Good afternoon, everyone. Thank you for joining CTF Services Limited Financial Year 2026 Annual Results Analyst Briefing.

I'm Silvia, the Head of Group Investor Relations. In today's meeting, our management presentation will cover the financial and operational performance for the period, provide updates on our five major business segments, and further elaborate on our strategic initiatives.

A Q&A section will follow the presentation. For participants joining us via webcast, please submit your questions at any time by clicking the question mark icon on the left-hand side of your screen.

Our management team will receive them directly on their iPad. Without further ado, may I now invite our Executive Director, Group Co-CEO Mr.

Gilbert Ho, and our Executive Director, Group CFO Mr. Jim Lam, to kick start today's meeting.

Thank you.

Thank you, Silvia. Thank you.

Let me have a quick introduction on our results. For financial year 2026, we continue to have a very stable year.

I would say it's not particularly strong, but it's a very stable year. We have done a number of acquisitions and also a number of disposals.

I will talk about the numbers later on, and Jim will elaborate on the operations as well as the numbers. Overall, as I said, we have a very solid financial year 2026.

In terms of the expansions, the financial services showed a very strong momentum, and it became the largest AOP contributor that replaced our roads segment as the top AOP contributor. We continue our capital recycling.

We disposed some of the assets. We redeployed our capital into two focus area, namely our financial services as well as our logistics segments.

As you may also know, during the year, we issued the convertible bond, and all of them has now been converted. We restored our public float, and also that enable us to go back into the Hang Seng Composite Index, as well as renewed our Stock Connect eligibility.

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

Dividends, we uphold our sustainable and progressive dividend policy. I think this is the 24th year.

This is the 24 years consecutively we distribute our dividends. We'll talk about the dividend part later on.

On AOP, we delivered a strong result with HK$4.59 billion of AOP, increased year-by-year by 3%. In terms of profit attributable to shareholders, it increased by 11% to HK$2.393 billion.

As you can see in the chart here, 32% of the AOP actually coming from the financial services now, and 31% coming from our roads segments, followed by our logistics, 14%, and then constructions, and then last but not least is our facility management. This basically summarized the entire year's of capital recycling that we have done.

I will first talk about the monetization and the disposal first. In October 2025, we first issued the exchangeable bond of HK$2.2 billion to exchange into our shareholding in Shoucheng.

That exchangeable bond, the coupon is 0.75%, is due 2028. That actually allowed us to monetize the stock without actually selling it, we can capture the upside, and in the meantime, we have a very low funding cost funds for us to do our acquisitions.

Then between 2025 and 2026, within this entire year, we have done a number of disposals within our strategic investments segments, that total of around HK$1.3 billion. That consists of a number of different investments, small and big.

In the old days, we have done very much a number of PE investments as well as VC investments. Here are the proceeds coming from those investments.

Then in 2026 July, we completed the disposal of one of our toll roads, the Cangzhou Expressway. That came back with RMB 1.6 billion, as well as, I think very importantly, it deconsolidated the net debt of around RMB 1.7 billion.

I think that actually very important to us because that substantially lowered our net gearing ratios. In addition to the monetizations as well as the disposal, we have done a number of acquisitions throughout the year.

In November last year, we acquired 13% in uSMART. This is actually a very important step.

Not only that, it expanded our financial services platform. This acquisitions, although it's only 13%, only account for half a year, already contribute around 30 30 million, right?

35 million of AOP just for this half year. Then between 2025 December and 2026 January, we consecutively acquired four logistics properties: one in Greater Bay and four in the Yangtze River Delta, around the Shanghai area.

Then in April, we invested in a battery energy storage platform in Finland. Then in 2026 July, we completed our acquisitions of 65% in Blackhorn.

Again, that is a very important step in building up our ecosystem in the financial services platform. It enhances the entire capability for us to cross-sell to our policyholders and offer more wealth management products to our customers.

Last but not least, in 2026 September, we completed another acquisitions of logistics property in the Yangtze River Delta. We also invested in a AI data center in this September 2026.

In fact, we just issued a press release for our investment in a data center project in Johor in Malaysia. That actually mark our first overseas investments of data center in this month.

Very importantly, I have to say that most of the investment, if not all, we don't invest in greenfield investments. We only invest in brownfield or mature assets.

Basically, all the investments that we do, no matter it is warehouses or data center, is already making cash flow. It is very important to us that we don't take any construction risk.

