Good morning. Welcome to ST Engineering's Full Year 2024 Results Briefing. We will begin with a presentation by our Group CFO, Cedric Foo. Our Group President and CEO, Vincent Chong will then give his remarks. After that, we will end today's session with a Q&A for the analysts. Without further ado, may I invite Cedric to give his presentation please.

Yes. Thank you. Welcome to ST Engineering's full year 2024 results briefing. A very good morning to everyone here in-person as well as those joining us via webcast. Slide 2 please. Before I begin, I would like to bring your attention to Slide 2 which states, amongst others, that the Group's actual performance, outcomes and results in the future may differ materially from those expressed in forward-looking statements. Slide 3 please. This is our agenda for today. I'll be covering Group highlights, business discussions, productivity, debt profile, contract wins and order book, investing for the future, dividends and outlook. Slide 4 please. First, let's take a look at group highlights. Slide 5. I'm pleased to report a very strong set of second half 2024 and full year 2024 results. First on the left for second half 2024, the Group achieved a solid year-on-year growth. 10% growth in revenue, 11% growth in EBITDA, 18% growth in EBIT, 26% growth in PBT, and 20% growth in net profit. For the full year 2024, the Group also performed very well. On a year-on-year basis, 12% growth in revenue, which crossed the $11 billion mark, 11% growth in EBITDA. And as you know, EBITDA is a good proxy for operating cash flow growing to $1.6 billion, 18% growth in EBIT to $1.1 billion, which exceeded the $1 billion mark. 23% growth in PBT to $863 million and 20% growth in net profit to $702 million. The above good performance was due to our concerted efforts all across the group in successfully executing on our order book. Order book as at end 2024 came in at $28.5 billion with about $8.8 billion to be delivered in 2025. Slide 6 please. This slide shows revenue by segment, revenue by type, and revenue by location of customers. First from the left, the pie chart shows revenue breakdown by segment. 39% was contributed by Commercial Aerospace or CA in short. 44% contributed by Defence & Public Security, DPS in short, and 17% contributed by Urban Solutions & Satcom, USS. DPS as a segment includes both local and international customers. It also covers commercial domains, not just defence domains, including public security and safety, critical information infrastructure and others. Hence DPS segment revenue, in the pie chart, which was $4.9 billion in 2024, is different from the revenue derived from pure defence products and solutions as shown in the middle, which is $3.5 billion. So I just want to clarify that $3.5 billion is a subset of the $4.9 billion or pure defence is a subset of DPS, which has more than defence. Revenue by type in the center of the slide, the bar chart shows revenue by type of products and solutions over the past three years they have all been growing. Commercial type increased from $7.1 billion in 2023 to $7.8 billion in 2024. Defence revenue grew a very robust 15% from $3 billion in 2023 to $3.5 billion in 2024, reflecting the opportunities arising from ongoing conflicts and geopolitical tensions around the world. Revenue by customer location, on the right of the slide. Asia contributed 51%, U.S. 23%, Europe 19% and others 7%. Slide 7 please. This slide shows the year-on-year increase in group revenue by segment. As you can see, all segments contributed to the growth and our revenue grew from $10.1 billion to $11.3 billion as a group, 12% increase contributed by all segments. Slide 8. This waterfall chart shows a strong EBIT growth of 18% from $915 million in 2023 to $1.1 billion in 2024, driven by business growth and cost savings. Slide 9 shows a significant net profit growth of 20% year-on-year, which crossed the $700 million mark for the first time. Next, I will move on to cover business discussions by segment. Slide 11 for Commercial Aerospace, revenue grew 12% to $4.4 billion, excluding aircraft sales in both 2023 and 2024, revenue growth would have been 15%. This growth is contributed by stronger sales from engine, MRO, nacelles, PTF and composite panel. Although the base revenue for Commercial Aerospace is now much higher at $4.4 billion. The second half 2024 growth rate, I must point out to you, year-on-year was not as high as the first half 2024 growth rate year-on-year and this isn't a surprise as Jeff has anticipated and spoken to you before. Nevertheless, we remain confident in the growth trajectory for the CA business. We will share more at Investor Day 18th of March, and we do expect our growth rate in the midterm going forward to be stronger than industry growth rates given our very strong competitive position. EBIT for Commercial Aerospace improved 19% to $400 million due to stronger revenue and good product mix, aircraft OEM have been unable to produce new aircraft fast enough to meet demand from airlines. Hence existing aircraft fleet remain in service for longer. This resulted in a lack of PTF, PAX aircraft feedstock impacting our PTF business volume. Nevertheless, we can and we are optimizing our hangar capacity since the capacity is fungible by increasing airframe MRO revenue to offset the lower PTF revenue. We are also looking at optimizing our CA facility network around the world for greater efficiency. In terms of contract wins, CA secured $4.7 billion of new contracts in 2024 of which $1.8 billion of new contracts were signed in the fourth quarter. Next, Slide 12 on DPS. DPS revenue grew 16% to $4.9 billion. This strong growth was contributed by all sub-segments. Digital business comprising Cloud, AI Analytics and Cyber, achieved a revenue of $645 million. On a BOP, base operating performance that is by excluding one off U.S. Marine post-sale completion gain of $16 million, which you will remember. EBIT for DPS increased 15% to $636 million, which is more in line with revenue growth of 16%. DPS secured $5.3 billion of new contracts in 2024 of which $1.7 billion came in fourth quarter. Slide 13. Moving on to USS segment. Revenue grew 1% to close to $2 billion. This growth was contributed by URS and partially offset by Satcom. EBIT for USS improved from $10 million to $40 million, attributed to higher revenue, the absence of SatixFy divestment loss and lower Satcom severance cost. USS secured $2.6 billion of new contracts in 2024 of which $0.7 billion was for the fourth quarter. During the quarter TransCore recorded its first tolling