FY 2023 Full-Year Financial Results Webcast Briefing

At the end of last year, we have completed our Strategic Review and Capital Structure Review and announced last month that we will be writing down surplus and non-core assets in our full-year 2023 earnings. This morning, we reported our Financial Year 2023 financial results and made two other announcements relating to The resolution of the historical event, operational car wash with the Brazilian authorities, and two, a 20 to 1 share consolidation exercise. We hope to spend some time going through each of them separately in detail. In financial year 2023, I think that achieved a positive underlying EBITDA of $628 million

Singapore dollars for FY23 as compared to 113 million Singapore dollars in FY22. Underlying EBITDA excludes exceptional items. Group net loss was 1.9 billion for FY23 as compared to 261 million in the prior year. The group's net loss in FY23 was primarily attributable to exceptional items that include non-cash write-downs of surplus and non-core assets, and excess and obsolete inventory arising from our strategic review, as well as provisions for contracts, legal and corporate claims, and merger expenses which amounted to 2 billion Singapore dollars. The group announced today that it had reached in principle settlement agreements with the Brazilian authorities in relation to the historical event

operation car wash, amounting to a settlement payment totaling 670.7 million Brazilian rias, equivalent to approximately 182.4 million Singapore dollars, subject to post-closing compliance obligations. In addition, the group has also made a provision of 82.4 million Singapore dollars for indemnity capital cooperation in relation to this matter. Can you actually see? No, you just put behind, we won't be looking at the... Good morning ladies and gentlemen.

Welcome to Citrium's financial year 2023 results breathing red cars. This morning we posted our FY2023 earnings with a positive underlying EBITDA of $628 million Singapore dollars, reflecting the group's strong operational performance. We have with us today, Mr Chris Ong, CEO and Mr Adrian Tang, CFO. I'll now pass it on to Chris, who will go through our business performance. Good morning and welcome to CITRAAM's group's full year 2023 results presentation. I'm pleased to have with me Mr Adrian Tang, Chief Financial Officer. We completed the combination at the end of February 2023 and have been extremely busy with the integration and transformation of CITRA. At the end of last year, we completed our Strategic Review and Capital Structure Review and announced

last month that we will be writing down surplus and non-core assets in our full year 2023 earnings. This morning, we reported our Financial Year 2023 financial results and made two other announcements relating to 1. The resolution of the historical event operational car wash with the Brazilian authorities and 2. A 20 to 1 share consolidation exercise. We hope to spend some time going through each of them separately in detail. In Financial Year 2023, we achieved a revenue that has more than triple to Singh $7.3 billion. Underlying EBITDA, which excludes exceptional items, jumped 456% year-on-year to Singh $628 million from Singh $113 million in Financial Year 2022.

We have narrowed our underlying net loss to SING dollar 28 million for financial year 2023 from the SING dollar 141 million for financial year 2022. In fact, underlying net profit was SING dollar 33 million dollars in second half of 2023, a reflection of an improved underlying business performance. We announced today that the group has reached in-principle settlement agreements with the Brazilian authorities in relation to the historical event Operation Car Wash for approximately $6.182.4 million. This latest development provides us with finality on this legal matter, which has been outstanding for quite some time, with the Brazilian authorities. It also ensures that we are able to continue to participate in tenders and other bidding

projects in Brazil. I would like to reiterate that we are determined to uphold the higher standards of governance and have taken firm steps to put in place policies and procedures to instill the higher standard of discipline, ethics and compliance in our business. Our reported performance in financial year 2023 was impacted by exceptional items, which include write-downs that are non-cash in nature, provision for honours contracts, legal and corporate claims and merger expenses. At the end of last year, we completed our Strategic Review and Capital Structure Review. Arising from that, we have identified our business priorities and how we will go about achieving the targets we have set. Surplus and non-core asset have been identified and written down.

While it widens our reported losses, it is value-accretive in improving CITRAAM's productivity, optimising the company's operational structure and reducing cash operating expenses over time. Our goodwill remains intact. Since the merger, we have reorganized ourselves differently from our old yard-centric ways of doing things. Today, Citroëm is organized around a one-Citroëm global delivery model where projects are worked on in different yards globally, supported by centralized engineering and technology resources. This way, we will not be limited to a specific yard capacity or resource limitation. Going forward, we will continue to invest in our core assets and capabilities to scale up our business under this new operating delivery model. As part of our capital structure review,

