Sembcorp Industries Stock

Ladies and gentlemen, a very good morning to everyone joining us both in person and online. Welcome to Sembcorp Industries First Half 2026 Results Presentation. I'm in Xin Jin from Group Strategic Communications and Portfolio Management. Before we begin, may I kindly request that all mobile phones be switched off or set to silent mode. Thank you. Joining us on the panel today are our Group CEO, Mr. Wong Kim Yin; and our Group CFO, Mr. Eugene Cheng. [Operator Instructions] Without further delay, I will now hand over to Kim Yin to begin the presentation. Kim Yin, please.

Good morning. Welcome to SGI First Half '26 Results Briefing. Let me begin with the key highlights. For the first half of 2026, turnover was SGD 3.8 billion, EBITDA, SGD 768 billion, adjusted EBITDA, SGD 947 million. Underlying net profit was SGD 369 million, and this translates into earnings per share of SGD 0.207 and annualized group ROE of 13%.

We completed the acquisition of Alinta in June. We are showing the pro forma financials, and this illustrates the group's earnings profile with Alinta included for the full period of the first half. On a pro forma basis, turnover would have been SGD 5.6 billion. EBITDA and adjusted EBITDA would have been SGD 1.2 billion and SGD 1.4 billion, respectively. Underlying net profit would have been SGD 558 million with earnings per share of SGD 0.314 and annualized group ROE at 19.1%.

The acquisition of Alinta broadens Sembcorp's earnings base and increases the contribution from integrated platforms with recurring cash flows. So in line with our outlook for the full year, we are pleased to increase the interim dividend to SGD 0.11 per share, up from SGD 0.09 a year ago.

Allow me to take you through the performance of each of the business segments. First, under Gas and Related Services. For the first half of 2026, underlying net profit for the segment was SGD 285 million. Spark spreads were lower in the first half. This was partially mitigated by our contracted portfolio. As of June 2026, 80% of Sembcorp's gas-fired generation portfolio, excluding Senoko's, is contracted for 5 years and above.

Our overseas assets remain resilient. In the Middle East, our operations performed well despite ongoing geopolitical tensions. We further expanded our platform in the Middle East through the 2.6 gigawatt Taweelah C independent power project in Abu Dhabi, underpinned by a 21-year PPA and a strong contractual framework. The project will provide long-term earnings visibility and stable cash flows to our overseas portfolio.

In the U.K., earnings were lower following the closure of one of our industrial customers. We are actively repositioning the Wilton site to capture new demand from data centers and digital infrastructure. Looking ahead, our 600-megawatt hydrogen-ready power plant remains on track for completion in the fourth quarter of this year. This will enhance our generation capacity and the competitiveness of our generation fleet.

During the period, we also secured 150-megawatt long-term power purchase agreement with Micron, bringing our total contracted supply to the semiconductor manufacturer to 600 megawatts. In addition, we announced an agreement to acquire 20% stake in Aster Power, where Sembcorp will have -- will be the sole gas supplier to the Aster facilities. And overall, gas and related services remains well-positioned, supported by our contracted base, integrated gas and power capabilities, and growing demand from AI-related industries.

The Renewables segment faced a challenging first half with underlying net profit of SGD 69 million. In China, generation hours experienced weak wind and solar resources. curtailment lower tariffs and the removal of VAT refund on onshore wind projects further impacted the segment. Our focus remains on disciplined execution and value creation within the portfolio. India remains a bright spot with renewables. We have 3.6 gigawatts of projects with high tariffs secured in the pipeline. Today, the group has a total of 6.6 gigawatts of renewable capacity under construction. As this pipeline comes into operation, it will strengthen the portfolio's earning potential and long-term value. With a sizable operating base and a strong pipeline under construction, we are now well positioned to unlock greater value from our investments in the Renewable segment.

We move on to Integrated Urban Solutions. The IUS segment delivered underlying net profit of SGD 62 million in the first half of 2026. This mainly reflects the absence of contribution from SembEnviro following its divestment in March 2025, partially offset by improved performance from the water business on stronger contribution from industrial water. Our urban business continued to expand its footprint and build recurring income.

In Vietnam, we secured 6 new projects, including the group's gross development land area to over 18,000 hectares across 31 projects, achieving our 2028 target well ahead of schedule. We are also growing our ready-built facilities portfolio. Gross floor area has grown from 134,000 square meters in 2023 to over 1.1 million square meters as of June 2026. This will strengthen the base for recurring income moving forward.

Looking ahead, we expect a strong second half from higher land sales. In Kendal Industrial Park, Indonesia, 40 hectares of land sales have already been secured and are expected to be recognized upon handover in the later part of the year. Within the water business, we continue to sharpen our portfolio and focus on areas where we see stronger returns. During the period, we completed the divestment of a municipal water in Qinzhou. This is our second municipal water exit in China since December '25.

So as you can see, we remain focused on growing the urban portfolio and its recurring income while optimizing our water portfolio to build stronger earnings base for the segment. For Alinta, the acquisition of Alinta Energy was completed in June 2026, adding a high-quality integrated energy platform in Australia to the group. On this slide, we are showing Alinta's first half performance to provide a clearer view of the strength and earnings capacity of the business. Alinta delivered a strong first half with underlying net profit increasing to SGD 231 million from SGD 101 million a year ago. This was supported by a high thermal fleet availability and Alinta has the lowest cost generation base in all of Australia through its fleet of generation plants, particularly Loy Yang B coal facility in Victoria.

During the first half of '26, Alinta also strengthened its long-term gas position. It secured 2 new long-term gas supply contracts with Chevron and LNG Japan in Western Australia. The business also benefited from strong portfolio management, capturing value through portfolio flexibility across generation and retail markets. Alinta's first half performance reflects the strength of its integrated platform. Looking ahead, its strong generation, retail and development capabilities are expected to strengthen Sembcorp's earnings base, enhance recurring cash flows, and add further resilience to Sembcorp's diversified portfolio.

I would like to touch on this growing wave, and some people call tsunami, of AI and data center demand. As you all know, AI and data center growth is increasingly becoming relevant to our portfolio. New data center bids require both power supply reliability and a credible pathway to low-carbon energy. This plays to Sembcorp's strength given our integrated energy portfolio and the suite of lower carbon solutions.

In Singapore, we are a trusted partner to data center and digital infrastructure customers with over 1 gigawatt of power purchase agreements secured. I'm pleased to share that, as the latest development, Senoko has entered into an arrangement with Micron for the development of a direct connection infrastructure. As you know, Senoko and Micron, their facilities are next to each other in the northern part of Singapore. So this direct connection infrastructure is an important step for Senoko to support the power supply needs of Micron's advanced wafer fabrication facility, the current as well as future developments.

Other than Singapore, in the U.K., our Wilton site provides a strong platform for data center development. Phase 1 with 200 megawatts of data center capacity is currently under planning. Wilton might be the only one, if not one of very, very few platforms, that is able to deliver 280 megawatts by 2028. Many players have land and -- but in order to secure power to the land, it will take them into the 2030s before the commissioning of any data centers that will come along. So Wilton, in the U.K., has a very precious commodity in the form of the powered land that's available by 2028 and in utility scale of 280 megawatts. So the site is very well-positioned with immediate grid connection, ready infrastructure as well as water availability.

I spoke about Singapore and U.K. And in Australia, Alinta adds a coast-to-coast integrated energy platform with 3.4 gigawatts of operational, thermal, and renewables capacity. In generation, retail and development capabilities position Alinta very well to serve growing AI-driven power demand.

And closer to home, across ASEAN, we have established data center footholds in Vietnam and Indonesia. In Vietnam, we received investment approval to develop a data center within Saigon Hi-Tech Park, very near to Ho Chi Minh City -- well, in fact, it is in Ho Chi Minh City. In Indonesia, we've told you that Batam is an emerging location for data centers supported by its connectivity to Singapore with submarine cable networks. So across all these markets, we have got platforms, ready platforms, that are able to capture the structural growth in digital infrastructure demand, leveraging on our existing power, renewables, and urban capabilities.

The second half of the year, we'll start with a very positive note. For the Gas and Related Services, in July, it was a very strong month. USEP prices in Singapore averaged SGD 240 per megawatt hour. And this, of course, creates opportunities for our GIS team to capture value from the spot market. And this is, of course, markedly improved from the first half. Alinta also delivered a strong performance in July across both the East and West Coast markets of Australia during this peak winter period. The business should continue to benefit from favorable market conditions as well as resilient customer growth. In India, our renewables business also performed well, supported by higher wind resource across the entire portfolio.

So these are all developments that underscore our confidence in the group's outlook for the full year. I want to emphasize on the strength of that confidence, the Board has supported us to increase our dividend to SGD 0.11 despite a weaker performance in the first half. This is part of our effort to -- in recognition that our dividend payout is lagging our peer group and is part of our -- this recognition to lever up to our peer group in terms of the dividend payout moving forward. I will now hand over to Eugene. He will tell you more about the financials and the details before we go into Q&A. Thanks.

Thank you, Kim Yin. Now we move on to the first slide. So on an overall basis, all the factors that Kim Yin talked about flowed through, right, into our underlying net profit, which are purely on a reported performance basis. Our underlying net profit was down 25% from SGD 491 million to SGD 369 million. I think from a pro forma perspective, if we have seen what Alinta would have contributed to kind of like show what a full first half run rate would have been for us this year, right? That would have been SGD 558 million.

Now there are a few items below the underlying net profit to take note. I think in terms of the DPN ForEx loss, the India rupee continued to depreciate slightly against the Singapore dollar and hence, a SGD 57 million mark-to-market loss, markedly lower than last year, right? We did see the Indian rupee turn slightly in Q2 of this year. Now the fair value loss on energy derivatives of $10 million, that's a purely mark-to-market as of 30th June position of Alinta's hedge positions, so not reflective of what cash flows have been as of 30th June. And exceptional items of $152 million comprises $155 million of transaction cost, that is in relation to the acquisition of Alinta, offset by $3 million from a gain from divestment in the China water portfolio. Now this $155 million is largely substantially all the costs already for the transaction.

Now some of you may ask why is it lower than what was previously guided, which was closer to $190-plus million. The reason was because in the previous guidance of the transaction cost, we have included in there the possible breakage cost of refinancing certain U.S. private placement debt facilities. So we were fortunate that upon the completion of the transaction, many of these U.S. private placement debt investors actually saw the credit improve, and hence, we're more than happy to stay. So that is a savings in terms of the transaction costs.

Now if we move on to the next slide, I will go into detail in terms of group net profit impact. For the Gas and Related Services as a segment, right, we did see a 14% or a $45 million decline year-on-year in terms of our net profit. Now you have seen from the earlier slide that for Singapore, it declined by about $33 million. The contributory factors of that is really a result of lower spreads from recontracting, both across the Sembcorp as well as the Senoko portfolio through 2025 and coming into the earlier part of 2026.

Now in general, our overall portfolio average spreads declined by about $8 per megawatt hour to average around the low 50s. Now we also saw a couple of things. In the first half of 2026, there were some one-off gains, including cargo diversion gains that we were not able to realize in the first half of this year. And also, there were some gas cost increase in Senoko as a result of a gas curtailment, but that impact is small. Probably we are talking about a $4 million type impact. So all this contributed overall to a decline of $33 million from Singapore year-on-year.

Now the U.K. saw a close to a $22 million decline year-on-year. And as guided at the earlier part of this year, we did see a loss of customers, petrochemical customers, and as a result, also a demand from them. We are working, as I came in talking about, redesignating Wilton for the use of AI as well as data centers. And we will -- we are looking into the second half to see if something materialize, okay? Now for the rest-of-the-world in the Gas and Related Services, we actually saw a $7 million improvement year-on-year across the different countries coming from various factors, cost savings, efficiency gains, and so forth. So that's the Gas and Related Services segment.

Now I'll talk about renewables first. Now the Renewables segment saw a decline of 48% or $63 million year-on-year. I think in the first half of this year, and you would have seen also the earnings announcements as well as profit guidance from pure renewables companies in China and also some in India that one key element that was quite common across the renewables business was resource, right? So we did see a weak resource across both wind and solar across China, some -- a little bit of India as well as Southeast Asia. So the impact of resource in the first half of this year actually saw a $40 million impact, close to $40 million impact of the $63 million that we talked about.

And China basically saw close to $30 million of that $40 million impact, okay? And specifically for China, we also saw a couple of other impacts. One, we did talk about the VAT that was lost. It was a $12 million full year. So $6 million of that came through in the first half. And in addition to that, we also foresaw a further $6 million impact as a result of lower market trading tariffs for the portion of the China portfolio that has to be put on market trading as a result of the move towards more market trading by the various provinces.

Specifically for curtailment, it is rather mixed. We did see curtailment improve for certain provinces that includes areas like Guangxi, Yunnan as well as Guizhou. And we did see worsening in some other regions as well, particularly in Hunan, where hydro output was high and increased. Hence, there was increased curtailment across solar and wind. And also in Ningxia itself, where there was a one-off outage of a cross-province transmission line for inspection. So in the second bucket of curtailment impacts, at least at this point in time, it doesn't look like it's systemic. Now the Northwestern part remains elevated and unchanged. So curtailment remains high in the northwestern part of the country, right? I think for India, there was some resource impacted in the first half, particularly over wind. But as Kim Yin has highlighted, we did see a strong improvement of that in July.

Now for our storage portfolio, right, which is largely centered around the U.K., we did see batteries prices decline by about $5 million in the first half, driven purely by supply and demand dynamics in the market. So basically, that accounts for the renewables performance and a big part of it is really due to resource in the first half, okay?

On Integrated Urban Solutions, net profit declined by $16 million. And of course, SembWaste no longer contribute. So that in itself contributed to a $10 million decline. Now urban saw a $4 million decline year-on-year, but that is really contributed by a delay in the recognition of KIK's 40 hectare of land sales. Now again, in the first half of this year, we did see more rainy days and hence, the land preparation and the resettlement was a little delayed. But I'm very happy to say that we have completed the handover to the customer, and we have booked the earnings in August, it would be booked in August, and that's about $11 million. So see it as $11 million, which would otherwise have been booked in the first half, essentially moved into August.

So all in all, IUS, apart from some timing of land sales, no real surprises there. And I'll talk a little bit about Alinta. So we closed the Alinta transaction on 11th June 2026, hence, not any meaningful recognition. But I think it's important to note that the first half performance was strong, right? We saw $231 million contribution from Alinta in the first half on a full half basis, which was a meaningful growth year-on-year. Now it's important to note that from that $231 million, $100 million of that is, really, from optimizing our green certificates portfolio, right, against a certain offtake. And it will not be repeated in the second half, but we do have visibility of the optimization opportunities into 2027.

Decarbonization Solutions, essentially, we did see our losses narrowed by $5 million, and that is really driven through a tightened cost control. And from a corporate perspective, interest cost increased slightly, $3 million. That is really for the purpose of funding the acquisition of Alinta in June. And our overall corporate cost, we did tighten by $6 million, which is a result of a tightened cost management as well. In terms of other business, which really comprises the -- our specialized construction business as well as the Mint business, it declined slightly, but this is really as a result of the timing of percentage of completion recognition of the projects that the specialized construction management business is operating. So all in all, those are the key segmental operational updates in the first half that really explains the results.

Now moving on to our group capital expenditure. We have significantly tightened CapEx and investment spending, excluding Alinta, where we did $257 million of CapEx and investment spend in the first half of 2026 relative to $567 million the year before. And of course, the equity payment for Atlanta was close to SGD 4.4 billion that was -- that outflowed in June of this year.

Now when we move over to free cash flow, okay, this -- which is the next slide. So this is the slide where I have to go into some details in terms of reconciliation, okay? Now I have to talk about some numbers to put first half '25 and first half '26 on a like-for-like basis, okay? So in first half '25, we reported a free cash flow of SGD 1.3 billion. But out of that SGD 1.3 billion, if you look in the cash flow statement, you will realize that SGD 383 million of that is really proceeds from the sale of SembWaste.

So if you remove that, our first half free cash flow would have been SGD 930 million, okay, SGD 930 million for the first half of 2025. Now if we look in the first half of 2026, our free cash flow were impacted by 3 key things. Number one, Alinta's transaction cost, SGD 155 million. So that clearly wasn't incurred last year. There was also SGD 80 million of a prepayment in relation to Taweelah C for the commencement of a project that sits in our working capital, right? Of course, that will reverse itself out later. And then in terms of our deferred payment note receipts, so there was a slight delay in the funds flow. So about SGD 90 million of that will flow into Sembcorp in August this year rather than in the May, June period. So when you adjust the free cash flow of SGD 373 million of all that, you end up at SGD 700 million.

So the difference of SGD 130 million of first half free cash flow, you would notice that it will tie in roughly with the underlying net profit decline, of which, as I mentioned, as Kim Yin mentioned earlier, we do expect the second half to be stronger.

So when we look at the group borrowings, our net debt right now sits at about $13.9 billion, and it increased by about $6 billion. Most of it is a result of the acquisition of Alinta, the equity purchase price as well as consolidating Alinta's net debt. And we also continue to deploy capital for the completion of CCP 4 and also the execution of our ongoing pipeline in SGI, which is our India Renewables. Now it is important to note that we have reported our net debt to adjusted EBITDA on a first half pro forma basis. So what does that mean? So we took our first half, including Alinta, for the full half run rate. But of course, we excluded roughly $100 million of the LGCs gain from Alinta because we do not expect that to be repeated in the second half. And on an annualized basis, that comes up to a net debt to adjusted EBITDA of 5.3x, which is roughly expected as a result of the completion of the transaction.

Now we remain very confident that with the continued cash flow as well as the some growth expected in Alinta, the delivery of CCP 4 going forward as well as continued development of the pipeline in India as well as a possible capital recycling exercises, we will deleverage in the coming years to come.

Now in terms of the group debt profile, I think from a debt maturity profile, it hasn't changed a lot, right? You will notice that our weighted average debt maturity actually have improved slightly in, in spite of a rolling forward 1 quarter and funding from Alinta. And also our weighted average cost of debt came down from 4.5% to 4.3%. That was because the funding of -- in raising the financing structures and debt for Alinta, we have achieved a very attractive metrics. The weighted average cost of debt for the funding of Alinta's acquisition was 3.4% and the weighted average tenor for the Alinta funding package was about 6.6 years, okay? So very strong financing metrics.

Now you will notice that our hedging profile has come down from the 70-ish percent down to 57% fixed. Now that is because in the funding of Alinta, about $1.6 billion of that, we are now using a 2-year revolving credit facility at very low cost. That in itself is close to about 1.5% in terms of interest cost. So the reason why we did that was because -- so with this RCF, we will be better able to strategically tap the different types of markets, whether it is the bank market or the long-term bond market to term out that 2 years RCF, right?

I think in addition to that, if we have a 2-year runway to term it out, it also gives us the opportunity to reduce that $1.6 billion through paydowns. So we may not need the full $1.6 billion in long-term permanent debt, which obviously on average will be at higher cost. So that is the strategy that we chose to take. So in short, it simply means that the 57% fixed ratio, ceteris paribus, all else equal, you would expect that to increase as we term out the $1.6 billion 2-year RCF. But all in all, we are very pleased that we achieved very, very competitive terms as well as the cost of financing for the acquisition of Alinta, which is also a testament of the financiers view of the asset that we acquired, led by a very strong management team led by Jeff.

And the last one is to talk about group liquidity. Our cash and equivalents have increased as a result of the consolidation of Alinta and our unutilized committed facilities also increased from $2.5 billion to $3.6 billion. So more than ample liquidity across the whole group. Now I'll talk a little bit about the outlook. The outlook statement in itself, I wouldn't read it. I'll leave it to you to read it in itself, but I will talk about the different segments in greater detail.

For the Gas and Related Services, I think we know the first half 2026 backdrop, right, where we saw a weaker performance because of lower recontracted spreads and certain gas curtailment and also a U.K. market softness. But as we head into the second half of 2026, directionally, we expect second half of 2026 to be meaningfully higher than the first half.

Now there are 3 key areas to take note. Number one, we will have higher levels of retail and vesting contracts that we'll be generating for in the second half compared to the first half. And these are also contracts with slightly better spreads, okay? Secondly, we do see portfolio optimization opportunities. as a result of occurrences of the first half, we do have some excess gas in the second half. And with the additional capacity that the CCP 4 presents, we see the opportunities of potentially optimizing that gas. And by optimizing the gas, it could be a sale of the gas or it could be generating the gas into the pool. And of course, we have to see what gives us a stronger spark spreads -- implied spark spreads. And of course, the third thing is CCP 4 significantly more efficient. So you would see improvement in the spark spreads simply by heat rate efficiencies.

So Gas and Related Services. I think for Alinta, in the second half -- well, okay, back to Gas and Related Services Kim Yin has also highlighted, I think we also had a strong July month, driven by a strong USEP outcome, and we did see some pool gains. Now for Alinta, for the second half, you have a 6-month contribution. The performance will largely be supported by a pretty favorable operating conditions and also our resilient customer book, right? In July in itself, Kim Yin also highlighted we see a strong performance -- trading performance across both West Coast as well as East Coast. But at this point in time, I'm still holding on to the $100 million contribution in the second half for Alinta.

And then for the Renewables segment, I think in the second half, performance is always seasonally lower than the first half, right? But I think the -- we will also continue to execute the growth pipeline. But of course, when you look at the schedule, we are not expecting a lot of capacity contribution coming through in the second half. The only point that I will note for the second half of 2026 is that we continue to watch closely the resource situation.

I think there potentially would still be possible resource uncertainties, although in the month of July, factually, we did see both wind and solar resource improve against our expectations. But we will have to continue to monitor how a possible resource variations could take place in the next 5 months.

And for Integrated Urban Solutions, we certainly expect higher land sales simply by the timing of land sales. We have a clear visibility in terms of the pipeline that's underpinning the order book for the land sales. And as mentioned earlier on, we have already confirmed the recognition of close to SGD 11 million as a result of the completion of the 40 hectares of land handover in KIK.

So I think that completes my report in relation to the first half of 2026. And the key note is that we do expect the second half to be meaningfully stronger than the first half, and July data shows the green shoots of that. So thank you and open for Q&A.

Thank you, Kim and Eugene. We will now proceed to the Q&A session. For those in the room, please raise your hand and a microphone will be brought to you. Kindly state your name as well as the organization that you represent before you ask your questions. [Operator Instructions]

My first question is current spot spark spread have spiked. Has this been mainly driven by the force majeure? And if yes, when do you expect the overall spread to be -- spot spark spread to be normalized?

Okay. [Foreign Language]. No, I think, Siew Khee, in -- at least based on what we are monitoring, we know that the USEP, it's always driven by marginal cost of SRMC, right? And the key SRMC, of course, is JKM. I think for many of you who have interacted with me post March up to May, June last year, the issue was that JKM has no conviction, right? It increased up to $18. And then next thing it comes back now $15, $14. But I think through July, what we saw was a pretty firm JKM outlook, $20, $21, and it remained that way. And that really drives the USEP outcome.

I think the reality is that it is hard to say, right, how that will hold out for the rest of the year. But if you look at the forward curves, normalization of JKM seems to -- it seems to suggest that normalization of that is really post 2026 into 2027. But again, those are forward curves. It can change. So I guess the point that I'm trying to make is that we are seeing firmness in the JKM market. But of course, that situation could change.

So the forward curve, however, possible changes that you can happen, that's the best you can go away, right? So today, you look at forward curve, it has firmed. People can offer all kind of reasons why, right, compared to the Ukraine situation where suddenly there was a shortage and then prices spike up. This time around, because of preparation, many economies are able to draw on their storage, right? Maybe it has gotten to the point where some of the storage is being used up, maybe, right? Or it may be that the people are already factoring in that this situation in the Middle East is going to drag, right, on-off, on-off. And because of that, they start to price it into the gas prices.

But it has -- if you remember, when we first looked at this, we were actually quite surprised that it didn't go the way Ukraine did, right? So -- but now I think that this -- the forward curve is the best way to think about where the market is heading, right? So I don't think we can sit here and have a crystal ball and tell you that it's going to stay there forever. But we also cannot offer any reasons why, but I was just trying to suggest some of the conventional wisdom. You ask AI today, they will tell you that all okay, use the storage.

So -- but all that chewing up a lot of time, I was just trying to say that we do think that this time, it could last at least for a short while, right? It probably will last because there's no good reason for it to come down also. The demand is actually quite firm, and you can see new demand coming through over time. So it's -- with demand holding up and the main factor being the supply and if the supply side dynamics doesn't look like there's any possibility that the things will just dramatically improve from a supply side, and the forward curve should hold out.

Then just on the new plant coming in, which month will it come in?

It will be early part of -- end Q3, early Q4, yes.

It's already connected to the grid. It is already generating power, and we're already clocking revenue. But it will be coming on progressively ramping up, right? So of course, we want to do more of that sooner than later, but it is really connected to the grid as we speak.

Okay. I just have 2 more questions before I jump back to the queue. So just on that itself, just if you use your crystal ball again, next year, we have so many new plants coming in. How do you actually manage to rationalize your old plants or optimize your overall portfolio so that the market is rational that the spark spread -- spot spark spread don't come down because there are so many plants that are coming in.

I think the -- what we have explained in the past is that with the portfolio, right, we're not just going to pump all the electrons from the new plant in addition to the old plant into the system, right? Some of it -- what we have is a portfolio of customer contracts. So we are using the more efficient plant, the new plant, to substitute out some of the less efficient plant to serve the customer. In so doing then, customer contracts don't change, right? Then if you are able to burn less gas, you actually make money. So that's one effect.

The other part of it is, of course, we told you about contracting strategy. So with the bigger fleet of plant, then that gives us that opportunity now to contract more aggressively right? So the contract portfolio, we are continuing to pursue that. And then we would -- over time, the market share would then reflect the increase in the new plant. So what I'm trying to explain is that please don't expect that 600 megawatts of plant get commissioned, then suddenly our revenue goes up by 600 megawatts. It's not going to happen that way. It will be responding what we're doing is using our fleet plan and repeating myself to respond to serve our customer portfolio. And this customer contract portfolio will grow over time into the near future.

So we feel actually pretty good about it. But net-net, there will be on the fringe additional revenue. As I told you just now, we are already connected to the grid. So for this second half of the year, earlier, we were thinking maybe it's October, November full commissioning, right? And for purpose of financial projection, we started adding numbers into the budget for October, November, but we are clocking some of that revenue even as we speak, taking advantage of the plant being connected and taking advantage of the higher use set in the market in the meantime. You okay there? CFO always wants me to be...

Next, Mayank.

Mayank from Morgan Stanley. So Kim Yin, first question for you at a portfolio level. 40% of your book value now sits in renewables. And obviously, it's been a struggle for the last 1.5, 2 years now for you. How are you thinking about capital deployment in renewables? Because even in the first half, a large part of the CapEx went into their ex Alinta. So is there a rethink around capital allocation in renewables in itself? And I think a related question on China, you said some of that capacity is now in the market on a spot basis. What percentage of your China renewables is now on spot?

