YTL CORPORATION

BERHAD 92647-H

the journey continues…

annual report 2005 the journey begins... OF RUNNINGTHEGOODRACE CELEBRATING 50YEARS otm Thelisting ceremony attheTokyo Stock Exchange Bottom: YTL’s YTL’s first fleet founder, Tan SriDato’ Seri(Dr) TiongLay(second Middle: Top: This year marksYTL’s 50 independence from Britishcolonial rule. before modernMalaysiaachieved herlong–awaited YTL hasitsroots inKualaSelangor1955,two years Tokyo Stock Exchange following on29February 1996. SecuritiesBerhadon3April1985,withlisting onthe YTL Corporation Berhadwaslisted ontheMainBoard ofBursa from right)ensuringqualitycontrol ateachconstruction site th Anniversary.

YTL CORPORATION BERHAD 05 CONSTRUCTION CONTRACTING 2 BERHAD 05 YTL CORPORATION 1950s & 1960s

YTL's experience developed rapidly in National Healthcare Network meeting the country's immediate construction needs, from military and In the late 1970s, YTL began constructing hospitals such as the police camps to town halls, and other General Hospital. The Group also constructed the Kuala public sector and institutional Terengganu General Hospital, the country's first turnkey buildings vital to give the newly–formed hospital contract. country its identity and direction. The Government instituted its Nucleus Concept in the 1980s for the development of a comprehensive rural health network throughout the peninsula, as an integral component of the nation's progress. YTL constructed 12 district hospitals throughout the country under this programme, and continued to utilise its expertise in this area to construct further hospitals such as the Seri Alam Medical Centre.

Educational Centres

In the 1970s, YTL began contributing to the Government's programme to eradicate illiteracy ad achieve educational excellence. Since then, the Group constructed numerous academic institutions ranging from science schools in Sungai Petani and Kangar, and teachers' and public servants' training centres, to university campuses in Kota Bharu and Sri Iskandar in Perak. 3 YTL CORPORATION BERHAD 05

Contribution to the Nation's Modernisation

The Group's established reputation for expertise, reliability and efficiency created a flood of demand for our services during the high–rise era of the 1980s and 1990s, when the country was gripped by the momentum to modernise.

Decades of experience enabled the Group to undertake construction on a vast array of projects, ranging from high profile commercial buildings in such as the Citibank and MAS headquarters, to town halls in Klang and dedicated terminal facilities in Labuan.

National Infrastructure Projects

In 1998, the Engineering Procurement and Construction contract for the Express Rail Link project connecting Kuala Lumpur to Kuala Lumpur International Airport was awarded to a consortium comprising Siemens AG, Siemens Electrical Engineering Sdn Bhd and YTL. YTL completed construction on schedule in 2002 and currently owns a 50% stake in Express Rail Link Sdn Bhd.

Construction is the core competency on which YTL's foundations were built and the Group is proud of its 50–year track record of contributing to the nation's infrastructure development needs. CEMENT MANUFACTURING 4 BERHAD 05 YTL CORPORATION 1997

YTL Cement Berhad Transferred to Main Board 1970s & 1980s On 26 June 1997, the listing of YTL YTL's cement operations commenced in the late 1970s primarily to support and Cement Berhad was transferred to the complement the construction division. The setting up of plants at our Main Board of Bursa Malaysia Securities construction sites improved efficiency and greatly reduced completion times for Berhad (Industrial Products sector). these projects. Directors of YTL Cement Berhad at the The division started with a single plant and only six trucks but the buoyant listing ceremony. From left: Dato’ Yeoh Seok construction industry fuelled rapid growth throughout the 1980s. Kian, Tan Sri Dato’ Seri (Dr) , Tan Sri Dato’ (Dr) Sock Ping, Joseph Benjamin Seaton, Dato’ Hj Mohd Zainal Abidin Bin Hj Abdul Kadir and YM Raja Dato’ Wahid Bin Raja Kamaralzaman.

1993

In 1993, YTL Cement Berhad (then known as Buildcon Berhad) was listed in the Industrial Products sector on the Second Board of Bursa Malaysia Securities Berhad.

