Ctfrvices Stock

Good afternoon, everyone. Thank you for joining CTF Services Limited Financial Year 2026 Annual Results Analyst Briefing. I'm Sylvia, the Head of Group Investor Relations. In today's meeting, our management presentation will cover the financial and operational performance for the period, provide updates on our 5 major business segments and further elaborate on our strategic initiatives. A Q&A section will follow the presentation. [Operator Instructions]

Without further ado, may I now invite our Executive Director, Group Co-CEO, Mr. Gilbert Ho; and our Executive Director, Group CFO, Mr. Jim Lam, to kick start today's meeting.

Thank you, Silvia. Okay. Let me have a quick introduction on our results. So for financial year '26, we continue to have a very stable year, I would say, it's not particularly strong, but it's a very stable year. We have done a number of acquisitions and also a number of disposals. I will talk about the numbers later on, and Jim will elaborate on the operations as well as the numbers.

But overall, as I said, we have a very solid financial year '26. In terms of the expansions, the financial services showed a very strong momentum and it became the largest AOP contributor that replaced our road segment as a top AOP contributor.

We continue our capital recycling. We disposed some of the assets. We deployed our capital into 2 focus areas, namely our Financial Services as well as our Logistics segments. As you may also know, during the year, we issued the convertible bond and all of them has now been converted. So we restored our public flow. And also that we enable us to go back into the Hang Seng Composite Index as well as renewed our Stock Connect Eligibility.

As you can expect, I mean, our DNA or our business is always a very strong cash flow generation, and that continues to be the case. We lower -- actually lower quite a bit on our net gearing ratios and have ample of liquidity for us to be deployed and expand into the 2 core areas that I mentioned before, the logistics sector as well as the financial services sector.

Dividends, we uphold our sustainable and progressive dividend policy. I think this is the 24th year. This is the 24 years consecutively, we distribute our dividend. We will talk about the dividend part later on. So -- on AOP, we delivered a strong result with HKD 4.59 billion of AOP, increased year-by-year by 3%.

In terms of profit attributable to shareholders, it increased by 11% to HKD 2.393 billion. As you can see in the chart here, 32% of the AOP actually coming from the Financial Services now and 31% coming from our Road segment, followed by Logistics, 14% and then Construction. And then last but not least is our Facility Management.

So this basically summarize the entire years of capital recycling that we have done. I will first talk about the monetization and the disposal first. In October 2025, we first issued the exchangeable bond of HKD 2.2 billion to exchange into our shareholding in Shoucheng. That exchangeable bond, the 0.75% is due 2028. So that actually allowed us to monetize the stock without actually selling it. We can capture the upside.

And in the meantime, we have a very low funding cost funds for us to do our acquisitions. And then between 2025 and 2026, within this entire year, we have done a number of disposals within our strategic investment segments. That total of around HKD 1.3 billion. That consists of a number of different investments, small and big. So in the old days, we have done very much a number of PE investments as well as VC investments. So here are the proceeds coming from those investments.

Then in 2026 July, we completed the disposal of one of our roads, the Changliu Expressway. That came back with HKD 1.6 billion as well as I think very importantly, we consolidated the net debt of around HKD 1.7 billion. So that -- I think that actually is very important to us because that substantially lowered our net gearing ratios. So in addition to the monetization as well as the disposal, we have done a number of acquisitions throughout the year. In November last year, we acquired a 13% in uSmart.

This is actually a very important step. Not only that expanded our financial services platform. These acquisitions, although it's only 13%, only account for half a year, already contribute around HKD 30 million, right? -- HKD 35 million of AOP just for this half year.

And then between 2025 December and 2026 January, we consecutively acquired 4 logistics properties, 1 in Greater Bay and 4 in the Yangtze River Delta, so around the Shanghai area. And then in April, we invested in a battery energy storage platform in Finland. Then in 2026 July, we completed our acquisitions of 65% in Blackhorn. Again, that is a very important step in building up our ecosystem in the financial services platform. It enhances the entire capability for us to cross-sell to our policyholders and offer more wealth management products to our customers.

Last but not least, in 2026 September, we completed another acquisition of logistics property in the Yangtze River Delta. We also invested in AI data center in this September 2026. In fact, we just issued a press release for our investment in a data center project in Johor in Malaysia. So that actually marked our first overseas investments of data center in this month.

Very importantly, we -- I have to say that most of the investment, if not all, we don't invest in greenfield investments. So we only invest in brownfield or mature assets. So basically, all the investment that we do, no matter it is warehouses or data center is already making cash flow. It is very important to us that we don't take any construction risk. It is really not the nature of our company.

So if we go to the strategic priorities and outlook, I'll very quickly go through this. As I said, financial services will be one of the core segments that we will grow. We will continue to expand this this particular platform, especially definitely is CTF Life. We will focus very much on the expansion of CTF Life. We will expand the reach of their customers, not only Hong Kong and CMV, Chinese Mainland Visitors. We have actually a very good growth, which Jim will talk about later on, that the customers coming from overseas, including Japan, including Taiwan. We will also look into overseas market such as Singapore. We will continue to enhance the wealth management platform.

Now we have CTF Life, we have Blackhorn, we have uSmart. We will continue to utilize all these different units to give more choices for our customers. We will also keep an eye open on to see whether there's any acquisitions suitable for this particular ecosystem to expand in this financial services sector. For Toll Roads, I said in the last analyst briefing that we are not going to expand further in toll roads. And in fact, we -- after that, we disposed one of the toll roads. We will continue to see whether there's opportunities to monetize at a good valuations, any of these toll roads.

I think one of the key step here is about good valuations. We won't monetize for the sake of just getting the cash flow back because all of the toll roads at the moment, we now have 12 toll roads left in our portfolio. All of them still generating very good cash flow. So unless we get good valuations, I don't see the needs of the immediate disposal. But if we get the right valuations, we have no hesitation to dispose toll roads in this juncture.

Logistics, we -- I think the idea, as I said, is to continue to expand in this particular area. Hong Kong, for ATL, we already increased the occupancy rate from 70-odd percent now to around 85% by the end of last financial period, which is 30th of June. We will continue to strengthen the operations of ATL and increase its occupancy rate. We will look for value acquisitions.

So we've already done 4 over the last few months. We'll see whether there's any other opportunities. I think it is very important that I mean, over the last 10 years, there's a period where there's many people chasing for assets in the logistics sector. We are not those type of people. We don't chase assets. We only -- we only do the acquisition when we see value.

So now although some of the people exiting the sector, it is not because it is really not because the entire sector outlook has been affected. It is because some of the funds reached the end of the fund life, they have different reasons. So we only do acquisitions. Again, when we see value in it, long-term value and good locations. At the end of the day, logistics is about locations, location, locations, locations.

So all the focuses of this is in the GBA area as well as in Yangtze River Delta.

Construction, we have now 4 platforms, Hsin Chong Aster, which focus on E&M. We have Hip Hing focused on building. We have Vibro focused on foundations. And then we have Quon Hing focused on concrete.

So all this actually can capture very different type of things, especially now, as you can see from the government policies, they are very focused on the Northern Metropolis. How we see it is, especially in the very initial phase, it will benefit Vibro doing the foundation work. This is actually very much stated already in the 5-years plan as well as in the policy address last week. So we think we can definitely capture that particular market, Vibro being the top -- not the top tier, the top, top foundation company, I think we can capture all these opportunities in the Northern Metropolis.

In fact, over the last year, Hip Hing already is doing some of the projects in the Northern Metropolis. We continue to see the recovery in the residential market as well. Some of the property developer already start bidding land again. So we are very positive about the construction segments. We will continue to do well, especially that we are in the top part of the cake. We are in the -- where we can actually capture the most value out of this particular sector.

Last but not least is the Facility Management. That includes the -- where you situated here, the HKCEC, GHK and KTSP, CEC, I mean, operationally, it continues to be good, but the result is a little bit affected because of the depreciation where we have only a few years left in the concessions. So while the operation is good, we will continue to hit by the high depreciation. We will start the negotiations or discussions with the government on the next concession period for HKCEC.

For GHK, GHK now mark the -- I think, the 6 years, 7 years of its operations. It started operating in 2017, grand opening in 2018. It turns into positive EBITDA in 2021. Now this year's AOP, in fact, the AOP grew 4x from last year, which Jim will talk about. We will continue to see this will continue to do well. We'll focus on the expansion of the clinics, which drives a lot of the patients from our clinics to our hospitals. We'll expand -- continue to expand on the clinic as well. We opened one of the clinics in Admiralty in last year. We will look for more expansions this year. The aim of opening the clinics really is not about the clinic itself, is to channel the patients into the hospital where they can do high-value operations.

KTSP, where we only own 25%. This is the second year in its operations. They've already done, I think, over 100 events, including concert and sports amidst all the KPI. We do see that it will continue to do well, although this is still the ramp-up phase. So it is still in the AOL phase, but we definitely will enjoy what we call " Seng Si Ging Jai" from the government. We will see how we can actually do better and improve the operational efficiency.

Okay. Now I'll pass it on to Jim on the financial updates.

First, a very quick recap on the key financial numbers.

Attributable operating profit up 3% to HKD 4.6 billion. Profit attributable to shareholders up 11% to HKD 2.4 billion. Adjusted EBITDA, which is a proxy of our operating cash flow before tax and interest increased by 1% year-on-year to HKD 7.4 billion.

Total liquidity remains very ample, HKD 31.3 billion as of June 2026, comprising of cash on hand, HKD 20.8 billion and undrawn committed banking facility HKD 10.5 billion. Net gearing ratio decreased by 9 percentage points year-on-year to 28% and net debt balance decreased by 12% year-on-year to HKD 11.7 billion.

In terms of the debt mix, we turned more bullish on the renminbi exchange rate about 18 months ago. Since then, we've been gradually reducing our renminbi borrowing exposure, resulting in a lower percentage of the renminbi debt to total debt. The ratio was 46% in June this year versus 62% a year ago. We believe such move will allow us to benefit from a stronger renminbi, resulting in a stronger increase in our equity on the back of the renminbi appreciation. The borrowing cost remained stable at 4.1%, which is unchanged compared with last year. We also done quite a lot of refinancing last year. We did HKD 14.2 billion of refinancing last year, which resulted in our debt maturing within the next 12 months from June this year to HKD 7.9 billion compared with over HKD 9 billion 12 months ago. The majority of this HKD 7.9 billion we expect will be refinanced by December this year.

We continue to maintain a very diversified funding channel. We have a banking facility of total HKD 35.5 billion onshore and offshore, of which about HKD 10.5 billion remained undrawn. We have 2 outstanding U.S. dollar bonds. We have issued an exchangeable bond exchangeable into our approximate 10% stake in Shoucheng Holdings, which was issued in September last year. And we have also issued Panda Bonds -- 3 tranches of Panda Bonds since 2022. We repaid the first tranche at its maturity in May this year, which is consistent with our strategy to reduce exposure to the renminbi borrowings.

We maintained our A+ credit rating with JCR and the outlook was upgraded from stable to positive. We also maintained our AAA rating with the domestic rating agency, China Lianhe.

As mentioned, our net gearing ratio decreased from 37% to 28% in June this year, which was due to, first, the issuance of HKD 2.2 billion exchangeable bond. second, reclassification of the HKD 2 billion net debt associated with Changliu Expressway to held for sale as of 30th of June 2022 because we signed the SPA to dispose this Expressway in May. conversion of approximately HKD 1 billion of convertible bond and finally, disposal proceeds of approximately HKD 1.7 billion. The majority of it come from the disposal of various strategic investments.

Okay. Page 14. Despite the challenging macro environment, both in Hong Kong as well as the Mainland, we managed to increase our attributable operating profit, profit attributable to shareholders as well as return on equity over the past 4 years, which reflected our successful portfolio optimization strategy as well as a shareholder-friendly dividend policy. We have committed to our sustainable and progressive dividend policy since fiscal '19. We -- today, we announced a 4% increase in our final to HKD 0.33 on a comparable basis. When I say comparable basis, it means we will adjust the FY '25 final and interim DPS number to reflect the 1 for 10 bonus issue completed in December 2025. So together with the HKD 0.28 interim dividend, total dividend this year would be HKD 0.61, and that represent a 3% increase year-on-year. We announced another 1 for 10 bonus issue.

The purpose, just like last year is to further increase the stock liquidity. Our daily stock daily turnover volume has increased substantially by about 1.4x to over USD 2 million, thanks to the increase in research coverage by the major investment banks as well as the 3 percentage point increase in our free float as a result of the CB conversion.