We have also announced today a 20 to 1 share consolidation exercise to increase market interest and attractiveness in our listed shares. This is subject to shareholders' approval in the upcoming AGM in April. The group successfully delivered 13 major projects with a strong net order book of SING dollars 16.2 billion. During the year, we made great strikes on the Capital Management Front, strengthening our balance sheet and improving liquidity. We secured over $3.5 billion in new loans refinancing as well as trade financing in financial year 2023 and year to date 2024, of which 71% is sustainability link or green. As at first half 2023, you would recall that we were

operating at the net current liabilities of Sink dollar 1.5 billion dollars. We have turned that around very quickly to be in a position of strength with a net current asset position. As a testament to our market recognition, Citram was included in the STI and MSCI last year, and has been included in the Food C for Good Index for the fifth year. In addition, we received market recognition in environmental achievement and workplace safety and health awards. As we advance our efforts towards energy transition, we have also strategically launched our new sustainability vision, 2030. It calls for us to achieve a 40% reduction in carbon emission by 2030 and net zero emissions by 2050. Despite the negative developments in the U.S. offshore wind market at the end of last year,

we were optimistic on its long-term potential. Just last week, we announced that we have received notification from Tannen that it plans to award and commence work on the third 2GWh high voltage direct current offshore converter platform in June this year. With this latest project, Citroëm is currently working on five HVDC offshore converter platforms, creating a franchise for series-built opportunities in HVDCs to achieve greater synergies from project repeatability. In addition, there are also HVDC offshore substations as well as wind turbine installation vessel projects. From the repairs and upgrades business, we are growing our baseload of RU projects globally, with a focus on marine decarbonisation solutions and fleet-based agreements for continuity and

capacity planning. In the past year, we have completed 291 repairs and upgrade projects, which were successfully completed with a focus on higher value add upgrades and conversions. Additionally, 46 low carbon and energy saving retrofits will carry out, including successful conversions of the world first ammonia dual fuel vessel FFI green pioneer. Citroëm achieves strong order winds of $4.5 billion in financial year 2023 and year to to date 2024 that spans across both oil and gas and renewables. Our projects under execution have deliveries that extend through 2030, underpinning our earnings visibility. The pipeline remains strong.

On the technology front, as one C-term, we are proud to have achieved server-significant accomplishment in our endeavors to decarbonize the maritime industry. We have successfully converted the world-first ammonia dual fuel vessel FFI Green Pioneer. We have also joined forces with Shell, Penguin International, Vincent and Air Liquid in a hydrogen pilot project to integrate a hydrogen fuel cell on a vessel. Our floating living lamp was recently chosen by Maritime and Port Authority of Singapore to pilot an innovative mobile charging solution for Harbourcraft electrification. We have also entered a partnership with ABS on digital transformation and smart initiatives, including the world-first offshore structure health monitoring notation.

During the year, we also launched the NUS-CITRAAM Professorship in Energy Transition and Sustainability, as well as our partnership with Global Centre for Maritime Decarbonisation on Shipboard Carbon Capture. In 2023, as part of our commitment to sustainability, we launched our new Sustainability Vision 2030. Our goal is to operate responsibly, engineer a sustainable future towards net zero, and positively impact people and communities. Our sustainability vision aims for a 40% reduction in carbon emissions by 2030 and the net zero emissions by 2050, of which we are proactively working towards. 2023 was a momentous year for Citroën. Our contract wins demonstrate the team's ability to seize market opportunities and pivot our

business to key focus areas to address market demand. As a leading global player in the industry, we are well positioned to benefit from the strong tailwinds arising from the energy trilemma. Over the past year, we are already executing on some of the plans of our strategic review, right-sizing our asset base, strengthening our balance sheet, and rationalizing our cost structure. The strategic write-downs we have undertaken are expected to create future value for the group under a more efficient, productive operating model. With this already underway, we are starting the new financial year on a strong footing. Citram's achievements today are the the result of strong commitment from the group and our management team who have worked tirelessly

to deliver what I consider a very satisfactory performance in a challenging year of integration. Looking ahead, we are committed to converting our robust order book into quality and timely project deliveries, improving earnings and building a resilient business. by strong industry tailwinds, the group is focused on delivering and improved financial performance in financial year 2024. I will now hand over to Adrian, our CFO, for the Financial Results Review. Thank you. Thank you Chris, and good morning to all. Before I take you through the group's financial performance, I would like to highlight that the financial results reflect the completion of the combination with Capital Offshore and Marine Limited, now known as C-Treme Offshore and Marine Limited, on 28 February 2023.

For the full year 2023, the group's revenue was $7.3 billion, representing a significant threefold increase year-on-year. This is attributed to a more robust audiobook following the combination, strong project execution, and higher repairs and upgrades activities. The group achieved a positive underlying EBITDA of $628 million for FY23, as compared to $113 million in FY22. Underline EBITDA excludes exceptional items. Group net loss was $1.9 billion for FY23, as compared to $261 million in the prior year. The group's net loss in FY23 was primarily attributable to exceptional items that include

non-cash write-downs of surplus and non-core assets, excess and obsolete inventory arising from our strategic review, as well as provisions for contracts, legal and corporate claims, and merger expenses, which amounted to $2 billion. The group announced today that it has reached in-principle settlement agreements with the Brazilian authorities in relation to the historical event Operation Car Wash, a mounting to a settlement payment totaling Brazilian Rios 670.7 million, which is equivalent to approximately Singh$182.4 million, subject to post-closing compliance obligations. In addition, the group has also made a provision of Singh$82.4 million for indemnity to capital cooperation in relation to this matter.

