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.

Thank you. Thanks for the presentation. I have three questions. One on M1, the second one on subsidy cables, and the third one is on the dividend payout ratio. So on M1, could you share a little bit more about how M1 is driving the higher EBITDA margin of RPUs? but despite a lower postpaid sub, apart from whatever you actually described inside your press release. Then on the subsea cables, could you share more about these two new projects that you're embarking on and the 30 fibre pairs that you mentioned? Are these 30-fibre pairs the main pairs or do they include the branch pairs? And how should we think about capital share of these fibres pairs? And then a sub-question on that is, any idea of how valuations are actually trading for these assets? And how should we think about pricing for these fibres pairs that you may sell? And then the last question is on dividend payout ratio. I think on the second half of 2024, I'm getting about 55% payout ratio. I think in the last two halves, you had previously pushed as much as 75%. So just wondering what the thinking is down here and how should we think about dividend payout ratio for 2025? Thank you.

Maybe I ask Wan, you want to deal with the first question and also part of the second question as well.

Thanks for the question. On M1, I think like we shared, one, digitalization is driving our cost to serve down, which is a very important part of our digital journey. And what that does is to reduce our overall cost and helps in our EBITDA. Now, it is true that the market is extremely competitive and the postpaid base is going down. But equally, the same only base is growing. So what that does is that for us, as we become more digitalized and we acquire customers more online, our cost to acquire is also going down. So overall, the cost management that we've been doing over this digitalization journey is helping us get our EBITDAs stable or, in fact, growing, as we've shown. So that's on MBAN. On the two new fiber cable projects that we are talking about and 30 fiber pairs, it's a little too early to share too many details on it at this point in time. I think like what the CEO shared in his opening remarks, these are two pairs that are going to connect South Asia with North Asia and beyond. We have already started talking to some of our partners in co-developing these two fiber pairs. But I think it won't be appropriate at this point in time to share how many fiber pairs will Keppel have, what is the price that we'll be selling them at, and so on and so forth. Because at this point in time, to be fair, Our focus and energy is to make sure that we are able to deliver Bifrost by the end of 2025, as we promised, getting the RFS done by end of Q2, or rather in the second half. And that's what we are working towards. So that is still in the pipeline, but this is more immediate and certain that we want to deliver.

Thank you, Man. Maybe just to supplement what Man has said. On M1, I think he mentioned about the cost management has gone on quite well. But on top of that, I think our enterprise side is also growing, and that has also helped. This is under Asia Pack. So that is something that on the ICT side that we are seeing quite good growth. And I think there's a potential we see that this ICT will also dovetail very well with our growing data center business as well as digital connectivity business in terms of tapping a different pool of customers than what we are currently tapping, which are mainly the hyperscalers. On what Man said is correct, on the subsea cable, it's still early days. But I think just to give a sense, I think we have reported that we are likely to get above 30% IRR for Bifrost. But it's quite unusual circumstance because we were able to lock in the costs very early on, and because of the scarcity value, there are no new systems approved by the FCC in the last eight years. We are getting a bit of a price premium on the fibre pair. So I would say that for the new systems, we would probably be expecting returns of probably in the mid-teens. This is on IRR basis. So 30% is not usual. But of course, if we get it, we are very happy. But I think the key is really on the O&M side, the operations and maintaining these cables. As I have shared in the past, each time we build one of these systems, we create returns for our shareholders, our investors, as well as for ourselves. But we also layer on top each time O&M fees that go for 25 years. And we have shared that for Bifrost, each fibre pair is expected to attract on average about $200 million. worth of O&M fees over the life of the 25 years. So we are quite excited by this. And I think besides doing this for capital, I think we and our customers, we think this is also a very good way to continue to enhance Singapore's position as a digital hub. I think that's all I want to say. Now, on the payout ratio, I think we are kind of guided not just on the year's results, and of course that matters, but we also look at overtime. As you know, we don't have a dividend policy per se, but we've been paying. You used to pay 40% to 50%, but in more recent times, we're paying up to 60%, 70%. But at the end of the day, we do understand that total shareholders' returns is important. Part of it is driven by share price, of course, but part of it is also driven by dividends, as well as share buybacks and distribution in species. So we'll continue to reward our shareholders, our stakeholders, as the business does well. That's the way. You have a follow-up question?

Yes, I have two follow-ups. So first one on M1, what's driving the higher depreciation? And then just coming back to the subsidy cable, I know a lot of us don't really value it in our SOTP, but how would you want us to value it? Giving you free reign, right? Is 11X EV bid high enough?