Expansion continued with the addition of new batching plants throughout the country and the commencement of operations at two slag cement grinding plants in Westport in Port Klang and Pasir Gudang, Johor in 1996. 5 YTL CORPORATION BERHAD 05

1998

Official Launch of the Pahang Cement Plant

Operations commenced in 1998 at Pahang Cement Sdn Bhd's state of Tan Sri Dato' (Dr) Francis Yeoh Sock Ping with the art plant at Bukit Sagu, Tan Sri Dato' Sri Haji Mohd Khalil bin Yaakob, Pahang, undertaken as a joint former Menteri Besar of Pahang Darul Makmur, venture between YTL and the witnessing Tun Dr. Mahathir Mohamad signing Pahang State Government. With a the commemorative plaque. capacity of 1.2 million tonnes per annum, this is the only integrated cement plant in the eastern corridor of Peninsula Malaysia.

2003 2004

Acquisition of Pahang resulting in Pahang Acquisition of 64.84% Stake in Perak–Hanjoong Cement Sdn Bhd Cement Sdn Bhd becoming Simen Sdn Bhd a wholly–owned subsidiary On 12 September 2003, YTL of YTL Cement Berhad. In 2004, YTL Cement Berhad acquired a 64.84% equity interest Cement Berhad entered in Perak–Hanjoong Simen Sdn Bhd, comprising a 32.10% Pahang Deputy Menteri Besar, into an agreement with the stake acquired from Doosan Heavy Industries & Construction Dato' Abdul Rahim Abdul Majid Pahang State Government (left), exchanging documents with Co Ltd of Korea, and a 32.74% stake acquired from Danaharta to acquire the remaining Dato' Michael Yeoh Sock Siong. Managers Sdn. Bhd. With an annual capacity of 3.0 million 50% equity interest in Witnessing the exchange are Dato' metric tonnes per annum for clinker and 3.4 million metric Pahang Cement Sdn Bhd Seri Adnan bin Yaacob, Menteri tonnes per annum for cement, Perak–Hanjoong is the second which it did not already Besar for Pahang, Tan Sri Dato' largest integrated cement producer in the country. own. This acquisition was (Dr) Francis Yeoh Sock Ping completed in early 2004, and Dato' Yeoh Seok Kian. From left: Choi Ir–Ju, Chief Representative South–East Asian Countries for Doosan, Hasan Ameer Ali, Executive Director of Gopeng Berhad, Tan Sri Dato' (Dr) Francis Yeoh Sock Ping, Sung Hee Lee, Executive Vice President & Chief Financial Officer of Doosan and Dato' Michael Yeoh Sock Siong at the signing ceremony to acquire Doosan's 32.10% stake PROPERTY DEVELOPMENT

1990s

1980s Pantai Hillpark, Kuala Lumpur

6 BERHAD 05 YTL CORPORATION Pantai Hillpark, with its Mediterranean– Development of Affordable Housing inspired architecture, was the Group's most successful high–end development YTL's early experience in property development stemmed from our involvement throughout the 1990s. Phase I was in the country's social housing schemes under the Government's 'Special Low launched in 1991, with subsequent Cost Housing' programme in the mid 1980s. We began innovating new design Phases II, III and V following shortly concepts for spacious, high–quality, low–cost housing, generating favourable thereafter, all to overwhelming responses from buyers and housing authorities alike. demand. Phase IV of the project was launched in 2001 and development is still ongoing on this very successful and sought–after project.

Building a Strong Reputation and Brand Name

Throughout the 1980s and 1990s, YTL undertook a raft of property development projects such as Taman Pakatan Jaya, an integrated satellite town in Ipoh, Perak, Taman Cahaya Masai comprising low and medium cost apartments, houses and shop lots in Johor, and Taman Puncak Kinrara comprising low and 1999 medium cost apartments, and double storey and terrace houses situated in Puchong. Acquisition of Starhill and Lot 10 & Development of Bintang Walk

In February 1999, the Group completed its acquisition of the Lot 10 and Starhill shopping centres, together with the adjoining JW Marriott Hotel Kuala Lumpur. Shortly thereafter, YTL proceeded to transform the surrounding areas into a multi–million Ringgit, environmentally friendly shopping walkway known as 'Bintang Walk'. 7 YTL CORPORATION BERHAD 05

2002

Launch of the Sentul Masterplan

In April 2002, YTL unveiled the new Sentul Masterplan, the Group's vision for the urban renewal of Sentul, in the heart of Kuala Lumpur. To date, the Group has launched luxury condominiums in each of the two distinct quadrants that make up Sentul – The Maple at Sentul West and The Tamarind at Sentul East. Earlier developments include the 2004 Sang Suria condominiums, completed in 2002.