Okay. I will ask Eugene to help me out with more details on the capital, but capital allocation is a reflection of your strategy, right? So the short answer to your question is, yes, the way we allocate capital is constantly adjusting. And when we see better opportunities, it will naturally attract the bulk of the capital, right? So Alinta was the big opportunity in front of us in the last year. So we shifted. Yes. So it's very clear how we allocate capital in that space.

Renewables, from a business -- a longer-term business perspective, we believe that -- we call ourselves energy transition player. We believe that each of these sources of energy will continue to have a place in the energy mix of the customer. Customer, broadly speaking, could be countries and grids. So renewables will continue to have a place in many, many energy mixes. Yes.

And you saw what happened in the Middle East and so on. Everybody has some sun, everybody has some wind. So there will be that desire to deploy assets in order to capture some of this. So we will be selective in trying to capture this. So renewables is a place in which we will continue to be looking for opportunities. But now that we have had a portfolio, right, we know we got Singapore, which is where we are very strong, right? And we -- frankly, please don't repeat the regulator, we're almost the only game in town. 60% of what's going out there is generated by us. China, we have got a lot of experience, not doing well at the moment because of all the reasons that we explained to you. But India, we have a very strong team as well, right?

So we are then in a very good position now to capture those opportunities that will come along, the better ones. So I'm trying to paint the picture that renewables will always be there. We have a good position. We will leverage on our good position to capture this, always be there, better opportunities among them, right?

So you can use the word selective, but selective might suggest very, very careful. But I'm saying in the context of your capital allocation question, we're looking for the higher margins. Yes. So that's why we say that, look, in India, we continue to feel good because our portfolio of projects that are coming online, what we call pipeline, those are secured. They are all in hybrid projects where the margins are higher. And so we're comfortable with that.

So then in terms of moving forward of capital allocation, the -- I spoke of renewables, but I also want to touch on gas and related. We continue to think that gas and related this season, and I'm talking about 5 years, 7 years, 8 years, will continue to be very high in demand because this is the one fuel that is reasonably clean and yet able to provide very reliable power to meet this tsunami of demand coming from digital infrastructure. And we are seeing that in Singapore, as I told you, we are seeing that in the U.K., right? People are coming to us.

So in a way, Wilton a chemical customer exiting -- at that time, we were all gloomy and all that, people sitting in front me was like you went there are so many trips to try to fix things. But it turned out to be a blessing in disguise because it compelled us to quickly pivot. And in that process, then suddenly, we realized we are the only sites in the U.K. that can do 2028. So the players who want to do fast, and of course, if you talk to any data center people, they say, "I want it yesterday." So it become -- position us in a very good position to cement that relationship.

So gas -- coming back to capital allocation again, so renewables, there will be allocation. Gas and related, there will be allocation, and we will be directing it. I know I probably not an answer that you'll be looking for, but it's a generic answer that we'll be directing it to -- it will be chasing the higher-margin for this projects.

I think there's a second question on the proportion of the China portfolio that is now spot, right? Now back in 2024, we were around 15% or so, right, because the -- and I did guide the market that our expectation is that all the province will start moving more and more. So today, almost around 50% of the portfolio is spot ready. So they are accelerating that move.

So that number should remain around that 50% range going forward? Or you think a larger part will go into there?

[indiscernible]

No, I was just saying that with that 50% now ramp up closer to a bigger number as you kind of...

The revenues are roughly about 50-50 split between the spot and secure.

And that should remain around the same range going forward?

It will increase over time.

I think the second question was Alinta. While you had some very, very good quarter compared to your peers, especially AGL and Origin when you look at their numbers as well. But your net profit is still near breakeven, correct, if you look at first half? So question was more in terms of what did you guys do differently at the Alinta level versus the peers? And second thing is when we can see some ramp or if you can just give us a bit of an idea around below the EBITDA line items around Alinta.

Mayank, can you repeat that part? You were saying that the breakeven, what was the...

Alinta, if you look at the net profit was around $5 million for the...

No, that is -- no, no, no. Mayank, $5 billion is because we completed the transaction on...

Really just because of that. Got it. Otherwise, what would be the...

Full first half net income of Alinta was [ SGD 238 ]...

Okay. So that was the run rate that was normal...

Yes, yes, yes. So the reason why we showed the full first half so that you know the run rate, but the SGD 5 million was because we only completed on the [ longer term ].

So otherwise, it's the normal run rate then. Okay. Got it. Yes.

You gave me a scare.

You scared me. I was like, you stunned me.

Yes. Okay. So then run rate is fine. But on the EBITDA line, the numbers were pretty good, correct, in the first half versus the peers. So is there something that you can kind of give us an idea around, especially on the West Coast, the numbers were pretty good -- sorry, East Coast, sorry. Anything you want to kind of highlight?

Maybe this is an opportunity to introduce you Jeff Dimery. He's sitting right here. Perhaps Jeff can give a little bit of a synopsis as to how you deliver superior results.

Yes. Thank you, Kim Yin. I think the first point I would make, if you're looking at AGL and Origin, they don't have nearly the same exposure that Alinta has to the West Coast of Australia. And obviously, they've commented on the market conditions in the East Coast, where we're seeing a decline in forward prices, et cetera, at the moment. I would contrast that with the West Coast of Australia, where we're seeing record prices. So we do have quite a bit of exposure there, and we're performing very strongly in that space. On the East Coast of Australia, Kim Yin and Eugene both mentioned our play around the renewables market, around the certificate contribution from the LGC.

As Eugene pointed out, we have that same opportunity in 2027. So that will come to an end. It's part of the previous legislation around how we can, I guess, bank renewable certificates and that scheme ends in 2030. So it won't be ongoing. Having said that, what I would say, and I note that the CEO of AGL also said this, when you look at the East Coast market and the outlook in Australia, today, the market prices are well below new entrant level. And so we don't think that they're sustainable where they are or we'll get no new investment in capacity into the market. And I say that against the backdrop, which is a global theme.

We're seeing exceedingly strong demand for data centers. We're seeing an enormous push now into the electrification of vehicles off the back of what's happened in the Middle East. So I guess the outlook we're saying is that prices are quite subdued on the East Coast. But as we look forward with demand rising, we will need new capacity. And right now, the signal is not there. So we expect -- and I think our peers would equally expect to see a forward change in market conditions in the not-too-distant future.

Having said that, the last point I would make is that whilst you are seeing declining forward curve relative to where it's been historically. We've been pretty well-hedged, so we are insulated to an extent, both today and for the short-term future in our portfolio management. So we're not anticipating. As I think the guys alluded to, we're very comfortable with the balance of calendar year and what the contribution is looking like.

Thanks, Jeff. So in a nutshell, just to -- if repeating -- at the risk of repeating, we are guiding that the second half 2026 contribution from Alinta, in terms of net profit to the Sembcorp Group, will be [ SGD 100 million ], right? So that's guidance...

It's not changing.

Yes. So usually, the first half is slightly stronger, right? So the full year will be 220, 230 type number if we were at 1st January today guiding 2026, yes. So that's -- just to be clear, that's the number. In terms of the underlying fundamentals in Australia, we are optimistic even though it is a merchant market, right? And first, Alinta is -- has a big retail portfolio that it is hedged. Maybe not 15 years, 18 years like what we can get in Singapore, 2, 3 years, but it is a retail portfolio that is also quite sticky.

The other part of it is that Alinta has got low-cost generation, right? So that underpins its ability, its competitiveness in terms of keeping customers and in terms of locking in margins. Yes. The other thing is that Alinta has an East and West Coast market. In the West Coast, they are dominant, right? And they are also very strong in the gas market. So then where the market is heading, demand is growing faster than all the planners have expected. So that's the first thing. And we all know that in a place like Australia, if you want to plan new plants, it will take time, right? So even in the past, supply has trouble catching up with demand. Now with demand going up faster, the supply will take -- is actually under a lot of pressure. So in terms of market outcome, that's a good reason to be optimistic, right?

So the macro is there, demand versus supply. The micro in terms of the business, low-cost generation, strong position, good management team. And that's why we're quite comfortable that this is a recurring cash flow and recurring income portfolio that will really enhance the resilience of the Sembcorp portfolio. So that's that. I want to also add a little bit more to the earlier question on capital allocation between renewables, gas and so on, right? So of course, IUS is IUS, we laid out the plan what we're doing. We're recycling capital. We're selling some of the municipal water and so on. We sold SembWaste, right? So then in the meantime, we are allocating capital to build recurring cash flow. So ready build factories in Vietnam, where we have got good access to good locations and good land. We're building up the land bank. So that part of it, there's allocation. Then in terms of gas, we spoke about that.

Then renewables, I just want to add that really, we will continue to chase after the good margin projects. And where we think we would have the opportunity in terms of geography is first, India, right? As I told you, we have a good team. We have a good portfolio that is currently being developed, but we will be chasing more, but we will be conscious about chasing the good margins. But the other one is Australia, right? Because, again, the fundamentals I described to you just now. And to the extent, Alinta is in a position to build renewable portfolio to complement the existing fleet of gas as well as coal power plants in order to serve the customer better, to create optionality for their portfolio trading and optimization. Those are things that -- those are areas that we would invest in right? So that's where the -- just to complete additional geographic dimension to the capital allocation question.

Joy from second row.

Joy from HSBC. First on -- if we can go back to spark spread, I think, Eugene, you mentioned average spark spread came down about $8. If I look at your price, I think there's a fair chunk at Senoko has already been repriced. How much more downside do we have on that your current spark spread? So that's the first question. Second, on dividend. I mean, you alluded to increasing dividend. Should we take your first half payout as your full year payout? Or should we look at the percentage of growth as an indication to a full year dividend number?

No, you're drawing a reaction from me. I'll answer the second question first.

He answered the second first.

If we're going to stop at SGD 0.11, you can take this company private. No, right? First half is SGD 0.11. Last year's first half was SGD 0.09, right? Last year's full year was SGD 0.25. So the -- we are -- I want to be very careful in my words because I was given a specific mandate what I can say, what I can't. But first, we recognize that we lack our peer group internationally as well as domestically. So domestically, if you look at it, the numbers roll off my tongue, ST Engineering payout ratio, 80-some percent, Keppel payout ratio, almost 70%. The bank's payout ratio, DPS is -- we know what they are. I think you will be more than 100%. So we lack our peer group. Peer group, today, any investor coming into Singapore will look at the stock exchange and they say, "Where do I pull my money, right?" So then if Sembcorp is lagging the peer group by so much, of course, we're the first one to be sold if they have to pull their money. And if they had to -- if we want to attract capital to come into our stock, we have to increase our payout ratio to at least be at par with our peer group, right?

So that is something that we recognize, right, that we are lagging. So now you will see in the last few years, our behavior, it has been a steady increase from '24 -- '23, '24, '25 and now '26, right? So short answer to your question, no, it is a half year payout, right? And you can -- if I was an investor, I would extrapolate the full year payout with also an increase in the second half, right? So because that is in the backdrop of what I told you, what we recognize that we are lagging our peer group, right? And that we think that's one aspect to it.

The other aspect is that we feel that we are actually very comfortable doing this in terms of that increasing the payout ratio, which we are very committed to. Why? Because the cash -- underlying business and the cash flow is very strong. And Eugene will be able to show you scenarios whereby even if we -- net profit doesn't perform as we expect it to grow, we will still be delevering quickly back into the 3x, 4x debt-to-EBITDA range in 3, 4 years' time. So we are very comfortable with that. And because of that, then the cash flow other than investing activities, returning it to shareholders through dividend is also an important signal to the investor community.

So short answer, it's only for half year $0.11, and we are -- we recognize we are a lagging peer group. We are committed to increasing our payout ratio. The only thing I fall short of saying is to tell you what is the target.

I guess -- yes, just to clarify, I guess what I'm trying to say is $0.11 is about 53% payout on the underlying profit for first half. Can we extrapolate that ratio?

I think for this particular year on a non-pro forma basis, not unreasonable, okay? And I think historically, how you have seen we have done it, it's -- if it's a year of dividend increase, we like to think of it of increasing both first half and second half also. And we also distribute our targeted increase for the full year accordingly, right?

I don't remember the numbers, Eugene. In 2025, first half was SGD 0.09, right?

SGD 0.09, that's right.

2024, first half was...

First half was SGD 0.06.

SGD 0.06. Okay? Then 2025, second half was what?

SGD [0.16] So the difference of...

2024, SGD 0.13. Okay. Sorry, I don't have a slide to show you that, but I'm trying to show you that there's a track record you can go back.

There is a certain pattern that we do.

Yes. So I tell people, we are committed to steadily increasing it as opposed to increasing it one round, right? So somehow many people feel that steady is always better. I happen to be a little bit on the other side of the camp, but it doesn't matter. So because we are comfortable with the -- more importantly, we are comfortable with sustaining it even while we delever. So that's very important.

Sustaining an increase. When I talk about sustaining, I'm talking about sustaining and increase. I'm not talking about sustaining at this level. Sustaining increased we delever, right, because the cash flow supports that. So I don't want to belabor that point. Our focus -- let's focus on the season today. It's SGD 0.11, it's SGD 0.02 more than what it used to be. And then year-end, we expect to be able to sustain the growth.

You had a second question.

Spark spread.

Spark spread. So now Senoko, we left about 20%, right? Of course, it's 20% for recontracting. A lot of it has been negotiated already. Now of course, we don't expect this to be as high as historical. But we are quite happy that the spark spreads that we are landing at is better than at the start of the year. Remember, we were struggling around 30%, 35% early on. But certainly, for this, it will be better.

And I think in the past, we have told our stakeholders that our portfolio-wise in terms of contracted portfolio for Sembcorp, we are sort of in the more than $50 range, right? So now with the market, the spot spark spread being closer to the -- between $60 to $90, it also presents opportunity to go and lock in better quality, better price, better margin contracts, albeit for the short term, right? But the longer term, if this sustains, then again, there may be an opportunity then to lock in long-term contracts. So the last month or 2 give us a lot of confidence that things are turning.

Horng Han from CLSA. I just want to ask 1 question with regards to the importation of renewables from Malaysia to Singapore. Is there a PPA contract for this? And if there is, what sort of return should investors expect? And to conclude, this would be in terms of cannibalization of existing demand, should we see more of this renewables importation coming to Singapore? Would this partially, to some extent, cannibalize the existing demand coming from gas-fired power plant?

It depends on price. So when it lands, what is the price, right? So at the end of the day, customers are selective based on price. So the import today, the -- you have to factor in the generation cost as well as the transmission cost because transmission undersea cable, even if you bring it from Peninsula Malaysia, there's still a short distance of undersea cable. And then in between the governments, there is also -- they need to negotiate what is the toll, right? So you factor all that in.

Today, if you ask me, I don't think it is as competitive as the domestic generation. I dare say that. Today, basic, if you add all that in of what upstream generation wants, what the transmission needs, and what the government wants to factor in on top of it as a margin, is still much cheaper to generate onshore. Let's put it that way.

So it will come, right? But at a point where there's still a distance -- let's put it this way, there's still a distance between what could be attractive to customers in Singapore from what the -- what people are asking for, for both generation and transmission. Chiap Khiong is here. You want to touch on that?

He was saying you covered it. So whether it's going to cannibalize, definitely not in the near term. I can't see it. Even if it lands, it's going to be expensive, right? So it would take away maybe the people who are very sensitive to green, right? So if somebody willing to pay $300 per megawatt hour, $280 per megawatt hour for green power, then okay, that customer might have to go there. But other than that, no one is going to pay that type of money for -- not in Singapore.

Sure. Can I try to understand from a distributor perspective, right? Because you operate power plants at the same time, you are also importing and distributing renewables energy into Singapore. What -- should we think that from a risk/reward perspective, distribution of electricity or the selling of electricity coming to Singapore would perhaps you will demand a slightly lower return compared to your power generation business?

No. It's the same customer that I'm serving. So when I have the same customer, I can choose to give him power from my CCP 4. I can choose to give him power from my Sakra. I can choose to direct that power source to Senoko, right? I can go and buy from Seraya if they sell me cheap for whatever reason to serve my customer. I can also then bring it in from Malaysia or Indonesia or for that matter, Vietnam to give to my customer.

So you can see that it's actually a very simple equation. This is what my customer willing to pay, right? Then what is the source that I would direct to serve my customer so that I maximize my margin. So if, let's say, in Singapore, I'm generating my power from my CCP 4 at $50 per megawatt hour, my customer willing to pay $150, my import is going to cost me $120. Why would I take the import to serve my customer, right? I would just run my power plant and then collect the $100 margin. So it's as simple as that.

So then it's the same dynamics. I'm going up to the upstream and telling an upstream generator, it could be in Sarawak, it could be in Malaysia, it could be in Batam, and I'm saying that, "Hey, look, I can sign a contract with you, but it has to be of this price that's worth my wow." So it's actually very commercial, right? So coming back, if -- I can see the underlying question is whether or not this market dynamics moving forward will be materially disrupted by incoming new sources from the neighboring countries? And my answer is that not in the time frame that we are planning.

Let's say, if I'm planning 2028, 2030, I can't see that happening at all. Even if it lands, it's going to be in the $300 range or $280, $270 range. And that range is just not competitive based on what we can deliver at that time.

Can I just circle back to the discussion towards USEP prices, right? I mean if you look at past cycles, USEP tends to correlate very much to supply-demand dynamics, it basically reflects supply-demand. But I think this relationship is no longer so straightforward this year on the back of Iran war. And I think if you look in terms of the price trend, it's basically rebound very strongly on the back of the geopolitical tensions. So the question I have is that spot spark spread has gone up significantly higher, as you mentioned, $60 to $90 range is very attractive. But at the same time, we do have a lot of supply coming through.

So can we try to get some insights with regards to the discussion you have with your customers, those who want to sign a 15-year contract. Are they looking backwards how spot spread price trend has been? Or are they looking more forward given that spot prices have gone up a lot more or they could be trying to renegotiate and delay some of the signing of contracts there?

How the customer thinks you can probably have a better guess than many people. But I will ask Chiap Khiong to address the customer part. But I want to first mention that this is not new to us. This volatility in the market is not new to us, right? So if you -- I don't know whether you were covering this company before I came here in 2019, 2020, right? In that period, we had a bat. There was too much of capacity, demand was not what planners expect, right? So then margins are very low.

So customers are thinking about the past and looking to the future. We ourselves are also doing the same. And that's why we keep on emphasizing that our strategy is to make sure that we are not overly exposed, and we insulate ourselves by signing contracts, right? So if we didn't sign the contracts that we did, if we didn't have the contract portfolio that we did, today, I might suggest that our -- based on the $30, $40 spark spread, Singapore instead of delivering $600 million, $700 million, we will be delivering $400 million. So we would be a $500 million company instead of $1 billion company net profit-wise.

So we're somewhat insulated or rather we -- somewhat is the wrong word. I think we have insulated ourselves very well in terms of thinking forward. And when we commission CCP 4, and that's why just now in Siew Khee's question, I'm saying that we are building the supply, we are lining up the supply in order to serve my customer portfolio. So the mentality is that, "Look, I have got these customers, I got these contracts, I got this margin. what is the plant that I need to go in?" Now I'm talking about this because you have to think about with someone who doesn't have my competitor who doesn't have this contract portfolio, what will they be doing? They will be planting and then they'll be trying to sign up the contracts. Some of them are copying our strategy to sign contracts, but -- and they also -- the bulk of the generation will be a little bit like Senoko selling into the pool.

So when there is more supply than the demand being expected coming through, you are right. You could expect that prices will start to ease, and it might go back to the days of the 2017, 2018, right? But again, I'm saying that we are first insulating ourselves. Second, in planting new plants, we have factored that into our considerations. And then in terms of engaging our customers, we are also going to the high-quality customers who are wanting to have stability rather than having to ride the cycles, right?

So someone like a Micron, for instance, that's why we keep emphasizing the relationship with them and the direct agreement that we just talked to you about. These are people who have a very long-term investment horizon, right? So even when things were bad, they were still planting. Now if you look at the Micron financials and the latest release, these guys -- the business is just booming, right, because of the high bandwidth memory and all those things that are going into their planning.

So the high-quality customers are more likely to want to have stability, and this is where we have a sweet spot, right? Because, again, we have a low-cost generation efficient. We have low-cost gas. Well, low-cost gas, maybe competitively priced gas, right? We have LNG, we've got PNG, and then we got the power plants. And then now we are increasingly also extending the contract strategy into Senoko, right? Because the Sembcorp portfolio is largely contracted. So now we are extending that contract strategy to make sure that Senoko will be less exposed. Never mind that Senoko will have our payback, right? Whatever that we pay to acquire it, we already got it. So -- but that extending that contract strategy, if we are successful. And in this case, Senoko and Micron moving forward, then it will again -- what we did with Sembcorp portfolio, we are hopeful that we can replicate that with the Senoko portfolio such that it will then elevate itself from a very volatile earnings profile into -- there is a base load that he can count on through contracts.

So again, we move away from -- so Senoko, hopefully, from a $500 million here, dropping to $100 million next year and then going to $600 million following year, we will try to get it to then stabilize at $400 million, $500, right? So that's the strategy. It's not quite there yet, but I alluded to it just now in my delivery that Senoko, with our help, has signed a direct connection agreement with Micron. It's significant because with that direct agreement, there is Micron and Senoko has a cost advantage because now you can connect directly without going through the grid.

So I'm saying all these things because I think Horng Han, you're asking your question is saying that, look, is this market going to hold up, right? So then I'm trying to say that I don't know, right? But I spend the time then talking about what we will do to navigate this market whichever way it's going to go. If it goes high, great, we are there, we'll capture it. If it's going to have an oversupply situation for all the plants coming online, our strategy is actually to make sure that we will hold out not just the Sembcorp portfolio, we are now extending it to the Senoko portfolio.

And we also just told you that we have just achieved a very good step, a next step in that strategy with the Micron direct connection agreement. So I would like Chiap to help me out talk about because he deals with the customers directly, so it's better to hear from him.

Yes. Thanks, Horng Han. I think the customers part is quite interesting. If you look at Singapore, additional growth for demand, which sector, okay? Comes namely from semicon and DCs. And we are quite in a very interesting position for capturing the market in these 2 segments. Why? Semicons are all growing more in the north side, the North, Northeast, and Senoko actually stands in a very, very interesting position. Micron, just for info, they take about 10% of the whole Singapore power is our strategic customer. So our linkage to Micron, as they grow, like what Kim Yin say, they are not looking at up and down, they are looking at stability of electrons, whether there's electrons, whether the price is stable instead of when they initially -- before they contract with us, Ukraine war came, the prices was crazy high.

So in terms of 10% needs of the power requirements, they will never be able to take this kind of shocks. So they're very happy to look at long-term agreements, and they are happy to look at a partnership with us. So semicons, we are in a very, very good position to actually look at the increasing growth. DCs, if you look at all the requirements in DCs getting a license, they need a lot of green elements, and we are also there. So these 2 segments where the big demand is we are very, very close to the customer. And if you look at demand supply, we have new machines. The way that we are thinking about it, the baseload we'll be contracting to with all these new customers, new growth, new customers. Then Senoko and ourselves, we've got some old machines, we can actually then flex it if the wholesale price goes high, we actually flex it.

So I think we are in a very good, comfortable position where overall demand and supply may be a bit mismatch, but where the customer is, where the long-term agreements are, we are quite in a good niche to cover them. And then we have the flex of opportunistic play as well. So why customers like us? Because we've got good machines, we also can access to gas. We have a good portfolio of green and new stuff like bio-methane and also. I think all this adds elements to why we believe that customers will come to us. And we have to work very hard to also caught them, but I think naturally, there's a fit between us.

Just to add a little bit, the 2 aspects. One is that this, we are customers selecting us, we are also selecting customers, right? So we are going to customers who -- as you can see from our past behavior, we are able to secure some of these people who are prepared to sign very long term, right? And we are selecting customers that are having that priority of stability versus short-term gains, right? So if you go to analyze the value chain, let's say, for a data center filler, the type of margins they're going to get in operating a data center is much, much, much higher than the margins that one can get selling power, right?

But we're not getting into their business. But what the point really is that if power supply is disrupted, that very, very high margin that they can corner with their customers will be affected. So they don't want that, right? So they have bigger fish to fry than try to negotiate with me for the last SGD 0.05 of power price. You can see -- so what they rather have is go to someone who can, in that market, give them what they want, but be able to stand behind it reliably. So to Chiap Khiong's point, we have all these sources, right? I've got older plants, I've got newer plants. On a bad day when my plant is down, my old plant can be cranked up to serve them. On a good day when they need some green, I am the biggest green player in town.

And because of that, then the second aspect I want to talk about is that then this import they're talking about. If I'm saying that, "Oh, look, it's still too expensive relative to my domestic generation." Why am I talking to all these people? Eventually, it will come. Eventually, there will be enough customers who pay for it. We are positioning ourselves to a full court press. So when that comes, we are not left out. So Batam, people come and talk to us. Johor, people come and talk to us, right? And then Sarawak, Vietnam, all the sources are there. And when it comes, we are the ones with the customer. As long as we have the customer, I sign a contract with whoever is generating power upstream, it will underpin the financing for the upstream investments, right?

And that contract has to be long. How many people have the ability to sign the long-term contract that will underpin the upstream investment in Singapore. So going back to what Chiap Khiong was saying, so there's that customer, what they want and how we select the customer. There's also why are we doing some of these things. It's actually to position so that then when it comes, right?

Government is talking about nuclear. Maybe I shouldn't say that, but people are talking about nuclear. And if nuclear comes, we are also positioning ourselves to protect our market share and to find the best way to serve our customers if it does come. So we have all those. So part of the decarbonization solution that we spoke about, right, we're trying to at -- by investing in option type costs, maintain that possibility that if it ever comes, we are in a position to not be left out, if not be in the lead.

So -- but today, in the planning horizon that we talk about when it comes to earnings forecast and so on, I wouldn't worry about imports. I wouldn't worry about nuclear. I wouldn't worry about hydrogen. right? Renewables, yes. Gas, yes, for Singapore. And then for places like India and Australia, coal remains a very big factor.

Yes, just a quick question from me. This is Terence from JPMorgan. I just wanted to ask about Wilton. Thank you for sharing on the data center slide. But I wanted to ask what's the monetization opportunity for Wilton given. Potentially, it could be powered up by 2028. How are you looking to sort of monetize that? And would -- and should we expect some power sales by '28 for Wilton?

Yes. You want to speak? Vipul, please. So Vipul, President CEO, Renewable West, but he looks after the U.K. business as Executive Director of the business. So -- and he's quite close to the situation. He's chairing the steering committee with the U.K. team every week to advance the U.K. data center agenda.

So in terms of monetization, there are multiple sort of revenue streams that can come out of this. One quite simply is -- it's called powered land. And the reason Wilton has that opportunity is because it is actually one of the few sites that in this time frame, as Kim Yin already said, can actually offer a combination of grid power, local generation. As you know, Wilton has the largest private wire network in the U.K. and backup power. So -- which obviously, if you're a data center builder, developer, or operator, that's a very, very -- that's the first step. So that provides one revenue stream.

Of course, if you look at what the values of those are with the scarcity of powered land availability, even outside the London area, of course, that's quite an attractive opportunity. I think the second is to provide power to that -- to any data center where there would be some monetization of the supply of that power, which would -- one option is bring it through the grid and then supply it through our network. There are some margins that come with that one. And of course, longer term, it would be quite sensible to build behind-the-meter generation within Wilton itself.

