Frasers Centrepoint Trust (J69U) Earnings Call Transcript & Summary

Good morning to everyone. Welcome to Frasers Centrepoint Trust results presentation for the first half financial year 2024 ended 31st of March 2024. We have uploaded the press release the results deck as well as the financial statements called the SGX net this morning. And we are happy that we are attending our briefing. And let me invite Richard, the CEO, to give us a run-through of the presentation. Richard, please?

Yes. Thanks, Anin, and good morning. to all of you. Thank once again for this quarter update. I'm going to dive straight into the summary of the results back, and I'm very happy to actually share a set of healthy performance that we have for this quarter. If you look at the financial aspect of it, revenue is at $172 million, NPI at $124 million. And later on, when we go into the various slides that shows the charts and so on, you will also see 2 charts, right? I think we want to distinguish it a little bit because if we were to exclude CCP which is Chinese City Point, which was divested last year -- at the end of last calendar year, by the first Q for our financial year and also the effect of AEI T1. Our gross revenue actually rose 2.9% and NPI actually was higher at 2.1%. DPU relatively stable at over $0.06. In terms of capital management, aggregate leverage is currently at about 38.5%, which is pretty healthy. Average borrowing cost slight improvement from 4.3% in first Q down to 4.2%. ICR over 3x. And currently, for FY '24, all our financing needs has been settled. Coming to the business operations side of things is we have seen a very robust set of numbers. Occupancy -- committed occupancy at close to 100%, rental reversion at 7.5%. Shopper traffic has gone up 8.1% year-on-year, and tenant sales has continued its trajectory of improvement, and we saw an increase of 4.3% year-on-year. And if you just take a step back, it will be compared to pre-COVID same period, we actually grew by over 20%. We also have some updates on AEI, which Pauline will share with you later on and as well as some highlights on our ESG activities for the quarter, which are something we share with you. Next slide, please. So just a quick recap of what we have done for this quarter. If you look at what we started of the calendar year, which is our Q2. First of the block, we made an announcement 25, January on the acquisition of the additional 24.5% stake in NEX, we also launched our equity fund raising, which we did raise $200 million, 2.5x covered. And also some other notable things that happened during this quarter included -- including the FCT's inclusion into the Straits Times Index on 18th of March. We did an EGM on 25th of March and also completed our transaction for the 24.5% stake in the NEX on the 26th of March. So today, we own 50% stake in NEX as a whole. Quick update on the market. I'm not going to spend time on the wider macro perspective because you guys know as much as we do. Maybe a little bit on the sales. So if you look at retail sales index, it's a 3% year-on-year growth if you exclude motor vehicles compared to ours, it's actually stronger. F&B sales continue to be one of the key driver at 4% year-on-year. From a rental perspective, similar trend. Suburban mall, you've seen a 2.7% year-on-year growth as compared to our 7.5% growth. But of course, the constituent of their numbers are very different from ours. Updating on the supply side of things, again, we're seeing a pretty muted supply that's coming on stream all the way to 2027. And we have also included some of the projects. This is actually extracted from recent report of CBRE. So some of the names that you could see some of the smaller malls. In fact, most of them are smaller malls that's going to be completed between now to 2027. So very limited supply, and that is -- that underpins the strong demand that we continue to see from retailers, especially to our stronger malls. And this is the -- those are the other reason why we are seeing such a robust rental reversion as well. For financial highlights, I'll pass over to Audrey to share about what has happened during the first -- the second quarter. Audrey, over to you.

