SARAWAK ENERGY BERHAD

(Company No. 007199-D)

Annual Report 2007 Laporan Tahunan

SARAWAK ENERGY BERHAD (Company No. 007199-D)

SARAWAK ENERGY BERHAD (Company No. 007199-D)

4th Floor, Wisma SESCO, Petra Jaya, 93673 Kuching, SARAWAK.
Tel: 6082-441 188 Fax: 6082-313 588 website: www.sarawakenergy.com.my
Annual Report
Laporan Tahunan 2007
 SARAWAK ENERGY BERHAD (Company No. 007199-D)

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 - 15
Group Managing Director’s Message 16 - 17
Group Five-Year Financial Statistics, 2003-2007 18
Group Financial Highlights 19
Corporate Social Responsibility 20
Flash Back 2007 21 - 23
Statement on Internal Control 24 - 26
Corporate Governance Statement 27 - 34
Audit Committee Report 35 - 42
Financial Statements 43 - 100
List Of Properties 101
Analysis Of Shareholdings 102
Substantial Shareholder 102
List Of Directors’ Interests 103
List Of Thirty Largest Securities Account Holders 104 - 105
Notice Of Annual General Meeting 106 - 109
Form of Proxy

Annual Report 2007 1

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

GROUP CORPORATE STRUCTURE

as at 30 April 2008

(Company No. 007199-D)

Syarikat SESCO Berhad

100%

Sejingkat Power Corporation Sdn Bhd

50.82%

Sarawak Power Generation Sdn Bhd

UTILITY 100%

Mukah Power Generation Sdn Bhd

100%

Sarawak Energy Services Sdn Bhd

100%

Sarawak Coal Resources Sdn Bhd

30%

Sarawak Hydro Power Generation Sdn Bhd

100%

Sarwaja Timur Sdn Bhd

MANUFACTURING &
77.71%
PROPERTY
Dunlop Estates Holdings Sdn Bhd
100%

Dunlop Agro-Management Sdn Bhd

100%

Dunlop Properties Sdn Bhd

INVESTMENT HOLDING & 100%

OTHER RELATED SUPPORT Dasar Untung Sdn Bhd

100%

Dectra Sdn Bhd

26.24%

Naungan Pertiwi Sdn Bhd

100%

2 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Sejingkat Power Corporation Sdn Bhd

49.18%

Sarwaja Timur Sdn Bhd

33.39%

PPLS Power Generation Sdn Bhd

100%

SESCO Engineering Sdn Bhd

70%

SESCO-EFACEC Sdn Bhd

51%

Universal Cable (Sarawak) Sdn Bhd

35%

Sarawak Gas Distribution Sdn Bhd

30%

Sarwaja Engineering & Construction Sdn Bhd

100%

Integrated Circuit Design Services Sdn Bhd

30%

Annual Report 2007 3

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

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 3. To establish Organisational Trust by ensuring that
electricity to promote quality life and sustain all structures and systems are in harmony with
economic growth in the State and Region; core values and behaviours;

2. To operate the Company on a sound financial 4. Recognition on the role that business plays in
basis of profitable growth, increasing shareholders’ society by initiating innovative ways to improve
value and creating career opportunities and the lives of the community.
providing rewards based on performance to our
employees;

CORPORATE LOGO

The logo, inspired by

the vibrant yellow-coloured lightning The red line-pillar
symbolising power and energy and the three horizontally symbolises energy, power, strength as well as
placed line-pillars incorporating the Sarawak State’s determination. These epitomize Sarawak Energy’s
colours, represent the core business of the Company goals and endeavours in the State’s economic growth
that is power generation, transmission and distribution. and in pursuing regional and global power needs.
This new logo defines Sarawak Energy Berhad.
The yellow line-pillar
The yellow lightning denotes being the State’s dominant colour, is depicted on
the letter “S” for “Sarawak” the middle line-pillar and denotes leadership and
with its unique strike pose, signifying electricity and professionalism of Sarawak Energy’s role as a stable
power generation which is Sarawak Energy’s main and responsible corporate citizen playing a pivotal role
core business activity thus thrusting Sarawak Energy in Sarawak’s rapid pace of development.
Group as the State’s flagship energy and utility group.
The black line-pillar
The three identical horizontal line-pillars represents integrity, commitment, responsibility and
symbolise the letter “E” for “Energy” depicting power resources, which are vital qualities for any aspect
transmission and the three-phases of electricity of a sustainable corporate and individual life, and
interpreted as the harmonious unison of a smart- we at Sarawak Energy always value these qualities
partnership between Sarawak Energy and the and strive to inculcate these significant traits in our
stakeholders via-a-vis the government and the public, undertakings.
in generating power and electricity needs for the
State and Region at large, hence, complementing the
development of Sarawak.

4 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE INFORMATION

DIRECTORS REGISTERED OFFICE / HEAD OFFICE

Datuk Abdul Hamed Bin Sepawi 4th Floor, Wisma SESCO
Chairman, Independent Non-Executive Director Petra Jaya 93673
Kuching, SARAWAK
Tan Sri Datuk Amar Haji Abdul Aziz Bin Tel: 6082-441 188
Dato Haji Husain Fax: 6082-313 588
Group Managing Director / Chief Executive E-mail: [email protected]
Executive Director
SHARE REGISTRAR
Datuk Amar Wilson Baya Dandot Symphony Share Registrars Sdn. Bhd.
Non-Independent Non-Executive Director Level 26, Menara Multi-Purpose
Capital Square
Dato’ Haji Idris Bin Haji Buang No. 8, Jalan Munshi Abdullah
Senior Independent Non-Executive Director 50100 Kuala Lumpur

Datuk Fong Joo Chung BURSA MALAYSIA STOCK NUMBER

Non-Independent Non-Executive Director Sarawak 2356

Dato’ Nordin Bin Baharuddin INTERNATIONAL SECURITIES

Independent Non-Executive Director IDENTIFICATION NUMBER (ISIN)
MYL235600003
AUDIT COMMITTEE
Dato’ Nordin Bin Baharuddin - Chairman AUDITORS
Datuk Amar Wilson Baya Dandot Ernst & Young
Dato’ Haji Idris Bin Haji Buang
PRINCIPAL FINANCIAL INSTITUTIONS
NOMINATION & REMUNERATION RHB Bank Berhad
COMMITTEE EON Bank Berhad
Datuk Abdul Hamed Bin Sepawi - Chairman AmInvestment Bank Berhad
Tan Sri Datuk Amar Haji Abdul Aziz Bin
Dato Haji Husain
Dato’ Haji Idris Bin Haji Buang

SENIOR INDEPENDENT NON-EXECUTIVE

DIRECTOR
Dato’ Haji Idris Bin Haji Buang

COMPANY SECRETARY
Aisah Eden
(LS 03629)

Annual Report 2007 5

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

BOARD OF DIRECTORS

DATUK ABDUL HAMED BIN SEPAWI

Chairman,
Independent Non-Executive Director

TAN SRI DATUK AMAR HAJI ABDUL AZIZ BIN DATO HAJI HUSAIN
Group Managing Director / Chief Executive
Executive Director

DATUK AMAR WILSON BAYA DANDOT

Non-Independent
Non-Executive Director

6 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

BOARD OF DIRECTORS

DATUK FONG JOO CHUNG

Non-Independent
Non-Executive Director

DATO’ HAJI IDRIS BIN HAJI BUANG

Senior Independent
Non-Executive Director

DATO’ NORDIN BIN BAHARUDDIN

Independent
Non-Executive Director

Annual Report 2007 7

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

DIRECTORS’ PROFILE

DATUK ABDUL HAMED BIN SEPAWI

Chairman,
Independent Non-Executive Director

a Malaysian aged 59, 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 all of the five Board
meetings held in year 2007. 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 from Oregon State University.

At present, Datuk Abdul Hamed is also the Chairman of Syarikat SESCO Berhad, Naim Cendera Holdings
Berhad, Ta Ann Holdings Berhad and sits on the boards of several other private limited companies.

TAN SRI DATUK AMAR HAJI ABDUL AZIZ BIN DATO HAJI HUSAIN
Group Managing Director / Chief Executive
Executive Director

a Malaysian aged 57, 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 Executive Director of the Company and attended all of the five Board meetings held in the
year 2007. He is also a Member of the Nomination & Remuneration Committee.

Tan Sri Datuk Amar 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 Haji
Abdul Aziz is also a Director of Borneo Housing Mortgage Finance Berhad, Koperasi Koppes Berhad, MLABS
Systems Berhad, Eksons Corporation Berhad and several other private limited companies.

DATUK AMAR WILSON BAYA DANDOT

Non-Independent
Non-Executive Director

a Malaysian aged 56, joined the Board of Sarawak Energy Berhad on 31 January 1996. He is a Non-Independent
Non-Executive Director of the Company and attended four out of the five Board Meetings held in the year 2007.
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/Principal Assistant
Director, State Planning Unit. 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
currently holds.

Datuk Amar Wilson also sits on the boards of several subsidiaries of the Sarawak Energy Group and other private
limited companies and organizations wherein the State Government of Sarawak has interests.

8 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

DIRECTORS’ PROFILE

DATUK FONG JOO CHUNG

Non-Independent
Non-Executive Director

a Malaysian aged 58, joined the Board of Sarawak Energy Berhad on 31 January 1996. He is a Non-Independent
Non-Executive Director of the Company and attended four out of the five Board Meetings held in the year 2007.

Datuk Fong holds a Bachelor of Laws Degree with Honours from University of Bristol, England and is a Barrister-at-
Law (Lincoln’s Inn). He was the Honorary Secretary and Committee Member (1973-1994) and was the President
(1983-1987) of the Advocates’ Association of Sarawak, member of the High Court Rules Committee (1982-1988),
Chairman of Kuching Rating Appeals Tribunal (1986-1992), member of the Council for Kuching City South (1981-
1992) and Chairman of Inquiry Committee (1991-1992). He was in private law practice from December 1971 to
July 1992 before being appointed as the State Attorney-General of Sarawak, in August 1992. Datuk Fong retired
as the State Attorney-General of Sarawak on 31 December 2007.

At present, Datuk Fong also sits on the boards of several other subsidiaries of the Sarawak Energy Group, Encorp
Berhad, Bintulu Port Holdings Berhad and several private limited companies wherein the State Government of
Sarawak has interests.

DATO’ HAJI IDRIS BIN HAJI BUANG

Senior Independent
Non-Executive Director

a Malaysian aged 54, joined the Board of Sarawak Energy Berhad on 24 June 2000. He is the Senior Independent
Non-Executive Director of the Company and attended all of the five Board Meetings held in the year 2007. He is
currently a member of the Remuneration Committee & the Nomination Committee and the Audit Committee.

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 and has been an advisory board member of Dewan Bandaraya
Kuching Utara since 1992. He was formerly the Chief Political Secretary to YAB Chief Minister of Sarawak,
a position he held from August 2000 to August 2006. He was appointed Senator of the Dewan Negara on 28
November 2005.

Dato’ Haji Idris also sits on the boards of Hock Seng Lee Berhad, Amanah Saham Sarawak Berhad and several
other private limited companies.

DATO’ NORDIN BIN BAHARUDDIN

Independent
Non-Executive Director

a Malaysian aged 58, joined the Board of Sarawak Energy Berhad on 9 September 2005. He is an Independent
Non-Executive Director of the Company and attended four out of the five Board Meetings held in the year 2007.
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 Accountants (MIA) and a Fellow of
Institute of Chartered Accountant 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 Audit and Risk Management 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, Visdynamics 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.

Annual Report 2007 9

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

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

Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain
Group Managing Director / Chief Executive

10 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

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 (Business Development)

Victor Wong
General Manager (Transmission)

Stell Sindau
General Manager (Generation I)

James Ung
General Manager (Generation II)

Ong Chiang Ann

General Manager (Sarawak Energy Services Sdn Bhd)

Annual Report 2007 11

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CHAIRMAN’S STATEMENT

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 2007.

DATUK ABDUL HAMED BIN SEPAWI

Chairman,
Independent Non-Executive Director

12 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CHAIRMAN’S STATEMENT

As announced on 2 April 2007, Sarawak Energy Berhad (“Sarawak Energy” or “the Company”) had undergone a
rebranding exercise in conjunction with the move to position the Company as a major energy and utility player in
the state of Sarawak and the Region. The introduction of the Company’s new logo in 2007 reflects the focus of the
future direction of the Company via the consolidation of the State’s power generation, transmission, distribution
and supply business.

With the management being lead by our Group Managing Director, together with the high commitment and full co-
operation of all employees as well as continuing confidence from the stakeholders and investors, the Company
has shown a favorable outcome in steering and achieving its vision to be a world class energy provider for the
Region, with competitive cost structure and organizational excellence to sustain long-term shareholders’ value.

The construction of our Mukah 2 x 135MW coal-fired power plant is progressing very well with the first unit
scheduled for operation by October 2008 and the second unit in March 2009. Meanwhile, we had in September
2007 commenced construction of the 110MW combined-cycle power plant in Bintulu which is slated to be
completed by final quarter of 2009.

We are also putting up massive development plans to increase our generation capacity mainly through hydro
power potentials and other coal-power generations. We expect to commence the construction of our Murum
hydro power project in the second half of 2008 and others will follow suit in line with our target to have an installed
capacity of 6,000MW by 2015 and 10,000 MW by 2020.

FINANCIAL REVIEW
For the financial year ended 31 December 2007, the Group’s revenue improved from RM1.18 billion in 2006 to
RM1.32 billion, representing an increase of RM141.4 million.

Profit before tax was recorded at RM400.7 million, an increase of RM136.3 million over the previous financial year.
Net profit attributable to shareholders grew to RM335.5 million as compared to RM255.8 million the preceding
year. Earnings per share grew to 22.1 sen against 16.8 sen the previous financial year.

The improvement in performance was contributed by the favourable impact arising from the disposal of our
investment in Encorp Berhad and higher electricity sales resulted from higher demand as well as the increase in
tariff rate which came into effect from 1 April 2007.

The Group has registered a Net Assets per share of RM1.71 as at 31 December 2007 as compared to RM1.52
in Year 2006.

As the Company gears forward in becoming a major electricity provider in the region, the Group has now principally
emphasised in the generation, transmission, distribution and sale of electricity activities. Therefore, no segmental
information is presented in the financial statement for this year.

Annual Report 2007 13

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CHAIRMAN’S STATEMENT

EMPLOYEE SHARE OPTIONS SCHEME (ESOS)

On 19 December 2007, the Company held an Extraordinary General Meeting seeking for shareholders’ approval
on the proposed Employee Share Options Scheme (ESOS). The ESOS was implemented on 21 December 2007
and is in force for a period of 10 years from the date of implementation.

Altogether, 10% of the paid-up and issued capital of Sarawak Energy or the shares are available under the ESOS
and will be offered to the employees of the Sarawak Energy Group who are eligible to participate in the ESOS.

The rationale of the ESOS are as follows:-

• to motivate the employees towards better performance through greater productivity and loyalty;
• to stimulate a greater sense of belonging and dedications since the employees are given the opportunity to
participate directly in the equity of the Company;
• to encourage the employees to remain with the Company thus ensuring the loss of key personnel is kept to
the minimum level; and
• to reward the employees by allowing them to participate in the Company’s profitability and realise any
capital gains arising from any appreciation in the value of the Company’s shares.

DIVIDEND
For the financial year ended 31 December 2007, the Board has recommended that a first and final dividend of 5.0
sen per share less income tax (26%), representing a distribution to shareholders of RM56.2 million.

14 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CHAIRMAN’S STATEMENT

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 to turn these plans into success stories.

APPRECIATION
On behalf of 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 favourable result during the year and I believe
this level of comitment will continue to be strengthen as we move forward.

I also wish to express our sincere appreciation to our valued shareholders, investors, customers, business
associates and professional advisers for their confidence and continued support in Sarawak Energy Group.

DATUK ABDUL HAMED BIN SEPAWI

Chairman

Annual Report 2007 15

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

GROUP MANAGING DIRECTOR’S

MESSAGE
We are grateful to God the Almighty for giving us His grace
and bountiful blessings in enabling us to face the challenges
and obstacles with excellence throughout the year 2007. The
year 2007 saw various policy and administrative changes being
introduced and implemented within the company to go along
with the growth path that the company is taking.

Since my appointment as the Group Managing Director of

Sarawak Energy Berhad on 1 March 2007, I have always
stressed on the importance of having a single corporate vision
and mission together with long-term strategic planning which
will be the foundation of the organisation’s structure, financial
resources structure, and the development of human capital.
On 31 March 2007, Sarawak Enterprise Corporation Berhad
was officially renamed as Sarawak Energy Berhad (“Sarawak
Energy”) with its new logo focussing on Sarawak Energy as a
power and electricity provider responsible for the generation,
transmission, distribution and supply of electricity throughout the
State of Sarawak. In the month of July 2007, we witnessed the
restructuring and rationalisation (R&R) of the Group’s corporate
functions whereby all the corporate service functions such
as Human Resource, Finance, Internal Audit and Corporate
Affairs were all placed under the parent company to provide
and facilitate services throughout the Sarawak Energy Group of
Companies. All the subsidiaries have undergone reorganisation
to focus on their respective operation and particularly, Syarikat
SESCO Berhad (“SESCO”) have been restructured to undertake
the Distribution and Supply/Network activities. All the other
subsidiaries and main units have been restructured in line
with the Strategic Business Units in which SBU Generation 1
undertakes gas and diesel generation and SBU Generation 2
responsible for coal and the Batang Ai Hydro power. PPLS Sdn.
Bhd., now operates under the name Sarawak Energy Services
Sdn. Bhd. providing the consultancy and project management
to the Group.

The whole impact of the restructuring and rationalisation (R&R)

exercise will have established itself fully by the year 2008. All
Sarawak Energy employees, especially those in the corporate
services sector, have been relocated at Wisma SESCO, Petra
Jaya which is presently the Sarawak Energy Group’s Head Office.
We have also planned to improve the working environment for all
employees throughout Sarawak so that all employees can work
under a better and more conducive working environment.

Sarawak Energy’s vision is to be a world class organization in

providing power and energy by optimizing the generation output
by utilising ethnic energy resources such as hydro and coal.
Providing power to meet the industrial needs as well as the rural
areas of Sarawak remains a daunting challenge to us. Thus,
new transmission systems and power generating sources need
to be identified and developed. This will need extremely delicate
planning and implementation.

Sarawak is currently undergoing the second phase of the politics

of development where 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 by the YAB Prime
Minister in February 2008 spanning from Tanjung Manis, Sarikei
to Similajau, Bintulu is based on energy intensive industries.
In order to meet the increasing demand for power in the State
based on organic growth and the state’s initiatives to attract high
energy intensive industries under SCORE and the potential to
export power to Peninsular Malaysia, Sabah and neighbouring

TAN SRI DATUK AMAR HAJI ABDUL AZIZ BIN DATO HAJI HUSAIN
Group Managing Director / Chief Executive
Executive Director

16 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

GROUP MANAGING DIRECTOR’S

MESSAGE
countries, it is our target that we will increase our generating Our newly developed strategic plans need to be refined and
capacity up to 6,000MW by 2015 and 10,000MW by the year adopted by all our Strategic Business Units. We need to
2020. These are lofty targets considering that our current develop capabilities to fully utilise all our resources including
total installed capacity is only 976MW. This high increase our intangible assets comprising human capital, information
in generation capacity will be made possible through the technology systems and our internal processes. Our human
development of hydro power through projects like Murum resources need to be developed into a more responsive,
(944MW) which is scheduled to commence construction by highly dedicated quality workforces, who are innovative
the second quarter of 2008. Other notable hydro potentials and responsive to customers needs. This would mean that
include Baram (1000MW), Metjawah (300MW), Limbang the work culture and values need to be tuned and adapted
(150MW), Lawas (105MW), Balleh (1,400MW). We are now to one with a greater purpose, more professionalism and
vigorously conducting pre feasibility and feasibility studies to uncompromising integrity. With these objectives in mind, we
determine the viability of a number of the hydro dam sites. have developed a new Performance Management System
The total potential of the state hydro power resources has based on the balanced scorecards with the advice of a
been estimated to be 20,000MW. reputable consultancy group. In the new system, the KPIs
(Key Performance Indicators) for all departments, Divisions,
Under coal power generation, we should be able to secure Units and individuals are developed based on the Corporate
135MW with the commissioning of the first generation set of Strategic Plan and the annual budget and taking into account
the 2x135MW plant being constructed in Matadeng, Mukah the four perspectives of the Balanced Scorecard, i.e.,
in 2008. The second set is expected to be commissioned in financial performance, customer value proposition, internal
March 2009. A lot of efforts have been spent in the realization processes and the learning and growth objectives. This
of this plant which, when completed, will be a record of sorts system fundamentally describes how our people, technology
for a greenfield project in this region. Based on the coal and the organizational culture are combined to support our
resources available, we are looking at expanding our Mukah overall strategy.
power generation by another 300MW in the near future.
Another mine mouth power plant is also being planned in the The Employee Share Option Scheme (ESOS) that was
proximity of the Balingian coal deposits. The coal deposits in launched in December 2007 is also an avenue to prove our
the Merit Pilla area may give us the potential to generate coal commitment and dedication as our employees who subscribe
fired power up to 1200MW in Kapit. With the advancement to the shares under the ESOS would directly be responsible
of technology, coal power generation is no longer seen to increase efficiency not just for the benefit of the Company
as an unfriendly system to the environment as proven by but also for themselves and other shareholders efficiency
our Sejingkat coal-fired power plants which are used as a and help to instil a sense of belonging among employees.
benchmark by the Department of Environment in their power
plants audit exercise nationwide. I fully appreciate the important role played by each and every
one of our employees and therefore with the support and
Despite the scarcity and the long term concern of the supply blessing from our Board and as importantly the confidence
of gas which at the moment forms about 60% of our total and trust of our shareholders I shall ensure that Sarawak
generation capacity, we endeavour to best maximize the Energy Group will be able to achieve its objectives.
utilization of the available gas supply for our power generation.
This strategic move can be seen in the construction of our I would like to take this opportunity to thank every one who
combined cycle power plant in Bintulu which started in late have assisted and help me and the management in the
2007 and expected to be completed before the end of 2009. transformation process of Sarawak Energy in 2007. I can
This combined cycle plant will be able to generate additional assure all of you that given the dedication that we have in
110MW using the excess heat from the existing open cycle doing our job so far, and the earnestness shown by everybody
gas generation under Units 7 and 8 plant in Bintulu. in trying to achieve our objectives, I am confident that we can
expect not only to achieve but to exceed our targets. More
As part of our plan to reduce cost, we will replace existing need to be done in 2008 and I am sure all of us at Sarawak
diesel generation plants with other cheaper alternatives Energy Group will continue to put our best effort.
as soon as it is practical to do so. In most cases this will
mean connecting the small towns to our State Grid. At the As we move forward, we must be bold and focused in
moment, a number of transmission line projects have been implementing changes and new administrative dimensions.
started in order to realize this objective. We are also looking The company needs the support of its employees and
at developing other alternative sources of energy from oil stakeholders all the way. I am fully committed to steer the
palm wastes and other solid waste, small hydro generations company forward to meet the challenges ahead. I strongly
and also from solar power. A division has been set up to believe that we can achieve our goal if we strengthen our
work with other interested parties in the development and resources and grasp the challenges ahead with determination
implementation of these renewable alternative sources of and grit. We can do this together. However, this requires hard
energy. work, long grinding hours, strategic networking, and to some
extend, personal sacrifices. Ultimately, we would all like to
Subject to all requirements being fulfilled, we are also confident see a vibrant, progressive and profitable company in Sarawak
that the Bakun hydro dam and the submarine underwater Energy Berhad for the best interest of our stakeholders and
cable linking Sarawak and Semenanjung Malaysia will open also shareholders and investors alike.
the door to fulfil the State’s vision in becoming the major
energy supplier and powerhouse in the Region through Terima kasih, Wassalam.
Sarawak Energy based on the development of our massive
hydro potentials and abundant coal reserves.