Next, I will talk about the performance of each of our 4 major segments. I will start with Financial Services. Sorry, as Gilbert mentioned, Financial Services has become our largest AOP contributor for the first time overtaking the Road segment. The AOP increased by 19% year-on-year to HKD 1.5 billion. And CTF Life represented the vast majority of this HKD 1.5 billion AOP, although uSmart that we acquired in November last year also contributed nicely to the AOP of the segment.

The earnings growth was driven mainly by the robust CSM release from CTF Life, which increased by 21% year-on-year to HKD 1.4 billion. We have also seen a strong increase in both our APE as well as NBP, meaning new business premium, 7% for APE and 74% increase for new business premium.

Regarding APE and new business premium, we want to go a little bit deeper because there has been a major shift in the product mix. I think it happened not just to us, but also to other life insurance company in Hong Kong as well as a result of the new commission spreading rule introduced by IA effective from the 1st of January 2026. So in the first half of the fiscal 2026, we saw a lot of multi-pay insurance policy, so it can be 2p, 5p, 10p.

But moving into the second half of this fiscal year, because of the new commission spreading rule, a lot of the insurance company, including us, are selling the majority of the product in the form of single premium, which when you translate that into APE calculation, you will only -- the APE only account 10% of the single premium as -- the APE only include 10% of the single premium. We substantially reduced the APE number for the second half of this fiscal year.

That's why we did not -- while we did not mention new business premium in the past, now we think it's important for investors to also look at new business premium, which is defined as 100% of the single premium together with the annualized first year premium.

Having said all this, we think this year, it will be quite misleading and not meaningful to look at the year-on-year growth of APE and new business premium between FY '26 and FY '25. Instead, we will urge you to focus more on the VONB dollar. Because no matter a single premium or multi-paid premium, at the end, you generate the same VONB. So we think VONB growth is the most important metric that you should focus on in fiscal year 2026.

Our VONB dollar increased by 30% year-on-year to HKD 1.3 billion, which is driven by -- sorry, the margin also increased from 30% to 37%, which is driven by, as I mentioned earlier, the shift to single-pay premium and also the successful repricing of our flagship product called the -- My Wealth Series.

The CSM balance of CTF Life increased by 22% year-on-year to HKD 11.3 billion, which is quite impressive considering the strong CSM release during the year. The Embedded value also increased by 12% year-on-year to HKD 28.4 billion. The solvency ratio for CTF Life stood at 285%, which has already taken into account HKD 0.6 billion of dividend remittance -- we believe 285% is one of the highest, if not the highest, among all the major insurance companies in Hong Kong.

Because of the very high solvency ratio, we actually think CTF Life is in a very strong position to argue for a further increase in its dividend payout ratio to the listed company.

Over the past 2 years, CTF Life pay out about 50% of its profit as dividend. So we think there's room for further improvement in the dividend payout ratio going forward. In terms of the performance of different channel, the agency channel saw a 10% increase in APE and 85% increase in NBP. The partnership channel increased its APE by 16% and NBP by 138%. As mentioned by Gilbert just now, in addition to focusing on the CMV business, we are also developing the overseas business, meaning we established a relationship with broker to focus on international high net worth customers. During the year, our APE from these overseas customers increased by 40% year-on-year. And now the overseas customer already accounted for slightly less than 10% of our total APE for fiscal year 2026.

In terms of the AUM, our total asset under management for the insurance company increased by 17% year-on-year to HKD 106 billion. Like in the past, most of this investment were allocated to investment-grade bonds. And also, we continue to maintain a very diversified geographical exposure, 45% in Asia and Oceania, 40% in North America and 12% in Europe. The strategy of our investment is to generate sustainable risk-adjusted long-term return in order to support the fulfillment of its obligation to the policyholders.

The fixed income portfolio continues to see a small increase in its investment -- recurring investment yield to 4.59% in FY '26.

With the -- first of all, we believe there are a lot of new business opportunity in the wealth management industry in Hong Kong. And with the recent acquisition of 13% stake in uSmart, which is the digital brokerage and 65% in Blackhorn, which is an external asset management, together with the core CTF Life insurance business, we think our Financial Service segment is now in a position to offer integrated financial solutions covering both wealth accumulation as well as protection and retirement.

I would move on to Roads. I'm mindful of time, so I will try to finish within the next 10 minutes. . As of today, following the disposal of Hunan Changliu Expressway in July, our portfolio now comprise of 12 toll road projects with a total length of 815 -- sorry, 815 kilometers. The average remaining concession period for our road portfolio is 11 years.

During FY '26, the segment AOP was flat year-on-year at HKD 1.4 billion of AOP. The average daily traffic flow and total revenue was down 1% year-on-year. AOP was broadly flat, however, thanks to the appreciation of the renminbi as well as the lower financing cost of the onshore project loans. we disposed the Hunan Changliu Expressway in July, which resulted in a 4% reduction in the AOP, which is pretty minimal for the segment and a 9 percentage point decrease in the group's gearing ratio, which is very substantial. And going forward, we will continue to optimize our portfolio by divesting selected mature assets with less attractive risk-adjusted returns.

Logistics. Our logistics business comprised of a 56% interest in ATL, almost 100% interest in all the warehouses, except Suzhou, which is 90% in 12 logistics properties in Mainland China and a 30% interest in CUIRC.

So first, let's talk about ATL Logistics. The Segment AOP was down 13% year-on-year in FY '26 to HKD 645 million, and the decline was driven mainly by the decline in AOP of ATL Logistics Center.

The occupancy rate of ATL Logistics was 80.7% in June last year, and then it declined further to 75% but started to recover to about 85% in June this year. However, if you take an average of the occupancy rate for FY '26 and FY '25, the average occupancy rate was still down percent and hence, the decline in AOP of ATL. Hopefully, we have already seen the worst of the occupancy rate for ATL given the recovering retail sales as well as the strong import export numbers of Hong Kong. Rental rate of ATL have been quite resilient over the year despite the challenging macro environment.

Going forward, we will continue to boost the occupancy rate for ATL through diversifying our tenant base, improving the service quality, upgrading the tenant experience as well as closer collaboration with the leasing agencies.

Regarding our logistics portfolio, regarding our logistics centers in Mainland China, we have provided deferred tax for the 7 -- for the 11 Mainland warehouses for the first time. So if you exclude this impact, the Mainland -- the PRC warehouses AOP actually increased by 11% year-on-year. The occupancy rate has been pretty stable. For the 7 existing property, the average occupancy rate was 86%. So as the entire portfolio, including the 4 newly acquired projects during the year.

We remain optimistic on the sector due to growing city distribution demand, increasing e-commerce penetration as well as the relatively resilient manufacturing export activity in Mainland China. Recently, we have acquired -- we have entered into the AI-related infrastructure sector, i.e., the AIDC. As of today, we have made 1 investment in AIDC project in Jiangsu. We have signed SPA to invest in another AIDC project in Hebei province. And this morning, we have also signed an SPA to invest in AIDC project in Johor, Malaysia.

CUIRC, its performance has been relatively stable, AOP up 2%. throughput increased by 8% to 7.6 million TEUs. We think it will continue to benefit from rising rail freight demand, favorable policy promoting the multimodal transportation in China and also its nationwide network comprising of 13 railway container terminal across different important cities in China.

Construction, as Gilbert mentioned, this comprises of Hip Hing, Vibro, Quon Hing and Hsin Chong Aster. During the year, its AOP -- the segment AOP was down 4% year-on-year to HKD 689 million. Contracts on hand increased by 7% year-on-year to HKD 63 billion. Backlog was HKD 35 billion and new contract secured was HKD 17 billion.

We have seen a continued increase in our exposure to the government and institutional sector comprising of 66% of our backlog. Obviously, the environment remains quite challenging given the softness in the private sector market, although we are seeing some private developer in Hong Kong started to bid or tender for residential land in the past 12 months. And we think the order flow should improve going forward.

We also want to highlight that despite the challenging operating environment, our account receivable management remains very stringent. So if you look at our financial statement, you will see that the account receivable balance of Hip Hing actually decreased by 12% year-on-year despite a 17% increase in revenue, which means its account receivable days has declined by 8 days to only 35 days.

I'll skip Page 31. So Page 32, Facility Management. The segment AOP was down 1% year-on-year to HKD 88 million. The key earnings driver for this segment was Gleneagles. Its AOP increased by 4x year-on-year. EBITDA increased by 15%. Inpatient, outpatient, day cases number grew 3%, 1%, 9%, respectively. We continue to expand our clinic network through Parkway Medical. As Gilbert mentioned, we recently opened a new clinic called MediCenter -- Gleneagles MediCenter in Admiralty in October this year. And this network have contributed approximately 10% of Gleneagles gross profit in fiscal '26. And currently, the network comprises of 7 clinics and 1 laboratory.

Hong Kong CEC, the revenue increased by 8%, and the AOP was down mainly because of the increase in depreciation charge as a result of the shortening remaining concession period. But if you exclude the depreciation and also CapEx, the AOP of CEC actually increased by 8% year-on-year. Kai Tak Sports Park still in AOL because of -- it is still in the ramp-up stage. However, operationally, the stadium has posted more than 150 events. The stadium rental utilization rate was very high at 90%. And the mall -- Kai Tak Retail Mall occupancy also improved 7 percentage points to 87%. It has received quite a number of international awards during the year like Venue of the Year, World's Greatest Places by TIME.

But most importantly, it ticket sales ranked the first in Asia and third globally in 2025. I pass on to Karen to go through our ESG achievement.

I will make it brief. So thank you, Jim. Before I -- sorry, before I take you through the FY 2023 ESG progress, I would like to start with the thinking behind our ESG philosophy. So our approach is built around 3 interconnected elements, understanding, integration and action. We start by understanding the ESG risks and opportunities that could affect our businesses. We then integrate those insights into risk management, investment decision, business planning and governance. And finally, we act by mobilizing capital, people, innovation to deliver measurable outcomes.

So let me show you how that works in practice. Our climate and nature assessment have given us greater visibility of risks such as heat stress, and extreme weather as well as dependency, including water climate regulation and flood production. But the important point is what we do with those insights. They are increasingly being incorporated into enterprise risk management, project planning, decarbonization, investment due diligence. So we are moving from simply understanding ESG risk using those insights to make better business decisions. So what has this translated into during FY 2026? I won't take you through every number, but let me highlight 2.

Green and Sustainability-linked financing now represents 45% of our total debt portfolio, bringing us closer to our 50% target and Scope 1 and 2 emissions have reduced by 17% compared with our FY 2023 baseline. So this is a good example of how ESG is becoming increasingly embedded in how we finance and operate our business.

Our progress has also been recognized externally. This year, CTFS achieved a AAA rating for the first time in the Hang Seng Corporate Sustainability Index assessment. External recognition is not the objective, but it provides a useful independent benchmark of our progress. Our focus remains on underlying capabilities and resilience that support long-term value creation.

Turning to capital. This slide shows you how ESG consideration is influencing both our financing and investment decision. We launched our sustainability-linked finance framework to strengthen the alignment between our sustainability target and financing. Our investment ESG considerations are increasingly integrated throughout the investment life cycle. One example is our strategic investment alongside Unisun in a battery energy storage system in Finland.

It's supporting renewable energy integration and grid reliability. With CTF Life, the investment portfolio carbon footprint has been declined by 12% compared with FY 2023 baseline. This example demonstrates how sustainability is increasingly shaping our way with how we finance and deploy capital. So better -- I think what we have mentioning is how we are making better decision.

I think in the era of data-driven era, better decision also depends on better data. Approximately 61% of our Scope 3 emissions are now calculated using higher quality supplier-specific or physical activity-based data, covering approximately 96% of our total Scope 3 emission. So this gives us better visibility of emission hotspot and help us focus on decarbonization effort where they can make the greatest difference. So this is not simply about better reporting. It is about enabling better decision and more targeted action. So what's in action now?

So we're also translating this insight into operational improvement. At Hip Hing, our carbon estimation tool is being developed to help project teams identify emission hotspot earlier and access reduced -- reduction opportunity during project planning phase. At HML, more than 27 energy efficiency projects were completed during the year, delivering estimated annual energy savings for more than 700,000 kilowatt per hour.

So they are practical example of sustainability and operational efficiency reinforcing each other. We also see the same connection between sustainability and resilience elsewhere in our portfolio. Across our 4 newly acquired logistics warehouse, on-site solar generation supply approximately 75% of electricity demand.

