Sembcorp Industries Ltd (U96) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to Sembcorp Industries Full Year 2023 Results Presentation. A warm welcome, too, to viewers tuning in via the webcast. I'm Xin Jin from Group Corporate Communications and Investor Relations. Before we begin, we would like to request for all mobile phones to be turned off or switched to the silent mode, please. If you feel unwell, do approach our staff for assistance. The members of the panel for today's presentation are Group President and CEO, Mr. Wong Kim Yin; and Group CFO, Mr. Eugene Cheng. There will be a question-and-answer session after the presentation. [Operator Instructions] Without further delay, I will now hand over the time to Kim Yin to begin the presentation. Kim Yin, please.

Thanks, Jin. Good morning, and wishing all of you happy and prosperous Lunar New Year. Welcome to Sembcorp Industries Full Year 2023 Results Briefing. For 2023, the group delivered a strong performance. Turnover was $7 billion. This is 10% lower year-on-year, while the EBITDA was $1.8 billion, 37% higher than 2022. Adjusted EBITDA was $2.1 billion, an increase of 32%. Net profit before exceptional items was $1 billion, representing a year-on-year increase of 38%. Exceptional items, EI for short, was $2 million for 2023. Earnings per share before EI was $0.571 and EPS itself was $0.572. Group ROE before EI and group ROE were both 23.8%. So in light of the group's strong results, the Board is proposing a final dividend of $0.08 per ordinary share for 2023. So together with the interim dividend of $0.05 paid in August, total dividend for the year will be $0.13 per ordinary share, an increase from the $0.12 of last year. Let me go through the key business updates. In 2023, we achieved cash flow certainty for the Gas and Related Services segment. We're the first in the market to secure multiple long-term PPAs with our customers in Singapore. This power purchase agreements contracted with quality customers represent contracted capacity of up to 668 megawatts. With these long-term PPAs, 74% of our generation capacity is contracted for a period of between 8 to 18 years. And this enhances earnings predictability. So in total, these contracts have an average tenure of 12 years. That transforms our merchant-centric portfolio into one that yields a stable recurring income, as the group contracted capacity accounted for 97% of the group's gas-fired power portfolio as at the end of 2023. For Singapore, our gas-fired portfolio was 99% contracted as at the end of 2023. And during the year, we continued to diversify our gas sources to support the energy needs of Singapore. We signed a gas sales agreement with Medco E&P Natuna to import pipe natural gas from West Natuna gas fuels in Indonesia. The agreement is valued at approximately $1.9 billion, and gas deliveries are expected to commence in the later part of 2024 with a tenure of 4 years. We have also started the construction of our new multi-utility center at Jurong Island. This facility will include a new 600 megawatts hydrogen-ready combined cycle power plant and it is expected to be fully operational by 2026. Now to Renewables. We achieved significant progress and very strong momentum in Renewables growth. Since the end of 2022, we have added a total of 4,000 megawatts of capacity through acquisitions and organic growth across our key markets of China, India and Southeast Asia. This brings the group's total gross renewables capacity to 13.8 gigawatts. In China, we grew organically by leveraging our partnership platforms. We also acquired brownfield projects to deepen our presence in the market. Year-on-year capacity increased 3,000 megawatts in 2023. In India, portfolio expansion was driven by both greenfield and brownfield project additions. The acquisition of Leap Green Energy, 228 megawatts operational wind assets portfolio was completed earlier this month. We also secured 750 megawatts of greenfield projects from competitive bidding in December and January. Our Southeast Asia renewables portfolio has surpassed the 1,000 megawatts capacity mark. Notably, we were awarded Singapore's largest solar project of 117-megawatt peak by JTC. We also signed an agreement to acquire a 245-megawatt portfolio of operational wind, solar and hydro assets from Gelex Group in Vietnam. The transaction is expected to close within the first half of this year. In 2023, the urban business registered higher land sales at 248 hectares compared to 172 hectares in 2022. The increase mainly came from industrial land sales in Indonesia and Vietnam. However, earnings declined year-on-year as commercial and residential land sales and handover of residential units in Vietnam were lower. Commercial and residential sales typically command higher margins compared to industrial land sales. During the year, we continued to build up our land bank with the award of 3 new investment licenses in Vietnam, adding a total of 1,290 hectares to our land bank. We believe strong market potential remains in Vietnam and Indonesia from the expansion of regional supply chains. The volume of water treated in our water business remains stable. Excluding the one-off termination fee received from a customer of the water business in China in 2022, 2023 earnings of our water business improved on cost savings. The Waste Management business in Singapore saw a 25% increase in its collection of recyclables in 2023. This is a result of our strategic partnerships and initiatives, which are aimed at promoting more recycling. And during our Investor Day 2023 in November, we shared our refreshed strategy and targets. So this is a snapshot of our progress against those targets. With multiple long-term power purchase agreements secured, our gas portfolio is now significantly contracted. This deliberate strategy on our part is aimed at ensuring a robust earnings and cash flow to support our renewables growth moving forward. In May 2021, we set a target to achieve 10 gigawatts of gross installed renewables capacity by 2025. So gross in stock renewables. And we are very close to this target with 9.8 gigawatts of gross in stock renewables capacity as of this point in time. We currently see strong momentum in our renewables growth as mentioned just now, and we'll focus our efforts on achieving our refresh target of 25 gigawatts by 2028. We have achieved also our 2025 emissions intensity target of 0.4 tonnes of CO2 equivalent per megawatt hours. And we are working towards our new target of 0.15 tonnes of CO2 equivalent per megawatt hours to be achieved by 2028. To drive growth beyond 2028, we must continue to advance our decarbonization pathways. And these are some of the new initiatives that has a longer-term horizon. And this includes the origination of low-carbon electricity through regional power imports, low carbon feedstock and low-carbon technologies. During the year, we received conditional approval to import 1.2 gigawatts of low-carbon electricity from Vietnam to Singapore. This is the largest import license issued by the Energy Market Authority. We are also in exclusive discussions to import 1,000 megawatts of low-carbon electricity from Sarawak. These imports will enable our customers to have greater access to green energy in the long run. We have also signed agreements with strategic partners to pursue opportunities in the production of low-carbon feedstock. We are collaborating with Sojitz Corporation and Kyushu Electric Power, both from Japan, to, pursue potential opportunities for the production of green ammonia in India for export into Japan. In Singapore, we have been shortlisted as one of 6 candidates by the Energy Market Authority to submit proposals for low or 0 carbon ammonia solution for power generation and bunkering on Jurong Island. In addition, we have signed a joint development study agreement with PT PLN (Persero) to assess the feasibility of green hydrogen production in Indonesia for export to Singapore, as well as an MOU with Gentari of Malaysia to export the development of hydrogen production facilities and transportation of hydrogen from Malaysia to Singapore. As we continue to operate our gas-fired plants efficiently to support the energy transition, we are also exploring low-carbon technologies to decarbonize our assets. In October 2023, we signed an MOU with IHI Corporation and GE Vernova's Gas Power business to jointly explore the retrofitting of our existing Sakra power plant in Singapore with ammonia firing capabilities. And finally, GoNetZero, our carbon management business has secured over 40 multinational clients across various industries, and this includes OCBC, Razer and UBS. During the year, it sold more than 2 million tonnes of carbon credits and registered a ninefold increase in renewable energy certificate sales to 1.8 million units. So overall, 2023 was marked by continued strong momentum in the Renewables business and good progress against targets that we have set out. We are encouraged by the strong performance in 2023, and we believe Sembcorp is well positioned to navigate the energy transition and sustainable development. Eugene will now take us through the details of our financial review. Thank you.