Yes. Thanks, Richard. So good morning to everyone. I'll run through the financial highlights for the first half. So first half, we have registered higher gross revenue and also higher NPI, if you were to exclude the China City Point, which was divested on 31st of October, and if you will exclude Tampines 1 which undergoes asset enhancement work. The gross revenue was up 2.9% due to higher occupancy, staggered rents and higher passing rents for the portfolio. NPI was also up by 2.1%. The higher gross trend offset by increase in property expenses. We have a good NPI growth of 2.1%. Next Slide. So distributions to unitholders is at $104.9 million. This is due to the higher NPI registered by the portfolio and also higher contributions from the investments, offset by the higher financing costs. DPU at $6.022 the first half of 2024. So for this slide, I would like to bring attention to the distributions from investments. It has grown 22.8%. This is mainly due to the higher contributions from GRPL, which is the entities that hold NEX. We acquired the 25.5% stake on 6 of February last year. And as a result, this year, it's a full 6 months contribution from the investments. Secondly, we actually -- we also increased our stake in SST which holds Waterway Point. From 40% to 50% last year on 8 of February, that also contribute to the increase. So however, this is offset by the absence of distributions in Hektar, which we have divested in December. Next, the adjusted NAV is stable at $2.25. For the financial metrics, the aggregate leverage actually went up from 37.2% to 38.5% due to the loans that was drawn down in March to finance the acquisitions of 25.5% stake in NEX and also to fund the asset enhancement work at Tampines 1. ICR at healthy level at 3.26x. And our cost of debt for this first half is at 4.2%. For the first quarter, it is at 4.3% and in second quarter it is at 4.1%. So you see a dip in terms of the cost of financing. The -- about 68.5% of our debt are actually hedged to fixed rate interest increased from the last quarter of 63.4%. So in total, we have undrawn facilities about $587.5 million for the vehicle mix. So this shows you the debt maturity profile is well spread. There's no refinancing risk in FY 2024. So what is [ view NEX ] in FY 2025 is about $320 million. We already started engaging the banks for the refinancing mix in next year. So with this, I'll hand over to Pauline, who will run through the portfolio highlights.

Thank you, Audrey. Good morning, everyone. I'm very happy to actually share with all of you a good report card -- I think it's a good report card with all around positive robust and resilient performance. All right. So I think Richard has spoken about some of the good news that we are sharing for this quarter. So we see very positive trends in terms of occupancy, in terms of sales, footfall as far as reversions. So I'll go into a little bit of details on these KPIs in my subsequent slide. Okay, what you see here is the committed occupancy. So the portfolio is committed occupancy has remained at a very strong level of 99.9%. This has been sustained over the past 2 to 3 quarters. On a year-on-year basis, we also see an improvement in the occupancy. And I would say that some of the active management in terms of repositioning in terms of curating the offering, the retail offering our malls and our malls is actually a bearing fruit. And this is also underpinned by the fact that we do see -- I mean, we shared earlier what some of the sales, the occupancy in the Singapore retail market, the trending is also generally in line with the positive performance that we are seeing in the overall market. Next slide, please, all right. So this slide, again, I think Richard said earlier that for revenue and NPI on a year-on-year basis, that has -- our portfolio has actually delivered a growth. And this is notwithstanding the headwinds that we are seeing in terms of cost inflation and so forth. And our focus remains on driving the top line. We see that across our assets on a year-on-year basis, the top line has actually been growing on a year-on-year basis. And I would attribute it to our 3 pillars of growth driving organic growth, so really driving the rental growth. And you'll see that in the rental reversions for our portfolio, that I will go share later is also through value creation via AEI as well as repositioning. So the likes of Century Square, for example, you see that the revenue has actually picked up quite strongly compared to last year. And also lastly, strategic acquisitions, the focus on rebalancing our portfolio going into quality assets. So all that is bearing fruit in terms of the numbers that we are showing. Next slide, please. All right. Footfall, I'm happy to share also that in terms of footfall, we are actually on an overall portfolio basis, we're actually recovering very close to pre-COVID level about 1% to 2% below pre-COVID level for the second quarter of this financial year. I think this is again attributed to some of the seasonality, the timing of CNY, the timing of having value-add this year versus last year also due to the active -- kind of the active management that I spoke earlier, in terms of changing out some of the tenants and also getting our existing tenants that are doing well to upgrade themselves. So that's coming through in terms of the footfall and also the marketing initiatives that are being undertaken to enhance the stickiness of our shoppers, right? And that flows through in terms of the sales trend, I think Richard mentioned earlier compared to pre-COVID, that has actually grown by 20%. On a quarter-to-quarter basis, we continue to see the growth being sustained, right. Okay. Next slide, please. All right. So reversion. So where does that lead us? So in terms of reversions, very happy to share very strong reversions for the first half of this year. I think -- over the cause of the past few months, we've met various investors, and this was an area of key focus, and we did indicate that we are positive about the reversions that we are seeing in the portfolio. So this has actually panned out in the number we have shown -- we have achieved a rental reversion of 7.5% on an average-to-average basis, for the first half of this year. And we are seeing good traction in terms of leasing. You don't see NEX here, but that -- the reversion from NEX has actually also contributed to the 7.5% for confidentiality reasons, I cannot share the exact number, but it has actually come out quite positive for NEX. Next slide, please. All right. This is just some of the new tenancies that we have brought to our portfolio for the second quarter of this financial year. I think in terms of focus on refreshing our retail mix that continues to be something that we are very, very cognizant of because that will then future-proof our portfolio for sustained good performance. And the same thing is also in terms of the Singapore retail sector that continues to be active. We do see good traction from various trades, including F&B fashion as well as beauty and services, right. Next slide, please. The focus on activating our malls -- entrenching our malls as a part of the community. We've not lost sight of this. So true promotion events are keeping up to date with some of the social trends that we are seeing. So this with activating our malls continues to be a key focus. And I think this is also one of the reasons why the footfall has actually recovered. So it's back to basics, getting the shoppers back to the malls. Providing them with the retail offering that is needed and driving the sales, right? Next slide, please. All right. Now I'll share a little bit about our enhancement strategy. So we have a live AEI project ongoing at Tampines 1. And -- in terms of the progress, it has panned well, both on the project side as well as on the leasing side. To date, we have achieved close to 100% in terms of the precommitment for the leases that is in scope for the AEI. And the project is -- or the construction is also turning well, on track for overall completion by the end of this financial year. And in fact for the month of May, we are looking at above 86% or more than 80% of the spaces impacted by the AEI being handed over to tenants, right? And progressively, you do see some of these new tenancies coming on. And kudos to the team on the ground. I think in terms of the brands, the new to Mall brands that are coming into the Tampines 1 post-AEI. That will definitely strengthen the positioning of this mall, and we do have quite a few good names that's coming to the mall. Next slide, please. All right. With this, I will hand over to Fung Leng to talk about sustainability. Thank you.

