Sembcorp Industries Ltd (U96) Earnings Call Transcript & Summary

Ladies and gentlemen, a very good morning to everyone joining both in person and on the web. Welcome to Sembcorp Industries Full Year 2025 Results Presentation. My name is Xin Jin from Group Strategic Communications and Portfolio Management. Before we begin, may I request that all mobile phones be switched off or set to the silent mode. And if you feel unwell at any point, please approach our staff for assistance. Joining us on the panel today are our Group CEO, Mr. Wong Kim Yin; and our Group CFO, Mr. Eugene Cheng. There will be a question-and-answer session following the presentation. Without further delay, I will now hand over to King to begin the presentation. Kim Yin, please?

Thanks, Jin. Good morning. very happy Lunar New Year to everyone. Let me now quickly get into the results of 2025. Now before I begin, I want to also set the stage. Compared to 2024, we have had -- those of you who have been following us would know that we have a significant headwind in 2025, right? The margins in Singapore has been under a lot of pressure with the increase in the supply in the Singapore market. That's the first one. In our U.K., margins -- so volume also come under pressure. China renewables continue to face heavy curtailment as well as pricing pressure. So despite those headwinds, we were able to offset the impact from those and came out in a resilient outcome, which is you can call it flat, but it is not without effort that we can get with the $1 billion mark. So for consecutive years, we stay at that level. And that has given us that the confidence to come out and say that, hey, look, the underlying cash flow and the business is strong and resilient. And actually, the cash flow is growing. And because of that, we convinced the Board to allow us to increase the dividend. It's just an indication. It's not much of an increased $0.02 out of $0.25. It is still we recognize that we lack our peer group in terms of dividend payout, right? But now that, again, we are operating [indiscernible] platform, this normal new normal that may not be new, we have been 3 years, but I think everybody is convinced that we have the underlying capability to increase our dividend to close the gap between ourselves and our peer group, right? So the idea is that in terms of returns, one can look forward to them. And then the second thing is that in terms of growth, we show you that in the year, we are pending the completion of a major acquisition in Australia, opening up a new market for growth, a new platform for growth that is of scale, right? So returns and growth. That's the message. If I want you to take away 2 message, please, those will be the 2 messages Yes. So then now let me then go through some of the details in 2025 performance. The turnover was $5.8 billion. Adjusted EBITDA, $2 billion. Underlying net profit, $1 billion. So easy to remember 6, 2, 1. That's how I remember the minus around numbers. Underlying earnings per share of $0.564, ROE 18.2%, right? So as I mentioned just now, we proposed a final dividend of $0.16, bringing a total of the year to $0.25. This is compared to 2024 to $0.23, it's a 9% increase. And again, like I said, we recognize the gap in terms of payout ratio and dividend yield from our peer group. And the idea, the intent is that over time, we're very comfortable and confident that we will close the gap. Then into the business segments under Gas and Related Services, earnings of the group continue to be anchored by Gas and Related. Within the segment, the Singapore portfolio contributed $538 million in net profit or 77% of the GRS segment's net profit. A combination of long-term contracted portfolio as well as the incremental contribution from Senoko Energy provided the anchor for the earnings in 2025. During the year, in the last year, we secured 370 megawatts of long-term contracts, of which 150 megawatts was from Micron, which we announced in January this year. So we continue to execute this strategy to capture demand from data centers and high-tech manufacturing customers. As of February 2026 right now, close to 80% of Sembcorp's portfolio is contracted for 5 years and above while the Senoko Energy's portfolio contracts are short term. So in 2026, just to go a bit further 5% of the Sembcorp portfolio will have to be recontracted. While about 50% of Senoko Energy's portfolio must be recontracted. So we expect that, of course, lower blended spread for the new contracted volumes, right? So 50% of Senoko, 5% of the same crop portfolio. So this impact will be partially offset by operational and financial synergies from both portfolios. Then in the fourth quarter of this year, 2026, the commissioning of the 600-megawatt hydrogen-ready power plant is expected to take place. It is highly efficient. and that will enhance our fuel and cost efficiency of the entire fleet. During the year 2025, we've also secured long-term PPA for Sembcorp Salalah independent water and power plant. This 10-year contract will commence from April 2027. The previous contract which is currently running is over a 15-year contract in expiry in April. So we secured another 10 years, and that will provide the stability coming in from the contribution of Oman. So the Middle East is entering a new phase of rising energy demand driven by industrial and digital hubs that require reliable uninterrupted power. We have extensive experience operating critical power and water infrastructure in the region, and we will selectively pursue growth opportunities in the Middle East. Moving on to renewables. During the year, we maintained the pace of growth in the selected geographies, adding 3.6 gigawatts of new capacity to our portfolio compared to the end of 2024. The earnings from the renewables and increased 5% year-on-year. This is despite the contribution from China renewables declining to $74 million from $89 million in 2024. In India, we have seen improved contribution from the existing fleets as well as from newly commissioned megawatts. During the year, pipeline continues to grow in renewables. We acquired 300 megawatts of solar capacity and secured 1.5 gigawatts of greenfield wins comprising hybrid projects round-the-clock projects, firm and disputable renewable energy projects. We are actively exploring capital recycling [indiscernible] in India. In the Middle East, we successfully entered the wind market in Oman with 125-megawatt greenfield development project underpinned by a 20-year PPA. In Singapore, we were award solar projects totaling 236-megawatt peak including 2 floating solar projects, reinforcing our position as the country's leading floating solar energy player. In Southeast Asia, we completed the acquisition of the 49 megawatts hydro project in Vietnam and a 28-megawatt solar and energy storage portfolio in Indonesia, which is currently under construction. So our total group renewable capacity is now 20.4 gigawatts, of which 5.4 gigawatts are secured, either under construction or under advanced development. This 5.4 gigawatts of new capacity will progressively come online between 2026 and 2030. Integrated Urban Solutions net profit for the IUS segment was stable. Earnings from our Water segment was stable while contribution from the other divisions were lower due to the absence of contribution from Sembcorp east or SemEnviro. Obviously, we closed the deal to divest the SemWaste was in, was it February? March 20, 2025, so it's been some time. So compared to 4 that the contribution from SemWaste is, of course, no longer. The urban business continued to secure new industrial projects, bringing our total gross development land area to over 16,000 hectares. In Vietnam, we secured 4 new investment licenses, and this brings the total number of projects in Vietnam to 22. In Indonesia, we are developing the 500-hectare Kendal Industrial Park Phase 2. Remember that Phase 1 is almost is mature and most of the land has been so now we're moving on to Phase 2 with 500 hectare. And we are also progressing on the development of the 100-hectare Tembesi Innovation District in Batam. We have also doubled our leasable gross floor area to 1.1 million square meters from 0.5 million square meters in 2024. So this -- and the occupancy rate of our operational industrial properties increased to 96% from 76% as of the end of 2024. So the in terms of both growth in square meters and also in terms of occupancy rate, the IUS team has done well to improve the performance. So this will particularly this area will further strengthen our recurring income coming up from IUS. So we will continue to review and sharpen our portfolio as we did through the sale of SemWaste and the divestment of municipal water business in China during the year. The long-term fundamentals of Sembcorp is very strong. We are in the right places. We have got secured cash flow through contracts with high-quality customers. And later, Eugene will show the underlying cash flow coming from the Singapore portfolio and then post-completion inter portfolio is actually very, very robust. But in the near term, we are facing some headwinds, which shouldn't be new. These are the things that we experienced in 2024. But in 2025 or rather in 2025 and 2026, we want to flag that in front of you and give you a little bit more color what we would do about them. In Singapore, with the new supply come on stream, we can naturally expect without spreads. And since 2023, you know that we have been transforming our portfolio by leveraging our position as an integrated gas and power player as well as the largest renewable player in Singapore to secure long-term contracts. So what was previously very merchant heavy portfolio is now largely contracted one. Of course, I'm speaking about the Sembcorp portfolio, not the Senoko Energy portfolio. Now Senoko Energy, we will go in there and try to add value as we did with our own portfolio, but the good thing is that we got it at a price at an investment level that is very comfortable, notwithstanding the merchant nature of the business, right? But as a portfolio, there are significant synergies in terms of financing, in terms of operations, in terms of how we run the plant. For instance, we can sign a hedging contract with Senoko and to provide insurance so that then we can aggressively contract our baseload high-efficiency units in the Sembcorp portfolio. So there are significant synergies. We bought Senoko a very attractive valuation. And in combination, we are now the largest fleet of gas-fired power stations in Singapore, together with our integrated gas portfolio and as well as our position as the largest renewable player. We are very well positioned. We think that we are highly competitive and the diversified portfolio will position us to capture the growing AI demand in Singapore, particularly from data centers and high-tech manufacturing sectors. Go off script a little bit. When we say, today, there's a lot of hype about AI shares, share price of some of these companies, tech companies are very high, we're not in that game. But by the time the AI demand translates into energy demand, and it translates into a contract with Sembcorp. That is a solid demand because that demand for energy is coming from Micron, is coming from data centers that are hyperscalers with good credit profile, right? So we are sort of on the receiving end of it. I'm not saying that we are an AI company now. But by the time we receive the demand translated from all the noise in the market, it is actually a very, very solid demand that we are capturing, right? So the important thing is that we are ready to capture it. And what we are saying here is that we are very well positioned to capture that demand. If I move on to China, of course, we will continue to face the tailwind and tariff pressures alongside with the recent cancellation of value-added tax refunds for onshore wind projects. So these are developments that will affect the entire sector, not just us. Now we will remain very disciplined in managing our portfolio exposure in China in terms of thinking through project additions or even divestments. We will allow time for expansion of transmission network and also pursue contracts to try to stabilize earnings. Having said all that, to put things into perspective, by now, if you look through the numbers, China is a relatively small contributor to the entire picture. right? And as I mentioned just now, notwithstanding the headwinds and the lower contribution and the recent contribution in the last couple of years, we were able to plug the gap to other means. The last one is the U.K. The closure of our key customers' operations, particularly SABIC is driven largely by weak economics, of course, in the industrial sector as well as in the U.K. in general. We are driving active cost management and repositioning the business to capture data center opportunities. We'll talk a little bit more about why we think we can capture that in the next slide. So I mentioned just now that we are -- we believe we're well positioned to support the region's accelerating AI-driven energy demand. So allow me to take a little bit of time to elaborate. Our Gas and Related Services provides reliable baseload energy. We are well positioned to capture more demand from new data centers as well as the semiconductor sector. As we have shown you, we now supply almost 700 megawatts of the high-tech manufacturing sector, which includes also the recent 150-megawatt contract with Micron. Our Renewables business delivers tailored green PPA solutions and long-term renewable energy supply for high-demand industries to meet their clean energy targets. Contracts secured include the supply of power-backed renewable energy certificates to day 1 20-megawatt data centers under a 10-year PPA. So data center day 1, 20 megawatts to a 10-year contract. That sets the tone of what we can expect moving forward as more new data centers get planted in the region, particularly in Singapore. We have also signed a 25-year renewable energy purchase agreement with Meta Platforms, and this is to build, own and operate 150-megawatt footing solar farm in Kranji. And finally, under the IUS business, we provide low carbon infrastructure to customers, and we are able to develop sustainable data center infrastructure with partners to supply land and power along with other green services. So within the Tembesi Innovation District in Batam, Indonesia, we can accommodate up to 100 megawatts of data center capacity. For those of you who are familiar, Batam, of course, is really seeing the action of fiber coming in from companies such as Singtel. So it is not whether there will be data centers, it is when and on what size, right? And what we have there in Tembesi is a really 100 hectares of plan ready to connect up to all these data center demand. And in the U.K., Wilton offers 138 hectares of ready land with immediate grid connection and supporting infrastructure. And that is naturally attractive for potential data center developments, right? Because as you know, for data centers, one of the biggest constraint is the power supply right? And if you in a place like U.K. or for the matter, Singapore, Australia, places like this, bring a new substation and a high-voltage cable to supply newly increased demand from data center that will take time. So the existing infrastructure, existing land will provide that opportunity. So together, in renewables as well as in U.S. Sembcorp is actually a very attractive comprehensive energy and infrastructure partner for the AI players. By integrating reliable baseload scalable renewables and sustainable urban solutions, we will capture the region's growth while enabling our customers to accelerate their decarbonization and digital transformation ambitions. I shall not go through this. And in the script that Jin has given me, I think what I want to emphasize before I hand over to Eugene for the detailed numbers is, again, first, in terms of returns, you can -- we are expecting that we will be able to improve our dividend payout ratio and dividend yield steadily over the coming years. And this year, the $0.02 increase compared to 2024 is just an indication, and we have deliberately been quite prudent given that we are pending the closing of a major transaction in Australia, right? So to close the gap in terms of dividend yield and payout ratio compared to our peer group. So that is the first thing. And the underlying cash flow, I have explained where our balance sheet and cash flow position we discuss the Alinta acquisitions a month ago. But if we need to provide elaboration, again, I'm happy to do that later. But suffice to say, we're very comfortable with our balance sheet position. We have very strong cash flows coming in. In fact, we struggle to find the type of growth opportunities like Alinta where we can deploy the cash flow. So naturally, either you grow or you we want shareholders return it to them in the form of dividends. So that's the first thing. And the second thing is that in terms of growth, we have immediately in front of us Alinta, which we will hopefully complete sooner than later, but certainly, we expect within this year, if not the first half. And Alinta will provide at least for the next few years, a significant scale market and a significant growth capabilities. We have a very strong management team now under to help us grow the entire energy portfolio. The lease of it is a 10 gigawatt renewable pipeline that they have already identified, right? And in addition to a very energy staffed high demand growth, Australia energy market. So certainly, in the next few years in terms of returns and in terms of growth, we are quite set up for that. So that's the picture that I want to leave with you before I hand over to Eugene. So Eugene, please.

