View - Sarawak Energy

Transcription

CONTENTS
Group Corporate Structure
2 - 3
Corporate Vision And Mission 4
Corporate Logo 4
Corporate Information 5
Board Of Directors
6 - 7
Directors’ Profile
8 - 9
Senior Management Team 10 - 11
Chairman’s Statement
12 - 14
Group Managing Director / Chief Executive’s Message
15 - 17
Group Five-Year Financial Statistics, 2004-2008 18
Group Financial Highlights 19
Corporate Social Responsibility 20
Flash Back 2008
21 - 25
Statement on Internal Control
26 - 30
Corporate Governance Statement
31 - 41
Audit Committee Report
42 - 49
Financial Statements
51 -115
List Of Properties116
Analysis Of Shareholdings117
Substantial Shareholder117
List Of Directors’ Interests118
List Of Thirty Largest Securities Account Holders
119 -120
Notice Of Annual General Meeting
121 -124
Form of Proxy125
1
2
GROUP CORPORATE STRUCTURE
as at 5 May 2009
3
CORPORATE VISION AND MISSION
VISION
To be a world class energy provider for the Region, with competitive cost structure and organisational excellence to
sustain long term shareholders’ value. A source of pride and admiration for employees, stakeholders and investors
alike.
MISSION
Sarawak Energy is dedicated to the demonstration of the corporate concept of linked prosperity. Our mission
comprises:1. To efficiently generate, transmit and distribute
electricity to promote quality life and sustain
economic growth in the State and Region;
3. To establish Organisational Trust by ensuring that
all structures and systems are in harmony with core
values and behaviours;
2. To operate the Company on a sound financial basis
of profitable growth, increasing shareholders’ value
and creating career opportunities and providing
rewards based on performance to our employees;
4. Recognition on the role that business plays in
society by initiating innovative ways to improve the
lives of the community.
The logo, inspired by
the vibrant yellow-coloured lightning
symbolising power and energy and the three horizontally
placed line-pillars incorporating the Sarawak State’s
colours, represent the core business of the Company that
is power generation, transmission and distribution. This
new logo defines Sarawak Energy Berhad.
The yellow lightning denotes
the letter “S” for “Sarawak” with its unique strike pose,
signifying electricity and power generation which is
Sarawak Energy’s main core business activity thus
thrusting Sarawak Energy Group as the State’s flagship
energy and utility group.
The three identical horizontal line-pillars
symbolise the letter “E” for “Energy” depicting power
transmission and the three-phases of electricity interpreted
as the harmonious unison of a smart-partnership
between Sarawak Energy and the stakeholders via-avis the government and the public, in generating power
and electricity needs for the State and Region at large,
hence, complementing the development of Sarawak.
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The red line-pillar
symbolises energy, power, strength as well as
determination. These epitomize Sarawak Energy’s goals
and endeavours in the State’s economic growth and in
pursuing regional and global power needs.
The yellow line-pillar
being the State’s dominant colour, is depicted on
the middle line-pillar and denotes leadership and
professionalism of Sarawak Energy’s role as a stable
and responsible corporate citizen playing a pivotal role
in Sarawak’s rapid pace of development.
The black line-pillar
represents integrity, commitment, responsibility and
resources, which are vital qualities for any aspect of
a sustainable corporate and individual life, and we at
Sarawak Energy always value these qualities and strive
to inculcate these significant traits in our undertakings.
CORPORATE INFORMATION
DIRECTORS
Datuk Abdul Hamed Bin Sepawi
Chairman, Independent Non-Executive Director
Tan Sri Datuk Amar (Dr) Haji Abdul Aziz Bin
Dato Haji Husain
Group Managing Director / Chief Executive
Non-Independent Executive Director
Datuk Amar Wilson Baya Dandot
Non-Independent Non-Executive Director
Senator Dato’ Haji Idris Bin Haji Buang
Senior Independent Non-Executive Director
Registered Office / Head Office
4th Floor, Wisma SESCO
Petra Jaya 93673
Kuching, SARAWAK
Tel: 6082-441 188
Fax: 6082-313 588
E-mail: [email protected]
SHARE REGISTRAR
Symphony Share Registrars Sdn. Bhd.
Level 26, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
Datuk Fong Joo Chung
Non-Independent Non-Executive Director
Dato’ Nordin Bin Baharuddin
Independent Non-Executive Director
AUDIT COMMITTEE
Dato’ Nordin Bin Baharuddin - Chairman
Datuk Amar Wilson Baya Dandot
Bursa Malaysia Stock Number
Sarawak 2356
International Securities Identification
Number (ISIN)
MYL235600003
Auditors
Ernst & Young
NOMINATION & REMUNERATION
COMMITTEE
Datuk Abdul Hamed Bin Sepawi - Chairman
Tan Sri Datuk Amar (Dr) Haji Abdul Aziz Bin
Dato Haji Husain
Principal Financial Institutions
RHB Bank Berhad
EON Bank Berhad
AmInvestment Bank Berhad
SENIOR INDEPENDENT NON-EXECUTIVE
DIRECTOR
COMPANY SECRETARY
Aisah Eden
(LS 03629)
5
BOARD OF DIRECTORS
TAN SRI DATUK AMAR (DR) HAJI ABDUL
AZIZ BIN DATO HAJI HUSAIN
6
DATUK ABDUL HAMED
BIN SEPAWI
DATO’ HAJI IDRIS BIN
HAJI BUANG
Chairman,
Independent Non-Executive
Director
Senior Independent
Non-Executive Director
DATO’ NORDIN BIN BAHARUDDIN
Independent
DATUK AMAR WILSON BAYA DANDOT
DATUK FONG JOO CHUNG
Non-Independent
Non-Independent
7
DIRECTORS’ PROFILE
DATUK ABDUL HAMED BIN SEPAWI
Chairman,
a Malaysian aged 60, joined the Board of Sarawak Energy Berhad and appointed Chairman of the Company on 27 June
2005. He is an Independent Non-Executive Director of the Company and attended six out of the seven Board meetings
held in year 2008. Datuk Abdul Hamed is currently the Chairman of the Nomination & Remuneration Committee.