Sentul's unique features include the 35–acre Park at Lake Edge, Puchong Sentul West and the newly–completed Kuala Lumpur Performing Arts Centre. The Lake Edge development situated in Puchong was launched in April Tan Sri Dato' (Dr) Francis Yeoh Sock Ping and Dato' Yeoh 2004 and has seen excellent take–up Seok Kian at the launch of the Sentul Masterplan. rates. Lake Edge is a secure gated community with resort–like facilities, offering innovative new home designs such as Courtyard Homes, and Garden and Pavilion Terraces.

2005 2005

Lake Fields, Sungei Besi Starhill Gallery

In 2005, continuing from the success On 30 July 2005, YTL revealed a of Lake Edge, the Group introduced spectacular new identity for Starhill its newest residential development in Gallery as a celebration of the latest the Klang Valley, Lake Fields at and best from international fashion, Sungei Besi. Set on the fringes of a art, beauty, food and living. Starhill charming lake, Lake Fields homes Gallery through its unique association stand at 3 storeys tall, creating a with architects and designers, generous sense of space. delivers "A Gallery of Rich Experiences" through specially themed floors – Feast, Indulge, Adorn, Explore, Relish, Pamper, Muse. UTILITIES

1993 1997

Malaysia's First Independent Listing of YTL Power International Berhad Power Producer (IPP)

8 BERHAD 05 YTL CORPORATION On 23 May 1997, YTL Power International Berhad was listed on the Main Board of In April 1993, YTL was honoured to be Bursa Malaysia Securities Berhad (Infrastructure Project Companies sector). awarded the first IPP licence and six months later, raised a record RM2.66 Directors of YTL Power International Berhad at the listing ceremony witnessing Tan Sri Dato’ billion entirely from the domestic Seri (Dr) Yeoh Tiong Lay ring the gong. From left: Tuan Syed Abdullah Bin Syed Abd. Kadir, Dato’ Michael Yeoh Sock Siong, Dato’ Yeoh Soo Min, Dato’ (Dr) Yahya Bin Ismail, Dato’ Yeoh financial markets, the largest ever Seok Hong, Dato’ Lau Yin Pin, Tan Sri Dato’ (Dr) Francis Yeoh Sock Ping and the late YABM Ringgit–denominated financing Raja Tun Mohar bin Raja Badiozaman. package at the time.

Signing Ceremony for the RM2.66 billion credit facility.

2000

Acquisition of 33.5% Stake in 1995 ElectraNet Pty Ltd

Commissioning of the Power Plants In 2000, YTL Power International Berhad acquired a 33.5% equity On 16 September 1995 and 22 September 1995, respectively, YTL's natural gas–fired, interest in ElectraNet Pty Ltd which combined cycle power stations at Paka, Terengganu and Pasir Gudang, Johor, owns and operates the electricity were fully commissioned and commenced operations. Completed within 22 transmission grid for the state of months, the YTL power plants set a new world record for construction of South Australia under a 200–year combined cycle power stations. concession from the Australian government. From left: Dato' Mark Yeoh Seok Kah, Harald Burchardt, Managing Director of YTL Power Services Sdn Bhd, Tan Sri Dato' Seri (Dr) Yeoh Tiong Lay (in background), Tun Dr. Mahathir From left: Jim Miller, Macquarie Bank Mohamad and Tan Sri Dato' (Dr) Francis Yeoh Sock Ping at the official launch of the Paka Director of Project and Structured Finance, Power Station in October 1994. and Tan Sri Dato' (Dr) Francis Yeoh Sock Ping. 9 YTL CORPORATION BERHAD 05

2002

Acquisition of 100% Stake in Wessex Water Limited

In May 2002, YTL Power International Berhad acquired a 100% equity stake in Wessex Water Limited, one of the most efficient water and sewerage providers in the United Kingdom. Wessex Water supplies 1.2 million customers with water and 2.5 million customers with sewerage services daily.

From left: Dato' Mark Yeoh Seok Kah, Keith Harris, Finance Director of Wessex Water Services Limited, Colin Skellet, Chairman of Wessex Water Services Limited, Tan Sri Dato' Seri (Dr) Yeoh Tiong Lay, Tan Sri Dato' (Dr) Francis Yeoh Sock Ping and Dato' Yeoh Seok Hong at Wessex Water's headquarters in Bath in the United Kingdom.

