ENERGISING A SUSTAINABLE TOMORROW INTEGRATED ANNUAL REPORT 2020 ABOUT THIS REPORT Inside WE ARE TNB 05 Thank You From The Board - Statement of Value Added 06 We Are TNB - Distribution of Value Added 07 Our Investment Case - Core Revenue - Financial Highlights - Our Credit Ratings This - Group Quarterly Financial Performance - Our Shareholding Structure - Six-Year Group Financial Summary - Generation Fuel Mix - Six-Year Group Growth Summary - Our Scorecard - Simplified Group Statement of 16 Our Structure Report Financial Position 18 Our International Footprint FROM OUR LEADERSHIP 22 Chairman’s Letter to Shareholders 26 President/Chief Executive Officer’s Review CREATING CONTINUED VALUE 34 The Market Landscape Mapping Our Performance 36 Our Value Creation Model Against the Capitals 46 Financial Capital Achieving Our Strategic Ambitions 48 Manufactured Capital 38 Future Generation Sources 50 Natural Capital 40 Grid of The Future 52 Intellectual Capital 42 Winning The Customer 54 Human Capital 44 Future Proof Regulations 56 Social and Relationship Capital CREATING VALUE THROUGH STRONG GOVERNANCE 59 Our Board at a Glance 103 Principle B: Effective Audit and Risk 60 Board of Directors’ Profile Management 72 Company Secretary’s Profile 111 Principle C: Integrity in Corporate 73 Organisational Structure Reporting and Meaningful Relationship 74 Senior Management Profile with Stakeholders 82 Chairman’s Introduction to Corporate 118 Statement on Risk Management and Governance Internal Control Cover Rationale 83 Principle A: Board Leadership and 123 Additional Compliance Information Effectiveness Energising A SUSTAINABILITY STATEMENT Sustainable Tomorrow 126 Sustainability at TNB 147 Environmental Stewardship - TNB’s Sustainability Strategy - Minimising Environmental Impacts - Spirit of Responsibility - Climate Change Tenaga Nasional Berhad has continued - TNB’s Stakeholder Engagement 153 Our People and Their Value to play our role in driving the nation - What Matters to Us - Employment Management and forward. We have been there, powering - Linking Performance to Global Relations reliable and affordable energy to people Agenda - Prioritising Health, Safety and - How TNB is Addressing a Global Personal Well-Being and businesses as well as progressing Pandemic 160 Contributing to Upliftment of sustainably in line with our focused 140 Empowering The Nation Communities strategies. - Sustainable Infrastructure and - Community Investments and Ecosystems Promoting Education - Customer Centricity - Dermasiswa My Brighter Future (MyBF) Today, our role is even more critical than ever. As the world emerges from FINANCIAL STATEMENTS the grips of one of the most devastating 170 Directors’ Report 179 Consolidated Statement of pandemics, there is an urgent need 175 Consolidated Statement of Changes in Equity to rebuild lives and economies in a Financial Position 182 Consolidated Statement of Cash Flows manner that is supportable. This is 177 Consolidated Statement of Profit 186 Notes to the Financial Statements or Loss 338 Statement by Directors something that resonates with TNB’s 178 Consolidated Statement of 338 Statutory Declaration own ongoing transformation. We believe Comprehensive Income 339 Independent Auditors’ Report that to energise a sustainable tomorrow, we need to work together, as one, to ADDITIONAL INFORMATION develop a better world with brighter lives. 346 Corporate Information 347 Statistics of Shareholdings Navigation Icon in this Integrated Report 350 Net Book Value of Land and Buildings 351 Notice of the 31st Annual General Meeting st This icon tells you where you can find 354 Statement Accompanying Notice of the 31 Annual General Meeting related information in our report. • Proxy Form p.2 TENAGA NASIONAL BERHAD About This Report This Integrated Report has been prepared to provide a balanced and accurate account of Tenaga Nasional Berhad (TNB)’s performance and prospects. It outlines our ongoing 10-year transformational strategy, Reimagining TNB 2025, and describes challenges posed by the operating environment as well as other key risks impacting the energy industry. The Report is intended primarily for our shareholders, financiers and investors, but is also relevant to stakeholders who seek to understand how we create value through good governance, in addition to how we balance our vision for sustainable growth against environmental and social imperatives. Our Capitals Our capitals are the resources and relationships that are essential to our business and which we leverage to create value. FINANCIAL MANUFACTURED NATURAL INTELLECTUAL HUMAN SOCIAL & RELATIONSHIP Funds available to Physical assets and Renewable and Our Research Our people, who The strength TNB to manage our infrastructure