Good morning, everyone. Welcome to PETRONAS Gas Berhad Analyst Briefing for the second quarter ended 30th June 2026.

Thank you for joining us today's session organized by the Microsoft Teams platform. I am Priya Vasu, Investor Relations Manager for PETRONAS Gas Berhad.

And I have here with me Abdul Aziz Othman, Managing Director and CEO of PETRONAS Gas Berhad; Shahrul Azham Sukaiman, Chief Financial Officer; as well as Wan Khairul Nizam Wan Kassim, Head of Business Development and Commercial. I would also like to introduce Mohd Fairos Bin Roslan, our Chief Operating Officer for Gas Processing and Utilities, and Azrul Roshazli Abdul Rahman, our Chief Operating Officer for Gas Transportation and Regasification.

The PETRONAS Gas Berhad analyst briefing for the second quarter will be presented in four segments. In the first segment, Encik Aziz will present the key highlights and business updates.

This will followed by the second segment, where Encik Shahrul Azham will take you through segment financial performance. And in the third segment, Encik Aziz will share PGB's focus moving forward.

And finally, in the fourth segment, we will open the floor for question-and-answer session. [Operator Instructions] For your information, our financial results are now available on the Bursa Malaysia and PETRONAS Gas Berhad website.

We have also published today's presentation deck on our website for your further reference. Without further ado, I would like to invite Encik Aziz to proceed with this presentation.

Aziz, over to you.

Thank you, Priya, and good morning, everyone. Thank you for joining us.

I'm pleased to present the PETRONAS Gas Berhad's financial performance for the second quarter of 2026. Let me first touch on the external factors influencing PGB's operating environment during the quarter.

Overall, quarter 2 2026 saw PGB operating in a mixed environment, mixed cost environment. While lower MRP and a relatively supportive ringgit provided some relief, service-related costs and electricity costs continued to trend higher.

Despite a moderation in the Malaysian reference price, gas price during quarter 2 2026, the ongoing geopolitical tensions in West Asia continued to pose an upside risk to the global energy prices. Brent crude remaining above $80 per barrel for much of the quarter.

Given the lag pricing mechanism for MRP, we anticipate MRP to rise progressively in the second half of 2026 as the higher energy price flow through the system. On electricity tariff, the automatic fuel adjustment, or AFA, moved from rebates during the January to April period to surcharges beginning in May, indicating rising fuel-related cost pressure.

As you all know, the net impact of tariff movement, especially to our Utilities segment, depends on the balance between revenue uplift, fuel and operating costs, customer demand and operational performance. Meanwhile, the ringgit remained relatively resilient despite the global market uncertainties, averaging MYR 4 per USD in quarter 2 2026,helping to partially offset imported cost pressures and support project economics.

Finally, SPPI rose further to 120.3, signaling a persistent inflation in service-related costs, affecting us in areas like maintenance, engineering and other contracted services and project execution costs. Overall, while certain indicators remain supportive in the quarter, the cost of doing business continues to remain elevated.

As such, we remain focused on disciplined cost management, operational efficiency and proactive mitigation measures to preserve margins and sustain long-term value creation for the shareholders. So amidst all this, PGB delivered a healthy performance in quarter 2 2026, underpinned by disciplined operation, proactive asset management and our continued cost optimization efforts.

Group revenue stood at 3.086 billion, a decline of 3.1% or MYR 98.8 million, and this is mainly attributable to lower revenue from Utilities segment following the lower sales volume, and this is associated to the planned regulatory turnaround activities, coupled with reduced product prices in line with decrease in fuel gas price. This impact was cushioned by higher revenue from the Gas Transportation segment, and this is following the upward tariff adjustment and increased contribution from Regasification segment arising from the liquefied natural gas for the LNG storage services at Pengerang, Johor, as you all recall, commenced the operation in August 2025.

Gross profit declined by 2.8% or MYR 31.6 million, and this is mainly due to tighter margins in the Utility segment, as mentioned, due to lower revenue, coupled with increased depreciation costs across all segments upon completion of quite a few capital projects. These impacts were cushioned by lower fuel gas costs in tandem with lower volume and fuel gas price.