This latest development provides us with finality of this legal matter with the Brazilian authorities. We continue to cooperate with the authorities in Singapore in their investigations and will make appropriate announcements as and when there are material developments. Underlying net loss excluding exceptional items was $6.28 million. Free cash inflow was $6.506 million as compared to free cash inflow of $6.2 billion in prior year. Early collection of receivables of $1.968 million from board drilling in November 2023 contributes it to the cash inflow. During the year we strengthened our balance sheet with higher liquidity and an improved debt maturity profile. Net gearing decreased to 0.12 times as at 31st December 2023 on the back of a higher

equity base and lower net debt of $747 million as at 31st December 2023 from $998 million in the prior year. Underline EBITDA grew more than four times year on year to $628 million for FY2023 as compared to SinkDollar 113 million for FY22, reflecting strong project execution and cost efficiencies. Underlying net loss was SinkDollar 28 million for FY2023, lower than the SinkDollar 141 million recorded in FY22.

Exceptional items of SinkDollar 2 billion in FY23 comprised non-cash write-downs of $1.4 billion for surplus and non-core assets, excess and obsolete inventories arising from our strategic review, and $0.6 billion pertaining to provisions for owner's contracts, legal and corporate claims, and merger expenses. The assets that were written down comprised yards and yard assets that will not contribute to the group's mid-to-long-term plans as a result of excess capacity due to duplication and change in business strategies, damaged assets beyond economic repair, or obsolete assets. While the write-down impacted our bottom line, it is value-accretive for the group in the medium to long term. The closure of surplus and non-core assets, writing down of excess

and obsolete inventories, are expected to improve C-TRIM's productivity, optimize its operational structure, and reduce cash operating expenses going forward. Shareholders' funds increased significantly from SING dollar 3.8 billion at end 2022 to SING dollar 6.5 billion at end 2023. This is attributable to new shares issued to Capital Corporation for the acquisition of capital offshore and marine renamed C-trim offshore and marine. Over the past year, we have strengthened our balance sheet significantly and have moved from a net current liability position of SING dollar 1.5 billion at 30th June 2023 to a net current asset position of SING dollar 131 million at 31st December 23. Net asset value per share decreased 21% to 9.49 cents, and net tangible asset value per share decreased 71% to 3.31 cents

because of the goodwill from the acquisition of Ctrim, Offshore and Marine. This slide highlights our proactive capital management, where we termed out our debt to 2027 and beyond. In FY23, we secured more than $3.5 billion in new loans, refinancing and trade finance, of which $2.5 billion were green or sustainability linked. As at 31st December 23, we have approximately $2 billion of undrawn credit facilities, providing ample financing capacity. We continue to adopt a disciplined approach to cash flow and liquidity management. Barring unforeseen developments, we have sufficient debt headroom, and with existing facilities and continuous support of our banks and bondholders,

we are able to execute our projects and meet our liquidity requirements. As mentioned earlier, free cash flow for FY23 was $6.506 million, from which net cash from operating activities was $601 million, as compared to $1 billion for the same period last year. This was mainly due to receipts from customers offset by working capital for ongoing projects. 39% of our net order book of $16.2 billion currently comprises renewables and clean all green solutions, and 27 projects are under execution with deliveries till 2030. The order book is split approximately 70-30 between floating solutions and fixed solutions.

Sea Trim's inaugural Investor Day will be held on 15 March 2024, a Friday, where we will share more information on the outcomes of our capital structure and strategic review, and the way forward. We will now proceed to the question and answer session. Thank you.

Thank you Adrian. I think we'll proceed now to Q&A session and we'll wait for any of the questions to arrive. The first question that we see there is, do you expect to turn profitable in 2024? Well, of course, I have to start by saying that we do not provide any forecasts. But nonetheless, let me assure that business continues to be well supported by industry tailwind arising from global energy transition and energy security. And as you can see from the results, we took proactive steps from the outcome of the strategic review in 2023 and has written down the surplus and non-core assets. This itself will allow us to drive not only productivity and optimize operational structure, but it also more importantly allow us to focus our investment into our core assets

to make us a lot more efficient. So with all this plus the hard work that my team has done in integration and transformation, we are committed to grow our order book and also focus on execution and focus on safety, quality, and timely project deliveries that will then improve our earnings and build a resilient business. So we are focused in delivering and improve financial performance in financial year 2024. The next question, will there be further write downs in 2024? Again, we do not provide forecasts, but notwithstanding changes to the industry conditions and also other matrices that will affect asset valuation from time to time. We believe we have undertaken a very thorough

strategic review of our business focus. So we will see that as of end of 2023, we have done a very thorough assessment and we do not foresee that there will be more at that point. Now question three is around Brazil. For the Brazil update, the SGX net announcement mentioned leniency agreement. So what is a leniency agreement? Now let me quickly educate what is a leniency agreement. It is a settlement between the company and the Brazilian authorities. What it means is that the company will be a fine to resolve a litigation of corruption-related offenses and it agreed to certain compliance related requirements going forward. But more importantly, there's no criminal liability for the company.