You know, it's a growing business. I think we see a lot of demand for this because if you kind of look at it as we said, as the world becomes more bifurcated, I think it's quite important for this digital connection. And as what Man correctly said, we have intentionally not pursued the new systems until we beat down this Bifrost. I think as in everything that Keppel does, execution is key. So we want to make sure that we execute well. the opportunity is quite immense. And we think that this whole digital play is something that Keppel is very well positioned to do well in. What was the second question? Depreciation.

Yes, there are two parts to that depreciation. One is, of course, on 5G rollout, which was enhanced in 2024, both outdoors and indoors. So that was added to our capex and therefore depreciation. And the second was our building of the new digital platform, both for consumer business and enterprise business. So that also contributed to our higher capex in 2024, which will reduce significantly in 2025.

So my colleague Chris reminded me not to forget to answer your question about how to value this business on the subsea cable. I think, as I said, what I probably should have continued is that as we kind of layer these O&M fees, and these O&M fees are very long-dated. we would expect that it should attract, I mean if you look at businesses like this, it can go above 20 times quite easily. Because it's a recurring income and on top of that, we have factored in certain assumptions in terms of, and we think we are quite prudent, so we have assumed, for instance, a certain number of cable breaks a year, and usually we assume a higher number compared to what historically it is. So if that doesn't take place, then the profitability will improve further.

20 times EV bidder or PE?

I think if you think about it right, there is on the service income, which is the O&M fees, there's really no, we don't really own the assets. So it's a service income. So you will probably more on PE rather than EBITDA. And frankly, there wouldn't be much of a difference because it's not asset heavy in that sense. Chris will probably say 25 times. He's looking at me like, what? Only 20? Okay, sorry. There are some questions at the back. I can't see you, but maybe you could.

Hi, Suki from CGS. Just since we're talking about Bifrost, I'll just ask about Bifrost first. So can you share with us, since it's a service fee, what should we be looking at in terms of, because there are a lot of assumptions that we need to use if we need to use PE. can we assume maybe about 6% over the IRU price as your revenue and can you please maybe just give us a guide on net margin on that just on the O&M part I know you can't share with us the selling price of the pairs but in terms of margin I think that would be really helpful

I think we'll take it back and we'll provide more information. I understand where you're coming from.

Okay, then we can actually look at PE. It's quite easy.

Good question. I don't have the answer for you today, but we'll revert.

Okay, can I just ask on just a segment, just some financial question. We saw some revaluation gain in real estate for assets in Singapore and Vietnam in second half, I suppose. What assets are those? So that would be my first question. Second one would be infra. There was also a sudden decline in terms of the valuation loss in second half. I saw that you mentioned some losses in private fund. Can we just elaborate on that? And finally, just asset core, is there any revaluation gained from subsuming the assets into the books? And what's the status of monetization of asset core assets?

Okay, I think most of this question I will ask CFO to address. Sure.

Thanks, Yuki. So the first one, just on valuation for real estate, primarily the two assets that we have in Singapore and Vietnam is Capital South Central, as well as Saigon Center in Vietnam. Those are the two primary ones that drove the valuation for real estate. And then your second question was on infrastructure as far as private funds. One of the private funds that we invested in has got some valuations that are losses due to some assets in there. That drives that question on infrastructure. And the third question is on status of asset co-monetization. Did I get that right? No, I think the question is with asset code. Part A and part B for asset code. When you brought in any revaluation. Oh, sorry, yeah. No, no. So asset code, when the SCR completed, we had to take in the asset, you know, according to accounting standards. You had to, you know, it's a business combination. So under one of the accounting standards, SFRS 13, you would have to fair value those assets based on, you know, highest and best use. So essentially, the approach that we took was to engage professional firms to give us the valuation of these assets based on value in use. And that was the valuation that we took in to book those assets. And the final conclusion with the exercise that's been done is comparable to the vendor notes that we're carrying. So there is no P&L impact, at least no material P&L impact on our financials when we took in a cycle. Okay.

Sorry. So the status of monetizing some of the assets, how has it been?

Sorry, assets as in general assets?

No, asset cost assets.

Okay, so for asset cost, I think we are, you know, as what Kevin is saying, our key thing is to how do we de-risk this portfolio over time. So we are looking at bare boat charters. We have already done so for, in fact, all our jackups. Now we are... Now we're also looking, there are some of the assets in certain markets where the conditions are quite conducive. So we will likely, for some of these assets that are almost completed, to complete those assets and to put them out for charters. And then, of course, over time, we will look at various opportunities for us to monetize this asset core. It could be from sale of assets over time, or it could also be as we put this into a fund. At this point in time, probably because not all the assets are cash flow generating, we probably have to charter them out first, provide the income, and then at some point in time, we will consider bringing in LPs for this fund. Finally, we could also securitize. So the key is really to create cash flow from these assets, and then we will have more optionalities in how we monetize this asset code.