Right. Thank you, Pauline. I'm happy to announce or rather to review the initiatives that we have on the ESG front. First of all, is the launch of the inaugural online ESG data book. This is in line with the group's approach to increase the disclosure on ESG data. So if you go to our website, that being that's provided there, you'll find that the -- all the ESG data that's related in the last 3 years, organized in different types for you to use -- for the user to look at all the related ESG data, including those with scope 3 disclosures. So this is a very comprehensive ESG data book and we hope that this will provide the investors and stakeholders with easy-to-use resource in the ESG study. We have announced last month, largest solarization project for retail malls to date across 6 of our retail malls, and this installation will be completed by the end of this year. So a total of 3,533 square meters of solar panels will be installed at 6 of our malls, including Causeway Point and Northpoint City North Wing. So the size is about nearly 3 Olympic size swing pools. So these will be installed on the rooftops. And this later initiatives is in line with our group's goal to achieve net 0 carbon by 2050. So the savings to be generated is roughly about 722,000 kilowatts of electricity per year, and this works out to be just under $180,000 in terms of energy costs and a reduction of 293 tonnes of carbon emission annually. So while the electricity generated is not meant to replace the main source of energy, it is meant to complement. So this amounts to about just under 2% of the energy consumption for the buildings. So I'll hand this over back to Richard to sum up the presentation. Richard?

