Tenaga Nasional Berhad

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Akhir sekali, selamat datang dan kekal selamat setiap masa di mana sahaja Anda berada.

Good evening, everyone. Thank you for joining TNB's second quarter FY2026 Energy Briefing. A very warm welcome to every one of you joining us here today. Yang berbahagia, Datuk in Senior Technologies, Kamsul Ahmad, President and Chief Executive Officer of Kanada Nasional Berhad. Our Chief Financial Officer, Mr. Badro Hisham Fauzi. I would also like to warmly welcome all of you here joining us here today. We also have 60 attendees joining us virtually while we're back. Today's session will be covered in two parts. Firstly, our CEO, Dr. Sam Choon, will provide an overview of TMB's second quarter FY2026 performance, group strategy and outlook. Followed by our Chief Financial Officer, Mr. Bagro, who will present on details of TMB's second quarter FY2026 financial performance. We will then open for Q&A before we end the session at 6pm. With that, I am pleased to invite Datuk Insinual Technologies, Samso Ahmad, to kick off our session for today.

Thank you, Erwin. Assalamualaikum warahmatullahi wabarakatuh. Very good evening to everybody. And thank you for joining us today. Everybody must be wondering, it's Friday afternoon, and we're doing a business analyst briefing to all of us. Is there a catch for doing that or not? There's nothing... that we are going to hide from you. We are going to be very transparent today. And it's just that I'm traveling from Kuantan this morning for our new PMU500KV from Pakar to Kandis. So that is another milestone as part of our expansion in improving and enhancing our grid expansion. First and foremost, let us share some of our key performance for the first half of our financial year. And we are glad to inform you that we delivered a resilient performance underpinned by strong operational executions across our key business pillars on a normalized basis, adjusting for product concentration and product air 16 impacts. Our core PAT reached 2.3 billion. Our regulated CAPEX momentum remains firm with ringgit 5.6 billion deployed into grid infrastructure to support accelerating electricity demand and enable our ongoing energy transition roadmap. Building on this stability, we are pleased to declare an interim dividend of 35 cents per share representing 63.2% payout on adjusted fatami. This demonstrates our continued commitment to delivering sustainable returns to our shareholders while maintaining financial discipline. So turning to our operational backdrop, electricity demand remains throughout the first half, primarily expanding commercial sector. The structural demand growth was demonstrated earlier this month when system peak demand scale consecutive historical high, reaching 22014 megawatt on 6 August, 2026. and surpassing the previous record of 21,827 megawatt, set just three days prior. This record underscore the sustained growth in electricity demand across the country. On exit execution, our clean energy roadmap, we achieved two key RE milestones. One is actually first TMD Bukit Sidim Kulim Solar achieved COD, adding 45 megawatt peak to our operating RE portfolio. and Dinawan Energy Hub was awarded the Capacity Investment Scheme, strengthening our future RE pipeline. We successfully hosted the TNB Energy Transition Conference ETHICON36, convening over 6,000 delegates and industrial stakeholders from one of the major and good events that are organized by us. More importantly, the platform catalyzed 15 strategic partnerships, cementing TNB's position as a preferred regional energy transition partner. and unlocking long-term opportunities across grid modernization, clean generation, and cross-border interconnectivity. And overall, our first half performance demonstrates continued resilience across our core business, while we remain focused on expanding our renewable energy footprint and advancing the energy transition. So building on our core demand momentum, total electricity units sold grew by 8% year-on-year. This growth was anchored by the commercial sector, which now comprises 59% of the total sales volume. Commercial demand expanded by 13.7% year-on-year, driven by data centers, shopping malls, businesses, and accommodation-related services. So looking specifically at the data center segment, actual energy consumption from operational data centers has more than doubled year-on-year, surging from 1.0 terawatt-hour to 4.0 terawatt-hour. Furthermore, load ramp-up continues to accelerate with demand reaching about 1.26 gigawatts as of June 2016, indicating highly predictable volume scaling. While data centers represent our fastest growing load category, they currently account for relatively small 6% of total sales, highlighting the underlying diversification and resilience of our broader customer base. Based on the strong momentum in actual data center consumption, let us look now at our secured pipeline and where this growth is concentrated. As of June 2026, our secured pipeline stands at 61 projects. representing 8.35 GW of maximum demand. Of these 42 projects representing 5.65 GW and are already in the system with actual load utilization reaching approximately 1.26 GW. This secured pipeline is progressively translating into actual electricity demand providing greater visibility of sustained demand growth. and Johor continues to strengthen its position at the leading regional data hub backed by distinct competitive advantages in the land and power infrastructure as acknowledged across the industry. We will inform Johor is actually the biggest data center clusters actually in the world, whereas Malaysia is actually one of the top 10 data centers clusters actually around the world. That occurs well when it comes to data center business coming to Malaysia. and as this project continues to progress into operations, our focus remains on ensuring grid readiness and reliability supply while maintaining disciplined capital deployment and working closely with data center developers. Turning to our technical performance, our disciplined operational execution throughout the period directly underpins our core earnings resilience providing a highly reliable foundation for the group's broader financial performance. Generation has turned around and now has produced a good performance for the first six months, where EF and equivalent availability factor have improved to 87.9% up from 86.1% last year. And the operational uplift reflects enhanced plant availability and proactive fleet maintenance. Turning to transmission and distribution, network performance remained firmly at world-class benchmarks, ensuring great stability and seamless power delivery despite expanding fixed demand. Specifically for distribution, our SID tracked at 23.545 minutes, while within our internal threshold of 47 minutes. This performance highlights the structural resilience and operational readiness of our network. Overall, the group's strong technical metrics reinforce our earning quality, operational stability, and ensure we are fully equipped to serve accelerating national electricity demand while enabling the nation's energy transition agenda. So, moving to our strategic partnership, we continue to expand our Beyond Kilowatt Hour. and integrated energy footprint through a high-impact long-term commercial collaboration across clean energy grid infrastructure and energy efficiency solutions. And in June, we hosted, as I mentioned earlier, our second TNBET conference. It is truly a proud moment for all of us. And beyond convening these key regional stakeholders, the platform served as a major commercial catalyst, culminating in 15 formal agreements. G-SPAN renewable generations across border power integrations, grid developments, gas infrastructure, and technical capability building. And highlighting some of them, our partnership with Day One to supply renewable energy for its data center operations under the CRES scheme. And we have also collaborated with Petronas for the re-classification terminal of RGT3 in Lumot. and through GC Sparks, our subsidiary, we have secured a 25-megawatt-feet rooftop solar project with EVE Energy. This represents GC Sparks' largest single rooftop solar project today. We also continue to expand our integrated energy solutions through recent partnerships with Unisim Melayu and Air Selangor First, TNEC signed a 20-year cooling energy supply agreement with Unity Melayu to modernize the cooling infrastructure at the UM's Wisma R&D. This demonstrates our capability to deliver reliable and cost-effective solutions that improve energy efficiency and support sustainable campus development. And we also signed a landmark dual agreement with AIS Langu to enhance the reliability and efficiency of Malaysia's critical water infrastructure. These agreements are electricity supply agreement for TMP to supply 100 kW power to the Sungai Rasa water treatment plant and 20-year cooling energy supply agreement. TMP will provide gas district cooling services to ISLAMOS facility. So collectively, these strategic alliances strengthen TMB's position as an integrated energy solutions provider while creating long-term value beyond conventional electricity supply. And moving to our non-regulated growth pillar, we are advancing a robust and diversified generation pipeline comprising about 12.7 gigawatts of projects under construction and development through 2033. In the first half of this year, we will commission an additional 30.5 MW from Unit 1 of the Sungai Perak Hydro Life Acceleration Program and our large-scale solar project in Sabah. Our commissioning trajectory accelerates in 2027, adding nearly 1 GW of RE capacity via Nigeri Hydro and large-scale solar 5. And this will be followed by over 3 GW peak in 2028. anchored predominantly by our flagship NETR development. 2030 will mark a pivotal year as we commercialize our 3GW of diversified capacity-spanning solar, hydro and wind assets across both our domestic and international portfolios.