2004 2001 Acquisition of 35% Stake in P.T. Jawa Power

Supplemental Power Purchase In December 2004, YTL Power International Berhad Agreement with Tenaga Nasional completed the acquisition of a 35% interest in P.T. Jawa Bhd (TNB) Power from P.T. Bumipertiwi Tatapradipta. P.T. Jawa Power owns a 1,220 MW power station located at the Paiton Power In January 2001, YTL Power Generation Complex in Indonesia, and is operated by P.T. International Berhad entered into a YTL Jawa Timur, the operations and maintenance company. three–year Supplemental Power Purchase Agreement with TNB for the From left: Ralf Lucht, former President Director of P.T. Jawa Power, supply of an additional 1,400 GWh of Colin Scoins, E.ON UK Head of Asian Asset Management, Tan Sri electricity per annum. Dato' (Dr) Francis Yeoh Sock Ping, Jongkie Sugiarto, President Director of P.T. Bumipertiwi Tatapradipta, and Dato' Yeoh Seok Hong at the completion ceremony. From left: Dato' Jamaludin Bin Mohd Jargis, YB Datuk Leo Moggie, Tan Sri Dato' (Dr) Francis Yeoh Sock Ping and Dato' Yeoh Seok Hong. HOTEL DEVELOPMENT & MANAGEMENT

1991 1990s

Eastern & Oriental Express Vistana Hotels in Kuala Lumpur, Penang & Kuantan

10 BERHAD 05 YTL CORPORATION In 1991, YTL entered into a Shareholders Agreement for the legendary Eastern & Oriental Express luxury train service to The Vistana Hotel in Kuala Lumpur Malaysia. Travelling between Singapore and Bangkok, the commenced operations in 1995. The inaugural service of the Eastern & Oriental Express took place concept was to offer a moderately on 19 September 1993. priced hotel catering to business travellers, but with the ability to provide Shareholders' Agreement Ceremony for the Eastern & Oriental Express in 1991 guests with a level of hospitality akin to international five–star hotels. This design proved successful and, in 1999, YTL opened two new hotels in the chain – the Vistana Kuantan and the Vistana Penang.

1986

Pangkor Laut Resort

Pangkor Laut Resort was opened in the mid-1980s and YTL has developed it into an internationally acclaimed resort, featuring Malaysian–style luxury villas that have been painstakingly created to blend in with and complement the natural environment of the island and its two million year old tropical rain forest. The resort's award–winning Spa Village was opened in 2002 and offers a range of Malay, Chinese, Indian and Thai spa treatments.

Luciano Pavarotti was overwhelmed by the beauty of the island. He proclaimed, "This place is enchanting. It is paradise. This morning when I woke up, I went out and I was moved, almost crying to see what beautiful things God has done". 11 YTL CORPORATION BERHAD 05

1999 1997 JW Marriott Hotel Kuala Lumpur The Ritz–Carlton, Kuala Lumpur The Ritz–Carlton style, blending old–world European elegance with YTL completed the acquisition of the fine Malaysian art and craftsmanship. JW Marriott Hotel Kuala Lumpur, In 1997, YTL opened the multi–award together with the adjoining Starhill and winning The Ritz–Carlton, Kuala Lot 10 shopping centres, from Taiping Lumpur, Malaysia's first luxury In 2005, the Group completed construction of the adjoining Consolidated Berhad (now known as boutique hotel. With its prime YTL Land & Development Berhad) in location within the heart of the complex, The Residences at The Ritz–Carlton, Kuala Lumpur, February 1999. Designed with the capital's Golden Triangle, the hotel business traveller in mind, the offers rooms and luxurious suites, all comprising luxurious serviced apartments. award–winning hotel is ideally located decorated in the timeless elegance of within the central business district of Kuala Lumpur, and together with the adjoining Starhill Gallery, anchors the popular Bintang Walk.

1999

Tanjong Jara Resort

In 1999, the Group took over the management and transformed Tanjong Jara Resort into an award–winning, deluxe five–star resort destination. Located along the pristine coastline of Terengganu, the resort's rooms are uniquely designed using local rich timbers and furnished to a high standard with luxurious fabrics and materials, assuring guests of an experience that is unmistakably Malay. IT & E–COMMERCE INITIATIVES

2002

Listing of YTL e–Solutions Berhad

On 2 July 2002, YTL e–Solutions Berhad was listed on the Malaysian Exchange for 12 BERHAD 05 YTL CORPORATION Automated Securities Dealing and Quotation (MESDAQ) of Bursa Malaysia Securities Berhad.

