounts are unsecured and the Company has given an undertaking to the subsidiaries not to recall the 

amount within 12 months from the balance sheet date. The amount due from LPL is interest free. The amount 

due from TPD is subject to interest at rates ranging from 6.7% to 8.4% (2006: 4.9% to 8.2%) per annum. 

47 




20 NON-CURRENT ASSETS HELD FOR SALE 

Group 

Company 

Carrying 

Carrying 

amount Carrying amount Carrying 

prior amount prior amount 

to as at to as at 

reclassification 31.8.2007 reclassification 31.8.2007 


Amount transferred from 

property, plant & equipment (Note 13) 54.3 54.3 54.3 54.3 


prepaid operating leases (Note 14) 1.5 1.5 1.5 1.5 


coal mining rights (Note 15) 69.2 69.2 0 0 

125.0 125.0 55.8 55.8 

During the year, the Company entered into several sale and purchase agreements with various parties, for which 

the disposals are still in progress. 

21 INVENTORIES 

Group 

Company 

2007 2006 2007 2006 


Raw materials, fuel and consumables 1,692.3 1,782.5 1,115.4 1,113.4 

Work-in-progress 51.2 9.8 0 0 

Finished goods 26.0 139.5 0 0 

1,769.5 1,931.8 1,115.4 1,113.4 

22 RECEIVABLES, DEPOSITS AND PREPAYMENTS 

Group 

Company 

2007 2006 2007 2006 


Trade receivables 2,045.1 2,519.8 1,639.1 2,095.6 

Less: allowance for doubtful debts (504.0) (667.7) (415.6) (597.7) 

1,541.1 1,852.1 1,223.5 1,497.9 

Rechargeable debtors 92.3 86.2 91.0 92.5 

Less: allowance for doubtful debts (83.8) (71.8) (73.3) (67.1) 

8.5 14.4 17.7 25.4 

Staff advances/loans 620.6 664.2 616.5 660.8 

Advance to contractors 114.5 133.2 98.1 117.2 

Deposits and prepayments 109.3 113.2 21.5 21.4 

Other receivables 527.8 638.3 227.3 178.7 

1,372.2 1,548.9 963.4 978.1 

2,921.8 3,415.4 2,204.6 2,501.4 

48 



22 RECEIVABLES, DEPOSITS AND PREPAYMENTS (Continued) 

The Group’s and the Company’s credit policy provides trade receivables with a 30 day (2006: 30 day) credit 

period. The Group and the Company have no significant exposures to any individual customer, geographical 

location or industry category. All credit and recovery risks associated with receivables have been provided for in 

the financial statements. 

Included in staff advances/loans are staff housing and car loans amounting to RM536.5 million (2006: RM575.6 

million) which are not recoverable within 12 months. 

23 AMOUNTS DUE FROM/TO SUBSIDIARIES 

Amount due from TLPL is interest free. Amounts due from TPD and TNB Janamanjung Sdn Bhd (‘TNBJ’) are 

subject to interest at rates ranging from 6.7% to 8.4% (2006: 4.9% to 8.2%) per annum and 4.0% (2006: 4.0%) 

per annum respectively. Amount due from SESB is subject to an interest rate of 6.0% (2006: 6.0%) per annum, 

is unsecured and has no fixed terms of repayment. 

Amounts due from/to all other subsidiaries are unsecured, interest free and have no fixed terms of repayment. 

24 SHORT TERM INVESTMENTS 

Group 

Company 

2007 2006 2007 2006 


Quoted warrants, at cost 12.6 12.6 12.6 12.6 

Market value - quoted warrants 23.7 14.8 23.7 14.8 

25 MARKETABLE SECURITIES 

Group 

Company 

2007 2006 2007 2006 


Quoted in Malaysia, at cost: 

Shares 27.1 27.1 27.1 27.1 

Less: allowance for diminution in value (16.5) (17.9) (16.5) (17.9) 

10.6 9.2 10.6 9.2 

Market value 10.6 9.2 10.6 9.2 

49 




26 DEPOSITS, BANK AND CASH BALANCES 

Group 

Company 

2007 2006 2007 2006 


Cash in hand and at bank 988.1 537.2 295.4 223.3 

Deposits with licensed banks 4,310.6 3,411.9 4,228.9 2,901.4 

Deposits with licensed finance companies 0.6 0.6 0 0 

5,299.3 3,949.7 4,524.3 3,124.7 

The interest rate per annum of deposits, bank and cash balances that were effective as at balance sheet date 

were as follows: 

Group 

Company 

2007 2006 2007 2006 

% % % % 

Deposits with licensed banks and 

finance companies 3.50 – 5.25 2.66 – 5.23 3.50 – 5.25 3.54 – 5.23 

Bank balances 1.80 – 2.00 1.80 – 3.60 1.80 – 2.00 1.80 – 3.60 

Deposits with licensed banks are held in the short term money market. Deposits have maturity periods ranging 

from 5 to 448 days (2006: 2 to 92 days) for the Group and the Company. 

Deposits of the Group and the Company at the end of the financial year have an average maturity period of 60 

days (2006: 63 days) and 60 days (2006: 69 days). 

Cash and cash equivalents at end 

of the financial year comprise: 

Group 

Company 

2007 2006 2007 2006 


Cash in hand and at bank 988.1 537.2 295.4 223.3 

Deposits with licensed banks 4,310.6 3,411.9 4,228.9 2,901.4 

Deposits with finance companies 0.6 0.6 0 0 

Deposits held in trust* 0 (0.6) 0 0 

Cash at bank held in trust* (65.6) (12.4) 0 0 

5,233.7 3,936.7 4,524.3 3,124.7 

* Deposits and cash at bank held in trust are in respect of a grant given to a subsidiary by the Government of 

Malaysia for a designated capital project. 

50 



27 PAYABLES 

Group 

Company 

2007 2006 2007 2006 


Trade payables 3,233.7 2,488.8 2,607.7 1,715.8 

Accrued interest on borrowings 470.8 462.4 240.9 275.9 

Payroll liabilities 163.7 172.1 152.8 165.2 

Deposits 15.4 18.6 9.8 9.7 

Other payables and accruals 418.0 591.6 121.5 228.3 

4,301.6 3,733.5 3,132.7 2,394.9 

Credit terms of trade payables of the Group and the Company vary from 30 to 60 days (2006: 30 to 60 days) 

depending on the terms of the contracts. 

28 SHORT TERM BORROWINGS 

Group 

Company 

2007 2006 2007 2006 


Portion of borrowings due within 

one financial year 

(Note 29) - unsecured 1,727.4 2,402.2 1,422.7 1,934.5 

- secured 215.8 43.6 0 0 

1,943.2 2,445.8 1,422.7 1,934.5 

Short term loans - unsecured 40.0 45.0 30.0 30.0 

Bankers’ acceptances 32.3 43.9 0 0 

2,015.5 2,534.7 1,452.7 1,964.5 

The short term borrowings carry interest at rates ranging from 2.50% to 8.30% (2006: 0.73% to 9.25%) per 

annum for the Group and the Company. Included in short term borrowings of the Group are loan stocks held by 

the Company in a subsidiary company which carries a coupon of 15.00% per annum. 

51 




29 BORROWINGS 

Group 

Company 

2007 2006 2007 2006 


Unsecured 

- Term loans (a) 10,198.2 10,564.7 7,557.5 7,733.3 

- Bonds (b) 8,173.8 10,511.8 6,954.6 8,331.1 

- Income Securities (c) 1,561.4 1,700.0 1,561.4 1,700.0 

- Amount due to Cagamas Berhad 248.0 271.1 248.0 271.1 

- Redeemable Unsecured 

Loan Stocks 380.2 383.0 0 0 

20,561.6 23,430.6 16,321.5 18,035.5 

Secured 

- Term loans (a) 437.5 484.2 0 0 

- Bonds (b) 2,908.0 3,111.9 0 0 

23,907.1 27,026.7 16,321.5 18,035.5 

Group 

Company 

2007 2006 2007 2006 


Payable within one year included 

under short term borrowings 

(Note 28) 1,943.2 2,445.8 1,422.7 1,934.5 

Repayable after one year: 

After one and up to two years 904.1 2,857.7 363.2 1,428.7 

After two and up to five years 5,957.0 5,895.2 4,308.4 4,154.6 

After five and up to ten years 7,851.4 8,548.8 4,212.1 4,666.9 

After ten and up to twenty years 5,740.3 5,664.8 4,907.9 4,647.3 

After twenty and up to thirty years 874.2 912.1 484.0 501.2 

After thirty years 636.9 702.3 623.2 702.3 

21,963.9 24,580.9 14,898.8 16,101.0 

23,907.1 27,026.7 16,321.5 18,035.5 

Net book values of property, plant and equipment pledged 

as security for term loans: 

Group 

2007 2006 


(i) Machinery and equipment 2,812.5 2,948.7 

(ii) Building 818.0 877.8 

3,630.5 3,826.5 

Unsecured term loans include RM16.1 million (2006: RM17.3 million) due to the Government of Malaysia and 

RM3,290.4 million (2006: RM2,842.2 million) guaranteed by the Government of Malaysia. 

52 



29 BORROWINGS (Continued) 

(a) 

Term loans 

Details of term loans with designated derivative financial instruments are as follows: 

(i) 10-YEAR JPY37.0 BILLION TERM LOAN 

In 1997, the Company entered into a 10-year JPY37.0 billion unsecured loan, paying 

interest at floating rates, matured on 30 June 2007. This loan is an amortising loan, whose principal 

amount is payable in equal semi-annual instalments over the life of the loan. The repayments 

commenced since 1997. The notional principals of the hedging contracts illustrated below amortise 

in the same manner as this loan. 

Interest rate swap (‘IRS’) 

On one tranche of the loan, the Company entered into an IRS agreement on 31 

December 1997 that entitles it to receive floating interest rates, and obliges it to pay interest at a 

fixed rate of 1.927%, matured on 30 June 2007. The notional principal of the swap is JPY8.6 billion. 

The effect of this transaction is to fix the interest rate payable on that tranche of the loan. 

For the period from 1 July 2002 to 30 June 2007, the Company entered into IRS 

agreements that entitles it to receive interest at floating rates on notional principals totalling JPY14.0 

billion and oblige it to pay interest at fixed rates ranging from 2.74% to 2.94%. The IRS has matured 

on 30 June 2007. 

(ii) TNB JANAMANJUNG SDN BHD (‘TNBJ’) 12-YEAR AMORTISING LOAN 

TNBJ, a wholly owned subsidiary of the Company, had in 1999 entered into a 12-year 

amortising loan facility with floating interest rates to part finance the construction of a power plant. 

On 30 August 2006 the loan was novated to TNB Capital (L) Ltd (‘TNBCL’) a wholly owned subsidiary 

of TNB. The loan is guaranteed by the Company and is denominated in US Dollar. The translated 

outstanding balance as at 31 August 2007 is RM1,557.4 million (2006: RM1,850.8 million). 

Forward interest rate swap 

TNBJ has entered into IRS agreements that entitles it to receive interest at floating 

rates and obliges it to pay interest at fixed rates in the range of 6.59% to 6.92% (depending on 

counterparty) on an aggregate notional amount of GBP250.0 million. The effect of this transaction is 

to fix the interest rate on the tranche. The IRS was however unwound in full on 3 January 2007. 

(iii) 30-YEAR JPY26.0 BILLION TERM LOAN 

On 30 March 2004, TNBCL entered into a 30-year JPY26.0 billion unsecured loan, 

paying interests at USD fixed rates. The loan will mature on 13 April 2034. The loan is an amortising 

loan whose principal is payable in 20 equal annual instalments. The first repayment shall be due on 

13 April 2015. The interest is paid semi-annually on 13 April and 13 October each year commencing 

13 October 2005. The balance as at 31 August 2007 is RM789.7 million (2006: RM817.6 million). 

USD-JPY Option on the principal repayment 

In April 2004, TNBCL entered into Currency Option Agreements with a notional 

amount of JPY26.0 billion as a hedge on its Term Loan. This transaction enables TNBCL to reduce 

its exposure to losses that may arise from adverse fluctuation on foreign currency exchange rates in 

relation to the above Term Loan. 

(iv) 5- YEAR JPY11.0 BILLION TERM LOAN 

On 13 December 2004, the Company entered into a 5-year JPY11.0 billion unsecured 

loan, paying floating interest rates. The loan will mature on 4 January 2010. The loan is an amortising 

loan whose principal amount is payable in 10 equal semi-annual instalments. The first repayment of 

the loan commenced on 4 July 2005. The translated Ringgit Malaysia of the loan as at 31 August 2007 

in accordance with Company’s accounting policy is equivalent to RM167.0 million (2006: RM242.1 

million). 

53 





(a) 

Term loans (Continued) 

(iv) 5- YEAR JPY11.0 BILLION TERM LOAN (Continued) 

JPY-MYR cross-currency swap (‘CCS’) 

In October 2006, TNB entered into a CCS agreement that entitles TNB to receive a floating 

interest rate in JPY and to pay a fixed rate of 4.23% in Ringgit Malaysia. The notional principle of the 

swap is JPY7.7 billion. The effect of this transaction is to fix the interest rate payable on that loan and 

reduce TNB’s exposure to losses that may arise from adverse fluctuation on foreign currency exchange 

rates and interest rates in relation to the loan. 

