Keppel Corp Ltd Ord

Good morning, ladies and gentlemen. Welcome to the conference for Capital Limited's second half and full year financial results for 2025. We have on the panel this morning, from your left, Mr. Manjot Singman, CEO, Connectivity and CEO, M1. Mr. Louis Lim, CEO, Real Estate. Ms. Christina Tan, CEO Fund Management and Chief Investment Officer, Mr. Low Chin Hwa, CEO, Mr. Kevin Cheung, CFO, and Ms. Cindy Lin, CEO Infrastructure. We will begin the session with presentations by CEO Mr. Low Chin Hwa and CFO Mr. Kevin Cheung, followed by the question and answer session. Mr. Low, please.

Thank you. Good morning. 2025 marked a year of strong progress for Keppel. Against the turbulent and uncertain global backdrop, we stayed focused on growing the new Keppel and are seeing the results of our transformation as a global asset manager and operator, delivering strong returns to our limited partners and shareholders, while creating real assets and solutions that meet the world's pressing needs the new capital delivered a very strong set of results net profit saw 39 year-on-year to 1.1 billion with improvements across all business segments and record earnings from the infrastructure division our funds under management grew from $88 billion a year ago to $95 billion at the end of 2025, well on track towards achieving our target FUM of $100 billion by end 2026, if not earlier, while asset management profit increased 15% to $189 million during this time. We also made good progress in asset monetization with $2.9 billion of divestments announced for 2025, bringing the total monetization announced since October 2020 to about $14.5 billion to date. At the same time, we continue to position capital to benefit from powerful global megatrends, such as the growing energy needs amidst increasing digitalization and the AI wave. with new power generation capacity and an expanding data center power bank of over 1 gigawatt in Asia Pacific. We delivered broad-based earnings growth across all three segments, infrastructure, real estate, and connectivity. with the infrastructure segment accounting for the largest share of the new capital's net profit in FY2025. Just as importantly, the quality of our earnings continued to strengthen, with recurring income from asset management and operations rising 21% year-on-year to $941 million in FY2025. including the non-core portfolio for divestment and discontinued operations, overall net profit for FY2025 was $789 million compared with $940 million for FY2024. This was mainly due to the $222 million accounting loss arising from the proposed sale of M1's telco business. As capital transforms and the market increasingly values the company based on the new capital's earnings, net profit of the new capital rather than overall net profit will become the more relevant measure of capital's performance. During the year, our expanding base of recurring income coupled with continued progress in asset monetization contributed to a healthy free cash inflow of $611 million. This is an improvement from financial year 24, when our free cash inflow of $901 million had benefited from the one-off net cash of over a billion received from the consolidation of Assetco. Reflecting our growth as an asset-like global asset manager and operator, the new capital achieved a return on equity of 18.7% for FY25 compared to 14.9% a year earlier. As at the end of December 25, the net debt to EBITDA of the new capital was a healthy 2x, lower than the 2.3x at the end of 2024. We will continue to be prudent and nimble in capital management, keeping our operations and costs efficient amidst the volatile landscape. As at the end of 2025, we achieved about $98 million in annual run rate cost savings since we started streamlining the company and sharpening our focus at the start of 2023. This puts us on track to achieve our stretched target of $120 million per annum by end 2026. Part of these savings are being reinvested into growth areas aligned with the new capital, including developing enterprise-wide digital and AI capabilities that will help entrench our strong competitive advantage while doing more with less. With a clear focus on optimizing both the pays and exit value of our divestments, our accelerating monetization task force continue to focus on unlocking capital. With the announced monetization of about $2.9 billion in assets in 2025, including the proposed sale of M1's telco business, which is pending regulatory approval. Meanwhile, We also completed transactions with a gross monetization value of about $1.6 billion in 2025. As at end 2025, our total asset monetization announced since October 2020 had reached approximately $14.5 billion, while our non-core portfolio for divestment stood at $13.5 billion. Looking ahead, we'll continue to work towards substantially monetizing our non-core portfolio by the end of 2030. Proceeds from