Sembcorp Industries Ltd (U96) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to Sembcorp Industries Full Year 2019 Results Presentation Webcast. I'm Lay San from Group Strategic Communications and Sustainability. The members of the panel for today's presentation are Group President and CEO, Neil McGregor; and Group CFO, Graham Cockroft. Without further delay, I will now hand over to Neil to begin the results presentation. Neil, please.

Thank you, Lay San. Good morning, and thank you once again for logging on to Sembcorp's results briefing forecast. I hope everyone is staying healthy and safe. Here is an overview of Sembcorp Industries Group 2019 results. Turnover in 2019 was $9.6 billion compared to $11.7 billion in 2018. Profit from operations was $749 million compared to $841 million in 2018. Net profit was $247 million compared to $347 million the year before. Earnings per share for the period was $0.118, while underlying earnings per share was up 22% to $0.201. Group return on equity or ROE was 3.5%. Group ROE excluding the Marine business and before exceptional items was 9.4%. As part of our strategy to unlock value through systematic capital recycling, we achieved total group divestment proceeds of $600 million since the beginning of 2018. This is before -- sorry, this exceeded our $500 million target. In view of group's improved underlying profits, the Board is proposing a final dividend of $0.03 per share, subject to shareholders' approval. Together, the interim dividend of $0.02 per share, this brings our total dividend for the year to $0.05. The next slide is a snapshot of the performance of our 3 key businesses. For 2019, Energy profit or net profit was $195 million compared to $312 million the year before. Exceptional -- excluding exceptional items, underlying net profit for the Energy business increased 12% to $360 million from $321 million in 2018 driven by better performance from our overseas businesses. I'm at the protracted industry downturn. The Marine business posted a net loss of $85 million to the group in 2019 compared to a loss of $48 million in 2018. This was mainly due to accelerated depreciation. This was for the Tanjong Kling yard and continued low overall business volume partly offset by profits from the repairs and upgrade business, which rose on improved margins and better product mix. Meanwhile, the Urban business posted another year of record net profits with a 36% growth to $117 million. This was driven mainly by profit from recognition from its Riverside Grandeur development in China. Let me now bring you through key updates for each of our businesses. The Energy business delivered a strong underlying performance in 2019 with underlying net profit increasing by 12% to $360 million. However, this was before the impact of exceptional items, which totaled negative $165 million. The exceptional items comprised mainly of $245 million of impairments for the energy assets and UK Power Reserve, China and Chile, offset by total divestment gains of $86 million. An impairment charge of $158 million was made for UKPR assets based on the expected value-in-use as at December 31, 2019. The performance of the business has been impacted by a combination of economic and industry factors. I will talk more about the U.K. market in the following slide. The Energy business also saw $23 million impairment for -- in China for its wastewater treatment assets. The impairment was taken as existing facilities will not be able to meet the new effluent design discharge standards, which will come into force in Jiangsu. This is China, and with effect from January 2021. In Chile, we sold our water business in line with the group's capital recycling efforts and port following rebalancing strategy. We made a $64 million impairment from the sale due to the difference between the sale value and the net asset value of the business. Realizable value for the assets was impacted by escalating operational and regulatory costs as well as the deterioration of Chile's economic, social and regulatory environment since October 2019. The business also faced growing uncertainty and risks in the Chilean water sector, such as potential reduction of regulated returns and depreciation of the Chilean peso. Now to our U.K. business. For financial year 2019, U.K.'s net profit comprising contribution from our Wilton International site as well as UK Power Reserve was $22 million. This was with UKPR contributing $1 million. The better performance in 2019 compared to 2018 was driven by the recognition of revenue from the capacity market, which resumed in the fourth quarter of 2019. Let me now spend some time on our UKPR business. We acquired UKPR in 2019 -- 2018, sorry, in line with our strategy to position amidst the global energy transition. UKPR is a flexible distributed energy generator with a portfolio of small scale, fast-ramping power generation assets and rapid response batteries. We believe and we still believe that there will be a growing need for flexible generation to bridge supply gaps caused by intermittent renewable generation. The acquisition of UKPR has allowed us to build capability and establish a foothold in this important growth market, which will be highly relevant globally as markets around the world move towards renewables to decarbonize. In 2019, we took $158 million impairment for the UKPR assets. I know this is disappointing, and it has been only 1.5 years since the acquisition. And I want to give you some background as to why we had to do it. Current market conditions in the U.K. are challenging. The business has been impacted by a combination of