Thank you, Kim Yin. And I just want to wish everyone indeed, a very happy new year, and that's my privilege to be sharing more details in relation to our financial performance for the financial year ended 2023. From a performance standpoint, this is a little bit of a watershed year for Sembcorp Industries. For indeed, we have achieved a net profit before exceptional items that is -- could be seen as the highest that we have ever achieved in the operating history of Sembcorp Industries. So when we go into a little more details in relation to the numbers, as Kim Yin has mentioned earlier on, our turnover declined approximately 10%, largely as a result of lower gas as well as power prices in the Gas and Related Services segment. Now I think one of this key element of turnover is that some of our gas sales, particularly in Singapore, it's indexed to HSFO. And the HSFO index has come off in 2023, and we have saw that phenomena take place in the first half of 2023. But you have also heard me mention that in our gas contracts, the margins are actually locked in, right, in an absolute dollar standpoint. So the earnings and the margins that comes for from the gas sales are essentially not as impacted. So what we have seen is actually overall still a growth in our EBITDA, right, realizing higher margins. So from an EBITDA standpoint, we grew 37% from $1.3 billion in FY 2022 to $1.8 billion -- close to $1.8 billion this current year. And it's really driven by improvements in the Gas and Related Services as well as in the Renewable segment as we continue to see new operating capacity come into the portfolio as we complete our acquisitions as well as our projects. Now share of results of associates and JVs net of tax increased by about 6% from $248 million to $264 million. From a Renewable standpoint, we did see a meaningful contribution coming through from the China portfolio, right, annualized contribution from acquisitions that was completed in 2022 as well as seeing the Hunan Xingling as well as the Xinmin portfolio contributing. Now this has been offset by a decline in performance in the urban portfolio in the Integrated Urban Solutions segment where, as Kim Yin has mentioned, although we have seen higher land sales in Indonesia, but we did see a slower C&I and resi sales and also a deferral of some of the land sales into the first quarter of this year. So while Indonesia has seen higher land sales, but from an average selling price perspective, Indonesia still has a slightly lower average selling price. So all in all, taking into account those impact, our share of results of associates and JVs increased by about 6% to 264. So all in, our adjusted EBITDA grew by 32% from about $1.6 billion in FY 2022 to just above $2 billion in FY '23. And that translates down to our net profit before exceptional items of just over $1 billion for FY 2023, representing a 38% increase over a similar number from a continuing operations standpoint from last year. Now in the discontinued operation, in FY 2023, we did book a loss of disposal of SEIL of $78 million, which was guided at the end of 2022. And this is a result of the movement in our foreign currency translation reserve between signing of the transaction and the closing of the transaction in January of 2023. That saw the $78 million loss come through. So all in, when we look at our earnings per share before extraordinary items, returning $0.571 and ROE before extraordinary items is 23.8% for FY 2023. Moving on to the next slide. Now I will just touch on this very quickly because from a turnover perspective, I probably laid the ground earlier on. The Gas and Related Services saw a decline, again, as a result of lower gas sales prices in Singapore and power prices in the U.K. Now for the Renewables segment, it grew 40% and as expected, where we saw the annualized contribution from our acquisitions completed in 2022 as well as the new projects and acquisitions that came through in 2023. Integrated Urban Solutions revenue is largely flattish or down slightly. And in the Integrated Urban Solutions, the revenues are more contributed by the waste as well as the Water segments. The slight decline is a result of us losing a public waste collection contract in the -- our Waste Management business, which was guided towards the end of 2022. And decarbonization solutions, you would see that revenues grew from $3 million in FY 2022 to $16 million. And this revenue is really driven by our GoNetZero, which [ Xinmin ] team has done very well in ramping up our sale of carbon credits and solutions. In terms of other businesses, revenues increased by 37% from $328 million to $448 million. Now in other businesses, it comprises largely 2 businesses. Our Singapore Mint business, which is flattish in revenue and earnings performance. And the other business in our other businesses segment is our specialized construction business that deals with construction in relation to government contracts. So what has happened is that over the past year, the order book for the business have grown somewhat resulting in higher revenues and earnings achieved in the other businesses segment. So all in, that resulted in our total turnover for FY 2023 at $7 billion, a slight decline from FY 2022. And more importantly, from a net profit, which is a contribution to the bottom line standpoint, right? Our Gas and Related Services business [ turning ] $809 million for FY 2023, which is 30% higher than what we have achieved in FY '22 of $622 million. So to characterize the Gas and Related Services, if you have recall, in the first half of FY 2023, the Gas and Related Services segment [ turning ] a $435 million in terms of net profit. Though at that point in time, I did guide that as we go into the second half of FY 2023, what's going to happen is that our portfolio will be increasingly comprising of contracted and very long-term contracted positions for our CCGTs. And you have also heard me guided that approximately, we do expect that the kind of peakish pool gains that we achieved in the second quarter of FY 2023 to be roughly in the $60 million region. So I guess if you compare the 2 half and do the math and -- yes, so that was essentially how it turned out, right? Now for the Renewables segment, group net profit grew from $140 million in FY 2022, by 42% to $200 million in FY 2023. Again, in line with our completion of our acquisitions and also continued growth in our operating capacity in that segment. And Integrated Urban Solutions segment also as highlighted earlier on, it declined by about 19% from $150 million that was achieved in FY 2022 to $121 million in FY 2023. There was a decline in the earnings of the Urban division. That was driven, as mentioned earlier on, C&I resi sales that was slower in Vietnam as well as a delay of the land sales into first quarter of 2024. And in addition to that, you also saw the loss of -- although it's not a very big earnings impact, 1 public cleaning division contract in the Waste Management business. Now also to mention, if you recall, in FY 2022, under the integrated urban solutions, there was a one-off income close to the tune of about $20 million that resulted in the settlement of our [ NKGC ] litigation. That $20 million obviously is also not in the current year's FY 2023 earnings as well. So that overall contributed to the roughly $30 million in decline in the Integrated Urban Solutions segment. Now for decarbonization solutions, this is the new segment that we've called out after our November Investor Day, where this would be the segment that focuses on originating power imports as well as low carbon energy into Singapore. Looking at originating hydrogen, as green hydrogen as well as ammonia project as well as looking at offtaking that into Singapore. And the third element is a GoNetZero. So for FY 2023, the loss on a cost investment in the segment is $13 million, right? As you can see, GoNetZero contributed part of it as a result of building up the necessary platform. And you can see that coming through in a significant growth in sales. The other aspect of it is also a continued development cost that is invested in our power import projects as well as in our green hydrogen projects. So as guided in Investor Day, you would