solution win in Southeast Asia. We have been talking about cross-selling and synergies from this very big acquisition of ours. So we are very heartened indeed that this tolling contract win is extensive. It will cover numerous expressways and lanes. It is a result of our U.S. tolling technology, which exists at TransCore level when we bought it, being sold into Asia where the rest of the group has a very strong customer network. The size of the synergy here is also meaningful and we expect to do more of such cross-selling synergistic wins. Slide 14. Vast challenges in the Satcom sub-segment remains, its transformation continues. We are encouraged by early signs of recovery, but we are not out of the woods yet. Revenue for fourth quarter 2024 was 12% higher year-on-year. Operational EBIT turned marginally positive in fourth quarter 2024. So this is an encouraging early sign. Satcom recorded key wins such as the Indonesia's Satria-1 satellite network and Brazil's energy connectivity project in collaboration with Viasat, just to name a few. Now, I've completed the business discussions. Let me now move on to productivity. Slide 16, our OpEx over revenue ratio has been trending well over the years. In 2024, we achieved the lowest OpEx over revenue ratio of 10.6% in recent years. As the group grows, we are experiencing scale and network effects, which have been translating to productivity gains, cost savings and better margins. Such savings have enabled us to mitigate inflation and improve margins. Slide 17 debt profile. Our borrowings as at 31st, December, 2024 reduced by 5% year-on-year from $6.1 billion to $5.8 billion and this is despite a 3% stronger U.S. dollar to Sing dollar exchange rate. Impacting the revaluation of U.S. dollar loans back to Sing dollars. If we work on a constant FX basis against N23 [ph] FX level, our borrowings as at N24 would have been even lower at $5.7 billion. EBITDA increased 11% year-on-year to $1.6 billion, again very strong cash flow. Gross debt to EBITDA leverage ratio correspondingly reduced from 4.2 times in 2023 to 3.6 times in 2024. Due to the twin effect of a reduction in debt, the numerator and the increase in EBITDA, the denominator. Fixed versus floating rate interest rate ratio stood at 69% to 31% as at N24. The group weighted average borrowing cost for 2024 was at a competitive level of 3.6% as previously guided to be mid 3%. Now looking ahead, we expect this weighted average borrowing cost to remain at mid 3% in 2025 assuming two small rate cuts in 2025. Our credit ratings remain very strong with AAA stable by Moody's and AA+ stable by S&P. I think even without the two rate cuts we will still be around mid-3s, because the impact would not be that significant. Next contract wins and order book. Slide 20 highlights some of our major wins in fourth quarter 2024. In this period the Group secured $4.3 billion worth of new contracts with $1.8 billion from CA, $1.7 billion from DPS, $0.7 billion from USS. This brings the total new contract value for the year 2024 to $12.6 billion. Slide 21. The Group ended the year with a robust order book of $28.5 billion another new record. About $8.8 billion of the order book is expected to deliver in 2025. This strong order book provides visibility for future revenue in the coming periods. Slide 22. Investing for the future. Slide 23 actually. Even as we perform well in 2024, we continue to focus on the future, to invest in line with our strategy and to optimize our portfolio. Our investment in the future covers three main areas; capacity and capability building; two, geographical market expansion; and three, operation efficiency. Firstly, for capacity and capability building. This includes the new airframe MRO capacities such as Changi Creek here in Singapore, Erto [ph] and Pensacola in Florida. Gul Yard also in Singapore for our marine business 4th Data Centre in Boon Lay, AI and Cyber capability building, an area we are very focused on and to develop and roll out Satcom's next generation intuition platform. Secondly, for market expansion, this includes 155mm ammunition exports to Europe. Partnership for in country production of 8x8 armoured vehicle in Kazakhstan. This is a milestone for us as it is a significant land platform program. Smart City platform in Lusail City, Qatar and as I described earlier, the first TransCore tolling solution in Southeast Asia. Thirdly, for operations improvement we are doing the following. Harnessing AI for internal productivity, continuing to seek procurement savings by leveraging scale and also across international business units of ours. We have also formed a Vietnam Competency Center, it has about 200 people now one-year in also into the program and this headcount is expected to increase. Additionally, our Vietnamese colleagues are also taking on higher value-added work and we can do this productively and as well with cost arbitrage vis-à-vis Singapore or elsewhere. Slide 24. Dividends, 25 actually. We are pleased to announce that a final tax exempt cash dividend of $0.05 per ordinary share has been recommended by the Board for the financial year ended 31st, December 2024. We are increasing our dividend per share by $0.01 per share. Payment of the final dividend is subject to the approval of shareholders of the company at the upcoming AGM on 24th April. The record date 30th, April and if so approved shareholders will receive the dividend payment on 15th of May. For the first three quarters of 2024 we have paid three interim dividends of $0.04 each for the financial year, and if you add that to the $0.05 final dividend this will make a total of $0.12 per share --sorry of the interim dividends of 0.12, this will make a total of $0.17 per share. So let me say again, for the first three quarters of 2024 we have paid three interim dividends of $0.04 each, making a total of $0.12 interim dividends in total. Hence, the total dividend for the year ended 31st, December, 2024 will be $0.17 per share if you add the $0.05 and final dividend to the $0.12 interim dividend. Slide 26. Next, let's move on to the outlook. I'll just read out the Group President's and CEOs message. We delivered a very strong set of results in 2024 despite an uncertain and challenging environment. We are confident that our strong fundamentals will continue to position us well even as we confront a fast changing landscape. We have a robust order book and a competitive market position, which will underpin our continuing revenue growth and performance. So this brings me to end my presentation. Thank you very much for your attention.