So as we scale this high-efficiency clean capacity,

GMB is executing a disciplined phase decommission strategy, retiring about 6.6 GW of legacy assets by 2030. This allows us to progressively transform our portfolio, keeping in action and aligned with the energy transition while safeguarding the grid stability and customer supply reliability. And looking beyond our committed pipeline, GMB remains strategically positioned to capture high value creative growth opportunities that line with Malaysia's long-term demand growth and decarbonisation objectives. The government recently unveiled two major national programmes. First, the LS6 programme, targeting commercial operations by December 2029. We are currently assessing our participation based on its strategic fit and commercial viability. And second, the new Gen26 programme, The government is soliciting new Combined Cycle gas turbine capacity of high-efficiency Combined Cycle block for Peninsula Malaysia to operate between 2029 and 2031. And we are pleased to inform, to report that we have submitted our proposal on 1st of July 2026. And we hope we will win the bid. To gather this initiative ensures CNB is well positioned to secure high-quality generation growth, reinforcing national energy security and drive long-term shareholder value creation. With that operational and strategic overview, I will now hand it to our CFO, Badrul, who will walk you through a detailed background of our financial results for the first half of this year.

Thank you.

To you, Badrul.

Thank you, Neto. So we'll go into some of the slides. to cover the financial highlights for our performance for the first half of 2026, where you have seen that the numbers are quite good in the sense that the profit lean is stable, and this is actually driven by overall solid performance across all our business units. So if you look at the revenue, actually it has grown by 7.5%, adding additional $2.5 billion of additional revenue, coming mostly from growth of electricity demand, as earlier explained by the CEO driven mostly by commercial sector and of course data center driving a lot of that demand very strongly but most importantly if you look at our EBITDA it has also increased around 509 million to 10.8 billion for the first half of 2026 granted we have there the EBITDA margin slightly lower at 30.8 compared to last year But this is also the fact that we are definitely not spared from the cost pressure that is actually everywhere in the current business climate. But we believe that this is being mitigated. We are looking at various ways to contain this cost. And this is actually not far off from our number in 2025, which was around 31.6%. So we believe that at the end of the day, absolute amount of EBITDA is actually still growing. That shows that there is a positive momentum as far as the earnings of the company is concerned. And most importantly, when it comes down to Core P80, after adjusting for Forex and MR5R16, we actually improved the Core P80 by 5.3%, recording $2.3 billion for the first six months. Granted, if you look at some of the news reports as well, the reported PAT is actually lower because of the absence of the forex gain of almost $370 million last year. That's why we believe that the more reasonable number is the core PAT. And if you drill down into the numbers as well, this year we do have lower finance income by almost $160 million as a result of us optimizing our cash balance on this on the face of massive capex last year and this year and of particular interest to all of you as well if you look at our effective tax rate for this year for the so far on the six months is at around 29.3 percent which is just slightly lower than 29.8 percent that we recorded last year and as mentioned earlier as well in the first quarter the The more moderate effective tax rate that we are targeting would still be around 24%, but that will only realize closer in the quarter 3 and quarter 4 as we finalize all the incentives that's being available to TNB. And I've also noticed that in some of the reports that have gone out by the analysts today, there was also a lot of focus on our Genco unit. So I'm pleased to actually confirm that as far as we are concerned, Genco is actually performing very well this year operationally. But financially, we urge you to look at the numbers in terms of the whole six months, not just quarter two alone, because obviously there are some non-seasonal items in quarter two, but we would like to confirm that there is no major one-off during the second quarter. but we do have a bit more higher one of course in the in particular two items we do have operationally we have minor demolition work in our Pasir Gudang and Putrajaya and we do have a minor combustion and inspection work exercise in prior in quarter two. So that actually is part of the normal operating business for Genco. But most importantly, if you look at year on year, the net energy generated is 10% higher year on year. So for us, it's about looking at the longer term rather than being too worried about one single quarter performance by Genco. And you have seen that as far as the six-month number are concerned, it's tracking very positively. So in short, we believe that the overall performance reflect the fact that increase in sale of electricity, higher consumption from commercial sector actually has improved the copy of the company, which is accompanied by improved operational profitability across all our businesses. So if we look at into capital management side of the company, obviously we are focusing on two important things. The first one is the working capital management. as well as making sure we have proactive funding arrangement to make sure that we are able to utilize our strong credit profile to raise funds at very competitive cost. If you look at capital management from the trade receivable side, we ended the first half year 26 at 4.7 billion, which is actually lower than 4.8 billion that we had six months last year, despite that we have much higher revenue. So this is actually granted. You can say that it's higher than March and December 2025, but the seasonality do reflect that by the end of the year. Obviously, a lot of our receivables are settled so that everybody can show a nice P&L at the end of the year. So we do expect that seasonality to happen. But as far as collection is concerned, at 4.7 billion receivables, again, much higher revenue compared to last year. This is a manifestation of the fact that we have now a very comfortable proactive credit management of our receivables where they are well below 30 days as far as receivables are concerned. And if you drill down further into regulatory receivables, this is even better in the sense that at the end of last year, we had 1.9 billion of regulatory receivables. So I'm pleased to report that actually as far as ICPT for April to June 2025, of $1.3 billion was already received in March 2026. So that amount actually has gone down to less than a billion as of June, and there are only two big components.

