President/CEOs Review

Sixty years down the road, TNB is today a blue chip corporation and an integrated electricity provider with approximately RM71.4 billion in assets catering to the energy requirements of some 7.6 million customers. The Company has also become one of the leading lights in the regional power industry and is ranked among the top energy companies in the world. For this, we must pay tribute to the many gallant men and women whose worthy efforts over the past sixty years have brought us thus far. As we continue to meet our crucial role in powering the nations progress, TNB remains committed to delivering astute business performance while maintaining our socio-economic responsibilities. We remain committed to powering the Nation and lighting up lives. FINANCIAL HIGHLIGHTS The 12-month period ended 31 August 2009 was truly a challenging one for TNB. We had to manage the combination of negative electricity demand growth, higher average coal prices, additional capacity payments following the commissioning of a new IPP, and the impact of foreign exchange exposure. Against this backdrop, the Group reported a 16.3% increase in total revenue for financial year 2009 (FY2009), from RM24,755.3 million previously to RM28,785.6 million primarily as a result of the two tariff adjustments that became effective on 1 July 2008 and 1 March 2009 respectively. While the last tariff adjustment in March 2009 allowed for the recovery of an average coal price in FY2009 up to USD85/mt, the Group reported that the average price of coal actually consumed during the year amounted to USD90.2/mt, meaning TNB had to bear the additional cost of USD5.2/mt. The impact of the repayable over 30 years. To manage our exposure to forex translation over the course of the year, we took advantage of opportunities to buy back some of our US Dollar bonds. This has helped reduce our exposure to the US Dollar from 27.8% to 24.3% and reduced our weighted average cost of debt from 5.44% to 5.16%. OPERATIONAL EFFICIENCIES IMPROVED In line with TNBs goal of achieving Service Excellence by the year 2010, our business divisions and business units continued to make excellent strides forward in FY2009, surpassing their target Key Performance Indicators (KPIs) and delivering significant improvements in operational efficiency. In the year under review, we successfully achieved an Equivalent Unplanned Outage Factor of 2.90% thus surpassing the industry benchmark of 4% for the fourth year in a row. We also recorded the lowest ever Transmission System Minutes time of 1.02 minutes against the KPI target of 7.50 minutes thereby maintaining single-digit System Minutes for the fourth consecutive year. Further improvements were also made on the Distribution System Average Interruption Duration Index (SAIDI) which chalked up 69 minutes/customer against the KPI target of 75 minutes/customer, bringing TNB on par with the SAIDI levels of G8 countries. SE10/10 ON TARGET FY2009 saw us continuing to roll out the SE10/10 phase of the 20-Year Strategic Plan (2006-2025) which calls for TNB to achieve Service Excellence by the year 2010. Despite external pressures weighing down on our operations, we have made solid inroads in the way of strengthening customer and stakeholder loyalty, enhancing service excellence and operational effectiveness as well as driving business expansion locally and globally. We have set several KPIs in place under the SE 10/10 to benchmark ourselves against the worlds best energy companies. We are also working to roll out a set of Internal Service Level standards besides complying with the Minimum Service Level standards introduced by the Energy Commission. On top of this, much emphasis is being placed on ensuring all customer needs and requirements are met or surpassed through our many touch points. As we work to roll out these KPIs in as smooth a manner as possible, we are confident of accelerating closer towards our goal of becoming the nations best run company by 2010 and ranking among the regions best. In fact, our being hailed the Business of the Year 2007 in the Superior Company Category by the SMI & SME Worldwide Network, as well as being awarded the ASEAN Business Councils award for the Top 3 Most Admired ASEAN Enterprises in the Employment Category, speaks volumes of our efforts to date. With the SE10/10 coming to an end in 2010, we are now focused on developing the details of the 2011-2015 phase of the Strategic Plan which calls for geographical business expansion. Once the strategy for this period is finalised, it will be submitted to the Management and Board for adoption before being cascaded throughout TNB. Going forward, we will continue to drive efforts to meet our end goal of commanding global leadership in the relevant business areas by the year 2025 while establishing a reputation as a As part of the Groups efforts to reduce capital