Thank you, Cedric. May I now invite our panelists up on stage, please. The panelists this morning are Vincent Chong, Group President and CEO; Cedric Foo, Group CFO; Ravinder Singh, Group Chief Operating Officer-Technology & Innovation and President-Defence & Public Security; Tan Lee Chew, Group Chief Commercial Officer-Market Development and President Smart City & Digital Solutions; and Jeffrey Lam, Group Chief Operating Officer-Operations Excellence and President-Commercial Aerospace. I will now hand the floor over to Vincent to deliver his remarks. Vincent, please.

Well, good morning everyone here at ST Engineering Hub as well as those who joined us virtually. Thank you for being with us this morning and welcome to ST Engineering's financial results briefing for second half and full year of 2024. As Cedric mentioned, we ended 2024 on a very positive note with a strong second half performance driving improvements across a range of financial metrics. Cedric had outlined the key factors behind those results and I will just highlight some key takeaways. In the second half of 2024, group revenue grew 10% year-on-year, and group EBIT rose 18%, group net profit up 20% compared to 2023. These improvements contributed to the stronger full year 2024 compared to 2023. Group revenue rose 12% higher -- closed 12% higher at $11.3 billion. Group EBIT crossed the $1 billion mark to $1.08 billion. Group net profit reached a new level of $702 million or a 20% increase that outpaced the annual revenue growth driven by a stronger margin mix across segment projects. At the segment level, Commercial Aerospace posted 12% increase in revenue as we had anticipated, the segment revenue had a more gradual second half growth after more than 10 consecutive or successive quarters of double-digit year-on-year growth. Its full year EBIT grew 19% reflecting an improved margin of or EBIT margin of 9.1%. As we had informed in the last briefing or the last results briefing or quarterly updates, we are addressing near term shortages in aircraft feedstock for PTF work by reallocating capacities and resources to capitalise on stronger airframe MRO demand. Notwithstanding the near term effects of PTF feedstock situation, at the close of 2024 our PTF business achieved a mid-single-digit EBIT margin percentage as expected and with a revenue of $706 million in total for PTF business. Surpassing our revenue target of $700 million for PTF set for 2026. So we have already achieved our 2026 target ahead of time, two years ahead of time actually. The Airbus A330, A321, A320, PTF programs are now integral part of our Commercial Aerospace business. The programs have matured and stabilized over the years. Given our much higher total commercial avenue -- Commercial Aerospace revenue now compared to pre-COVID levels, we feel it's no longer as meaningful to single out PTF targets going forward. That said, it remains a valuable contributor to the segment's revenue and profitability. But we will not call out PTF targets going forward given the reasons which I have just mentioned. Now moving on, looking ahead, we remain confident, as Cedric mentioned, in the growth trajectory of our Commercial Aerospace business. We will share more at the upcoming Investor Day on the 18th of March. I hope all of you can attend, but we do expect our Commercial Aerospace growth to be stronger than industry growth rates for the commercial aerospace industry given our strong value proposition growth track record as well as our own growth plans. More to come on the 18th of March. Moving on, the Defence & Public Security segment performed very well with revenue rising 16% and BOP EBIT, or base operating performance EBIT up 15% in full year 2024 compared to full year 2023. So with that we have to exclude the post-closing adjustment for U.S. Marine business that we benefited from in 2023 if you exclude the effect. DPS EBIT went up 15% as the slide would have shown you just now. This also serves as a good segue to highlight that our defence business sales increased 15% to $3.5 billion [ph] as presented by Cedric. We saw stronger demand for defence-related products and services driven in part by heightened geopolitical tensions and ongoing conflicts around the world. Next Our Urban Solutions & Satcom segment delivered a stronger 2024 than 2023 as