Datuk Abdul Hamed holds a Bachelor of Science from University of Malaya in 1971 and pursued his undergraduate
studies in Forestry at the Australia National University from 1974 to 1975. He also holds a Masters degree in Forests
Products Utilisation from Oregon State University, United States. He was awarded the title of Panglima Gemilang Bintang
Kenyalang on 11 September 1999, and Sarawak Entrepreneur of the Year 2004. He was a finalist for the Entrepreneur
of the Year Malaysia Award 2005.
At present, Datuk Abdul Hamed is also the Chairman of Syarikat SESCO Berhad, Naim Holdings Berhad, Executive
Chairman of Ta Ann Holdings Berhad, Director of Sarawak Plantation Berhad and sits on the boards of several other
private limited companies.
TAN SRI DATUK AMAR (DR) HAJI ABDUL AZIZ BIN DATO HAJI HUSAIN
a Malaysian aged 58, joined the Board of Sarawak Energy Berhad on 27 June 2005. He was appointed as the Group
Managing Director of the Company on 1 March 2007 pursuant to his retirement as the State Secretary of Sarawak. He
is also an Independent Executive Director of the Company and attended all of the seven Board meetings held in the year
2008. He is also a Member of the Nomination & Remuneration Committee.
Tan Sri Datuk Amar (Dr) Haji Abdul Aziz holds a Bachelor in Economics majoring in Business Administration from the
University of Malaya (1973) and a Masters in Business Administration majoring in Finance in 1978 from Syracuse
University, New York. He also attended various training programmes during his public service career including the Project
Planning and Management Course in INTAN (1973), the Financial Management Course in Banff School of Management,
Alberta (1981), the Wolfson Course in Cambridge University, England (1991), the Human Resource and Personnel
Management, University of Pittsburgh (1993) and the Management Development Program in Harvard University Business
School, Boston (1994).
Besides sitting on the boards of subsidiaries/associates of the Sarawak Energy Group, Tan Sri Datuk Amar (Dr) Haji Abdul
Aziz is also a Chairman in Eksons Corporation Berhad and several other private limited companies.
DATUK AMAR WILSON BAYA DANDOT
Non-Independent
a Malaysian aged 57, joined the Board of Sarawak Energy Berhad on 31 January 1996. He is a Non-Independent NonExecutive Director of the Company and attended six out of the seven Board Meetings held in the year 2008. He is currently
a Member of the Audit Committee.
Datuk Amar Wilson has a degree in Bachelor of Economics from the University of Western Australia and a Masters degree
in Development Economics from University of Sussex, United Kingdom. He has also attended a Senior Executive Fellows
Programme at JFK School of Government, Harvard University. He first joined Sarawak State Government Office as the
Assistant Secretary of Agriculture Sector State Planning Unit in 1973. He was an Economist of the International Pepper
Community, Jakarta in 1977-1983, and later as Principal Assistant Secretary in the State Planning Unit in 1983. He was
appointed as Project Director, IADP Kalaka, Saribas, Ministry of Agriculture Malaysia in 1986-1989. In 1990, he was
appointed as Deputy Director, State Planning Unit, Sarawak. He later assumed the position of Director, State Planning Unit
in 1995 and Deputy State Secretary (Planning & Development) in 2000. He was then promoted as Deputy State Secretary
(Human Resource) and was subsequently appointed as Deputy State Secretary (Administration, Security & Protocol) at the
Chief Minister Department. On 1 January 2007, he was appointed as Sarawak State Secretary, a position he held until
today.
Datuk Amar Wilson also sits on the boards of several subsidiaries of the Sarawak Energy Group and other private limited
companies and organisations wherein the State Government of Sarawak has interests.
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DIRECTORS’ PROFILE
DATUK FONG JOO CHUNG
Non-Independent
a Malaysian aged 59, joined the Board of Sarawak Energy Berhad on 31 January 1996. He is a Non-Independent NonExecutive Director of the Company and attended six out of the seven Board Meetings held in the year 2008.
Datuk Fong obtained his Bachelor degree in Law (LLB) (Hons.) from the University of Bristol, United Kingdom in June, 1971.
He was called to the English Bar by the Honourable Society of Lincoln’s Inn in November, 1971. Datuk Fong began his
professional career in January, 1972 as an advocate, practicing under the firm of Reddi & Co. in Kuching. He retired
from the firm in July, 1992. He was appointed as the State Attorney-General, Sarawak in August 1992. His service as
State Attorney-General, Sarawak ended on 31 December, 2007, but he has been retained by the Sarawak Government
in an advisory capacity and represented the Government in Court as State Legal Counsel. He served as Councilor with the
Kuching Municipal Council and, later, the Council of Kuching City South, from October 1981 until March 1992. He was
President of the Advocates’ Association of Sarawak from 1982 until 1984 and was a founder member of the Association.
Datuk Fong was conferred the award of Panglima Jasa Negara (PJN) by the Yang di-Pertuan Agong, Malaysia in 1999
and Panglima Gemilang Bintang Kenyalang (PGBK) by the Yang di-Pertua Negeri, Sarawak in 1994. Both awards carry
the title “Datuk”.
At present, Datuk Fong also sits on the boards of several other subsidiaries of the Sarawak Energy Group besides holding
directorship in Encorp Berhad, Bintulu Port Holdings Berhad, Universal Cable (Sarawak) Sdn. Bhd., Borneo Development
Corporation (Sarawak) Sdn. Bhd., Harwood Timber Sdn. Bhd. and Permodalan Assar Sdn. Bhd. He is the President of
the Kidney Association of Sarawak, a Trustee of the Sarawak Heart Foundation and a member of the University Council,
Curtin University, Miri Campus.
SENATOR DATO’ HAJI IDRIS BIN HAJI BUANG
Senior Independent
a Malaysian aged 55, joined the Board of Sarawak Energy Berhad on 24 June 2000. He is an Independent Non-Executive
Director of the Company and attended five out of the seven Board Meetings held in the year 2008. He is currently a
member of the Nomination & Remuneration Committee and the Audit Committee.
