FY 2023 Full-Year Financial Results Briefing

Good morning ladies and gentlemen. Welcome to capital and integrated commercial trust or CICTs FY 2023 results briefing. We are hosting this event live from our office at Capital Tower. Since this is a new year, we have also decided to try something new. So instead of a former presentation, we will be having a sort of a question and answer with the management team of CICT. Please feel free to give us feedback how you find the session and we will be glad to improve. So the sequence of the discussion will also may not follow the flow of the presentation that's

uploaded on SGAXNet, but largely the contents are there. So before we kick off the session, I'm pleased to introduce the panel starting from our CEO, Mr. Tony Tan. And on Tony's left, and on Tony's left is Ms. Jacqueline Lee, our head of investment. And on Jacqueline's left is Mr. Lee Yi Zhuan, our head of portfolio management. And on Tony's right is Ms. Mayor Jan, our Chief Financial Officer. And I may pay the head of investor relations. So to start off, we are also pleased to invite Tony to give us some of the contacts and performance of CICT's financial results. Tony, please. Thank you,

for the last few weeks of things that went the other direction. We have a series of very aggressive central bank rate height started from the first quarter. And hence, to a lot of the standard, I think has affected a lot of market volatility and economic uncertainty. So that's a little bit of backdrop. But to bring the contacts to an entry tree, we were actually positioned quite well with some of the portfolio reconstitution that we had done in 2021. And hence, you see the full effect coming in into entry entry. So the financial result is to a large extent, reflection of the completion of the acquisition that we did in 2002. And hence, to entry entry, you see that delta in numbers.

But having said that the operationally, we also very little focus on given things were moving quite rapidly during the year, focus on a few things. Versus revenue, we need to protect our revenue. And one way to do that is to do really, really go out quite early in our least asparagus and show we're locking our rental as quickly as possible. And this is exactly what we did. So, we're going to rent the tenant we want. And hence, you see across the portfolio, we have a very high level of retention and a good nice reversion as well. Secondly is cost management. Extremely important to ensure we manage the cost carefully. And we were fortunate that in 2020, versus 2022, one of the highest cost was naturally

the utility cost. And we managed to get a lower rate in the second half. So you see a second half improvement in basically the margin for the reduced OPACs. At the same time, we also restructured our property management agreement to get stronger alignment between the rate as a set owner and the property manager. So what that entails is the typical arrangement for the property manager is that the rate actually carries some cost. So in the revised property management agreement, we are structured such that certain element of the cost is specifically the manpower cost relating to leasing is taken away.

And we compensate the property manager on a transaction basis. So the closer deal, you can pay commission. So in a way, there's a bit more closer alignment in terms of where the revenue generation are costing currency. So in the long run, I think we should see the benefit even clearer. So we have been cautiously trying to focus this to enhance the city throughout the year. Naturally, obviously, we had a benefit in the first half of 2020 tree, a lower base into into a big ramp up and gradually taper down in second half. And with as a result, all these active work, you see how operating metrics has been very stable.

Hopefully, occupancy has gone up, a nice end point tree, business last year, beginning of the year. Valuation has gone up as a result of a very strong operational improvement. No, rental rate has achieved higher than what we expected. We also started to look at cost minimization in the risk perspective by looking at where relevant certain building, the cost required restructure and hence certain costs will be passed on to basically occupy to the adjusted service shut during the year as well. So all this accumulated into a very high-tech kind of operational number. So this is a little bit of backdrop of the financial number.

In the short term, this is what I have been doing in the doing tree. But in the mid to longer term, in fact, during the year, we have started to think about where the new revenue stream will come true. With the completion of a clunky in November this year, it should be a fully ramp up by hopefully by second quarter. Then we have started thinking about where is the new source of income stream. And hence, we announced that we are going to do a break on the IMM to reposition iron stronger as a key regional outlet more, not just in Singapore, hopefully around the region as well. So that story, hopefully it could carry true as we start to do the work along the way.

And also, as of now, we are very pleased that even started the work in the IMM, we have already secured 70% of the pre-combingments in the AI space. So that's the series of work that we are planning ahead. In the slightly longer term, we also, and this is also in the back of everyone's mind, including some of you that we were talking earlier about what we are going to do in Gallileo. We started to embark on a fairly different, different system to bring friends to their set so that we can protect the value for a longer period of time. If you recall Gallileo was built for unused, historically owned by a bank built for themselves, particularly, it was not a disaster to a different owner and eventually actually debug over.

So that building is constructed not for a general multi-office-lacking-time environment. So we want to do that correction so that in the eventuality, whichever perspective, tenant that we prospect out, we can survive the next five to ten years. We don't worry about a single-tener exposure because the building is built for unused. So that is something that we are working on. And naturally, a few things that will come along the way as we completed the Australian acquisition, we knew that there are certain gaps in the field and we started to plan in the necessary upgrade in the field by assets and hopefully we get some traction. Again, that will bring additional revenue source.

So if you look at a long runway, we have crossed 23 quite successfully. We enter into the field work to be done and hopefully once that clarity along the way into into the field, we can see even 25 to 26 where we'll be the potential new revenue stream that's coming in. So those are critically important for us to manage. So that's a little bit of backdrop. The other thing that has, so this is all at the asset level, at the financing level, we also very laser focus on making sure we manage the interest expense, I think it's a little a little bit more. So one of the key priorities is very active catch management.