Yes. Thanks Fung Leng. So just a quick closing summary. So as what Pauline has mentioned, there's now, I think, our approach or strategy of having 3 pillars of growth that are bearing foods in terms of organic growth value enhancement and also strategic acquisition. And that, as you can see, the healthy first half results that we have shown in terms of financial results, in terms of the overall operating performance. If you look at -- what we have done at our AEI, we are close to completing our AEI and as we have indicated for the next FY, you will be able to enjoy the full year's contribution from this asset enhancement initiative. So by and large, we are going to continue very much to focus on our asset and property management capabilities to drive both organic growth, value creation and at the same time, always look for opportunistic investment when it comes out, right? So Also, I think the other notable point to note is that the acquisition of 24.5% stake in NEX. Again, this year, we only will have part of the results coming from that acquisition. And -- but for the next FY, we will be able to enjoy again a full contribution for the entire year, like what we have done or what we have achieved for the initial acquisition of the stake in NEX, right. So with that, we end our presentation and happy to take questions. Back to you, Fung Leng.

[Operator Instructions] Okay. We have the first question from Jonathan Cohen. Jonathan, please unmute yourself and go ahead with your question.

Management team. Two questions from me.

Jonathan, could you speak up a little bit louder?

Okay. Can you hear me now? Okay. So yes, congrats on a good number. Two questions. Firstly, you mentioned improved physical occupancy for your suburban mall. Could you elaborate a little bit more because we tend to relieve physical occupancy to office. For dynamics on the ground at suburban mall, is there a negative impact from more people going back to work in the office and would you attribute a better performance at suburban mall to less leakage to Singaporeans traveling out. Secondly is on cost of debt. There's a 20 basis point Q-on-Q improvement. Yes, I did notice that [indiscernible] is a little bit lower but couldn't have caused that big a fluctuation. Could you share if you have benefited from better credit rating and therefore, a narrower credit spread? Those are my 2 questions?

Yes. Thanks, Jonathan. I will bridge the first question and then Audrey, maybe you can take on the debt interest rate question. So I suppose you are referring to committed occupancy that we have indicated for this set of numbers we have revealed that we achieved a committed occupancy of 99.9%. There is a slight improvement from where we were at. And also, I think the key point here is to highlight the strong demand that we are seeing from retailers for our malls, right? Again, we have alluded to the fact that we have significantly improve the performance of order, the quality of the portfolio that we have today. So that is also one of the key drivers as we continue to see strong demand because retailers want to be in malls that they could probably do better. They want to be in stronger, more dominant malls, of which we have 4 out of the 10 largest -- 4 of the 10 in terms of the largest malls across Singapore. So that actually put us in a very good state to continue the trajectory of getting good occupancy. In terms of the negative impact of leakage, I presume you are talking about comparing different trades across the retail market, right? So it is true because our portfolio largely provide basic essentials, right? So whether you travel or you don't travel, most of the items, products that you find in our malls are basic necessity, things that you will need on a daily basis. So the impact could be less affected by traveling. Of course, traveling would do -- will still impact the market overall because people are away from Singapore at a certain point in time, right? But nonetheless, I think because the nature of our product will ensure that the communities still comes to the mall because that is what they need on a daily basis. And I think there's also one question you talk about whether back to office has some impact, yes and no, there are 2 sides to the coin for that. What you are seeing is that the traffic numbers has grown, meaning that probably we are seeing more people going back to the office because by and large, a lot of the commuters are residing near to our mall so when they go back to what we do, go to the mall. But at the same time, we are not really seeing an impact because our sales continue in a very good, strong positive trajectory. So we do see from both aspect people do go back to work more, but I think there's still a proportion of people working from home and also people are spending more at our malls, right? So I hope that answers your first part of the question. Audrey you want to take on the interest rate question?

Yes. So answering your question is for quarter-on-quarter, there's a savings of 20 bps in terms of the cost of debt. That's mainly because we actually repaid some of the higher interest rate debt using the divestment business and also the [ ARF ] persist pending the deployment of -- to fund the acquisitions of NEX. And coupled with the fact that we have also entered into IRS in December and January that helps to bring down the average cost of debt.

All right. Jonathan, I hope we answer your questions.

Yes. Thank you for the color.

We'll move on to the next question from Derek Chang, Morgan Stanley.

