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- 37,500.00 39,784.00 133,509.81 Total 1,560,000.00 1,970,774.17 70,645.16 694,000.00 8,500.00 2,344,255.00 593,001.48 7,241,175.81 Notes: 1. Contribution to EPF, Bonus, Car Allowance, LTIP, Ex-Gratia and Gratuity. 2. Utilities Bills, Business Peripherals, Purchase of Handphone, Uniforms, Club Membership, Medical and Travelling Expenses. 3. Payment made by respective subsidiaries. 4. Paid 50% in respect of Director’s fees directly to EPF. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 164 KEY ACTIVITIES OF THE COMMITTEE During the Financial Year under review, the BNRC held 12 meetings. T o date, the BNRC’s key activities included the approval/deliberation of the following: • Annual Assessment of Independence of Independent Non-Executive Directors • BEA of the Board of Directors, its Committees and each Individual Director by independent expert • Assessment of fit and proper and performance review ofDirectors for re-appointment/ re-election • Recommendation to the Board with regard to Directors who sought re-election at the AGM • Assessment of fit and proper of potential candidates for proposed appointment as TNB Non-Executive Directors • Appointment and resignation of Non-Executive Directors • Review of the composition of the Board Committees upon appointment/resignation of Directors • Fit and proper assessment of potential candidates for T op Management • Appointment of T op Management due to establishment of respective Divisions/succession planning • Review of composition of the Boards of TNB Power Generation Sdn. Bhd. and TNB Group • Assessment and recommendation to the Board on the appointment and renewal of service contract of T op Management • Review of performance evaluation against assigned KPIs of President/CEO and T op Management • TNB Notice of 34th AGM • Board succession planning • Approval of Group Term Life Insurance Coverage for TNB Directors • Succession Planning for the President/CEO and the Proposed Creation for the Position and Appointment of COO • Implementation/Progress Status of
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Review of the composition of the Board Committees upon appointment/resignation of Directors • Fit and proper assessment of potential candidates for T op Management • Appointment of T op Management due to establishment of respective Divisions/succession planning • Review of composition of the Boards of TNB Power Generation Sdn. Bhd. and TNB Group • Assessment and recommendation to the Board on the appointment and renewal of service contract of T op Management • Review of performance evaluation against assigned KPIs of President/CEO and T op Management • TNB Notice of 34th AGM • Board succession planning • Approval of Group Term Life Insurance Coverage for TNB Directors • Succession Planning for the President/CEO and the Proposed Creation for the Position and Appointment of COO • Implementation/Progress Status of SuccessionManagement for the T op Management • Review of Terms of Reference of the BRC and for the BRC to be renamed as BSRC • Proposed FY2024 KPI Planning For President/CEO • TNB Non-Executive Directors Remuneration Review by independent expert • Appointment and expiry of service tenure of President/CEO/Non-Independent Executive Director • Appointment and Resignation of Company Secretary • Guidelines on Selection of Candidates for Board Members of TNB Group and Statistics Report of Women Board Members and Future Strategies • Proposed Realignment of TNB’s Macro Organisational Structure (Establishment of Sustainability Division and COO post & their relevant reporting) FOCUS FOR 2023 AND BEYOND • Ongoing planning and management of board succession. • Ongoing monitoring and oversight of T op Management succession planning. • Non-Executive Directors’ Remuneration Review by independent expert in ensuring it reflects the Company’s business strategy and long-term objectives, the complexity, responsibility/ accountability of the Directors’ roles with increasing regulatory demands, TNB’s national importance, its competitiveness against the market and to attract/retain the talent profiles. This is in line with
[ 166 ]
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service tenure of President/CEO/Non-Independent Executive Director • Appointment and Resignation of Company Secretary • Guidelines on Selection of Candidates for Board Members of TNB Group and Statistics Report of Women Board Members and Future Strategies • Proposed Realignment of TNB’s Macro Organisational Structure (Establishment of Sustainability Division and COO post & their relevant reporting) FOCUS FOR 2023 AND BEYOND • Ongoing planning and management of board succession. • Ongoing monitoring and oversight of T op Management succession planning. • Non-Executive Directors’ Remuneration Review by independent expert in ensuring it reflects the Company’s business strategy and long-term objectives, the complexity, responsibility/ accountability of the Directors’ roles with increasing regulatory demands, TNB’s national importance, its competitiveness against the market and to attract/retain the talent profiles. This is in line with Practice7.1 of MCCG. • BEA FY2023 by independent expert in line with Practice 6.1 of MCCG • Review of Terms of Reference of the BRC includes the oversight of sustainability in line with the Bursa Malaysia Sustainability Reporting Guide 3rd Edition and for the BRC to be renamed as BSRC. KEY ROLES & RESPONSIBILITIES For details of the roles and responsibilities of the Committee, please refer to page 149. BOARD NOMINATION AND REMUNERATION COMMITTEE REPORT BOARD NOMINATION AND REMUNERATION COMMITTEE Chairman Dato’ Roslina binti Zainal Independent Non-Executive Director Members Ramzi bin Mansor Non-Independent Non-Executive Director (Appointed as member w.e.f. 26 March 2024) Muazzam bin Mohamad Non-Independent Non-Executive Director (Appointed as member w.e.f. 25 August 2023) Dato’ Merina binti Abu Tahir Independent Non-Executive Director Gopala Krishnan K.Sundaram Independent Non-Executive Director (Appointed as member w.e.f. 1 July 2023) DatinRashidahbintiMohdSiesNon-IndependentNon-ExecutiveDirector(Appointedandceasedasmemberw.e.f. 1July2023and12January2024respectively) Datuk Amran Hafiz
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6.1 of MCCG • Review of Terms of Reference of the BRC includes the oversight of sustainability in line with the Bursa Malaysia Sustainability Reporting Guide 3rd Edition and for the BRC to be renamed as BSRC. KEY ROLES & RESPONSIBILITIES For details of the roles and responsibilities of the Committee, please refer to page 149. BOARD NOMINATION AND REMUNERATION COMMITTEE REPORT BOARD NOMINATION AND REMUNERATION COMMITTEE Chairman Dato’ Roslina binti Zainal Independent Non-Executive Director Members Ramzi bin Mansor Non-Independent Non-Executive Director (Appointed as member w.e.f. 26 March 2024) Muazzam bin Mohamad Non-Independent Non-Executive Director (Appointed as member w.e.f. 25 August 2023) Dato’ Merina binti Abu Tahir Independent Non-Executive Director Gopala Krishnan K.Sundaram Independent Non-Executive Director (Appointed as member w.e.f. 1 July 2023) DatinRashidahbintiMohdSiesNon-IndependentNon-ExecutiveDirector(Appointedandceasedasmemberw.e.f. 1July2023and12January2024respectively) Datuk Amran Hafiz binAffifudin Non-Independent Non-Executive Director (Ceased as member w.e.f. 1 July 2023) BOARD LEADERSHIP & EFFECTIVENESS CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 165 In 2017, TNB was one of the first listed corporation to embark on the ISO 37001:2016 Anti-Bribery Management System (ABMS) certification. T owards achieving the certification, TNB launched the TNB Corporate Integrity Management System (TCIMS) to drive an integrity-based culture and a high level of compliance with local and international anti-bribery standards. On 15 November 2018, TNB was awarded with the ABMS Certification from SIRIM and to further reinforce this culture, launched the TCIMS Handbook. TNB has a well thought out set of Shared Values made publicly available and communicated to the workforce. First among the TNB Shared Values is Integrity. The three (3) behaviours of Integrity are: The TCIMS covers four (4) main policies, namely the Anti-Bribery Policy; the Gifts, Hospitality and Related Benefits Policy; the Conflicts of
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2017, TNB was one of the first listed corporation to embark on the ISO 37001:2016 Anti-Bribery Management System (ABMS) certification. T owards achieving the certification, TNB launched the TNB Corporate Integrity Management System (TCIMS) to drive an integrity-based culture and a high level of compliance with local and international anti-bribery standards. On 15 November 2018, TNB was awarded with the ABMS Certification from SIRIM and to further reinforce this culture, launched the TCIMS Handbook. TNB has a well thought out set of Shared Values made publicly available and communicated to the workforce. First among the TNB Shared Values is Integrity. The three (3) behaviours of Integrity are: The TCIMS covers four (4) main policies, namely the Anti-Bribery Policy; the Gifts, Hospitality and Related Benefits Policy; the Conflicts of InterestPolicy; and the Whistleblowing Policy. In 2022, TNB reviewed these four (4) main policies to reflect the current policies, circulars and practices. During the Financial Year under review, surveillance audits by SIRIM were conducted involving the Retail Division and four (4) wholly-owned subsidiaries of TNB, namely Malaysia Transformer Manufacturing Sdn. Bhd. (MTM), TNB Integrated Learning Solution Sdn. Bhd. (ILSAS), TNB Fuel Services Sdn. Bhd. (TNBF) and TNB Repair and Maintenance Sdn. Bhd. (REMACO). There were two (2) recertification audits by SIRIM conducted for Procurement & Supply Chain Division (P&SC) and a subsidiary of TNB, Tenaga Cable Industries Sdn. Bhd. (TCI). All the entities successfully retained the ISO 37001 Anti-Bribery Management System certification by SIRIM. In 2022, TNB signed a Memorandum of Understanding (MoU) with the Malaysian Anti-Corruption Commission (MACC) and signed the Corruption Free Pledge. This pledge emphasises the pledges and promises made by the leadership of TNB and its staff voluntarily in their capacity as an organisation to ensure that each of us will be more responsible in carrying out our duties and curbing corruption. TNB has
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Bhd. (MTM), TNB Integrated Learning Solution Sdn. Bhd. (ILSAS), TNB Fuel Services Sdn. Bhd. (TNBF) and TNB Repair and Maintenance Sdn. Bhd. (REMACO). There were two (2) recertification audits by SIRIM conducted for Procurement & Supply Chain Division (P&SC) and a subsidiary of TNB, Tenaga Cable Industries Sdn. Bhd. (TCI). All the entities successfully retained the ISO 37001 Anti-Bribery Management System certification by SIRIM. In 2022, TNB signed a Memorandum of Understanding (MoU) with the Malaysian Anti-Corruption Commission (MACC) and signed the Corruption Free Pledge. This pledge emphasises the pledges and promises made by the leadership of TNB and its staff voluntarily in their capacity as an organisation to ensure that each of us will be more responsible in carrying out our duties and curbing corruption. TNB has conductedthe Integrity Health Survey in 2023 through UNITEN R & D Sdn. Bhd. where 25,680 staff have participated and based on the survey TNB received a 87.16% score as opposed 79.36% in 2022. TNB has also established a systematic approach through the Annual Training and Communication Plan (TCP) for the areas of improvement identified through the Integrity Health Survey conducted in 2022. In 2023, all activities under the TCP were successfully completed including Seminar for Boards and T op Management. A series of trainings and awareness sessions were conducted by Integrity Department to better equip the Company in line with the implementation of Section 17A of the MACC Act 2009. These included the following: • TNB Integrity Day 2023 • Related programs to Divisions/Departments and Subsidiaries • Five (5) sessions of Fraud and Bribery Risk Management workshop • All staff and active vendors/contractors were required to complete Integrity E-Learning • All staff are required to sign the integrity pledge, declare any conflicts of interest annually and specifically when a conflict arises • Joint integrity programs with MACC • Published 12 Integrity bulletins and e-poster LIMITS OF AUTHORITY The Limits of
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In 2023, all activities under the TCP were successfully completed including Seminar for Boards and T op Management. A series of trainings and awareness sessions were conducted by Integrity Department to better equip the Company in line with the implementation of Section 17A of the MACC Act 2009. These included the following: • TNB Integrity Day 2023 • Related programs to Divisions/Departments and Subsidiaries • Five (5) sessions of Fraud and Bribery Risk Management workshop • All staff and active vendors/contractors were required to complete Integrity E-Learning • All staff are required to sign the integrity pledge, declare any conflicts of interest annually and specifically when a conflict arises • Joint integrity programs with MACC • Published 12 Integrity bulletins and e-poster LIMITS OF AUTHORITY The Limits of Authoritylays down guiding principles governing decision-making throughout the Group, emphasizing the escalation and reporting procedures to the Board. Delegating authority is a key aspect, with the Board entrusting the President/CEO and other Executives to oversee the Company’s day-to-day activities. This delegation includes the responsibility to recommend and approve both monetary and non-monetary limits of authority for operational and management decisions before execution. The Limits of Authority strikes a balance between effective oversight and empowering the Management with appropriate accountability. CODE OF ETHICS FOR DIRECTORS The Board of Directors adheres to the Code of Ethics for Company Directors established by the Companies Commission of Malaysia. Each Non-Executive Director is equipped with the Non-Executive Directors’ Handbook, serving as a reference for their professional responsibilities and the terms and conditions of their service. This handbook undergoes regular updates to reflect changes in applicable rules, regulations, and policies governing Directors’ conduct. CODE OF BUSINESS ETHICS (COBE) EFFECTIVE AUDIT AND RISK MANAGEMENT We uphold the highest ethical standards and do what
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activities. This delegation includes the responsibility to recommend and approve both monetary and non-monetary limits of authority for operational and management decisions before execution. The Limits of Authority strikes a balance between effective oversight and empowering the Management with appropriate accountability. CODE OF ETHICS FOR DIRECTORS The Board of Directors adheres to the Code of Ethics for Company Directors established by the Companies Commission of Malaysia. Each Non-Executive Director is equipped with the Non-Executive Directors’ Handbook, serving as a reference for their professional responsibilities and the terms and conditions of their service. This handbook undergoes regular updates to reflect changes in applicable rules, regulations, and policies governing Directors’ conduct. CODE OF BUSINESS ETHICS (COBE) EFFECTIVE AUDIT AND RISK MANAGEMENT We uphold the highest ethical standards and do what isright, all the time We are fair, honest and transparent in everything we do We always seek to achieve mutual benefit for the country, Company and customers 3 BEHAVIOURS OF INTEGRITY TNB has developed the new COBE to govern the conduct of all Directors and employees which take effect on 25 August 2023. This code ensures adherence to laws and regulations, promotes sound employment practices, upholds confidentiality and privacy, and addresses matters such as conflicts of interest, business courtesies, and the proper use of TNB’s assets. It also outlines how TNB engages with its shareholders, employees, customers, suppliers, and the communities in which it operates, emphasizing general principles of business integrity. All employees are expected to conduct business in accordance with applicable laws and regulations, contributing to the enhancement and protection of TNB’s reputation. In2023,TNBlaunchedtheCodeofBusiness Ethics(COBE)andOrganisational Anti-CorruptionPlan(OACP)tostrengthen thepracticeofintegrityinTNB. ETHICS, INTEGRITY & TRUST TENAGA NASIONAL BERHAD Integrated Annual Report 2023 166 The
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country, Company and customers 3 BEHAVIOURS OF INTEGRITY TNB has developed the new COBE to govern the conduct of all Directors and employees which take effect on 25 August 2023. This code ensures adherence to laws and regulations, promotes sound employment practices, upholds confidentiality and privacy, and addresses matters such as conflicts of interest, business courtesies, and the proper use of TNB’s assets. It also outlines how TNB engages with its shareholders, employees, customers, suppliers, and the communities in which it operates, emphasizing general principles of business integrity. All employees are expected to conduct business in accordance with applicable laws and regulations, contributing to the enhancement and protection of TNB’s reputation. In2023,TNBlaunchedtheCodeofBusiness Ethics(COBE)andOrganisational Anti-CorruptionPlan(OACP)tostrengthen thepracticeofintegrityinTNB. ETHICS, INTEGRITY & TRUST TENAGA NASIONAL BERHAD Integrated Annual Report 2023 166 The ProcurementCode of Conduct serves as a guiding framework for TNB’s Directors and employees, as well as suppliers/contractors and their personnel. TNB places a strong emphasis on principles such as integrity, accountability, fairness, and a zero-tolerance approach towards bribery and corruption in all supplier/contractor relationships. This code undergoes regular revisions to align with changes in regulations, reputational demands, and evolving business challenges. Additionally, the Procurement & Supply Chain Policy and Procedures provide comprehensive guidance for executing procurement within TNB. This policy framework enables TNB to achieve optimal value, adopt leading business practices, prioritise business objectives, add value to customers, and maintain high standards of corporate governance. Both TNB’s COBE and Procurement Code of Conduct are accessible on the respective sections of the Company’s website at www.tnb.com.my. CONFLICTS OF INTEREST (COI) In upholding principles of ethical and independent decision-making and the enhancement to
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as well as suppliers/contractors and their personnel. TNB places a strong emphasis on principles such as integrity, accountability, fairness, and a zero-tolerance approach towards bribery and corruption in all supplier/contractor relationships. This code undergoes regular revisions to align with changes in regulations, reputational demands, and evolving business challenges. Additionally, the Procurement & Supply Chain Policy and Procedures provide comprehensive guidance for executing procurement within TNB. This policy framework enables TNB to achieve optimal value, adopt leading business practices, prioritise business objectives, add value to customers, and maintain high standards of corporate governance. Both TNB’s COBE and Procurement Code of Conduct are accessible on the respective sections of the Company’s website at www.tnb.com.my. CONFLICTS OF INTEREST (COI) In upholding principles of ethical and independent decision-making and the enhancement to theexisting COI disclosures as required by the MMLR, the Directors and T op Management are required to disclose on the nature and extent of any COI or potential COI, including interest in any competing business that the person has with TNB and its subsidiaries. Directors or T op Management with such interests are required to declare them immediately and at the respective meetings to be abstained from participating in the deliberations, in ensuring impartial decision-making. Mitigation actions shall be taken upon any declaration of COI by the Directors or T op Management, with the concurrence of the President/ CEO/Chairman/Senior Independent Director. In addition, TNB Directors, T op Management and its Boards of Subsidiaries are required to make COI declaration annually and on adhoc basis. Currently the Integrity Department, Company Secretary’s Office, Legal Services Department and Internal Audit Department are jointly developing the COI guidelines/ framework in ensuring it fulfills the enhancement to the existing COI disclosures as prescribed by the MMLR. As
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business that the person has with TNB and its subsidiaries. Directors or T op Management with such interests are required to declare them immediately and at the respective meetings to be abstained from participating in the deliberations, in ensuring impartial decision-making. Mitigation actions shall be taken upon any declaration of COI by the Directors or T op Management, with the concurrence of the President/ CEO/Chairman/Senior Independent Director. In addition, TNB Directors, T op Management and its Boards of Subsidiaries are required to make COI declaration annually and on adhoc basis. Currently the Integrity Department, Company Secretary’s Office, Legal Services Department and Internal Audit Department are jointly developing the COI guidelines/ framework in ensuring it fulfills the enhancement to the existing COI disclosures as prescribed by the MMLR. As practiceby the Procurement & Supply Chain Division in collaboration with the Integrity Department, each Director shall sign an Integrity Pledge during every BTC/Board meeting. This commitment entails a declaration of any interests related to procurement or matters on the meeting agenda, underscoring the Company’s dedication to preventing corruption, mitigating conflicts of interest and safeguarding the confidentiality of information. WHISTLEBLOWING PROCEDURE The Whistleblowing Procedure underscores TNB’s commitment to fostering an open working environment, where employees, contractors and members of the public can confidentially report instances of unethical, unlawful or undesirable conduct without fear of intimidation or reprisal. An independent investigation team examines all reported concerns and where applicable, offers feedback on the outcome of the investigation. The objectives of the Whistleblowing Procedure are threefold: • T o identify and address unacceptable conduct. • T o cultivate a supportive working environment that empowers employees and contractors to raise legitimate concerns with both personal and organisational implications. • T o
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of any interests related to procurement or matters on the meeting agenda, underscoring the Company’s dedication to preventing corruption, mitigating conflicts of interest and safeguarding the confidentiality of information. WHISTLEBLOWING PROCEDURE The Whistleblowing Procedure underscores TNB’s commitment to fostering an open working environment, where employees, contractors and members of the public can confidentially report instances of unethical, unlawful or undesirable conduct without fear of intimidation or reprisal. An independent investigation team examines all reported concerns and where applicable, offers feedback on the outcome of the investigation. The objectives of the Whistleblowing Procedure are threefold: • T o identify and address unacceptable conduct. • T o cultivate a supportive working environment that empowers employees and contractors to raise legitimate concerns with both personal and organisational implications. • T o safeguardindividuals who, in good faith, report unacceptable conduct from any adverse consequences. Reporting channels are made easily accessible through the Online Whistleblowing Information System (WBIS) at http:/ /wbis.tnb.com.my. Alternatively, reports can be submitted via email to the designated officers using the Whistleblowing Complaint Form, available in both Malay and English. NAME DESIGNATION EMAIL ADDRESS OngAiLinSeniorIndependent Non-ExecutiveDirector [email protected] Kalivann Palanivelu Chief Integrity Development Officer [email protected] Hasbah binti Hasbullah Senior Manager (Financial Integrity) [email protected] • Whistleblowing toll free number: 1-800-888-862 ANTI-BRIBERY POLICY TNB is resolute in articulating its position on bribery and related matters, establishing essential pillars within its framework to fortify the Company against any manifestation of bribery. All forms of bribery related to TNB’s activities are unequivocally prohibited. Upholding integrity is a collective responsibility that extends across all levels
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who, in good faith, report unacceptable conduct from any adverse consequences. Reporting channels are made easily accessible through the Online Whistleblowing Information System (WBIS) at http:/ /wbis.tnb.com.my. Alternatively, reports can be submitted via email to the designated officers using the Whistleblowing Complaint Form, available in both Malay and English. NAME DESIGNATION EMAIL ADDRESS OngAiLinSeniorIndependent Non-ExecutiveDirector [email protected] Kalivann Palanivelu Chief Integrity Development Officer [email protected] Hasbah binti Hasbullah Senior Manager (Financial Integrity) [email protected] • Whistleblowing toll free number: 1-800-888-862 ANTI-BRIBERY POLICY TNB is resolute in articulating its position on bribery and related matters, establishing essential pillars within its framework to fortify the Company against any manifestation of bribery. All forms of bribery related to TNB’s activities are unequivocally prohibited. Upholding integrity is a collective responsibility that extends across all levels ofpersonnel. Guided by a stringent ‘No Gifts’ policy, TNB emphasises integrity through the regular signing of Integrity Pledges and the declaration of conflicts of interest by personnel. While certain exceptions may exist, TNB ensures that these policies are consistently adhered to. Prudent management of business associates acting on behalf of the Company further enhances TNB’s commitment to ethical conduct. The reporting of misconduct by personnel or third parties is not only encouraged but expected, with robust protection in place for those acting in good faith as whistleblowers. Enforcing its position on ethical standards, TNB entrusts the Integrity Department with the responsibility of upholding and reinforcing these principles. The TCIMS undergoes periodic assessments and updates to ensure its continued effectiveness in upholding the Company’s commitment to ethical business practices. This proactive approach reflects TNB’s dedication to maintaining the
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emphasises integrity through the regular signing of Integrity Pledges and the declaration of conflicts of interest by personnel. While certain exceptions may exist, TNB ensures that these policies are consistently adhered to. Prudent management of business associates acting on behalf of the Company further enhances TNB’s commitment to ethical conduct. The reporting of misconduct by personnel or third parties is not only encouraged but expected, with robust protection in place for those acting in good faith as whistleblowers. Enforcing its position on ethical standards, TNB entrusts the Integrity Department with the responsibility of upholding and reinforcing these principles. The TCIMS undergoes periodic assessments and updates to ensure its continued effectiveness in upholding the Company’s commitment to ethical business practices. This proactive approach reflects TNB’s dedication to maintaining the higheststandards of integrity in its operations. ETHICS, INTEGRITY & TRUST EFFECTIVE AUDIT AND RISK MANAGEMENT CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 167 EFFECTIVE AUDIT AND RISK MANAGEMENT BOARD AUDIT COMMITTEE REPORT KEY ROLES & RESPONSIBILITIES For detailed roles & responsibilities of the Committee, please refer to page 148. BOARD AUDIT COMMITTEE The Board Audit Committee (BAC) was established to assist the Board to carry out their oversight and fiduciary duties and responsibilities. BAC’s objectives, authorities and functions are governed by the Terms of Reference (T oR). The T oR was last reviewed in November 2023 and approved by TNB’s Board in December 2023. The T oR is accessible on the Company’s official website at www.tnb.com.my. MEMBERSHIP AND MEETINGS As of 31 December 2023, the BAC comprises three (3) Independent and one (1) Non-Independent Directors, all of whom are Non-Executive Directors. This composition is aligned with Paragraph 15.09 (1) (a) and (b) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements (MMLR), which states that the Audit Committee must be composed of not