With road, technology such as slope monitoring, bridge structure health monitoring and intelligent traffic management are helping our business anticipate and respond to climate-related risk. For us, ESG is not only about reducing our environmental impact, it is about strengthening the resilience and long-term performance of our assets. So ultimately, sustainability is implemented by people.

So this year, we continue to invest in building ESG capabilities and empowering colleagues across the group to turn ideas into action. Our aim is for ESG to become part of everyday decision making rather than somehow owned by one team. So during FY 2026, we strengthened our understanding of ESG risk and opportunity, integrated those insights into business and investment decision and translate them into tangible action.

Looking ahead, our focus remains on strengthening resilience, embracing innovation and allocating capital responsibly to create sustainable long-term value for our investors. So thank you very much.

Thank you, Karen. So we are now moving to the Q&A session. [Operator Instructions].

This is Jeffrey from CLSA. So maybe starting with insurance. So just want to get a sense on how the business momentum is going after period end going into July, August. Anything you can comment, that would be helpful. And second question on -- maybe just going to ATL a little bit. On the pickup of occupancy to 84% or 84.5%, so can you give us a little bit more color whether the additional occupancy is from existing tenants or new tenants? And also any comment on the average rental growth for FY '26?

Okay. For the first one, for the July or the last 3 months, third quarter of this year. I think you're referring to the -- especially after the new policy coming from China. I think we are very similar to all the other insurance company. We do see some vacillations or slowdown, but it's not significant. We're talking about a single-digit slowdown in terms of the people coming from China to buy insurance policy from us. If we compare to the information that we've got with the industry, in fact, we are a little bit better than them. We do think that this effect is short term. I think people are doing -- putting a wait-and-see mode.

I mean, as you know, I mean, China has been putting out different policies over the last few years. I think for the first few months, it is very obvious for the people to wait and see until it becomes more clear. And I think fundamentally, because of the rate -- interest rate differentiations and also the protections that we can offer in most of the insurance company in Hong Kong, that actually differentiates us from the policies from the insurance company in China. I think there's still fundamentally, we still have the attractiveness of of insurance in Hong Kong. Jim, you have anything to add?

Yes. Just want to supplement. When Gilbert mentioned there is a single-digit year-on-year decline in VONB dollar in July and August combined. Bear in mind that we are comparing July and August this year with July and August last year. And July last year was actually a very, very strong month because of the -- a lot of policy submission in June last year ahead of the illustrative return cap introduced by IA, a lot of the clients they submitted their policy in June, which then spill over into July.

So our VONB dollar for last July was 3x the average normal level. So a single-digit year-on-year decline in VONB for July and August this year is actually, I would say it's actually quite satisfactory.

Yes. I think that also answered one of the online questions that actually asked about the so-called differences in the growth rate on the second half of this year compared to the growth rate of the first half of our financial years. On your second question about ATL, a lot of them are new tenants. Obviously, we have some renewal, but a lot of them are new tenants. That actually drives the occupancy rate back up from 70-odd percent to 85%. In terms of the rental rate, average rental, if we're looking at the full year average rental, it actually increased compared with last year.

Low single digit.

Low single digit.

Timothy from Citi.

This is Timothy from Citigroup. I got 2 questions as well, if I may. The first one is about the bonus issue. So would you mind elaborate a little bit more about the thought process from the management in terms of pushing forward this kind of a bonus issue. Of course, from sell-side banks perspective, we are always welcome for more liquidity and more trade potentially. But I'm just trying to understand what -- is there a target of average daily trading value or volume that we are going for.

Last round, of course, we are trying to get back to stock connect. So I'm just wondering this round, is there something that we are looking at?

And please allow me to ask a not so intelligent question, which is about the DPS. Does it mean that next year, DPS would likely be 10% lower? So that is the first question.

The other question is about the AIDC acquisition. So I'm just curious because, of course, AI and data center is likely going to be a very strong growth engine going forward globally as well. But I'm just -- but in the market to what I understand, usually this kind of AIDC, the valuation might be a little bit ludicrous. So I'm just wondering because of the unfortunately, lack of the disclosures on -- I totally understand that because of ongoing investments probably other potential deals. But just wondering what kind of expectation, valuation range and target about our future logistics kind of business mix between different segments going forward?

I take the most easiest one first, right, the DPS growth. Yes, we always look at comparable basis. I think that answer your question. And answer your first question, stock turnover target, obviously, the higher, the better. But we -- as I mentioned, now our daily stock turnover volume is about USD 2 million a day. We do recognize that in order to attract some of the bigger size fund, we do need to get across the USD 5 million per day threshold. So we are aiming towards that threshold.

Yes. I think I just want to supplement a little bit on that. We don't really have a target. what's the volume. But at the end of the day, as Jim said, the higher the better. I think it goes both ways. When the stock is more liquid, it's more lucrative, it actually drives the share price as well to a more realistic value. I mean, personally, I think our stock under priced. So maybe I put the excuse on the liquidity. But I think that's one of the real excuse that we are having because of we are a relatively high dividend yield stock. A lot of people actually buy and hold rather than trade. So we do want to create more liquidity out there.

In terms of AIDC, maybe we both can answer that question. I think, first of all, there's no set target of what how much we're going to put in these sectors. We -- I think we are a very -- first of all, we are very disciplined investors. We don't really say that we're going to expand this to overtake whatever portion of the logistics sectors. I think we just see that as a whole, the logistics sector or the infrastructure, I mean, CDFS traditionally has been an infrastructure company. And we just need to modernize ourselves to go into the new infrastructure. And when we do AIDC, we don't really do the high technology stuff. We don't do the chipset. We don't do the rack. We basically just do the box. So it is no difference. It is no difference to how I see the traditional warehouses. And in fact, we're looking at it like the traditional warehouses. We're looking at it using cap rate, okay? So we are not using the AIDC like VNET and all the other company where you're looking at the PE, we are not doing that because we're basically receiving rental on the rack and also on the operators.

So again, I'm not going to disclose what kind of valuation that we are buying, but I can assure you whatever Brian is buying is very conservative. I mean we're definitely getting value of money on that. And we -- I mean, it's even below a disclosable transaction. It's a very small amount. So we are still building the base out of this particular sector.

Jeff from DBS.

I almost messed up myself. So just switching gear a bit to construction. Obviously, you hinted the margin is lower. So I just want to understand maybe what are you seeing? Is it because of the mix of the projects? Or is it still because of the labor shortage? If it is the latter, then can you give a little bit color on what we are seeing in the labor market for now?

I'm asking whether we hinted that because I don't realize we don't really.

The gross margin for the Construction segment this year was marginally lower as compared with last year. But bear in mind that the project that we're working on in FY '26, it was secured like 2, 3 years ago. And during that time, there was still a downturn of the property sector in Hong Kong. As a result, we need to be more competitive in terms of pricing.

And I think it's worthwhile to know it was also slightly affected by the projects of Aster because one of the big projects of Aster has a lower margin because of cost overrun. So that actually affected the overall margin of the Construction segment as well.

Okay. Thank you. We have a question online. It asked about the CTF Life dividend payout ratio was 50%. Can you talk about the actual cash flow that CDFS getting from CTF Life?

It is very easy to answer.

Yes, in FY '26, we received about HKD 640 million dividend from CDFS -- sorry, from CTF Life, which represented 50% of its AOP in FY '25.

Is there any other questions? Evan from HSBC.

Evan from HSBC. I have 2 questions. One would be on your construction business. How do we think about the upcoming pipeline of new projects for the next financial year or 2? And how the Northern Metropolis could contribute into a long run over -- we think about revenue over a series of years?

And then second question would be on the Kai Tak Sports Stadium. When should we expect it will start providing a profit on adjusted operating profit basis?

Okay. For construction, I think we already have disclosed a very strong pipeline in terms of the new projects that we received. I think with the -- what Jim has already mentioned, with the warming up or slowly recovery of the residential market. We do see the new contracts that we are getting will be steady. As you can see actually from the result of the entire construction segment, it has been very steady even through the trough days of the property market. So I don't really see there will be any challenges in the construction segment. In fact, I do see the upside of that because of the -- as Evan mentioned, about Northern Metropolis, not only on Hip Hing, but also on Vibro, which is the foundation company.

I mean if you're looking at the policy address, it talks about a few very important information. Let's talk about the 3 university town which is over 1,000 hectares. And then it talks about 9 development district. And the first thing they mentioned is about foundation. So that definitely will benefit Vibro because Vibro is -- again, it's not one of the foundation company. It's a top foundation company. And in fact, there were 2 -- actually there are many projects that we are getting the projects on a technical basis and beating our second bidders by a couple of hundred of million dollars, meaning we are actually premium to them. We are charging more to our second bidders and not less. So we are actually winning by the technicality.

So we received more money and the vendor or the government or the owner actually happy to pay that premium. So I definitely will see there's actually more opportunities coming up from the -- Northern Metropolis. In fact, I think the construction sectors, while it will be steady, but I think it will be steadily growing.

Kai Tak?

Kai Tak, sorry, what's the question on Kai Tak?

When will you break even.

Only at 25% No, I think seriously, I don't really have a forecast on that. But I think it would take at least another 12 to 18 months, I would say, for it to break even. Operationally, it's already improved a lot the margin improved a lot, but it really takes some time to optimize the operations. So we already see that -- I mean, to be very honest, I mean, all of you guys are friends here. So we already see that some of the human power are excessive. So we are doing something to optimize that.

And you can also see the Kai Tak Mall has more traffic now and also has more occupancy. And for some of you, who are store owner of Kai Tak. Some of them are laughing already.

You probably already received because of the renewal coming up, you will see that the price increase is 3x at the very minimum. And people are still bidding up for that. So you can see that actually the entire result is coming up, but it will take some time because, I mean, store is a very typical example, 2 years, 3 years. The 2 years contracts, there's only a few of them expiring this year. 3 years is next year. So next year, there will be a lot of them expiring. And we're talking about 3x of the rentals, 4x of rental. So yes.

Thank you, Gilbert. So we received a question online. Adjusted EBITDA is your proxy for cash flow, which is HKD 7.4 billion and dividend is HKD 2.8 billion. So how much capital have you reserved for acquisition per year? And your gearing target, what is that? And can the dividend still go further up?

HKD 7.4 billion is the operating cash flow, but we do need to pay taxes as well as interest expenses. So if you net out these 2 items from HKD 7.4 billion, we end up with slightly more than HKD 5 billion. So after paying HKD 2.8 billion, we still have slightly more than HKD 2 billion of cash reserve for acquisition. The gearing target is about 40% to 45% range.

Can dividend go up further? There's always a possibility. And already raised the dividend this year. But at the end, it's all depend on how strong our adjusted EBITDA growth and also how strong our AOP growth.

[indiscernible] From HSBC.

I just want to understand because I understand the company has acquired many businesses, including uSmart, including Blackhorn and logistics properties. I want to understand the profit contribution from these newly acquired businesses. And what is your expectation about the contribution next year?

Yes. A very good question. I think, first of all, we are not acquiring this -- some of them are, but we are not acquiring these companies solely for the profit contributions. I think it's about the platform that we are building, especially Blackhorn and uSmart. I mean, honestly speaking, Blackhorn is a relatively small E&M company. It is about the the services that we can actually provide to our existing policyholders and actually attract more customers to provide a diversified type of products to them.

Obviously, uSmart, uSmart give a very good return to us already. We only own 13% already have a very strong AOP contribution this year. We do expect because of the trading volume increase in both Hong Kong and the U.S. stock. So people will use more of the [indiscernible] services. So we do expect that it will continue to provide a very healthy AOP contribution.

In terms of the few logistics acquisition as well as the data center, as I said, I think we are looking more on a yield play. At the time of the acquisitions, our general hurdle rate, we're talking about a cap rate of a little less than 6%. So you can basically calculate everything from there. I don't really have a target of what kind of profit contributions or cash flow contributions that we can come. But I think for logistics, it's more about the stable cash flow that they can provide to us, both in the warehouses as well as the data center.

Thank you. It's about time. So that concludes today's analyst briefing. If you have further questions, feel free to reach out to the group Investor Relations team. And thank you for your support, and I hope to see you next time. Thank you.

Thank you.