TAN SRI DATUK AMAR HAJI ABDUL AZIZ BIN

DATO HAJI HUSAIN
Group Managing Director
Sarawak Energy Berhad

Annual Report 2007 17

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

GROUP FIVE-YEAR FINANCIAL

STATISTICS, 2003-2007

2007 2006 2005 2004 2003

PERFORMANCE RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 1,319,208 1,177,813 680,082 220,800 265,060

Profit before taxation 400,727 264,466 180,315 75,610 101,999
Taxation (63,316) (6,679) (44,600) (32,634) (23,624)
Profit for the year 337,411 257,787 135,715 42,976 78,375
Minority interest (1,949) (2,022) (4,024) (5,044) (10,061)
Profit attributable to
equity holders of the Company 335,462 255,785 131,691 37,932 68,314
Net dividends 56,201 45,462 42,652 12,639 12,639

ASSETS EMPLOYED

Property, plant and equipment 4,341,983 3,765,040 3,758,946 451,337 473,767

Prepaid land lease payments 129,800 131,524 132,028 37,109 37,444
Investments and goodwill - 2,686 2,688 456,342 591,418
Long term receivable - - - 40,595 108,106
Bank and cash balances 909,515 668,700 494,435 160,167 117,193
Other net current assets /
(Liabilities) 41,627 119,416 (107,324) 68,331 90,634
Associated companies 35,279 55,098 48,163 1,709,406 1,730,053

Total 5,458,204 4,742,464 4,328,936 2,923,287 3,148,615

FINANCED BY

Equity attributable to
equity holders of the Company 2,595,994 2,305,090 2,089,556 2,662,010 2,844,789
Minority interests 16,147 14,406 12,404 90,004 84,960
Long term liabilities 2,470,359 2,045,225 1,810,003 148,184 201,549
Deferred taxation 375,704 377,743 416,973 23,089 17,317

Total 5,458,204 4,742,464 4,328,936 2,923,287 3,148,615

SELECTED RATIOS

Net tangible assets per share (RM) 1.71 1.52 1.38 2.27 2.42
Net earnings per share (Sen) 22.09 16.84 9.76 3.24 5.84
Gross dividend per share (Sen) 5.0 4.1 3.9 1.5 1.5

18 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

GROUP FINANCIAL HIGHLIGHTS

1,400 350
1,319.2 337.4

1,200 300

1,177.8 257.8
1,000 250

800 200
RM (Million)

RM (Million)
680.1
600 150 135.7

400 100
78.4
265.1 220.8
200 50 43.0

0 0
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

Revenue Profit After Taxation

3.0 25

22.09
2.5 2.42
20
2.27

16.84
2.0

1.71 15

1.52
(Sen)
(RM)

1.5
1.38

10 9.76

1.0
5.84
5
0.5 3.24

0.0 0
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

Net Tangible Assets Per Share Net Earnings Per Share

Annual Report 2007 19

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE SOCIAL RESPONSIBILITY

(CSR)

Sarawak Energy Berhad and its group of companies being the Gold sponsor for the Curtin University of
continue to reinforce its presence in the state of Technology Sarawak Engineering Conference 2007.
Sarawak not only through robust development projects The company was one of the main sponsors for the
but also with a heart and mind to involve itself in Pesta Limbang 2007, the SUPP Career Expo 2007
corporate social responsibility programs both for its and the 16th Annual Convention of Toastmasters
employees and the local community as a whole. District 51 organized through Angkatan Zaman
Mansang(AZAM).
Being the forerunner in the field of generation,
transmission and distribution of electricity in Sarawak, During the month of Ramadan, Sarawak Energy Berhad
Sarawak Energy group is a highly visible corporate organized several “Berbuka Puasa” functions for
entity in the State. The Board of Directors and the various groups and organization through out the State
management of the company are dedicated towards the where it contributed gifts and financial contribution to
practice of good corporate governance alongside ethical the needy. For its employees, business associates
corporate values and efficient business management and local community a grand “Majlis Ramah Tamah
practices, transparent, exemplary corporate citizenship Idil Fitri” was organized at its Head Office at Wisma
as well as excellent customer services. The company SESCO while similar functions of smaller scale were
is also dedicated towards maintaining its international done at the various Regional offices through out the
recognition in the field of quality control and safety State. These functions were aimed at bringing better
where a high standard of occupational safety and rapport among employees, business associates and the
health regime is being observed and enforced at all community arrived Through a quarterly Blood Donation
times vis-à-vis putting in place, a strict observance Program, employees of Sarawak Energy Berhad have
of and compliance to the prevailing environmental voluntarily donated their blood for a good cause to fill
regulations, policies and practices. the blood bank of the Sarawak General Hospital.

With strategic commitments, strength and momentum In March 2008, Sarawak Energy Berhad launched
in all those perspectives which are well reflected in its an English development program for the children of
involvements in its corporate and social activities, the Lubok Antu, Sarawak, where our Batang Ai Hydro
company is well poised towards a balanced growth. Power Station is located. The three month program,
This is in tandem with the government’s effort in which incorporates developing the children’s listening,
creating Government Linked Companies (GLCs) which reading and writing skills as well as building self
are conscious and sensitive to the needs of the society, confidence was launched by the Group Managing
socially responsible, yet highly efficient and profitable. Director, Tan Sri Haji Abdul Aziz Husain. Together with
this, a career awareness program was conducted for
For Sarawak Energy Berhad, giving back to the society secondary school students.
is a norm and a practice that it will always continue to
sustain. Through out the year 2007, Sarawak Energy In the year 2007, Sarawak Energy Berhad continued
Berhad and its group of companies have embarked on to participate in the Hari Kemerdekaan celebration,
a number of social projects. This was done both through Maulidur Rasul and Ma’al Hijrah congregations, the
its participation in various social programs or by granting Yang Di-Pertua Negeri’s Birthday parade and Hari
monetary assistance to non-profitable organizations Keputera’an DYMM Seri Paduka Baginda Yang Di-
within the State. Among the major beneficiaries Pertuan Agong’s parade. In the same year, several
are the Laila Taib Cancer Charitable Trust, Kidney employees of Sarawak Energy Berhad were selected
Association of Sarawak, the Persatuan Kebajikan as officials and coaches at state and national level in
Islam Malaysia(PERKIM) Miri Branch, the Salvation sport events. The Inter-Regional Games for employees
Army, the Mental Health Association of Sarawak, St. of the Group were held in June 2007 in Sibu with the
Ann’s Church Building Fund, the Sarawak Children Central Region emerging as the overall champion.In
Cancer Society, Skuad 69 PDRM Sarawak, SABATI, realising the importance to develop young sport talents,
Rumah Kanak-Kanak Ajibah Abol Sri Aman, Persatuan particularly in badminton Sarawak Energy Berhad has
Bekas Tentera Malaysia, Jawatankuasa Pembinaan joined force with Sarawak Badminton Association on
Masjib Baru Niah, Persekutuan Perkumpulan Wanita the State’s Youth Development Program.
Sarawak, PEMADAM Daerah Mukah, Polis DiRaja
Malaysia, Rumah Ajie, Saratok, Rumah Peligong, Sarawak Energy Berhad is committed towards
Saratok, Tabung Yayasan Pencegahan Jenayah sustaining a meaningful symbiotic co-existence with
Malaysia Negeri Sarawak, Kelab Sukan, Sosial dan the surrounding community that it operates in. To
Kebajikan Kakitangan Kementerian Pembangunan achieve this, the company will continue to put in place,
Bandar dan Pelancongan Sarawak, HIKMAH Sarawak strategic CSR initiatives that will help to strengthen
and the Cancerlink Foundation. Sarawak Energy its place in the hearts and minds of its peers and the
Berhad is also proud to be associated with the society. Ultimately, Sarawak Energy Berhad seeks
publication of the official Bintulu Book initiated by the to position itself as a positive contributor towards the
Bintulu Development Authority, the MITI Directory, and cause of nation building.

20 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

FLASH BACK 2007

Rebranding Dinner, March 2007

MOU between SEB & Press Metal, July 2007

Signing Ceremony between SACOFA & SESCO,

August 2007

Contract Signing Agreement with CMEC,

September 2007
Career Expo, December 2007

Annual Report 2007 21

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

FLASH BACK 2007

Donation of computers to Hikmah Donation of RM250,000 to Lembaga Kebajikan

Anak-Anak Yatim Sarawak (PERYATIM), Miri

Donation to Rumah Kanak-Kanak Cheque presentation to Tabung

Datuk Ajibah Abol in Sri Aman Masjid Batu Niah Miri

English Development Blood donation drive 2007

Program

SEB Family Day 2007 Annual Dinner in Mukah (MPG) 2007

Annual Dinner 2007 Majlis Ramah Tamah Aidil Fitri 2007 (Head Office)

22 Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

FLASH BACK 2007

Majlis Ramah Tamah Aidil Fitri at Majlis Ramah Tamah in Miri

Sejingkat Power Corporation (Gen 2) (Northern Region) 2007

TNB Technical Games 2007 Sarawak Energy Badminton Challenge 2007

(Opening Ceremony)

National Day Parade 2007 - Miri Prophet Muhammad’s Birthday in Sarikei

TYT’s birthday parade in Mukah - 2007 SEB Inter Regional Games 2007

Annual Report 2007 23

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

STATEMENT ON INTERNAL CONTROL

1.0 INTRODUCTION

The Malaysian Code on Corporate Governance requires the Board of Directors (“Board”) of listed companies
to maintain a sound system of internal control to safeguard shareholders’ investments and the Group’s
assets. Set out below is the Board’s Statement of Internal Control (“Statement”) of the Group for the financial
year ended 31 December 2007 in compliance with paragraph 15.27(b) of the Bursa Malaysia Securities
Berhad’s Listing Requirements, and in accordance with the Statement on Internal Control Guidance for
Directors of Public Companies.

2.0 THE BOARD’S RESPONSIBILITY

The Board recognizes its responsibilities and the importance of sound internal controls and risk management
practices, and for reviewing the adequacy and integrity of those systems. It should be noted, however, that
such systems are designed to manage rather than eliminate risk. As such, the system can only provide
reasonable and not absolute assurance against material misstatement or loss to the Group.

3.0 THE GROUP’S SYSTEM OF INTERNAL CONTROL

Risk Management

The Board acknowledges that effective risk management is part of good business management practice.
The Board also recognizes that a sound system of internal control should be capable of managing principal
risks of the Group and be embedded in the operations of the Group.

To ensure this is possible, the Group has a formalized reporting structure comprising the Group Managing
Director (“GMD”) and management, which ensures continuous communication and escalation of operational
and financial issues or risks through management meetings at various levels. In addition, the Board of
Directors is of the opinion that it has experienced GMD and a team of senior management with relevant
industry experience to run and manage the operations and business of the Group in the most effective and
efficient manner.

Throughout the financial year, the Board has evaluated and managed the key principal risks faced by the
Group through monitoring of the Group’s operations, performance and profitability at its board meetings.
The board meetings also provide the platform by which the Board through the GMD, communicates its
expectations to senior management and other employees.

Notwithstanding the process and matters described above, the Board of Directors is committed towards
establishing a formal risk management framework to enable the systematic identification, assessment,
treatment and monitoring of the principal risks faced by the Group.

In November 2007, the Management has engaged a professional services firm to assist the Group’s
management in establishing a formal Enterprise Risk Management (“ERM”) framework. These initiatives will
ensure that the Group has in place a formalized ongoing process for identifying, evaluating, monitoring and
managing the significant risks impacting the achievement of the Group’s strategic business objectives.

The process includes formalizing and implementing a 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.

24 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

STATEMENT ON INTERNAL CONTROL

3.0 THE GROUP’S SYSTEM OF INTERNAL CONTROL (Cont’d.)

Other Key Elements of the Group’s System of Internal Control

The current system of internal control in the Group has within it, the following key elements:

• Group’s business objectives are communicated widely through its mission statement and budgets and
active interaction between the GMD with management and other employees.

• GMD and senior management members of the Group practice a “hands on” approach in managing the
business that enables timely identification and reporting of any significant matters as well as ensuring
that the Board is well informed and updated on the operation of the Group on a timely basis.

• Scheduled meetings both at management and operational levels, which are attended, by the GMD to
deliberate and resolve business, financial and operational matters.

• Close monitoring of projects progress through regular visits to sites by GMD and management and the
project teams.

• Policies and procedures manual, which acts as a comprehensive guide in carrying out daily tasks
ensures that there is a clear understanding of the “modus operandi” of the Group.

• Formalized Corporate Code of Ethics implemented for the Group in 2007.

• Effective reporting system that highlights operational and financial performances where the information
is deliberated at appropriate management meetings.

• A detailed strategic planning and budgeting process where operating units prepare business plans and
detailed capital and operating budgets for the coming year.

• Clearly defined delegation of responsibilities to committees of the Board and the Management, including
authorization levels for all aspects of the businesses.

• A new performance management system has been introduced in 2007 wherein individual performance
will be monitored against agreed targets (key performance indicators) to strengthen accountability,
controls and to instill a stronger performance culture and the system will be rollout in 2008.

• An independent Audit Committee (“AC”) comprising majority of Independent Non-Executive members

of the Board. After each AC meeting, the Chairman then briefs on matters deliberated and decisions
reached at the meeting to the Board of Directors.

• An independent Internal Audit Department whose primary responsibility is to conduct regular and
systematic audits of the significant operations of the Group based on assessed risks and major concerns
raised by management so as to provide reasonable assurance to the Audit Committee on the adequacy
of the systems of internal control within the Group.

Assurance Mechanisms

The Audit Committee is tasked by the Board with a duty of reviewing and monitoring the effectiveness of the
Group’s system of internal control. The internal audit function provides the AC with periodic reports, based on
the audits conducted, highlighting observations, recommendations and management action plan to improve
the system of internal control. In addition, the AC also reviews and deliberates on any matters relating to
internal control highlighted by the external auditors in the course of their statutory audit of the financial
statements of the Group through management letters or are articulated at AC meeting.

ANNUAL REPORT 2007 25

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

STATEMENT ON INTERNAL CONTROL

4.0 REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

Pursuant to paragraph 15.24 of the Listing Requirements of Bursa Malaysia Securities Berhad, the external
auditors have reviewed this Statement for inclusion in the annual report for the financial year ended 31
December 2007 and reported to the Board that nothing has come to their attention that causes them to
believe that this Statement is inconsistent with their understanding of the processes adopted by the Board in
reviewing the adequacy and integrity of the system of internal controls.

5.0 THE BOARD’S COMMITMENT

The Board recognizes that the Group operates in a dynamic environment in which the internal control
system must be responsive in order to be able to support its business objectives. To this end, the Board is
committed towards maintaining a sound system of internal control and therefore recognizes that the system
must continuously evolve to support the growth and dynamics of the Group. As such, the Board, in striving
for continuous improvement, will put in place appropriate action plans, when necessary to further enhance
the Group’s system of internal control and keeping abreast with the ever-changing business environment in
order to support the Group’s business and operations.

6.0 CONCLUSION

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
being 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 2008.

26 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Sarawak Energy Berhad (“SEB”) is committed to ensure that the highest standard of
Corporate Governance is practiced throughout the Group with the objective of strengthening the Group’s growth,
corporate accountability and safeguarding the interests of the shareholders.

The Board of Directors is pleased to report a statement to the shareholders on how the Group has applied the
principles of good governance and compliance of the best practices set out in the Malaysian Code of Corporate
Governance.

The Board of Directors

The Board’s principal responsibilities for corporate governance are by setting out the strategic direction of the
Group, establishing the objectives and achievement of the objectives and goals.

The current Board comprises one (1) Executive Director and five (5) Non-Executive Directors. Three of the Non-
Executive Directors are Independent Directors, which complied with paragraph 15.02 of the Listing Requirements
of Bursa Malaysia Securities Berhad which require one-third of the Board to comprise of Independent Directors.
The Directors collectively have wide range of experience and expertise drawn from the area of legal, business,
accounting, economics as well as public administration. Their expertise, experience and background are vital for
the strategic direction of the Group. The profiles of the Directors are set out on pages 8 to 9.

The division of responsibilities is clearly defined between the Chairman and Group Managing Director. The Chairman
is responsible for ensuring the effectiveness of the Board and conduct while the Group Managing Director has the
overall responsibilities of managing the operation and performance of the Group, implementation of policies and
executive decision-making. The Independent Non-Executive Directors play an important role to ensure the views
provided are professional and independent and that the advice and judgment made on issues and decisions are
to the best interest of the stakeholders and the Group.

The Board is satisfied that investment of the minority shareholders in the Company is fairly reflected through Board
representation.

Dato’ Haji Idris Bin Haji Buang is the senior independent non-executive Director of the Board to whom concerns
maybe conveyed.

The Board meets at least four times a year, with additional meetings for particular matters convened as and when
necessary. Five (5) Board meetings were held during the year ended 31 December 2007. The record of their
meeting attendance is as follows:

Directors Meetings % of
Attended Attendance
Datuk Abdul Hamed Bin Sepawi Chairman 5/5 100
Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Group Managing 5/5 100
Husain Director
Datuk Amar Wilson Baya Dandot Non-Independent 4/5 80
Non-Executive Director
Datuk Fong Joo Chung Non-Independent 4/5 80
Non-Executive Director
Dato’ Nordin Bin Baharuddin Independent 4/5 80
Non-Executive Director
Dato’ Haji Idris Bin Haji Buang Independent 5/5 100
Non-Executive Director

ANNUAL REPORT 2007 27

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE GOVERNANCE STATEMENT

Supply of Information

The Board and its Committees have full and unrestricted access to all information within SEB pertaining to the
Group’s business and affairs.

All the Directors are notified of the Board meetings within stipulated time prior to the meetings date. Directors are
provided with an agenda and a set of Board papers prior to each Board Meeting. These are issued in sufficient time
to enable them to obtain further explanation, where necessary, in order to be properly briefed before the meeting.

In most instances, the Senior Management of the Group as well as external advisors are invited to be in attendance
at Board Meetings to provide insights and to furnish clarification on issues that may be raised by the Board.

Board members have access to the Group Company Secretary for any further information required. Directors may
also seek independent professional advice on any matter connected with the discharge of their responsibilities
deems necessary and appropriate, whether as a full board or in their individual capacities, at the Company’s
expense.

Board Committees

The following Committees have been established to assist the Board in the execution of its responsibilities. These
Committees have written terms of reference which have been approved by the Board and set out their authority
and duties.

1. Audit Committee

The Audit Committee continued to play an important role in reviewing the Group’s financial management
and reporting, and to assess the integrity of the Group’s accounting procedures and financial control. The
Committee is responsible for the review of accounting policy and presentation of external financial reporting
including the Group’s interim results and its disclosures, monitoring the work of the internal audit function and
ensuring an objective and professional relationship is maintained with the external auditors, and that conflicts
of interest, if any, are avoided. The Committee has full access to both internal and external auditors, who in
turn, have access at all times, to the Chairman of the Audit Committee.

The Audit Committee strives to ensure that it keeps abreast of all material developments in regulations and
best practices in its area of responsibility.

The report of the Audit Committee, including their attendance at the Committee Meetings is set out on pages
35 to 42 of this Annual Report.

2. Nomination & Remuneration Committee

The Committee consists of two (2) Non-Executive Directors and one (1) Executive Director. The members of
the Committee as at the date of this Annual Report are:

i. Datuk Abdul Hamed Bin Sepawi

(Non-Executive Director) – Chairman

ii. Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain
(Executive Director)

iii. Dato’ Haji Idris Bin Haji Buang

(Non-Executive Director)

28 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE GOVERNANCE STATEMENT

Board Committees (Cont’d.)

The duties and responsibilities of the Committee are to:

a) identify and recommend to the Board candidates for directorships to the Board;

b) make recommendations to the Board on all new or re-appointments of members of the Board;

c) evaluate the effectiveness of the Board as a whole and the Committees of the Board;

d) make recommendations to the Board on the Company’s framework of remuneration and its cost and
to determine on behalf of the Board specific remuneration packages and terms and conditions of
employment for the Group’s employees;

e) provide remuneration input on any contract of employment with executive directors and determine
the terms of any compensation in the event of early termination of the employment contracts thereon;
and

f) make recommendations to the Board on the remuneration of Non-Executive Directors which shall be a
decision of the Board as a whole.

The Committee met two (2) times during the year to:

a) deliberate and endorse the implementation of the Group Remuneration System proposed by Hay Group
and migration of the Group’s Current Scheme of Service to Hay Scheme for Sarawak Energy Group of
Companies with effect from January 1, 2008 and recommend to the Board for approval.

b) approve the Group’s Performance Appraisal for annual salary increment in Year 2008.

c) approve the reduction of leave benefits for all employees of Sarawak Energy Berhad Group by five (5)
days except for those employees under job grades NE1 to NE2 and implementation of a buy-back of
leave from the affected employees.

d) approve the appointment of members of Sarawak Energy ESOS Options Committee pursuant to
Section 16 of the ESOS By-Laws.

e) propose the appointment of a new member of the Audit Committee for approval by the Board.

As part of the recommendations set out in the “Greenbook: Enhancing Board Effectiveness” which was
issued by the Putrajaya Committee for GLC High Performance, PricewaterhouseCoopers Advisory Services
Sdn. Bhd. (PwC) was engaged by SEB to perform a Board Effectiveness Assessment for SEB and its wholly
owned subsidiary, Syarikat SESCO Berhad (SESCO).

PwC was commissioned to review the effectiveness of the Board and implement a framework for the formal
evaluation process to be conducted annually.

PwC conducted the Board Effectiveness Assessment for the year ended 31 December 2006 and presented
their final report to the Board in 2007. The Directors of SEB and Syarikat SESCO Berhad were also given
copies of their individual and peer assessment results by PricewaterhouseCoopers.

The objectives of the engagement are to carry out the following:

a) To review the SEB and SESCO Boards’ objectives, corporate governance principles, roles and
responsibilities and shareholders’ expectations.

ANNUAL REPORT 2007 29

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE GOVERNANCE STATEMENT

Board Committees (Cont’d.)

b) To conduct an independent review of the structure, processes and documentation with regards to the
SEB and SESCO Boards and making appropriate recommendations in accordance with applicable
good practices.

c) To develop a Board Effectiveness Assessment framework for annual assessments and conduct a pilot
run of the evaluation process for the SEB and SESCO Boards.

d) To assist in the development of a Board Improvement Program to address the gaps and issues identified
from the SEB and SESCO Board Effectiveness Assessments.

The Board Effectiveness evaluations and improvement programmes recides in the Chairman’s Office.

PwC has further submitted a proposal to conduct the annual Board Effectiveness Assessment for SEB for
the assessment year ending 31 December 2007 which will be later conducted in 2008.

3. Employees’ Share Option Scheme (“ESOS”) Committee

The ESOS Committee was established on 19 December 2007 to administer the Sarawak Energy Berhad
Employees’ Share Option Scheme (“Scheme”). The Scheme was granted for a period of 10 years effective
from 21 December 2007.

The ESOS Committee ensures that the Scheme is administered in accordance with the By-Laws approved
by the shareholders of the Company.

The members of the Committee as at the date of this Annual Report are:

i. YBhg Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain
(Group Managing Director) – Chairman

ii. Danice Endawie Ita

(Chief Operating Officer)

iii. Aisah Binti Eden

(General Manager, Group Human Resources)

iv. Zuraimy Bin Kushaili

(General Manager, Group Corporate Affairs)

v. Haji Sulaiman Bin Haji Abdul Hamid

(General Manager, Group Finance)

vi. Wan Mahmud Bin Abdullah

(General Manager, Group Internal Audit & Risk Mgt)

vii. James Ung

(General Manager, Generation 2)

Re-Election of Directors

In accordance with the Company’s Articles of Association, all Directors appointed by the Board are subject to
election by shareholders at the first Annual General Meeting after their appointment. One-third of the remaining
Directors are required to submit themselves for re-election by rotation at each annual general meeting. All Directors
must submit themselves for re-election at least once in every three years. Directors over seventy years of age are
required to submit themselves for reappointment annually in accordance with Section 129(6) of the Companies
Act 1965.

30 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE GOVERNANCE STATEMENT

Directors’ Training

All the Directors have attended and successfully completed the Mandatory Accreditation Program (“MAP”) as
specified by Bursa Malaysia Securities Berhad.