expenditure as well as optimise cost and value without compromising product and service quality or our operational capability, the various divisions within TNB were directed to formulate appropriate measures through an initiative that was launched beginning January 2009 called Ops Trim-X. I am pleased to report that even from just the period of January 2009-June 2009, Ops Trim-X had enabled us to successfully reduce capital expenditure by RM586 million and indirect operating expenses by about RM113 million. As an apt reflection of our strengthened operations, we were ranked 100th among 250 of the worlds best energy companies and 18th among 59 of the best Asian and Australian energy companies on the Platts 250 Global Energy Company Rankings for 2008. strong business partner and creator of shareholder value. It is our hope, that in time to come, TNB will be acknowledged as one of the most admired companies in the world. CUSTOMER SERVICE LEVELS ENHANCED The majority of TNBs 7.6 million customers comprise Ordinary Power Customers (OPCs) which are mainly Malaysian households. Our Large Power Customers (LPCs), while small in number, account for almost 80% of the total sales of electricity in the country. The year saw us expanding our existing Customer Relationship Management (CRM) initiatives and implementing new ones to enhance customer service levels and take the customer experience to new heights. To garner accurate feedback and enhance customer satisfaction levels, we made further improvements to our integrated Customer Feedback System or Sistem Maklumbalas Pelanggan (SMP) through adding on several new modules. The SMP enables us to track, escalate, monitor reports and evaluate feedback from different groups via a single platform. On top of this, we established a Minimum Service Level standard for our customers. An online tracking system developed in-house now tracks compliance with this standard. Our CRM efforts also extended to initiating power quality awareness programmes, streetlights awareness programmes and seminars on energy efficiency and renewable energy. Our simplified online application system, e-Application continues to do much to improve the time taken to provide electricity supply to customers. June 2009 saw us initiating the use of the e-Application system for housing developers with 150 units of houses and above. As at the end of FY2009, there were 214 housing developers, 675 electricity contractors and 931 individuals registered on our e-Application

system. These figures are expected to rise as we promote the system among the public. services. The knowledge portal or K-Portal initiative developed for our front-liners is helping them ensure they provide accurate and consistent responses to customer queries. Upon registering, new residential customers are provided information packs which incorporate information on TNB products, services, bill payment channels, contacts as well as tips on electricity safety and energy efficiency. Today, our 24-hour TNB Careline 15454 Call Management Centre (CMC) caters not only for instances of supply interruption and faulty streetlights, it also responds to billing-related issues, supply disconnection issues and electricity supply issues. We are continuously exploring new and convenient mechanisms for customers to settle their bills. To date, our range of handy payment channels include Kedai Tenaga counters, onestop collection centres, direct debit, auto debit, on line payments, phone banking, ATMs, mobile collection and over the counter payments at participating bank or agencies, the list of which keeps growing. We continue to undertake initiatives to improve service levels at our 135 Kedai Tenaga service outlets throughout the country. The QMatic queue management system that helps optimise customer flow is now being monitored at the headquarters level and we are seeing tangible improvements in waiting and transaction time for counter services. The knowledge portal or K-Portal initiative developed for our front-liners is helping them ensure they provide accurate and consistent responses to customer queries. Upon registering, new residential customers are provided information packs which incorporate information on TNB products, services, bill payment channels, contacts as well as tips on electricity safety and energy efficiency. . Several new technologies to automate and improve various processes were introduced over the course of the year. The Electronic Customer Information Billing System (e-CIBS) saw an e-DAS or Disconnection Activity via SMS module being added to it. This effectively enables information on disconnection and reconnection activities to be relayed to the e-CIBS and our field staff via SMS. Following the roll out of the second phase of the Remote Meter Reading (RMR) Low Voltage and Medium Voltage project, the meter reading