Good afternoon, everyone. Thank you for joining CTF Services Limited Financial Year 2026 Interim Results Analyst Briefing. I'm Silvia, the Head of Group Investor Relations. Today, our management will go through the financial and operational results for the period, giving you an update on our key -- 5 key business segments and also have further elaboration on our strategic initiative. There will be a Q&A session following the presentation. [Operator Instructions]

Without further ado, may I now invite Executive Director, Group Co-CEO, Mr. Gilbert Ho; Executive Director, Group COFO, Mr. Jim Lam, to kick start the meeting. Thank you.

Thank you, Silvia. I first will give a brief introduction on our results, and then I will pass on to Jim to give the financial updates as well as some updates on our business operations. Okay. So first of all, on the first half results, I give some highlights. Overall, we have delivered a solid earnings with steady growth. Mainly on the Financial Services segment, we delivered a very strong growth. Later on, I will go through the numbers. It is -- remain as a core earnings driver for our company.

We continue on our portfolio optimization by streamlining our stagnant assets to strengthen the financial flexibility and support growth initiatives in our financial segment as well as our Logistics segments. Throughout the period, we have successfully restored our public float to over 25% via the CB issuance and also the subsequent conversions, which enhanced the market liquidity of our stock. With the effect on the 9th of March, our re-inclusion into the Hang Seng Composite Index will make us eligible to go to the Stock Connect and will further enhance the company's investor outreach.

On the portfolio optimization, we have done a number of acquisitions. First of all, we have completed the acquisitions of 13% in uSmart in November 2025. uSmart is a leading technology-driven financial service provider. We also announced the acquisitions of 65% in Blackhorn Group, which is an external asset manager. The acquisition is still pending the approval from the relevant regulators. These 2 acquisitions, which profitable on its own, will expand the entire financial services platform beyond insurance, which give our customers a more full scope financial offerings and will target on high net worth individuals to give them more products that they can actually choose from our platform.

On the Logistics side, we have completed 2 acquisitions. The first one is in December 2025, we acquired a logistics property in Dongguan. Second, we have completed 3 logistics properties in Shanghai, Ningbo and Changzhou in January 2026. All of these properties are completed logistics properties, which will start to contribute AOP immediately. With all these acquisitions, we expand our logistics portfolio to 12 logistics properties with the total GLA to around 14.5 million square feet, strengthening the entire group's presence in key economic region in Chinese Mainland as well as Hong Kong.

At the same time, we also divest some of our investments. Most notably is our issuance of exchangeable bond in Shoucheng Holdings of $2.2 billion, 0.75% exchangeable bond due 2028. We also disposed various investments in our strategic investment segment worth over $300 million. Our investment thesis continue to be a diversified business to drive strong cash flow as well as enhance the long-term shareholders' return. With a number of initiatives. Firstly, is disciplined capital stewardship to pursue growth in strong fundamentals, cash flow businesses. Second is about the financial flexibility to navigate market uncertainties, and we will continue to do portfolio optimizations in terms of divestment as well as investments.

We will continue to expand in our financial as well as our logistics segments to strengthen earnings growth as well as recurring income and cash flow durations. With a consistent dividend track record, we will uphold our sustainable and -- sustainable and progressive dividend policies. In terms of numbers, here is the AOP for the last 6 months. As you can see, our road segment has increased 1% in terms of AOP. Financial Services segment increased 19%. Logistics segment has a decrease of 14%. Construction decreased 21%. Facility Management, which includes HKCEC, Kai Tak Sports Park as well as Gleneagles hospitals increased 360%. Last but not least is our Strategic Investments segment increased 78%.

On the business strategies as well as our outlook. For the road segment, we will continue to drive operational agility to manage changing traffic patterns. As I said in the last analyst presentations, we are not pursuing new projects. So we will continue to optimize our existing portfolio as well as to look for enhancement of our earning portfolio within the road segments. For the financial services, we will continue to capture demand from the Chinese Mainland visitors as well as other overseas markets to capture the cross-border wealth flows.

For the Logistics segment, we will continue to pursue acquisitions in stable assets in GBA, the Yangtze River Delta as well as major metropolitan areas in Western China. For Construction, we definitely will leverage on the Hong Kong government initiatives in the major metropolis. We will definitely benefit on the continued warming of the property market in Hong Kong.

On the Facility Management segment, HKCEC, we will continue to attract high-value mega events. GHK, you will see later on in Jim's presentation, which turned from AOL in the previous year to AOP, will continue its expansions in the clinics as well as its growth in the hospitals. KTSP, needless to say, we will capture on the initiatives from the government of Hong Kong being the events capital of Asia and continue the operational ramp-up and the development of the strategic partnerships with various segments.

I'll pass it on to Jim on the financial update.

Thank you, Gilbert. On our first half fiscal 2026 financial results, AOP was up 3% to $2.3 billion. Adjusted EBITDA was up 1% to $3.6 billion. Net profit was up 15% to $1.3 billion. The stronger growth in net profit than AOP was mainly due to the high exceptional loss in relation to the Hyva disposal last year. The Board announced an interim ordinary dividend of $0.28 per share, which was up 3% year-on-year compared with the last period on a comparable basis.

The total available liquidity of the group was $31 billion as at 31st of December 2025, which comprised of cash on hand of close to $21 billion and committed undrawn banking facility of close to $10 billion. The net debt balance was $13.8 billion, which translates into a net gearing ratio of 34% and net debt to adjusted EBITDA of 1.9x. It is worth noting that the net debt balance of $13.8 billion exclude the exchangeable bond that we issued in September 2025. And this exchangeable bond is now treated as financial liability at fair value through P&L. But we're actually quite hopeful that the EB will eventually be exchanged into Shoucheng shares before its maturity.

As at 31st of December 2025, our renminbi debt to total debt ratio stood at 61% and renminbi liability to renminbi asset ratio stood at 76%. Since the risk of renminbi depreciation against Hong Kong dollar, US dollar is now considered low compared with 3 years ago, we have been reducing our exposure to renminbi borrowing since the beginning of this year. And we target to lower the renminbi debt to total debt ratio to about 40% to 50% by June this year and to lower the renminbi liability to renminbi asset ratio to about 50% to 60% by June this year.

Fixed rate debt to total debt was 76%. We've been seeing a consistent decline in our average borrowing cost since fiscal 2024, and we further reduced our average borrowing cost from 4.2% a year ago to 4% in the current period. We project the average borrowing cost for full year fiscal 2026 to be similar to first half fiscal 2026 as HIBOR was abnormally low in July to August 2025, which was below 1%. As of 31st of December 2025, we had total debt of close to $35 billion, of which about 19% or $6.8 billion will fall due within the next 12 months. If you compare this figure to the $9.4 billion of short-term debt as of 30 of June 2025, we managed to reduce our short-term debt that will mature within 1 year to -- sorry, by 28%.

We have diversified funding channels, which include onshore and offshore banking facilities, U.S. dollar bonds -- offshore U.S. dollar bonds, onshore panel bonds and also offshore convertible bonds. We maintained an A+ offshore credit rating with JCR and an onshore AAA credit rating with China Land. Just a quick recap on the EB that we issued in September last year. The issue size is $2.2 billion, and we issued the bond at a 3% premium to the principal value. So the total proceeds we received is $2.3 billion. Coupon is 0.75%, time is 3 years. It's exchangeable into shares of our Shoucheng stake, which accounts -- which comprise of about 10% of the issued capital of Shoucheng. Initial exchange price is $2.66. If we manage to -- if the exchangeable bond is exchange -- is fully exchanged into Shoucheng shares, we'll be able to book a disposal gain of HKD 1.2 billion.

This chart shows the movement of our gearing ratio since fiscal 2019. The net gearing ratio increased from 0% to 31% in fiscal 2020. After the acquisition of CTF Life Insurance for almost HKD 22 billion. Since then, it has been on a steady declining trend down to 8% in fiscal 2023, thanks to the strong cash flow generation and the noncore disposal proceeds despite a series of acquisitions that we made during the years. In fiscal 2024, we announced a sizable special dividend, the aim of which is to optimize the capital structure and to boost our ROE. The net gearing ratio increased to 35% as a result. Since then, it has been maintained at around the same level. And our target net gearing ratio remain unchanged at 40% to 45% in the near to medium term.

Over the past several years, despite the challenging market condition, we've been able to consistently grow our AOP, net profit as well as ROE. We have been committed to a sustainable and progressive dividend policy since fiscal 2019, the first year that we adopted this dividend policy. Since then, we've been gradually increasing our dividend per share from $0.58 in fiscal 2019 to $0.65 in fiscal 2025. As you know, we completed 1-for-10 bonus issue in December 2025. As such, all the per share data will need to be adjusted retrospectively to account for the enlarged share capital because of the bonus issue. The $0.30 interim DPS for fiscal 2025, therefore, should be adjusted to $0.273 after adjustment. So the interim DPS that we announced for fiscal year 2026 is -- represent a 3% increase year-on-year.

We estimate the total interim ordinary dividend for the first half of fiscal 2026 would amount to about $1.268 billion, which translate into a growth rate of 6%. Again, this demonstrated our commitment to the sustainable and progressive dividend policy. The reason why the total interim dividend growth is stronger than the DPS growth is mainly due to the increase in capital base because of the CV conversions. We are glad to report that our company will be included back into the Hang Seng Composite Index effective from 9th of March 2026. As a result, we will be eligible to participate in the Stock Connect program pending final approval from the Shanghai and Shenzhen Stock Exchange. We believe this will further boost our stock trading turnover by attracting a broader base of investors from the Chinese Mainland. It is also worth highlighting that our average daily trading volume has increased by 51% for full year 2025. And if you look at the more recent data in January 2026, our average daily trading volume actually increased by almost 4.8x compared with January 2025.

Next, I will briefly discuss the performance of each of our 5 segments during the current period. We have a total of 13 road projects with a total length of 880 kilometers, spanning 6 provinces. During the period, the AOP of the road segment increased by 1% year-on-year to $771 million. The daily traffic flow and toll revenue for our road portfolio was down 1% year-on-year during the period because of the partial closure on 2 Expressway currently undergoing expansion program. However, the AOP of the road segment actually increased by 1%, as I just mentioned, and that was driven mainly by the lower finance cost of the onshore project [indiscernible].

For the Financial Services segment, the segment AOP increased strongly by 19% year-on-year to $729 million, and that was driven mainly by the increase in CTF Life CSM released, which is supported by the new business growth and also favorable financial market conditions. The CSM release grew by 17% year-on-year to $665 million. And the CSM balance also increased strongly by 18% from 30th of June 2025 to HKD 10.8 billion as at 31st of December 2025. So this increase is actually very significant. Investment income on its fixed income portfolio grew further to 4.7% as compared with 4.6% a year ago. We think this return figure is actually very high as compared with our peers in the Hong Kong market.

The overall APE growth during the period increased by 48% year-on-year to $2.3 billion. VONB increased by 39% year-on-year to $733 million. VONB margin also recovered from 27% in the second half of fiscal 2025 to 32% in the current period. Embedded value, which is the most important variation benchmark for life insurers increased by 10% year-on-year to $27.8 billion. CTF Life maintained A- rating with Fitch rating and A3 credit rating with Moody's. The solvency ratio remained very high at 282% despite the strong APE growth, payment of the dividend to the list code, thanks to its strong asset and liability management efforts.

The agency force of CTF Life performed exceptionally well during the period. The agency APE grew by 32% year-on-year to $612 million, driven mainly by the improvement in agency productivity, which was up 24% year-on-year. Agency persistency was up 13% year-on-year to well over 90%. The MDRT number also increased by 29% year-on-year. In order to diversify its reliance on the CMV business, CTF has been expanding its overseas business in order to create a new engine for growth. During the period, the overseas business APE increased by 86% year-on-year to $191 million, which is supported by closer broker engagement and by leveraging on the broader CTF Group ecosystem. It's now expanding its customer footprint in the Southeast Asian country and also the -- among the high net worth customers through its new Bermuda operations. Its investment portfolio is now close to HKD 100 billion, of which about 68% is allocated to bond and 19% is allocated to equity investments. In terms of geographical distribution, the investment is actually very well diversified among Asia, North America as well as Europe. The vast majority of the bond portfolio with investment-grade bonds.