Overall, the group recorded a profit of MYR 942 million, a decline of just 3% or MYR 29.6 million, in line with the decline in gross profit, as I've mentioned. EBITDA, however, was higher by 3.1% or MYR 53 million, and this reflects a resilient operating performance despite lower profit before tax.

Earnings per share decreased by 2.9%, reflecting lower profit attributable to shareholders to the company. Board of Directors has approved a second interim dividend of MYR 0.16 per ordinary share.

This amounts to MYR 316.6 million in respect of the financial year ending 31st December 2026. Moving on, on the business update for second quarter 2026.

You recall last quarter, we announced the FID for RGT-3. So today, RGT-3 continues to advance according to schedule and remains a key strategic project for PGB.

Engineering works for FSRU and Jetty development activities are underway, while the shareholders' agreement with Integrax, subsidiary of TNB, is being finalized. Targeted for operation in second quarter of 2029 under the IBR framework, project is expected to enhance gas supply flexibility and provide stable long-term earnings for PGB.

Second, on PG LinkaranFibre. Our fiber projects have successfully installed about 750 kilometers of fiber optic cables out of the total 880 kilometers, and this represents about 85% completion.

Project is progressing as planned and is well positioned to capitalize on emerging opportunities driven by growing demand for digital infrastructure, particularly from the data center development across the region. Third, Kimanis Power.

The KP2SB successfully completed the issuance of MYR 580 million Sukuk Wakalah in April 2026. And this is to finance the development of the 100-megawatt gas engine power plant that we are building in Kimanis, Sabah.

Project is strategically important in supporting Sabah's growing power demand and enhancing the grid reliability for Sabah. On completion, it will complement the existing Kimanis power plant, strengthening PGB's presence in Sabah Energy infrastructure.

Next is on the power projects. At the same time, our power plant projects in Persekutuan Labuan continue to progress according to plan and are expected to support future demand growth in Sabah and Labuan.

Lastly, on our operational excellence and asset integrity. During the quarter, our Gas Processing and Utilities segment successfully achieved special scheme of inspection certification and completed the planned regulatory ASU2 turnaround at our Utility segment in alignment with customers' turnaround activities within the Kerteh Integrated Petrochemical Complex.

This milestone demonstrated our continued focus on operational excellence, asset integrity and reliable supply to our customers. With that, we now come to the details of our business and financial performance.

This section, as always, will be presented by Shahrul. Over to you, Shahrul.

Thank you, Aziz. Good morning, everyone.

Before we go to individual segment business and financial performance, quarter two 2026 was another quarter where our operational excellence strongly supported both our reliability and financial resilience. We maintained reliability levels of 99.8% to 99.9% across all of our business segments, reflecting the strength of our assets and disciplined maintaining practices.

So this has enabled us to sustain higher gas deliveries through improved recovery at the gas processing facilities as well as higher LNG deliveries from the regasification terminals and reinforcing supply reliability and supporting the energy needs of Peninsular Malaysia. This operational achievement supported the group's financial performance during the quarter.

While operating costs increased, as explained by Aziz earlier, our high asset availability and throughput levels continued to underpin our earnings and cash generation. Overall, our focus remains unchanged, ensure safe, reliable and efficient operations that support Malaysia's energy security while delivering sustainable long-term value creation to our shareholders.

Moving on to the segmental performance start with the Gas Processing segment. Our gas processing plant, as mentioned earlier, sustained strong reliability and achieved 99.9% of overall equipment effectiveness or OEE during the quarter under review.

Our effort in investing into intelligent analytics continue to provide our gas processing plant strong reliability as well as ability to be cost efficient. Having said that, against the corresponding quarter, quarter two 2025, segment revenue declined slightly by about 0.8% or RM 3.9 million due to lower internal gas consumption incentive following reduced fuel gas price.

This was offset by the favorable volume savings. Segment result decreased by 4.3% or RM 99.1 million due to higher operating expenses, mainly from higher depreciation expenses following the completion of several key projects last year.