process has been improved through doing away with manual processes and human error. Via RMR, we are now able to efficiently monitor metering data and reduce non-technical losses. Tenaga Nasional Berhad 47 Annual Report 2009 took up the offer which involved the PQ WalkThrough Audit, Ride-Through Test and a Full PQ Study. Our Corporate Account Relationship Enhancement or CARE Programme is also helping forge a closer two-way relationship between TNB and our corporate customers. SUPPLY RELIABILITY STRENGTHENED TNBs unwavering focus on operational excellence in our core electricity generation, transmission and distribution activities is ensuring that we deliver on our promise of a secure and uninterrupted power supply to our customers. In FY2009, we embarked on various initiatives to strengthen the reliability of our supply. On the Generation front, the Divisions efforts to enhance operational efficiency saw TNB TNBs Outage Management System (TOMS) also assists us to respond quickly to outages and is doing much to improve communication between customers, the TNB Contact Centre and technical crews. TOMS is also enabling improved data analysis, prudent and efficient asset management and better projections of outage patterns, among others. The Mobile Field Force Automation (MFFA) for low voltage supply restoration activities is a real time mobile application that enables instant feedback on what is happening onsite. It also updates customers as to when supply will be restored via the TNB Careline. Following the implementation of the pilot MFFA project in Shah Alam, the system is currently used in Selangor, Wilayah Persekutuan, Johor and Penang. As TNB places a high priority on delighting customers, it is important that we identify customer needs and expectations. To this end, we have implemented a structured data and information gathering programme to gauge customer feedback and complaints. This programme involves the use of platforms such the Customer Satisfaction Index (CSI) survey, feedback forms at Kedai Tenaga service outlets, and a survey via the CMC. TNB continues to engage in dialogues and meetings with captains of industries, businesses and government agencies to gather feedback and perspectives on common issues. These high-level discussions typically involve the President/CEO and allow us the opportunity to better understand customer needs while addressing issues in greater depth. TNBs top 1000 LPCs are managed via the PRIME Management Programme for our top 1,000 customers in the country which involves our

executives personally making visits to LPCs to address their concerns and provide solutions. The year saw us offering our LPCs free Power Quality (PQ) Mitigation services by our official PQ consultant, TNB Energy Services. Some 78 LPCs registering an Equivalent Unplanned Outage Factor (EUOF) of 2.90% thereby surpassing the 4% world class industrial benchmark EUOF for the fourth year running. The Division also turned in a Power Plant Equivalent Availability Factor of 90.49% for FY2009. To date, all our power stations have received MS ISO 9001 and MS ISO 14001 certification. Six power stations have received OHSAS 18001 certification and several power stations have won national awards from the Malaysian Society for Occupational Safety and Health (MSOSH). Responsible for improving transmission network reliability, our Transmission Divisions efforts ensure high system reliability, security of supply as well as high system availability and improvements to restoration time. The Division of the performance of TNBs distribution network. On top of this, TNBs Distribution losses were successfully reduced from 8.69% to 8.65%. To prevent any recurrence of theft of electricity (TOE) and tampering of meters, we introduced the Anomaly Fault Detection System (AFDS) to physically protect the metering installations of customers defined as high-risk customers. We also took steps to further enhance monitoring and detection capabilities by using RMR technology. The latter project is providing TNB and its customers a better understanding of load profiles or usage patterns so that energy consumption can be managed more efficiently. Initially implemented among all high voltage and medium voltage LPCs, RMR implementation has now been extended to low voltage LPCs. The achieved a System Minutes time of 1.02 minutes for FY2009 well below the 6.56 minutes recorded in FY2008 and another single digit figure for the fourth time in a row. The Transmission Division also maintained its Zero Major Disturbance record for the fourth consecutive year and kept transmission system losses at the 2% level. On top of this, the Division added a 4,125 MVA transformer capacity and 690 MVar capacitor banks into the system through the commissioning of 54 new projects. In FY2009, the Distribution Division registered a SAIDI of 69 minutes against the KPI target of 75 minutes and a SAIDI of 78 minutes in the preceding year. The SAIDI is defined as the average interruption (in minutes) for each customer per year and it is an important measure year saw us completing 71.1% of the total 60,000 RMR installations for low voltage LPCs. We also restructured and upgraded our Special Engagement Against Losses (SEAL) Task Force to strengthen the planning and coordination of SEAL

