TNB HANDBOOK

Prepared by:
COE Investor Relations
CONTENTS

1. INTRODUCTION TO TENAGA
2. INCENTIVE BASED REGULATION (IBR)
3. BUSINESS STRATEGY & DIRECTION
4. DIVIDEND POLICY
5. FINANCIAL HIGHLIGHTS

2
INTRODUCTION TO TENAGA

Sabah Electricity Sdn Bhd

Tenaga Nasional Bhd (A 83% TNB Subsidiary)
1,290MW*
24,124MW SABAH
PENINSULAR
MALAYSIA
4,437MW
SARAWAK

* Based on dependable capacity

INSTALLED CAPACITY
6.4% TNB : 54.3%
IPP : 45.7% Period
FY’14 FY’15 FY’16 FY’17 Ended
Dec’17
10% 37.2% TNB - Peninsula
Installed Capacity 10,814 11,708 12,904 12,880 13,108
48% (MW)
42%
Total units sold (Gwh) 108,102 110,837 115,505 116,586 39,562

Total customers (mn) 8.64 8.94 9.01 9.08 9.04

56.0% MARKET SHARE
TNB : 55.7%
Total employees
IPP: 44.3% 36.1 36.0 35.6 35.0 35.0
(‘000)
Gas & LNG Coal Hydro & Others Oil & Distillate
Total assets (RM bn) 110.7 117.1 132.9 142.0 144.3

Peninsula Installed Capacity vs. Generation mix 3

INTRODUCTION TO TENAGA
TNB Sectoral Sales Analysis

Sectoral Sales Analysis (Gwh)

Period Ended
Dec’17
Period Ended Dec'17 40.8 35.0 22.2 2.0
0.8% 1.6% 2.0%
18.4% 22.2% FY'17 39.9 35.7 22.5 1.9

FY'16 39.6 35.3 23.3 1.8

82.2% 41.9% 35.0% FY'15 41.8 34.6 21.8 1.8

FY'14 42.0 34.5 21.6 1.8

FY'13 42.5 34.4 21.3 1.8

38.1% 40.8%
FY'12 43.6 34.1 20.6 1.7
16.7%
0.3% FY'11 44.3 33.8 20.3 1.6
No of Sales (RM) Sales (Gwh)
Customer 0% 20% 40% 60% 80% 100%

Industrial Commercial Domestic Others Industrial Commercial Domestic Others

4
INTRODUCTION TO TENAGA
Industry Regulatory Framework

PRIME MINISTER
/CABINET
Holds
‘Golden’
Share

28.1%
Ministry of Finance/ MINISTRY of ENERGY,
SEDA
GREEN TECHNOLOGY
Khazanah Nasional Berhad Malaysia
AND WATER (KeTTHA)

33.7%
14.1% 24.1%
Other Corporations &
Govt. Agencies :
ECONOMIC PLANNING UNIT (EPU)
Public Foreign
EPF 11.8% - Develops and complements
Privatisation Policy
PNB 14.6% ENERGY COMMISSION - Evaluates and selects IPPs
Others 7.3% (Regulator) - Recommends ESI policies
- Promote competition
- Protect interests of
consumers Policy Maker
Shareholders - Issue licenses
- Tariff regulation
As at Dec’17

% Based on Top 100 Shareholders

Tenaga Nasional Berhad

IPPs

Latest Market Cap.

RM89.2bn (2nd) 22.9USDbn
- As at 26th Feb’18 -
Consumers
5
CONTENTS

1. INTRODUCTION TO TENAGA
2. INCENTIVE BASED REGULATION (IBR)
3. BUSINESS STRATEGY & DIRECTION
4. DIVIDEND POLICY
5. FINANCIAL HIGHLIGHTS

6
INCENTIVE BASED REGULATION (IBR)
The Move Towards Better Regulation

IBR mechanism to strengthen the following:

The Economic Regulatory Framework for

Regulating TNB

The Tariff Setting Mechanism and Principles for

Tariff Design

Incentive Mechanisms to Promote Efficiency and

Service Standards

The Process of Tariff Reviews

Creation of Regulatory Accounts and Its Annual

Review Process

Business entities under IBR

(Accounting Separation)

11 Regulatory Implementation Guidelines (RIGS) were Developed for IBR Implementation

*Source: EC 7
 INCENTIVE BASED REGULATION (IBR)
Electricity Tariff Review = Base Tariff + Imbalance Cost Pass-Through (ICPT)

*Source: EC 8
INCENTIVE BASED REGULATION (IBR)
Imbalance Cost Pass-Through (ICPT) Comprises Two Components