economic and industry factors. The retirement of the U.K.'s coal and older gas-fired power plants was slower than expected. In addition, there was a reduction in underlying demand. The increase in energy capacity and reduction in demand naturally led to more competition, causing lower prices and impacting the earnings of UKPR. Milder winters, which further moderated volatility and the absence of extreme weather and other system stress events also exacerbated the situation. While performance improved in 4Q 2019 with the resumption of the capacity markets, overall performance of the business remained below expectations. Flexible assets operate in the short-term markets and earnings will vary from year-to-year. However, considering the current challenges faced by the business, including factors outlined above, the business future performance is now projected to be below the investment case. As part of the annual impairment testing exercise, we therefore had to prove -- we therefore prudently assessed the value and use of its assets and decided to impair the assets. Market conditions and the regulatory environment in the U.K. are undergoing rapid change. This is especially as the region moves to decarbonize. The country's coal and older power plants will inevitably be decommissioned over time. And with growing renewable capacity, there will clearly be a requirement for flexibility services. We continue to believe that there is value in UKPR's flexible assets. Looking ahead, our priorities for the U.K. business are to lift performance and returns as well as build capabilities to support the energy transition in the country. The key, of course, is to turn the business around to deliver increased value. This may take some time, but we continue to believe in the long-term prospects of the business. Now the table on the right sets out different market segments for UKPR: the Capacity, Balancing Services, Triad and Wholesale markets. Capacity market payments are expected to provide a stable earnings stream for the business while Triad income will decrease over time. We believe that we would be able to capture value from the Balancing Services markets with our flexible response gas engines and new battery storage systems. Our strategy is to optimize the placement of capacity across markets to capture value. The U.K. electricity market is rapidly evolving to renewable generation with a legally binding target of mid-zero by 2030. With our portfolio of flexible assets, the merchant and digital capabilities that we are developing, we believe that we will be well positioned to capture emerging opportunities. Now back to our home base, Singapore, where we continue to strengthen our position as a provider of integrated energy solutions. In 2019, we secured 63-megawatt peak of solar capacity, bringing total capacity to 180 megawatts peak. Earlier this month, we were also named the preferred bidder by the national water agency, PUB, to construct Singapore's largest floating solar photovoltaic system. When completed, the 60-megawatt peak project will be one of the world's largest single-floating solar PV systems. On the gas front, Sembcorp Gas is now a wholly owned subsidiary after we acquired the remaining 30% stake. The deal strengthened our position as a major gas player in Singapore. Now for the waste management arm. We entered into a sale and purchase agreement to acquire 100% equity interest in Veolia ES Singapore and the public cleaning business of the Veolia ES Singapore Industrial in January 2020. The proposed acquisition will help strengthen our strategy of supporting sustainable development through our integrated environmental solutions. We also launched the mobile application, ezi, last year, which provides a more convenient way of recycling in Singapore. Outside of Singapore, we continue to grow our reach in Southeast Asia. In Vietnam, we formed a joint venture with Becamex and VSIP. The partnership aims to deliver a new generation of sustainable integrated smart-energy solutions, such as renewable energy, waste-to-energy, wastewater treatment and water recycling to the market. Looking ahead, we will be exploring the rejuvenation of our power assets. We will be focusing our efforts on extending our reach to more customers with our integrated energy and environmental solutions. In Southeast Asia, Vietnam is a market where we see potential growth. We will also seek out renewable energy opportunities in other target markets in the region. Moving to China. China has delivered resilient earnings contribution to the group in 2019. Net profit was $106 million, an increase of 22% compared to the previous year, with growing contribution from our renewable energy business. Last month, protracted legal proceedings of our joint venture company, Sembcorp Nanjing SUIWU came to a close. This was in relation to an isolated incident that happened in the period prior to early 2017 and was a result of a legal and criminal activities of former employees of the joint venture company. We are deeply disappointed that the actions of these individuals have caused significant damage to our reputation, and the good name that all of us here at Sembcorp hold dear and work hard to uphold. I want to make it very clear that under no circumstances do we tolerate such actions and behaviors. These 4 employees were charged, tried and sentenced in their individual capacities by the courts. We also terminated their employment. The $54 million in share of fines and cash settlement was fully provided for, and there is no further financial input -- impact to the group. We remain committed to responsible