The Group's stable of incubatees has grown to include Extiva Communications Sdn Bhd, Infoscreen Networks Plc and it wholly–owned subsidiary, YTL Info Screen Sdn Bhd, Hipmobile (M) Sdn Bhd, Hipmobile Singapore Pte Ltd, Intellectual Learning Sdn Bhd and PropertyNetAsia (M) Sdn Bhd.

2003 2004 Acquisition of 70% Stake in Hipmobile (M) Sdn Bhd Listing of Infoscreen Networks Plc In June 2003, YTL e–Solutions Berhad acquired a 70% stake in Hipmobile (M) Sdn Bhd, a Multimedia Messaging Service (MMS) content provider. On 20 June 2005, Infoscreen Networks Plc was listed on the Alternative Investment Market (AIM) of the London Stock Exchange. Infoscreen Networks Plc is the holding company of YTL Info Screen Sdn Bhd, which is involved in creating, providing and advertising content, media, web media and up to date information via electronic media in Malaysia. CELEBRATING 50 YEARS 13 OF RUNNING THE GOOD RACE YTL CORPORATION BERHAD 05

The YTL Group remains committed to producing world class products and The YTL Group has grown into an integrated infrastructure developer with core services at competitive prices, as well as activities comprising power generation and transmission, water and sewerage its strategy of acquiring regulated assets services, property and hotel development, cement manufacturing, construction operating under long–term concessions, contracting and e–commerce initiatives. in Australia, the United Kingdom and, most recently, in Indonesia. The Group now has five companies listed on Bursa Malaysia Securities Berhad with a combined market capitalisation exceeding RM20 billion, namely, YTL Corporation This corporate philosophy and a Berhad, YTL Power International Berhad, YTL Cement Berhad, YTL Land & 50–year track record of dedication to Development Berhad and YTL e–Solutions Berhad. Foreign listings include YTL excellence have enabled the YTL Corporation Berhad's listing on the Tokyo Stock Exchange and YTL e–Solutions Group to build up a growing customer Berhad's subsidiary, Infoscreen Networks Plc, listed on the Alternative Investment base of more than 10 million Market (AIM) of the London Stock Exchange. customers globally. the journey continues... OWNING & MANAGING REGULATED ASSETS 1955 ~ 2005 BY TAN SRI DATO' (DR) FRANCIS YEOH SOCK PING

If there is an encapsulation of YTL's journey thus far, crisis of the early 1970s and the country's exposure it is an ancient Chinese adage that is still appropriate to the volatile global commodities markets of the today: “May you live in interesting times”. Whether that time meant skyrocketing prices of cement and steel saying is a blessing or a curse depends on whether hit every local contractor hard. YTL was no exception,

14 BERHAD 05 YTL CORPORATION we are prepared to meet the challenges of burdened with contracts priced before the effects of interesting times. a global oil crisis could be anticipated.