Against the preceding quarter, quarter one 2026, segment revenue declined slightly by 0.9% or RM 4.4 million due to lower internal gas consumption incentive. This is mainly due to unavailability of gas processing plant, which was undergoing plant shutdown for maintenance, coupled with the lower prices of gas compared to quarter one this year.

However, segment results increased by 2.4% or RM 4.7 million following lower maintenance cost during the quarter, and this was partly offset by lower price for internal gas consumption incentive. Moving on to the next segment of Gas Transportation.

We continue to leverage on technology data-driven insights and asset integrity initiatives and this has helped PGB to further enhance our network resilience, reliability and operational performance of our gas pipeline system. So in terms of financial performance against the corresponding quarter, quarter two 2025, segment revenue increased by 12.7% or RM 36.2 million.

This is mainly due to higher regulatory period or RP3 tariff supported by growth in the regulated asset base following successful execution of RP2 projects, which was completed last year. This was further complemented by upward tariff adjustment, primarily related to sharing factor for prior years under recovery of IGC price.

This is in accordance with the incentive-based regulation framework by Suruhanjaya Tenaga. Correspondingly, segment results grew by 32.2% or RM 38.4 million, in line with the higher revenue along with a slightly lower operating expenses.

Depreciation expense for the quarter increased following the completion of several capital projects while repair and maintenance cost was notably higher in the corresponding quarter due to gas supply restoration works following incident last year. Against the preceding quarter, quarter one 2026, slightly higher by 0.7% or RM 2.1 million.

This is due to higher number of operating days. Segment results, however, rose by 20% or RM 26.3 million following lower operating cost in internal gas consumption as well as electricity usage.

Moving on to the Regasification segment. Our LNG regasification in Sungai Udang, Melaka, and Pengerang, Johor, sustained strong reliability performance following effective maintenance program and continued to operate reliably.

While many markets experienced supply uncertainties amid the West Asia crisis, Malaysia's gas supply remains stable. Our ability to deliver high LNG into the PGU system in quarter two this year reflects the resilience of our assets and our commitment to safeguarding national energy security.

Financial performance for Regasification segment against the corresponding quarter, quarter two 2025, revenue increased by 6.9% or RM 23 million. This is mainly contributed by the new revenue stream from providing LNG storage services at Pengerang, Johor, which was commenced in August 2025 last year, coupled with the increased revenue from regasification service following higher RP3 tariff supported by the growth in the regulated asset base last year.

Correspondingly, the segment results grew by 5.9% or RM 9 million in line with the higher revenue, but this was partially offset by higher depreciation expense following completion of capital projects last year. Against the preceding quarter, quarter one 2026, revenue increased marginally contributed by higher regasification tariff recognition on a higher number of operating days and this was further supported by favorable foreign exchange translation on the LNG storage service fee, which is denominated in U.S.

dollar arising from the weaker ringgit. And the segment result correspondingly improved by 2.6% or RM 4 million flowing directly from the revenue growth with operating expenses hold -- held broadly stable.

Our Utilities segment -- our Utility plant registered 99.9% product delivery reliability for all the products during the quarter of financial performance against the corresponding quarter, quarter two 2025, revenue declined by 28.6% or RM 144.7 million attributed to Kerteh integrated petrochemical complex regulatory turnaround activities, which reduced sales volume for all products following lower demand and uptake by customers. Results fell by 61.3% or RM 52.3 million due to the regulatory turnaround activities as mentioned earlier.

For the 6-month period, corresponding year to date, PGB group recorded revenue -- decrease in revenue of 3.1% or RM 98.8 million, reflecting lower income from Utilities segment following the lower sales volume because of the turnaround activities as mentioned earlier, coupled with the reduced product prices in line with the lower MRP. Segment result decreased in line with the lower revenue, partially mitigated by lower operating expenses from reduced fuel gas costs in tandem with the lower volume.

Coming to our group performance. Group performance against the corresponding quarter two 2025.

Revenue stood at RM 1.5 billion, a decrease of 5.6% or RM 89.4 million in line with the planned regulatory turnaround activities in the Utility segment during the quarter. Our gross profit declined by 2.5% or RM 14 million attributable to the tighter margins in the Utilities segment as well as increase in depreciation costs across all segments with the impact cushioned by the absence of repair and maintenance costs, which was incurred for the gas supply restoration works following fire incident in the quarter.

