Follow us on Twitter Find us on Facebook

YTL CORPORATION

YTL SUSTAINABILITY

UTILITIES
YTL POWER INT.

CONSTRUCTION
YTL CONSTRUCTION

MANUFACTURING
YTL CEMENT

PROPERTY DEVELOPMENT
YTL LAND & DEV.

REIT
YTL HOSPITALITY REIT
STARHILL GLOBAL REIT

TECHNOLOGY
YTL E-SOLUTIONS

COMMUNICATIONS
YTL COMMS.
YTL BROADBAND

EDUCATION
YTL FOUNDATION
FROGASIA
FROG EDUCATION LIMITED

TRANSPORTATION
EXPRESS RAIL LINK

CARBON CONSULTING
YTL-SV CARBON

ENTERTAINMENT
KL PAC

RESTAURANTS
LOT 10 HUTONG
FEAST VILLAGE
SHOOK! SHANGHAI

SHOPPING
L0T 10 SHOPPING CENTRE
STARHILL GALLERY
WISMA ATRIA
NGEE ANN CITY
RENHE SPRING ZONGBEI
DAVID JONES

HOTELS & RESORTS
YTL HOTELS

ADVOCACY PROJECTS
YTL CCW
EARTH HOUR

REWARDS
YTL PLATINUM PLUS


YTL Power continues to show them the money

   
The Edge Malaysia, 18 August 2003

BY M SHANMUGAM

YTL Power International, the winner in the energy and natural resources category, declared its highest dividend in the most unlikely of times.

The company completed the acquisition of Wessex Water Ltd for a staggering RM6.9 billion in May last year. The massive acquisition comes with equally huge liabilities. With an acquisition of that size, most companies would not declare a big dividend. But YTL Power declared its highest ever dividend -a 20 per cent payout -since it was listed in 1997.

In 2001, YTL Power gave 15 per cent and before that, a 10 per cent payout was the norm.

“We have a dividend policy that is not based on borrowings, but income. We started with a 10 per cent dividend policy and have increased it over the years,” says Tan Sri Francis Yeoh, the managing director of YTL Power in faxed replies.

In 2001, YTL Power paid 15 per cent and after the Wessex Water deal, this increased to 20 per cent. With the acquisition of Wessex Water, YTL Power’s turnover and profit rose by 100 and 30 per cent, respectively. This translated to a growth of 20 per cent per annum since its listing just before the Asian currency crisis struck.

YTL Power International is one of the few companies that have emerged stronger after the crisis.

It pioneered the art of supplying power to Tenaga Nasional Bhd in a big way – by being an independent power producer (IPP) – when the national utility came under fire following a nationwide blackout in September 1992. For charting the course in the unknown IPP market then, YTL Power earned premium rates for electricity units it supplies to Tenaga Nasional, much to the envy of others in the industry.

YTL Power also decided to finance the construction of the IPPs in Paka, Terengganu, and Pasir Gudang, lohor, by issuing ringgit-denominated bonds when the most common mode of bonds then were US dollar papers. It was a commercial decision that proved to be astute.

When the ringgit depreciated in 1997/ 98, companies with US dollar bonds plunged into difficulty and some did not survive as debts ballooned. YTL Power came out of the crisis unscathed.

By being a pioneer IPP and by using ringgit-denominated bonds, the company grew from strength to strength and is now a multi-utility provider with long-term government concessions. Apart from the sweet deal with Tenaga Nasional and the water concession through Wessex Water, YTL Power also has a 33.5 per cent stake in ElectraNet Pty Ltd, the company that has a 200-year concession to own and manage the South Australian transmission grid.

“Since 1996, we have been exploring opportunities internationally. It was only last year that we made our first international investment [acquiring a 33.5 per cent in ElectraNet]. Each international foray enabled us to accumulate intellectual capital as we had to compete with the best in the world,” says Yeoh.

After the ElectraNet acquisition came Wessex Water, the deal that caught most investors by surprise. This acquisition also came at a time when critics were taking potshots at the YTL Group as a company that was a quality defensive stock with a cash pile of RM3.2 billion but without any growth prospects.

“We are not only a defensive stock but also a growth stock,” retorts Yeoh. “Notwithstanding our high dividend payout, we still have cash reserves of over RM3 billion to fund new investments. What this means is that we will still be able to grow without diminishing dividend payments to shareholders. “

YTL Power used to be viewed as a well-connected company that had used its influence to pounce on opportunities in the utilities sector of the country. But its acquisition of Wessex Water earned the group respect as an international player in the utility business.

Yeoh lists three elements that are important for the utility business.

“What is essential in the utility business is the same for every other successful business -strong balance sheet, steady cash flow and a large store of intellectual property.”

He says YTL Power has been able to maximise shareholders’ funds because it stays ahead of the curve, develops new ideas and innovates.

“To understand the regulation of utility business in developed markets, we made our first investment in ElectraNet. ‘ This led to our ability to win Wessex Water in the UK in a highly competitive bidding game. We need to be aware of the latest developments in the industries we are in,” he says.




Back
 
    

SPEECHES

INTERVIEWS

THE OSLO BUSINESS FOR PEACE AWARD

TRANSPARENT COHERENT REGULATORY FRAMEWORK

PERSONAL AND SUSTAINABILITY AWARDS

TAN SRI FRANCIS YEOH'S BIODATA

 
 

Contact Us | Newsletter | Career | Privacy Policy
Twitter | Facebook
 
Terms, Conditions and Disclaimers
Copyright © 2001 - 2017 All rights reserved.
Powered by YTL e-Solutions Bhd.