Thanks. Just follow up on that. While you're looking for chartering assets, so we should be looking at some cost that you would incur and you will park it under legacy line?

Yes, that's correct.

Okay, thanks.

Maybe I'll take one or two questions from the web. They've been waiting patiently. So the first question is from Paul Chu of Philips Securities. He has two questions. First question is, what is the profit and loss impact from consolidating AssetCo? I think you've heard from CFO in answering Siu Kee's question that there is no impact, no material impact. Second question, how large are the losses from SIR, retail and senior living and could the losses widen further? Thank you Paul for the question.

So I think you'll notice that the net loss for the operating side for real estate was about $111 million. That was also contributed by the KREIT situation, where we have a lower share of KREIT today. But primarily when you talk about SIR, retail and senior living, the reason for the losses is that we have a number of assets coming online. So, for example, Park Avenue Central in China, which has both commercial office and retail, as well as Capital South Central in Singapore. As you know, the senior living business we just launched, so we have about 70 to 80 residents at the moment. So we're tracking well, but as these assets are just coming online, as we pivot away from the traditional trading and development model to recurring income model, we're incurring losses at this stage. But we expect these losses to narrow as we build them up.

So the answer is we should be expecting the losses to narrow, not widen further. Maybe I take one more question before I go to the floor. This is Alvin, a retail investor in Singapore. Since Keppel has taken back the legacy assets, when do you expect to sell and lock in the profit? I think I've addressed that earlier with Siu Kee. Also, regarding the proceeds from the sale of Citrium shares, there's still a substantial amount in the segregated account. Does this account earn any interest or dividends? I guess the account will earn interest because the cash is in the bank account. If there were to be any dividends distributions from Citrium, you will also go to this account. Okay? Right. Next, we have someone from the floor. I can't see you. Please.

Hey, morning. Morning, Shiva. Brandon from Sydney. Hey, Brandon. Hey, morning. Just a few questions. The first one will be on your asset monetization target. Realize that this second half year, you sort of hinted that you could have made $11.7 billion. You have included the sale of the asset pool. So going forward, to hit that $10 to $12 billion, Should we be looking at new items being placed in a bucket, such as your perhaps stake reduction in your REITs, in your private funds, or even more of asset core? That's my first question. The second question would be, I think we've seen a lot of these talk over the export quotas on AI chips and obviously the cheaper AI models. So how does that impact your strategy? on expanding in the DC sector. Should we be seeing something different or you're still looking at doubling that FUM and things like that? Yeah, that's my second question. And the third question would be from a P&L angle, right, this cost savings that you have alluded to, how should we sort of model this, especially given that you're now targeting an additional 20 million, right? Yeah, thanks.

Okay, very good questions, Brandon. I think maybe on asset monetization, I'll cover that. And then your second question is very topical. So I'll ask Man to deal with that. And then lastly, I'll ask CFO to deal with the third question on how to help you model the project that we have internally. We call it Project Lean. Okay, so on the first question on monetization, I think as we all know, or we've been discussing now for a few years, the 10 to 12 billion target monetization by 2026, is on the back of, it's a pool of assets that we identified in 2020, June to be precise, where we identified I think 17.5 billion of assets in our balance sheet that we can potentially monetize, because we are now on an asset-light model, so we don't really need all these assets in our balance sheet. And specifically, these assets that we identified back in 2020 did not include any of our operating businesses. So when Qom was divested, We did not add that to the number. So the 10 to 12 that we're targeting does not include COM. COM was an addition on top, which we reported today. So the pool of assets that we are potentially monetizing is actually larger than the 10 to 12. The way we look at it, Brandon, is that we are currently at seven or close to seven. We've got two more years to hit 10 to 12. So the target for us is quite clear. And it could come from different forms, but asset core definitely would be part of that. So to your specific question. So now maybe I turn the attention to the second question, which is very topical. I'm sure a lot of you thought about it. Now you're waiting for someone to ask it. So, Man, you want to take it away?