Moving on to the Logistics segment, which comprised of ATL Logistics Center with a gross leasable area of 5.9 million square feet, 8 logistics properties in Chengdu, Wuhan, Dongguan with -- and Suzhou with a total gross leasable area of 6.9 million square feet and also CUIRC with 13 large-scale well container terminals in the Chinese Mainland. For ATL, the occupancy rate as of 30th of June 2025 was 80.7%. And as at the 31st of December 2026, it was 75.2%. The average rental rate increased by 3% year-on-year. In order to further improve its occupancy rate, the ATL has been diversifying its tenant base, intensifying its marketing and branding efforts in order to attract new customers and also upgrading the amenities and facility in order to enhance the service quality.

For the logistics properties in Chinese Mainland, for the 7 logistics properties in Chengdu, Wuhan and Suzhou, it increased from 87.5% 6 months ago to 90.9% in December 2025. Occupancy of our Suzhou logistics property also improved markedly to 75.7% from 40.7% in June 2025 after we terminate the lease with subtenant. In December, the group further acquired a logistic property in Dongguan, which marked its first expansion into the GBA area. Overall, the average occupancy rate for the 8 logistics property in Chengdu, Wuhan, Suzhou and Dongguan stood at 91.2% in December 2025. Post the period end in January 2026, the group further completed the acquisition of 3 premium logistics properties in Shanghai, Ningbo and Changzhou with a cap rate of 6% and a total leasable area of 1.7 million square feet. The group will continue to explore potential investment in the next generation of digital infrastructure, i.e., in data center.

For CUIRC, thanks to the strong demand for multimodal transportation services, its AOP increased by 19% year-on-year, throughput increased by 10% and the TEU number reached 3.84 million. For the Construction segment, the AOP was down 21% year-on-year to $310 million due mainly to the lower profit margin of the revenue recognized during the period and the absence of expected credit loss provision reversal in the prior period. The gross value of contract on hand was $65.4 billion. The backlog was $39.6 billion, and the newly awarded contract was $9.7 billion. And the newly awarded contract represent a year-on-year growth of 115%, which demonstrated the strong reputation of CTFS Construction Group in the industry.

In terms of the split of our existing orders, 67% of the contract came from government and institution and 33% came from the private sector. CTFS Construction Group as a quick recap include Hip Hing Group, which is a building construction project management company; Vibro, which is a foundation company; Quon Hing, which is one of the largest concrete producer in Hong Kong; and Hsin Chong Aster, which is a leading E&M specialist. Going forward, we believe there's early signs of recovery in the private residential market, which should lead to a pickup in market activity in the next 12 to 24 months. While the government and institutional project remain the major growth driver in the near term, we are hopeful that there will be more project opportunity coming from the Northern Metropolis, especially given the pilot tenders, which has just been launched by the Hong Kong government.

With a strong reputation and proven technical capability, CTFS Construction Group is well positioned to capture the emerging opportunities in the sector. Facility Management, the -- if you include the Free Duty, which was disposed of in December 2024, the segment AOP was up 360% year-on-year to $43 million. If we exclude the Free Duty contribution, then the segment AOP was down 12% year-on-year. For GHK, it turned around from AOL in the last period to AOP in the current period. EBITDA grew by 11% year-on-year and the number of inpatient, outpatient as well as state cases all grew steadily by 1%, 2% and 8%, respectively. We have built an extensive network of clinic in order to feed the patients to GHK and also to divert the traffic away from -- and also to direct the lower valued-added services from GHK to such clinic.

For the HKCEC, the AOP declined due to increased depreciation and higher capital expenditure as well as subdued F&B revenue because of the fewer events. The number of events fell slightly from 426 in the prior period to 378 in the current period. Total attendancy was down 4% year-on-year to 4.4 million. Kai Tak Sports Park, it recorded AOL because it's still under the ramp-up phase. But since its grand opening in March 2025, KTSP has already became the flagship venue under the Sports + Mega-events initiative. During the 6-month period ended December 2025, the Kai Tak Sports Park hosted 2 live sports events as well as 11 entertainment events with a total of 7 million visitors. And KTSP actually ranked third globally and first in Asia in terms of ticket sales for 2025 despite KTSP was only opened in March, while the other venues actually report a full year of operation. For our Kai Tak Mall within the KTSP, the occupancy rate was 90% in December 2025.

I will pass on to Karen to talk about our ESG achievement during the period.

Thank you. Thank you, Jim. For the ESG update, I would like to start with recognition we have received. They highlight the strength of our ESG strategy and dedication of our teams. We maintained strong rating across key benchmarks such as Hang Seng Corporate Sustainability Index, the S&P Global ESG Assessment and MSCI ESG Rating. And for the first time, we were honored with both the distinction award of the Hong Kong Sustainability Award and the ESG Excellence Award at the Hong Kong Corporate Governance and ESG Excellence Award 2025. This achievement validates our progress and show the impact of our collective efforts across the group. Beyond recognition, we have also advanced our ESG strategy through greater integration and sustainability investment.

CTF Life released its first voluntary ESG disclosure report at the business unit level, enhancing credibility and strengthening alignment with group-wide reporting practices. Importantly, this disclosure also prepares to align with Hong Kong road map on sustainability disclosure, help us stay ahead of evolving standards and provide more transparent information for our investors. We also acquired industrial logistics property in East China, all which achieved LEED Gold certificate, reinforcing our long-term sustainability ambitions under Breakthrough 2050. Community engagement remains a cornerstone of our ESG journey. This year, we were honored with the Hong Kong Volunteer Award 2025, Outstanding Corporate Award as well as caring company and caregiver-friendly company accolades. This achievement reflects our sustained commitment to volunteerism and community care, while also underscoring our dedication to creating a supportive and inclusive working environment for our colleagues.

Together, these recognition highlight the strength of our values and our ongoing effort to foster both social impact and workforce well-being. Looking ahead, we will continue to build on this momentum, strengthening disclosure practices, expanding coverage, investing further in sustainable asset and innovation and forging meaningful partnership across our value chain to support a just and effective transition. In particular, we will deepen our focus on climate and nature, not only by enhancing transparency in our disclosure, but also embedding this priority into our operation. Our ESG journey is ongoing, and this interim result reflects strong progress. More importantly, they demonstrate our shared commitment to shaping a resilient and sustainable business and operating model for the future. Thank you.

Thank you, Karen, Jim and Gilbert. So now we are moving to the Q&A session. [Operator Instructions] [indiscernible] from HSBC.

I have 3 questions. First, I would like to ask because I saw company has like multiple acquisition deals ongoing. I would like to know if there's any update and if there's the time line when the deal will be completed and these companies will be integrated. And the second question is regarding the margin of the Construction segment. I saw -- as mentioned, the margin is lower this period. And I would like to ask for the second period margin and also for the newly awarded contract, the margin compared to the existing contracts. The third question is the guidance on CapEx, if there's any update.

Okay. I will take the first 2 and Jim can take the last one. On the acquisitions, I assume you're referring to the Blackhorn and the uSmart as well as the acquisitions of the logistics properties, right? All of them already completed, save and except Blackhorn. For Blackhorn acquisition, the 65% is still waiting for the approval from SFC. So pending that, there will be no further CPs that we will complete after we get the approval from SFC.

The second question is about the margin of the Construction business. Yes, it's because of the competition, obviously, and also the fewer projects in Hong Kong that the margin has been quite squeezed. I would say that the second half, I do not expect there will be further downtrend on the margin, but I wouldn't expect a lot of the uptrend either on the margin for the Construction business.

Sure. On CapEx, in the first half of fiscal 2026, we spent about $1.5 billion on CapEx. The major investment was made with uSmart acquisition, the expansion of the 2 Expressway, acquisition of the logistics property in GBA. And also, we put down some deposit for the acquisition of the 3 logistics warehouses that we acquired in Yangtze River Delta. But on the other hand, we also received a disposal proceeds of about -- of over $500 million from the disposal of the [ non-core ] asset.

Moving into the second half of this fiscal year, the committed CapEx was about $850 million, which includes mainly the acquisition of the 3 logistics warehouses in Yangtze River Delta, which was already completed in January and also the ongoing expansion project of the 2 Expressway. Whether or not the actual CapEx will be higher than $850 million will depend on the potential investment opportunities. On the other hand, we also think there will be over $800 million of disposal proceeds from the [ non-core ] asset disposals.

Okay. Thank you. We received a question online asking about ATL. So does management have any guidance on the outlook of the ATL regarding the occupancy and also the expected rental change?

Okay. I think, first of all, as you can see, the occupancy has dropped from 80% to 75%. We do expect that will be stabilized. And we do see some new inquiries and new tenants coming to ATL. Obviously, due to the better environment -- economic environment. We've seen some new retail tenants, I mean, retail business tenants as well as some e-commerce tenants inquiring and actually confirming some of the new leases. And we do -- I think the guidance will be that, hopefully, the occupancy rate will increase for the second half of this year.

Okay. Thank you. Is there any question on the floor? I received another question online regarding dividend. So will there be any stock dividend in the second half? And also, will the dividend per share go back to $0.65 like before?

Sorry, what was the second part?

Okay. $0.65 is the last time...

Okay. The first question, whether there will be any issues. So I assume the question is asking. I think we will look at it on a case-by-case basis. I think we'll decide closer to the time in the final result next year -- coming September. So we don't have any guidance on that. There's no confirmation that there will definitely be a bonus issues. But we do hope that there will be more on the -- there will be more increase on the return to the shareholders. On the second question, I think, first of all, the 65% -- $0.65 was based on the old number of shares. After the bonus issues last year, so the share base was enlarged. So I would say...

It became $0.59.

It becomes $0.59. So first of all, it's not $0.65, it's $0.59. So if I mean as we always do, we have been committed to the sustainable and progressive dividend policy. And we always say that the meaning of a sustainable and progressive dividend policy is we will commit to the dividend payout, and we will not lower the dividend after the declaration of the dividend. So we do hope that we will continue to pay...

$0.59. It won't be less than...

It won't be $0.59, yes, at the very least. And this time, if we use a comparable basis, the last interim dividend was $0.27. So we increased to $0.28 already. So hopefully, it will be more than $0.58, $0.59.

$0.59.

$0.59, yes.

So to clarify because there is another question related to the same topic. So our progressive and dividend policy means total amount is of DPS. Is it the case?

Yes.

So is there any questions on the floor? Okay. So that concludes today's analyst briefing. If you have any questions, feel free to reach out to the Group Investor Relations team. We are happy to assist any time, and have a good evening.

Thank you for all these people who joined today, all the HKEX and all the other big companies. It's very amazing that you guys choose us over all these other big companies. Thank you.

Thank you for your support.

Good afternoon, everyone. Welcome to CDF Services Limited Financial Year 2025 Annual Results Analyst Briefing. I'm Silvia, the Head of Group Investor Relations and Corporate Communications. Thank you for joining us today, both online and in person.

Due to the impact of the very strong typhoon, we had to delay the analyst briefing to today, and we truly appreciate your flexibility and also continued support. Our senior management will walk you through the overview of the results highlights and also the outlook of each of our 5 business segments and also our strategy moving forward, and then Q&A session will follow.

[Operator Instructions] Without further ado, may I now invite our Executive Director and Group Co-CEO, Mr. Gilbert Ho; and Executive Director and Group Chief Operating and Financial Officer, Mr. Jim Lam, to kick start the meeting. Thank you.

Okay. Thank you. Again, thank you for everyone for joining our presentation today. I understand it messes up everyone's schedule, but unfortunately, we can't do the presentation yesterday.

So first of all, the financial year '25 was a stable year for us. We continue our effort to redefine and strengthen the group business portfolio. As you can see, we have done a number of acquisitions as well as disposal. We also renamed our Insurance segment to Financial Services segment. And obviously, because of the couple of the acquisitions and we will explain also later on that. That will be one of the group focus on the fast-growing wealth management business.

In [ overseas market ].

Okay. And also with the logistics warehouses, we also renamed -- or I would say rebrand, give the logistics asset a brand called CTF Logistics to leverage the strong brand equity of Chow Tai Fook. We will continue to grow this particular segments and drive synergies across different portfolios so that the tenants mix can actually can move across our different assets.

In the capital market, we have issued a number of convertible bonds with the initial aim to increase our public float and hopefully to also enhance the liquidity of our stock. And we will obviously talk about the bonus shares as well as the EB that we issued later on. We also maintained the sustainable and progressive dividend policy, and we continue to have a very consistent dividend distribution to our shareholders.

In terms of the portfolio optimizations, as I mentioned, we have done a number of divestments throughout the financial year 2025. We have very timely disposed of the free duty businesses. We also disposed one of the investments that the group invested in 2011, Hyva Group, we disposed it earlier this year. Last but not least, we also disposed of our investment in [ ITAI ], which is a solar farm investments, which we invested in 2018, 2019.