expected, while this segment had a weaker second half year-on-year, second half revenue and EBIT were stronger than the first half of 2024 in line with our expectations and in line with what we have communicated as our outlook in the last couple of briefings. And as Cedric mentioned, TransCore secured its first tolling solution win in Southeast Asia. We are very heartened by that. While we are not at liberty to disclose contractual details at this time, it was a synergistic win involving the provision of full-fledged tolling solutions for numerous expressways and lanes, leveraging on the group's customer networks in Southeast Asia and TransCore's very strong value proposition and technologies in the tolling solutions space. Satcom while its full year revenue remained weak in 2024 due to its ongoing transformation and focus on enhancing revenue quality. We are heartened to see early signs of improvement in the fourth quarter of 2024 with a 12% year-on-year revenue increase versus the same period last year and marginally positive operating EBIT in the quarter. But as Cedric said, we are not out of the words, but we're heartened by the so called early signs. But we'll continue our focus on turning around the business for Satcom sub-segment. On order book, a strong order win of $4.3 billion in the fourth quarter, a total of $12.6 billion order wins for 2024 strengthen our order book to a new level at $28.5 billion. While we are heartened by the strong order wins in fourth quarter 2024, I will say again that quarterly order book fluctuations are a normal part of our business and therefore it is more important to look at our order book win track record and order book trends. Notwithstanding short term variations in contract win timing and project completions. Key points to note are that our robust order book is a leading indicator of growth and our strong revenue pipeline ensures sustained revenue growth over the next few years. In the medium term, these are points, which we have made before, but it's worth mentioning against our strong set of results in 2024. Group has strong track record of focusing on improving operational efficiencies, productivity and cost management to drive better margin outcomes as evidenced by the resilient results even during the COVID years. Such focus continued in 2024 and will continue in the years ahead and Cedric has already showed you the unit operating expenses, which went down to 10.6% of total revenue in 2024 a new low. In summary, we delivered a strong set of results in 2024, with three segments each playing a key role in delivering growth and profitability. A healthy project mix, along with cost efficiencies and procurement savings helped improve our margins. Building on this strong foundation, we have set our next five year targets with a clear commitment to continue investing in growth and innovation and continual portfolio management to high grade our portfolio. We remain mindful of external factors, which we cannot control, as well as execution risks in today's fast changing external environment. And we will stay focused in the pursuit of our strategic objectives as we navigate the challenges in our operating landscape as we have so effectively done over the years. You will hear more from us at our Investor Day on the 18th of March, so we'll give you a more comprehensive overview and description of our plans and our growth plans in the next five years. Finally, on dividend, our Board of Directors has approved a final dividend of $0.05 per ordinary share, subject to shareholders approval at the upcoming AGM. This will bring the total dividend per share for 2024 to $0.17 if approved at the AGM, compared to $0.16 per share paid out for each of 2023 and 2022. This increase is in line with our unwavering focus in returning value to our shareholders as our net profit progressively improves with concurrent disciplined allocation of growth capital and prudent management of our balance sheet. So on that note, we'd like to take questions that you may have at this time.

Thank you, Vincent. We will now move on to the Q&A session for the next half an hour. I will open up the floor to our participants in the room first, for our analysts online, please click the raise your hand icon and we will place you in the queue. May we have our first question please?