Sure. Sorry, Brandon, I can't see you, so I'll give you the answer and probably you can hear me. You know, both these issues that have happened in the last few weeks and months, the CHIPS quota and LeapSeek, In our opinion, I think it's a little too early to comment on how this will unfold in terms of both demand and supply. But one thing is for sure, that the digitalization trend and sustainability trends are here to stay. I think the reality is that as efficiencies grow and as costs drop, we expect actually the innovation landscape to increase significantly. We expect it to become more democratized and for large and medium and small enterprises to start looking at AI innovations in a far more economic way than what the world has seen so far. So I think We do think that this is a positive thing. There is more an opportunity than a threat because this will help us provide digital infrastructure as the demand grows exponentially with the drop in costs and increase in efficiency. So I think it's really a positive trend for us the way we see it. The second part is that we've been working with our business with our hyperscaler and cloud partners quite closely. As you would have heard, we signed the SFA with AWS. We also work with other hyperscalers. And working with them keeps us very close to the market, very close to the technology trends. And the reality is that this space, this is just the beginning. I think a lot will get innovated as time progresses, because there is so much that can happen in terms of software development, not just coming out of China, but coming out of multiple parts of the world. And every technology operator is finding their own way to address the competition that emerges. And that is good for the industry. That is good for the digitalization trends. Lastly, I think as Keppel, we have to understand that these trends are here to stay. Innovation is going to continue to bloom. And Keppel has to be agile enough to make sure that we are on the right side of opportunity. And as these opportunities present themselves, how do we monetize them? I think that's a model that we are trying to evolve, both outside in terms of how do we monetize opportunities outside of Keppel for our data centers and subsea cables and sustainability business. but also within Keppel of how do we adopt AI and the emerging trends to make our own operations more cost-effective and efficient as innovations evolve. So that's pretty much our thinking, that there is an opportunity, trends will get democratized, prices will come down, efficiencies will go up. And that will really create an innovation boom, if you ask me, if the trends continue in terms of innovation. So that's pretty much my thinking.

Thanks, Man. Maybe just to share, even for Keppel as a user of AI, we have seen over the past 12 and I'm sure what we're experiencing is not unique to us. A lot of companies are also going through this journey that as we digitalize our operations, we are also seeing that there's actually a lot of use cases for applying AI to improve not just the efficiency, the way we work, but also to provide in some cases, in some instances, a competitive advantage. and age in how we are able to respond to market opportunities, how we are able to use AI to figure out some of the trends and identify opportunities where we can actually improve the value set for our customers, for our investors, and also to improve, in many cases, the profit pools that we have. So I think this is a trend that is... And we also look at costs, right? I mean, on the one hand, we are supplying the power for data centers. We are supplying the data centers and the connectivity. But as a user... We are also looking at the cost. How much would it cost to make a query under AI? So I think what Man said is correct, that over time, as you bring the cost down, efficiency, we expect demand to pick up. And it will make it more available, especially to the smaller enterprises, which maybe today they find it is a bit expensive. And there's something that even AsiaPAC is also very actively looking at. How do you bring AI as a service to our SME customers, right? And I think the general trend as we see it is that I think power and digital connectivity with increasing digitalization and the AI boom, we believe that that would be a huge positive on both counts for the businesses that we run.

Okay, Kevin, you undo. Thanks, Brendan. So maybe just I'll answer the question in two parts. I think the $17 million savings that we have announced, that's on a run rate basis. So it will get to the P&L. It will be in different periods because it's on a run rate basis. And then your second question around how to model this. I think, you know, at the same time, we have, you know, investments in different places as far as our strategy goes. So I would maybe leave you this thought that, look, you know, if you hadn't done this cost savings exercise, the cost base would basically be unchanged and in fact even more given the investments. So I think this exercise is extremely important for us given the first lot that we've done and we've done quite well in terms of achieving earlier than what we have originally planned. And the additional $50 million we are announcing today is essentially to continue the progress of making this organisation leaner in order for us to place ourselves in a position to achieve the growth that we have planned.

Before I take more questions from the floor, I'll just take two quick questions from the web. They're submitted by Tom Taylor of Pay Group in Australia and Tan Xuan of Goldman Sachs. I will combine the questions, so you don't mind, because they're related to fund management, and I'll ask Chris to address them. But the first question is, is fundraising was challenging for infrastructure funds across the market in 2023-24. How has capital adjusted its fundraising strategies to secure commitments more effectively? Maybe you address that first.

Hi, Tom. Good to have your question. Indeed, actually, it's a very challenging market environment. I think given the volatility that we're seeing in the market, the geopolitical risk that we're seeing. But actually, I'm very grateful to be at Capital because Kapol is really in the business of providing essential services. So whether it's in real estate, in different forms of real estate, whether it's in different forms of infrastructure, decarbonization, provision of clean energy, clean environment, like water desalination, all that. And of course, data center connectivity and subsea cables. We are really uniquely placed to provide actually being a forefront in the leader poll to provide very specific strategies that will interest investors. So I guess that's where, even though fundraising environment is difficult, but I think the investors, the LPs that we talked to, do see that Keppel has a very unique ecosystem. So for example, like data center, nowadays you don't just be just a data center provider, but actually you need a whole ecosystem because Singapore has a moratorium. So if you don't have green electrons, you don't have green renewable energy, you can't really build data centers in Singapore. So Keppel is very uniquely placed that we have the full ecosystem within our data center this space to be able to capture values, whether it's in creation of new data centers or even in terms of creation of infrastructure funds for investors. So that's why actually you're able to see, like even when we divested, we called Guntin Lane to the REIT, the private funds achieved an IRR of 50%. So investors can see that actually it's very interesting how we have positioned it. data center funds within this ecosystem. And even for like subsea cables, we're looking at 33% IRR. So what I'm saying is that because of where we are placed in terms of our capabilities in provision of essential services, we are able to actually come up with fund strategies that would be very unique to us.