This webinar is being transcribed and summarized.

We have been enjoying AFAR rebates all the way up to until April 2026 before the fuel cost dictated that there is AFAR surcharge coming from May. and the government actually has decided to come in and shield the rakyat from the full brunt of this elevated fuel cost. So that actually is the first time that we are using, I mean, government is utilizing KUI's fund to shield part of the Afas impact. So that's why we are cleaning it from KUI already, but the process, because this is the first time we are starting this, so the amount from May and June has already been claimed and July is coming soon. So the amount is being processed in the beginning. So that's why it's a bit slow at the moment. But once that mechanism is finalized, it will be monthly payable to TMB. So you will see a much lower amount from that. So that's one part of it. And we also have around 370 million of UPOCs from year 2024, which half of it was already received already by now in July. So once these mechanisms are in place, you will be able to see that the regulatory risk level will be much lower. So this is also the beauty of LP4 where under the new tariff mechanism, a lot has been done to make sure that TMB would be sheltered in terms of the cash flow risk from the uncontrollable factor. So that's very important. So if you look at the next item on AFA, as mentioned just now, almost 400 million actually still to be recovered. But again, like I said, this is only a small portion of the overall cost pass-through. so a lot of it has been passed through the consumer where TMB has been able to recover a lot of it from monthly basis only the one that's coming from KUI that's a bit delayed in this sense because the early days of governmentation but this is also the fact that government is making sure that rakyat is not too affected by this current high elevated prices so if you look at funding Obviously, we have been an active issuer in the market this year. We have actually issued $6.55 billion at current relatively low rate, making sure that we lock in our current borrowing at this current level over the next 25 years to match with our asset profile. So if you look at the first one, we already issued $4 billion for TMB. That is maturity between 7, 10, 15, 20, and 25 years. That's very well subscribed. with blended average rate actually at around 4.22%. The second one on the subsidiary, this is very unique. This is for our LSS 5 Plus under TNB Renewable. This is very unique in the sense that, yes, it's just slightly above $1 billion. We can probably get many banks interested to give us term loan, but we actually went with SRI Sukuk Wakala where we actually issued maturity of every year So it's like amortized loan, but Sukuk. So investors actually take a tenure of 3, 4, 5, 6, 7, 8, 9, all the way up to 19 years. But we did that because of the appetite for very clean renewable Sukuk. So we got a very good rate. So the blended rate between 3 to 19 years is actually 3.99%. So that's very competitive. And the third one under TMBC and Co, we have our third issuers of 1.5 billion. This is mostly to finance Nenggiri hydro project as well as Sungai Perak life extension. Again, that one is we don't want it to be short term because this is long term PPA, 20 to 40 years. So we issued 10, 15, 20, 25. And that actually got us blended rate of only 4.17%. So you see that as far as borrowing is concerned, we must make sure that we are able to lock in a good rate on long term and that's why today we have a competitive rate of cost of borrowing of 4.65% and 96% of that amount are fixed long term rate. So in the event that there is up cycle of higher interest rate coming over the next many years, we would not be exposed under that environment. so we must be able to continue in doing this to make sure that we have a disciplined financial management so that we are able to continue having a strong credit rating as demonstrated by RAM that has maintained our AAA rating and yes they are aware of our massive regulated asset investment case but they are also aware of our massive investment in the generation power plant but they are convinced that as far as these new is for productive and profitable usage. So this is also showing that we do have enough capacity to support the investment that we need to make over the next many years. And if we move the next one to what we have done so far, Obviously, if you look at our CAPEX for first six months, we have spent $7.1 billion and you will notice that out of that, a lot of it is actually to strengthen our grid resilience as well as advancing our clean energy capacity on the non-regulated CAPEX. So if you look at our regulated CAPEX that we will spend already this year, that's $5.6 billion. That is more than last year's delivered at around $4 billion. and if you look at our base capex in particular that is already last year 10.6 billion plus this 5.6 billion we are already at around 58% of the RP4 base capex of 26 billion and if you look at the contingent capex yes we spent last year 1.7 billion this year another 740 million but we are not really concerned about the mix between the two anymore so as mentioned in the first quarter briefing as well you should focus on the total regulated capex both base and contingent because we are on track to deliver the 13 billion regulated capex this year which will reflect in our income irrespective of base or contingent So if you look at what we have spent this year, 5.6 billion, we can categorize it into three main categories. Security of supply, 2.6 billion. To cater for demand growth, 2.3 billion. That will be all the data center that CEO mentioned just now. So all those needs to be strengthened to make sure that we are able to supply those. And around 600 million was spent on energy transition. So sometimes it's very difficult to get a color of exactly What are we spending on? Because you're talking about the grid. So today, we are lucky CEO was saying he just came back from the PMU in Kampong Awah. That's our 500 KV line. So that is groundbreaking ceremony. I've seen the photos of him with the shovel just now putting the ground away. So in the next few quarters, you'll be able to see PMU Kampong Awah in the CAPEX that we do under network reinforcement. But so far in the first quarter, in the first half, that will be the one that we did in Southern Northwest and Seri Iskandar West, plus the upgrade of our underground cable from Pantai to Salat South. These are specific major projects, but actually it's a lot more with smaller projects across the country where we do proactive asset replacement initiative to make sure that the network are able to deliver the number that you see just now, 0.001 minutes and all. So these are effectively being done all the time. and you've got specific project for example this year ECRL where we had a 10 feeder station supplying 132 kV bulk supply so that is already 97% completion and on energy transition obviously we have our flagship santum battery energy storage system that was already operating since the second quarter of this year and if you look at the sum of the energy transition project that we're doing, Smart Meter, which is a key project for us to enable time of use for all our customers. Year-to-date, we have achieved around 351,000 meters installed. That would be target this year is around 1 million. By the time we finish year-to-date, that is already close to 6 million customers having Smart Meters. And of course, we need also on our distribution network, we are actually investing in distribution automation to make sure that we are able to reduce downtime remotely to ensure supply reliability. And so far, 53% of the targeted work has already been completed. So I'm dwelling a bit more here so that the communities actually understand that, yes, it may sound big, $7 billion, $5 billion and all, but if you break it down, there are key components and teams that we are delivering across these three pillars to make sure that we are able to support the demand that is coming in. And on the other side of the slide, if you talk about non-regulated CAPEX, yes, investment in the grid and the regulated business is important, but non-regulated CAPEX is equally important to make sure that at the end of the day, there is power to be delivered over the grid that we are upgrading. So far, we have spent $1.5 billion already for the six months, and this is on the future growth platform. So you've seen there, Negeri Hydro Project that CEO mentioned just now, that 76% completion already, ready for operation second quarter next year. We've got the Sungai Perak, 36% already, the first unit coming on stream by year-end. And the one that we did a financial close just now, that is LSS5. that 686 MW peak that is on progress so we can expect construction that the funding is already in place and one of the project class that MCO mentioned just now we signed around 1050 MW of class project with J1 that split into two the first 500 MW which is 785 MW peak is the Hydro Floating Solar Kenya which is progressing very well where EPCC has already awarded and hopefully the next quarter we should be able to tell you that the ideal 500 megawatt ground mounted solar will also be coming on stream. So these are all part of the massive generation capacity that's coming on stream over the next many years as detailed out by the CEO in the previous slide. So yes, that's pretty much hopefully the details of what we have spent and invested on over the many years. Obviously, if I don't talk about dividend, all that I mentioned just now won't matter much to all of you. So we are pleased to actually show that as far as the performance of the company is concerned, we are maintaining the absolute amount of $0.25 dividend payout to reward our shareholders for the first six months. and at $0.25, yes, that will be similar to what we paid entering dividend for $0.24 and $0.25. Don't worry so much about the payout ratio, obviously, because as far as the company is concerned, that is not much off from the 60% payout. And we do expect to sustain the current trend of dividend payment, which will be determined by the end of the year when the full year numbers are in place. So with that, I pass back to CEO to talk about the outlook and guidance for the rest of the year.

