Seatrium Ltd

Good morning ladies and gentlemen. Welcome to Citrium's financial year 2023 results briefing webcast. This morning, we posted our FY2023 earnings with a positive underlying EBITDA of S$628 million, reflecting the Group's strong operational performance. We have with us today Mr. Chris Ong, CEO, and Mr. Adrian Tang, CFO. I'll now pass it on to Chris, who will go through our business performance.

Good morning, and welcome to Citrum Group's full year 2023 results presentation. I'm pleased to have with me Mr. Adrian Tang, Chief Financial Officer. We completed the combination at the end of February 2023, and have been extremely busy with the integration and transformation of Citrum. At the end of last year, we completed our strategic review and capital structure review, and announced last month that we will be writing down surplus and non-core assets in our full year 2023 earnings. This morning, we reported our financial year 2023 financial results and made two other announcements relating to 1. the resolution of the historical event operational car wash with the Brazilian authorities and 2. a 20 to 1 share consolidation exercise. We hope to spend some time going through each of them separately in detail. In FY2023, we achieved a revenue that has more than tripled to S$7.3 billion. Underlying EBITDA, which excludes exceptional items, jumped 456% year-on-year to S$628 million from S$113 million in FY2022. we have narrowed our underlying net loss to SGD $28 million for FY2023 from SGD $141 million for FY2022. In fact, underlying net profit was SGD $33 million in second half of 2023, a reflection of an improved underlying business performance. We announced today that the Group has reached in-principle settlement agreements with the Brazilian authorities in relation to the historical event Operation Car Wash for approximately S$182.4 million. This latest development provides us with finality on this legal matter, which has been outstanding for quite some time with the Brazilian authorities. It also ensures that we are able to continue to participate in tenders and other bidding projects in Brazil. I would like to reiterate that we are determined to uphold the highest standards of governance and have taken firm steps to put in place policies and procedures to instil the highest standards of discipline, ethics and compliance in our business. Our reported performance in financial year 2023 was impacted by exceptional items, which include write-downs that are non-cash in nature, provision for onerous contracts, legal and corporate claims, and merger expenses. At the end of last year, we completed our strategic review and capital structure review. Arising from that, we have identified our business priorities and how we will go about achieving the targets we have set. Supplies and non-core assets have been identified and written down. While it widened our reported losses, it is value-accretive in improving Citrum's productivity, optimizing the company's operational structure, and reducing cash operating expenses over time. Our goodwill remains intact. Since the merger, we have reorganized ourselves differently from our old yacht-centric ways of doing things. Today, Citrum is organized around a one-Citrum global delivery model where projects are worked on in different yachts globally. supported by centralized engineering and technology resources. This way, we will not be limited to a specific yard capacity or resource limitation. Going forward, we will continue to invest in our core assets and capabilities to scale up our business under this new operating delivery model. As part of our capital structure review, we have also announced today a 20-to-1 share consolidation exercise to increase market interest and attractiveness in our listed shares. This is subject to shareholders' approval in the upcoming AGM in April. The group successfully delivered 13 major projects with a strong net order book of SGD $16.2 billion. During the year, we made great strides on the capital management front, strengthening our balance sheet and improving liquidity. We secured over SGD $3.5 billion in in new loans refinancing, as well as trade financing in financial year 2023 and year to date 2024, of which 71% is sustainability lean or green. As at first half 2023, you would recall that we were operating at the net current liabilities of SingDollar $1.5 billion. We have turned that around very quickly to be in a position of strength with a net current asset position. As a testament to our market recognition, Citrum was included in the STI and MSCI