Keppel Corp Ltd Ord

Our net profit from continuing operations was $1.06 billion in FY24, about 5% higher than the $1.02 billion in FY23, excluding the effects of the legacy offshore and marine assets. Including these effects and the discontinued operations, our net profit was $940 million for FY24. All three segments were profitable in 2024, with infrastructure delivering robust results and connectivity recording 45% in earnings growth year-on-year. Asset management fees in FY24 grew strongly by 54% to $436 million as we selectively made investments and also raised our funds under management from $55 billion to $88 billion through organic and inorganic growth. FY24 also saw a free cash inflow of $901 million compared to a free cash outflow of $384 million in the prior year. Supported by our asset-light strategy, our return on equity has been steadily improving over the years. Financial Year 2024, our ROE from continuing operations reached 10.1%, excluding the effects of the legacy O&M assets, compared to 7.9% two years ago in FY22. Since embarking on our ambitious $17.5 billion asset monetisation programme in October 2020, We have announced close to $7 billion in assets monetised, including some $1.5 billion in 2024. We are making good progress towards our interim target of $10-12 billion by the end of 2026. The asset monetisation announced does not include the divestment of capital O&M, which would have added another $4.7 billion, bringing our total monetisation to date to about $11.7 billion. Looking ahead, having taken over full control of AssetCo, we will focus on de-risking our legacy O&M assets, which include AssetCo's Ricks and our stake in Flotel, with a carrying value of approximately $3.6 billion as at the end of 2024. Taking control of asset core, including the $1.1 billion cash in the now 100% owned subsidiary, enables us to better manage when and how the legacy rates are monetised. Over the past few years, the quality of our earnings has improved significantly. In 2024, our recurring income was $766 million. This represents 72% of our net profit from continuing operations in 2024, excluding the legacy O&M assets, above the 56% in FY22 and 21% in FY21. Reflecting our transformation, capital is no longer ascribed a conglomerate discount by most analysts. We hope in time to come, the market will ascribe an appropriate growth multiple to value the growing recurring income of the new capital. As an organisation, we have not only integrated the company and removed vertical silos, we have also flattened the organisational structure, making capital more streamlined and agile. Through disciplined restructuring, We achieved our target of $70 million in recurring annual run rate cost savings two years ahead of schedule. We are now working towards an additional savings of $50 million per annum by end 2026 through further cost optimisation and by harnessing the power of cloud and AI to work even better and faster. To reward shareholders, the Board of Directors has proposed a final cash dividend of $0.19 per share for FY24, payable on 9 May 2025. The final cash dividend is comparable to last year's final dividend. including the interim cash dividend of $0.15 per share paid in August 2024, shareholders will receive a total cash dividend of $0.34 per share for FY24. Over the past three years, Capital has achieved an annualised total shareholder return of 34.8%, compared to STI's 11.9%. including the final dividend declared for FY24, we would have paid a total of $3.37 per share in dividends and distributions in species over the past three financial years. As we continue to grow recurring income and drive asset monetisation, we will be in a good position to continue rewarding shareholders well whether it's through dividends, distributions in specie, or share buybacks. As a global asset manager and operator, all our platforms and divisions have also undergone significant transformation with strong results. Our FUM surged by about 2.4 times from $37 billion at the end of 2020 to $88 billion at the end of 2024. Our asset management fees grew from $180 million in 2020 to $436 million in 2024 at a compounded annual growth rate of about 25% in four years. Investments by Keppel's private funds have expanded from what was mainly real estate in the past to include energy and environment infrastructure, data centres and private credit. Our geographical reach has also expanded from what was mainly Asia-Pacific to now including Europe with Amon Capital as our European platform. In 2024, Keppel was ranked in IPE Real Assets List of Top 100 Infrastructure Managers, emerging as the third largest globally by listed investments and the sixth largest in Asia Pacific by assets under management. Keppel has earned its reputation as a trusted partner to our investors. Our success is grounded in a proven track record of having delivered strong and consistent returns to our LPs over the years. Since 2002, we have achieved an average internal rate of return of 20% across deals with an equity multiple of 2.0x. Against a challenging fundraising environment marked by high interest rates and macroeconomic headwinds, we raised $3.4 billion in equity in 2024, 48% higher than in 2023. During the year, we executed $6.2 billion worth of deals across data centres, infrastructure