YTL POWER INTERNATIONAL BERHAD BUILDING THE RIGHT THING The Journey Continues... Annual Report 2020 Annual Report 2020 CONTENTS CORPORATE REVIEW 02 Chairman’s Statement 04 Managing Director’s Review 07 Corporate Events 08 Management Discussion & Analysis 32 Managing Sustainability 36 Notice of Annual General Meeting 40 Statement Accompanying Notice of Annual General Meeting 41 Corporate Information 42 Profile of the Board of Directors 47 Profile of Key Senior Management 48 Statement of Directors’ Responsibilities 49 Audit Committee Report 52 Nominating Committee Statement 56 Corporate Governance Overview Statement 65 Statement on Risk Management & Internal Control 69 Analysis of Shareholdings 71 Statement of Directors’ Interests 74 List of Properties YTL POWER INTERNATIONAL BERHAD Company No. 199601034332 (406684-H) FINANCIAL STATEMENTS 76 Directors’ Report 86 Statement by Directors 86 Statutory Declaration 87 Independent Auditors’ Report 98 Income Statements 99 Statements of Comprehensive Income 100 Statements of Financial Position 102 Statements of Changes in Equity 105 Statements of Cash Flows 109 Notes to the Financial Statements • Form of Proxy YTL POWER INTERNATIONAL BERHAD Chairman’s Statement TAN SRI DATO’ (DR) FRANCIS YEOH SOCK PING KBE, CBE, FICE Executive Chairman The financial and operational performance of YTL Power International Berhad (“YTL Power”) and its subsidiaries (“Group”) for the year under review underscored the efficacy our strategy of investing in regulated utilities operating under long- term concessions. The benefits of these assets is that they are not subject to the vagaries of changing operating cycles and the year under review demonstrated the resilience of this business model. The outbreak of the COVID-19 pandemic has not spared any country or industry, necessitating the closure of borders, the imposition of movement control orders and restrictions on the provision of non-essential services across the globe. Our Group’s utility businesses, however, provide essential services and, as such, continued to operate throughout the current control periods. We continued to provide water and sewerage services in the United Kingdom, power generation, transmission and other multi-utility services in Malaysia, Singapore, Indonesia and Australia, and telecommunications across Malaysia, which included free data and learning resources to support students, teachers and schools through our Learn from Home initiative. 02 ANNUAL REPORT 2020 Chairman’s Statement The Malaysian economy registered respectively, in the first and second quarters of the lower gross domestic product (GDP) 2020 calendar year (sources: Ministry of Finance Malaysia, growth of 4.3% for the 2019 calendar Singapore Ministry of Trade & Industry, UK Office for National year compared to 4.7% in 2018, Statistics updates & reports). impacted by weaker external demand and investment activity, as well as YTL Power declared a distribution of 1 treasury share supply disruptions in the commodities for every 16 ordinary shares held as at the entitlement sector. The economy contracted by date of 28 October 2020, representing a yield of 0.7% in the first quarter and 17.1% approximately 6.3% based on the average share price in the second quarter of 2020, for the financial year of RM0.67 per share. YTL Power resulting from the concurrent supply has a consistent dividend track record and has declared and demand shocks due to weak dividends to shareholders for 23 consecutive years external conditions and the strict since listing on the Kuala Lumpur stock exchange measures implemented to contain the in 1997. COVID-19 pandemic (sources: Ministry of Finance Malaysia, Bank Negara Malaysia This year, the fortitude we have built up in the Group updates & reports). through our long-term strategy of investing in regulated assets that provide essential services such as water Meanwhile, in other major economies and electricity provided the necessary stability, as it in which the Group operates, the was designed to do, enabling us to continue to operate United Kingdom registered GDP growth profitably during even the most difficult times, albeit of approximately 1.5% during 2019, at lower levels, and cushioning our Group from the with the economy contracting by an impact of large scale external events. estimated 2.2% and 20.4%, respectively, in the first and second Financial stability and business continuity remain the quarters of the 2020 calendar year. driving factors of our Group’s strategy as we work to Singapore’s economy showed growth enhance our expertise across water, electricity, of 0.7% in 2019, followed by telecommunications and other key utilities in Malaysia, contractions of 0.3% and 13.2%, the UK, Singapore, Australia, Indonesia and Jordan. TAN