last year and has been included in the FTSE for Good Index for the 5th year. In addition, we receive market recognition in environmental achievement and workplace safety and health awards. As we advance our efforts towards energy transition, we have also strategically launched our new sustainability vision, 2030. It calls for us to achieve a 40% reduction in carbon emissions by 2030 and net zero emissions by 2050. Despite the negative developments in the U.S. offshore wind market at the end of last year, we were optimistic on its long-term potential. Just last week, we announced that we have received notification from Tenet that it plans to award and commence work on the third 2GW high-voltage direct current offshore converter platform in June this year. With this latest project, Citrum is currently working on five HVDC offshore converter platforms, creating a franchise for series build opportunities in HVDCs to achieve greater synergies from project repeatability. In addition, there are also HVAC offshore substations as well as wind turbine installation vessel projects. On the repairs and upgrades business, we are growing our baseload of RU projects globally, with a focus on marine decarbonisation solutions and fleet-based agreements for continuity and capacity planning. In the past year, we have completed 291 repairs and upgrade projects, which were successfully completed with a focus on higher value-add upgrades and conversions. Additionally, 46 low-carbon and energy-saving retrofits were carried out, including successful conversions of the world's first ammonia dual-fuel vessel FFI Green Pioneer. Citrum achieved strong order wins of SING$4.5 billion in FY2023 and YTD2024 that spans across both oil and gas and renewables. Our projects under execution have deliveries that extend through 2030, underpinning our earnings visibility. The pipeline remains strong. On the technology front, as one CITRM, we are proud to have achieved several significant accomplishments in our endeavours to decarbonise the maritime industry. We have successfully converted the world's first ammonia dual-fuel vessel FFI Green Pioneer We have also joined forces with Shell, Penguin International, Vincent and Air Liquide in a hydrogen pilot project to integrate a hydrogen fuel cell on a vessel. Our floating living lab was recently chosen by Maritime and Port Authority of Singapore to pilot an innovative mobile charging solution for harbourcraft electrification. We have also entered a partnership with ABS on digital transformation and smart initiatives, including the world's first offshore structure health monitoring notation. During the year, we also launched the NUS CITRM Professorship in Energy Transition and Sustainability, as well as our partnership with Global Center for Maritime Decarbonization on Shipboard Carbon Capture. In 2023, as part of our commitment to sustainability, we launched our new Sustainability Vision 2030. Our goal is to operate responsibly, engineer a sustainable future towards net zero, and positively impact people and communities. Our sustainability vision aims for a 40% reduction in carbon emissions by 2030 and a net zero emissions by 2050, of which we are proactively working towards. 2023 was a momentous year for Citrum. our contract wins demonstrate the team's ability to seize market opportunities and pivot our business to key focus areas to address market demand. As a leading global player in the industry, we are well positioned to benefit from the strong tailwinds arising from the energy trilemma. Over the past year, we are already executing on some of the plans of our strategic review, including rightsizing our asset base, strengthening our balance sheet, and rationalizing our cost structure. The strategic write-downs we have undertaken are expected to create future value for the group under a more efficient, productive operating model. With this already underway, we are starting the new financial year on a strong footing. Citrum's achievements today are the result of strong commitment from the group and our management team who have worked tirelessly to deliver what I consider a very satisfactory performance in a challenging year of integration. Looking ahead, we are committed to converting our robust order book into quality and timely project deliveries, improving earnings and building a resilient business. Supported by strong industry tailwinds, the group is focused on delivering an improved financial performance in financial year 2024. I will now hand over to Adrian, our CFO, for the financial results review. Thank you.

