IT WOULD be rare for YTL CORPORATION BHD managing director Tan Sri Francis Yeoh (recently named 2002 Malaysian Entrepreneur of the Year) not to bring up the words regulated assets in an interview. Bordering on obsession, Yeoh mentions them at every given opportunity.
In announcing record quarterly profits for YTL in November last year, Yeoh said again that the group would continue to look for regulated assets around the world.
We have built up our core expertise in managing regulated assets, and thats the direction we are moving, he said then.
But one can hardly fault Yeoh for his enthusiasm; for it is precisely the YTL groups pursuit of these assets in power generation and water services that have paid and will continue to pay handsome dividends to its shareholders.
For the year ended June 30, 2002, for example, 55% of the groups revenue of RM2.6bil and more than 70% of its pre-tax profit of RM798mil were derived from regulated assets such as power generation at the groups two power plants in Paka (Terengganu) and Pasir Gudang (Johor).
Looking ahead, growth of the group will continue to be from such sources as more regulated assets accumulated in Malaysia (Jimah power plant in Negri Sembilan), Britain (Wessex Water) and Australia (ElectraNet) come on-stream. Subsidiary YTL POWER INTERNATIONAL BHD is also one of the bidders for Britains Midlands Electricity plc.
Investors who decided to buy YTL shares back in 1990 would probably not have imagined that the construction company (1990 turnover: RM218mil) they were investing in would one day emerge as the holding company for one of the largest independent power producers in the country.
More importantly for them, perhaps, their one lot of YTL shares would have grown ten-fold over the 13-year period to 10,498 shares by the end of 2002 through various bonus and rights issues.
The company rewarded shareholders with no fewer than six bonus issues: a one-for-five in financial year ended June 30, 1993, was followed by similar issue the following year. The next two years saw the company rewarding consecutive one-for-two bonus issuesAnother oen-for-two bonus issue was made in 1998, while in 2000, the company rewarded shareholders again by issuing a one-for-five bonus.
Over the years, investors might also have been tempted to subscribe to the transferable subscription rights (TSRs) and warrants of the company. Although the TSRs, which were issued in 1993 and convertible to YTL shares at RM5.60 in early 1994 was in-the-money, the warrants subscribed to in 1997 at RM1.27 and in 1999 at 50 sen would have been a little less attractive.
Dividends were, however, consistently paid, with the company ensuring five sen per share almost every year. This amounted to RM4,473 over the 13-year period.
Overall, an investor would have gained RM30,300 or over three times his investment of RM9,566.
An analyst once said of YTL: The management has a shrewd business sense in creating shareholder value. A holder of one lot of YTL shares since 1990 might very well agree all the way to the bank.