So I'm glad, as Kim Yin has highly as I pointed out earlier on, I think 2025 was the year the half year earnings announcement that we are seeing some headwinds but we were quite pleased that as we close -- 2025, we were still able to close the year strong, right, keeping to the $1 billion underlying or net profit earnings relative to 2024. Now on this slide is basically the group-level statistics, and I will talk through them. I will use one particular slide, which talks about the net profit of the different segments, right, to elaborate more in terms of the specific performance. Now if we look at a headline from a turnover and EBITDA standpoint, we did see a commensurate 10% decline across both of them. I think from a -- we already know the key reasons for that, right, in general, in Singapore. We did see, in general, lower spark spreads for the renewed contracts that took place towards the latter part of Q2 that also carried through for the rest of the year. And also in addition to that, we also saw a high cost power import contract that continue to weigh us down. And also, we did see some compression of gas margins and also the absence of a roughly $10 million to $15 million of gas upstream curtailment gain that we had in that was not present in 2025. Now in addition to that, we also saw weaker price and customer demand across U.K. in the U.K. Wilton gas business. For 2025, we were hedged on contracted forward prices at the end of 2024, which was weaker relative to what was hedged for 2024 at the end of 2023. In addition, we also saw the petrochemical sector, which is a significant part of the current customer base in New Berlin. that has seen weakening. So in general, customer demand has been weak as well. So we did see a weaker [indiscernible] in the U.K. Now of course, we also were impacted by the loss of contribution right from SemWaste after we have divested debt in March of 2025. Now this is partially offset by new capacity that has been commissioned in renewables right across India, the Middle East as well as Southeast Asia where we completed the acquisition of the 49 megawatts of hydro project in Vietnam. Of course, that is offset by some curtailment issues that take place that continue, particularly in the Guangxi province of our control portfolio. So the effect across the turnover of EBITDA. Now our share of results of associates and JV increased markedly by 57% or $180 million. Of course, this is driven by Senoko's full year contribution of 30% and an incremental 20% for half year. Now from a Senoko standpoint, this is -- this contribution is also offset by renewals of roughly 20% of its contracted portfolio in the latter half of 2025. Now just to give you a sense in those rounds of contracting, we essentially saw the recontracted spark spreads come off quite partly, right, we were contracting between $30 to $35 spark spread for that renewal and -- which essentially came off highs of $70 to $80, which were contracted more at the '23 period for them. Of course, I will touch on later on because there continues to be recontracting taking place, as Kim Yin highlighted through 2026. We also saw in the VSIP portfolio, we saw a higher contribution, right? Part of it is as a result of a fair value gains for the completed RBF projects within the VSIP parks that we own. But this is offset by some land sales weakness in the Central Vietnam. The fair value contribution was $27 million, but I'll talk about it later on, later. And it's also offset by continued China curtailment in the SDIC portfolio. All in all, adjusted EBITDA, it's about 2% lower compared to FY 2024, $2.016 billion compared to $2.050 billion and our net profit before exceptional items and the DPN FX is a $1.003 billion relative to $1.014 billion. Now we did realize a noncash FX for the payment note in 2025 of $154 million, right? This is roughly about -- coming simply from a roughly 10% to 11% depreciation of the Indian rupees relative to strengthening Sing dollars. When we compare the rate in which we mark-to-market or rather translate the DPN balance from India rupee to sing dollar, the rate used in -- as of 31st December 2024 was compared to the rate used at the 31st December of 2025, the rate declined roughly 10% to 11%. Of course, this does not indicate any cash flow impact, but it's really a mark-to-market. Now as highlighted previously, hedging the balance of the deferred payment note, it's dependent on 2 factors: number one, the visibility of cash flows. Now the deferred payment note is largely on availability of cash sweep model, right? And as a result, putting in place hard forward cash flow hedges effectively from an accounting standpoint, we will not result in an effective hedge, right? I think the second element also throughout 2025, when we look at what is the forward cost of hedging. The forward cash flow cost of hedging is -- well, will result in a worse outcome than the market. And if we do put on those hedges, it will be real cash outflows. So as a result of that, we did not put in any form of forward contracts as a counterbalance against the rupiah swings here. Nevertheless, $154 million is really a onetime mark-to-market. It does not indicate any cash flow impact in the current cash flow generation capabilities of the portfolio. We have an exceptional items gain of $135 million. So that comes largely from the sale of SemWaste, also included in the sale of SemWaste in this sorry, exceptional items was the positive goodwill or bargain purchase option gain as a result of the second tranche completion of the Senoko attraction. This is offset by roughly $28 million -- $28 million to $30 million of some asset impairments that we took across the Southeast Asia, where we made the broader decision that we will not continue with the [indiscernible] business, where generally it's a very small part of Southeast Asia currently. Now -- so all that results in the net profit from continuing operations, taking into account the DPN and FX loss and the exceptional items of 984 million, right, a lot of which is driven by the DPN FX impact. Now our ROE from a more underlying basis, right, before exceptional items and our DPN FX loss is 18.2% relative to 20% last year. Now there are some capital drawdowns that were not -- that took place in 2025, particularly in relation to CCP4 and also continued capital deployment for our pipeline and also certain projects that came online, but were not contributing on a full year. I will illustrate what the effects are those from a normalized basis on a slide later. Now I won't touch so much on the broad group turnover because the reasons are largely about was what I've highlighted earlier, I want to move on to the next slide, which illustrates the group net profit by segment. Now for the Gas and Related Services, with $2.701 billion, which is a 4% decline relative to [indiscernible] in 2024. As Kim Yin has shared in the earlier slide, the effects can be broken largely into two, right? So for the Singapore Gas and Related Services portfolio, FY 2025 turned in $538 million relative to $546 million in FY 2024. These numbers are there. It is just in Kim Yin's earlier slides, okay? So that is approximately an $8 million decline. Now there are basically two effects here, right? One contribution from Senoko and the other one is the continued margin pressures that we see in our Singapore only portfolio. I think throughout 2025, as highlighted in the first half results, we did see roughly 10% of our portfolio recontracting 90 to 100 megawatts from Sembcorp portfolio that took place at that point in time. We did see spark spreads coming off down to the $30 range which was coming down from the high of the $80 to $100 range that was previously contracted. So that carried through full year, and the impact from the declining spark spread was about $60 million to $70 million on a full year basis. Now we also saw the high cost power import contract that we signed and disclosed at the end of December 2024. The run rate impact in the first half carried through for the full year as well. So in the first half, we highlighted it was about $20 million so that continued to weigh down the portfolio. We also saw some decline in gas margins. And also in addition to that, there was a one of a curtailment compensation gain in 2024 and about $15 million to $20 million that wasn't there in 2025. So these are the impacts on the ex Senoko portfolio. On the Senoko compensation, largely across the Gas and Related Services, just EBITDA disclosure, you will be able to largely look at that number. But again, as highlighted earlier on, we do have to bear in mind that in Senoko's 2025 numbers, particularly in the second half, it has been impacted by roughly 20% of the portfolio that has been recontracted. Now they have been recontracted at $30 to $35 spark spreads as well, right? And that has come off similar high levels of about $70 to $80 a spread that was contracted before. And as Kim Yin has highlighted in the pie chart earlier on, we expect to see close to 50%, roughly 47% of the Senoko portfolio that will be recontracting from the second half onwards. So all in all, we do have -- we believe, based on our visibility right now, those recontracting levels will largely be at a $30 to $35 level as well, coming off similar highs as highlighted. So that are the visibility that we have on the Senoko earnings. Now on the rest of the world earnings, with $363 million, relative to $182 million for the Gas and Related Services segment. So that's about $20 million, $19 million to $20 million decline. Now the rest of the world gas earnings were historically largely very stable. But I think this year, we saw a $20 million decline largely as a result of U.K., right? Now as highlighted earlier on, U.K. did see two effects [indiscernible], number one, basically lower power prices, right? And secondly, lower customer demand as well, particularly the petrochemical customers in the U.K. One of them SABIC did not return, right, for its olefins plant. And we do expect the weak customer demand potentially to carry through into 2026. So that's for the Gas and Related Services segment. Now for the Renewables segment, from a net profit standpoint, right, we turned in $192 million, which is 5% higher than $183 million, which we close FY 2024 with. Now again, earlier on, we have broken out this segment into China as well as others. Let's talk a little bit about China. So for China, it's FY 2025, we turned in a $74 million net profit versus $89 million in 2024. So it's a $15 million decline so there are two key effects to that change in net income. So firstly, it is continued curtailment that affect the China portfolio, particularly in the northwestern side of the portfolio. I mean to give you a on the average China curtailment that we have across our portfolio, in FY 2025, our average curtailment for the wind portion of the China portfolio was 14% versus 8% in 2024. So it's a very significant increase in a curtailment. And for the solar portfolio, it was 16% average of tailwind in 2025 relative to 9% in 2024. So also commensurate increase in the level of curtailment. So the impact of curtailment on the China portfolio in FY 2025 was approximately $30 million in net income, okay? But we did see a capacity increase in 2025 from project pipelines that were coming through. Gross capacity, we added about 900 megawatts, right? So the increase -- the capacity increased plus also some stronger generation that we see, right, in our high portfolio on the wind generation did result in a $15 million positive net income on a year-on-year basis. So the net impact of both, like curtailment, negative 30, but we do have some 900 megawatts of capacity increase and stronger wind generation in the high wind portfolio. That resulted in a net $15 million downside in our China renewables earnings. Now in the others portfolio, which comprises of India, Middle East as well as Southeast Asia, we saw -- in 2025, we did $118 million relative to $94 million in FY '24. That's a $24 million increase. This is largely driven by 2 things, right? We did see a new capacity commissioning across India, Middle East. And also, we completed a couple of acquisitions, right? One, which is the 300-megawatt renew portfolio and also the 49 megawatts Vietnam hydro portfolio, though those were later in the year and did not contribute on a full year basis. So all in all, that contributed to that increase. I think in addition, also, we did see a slightly better wind resource of performance across India as well. So that contributed to the renewables portfolio outside of China that saw a $24 million increase. So if we move to the Integrated Urban Solutions, right, it is flattish across both from 2025 compared to 2024, $178 million compared to $173 million. But when we break across the 3 segments in Kim Yin's earlier slide, right, the urban business, $114 million relative to $101 million in 2026. So it's about a $13 million increase, okay? So the increase was really driven by about $27 million of fair value gains as a result of the ready-built factories and warehouses that are being commissioned. But this is offset by some land sale weakness in Central Vietnam. And as you will recall, one of the as that we have been very vigilant since the liberation day tariffs were announced was Central Vietnam, where the manufacturing activities of our customers tend to be lower value variety, right? And we all know that Central Vietnam in Vietnam itself basically from a labor perspective, they are of a lower level. So we did see a weakness in that segment as well. But across the northern as well as the southern part of Vietnam continue to see land sales to be strong, but -- and also across Indonesia. I think Kim Yin brought up an important point. The -- coming through of the ready-built factories and ready-built warehouses did also increase our recurring income contribution in the urban business. Now in 2025, our recurring income contribution across