operations. All necessary steps to strengthen internal controls and processes have been taken. As part of our efforts, we have also implemented our proprietary technology to track and monitor plant performance and compliance in our water facilities. A Country Center of Excellence in Shanghai was also established to centralize all technical resources, implement group water business standard operating procedures as well as oversee project management and control for all new projects. Looking ahead, we will leverage our proprietary technology to grow the water business. We will also be focusing on the upgrading of facilities to meet tightened environmental standards. Moving on to India. In 2019, net profit in India more than doubled from $47 million to $100 million with the thermal portfolio turning in a profitable year. We completed the Solar Energy Corporation of India Limited, known as SECI 2 Project and commissioned 227 megawatts of the SECI 3 Project, bringing total operating renewable capacity to over 1,600 megawatts. We were also the first independent power player to fully commission capacity won in SECI 2 bid round, the same as SECI 1. Over 600 megawatts of previously outsourced wind and solar plants are now under self-operation. This has enabled us to achieve industry-leading asset productivity. With the purchase of the remaining 6% stake from Gayatri in 2019, Sembcorp Energy India Limited, or known as SEIL, is now a wholly-owned subsidiary. In 2020, we will continue to focus on lifting performance and securing long or medium-term power purchase agreements for our thermal business. Our efforts will also be on maximizing uptime and energy generation from our renewable assets, supported by remote digital monitoring and analytics capabilities. We remain committed to unlocking value and capital recycling in India. This includes exploring an IPO of the business as well as other strategic options. We continue to reshape our portfolio towards renewables. Since our entry in the renewables business in 2012, we have built capabilities in the areas of wind and solar power as well as battery storage and distributed energy solutions. In Singapore, we are one of the largest solar energy players with 180 megawatts of peak capacity. With the addition of recent contract awards, including the floating solar win, we would have close to 250-megawatt peak of renewable capacity in operation and under development. In China, renewable energy contribution grew with our portfolio of 725 megawatts of wind power projects now fully operational. In India, we have over 1,700 megawatts of wind and solar power across 7 states as well as the highest renewable capacity under self-operation for an independent power producer in the country. In the U.K., our 120-megawatt battery storage portfolio is one of Europe's largest. Profit contribution from our renewables business has grown nearly fivefold since 2016, and the business delivered $80 million of net profit in 2019. Over the last 2 years, we have grown our renewables capacity by about 20% to 2,600 megawatts. We continue to aim for 4,000 megawatts of renewable capacity by 2022 with the goal of becoming one of the region's leading renewable energy players. Over to Marine, the business secured $1.5 billion of new orders in 2019. This was an improvement over the $1.2 billion of orders received the year before. Total net order book stood at $2.4 billion. In the fourth quarter of 2019, Sembcorp Marine reached the final settlement with Sete Brasil Group on 7 drillship contracts. Sembcorp Marine is currently in discussion with a potential bar for 2 drillships. Looking forward, the business aims to gear up for the shift towards cleaner energy use with long-term investments in innovation, technologies and expertise to develop new engineering solutions, grow order volume and offshore wind by raising brand awareness in regions unfamiliar with Sembcorp Marine Solutions and its track record. And develop new design solutions for the battery and hydrogen fuel cell-powered ship segments. For our Urban business, total land sales in 2019 was 268 hectares, less than 2018, but mainly due to lower land sales in China and Indonesia. However, demand for industrial land in Vietnam remained high and land sales were strong. Net order book remained healthy and stable at 423 hectares with a robust order book from Vietnam and the pickup in manufacturing interest for the Kendal Industrial Park in Indonesia. In 4Q 2019, we completed the handover of Riverside Grandeur residential development in China. This drove Urban's profit in 2019, leading to record net profit for the third consecutive year. In Vietnam, we continue to grow our land bank and secured an additional 900 hectares of salable land. Phase 2 of The Habitat Binh Duong was sold out in 2019, and we expect to recognize the profit in 2020. The soft launch of Phase 3a took place in October 2019. The current net order book is expected to be recognized as land sales over the next 2 to 3 years. The Urban business will continue to develop new residential projects. Income from property development in Vietnam, the Habitat Phase 2 and Sun Casa is expected to be recognized in 2020. We will also focus efforts on replenishing our land bank for future growth. We remain driven by our purpose to play our part in creating a sustainable future, and are confident that the actions we are taking in our transformation journey will make for a stronger, better performing and more sustainable Sembcorp. Now let me hand over the remaining time to our Group CFO, Graham, to take you through the group financial review. Thank you very much.