Thank you, Chris, and good morning to all. Before I take you through the Group's financial performance, I would like to highlight that the financial results reflect the completion of the combination with Keppel Offshore & Marine Limited, now known as SeaTrim Offshore & Marine Limited, on 28 February 2023. For the full year 2023, the Group's revenue was SING$7.3 billion, representing a significant threefold increase year on year. This is attributed to a more robust order book following the combination, strong project execution and higher repairs and upgrades activities. The group achieved A-positive underlying EBITDA of SING$628 million for FY23, as compared to SING$113 million in FY22. Underlying EBITDA excludes exceptional items. Group net loss was SING$1.9 billion for FY23, as compared to SING$261 million in the prior year. The group's net loss in FY23 was primarily attributable to exceptional items that include non-cash write-downs of surplus and non-core assets, excess and obsolete inventory arising from our strategic review, as well as provisions for contracts, legal and corporate claims, and merger expenses, which amounted to SING$2 billion. The group announced today that it has reached in-principle settlement agreements with the Brazilian authorities in relation to the historical event Operation Car Wash, amounting to a settlement payment totaling R$670.7 million, which is equivalent to approximately S$182.4 million, subject to post-closing compliance obligations. In addition, the Group has also made a provision of S$82.4 million for indemnity to capital corporation in relation to this matter. This latest development provides us with finality of this legal matter with the Brazilian authorities. We continue to cooperate with the authorities in Singapore in their investigations and will make appropriate announcements as and when there are material developments. Underlying net loss excluding exceptional items was SING$28 million. Free cash inflow was SING$506 million as compared to free cash inflow of SING$1 billion in prior year. Early collection of receivables of SING$968 million from board drilling in November 2023 contributed to the cash inflow. During the year, we strengthened our balance sheet with higher liquidity and an improved debt maturity profile. Net gearing decreased to 0.12 times as at 31st December 2023 on the back of a higher equity base and lower net debt of SING$747 million as at 31st December 2023 from SING$998 million in the prior year. Underlying EBITDA grew more than four times year-on-year to SING$628 million for FY2023, as compared to SING$113 million for FY22, reflecting strong project execution and cost efficiencies. Underlying net loss was SING$28 million for FY2023, lower than the SING$141 million recorded in FY22. Exceptional items of SING$2 billion in FY23 comprise non-cash write-downs of SING$1.4 billion for surplus and non-core assets, excess and obsolete inventories arising from our strategic review, and SingDollar's $0.6 billion pertaining to provisions for owner's contracts, legal and corporate claims, and merger expenses. The assets that were written down comprise yards and yard assets that will not contribute to the group's mid- to long-term plans as a result of excess capacity due to duplication and change in business strategies, damaged assets beyond economic repair, or obsolete assets. While the write-down impacted our bottom line, it is value accretive for the group in the medium to long term. The closure of surplus and non-core assets, writing down of excess and obsolete inventories are expected to improve Ctrim's productivity, optimize its operational structure, and reduce cash operating expenses going forward. Shareholders' funds increased significantly from SING$3.8 billion at end 2022 to SING$6.5 billion at end 2023. This is attributable to new shares issued to Capital Corporation for the acquisition of Capital Offshore & Marine, renamed C-TRIM Offshore & Marine. Over the past year, we have strengthened our balance sheet significantly and have moved from a net current liability position of SGD $1.5 billion at 30 June 2023 to a net current asset position of SGD $131 million at 31 December 2023. Net asset value per share decreased 21% to 9.49 cents, and net tangible asset value per share decreased 71% to 3.31 cents because of the goodwill from the acquisition of CITRIM Offshore and Marine. This slide highlights our proactive capital management, where we termed out our debt to 2027 and beyond. In FY23, we secured more than SING$3.5 billion in new loans, refinancing, and trade finance, of which SING$2.5 billion were green or sustainability-linked. As of 31 December 23, we have approximately SING$2 billion of undrawn credit facilities, providing ample financing capacity. We continue to adopt a disciplined approach to cash flow and liquidity management. Barring unforeseen developments, we have sufficient debt headroom, and with existing facilities and continuous support of our banks and bondholders, we are able to execute our projects and meet our liquidity requirements. As mentioned earlier, free cash flow for FY23 was S$506 million, from which net cash from operating activities was S$601 million, as compared to S$1 billion for the same period last year. This was mainly due to receipts from customers offset by working capital for ongoing projects. 39% of our net order book of SGD $16.2 billion currently comprises renewables and clean or green solutions, and 27 projects are under execution with deliveries till 2030. The order book is split approximately 70-30 between floating solutions and fixed solutions. CISRIM's inaugural Investor Day will be held on 15 March 2024, a Friday, where we will share more information on the outcomes of our capital structure and strategic review, and the way forward. We will now proceed to the question and answer session. Thank you.