The latency agreement actually guarantees that we will be able to continue to participate in Petrobras tenders or other bidding projects in Brazil. So all in all, it actually avoids uncertainties. It saves time and expense associated with a judicial proceeding to resolve these matters and is the least disruptive path forward for our business in Brazil, which is a very critical market that we have big ambition for. And the next question is around the share consolidation. Why do you need to undertake a share consolidation? Well, we believe the share consolidation will generally be beneficial to the company and its shareholders through the reduction of volatility of the share price and also increase the market interest and attractiveness of the company.

In our engagement with many of the potential shareholders that are looking at this counter, Some of them are unable to actually participate in our share because of the penny stock status. Now the next question comes from Tsue of Macquarie who asked, thank you for your presentation. Two questions. Number one, what is the 85 million provision for the honours contracts for in second half 2023 and the second question is what projects are recognized during second half 2023 and what projects had greater revenue recognition during the period. Now I will take the first question and then let Adrian warm up with the second one. The first one the 85 million provision for the Honours contracts

Involve legacy projects. So we largely, you can see that from the amount, management has actually at the onset of merger address, what are the provision for onerous contracts, and in the second half, the number has greatly reduced. So from that sense, we can see that our confidence in our execution moving forward. So now over to Adrian for the second question. So in terms of projects which had greater revenue recognition in the second half, I think one can safely assume the PCE's FPSO projects will contribute a majority of that revenue recognition. Obviously, repairs and upgrades have also performed very strongly in the second half, So they have also provided a percentage of that revenue in the second half and then the rest would be the green and Wind projects that we are currently undertaking

But that would be the sort of breakdown of the revenue construct in the second half of 23 Thanks Adrian question six Well, this this question comes from the platform. Thank you for the presentation. I have three questions One, could you provide us further breakdown of the 2 billion write-downs and provisions? Two, any other asset potentially at risk of further impairment or provision? Three, can we get an update on the progress of P84, 85, FPSO orders? Thanks. Well, thanks for the question. As for question one, further breakdown of the $2 billion write-down and provision, I'll have Adrian to answer them, but maybe I can take question two and three first. Question two is about any potential further impairment or provision. We have answered that in the previous question.

So now question three, the progress of P-85, 84 and 85, right now commercial negotiations are underway. We can't comment further because it is a bidding process. So the whole commercial tender is still underway and we have been approached for both P84 and 85. Now over to you Adrian on question one. So the question on the $2 billion write down and sort of the breakdown. I think as we have presented earlier, the bulk of the write-down of 1.4 billion sing dollars are for surplus and non-core assets and they include the yards as well as yard assets and more importantly, there are also excess and obsolete inventories that we have reviewed from the strategic study and and determine that they are non-essential for our mid- to long-term strategy.

In addition, we also provided for $0.6 billion for contracts and, in principle, settlement agreements as well as merger expenses. Remember, closure of the surplus non-core assets and writing down of the excess and obsolete inventories really will improve the group's productivity, optimize our cost structure and reduce the cash operating expenses which will result in significant value creation in the medium to long term. Thanks Adrian. Question 7 comes from Rahul of HSBC. Thanks Rahul. Question 1, he actually has 5. So question 1, We'll take one by one. Could you share more of the honours provision of SinkDollar 373.7 million?

Does this capture the incremental cost for all contracts that are not in line with margin expectation for your more recent contracts and tasks accelerate your vision of stable margin? Bracket, mid teens. We have answered previously The key provision as mentioned are mainly for the weakness in margins for legacy contracts that are entered previously. The $373.7 million is actually full year 2023. So as mentioned, most of it is in first half of 2023. So you can see that the team has rigorously gone through all the contracts that we have in hand. that are secured previously, and we believe that that amount for the full year will be sufficient.

Question two, could you share what is the annual saving you expect from write-downs taken from 2023 results? Adrian. So bearing in mind, the majority of the write-downs are non-cash in nature. So the immediate impact to us will be reduction of depreciation schedule and the cash savings will be crystallized on divestment of these known core assets through improved operational performance and reduced operating expenses to the group. Thanks. Question three, other income in 2023 was $6.120.7 million,

which is mentioned too as Meselaneous Income and Scrap Sales. Could you comment on the outlook for this? Well, these are Meselaneous Income that is part and parcel of the business. They are generated from our non-call or BAU like Scrap Sales. So we do not provide any forecast for it. Question four, could you talk about order outlook please? The revenue run rate in two half was around $6.2 billion, which implies an annual revenue of $6.9 billion. Do you expect to at least have similar annual order run rate to maintain revenue for the longer term? Well, the order book outlook, the net order book right now is still very strong at the $6.2 billion as at financial year 2023 results. So it comprises of actually 27 projects

already under execution. The original contract is actually $25.3 billion with deliveries up to 2030. So in a way, we are keeping the yards busy and our people very occupied in delivering assets that meant a lot to the industry and we'll continue to do so. But then to outlook, we have always mentioned that the way that we have positioned ourselves As a one-seater global delivery company, you can see that there are customer-accepted way of execution, and he has caught catch on with working together with customers to create win-win solution. Take for example, Tenet has just awarded the third two gigawatt HVDC converter platform, and will potentially reward new ones beyond the first batch of 14.