Thanks, Chris. I think that's what Chris is saying. What investors look at us is that we're not just a financial investor. We have very strong operating capability, whether it's in infrastructure or in real estate or in data center connectivity. Second question is, how is the fundraising progress of data center fund tree?

I think we are doing very well because based on the track record that we have secured for the previous divestments, I think investors are seeing that we are really uniquely placed to actually take advantage of the strategies that we have in developing these data centres. So in terms of the returns profile, I think they are looking at CAPO being able to provide this whole ecosystem for fund tree. And this has attracted a lot of investors who are both from the infrastructure side as well as the real estate side for this fundraising.

So we expect closing very soon?

We have actually been working through with the investors on the documentations and all that. And in the right time, we will actually announce the fund closing.

But soon?

Soon, yeah.

Okay. On asset management, another question for you, Chris. On the asset management segment, can you share what is the EBITDA margin?

I think we don't share the EBITDA margin, but I think in terms of the fee space, it's about 50 bps in terms of FUM.

And I think the last question is on, will you consider separate reporting for this segment in line with other asset management peers? I guess we are really doing it. We're showing the asset management fees and also profitability from the three different segments that we have. So whether it's real estate, infrastructure or connectivity. Okay. Yes. Yes.

Hi. I'm Felicia from The Edge Singapore.

Oh, sorry. OK.

Hi. Sorry. So about the subsea cable contracts, we just want to know how likely will the group structure at stake and will Keppel build and operate or just invest? I have three other questions. The second one is outlook on the offshore and marine market. Do you guys have one, particularly in relation to rig coal? The third and the fourth one is on the interest rate cycle and Keppel as an asset management operator. The third one is, does the interest rate cycle mean that the group have to provide higher returns to compensate for the higher or longer rates? And the last one is, do investors, have they given any indication whether they prefer capital to have real assets or instead of a platform that manages them?

Sorry, I didn't quite understand the last question. Can you repeat that?

The last one is really on investors' preference. Have they indicated that they prefer the group to have real assets instead of a platform that manages them?

Oh, you're talking about investors in capital or investors in our funds?

Your funds.

Oh, okay. Maybe the way, you know, there are different ways we could have organised this, but I think we have private funds that actually invest in the different... asset classes or segments that we have operating divisions that are very actively, all the strengths that Christina mentioned that makes us very unique. So that is, I think, a very key selling point, as you heard from Chris, for the LPs. But more importantly, we also have a group of publicly listed REITs and trusts that is part of our ecosystem for recycling. So I think it works well for the investors that we attract, and that's why they continue to support us. And you can see our fund FUM growth. And for our shareholders, it's also attractive because we are generating profits from our investments in the fund, where we are aligning our interests with LPs. But on top of that, we can also create long-term annuity income for the group through the O&M contracts and, of course, the asset management fees that we earn. So this is the model that we have and I think investors are quite happy both on the LP side and on our shareholder side. And I think we are all involved in real, I mean our assets are all real assets. That means they are assets that can generate cash flows generally, and they can also provide some hedge against rising inflation. On interest rate cycle higher for longer, I think this is something that we have already baked into our own underwriting models. As I shared in earlier results broadcast, we don't depend on gearing just to provide returns, so it's mostly from our value adding, whether it's how we build better, we create more value that way, or we manage better. So it's not related to just interest rates. That makes it more sustainable. That means we can actually invest through the cycles, rather than just have to depend on interest rates coming down. So we don't rely strictly on gearing. On O&M outlook, I think generally if you compare to when we undertook the deal with Sam Marine, this was now a couple of years ago. The closing, of course, was only last year, but actually the transaction was negotiated, I believe, in 2023. And at that time, I think, compared to now, the O&M sector has improved by leaps and bounds. Having said that, I think there will be some soft spots along the way, but generally I would say the trend is There are essentially good reasons why these risks will be required. I think oil as a part of the energy mix will probably have a longer term play compared to what some people might have thought even a few years ago. And the day rates are improving and unlikely to see new supply come on because the day rates will have to go significantly higher for a new rig to be built. So by which time, when the day rates are high enough, we should be able to achieve some form of monetization for AssetCo. Okay?

Sorry, there was one more question on the subsea cables. Are you guys looking to build and operate or you intend to just invest?