activities as well as ensure effective monitoring of process compliance. To combat the higher instances of TOE during this economic downturn, the SEAL Task Force undertook several high impact initiatives to curb non-technical losses which included the TOE Flying Squad, meter relocation projects and public awareness programmes. On top of this, our close working relationship with the Energy Commission and police force has also helped to expedite the resolution of TOE incidents. Tenaga Nasional Berhad 49 Annual Report 2009 transmission lines, 777 circuit-km of underground transmission cables and 385 sub-stations with a transformation capacity of 82,990 MVA. Over the course of the year, we completed and fully commissioned a total of 54 projects, part of which contributed an additional 4,125 MVA transformer capacity to the network. The National Load Despatch Centre is also undergoing modernisation works even as a new Energy Management System/SCADA has been brought in to replace the older system. The Government has agreed that TNB and Sarawak Energy Berhad (SEB) will take over the operation of the 2,400 MW Bakun Hydroelectric Dam from Sarawak Hidro Sdn Bhd through a leasing agreement. We are also to develop the associated transmission facilities from Sarawak to Peninsular Malaysia, including more than 700 km of undersea transmission cable. This project is an important alternative source of supply to meet the growing demand for affordable electricity in Peninsular Malaysia while in line with the Governments aspiration of promoting clean energy resources for the Nation. Once the High Voltage Direct Current (HVDC) submarine In the way of major generation projects, two major rehabilitation projects were completed in FY2009. The year saw the Tuanku Jaafar Power Station Rehabilitation Phase 2 (PD2) Project for combined cycle commercial operation in Port Dickson coming to its completion with an additional installed capacity of 694 MW being added to the existing 750 MW PD1 plant. The 260 MW Cameron Highlands and Batang Padang Hydroelectric Schemes Plant Life Extension and Automation Project too came to its completion. Involving the rehabilitation of 15 generating units at four existing major stations, this project has effectively extended the operating life of the Cameron Highlands Hydroelectric Scheme by another 30 years. To ensure adequate system capacity and supply reliability, TNB will continue to make significant investments in electricity supply systems while ensuring that additional generation capacity is integrated into the system in a timely and efficient manner. In line with our goal of harnessing all possible hydro power potential in Peninsular Malaysia and Sarawak, we are now at the procurement stage

of two major hydroelectric projects. The 250 MW Hulu Terengganu Hydroelectric Project and 372 MW Ulu Jelai Hydroelectric Project are scheduled to commence construction in 2010 with project completion targeted for 2014 and 2015 respectively. The 300 MW coal-fired IPP Project in Sabah which has been relocated to Felda Sahabat, Lahad Datu is currently undergoing site preliminary and survey works. A new detailed environmental impact assessment study is to follow. System improvements to strengthen network integrity and improve supply security are a top priority at TNB. Over the last 60 years, we have grown our network from strength to strength and the result is the National Grid comprising approximately 18,935 circuit-km of overhead cables interconnecting Peninsular and Sarawak are operationalised by 2017, up to 1,600 MW of power can be imported from the Bakun Dam. Successful implementation of Bakun and the HVDC interconnection will pave the way for additional import of power from Sarawak of some additional 1,000 MW by 2019 and 6,000 MW by 2030. ENSURING ENERGY SECURITY AND THE PROMOTION OF GREEN ENERGY In addressing the issue of energy supply security, while TNB is already exploring commercially viable technologies such as hydro, biomass, thermal energy storage co-generation, energy efficiency and demand side management initiatives which are proven technologies and are widely implemented around the world, we also continue to work with various parties to explore alternative fuel sources. As part of the Governments efforts to promote the development of Renewable Energy (RE) as the fifth fuel resource under the countrys Fuel Diversification Policy, the Small Renewable Energy Programme (SREP) was launched under TNB will continue to play an active role to support the National Green Technology Plan/ Roadmap through raising public awareness and disseminating information on energy efficiency (EE). Recently, we collaborated with the Federation of Malaysian Consumer Associations (FOMCA) on a National Energy Efficiency Awareness Campaign called SWITCH! which aims to raise awareness on EE, promote EE practices, as well as improve and increase usage of EE products and equipment. As part of our corporate responsibility efforts, TNB has pledged to contribute RM1.5 million to the campaign. TNB is also committed to undertaking training and capacity building initiatives through Universiti Tenaga Nasional (UNITEN), Integrated Learning