Apart from the MAP training, the directors have also attended various accredited programs under the Continuing
Education Program (“CEP”) conducted by various course leaders. The Company will continuously arrange for
further training of the directors as part of the directors obligation to update and enhance their skills and knowledge
which are important for their carrying out an effective role as directors.

Throughout the financial year, the directors have attended relevant seminars/courses organized by various
professional bodies and corporations including:

• Updates on Listing Requirements: Issues and Challenges

• Corporate Fraud Workshop
• Contemporary Governance Tool
• Audit & Governance Summit for Independent Directors and Chief Auditors
• Director’s Duties, Governance & Liabilities 2007
• Malaysia Energy 2007 Conference
• The 10th Annual Asia Power & Energy Congress
• China-ASEAN Power Cooperation & Development Forum

Number of Directorships in Other Companies

None of the directors of the Company hold more than ten (10) directorships in public listed companies or more than
fifteen (15) in non-public listed companies, as required by the Listing Requirements.

Directors’ Remuneration

1. The details on the aggregate remuneration of directors for the financial year ended 31 December 2007 are
as follows:

Directors’ Remuneration Executive Non-Executive Total

(RM) Director Director Amount
Fees 119,710 334,200 453,910
Attendance/Meeting Allowance - 29,450 29,450
Salary & Bonus 725,300 - 725,300
Benefits-in-Kind 6,000 - 6,000
TOTAL 851,010 363,650 1,214,660

2. In compliance with the disclosure requirements under Bursa Malaysia’s Listing Requirements, the number
of Directors whose total remuneration falls within the following bands during the financial year ended 31
December 2007:

Directors’ Remuneration Executive Non-Executive Total

(RM) Director Director Number
0 - RM50,000 - - -
RM50,001 to RM100,000 - 5 5
RM100,001 to RM150,000 - - -
RM750,001 to RM800,000 1 - 1
TOTAL 1 5 6

ANNUAL REPORT 2007 31

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE GOVERNANCE STATEMENT

Investor Relations and Shareholders Communications

The Company seeks to develop and maintain regular informative communications with its shareholders. In addition
to the various public announcements made during the year, the timely release of financial results on quarterly basis
provides shareholders with an overview of the Group’s performance and operations.

The Annual General Meeting of the Company remains the principal forum for dialogue with shareholders.
Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf. Members of
the Board, as well as, external auditors of the Company are present to answer questions raised at the Meeting.

The Board has also adopted the following best practices to enhance the efficiency and value of general
meetings:

• ensures that each item of special business included in the notice of meeting is accompanied by a full
explanation of the effects of the proposed resolution; and

• ensures that the Chairman provides reasonable time at the meeting for discussion and for a question and
answer session.

The outcome of all resolutions proposed at the general meeting is announced to Bursa Malaysia at the end of the
meeting day.

Continuing Disclosure of Material Information

The Company observes the continuing disclosure obligation imposed upon a listed issuer by Bursa Malaysia.

Timely and accurate disclosure is made on all material information. Throughout the financial year under review, the
material information and material development thereof on disposal, proposed dividend, proposed financing facility,
related party transaction, and change in composition of board members and board committees’ members were
among the material information released to Bursa Malaysia via the Bursa Malaysia Link.

Confidentiality of Information

In conducting briefings or presentations, the Company takes due care to ensure that any information regarded as
undisclosed material information about the Company and its operations will not be given to any single shareholder
or group of shareholders.

Accountability and Audit

Financial Reporting

The Directors are responsible in ensuring that the annual financial statements of the Company and the Group are
drawn up in accordance with the applicable approved accounting standards in Malaysia and the provisions of the
Companies Act, 1965.

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance
and prospects, primarily through the annual financial statements, quarterly and half yearly announcements of
results to the shareholders as well as the Chairman’s statement and review of operations in the Annual report. The
Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the quality of
its financial reporting.

32 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE GOVERNANCE STATEMENT

Accountability and Audit (Cont’d.)

Relationship with Auditors

The Board has, through the Audit Committee, established a formal, transparent and appropriate relationship with
the Group’s Auditors, both external and internal. The Audit Committee meets regularly with external and internal
auditors to discuss and review the audit plan, quarterly financial results, annual financial statements, internal audit
reports etc and at every Board meeting, the Chairman of the Committee briefed the Board on significant matters
discussed and deliberated at each Committee’s meeting and makes recommendations for the Board’s approval
and endorsement as the case may be.

Internal Controls

Information on the Group’s internal controls system is presented in the Statement on Internal Control as set out on
pages 24 to 26 of this Annual Report.

RESPONSIBILITY STATEMENT IN RESPECT OF THE FINANCIAL YEAR UNDER REVIEW

(Pursuant to paragraph 15.27(a) of the Bursa Malaysia Listing Requirements)

The Board is fully accountable to ensure that the financial statements are prepared in accordance with the Companies
Act, 1965 and the applicable approved accounting standards set by the Malaysian Accounting Standards Board
so as to present a true and fair, balanced and understandable assessment of the Group’s financial position and
results. In this Annual Report, an assessment is provided in the Directors’ Report of the Audited Accounts.

The Audit Committee reviews the statutory compliance and scrutinizes the financial aspects of the Audited Accounts
prior to deliberation at the Board level.

Additional Compliance information

• Material Contracts

Save as disclosed hereunder, neither the Company nor its Subsidiaries had entered into any material
contracts not in the ordinary course of business during the financial year ended 31 December 2007:

The Share Sale and Purchase Agreement dated 14 August 2007 entered into between Dasar Untung Sdn
Bhd “DUSB”) and Pegang Impian Holdings Sdn Bhd (“PIHSB”) involving the disposal by DUSB of 59,000,000
ordinary shares of RM1.00 each in Encorp Berhad constituting approximately 26.40% of the issued and paid
up capital of Encorp Berhad (“Disposal”) for a total cash consideration of RM86,140,000.00 or RM1.46 per
share.

The disposal has been duly completed on 20 September 2007.

• Sanctions/Penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or
Management by any relevant regulatory authorities during the financial year ended 31 December 2007.

• Non-Audit Fees

Non-audit fees of RM30,000.00 were paid to the External Auditors for the financial year ended 31 December
2007.

ANNUAL REPORT 2007 33

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

CORPORATE GOVERNANCE STATEMENT

Additional Compliance information (Cont’d.)

• Revaluation Policy on Landed Properties

The Group does not have a revaluation policy on landed properties.

• Recurrent Related Party Transactions

At the 40th Annual General Meeting of the Company held on 27 June 2007, the shareholders of the Company
had approved the renewal of and new shareholders’ mandate for recurrent related party transactions of a
revenue or trading nature and renewal of and new general mandate for provision of financial assistance which
are necessary for the day-to-day operations of the Group, entered into by the Company and/or its subsidiaries
with certain classes of related parties from 27 June 2007 until the forthcoming Annual General Meeting. Such
approval will expire at the conclusion of the forthcoming Annual General Meeting thus compelling the Board
to propose to seek the shareholders’ mandate for the renewal of the same.

The breakdown of the significant related party transactions entered into by the Company and/or its subsidiaries
during the financial year are set out in Note 33 of the Notes to the Financial Statements set out on pages 96
to 97 of this Annual Report.

• Employees’ Share Option Scheme

The Company launched its first Employees’ Share Option Scheme (“ESOS”) in December 2007 and under
the first offer, options representing 103,187,000 shares were offered at an option price of RM2.15 (being the
5 day weighted average price from 15 December 2007 to 19 December 2007 net of 10% discount) to 2,511
eligible employees and directors. As at December 31 2007, no option has been taken up by the grantees.

This Statement is made in accordance with a resolution of the Board of Directors at its Meeting held on 30 April
2008.

34 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

AUDIT COMMITTEE REPORT

The Audit Committee (“AC”) of Sarawak Energy Berhad is pleased to present the Committee Report for the financial
year ended 31 December 2007.

A. MEMBERS AND MEETINGS

The AC met five (5) times during the financial year ended 31 December 2007. Members of the AC during the
financial year together with their attendances at the meetings during the year are as follows:

Names Status of Directorship Attendance of Meetings

Dato’ Nordin Bin Independent - Non-Executive Director 5/5
Baharuddin (Chairman)*
Dato’ Haji Idris Bin Haji Independent - Non-Executive Director 5/5
Buang
Tan Sri Datuk Amar Haji Non-Independent - Executive Director 4/5
Abdul Aziz Bin Dato Haji
Husain

* Fellow of the Institute of Chartered Accountants in England and Wales and Member of the Malaysian
Institute of Accountants and the Malaysian Institute of Certified Public Accountants.

B. TERM OF REFERENCE

1.0 CONSTITUTION

1.1 The Board of Directors of Sarawak Energy Berhad (SEB) has established a Committee of the Board,
known as the Audit Committee, vide a resolution of the Board on 30 July 1994.

1.2 The function and authority of the AC extends to SEB and all its subsidiaries, (collectively referred to as
the “Group”).

2.0 COMPOSITION OF THE COMMITTEE

2.1 The members of the AC shall be appointed by the Board of Directors of SEB and shall consist of
not less than three (3) members, all of whom shall be Non-Executive Directors of which the majority
shall be independent in accordance with the definition in Bursa Malaysia Securities Berhad’s Listing
Requirements.

2.2 Where the members for any reason are reduced to less than three (3), that Board shall within one (1)
month of the event, appoint such number of new members as may be required to make up the minimum
number of three (3) members.

2.3 At least one (1) member of the AC must meet the criteria set by the Bursa Malaysia Listing Requirements,
i.e.:

2.3.1 must be a member of the Malaysian Institute of Accountants; or

2.3.2 if he/she is not a member of the Malaysian Institute of Accountants, he must have at least 3
years’ working experience, and:

i. he/she must have passed the examinations specified in Part 1 of the 1st Schedule of the
Accountants Act 1967; or
ii. he/she must be a member of one of the associations of accountants specified in Part II of
the 1st Schedule of the Accountants Act 1967; or

ANNUAL REPORT 2007 35

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

AUDIT COMMITTEE REPORT

B. TERM OF REFERENCE (Cont’d.)

2.0 COMPOSITION OF THE COMMITTEE (Cont’d.)
2.3 At least one (1) member of the AC must meet the criteria set by the Bursa Malaysia Listing Requirements,
i.e.: (Cont’d.)
2.3.3 fulfill such other requirements as follows:

i. he/she holds a degree/masters/doctorate in accounting or finance and at least three (3)

years’ post qualification experience in accounting or finance; or
ii. he/she has at least seven (7) years’ experience being chief financial officer of a corporation
or having the function of being primarily responsible for the management of the financial
affairs of a corporation.

2.4 The Board shall elect a Chairman from among the members of the AC who shall be an Independent
Director as set out in the Bursa Malaysia Listing Requirements.

2.5 All members shall hold office only for as long as they serve as directors of SEB.

2.6 No alternate Directors shall be appointed to the AC.

3.0 CHAIRMAN OF THE COMMITTEE

3.1 The following are the main duties and responsibilities of the Chairman of the AC:

3.1.1 to steer the AC to achieve its objectives;

3.1.2 to provide leadership to the AC and ensure proper flow of information to the AC, review adequacy
and timing of documentation;

3.1.3 to provide a reasonable time for discussion at the AC meetings. Organize and present the
agenda for AC meetings based on input from members and ensure that all relevant issues are
on the agenda. In addition, the Chairman should encourage a healthy level of skepticism and
independence;

3.1.4 to manage the process and working of the AC and ensure that the AC discharges its
responsibilities; and

3.1.5 to ensure that all members participate in the discussion to enable effective decisions to be
made.

4.0 COMMITTEE MEMBERS

4.1 Each AC Member is expected to:

4.1.1 provide independent opinions to the fact-finding, analysis and decision making process of the
AC, based on their experience and knowledge;

4.1.2 consider viewpoints of the other members, and make decisions and recommendations for the
best interest of the Group;

4.1.3 keep abreast of the latest corporate governance guidelines in relation to the AC and the Board
as a whole; and

4.1.4 continuously seek out best practices in terms of the processes utilized by the AC, following
which these should be discussed with the rest of the members for possible adoption.

36 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

AUDIT COMMITTEE REPORT

B. TERM OF REFERENCE (Cont’d.)

5.0 OBJECTIVES OF THE COMMITTEE

5.1 The objectives of the AC are:

5.1.1 to ensure transparency, integrity and accountability in the Group’s activities so as to safeguard
the rights and interests of the shareholders;

5.1.2 to provide assistance to the Board in fulfilling its fiduciary responsibilities relating to corporate
accounting and reporting practices;

5.1.3 to improve the Group’s business efficiency, the quality of the accounting and audit function and
strengthening public confidence in the Group’s reported financial results;

5.1.4 to maintain, through regularly scheduled meetings, a direct line of communication between the
Board and the External and Internal Auditors;

5.1.5 to ensure the independence of the external and internal audit functions; and

5.1.6 to create a climate of discipline and control within the Group which will reduce the opportunity
for fraud.

6.0 AUTHORITY OF THE COMMITTEE

6.1 The AC is authorized by the Board to:

6.1.1 investigate any activity within its terms of reference; or as directed by the Board of Directors;

6.1.2 have full and unrestricted access to all employees, the Group’s properties and works, to all
books, accounts, records and other information of the Group in whatever form;

6.1.3 have direct communication channels with external auditors and person(s) carrying out the
internal audit function or activity for the Group;

6.1.4 direct the Internal Audit function in the Group;

6.1.5 engage independent advisors and to secure the attendance of outsiders with relevant experience
and expertise if it considers deem necessary; and

6.1.6 to review the adequacy of the structure and terms of reference of the Board Committees,
including the AC.

7.0 FUNCTIONS OF THE COMMITTEE

7.1 The functions and responsibilities of the AC are as follows:

7.2 Corporate Financial Reporting

7.2.1 To review and recommend acceptance or otherwise of accounting policies, principles and
practices.

ANNUAL REPORT 2007 37

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

AUDIT COMMITTEE REPORT

B. TERM OF REFERENCE (Cont’d.)

7.0 FUNCTIONS OF THE COMMITTEE (Cont’d.)

7.2.2 To review the quarterly results and annual financial statements of the Company and Group
before submission to the Board. The review should focus primarily on:

i. any changes in existing or implementation of new accounting policies;

ii. major judgment arrears, significant and unusual events;
iii. significant adjustments resulting from audit;
iv. the going concern assumptions;
v. compliance with accounting standards; and
vi. compliance with Bursa Malaysia Listing Requirements and other legal and statutory
requirements;

7.2.3 To review with management and the external auditors the results of the audit, including any
difficulties encountered.

7.3 Enterprise – wide Risk Management

7.3.1 To review the adequacy of and to provide independent assurance to the Board of the effectiveness
of risk management functions in the Group.

7.3.2 To ensure that the principles and requirements of managing risk are consistently adopted
throughout the Group.

7.3.3 To deliberate on the key risk issues highlighted by the group Risk Management Committee in
their reports to the AC.

7.4 Internal Control

7.4.1 To assess the quality and effectiveness of the systems of internal control and the efficiency of
the Group’s operations.

7.4.2 To review the findings on internal controls in the Group by internal and external auditors.

7.4.3 To review and recommend for Board approval, the Statement on Internal Control and Audit
Committee Report for inclusion in the Company’s Annual Report as required under Bursa
Malaysia Listing Requirements.

7.5 Internal Audit

7.5.1 To approve the Audit Charters of internal audit functions in the Group.

7.5.2 To ensure that the internal audit functions have appropriate standing in the Group and have
the necessary authority and resources to carry out their work. This includes a review of the
organizational structure, resources, budgets and qualifications of the internal audit personnel.

7.5.3 To review internal audit reports and management’s response and actions taken in respect of
these. Where actions are not taken within adequate timeframe by management, the AC will
report the matter to the Board.

7.5.4 To review the adequacy of internal audit plans and the scope of audits, and ensure that the
internal audit functions are carried out without any hindrance.

7.5.5 To appraise the performance of the Head of Internal Audit.

38 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

AUDIT COMMITTEE REPORT

B. TERM OF REFERENCE (Cont’d.)

7.0 FUNCTIONS OF THE COMMITTEE (Cont’d.)
7.5 Internal Audit (Cont’d.)

7.5.6 To review any appraisal or assessment of the performance of members of internal audit
function.

7.5.7 To be informed of resignations of internal audit staff members and provide the resigning staff
member an opportunity to submit his/her reasons for resigning.

7.5.8 To direct any special investigation to be carried out by Internal Audit.

7.6 External Audit

7.6.1 To recommend the nomination of the External Auditors together with such other functions as
may be agreed to by the Board and recommend for approval of the Board the external audit fee,
and consider any questions of resignation or termination.

7.6.2 To review external audit reports and management’s response and actions taken in respect of
these, where actions are not taken within an adequate timeframe by management, the AC will
report the matter to the Board.

7.6.3 To review external audit plans and scope of work.

7.6.4 The AC shall meet the external auditors at least twice a year to discuss problems and reservations
arising out of external audits and any matters the auditors may wish to discuss, in the absence
of management, Executive Directors or Non-Independent Directors where necessary.

7.7 Corporate Governance

7.7.1 To review the effectiveness of the system for monitoring compliance with laws and regulations
and the results of management’s investigation and follow up (including disciplinary action) of
any instances of non-compliance.

7.7.2 To review the findings of any examinations by regulatory authorities.

7.7.3 To review any related party transaction and conflict of interest situation that may arise within
the Group including any transaction, procedure or course of conduct that raises questions of
integrity.

7.7.4 To review and recommend the Corporate Governance Statement for Board approval for inclusion
in the Company’s the Annual Report.

7.7.5 To review the investor relations program and shareholders’ communications policy for the
company.

7.7.6 To examine instances and matters that may have compromised the principles of corporate
governance and report back to the Board.

7.7.7 Where the AC is of the view that a matter reported by it to the Board has not been satisfactorily
resolved, resulting in a breach of Bursa Malaysia Listing Requirements, the AC must promptly
report such matters to Bursa Malaysia.

ANNUAL REPORT 2007 39

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

AUDIT COMMITTEE REPORT

B. TERM OF REFERENCE (Cont’d.)

8.0 COMMITTEE MEETINGS

8.1 The AC shall convene meetings as and when required, and at least four (4) times during the financial
year of SEB.

8.2 The number of the AC meetings held a year and the details of attendance of each individual member in
respect of meetings held should be disclosed in the annual report.

8.3 The Chairman of the AC, or the Secretary on the request of any member, the Head of Internal Audit or
the External Auditors, shall at any time summon a meeting of the AC by giving reasonable notice.

8.4 No business shall be transacted at any meeting of the AC unless a quorum is present. The quorum for
each meeting shall be two (2) members comprising of all independent directors.

8.5 The Chairman of the AC shall chair the committee meetings and in his absence, the members present
shall elect one amongst themselves to be the Chairman of the meeting.

8.6 In appropriate circumstances, the AC may deal with matters by way of circular reports and resolution in
lieu of convening a formal meeting.

8.7 Officers of the Group or others as necessary may be invited to attend meetings where the Committee
considers their presence necessary.

8.8 A committee member shall excuse himself/herself from the meeting during discussions or deliberations
of any matter which gives rise to the actual or perceived conflict of interest situation for the member.
Where this causes insufficient Directors to make up a quorum, the AC has the right to appoint another
Director(s), which meets the membership criteria.

8.9 The AC, through its Chairman, shall report to the Board after each meeting.

8.10 Subject to the provisions of this Terms of Reference and Memorandum and Articles of Association of
SEB, the AC shall establish its own procedures for meeting.

9.0 SECRETARY OF THE COMMITTEE

9.1 The Secretary of the AC shall be the Company Secretary.

9.2 The Secretary shall draw up an agenda for each meeting, in consultation with the Chairman of the AC.
The agenda shall be sent to all members of the AC and the Head of Internal Audit at least three (3)
working days before each meeting together with the relevant papers.

9.3 The Secretary shall promptly prepare the written minutes of the meeting and distribute it to each
member. The minutes of the AC meeting shall be confirmed and signed by the Chairman of the meeting
at the next succeeding meeting.

9.4 The minutes of each meeting shall be entered into the minutes book kept at the registered office of the
Company under the custody of the Company Secretary. The minutes shall be available for inspection by
the members of the Board, external auditors, internal auditors, and other persons deemed appropriate
by the Company Secretary.

40 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

AUDIT COMMITTEE REPORT

B. TERM OF REFERENCE (Cont’d.)

10.0 DISCLOSURE

10.1 The AC shall assist the Board in making disclosures concerning the activities of the AC, in the Report
of the Audit Committee, to be issued in the Annual Report.

10.2 The Board requires all Directors to submit a Disclosure of Interest to avoid any conflict between their
personal interests of the Company. In the event of a conflict, either perceived or actual, this Disclosure
of Interest shall be submitted to the Chairman of the AC with a copy to the Company Secretary.

11.0 REVISION OF THE TERMS OF REFERENCE

11.1 Any revision or amendment to the Terms of Reference, as proposed by the AC or any third party, shall
be presented to the Board for its approval.

11.2 Upon the Board’s approval, the said revision or amendment shall form part of this Terms of Reference
and this Terms of Reference shall be considered duly revised or amended.

C. ACTIVITIES OF THE AUDIT COMMITTEE IN THE YEAR 2007

A summary of the activities performed by the AC during the financial year are set out below:

• Reviewed the quarterly financial statements of the Company and the Group and the annual audited
accounts prior to submission to the Board for approval.

• Reviewed the financial statements and ensure that the financial reporting and disclosure requirements
of the relevant authorities are complied with.

• Reviewed accounting/audit issues, findings and other reservations arising from the external audit and
ensured that appropriate action is taken.

• Reviewed and endorsed the establishment and implementation of Enterprise Risk Management
(“ERM”) framework and system for SEB Group and recommended same for Board adoption.

• Reviewed the adequacy of disclosure of related party transactions entered into by the Company and
the Group and also the adequacy of policies and procedures in respect of related party transactions in
ensuring that these transactions are in the best interest of the Company.

• Considered and recommended to the Board the reappointment of the external auditors of the Company
and their proposed audit fees.

• Discussed with External Auditors on any problems and reservations arising out of their audits without
the presence of management members.

• Reviewed the adequacy of the internal audit plans, scope of coverage and internal audit reports
and ensure that appropriate action is taken by Management in respect of the audit findings and the
Committee’s recommendations.

• Reviewed and recommended for Board approval the Statement of Internal Control, Audit Committee
Report and Corporate Governance Statement for inclusion in the Company’s Annual Report for
FY2007.

ANNUAL REPORT 2007 41

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

AUDIT COMMITTEE REPORT

D. GROUP INTERNAL AUDIT

The Group has an Internal Audit Department whose primary responsibility is to conduct regular and systematic
audits of the significant operations based on assessed risks and major concerns raised by management so
as to provide reasonable assurance to the Audit Committee (AC) on the adequacy of the systems of internal
control within the Group.

The Annual Group Internal Audit Plan is approved by the AC at the beginning of each year. The internal audit
function which is independent of the activities they audit has carried out planned audits and special ad-hoc
reviews or investigations during the year and provided regular reports on the adequacy of controls, extent
of compliance with internal financial policies and operational procedures in respect of the areas audited and
recommendations to improve the existing systems of internal control and operational weaknesses have also
been communicated to both operations management, senior management and the AC.

The internal audit reports incorporated the findings, recommendations for improvements, management
actions, and implementation of the recommendations. Internal Audit also monitors the implementation and
disposition of significant findings and management actions and the status of such action plans is reported to
the AC.

The AC has full access to both internal and external auditors and receives reports on all audits performed.

42 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

FINANCIAL STATEMENTS

Directors’ Report 44 - 47
Statement by Directors and Statutory Declaration 48
Report of the Auditors 49
Income Statements 50
Balance Sheets 51 - 52
Consolidation Statement of Changes in Equity 53
Company Statement of Changes in Equity 54
Cash Flow Statements 55 - 56
Notes to the Financial Statements 57 - 100

Annual Report 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Directors’ Report

The directors have pleasure in presenting their report together with the audited financial statements of the Group
and of the Company for the financial year ended 31 December 2007.