[ 168, 169 ]
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to page 148. BOARD AUDIT COMMITTEE The Board Audit Committee (BAC) was established to assist the Board to carry out their oversight and fiduciary duties and responsibilities. BAC’s objectives, authorities and functions are governed by the Terms of Reference (T oR). The T oR was last reviewed in November 2023 and approved by TNB’s Board in December 2023. The T oR is accessible on the Company’s official website at www.tnb.com.my. MEMBERSHIP AND MEETINGS As of 31 December 2023, the BAC comprises three (3) Independent and one (1) Non-Independent Directors, all of whom are Non-Executive Directors. This composition is aligned with Paragraph 15.09 (1) (a) and (b) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements (MMLR), which states that the Audit Committee must be composed of not fewerthan three (3) members and all the Audit Committee members must be Non-Executive Directors, with a majority of them being Independent Directors. The BAC is chaired by Dato’ Merina binti Abu Tahir effective 1 February 2022. The BAC remains committed in adhering to the practice outlined in the Malaysian Code on Corporate Governance (MCCG) 2021, whereby the Chairman of BAC was not the Chairman of TNB Board during the year under review. In FY2023, a total of 13 BAC meetings were conducted, fulfilling the stipulation in BAC T oR that mandates a minimum of six (6) meetings per year. Attendance at all meetings met the requisite quorum as stipulated in the BAC T oR. The Company Secretary who is the Secretary to the BAC and the Chief Internal Auditor (CIA) were in attendance during the meetings. The President/CEO and other officers were invited to the meetings to deliberate on matters within their purview. The governance practices are further strengthened as the BAC adheres to the provision of Paragraph 15.09 (1) (c) of MMLR, which requires of at least one (1) member of the Audit Committee must be a member of the Malaysian Institute of Accountants (MIA). Two (2) members of the BAC, Dato’ Merina binti Abu Tahir and Ong Ai
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fulfilling the stipulation in BAC T oR that mandates a minimum of six (6) meetings per year. Attendance at all meetings met the requisite quorum as stipulated in the BAC T oR. The Company Secretary who is the Secretary to the BAC and the Chief Internal Auditor (CIA) were in attendance during the meetings. The President/CEO and other officers were invited to the meetings to deliberate on matters within their purview. The governance practices are further strengthened as the BAC adheres to the provision of Paragraph 15.09 (1) (c) of MMLR, which requires of at least one (1) member of the Audit Committee must be a member of the Malaysian Institute of Accountants (MIA). Two (2) members of the BAC, Dato’ Merina binti Abu Tahir and Ong Ai Lin,are members of the MIA. The BAC Chairman submits report on proceedings of the BAC meetings to the Board for information and attention. Matters reserved for the Board’s approval are tabled at TNB’s Board meetings. Action sheets are issued by the Company Secretary on the decisions made and actions required. These are circulated to Management and relevant parties for their actions. Chairman Dato’ Merina binti Abu Tahir Independent Non-Executive Director Members Ong Ai Lin Senior Independent Non-Executive Director Juniwati Rahmat Hussin Independent Non-Executive Director Dato’ Zulkifli bin Ibrahim Independent Non-Executive Director (Appointed as member w.e.f. 1 April 2024) Rohaya binti Mohammad Yusof Non-Independent Non-Executive Director (Ceased as member w.e.f. 1 April 2024) Gopala Krishnan K.Sundaram Independent Non-Executive Director (Ceased as member w.e.f. 1 July 2023) Datuk Rawisandran Narayanan Independent Non-Executive Director (Ceased as member w.e.f. 18 May 2023) Datuk Lau Beng Wei Independent Non-Executive Director (Ceased as member w.e.f. 6 March 2023) The BAC members’ meeting attendance for the Financial Year under review is on page 148 of this Integrated Annual Report. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 168 EFFECTIVE AUDIT AND RISK MANAGEMENT The BAC
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their actions. Chairman Dato’ Merina binti Abu Tahir Independent Non-Executive Director Members Ong Ai Lin Senior Independent Non-Executive Director Juniwati Rahmat Hussin Independent Non-Executive Director Dato’ Zulkifli bin Ibrahim Independent Non-Executive Director (Appointed as member w.e.f. 1 April 2024) Rohaya binti Mohammad Yusof Non-Independent Non-Executive Director (Ceased as member w.e.f. 1 April 2024) Gopala Krishnan K.Sundaram Independent Non-Executive Director (Ceased as member w.e.f. 1 July 2023) Datuk Rawisandran Narayanan Independent Non-Executive Director (Ceased as member w.e.f. 18 May 2023) Datuk Lau Beng Wei Independent Non-Executive Director (Ceased as member w.e.f. 6 March 2023) The BAC members’ meeting attendance for the Financial Year under review is on page 148 of this Integrated Annual Report. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 168 EFFECTIVE AUDIT AND RISK MANAGEMENT The BAC alsoapproved the revised Annual Audit Plan which was reviewed quarterly to ensure it remained agile, in view of emerging risks stemming from shifts in business environment and regulatory requirements, and to fulfil requests from BAC and Management. vii. BAC assessed GIA’s effectiveness through quarterly review of its performance comprising amongst others, contribution to cost saving and process improvement, BAC survey index, completion of audit plan, and audit turnaround. The BAC also appraised the overall FY2022 performance of GIA and discussed on succession planning for the CIA. viii. BAC deliberated the outcome of GIA’s Quality Assurance and Improvement Programme (QAIP) resulting from the annual internal assessment and acknowledged the implementation status of GIA’s 3-year Strategic Plan. ix. Reviewed GIA’s organisational independence declaration for FY2022 to assist BAC in fulfilling necessary disclosures mandated by the MCCG pertaining to independence and objectivity of the internal audit function. GIA carried out its responsibilities independently and objectively under the existing reporting
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requirements, and to fulfil requests from BAC and Management. vii. BAC assessed GIA’s effectiveness through quarterly review of its performance comprising amongst others, contribution to cost saving and process improvement, BAC survey index, completion of audit plan, and audit turnaround. The BAC also appraised the overall FY2022 performance of GIA and discussed on succession planning for the CIA. viii. BAC deliberated the outcome of GIA’s Quality Assurance and Improvement Programme (QAIP) resulting from the annual internal assessment and acknowledged the implementation status of GIA’s 3-year Strategic Plan. ix. Reviewed GIA’s organisational independence declaration for FY2022 to assist BAC in fulfilling necessary disclosures mandated by the MCCG pertaining to independence and objectivity of the internal audit function. GIA carried out its responsibilities independently and objectively under the existing reporting arrangements,where GIA reports functionally to BAC. GIA has established mechanisms to report conflict of interest situations at department, engagement and individual levels. No conflict of interest situations were reported for FY2022. x. BAC convened three (3) private meetings with Chief Internal Auditor, in the absence of Management and Executive Directors, to address issues and concerns arising from audit engagements. xi. Acknowledged GIA’s annual review of the Internal Audit Charter, conducted to evaluate whether the purpose, authority, and responsibilities of the internal audit function continue to enable it to accomplish its objectives. xii. Approved the acquisition of new audit management system software to enhance effectiveness and efficiency of internal audit activities. 2. EXTERNAL AUDIT i. Reviewed and endorsed the revised TNB Implementation Guideline on Provision of Services by External Auditors before recommending to Board for approval. The guideline primarily addresses matters related to audit services offered by External Auditor, categorisation of non-audit services and its threshold,
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were reported for FY2022. x. BAC convened three (3) private meetings with Chief Internal Auditor, in the absence of Management and Executive Directors, to address issues and concerns arising from audit engagements. xi. Acknowledged GIA’s annual review of the Internal Audit Charter, conducted to evaluate whether the purpose, authority, and responsibilities of the internal audit function continue to enable it to accomplish its objectives. xii. Approved the acquisition of new audit management system software to enhance effectiveness and efficiency of internal audit activities. 2. EXTERNAL AUDIT i. Reviewed and endorsed the revised TNB Implementation Guideline on Provision of Services by External Auditors before recommending to Board for approval. The guideline primarily addresses matters related to audit services offered by External Auditor, categorisation of non-audit services and its threshold, prohibitednon-audit services, and other matters. MAIN ACTIVITIES OF BAC IN FY2023 In FY2023, BAC executed the following activities to proficiently fulfil its duties and responsibilities as set forth in the BAC T oR: 1. INTERNAL AUDIT i. Deliberated the adequacy and effectiveness of governance, risk management, and internal control system based on the findings and outcome of audits conducted and reported by Group Internal Audit Department (GIA) during the year. The audit findings were presented and deliberated in BAC meetings and where relevant, BAC requested Management to rectify the weaknesses based on recommendations provided by GIA. GIA’s areas of coverage for FY2023 are summarised in the Statement of Internal Audit Function. ii. Deliberated the outcome of review performed bi-annually by GIA on TNB’s Integrity and Governance Unit (IGU) Report prior to submission to Malaysian Anti-Corruption Commission. iii. Approved the appointment of independent advisor for review of TNB’s Whistle Blowing Management System. iv. Reviewed TNB’s quarterly State of Internal Controls (SOIC) on the adequacy, effectiveness, and reliability of
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adequacy and effectiveness of governance, risk management, and internal control system based on the findings and outcome of audits conducted and reported by Group Internal Audit Department (GIA) during the year. The audit findings were presented and deliberated in BAC meetings and where relevant, BAC requested Management to rectify the weaknesses based on recommendations provided by GIA. GIA’s areas of coverage for FY2023 are summarised in the Statement of Internal Audit Function. ii. Deliberated the outcome of review performed bi-annually by GIA on TNB’s Integrity and Governance Unit (IGU) Report prior to submission to Malaysian Anti-Corruption Commission. iii. Approved the appointment of independent advisor for review of TNB’s Whistle Blowing Management System. iv. Reviewed TNB’s quarterly State of Internal Controls (SOIC) on the adequacy, effectiveness, and reliability of internalcontrol system based on the overall risks/areas covered and issues reported by GIA and subsidiaries’ internal audit function, as well as the status of corrective actions implemented by Management. v. BAC took note of TNB’s FY2022 Integrated Assurance Report for GIA and other assurance providers i.e. subsidiaries’ internal audit functions, compliance function in divisions, Health, Safety and Environment Department, and Risk Management Department, which was intended to demonstrate the organisation’s risk coverage, and help identify gaps and overlaps. Additionally, the report shows the overall governance and state of internal controls in TNB based on reviews performed by the various assurance providers. vi. Approved GIA’s Annual Audit Plan and the methodology applied in formulating a risk-based audit plan to ensure adequacy of audit scope and comprehensive coverage of the Group’s activities. The BAC also took cognisance of the resource and budgetary requirements for successful execution of the audit plan. BOARD AUDIT COMMITTEE REPORT CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 169 ii. In evaluating the suitability, objectivity, and
[ 170, 171 ]
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for GIA and other assurance providers i.e. subsidiaries’ internal audit functions, compliance function in divisions, Health, Safety and Environment Department, and Risk Management Department, which was intended to demonstrate the organisation’s risk coverage, and help identify gaps and overlaps. Additionally, the report shows the overall governance and state of internal controls in TNB based on reviews performed by the various assurance providers. vi. Approved GIA’s Annual Audit Plan and the methodology applied in formulating a risk-based audit plan to ensure adequacy of audit scope and comprehensive coverage of the Group’s activities. The BAC also took cognisance of the resource and budgetary requirements for successful execution of the audit plan. BOARD AUDIT COMMITTEE REPORT CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 169 ii. In evaluating the suitability, objectivity, and independenceof the External Auditor, the BAC reviewed and deliberated on the following: • The overall performance and effectiveness of the External Auditor for the period from 1 January 2022 to 31 December 2022. For this purpose, a survey was coordinated by GIA and assessments on the effectiveness of the External Auditor were performed by members of BAC and Management, addressing aspects of (1) quality of service, (2) sufficiency of resources, (3) communication and interaction, and (4) independence, objectivity, and professional scepticism. • The audit fees for quarterly review of the unaudited consolidated results and annual statutory audit of TNB and its subsidiaries for Board’s approval. • The External Auditor’s Audit Plan for FY2023. • The External Auditor’s Annual Transparency Report which outlines amongst others, the legal and governance structure, as well as measures taken by the External Auditor to uphold audit quality and address risks. • Non-audit services provided by the External Auditor to TNB and the Group. The fees associated with non-audit services performed by the External Auditor were within the permissible threshold set
[ 171 ]
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of the External Auditor were performed by members of BAC and Management, addressing aspects of (1) quality of service, (2) sufficiency of resources, (3) communication and interaction, and (4) independence, objectivity, and professional scepticism. • The audit fees for quarterly review of the unaudited consolidated results and annual statutory audit of TNB and its subsidiaries for Board’s approval. • The External Auditor’s Audit Plan for FY2023. • The External Auditor’s Annual Transparency Report which outlines amongst others, the legal and governance structure, as well as measures taken by the External Auditor to uphold audit quality and address risks. • Non-audit services provided by the External Auditor to TNB and the Group. The fees associated with non-audit services performed by the External Auditor were within the permissible threshold set inTNB’s Implementation Guideline on Provision of Services by External Auditors. iii. Acknowledged TNB’s Internal Control Memorandum for FY2022, which offers status updates on internal control recommendations and areas of enhancement over financial reporting and information technology general control (ITGC) including accounting matters, systems, and process weaknesses. iv. BAC held two (2) meetings with the External Auditor without the presence of Management and Executive Directors to enable open discussion with the BAC and to reinforce independence of the external audit function of the Company. 3. FINANCIAL REPORTING BAC reviewed and endorsed the following financial matters before recommending to Board for approval: i. Quarterly unaudited financial results of the Group and the draft announcements with considerations on key developments during the period, significant accounting matters, and other review matters. ii. Audited financial statement of the Group and of the Company for the financial year ended 31 December 2022 and agreed that the financial statements were prepared in accordance with the relevant standards and regulatory requirements as to give a true and fair
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systems, and process weaknesses. iv. BAC held two (2) meetings with the External Auditor without the presence of Management and Executive Directors to enable open discussion with the BAC and to reinforce independence of the external audit function of the Company. 3. FINANCIAL REPORTING BAC reviewed and endorsed the following financial matters before recommending to Board for approval: i. Quarterly unaudited financial results of the Group and the draft announcements with considerations on key developments during the period, significant accounting matters, and other review matters. ii. Audited financial statement of the Group and of the Company for the financial year ended 31 December 2022 and agreed that the financial statements were prepared in accordance with the relevant standards and regulatory requirements as to give a true and fair viewof the Group’s financial performance. 4. RELATED PARTY TRANSACTIONS In February 2023, BAC reviewed and recommended to the Board to approve the related party/recurrent related party transactions entered into by TNB Group for the year ended 31 December 2022. 5. ANNUAL REPORTING BAC recommended for Board’s approval the reports to be incorporated in the Integrated Annual Report 2022 namely (i) BAC Report, (ii) Statement of Internal Audit Function, (iii) Statement on Risk Management and Internal Control, and (iv) Corporate Governance Overview Statement and Corporate Governance Report. 6. SUSTAINABILITY AND OTHER MATTERS i. BAC approved the methodology and scope of work for assurance of the FY2023 Sustainability Statement. The assurance exercise is part of Bursa’s Enhanced Sustainability Disclosure Requirement which requires issuance of Statement of Assurance on whether the Sustainability Statement has been subjected to an assurance process. ii. T ook note on the updates to MMLR and new regulations/ requirements comprising amongst others disclosure on conflict of interest or potential conflict of interest situation reviewed by BAC, Sustainability Reporting Standards, Tax Corporate
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for Board’s approval the reports to be incorporated in the Integrated Annual Report 2022 namely (i) BAC Report, (ii) Statement of Internal Audit Function, (iii) Statement on Risk Management and Internal Control, and (iv) Corporate Governance Overview Statement and Corporate Governance Report. 6. SUSTAINABILITY AND OTHER MATTERS i. BAC approved the methodology and scope of work for assurance of the FY2023 Sustainability Statement. The assurance exercise is part of Bursa’s Enhanced Sustainability Disclosure Requirement which requires issuance of Statement of Assurance on whether the Sustainability Statement has been subjected to an assurance process. ii. T ook note on the updates to MMLR and new regulations/ requirements comprising amongst others disclosure on conflict of interest or potential conflict of interest situation reviewed by BAC, Sustainability Reporting Standards, Tax Corporate GovernanceFramework (TCGF), Base Erosion Profit Shifting, and e-invoice implementation. iii. Reviewed the proposal for vesting of performance shares as well as restricted shares under the LTIP for Board’s approval. iv. Acknowledged the outcome of Regulatory Compliance Audit (RCA) for the period from 1 September 2016 to 31 December 2020. This is a regulatory audit conducted to fulfill the mandate of Energy Commission relating to license condition under Electricity Supply Act 1990 aimed to ascertain the extent of compliance with (i) specific performance standard established by the Commission, (ii) regulatory implementation guidelines, and (iii) safety and health management. v. Discussed on other key operational/strategic matters, amongst others on (i) subsidiary’s way forward and strategic matters, (ii) credit management, (iii) status of action plan on ownership of substation land, (iv) status of smart meter installation, customer offerings, complaints, and prolonged estimated bill, and (v) summons/compounds imposed on TNB by regulatory authorities. vi. Participated in technical excursions to TNB Janamanjung Sdn. Bhd., Sabah
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outcome of Regulatory Compliance Audit (RCA) for the period from 1 September 2016 to 31 December 2020. This is a regulatory audit conducted to fulfill the mandate of Energy Commission relating to license condition under Electricity Supply Act 1990 aimed to ascertain the extent of compliance with (i) specific performance standard established by the Commission, (ii) regulatory implementation guidelines, and (iii) safety and health management. v. Discussed on other key operational/strategic matters, amongst others on (i) subsidiary’s way forward and strategic matters, (ii) credit management, (iii) status of action plan on ownership of substation land, (iv) status of smart meter installation, customer offerings, complaints, and prolonged estimated bill, and (v) summons/compounds imposed on TNB by regulatory authorities. vi. Participated in technical excursions to TNB Janamanjung Sdn. Bhd., Sabah ElectricitySdn. Bhd., and Large Scale Solar Bukit Selambau to gain insights on business operations and foster professional relationships. EFFECTIVE AUDIT AND RISK MANAGEMENT BOARD AUDIT COMMITTEE REPORT TENAGA NASIONAL BERHAD Integrated Annual Report 2023 170 Since its establishment on 5 June 2013, the Board Risk Committee (BRC) has been an integral part of our governance framework. Recognising the importance of sustainability, the Board of Directors expanded the oversight scope of the BRC to include sustainability and consequently, the BRC was renamed to the Board Sustainability and Risk Committee (BSRC) effective from 25 August 2023 with the attendant changes to its Terms of Reference. ROLE OF THE BOARD SUSTAINABILITY AND RISK COMMITTEE The objective of the Board Sustainability and Risk Committee (BSRC) is to assist the TNB Board of Directors (Board) in fulfilling its responsibilities by overseeing the robustness and effective implementation of the Group’s sustainability and risk management framework, policy, strategy and initiatives to achieve business objectives and sustainability commitments. KEY RESPONSIBILITIES The
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Since its establishment on 5 June 2013, the Board Risk Committee (BRC) has been an integral part of our governance framework. Recognising the importance of sustainability, the Board of Directors expanded the oversight scope of the BRC to include sustainability and consequently, the BRC was renamed to the Board Sustainability and Risk Committee (BSRC) effective from 25 August 2023 with the attendant changes to its Terms of Reference. ROLE OF THE BOARD SUSTAINABILITY AND RISK COMMITTEE The objective of the Board Sustainability and Risk Committee (BSRC) is to assist the TNB Board of Directors (Board) in fulfilling its responsibilities by overseeing the robustness and effective implementation of the Group’s sustainability and risk management framework, policy, strategy and initiatives to achieve business objectives and sustainability commitments. KEY RESPONSIBILITIES The BSRCis guided by its Terms of Reference in carrying out the following responsibilities: • Deliberate and recommend the sustainability framework and policy for Board’s approval. • Oversee on the implementation of the sustainability framework integration into the Group’s culture, processes, and structures. • Deliberate on TNB’s sustainability roadmap based on Board-approved sustainability strategies & targets and ensuring effective deployment across the Group. • Oversee the Group’s sustainability KPIs against approved strategies and targets. • Review and recommend on Group’s sustainability disclosures required by Bursa Malaysia for Board approval. • Advise on TNB’s sustainability report disclosures to external stakeholders prior to publication. • Deliberate and recommend the risk management framework and policy for Board’s approval. • Oversee the implementation of the risk management framework integration into the Group’s culture, processes, and structures. • Deliberate on the Group’s strategic, key operating risks and risk issues through timely and regular reports, ensuring the establishment of appropriate systems for risk management. This includes
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the sustainability framework integration into the Group’s culture, processes, and structures. • Deliberate on TNB’s sustainability roadmap based on Board-approved sustainability strategies & targets and ensuring effective deployment across the Group. • Oversee the Group’s sustainability KPIs against approved strategies and targets. • Review and recommend on Group’s sustainability disclosures required by Bursa Malaysia for Board approval. • Advise on TNB’s sustainability report disclosures to external stakeholders prior to publication. • Deliberate and recommend the risk management framework and policy for Board’s approval. • Oversee the implementation of the risk management framework integration into the Group’s culture, processes, and structures. • Deliberate on the Group’s strategic, key operating risks and risk issues through timely and regular reports, ensuring the establishment of appropriate systems for risk management. This includes theauthority to initiate special investigations, on behalf of the Board, into significant risk management activities when necessary. • Approve the Group’s risk appetite and ensure timely actions are taken when risks exceed acceptable ranges. • Jointly review with the BAC and recommend for Board’s approval on the Statement on Risk Management and Internal Control disclosure required by Bursa Malaysia. KEY ROLES & RESPONSIBILITIES For detailed roles & responsibilities of the Committee, please refer to page 149. BOARD SUSTAINABILITY AND RISK COMMITTEE Chairman Ong Ai Lin Senior Independent Non-Executive Director Members Selvendran Katheerayson Non-IndependentNon-ExecutiveDirector(Appointedasmemberw.e.f. 24November2023) Muazzam bin Mohamad Non-IndependentNon-ExecutiveDirector(Appointedasmemberw.e.f. 25August2023) Gopala Krishnan K.Sundaram Independent Non-Executive Director Dato’ Zulkifli bin Ibrahim Independent Non-Executive Director (Appointed as member w.e.f. 1 April 2024) Dato’ Roslina binti Zainal IndependentNon-ExecutiveDirector(Appointedandceasedasmemberw.e.f.
