Annual Report 2013
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ANNUAL 2013 REPORT ANNUAL Annual Report 2013 Tenaga Nasional Berhad 200866-W ENERGY INCORPORATED OUR VISION TO BE AMONG THE LEADING CORPORATIONS IN ENERGY AND RELATED BUSINESSES GLOBALLY OUR MISSION WE ARE COMMITTED TO EXCELLENCE IN OUR PRODUCTS AND SERVICES WHAT IS ENERGY INCORPORATED? Energy is the driving force behind the better, brighter world in which we wholeheartedly believe, It powers our passion, inspires our ideas and pushes us ever onwards, no matter the challenges we face. For ultimately, we know that the outcome of energy precisely channelled and well spent will prove, in all aspects, a positive charge in the lives off all it touches. And that alone, makes our every endeavour well worth the effort we take. FACTS AT A GLANCE NO. OF EMPLOYS MORE THAN EMPLOYEES 34,900 PEOPLE GROUP-WIDE ASSETS ALMOST FIGURE RM99 BILLION IN ASSETS CUSTOMER AN ESTIMATED BASE 8.4 MILLION CUSTOMERS IN PENINSULAR MALAYSIA, SABAH AND LABUAN SAIDI 64.63 MINUTES SYSTEM AVERAGE INTERRUPTION DURATION INDEX (SAIDI) PER CUSTOMER PER YEAR INSTALLED TOTAL INSTALLED CAPACITY OF CAPACITY 9,041 MW COMPRISING 7,130MW THERMAL PLANTS AND 1,911MW HYDRO PLANTS REVENUE GROWTH 3.6 % ( SALES OF ELECTRICITY: PENINSULA AT 4.4%, SESB AT 7.3% ) Contents CORPORATE FRAMEWORK 4 Notice of the 23rd Annual General Meeting 38 About Us 8 Statement Accompanying Notice of the 40 Corporate Information 23rd Annual General Meeting 42 Group Corporate Structure 9 Financial Calendar 44 Organisational Structure 10 Investor Relations 45 Awards & Recognition 16 Chairman’s Letter to Shareholders 48 Key Past Awards 22 President/CEO’s Review 50 Media Highlights 32 Key Highlights 52 Calendar of Events 33 Key Financial Highlights 58 Milestones from 1949 34 Five-Year Group Financial Summary 35 Five-Year Group Growth Summary Chairman’s President/ Letter to CEO’s 16Shareholders 22 Review PERFORMANCE REVIEW 68 Simplified Group Statement of Financial Position 69 Group Quarterly Financial Performance 70 Statement of Value Added 71 Distribution of Value Added 72 FY2013 Core Revenue 73 Operational Statistics 74 Group Financial Review LEADERSHIP KEY INITIATIVES 78 Board of Directors 200 Towards Greater Innovation 80 Profile of Directors 204 Enabling People for 90 Group Executive Council Committee – GECC Business Expansion Development 90 Energy Supply Committee – ESC 208 Occupational Safety and Health 92 Group Executive Management 210 Commitment to Environment Committee – GEMC 214 Corporate Responsibility 94 Profile of Management Team FINANCIAL STATEMENTS ACCOUNTABILITY 222 Financial Statements 102 Statement of Corporate Governance 120 Statement on Risk Management and Internal Control 126 Board Risk Committee Report 129 Board Audit Committee Report 132 Statement on Internal Audit Function 134 Terms of Reference of The Board Audit Committee Core Non-Core 141 Businesses 163 Businesses OPERATIONS REVIEW OTHER INFORMATION 141 Core Businesses 384 Analysis of Shareholdings 142 Generation 387 Net Book Value of Land & Buildings 148 Transmission 388 Group Directory 152 Distribution • Proxy Form 163 Non-Core Businesses 164 New Business & Major Projects 172 Group Finance 174 Planning 178 Corporate Affairs & Services 182 Procurement Other Services 186 Sabah Electricity Sdn. Bhd. 197 National Grid Energy Incorporated NOTICE OF THE 23RD ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT THE TWENTY-THIRD ANNUAL GENERAL MEETING (“23RD AGM”) OF TENAGA NASIONAL BERHAD WILL BE HELD ON THURSDAY, 19 DECEMBER 2013, AT 10.00 A.M. AT DEWAN SERBAGUNA, KOMPLEKS SUKAN TNB, JALAN PANTAI BARU, 59200 KUALA LUMPUR TO TRANSACT THE FOLLOWING BUSINESSES: AGENDA AS ORDINARY BUSINESS: 5. To re-appoint the following Directors who retire in accordance with Section 129(6) of the Companies 1. To receive the Audited Financial Statements for the Act, 1965 (“Act”) to hold office until the conclusion of Financial Year ended 31 August 2013 together with the the next Annual General Meeting (“AGM”): Reports of the Directors and Auditors thereon. Please refer to Note (i) of the Explanatory Notes on (i) Tan Sri Leo Moggie; Ordinary Resolution 6 Ordinary Businesses (ii) Tan Sri Dato’ Seri Siti Norma binti Yaakob. Ordinary Resolution 7 2. To approve the declaration of a final single-tier dividend of 15.0 sen per ordinary share for the Financial Year 6. To re-appoint Messrs PricewaterhouseCoopers, having ended 31 August 2013. Ordinary Resolution 1 consented to act, as Auditors of the Company, to hold office until the conclusion of the next AGM and to 3. To approve the following Directors’ Fees: authorise the Directors to fix their remuneration. (i) Increase in Directors’ Fees amounting to Ordinary Resolution 8 RM180,000.00 per annum for the Non-Executive Chairman and RM120,000.00 per annum for the Non-Executive Director with effect from AS SPECIAL BUSINESS: 1 January 2013; Ordinary Resolution 2 To consider and if thought fit, to pass the following (ii) Payment of Directors’ fees of RM1,900,000.00 for Resolutions: the Financial Year ended 31 August 2013. 