Solution Sdn. Bhd. ILSAS and TNB Research Sdn. Bhd. Besides establishing a Centre of Excellence on RE, UNITEN also hosts the newly launched Institute of Energy Policy and Research (IEPRe). To sustain Malaysias long-term energy requirements and to ensure energy security for the Nation, alternative large scale energy technology with minimal carbon emissions such as hydro from Sarawak and nuclear power are currently being considered as viable alternatives for our electricity generation mix. We have already begun working with several stakeholders and agencies, in particular the Malaysian Nuclear Agency (Nuclear Malaysia), to explore the viability of nuclear energy as an alternative fuel source for the future. CAPACITY BUILDING BOLSTERED TNBs 29,149-strong workforce is our greatest asset and we remain committed to developing our employees capabilities to ensure the Groups sustainable growth. FY2009 saw us continuing to roll out several capacity building measures at all levels of the organisation. the Eight Malaysia Plan. TNB has been contributing to the SREP by way of helping developers of potential SREP projects identify suitable points of interconnection with the TNB distribution network as well as through undertaking technical studies. We have also entered into long-term RE Power Purchase Agreements (REPPA) with RE proponents. As at the end of FY2009, we had signed 11 REPPAs totalling 54.55 MW. To date, we are the midst of finalising negotiations to conclude a total of 15 REPPAs with other SREP developers using biogas, biomass and mini-hydro as RE resources. The sustainable utilisation of energy continues to be given priority by the Government. In April 2009, following a Cabinet reshuffle, the Ministry of Energy, Green Technology and Water (MoEGTW) was formed, thus presenting another milestone in the Governments commitment towards Green Energy. Subsequently on 24 July 2009, the Prime Minister introduced the Five Strategic Thrusts of the National Green Technology Policy. Given the prominence that Green Technology has assumed within the national landscape, TNB is fully supportive of the need to strengthen the commitment and focus required to implement Green Technology particularly in Malaysias energy sector. On our part, we have already been actively contributing to the Green Technology segment through our involvement via the SREP and the REPPAs we have signed. On top of this, wholly owned subsidiary, TNB Energy Services, has also implemented several mini hydro projects in Peninsular Malaysia. We are also involved in several ongoing solar hybrid projects which utilise solar energy, diesel