(b) 

Bonds 

Details of bonds with designated derivative financial instruments are as follows: 

(i) 5-YEAR USD400.0 MILLION GUARANTEED EXCHANGEABLE BONDS (‘GEB’) 

On 20 November 2002, TNBCL a wholly owned subsidiary of TNB, issued USD400.0 

million 2.625% GEB. The GEB’s maturity date is on 20 November 2007. 

The holders of the GEB are entitled to exchange, at par, the GEB for TNB’s share 

based on an exchange price which had commenced on 20 December 2002 and ended on 21 October 

2007. The holders of the GEB also had the option to put the bonds to TNBCL for redemption on 20 

November 2005. The put option notice period had since expired on 21 October 2005. On the expiry 

date, no bonds were put and the issuer, TNBCL was not required to repurchase all of its bonds or any 

portion of the principal amount thereof. 

The GEB are redeemable at the option of the issuer, in whole or in part, upon notice 

to the holders on or any time after 20 November 2005. 

On 28 February 2006, the exchange price of the GEB was adjusted from RM10.15 per 

share to RM8.10 per share as a result of TNB’s bonus issue. 

The right of exchange of the Bonds had expired on 6 October 2006. Upon expiry 

of that right, a total of USD398.9 million were exchanged. As a result of the exchange, the paid-up 

ordinary share capital of the Company had increased by the total of 187,155,756 new TNB shares. On 

13 October 2006, the balance of USD1.1 million, had since been fully redeemed. 

(ii) 5-YEAR RM200.0 MILLION CONVERTIBLE INCOME SECURITIES (‘CRIS’) 

On 11 May 2004, the Company issued RM200.0 million 3.05% CRIS. The CRIS will 

mature on 8 May 2009. 

The holders of the CRIS have the right at any time during the conversion period to 

convert all or any part of the CRIS into fully paid up ordinary shares of the Company at the conversion 

price. 

On 28 February 2006, the exchange price of the CRIS was adjusted from RM11.47 per 

share to RM9.18 per share as a result of the bonus issue. 

(iii) ISLAMIC DEBT SECURITIES - BAI BITHAMIN AJIL (‘BaIDS’) 

On 28 June 2004, Kapar Energy Ventures Sdn Bhd (‘KEV’), a subsidiary of TNB obtained 

RM3,402.0 million BaIDS to finance the acquisition of Stesen Janaelektrik Sultan Salahuddin Abdul 

Aziz. The tenure of the BaIDS Facility ranges from 1 to 15 years with a profit rate of between 3.65% 

and 8.70% per annum. 

54 




(b) 

Bonds (Continued) 

(iii) ISLAMIC DEBT SECURITIES - BAI BITHAMIN AJIL (‘BaIDS’) (Continued) 

The BaIDS are secured by the following: 

(i) Charge over KEV’s leased land. The charge of the leased land was not effected as 

at 31 August 2007. 

(ii) Debenture over KEV’s assets and properties and assignment of all rights, title 

interest and benefits under the project documents, the assigned insurances, and the designated 

accounts to secure the payment and repayment of the total secured amounts. 

(iii) The Priority and Security Sharing Agreement. 

The terms of BaIDS require deposits to be placed in the debt reserve account with 

a licensed bank to meet the debt servicing requirements. The terms of BaIDS also require KEV to 

maintain certain financial covenants. 

(c) 

Income Securities 

Fixed Income Securities (‘FIS’) 

The FIS consists of both redeemable bonds and Redeemable Preference Shares (‘RPS’), details of which are 

as follows: 

(i) 1,500 interest bearing 10-year redeemable unsecured bonds (“Bonds”) of an 

aggregated nominal value of RM999.0 million issued at 100% of nominal value (in denominations 

of RM999,000.00 each), with detachable coupons representing interest on the Bonds. The Bonds are 

to be redeemed at par in two tranches with redemption amounts of RM999.0 million and RM499.5 

million on 16 August 2011 and 19 September 2011 respectively, and; 

(ii) 1,000 Class A RPS of RM1.00 each, issued at a premium of RM999.00 per share and 

500 Class B RPS of RM1.00 each, issued at a premium of RM999.00 per share. Both classes of RPS are 

redeemable at RM1,000 each at the Company’s option at any time on or after 16 August 2010 and 

19 September 2010, for Class A and B RPS respectively. If the Class A and B RPS are not redeemed by 

16 August 2011 and 19 September 2011 respectively, an additional sum of RM1.0 million on the first 

tranche and RM0.5 million on the second tranche shall become due and payable under the final Bond 

Coupon payment for each of the tranches. 

If the Company elects to declare and pay dividends on the RPS, payment of such dividends amounting to 

RM71.9 million per annum (net of income tax) shall be on a six monthly basis non-cumulative. In addition, 

interest under the Bond Coupons amounting to RM0.2 million per annum shall be payable. In the event 

that dividends on the RPS are not declared or paid, interest payable under the Bond Coupon is RM94.5 

million per annum payable semi-annually. 

The FIS are classified as debt instruments and hence are reported as liabilities. Accordingly, the annual 

net dividend payment of the RPS amounting to RM71.9 million is classified as an interest expense in the 

income statement. 

Under the terms of the FIS, if the holder of the RPS is unable to receive the related tax credits associated 

with the transaction, the Company has to indemnify the holder of the RPS, in respect of the benefits 

denied and any penalties arising which the RPS holder may incur. 

55 




30 CONSUMER DEPOSITS 

Consumers (with the exception of employees and government departments/agencies) are required to deposit 

a sum sufficient to cover charges for two months supply of energy as allowed under the regulation of the 

Licensee Supply (Amendment) Regulations 2002. In default of payment of the deposit within the time specified, 

the supply to the consumer’s installation may be disconnected, subject to certain conditions laid out in the 

Regulations. 

TNB shall pay a sum equivalent to 5% per annum on the amount of cash deposit as a rebate, on a pro-rated 

basis, in January every year. 

31 EMPLOYEE BENEFITS 

The movements during the financial year in the amounts recognised in the consolidated balance sheet are as 

follows: 

Retirement Retirement 

benefit plan medical plan Total 

RM’million RM’million RM’million 

Group 

At 1 September 2005 941.0 1,307.2 2,248.2 

Charged to income statement 199.8 95.3 295.1 

Contribution and benefits paid (129.8) (99.4) (229.2) 

At 31 August 2006 1,011.0 1,303.1 2,314.1 


Contribution and benefits paid (123.8) (108.9) (232.7) 

At 31 August 2007 1,136.2 1,594.4 2.730.6 

The amounts recognised in the consolidated balance sheet are analysed as follows: 

Group 




At 31 August 2006 

Present value of obligations 1,595.3 1,340.4 2,935.7 

Fair value of plan assets (451.7) 0 (451.7) 

Present value of unfunded obligations 1,143.6 1,340.4 2,484.0 

Unrecognised actuarial losses (92.9) 0 (92.9) 

Unrecognised past service cost (41.9) (37.3) (79.2) 

Others 2.2 0 2.2 

Liability in the balance sheet 1,011.0 1,303.1 2,314.1 





Unrecognised actuarial losses (193.8) (1,459.1) (1,652.9) 

Unrecognised past service cost (77.3) 0 (77.3) 

Others 5.9 0 5.9 


56 



31 EMPLOYEE BENEFITS (Continued) 

The expense recognised in the consolidated income statement is analysed as follows: 

Group 

2006 




Current service cost 110.9 8.3 119.2 

Interest cost 98.8 87.0 185.8 

Expected return on plan assets (25.7) 0 (25.7) 

Past service cost 15.5 0 15.5 

Others 0.3 0 0.3 

Total, included in staff costs 199.8 95.3 295.1 

Actual return on plan assets (18.8) 0 (18.8) 

2007 




Current service cost 133.2 8.4 141.6 

Interest cost 119.2 199.4 318.6 


Actuarial losses recognised 9.7 192.4 202.1 


Amortisation of transitional liability 0 0 0 



The charge to income statement was included in the administrative expenses. 

57 





The principal actuarial assumptions used in respect of the Group’s defined benefit plans were as follows: 

Group 



benefit plan medical plan 

% % 

Discount rates 7.0 7.0 

Expected return on plan assets 8.0 N/A 

Expected rate of salary increases 5.0 N/A 

Medical cost inflation 

- inpatient N/A 6.0 

- outpatient N/A 6.0 








The movements during the financial year in the amounts recognised in the Company’s balance sheet are as 

follows: 

Company 




At 1 September 2005 929.6 1,233.3 2,162.9 


Contributions and benefits paid (128.0) (99.4) (227.4) 

At 31 August 2006 1,000.4 1,220.9 2,221.3 


Contributions and benefits paid (123.0) (108.9) (231.9) 

At 31 August 2007 1,123.6 1,503.8 2,627.4 

58 




The amounts recognised in the Company’s balance sheet are analysed as follows: 

Company 








Unrecognised actuarial losses (41.7) (37.3) (79.0) 







Unrecognised actuarial losses (193.8) (1,459.1) (1,652.9) 



The expense recognised in the Company’s income statement is analysed as follows: 

Company 

2006 




Current service cost 110.3 0 110.3 

Interest cost 98.7 87.0 185.7 





59 








Company 

2007 

Current service cost 130.4 0 130.4 

Interest cost 119.2 199.4 318.6 


Actuarial losses recognised 9.7 192.4 202.1 




The charge to income statement was included in the administrative expenses. 

The principal actuarial assumptions used in respect of the Company’s defined benefit plans were as follows: 

Company 



benefit plan medical plan 

% % 














60 



32 DEFERRED TAXATION 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets 

against current tax liabilities and when the deferred taxes relate to the same tax authority. The following 

amounts, determined after appropriate offsetting, are shown in the balance sheet: 

Group 

Company 

2007 2006 2007 2006 


Deferred tax liabilities: 

- subject to corporate income tax (6,274.4) (6,390.2) (5,524.8) (5,724.0) 

- subject to real property gains tax 0 (34.4) 0 (34.4) 

(6,274.4) (6,424.6) (5,524.8) (5,758.4) 

The movements during the financial year relating to deferred tax are as follows: 

Group 

Company 

2007 2006 2007 2006 


As at the beginning of the financial year (6,424.6) (5,997.8) (5,758.4) (5,456.5) 

(Charged)/credited to income statement: 

- property, plant and equipment 149.1 (399.7) 232.5 (274.8) 

- provision and allowances 1.1 (27.1) 1.1 (27.1) 

150.2 (426.8) 233.6 (301.9) 

As at the end of the financial year (6,274.4) (6,424.6) (5,524.8) (5,758.4) 

Subject to income tax 

Deferred tax assets (before offsetting) 

Provision and allowances 798.6 797.5 798.6 797.5 

Property, plant and equipment 1.6 1.6 0 0 

Offsetting (800.2) (799.1) (798.6) (797.5) 

Deferred tax assets (after offsetting) 0 0 0 0 

Deferred tax liabilities (before offsetting) 

Property, plant and equipment (7,074.6) (7,189.3) (6,323.4) (6,521.5) 

Offsetting 800.2 799.1 798.6 797.5 

Deferred tax liabilities (after offsetting) (6,274.4) (6,390.2) (5,524.8) (5,724.0) 

Subject to capital gains tax 

Group 

Company 

2007 2006 2007 2006 


Deferred tax liabilities 

Property, plant and equipment 0 (34.4) 0 (34.4) 

61 




32 DEFERRED TAXATION (Continued) 

The amount of deductible temporary differences and unused tax losses (both of which have no expiry date) for 

which no deferred tax assets is recognised in the balance sheet are as follows: 

Group 

Company 

2007 2006 2007 2006 


Deductible temporary differences 1,688.4 1,180.3 0 0 

Tax losses 1,222.7 1,135.2 0 0 

As at 31 August 2007, the temporary differences associated with unremitted earnings of subsidiaries for which 

deferred tax liabilities have not been recognised amounted to RM740.2 million (2006: RM498.0 million). 

33 DEFERRED INCOME 

Group 

Company 

2007 2006 2007 2006 


As at the beginning of the financial year 2,675.8 2,505.9 2,400.6 2,271.0 

Received during the financial year 454.6 510.3 395.9 406.7 

Released to income statement (Note 4) (326.9) (340.4) (291.8) (277.1) 

As at the end of the financial year 2,803.5 2,675.8 2,504.7 2,400.6 

34 GOVERNMENT DEVELOPMENT GRANTS 

Group 

2007 2006 


As at the beginning of the financial year 665.0 686.0 

Received during the financial year 0 26.3 

Released to income statement (Note 7) (44.5) (47.3) 

As at the end of the financial year 620.5 665.0 

The Government development grants are in respect of capital grants received by an 80% subsidiary company 

Sabah Electricity Sdn. Bhd. for capital projects in the State of Sabah. 

