Keppel Corp Ltd Ord

Good morning, ladies and gentlemen. Welcome to the conference for Kepo Limited's first half financial results for 2026. We have on the panel this morning, from your left, Mr Manjot Singh Man, CEO Connectivity and CEO M1, Mr Louie Lin, CEO Real Estate, Ms Christina Tan, CEO Fund Management and Chief Investment Officer, Mr. Loh Chin Hua, CEO, Mr. Kevin Cheung, CFO, and Ms. Cindy Lin, CEO, Infrastructure. We will begin the session with presentations by CEO, Mr. Loh Chin Hua, and CFO, Mr. Kevin Cheung, followed by the question and answer session. Mr. Loh, please.

Thank you, Amira. Good morning, all. The new capital delivered strong results in the first half of 2026. amidst a highly volatile global environment. Despite geopolitical tensions, the demand for sustainable digital and energy infrastructure continues to rise with accelerating AI adoption. With our integrated ecosystem spanning capital, digital infrastructure and power, Keppel is well positioned to capture opportunities in this growing market. The new capital delivered net profit of $530 million in the first half of 2026, up 25% year-on-year. This was driven by strong contributions from sponsor stakes and co-investments, as well as higher recurring income from asset management and our operating platform. We also made significant progress on our two strategic priorities – We surpassed our end-2026 target of $100 billion funds under management ahead of schedule, reaching $106 billion in July. In addition, we announced about $1.7 billion of asset monetization year-to-date on track towards our full-year target of $2-3 billion. We also achieved key operating milestones. across digital and energy infrastructure, with Bifrost fully commercialised, while the Keppel-Sakra co-gen plant, Singapore's first hydrogen-compatible and most advanced power plant, has commenced operations. Both assets are now contributing to Keppel's growing base of recurring income. In first half 2026, Our recurring income expanded by 13% year-on-year to $467 million. Starting from first half 2026, we will separately disclose profit contributions from our sponsor stakes and co-investments or SSCI to provide greater clarity on the new capital's performance. The new reporting approach mirrors our business model Profits are earned as an asset manager, as a co-investor in our funds, REITs and trusts, alongside our LPs and unit holders, and as an operator. Beyond aligning our interests with those of our LPs, SSCI also provides an important source of earnings and cash flow for the company. In first half 2026, Profit from SSEI increased significantly to $175 million compared to $18 million in first half 2025. As our FUM expands, SSEI will become an increasingly significant pillar of the new capital's earnings and growth. In the first half of 2026, the non-core portfolio recorded a net loss of $375 million Due mainly to impairments taken for our legacy rigs, interest costs attributable to the legacy rigs, as well as depreciation and amortization adjustments with the termination of the M1 Telco sale. Including these accounting losses, the company's overall net profit for the period was $155 million. Importantly, Our financial position continues to strengthen. Our free cash flow swung from an outflow of $48 million in the first half of 2025 to an inflow of $570 million. The new capital's annualized return on equity improved to 15% in first half 2026 compared to 14.7% in first half 2025 while the net debt to EBITDA remains steady at 1.5x. Across capital, AI is increasingly embedded into our investment, asset management and operating activities. This, coupled with continued streamlining, has contributed to over $100 million in recurring annual run rate cost savings. We are also using AI To improve our value proposition to our customers and LPs, expand revenue opportunities, and look for new profit pools. Reflecting confidence in the company's progress, the Board has declared an interim cash dividend of $0.15 per share for first half 2026, unchanged from a year ago, which will be paid out on 21 August 2026. We have made good progress in the monetization of non-core assets. The rigged transaction announced earlier this week is significant. We have secured a US $1.5 billion commitment from our LP Apollo to the Capital Offshore Fund, creating a clear pathway to monetize up to $3.7 billion of legacy rigs while expanding our FUM and fee income. The divestment of the first six operational rigs is expected to generate cash proceeds of about $611 million this year. As the remaining four rigs are completed, they can be divested to the fund, unlocking another approximately $1.3 billion in cash over 2027 and 2028. This will not only improve our gearing, but also increase funds for higher return opportunities and to reward our shareholders. At the end June 2026, we have completed and realised monetisation of non-core assets of approximately $560 million, a portion of which would fund special dividends for the full year. At the same time, The gross asset value of the Nong Corp portfolio, including M1's telco business, was $13.7 billion. These figures do not yet reflect the transactions announced in July. In the first half of 2026, we generated $200 million of asset management fees, We also completed 3.1 billion of acquisitions and another 2.4 billion of divestments across our private funds and listed vehicles. As at end July, we achieved $106 billion in FUM, surpassing our $100 billion target for 2026. This marks an important inflection point in Keppel's growth as a global asset manager and operator. Thank you for joining us. We can originate differentiated assets, create