We prefer to call our times “exciting” times – filled The Group rallied in order to survive, streamlining with many opportunities we could never have operations and increasing efficiencies to complete imagined when YTL's journey began. YTL celebrates a every project, and the benefits of being able to remarkable milestone this year: 50 years of running mitigate the vagaries of our operating environments the good race. In 50 short years, the modernisation of became evident. Our early model for a regulated business and economic environments in Malaysia and business centred around ensuring a balance of an increasingly globalised economy have provided YTL promoting efficiencies and passing on gains to the opportunity to change the dynamics of both the consumers and subjecting the business to a Group and the spheres in which we operate. transparent regulatory process whilst also creating incentives to pursue cost-effectiveness, providing a YTL's development strategy of providing world–class fair return to the business over a period of time. products and services at competitive prices has been extremely successful, whether we apply it to It was during this time that YTL's housing construction, power generation, cement, hotels, development unit became active, amid the recession property or transportation enterprises. that gripped the country and escalated the need for low–cost housing in the mid–1980s. After initial projects consisting of walk–up flats, we streamlined YTL'S BEGINNINGS construction costs and designs to begin offering more spacious 3–bedroom houses, winning the hearts of The Group began life in Kuala as the Yeoh many consumers and this was made possible by our Tiong Lay Construction Company in 1955, coinciding model for regulated business – keeping land costs with the State of Emergency declared by the colonial low through joint ventures, profit sharing to cut costs British government to counter the threat from and reducing premiums and fees. This enabled us to communist insurgents. Against this backdrop, it was offer these units at prices as low as RM25,000 each, inevitable that YTL's foundations would be grounded which was well applauded by the market. in the construction of army barracks and munitions depots essential to ensure national security. It is these lessons and experiences that have enabled us to grow into the leading developer that is YTL Land Following independence in 1957, the Government & Development Berhad today, without forsaking the implemented new large–scale infrastructure projects – importance of providing high quality homes. This schools, hospitals and clinics, waterworks, power commitment to developing lifestyle concepts and stations, roads, bridges and other basic facilities. YTL's homes in aesthetically pleasing living environments initial involvement was predominantly in rural has continued to be the hallmark of YTL–branded development plans and the Group benefited from the properties, and has driven us to offer our consumers policies of the day which enabled entrepreneurs to thrive. features such as a gated park and landscaped gardens, all designed to enhance the quality of life. Throughout the 1960s, we continued to hone our construction knowledge, building defence and It was also in the 1980s that the Malaysian security installations for the Government, and Government introduced the privatisation concept, progressing to educational and agro–business enabling the private sector to drive the engine of construction and development during the 1970s. economic growth. For the first time, we could own and grow what we had built. In this new environment, motivated by new incentives, we introduced the EARLY EXPERIENCES IN REGULATED BUSINESS turnkey concept in Malaysia, using what we call infrastructure development. We designed, raised the In the 1970s, the local construction business was capital for, and built hospitals, including 12 nucleus developing into a highly specialised industry but hospitals, universities, residential properties, Malaysia's construction contractors were still heavily high–rise office buildings, industrial facilities and reliant on imported building materials as the local other infrastructure projects. industry had yet to develop sufficient capacity. The oil 15 YTL CORPORATION BERHAD 05

The Group utilised its intellectual assets to build up a Throughout that slump, YTL's resilience and tremendous reputation, pioneering innovations which intellectual assets ensured that the Group would became industry standards in the Malaysian continue not just to survive but to be profitable. construction industry such as slipforming in the corewall construction of high–rise buildings, steel scaffolding, skid mounted portable cabins, tower BUILD FOR LESS, SO YOU CAN BORROW LESS cranes and passenger hoists. The corollary to cost–effective financing is to build for less, so you can borrow less and, in the early 1990s, INNOVATING TO MANAGE THE COST OF CAPITAL when we sought the capital funding to build our two Malaysian power plants, we first utilised our In 1993, triggered by the Peninsula–wide black–outs of knowledge of construction to design a plant that cost 1992 that exposed the very real damage that an 40% less to build. Combining the benefits of unstable, insufficient electricity supply could do to a state–of–the–art technological partners and thriving economy, YTL was awarded the first innovative financing enabled us to build world class Independent Power Producer (IPP) licence. At this power stations that produce power that can be sold at stage, the Group was comfortable with the demands a very competitive price – 3.8 US cents per kilowatt of operating a regulated asset such as a power hour, amongst the cheapest in the world. station, having drawn on our experiences in working to meet the Government's standards and YTL was also the first Malaysian company to use requirements to build infrastructure and low cost non–recourse local financing for a high–speed rail housing at home. project. The Express Rail Link (ERL) connecting Kuala Lumpur with its international airport was completed Our predominant concern was that a project on such in 2002. Built with Siemens rail transportation a massive scale would have to be funded in Ringgit. technology, the ERL is virtually identical in design to The Group could not expose itself to foreign exchange the high–speed rail system in cities like London. risk on that scale and this necessitated the development of financing using local lenders and The difference, however, was that high–speed rail borrowing in local currencies. Raising RM2.66 billion systems were normally built at an approximate cost entirely from the domestic financial markets, YTL of RM157 million per kilometre. At RM35 million embarked on the construction of two combined–cycle per kilometre, YTL built the ERL at a fraction of the power plants. Work on these power stations in Paka, cost. The ERL also runs on a fare of about US$8 for Terengganu, and Pasir Gudang, Johor, began in a 28–minute, 57–kilometre journey, compared to November 1993 and both plants were successfully US$15 for a 15–minute trip on the British rail link. commissioned and commenced operations within 22 This is one of the cheapest fares–per–kilometre in months, a record–breaking feat. the world for rapid rail transit and, more importantly, Malaysians can afford to ride this train. This prescript has endured and rather than working in US dollars or Yen to finance Malaysian projects, for This strategy has pervaded every aspect of the Group's example, we have matched financing for projects in operations. When YTL developed The Ritz–Carlton, local currencies, dispelling entrenched myths that all Kuala Lumpur, for example, we used decades of companies in developing countries should be burdened construction expertise to cut the costs of construction, with increased costs of capital to balance risks deemed reducing the amount we were required to borrow and to be inherent in their operating environments. enabling us to control the cost of that capital. Our building costs ran to about a third of the per–room YTL was fortunate because this protective measure costs of other hotels. As a result, a room night in this borne from lessons learned decades earlier also luxury, five–star hotel runs to only about US$80 shielded the Group from the worst of the Asian compared to US$300 to US$400 or more in financial crisis that ravaged the region's financial comparable hotels in Europe or the U.S. The hotel has markets and banking sectors in 1997. Economies received a raft of international awards since around the region imploded, their currencies rapidly commencing operations, however, proving that losing value as the “Miracle of the Pacific Rim” came affordable pricing does not affect quality. Our Pangkor to an end, taking numerous companies with it. Laut Resort and JW Marriott Hotel in Kuala Lumpur However, as all YTL's local debt obligations were fixed are also based on this model. and funded in local currency, the Group was insulated from escalating interest rates and exchange rates that swung against the country seemingly overnight. 16 YTL CORPORATION BERHAD 05 OWNING & MANAGING REGULATED ASSETS 1955 ~ 2005