Ladies and gentlemen, the last three years have been very exciting to us and also to the whole ecosystem. Plenty of exciting things happening, driven mainly by the energy transition. And we also see that Many things have been driven by the robust macroeconomic fundamentals that accelerate load expansion and increase demand from data centers especially. And we are revising our electricity demand growth upward between 5% to 6%. And this aligns with Malaysia's projected GDP growth of 4% to 5% this year. To support this expanding electricity demand and execute our strategic decarbonization commitments we maintain our total growth capacity deployment for the year of to be approximately 18 billion of this 13 billion will be allocated to our core regulated business with the remaining 5 billion will fund for our non-regulated growth pillar As we deploy this growth capital Can be remit anchored to strict financial discipline. We will actively optimize our capital structure, leverage competitive funding sources, and preserve robust balance sheet liquidity to safeguard our investment credit ratings. And finally, underpinned by our resilient operation cash flows, we trade our firm commitment to our established dividend policy. delivering consistent, sustainable distribution and long-term value to our shareholders. Alongside delivering sustainable shareholder returns, sustainability remains fully integrated into our long-term value creation strategy. Our focus is to expand our core business by supporting Malaysia's energy transition and solidifying TME's position across the evolving regional energy landscape. In line with this commitment, we have published our latest sustainability report, which is very thick in nature, very heavy, close to two kilograms report, just to impress everybody, you know, how serious we are in ESG, which highlights our group progress, the operational milestones, and ongoing initiative. We submitted two reports, a sub-statement, almost 100 pages, and report also close to 100 pages. So everybody said, where is your ESG? You printed almost close to 2 kilograms of report. So okay, probably next year we'll do it better. Okay, limited printing. She always correct me. That's my CSO. With that, I'm glad that Today is a presentation I made to you, very honest, very transparent, and I hope there will be a lot of questions and answers after this, and we do look forward for your continued support and attention, and to that I hand over back to you, Edwin.