monetization will allow us to further reduce debt, fund the new capital's growth, as well as return capital to shareholders. In 2025, capital delivered a total shareholder return of 58.5%, supported by strong performance distributions and a re-rating of the company that reflects the market's increasing recognition of our transformation and growth strategy. Since the launch of our $500 million share buyback program in July 2025, we have repurchased over 13 million capital shares for a total consideration of $116 million. Reflecting Keppel's commitment to a steady and sustainable dividend strategy, we have said that the company will pay ordinary dividends based on the new Keppel's performance. In addition, we aim to pay out special dividends based on 10-15% of the gross value of asset monetization transactions completed in the financial year. until our monetization program is completed. The actual percentage will depend on the company's growth plans as well as cash generated. In appreciation of the support and confidence of shareholders, the Board has approved or has proposed a final ordinary dividend of $0.19 per share in cash bringing the full-year ordinary cash dividend to $0.34 per share. This represents a payout ratio of about 56% of the new capital's net profit for FY2025. Considering the strong progress in monetization achieved, the Board has further proposed a special dividend amounting to approximately $0.13 per share comprising two cents per share in cash and one capital reit unit for every nine capital shares held which is equivalent to approximately 11 cents per share based on capital reits closing market price of 98 cents on the 3rd of february 2026. this special dividend proposed is approximately 15 of the completed monetization of $1.6 billion for FY2025. In all, we will be distributing total dividends of approximately $0.47 per share for FY2025, up 38% from FY2024, which represents a yield of approximately 4.3% based on Keppel's closing share price of $10.95 last evening. I will now run through some of the highlights of the new Keppel's developments during the year. Our asset management business continued to gain momentum in 2025. We generated $453 million in asset management fees, while FUM reached $95 billion by year end. but growing at a compound annual growth rate of about 20% over the past five years. As our platforms scale, we have seen a clear strengthening of capital standing with global institutional LPs. Today, we are working with a growing group of established pension and sovereign wealth funds, financial institutions and endowments across the world, from Asia Pacific to the Middle East, Europe and North America. We are seeing more LPs initiate conversations with us, reflecting growing recognition of Keppel's track record and differentiated capabilities. During the year Active fundraising by our private funds, together with portfolio expansion across our listed REITs and infrastructure trusts, added $10.1 billion of new FUM. In Europe, Amon Capital continued to perform well and has begun marketing Fund 6 with first close targeted in the first half of this year. Across our private and listed vehicles, we completed $11.4 billion of acquisitions and $2.9 billion of divestments during the year. With a deal flow pipeline of $33 billion, we see a strong runway to deploy capital and expand our asset management income. Looking ahead, a more inflationary environment accentuated by tariffs and trade restrictions is expected to sustain investor demand for real assets with steady cash flow that can also serve as a hedge against inflation. This continues to favor alternative real assets aligned with long-term macro trends, such as the energy transition, digitalization, and the AI wave, which Keppel has deep expertise in. Against this backdrop, lps are placing greater value on asset managers who can originate differentiated opportunities and with proven expertise in operating such critical assets as energy and digital infrastructure solutions become larger more complex and more capital intensive capital's integrated ecosystem positions us well to originate develop and scale such projects alongside institutional investors beyond what our balance sheet could otherwise have been able to support. Within our operating platform, infrastructure continues to be a sturdy pillar of quality earnings. Underpinned by recurring income, which grew at 51% CAGR over the past four years, The infrastructure division delivered record recurring earnings of $703 million in FY2025. Its integrated power business delivered resilient EBITDA of $661 million, backed by long-term contracted capacity, disciplined contracting and strong operational performance, even amidst softening spark spreads. Meanwhile, the decarbonization and sustainability solutions business has performed extremely well, achieving an EBITDA of $130 million, up 32% year-on-year, surpassing