Principal activities
The principal activity of the Company is investment holding.

The principal activities of the subsidiaries and associates are disclosed in Note 13 and Note 14 to the financial
statements.

There have been no significant changes in the nature of these activities during the financial year.

Results
Group Company
RM’000 RM’000

Profit for the year 337,411 135,328

Attributable to:
Equity holders of the Company 335,462 135,328
Minority interests 1,949 -

337,411 135,328

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed
in the financial statements.

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial
year were not substantially affected by any item, transaction or event of a material and unusual nature other than
as disclosed in the financial statements.

Dividends
The amount of dividends paid by the Company since 31 December 2006 were as follows:

In respect of the financial year ended 31 December 2006 as reported in the directors’ report of that year:

RM’000

Final dividend of 4.1 sen less 27% taxation, on

1,518,949,379 ordinary shares and paid on 31 July 2007 45,462

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 December
2007, of 5.0 sen less 26% taxation on 1,518,949,379 ordinary shares, amounting to a dividend payable of
RM56,201,127 will be proposed for shareholders’ approval. The financial statements for the current financial
year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for
in equity as an appropriation of retained earnings in the financial year ending 31 December 2008.

Employee Share Options Scheme

The Company’s Employee Share Options Scheme ("ESOS") is governed by the by-laws approved by the
shareholders at an Extraordinary General Meeting held on 19 December 2007. The ESOS was implemented on
21 December 2007 and is to be in force for a period of 10 years from the date of implementation.

The salient features and other terms of the ESOS are disclosed in Note 29 to the financial statements.

The Company has been granted an exemption by the Companies Commission of Malaysia from having to disclose
the names of the eligible employees who have been granted options to subscribe for less than 500,000 ordinary
shares of RM1 each. Details of options granted to directors are disclosed in the section on Directors’ interests in
this report.

44 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Directors’ Report

Directors
The names of the directors of the Company in office since the date of the last report and at the date of this report
are:

Datuk Abdul Hamed Bin Sepawi - Chairman

Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain - Group Managing Director
Datuk Amar Wilson Baya Dandot
Datuk Fong Joo Chung
Dato’ Haji Idris Bin Haji Buang
Dato’ Nordin Baharuddin

In accordance with Article 82 of the Company’s Articles of Association, Datuk Abdul Hamed Bin Sepawi and Tan
Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain retire by rotation at the forthcoming Annual General Meeting
and, being eligible, offer themselves for re-election.

Directors’ benefits
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to
which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of
shares in or debentures of the Company or any other body corporate, other than those arising from the share
options granted under the Employee Share Options Scheme.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other
than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as
shown in the financial statements or the fixed salary of a full-time employee of the Company as shown in Note 7 to
the financial statements) by reason of a contract made by the Company or a related corporation with any director
or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except
as disclosed in Note 33 to the financial statements.

Nomination and remuneration committee

The Committee consists of three (3) non-executive directors, the majority of whom are independent. The members
of the Committee as at the date of this report are:

Datuk Abdul Hamed Bin Sepawi

(Independent Non-Executive Director) - Chairman

Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain
(Non-Independent Executive Director) – Group Managing Director

Dato’ Haji Idris Bin Haji Buang

(Senior Independent Non-Executive Director)

Among others, the principal duties and responsibilities of the Committee are to:

(a) identify and recommend to the Board candidates for directorships to the Board;

(b) make recommendations to the Board on all new or re-appointments of members of the Board;

(c) evaluate the effectiveness of the Board as a whole and the Committees of the Board;

(d) make recommendations to the Board on the Company’s framework of remuneration and its cost and to
determine on behalf of the Board specific remuneration packages and terms and conditions of employment
for the Group; and

(e) make recommendations to the Board on the remuneration of non-executive directors which shall be a
decision of the Board as a whole.

ANNUAL REPORT 2007 45

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Directors’ Report

Directors’ interests
According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year
in shares and options in the Company and its related corporations during the financial year were as follows:

Number of Ordinary Shares of RM1 Each

At 1 January 2007 and 31 December 2007
The Company

Direct interest:

Datuk Abdul Hamed Bin Sepawi 800,000

Tan Sri Datuk Amar Haji Abdul Aziz Bin
Dato Haji Husain 303,000

Number of Options Over Ordinary

Shares of RM1 Each
Exercise
price 1.1.2007 Granted 31.12.2007
The Company

Datuk Abdul Hamed Bin Sepawi 2.15 - 500,000 500,000

Tan Sri Datuk Amar Haji Abdul Aziz Bin
Dato Haji Husain 2.15 - 1,000,000 1,000,000
Datuk Amar Wilson Baya Dandot 2.15 - 350,000 350,000
Datuk Fong Joo Chung 2.15 - 350,000 350,000
Dato’ Haji Idris Bin Haji Buang 2.15 - 350,000 350,000
Dato’ Nordin Baharuddin 2.15 - 350,000 350,000

Other statutory information

(a) Before the income statements and balance sheets of the Group and of the Company were made out, the
directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making
of provision for doubtful debts and satisfied themselves that all known bad debts had been written off
and that adequate provision had been made for doubtful debts; and

(ii) to ensure that current assets which were unlikely to realise their value as shown in the accounting
records in the ordinary course of business had been written down to an amount which they might be
expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial
statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company
misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which
would render adherence to the existing method of valuation of assets or liabilities of the Group and of the
Company misleading or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this
report or financial statements of the Group and of the Company which would render any amount stated in
the financial statements misleading.

46 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Directors’ Report

Other statutory information (Cont’d.)

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Company which has arisen since the end of the
financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group and of the Company which has arisen since the end of the
financial year.

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the
period of twelve months after the end of the financial year which will or may affect the ability of the
Group and of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the
end of the financial year and the date of this report which is likely to affect substantially the results of
the operations of the Group and of the Company for the financial year in which this report is made.

Significant events
Details of significant events are disclosed in Note 35 to the financial statements.

Subsequent events
Details of subsequent events are disclosed in Note 36 to the financial statements.

Controlling shareholder
The Directors regard State Financial Secretary, Sarawak, a statutory corporation established under the State
Financial Secretary (Incorp oration) Ordinance of Sarawak, as the controlling shareholder of the Company.

Auditors
The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 30 April 2008.

Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato’ Nordin Baharuddin
Dato Haji Husain

ANNUAL REPORT 2007 47

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Statement by Directors
Pursuant to Section 169(15) of the Companies Act, 1965

We, Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain and Dato’ Nordin Baharuddin, being two of
the directors of Sarawak Energy Berhad, do hereby state that, in the opinion of the directors, the accompanying
financial statements set out on pages 50 to 100 are drawn up in accordance with the provisions of the Companies
Act, 1965, and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of the
financial position of the Group and of the Company as at 31 December 2007 and of the results and the cash flows
of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 30 April 2008.

Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato’ Nordin Baharuddin
Dato Haji Husain

Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965

I, Haji Sulaiman Bin Haji Abdul Hamid, being the person primarily responsible for the financial management of
Sarawak Energy Berhad, do solemnly and sincerely declare that the accompanying financial statements set out
on pages 50 to 100 are in my opinion correct, and I make this solemn declaration conscientiously believing the
same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the

abovenamed Haji Sulaiman Bin Haji Abdul Hamid
at Kuching in the State of Sarawak
on 30 April 2008.

Haji Sulaiman Bin Haji Abdul Hamid

Before me,

48 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Auditors’ Report

Report of the Auditors to the Members of Sarawak Energy Berhad

(Incorporated in Malaysia)
We have audited the financial statements set out on pages 50 to 100. These financial statements are the
responsibility of the Company’s directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to
report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other
purpose. We do not assume responsibility to any other person for the content of this report.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by the directors, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies
Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of:

(i) the financial position of the Group and of the Company as at 31 December 2007 and of the results
and the cash flows of the Group and of the Company for the year then ended; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial
statements; and

(b) the accounting and other records and the registers required by the Act to be kept by the Company and by its
subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions
of the Act.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial
statements of the Company are in form and content appropriate and proper for the purposes of the preparation
of the consolidated financial statements and we have received satisfactory information and explanations required
by us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did
not include any comment required to be made under Section 174(3) of the Act.

ERNST & YOUNG YONG VOON KAR

AF: 0039 1769/04/10 (J/PH)
Chartered Accountants Partner

Kuching, Malaysia
Date: 30 April 2008

ANNUAL REPORT 2007 49

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Income Statements
for the year ended 31 December 2007

Group Company
Note 2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Revenue 3 1,319,208 1,177,813 101,635 151,292

Cost of sales (1,023,593) (979,991) - -

Gross profit 295,615 197,822 101,635 151,292

Other income 161,461 159,118 66,703 94

Administrative expenses (19,834) (11,071) (4,992) (2,955)
Selling and distribution expenses (423) (138) - -
Other expenses (21,025) (19,753) (2,803) (180,939)

Operating profit/(loss) 415,794 325,978 160,543 (32,508)

Finance costs 4 (35,447) (32,737) - -

Share of results of associates 20,380 (28,775) - -

Profit/(loss) before tax 5 400,727 264,466 160,543 (32,508)

Income tax expense 8 (63,316) (6,679) (25,215) (19,087)

Profit/(loss) for the year 337,411 257,787 135,328 (51,595)

Attributable to:
Equity holder of the Company 335,462 255,785 135,328 (51,595)
Minority interests 1,949 2,002 - -

337,411 257,787 135,328 (51,595)

Earnings per share attributable

to equity holders of the
Company (sen)

Basic 9 22.1 16.8

Diluted Not
22.1 applicable

The accompanying notes form an integral part of the financial statements.

50 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Balance Sheets
as at 31 December 2007

Group Company
Note 2007 2006 2007 2006
(Restated) (Restated)
RM’000 RM’000 RM’000 RM’000
ASSETS

Non-current assets

Property, plant and equipment 11 4,341,983 3,765,040 3,475 1,135

Prepaid land lease payments 12 129,800 131,524 18,984 19,334
Investment in subsidiaries 13 - - 1,597,924 1,596,613
Investment in associates 14 35,279 55,098 600 -
Other investments 15 - 2,686 - 2,686
Amounts due from subsidiaries 16 - - 76,208 107,765

4,507,062 3,954,348 1,697,191 1,727,533

Current assets

Property development costs 17 100,273 100,273 - -

Inventories 18 249,761 267,977 - -
Marketable securities 19 - 1,607 - -
Trade and other receivables 20 274,189 281,343 43,581 297
Amounts due from subsidiaries 16 - - 2,234 1,463
Short-term deposits 21 637,199 432,032 81,187 4,844
Cash and bank balances 272,316 236,668 5,052 3,207

1,533,738 1,319,900 132,054 9,811

TOTAL ASSETS 6,040,800 5,274,248 1,829,245 1,737,344

EQUITY AND LIABILITIES

Equity attributable to equity holders

of the Company

Share capital 22 1,518,949 1,518,949 1,518,949 1,518,949

Reserves 23 1,077,045 786,141 308,313 217,543

2,595,994 2,305,090 1,827,262 1,736,492

Minority interests 16,147 14,406 - -

Total equity 2,612,141 2,319,496 1,827,262 1,736,492

ANNUAL REPORT 2007 51

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Balance Sheets
as at 31 December 2007 (Cont’d)

Group Company
Note 2007 2006 2007 2006
(Restated) (Restated)
RM’000 RM’000 RM’000 RM’000
Non-current liabilities

Borrowings 24 1,015,000 631,000 - -

Deferred taxation 25 375,704 377,743 - -
Deferred income 26 1,452,259 1,411,125 - -
Retirement benefits 27 3,100 3,100 - -

2,846,063 2,422,968 - -

Current liabilities

Trade and other payables 28 278,271 253,399 1,331 852

Collateral deposits 202,794 182,957 - -
Borrowings 24 89,984 83,564 - -
Amounts due to subsidiaries 16 - - 652 -
Current tax payable 11,547 11,864 - -

582,596 531,784 1,983 852

Total liabilities 3,428,659 2,954,752 1,983 852

TOTAL EQUITY AND LIABILITIES 6,040,800 5,274,248 1,829,245 1,737,344

The accompanying notes form an integral part of the financial statements.

52 ANNUAL REPORT 2007

 Attributable to equity holders of the Company Minority Total
Non-Distributable Distributable interests equity
Capital Share
Share Capital redemption option General Retained
Note capital reserves reserves reserves reserves earnings Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2006 1,518,949 85,355 73,128 - 94,147 317,977 2,089,556 12,404 2,101,960

Effect of adoption FRS 3 - - - - - 2,401 2,401 - 2,401

Profit for the year - - - - - 255,785 255,785 2,002 257,787
Dividend 10 - - - - - (42,652) (42,652) - (42,652)

At 31 December 2006 1,518,949 85,355 73,128 - 94,147 533,511 2,305,090 14,406 2,319,496

At 1 January 2007 1,518,949 85,355 73,128 - 94,147 533,511 2,305,090 14,406 2,319,496

Profit for the year - - - - - 335,462 335,462 1,949 337,411

Dividend 10 - - - - - (45,462) (45,462) - (45,462)
Share options granted
under ESOS 6 - - - 904 - - 904 - 904
Arising from acquisition
of additional equity
in subsidiary - - - - - - - (208) (208)

At 31 December 2007 1,518,949 85,355 73,128 904 94,147 823,511 2,595,994 16,147 2,612,141
for the year ended 31 December 2007
Consolidated Statement of Changes in Equity
SARAWAK ENERGY BERHAD

ANNUAL REPORT 2007

The accompanying notes form an integral part of the financial statements.
(Company No. 007199-D)

53
 54
Non-Distributable Distributable
Capital
Share redemption Share option General Retained
Note capital reserves reserves reserves earnings Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2006 1,518,949 73,128 - 5,000 233,662 1,830,739

Loss for the year - - - - (51,595) (51,595)

Dividend 10 - - - - (42,652) (42,652)

ANNUAL REPORT 2007

SARAWAK ENERGY BERHAD

At 31 December 2006 1,518,949 73,128 - 5,000 139,415 1,736,492

At 1 January 2007 1,518,949 73,128 - 5,000 139,415 1,736,492

Profit for the year - - - - 135,328 135,328

(Company No. 007199-D)

Dividend 10 - - - - (45,462) (45,462)

Share options granted under ESOS:
Recognised in profit or loss 6 - - 48 - - 48
Included in investments in subsidiaries - - 856 - - 856

At 31 December 2007 1,518,949 73,128 904 5,000 229,281 1,827,262

for the year ended 31 December 2007 (Cont’d)

The accompanying notes form an integral part of the financial statements.

Company Statement of Changes in Equity
 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Cash Flow Statements

for the year ended 31 December 2007

Group Company
2007 2006 2007 2006
(Restated) (Restated)
RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit/(loss) before tax 400,727 264,466 160,543 (32,508)

Adjustments for:
Amortisation of prepaid land lease payments 3,211 3,188 350 350
Bad debts written off 144 137 - -
Depreciation of property, plant and equipment 255,048 251,413 400 335
Dividend income (47) (270) (100,000) (150,578)
Gain on disposal of investments (2,170) (124) (2,136) (1)
Gain on disposal of investment
in an associate (11,835) - - -
Loss on disposal of prepaid land
lease payment 122 - - -
Loss/(gain) on disposal of
property, plant and equipment 996 (241) 216 47
Interest expenses 457 896 - -
Interest income (22,210) (16,158) (1,635) (714)
Profit payments on islamic debt securities 34,897 31,744 - -
Property, plant and equipment written off 82 - - -
Provision for doubtful debts less provision
no longer required 72 173 (64,560) 80,902
Release of deferred income (68,650) (65,755) - -
Negative goodwill on
acquisition of additional equity in subsidiary (8) - - -
Reversal of write-down of inventories (162) (628) - -
Share of results of associates (20,380) 28,775 - -
Share options granted under ESOS 904 - 48 -
Unrealised loss on foreign exchange 78 - - -
Waiver of debts owing by subsidiaries - - - 97,715
Write-back for accrued loan interest - (23,992) - -
Write-back for impairment
in value of investment in an associate (36,060) (31,240) - -

Operating profit/(loss) before

working capital changes 535,216 442,384 (6,774) (4,452)

Inventories 18,378 (23,789) - -

Receivables 9,102 (112,825) (41,499) (42)
Payables 24,772 10,661 479 (75)

Collateral deposits 19,837 15,765 - -

Amount due from subsidiaries - - 95,998 (4,922)

Cash generated from/(used in) operations 607,305 332,196 48,204 (9,491)

Interest paid (457) (896) - -
Taxes paid (67,836) (42,546) - (181)

Net cash from/(used in) operating activities 539,012 288,754 48,204 (9,672)

ANNUAL REPORT 2007 55

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Cash Flow Statements

for the year ended 31 December 2007 (Cont’d)

Group Company
2007 2006 2007 2006
(Restated) (Restated)
RM’000 RM’000 RM’000 RM’000

Cash flows from investing activities

Acquisition of subsidiary - - (455) -

Additional investment in a subsidiary (200) - - (2,000)
Acquisition of associate - (400) (600) -
Additional investment in an associate (200) (1,931) - -
Grants and capital contribution received 109,784 134,847 - -
Purchase of property, plant and equipment (834,498) (263,647) (2,960) (196)
Purchase of prepaid land lease payments (1,609) (2,684) - -
Proceeds from disposal of property, plant
and equipment 1,429 6,381 4 55
Proceeds from disposal of investments 92,604 556 4,822 2
Interest received 22,210 16,158 1,635 714
Dividends received 2,200 444 73,000 54,143

Net cash (used in)/from investing activities (608,280) (110,276) 75,446 52,718

Cash flows from financing activities

Proceeds from islamic debt securities 465,000 300,000 - -

Profit payments on islamic debt securities (34,875) (31,800) - -
Repayment of islamic debt securities (80,000) (110,000) - -
Net drawdown and repayment of
bank borrowings 5,420 (119,761) - -
Dividend paid (45,462) (42,652) (45,462) (42,652)

Net cash from/(used in) financing activities 310,083 (4,213) (45,462) (42,652)

Net increase in cash and cash equivalents 240,815 174,265 78,188 394

Cash and cash equivalents at the beginning

of the year 668,700 494,435 8,051 7,657

Cash and cash equivalents at the end

of year 909,515 668,700 86,239 8,051

Cash and cash equivalents are analysed as follows:

Short-term deposits 637,199 432,032 81,187 4,844

Cash and bank balances 272,316 236,668 5,052 3,207

909,515 668,700 86,239 8,051

The accompanying notes form an integral part of the financial statements.

56 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
1. Corporate information
The Company is a public limited liability company, incorporated and domiciled in Malaysia, listed on the
Main Board of Bursa Malaysia Securities Berhad and produces financial statements available for public
use. The controlling shareholder of the Company is the State Financial Secretary, Sarawak, a statutory
corporation established under the State Financial Secretary (Incorporation) Ordinance of Sarawak. The
registered office of the Company is located at 4th Floor, Wisma SESCO, Petra Jaya, 93673 Kuching,
Sarawak.

The principal activity of the Company is investment holding. The principal activities of the subsidiaries of the
Company are described in Note 13 to the financial statements. There have been no significant changes in
the nature of these principal activities during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution
of the directors on 30 April 2008.

2. Significant accounting policies

2.1 Basis of preparation

The financial statements comply with the provisions of the Companies Act, 1965 and applicable
Financial Reporting Standards in Malaysia. At the beginning of the current financial year, the Group
and the Company had adopted new and revised Financial Reporting Standards (“FRSs”) which are
mandatory for the current financial year as described fully in Note 2.3.

The financial statements of the Group and of the Company have also been prepared on a historical
basis except as disclosed in the significant accounting policies.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the
nearest thousand (RM’000) except when otherwise indicated.

2.2 Summary of significant accounting policies

(a) Subsidiaries and basis of consolidation
(i) Subsidiaries

Subsidiaries are entities over which the Group has ability to control the financial and
operating policies so as to obtain benefits from their activities. The existence and effect
of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Group has such power over another entity.

In the Company’s separate financial statements, investments in subsidiaries are stated at

cost less impairment losses. On disposal of such investments, the difference between net
disposal proceeds and their carrying amounts is included in profit or loss.

(ii) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company
and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries
are prepared for the same reporting date as the Company.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group
obtains control, and continue to be consolidated until the date that such control ceases.
In preparing the consolidated financial statements, intragroup balances, transactions
and unrealised gains or losses are eliminated in full. Uniform accounting policies are
adopted in the consolidated financial statements for like transactions and events in similar
circumstances.

ANNUAL REPORT 2007 57

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(a) Subsidiaries and basis of consolidation (Cont’d.)

(ii) Basis of consolidation (Cont’d.)

Acquisitions of subsidiaries are accounted for using the purchase method. The purchase
method of accounting involves allocating the cost of the acquisition to the fair value of the
assets acquired and liabilities and contingent liabilities assumed at the date of acquisition.
The cost of an acquisition is measured as the aggregate of the fair values, at the date
of exchange, of the assets given, liabilities incurred or assumed, and equity instruments
issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of
the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent
liabilities over the cost of acquisition is recognised immediately in profit or loss.

Minority interests represent the portion of profit or loss and net assets in subsidiaries not
held by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’
identifiable assets and liabilities at the acquisition date and the minorities’ share of changes
in the subsidiaries’ equity since then.

(b) Associates

Associates are entities in which the Group has significant influence and that is neither a
subsidiary nor an interest in a joint venture. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but not in control or joint control over
those policies.

Investments in associates are accounted for in the consolidated financial statements using the
equity method of accounting. Under the equity method, the investment in associate is carried
in the consolidated balance sheet at cost adjusted for post-acquisition changes in the Group’s
share of net assets of the associate. The Group’s share of the net profit or loss of the associate is
recognised in the consolidated profit or loss. Where there has been a change recognised directly
in the equity of the associate, the Group recognises its share of such changes. In applying
the equity method, unrealised gains and losses on transactions between the Group and the
associate are eliminated to the extent of the Group’s interest in the associate. After application
of the equity method, the Group determines whether it is necessary to recognise any additional
impairment loss with respect to the Group’s net investment in the associate. The associate is
equity accounted for from the date the Group obtains significant influence until the date the
Group ceases to have significant influence over the associate.

Goodwill relating to an associate is included in the carrying amount of the investment and is not
amortised. Any excess of the Group’s share of the net fair value of the associate’s identifiable
assets, liabilities and contingent liabilities over the cost of the investment is excluded from the
carrying amount of the investment and is instead included as income in the determination of the
Group’s share of the associate’s profit or loss in the period in which the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate,
including any long-term interests that, in substance, form part of the Group’s net investment in
the associate, the Group does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the associate.

The most recent available financial statements of the associates are used by the Group in
applying the equity method. Where the dates of the audited financial statements used are not
coterminous with those of the Group, the share of results is arrived at from the last audited
financial statements available and management financial statements to the end of the accounting
period. Uniform accounting policies are adopted for like transactions and events in similar
circumstances.

58 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(b) Associates (Cont’d.)

In the Company’s separate financial statements, investments in associates are stated at cost
less impairment losses.

On disposal of such investments, the difference between net disposal proceeds and their carrying
amounts is included in profit or loss.

(c) Intangible assets

(i) Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess
of the cost of business combination over the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities. Following the initial recognition,
goodwill is measured at cost less any accumulated impairment losses. Goodwill is not
amortised but instead, it is reviewed for impairment, annually or more frequently if events
or changes in circumstances indicate that the carrying value may be impaired. Gains and
losses on the disposal of an entity include the carrying amount of goodwill relating to the
entity sold.

(ii) Research and development costs

All research costs are recognised in the profit or loss as incurred.

Preliminary engineering, investigation and survey costs incurred on projects before

authorisation for their construction are charged to operating expenditure. The cost of
research and development related to alternative energy sources, or those not related to a
specific project, is also charged to operations.

(d) Property, plant and equipment, and depreciation

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are
included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the income statement during
the financial period in which they are incurred.

Subsequent to recognition, property, plant and equipment except for freehold land are stated at
cost less accumulated depreciation and any accumulated impairment losses.