infrastructure charges in the parks as well as a ready-built factories, it's approximately 20%, right? Net profit contribution from recurring income. This has increased markedly compared to about 10% to 12%, which 3 to 4 years ago. So the coming through of the ready-built factories has improved the recurring income quality within the urban portfolio. As highlighted also by Kim Yin going into '26 and '27 going into '28, we would have a significant amounts of ready-built factory and ready-built warehouses to be constructed, right? And once that is done, we were some stronger recurring income contribution to urban. In the Water business, $52 million relative to $50 million in '26, fairly stable, right? We did see operate cost optimization efforts in 2025. That turn into fruition. Approximately $2 million of cost optimization gains that hopefully would stay as run rate going forward. But at one point to note also in 2025, we did receive a one-off of $10 million receivable settlement for past receivable in relation to one of our not-so-well-performing municipal asset [indiscernible]. In 2024, we also have similar levels of one-off gains, right, but that was across [indiscernible] and another water plant compensation collection recoveries of past receivables as well as certain provision reversals. The last element to talk about in IUS is really our waste and waste to energy business. We did see a decline of $10 million, and this is largely contributed from the divestment of the SemWaste business, which took place in March of 2025. Now if we move one further down the line into the decarbonization solutions segment. So will we turn in a negative to be relative to negative 20% in FY 2024. One of the key elements of the $3 million increase in terms of our losses is a result of a write-off of a write-down of our RECs inventory value in [indiscernible]. I think in 2025, we have seen a marked decline in the value of the RECs. So we took off a meaningful write-off and that contributed to the increase in the losses. Now in other businesses, we turn in $45 million relative to $38 million in FY 2024. Now other businesses, largely comprises our Sembcorp's specialized construction as well as the mint business. The main business continues to contribute to $1 million, $2 million of net profit. So it means flat. But our Sembcorp Construction business continued to accelerate in net income realization, simply because of growing order book. Order book for the Sembcorp Construction business is in excess of $1 billion currently. So going further down the line from a corporate cost perspective. Now for interest costs, we were able to optimize that by about $10 million largely, and this is a corporate level of interest costs. Now we were able to do that because we did take efforts to optimize our cash usage to minimize negative carry. I think in addition to that, also we benefited from refinancing activities that were at a lower interest cost. We were also quite active in looking to rework some of our commitment fees, for example, with our banking partners, and this resulted in a reduction in our interest cost. Our other corporate costs reduced by $25 million. So to give a greater clarity of that, $11 million of that on a year-on-year basis came as a result of a past tax provision reversals. That is in relation to our withholding tax provision that we made against a China dividend that was paid up, right? So the withholding tax provisions has gone past time bar, right? the time bar and hence, it was okay for us to release the provisions. But $14 million of that $25 billion came through discretionary cost savings. So we were managing costs across professional fees, across travel, across manpower costs throughout the year, and that allow us to lesser cost. Now going forward, because these are cost management against discretionary costs, we will continue those efforts in 2026, but we may not be able to realize the same magnitude of our cost savings, but we will continue to be driving cost savings at the corporate level in those areas. Now for the DPN income, that has come off $25 million, $159 million, down to $109 million. Now I think that simply is a result of a continued paydown of the debt balance in India rupee terms of the deferred payment note. I think one of the key things to highlight is the cash flows as well as the earnings performance of the underlying asset, which is SEIL, the coal blood continues to be very strong, right? People I may not have highlighted this enough. But from since the transaction incepted in January 2023, until today, total cash collected across both income as well as a principal paydown in Sing dollar terms is in excess of $1 billion, right? It's about $1.05 billion, right? So looking into 2026, we do expect a continued similar strong cash flows, return and paydown of the deferred payment note income as a result of CIL's underlying performance. But of course, that will also mean that our DPN income will continue to decline as we see a faster recovery of the principal. So I think essentially, that largely highlights the differential performance across all the segments. and the DPN FX gain loss and the exceptional items I've touched on earlier on, so I won't go into more detail. If we move on to the next slide. This is basically a bridge that highlights what I was talking about, so I won't talk through this slide again. Now in terms of the group ROE, as highlighted earlier on, we did see a decline in the group ROE. Gas and Related Services was 32.1 in FY 2024, down to 26.4. Now in ROEs itself, there are two effects. I think the firstly, it is the one, as we are talking about. But the second element also is we are incurring CapEx and drawing on capital particularly for CCP4, right? So in 2025 was the year where we incurred the larger amount of CapEx coming into 2026, where we expect CCP4 commissioning to take place towards the end of the year. So normalizing for that, the ROE would have been better. Now for renewables, it's 7.4% relative to 8%, two effects. One of the permit is we continue to see curtailment elements way down the China portfolio. Also, we have projects that are commissioned that have not contributed on a full year. I would show the normalization of the effects on the next slide. And the Integrated Urban Solutions continue to be at 8.4%. Now if you move to the next slide. Now if we look at the ROEs, as I highlighted, we do want to call out what are the capital draw potentially weighed down the ROE versus what it would have been on a normalized basis across the renewables as well as the group. For renewables, we did have 0.7% that comes from a combination of projects that were commissioned in 2025 that did not contribute on a full year basis, right? So if those projects contributed on a full year basis, we have been an additional 0.7%. Now we also have certain projects in the pipeline that are under development have drawn down on CapEx and have not COD yet. So the impact of that is about it's another.2% on ROE. So the normalized renewables ROE would have been about 8.3%. From a group perspective, on a similar basis, the contribution from projects that were commissioned in 2025 that if they contribute on a full year basis, that would have been a 0.3% impact. And projects that are under development, would have been at 1.8%. Now that looks a lot larger relative to Renewables because the biggest part of that is the CapEx that is drawn for CCP construction, which is expected to be commissioned in the later part of the year. So if we move on to the next slide. This is to highlight the impact the translation impact of the strong Sing dollar across the different currencies [indiscernible] on our earnings. As you will recall, I highlighted this in the first half because from the first half, we have seen a almost systemic strengthening of the Sing dollar against all our key functional currency exposure. Now just for us to note, this translation impact is simply for each of our overseas operations. The accounts are kept in local functional currencies. And when we are translated back into Sing dollars, we would have to use an average translation rate, and that translation rate have a decline, right? Operationally, in the respective markets, certainly, it is not indication of the operational earning capabilities in those markets. So cumulatively, across 2025 compared to 2024, right, the estimated impact of on -- the translation impact on our earnings has been about $32 million. So it's fairly significant, right, almost 3% to 3.2% of underlying earnings. So this continued heightened currency volatile, we will monitor the situation. But given that this is a translation impact, traditional hedging activities may not be that effective. Now if we move on to the next slide, this is really our CapEx and equity investments for FY 2025. In short, total investments that we have made in 25 total about $1.2 billion, right, relative to close to $2 billion in 2024. And if we move to the next slide, our cash flow generation continues to be strong, right? In 2025, our cash flow -- operational cash flows is about $1.2 billion, slightly down from $1.4 billion the year before. Now taking into account cash flows from essentially interest income as well as dividends and the DPN receipts and our free cash flow before deployment for expansion CapEx as well as equity investments is about $2.1 billion relative to $1.8 billion last year. Now of course, in the $2.1 billion, we have the benefit of $383 million, which is the net cash proceeds realized from the SemWaste sale. okay? Now but even if you take that out from the free cash flow of $2.1 billion, our free cash flow available for debt service as well as growth on an annual basis still remains approximately $1.7 billion, which is similar to FY '24 the year before. So highlighting our confidence that we can service any outlook in relation to our dividends going forward. So in terms of our group borrowings. From a gross debt perspective, we saw roughly about $200 million plus, $300 million increase. that result as a continued drawdown of the completion of our pipeline and also CCP4, but also because of our overall net -- stronger net cash flow generation, our net debt remains fairly similar to last year at roughly $7.8 billion with our cash and cash equivalents increasing from $871 million to $1.1 billion. Our key leverage metric, which we always focus on our net debt to adjusted EBITDA, right, stands at 3.9x, which is not very different from where we were 1 year ago. Moving on to next slide. From a group debt profile perspective, we improved it slightly this year. Some of our refinancing activities where we were able to benefit from lower base rates, tighter margins and also an extension in terms of tenor. We were able to refinance some of our, for example, a 5- to 7-year bank of revolving credit facilities towards the 8-year mark. And also, we were able to issue a 2.5-year bond at 3.55% in October of last year. So all this resulted in our weighted average cost of debt declining slightly from 4.6% a in 2024 to 4.5% in 2025 while being able to extend our weighted average debt maturity to 5.2 years. But in terms of our fixed versus floating profile, 76% of our portfolio remains fixed, which means that on a floating perspective, every 1% change in the base rate will be about $15 million to $16 million impact. Of course, we are mindful that given the current interest rate environment, it's, on average, a more towards a downward bias. So we would also be monitoring our fixed and floating rate mix taking that into account as we go through the year. So from our available liquidity, we remain strong, right? The key thing that we always focus on is what is our on-demand liquidity so -- which is really a combination of a cash equivalents and our unutilized committed facilities. So as of today, our cash and cash equivalents stands at $1.1 billion and our unutilized committed facilities is at $2.5 billion. So total about $3.6 billion of on-demand liquidity that will allow us to take advantage of any growth opportunities that come through. So the next slide is just to highlight the outlook. Essentially, we have delivered resilient financial results, right, reflecting the strength of our diversified portfolio and cost management, right? Now you have long-term contracts across our portfolio and increasing the proposed dividend in refi reflects our belief in our the strength of our underlying earnings and also cash flow visibility. Now when we go through the different segments, I think in 2026, as highlighted before, the Gas and Related Services segment is still expected to be affected by a gliding down of our spark spreads, right, and margins because we do, as guided before, roughly 3%, 3% to 5% of our own portfolio will be subjected to some recontracting in 2026, I approximately 47% or 50%, right, approximately half of our Senoko's portfolio will be recontracted. So coming into 2026, you will especially for Senoko you would expect to see a full year impact of the recontracting that took place in the second half of 2026, roughly 20% of our portfolio and 50% of Senoko Energy's portfolio that will be recontracted starting from the second -- from the middle of the year onwards. So that is something to take note. Now of course, we would expect that effect to be partially offset by operational and financial synergies across the 2 portfolios and also the when the [indiscernible] class is commissioned, we do expect to see a greater fuel and operating cost efficiency as a result of running that hard against the portfolio first. And this highly competitive portfolio will position us well to continue to capture incremental contracts because of the power growing power demand driven by data centers and high-tech manufacturing sectors as we have demonstrated since 2023, having a leading track record in being able to do that consistently again and again. For our renewables portfolio, we do expect our platforms across India.