our earlier projection of $100 million in 2025. Our infrastructure division has successfully built an asset-like and fast-scaling new engine underpinned by long-term contracts which will bolster recurring income in addition to earnings from the integrated power business. As at end 2025, around 67% of our infrastructure division's power generation capacity is contracted for three years or longer. The 600 megawatt hydrogen-compatible Keppel-Sakra cogem plant, a key proprietary asset within our infrastructure private fund, is on track to commence operations in first half 2026. And its capacity has been already fully contracted for 2026 and 2027 after factoring in the required market reserves. The Sakrapran plant will strengthen recurring earnings, demonstrating our ability to scale advanced infrastructure with an asset-like model. We also continue to build scale in our non-power infrastructure businesses. Long-term supply contracts grew by over $1 billion year-on-year to reach $7.1 billion by end 2025. with revenues to be earned over 10 to 15 years. A case in point is the Hong Kong Integrated Waste Management Facility, which is now at an advanced stage of testing and commissioning. With a 15-year operations and maintenance contract, it reflects the kind of strategic and complex infrastructure that Keppel is able to deliver and operate. Our deep operational capabilities also underpin our progress in digital connectivity. We believe that AI remains in the early innings of adoption and value creation. Scaling AI requires real infrastructure such as power, data centers, and subsea connectivity. And this is where capital can contribute and seize opportunities. A key enabler of our digital infrastructure strategy is data center power banking, which allows us to deliver shovel-ready capacity, significantly shortening time to development and service readiness. We are positioning ahead of the digitalization and AI megatrend by investing upstream to secure early and exclusive access to power, water, and fiber connectivity at strategic sites in key data hubs. In January this year, we expanded our data center power bank in Asia Pacific from around 300 megawatt to over 1 gigawatt with the addition of a prime site in Melbourne, earmarked for the planting of a future 720 megawatt AI campus. We're in active discussions with hyperscalers and new clouds, and interest in the Melbourne site has been encouraging. At scale, our more than 1 gigawatt of power bank capacity, when fully activated, has the potential to translate into about 10 billion of data centre FUM, supporting the continued growth of Capel's asset management platform. Beyond data centers, we achieved an important milestone with the Bifrost cable system, which commenced carrying commercial traffic in December 2025. Our first two fiber pairs, already committed to customers, contributed to earnings towards the end of last year. Last month, we signed a binding term sheet with a customer for another fiber pair. over its 25 years operating life bifrost is expected to generate on average about 200 million in operations and maintenance fees per fiber pair for capital adding a new stream of long-term recurring income at the same time we'll continue to grow our technology solutions and services business which together with our digital infrastructure expertise enables capital to participate in the full value chain serving both hyperscalers and enterprises alongside infrastructure and connectivity our real estate division contributes to sustainable development through providing solutions and services for future ready energy efficient assets in 2025 the division recorded total real estate as a service revenue of 98 million, deepening its pivot to an asset-like model. Looking ahead, both the energy transition and the scaling of digital and AI adoption will require substantial capital and deep execution know-how. By leveraging our strong fund management and operating expertise, we can mobilize institutional capital effectively and undertake such projects at scale, while offering attractive investment opportunities to our LPs. To conclude, the new capital performed strongly in 2025. Earnings grew and asset monetization continued to gain momentum. In addition, we are returning capital to shareholders through ordinary cash dividends as well as special dividends. As we execute our strategy, the market increasingly recognizes Keppel as a global asset manager and operator, which is reflected in the continued re-rating of the company. Looking ahead, while volatility and geopolitical uncertainty are likely to persist, Keppel has built strong foundations and is well positioned to deliver digital and low-carbon solutions that the world needs, as well as strong returns to our LPs and shareholders. This bodes well for our future. Our CFO, Kevin, will now take you through details of the company's financial performance.