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risk management. This includes theauthority to initiate special investigations, on behalf of the Board, into significant risk management activities when necessary. • Approve the Group’s risk appetite and ensure timely actions are taken when risks exceed acceptable ranges. • Jointly review with the BAC and recommend for Board’s approval on the Statement on Risk Management and Internal Control disclosure required by Bursa Malaysia. KEY ROLES & RESPONSIBILITIES For detailed roles & responsibilities of the Committee, please refer to page 149. BOARD SUSTAINABILITY AND RISK COMMITTEE Chairman Ong Ai Lin Senior Independent Non-Executive Director Members Selvendran Katheerayson Non-IndependentNon-ExecutiveDirector(Appointedasmemberw.e.f. 24November2023) Muazzam bin Mohamad Non-IndependentNon-ExecutiveDirector(Appointedasmemberw.e.f. 25August2023) Gopala Krishnan K.Sundaram Independent Non-Executive Director Dato’ Zulkifli bin Ibrahim Independent Non-Executive Director (Appointed as member w.e.f. 1 April 2024) Dato’ Roslina binti Zainal IndependentNon-ExecutiveDirector(Appointedandceasedasmemberw.e.f. 1July2023and24November2023respectively)Datuk Amran Hafiz bin Affifudin Non-IndependentNon-ExecutiveDirector(Ceasedasmemberw.e.f. 1September2023) Datuk Rawisandran Narayanan IndependentNon-ExecutiveDirector(Ceasedasmemberw.e.f. 18May2023) BOARD SUSTAINABILITY AND RISK COMMITTEE REPORT EFFECTIVE AUDIT AND RISK MANAGEMENT CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 171 EFFECTIVE AUDIT AND RISK MANAGEMENT BOARD SUSTAINABILITY AND RISK COMMITTEE REPORT Refer to SORMIC for more details. Refer to SORMIC for more details. Refer to SORMIC for more details. In addition, the BRC deliberated key operating risks of 14 TNB business entities in the year under review. Based on an annual schedule, TNB business entities table their respective operational risk profile to the BRC, highlighting key risks and mitigations taken to address root causes, emerging risks related to its business and lessons learned from risk events. The BSRC
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w.e.f. 1 April 2024) Dato’ Roslina binti Zainal IndependentNon-ExecutiveDirector(Appointedandceasedasmemberw.e.f. 1July2023and24November2023respectively)Datuk Amran Hafiz bin Affifudin Non-IndependentNon-ExecutiveDirector(Ceasedasmemberw.e.f. 1September2023) Datuk Rawisandran Narayanan IndependentNon-ExecutiveDirector(Ceasedasmemberw.e.f. 18May2023) BOARD SUSTAINABILITY AND RISK COMMITTEE REPORT EFFECTIVE AUDIT AND RISK MANAGEMENT CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 171 EFFECTIVE AUDIT AND RISK MANAGEMENT BOARD SUSTAINABILITY AND RISK COMMITTEE REPORT Refer to SORMIC for more details. Refer to SORMIC for more details. Refer to SORMIC for more details. In addition, the BRC deliberated key operating risks of 14 TNB business entities in the year under review. Based on an annual schedule, TNB business entities table their respective operational risk profile to the BRC, highlighting key risks and mitigations taken to address root causes, emerging risks related to its business and lessons learned from risk events. The BSRC provideddirection and advice for improvements in embedding risk management principles and practices to make informed decisions. In the year under review, the BRC approved revisions to the TNB Investment Risk Methodology and deliberated on reports of specific risk exposures in the areas of safety, legal and compliance, and document management. TNB Risk Dashboard The BRC deliberated on quarterly TNB Risk Dashboard reports consisting of Key Risk Indicators (KRIs) with impact to business operations, financial standing, regulatory, reputation and international investment. KRIs that had surpassed thresholds are deliberated in detail and proposed mitigation are challenged to effectively address related risk exposures and opportunities. Annually, the BSRC approves revisions to the TNB Risk Dashboard to ensure its relevancy and adequacy in view of changes in the risk landscape. Capability Building The BRC mandated for risk practitioners in the Group to be adequately trained and certified by
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In the year under review, the BRC approved revisions to the TNB Investment Risk Methodology and deliberated on reports of specific risk exposures in the areas of safety, legal and compliance, and document management. TNB Risk Dashboard The BRC deliberated on quarterly TNB Risk Dashboard reports consisting of Key Risk Indicators (KRIs) with impact to business operations, financial standing, regulatory, reputation and international investment. KRIs that had surpassed thresholds are deliberated in detail and proposed mitigation are challenged to effectively address related risk exposures and opportunities. Annually, the BSRC approves revisions to the TNB Risk Dashboard to ensure its relevancy and adequacy in view of changes in the risk landscape. Capability Building The BRC mandated for risk practitioners in the Group to be adequately trained and certified by recognisedlocal or international professional bodies to ensure quality risk management practices are effectively implemented at all levels. Risk management training at fundamental and intermediate levels are conducted by TNB Integrated Learning Solution Sdn. Bhd. (ILSAS) to increase the risk competency of employees across the Group. HOW THE COMMITTEE OPERATES Throughout Financial Year 2023, seven (7) BRC meetings were held prior to 25 August 2023 and two (2) BSRC meetings were held for the remaining of the year. Ahead of each meeting, meeting schedules, agenda, papers approved for tabling and updates of outstanding matters from previous meetings were communicated to the BSRC members. The President/CEO, Chief Operating Officer, Chief Sustainability Officer, Chief Risk Officer and Company Secretary, who is also secretary to the BRC/BSRC, attended the meetings. Other attendees, internal or external, were invited to deliberate on matters within their purview. Decisions made during these sessions were diligently documented in action sheets by the Company Secretary, outlining necessary steps for implementation. These action sheets were swiftly circulated to
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competency of employees across the Group. HOW THE COMMITTEE OPERATES Throughout Financial Year 2023, seven (7) BRC meetings were held prior to 25 August 2023 and two (2) BSRC meetings were held for the remaining of the year. Ahead of each meeting, meeting schedules, agenda, papers approved for tabling and updates of outstanding matters from previous meetings were communicated to the BSRC members. The President/CEO, Chief Operating Officer, Chief Sustainability Officer, Chief Risk Officer and Company Secretary, who is also secretary to the BRC/BSRC, attended the meetings. Other attendees, internal or external, were invited to deliberate on matters within their purview. Decisions made during these sessions were diligently documented in action sheets by the Company Secretary, outlining necessary steps for implementation. These action sheets were swiftly circulated to managementteam for further action. Furthermore, the Chairman’s Reports from these BRC/BSRC meetings were presented at Board meetings, facilitating deliberation of key sustainability and risk matters. MAIN ACTIVITIES OF THE BRC/BSRC (I) BRC Below are the key activities of the BRC (until 24 August 2023): TNB RISK MANAGEMENT FRAMEWORK & GOVERNANCE The BRC has approved the TNB Risk Management Framework that provides a structured and consistent approach to risk management across the Group. The implementation of the framework is governed through the TNB risk governance documents, which are guidance documents for the business entities across the Group to implement and integrate risk management into its business operations for informed decision-making and to achieve objectives and targets. The TNB Risk Management Structure described in the TNB Risk Management Framework governs effective risk management implementation in the Group. TNB Strategic Risks & Key Operating Risks The BRC approved 12 TNB Strategic Risks in the year under review. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 172 EFFECTIVE AUDIT AND RISK MANAGEMENT Communication The BRC continues
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2023): TNB RISK MANAGEMENT FRAMEWORK & GOVERNANCE The BRC has approved the TNB Risk Management Framework that provides a structured and consistent approach to risk management across the Group. The implementation of the framework is governed through the TNB risk governance documents, which are guidance documents for the business entities across the Group to implement and integrate risk management into its business operations for informed decision-making and to achieve objectives and targets. The TNB Risk Management Structure described in the TNB Risk Management Framework governs effective risk management implementation in the Group. TNB Strategic Risks & Key Operating Risks The BRC approved 12 TNB Strategic Risks in the year under review. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 172 EFFECTIVE AUDIT AND RISK MANAGEMENT Communication The BRC continues tocascade its tone from the top, and particularly in the year under review, through the first in-person Top Management Risk Forum held since the pandemic. The BRC not only set the tone on the importance of effective risk management but also dialogued with 102 members of top and senior management in navigating a challenging risk landscape. The BRC successfully launched the TNB risk slogan, “RISK - First In Mind”, during the forum and the slogan has been further cascaded to all levels of employees through various communication platforms. Statement on Risk Management and Internal Control The BRC jointly reviewed and endorsed the Statement on Risk Management and Internal Control with the BAC. Subsequently, the Board approved it for inclusion in the TNB Integrated Annual Report. This statement outlines the Group’s implemented risk management practices and internal controls. Additionally, it includes assurance from the President/CEO and Chief Financial Officer to the Board, confirming that the Group’s risk management and internal control system are operating adequately and effectively in all material aspects. (II) BSRC From 25 August 2023 onward, the BSRC
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navigating a challenging risk landscape. The BRC successfully launched the TNB risk slogan, “RISK - First In Mind”, during the forum and the slogan has been further cascaded to all levels of employees through various communication platforms. Statement on Risk Management and Internal Control The BRC jointly reviewed and endorsed the Statement on Risk Management and Internal Control with the BAC. Subsequently, the Board approved it for inclusion in the TNB Integrated Annual Report. This statement outlines the Group’s implemented risk management practices and internal controls. Additionally, it includes assurance from the President/CEO and Chief Financial Officer to the Board, confirming that the Group’s risk management and internal control system are operating adequately and effectively in all material aspects. (II) BSRC From 25 August 2023 onward, the BSRC continuedto exercise the oversight by the Board of Directors on the effective governance and implementation of risk and in addition placed further emphasis on sustainability initiatives, as follows: Sustainability Governance The BSRC deliberated on TNB Sustainability Pathway and Energy Transition (ET) Plan, addressing transition risks and key action items in our ET journey. Additionally, the BSRC also deliberated on the governance and structured monitoring of the TNB Sustainability Pathway and ET Plan that was reformed in FY2022 through the introduction of the Sustainability and Energy Transition Council (SETC). This council aims to coordinate and oversee the TNB ET Plan, providing a platform for discussing the sustainability agenda, strategy development, implementation and value delivery of ET initiatives and climate-related matters. In the year under review, BSRC also approved revisions to the ESG related Key Risk Indicator (KRI) and its status was tabled quarterly through the TNB Risk Dashboard Report. TNB Sustainability Statement The BSRC deliberated on the approach and plan for compliance, assurance, reporting of the TNB Sustainability Statement and the
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addressing transition risks and key action items in our ET journey. Additionally, the BSRC also deliberated on the governance and structured monitoring of the TNB Sustainability Pathway and ET Plan that was reformed in FY2022 through the introduction of the Sustainability and Energy Transition Council (SETC). This council aims to coordinate and oversee the TNB ET Plan, providing a platform for discussing the sustainability agenda, strategy development, implementation and value delivery of ET initiatives and climate-related matters. In the year under review, BSRC also approved revisions to the ESG related Key Risk Indicator (KRI) and its status was tabled quarterly through the TNB Risk Dashboard Report. TNB Sustainability Statement The BSRC deliberated on the approach and plan for compliance, assurance, reporting of the TNB Sustainability Statement and the TNBMateriality Matrix, which forms part of the TNB Integrated Annual Report. The TNB Sustainability Statement is prepared in alignment with Bursa requirements and is guided by the Bursa Sustainability Reporting Guide (3rd Edition). CONCLUSION The BSRC continues to exercise its oversight over the implementation of risk management initiatives for the achievement of business objectives. In addition, BSRC will have greater oversight over the implementation of the sustainability framework and the deployment of initiatives that are supported by specific indicators measuring performance against sustainability goals and targets. This statement was made in accordance with the resolution of the Board of Directors dated 27 February 2024. BOARD SUSTAINABILITY AND RISK COMMITTEE REPORT CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 173 The Group Internal Audit Department (GIA) of TNB is established by the Board to provide independent, objective assurance and consulting services designed to add value and improve TNB’s operations. GIA assists TNB in accomplishing its business objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness
[ 174, 175 ]
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its oversight over the implementation of risk management initiatives for the achievement of business objectives. In addition, BSRC will have greater oversight over the implementation of the sustainability framework and the deployment of initiatives that are supported by specific indicators measuring performance against sustainability goals and targets. This statement was made in accordance with the resolution of the Board of Directors dated 27 February 2024. BOARD SUSTAINABILITY AND RISK COMMITTEE REPORT CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 173 The Group Internal Audit Department (GIA) of TNB is established by the Board to provide independent, objective assurance and consulting services designed to add value and improve TNB’s operations. GIA assists TNB in accomplishing its business objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness ofgovernance, risk management and control processes. GIA reports directly to the BAC to preserve its independence and objectivity, and administratively to President/CEO to enable the required stature to fulfil its responsibilities. GIA is headed by the Chief Internal Auditor (CIA), Lizah Abd Wahab since 1 April 2021. With more than 20 years of experience in internal auditing, she brings a wealth of expertise to steer the team with proficiency and direction. She holds a Bachelor of Accounting and Finance degree from Manchester Metropolitan University, United Kingdom and a Master of Business Administration from Universiti Tenaga Nasional and Graduate Certificate in Management from the University of Melbourne. Additionally, she is a Certified Internal Auditor and obtained a Certification of Risk Management Assurance from Institute of Internal Auditors (IIA). APPROACHES AND FRAMEWORK GIA strives to protect and enhance organisational value by providing risk-based and objective assurance, advice and insight through innovative solutions. The Internal Audit Charter, approved by the BAC, delineates GIA’s responsibilities, authority,
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by the Chief Internal Auditor (CIA), Lizah Abd Wahab since 1 April 2021. With more than 20 years of experience in internal auditing, she brings a wealth of expertise to steer the team with proficiency and direction. She holds a Bachelor of Accounting and Finance degree from Manchester Metropolitan University, United Kingdom and a Master of Business Administration from Universiti Tenaga Nasional and Graduate Certificate in Management from the University of Melbourne. Additionally, she is a Certified Internal Auditor and obtained a Certification of Risk Management Assurance from Institute of Internal Auditors (IIA). APPROACHES AND FRAMEWORK GIA strives to protect and enhance organisational value by providing risk-based and objective assurance, advice and insight through innovative solutions. The Internal Audit Charter, approved by the BAC, delineates GIA’s responsibilities, authority, andscope of internal audit activities. The Charter is reviewed annually to ensure continued relevance to its intended purpose. The processes and activities of GIA are governed by the standards and principles outlined in the International Professional Practices Framework (IPPF) issued by IIA, which comprises Core Principles for the Professional Practice of Internal Auditing, Code of Ethics, International Standards for the Professional Practice of Internal Auditing, and Definition of Internal Auditing. GIA undergoes an external evaluation of its effectiveness and quality at least once every three (3) years, and the result of the review is subsequently reported to the BAC. GIA is guided by the Internal Control Framework of Committee of Sponsoring Organizations of the Treadway Commission (COSO) and Control Objectives for Information and Related Technology (COBIT) in assessing and reporting the adequacy and effectiveness of the design and implementation of the organisation’s overall system of internal control, risk management and governance. SCOPE AND COVERAGE GIA persistently develops the annual audit plan through a risk-based approach,
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Framework (IPPF) issued by IIA, which comprises Core Principles for the Professional Practice of Internal Auditing, Code of Ethics, International Standards for the Professional Practice of Internal Auditing, and Definition of Internal Auditing. GIA undergoes an external evaluation of its effectiveness and quality at least once every three (3) years, and the result of the review is subsequently reported to the BAC. GIA is guided by the Internal Control Framework of Committee of Sponsoring Organizations of the Treadway Commission (COSO) and Control Objectives for Information and Related Technology (COBIT) in assessing and reporting the adequacy and effectiveness of the design and implementation of the organisation’s overall system of internal control, risk management and governance. SCOPE AND COVERAGE GIA persistently develops the annual audit plan through a risk-based approach, consideringfactors such as TNB’s risk profile, strategic objectives, regulatory requirements as well as inputs from BAC and senior management. In FY2023, GIA produced a total of 143 reports arising from planned audits (comprising thematic and non-thematic audits), ad-hoc audit, and follow-up audits. Audit findings were presented to the BAC for deliberation and where relevant, BAC requested Management to rectify the weaknesses based on recommendations provided by GIA. GIA oversees the execution of corrective actions using the Audit Management System and reports the status to BAC and Management on a quarterly basis. GIA has classified the areas of review into six (6) audit hotspots, aligning with current trends, shifts in risk landscape, and the dynamic roles of internal auditors. During FY2023, some of the focal areas reviewed encompassed: • Corporate Governance Compliance • Document Management System • HR Reskilling & Upskilling Management • Electric Vehicle Ecosystem • TNB Ways of Working Initiatives • Section 17A Malaysian Anti-Corruption Commission Act* • Health, Safety & Environment Management • Operation and Maintenance • Revenue
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Audit findings were presented to the BAC for deliberation and where relevant, BAC requested Management to rectify the weaknesses based on recommendations provided by GIA. GIA oversees the execution of corrective actions using the Audit Management System and reports the status to BAC and Management on a quarterly basis. GIA has classified the areas of review into six (6) audit hotspots, aligning with current trends, shifts in risk landscape, and the dynamic roles of internal auditors. During FY2023, some of the focal areas reviewed encompassed: • Corporate Governance Compliance • Document Management System • HR Reskilling & Upskilling Management • Electric Vehicle Ecosystem • TNB Ways of Working Initiatives • Section 17A Malaysian Anti-Corruption Commission Act* • Health, Safety & Environment Management • Operation and Maintenance • Revenue Assurance• Electricity Supply Application • Production Management • HR Management* • Competency Development • Asset Management • Corporate Ventures & Development • Rehiring & Renewal of Contract Staff • Direct Negotiation Process • Warehouse Management • Vendor Management • Coal & Freight Procurement • Material Planning and Sourcing • Information Communication & Technology Systems • Operational Technology Security & Access Controls • Virtual Private Network • Careline World Class Contact Centre Systems • Non-Purchase Order Solutions • Cloud Management • TNB Global Captive (L) Ltd • Incentive Based Regulation • Tax Management Environment, Social & Governance (ESG) Essentials HS1 HS2 Business & Operational Excellence HS3 Supply Chain Resilience HS4 IT and Cyber Security HS6 Asset Development HS5 Managing Stakeholders • Project Management • Verification of Works Note: * Indicates thematic audits. Areas of Review Audit Hotspots (HS) EFFECTIVE AUDIT AND RISK MANAGEMENT STATEMENT ON INTERNAL AUDIT FUNCTION TENAGA NASIONAL BERHAD Integrated Annual Report 2023 174 EFFECTIVE AUDIT AND RISK MANAGEMENT PROFESSIONAL QUALIFICATION AND CONTINUOUS DEVELOPMENT GIA is committed to fostering
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Procurement • Material Planning and Sourcing • Information Communication & Technology Systems • Operational Technology Security & Access Controls • Virtual Private Network • Careline World Class Contact Centre Systems • Non-Purchase Order Solutions • Cloud Management • TNB Global Captive (L) Ltd • Incentive Based Regulation • Tax Management Environment, Social & Governance (ESG) Essentials HS1 HS2 Business & Operational Excellence HS3 Supply Chain Resilience HS4 IT and Cyber Security HS6 Asset Development HS5 Managing Stakeholders • Project Management • Verification of Works Note: * Indicates thematic audits. Areas of Review Audit Hotspots (HS) EFFECTIVE AUDIT AND RISK MANAGEMENT STATEMENT ON INTERNAL AUDIT FUNCTION TENAGA NASIONAL BERHAD Integrated Annual Report 2023 174 EFFECTIVE AUDIT AND RISK MANAGEMENT PROFESSIONAL QUALIFICATION AND CONTINUOUS DEVELOPMENT GIA is committed to fostering continuouslearning and development among internal auditors, aiming to ensure high level of proficiency and demonstration of due professional care in fulfilling their responsibilities. As of 31 December 2023, 31 auditors in GIA hold various professional certifications, as outlined below: CERTIFICATION NO. OF CERTIFICATIONS OBTAINED Certified Internal Auditor (CIA) 14 Professional Technologist 11 Certification in Risk Management Assurance (CRMA) 4 Certified Information System Auditor (CISA) 4 Association of Chartered Certified Accountants (ACCA) 3 Chartered Accountant (Malaysia) 3 CISCO Certified Network Associate (CCNA) 3 Certified COBIT 5 3 Professional Engineer 2 Certified Fraud Examiner (CFE) 1 Chartered Institute of Management Accountants (CIMA) 1 Malaysia Institute of Certified Public Accountants (MICPA) 1 Total 50 In delivering value to the Company and ensuring the efficiency of audit activities, the internal auditors’ key performance indicators include value creation in terms of cost savings/recoveries and business process improvements implemented, completion of audit plan, and audit turnaround. Beyond executing audit