Certain items of property, plant and equipment of the Group have not been revalued since 1993.
The Directors have not adopted a policy of regular revaluations of such assets and no later
valuation has been recorded. As permitted under the transitional provisions of IAS 16 (Revised):
Property, Plant and Equipment, these assets continue to be stated at their 1996 valuation less
accumulated depreciation. The above transitional provisions are available only on the first
application of the MASB Approved Accounting Standard IAS 16 (Revised): Property, Plant and
Equipment which is effective for periods ending on or after 1 September 1998. By virtue of this
transitional provision, an entity that had recorded its property, plant and equipment at revalued
amounts but had not adopted a policy of revaluation has been allowed to continue carrying
those assets on the basis of their previous revaluations subject to continuity in its depreciation
policy and the requirement to write down the assets to their recoverable amounts for impairment
adjustments. The transitional provisions will remain in force until and unless the entity chooses
to adopt a revaluation policy in place of a cost policy. When that happens, FRS 116 (which
supersedes IAS 16) would require revaluations to be carried out at regular intervals.

ANNUAL REPORT 2007 59

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(d) Property, plant and equipment, and depreciation (Cont’d.)

Any revaluation surplus is credited to the revaluation reserve included within equity, except to the
extent that it reverses a revaluation decrease for the same asset previously recognised in profit
or loss, in which case the increase is recognised in profit or loss to the extent of the decrease
previously recognised. A revaluation deficit is first offset against unutilised previously recognised
revaluation surplus in respect of the same asset and the balance is thereafter recognised in
profit or loss. Upon disposal or retirement of an asset, any revaluation reserve relating to the
particular asset is transferred directly to retained earnings.

Freehold land has unlimited useful life and therefore is not depreciated. Capital work-in-progress
are not depreciated as these assets are not available for use. Depreciation of other property,
plant and equipment is provided for on a straight-line basis to write off the cost of each asset to
its residual value over the estimated useful life, at the following annual rates:

Buildings - 2% to 5%
Structures and improvements - 1.33% to 10%
Plant and machinery - 4% to 20%
Lines and distribution mains - 4%
Distribution services - 4% to 10%
Meters - 6.67%
Public Lighting - 4%
Furniture, fittings, equipment and others - 6.67% to 50%
Motor vehicles - 10% to 20%

The residual values, useful life and depreciation method are reviewed at each financial year-
end to ensure that the amount, method and period of depreciation are consistent with previous
estimates and the expected pattern of consumption of the future economic benefits embodied in
the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. The difference between the net disposal
proceeds, if any and the net carrying amount is recognised in profit or loss and the unutilised
portion of the revaluation surplus on that item is taken directly to retained earnings.

(e) Property development costs

Property development costs comprise all costs that are directly attributable to development
activities or that can be allocated on a reasonable basis to such activities.

When the financial outcome of a development activity can be reliably estimated, property
development revenue and expenses are recognised in the income statement by using the stage
of completion method. The stage of completion is determined by the proportion that property
development costs incurred for work performed to date bear to the estimated total property
development costs.

Where the financial outcome of a development activity cannot be reliably estimated, property
development revenue is recognised only to the extent of property development costs incurred
that is probable will be recoverable, and property development costs on properties sold are
recognised as expense in the period in which they are incurred.

Any expected loss on a development project, including costs to be incurred over the defects
liability period, is recognised as an expense immediately.

Property development costs not recognised as an expense are recognised as an asset, which is
measured at the lower of cost and net realisable value.

60 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(e) Property development costs (Cont’d.)

The excess of revenue recognised in the income statement over billings to purchasers is
classified as accrued billings within trade receivables and the excess of billings to purchasers
over revenue recognised in the income statement is classified as progress billings within trade
payables.

(f) Construction contracts

Where the outcome of a construction contract can be reliably estimated, contract revenue and
contract costs are recognised as revenue and expenses respectively by using the stage of
completion method. The stage of completion is measured by reference to the proportion of
contract costs incurred for work performed to date to the estimated total contract costs.

Where the outcome of a construction contract cannot be reliably estimated, contract revenue
is recognised to the extent of contract costs incurred that it is probable will be recoverable.
Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss
is recognised as an expense immediately.

When the total costs incurred on construction contracts plus recognised profits (less recognised
losses) exceeds progress billings, the balance is classified as amount due from customers on
contracts. When progress billings exceed costs incurred plus recognised profits (less recognised
losses), the balance is shown as amount due to customers on contracts.

(g) Impairment of non-financial assets

The carrying amounts of assets, other than investment property, construction contract assets,
property development costs, inventories, deferred tax assets and non-current assets (or disposal
groups) held for sale, are reviewed at each balance sheet date to determine whether there is
any indication of impairment. If any such indication exists, the asset’s recoverable amount is
estimated to determine the amount of impairment loss.

For the purpose of impairment testing of these assets, recoverable amount is determined
on an individual asset basis unless the asset does not generate cash flows that are largely
independent of those from other assets. If this is the case, recoverable amount is determined for
the cash-generating unit (CGU) to which the asset belongs to. Goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups
of CGUs, that are expected to benefit from the synergies of the combination, irrespective of
whether other assets or liabilities of the Group are assigned to those units or groups of units.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell
and its value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. Where the carrying amount of an asset
exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are
allocated first to reduce the carrying amount of any goodwill allocated to those units or groups
of units and then, to reduce the carrying amount of the other assets in the unit or groups of units
on a pro-rata basis.

An impairment loss is recognised in profit or loss in the period in which it arises, unless the
asset is carried at a revalued amount, in which case the impairment loss is accounted for as a
revaluation decrease to the extent that the impairment loss does not exceed the amount held in
the asset revaluation reserve for the same asset.

ANNUAL REPORT 2007 61

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(g) Impairment of non-financial assets (Cont’d.)

Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an
asset other than goodwill is reversed if, and only if, there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognised.
The carrying amount of an asset other than goodwill is increased to its revised recoverable
amount, provided that this amount does not exceed the carrying amount that would have been
determined (net of amortisation or depreciation) had no impairment loss been recognised for the
asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised
in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is
treated as a revaluation increase.

(h) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is determined using the weighted average cost method. The cost of raw materials
comprises costs of purchase. The costs of finished goods and work-inprogress comprise costs
of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing
overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.

(i) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party
to the contractual provisions of the instrument.

Financial instruments are classified as liabilities or equity in accordance with the substance
of the contractual arrangement. Interest, dividends, gains and losses relating to a financial
instruments classified as a liability are reported as income or expense. Distributions to holders of
financial instruments classified as equity are recognised directly in equity. Financial instruments
are offset when the Group has a legally enforceable right to offset and intends to settle either on
a net basis or to realise the asset and settle the liability simultaneously.

(i) Cash and cash equivalents

For the purposes of the cash flow statements, cash and cash equivalents include cash and
bank balances and short-term highly liquid investments which have an insignificant risk of
changes in value, net of outstanding bank overdrafts.

(ii) Other non-current investments

Non-current investments other than investments in subsidiaries and associates are stated
at cost less impairment losses. On disposal of an investment, the difference between net
disposal proceeds and its carrying amount is recognised in profit or loss.

(iii) Marketable securities

Marketable securities are carried at the lower of cost and market value, determined on an
aggregate basis. Cost is determined on the weighted average basis while market value
is determined based on quoted market values. Increases or decreases in the carrying
amount of marketable securities are recognised in profit or loss. On disposal of marketable
securities, the difference between net disposal proceeds and the carrying amount is
recognised in profit or loss.

62 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(i) Financial Instruments (Cont’d.)
(iv) Receivables

Receivables are carried at anticipated realisable values. Bad debts are written off when
identified. An estimate is made for doubtful debts based on a review of all outstanding
amounts as at the balance sheet date.

(v) Payables

Payables are stated at the fair value of the consideration to be paid in the future for goods
and services received.

(vi) Interest bearing loans and borrowings

All loans and borrowings are recognised at the fair value of the consideration received less
directly attributable transaction costs.

(vii) Equity instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in
equity in the period in which they are declared.

The transaction costs of an equity transaction are accounted for as a deduction from equity,
net of tax. Equity transaction costs comprise only those incremental external costs directly
attributable to the equity transaction which would otherwise have been avoided.

(viii) Derivative financial instruments

The Group uses derivative financial instruments, including interest rate swaps to hedge its
exposure to interest rate risks arising from operational, financing and investment activities.
In accordance with its treasury policy, the Group does not hold or issue derivative financial
instruments for trading purposes.

Derivative financial instruments are not recognised in the financial statements on

inception.

Interest rate swap contracts

Net differentials in interest receipts and payments arising from interest rate swap contracts
are recognised as interest income or expense over the period of the contract.

(j) Leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the
risks and rewards incidental to ownership. Leases of land and buildings are classified
as operating or finance leases in the same way as leases of other assets and the land
and buildings elements of a lease of land and buildings are considered separately for the
purposes of lease classification.

ANNUAL REPORT 2007 63

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(j) Leases (Cont’d.)

(ii) Finance leases - the Group as lessee

Assets acquired by way of hire purchase of finance leases are stated at an amount equal
to the lower of their fair values and the present value of the minimum lease payments at
the inception of the leases, less accumulated depreciation and impairment losses. The
corresponding liability is included in the balance sheet as borrowings. In calculating the
present value of the minimum lease payments, the discount factor used is the interest rate
implicit in the lease, when it is practicable to determine otherwise, the Group’s incremental
borrowing rate is used.

Lease payments are apportioned between the finance costs and the reduction of the
outstanding liability. Finance costs, which represent the difference between the total leasing
commitments and the fair value of the assets acquired, are recognised as an expense in
the income statement over the term of the relevant lease so as to produce a constant
periodic rate of charge on the remaining balance of the obligations for each accounting
period.

The depreciation policy for leased assets is consistent with that for depreciable property,
plant and equipment as described in Note 2.2(d).

(iii) Operating leases - the Group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the
term of the relevant lease. The aggregate benefit of incentives provided by the lessor is
recognised as a reduction of rental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front
payments made are allocated, whenever necessary, between the land and the buildings
elements in proportion to the relative fair values for leasehold interests in the land element
and buildings element of the lease at the inception of the lease. The up-front payment
represents prepaid lease payments and are amortised on a straight-line basis over the
lease term.

(iv) Operating leases - the Group as lessor

Assets leased out under operating leases are presented on the balance sheet according to
the nature of the assets. Rental income from operating lease is recognised on a straight-
line basis over the term of the relevant lease (Note 2.2(q)(vi)). Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the
leased asset and recognised on a straight-line basis over the lease term.

(k) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying

assets, which are assets that necessarily take a substantial period of time to get ready for their
intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. Investment income earned on the temporary
investment of specific borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are
incurred.

64 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(l) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is
the expected amount of income taxes payable in respect of the taxable profit for the year and is
measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax assets are recognised for all
deductible temporary differences, unused tax losses and unused tax credits to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences,
unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the
temporary difference arises from goodwill or negative goodwill or from the initial recognition of
an asset or liability in a transaction which is not a business combination and at the time of the
transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset
is realised or the liability is settled, based on tax rates that have been enacted or substantively
enacted at the balance sheet date. Deferred tax is recognised as income or an expense and
included in the profit or loss for the period, except when it arises from a transaction which is
recognised directly in equity, in which case the deferred tax is also recognised directly in equity,
or when it arises from a business combination that is an acquisition, in which case the deferred
tax is included in the resulting goodwill the amount of any excess of acquirer’s interest in the net
fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of
the combination.

(m) Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event
and it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate of the amount can be made. Provisions are
reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where
the effect of the time value of money is material, provisions are discounted using a current pre-
tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is
used, the increase in the provision due to the passage of time is recognised as finance cost.

Provision for restructuring costs is recognised when a detailed and formal restructuring plan has
been approved, and the restructuring has either commenced or has been announced publicly.
Costs relating to ongoing activities are not provided for.

(n) Employee benefits

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense
in the year in which the associated services are rendered by employees. Short term
accumulating compensated absences such as paid annual leave are recognised when
services are rendered by employees that increase their entitlement to future compensated
absences. Short term nonaccumulating compensated absences such as sick leave are
recognised when the absences occur.

(ii) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays
fixed contributions into separate entities or funds and will have no legal or constructive
obligation to pay further contributions if any of the funds do not hold sufficient assets to pay
all employee benefits relating to employee services in the current and preceding financial
years. Such contributions are recognised as an expense in the profit or loss as incurred.
As required by law, companies in Malaysia make such contributions to the Employees
Provident Fund (“EPF”).

ANNUAL REPORT 2007 65

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(n) Employee benefits (Cont’d.)
(iii) Defined benefit plans

Following the adoption of applicable Approved Accounting Standard by MASB, FRS 1192004
Employee Benefits and Amendment to FRS 1192004 Employee Benefits – Actuarial Gains
and Losses, Group Plans and Disclosures, the Group has previously made provisions
amounting to RM3.1 million for its unfunded post employment medical benefits for its
eligible employees. No further provision is made for the period under review. However,
post employment medical expenses were recognised continuously in the income statement
when incurred. The Group is in the process of obtaining actuarial valuation in respect of the
Group’s obligations under the defined benefit plan, so as to conform with the requirements
of the Standards.

(iv) Share-based compensation

The Company’s Employee Share Options Scheme (“ESOS”), an equity-settled, share-

based compensation plan, allows SEB and its subsidiaries to acquire ordinary shares
of SEB. The total fair value of share options granted to employees is recognised as an
employee cost with a corresponding increase in the share option reserve within equity over
the vesting period and taking into account the probability that the options will vest. The fair
value of share options is measured at grant date, taking into account, if any, the market
vesting conditions upon which the options were granted but excluding the impact of any
non-market vesting conditions. Non-market vesting conditions are included in assumptions
about the number of options that are expected to become exercisable on vesting date.

At each balance sheet date, the Group revises its estimates of the number of options that
are expected to become exercisable on vesting date. It recognises the impact of the revision
of original estimates, if any, in the profit or loss, and a corresponding adjustment to equity
over the remaining vesting period. The equity amount is recognised in the share option
reserve until the option is exercised, upon which it will be transferred to share premium, or
until the option expires, upon which it will be transferred directly to retained earnings.

The proceeds received net of any directly attributable transaction costs are credited to
equity when the options are exercised.

(o) Foreign currencies

(i) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the
currency of the primary economic environment in which the entity operates (“the functional
currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM),
which is also the Company’s functional currency.

(ii) Foreign currency transactions

In preparing the financial statements of the individual entities, transactions in currencies

other than the entity’s functional currency (foreign currencies) are recorded in the functional
currencies using the exchange rates prevailing at the dates of the transactions. At each
balance sheet date, monetary items denominated in foreign currencies are translated at
the rates prevailing on the balance sheet date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at the rates prevailing on the
date when the fair value was determined. Nonmonetary items that are measured in terms
of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation
of monetary items, are included in profit or loss for the period.

66 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(o) Foreign currencies (Cont’d.)
(ii) Foreign currency transactions (Cont’d.)

Exchange differences arising on the translation of non-monetary items carried at fair

value are included in profit or loss for the period except for the differences arising on the
translation of non-monetary items in respect of which gains and losses are recognised
directly in equity. Exchange differences arising from such non-monetary items are also
recognised directly in equity.

The principal exchange rates concerned ruling at balance sheets date used are as
follows:
2007 2006
RM RM

1 Euro Dollar 4.930 4.646

1 Australian Dollar 2.952 2.793
1 United States Dollar 3.345 3.531
1 New Zealand Dollar 2.607 2.482
1 Singapore Dollar 2.316 2.302
1 Sterling Pound 6.682 6.931
1 Swiss Franc 2.974 2.891
1 Danish Krone 0.680 0.624
1 Japanese Yen 0.029 0.029
1 Norwegian Krone 0.637 0.564
1 Swedish Krone 0.541 0.514

(p) Deferred income

Certain consumers are required to contribute towards the cost of revenue earning capital
projects. These contributions together with government grants in respect of capital expenditure
are credited to the deferred income account and released to the income statement on a straight
line basis over the expected useful lives of the assets except for those relating to projects not
yet completed.

(q) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to
the Group and the revenue can be reliably measured. The following specific recognition criteria
must also be met before revenue is recognised:

(i) Sale of electricity

Sale of electricity is recognised upon invoiced value of services rendered.

(ii) Sale of goods

Revenue is recognised net of sales taxes and upon transfer of significant risks and
rewards of ownership to the buyer. Revenue is not recognised to the extent where there
are significant uncertainties regarding recovery of the consideration due, associated costs
or the possible return of goods.

(iii) Interest income

Interest income is recognised on an accrual basis using the effective interest method.

ANNUAL REPORT 2007 67

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.2 Summary of significant accounting policies (Cont’d.)
(q) Revenue recognition (Cont’d.)
(iv) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

(v) Construction contracts

Revenue from construction contracts is accounted for by the stage of completion method
as described in Note 2.2(f).

(vi) Revenue from parking and maintenance fees and rental income

Revenue from maintenance charges and rental income is recognised on an accrual

basis.

(vii) Development properties

Revenue from sale of development properties is accounted for by the stage of completion
method as described in Note 2.2(e).

2.3 Changes in accounting policies and effects arising from adoption of new and
revised FRSs
On 1 January 2007, the Group and the Company adopted the following FRSs mandatory for the
current financial year:

FRS 6 Exploration for and Evaluation of Mineral Resources

FRS 117 Leases
FRS 124 Related Party Disclosures
Amendment to FRS 1192004 Employee Benefits – Actuarial Gains and Losses, Group Plans
and Disclosures

At the date of authorisation of these financial statements, the Group and the Company have not
adopted the following Amendment to FRS, IC Interpretations and FRSs which have effective dates as
follows:
Amendment to FRS, IC Interpretations and FRSs Effective for financial periods
beginning on or after
Amendment to FRS 121: The Effects of Changes in Foreign
Exchange Rates - Net investments in a Foreign Operation 1 July 2007
IC Interpretation 1: Changes in Existing Decommissioning,
Restoration and Similar Liabilities 1 July 2007
IC Interpretation 2: Members’ Shares in Co-operative Entities and
Similar Instruments 1 July 2007
IC Fund Interpretation 5 : Rights to Interests arising from
Decommissioning, Restoration and Environmental Rehabilitation
Funds 1 July 2007
IC Interpretation 6: Liabilities arising from Participating in a Specific
Market - Waste Electrical and Electronic Equipment 1 July 2007
IC Interpretation 7: Applying the Restatement Approach under FRS
1292004 Financial Reporting in Hyperinflationary Economies 1 July 2007
IC Interpretation 8: Scope of FRS 2 1 July 2007

68 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.3 Changes in accounting policies and effects arising from adoption of new and
revised FRSs (Cont’d.)
Amendment to FRS, IC Interpretations and FRSs Effective for financial periods
beginning on or after
Revised FRS 107 : Cash Flow Statements 1 July 2007
Revised FRS 111 : Construction Contracts 1 July 2007
Revised FRS 112 : Income Taxes 1 July 2007
Revised FRS 118 : Revenue 1 July 2007
Revised FRS 119 : Employee Benefits 1 July 2007
Revised FRS 120 : Accounting for Government Grants and
Disclosure of Government Assistance 1 July 2007
Revised FRS 126 : Accounting and Reporting By Retirement
Benefit Plans 1 July 2007
Revised FRS 129 : Financial Reporting in Hyperinflationary
Economies 1 July 2007
Revised FRS 134 : Interim Financial Reporting 1 July 2007
Revised FRS 137 : Provisions, Contingent Liabilities and Contingent
Assets 1 July 2007
FRS 139 : Financial Instruments - Recognition and Measurement Effective date deferred

The adoption of the above Amendment, IC Interpretations and FRSs is not expected to have any
significant effects on the financial statements of the Group for the year ending 31 December 2008.

The adoption of new and revised FRS 6 and FRS 124 does not result in significant changes in
accounting policies of the Group. The principal change in accounting policy and its effects resulting
from the adoption of the other revised FRS is discussed below:

(a) FRS 117: Leases

Leasehold land held for own use

Prior to 1 January 2007, leasehold land held for own use was classified as property, plant and
equipment and was stated at cost less accumulated depreciation and impairment losses. The
leasehold land was revalued in 1993. The adoption of the revised FRS 117 has resulted in a
change in the accounting policy relating to the classification of leases of land and buildings.
Leases of land and buildings are classified as operating or finance leases in the same way as
leases of other assets and the land and buildings elements of a lease of land and buildings are
considered separately for the purposes of lease classification. Leasehold land held for own
use is now classified as operating lease and where necessary, the minimum lease payments
or the up-front payments made are allocated between the land and the buildings elements in
proportion to the relative fair values for leasehold interests in the land element and buildings
element of the lease at the inception of the lease. The up-front payment represents prepaid
lease payments and are amortised on a straight-line basis over the lease term.

The Group and the Company have applied the change in accounting policy in respect of
leasehold land in accordance with the transitional provisions of FRS 117. At 1 January 2007, the
unamortised amount of leasehold land is retained as the surrogate carrying amount of prepaid
lease payments as allowed by the transitional provisions. The reclassification of leasehold land
as prepaid lease payments has been accounted for retrospectively and as disclosed in Note
2.3(c), certain comparatives have been restated. The effects on the balance sheets as at 31
December 2007 are set out in Note 2.3(b). There were no effects on the income statements for
the year ended 31 December 2007.

ANNUAL REPORT 2007 69

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
2. Significant accounting policies (Cont’d.)
2.3 Changes in accounting policies and effects arising from adoption of new and
revised FRSs (Cont’d.)
(b) Summary of effects of adopting new and revised FRSs on the current year’s financial
statements

The following table provides the extent to which the line items in the balance sheets for the year
ended 31 December 2007 is higher or lower than it would have been had the previous policy
been applied in the current year.

Effects on balance sheets as at 31 December 2007

Increase/(decrease)
FRS 117
Note 2.3 (a)
RM’000
Group

Description of changes
Property, plant and equipment (129,800)
Prepaid land lease payments 129,800

Company

Description of changes
Property, plant and equipment (18,984)
Prepaid land lease payments 18,984

(c) Restatement of comparatives

The following comparative amounts have been restated as result of adopting the new and revised
FRS:
Increase/
(decrease)
Previously FRS 117
stated Note 2.3(a) Restated
RM’000 RM’000 RM’000
Group

Description of changes

At 31 December 2006

Property, plant and equipment 3,896,564 (131,524) 3,765,040

Prepaid land lease payments - 131,524 131,524

Company

Description of changes

At 31 December 2006

Property, plant and equipment 20,469 (19,334) 1,135

Prepaid land lease payments - 19,334 19,334

70 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
3 Revenue
Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Dividend income - 198 100,000 150,578

Interest income 1,465 366 1,635 714
Sales of electricity 1,215,501 1,090,189 - -
Sales of goods and services 91,788 70,335 - -
Manufacturing, fabrication, galvanising
and sale of steel structures 7,604 14,198 - -
Others 2,850 2,527 - -

1,319,208 1,177,813 101,635 151,292

4. Finance costs
Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Bank charges and commission 93 97 - -

Bankers acceptance and
trust receipts interest 150 65 - -
Overdraft interest 3 14 - -
Profit payments on islamic debt securities 64,074 31,923 - -
Revolving credit interest 304 56 - -
Term loan interest - 761 - -
Interest expense on bridging loan - 2,890 - -

64,624 35,806 - -
Less: Amount capitalised in capital
work-in-progress (Note 11)
- Interest expense on bridging loan - (2,890) - -
- Profit payments on islamic debt securities (29,177) (179) - -

35,447 32,737 - -

5. Profit/(loss) before tax

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000
The following amounts have been included
in arriving at profit/(loss) before tax:

Auditors’ remuneration
- statutory audits
current year 225 205 60 60
under/(over)provision in prior years 17 (1) 2 -
- other services
current year 30 515 30 420
Bad debts written off 144 137 - -
Depreciation of property, plant and
equipment 255,048 251,413 400 335
Directors’ remuneration (Note 7) 2,279 1,038 1,058 336
Employee benefits expense (Note 6) 156,070 141,038 3,724 1,933
Finance costs (Note 4) 35,447 32,737 - -
Loss on disposal of property, plant
and equipment 1,051 69 220 61
Loss on disposal of prepaid land lease payment 122 - - -
Amortisation of prepaid land lease payments
(Note 12) 3,211 3,188 350 350

ANNUAL REPORT 2007 71

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
5. Profit/(loss) before tax (Cont’d.)
Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

The following amounts have been included

in arriving at profit/(loss) before tax: (cont’d.)