Imbalance Cost Pass-Through (ICPT)

Generation Specific
Fuel Cost Pass Through
Cost Adjustment
(FCPT)
(GSCPT)

Adjustment in the Adjustment in the

FCPT
following 6 month following 6 month Actual cost of
(gas/LNG and coal
period, subject to period, subject to generation
only)
government approval government approval
Changes in gas/LNG and coal costs Changes in:
• Other fuel costs such as distillate and fuel oil
• All costs incurred by SB under the power
procurement agreements (PPAs, SLAs and etc.)
and fuel procurement agreements (CSTA, CPC,
PPAs Power Purchase Agreements GFA/GSA and etc.)
SLAs Service Level Agreements
CSTA Coal Supply and Transportation Agreement
• Renewable energy FiT displaced cost
CPC Coal Purchase Contract
GFA Gas Framework Agreement
GSA Gas Supply Agreement

9
 TNB REMAINS NEUTRAL FROM FUEL FLUCTUATION
Incentive Based Regulation (IBR) & Imbalanced Cost Pass-Through (ICPT)

Interim First Second

Regulatory Regulatory Regulatory
Period Period (RP1) Period (RP2)

2014 2015 2016 2017 2018

Jan Jul Dec Jan Mar Jun Jul Dec Jan Jun Jul Dec Jan Jun Jul Dec Jan
P1 P2 P3 P4 P5 P6 P7 P8 RP2

sen/kWh 2.25 2.25 1.52 1.52 1.52 1.52

rebate rebate rebate rebate rebate rebate
Base Tariff
38.53
ICPT review
sen/kWh RM mn (726.99) (1,085.67) (762.03) (758.03) (766.33) *(1,303.23) every 6 months

RM5.4 billion
Total ICPT Rebate Approved to be Passed
Through to Customers up to December 2017
Source: Regulatory Economics & Planning, TNB

* Comprises of: RM 523.23 million total imbalance cost for period Jan- Jun 2017 and RM 780 million to continue the current ICPT rebate of 1.52 sen/kWh.
10
INCENTIVE BASED REGULATION (IBR)
IBR ENTITIES

1
In RP1, these 2 entity are grouped as
Price –Cap entity

11
INCENTIVE BASED REGULATION (IBR)
BASE TARIFF
Average Tariff by IBR Entities (sen/kwh)

RP1 (2015 – 2017) RP2 (2018 – 2020)

Single Buyer Generation
26.76 27.05
Transmission/Grid
4.03
3.66
Distribution Network &
7.15 Customer Services
7.87 Distribution Network
0.96
Customer Services
0.19
0.19
Single Buyer Operations
0.05 0.06
Grid System Operations
38.53 sen/kwh 39.45 sen/kwh

Average Tariff by Sectors (sen/kwh)

39.45
Base Tariff
38.53
46.93
Commercial
47.92
36.85
Industrial
36.15
32.95
Domestic
31.66

RP2 RP1 12
INCENTIVE BASED REGULATION (IBR)
WACC, RAB, CAPEX & OPEX

No Item RP2

1. WACC 7.3%

2. Avg. Regulated Asset Based (RAB) RP2 Approved RAB = RM54.8 bn

CAPEX
3. RP2 Approved CAPEX = RM18.8 bn

OPEX RP2 Approved OPEX = RM18.2 bn

4.

13
INCENTIVE BASED REGULATION (IBR)
GENERATION MIX

RP1 RP2

1%
1% 0.1%

5% 4%
4%

44% 33%

61%
47%

Coal Gas Hydro Other

Coal Gas Hydro RE LTM LSS

14
CONTENTS

1. INTRODUCTION TO TENAGA
2. INCENTIVE BASED REGULATION (IBR)
3. BUSINESS STRATEGY & DIRECTION
4. DIVIDEND POLICY
5. FINANCIAL HIGHLIGHTS

15
TNB 2025 GROWTH ASPIRATION
Aspire to Grow our EBIT to RM20.0 billion by 2025 through Domestic & International
Investment