expect this segment to have near-term cost investments, but we do still expect this segment to turn positive in net profit contribution by 2028. And in the other business segment, we did see a growth in net profit. And as mentioned earlier on, driven by higher revenues as well as order book growth realized in our specialized construction segment. Now from a corporate cost perspective, we took efforts to split between interest costs as well as others, which represents more the gross corporate cost that is incurred so that you would really be able to see the difference. So interest cost, which is in relation to a corporate funding for the acquisitions and projects that came through in 2022 annualized for 2023 as well as for the projects that were -- and acquisitions that were completed in 2023 resulted in a roughly 93% growth and increase in the interest cost. Embedded in that also is a slight increase as a result of base rates as we manage the roughly 25% to 30% portion of the floating rate exposure of the portfolio. Now on the deep -- under the Others, which represents the gross corporate cost, it looks like it has declined by 16% from $103 million to $87 million. One of the reasons for that is because when we review our tax provisions, we were -- we had to release tax provisions that was helped as we are out of the time [ bar ] period of 7 years, which is typically the look-back period for IRS. So that write-back of a tax provision is approximately about close to $20 million. So when you adjust for that, our gross corporate costs did increase slightly to about between $110 million to $114 million. And a lot of it is driven by continued investment in capabilities carried in the corporate level. And for the DPN income, we turned in $133 million, but this is really split into 2 portions. The actual interest income that is recognized for the year was $179 million, but we did booked a $46 million of FX revaluation loss as a result of depreciation of the Indian rupee. Now just to be clear, this $46 million of FX revaluation, a loss that was booked is noncash in nature. And it really depends at the end of 31st December, where the Indian rupee rest versus the Indian rupee as of 31st December of 2023. It is noncash in nature and movements of that would largely be in accordance to how the rupee fluctuates. But I guess when we look back in FY 2023, the movement of a 46% loss implied a depreciation of the rupee of about 2.5%, right? And if you have heard me mention, it does cost in terms of forward points when we take a 2-year forward view, close to 4% to 4.5% to hedge the Indian rupee. So all in all, on a net basis, it was probably a better outcome that the actual hedge cost was not incurred. So looking forward this year, we do -- while it's anybody's guess on how the rupee will perform, but as we continue to monitor expected forecast of the rupees performance in FY 2024, it ranges from maximum downside of between 2% to 2.5%, right? Though we know that in long-term devaluation terms, it probably trend towards the 4%. So that's probably the maximum downside. And there were a forecast that suggests that the rupee could appreciate by 0.5% against the Sing dollar. So when we look at debt and against the continued forward hedging cost of about 4% to 4.5%, we think it is probably more sensible to continue to monitor the FX rates in relation to the DPN note. So taking all of that into account, net profit before exceptional items, it's 1 -- just over $1 billion, as highlighted earlier on. Okay. Now this slide is basically a waterfall of bridging the earnings from 2022 to 2023. So I probably won't touch on it because a lot of it I have went through in detail in the previous slide. So we move on to the next slide. So looking at our group ROE, strong ROE performance in FY 2023. The Gas and Related Services ROE returned in 40.7%. Of course, in Investor Day, I did guide that we will be reinvesting in a new hydrogen-ready machines that are coming through. And so you would expect the longer-term ROE of this segment will normalize. For Renewables, we continue to see strong and healthy ROEs, realizing 11% in terms of ROE performance for FY 2023. Now for the ROE of the Renewables segment, we did see a couple of Chinese acquisitions completed in December, right, which was the 100-megawatt ambition portfolio and also a slightly smaller portfolio from Sembcorp. So if we analyze that performance on a full year basis, ROEs for before exceptional items for the renewables would be closer to 11.7%. So all in all, a good performance in the Renewable segment. For the Integrated Urban Solutions, ROEs that we turn out for FY 2023 is 6.7%, decline from FY 2022. And as I highlighted earlier on, essentially for all the business reasons that contributed to the decline in the net profit before exceptional items of the Integrated Urban Solutions segment. Now if we move on to the next slide. So when we look at our investments and our CapEx that took place in FY 2023, right? So we had seen about just over $200 million of investments in our Gas and Related Services, and the meaningfully -- meaningful increment from FY 2022 and the years before. And as you know, we are starting the construction of the 600-megawatt hydrogen-ready combined cycle power plant in Jurong Island as we have announced earlier in 2023. So of course, we have started incurring the capital expenditure in related to that hydrogen-ready CCGT investment in Singapore. And for the Renewables segment, we did see about $595 million of capital expenditure investments basically to build as we continue to build out the contracted portion of our portfolio under construction. And we saw $710 million of equity-related investments in our acquisitions activities. And we saw a small $40 million investment in the integrated urban solutions. Moving to the group free cash flow. From a cash flow perspective, our group free cash flow continued to be strong, right? From a cash flow from operating activity standpoint, we turned in about close to $1.5 billion. You will imagine that, that has probably come down slightly relative to FY 2022 because in FY 2022, the changes in working capital captures a lot of a onetime effect where our India receivables got converted into the eco monthly installment payments. So -- but in any case, FY 2023, cash flow from operating activities was so strong at $1.5 billion. Now what is different between FY '23 and FY '22 is that the DPN receipts of $355 million came through. So this $355 million could largely be broken into about $179 million for the interest repayment and the remaining for principal repayment. We would expect another tranche of principal repayment to come through sometime towards the end of this month. And the reason why that wasn't captured in the 31st December because we understand that there was a certain upstreaming of cash that has to take place after the 31st December quarter end for SEIL -- for the coal plant in operation in India. So all in all, we are quite pleased to see that we are seeing strong cash receipts from the deferred payment note. So all in -- before we move on, so all in, when we adjust back our expansionary CapEx and equity investments, our free cash flow for FY 2023 is close to $2 billion, which is available for expansionary CapEx as well as shareholder distributions and capital management activities. In terms of our group borrowings, our gross debt as of 31st of December is increased slightly to the tune of about $200 million over 31st of December of 2022. Now actually, 2023 was a year in which we were very focused on capital management, where we were focused on releasing [ track ] cash particularly across India as well in China, right? And we use our freed up cash for the purpose of investment and also managing debt. And the reason, if you have to recall, what I've mentioned in our half year earnings announcement, is because given the higher interest rate environment, the cost of holding cash on balance sheet is expensive. So essentially, what you would see, although the gross debt appeared to have increased by $200 million, what really happened was we actually had about $416 million of debt pay down -- net debt pay down, okay, if you look in the cash flow statement. But the