Overall, the group recorded a profit for the quarter of RM 476 million, a slight decrease of 0.7%, in line with the lower gross profit and this was cushioned by the higher share of profit from joint ventures. Against the preceding quarter one 2026, the group revenue recorded a decrease of 5.3% or RM 84.1 million.

This is reflecting the lower revenue -- lower Utility sales volume because of the turnaround activities. Profit declined slightly by about 0.1% or RM 2.9 million, mainly due to lower revenue and the impact of lower revenue was cushioned by lower fuel gas cost because of the lower volume as well as lower repair and maintenance activities undertaken in the current quarter as compared to the preceding quarter.

Nevertheless, the group recorded a higher profit for the quarter, an increase of 2.1% or RM 10 million primarily attributable to higher other income recognized during the quarter. For the 6 months period, corresponding year to date PGB group recorded revenue -- decrease in revenue of 3.1% or RM 98.8 million, reflecting lower income from Utilities segment allowing the lower sales volume because of the turnaround activities as mentioned earlier, coupled with the reduced product prices in line with the lower MRP.

But this lower revenue from Utility segment was cushioned by the higher revenue from GT and Regasification segment following respective upward tariff adjustment as well as increased contribution from the LNG storage services at Pengerang, Johor. Our gross profit declined by 2.8% or RM 31.6 million due to tighter margins in the Utilities segment.

With increased depreciation cost across all segment upon completion of capital projects. Remember last year, we recorded a total CapEx of about RM 2.5 billion, one of the highest for the past decade.

And this impact was cushioned by lower fuel gas costs in tandem with the lower volume and also lower fuel gas price. Profit for the 6-month period stood at RM 942 million, lower by 3% or RM 30 million due to tighter margin in this Utility segment as well as the reduced product prices in line with the decrease in fuel gas price.

In addition, depreciation cost was higher across our segment and lower profit was generated from fund investment in line with the lower cash balance. Nevertheless, this impact was partially cushioned by higher revenue from GT and Regasification segment coupled with a lower fuel gas cost in tandem with a lower volume and lower MRP.

Moving on to the balance sheet. Our total assets of RM 19.9 billion was marginally higher by RM 62.7 million, driven by higher property, plant and equipment from the additional CapEx expenditure incurred with additional investment in the joint venture and this was partially offset by the lower cash balance.

Total liabilities decreased by 1.2% or RM 63.7 million, mainly from the higher settlement of trade and other payables, offset by higher borrowings following Sukuk Wakalah for our PLNG2 Sdn Bhd. As we discussed our operational and financial performance it is equally important to provide the context, how we are funding our growth ambition while maintaining a prudent financial position.

As mentioned earlier, PGB is executing a number of sanctioned group projects alongside ongoing investment required to sustain and expand our regulated asset base. And these investments are critical to supporting future growth and reinforcing our long-term competitive position.

At the same time, we remain focused on the optimization of our cost structure and capital allocation to enhance efficiency and preserve financial flexibility. To fund these commitments, our group gearing have increased from 9% by end of last year to approximately 15% as at 30th June 2026.

Importantly, the increase in gearing is driven by planned investment in growth projects and internal funding requirements rather than any deterioration in group's underlying financial position. This reflects our disciplined approach to fund our growth projects supported by ongoing cost structure optimization initiatives and a strong financial foundation.

That's all from me. I will now pass the line over to Mr.

Aziz to share on the company outlook.

Thank you, Shahrul. Following what I shared earlier, our focus remains on delivering a sustainable value creation through growth, discipline and efficiency.

And looking ahead, we will remain firmly focused on five key priorities. First, executing our approved internal reorganization, which will create a more agile operating structure, enhance cost competitiveness and of course, strengthening our flexibility to fund future growth.

Second, maintaining a disciplined capital allocation, ensuring that every investment is aligned with our return thresholds while preserving a strong balance sheet and sustainable shareholder value -- shareholder return. Third, unlocking a greater value from our existing assets and capabilities, maximizing return from our infrastructure and leveraging our strategic position as Malaysia's leading gas infrastructure provider.