engine and battery power to provide an uninterrupted 24-hour long supply of electricity to remote areas and islands which are far from the mainland. In addition, some of our large hydro schemes with a reservoir power density ratio larger than 4 W/m2 are also considered RE projects based on the definition by the United Nations Framework Convention on Climate Change. Following a restructuring exercise within the Group HR Division in April 2009, a Talent Management & Development Unit was established to complement the existing Succession Planning Unit. TNBs current Succession Management Programme aims to ensure a ready pool of strong leaders and professionals with critical skills is available to sustain the Groups growth. Incorporating individual development plans, the programme prepares high-potential executives for advancement to higher positions within the Group. The new unit has been tasked with filling up and developing our talent pool as well as identifying and recommending potential candidates for key leadership positions. Our current talent pool strength stands at 279 while there are 204 key leadership positions available. Potential successors have been nominated for 88.23% of these positions. Established five years ago, our Specialist Career Path Scheme seeks to address the imbalance between technical and management skills by retaining and rewarding technical experts in their respective fields of specialisation while equipping them with managerial skills. The scheme continues to create opportunities for aspiring and deserving candidates and to date two specialists and 23 technical experts have been groomed under this programme. September 2008 saw our training arm, Institut Latihan Sultan Ahmad Shah (ILSAS) being incorporated as a TNB subsidiary known as TNB Integrated Learning Solution Sdn. Bhd. (TNB-ILSAS) and taking on the role of TNBs new centre of excellence for energy utilities training. The year also saw 214 developmental training programmes and 966 mandatory and competency training programmes (technical and non-technical) being conducted. The programmes all aim to equip TNB employees with competencies that raise our organisational efficiency and productivity. Tenaga Nasional Berhad 51 Annual Report 2009 TNB continues to establish strong relationships with regulatory authorities, namely the Department of Occupational Safety and Health, the Energy Commission, the Fire and Rescue Department and other government agencies which readily support us on OSH issues. Qualified Safety and Health Officers are appointed to ensure OSH is managed diligently. They in turn are supported by second level Safety Inspectors and third level Safety Representatives who also monitor and

report on OSH performance to the Management. TNB has formulated an emergency response framework in collaboration with the Enterprise Wide Risk Management Department while a Corporate Emergency Response Plan is in place to cover emergency situations for our core divisions, namely the Generation, Transmission and Distribution divisions. Annual emergency response exercises are conducted involving the relevant workforce, while a crisis management team headed by Senior Management is ready to be activated at a moments notice. All TNB employees are required to attend at least a days OSH training while OSH practitioners are required to impart their knowledge to the employees. In line with this, a steady stream of briefings, training programmes, seminars, conferences, symposiums and workshops are made available to all levels of the organisation. The NIOSH-TNB Safety Passport developed in collaboration with the National Institute of Occupational Safety and Health (NIOSH) ensures our contractors are aware of the basic OSH requirements. Some 14,000 contractors have undergone training to obtain the safety passport. Defensive driving courses are also conducted particularly for corporate drivers to ensure safe driving on the road. TNB also invests in educating members of the public on electrical safety through awareness programmes targeting schools, non-governmental organisations, industries and various associations. Safety campaigns are undertaken to ensure maximum information dissemination. TNB is a party to the GLC Talent Exchange Programme which basically aims to accelerate the development of a cadre of skilled business leaders among Government Linked Companies by exposing these high-potential candidates to challenging roles within different functions, businesses and industries. In July 2009, Cross Assignment Cycle 2 of the GLC Talent Exchange Programme was launched. Two of our top candidates were assigned to Khazanah Nasional Berhad for one year while we accepted two candidates from UEM and CELCOM in return. Over the course of the year, Phase 3 of our Enterprise Human Resource Management System Project was carried out while the Employee Self Service web-based system was introduced to enable staff to perform administrative functions more efficiently anywhere, anytime. As a testament to the good progress we are making on the capacity building front, TNB was chosen as one of the three finalists in the Employment Category at the ASEAN Business Awards 2008 organised by the ASEAN Business Council. We also won the Silver Award in the HR Excellence Category at the Malaysia HR Awards 2008/2009 organised by the Malaysian Institute of Human Resource Management (MIHRM). OSH ISSUES PRIORITISED