Senator Dato’ Haji Idris holds a Bachelor of Laws Degree with Honours from University Buckingham, England and a degree
of utter Barrister from the Lincoln’s Inn, London. He is the proprietor of Idris-Buang & Associates (since 1985), a legal firm
located in Kuching, Sarawak. He was formerly the Chief Political Secretary to YAB Chief Minister of Sarawak, a position
he holds from August 2000 to August 2006. He was appointed Senator of the Dewan Negara on 28 November 2005.
Senator Dato’ Haji Idris also sits on the boards of Hock Seng Lee Berhad where he is an Independent Non-Executive
Chairman/Director. He also sits on the board of Amanah Saham Sarawak Berhad and several other private limited
companies.
DATO’ NORDIN BIN BAHARUDDIN
Independent
a Malaysian aged 59, joined the Board of Sarawak Energy Berhad on 9 September 2005. He is an Independent NonExecutive Director of the Company and attended all the seven Board Meetings held in the year 2008. He is currently the
Chairman of the Audit Committee.
Dato’ Nordin holds a Bachelor of Science in Economics with Honours from London School of Economics & Political
Science. He is a Chartered Accountant with the Malaysian Institute of Accountant (MIA) and a Fellow of Institute of
Chartered Accountants in England and Wales. Dato’ Nordin is active in local professional accounting bodies through
his membership of the Malaysian Institute of Certified Public Accountants (MICPA) where he is President and is a Council
Member, Chairman of the Disciplinary Committee and Audit Committee of Council and a member of the Financial Reporting
Standards Implementation Committee of MIA. He served for two terms on the Malaysian Financial Reporting Foundation
and was also a member of the Working Group on Corporate Governance for The Islamic Financial Services Board.
Currently Dato’ Nordin is the Chairman of KUB Malaysia Berhad and his other directorships include Scomi Engineering
Berhad, Visdynamic Holdings Berhad and Malaysian Rating Corporation Berhad where he is also the Chairman of the
Audit Committee. He also sits on several other private limited companies.
9
SENIOR MANAGEMENT TEAM
From left to right:
Lu Yew Hung
General Manager (Network)
Phang Chung Tchet
General Manager (Engineering & Construction)
Hj. Wan Mahmud Bin Wan Abdullah
Group General Manager (Internal Audit & Risk Management)
Zuraimy Bin Kushaili
Group General Manager (Corporate Affairs)
Danice Endawie Ita
Chief Operating Officer
10
Tan Sri Datuk Amar (Dr) Haji Abdul Aziz Bin Dato Haji Husain
SENIOR MANAGEMENT TEAM
From left to right:
Aisah Binti Eden
Group General Manager (Human Resource) / Group Company Secretary
Hj. Sulaiman Bin Hj. Abd. Hamid
Group General Manager (Finance)
Yong Kiong Choon
General Manager (Hydropower Generation)
Victor Wong
General Manager (Transmission)
Stell Sindau
General Manager (Gas Power Generation)
James Ung
General Manager (Coal Power Generation)
Ong Chiang Ann
General Manager (Sarawak Energy Services Sdn Bhd)
11
CHAIRMAN’S STATEMENT
Chairman,
12
It is with great pleasure for me on behalf of the Board of Directors of Sarawak Energy Berhad, to present to you
the Annual Report and Audited Financial Statements of the Company and the Group for the financial year ended
31 December 2008.
SEB (“Sarawak Energy Berhad” or “the Company”) is in the midst of transformation. It is actively pursuing collaborative
efforts with other power utility agencies and academic and business institutions to enhance productivity, exchange
of technical skills and ideas and increase revenue. In the years ahead, SEB will continue to explore possibilities
with other ASEAN countries for power inter-connectivity and exchange of expertise. At the same time, SEB will also
continue to conduct its own studies on new sources of renewable and sustainable energy that will ultimately earned
the State of Sarawak as the power hub of the nation. The Mukah Coal-Fired Power Plant has been completed and
has gone on full commercial operation in May 2009. We have also commenced the construction of the 944 MW
Murum Hydro Electric Power project in line with our target to have an installed capacity of 6,000MW by 2015
and 10,000 MW by 2020.
Internally, SEB continued to look into ways to spur its workforce to meet the challenges of the future. Various HR
initiatives are being introduced to streamline and facilitate operations, keep costs down and inevitably to increase
profits. With the management acumen shown by our Group Managing Director/Chief Executive, together with the
high commitment and full co-operation of all employees as well as continuing confidence from the stakeholders and
investors, SEB has shown a favorable outcome in steering and achieving its vision to be a world class power utility,
with competitive cost structure and organisational excellence to sustain long-term shareholders’ value.
FINANCIAL REVIEW
For the financial year ended 31 December 2008, the Group’s revenue improved from RM1.32 billion in 2007 to
RM1.34 billion, representing an increase of RM20.1 million.
Profit before tax was recorded at RM293.7 million, a decrease of RM107.0 million as compared to RM400.7
million in the previous financial year. The decrease was mainly due to higher fuel costs resulting from higher
diesoline price. The better performance in previous financial year was also contributed by the favorable impact
arising from the disposal of investment in Encorp Berhad.
The Group has registered a Net Assets per share of RM1.88 as at 31 December 2008 as compared to RM1.71
in Year 2007.
13
FUTURE DIRECTION
With the new development plans being put in place in tandem with our vision and mission, the Company is
confident that it will be able to steer the state into becoming the power house in the Region by year 2020. The
State of Sarawak is blessed with abundant hydro potentials and coal reserves which need to be developed to
become tangible assets both in terms of commercial and socio-economic aspects. This poses an intense challenge
to Sarawak Energy Berhad to turn these plans into success stories.
APPRECIATION
On behalf of my colleagues on the Board, I wish to record our appreciation to the management and staff of the
Group for their dedication, efforts and diligent contributions towards achieving our favorable result during the year
and I believe this level of commitment will continue to be strengthened as we move forward.