We haven't planted in Wilton for many years, but this opportunity then opens up that -- those options. And so those are the 2 very straightforward power-related ones. And then, of course, there's -- powered shells will get built, et cetera, et cetera, that is -- which is potential.

That's very clear. If I could also ask, EMA is running RFP for new planting. Is Sembcorp potentially interested in participating in any of the RFPs for new plants?

I think in relation to the -- and I presume you are referring to DC-CFA2, right?

Not just the new planting for EMA. The new power plants.

The new power plants for EMA, which is the ones in 2031.

We are in the best position to address the power needs of the country. So like I don't want to answer your question. I hope you understand it's a little bit sensitive, but we are in the best position to address the next increase in the demand and when the government -- I think there is a trust between government and us when it comes to addressing the immediate as well as future power needs. So we will do what is good for the nation and also for ourselves to address those immediate needs.

And since we are on it, then could you discuss about the DC-CFA2 process? And how is Sembcorp participating in that?

I think the honest answer is that for DC-CFA2 specifically, we are clearly not participating it from a DC perspective. But the DC-CFA2 does require the DC operator to submit with an accepted a power -- grid power solution and offer. We are quite pleased to say that most of the DCs that have submitted for that have accepted -- have submitted with our power offer. So it is our expectation that we will be powering most of that capacity unless it gets all awarded to somebody else. But the reality is that we do feel that we are in a good position for that. Yes. But for now, it is really a power offer. And we have not -- we have no intentions of being involved in the DC construction for the DC-CFA2.

Pei Hwa, please?

Pei Hwa from DBS. Maybe a first question on India Renewable for Vipul. I think the grid bottleneck has been an issue. I just want -- there's been more news flow recently. So I'm wondering if that has become more concerning in terms of grid infrastructure bottleneck, especially with the influx of new capacity.

I think at an overall level, you're quite right, the grid has not been able to keep pace despite massive expansions in the grid. As I had mentioned in our last briefing, there are new policies on the anvil to actually give the grid developers a lot more power to acquire land and clear the bottlenecks. Now that's at the overall country level. If I look at our portfolio, which is more relevant, the -- our curtailment levels are less than 1%, and that's on our operational portfolio at the moment. So I think we are in good shape, and there are rules in place that allow compensation if there is grid curtailment for any reason other than grid security.

Now, then the question comes, okay, we are building out close to 4 gigawatts, of which 2.5 gigawatts has signed PPAs and 1.5 gigawatts we are in the process of going ahead and trying to confirm those. So what happens to those? I think this is where it's worth noting what our strategy for project development is versus perhaps what many others in the industry do. Our objective is to increase electrons sold, not just rack up capacity commissioned. So what we do is we keep a very close eye on when the grid is likely to come, and we time our project commissionings accordingly.

Why is this important in India? Because the way the rules work for the generalized network access or GNA, if you come before your authorized date of network access, you could get connected because there's always some way to move the power through some route or the other, but you get what is called a temporary GNA, TGNA. If you're on temporary GNA, the grid has no obligation to take your power. They take it on a best efforts basis and therefore, can curtail, which is why you may have read some very alarming numbers. I think there was a 43% curtailment number for some players in Rajasthan a few months ago. That's because they're on TGNA because they built their plants before their permanent GNA was ready.

Our strategy is to time it to the best possible to come within a month or 2 of our permanent GNA. Therefore, once that happens, the grid is obliged to take our power even if it means backing down anyone else who might be on a temporary GNA at the time. That's how we are managing this.

One more question on India Renewable. Given the first half is relatively weak because of the weather pattern, I'm just wondering whether this has any implication to our IPO. What's the time line now? And any change in that?

I'm going to hand it to Eugene to answer.

Yes. So I think the -- again, like I've always said, I've been read the right, somebody is staring at me. But in any case, let's call it capital recycling, right, and not refer towards like the 3 letters that you pointed out, right? It's sensitive. Now -- but of course, I think you have heard me mention before, we are always gearing up towards a capital recycling exercise, putting all the necessary preparations in place. Now the war started, you create some volatility in the market. I think what is positive for us is that if you look at a recent performance of India Renewables listed. Of course, just because they're listed, it doesn't make any reference to the exact mode of capital recycling, okay? But because they are listed and they are performing fairly well. I think some of the recent performance include CleanMax has now recovered over its IPO price. Also a recent listing at Juniper. I think we saw a huge coverage of the book, almost 6x.

26x QAV. About 6, 7x overall.

Yes, on the books. So it gives a lot of indication that the capital recycling exercise is actually good. So you would imagine that we will be gearing towards a capital recycling exercise. I think in terms of timing, it's quite difficult for us to guide you, but you would imagine that we are certainly putting ourselves in a position to take advantage of the momentum that we see in the market.

Maybe to supplement Eugene's comment. It's not just CleanMax and Juniper. All the listed entities in renewables in India, which maybe this time last year were languishing somewhat, they are all at much better levels today. And of course, you would know that. I think what I'd like to add is the reason why. If you're looking at just delivery of projects that were promised and so on, a lot of that has come along. But more importantly, with the Middle East situation, we are actually seeing a very strong push for generation capacity additions in India, supported by policy, particularly wherever there is local resource.

So what are the local resources for India? There's coal, there's renewables. So these are the 2. Hydro is, of course, there, but that gets capped out at a certain level given the rivers and so on. So there is actually a very strong sort of policy push and perhaps that's putting tailwinds into the market. And the only other thing I just -- maybe it's worth mentioning is that, obviously, we'll factor that into all our assessments and valuations of what we do. But does this materially affect our plans one way or the other?

For us, we are quite clear that we now have a strong portfolio geared towards growth. We have our connectivity 100% secured. We have a very large proportion of our land secured as well. We now have 2.5 gigawatts of signed PPAs, which are now going into construction. We have 1.5 gigawatts of awards, which are still very much in discussion to try and convert into contracts. So that agenda has to get done, and we factor that into our calculation.

Just as a reminder, Pei Hwa, it's in reference to a capital recycling exercise, yes.

Yes, just to continue on that topic. I just wonder what other asset of business that we may consider to capital recycle, firstly. And then also a bigger scheme of things, I mean, shareholders are happy to see you increase your dividend. At the same time, we're also doing deleveraging. And how should we think about our M&A, our growth forward is more on the bigger things.

Yes I think, Pei Hwa, in relation to that, right, we are calibrating -- I think our outlook when we look further into the next 5 years, we are quite careful to ensure that we are in a position to capture growth. I think that will always be on our agenda, right? But we are also of the view that we have to be very focused on capturing growth along key themes that Sembcorp has the right to play. And also thematically, we are comfortable that there will be a trend that would be a secular trend that will transcend a fairly long period.

So I think some of these themes that you would imagine would be, okay, number one, clearly looking at a growing power provision to growing AI and data center demands, right? So that will be one key theme that we'll be playing into. Now I'm going to talk about in broad themes because I don't think we are at a point where we can really talk about specific capital allocation, right? So I'll talk about broad themes. So power into a growing AI/data center thematic. And of course, through that, Sembcorp does have a very strong right to play because in many of the markets that we are in, right, they are actually attractive to many of these AI and data center players. And we're talking about Wilton, which fingers crossed imminent, right, for power land. We already have a plot of land secured in Vietnam that is already data center shovel-ready towards RFS, Batam and of course, Australia now with Alinta already in the portfolio, and we are getting very strong request inquiries.

So -- well, I don't use that word, but looking at growth along these strategic themes are important. Others will obviously be along the tailwinds of what we have always done well. I think we are in the theme of energy transition. So continue to be focused on allocating capital for the purpose of renewables growth is also important. But we'll be very careful of the markets that we are in. And right now, clearly, India is a key bright spot for that. And the capital recycling exercise will give us access to a well-priced cost of capital to allow us to continue to grow there, right?

And then other key themes will be, of course, Australia. I think Australia power fundamentals and also increasing demand, as Jeff has pointed out, coming through from the AI thematics will also allow us to continue to grow there, right? And then we also see the possibilities of looking how we could expand our LNG networks to take advantage of the core baseload markets that we are in. So this will be some of the key growth themes that we will still be looking at it.

Of course, if we drill down to our capital allocation thoughts, we have to be very selective, right, because the key goal ultimately is to be able to accrete our ROICs and ROE, right? So we will be taking that lens towards that. Now then, when we flip into the other key theme of capital management, I think we are quite comfortable to say that when we look at the base, the cash flow generation that we have, right, we would be very comfortable over the next 5 years to say that in the base case scenario, we would be more than ready to be able to delever the balance sheet, right, naturally.

Now then the speed at which we delever the balance sheet, of course, will be informed by the specific opportunities we see along those growth themes. But in general, we will delever the balance sheet. Now then in light of being able to delever the balance sheet, then are we able to increase the capital -- sorry, the cash flow returns to our shareholders. And we see an opportunity for us to do that quite comfortably actually, right, that we will be able to -- we have the capacity, right? I don't want to commit too far forward on any payout ratios or so, but we do have the capacity to quite comfortably catch up with our peers in a reasonable time frame.

Now you have always heard me talk about this. The cash cost of dividend increase to us has not -- has always been low, right? Every cent of dividend increase, you can do the math, is a $70 million increase, okay? And the reality is that from a funding perspective, we have always have a lot of cost of capital advantages in terms of our debt as well as our long-term bond capital markets. For example, we funded Alinta, right, close to SGD 6.5 billion of total debt on balance sheet plus new debt, right? And we are able to average down our cost of borrowings, right? We have funded SGD 6.5 billion using a 3.4% cost of capital.

So because of that, we do have -- we don't have a large equity base in terms of our funding, right? And hence, our ability to grow cash flow returns back to our shareholders is not very demanding from a cash flow standpoint, right? So I think when you put that into perspective, I think the goal would still be to pursue growth, right, along those key themes, but be very careful in terms of how we are focused on accretion on our ROICs and ROEs. And yet with the cash flow generation ability already in the balance sheet today, we still see the possibility of deleveraging and yet increasing our dividend.

So Eugene, Pei Hwa was asking about how else one might recycle, right? And you spoke about the purpose at the end of the day is to access capital if we need it so that you can recycle, right? Because as we grow, we become bigger and we're in a capital-intensive industry. So you want to be able to access capital so and to enable the growth, right, without having to come back to shareholders to ask for capital. But the other purpose could be also to access a high valuation opportunistically when the opportunity arises, just like in the case of, potentially India, right?

So -- but what other things inside the Sembcorp portfolio that can be open for recycling? Is it your IUS portfolio, your -- the ready-built factories, recurring cash flow? Is it the gas portfolio in Singapore? Is it the Alinta? I think she's asking for...

I think to put it very circumspectly, right, there will be a range of capital recycling options, okay? And to put it very bluntly, everything is available for capital recycling from an asset perspective, right? So it will always boil down to what is the cost of capital I'm able to achieve, right, in the capital recycling exercise versus the use of proceeds. So I think within the IUS perspective, you will notice that I don't speak a lot of capital -- significant capital. incremental capital deployment into IUS because in the particular LOB itself, we see many capital recycling opportunities. I think one of the key things is that for the water portfolio, exiting lower returns municipal type plants and then redeploying it or increasing capacity to organically grow our industrial water plants is there, right?

I think in the urban business model, it is already, to a certain extent, self-capital recycling, right, in terms of the land bank. And also as we build up the RBFs, we are already looking at the possibility of capital recycling some of the already built factories and really built warehouses ahead of time. So that's for IUS. I think on a broader team, more across the renewables portfolio, we will selectively look at the capital recycling. I think at China, even given its situation right now, it is always a target that we'll look at for capital recycling.

I think more broadly, across Australia, because of the significant opportunities that we see, right, we will have to think of structures to fuel growth, right? And many of these capital recycling opportunities will probably come in the development of the renewables portfolio. We certainly may not see the need to hold 100% of the equity of the renewables portfolio as long as we have the electrons for distribution, right? So that's one possibility, right? And as we look at the possibilities of scaling in assets as a result of AI-driven growth, then we will look at capital partnerships for capital recycling as well. So I think more broadly, I would characterize it that way.

Yes. So again, we are very clear what is the purpose, right? Are we divesting for managing exposure? Are we divesting to recycle capital? Are we trying to access capital? Or are we trying to access valuation? So we -- the purpose of doing it will be very clear. And then the short answer to your question is that actually, the -- we are here to manage value. So to the extent there's an opportunity, we will -- we are open to all those possibilities. So Eugene described a wide range of it. And I'd be very happy to hear your feedback as to whether or not you think the -- especially analyst community, when you look at so many other peer group and you look at us and then say, which are the ones that we can think about, we're very open to that suggestion. We took a long time to answer that. I saw hands from the back, so we need to...

I'm Sharon See from The Business Times. I just have a follow-up question on capital recycling actually. Specifically in China, you highlighted that some regions remain challenging like Hunan and Ningxia. Are there any plans to divest the underperforming assets there? I think in the previous briefing, someone also asked if there's any impairment risk? Like what's your assessment of that? Also wanted to ask a second question about DC-CFA2. You mentioned that you are involved in supplying power to some of the applicants. Are you providing purely gas solutions? Or are you also involved in providing the green component that's mandatory like biomass? And if it's biomass, could you share a bit more color on like where are you procuring your feedstock from and what type of biomass?

I have a third question on power import projects. So you have conditional approvals now for the Johor one that was just announced and also for Sarawak and Vietnam. Do you have any time line on when the CAs will progress to conditional licenses? And you mentioned that the costs are very high and Sembcorp also has experience in this import business with the ENEGEM project like -- so given your experience, what breakeven time line do you expect on these projects? Yes, especially for the Johor one since you are developing your own floating power plant and then also for the others?

First, China. When things are not going well, generally not the best time to sell, right? You'll be selling it at a discount. And do we need the cash back? We don't, right? I just told you that we have strong cash flow and all that. So if somebody comes along with a proposition that can help to enhance value with a merger or something like that, that's a possibility. But the short answer to your question is that I don't think it is top on the priority list to sell China now, right, especially we have a not a very good first half in terms of resource. We are experiencing tariff reform. We've still got curtailment that we expect with the build-out of transmission liquid ease. So we are not in a hurry to do something like that when there's no gun to the hit. So that's China, if you ask me.

But we are managing it carefully to make sure that we have as much as possible, matching cost structures to the revenue structure, right? And that's something that we will continue to do and also to make sure that the assets remain in good condition. And so that then when the right time comes, then we can consider. But today, since you are from BT, I expect they'll be writing something. So if you have to quote me, I would say that we are not -- selling China is not a priority in the immediate future, that means the next 6 months.

In terms of the DC-CFA, I'll ask Eugene to help me. Power import in terms of the timing -- and again, I think the -- I don't have a fixed timing in mind. These projects have their own life in terms of the -- it takes on its own life. That's the right way to put it. So what we want to do is to make sure that we are ready when the stakeholders are ready, right? But today, what I've said just now, I stand by is that today, what is being talked about as the power price, we do not see a match between what is the cost from upstream matching the cost or the matching the desire to pay from the downstream, which is our customers.

So in other words, we are standing in between and we're saying that, "Look, we will be talking to upstream exporters, right?" We are the importers. Exporters are telling us this is the price that they need in order to sell the power to us. And when we look at our customers downstream, when we talk to them, they are not willing to pay the price that is being demanded upstream. So we -- again, if you have to quote me, you will be -- we have to wait for the right opportunity whereby there is a matching between the upstream and downstream expectations in terms of price, right?

So -- and then how long it would take, I do not have a crystal ball to address that. I'm sorry about that. But what we want to do is that -- we think eventually it will come, and we want to position ourselves to be there when the conditions are matching. DC-CFA?

I think on DC-CFA2, clearly, if you look at, in general, the requirements of DC-CFA2 -- or maybe I'll ask Chiap to help me answer that.

I think the question is whether we just offer the green -- the gas, no, it's a bundle. So as you know, we also issued bio-methane pilot scheme. We have also the whole suite of other things in the green part. So as a proposal, depending on the customers, we do customize all the green solutions together with gas for customers' needs, yes. Yes, it will be important. And in our scheme that we have submitted is actually from different sources. We are still working on the sources.

Thank you very much. I'll just take several online questions. Most of them have actually been answered through the questions raised by the analysts as well. But in terms of the Gas and Related Services segment, there's a question on the assumptions behind the higher net profit for the second half of this year for GRS. Is it because of the start-up of the new 600-megawatt plant? And also what's the rationale for acquiring a 20% stake in Aster Power?

You want to...

Yes, I can answer the first question. Thanks, [ Yuan Long ], for that question. I think the first thing first is that we can't think of our Singapore gas business as, okay, we are adding in a new a plant and immediately, there will be a step-up of earnings that will come because it comes a contracted -- a new contract that comes with the plant, right? We have to see it as Singapore has a strong portfolio of contracts ranging from very long term to short term, and we will have a generation fleet. And then the generation fleet will then fulfill those contracts in the best way that we can together with our gas portfolio. So that is the right way to think about it.

So in the second half, as the CCP 4 comes in, how does it add to the portfolio? So I would say, number one, there will be a heat rate efficiencies. So you would imagine that we would be running the CCP 4 at base load. And hence, as a result, the hit rates that we will be able to achieve is lower. It's almost 10% to 15% lower compared to the current F-class machines. So that will translate to a better -- more efficient cost usage for the purpose of generation. So that's one element.

The second element will be, if you recall, early on, I mentioned that we will enter into second half with higher contract levels, probably about between 100 to 200 megawatts more, right, for Singapore. So these are contract levels that we'll be generating for that was not contributing in the first half. So the higher contract levels on the contract side of things would also help to improve the profits. And the third thing is, you also have heard me mention earlier on, we have excess gas coming into our second half, which means that we have more gas than our contracted portfolio, right? So with that and the CCP4 currently in the portfolio, we do have additional generation capacity for us to optimize the excess gas, right?

And our options are to do that, which we were -- was not there in the first half, was to either generate more than our contract levels into the pool if the spark spreads make sense or we could monetize the gas by selling it if the implied margins spark spreads make sense. So it's a combination of these 3 elements, which was not there in the first half that will essentially drive our second half to have stronger profits than the first half.

And above and on top of that, the -- of course, we just told you that in July, we are seeing the spark spreads increasing, right? So multiple dimensions, some are locked in or we can count on, some are market related, but we are quite confident that all these things, a good part of it will come through. Rationale for acquiring 20% stake in Aster is very simple. As part of that, they are signing us with exclusive gas supply contract that -- a contract that we're very happy with. So the gas supply contract is a very -- it is actually the important part of the deal.

Two other questions on Alinta. The guidance is for $100 million contribution in terms of net profit for the second half. What proportion of the earnings are anchored by long-term commercial contracts versus retail contracts? And then in terms of the Alinta completion, have you identified which renewable projects you'll be pursuing over the next 12 to 24 months?

I think why don't I answer question 16, the second one, and then I'll ask Jeff to answer the first one, okay? So I think in relation to the renewable projects that we will look in the next 12 to 24 months, well, some of this is already publicly known in Alinta's own press release. We would be looking at a 100-megawatt or 212-megawatt hour battery at Wagerup, like there's one. We will also be looking at another BESS project, which is the Reeves Plains 1. And in addition to that, you would have also seen in Alinta's press release that we have actually signed a long-term PPA with Watercorp, right, which will underpin a wind farm that what we call the Marri Wind Farm close to 500 megawatts. So that will be developed as well. I think from a COD time line, the Marri Wind Farm probably won't be in the next 12 to 24 months. But essentially, this will be the key projects that we will be looking at.

I think I just want to also caution that Atlanta is a big portfolio, right? So each of these businesses or these projects, some are committed, some are not. And that we want to -- as much as directionally, we are there to support the growth and the energy transition of the business as well as of Australia. We will be evaluating each one of these projects on a stage-by-stage basis. So that's something that I thought I need to be clear about in case. I don't want you to be -- just based on what we're seeing here, then start to build all these things into your model with the full CapEx and then with some earnings and so on. We will go through that in stages.

And just like in the Singapore portfolio or elsewhere, we will inform you when the key milestones are reached. Just like we won the bid for Taweelah C. We signed a contract for Taweelah C. Along the way, we will announce it, right? So this -- but I think what Eugene is confirming is these are projects that are in the pipeline, right? And that it's one of the reasons why, when we looked at the investment into Alinta, we know that they have a strong pipeline that we can come in to support.

Okay. Then the question that we will ask Jeff's help on is to -- in relation in the second half for Alinta's core earnings, how much of those earnings is anchored by long-term or retail or commercial contracts versus basically taking spot volatility in the spot markets.

So the short answer is predominantly all secured for the next half. So either through customer contracts. So we don't have any major renewals coming up in that period. So customers are secured away. We continue to receive payments, capacity payments, for generation that we have in the West, and our portfolio is predominantly hedged for that period as well. So the outlook, I would say, from our perspective is quite secure.

And Jeff, if I may, just to clarify because you can't see the question here, but the question says that are these long-term retail commercial contracts. And I think the nature of the contracts in Australia in the case, they are -- none of them are like 10 years, right? They are all sort of in the 3-year range, 2, 3 years.

1 to 3 years -- so the average duration in the book would be approximately 2 years on average, made up of 1-, 2- and 3-year contracts with the exception. Eugene spoke about the PPA with the Water Corporation. If we go ahead -- and that's conditional on us building the Marri Wind Farm. So if we get to FID on that, the PPA will be for 15 years. So that will be a bit of an outlier.

Right. So for the second half of the year is covered by contracts, right? But these contracts, they are of a 2-, 3-year tenure. So just to be clear so that -- okay. Thanks, Jeff.

There are no further questions online. We'll take one last question from the floor. [ Tawi ], thanks for your patience.

Tawi from The Age Singapore. I have 2 questions. Firstly, relates to the Alinta loan. With the Australian dollar rising, how does it impact financing costs? Secondly, relates to Wilton U.K. I understand it is still very early. You are still doing the proposals or bidding. But of course, before you decided to pivot, I'm sure you all have calculated what are the returns. Could you share some insight into what are your calculations?

I think I will -- on your first question is in relation to the -- basically fixed versus floating of the Alinta financing, right? So when we look at the Alinta financing, SGD 6.5 billion, close to SGD 4 billion of that is really and then the remaining is in Australian dollars. So you're right. I think in general, we have seen base rates in Australia rising. So we -- our inclination is to hedge the Australian dollar base rates so that we don't take a lot of base rate risk in terms of the Australian dollar funding.

On the Singapore side, we are taking a more balanced view, right? Because when we look at the Singapore SORA, it has been fairly benign. So we are basically looking at our options in relation to hedging off our Singapore base rate exposure. given the fact that it is benign. So -- but in general, we still prefer more fixed than the floating. But of course, we will be quite judicious in how we approach hedging the Singapore dollar portion. So that's the question on hedging.

Wilton returns, because it is an existing site and it is existing assets that we're leveraging on, suffice to say that the returns will be very high, right? Because the book value written down is already written down to very low levels, right? In terms of new investment going into it, it will obviously have to make sense before we will put in any new investments. But when we talk about 280 megawatts of powered land that is ready by 2028, it is through the transmission grid and the substation that is really there.

So with the chemical customer having vacated the land, the transmission capacity is still there, right? So not much additional investment has to go in, right? So what we're doing is that we're selling the land together with the transmission capacity if the customer comes along and offers us the right terms, right? So in that type of scenario, because of the lower investment going in, in the front end, the return should be very, very high because the denominator in your return calculation is small.

Now having said that, this will be the first phase. And we obviously have the ambition to go further beyond the Phase 1, right? And if the right customer comes along, as I say, then the Phase 2, in order to serve the customer need, we would need to involve new investments into new power plants and so on and so forth. But that is a happy situation, frankly. And we are taking it a phase at a time.

So right now, Phase 1 is shovel-ready -- borrowing Eugene's phrase, shovel-ready powered land, very rare in the U.K., and we will take advantage of that in order to secure a longer-term future for the sites. You're not taking further questions, right?

No more.

I think it's a bit late. Thank you for your patience. Before you go, if you just have to remember 1 or 2 things coming out from this session. I think for us, at least my own lens is that the highlight for this season is actually first, the Alinta, right, the completion smoothly for Alinta and then having seen it contributing to the group's earnings base. And the second thing is that the second half, we are -- we see all the catalysts and all the reasons why we are very confident about the full year being good, right? So the second half will be much better than the first half. So that's something that we described all the things that we mentioned to you just now.

And that anchors the confidence that we will continue with our commitment to sustain the growth in our dividend even while we deleverage, right? So Alinta, second half as well as sustained dividend growth for deleveraging. So those are the few things that I would offer as the takeaway. Certainly, something that I would like you to take away from this session. So thank you very much.

Thank you. This brings us to the end of today's presentation. Thank you very much for joining us again, and we wish you a pleasant day ahead.

Are you serving lunch. So there's some buffet out there if you're hungry.

Ladies and gentlemen, a very good morning to everyone joining both in person and on the web. Welcome to Sembcorp Industries Full Year 2025 Results Presentation. My name is Xin Jin from Group Strategic Communications and Portfolio Management.

Before we begin, may I request that all mobile phones be switched off or set to the silent mode. And if you feel unwell at any point, please approach our staff for assistance.

Joining us on the panel today are our Group CEO, Mr. Wong Kim Yin; and our Group CFO, Mr. Eugene Cheng. There will be a question-and-answer session following the presentation.

Without further delay, I will now hand over to King to begin the presentation. Kim Yin, please?

Thanks, Jin. Good morning. very happy Lunar New Year to everyone. Let me now quickly get into the results of 2025. Now before I begin, I want to also set the stage. Compared to 2024, we have had -- those of you who have been following us would know that we have a significant headwind in 2025, right? The margins in Singapore has been under a lot of pressure with the increase in the supply in the Singapore market. That's the first one. In our U.K., margins -- so volume also come under pressure. China renewables continue to face heavy curtailment as well as pricing pressure. So despite those headwinds, we were able to offset the impact from those and came out in a resilient outcome, which is you can call it flat, but it is not without effort that we can get with the $1 billion mark.

So for consecutive years, we stay at that level. And that has given us that the confidence to come out and say that, hey, look, the underlying cash flow and the business is strong and resilient. And actually, the cash flow is growing. And because of that, we convinced the Board to allow us to increase the dividend. It's just an indication. It's not much of an increased $0.02 out of $0.25. It is still we recognize that we lack our peer group in terms of dividend payout, right? But now that, again, we are operating [indiscernible] platform, this normal new normal that may not be new, we have been 3 years, but I think everybody is convinced that we have the underlying capability to increase our dividend to close the gap between ourselves and our peer group, right? So the idea is that in terms of returns, one can look forward to them.

And then the second thing is that in terms of growth, we show you that in the year, we are pending the completion of a major acquisition in Australia, opening up a new market for growth, a new platform for growth that is of scale, right? So returns and growth. That's the message. If I want you to take away 2 message, please, those will be the 2 messages Yes.