alphas through operations and offer our LPs access to compelling investment opportunities supported by our private funds and listed evergreen real estate and infrastructure trusts. In our power business, The new 600MW Capital Sacra co-gen plant commenced operations smoothly at the end of May, increasing our generation capacity by 45%. Its first-month earnings helped to offset softer spark spread and cause impact from the Middle East conflict in the first half of 2026, contributing towards the 9% year-on-year EBITDA growth for the power business. We are also developing a pipeline of proprietary energy transition and infrastructure projects across the low-carbon hydrogen and ammonia value chains, as well as the importation of up to 1 GW of low-carbon energy into Singapore. Keppel's integrated capabilities in energy, cooling and water have enabled the planting of new AI-ready hyperscale data centres and our innovative Floating Data Centre. They will also empower us to originate and develop the next generation of digital infrastructure projects. Following the commercialisation of all five Bifrost Fibre pairs, we are advancing discussions with joint-built partners, and selecting landing sites for two possible new subsea cable systems linking Singapore to the Middle East and Japan. We expect to take a decision on this project by year-end. Our asset-light approach extends beyond digital infrastructure. Hanoi Centre, our first retail mall in Vietnam's capital, is one such example. Through a master lease arrangement, we repositioned the property through active asset and retail management leveraging our deep operating expertise in Vietnam to earn a recurring profit from rents. We continue to explore opportunities for consolidation for M1 which we believe is needed for Singapore's telco sector. Based on what we have observed in the region, Operators that have undergone consolidation have typically seen a 10-15% ARPU uplift, leading to more sustainable markets. In the meantime, we are focused on strengthening M1's performance to maximize its strategic value in any future industry consolidation. A three-year business plan has been established, to raise productivity and structurally reset M1's cost base. This will strengthen M1's profitability and competitiveness while maintaining resilience, cybersecurity and customer experience. Our initiatives are expected to deliver an annual run rate cost savings of $70 million by 2028 Year to date, we have achieved cost savings of $4 million per annum and aim to reach $10 million per annum by the end of 2026. To conclude, the progress we have made reflects the strengths of New Capital. We have bolstered our earnings, expanded our asset management business to $106 billion in FUM, delivered landmark assets like the Sakra Cogem plant and Bifrost, and establish a clear pathway to monetize the legacy rates. As a global asset manager and operator, we have demonstrated that we are increasingly bringing together capital, operating capabilities and proprietary investment opportunities to create value for our LPs, shareholders and customers. Looking ahead, as demand for power and digital infrastructure accelerates, Keppel's integrated ecosystem positions us well to capture these opportunities and power our next phase of growth. Our CFO, Kevin, will now take you through details of the company's financial performance.

Thank you, CEO, and a very good morning to all. I shall now take you through Keppel's financial performance. While new Keppel performed well, Our net profit for first half 2026 was 155 million, 59% lower than the 378 million for first half 2025, due to results from the non-core portfolio which I will elaborate later. Consequently, annualised ROE decreased to 3.6% from 7.2% in first half 2025. Net Debt to EBITDA increased to 6.7 times at the end June 2026 from 5.8 times at the end December 2025. Pre-cash inflow was $570 million in first half 2026 compared to an outflow of $48 million in first half 2025. This was underpinned by strong cash inflow from investing activities with higher divestment proceeds received during the first half of this year. This was partly offset by lower cash inflows from operating activities as a result of higher working capital requirements. Excluding non-core portfolio for divestment, New Capital delivered profit of $530 million, 25% higher than the $424 million recorded in first half 2025. I will first cover non-core portfolio for divestment before presenting the financials of New Capital to provide greater clarity on our performance excluding the effects of non-core portfolio for divestment. Net loss from non-corp portfolio for divestment was $375 million in first half 2026. Net loss from legacy offshore and marine assets was $278 million. As announced earlier this week, we have put in place a program to progressively monetize up to 10 legacy rigs through a new private fund, Capital Offshore Fund. This marks a further milestone in our transformation as it establishes a clear pathway for the progressive monetization of our legacy rigs. while improving gearing and unlocking capital for reinvestment and to reward shareholders. Arising from this, we have recognised an accounting loss of $165 million from the impairment of 13 legacy rig assets, including recycling of foreign currency translation loss to profit and loss, net of write-backs in cost provisions. The impairment was based on the group's assessment of the recoverable amounts of the rigs, taking into account the monetization program through Keppel Offshore Fund of up to 10 RICs announced earlier this week and the business plans of the fund. The remaining loss on legacy