In terms of the strategic advancement, as I mentioned, we have renamed the Insurance segment into Financial Services segment to reflect its expanded scope with the 2 new members that we acquired throughout the year, first of all, uSmart in that group as well as the Blackhorn Group, which is focusing on external asset management. We also established -- through CTF Life, we also established Bermuda operations to serve the high net worth clients who want offshore insurance policies.

For the Logistics segment, as I said, we rebrand the Logistics segment, the asset of the Logistics segment to have a consistent brand name of CTF Logistics. We will also, going forward, target the undervalued logistics assets in 2 main areas. One is the Greater Bay Area. The other is the Yangtze River Delta, which is around the Shanghai area. So for the investors who are looking into our stock, I think the key investment thesis when you're looking at CTFS, first of all, is the operational excellence across our very diversified business portfolio.

All of them actually have very similar characteristics with stable cash flow and resilient earnings. You can see from the results that even during the trade war, the geopolitical tensions, we still deliver a relatively stable result for 2025. With the expansion of the financial services, we hope that we can actually leverage on a very strong brand name of Chow Tai Fook and also a very strong network of Chow Tai Fook Group to deliver unparalleled services to our different clients within the Financial Services segment.

We continue to do portfolio optimization. As you can see, since 2018, we have done a series of portfolio optimization and it's not the end. In fact, we've just done one portfolio optimization yesterday, which we'll talk about it later on. Obviously, the aim is to maximize our long-term shareholders' value. Jim will talk about the financial management and the diversified sources of fundings, which is actually one of the foundations of our continued expansion of the group.

Dividend policy, which I'm not going to talk about further. I think the actions say it all, we continued our dividend distributions for 22 consecutive years and it's counting and will continue. Last but not least, about our independent management team. All of us has been with the group for quite some years now. So for 2025, our AOP up 7% year-on-year to $4.4 billion, $4.5 billion. That actually includes 2 business, which is Free Duty and Wai Kee. If we exclude those 2 business, our AOP actually has gone up by 9% to $4.5 billion.

In terms of each business segments, Road segments, the AOP is $1.4 billion, decreased 8% year-on-year, which I will actually explain a little bit about that later. If we exclude -- let's put it this way, we're just looking at the operating roads, which is -- because we have 4 roads which the concession period has expired throughout the year. If we exclude those 4 roads, the AOP actually has gone up by 1%. Financial Services, which for this financial year, which only has CTF Insurance has gone up by 29% to $1.24 billion.

Logistics business, the AOP gone up by 3% to $740 million. Construction, $790 million, our AOP. If we exclude Wai Kee, it slightly decreased by 7% because of the project completions of the Construction business. Facility management is $89 million because Free Duty was disposed in the middle of the financial year, which was completed by the end of 2024 in December. If we exclude the Free Duty business, the AOV actually was increased by 16%.

Last but not least, our strategic investment has increased by over 1,000% to $237 million. So looking ahead, different business segments. On roads, we do see the changes in the Road segments because of, first of all, of the economic situation and also the shifting traffic pattern. Second, the rising competition of newly developed roads. So I think from a long-term perspective, we will be very unlikely to further expand on the Road segments.

However, we will try to enhance the earnings of our existing road portfolio, including some expansions on our current roads if we can find that the return of such expansion actually makes sense. On the Financial Services segment, CTF Life, as I mentioned, established its Bermuda operations to provide insurance products for high net worth individuals. We definitely will continue to boost our agency force, which I will talk about later. And also upon the completion of uSmart as well as Blackhorn. We will use that to expand on a very holistic wealth management platform, which hopefully, with all the different financial services units can actually work together to build our entire wealth management platform.

And last but not least, is to utilize the strength of CTF Group for cross-sell about the different wealth management products, including insurance, brokerage as well as the external asset managers services of Black Horn. For logistics, we will continue to diversify the tenant base for both the logistics properties in Hong Kong as well as in China to offer more flexible arrangements to attract both short-term and non-long-term tenants. We will look for acquisitions in this space, especially in the GBA as well as Yangtze River Delta, which is around the Shanghai area for some undervalued logistics assets. For our construction business, we will continue to grow and gain market shares on the Hong Kong recovering construction market.

As all of you know, a number of large construction contractor have closed down. So from our perspective, it is a time for our CTF Construction Group to gain market share in this respect. We will also explain later on that you can see the portion of government-related projects has increased from 40-odd percent to now 61% of our entire construction in progress. So that we will continue to focus on the government projects, especially the latest policy address has strengthened the effort in delivering the Northern Metropolis construction developments. The facility management, the 3 parts, the CEC, GHK as well as KTSP, I think we will continue to leverage on the government initiatives in supporting mega events in both CEC as well as KTSP.

And for GHK, which we will explain also later on that we now achieved AOP, meaning that it finished its ramp-up phase and it's now going into a phase of fast-growing development, we will continue to expand its health care network in Hong Kong to diversify its revenue stream and also capture more patients from different areas in Hong Kong. I will pass it to Jim to talk about the financial first, and then we will talk about the different business segments updates.

Sure. Thank you, Gilbert. Some highlights on the FY '25 financial results. As Gilbert mentioned, AOP for this year increased by 7% year-on-year to $4.5 billion. Adjusted EBITDA, which is a proxy of our cash flow generation for the year and included dividend received from our joint ventures and associated company increased by 1% to $7.3 billion. Profit attributable to shareholders increased by 4% year-on-year to HKD 2.2 billion. The Board approved a final ordinary dividend of HKD 0.35 per share, which is the same as last year. Including the interim ordinary dividend of HKD 0.30 per share and also the one-off interim special dividend of $0.30 per share, total dividend for the year amounted to $0.95 per share.

Even if we exclude the special dividend, the ordinary dividend for the year of HKD 0.65 per share generated 8.3% dividend yield for the stock based on the latest closing price, which is quite attractive. Cash on hand amounted to HKD 20.2 billion. We have committed undrawn bank facility of HKD 9.6 billion. So total available liquidity is close to HKD 30 billion. Net debt balance was HKD 14.7 billion, which translates into a net gearing ratio of 37%, which is more or less the same as a year ago. Net debt to adjusted EBITDA ratio is 2x, which suggests we remain in a very healthy financial position. As you know, we have strategically shifted a substantial portion of our debt to the lower-cost renminbi borrowing since 2023. This helps us to save the interest expenses and also it will serve as a lateral hedge against our renminbi-denominated asset.

As of 30 of June 2025, our renminbi debt to total debt ratio added further to 62%. Renminbi liability to renminbi asset increased to almost 80% and the fixed rate debt now accounted for about 70% of our total debt. Because of the increase in proportion of renminbi borrowing and also the decrease in HIBOR during the year, we have witness decline in average borrowing cost from 4.7% in fiscal 2024 to 4.1% in fiscal 2025. We do expect our interest rate -- average borrowing cost to continue to come down in fiscal 2025, given the expected interest rate cut. Given the expected further interest rate cut in the U.S. and the moderate decline in interest rate in the Mainland. Debt maturity profile, we had about HKD 35 billion of gross debt as of 30 of June 2025, of which about $9.4 billion or 27% will mature in the coming 12 months.

We've been negotiating with banking partners for refinancing of the debt that will fall due within the next 12 months, and we expect the majority of the refinancing will be done before December 2025. We have quite a diversified sources of funding. We have bank loans, both onshore and offshore. We have issued U.S. dollar senior notes in Hong Kong. We have issued Panda bonds in the NAFMII market in Mainland, and we have also issued 2 convertible bonds this year in order to restore our free float. Hot off the press is the HKD 2.2 billion EB transaction announced last night. This chart shows the movement of our lagging ratio since 2019. Back in 2019, we had flat cash position. Then the lending ratio increased to 31% due to the acquisition of CTF Life.

Thanks to the strong cash flow generation and to some extent, noncore disposal proceeds, our lending ratio has been gradually coming down to just 8% in fiscal 2023. From the general offer by CTFE, our gearing ratio increased to 35% due partly to the payment of a special dividend of HKD 6.5 billion and also partly to the redemption of our public [ perp ] with the amount of USD 1 billion, which is also associated with the acquisition of CTF Life because the perp was issued in fiscal 2019. As I mentioned earlier, the lending ratio in fiscal 2025 is 37%. Our target, [ deep decking ] ratio remain unchanged, 40% to 45% in the near to medium term. Despite the headwind to the macro economy both in Hong Kong and the Mainland, we've been able to grow our AOP, our cash flow as well as the net profit from 2023 to 2025. And we are also improving our return on equity thanks to the more optimal capital structure.

We've been paying -- we have a very long dividend track record. We've been paying dividend for 22 consecutive years. We have adopted the current progressive and sustainable dividend policy since fiscal 2019, and we gradually increased our ordinary DPS from HKD 0.58 per share in fiscal 2019 to the current HKD 0.65 per share. We paid out special dividend once in the fiscal year 2024 and the other one in the fiscal year 2025. And for the current year, we have given the shareholders a scrip option for the final ordinary dividend for fiscal 2025.

We also announced a 1-for-10 bonus issue. The purpose of both is to increase the liquidity and trading volume of our stock. As you know, we have issued 2 CB. The primary purpose is to restore the public float of the company. We issued the first CB $780 million in January 2025. Upon its maturity in July, approximately 27% of the CB were converted, and we managed to increase our public float to about 24.4% because it's still below the 25% minimum requirement. As a result, we repurchased the remaining outstanding CB and issued new CB with an amount of HKD 518 million. As of today, part of that HKD 850 million CB has been converted and our latest public float is about 24.5%. So we are confident that the outstanding CB will get converted because the current share price is above the conversion price by quite a wide margin. And upon full conversion of the $850 million CB, our free float will be able to increase to 26.4%, which is above the 25% minimum requirement.

Maybe Jim can talk about the -- I hope you -- maybe you can talk about the exchangeable bond.

Okay, sure. We announced exchangeable bond transaction last night. The key terms include the size of the bond is HKD 2.2 billion. The coupon is 0.75% per annum. The maturity date is 3 years with the put in 2 years by the investor. It's exchangeable into our 10% stake in Shoucheng Holdings. We issued the EB at a 3% premium. So we will get a total proceed of HKD 2.3 billion. If we manage to dispose all the CB due to the conversion, we will be able to generate a gain of about $1.1 billion, $1.2 billion pretax.

I think the beauty of this CB transaction is that we are able to take advantage of the very hot CB market in Hong Kong by issuing the CB at so-called negative yield, meaning that we free dollar from the investors, and we will give out 0.75% coupon every year. So at the end of 3 years, in case the EB does not get converted, we will still be in a net gain of about 0.75%. The reason why we decided to issue the CB is because, first, it will allow us to dispose of our stake in -- so at a premium. The premium is 5% to the latest closing price. And also, as I said, right, if we're not able to get converted on this EB, we will still be able to acquire the funding at a negative yield.

Thank you, Jim. Next, I will talk a little bit about the business operations of each of the segment. Let me just give me -- time to go back. Okay. So first of all, the Road segment, as I mentioned, the AOP has decreased 8%. But if we exclude the 4 roads, the Guangzhou City Northern and the 3 toll roads in Shanxi, the AOP of the operating roads actually has a 1% increase year-on-year. In terms of the traffic, it increased 2% However, there is a decrease in the long-distance traffic, which actually lead to a 2% decrease in the toll revenue. For our remaining concession period, it's about 12 years.

As I mentioned at the very beginning, I don't think we will heavily invest in the toll roads in the expansions. We probably will look at enhancing the income of the existing toll roads by expanding the existing toll roads. Obviously, on each particular investments of expanding, we will calculate the return in deciding whether to expand the current toll roads in order to get the extension of the concession period. But it is unlikely that we will acquire any new toll roads in the near future. For the Financial Services segment, we have rebranded the CTF insurance into CTF into the financial services segment. And throughout the year, we have leveraged on the CTF brand rather than the OFT Life -- sorry, I forgot already, the OFT Life brand. So we can actually leverage very much on the CTF jewelry popularity in China to sell its insurance products.

Going forward, as I mentioned, we will develop the integrated wealth solutions platform for the entire services. For the CTF Life, the AOV increased by 29%. CSM release increased by 28% to $1.1 billion. And the CSM balance net of reinsurance also increased by 13% year-on-year to $9.2 billion, which actually position us for a very consistent and sustainable profit recognition going forward. The investment yield on the fixed income portion also increased by 0.1% to 4.6%. So on the details of the operations, the APE decreased by 27% because that I need to explain a little bit because our financial year actually spending across the second half of 2023 to the first half of 2024. So that has actually an impact on the pent-up demand for COVID-19 for the second half of 2023.