Thank you, Dr. Samchul and Mr. Bajo for your presentation just now. Let us now move to the Q&A session. We'll begin by the by taking questions here from the attendees in the room, followed by those joining us on Webex. With that, I open the floor for questions. Please feel free to raise your hand and I'll start to pass the microphone to you so that you can ask your questions. Kindly introduce yourself and share your questions.

Hi, I'm Daniel from Hong Kong.

A few questions here. First thing is on your regular capex, you're guided 13 billion for the full year and then 5 billion for the non-regulated. But your first half only done 5.6 for regulated and 1.5 billion for non-regulated. So we are subtracting all this to accelerate towards second half of the year. Another question is that on the 5.6 billion regular capex already spent, how much of it actually Part of this so-called contingent tax If it's already spent on the contingent tax for your first half Has this actually started to flow into your first half earnings?

The short answer to the first question Yes, I have my senior chief network officer here Who are very committed And they do tell me that they work better under pressure So they will deliver the number according to the plan So yes, internally, we have guided for this 13 billion regulated CAPEX for the first quarter. And we know that the first half, we have only delivered 5 billion of that. But a lot of it in a normal construction project, you do spend a lot of time building the foundation and the groundwork to make it moving. But once it gets moving, you get to progress very quickly. So we are confident still to deliver the regulated CAPEX in particular according to that progress. and yes as far as non-regulated CAPEX much slower but those are tied to the commitment that we have in terms of COD of this project so we will be delivering that so if you notice our guidance for CAPEX second quarter and first quarter has not changed internally yes we had the same question based on six months progress can we do it towards the end of the year and the answer that I got was yes and we will deliver this CAPEX this year As far as Contingent Capax Recognition is concerned, yes, so far, 700 million of that Contingent Capax has been recognized this year. And yes, it has already flowed into our income for six months this year already. That's around 160 million already.

So 160 million PAP at the bottom line?

Yes.

So if you exclude this one, basically, your earnings didn't really grow? I mean, first half of last year, if they exclude this contingent capex earnings, which is additional, that means year-on-year basis wouldn't have much growth.

Yep. I mean, we look at it, that's why I said, as far as we are concerned, we look at the regulated earnings overall for six months this year against six months last year, which is growing as a result of the both base and contingent capex. So, it is growing. So that's what I'm contributing towards the overall corporate growth of the group.

Okay, just to make things clear here, when you get the capex spending of 13 billion, it's based on cash flow, right?

Capitalized under accounting principle, so that it goes into our regulatory financial statement, then the regulator can approve that amount as due to us.

Cash flow, you got the cash flow going out and some of them goes under what we call C-wave, work in progress.

So the project needs to achieve certain milestone. Of course, if you COD, that one's easy. But you've got certain milestone before you are able to capitalize it. So once you capitalize it, then you can earn the return on base and contingent capex. But this is like ongoing all the time. So you've got project are being spent and being capitalized. So it's a rolling numbers all the time. But what we are guiding is what we were going to capitalize under the balance sheet, which will be tied to the earnings that we're going to get, which is the 7.3%.

So it's a project. Okay, for example, the project is halfway this quarter and halfway done WIP. What in progress? Only done by 70% and then the engineer and contractor already approved. said that it has been done 75-70% but I have not COD yet. Will you actually start to recognize these earners? You still have to wait till COD first of the project.

But that's why when I showed the project just now, under the network side, it's very, very unique in the sense that you really have to define one project on its own or how do you define it? Let's say you're building a cable between two PMU, that's 100 kilometers long. So you can say it's one project you need to wait until 100km siap, baru you can capitalise. Or if you award it under two packages, 50km, 50km, 150km siap, that's one project that you can capitalise already. So there are a lot of nuances to it. But what we're saying is, yes, it has to be capitalised, and what we're guiding is what will go into our balance sheet.

And then my follow-up question is that, for the next 2-3 years until 2027 the RP4 has it actually allocate some of the budget for the Ascend Grid or we can only expect the Ascend Grid CapEx to only start in in flow in 2028 or RP5 I think we better use the manual one it's a lot of

there are some CAPEX being allocated under RP4 but we will not be covering the whole project of APG but for example there are CAPEX for land acquisition which has been actually budgeted under RP4 so there will be some minimum CAPEX allocation that we will see under RP4 IPR period But it's not totally the whole APG project data. So it depends, you know. For example, for the project APG, land acquisition is one of the key that we need to do it fast. Then it allows about 200 million over there for the land acquisition. Those are the things that we see under RP4. So the likelihood is actually when we go under RP5, there will be slightly major allocations under RP5, simply because there's a lot more clarity in terms of the project. Meanwhile, it's just a bare minimum of allocations being allocated under RP4. Okay, any more questions?

One question, Max from RHB Max, can you share in terms of the new ESA that was signed in first quarter and second quarter So I just want to get a sense of what's the progress And if I check, if I remember, if I see the slide correctly I think it's about 0.9 gigawatts, right?

0.9 gigawatts, 5 ESAs so far So what's the state between 1Q and 2Q?

Kawang, do you want to take that one?

The new ESA signed between 1Q and 2Q

Currently for the first half of the year, we have signed five ESA, which is totaling about 862 megawatt. So we're actually projecting 11 throughout the whole of the year. So we already have two, right? I'll give you the detail with respect to first quarter and second quarter, right?

Thank you.

Good evening, this is Isaac from Aftinhuang. I have two questions please. Number one, just now you have shown your plans for the capacity expansion over the next couple of years. May I know that those new power plants subject to further approval from the Surajayan Tenaga, is this going to be under the current new Gen 26 or is that like separate?