Thank you very much, Neil. Good morning, everyone, and thank you for joining us. It's my pleasure to take you through the group's financial performance for the full year of 2019. And we start on Slide 14 with the group profit and loss. Sembcorp Industries posted a turnover of $9.6 billion for FY '19, 18% lower than the prior year. Despite the lower turnover, the group earned an EBITDA of $1.5 billion in FY '19, 20% higher year-on-year. Excluding exceptional items, underlying profit from operations of $907 million was 10% higher than FY '18. The improved EBITDA and underlying PFO came mainly from the Urban and Energy businesses and was offset by losses from the Marine business. Finance costs of $586 million were 15% higher compared to FY '18. The increase came mainly from higher average bank borrowings, ongoing projects and working capital needs in the Energy and Marine businesses. The increase was also due to the interest costs no longer being capitalized at our plants in Myanmar and Bangladesh after these plants commenced commercial operations in 2018 and 2019. FY '19 finance costs will also -- sorry, also included $18 million of deemed interest costs on lease liabilities from the adoption of SFRS(I) 16, which took effect at the beginning of January 2019. Higher finance income [ arose and just ] received from customers of Marine under deferred payment arrangement. You can see the group's tax expense of $78 million is 11% lower than FY '18. Net profit after tax and noncontrolling interest of $247 million was 29% lower than FY '18. FY '19 exceptional items of negative $148 million include impairment losses of $245 million and a $7 million additional provision for potential fines and claims at NSS in China, a net of divestment gains of $104 million. Net profit before exceptional items of $395 million was 17% higher than FY '18, and earnings per share before exceptional items was $0.201, 22% higher than FY '18. Turning to Slide 15 and group turnover. The Energy business recorded a turnover of $6.1 billion, approximately $398 million or 6% lower than FY '18. The reduction in turnover rose mainly from Singapore, India, Bangladesh and the absence of contribution from South Africa after divestment in December 2018. In Singapore, the low turnover was a result of lower gas sales, the planned major maintenance shutdown for power generating assets in Q4 and the loss of contribution from divested businesses and assets. In India, the lower turnover was due to the shutdown of 1 thermal power unit in India during the first Q of 2019. Marine's lower turnover was the result of lower revenue recognition from rigs and floaters and offshore platform projects, mitigated by higher repair and upgrade revenue. And Urban's higher turnover rose from the sale of a Nanjing Riverside Grandeur Residential Property in China. Increase in other businesses turnover came mainly from the design and construction business. Turning to Slide 16, group profit from operations. The group registered profit from operations of $749 million in FY '19, an 11% decrease year-on-year. Looking at profit from operations before exceptional items, the group achieved a figure of $907 million, an increase of 10% year-on-year. For Energy, the FY '19 PFO before exceptional items of $894 million was 9% higher than FY '18. The improved performance came mainly from our international businesses. I'll go through more details on that in subsequent slides. Marine's FY '19 loss from operations before exceptional items of $148 million was $88 million higher than last year. FY '19 results continue to be impacted by the low overall business volume, offset by profits from repairs and upgrades. For Urban, the FY '19 PFO before exceptional items of $177 million was an increase of $99 million over FY '18. And this increase was mainly due to recognition of the Nanjing Riverside Grandeur residential property sales and the steady performance from our Vietnam operations. An increase in PFO for other businesses came mainly from the design and construction business, which share divested as loss-making investment in Sembcorp EOSM in November 2018. And the group's higher corporate costs were mainly due to an increase in consultancy and personnel costs as we continue to build our capabilities in key areas such as digital and technology. Turning to Slide 17, group net profit. The group posted a net profit of $247 million for FY '19, 29% lower than FY '18. The group's net profit before exceptional items of $395 million for FY '19 was 17% higher than the equivalent figure in FY '18. The Energy business' underlying net profit increased 12% to $360 million compared to the prior year's profit of $321 million. Again, we have more details in the next slides on this performance. Our share of Marine's net loss was $88 million for FY '19, an increase over last year's $48 million. And for Urban, the net profit before exceptional items in FY '19 was $117 million, 65% better than last year for the reasons explained in the prior slides. Turning to Slide 18, group return on equity. You can see there that the return on equity has been impacted by exceptional items and the losses at Marine. Excluding those exceptional items, both the Energy and Urban businesses achieved a good improvement and return on equity year-on-year. Turning to Slide 19, Energy PFO by geography here. You can see the Energy's PFO of $717 million, represents a reduction of 13% over FY '18, impacted by the impairment charges, net of disposal gains in FY '19. Excluding exceptional gains -- sorry, excluding exceptional items, PFO for Energy grew by 9% over FY '18 to $894 million. If we turn to Slide 20, we can see there a waterfall chart by