O&M assets was due to interest costs attributable to legacy RICs and expected credit loss recognized on receivables from Chris Energy, partly offset by gains on CITRM shares which have been fully divested. Net loss from property-related non-core assets was $32 million, mainly from operating losses on investment properties and fair value loss on investments, partly offset by net fair value gain on investment properties. The first half of 2025 benefited from gains related to divestments in China and Vietnam. Investments, M1 Telco and others recorded net loss of $65 million. This was mainly due to the release of financial year 2025 suspended depreciation and amortization following the termination of M1 Telco divestment, where M1 ceased to be classified as a disposal group held for sale, as well as fair value losses on investments. Moving to New Capital New Capital performed well, with net profit increase of 25% year-on-year to $530 million. Excluding the loss from dividend in specie of capital REIT units, otherwise known as DIS loss, all three segments were profitable, with higher earnings from infrastructure and connectivity. Analyzed ROE increased to 15% from 14.7% a year ago. Net debt to EBITDA was 1.4 times as at end June 2026, unchanged from end December 2025. Pre-cash inflow was $244 million in the first half of 2026 compared to an outflow of $179 million in the same period last year. In line with growing recurring income, new capital generated healthy cash inflows from operating activities. Divestments and dividends received were reinvested to fund investments in sponsor stakes and capital expenditure. As mentioned by CEO earlier, starting from this reporting period, we will separately disclose profit contributions from our Sponsor Stakes and Co-Investments, or SSEI, to provide greater clarity on New Capital's performance as an asset manager and operator. At the same time, we continue to provide the breakdown between recurring operational earnings and market or event-driven valuation and divestment profits. Supported by stable performance from asset management and higher contributions from operations, recurring income rose 13% to $467 million from $414 million a year ago. Our fund management and investment platforms achieved net profit of $247 million, more than double first half 2025, led by stronger contributions from SSEI. As a result of lower divestment and revaluation gains, net profit from operating platform was lower at $349 million Moving on to our segmental performance Infrastructure segment achieved strong earnings with a net profit of $538 million 55% higher than the $346 million a year ago Asset management net profit was higher than the prior year mainly from higher asset management fee revenue and Acquisition Fees, partly offset by higher costs and the absence of divestment fees. Profit contributions from SSCI rose significantly to $178 million, underpinned by gains from the disposal of a partial stake in Kepo Malimau Coaching Plant and our interest in 800 super holdings, as well as higher distribution from Kepo Infrastructure Trusts. These were partly offset by fair value loss from co-investments. Infrastructure Division earnings grew $339 million, supported by better performance from our integrated power, as well as decarbonisation and sustainable solutions businesses. Kapo Sekar Cogen Plant commenced commercial operations at the end of May, and contributed positively to offset the softer spark spreads and cost impact from the Middle East conflict in first half 2026. Real estate segment recorded a net loss of $19 million in the first half of 2026, compared to a net profit of $98 million in the previous year. Excluding the GIS loss, the segment would have been profitable at $32 million. Asset management net profit was lower at $36 million, mainly due to lower contributions from AMON, Arising from the change in Fund 5 fee basis as it reaches the end of its investment period, as well as higher costs. This was partly offset by divestment fees and higher asset management fee revenues, following acquisitions by Capital REIT and fundraising by Capital Education Asset Fund 2. Net loss from sponsor stakes and co-investments was largely due to losses from dividend in specie of Capital REIT units. Real Estate Division recognized lower year-on-year earnings, mainly due to the absence of gain from the partial disposal of Saigon Centre Phase 3 that was recognized in first half 2025, lower fair value gains on investment properties, and lower share of profits from SSCEC. Net profit from connectivity segment was $77 million, 54% higher than the $50 million a year ago. The increase in asset management net profit reflected higher asset management fee revenue following acquisitions by Capital DC REIT and funds raised by Capital DC Fund 3, partly offset by higher costs. Profit contributions from SSCI tripled from $18 million to $55 million, underpinned by gains from the customer commitments secured for the third and fourth fiber pairs of the Bicross Cable System and higher contributions from Capital DCE. This was partly offset by Fair Valley losses from private funds. We expect to recognize gains from the fifth committed fiber pair when it is handed over to the customer in second half of 2026. Operating Division's earnings were lower, as the first half of 2025 had benefited from valuation gains from a data center investment. This was partly offset by higher year-on-year contributions from the technology solutions business, as well as higher fees from data center project management and network operations and maintenance activities. 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.