It is really not the nature of our company. If we go to the strategic priorities and outlook, I will very quickly go through this.

As I said, financial services will be one of the core segment that will grow. We will continue to expand this particular platform, especially definitely is CTF Life.

We'll focus very much on the expansion of CTF Life. We will expand the reach of their customers, not only Hong Kong and MCV, Chinese mainland visitors.

We have actually very good growth, which Jim will talk about later on, that the customers coming from overseas, including Japan, including Taiwan. We'll also look into overseas market such as Singapore.

We will continue to enhance the wealth management platform. Now we have CTF Life, we have Blackhorn, we have uSMART.

We will continue to utilize all these different units to give more choices for our customers. We'll also keep an eye open to see whether there's any acquisitions suitable for this particular ecosystem to expand in this financial services sector.

For toll roads, I said in the last analyst briefing that we are not going to expand further in toll roads. In fact, after that, we disposed one of the toll roads.

We will continue to see whether there's opportunities to monetize at a good valuations any of this toll roads. I think one of the key words here is about good valuation.

We won't monetize for the sake of just getting the cash flow back because all of the toll roads at the moment, we now have 12 toll roads left in our portfolio, all of them still generating very good cash flow. Unless we get good valuations, I don't see the need of the immediate disposal.

If we get the right valuations, we have no hesitation to dispose toll roads in this juncture. Logistics, I think the idea, as I said, is to continue to expand in this particular area.

Hong Kong, for ATL, we already increased the occupancy rate from 70-odd percent now to around 85% by the end of last financial period, which is 30th of June. We will continue to strengthen the operations of ATL and increase its occupancy rates.

We will look for value acquisitions. We already done four over the last few months.

We'll see whether there's any other opportunities. I think it is very important that over the last 10 years, there's a period where there's many people chasing for assets in the logistics sectors.

We are not those type of people. We don't chase assets.

We only do the acquisition when we see value. Now, although some of the people exiting the sector, it is really not because the entire sector outlook has been affected.

It is because some of the funds reached the end of the fund life, they have different reasons. We only do acquisitions, again, when we see value in it, long-term value, and good locations.

At the end of the day, logistics is about locations, locations, locations, locations, locations. All the focuses of this is in the GBA area as well as in the Yangtze River Delta.

Constructions, we have now four platforms: Sanfield Aster, which focused on E&M, we have Hip Hing focused on building, we have Vibro focused on foundations, and then we have Quon Hing focused on concrete. All this actually can capture very different type of things, especially now as you can see from the government policies, they are very focused on the Northern Metropolis.

How we see it is, especially in the very initial phase, it will benefit Vibro doing the foundation work. This is actually very much stated already in the Five-Year Plan and as well as in the Policy Address last week.

We think we can definitely capture that particular market, Vibro being the top, not the top few, the top foundation company. I think we can capture all these opportunities in the Northern Metropolis.

In fact, over the last year, Hip Hing already is doing some of the projects in the Northern Metropolis. We continue to see the recovery in the residential market as well.

Some of the property developer already start bidding land again. We are very positive about the constructions segments.

We'll continue to do well, especially that we are in the top part of the cake. We are where we can actually capture the most value out of this particular sector.

Last but not least is the facility management. That includes where you're situated here, the HKCEC, GHK, and KTSP.

CEC, operationally it continues to be good, but the results is a little bit affected because of the depreciations where we have only a few years left in the concessions. While the operation is good, we'll continue to hit by the high depreciations.

We will start the negotiations or discussions with the government on the next concession period for HKCEC. For GHK, now marked the, I think the sixth year, seventh year of its operations.

It started operating in 2017, grand opening in 2018. It turns into positive EBITDA in 2021.

Now this year, in fact, the AOP grew four times from last year's, which Jim will talk about. We'll continue to see this will continue to do well.

We'll focus on the expansion of the clinics, which drives a lot of the patients from our clinics to our hospitals. We'll continue to expand on the clinic as well.

We opened one of the clinics in the MOT in last year. We will look for more expansions this years.

The aim of opening the clinics really is not about the clinic itself, is to channel the patients into the hospital where they can do high-value operations. KTSP, where we only own 25%, this is the second year in its operations.

They already done, I think over 100 events including concert and sports. It meets all the KPI.

We do see that it will continue to do well. Although this is still the ramp-up phase, it is still in its AOL phase, but we definitely enjoyed what we call the [sangsik gingjai?]

from the government. We will see how we can actually do better and improve the operational efficiency.

