Seatrium Ltd

Good morning, ladies and gentlemen. I'm Judy, the head of investor relations and corporate communications at Citrum. Welcome to Citrum Limited's first half 2024 financial results webcast briefing. We have with us today Mr Chris Ong, Chief Executive Officer and Mr Adrian Tang, Chief Financial Officer. To follow today's webcast, please refer to our latest financial results documents which are available on the SGXnet and our corporate website. To commence today's webcast, I would like to welcome Mr Chris Ong to deliver the CEO address. Chris, please.

Thank you, Judy. Good morning and welcome to Citrum Group's first half 2024 results presentation. I am pleased to have with me Mr Adrian Tang, Chief Financial Officer. First half 2024 was a busy, fruitful first half for Citrum. We clinched several prize contracts to value-add to our portfolio of projects, including the much-anticipated new-built FPSO platforms P84 and P85 for Petrobras, and the third 2GW HVDC offshore converter platform for Tenet, as well as a number of repairs and upgrade projects worth over half a billion to date. We have also successfully completed our share consolidation exercise in May and embarked on our inaugural SingDollar 100 million share buyback programme. At our Investor Day held earlier in March, We have laid out our longer-term strategy and 2028 financial targets, providing clarity on how the Group intend to leverage the strong industry tailwinds to chart our transformation journey from here. This morning, we reported our first-half 2024 financial results. I will spend some time to go through our operational performance and business outlook. Adrian will then cover the financial performance in greater detail. I am pleased to inform on behalf of the Group that Citrum has delivered its first positive financial results in first half 2024. First half 2024 revenue crossed S$4 billion, a 39% increase from S$2.9 billion in first half 2023. Underlying EBITDA was SING $390 million in first half 2024, a more than 9-fold increase over SING $36 million in the same period last year. The Group achieved an underlying net profit of SING $115 million for the first half of 2024, reversing from a net loss of S$264 million for first half 2023, a S$379 million increase in absolute dollar terms. Our profitability turnaround in first half 2024 and a significantly improved EBITDA reflects our strong focus on project execution, prudent cost management, and improve operational efficiencies. Citrum's net order book at S$26.1 billion is at a decade high. In first half 2024 alone, we have secured over S$13 billion in new orders. Our strong order backlog, comprising 32 projects with deliveries till 2031, will underpin our revenue visibility for the next few years, supported by our one-seater global delivery model, which enables us to scale our business. Today, we have orders from the world's largest oil and gas and renewable players, many of whom are repeat customers. This reflects the trust that our customers have in our ability to deliver quality assets on time and safely. Across our key business segment, Citrum is actively building a franchise of series-built projects to achieve operational efficiencies from project repeatability. In the renewable space, our order book has three 2GW HVDC offshore converter platforms for Tenet, other than HVDC offshore converter platforms for Tenet, other than Dowin, Epsilon and Sophia HVDC platforms which have sailed away, as well as two wind turbine installation vessel projects and HVAC offshore substations. In oil and gas, we will solidify our leadership in offshore production assets across EPC projects in floating production storage and offloading platforms and floating production unit , as well as FPSO top sites fabrication integration contracts. Our robust order book currently comprises six P-Series new-built FPSOs for Petrobras, and we would have worked on six FPSOs for ExxonMobil through SBM Offshore for Guyana, once FPSO Jaguar comes online by 2027. In repair and upgrades, we have inked 26 alliances and long-term strategic partnerships over time, and will continue to do more. The ability to simplify and replicate designs and processes enhances productivity, reduces errors and quickens construction time, ultimately making it more sustainable and cost-effective over time. We are now organised around a one Citrum global delivery model, where operations are closely coordinated across different yards globally, supported by centralised engineering and integrated technology resources. It effectively integrates our global assets and workforce onto an efficient operating platform, enabling Citrum to be the only global player with end-to-end delivery capability in key continents. This will allow us to effectively scale, taking on new projects at any point in time, while harnessing the competitive advantage of the locations we operate in. We are looking at an artist's impression of the 2GW HVDC converter platform, which we are currently working on for Tenet. We announced our Framework Cooperation Agreement with our consortium partner GE-Venova and Tenet in March last year, and more recently in June, the award of the third contract for Netherwick II offshore wind farm in the Netherlands. We spent 18 months on design and engineering work, with construction to commence shortly for the Beta project and Gamma thereafter. Citrum continues to play a critical supporting role in maritime decarbonisation. In first half 2024, the Group added over S$2.9 billion of projects in renewables and cleaner green solutions to the Net Order Book. Even in the oil and gas space, we are helping our customers to extract more sustainably The latest P84 and 85 platforms, which are part of Petrobras' new generation of FPSO platforms, are characterised by high production capacity that prioritise sustainable practices with innovative technologies. Both FPSO will incorporate advanced technology such as zero-routine flaring and venting, variable speed drives and measures to control emissions and capture CO2, including an all-electric concept which focuses on efficient power generation and increased energy efficiency to achieve a 30% reduction in greenhouse gas emission intensity. These features will enhance operational efficiency and reduce environmental impact, showcasing Citrum's commitment to responsible and sustainable operation. In addition, the HVDC offshore converter platforms that we are working on underscores our commitment to helping our customers achieve their renewable goals by producing innovative and cost-effective solutions to accelerate the global energy transition. Our R&U business has been growing, contributing to a steady baseload revenue for us. In first half 2024, we completed over 130 repairs, upgrades and conversion projects that contributed S$517 million in revenue. We have signed a total of 22 favoured customer contracts , including the six that we have announced year-to-date. FCCs facilitate forward capacity planning, joint value creation and support a steady flow of repairs and upgrade orders that will contribute towards a recurring revenue base. Every docking space in our shipyard is valuable and forward planning allows us to plan ahead for our future projects. The outlook for offshore and marine industry remains positive, supported by broad-based demand across both oil and gas and renewable sectors. CITREM is committed to sustaining its improved financial performance for the full year of 2024. The Group's overall performance for the year will depend on the completion of its legacy projects, the safe, timely and on-budget execution of its order book, and the implementation of identified cost savings initiatives to achieve a leaner cost structure. Citrum is well positioned to benefit from the industry upturn supported by the One Citrum Delivery Model that integrates its global assets and workforce onto an efficient operating platform, allowing the Group to scale its business for accelerated growth. We still have our challenges, and we are a work in progress in our transformation journey. We have a strong management and board that is focused on righting the ship, resolving legacy issues and putting us on the path to profitability. We are committed to delivering on a longer term financial targets and creating value for our stakeholders. I will now hand over to Adrian, our CFO, for the financial results review. Thank you.