62 



35 SHARE CAPITAL 

Group and Company 

2007 2006 

RM 

RM 

Authorised: 

Ordinary shares of RM1.00 each 5,000,000,000 5,000,000,000 

Special Rights Redeemable Preference Share of RM1.00 each 1 1 

Class A Redeemable Preference Shares of RM1.00 each 

As at the beginning/end of the financial year 1,000 1,000 

Class B Redeemable Preference Shares of RM1.00 each 

As at the beginning/end of the financial year 500 500 

Issued and fully paid: 

Ordinary shares of RM1.00 each 4,331,709,068 4,135,170,337 

Special Rights Redeemable Preference Share of RM1.00 each 1 1 

Total share capital issued and fully paid as at the 

end of the financial year 4,331,709,069 4,135,170,338 

Movements on issued ordinary shares of RM1.00 each 

As at the beginning of the financial year 4,135,170,337 3,220,719,030 

Issuance of ordinary shares of RM1.00 each under the ESOS II 66,736,312 33,335,924 

Issuance of ordinary shares of RM1.00 under 

the exchange of Guaranteed Exchangeable Bonds 114,699,925 72,413,901 

Issuance of ordinary shares of RM1.00 under 

the Unsecured Convertible Redeemable Income Securities 15,102,494 0 

Issuance of bonus shares as fully paid up, on the basis 

of one (1) bonus share for every four (4) existing TNB 

shares held by shareholders via the capitalisation of 

the share premium account 0 808,701,482 

As at the end of the financial year 4,331,709,068 4,135,170,337 

Employees’ Share Option Scheme (‘ESOS’) 

The Company implemented a new Employees’ Share Option Scheme II (‘ESOS II’) on 8 July 2003 for a period of 

10 years. The ESOS II is governed by the bye-laws, which were approved by the shareholders at an Extraordinary 

General Meeting (‘EGM’) on 29 May 2003 and amended at the EGM held on 15 December 2005. 

The main features of ESOS II are as follows: 

(a) The total number of ordinary shares to be issued by the Company under the ESOS II shall not exceed 10% 

of total issued and paid-up ordinary shares of the Company, such that not more than 50% of the shares 

available under the ESOS II are allocated, in aggregate, to Directors and senior management. 

(b) 

Not more than 10% of the shares available under the ESOS II is allocated to any individual Director or 

employee who, either singly or collectively through his/her associates, holds 20% or more in the issued 

and paid-up capital of the Company. 

63 




35 SHARE CAPITAL (Continued) 

Employees’ Share Option Scheme (‘ESOS’) (Continued) 

(c) 

(d) 

(e) 

Any employee, including any Executive Director and those categorised as Fixed Term Senior Management, 

but excluding a Skim A employee (the scheme governing employees who, upon the corporatisation and 

privatisation of the Lembaga Letrik Negara in 1990, remain employed under the Government’s terms and 

conditions) are eligible to participate in the ESOS II. Employees under the Fixed Term Senior Management 

are also entitled to the Performance Options based on them meeting prescribed performance targets. 

The option price under the ESOS II is the higher of the weighted average market price of the shares as 

shown in the daily official list issued by the Bursa Malaysia Securities Berhad for the five trading days 

preceding the date of offer with a 10% discount on the nominal value of the shares, subject always that 

the discount shall not be applicable to any shares under the Performance Option. 

In the event of any alteration to the capital structure of the Company during the option period which 

expires on 7 July 2013, such corresponding alterations shall be made in: 

(i) the number of new shares in relation to the ESOS II so far as unexercised; 

(ii) the option price; and/or 

(iii) the method of the exercise of the option. 

. 

(f) 

(g) 

Options granted under the ESOS II carry no dividends or voting rights. Upon exercise of the options, 

shares issued rank pari passu in all respects with the then existing ordinary shares of the Company. 

The persons to whom the options have been granted under the ESOS II have no right to participate in any 

share issue of any other company within the Group. 

Movements in the number of shares represented by options outstanding and their related weighted average 

exercise prices are as follows: 

2007 2006 

Average Number Average Number 

exercise of exercise of 

price shares price shares 

RM/share ‘000 RM/share ‘000 

Beginning of year 6.89 133,821 6.81 120,013 

Granted 10.92 17,087 7.33 17,267 

Bonus Issue 0 0 6.89 30,679 

Exercised 6.86 (66,736) 6.82 (33,336) 

Expired 11.68 (141) 7.16 (802) 

At end of year 7.73 84,031 6.89 133,821 

Out of the options outstanding, those representing 84,030,814 shares (31.8.2006: 133,821,051 shares) were 

exercisable. Options exercised during the period resulted in 66,736,312 shares (31.8.2006: 33,335,924 units) being 

issued at RM6.71, RM6.99, RM7.42, RM7.33, RM7.75, RM7.80, RM9.189 or RM11.07 each (31.8.2006: RM8.39, 

RM8.74, RM9.28, RM6.71, RM6.99, RM7.42 or RM7.33 each). The related weighted average share price at the 

time of exercise was RM7.73 (31.8.2006: RM6.89) per share. 

64 





Details relating to the options exercised during the financial year are as follows: 

Number of 

Fair value of 

shares 

shares at share Exercise issued as at 

Exercise date issue date price 31.8.2007 

RM/share 

RM/share 

September 2006 9.15-10.10 6.71/6.99/7.42/7.33 5,665,650 

October 2006 9.55-10.10 6.71/6.99/7.42/7.33 8,760,475 

November 2006 9.95-10.90 6.71/6.99/7.42/7.33 6,233,325 

December 2006 10.80-11.60 6.71/6.99/7.42/7.33 12,435,132 

January 2007 11.00-12.40 6.71/6.99/7.42/7.33 8,694,675 

February 2007 12.00-12.40 6.71/6.99/7.42/7.33/7.75/7.80 10,226,530 

March 2007 11.10-12.00 6.71/6.99/7.42/7.33 2,497,075 

April 2007 11.50-12.20 6.71/6.99/7.42/7.33 3,129,975 

May 2007 11.10-12.00 6.71/6.99/7.42/7.33/7.75/11.07 3,938,600 

June 2007 11.20-11.70 6.71/6.99/7.42/7.33/11.07 1,919,825 

July 2007 10.90-11.60 6.71/6.99/7.42/7.33/9.189 2,214,775 

August 2007 9.95-10.90 6.71/6.99/7.42/7.33 1,020,275 

Sub-total 66,736,312 

Exchange of Guaranteed Exchangeable Bonds (‘GEB’) 8.10 114,699,925 

Conversion of Convertible Redeemable Income Securities (‘CRIS’) 9.18 15,102,494 

Total 196,538,731 

Share options outstanding at the end of the year have the following expiry dates and exercise price. 

Number of shares 

Expiry date Exercise price 2007 2006 

RM/share ‘000 ‘000 

07.07.2013 6.71 42,877 92,022 

07.07.2013 6.99 5,149 9,070 

07.07.2013 7.75 7,469 250 

07.07.2013 7.42 205 13,034 

07.07.2013 8.39 0 0 

07.07.2013 7.80 288 313 

07.07.2013 7.33 8,042 14,022 

07.07.2013 7.33 3,110 5,110 

07.07.2013 9.189 1,306 0 

07.07.2013 11.07 15,585 0 

84,031 133,821 

65 






The weighted average fair value of options granted during the year was determined using the Trinomial 

valuation model. The significant inputs into the model were as follows: 

5 year average 

Share price Exercise Option Expected Risk free share price 

Grant Date at grant date price life dividend yield interest rate movement 

RM RM Years % % % 

25.02.2005 8.24 7.75 8 1.14 3.64 21.57 

31.03.2005 8.00 7.42 8 1.14 3.33/3.72 22.13 

17.07.2005 8.56 7.80 7 1.14 3.40 19.41 

24.02.2006 8.70 7.33 7 1.14 3.43/3.63/3.77 24.01 

16.04.2006 8.65 7.33 7 1.14 3.55/3.96 18.07 

25.09.2006 9.91 9.189 6 1.14 3.86/3.95 18.52 

28.03.2007 11.50 11.07 6 1.14 3.48/3.50 17.59 

The charges to income statement arising from share-based payments during the financial year amounted to 

RM35.7 million (2006:nil) for the Group and RM30.8 million (2006:nil) for the Company as set out in Note 6 to 

these financial statements. 

31.8.2007 

RM’000 

Ordinary share capital, at par 66,736 

Share premium 391,233 

Proceeds received on exercise of share options 457,969 

Fair value at exercise date of shares issued 743,961 

Special Rights Redeemable Preference Share (‘Special Share’) 

(a) 

The Special Share would enable the Government of Malaysia through the Minister of Finance Incorporated 

to ensure that certain major decisions affecting the operations of the Company are consistent with the 

Government’s policies. The Special Shareholder, which may only be the Government or any representative 

or person acting on its behalf, is entitled to receive notices of meetings but not to vote at such meetings 

of the Company. However, the Special Shareholder is entitled to attend and speak at such meetings. 

The Special Shareholder has the right to appoint any person, but not more than six at any time, to be the 

Board of Directors of the Company. 

(b) 

(c) 

(d) 

Certain matters, in particular the alteration of the Articles of Association of the Company relating to the 

rights of the Special Shareholder, creation and issue of additional shares which carry different voting 

rights, the dissolution of the Company, substantial disposal of assets, amalgamations, merger and takeover, 

require the prior consent of the Special Shareholder. 

The Special Shareholder does not have any right to participate in the capital or profits of the Company. 

The Special Shareholder has the right to require the Company to redeem the Special Share, at par, at any 

time. 

66 




Class A and Class B Redeemable Preference Shares (‘RPS’) 

The main features of the Company’s Class A and Class B RPS are as follows: 

(a) 

(b) 

(c) 

The RPS do not carry any right to participate in the assets and surplus profit of the Company. 

The RPS holders have no voting rights except on resolution to amend the RPS holders’ rights. 

These RPS are not convertible into ordinary shares 

(d) The Company has the right to redeem all Class A and Class B RPS on or after 16 August 2010 and 19 

September 2010 respectively at RM1,000 each. 

As described in Note 29(c) to these financial statements, these RPS form part of the Company’s Fixed Income 

Securities. 

36 SHARE PREMIUM 


2007 2006 


As at the beginning of the financial year 3,912.9 3,989.6 

Arising in respect of ordinary shares 

issued during the financial year 1,329.1 732.0 

Issuance of bonus shares as fully paid up 

on the basis of one (1) bonus share for 

every four (4) existing TNB shares held 

by shareholders via the capitalisation 

of the share premium account 0 (808.7) 

As at the end of the financial year 5,242.0 3,912.9 

37 REVALUATION AND OTHER RESERVES 

Non-distributable 

Group 

Company 

2007 2006 2007 2006 


Revaluation reserve 1,000.6 1,027.7 990.5 1,017.6 

Foreign currency translation reserve 5.2 (37.5) 0 0 

Reserve on consolidation (146.6) (146.6) 0 0 

Employees’ Share Option Scheme reserve 35.7 0 30.8 0 

894.9 843.6 1,021.3 1,017.6 

67 




37 REVALUATION AND OTHER RESERVES (Continued) 

The movements in each category of reserves were as follows: 

Revaluation reserve 

Group 

Company 

2007 2006 2007 2006 


As at the beginning of the financial year 1,027.7 1,034.6 1,017.6 1,028.7 

Realisation of revaluation reserve (27.1) (6.9) (27.1) (11.1) 

As at the end of the financial year 1,000.6 1,027.7 990.5 1,017.6 

Foreign currency translation reserve 

As at the beginning of the financial year (37.5) (43.3) 0 0 

Arising in the financial year 42.7 5.8 0 0 

As at the end of the financial year 5.2 (37.5) 0 0 

Reserve on consolidation 

As at the beginning of the financial year (146.6) (146.6) 0 0 

Arising in the financial year 0 0 0 0 

As at the end of the financial year (146.6) (146.6) 0 0 

Employees’ Share Option Scheme reserve 

As at the beginning of the financial year 0 0 0 0 

Arising in the financial year 35.7 0 30.8 0 

As at the end of the financial year 35.7 0 30.8 0 

Total revaluation and other reserves 

As at the beginning of the financial year 843.6 844.7 1,017.6 1,028.7 

Arising in the financial year 78.4 5.8 30.8 0 

Realisation of revaluation reserve (27.1) (6.9) (27.1) (11.1) 

As at the end of the financial year 894.9 843.6 1,021.3 1,017.6 

38 RETAINED PROFITS 

Subject to agreement by the Inland Revenue Board, the Company has sufficient tax credits under Section 108 

of the Income Tax Act, 1967 available to frank approximately RM1,858.3 million (2006: RM1,058.2 million) of 

its retained profits as at 31 August 2007, if paid out as dividends. There is insufficient tax credit to cover the 

remaining profits of RM11,427.2 million (2006: RM9,777.4 million), if paid out as dividends. 

In addition, the Company has tax exempt income as at 31 August 2007 arising from the Income Tax (Amendment) 

Act, 1999, relating to tax on income earned in 1999 being waived and exempt dividend income amounting to 

approximately RM47.3 million (2006: RM129.1 million) available for distribution as tax exempt dividends to 

shareholders. This tax exempt income is subject to agreement by the Inland Revenue Board. 

68 



39 COMMITMENTS 

(a) 

Capital and other commitments for 5 years 

Group 

Company 

2007 2006 2007 2006 


Authorised capital expenditure 

not provided in the financial 

statements 

Contracted 1,141.2 2,048.4 912.9 1,867.7 

Not contracted 11,580.6 12,781.5 11,283.5 12,180.3 

12,721.8 14,829.9 12,196.4 14,048.0 

(b) 

Non-cancellable operating lease commitments 


2007 2006 


Future minimum lease payments 

Not later than one year 13.3 13.3 

Later than one year and not later than five years 24.3 37.5 

37.6 50.8 

The above lease payments relate to the non-cancellable operating leases of the Group and the Company. 