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

First, a very quick recap on the key financial numbers. Attributable operating profit up 3% to HK$4.6 billion.

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

Total liquidity remained very ample, HK$31.3 billion as at June 2026, comprising of cash on hand, HK$20.8 billion, and undrawn committed banking facilities, HK$10.5 billion. Net gearing ratio decreased by 9 percentage point year-on-year to 28%, and net debt balance decreased by 20% year-on-year to HK$11.7 billion.

In terms of the debt mix, we turned more bullish on the renminbi exchange rate about 18 months ago. Since then, we've been gradually reducing our renminbi borrowing exposure, resulting in a lower percentage of the renminbi debt to total debt.

The ratio was 46% in June this year versus 62% a year ago. We believe such move will allow us to benefit from a stronger renminbi, resulting in a stronger increase in our equity on the back of the renminbi appreciation.

The borrowing cost remained stable at 4.1%, which is unchanged compared with last year. We also quite a lot of refinancing last year.

We did HK$14.2 billion of refinancing last year, which resulted in our debt maturing within the next 12 months from June this year to HK$7.9 billion compared with over HK$9 billion 12 months ago. The majority of this HK$7.9 billion we expect will be refinanced by December this year.

We continued to maintain a very diversified funding channel. We have banking facility of total HK$35.5 billion, onshore offshore, of which about HK$10.5 billion remained undrawn.

We have two outstanding US dollar bonds. We have issued an exchangeable bond exchangeable into our approximate 10% stake in Shoucheng Holdings, which was issued in September last year.

We have also issued Panda bond, three tranches of Panda bond since 2022. We repaid the first tranche at its maturity in May this year, which is consistent with our strategy to reduce exposure to the renminbi borrowings.

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

As mentioned, our net gearing ratio decreased from 37% to 28% in June this year, which was due to, first, the issuance of HK$2.2 billion exchangeable bond; second, reclassification of the HK$2 billion net debt associated with Changliu Expressway to held-for-sale as at 30th of June 2022, because we signed SPA to dispose this expressway in May; conversion of approximately HK$1 billion of convertible bond; and finally, disposal proceeds of approximately HK$1.7 billion, the majority of it come from the disposal of various strategic investments. Page 14, despite the challenging macro environment, both in Hong Kong as well as the mainland, we managed to increase our attributable operating profit, profit attributable to shareholders, as well as return on equity over the past four years, which reflected our successful portfolio optimization strategy as well as a shareholder-friendly dividend policy.

We have committed to our sustainable and progressive dividend policy since fiscal '19. Today, we announced a 4% increase in our final DPS to 31 cent, sorry, to 33 cents on a comparable basis.

When I say comparable basis, it means we will adjust the FY25 final and interim DPS number to reflect the 1-for-10 bonus issue completed in December 2025. Together with the 28 cents interim dividend, total dividend this year would be 61 cents, and that represent a 3% increase year-on-year.

We announced another 1-for-10 bonus issue. The purpose, just like last year, is to further increase the stock liquidity.

Our stock's daily turnover volume has increased substantially by about 1.4 times to over US$2 million now, thanks to the increasing research coverage by the major investment banks, as well as the 3 percentage point increase in our free float as a result of the CB conversion. Next, I will talk about the performance of each of our four major segments.

I will start with financial services. Sorry, as Gilbert mentioned, financial services has become our largest AOP contributor for the first time, overtaking the roads segment.

The AOP increased by 19% year-on-year to HK$1.5 billion. CTF Life represented the vast majority of this HK$1.5 billion AOP, although uSMART that we acquired in November last year also contributed nicely to the AOP of the segment.

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

Regarding APE and new business premium, we want to go a little bit deeper because there has been a major shift in the product mix. I think it happened not just to us, but also to other life insurance company in Hong Kong as well, as a result of the new commission spreading rule introduced by IA effective from the 1st of January 2026.

In the first half of the fiscal 2026, we saw a lot of multi-pay insurance policies, it can be two-pay, five-pay, 10-pay. Moving into the second half of this fiscal year, because of the new commission spreading rule, a lot of the insurance company, including us, are selling the majority of their products in the form of single premium, which, when you translate that into APE calculation, the APE only account 10% of the single premium as sorry, the APE only include 10% of the single premium, which substantially reduced the APE number for the second half of this fiscal year.