And then on top of that, we are also working very closely on Petrobras for their future APSO projects. They have came up with their future strategy and budget, which is publicly available. And most importantly is that the offshore and marine industry, whether it is a traditional oil and gas renewables or new energy for the future will be well supported by a strong industry headwind arising from energy transition and the energy security. So we're actively working on multiple tenders in order to build on our order book. But most importantly, as we always educated, it is the quality of the order book and the discipline around it to make sure that we can execute it well, which is most important. All right, question five. On Outlook, improve financial performance in financial year 2024. Could you clarify what would be your barometer

of comparison here, considering Citroen reported underlying net profit and not loss? Well again, Rahul, we do not provide forecasts, but there are many things that the team are working on. As you can see, the non-cash right down itself write down itself is the first step for us to optimize our structure and operation. That also allow us to really focus on where we should invest on for our core assets. In that way, 2024 will be a real focus on how do we get even more competitive and be the preferred solution provider for our customers. And with execution excellence that we always stress upon and risk adjusted return discipline that we have always educated upon, we are working towards better

and improved financial performance in financial year 2024. And of course, in all financial results, we always compare with the previous year. So if you need a barometer, take a look at financial year 2023. Question 8 comes from CRSA Honghan. Thanks Honghan. Good morning, thank you for the presentation. I have two questions. Number 1, I'm trying to understand the annual SG&A run rate. The level of this expenditure is higher in second half 23 versus first half 23. What is driving this please? Post restructuring should the second half 23 run rate continue or reduce? I will take this. The main run rate increase is for higher professional fees incurred from the combination of Citroen O&M and merger expenses, higher depreciation.

There are quite a lot of first one-time, which at the end of the day, we have provided for the merger expenses and that is the reason for us to be a lot more predictable around expenditure. Now, second question, recurring profit in second half 2023, which was better than expected with with $33 million profit based on $4.4 billion revenue. However, second half-23 profit improvement seems marginal versus first half-23 despite higher revenue in second half-23. Thus, there does not seem to have much operating leverage. What is the reason behind this is this deal to higher recognition of low margin backlog in second half 23 and also higher cost structure

as now seen in your second half 23 SG&A or both. Since revenue momentum is going slow in 2024 as it normalize, how should we look at profitability? Now, Hong Han, I'll have a go at this and Adrian can chip in. First thing first, I think we are a company undergoing transformation. As what we have articulated, we are still integrating. Synergy out of the merger that's identified will take time to recognize. The operational excellence will also take some time. As per what you have noticed, that the question before this was around what projects have been recognized in the revenue. you will notice that most of the F's curve of the more recently secured projects are still at early stage.

So there are many multiple factors that are there. But suffice to say, if you take a look at the underlying performance, that is the key metrics that you should be looking at. because Ibeda basically have turned positive and on top of that, it is a significant improvement from the previous year. Anything to add? A couple of points is bearing in mind, we made a lot of provisions in the second half. So that does need to take into consideration. I think as Chris has alluded to, our core operational KPI or barometer is really on the EBITDA. Between EBITDA and Net Profit, there are other levers, provisions being one of them, interest expenses certainly will be improved going forward. So I would say that things should look more optimistic

from a operating leverage perspective, and these are the areas that we are very much focusing on. Thank you. Question nine is from AGC. Rajib Boss, thank you for the question, on legacy projects. What is the progress on previously announced combo FPSO and Dorado FPSO projects? Are they planned for ascension construction start in 2024 or 2025? Well, Rajib, thanks for the question. We are still in constant conversation with the customers. At the same time for combo, we are still in engineering engagement. And then when will they actually sanction the projects? I think that we do not have visibility. It would be down to the customer managing

quite multifaceted issues that they are looking at. we are unable to comment when the FID will happen. But suffice to say, Citroen is actively involved at the front end with all our customers. So as and when they are ready to FID, I think we are in a very good position since we have value added to their solution. Question 10 comes from Hong Han again, can you let us know what are the specific surplus assets written down and the value? Likewise, what are the non-core asset written down and the value? Thank you very much. I think I'll let Adrian take this. Thank you, Chris. As we mentioned earlier, management undertook a strategic review of its business focus in 2023. We reviewed our operational yard footprint, we reviewed the inventories and the assets that we needed to support the strategy of building a profitable

and resilient business going forward. We have since completed the review and identified the core as as well as surplus assets and determine which are needed to bring synergies to the group. And for the surplus and the non-core assets, we have obviously written them down. Certain yards were identified for eventual closure after the conclusion of specific projects currently deployed within these yards. And this is an important point to note. S&P's obsolete inventories have also been identified and written down, but obviously we are looking to monetize them as soon as possible. Again, to reiterate, these write-downs are expected to improve the group's productivity, optimize our cost structure, and reduce cash operating expenses resulting in value creation in the medium to long term.