Okay, just to answer you Isaac, all projects must be approved by Suraja Tanaka and also Petra so what the project is actually they issue you an initial letter of notification for you to do the necessary preparations once you receive that basically the project is given to you but you need to comply to certain governance regulations and policies and procedures of the government then after that We need to submit for levelized tariff, you know, and some negotiations with SP, then you lock the deal. So there's plenty of exciting projects because we see moving forward until 2031, 2022, there's a good growth in total electricity demand. Whereas and what we see is actually our existing facility remains the same. So there is a risk now to actually plant up quickly in order for us to meet those rise in demand. And that is where NextGen certifies Nasional Berhad Nasional Berhad Nasional Berhad 39, 30 and 31 year growth. So we bid for next gen 36 for an open cycle gas turbine. And there are quite a number of other participants also. So they are all lined up to meet that expected demand due to the rise in the electricity growth.

Sure. I think you have secured some of the islands already. For those you have fleshed out, maybe the Kappa, the

Pakar Repowering Pakar Repowering Pakar Repowering Pakar Repowering Pakar Repowering I loaned for PAKA 1 coming loan for PAKA 2 we received already that is 2008 so we received an I loan for our palm storage Ulu Jalai of 700 MW and we also received KAPA I loan for 2100 MW so it's a confirmed I loan and loan that we have received for now so that one I probably expecting close to about more than 50B over the next five years that we'll be expanding our capacity.

Alright, thanks. Just another question. This is on the CREST versus the LSS. So I see that you have both. So in terms of the preference, is there any particular, which one of these are you prioritizing? And in the day one deal that you have, who is who will be there for the partition and the SAC? Is that Your part or is it your part? Thanks.

Larry, you want to take it on? This is my expert on CRESS and LSS.

Okay, thank you for the questions.

On the first one, whether do we prefer CRESS or LSS, short answer is no.

Both offer opportunities in terms of benefits and return. On the CRESS, I'm not sure whether it's public information, but there is a risk

I hope that

Okay, anyone? Yes. Hi, Dr. Ivekro. Yeah, it's calling from Macquarie. I just wanted to understand a bit on the regulated KPAX type of things. Because you're saying the base KPAX and continuing KPAX, you should just look at it as one item regulated KPAX, right? But just going into 1027, which is your last year of the RP4, how would that look like your regulated KPAX? Would that be on a similar level or, you know, should we expect more contingent KPAX to ramp up significantly as a result? Yeah, color some of that.

As mentioned, if you look at our base CAPEX with $4 billion that we spent this year and $10.5 billion we spent last year, that's already 58% of the $26 billion base CAPEX. So we have a three-year CAPEX plan for regulated. We have guided that to be at around 70% to 80% of the allocated $43 billion. So last year we spent $12 billion. This year we're guiding for $13 billion. So you need close to another 13, 14, 15 in next year. So yes, contingent CAPEX has to make up most of the CAPEX in 2027. And that's much easier to justify because of the fact that most of the base CAPEX will have already been spent already. So when there is demand, there is supply. and there is the need for energy transition to cater for all these LSF projects and CRESS and all. So that's how we are positioning it so that we are able to get timely approval for the contingent CAPEX. So it has to come in because of the demand, because of the energy transition needed to cater for the solar projects.

Understood, thank you.

Any more questions, please?

Hi, this is Noah from Kazana. Just a question on Genco. You mentioned that we should look at the first half results rather than quarter and quarter and you said that 10% net energy generated year on year. How do you expect that performance for Genco for the rest of the year on net energy generated?

And the Genco you want to take out or you want me to take out? Suddenly I got to take out also.

Okay, we'll see a very strong performance.

I'm very happy to look at the performance of Genco this year. We have turned around the organization. We are hitting the numbers that we expect to hit. And I'm really hoping that with the strict discipline of doing the necessary maintenance, The sales, the net megawatt sales out of Genco is going to be very consistent towards the end of the year. There'll be patches of my maintenance here and there, but overall, thank God, cross my fingers that nothing will... Hi, Hazmi here from CLSA. Just a couple of questions.

just on cost items I think in second quarter we can see some elevated bit I mean of course on the fuel or packs but also on the non-fuel or packs part can you comment a little bit especially surrounding any staff IT costs and all that will it still remain elevated going into second half and if there are any details about that sounds like cost is my part of the anything money apart so yes

I've seen a lot of concern as well on the energy side, on the elevated cost non-fuel in the second quarter in particular. But I think as earlier mentioned, there is a lot of it coming from repair and maintenance actually for our bigger asset base. But yes, you are right, there is also attribution to computer licences, trainings as well as overall staff costs. So I think it's important to note that as far as staff costs are concerned, yes, you have seen that for RP4 in particular. We have scaled up our capex delivery from $9 and $10 billion a year now to $13 and $14 billion going to $15 billion. So obviously for 2025, the first year operation, we do push our people under a lot of pressure to deliver those kind of capex. But of course, during the course of the time, we have been hiring as well. So that is a reflection of the fact that it's a much bigger scale for CapEx delivery for our regulated business. But if you look at Genco as well just now, those projects that's going to get us another 12.7 gigawatts over the next few years, those come with people that have to deliver the project now, but earnings will come earlier, three, four years down the road. So there is a bit of a mismatch there that as far as we are concerned that we have to deliver to make sure that the earnings comes later. And in second quarter in particular, obviously there is this annual performance cycle that happens as well. So that's something that we have to take in. So we do expect that as far as non-fuel or tax costs for third and fourth quarter, we are managing that and we expect that to moderate in the quarter three and four. But I would have to say that at the end of the day, when additional people is being employed to deliver those business cases, so it does flow through to the additional licensing, IT costs, training costs, and all those. So yes, it's high on our list, and it's a bit elevated in the second quarter, but should moderate quotes in the third and fourth quarter based on those trendings.

Just to piggyback on that, going with all this inflationary pressure and going into RP5 kind of like discussion as well, the question then back is 7.3% still a good run rate for the RAB or how do you guys look at it? That sounds like CEO's question.