and renewable. renewables, more than doubling the acquisitions and divestments in 2023. We are now close to our interim FUM target of $100 billion by end 2026, which we are hopeful of achieving ahead of schedule. We will double down on organic growth initiatives to drive our fundraising momentum to reach our longer-term FUM target of $200 billion by 2030. We will also draw on our synergies with AMON to grow our FUM in the European market During the year, Keppel contributed to AMON's successful acquisition of Spain's leading data centre group, NABIAX, under Fund 5. AMON is now making plans to launch Fund 6, building on the success of Fund 5 and good investor interest. Looking ahead, Keppel's strengths in sustainability and connectivity will continue to position us well to seize opportunities, bolstered by $26 billion in dry powder and a $40 billion deal flow pipeline. Our infrastructure segment, currently Keppel's largest earnings contributor, has also evolved significantly over the past few years. During this time, earnings from infrastructure have surged 4.9x from $137 million in FY21 to $673 million in FY24, underpinned by strong recurring income. The capital of the past used to be focused on the power trading business, with a high exposure to the spot market, which resulted in volatile earnings. Presently, about 70% of our contracted power capacity is locked in for three years or more, abating the effects of wholesale electricity price fluctuations. We also shifted from being largely an EPC player in the past to providing technology solutions and operating and maintenance services that generate steady recurring income. We used to operate a subscale infrastructure business, mainly in Singapore. Today, we have expanded into China, India, Thailand and Vietnam, deploying AI and machine learning to offer our decarbonisation and sustainability solutions at scale. As at end 2024, the segment had about $6 billion of such long-term, non-power-related contracts, which are expected to generate over $100 million in annual EBITDA from 2025. Importantly, we have succeeded in transforming a traditionally asset-heavy business into an asset-like one, Today, our infrastructure division is seizing opportunities across the renewables, clean energy and decarbonisation value chains by co-investing with our private funds and recycling capital through Keppel Infrastructure Trust. Real estate continues to be an important segment for Keppel. However, the way we operate has changed. pivoting from a traditional developer into an asset-like real estate solutions provider focused on recurring income. From $15.7 billion as at the end of 2017, total assets in the real estate segment have shrunk to $14.1 billion by the end of 2024. Our exposure to China property has also been significantly de-risked. As at the end of 2024, we had the remaining land bank in China of about $1.1 billion held at historical cost in our books, compared to $3.1 billion in 2017. Reflecting our efforts to unlock capital, we have announced the monetisation of about $3.6 billion in real estate assets, making up 51% of CAPL's cumulative asset monetisation of $7 billion as at the end of 2024. Through our multi-year restructuring, we have also generated significant run-rate cost savings of about $100 million over the past two years. As we sharpen our focus on expanding recurring income, the Real Estate Division will continue offering sustainable urban renewal solutions through KSERV, and provide consultancy services for large-scale developments, leveraging Keppel's established track record in Asia. Connectivity is today a fast-growing segment. with earnings rising 2.5x from $74 million in FY18 before the privatisations of Capital TNT and M1 to $184 million in FY24. From a subscale data centre and logistics player, our horizontally integrated connectivity segment has evolved into a leading digital infrastructure solutions provider, seizing opportunities in the digitalisation and AI wave. Over this period, the total gross power capacity of our data centre portfolio has expanded 2.7x from 240 million MW in 2018 to 650 MW in 2024. We have announced plans to further grow this by over 500 MW to 1.2 GW in the next few years. fueled by a $10 billion expected in new FUM from Capital Data Centre Fund 3 and further co-investments. We have also expanded beyond data centres into new areas like subsea cable systems, Last month, the Bifrost cable system that we are developing was granted a subsea cable landing licence by the US FCC, paving the way for its successful deployment in the second half of this year. When completed, Bifrost will not only deliver enhanced connectivity and network diversity to our customers, but also generate attractive returns for capital and our private fund co-investors with expected internal rate of return of over 30% per annum. In addition, Keppel will continue to earn long-term operating and maintenance fees of over $200 million per fibre pair over 25 years. Beyond Bifrost, we are also pursuing opportunities for two more cable systems with over 30 fibre pairs connecting Southeast Asia to the rest of Asia and beyond. Since the privatisation of M1 five years ago, it has transitioned from a traditional telco into a digital-first network operator and has synergised with Keppel as part of our