I also wish to express our sincere appreciation to our valued stakeholders, shareholders, investors, customers,
business associates and professional advisers for their confidence and continued support in the Sarawak Energy
Group.
Chairman
14
GROUP MANAGING DIRECTOR / CHIEF EXECUTIVE’S MESSAGE
FOREWORD
Praise be to God the Almighty for giving us His grace and
bountiful blessings in enabling us to face the challenges
and obstacles with continued dedication throughout the
year 2008.
SEB will strive to pursue its vision to be a world class
organisation in providing power and energy by optimizing
the generation output using ethnic energy resources such
as hydro and coal providing power to meet the needs of
all strata of the population. Thus, new power generating
sources, especially sustainable and renewable energy,
and transmission systems need to be further identified and
developed.
The development of our power and energy resources has
been identified as one of the critical factors to spur the
State’s future economic growth. The Sarawak Corridor
of Renewable Energy (SCORE) launched in February
2008 spanning from Tanjung Manis, Sarikei to Similajau,
Bintulu is based on energy intensive industries. SCORE is
a long-term integrated development strategy to create rural
growth centers and improve connectivity and infrastructure
with focus on ten priority industries. It should be noted that
SEB plays a very significant role in SCORE, particularly
in the area of generation and transmission of electricity
across the vast span of the corridor and beyond.
Mukah Power Generation Sdn. Bhd., a subsidiary of SEB,
TAN SRI DATUK AMAR (DR) HAJI ABDUL AZIZ BIN DATO HAJI HUSAIN
15
was formed to undertake the development of 2 units of
135 MW coal-fired power plant in Mukah on an 865-acre
of land located at Matadeng, Mukah The turnkey project
commenced in May 2006. Thus far, we have managed
to secure 135MW with the commissioning of the first
generation set of the plant in 2008. The second set is
expected to be commissioned in May 2009.
A few mine mouth power plant are being planned in the
proximity of the Mukah-Balingian coal deposits. Land
studies are currently being carried out to determine the
viability of these projects. The coal deposits in the Merit
Pilla area may give us the potential to generate coal fired
power up to 1200MW in Kapit. With the advancement
of technology, coal power generation is no longer seen
as an unfriendly system to the environment as proven by
our first Sejingkat coal-fired power plant which is used as
a benchmark by the Department of Environment in their
powerplants audit exercise nationwide.
The existing power grid system has also been expanded
with the development of a few more EHV substations such
as Selangau and Metadeng which were commissioned
recently with the commissioning of the Mukah 270MW
coal-fired power plant. New major EHV substations at
Sungai Asap and Similajau and the transmission lines
from Bakun to Similajau are currently under construction.
Despite the scarcity and the long term concern of the
supply of gas which at the moment forms about 45% (after
the full commissioning of the Mukah Coal-Fired Power
Plant) of our total generation capacity, we endeavor to
maximize the utilization of the available gas supply for
our power generation. This strategic move can be seen
in the construction of our combined cycle power plant
in Bintulu which started in late 2007 and is expected to
be completed before the end of 2009. This combined
cycle plant will be able to generate additional 110MW
using the excess heat from the existing open cycle gas
generation under Units 7 and 8 plant in Bintulu.
ASEAN POWER HUB
Being a fully integrated power utility responsible for the
generation and distribution of electricity in the State, SEB
is poised to become a major power producer in the region
through harnessing the abundant renewable energy
resources in the State.
The Bakun hydroelectric project with a generation
capacity of 2400 MW, developed by Sarawak Hidro
Sdn. Bhd., is intended to supply power to Semenanjung
Malaysia through submarine cables. With existing
generation capacity in Semenanjung Malaysia unable
to cope with projected increase in demand, power from
Sarawak is being sourced. Subject to all requirements
being fulfilled, we are confident that the Bakun hydro dam
and the submarine underwater cable linking Sarawak
and Semenanjung Malaysia will open the door to fulfill
the State’s vision in becoming the major energy supplier
and powerhouse in the region through SEB, based on
the development of our massive hydro potentials and
16
abundant coal reserves.
Meanwhile, SEB has also embarked on the construction
of Murum hydroelectric dam which has a generating
capacity of 944 MW. The signing ceremony of the
main construction contract of the Murum HEP was held
in Yichang, China in October 2008. The construction of
Limbang hydro dam (195MW) Trusan and Lawas hydro
dam (300 MW), Baleh (1400 MW), Metjawah (300
MW) and others will follow suit. By 2020, SEB is expected
to develop more than 10000 MW of generating capacity
which will be able to supply not just to Semenanjung
Malaysia and Sarawak organic growth but also the
neighbouring ASEAN countries such as Negara Brunei
Darussalam and Indonesia.
HR INITIATIVES
Our newly developed strategic plans will need to be
refined and adopted by all our Strategic Business Units.
We need to develop capabilities to fully utilize all our
resources including our intangible assets comprising human
capital, information technology systems and our internal
processes. Our human resources need to be developed
into a more responsive, highly dedicated and qualityconscious workforces who are innovative and responsive
to customers needs. This would mean that the work culture
and values need to be tuned and adapted to one with
a greater sense of purpose, more professionalism and
uncompromising integrity. With these objectives in mind,
we have developed a new Performance Management
System based on the balanced scorecards where the
KPIs (Key Performance Indicators) for all departments,
Divisions, Units and individuals are developed based on
the Corporate Strategic Plan and the annual budget and
taking into account the four perspectives of the Balanced
Scorecard, i.e., financial performance, customer value
proposition, internal processes and the learning and
growth objectives.
As part of its restructuring exercise, the SEB Group of
Companies has also embarked on the Enterprise Resource
Planning (ERP) Project upgrade to enable it to meet the
objectives and the challenges of its fast expanding
business. The SAP Modules to be implemented include:
• SAP Financials ( FICO )
• Project System ( PS )
• Materials Management ( MM )
• Customer Care & Services ( CCS )
• Plant Maintenance ( PM )
• Human Capital Management ( HR )
• Fixed Assets ( FA )
• Business Intelligence
The project carried out in five stages successfully went on
live in April 2009.