Fourth, reinforcing a safe, reliable and efficient operations while continuing to deliver our project safely, on time and within budget. Finally, pursuing selective growth opportunities, both within our core business and in adjacent infrastructure sectors that strengthen the energy security and to create a long-term earnings growth for the company.

Together, these priorities will position PGB to navigate the current challenges while, of course, creating a long-term value for our shareholders. That's all from me.

I'll now pass it over to Priya.

Thank you, Aziz and Shahrul. We have now come to the Q&A session.

[Operator Instructions] Hazmy from CLSA Limited.

Congrats on the results. Just a couple of questions to start.

In terms of the Gas Transportation segment, what sort of the quantum on the one-offs, the nonrecurring part during the quarter, like the IGC true-ups and all that. I just want to gauge what's the sustainable margins for Gas Transportation segment going forward.

I just also want to get a better color in terms of the improvement. How much does it roughly percentage-wise comes from the underlying increase in RP3?

And also like other factors as well? And should we expect any further sort of IGC true-ups in the second half as well?

I'll start with that first.

I'll let Shahrul to answer that.

Thank you Hazmy, for the question. If I understand your question correctly, your question was the one-off item for the quarter or perhaps also in the corresponding quarter.

I think you remember what happened last year was post the fire incident in April. We actually incurred around RM 27 million of the temporary repair cost of that -- for that incident.

While waiting for the permanent repair works to be completed by this year. That's the one-off item in the quarter two last year.

For quarter two this year, there is no one-off items per se. And as you rightly mentioned for GT segment this year, what's notably different compared to last year is the increase in the RP3 tariff, that's going to be persistent throughout the year to the end of RP3, by end of 2028 and for the second half of the year, we anticipate higher MRP, that will have an impact to the IGC cost for the GT segment but given optimization effort leveraging on AI and technology to minimize the transition of gas.

We don't foresee the impact will be significant, but definitely, there will be an impact from the price side of the IGC.

Right. I mean just to understand this better, RP3 was already kicked in and reflected in the previous quarter in the first quarter.

The reason why it's mainly reflected more this quarter because the cost is lower in terms of...

Yes. I think as I mentioned earlier, slightly lower Utilities cost, but we foresee the trend in quarter two probably continue except for the price impact that probably will be affecting the GT segment.

And just to understand in terms of impact of gas price for MRP, typically, if the MRP increase, the net-net for PETGAS, is it positive or neutral or negative?

You know there are a few segments. For GT and the Regas you will see the impact this year, but obviously, under the IBR, that can be recovered in the following year.

But for UT, you will see the impact immediately because if you recall, let's say, tariff is pegged to TNB. So unless that tariff is changed with which today you see the FA mechanism.

So some of it probably can be recovered through FA. But if the FA is not enough, then the margin will be affected by -- only for the Utilities segment.

Understood. I think my -- just two more questions on the Utilities segment, in terms of the customer turnaround, you mentioned already, and then have you seen the gas volume -- I mean, the demand already recovering in July, August so far?

Yes, it should be because recall the second quarter is where the turnaround happened. So you should see a normal volume back in the new quarter.

Just lastly on my question -- my last question, just going into 2027 in terms of growth projects, you mentioned like Kimanis, Pengerang, the fibre business, the ASU and all this, can you just share in terms of when specifically the earnings will start to flow in, like which quarters and what kind of quantum internally that you expect from this new growth segment?

Typically, the projects that you listed by next year, you will see the earnings start to contribute to the growth. And as far as the impact, I'll let the CFO.

I think the couple of projects will come on stream by end of this year or early next year, mentioned by Aziz. And most of these projects are actually joint venture in nature.

So with that, we anticipate the contribution will be around of 5% and 6% of the total PGB profitability.

And sorry, lastly, any updates on RGT, any new updates or anything?

You're talking about the RGT-3, right?

Yes, yes, sorry, RGT3, the new one.

Yes. As mentioned in my presentation just now, we are progressing according to schedule.

Again, this is very early in the projects. We just FID last quarter.