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31 December 2023, 31 auditors in GIA hold various professional certifications, as outlined below: CERTIFICATION NO. OF CERTIFICATIONS OBTAINED Certified Internal Auditor (CIA) 14 Professional Technologist 11 Certification in Risk Management Assurance (CRMA) 4 Certified Information System Auditor (CISA) 4 Association of Chartered Certified Accountants (ACCA) 3 Chartered Accountant (Malaysia) 3 CISCO Certified Network Associate (CCNA) 3 Certified COBIT 5 3 Professional Engineer 2 Certified Fraud Examiner (CFE) 1 Chartered Institute of Management Accountants (CIMA) 1 Malaysia Institute of Certified Public Accountants (MICPA) 1 Total 50 In delivering value to the Company and ensuring the efficiency of audit activities, the internal auditors’ key performance indicators include value creation in terms of cost savings/recoveries and business process improvements implemented, completion of audit plan, and audit turnaround. Beyond executing audit engagements,GIA was proactively involved in bolstering the internal control system across operations through sharing of knowledge and best practices on risk management and internal controls. RESOURCES The internal audit activities for FY2023 were carried out by a team of 62 internal auditors with diverse disciplines, as summarised below: The overall cost incurred in managing the internal audit function for FY2023 is RM14.93 million, comprising mainly staff costs and other operating expenses, as follows: RM14.93 million Total Costs Incurred for FY2023 RM13.67 mil (92%) Staff costs RM1.26 mil (8%) Other operating costs Engineering 25 (40%) Accounting, Finance and Business 30 (48%) Quantity Surveying 2 (4%) System & Data Analyst/Information Technology 5 (8%) 62 Total Number of Auditors STATEMENT ON INTERNAL AUDIT FUNCTION CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 175 In addition to the above, 32% (20 auditors) are actively engaged in pursuing professional certifications at various levels. GIA commits to ensure that the level of auditors’ skills, knowledge and competencies are
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carried out by a team of 62 internal auditors with diverse disciplines, as summarised below: The overall cost incurred in managing the internal audit function for FY2023 is RM14.93 million, comprising mainly staff costs and other operating expenses, as follows: RM14.93 million Total Costs Incurred for FY2023 RM13.67 mil (92%) Staff costs RM1.26 mil (8%) Other operating costs Engineering 25 (40%) Accounting, Finance and Business 30 (48%) Quantity Surveying 2 (4%) System & Data Analyst/Information Technology 5 (8%) 62 Total Number of Auditors STATEMENT ON INTERNAL AUDIT FUNCTION CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 175 In addition to the above, 32% (20 auditors) are actively engaged in pursuing professional certifications at various levels. GIA commits to ensure that the level of auditors’ skills, knowledge and competencies are maintainedas reflected in the Internal Audit Charter. These are accomplished through the following: • Active participation of auditors in national conferences and trainings (both internally and externally) focused on diverse areas such as auditing, strategic initiatives, leadership and communication, business acumen, data analytics, and personal development. • Involvement in training programs focused on ESG matters, aimed at acquiring a comprehensive understanding and insights into the fundamentals of ESG. This encompasses methodology for providing sustainability assurance, aligning with the enhanced sustainability disclosure mandated by Bursa Malaysia. • Maintain corporate membership status in IIA Malaysia, ensuring internal auditors have continuous access to valuable resources such as trainings, reading materials, and audit-related updates, fostering a well-informed and connected audit community. • Implemented succession management programme tailored to internal auditors at different levels, ensuring a strategic approach to talent development and continuity within the audit team. As of 31 December 2023, GIA invested a total cost of RM209,477 on trainings and conferences, aimed
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such as auditing, strategic initiatives, leadership and communication, business acumen, data analytics, and personal development. • Involvement in training programs focused on ESG matters, aimed at acquiring a comprehensive understanding and insights into the fundamentals of ESG. This encompasses methodology for providing sustainability assurance, aligning with the enhanced sustainability disclosure mandated by Bursa Malaysia. • Maintain corporate membership status in IIA Malaysia, ensuring internal auditors have continuous access to valuable resources such as trainings, reading materials, and audit-related updates, fostering a well-informed and connected audit community. • Implemented succession management programme tailored to internal auditors at different levels, ensuring a strategic approach to talent development and continuity within the audit team. As of 31 December 2023, GIA invested a total cost of RM209,477 on trainings and conferences, aimed atenhancing auditors’ skills, knowledge, and competencies. SUMMARY OF GIA’S ACTIVITIES IN FY2023 The key activities undertaken by GIA in FY2023 are as follows: • Provided independent and objective assurance on the adequacy of internal controls implemented to mitigate risk exposures. The reports issued to respective client, senior management, and BAC encompassed observations, root causes, recommendations, management responses, deadline, and person responsible and accountable for implementation of corrective actions. • Presented TNB’s State of Internal Controls to BAC on a quarterly basis covering audit completion status against the approved audits, risks reviewed during audits, results of internal control assessment, and status of corrective actions including aging for pending actions. • Conducted follow-up audits on corrective actions agreed upon by management to assess the effectiveness and efficiency of the actions implemented. • Participated in periodic management and board breakouts, offering independent feedback on governance, risks, and controls. This
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in FY2023 are as follows: • Provided independent and objective assurance on the adequacy of internal controls implemented to mitigate risk exposures. The reports issued to respective client, senior management, and BAC encompassed observations, root causes, recommendations, management responses, deadline, and person responsible and accountable for implementation of corrective actions. • Presented TNB’s State of Internal Controls to BAC on a quarterly basis covering audit completion status against the approved audits, risks reviewed during audits, results of internal control assessment, and status of corrective actions including aging for pending actions. • Conducted follow-up audits on corrective actions agreed upon by management to assess the effectiveness and efficiency of the actions implemented. • Participated in periodic management and board breakouts, offering independent feedback on governance, risks, and controls. This involvementalso served to gain insights into the Company’s direction, enabling the provision of value-added assurance and advisory roles. • Collaborated with Risk Management Department to discuss on Company’s risk indicators, emerging risks, and pertinent mitigation plans. Additionally, quarterly coordination meetings were held with the External Auditor to address audit scope/issues, ensuring comprehensive coverage and minimising duplication of effort. • Conducted syndication sessions with TNB’s senior management to comprehend emerging risks and concerns facing TNB, to be incorporated into the development of Annual Audit Plan. • Maintained a comprehensive Quality Assurance and Improvement Programme (QAIP) covering all aspects of the internal audit activities. This programme evaluates the adherence of audit activities to the standards established in IPPF. • Organised mentoring and connecting sessions that fostered interaction with BAC members and TNB’s top management, providing valuable opportunities for guidance and relationship building for GIA auditors. • Organised series of company-wide
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with Risk Management Department to discuss on Company’s risk indicators, emerging risks, and pertinent mitigation plans. Additionally, quarterly coordination meetings were held with the External Auditor to address audit scope/issues, ensuring comprehensive coverage and minimising duplication of effort. • Conducted syndication sessions with TNB’s senior management to comprehend emerging risks and concerns facing TNB, to be incorporated into the development of Annual Audit Plan. • Maintained a comprehensive Quality Assurance and Improvement Programme (QAIP) covering all aspects of the internal audit activities. This programme evaluates the adherence of audit activities to the standards established in IPPF. • Organised mentoring and connecting sessions that fostered interaction with BAC members and TNB’s top management, providing valuable opportunities for guidance and relationship building for GIA auditors. • Organised series of company-wide anddivision-tailored webinars focused on raising awareness about the role of internal audit department within an organisation and emphasizing key aspects of risks and internal controls. • Participated as panellist at national conferences, contributing valuable insights and perspectives to enrich the discussions. • Contributed as taskforce members of the committee in developing the Frequently Asked Question (FAQ) document for IIA Malaysia on Internal Review of Sustainability Statement by Internal Auditors. • Attended Head of ASEAN Power Utilities/Authorities (HAPUA) Internal Audit Summit, which centred on topics including data analytics, third party vendor risk management, supply chain disruption, fraud, and sustainability. The summit involved the engagement of internal audit functions from Singapore, Thailand, Indonesia, Philippines, and Vietnam. • Executed guest auditor initiative involving subsidiaries’ internal audit personnel, along with internal and external attachment programs aimed at enhancing knowledge and expertise. • Implemented the BAC Meeting Observer program,
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and emphasizing key aspects of risks and internal controls. • Participated as panellist at national conferences, contributing valuable insights and perspectives to enrich the discussions. • Contributed as taskforce members of the committee in developing the Frequently Asked Question (FAQ) document for IIA Malaysia on Internal Review of Sustainability Statement by Internal Auditors. • Attended Head of ASEAN Power Utilities/Authorities (HAPUA) Internal Audit Summit, which centred on topics including data analytics, third party vendor risk management, supply chain disruption, fraud, and sustainability. The summit involved the engagement of internal audit functions from Singapore, Thailand, Indonesia, Philippines, and Vietnam. • Executed guest auditor initiative involving subsidiaries’ internal audit personnel, along with internal and external attachment programs aimed at enhancing knowledge and expertise. • Implemented the BAC Meeting Observer program, allowingmanagers/ executives to participate as observers. This initiative offers valuable opportunity for practical learning and exposure amongst auditors. • Demonstrated commitment to sustainability goals through GIA’s corporate social responsibility (CSR) programme and other initiatives, including tree planting, gotong-royong at orphanage, donation for school children, and recycling activity. EFFECTIVE AUDIT AND RISK MANAGEMENT STATEMENT ON INTERNAL AUDIT FUNCTION TENAGA NASIONAL BERHAD Integrated Annual Report 2023 176 ANNUAL GENERAL MEETING We value and facilitate a direct, two-way dialogue with the shareholders and investors. It is our top priority to provide relevant information to shareholders, listen to and understand their perspectives and respond to their feedback. Our AGM plays an important role in providing the shareholders with an opportunity to communicate directly with the Chairman and President/CEO about the business, governance, financial performance and prospects. It also provides an opportunity for shareholders to raise questions for the Board, T
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• Demonstrated commitment to sustainability goals through GIA’s corporate social responsibility (CSR) programme and other initiatives, including tree planting, gotong-royong at orphanage, donation for school children, and recycling activity. EFFECTIVE AUDIT AND RISK MANAGEMENT STATEMENT ON INTERNAL AUDIT FUNCTION TENAGA NASIONAL BERHAD Integrated Annual Report 2023 176 ANNUAL GENERAL MEETING We value and facilitate a direct, two-way dialogue with the shareholders and investors. It is our top priority to provide relevant information to shareholders, listen to and understand their perspectives and respond to their feedback. Our AGM plays an important role in providing the shareholders with an opportunity to communicate directly with the Chairman and President/CEO about the business, governance, financial performance and prospects. It also provides an opportunity for shareholders to raise questions for the Board, T opManagement and the External Auditors on the management and performance of the Company. The Board ensures that shareholders are given sufficient notice and time to consider the resolutions that will be tabled and discussed at the AGM. The AGM Notice includes explanatory notes that contain further information on the proposed resolutions. It has been the Company’s practice as per the MCCG, to issue out the Notice of AGM to the shareholders at least 28 days prior to the meeting. TNB hosted its 33rd AGM on 18 May 2023 virtually via Remote Participation and Voting (RPV) at Pusat Konvensyen Leo Moggie, TNB Platinum, No. 3, Jalan Bukit Pantai, Bangsar, 59100 Kuala Lumpur, Malaysia, the Broadcast Venue. Holding a virtual AGM allows our shareholders with the opportunity to participate in the AGM regardless of their geographical differences. A dedicated link was created in our website within a stipulated timeframe so as to provide the shareholders with all information they needed to attend the meeting, including our virtual AGM online guide on how to use the online facility. In line with the Group’s commitment to
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the Company’s practice as per the MCCG, to issue out the Notice of AGM to the shareholders at least 28 days prior to the meeting. TNB hosted its 33rd AGM on 18 May 2023 virtually via Remote Participation and Voting (RPV) at Pusat Konvensyen Leo Moggie, TNB Platinum, No. 3, Jalan Bukit Pantai, Bangsar, 59100 Kuala Lumpur, Malaysia, the Broadcast Venue. Holding a virtual AGM allows our shareholders with the opportunity to participate in the AGM regardless of their geographical differences. A dedicated link was created in our website within a stipulated timeframe so as to provide the shareholders with all information they needed to attend the meeting, including our virtual AGM online guide on how to use the online facility. In line with the Group’s commitment to ESGas well as to achieve cost efficiencies, the shareholders may access the digital copy of TNB’s Integrated Annual Report 2023 by downloading it from the Company’s website. Aside from that, TNB also issued out postcards with QR code to the shareholders, consisting the Notice of 33rd AGM, Administrative Details of the 33rd AGM, Integrated Annual Report 2023, Proxy Form and Requisition Form to the shareholders, which were also available at the Company’s website. A total of 1,749 shareholders and proxies representing 3,765,445,568 ordinary shares participated online in TNB Virtual 33rd AGM as per the Attendance Record issued by TNB Share Registrar. Saved for Datin Rashidah binti Mohd Sies and Datuk Rawisandran Narayanan, all Directors attended the AGM, including the Chairmen of BAC, BSRC and BNRC. The Engagement Partner of PricewaterhouseCoopers PL T (PwC) was also in attendance at the AGM to answer shareholders’ questions on the conduct of the audit, the preparation and content of the audit report, the accounting policies adopted by the Company and the independence of auditors in the audit process. Shareholders were provided with similar opportunities online as they would have had attending the AGM in person. They were able to view presentation on the
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Company’s website. A total of 1,749 shareholders and proxies representing 3,765,445,568 ordinary shares participated online in TNB Virtual 33rd AGM as per the Attendance Record issued by TNB Share Registrar. Saved for Datin Rashidah binti Mohd Sies and Datuk Rawisandran Narayanan, all Directors attended the AGM, including the Chairmen of BAC, BSRC and BNRC. The Engagement Partner of PricewaterhouseCoopers PL T (PwC) was also in attendance at the AGM to answer shareholders’ questions on the conduct of the audit, the preparation and content of the audit report, the accounting policies adopted by the Company and the independence of auditors in the audit process. Shareholders were provided with similar opportunities online as they would have had attending the AGM in person. They were able to view presentation on the Company’sfinancial and technical/operational highlights by the President/CEO, as well as vote and ask questions during the meeting. During the Meeting, the Chairman encouraged the shareholders to post questions to the Board and Management on the proposed resolutions tabled at the AGM. All questions submitted during the meeting were answered by the President/CEO, Chief Financial Officer and Company Secretary accordingly during the meeting. The 33rd AGM was conducted online via BoardRoom’s LUMI AGM. Shareholders/proxies were able to view the live webcast of the AGM proceedings, post questions to the Board/Management and submit their votes in real-time whilst the meeting was in progress. The procedures for RPV facilities were explained in the Administrative Details of 33rd AGM issued to the shareholders on 17 April 2023. All resolutions of 33rd AGM were tabled and approved by the shareholders. All resolutions were voted by poll and the results were validated by Boardroom Corporate Services Sdn. Bhd., the independent scrutineer appointed by the Company. The outcomes of poll voting were announced to the market and posted on the Company’s website on the same day of the AGM. The minutes of meeting was made
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the meeting. The 33rd AGM was conducted online via BoardRoom’s LUMI AGM. Shareholders/proxies were able to view the live webcast of the AGM proceedings, post questions to the Board/Management and submit their votes in real-time whilst the meeting was in progress. The procedures for RPV facilities were explained in the Administrative Details of 33rd AGM issued to the shareholders on 17 April 2023. All resolutions of 33rd AGM were tabled and approved by the shareholders. All resolutions were voted by poll and the results were validated by Boardroom Corporate Services Sdn. Bhd., the independent scrutineer appointed by the Company. The outcomes of poll voting were announced to the market and posted on the Company’s website on the same day of the AGM. The minutes of meeting was made availableon TNB’s website at www.tnb.com.my no later than 30 business days after the 33rd AGM. INTEGRITYINCORPORATEREPORTINGAND MEANINGFULRELATIONSHIPWITHSTAKEHOLDERS CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 177 Announcements of Consolidated Results Unaudited consolidated results for the first (1st) quarter ended 31 March 2023 Unaudited consolidated results for the third (3rd) quarter ended 30 September 2023 Unaudited consolidated results for the second (2nd) quarter ended 30 June 2023 Unaudited consolidated results for the fourth (4th) quarter ended 31 December 2023 Annual General Meetings Notice of Virtual 33rd Annual General Meeting and Issuance of Integrated Annual Report and Audited Financial Statements for the Financial Year ended 31 December 2022 Notice of Virtual 34th Annual General Meeting and Issuance of Integrated Annual Report and Audited Financial Statements for the Financial Year ended 31 December 2023 Virtual 33rd Annual General Meeting Virtual 34th Annual General Meeting Dividends Interim Single-Tier Dividend of 18.0 sen per ordinary share for the Financial Year ended 31 December 2023 Final Single-Tier Dividend of 28.0 sen per ordinary share for the Financial Year ended 31 December 2023 Payment Date Entitlement Date
[ 178, 179 ]
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September 2023 Unaudited consolidated results for the second (2nd) quarter ended 30 June 2023 Unaudited consolidated results for the fourth (4th) quarter ended 31 December 2023 Annual General Meetings Notice of Virtual 33rd Annual General Meeting and Issuance of Integrated Annual Report and Audited Financial Statements for the Financial Year ended 31 December 2022 Notice of Virtual 34th Annual General Meeting and Issuance of Integrated Annual Report and Audited Financial Statements for the Financial Year ended 31 December 2023 Virtual 33rd Annual General Meeting Virtual 34th Annual General Meeting Dividends Interim Single-Tier Dividend of 18.0 sen per ordinary share for the Financial Year ended 31 December 2023 Final Single-Tier Dividend of 28.0 sen per ordinary share for the Financial Year ended 31 December 2023 Payment Date Entitlement Date EntitlementDate Payment Date BUILDING CONFIDENCE AND POSITIVE RELATIONSHIP THROUGH EFFECTIVE AND PROACTIVE COMMUNICATION WITH THE INVESTMENT COMMUNITY The Group upholds its commitment to foster purposeful and strategic relationship with the investment community through effective communication and proactive engagement. Led by the Senior Management and supported by the Investor Relations team, we adopt an inclusive approach to disseminate relevant and material information regarding the Group’s development. This ensures transparency and facilitate a comprehensive understanding of our strategic initiatives. Our formal communication channels encompass various platforms, namely: • Quarterly and Full Year Financial Results Announcements; • Engagement sessions with the investment community through one-on-one/group meetings, investor conferences and Non-Deal Roadshows; • Annual General Meeting; • Bursa filings and Press Releases; • Annual Integrated and Sustainability Reports; • TNB corporate website’s Investor Relations section; • Site visits to TNB power plants for investors; and • Email updates to investment community. Active communication is instrumental in keeping both existing
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relationship with the investment community through effective communication and proactive engagement. Led by the Senior Management and supported by the Investor Relations team, we adopt an inclusive approach to disseminate relevant and material information regarding the Group’s development. This ensures transparency and facilitate a comprehensive understanding of our strategic initiatives. Our formal communication channels encompass various platforms, namely: • Quarterly and Full Year Financial Results Announcements; • Engagement sessions with the investment community through one-on-one/group meetings, investor conferences and Non-Deal Roadshows; • Annual General Meeting; • Bursa filings and Press Releases; • Annual Integrated and Sustainability Reports; • TNB corporate website’s Investor Relations section; • Site visits to TNB power plants for investors; and • Email updates to investment community. Active communication is instrumental in keeping both existing andpotential investors informed on our strategic developments, financial and technical performance, and other key focus areas as outlined in the ‘Investment Community Feedback’ section below. Our dedicated Investor Relations section on TNB’s corporate website at www.tnb.com.my provides an access to our corporate financial information as well as investor presentation to the investment community. The team welcomes any investor related queries and feedback at [email protected]. ACTIVE DIALOGUE WITH THE INVESTMENT COMMUNITY Amid a challenging year due to fuel price fluctuations and widespread global inflation, the year 2023 unfolded as a pivotal period with the announcement of the National Energy Transition Roadmap (NETR). In response to this noteworthy development, the Investor Relations team remained engaged in fostering active dialogue with the investment community to keep them informed of TNB Energy Transition developments in supporting the NETR. During the year, we conducted 616 engagements with analysts and investors through planned investor relations