That's why we did not mention new business premium in the past, now we think it's important for investor to also look at new business premium, which is defined as 100% of the single premium together with the annualized first-year premium. Having said all this, we think this year you will be quite misleading and not meaningful to look at the year-on-year growth of APE and new business premium between FY26 and FY25.

Instead, we would urge you to focus more on the VONB dollar, because no matter it's single premium or it's multi-pay premium, at the end you will generate the same VONB. We think VONB growth is the most important metric that you should focus on in fiscal 2026.

Our VONB dollar increased by 30% year-on-year to HK$1.3 billion. The margin also increased from 30% to 37%, which is driven by, as I mentioned earlier, the shift to single-paid premium, and also the successful repricing of our flagship product called the MyWealth series.

The CSM balance of CTF Life increased by 22% year-on-year to HK$11.3 billion, which is quite impressive considering the strong CSM release during the year. The embedded value also increased by 12% year-on-year to HK$28.4 billion.

The solvency ratio for CTF Life stood at 285%, which have already taken into account a HK$0.6 billion of dividend remittance. We believe 285% is one of the highest, if not the highest, among all the major insurance companies in Hong Kong.

Because of the very high solvency ratio, we actually think CTF Life is in a very strong position to argue for a further increase in its dividend payout ratio to the listed company. Over the past two years, CTF Life pay out about 50% of its profit as dividend, we think there's room for further improvement in the dividend payout ratio going forward.

In terms of the performance of different channel, the agency channel saw a 10% increase in APE and 85% increase in NBP. The partnership channel increase is APE by 16% and NBP by 138%.

As mentioned by Gilbert just now, in addition to focusing on the MCV business, we are also developing the overseas business, meaning we are establishing relationship with broker to focus on international high-net-worth customers. During the year, our APE from these overseas customers increased by 40% year-on-year, and now the overseas customer already accounted for slightly less than 10% of our total APE for fiscal year 2026.

In terms of the AUM, or total asset under management for the insurance company, increased by 17% year-on-year to HK$106 billion. Like the past, most of this investment were allocated to investment-grade bonds, and also we continue to maintain a very diversified geographical exposure: 45% in Asia and Oceania, 40% in North America, and 12% in Europe.

The strategy of our investment is to generate sustainable, risk-adjusted long-term return in order to support the fulfillment of its obligation to the policyholders. The fixed income portfolio continued to see a small increase in its recurring investment yield to 4.59% in FY26.

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

I will move on to roads. I'm mindful of time, I will try to finish within the next 10 minutes.

Sorry, my bad.

Roads, as of today, following the disposal of Hunan Cangzhou Expressway in July, our portfolio now comprised of 12 toll road project with a total length of 815, sorry, 815 km. The average remaining concession period for our road portfolio is 11 years.

During FY26, the segment AOP was flat year-on-year at HK$1.4 billion HK dollar of AOP. The average daily traffic flow and toll revenue was down 1% year-on-year.

AOP was broadly flat, however, thanks to the appreciation of the renminbi as well as the lower financing cost of the onshore project loans. We disposed the Hunan Cangzhou Expressway in July, which resulted in a 4% reduction in the AOP, which is pretty minimal for the segment, and a 9 percentage point decrease in the group's net gearing ratio, which is very substantial.

Going forward, we will continue to optimize our portfolio by divesting selected mature asset with less attractive risk-adjusted returns. Logistics, our logistics business comprised of a 56% interest in ATL, almost 100% interest in all the warehouses except Suzhou, which is 90%, in 12 logistics properties in mainland China, and a 30% interest in CUIRC.

First, let's talk about ATL logistics. The segment AOP was down 13% year-on-year in FY26 to HK$645 million, and the decline was driven mainly by the decline in AOP of ATL logistics center.

The occupancy rate of ATL logistics was 80-plus-7% in June last year, and then it declined further to 75%, but started to recover to about 85% in June this year. However, if you take an average of the occupancy rate for FY26 and FY25, the average occupancy rate was still down percent, and hence the decline in AOP of ATL.

Hopefully, we have already seen the worst of the occupancy rate for ATL, given the recovery in retail sales as well as the strong import-export numbers of Hong Kong. Rental rate of ATL have been quite resilient over the year despite the challenging macro environment.