Hello. Thanks management. Congrats for the very strong results and very good achievement over the past few years, reaching your many of your targets two years in advance. I have three questions. First question is regarding the $0.05 dividend we raised from $0.04 to $0.01 for the fourth quarter. So the question is, should we take it as a run rate for future quarterly dividend payout? I just want to confirm this is not just one quarter impact. Yes. Second question is regarding your order book delivery guidance. We are guiding for $8.8 billion delivery for FY 2025. This is $0.9 billion higher than the start of last year when you get for FY 2024. So on to have a sense of the breakdown of this additional $0.9 billion, how much is for Defence & Public Security, how much for CA and how much is for USS? That's the second question. The third question is regarding the Defence & Public Security margin year-on-year. Based on my own adjustment in the second half this year there is a still a slight improvement in margin year-on-year. Last year was about 11.5% and this year second half is 12%. But if you compare with the first half there is a moderation first half was like 13% plus, second half is 12%. So we'd like to have some understanding about the margin outlook. Should we expect similar level of margins going forward or you expect the margin to moderate? That's all from me. Thank you.

Okay, well, thank you Roy. I will let Ravi talk about the DPS margin last. As we told you before, margin is also dependent on project timing margin mix. But Ravi will be able to give more insights. Now we do not disclose order book delivery by segment. It is true that the $8.8 billion of order book delivery expected in 2025 is higher than the previous year. But we will not be able to break down for you or we do not break down for you the segments. Dividend, as we said before, and we say again, as our net profit progressively strengthens, we'll have more capacity to return value to our shareholders through dividend. But at the same time we also need to reserve capital for growth to capture growth. We are a yield come growth stock. So we'll make sure that we return value through dividend, but at the same time reserve capital, growth capital so that we can pursue those growth that will create value for shareholders. And it's our commitment still that as our net profit continues to strengthen, [indiscernible] strengthens, we will have more capacity to look at dividend returns to our shareholders. But maybe later on Cedric can add on as appropriate. But let me just go to Ravi about the DPS market.

Roy, thanks for your question. So first of all, I think as Vincent mentioned, in our business in Defence & Public Security, our projects tend to be quite long and multi-year and a lot of it depends on when the project is completed and also the milestones. When we look at margins, we tend to look at it over the year and if you compare the margin last year 2024 and with the margin 2023 without the one-off, actually they're very comparable. I would say, the DPS margins are quite good and, of course, with the orders that we have won and I think the opportunities that we are pursuing, we hope to continue to maintain the margin.

Thanks Roy, for a question I'll just Add that Investor Day is the 18th of March. It's about three weeks from now. I think then we can treat the subject of dividend which is driven by our growth more meaningfully and allocate more time and describe in more detail. So I seek your patience on that subject.

Yes.

I want to follow up for the understand you will not get the breakdown of the guided delivery. Just want to have a sense because year-on-year growth in terms of the guidance for the whole group is like maybe 12%, 13%. So just want to have a sense which segment of the tree are growing faster…

In terms of order book.

In terms of the order book delivery guidance for next year.

Okay. So we will not break down the delivery book delivery guidance by segment. I will just tell you that we can only share that it's $8.8 billion to be drawn down from the order book. But at the same time we also have in year revenue as you are aware. But maybe I can share this with you. In 2024, the higher order book was contributed by all three segments. All three segments had higher order book in 2024 at the year end of 2024 compared to year end 2023.

Okay, thank you.

Okay.

Hi morning everyone. Shekhar from RHP. Two more questions on margins, but this time for the other two segments. So I'll start with Commercial Aerospace. Second half 2024 EBIT margin was fairly strong. Is there a one off in that number? Second question is on the USS margin. Very solid set of numbers for Satcom fourth quarter turning EBIT positive. How should we look at the margin outlook for USS over the next year? Two more questions. One is on the associates. I noticed the DPS associate earning was fairly strong in the first half and then it tapered off. What led to that increase and then decline? And last question is on investing for growth. Vincent, you mentioned that ST Engineering is a growth plus yield company. You're not comfortable giving a yield guidance right now, but looking at CapEx. So where are you growing and what kind of CapEx outlook we should look at for the next two years?

I think at the Investor Day, we don't also break down by CapEx growth category, but we have been investing in the strategic areas. So if you go back to our growth plans, our strategy, which has remained steadfastly consistent since 2018, we talked about strengthening our base business, core businesses while pursuing new growth areas including international defence and smart city. So you will hear this theme going on because it has been a very good strategy for us. So on Investor Day conference we will share more details with you on how we intend to move on this front in each of our segments. So it will be a holistic overview for the next five years.

Just to understand you will be investing more so higher CapEx [indiscernible]?

So our run rate, I mean for replacement capital, CapEx and so forth, we are somewhere between $400 million to $500 million. But then this excludes M&A. If there are M&A opportunities we may spend more but run rate is between $400 million to $500 million of CapEx and that gives us capacity to pursue our base business growth. But then there are incremental CapEx requirements that are not baked in which will include M&A or if they are opportunistic aircraft purchase, which will later on be recycled in terms of the capital, we might also do. So supported by of course, a robust set of returns that we expect to get. And so far we have been achieving those return targets over the years. So I think you have two other questions on margins for Commercial Aerospace and second half whether there are any extraordinary items for CA and then for USS. What do we expect the margin outlook to be? And then we'll then move on to Ravi to talk about the SOC [ph] and JVs. Why is second half a little softer than first half? Okay, so maybe Jeff can start.