40 CONTINGENT LIABILITIES (UNSECURED) 

Group 

Company 

2007 2006 2007 2006 


Claims by third parties 943.0 974.5 917.9 905.4 

Trade guarantees and performance bonds 5.4 5.4 0 0 

Corporate guarantees given to financial 

institutions in respect of facilities granted 

to subsidiaries 170.8 0 3,894.4 5,366.4 

Stamp duties on transfer of assets 

to a subsidiary (1) 108.0 108.0 0 0 

Other contingent liabilities 29.7 67.2 0 0 

1,256.9 1,155.1 4,812.3 6,271.8 

Claims by third parties include claims by contractors, consultants, consumers and former employees. These claims 

are being resolved and the Directors are of the opinion that their outcome will not have a material adverse 

effect on the financial position of both the Group and the Company. 

(1) 

In respect of stamp duties on transfer of assets from Lembaga Letrik Sabah, SESB is in the process of 

obtaining a vesting order to exempt itself from any potential liability. 

69 




41 SIGNIFICANT RELATED PARTY DISCLOSURES 

In addition to related party balances mentioned elsewhere in the financial statements, set out below are other 

significant related party transactions which were carried out on terms and conditions negotiated amongst the 

related parties: 

Group 

Company 

2007 2006 2007 2006 


(a) Sales of electricity to associates 0.3 0.1 0.3 0.1 

(b) Purchases of electricity from 

associates 1,194.9 1,156.2 1,194.9 1,156.2 

(c) Interest income received from an 

associate - GB3 Sdn Bhd 5.9 6.3 5.9 6.3 

Sales and purchases of electricity to and from associates are aggregated because the transactions are similar in 

nature and no single transaction is significant enough to warrant separate disclosure. 

As stated under paragraph 5 of FRS Standard No. 124 “Related Party Disclosures”, disclosure of significant related 

party transactions between a state-controlled enterprise with other state-controlled enterprises is not required 

to be disclosed in the financial statements. 

Accordingly, significant related party transactions between the Company and other Government controlled 

entities are not presented as the principal shareholders of the Company are the Government of Malaysia and 

related entities owned by the Government. 

42 SEGMENTAL REPORTING 

As the principal activities of the Group and the Company are the generation, transmission, distribution and sale 

of electricity, segmental reporting is deemed not necessary. 

43 FINANCIAL RISK MANAGEMENT 

(a) 

Financial risk management objectives and policies 

The main risks arising from the Group’s financial assets and liabilities are foreign currency exchange, 

interest rate, credit, liquidity and cash flow risks. 

The Group’s overall risk management seeks to minimise potential adverse effects of these risks on the 

financial performance of the Group. 

The Group has established risk management policies, guidelines and control procedures to manage its 

exposure to financial risks. Hedging transactions are determined in the light of commercial commitments; 

derivative financial instruments are used only to hedge underlying commercial exposures and are not held 

or sold for speculative purposes. 

• Currency risk 

The foreign currency exchange risk of the Group arises from borrowings denominated 

in foreign currencies. The main currency exposures are primarily in United States Dollar and Japanese 

Yen. The Group also has subsidiaries operating in foreign countries, which generate revenue and incur 

costs denominated in foreign currencies. The main currency exposure is primarily in United States 

Dollar. 

70 



43 FINANCIAL RISK MANAGEMENT (Continued) 

(a) 

Financial risk management objectives and policies (Continued) 

• Interest rate risk 

The Group has cash and bank balances and deposits placed with creditworthy licensed 

banks and financial institutions. The Group manages its interest rate risks by placing such balances on 

varying maturities and interest rate terms. 

The Group’s debt includes bank overdrafts, bank borrowings, bonds and notes. The 

Group’s interest rate risk management objective is to manage the interest expense consistent with 

maintaining an acceptable level of exposure to interest rate fluctuations. In order to achieve this 

objective, the Group targets a mix of fixed and floating debt based on assessment of its existing 

exposure and desired interest rate profile. To obtain this mix, the Group combines cross-currency 

interest rate swaps, interest rate swaps and options to convert certain long term foreign currency 

borrowings from variable to fixed rate and vice versa. 

• Credit risk 

Financial assets that potentially subject the Group to concentrations of credit risk consist 

primarily of receivables, cash and cash equivalents, marketable securities and financial instruments used 

in hedging activities. 

Due to the nature of the Group’s business, customers are mainly segregated into business 

and residential. The Group has no other major significant concentration of credit risk other than business 

and residential trade receivables due to its diverse customer base. Credit risk is managed through 

the application of credit limits and monitoring procedures. Where appropriate, the Group obtained 

deposits or bank guarantees from the customers. 

The Group places its cash and cash equivalents and marketable securities with a number 

of creditworthy financial institutions. The Group’s policy limits the concentration of financial exposure 

to any single financial institution. 

All hedging instruments are executed with creditworthy financial institutions with a view 

to limit the credit risk exposure of the Group. The Group, however is exposed to credit-related losses 

in the event of non-performance by counterparties to financial derivative instruments, but does not 

expect any counterparties to fail to meet their obligations. 

• Liquidity and cash flow risks 

In the management of liquidity and cash flow risk, the Group monitors and maintains 

a level of cash and cash equivalent deemed adequate by the management to finance the Group’s 

operations and mitigate the effects of fluctuations in cash flows. Due to the dynamic nature of the 

underlying business, the Group aims at maintaining flexibility in funding by keeping both committed 

and uncommitted credit lines available. 

(b) 

Interest rate risk 

Fair value interest rate risk 

The Group’s exposure to risk that the value of a financial instrument will fluctuate due to changes in 

market interest rates as mentioned in Note 29. 

Cash flow interest rate risk 

The Group’s income and operating cash flows are substantially independent of changes in market interest 

rates. Interest rate exposure arises from the Group’s borrowings and deposits, and is managed through the 

use of fixed and floating rate debt and derivative financial instruments. Derivative financial instruments 

are used, where appropriate, to generate the desired interest rate profile. 

71 





(b) 

Interest rate risk (Continued) 

Group 

2007 

72 


Cash flow interest rate risk (Continued) 

The Company has entered into interest rate swap contracts that entitle it to receive interest at floating 

rates on notional principal amounts and obliges it to pay interest at fixed rates on the same amounts. 

Under the interest rate swaps, the Company agrees with other parties to exchange, at quarterly intervals, 

the differences between fixed rate and floating rate interest amounts calculated by reference to the 

agreed notional principal amounts. 

The weighted average interest rate of the Company’s fixed rate borrowings at balance sheet date was 

5.79% (31.8.2006: 5.82%) per annum. After the interest rate swap, the Company’s weighted average 

interest rate at balance sheet date was 5.85% (31.8.2006: 5.86%) per annum. 

The remaining terms and notional principal amounts of the outstanding interest rate swap contracts of 

the Company at the balance sheet date, which are denominated in US Dollars, were as follows: 

2007 2006 


In one year or less 0 116.4 

The tables below summarise the Group and the Company’s exposure to interest rate risk. Included in the 

tables are the Group and the Company’s financial assets and liabilities at carrying amounts, categorised 

by the earlier of repricing or contractual maturity dates. The off-balance sheet gap represents the net 

notional amounts of all interest rate sensitive derivative instruments. Sensitivity to interest rates arises from 

mismatches in the repricing dates, cash flows and other characteristics of assets and their corresponding 

liability funding. 

Financial assets 

Effective 

interest F ixed rate instruments Total 

at balance Floating maturing or repriced in interest 

sheet date rate < 1 year 1- 2 years 2- 3 years 3- 4 years 4- 5 years > 5 years sensitive 

% RM RM RM RM RM RM RM RM 

per annum ’million ’million ’million ’million ’million ’million ’million ’million 

Trade and 

other receivables 0 22.2 202.2 0 0 0 0 0 224.4 

Amount due from 

associates 0 0 34.6 0 0 0 0 0 34.6 

Deposits and 

bank balances 0 87.1 4,741.7 0 0 0 0 0 4,828.8 

2006 


109.3 4,978.5 0 0 0 0 0 5,087.8 

Trade and 

other receivables 0 23.4 444.3 0 0 0 0 0 467.7 


associates 0 0 30.7 0 0 0 0 0 30.7 

Deposits and 

bank balances 0 134.2 2,847.5 0 0 0 0 0 2,981.7 

157.6 3,322.5 0 0 0 0 0 3,480.1



(b) 

Interest rate risk (Continued) 

Balances 

Total Non under 

interest interest Islamic 

sensitive sensitive principles Total 


Group 

2007 


Investments 0 50.6 0 50.6 

Trade and other 

receivables 224.4 2,332.2 365.2 2,921.8 


associates 34.6 10.7 0 45.3 

Marketable securities 0 10.6 0 10.6 

Deposits and bank 

balances 4,828.8 9.7 460.8 5,299.3 

Other assets (amount 

receivable from swap 

counterparties) 0 0.3 0 0.3 

2006 


5,087.8 2,414.1 826.0 8,327.9 


Trade and other 

receivables 467.7 2,237.9 368.2 3,073.8 


associates 30.7 12.9 0 43.6 



balances 2,981.7 88.3 879.7 3,949.7 




3,480.1 2,399.0 1,247.9 7,127.0 

73 





(b) 

Interest rate risk (continued) 

Effective 






Company 

2007 


Amount due 

from subsidiaries 8.94 648.5 946.7 54.6 0 0 0 0 1,649.8 

Amount due 

from associates 0 0 34.6 0 0 0 0 0 34.6 

Deposits and 

bank balances 0 0 3,768.1 0 0 0 0 0 3,768.1 

2006 


648.5 4,749.4 54.6 0 0 0 0 5,452.5 

Amount due 

from subsidiaries 7.11 784.6 4,306.3 0 57.2 0 0 0 5,148.1 

Amount due 

from associates 0 0 30.7 0 0 0 0 0 30.7 

Deposits and 

bank balances 0 0 2,425.4 0 0 0 0 0 2,425.4 

784.6 6,762.4 0 57.2 0 0 0 7,604.2 

74 




(b) 


Balances 





Company 

2007 


Investments 0 110.0 0 110.0 

Trade and other receivables 0 1,789.9 365.2 2,155.1 


subsidiaries 1,649.8 303.4 0 1,953.2 


associates 34.6 0 0 34.6 



balances 3,768.1 249.4 506.8 4,524.3 




5,452.5 2,463.6 872.0 8,788.1 

2006 



Trade and other receivables 0 2,093.9 368.2 2,462.1 


subsidiaries 5,148.1 1,139.6 0 6,287.7 


associates 30.7 0 0 30.7 



balances 2,425.4 258.7 440.6 3,124.7 




7,604.2 3,570.9 808.8 11,983.9 

75 





(b) 


Effective 






Group 

2007 

Financial liabilities 

Trade and 

other payables 0 0 491.9 0 0 0 0 0 491.9 

Amount due to 

associates 0 0 224.5 0 0 0 0 0 224.5 

Borrowings 5.77 1,941.8 4.7 63.8 307.2 3,008.0 639.1 11,814.1 17,778.7 

1,941.8 721.1 63.8 307.2 3,008.0 639.1 11,814.1 18,495.1 

On-balance sheet 

interest sensitivity gap 0 (1,832.5) 4,257.4 (63.8) (307.2) (3,008.0) (639.1) (11,814.1) (13,407.3) 

Off-balance sheet 

interest sensitivity gap 0 167.0 0 0 (170.5) 0 0 0 (3.5) 

Total interest 

sensitivity gap (1,665.5) 4,257.4 (63.8) (477.7) (3,008.0) (639.1) (11,814.1) (13,410.8) 

2006 


Trade and 

other payables 0 0 605.8 0 0 0 0 0 605.8 

Amount due 

to associates 0 0 212.4 0 0 0 0 0 212.4 

Borrowings 5.81 2,596.2 250.0 2,719.2 0 0 0 15,781.6 21,347.0 

2,596.2 1,068.2 2,719.2 0 0 0 15,781.6 22,165.2 


interest sensitivity gap 0 (2,438.6) 2,254.3 (2,719.2) 0 0 0 (15,781.6) (18,685.1) 


interest sensitivity gap 0 1,354.8 0 (1,354.8) 0 0 0 0 0 


sensitivity gap (1,083.8) 2,254.3 (4,074.0) 0 0 0 (15,781.6) (18,685.1) 

76 




(b) 


Balances 





Group 

2007 


Trade and other payables 491.9 3,809.7 0 4,301.6 

Amount due to associate 224.5 1.6 0 226.1 

Borrowings 17,778.7 221.2 6,435.2 24,435.1 

Other liabilities 

(amount payable to 

swap counterparties) 0 1.2 0 1.2 

18,495.1 4,033.7 6,435.2 28,964.0 


interest sensitivity gap (13,407.3) (1,619.6) (5,609.2) (20,636.1) 


interest sensitivity gap (3.5) 0 0 (3.5) 

Total interest sensitivity gap (13,410.8) (1,619.6) (5,609.2) (20,639.6) 

2006 


Trade and other payables 605.8 2,160.8 0 2,766.6 

Amount due to associate 212.4 0 0 212.4 

Borrowings 21,347.0 254.7 6,600.5 28,202.2 




22,165.2 2,416.0 6,600.5 31,181.7 


interest sensitivity gap (18,685.1) (17.0) (5,352.6) (24,054.7) 

Total interest sensitivity gap (18,685.1) (17.0) (5,352.6) (24,054.7) 

77 





(b) 