Going forward, we will continue to boost the occupancy rate for ATL through diversifying tenant base, improving the service quality, upgrading the tenant experience, as well as closer collaboration with the leasing agencies. Regarding our logistics centers in mainland China, we have provided deferred tax for the seven, sorry, for the 11 mainland warehouses for the first time.

If you exclude this impact, the PRC warehouses AOP actually increased by 11% year-on-year. The occupancy rate has been pretty stable for the seven existing property.

The average occupancy rate was 86%, so as the entire portfolio, including the four newly acquired projects during the year. We remain optimistic on the sector due to growing city distribution demand, increase in e-commerce penetration, as well as the relatively resilient manufacturing and export activity in mainland China.

Recently, we have entered into the AI-related infrastructure sector, i.e., the AI DC. As of today, we have made investment in one AI DC project in Jiangsu.

We have signed SPA to invest in another AI DC project in Hebei Province. This morning, we have also signed SPA to invest in AI DC project in Johor, Malaysia.

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

Construction, as Gilbert mentioned, this comprised of Hip Hing, Vibro, Quon Hing, and also Sanfield Aster. During the year, the segment AOP was down 4% year-on-year to HK$689 million.

Contract on hand increased by 7% year-on-year to HK$63 billion, backlog was HK$45 billion, and new contract secured was HK$17 billion. We have seen a continued increase in our exposure to the government and institutional sector, comprising of 66% of our backlog.

Obviously, the environment remained quite challenging given the softness in the private sector market, although we are seeing some private developer in Hong Kong started to bid on a tender for residential land in the past 12 months. We think the order flow should improve going forward.

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

I will skip page 31. Page 32, facility management, the segment AOP was down 1% year-on-year to HK$88 million.

The key earnings driver for the segment was Gleneagles. Its AOP increased by four times year-on-year, EBITDA increased by 15%, inpatient, outpatient, day cases number grew 3%, 1%, 9% respectively.

We continued to expand our clinic network through Parkway Medical. As Gilbert mentioned, we recently opened a new clinic called MediCentre, Gleneagles MediCentre in MOT in October this year.

This network have contributed approximately 10% of Gleneagles' gross profit in fiscal 2026. Currently, the network comprises of seven clinics and one laboratory.

Hong Kong CEC, the revenue increased by 8%, and the AOP was down mainly because of the increase in depreciation charge as a result of the shortening remaining concession periods. If you exclude the depreciation and also CapEx, the AOP of HKCEC actually increased by 8% year-on-year.

Kai Tak Sports Park still in AOL because of it is still in the ramp-up stage. However, operationally, the stadium has hosted more than 150 events.

The stadium arena utilization rate was very high, 90%, and the Kai Tak retail mall occupancy also improved 7 percentage point to 87%. It has received quite a number of international award during the year, like Venue of the Year, World's Greatest Places by TIME.

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

I will make it brief. Thank you, Jim.

Before I, oh, sorry, before I take you through the FY2026 ESG progress, I would like to start with the thinking behind our ESG philosophy. Our approach is built around three interconnected elements: understanding, integration, and action.

We start by understanding the ESG risk and opportunity that could affect our businesses. We then integrate those insights into risk management, investment decision, business planning, and governance.

Finally, we act by mobilizing capital, people, innovation to deliver measurable outcomes. Let me show you how that works in practice.

Our climate and nature assessment have given us greater visibility of risk, such as heat stress and extreme weather, as well as dependency, including water, climate regulation, and flood protection. The important point is what we do with those insights.

They are increasingly being incorporated into enterprise risk management, project planning, decarbonization tool, investment due diligence. We are moving from simply understand ESG risk, using those insight to make better business decision.

What has this translated into during FY2026? I won't take you through every number, but let me highlight two.

Green and sustainability-linked financing now represent 45% of our total debt portfolio, bring us bringing us closer to our 50% target. Scope 1 and 2 emission have reduced by 17% compared with our FY2023 baseline.

That These are good example of how ESG is becoming increasingly embedded in how we finance and operate our business. Our progress has also been recognized externally.

This this year, CTFS achieved a AAA rating for the first time in the Hang Seng Corporate Sustainability Index assessment. External recognition is not the objective, but it provides a a useful independent benchmark of our progress.

Our focus remained on underlying capabilities and resilience that support long-term value creation. Turning to capital, this slide show you how ESG consideration is influencing both our financing and investment decision.

We launch our Sustainability-Linked Finance Framework to strengthen the alignment between our sustainability target and financing. Our investment, ESG consideration are increasingly integrated throughout the investment lifecycle.