It's important to again note that we are now organised as one C-TREAM execution model, as compared to the past where it was yard-centric. And this will enable us to derive operational efficiencies and synergies as we leverage resources and yard facilities globally and as a single entity. Thanks Adrian. Just to add to that point, when you ask about what are the assets that are actually involved in all this, now if you can picture this, when the two legacy companies operate as single entity on their own, there will be some strategic assets that will be held in order for them to participate with sufficient capacity. But now as one company, the strategic review actually critically take a look at how do we execute

the one-seaterum delivery model. So the outcome is that there are assets that both companies that have developed on their own but are no longer required because we have a combined capacity that is able to meet the demand. So we have done a very critical exercise and those are the assets that we have written down and certainly some of them it will be in our interest to monetize them and once we are able to do that, it actually creates value in terms of reduced or packs as a run rate and on top of that, the most important as I mentioned is to allow us to focus our investment in our core assets which is what we intended to do to make us a lot better in the marketplace, right? Question 11, this come from Silky of CGS CIMB.

Thank you Silky. Five questions. On the surplus non-core asset write down of assets, what are the surplus PPE? Any amount related to Brazil towards new integrated yarn? I believe we have replied on one other written down asset, any amount related to Brazilian, Tuan's new integrated yacht. I believe you are referring to Tuan's Boulevard

and we don't have significant write downs for our most capable yacht right now in the arsenal. So most of those would be about duplication of asset rather than physical new assets that we are holding. Now next question, are there any projects you might see further provision for higher cost? Now as mentioned, the way that we approach this is two tier. First, legacy projects we have gone in to make sure that we have taken a look at what is the running margin, One is the running execution issue because the projects were signed during COVID and the execution was pre-war or COVID where your inflation wasn't so high, interest rate wasn't so high. So there are cost pressure and execution pressure

on those legacy projects. So for the last one year, management has gone in to take a look what it takes to provide for in order for us to comfortably be able to deliver them on our promise to our customers. So that's one part. And as of end of last year, we feel that the provision prudent, and we think that that's sufficient to bring those projects to the end. Now the other portion would be on where do we see the new contracts that we have landed. As I always mentioned, those are contracts that we secure based on re-sharing, progress payment, and also at the same time as much share risk as possible. So those contracts we are focusing a lot on how do we execute them to plan. So there are no provisions for higher costs

for those projects that are secured under Citra. Next question, any timeline when Singapore investigation be concluded. Obviously we can't comment on that. We are just cooperating with the authorities in Singapore in the investigations and we will make appropriate announcement when there are material development. Next one is how much do you expect to see annual savings in depreciation from surplus non-core assets and closure of yard. Well, one is about how much would be the saving, the other one would be timeline. Because we have to understand that the assets and closure of yards, it depends on when the end of lease or when we have in our plan to close. But these write downs are non-cash, so the immediate impact to us would be reduction of depreciation. We don't announce and break down what are those depreciation for, but suffice to say,

once we have written them down, their depreciation won't appear. Cost savings, main thing is that the cash savings will only be crystallized on the divestment of all these non-core assets. Question 6 is what is your gross margin excluding provisions in second half 23? I'll pass on to Adrian to answer this. Well it's very simple. We typically do not share information on the gross margin in detail. I think we have reiterated in past forums that going forward projects we are targeting meetings returns and that is a discipline that we will look to maintain so that we can avoid you know all of these onerous contracts provisions going forward but it's certainly something that we

will be very mindful of going forward. Question 12 is from Adrian from UOB Keihin. Thanks Adrian for the question. Two questions. First question is good morning and thank you for a presentation from the look of the balance sheet, it does not look like C-TRAM needs to undertake another equity capital raising. Can we confirm that you do not need such capital raising? I think this sounds like a CFO part to answer, but it's important for me to actually take this. I think that first, take a look at what the team have achieved. Focus on that. I think for just less than a year into the merger, I think the team has done a tremendous job in turning our status from a net current liability to net current asset position.

A lot of the support from our partnership banks have allowed us to turn out now loan and we still have undrawn capacity there. So I think as of now, I think we always optimally evaluate our financial solution to support our operational needs, but not to forget it's also in line with long term growth. So based on that, we are quite well, we are very confident in fact that our strong balance sheet will continue to support our funding needs and future business growth. The second question is, could you give us an idea on a pipeline that Citroen will be looking at for 2024? I have already mentioned this, pipeline is strong. I think that proven integration results by delivering 13 projects just in this short time and a good execution of the ongoing projects itself. You can see that the confidence

in the customers in Citroen formula is big. And we are working with our customers from a solution provider anger. Pipeline-wise, again, it will be across the whole energy transition, and we are taking calculated investment and also a look at how can we also participate in the decarbonization and in the new technologies. So suffice to say, we are not stopping on those projects that are already known in the market. Question 13 comes from Maia for Morgan Stanley. Thanks, Maia. How much would be the cost saving annually from the $1.8 billion asset write down? Can you give us the medium term view on the same? My act we don't break down on what are exactly other savings, but I would say again that depreciation is non-cash,

but I think the cash will come upon divestment. And of course there will be opaque savings once we are able to divest this assets itself. But again, more importantly, now with the core assets identified, we will be relentless in investment in our people, which is our most important asset, but also in the future technologies to change the way we work to be more productive. Question 14 comes from Mr. Michael Seow, who asked how was the share consolidation ratio of 20 to 1 derived? Why not 10 is to 1 or 30 is to 1? I think, thank you Michael for the question. As part of our capital structure review, we have partnership banks and vices looking at factors like share price volatility and also other constituents of STI indexes.

