annual report 2005

YTLCORPORATIONBERHAD 92647-H

the journey continues…

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This year marks YTL’s 50th Anniversary.

YTL Corporation Berhad was listed on the Main Board of BursaMalaysia Securities Berhad on 3 April 1985, with listing on theTokyo Stock Exchange following on 29 February 1996.

YTL has its roots in Kuala Selangor in 1955, two yearsbefore modern Malaysia achieved her long–awaitedindependence from British colonial rule.

Top: YTL’s first fleetMiddle: YTL’s founder, Tan Sri Dato’ Seri (Dr) Yeoh Tiong Lay (second

from right) ensuring quality control at each construction siteBottom: The listing ceremony at the Tokyo Stock Exchange

CELEBRATING 50 YEARSOF RUNNING THE GOOD RACE

the journey begins...

CONSTRUCTION CONTRACTING

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1950s & 1960s

YTL's experience developed rapidly inmeeting the country's immediateconstruction needs, from military andpolice camps to town halls, and otherpublic sector and institutionalbuildings vital to give the newly–formedcountry its identity and direction.

Educational Centres

In the 1970s, YTL began contributing to the Government's programme toeradicate illiteracy ad achieve educational excellence. Since then, the Groupconstructed numerous academic institutions ranging from science schools inSungai Petani and Kangar, and teachers' and public servants' training centres, touniversity campuses in Kota Bharu and Sri Iskandar in Perak.

National Healthcare Network

In the late 1970s, YTL began constructing hospitals such as theKlang General Hospital. The Group also constructed the KualaTerengganu General Hospital, the country's first turnkeyhospital contract.

The Government instituted its Nucleus Concept in the 1980s forthe development of a comprehensive rural health networkthroughout the peninsula, as an integral component of thenation's progress. YTL constructed 12 district hospitalsthroughout the country under this programme, and continued toutilise its expertise in this area to construct further hospitalssuch as the Seri Alam Medical Centre.

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Contribution to the Nation's Modernisation

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

Decades of experience enabled the Group to undertakeconstruction on a vast array of projects, ranging from highprofile commercial buildings in Kuala Lumpur such as theCitibank and MAS headquarters, to town halls in Klang anddedicated terminal facilities in Labuan.

National Infrastructure Projects

In 1998, the Engineering Procurement and Constructioncontract for the Express Rail Link project connecting KualaLumpur to Kuala Lumpur International Airport was awardedto a consortium comprising Siemens AG, Siemens ElectricalEngineering Sdn Bhd and YTL. YTL completed constructionon schedule in 2002 and currently owns a 50% stake inExpress Rail Link Sdn Bhd.

Construction is the core competency on which YTL'sfoundations were built and the Group is proud of its 50–yeartrack record of contributing to the nation's infrastructuredevelopment needs.

CEMENT MANUFACTURING

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1997

YTL Cement Berhad Transferred toMain Board

On 26 June 1997, the listing of YTLCement Berhad was transferred to theMain Board of Bursa Malaysia SecuritiesBerhad (Industrial Products sector).

Directors of YTL Cement Berhad at thelisting ceremony. From left: Dato’ Yeoh SeokKian, Tan Sri Dato’ Seri (Dr) Yeoh Tiong Lay,Tan Sri Dato’ (Dr) Francis Yeoh Sock Ping,Joseph Benjamin Seaton, Dato’ Hj MohdZainal Abidin Bin Hj Abdul Kadir and YMRaja Dato’ Wahid Bin Raja Kamaralzaman.

1993

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

Expansion continued with the addition of new batchingplants throughout the country and the commencement ofoperations at two slag cement grinding plants in Westport inPort Klang and Pasir Gudang, Johor in 1996.

1970s & 1980s

YTL's cement operations commenced in the late 1970s primarily to support andcomplement the construction division. The setting up of plants at ourconstruction sites improved efficiency and greatly reduced completion times forthese projects.

The division started with a single plant and only six trucks but the buoyantconstruction industry fuelled rapid growth throughout the 1980s.

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1998

Official Launch of the PahangCement Plant

Operations commenced in 1998 atPahang Cement Sdn Bhd's state ofthe art p lant at Buki t Sagu,Pahang, undertaken as a jo intventure between YTL and thePahang State Government. With acapacity of 1.2 million tonnes perannum, this is the only integratedcement plant in the easterncorridor of Peninsula Malaysia.