So then now let me then go through some of the details in 2025 performance. The turnover was $5.8 billion. Adjusted EBITDA, $2 billion. Underlying net profit, $1 billion. So easy to remember 6, 2, 1. That's how I remember the minus around numbers. Underlying earnings per share of $0.564, ROE 18.2%, right? So as I mentioned just now, we proposed a final dividend of $0.16, bringing a total of the year to $0.25. This is compared to 2024 to $0.23, it's a 9% increase. And again, like I said, we recognize the gap in terms of payout ratio and dividend yield from our peer group. And the idea, the intent is that over time, we're very comfortable and confident that we will close the gap.

Then into the business segments under Gas and Related Services, earnings of the group continue to be anchored by Gas and Related. Within the segment, the Singapore portfolio contributed $538 million in net profit or 77% of the GRS segment's net profit.

A combination of long-term contracted portfolio as well as the incremental contribution from Senoko Energy provided the anchor for the earnings in 2025.

During the year, in the last year, we secured 370 megawatts of long-term contracts, of which 150 megawatts was from Micron, which we announced in January this year. So we continue to execute this strategy to capture demand from data centers and high-tech manufacturing customers.

As of February 2026 right now, close to 80% of Sembcorp's portfolio is contracted for 5 years and above while the Senoko Energy's portfolio contracts are short term. So in 2026, just to go a bit further 5% of the Sembcorp portfolio will have to be recontracted. While about 50% of Senoko Energy's portfolio must be recontracted. So we expect that, of course, lower blended spread for the new contracted volumes, right? So 50% of Senoko, 5% of the same crop portfolio. So this impact will be partially offset by operational and financial synergies from both portfolios.

Then in the fourth quarter of this year, 2026, the commissioning of the 600-megawatt hydrogen-ready power plant is expected to take place. It is highly efficient. and that will enhance our fuel and cost efficiency of the entire fleet. During the year 2025, we've also secured long-term PPA for Sembcorp Salalah independent water and power plant. This 10-year contract will commence from April 2027. The previous contract which is currently running is over a 15-year contract in expiry in April. So we secured another 10 years, and that will provide the stability coming in from the contribution of Oman.

So the Middle East is entering a new phase of rising energy demand driven by industrial and digital hubs that require reliable uninterrupted power. We have extensive experience operating critical power and water infrastructure in the region, and we will selectively pursue growth opportunities in the Middle East.

Moving on to renewables. During the year, we maintained the pace of growth in the selected geographies, adding 3.6 gigawatts of new capacity to our portfolio compared to the end of 2024. The earnings from the renewables and increased 5% year-on-year. This is despite the contribution from China renewables declining to $74 million from $89 million in 2024.

In India, we have seen improved contribution from the existing fleets as well as from newly commissioned megawatts. During the year, pipeline continues to grow in renewables. We acquired 300 megawatts of solar capacity and secured 1.5 gigawatts of greenfield wins comprising hybrid projects round-the-clock projects, firm and disputable renewable energy projects. We are actively exploring capital recycling [indiscernible] in India.

In the Middle East, we successfully entered the wind market in Oman with 125-megawatt greenfield development project underpinned by a 20-year PPA. In Singapore, we were award solar projects totaling 236-megawatt peak including 2 floating solar projects, reinforcing our position as the country's leading floating solar energy player.

In Southeast Asia, we completed the acquisition of the 49 megawatts hydro project in Vietnam and a 28-megawatt solar and energy storage portfolio in Indonesia, which is currently under construction. So our total group renewable capacity is now 20.4 gigawatts, of which 5.4 gigawatts are secured, either under construction or under advanced development. This 5.4 gigawatts of new capacity will progressively come online between 2026 and 2030.

Integrated Urban Solutions net profit for the IUS segment was stable. Earnings from our Water segment was stable while contribution from the other divisions were lower due to the absence of contribution from Sembcorp east or SemEnviro. Obviously, we closed the deal to divest the SemWaste was in, was it February? March 20, 2025, so it's been some time. So compared to 4 that the contribution from SemWaste is, of course, no longer.

The urban business continued to secure new industrial projects, bringing our total gross development land area to over 16,000 hectares. In Vietnam, we secured 4 new investment licenses, and this brings the total number of projects in Vietnam to 22. In Indonesia, we are developing the 500-hectare Kendal Industrial Park Phase 2. Remember that Phase 1 is almost is mature and most of the land has been so now we're moving on to Phase 2 with 500 hectare. And we are also progressing on the development of the 100-hectare Tembesi Innovation District in Batam.

We have also doubled our leasable gross floor area to 1.1 million square meters from 0.5 million square meters in 2024. So this -- and the occupancy rate of our operational industrial properties increased to 96% from 76% as of the end of 2024. So the in terms of both growth in square meters and also in terms of occupancy rate, the IUS team has done well to improve the performance. So this will particularly this area will further strengthen our recurring income coming up from IUS. So we will continue to review and sharpen our portfolio as we did through the sale of SemWaste and the divestment of municipal water business in China during the year.

The long-term fundamentals of Sembcorp is very strong. We are in the right places. We have got secured cash flow through contracts with high-quality customers. And later, Eugene will show the underlying cash flow coming from the Singapore portfolio and then post-completion inter portfolio is actually very, very robust. But in the near term, we are facing some headwinds, which shouldn't be new. These are the things that we experienced in 2024. But in 2025 or rather in 2025 and 2026, we want to flag that in front of you and give you a little bit more color what we would do about them.

In Singapore, with the new supply come on stream, we can naturally expect without spreads. And since 2023, you know that we have been transforming our portfolio by leveraging our position as an integrated gas and power player as well as the largest renewable player in Singapore to secure long-term contracts. So what was previously very merchant heavy portfolio is now largely contracted one. Of course, I'm speaking about the Sembcorp portfolio, not the Senoko Energy portfolio. Now Senoko Energy, we will go in there and try to add value as we did with our own portfolio, but the good thing is that we got it at a price at an investment level that is very comfortable, notwithstanding the merchant nature of the business, right? But as a portfolio, there are significant synergies in terms of financing, in terms of operations, in terms of how we run the plant. For instance, we can sign a hedging contract with Senoko and to provide insurance so that then we can aggressively contract our baseload high-efficiency units in the Sembcorp portfolio. So there are significant synergies. We bought Senoko a very attractive valuation. And in combination, we are now the largest fleet of gas-fired power stations in Singapore, together with our integrated gas portfolio and as well as our position as the largest renewable player. We are very well positioned. We think that we are highly competitive and the diversified portfolio will position us to capture the growing AI demand in Singapore, particularly from data centers and high-tech manufacturing sectors. Go off script a little bit.

When we say, today, there's a lot of hype about AI shares, share price of some of these companies, tech companies are very high, we're not in that game. But by the time the AI demand translates into energy demand, and it translates into a contract with Sembcorp. That is a solid demand because that demand for energy is coming from Micron, is coming from data centers that are hyperscalers with good credit profile, right? So we are sort of on the receiving end of it. I'm not saying that we are an AI company now. But by the time we receive the demand translated from all the noise in the market, it is actually a very, very solid demand that we are capturing, right? So the important thing is that we are ready to capture it. And what we are saying here is that we are very well positioned to capture that demand.

If I move on to China, of course, we will continue to face the tailwind and tariff pressures alongside with the recent cancellation of value-added tax refunds for onshore wind projects. So these are developments that will affect the entire sector, not just us. Now we will remain very disciplined in managing our portfolio exposure in China in terms of thinking through project additions or even divestments. We will allow time for expansion of transmission network and also pursue contracts to try to stabilize earnings. Having said all that, to put things into perspective, by now, if you look through the numbers, China is a relatively small contributor to the entire picture. right? And as I mentioned just now, notwithstanding the headwinds and the lower contribution and the recent contribution in the last couple of years, we were able to plug the gap to other means.

The last one is the U.K. The closure of our key customers' operations, particularly SABIC is driven largely by weak economics, of course, in the industrial sector as well as in the U.K. in general. We are driving active cost management and repositioning the business to capture data center opportunities. We'll talk a little bit more about why we think we can capture that in the next slide.

So I mentioned just now that we are -- we believe we're well positioned to support the region's accelerating AI-driven energy demand. So allow me to take a little bit of time to elaborate.

Our Gas and Related Services provides reliable baseload energy. We are well positioned to capture more demand from new data centers as well as the semiconductor sector. As we have shown you, we now supply almost 700 megawatts of the high-tech manufacturing sector, which includes also the recent 150-megawatt contract with Micron.

Our Renewables business delivers tailored green PPA solutions and long-term renewable energy supply for high-demand industries to meet their clean energy targets.

Contracts secured include the supply of power-backed renewable energy certificates to day 1 20-megawatt data centers under a 10-year PPA. So data center day 1, 20 megawatts to a 10-year contract. That sets the tone of what we can expect moving forward as more new data centers get planted in the region, particularly in Singapore.

We have also signed a 25-year renewable energy purchase agreement with Meta Platforms, and this is to build, own and operate 150-megawatt footing solar farm in Kranji. And finally, under the IUS business, we provide low carbon infrastructure to customers, and we are able to develop sustainable data center infrastructure with partners to supply land and power along with other green services. So within the Tembesi Innovation District in Batam, Indonesia, we can accommodate up to 100 megawatts of data center capacity. For those of you who are familiar, Batam, of course, is really seeing the action of fiber coming in from companies such as Singtel. So it is not whether there will be data centers, it is when and on what size, right? And what we have there in Tembesi is a really 100 hectares of plan ready to connect up to all these data center demand.

And in the U.K., Wilton offers 138 hectares of ready land with immediate grid connection and supporting infrastructure. And that is naturally attractive for potential data center developments, right? Because as you know, for data centers, one of the biggest constraint is the power supply right? And if you in a place like U.K. or for the matter, Singapore, Australia, places like this, bring a new substation and a high-voltage cable to supply newly increased demand from data center that will take time. So the existing infrastructure, existing land will provide that opportunity. So together, in renewables as well as in U.S. Sembcorp is actually a very attractive comprehensive energy and infrastructure partner for the AI players. By integrating reliable baseload scalable renewables and sustainable urban solutions, we will capture the region's growth while enabling our customers to accelerate their decarbonization and digital transformation ambitions.

I shall not go through this. And in the script that Jin has given me, I think what I want to emphasize before I hand over to Eugene for the detailed numbers is, again, first, in terms of returns, you can -- we are expecting that we will be able to improve our dividend payout ratio and dividend yield steadily over the coming years. And this year, the $0.02 increase compared to 2024 is just an indication, and we have deliberately been quite prudent given that we are pending the closing of a major transaction in Australia, right? So to close the gap in terms of dividend yield and payout ratio compared to our peer group. So that is the first thing.

And the underlying cash flow, I have explained where our balance sheet and cash flow position we discuss the Alinta acquisitions a month ago. But if we need to provide elaboration, again, I'm happy to do that later. But suffice to say, we're very comfortable with our balance sheet position. We have very strong cash flows coming in. In fact, we struggle to find the type of growth opportunities like Alinta where we can deploy the cash flow. So naturally, either you grow or you we want shareholders return it to them in the form of dividends. So that's the first thing.

And the second thing is that in terms of growth, we have immediately in front of us Alinta, which we will hopefully complete sooner than later, but certainly, we expect within this year, if not the first half. And Alinta will provide at least for the next few years, a significant scale market and a significant growth capabilities. We have a very strong management team now under to help us grow the entire energy portfolio. The lease of it is a 10 gigawatt renewable pipeline that they have already identified, right? And in addition to a very energy staffed high demand growth, Australia energy market. So certainly, in the next few years in terms of returns and in terms of growth, we are quite set up for that. So that's the picture that I want to leave with you before I hand over to Eugene. So Eugene, please.

So I'm glad, as Kim Yin has highly as I pointed out earlier on, I think 2025 was the year the half year earnings announcement that we are seeing some headwinds but we were quite pleased that as we close -- 2025, we were still able to close the year strong, right, keeping to the $1 billion underlying or net profit earnings relative to 2024.

Now on this slide is basically the group-level statistics, and I will talk through them. I will use one particular slide, which talks about the net profit of the different segments, right, to elaborate more in terms of the specific performance.

Now if we look at a headline from a turnover and EBITDA standpoint, we did see a commensurate 10% decline across both of them. I think from a -- we already know the key reasons for that, right, in general, in Singapore. We did see, in general, lower spark spreads for the renewed contracts that took place towards the latter part of Q2 that also carried through for the rest of the year.

And also in addition to that, we also saw a high cost power import contract that continue to weigh us down. And also, we did see some compression of gas margins and also the absence of a roughly $10 million to $15 million of gas upstream curtailment gain that we had in that was not present in 2025.

Now in addition to that, we also saw weaker price and customer demand across U.K. in the U.K. Wilton gas business. For 2025, we were hedged on contracted forward prices at the end of 2024, which was weaker relative to what was hedged for 2024 at the end of 2023. In addition, we also saw the petrochemical sector, which is a significant part of the current customer base in New Berlin. that has seen weakening. So in general, customer demand has been weak as well. So we did see a weaker [indiscernible] in the U.K.

Now of course, we also were impacted by the loss of contribution right from SemWaste after we have divested debt in March of 2025. Now this is partially offset by new capacity that has been commissioned in renewables right across India, the Middle East as well as Southeast Asia where we completed the acquisition of the 49 megawatts of hydro project in Vietnam. Of course, that is offset by some curtailment issues that take place that continue, particularly in the Guangxi province of our control portfolio. So the effect across the turnover of EBITDA.

Now our share of results of associates and JV increased markedly by 57% or $180 million. Of course, this is driven by Senoko's full year contribution of 30% and an incremental 20% for half year. Now from a Senoko standpoint, this is -- this contribution is also offset by renewals of roughly 20% of its contracted portfolio in the latter half of 2025.

Now just to give you a sense in those rounds of contracting, we essentially saw the recontracted spark spreads come off quite partly, right, we were contracting between $30 to $35 spark spread for that renewal and -- which essentially came off highs of $70 to $80, which were contracted more at the '23 period for them.

Of course, I will touch on later on because there continues to be recontracting taking place, as Kim Yin highlighted through 2026.

We also saw in the VSIP portfolio, we saw a higher contribution, right? Part of it is as a result of a fair value gains for the completed RBF projects within the VSIP parks that we own. But this is offset by some land sales weakness in the Central Vietnam. The fair value contribution was $27 million, but I'll talk about it later on, later. And it's also offset by continued China curtailment in the SDIC portfolio.

All in all, adjusted EBITDA, it's about 2% lower compared to FY 2024, $2.016 billion compared to $2.050 billion and our net profit before exceptional items and the DPN FX is a $1.003 billion relative to $1.014 billion.

Now we did realize a noncash FX for the payment note in 2025 of $154 million, right? This is roughly about -- coming simply from a roughly 10% to 11% depreciation of the Indian rupees relative to strengthening Sing dollars. When we compare the rate in which we mark-to-market or rather translate the DPN balance from India rupee to sing dollar, the rate used in -- as of 31st December 2024 was compared to the rate used at the 31st December of 2025, the rate declined roughly 10% to 11%. Of course, this does not indicate any cash flow impact, but it's really a mark-to-market.

Now as highlighted previously, hedging the balance of the deferred payment note, it's dependent on 2 factors: number one, the visibility of cash flows. Now the deferred payment note is largely on availability of cash sweep model, right? And as a result, putting in place hard forward cash flow hedges effectively from an accounting standpoint, we will not result in an effective hedge, right?

I think the second element also throughout 2025, when we look at what is the forward cost of hedging. The forward cash flow cost of hedging is -- well, will result in a worse outcome than the market. And if we do put on those hedges, it will be real cash outflows. So as a result of that, we did not put in any form of forward contracts as a counterbalance against the rupiah swings here.

Nevertheless, $154 million is really a onetime mark-to-market. It does not indicate any cash flow impact in the current cash flow generation capabilities of the portfolio.

We have an exceptional items gain of $135 million. So that comes largely from the sale of SemWaste, also included in the sale of SemWaste in this sorry, exceptional items was the positive goodwill or bargain purchase option gain as a result of the second tranche completion of the Senoko attraction. This is offset by roughly $28 million -- $28 million to $30 million of some asset impairments that we took across the Southeast Asia, where we made the broader decision that we will not continue with the [indiscernible] business, where generally it's a very small part of Southeast Asia currently.

Now -- so all that results in the net profit from continuing operations, taking into account the DPN and FX loss and the exceptional items of 984 million, right, a lot of which is driven by the DPN FX impact.

Now our ROE from a more underlying basis, right, before exceptional items and our DPN FX loss is 18.2% relative to 20% last year. Now there are some capital drawdowns that were not -- that took place in 2025, particularly in relation to CCP4 and also continued capital deployment for our pipeline and also certain projects that came online, but were not contributing on a full year. I will illustrate what the effects are those from a normalized basis on a slide later.

Now I won't touch so much on the broad group turnover because the reasons are largely about was what I've highlighted earlier, I want to move on to the next slide, which illustrates the group net profit by segment.

Now for the Gas and Related Services, with $2.701 billion, which is a 4% decline relative to [indiscernible] in 2024.

As Kim Yin has shared in the earlier slide, the effects can be broken largely into two, right? So for the Singapore Gas and Related Services portfolio, FY 2025 turned in $538 million relative to $546 million in FY 2024. These numbers are there. It is just in Kim Yin's earlier slides, okay? So that is approximately an $8 million decline.

Now there are basically two effects here, right? One contribution from Senoko and the other one is the continued margin pressures that we see in our Singapore only portfolio. I think throughout 2025, as highlighted in the first half results, we did see roughly 10% of our portfolio recontracting 90 to 100 megawatts from Sembcorp portfolio that took place at that point in time. We did see spark spreads coming off down to the $30 range which was coming down from the high of the $80 to $100 range that was previously contracted. So that carried through full year, and the impact from the declining spark spread was about $60 million to $70 million on a full year basis.

Now we also saw the high cost power import contract that we signed and disclosed at the end of December 2024. The run rate impact in the first half carried through for the full year as well. So in the first half, we highlighted it was about $20 million so that continued to weigh down the portfolio.

We also saw some decline in gas margins. And also in addition to that, there was a one of a curtailment compensation gain in 2024 and about $15 million to $20 million that wasn't there in 2025. So these are the impacts on the ex Senoko portfolio.

On the Senoko compensation, largely across the Gas and Related Services, just EBITDA disclosure, you will be able to largely look at that number. But again, as highlighted earlier on, we do have to bear in mind that in Senoko's 2025 numbers, particularly in the second half, it has been impacted by roughly 20% of the portfolio that has been recontracted. Now they have been recontracted at $30 to $35 spark spreads as well, right? And that has come off similar high levels of about $70 to $80 a spread that was contracted before.

And as Kim Yin has highlighted in the pie chart earlier on, we expect to see close to 50%, roughly 47% of the Senoko portfolio that will be recontracting from the second half onwards. So all in all, we do have -- we believe, based on our visibility right now, those recontracting levels will largely be at a $30 to $35 level as well, coming off similar highs as highlighted. So that are the visibility that we have on the Senoko earnings.

Now on the rest of the world earnings, with $363 million, relative to $182 million for the Gas and Related Services segment. So that's about $20 million, $19 million to $20 million decline.

Now the rest of the world gas earnings were historically largely very stable. But I think this year, we saw a $20 million decline largely as a result of U.K., right? Now as highlighted earlier on, U.K. did see two effects [indiscernible], number one, basically lower power prices, right? And secondly, lower customer demand as well, particularly the petrochemical customers in the U.K. One of them SABIC did not return, right, for its olefins plant. And we do expect the weak customer demand potentially to carry through into 2026. So that's for the Gas and Related Services segment.

Now for the Renewables segment, from a net profit standpoint, right, we turned in $192 million, which is 5% higher than $183 million, which we close FY 2024 with. Now again, earlier on, we have broken out this segment into China as well as others. Let's talk a little bit about China. So for China, it's FY 2025, we turned in a $74 million net profit versus $89 million in 2024. So it's a $15 million decline so there are two key effects to that change in net income.

So firstly, it is continued curtailment that affect the China portfolio, particularly in the northwestern side of the portfolio. I mean to give you a on the average China curtailment that we have across our portfolio, in FY 2025, our average curtailment for the wind portion of the China portfolio was 14% versus 8% in 2024. So it's a very significant increase in a curtailment. And for the solar portfolio, it was 16% average of tailwind in 2025 relative to 9% in 2024. So also commensurate increase in the level of curtailment. So the impact of curtailment on the China portfolio in FY 2025 was approximately $30 million in net income, okay?

But we did see a capacity increase in 2025 from project pipelines that were coming through. Gross capacity, we added about 900 megawatts, right? So the increase -- the capacity increased plus also some stronger generation that we see, right, in our high portfolio on the wind generation did result in a $15 million positive net income on a year-on-year basis. So the net impact of both, like curtailment, negative 30, but we do have some 900 megawatts of capacity increase and stronger wind generation in the high wind portfolio. That resulted in a net $15 million downside in our China renewables earnings.

Now in the others portfolio, which comprises of India, Middle East as well as Southeast Asia, we saw -- in 2025, we did $118 million relative to $94 million in FY '24. That's a $24 million increase. This is largely driven by 2 things, right? We did see a new capacity commissioning across India, Middle East. And also, we completed a couple of acquisitions, right? One, which is the 300-megawatt renew portfolio and also the 49 megawatts Vietnam hydro portfolio, though those were later in the year and did not contribute on a full year basis. So all in all, that contributed to that increase.

I think in addition, also, we did see a slightly better wind resource of performance across India as well. So that contributed to the renewables portfolio outside of China that saw a $24 million increase.

So if we move to the Integrated Urban Solutions, right, it is flattish across both from 2025 compared to 2024, $178 million compared to $173 million. But when we break across the 3 segments in Kim Yin's earlier slide, right, the urban business, $114 million relative to $101 million in 2026. So it's about a $13 million increase, okay? So the increase was really driven by about $27 million of fair value gains as a result of the ready-built factories and warehouses that are being commissioned. But this is offset by some land sale weakness in Central Vietnam. And as you will recall, one of the as that we have been very vigilant since the liberation day tariffs were announced was Central Vietnam, where the manufacturing activities of our customers tend to be lower value variety, right? And we all know that Central Vietnam in Vietnam itself basically from a labor perspective, they are of a lower level. So we did see a weakness in that segment as well. But across the northern as well as the southern part of Vietnam continue to see land sales to be strong, but -- and also across Indonesia.

I think Kim Yin brought up an important point. The -- coming through of the ready-built factories and ready-built warehouses did also increase our recurring income contribution in the urban business. Now in 2025, our recurring income contribution across infrastructure charges in the parks as well as a ready-built factories, it's approximately 20%, right? Net profit contribution from recurring income. This has increased markedly compared to about 10% to 12%, which 3 to 4 years ago. So the coming through of the ready-built factories has improved the recurring income quality within the urban portfolio.

As highlighted also by Kim Yin going into '26 and '27 going into '28, we would have a significant amounts of ready-built factory and ready-built warehouses to be constructed, right? And once that is done, we were some stronger recurring income contribution to urban.

In the Water business, $52 million relative to $50 million in '26, fairly stable, right? We did see operate cost optimization efforts in 2025. That turn into fruition. Approximately $2 million of cost optimization gains that hopefully would stay as run rate going forward. But at one point to note also in 2025, we did receive a one-off of $10 million receivable settlement for past receivable in relation to one of our not-so-well-performing municipal asset [indiscernible]. In 2024, we also have similar levels of one-off gains, right, but that was across [indiscernible] and another water plant compensation collection recoveries of past receivables as well as certain provision reversals.

The last element to talk about in IUS is really our waste and waste to energy business. We did see a decline of $10 million, and this is largely contributed from the divestment of the SemWaste business, which took place in March of 2025.

Now if we move one further down the line into the decarbonization solutions segment. So will we turn in a negative to be relative to negative 20% in FY 2024. One of the key elements of the $3 million increase in terms of our losses is a result of a write-off of a write-down of our RECs inventory value in [indiscernible]. I think in 2025, we have seen a marked decline in the value of the RECs. So we took off a meaningful write-off and that contributed to the increase in the losses.

Now in other businesses, we turn in $45 million relative to $38 million in FY 2024. Now other businesses, largely comprises our Sembcorp's specialized construction as well as the mint business. The main business continues to contribute to $1 million, $2 million of net profit. So it means flat. But our Sembcorp Construction business continued to accelerate in net income realization, simply because of growing order book. Order book for the Sembcorp Construction business is in excess of $1 billion currently.

So going further down the line from a corporate cost perspective. Now for interest costs, we were able to optimize that by about $10 million largely, and this is a corporate level of interest costs. Now we were able to do that because we did take efforts to optimize our cash usage to minimize negative carry. I think in addition to that, also we benefited from refinancing activities that were at a lower interest cost. We were also quite active in looking to rework some of our commitment fees, for example, with our banking partners, and this resulted in a reduction in our interest cost.

Our other corporate costs reduced by $25 million. So to give a greater clarity of that, $11 million of that on a year-on-year basis came as a result of a past tax provision reversals. That is in relation to our withholding tax provision that we made against a China dividend that was paid up, right? So the withholding tax provisions has gone past time bar, right? the time bar and hence, it was okay for us to release the provisions.

But $14 million of that $25 billion came through discretionary cost savings. So we were managing costs across professional fees, across travel, across manpower costs throughout the year, and that allow us to lesser cost. Now going forward, because these are cost management against discretionary costs, we will continue those efforts in 2026, but we may not be able to realize the same magnitude of our cost savings, but we will continue to be driving cost savings at the corporate level in those areas.

Now for the DPN income, that has come off $25 million, $159 million, down to $109 million. Now I think that simply is a result of a continued paydown of the debt balance in India rupee terms of the deferred payment note. I think one of the key things to highlight is the cash flows as well as the earnings performance of the underlying asset, which is SEIL, the coal blood continues to be very strong, right? People I may not have highlighted this enough. But from since the transaction incepted in January 2023, until today, total cash collected across both income as well as a principal paydown in Sing dollar terms is in excess of $1 billion, right? It's about $1.05 billion, right? So looking into 2026, we do expect a continued similar strong cash flows, return and paydown of the deferred payment note income as a result of CIL's underlying performance. But of course, that will also mean that our DPN income will continue to decline as we see a faster recovery of the principal.

So I think essentially, that largely highlights the differential performance across all the segments. and the DPN FX gain loss and the exceptional items I've touched on earlier on, so I won't go into more detail.

If we move on to the next slide. This is basically a bridge that highlights what I was talking about, so I won't talk through this slide again.

Now in terms of the group ROE, as highlighted earlier on, we did see a decline in the group ROE. Gas and Related Services was 32.1 in FY 2024, down to 26.4.

Now in ROEs itself, there are two effects. I think the firstly, it is the one, as we are talking about. But the second element also is we are incurring CapEx and drawing on capital particularly for CCP4, right? So in 2025 was the year where we incurred the larger amount of CapEx coming into 2026, where we expect CCP4 commissioning to take place towards the end of the year.

So normalizing for that, the ROE would have been better. Now for renewables, it's 7.4% relative to 8%, two effects. One of the permit is we continue to see curtailment elements way down the China portfolio. Also, we have projects that are commissioned that have not contributed on a full year. I would show the normalization of the effects on the next slide. And the Integrated Urban Solutions continue to be at 8.4%.