7. Proposed Continuation in Office as Independent Non- Ordinary Resolution 3 Executive Director in accordance with Recommendation 3.3 of the Malaysian Code on Corporate Governance 4. To re-elect the following Directors who retire in 2012: accordance with Article 135 of the Company’s Articles of Association: “THAT Dato’ Zainal Abidin bin Putih who has served as (i) Datuk Nozirah binti Bahari; Ordinary Resolution 4 an Independent Non-Executive Director of the Company (ii) Datuk Chung Hon Cheong. Ordinary Resolution 5 for a cumulative term of more than nine (9) years, be and is hereby authorised to continue to act as an Independent Non-Executive Director of the Company Tan Sri Dato’ Hari Narayanan a/l Govindasamy who and to hold office until the conclusion of the next AGM retires pursuant to Article 135 of the Company’s Articles of the Company”. Ordinary Resolution 9 of Association, has expressed his intention not to seek re-election. Hence he will retain office until the conclusion of the 23rd AGM of the Company. 4 TENAGA NASIONAL BERHAD (200866-W) 8. Proposed renewal of authority for the purchase by the “AND THAT the Board be and is hereby authorised to Company of its own shares. take such steps to give full effect to the Proposed Share Buy-Back with full power to assent to any “THAT subject to compliance with the Act, the conditions, modifications, variations and/or Company’s Memorandum and Articles of Association, amendments as may be imposed by the relevant the Main Market Listing Requirements of Bursa Malaysia authorities and/or to do all such acts and things as Securities Berhad (“MMLR”) and all other applicable the Board may deem fit and expedient in the best laws, guidelines, rules and regulations for the time interest of the Company”. Ordinary Resolution 10 being in force or as may be amended from time to time, and the approvals from all relevant authorities, 9. To transact any other business of which due notice the Company be and is hereby authorised to purchase shall have been given in accordance with the Act. such amount of ordinary shares of RM1.00 each in the Company’s issued and paid-up share capital through FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of Bursa Malaysia Securities Berhad (“BMSB”) upon such determining a member who shall be entitled to attend this terms and conditions as the Directors of the Company 23rd AGM, the Company shall be requesting Bursa Malaysia (“Board”) may deem fit and expedient in the interest Depository Sdn. Bhd. (“Bursa Depository”) in accordance of the Company provided that: with Article 87(B)(1) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central (i) the aggregate number of shares purchased Depositories) Act 1991 (“SICDA”) to issue a General Meeting pursuant to this resolution shall not exceed 10% of Record of Depositors (“ROD”) as at 12 December 2013. Only the total issued and paid-up share capital of the a depositor whose name appears on the ROD as at Company (“Proposed Share Buy-Back”); 12 December 2013 shall be entitled to attend the said meeting or appoint proxy/proxies to attend and/or vote on (ii) the maximum amount of funds to be utilised for his/her behalf. the purpose of the Proposed Share Buy-Back shall not exceed the Company’s aggregate retained profits and/or share premium account at the time NOTICE ON ENTITLEMENT AND PAYMENT OF FINAL of purchase be allocated by the Company for the DIVIDEND Proposed Share Buy-Back; NOTICE IS ALSO HEREBY GIVEN THAT subject to the (iii) the authority conferred by this resolution shall approval of Members at the 23rd AGM to be held on commence immediately upon the passing of this 19 December 2013, a final single-tier dividend of 15.0 sen resolution and shall continue to be in force until: per ordinary share for the Financial Year ended 31 August (a) the conclusion of the next AGM of the 2013 will be paid on 31 December 2013 to Depositors Company at which time the authority shall whose names appear in the ROD on 20 December 2013. lapse unless by an ordinary resolution passed by the shareholders of the Company in a FURTHER NOTICE IS HEREBY GIVEN THAT a Depositor shall general meeting, the authority is renewed qualify for entitlement to the dividend only in respect of: either unconditionally or subject to conditions; (i) shares transferred into the Depositor’s securities (b) the expiry of the period within which the next account before 4.00 p.m. on 20 December 2013 in AGM of the Company is required by law to respect of ordinary transfers; and be held; (ii) shares bought on BMSB on a cum entitlement basis (c) the authority is revoked or varied by an according to the Rules of the BMSB.