So it has a relatively high base. That actually attributed to the decrease in the APE. And also because -- but if you're looking at the 3 years CAGR, the increase was actually quite significant on the 23%. The VONB also got impacted by the same reasons. But looking again on the 3 years CAGR, it also is around 24%. The VONB margin increased 3% to 30%. Our solvency ratios actually still maintained at a very strong position at 279% even after the dividend distributions to us in the middle of this year. The embedded value, which is essentially the value of the insurance company increased by 90% to HKD 25 billion. So the APE, when you're looking at the APE, as I mentioned, there was this effect of the pent-up demand in 2023 and financial year 2024. But if you break it down to look at the performance of each channel, our agency channel has actually performed very strongly.

Next page. So if you're looking at the agency, the APE from agency actually increased by 48%. And looking at the quality, the agency productivity increased by -- also by 48%. The persistency of the agency also increased by 23% and new recruits increased 24% year-on-year. So this actually is a result of the transformation of the agency force over the last few years. And you can see the fruits of the transformation actually improved the KPI of the agency channel. In 2025, we expect the agency channel will continue to grow in the coming years. So looking at each parameters, the investment portfolio AUM increased to HKD 91 billion. All the other investment criteria has not changed with the majority in bonds and also the majority of the bonds is in A- or above.

So the 2 acquisitions that we have done in March 2025 and August 2025, including the acquisition of uSmart and the acquisition of Blackhorn is basically the backbone of our expansion in the financial services segment, catering to serve the high net worth clients, essentially to try to form a mini ecosystem within the financial segments so that we can actually blend all the different products together to cross-sell our clients within the different companies.

Next is our logistics with the 3 different portions, the ATL, the 7 logistics properties in China as well as CUIRC. So in the logistics asset and management segment, ATL in Hong Kong, the occupancy rate is 80%. The average rental increased by 8%. So you can see the occupancy rate actually decreased from 96% to 80%. The reason probably I have explained in the half year result as well. The reason is actually very simple because in the -- during the year, we have the renewal of one very big clients within the premises. And the determination of the next 5 years rental is actually by the average rental of the existing plants. That's why we need to keep the rental -- existing rental high. And by that, we give up some of the lower rental tenants. That actually drive the occupancy rate down. And we now have already determined the next 5 years of this big tenant. So we can actually ramp back up the occupancy rate. Our target is to go back up to above 85% by the end of this year for ATL. For the 7 logistics properties, the overall occupancy rate maintained at 87%. One to note is the Suzhou property. As you can see here, the occupancy rate of Suzhou properties decreased to 40%. The reason of that is we terminated our tenant what we call a -- the subtenant, okay? The [Foreign Language]. The reason is the subtenant.

So we mix the Chinese and English together, subtenant. The subtenant. The subtenant because they are in financial difficulties. So they are not actually servicing they're not actually doing their work. So we terminate that subtenant. We directly manage our tenant now. And we already -- we terminate that tenant in April. And by now, in August, we already increased back the occupancy rate from 40% to above 60%. So we do expect it will go back to about 80% by the end of this year. I mentioned before, going forward, we will continue to look for undervalued logistics opportunities in Mainland China, particularly in GBA as well as the Yangtze River Delta.

The target is to look for fully occupied asset at above 8% cap rate. So this is the target for our acquisitions in this particular space. So it's very simple. We look for undervalued assets with strong cash flow. CUIRC in which we own 40%. The AOP increased by 23%. Throughput increased by 10%. It is a very strong year for CUIRC. We do expect that it will continue to because it continued to be supported by the Belt and Road initiatives. And the new expansion Urumqi terminal will finish by the end of this year. So we do foresee that the result of CUIRC will continue to grow.

Next is Construction segment. Our Construction segment maintained a very steady AOP despite probably all of you think the diverse tech -- residential market in Hong Kong. We completed the acquisition of Hsin Chong Aster earlier this year and which already contributed positively to our profitability. The gross value of contracts on hand decreased 8% to $58 billion because throughout the last financial years. We basically finished the entire the sports park. So that actually decreased the contracts on hand. The backlog increased 24% to $38 billion. The newly awarded contracts also increased by 9% to $23.9 billion.

The type of projects now stood at 61%, government-related projects that actually increased from 48% to 61%. Probably some of you will be curious how many of those projects are New World related. 8% of them are New World related. I need to give you a little bit of light in this. First of all, there is no pressure for us to get or to take any New World-related projects. It's all independently negotiated. So from our perspective, from CTFS' perspective, we won't sacrifice our profit or margin to do projects for related parties. I think the bottom line for us is we will maintain our profit margin if we do any of the related party projects. So this 8% actually were projects that we got from Hip Hing, one of the previously the construction contractor for New World projects. Going forward, whether we will do any New World-related projects is definitely going to be a competitive bidding process. For us, again, it's not necessary for us to do any New World projects.

And for those who are concerned about the payment of New World projects, I can rest assure all of you that the 2 projects that we got from New World, one is The Pavilia Farm. The other is State Pavilia. Both of them already got enough cash in the stakeholder accounts to pay our construction cost. So rest assured, there's no issues on the payment on our construction expenses. So the CTF Construction Group, now we have the complete suite of different services. including the engineering and building construction for Hip Hing, the foundation of Vibro, the concrete products, suppliers of Quon Hing as well as the electric and mechanical engineering services of Aster.

For construction industry, I think, as a whole, we're still very positive, as you can see from the recent policy address that the very strong emphasis has been put in the Northern Metropolis, and we definitely will be benefiting from them. and we will continue to focus on government-related projects. One thing that probably said for others is there has been a close down of a number of contractors throughout the year, but that will actually benefit Hip Hing as less competitors in the field going forward.

Last but not least is the facility management business, which comprise the GHK Hospital commission center as well as KTSP. GHK as I mentioned, we own 40%. First time since its opening, it contributed positively to our AOP. EBITDA increased by 23% and the patient volume also continued to increase with the regularly utilized bed increased from HKD 313 million to HKD 337 million. The average occupancy rate maintained at 64%.

As some of you know, or probably don't know, the GHK actually also comprises of a network of clinics. We have now 6 clinics and different services within the network. So we have clinics in both Central, the Western District and also the southern districts. We also have a pharmacy. We also have laboratory services, and we're going to open another medical services center in Central -- in MOT later this year. So all these actually serve as a channel to get patients into the hospitals. And also to free up some spaces, available spaces within the hospitals so that they can actually serve the patient off site from other service centers.

Next is the CEC. The AOP declined mainly because of the decrease in F&B revenue due to fewer banquet events and also down scaling of some of the trade exhibitions. Going forward, I think CEC, CEC will definitely expand on the emphasis on conventions as well as conferences, which will require physical attendance rather than the traditional trade shows. We will also get the government support on mega events to bring in more nontraditional type of industries, including the recent Bitcoin conferences and all these different new conferences to Hong Kong. KTSP in which we own 25%. Because of the preopening expenses, it recorded AOL during this financial year. So since the opening -- official opening of KTSP on the 1st of March, already more than 30 sports and entertainment events held in the park with over 1 million events -- 1 million attendance to the main stadiums and more than 7 million visitors to the entire park.

As you probably know, within the park, there's a shopping mall of around 700 square feet shopping mall. The occupancy rate is around 80% by the end of the financial year. Now it's already over 90% as we speak. So we do expect the result of KTSP will continue to grow. So I will pass on to Karen to speak a little bit on ESG.

Hello. Thank you. I'm pleased to share an update on our ESG progress for FY 2025. Since we introduced Breakthrough 2050, our ESG strategic framework last year, I'm happy to report that all our key targets remain on track. In particular, I would like to highlight 2 major achievements. 39% of our bonds and loan facility are now coming from green financing. And we have achieved a 19% reduction in Scope 1 and 2 emissions compared to our FY 2023 baseline. So let me now walk you through what this number means in context and how they reflect our broader ESG journey.

So our ESG rating provides a snapshot of how we are performing across key sustainability dimension. I'm proud to say we have maintained strong standing across all major ratings. This result reinforces our commitment to transparency, accountability and continuous improvement. With that foundation, let's take a closer look at some of the operational highlights driving this performance. So in our upcoming ESG report, we have expanded our GHG inventory disclosure to provide a clearer picture of our emission hotspots. This allow us to tailor decarbonization strategy to each business unit, operational and strategic context. So when you look at the number, you can see that Scope 1 and 2 emissions are largely concentrated in on-site operation at Hip Hing and HML, which is the Hong Kong CEC operation, making up 86% of our direct emission.

Meanwhile, Scope 3 emission, primarily from investment and procurement account for 97% of our total footprint, underscoring the importance of engaging our value chain. So with this deeper understanding of our emission profile, we have been able to allocate resources more effectively and accelerate our impact. Hip Hing and CTF Life have now received SBTi validation for their near-term target. In FY 2025, we achieved a 19% reduction in Scope 1 and 2 emission compared to FY 2023. This effort aligned with our goal to reduce emission by 50% by 2035. So we kind of list out of the decarbonization levers that we are going to focus for each business segment. So I go too technical at this point. Let's now zoom in on how our business units are driving the transition through some technology.

In construction, digital transformation is a key enabler. We are integrating tech across the project life cycle. A standard example is a Hip Hing distant tower crane command system, which combines MiC, AI, IoT and remote control technology. This innovation not only enhances safety and efficiency, but also helps attract younger talent and promote lean data-driven practices. So when you look into our report, you can have some more insight of this new innovation. So we also use tech throughout operation. Communication is critical to supporting our people and communities and technology is helping us to do that even better. Our digital platform now provide real-time well-being support, safety update, an engagement tool for employees anytime, anywhere. In particular, for construction worker, Hip Hing Connect has become a key tool. Over 77% of registered construction market in Hong Kong are now using it to access safety record and site entry for all Hip Hing construction sites. So we have -- we have also launched Go Hong Kong CEC, a virtual queuing system that reduces traffic congestion in one short area by allowing trucks to enter only when loading bay are available.

So we're using this kind of digital tool to improve not only communication but also safety, efficiency and community impact. So in our rail operation, we have continued to modernize with AI monitoring, electronic tolling and mobile payment like WeChat Pay and Alipay. This upgrade reduced congestion, enhanced user experience, and support our Green Mobility goal. By embedding technology into our operations, we are now delivering services more effectively and managing resources board more efficiently.

Now let's shift gears and look at how we are capitalizing on opportunities through responsible investment. So in FY 2025, we mobilized HKD 18.5 billion in sustainability-linked loans and green debt financing, representing 39% of our total debt financing. We also partnered with RESET Carbon to procure green electricity certificate in China, following a rigorous due diligence process. This is not only support our own emission target but also contribute to broader renewable energy transition in the region. So we recognize that how we allocate our capital plays a critical role in the transition. That's why we have embedded ESG into our investment criteria, ensure capital flows to initiatives that build resilience and mitigate climate and social risk. We have implemented an ESG due diligence checklist at the investment planning stage to identify and address potential risk area.

Our exclusion list ensure 0 exposure to non-ESG aligned sector. At CTF Life, we have adopted MARS Climate, a Bloomberg NEF power model that assess transition risk and opportunity under various climate scenario. In FY 2025, we have invested HKD 3 billion in ESG label bonds, which accounted for 5.2% of our total bond investment. Additionally, we allocate HKD 4.5 billion to ESG fund, representing 34% of our mutual fund and ETF investment. Importantly, 100% of our credit and equity research report incorporated ESG assessment, reinforcing our commitment to responsible and resilient investment.

So to quickly wrap up my update, I want to emphasize that we know that ESG is not just a reporting exercise. It's a continuous process to require cohesive effort across the group. We have been actively creating a platform like our internal ESG conference, project funds and leadership workshop to engage colleagues at all levels. This year, we have further strengthened our efforts by appointing 45 impact leaders from across all business units. They serve as a key driver in embedding our ESG strategy into day-to-day operation.

So together, they form a powerful network of change agent, helping us embed ESG thinking into everyday decision and drive measurable progress across the group. So as we look ahead to FY 2026 and beyond, we invite all stakeholders to engage with us, challenge us and collaborate in shaping a more sustainable resilient future. So that's it for me. Thank you.