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Community Feedback’ section below. Our dedicated Investor Relations section on TNB’s corporate website at www.tnb.com.my provides an access to our corporate financial information as well as investor presentation to the investment community. The team welcomes any investor related queries and feedback at [email protected]. ACTIVE DIALOGUE WITH THE INVESTMENT COMMUNITY Amid a challenging year due to fuel price fluctuations and widespread global inflation, the year 2023 unfolded as a pivotal period with the announcement of the National Energy Transition Roadmap (NETR). In response to this noteworthy development, the Investor Relations team remained engaged in fostering active dialogue with the investment community to keep them informed of TNB Energy Transition developments in supporting the NETR. During the year, we conducted 616 engagements with analysts and investors through planned investor relations activities,including conferences, roadshows, one-on-one/group meetings, analyst briefings, and other communication platforms. 29 May 2023 25 August 2023 29 September 2023 29 March 2024 17 October 2023 18 April 2024 17 April 2023 18 May 2023 22 April 2024 21 May 2024 24 November 2023 27 February 2024 FINANCIAL CALENDAR INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS TENAGA NASIONAL BERHAD Integrated Annual Report 2023 178 INTEGRITYINCORPORATEREPORTINGAND MEANINGFULRELATIONSHIPWITHSTAKEHOLDERS INVESTOR RELATIONS CALENDAR OF EVENTS FOR FY2023 CGS-CIMB 15th Annual Malaysia Virtual Corporate Day Analyst Briefing 4QFY2022 Quarterly Results Announcement INVESTMENT COMMUNITY FEEDBACK Based on Investor Relations’ engagement sessions with the investment community, the primary areas of interest include: • Business strategy and performance • Regulatory framework • Imbalance Cost Pass-Through (ICPT) mechanism • Incentive Based Regulation (IBR) Regulatory Period 4 • National Energy Transition Roadmap (NETR) • Flagship catalyst projects • Market Aggregator • Energy Transition (ET) Plan initiatives
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29 March 2024 17 October 2023 18 April 2024 17 April 2023 18 May 2023 22 April 2024 21 May 2024 24 November 2023 27 February 2024 FINANCIAL CALENDAR INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS TENAGA NASIONAL BERHAD Integrated Annual Report 2023 178 INTEGRITYINCORPORATEREPORTINGAND MEANINGFULRELATIONSHIPWITHSTAKEHOLDERS INVESTOR RELATIONS CALENDAR OF EVENTS FOR FY2023 CGS-CIMB 15th Annual Malaysia Virtual Corporate Day Analyst Briefing 4QFY2022 Quarterly Results Announcement INVESTMENT COMMUNITY FEEDBACK Based on Investor Relations’ engagement sessions with the investment community, the primary areas of interest include: • Business strategy and performance • Regulatory framework • Imbalance Cost Pass-Through (ICPT) mechanism • Incentive Based Regulation (IBR) Regulatory Period 4 • National Energy Transition Roadmap (NETR) • Flagship catalyst projects • Market Aggregator • Energy Transition (ET) Plan initiatives andprogress • Decarbonisation plan • Renewable Energy growth opportunities 28 February 2023 Site Visit to Sepang Solar 16 June 2023 Analyst Briefing 1QFY2023 Quarterly Results Announcement 31 May 2023 AIGCC, Roundtable Discussion on Malaysia’s Energy Transition FY2023 23 June 2023 Nomura Non-Deal Roadshow, T okyo, Japan 20-21 June 2023 CITI Non-Deal Roadshow, New York, United States of America Analyst Briefing 2QFY2023 Quarterly Results Announcement 4 September 2023 CGS-CIMB Corporate Day 12 September 2023 J.P. Morgan ASEAN Energy & Metal 11 July 2023 CLSA ASEAN Forum & Non-Deal Roadshow, Hong Kong 12-13 September 2023 Site Visit to Southern Power Generation 26 October 2023 Bloomberg Buy Side Forum, Kuala Lumpur 3 October 2023 Maybank Non-Deal Roadshow, Singapore 7-9 November 2023 CGS-CIMB ESG Sustainability Conference 17 October 2023 RHB ESG Thematic Conference Analyst Briefing 3QFY2023 Quarterly Results Announcement 9 November 2023 28 November 2023 Event • Capital expenditure plan for ET • TNB’s plan on electric vehicle (EV) ecosystem • Financial sustainability and
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on Malaysia’s Energy Transition FY2023 23 June 2023 Nomura Non-Deal Roadshow, T okyo, Japan 20-21 June 2023 CITI Non-Deal Roadshow, New York, United States of America Analyst Briefing 2QFY2023 Quarterly Results Announcement 4 September 2023 CGS-CIMB Corporate Day 12 September 2023 J.P. Morgan ASEAN Energy & Metal 11 July 2023 CLSA ASEAN Forum & Non-Deal Roadshow, Hong Kong 12-13 September 2023 Site Visit to Southern Power Generation 26 October 2023 Bloomberg Buy Side Forum, Kuala Lumpur 3 October 2023 Maybank Non-Deal Roadshow, Singapore 7-9 November 2023 CGS-CIMB ESG Sustainability Conference 17 October 2023 RHB ESG Thematic Conference Analyst Briefing 3QFY2023 Quarterly Results Announcement 9 November 2023 28 November 2023 Event • Capital expenditure plan for ET • TNB’s plan on electric vehicle (EV) ecosystem • Financial sustainability and return• Working capital management initiatives • Fuel margin • Gearing and financial position • Dividend BUILDING LONG-TERM SHAREHOLDER VALUE In 2023, TNB Board of Directors has approved a final single tier dividend of 28.0 sen per share, raising the single tier dividend total to 46.0 sen per share. This translates to a dividend payout ratio of 66.6% from the Group’s Adjusted PATAMI, honouring the company’s 30% to 60% dividend policy consistently for the last seven (7) financial years. 6 January 2023 6 June 2023 CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 179 ANALYST COVERAGE As one of the top companies on Bursa Malaysia in terms of market capitalisation, we benefit from comprehensive analyst coverage of 21 sell-side research analysts, with 38% representing foreign research houses. Fostering close relationships with these analysts is a priority, ensuring the dissemination of accurate and consistent information to the market regarding the company’s performance and latest developments. This commitment to transparency and collaboration strengthens our communication and engagement with the investment community. Affin Hwang Investment Bank AmInvestment Bank Bank Islam Malaysia
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This translates to a dividend payout ratio of 66.6% from the Group’s Adjusted PATAMI, honouring the company’s 30% to 60% dividend policy consistently for the last seven (7) financial years. 6 January 2023 6 June 2023 CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 179 ANALYST COVERAGE As one of the top companies on Bursa Malaysia in terms of market capitalisation, we benefit from comprehensive analyst coverage of 21 sell-side research analysts, with 38% representing foreign research houses. Fostering close relationships with these analysts is a priority, ensuring the dissemination of accurate and consistent information to the market regarding the company’s performance and latest developments. This commitment to transparency and collaboration strengthens our communication and engagement with the investment community. Affin Hwang Investment Bank AmInvestment Bank Bank Islam Malaysia BerhadCGS-CIMBSecuritiesCLSACiti Research Credit Suisse Morgan StanleyResearch Nomura Public Investment Bank RHB UBS Global Research TA Securities UOB KayHianSecurities KAF-Seagroatt & Campbell Securities Kenanga Investment Bank Maybank Investment Bank Macquarie Capital Securities MIDF AmanahInvestmentBank J.P . Morgan Hong Leong Investment Bank SHARE PRICE PERFORMANCE TNB SHARE PRICE, FBM KLCI INDEX AND VOLUME TRADED IN THE YEAR 2023 Share Price (RM) KLCI Index 10.50 9.50 8.50 7.50 1,650.0 1,600.0 1,450.0 1,500.0 1,550.0 1,400.0 1,350.0 1,300.0 1,200.0 1,250.0 Jan 23 Feb 23 Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 Note: AB = Analyst Briefing Results Announcement KLCI TNB Share Price 28 Nov 2023 AB 3QFY2023 Closing Share Price: RM9.89 31 May 2023 AB 1QFY2023 Closing Share Price: RM9.51 4 Sep 2023 AB 2QFY2023 Closing Share Price: RM9.90 12 Sep 2023 Announcement made to Bursa on interim dividend payment FY2023 Closing Share Price: RM9.84 28 Feb 2023 AB 4QFY2023 Closing Share Price: RM9.37 15 Mar 2023 Announcement made to Bursa on final dividend payment FY2022 Closing Share Price: RM9.42 INTEGRITY IN CORPORATE
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THE YEAR 2023 Share Price (RM) KLCI Index 10.50 9.50 8.50 7.50 1,650.0 1,600.0 1,450.0 1,500.0 1,550.0 1,400.0 1,350.0 1,300.0 1,200.0 1,250.0 Jan 23 Feb 23 Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 Note: AB = Analyst Briefing Results Announcement KLCI TNB Share Price 28 Nov 2023 AB 3QFY2023 Closing Share Price: RM9.89 31 May 2023 AB 1QFY2023 Closing Share Price: RM9.51 4 Sep 2023 AB 2QFY2023 Closing Share Price: RM9.90 12 Sep 2023 Announcement made to Bursa on interim dividend payment FY2023 Closing Share Price: RM9.84 28 Feb 2023 AB 4QFY2023 Closing Share Price: RM9.37 15 Mar 2023 Announcement made to Bursa on final dividend payment FY2022 Closing Share Price: RM9.42 INTEGRITY IN CORPORATE REPORTINGAND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS TENAGA NASIONAL BERHAD Integrated Annual Report 2023 180 INTEGRITYINCORPORATEREPORTINGAND MEANINGFULRELATIONSHIPWITHSTAKEHOLDERS Jan 23 Feb 23 Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 Volume 31 21 26 6 16 11 1 Volume (million) RELATIONSHIP WITH EXTERNAL AUDITORS The Board maintains an open and professional association with External Auditors, and the BAC is entrusted with recommending their appointment or removal, approving their remuneration, and establishing the terms of engagement for Board approval. Responsibilities of the Board and BAC include reviewing, assessing, and monitoring the performance, suitability, and independence of External Auditors. A comprehensive policy outlines guidelines and procedures for the assessment and monitoring processes, covering aspects such as Selection and Appointment, Independence, Conflict of Interest, Non-Audit Services, Rotation of Audit Partner, Annual Reporting, Annual Assessment and Audit Fees. The appointed Audit Partner undergoes rotation at least every five (5) Financial Years, with a mandated two (2) year gap before returning as the Audit Partner for the engagement. While External Auditors may be engaged for non-audit services, their objectivity, judgment and
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open and professional association with External Auditors, and the BAC is entrusted with recommending their appointment or removal, approving their remuneration, and establishing the terms of engagement for Board approval. Responsibilities of the Board and BAC include reviewing, assessing, and monitoring the performance, suitability, and independence of External Auditors. A comprehensive policy outlines guidelines and procedures for the assessment and monitoring processes, covering aspects such as Selection and Appointment, Independence, Conflict of Interest, Non-Audit Services, Rotation of Audit Partner, Annual Reporting, Annual Assessment and Audit Fees. The appointed Audit Partner undergoes rotation at least every five (5) Financial Years, with a mandated two (2) year gap before returning as the Audit Partner for the engagement. While External Auditors may be engaged for non-audit services, their objectivity, judgment and independencemust not be impaired. Written assurance of meeting independence requirements is obligatory for each non-audit service undertaken for the TNB Group. Three (3) fundamental principles govern the prohibition of non-audit services: External Auditors cannot function in a management role, audit their own work, or serve in an advocacy role for TNB Group. Compliance with the By-Laws of the Malaysian Institute of Accountants (MIA) concerning non-audit services is mandatory, with the application of safeguards if necessary. TNB External Auditors Policy stipulates a three (3)-year cooling-off period for a former partner of TNB’s External Auditors before being appointed as a BAC member in accordance with Practice 9.2 of the MCCG. Additionally, in alignment with Guidance 9.3 of the MCCG, the annual assessment of External Auditors incorporates information from the Annual Transparency Report of the audit firm. CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 181 The BAC, in evaluating the External Auditors’ independence, considers non-audit fees provided for services during the Financial Year. The
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cannot function in a management role, audit their own work, or serve in an advocacy role for TNB Group. Compliance with the By-Laws of the Malaysian Institute of Accountants (MIA) concerning non-audit services is mandatory, with the application of safeguards if necessary. TNB External Auditors Policy stipulates a three (3)-year cooling-off period for a former partner of TNB’s External Auditors before being appointed as a BAC member in accordance with Practice 9.2 of the MCCG. Additionally, in alignment with Guidance 9.3 of the MCCG, the annual assessment of External Auditors incorporates information from the Annual Transparency Report of the audit firm. CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 181 The BAC, in evaluating the External Auditors’ independence, considers non-audit fees provided for services during the Financial Year. The conclusionis that these fees do not compromise or impair the independence or objectivity of the External Auditors. The amount of Audit and Non-Audit Fees paid or payable to PwC or its affiliates by the Company and TNB Group for the Financial Year ended 31 December 2023 is as follows: Group RM million Company RM million Statutory Audit 10.3 1.6 Audit Related Services 1.9 1.3 Total 12.2 2.9 Non-Audit Services: - Tax Related Services 0.2 0 - Other Non-Audit Services 0 0 Total 0.2 0 The Non-Audit Fees did not exceed 50% of the Audit Fees for the Financial Year under review, in line with TNB’s External Auditors Policy. All services were procured competitively in accordance with TNB’s Procurement & Supply Chain Policy and Procedures and External Auditors Policy. Non-audit services can be offered by the External Auditors of the Group if there are clear efficiencies and value added benefits to the Group. Based on the External Auditors Assessment Results for the Financial Year 2023, overall, the Company was completely satisfied/satisfied, with a score of 97%, showing an increase of 3.7% compared to the previous Financial Year, with the services provided by PwC in term of quality,
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Services: - Tax Related Services 0.2 0 - Other Non-Audit Services 0 0 Total 0.2 0 The Non-Audit Fees did not exceed 50% of the Audit Fees for the Financial Year under review, in line with TNB’s External Auditors Policy. All services were procured competitively in accordance with TNB’s Procurement & Supply Chain Policy and Procedures and External Auditors Policy. Non-audit services can be offered by the External Auditors of the Group if there are clear efficiencies and value added benefits to the Group. Based on the External Auditors Assessment Results for the Financial Year 2023, overall, the Company was completely satisfied/satisfied, with a score of 97%, showing an increase of 3.7% compared to the previous Financial Year, with the services provided by PwC in term of quality, sufficiencyof resources, communication and interaction and independence, objectivity and professional skepticism. All comments made were forwarded to PwC in order to further improve their services. With that, the Board/BAC are satisfied with the quality of service, sufficiency of resources, communication and interaction and independence, objectivity and professional skepticism demonstrated by PwC in carrying out its duties as External Auditors. Being satisfied with the External Auditors’ performance, the Board recommends their re-appointment for shareholders’ approval at the AGM. INSIDER TRADING Directors and T op Management at TNB must not deal in the securities of the Company or of other listed issuers as long as he/she is in possession of price-sensitive information relating to such listed securities. This adherence is in line with the MMLR and pertinent provisions of the Capital Markets & Services Act 2007. Notices delineating closed periods for trading in TNB’s securities are disseminated on a quarterly basis, well in advance of each closed period. The Company Secretary shall made appropriate announcement upon receiving any notices of dealing in securities in line with Paragraph 14.08 and 14.09 of the MMLR respectively. INTEGRITY IN
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as External Auditors. Being satisfied with the External Auditors’ performance, the Board recommends their re-appointment for shareholders’ approval at the AGM. INSIDER TRADING Directors and T op Management at TNB must not deal in the securities of the Company or of other listed issuers as long as he/she is in possession of price-sensitive information relating to such listed securities. This adherence is in line with the MMLR and pertinent provisions of the Capital Markets & Services Act 2007. Notices delineating closed periods for trading in TNB’s securities are disseminated on a quarterly basis, well in advance of each closed period. The Company Secretary shall made appropriate announcement upon receiving any notices of dealing in securities in line with Paragraph 14.08 and 14.09 of the MMLR respectively. INTEGRITY IN CORPORATEREPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS TENAGA NASIONAL BERHAD Integrated Annual Report 2023 182 RESPONSIBILITY STATEMENT IN RESPECT OF THE FINANCIAL YEAR UNDER REVIEW The Board holds full responsibility for ensuring the preparation of Audited Financial Statements aligns with the Companies Act 2016 and the approved accounting standards set forth by the Malaysian Accounting Standards Board. This commitment is aimed at presenting an accurate portrayal of the Group’s state of affairs, profit or loss and cash flow at the close of the accounting period. In the preparation of these financial statements, the Directors confirm compliance with applicable approved accounting standards in Malaysia, exercising reasonable and prudent judgements and estimates. Furthermore, the Audited Financial Statements are prepared on a going concern basis, as the Board, upon thorough inquiry, reasonably expects the Group to possess adequate resources for its operational continuity in the foreseeable future. INTEGRITYINCORPORATEREPORTINGAND MEANINGFULRELATIONSHIPWITHSTAKEHOLDERS CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 183 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL The Board of Directors
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Statements aligns with the Companies Act 2016 and the approved accounting standards set forth by the Malaysian Accounting Standards Board. This commitment is aimed at presenting an accurate portrayal of the Group’s state of affairs, profit or loss and cash flow at the close of the accounting period. In the preparation of these financial statements, the Directors confirm compliance with applicable approved accounting standards in Malaysia, exercising reasonable and prudent judgements and estimates. Furthermore, the Audited Financial Statements are prepared on a going concern basis, as the Board, upon thorough inquiry, reasonably expects the Group to possess adequate resources for its operational continuity in the foreseeable future. INTEGRITYINCORPORATEREPORTINGAND MEANINGFULRELATIONSHIPWITHSTAKEHOLDERS CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 183 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL The Board of Directors (theBoard) is pleased to present its Statement on Risk Management and Internal Control (SORMIC) for the financial year ended 31 December 2023. This statement, collaboratively developed and jointly endorsed by the Board Sustainability and Risk Committee (BSRC), formerly known as the Board Risk Committee (BRC), and the Board Audit Committee (BAC), adheres to the stipulations set forth in paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Bursa). Additionally, it is guided by the Statement on Risk Management and Internal Control - Guidelines for Directors of Listed Issuers issued by Bursa. The SORMIC delineates the nature and breadth of the risk management and internal control systems in TNB Group, including subsidiaries, throughout the reviewed fiscal year. It provides an overview of the framework, policy, process and measures adopted to mitigate risks and uphold operational integrity within TNB Group. Notably, this disclosure excludes associated companies and joint ventures. The Board persistently upholds its overarching responsibility and remains
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Sustainability and Risk Committee (BSRC), formerly known as the Board Risk Committee (BRC), and the Board Audit Committee (BAC), adheres to the stipulations set forth in paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Bursa). Additionally, it is guided by the Statement on Risk Management and Internal Control - Guidelines for Directors of Listed Issuers issued by Bursa. The SORMIC delineates the nature and breadth of the risk management and internal control systems in TNB Group, including subsidiaries, throughout the reviewed fiscal year. It provides an overview of the framework, policy, process and measures adopted to mitigate risks and uphold operational integrity within TNB Group. Notably, this disclosure excludes associated companies and joint ventures. The Board persistently upholds its overarching responsibility and remains dedicatedto the establishment and continual upkeep of robust, efficient, and effective risk management and internal control systems. This commitment serves to safeguard shareholders’ investments and the assets held by the Group. These systems are designed to manage rather than eliminate risks and therefore provide reasonable rather than absolute assurance against material losses, misstatements, or other significantly adverse consequences. The Board Committees The Board acknowledges the pivotal role of maintaining robust risk management practices and establishing sound internal controls in upholding corporate governance standards. The following Board Committees have been established with clear mandates fostering a culture of structured oversight and operational excellence: Board Audit Committee Board Finance and Investment Committee Board Tender Committee Board Nomination and Remuneration Committee Board Sustainability and Risk Committee (previously BRC until 25 August 2023) Board Long Term Incentive Plan Committee Board Integrity Committee The Management Committees TNB Management is accountable to the Board to ensure effective
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investments and the assets held by the Group. These systems are designed to manage rather than eliminate risks and therefore provide reasonable rather than absolute assurance against material losses, misstatements, or other significantly adverse consequences. The Board Committees The Board acknowledges the pivotal role of maintaining robust risk management practices and establishing sound internal controls in upholding corporate governance standards. The following Board Committees have been established with clear mandates fostering a culture of structured oversight and operational excellence: Board Audit Committee Board Finance and Investment Committee Board Tender Committee Board Nomination and Remuneration Committee Board Sustainability and Risk Committee (previously BRC until 25 August 2023) Board Long Term Incentive Plan Committee Board Integrity Committee The Management Committees TNB Management is accountable to the Board to ensure effective implementationof the Group’s risk management and internal controls. The Management is responsible for implementing the processes to assess, monitor and report risk exposures and ensuring effectiveness of internal controls, taking appropriate and timely action as required. The following Management Committees are in place to implement and execute the Group’s risk management and internal control systems for the achievement of short- and long-term business objectives. Group Executive Management Committee Information & Communication Technology Governance Committee Group People Committee Regulatory Council Group Management Tender Committee TNB Sustainability and Energy Transition Council Green Lane Tender Committee Electric Vehicle Council Commodity Procurement Executive Committee Technology Council Investment Executive Committee Smart Meter Council Energy Supply Committee Health, Safety and Environment Council Integrity Council TENAGA NASIONAL BERHAD Integrated Annual Report 2023 184 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL RISK MANAGEMENT Risk Management Framework
[ 185, 186 ]