Occupational Safety and Health (OSH) are of paramount importance at TNB. Our commitment to employee safety and health takes the form of an OSH management system called the Safety Excellence Management System (SEMS). TNBs SEMS is subjected to annual reviews to ensure our progress is in line with current OSH best practices as well as OHSAS 18001:2007 and MS 1722 requirements. To date, all our power stations have obtained 5-Star certification under the SEMS auditing system and comply with stringent industry standards. GEOGRAPHICAL FOOTPRINT EXPANDED As part of TNBs 20-Year Strategic Plan and in preparation for our second phase of geographical expansion by 2015, we are continuously looking for new business opportunities locally and abroad. Given the limited opportunities for business growth in Malaysia, we have also been actively exploring partnerships and collaboration opportunities with our international utility services counterparts around the region. By diversifying our earnings base abroad through asset or service opportunities, we will be able to spread our business risk and create new sources of income. Our preference will be to implement a strategy of adding value to TNBs core competencies rather than act as an equity investor. Notwithstanding this, rest assured we will exercise prudence in the selection and evaluation of projects in view of the current economic challenges. During the year under review, all our overseas projects made good progress. In the Kingdom of Saudi Arabia, our investment in the SaudiMalaysia Water and Electricity Company Limited consortium for the Shuaibah III Independent Water and Power Project (Shuaibah III IWPP) continued to make good headway with Units 1, 2 and 3 of the project successfully achieving commercial operation, meeting the contracted date of 25 July 2009 as required under the Power and Water Purchase Agreement. The Shuaibah Expansion project involving the expansion of the Shuaibah III IWPPs desalination plant by some 150,000 m3/day is progressing well, in which the testing and commissioning activities of the Plant is due to be completed in mid-November 2009. Despite the impact of the global economic slowdown, TNBs mission to be a global player remains on course. We will remain selective about overseas ventures and will be guided by the Board-approved level of country risk against President/CEOs Review (Contd.) Tenaga Nasional Berhad 52 Annual Report 2009 TNBs financial condition and our ability to make future investments in a timely manner will to a great extent be dependent on how well we can recover increases in electricity supply cost through enhanced operational efficiencies and productivity. This is where initiatives akin to Ops

Trim-X will continue to play an important role going forward. While we are unable to impact external market forces that are driving fuel costs higher, we will focus on improving the efficiency of our operations to keep costs low while strengthening our competitive position. TNB will also work on strengthening our financial fundamentals and will endeavour to provide high quality and reliable services to our customers. At the same time we will continue to play a vital role in lighting up lives, being a catalyst for the nations progress and creating enduring value for our shareholders. Given that the recovery of the global and domestic economies will be slow and operating costs will remain high, we expect the Groups performance for the financial year ending 31 August 2010 to continue to remain challenging. Notwithstanding this, we remain committed to providing all TNBs customers with a reliable supply of electricity and the highest levels of service and operational excellence. reasonable returns. Our selection of investment opportunities will also need to fall in line with our core competencies of generation, operation and maintenance. Going forward, TNB will actively explore new business opportunities which fall within the guidelines of our investment policy to ensure maximum returns and manageable risks. GOING FORWARD Following the Governments proactive measures to stimulate the domestic economy, the Malaysian economy has begun to show signs of recovery. This is evident from GDP contracting at a slower pace of -3.9% in Q2 of fiscal year 2009, as compared to -6.2% in Q1. The Government has also announced that Malaysias economy is expected to expand to between 2% and 3% in fiscal year 2010. Despite the recent positive indications of an increase in demand for electricity, the industry outlook may remain challenging for some time due to continuing concerns over rising operating costs. ACKNOWLEDGEMENTS I wish to convey my deep gratitude to the Government of Malaysia, the Ministry of Energy, Green Technology and Water, the Ministry of Finance, the Ministry of International Trade and Industry, the Energy Commission, the Malaysian Industrial Development Authority and other government agencies for their unwavering support of TNB. Our sincere appreciation goes to our valued shareholders and customers for their trust and confidence in TNB despite the challenging marketplace. I would like to extend my heartfelt appreciation to our loyal employees for their perseverance and diligence amidst a volatile operating environment. Last but not least, my utmost gratitude to the Board of Directors for their wise counsel and expert insights that have enabled us to keep

pressing forward. I trust all our stakeholders will lend us their full support as we continue to face challenges head on and capitalise on the opportunities before us. Thank you. DATO SRI CHE KHALIB BIN MOHAMAD NOH President/Chief Executive Officer