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INVESTOR PRESENTATION 01 INTRODUCTION TO TENAGA 02 REGULATORY TABLE OF CONTENT 03 BUSINESS STRATEGY & DIRECTION 04 CAPITAL MANAGEMENT 05 FINANCIAL & TECHNICAL HIGHLIGHTS INTRODUCTION TO TENAGA Sabah Electricity Sdn Bhd (SESB) (83% owned by TNB) Dependable Capacity: 1,257MW MALAYSIA Tenaga Nasional Bhd (TNB) Sarawak Energy Bhd (SEB) Holds ‘Golden’ PRIME MINISTER / CABINET Share Ministry of Finance/ Policy Maker Khazanah Nasional Berhad MINISTRY of ENERGY, TECHNOLOGY, SCIENCE, CLIMATE CHANGE AND i. EPF ENVIRONMENT (MESTECC) ii. PNB iii. Other Govt. Agencies Implementor Other Corp. & ENERGY COMMISSION (Regulator) Public - Promote competition - Protect interests of consumers Foreign - Issue licenses - Tariff regulation Shareholders Market participant Tenaga Nasional Berhad IPPs Regulatory & Shareholding Structure & Shareholding Regulatory Consumers 33 INTRODUCTION TO TENAGA Distribution Network & Generation Grid/Transmission Customer Service Non-Regulated Business Regulated Business TNB Generation Mix: Installed Capacity: Distribution Network Length: 25,196MW Transmission Network Length: 660,038KM Oil & Distillate 0.01% TNB: 14,038MW @ 55.7% IPP: 11,158MW @ 44.3% 23,082KM Solar 0.2% Distribution Substations: Generation Market Share: Hydro 5.1% 81,327 51.2% Transmission Substations: Core Core Business 443 SAIDI: Gas & LNG 37.8% Equivalent Availability Factor 39.2mins (EAF): Transmission System Minutes: 87.7% Customer Satisfaction Index (CSI): Coal 56.9% 0.27 mins Note: TNB installed capacity & Market Share 8.1 are based on gross capacity Source: TNB Data / Info as at September 2019 Main Subsidiaries Non-Regulated Business Operation &Maintenance (O&M) Renewables, Energy Efficiency & Other Services Education & Research • TNB Repair & Maintenance Sdn. Bhd. (REMACO) • TNB Renewables Sdn. Bhd. • TNB Integrated Learning Solution Sdn. Bhd. • GSPARX Sdn. Bhd. (ILSAS) Manufacturing • TNB Energy Services Sdn. Bhd. • TNB Research • TNB Engineering Corporation Sdn. Bhd. • University Tenaga Nasional (UNITEN) Non-Core Business Non-Core • Tenaga Switchgear Sdn. Bhd. • Integrax Bhd. • Malaysia Transformer Manufacturing Sdn Bhd. • Allo Technology Sdn. Bhd. • Tenaga Cables Industries Sdn. Bhd. 44 INTRODUCTION TO TENAGA Expanding Global Footprint To Achieve Aspiration – TNB is currently present in more than 5 countries • 50% equity ownership in Vortex Solar Investments S.à.r.l United (May 2017) Kingdom • 80% equity ownership in Operational Onshore Wind United Portfolio in UK (Feb 2018) Kingdom Turkey • 30% equity ownership in GAMA Enerji A.Ș. (Apr 2016) Turkey Pakistan • 20% equity ownership in a Malaysian Shoaiba Consortium Kuwait Saudi Arabia Sdn Bhd (Aug 2005) India • REMACO O&M Services for Shuaibah IWPP (Jan 2010) Saudi Arabia • REMACO O&M for 225MW Sabiya Power Generation & Water Distillation Plant (July 2014) Kuwait • REMACO O&M for Shuaiba North Co-Gen 780MW Power; 204,000 m3/day water (Sept 2013) • REMACO O&M for 210MW Doha West Power Generation & Water Distillation Plant (Nov 2016) • Liberty Power Ltd 235MW (Sept 2001) TNB’S FOCUS ON INTERNATIONAL Pakistan • REMACO O&M Services - Bong Hydro Plant (May 2011) • REMACO O&M Services - Balloki Power Plan (July 2018) EXPANSION India • 30% equity ownership in GMR Energy Ltd (Nov 2016) AND INVESTMENT IN THERMAL & • Convertible debenture in Bajoli Holi RENEWABLE ENERGY 55 INTRODUCTION TO TENAGA TNB Sectoral