One example is our strategic investment alongside Unison in a battery energy storage system in Finland, supporting renewable energy integration and grid reliability. With CTF Life, the investment portfolio carbon footprint has been declined by 12% compared with FY2023 baseline.

This example demonstrate how sustainability is is increasingly shaping our way by with how we finance and deploy capital. Better I think what we have mentioning is how we are making better decision.

I think in the era of data-driven era, better decision also depends on better data. Approximately 61% of our Scope 3 emission are now calculated using higher quality supplier-specific or physical activity-based data, covering approximately 96% of our total Scope 3 emission.

It this this give us better visibility of emission hotspot and help us focus on decarbonization effort where they can make the greatest difference. This is not simply about better reporting, it is about enabling better decision and more targeted action.

What in action now? We are also translating this insight into operational improvement.

At Hip Hing, a carbon estimation tool is being developed to help project teams identify emission hotspot earlier and access reduce reduction opportunity during project planning phase. At HML, more than 27 energy efficiency projects were were completed during the year, deliver delivering estimated annual energy saving for more than 700,000 kWh.

They are practical example of sustainability and operational efficiency reinforcing each other. We also see the same connection between sustainability and resilience elsewhere in our portfolio.

Across our four newly acquired logistic warehouse, on-site solar generation supply approximately 75% of electricity demand. With roads, technology such as slope slope monitoring, bridge structure health monitoring, and intelligent traffic management are help are helping our business anticipate and respond to climate-related risk.

For us, ESG is not only about reducing our environmental impact, it's just about strengthening the resilience and long-term performance of our of our asset. Ultimately, sustainability is implemented by people.

This year, we continue to invest in building ESG capabilities and empowering colleagues across the group to turn ideas into action. Our aim is for ESG to become part of everyday decision-making, rather than somehow owned by one team.

During during FY2026, we strengthen our understanding of ESG risk and opportunity, integrated those insight into business and invest and investment decision, and translate them into tangible action. Looking ahead, our focus remained on strengthening resilience, embracing innovation, and allocating capital responsibly to create sustainable long-term value for our investor.

Thank you very much.

Thank you, Karen. We are now moving to the Q&A session.

If you would like to ask your question, please state your name and organization you work for.

Hi, this is Jeffrey from CLSA. Thank you very much for the presentation.

Maybe starting with insurance, just want to get a sense on how the business momentum is going after period end, going into July, August, anything you can comment that would be helpful. Second question on maybe just going to ATL a little bit.

On the pick-up of occupancy to 84% or 84.5%, can you give us a little bit more color whether the additional occupancy is from existing tenants or new tenants, and also any comment on the average rental growth for FY26? Thank you.

For the first one, for July, August or the last three months, the third quarter of this year, I think you're referring to, especially after the new policy coming out from China. I think we are very similar to all the other insurance company.

We do see some reservations or slowdown, but it's not significant. We're talking about single-digit slowdown in terms of the people coming from China to buy insurance policy from us.

If we compare to the information that we've got with the industry, we in fact were a little bit better than them. We do think that this effect is short term.

I think people are putting a wait-and-see mode. As China has been putting out different policies over the last few years.

I think for the first few months, it is all very obvious for the people to wait and see until it becomes more clear. I think fundamentally, because of the rate differential, interest rate differentiations, and also the protections that we can offer in most of the insurance company in Hong Kong, that actually differentiate us from the policies from insurance company inside.

I think we still have the attractiveness of insurance in Hong Kong. Whether you have anything to add?

Just want to supplement. When Gilbert mentioned there's a single-digit year-on-year decline in VONB dollar in July and August combined, bear in mind that we are comparing July and August this year with July, August last year.

July last year was actually a very, very strong month because of a lot of policy submission in June last year ahead of the what's it called? The illustrative return cap

introduced by the IA.

A lot of the clients, they submitted their policy in June, which then spill over into July. Our VONB dollar for last July was three times the average normal level.

A single-digit year-on-year decline in VONB for July and August this year is actually, I would say it's actually quite satisfactory.

I think that also answered one of the online questions that actually asked about the so-called differences in the growth rate on the second half of this year compared to the growth rate of the first half of our financial years. On your second questions about ATL, a lot of them are new tenants.

Obviously, we have some renewal, but a lot of them are new tenants. That actually drives the occupancy rate back up from 70-odd percent to 85%.