Thank you, Chris, and good morning to all. I will now take you through the group's financial performance. For first half 24, the group's revenue was $4 billion, a 39% increase year-on-year from our strong project execution. The group achieved an underlying EBITDA of $390 million in first half 24, a more than nine-fold increase as compared to $36 million in first half 23. Group underlying net profit was $115 million, achieving a significant turnaround from a net loss of $264 million in the same period last year. Our balance sheet is much stronger today, as at 30 June 2024, the net current asset stood at $700 million, reversing from a net current liabilities position of $1.5 billion last year. This positive swing of over $2.2 billion was driven by proactive capital management efforts in refinancing bank lines, obtaining new facilities, and managing key outstanding accounts receivables. In first half 24, RPE series projects contributed almost 55% to the overall revenue of $4 billion. There was good progress made in RPE series projects. including hull arrival and integration of topside modules prior to commissioning for P78, and ongoing construction of the hull, living quarters, and topside modules for P80, P82, and P83. The Sturgeon wind turbine installation vessel and the 2GW high-voltage direct current offshore converter platform projects were the other material revenue contributors in First Half 24. Revenue from repairs and upgrades was $517 million in first half 24 compared to $504 million in the same period last year, contributing to a growing base load revenue for the group. First half 24 underlying EBITDA improvement from same period last year was driven by higher revenue, operating margin improvements and lower overheads. Our profit turnaround reflects our strong focus on project execution, improved gross margins, and prudent cost management. We are on track to realize the annual recurring savings of $300 million by next year. First half 24 underlying return on equity was positive at 3.6%. a step towards our ROE target of 8% or more by 2028 or earlier. In First South 24, the group successfully divested the Patangas Yard in the Philippines and entered into an option to sell Crescent Yard in Singapore. These investments come from the group's strategic review to optimize its operations and yard footprint. and will further contribute to savings on operating expenses going forward. Net debt at 30 June 2024 increased to $1.8 billion, from over $0.7 billion at the end of last year, mainly due to increased working capital needs for ongoing projects. Net leverage ratio was 2.9 times as at 30 June, within the 2028 net leverage target of 3 times, which was shared during our investor day. In first half 24, free cash outflow was a billion, mainly due to working capital needs for ongoing projects. We continue to adopt a disciplined approach to cash flow and liquidity management, We have adequate liquidity with more than $2.5 billion of cash and undrawn credit facilities as of 30 June. To support CETRAN's project needs for future business growth, we have secured a $1.1 billion three-year committed global syndicated bank guarantee facility supported by a group of eight financial institutions. The flexible structure of this facility is the first of its kind in the offshore and marine sector in Singapore. As part of integrating sustainability into our financing strategy, we have also established CETRIM's inaugural Sustainable Finance Framework. which provides overarching principles and guidelines on the execution and management of sustainability-linked financing transactions and use of proceeds. The first sustainability framework in the offshore and marine industry to obtain an all-round strong and very strong ratings. This FFF is developed in accordance with international sustainability principles and guidelines, which include key performance indicators and sustainability performance targets, which are material to CETRIM's sustainability strategy and business operations. The three KPIs are... Second, And third, a workplace injury rate below the Singapore national benchmark for the marine industry by at least 30% on a three-year rolling average basis. Standard Chartered Bank was our sustainability advisor on this SFF, and these targets were implemented into the US$500 million credit facility that Seatrum secured from SCB last year. We believe with this SFF in place, Citrim continues to diversify its funding base and further grow our sustainability-linked and green banking facilities to enjoy lower financing costs. Citrim's net order book at $26.1 billion. comprising 32 projects with deliveries till 2031, will underpin our revenue visibility for the next seven years. Renewables and cleaner solutions comprise approximately 35% of our current record net order book. We will now proceed to the question and answer session. Thank you.