Wait, please come back.

Wow, okay. I didn't know I hope I didn't say something that was debt factoring. But what I was about what I meant to say was that in renewables, our expanding platforms across India, Middle East and Singapore will continue to grow. That's a good thing. And with the new capacity progressively coming in 2026 across to 2030. Now having said that, for China will continue to be very watchful. We do expect tailwind to persist, right? And there's one other regulatory development that we want to highlight. Now China has come up with a policy where they said that value-added tax refunds for onshore power wind projects, they're going to stop it, right? So that applies retroactively as well to our products that have already been commissioned. So that policy change will see a $12 million impact for the -- on the China portfolio in 2026. Now for the IUS business, the urban business, I think one point to highlight is that we are going into a phase in 2026 and going into right, where we would be developing close to 800,000 square meters of ready-built factories. So of course, this ready-built factories across '26 and '27, they are not -- will not be generating incremental recurring income. But we would expect to see some pre-operating as well as a financing cost for them. And but once they are TOP towards the end of 2027 and going into 2028, there will be a meaningful increase in contribution of recurring income to the urban portfolio. So all of this put us in a good state to navigate our near-term headwinds. And we expect that Alinta acquisition to be completed in the first half of 2026, and that acquisition -- completion of the acquisition will further strengthen our earnings base, our recurring cash flow and our ability to sustain and potentially grow our dividends over time, okay? So a couple of more developments to note. When we complete Alinta, we have already highlighted this in the circular to shareholders as well as in our briefings, right? We do expect one-off transaction cost of close to AUD 208 million. This will be called out in exceptional items, right? The bulk of that more than 50% of the AUD 208 million are really in relation to stamp duties for the ownership transfer. okay? And in U.K., we have a 4-week maintenance at Wilton 10, right, towards the middle of our 2026. It would not be a very material earnings impact, $5 million to $10 million, okay? So that ends my presentation, and we can open up for Q&A.