increment of $200 million was simply because this was offset by consolidating close to $616 million of debt as a result of our acquisitions of Vector Green as well as the 2 Chinese portfolios that was acquired towards the end of December, right? You can find that in the SGXNet. And if you want specific the pages, I'm happy to point out to you later on. So as a result of that, what I want to point out is that we are quite focused on managing our capital. And actually, we have been using excess cash to manage down our existing debt. It looks like it has increased simply because of consolidation of debt from the acquisitions that we have made. But in any case, our total equity also increased to $4.8 billion. And our net debt, taking into account of our cash and equivalents increased to about $6.5 billion relative to a $5.8 billion in 31st December of 2022. But taking into account also our increasingly strong as well as a contracted EBITDA positions, our leverage ratio, right, which is essentially our balance sheet position has improved quite drastically. In essence, net debt to EBITDA has declined by 4.4x as of 31st December of 2022 to 3.6x and our net debt to adjusted EBITDA has declined from 3.7x to 3.2x. And from a coverage ratio standpoint, our EBITDA to interest coverage ratios improved from 4.2 to 4.4, and our adjusted EBITDA to interest ratio still remains fairly healthy at 5x. So signifying that our financial position has improved markedly even in the past financial year. So on this particular slide, it shows the debt maturity profile. I think over the past 3 years, we have taken quite a lot of efforts to term out our debt, and also making sure that we are reducing reliance on a more expensive and cash restrictive or project finance loans to corporate and more green and sustainability linked borrowings. So essentially, that is the debt maturity profile. Now I just want to point out the refinancings that we are targeting to do within the next 1 year. It looks like there is a $1.3 billion of debt, okay? Essentially, out of the $1.3 billion, about $260 million of that is really project finance loans and working capital at the project finance level. So that will ultimately be taken cut off by cash flows at the project level. So approximately $1 billion of debt facilities remain to be refinanced. Now of the $1 billion facilities, $700 million of that has already been secured. Credit approved term sheets have been secured from my very supportive banking partners on this side of the room. So thank you. You know who you are and in various stages of documentation. Now just I had a question in relation to, oh, these refinancings will drive results in a 50 basis points increase in our weighted average debt -- cost of debt. I mean just to give you a sense on how -- where we think that the refinancing costs for this $700 million would turn out. I mean, right now, from a margins perspective, they are probably going to be just under 100 basis points. And given the SORA, it's in approximately 3.5%, 3.6% now, you would see that the expected all-in cost of refinancing is actually around 4.4%, 4.5%. So it's unlikely that just from this refinancing, it's going to drive a 50 basis point increase in our weighted average cost of debt. Of course, that will be balanced against a continued debt financings that we will manage for the purpose of our growth activities. Now of the $1 billion, I managed $700 million of secured term facilities. Now the remaining $300 million, we will be monitoring because we will have cash flows coming through. So the remaining $300 million we will be managing between a cash that is going to be coming in as well as our revolving credit facilities, of which we have very ample secured RCF facilities to deal with it. So in short, the $1.3 billion refinancing is essentially already taken care of prior to the end of the year. So the next slide, moving on. This is basically our group liquidity position. So I guess the key point to highlight is that as of 31st December 2023, our unutilized committed RCF still stands at approximately $2.5 billion, which is basically essentially an ample ready to be drawn on demand liquidity that we have. So basically, a good position to underpin our continued growth, particularly in the Renewables segment. So second last slide, which is the outlook statement that we will be putting out in relation to our view of prospects in 2024. Essentially, the group has performed well in 2023, and we all know that it's underpinned by the strong contribution of the Gas and Related Services segment and also on the -- which is achieved on the back of better performance in the Singapore power market as well as seeing earnings growth in the Renewables segment as the projects and operating capacities come online. The earnings of the Gas and Related segment are expected to remain robust throughout 2024, and that's really underpinned by our significantly contracted position, as Kim Yin has mentioned. One thing to note is that because of -- that we are contracted very long now or exactly 4% of that is more than 5 years. Actually, 18 years. In 2024, we would be doing -- planning a fairly major maintenance in one of the units in Singapore so that we can ensure that there's continued efficiency and high reliability of our asset given the fact that we have contracted so long. And of course, as always guided, the income contribution from our Phu My 3 power plant in Vietnam were also ceased in end of February. The Renewables segment is also expected to continue to perform well as more greenfield projects commissioned and brownfield acquisitions that are completed progressively in the course of the year. And the outlook of the Integrated Urban Solutions segment is expected to remain stable. Now we do also want to highlight that our macroeconomic uncertainty still remains, and there could be potential policy changes, right, that could affect the global economies and also the markets that we're in. And this could result in a risk that comes through from further escalations in geopolitical tensions and that could ultimately impact our business performance. But all in all, we continue to remain well positioned to navigate the path of energy transition and to grow our renewables portfolio and the execution of our brown to energy transition strategy as highlighted at the Investor Day last year. Now moving on to the last slide. Just want to give a little more guidance in relation to the 2 developments that I highlighted earlier on. Essentially, the Phu My 3 BOT Power Plant will come to the end of its operations on February 2024. I mean just to give you a sense, historically, this plant has -- it generated a stable earnings of about SGD 10 million to us. So clearly, with this plant reaching the end of its operations, you would expect that, that would be the quantum of earnings that will impact us this year. Now in terms of the major maintenance for the Singapore cogen plants, we expect it to be approximately 2 months or 60 days in the first half of 2024. Now this is how I would think about it in terms of how it will potentially impact the Gas and Related Services segment. In the second half of 2023, we achieved about $374 million. And as you have always certainly guided, that is off the back of a highly contracted position that were carried through into 2024 and beyond. Now of that, the $374 million achieved in the second half, the Singapore Gas and Related business comprises between 80% to 85% of that, okay? Now essentially the cogeneration plants that will be impacted in this major maintenance is roughly 2/3 of the capacity in the 2 months, okay? It's roughly -- capacity on roughly 2 months of that Singapore earnings. So if you think through that and you work through the math of that, then you would be able to come to approximate number of the impact on our earnings this year, okay? So again, to repeat, we did about $374 million in the second half of 2023. We do expect that to carry through. Approximately 80% to 85% of that in Singapore. The cogeneration plants that would be shut down for about 2 months comprises about 2/3 of the generation capacity, okay? So I think that ends my discussion on the financial results. And I think we are open for any Q&A.