Sustaining this business model from the outset of a Rather than merely running operations to service the project has helped to ensure financial success long construction division and other in–house needs, the after the doors open for business. As a counterweight, Group focused on its obligation to create value for its international awards and certifications reflect our shareholders. This meant building up individual developments in every area have passed international businesses that could compete with and outperform scrutiny and maintained a level of excellence equal to peers in their industries, meeting intra–Group needs similar projects anywhere in the world. as a secondary consideration. Beginning with a market capitalisation of about RM100 million (US$26 million) in 1985, the Group has now grown to ACCESSING THE PUBLIC EQUITY CAPITAL encompass five listed entities with a combined market MARKETS capitalisation of over RM20 billion (US$5 billion).

YTL's listing strategy has from inception been grounded in the prerequisite that each business must COMPETING IN A GLOBALISED ECONOMY be a commercially viable entity in its own right before the Group would proceed to offer a stake in these The advent of globalisation, and its inherent businesses to potential shareholders. Accessing the diminishing effect on the importance of state public equity capital markets had to be a win–win boundaries, has enabled companies like YTL to situation in order for the markets to maintain their expand beyond the limits of national borders. belief in the YTL brand. Nowhere is this clearer than in our utilities division. In 2000, the Group ventured into Australia, acquiring YTL Corporation Berhad was listed in April 1985, a 33.5% stake in ElectraNet, which operates the followed in succession by YTL Cement Berhad, listed electricity transmission grid for the state of South in 1993, YTL Power International Berhad in 1997 and Australia under a 200–year concession. YTL e–Solutions Berhad in 2002. YTL also acquired the troubled Taiping Consolidated Berhad group in Our next investment was Wessex Water, which we 2001, restructured it and renamed it YTL Land & acquired in 2002. However, the Group bought Wessex Development Berhad. Water from Enron, following the latter's collapse at the end of 2001, which served to underscore that, The build–up of these businesses stemmed from YTL's despite the benefits, the hazards of globalisation core competency – construction contracting. Cement cannot be discounted. operations commenced in the late 1970s as a natural adjunct of the construction contracting business, Most recently, in 2004, the Group acquired a 35% eliminating the risks and vagaries of both supply and stake in Jawa Power in Indonesia, a 1,220 megawatt price of this essential building material. YTL Cement power plant that supplies power to the Java–Bali Berhad (or Buildcon Berhad, as it was then known) transmission grid, which currently handles began with one batching plant and 6 trucks and has, approximately 80% of Indonesia's energy consumption. today, grown into the second largest cement company The investment in Indonesia's power generation sector in this country, with a fleet of over 700 vehicles and was a natural extension for YTL, both as a sound capacity of 5.0 million tonnes per annum. regional investment and as an opportunity for growth of the Group's key utilities division. The Group's property development business began well before the acquisition of YTL Land & Development We are proud that the Group's expansion and success Berhad, and was, in fact, another natural extension of have enabled us to hire the best of the best to build the construction contracting business. Since then, the up a pool of intellectual capital that includes Group has continued to mature, offering more unique nationalities from around the world, from Malaysian and innovative design concepts such as Pantai to American, British, German, Australian and Hillpark, Lake Edge, Lake Fields and the urban Indonesian, generating employee productivity and profit regeneration of Sentul. rates comparative with the world's top companies.