We don't invest. I mean, Bifrost is built and operated by us. So that's the model that we have. We don't intend to just invest passively, if that was your question. Okay. There was one question from a lady in front. Oh, sorry. You've got to come to the front. Okay, never mind. Hi.

Hi, Joy from HSBC. I've got a few questions. First on infrastructure segment. I remember Cindy mentioned that you wanted to build one more power plant by end of this decade. So there is one being awarded to Pacific Light. Does that change your decision in terms of building one more? So that's one. Two, on earmone integration, I think you've done quite a bit together with them. Is there any opportunity for them to raise funds for you as well, in terms of in Asia? And on top of that, are you ready to explore more M&A including supporting your REITs, looking at consolidation opportunities, and how much would you sort of support as a sponsor for your REITs? And lastly, just on sort of shareholder return, your recycling pace has picked up. Can we expect a bit more sort of step up in terms of potential reward to shareholders? And particularly, what's your thought on share buyback? Thank you.

Okay, maybe ask Cindy to respond on the first one.

Thank you. Happy New Year. Right. First and foremost, I think we congratulate the winner of the award on the RFP from EMA. You're right. We have the ambition to grow our power capacity or power generation capacity by the end of this decade. So we run our business as an integrated power business. So whether it is high efficiency gas to power or renewable integration, or subsequently low-carbon molecules, whether in the form of ammonia and esterative, will be our focus from the infrastructure division. The planting of another 600 MW CCGT is a function of supply and demand, so we will be very laser-focused on the supply and demand situation in Singapore. Suffice to say that we are very cautiously hopeful and optimistic about the demand momentum in Singapore. At the back of, as you have heard, the earlier conversation around data centre, electrification, especially from transportation sector. More importantly, also from the cooling of built environment and the pickup of advanced manufacturing. More importantly in Singapore, you have to layer the fact that the current generation fleet are also ageing. So there is a need to have replacement of ageing CCGT to have a high reliability system. At the back of this, we are also very focused on expanding some of our existing generation's efficiency so that we can capture the upside. And you know, by 2086, we will have our existing CCGT that is under construction coming online. And this is something which we are very happy with in terms of the timing, because we will be the first to market. So you know, Singapore is a married order market. So being the first to market and the most efficient in the market, we will augur the integrated power business performance very well. Thank you.

Thanks, Cindy. You know, we've worked, as you said, we've worked very well with Ammon since the acquisition. I will invite Chris to address the question that you have posed.

Hi, Joy. On Amont itself, I think the integration went really well. I think, you know, like we said, they checked the boxes of what we were expecting, and the relationship went really well. In terms of the investing style, I think we liked what we see. Very small lean group, and yet they're able to do large funds. They're able to actually pick on, they're more like private equity real estate, So I think that style of investing is what we like and we could actually leverage on that to actually look at doing the similar things in Asia using that style as well. And I think in terms of the LPs, I think because of the combined LP base, I think there's a larger reach for AMON to our LPs as well as for us to actually reach out to some of the LPs that we do not have. So I think the IMO acquisition is actually a very positive combination between the two groups.

We now have this challenge that our board now says, whoa, AMON is so much more efficient in terms of the number of people versus the size of FUM. So I think these are things that we can learn. So it's not always the acquirer imposes on the acquired. Sometimes the acquirer can also learn from the acquired. Okay, your third question is on, I guess it's related to what do we do when we do all this monetization. I think I've said this many times, Joy, you have heard this many times. Our goal is that if you look at our balance sheet, quite a large chunk of our balance sheet is kind of what we call old capital. That means these are assets that we no longer need to be on our balance sheet with the new capital and our goal is to as quickly as possible in a very measured way to make sure that we get the right pricing, monetize that and when we monetize we will reduce our debt and we will also of course invest in growth But at the same time, we will also be looking to reward our shareholders, either through dividends in species or through a share buyback. So in short, we will do all of that, but I don't have any specific point to address your question on share buyback today.

And just follow up on the re-consolidation, how...

Okay, that one is a loaded question. I think we are always looking to help our platforms to the extent that we can. So we will work closely, look at opportunities that they might come up with and see how we can be supportive. Syuki, you have a... Oh, sorry, no, no, no, it's this...

Hi, Pim Phai here from DoShootAsia. I just wanted to go back on the fundraising topic for Chris. How are we feeling about the fundraising achievements last year and how do you think things are going to fare this year now that we're in the new year?

I like her question. She always says, how are we feeling? So she's part of us.