Effective 






Company 

2007 


Amount due to 

associates 0 0 224.5 0 0 0 0 0 224.5 

Amount due to 

subsidiaries 5.32 0 1,403.4 219.2 219.2 219.2 219.2 2,744.3 5,024.5 

Borrowings 5.57 197.0 4.7 63.8 307.2 3,008.0 639.1 8,838.9 13,058.7 

197.0 1,632.6 283.0 526.4 3,227.2 858.3 11,583.2 18,307.7 


interest sensitivity gap 0 451.5 3,116.8 (228.4) (526.4) (3,227.2) (858.3) (11,583.2) (12,855.2) 


interest sensitivity gap 0 167.0 0 (170.5) 0 0 0 0 (3.5) 


sensitivity gap 618.5 3,116.8 (398.9) (526.4) (3,227.2) (858.3) (11,583.2) (12,858.7) 

2006 


Amount due to 

associates 0 0 212.4 0 0 0 0 0 212.4 

Amount due to 

subsidiaries 4.92 0 1,700.3 217.7 217.7 217.7 217.7 2,958.3 5,529.4 

Borrowings 5.80 470.9 1,445.3 8.5 203.0 408.9 3,106.4 9,122.8 14,765.8 

470.9 3,358.0 226.2 420.7 626.6 3,324.1 12,081.1 20,507.6 


interest sensitivity gap 0 313.7 3,404.4 (226.2) (363.5) (626.6) (3,324.1) (12,081.1) (12,903.4) 


interest sensitivity gap 0 116.4 (116.4) 0 0 0 0 0 0 


sensitivity gap 430.1 3,288.0 (226.2) (363.5) (626.6) (3,324.1) (12,081.1) (12.903.4) 

78 




(b) 


Balances 





Company 

2007 


Trade and other payables 0 2,804.0 0 2,804.0 

Borrowings 13,058.7 170.6 3,362.7 16,592.0 

Amount due to subsidiaries 5,024.5 0 0 5,024.5 

Amount due to associates 224.5 0 0 224.5 




18,307.7 2,975.8 3,362.7 24,646.2 


interest sensitivity gap (12,855.2) (512.2) (2,490.7) (15,858.1) 


interest sensitivity gap (3.5) 0 0 (3.5) 

Total interest sensitivity gap (12,858.7) (512.2) (2,490.7) (15,861.6) 

2006 


Trade and other payables 0 2,050.5 0 2,050.5 

Borrowings 14,765.8 206.2 3,369.4 18,341.4 

Amount due to subsidiaries 5,529.4 81.1 0 5,610.5 

Amount due to associates 212.4 0 0 212.4 




20,507.6 2,338.3 3,369.4 26,215.3 


interest sensitivity gap (12,903.4) 1,232.6 (2,560.6) (14,231.4) 

Total interest sensitivity gap (12,903.4) 1,232.6 (2,560.6) (14,231.4) 

79 





(b) 


Group 

2007 

The table below summarises the effective weighted average interest rate as at 31 August 2007 and 31 

August 2006 by major currencies for each class of financial asset and financial liability. 


USD JPY EURO RM Others 

% % % % % 

Deposits and bank balances 4.52 0 0 3.53 0 


Borrowings 6.61 1.95 3.06 6.60 2.25 

2006 


Receivables 0 0 0 4.00 8.37 



Borrowings 6.22 2.07 3.16 6.59 2.20 

Company 

2007 



subsidiaries 7.04 0 0 7.90 0 

Trade and other receivables 0 0 0 4.00 0 



Amount due to subsidiaries 5.37 4.05 0 0 0 

Borrowings 7.57 1.43 3.06 6.30 2.25 

2006 



subsidiaries 6.95 0 0 4.51 0 

Trade and other receivables 0 0 0 4.00 0 



Amount due to subsidiaries 4.85 4.05 0 0 0 

Borrowings 7.53 1.52 3.16 6.34 2.20 

80 




(c) 

Credit risk 

(i) On balance sheet, commitment and contingencies 

Credit risk is the risk that one party to a financial instrument will fail to discharge an 

obligation and cause the other party to incur a financial loss. The following tables analyse the Group’s 

and the Company’s financial assets by industry concentration as at the balance sheet date. 

Interest 

receivable 

Deposits Trade from Total 

and bank Investment receivables swap on- Commitment 

balances in unquoted and other Inter- counter- balance and 

(excl. cash) instruments # assets company parties sheet contingencies 


Group 

2007 

Government 0 0 114.2 0 0 114.2 0 

Financial 

Institutions 4,339.8 38.0 15.3 0 0.3 4,393.4 0 

Business 0 0 1,105.2 0 0 1,105.2 0 

Individuals 0 0 1,041.8 0 0 1,041.8 0 

Associates 0 0 0 34.6 0 34.6 0 

Others 0 0 190.3 0 0 190.3 3,566.3 

2006 

4,339.8 38.0 2,466.8 34.6 0.3 6,879.5 3,566.3 

Government 0 0 110.5 0 0 110.5 0 

Financial 

Institutions 3,006.6 38.0 0 0 0.1 3,044.7 0 

Business 0 0 1,455.7 0 0 1,455.7 0 

Individuals 0 0 1,096.2 0 0 1,096.2 0 

Others 0 0 162.1 0 0 162.1 0 

3,006.6 38.0 2,824.5 0 0.1 5,869.2 0 

# 

This amount excludes equity instruments amounting to RM23.2 million (2006: RM21.8 

million), net of allowance. 

81 





(c) 

Credit risk (continued) 

Company 

2007 

(i) On balance sheet, commitment and contingencies (Continued) 

Interest 

receivable 

Deposits Trade from Total 

and bank Investment receivables swap on- Commitment 

balances in unquoted and other Inter- counter- balance and 

(excl. cash) instruments # assets company parties sheet contingencies 


Government 0 0 76.9 0 0 76.9 0 

Financial 

Institutions 4,228.9 38.0 15.3 0 0.3 4,282.5 0 

Business 0 0 967.6 0 0 967.6 0 

Individuals 0 0 905.0 0 0 905.0 0 

Associates 0 0 0 34.6 0 34.6 0 

Subsidiaries 0 0 0 1,953.2 0 1,953.2 3,894.4 

Others 0 0 190.3 0 0 190.3 0 

2006 

4,228.9 38.0 2,155.1 1,987.8 0.3 8,410.1 3,894.4 

Government 0 0 28.8 0 0 28.8 0 

Financial 

Institutions 2,901.4 38.0 7.1 0 0 2,946.5 0 

Business 0 0 1,306.6 0 0 1,306.6 0 

Individuals 0 0 957.5 0 0 957.5 0 

Associates 0 0 0 30.7 0 30.7 0 

Subsidiaries 0 0 0 6,287.7 0 6,287.7 5,366.4 

Others 0 0 162.1 0 0 162.1 0 

2,901.4 38.0 2,462.1 6,318.4 0 11,719.9 5,366.4 

# 

This amount excludes equity instruments amounting to RM23.2 million (2006: RM21.8 

million), net of allowance. 

* This amount represents the financial guarantees issued by the Company on the 

borrowing facilities given to subsidiaries. 

82 




(c) 

Credit risk (continued) 

(ii) Off balance sheet 

The Group and the Company are exposed to credit risk where the fair value of the 

contract is favourable, where the counterparty is required to pay the Group or the Company in the 

event of contract termination. The following table summarises the favourable fair values of the 

contracts, indicating the credit risk exposure. 

2007 

Group 

Company 

Contract or 

Contract or 

notional Favourable notional Favourable 

principal net fair principal net fair 

amount value amount value 


Cross currency interest rate swap 167.0 0 167.0 0 

2006 

167.0 0 167.0 0 

Interest rate swap 1,266.8 10.5 28.3 0 

Forward start interest rate swap 88.1 0 88.1 0 

1,354.9 10.5 116.4 0 

(d) 

Foreign exchange risk 

The currency exposure of financial assets and financial liabilities of the Group and the Company that are 

not denominated in the functional currency of the respective companies is set out below. 

Group 

2007 


USD JPY EURO Others 


Receivables, deposits and 

prepayments 0.6 0 0 0 

Deposits and bank balances 18.6 0 0 0 

Other assets 0 0.3 0 0 


19.2 0.3 0 0 

Payables 

- external 1.8 0 0.1 0 

Borrowings 6,666.3 4,254.9 6.1 8.1 

6,668.1 4,254.9 6.2 8.1 

83 





(d) 

Foreign exchange risk (Continued) 

USD JPY EURO Others 


Group 

2006 


Deposits and bank balances 22.6 0 0 0.1 

Other assets 0 0.1 0 0.1 


22.6 0.1 0 0.2 

Payables 2.7 0 0.1 0 

Borrowings 8,947.4 4,023.7 10.3 10.0 

Other liabilities 0 0.5 0 0 

8,950.1 4,024.2 10.4 10.0 

Company 

2007 


Amount due from subsidiaries 1,322.2 0 0 0.2 

Deposits and bank balances 14.4 0 0 0 

Other assets (interest receivable 

from swap counterparties) 0 0.3 0 0 


1,336.6 0.3 0 0.2 

Amount due to subsidiaries 3,108.1 885.6 0 0 

Borrowings 3,754.6 3,427.2 6.1 8.1 

2006 


6,862.7 4,312.8 6.1 8.1 

Amount due from subsidiaries 1,354.4 0 0 0 

Deposits and bank balances 50.5 20.1 0 0.1 

Other assets (interest receivable 

from swap counterparties) 0 0.1 0 0.1 


1,404.9 20.2 0 0.2 

Amount due to subsidiaries 4,132.4 885.6 0 0 

Borrowings 4,713.6 3,163.2 10.3 10.0 

Other liabilities (interest payable 

to swap counterparties) 0 0.5 0 0 

84 


8,846.0 4,049.3 10.3 10.0



(e) 

Fair value 

The fair value of a financial instrument is assumed to be the amount at which the instrument could be 

exchanged or settled between knowledgeable and willing parties in an arm’s length transaction, other 

than in forced or liquidation sale. Quoted market prices, when available, are used as the measure of fair 

values. However, for a significant portion of the Group’s and the Company’s financial instruments, quoted 

market prices do not exist. For such financial instruments, fair values presented are estimates derived 

using the net present value or other valuation techniques. The above techniques involve uncertainties 

and are significantly affected by the assumptions used and judgements made regarding risk characteristics 

of various financial instruments, discount rates, estimates of future cash flows, future expected loss 

experience and other factors. Changes in assumptions could significantly affect these estimates and the 

resulting fair values. 

The face values for financial assets and liabilities with a maturity of less than one year are assumed to 

approximate their fair values. 

(i) On balance sheet 

The carrying amounts of financial assets and liabilities of the Group and the Company 

at the balance sheet date approximated their fair values except as set out below. 

Group 

Company 

Carrying Fair Carrying Fair 

amount value amount value 


2007 


Investments 0.1 0 0 0 

Long term receivables 0 0 703.1 700.9 

Receivables, deposits 

and prepayments 38.8 17.4 0 0 


Payables 32.9 0 0 0 

Borrowings 24,435.0 25,127.1 15,589.3 16,156.2 

Amount due to 

subsidiaries (non-current) 0 0 3,621.1 3,616.2 

Other liabilities 712.4 0 0 0 

2006 


Long term receivables 0 0 841.8 841.7 


Borrowings (exclude Islamic 

Instrument and include 

Short term portion of 

Borrowings) 21,601.6 22,364.2 13,717.6 14,207.5 

Amount due to 

subsidiaries (non-current) 0 0 3,829.3 3,921.6 

85 





(e) 

Fair value (Continued) 

(i) On balance sheet (Continued) 


The fair value of long term receivables is lower than carrying amount at balance sheet 

date as the Company gives its subsidiaries advances at below current market rate. The Directors consider 

the carrying amount fully recoverable as they do not intend to realise the financial assets via exchange 

with another counterparty. 


The fair value of quoted bonds has been estimated using the respective quoted 

offer price. For unquoted borrowings with fixed interest rate, the fair values have been estimated by 

discounting the estimated future cash flows using the prevailing market rates for similar credit risks 

and remaining period to maturity. For unquoted borrowings with floating interest rate, the carrying 

values are generally reasonable estimates of their fair values. 

The method by which fair value information was determined and any significant 

assumptions made in its application are as follows: 

• quoted shares and marketable securities - quoted market prices at balance sheet 

date 

• loans to subsidiaries, amounts due from subsidiaries and staff loans - future 

contractual cash flows discounted using dealer quotes of interest rates for similar loans 

• bank overdrafts, cash and cash equivalents, receivables and payables with a 

maturity period of less than one year (all of which were subject to normal credit terms) - carrying 

value at balance sheet date 

• borrowings other than bank overdraft - future contractual cash flows discounted 

at current market interest rates available for similar financial instruments 

• vacant property provision - cash flows discounted using a discount rate that 

reflects current market assessments of the time value of money and the risks specific to the 

liability 

• financial guarantees given to third parties - quotation from bankers in respect of 

the amount required to settle the contingent obligations at the balance sheet date 

• forward foreign exchange contracts - difference between the spot exchange 

rates and the contracted forward exchange rates at balance sheet date, applied to the contracted 

sum 

• interest rate swaps - present value of estimated future cash flows calculated using 

forward rates 

(ii) Off balance sheet 

The financial derivative instruments are used to hedge foreign exchange and interest 

rate risks associated with certain long term foreign currency borrowings. The contract notional principal 

amounts of the derivative and the corresponding fair value adjustments are analysed as below. 