Thank you, Kim Yin and Eugene will now proceed to the Q&A session. For those in the room, you can raise your hand and a microphone will be handed to you. Please state your name and the organization that you represent. [Operator Instructions] Yes, we'll start with those on the floor. Maybe Zhiwei first. Yes.

Zhiwei from Macquarie. Thank you for your presentation. I have -- let's start with two questions first. First, China renewables, right? It's been 3 years and the curtailment issue has not improved. I think about a year ago, you said that under curtailment, it will maybe hit about 1% of earnings, but it seems like if I didn't hear it correct -- you heard correctly, about $30 million for this year. So it's coming up to almost 3%. So how are you thinking about the entire business if things do not continue to deteriorate right? And what are sort of your thinking around how to mitigate this risk further? Then from your point of view, where do you see us sitting in this entire down cycle for China renewables? Are we at the bottom or at the bottom? And can roughly just your sense when do you think will see things will improve? And the second question is on the Gas and Related Services service for Singapore. You mentioned a decline in your gas margin. Can you run us through of a bit more color on what changed, right? Because this is a pretty significant contributor to your bottom line profit. How big was the year-on-year decline in the gas trading business and how do you see the margins change going forward? Because if I remember correctly, this used to be a high single-digit business and a gross margin business and then you moved it into a mid-teens and where do you see it go now?

Can I ask Alex to deal with the China question? Renewables is CEO, President is here.

Thanks, Zhiwei for the question. I cannot say for sure whether China has reached the bottom in terms of the curtailment. But let me offer some insights directionally where the government is going. So what's really caused the curtailment as we all know, is the search in renewable install capacity, right? A lot of new projects. So just to give people some perspective, when we first started the journey in 2021, the renewable solar and wind -- onshore wind was growing roughly about 120 gigawatts a year. 2021, 2022 was roughly about 120 gigawatts. And what happened was in 2023, we saw a surge in the renewable capacity to roughly about 300. And just to give you some perspective, 300 gigawatts a year 2023, 2024, right? And in 2025, because of a change in policy, everybody was rushing to get their projects online by the middle of 2025 to make sure that they enjoy the existing policies. And because of that, there was a mad rush and the capacity actually surged an increase to roughly about 400 gigawatt year, just to give you some perspective. So what's going to happen is this, I think we have to look at this from 3 perspectives. One is demand. Second supply and then what is the government doing in terms of making the grid more resilient so that the grid is able to absorb all that additional capacity. So in terms of demand, as we all know, China continues to have seen a very strong power demand, roughly about 5% to 6% a year, driven by electrification, [indiscernible] and AI, right? So that's why. Demand continues to be very strong. On the supply side, there is a new government policy that states the -- by 2035, renewables is going to get to 3,600 gigawatts, which basically translates into every year from now until 2035, renewables will slow down to roughly about 180 gigawatts a year, which I think will give the industry a bit of relief, right, from the 300 to 400 gigawatts a year of growth today to roughly about 180 gigawatts. So 180 gigawatts is still a big number, but in -- if you look at it, China has a big base right now. So I think 180 gigawatts is not a bad number in terms of where the government is taking this directionally. Then the third is what is the government doing in terms of making the great infrastructure more resilient, which is essentially one of the issues to move the electrons from the west to the east. And the government is going to pour pull in RMB 4 trillion, which is roughly about SGD 700 billion over the next 5 years. So there's a lot of money, right, to grow the -- and that investment would include things like transmission lines, which is important because they got to move the electrons from the west to the east. which is essentially one of the biggest problems that China is facing today. The second thing is they will also put money in transformers and all kinds of -- are not simple to make the great infrastructure more resilient. And the last but not least is there is also another new -- we are catching up, right? And there's also another new policy in November 2025 that encourages data centers to be built in the Northwest, right? So I think that's also important because the additional power demand in the West is going to absorb the additional power supply. And so again, just to get everybody on the same page, demand is going to continue to be strong, 5% to 6%, driven by electrification and AI. Supply will slow down based on new policy to roughly about 180 gigawatts a year until 2035. And then the third is the government is going to pour in roughly about SGD 700 billion on the grid infrastructure. And the last one is the latest news in November, which is encouragement of data centers to be built in the West.

So the first point in the perspective of cost, the $30 million, a good part of it Eugene was just telling me between 1/4 to 1/3. It's actually new. It's coming from [indiscernible]. And that one is because they've got a lot of hydro, heavy rainfall. So that might not repeat, right? Then the rest of it is coming from the Northwest largely. So the Northwest, that's the part that subject to the transmission, subject to the new demand coming anybody's guess, right? So if you ask me whether you had hit the bottom, maybe how much longer it will last, for our planning purposes, we are saying that for 2026, we are not counting on it to flip around, right? So hopefully, for the near term, that puts additional color to it. No. You take another step back for us, it has gotten to this point where it is earlier China portfolio is supposed to be contributing with 120, 130 just from the renewables now. It's at 80 -- it could get worse. It's always possible, but it is quite a bit turned down already. So for us, we are planning we are not counting on it recovering in the coming year. right? So we'll have to see. And in the meantime, your other part of the question, what are we doing, right? Of course, tight cost. We are looking at other forms of managing exposure. For instance, growth has also been very, very calibrated discipline selective. Those are the words. You don't see the type of growth anymore coming. We are also thinking about whether or not we could manage exposure through perhaps bringing partners looking at the capital structure, that's a thing, right? But I'm not promising anything we're saying that we with the outlook, as I described just now, we're not expecting anything to change for at least a 12, 18, 24 months then, you should be doing this in the meantime, right? So that's what I want to suggest to you without having anything concrete to show you yet. But the plowing with outlook naturally, the management action must come in. So that's on the renewables. The gas, maybe, Eugene.

The gas margin, that's the way you -- still a few to point that out. I think for 2025, when we look across the gas, number one, we have the onetime upstream or curtailment gain. That was about $10 million to $15 million. But outside of that, from a gas margin standpoint, we probably saw a $25 million to $30 million downside impact, okay? Now so what has changed? I think the periods where you saw high double digits -- actually higher than double digits. Gas margins if you are looking at the Sing dollar financials, which I know you always do, right? Thank you for spending the money to do that. Then those periods, obviously are periods where there is volatility in the index, right? So when there's a volatility in the index, it gives our gas I don't know us or trading, but our gas business, the opportunity to I think arbitrage is the right word to basically look at alternatives to a diverse gas and optimize gas cargo right to have a larger amount of gas optimization earnings on top of what is contracted. Now of course, when you see that going through 2024, 2024 is still fairly volatile. And then when you come back to problem, we are essentially seeing more stability between the JKM index and also across the brand index on which our long-term prices were. So because of there is a lack of volatility. So our ability to drive the same level of gas optimization or arbitrage gains, right, is less. Now the good news is that I think across 2025, we have been monitoring the gas margins in the first half, second half, it has been stable. So going forward, we don't expect the gas margins to be similarly impacted because it is trending more towards our base contracted level of gas margins. And we are not at single-digit gas margins. We are actually still at the low double-digit gas margins. Yes.

Zhiwei is asking about the spark spread in the power side.

You're talking about gas. You're talking about exactly what I'm saying, right?

Yes. Just one follow-up. Coming back to China renewables, right? If your curtailment stays at this low teens number for the next 1, 2 years, and let's say, things do not deter further. Do I have to worry about impairment of the China renewable asset base? If not, at what point will you start to set up and pay attention.

Okay. So I think in relation to our China asset base, we have always do very detailed impairment analysis, right? I think where we stand right now, right, we do not see the need for any impairment because from a policy standpoint, right? And Alex, you can help me to elaborate more. that the Chinese government have made a very strong stance that they will build the Northwest interconnection lines across to the eastern side of things. Now the exposure for us for the very high curtailment like I pointed out earlier on, it is really across the SDIC portfolio, okay, because that has a significant exposure to the northwestern side of things. And then also in some of our [indiscernible] assets. Now so of course, with that, we are confident that within a certain level of visibility the curtailment situation will abate as these interconnector lines are built up. Then the question is really about how long. Of course, we do stress test the outcome of our assets. So the curtailment situation will have to persist for rather long, and I'm talking about many, many, many years kind of long, right? before you even worry about curtailment. More specifically, on the SDIC portfolio, if you will recall, our -- that is best essentially one of our higher returning portfolio, right, where we entered in at 1.8 gigawatts, organically, it grew to more than double in terms of capacity. So when we look at our cost of investment for the FDIC portfolio, based on our analysis right now, it is very unlikely that you will hit any form of impairment simply because our cost of investments. So just to isolate those are the 2 key customer. I don't know, Alex, do you want do you highlight that on the mines?