Very good. Actually, this is quite an interesting year for us because as we launch new products and share the results of our exits with the investors, I think they become more excited about the strategies that we are showing them. So like, for example, for real estate, we are actually working on CAPO's Sustainable Urban Renewal Fund. And this is attracting actually a great amount of interest, because I think everyone is also still looking forward towards making sure that buildings are sustainable, it's green, you're saving more energy, there's lower carbon emissions, and actually all this adds to the bottom line. So like we explained, the NOI for this building itself, where you're in, went up by 31% because of all the SIRS solutions that we're providing. And I think for every dollar that we said you saved or you actually created, using a cap rate of 4, you create a value of 25. So for a savings of $10 million, you actually can create a value of $250 million. So I guess that's where actually investors get really excited when we share with them about the SIRS solution. So we are working towards the documentations for some of these closing, so we'll be announcing. It's going to be a big fun actually. For DC, DC is the hottest sector right now, and coupled with our exits in Genting Lane at 50%, IRR3X three times multiple, I think investors are really excited as well. And they know that there's this growing digitalization, the AI is coming. So everyone's looking forward to actually, there's a huge demand for data centers. And it's also evidenced by what you see when we couple signed a strategic framework agreement with AWS. And for infrastructure itself, you know, we're very good at digital infrastructure, like subsea cables, we talked about, Even for Funtube, we are looking at acquiring actually the full ecosystem now, subsea cabling vessels, companies that are generating this in a monopolistic situation. So things like that excites actually our investors. And even for our renewable energy projects, I think Capo is the only one that can actually help the investors de-risk it completely. Because we have the data centres that needs all the green electrons, And if we are able to create huge renewable projects importing from whether it's our neighbouring countries to Singapore, we are actually able to sell it and de-risk it completely for the infrastructure projects. So I think because of these ability to create such unique projects, which is essential services, regardless of what's going to happen to the world, every day you wake up, you still need some of these services. This will generate actually good cash flows for the investors. And in a way, that's where I think our fund offerings becomes more interesting for them.

Yeah, and building on the successful integration with Armand, are you thinking about any other geographic target that you would want to expand into in terms of after buying up another GP?

Yeah, I think we are always on the lookout for interesting acquisitions. So M&A, whether it's in a REITs and trust space or whether it's in a private fund side, whether looking at other GPs, I think that's where we are really open to. But we are actually still very disciplined in terms of how much we are going to pay for each platform. So I guess that's where we are balancing the opportunities versus the costs as well.

We will also focus on organic growth because inorganic growth like Ammon, the opportunity was there, but to be very honest, you also need a bit of luck to land with the right platform because they don't come by every day. So we have to kind of depend on our own steam to grow organically. And then as Chris said, If something interesting like another air mount comes along, then we will look at it and we will be very disciplined because we don't really need to depend on inorganic to get to our 200 billion target. Of course, if it comes, it gets us there faster, maybe we can become bigger, more than 200, but we don't have to depend on inorganic. There's a question on the web that I just want to quickly take because it's something new. This is an observation from Tom Taylor of Pay Group. His question is, with real estate assets making up 51% of total asset monetization efforts, is capital shifting towards a more infrastructure-heavy portfolio? I think you've heard what Chris have said, you've heard what Cindy have said. We are firm believers in infrastructure, including connectivity. I think we've seen from the assets that we have in our portfolio and in our funds that these assets that provide essential services perform very well through the cycles. They perform extremely well, for instance, during the pandemic. So we like that. But I think the fact that we sold 51% of the real estate assets, I mean the total asset monetization, 51% is from real estate assets, is actually related to the fact that most of these assets that we sold are land banks. We are not... This is certainly one area that we are not going into. And you've heard from both Louis and Chris, we are now looking more for recurring income. We're looking for fee income. And on the recurring income side, I think a fund like KSERV is quite interesting because it allows us to bring our capabilities to basically address the built environment, the existing built environment, how to turn them green. And in the process, as what Chris has said, we are able to generate positive returns for our investors. So it's a win-win for everybody. So this is something that we are pushing towards. And of course, infrastructure will continue to grow. It is infrastructure, whether it's energy, decarbonisation, and also on the built environment, and also on connectivity, will continue to grow. Okay, we probably have time for one or two more questions. So, please. Yes.

Hi Chin Wah, Joel from DBS here. Happy New Year to you and your team. I have three questions. The first is on asset code, second one by Frost, and third on the power plants. So for asset code, I just wanted to know on that $1.1 billion in cash, how much would potentially be needed to complete and operate the existing O&M assets, and how much could you extract for perhaps more productive use? And a follow-up to that is, how is the market appetite for such O&M funds? On the Bifrost, question two, are you able to share how many fibre pairs are there currently in the existing Bifrost project? And could this potentially grow over time on the same project beyond the 2025 completion? And on power plants, does it make sense to build or to perhaps acquire existing power plants? Considering the recent Sinoco deal by Semcorp, I think it was a quite attractive valuation. So just wondering if you are in the market or looking at such deals.