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is responsible for implementing the processes to assess, monitor and report risk exposures and ensuring effectiveness of internal controls, taking appropriate and timely action as required. The following Management Committees are in place to implement and execute the Group’s risk management and internal control systems for the achievement of short- and long-term business objectives. Group Executive Management Committee Information & Communication Technology Governance Committee Group People Committee Regulatory Council Group Management Tender Committee TNB Sustainability and Energy Transition Council Green Lane Tender Committee Electric Vehicle Council Commodity Procurement Executive Committee Technology Council Investment Executive Committee Smart Meter Council Energy Supply Committee Health, Safety and Environment Council Integrity Council TENAGA NASIONAL BERHAD Integrated Annual Report 2023 184 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL RISK MANAGEMENT Risk Management Framework Riskmanagement in TNB is governed by the TNB Risk Management Framework, which adopts the principles and guidelines set out in ISO 31000:2018, ‘Risk Management - Guidelines’. This framework provides a structured and consistent approach for risk management implementation across the Group. The purpose of risk management is to create and protect value and this is exemplified through each element in the TNB Risk Management Framework. The framework has been approved by the BRC/BSRC and is reviewed annually. The implementation of the TNB Risk Management Framework is documented through six risk governance documents, which are the TNB Risk Management Framework, TNB Risk Management Policy, TNB Risk Assessment Process, Risk Review, Risk Report and Key Risk Indicator (KRI). TNB Risk Governance Documents The TNB Risk Management Framework document describes the criteria and frequency of revision of these risk governance documents and the levels of approving authority to ensure the documents are robust, practical for implementation and
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This framework provides a structured and consistent approach for risk management implementation across the Group. The purpose of risk management is to create and protect value and this is exemplified through each element in the TNB Risk Management Framework. The framework has been approved by the BRC/BSRC and is reviewed annually. The implementation of the TNB Risk Management Framework is documented through six risk governance documents, which are the TNB Risk Management Framework, TNB Risk Management Policy, TNB Risk Assessment Process, Risk Review, Risk Report and Key Risk Indicator (KRI). TNB Risk Governance Documents The TNB Risk Management Framework document describes the criteria and frequency of revision of these risk governance documents and the levels of approving authority to ensure the documents are robust, practical for implementation and reflectiveof the internal and external context. In the year under review, no major change was made and revisions for clarity in these documents were deliberated and approved by the Group Risk Management Working Committee (GRMWC). Risk Review Guide Structured risk review methodology Risk Report Guide Structured and standardised risk reporting template Key Risk Indicator Guide Structured and standardised methodology to identify, monitor and report KRIs Four Risk Management Guides TNB Risk Management Framework Document Structuredandconsistentapproachto riskmanagement TNB Risk Management Policy StatementdeclaringTNB’scommitmentand approachtoriskmanagement VALUE CREATION & PROTECTION Leadership & Commitment Culture Business Strategy Communication Integration Risk Assessment Review, Monitor & Report TNB Risk Assessment Process Guide Structured and standardised risk assessment methodology CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 185 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Risk Management Policy The TNB Risk Management Policy is a statement of the overall intention and direction of the Group on risk management. It describes the commitment of the Group to
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Group Risk Management Working Committee (GRMWC). Risk Review Guide Structured risk review methodology Risk Report Guide Structured and standardised risk reporting template Key Risk Indicator Guide Structured and standardised methodology to identify, monitor and report KRIs Four Risk Management Guides TNB Risk Management Framework Document Structuredandconsistentapproachto riskmanagement TNB Risk Management Policy StatementdeclaringTNB’scommitmentand approachtoriskmanagement VALUE CREATION & PROTECTION Leadership & Commitment Culture Business Strategy Communication Integration Risk Assessment Review, Monitor & Report TNB Risk Assessment Process Guide Structured and standardised risk assessment methodology CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 185 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Risk Management Policy The TNB Risk Management Policy is a statement of the overall intention and direction of the Group on risk management. It describes the commitment of the Group to assessrisks in alignment to business objectives, integrating risk management in all decision-making processes, anticipating potential risks while identifying opportunities in response to changes in the internal and external environments and ensuring that risk information is communicated through a clear and robust monitoring and reporting structure. The policy emphasises on the role of all TNB employees, who are responsible and accountable to manage risks by taking all reasonable care to minimise loss, maximise opportunity and ensure TNB’s reputation is upheld. Leadership and Commitment The TNB Risk Management Structure depicts the leadership and commitment of Board and Management in the escalation and cascading of risk information across all levels. Since its establishment on June 5, 2013, the Board Risk Committee (BRC) reaffirms the Board’s commitment to ensure that the Group has in place a robust risk management framework and that such framework has been effectively implemented to enhance the Group’s ability to achieve its
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the internal and external environments and ensuring that risk information is communicated through a clear and robust monitoring and reporting structure. The policy emphasises on the role of all TNB employees, who are responsible and accountable to manage risks by taking all reasonable care to minimise loss, maximise opportunity and ensure TNB’s reputation is upheld. Leadership and Commitment The TNB Risk Management Structure depicts the leadership and commitment of Board and Management in the escalation and cascading of risk information across all levels. Since its establishment on June 5, 2013, the Board Risk Committee (BRC) reaffirms the Board’s commitment to ensure that the Group has in place a robust risk management framework and that such framework has been effectively implemented to enhance the Group’s ability to achieve its strategicobjectives. The BRC is supported by the Management, primarily through the Group Executive Management Committee chaired by the President/CEO. It is complemented by the cross-functional GRMWC and Subsidiaries Risk Management Working Committee (SRMWC). The Risk Management Department (RMD) helmed by the Chief Risk Officer facilitates the implementation of the TNB Risk Management Framework. Recognising the importance of sustainability in our business, the BRC Terms of Reference was reviewed, which led to the transformation of the BRC to the Board Sustainability and Risk Committee (BSRC), effective from 25 August 2023. Consequent to changes in the organisational structure in the fiscal year, the Chief Risk Officer (CRO) reports to the Chief Sustainability Officer with RMD being one of the departments in the newly formed Sustainability Division effective from 1 June 2023. Throughout the fiscal year, the BRC/BSRC upheld its commitment to diligent oversight, convening nine (9) meetings to address various risks and opportunities associated with investment proposals, strategic initiatives, and operational dynamics. These meetings also encompassed a thorough review of TNB business
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Risk Officer facilitates the implementation of the TNB Risk Management Framework. Recognising the importance of sustainability in our business, the BRC Terms of Reference was reviewed, which led to the transformation of the BRC to the Board Sustainability and Risk Committee (BSRC), effective from 25 August 2023. Consequent to changes in the organisational structure in the fiscal year, the Chief Risk Officer (CRO) reports to the Chief Sustainability Officer with RMD being one of the departments in the newly formed Sustainability Division effective from 1 June 2023. Throughout the fiscal year, the BRC/BSRC upheld its commitment to diligent oversight, convening nine (9) meetings to address various risks and opportunities associated with investment proposals, strategic initiatives, and operational dynamics. These meetings also encompassed a thorough review of TNB business entities’operational risk profiles and in-depth deliberations on KRI. Moreover, the BRC/BSRC also endorsed the SORMIC FY2022 and TNB Materiality Matrix FY2023, and approved the revised TNB Risk Dashboard FY2023, TNB Strategic Risks and the updated TNB Investment Risk Methodology. Business entities provided assurances to the BRC/BSRC regarding their risk management and internal controls, thus assisting the Board in its decision-making, particularly in managing potential risks and harnessing opportunities. Assurance (Internal and External Audit) Risk Manager Risk Owner Divisions, Departments and Subsidiaries TNB Board of Directors Chief Risk Officer Risk Management Department Group Executive Management Committee Group/Subsidiaries Risk Management Working Committee TNB Board Sustainability and Risk Committee (BSRC)* Note: * BRC changed to BSRC on 25 August 2023. TNB Risk Management Structure TENAGA NASIONAL BERHAD Integrated Annual Report 2023 186 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Risk Assessment Process TNB business entities are guided by the TNB Risk Assessment Process that provides a structured approach to identify, analyse,
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Strategic Risks and the updated TNB Investment Risk Methodology. Business entities provided assurances to the BRC/BSRC regarding their risk management and internal controls, thus assisting the Board in its decision-making, particularly in managing potential risks and harnessing opportunities. Assurance (Internal and External Audit) Risk Manager Risk Owner Divisions, Departments and Subsidiaries TNB Board of Directors Chief Risk Officer Risk Management Department Group Executive Management Committee Group/Subsidiaries Risk Management Working Committee TNB Board Sustainability and Risk Committee (BSRC)* Note: * BRC changed to BSRC on 25 August 2023. TNB Risk Management Structure TENAGA NASIONAL BERHAD Integrated Annual Report 2023 186 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Risk Assessment Process TNB business entities are guided by the TNB Risk Assessment Process that provides a structured approach to identify, analyse, evaluateand treat risks. TNB business entities apply the process in a systematic, iterative and collaborative manner, drawing on the knowledge and views of stakeholders to develop and review their respective risk profiles. The TNB Risk Assessment Process was applied in the assessment of the TNB Strategic Risks based on the Reimagining TNB (RT) strategy and in consideration of internal and external factors. Below are the 12TNB Strategic Risks approved by the BRC/BSRC in the year under review: Category No. TNB Strategic Risk External 1. Catastrophic disruptions from external factors TNB faces the potential threat of unpredictable external events, which possess the capacity to significantly disrupt our business operations, profitability, and/or reputation. These events encompass various external factors, including but not limited to pandemics, cybersecurity attacks, economic collapses, and geopolitical risks. Although these occurrences have a low probability of transpiring, their unpredictability renders them capable of inflicting catastrophic impacts on our business operations.
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to develop and review their respective risk profiles. The TNB Risk Assessment Process was applied in the assessment of the TNB Strategic Risks based on the Reimagining TNB (RT) strategy and in consideration of internal and external factors. Below are the 12TNB Strategic Risks approved by the BRC/BSRC in the year under review: Category No. TNB Strategic Risk External 1. Catastrophic disruptions from external factors TNB faces the potential threat of unpredictable external events, which possess the capacity to significantly disrupt our business operations, profitability, and/or reputation. These events encompass various external factors, including but not limited to pandemics, cybersecurity attacks, economic collapses, and geopolitical risks. Although these occurrences have a low probability of transpiring, their unpredictability renders them capable of inflicting catastrophic impacts on our business operations. Sustainability2. Inability to keep pace with Environment, Social & Governance (ESG) developments and transitions globally Corporations worldwide face increase risks in transitioning to a low-carbon and climate-resilient economy. It is vital that we align to global ESG commitments and frameworks given TNB’s role as Malaysia’s primary power utility. Failure to do so will impede our business growth in addition to eroding market confidence in TNB to be a utility that is able to provide sustainable energy solutions. This will adversely impact investors’ confidence, stakeholder’s trust and company reputation. Regulatory 3. Unfavourable energy transition & climate change policies & regulations Energy Transition regulatory risks pose significant challenges for power utilities. The shift towards renewable energy sources and decarbonisation initiatives may require costly infrastructure upgrades and technology investments. Evolving regulations can impact revenue streams and profitability, especially if incentives or subsidies change. Stricter emissions standards might necessitate the retirement of existing assets or
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a low-carbon and climate-resilient economy. It is vital that we align to global ESG commitments and frameworks given TNB’s role as Malaysia’s primary power utility. Failure to do so will impede our business growth in addition to eroding market confidence in TNB to be a utility that is able to provide sustainable energy solutions. This will adversely impact investors’ confidence, stakeholder’s trust and company reputation. Regulatory 3. Unfavourable energy transition & climate change policies & regulations Energy Transition regulatory risks pose significant challenges for power utilities. The shift towards renewable energy sources and decarbonisation initiatives may require costly infrastructure upgrades and technology investments. Evolving regulations can impact revenue streams and profitability, especially if incentives or subsidies change. Stricter emissions standards might necessitate the retirement of existing assets or imposepenalties for non-compliance. Additionally, uncertainties in policy direction may hinder long-term planning and investments. Failure to address these risks adequately can undermine TNB’s competitiveness and financial stability. 4. Unfavourable Electricity Supply Industry (ESI) regulatory implementation and outcome Globally, the electricity supply industry is highly regulated. Government regulations and policies control various aspects, including approving generation capacity and mix, setting limits for investment and operation costs of electricity networks, and determining electricity prices. Uncertainty surrounding future regulations may hinder long-term planning and investment decisions whilst non-compliance with regulations can result in penalties and reputational damage. Inability to shape and manage the outcome of these regulation and policies governing the Malaysian ESI would be key impediment impacting TNB ability to deliver its business aspiration. 5. Regulatory Uncertainty Due to the nature of our business, we are susceptible to the decisions by regulatory stakeholders at the
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to address these risks adequately can undermine TNB’s competitiveness and financial stability. 4. Unfavourable Electricity Supply Industry (ESI) regulatory implementation and outcome Globally, the electricity supply industry is highly regulated. Government regulations and policies control various aspects, including approving generation capacity and mix, setting limits for investment and operation costs of electricity networks, and determining electricity prices. Uncertainty surrounding future regulations may hinder long-term planning and investment decisions whilst non-compliance with regulations can result in penalties and reputational damage. Inability to shape and manage the outcome of these regulation and policies governing the Malaysian ESI would be key impediment impacting TNB ability to deliver its business aspiration. 5. Regulatory Uncertainty Due to the nature of our business, we are susceptible to the decisions by regulatory stakeholders at the federal,state and international levels. Business operations may be delayed or encumbered due to measures and decisions in relation to investment and divestment, use of natural resources and right-of-way. Market 6. Unable to be competitive in non-regulated business (international & domestic) Growing TNB’s non-regulated business is a key strategy of TNB’s future growth plans. Inability to be competitive would result in difficulty to attract new customers and potential partners leading to stagnant or decline in market share and potential revenue. Inadequate competitiveness may result in lower operational efficiencies and higher costs that may hamper our ability to access capital while reducing the overall returns. Customer 7. Inability to remain as the electricity provider of choice by customers TNB supplies electricity to the entire nation, and we need to continue doing it reliably, safely and at a high quality to retain the trust and confidence of the people. At the same time, we need to continue growing TNB’s brand and reputation. Failure to do so may cause
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(international & domestic) Growing TNB’s non-regulated business is a key strategy of TNB’s future growth plans. Inability to be competitive would result in difficulty to attract new customers and potential partners leading to stagnant or decline in market share and potential revenue. Inadequate competitiveness may result in lower operational efficiencies and higher costs that may hamper our ability to access capital while reducing the overall returns. Customer 7. Inability to remain as the electricity provider of choice by customers TNB supplies electricity to the entire nation, and we need to continue doing it reliably, safely and at a high quality to retain the trust and confidence of the people. At the same time, we need to continue growing TNB’s brand and reputation. Failure to do so may cause customerdissatisfaction and impact our sales, EBIT and reputation. CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 187 Review, Monitor and Report The BRC/BSRC approved the TNB 3-Year Cycle Risk Governance Plan for implementation from FY2022 to FY2024. This plan is implemented by the RMD to assist the BRC/BSRC in meeting its terms of reference. The plan outlines three (3) risk governance activities, which are risk review, risk maturity assessment and desktop risk assessment. According to plan, RMD in collaboration with TNB business entities, conducted 15 risk reviews, five (5) risk maturity assessments and eight (8) desktop risk assessments in the year under review. As per the TNB Risk Management Framework, TNB business entities are responsible to assess respective risks and register into the TNB Risk Information System (TRIS), a centralised online real-time tool and database, for monitoring and reporting. Risks are also reviewed annually by the business entities with participation and eventual approval from the risk owners. Half-year risk reports are submitted by business entities to RMD for consolidation. Group-wide consolidated half-year risk reports, which include reports of emerging risks, are deliberated and
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plan outlines three (3) risk governance activities, which are risk review, risk maturity assessment and desktop risk assessment. According to plan, RMD in collaboration with TNB business entities, conducted 15 risk reviews, five (5) risk maturity assessments and eight (8) desktop risk assessments in the year under review. As per the TNB Risk Management Framework, TNB business entities are responsible to assess respective risks and register into the TNB Risk Information System (TRIS), a centralised online real-time tool and database, for monitoring and reporting. Risks are also reviewed annually by the business entities with participation and eventual approval from the risk owners. Half-year risk reports are submitted by business entities to RMD for consolidation. Group-wide consolidated half-year risk reports, which include reports of emerging risks, are deliberated and endorsedby the GRMWC for onward internal dissemination. Key Risk Indicators Business entities have diligently identified relevant Key Risk Indicators (KRIs) that serve as early warning of increasing risk exposures and potential risk events. These KRIs are developed in consideration of the risk appetite of the BRC/BSRC and Management. The status of KRIs is reported quarterly to the BRC/BSRC, GRMWC and SRMWC with mitigating measures extensively deliberated to address risk exposures from escalating beyond tolerable levels. The BRC/BSRC monitors KRIs impacting five (5) key areas, which are operations, financial standing, regulatory, reputation and international investment. Operational-level KRIs are deliberated by the GRMWC and SRMWC that are platforms for inter-business collaboration to mitigate risks from a group-wide perspective. Annually, these KRIs undergo review to ensure relevance and adequacy, aligning with short- and long-term business objectives while considering changes in internal and external environments. Communication & Integration TNB business entities consistently engage in communication with both internal and external stakeholders,
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and potential risk events. These KRIs are developed in consideration of the risk appetite of the BRC/BSRC and Management. The status of KRIs is reported quarterly to the BRC/BSRC, GRMWC and SRMWC with mitigating measures extensively deliberated to address risk exposures from escalating beyond tolerable levels. The BRC/BSRC monitors KRIs impacting five (5) key areas, which are operations, financial standing, regulatory, reputation and international investment. Operational-level KRIs are deliberated by the GRMWC and SRMWC that are platforms for inter-business collaboration to mitigate risks from a group-wide perspective. Annually, these KRIs undergo review to ensure relevance and adequacy, aligning with short- and long-term business objectives while considering changes in internal and external environments. Communication & Integration TNB business entities consistently engage in communication with both internal and external stakeholders, providingcurrent and comprehensive risk information. Timely feedback is gathered and integrated to foster continual enhancement. Integral to their role is the seamless integration of risk management within their objectives, governance, leadership commitment, operations, and performance management. This holistic approach ensures that risk management becomes an inherent part of the operational fabric, enhancing the overall resilience and adaptability of the Group. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Category No. TNB Strategic Risk Finance 8. Ineffective capital allocation to maximise value creation Management makes decisions on how to source and allocate funds effectively to maximise potential return. Failure to do so would have dire implications to TNB, including missed opportunities, reduced financial profits and market confidence. Capabilities 9. Gaps in workforce capabilities to deliver RT strategy and sustainability aspiration It is critical for TNB to focus on developing and deploying new institutional capabilities to the right areas. We also need to enhance
