1H 2026 Financial Results Webcast Briefing

Good morning and welcome to ST Engineering's first half 2026 results briefing. We will begin with a presentation by our group CFO Cedric Fu. Our group President and CEO Vincent Chong will then give his remarks. Following that, we will open the floor for a Q&A session for the analysts. Without further ado, may I invite Cedric to give his presentation, please. Yeah, good morning. Welcome to ST Engineering's first half 2026 Market Update. Also a warm welcome to those joining us via the webcast. Slide two. Before I begin, I would like to draw your attention to slide number two, which states among others that the group's actual performance, outcomes and results in the future may differ materially from those expressed in forward-looking statements as a result of risks, uncertainties and assumptions. Slide three. For our agenda today, I'll be covering group highlights,

business segment discussions, contract wins and order books, as well as dividends and outlook. After Vincent will make some key remarks before the Q&A. Slide four. First, let's start with group highlights on slide number five. I'm very pleased to report a very robust set of first half 2026 results. For this period, the group delivered very strong revenue growth at 11% year-on-year. In addition, it recorded even stronger earnings growth year-on-year. EBIT at 23%. PBT at 30%. And net profit at 27%. Our disciplined execution and scale effects are clearly manifested in this numbers.

Net profit for the first half of 2026, as you can see on the slide, was $512 million. And this is with a 500-hander. This is the highest half-year profit in our history. I recall not so long ago in 2023, some three years ago, the entire full year profit for 2023 was with a 500-hander, about $500 million. And now at half time, we are already 500-plus. Slide six. From left to right, it shows the revenue breakdown by segment, by type, and by location of customers. First, by segment on the pie chart. CA contributed 41%, DPS 43%, and U.S. 16%.

Now, DPS spanks both local and international customers, as well as commercial domains, such as critical infrastructure, and not just defense domains. Hence, the DPS segment revenue of $2.8 billion, you can see on the pie chart, differs from the defense revenue of $2 billion on the bar chart in the middle. Now, in the center, we show revenue by type. Commercial revenue rose from $4.1 billion to $4.6 billion, or 11% year-on-year. Defense revenue from $1.8 billion to $2 billion or 12% year-on-year. On the right-hand side, we show revenue breakdown by customer location. Asia contributed 55%, U.S. 14%, Europe 23%, and others 8%. Revenue to customers in Europe increased,

while those of U.S. reduced largely as a result of the divestment of Lebois in September last year. But importantly, the overall group revenue increased 11%, as I have described. Slide 7. This 11% revenue growth is contributed by all segments. Excluding Lebois, it would be 14%. Excluding both Lebois and the weakening U.S. dollar, for which many of our revenue are denominated, group revenue would have grown by 15.5%, close to 16%. So a very healthy underlying revenue growth. Slide 8. EBIT grew by a very strong 23% year-on-year to $738 million. On a rebase basis, excluding Lebois and our share of city cap,

both of which were divested last year, EBIT grew 27%. EBIT must test for underlying performance. Its cash flow, here our operating cash flow, grew very strongly at 26%. From $761 million, first half 25, to $960 million, first half 26. And this underscores the strength of our core business. So the accounting numbers are very straightforward. EBIT rose 27%. I would dwell into what are the drivers of that growth. But the cash also grew 26%. Slide 9. Net profit. Net profit improved from $403 million in first half 25 to $512 million in first half 26. An impressive 27% year-on-year improvement.

Now this is enabled by one, stronger product and margin mix. Two, higher productivity. We have aimed to secure about $200 million a year in productivity. We have already secured more than $150 million in half year. And lower finance costs, as we generated more cash flow, as I described, we are able to pay down debt and reduce interest costs. We are indeed very encouraged by our growth momentum and are confident of finishing the year strongly. By that, we meant strongly in terms of earnings, not just top nine. DPS is targeting a similar growth momentum as they did in first half 25. CA expects continued strong earnings growth rate. And U.S.S. will have a stronger second half.

So all segments are poised to finish the year strongly. Slide 10. Let's move on to business segment discussions. 11. Commercial aerospace revenue grew 15%, $2.7 billion. And this is at half time, $2.7 billion. This was driven by stronger engine MRO, Nacelle's and spare sales. CA eBit grew by a very strong 29% to $288 million. On the back of higher revenue, better product mix and cost savings. Slide 12. Next on DPS. DPS revenue grew 7% year on year on a reported basis. However, on a rebased basis, which is the underlying growth, DPS revenue grew 14%, 1.4% year on year to $2.8 billion.

This is largely because Leboi was invested in September last year. And hence, for the whole first half of 26, we do not enjoy any Leboi revenue. Digital business, spanning cloud, AI analytics and cyber achieved 27% revenue growth year on year from $367 million to $468 million in the first half of 26. $468 million just for the digital business aspect. This shows an increased momentum given that in 2025, digital business revenue grew 15% year on year and now 27% if you compare first half of 26 to first half of 25. We are about one year ahead of schedule and will achieve our targeted 2029 annual revenue for digital business of more than $1.3 billion, not in 2009 but in 2008 or earlier.

International defence wins amounted to $1.2 billion for first half of 26 compared to more than $600 million for the full year of 2025. So by this year end, since we have achieved $1.2 billion in first half of 26, we will be well above 2x of the full year 2025 wins, which is more than $600. So last year we are more than $600. First half we are really $1.2 billion. We have half a year to go and hence we will exceed 2x of 2025 wins. On a reported and rebased basis, DPS EBIT rose 10% and 16% respectively to $404 million ahead of its revenue growth. On slide 13, moving on to USS Seckom, revenue grew 15% to $1.1 billion.

And this is contributed by both URS and Seckom. USS EBIT improved from a low base of $12 million to $46 million and boosted by stronger revenue across both businesses. Seckom cost reduction initiatives, which we have explained previously, were completed by end of the first half of this year with $63 million of annualized cost savings, and these are starting to accrue. I will cover Seckom in greater detail in the next slide. Slide 14. The iDirect improved its financial performance in first half of 2026. Revenue grew 18% year-on-year, increasing from $117 million to $138 million. Cost savings initiatives, as I mentioned earlier, $63 million on an analyzed basis,

were completed in first half of 2026, explained. This puts iDirect on track to becoming EBIT positive. iDirect's intuition portfolio of products and services continues to gain traction with customers. We secured strategic wins in Asia and Europe, supporting mission-critical operations for government and defense contractors, while our new software-defined modem is gaining good adoption with U.S. and international government and defense customers. This new software-defined modem is a key differentiator, which enables multi-wayform, multi-orbit operations on a single-edged platform, protecting customer investments, submission requirements, and networks evolved. Intuition foresight, which is a trade name for this single pane of glass that iDirect have introduced,