All right. Perfect. I just want to ask a question on management fees taken in units. I think this half, you took about 82% in units, significantly higher than usual. Just wondering, is this just to soften the timing gap between the placement and the full contribution from NEX. Or will this be a more permanent feature?

I would say it's not a permanent feature, but especially as and when we do, I think this is something that we shared with you guys and also with the investors. And whenever we do AEI, any shortfall in the results or the performance, the financial performance of the asset that's undergoing AEI will then be supplemented from AMCs to cover the shortfall. So one of the key attributes to this higher-than-usual AMCs for this quarter is because the fact that Tampines 1 s more or less in a stage of full blown AEI works and that has a significant impact to the bottom line and that can be using AEI to cover the shortfall. And that's one. And the other one is also, as you're probably aware, for NEX, we are actually taking 100% AMC in units. So a combination of those 2 that led to the higher than usual AMCs. So once Tampines 1 AEI is completed, you will see that AMCs numbers coming down.

So once that's complete, we'll be seeing go back towards the 20% number or the 20%, 45% number?

The 20% will be for most of the other -- the rest of the portfolio -- but I mentioned that for NEX, we are taking 100% of the fees in unit.

Moving on to the next question from Yew Kiang from CLSA.

Richard, can you hear me?

Yes, sure.

Yes, I have 2 questions. First is on NEX. Is the reversions tracking ahead of your portfolio or below? I think your portfolio is being 7.5%. I just want to know that number. And then for tenant sales wise, is it also tracking above your portfolio average or below? And then the second question is on Central Plaza. Can you talk about the occupancy and also it seems like the reversions for that office is tracking below some of your other office peers?

Okay. Let me take the first part. Maybe, Pauline, do you want to take on the Central Plaza question. So for NEX -- okay, we can't share with you the specifics, but I'm happy to say that in fact the reversion is very strong, and it's above the average number you are seeing, right? And I think this is something that we have shared at the -- when we talk about the acquisition. Recently, we said that we see opportunity for us to gain organic growth from the asset. Through rental reversion, some remixing and also especially in terms of looking at how can we rightsize some of the tenants, et cetera. So this is bearing fruits and we are seeing a very strong reversion from NEX. At the same time, the sales is pretty much in line in terms of the growth that we are seeing for the mall, right? So that hopes to answer your question on NEX. . Colin, do you want to take on the Central Plaza?

Sorry, I got distracted by your question on NEX. So you were saying -- you were asking about the reversion, right, for Central Plaza?

Yes.

Okay. Actually, it's a...

No, no, no, no. I mean Central Plaza, just to talk about the occupancy coming down. And in terms of the office reversion, it is weaker than some of the other office peers that we are seeing.

Yes. Okay. So for Central Plaza in terms of the occupancy, I would say it's still at a respectable level. It's above 90%, 90-over percent close to the mid-90s in terms of reversion, what we have shown here is only for one space per se, right? But if I can bring you back to the -- we were showing the revenue and the NPI. If you look at it on a year-on-year basis, it has actually been on the uptick.

Okay. So last question. Can you talk about plans for the AEI for NEX? There was -- its mentioned in your press release. Just want to know how much can you do -- is it a big chunk? Or is it like 5% of the total annually -- how much can you squeeze out?

Yes, Yew Kiang, we indicated that overall, there's a potential to do about 60,000 square feet of space. But of course, subject to what we can achieve or what will the approval comes back with -- that is the maximum amount, right? So we are working very hard with the consultants to push for as much as possible. But at the same time, we also want to create space that makes sense, right? I mean, 60,000 is available, but it has to also make sense. That's one point, right? So this is -- and we also shared that we will be looking at between 15 to 18 months in terms of getting the approval. So now we are in the process of going through that motion.

That 60,000 space is existing? Or are you coming out? I mean are you improving the efficiency? Or are you getting additional?