geographies showing the deltas. This chart reconciles Energy's FY '18 PFO to the FY '19 PFO, both before and after exceptional items and shows the variances for each geography year-on-year. You can see there that the underlying growth came from all of our markets except Singapore. I'll highlight just a few. Higher profit was driven mainly by the Rest of Asia and Rest of the World. Our plants in Myanmar and Bangladesh commenced commercial operations in phases during year 2018 and 2019. The results of Myanmar benefited from a couple of one-offs on liquidated damages and a settlement with a vendor, which totaled $21 million. In China, we had better results from both our thermal and renewable energy businesses. And in the U.K., where the capacity market scheme resumed in Q4, we recognized the capacity market revenue from November 2018 through to December 2019. In India, underlying PFO was $68 million higher with new capacity added to the renewable fleet and Project 2 achieved higher dark spreads from better short-term contracts and lower coal costs. Project 1's results include receipts from insurance claims, settlement with a customer and recovery from a related party, which are mainly to compensate for loss of revenue or higher costs in prior financial periods. Just for those who are interested, the FY '19 load factors for the plan for SEIL Project 1 was 80%; for Project 2, 77%; and at SGI, 24%. And these gains were offset by Singapore's lower PFO due mainly to the planned outage in Q4. FY '18 had included some one-off income from pipeline construction and the sale of excess strategic fuel. Turning to Slide 21. This chart reconciles the Energy segments net profit in FY '18 to FY '19, both before and after exceptional items. At a headline level, the net profit falls from $312 million in FY '18 to $195 million in FY '19. Excluding exceptional items, the underlying net profit increased from $321 million to $360 million. And the better performance was mainly due to increased EBIT of $31 million due to better performance from the geographical regions, I highlighted in the prior slide, an increase in the share of associates and joint ventures of $22 million driven by better performance in Vietnam, China and the Middle East. That was offset by higher finance costs and profit attributable to noncontrolling interests of $6 million. Higher net finance costs was $61 million. However, taxes were lower by $53 million after the merger of our Indian thermal power operations in the last quarter of 2018 and with lower operating profit from Singapore. Turning to Slide 22, where we present a summary of the group CapEx and equity investment. Capital expenditure incurred in FY '19 was mainly for growth in our India renewables business, our U.K. battery facilities and for Marine's yard consolidation and improvements. Equity investment was mainly for the acquisition of the shares we didn't own in SEIL and Sembcorp Gas in the fourth quarter of 2019. Turning to Slide 23, the group free cash flow. The group's FY '19 cash flow from operating activities was $977 million, $238 million higher than FY '18. The group net cash flow used in investing activities was $451 million, mainly for CapEx is detailed a lot on the prior slide, but offset by proceeds from divestment, dividend and interest income received. The proceeds from the disposal of Gallant Venture shares were $62 million and the utilities assets serving former Jurong Aromatics Corporation was $197 million. Excluding [ expansionary ] CapEx, the group free cash flow for FY '19 was $1.352 billion. Turning to Slide 24, on group borrowings. The group's net debt was $9 billion at the end of FY '19. Interest cover was 2.6x while gross debt and net debt-to-capitalization ratios was 0.58 and 0.48, respectively. Total gross debt of $10.8 billion at the end of FY '19 was slightly higher than the same time the year before. You can see the profile of debt has changed with an increase in corporate debt from $2.8 billion to $4.3 billion with issuance of a $1.5 billion 5-year bond that was used to provide a subordinated loan to Marine in July of 2019. Correspondingly, Marine's external debt has reduced in the same period by $1.3 billion. Turning to Slide 25, where we show the group's debt profile. You can see there that as at the end of 2019, out of the $10.8 billion, 25% of our debt is due within 1 year, 18% between 1 to 3 years and 24% is due after 5 years. Marine's debt within 1 year amounts to $1.4 billion. On the 8th of July, this prior year, our Marine business drew down a subordinated loan of $1.5 billion from Sembcorp Industries and retired some of their short-term borrowings. And they're currently working on reprofiling the remaining borrowings with longer-term maturities. 34% or $3.6 billion of our total debt as project finance debt, which is mostly attributed to India, Myanmar and Bangladesh. And further breakdown of the borrowings can be found in the appendix. Turning to Slide 26, on group liquidity. We've added this slide to provide additional information on the group's liquidity. And at the end of FY '19, the group's cash and cash equivalents were nearly $1.8 billion and our unutilized committed facilities were $2.1 billion. So in total, at the end of FY '19, the group had $3.9 billion of cash, cash equivalents and undrawn committed facilities. And just turning to Slide 27. We're just letting the market know that following the recent amendments to the SGX Mainboard rules, which took effect from the 7th of February, this year, we will be adopting semiannual financial reporting for this year and beyond. And with that, I end my presentation, and we open the floor to take the questions.