Now if you move to the next slide. Now if we look at the ROEs, as I highlighted, we do want to call out what are the capital draw potentially weighed down the ROE versus what it would have been on a normalized basis across the renewables as well as the group. For renewables, we did have 0.7% that comes from a combination of projects that were commissioned in 2025 that did not contribute on a full year basis, right? So if those projects contributed on a full year basis, we have been an additional 0.7%.

Now we also have certain projects in the pipeline that are under development have drawn down on CapEx and have not COD yet. So the impact of that is about it's another.2% on ROE. So the normalized renewables ROE would have been about 8.3%.

From a group perspective, on a similar basis, the contribution from projects that were commissioned in 2025 that if they contribute on a full year basis, that would have been a 0.3% impact. And projects that are under development, would have been at 1.8%. Now that looks a lot larger relative to Renewables because the biggest part of that is the CapEx that is drawn for CCP construction, which is expected to be commissioned in the later part of the year.

So if we move on to the next slide. This is to highlight the impact the translation impact of the strong Sing dollar across the different currencies [indiscernible] on our earnings. As you will recall, I highlighted this in the first half because from the first half, we have seen a almost systemic strengthening of the Sing dollar against all our key functional currency exposure.

Now just for us to note, this translation impact is simply for each of our overseas operations. The accounts are kept in local functional currencies. And when we are translated back into Sing dollars, we would have to use an average translation rate, and that translation rate have a decline, right?

Operationally, in the respective markets, certainly, it is not indication of the operational earning capabilities in those markets. So cumulatively, across 2025 compared to 2024, right, the estimated impact of on -- the translation impact on our earnings has been about $32 million. So it's fairly significant, right, almost 3% to 3.2% of underlying earnings. So this continued heightened currency volatile, we will monitor the situation. But given that this is a translation impact, traditional hedging activities may not be that effective.

Now if we move on to the next slide, this is really our CapEx and equity investments for FY 2025. In short, total investments that we have made in 25 total about $1.2 billion, right, relative to close to $2 billion in 2024.

And if we move to the next slide, our cash flow generation continues to be strong, right? In 2025, our cash flow -- operational cash flows is about $1.2 billion, slightly down from $1.4 billion the year before.

Now taking into account cash flows from essentially interest income as well as dividends and the DPN receipts and our free cash flow before deployment for expansion CapEx as well as equity investments is about $2.1 billion relative to $1.8 billion last year.

Now of course, in the $2.1 billion, we have the benefit of $383 million, which is the net cash proceeds realized from the SemWaste sale. okay? Now but even if you take that out from the free cash flow of $2.1 billion, our free cash flow available for debt service as well as growth on an annual basis still remains approximately $1.7 billion, which is similar to FY '24 the year before. So highlighting our confidence that we can service any outlook in relation to our dividends going forward.

So in terms of our group borrowings. From a gross debt perspective, we saw roughly about $200 million plus, $300 million increase. that result as a continued drawdown of the completion of our pipeline and also CCP4, but also because of our overall net -- stronger net cash flow generation, our net debt remains fairly similar to last year at roughly $7.8 billion with our cash and cash equivalents increasing from $871 million to $1.1 billion.

Our key leverage metric, which we always focus on our net debt to adjusted EBITDA, right, stands at 3.9x, which is not very different from where we were 1 year ago.

Moving on to next slide. From a group debt profile perspective, we improved it slightly this year. Some of our refinancing activities where we were able to benefit from lower base rates, tighter margins and also an extension in terms of tenor. We were able to refinance some of our, for example, a 5- to 7-year bank of revolving credit facilities towards the 8-year mark. And also, we were able to issue a 2.5-year bond at 3.55% in October of last year. So all this resulted in our weighted average cost of debt declining slightly from 4.6% a in 2024 to 4.5% in 2025 while being able to extend our weighted average debt maturity to 5.2 years.

But in terms of our fixed versus floating profile, 76% of our portfolio remains fixed, which means that on a floating perspective, every 1% change in the base rate will be about $15 million to $16 million impact. Of course, we are mindful that given the current interest rate environment, it's, on average, a more towards a downward bias. So we would also be monitoring our fixed and floating rate mix taking that into account as we go through the year.

So from our available liquidity, we remain strong, right? The key thing that we always focus on is what is our on-demand liquidity so -- which is really a combination of a cash equivalents and our unutilized committed facilities. So as of today, our cash and cash equivalents stands at $1.1 billion and our unutilized committed facilities is at $2.5 billion. So total about $3.6 billion of on-demand liquidity that will allow us to take advantage of any growth opportunities that come through.

So the next slide is just to highlight the outlook. Essentially, we have delivered resilient financial results, right, reflecting the strength of our diversified portfolio and cost management, right?

Now you have long-term contracts across our portfolio and increasing the proposed dividend in refi reflects our belief in our the strength of our underlying earnings and also cash flow visibility.

Now when we go through the different segments, I think in 2026, as highlighted before, the Gas and Related Services segment is still expected to be affected by a gliding down of our spark spreads, right, and margins because we do, as guided before, roughly 3%, 3% to 5% of our own portfolio will be subjected to some recontracting in 2026, I approximately 47% or 50%, right, approximately half of our Senoko's portfolio will be recontracted. So coming into 2026, you will especially for Senoko you would expect to see a full year impact of the recontracting that took place in the second half of 2026, roughly 20% of our portfolio and 50% of Senoko Energy's portfolio that will be recontracted starting from the second -- from the middle of the year onwards. So that is something to take note.

Now of course, we would expect that effect to be partially offset by operational and financial synergies across the 2 portfolios and also the when the [indiscernible] class is commissioned, we do expect to see a greater fuel and operating cost efficiency as a result of running that hard against the portfolio first. And this highly competitive portfolio will position us well to continue to capture incremental contracts because of the power growing power demand driven by data centers and high-tech manufacturing sectors as we have demonstrated since 2023, having a leading track record in being able to do that consistently again and again.

For our renewables portfolio, we do expect our platforms across India.

Wait, please come back.

Wow, okay. I didn't know I hope I didn't say something that was debt factoring. But what I was about what I meant to say was that in renewables, our expanding platforms across India, Middle East and Singapore will continue to grow. That's a good thing. And with the new capacity progressively coming in 2026 across to 2030.

Now having said that, for China will continue to be very watchful. We do expect tailwind to persist, right? And there's one other regulatory development that we want to highlight. Now China has come up with a policy where they said that value-added tax refunds for onshore power wind projects, they're going to stop it, right? So that applies retroactively as well to our products that have already been commissioned. So that policy change will see a $12 million impact for the -- on the China portfolio in 2026.

Now for the IUS business, the urban business, I think one point to highlight is that we are going into a phase in 2026 and going into right, where we would be developing close to 800,000 square meters of ready-built factories. So of course, this ready-built factories across '26 and '27, they are not -- will not be generating incremental recurring income. But we would expect to see some pre-operating as well as a financing cost for them. And but once they are TOP towards the end of 2027 and going into 2028, there will be a meaningful increase in contribution of recurring income to the urban portfolio. So all of this put us in a good state to navigate our near-term headwinds. And we expect that Alinta acquisition to be completed in the first half of 2026, and that acquisition -- completion of the acquisition will further strengthen our earnings base, our recurring cash flow and our ability to sustain and potentially grow our dividends over time, okay?

So a couple of more developments to note. When we complete Alinta, we have already highlighted this in the circular to shareholders as well as in our briefings, right? We do expect one-off transaction cost of close to AUD 208 million. This will be called out in exceptional items, right? The bulk of that more than 50% of the AUD 208 million are really in relation to stamp duties for the ownership transfer. okay?

And in U.K., we have a 4-week maintenance at Wilton 10, right, towards the middle of our 2026. It would not be a very material earnings impact, $5 million to $10 million, okay? So that ends my presentation, and we can open up for Q&A.

Thank you, Kim Yin and Eugene will now proceed to the Q&A session. For those in the room, you can raise your hand and a microphone will be handed to you. Please state your name and the organization that you represent. [Operator Instructions]

Yes, we'll start with those on the floor. Maybe Zhiwei first. Yes.

Zhiwei from Macquarie. Thank you for your presentation. I have -- let's start with two questions first. First, China renewables, right? It's been 3 years and the curtailment issue has not improved. I think about a year ago, you said that under curtailment, it will maybe hit about 1% of earnings, but it seems like if I didn't hear it correct -- you heard correctly, about $30 million for this year. So it's coming up to almost 3%. So how are you thinking about the entire business if things do not continue to deteriorate right? And what are sort of your thinking around how to mitigate this risk further?

Then from your point of view, where do you see us sitting in this entire down cycle for China renewables? Are we at the bottom or at the bottom? And can roughly just your sense when do you think will see things will improve?

And the second question is on the Gas and Related Services service for Singapore. You mentioned a decline in your gas margin. Can you run us through of a bit more color on what changed, right? Because this is a pretty significant contributor to your bottom line profit. How big was the year-on-year decline in the gas trading business and how do you see the margins change going forward? Because if I remember correctly, this used to be a high single-digit business and a gross margin business and then you moved it into a mid-teens and where do you see it go now?

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

Thanks, Zhiwei for the question. I cannot say for sure whether China has reached the bottom in terms of the curtailment. But let me offer some insights directionally where the government is going. So what's really caused the curtailment as we all know, is the search in renewable install capacity, right? A lot of new projects.

So just to give people some perspective, when we first started the journey in 2021, the renewable solar and wind -- onshore wind was growing roughly about 120 gigawatts a year. 2021, 2022 was roughly about 120 gigawatts. And what happened was in 2023, we saw a surge in the renewable capacity to roughly about 300. And just to give you some perspective, 300 gigawatts a year 2023, 2024, right? And in 2025, because of a change in policy, everybody was rushing to get their projects online by the middle of 2025 to make sure that they enjoy the existing policies. And because of that, there was a mad rush and the capacity actually surged an increase to roughly about 400 gigawatt year, just to give you some perspective.

So what's going to happen is this, I think we have to look at this from 3 perspectives. One is demand. Second supply and then what is the government doing in terms of making the grid more resilient so that the grid is able to absorb all that additional capacity.

So in terms of demand, as we all know, China continues to have seen a very strong power demand, roughly about 5% to 6% a year, driven by electrification, [indiscernible] and AI, right? So that's why. Demand continues to be very strong.

On the supply side, there is a new government policy that states the -- by 2035, renewables is going to get to 3,600 gigawatts, which basically translates into every year from now until 2035, renewables will slow down to roughly about 180 gigawatts a year, which I think will give the industry a bit of relief, right, from the 300 to 400 gigawatts a year of growth today to roughly about 180 gigawatts. So 180 gigawatts is still a big number, but in -- if you look at it, China has a big base right now. So I think 180 gigawatts is not a bad number in terms of where the government is taking this directionally.

Then the third is what is the government doing in terms of making the great infrastructure more resilient, which is essentially one of the issues to move the electrons from the west to the east. And the government is going to pour pull in RMB 4 trillion, which is roughly about SGD 700 billion over the next 5 years. So there's a lot of money, right, to grow the -- and that investment would include things like transmission lines, which is important because they got to move the electrons from the west to the east. which is essentially one of the biggest problems that China is facing today.

The second thing is they will also put money in transformers and all kinds of -- are not simple to make the great infrastructure more resilient. And the last but not least is there is also another new -- we are catching up, right? And there's also another new policy in November 2025 that encourages data centers to be built in the Northwest, right? So I think that's also important because the additional power demand in the West is going to absorb the additional power supply.

And so again, just to get everybody on the same page, demand is going to continue to be strong, 5% to 6%, driven by electrification and AI. Supply will slow down based on new policy to roughly about 180 gigawatts a year until 2035. And then the third is the government is going to pour in roughly about SGD 700 billion on the grid infrastructure. And the last one is the latest news in November, which is encouragement of data centers to be built in the West.

So the first point in the perspective of cost, the $30 million, a good part of it Eugene was just telling me between 1/4 to 1/3. It's actually new. It's coming from [indiscernible]. And that one is because they've got a lot of hydro, heavy rainfall. So that might not repeat, right?

Then the rest of it is coming from the Northwest largely. So the Northwest, that's the part that subject to the transmission, subject to the new demand coming anybody's guess, right? So if you ask me whether you had hit the bottom, maybe how much longer it will last, for our planning purposes, we are saying that for 2026, we are not counting on it to flip around, right? So hopefully, for the near term, that puts additional color to it. No.

You take another step back for us, it has gotten to this point where it is earlier China portfolio is supposed to be contributing with 120, 130 just from the renewables now. It's at 80 -- it could get worse. It's always possible, but it is quite a bit turned down already. So for us, we are planning we are not counting on it recovering in the coming year. right? So we'll have to see.

And in the meantime, your other part of the question, what are we doing, right? Of course, tight cost. We are looking at other forms of managing exposure. For instance, growth has also been very, very calibrated discipline selective. Those are the words. You don't see the type of growth anymore coming. We are also thinking about whether or not we could manage exposure through perhaps bringing partners looking at the capital structure, that's a thing, right? But I'm not promising anything we're saying that we with the outlook, as I described just now, we're not expecting anything to change for at least a 12, 18, 24 months then, you should be doing this in the meantime, right? So that's what I want to suggest to you without having anything concrete to show you yet. But the plowing with outlook naturally, the management action must come in. So that's on the renewables. The gas, maybe, Eugene.

The gas margin, that's the way you -- still a few to point that out. I think for 2025, when we look across the gas, number one, we have the onetime upstream or curtailment gain. That was about $10 million to $15 million. But outside of that, from a gas margin standpoint, we probably saw a $25 million to $30 million downside impact, okay?

Now so what has changed? I think the periods where you saw high double digits -- actually higher than double digits. Gas margins if you are looking at the Sing dollar financials, which I know you always do, right? Thank you for spending the money to do that. Then those periods, obviously are periods where there is volatility in the index, right? So when there's a volatility in the index, it gives our gas I don't know us or trading, but our gas business, the opportunity to I think arbitrage is the right word to basically look at alternatives to a diverse gas and optimize gas cargo right to have a larger amount of gas optimization earnings on top of what is contracted.

Now of course, when you see that going through 2024, 2024 is still fairly volatile. And then when you come back to problem, we are essentially seeing more stability between the JKM index and also across the brand index on which our long-term prices were. So because of there is a lack of volatility. So our ability to drive the same level of gas optimization or arbitrage gains, right, is less.

Now the good news is that I think across 2025, we have been monitoring the gas margins in the first half, second half, it has been stable. So going forward, we don't expect the gas margins to be similarly impacted because it is trending more towards our base contracted level of gas margins. And we are not at single-digit gas margins. We are actually still at the low double-digit gas margins. Yes.

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

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

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

Okay. So I think in relation to our China asset base, we have always do very detailed impairment analysis, right? I think where we stand right now, right, we do not see the need for any impairment because from a policy standpoint, right? And Alex, you can help me to elaborate more. that the Chinese government have made a very strong stance that they will build the Northwest interconnection lines across to the eastern side of things.

Now the exposure for us for the very high curtailment like I pointed out earlier on, it is really across the SDIC portfolio, okay, because that has a significant exposure to the northwestern side of things. And then also in some of our [indiscernible] assets.

Now so of course, with that, we are confident that within a certain level of visibility the curtailment situation will abate as these interconnector lines are built up. Then the question is really about how long. Of course, we do stress test the outcome of our assets. So the curtailment situation will have to persist for rather long, and I'm talking about many, many, many years kind of long, right? before you even worry about curtailment. More specifically, on the SDIC portfolio, if you will recall, our -- that is best essentially one of our higher returning portfolio, right, where we entered in at 1.8 gigawatts, organically, it grew to more than double in terms of capacity. So when we look at our cost of investment for the FDIC portfolio, based on our analysis right now, it is very unlikely that you will hit any form of impairment simply because our cost of investments. So just to isolate those are the 2 key customer. I don't know, Alex, do you want do you highlight that on the mines?

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

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

I think maybe to start with the second part of your question first. Of the roughly 2.5 gigs of PPAs that are signed -- I'm sorry, of 2.5 gigs of pipeline, about half have PPAs signed about 1.2 and about half are at the LOA stage, where we are discussing with the various RIAs and the DISCOMs. As you might be aware, I'm sure, a few months ago, there was a push by the central government to try and clear that backlog. That has had the effect because the PPA all the REIs then went around and said, "okay, let's take a closer look at each of these LOAs." There's there are active discussions going on typically between generators like us. RIAs like or DPN and the DISCOMS who would be the off-takers. Fortunately, the with declines in equipment prices since the time that these PPAs were entered into, most generators, including us, are in a position to offer more tailored offerings within the same tariff range to the DISCOMs. So those discussions are proceeding. And of course, we'll as and when we sign the PPAs, we'll make the necessary disclosures. So about half and half on the first one.

Your observation on the pipeline is absolutely right. The way we look at it is that there is -- there will likely be some of our projects that are at advanced stage of construction will get completed in 2026. The bulk of the pipeline will indeed be '27, '28 thereafter, largely constrained by grid capacity availability of connectivity availability. But these estimates that we do are after we take into account whatever grid delays and I'm happy to have a deeper discussion on that. But what we are seeing is considerable all of government effort across the central government, the state governments, the local governments to try and debottleneck the grids. In fact, if you look at the Electricity Act amendments that are now proposed which are widely circulated in the public domain, special powers to governments to acquire land and get grid done have also been included there. But I think coming back to the effect on us, the way we look at it is, it actually gives us a little bit of that [indiscernible] to make sure that land acquisition, which is usually the one of the bottlenecks for any renewable power development. We actually get much more time to do our land acquisition and be very true to our intent, which is to have 100% land acquired before we break ground. And so that is now what we are seeing in the projects that are coming forward.

So actually, what ends up happening is, say, for a slow project, even a large one, let's say, 400, 500 megawatts. The actual construction time is rarely more than a year or at most 15 years, whereas the total elapsed time maybe 2, 3 years, maybe even sometimes a bit more. So actually, what we get is good enough time to get the land done, get the engineering done perfectly, get the EPC done perfectly and then move on from there.

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

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

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

No, thanks. That's also a very germane issue. For us, in India, it works a little bit differently. The curtailment that has been talked about in the press and is part of a lot of concern from many people, is basically when projects connect to the grid on a temporary connectivity. We call it G&A. When you have temporary connectivity, then the grid's obligation is to give these projects connectivity on a best-effort basis. But then, all bets are off as far as curtailment is concerned. So the moment there is any sort of congestion get back down. Our projects are all on permanent connectivity. The moment you have permanent connectivity, any commercial back down due to congestion or due to commercial reasons like demand is recoverable by the generator.

The only reason that grid curtailment can happen as per the PPAs, once you have a permanent connectivity is when there is a specific grid security issue, which typically will not occur for more than a very, very short period, typically a few hours here or an hour there. So the numbers that are being floated around in the press have nothing to do with our portfolio.

If I look at our [indiscernible] portfolio, I don't think we've actually disclosed these numbers, but I think it's fair to say our curtailment on that, including what we including what we will recover back part of which we'll recover back is below 1% at the moment. And that, too, a large part will come back.

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

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

I think going into 2026, renewables as a portfolio, we think from an earnings perspective, it will likely be flattish to a slight upside, okay? Now because there would have been better growth, but I think the reality is that we have hit with another $12 million downside because of the VAT policy change, which came through unfortunately, towards the later part of Q4 of last year. So as a result, we think renewables flattish to slightly positive.

I think for China, I just want to characterize the issue. I think from a renewables book value standpoint, it stands roughly from a Sing dollars perspective, SGD 1.8 billion to SGD 2 billion, right, of invested capital. from an equity standpoint.

Now from a receivables, right, the receivables that are exposed, which is largely in our high portfolio that has not really cleared -- that has not been given a green code in the subsidy audit is around SGD 350 million, right? The total subsidy receivables on our books, really, it's approximately SGD 370 million, but those pending subsidy audit is about SGD 340 million to SGD 350 million. Of course, we have made provisions against them like provisions to date, there's about SGD 43 million against that gross amount. Now I think in relation to that, we continue to press respective authorities on being able to release those projects sooner rather than later. But I think what we have noticed is that for projects that have cleared the subsidy audit, they are actually paying down their receivables fast. And this is empirical, right? Because in our own portfolio and our own high portfolio, the amount of subsidies receivables collections in 2025 was about 1.7x that of 2024. We see it accelerating. No doubt. In our JV portfolios, we also see the subsidy receivables collections in 2025, roughly double that of the year before. So I think there is a clear effort from the Chinese government to clear the subsidy receivables. And we are certainly hopeful while we have continued to provision against it, the subsidy receivables that has not yet cleared the audit.

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

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

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

No, no, for a while Sorry.

Rachel first.

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

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

If you bring up the slide, Jin?

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

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

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

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

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

Maybe Jin, to put a footnote on something.

A question on the DPN.

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

Sorry, Siew Khee.

Siew Khee from CGSI. I have two questions. On gradual increase in the dividend to benchmark against yourself with peers, who are the peer group that you're looking at? Are you looking at yield or payout? And given that your earnings base is potentially stable at $1 billion, would you target to increase your yield to about 5%? That's my first question.

Second question is, thanks for guiding us on the spark spread. with much more power coming into the market, would you be able to have a guess on what would be the spot spread into 2027? And I remember previously, we were hoping to actually get more long-term contracts or convert some of the short-term contracts from Senoko to long term. How realistic is that?

Okay. I think in terms of the dividend benchmarking, Siew Khee, we look at the benchmarking in 2 sets. One is across more broadly STI comps. Of course, then within the STI comps, we look at both payout ratios as well as a dividend yield. So excluding REITs, we do notice that average dividend yield is around 5%. right? So our yield is about 4% or so. But I'm hesitant to say that we are targeting a yield, Siew Khee, because of my payout ratio is kind of low, right? So we are at a 40-ish percent right now. Though we do note that, number one, the average STI broader comps, the payout ratios are 60% or more, right? And then if we compare to a closer TLC industrial companies, right, you know who they are, just to name a few, includes the Keppel, includes ST Engineering, there are payout ratios in the longer term in excess of 70% or so. So these are some of the guidelines that we are looking at.

Now we also benchmark payout ratios as well as the dividend yields to a broader gencos, like both Asia Pacific as well as European players. So in those situations, we do see average dividend yield also in close to a 5% range, and average payout ratios for those are in the 60% to 70% range as well. So I guess this is to guide you in terms of how we think in terms of the payout.

Now I just want to caution a little bit about the yield perspective because at the end of the day, while those are guidelines for ourselves, we are still focusing more on the absolute dividend and a sustainable and growing over time. So I guess the key point to note is that where the dividend is, going forward, we will have the ability to grow it both from an earnings perspective and also looking at where our payout ratio stand relative to those benchmarks that I mentioned.

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

Next question from Sumedh.

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

The first question was noncore assets for disposal. I was trying to look at Eugene and I was trying to look at me. Now the portfolio in Singapore, I think we manage the entire portfolio for value, okay? I just want to reassure everybody, that's the first thing. And over the last 5 years, we have made several changes to the port. See you [indiscernible] questions, we can follow up later. So I think we already reorganized ourselves into the 3 big business segments, right? So gas-related services renewables as well as U.S. Most of the contributors are actually squarely slot into them, right? So in the long run, we do not have -- I don't want to -- the smaller businesses, even if there is a noncore disposal, I wouldn't I don't think it will be something that should bother you yes? So let's put it that way. Now each of the lines of businesses, they are all growing up and as they grow up, as you already pointed out, the India IPO possibility that itself is actually something that is much more symbolic and significant to the portfolio if it happens.

So in terms of -- but to us, the India renewal portfolio is a core asset, right? So that's not a noncore. So I wouldn't put that in the category of the first question, right? So maybe the short answer to it, having stopped very loudly in front of you, the short answer is no, right? And the second one is in terms of capital recycling, we are thinking about it actually for the rest of the portfolio as well, including China. if the opportunity arises, right? And 5 years ago, I would tell everyone that look, [indiscernible] too small in most of the pieces, right? So now India has grown up and China is in a certain state. So when things are ready, we would definitely be managing them for value, right? So I just want to reassure you that.

In terms of actual timing, I am warn many times to not say that because we have a plan, right. And there are typical time lines in India, how quickly you can do certain things. So -- and of course, there's no certainty until the moment -- the pattern is pressed, right? There are people who build their book and then decided that on of this book doesn't look good enough, I don't want to do it, right? So you can -- I don't think we would have the ability to do things much faster than the next guy who is filing. That's probably that way. So if you apply the usual time line, that's a good way to think about if it happens. I'm sorry, I'm not answering your question. I'm struggling a little bit, but I have got strict rules tying my hands behind me. So Sumedh, do you have any other?

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

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

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

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

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

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

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

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

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

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

I think as highlighted earlier on the U.K. gas business, right, in 2025, we saw a $20 million right for the U.K. gas business. Now of course, when we look into 2026, there are headwinds and also the possible and also positives. The headwinds, of course, the customer demand continued to be under pressure, simply -- and power prices as well, simply because key -- some of the key customers in Wilton, they are petrochemical players, and we all know that the petrochemical sector is under pressure right now. So that is the headwinds that we expect going into 2026.

Now of course, we did we are excited because the value of powered land particularly for data centers is important and Wilton is powered net, right? So we do at a very initial stages of engagement. have seen a DAS interest in our U.K. Wilton site. So we hope to be able to see more of the developments there. But of course, barring a positive development on the DC capacity, we do expect U.K. continue to be under pressure as we go into 2026.

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

Okay. So Luis, to answer your question on the first point, I think from the second half 2025 going into FY 2026, I wouldn't say that we could use that level because a couple of things would have to you have to bear in mind. Number one, into 2026, roughly 3% to 5% of the Singapore portfolio will be up for renewal. So those renewals would be at roughly $30, $35 type of spark spread. So that will be coming off historical high short-term contracting spark spreads of $70 or so, like $70 to $80. So that's one impact. Second impact is for Senoko. We did highlight that coming into 2026, you have a full year impact of roughly 20% of the portfolio that was renewed in the second half of 2025, right? Also $30, $35 spark spread. And in 26 itself, we would have about 47%, close to of the Senoko portfolio that will be up for renewals. Indications clearly show that spark spreads will be around $30 to $35. So you do have to factor that into your outlook for 2026.

Now for the exceptional expense of $28 million, it will be reflected whenever the reduction close, right? So if the transaction closed in the first half, that 208, the bulk of it will be booked as exceptional items by half year. If we close beyond 30th of June, then it will be -- it will show up in the second half so it's really a timing-related. Bulk of that is driven by stands. So it's really linked to the timing of the completion of the transaction.

Okay. Question from [indiscernible] Business Times.

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

The specific requirements or rather requirements of the DC CFA 2, my understanding is that it is actually quite specific. It will have to be new sources right? So it is not existing. So my solar panel doesn't count, yes. So we are working with our customers who are interested to win the DC CFA2 to provide them with new sources that include green power from biofuel that includes fuel cells, right? So the array of potential solutions that can qualify for this new green source, we actually have them as part of our toolkit to supply them. The question really is for each one of them, because difference in size, big difference in technology, different in their customer base, their appetite to absorb the cost from some of these new sources is different. You can imagine some of these new sources is at a higher cost than your solar, right? So that's why what I'm trying to say is that we have those solutions, and we are working with each one of them to tailor it for their specific requirements based on a right? So that's on that.