Tan Sri Dato' (Dr) Francis Yeoh Sock Ping withTan Sri Dato' Sri Haji Mohd Khalil bin Yaakob,former Menteri Besar of Pahang Darul Makmur,witnessing Tun Dr. Mahathir Mohamad signingthe commemorative plaque.

2004

Acquisition of 64.84% Stake in Perak–HanjoongSimen Sdn Bhd

In 2004, YTL Cement Berhad acquired a 64.84% equity interestin Perak–Hanjoong Simen Sdn Bhd, comprising a 32.10%stake acquired from Doosan Heavy Industries & ConstructionCo Ltd of Korea, and a 32.74% stake acquired from DanahartaManagers Sdn. Bhd. With an annual capacity of 3.0 millionmetric tonnes per annum for clinker and 3.4 million metrictonnes per annum for cement, Perak–Hanjoong is the secondlargest integrated cement producer in the country.

From left: Choi Ir–Ju, Chief Representative South–East Asian Countriesfor Doosan, Hasan Ameer Ali, Executive Director of Gopeng Berhad,Tan Sri Dato' (Dr) Francis Yeoh Sock Ping, Sung Hee Lee, Executive VicePresident & Chief Financial Officer of Doosan and Dato' Michael YeohSock Siong at the signing ceremony to acquire Doosan's 32.10% stake

2003

Acquisition of PahangCement Sdn Bhd

On 12 September 2003, YTLCement Berhad enteredinto an agreement with thePahang State Governmentto acquire the remaining50% equity interest inPahang Cement Sdn Bhdwhich it did not alreadyown. This acquisition wascompleted in early 2004,

resulting in PahangCement Sdn Bhd becominga wholly–owned subsidiaryof YTL Cement Berhad.

Pahang Deputy Menteri Besar,Dato' Abdul Rahim Abdul Majid(left), exchanging documents withDato' Michael Yeoh Sock Siong.Witnessing the exchange are Dato'Seri Adnan bin Yaacob, MenteriBesar for Pahang, Tan Sri Dato'(Dr) Francis Yeoh Sock Pingand Dato' Yeoh Seok Kian.

PROPERTY DEVELOPMENT

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1980s

Development of Affordable Housing

YTL's early experience in property development stemmed from our involvementin the country's social housing schemes under the Government's 'Special LowCost Housing' programme in the mid 1980s. We began innovating new designconcepts for spacious, high–quality, low–cost housing, generating favourableresponses from buyers and housing authorities alike.

1999

Acquisition of Starhill and Lot 10& Development of Bintang Walk

In February 1999, the Groupcompleted its acquisition of the Lot 10and Starhill shopping centres,together with the adjoining JW MarriottHotel Kuala Lumpur. Shortlythereafter, YTL proceeded totransform the surrounding areas intoa multi–million Ringgit, environmentallyfriendly shopping walkway known as'Bintang Walk'.

Building a Strong Reputation and Brand Name

Throughout the 1980s and 1990s, YTL undertook a raft ofproperty development projects such as Taman Pakatan Jaya, anintegrated satellite town in Ipoh, Perak, Taman Cahaya Masai comprising low and medium cost apartments, houses and shoplots in Johor, and Taman Puncak Kinrara comprising low andmedium cost apartments, and double storey and terrace housessituated in Puchong.

1990s

Pantai Hillpark, Kuala Lumpur

Pantai Hillpark, with its Mediterranean–inspired architecture, was the Group'smost successful high–end developmentthroughout the 1990s. Phase I waslaunched in 1991, with subsequentPhases II, III and V following shortlythereafter, all to overwhelmingdemand. Phase IV of the project waslaunched in 2001 and development isstill ongoing on this very successfuland sought–after project.

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2002

Launch of the Sentul Masterplan

In April 2002, YTL unveiled the new SentulMasterplan, the Group's vision for the urbanrenewal of Sentul, in the heart of Kuala Lumpur. Todate, the Group has launched luxury condominiumsin each of the two distinct quadrants that make upSentul – The Maple at Sentul West and The Tamarindat Sentul East. Earlier developments include theSang Suria condominiums, completed in 2002.

Sentul's unique features include the 35–acre Park atSentul West and the newly–completed Kuala LumpurPerforming Arts Centre.