In September 2008 the Trainee Engineers Development
Programme (TEDP) was launched involving a pioneer
batch of twenty-two trainee engineers with the aim of:
• training a pool of engineers who would be competent to
fill vacant positions;
• building up technical human capital as a succession
planning initiative;
• complementing the government Graduates Training
Scheme designed for engineers.
The training that the participants undergo could span
between one to two years comprising structured classroom
training as well as on the job training (OJT) at various
operation and maintenance premises.
OTHER INITIATIVES
SEB is vigorously pursuing other initiatives to maintain its
status as the power utility in the country. Syarikat SESCO
Berhad, a subsidiary of SEB, and Press Metal Berhad
(PMB) inked the Power Purchase Agreement (PPA) on 1
July 2008. Under the terms of the PPA, SESCO undertakes
to supply electricity to PMB’s aluminium smelting plant in
Balingian commencing middle of 2009.
On 7 May 2009, SEB and Tenaga Nasional Berhad
(TNB) took their joint collaboration to a new level when
they formalized the power supply arrangement at the
signing of Heads of Agreement (HoA). Under the terms
of the HoA, SEB will supply to TNB 3000 MW from the
year 2017 to 2020 and 5000 MW from 2021 to 2030.
A joint committee has been established to oversee and
facilitate the implementation of the terms of the agreement.
In September 2008, SEB signed a memorandum of
understanding (MoU) with JKR and UNIMAS to undertake
research and development, and collaboration activities
through cooperative research, joint courses, training and
industrial attachment, and joint consultancy activities. The
R & D activities resulting from the MoU is intended to focus
on the development of competency, skills enhancement
and professional advancement which is vital for the
development of human capital in the state.
The year 2008 also saw SEB marking its first foray into
the retail business by launching its first consumer product
targeted for the energy-conscious market – the SEB
Energy Saving bulbs. This is one of the ways in which the
company can generate revenue and mitigate the shortfall
in energy availability. The potential reduction in electricity
consumption through the use of the energy saving bulbs
would be up to 16.8 MW state-wide. This would have a
significant impact on SEB’s power generating capacity and
can help reduce SEB’s dependency on diesel, particularly
at the non-grid stations.
Another wholly-owned subsidiary, the Sarawak Power
Generation Sdn. Bhd. (SPG), reached an important
milestone with the signing of our first ever Clean
Development Mechanism (CDM) agreement and Emission
Reduction Purchase Agreement (ERPA) with Mitsubishi
Corporation of Japan for the Bintulu Combined-Cycle Gas
Turbine STG No. 9 Project (CCGT).
The project involves the conversion of the existing two
open-cycle gas generating sets (GT 7 and GT 8) in the
Bintulu Power Station to one block of combined-cycle
power generating plant with a total capacity 330 MW
of which 110 MW is new generation. This project is
eligible for CDM because it generates electricity without
polluting the environment with greenhouse gases. The
resultant reduction in emission of greenhouse gases will be
sold to our CDM partners Mitsubishi Corporation through
Certified Emission Reduction (CER) credits.
CONCLUSION
SEB will continue to be in the forefront spearheading the
role to transform Sarawak, the largest State in Malaysia,
to become the largest supplier of the nation’s power needs
through the development of its rich natural resources - vast
hydro power potential and abundant coal deposits. Thus,
in the next five to ten years, Sarawak is poised to see a
quantum leap in its development through transformational
change in its economic, social and industrial landscape
through the implementation of SCORE.
I fully appreciate the important role played by each
and every one of our employees and therefore with the
support and blessing from our Board and as importantly
the confidence and trust of our shareholders I shall ensure
that Sarawak Energy Group will be able to achieve its
objectives.
The transformation and progression of SEB is an on-going
journey. Hence, I would like to take this opportunity to
thank everyone who has assisted me and the management
in this process of Sarawak Energy throughout 2008. I can
assure all of you that given the dedication that we have in
doing our job so far, and the passion shown by everybody
in trying to achieve our objectives, I am confident that we
can expect not only to achieve but to exceed our targets
in 2009.
As we move forward, we must not be afraid of the
challenges ahead. We must push for more reformative
steps to enhance our efficiency, effectiveness and
productivity which will eventually lead to an upsurge in our
bottom-line. In this regard, the company needs the support
of its employees and stakeholders all the way. I am fully
committed to steer the company forward and I strongly
believe that we can achieve our goal if we strengthen our
resources and grasp the opportuniities with determination
and grit. Together, we can perform wonders.