This is Nikhil Bhandari from Goldman Sachs. So just sticking to renewables, but shifting from China to India renewables. When we look at the overall over 5 gigawatt under construction or secured portfolio, India is a big chunk of that, it appears that there isn't a lot of completion of projects happening in calendar 2026. It seems to be more heavy on '27, '28, 2030. Out of all of that portfolio in India, what percentage has already the PPAs signed? What percentage already has the exit connectivity already secured, if you can help provide some color on that? That's the first question.

Okay. renewable presidency of West Yes. We put is in the best position to answer this.

I think maybe to start with the second part of your question first. Of the roughly 2.5 gigs of PPAs that are signed -- I'm sorry, of 2.5 gigs of pipeline, about half have PPAs signed about 1.2 and about half are at the LOA stage, where we are discussing with the various RIAs and the DISCOMs. As you might be aware, I'm sure, a few months ago, there was a push by the central government to try and clear that backlog. That has had the effect because the PPA all the REIs then went around and said, "okay, let's take a closer look at each of these LOAs." There's there are active discussions going on typically between generators like us. RIAs like or DPN and the DISCOMS who would be the off-takers. Fortunately, the with declines in equipment prices since the time that these PPAs were entered into, most generators, including us, are in a position to offer more tailored offerings within the same tariff range to the DISCOMs. So those discussions are proceeding. And of course, we'll as and when we sign the PPAs, we'll make the necessary disclosures. So about half and half on the first one. Your observation on the pipeline is absolutely right. The way we look at it is that there is -- there will likely be some of our projects that are at advanced stage of construction will get completed in 2026. The bulk of the pipeline will indeed be '27, '28 thereafter, largely constrained by grid capacity availability of connectivity availability. But these estimates that we do are after we take into account whatever grid delays and I'm happy to have a deeper discussion on that. But what we are seeing is considerable all of government effort across the central government, the state governments, the local governments to try and debottleneck the grids. In fact, if you look at the Electricity Act amendments that are now proposed which are widely circulated in the public domain, special powers to governments to acquire land and get grid done have also been included there. But I think coming back to the effect on us, the way we look at it is, it actually gives us a little bit of that [indiscernible] to make sure that land acquisition, which is usually the one of the bottlenecks for any renewable power development. We actually get much more time to do our land acquisition and be very true to our intent, which is to have 100% land acquired before we break ground. And so that is now what we are seeing in the projects that are coming forward. So actually, what ends up happening is, say, for a slow project, even a large one, let's say, 400, 500 megawatts. The actual construction time is rarely more than a year or at most 15 years, whereas the total elapsed time maybe 2, 3 years, maybe even sometimes a bit more. So actually, what we get is good enough time to get the land done, get the engineering done perfectly, get the EPC done perfectly and then move on from there.

Is it fair to say the projects we have until 2028 commissioning estimate has most of the land and the connectivity already secured or...

Connectivity is 100% secured. We don't in fact, we have connectivity available for which we are yet to conclude PPAs the part is clear. Land, very, very advanced. So we are now, I would say, a very vast majority of land already done, and the rest is will be done before we break ground.

Another question just sticking to India renewable business. We heard a lot of news flow around some renewable power curtailment in India last year, especially concentrated in Rajasthan, Gujarat area. And we also started hearing some of the newer PPAs being signed, have some curtailment clauses in it, up to 100 or 170 hours in one of the PPA, which is in the public domain signed. I'm asking this question because coincidentally, maybe India has also hit nearly 50% of the power capacity mix as renewables and hydro with China hit that number probably 3 to 4 years ago and there was a beginning of a curtailment phase in China. How do we think about the risk of grid absorption, curtailment risk in India given the system is so heavy now on renewable and some of the weather-related power generation?

No, thanks. That's also a very germane issue. For us, in India, it works a little bit differently. The curtailment that has been talked about in the press and is part of a lot of concern from many people, is basically when projects connect to the grid on a temporary connectivity. We call it G&A. When you have temporary connectivity, then the grid's obligation is to give these projects connectivity on a best-effort basis. But then, all bets are off as far as curtailment is concerned. So the moment there is any sort of congestion get back down. Our projects are all on permanent connectivity. The moment you have permanent connectivity, any commercial back down due to congestion or due to commercial reasons like demand is recoverable by the generator. The only reason that grid curtailment can happen as per the PPAs, once you have a permanent connectivity is when there is a specific grid security issue, which typically will not occur for more than a very, very short period, typically a few hours here or an hour there. So the numbers that are being floated around in the press have nothing to do with our portfolio. If I look at our [indiscernible] portfolio, I don't think we've actually disclosed these numbers, but I think it's fair to say our curtailment on that, including what we including what we will recover back part of which we'll recover back is below 1% at the moment. And that, too, a large part will come back.

Just combining previous China-related questions and the questions related to India. Given China, we still expect some more deceleration in the earnings this year and given there are more limited new project completions in calendar '26, should we assume any growth in the renewable business earnings in calendar '26? And also, while we don't assess any impairment risk right now, but can we quantify like what percentage of our receivables, for example, are related to the China renewable business or any quantification, if you can help us provide on the China exposure in the overall balance sheet?

Yes. I'll ask Eugene to address that. But before we move off the topic of the development pipeline in India, hopefully, what people have described to you is that when we come out and tell you that there's gigawatt is under development relative to maybe what other people might be talking about as pipeline. The quality and the certainty that is behind it you have the form your own judgment from what people is telling you, right? So I think Nikhil's question is actually very, very straight forward saying that helmets pipeline, how much is it going to come in? Is it really going to come at, are you going to say that there's no activity, there's no land, no PPA and so on. So without giving you a straight number, we are giving you the conditions under which we are -- the way we develop projects and then the risks that we're taking or not taking so hopefully, I'd like to think that we are actually relatively when we say there's a pipeline, our pipeline is relatively of a much higher quality in terms of certainty and deliverable right? So on the -- is there any guidance that you was asking for the renewables earnings growth?

I think going into 2026, renewables as a portfolio, we think from an earnings perspective, it will likely be flattish to a slight upside, okay? Now because there would have been better growth, but I think the reality is that we have hit with another $12 million downside because of the VAT policy change, which came through unfortunately, towards the later part of Q4 of last year. So as a result, we think renewables flattish to slightly positive. I think for China, I just want to characterize the issue. I think from a renewables book value standpoint, it stands roughly from a Sing dollars perspective, SGD 1.8 billion to SGD 2 billion, right, of invested capital. from an equity standpoint. Now from a receivables, right, the receivables that are exposed, which is largely in our high portfolio that has not really cleared -- that has not been given a green code in the subsidy audit is around SGD 350 million, right? The total subsidy receivables on our books, really, it's approximately SGD 370 million, but those pending subsidy audit is about SGD 340 million to SGD 350 million. Of course, we have made provisions against them like provisions to date, there's about SGD 43 million against that gross amount. Now I think in relation to that, we continue to press respective authorities on being able to release those projects sooner rather than later. But I think what we have noticed is that for projects that have cleared the subsidy audit, they are actually paying down their receivables fast. And this is empirical, right? Because in our own portfolio and our own high portfolio, the amount of subsidies receivables collections in 2025 was about 1.7x that of 2024. We see it accelerating. No doubt. In our JV portfolios, we also see the subsidy receivables collections in 2025, roughly double that of the year before. So I think there is a clear effort from the Chinese government to clear the subsidy receivables. And we are certainly hopeful while we have continued to provision against it, the subsidy receivables that has not yet cleared the audit.

Yes. The -- so immediate 12 months renewables, we won't be seeing a lot of growth, but we're very comfortable because the pipeline is strong, and we've got new markets. Middle East, in addition to India, is actually very active. If I have to use that word, as you would know. And also now in Australia is coming in. So we think -- I'm not too worried about the 2028 target if that's the follow-on question yes. So yes.

Maybe also just to add what we are seeing, particularly in India, but also in other markets is many competitors have overextended themselves. And there are now assets available, which makes sense for us. We are now in a position to be able to acquire at attractive prices, add value through refurbishment and operations as we find the opportunities. So that's the other one. These are all the way from relatively small to relatively meaningful opportunities.

Can we have [indiscernible] at the back, please?

No, no, for a while Sorry.

Rachel first.

This is Rachel from UBS. I have two questions. The first one is that on SCI's ex Senoko power plant contracting profile, does this include the new 600-megawatt plant because in H1 '25, only 13% of the portfolio had expiry profile of 0 to 5 years. And now it's 21%. So I'm trying to reconcile that. So that's my first question. My second question is, what's the principal payment for the DPN versus the interest payment?