Tan Sri Dato' (Dr) Francis Yeoh Sock Ping and Dato' YeohSeok Kian at the launch of the Sentul Masterplan.

2005

Lake Fields, Sungei Besi

In 2005, continuing from the successof Lake Edge, the Group introducedits newest residential development inthe Klang Valley, Lake Fields atSungei Besi. Set on the fringes of acharming lake, Lake Fields homesstand at 3 storeys tall, creating agenerous sense of space.

2005

Starhill Gallery

On 30 July 2005, YTL revealed aspectacular new identity for StarhillGallery as a celebration of the latestand best from international fashion,art, beauty, food and living. StarhillGallery through its unique associationwith architects and designers,delivers "A Gallery of RichExperiences" through speciallythemed floors – Feast, Indulge, Adorn,Explore, Relish, Pamper, Muse.

2004

Lake Edge, Puchong

The Lake Edge development situatedin Puchong was launched in April2004 and has seen excellent take–uprates. Lake Edge is a secure gatedcommunity with resort–like facilities,offering innovative new home designssuch as Courtyard Homes, andGarden and Pavilion Terraces.

UTILITIES

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1993

Malaysia's First IndependentPower Producer (IPP)

In April 1993, YTL was honoured to beawarded the first IPP licence and sixmonths later, raised a record RM2.66billion entirely from the domesticfinancial markets, the largest everRinggit–denominated financingpackage at the time.

Signing Ceremony for the RM2.66 billioncredit facility.

1995

Commissioning of the Power Plants

On 16 September 1995 and 22 September 1995, respectively, YTL's natural gas–fired,combined cycle power stations at Paka, Terengganu and Pasir Gudang, Johor,were fully commissioned and commenced operations. Completed within 22months, the YTL power plants set a new world record for construction ofcombined cycle power stations.

From left: Dato' Mark Yeoh Seok Kah, Harald Burchardt, Managing Director of YTL PowerServices Sdn Bhd, Tan Sri Dato' Seri (Dr) Yeoh Tiong Lay (in background), Tun Dr. MahathirMohamad and Tan Sri Dato' (Dr) Francis Yeoh Sock Ping at the official launch of the PakaPower Station in October 1994.

2000

Acquisition of 33.5% Stake inElectraNet Pty Ltd

In 2000, YTL Power InternationalBerhad acquired a 33.5% equityinterest in ElectraNet Pty Ltd whichowns and operates the electricitytransmission grid for the state ofSouth Australia under a 200–yearconcession from the Australiangovernment.

From left: Jim Miller, Macquarie BankDirector of Project and Structured Finance,and Tan Sri Dato' (Dr) Francis Yeoh Sock Ping.

1997

Listing of YTL Power International Berhad

On 23 May 1997, YTL Power International Berhad was listed on the Main Board ofBursa Malaysia Securities Berhad (Infrastructure Project Companies sector).

Directors of YTL Power International Berhad at the listing ceremony witnessing Tan Sri Dato’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’ YeohSeok Hong, Dato’ Lau Yin Pin, Tan Sri Dato’ (Dr) Francis Yeoh Sock Ping and the late YABMRaja Tun Mohar bin Raja Badiozaman.

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2004

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

In December 2004, YTL Power International Berhadcompleted the acquisition of a 35% interest in P.T. JawaPower from P.T. Bumipertiwi Tatapradipta. P.T. Jawa Powerowns a 1,220 MW power station located at the Paiton PowerGeneration Complex in Indonesia, and is operated by P.T.YTL Jawa Timur, the operations and maintenance company.

From left: Ralf Lucht, former President Director of P.T. Jawa Power,Colin Scoins, E.ON UK Head of Asian Asset Management, Tan SriDato' (Dr) Francis Yeoh Sock Ping, Jongkie Sugiarto, PresidentDirector of P.T. Bumipertiwi Tatapradipta, and Dato' Yeoh Seok Hongat the completion ceremony.

2002

Acquisition of 100% Stake in Wessex Water Limited

In May 2002, YTL Power International Berhad acquired a100% equity stake in Wessex Water Limited, one of the mostefficient water and sewerage providers in the UnitedKingdom. Wessex Water supplies 1.2 million customers withwater and 2.5 million customers with sewerage services daily.

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

2001

Supplemental Power PurchaseAgreement with Tenaga NasionalBhd (TNB)

In January 2001, YTL PowerInternational Berhad entered into athree–year Supplemental PowerPurchase Agreement with TNB for thesupply of an additional 1,400 GWh ofelectricity per annum.