integrated connectivity ecosystem. Despite challenging market conditions, M1 has seen steady EBITDA growth of 10.7%, from $196 million in FY22 to $217 million in FY24. The separation of M1's network assets had also liberated $580 million from the balance sheet, making it more asset-like. As part of its extensive digital transformation, M1 refreshed its technology stack and migrated all customers to its cloud-native digital platform, improving customer acquisition and retention while reducing its cost to serve. About $10 million in cost savings were achieved with the retirement of M1's old technology. Currently, about 90% of its customer transactions are conducted online through M1's digital platform compared to 65% in 2019. M1's cost to serve has also been declining and is expected to yield 20% in annual savings per customer from 2025 compared to 2020. M1 has also expanded its presence beyond Singapore, in Malaysia and Vietnam. The enterprise business has been identified as a new growth engine, with M1's enterprise revenue surging 82% from 2021 to 2024. In a fast-growing digital economy, Keppel stands ready to meet the growing demand for leading-edge data centres and digital infrastructure, from global cloud players and hyperscalers. Going forward, we will continue to focus on investing in the digital economy, leveraging Keppel's ecosystem and value chains to deliver robust returns. We will seek more opportunities to work with global cloud players and technology leaders such as Amazon Web Services, with whom we have signed a Strategic Framework Agreement for our global partnership for data centres, subsea cables and renewable energy. This will enable us to drive growth and better navigate the disruptions in the fast-changing digital and AI landscape. To conclude, CAPL's comprehensive transformation has positioned us to thrive in a volatile future marked by increasing geopolitical risks, technology disruptions and trade tensions. I am confident that CAPL is well poised to seize opportunities, leveraging our integrated ecosystem and access to diverse capital pools to deliver the sustainability and connectivity solutions that investors and customers seek. As we accelerate Keppel's growth as a global asset manager and operator, harnessing the cloud and AI to drive efficiencies and competitive advantage, we will deliver strong returns to both our shareholders and LPs. Our CFO, Kevin Cheung, will now take you through details of the company's financial performance. Kevin.

Thank you, CEO, and a very good morning to all. I shall now take you through Capo's financial performance. Our net profit for financial year 2024 was $940 million as compared to $4.1 billion for financial year 2023. Excluding these continued operations, net profit was $832 million as compared to $885 million for financial year 2023. During the year, legacy O&M assets and discontinued operations registered a net loss of $124 million as compared to a net profit of $3.1 billion for financial year 2023. Financial year 2023 included a gain on disposal of capital offshore and marine of approximately $3.3 billion. In addition, there were fair value losses on the remaining CETRM shares in our segregated account as compared to gains in financial year 2023. higher financing costs and amortization of day one fair value loss on note receivables. These were partly offset by the right back of certain cost provisions made in 2023 relating to the combination of COM and SEMCorp Marine, as well as recognition of indemnity claim under the combination transaction. As CEO mentioned, the new capital has performed strongly in financial year 2024, excluding the effects of legacy offshore and marine assets and discontinued operations. In the next few slides, I will present the financials excluding effects of the legacy O&M assets and discontinued operations to provide greater clarity on the financial performance of the new capital as a global asset manager and operator. Net profit for FY2024 was $1.064 billion, which is 5% of $49 million higher than the $1.015 billion for FY2023. All three segments were profitable, with stronger year-on-year performance from the connectivity segment. ROE increased to 10.1% for FY2024 from 9.5% for FY2023. I will further elaborate on the performance of each segment later. Adjusted net debt to EBITDA was 3.7 times as at end December 2024, as compared to 3.3 times as at end 2023. This was mainly due to an increase in adjusted net debt as a result of acquisitions and investments, including the One Paramount project in India and Amon Capital. There were also additions of fixed assets, investment properties and dividend payments, partly offset by divestment proceeds received during the year. Free cash inflow was $901 million as compared to free cash outflow of $384 million in the same period last year. Net cash from operating activities was higher at $200 million as compared to $58 million in the prior period, mainly due to higher operational cash inflows and lower working capital requirements, partly offset by higher interest and income tax paid. Net cash for investing activities was $701 million in FY2024, was mainly attributable to cash balances of about $1.07 billion consolidated upon obtaining control of Assetco. FY2024's net profit was supported by positive contributions