Fair values of financial derivative instruments are the present values of their future 

cash flows and are arrived at based on valuations carried out by the Company’s bankers. Favourable 

fair value indicates amount receivable by the Company if the contracts are terminated as at 31 August 

2007 or vice versa. 

86 




(e) 

Fair value (Continued) 

(ii) Off balance sheet (Continued) 

Contract or 

notional 

principal Favourable Unfavourable 

amount net fair value net fair value 


Group 

2007 

Cross currency interest rate swap 167.0 0 (5.1) 

Currency option 789.7 0 (11.2) 

Corporate guarantee given to financial institutions 

in respect of facilities granted to subsidiaries 170.8 0 0 

2006 

1,127.5 0 (16.3) 

Interest rate swap 1,266.8 10.5 (17.2) 

Forward start interest rate swap 88.1 0 (1.4) 

Currency option 817.6 0 (4.0) 

Company 

2007 

2,172.5 10.5 (22.6) 

Corporate guarantee given to 

financial institutions in respect of 

facilities granted to subsidiaries 3,894.4 0 (105.6) 

Cross currency interest rate swap 167.0 0 (5.1) 

2006 

4,061.4 0 (110.7) 

Corporate guarantee given to 

financial institutions in respect of 

facilities granted to subsidiaries 5,366.4 0 (254.5) 

Interest rate swap 28.3 0 (0.3) 

Forward start interest rate swap 88.1 0 (1.4) 

5,482.8 0 (256.2) 

87 




44 CHANGES IN ACCOUNTING POLICIES 

The following describes the impact of the new financial reporting standards, amendments and interpretations 

on the financial statements of the Group and the Company. 

(a) 

Irrelevant or immaterial effect on financial statements 

FRS 1 is not relevant to the Group’s and Company’s operations. The adoption of FRS 102, 108, 110, 116, 

121, 127, 128, 131, 132, 133, 140 and the ‘asset ceiling’ amendment to FRS 119 2004 

and Interpretations did 

not have material impact on the financial statements and policies of the Group and the Company. 

(b) 

Reclassification of prior year comparatives 

Set out below are changes in accounting policies that resulted in reclassification of prior year comparatives 

but did not affect the recognition and measurement of the Group’s and Company’s net assets: 

FRS 101 - has affected the presentation of minority interests. In the consolidated balance sheet, minority 

interests are now presented within equity, separately from parent shareholders’ equity. Profit or loss in 

the consolidated income statement as well as total income and expenses for the year recognised directly 

in equity are now allocated between minority interests and equity holders of the parent. The Group’s 

share of results of jointly controlled entity and of associates are now shown net of tax in the consolidated 

income statement. 

FRS 117 - requires leasehold land to be treated as an operating lease. The Group has applied FRS 117 

retrospectively on or after 1 September 2006. Consequently from the adoption of FRS 117, the Group and 

the Company has reclassified the leasehold land as prepaid operating leases instead of property, plant 

and equipment. The prepaid lease rentals are amortised on a straight-line basis over the remaining lease 

period. 

(c) 

FRS 2 – Share-based Payment 

The adoption of FRS 2 has resulted in a change in the accounting policy for share-based payments. In 

previous years, the provision of share options to employees did not result in a charge to the income 

statement. Upon adoption of FRS 2, the Group and the Company recognise the fair value of such share 

options as an expense in the income statement over the vesting period of the grant with a corresponding 

increase in equity (Note 2(x)(iii)). 

Under the transitional provisions of FRS 2, this standard must be applied to share options that were 

granted after 31 December 2004 and had yet to be vested on 1 September 2006. The financial impact to 

the Group and the Company arising from the retrospective application of FRS 2 is not material and hence, 

no restatement of retained profits is performed. 

(d) 

FRS 5 – Non-current Assets Held for Sale and Discontinued Operations 

The adoption of FRS 5 requires a non-current asset or disposal group to be classified as non-current assets 

held for sale if; 

i ) 

its carrying amount will be recovered principally through a sale transaction rather than 

through continuing use 

ii ) the asset or disposal group is available for immediate sale in its present condition 

subject only to terms that are usual and customary for sales of such assets or disposal group and the sale 

is highly probable. 

The Group has applied FRS 5 prospectively on or after 1 September 2006. Consequently from the adoption 

of FRS 5, the Group and the Company has reclassified non-current assets identified for sale from property, 

plant and equipment to non-current assets held for sale. 

88 



44 CHANGES IN ACCOUNTING POLICIES (Continued) 

(e) FRS 3 - Business Combinations 

FRS 136 - Impairment of Assets 

FRS 138 - Intangible Assets 

The adoption of FRS 3, FRS 136 and FRS 138 has resulted in changes in accounting policy for goodwill. 

Goodwill arising on consolidation has to be capitalised and subject to annual impairment test. Impairment 

of goodwill is charged to the income statement as and when it arises and reversal is not allowed. 

(f) Restatement of the financial statements for the financial year ended 31 August 2006 

The following table sets out the material adjustments that have been made in accordance with the 

transitional and new provisions of the respective FRSs to each of the line items in the Group’s and the 

Company’s balance sheet for the financial year ended 31 August 2006. 

Group 

Balance Sheet as at 31 August 2006 

Effect of change in accounting policies 

As previously FRS117 As 

reported Note 44(b) restated 


Property, plant and equipment 55,201.3 (856.8) 54,344.5 

Prepaid operating leases 0 856.8 856.8 

Company 

Balance Sheet as at 31 August 2006 

Property, plant and equipment 44,826.4 (690.2) 44,136.2 

Prepaid operating leases 0 690.2 690.2 

45 SUBSEQUENT EVENTS 

On 9 October 2007, TNB announced that TNB Transmission Network Sdn. Bhd. (‘TNBT’), which is now a dormant 

company, received the Award of the Arbitration, whereby the Arbitrator dismissed TNBT’s claims with cost 

and allowed the counter claims by Irham Niaga Sdn. Bhd. and Irham Niaga Logistics Sdn. Bhd. for the sums of 

RM106,888,499.34 and RM6,102,922.50 respectively, together with simple interest to be calculated at 8% from 

19 April 2004 until the date of Award, and between the Award and the payment for the wrongful repudiation 

of the Tenancy Agreeements. 

TNBT has been advised by its solicitors that there are strong grounds to set aside the Award and accordingly 

instructed its solicitors to file the necessary application to the High Court to set aside the Award. 

46 COMPARATIVE FIGURES 

The amount due to subsidiaries amounting to RM3,829.3 million has been reclassified to non-current, to conform 

with the current year’s accounts presentation. 

47 APPROVAL OF FINANCIAL STATEMENTS 

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors 

on 31 October 2007. 

89 


Statement by Directors Pursuant to 

Section 169 (15) of the Companies Act, 1965 

We, Tan Sri Leo Moggie and Dato’ Sri Che Khalib bin Mohamad Noh, two of the Directors of Tenaga Nasional 

Berhad, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 6 to 89 

are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 

August 2007 and of the results and the cash flows of the Group and of the Company for the financial year ended 

on that date in accordance with the MASB Approved Accounting Standards in Malaysia for Entities Other than 

Private Entities and the provisions of the Companies Act, 1965. 

Signed on behalf of the Board of Directors, in accordance with their resolution dated 31 October 2007. 


CHAIRMAN 


PRESIDENT/CHIEF EXECUTIVE OFFICER 

90 


Statutory Declaration Pursuant to 

Section 169 (16) of the Companies Act, 1965 

I, Dato’ Mohd Izzaddin Idris, the person primarily responsible for the financial management of Tenaga Nasional 

Berhad, do solemnly and sincerely declare that the financial statements set out on pages 6 to 89 are, in my 

opinion, 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. 

DATO’ MOHD IZZADDIN IDRIS 

Subscribed and solemnly declared by the above named Dato’ Mohd Izzaddin Idris at Kuala Lumpur, Malaysia on 

31 October 2007, before me. 

MOHD RADZI BIN YASIN 

COMMISSIONER FOR OATHS 

91 


Auditors’ Report to the Members of 

Tenaga Nasional Berhad (Company no. 200866-W) (Incorporated in Malaysia) 

PricewaterhouseCoopers (AF 1146) 

Chartered Accountants 

Level 10, 1 Sentral 

Jalan Travers, Kuala Lumpur Sentral 

P O Box 10192 


Telephone +60 3 2173 1188 

Facsimile +60 3 2173 1288 

www.pwc.com 

We have audited the financial statements set out on pages 6 to 89. These financial statements are the 

responsibility of the Company’s Directors. It is our responsibility to form an independent opinion, based on our 

audit, on these financial statements and to report our opinion to you, as a body, in accordance with Section 174 

of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for 

the content of this report. 

We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require 

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are 

free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts 

and disclosures in the financial statements. An audit also includes assessing the accounting principles used and 

significant estimates made by the Directors, as well as evaluating the overall financial statements presentation. 

We believe that our audit provides a reasonable basis for our opinion. 

In our opinion: 

(a) the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 

and Financial Reporting Standards, the MASB Approved Accounting Standards in Malaysia for Entities 

Other than Private Entities so as to give a true and fair view of: 

and 

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in 

the financial statements; and 

(ii) the state of affairs of the Group and the Company as at 31 August 2007 and of the 

results and cash flows of the Group and the Company for the financial year ended on that date; 

(b) 

the accounting and other records and the registers required by the Act to be kept by the Company and 

by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the 

provisions of the Act. 

92 


Auditors’ Report to the Members of Tenaga Nasional Berhad (Company no. 200866-W) (Incorporated in Malaysia) (Continued) 

The names of the subsidiaries of which we have not acted as auditors are indicated in Note 16 to the financial 

statements. We have considered the financial statements of these subsidiaries and the auditors’ reports 

thereon. 

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s 

financial statements are in form and content appropriate and proper for the purposes of the preparation of the 

consolidated financial statements and we have received satisfactory information and explanations required by 

us for those purposes. 

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did 

not include any comment made under subsection (3) of Section 174 of the Act. 

PRICEWATERHOUSECOOPERS 

(No. AF: 1146) 

Chartered Accountants 

THAYAPARAN A/L S. SANGARAPILLAI 

(No. 2085/09/08(J)) 

Partner of the firm 

Kuala Lumpur 

31 October 2007 

93 



as at 10 October 2007 

SHARE CAPITAL 

Authorised Share Capital 5,000,000,000 ordinary shares of RM1.00 per share, 

1 (One) Special Rights Redeemable Preference Share of RM1.00 per share, 

1,000 Class A Redeemable Preference Share of RM1.00 per share, 

500 Class B Redeemable Preference Share of RM1.00 per share. 

Issued and Fully Paid-Up 

Share Capital 

Voting Right 

4,332,064,193 ordinary shares of RM1.00 per share, 

1 (One) Special Rights Redeemable Preference Share of RM1.00 per share, 

1,000 Class A Redeemable Preference Share of RM1.00 per share, 

500 Class B Redeemable Preference Share of RM1.00 per share. 

One voting right for one ordinary share 

ANALYSIS OF SHAREHOLDINGS 

No. of 

% of 

Size of No. of % of Ordinary Issued 

Shareholdings Shareholders Shareholders Shares Held Share Capital 

Less Than 100 777 2.55 22,637 0.00 

100 - 1,000 5,602 18.39 4,018,134 0.09 

1,001 - 10,000 21,412 70.28 55,601,926 1.28 

10,001 - 100,000 1,882 6.18 55,326,791 1.28 

100,001 To Less Than 5% of Issued Shares 790 2.59 1,817,716,030 41.96 

5% and above of Issued Shares 3 0.01 2,399,378,675 55.39 

TOTAL 30,466 100.00 4,332,064,193 100.00 

DIRECTORS’ SHAREHOLDINGS 

No. Name of Directors No. of shares 

Direct/Indirect % 

Interest 

1 Tan Sri Leo Moggie 40,000 0.00 

- 40,000 shares held through Cimsec Nominees (Tempatan) Sdn Bhd 

2 Dato’ Sri Che Khalib Bin Mohamad Noh - - 

3 Dato’ Puteh Rukiah Binti Abd Majid - - 

4 Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng - - 

5 Tan Sri Dato’ Hari Narayanan a/l Govindasamy - - 

6 Dato’ Zainal Abidin Bin Putih 1,250 0.00 

7 Datuk Mohd Zaid Bin Ibrahim - - 

8 Datuk Zalekha Binti Hassan - - 

9 Mohammad Zainal Bin Shaari - - 

10 Dato’ Fuad Bin Jaafar 62,500 0.00 

94 


Analysis of Shareholdings (Continued) 