Now the other one I want to say is that for generically, like you say, whether it is in the region or even in Singapore at the end of the day, data centers, they need very stable, reliable power, highly reliable, in fact, they don't want interruption. So the new sources, generally, on the one hand, we'll put cost pressure. On the other hand, very often, it may not be as reliable, right? And certainly, even if you -- if there are reasonably reliable, you still need to back up from existing sources, be it from batteries, be it from battery, be it from the grid, right? So this is where Sembcorp believes we are actually very well positioned because we have the entire array. In Singapore, we have got the gas-fired power plants. We have our solar panels. We have the largest battery in the region. And then on top of that, we have got these new sources, biofuel fuel cells, so on and so forth. So we are able to say that, hey, look, even as you take the new source, we can supplement it and support it and provide insurance and reliability by giving you everything else, right? So that is where we are. We have that strength.

In the region, it is the same, right? So when we go to a bottom this is something that we can offer. And our experience doing this is also giving them confidence, right? If you're getting this from Sembcorp, that's one story. You're getting this from only a solar player, you might actually have to think twice because how good are they even if they offer you batteries, right? But I've got cars. I've got other sources. And I have shown that I am able to keep reliability very, very high as a portfolio. So that's where even in place side, India, not just Indonesia, we are seeing some of these demands coming, and we are on the slide that we show here, we are signing up actually beginning to sign up some of them, right?

So coming back, I also want to make that point, I want to reiterate the point that by the time we see the demand from the AI side, we are seeing the real thing this is the solid demand. This is not the fluff. So because I'm very worried that people say, "Oh, this Sembcorp suddenly turn around, I want to enter into the AI space, are they going to catch the froth and then get caught up. No, no, no, by the time it comes to us, it is a solid energy side of the demand, not the AI demand. We don't take that risk. We are selling power. We are selling reliable power, and we demand and expect that our customer is a reliable paymaster.

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

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

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

Right. And again, two things to take away, if I may, in terms of returns can expect dividend to steadily sustain and grow. And we recognize that we are behind the curve compared to our peer group in terms of payout in terms of yield, so -- and we because of our strong balance sheet, strong cash flow, we are very confident increasing the dividend along that path to cover that gap. That's the first thing.

Then in terms of growth, at least for the next few years, we have got new markets that we are entering into, and we are seeing success. In the case of Australia, there's Alinta, very scale, very committed to decarbonization and also very energy shots, right?

And in terms of other greenfield opportunities other than a very hot India market where we have strong establishment there's also Middle East that is giving us that pipeline. So there is returns. There's growth. 2026, we will have headwinds, but we are very confident setting into 2026 and beyond. So thank you very much. Thanks.

Thank you.

Okay. Is the food outside.

Yes.

Okay. So sorry to hold you. There's full outside, and please feel free to help us consume it.

Good evening, everyone. Thank you for dialing in for the briefing following our announcement this evening. I'm [indiscernible] from [indiscernible] and Investor Relations. On the panel today are Group CEO, Mr. Kim Yin Wong; Group CFO as well as President and CEO of Integrated Urban Solutions, Mr. Eugene Cheng; and President and CEO of Renewables East, Mr. Alex Tan. Without further delay, I'll hand the time over to Kim Yin for opening remarks. Kim Yin, please?

Good evening, everyone. Thank you for taking time to join us on this call at such short notice and at this hour. This evening, we announced the proposed acquisition of Alinta Energy, a leading integrated energy company in Australia. Let me start with the transaction overview. The proposed transaction involves an agreement to acquire 100% of Pioneer Sale Holdings and the Trop Valley Power Holdings collectively known as Alinta Group. This acquisition is expected to deliver immediate earnings and returns accretion. On a pro forma basis, EPS is expected to increase by 14% to SGD 0.65 for the last 12 months ended June 30, 2025, and 9% on to SGD 0.63 for financial year 2024. ROE is expected to increase to 22.5% and 22.3% in the respective periods. The equity consideration is approximately AUD 5.6 billion. The acquisition is competitively valued at an enterprise value of AUD 6.5 billion, representing an EV to EBITDA multiple of 6.6x based on LTM ended June 30, 2025.

The transaction will be fully funded by a bridge facility of AUD 6.5 billion with no equity funding required. Completion is expected in the first half of 2026, subject to shareholder and regulatory approvals as well as other customary closing conditions. Alinta is a leading integrated energy player, operating across multiple states in Australia as well as New Zealand. The company has a generation portfolio of 3.4 gigawatts, comprising 2.8 gigawatts of in-stock generating -- generation assets, including gas, coal and wind providing reliable baseload generation. It also has 0.6 gigawatts of third-party wind and solar assets from which Alinta offtakes power to supplement its own supply. The company has a significant development options pipeline of 10.4 gigawatts. These projects span wind, solar and firming technologies such as gas peakers and storage, which are critical for future transition. Alinta serves a sizable pool of almost 1.1 million retail customers across electricity and gas retail markets. Alinta Group is underpinned by strong financials. For financial year 2025, Alinta delivered an underlying adjusted EBITDA of AUD 987 million, and underlying net profit of AUD 483 million. Underlying ROE was 14.6%, reflecting healthy profitability.

Let me take you through the strategic rationale of this transaction. First, the acquisition offers a strong strategic entry into Australia, a AAA-rated country with significant growth opportunities. Second, as an integrated energy player, Alinta is underpinned by strong fundamentals to fund growth to drive energy transition. And third, this is an accretive acquisition that provides both financial uplift and scale for Sembcorp.

Now let me invite Alex Tan, our President and CEO of Renewables East to bring you through in greater detail.

Thank you, Kim Yin. So just let me start by explaining why Australia is an attractive market for Sembcorp. Australia is a AAA-rated country. We have a stable regulatory framework for the energy market, and this provides both transparency and predictability. The market is large and growing. Australia has about 87 gigawatts of installed capacity in the national energy market and a very sizable addressable renewables market, which is expected to exceed 200 gigawatts by 2050. The country has clear structural drivers for decarbonization. The state government has legislated its climate targets backed by strong policy incentives to drive transition including our goal to achieve 82% renewable electricity by 2030.

Finally, the Australian energy market offers long-term growth potential. The phasing out of coal power to transition to renewables will accelerate the buildup of renewables. However, even as the country expands renewable capacity, thermal baseload remains essential for grid stability during the transition. And this creates a unique opportunity for integrated players like Alinta that can deliver reliable power today while investing in clean energy for the future. For Sembcorp entering via an established platform like Alinta offers a strategic base for us to invest long term and scale up the renewables development. It also rebalances Sembcorp's portfolio towards developed markets.

Alinta brings 3 key strengths that make it the right platform for Australia's transition. First, a high-quality generation portfolio with significant coast-to-coast operational footprint second, a strong and diversified renewables and firming project pipeline; and third, strong financial fundamentals to fund future investments. This attributes make Alinta a very compelling platform for the long-term growth. Alinta's operational footprint is one of its biggest strengths.

It operates across diverse geographies and technologies, given its scale and flexibility. On the West Coast, Alinta owns 2 gas plants, [indiscernible], and holds a 30% stake in the [indiscernible] Wind farm, one of the largest and most efficient wind farms in the state.

On the East Coast and in New Zealand, Alinta owns 3 gas plants, Braemar in Queensland, [indiscernible] in Victoria and Glenbrook in Northern New Zealand as well as the [indiscernible], one of the most reliable baseload assets in Victoria. In addition, Alinta has contracted 0.6 gigawatts of third-party wind and solar capacity from which Alinta offtakes power to supplement its generation supply. In total, Alinta has 3.4 gigawatts of in-stock and contractor capacity. Alinta's footprint and portfolio provides scale and geographic diversity, and more importantly, the ability to serve retail customers competitively by owning generation assets close to major demand centers such as Victoria and Queensland.

The coast to coast presence has also helped Alinta secure a significant portion of market share in the retail segment. It's currently the #1 private integrated gas and electricity provider in the wholesale electricity market which is the primary electricity market on Australia's West Coast, combined with a robust trading and portfolio management platform, Alinta is well positioned to optimize both portfolio value and enhanced returns. Alinta's development pipeline is substantial with 10.4 gigawatts of options aligned with the country's energy transition needs. This pipeline includes onshore and offshore wind, storage and gas firming projects providing a balanced mix of technologies across multiple states. Many of these sites are located near existing transmission infrastructure with land already support an advantage that lowers costs and speeds up delivery.

Alinta is led by an experienced in-house development team with a proven track record of delivering large-scale projects and minimizing execution risk through disciplined planning and strong stakeholder management. And combined with Sam corp's global experience, Alinta's deep local expertise will enable us to pursue renewables and firming opportunities to drive Australia's transition. Financially, Alinta is underpinned by strong fundamentals, delivering consistent underlying earnings growth since 2022, underlying adjusted EBITDA and net profit have achieved compounded annual growth rate of 11% and 14% between 2022 and 2025, respectively.

Underlying EBITDA margins have also been consistently superior and stable compared to peers. Cash generation is robust, underpinned by resilient operations. These fundamentals strong earnings, margins and strong cash generation provide the capacity to pursue Alinta's development pipeline while maintaining a very strong capital position.

Finally, a key success factor for this acquisition is the strength of Alinta's leadership team. The business will continue to be led by its experience management, who has a proven track record of delivering transformation and growth. At the helm is [indiscernible], Managing Director and CEO, who has been with Alinta for over a decade and led his transformation. Under his watch, Alinta has achieved more than tenfold EBITDA growth. Jeff is supported by a seasoned executive team, each with more than 15 to 20 years of industry experience. The depth of expertise and continuity, ensure operational excellence and stability for Alinta stakeholders.

I'll now invite Eugene to take you through the financial impact of this acquisition and our ESG considerations.

Thank you, Alex. Now let me take you through the pro forma figures of this transaction. As you can see from the table, the acquisition will deliver immediate financial accretion to Sembcorp. Now the top half of the table presents the underlying numbers in relation to both Alinta as well as Sembcorp, which as you know, excludes the impact of exceptional items, our deferred payment note FX mark-to-market swings as well as fair value adjustment and mark-to-market swings on energy derivatives on Alinta's financials.

On a pro forma underlying basis for FY 2024, adjusted EBITDA and net profit will see a 44% and 28% uplift, respectively. Earnings per share is expected to increase by 28% to SGD 0.73, and ROE will increase from 20.1% to 26%. Similarly, for the last 12 months ended 30th of June of 2025, adjusted EBITDA and net profit would increase by 42% and 23%, respectively. EPS is expected to increase by 23% to SGD 0.70 and ROE will improve to 24.3%.

Now when we look at reported figures, which takes into account all the impact of our DPN mark-to-market swings as well as fair value adjustments on the energy derivatives adjusted EBITDA was increased by 33% in FY 2024 and 36% in the last 12 months ended 30th June 2025. Net profit will increase by 9% and 14%, respectively. Earnings per share would increase by 9% and 14% similarly, respectively, and ROE would improve to 22.3% and 22.5% respectively. Now beyond earnings accretion, this acquisition strengthens our risk profile. Both acquisitions, pro forma underlying net profit for the last 12 months ended 30th of June of 2025, will increase to $1.2 billion with a higher proportion coming from OECD markets. Today, 55% of group net profit are from OECD markets and Singapore. And after the acquisition, this will increase to 64%. There will also be an increase in our gross generation capacity from 28.3 gigawatts to 31.1 gigawatts post acquisition with 31% of our portfolio coming from OECD and Singapore markets. This rebalancing is deliberate and strategic.

With this acquisition, we strengthened our presence in developed markets with transparent frameworks and therefore, reducing regulatory risk and exposures, our portfolio risk profile will shift towards lower risk jurisdictions. It also strengthens our portfolio resilience with greater geographic diversification, reducing earnings volatility across different market cycles.

And finally, the acquisition delivers an immediate step-up in capacity and operational footprint. Now the transaction will be fully funded by cash and debt with no equity raising required. We have secured a fully committed bridge facility of AUD 6.5 billion as well as a standby working capital facilities of AUD 1.2 billion for the purpose of refinancing any potential existing debt in Alinta. So the AUD 1.2 billion revolving facility is not expected to represent incremental debt. Now these facilities will be used for the purchase consideration as well as refinancing of Alinta's existing debt as mentioned earlier on and funding of its working capital and other transaction costs.

In terms of long-term funding strategy, the bridge facility will be refinanced through a mix of Alinta level debt as well as long-term funding raised by Sembcorp by syndicated loans and corporate bonds. To give an illustration of the enterprise value of AUD 6.5 billion given Alinta's currently a fairly underlevered balance sheet, which is less than 1x EBITDA level, we believe we could optimize leverage there by [ AUD 2 billion ]. That leaves [ AUD 4.5 billion ] to be taken out by long-term bank and syndicated facilities, representing about 60% of the AUD 4.5 billion as well as a potential longer-term capital markets instruments that represents close to 40% of that AUD 4.5 billion.

Post acquisition, our leverage remains -- we believe the leverage remains within our investment-grade parameters. Net debt to adjusted EBITDA and adjusted EBITDA to interest ratio on a pro forma basis will increase to 4.6x and 4.5x, respectively. And more important than that, while near-term leverage will increase as a result of the transaction because Alinta have strong cash flow generation capabilities, as Alex have earlier pointed out, we expect the group balance sheet to be able to deleverage steadily going forward. And as a group, Sembcorp will continue to focus on maintaining a strong balance sheet discipline as well as an investment grade credit profile.

We also remain committed to maintain our dividend for the full year. And more importantly, given the expected cash flows as well as the leverage profile going forward, we do expect to be able to maintain our dividend profile for the years ahead. Alinta provides a reliable baseload portfolio that supports grid stability. The portfolio has an average availability factor of 93%, well above peer average of 76%. Its gas [indiscernible] achieved an average start reliability of 99%, outperforming all global benchmarks. [indiscernible], which is a 1.1 gigawatt of coal asset in Victoria is one of the most reliable generators in the national electricity market.

And it supplies 20% of Victoria's energy demand, making it critical for system stability, particularly in Victoria. Now as Australia builds out its renewables capacity, we believe LoyanB will play a bridging role, providing reliable base look while supporting an orderly transition. Sembcorp is completely committed to working collaboratively with government, industry as well as the community to support an orderly and responsible transition. And we will do so via the development and execution of Alinta's renewable development pipeline of 10.4 gigawatts. The future portfolio, assuming all of the pipeline is built up, will comprise 45% of renewables and 26% of storage capacity. This makes ensures reliability while driving down emissions intensity over time.

Now in terms of our climate action trajectory, previously, we have committed to reducing emissions intensity to 0.15 tons of carbon dioxide emissions equivalent per megawatt hour by 2028 and absolute emissions down to 2.7 million tons by 2030. However, with the addition of Alinta's portfolio, our near-term emissions are expected to first increase before decreasing later on. This means we will not be able to meet the earlier targets that we have mentioned. Our updated target is to reduce emissions intensity to 0.26x of carbon downside equivalent per megawatt hour of generation by 2035, which was developed with reference to country-specific well below 2 degrees trajectories.

We remain committed to our net 0 Scope 1 and 2 emissions by 2050 and remained focused on driving energy transition in the markets where we operate. And to achieve our target emissions intensity, we will focus on 4 key levers. We will grow renewables as well as [indiscernible] technologies, which is a core operating capability within Sembcorp's portfolio. We will also leverage low-carbon technologies. We will manage fossil generation to reduce emissions through efficiency improvements, and we also will apply disciplined capital recycling.

In summary, this slide outlines our approach to driving energy transition responsibly. Energy demand has continued to grow faster, driven by digital and electrification demand. even as countries remain committed to energy transition, we must ensure energy demand and development needs are met. This necessitates a more nuanced and inclusive approach to transition, balancing energy security, affordability and sustainability to align with the government's plans as well as community needs.

In relation to Alinta's generation portfolio, Sembcorp recognizes the role [indiscernible] place in providing 20% of Victoria State's energy demand with flexible and low-cost base load electricity, along with essential system services required to support the integration of renewables into the grid. We will work closely with governments and stakeholders to support Australia's national climate targets through renewables and low-carbon solutions.

Through Alinta, we will continue to invest in communities to create lasting change. And our goal is to make the transition inclusive and equitable. Finally, we will uphold strong governance and local stewardship to ensure continued accountability and operational excellence of the assets. Now in terms of the indicative transaction timeline for this announced transaction, this transaction will require shareholder approval. The circular and notice of the extraordinary general meeting will be dispatched targeted in the middle of January of 2026 with the EGM expected to be scheduled towards the end of January 2026 and subject to shareholder approval and the fulfillment of other condition precedents, including regulatory approvals, we aim to complete the transaction in the first half of 2026.

I'll now hand the time back to Kim Yin to share the closing remarks.

Thanks, Eugene. To wrap up, let me just once again highlight the key takeaways. First of all, why Australia? Australia is a AAA-rated country with supportive regulatory framework towards transiting its coal-fired generation baseload towards firm renewables. The country also has a legislated 2050 net 0 target. This aligns with Sembcorp's energy transition objectives. Second, Alinta is a high-quality integrated energy platform that delivers today and is well positioned to drive transition with substantial renewables and firming technology pipelines. This presents an attractive opportunity for Sembcorp to help drive Australia's energy transition. But this is a highly accretive acquisition.

The acquisition is immediately accretive, delivering financial uplift, expanding operational scale and strengthening our risk profile through greater exposure to developed markets. Lastly, we remain committed to a responsible energy transition, balancing reliability, affordability and sustainability as we grow. This is a pivotal step in Sembcorp's transformation journey to deliver value for our stakeholders while supporting Australia's clean energy future. Thank you.

The first question is from Sumedh Samant of JPMorgan.

I have maybe 3 questions to kick off. Firstly, if I look at your sort of pro forma numbers that are provided for FY '24 to last 12 months, June '25, what I could see is that the acquisition of EBITDA, so the EBITDA number seems to be coming down a little bit. We are just trying to understand why is that? Is there a seasonality component or do we think that the peak of EBITDA is behind us? That's my first question.

My second question is with regards to the coal fired power plant, as too early, you must have think a lot about it. Sembcorp tried hard to get rid of the coal exposure, but we are now getting that again. So trying to understand how you convince your equity and debt holders to get around it considering it's going to be a sizable asset? Or else, do you have any plans to remove it from your balance sheet similar to the ACIL transactions in the past.

And perhaps my third question is on your gearing. Obviously, it's a very large transaction. It's almost half of your market cap. How do we -- or where do we see gearing to be comfortable levels? Considering that, again, we are already going to go almost close to 4.5 to 5 kind of levels. So is that still comfortable? Or do we see some equity issuance risk in the future?

Let me take the call question first, and I'll ask Eugene to look after the EBITDA as well as the gearing questions. Now we are approaching this acquisition and Australia from the perspective of firmly engaging in energy transition. We see ourselves as an energy transition player, very much committed to it. We are attracted by Alinta's big renewables pipeline. I think just now, we explained that there's 10 gigawatts and bigger renewables pipeline that is -- that we can look forward to. So when we approach this acquisition, the idea really is that, look, this is a portfolio. By building out -- by supporting Alinta management in Australia to build out the renewables pipeline, we can help to transit this portfolio. Carbon intensity of the property will reduce, right? So that's the first point.

And in terms of transition, we are also cognizant that at the end of the day, it is very important to have a [indiscernible] inclusive transition. The recent [ COP-30 ], the team was just transition. So what that means is that energy, security, affordability are just as important as sustainability. So in this case, the coal asset under Alinta is some of the most reliable and lowest cost asset that is operating in Australian market. So the -- its role today is actually very critical for the Australian national electricity market to have a very more competitively priced power as well as a reliable supply. Even as new sources and greener sources are added to the port, right? So without firming or without firm baseload technology, the transition in any market cannot be sustained.

So we see this, again, coming back, being an energy transition play the portfolio is what we are acquiring. And over time, we see a definite right path towards reducing the carbon intensity building on what we do best, which is supporting investments in renewables technology. So hopefully, that addresses your question on coal. Anything to add, Eugene?

No. I think from a coal perspective, that made sense. Now I'll first talk about the pro forma numbers from FY '24 and the last 12 months for 30th of June 2025. Now if you look at the EBITDA performance of Alinta, where it's year-end, it's 30th of June, 2025, for the year -- year ended last 12 months into June 2025, we did an EBITDA of $987 million whereas in 2024, adjusted EBITDA for Alinta was $843 million. Now adjusting for certain mark-to-market gains on the derivatives, then the EBITDA of FY 2025 would seem to be flattish or slightly lower relative to 2024.

Now this is one of the key reasons is because Alinta across the years of 2024 and 2025, they had a favorable swap contracts, particularly in Queensland that has -- was expiring and it's not expected to go going forward. So that explains why when we adjust out the mark-to-market from derivatives, the adjusted EBITDA for 2025 has declined slightly. Now going forward, taking a longer term trend and expectation of the adjusted EBITDA for Alinta, particularly in the markets that they operate in Australia. We believe that the EBITDA performance over a period of time would be a stable.

Now the reason why the financial performance over a longer period of time, over several years, we expect that to be the case. It's because Alinta has a very able, right, operational able. You have heard me mention that the uptime of the operational assets, particularly [indiscernible], which is the coal asset, it's high, above 90%, the short-run marginal cost of the assets are also low, which puts it in a position to be able to generate efficiently to meet its retail demand.

Now having said that, the contract levels of Alinta, of course, shorter term in nature relative to what you are potentially used to in Singapore. So typically, across C&I and retail contracts as well as swaps and hedges that are typically important. Alinta's generation capacity against this demand is typically contract forward by about approximately 1.5 years. As a result, while in the longer term, given the operational and cost advantage that Alinta has in its portfolio, plus the fact that for Australia in general, going forward, because of the coal closures of plants that have already taken place. It is in a short baseload situation with no expectation of a baseload capacity increasing in the foreseeable future.

We do expect the pricing environment to be more favorable. Having said that, given the shorter-term contract nature of Alinta, we do expect slightly more favorability in terms of the adjusted EBITDA, but taking a longer-term view, given the characteristics that I talked about low-cost efficient and highly available generation assets with a strong C&I and retail demand as well as pricing outlook, which looks more benign, given the fact that in general, East case markets are shorter on base load.

We do expect EBITDA to be, in general, more stable. Now 1 point to note also is that for Alinta, particularly on the West Coast, the -- it's less of a merchant contracting, and they do have forward capacity markets. So EBITDA and cash flow generation on the West Coast are certainly a lot more stable. So that is the consideration in addition to the EBITDA trends.

Now in terms of gearing, as I highlighted, post this transaction, our net debt to adjusted EBITDA will increase to 4.6x. Now as mentioned earlier on, our goal is to whenever we go into a particular investment we like to deploy capital into stronger and the foreseeable operational cash flows that will clearly give us the opportunity for deleveraging. So similarly, for Alinta, right, we are seeing our net debt to adjusted EBITDA go up to 4.6x. And we do expect that in the coming years, given the operating cash flow generation of the business, we will expect to see deleveraging to come down.

So because of that, we do believe that over a 5-year investment and leverage trajectory, we would be able to still comfortably manage our leverage as well as access to debt and cost of that capital in the investment grade range. and we do not expect there will be no equity issuance risk.

In the leverage and the cash flow profile, we also expect to be able to maintain our dividend and we endeavor to keep and maintain our dividend profile.

The next question is from Zhiwei Foo from Macquarie.

I think I have three questions. First of all, could you start with reminding me what the [indiscernible] comparable transactions are? And why is CTS selling to you such a multiple, right? Second question is, could you go a little bit more into sort of like earnings profile of Alinta Energy. How much of this is caused by swaps? How was the most of these derivatives can swing your earnings by, right? Because I'm trying to understand why your FY '22, '23 earnings was so low, right? And then we'll cause it to move up in the later years right? And then for the last question, it's more of like your asset -- your energy transition story. A lot of your earnings, I'm sure right now is underpinned by your Tomo asset. I'm not sure how much loan is contributing. So in the next, say, 5 years, when you transition this asset, how does that affect your overall earnings profile and your ROE when that happens, we expect you already to maintain at similar levels? Or does it come off as a result of this core transition?

Thanks, Zhiwei. This first on peer transaction, I think later, do we have that that we can flesh or you've got numbers you can read out Yes. So later, Eugene can read those things out. Generally, you are right. We -- this particular transaction that we're having is at reasonably competitive but also attractive multiple. Now from -- I can't speak on behalf of the seller. And I think each group has their own priorities. So I won't be able to speak on their behalf. But suffice to say, during the current owners ownership in the last few years, Alinta has also performed very well and created a lot of value for them, right? So that's something that is quite obvious if you look at the performance of the business as well as -- I'm sure you can also trace when they acquired it. It was done at a lower number, right? Of course, at that time, the business was smaller.

So I think if I may read it out in winter when CFE acquired in March 2017, it was for [indiscernible] [ or AUD 4 billion ], right? And that was a -- that was for 100% stake, right? Then in November 2023, Brookfield and EIG bought Origin Energy Markets at AUD 10 billion. That multiple was 9.6x, right? And those are the -- some of the handy statistics that we have. So we think both the sell side as well as the buy side can see good strategic reasons why we want to do the deal together, all right? So that's the first part. In terms of the earnings volatility, if I may ask Alex to help with that, but essentially, it has something to do with the Ukraine and all the gas prices affecting the affected by the Ukraine war and so on from Europe and so on.

I think the way your question is more of a general 1 in terms of how stable is the earnings profile. And in terms of swaps and hedges different instruments, how much contribution, is it relative to total earnings and give you some rough numbers. So in terms of the various instruments, the rough percentage to revenues is less than 5%. And in terms of EBITDA, that's within roughly about 10%, just to give you a rough view. But I just wanted to also give you a little bit more color there in terms of why Alinta enters into various instruments. And the underlying reason for entering into such instruments is really to hedge the capacity. They are generally long in generation, which basically means that they are never short right. They never left in -- with a [indiscernible] position where they don't have the capacity but they are obligated to sell capacity. So in many cases, what they do is they go in there, for instance, [indiscernible] in Victoria in a decent market, what they do is they lock in by selling swaps, right? This is essentially very similar to what we do in Singapore.

In terms of PPAs, although our PPAs are much longer and the swaps are much shorter, roughly about 1 to 1.5 years. So that's one, right? And so what I just want to mention that and highlight that is because we are not entering into these instruments to trade, but really is to protect the downside or capture or fix the decent price. So that actually lends -- by doing that, it actually provides the stability to the cash flows and earnings.

I mean then it's a little bit like what we do in Singapore, right? What we call the contracts here, the contracts for differences CFDs, those are effectively swaps. So their market structure is actually quite similar or other Singapore's market structure was somewhat modeled after [indiscernible] where there's wholesale electricity market in the middle, power generators on the 1 side and then customers on the other side. So the hedges or the contract for differences as Alex puts it, means for the generation output to be less exposed to the short term in the case of the national existing market in Australia, which is I think every 5 minutes, there's a price, right? Singapore is half an hour. So to insulate one from the 5-minute volatility or prices you enter into contracts between the retail side and the generation side. And here, I want to digress a little bit because that's precisely why we when we look at entering into Australia, we can enter into pure power generation assets, just like renewable assets like what we do in other markets, but because of the market structure, if we just do generation, then we will be exposed to the wholesale electricity market.