Thank you, Graham. Thank you, Neil. We have now come to our Q&A session. [Operator Instructions] Okay. I have the first question from Rahul Bhatia of HSBC, asking 3 questions. Number one, could you please share more details on COVID-19 impact on the various company assets, especially in China? Number two, could you please elaborate more on the strategy for India? Is there any time line you're looking for the IPO? And also what are the strategic options you are exploring? Also for the profit of India operations in 4Q '19 was very strong, is it a seasonality impact? Or were there any one-offs or positive impact from the additional wind assets? Thirdly, a general question on the near-term outlook. What are the key drivers you believe could drive underlying profit for 2020? What are your expectations for profit from your key countries, Singapore, China, India and the U.K.?

I'll ask Graham to take question number one. Then question number two, I will deal with and -- as well as question number 3 with some input from Graham as well. Thank you. Over to you, Graham.

Thanks, Neil. To date, we haven't seen any significant financial impact from COVID-19. However, it's likely that we are -- we will see some impact going forward as there's a decline in trade and industrial activities occurring in some of our markets. We have seen a little bit of impact already. In China, the industrial wastewater businesses there, where there's been a slight decline in demand. But it's too early to say in terms of what the financial impact will be at this point for the full year.

Okay. For the second question, on elaborating more for the strategy in India. Is there any time line that we're looking at the IPO? No, generally, we are looking at market conditions. As soon as we are able to get the kind of value that we want for an IPO, we will then move in that direction. But markets currently are quite soft, and the economy in India has also come off from about 7% GDP growth to around about 4%. Let me just go back to the other part of the question, profit from operations. And Q4 is very strong. Graham?

Yes, sure. So as I mentioned in my notes before, we did have a positive impact in India from insurance settlement, which related to the STATA damage we had at Plant 1, Project 1. That plant was out for the last 3 months of 2018, the first couple of months of 2019. So we received some interest receipts for that. There's maybe more still to come that's related to property damage and to business interruption. We also had an interest recovery from a customer that came through about -- that's about $10 million or so that came through in the quarter as well. So there were some one-offs. Some of it clearly attributable to the year and some of it relating to prior years.

Okay, question 3. Just generally, in 2020, the underlying performance of the Energy business is expected to be lower than 2019 due to the loss in contribution from divested assets, the absence of one-off income in Myanmar and the potential impact arising from COVID-19 outbreak. But to go back to what are our expectations for profit, for our key countries, Singapore, China and India, I think you will see that we've actually become a more resilient company. Several years ago, our profit engines were only Marine and Singapore. Today, we have 5 profit engines that are over 100 -- are contributing more than $100 million to each geography. So the 4 geographies are Singapore, China, India and the Rest of the World and then add on top of that, Urban. So you can see that we are much more diversified from where our profit pools and geographies are coming from. Thank you.