So various options were proposed and we have determined 20 is to 1 and it will achieve the two goals that we won. One is to reduce volatility of the share price and the second one is to reduce percentage transaction costs for trading in each lot of shares. So those were the two that guided us to determine this. Next question, question 15 comes from Peggy Mark from Philips Securities Research Private Limited. Thank you, Peggy. You asked, you have 4.5 billion in new order secured. Is this gross value contract value or net contract value? I think a straightforward answer, this is gross. This is secured per contract value basis. Question 16, Mr Lim Hoekchwan asked, NAV 9.49 cents and NTA or 3.31 cents.

Please elaborate the big disparity between the NAV and NTA. Is the difference mainly due to goodwill? If so, do you foresee this goodwill will eventually be written off as impairment going forward? I'll let Adrian take this question. The straight answer is yes, it is due to goodwill. And as you will have reviewed the accounts in detail, we did book a goodwill of $3.8 billion. However, we believe very strongly that there is no impairment for goodwill. This goodwill represents the synergy of the combination of the two groups that is currently C-trim And for the FY2023 results, we do not expect the goodwill to change, and there is no impairment required based on a thorough assessment and concurred by our auditors.

Thanks Adrian. Question 17 comes from Jerick Seed from Maybank. The question goes, can I check for the existing order book? What percentage of it is legacy projects that are still loss making or with low margin? And how long will this project take to complete? Although we do not go into details of each of the projects, suffice to say, for financial year 2024, less than 10% of the order book that is loss making exists right now. And we have said that by end of 2024, we should deliver most, if not all of it. Question 18 comes from Yau Yong-sin, who asked, with $2.2 billion in cash, how is the company

utilizing the cash? Thank you, Yong-sin, for the question. I will let Adrian take this question. Again, as we mentioned earlier in the presentation, we are taking a very proactive approach to capital management, as well as cash flow and liquidity management. So as such, we are looking to optimize this cash through our projects in supporting working capital requirements. We are also looking at trying to maximize interest income on this cash as well. but balancing between putting it into term deposits as well as funding the projects, working capital, is a balance that we will proactively manage going forward. Well, just to add on, this cash profile itself, we also have to understand that because of the way that now we have secured our contracts,

where we are either cash flow neutral or milestone paid up. You will expect that when the contracts are secured from the start, we do have cash receipt. So some of these cash receipts in our books as cash and they are actually planned to eventually be utilized as working capital in the projects itself. So that I think it will be the main use for this cash. But saying that, of course, we have always mentioned that being EBITDA positive is very important, which means that we are operationally viable. We also will be looking at what are the different ways to grow the company and also to invest back into our core assets and our people in order to make us relevant and competitive in the new energies in the energy transition. Next question come from Luis Jalido,

from Citigroup. Luis asks, with the 1.4 billion provision on non-core asset, should we expect a material drop in your financial year 24 depreciation and any other expenses? Thanks. Again, we have answered that question already, but I just want to be clear that we did not take the 1.4 billion dollar provision on the non-core asset, purely from the anger of reducing depreciation and expenses. The first thing is that it arises from a strategic review and it focus the management team and the whole organization in how do we get even better. The next question, cycle back Tzu-Wei from a query. Tzu-Wei asked, thank you for your earlier reply. One follow up question please. Second half 23 underlying Ibida margin slipped slightly to 8.4% from 8.9% in first half 23.

Since more revenue recognition was for P Series FPSO, in second half 23 is the dip in Ibida margin attributable to FPSO or was it more due to the wind project recognized during second half 23. Well, it's very difficult to actually split between the two margin. Suffice to say, we are actually looking at growing the margin, but if you take a look at the full year performance, it's actually a big jump. So I think if you take a look from that, the Ibeda margin has actually improved tremendously, rather than take it from first half and second half because it depends on all the different factors out there. And I guess your question on whether the APSO or the wind projects, we have always mentioned that whether it is an APSO or a wind project, the investment or the capacity allocation undergo

the same rigorous and discipline from the management itself. So I don't think that that is a show or a disparity in the margin we are getting from the projects. The next question comes from Uma Devi from Business Times. The question goes, thank you for the presentation. Could I ask what proportion of the write downs were attributable to capital offshore and marine versus Samkop marine? And the same question on operating losses. Thank you. Uma, thanks for the question, but we do not split the accounts today and it's not relevant anymore because the strategy that we are undertaking is one-seaterum. So when we take a look at whether there are assets that belong to the legacy capital ashram Marine or Samkot Marine, it is not a measure of whether it's relevant or it's not relevant. As what

we mentioned, when we combine the two, we are relentless in looking at the strategic implication of what are the assets that we can do without. Some of the assets that are very relevant to the legacy companies may no longer be relevant anymore, even for some of the new assets, purely because the strategic approach for two individual company is very different from a combined entity of Ctrum. So as a company on its own, we have came up with this list, not pertaining to whether it's red or it is green. Ctrum is blue right now. We take a look at what is the right strategic approach going forward. Next question from Rahul again from HSBC. Couple of question, wow Rahul,

Could you provide more color in the use of cash of 2.3 billion? I think we've answered that. The next question is, given majority of contracts are on milestone payment, do you foresee the need of high amount of cash on books or other use that you will consider for this cash like any acquisition or buy bank? Rahul, again, we have answered that question, but I just give you a little bit of color. I think cash itself, you have to read in tandem on how we secure contracts. But whether are we using the cash more efficiently, I think that is the reason why we have a capital structure review and that is the reason why the team is working so hard. Not only on strategic items, some of the business as usual items that the team has achieved through turning out loans through getting more sustainability link financing and trade financing.