So we thought if we -- if there is an integrated platform like what we have now in line then you have a natural hedge between generation as well as the customer and the retail end. And that is something that also we are -- the concept is very familiar to us because of what we do in Singapore, right? So that's something that's important to note. And I think, Alex, the FY '23 earnings being lower, I think just to directly hit that, is that because the -- in that year, Australia actually had experienced high gas prices for input, right? But then on the other hand, on the electricity. And because he hit a certain regulatory threshold, there was a price cap. So not all the gas prices, gas costs can be passed on to downstream.

And that's a simple explanation, but there's a lot more complicated involving all the hedges and so on. But in a nutshell, there was an aberration driven by the high gas import prices coming originating from Europe and Ukraine, right? So that's on that part of it. Energy transition story earnings being underpinned by thermal.

Yes and no. As I mentioned just now, this portfolio, it is you can say they all come from thermal, but you can also say that it all comes from the retail end of things. So it is particularly integrated. Over the 5 years, for instance, we do not foresee materially reduction, right? If the 5 year is the horizon, we don't see a material reduction in the ROE as well as the earnings of this business. You have something to add to that?

I think in relation to the transition away -- when we look at the transition profile of the coal asset, we do believe that we will have to take a longer-term view, right, probably in excess of 5 years and 10 years, right, where we will certainly aim to build out the renewables into accelerate building out the renewables pipeline. But of course, that will have to be matched against the pace at which the government as well as local communities and approvals would allow us to, but within the next 5 years, much as we would aim to accelerate the renewables development, but we do not believe that the pace of that is going to materially results in a significant decline of ROEs or earnings.

Now having said that, it is important to note why we are taking an integrated approach in entering the market. Now of course, if you are going to do a pure renewables asset, without access and ability to generate demand with a strong retail customer book and also access to C&I with a mix of generation technologies to manage across demand and the price curves within a day. Then you run the risk of having a low ROE. But I think the most important element of Alinta as an integrated retail as well as a generation portfolio is with the range of -- as we build out renewables, we will also be managing that with our batteries as well as gas peakers. The combination of the generation assets would allow us to take -- to use the right assets to generate at the right periods of the price and the demand curves during the day, right, and hence, be able to optimize the spot spread capture.

So that is important because then the [indiscernible] capabilities would then enhance the returns from any standalone renewables asset. So we do believe that within the next 5 years, even as these -- the transition happens, we will still be able to keep our ROEs in the teens for this asset.

The other thing to note is also, of course, in the next 5 years, we do expect growth, right, growth in terms of market share, growth in terms of market demand. And so a good part of the new assets, renewable or greener powers that we may put into the system will be chewed up by the increase in the demand and the market share, right?

So the overall intensity of the portfolio, carbon intensity can come down, right? But the overall profitability might not necessarily have to come -- in fact, earnings should comfortably grow. And in terms of the returns, Eugene has explained that there are reasons to believe that Alinta management will be able to keep up the ROE.

Sorry, one follow-up question, please. You pointed out that FY '23 was lower due to a spike in gas prices. Now as I understand it, there isn't a lot of gas in Australia. And unlike Singapore, you don't have the advantage of being a gas -- a licensed gas importer.

So how can you assure us that if, let's say, there's another gas price spike, your strategy to ensure that you have sufficient gas, you don't pay too much and we won't have this sort of volatility in your earnings in the next 5 years?

I think clearly, if you talk to the management of Alinta, they have learned the lesson. And it comes from -- even if one doesn't have direct -- a lot of direct import, one can hedge its output through contracting, right? So if you look at the fleet of assets in Alinta, there is multiple gas assets, there is also PPAs that they buy power from producers.

They will increasingly have more and more, as I mentioned just now, a growing fleet of renewable assets, right? On top of that, they have, of course, Loan B to underpin. So the -- they are actually long generation compared to their customer base. So from that perspective, if managed properly, they could insulate themselves to another gas spike. And having experienced it, the management of Alinta is actually very much on top of this issue.

The next question is from Ho Pei Hwa from DBS. Is clear?

Can you hear me?

Yes, can hear you. Ho Pei.

I also would like to follow up on we's question on the earnings volatility. I mean we have been following Semcorp and management has been prudent. I think from what we heard so far, we see that there's quite a bit of moving parts for Alinta earnings from tariff your capacity contracting to even gas costs?

Just trying to understand from standpoint, how do you plan to better manage this? Because even forward contract of 1.5 years is still relatively short. Just trying to help us better project the earnings going forward. And also what other moving parts that could materially impact our earnings? That is the first question.

You want me to answer the first one first before you -- or you...

I can ask the other 2 as well, if I may.

Please go, please go.

The other is expansion in Australia by geography diversification, do we have a target as to in individual country certain percentage? That's first. And then do we -- if there's another attractive deal in the coal asset again, do we foresee us may be interested is the second question.

And thirdly, on the dividend, when we say we maintain the dividend, do we refer to dividend payout that we had, I think, communicated is about 40% because the last one, we also mentioned that we will maintain on an absolute basis, the DPS for this year. So just trying to confirm, are we referring to absolute EPS or the payout? Yes, that's all for me.

I take the easy one in reverse order. Dividend in the $0.23, we are very, very comfortable keeping it to that level, if not growing it. That's number one. Payout ratio, of course, as we grow the earnings base, we are hoping that we can increase the payout ratio.

But suffice to say, this deal doesn't put any stress on our balance sheet. It doesn't reduce our ability to pay out the dividend, right? So that is very, very important to us, and I want to emphasize that point. So that's the first part.

Then in terms of the -- if you go back to the earnings volatility point, this is, as I mentioned, just now integrated platform, Gentaylor, they call it a generator and a retailer. They have got -- I explained just now that it's somewhat similar in market structure to Singapore. But in terms of the profile, in terms of both ends of the spectrum is quite different. In terms of generation, they got all these different technologies. So in Singapore, it's just all gas and otherwise solar.

Then in the customer end, in Singapore, Sembcorp's customer portfolio largely underpinned by C&I, right? And Singapore has that type of customer base. But in the case of Alinta, it is a lot of more mix, right, that has got C&I as well as retail customers. Now retail customers tend not to sign very long-term contracts. But for the same reason, they're also sticky. They also very often give a healthy margin, right?

So it's natural to expect that if we're looking for comfort from the length of contract cover as we did using that lens for Singapore, we will not see the same comfort if you use that as a measure in terms of length of contract and the percentage that is contracted. But I just want to point to the fact that they are the integrated nature and the type of customers that they have is quite different, right? And also because the generation end, they've got all these different technologies and they are long generation by far, and they will have a lot of levers to use in order to manage the margins and the profitability and how they want to serve the downstream customer base within their means compared to -- relative to Singapore, we have much fewer levers to pull.

So that's one. The -- and because of that, in the past few years, you can see that the Alinta management is able to consistently grow their earnings base as well as maintain their profitability, right? So that's one.

And then moving forward, the -- if you think about it, Australia as a market, it is not easy to bring in new generation capacity, as mentioned just now by one of us. You would need to have siting permits, government permits, local community approvals and so on and so forth.

So even though that we do look towards the pipeline for decarbonization, the addition of new capacity will come at a certain measured pace, if I may call it. And because of that, the incumbent generators actually enjoy a healthy -- how should I put it, they do enjoy a certain advantage of incumbency in terms of their profitability and their earnings capability, right?

So that's how I would think about it. Now of course, nothing beats having fully contracted, right? And we walk in there with our eyes open, knowing that this portfolio comes along with the nuances that I just described. The other part of it is, of course, when we look at the entire portfolio of Sembcorp, then with the additional diversification, then there's more opportunities to see the benefits of the diversification.

If one market is a little bit down, the other market, hopefully would pick up the slack. So overall, I would like you to think about this acquisition actually allows the entire Sembcorp portfolio to be more diversified and also in a high-quality market with high-quality asset, high-quality management. Eugene, anything to add to that or Alex?

Yes. I think a couple of things that when we look at this a bit deeper. First one is there is potential to grow, right? So Kim Min mentioned about renewables growth. On the renewable side, frankly, given our track record over the last 5 years and what we've done in various countries, we -- based on our scale today, I think we could generate or enjoy some cost benefits, whether it's in the form of equipment cost or even on Eugene side in terms of access to cheaper capital.

These are things that we can do to bring the cost down when we grow renewable projects in Australia. So this is one. The other one is on the retail side, Kim Min mentioned that, too. In the West Coast, we -- Alinta has about 20% of the market share and only 5% market share in the East Coast. So on the East Coast, given where they are today and potential growth in the future, I think there is a lot of potential upside to continue to grow.

So I think to add to what Kim Min as well as Alex have highlighted, P, I think it's important to note that Again, like my response to Sumit earlier on, when we look at the market dynamics as well as Alinta's generation capabilities, it is important to note that going forward, in general, in Australia, from the perspective of at least in the foreseeable future, you will not have a huge influx of baseload capacity.

And hence, given the fact that Alinta is long generation and have a very strong operational uptimes and availability is well maintained asset that's always up to capture the generation opportunities. as well as the fact that it's short-run marginal cost of its portfolio is among the lowest of the General. It will always be in the best position to generate as well as to capture prices.

Now the other thing also to consider is that Alinta has demonstrated that it has grown its retail book, 1.1 million retail customers and on top of that C&I customers. So -- and as it continues to service the retail customers, which tend to be sticky, also the retail tariffs in Australia are fairly stable, right? So that also gives an element of stability to the outlook of the Alinta's portfolio. Now again, I also made a point earlier on. When you look at the EBITDA, where the EBITDA and earnings are generated for Alinta, there is the East Coast and Alinta is also in the West Coast.

In fact, Alinta's market position in the West Coast is -- they are actually a leading #1 and the leading -- more than 50% market share in terms of gas sales and about 25% market share in terms of electricity sales. Now the West Coast market is also different because on the West Coast, the WA, there are available forward capacity contracts, which gives a stable capacity-based earnings as well.

So all in all, all this makes Alinta's EBITDA as well as earnings profile, a lot more stable relative to any of the other Australians or Australian retailors. So these are the key differentiating factors for us to be comfortable that Alinta inherently in its portfolio as well as the market position against -- in the West Coast as well as the East Coast makes its earnings profile a lot more defensive and less volatile relative to the other retailors.

And this question about whether or not we'll be interested if there are other coal assets. I want to emphatically say that we shall not invest in greenfield coal, number one. We shall not invest in stand-alone coal.

We -- Alinta is a portfolio that has got renewables gas as well as this coal asset. And I want to emphasize that we enter this with the lens of supporting the energy transition and that having a very balanced and inclusive transition such that balancing all the energy, security, affordability alongside with the sustainability, and we are attracted by the large renewable pipeline portfolio so that then we can help do what we do best to support Alinta to grow the renewable portfolio so that then we can reduce the carbon intensity. So that's on that.

Now whether or not there are country percentages, we do not disclose that. But I want to reassure that we watch very carefully concentration risk. And -- but today, with the inclusion of Alinta, we -- there's still headroom for Australia, right? Now whether or not there will be future opportunities for further expansion, of course, we enter this as a growth platform. The growth can come from greenfield as well as acquisitions, but we will evaluate and assess when the right opportunity comes along.

If I may ask one last question. Since now Australia will be quite a significant portion of our portfolio. How about the ForEx for Eugene? And Australia is probably near an all-time low. It may be a good time for you to acquire at this time. Just trying to understand the ForEx why, what should we think of ForEx?

Yes. I think, Pei Hwa, I think first and foremost, we are not ForEx traders, right? So to be very clear, we do not emphatically time any investments or entry simply because of ForEx. So our approach to managing the AUD SGD exposure, again, will be -- we will likely be leveraging Australian-denominated financing, particularly onshore in Australia and we are more focused in hedging -- naturally hedging any Australia exposure.

Now having said that, we do recognize that the Australia dollar against the Sing dollar, it's in favor, right, of the Australian dollar when you look ahead. I guess if you look at your bank projections or you triangulate forward curves between the Australian dollar U.S. dollar as well as the Sing dollar-U.S. dollar cross rates, it will suggest that over time, the Australian dollar potentially may appreciate.

But having said that, we would still tend to ensure that our exposure to Australia dollars onshore will be first naturally hedged onshore. And we would still choose to minimize any outright ForEx exposure. Of course, the net equity exposure to the Australian dollars that just like all the other subsidiaries in Sembcorp, they will not -- they can't be hedged.

So I guess if you take the view that the AUD SGD as implied by -- I'm sure all of you will have access to very, very robust projections in your house views. And also taking reference to the cross rates on the forward curves of your AUD USD as well as AUD SGD USD forward curves, it does imply that probabilistically speaking, the Australian dollar will be more likely to strengthen over a period of time, obviously, because I do not have a crystal ball against the Sing dollar. I would characterize it that way.

The next question is from Louis Hilado from Citi.

I just had 2 questions. The first is, if the transaction does push through, how does that impact, if at all, your 2028 targets for renewables gross capacity? Or will it be increased or it's more of a longer term? Second question is just a housekeeping one. Is there any major maintenance expected for Alinta's plants in the next 3 years or so?

To answer the second question, in the course of our due diligence, we do not expect any significant major maintenance for Alinta's plants. They are always maintained in accordance to the required maintenance schedules. And as of -- if we look ahead in the next 3 years, there are not any chunky maintenance for the plants.

And as I mentioned just now, they are long generation. The number of megawatts that they have in their fleet is bigger than the demand or the customer base that they have. So they should be able to comfortably cover that if there is any major maintenance.

So that's one bit. How does it impact the 2028 targets in terms of renewable megawatts? I suppose this additional growth platform is just going to make it so much easier for us to meet the 2028 targets. The 2028 targets, even without this platform, we were quite confident to reach it. As of today, we are already 19 over 20 gigawatts really, right?

So we should reach it quite comfortably. With this addition, it will be easier. So what happens is that it's supposed to be a happy situation that we are able to meet our targets set earlier, but it also suggests that then we have been a little bit too conservative.

So what will happen is that at the right time, we will come out and recast those targets. We tend to do a 5-year look ahead. So hopefully, soon enough, we'll come out and when we're ready, we will articulate new targets that goes beyond the 2028 ones.

The next question is from Paul Chew from Phillip Securities.

Just 3 questions from me. Can I just reconcile the underlying net profit again? The headline numbers is SGD 416 million. But the difference such of SGD 1,248 million less the SGD 116 million is SGD 232 million.

I think you mentioned part of it is mark-to-market. And I believe there's also some shareholder loan interest difference. So just trying to understand, is the difference largely the mark-to-market gains that was experiencing?

Yes. The difference is largely a result of the derivatives, noncash mark-to-market. To a certain extent, it is similar to our deferred payment note, right, where at every balance sheet date, they will do a mark-to-market of those -- of the instrument.

That is for ForEx. And because the -- for Alinta, they do have a derivative hedge book for the purpose of hedging forward. So every balance sheet date, there would just be a noncash mark-to-market gain. So the difference is largely usually a result of the noncash mark-to-market outcomes.

So also when computing the earnings accretion, are you using their existing interest rates or you're imputing your own interest rates? Of course, you're taking on debt and so forth, but do you also change the interest rate assumptions on that is faced by them?

Yes. For the purpose of the accretion computation, all the external borrowings that are at the Alinta level, we are taking the assumption that they are retained. So there is no change in the interest rates. Of course, if there is an opportunity to refinance to tighter margins, especially given the Sembcorp's credit now, we potentially would do so. So none of that is imputed. Now then, of course, the acquisition financing interest that we would -- we imputed our Sembcorp cost of capital. So of course, the margins will be tighter than the interest rates that are at the Alinta's level.

And sorry, if you may have mentioned this, but do you mention what's the cost of debt at Alinta level?

At the Alinta level, in Australia dollar level, the average cost of debt is around -- between 5% to 6% pretax. It will be a range, right, of loans, some closer to 5%, some 6% plus reaching 7%. But on average, it is between 5.5% to about 6% pretax.

And I guess if you were to borrow at your level, we can probably assume a 50, 100 basis points savings to speculate.

I don't need to speculate. Okay. I realize my friendly banks are not in this particular call, but I would expect it at the minimum to be the kind of levels of savings.

Okay. Just last 2. In terms of the hedging, like I said, there were mark-to-market gains, does it -- does the accounting treatment work whereby these are upfront gains then -- because then later on, you will realize lower electricity prices in the future because the gains, I presume is because prices drop. But as you realize them, the accounting impact will be to lower earnings. Is that how to understand this mark-to-market?

These mark-to-market gains are really swings against the where the market prices when the instruments are not due. Now of course, these hedges are taken against the physical hedge positions of the generation. So when you have a mark-to-market gain, it simply means that on the physical to underlying, you would have realized a lower physical price.

Now if you have a mark-to-market losses, then it simply means that on the physical side, you would have realized higher prices. So essentially, that is how that is how it works.

Okay. So -- and you do match. It's not like later on, you recognize the physical prices that are lower. So they kind of match I guess.

Yes. So that's how the hedges work. So the mark-to-market gains losses are against the physical earnings in the underlying.

Just one last one. The CapEx for the pipeline, the renewables pipeline, do you have a ballpark number that you have to commit to?

No, I think from a CapEx perspective, of course, we do not have a crystallized number at this point. Of course, they are at various stages of development. But you probably could look at average general cost of development in Australia today to impute the CapEx cost. Of course, the point to note is that while we have a 10.4 gigawatt pipeline at different stages of maturity, we do expect the execution of the pipeline to be fairly -- over a fairly long period of time, right, potentially in excess of 5 years.

So while you may be able to estimate the CapEx against them but over time, potentially, there would be cost adjustments, either cost savings because of efficiency of the technology being realized, of cost inflation as a result of local EPC cost inflation.

If you look at -- I think Slide 9 -- can we have Slide 9. So if you look at it, what is under construction is 400 megawatts. And then what is under development is 1.8, right? So those will give you some visibility. Now then against the cash flow, the EBITDA of this company, you would be able to see that they could actually support all that very comfortably even just from the operating cash flow. So that's -- I think that's something that you can look at.

[Operator Instructions] Zhiwei from Macquarie.

It's -- okay, this is a question about management in Australia. And the overall guest is it sounds like you have a key man risk. How are you -- what have you put in place to kind of like ensure that you retain management as long as possible? Because if you think about -- I think Temasek once did this or Temasek affiliated entity called City Spring once acquired this asset called Bestling, very different, more energy transmission from Tasmania to Melbourne, and they had this whole similar derivatives that they had used to hedge as well.

I think when -- without the local management, there was an absolute disaster in earnings. So just -- and I'm not too sure whether SCI's Singapore team has the capability to manage the Australian market yet. So it sounds like the Austrian management is very important. So kind of keen to what sort of plans you have to keep them there.

Okay. You want to try? Go ahead.

Maybe let me just talk a little bit about the local management team, and then I think Kim Min can chime in on some of these other comments. The local management team, if you look at Jeff, Dean Murray, who is the CEO, Jeff's right-hand man is actually Ken Wooley on the slide on the extreme left. So Ken has been with Jeff for the last 15 years. He's actually not just #2, he's basically the COO and he's got very good experience as well.

And then if you move to the right-hand side, between Chris and Dan, if your concern is really more around the trading portfolio management bit, both of them actually have exposure. And what Jeff has cleverly done in the past is rotated his key people around the various functions, including both portfolio management as well as finance. So I think that, to a large extent, mitigate the key risk.

I also want to say, yes, there was the experience in Daising, but there is also experiences in many other companies. I personally have looked after SP AusNet as well as Gemina during my time in Singapore Power, one listed vehicle and a private vehicle, both in the power industry. So the -- we do not approach this opportunity being complacent about what you just mentioned as a potential risk.

Clearly, we do not have boots on the ground. And we invest in this GentaylO platform precisely because they have got a solid management team with a good track record. So working with the team to map out their next 5, if not longer-term growth plan is something that has been ongoing for a few months now.

So I -- we feel like there is a strong alignment in terms of what we believe we can support in their plan and they believe that we can be the right shareholders that can drive the next phase of growth. Now all that aside, at the end of the day, it is about also putting in the right management incentive and retention plans, which we will have in place, right?

So it will very closely align the management to delivering the value that they have crystallized or they will be crystallizing in their business plan. And I go back to what I started with by saying that, look, in my previous experience, we have got -- I personally have got quite a fair bit of exposure to working with Australian management teams from a Board level, from an investor level and from a Chief Executive level as well. So I don't know whether that addresses your point, but compared to [indiscernible] is very far at the other end of the spectrum when it comes to what the Sembcorp Singapore team is and the Alinta team is that we're dealing with in this season.

And I think to add to that, we, of course, Sembcorp has always been very careful, thoughtful its acquisitions, right? So I think in relation to this, it will be very clear that in the course of looking at the business plans that triangulates to valuations that we are comfortable with, looking at possible levers for driving upside.

If we take a 5-year view, as Kim Min has pointed out, one of the key things that we are very, very particular about is to ensure that in the course of acquiring the assets, understanding the business plan and agreeing them, right, to the -- and also diligencing the management's ability to deliver them.

These -- the next 5 years target, both from a -- all the way up to stretch levels of performance would have been appropriately set as a management KPIs as a part of the incentives as to ensure that we align motivation as well as ultimately driving performance as well as value. So you can be assured that we have done those things. I think the track record of this management, if you look -- take the last 5 to 7 years performance of Alinta, it speaks clearly for itself in terms of its earnings as well as cash flow generation capabilities when you compare that against the other gentailers, even against the much higher valued gentailers in Australia, you will find that the performance have been stronger in terms of CAGR performance.

And more importantly, if you measure against a volatility against a mean performance, mean earnings over the last 5 to 7 years, Alinta's will be absolutely least volatile. So that clearly shows the quality of this management team. So we do believe that going forward, the important thing is that, number one, we have a high-quality management team with a demonstrated track record quite clearly, right?

And going forward, we have always been very careful in terms of developing business plans that underpin our valuation and expectations and to ensure that all the way up to stretch levels are appropriately reflected in the right incentives that will motivate this management team to continue to perform at the levels that they have done so.

Yes, I guess the Board must take great care of you all, too. I have one last question. Could you just share the breakdown of how your earnings are as a split of your generation capacity, if you could?

Just for Alinta or for the Sembcorp Group?

For Alinta.

Split of earnings.

Earnings. Margin generation capacity.

Do we disclose that?

No, we don't I think maybe we take that offline, we can follow up, help you have a sense on that. What do you mean by earnings as a split based on generation capacity? So earnings.

How much is from LYB, -- how much is from your gas speakers?

Okay. It will be difficult because as I mentioned just now, it is [ a gentler ] portfolio, right? So -- but I think we will try to -- we'll follow up and then see what we could brief you in more details to help you understand better how to think about the risk and the attributes, how you attribute and allocate value across the assets.

But having said that, when we look at the direct coal revenues, right, that is generated by LYB, it is post acquisition in a combined Sembcorp revenue, right? It is expected to be approximately 5% or less of our Sembcorp pro forma revenue. But if you want specific down to the earnings level by generation, okay, we would have to.

I don't think Jeff thinks about his business that way.

Yes, we don't -- but anyway, we can take that...

But I think he is also trying to -- what he is trying to do is to just any good analyst, try to attribute value against each of the assets, right? So we try to help each other understand this better.

We have a follow-up question from Pei Hwa from UBS..

I'll just follow up on the growth prospects. You talk about the market share gain especially in East Coast. Could you share internally, do you have a target as to what do we see our portfolio in 3 to 5 years' time, greenfield or brownfield projects, capacity increase or volume increase.

I don't -- we don't have any clear targets for the East Coast. But clearly, if you look at the East Coast, the more of the demand is going to come from both Victoria and New South Wales to some extent, Brisbane. So in fact, one of the things that Alinta did before they started going into the East Coast and was really to look at where the potential growth is going to come from in Australia. That's when they decided to move into the East Coast.

They were wildly successful in the West Coast, like Eugene mentioned earlier with more than 20% market share. So East Coast now represents 5%, right? They have 5% market share. And like I said, I think with the potential growth in renewables, I think there is quite a bit of potential growth in the East Coast, but we don't -- there's no...

The -- qualitatively, again, for whatever this is, they are the small player in the East Coast. And yet they have the lowest cost generator in the East Coast. So that actually positions them very well to capture market share in the East Coast. So then on the West, as Alex mentioned, they are the Starwood, right?

So their market share when it comes to customers, you can have a reasonably expect them to have an advantage to grow that. Now exactly how much is embedded in the business plan that we have, but I don't think we are ready to disclose that at this stage. So we register your question and then we'll try to see how we might be able to provide some guidance.

But at the mid...

Could it be more greenfield versus brownfield?

For them, it would be more.

It will be all greenfield, Hwa. I think when we look at Slide 9 of our presentation, right, it will be quite clear that we have 400 megawatts of BES that is already under construction and another 1.8 gigawatts of pipeline that is under development. So you would expect these to be commissioned in the course of the next 5 years.

We have another follow-up question from Sumedh, JPMorgan.

Maybe just one quick question on the governance side, right? So how do you how does Sembcorp manage Alinta? I presume that it is going to be independent -- it is going to stay independent. It's not going to be merged into Sembcorp.

And if that's the case, how do you sort of chalk out business plan per KPIs for them? I just want to understand that broadly. And secondly, on the cash flows earned by Alinta, is there any friction in terms of cash flows repatriation into Singapore? Or that shouldn't be an issue from a Sembcorp perspective?

This is 100% acquisition. So -- and Alinta, of course, has been -- they have independent management team that's running that the business for a while now. But as I mentioned, just 100% acquisition. This will become a wholly owned subsidiary. We have full control over the business.

Now so what we need to do is to make sure that we strike a good balance as to how we can, as a holding company, as an investor, be comfortable with the risk management and yet enable them to grow into their business plan that they have very well put together, right? So we bought -- we come into this business believing and buying into the management business plan, and we will support them in growing that.

Now having said that, as a 100% shareholder, we will want to have the usual oversight any other 100% shareholder would have. So we certainly would be wanting to have -- to do it at the Board level, right? And then at the management level, we believe that they have a very competent, very solid management team. But where it makes sense, we would also complement both sides, right?

Maybe someone from Singapore can learn something from Australia and vice versa. So there could be opportunities for cross-fertilization, but we don't want to preempt all that and be prescriptive. What we want to do is that to be very respectful and understand what is going on, how are things done in the past and then find the opportunity or the gaps whereby we could add value to each other.

So I want to set the perception that looking at 100% owned, we have full control, but we will be -- but we are coming in here to support the growth of the business plan and the management team, and we would look for opportunities to add value to each other, while at the same time, making sure that it meets our risk thresholds and our risk limits and work together with them to grow it, right?

So in terms of the business plans and KPIs, as I mentioned, just now, they do have a business plan. Today, they have a structured short-term goals as well as long-term goals. And what we will do is that we will be coming in to first endorse their existing short-term KPIs, and we will then work together with them to develop the KPIs after we complete the deal and become owners.