In terms of the rental rate, average rental, if we're looking at the full-year average rental, it actually increased compared with last year's.

Low single digit.

Low single digit.

Timothy from Citi.

Thank you management for the opportunity to ask questions. This is Timothy from Citi Group.

I got two questions as well if I may. The first one is about the bonus issue.

Would you mind elaborate a little bit more about the thought process from the management in terms of pushing forward this kind of bonus issue? Of course, from sell-side bank's perspective, we always welcome for more liquidity and more trade potentially.

I'm just trying to understand what is there a target of average daily trading value or volume that we are going for? Because last round, of course, we are trying to get back to Stock Connect, I'm just wondering this round is there something that we are looking at?

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

That is the first question. The other question is about the data AI DC acquisition.

I'm just curious because, of course, AI and data center is likely going to be a very strong growth engine going forward globally as well. In the market, to what I understand, usually this kind of AI DC, the valuation might be a little bit ludicrous.

I'm just wondering because of the unfortunately, a lack of disclosures to fully understand that because of ongoing investments probably with other potential deals. Just wondering what kind of expectation valuation range and target about our future logistic kind of business mix between different segments going forward?

Thank you.

I take the most easiest one first, right? The DPS growth.

Yes, we always look at comparable basis. I think that sort of answer your question.

Also your first question, stock turnover target, obviously, the higher the better. We allow, as I mentioned, now our daily stock turnover volume is about US$2 million a day.

We do recognize that in order to attract some of the bigger size fund, we do need to get across the US$5 million per day threshold, we are aiming towards that threshold.

I think I just want to supplement a little bit on that. We don't really have a target of what's the volume.

At the end of the day, as Jim said, the higher the better. I think it goes both way.

When the stock is more liquid, it's more lucrative, it actually drives the share price as well to a more realistic value. Personally, I think our stock underpriced.

Maybe I put the excuse on the liquidity. I think that's one of the real excuse that we're having because of we are a relatively high dividend yield stock.

A lot of people actually buy and hold rather than trade. We do want to create more liquidity out there.

In terms of AI DC, maybe we both can answer that questions. I think, first of all, there's no set target of how much we're going to put in this sector.

We are a very disciplined investors. We don't really say that we're going to expand this to overtake whatever portion of the logistics sectors.

I think we just see that as a whole the logistics sector or the infrastructure, CTFS traditionally has been an infrastructure company. We just need to modernize ourselves to go into the new infrastructure.

When we do AI DC, we don't really do the high-technology stuff. We don't do the chip set, we don't do the rack, we basically just do the box.

It is no difference to how I see the traditional warehouses. In fact, we're looking at it like a traditional warehouses, we're looking at it using cap rates, okay?

We're not using the AI DC like VNET and all this other company where you're looking at the PE. We're not doing that, because we're basically receiving rental on the rack and also on the operators.

Again, I'm not going to disclose what kind of valuation that we're buying, but I can assure you whatever Brian is buying is very conservative. We definitely getting value of money on that.

We it's even below a discloseable transaction, it's a very small amount, we're still building the base out of this particular sector.

Thank you. Jeff from DBS.

Sorry, typo, Jeff from CLSA.

I almost mixed up myself. Just switching a gear a bit to construction.

Obviously, you hinted the margin is lower, just want to understand maybe what are you seeing? Is it because of the mix of the projects, or is it still because of the labor shortage?

If it is the latter, then can you give a little bit color on what we are seeing in the labor market for now? Thank you.

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

The gross margin for the construction segment this year was marginally lower as compared with last year. Bear in mind that the projects that we're working on in FY26, it was secured two, three years ago, and during that time, it was still a downturn of the property sector in Hong Kong.

As a result, we need to be more competitive in terms of pricing.

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

Thank you. We have a question online.

It asked about the CTF Life dividend payout ratio was 50%. Can you talk about the actual cash flow that CTFS getting from CTF Life last fiscal year?

Oh, that's very easy to answer.

Yes, in FY26, we receive about HK$640 million dividend from CTF Life, which represented 50% of its AOP in FY25.

Thank you. Is there any other questions?

Evan from HSBC. Thanks.

Thank you. Evan from HSBC.

I have two questions. One would be on your construction business.

How do we think about the upcoming pipeline of new projects for the next financial year or two? How the Northern Metropolis could contribute into a long run over we think about revenue over a series of years?