Okay. Your question was whether there were one-offs. We had a combination of product mix and stronger performance due to productivity improvements which we obviously will continue to work on. So there isn't a one-off happening. But we have a combination of multiple businesses that are working towards productivity improvements. Thank you.

It's a new run rate?

I won't say it's a new run rate, but there are always challenges in the market, but we aspire to achieve a better outcome.

As you can see Commercial Aerospace, our margins were really quite resilient even in the COVID years and we have already achieved mid-single-digit EBIT margin expectation for PTF and you know fundamentals continue to strengthen. For the first time we passed $400 million of EBIT for aerospace. So I think let our track record speak for itself and we'll hear more during the Investor Day.

Thank you.

So on the USS front, the Urban Solutions business as you would appreciate is no different from what Ravi was mentioning earlier. They are project milestone base and our revenue as well as profitability will track the milestones as we deliver to those projects. On the Satcom side, we feel good coming into 2025 with the fundamentals, which is why we called out Q4 being early signs of improvement that we see and you know the commitment that we made in terms of cost savings on the cash flow front continues to be front-end center for us and we are on track to deliver the $60 million to $70 million of cash flow cost savings as we had communicated earlier. So all of this will add to our EBIT profile as we work into 2025.

$70 million is already achieved?

$60 million to $70 million that we communicated is an annual savings that you will see. Obviously, as we get into impact of that for the bottom line, we had also made it clear that not everything is going to fall into the bottom line because of amortized engineering costs, et cetera. We said earlier that about 60% of that will help us.

So we have achieved that number for this year?

Yes.

Which of course helped, because we did have lower revenues. But the cost saving sites actually provides the mitigation. Okay, so maybe we can go to Ravi. It's a very simple, quick answer.

Thanks for the question. The contribution actually some experience for the Singapore Air Show. Every two years in the first half of the year there will normally be a contribution from them and that's where the variation comes from.

[Indiscernible].

Ravi also happens to be the Chairman of [indiscernible].

Okay, is there any question from online? Okay, come please. Jason.

Hi, good morning. Thanks for the opportunity to ask questions. Just three questions from me. So right now at this juncture, how are you assessing the potential impact of tariffs that were recently implemented or tariffs that have already been announced on your U.S.-based Commercial Aerospace operations and maybe discuss if you have any contingency in plans if the tariff conditions worsen. Second question is GE and Safran has guided for 15% to 20% increase in LEAP engine output for 2025. So should we be expecting the sale production to keep pace with their guidance this year? And third question is maybe just a quick update on where we are today with the New York congestion pricing project? I think Trump just came up and said, the March 21 deadline for the project to conclude. So have you seen any changes in your discussions with partners in other cities that were initially interested in implementing congestion pricing as well?

Okay. So there are three questions, tariffs and then -- tariffs in the U.S., the other one is output of aircraft from engines. I mean in the sales for based on what GE and Safran said. So I'll let Jeff answer that. And the third one on New York congestion pricing, the two questions, there are two sub questions there. One, what do we think is the immediate impact? And then the other one is, whether the other cities are still looking at it. Just keep in mind that the constellation or the global space for congestion pricing is not just limited to the United States. On potential tariffs, we are watching the space very closely. I think we've got to see what actually gets finally done because there's a lot of news coming out from there. So our competitors will also have the same considerations and situations. And for our Commercial Aerospace business, ours is a global network. So we have some degrees of freedom to balance our workload and portfolio of customer locations. We also have supply chain resilience and measures in place. So I think it's a bit too early to talk about the effects, but we're watching because right now there's a lot of news flow. But the actuals remain to be seen. Okay. But we are watching the space very closely. But I can ask maybe Jeff for Commercial Aerospace business to talk a little bit about that and then let him talk about the engines as well. Engines and nacelle prospects as well.

Okay. In terms of tariff policies, I think it's not yet clear what's going to happen, but we do have a complex and should I say, resilient supply chain of suppliers both within the U.S. and outside the U.S. right, and we source largely from suppliers in the U.S., which may also be affected by supply chain coming from outside the U.S. So it remains to be seen how this would be dealt with depending on the venture tariff policy. In terms of GE, Safran LEAP engine output, they have been outputting insufficient number of engines in past years. As a result, the spare engine market is insufficiently supplied. So what they will supply is a combination of both with the new aircraft deliveries as well as in the spare engine market. So we are happy to hear they are good forecasts. We continue to take guidance from Airbus in terms of the number of A320neo deliveries, which is our largest nacelle market. And obviously Airbus is going to aim for a good outcome. And we saw last year that eventually they actually came down on original forecast. So we are hopeful, and hopefully the engines can be supplied well and then all of us will also follow the drumbeat. Thank you.