Okay. The next question. [Operator Instructions] Okay. Our next question comes from CIMB, Lim Siew Khee. There are a few questions here. Number one, there seem to be a fair bit of one-off income in India that caused the division to be profitable in 4Q and also full year. The profitability is in line with your target. Can we assume India to remain profitable in 2020 and onwards? Second question, how are your businesses in China affected by COVID? I think that has already been answered in HSBC answer. And thirdly, can you please comment on your expectations on the Singapore Energy business in 2020, excluding the loss of the income from JAC operations? So maybe we will take the first and the last question since the COVID question has been answered.

Graham?

Yes. I might think I've provided already some color on the one-off income in Q4 for India. As I mentioned, insurance, which I can give some figures on. Property damage and business interruption insurance, we made $17 million there in Q4, $10 million interest recovery. And actually, there was also a write-back of an expected credit loss allowance of $9 million. So that's -- yes, there were some one-offs. As I mentioned, I think some of those could be, relate to prior years and some relate to the current year. In terms of the outlook for India, we're expecting it to be comparable to the outturn in FY '19.

And the third question on expectations on the Singapore Energy business, excluding the loss of income from JAC operations.

Graham?

So JAC coming off, it clearly has an impact. The Energy business in Singapore remains highly competitive. So if we can maintain current level, I think we'll be pleased with that.

Okay, we can now have the next question. Okay, this is from Cheryl Lee, UBS. Regarding India, what was the 4Q net profit contribution from SEIL Project 1, Project 2 and green assets? Secondly, regarding Singapore, what was the approximate annual net profit contribution from the assets sold? Energy's ROE was 9.8% in full year '19. What ROE could you expect the division to achieve in the medium term?

All right. Cheryl, for Q4, India SEIL Project 1, the net profit was $56 million. For Project 2, minus $25 million and for SGI, $15 million. For Singapore, the contribution from JAC was $20 million in net profit for the period that we owned it, which were from January of '19 through until September -- end of September 2019.

I'll take the last question because I think it's a strategic question. Cheryl, the Energy's ROE was 9.8%. You may recall that when we released our strategy in 2018, we said we were targeting double-digit returns in the area of low teens. This is quite close to double digit. But I think looking forward, it's going to take us a longer period of time to have a consistent return on equities that in the double-digit range. Thank you.

And now we have [ Go Lee Ping ] from Fullerton Fund Management. [ Lee Ping ] says, thank you for the webcast. I have 3 questions. Of the divestment proceeds of $600 million since 2018, how much was attributed to 2019? What is the outlook for the Singapore Energy market? How will SCI manage the current unfavorable pricing environment? And lastly, what is the group's CapEx plan for 2020?

I'll ask Graham to take questions 1 and 3, and I'll take question 2.

So for the divestment proceeds attributable to 2019, the figure is $350 million. I don't think we've given any CapEx guidance for 2020 at this point.

Okay. For question two, the outlook for Singapore Energy market, I would say in a word, challenging. The market has not recovered. But I must say that given that we are an integrated energy supplier, our profitability still remains reasonably resilient, even if it has been down in recent years. Thank you. Is there a question 3 that we missed there?

No, it was covered.

Covered, okay.

We now have the next question from Morgan Stanley. Mayank asked, in India, how much has been SCI's receivables in 2019? And how has this been -- and how has been the trend versus 2018? Also how much does the company see impact on Singapore EBITDA from asset sales? LNG -- lastly, LNG prices did drop quite significantly in the last quarter and 1Q 2020. How does the company see this impacting its gas business?

Okay. Graham, question one, and I'll take question two.

Yes. So let me do the second part of question one, first. Clearly, the -- as I mentioned before, with the sale of the Jurong Aromatics Corporation assets, we will -- won't see the $20 million profit that we earned from that during 2019, between January and September. Receivables in India have been improving, not as much as we would like, but we are seeing a better environment there. The federal government or national government has implemented new laws to try and encourage the states to make their payments on time, and we're seeing an improving situation with the current receivables. There's still a bit of a backlog to catch up, but we're hoping to get through that in 2020.