I think maybe on the first question, I'll address it. The cash there, obviously, as I mentioned earlier, we still have some uncompleted projects under Asset Co. Since we've only taken effective control at the end of December, so it's still still in our first 100 days. I think we will have to work very closely to see what's the best way to extract value from that. On Bifrost, I may not understand your question, but there's only a certain number of fibre pairs. You cannot grow them. In a sense, I mean, you can build a new system, like what we said, we're building new systems to North Asia and beyond, two systems. So that would be kind of where we see the growth. On the question on power plant, whether to build or to buy, can I ask Cindy to address that?

Thank you, Joel. We are always open in terms of potential inorganic opportunities. However, like what the CEO said earlier, we do have a very strong desire to grow organically, as you saw in the infrastructure division's improvement in the earnings in the last three years. The consideration that we make with regards to inorganic acquisition of power plant depends on whether, number one, there are synergies. Synergies with supporting infrastructure, synergies in terms of timing and operation, synergies in terms of the gas contracting portfolio or positions, and also synergies in terms of how we deploy our capital stack. The second very large consideration is also how then we manage the transition of the carbon intensity of the portfolio. So as you are aware, while we have ambition to grow our power business, we are also laser focused in terms of lowering our carbon intensity. So the entire portfolio of how we can bring low-carbon molecules to the power plant and how can we then serve our end-user, whether it is a data center or high-value CNI customer effectively are the two major considerations.

Okay, thank you Cindy. Okay, I have one last question for Siu Kee because she raised her hand so high.

One question, not five. Three, very quickly. I'm sure a lot of people want to ask, but they didn't have the chance. I'm helping them to ask. Just on real estate, we have seen the drop in EPC significantly over years and year on year. Is this a new norm? And what's your outlook for 2025 on the EPC side for real estate? So that's question one. And also just want to hear Cindy's thoughts on slightly lower operating income in infra. Is this a new norm? Your thoughts on spread? And finally, connectivity, you had a 25 million impairment on low-cost assets. What are those? Thank you very much.

Okay, can I ask my colleagues to address this, but very short, short answers.

The operating income, just let me share some colours. While we say that it is 4% lower compared to FY 2023, there are two major contributing factors. One being the distribution from Kepa Infrastructure Trust. In 2023, there are two effects from the distribution, one being a special distribution from KIT. I think that makes up nearly 24 million of special distribution from KIT. Besides that, due to the timing of the stub distribution, in 2023, we have effectively about 15 months' worth of distribution from KIT. versus 2024, which is about 11 months of distribution. Just the KIT effect from distribution contributes to more than 5% reduction in the earnings. You are talking about an effect of about $33 million. Then another drag is the contribution from an associated company in Europe. As you are broadly aware, the exceptional contribution from European energy market back in 2022 and 2023 is due to externality, in that case, the war. So we do see the momentum of this externality diluting over time. It will normalize, so the effect was contributed to the drag. But more importantly, you see that we managed to keep a very stable earning from the operating division. So this would mean that the other parts of our growth engine has made back these two one-offs, plus the reduction in spread that you were talking about. So be very focused on the fact that we have built up a very resilient portfolio in the infrastructure update coming from both integrated power business and the decarbonisation and sustainability solution business. Thank you.

Thanks indeed. Louis? On the real estate front, I think as you point out, Suki, we are definitely doing less of EPC and driving to more recurring income, but definitely that doesn't mean we're not doing EPC at all. So just to share with everyone here, like the Keppel Bay precinct, we've completed the brief. We've sold down all but one unit in this area, but we still have one more plot on the private island, which we'll be developing. So that's an example of something that we'll still do in development. Vietnam is a market that we see a lot of continued interest in development. We have ongoing projects, and we're still continuing to look for projects there. Although as we do development going forward, we'll also be looking at using this more of a fund model or bringing in co-investors where we can earn fees. So for example, with the education fund as well, we could potentially work with the education fund on particular projects where we'll develop the schools for them.

Okay, thanks Louis. Just on the last question for connectivity impairment, they were largely from China logistic assets. Okay.

Well, thank you all for your kind attention. Thank you for all the questions. I can't remember one session where there were so many questions. I'm sure there are still more questions. My colleagues will be happy to try and address them offline. But we're very excited by what we have achieved over the last few years in the transformation. And as we've been sharing, you can see that the transformation is actually very deep within Capo. It's not just at the group level, but even in the individual platforms and divisions. You've seen the transformation. But more importantly, I think we are very excited about the future. I think we are, you know, I've said many times, we're in the right space and the right time. And the group now is very well integrated. We are truly hunting as one capital. And we think that, you know, the future is very bright. So thank you very much for your attention.

Ladies and gentlemen, we have come to the end of our conference. Thank you for joining us here today.