Kevin. Thank you, CEO, and a very good morning to all. I shall now take you through Keppel's financial performance. Overall net profit for financial year 2025 was $789 million, 16% lower than the $940 million for financial year 2024 due to discontinued operations, which I will elaborate later. Consequently, ROE was lower at 7.4%. Net debt to EBITDA was lower than last year and mainly due to lower net debt. Free cash flows were $611 million as compared to $901 million in the prior period. As financial year 2024 benefited from the consolidation of asset cost cash balances of about $1.07 billion. Excluding cash balances from Assetco, our free cash flows have improved by $780 million. In financial year 2025, Capo recorded stronger cash inflows from operating activities as a result of lower working capital requirements, as well as higher divestment proceeds and dividends received. These were partly offset by higher investments and capex during the year. Excluding non-core portfolio for divestment and discontinued operations, net profit of new capital was $1.1 billion, significantly higher as compared to $793 million in FY2024. discontinued operations net loss of 227 million in financial year 2025 mainly arose from a loss on re-measurement of m1's telco business net of cessation of depreciation and amortization following the classification of m1 telco as a disposal group to provide greater clarity on the performance of new capital In the next few slides, I will present our financials, excluding the effects of non-core portfolio for divestment and discontinued operations. Net profit of New Capital increased 39% year-on-year to $1.1 billion. All three segments achieved higher profits. Infrastructure continues to be the largest contributor to New Capital's earnings, followed by real estate and connectivity. With the stronger earnings, ROE improved to 18.7% from 14.9% a year ago. Supported by increase in EBITDA and a lower net debt, net debt to EBITDA of New Capital improved to two times as at end December 2025 from 2.3 times as at end December 2024. Free cash inflow for financial year 2025 was $177 million. In line with our focus on growing recurring income, New Capital generated healthy cash inflows from operating activities. Cash inflows from operating activities, divestment proceeds and dividends received were reinvested to fund investments in sponsor stakes, as well as acquisitions and capital expenditure. As a result of better performance from asset management and operations, recurring income rose 21% to $941 million from $779 million a year ago. New Capital also recorded higher valuation and capital recycling gains during the year, from higher fair values on investment properties and investments, as well as monetization from real estate and connectivity. Moving on to our segmental performance. Infrastructure segment recorded a net profit of $803 million, 18% or $125 million higher than the $678 million in the previous financial year. Asset management net profit was lower at $46 million compared to the previous year, mainly due to the absence of performance fees and transaction advisory fees recognized in financial year 2024, as well as lower acquisition fees from capital infrastructure trusts. This was partly offset by lower costs, divestment fees from KIT, and higher management fees from KIT and from private funds. Stronger operating income was supported by higher contributions from decarbonisation and sustainability solutions, as well as sponsor stakes and co-investment. This was partly offset by lower earnings from integrated power business as a result of lower contracted spreads. The segment also recorded net valuation gains from its sponsor stakes and co-investments in 2025. Real estate segment achieved a net profit of $273 million, a significant improvement compared to the net profit of $107 million a year ago. Asset management net profit of $93 million was $31 million higher year-on-year. Driven by acquisition fees in relation to capital REITs, acquisition of an additional one-third interest in MBFC Tower 3 in Singapore and an interest in a retail mall in Sydney. There were also higher management fees following the first close of Education Asset Fund 2 and higher contribution from AMON as well as lower cost and interest expense. Operating income improved $45 million year-on-year, mainly due to higher contributions from sponsor stakes and lower financing costs, partly offset by higher losses from senior living business. In 2025, real estate recorded higher valuation gains from sponsor stakes and co-investments, and also recognized net gains from the partial disposal of Saigon Center Phase III in Vietnam and the disposal of One Paramount in India. Net profit from connectivity segment of $175 million was 17% or $26 million higher than the $149 million in the prior year. Asset management net profit was 47% higher year-on-year at $15 million, driven by higher management fees following the acquisition of two assets by Capital DC Reit. and the first close of DC Fund 3 both in December 2024 as well as carry interest earned from Alpha Data Center Fund. Operating income of $35 million was $9 million higher than prior, mainly due to higher contributions from Capital DC REIT following contract renewals and acquisitions of assets at the end of 2024. The segment recorded lower net fair value gains mainly due to fair value losses on sponsor stakes in private funds, partly offset by higher fair value gains from a data center investment in KapoDC REIT. Gains of $84 million were recognized in 2025 from lease extension of Kapo Data Center Campus Singapore and from the sale of two fiber pairs of the Bifrost cable system upon receiving Ready for Service status. Net loss from non-core portfolio was $84 million as compared to net loss of $6 million a year ago. Net loss of legacy O&M assets of $156 million in FY2025 was mainly due to interest costs attributable to legacy risk and impairment of fixed assets, partly offset by fair value gain from CETRAN shares and foreign exchange gains, interest income and tax provision write-backs. For financial year 2025, the property-related non-core assets registered a net profit of $119 million, mainly driven by gains from divestments in China and Vietnam, which were partly offset by operating and fair value losses on investment properties and losses from development projects. Investment and others recorded net loss of $47 million, mainly from fair value losses on investments, partly offset by game on disposal of Computer Generated Solutions Inc. in the United States. With that, we have come to the end of the presentation, and I shall hand the time back to CEO for the Q&A session. Thank you. Thanks, Kevin.