that non-renewable and Development are responsible for we derive from operations, namely enable us to carry environmental capabilities, ensuring we meet maintaining strong our shareholders’ out our business, resources used by investments into our obligation to relationships with equity, borrowings namely our plants, TNB to generate new technologies keep the lights our investors, and income transmission electricity such as and innovation on day after day; employees, trade and distribution coal, natural gas, that enhance and our Board unions, customers, networks, fibre liquefied natural our operational of Directors who suppliers and the optic cable, office gas, water and efficiency and ensure sound community at large premises and sunlight facilitate our governance vehicles transition into green energy Materiality Reporting Framework Information disclosed is relevant to our material matters, which have Other than be guided by the International Integrated Reporting been determined by extensive stakeholder engagement as well as Framework (IIRF), we have referred to the principles and requirements internal evaluation. These material matters reflect existing and emerging of the Main Market Listing Requirements of Bursa Malaysia Securities risks and opportunities, which could affect our ability to create value in Berhad (MMLR), the Companies Act 2016, the Malaysian Code on the short, medium and long term. Corporate Governance 2017 (MCCG), the Corporate Governance Guide (3rd Edition) issued by Bursa Malaysia, Malaysian Financial Reporting Standards (MFRS), and International Financial Reporting Standards (IFRS). p.3 INTEGRATED ANNUAL REPORT 2020 About This Report Scope and Boundary In this report, we disclose material information relating to the Group covering the year from 1 January 2020 to 31 December 2020. In cases where material for FY2020 was not available, the most recent material was provided. Forward-looking Statements This report contains certain forward-looking statements relating to future performance. Such statements are premised on current assumptions and circumstances, which could change, hence they necessarily involve uncertainty. Various factors could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Targeted Readers This report is primarily intended to address questions that our shareholders and prospective investors may have. However, the information provided includes the way we create value for other key stakeholders, including our employees, customers, regulators and the community. Where You Will Find Our Management Discussion & Analysis Although we have not presented a Management Discussion & Analysis (MD&A) in this report, key components of the MD&A can be found in the following pages: Topic OVERVIEW OUR DISCUSSION OF REVIEW OF ANTICIPATED OR OUR OF OUR STRATEGY OUR FINANCIAL OPERATING KNOWN RISKS PROSPECTS BUSINESS & RESULTS AND ACTIVITIES OPERATIONS FINANCIAL POSITION Pages 6, 18-19 for Pages 38-57 for Pages 23 and 27 for Pages 26-31 for Pages 118-122 for Pages 25 and 31 for more information more information more information more information more information more information Verification & Approval Supplementary Report Our Board acknowledges its responsibility in This report is supplemented by our Sustainability Report. ensuring the integrity of this Integrated Report, Report Disclosure Reporting Framework which in its opinion addresses issues that are material to the Group’s ability to create value Our Sustainability • Global Reporting Initiative (GRI) Standards: Core and fairly presents the integrated performance Report details the option of TNB. Sustainability manner in which TNB • GRI Electric Utilities Sector Disclosures Report creates value for our • Bursa Malaysia’s MMLR stakeholders, focusing • Bursa Malaysia’s Sustainability Reporting Guide 2nd Feedback on our economic, Edition environmental, social • Task Force on Climate-related Financial Disclosures We welcome feedback to the Report, and and governance (TCFD)framework look forward to receiving your comments/ imperatives. suggestions via email to [email protected]. We are TNB 05 Thank You From The Board 06 We Are TNB 07 Our Investment Case - Financial Highlights - Group Quarterly Financial Performance - Six-Year Group Financial Summary - Six-Year Group Growth Summary - Simplified Group Statement of Financial Position - Statement of Value Added - Distribution of Value Added - Core Revenue - Our Credit Ratings - Our Shareholding Structure - Generation Fuel Mix - Our Scorecard 16 Our Structure 18 Our International Footprint p.5 Thank You From The Board The last few months have been tumultuous, if not traumatic, for many. In Malaysia, not only have we experienced an ongoing pandemic that has robbed people of their