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of risk management within their objectives, governance, leadership commitment, operations, and performance management. This holistic approach ensures that risk management becomes an inherent part of the operational fabric, enhancing the overall resilience and adaptability of the Group. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Category No. TNB Strategic Risk Finance 8. Ineffective capital allocation to maximise value creation Management makes decisions on how to source and allocate funds effectively to maximise potential return. Failure to do so would have dire implications to TNB, including missed opportunities, reduced financial profits and market confidence. Capabilities 9. Gaps in workforce capabilities to deliver RT strategy and sustainability aspiration It is critical for TNB to focus on developing and deploying new institutional capabilities to the right areas. We also need to enhance workforcediversity in terms of skill sets and exposures that are in line with our aspiration to diversify internationally. Failure to close the capabilities gap would impact TNB’s ability to achieve its RT strategy. 10. Failure to ingrain TNB culture in employees’ behaviour in supporting Reimagining TNB strategy and sustainability aspiration Culture molds the direction, beliefs and shared values that shapes employee (at all levels including the Board)’s perceptions, behaviours and understanding. Failure to ingrain the Reimagining Culture values in the organisation and processes may result in lower productivity, fraud and bribery or silo mentality. Physical Asset Risk 11. Failure to mitigate physical risks caused by climate change Physical climate change risks pose significant challenges to TNB in the form of extreme weather events, rising sea levels, and changing precipitation patterns that can damage infrastructure, disrupt operations and impact power generation, transmission and distribution. Failure to manage these risks can result in prolonged outages, increased operation and repair costs, regulatory penalties,
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strategy. 10. Failure to ingrain TNB culture in employees’ behaviour in supporting Reimagining TNB strategy and sustainability aspiration Culture molds the direction, beliefs and shared values that shapes employee (at all levels including the Board)’s perceptions, behaviours and understanding. Failure to ingrain the Reimagining Culture values in the organisation and processes may result in lower productivity, fraud and bribery or silo mentality. Physical Asset Risk 11. Failure to mitigate physical risks caused by climate change Physical climate change risks pose significant challenges to TNB in the form of extreme weather events, rising sea levels, and changing precipitation patterns that can damage infrastructure, disrupt operations and impact power generation, transmission and distribution. Failure to manage these risks can result in prolonged outages, increased operation and repair costs, regulatory penalties, reputationaldamage and impede long-term business sustainability. Supply Chain 12. Disruptions to supply chain TNB’s ability to ensure the security of supply depends on undisrupted procurement and distribution of resources needed to operate all its infrastructure. Delays or disruption resulting from supplier failure, transportation issues and geopolitical interventions may lead to delays in project delivery, prolonged electricity supply outages and increased costs. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 188 The BRC/BSRC continues to cascade its tone from the top, and particularly in the fiscal year, through the first in-person T op Management Risk Forum held since the pandemic. The BRC/BSRC not only set the tone on the importance of effective risk management but also dialogued with 102 members of top and senior management in navigating a challenging risk landscape. Market experts such as the Head of Carbon Market, Bursa Malaysia, were invited to share insights on risk and opportunities related to the power utility industry. The TNB risk slogan, “RISK - First In Mind”, was launched by the
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supplier failure, transportation issues and geopolitical interventions may lead to delays in project delivery, prolonged electricity supply outages and increased costs. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 188 The BRC/BSRC continues to cascade its tone from the top, and particularly in the fiscal year, through the first in-person T op Management Risk Forum held since the pandemic. The BRC/BSRC not only set the tone on the importance of effective risk management but also dialogued with 102 members of top and senior management in navigating a challenging risk landscape. Market experts such as the Head of Carbon Market, Bursa Malaysia, were invited to share insights on risk and opportunities related to the power utility industry. The TNB risk slogan, “RISK - First In Mind”, was launched by the BRC/BSRCduring the forum and was further cascaded to all levels of employees through various communication platforms. RMD actively promotes a culture of risk awareness throughout TNB in the year under review, organising five (5) highly successful face to face internal risk conferences, bringing together 383 TNB executives and non-executives. These risk communication efforts were held to encourage active participation across all levels with emphasis on the importance and benefits of integrating risk management into daily operations and decision-making processes. The strong support, including the commitment from TNB Management in holding dialogues with the employees during these conferences, reflects the shared responsibility for effective risk management by all employees in order to successfully navigate current and future challenges. Additionally, RMD in collaboration with TNB Integrated Learning Solution Sdn. Bhd. (ILSAS), the centre for energy learning, advisory, services and consultancy, continue to drive risk management training modules at fundamental and intermediate levels. In the year under review, a total of 116 TNB employees completed the fundamentals module and 119 employees completed the
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bringing together 383 TNB executives and non-executives. These risk communication efforts were held to encourage active participation across all levels with emphasis on the importance and benefits of integrating risk management into daily operations and decision-making processes. The strong support, including the commitment from TNB Management in holding dialogues with the employees during these conferences, reflects the shared responsibility for effective risk management by all employees in order to successfully navigate current and future challenges. Additionally, RMD in collaboration with TNB Integrated Learning Solution Sdn. Bhd. (ILSAS), the centre for energy learning, advisory, services and consultancy, continue to drive risk management training modules at fundamental and intermediate levels. In the year under review, a total of 116 TNB employees completed the fundamentals module and 119 employees completed the intermediatemodule. During the fiscal year, the first TNB Risk Management E-Learning Module was launched and incorporated as part of the learning journey of all TNB executives, whereby each TNB executive shall complete the online module every two (2) years. The purpose of the e-learning module is to inculcate a risk thinking mindset and strengthen informed decision-making among TNB executives. The e-learning module is continually reviewed taking into account changes in the TNB Risk Management Framework and its implementation. Culture The risk culture delineated within the TNB Risk Management Framework harmonises seamlessly with the six (6) TNB core values and corresponding behaviors. The application of these core values and behaviours serves as a beacon, offering clear guidance and communicates the expected behaviour of employees. This alignment fortifies a cohesive understanding, establishing a framework for fostering and perpetuating a resilient and enduring risk culture essential for TNB’s sustainable growth and resilience. INTERNAL CONTROL STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Group
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complete the online module every two (2) years. The purpose of the e-learning module is to inculcate a risk thinking mindset and strengthen informed decision-making among TNB executives. The e-learning module is continually reviewed taking into account changes in the TNB Risk Management Framework and its implementation. Culture The risk culture delineated within the TNB Risk Management Framework harmonises seamlessly with the six (6) TNB core values and corresponding behaviors. The application of these core values and behaviours serves as a beacon, offering clear guidance and communicates the expected behaviour of employees. This alignment fortifies a cohesive understanding, establishing a framework for fostering and perpetuating a resilient and enduring risk culture essential for TNB’s sustainable growth and resilience. INTERNAL CONTROL STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Group Policiesand Procedures The Board and Management have approved group-wide policies and procedures, embedding ethics and internal control principles and mechanisms within business operations. Regular review processes ensure the ongoing relevance and effectiveness of these policies and procedures. Among others, the Group policies and procedures in place are: TNB Code of Business Ethics TNB ICT Security Policy and ICT Codes of Practice TNB Ethics & Integrity Policy TNB Safety & Health Policy TNB Risk Management Policy TNB Confidentiality Policy TNB Asset Management Policy TNB Limits of Authority TNB Procurement and Supply Chain Policy and Procedures TNB Environmental Policy TNB Security Policy TNB Communication Policy TNBInvestmentProcessControl:UpdatedInvestmentProcess andInvestmentRiskMethodology TNB Personal Data Protection Policy TNB Group Financial Policies and Procedures TNB Disciplinary Procedures TNB Group Human Resource circulars and guidelines CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 189 Financial and Operational Control Framework The TNB Group Financial Policies and Procedures (GFPP) stand as an imperative
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Regular review processes ensure the ongoing relevance and effectiveness of these policies and procedures. Among others, the Group policies and procedures in place are: TNB Code of Business Ethics TNB ICT Security Policy and ICT Codes of Practice TNB Ethics & Integrity Policy TNB Safety & Health Policy TNB Risk Management Policy TNB Confidentiality Policy TNB Asset Management Policy TNB Limits of Authority TNB Procurement and Supply Chain Policy and Procedures TNB Environmental Policy TNB Security Policy TNB Communication Policy TNBInvestmentProcessControl:UpdatedInvestmentProcess andInvestmentRiskMethodology TNB Personal Data Protection Policy TNB Group Financial Policies and Procedures TNB Disciplinary Procedures TNB Group Human Resource circulars and guidelines CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 189 Financial and Operational Control Framework The TNB Group Financial Policies and Procedures (GFPP) stand as an imperative pointof reference guiding the Group’s financial and operational conduct. The Group has acted in accordance with generally accepted accounting principles and the Malaysian Financial Reporting Standards. Regular evaluations comparing actual performance against established budgets, targets, and historical benchmarks for key functions and strategic initiatives are carried out. Necessary mitigating measures and follow-up actions are promptly implemented. The Board Audit Committee (BAC) reviews the Group’s quarterly financial performance together with Management and these are subsequently reported to the Board. The quarterly reviews enable the BAC to deliberate and assess the Group’s financial results and operational performance. TNB continues to proactively engage with relevant stakeholders for smooth implementation of the Incentive-Based Regulations (IBR) framework. The performance of the regulated business is meticulously monitored through the IBR performance indicators and dashboards. These are reported regularly to relevant decision-making committees to ensure effective implementation
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acted in accordance with generally accepted accounting principles and the Malaysian Financial Reporting Standards. Regular evaluations comparing actual performance against established budgets, targets, and historical benchmarks for key functions and strategic initiatives are carried out. Necessary mitigating measures and follow-up actions are promptly implemented. The Board Audit Committee (BAC) reviews the Group’s quarterly financial performance together with Management and these are subsequently reported to the Board. The quarterly reviews enable the BAC to deliberate and assess the Group’s financial results and operational performance. TNB continues to proactively engage with relevant stakeholders for smooth implementation of the Incentive-Based Regulations (IBR) framework. The performance of the regulated business is meticulously monitored through the IBR performance indicators and dashboards. These are reported regularly to relevant decision-making committees to ensure effective implementation ofthe IBR framework as well as to the Energy Commission in compliance with the IBR guidelines. The procedures for critical functions and key activities are documented, communicated to employees and periodically reviewed. Relevant business entities have been consistently maintaining its certification in ISO 9001, ISO 14001, ISO 27001, ISO 37001, ISO 45001 and ISO 55001. Internal audits are conducted to ensure compliance with relevant standards and procedures. Strategic Planning and Performance Management Cycle A holistic strategic planning process is integral in providing focus and alignment between aspiration, strategies, performance management and the desired strategic outcomes. The Strategic Planning and Performance Management (SPPM) cycle approved by the Board depicts a 5-part cycle that integrates the capital and budget allocation process with the performance management cycle. It includes the identification of strategy driven Key Performance Indicators (KPI) based on long-term business plans and annual operating
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guidelines. The procedures for critical functions and key activities are documented, communicated to employees and periodically reviewed. Relevant business entities have been consistently maintaining its certification in ISO 9001, ISO 14001, ISO 27001, ISO 37001, ISO 45001 and ISO 55001. Internal audits are conducted to ensure compliance with relevant standards and procedures. Strategic Planning and Performance Management Cycle A holistic strategic planning process is integral in providing focus and alignment between aspiration, strategies, performance management and the desired strategic outcomes. The Strategic Planning and Performance Management (SPPM) cycle approved by the Board depicts a 5-part cycle that integrates the capital and budget allocation process with the performance management cycle. It includes the identification of strategy driven Key Performance Indicators (KPI) based on long-term business plans and annual operating plans,which are thereafter cascaded to all levels of employees. The strategy driven KPI methodology is derived from the Balanced Scorecard concept that focuses on performance measures from four (4) perspectives, which are financial, customer, internal process and learning and growth. Human Resource Management and Development The TNB Ways of Working (TwoW) that promotes flexible working arrangements has been implemented across the Group in the year under review. This strategic decision seamlessly aligns with the amendments to the Employment (Amendment) Act 2022, particularly in embracing and enacting flexible working arrangements. This way of working aims to inspire and add value to employees, create an agile workforce and foster a culture of wholehearted dedication, underpinned by three (3) fundamental principles of trust, empowerment, and mindfulness. Job descriptions and responsibilities of approved positions are clearly defined and communicated through the internal online platform, People Matters Better Brighter. Workforce requirement planning is carried out and led by the Group
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four (4) perspectives, which are financial, customer, internal process and learning and growth. Human Resource Management and Development The TNB Ways of Working (TwoW) that promotes flexible working arrangements has been implemented across the Group in the year under review. This strategic decision seamlessly aligns with the amendments to the Employment (Amendment) Act 2022, particularly in embracing and enacting flexible working arrangements. This way of working aims to inspire and add value to employees, create an agile workforce and foster a culture of wholehearted dedication, underpinned by three (3) fundamental principles of trust, empowerment, and mindfulness. Job descriptions and responsibilities of approved positions are clearly defined and communicated through the internal online platform, People Matters Better Brighter. Workforce requirement planning is carried out and led by the Group HumanResource, mirroring the budget planning cycle with the aim of optimising staffing levels and increasing productivity. Employee training needs are regularly assessed and various programmes are in place to address competency gaps. Moreover, effective succession management improves organisational ability to maintain continuity of operations with minimal disruption and benefits both the employees by preparing them to be strong talents and the organisation by facilitating smooth transitions. The TNB Succession Management Framework aims to ensure the succession management strategy is agile and in line with current and projected business objectives by defining critical positions, nominating and evaluating talents, identifying development needs, and reviewing and adapting to business needs. Healthcare & Wellness Management TNB is committed towards elevating the standard of healthcare for its employees, retirees, and dependents. A key initiative introduced in the year under review is the Medication Delivery Services (MDS) to facilitate seamless procurement and delivery of long-term or chronic medications through three (3)
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place to address competency gaps. Moreover, effective succession management improves organisational ability to maintain continuity of operations with minimal disruption and benefits both the employees by preparing them to be strong talents and the organisation by facilitating smooth transitions. The TNB Succession Management Framework aims to ensure the succession management strategy is agile and in line with current and projected business objectives by defining critical positions, nominating and evaluating talents, identifying development needs, and reviewing and adapting to business needs. Healthcare & Wellness Management TNB is committed towards elevating the standard of healthcare for its employees, retirees, and dependents. A key initiative introduced in the year under review is the Medication Delivery Services (MDS) to facilitate seamless procurement and delivery of long-term or chronic medications through three (3) KlinikTNB. In addition, 1,276 panel hospitals and clinics are available nationwide for widespread accessibility to essential medical treatment and healthcare. The TNB T otal Wellness Programme is aimed at educating and influencing employees towards a healthy lifestyle and work life balance continues to be implemented through the “Vibrant Living - Healthier. T ogether” initiative. This initiative focuses on six (6) scope, which are healthy diet, no smoking/vaping, active lifestyle, weight management, basic health screening and mental well-being. Weekly “Wellness Wednesday” health talks and awareness sessions conducted online are open to all employees and retirees with the aim of increasing awareness on common health issues and encouraging healthier habits. TNB Digital Strategy TNB has undertaken significant digitalisation endeavours to embrace digital transformation as a key enabler of the RT strategy. These initiatives encompass data analytics, robotic process automation, and development of a visionary Network of the Future. TNB remains steadfast in advancing digital transformation aligned to
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aimed at educating and influencing employees towards a healthy lifestyle and work life balance continues to be implemented through the “Vibrant Living - Healthier. T ogether” initiative. This initiative focuses on six (6) scope, which are healthy diet, no smoking/vaping, active lifestyle, weight management, basic health screening and mental well-being. Weekly “Wellness Wednesday” health talks and awareness sessions conducted online are open to all employees and retirees with the aim of increasing awareness on common health issues and encouraging healthier habits. TNB Digital Strategy TNB has undertaken significant digitalisation endeavours to embrace digital transformation as a key enabler of the RT strategy. These initiatives encompass data analytics, robotic process automation, and development of a visionary Network of the Future. TNB remains steadfast in advancing digital transformation aligned to nationaland organisational aspiration. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL TENAGA NASIONAL BERHAD Integrated Annual Report 2023 190 Personal Data Protection TNB is committed to safeguard data subjects’ personal data in accordance with the Personal Data Protection Act 2010 (PDPA). TNB was an active contributor to the development of The Personal Data Protection Code of Practice for The Utilities Sector (Electricity) Version 2.0 (Code of Practice), which serves as a guideline for the processing and handling of data subjects’ personal data. As data privacy is vital, the Legal Services Department is committed to consistently educate and communicate the requirements of the PDPA and the Code of Practice across TNB to enhance awareness and compliance to the PDPA. TNB Corporate Integrity Management System The TNB Corporate Integrity Management System (TCIMS) is in place to improve the integrity culture in the Group, reduce the impact of corruption or mismanagement and position TNB at par internationally through a strategic and structured integrity management system. TNB is certified with ISO 37001:2016
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(PDPA). TNB was an active contributor to the development of The Personal Data Protection Code of Practice for The Utilities Sector (Electricity) Version 2.0 (Code of Practice), which serves as a guideline for the processing and handling of data subjects’ personal data. As data privacy is vital, the Legal Services Department is committed to consistently educate and communicate the requirements of the PDPA and the Code of Practice across TNB to enhance awareness and compliance to the PDPA. TNB Corporate Integrity Management System The TNB Corporate Integrity Management System (TCIMS) is in place to improve the integrity culture in the Group, reduce the impact of corruption or mismanagement and position TNB at par internationally through a strategic and structured integrity management system. TNB is certified with ISO 37001:2016 Anti-BriberyManagement Systems since 2018 and has put in place a management system designed to help prevent, detect and respond to bribery and comply with anti-bribery laws and voluntary commitments applicable to its activities. Annually, TNB employees complete the Integrity Pledge and Conflict of Interest declarations via the Employee Self Service system and the Integrity E-learning module via the People Matters Better Brighter system. The integrity e-learning module is also extended to the vendors and suppliers. The Integrity Department designs and implements a comprehensive training and communication plan comprising of initiatives and programs to address gaps identified in the annual Integrity Health Index (IHI) survey. Highlights of the training and communication initiatives implemented in the fiscal year include a seminar for the Board and Management titled “The Law Behind Corporate Governance” conducted by the Malaysia Institute of Corporate Governance (MICG) and engagements and training sessions with the unions, employees and vendors on anti-bribery, corruption and corporate liability. These efforts align with the requirements outlined in the TRUST elements under Section 17A of the