It goes to show that we are actively looking at how we approach cash optimization and also discipline. Whether will we do any acquisitions or buyback, I think that is opportunistic. Acquisition in organic growth is definitely one of the areas that is important to any organization in transformation. And share buyback, it is as per need and not to forget, any shares buyback is governed by AGM approvals and approval by the board. Just add on one more point, there are legacy debt on our books that are not in our most favorable terms. So we are also looking at these debt profiles and see if there are ways to look for early redemption. so that we can actually minimize interest expenses going forward. So these are another example of how we're looking to optimize our cash presently.

Thanks Adrian. Another question from Rahul. Can you share if the US YAD is one of the YADs being closed? It has been one location where managing costs had been difficult. Thank you. US YAD is a strategic given our approach. in renewables and also looking at where the next renewable market will come. Not only renewable market, I think in the whole energy transition, US plays a very important role. It is just right now, the projects that we are managing now was at a point of time where it wasn't apparent or manpower and cost challenges, like in all projects that have undergone COVID disruption. But moving forward, we are rationalizing the footprint. We are very focused in the US approach on a different,

even R U market in the US. So US still has a very relevant play to our strategic plan.

Next question come from Suki. Follow up question. Can we assume provision for honours contracts and inventory right down in the COS? We do not provide the analyst, the analysis to the market.

No, this is, I would say proprietary information. So we're not going to break down on the gross profits construct. I think similarly for the merger expenses, we're not providing that guidance as well. Okay, next Sean from JP Morgan. Thanks Sean. How do we see offshore wind business over near to mid-term with ESG potentially taking the back seat as European nation paratize spending on defence spending? Do we have any mid-term margin target? Well, Sean, I would say that my view is largely different. As what we mentioned in our strategy that we educated, First, we think that the energy trilemma is a business opportunity. We see sustainability as a business.

It is our business, not just commercial business. If we take a look at the sustainability challenge and the greenhouse gas emission challenge, we think that we have a mixed issue to act even faster. Many nations are now really moving aggressively in trying to decarbonize their greed. The market may differ from geography to geography and also be very geopolitically driven. But at the end of the day, that's the beauty of Citroëm's capability. We are horizontally enabled and when we take a look at the need to actually extract the traditional oil and gas more responsibly, it also take a look at oil and gas as a decarbonisation

opportunity. Now offshore wind in specific, I think that right now based on economics, the best would be basically solar panels and also wind generation. So for us playing in offshore wind market and as we go further and further offshore, I think floating structures are definitely within our ambition. So I think we should take a look at the business opportunity horizontally across the energy transition. Offshore wind, I guess the question is around the recent news around US, but the fact of it is that US are continuing to go on public tender to give out encourages to increase their offshore wind development and also to decarbonise their grid. So we are still very active on this. In fact, this is one of the active trusts that we will continue to do so in near to mid-term.

Question 25, Yongsin again asks, what is the remaining sum utilised from the rights issue, Adrian? It's all been consumed in FY2023. And just to add, we have been very transparent in our sharing with our shareholders on how and what do we use on the rights issue. So yes, that has all been used basically not only just on working capital but we have also repaid some loans with it. question 26 from question 26 from Suki apologies more follow-up question why is the depreciation higher H OH H means half on half right from $600 million to 256 million is this the depreciation rate that we should be using going forward

on our renewed PPE balance. Thanks. I think it's another attempt in trying to ask the same question. Adrian. Yeah, again, just to reiterate this point, the first half of 2023 only included four months of comms financials because obviously the merger completed at the end of February. So it's only four months. in the first half versus six months in the second half. So it's not apples for apples comparison when you look at first half and second half, which I know you are going through all the analysis. So please bear that in mind as you do the analysis. And that is one contributing factor of the difference between the two halves. The first two months of 2023 does make a difference to that analysis.

Question 27 comes from Peggy Mark from Philips Security Research. Thanks for the question. The question goes, can you elaborate what is in the provision item in your balance sheet? Non-current 684 million and current 782 million, Adrian.

This includes the claim settlement that we have mentioned. We have also set aside other legal claims as well as for the owners contract provisions in those numbers. I think that is the last question that has been put up. Thank you very much for all your interest shown in our results announcement. I'm very sure that in the weeks and months to come we'll be in close contact. So feel free to ask any question that you have through those engagement and not to forget Please pan in your date for our investor day We look forward to seeing you and showcasing Citroen to you and How we're gonna grow together with you. So thank you very much and have a nice day. Thank you