Sales Analysis* Total Unit Sold 92,832 GWH 0.8% 1.6% 2.1% 20.0% Total 23.6% Assets RM181.5bn 81.7% 40.9% 34.6% Total TNB: 9.2mn Customers SESB: 0.6 mn Total 37.4% 39.7% Employees 36,293 17.2% 0.3% NO OF CUSTOMER SALES (RM) SALES (GWH) Industrial Commercial Domestic Others Note: Data / Info as at 9MFY19 (September 2019) * Peninsular Malaysia only (TNB exclude SESB and other subsidiaries) 66 INTRODUCTION TO TENAGA Steady Electricity Demand in line with GDP Growth GDP & TNB (Peninsula) Demand Growth TNB (Peninsula) Yearly Peak Demand by Financial Year MW % 18,566 18,338 6.0 5.9 5.5 17,790 5.3 17,788 Recorded at: 4.7 5.0 4.7 4.2 4.6 18 Apr’19 at 1430hrs 16,901 16,822 4.3 16,562 3.8 1 3.2 3.2 3.1 15,826 2.5 2.5 2.5 2.2 15,476 FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 9MFY'19 FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 9MFY'19 Demand Growth GDP 1 Average demand growth for FY2016 & FY2017. This is to eliminate the one-off El-Nino phenomenon during 3QFY’16 Note: i. Data / Info as at 9MFY19 (September 2019) ii. Peninsular Malaysia only (TNB exclude SESB and other subsidiaries) 77 INTRODUCTION TO TENAGA Stable Y-o-Y Growth for All Sectors (GWh) Industrial Commercial Y-o-Y 0.6% 3Q main contributors for the drop : Y-o-Y 3.2% • Iron & steel 2.2% 2.6% (2.8%) • Electric & Electronic 4.2% 2.9% 2.4% • Utility Electrical (consistent with the drop in IPI Manufacturing ) 9,769 11,359 9,373 10,078 9,963 9,851 11,118 11,736 11,786 11,800 10,375 10,200 12,037 11,458 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Unit Sales Growth 2018 Y-o-Y Domestic Others* *includes Agriculture, 2019 Q-o-Q Mining & Public Lighting Y-o-Y 7.6% Y-o-Y 8.8% 11.1% 6.5% 5.6% 17.1% 3.4% 6.1% 6,036 6,707 6,632 7,060 6,602 6,973 6,253 543 636 559 578 565 600 575 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Note: Data / Info as at 9MFY19 (September 2019) 8 * Peninsular Malaysia only (TNB exclude SESB and other subsidiaries) 8 INTRODUCTION TO TENAGA TNB Shareholding Top 10 KLCI Stocks by Shareholding as at Sep’19 Market Capitalization as at 25 Nov’19 RM bil Khazanah Nasional Berhad Total Govt. Agencies 17.3 66.2% Maybank 97.1 Permodalan Nasional 15.1 (0.5%) Berhad TNB 77.2 Employees Provident Fund Sep’19 : RM77.6bil Board 6.5 (ranked 3rd) (%) Public Bank 77.1 Other Government 27.3 Agencies 14.8 Local Corporation & Retail Petronas Chemicals 56.9 19.0 Foreign Shareholding CIMB Group 53.3 IHH Healthcare 47.7 Pacific, Africa, 0.2% 0.1% Foreign Shareholding (%) Maxis 41.5 Europe, Asia, 25.7% 30.0% Axiata Group 40.0 North America, 44.0% MISC 37.1 Hong Leong Bank 36.3 Institutional: 18.95% 22.8 28.3 24.4 24.1 20.8 20.2 19.7 19.1 19.5 18.8 18.9 18.7 19.0 Individual: 0.02% Aug'15 Aug'16 Aug'17 Dec'17 Dec'18 Jan'19 Feb'19 Mar'19 May'19 Jun'19 Jul'19 Aug'19 Sep'19 99 INTRODUCTION TO TENAGA Composition of BOD CHAIRMAN EXECUTIVE DIRECTOR / CEO TAN SRI LEO MOGGIE DATUK SERI AMIR HAMZAH BIN AZIZAN Independent Non-Executive Directors (Total = 5) Non-Independent Non-Executive Directors (Total =3) NORAINI BINTI CHE DAN GEE SIEW YOONG ONG AI LIN DATUK AHMAD BADRI BIN AMRAN HAFIZ BIN AFFIFUDIN Expertise: Audit & Finance Expertise: Audit & Finance Expertise: Audit & Finance MOHD ZAHIR (Khazanah) (MoF) GOPALA KRISHNAN A/L K.SUNDARAM JUNIWATI BINTI RAHMAT HUSSIN Expertise: Law Expertise: Project Management, Corporate DATO' ROSLINA BINTI ZAINAL Planning and Human Resource 1010 01 INTRODUCTION TO TENAGA 02 REGULATORY TABLE OF