From left: Dato' Jamaludin Bin Mohd Jargis, YBDatuk Leo Moggie, Tan Sri Dato' (Dr) FrancisYeoh Sock Ping and Dato' Yeoh Seok Hong.

HOTEL DEVELOPMENT & MANAGEMENT

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1986

Pangkor Laut Resort

Pangkor Laut Resort was opened in the mid-1980s and YTL has developed it intoan internationally acclaimed resort, featuring Malaysian–style luxury villas thathave been painstakingly created to blend in with and complement the naturalenvironment of the island and its two million year old tropical rain forest. Theresort's award–winning Spa Village was opened in 2002 and offers a range ofMalay, 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 outand I was moved, almost crying to see what beautiful things God has done".

1990s

Vistana Hotels in Kuala Lumpur,Penang & Kuantan

The Vistana Hotel in Kuala Lumpurcommenced operations in 1995. Theconcept was to offer a moderatelypriced hotel catering to businesstravellers, but with the ability to provideguests with a level of hospitality akin tointernational five–star hotels. Thisdesign proved successful and, in 1999,YTL opened two new hotels in thechain – the Vistana Kuantan and theVistana Penang.

1991

Eastern & Oriental Express

In 1991, YTL entered into a Shareholders Agreement for thelegendary Eastern & Oriental Express luxury train service toMalaysia. Travelling between Singapore and Bangkok, theinaugural service of the Eastern & Oriental Express took placeon 19 September 1993.

Shareholders' Agreement Ceremony for the Eastern & Oriental Express in 1991

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1997

The Ritz–Carlton, Kuala Lumpur

In 1997, YTL opened the multi–awardwinning The Ritz–Carlton, KualaLumpur, Malaysia's first luxuryboutique hotel. With its primelocation within the heart of thecapital's Golden Triangle, the hoteloffers rooms and luxurious suites, alldecorated in the timeless elegance of

The Ritz–Carlton style, blendingold–world European elegance withfine Malaysian art and craftsmanship.

In 2005, the Group completedconstruction of the adjoiningcomplex, The Residences at TheRitz–Carlton, Kuala Lumpur,comprising luxurious servicedapartments.

1999

Tanjong Jara Resort

In 1999, the Group took over the management and transformed Tanjong JaraResort into an award–winning, deluxe five–star resort destination. Located alongthe pristine coastline of Terengganu, the resort's rooms are uniquely designedusing local rich timbers and furnished to a high standard with luxurious fabricsand materials, assuring guests of an experience that is unmistakably Malay.

1999

JW Marriott Hotel Kuala Lumpur

YTL completed the acquisition of theJW Marriott Hotel Kuala Lumpur,together with the adjoining Starhill andLot 10 shopping centres, from TaipingConsolidated Berhad (now known asYTL Land & Development Berhad) inFebruary 1999. Designed with thebusiness traveller in mind, theaward–winning hotel is ideally locatedwithin the central business district ofKuala Lumpur, and together with theadjoining Starhill Gallery, anchors thepopular Bintang Walk.

IT & E–COMMERCE INITIATIVES

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2002

Listing of YTL e–Solutions Berhad

On 2 July 2002, YTL e–Solutions Berhad was listed on the Malaysian Exchange forAutomated Securities Dealing and Quotation (MESDAQ) of Bursa MalaysiaSecurities Berhad.

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

2003

Acquisition of 70% Stake in Hipmobile (M) Sdn Bhd

In June 2003, YTL e–Solutions Berhad acquired a 70% stake in Hipmobile (M) SdnBhd, a Multimedia Messaging Service (MMS) content provider.

2004

Listing of Infoscreen Networks Plc

On 20 June 2005, Infoscreen NetworksPlc was listed on the AlternativeInvestment Market (AIM) of theLondon Stock Exchange. InfoscreenNetworks Plc is the holding companyof YTL Info Screen Sdn Bhd, which isinvolved in creating, providing andadvertising content, media, web mediaand up to date information viaelectronic media in Malaysia.

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The YTL Group remains committed toproducing world class products andservices at competitive prices, as well asits strategy of acquiring regulated assetsoperating under long–term concessions,in Australia, the United Kingdom and,most recently, in Indonesia.