With the emergence of the information technology (IT) era, companies ignored this sector at their own CAPITALISING ON UNLIKELY OPPORTUNITIES peril. Although the lessons of the dot com bubble were particularly harsh, the necessity of IT to a modern The last 50 years have demonstrated that recessions business was not shaken. YTL itself took a cautionary and economic downturns are the time to sit back, approach to its plans to list its IT business until the consolidate and regroup so that the Group is strong market stabilised and listing of YTL e–Solutions enough to weather the downswing and yet financially Berhad went ahead in 2002. able to capitalise on unlikely opportunities that may arise during this time. 17 YTL CORPORATION BERHAD 05

The acquisitions of Lot 10 Shopping Centre, the JW Our tenet of providing world class products and Marriott Hotel Kuala Lumpur and Starhill Gallery are services at very competitive prices is geared solely good illustrations of this as the three properties were towards keeping our products and services affordable put up for sale by Taiping Consolidated Berhad in to our global customer base of 10 million and growing. 1998 during the financial crisis. The availability of cash reserves to meet the discounted but still Strategies to keep costs down are not new. Henry substantial asking price enabled YTL to acquire three Ford discovered that if he mass–produced the same prime properties in the heart of the Golden Triangle. black Model–T, economies of scale would enable him to produce a car that, for the first time, average Yet this was just the beginning. When YTL acquired Americans could afford. In the 1960's, Japanese car these 3 properties in 1999, Bukit Bintang was slowly makers used the principles of Total Quality turning into a crime–infested, red light district. YTL Management and other quality processes to reduce sought government approval to create Bintang Walk their costs, and produce affordable, good quality to prevent further deterioration and the Government automobiles for the rest of the world. At YTL, three and City Hall responded quickly and positively, generations have constantly found new ways to enabling us to have the iconic Bintang Walk up and become more cost effective without sacrificing running in just 6 months. quality, so that our Asian customers can afford our products, whilst the Group remains profitable. The next step was duty–free retail, essential if Kuala Lumpur was to compete with retail havens such as As exemplified by the last half–century, YTL's interests Singapore and Hong Kong. In 1999, the only items that lie in the sustainability of the long term – long–term were duty–free were watches and cameras and we regulated assets, long–term concessions and noted these tenants were the only ones paying high long–term returns to our shareholders. Now, fifty rental rates and paying on time. Other retail goods years on, the Group must remain committed to the were attracting duties as high as 40%. Once again, we ideals on which YTL was founded and which, sought approval from the Government to reduce accumulated over 50 years, have brought us from our these duties and the Government responded in a humble beginnings in Kuala Selangor to an record 4 months. integrated infrastructure developer with operations on three continents and a combined market With branded goods free of duty, retailers from capitalisation in excess of RM20 billion. around the region and the world began to take notice and started to reinvest in retailing in Kuala Lumpur. We have only been able to reach these heights today Luxury brands are now willing to open their flagship by standing on the shoulders of my grandfather, Mr stores in Kuala Lumpur and, with the launch of the Yeoh Cheng Liam, and my father, our Executive newly refurbished Starhill Gallery earlier this year, Chairman, Tan Sri Dato' Seri (Dr) Yeoh Tiong Lay, and international brands have opened their stores all the members of my family, to whom I offer my exclusively in Starhill Gallery. most heartfelt gratitude. I must also thank the entire Board of Directors, both past and present, for their It is now these three properties, Lot 10, Starhill Gallery guidance and dedication to sustaining the Group's and the JW Marriott Hotel, that the Group intends to performance, as well as the staff of the YTL Group inject into the next phase of development and the and the Government and regulatory authorities for culmination of the Group's renaissance of Bintang Walk their unwavering support throughout the years. – the proposed Starhill real estate investment trust (REIT) that YTL embarked on this year. And, most of all, I thank God for all the blessings He has bestowed upon us. I also thank Him for His mercy and His grace in allowing us to walk in this journey of YTL IN 2005 light with Him.

The Group has grown and thrived by adhering to a The last 50 years have indeed been interesting times. business model that focuses on what is relevant; on For YTL, the journey continues. watching evolving economic trends and identifying long–term solutions to these conditions and, crucially, having the strength to ride out short term glitches in our operating environments without allowing these glitches to affect the integrity of the business.