Thank you, Kevin and Eugene. We've now come to our Q&A session. Please raise your hand if you have a question and a microphone will be brought over to you. Please state your name as well as the organization, which you represent. [Operator Instructions] Thank you. Rahul?

Rahul Bhatia from HSBC. Just continuing on the last point that you mentioned about SG plant. Given now you have a contracted capacity, I assume you would be still liable to supply power during those 2 months. So how does it work? I mean you'll be buying it from someone else and then supplying? If that's the case, then you would be still getting the fixed dollar margin, right?

Yes. I think in relation to that, we will have to incur the cost to buy the necessary CFD [ slag ] for the purpose of covering the contract positions.

So it's a probability game. You might still make profit during...

I think it depends on whether the CFD would be in the money or not, right? So I think from the overall impact perspective, we choose to take it as the CFD would largely be neutral and then look at it from the effects of the cost of the shutdown.

And second, about Myanmar operations. I noticed that you still took some credit losses in second half 2023 even though it was significantly lower than second half '22. Could you update us the situation there? And how much is the exposure today as of end of '23?

Okay. So in relation to the Myanmar situation, you will recall that as of the end of FY 2022, we took a fairly significant ECL, expected credit loss provision, right, in the region of about $83 million. Now as we close December 2023, we as the accounting rules are required. We are expected to again review the risk environment in relation to the Myanmar power plant. Now we do came to the view that the risk is probably slightly escalated because, as you would imagine, towards the fourth quarter of last year that were reported certain applications that took place in the Myingyan profits, okay? So the essentially local rebel forces were having [ as commissions ] with the ruling party. And as a result, that is in the province of where the plant sits. So we would have to take the view that there is an increase in the risk profile. So as a result, going through -- looking at the potential probability of default as well as loss given default rates, that has resulted an additional $18 million or so of a provision. Now in terms of your question of how much exposure is still there. Let me get back to you on that, Rahul.

Next question, please. Mayank?

Mayank from Morgan Stanley. I think, Kim Yin, first question for you, I suppose. The Singapore government has announced the $5 billion new energy fund. Can you just talk us through how does it affect Sembcorp on the more medium term?

If you think about it, it is -- by the way, thanks, Mayank. Good to see you again, of course, many of you. The Singapore government as part of the budget, DPM Lawrence Wong, and he was EMA Chief some years ago. So he knows the energy markets very well. It's aimed at helping to decarbonize, right? So it will -- and I think if you read carefully also aimed at infrastructure. Yes. So what that means is that you connect the dots with all the previous announcements, the previous announcements that we got 4 switches, we're going to have to continue to rely on gas. We'll max out our solar. We'll try to bring in regional imports, and then we will have technology solutions, right? So if you think about it, the $5 billion will be aimed at providing infrastructure that would facilitate or to support the 4 switches, right? So I can imagine now that I should start by saying that they haven't announced any details. And I'm none the wiser than any of you at the table. Maybe some of you have exclusive interviews with DPM or EMA Chief, you have better information, but I first disclaimed that I do not have -- I'm attempting to guess, right? So they have 4 switches, and they say $5 billion in the infrastructure. Long term, we want to decarbonize. So it must be -- I suspect it could be used directed at providing infrastructure that will facilitate the last 2 switches, right? Because solar today, putting it up into the rooftops and the rest of Singapore is really very commercially viable and very competitive process, actually, right? So -- and gas fired, we see Sembcorp building a plant, Keppel announcing a plant and then now YTL announcing a plant. So that shouldn't be necessary. So I would guess that you'll be aimed at providing infrastructure that will support the -- that switch, which is regional import and perhaps also to support developing low carbon feedstock solutions, which I -- I think in my presentation just now, I also alluded to, for us, we are positioning ourselves in low-carbon regional imports, electrons and then low carbon feedstock as well as carbon trading. So we hope to be able to benefit from it, right? So let's say, for instance, if they directed that money at providing transmission infrastructure, right? And that could actually help us bring in the electrons into Singapore without having the commercial parties investing heavily, a lot of capital into transmission infrastructure. I'm guessing, right? I'm guessing. I'm just attempting to connect the dots, but I'm none the wiser. But net-net, it is a very good sign that the government is taking the initiative and setting aside real money, right? Whether or not it is enough, it depends on how and the structure and where it's directed at. I don't know whether I answered your question. You probably already gotten a much clearer picture in your head, but, I mean Sembcorp cannot say we don't have a view on this, having had -- being a Singapore player and having had the budget in our faces just a few days ago. So you have to put up with my ambiguity there.

So I think from your perspective, if I kind of look at now capital allocation for '24, you have pretty much a clearer plan on how much you'll be spending on the cogen side as well as on the renewable side. So can you just give us a bit of a guidance in terms of what would be your CapEx plan for '24? What's kind of all black and white right now? Obviously, there will be acquisitions and all that will build on that. But can you just give us a bit of a sense of how that breakup will look like on investments for '24?

Yes. I think in general, Mayank, I've given the 5-year capital allocation, right, from 2024, all the way through 2028. I think a broad guidance will be just look at it from a straight line perspective, okay, for the purpose of modeling.

And I think in -- the other question, thank you for addressing the interest cost point. Can you just give us a sense of the $700-odd million that's there at the corporate level in terms of financing that you've already done at 100 bps above SORA. How much is it in absolute terms in terms of an increase? And then there is another one refinancing coming in 1 to 2 years. So how are you thinking about those terms as well right now? Is there some clarity yet? Or you want to kind of ride through as the rate cycle evolves?

Okay. So for the $700 million, I pretty guided earlier on, right, the margins are probably just shy of 100 basis -- just below 100 basis points. And given where SORA is you kind of -- we'll be able to get a sense on where that will come out in terms of interest costs. Now of course, the refinancings 2 years out. We continue to evaluate because where we are now in the rate cycle, is it's still volatile, right? Because for -- towards the second half of 2023, that still continue -- the earlier part of second half 2023, there continue to be beliefs that the rate hikes will happen. Towards the end of 2023 and as we come across over to 2024, that confidence of a Fed accelerating rate hikes. We see expectations of up to 5 rate hikes -- sorry, rate cuts -- 6 rate cuts in 2024 expected. And before you know it, looking at the inflation data, not too great, Fed is now turning back to neutral and kind of wondering, okay, should we hike rates more -- hike rates more or what should we do? I think given the volatility, we are probably -- where I stand right now, I'm probably not so forthcoming in trying to commit a 2-year hit refinancing on fixed rates. And we'll prefer to monitor the market because given where the rate cycle is right now. In any case, I would like to think that the Fed has really hiked fairly aggressively in the last 18 months or so. That where the rates are right now, hopefully, it will be a peak-ish. And then it will be a situation of just how long it would take for them to bring down the rates. Of course, the most recent inflation data may suggest that they may continue to think about rate hikes, but it's really off the back of this volatility in rates that we would continue to monitor the markets and to see how we would approach the refinancing for debt that is due 2 years out.