At the same time, the longer-term KPIs will be very much -- today, it is already sort of articulated in their midterm business plan, and we will be putting against that incentive plans and retention plans to make sure that the management is aligned with delivering what they believe they can deliver and also then, of course, be motivated to stay to share in the benefits of that delivery, right? So hopefully, that answers that. Cash flow repatriation, this one is Eugene's...

In terms of cash flows repatriation, I think between Australia and Singapore, it's one of the most friendly cash flow fungibility markets. So franked dividends, SE dividend is paid out of Australian profits that have already paid Australian taxes onshore. There is no withholding tax. So it's a pretty friendly cash flow repatriation jurisdiction. So we are actually very, very comfortable in terms of the fungibility of the cash flows between Australia and Singapore.

Just one more question on the whole financing, right? I mean, as you said initially, there is going to be $6.5 billion bridge loan facility. But you also mentioned that Alinta is kind of under geared, so we could optimize leverage there. Could you please just walk us through, again, what are the plans, and how you're going to fund it, and how those leverage will look like?

Of course, right now, Sumedh, we are in the process of structuring the longer-term financing. But the thinking is as such, okay? Now $6.5 billion is the enterprise value. Now Alinta is under geared right now. They probably have less than AUD 1 billion of net debt. So we think that we potentially could maintain close to a $2 billion -- or 2x, approximately 2, 2.5x EBITDA of net debt in Alinta. So out of the $6.5 billion enterprise value, approximately $2 billion would reside in the Alinta OpCo itself. So that leaves AUD 4.5 billion of financing. So of the AUD 4.5 billion, we would likely look at it across 2 tranche, about close to 60% -- 60% to 65% of that will likely come in the form of a long-term syndicated bank facilities, right? The target tenor of those will be in excess of 7 years, right? We're targeting about 7 to 10 years. And then the remaining 40% of the $4.5 billion would likely be looking at longer-term capital markets instruments as well. And of course, we will be targeting a very long tenors for those. So that is how we would quite efficiently structure the financing for the $6.5 billion bridge loan into the long term.

Understand. Sorry, perhaps on that long-term capital market instruments that you mentioned, what exactly are you referring to? Could you please give us some examples...

There will be debt capital market instruments, bonds. I've already said no equity fundraising, so you don't have to worry about that.

No, no. My reference was towards going into, obviously, next couple of years, are there any assets that you see on your balance sheet currently or in your current portfolio that are not warranted anymore, so that could be used towards partly financing this?

We would be -- we are always looking at the portfolio, right? It's just like earlier this year, we divested our waste business. So we will be reviewing the portfolio from time to time. But I do want to emphasize that even at the leverage that the pro forma leverage that we would put on for this, there is still headroom in our balance sheet in terms of debt capacity. So our 5-year plan, we -- internally, we have a 5-year plan that we are growing into. This is only part of what we plan to do and that there is actually headroom to fund what we need to do without any equity raising, right? So that I want to emphasize.

So this is not like if we do this deal, then you will sub all the oxygen out and we won't be able to do another deal. And then if we want to grow further, we have to come out with EFR. No. We didn't -- when we approach the target we were looking for, all these criteria that look, will we be -- how are we going to execute our 5-year plan? Can we do it without -- do we have headroom? Can we try to avoid equity financing where we could? So that's why this particular platform is -- we like it a lot because it is very cash generating. So the cash -- underlying cash flow generating capability will allow us to quickly delever on the one hand. But moving forward, it could actually complement what we have in our Singapore portfolio to generate all that cash to fund our future growth as well into the green side.

So the -- even though I didn't emphasize it, but this idea about taking brown cash flow to fund green continues to be very well and alive in the thinking moving forward. So again, there is headroom even at the 4.5x or 4.6x, if you think about it, it is not at the highest end within the industry. On the other hand, the cash flow generating capability of this business will enable us to very quickly delever. If you think about it, Singapore alone, maybe 1, 1.5 years ago, we were looking at 4x, more than 4x, 4.5x, right? And then now in a space of 1 year, we're down to 3.some, right? So it is -- on a good day, Eugene can really lay out if necessary in more details how we think the the cash profile will look like. But we're very comfortable, frankly. And because of that, we're also heavy in our mind is also can we maintain the dividend payout ratio as well as the dividend payout levels.

And that is something that -- that's why in the past, we have been very, very careful in terms of increasing the ordinary dividend, right? So when -- for a couple of years, we did very well financially, but we paid out special dividend. And then it's only when we became quite confident then we say, okay, let's increase it. So at the $0.23, very, very comfortable. We definitely want to keep to that level, if not increase it as we move along. And in the meantime, for us to grow further, we feel like we do have the balance sheet headroom and then the existing assets now that we've got -- after this transaction closes, we've got Singapore, we've got Australia, both are very cash generating that will really be the twin engines that will fund our growth into the energy transition moving forward.

Thank you. There's a question from Mayank Maheshwari, Morgan Stanley.

I think, I have -- beyond the numbers, I have the fundamental question around -- when you look at this asset, it fundamentally changes your balance sheet in multiple ways, correct? Whether it is the mix of your fuels, whether it is the structure of the balance sheet, exposure to markets, et cetera, right? So what made you from your perspective and the Board's perspective, think that Alinta was the place to be in while you were scouting for assets around the world?

Eugene, do you want to take that?

Okay. So I think in relation to that, it was a pretty strategic approach where we took almost -- a year ago, right, at the start of the year where we took a step back and we look at the Sembcorp portfolio. And we ask ourselves, and I hope you guys will forgive me and also Alex and Jim because I'm just going to take some time to share the thinking. Now it's almost a year ago where we look at our Sembcorp portfolio, and we are -- when we look ahead over the next 5 years, the key question that we ask ourselves when we look at where energy transition is, and also when we look at how we potentially would see growth coming from with the target to hit double-digit total shareholder return in mind, how will we want to see our portfolio being constituted?

Now when we look across all our different markets, the reality is that while the Sembcorp current business portfolio, driven by our core capabilities and also the -- our energy transition strategy, has worked well for us. When we look forward into the next 5 years, it may not necessarily be so. I think one of the key elements, and you all know this when you are following us. China has been a huge growth engine for us in the last 4 years, but it's quite apparent, and you have heard me and Kim Min mentioned many times. And I think Alex will also admit himself that I think going forward, at least in the foreseeable future, we see capital deployment challenges for China. And clearly, it will not drive growth the same way as it did for us in the past years.

I think in the Southeast Asia renewables segment, also the challenges where we are always very ready to deploy capital, but the challenge is that it's just slow, right? When you look across Vietnam, Indonesia, Philippines, each of the individual markets either are not that scalable in itself or present opportunities that are probably a lot slower than we have expected. And over the next 5 years, we do expect this region to continue to be slow, right, in terms of allowing us to grow. Then, of course, India continue to be a bright spot, and you have heard me talk about the possibility of a capital recycling the Indian portfolio, right, taking advantage of the equity markets in terms of renewables valuation there.

And essentially, then in Singapore, which is very much a cash flow generating market for us. But I think you would also have seen the challenges where clearly, the visibility of -- I call them the 4 huge khunas, right, 600 megawatts highly efficient [indiscernible] coming on stream clearly has seen spark spreads moderated. Though just before all of you think that Singapore is ex growth for us, we still see specific opportunities across data centers and high-tech manufacturing with specific capacities that we can clearly capture. But Singapore is probably not going to carry a double-digit TSR over the next 5 years.

So we set ourselves the goal of looking to enter new markets. So what are these -- what -- and if we want to enter new markets, what do these markets have to look like for us, right? So I think, firstly, we certainly want them to average up in terms of quality, in terms of regulatory framework transparency and thereby, reducing our overall risk of our business portfolio. And secondly, be scalable enough for growth, yet clearly supporting energy transition.

So you have heard me talk about this before. Middle East was one region. We have been there for a long while. Clearly, you have scale opportunities for us to grow, very long PPAs, good quality and bankable. Of course, returns are also -- we have to manage expectations because simply of the quality of the PPAs. And also regionally, we are focusing on the investment-grade markets.

Then we also ask ourselves from OECD, do -- are there possibilities for us to focus on adding OECD markets into the portfolio where Singapore like, but yet having a greater scale for growth? Now across OECD markets, we are certainly not at this point in time, looking to go too far west, talking about the Americas. And I think, in Europe, as a power player, you have heard me talk about this before. I think our right to play and compete there in general is challenging, right, particularly where you have very large players there already.

So when we look out here in Asia, we did consider North Asian OECD markets like Japan, clearly, from a return standpoint. It is probably lower and hence, can't be a priority market for us to be looking to grow quickly into. We did consider Korea. But I think from a cultural perspective, trying to understand how to work in the Korean market and with the Koreans continue to be something that we need to grow more in first. Now we did consider Taiwan as an OECD-like market. Now the issue with Taiwan is that we do not consider ourselves comfortable to participate in the offshore wind projects as of now. So from an onshore perspective, we are talking about 8 gigawatt speed kind of onshore demand and capacity.

So in going into any new market, we clearly want to capture 2, 2.5 gigawatts that will obviously give us a very large footprint in Taiwan, which, at this point in time, may not be that comfortable relative to the position that we have in China. So while Taiwan continues to be a possibility, but may not be a priority market for us to go into. So then naturally, Australia as an OECD market open up itself. And Australia, clearly supportive of the energy transition ambitions, legislated 2050 net zero, clear intent against capping out coal generation and looking at coal closures definitely suits our strategy of doing so. And then also as a merchant market, looking at market entry strategy via a [indiscernible] model, which is similar to what we are doing in Singapore is something that we can understand.

And also, we are looking at -- and when we spend the last year or so studying the Australian market, we are also convinced that the [indiscernible], integrated retail and generation portfolio operations allow us to quite be in a position to match generation against demand characteristics and hence, drive alpha, as I will put it that way, right, higher-than-expected ROEs. So then that led to the decision to come into Australia as well as Atlanta. So it was a fairly considered approach when we look across at how our portfolio -- how we would intend for the portfolio to be constituted, taking a 5-year view. And also, we did methodically considered across all the target markets, and we believe that Australia is the right one for us to go into at this point.

Yes. In a nutshell, since, Mayank, you joined a little bit late, really, it is wanting to have a different -- improve the risk profile, right, or diversify and this is a AAA country, and then a clear regulatory frame and also a clear pathway into net zero, very aligned with the energy transition. And at the same time, it provides this very sizable pipeline that we can grow into in terms of renewables and firming technologies. So we need to have that profile. We need to have the size and this market and this target actually giving us that growth market that we're looking for that can allow us to engage in the next phase of our growth, right?

In the last 5 years, we've grown into a certain size. And then now, in order to continue that exciting growth path, we want to double in 5 years and all that, then we need to look for new markets. And Australia presents that opportunity for us to grow into a new market with a very conducive, I don't want to say attractive, and I don't want to say -- maybe complementary is the right word in terms of the profile that you just described yourself that from many dimensions, it actually complements our portfolio very well. So I hope that, in a very lengthy way, we went around the region. But to give people a sense that it wasn't opportunistic just like that, it was actually a case in which we were -- it took Eugene and Alex, we started hunting around in Australia since, what, February or April.

Kim Yin, just a follow-up on that. I think that's a very good detailed explanation of how Go through went through markets. In terms of right to win for Alinta, what do you see as the biggest strength on right to win? Because I think it's the fourth largest integrated utility player there. And also, I think in terms of risks, [indiscernible] has always been ahead of from a regulatory perspective and utilities versus the rest of the world. How do you assess risks versus your rest of your portfolio when you think about Australia now going forward?

No, the -- you were breaking up just now, but I heard 2 questions, right? One is for Alinta's right to win and the other one is more sort of Australia as a risk profile within the Sembcorp portfolio. And so correct me if I'm wrong. So...

That's correct.

Yes, Australia right to win, I think it crystallizes maybe 2 points. One is the management, right? This management has proven to be exceptional and be able to perform, right? And they've been together for quite a while now. So the quality of the management is important because the market is complex and you need good quality management to capture the opportunities. So that's one. The other one is that the asset portfolio of this business, again, if you look through the asset base in terms of the generating assets, and you look through the customer base in terms of where they are, they actually are in a very good position to capture more market share from a customer perspective in the East Coast, and they are very well entrenched in the West.

They are -- as I mentioned just now, you might not have heard it in the East Coast, they are the smallest retailing customer base and yet they have the largest low-cost power generation, right? So that alone is -- so that's one element in the asset portfolio. So in a nutshell, to answer your question, the way we see it as management team is one reason for the right to win. The other one is the way the business has been set up and the asset base that they have -- asset base widely defined, which include the customer base, the assets, the hard assets as well. So that's on the first one. And Alex, do you have anything to add to that one?

No.

Okay. And then in terms of Australia as a risk to the rest of the portfolio, we've been telling everyone that in the first 5 years of our growth, Southeast Asia, China, India, right? So these are all developing markets. And Singapore remains a strong anchor that generates a lot of the contribution, right? Then as the developing markets portfolio grows, it actually also presents a certain increased risk profile. For instance, even though we're doing well in India, the portfolio is dominated by greenfield projects, right? And greenfield projects come with a certain profile, right? Of course, there's execution risk, there is equipment price risk, there is construction risk. But when the pipeline comes online, it will start to become very high returns, right, relative to just buying existing assets from brownfield.

But for the same reason, the profile is also such that the cash flow is back-end loaded. The front end is all going in, and then it will take a while for the cash to come out from the tail end. So now Australia is providing this very complementary profile from a risk/reward profile, right? So we -- this Alinta project that we're getting, it is immediately cash generating. It is immediately earnings accretive. It does have a greenfield portfolio, but it's, as mentioned just now, and if you look at the numbers, it's very manageable within itself. We don't even have to put extra money to go in there to fund the growth even with the 10 gigawatt pipeline.

And so from developing country, greenfield risk, construction, cash flow profile developed market, AAA brownfield cash generating earnings accretive, it provides a very nice anchor. And if you look forward 1 year from today, after we close this deal, you suddenly -- if you look at it, the risk and the returns, the earnings contribution profile of this business is so much as a portfolio more diversified and more robust. So my partners here at the panel, have I missed something? That is essentially it.

Do we have a question from [indiscernible].

The next question is from Siew Khee Lim, CGS.

Sorry, I joined late. I may have -- I may ask some questions that I think I was not clear. Just wanted to check on the profitability that you shared, $483 million, how do we actually tie this back to -- if let's say, we were to actually get audited financials account? And how stable is this? And I'll follow up with other questions.

Okay. This $483 million, essentially in the audited financials, there will be disclosures in relation to fair value changes of energy derivatives. So that will be the key.

difference?

Yes, that's right.

How do we look at that? Like is that -- do we have that difference to repeat every year? Or how do we forecast this stability of $483 million with the derivative gain?

Yes. So this $483 million is before the derivative gains, right? It takes out essentially for the $483 million, there are actually derivatives mark-to-market losses. So the reported net profit, you see is probably closer to [ $340 million ], okay? So -- but these mark-to-market losses are really dependent on the balance sheet date where the mark-to-market, the losses somewhat like the deferred payment note, the FX changes that we have on our current balance sheet. So these will be dependent on the -- really the derivatives prices on the balance sheet date and the noncash mark-to-market losses. So...

What derivatives are these? Sorry.

These are essentially of 2 key types. One is the swaps where the Alina could be selling swaps for the purpose of hedging the prices of the retail demand. Some of the peaking assets, for example, the gas assets in Queensland, they would potentially be selling caps, which essentially, they are selling the generation capacity as insurance to other retailers for a certain premium. And if the energy retailers call for them to generate for that at a certain price, then they will have to generate. So you would imagine for a cap, for example, they would have sold a cap at a, for example, market price at $300. So then the mark-to-market gains or losses against the $300 will essentially be at the balance sheet date, what the spot prices would be against the cap price. So that's an example of the noncash derivative losses or gains at the end of the year.

Okay. And then I just wanted to just check on the tariff that you -- I understand that the contracts are generally short term 1 to 1.5 years. How stable has the tariff been, or how has the tariff been 1.5 years ago? And what's your outlook 1.5 years later?

Sure. Besides the tariff, I'll get into the tariff shortly, but besides the -- because you were, Siew Khee, we're talking about the earnings stability, right? So I just wanted to give you a bit more color there since you joined a bit late, right? We actually talk about the Gen Tailor, which is the generation retail customers. And obviously, with 1.1 million customers, that provides a bit of a natural hedge in terms of earnings. So that's one. And Eugene mentioned about the hedge, which basically Alinta is long in generation. So they do sell swaps, right, which is to lock in the price, which is essentially similar to our PPAs, except that it's 18 months in nature, not 10 years. So that's the second one.

In terms of growth and in terms of tariff, what we have seen historically is that every time there is a decommissioning of a coal-fired power plant, it takes that supply out, right, of the supply-demand balance, and we see a rising trend in the tariffs. And so given where Australia is in terms of the carbon transition or energy transition story and plans and going towards a 2050 net zero target, more and more of the coal-fired power plants will be decommissioned. And we believe, going forward, if history is a good predictor of the future, we do see upside in the tariff as well. Hopefully, that answers your question, Siew Khee?

Okay. I'll try to absorb it later. And also just on EBITDA margin. So before the acquisition, group margin was 31%. But after it actually dropped to 24%. Just wanted to hear your thoughts on you're willing to actually forgo this? Or do you see margin expansion going forward?

Sorry, Siew Khee, your 24% and 25%, you're referring to EBITDA margins of Alinta?

Yes. No, I think group.

Okay. I think for a group perspective, Siew Khee, the focus is less on EBITDA margin in itself, right, but more on ROEs. That means capital deployment and acquiring an asset and how that enhances our ROEs. So again, EBITDA margins, even in our gas business in Singapore, it could be variable, right, because it really depends on the -- for the gas that has been contracted downstream, it really depends on where the index are, right? Because the index are higher, it may just imply a higher EBITDA margin simply because my spot spreads are actually fixed, right? So to a certain extent, the group EBITDA margin is also not necessarily a good predictor of economics or earning capability of the [indiscernible] business. So we are always more focused on the ROE.

I think the point that we are trying to make where we show the EBITDA margins of Alinta is to highlight that consistently, Alinta has been able to leverage on its very available as well as a cost effective generation portfolio to generate earnings, right, relative to its peers, right? Because when you look at its average EBITDA margins ranging from 15% in 2023 to 19% in 2025, where it has been expanding. It has been ahead of its peers. But for Sembcorp as a group, right, as I've always said, my focus is always on the ROE. That means it is the capital that is -- that I have deployed for the group. Ultimately, what does it drive in terms of the net income returns for us. So it's probably less about the EBITDA margin, but more for the ROE.

Sorry. So why did -- I'm not sure whether you shared, but if you shared, I'll check in with my colleague later. Why is the Alinta's margin better than peers? If you shared, it's okay. I'll follow up later.

Okay. I kind of mentioned that. The key element for the stronger and more stable actually margin performance really is because, number one, they have the highest generation length. That means they have the most capacity for the purpose of generation relative to its peers, right? So they are less likely to take shocks in relation to electricity prices. That means they don't have a situation where they have electricity demand downstream and they actually don't have enough capacity to generate for it themselves, and they have to buy electricity from other people. So Alinta does not run into that kind of situation. They are always generating their own electricity.

So because of that, the generation fleet is, number one, very available, right? Average availability for their generation fleet is over 90%, which is very strong relative to the industry. So which means that they are always in a position to generate for their retail as well as C&I and wholesale customers. Then the second thing is that when we look at the average short-run marginal cost or essentially the cost of generation, right, for their fleet, they are one of the lowest. So for example, Loy Yang B, the coal plant, the average short run marginal cost is about $20 to $25 per megawatt hour, which is one of the lowest relative to the other [indiscernible]. So that allows them to generate more effectively and more profitably relative to other GLS. So these are the reasons why.

Okay. I assume other competitors also have coal availability. What sets it apart? Unless we're saying that because the rest has less coal ability or I mean, if everybody is integrated, wouldn't everybody face the same cost structure as well as generation capacity structure?

I think there are a few distinctions. You rightly pointed out that other competitors also have coal-fired power plants. Just wanted to highlight a few points, which sets Alinta apart from competition. So one, as Eugene pointed out, very cost competitive. And one of the reasons why it's cost competitive is also because it's one of the newer coal-fired power plants, right? There are older ones. Second, reliability; third, high availability. These are things that Eugene highlighted earlier. The fourth, actually, if you look at the asset base, it's also very flexible. So the coal-fired power plant is able to turn all the way down to roughly about 40% and not all the coal-fired power plants are able to do that. So there are a few of these distinctions, which set Alinta apart.

Okay. And my last question is, they currently have 3.4 gigawatts and then we want to actually grow to 10.4 gigawatts, and we didn't really talk about the time line, right? And I know that, Kim Yin, you mentioned that it will not impact your dividend payout. But just wanted to just like realistically, when we look at the website, they said that they are growing 4 gigawatt of RE. But now we are saying that they have a 10 gigawatt growth plan. Can we be a bit more like specific on [indiscernible] how many gigawatts will you increase per year?

This slide actually would also tell you, right? The development cycle in Australia, obviously, is a bit longer than it is in China or India. And if you look at it, right now, they have got 400 megawatts that is under construction and 1.8 in the pipeline. The other 8 gigawatts, those will take much longer. So at any one point in time, even if the 1.8 is all, let's say, half of it is under construction, you're still talking about 1 gigawatt, right? So if I have to put a thumb against it -- a thumb rule against it, that's the kind of numbers that I will look at. But I hesitate to -- I think that thumb is very, very rough thumb, right? If we see a good project, there's no reason why we wouldn't want to go in. But we would want to do it -- and this is 100% subsidiary, as I mentioned, just now, and we will only do it if we are very comfortable.

But this will be -- this will all be done in consultation with the Alinta management, and we think the pipeline is -- a good part of it is very real. And it's only, as you rightly point out, the matter of time, how you pace it out and then how you make sure that the risk reward meets the -- both Alinta as well as the shareholders' thresholds. And I believe those are quite well aligned.

Sorry, I just have one very pointed question. I just asked, please don't be offended. So how do we actually answer to shareholders on our brown to green strategy and now adding some brown into our portfolio?

As I said, we approach this. we firmly remain -- position ourselves as a player in energy transition. So the -- and we are attracted to this opportunity precisely because it has a big greenfield pipeline that will allow us to support the energy transition, to do the transition, right? And maybe you will not hear in the earlier part when I mentioned at the end of the day, this season with demand growing so strongly in many markets, because of digital, because of AI data centers and what have you, electrification included, then the balance between energy security, affordability and availability as well as sustainability will have to be a much more nuanced one, a more balanced one. In fact, in many markets, I'm sure you know, security and affordability has been put in priority even to sustainability.

So as a responsible energy transition player, what we are seeing is that we are coming in here to support the transition in the relevant market. Australia is firmly on the path to a 2050 net zero. They have legislated that. They have some interim targets. And then we are in a better position than arguably the outgoing shareholder and many other incumbents to support the transition that this market as well as -- this player, Alinta is undergoing. And then -- so -- and we do that by building out the greenfield portfolio. So as we build up the greenfield portfolio, the carbon intensity of this portfolio will reduce, right, even as the brown continues to be there. And over time, the brown will start to -- as the more competitive green sources come in, the brown will, over time, may take a while, but it will over time reduce.

So that's one dimension. And then the brown to green strategy, we have always said that, I'm taking the brown cash flow to fund the green. And this one fits straight into that the brown cash flow coming in from the portfolio will be used to fund the green. And we are emphatic about we're not going to build another coal plant, and we also will not be investing in another stand-alone coal plant. We look at this as a portfolio. We didn't go into this to buy the coal plant. We go into this to buy a portfolio that enable us to transit by building the green portfolio and hopefully, over time, help the community decarbonize in a sustainable, inclusive and responsible manner. A whole bunch of it, but I guess I'm just emphasizing that we are not reversing -- this is not a reversal. We are not going back into coal by itself, right? It is because it is part of our portfolio. And just now we explained to Mayank, when we look at the market, each of these, they all come with a certain portfolio. And we -- again, we approach this from a portfolio perspective.

We have one more question from Rachael Tan, UBS.

This is Rachael from UBS. Sorry, I am also once again late. So I apologize if I've asked this question before. You mentioned that you still have some headroom to fund the growth that you need. Now that you've made this Alinta announcement, what are the characteristics of future assets that would appeal to you? And how would you make sure that management bench strength is not affected?

In terms of the -- if I may, can you repeat the characteristic of the future -- future assets that may appeal. I think we continue to -- the 3 growth areas that we articulated, those continue to be very relevant, gas and related services, renewable energy as well as integrated urban solutions. Each of the 3 growth areas continue to -- we are not changing from that, right? And so -- and that's why this particular acquisition is undertaken by Alex and his Renewable East site to tackle this, right? So the assets doesn't change, but now we are opening up into a new growth market so that we have more dimensions and opportunities of growth into the same areas.

Hopefully, that addresses that first part. Bench strength, and you know that in the earlier part of this year, we reorganized ourselves into 3 groups or 4 groups, GRS, gas-related services, Renewable Energy East, Renewable Energy West as well as Integrated Urban Solutions. And we've got teams organized now fully functioning team in each of the groups. So the bench of SCI management is really chasing some of these markets quite independently almost, right? So the bench strength in that sense is not diluted. For instance, Alinta, right now, Alex is leading the charge into Australia. Now even as the activities in China has slowed down. You may know that Alex earlier has been leading our Chinese business when it was a very high growth pace. And now even our Chinese team that worked under Alex, they have matured. And when I travel there, they are all ready to come out and support activities in the other parts in the Renewable East region. So I think we are at the -- in fact, I'm glad you asked this question because we are at a place in which I want to say, after the last 5 years, the team has matured and the bench has strengthened. And then now we are at a very good place to -- even as -- when we come out here to do new markets. And that's why we feel, on the one hand, we are comfortable going into a new market. For the last -- first 4 years of our journey, you may have heard me saying some of you would have heard me saying, hey, look, I didn't enter into a new geography at all. We are always into the places in which we already have boots on the ground. Now with the team having matured and with the types of businesses, the 3 lines of businesses, we gain capabilities, the bench is stronger, now we're very confident that we can come out here. So certainly not diluted.

There are no further questions on the web.

Okay. So if I may, just to sum up, this is an opportunity for us to enter into a new growth market, a very complementing risk/reward profile into the Sembcorp portfolio. And I want to emphasize that we would -- it's very accretive that it doesn't -- we are very comfortable with the balance sheet and the cash flow generating nature of this business. We are very comfortable that -- and confident that we can maintain the dividend absolute amount as well as the payout ratio, if not to grow it. And most importantly, there are no plans to do any equity raising because we don't need it, and we are comfortable with the balance sheet.

So if I may leave you with those few very important points that I want to emphasize. So thank you very much. I know that it's short notice. Again, it's late. And this is December, but sometimes opportunities do not fit into people's holiday calendar very well. So I apologize if I have disrupted any of your work in your lives. But thank you for taking time to hear us out. And we will follow up later with -- if there are further questions and where we could help to provide a clearer guidance on some of the matters that bothers you. So thank you very much again. Have a good night.

Okay. Thanks for your time. Have a good night. Thank you.