SRI DATO’ (DR) FRANCIS YEOH SOCK PING PSM, KBE, CBE, FICE, SIMP, DPMS, DPMP, JMN, JP 03 YTL POWER INTERNATIONAL BERHAD Managing Director’s Review DATO’ YEOH SEOK HONG Managing Director OVERVIEW FOCUSING ON GROWTH YTL Power International Berhad (“YTL Power”) and its subsidiaries YTL Power took the prudent step of declaring a 1-for-16 share (“Group”) turned in a stable performance for the financial year dividend in respect of the financial year under review, representing ended 30 June 2020, recording revenue of RM10.6 billion, compared a yield of about 6.3%. This share dividend ensures that shareholders to RM11.7 billion for the last financial year ended 30 June 2019, are rewarded with healthy dividend yields, whilst enabling us to and profit before tax of RM425.2 million this year, compared to conserve cash to provide increased flexibility and options to optimally RM753.4 million last year. manage our existing businesses given the volatility of the current operating environment. The events of 2020 further validated YTL Power’s growth, development and operational strategies to date. Our businesses With cash reserves of RM8.9 billion as at 30 June 2020, should continued to operate during the most restrictive of social and viable new opportunities for expansion arise, our Group will be economic shut-downs, and were able to do so as the operational able to move forward and invest to further grow our businesses. procedures, technology and automation levels necessary to protect our manpower resources were already in place. In March this year, we entered into an agreement to acquire the power plant and associated assets of Tuaspring Pte Ltd in Singapore Whilst this year saw unprecedented interruptions in economic for a total purchase consideration of SGD331.45 million. The activity as countries across the globe implemented restrictions and combined cycle power plant was commissioned in 2016 and is one other measures to control the outbreak of the COVID-19 pandemic, of the most technologically advanced assets on Singapore’s power our businesses were largely unaffected as being utility in nature, generation grid. are essential services that operated throughout this disruption. 04 ANNUAL REPORT 2020 Managing Director’s Review Upon completion of this proposed acquisition, the plant will be In our telecommunications business, the national digital landscape integrated into our existing multi-utilities business, undertaken by saw highly positive developments with the launch in August 2020 wholly-owned YTL PowerSeraya Pte Limited in Singapore, enabling of Jalinan Digital Negara (JENDELA), a plan to upgrade Malaysia’s us to consolidate our power generation capacity. As Singapore’s digital communications infrastructure formulated by the Government electricity market continues to face an oversupply of generation and the Malaysian Communications and Multimedia Commission capacity, this acquisition should assist to partially redress the (MCMC). Initial phases of the plan focus on expanding 4G mobile situation whilst concurrently achieving synergies across our portfolio broadband coverage and increasing broadband speeds, with the of utility businesses. aim of shutting down 3G by 2021. Unlike other telcos who face sunsetting legacy 3G infrastructure, our pure-4G YES network is The Group’s water and sewerage segment, undertaken by wholly- ideally positioned to attract subscribers and deliver the future owned Wessex Water Limited in the United Kingdom (UK), performed envisioned under JENDELA. well, providing a business-as-usual service to all customers throughout the year. YTL Communications Sdn Bhd, our 60%-owned subsidiary undertaking our telecommunications business, was one of the first In addition to consistent earnings and dividend income, Wessex movers in rolling out a 4G network across the Peninsula. This Water has the added advantage of a regulated asset base (“RAB”) investment in building the network for the future bodes well for that increases in value over time, thereby generating returns to our ability to meet the country’s digital infrastructure needs going YTL Power in terms of both dividends and asset growth. forward. Over the past 5 years, for example, Wessex Water’s RAB value In the UK, we received the necessary planning approvals this year increased from RM15.1 billion (GBP2.8 billion) to RM17.8 billion to proceed with YTL Arena at the Brabazon Hangars in Bristol. YTL (GBP3.3 billion). As Wessex Water carries out its capital expenditure Arena will be a premier live entertainment venue with a 17,080 plans and invests further, its RAB value is expected to increase to capacity, making it the third largest arena in the UK after Manchester RM20.7 billion (GBP3.9 billion) by the end of the current regulatory and London and