Okay. And then we have the New York congestion pricing.

Yes. So on New York congestion pricing, obviously we are monitoring it closely. As you said, the news came out this morning, but we've been monitoring the situation as it unfold. The O&M arrangement with MTA is still ongoing and in the event that future circumstances might impact that, I just want to also iterate that this is immaterial at the group level in terms of revenue and also immaterial for us at the USS level. So less than 1% at the group level, and maybe less than 2% at the USS level. The second question around interest in congestion pricing. We, since the congestion pricing went live in January, we've received actually a lot of interest from Europe as well as from Southeast Asia, just inquiring about congestion pricing as a project and as a program.

Yes. So I think we've got to look longer term and beyond any specific market. We have good solutions and it is really part of a set of measures, a part of the measures that can address continued urbanization of the world population. So we'll stay tuned. So far we've been getting good inquiries and we'll see we still remain optimistic.

Any other questions? Anyone from the line? And then we'll come back to you, Paul, after we take a question from the online.

We'll now move on to participants online. May we have Lorraine from Morningstar, please? Okay, we'll move on to Louis from Citi. Louis, please unmute to talk, please.

Hi, good morning and congratulations on the results. I joined the call late, so apologies if these questions were in the presentation. Two questions. The first is, on your order win outlook for this year. Are you expecting similar as to last year or even better? We note, of course, that your disclosure of the order wins is now coming ahead of the results. So should that be a positive signal? And second question is housekeeping on the TransCore ASEAN contract. Appreciate you can't disclose the counterparty, but are you able to disclose whether it's the public or private sector contract?

I'm sorry, Louise. Southeast Asia, whether it's public sector or private sector. Okay. Let Lee Chew talk about it. At this time, we don't have liberty to go into a lot of details because contractually we are obliged to keep things confidential for now. Let's see whether during Investor Day we can say more, but not at this time. But the fact of the matter is, we've been awarded the contract and it is a synergistic win. I'll let Lee Chew elaborate. Now, order win, we do not give a forecast on order wins. Which is why, Louise, perhaps that was before you dial in. I did recap the fact that order wins comes there are fluctuations quarter-to-quarter. It is more important to look at our order win track record over the last few years. As Cedric showed you, our order book, which is a derivative of our new order win has almost double. In fact more than double compared to pre-COVID. If you exclude the U.S. Marine divested divestment. Our order book has doubled over the last few years. So it is more important, Louis, even as we see quarter-to-quarter, year-to-year fluctuations, look at the longer term trend and our track record of successfully competing for new contracts due to our competitive advantage, our value proposition and our project execution. So keep that in mind. Now then, you also asked this time we decided to announce new order wins a few weeks before our results briefing. For those of you who have been following us for some time, you would recall that that was what we used to do. And we think that it will give insights before the results briefing and we will continue to do so for you to get some indication of our order wins, which again is a contributor to order book. So it's not exactly a new practice, Louis. We used to do that and given that we only report full year, half year results, we thought that maybe sharing more with you ahead of the quarterly and half yearly calls may be helpful to you. Okay, so maybe I'll move to the second question to Lee Chew

Sure. Just a simple answer. It is a private entity that we've contracted with.

Thank you, Louis. Now, we'll move on to Karen from JPMorgan, Hong Kong.

Hello. Morning. Hi Vincent, how are you and all the management? Yes, good to reconnect again. I used to cover your company. Anyway, I'm back again. Quick question. It's a follow up question related to the NYC congestion charge. I heard that the impact on annual basis is not that significant, but is there any event that we might have to do the write-off? And in that case I think the impact might be quite substantial. I don't know whether we are able to give any color on that. And also related to margin, I don't know whether we can talk much about it, but is it possible to understand is there any margin differential between the EPC stage and also ON stage? And then that's the very first question. Sorry, I do have a follow up question regarding the contract part of -- the defence part of the business as well. Are you able to give a little bit more color with regard to our progress in terms of getting older from NATO standardization, which I think is important initiative last year. Thank you.

I'm sorry Karen. First of all, very nice to hear from you. The second question, the last part, were you referring to Satcom or what were you referring to?

The NATO. N-A-T-O. So I remember last year, we were trying to capitalize on the opportunity over there because right now for the defence power business, it's mainly home driven. And then last year, I recall that we actually managed to get ammunition related contract, which I think is a very important step forward. Just wondering, I know we probably can't talk too much, but maybe just give some color on that front.