TAN SRI DATUK AMAR (DR) HAJI ABDUL AZIZ
BIN DATO HAJI HUSAIN
Sarawak Energy Berhad
17
GROUP FIVE-YEAR FINANCIAL STATISTICS
2004-2008
2008 RM’000 PERFORMANCE Revenue Profit before taxation Taxation Profit for the year Minority interest Profit attributable to equity
holders of the Company Net dividends 1,339,266
293,731
(16,974)
276,757
(1,110)
275,647 63,006 2007 RM’000 1,319,208
400,727
(63,316)
337,411
(1,949)
335,462 56,201 2006 RM’000 1,177,813
264,466
(6,679)
257,787
(2,022)
255,785 45,462 2005 RM’000 2004
RM’000
680,082
180,315
(44,600)
135,715
(4,024)
220,800
75,610
(32,634)
42,976
(5,044)
131,691 42,652 37,932
12,639
ASSETS EMPLOYED
Property, plant and equipment 4,875,994 Prepaid land lease payments 125,307 Investments and goodwill -
Non-current receivable -
Deferred tax assets 34,337 Bank and cash balances 766,392 Other net current assets / (Liabilities) (134,483) Associated companies 45,314 4,341,983
129,800
909,515
41,627
35,279
Total 5,712,861 5,458,204 Equity attributable to equity
holders of the Company Minority interests Non-current liabilities Deferred taxation 2,865,428
17,257
2,459,774
370,402
2,595,994
16,147
2,470,359
375,704
Total 5,712,861 3,765,040
131,524
2,686
668,700
119,416
55,098
3,758,946
132,028
2,688
494,435
(107,324)
48,163
451,337
37,109
456,342
40,595
160,167
68,331
1,709,406
4,742,464 4,328,936 2,923,287
2,305,090
14,406
2,045,225
377,743
2,089,556
12,404
1,810,003
416,973
2,662,010
90,004
148,184
23,089
FINANCED BY
5,458,204 4,742,464 4,328,936 2,923,287
1.71 22.09 5.0 1.52 16.84 4.1 1.38 9.76 3.9 2.27
3.24
1.5
SELECTED RATIOS
Net tangible assets per share (RM) Net earnings per share (Sen) Gross dividend per share (Sen) 18
1.88 18.10 5.5 GROUP FINANCIAL HIGHLIGHTS
1,600
400
1,400
1,319.2
1,200
350
1,339.3
337.4
300
1,177.8
276.8
257.8
250
800
RM (Million)
RM (Million)
1,000
680.1
200
600
150
400
100
135.7
220.8
200
0
50
2004
2005
2006
2007
0
2008
REVENUE
43.0
2004
2005
2006
2007
2008
PROFIT FOR THE YEAR
25
3.0
22.09
2.5
20
2.27
16.84
2.0
1.88
15
1.71
1.5
1.38
1.52
(Sen)
(RM)
18.10
9.76
10
1.0
5
0.5
0.0
2004
2005
2006
2007
2008
NET TANGIBLE ASSETS PER SHARE
0
3.24
2004
2005
2006
2007
2008
NET EARNINGS PER SHARE
19
CORPORATE SOCIAL RESPONSIBILITY (CSR)
WHAT DO WE STAND FOR?
Sarawak Energy Berhad has a long standing tradition of
contributing to society and its employees for we believe in
striking a balance between profitability and giving back to
the communities as well as employees.
We are driven by the belief in good corporate governance
and integrity.
As a caring organisation, SEB and its group of companies
will continue to reinforce its presence in the State of
Sarawak not only through vigorous development projects
but also in the heart and mind of the people to involve itself
in corporate social responsibility programs.
SEB CORE CSR THRUSTS
Within the platforms of education, sports development,
and community- & nation-building, SEB will continue to
carry out activities that create a value proposition for all
parties concerned.
Education
In March 2008, Sarawak Energy Berhad launched an
English development program for the children in Lubok
Antu, Sarawak, where our Batang Ai Hydro Power Station
is located. The three-month program which is aimed at
developing the children’s listening, reading and writing
skills as well as building self-confidence, was launched by
Group Managing Director / Chief Executive.
SEB also contributed to Pusat Pembangunan Kemahiran
Sarawak during its open day, Anugerah Pelajar Islam
Cemerlang peringkat negeri Sarawak and partially
funded the publication of the book, “Arkitek Bandaraya
Terbilang” in 2008.
In recognizing the difficult times for graduates to secure
jobs in the current economic conditions, the company also
launched the Trainee Engineers Development Program.
This program is aimed at providing the platform for young
engineers to be trained with the right skills and on-the-job
training for a period between one (1) to two (2) years.
Trainees who excel during the program would be offered
more permanent jobs within the SEB group.
Sports and Recreations
In August 2008, SEB organised the Sarawak Energy
Badminton Challenge Trophy tournament to unearth
new talents among the badminton fraternity and also to
inculcate better understanding and rapport between SEB
and their major clients and customers. In December same
year, SEB organised the SEB GOLF OPEN TOURNAMENT
at Sarawak Club Golf & Resort course. It was participated
by heads of government departments, business associates
and clients of SEB.
SEB also participated in the TNB Technical Games held at
ILSAS Kuala Lumpur in June 2008 to learn new as well as
exchange technical skills and to foster closer rapport with
our counterparts in the power utility industry, notably TNB
and SESB.
20
During the holy month of Ramadan, SEB organised several
Majlis Berbuka Puasa functions for charitable and welfare
organisations throughout the State, presenting gifts and
monetary assistance to the needy and less fortunate.
With regard to staff welfare, Annual Dinner and Family
Day functions were organised in all major stations. They
were aimed at enhancing the esprit-de-corp among fellow
employees and inculcate good family values.
SEB employees also voluntarily participated in blood
donation campaigns for a noble cause through the
quarterly Blood Donation program and during the Annual
Safety campaign at the various administrative regions.
SEB also participated in the Hari Kemerdekaan celebration,
Maulidur Rasul and Ma’al Hijrah activities, as well as the
Yang Di-Pertua Negeri’s Birthday parade.
Community & Nation-Building
For SEB, giving back to the society is a norm and a
practice that it will always continue to sustain. Throughout
2008, SEB and its group of companies embarked on a
number of social projects. This was done both through its
participation in various social programs or by granting
monetary assistance to non-profitable organisations within
the State.
Among the beneficiaries are Persatuan Orang-Orang
Cacat Penglihatan Islam Malaysia,Pertubuhan Kebajikan
Anak-anak Yatim (PERYATIM), Skuad 69 PDRM Sarawak,
PERKATA Sarawak, Angkatan Zaman Mansang, Laila
Taib Cancer Charitable Trust Dinner, Badan Pengawas
Saham Minority Berhad, International Baram Regatta,
Kelab Penerangan-Program Kembara Jalur Gemilang
2008, Sarawak Chambers of Commerce & Industry, Kapit
Merdeka Celebration Trust Fund and Asian Strategy &
Leadership Incorporated Sdn Bhd.
In tandem with the development of the Murum Hydroelectric Project which is currently under construction, the
company also assures that the local communities are not
adversely affected. Together with the relevant government
agencies, various dialogues and community events have
been organised to ensure these communities are given
the proper information with regard to the project. As a
responsible corporate citizen, the company also ensures
that in carrying out the various projects, the environmental
aspects are not taken lightly. In this respect, a pro-active
approach has been taken by the company in adhering to
the environmental laws in the State of Sarawak and taking
into account the applicable laws are fully adhered to and
that the views of all concerned such as the government
agencies and the local community are taken into account.