SUBSTANTIAL SHAREHOLDERS 

No. Name of Substantial Shareholders No. of Shares % 

1 KHAZANAH NASIONAL BERHAD 1,631,574,464 37.66 

2 EMPLOYEES PROVIDENT FUND BOARD 478,522,861 11.05 

- 428,939,911 shares held its own name 

- 13,434,400 shares held through SBB Nominees (Tempatan) Sdn Bhd 

- 10,400,000 shares held through Alliancegroup Nominees (Tempatan) Sdn Bhd 

- 5,888,750 shares held through HSBC Nominees (Tempatan) Sdn Bhd 

- 5,225,000 shares held through Cartaban Nominees (Tempatan) Sdn Bhd 

- 4,018,700 shares held through Am Nominees (Tempatan) Sdn Bhd 

- 1,650,000 shares held through Citigroup Nominees (Tempatan) Sdn Bhd 

- 436,100 shares held through Mayban Nominees (Tempatan) Sdn Bhd 

- 4,660,000 shares held through RHB Nominees (Tempatan) Sdn Bhd 

- 3,400,000 shares held through Mayban Nominees (Tempatan) Sdn Bhd 

- 470,000 shares held through Mayban Nominees (Tempatan) Sdn Bhd 

3 SKIM AMANAH SAHAM BUMIPUTERA 338,864,300 7.82 

- 338,864,300 shares held through Amanah Raya Nominees (Tempatan) Sdn Bhd 

30 LARGEST SHAREHOLDERS 

No. Name of Shareholders No. of Shares % 

1 KHAZANAH NASIONAL BERHAD 1,631,574,464 37.66 

2 EMPLOYEES PROVIDENT FUND BOARD 428,939,911 9.90 

3 AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD 338,864,300 7.82 

SKIM AMANAH SAHAM BUMIPUTERA 

4 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) 140,437,300 3.24 

5 LEMBAGA TABUNG HAJI 94,996,375 2.19 

6 CARTABAN NOMINEES (ASING) SDN BHD 87,808,700 2.03 

SSBT FUND NB37 FOR JANUS CONTRARIAN FUND 


AMANAH SAHAM WAWASAN 2020 


AMANAH SAHAM MALAYSIA 

9 VALUECAP SDN BHD 35,813,600 0.83 

10 HSBC NOMINEES (ASING) SDN BHD 35,805,300 0.83 

TNTC FOR SAUDI ARABIAN MONETARY AGENCY 


SSBT FUND RNZX FOR STICHTING PENSIOENFONDS ABP 

12 CITIGROUP NOMINEES (ASING) SDN BHD 32,310,530 0.75 

EXEMPT AN FOR MELLON BANK (MELLON) 


ROYAL BANK OF SCOTLAND AS DEPOSITORY FOR 

FIRST STATE ASIA PACIFIC LEADER FUND (CB LDN) 

95 



as at 10 October 2007 

30 LARGEST SHAREHOLDERS (Continued) 

No. Name of Shareholders No. of Shares % 


BNY BRUSSELS FOR MAGELLAN 


UBS AG FOR PRISM OFFSHORE FUND LTD 

16 CIMSEC NOMINEES (TEMPATAN) SDN BHD 23,451,775 0.54 

SECURITY TRUSTEE (KCW ISSUE 1) 


EXEMPT AN FOR J.P. MORGAN BANK LUXEMBOURG S.A. 

18 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 22,955,175 0.53 

EXEMPT AN FOR PRUDENTIAL ASSURANCE MALAYSIA BERHAD 

19 PERMODALAN NASIONAL BERHAD 22,873,775 0.53 

20 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 20,100,000 0.46 

GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (PAR 1) 


GSI FOR PERRY PARTNERS INTER INC 


MORGAN STANLEY & CO. INTERNATIONAL PLC (FIRM A/C) 


AMANAH SAHAM DIDIK 


EXEMPT AN FOR JPMORGAN CHASE BANK, 

NATIONAL ASSOCIATION (U.K.) 

25 CARTABAN NOMINEES (TEMPATAN) SDN BHD 17,390,900 0.40 

PETROLIAM NASIONAL BERHAD (STRATEGIC INV) 


EXEMPT AN FOR AMERICAN INTERNATIONAL ASSURANCE 

COMPANY LIMITED 


EXEMPT AN FOR MORGAN STANLEY & CO. INTERNATIONAL PLC 


GSCO FOR INDUS ASIA PACIFIC MASTER FUND LTD 


BNY BRUSSELS FOR CG NOUVELLE ASIE 


INVESTORS BANK AND TRUST COMPANY FOR ISHARES, INC. 

Total 3,327,198,370 76.80 

96 


Analysis Of Convertible Redeemable Income Securities 

2004-2009 (“CRIS”) Holdings as at 10 October 2007 

Type of Security : 3.05% 5 year Unsecured Convertible Redeemable Income Securities 2004-2009 

(CRIS) with nominal value of RM1.00 each 

Voting Right : None until upon conversion into Ordinary Shares of RM1.00 each 

STATISTICS ON CONVERTIBLE REDEEMABLE INCOME SECURITIES 2004-2009 (“CRIS”) 

AS AT 10 OCTOBER 2007 

ANALYSIS OF CONVERTIBLE REDEEMABLE INCOME SECURITIES 2004-2009 (“CRIS”) 

Category No.of % of Nominal Value % of 

CRIS Holders CRIS Holders of CRIS (RM) CRIS Issued 

LESS THAN 100 3 3.23 72 0.00 

100 - 1,000 7 7.52 3,970 0.01 

1,001 - 10,000 23 24.73 124,588 0.21 

10,001 - 100,000 24 25.81 1,441,540 2.39 

100,001 TO LESS THAN 5% OF ISSUED SHARES 31 33.33 23,633,100 39.16 

5% AND ABOVE OF ISSUED SHARES 5 5.38 35,137,300 58.23 

Total 93 100.00 60,340,570 100.00 

DIRECTORS’ CRIS HOLDINGS 

No. Name of Directors Nominal Value Of CRIS (RM) 

Direct/Indirect % 

Interest 

1 TAN SRI LEO MOGGIE - - 

2 DATO’ SRI CHE KHALIB BIN MOHAMAD NOH - - 

3 DATO’ PUTEH RUKIAH BINTI ABD MAJID - - 

4 TAN SRI DATO’ LAU YIN PIN @ LAU YEN BENG - - 

5 TAN SRI DATO’ HARI NARAYANAN A/L GOVINDASAMY - - 

6 DATO’ ZAINAL ABIDIN BIN PUTIH - - 

7 DATUK MOHD ZAID BIN IBRAHIM - - 

8 DATUK ZALEKHA BINTI HASSAN - - 

9 MOHAMMAD ZAINAL BIN SHAARI - - 

10 DATO’ FUAD BIN JAAFAR - - 

SUBSTANTIAL CRIS HOLDERS 

No. Name of CRIS Holders Nominal Value of CRIS (RM) % 

1 MAYBAN NOMINEES (TEMPATAN) SDN BHD 10,000,000 16.57 

MALAYSIA NATIONAL INSURANCE BERHAD (LIFE PAR FUND) 


ING INSURANCE BERHAD (INV-IL PAR) 




PUBLIC FAR-EAST BALANCED FUND 


PUBLIC ENHANCED BOND FUND 

97 



2004-2009 (“CRIS”) Holdings as at 10 October 2007 (Continued) 

30 LARGEST CRIS HOLDERS 


1 MAYBAN NOMINEES (TEMPATAN) SDN BHD 10,000,000 16.57 

MALAYSIA NATIONAL INSURANCE BERHAD (LIFE PAR FUND) 


ING INSURANCE BERHAD (INV-IL PAR) 




PUBLIC FAR-EAST BALANCED FUND 


PUBLIC ENHANCED BOND FUND 


KUMPULAN WANG BERSAMA 


PUBLIC GLOBAL BALANCED FUND 


PUBLIC DIVIDEND SELECT FUND 

9 HSBC NOMINEES (TEMPATAN) SDN BHD 1,544,000 2.56 

HSBC (M) TRUSTEE BHD FOR OSK-UOB KIDSAVE TRUST (3621) 

10 MAYBAN TRUSTEES BERHAD 1,510,000 2.50 

STRATEGIC BOND FUND 

11 HSBC NOMINEES (TEMPATAN) SDN BHD 1,218,000 2.02 

HSBC (M) TRUSTEE BHD FOR OSK-UOB INCOME FUND (4314) 

12 AMSEC NOMINEES (TEMPATAN) SDN BHD 1,000,000 1.66 

PLEDGED SECURITIES ACCOUNT FOR TAN KIM KUAN @ TAN KIM CHIN 

13 MAYBAN NOMINEES (TEMPATAN) SDN BHD 980,000 1.62 

MAYBAN TRUSTEES BERHAD FOR INCOME PLUS FUND (N14011980070) 

14 KE-ZAN NOMINEES (ASING) SDN. BHD. 976,000 1.62 

KIM ENG SECURITIES PTE. LTD. FOR CYL INVESTMENTS LIMITED 

15 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD 963,300 1.60 

CIMB-PRINCIPAL ASSET MGMT BHD FOR 

GLOBALE RUCKVERSICHERUNGS-AKTIENGESELLSCHAFT 

16 UNIVERSAL TRUSTEE (MALAYSIA) BERHAD 850,000 1.41 

HLG BOND FUND (L1) 

17 DAYA MAHSURI SDN BHD 800,000 1.33 

18 CIMSEC NOMINEES (TEMPATAN) SDN BHD 800,000 1.33 

CIMB FOR HASRAT JAGUH SDN BHD (PB) 

19 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 687,700 1.14 

ING INSURANCE BERHAD (INV-IL NON-PAR) 


CIMB FOR SIEH KOK SWEE (PB) 

98 



2004-2009 (“CRIS”) Holdings as at 10 October 2007 (Continued) 

30 LARGEST CRIS HOLDERS (Continued) 


21 HLG NOMINEE (TEMPATAN) SDN BHD 505,000 0.84 

HLG ASSET MANAGEMENT SDN BHD FOR 

YAYASAN USAHAWAN BUMIPUTRA (1084) 


CIMB FOR FAIRLY YAP SWEE ENG (PB) 


CIMB FOR CHEONG KEE LAI (PB) 

24 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 450,000 0.75 

OVERSEAS ASSURANCE CORPORATION 

(MALAYSIA) BERHAD (MGF) 

25 HSBC NOMINEES (TEMPATAN) SDN BHD 347,000 0.58 

HSBC (M) TRUSTEE BHD FOR RHB BALANCED FUND (3936) 

26 HLG NOMINEE (TEMPATAN) SDN BHD 338,000 0.56 

HLG ASSET MANAGEMENT SDN BHD FOR 

PERBADANAN BEKALAN AIR PULAU PINANG SDN BHD (2052) 


CIMB FOR TAN KOK HENG (PB) 


CIMB FOR ROSLINA BINTI ABDUL RAHMAN (PB-IU) 

29 MAYBAN NOMINEES (TEMPATAN) SDN BHD 200,000 0.33 

AMANAHRAYA-JMF ASSET MANAGEMENT SDN. BHD. FOR 

AZIAN BINTI AIYUB GHAZALI (C193-240084) 

30 NADIAH PAUT ABDULLAH @ REBECCA PAUT 187,300 0.31 

Total 57,975,600 96.08 

99 



RM 

15 

12 

9 

Sept 

06 

Oct 

06 

Nov 

06 

Dec 

06 

Jan 

06 

Feb 

07 

Mar 

07 

Apr 

07 

May 

07 

Jun 

07 

Jul 

07 

Aug 

07 

TNB MK Equity Px Low 

TNB MK Equity Px Last 

TNB MK Equity Px High 

100 


Property List 

Generation 

Nature of LAND BUILDINGS DESCRIPTION 

Functional Leasehold Freehold Total Total Total No. Built-Up Total 

Activity No.of Area NBV Area NBV 

No.of Area NBV No.of Area NBV Lots (sq M) (RM’000) (sq M) (RM’000) 

Generation Lots (sq M) (RM’000) Lots (sq M) (RM’000) 

(1) (2) (3) (4) (5) (6) (1 +4) (2+5) (3+6) (10) (11) (12) (13) 

Location 

Perlis - - - 2 1,499 52 2 1,499 52 - - - Office Buildings, 

Kedah 2 1,676 28 6 22,280 6,047 8 23,956 6,075 21 2,493 5,856 Stores, Jetties, 

Pulau Pinang 2 163,325 26,972 2 67,726 2,136 4 231,051 29,108 7 10,258 153,973 Power Stations, 

Perak 8 2,933,400 130,751 10 1,684,595 63,916 18 4,617,995 194,667 115 80,378 582,462 Rural 

Selangor 5 16,892,869 125,121 4 514,707 25,451 9 17,407,576 150,572 39 11,688 894,067 Power Stations, 

W.Persekutuan - - - - - - - - - 10 150 7,284 Dams and 

Putrajaya/Cyberjaya - - - - - - - - - Mini Hydros 

N.Sembilan 4 170,812 4,159 1 13,550 1,657 5 184,362 5,816 20 3,257 164,036 

Melaka - - - - - - - - - - - - 

Johor 3 89,012 13,240 2 167,515 13,923 5 256,527 27,163 27 9,850 68,853 

Pahang 47 230,588 243 58 98,742 8,616 105 329,330 8,859 137 2,755 38,127 

Terengganu 45 239,386 16,753 48 28,817 13,938 93 268,203 30,691 90 12,316 457,844 

Kelantan 75 76,498 554 39 56,539 1,348 114 133,037 1,902 94 4,444 861,930 

Sabah 23 5,462,413 6,679 18 4,017,445 5,769 41 9,479,858 12,448 50 11,000 183,350 

Total 214 26,259,979 324,500 190 6,673,415 142,853 404 32,933,394 467,353 610 148,589 3,417,782 

GENERATION 

Electricity is produced through a process of converting other forms of energy into electrical energy. This conversion process is known as generation and is mainly carried out at 

power stations. 

In addition, a number of mini hydro stations and numerous diesel generating sets are operated by TNB. 