Okay, this is actually GFA that was previously used when they complete the carpark development, all right? So now we -- and because there is a whole way of computation back then the guidelines necessitate, the use of GFA to build carpark space. But since changed, meaning that now you can unlock this GFA without actually removing the carpark just to again be very clear because NEX, you don't have enough carpark in fact, we will be putting more car park as part of the AEI. So -- but the underlying area that was computed as carpark usage previously can now be unlocked and convert into commercial revenue generating space. So it's an addition to whatever NLA that we have today, if you look at it from that perspective, just to simplify it.

Okay.

So you can, if I may put it into perspective, if you look at the NLA for NEX, it's about 600 over 1,000, right? So -- so this 60,000 square feet is actually GFA. If you are able to get very high efficiency from that GFA, it's quite close to that 10%, right? If we are able to convert that GFA in full.

All right. Moving on to the next question from Geraldine Wong, BBS.

So the first half will be on reversions. Can we expect Tampines 1 when it starts to contribute to deliver above portfolio average reversions may be in the double-digit range and White Sands looks a bit weaker potentially from the Pasir Ris Mall, do you expect this to stay on throughout the first leasing cycle as that asset ramp up?

Yes. Okay. for Tampines 1 as we have shared because what we are expecting a return from our investment in the AEI, it's about 8%, right? So that comes from the uplift in overall revenue that's going to be rental that's going to be generated as part of this AEI. So in terms of the -- if you look at this pure reversion, I think it's pretty much aligned with what we are getting right now. Some spaces, of course, will be higher than others. But overall, it's about that range, 7-plus, 8% reversion. For what sense you highlighted that, yes, this is one of the softer reversion that we are seeing in terms of our portfolio. Partly, we have done a lot of work around remixing our trade mix, strengthening our trade mix and to complement what is coming up at Pasir Ris Mall. So it's a deliberate effort for us to improve some of the tenants or rather replacing some of the nonperforming tenants with better performing tenants, better brands. And like what I say, this is still in our effort to complement the upcoming opening of Pasir Ris Mall.

If I may supplement on T1 AEI. So I think Richard mentioned earlier that in terms of the ROI, we're seeking that 8%. And I think one of the key aspects of unlocking value is actually transferring the space from, say, a weaker lower rent area to a higher yielding area. So you will see post completion, right? We have actually moved or increased the space at some of the prime areas or prime levels like level 1 basement and so forth, right? So in terms of overall rent or average rent for the mall, it should -- it will pick up post-AEI, right? And that repositioning that we are undertaking to strengthen its -- there has been young trending positioning T1. Will then future profit for that stronger sales, and that was then in turn drive the rental reversion for this mall. So I'm not sure whether that gives you a little bit more perspective on your rental question.

Very competitive on Tampines. If I could just squeeze one more in on utilities costs. I understand that there's some cost savings this year, able to share any numbers year-on-year savings or any form of quantum that we can explain?

I think we have indicated before that we -- currently, the utility cost is about 10% of our overall OpEx. And we expect this to go up by 1% which point to about 11%. While we have done a lot of initiatives rolling out a lot of initiatives in terms of cost savings, but not all of them will be completed ahead or on time or rather some of the works are ongoing and may take a while before completion. So the overall savings may not be achieved in this FY alone. So we are still expecting the utility cost to go up by about 1% which point to about 11% of our OpEx.

Moving on to the next question from Joel Siew, DBS.

I just had 2 questions. The first is regarding Tiong Bahru Plaza understand the revenue dropped a little despite the higher occupancy year-on-year. So just wondering if you guys could elaborate on it. Is this due to sales turnover or some transition?

Yes. Okay. From that perspective, if you go to Tiong Bahru Plaza, you would have seen that some minor AEI work was carried out in which we cover -- or rather, we took back some space from the food court previously and also amalgamate that faced to provide or rather to create a space and brought in Don Don Donki, right? So now we have also a smaller food court, which is actually doing better, more efficient and a new tenant in terms of having Don Don Donki in the mall. So because of that work has created some downtime during the period, and that's one of the reason why you saw a lower financial performance from Tiong Bahru Plaza. But that is actually something we feel more sustainable going forward.