CONTENT 03 BUSINESS STRATEGY & DIRECTION 04 CAPITAL MANAGEMENT 05 FINANCIAL & TECHNICAL HIGHLIGHTS REGULATORY INCENTIVE BASED REGULATION (IBR) A Mechanisms For Tariff Setting With Incentives To Improve Efficiency & Greater Transparency Non – Regulated Regulatory Environment: (competitive bidding environment) 1. Clear and Transparent Regulatory Framework Clear and transparent regulatory framework governed by the Energy Commission provides investors with confidence in TNB’s cash flow visibility 2. Consistent and Clear Returns Regulatory WACC of 7.3% provides consistent and clear return to debt and equity holders 3. Shield against Uncontrollable Swings Imbalance Cost Pass-Through mechanism shields Tenaga against uncontrollable swings in input costs, with a review every 6 months 4. Incentives for Operational Efficiencies Incentive / Penalty mechanism provides clear incentives for TNB to achieve operational efficiencies Regulated Source: Energy Commission (EC) 1212 REGULATORY INCENTIVE BASED REGULATION (IBR) Imbalance Cost Pass-Through (ICPT) Mechanisms Ensures TNB Remain Neutral Base Tariff under IBR framework comprises of: a) Opex, Depreciation of Regulated Assets & Tax Expenses of Business Entities - transmission, grid system operation, Single Buyer operation, distribution network and customer services b) Power purchase cost charged by generators to the Single Buyer Base Tariff: (based on fuel forecast base price) RP1 - 38.53 sen/kWh RP2 – 39.45 sen/kWh c) Return on regulated assets (rate base) of Business Entities . Reviewed every 3 years 39.45 Imbalance Cost Pass-Through (ICPT): a) ICPT is 6-monthly pass-through of variations in uncontrollable fuel costs and other generation specific costs (imbalance cost) incurred by utility for the preceding 6-month period . Reviewed every 6 months Principle for ICPT Calculation Cost components comprise of • The ICPT is calculated based on an estimated actual fuel cost and generation specific costs for a particular six (6) months period against the corresponding baseline costs in the Base Tariff. Source: Energy Commission (EC) 1313 REGULATORY INCENTIVE BASED REGULATION (IBR) Imbalance Cost Pass-Through (ICPT) Comprises Two Components Imbalance Cost Pass-through (ICPT) Fuel Cost Pass Through (FCPT) Generation Specific Cost Adjustment (GSCPT) Changes in Gas/LNG and Coal Costs Changes in: PPAs Power Purchase Agreements • Other fuel costs such as distillate and oil SLAs Service Level Agreements • All costs incurred by SB under the power procurement CSTA Coal Supply and Transportation Agreement agreements (PPAs, SLAs and etc.) and fuel procurement CPC Coal Purchase Contract agreements (CSTA, CPC, GFA Gas Framework Agreement • Renewable energy FiT displaced cost GSA Gas Supply Agreement RP2 ICPT Surcharge Period Jan –Jun’18 1.35sen/kWh Jul –Dec’18 Jul–Dec’18 2.15sen/kWh Jan –Jun’19 Jan–Jun’19 2.55sen/kWh Jul –Dec’19 Jul–Dec’19 2.00sen/kWh Jan –Jun’20 Source: Energy Commission, company presentations, company fillings 1414 REGULATORY INCENTIVE BASED REGULATION (IBR) New Features in Electricity Tariff Review for RP2 (2018-2020) * Source: Energy Commission (EC) 1515 REGULATORY INCENTIVE BASED REGULATION (IBR) IBR Entities 1 1 In RP1, these 2 entity are grouped as Price –Cap entity Source: Energy Commission (EC) 1616 REGULATORY INCENTIVE BASED REGULATION (IBR) New Base Tariff Under IBR Mechanism RP2 Variance RP1 Average Tariff by Entities (sen/kwh) Entities (RP2 v.