Being a highly visible corporate entity in the State, SEB
is always committed towards sustaining a meaningful
co-existence with the surrounding community. Our CSR
initiatives will continue to strengthen our relationship and
place SEB in the hearts and minds of the society.
FLASH BACK 2008
Launching of Sarawak Corridor of Renewable
Energy (SCORE)
Launching of Sarawak Corridor of Renewable
Energy (SCORE)
Signing of Memorandum of Understanding (MoU) in Bintulu, 2008
Site visit by the Group Managing Director /
Chief Executive to Selangau Substation
Site visit by the Group Managing Director /
Chief Executive to Bintulu Combine Cycle Gas
Turbine Plant
21
FLASH BACK 2008
SEB Badminton Challenge Trophy
SEB Corporate Golf Tournament
Site visit by the Group Managing Director / Chief Executive to
Sarikei Office
Auxiliary Police Annual Conference
22
Auxiliary Police Annual Conference
FLASH BACK 2008
Papua New Guinea delegation’s visit to
Sejingkat Power Corporation
SEB’s participation in POWER-GEN ASIA
Exhibition 2008
Signing of Heads of Agreement (HOA) between Sarawak Energy
Berhad and Tenaga Nasional Berhad
Blood Donation Campaign
Donation to Rumah Sri Kenangan
23
FLASH BACK 2008
Ramah Tamah Aidil Fitri 2008
Ramah Tamah Aidil Fitri 2008
Ramah Tamah Aidil Fitri - Mukah, 2008
Visit to Rumah Sri Kenangan
24
Visit to Rumah Sri Kenangan
FLASH BACK 2008
Annual Dinner 2008
Selamat Hari Gawai Function 2008
Annual Family Day 2008
SEB’s participation in TNB’s Technical Games
Competition
SEB’s participation in TNB’s Technical Games
Competition
25
STATEMENT ON INTERNAL CONTROL
1.0 INTRODUCTION
The Board of Directors (Board) is committed to maintaining an effective control structure and environment for
the proper conduct of the Sarawak Energy Berhad Group’s business operations and is pleased to provide the
following statement, which outlines the nature and scope of internal control of the Group during the financial
year under review.
2.0 BOARD RESPONSIBILITY
The Board recognises the importance of sound internal controls and risk management systems and corporate
governance. The Board acknowledges that it is ultimately responsible for the Group’s system of internal
control, which includes the establishment of an appropriate control environment and framework, as well
as reviewing the adequacy and integrity of risk management, governance and compliance functions. The
system of internal control covers financial, operational, management information systems, risk management
and compliance with relevant laws, regulations, rules, directives and guidelines.
The internal control operating within the Group is designed to meet the business objectives and to manage
the risks to which the Group is exposed.
It is emphasised however, that any internal control system provides only reasonable and not absolute
assurance against material misstatement, loss and fraud.
3.0 ENTERPRISE - WIDE RISK MANAGEMENT
26
As part of its efforts to discharge its duties and responsibilities of maintaining a sound system of internal
control and ensuring its continuing adequacy and integrity, the Board has in February 2008 approved the
establishment of a formalised Enterprise Wide Risk Management (EWRM) Framework for the Group. The
EWRM Framework includes a method of identifying, analysing, assessing and monitoring the Group’s risks
and it is an ongoing and a continuous process.
The ongoing process is to identify, evaluate and manage significant risks that affect the achievement of the
Group’s strategic business objectives. This process includes implementing the risk management policy, which
would drive the risk management activities of the Group as well as establishment of a risk management
oversight structure to oversee these activities. Additionally, this process includes a review of the adequacy of
the present system of internal control to manage principal risks identified.
For the financial year under review, the Board, through the Audit Committee (AC) and Group Managing
Director’s Committee (GMDC) has reviewed the progress of implementation of the risk management
framework and status of implementation of action plans developed by business units and support functions to
mitigate the identified strategic and other principal risks of the Group through quarterly consolidated reports
prepared and presented by Risk Management Division (RMD) during the committees’ meetings.
RMD is responsible for coordinating and facilitating the EWRM activities groupwide through all the appointed
risk owners, co-owners and person in-charge for each business units and support functions within the Group.
In addition, the AC and Board also ensure that management implements all the action plans within the
agreed timeframe while RMD monitors the status of their implementation and report the progress to the AC
and Board on quarterly basis.
4.0 CONTROL STRUCTURE
Apart from risk management activities, the Board has also set up the key elements of the Group control
structure to maintain an effective control environment. One of the key elements of the control environment
includes the basic principles and values of the organisation such as integrity, commitment and credibility
which formed part of the organisation’s culture. Some of the other elements of the Group’s control structure
include the following:-
Board and Management Committees
The Company has established Board and Management Committees to promote corporate governance and
transparency. Specific terms of reference and authority are assigned to the Committees within their scope.
Board Committees
• Audit Committee (AC)
• Board Tender Committee (BTC)
• Group Establishment and Disciplinary Committee (GEDC)
• Nomination & Remuneration Committee (NRC)
Management Committees
• Group Managing Director’s Committee (GMDC)
• Management Tender Committee (MTC)
• Regional Tender Committee (RTC)
Board Meetings
The Board maintains full and effective supervision over key issues affecting the Group. This is done through
regularly scheduled meetings, where the agenda is set and agreed by the Chairman and Senior Management.
Board papers are circulated to members ahead of the meetings. All important matters are dealt with and
decided on after the required information is presented and deliberated.
Management Meetings
The Group’s Management conducts monthly senior management meetings which comprise Group Managing
Director/Chief Executive, Chief Operating Officer and business units and departmental heads. The purpose
of these meetings is to deliberate and decide on policy and operational matters affecting the Group.
Organisation Structure
The Board has implemented a clearly defined structure that is aligned to Group’s strategic and operational
requirements. The Group structure is departmentalised to enable better focus on both core business and
support functions. Additionally, clear lines of accountability and responsibilities have been established for
each department and operating units.