16
SHAPING SUSTAINABLE FUTURE
Our Strategic Plan 2017

3 STRATEGIC PILLARS

17
EXPANDING GLOBAL FOOTPRINT TO ACHIEVE ASPIRATION
TNB is currently present in more than 5 countries
80% equity ownership
in Operational Onshore Wind
Portfolio in UK
Equity ownership
IPP, IWPP & Development Projects
Supply & Services
REMACO O&M for 225MW REMACO O&M for 210MW
Sabiya Power Generation & Doha West Power Generation
Water Distillation Plant & Water Distillation Plant
(Kuwait) (Kuwait)
REMACO O&M for Shuaiba
North Co-Gen 780MW Power;
204,000 m3 / day water
(Kuwait)
IPP: Liberty Power Ltd
30% equity ownership 235MW
in GAMA Enerji A.S.
50% equity ownership REMACO O&M services
in Vortex Solar Investments S.a.r.l.. for 1,223 MW Balloki Power Plant in
Pakistan
REMACO O&M Services for
Shuaibah IWPP
30% equity ownership
in GMR Energy Limited
IWPP: Shuaibah 900MW Power
880,000 m3 / day water
150,000 m3 / day water
Development of the Sumatera
– Peninsular Malaysia HVDC
Interconnection, coal-fired
power plant & coal mine mouth
projects
REMACO O&M services for
Bong Hydro Plant in Pakistan
18
INTERNATIONAL ACQUISITION
Four International Acquisitions to Support Aspiration

30% 30%
Equity interest of GAMA Enerji A.S. Equity interest of GMR Energy Limited.

Assets include a 840MW natural gas- Assets include 2,298MW coal, gas and
fired plant and 117.5MW wind plants solar plants.

Vortex Solar UK Tenaga Wind Ventures

50% 80%
Equity interest of Vortex Solar Equity interest of GVO Wind Limited &
Investments S.a.r.l. Blumerang Capital Limited

Assets include 24 operational solar PV Assets include 53 operational onshore

Farm across England and Wales with net medium wind turbines with a total
installed capacity of about 365MW combined capacity of 26.1MW
16 19
RENEWABLE GENERATION
Government Green Policy & Initiatives

Evolution on National Energy Policies

• Minimise negative • Green Technology as the

impacts on the driver to accelerate the
environment national economy

• Promote efficient • Promote Sustainable

utilisation of energy Development

Government Green Development Plan

11th Malaysia Plan (2016-2020)

Reduction in GHGs emission

8th Malaysia Plan 9th Malaysia Plan 10th Malaysia Plan 2013 : 33%
(2001-2005) (2006-2010)
intensity of GDP compared to
(2011-2015)
2005 level
• RE as the fifth fuel • RE Grid-connectivity • RE installed capacity
• Target: 5% RE in • Target: • Target: 985 MW of
Formulation of a
energy mix  Peninsula 300 MW RE by 2015 comprehensive demand side
 Sabah 50 MW management master plan

In renewable energy installed As at Dec 2017 :

capacity by 2020 (7.5% energy
431MW
mix)
20
BUILDING RENEWABLE ENERGY PORTFOLIO FOR BETTER FUTURE
TNB Green Policy & Initiatives

TNB Green Policy

“TNB is committed to support the national green agenda and minimise the
environmental impact of our business by applying sustainable, efficient operations and
delivering green energy through the application of
appropriate technologies and investments”

TNB RE Targets
by 2025

1,700MW
Actual as at to date
280MW

21
BUILDING RENEWABLE ENERGY PORTFOLIO FOR
GREENER FUTURE
50MW and 30MW Large Scale Solar (LSS) Photovoltaic Plants

TNB SEPANG SOLAR BUKIT SELAMBAU, KEDAH

50MW 30MW
LSS Photovoltaic Plant LSS Photovoltaic Plant

Expected COD: 1 November 2018 TNB received a Letter of Acceptance

PPA Tenure: 21 years of Offer from Energy Commission
(EC) to develop a 30MW LSS Plant

22
CONTENTS

1. INTRODUCTION TO TENAGA
2. INCENTIVE BASED REGULATION (IBR)
3. BUSINESS STRATEGY & DIRECTION
4. DIVIDEND POLICY
5. FINANCIAL HIGHLIGHTS

23
FY2017 MARKS THE HIGHEST DIVIDEND PAYOUT TO DATE
Continue to Maximise Shareholders Value Through Consistent and Sustainable Dividend
Payout Ratio at 50%

Dividend Policy
Distribution of dividend is based on 30% to 60% dividend payout ratio, based on the reported Consolidated
Net Profit Attributable to Shareholders After Minority Interest, excluding Extraordinary, Non-Recurring items

Dividend Payout 50.0% 50.0%

(PATAMI)
26.1% 25.5% 27.0% 24.7% 61.0

Dividend Paid 32.0

Per Share (sen) 25.0 29.0 29.0
21.4

FY2013 FY2014 FY2015 FY2016 FY2017 Period Ended

Dec'17

24
CONTENTS

1. INTRODUCTION TO TENAGA
2. INCENTIVE BASED REGULATION (IBR)
3. BUSINESS STRATEGY & DIRECTION
4. DIVIDEND POLICY
5. FINANCIAL HIGHLIGHTS