Loss on foreign exchange-unrealised 78 5 - -

Property, plant and equipment written off 82 - - -
Provision for doubtful debts 72 173 - 80,902
Operating lease 2,994 1,933 418 509
Waiver of debts owing by subsidiaries - - - 97,715

After crediting:

Dividends (gross)
- unquoted subsidiary - - 100,000 150,380
- quoted investments 47 270 - 198
Gain on disposal of marketable securities 34 - - -
Gain on disposal of property, plant and
equipment 55 310 4 14
Gain on disposal of other investments 2,136 124 2,136 1
Gain on disposal of investment
in an associate 11,835 - - -
Gain on foreign exchange
- realised 430 2,509 - -
- unrealised - 5 - -
Interest income
- subsidiaries - - 170 348
- fixed deposits 22,210 15,266 1,464 366
- others - 892 - -
Negative goodwill on acquisition of
additional equity in subsidiary 8 - - -
Release of deferred income 68,650 65,755 - -
Rental income 4,323 4,010 - -
Reversal of provision for doubtful debts - - 64,560 -
Reversal of write-down of inventories 162 628 - -
Write-back for accrued loan interest - 23,992 - -
Write-back for impairment in value of
investment in associates 36,060 31,240 - -

6. Employee benefits expense

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Salaries, wages and bonus 118,590 109,720 2,831 1,444

Social security contributions 1,073 1,037 9 8
Contributions to defined contribution plan 13,090 13,511 354 173
Other benefits 23,364 16,912 482 308
Share options granted under ESOS (Note 29) 904 - 48 -

157,021 141,180 3,724 1,933

Less: Amount capitalised in capital
work-in-progress (Note 11) (951) (142) - -

156,070 141,038 3,724 1,933

Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration
amounting to RM1,473,545 (2006: RM364,751) and RM734,042 (2006: RMNil) respectively.

72 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
7. Directors’ remuneration
Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000
Directors of the Company
Emoluments 755 - 755 -
Fees 454 458 272 336
Benefits-in-kind 6 - 6 -
Share options granted under ESOS (Note 29) 25 - 25 -

1,240 458 1,058 336

Other directors
Emoluments 751 367 - -
Fees 260 201 - -
Benefits-in-kind 4 12 - -
Share options granted under ESOS (Note 29) 24 - - -

1,039 580 - -

Total Directors’ remuneration (Note 33) 2,279 1,038 1,058 336

The number of directors of the Company whose total remuneration falls within the following bands is
analysed below:

Number of Directors
2007 2006
Executive Directors
RM850,001 – RM900,000 1 -

Non-executive Directors
<RM50,000 1 2
RM50,001 - RM100,000 5 4
RM100,001 - RM150,000 - 1

8. Income tax expense

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Income tax:
Income tax expense for the year 65,522 45,137 27,000 42,162
(Over)/underprovided in prior years (167) 772 (1,785) 14

65,355 45,909 25,215 42,176

Deferred tax: (Note 25)

Relating to origination and reversal
of temporary differences 13,586 13,407 - -
Overprovided in prior years (995) (24,671) - (23,089)
Relating to changes in tax rates (14,630) (27,966) - -

(2,039) (39,230) - (23,089)

Total income tax expense 63,316 6,679 25,215 19,087

Income tax is calculated at the statutory tax rate of 27% (2006: 28%) of the estimated assessable profit
for the year. The statutory tax rate will be reduced to 26% from the current year’s rate of 27% effective
year of assessment 2008 and to 25% in subsequent years. The computation of deferred tax rate as at 31
December 2007 has reflected these changes.

ANNUAL REPORT 2007 73

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
8. Income tax expense (Cont’d.)
A reconciliation of income tax expense applicable to profit/(loss) before tax at the statutory income tax rate
to income tax expense at the effective income tax rate of the Group and of the Company is as follows:

2007 2006
RM’000 RM’000
Group

Profit before tax 400,727 264,466

Taxation at Malaysian statutory tax rate of 27% (2006: 28%) 108,196 74,050
Effect of income subject to tax rate of 20% (80) (31)
Effect of changes in tax rates (15,348) (27,966)
Effect of expenses not deductible for tax purposes 1,770 7,310
Effect of income not subject to tax (14,508) (17,925)
Effect of utilisation of unrecognised tax losses, unabsorbed
capital allowances, reinvestment and investment allowances (10,097) (13,313)
Effect of share of results of associates (5,503) 8,057
Deferred tax assets not recognised during the year 48 396
(Over)/under provision of taxation in prior years (167) 772
Overprovision of deferred taxation in prior years (995) (24,671)

Income tax expense for the year 63,316 6,679

Company

Profit/(loss) before tax 160,543 (32,508)

Taxation at Malaysian statutory tax rate of 27% (2006: 28%) 43,347 (9,102)
Effect of expenses not deductible for tax purposes 1,662 52,217
Effect of income not subject to tax (18,009) (15)
Effect of utilisation of previously unrecognised tax losses - (938)
(Over)/underprovision of taxation in prior years (1,785) 14
Overprovision of deferred taxation in prior year - (23,089)

Income tax expense for the year 25,215 19,087

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

(a) Tax losses are analysed as follows:

Tax savings recognised during the

year arising from:
Utilisation of tax losses brought
forward from previous years - 938 - 938
Unutilised tax losses carried forward 7,596 7,721 - -

74 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
8. Income tax expense (Cont’d.)
Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

(b) Capital allowances, reinvestment

and investment allowances are
analysed as follows:

Tax savings recognised during the

year arising from:
Utilisation of reinvestment and
investment allowances brought
forward from previous years 8,420 8,510 - -

Unabsorbed capital allowances

carried forward 264,826 247,265 - 294

Unutilised reinvestment allowances

carried forward 4,158 5,968 - -

Unutilised investment allowances

carried forward 388,880 418,190 - -

As at 31 December 2007, the deferred tax assets of certain subsidiaries are not recognised as the
availability of future taxable profit (against which the unutilised tax losses, unabsorbed capital allowances
and investment allowances may be absorbed) cannot be determined with certainty.

9. Earnings per share

(a) Basic

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary
equity holders of the Company by the weighted average number of ordinary shares in issue during the
financial year, excluding treasury shares held by the Company:
2007 2006
RM’000 RM’000
Profit attributable to ordinary equity holders
of the Company 335,462 255,785

2007 2006
’000 ’000

Weighted average number of ordinary shares in issue 1,518,949 1,518,949

Basic earnings per share (sen) 22.1 16.8

(b) Diluted

For the purpose of calculating diluted earning per share, the profit for the year attributable to ordinary
equity holders of the Company and the weighted average number of ordinary shares in issue during
the financial year have been adjusted for the dilutive effects of all potential ordinary shares, i.e. share
options granted to employees.

ANNUAL REPORT 2007 75

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
9. Earnings per share (Cont’d.)

(b) Diluted (Cont’d.)

2007 2006
RM’000 RM’000
Profit attributable to ordinary equity holders
of the Company 335,462 255,785

2007 2006
’000 ’000

Weighted average number of ordinary shares in issue

Effects of dilution:
Share options 60 Not applicable

Adjusted weighted average number of ordinary shares in

issue and issuable 1,519,009 Not applicable

Diluted earnings per share (sen) 22.1 Not applicable

10. Dividends
Dividends in respect Dividends recognised
of year in year
2007 2006 2005 2007 2006
RM’000 RM’000 RM’000 RM’000 RM’000

Recognised during the year

Final dividend for 2005: 3.9 sen

less 28% taxation on 1,518,949,379
ordinary shares - - 42,652 - 42,652

Final dividend for 2006: 4.1 sen

less 27% taxation on 1,518,949,379
ordinary shares - 45,462 - 45,462 -

Proposed for approval at AGM

Final dividend for 2007: 5.0 sen
less 26% taxation on 1,518,949,379
ordinary shares 56,201 - - - -

56,201 45,462 42,652 45,462 42,652

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31
December 2007, of 5.0 sen less 26% taxation on 1,518,949,379 ordinary shares, amounting to a total
dividend of RM56,201,127 will be proposed for shareholders’ approval. The financial statements for the
current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders,
will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31
December 2008.

76 ANNUAL REPORT 2007

 11. Property, plant and equipment
Motor vehicle
furniture
Structures Lines and fittings,
Freehold and Plant and distribution Distribution Public equipment
land Buildings improvements machinery mains services Meters lighting and others Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2007

Cost / valuation
At 1 January 2007 - 377,108 434,372 2,810,785 1,338,992 467,804 67,427 84,564 286,621 5,867,673
Additions - 3,268 2,992 99,161 37,117 33,522 2,602 6,306 7,352 192,320
Disposals/written off - - - (3,004) (2,269) (466) (878) (3) (2,268) (8,888)
Reclassification 1,180 (1,180) - - - - - - - -

At 31 December 2007 1,180 379,196 437,364 2,906,942 1,373,840 500,860 69,151 90,867 291,705 6,051,105

Accumulated
depreciation

At 1 January 2007 - 148,778 140,495 1,211,476 547,750 209,421 34,325 31,575 208,959 2,532,779
Charge for the year - 13,421 6,773 133,234 53,305 19,368 3,796 3,525 21,626 255,048
Disposals/written off - - - (1,863) (1,308) (395) (866) (3) (1,946) (6,381)

At 31 December 2007 - 162,199 147,268 1,342,847 599,747 228,394 37,255 35,097 228,639 2,781,446

Net carrying amount

31 December 2007
NOTES TO THE FINANCIAL STATEMENTS

At 31 December 2007 1,180 216,997 290,096 1,564,095 774,093 272,466 31,896 55,770 63,066 3,269,659

Capital work-in-progress 1,072,324

4,341,983
SARAWAK ENERGY BERHAD

ANNUAL REPORT 2007

(Company No. 007199-D)

77
 78
11. Property, plant and equipment (Cont’d.)
Motor vehicle
furniture
Structures Lines and fittings,
and Plant and distribution Distribution Public equipment
Buildings improvements machinery mains services Meters lighting and others Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2006

ANNUAL REPORT 2007

SARAWAK ENERGY BERHAD

Cost / valuation
At 1 January 2006 370,884 434,372 2,730,799 1,307,102 450,376 63,700 80,767 262,714 5,700,714
Additions 6,243 - 103,000 32,206 17,428 3,985 3,797 27,277 193,936
Disposals (19) - (23,264) (316) - (248) - (3,130) (26,977)
Reclassification - - 250 - - (10) - (240) -
(Company No. 007199-D)

At 31 December 2006 377,108 434,372 2,810,785 1,338,992 467,804 67,427 84,564 286,621 5,867,673

Accumulated depreciation

At 1 January 2006 135,327 134,021 1,098,349 495,851 191,008 30,807 28,287 188,553 2,302,203
Depreciation charge for
31 December 2007

the year 13,454 6,474 130,787 52,055 18,413 3,765 3,288 23,177 251,413
Disposals/written off (3) - (17,691) (156) - (246) - (2,741) (20,837)
Reclassification - - 31 - - (1) - (30) -

At 31 December 2006 148,778 140,495 1,211,476 547,750 209,421 34,325 31,575 208,959 2,532,779

Net carrying amount

At 31 December 2006 228,330 293,877 1,599,309 791,242 258,383 33,102 52,989 77,662 3,334,894

Capital work-in-progress 430,146

3,765,040
NOTES TO THE FINANCIAL STATEMENTS
 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
11. Property, plant and equipment (Cont’d.)
(a) The valuation for 1993 was adopted based on professional appraisals by independent valuers. The
valuation was on the basis of open market value for land and buildings.

(b) Included in the capital work-in-progress are projects of a subsidiary completed up to 31 December
2007 but not capitalised amounted to RM7,144,304 (2006: RM6,918,475). The subsidiary is taking
concerted action to identify the total cost of these completed projects and take them to the respective
assets accounts.

(c) The following expenses incurred during the year have been included in capital work-in-progress of
another subsidiary:
Group
2007 2006
RM’000 RM’000

Interest expenses on bridging loan - 2,890

Profit payments on islamic debt securities 29,177 179
Employee benefits expense 951 142
Rental expenses 146 -

Motor vehicle,
furniture, fittings,
equipment
and others Total
RM’000 RM’000
Company

At 31 December 2007

Cost

At 1 January 2007 2,469 2,469

Additions 2,960 2,960
Disposals/written off (397) (397)

At 31 December 2007 5,032 5,032

Accumulated depreciation

At 1 January 2007 1,334 1,334

Depreciation charge for the year 400 400
Disposals/written off (177) (177)

At 31 December 2007 1,557 1,557

Net carrying amount

At 31 December 2007 3,475 3,475

ANNUAL REPORT 2007 79

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
11. Property, plant and equipment (Cont’d.)
Motor vehicle,
furniture, fittings,
equipment
and others Total
RM’000 RM’000
Company

At 31 December 2006

Cost

At 1 January 2006 2,551 2,551

Additions 196 196
Disposals/written off (278) (278)

At 31 December 2006 2,469 2,469

Accumulated depreciation

At 1 January 2006 1,175 1,175

Depreciation charge for the year 335 335
Disposals/written off (176) (176)

At 31 December 2006 1,334 1,334

Net carrying amount

At 31 December 2006 1,135 1,135

12. Prepaid land lease payments

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

At 1 January 131,524 132,028 19,334 19,684

Addition 1,609 2,684 - -
Amortisation for the year (Note 5) (3,211) (3,188) (350) (350)
Disposal (122) - - -

At 31 December 129,800 131,524 18,984 19,334

Analysed as:
Long term leasehold land 51,098 53,971 18,984 19,334
Short term leasehold land 78,702 77,553 - -

129,800 131,524 18,984 19,334

The title deeds of certain lands of certain subsidiaries are in the process of being registered in the name of
the subsidiaries.

80 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
13. Investment in subsidiaries

Company
2007 2006
RM’000 RM’000

Unquoted shares at cost 1,690,841 1,690,386

Less: Accumulated impairment losses (93,773) (93,773)
Equity contribution to subsidiary companies (a) 856 -

1,597,924 1,596,613

(a) The amount represents the fair value adjustment for ESOS granted to employees of the subsidiary
companies.

Details of the subsidiaries, all of which are incorporated in Malaysia and audited by Ernst & Young, Malaysia,
are shown below:
Proportion of
Name of Subsidiaries Principal activities ownership interest
2007 2006
% %

Subsidiaries of the Company:

Syarikat SESCO Berhad Generation,transmission,
distribution and sale of electricity 100.00 100.00

Sarawak Power Generation

Sdn. Bhd. Power generation 100.00 100.00
Sejingkat Power Corporation
Sdn. Bhd.* Power generation 100.00 100.00
Mukah Power Generation
Sdn. Bhd.# Power generation 100.00 100.00
Sarawak Hydro Power Generation
Sdn. Bhd. # ^ Power generation 100.00 -
Sarwaja Timur Sdn. Bhd.* Manufacture, fabrication,
galvanising and sale of steel 100.00 100.00
structures
Dasar Untung Sdn. Bhd. Investment holding 100.00 100.00
Dunlop Agro-Management
Sdn. Bhd. Investment holding 100.00 100.00
Dunlop Estates Holdings Sdn. Bhd. Investment holding 100.00 100.00
Dunlop Properties Sdn. Bhd. Investment holding 100.00 100.00
Naungan Pertiwi Sdn. Bhd.^ Dormant 100.00 -

Subsidiaries of Syarikat SESCO Berhad:

SESCO-EFACEC Sdn. Bhd. Manufacturing of transformers and
switch gears and contracting
electrical works 51.00 51.00
Sarawak Energy Services Provision of management services,
Sdn. Bhd. (formerly known as operation and maintenance of
PPLS Management Services power stations and contracting
Sdn. Bhd.) 100.00 100.00

ANNUAL REPORT 2007 81

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
13. Investment in subsidiaries (Cont’d.)

Proportion of
Name of Subsidiaries Principal activities ownership interest
2007 2006
% %

Subsidiaries of Syarikat SESCO Berhad

(Cont’d.):
Sesco Engineering Sdn. Bhd. Mechanical, electrical and electronic 70.00 70.00
engineering and contracting
PPLS Power Generation Sdn. Bhd. Power generation 100.00 100.00

Subsidiary of Sarwaja Timur Sdn. Bhd.:

Sarwaja Engineering & Construction Undertake engineering and
Sdn. Bhd. construction projects 100.00 100.00

Subsidiary of Sarwaja Engineering

& Construction Sdn. Bhd.:
Naungan Pertiwi Sdn. Bhd.^ Dormant - 60.00

* Through the equity interest held by the Company and its subsidiary, Syarikat SESCO Berhad.
# The subsidiaries have yet to commence operations during the financial year.
^ Refer to Note (i) and (ii) below

Acquisition of subsidiaries

(i) On 5 November 2007, the Company acquired 100.0% equity interest in Sarawak Hydro Power
Generation Sdn. Bhd., a company incorporated in Malaysia for a cash consideration of RM2.00.

(ii) On 5 December 2007, the Company acquired 60.0% equity interest in Naungan Pertiwi Sdn. Bhd.
from its wholly-owned subsidiary company, Sarwaja Engineering & Construction Sdn. Bhd. and
another 40.0% from a non-related party, Daya Perumahan Sdn. Bhd. for a total cash consideration of
RM454,800.

14. Investment in associates

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Quoted shares in Malaysia, at cost - 90,900 - -

Share of post-acquisition reserves - (32,141) - -
Effect of adopting FRS 3 - 901 - -

- 59,660 - -
Less: Accumulated impairment losses - (36,060) - -

- 23,600 - -

82 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
14. Investment in associates (Cont’d.)
Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Unquoted shares in Malaysia, at cost 17,822 17,622 9,035 8,435

Share of post-acquisition reserves 22,492 18,911 - -
Effect of adopting FRS 3 1,500 1,500 - -

41,814 38,033 9,035 8,435

Less: Accumulated impairment losses (6,535) (6,535) (8,435) (8,435)

35,279 31,498 600 -

Total 35,279 55,098 600 -

Market value of quoted shares - 34,810 - -

Details of the associates, all of which are incorporated in Malaysia, are shown below:

Proportion of
Name of Associates Principal activities ownership interest
2007 2006
% %

Associates of the Company:

Dectra Sdn. Bhd.+ Provision, integration and
maintenance of control
instrumentation and SCADA
systems 26.24 26.24
Sarawak Coal Resources Extraction and sales of coal
Sdn. Bhd. +* 30.00 -

Associate of Dasar Untung Sdn. Bhd.:

Encorp Berhad ** Investment holding - 26.40

Associate of Sejingkat
Power Corporation Sdn. Bhd.:
Gobel Industry Sdn. Bhd. + Coal mining, sales of coal, and
provision of transportation,
manpower supply and machinery
services 20.00 20.00

Associate of Dunlop Properties

Sdn. Bhd.:
Integrated Circuit Design Services Provision of integrated circuit design
Sdn. Bhd. + services, intellectual property
licensing and operation support 30.00 30.00

Associates of Syarikat SESCO Berhad:

Universal Cable (Sarawak) Manufacture of electrical wires and
Sdn. Bhd. cables, and sub-contract of power
and transmission related works and
services 35.00 35.00

ANNUAL REPORT 2007 83

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
14. Investment in associates (Cont’d.)

Proportion of
Name of Associates Principal activities ownership interest
2007 2006
% %

Associates of Syarikat SESCO Berhad

(Cont’d.):
Sejingkat Power Corporation Power generation
Sdn. Bhd. 49.18 49.18
Sarwaja Timur Sdn. Bhd. Manufacture, fabrication, galvanising
and sale of steel structure 22.29 22.29
Sarawak Gas Distribution Distribution of gas
Sdn. Bhd. 30.00 30.00
Sarawak Coal Resources Extraction and sales of coal
Sdn. Bhd. +* - 20.00

* During the financial year, the Company acquired 20% equity interest in Sarawak Coal Resources Sdn.
Bhd. from its wholly-owned subsidiary, Syarikat SESCO Berhad and another 10% from State Financial
Secretary, Sarawak, for a total cash consideration of RM600,000.
** During the financial year, the Company’s wholly-owned subsidiary, Dasar Untung Sdn. Bhd. disposed
off its entire equity interest in Encorp Berhad to a non-related party, Pegang Impian Holding Sdn. Bhd.
for a cash consideration of RM86.14 million.

All the companies are audited by Ernst & Young, Malaysia except for those marked + which are audited by
other firms.

The summarised financial information of the associates are as follows:

Group
2007 2006
RM’000 RM’000

Assets and liabilities

Current assets 105,991 273,412

Non-current assets 47,660 1,506,659

Total assets 153,651 1,780,071

Current liabilities (19,190) (196,177)

Non-current liabilities (11,237) (1,267,620)

Total liabilities (30,427) (1,463,797)

Results
Revenue 132,699 244,752
Profit/(loss) for the year 10,052 (111,976)

84 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
14. Investment in associates (Cont’d.)
The details of goodwill and negative goodwill included within the Group’s carrying amount of investment in
associates are as follows:
Negative
Goodwill Goodwill Total
RM’000 RM’000 RM’000

Cost
At 1 January 2006 2,236 (2,401) (165)
Effect of adopting FRS 3 - 2,401 2,401

At 31 December 2006 2,236 - 2,236

At 31 December 2007 2,236 - 2,236

Net carrying amount

At 31 December 2006 2,236 - 2,236

At 31 December 2007 2,236 - 2,236

15. Other investments

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Quoted shares in Malaysia, at cost - 3,869 - 3,869

Less: Accumulated impairment
losses - (1,183) - (1,183)

Total - 2,686 - 2,686

Market value of quoted shares - 3,922 - 3,922

16. Amounts due from/(to) subsidiaries

Company
2007 2006
RM’000 RM’000
(a) Amounts due from subsidiaries

Amounts due from subsidiaries

- interest-bearing 1,286 3,227
- interest-free 179,498 272,903

180,784 276,130
Less: Provision for doubtful debts (102,342) (166,902)

78,442 109,228
Amounts due after 1 year (76,208) (107,765)

Amounts due within 1 year 2,234 1,463

The amounts due from subsidiaries are unsecured and have no fixed terms of repayment. Interest is
charged on the interest-bearing portion at rates ranging from 5.0% to 6.4% (2006: 5.0% to 6.4%) per
annum.
Company
2007 2006
RM’000 RM’000

(b) Amount due to subsidiaries 652 -

The amount due to subsidiaries is unsecured, non-interest bearing and has no fixed term of repayment.

ANNUAL REPORT 2007 85

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
17. Property development costs
Group
2007 2006
RM’000 RM’000

Freehold land 5,372 5,372

Development cost 94,901 94,901

100,273 100,273

18. Inventories

Cost
Finished goods 2,282 5,438
Raw materials and consumables 246,536 264,185
Work-in-progress 5,775 2,948
Inventories in transit 160 328

254,753 272,899
Less: Provision for slow-moving inventories
and inventories obsolescence (4,992) (4,922)

249,761 267,977

19. Marketable securities

Quoted shares in Malaysia, at cost - 1,728

Less: Provision for diminution in value - (121)

- 1,607

Market value of quoted shares - 1,614

20. Trade and other receivables

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000
Current

Trade receivables
Trade receivables 155,183 150,625 - -
Less: Provision for doubtful debts (2,903) (3,070) - -

Trade receivables, net 152,280 147,555 - -

Other receivables
Deposits 347 358 94 145
Prepayments 5,850 1,509 29 6
Sundry receivables 114,429 132,802 41,617 90
Current tax assets 2,294 130 1,841 56

122,920 134,799 43,581 297

Less: Provision for doubtful debts (1,011) (1,011) - -

121,909 133,788 43,581 297

274,189 281,343 43,581 297

86 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
20. Trade and other receivables (Cont’d.)

Included in sundry receivables of the Group and of the Company are advances to the contractor for the
power plants undertaken by the Group amounting to RM60.2 million (2006: RM85.5 million) and RM39.7
million (2006: RMNil) respectively.