This corporate philosophy and a50–year track record of dedication toexcellence have enabled the YTLGroup to build up a growing customerbase of more than 10 millioncustomers globally.

CELEBRATING 50 YEARSOF RUNNING THE GOOD RACE

the journey continues...

The YTL Group has grown into an integrated infrastructure developer with coreactivities comprising power generation and transmission, water and sewerageservices, property and hotel development, cement manufacturing, constructioncontracting and e–commerce initiatives.

The Group now has five companies listed on Bursa Malaysia Securities Berhad witha combined market capitalisation exceeding RM20 billion, namely, YTL CorporationBerhad, YTL Power International Berhad, YTL Cement Berhad, YTL Land &Development Berhad and YTL e–Solutions Berhad. Foreign listings include YTLCorporation Berhad's listing on the Tokyo Stock Exchange and YTL e–SolutionsBerhad's subsidiary, Infoscreen Networks Plc, listed on the Alternative InvestmentMarket (AIM) of the London Stock Exchange.

OWNING & MANAGING REGULATED ASSETS 1955 ~ 2005BY TAN SRI DATO' (DR) FRANCIS YEOH SOCK PING

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If there is an encapsulation of YTL's journey thus far,it is an ancient Chinese adage that is still appropriatetoday: “May you live in interesting times”. Whether thatsaying is a blessing or a curse depends on whetherwe are prepared to meet the challenges ofinteresting times.

We prefer to call our times “exciting” times – filledwith many opportunities we could never haveimagined when YTL's journey began. YTL celebrates aremarkable milestone this year: 50 years of runningthe good race. In 50 short years, the modernisation ofbusiness and economic environments in Malaysia andan increasingly globalised economy have provided YTLthe opportunity to change the dynamics of both theGroup and the spheres in which we operate.

YTL's development strategy of providing world–classproducts and services at competitive prices has beenextremely successful, whether we apply it toconstruction, power generation, cement, hotels,property or transportation enterprises.

YTL'S BEGINNINGS

The Group began life in Kuala Selangor as the YeohTiong Lay Construction Company in 1955, coincidingwith the State of Emergency declared by the colonialBritish government to counter the threat fromcommunist insurgents. Against this backdrop, it wasinevitable that YTL's foundations would be groundedin the construction of army barracks and munitionsdepots essential to ensure national security.

Following independence in 1957, the Governmentimplemented new large–scale infrastructure projects –schools, hospitals and clinics, waterworks, powerstations, roads, bridges and other basic facilities. YTL'sinitial involvement was predominantly in ruraldevelopment plans and the Group benefited from thepolicies of the day which enabled entrepreneurs to thrive.

Throughout the 1960s, we continued to hone ourconstruction knowledge, building defence andsecurity installations for the Government, andprogressing to educational and agro–businessconstruction and development during the 1970s.

EARLY EXPERIENCES IN REGULATED BUSINESS

In the 1970s, the local construction business wasdeveloping into a highly specialised industry butMalaysia's construction contractors were still heavilyreliant on imported building materials as the localindustry had yet to develop sufficient capacity. The oil

crisis of the early 1970s and the country's exposureto the volatile global commodities markets of thetime meant skyrocketing prices of cement and steelhit every local contractor hard. YTL was no exception,burdened with contracts priced before the effects ofa global oil crisis could be anticipated.

The Group rallied in order to survive, streamliningoperations and increasing efficiencies to completeevery project, and the benefits of being able tomitigate the vagaries of our operating environmentsbecame evident. Our early model for a regulatedbusiness centred around ensuring a balance ofpromoting efficiencies and passing on gains toconsumers and subjecting the business to atransparent regulatory process whilst also creatingincentives to pursue cost-effectiveness, providing afair return to the business over a period of time.

It was during this time that YTL's housingdevelopment unit became active, amid the recessionthat gripped the country and escalated the need forlow–cost housing in the mid–1980s. After initialprojects consisting of walk–up flats, we streamlinedconstruction costs and designs to begin offering morespacious 3–bedroom houses, winning the hearts ofmany consumers and this was made possible by ourmodel for regulated business – keeping land costslow through joint ventures, profit sharing to cut costsand reducing premiums and fees. This enabled us tooffer these units at prices as low as RM25,000 each,which was well applauded by the market.