Management Information Systems
The Board recognises the importance of leveraging on management information systems to enable faster
information for decision making and assisting operations to be run effectively and efficiently. During the year,
the following systems were initiated and implemented:
27
4.0 CONTROL STRUCTURE (Cont’d.)
Management Information Systems (Cont’d.)
1)
SAP ECC 6.0 Functional Upgrade Implementation
This IT Applications Roadmap is for the implementation of a single integrated Enterprise Planning
System for the Group. The project covers eleven companies of the Group and they are implemented to
support the objectives of the Group’s organisational restructuring exercise and to meet the challenges
of its fast expanding business activities. Among others, the scope of the project includes the following
modules:• Industry Solution for Utilities – Customer Care Services for Syarikat SESCO Berhad (SESCO)
• Project Systems
• Financial and Controlling
• Business Intelligence
• Plant Maintenance
• Material Management
• Fixed Asset Management
• Human Resource/Human Capital Management
• E – Portal (e-recruitment)
The project is scheduled for live run in April 2009.
2)
Enterprise Management System (EMS)
EMS is a web-based, centralised server software application system implemented to support the EWRM
framework of reporting and monitoring risks. The system enables the recording of risks, controlling
and tracking of implementation of action plans to manage risks.
3)
E – Bidding System
The System is implemented in SESCO, the Group’s major and wholly owned subsidiary company to
facilitate the company in managing the tendering process in a more effective and efficient manner
through the website and it is designed to meet the following key objectives:• Reduce administrative cost of printing and delivery of tender documents
• Allow greater flexibility and speed for the vendors to obtain tender documents
• Facilitate vendors to purchase tender documents through website and making payment through
electronic banking system
• Facilitate online tender bid submission
Group Policies and Procedures
The Group has put in place approved policies and procedures to govern the financial and operational
functions of the Group. The objectives of these are to ensure that internal controls are embedded in operations.
Among others, the key policies and procedures implemented are as follows:• Group Financial Policies & Procedures
• General Instructions on Purchasing & Contracts (GIPC 2006)
• Group Terms & Conditions of Service (TACOS)
• Risk Management Policy & Procedures
• Policy, Procedures & Guidelines on Vehicles Fleet Management
28
4.0 CONTROL STRUCTURE (Cont’d.)
Group Policies and Procedures (Cont’d.)
During the year, the following revisions/amendments were introduced to enhance the existing policies and
procedures:
• Review of the Limits of Financial Authority under the Group Financial Policies & Procedures to streamline
and improve controls over financial transactions
• Establishment of the Group Establishment & Disciplinary Committee to replace the existing Establishment
& Disciplinary Committee of SESCO
• Revision of GIPC 2006 to incorporate amendments to the authority limits and composition of the various
tender committees within the Group
• Revision of Group TACOS to match new position grades to employees’ benefits such as travelling
entitlements & allowances, medical provisions, housing & vehicle loan entitlements etc
Distribution System Losses
In March 2008, the Distribution Losses Taskforce was formed and mobilised to look into the increasing trend
of system losses in SESCO and to formulate specific action plans to evaluate the distribution losses and
determine the quantum of both technical and non-technical losses.
The objectives of the taskforce are as follows:• To draw up specific action plans with clear timelines covering short, medium and long term plans
• To measure and compute accurately both technical and non-technical distribution losses
• To identify feeders, substations and transformers that have high percentage of losses for immediate
mitigation measures
• To install smart meters at strategic locations of 33kV and 11kV networks
• To advise Revenue Management Division at Headquarters and Revenue Processing Units at all the regions
on areas of high losses for immediate follow through actions
• To put in place effective procedures and workflows for the regions and power stations to measure,
compute and monitor distribution losses on regular basis
5.0 MONITORING & REVIEW
Business Planning & Budgeting Review
The Board places emphasis on a long-term plan to ensure that the Group realises its mission and objectives.
For this purpose, a Strategic Plan for Long – Term Power System Development in Sarawak was drawn up by
the Group Managing Director to guide the organisation in achieving its vision of becoming the Powerhouse
for the Region and a World Class Energy Provider.
Based on the strategies identified in the Strategic Plan, Annual Business Plan and Budget and Key Performance
Indicators are drawn up and approved by the Board. This is to ensure accountability and achievement of
the Group’s objectives and strategies. The Business Plans include the budget, new project proposals and
capital budget. Measurement of performance are regularly monitored through the GMD Monthly Report
incorporating key project progress, financial and operational key performance indicators and departmental
initiatives. These reports are tabled to the Board by the GMD at every board meeting.
29
5.0 MONITORING & REVIEW (Cont’d.)
Financial and Operational Review
Interim financial results are reviewed by the Audit Committee and approved by the Board upon recommendation
of the Audit Committee before being release to Bursa Malaysia. The full year financial results and analyses of
SEB Group’s state of affairs are disclosed to shareholders after being reviewed and audited by the external
auditors.
Group Management Report containing key financial results, operational performance indicators and
improvement initiatives implemented by business units are also issued to the Board and Senior Management
to enable them to have updated information of the Group’s performance.
Internal Audit
The internal audit function of the Group is carried out by an Internal Audit Division, a division established
within the Internal Audit & Risk Management Department. The internal audit function provides the Board with
the assurance it required with regard to the adequacy and integrity of the system of internal control through
regular reviews carried out in the key activities of the Group’s businesses based on the annual internal audit
plan, which is presented to the Audit Committee for approval. The internal audit function adopts a risk-based
approach and prepares its audit strategy and plan based on the risk profiles of the business units and support
functions of the Group.
The internal audit reports are reviewed by the Audit Committee. The Management is responsible for ensuring
that corrective actions on reported weaknesses are being implemented within the required time frame.
The Audit Committee has access to both internal and external auditors and receives reports on all audits
performed.
6.0 CONCLUSION
30
During the current financial year to the date of this report, no major control weaknesses were discovered.
However, a number of minor internal control weaknesses were discovered, all of which have been, or are
addressed. These are not expected to result in any material loss, contingency or uncertainty that would
require disclosure in the Annual Report.
This Statement is made in accordance with a resolution of the Board of Directors dated 30th April 2009.

View - Sarawak Energy

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