Yes. And Richard is not just the food court space. It's also another mini anchor space that was recovered for the reconfiguration.

Yes that amalgamate that to create that space for Donki.

Yes. And in terms of the sales performance, it has actually panned out quite well post reconfiguration. So that would then provide that trajectory level for growth for this asset going forward.

My next question is regarding the tapping the bond market. I understand previously, you guys said that bank loans are cheaper than bonds. Is this still the case? And I think the bulk of your retail bond peers, you trade high trees or lower on the secondary. And this compares against, I think, 4.1% of your average cost of funding. So just wondering what are your thoughts around this?

So maybe I can do it question. So for bond is always opportunistic. And then it fluctuates from time to point. So when we look at the refinancing for the upcoming FY with the [indiscernible] options, it would be bond and bank loans and it says accordingly.

Okay, sure. Or is it because you don't want to lock in a higher rate for longer. So I'm just wondering?

Yes. So we will explore and see what makes sense for the vehicle. At the end of day bring down the average cost of debt and aspiring the various options that is in the market, yes.

Just to add, I think we always look at having a wider range of options available in terms of financing, but then it has to make sense, right? So at some point in time, we will also want to look at that market and not just relying on bank financing.

Moving on to the next question from Terence Lee.

Thanks, Richard. Sorry, I apologize if this has been asked before as I logged in late, but I want to check revenue and NPI from NEX essentially. It's very, very volatile. You have $20 million up and down from last -- from second half of last year to first half of this year. So it's almost like 20%, 25% change. Could you share a little bit on what's been happening there?

Rami, can you pull that slide?

To be specific, I'm comparing against second half of last year versus first half of this year. I think on a year-on-year basis, it looks flattish, but on a hedge on hedge basis. Yes. Rather than...

You're talking about a quarter-on-quarter basis. There was a $20 million movement. Are you referring to the distribution or the...

Both on revenue and NPI. So half-on-half, essentially, if you look at second half last year, I think your NPI margins for NEX was close to 80%. And then first half last year was 76% and then now is sort of normalized back to 77%. So there seems to be quite a bit of noise coming from NEX, yes.

Okay. Honestly, I think we need to compare the numbers. But from what we could see, in fact, the performance of NEX has continued to be very strong. Of course, there is some cost pressure coming from inflationary impact in terms of utilities in terms of the cleaning and so on cost. But I Honestly, I don't think there's a movement of about $20 million, but we need to check on that. Pauline, do you have any visibility on that? Because I don't remember that...

Is like what you said, it's actually been improving. Terence, are you looking at the same basket because there is a change, right, in the percentage over the period. Could it be distorting the numbers.

Not possibly. Maybe I'll get back to you separately on that.

Maybe we can take this offline.

If I could ask financing costs, maybe could you share a little bit what's the expectations for financing costs for FY or this FY given that we saw a little bit of dip in financing cost?

So we reckon that bearing on [indiscernible] circumstances. The average cost of debt for this FY should be around low [ 12 ].

Thank you. It looks like there's no questions in the queue at the moment. So if you have any questions, please feel free to raise your hand. Okay. It appears there's no further questions from the audience. Maybe we can invite Richard to do a wrap and yes, Richard.

Yes. Thanks, Fung Leng. Just wanted to give a quick wrapped up of our performance. Like what we said, we are actually very happy to be able to share a set of healthy results both from the financial front and also what you could have seen from the operating side of things, right? We will ask, I think when we did our first Q business update in terms of what we expect from the market. And our team back then was that we are positive with the market, and it's rightly so as you can see from these numbers, where we continue to remain positive, of course, bearing any unforeseen circumstances that in terms of traffic visibility in terms of the performance of the mall I shared a bit about underpinned by limited supply, strong demand from retailers coming into the mall, strong performance by our retailers and so on. So this is actually panning out as what we had expected. So we -- we hope that we will continue to be able to deliver on the same trajectory for the rest of the year. With that, I'll end our presentation. Thank you so much for joining us today.

Thank you, everybody, for attending the briefing this morning. Mike, you may lock up now.