It is these lessons and experiences that have enabledus to grow into the leading developer that is YTL Land& Development Berhad today, without forsaking theimportance of providing high quality homes. Thiscommitment to developing lifestyle concepts andhomes in aesthetically pleasing living environmentshas continued to be the hallmark of YTL–brandedproperties, and has driven us to offer our consumersfeatures such as a gated park and landscapedgardens, all designed to enhance the quality of life.

It was also in the 1980s that the MalaysianGovernment introduced the privatisation concept,enabling the private sector to drive the engine ofeconomic growth. For the first time, we could own andgrow what we had built. In this new environment,motivated by new incentives, we introduced theturnkey concept in Malaysia, using what we callinfrastructure development. We designed, raised thecapital for, and built hospitals, including 12 nucleushospitals, universities, residential properties,high–rise office buildings, industrial facilities andother infrastructure projects.

The Group utilised its intellectual assets to build up atremendous reputation, pioneering innovations whichbecame industry standards in the Malaysianconstruction industry such as slipforming in thecorewall construction of high–rise buildings, steelscaffolding, skid mounted portable cabins, towercranes and passenger hoists.

INNOVATING TO MANAGE THE COST OF CAPITAL

In 1993, triggered by the Peninsula–wide black–outs of1992 that exposed the very real damage that anunstable, insufficient electricity supply could do to athriving economy, YTL was awarded the firstIndependent Power Producer (IPP) licence. At thisstage, the Group was comfortable with the demandsof operating a regulated asset such as a powerstation, having drawn on our experiences in workingto meet the Government's standards andrequirements to build infrastructure and low costhousing at home.

Our predominant concern was that a project on sucha massive scale would have to be funded in Ringgit.The Group could not expose itself to foreign exchangerisk on that scale and this necessitated thedevelopment of financing using local lenders andborrowing in local currencies. Raising RM2.66 billionentirely from the domestic financial markets, YTLembarked on the construction of two combined–cyclepower plants. Work on these power stations in Paka,Terengganu, and Pasir Gudang, Johor, began inNovember 1993 and both plants were successfullycommissioned and commenced operations within 22months, a record–breaking feat.

This prescript has endured and rather than working inUS dollars or Yen to finance Malaysian projects, forexample, we have matched financing for projects inlocal currencies, dispelling entrenched myths that allcompanies in developing countries should be burdenedwith increased costs of capital to balance risks deemedto be inherent in their operating environments.

YTL was fortunate because this protective measureborne from lessons learned decades earlier alsoshielded the Group from the worst of the Asianfinancial crisis that ravaged the region's financialmarkets and banking sectors in 1997. Economiesaround the region imploded, their currencies rapidlylosing value as the “Miracle of the Pacific Rim” cameto an end, taking numerous companies with it.However, as all YTL's local debt obligations were fixedand funded in local currency, the Group was insulatedfrom escalating interest rates and exchange rates thatswung against the country seemingly overnight.

Throughout that slump, YTL's resilience andintellectual assets ensured that the Group wouldcontinue not just to survive but to be profitable.

BUILD FOR LESS, SO YOU CAN BORROW LESS

The corollary to cost–effective financing is to build forless, so you can borrow less and, in the early 1990s,when we sought the capital funding to build our twoMalaysian power plants, we first utilised ourknowledge of construction to design a plant that cost40% less to build. Combining the benefits ofstate–of–the–art technological partners andinnovative financing enabled us to build world classpower stations that produce power that can be sold ata very competitive price – 3.8 US cents per kilowatthour, amongst the cheapest in the world.

YTL was also the first Malaysian company to usenon–recourse local financing for a high–speed railproject. The Express Rail Link (ERL) connecting KualaLumpur with its international airport was completedin 2002. Built with Siemens rail transportationtechnology, the ERL is virtually identical in design tothe high–speed rail system in cities like London.

The difference, however, was that high–speed railsystems were normally built at an approximate costof RM157 million per kilometre. At RM35 millionper kilometre, YTL built the ERL at a fraction of thecost. The ERL also runs on a fare of about US$8 fora 28–minute, 57–kilometre journey, compared toUS$15 for a 15–minute trip on the British rail link.This is one of the cheapest fares–per–kilometre inthe world for rapid rail transit and, more importantly,Malaysians can afford to ride this train.