When we say 80% contracted 5 years or more, it's 80% of what to include the.

If you bring up the slide, Jin?

Okay. So you are referring to the Sembcorp-only contracts contracting, where 0 to 5 years has gone up to 21%. I think there are a couple of effects there, right? Number one, mainly it is due to high -- basically, we are also contracting a little more in terms of volume, right? Because we have secured more contracts that are of a shorter-term nature as well. So essentially, from a contracted perspective, historically, when you saw that 13%, that was of a contracted capacity of about 960 megawatts or so, but I think we have also increased our contract levels at a shorter-term level. It has gone up to about close to 1,200 megawatts already. That's on the Singapore side. So the base is 1,200 megawatts. Today, our existing portfolio is less than 1,000.

No. So when we showed the guidance earlier on at half year, right, where it was 13%, right? So at that point in time, the contracted capacity, right, for generation was about 960 megawatts, right? So we did say that is one of our intent to sign more contracts. So even over our Singapore portfolio, we have up to 1,200 megawatts already. And some of these are shorter-term contracts because we do want to increase the contract levels and hence, you see the 0 to 5 years increase to 21%. So essentially, there's 21%, but the total base of this is no longer 960. It is now about 1,200.

So in a way, it has included the 600. In a way, it hasn't -- you see what's going on because what we're saying is that we want to sell 1,200 megawatts, of which some are long contracts, some are shorter contracts. And what happens is that when a new plant comes in because this is much more efficient, what we will do is that we back out some of the other ones. So we can't -- I would guide you to not say that, look, when the new plant comes in, then suddenly, our revenue our megawatts will up by 600 megawatts and now revenues suppose got 600 megs, it doesn't want to tell, right? It's a portfolio right? So what Eugene is saying is that, yes, it is in there. as part of the 10-year contract and the 5-year contract will be served using the new plant, right? No, it is not in there. We didn't add it up in blocks like that. So hopefully, that clarifies that.

So I think, Rachel, you heard me talk about this because you stumped me a little bit because we don't think in terms of, oh, this plan and a contract for this plant, right? we think is, okay, so capacity 1,200 potentially going up to 1,800. But today, if we see opportunities to contract a hit or over contract with a forward start, then we will just increase our [indiscernible]

I think maybe the first time we told them it's 1,200 so yes.

Maybe Jin, to put a footnote on something.

A question on the DPN.

So for DPN for the principal and interest payment, I think, Rachel, in general, we don't -- there is no fixed principal payment, right? So essentially, if you look at the mechanism, how it works is that whatever equity cash flows is generated at the plant level, right? It will be a full suite of the cash leaving a 6.75% of the equity cash flows to the owners, right? So I think in general, that is the basis. So we have not -- there is no fixed principal repayment. But I think what we can look at is over the -- from a principal paydown standpoint. Over the last 3 years, we have collected $1 billion, of which the principal has ran down from roughly $2 billion at the start of the period to about $1.3 billion currently, right? So which means that on average, the principal paydown is about $300 million a year. So I think going forward, we do expect the SAIL equity cash flows to be similar. simply because they are covered by our long-term contracts. So that would roughly be the paydown. Interest cost is still around 8.75% to 8.9%. Yes.

Sorry, Siew Khee.

Siew Khee from CGSI. I have two questions. On gradual increase in the dividend to benchmark against yourself with peers, who are the peer group that you're looking at? Are you looking at yield or payout? And given that your earnings base is potentially stable at $1 billion, would you target to increase your yield to about 5%? That's my first question. Second question is, thanks for guiding us on the spark spread. with much more power coming into the market, would you be able to have a guess on what would be the spot spread into 2027? And I remember previously, we were hoping to actually get more long-term contracts or convert some of the short-term contracts from Senoko to long term. How realistic is that?

Okay. I think in terms of the dividend benchmarking, Siew Khee, we look at the benchmarking in 2 sets. One is across more broadly STI comps. Of course, then within the STI comps, we look at both payout ratios as well as a dividend yield. So excluding REITs, we do notice that average dividend yield is around 5%. right? So our yield is about 4% or so. But I'm hesitant to say that we are targeting a yield, Siew Khee, because of my payout ratio is kind of low, right? So we are at a 40-ish percent right now. Though we do note that, number one, the average STI broader comps, the payout ratios are 60% or more, right? And then if we compare to a closer TLC industrial companies, right, you know who they are, just to name a few, includes the Keppel, includes ST Engineering, there are payout ratios in the longer term in excess of 70% or so. So these are some of the guidelines that we are looking at. Now we also benchmark payout ratios as well as the dividend yields to a broader gencos, like both Asia Pacific as well as European players. So in those situations, we do see average dividend yield also in close to a 5% range, and average payout ratios for those are in the 60% to 70% range as well. So I guess this is to guide you in terms of how we think in terms of the payout. Now I just want to caution a little bit about the yield perspective because at the end of the day, while those are guidelines for ourselves, we are still focusing more on the absolute dividend and a sustainable and growing over time. So I guess the key point to note is that where the dividend is, going forward, we will have the ability to grow it both from an earnings perspective and also looking at where our payout ratio stand relative to those benchmarks that I mentioned.

And in the Singapore gas market or gas-fired power market, what would be the spreads into 2027. I don't have a crystal ball at the moment. If you got there to contract, you're getting mid-30s, right? So that's -- you could see that still okay, right? So the part that I described just now, they are going into new contracting, we will be contracting in that range. So the 47% in Senoko will be contracting into that range, the 5% from the Sembcorp portfolio will be contracting into that range. What is the outlook for longer-term contracts, actually, Singapore market is very small, right? So the it is quite binary. If you secure the customer, like in our case, Micron Singtel, then suddenly, there will be one big chunk that will come in. right? So there's a group of customers that will be prepared to sign long-term contracts. And that group of customers is a finite universe today, even as the new data centers coming in to increase that pot. So what we're seeing is that, as I mentioned at the beginning of my delivery, we are very well positioned to chase after the both the existing ones as well as the newcomers. So what is really specifically to Senoko. But you will see I'm very confident to say that we will be able to increase Senoko's pie chart to look a lot more longer term than what it is shown today. But I hesitate exactly how much because it depends on the lumpy big customers that will come in. And if you think about it, and they are indeed lumpy, right? Because when a data center comes along, it's 30 megawatts, 50 megawatts and so on. So it will suddenly shift the profile of the donut over there.

Next question from Sumedh.

Sumedh from JPMorgan here. I just have a couple of questions maybe on capital allocation. So do you think currently you have any noncore assets that may be up for disposals, the other businesses, even the U.K. plants. Any thoughts on that? And also, you did mention that actively looking at capital recycling in India. May I ask what's the progress there and any time line you have in mind? And perhaps my second and more housekeeping question. I think in one of the slides, you mentioned that 1/3 of DCs being catered by gas and related segment. Is that your own business? Or are you talking about the broader Singapore market?

The first question was noncore assets for disposal. I was trying to look at Eugene and I was trying to look at me. Now the portfolio in Singapore, I think we manage the entire portfolio for value, okay? I just want to reassure everybody, that's the first thing. And over the last 5 years, we have made several changes to the port. See you [indiscernible] questions, we can follow up later. So I think we already reorganized ourselves into the 3 big business segments, right? So gas-related services renewables as well as U.S. Most of the contributors are actually squarely slot into them, right? So in the long run, we do not have -- I don't want to -- the smaller businesses, even if there is a noncore disposal, I wouldn't I don't think it will be something that should bother you yes? So let's put it that way. Now each of the lines of businesses, they are all growing up and as they grow up, as you already pointed out, the India IPO possibility that itself is actually something that is much more symbolic and significant to the portfolio if it happens. So in terms of -- but to us, the India renewal portfolio is a core asset, right? So that's not a noncore. So I wouldn't put that in the category of the first question, right? So maybe the short answer to it, having stopped very loudly in front of you, the short answer is no, right? And the second one is in terms of capital recycling, we are thinking about it actually for the rest of the portfolio as well, including China. if the opportunity arises, right? And 5 years ago, I would tell everyone that look, [indiscernible] too small in most of the pieces, right? So now India has grown up and China is in a certain state. So when things are ready, we would definitely be managing them for value, right? So I just want to reassure you that. In terms of actual timing, I am warn many times to not say that because we have a plan, right. And there are typical time lines in India, how quickly you can do certain things. So -- and of course, there's no certainty until the moment -- the pattern is pressed, right? There are people who build their book and then decided that on of this book doesn't look good enough, I don't want to do it, right? So you can -- I don't think we would have the ability to do things much faster than the next guy who is filing. That's probably that way. So if you apply the usual time line, that's a good way to think about if it happens. I'm sorry, I'm not answering your question. I'm struggling a little bit, but I have got strict rules tying my hands behind me. So Sumedh, do you have any other?

Yes, I just had a quick follow-up. I think the data center slide. I think the slide that you mentioned where you have AI opportunities and I think in Gas and Related Services segment, you show that 1/3 of data center -- yes, this one. And that first bullet, I just want to understand what it presents. Is it like for Singapore data centers, is it 1/3 of demand being catered to by your own plans? Is that what you are...