So the work today primarily is on the engineering side.

We have the second question from Daniel from Hong Leong Investment Bank.

Firstly, can I check what caused the admin cost to decrease and the other income to increase on a quarter-to-quarter basis? Second quarter versus the first quarter, what has caused the admin cost to come down and the other income to increase?

Okay. Looking at -- in this second quarter or first quarter.

Yes. Second quarter versus the first quarter income increase...

Other income to decrease and admin expense...

I think admin expense and then other income increase.

Okay, other income increase because there's one-off item recognized from some settlement, our contractual settlement with core customers, and admin expense decrease because of lower operating expenses.

Overall operating expenses for the group, is it for the holding co or for certain segments?

For corporate typically, what happens, we normally pay the bonus in quarter one. So that partly contributed to the lower admin cost in quarter 2.

Okay. And can you give us more color on this planned regulatory?

Why this happens every five years, kind of thing or what? And then how long was this activity of a turnaround thing?

Okay. As you recall in my presentation, we have gone for a new scheme called SSI or SAF regulation.

So with that, our turnaround is expected to be at least 72 months rather than a more frequent interval. So some of the turnaround, you have to do today because the previous cycle has completed.

But going forward, you'll be looking at a more lesser frequency when it comes to turnaround. Of course, some of the shutdown will depend on the customer also.

If the customer do their turnaround, sometimes we do take advantage also to shut down to do some of the maintenance work.

I would like to check your main client in Kerteh, these are mainly PetChem. And just wondering, has PetChem activities actually slowed down during the second quarter or it slowed down due to this Middle East event?

In quarter two, as you recall, it was a planned turnaround. So that's not a reflection of a reduction in the business activities.

So that's a normal one. Now whether they will have any impact because of Middle East, so far, we have not seen any indication from their side.

What we have seen from their nomination and what not, it seems to be everything is normal, yes.

I see. Can you give us an update on the -- Okay, first thing, Sipitang Power and Labuan Power, when are they COD already actually?

Yes. Sipitang, we're looking at end of the year.

Labuan is still end of 2027 or early 2028.

And how about this Kimanis Power 2?

Within this year also.

Kimanis Power 2 this year -- end of this year, supposed to be early in 2026, remember. And this -- in general, is it delayed, sorry?

Okay, go ahead.

I was checking this Kimanis Power 2, last time I remember it was supposed to be early this year, the COD. Is this being early this year or already as of today, has it already COD?

No, the project is progressing. There are some delays.

There is a recovery plan in place. So we have taken additional action to accelerate the remaining work, but we are looking at no longer than end of this year for this unit to come on stream.

I see. This -- the Linkaran fibre already done 750 km [ 880km ] looks already pass.

Means by end of this year, it will start operation. How can I check?

How much is their CapEx? And how do we look at depreciation?

Thank you. We -- indeed, we are progressing quite fast with the construction.

Just slight correction to you. We will bring it online quarter one next year instead of end of this year.

CapEx, I think we have made the announcement. For business reason, we are not disclosing CapEx knowing the nature of the of the business we're not disclosing CapEx, yes.

Yes. I'm just trying to understand.

Okay. In terms of contribution, just you mentioned that the contribution from all these projects, Kimanis and Pengerang, and the Lingkaran fibre overall roughly about 5% to 6% growth in earnings in coming 2026 -- sorry 2027, correct?

Yes.

I think if I can also provide the context, I think for the Kimanis power plant is quite straightforward because it's TPA income. For Lingkaran, I think it is progressively we continue to secure customers from time to time customer base.

But we can't really have a specific indication how much will be onboard next year. But I think there is still potential from -- over and above the Lingkaran areas.

Over and above the other 5% that we forecasted, Shahrul mentioned.

Means the Lingkaran fibre could provide higher -- higher growth, if the take up rate is increasing.

Yes.

[Operator Instructions] I guess we are good. In that case, this is all the time we have for today.

Thank you so much for your active participation fellow analysts and your engagement. We hope to see you again all in the next quarter analyst briefing in November 2026.

Have a good day, and goodbye, everyone.

Thank you.