The Group’s normal trade credit term ranges from 14 days to 60 days. Other credit terms are assessed and
approved on a case-by-case basis.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor
or to groups of debtors.

21. Short-term deposits

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000
Deposits placed with:

- licensed banks 637,199 429,783 81,187 2,595

- discount houses - 2,249 - 2,249

637,199 432,032 81,187 4,844

Included in deposits placed with licensed banks are amounts pledged as security for the following:

Group
2007 2006
RM’000 RM’000

Islamic debt securities 81,942 19,286

The interest rates and the maturities of deposits at balance sheet date range from 2.35% to 4.55% (2006:
2.50% to 3.90%) per annum and on call to 365 days (2006: on call to 365 days) respectively.

22. Share capital

Group and Company

2007 2006
RM’000 RM’000
Issued and fully paid

At 1 January/31December
1,518,949 ordinary shares of RM1 each 1,518,949 1,518,949

Authorised

At 1 January/31 December:
2,900,000,000 ordinary shares of RM1 each 2,900,000 2,900,000
1,000,000,000 5-year 5% RCPS of RM0.10 each 100,000 100,000

3,000,000 3,000,000

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to
the Company’s residual assets.

ANNUAL REPORT 2007 87

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
23. Reserves
Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Non-distributable:

Capital reserves (a) 85,355 85,355 - -

Capital redemption reserve (b) 73,128 73,128 73,128 73,128
Share option reserve (c) 904 - 904 -

159,387 158,483 74,032 73,128

Distributable:

General reserves (a) 94,147 94,147 5,000 5,000

Retained earnings (d) 823,511 533,511 229,281 139,415

917,658 627,658 234,281 144,415

1,077,045 786,141 308,313 217,543

Movements in reserves are shown in the Statements of Changes in Equity.

The nature and purpose of each category of the reserves are as follows:

(a) Capital reserves and general reserves

These reserves include reserves created prior to year 2006 in accordance with Section 21(2)(a) of the
SESCo Ordinance, 1962 which had since been repealed in year 2005.

(b) Capital redemption reserve

This reserve represents cancellation of nominal value of ordinary shares arising from purchase of own
shares and cancellation of nominal value of RCPS redeemed in year 2005.

(c) Share option reserve

The share option reserve represents the equity-settled share options granted to employees. This
reserve is made up of the cumulative value of services received from employees recorded on grant of
share options.

(d) Retained earnings

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In
accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall
not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such
dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However,
there is a transitional period of six years, expiring on 31 December 2013, to allow companies to
pay franked dividends to their shareholders under limited circumstances. Companies also have an
irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system.
The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December
2007 in accordance with Section 39 of the Finance Act 2007.

The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during
the transitional period, the Company may utilise the credit in the 108 balance as at 31 December 2007
to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act
2007.

As at 31 December 2007, the Company has sufficient credit in the 108 balance to pay franked dividends
out of its entire retained earnings. In addition, the Company has tax exempt profits available for
distribution of approximately RM102 million (2006: RM102 million) as at 31 December 2007, subject
to agreement of the Inland Revenue Board.

88 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
24. Borrowings
Group
2007 2006
RM’000 RM’000
Long-term borrowings

Unsecured:
Islamic debt securities 220,000 275,000

Secured:
Islamic debt securities 795,000 356,000

1,015,000 631,000

Short-term borrowings

Unsecured:
Bankers’ acceptances and trust receipts 458 359
Islamic debt securities 55,000 55,000

55,458 55,359

Secured:
Bankers’ acceptances and trust receipts 2,226 505
Revolving credits 6,300 2,700
Islamic debt securities 26,000 25,000

34,526 28,205

89,984 83,564

Total borrowings

Bankers’ acceptances and trust receipts (a) 2,684 864

Revolving credits (a) 6,300 2,700
Islamic debt securities (b) 1,096,000 711,000

1,104,984 714,564

(a) Revolving credits, bankers’ acceptances and trust receipts

The revolving credits, bankers’acceptances and trust receipts are secured by way of a first fixed
charge over the land and buildings and by way of a debenture covering a first fixed and floating charge
over the entire assets of a subsidiary company.

The revolving credits, bankers’ acceptances and trust receipts bear interest at rates of 0.5% to 1.25%
(2006: 0.5% to 1.25%) per annum above the bankers’ base lending rates.

The amount pledged on the assets of the Group as securities for the borrowings is RM47.6 million
(2006: RM44.9 million).

ANNUAL REPORT 2007 89

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
24. Borrowings (Cont’d.)
(b) Islamic debt securities

The details of the islamic debt securities of the Group are as follows:

(i) 11-year RM605 million Al-Bai Bithaman Ajil Islamic Debt Securities (“BaIDS”)

The unsecured islamic debt securities were issued by a subsidiary at interest rates of 3.70% to
6.55% per annum and redeemable by eleven tranches over a period of eleven years commencing
2002 till 2012.

The BaIDS are redeemable as follows:

Group
2007 2006
RM’000 RM’000

Redeemable within 1 year 55,000 55,000

Between 1 and 2 years 55,000 55,000

Between 2 and 5 years 165,000 165,000
After 5 years - 55,000

Redeemable after 1 year 220,000 275,000

275,000 330,000

(ii) 6-year RM160 million and 9-year RM195 million BaIDS

The BaIDS of nominal amounts of RM160 million and RM195 million respectively were issued on
15 December 2000 by two subsidiaries of the Group to a licensed bank, the primary subscriber.
Each issue is secured by a security trust deed, a charge in escrow over certain landed property
or assignment of certain lease, as applicable, a first legal charge over designated accounts of
the subsidiaries and assignment of rights, titles and interests of the monies standing to the credit
of these accounts, assignment of rights over specified licence, agreements and insurances, and
a deed of debenture creating a first fixed and floating charge over present and future assets of
the subsidiaries.

The BaIDS are redeemable annually in stages over 6 and 9 years respectively commencing 12
months from the issue date. Profit is payable on the nominal amounts of the BaIDS in tranches
at rates of 4.5% to 7.2% per annum and 4.5% to 8.25% per annum respectively.

The BaIDS are redeemable as follows:

Group
2007 2006
RM’000 RM’000

Redeemable within 1 year 26,000 25,000

Between 1 and 2 years 30,000 26,000

Between 2 and 5 years - 30,000

Redeemable after 1 year 30,000 56,000

56,000 81,000

The 6-year RM160 million BaIDS was fully settled in year 2006.

The amount charged on the assets of the Group as security for the BaIDS in issue is RM276.0
million (2006: RM293.8 million).

90 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
24. Borrowings (Cont’d.)
(b) Islamic debt securities (Cont’d.)
(iii) 15-year RM215 million Sukuk Musharakah

This secured borrowing represents the Serial Sukuk Musharakah of up to an aggregate nominal
amount of RM215.0 million (“the Sukuk Musharakah”) issued under the Islamic principle of
Musharakah by a subsidiary to partly finance the development and construction of a coal-fired
power plant in Mukah which is undertaken by another subsidiary of the Group.

This borrowing shall be issued in three tranches over a period of eighteen (18) months to a
licensed bank, the primary subscriber. The first tranche of Sukuk Musharakah up to a nominal
amount of RM105.0 million had been issued in prior year.

The Sukuk Musharakah is secured by a security trust deed, the assignment of certain lease of
the subsidiary, a first legal charge over designated accounts of the subsidiary and assignment
of rights, titles and interests of the monies standing to the credit of these accounts, assignment
of rights over specified licence, agreements and insurances, and a deed of debenture creating
a fixed and floating charge over present and future assets of the subsidiary.

The subsidiary undertakes (and has complied with this undertaking) to maintain during the
tenure of the facilities Service Cover Ratio of not less than 1.25:1.

On 26 June 2007 and 26 December 2007, the second and third tranche of Sukuk Musharakah
up to a total nominal amount of RM110.0 million has been issued. The table below summarises
the profit payment rates and redemption dates of the Sukuk Musharakah as at 31 December
2007:

Tranche Nominal amount Profit payment rates Redemption dates

RM’ million % year
1 105.0 7.05 - 8.10 2016 - 2021
2 55.0 6.55 - 7.05 2012 - 2016
3 55.0 5.80 - 6.85 2009 - 2012

215.0

(iv) 15-year RM665 million Sukuk Mudharabah

This secured borrowing represents the Serial Sukuk Mudharabah of up to an aggregate nominal
amount of RM665.0 million (“the Sukuk Mudharabah”) issued under the Islamic principle of
Mudharabah by a subsidiary to partly finance its development and construction of a coal-fired
power plant in Mukah.

This borrowing shall be issued in five tranches over a period of two years to a licensed bank, the
primary subscriber. The first tranche of Sukuk Mudharabah amounting to a nominal amount of
RM195.0 million had been issued in prior year.

The Sukuk Mudharabah is secured by the following:

(i) Assignment of all rights, benefits and titles of the subsidiary under its project documents;

(ii) Memorandum of charge to be signed in escrow over the subsidiary’s land upon the issuance
of the land title to the subsidiary;

(iii) Memorandum of first legal charge over designated accounts of the subsidiary and
assignment of rights, titles and interests of the monies standing to the credit of these
accounts; and

(iv) First ranking debenture creating fixed and floating charge over present and future assets
of the subsidiary.

ANNUAL REPORT 2007 91

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
24. Borrowings (Cont’d.)
(b) Islamic debt securities (Cont’d.)
(iv) 15-year RM665 million Sukuk Mudharabah (Cont’d.)

The subsidiary undertakes (and has complied with this undertaking) to maintain during the
tenure of the facilities Service Cover Ratio of not less than 1.25:1.

On 27 June 2007 and 27 December 2007, the second and third tranche of Sukuk Mudharabah
amounting to a nominal amount of RM325.0 million and RM30.0 million respectively, has been
issued. The table below summarises the profit payment rates and redemption dates of the Sukuk
Mudharabah as at 31 December 2007:

Tranche Nominal amount Profit payment rates Redemption dates

RM’ million % year
1 195.0 8.10 – 8.60 2019 – 2021
2 325.0 7.15 – 8.25 2013 – 2018
3 30.0 7.40 – 7.50 2012

550.0

25. Deferred taxation

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

At 1 January 377,743 416,973 - 23,089

Recognised in the income statement
(Note 8) (2,039) (39,230) - (23,089)

At 31 December 375,704 377,743 - -

Presented after appropriate offsetting

as follows:

Deferred tax liabilities (i) 376,479 394,628 - -

Deferred tax assets (ii) (775) (16,885) - -

375,704 377,743 - -

92 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
25. Deferred taxation (Cont’d.)
(i) Deferred tax liabilities

The components and movements of deferred tax liabilities during the financial year are as follows:

Deferred tax arising from

Revaluation Accelerated Other
of land and capital timing
buildings allowances differences Total
RM’000 RM’000 RM’000 RM’000
Group

At 1 January 2007 14,371 380,257 - 394,628

Recognised in the income
statement 653 (18,802) - (18,149)

At 31 December 2007 15,024 361,455 - 376,479

At 1 January 2006 16,248 403,161 23,089 442,498

Recognised in the income
statement (1,877) (22,904) (23,089) (47,870)

At 31 December 2006 14,371 380,257 - 394,628

Deferred tax
arising from
other timing
differences
RM’000
Company

At 1 January 2007 -
Recognised in the income statement -

At 31 December 2007 -

At 1 January 2006 23,089

Recognised in the income statement (23,089)

At 31 December 2006 -

(ii) Deferred tax assets

Deferred tax arising from
Provision for Provision for
genset employee
maintenance benefits Total
RM’000 RM’000 RM’000
Group

At 1 January 2007 (16,079) (806) (16,885)

Recognised in the income statement 16,079 31 16,110

At 31 December 2007 - (775) (775)

At 1 January 2006 (24,657) (868) (25,525)

Recognised in the income statement 8,578 62 8,640

At 31 December 2006 (16,079) (806) (16,885)

ANNUAL REPORT 2007 93

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
26. Deferred income

Deferred income represents government grants and capital contributions by consumers towards the cost of
capital projects and is analysed as follows:

Group
2007 2006
RM’000 RM’000

At 1 January 1,411,125 1,342,033

Received during the year 109,784 134,847
Released to the income statement (68,650) (65,755)

At 31 December 1,452,259 1,411,125

Capital contributions and grants received from consumers and government during the year amounted to
RM109.8 million (2006: RM134.8 million) and an amount of RM68.7 million (2006: RM65.8 million) was
transferred to the income statement based on the lives of the related property, plant and equipment.

27. Retirement benefits

This represents provision for unfunded post-employment medical benefits.

28. Trade and other payables

Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000
Trade payables
Trade payables 120,782 113,186 - -

Other payables
Other payables 66,107 114,972 46 5
Accruals 91,328 25,198 1,231 804
Dividend payables 54 43 54 43

157,489 140,213 1,331 852

278,271 253,399 1,331 852

The normal trade credit term granted to the Group ranges from 14 days to 90 days.

Included in the Group’s other payables as at 31 December 2006 was a provision for genset maintenance
amounting to RM63.7 million.

29. Employee benefits - Employee Share Options Scheme

The Company’s Employee Share Options Scheme (“ESOS”) is governed by the by-laws approved by the
shareholders at an Extraordinary General Meeting held on 19 December 2007. The ESOS was implemented
on 21 December 2007 and is in force for a period of 10 years from the date of implementation.

The salient features of the ESOS are as follows:

(i) The Employee Share Options Scheme Committee (“Options Committee”) appointed by the Board of
Directors to administer the ESOS, may from time to time grant options to eligible employees of the
Group to subscribe for new ordinary shares of RM1 each in SEB.

(ii) Subject to the discretion of the Options Committee, any employee whose employment has been
confirmed and in employment of the Group for a period of at lease one (1) year of continuous service
prior to and up to the Offer Date and any executive directors holding office in a full-time executive
capacity of the Group, shall be eligible to participate in the ESOS.

94 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
29. Employee benefits - Employee Share Options Scheme (Cont’d.)

(iii) The total number of total shares to be issued under the ESOS shall not exceed in aggregate 10% of
the total issued and paid-up share capital of SEB at any point of time during the tenure of the ESOS
and out of which not more than 50% of the shares shall be allocated, in aggregate, to directors and
senior management of the Group. In addition, not more than 10% of the shares available under
the ESOS shall be allocated to any individual director or employee who, either singly or collectively
through his/her associates, holds 20% or more in the issued and paid-up capital of SEB.

(iv) The option price for each share shall be the weighted average of the market price as quoted in the
Daily Official List issued by Bursa Malaysia Securities Berhad for the 5 market days immediately
preceding the date on which the option is granted, the Options Committee shall so determine at their
discretion from time to time, a discount of not more than 10% or the par value of the shares of SEB of
RM1.00.

(v) The employees’ entitlements to the options are vested as soon as they become exercisable. The
options upon acceptance will entitle the employee to subscribe for the total options granted to him
over a period commencing from the date of the offer letter to 21 December 2017 subject to the
maximum percentage of option exercisable in a particular year. In the first year, it will be 20% of
the total options granted and subsequently, 10% from the second year to the ninth year. Where
the maximum percentage of options exercisable for a particular period is not fully exercised, the
percentage unexercised shall be carried forward to the next period subject to any retention percentage
imposed by the Options Committee. Any percentage that is rolled over to the next period shall not
subject to the maximum percentage for the next period.

(vi) All new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari
passu in all respects with the existing ordinary shares of SEB other than as may be specified in a
resolution approving the distribution of dividends prior to their exercise dates.

(vii) The persons to whom the options have been granted have no right to participate by virtue of the
options, in any share issue of any other company.

(viii) The ESOS will not have any immediate effect on the issued and paid-up share capital, the substantial
shareholding structure of the Company, earnings of the Group, the consolidated net asset per SEB
share and no material effect on the future dividends to be declared by the Company and gearing until
such time when the options granted under the ESOS are exercised.

The following table illustrates the movements in the number of share options during the year:
Outstanding Outstanding Exercisable
at at as at
1 January Granted Exercised Forfeited Expired 31 December 31 December
‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000
2007

2007 options - 103,484 - - - 103,484 20,697

(i) Details of share options outstanding at the end of the year:

Expiry date Exercise price Exercisable period

RM/share
21.12.2017 2.15 21.12.2007 to 21.12.2017

(ii) Share options exercised during the year

There was no share option exercised during the financial year.

ANNUAL REPORT 2007 95

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
29. Employee benefits - Employee Share Options Scheme (Cont’d.)
(iii) Fair value of share options granted during the year

The fair value of share options granted during the year was determined using the Binomial
model, taking into account the terms and conditions upon which the options were granted. The
fair value of share options measured at grant date and the assumptions are as follows:

2007

Fair value of share options at the grant dated (RM) 0.83

Share price at grant date (RM) 2.39
Exercise price (RM) 2.15
Expected volatility (%) 23.13
Option life (years) 10.00
Risk free interest rate (%) 3.88
Expected dividend yield (%) 1.71

30. Capital commitments

Group
2007 2006
RM’000 RM’000

Capital expenditure approved and contracted for 1,243,424 1,646,953

Capital expenditure approved and not contracted for 3,198,323 485,494

31. Controlling shareholder

The Directors regard State Financial Secretary, Sarawak, a statutory corporation established under the
State Financial Secretary (Incorporation) Ordinance of Sarawak, as the controlling shareholder of the
Company.

32. Segmental information

The Group principally involves in the generation, transmission, distribution and sale of electricity within the
same geographical region. Accordingly, no segmental information is presented.

33. Related party disclosures

(a) During the financial year, the Group and the Company entered into the following significant related
party transactions:
Company
2007 2006
RM’000 RM’000
(i) Transactions with subsidiaries:

Income
Interest income
Sejingkat Power Corporation Sdn. Bhd. 168 169
Sarwaja Timur Sdn. Bhd. 3 179

(ii) Transactions with associates:

Income
Rental of premises charged to Sarawak Coal
Resources Sdn. Bhd. 22 -

Expenditure
Purchases of coal from Sarawak Coal Resources
Sdn. Bhd. 18,573 -

96 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
33. Related party disclosures (Cont’d.)

(a) During the financial year, the Group and the Company entered into the following significant related
party transactions (Cont’d.):
Group
2007 2006
RM’000 RM’000
(iii) Transactions with associates of subsidiaries:

Income
Sales
Universal Cable (Sarawak) Sdn. Bhd. - 6
Gobel Industry Sdn. Bhd. 35 -

Expenditure
Purchases
Gobel Industry Sdn. Bhd. 2,743 431
Universal Cable (Sarawak) Sdn. Bhd. 22,174 47,116
Sarawak Coal Resources Sdn. Bhd. - 1,615
Rental paid to Gobel Industry Sdn. Bhd. 53 53

(iv) Transactions with a company in which a subsidiary

has significant influence:

Income
Interest charged to Genesis Force Sdn. Bhd. 80 90

Expenditure
Purchases of coal from Genesis Force Sdn. Bhd. 22,727 28,169

(v) Transaction with a company in

which a director has influence:

Expenditure
Rental of premises charged by
Custodev Dua Sdn. Bhd. 219 219

The directors are of the opinion that the above transactions were entered into in the normal course of
business and were transacted on normal commercial terms.

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the year was as
follows:
Group Company
2007 2006 2007 2006
RM’000 RM’000 RM’000 RM’000

Salaries, allowances and fees 4,461 3,871 1,445 816

Defined contribution plan 502 378 162 54
Other benefits 629 20 134 -
Share options granted under ESOS 79 - 31 -

5,671 4,269 1,772 870

Included in the total key management

personnel are:
Directors’ remuneration (Note 7) 2,279 1,038 1,058 336

ANNUAL REPORT 2007 97

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
33. Related party disclosures (Cont’d.)
(b) Compensation of key management personnel (Cont’d.)
Executive directors of the Group and other members of key management have been granted the
following number of options under the Employee Share Options Scheme (“ESOS”):

Group Company
2007 2006 2007 2006
’000 ’000 ’000 ’000

At 1 January - - - -
Granted 9,000 - 3,500 -

At 31 December 9,000 - 3,500 -

The share options were granted on the same terms and conditions as those offered to other employees
of the Group.

34. Financial Instruments

(a) Financial risk management objectives and policies

The Group’s financial risk management policy seeks to ensure that adequate financial resources are
available for the development of the Group’s businesses whilst managing its interest rate risks (both
fair value and cash flow), foreign currency risk and credit risk. The Board reviews and agrees policies
for managing each of these risks and they are summarised below. It is, and has been throughout
the year under review, the Group’s policy that no trading in derivative financial instruments shall be
undertaken.

(b) Interest rate risk

The Group’s primary interest rate risk arises primarily from interest-bearing assets and debts. The
investment in financial assets are not held for speculative purposes but have been mostly placed in
fixed deposits or occasionally, in loan stocks which yield better returns than cash at bank.

The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate
borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding
period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest
rate environment and achieve a certain level of protection against rate hikes.

The information on maturity dates and effective interest rates of financial assets and liabilities are
disclosed in their respective notes.

(c) Foreign currency risk

The Group is exposed to transactional currency risk primarily through purchases that are denominated
in currency other than Malaysian Ringgit. Foreign exchange exposures in transactional currencies
other than the entity’s functional currencies are kept to an acceptable level.

The Group does not use hedging activities to protect themselves against the volatility associated with
foreign currency transactions.

(d) Liquidity risk

The Group manages its debt maturity profile, operating cash flows and the availability of funding so as
to ensure that refinancing, repayment and funding needs are met. As part of its overall prudent liquidity
management, the Group maintains sufficient levels of cash or cash convertible investments to meet
its working capital requirements. In addition, the Group strives to maintain available banking facilities
at a reasonable level to its overall debt position. As far as possible, the Group raises committed
funding from both capital markets and financial institutions and balances its portfolio with some short-
term funding so as to achieve overall cost effectiveness.

98 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
34. Financial Instruments (Cont’d.)

(e) Credit risk

Credit risks, or the risk of counterparties defaulting, is controlled by the application of credit approvals,
limit and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the
Group’s associations to business partners with high creditworthiness. Trade receivables are monitored
on an ongoing basis via Group management reporting procedures.

The Group does not have any significant exposure to any individual customer or counterparty nor
does it have any major concentration of credit risk related to any financial instruments.

(f) Fair values

The fair values of the financial instruments are the amount at which the instruments could be exchanged
in a current transaction between willing parties, other than in a forced sale.

The carrying amounts of the financial assets and liabilities such as trade and other receivables, fixed
deposits, cash at bank, amount due to bankers, trade and other payables approximate their fair value
due to their relatively short-term maturity.

The carrying amounts of other investments are stated at cost less provision for diminution in value.
The fair values of these investments are expected to be at or above their carrying amounts.

35. Significant events

(a) On 7 March 2007, the Company announced that its wholly-owned subsidiary, Syarikat SESCO
Berhad, has been notified that the State Government of Sarawak has approved a new electricity tariff
structure for the State of Sarawak, effective on 1 April 2007;

(b) On 20 September 2007, the Group had completed the disposal of its investment of 26.4% equity
interest in Encorp Berhad for a total cash consideration of RM86,140,000;

(c) On 5 November 2007, the Company announced the acquisition of 100% equity interest in Sarawak
Hydro Power Generation Sdn. Bhd., a company incorporated in Malaysia, for a total cash consideration
of RM2.00;

(d) On 5 December 2007, the Company announced the acquisition of the remaining 40% equity interest
in Naungan Pertiwi Sdn. Bhd; and

(e) On 20 November 2007, the Company announced the Proposed Employees Share Option Scheme of
up to 10% of the issued and paid-up share capital of the Company (“Proposed ESOS”). The Proposed
ESOS was approved at the Extraordinary General Meeting held on 19 December 2007.

36. Subsequent events

(a) On 24 January 2008, the Company announced that its wholly-owned subsidiary, Sarawak Power
Generation Sdn. Bhd. had entered into a Memorandum of Understanding with Mitsubishi Corporation
for the project in Sarawak under the Scheme of Clean Development Mechanism of the Kyoto Protocol
to the United Nations Framework Convention on Climate Change.