In any case, the -- Eugene has been repeating for many times. And you know -- you well know it, but for the benefits so some others who may not be familiar. We have got maybe 70%, 75% of our debt portfolio, they are in fixed rates already. So with that, then we are actually in a very good position today. So do we go out there and do we feel we have gone to hit just in case they hiked the rate another 2 rounds, another 50 basis points? The hit that will come to us on that part that is floating is no longer so worrying, right, as opposed to a few years ago, we were 30%. So that really positions us in a very good position. So the issue really is rates moving forward as far as availability of capital. So that's why just now Eugene was taking a little bit of time in explaining that we actually have got lined up the capital already. Then the issue really is why it's the rates. And today, if interest rate goes up 1%, everything else being equal for the full year that it will impact us by about $20 million, $21 million. That's about the position.

Just to clarify the $700 million, it's not just line up the capital, the rates also decrease.

So it's -- so to the point, if you look at it 2 years out, it's only at 400 out there. And 3 years out, it's another [ 9 50 ]. It's -- so no issues about availability, okay? So that's the first thing. And second thing, in terms of the rates, how bad is it going to bother us? Do we have to -- do we feel compelled to quickly go out there and do something? We are not. Somebody -- if we went out there and say, "Look, let's lock in the rates now." Somebody might say we are foolish. So it's -- I can't say that we are wise to know what to do, but I think we're in a good position to maneuver when there is clarity, there's better clarity. We are in a better position than most, if I have to put it that way.

And the last question from my end. Just can you just talk about the performance on UKPR as well as the situation on receivables of both India and China?

Okay. So for UKPR, I think you have meant -- see that I've mentioned earlier on in the Gas and Related segment, we have seen prices -- power prices in U.K. come off, right? And I would say that for UKPR, 2023 was a year, a down year relative to 2022. And you can really see that in the FFR rates as well as ancillary services rates in the U.K. Now what is happening in 2023 really is we see a lot less volatility and scarcity events in the U.K. national grid power system. I think in addition to that, also, as we understand the situation to be, the government was actually more focused on running up baseload than relying on renewables. So the combination of that resulted in less volatility in the system. So that also reduced prices and demand for FFR services. So all in all, for the UKPR business, we did see a down year in 2023 relative to 2022. Now on your -- the other couple of questions, sorry.

Before we move on, Eugene, you can prepare for the data. On UK, so the external environment is one factor. The other thing that we, of course, what is it that we have been doing? The availability of the flex portfolio in 2023 is actually a marked improvement over 2022. So if the market was there, I suspect we would have done better than the previous year, right? But the volatility wasn't there even though we were available. So I think this also brings out the other point, which is why we are so adamant about wanting to remove merchant risk from our portfolio, right? So this part about UK remains exposed to merchant, right? But our Singapore business, where most of our earnings and cash flows are coming from, we have locked it in. So it really brings up this point in my mind, when -- can you imagine if we continue to have that type of exposure in Singapore, 1 year, you will see $200 million of contribution. Next year, you see $600 million. I don't know how I can explain to you in a meaningful and coherent way the next year's projections. But now with -- where we are now, even though UK is still very exposed, but we don't -- it is something that we're not happy with. We're doing what we can in building up the availability and operational so-called standards. But in the meantime, our earnings base and our cash flow base, we are not -- to be very frank, not relying on that anymore.

Sorry, Mayank, I think I missed your next 2 questions. Do you mind if you repeat...

Receivables. Receivables in India and China.

So let's touch on India first. I think India continues to be in a good position. The thing is that with the commitment to eco-monthly installment payments, even on the renewables side of things, the receivables that are contracted to the REIAs, right, which is [ Sakis ] and the national REIAs, that is not an issue at all, right? I think those receivables that are being contracted to the disk comps, they have also signed up and converted them into the eco-monthly installment plan. And we have seen past receivables coming down quite significantly. Now on China, there will be 2 considerations, right? Because from a receivable standpoint, there are really 2 components, the receivables due to the on-grid tariff. So that's not an issue, right? That has been paid on time, and nothing is built up. Now then, of course, the other element will be receivables that are in relation to the subsidies. So in relation to the subsidy receivables, you would have recall that last year, we did update the market to say that there is an ongoing subsidy audit that is taking place in China. And as we've gone through the audit and as we have reviewed our own portfolio, where we stand right now, given the opinions as well as our own tariff assessment of the portfolio, we are confident that the subsidy receivables will be collectible. Now of course, the national NRE is going through the process of clearing the projects through the subsidy audits. Now as of now, as of today, we understand that about 25% or so of the projects have been cleared through the audit and they will continue to work through the audit. So the subsidy receivables where it stands right now is still pretty sizable. But where we stand right now based on our assessment as well as looking at it together with our external consultants as well as advisers, we are confident that our projects stand in good stead to clear their subsidy audit.

And the other important thing to note is that we are in no disadvantaged position relative to all the other generators, including state-owned ones, right? So we have got state-owned partners. We've got projects is state-owned partners and we can see, right? We are just one of the people in the queue, right? So the whole number for us is big. But for the entire portfolio that's undergoing audit it's even much bigger and it includes state-owned players. And among all these, we are just one of the people in the queue. We are not being discriminated against. We are lined up and to Eugene's point so far, when we made those acquisitions, we did our diligence, and we have certain confidence that they should qualify for the subsidies, right? So we're waiting for the outcome of the audit and they are taking the time that they deem necessary. And it is something that we do what we can to try to encourage them as a foreign investor, and also using our relationships where we could. But I think it is something that we cannot -- you don't want to push too hard and rush them beyond their comfort zone. Yes. So that's really what I see, but the number is big.

Another question from the audience? Peggy, please?

Just one question from me on your assets value under your urban solutions, do you see any rise of debt having -- have you having to write off further of this value comparing -- looking at the current market situation? And there are some listed companies who operate in China telling us that they rather cut prices and get that let go and maybe book a loss. What is your view on this current market situation right now?

Okay. Let me comment more generically, and maybe Kim Yin also can jump in from a business standpoint. In relation to the book value of our urban business in the Integrated Urban Solutions, I mean, whenever we close the year-end, we will do a very thorough assessment of the assets that is on the balance sheet. And we're looking at it from both the market conditions as well as corroborating it with a third-party valuers report. So where we stand right now is that the book value, at least looking at where the market is trending because when the valuation reports come through, it does take into account of the foreseeable outlook. There is no risk of debt being written off. Now I think I also want to characterize that our urban business right now, I mean, the bulk of the investment earnings as well as exposure is really Vietnam. And we know that Vietnam continues to be a market that is in demand, particularly, from the supply chain migration standpoint. And then China, probably it's a meaningfully smaller than Vietnam. So all in all, the overall urban portfolio, thankfully, is not that significantly exposed to China relative to Vietnam, and we also have Indonesia as another meaningfully developing and a growth market. And where the book value stands as of the year-end, we assess it very thoroughly. There is no risk of impact. But in terms of us looking at how we would think about the business, Kim Yin, do you have any thoughts on that?