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declarations via the Employee Self Service system and the Integrity E-learning module via the People Matters Better Brighter system. The integrity e-learning module is also extended to the vendors and suppliers. The Integrity Department designs and implements a comprehensive training and communication plan comprising of initiatives and programs to address gaps identified in the annual Integrity Health Index (IHI) survey. Highlights of the training and communication initiatives implemented in the fiscal year include a seminar for the Board and Management titled “The Law Behind Corporate Governance” conducted by the Malaysia Institute of Corporate Governance (MICG) and engagements and training sessions with the unions, employees and vendors on anti-bribery, corruption and corporate liability. These efforts align with the requirements outlined in the TRUST elements under Section 17A of the MACCAct 2009. Additionally, the Whistle Blowing Information System (WBIS) underwent enhancements in the year under review to strengthen the management of integrity governance data for reporting to the Board Integrity Committee and in compliance to mandatory reporting requirements by MACC. Tenaga Safety Culture The Tenaga Safety Culture Programme aims to inculcate safety as part of the everyday working culture, transforming it from a mere compliance activity. It is based on four core behaviours, which are ‘Assess’, ‘Comply’, ‘Intervene’ and ‘Actively Caring’. Various initiatives have been implemented such as the TNB Life Saving Rules (LSR) that has been in effect since 2017. These rules are intended to preserve the lives of employees and contractors, and mitigate the risk of serious injuries within the work environment. The LSR implementation includes consequence management as part of our internal controls. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Management Information Systems Leveraging on information and communication technology is vital in promoting effective and efficient business operations as well as timely and
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by MACC. Tenaga Safety Culture The Tenaga Safety Culture Programme aims to inculcate safety as part of the everyday working culture, transforming it from a mere compliance activity. It is based on four core behaviours, which are ‘Assess’, ‘Comply’, ‘Intervene’ and ‘Actively Caring’. Various initiatives have been implemented such as the TNB Life Saving Rules (LSR) that has been in effect since 2017. These rules are intended to preserve the lives of employees and contractors, and mitigate the risk of serious injuries within the work environment. The LSR implementation includes consequence management as part of our internal controls. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Management Information Systems Leveraging on information and communication technology is vital in promoting effective and efficient business operations as well as timely and accuratecommunication with internal and external stakeholders. Examples of key information systems utilised by the Group for that purpose are: Super User Privilege Management and Governance, Risk and Compliance systems have been implemented to control and govern access to core systems and servers. This is to ensure that access to critical information systems and confidential information is adequately monitored and controlled. Annual disaster recovery tests are carried out at the data centres and ICT security assessments are regularly carried out on systems at the business entities. In addition, various enhancements are implemented to strengthen cyber security for Information Technology and Operational Technology systems. In the event of system failure, various mitigations are in place to minimise disruption to operations. Enterprise Resource Management System (ERMS) Enterprise Human Resources Management System (EHRMS) Supervisory Control and Data Acquisition System (SCADA) TNB Outage Management Systems (TOMS) Billing Customer Relationship Management (BCRM) Employee Self Service (ESS) CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 191 The Stop Work Intervention
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and govern access to core systems and servers. This is to ensure that access to critical information systems and confidential information is adequately monitored and controlled. Annual disaster recovery tests are carried out at the data centres and ICT security assessments are regularly carried out on systems at the business entities. In addition, various enhancements are implemented to strengthen cyber security for Information Technology and Operational Technology systems. In the event of system failure, various mitigations are in place to minimise disruption to operations. Enterprise Resource Management System (ERMS) Enterprise Human Resources Management System (EHRMS) Supervisory Control and Data Acquisition System (SCADA) TNB Outage Management Systems (TOMS) Billing Customer Relationship Management (BCRM) Employee Self Service (ESS) CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 191 The Stop Work Intervention guidelinewas established in the year under review to empower employees and contractors to assume responsibility for their safety and the safety of their peers. Any individual is authorised to activate a stop work intervention upon encountering unsafe conditions or observing unsafe acts within the workplace. In addition, the NIOSH Tenaga Safety Leader Passport (NTSLP) certification, which is implemented across the Group for all employees, has been extended and enforced in the fiscal year for contractor supervisors. This aims to address the primary cause of past contractor accidents due to inadequate supervision. NIOSH had acknowledged the strategic partnership of this program, further validating its importance and impact. Customer Experience With attention to customer centricity, a variety of channels, utilising the “Click, Call, Come Over,” platform, is made available to customers. The platform covers a wide range of touch points that enable quality solutions, services and continuous interaction options to enhance customer experience. A systematic approach is in place for timely resolution of feedback
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upon encountering unsafe conditions or observing unsafe acts within the workplace. In addition, the NIOSH Tenaga Safety Leader Passport (NTSLP) certification, which is implemented across the Group for all employees, has been extended and enforced in the fiscal year for contractor supervisors. This aims to address the primary cause of past contractor accidents due to inadequate supervision. NIOSH had acknowledged the strategic partnership of this program, further validating its importance and impact. Customer Experience With attention to customer centricity, a variety of channels, utilising the “Click, Call, Come Over,” platform, is made available to customers. The platform covers a wide range of touch points that enable quality solutions, services and continuous interaction options to enhance customer experience. A systematic approach is in place for timely resolution of feedback suchas service requests, complaints, comments, enquiries and concerns. In addition, the myTNB web portal and mobile application are available to customers to manage their electricity account(s) in one location. myTNB allows customers to make express payment of electricity bills without needing to log in. Business Continuity Management The TNB Business Continuity Management (BCM) Framework was developed in alignment with ISO 22301:2019 ‘Security and Resilience - Business Continuity Management Systems’. The framework provides a structured approach in managing business continuity in the Group that enables prompt, coordinated and effective response to a crisis and maintain continuity of essential activities as well as protecting human life, assets, reputation and the environment. The framework is the focal point of reference for TNB business entities to formulate and implement business continuity strategies tailored to respective business objectives and critical functions. The robustness of the TNB Corporate Crisis Command Structure, of which the President/CEO and TNB Management are members, is tested annually through planned drills and is
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express payment of electricity bills without needing to log in. Business Continuity Management The TNB Business Continuity Management (BCM) Framework was developed in alignment with ISO 22301:2019 ‘Security and Resilience - Business Continuity Management Systems’. The framework provides a structured approach in managing business continuity in the Group that enables prompt, coordinated and effective response to a crisis and maintain continuity of essential activities as well as protecting human life, assets, reputation and the environment. The framework is the focal point of reference for TNB business entities to formulate and implement business continuity strategies tailored to respective business objectives and critical functions. The robustness of the TNB Corporate Crisis Command Structure, of which the President/CEO and TNB Management are members, is tested annually through planned drills and is activatedto manage potential or declared crises in accordance with the Corporate TNB BCM document. Improvements identified in post-mortems are implemented to enhance capabilities, preparedness and resiliency. Additionally, drills of various scenarios are collaboratively conducted by TNB business entities to enhance coordination and effective response. In the year under review, specific business continuity plans were developed and tested to ensure available and reliable electricity supply throughout the period of the Malaysian state elections at Selangor, Kelantan, Terengganu, Negeri Sembilan, Kedah, and Penang following the dissolution of respective state assemblies. T o further strengthen prompt and coordinated response during crises that affect the nation, strategic engagements were carried out with relevant government agencies such as the National Disaster Management Agency (NADMA) via courtesy visits and joint drills. Notable outcomes in the fiscal year are the successful desktop drills conducted in collaboration with NADMA based on a dam safety scenario and with the Majlis Keselamatan Negara (MKN) based on a
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various scenarios are collaboratively conducted by TNB business entities to enhance coordination and effective response. In the year under review, specific business continuity plans were developed and tested to ensure available and reliable electricity supply throughout the period of the Malaysian state elections at Selangor, Kelantan, Terengganu, Negeri Sembilan, Kedah, and Penang following the dissolution of respective state assemblies. T o further strengthen prompt and coordinated response during crises that affect the nation, strategic engagements were carried out with relevant government agencies such as the National Disaster Management Agency (NADMA) via courtesy visits and joint drills. Notable outcomes in the fiscal year are the successful desktop drills conducted in collaboration with NADMA based on a dam safety scenario and with the Majlis Keselamatan Negara (MKN) based on a securitythreat scenario to critical national infrastructures in power utility, telecommunications, and oil and gas. CONCLUSION The Board has obtained assurances from the President/CEO and Chief Financial Officer that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects. Where areas of improvement have been identified, rectification steps have been taken for enhancement. The Board is of the view that the risk management and internal control system in place for the year under review and up to the date of approval of this statement for inclusion into the annual report, is adequate and effective to safeguard shareholders’ investment, the interests of customers, regulators and employees, and the Group’s assets. REVIEW OF THE STATEMENT BY EXTERNAL AUDITOR As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Audit and Assurance Practice Guide (AAPG) 3 issued by the
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in all material aspects. Where areas of improvement have been identified, rectification steps have been taken for enhancement. The Board is of the view that the risk management and internal control system in place for the year under review and up to the date of approval of this statement for inclusion into the annual report, is adequate and effective to safeguard shareholders’ investment, the interests of customers, regulators and employees, and the Group’s assets. REVIEW OF THE STATEMENT BY EXTERNAL AUDITOR As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Audit and Assurance Practice Guide (AAPG) 3 issued by the MalaysianInstitute of Accountants. AAPG 3 does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group. This statement is made in accordance with the resolution of the Board of Directors dated 27 February 2024. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL TENAGA NASIONAL BERHAD Integrated Annual Report 2023 192 ADDITIONAL COMPLIANCE INFORMATION (1) UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSALS No proceeds were raised as the Company did not undertake any corporate proposals in the Financial Year ended 31 December 2023. (2) MATERIAL CONTRACTS There were no material contracts entered into by the Company and its subsidiaries involving the interests of the Directors or Major Shareholders, either still subsisting at the end of the Financial Year or, if not then subsisting, entered into since the end of the previous Financial Year. (3) RELATED PARTY TRANSACTIONS The Group has established appropriate procedures to ensure it complies with the MMLR with regards to related party transactions. All related party transactions are reviewed by the Group Internal Audit Department, following which a
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TENAGA NASIONAL BERHAD Integrated Annual Report 2023 192 ADDITIONAL COMPLIANCE INFORMATION (1) UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSALS No proceeds were raised as the Company did not undertake any corporate proposals in the Financial Year ended 31 December 2023. (2) MATERIAL CONTRACTS There were no material contracts entered into by the Company and its subsidiaries involving the interests of the Directors or Major Shareholders, either still subsisting at the end of the Financial Year or, if not then subsisting, entered into since the end of the previous Financial Year. (3) RELATED PARTY TRANSACTIONS The Group has established appropriate procedures to ensure it complies with the MMLR with regards to related party transactions. All related party transactions are reviewed by the Group Internal Audit Department, following which a Group-WideReport is submitted to the BAC on a quarterly basis for monitoring purposes. The Group did not seek any mandate from its shareholders pertaining to related party transactions during the Financial Year under review. 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 ON CORPORATE GOVERNANCE 2021 (Pursuant to paragraph 15.25 of the MMLR) The Board has reviewed, deliberated and approved this Statement on 27 February 2024. The Board is pleased to report to its shareholders that to the best of its knowledge, the Company has complied with and shall remain committed to attaining the highest possible standards of corporate governance through the continuous adoption of the principles and best practices of the MCCG and all other applicable laws, save as disclosed above. CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 193 Tenaga Nasional Berhad 199001009294 (200866-W)    TOGETHER, LET US IGNITE A CHANGE AND EMPOWER A BETTER, BRIGHTER FUTURE. We are dedicated to driving a responsible energy transition and leading the pathway to a sustainable future. Let us
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CODE ON CORPORATE GOVERNANCE 2021 (Pursuant to paragraph 15.25 of the MMLR) The Board has reviewed, deliberated and approved this Statement on 27 February 2024. The Board is pleased to report to its shareholders that to the best of its knowledge, the Company has complied with and shall remain committed to attaining the highest possible standards of corporate governance through the continuous adoption of the principles and best practices of the MCCG and all other applicable laws, save as disclosed above. CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 193 Tenaga Nasional Berhad 199001009294 (200866-W)    TOGETHER, LET US IGNITE A CHANGE AND EMPOWER A BETTER, BRIGHTER FUTURE. We are dedicated to driving a responsible energy transition and leading the pathway to a sustainable future. Let us shapea world where clean energy defines tomorrow, sustainable cities thrive, green mobility becomes the norm, and digitalisation serves as the catalyst for transformation. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 194 FINANCIAL STATEMENTS Directors’ Report 196 Consolidated Statement of Financial Position 202 Consolidated Statement of Profit or Loss 204 Consolidated Statement of Comprehensive Income 205 Consolidated Statement of Changes in Equity 206 Consolidated Statement of Cash Flows 209 Notes to the Financial Statements 213 Note28:OtherLiabilitiesNote29:ShareCapitalNote30:OtherReservesNote31:RevenueNote32:ImbalanceCostPass-Through(‘ICPT’)UnderRecoveryNote33:OperatingExpensesNote34:StaffCostNote35:OtherOperatingIncomeNote36:ForeignExchangeLossNote37:FinanceIncome/CostandFairValueChanges
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applicable laws, save as disclosed above. CREATING VALUE THROUGH STRONG GOVERNANCE Sec 4 193 Tenaga Nasional Berhad 199001009294 (200866-W)    TOGETHER, LET US IGNITE A CHANGE AND EMPOWER A BETTER, BRIGHTER FUTURE. We are dedicated to driving a responsible energy transition and leading the pathway to a sustainable future. Let us shapea world where clean energy defines tomorrow, sustainable cities thrive, green mobility becomes the norm, and digitalisation serves as the catalyst for transformation. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 194 FINANCIAL STATEMENTS Directors’ Report 196 Consolidated Statement of Financial Position 202 Consolidated Statement of Profit or Loss 204 Consolidated Statement of Comprehensive Income 205 Consolidated Statement of Changes in Equity 206 Consolidated Statement of Cash Flows 209 Notes to the Financial Statements 213 Note28:OtherLiabilitiesNote29:ShareCapitalNote30:OtherReservesNote31:RevenueNote32:ImbalanceCostPass-Through(‘ICPT’)UnderRecoveryNote33:OperatingExpensesNote34:StaffCostNote35:OtherOperatingIncomeNote36:ForeignExchangeLossNote37:FinanceIncome/CostandFairValueChanges ofFinancialInstrumentsNote38:TaxationandZakatNote39:EarningsPerShare(‘EPS’)Note40:DividendsNote41:CommitmentsNote42:ContingentLiabilitiesandMaterialLitigationsNote43:SignificantRelatedPartyDisclosuresNote44:SegmentalReportingNote45:FinancialInstrumentsNote46:CapitalRiskManagementNote47:RestatementNote48:SignificantAcquisitionsDuringCurrentandPrecedingFinancialYearsNote49:ListofSubsidiariesNote50:ListofJointArrangementsNote51:ListofAssociatesNote52:EventsAfterReportingPeriodNote 1 : General Information Note 2 : Basis of Preparation Note 3 : Summary of Material Accounting Policies Note 4 : Critical Accounting Estimates and Judgements Note 5 : Property, Plant and Equipment (‘PPE’) Note 6 : Right-of-Use (‘ROU’) Assets Note 7 : Subsidiaries Note 8 : Joint Arrangements Note 9 : Associates Note 10 : Intangible Assets Note 11 : Investment in Unquoted Debt Securities Note 12 : Deferred Taxation
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the catalyst for transformation. TENAGA NASIONAL BERHAD Integrated Annual Report 2023 194 FINANCIAL STATEMENTS Directors’ Report 196 Consolidated Statement of Financial Position 202 Consolidated Statement of Profit or Loss 204 Consolidated Statement of Comprehensive Income 205 Consolidated Statement of Changes in Equity 206 Consolidated Statement of Cash Flows 209 Notes to the Financial Statements 213 Note28:OtherLiabilitiesNote29:ShareCapitalNote30:OtherReservesNote31:RevenueNote32:ImbalanceCostPass-Through(‘ICPT’)UnderRecoveryNote33:OperatingExpensesNote34:StaffCostNote35:OtherOperatingIncomeNote36:ForeignExchangeLossNote37:FinanceIncome/CostandFairValueChanges ofFinancialInstrumentsNote38:TaxationandZakatNote39:EarningsPerShare(‘EPS’)Note40:DividendsNote41:CommitmentsNote42:ContingentLiabilitiesandMaterialLitigationsNote43:SignificantRelatedPartyDisclosuresNote44:SegmentalReportingNote45:FinancialInstrumentsNote46:CapitalRiskManagementNote47:RestatementNote48:SignificantAcquisitionsDuringCurrentandPrecedingFinancialYearsNote49:ListofSubsidiariesNote50:ListofJointArrangementsNote51:ListofAssociatesNote52:EventsAfterReportingPeriodNote 1 : General Information Note 2 : Basis of Preparation Note 3 : Summary of Material Accounting Policies Note 4 : Critical Accounting Estimates and Judgements Note 5 : Property, Plant and Equipment (‘PPE’) Note 6 : Right-of-Use (‘ROU’) Assets Note 7 : Subsidiaries Note 8 : Joint Arrangements Note 9 : Associates Note 10 : Intangible Assets Note 11 : Investment in Unquoted Debt Securities Note 12 : Deferred Taxation Note13 : Long Term Receivables Note 14 : Amounts Due From/(T o) Subsidiaries Note 15 : Leases Note 16 : Financial Assets at FVOCI Note 17 : Contract Balances Note 18 : Financial Assets at FVTPL Note 19 : Derivative Financial Instruments Note 20 : Inventories Note 21 : Receivables, Deposits and Prepayments Note 22 : Deposits, Bank and Cash Balances Note 23 : Payables Note 24 : Employee Benefits Note 25 : Consumer Deposits Note 26 : Borrowings Note 27 : Government
[ 196 ]
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Note 5 : Property, Plant and Equipment (‘PPE’) Note 6 : Right-of-Use (‘ROU’) Assets Note 7 : Subsidiaries Note 8 : Joint Arrangements Note 9 : Associates Note 10 : Intangible Assets Note 11 : Investment in Unquoted Debt Securities Note 12 : Deferred Taxation Note13 : Long Term Receivables Note 14 : Amounts Due From/(T o) Subsidiaries Note 15 : Leases Note 16 : Financial Assets at FVOCI Note 17 : Contract Balances Note 18 : Financial Assets at FVTPL Note 19 : Derivative Financial Instruments Note 20 : Inventories Note 21 : Receivables, Deposits and Prepayments Note 22 : Deposits, Bank and Cash Balances Note 23 : Payables Note 24 : Employee Benefits Note 25 : Consumer Deposits Note 26 : Borrowings Note 27 : Government DevelopmentGrants Statement by Directors 363 Statutory Declaration 363 Independent Auditors’ Report 364 195 FINANCIAL STATEMENTS Sec 5 TENAGA NASIONAL BERHAD Integrated Annual Report 2023 196 DIRECTORS’ REPORT The Directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2023. PRINCIPAL ACTIVITIES The Group and the Company are primarily involved in the business of the generation, transmission, distribution and sales of electricity and those tabulated in Note 49 to the financial statements, which has the details of the subsidiaries of the Group. There have been no significant changes in these activities during the financial year. FINANCIAL RESULTS Group Company RM’million RM’million Profit for the financial year attributable to: - Owners of the Company 2,770.3 2,955.0 - Non-controlling interests (166.7) 0 Profit for the financial year 2,603.6 2,955.0 DIVIDENDS The dividends paid or declared by the Company since the previous financial year ended 31 December 2022 were as follows: RM’million In respect of the financial year ended 31 December 2022: Final single tier dividend of 26.0 sen per ordinary share, paid on 14 April 2023 1,495.8 In respect of the financial year ended 31 December 2023: Interim single tier
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of electricity and those tabulated in Note 49 to the financial statements, which has the details of the subsidiaries of the Group. There have been no significant changes in these activities during the financial year. FINANCIAL RESULTS Group Company RM’million RM’million Profit for the financial year attributable to: - Owners of the Company 2,770.3 2,955.0 - Non-controlling interests (166.7) 0 Profit for the financial year 2,603.6 2,955.0 DIVIDENDS The dividends paid or declared by the Company since the previous financial year ended 31 December 2022 were as follows: RM’million In respect of the financial year ended 31 December 2022: Final single tier dividend of 26.0 sen per ordinary share, paid on 14 April 2023 1,495.8 In respect of the financial year ended 31 December 2023: Interim single tier dividendof 18.0 sen per ordinary share, paid on 17 October 2023 1,041.7 The Directors have approved a final single tier dividend of 28.0 sen per share on 5,787,331,871 ordinary shares in respect of the financial year ended 31 December 2023 amounting to a total of RM1,620.5 million. The dividends will be paid on 18 April 2024. RESERVES AND PROVISIONS All material transfers to or from reserves and provisions during the financial year are shown in the financial statements. ISSUE OF SHARES During the financial year, the paid-up share capital of the Company increased due to the vesting of Long Term Incentive Plan (‘LTIP’) granted to eligible employees, details of which are disclosed in Note 34 to the financial statements. The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company. FINANCIAL STATEMENTS Sec 5 197 TENAGA NASIONAL BERHAD’S LTIP The Company implemented a LTIP on 30 April 2015 for a period of 10 years. The LTIP is governed by the by-laws, which are approved by the shareholders at an Extraordinary General Meeting on 18 December 2014. The main features and details of the number of grants over the shares of the Company are set out in Note 34 to the financial statements. The
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