This strategy has pervaded every aspect of the Group'soperations. When YTL developed The Ritz–Carlton,Kuala Lumpur, for example, we used decades ofconstruction expertise to cut the costs of construction,reducing the amount we were required to borrow andenabling us to control the cost of that capital. Ourbuilding costs ran to about a third of the per–roomcosts of other hotels. As a result, a room night in thisluxury, five–star hotel runs to only about US$80compared to US$300 to US$400 or more incomparable hotels in Europe or the U.S. The hotel hasreceived a raft of international awards sincecommencing operations, however, proving thataffordable pricing does not affect quality. Our PangkorLaut Resort and JW Marriott Hotel in Kuala Lumpurare also based on this model.

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Sustaining this business model from the outset of aproject has helped to ensure financial success longafter the doors open for business. As a counterweight,international awards and certifications reflect ourdevelopments in every area have passed internationalscrutiny and maintained a level of excellence equal tosimilar projects anywhere in the world.

ACCESSING THE PUBLIC EQUITY CAPITALMARKETS

YTL's listing strategy has from inception beengrounded in the prerequisite that each business mustbe a commercially viable entity in its own right beforethe Group would proceed to offer a stake in thesebusinesses to potential shareholders. Accessing thepublic equity capital markets had to be a win–winsituation in order for the markets to maintain theirbelief in the YTL brand.

YTL Corporation Berhad was listed in April 1985,followed in succession by YTL Cement Berhad, listedin 1993, YTL Power International Berhad in 1997 andYTL e–Solutions Berhad in 2002. YTL also acquiredthe troubled Taiping Consolidated Berhad group in2001, restructured it and renamed it YTL Land &Development Berhad.

The build–up of these businesses stemmed from YTL'score competency – construction contracting. Cementoperations commenced in the late 1970s as a naturaladjunct of the construction contracting business,eliminating the risks and vagaries of both supply andprice of this essential building material. YTL CementBerhad (or Buildcon Berhad, as it was then known)began with one batching plant and 6 trucks and has,today, grown into the second largest cement companyin this country, with a fleet of over 700 vehicles andcapacity of 5.0 million tonnes per annum.

The Group's property development business beganwell before the acquisition of YTL Land & DevelopmentBerhad, and was, in fact, another natural extension ofthe construction contracting business. Since then, theGroup has continued to mature, offering more uniqueand innovative design concepts such as PantaiHillpark, Lake Edge, Lake Fields and the urbanregeneration of Sentul.

With the emergence of the information technology(IT) era, companies ignored this sector at their ownperil. Although the lessons of the dot com bubble wereparticularly harsh, the necessity of IT to a modernbusiness was not shaken. YTL itself took a cautionaryapproach to its plans to list its IT business until themarket stabilised and listing of YTL e–SolutionsBerhad went ahead in 2002.

Rather than merely running operations to service theconstruction division and other in–house needs, theGroup focused on its obligation to create value for itsshareholders. This meant building up individualbusinesses that could compete with and outperformpeers in their industries, meeting intra–Group needsas a secondary consideration. Beginning with amarket capitalisation of about RM100 million (US$26million) in 1985, the Group has now grown toencompass five listed entities with a combined marketcapitalisation of over RM20 billion (US$5 billion).

COMPETING IN A GLOBALISED ECONOMY

The advent of globalisation, and its inherentdiminishing effect on the importance of stateboundaries, has enabled companies like YTL toexpand beyond the limits of national borders.Nowhere is this clearer than in our utilities division.In 2000, the Group ventured into Australia, acquiringa 33.5% stake in ElectraNet, which operates theelectricity transmission grid for the state of SouthAustralia under a 200–year concession.

Our next investment was Wessex Water, which weacquired in 2002. However, the Group bought WessexWater from Enron, following the latter's collapse atthe end of 2001, which served to underscore that,despite the benefits, the hazards of globalisationcannot be discounted.

Most recently, in 2004, the Group acquired a 35%stake in Jawa Power in Indonesia, a 1,220 megawattpower plant that supplies power to the Java–Balitransmission grid, which currently handlesapproximately 80% of Indonesia's energy consumption.The investment in Indonesia's power generation sectorwas a natural extension for YTL, both as a soundregional investment and as an opportunity for growthof the Group's key utilities division.

We are proud that the Group's expansion and successhave enabled us to hire the best of the best to buildup a pool of intellectual capital that includesnationalities from around the world, from Malaysianto American, British, German, Australian andIndonesian, generating employee productivity and profitrates comparative with the world's top companies.