Sorry, I forgot about that. No, just to be clear, this one is we have highlighted that before, maybe we were not so key in this bullet we are supplying power to 1/3 of the current data center in Singapore, right? So Singapore, 1,400 megawatts of IT capacity. PUE is probably 1.25, 1.2. I think it's 1.3 , right? And then so you multiply that, that is the quantity that we are supplying to. So it's fairly strong, right? And I think it's also instructive to note that the 1/3 of our capacity that we capture for these data center companies, they are off longer-term PPAs, right? So our understanding is that the other 2/3, they are not really covered by long-term PPAs of [indiscernible]

Yes. Okay. We'll take questions from the web first. There's a question from Mayank from Morgan Stanley. He's talking about the U.K. impact on earnings and outlook in 2026 has also the ability to put DC capacity in the U.K. In terms of China, any plans on adding battery investments into China for 2026? And then lastly, if we can share any performance highlights from [indiscernible] the second half of 2025?

Do you want to take that the performance highlights from Alinta in second half of 2025.

Okay. I think, Mayank, in relation to our performance for Alinta, we certainly have not completed yet. But I think we will be in a position to speak more about Alinta once we have completed the acquisition. You would imagine that we can't, okay? We just can't. Now of course, you could draw a broader market performance from the listed guys, right? You've got origin, you've got AGL may not be directly comparable. You would just have to bear in mind that if there's any earnings volatility as a result of cost of supply, that is not an issue for Alinta. So you can take guidance from where the other 2 guys are how they are doing. But of course, pressure. If there's any volatility caused by cost of supply of electricity, we will be a lot more insulated because we are very long.

And we when we talked about the Alinta acquisition, which the historical earnings profile, so 2024, we also show the pro forma.

Yes. So in 2024, from an underlying earnings standpoint, they are doing about 400-plus.

400-plus, right? So if there is they're not going to suddenly go to 600, they're also not going to suddenly drop to 0. So that's if you so you can apply 6 months, you overlay with the amount of debt are putting on top of it, which we have also disclosed, right?

So the level -- we do expect the level of accretion in the second half of 2025 to be similar to what was disclosed.

Yes. But to also point to the fact that because the first half is their winter, so typically, the first half is stronger than the second half, sort of 60% to 70%. 60% in the first half, 40% in the second half right? So hopefully, that helps any battery investment in China, even if there is, it will not move the needle, right? But he is being very kind. Thanks, Nikhil. He's is being very kind he's saying that he look in Europe as the one maybe should win some batteries so that then you don't waste the power. So thank you for that. U.K. impact on earnings, Mr. Eugene.

I think as highlighted earlier on the U.K. gas business, right, in 2025, we saw a $20 million right for the U.K. gas business. Now of course, when we look into 2026, there are headwinds and also the possible and also positives. The headwinds, of course, the customer demand continued to be under pressure, simply -- and power prices as well, simply because key -- some of the key customers in Wilton, they are petrochemical players, and we all know that the petrochemical sector is under pressure right now. So that is the headwinds that we expect going into 2026. Now of course, we did we are excited because the value of powered land particularly for data centers is important and Wilton is powered net, right? So we do at a very initial stages of engagement. have seen a DAS interest in our U.K. Wilton site. So we hope to be able to see more of the developments there. But of course, barring a positive development on the DC capacity, we do expect U.K. continue to be under pressure as we go into 2026.

Yes. Okay. I'll take another question from the web. This is from Louis City. He's asking about the run rate for the gas and Related Services segment. So should we look at the second half level to be roughly the 2026 run rate? And will the Alinta expenses be booked in the first half if the transaction closes by end of first half of 2026, or will it be booked at the year-end?

Okay. So Luis, to answer your question on the first point, I think from the second half 2025 going into FY 2026, I wouldn't say that we could use that level because a couple of things would have to you have to bear in mind. Number one, into 2026, roughly 3% to 5% of the Singapore portfolio will be up for renewal. So those renewals would be at roughly $30, $35 type of spark spread. So that will be coming off historical high short-term contracting spark spreads of $70 or so, like $70 to $80. So that's one impact. Second impact is for Senoko. We did highlight that coming into 2026, you have a full year impact of roughly 20% of the portfolio that was renewed in the second half of 2025, right? Also $30, $35 spark spread. And in 26 itself, we would have about 47%, close to of the Senoko portfolio that will be up for renewals. Indications clearly show that spark spreads will be around $30 to $35. So you do have to factor that into your outlook for 2026. Now for the exceptional expense of $28 million, it will be reflected whenever the reduction close, right? So if the transaction closed in the first half, that 208, the bulk of it will be booked as exceptional items by half year. If we close beyond 30th of June, then it will be -- it will show up in the second half so it's really a timing-related. Bulk of that is driven by stands. So it's really linked to the timing of the completion of the transaction.

Okay. Question from [indiscernible] Business Times.

Yes. I'd like to ask a bit more about the data center strategy in terms of supplying energy for DCC to there's a requirement. I think it's at least 50% has to be like clean power. So for yourselves like what sources of clean power deals yourselves getting in terms of fulfilling this demand from DC CFA 2? And also, I think for other markets in the region where you hope to power data centers, do you see it mainly being gas or more renewables?

The specific requirements or rather requirements of the DC CFA 2, my understanding is that it is actually quite specific. It will have to be new sources right? So it is not existing. So my solar panel doesn't count, yes. So we are working with our customers who are interested to win the DC CFA2 to provide them with new sources that include green power from biofuel that includes fuel cells, right? So the array of potential solutions that can qualify for this new green source, we actually have them as part of our toolkit to supply them. The question really is for each one of them, because difference in size, big difference in technology, different in their customer base, their appetite to absorb the cost from some of these new sources is different. You can imagine some of these new sources is at a higher cost than your solar, right? So that's why what I'm trying to say is that we have those solutions, and we are working with each one of them to tailor it for their specific requirements based on a right? So that's on that. Now the other one I want to say is that for generically, like you say, whether it is in the region or even in Singapore at the end of the day, data centers, they need very stable, reliable power, highly reliable, in fact, they don't want interruption. So the new sources, generally, on the one hand, we'll put cost pressure. On the other hand, very often, it may not be as reliable, right? And certainly, even if you -- if there are reasonably reliable, you still need to back up from existing sources, be it from batteries, be it from battery, be it from the grid, right? So this is where Sembcorp believes we are actually very well positioned because we have the entire array. In Singapore, we have got the gas-fired power plants. We have our solar panels. We have the largest battery in the region. And then on top of that, we have got these new sources, biofuel fuel cells, so on and so forth. So we are able to say that, hey, look, even as you take the new source, we can supplement it and support it and provide insurance and reliability by giving you everything else, right? So that is where we are. We have that strength. In the region, it is the same, right? So when we go to a bottom this is something that we can offer. And our experience doing this is also giving them confidence, right? If you're getting this from Sembcorp, that's one story. You're getting this from only a solar player, you might actually have to think twice because how good are they even if they offer you batteries, right? But I've got cars. I've got other sources. And I have shown that I am able to keep reliability very, very high as a portfolio. So that's where even in place side, India, not just Indonesia, we are seeing some of these demands coming, and we are on the slide that we show here, we are signing up actually beginning to sign up some of them, right? So coming back, I also want to make that point, I want to reiterate the point that by the time we see the demand from the AI side, we are seeing the real thing this is the solid demand. This is not the fluff. So because I'm very worried that people say, "Oh, this Sembcorp suddenly turn around, I want to enter into the AI space, are they going to catch the froth and then get caught up. No, no, no, by the time it comes to us, it is a solid energy side of the demand, not the AI demand. We don't take that risk. We are selling power. We are selling reliable power, and we demand and expect that our customer is a reliable paymaster.

have I understand you have import licenses from EMV, right, for like Sarawak and also from Vietnam. With the new sources that you supply to [indiscernible] also include like green power that you are importing?

My understanding is the imported green power doesn't come. And we can confirm that after the meeting. My understanding is that they don't count. But if they count that, we also have that, right? So in fact, last year, we imported some and then that contributed to some of my losses in the previous year. It was a good, what, $40 million. So yes, the Malaysia one. So I'm glad that it's almost over. So it will not weigh so heavily on to 2026 anymore. Any other queries?

No further questions. If not that much the end of today's briefing. Thank you very much for attending the briefing everyone.

Right. And again, two things to take away, if I may, in terms of returns can expect dividend to steadily sustain and grow. And we recognize that we are behind the curve compared to our peer group in terms of payout in terms of yield, so -- and we because of our strong balance sheet, strong cash flow, we are very confident increasing the dividend along that path to cover that gap. That's the first thing. Then in terms of growth, at least for the next few years, we have got new markets that we are entering into, and we are seeing success. In the case of Australia, there's Alinta, very scale, very committed to decarbonization and also very energy shots, right? And in terms of other greenfield opportunities other than a very hot India market where we have strong establishment there's also Middle East that is giving us that pipeline. So there is returns. There's growth. 2026, we will have headwinds, but we are very confident setting into 2026 and beyond. So thank you very much. Thanks.

Thank you.

Okay. Is the food outside.

Yes.

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