Well, the 2 properties that we have out there, which we book as investment properties, SNEI and the IWH, the Water Hub, more of which to Eugene's point, we make annual impairment assessment and the assessed value, there's headroom above what we have in the books are. So that's the more technical point, whether or not there's risk that we will come out there and do. There is headroom, right? So that's really what is it unless it comes out. Never say never. If it comes down dramatically, then of course, then your headroom gets eroded then from an accounting perspective, you have to come out and do that. So -- but right now, I can tell you that the urban. That's number one. Number two, to Eugene's point, it's a relatively small part of our portfolio in urban. The third bit is also some of the people who have to cut losses and move on, they have got precious because they may have overexposed, that's number one. The other part that they may have pressures, they may have got cash flow issues, right, none of which we are exposed to, right? So first, it's a very small part of our business. We were not counting on cash flow from this business, be it through rental or through sale to fund our growth in the energy side or for that matter in the urban side. So we don't have all that pressure. So from -- a short answer to your -- unless something very bad happens in China, then we will be one of the last to suffer from this. Someone else would fall like a deck of cards well ahead of us if they are overexposed to real estate in China. We are actually not. So the exposure, I wouldn't worry about this one. I wouldn't worry about -- if you worry about write-down in our portfolio, I wouldn't worry about this one. You will stop me from pointing where I would worry, but no single portfolio is so-called bulletproof, right? We have some places where we are watching very closely, where we've got bigger exposures. To Rahul's question just on Myanmar, for instance, you have the number...

Thanks for inviting me. I was just waiting for an opportunity. So Rahul, from a service concession receivables we probably have about $334 million. And now today, $131 million of provisions against it. So from what is still outstanding exposes about $200 million.

We'll take some questions from the web first. It's mainly related to the net profit figures for the second half. If you look at second half 2023 profit, it's about 80% of that in first half. Is there a reason for that? And is there a pattern that we see moving forward? Somewhat related to this as well also on renewables, whereby the second half net profit is lower sequentially, first half versus second half. How should we be thinking about the earnings in this segment going forward?

Yes. So I think I'll take both the questions because they are somewhat related, right? I'll touch on the renewables one first. I think historically, you would have seen that the pattern and distribution of our renewables portfolio earnings between first half and second half is always first half is high and second half is lower. Because in the second half, you have captured 2 effects, you will have 3Q where India would go into a lower wind season. And then in the fourth quarter, China would go into a lower wind season. So it's just a natural seasonality that comes through in our renewables portfolio. And you probably have seen that this is probably the third year running when you see that seasonality. So of course, that answer will then feed into the first question, where you say that why the second half earnings is slightly weaker than the first half. So apart from the renewables, which are seasonally typically, see a weaker second half, the Gas and Related Services segment in the second half was also lower, essentially as guided in our half year earnings that approximately $60 million of the higher pool earnings that was achieved in the second quarter of 2023 potentially would be cut off, right, as we go into a highly contracted second half. So essentially, the combination of those 2 would be the reason contributing to why the second half profit is slightly lower than the first half 2023.

Okay. And in terms of renewables, there's also a question on the percentage of the portfolio generation that is actually contracted versus merchant.

Actually, for the renewables portfolio, the bulk of it is actually contracted, right? India, China, also majority is contracted. So the only market where it is not contracted is really out of Singapore, right, because Vietnam would be a long-term contractor as well. And even as we go forward on Indonesia, that is also a long-term PPA market. So from a renewable standpoint, probably quite a smallish part of the portfolio would be exposed. Of course, from running their business standpoint, [ Chuck ] is not here, but essentially, we would, of course, look to package that into signing a long-term green/virtual PPAs for these electrons as well. So essentially, the renewables portfolio, it's almost a very, very significantly majority contracted.

Actually, the green portfolio in Singapore, you don't want to contract because it is a scarcity value. We are one of very, very few. And that's why Eugene was saying, we try to package it so that then we can drive higher margin for our brand. It can then help us attract long-term contracts for our brand because anybody who wants green today, I'm not just going to give it to you. I say, look, sign me a long-term contract then we talk. So it is giving us the mileage and the competitive advantage. In fact, not having it contracted is a good thing for Singapore, but all the green coming back, all the renewables that we built effectively, they are all contracted. We don't do much in renewables. I don't -- I can't think of one.

We don't do much on renewables.

Batteries, of course, in the UK, you are exposed -- that's the one place. Sometimes, if you consider that part of it as part of the renewables portfolio, yes, the part in the UK is exposed. Yes. I don't know whether that answer that question.

Any other questions from the floor? Siew Khee?

Siew Khee from CGS. I have 3 questions. First one was, you mentioned that for EI, the ROE would have been -- was it 11.7% if you had included the acquisitions?

Full year contribution of the China portfolios that was completed in December.

Okay. So only the Chinese one, right?

Yes.

Okay. So that would mean we can use that as a trend for 2024?

Essentially, yes, that's right.

And also for the cut costs, now you singled it out. Is the annual run rate that we should be looking at? Or are you continuing to spend even more?

I think for the decarbonization solutions segment is going to be activity driven, right, as we look to originate the projects. But as you have heard me highlight during Investor Day, I think while we see this as a critical element to build out for our portfolio beyond 2028, we would look to contain our -- both from a capital and cost investments and to be very, very tight and efficient on it. So I think from a run rate perspective, I think what we have achieved for $13 million this year are fairly representative. But of course, it will really depend on the volume of the activity that's coming through.

And also just this DPN, right? I appreciate your elaboration on hedging and forward-looking rupee trend. So just simplistically, can I just take 95 times 2 because I mean for second half second half was $95 million, right?

For the DPN interest, right?

Correct.

Approximately, roughly that. But of course, I think what you ought to do is to look at the interest rate -- so it is still running at around 9% and apply that to the opening balance because we did receive a meaningful amount of principal paydown.

So previously, you had a receivables left of about, I think, 500 and then that was being used to actually knock off the overall DPN, the original receivables. How has that been -- sorry, I'll just take this offline, sorry.

Okay. So Siew Khee, we completed the transaction, we have about $2 billion of the DPN book value, right, if you recall. So we ended the year about $1.8 billion because of a paydown in principal that was achieved. So it is actually a good result, okay? And then you would expect that principal also to be paid down as we go on. So from a DPN income perspective, you would think in terms of where the interest rate is, we did guide that is 180 basis points over your 10-year GSEC. So right now, it still stands around 9%. And then when you apply that to your opening DPN book value, that will give you a sense of what the DPN income would be. Yes.