CAPITALISING ON UNLIKELY OPPORTUNITIES

The last 50 years have demonstrated that recessionsand economic downturns are the time to sit back,consolidate and regroup so that the Group is strongenough to weather the downswing and yet financiallyable to capitalise on unlikely opportunities that mayarise during this time.

16YTL CORPORATION BERHAD 05 OWNING & MANAGING REGULATED ASSETS 1955 ~ 2005

The acquisitions of Lot 10 Shopping Centre, the JWMarriott Hotel Kuala Lumpur and Starhill Gallery aregood illustrations of this as the three properties wereput up for sale by Taiping Consolidated Berhad in1998 during the financial crisis. The availability ofcash reserves to meet the discounted but stillsubstantial asking price enabled YTL to acquire threeprime properties in the heart of the Golden Triangle.

Yet this was just the beginning. When YTL acquiredthese 3 properties in 1999, Bukit Bintang was slowlyturning into a crime–infested, red light district. YTLsought government approval to create Bintang Walkto prevent further deterioration and the Governmentand City Hall responded quickly and positively,enabling us to have the iconic Bintang Walk up andrunning in just 6 months.

The next step was duty–free retail, essential if KualaLumpur was to compete with retail havens such asSingapore and Hong Kong. In 1999, the only items thatwere duty–free were watches and cameras and wenoted these tenants were the only ones paying highrental rates and paying on time. Other retail goodswere attracting duties as high as 40%. Once again, wesought approval from the Government to reducethese duties and the Government responded in arecord 4 months.

With branded goods free of duty, retailers fromaround the region and the world began to take noticeand started to reinvest in retailing in Kuala Lumpur.Luxury brands are now willing to open their flagshipstores in Kuala Lumpur and, with the launch of thenewly refurbished Starhill Gallery earlier this year,international brands have opened their storesexclusively in Starhill Gallery.

It is now these three properties, Lot 10, Starhill Galleryand the JW Marriott Hotel, that the Group intends toinject into the next phase of development and theculmination of the Group's renaissance of Bintang Walk– the proposed Starhill real estate investment trust(REIT) that YTL embarked on this year.

YTL IN 2005

The Group has grown and thrived by adhering to abusiness model that focuses on what is relevant; onwatching evolving economic trends and identifyinglong–term solutions to these conditions and, crucially,having the strength to ride out short term glitches inour operating environments without allowing theseglitches to affect the integrity of the business.

Our tenet of providing world class products andservices at very competitive prices is geared solelytowards keeping our products and services affordableto our global customer base of 10 million and growing.

Strategies to keep costs down are not new. HenryFord discovered that if he mass–produced the sameblack Model–T, economies of scale would enable himto produce a car that, for the first time, averageAmericans could afford. In the 1960's, Japanese carmakers used the principles of Total QualityManagement and other quality processes to reducetheir costs, and produce affordable, good qualityautomobiles for the rest of the world. At YTL, threegenerations have constantly found new ways tobecome more cost effective without sacrificingquality, so that our Asian customers can afford ourproducts, whilst the Group remains profitable.

As exemplified by the last half–century, YTL's interestslie in the sustainability of the long term – long–termregulated assets, long–term concessions andlong–term returns to our shareholders. Now, fiftyyears on, the Group must remain committed to theideals on which YTL was founded and which,accumulated over 50 years, have brought us from ourhumble beginnings in Kuala Selangor to anintegrated infrastructure developer with operationson three continents and a combined marketcapitalisation in excess of RM20 billion.

We have only been able to reach these heights todayby standing on the shoulders of my grandfather, MrYeoh Cheng Liam, and my father, our ExecutiveChairman, Tan Sri Dato' Seri (Dr) Yeoh Tiong Lay, andall the members of my family, to whom I offer mymost heartfelt gratitude. I must also thank the entireBoard of Directors, both past and present, for theirguidance and dedication to sustaining the Group'sperformance, as well as the staff of the YTL Groupand the Government and regulatory authorities fortheir unwavering support throughout the years.

And, most of all, I thank God for all the blessings Hehas bestowed upon us. I also thank Him for His mercyand His grace in allowing us to walk in this journey oflight with Him.

The last 50 years have indeed been interesting times.For YTL, the journey continues.

17YTL CORPORATION BERHAD 05