Yeah. We've got to wait until RP5 lah. when we submit a proposal. We want to submit at 7.8. Most of the time, there is a real pushback from the government. So we'll let see and wait for the RP5 proposal. Then we'll come back to you, Lohagmi, probably in the next one. Difficult for me to tell you that we love 7.3. They have been maintaining 7.3. We hope that we're going to enter the negotiation with 7.3. Let's see how it goes when we're ready with all the proposals by the regulatory teams. On top of that, we see that, you know, there is actually a thing I just want to add on CFO's comment. We see a growth in the company. There are plenty of projects, you know. You need more people. And also, we are, you know, we are also very supportive of the government's call for the minimum living wage. And you see that being included also in part of our effort to actually improve the basic living wage for instead of having it one lump sum we spread it over three years period so this is where you see there'll be some gradual increase over the period of three years where you see our overhead costs will slightly go up in nature all right okay just just one two last one on the qui fund

Okay, remind me again, how much do they owe you, and also how much of remaining buffer that they have left?

It's funny. Actually, it's confidential. Only they know. But we also track, because we always pay. But I think it's enough for them to cover. And the government has been... Do they owe us anymore? No.

that's 900 million out of which we have received around 180 ICPT last year so that will be around 380 for AFA for the three months plus all the contingent capex recovery and all those but to tell you they have enough to cover us on top of that we are very concerned because of the high surcharge period that the whole country is experiencing

And I'm truly glad that the government has just come forward to actually alleviate the surcharge by taking a portion of it, you know, to be absorbed by the Kuih. And that's great to me, by elevating whatever the surcharges that are being actually supposedly to be passed through to the whole consumer are being absorbed through the Kuih fund by the government. So that is a great news, you know, that people may not realize it.

Yeah.

But I think initially we have a lot of buffers there. But being buffers, you know, as long as you consume, it's going to deplete someday. But I think that's where ST is actually looking at it diligently and prudently how to actually expense the equivalent. Okay, thanks. Last question on data centers.

I think on the plan of the 5 ESA, How is it in terms of progress compared to last year? I'm referring to on data center task force. Is it like getting tougher now to get sort of like more data center application and all that?

Good news is actually we had a good meeting with Datuk Sri Joe. They approved 19 two weeks ago and recently they want to approve another 33. So all in all, the left loop is going close to more than 5 gigawatt coming to the system. And that's the good news for the industry. And that's what I can tell you. For the next three years, it projected close to 8 gigawatt coming from the electricity.

So that 5 gigawatt is on top of the 8 gigawatt that you show in the slide system?

5 megawatt. 5 plus 8. 5 plus 8.

Thank you.

Okay, any questions? Hi, can I follow up some questions here?

Just now you guided guiding that in second quarter there will no major one-off for your power generation site but if there are some demolition works and minor combustions all this so this actually hike up your cost including the second quarter and then compared to your first quarter is it?

For Genco performance? Yes So it will be roughly around 200 million total cost here

I think it's just happening this quarter it may not actually continue in the coming quarters I don't think it's 200 million but I need to look at the details I don't think it's 200 million out of these few things that we have to look at because I'm looking at your numbers actually dropped from 300 million to less than 100 million in second quarter and then if there's no major one of all this but your numbers probably continue to improve In the middle, unless the interest cost or depreciation charges go up, then shouldn't be much difference to explain the $200 million. Unless you're talking about the tax, they have a higher tax expense.

Not at Genco. The tax expenditure is at, I mean the tax expenditure, the major portion is actually at CNB, not at Genco.

I'm trying to find out, compared to your first quarter and second quarter, what are the major difference here? If you're looking at from the Genco side, The difference is only about 200 million compared to your first quarter and your second quarter.

There is also provisions that we have to do in terms of the regulatory charges from the state entities in particular. So there are a few items that is being charged where we are in the process of finalizing the recovery. So you know that we operate in many different states and some of the charges are being imposed by the state in terms of water usage and all. So different states have different charges and sometimes they are being charged to us and some are being negotiated, some are being distributed and all, but some may need accounting provisions already. So we do have a bit of that in the second quarter as well. This is on the PowerGem site.

I see. Another question. Just now you mentioned that the AFL subsidy service, you are trying to recover $400 million from the KWIE fund or from the government?

Yes, that one is not we are trying to recover. Actually when we do the projection for AFA, government has decided that they don't want to pass through the whole amount to the rakyat. That's why CEO was saying government want to alleviate some of the pain. So KUI says they will cover part of that AFA because AFA is fuel cost, supposed to be neutral for T&B. So it should have gone to all of us, but government decide some part of it, government will take. So the one that is being passed to consumer, I get it within 30 days. The one that is being covered by QE, because this is a new process, so it started in May, May and June. We have submitted our claim for May and June already, and July is being processed. So that amount is not yet paid to us. So that's around $380 million that I have in the slide just now that is part of the overall $900 million regulatory view from government entities.

So this only affect your cash flow but doesn't affect your P&L because your P&L you will accrue on it.

Yes.

Alright, thank you.

Hello.

I believe we have taken a lot of questions from the floor today. So we would like to proceed to the last two questions from the participants from Webex. So we have two persons with a couple of questions here. First, Rachel Tan from UBS. You may proceed to ask your question.

Hi, good evening and thanks for taking my question. I have a couple. So in terms of the cost, are there steps you can take to manage the cost inflation that you talked about earlier? And also, given that you are ramping up staff costs ahead of execution, should we be expecting a bit more Compressed EBITDA margins going into the full year and maybe next year?

First question is about the cost, right? So as far as the non-fuel OPEX, yes. Well, we talked about the staff cost just now, but there is also an RNM cost that has came in as a result of the higher capitalization. What does this mean is that basically, for example, 2025, we capitalize 13 billion new assets. So those go into our balance sheet, and once it goes into our balance sheet, the RNM work for those assets actually become OPEC for 2026 already. So that's why a lot of that cost pressure actually because of higher asset base. But this is something that the team is also looking very closely in the sense that we are trying to push a lot more towards preventive maintenance so that the more expensive collective maintenance can be reduced. So this is part of the overall effect to make sure that we continue to protect our margins. That's the first question.