(b) On 11 February 2008, the Company announced that it had entered into the following Memorandum of
Understanding (“MOU”):

(i) a MOU with Press Metal Berhad (“PMB”) to record the understanding of both parties on PMB’s
request for additional supply of 510MW to its Aluminium Smelting Plant in Mukah by July 2010
thus increasing the supply from 90MW in the Supply Agreement dated 11 July 2007 to 600MW
and the Company has, in principle agreed to the proposed increase provided certain provisions
as per MOU are achieved;

ANNUAL REPORT 2007 99

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTES TO THE FINANCIAL STATEMENTS

31 December 2007
36. Subsequent events (Cont’d.)

(ii) a MOU with a Consortium of bankers comprising of RHB Islamic Bank Berhad, Unicorn
International Islamic Bank Malaysia Berhad, Asian Finance Bank Berhad and Kuwait Finance
House Malaysia Berhad on the proposed study to be carried out by the Consortium on the
energy fund structure for the Group’s energy projects in Sarawak (excluding Murum Hydroelectric
Project) for the Company’s consideration within the given time-frame of three (3) months on a
non-committal basis;

(iii) a MOU with Cahya Mata Sarawak Berhad (“CMS”) and Rio Tinto Aluminium Limited (“RTA”) to
enter into negotiations in good faith for the Group to supply power (900MW to 1200MW) to the
CMS’s and RTA’s Aluminium Smelter through a Power Purchase Agreement and/or any other
definite agreement to be negotiated pursuant to the MOU by 31 August 2008 or such extended
date as the Parties may mutually agree;

(iv) a MOU with Sime Darby Berhad to co-operate and work together in the implementation of the
proposed 8 x 300MW Bakun Hydroelectric Plant (“Bakun HEP”) and the High Voltage Direct
Current Link Project which includes the dual submarine cables linking Bakun HEP to Peninsular
Malaysia; and

(v) a MOU with Tenaga Nasional Berhad to set out amongst other, the parties’ understanding and
commitment to collaborate on the analysis and development of energy options and resources
to support the objectives and obligations of both Parties, particularly relating to the potential
transmission of electricity to Peninsular Malaysia from hydro and/or coal power generated in
Sarawak.

100 ANNUAL REPORT 2007

 LAND BUILDINGS
Leasehold Freehold Total no. Total Area Total NBV No. of NBV
Nature of of Lots Units
Functional No. of Area NBV No. of Area NBV
Location Lots (sq. M) (RM’000) Lots (Sq. M) (RM’000)
Activity (Sq. M) (RM’000) (RM’000)

(1) (2) (3) (4) (5) (6) (1+4) (2+5) (3+6) (10) (11)
Power Sarawak 61 5,578,949 51,523 - - - 61 5,578,949 51,523 224 133,323
Generation
Power Sarawak 4 67,638 33,771 - - - 4 67,638 33,771 1 428
Transmission
Power Sarawak 205 305,827 18,235 - - - 205 305,827 18,235 77 23,604
Distribution
Other Support Sarawak 14 372,454 26,271 2 217 1,180 16 372,671 27,451 124 59,642
Services
Property Johore - - - 1 5,261 5,372 1 5,261 5,372 1 94,901
Development # Bahru

Total 284 6,324,867 129,800 3 5,478 6,552 287 6,330,345 136,352 427 311,898

# The land on which the 30-storey office stands was revalued in 1983 by a company which subsequently became a wholly-owned subsidiary of the
Company in 1991.

The 30-storey office tower together with its land was further revalued in year 2004.

Note: Included in the leasehold land of power generation was a piece of land (3,500,531 Sq. meter) in Mukah for the construction of 2x135 MW power plant.
As at 31.12.2007, the Group has captured the cost only up to RM2.5 million. The land premium payable to the Government of Sarawak has yet been
finalised.
as at 30 April 2008
LIST OF PROPERTIES
SARAWAK ENERGY BERHAD

ANNUAL REPORT 2007

(Company No. 007199-D)

101
 SARAWAK ENERGY BERHAD (Company No. 007199-D)

ANALYSIS OF SHAREHOLDINGS
as at 30 April 2008
Class of Share: Ordinary Share of RM1.00 each

Voting Right: 1 vote per share

No. of Holders Total Holdings

LARGEST SHAREHOLDERS 30 1,349,543,316 88.82

SIZE OF HOLDINGS
Less than 100 shares 217 10,310 0.00#
100-1,000 shares 3,083 2,909,747 0.19
1,001-10,000 shares 5,074 21,165,085 1.39
10,001-100,000 shares 1,016 29,214,891 1.92
100,001- Less than 5% of issued shares 237 478,570,819 31.50
5% and above of issued shares 1 987,537,427 64.99

TOTAL 9,628 1,519,408,279 100.00

#
less than 0.01%

SUBSTANTIAL SHAREHOLDER
as at 30 April 2008

Direct Indirect
Substantial Shareholder No. of Shares % No. of Shares %
State Financial Secretary, Sarawak 987,537,427 64.99 - -

102 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

LIST OF DIRECTORS’ INTERESTS

as at 30 April 2008
The Directors’ interest in shares and share option of the Company are as follows:

Director/Person Connected Ordinary shares of RM1.00 each Options over

in the Company ordinary shares of
RM1.00 each in the
Company
Direct % Indirect % No. of %&
Interest Interest options
1. Datuk Abdul Hamed Bin Sepawi 800,000* 0.05 - - 500,000 0.48
2. Tan Sri Datuk Amar Haji Abdul
Aziz Bin Dato Haji Husain 603,000# 0.04 - - 350,000 0.97
3. Datuk Amar Wilson Baya Dandot - - - - 350,000 0.34
4. Dato’ Haji Idris Bin Haji Buang - - - - 350,000 0.34
5. Datuk Fong Joo Chung - - - - 350,000 0.34
6. Dato’ Nordin Bin Baharuddin - - - - 350,000 0.34

* shares held through OSK Nominees (Tempatan) Sdn Bhd

# 503,000 shares are registered in his own name and 100,000 shares are held through CIMSEC Nominees
(Tempatan) Sdn Bhd
& Percentage is computed based on the total number of share options granted by the Company of
103,187,000

The Directors by virtue of their interest in shares in the Company are also deemed to have interest in shares in
all of its related corporations to the extent the Company has an interest.

ANNUAL REPORT 2007 103

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

LIST OF THIRTY LARGEST securities

account holders as at 30 April 2008
NAME SHAREHOLDINGS PERCENTAGE

STATE FINANCIAL SECRETARY SARAWAK 987,537,427 64.99

MULTI-PURPOSE HOLDINGS BERHAD 48,324,492 3.18

CIMSEC NOMINEES (TEMPATAN) SDN Bhd 43,586,600 2.87

EXEMPT AN FOR CMS ASSET MANAGEMENT SDN BHD

EMPLOYEES PROVIDENT FUND BOARD 38,758,900 2.55

LEMBAGA TABUNG HAJI 24,814,500 1.63

MAYBAN NOMINEES (TEMPATAN) SDN BHD 23,430,200 1.54

MAYBAN TRUSTEES BERHAD FOR PUBLIC ITTIKAL FUND
(N14011970240)

HSBC NOMINEES (ASING) SDN BHD 23,380,000 1.54

EXEMPT AN FOR MORGAN STANLEY & CO. INCORPORATED

MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 22,000,000 1.45

GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD
(PAR 1)

MAYBAN NOMINEES (TEMPATAN) SDN BHD 11,983,000 0.79

MAYBAN TRUSTEES BERHAD FOR PUBLIC REGULAR
SAVINGS FUND (N14011940100)

CITIGROUP NOMINEES (ASING) SDN BHD 11,776,997 0.78

EXEMPT AN FOR UBS AG SINGAPORE (FOREIGN)

AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD 10,695,900 0.70

PUBLIC GROWTH FUND

AMANAH RAYA NOMINESS (TEMPATAN) SDN BHD 9,512,500 0.63

PUBLIC SOUTH-EAST ASIA SELECT FUND

AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD 8,985,900 0.59

PUBLIC EQUITY FUND

MAGNUM 4D (SELANGOR) SDN. BHD. 8,000,000 0.53

AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD 7,292,500 0.48

PUBLIC FAR-EAST SELECT FUND

MAYBAN NOMINEES (TEMPATAN) SDN BHD 7,005,800 0.46

MAYBAN TRUSTEES BERHAD FOR PUBLIC AGGRESSIVE
GROWTH FUND (N14011940110)

AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD 6,355,400 0.42

PUBLIC ISLAMIC DIVIDEND FUND

HSBC NOMINEES (ASING) SDN BHD 5,750,000 0.38

BBH (LUX) SCA FOR FIDELITY FUNDS
- ASIA PACIFIC GROWTH & INCOME FUND

MAGNUM 4D (SELANGOR) SDN. BHD. 5,649,400 0.37

MAYBAN NOMINEES (TEMPATAN) SDN BHD 5,312,500 0.35

MAYBAN TRUSTEES BERHAD FOR PB ASEAN
DIVIDEND FUND (270334)

104 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

LIST OF THIRTY LARGEST securities

account holders as at 30 April 2008
NAME SHAREHOLDINGS PERCENTAGE

KUEH OOI VOON 4,985,000 0.33

MAYBAN NOMINEES (TEMPATAN) SDN BHD 4,803,600 0.32

ETIQA INSURANCE BERHAD (LIFE PAR FUND)

CITIGROUP NOMINEES (ASING) SDN BHD 4,746,700 0.31

CBNY FOR DFA EMERGING MARKETS FUND

CITIGROUP NOMINEES (ASING) SDN BHD 4,467,700 0.29

EXEMPT AN FOR AMERICAN INTERNATIONAL ASSURANCE
COMPANY LIMITED

AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD 4,376,000 0.29

PUBLIC SAVINGS FUND

MAYBAN NOMINEES (TEMPATAN) SDN BHD 4,200,600 0.28

MAYBANK TRUSTEES BERHAD FOR PUBLIC BALANCED FUND
(N14011950210)

AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD 3,503,200 0.23

PUBLIC ISLAMIC SECTOR SELECT FUND

AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD 2,787,100 0.18

PB ASIA EQUITY FUND

VALUECAP SDN BHD 2,771,400 0.18

MAYBAN NOMINEES (TEMPATAN) SDN BHD 2,750,000 0.18

ETIQA TAKAFUL BERHAD (FAMILY FUND)

ANNUAL REPORT 2007 105

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Forty-First Annual General Meeting of Sarawak Energy Berhad (“the
Company”) will be held at Ballroom III, Lobby Floor, Hilton Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching,
Sarawak on Friday, 27 June 2008 at 11.00 a.m. for the following purposes:

AGENDA

1. To receive the Audited Financial Statements for the financial year ended 31 December 2007 together with
the Report of the Directors and the Auditors thereon (Please refer to Note A).

2. To declare a final dividend of 5.0 sen gross per share less income tax, in respect of the financial year ended
31 December 2007.

3. To approve the payment of Directors’ fees of RM272,000.00 in respect of the financial year ended 31
December 2007 (2006:RM336,000.00).

4. To re-elect the following Directors retiring pursuant to Article 82 of the Company’s Articles of Association
and who, being eligible, have offered themselves for re-election:

(a) Datuk Abdul Hamed Bin Sepawi; and

(b) Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain.

5. To re-appoint Messrs Ernst & Young as Auditors of the Company for the ensuing year and to authorize the
Directors to fix their remuneration.

SPECIAL BUSINESS:

6. To consider and if deemed fit, to pass the following ordinary resolutions:

(a) Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965

“THAT, subject always to the Companies Act, 1965, the Articles of Association of the Company
and the approvals of the relevant governmental and/or regulatory authorities, the Directors be and
are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares
in the Company from time to time and upon such terms and conditions and for such purposes as
the Directors may deem fit provided that the aggregate number of shares issued pursuant to this
resolution does not exceed ten per centum (10%) of the total issued capital of the Company and that
such authority shall continue in force until the conclusion of the next Annual General Meeting of the
Company.”

(b) Proposed Renewal of and New Shareholders’ Mandates for Sarawak Energy Berhad and/or
its subsidiary companies to enter into Recurrent Related Party Transactions of a Revenue
or Trading Nature and Proposed Renewal of and New General Mandates for the Provision of
Financial Assistance involving the interests of the State Government of Sarawak (“SGS”)

“THAT, approval be and is hereby given to the Company and/or its subsidiary companies (“SEB
Group”) to enter into any of the categories of recurrent transactions of a revenue or trading nature with
persons connected with the SGS and to provide financial assistance to persons connected with the
SGS as set out in Sections 2.2.1 and 2.2.2 of the Circular to Shareholders dated 5 June 2008, which
are necessary for the day-to-day operations of the SEB Group subject further to the following:

(i) the transactions are in the ordinary course of business and are at arm’s length basis and on
normal commercial terms which are not more favourable to the related parties than those
generally available to the public and are not detrimental to the minority shareholders of the
Company; and

(ii) disclosure is made in the annual report a breakdown of the aggregate value of transactions
conducted pursuant to this proposal during the financial year where the aggregate value is equal
to or exceeds the applicable prescribed threshold under Paragraph 2.1 of the Practice Note
12/2001, and amongst others, based on the following information :-

106 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTICE OF ANNUAL GENERAL MEETING

• the type of the recurrent transactions made; and

• the names of the related parties involved in each type of the recurrent transactions made
and their relationship with the Company.

AND THAT such authority shall commence upon the passing of this ordinary resolution and shall
continue to be in force until:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time it will
lapse, unless the authority is renewed by a resolution passed at a general meeting;

(ii) the expiration of the period within which the next AGM after that date is required to be held in
accordance with the Companies Act, 1965 (but shall not extend to such extension as may be
allowed pursuant to Section 143(2) of the Companies Act, 1965); or

(iii) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general
meeting;

whichever is the earlier;

AND THAT the Directors and/or any one of them be and are/is hereby authorised to complete and do
all such acts and things as they/he may consider expedient or necessary to implement, finalise and
give full effect to the transactions contemplated and/or authorised by this ordinary resolution.”

(c) Proposed Renewal of and New Shareholders’ Mandates for Sarawak Energy Berhad and/or
its subsidiary companies to enter into Recurrent Related Party Transactions of a Revenue or
Trading Nature with certain Directors

“THAT, approval be and is hereby given to the Company and/or its subsidiary companies (“SEB
Group”) to enter into any of the categories of recurrent transactions of a revenue or trading nature
with certain Directors as set out in Sections 2.2.1 and 2.2.2 of the Circular to Shareholders dated 5
June 2008, which are necessary for the day-to-day operations of the SEB Group subject further to the
following:

(i) the transactions are in the ordinary course of business and are at arm’s length basis and on
normal commercial terms which are not more favourable to the related parties than those
generally available to the public and are not detrimental to the minority shareholders of the
Company; and

(ii) disclosure is made in the annual report a breakdown of the aggregate value of transactions
conducted pursuant to this proposal during the financial year where the aggregate value is equal
to or exceeds the applicable prescribed threshold under Paragraph 2.1 of the Practice Note
12/2001, and amongst others, based on the following information:

• the type of the recurrent transactions made; and

• the names of the related parties involved in each type of the recurrent transactions made
and their relationship with the Company.

AND THAT such authority shall commence upon the passing of this ordinary resolution and shall
continue to be in force until:

(i) the conclusion of the next AGM of the Company following the passing of this ordinary resolution,
at which time it will lapse, unless the authority is renewed by a resolution passed at a general
meeting;

(ii) the expiration of the period within which the next AGM after that date is required to be held in
accordance with the Companies Act, 1965 (but shall not extend to such extension as may be
allowed pursuant to Section 143(2) of the Companies Act, 1965); or

(iii) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general
meeting;

whichever is the earlier;

ANNUAL REPORT 2007 107

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTICE OF ANNUAL GENERAL MEETING

AND THAT the Directors and/or any one of them be and are/is hereby authorized to complete and do
all such acts and things as they/he may consider expedient or necessary to implement, finalise and
give full effect to the transactions contemplated and/or authorized by this ordinary resolution.”

Special Resolution:

7. Proposed amendments to the Company’s Articles of Association (“Proposed Amendments”)

“THAT, the Proposed Amendments as set out in Appendix II of the Circular to Shareholders dated 5 June
2008 be hereby approved;

AND THAT, the Board of Directors be and is hereby authorized to give full effect to the Proposed
Amendments.”

8. To transact any other business for which due notice shall have been given in accordance with the Articles
of Association of the Company and the Companies Act, 1965.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT subject to the approval of the shareholders at the Annual General
Meeting, a final dividend of 5.0 sen gross per share less income tax, will be paid on 31 July 2008 to shareholders
and/or depositors whose names appear in the Register of Members and Record of Depositors at the close of
business on 7 July 2008.

A Depositor shall qualify for entitlement only in respect of:

(a) shares deposited into the depositor’s securities account before 12:30 p.m. on 3 July 2008 (in respect of
shares which are exempted from mandatory deposit);

(b) shares transferred into the depositor’s securities account before 4:00 p.m. on 7 July 2008 in respect of
transfers; and

(c) shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the rules of
the Bursa Malaysia Securities Berhad.

Shareholders are reminded that pursuant to the Securities Industry (Central Depositories) (Amendment) (No.2)
Act, 1998 which came into effect on 1st November 1998, all shares not deposited with Bursa Malaysia Depository
Sdn Bhd by 12:30 p.m. on 1st December 1998 and not exempted from mandatory deposit, have been transferred
to the Minister of Finance (“MOF”). Accordingly, the dividend for such undeposited shares will be paid to MOF.

BY ORDER OF THE BOARD

AISAH EDEN
Company Secretary
Kuching

5 June 2008

Notes:

A. This Agenda item is meant for discussion only as the provision of Section 169 (1) of the Companies Act 1965 does not require formal
approval of the shareholders and hence, is not put forward for voting.

(1) A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965, shall
not apply to the Company.

(2) To be valid, the Form of Proxy, duly completed must be deposited at the registered office of the Company not less than 48 hours
before the time for holding the meeting.

(3) A member who is an authorized nominee may appoint one (1) proxy in respect of each securities account it holds with ordinary shares
of the Company standing to the credit of the said securities account.

108 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

NOTICE OF ANNUAL GENERAL MEETING

(4) A member other than an authorized nominee shall be entitled to appoint not more than two (2) proxies to attend and vote at the same
meeting.

(5) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his
holdings to be represented by each proxy.

(6) If the appointor is a corporation, the Form of Proxy must be executed under its common seal or under the hand of an officer or attorney
duly authorized.

EXPLANATORY NOTES ON SPECIAL BUSINESS

Agenda 6 (a) (Ordinary Resolution)

The ordinary resolution proposed under agenda 6 (a), if passed, will empower the Directors to allot and issue
shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company
for such purposes as they consider would be in the interest of the Company. This authority, unless revoked or
varied at a general meeting, will expire at the next Annual General Meeting of the Company.

Agenda 6 (b) (Ordinary Resolution)

The ordinary resolution proposed under agenda 6 (b), if passed, will enable SEB Group to enter into recurrent
transactions with persons connected with the State Government of Sarawak, which are necessary for the day-
to-day operations of SEB and/or its subsidiary companies in the ordinary course of business, at arm’s length
basis and on normal commercial terms which are not more favourable to the related parties than those generally
available to the public and are not detrimental to the minority shareholders of the Company.

Please refer to the Circular to Shareholders dated 5 June 2008 for further information.

Agenda 6 (c) (Ordinary Resolution)

The ordinary resolution proposed under agenda 6 (c), if passed, will enable SEB Group to enter into recurrent
transactions with certain Directors, which are necessary for the day-to-day operations of SEB and/or its subsidiary
companies in the ordinary course of business, at arm’s length basis and on normal commercial terms which are
not more favourable to the related parties than those generally available to the public and are not detrimental to
the minority shareholders of the Company.

Please refer to the Circular to Shareholders dated 5 June 2008 for further information.

Agenda 7 (Special Resolution)

The proposed amendments to the Company’s Articles of Association is to bring the Company’s Articles of
Association in line with the Listing Requirements of Bursa Malaysia Securities Berhad, to allow the Company
the flexibility to make payment of its dividend to its shareholders by direct credit into the shareholders’ account
or any other form of electronic transfer, which would reduce cost and increase efficiency of the Company and to
allow faster dissemination of audited financial statements to the public and to facilitate the issuance of financial
statements in CD-ROM form or in such other form of electronic media, if deemed appropriate.

Please refer to Appendix II of the Circular to Shareholders dated 5 June 2008 for further information.

ANNUAL REPORT 2007 109

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

This page is deliberately left blank

110 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

FORM OF PROXY

I/We (full name in block capitals) ................................................................................................................................................

identity card no./company registration no. ..................................................................................................................................
of..................................................................................................................................................................................................
being a member/members of SARAWAK ENERGY BERHAD, hereby appoint ........................................................................
.....................................................................................................................................................................................................
of..................................................................................................................................................................................................
or failing him/her..........................................................................................................................................................................
of ................................................................................................................................................................................................
or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us and on my/our behalf at the Forty-
First Annual General Meeting of the Company to be held at Ballroom III, Lobby Floor, Hilton Kuching, Jalan Tunku Abdul
Rahman, 93100 Kuching, Sarawak on Friday, 27 June 2008 at 11.00 a.m. and at any adjournment thereof.

My/Our proxy/proxies is/are to vote as indicated below:

NO. RESOLUTIONS *FOR *AGAINST
1 To declare a final dividend of 5.0 sen gross per share less income tax
2 To approve the payment of Directors’ fees of RM272,000.00
3 To re-elect the following Directors retiring in accordance with Article 82 of the Company’s
Articles of Association:
(a) Datuk Abdul Hamed Bin Sepawi
(b) Tan Sri Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain
4 To re-appoint Messrs. Ernst & Young as auditors of the Company
SPECIAL BUSINESS:
5 (a) Ordinary Resolution - Authority to allot and issue shares pursuant to Section 132D of
the Companies Act, 1965
(b) Ordinary Resolution - Proposed renewal of and new shareholders’ mandates for
recurrent related party transactions of a revenue or trading nature and proposed
renewal of and new general mandates for the provision of financial assistance
involving the interests of the State Government of Sarawak
(c) Ordinary Resolution - Proposed renewal of and new shareholders’ mandates for
recurrent related party transactions of a revenue or trading nature with certain
Directors
6 Special Resolution – Proposed amendments to the Articles of Association of the
Company
* Please indicate with an “X” how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain
at his/her discretion.

As witness my/our hand(s) this .......................... day of ....................................... 2008

........................................................................... ...........................................................................
Signature (s) of Shareholder Signature of Witness

........................................................................... ...........................................................................
Number of Shares held Name of Witness

……………………………………………………………
CDS Account Number

NOTES :

(1) A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act 1965 shall not apply to the Company.
(2) To be valid, this Form of Proxy, duly completed must be deposited at the registered office of the Company not less than 48 hours before the time for holding the
meeting.
(3) A member who is an authorised nominee may appoint one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing
to the credit of the said securities account.
(4) A member other than an authorised nominee shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting.
(5) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holding to be represented by each
proxy.
(6) If the appointor is a corporation, this Form of Proxy must be executed either under its Common Seal or under the hand of an officer or attorney duly authorised.
(7) Any alteration made in this form must be initialled.

ANNUAL REPORT 2007 111

 SARAWAK ENERGY BERHAD (Company No. 007199-D)

Please fold here

Stamp

The Company Secretary

SARAWAK ENERGY BERHAD
(Company No. 007199-D)

4th Floor, Wisma SESCO

Petra Jaya 93673
Kuching, Sarawak.

Please fold here

112 ANNUAL REPORT 2007

 SARAWAK ENERGY BERHAD
(Company No. 007199-D)
Annual Report 2007 Laporan Tahunan

SARAWAK ENERGY BERHAD (Company No. 007199-D)

SARAWAK ENERGY BERHAD (Company No. 007199-D)

4th Floor, Wisma SESCO, Petra Jaya, 93673 Kuching, SARAWAK.
Tel: 6082-441 188 Fax: 6082-313 588 website: www.sarawakenergy.com.my
Annual Report
Laporan Tahunan 2007