Thank you, Gilbert, Jim and Karen, for the insightful presentation. We are now moving to the Q&A session, and please state your name and organization before stating your questions. Thank you. Jeffrey Kiang from CLSA?

So my first question would be, can you give us some update on the roads, probably from some media, we saw there could be some potential disposals happening a few months back. So I just want to hear any updates on what's happening behind the door.

Okay. First of all, actually, there's a lot of questions about toll roads on the Internet, which I will answer it together as well. There has been news I think on Bloomberg or whatever about the road disposal. I think given that we have very good road assets. So there has been approaches from different parties about our toll roads assets. From our perspective, we have a very strong cash flow with all our toll roads assets. I mean, from our perspective, there is no immediate needs of disposing any of those. Obviously, if the price is right, if the price is good, then we might selectively dispose some of them, but only if we think it makes sense from a price perspective. And there is no, again, there's no immediate plan of what the articles mentioned about the entire toll road portfolio. There's no such plan. On the internet, there is this question.

[Interpreted] On the Internet, there's these questions on -- there is a question online saying that right now, the duration -- the remaining duration is only 12 years. And then for the Road business segment, if we do not invest further, so will it contract. Or in other words, when the duration or when the maturity is reached, are we just going to just extend the concession period by means of expansion or modification, if we are to invest, how much do we need to invest?

[Interpreted] Okay, 2 points here. First of all, for every road, before the end of the concession period, we need to calculate whether we want to put in place expansion or modification. Every road is in a different situation. If we use Guangzhou North Ring as an example, back then, we discussed with the government to see whether there can be expansion and alteration to extend the concession period. However, the cost of expansion and alteration is too high.

Guangzhou North Ring is in the center of Guangzhou City. And if expansion and alteration is to take place, we have to make use of the sites on which other people might be building properties. We have to first acquire those sites before we can start expansion and modification. Even if the place is not within the city center, there are other parallel roads.

[Interpreted] Will there be an impact on future traffic? Are there any slip roads or branches to be built that may affect road traffic. Regarding the province, if we build a new road or if we do expansion, how much is the cost.

In each province, to do this work, the requirements are different. So when we do an overall calculation, the thing is very straightforward. We look at future vehicle flow and whether the return makes sense. If it doesn't make sense, we won't do it. We will not, for the sake of maintaining a big road portfolio blindly invest to maintain all the 13 roads. There is not a need for us to do that. So the answer is correct. On one hand, if we do not do expansion or modification, if we don't buy new roads, then of course, the concession period will continue to fall. That's the fact. But still, there are still 12 years to go. Secondly, for the decision about expansion or modification, it all depends on investment return. If the investment return doesn't meet the standard, then we would rather use the money for other investments.

Is there any question?

Thanks for the question. So my next question would be logistics. So you highlighted some factors that may have impacted the occupancy and probably your target by year-end for Hong Kong and Suzhou. So I just want to maybe hear your thoughts about -- from 80%, let's say, in Hong Kong to 85%, we probably are quite confident on that. Based on what you are seeing in the market and how we determine the rent, how difficult would you say it will be from 85% to 90-plus percent for the occupancy, let's say, in Hong Kong, maybe for the next 12 to 18 months? Just want to maybe hear assessment around this.

Okay. That's a very good question. I think, first of all, it's definitely not going to be easy. The Hong Kong warehouse market, although we are in a very, very good location in Kwai Chung, but at the same time, the tenant has actually changed over the last 20, 30 years. Less than 50% of our tenants are transshipment tenants. So basically, we are serving like retail tenants locally, okay? So our biggest tenant. We're talking about dairy farm. We got Coca-Cola, we got Wellcom. So it's all about domestic consumptions.

So when we're talking about the next 12 to 18 months, hopefully, the economy and especially domestic consumption needs to get better, right, before we can actually say that our warehouse will have tenants. And give you another example, one of the tenants is Sza Sza. So with the tourists are coming in and they need to buy things to ensure that the retail market goes well, then accordingly our warehouse will go well. In terms also of the supply, there will be new supplies, but not in the next 12 to 18 months. There will be still quite some time before the new warehouse from ESRs is coming out to the market.

So we think that the main driver will still be a stabilizing domestic consumption market, then I think we are confident to get back to 90%. But 85% shouldn't be a problem because we strategically didn't lower our rent for the last 12 months. So with our premium locations facilities, we are very confident to get back to 85%. You can talk about construction now, I think.

Yes. Actually, my first question is really about construction. So on Xinhong as that asset we acquired, of course, it's good to see it is contributing positive profit. But strategically, can you help us understand how it has added value to Hip Hing maybe from a project bidding point of view? And maybe specifically, how is it different by sitting on the CTF Group, before acquisition and now sitting under CTFS, is there any change in the strategic value on this asset. That will be helpful.

I guess this is something that all of you will very like to hear, although it is sitting at CTFE Group, all of us, despite all of you probably wouldn't imagine, all of us actually working very independently without influencing each other, okay. So putting that company mean into CTFS group we can actually do all the tendering together, especially the design and build contracts. Because just to give you a little bit of sense about the design and bill contract. Design and build contract, meaning that when you submit the tender. You actually need to know all the costing of different components in the design and build tender you have the construction component. You also have the M&A component. So if you don't have that up, you need to guess or you need to actually have that other contractor coming in as a joint venture partner to submit together the tender, okay?

That one problem is, you probably need to give some of your profit margin to that tenderer, to that M&A tenderer. And you don't have the full collaborations on the tendering process. Now we have all the costing base of the different components, we can actually submit a more competitive tender. And actually, can calculate the costing more accurately. So we do see that there is a very competitive advantage in having a full suite of different services. There is only 2 big construction group having that. One is us, one is Gammon. So in order to bid for high-value contracts, because usually design and build contracts are higher margin. So in order to build this high bid for these higher-margin projects, we think it is beneficial to have this M&A arm in this particular area. And when you're looking at more deeply into Hsin Chong Aster, more than 60% of the Hong Kong hospitals are built by the M&A team. So we do, we will, going forward, and have a competitive advantage in this project because we have this experience with Hsin Chong Aster being in the team.

Thank you, Gilbert, and thank you, Jeffrey. We received a question online regarding the toll road business. So if we do not further invest in the toll road portfolio, then the concession period will continue to go down, then how will this impact the sustainable and progressive dividend policy?

Okay. First of all, the next main toll road concession expiry is 2029, which is the Hanzhou Ring Road. So there's still a little bit of time. And I think from now until then, first of all, there will be continued growth in our different business segments that you can actually see the trajectory of the different business segments is already on a growing trend, especially on the financial segment, which is CTF Life. And I also mentioned that we will look for value accretive acquisitions in the logistics segment. The first most important criteria in this area is a strong cash flow in any of the acquisitions. So we are very confident that we can actually replenish both the profit and the cash flow that we're going to lose in probably 5 years' time from some of the toll roads' expiry.

Yes. Besides the dividend -- the ordinary dividend only accounts for about 50% of our operating cash flow. So there is room for us to reinvest to the remaining 50% of our operating cash flow into new acquisitions.

Thank you , Jim, Gilbert. So then from Ethan from HSBC.

I do have a few questions in mind. First of all, on your presentation, Page 30, on your construction business. On your lower left chart, it says that 61% of your projects are government-related. Is that based on your existing projects on hand? Or was that based on revenue already incurred in your financial year 2025. That would be my first question.

Existing project on hand.

Got it. Okay. So that reflects basically 61% of your order book, I think. Correct?

Yes.

Okay. Got it. So that would be reflected into revenue in the future and will be mainly driven by government-related projects. And my second question will be on your dividends. I just want to kind of get more -- a better understanding on your progressive dividend strategy, meaning does that mean that your core or regular dividend will be maintained on a dividend per share basis, irrespective of the bonus shares being allocated on this year, and whether or not that 10:1 bonus shares continue to recur in the next financial year. So that would be quite key, right?

I'm just trying to think what is the total cash return that shows would bring back on an ongoing basis on a multiyear basis?

Okay. Maybe I can talk about it more qualitatively and then talk about it more quantitatively. I think, first of all, in terms -- for the current year, okay, first of all, in the current year, we are looking at the DPS. We are looking at the DPS continue to be at $0.65 totaling like $0.35 for the final dividend. And I think the -- there will be no changes on that for the current year, okay? Going forward, whether the DPS for a full year basis, whether we're going to keep at $0.65 per share or there will be any changes to that because of the 10:1 bonus issues. We are still internally thinking about that.

I think I would say, okay, without discussing internally. I would say it wouldn't -- because we're talking about 10% increase in our shareholder base. So without changing the DPS, we're talking about 10% increase in the dividend, right? So I think we will be more looking at assuming every single shareholder getting the bonus shares, not selling their bonus shares, you will have the absolute amount of return on your shareholding stay the same, okay? So conversely -- so there will be a decrease in the DPS, okay? But we still haven't decided yet. I mean we haven't discussed in the Board going forward on that.

The next question is about whether there will be a continuous policy on whether there will be bonus shares every single year. okay? I think we actually mentioned that in the press conference. The reason of having the bonus shares is to create a more liquid shareholder base. So we hope the increase of the number of shares will actually enhance the liquidity of the stock going forward. It's not going to happen in one single year. So we do think it will be a continuous policy. So we will continue to do this. Again, whether we're going to maintain the DPS, we still haven't discussed that in the Board. Maybe Jim can actually supplement that.

Actually, I don't have much to add. So the primary purpose of the bonus issue is to increase the liquidity and trading volume of the stock.

Got it. Because if I understand it correctly, with the dividend on the final year of the $0.65 you gave with the additional 10% additional shares that shareholders get a kick back. The yield, at least for the next few months to go IS going to be quite attractive, right? Assuming the equity value is not going to go down, then I think that itself, the return for shareholders are actually quite attractive. I'm just trying to think whether or not that return could be sustained? And when you think about progressive, are you -- maybe it's a question that, same question that as basically, whether or not are you thinking of maintaining your dividend per share continuously by enhancing return for shareholders through bonus shares? Or should we say that bonus shares still going to be a one-off for this year?

I think, first of all, it's unlikely to be one-off. As I said, it's going to be a continuous policy as we see it as of now.

I think we can only assure you at this point that the total amount of dividend in absolute term will not be lowered. But whether or not the DPS will be lower or not, we haven't decided yet.

Got it. Makes sense. And my final question would be about your financial sector. You've done quite a number of things on -- alongside with CTF Life. I just want to see how optically or how do I understand the synergy could be created between FTLife, uSmart and Blackhorn together in the next couple of years, how much accretion that we could estimate or imagine, at least qualitatively, where that's going to come from?

I think, first of all, in terms of numbers, it will be very difficult to actually give any exact numbers as of now, given that we still haven't even completed transactions. But I think the logic or the division is actually to have our high net worth clients at FTLife, CTF Life to be able to buy their other wealth management products within our own ecosystem. In a very blunt way, is to lock their money within our own ecosystem. So they have $10 spent already $5 in CTF Life, they can spend the other $5 at Blackhorn and uSmart. So the idea is actually very simple from our perspective. The main growing sectors in Hong Kong, as you can actually see from all the different banks, HSBC, Standard Chartered, everyone, whether they are actually doing it or not. They are actually saying that they're growing the wealth management segment, right? We are doing exactly the same.

The difference is we already have a very large pool of policyholders with CTF Life, and we are having individually servicing each of these policyholders. And you like it or not, we basically will contact all these policyholder every single year, right? I don't see HSBC contacting me every single year. So by that, I mean, obviously, we have this very good touch point that we can actually grab all these different clients and sell them our other wealth management product at uSmart this is something that I think is very likely to do. Vice versa, obviously, it's a very relatively small amount. I think Blackhorn currently has around 3,000-something high net worth clients. Vice-versa, obviously, we can do exactly the same. And we have the biggest suite of wealth management platform and products to sell. We can obviously use our other clientele, including [ China Porter and Rosewell ] and all the others to give them services and also sell them our wealth management products.

So it is a very lucrative way. I can't really quantify that, but at least this is the vision. I know I have been talking about that for the last 5 years. But now with the reality that the platform actually builds up with a stronger team of agency force, they are actually very hungry to have more products for them to sell to ensure all these clients stay within our own ecosystem. So it is something that I see that it is going to come in the next few years.

Okay. Thank you, management, and thank you, Ethan. So this is the end of our analyst briefing, and thank you so much for joining us. Have a nice evening. Thank you.