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

Thank you.

For constructions, I think we already have disclosed a very strong pipeline in terms of the new projects that we received. I think with what Jim has already mentioned, with the warming up or slowly recovery of the residential market, we do see the new contracts that we are getting will be steady.

As you can see actually from the result of the entire construction segment, it has been very steady even through the trough days of the property market. I don't really see there will be any challenges in the construction segments.

In fact, I do see the upside of that because of the, as Evan mentions, about Northern Metropolis. Not only on Hip Hing, but also on Vibro, which is the foundation company.

If you're looking at the Policy Address, it talks about a few very important information. It's talk about the three university town, which is over 1,000 ha, and then it talks about nine development district.

The first thing they mentioned is about foundation. That definitely will benefit Vibro, because Vibro is, again, is not one of the foundation company, it's the top foundation company.

In fact, there actually not two, there are many projects that we are getting the projects on technical basis and beating our second bidders by a couple hundred of million dollars, meaning we are actually premium to them. We are charging more to our second bidders, and not less.

We are actually winning by the technicality. We receive more money, and the government or the owner actually happy to pay that premium to Vibro.

I definitely will see there's actually more opportunities coming out from the Northern Metropolis. In fact, I think the construction sectors, while it will be steady, but I think it will be steadily growing.

Kai Tak.

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

When will it break even?

I only have 25% holder. No, I think seriously, I don't really have a forecast on that, but I think it will take at least another 12 to 18 months, I would say, for it to break even.

Operationally is already improve a lot, the margin improve a lot, but it really takes some time to optimize the operations. We already see that, to be very honest, all of you guys are friends here, we already see that some of the human power are excessive.

We are doing something to optimize that. You can also see the Kai Tak Mall has more traffic now and also has more occupancy.

For some of you who are suite owner of Kai Tak, some of them are laughing already, you probably already received because of the renewal coming up, you will see that the price increase is three times at the very minimum, and people are still bidding up for that. You can see that actually the entire result is coming up, but it will take some time.

Because suite is very typical example: two years, three years. The two years contracts is only a few of them expiring this year.

Three years is next year. Next year, there will be a lot of them expiring, and we're talking about three times of the rentals, four times of the rentals, yeah.

Thank you, Gilbert. We receive a question online.

Adjusted EBITDA is your proxy for cash flow, which is HK$7.4 billion, and dividend is HK$2.8 billion. How much capital have you reserved for acquisition per year, and your gearing target, what is that, and can the dividend still go further up?

HK$7.4 billion is the operating cash flow, but we do need to pay taxes as well as interest expenses. If you net off these two items from HK$7.4 billion, we end up with slightly more than HK$5 billion.

After paying HK$2.8 billion, we still have slightly more than HK$2 billion of cash reserve for acquisition. The gearing target is about 40% to 45% range.

Can dividend go up further? There's always a possibility.

Already raised the dividend this year. At the end, right, it's all depend on how strong our adjusted EBITDA growth and also how strong our AOP growth.

Zoe from HSBC.

Thanks for the opportunity. I just want to understand because I understand the company has acquired many businesses, including uSMART, including Blackhorn, and logistics properties.

I want to understand the profit contribution from these newly acquired businesses, and what is your expectation of the about the contribution next year? Thank you.

Very good questions. I think, first of all, some of them are, but we are not acquiring these companies solely for the profit contributions.

I think it's about the platform that we are building, especially Blackhorn and uSMART. Honestly speaking, Blackhorn is a relatively small EAM company.

It is about the services that we can actually provide to our existing policyholders and actually attract more customers to provide a diversified type of products to them. Obviously, uSMART give a very good return to us already.

We only owned 13%, already have a very strong AOP contribution this year. We do expect because of the trading volume increase in both Hong Kong and the US stock, people will use more of the digital services.

We do expect that it will continue to provide a very healthy AOP contributions. In terms of the few logistics acquisitions as well as the data center, as I said, I think we are looking more on a yield play.

At the time of the acquisitions, our general hurdle rate, we're talking about a cap rate of no less than 6%, you can basically back-calculate everything from there. I don't really have a target of what kind of profit contributions or cash flow contributions that it can come, but I think for logistic is more about a stable cash flow that it can provide to us both in the warehouses as well as the data center.

Thank you. It's about time, so that concludes today's analyst briefing.

If you have further question, feel free to reach out to the Group Investor Relations.