Note : NBV - Net Book Value 

101 


Property List 

Transmission 

Nature of LAND BUILDINGS Description 




Transmission Lots (sq M) (RM’000) Lots (sq M) (RM’000) 

(1) (2) (3) (4) (5) (6) (1 +4) (2+5) (3+6) (10) (11) (12) (13) 

Location 

Perlis 4 110,024 1,052 2 15,860 474 6 125,884 1,526 16 3,145 66,056 Main Intake 

Kedah 12 445,892 3,500 180 71,451 2,550 192 517,343 6,050 70 7,694 187,314 Substations 

Pulau Pinang 15 1,311,447 8,296 36 114,908 4,739 51 1,426,355 13,035 41 3,653 158,064 

Perak 10 157,193 1,529 68 26,438 12,396 78 183,631 13,925 53 8,146 250,199 

Selangor 20 257,523 25,006 45 92,713 109,321 65 350,236 134,327 121 13,673 633,244 

W.Persekutuan 10 176,794 11,221 203 79,800 13,543 213 256,594 24,764 45 7,740 324,386 

Putrajaya/Cyberjaya - - - - - - - - - 

N.Sembilan 13 688,904 6,843 12 87,029 4,633 25 775,933 11,476 57 3,836 120,963 

Melaka 6 59,717 4,984 21 20,627 10,804 27 80,344 15,788 49 7,167 81,508 

Johor 30 554,552 22,617 44 64,522 15,136 74 619,074 37,753 133 9,027 715,557 

Pahang 8 86,487 1,261 18 155,835 3,856 26 242,322 5,117 76 2,934 183,539 

Terengganu 5 170,622 3,433 9 - 54 14 170,622 3,487 41 3,544 71,961 

Kelantan 3 95,628 1,876 169 176,029 5,199 172 271,657 7,075 33 5,551 59,007 

Sabah 3 30,904 1,555 1 14,165 134 4 45,069 1,689 15 3,600 31,520 

Total 139 4,145,687 93,173 808 919,377 182,839 947 5,065,064 276,012 750 79,710 2,883,318 

TRANSMISSION 

Transmission activity relates to the process of transmitting electricity generated at power stations to the load centres where it is required, eg. townships, industrial growth centres 

and major customers. 

A network of transmission lines, forming the National Grid is required for this purpose. At appropriate sites, transmission substation are constructed to channel electricity from the 

National Grid to the numerous load centres. The transmission system operates at voltage levels of 500 kV, 275 kV, 132 kV and 66 kV. 


102 


Property List 

Distribution 





Distribution Lots (sq M) (RM’000) Lots (sq M) (RM’000) 

(1) (2) (3) (4) (5) (6) (1 +4) (2+5) (3+6) (10) (11) (12) (13) 

Location 

Perlis 37 16,378 795 42 71,964 880 79 88,342 1,675 52 1,200 4,919 Distribution 

Kedah 159 296,580 5,491 307 510,601 32,586 466 807,181 38,077 214 46,250 40,171 Substations 

Pulau Pinang 106 71,696 4,777 364 131,413 24,271 470 203,109 29,048 175 12,880 25,075 

Perak 538 563,012 10,162 227 528,843 9,755 765 1,091,855 19,917 356 12,617 48,206 

Selangor 398 201,800 39,193 544 481,128 83,376 942 682,928 122,569 790 121,096 142,658 

W.Persekutuan 176 122,882 45,030 157 122,976 21,127 333 245,858 66,157 291 16,603 328,296 

Putrajaya/Cyberjaya - - 71 2 - 676 2 - 747 14 - 28,536 

N.Sembilan 246 108,319 2,909 136 40,689 2,369 382 149,008 5,278 123 6,872 6,371 

Melaka 197 80,639 4,606 210 67,646 24,825 407 148,285 29,431 156 6,136 6,217 

Johor 588 464,188 19,161 625 388,894 44,982 1,213 853,082 64,143 465 19,774 41,554 

Pahang 204 157,472 7,591 175 94,830 173 379 252,302 7,764 152 9,801 29,419 

Terengganu 188 638,856 3,373 55 41,337 1,571 243 680,193 4,944 119 4,508 18,278 

Kelantan 175 493,617 3,689 176 236,271 6,601 351 729,888 10,290 139 67,062 10,305 

Sabah 51 637,841 3,572 37 173,243 1,881 88 811,084 5,453 318 84,500 28,188 

Total 3,063 3,853,280 150,420 3,057 2,889,835 255,073 6,120 6,743,115 405,493 3,364 409,299 758,193 

DISTRIBUTION 

The distribution process begins at the termination of the transmission line where distribution substations step down voltage to enable electricity to be distributed to TNB’s 

customers. 

The distribution system consists of distribution substations, overhead lines and underground cables operating at voltage levels of 33 kV and below. 


103 


Property List 

Residential & Others 


Functional Leasehold Freehold Total Total No. Built-Up Total 

Activity Total Area NBV Area NBV 

No.of Area NBV No.of Area NBV No.of (sq M) (RM’000) (sq M) (RM’000) 

Residential and Lots (sq M) (RM’000) Lots (sq M) (RM’000) Lots 

others (1) (2) (3) (4) (5) (6) (1 +4) (2+5) (3+6) (10) (11) (12) (13) 

Location 

Perlis 1 1,037 329 6 50,816 1,987 7 51,853 2,316 13 6,151 6,295 Residential 

Kedah 5 43,983 2,543 29 259,202 22,711 34 303,185 25,254 42 39,168 25,309 Houses, 

Pulau Pinang 8 26,829 5,405 23 256,968 28,168 31 283,797 33,573 54 13,628 139,133 Apartments, 

Perak 37 78,110 3,124 53 1,074,710 28,544 90 1,152,820 31,668 115 134,749 65,419 Holiday 

Selangor 36 33,009,908 161,887 49 1,764,430 137,897 85 34,774,338 299,784 331 80,974 1,044,809 Bungolows, 

W.Persekutuan 3 18,757 7,189 11 79,918 74,101 14 98,675 81,290 123 136,326 148,031 Office Buildings, 

Putrajaya/Cyberjaya - - - - - - - - - Main Store and 

N.Sembilan 10 113,329 2,055 28 359,906 29,597 38 473,235 31,652 71 132,894 60,948 Warehouse 

Melaka 4 99,097 8,549 20 142,288 9,582 24 241,385 18,131 31 28,635 19,437 

Johor 23 384,439 36,860 49 773,793 22,953 72 1,158,232 59,813 119 76,373 67,709 

Pahang 23 760,444 15,938 24 67,598 7,332 47 828,042 23,270 183 76,822 158,834 

Terengganu 25 3,306,420 30,026 4 1,922 2,362 29 3,308,342 32,388 53 47,434 92,567 

Kelantan 11 229,863 7,463 22 87,845 5,822 33 317,708 13,285 54 322,636 60,197 

Sabah 5 122,369 3,177 2 59,490 10,043 7 181,859 13,220 12 33,500 19,435 

Pakistan - - - 1 856,207 2,940 1 856,207 2,940 3 12,713 1,999 

Kalimantan* - - - 1 578,317 2,782 1 578,317 2,782 - - 565 

Total 191 38,194,585 284,545 322 6,413,410 386,821 513 44,607,995 671,366 1,204 1,142,003 1,910,687 

RESIDENTIAL AND OTHERS 

‘Residential Property’ includes staff quarters, holiday bungalows and apartments. “Others” include office buildings, main store and warehouse. 

*Land Acquired for holding overburden soil during coal mining. 


104 


Glossary 

5S : 5S Initiatives 

AAIBE : Akaun Amanah Industri Bekalan Elektrik 

ACP : Average Collection Period 

AKP : Anugerah Kualiti Presiden TNB 

BTU : British Thermal Units 

CAR : Central Area Reinforced Project 

CMC : Call Management Centre 

CRM : Customer Relationship Management 

CSR : Corporate Social Responsibility 

DPMS : Distribution Project Monitoring System 

DSM : Demand Side Management 

EDMS : Electronic Document Management System 

EMF : Electronic Magnetic Field 

EVA : Economic Value Added 

FY : Financial Year 

GIS : Gas Insulated Switchgear 

GLC : Government Linked Companies 

GWh : 1,000,000 kWh 

ICT : Information, Communication and Technology 

IFM : Integrated Fleet Management 

ILSAS : Institut Sultan Ahmad Shah 

IPPs : Independent Power Producers 

IWPP : Independent Water and Power Project 

kV : Kilovolt 

kVA : Kilovolt Ampere 

kW : Kilowatt (measure of capacity) 

kWh : Kilowatt Hour (unit of electricity) 

LOA : Limit of Authority 

MW : Megawatts 

MVA : Mega Volt Ampere 

OCGT : Open Cycle Gas Turbine 

PPA : Power Purchase Agreement 

PQ : Power Quality 

PRIME : Special programme for TNB 1000 customers 

PSI : Process Standardisation and Improvement 

R & D : Research and Development 

RCM : Reliability Centred Maintenance 

SAIDI : System Average Interruption Index 

SAIFI : System Average Interruption Frequency Index 

SAR : System Average Restoration Index 

SCADA : Supervisory Control and Data Acquisition 

SE 10/10 : Service Excellence Year 2010 

SEMS : Safety Excellence Management System 

SLA : Service Level Agreement 

T7 : Strategy T7 

TNB : Tenaga Nasional Berhad 

UOR : Unplanned Outage Rate 

WIT : Work Improvement Team 

105 


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Proxy 

Form 

Number of Ordinary Share(s) held 

CDS Account No.: 

I/We, ___________________________________________________________ NRIC No./Passport No./Co.No.__________________________________ 

(FULL NAME IN CAPITAL) 

of ________________________________________________________________________being a Member/Members of Tenaga Nasional Berhad, 

(ADDRESS) 

hereby appoint__________________________________________________ NRIC No./Passport No./Co.No.__________________________________ 


of ___________________________________________________________________________________________________________________________ 

(ADDRESS) 

and/or failing him/her ___________________________________________ NRIC No./Passport No./Co.No__________________________________ 


of____________________________________________________________________________________________________________________________ 

(ADDRESS) 

Or failing him/her, the Chairman of the Meeting, as my/our proxy, to vote for me/us, and on my/our behalf at THE SEVENTEENTH ANNUAL 

GENERAL MEETING of TENAGA NASIONAL BERHAD to be held at Dewan Serbaguna, Kompleks Sukan TNB, Jalan Pantai Baru, 59200 

Kuala Lumpur on Thursday, 13 December 2007, at 10.00 am and/or at any adjournment thereof. 

My/Our proxy is to vote as indicate below: 

FOR 

AGAINST 

1. RESOLUTION 1 To receive the Directors’ Report and Audited Financial Statements for the Financial Year 

ended 31 August 2007 

2. RESOLUTION 2 Declaration of Dividend 

3. RESOLUTION 3 Payment of Directors’ Fees 

4. RESOLUTION 4 Re-election of Dato’ Sri Che Khalib bin Mohamad Noh 

5. RESOLUTION 5 Re-election of Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng 

6. RESOLUTION 6 Re-election of Dato’ Fuad bin Jaafar 

7. RESOLUTION 7 Re-election of Mohammad Zainal bin Shaari 

8. RESOLUTION 8 Re-appointment of Messrs PricewaterhouseCoopers as the Company’s Auditors 

SPECIAL BUSINESS 

9. RESOLUTION 9 Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transaction 

(RRPT) of a Revenue or Trading Nature Entered With Persons Connected to a Major 

Shareholder 

10 RESOLUTION 10 Proposed Shareholders’ Mandate for RRPT of a Revenue or Trading Nature Entered With 

Persons Connected to a Director and a Major Shareholder 

11. RESOLUTION 11 Issuance of Shares Pursuant to Employees’ Share Option Scheme II (ESOS II) 

12. RESOLUTION 12 Issuance of New Shares Pursuant to Section 132D, Companies Act, 1965 

13. SPECIAL RESOLUTION 1 Proposed Amendments to the Company’s Articles of Association 

(Please indicate “X” in the appropriate box against each Resolution as to how you wish your proxy/proxies to vote. If no voting 

instruction is given, this form will be taken to authorise the proxy/proxies to vote at his/her discretion). 

Dated: ______________ December 2007 

____________________________________ 

Signature of Shareholder(s) or Common Seal 

NOTES:- 

1. Any member entitled to attend and vote at this Meeting of the Company is entitled to appoint a proxy to attend and vote in his stead. A proxy need 

not be a member of the Company. 

2. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly appointed under a power of attorney. 

Where the instrument appointing a proxy/proxies is executed by a corporation, it shall be executed either under its common seal or under the hand of 

any officer or attorney duly appointed under a power of attorney. 

3. Pursuant to Article 105(4) of the Company’s Articles of Association, a member is entitled to appoint not more than two proxies, and where a member 

appoints two proxies, the appointment shall be invalid unless the percentage of the holding to be represented by each proxy is specified. 

4. A corporation which is a member, may by resolution of its Directors or other governing body authorise such person as it thinks fit to act as its representative 

at the Meeting, in accordance with Article 107(6) of the Company’s Articles of Association. 

5. The instrument appointing a proxy/proxies must be deposited at Symphony Share Registrars Sdn. Bhd., Level 26, Menara Multi-Purpose, Capital Square, 

No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than forty-eight (48) hours before the time set for the Meeting.

Symphony Share Registrars Sdn. Bhd. 

Level 26, Menara Multi-Purpose 

Capital Square 

No.8, Jalan Munshi Abdullah 

50100 Kuala Lumpur 

Stamp

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