from all income streams. Lower operating income partly offset by robust asset management earnings translated into a recurring income of $766 million for financial year 2024, which is comparable to $773 million in the preceding year. Valuation gains of $361 million was higher than the prior year, led by higher fair value gains for investment properties in Singapore and Vietnam, as well as investments held by real estate and connectivity segments. Development and EPC earnings declined year-on-year, mainly due to a decrease in profits from property trading projects in China and Singapore. Excluding the loss arising from the dividend in species of units in capital REIT in FY2023, divestment gains declined year-on-year due to lower recognition from asset management in FY2024. Net loss from corporate activities was lower than that of financial year 2023, mainly due to receipt of an award following a successful arbitration and divestment gains from the sale of non-core assets. This was partly offset by fair value losses from investments, as compared to fair value gains in the prior year, as well as higher net interest and share plan expenses. Moving on to segmental performance. The infrastructure segment recorded a net profit of $673 million in FY2024, 4% or $26 million lower than the $699 million in FY2023. Asset management achieved earnings growth of $28 million, mainly due to acquisition fees from Capital Infrastructure Trust's acquisition of a German solar portfolio and an Australian transportation business, as well as other transaction advisory fees on sponsor stakes and co-investments. The decline in operating income was a result of lower contributions from an associated company in Europe and lower contributions from KIT. FY2023 benefited from a special distribution from KIT. This was partly offset by stronger operating performance from the integrated power business underpinned by higher contracted loads. The segment also recorded lower fair value gains from its sponsor stakes in private funds in FY2024. Amidst challenging market conditions, the real estate segment recorded a net profit of $306 million, 3% lower than the $350 million in FY2023. Asset management net profit was $36 million higher year-on-year, mainly driven by maiden contributions from Amon Capital, which was acquired in April 2024, as well as foreign exchange gains. The decline in operating income was a result of lower contributions from capital REIT, partly due to our reduced unit holding interests, following the dividend in species paid out to capital shareholders in November 2023, as well as higher operating losses from sustainable urban renewal, retail and senior living businesses. Higher fair value gains on investments, including investment properties in Singapore and Vietnam, led to year-on-year increase in valuation gains of $160 million. Development earnings were $173 million lower year-on-year, mainly due to lower profits from trading projects in China and Singapore. Excluding the DIS loss in FY2023, divestment gains were lower due to fewer assets monetised in FY2024, as market conditions were not conducive. The connectivity segment achieved a net profit of $184 million in FY2024, 45% of $57 million higher than the $127 million in FY2023. Asset management net profit grew 79% year-on-year, mainly due to higher acquisition fees relating to KepoDC REIT's acquisition of two data centres at the Kepo Data Centre campus in Singapore. divestment and acquisition fees in relation to Capital DC REITs data centre in Australia, as well as lower overhead costs. Operating income was comparable year-on-year. Whilst earnings from M1 and contributions from sponsor stakes were lower, this was partly offset by improved performance by the data centre division, with higher revenues from project and facility management, as well as lower overheads. Despite the lower net profit contribution in financial year 2024 from M1, mainly due to higher depreciation, M1 managed to deliver a slightly higher year-on-year EBITDA due to effective cost management efforts. The segment recorded higher fair value gains from capital DC REIT, data centres and other investments, as well as a dilution gain following capital DC REIT's private placement exercise, which were partly offset by lower fair value gains from private funds and impairments of non-core assets. The segment also recorded lower gains from the disposal of non-core assets, partly offset by a share of capital DC REITs gained from the disposal of its Australian data centre asset. Net loss from corporate activities was lower at $99 million as compared to $126 million in FY2023. This was mainly due to receipt of an award following a successful arbitration, divestment gains from the sale of non-core assets, and a write-back of prior year's tax provision. This is partly offset by fair value losses on investments in financial year 2024 as compared to fair value gains in financial year 2023, as well as higher net interest and share plan expenses. With that, we have come to the end of the presentation, and I shall hand the time over to CEO for the Q&A session.

Thank you. Thanks, Kevin. So for the Q&A session, we will invite folks from the room here who are attending in person, see whether they have any questions before we take questions from the web. Ziwei.