Okay, yeah. My next question will be, given the higher electricity growth forecast for the next couple of years, as well as you're talking about 8 plus 5, what is your sense on the RP5 capex for now? Because last quarter you suggested that it could potentially be lower.

You know, we've got to wait until the team finalizes the RP5 proposal. Right now, what the team is doing is compiling all the projections, reports, and everything so that we have a good proposal to the government that will take into account all these demands for cars and all those things. Definitely, whenever you see sales increase, definitely it will also affect the profitability of the company so going to your number three the cost inflation what we are currently doing essentially we're looking into various initiatives that to look into our productivity improvement currently in distribution network we are that is a project to look how do we manage and improve our maintenance costs, now by deploying a lot more predictive maintenance, reach-based maintenance, rather than corrective-based maintenance. So we are looking at it, and we are making good progress, and we hope that we'll have good results towards sometime end of the year and towards early next year. And we are also looking at how do we do productivity, efficiency, effectiveness, cost optimization, cost savings initiatives that are currently ongoing, being led by our CSBO strategy division. How do we capitalize on our strength while minimizing the cost? Those are all in the pipeline, Rachel. Be assured, we are working hard on it so that in order for us to manage this cost inflation moving towards the end of the year.

Okay.

Alright, thanks for the question.

Okay, we have one last participant on Webex with questions. Fung from CIMB. You may proceed to ask your questions.

Hi, good evening. Dr. Shamsul and Mr. Badrul. Two questions from me. So firstly, just going back to the non-fuel OPEX, right? So I note the comments earlier around repair maintenance and staff costs due to the scaled up capex delivery under RP4, as well as the comments on the general cost inflation. But this is covered by the 7.3% regulated return under the IBR, right? So am I right to say that this shouldn't affect the EBITDA margin ultimately? and if anything, it is just timing differences between cost incurrence and perhaps recovery in the later quarters. Maybe I'll start off with that question first.

The return under the regulated IBR framework at 7.3% assumes certain level of OPEX. so obviously when you get approvals you have to keep it within that budget so not every maintenance not every effect item would fall within the approved so if some of the amount does exceed the approved amount then it will eat into the profitability in terms of the EBITDA margin so you cannot just generally say that everything under regulated business would be net at 7.3%. There are cost elements that is not part of the overall regulated return as well.

Then in terms of OPEX that's under the regulated business, in terms of how it's trending so far, are we still within the OPEX budget under RP4 or are we starting to reach a level where we are starting to perhaps exceed some of this budget that we have been allocated for?

We are within budget.

Okay, so if it's within budget, then it should be no issue, at least at this point in time.

Yes. That's why I'm not concerned. Okay. If it's not, then very difficult for me.

Okay, okay, understood, understood. Okay, and on Genco, right, Dr. Shamsul, any guidance on the adjusted EAT for Genco for the full year so that, you know, we know the first half has been pretty strong. and you're saying that the performance will be strong for the full year, but any number that you can guide us on?

Oh, okay. You know, we hit 420 in the first six months. They said their own KPI is 600, you know. So, another 180 to reach. So, I say that it's not going to be acceptable to us. So, we're asking more, lah. So we are hoping that it's going to be, you know, if I commit, then you start writing your analysis and start saying that. So, okay, off the record, probably around, oh yeah, now I'm getting worried because if I commit, but certainly more than $600 million. That I can vouch. Okay lah. If I don't hit 600 million, you come back to me lah. I correct you lah. But at least 600 million, I'm quite confident to hit that one. Alright. Okay, Hong. Alright. Thank you so much. You ask the same question lah. Then I ask you again lah.

Okay, okay. Thank you so much.

Okay, Hong.

Thanks. Okay. That will be all the questions for today. Ladies and gentlemen, Thank you all for your questions. Once again, I would like to invite Datuk in Senior Technologies, Samso Ahmad, to deliver his closing remarks.

All right.

So, ladies and gentlemen, thank you for the engaging session.

And, you know, it's very exciting year for us, you know. But first, we remain highly confident in the core resilience of our operations and structure strengths of electricity demand trajectory. And as Malaysia landscape evolves, We are strategically positioned to capture high value opportunities selectively and with investment discipline. And TNB remains firmly committed to a prudent capital allocation framework while delivering sustainable shareholder returns. And backed by strong operational fundamentals, high visibility growth pipeline and discipline and execution, we are well positioned to deliver long-term active value for TNB shareholders. It has been certainly a very exciting three years for all of us, and we're looking forward to a very exciting few more years coming. There's plenty of things on our plate. You know, currently our plates are full. We're making many more proposals to the government, which I cannot disclose right now. But certainly we look forward for a very exciting years coming to Tenaga in the future. Thank you very much, ladies and gentlemen. If you have any follow-up questions, do not hesitate to contact any of our members, investor relations teams. It's always available at your disposal. Please contact them. And I hope that concludes today's session. And I would like to take this opportunity to wish everybody a meaningful Merdeka celebration. We celebrated our 77th year. On 1st of September, we celebrated Thank you very much and Assalamualaikum Warahmatullahi Wabarakatuh

On behalf of Tenaga National Berhad, we thank you for your participation in today's meeting. If you wish to add further clarification on any unanswered questions, please feel free to contact our investors relations officers or email us at tenaga underscore ird at tmb.com.my. To all our attendees, whether present physically or virtually, we appreciate your time and engagement. For our Muslim attendees who are here with us physically today, A prayer room is available at Tower A Level 1 and our staff will be happy to guide you there. Thank you once again and we look forward to seeing you in our future sessions. With Malaysia's Independence Day just around the corner, we wish everyone a wonderful and meaningful celebration. Take care and have a wonderful day.