25
FINANCIAL HIGHLIGHTS
Solid Finish for a Short Financial Year

Revenue (RM bn) EBITDA (RM bn)

33.7% 31.2% 34.2% 31.2% 31.3%
15.83

5.20
12.55 12.46
11.24 11.16 11.61
4.30
3.79 3.89 3.86
3.49

1Q 2Q 3Q 4Q Period Period * 1Q 2Q 3Q 4Q Period Period

FY'17 FY'17 FY'17 FY'17 Ended Ended FY'17 FY'17 FY'17 FY'17 Ended Ended
Nov'17 Dec'17 Nov'17 Dec'17

* Period of 4 months (Sep-Dec’17) 26

FINANCIAL HIGHLIGHTS
Financial Position Remain Intact

PAT (RM bn) Normalised PAT (RM bn)

2.74 2.02

2.16 1.69 1.65

1.95
1.79 1.51 1.47
1.75
1.44 1.22

1Q 2Q 3Q 4Q Period Period * 1Q 2Q 3Q 4Q Period Period

FY'17 FY'17 FY'17 FY'17 Ended Ended FY'17 FY'17 FY'17 FY'17 Ended Ended
Nov'17 Dec'17 Nov'17 Dec'17

* Period of 4 months (Sep-Dec’17) 27

FINANCIAL HIGHLIGHTS
Key Performance Indicators

Period Ended
Aug’17
31 Dec’17

• Return on Assets (ROA) (%) 5.6 5.4

• Company CPU (sen/kwh) 37.3 36.6

• Revenue from Non-Regulated 3.3

0.9
Business (RM bn) *

• Equivalent Plant Availability 85.7 89.5

Factor (EAF) (%)

• Transmission System Minutes (mins) 0.05 0.23

• Distribution SAIDI (mins) 18.1 50.2

* Gross revenue of all subsidiaries excluding SESB, KEV, TNBJ & TNB Capital 28
FINANCIAL HIGHLIGHTS
Growing Market Capitalization

Shareholding as at Dec’17 Foreign Shareholding (%)

Khazanah Nasional
Berhad 7.3 14.1
Permodalan Nasional 11.8
Bhd
Employees Provident
Fund Board (%) 24.1
Other Government 14.6
Agencies
Other Corp. &
22.81 28.28 24.38 24.33 24.31 24.23 24.06
Malaysian Public
28.1 Aug'15 Aug'16 Aug'17 Sept'17 Oct'17 Nov'17 Dec'17
Foreign

Market Capitalization as at Dec’17

RM105.5bn
RM86.5bn Malayan
Banking Bhd
RM80.2bn Tenaga
Nasional Bhd
RM61.6bn Public bank Bhd
RM60.3bn Petronas Chemicals
Group Bhd
RM49.7bn CIMB Group
+7.1%
Holdings Bhd
RM48.3bn Axiata
IHH Group Bhd
RM46.9bn
Healthcare Bhd
RM40.8bn Maxis Bhd
RM39.7bn Sime Darby
Plantation Bhd
DiGi.Com Bhd
TNB Latest Market Cap. RM89.2bn (2nd), as at 26th Feb’18 29
DISCLAIMER

All information contained herein is meant strictly for the use of this presentation only

and should not be used or relied on by any party for any other purpose and without the

prior written approval of TNB. The information contained herein is the property of

TNB and it is privileged and confidential in nature. TNB has the sole copyright to such

information and you are prohibited from disseminating, distributing, copying,

re-producing, using and/or disclosing this information.

CONTACT DETAILS
For further enquiries, kindly contact us at:

CoE INVESTOR RELATONS

GROUP FINANCE DIVISION
Tenaga Nasional Berhad
4th Floor, TNB Headquarters
No.129, Jalan Bangsar,
59200 Kuala Lumpur, MALAYSIA
Tel : +603 2296 6748
Fax : +603 2284 0095
Email : tenaga_ird@tnb.com.my
Website : www.tnb.com.my

IR OFFICERS:

Anis Ramli +603 2296 6821 AnisRa@tnb.com.my

Mimi Norliyana +603 2296 6698 mimi.norliyana@tnb.com.my
Nizham Khan +603 2296 6951 nizham.jamil@tnb.com.my
THANK YOU

Prepared by:
CoE Investor Relations