And just additional comment on that because the -- it is running down. It's going paid down faster, much faster than we expected. So if you go at this rate, in 10 years' time it's gone. So we are actually quite pleased with this outcome.

Yes.

And the cash flow is good. In the meantime, all our ratios and all those things, Eugene has extra cash to go and pay down the expensive debt then to do a lot of very good things.

Yes. I'll characterize it this way. I mean having sold the asset and been in a position where we have to now take the role as a lender to finance at the DPN, I'm personally quite pleased at the cash flow that is coming back to the group as a result of the DPN. Yes. So very strong cash collection, $355 million in FY 2023, of which there will be more that would come through later on this month, and that's simply because the result of having to declare dividends at the asset level after the 31st December unaudited financials. So I guess what I'm trying to say is that with the DPN outcome, I'm very happy with the cash collection back to the group. Yes.

Any other questions from the floor? Okay. I'll move to online questions. Now on the conventional -- the Gas and Related Services segment. Is the price for gas supply for the power generation business fixed or hedged over the supply? And then the Singapore portfolio, when you look at the contracted portion, are there any differences in terms of the contract for those contracted between 0 to 5 years and longer -- or longer?

Okay? So on the price for gas supply for the power generation business, it will always be hedged, okay? But how it is hedged will depend on the contract structure. So we do have a fixed tariff contract, and that's indirectly answering question 5 where the fixed tariff contract, which is tend to be the ones that is below 5 years. So for that portion of the contracts and the volume of gas that is needed to generate for those contracts, we will hedge it. We will close off the indexation. But for the long-term PPAs, which is the ones that are more than 5 years, the 8 to 18 years, the contract structure is such that it is on the premise of a fixed spark spread and the gas cost is passed through, right? So on those, obviously, we will not fix the indexation because it is already naturally hedged over the life of the contract.

Okay. Another 2 questions. I think actually, you've explained part of it, but maybe it wasn't caught by the online audience. How much of the strong Gas and Related Services segment performance could be attributed to declining gas price? And how do you expect spark spreads to expand with declining gas price?

I guess, in relation to this, kind of explained that, right? The portion that we typically hedge the gas prices against the structure of the tariffs of our contracts. So essentially, we are quite hedged against the movement of the gas prices, so which is why we can now claim that are from an earnings and cash flow stability standpoint, it is a lot more visible going forward.

Okay. And the last question, what are your expectations of the impact on net profit once the Gasco begins to aggregate the supply of gas?

Our contracted position is expected to be respected, right? Single government do not expropriate if I have to use that word. So -- and that's why putting in place these contracts, again, it's not just from insulating us from market volatility in the merchant sense, but also allowing us to have the stability and to be able to count on our own effort to these contracts even when the Gasco comes in. In the very long run, yes, the gas supply, one would have to -- for the purpose of power generation, one will have to purchase through the Gasco, right? But to the extent if we have got existing contracts, long-term contracts, especially, they're already with external customers, third-party customers. Gasco will -- the volume coming through Gasco will not interfere with that. And I think it doesn't bother the Gasco or the government, right? When the regulator put in place the Gasco, they are actually trying to make sure that consumers be it commercial consumers, industrial consumers or other consumers they are trying to make sure that they get their supply, right? So to the extent they have already secured supply from a supplier like us, there's no reason for Gasco to not want to allow that to continue, right? So the purpose and the intent of having the Gasco really shouldn't affect what we have done and what we've put in place. So all these questions actually they are very good because the gas at the end of the day, is a big part. Gas and Related Services segment, which is then the power and so on, especially in Singapore, it's a very big part of our earnings base and our cash flow base. So I want to take this opportunity to actually to make this point, this season. I don't know whether it is obvious to everyone that we -- our confidence level in our future earnings and cash flow is actually much stronger than last year when Eugene and I sat in front of you. Why? It manifests in the fact that we are prepared to come out and say our ordinary dividend shall be $0.13 moving forward. In the past, we would say, no, no, no, it's $0.08, $0.05 special. Why is special? Because it's special. It's not recurring. We are not confident that we can recur. So we don't want to come in here [ 1 year, 12; 1 year, 11; 1 year 5 ]. But now this year, we are telling you no special dividend. We've done well earnings. Better than last year, right? We can argue that we can -- maybe we should call for a special, but this year, we're saying not special ordinary. That means what we are saying is that next year, you would expect my investors to expect us to sustain their number, if not grow it, right? So that, I think, is a very important signal. And why are we prepared to do that, Eugene has mentioned, I mentioned, because of our confidence in our biggest earnings base over -- we are no longer exposed to merchant risk. We have locked in. And again, another evidence, revenue or turnover can come down materially. And yet our earnings can stay, if not increase. That tells you the strength of the contract portfolio that we have, right? So moving forward, revenue can turnover, can be up and down. But as long as we continue to deliver the megawatt hours, the earnings will be there. And this delivery is underpinned by the contracts that we put in place. Then we are confident of our earnings and our cash flow. We can then fund our growth into our green. So the brown to green strategy, if your brown is 1 year, 200, on 600, you have to worry about where I'm -- but if it's a 20 year where am I going to -- how am I going to pay for my CapEx? But now it's locked in, in that sense. We have good visibility. So I want to -- at this stage, if not end by emphasizing this point, I think it is a significant shift. We already signaled all that shift in the last year, right? But I think this is the point where we are saying, we're there. All right? We're there, we have completed that shift. Not just in terms of the Singapore business. But if you think about it moving forward, we are putting money into renewables. And all our renewables are backed by long-term contracts, right? So the entire portfolio's risk profile. I want to emphasize, at least from our perspective, we have -- the team has put in this very deliberate, very concerted effort to have shifted the risk profile of the entire portfolio from what it was when I first came to this company. If you remember the 2020 was it 400 net profit of the whole group. Same assets. We didn't build a new plant in Singapore. But how much is it contributed this year? So we knew the potential of the assets. We knew that we could take advantage of the situation of the market volatility and tightness. But then we say, look, we are here for the long haul. What we want is visibility and predictability so that then we can decisively without having to look back, move into our green portfolio. So that's really what has happened. And this season, we can tell you emphatically that we are ready. We're there, right? And that's why we said, okay, we had a big debate at the Board, ordinary dividend versus a special dividend, and we see look, okay, let's come up. Okay. Next year, we hold ourselves to delivering this stability moving forward. And we are coming out to tell you that.

Any other burning questions? If not, we've now come to the end of today's briefing. Thank you very much for joining us. Once again, a very happy Lunar New Year, and wishing all of you a healthy and successful new year ahead. Thank you.

Thank you. Thanks all for coming.

Thank you.