I think Ravi will be very, very delighted to tell you the success stories that we had in 2024 in the international defence space. We have actually secured quite a few good wins and, of course, at the Investor Day, Ravi will give you a more comprehensive overview of our track record in the last few years and what we expect in the next few years. So we'll come back to Ravi very shortly. But to your first question for the congestion pricing contract in New York, we don't own the assets. We are basically the EPC contractor to help them build the solution and do the maintenance. So there is no impairment effects on us at all. And we said that if the O&M contract or the congestion pricing operation gets terminated, hopefully not, but if it does, then the impact on our revenue is very small. At the group level it's less than 1%. At the USS level is circa 2%. So it's not something that would be material impact on our group. Then as Lee Chew mentioned, there are also interests from outside of the U.S. to look at congestion pricing solutions. And so we still remain long term positive about the potential of congestion pricing solution. But maybe, Lee Chew, is there anything that you'd like to add?

No, I think you described it well. Maybe, I just answered the question around margins, whether there's any differentiation between EPC margin and O&M margin and unfortunately we're not at liberty to kind of disclose the split of the margins across these projects. So, yes…

All right. But anyway, thanks for your question, Karen. Really nice to hear from you today. I hope we have answered your question. So let's -- or maybe we second one to Ravi. Yes.

Karen, thank you very much for your question. We announced earlier that we sold 155 ammunition to Europe last year, 2024 last year. And I would see that overall our international defence business is doing well, better than in the past and things improving. Last year, in fact, we had a few wins that were the first. The 155 is one of them. First time we did it also managed to sell some electronic solution to Europe. We sold UAVs to country in Asia, and as we announced we're doing some work with Kazakhstan on the 8x8. So overall I would say, that we've done better than the year before and there are a lot more prospects which we are pursuing. We are positive about the opportunities moving forward.

Right, thank you. So Karen, I hope we've answered your questions. So maybe we can -- is Lorraine also lining up? No. Okay, so perhaps we can come back to Paul. So you had a question before we went to the online participants.

Thanks. And sorry to drag this just to zero in on your second half results. I noticed your other OpEx did come down. I just wondering. And part of it was impairment. Just wanted some housekeeping. What was the amount? And just to follow up on the CA question again, just on the second half again, your revenue grew 100 [ph], but your EBIT kind of grew 50 [ph]. So I know there's a bit of timing issues, but just seem a bit extreme at least on the second half numbers for your CA earnings.

Well, I'll let Jeff talk about the CA results in second half of 2024. But for the other OpEx, I mean, I think, let's recap this. Our overall OpEx trend is going in the right direction. It continues to be at lower level. In fact, 10.6% is the lowest we've gotten at least in the last 20 years that we've kept record. So it's as a result of our discipline in pursuing operational efficiencies, procurement savings, in fact, last year a total procurement savings and productivity improvements of more than $200 million that helped us mitigate the effects of inflation. So we're actually quite heartened by the continued progress that we have made. As I mentioned to you before, we have a team of dedicated people in the continuous improvement team. The whole team will go around -- the team members go around the company at every sector working with the business units to see how best to progress efficiency, capture productivity gains. And that team is under the oversight of Jeff. So we'll continue to make that. But to your specific question, maybe later on we can point us to the details and we'll share with you exactly what it is. But overall our OpEx is in a pretty good situation. Jeff?

Yes. Okay, just to add, the numbers are not exactly what you said, but in terms of product mix, obviously we did have some spare sales in the second half that were not so strong in the first half.

Hello. Thanks. Morning, [indiscernible]. Okay, just two quick questions, the first of which is could I get some color on how the group navigates negative forex impact from the U.S. dollar on revenue? And secondly, I think you mentioned earlier that you guys are going to optimize your hanger capacity. So could I just get some details on that in terms of keybacks timeline? Yes, thanks.

Okay. So the second question we'll direct to Jeff later on. We have been announcing our new hanger capacity. But I can tell you that we'll always be looking at optimizing our network. So you know, we have growth plans, but at the same time we're always constantly looking at how to optimize. So I'll let Jeff talk about it. And then maybe Cedric can talk about how in general we manage our forex exposures.

So the first aspect of the forex is just accounting translation. Right. So if we receive U.S. dollar revenue and US dollar strengthened we will have higher revenue in Sing dollar terms and vice versa. A 1% appreciation in U.S. dollar versus Sing dollar will result in something like $20 million odd increasing good revenue and vice versa. So it's not very significant. But beyond accounting on the economics aspects of it we have a very disciplined way of hedging our foreign exchange exposure or an economics basis. Ideally we would like the revenue in a certain currency other than Sing dollar, let's say, U.S. dollar revenue you negotiate with the customers or U.S. dollar revenue to match U.S. dollar cost. I think that's on a project basis that's a natural hedge, that's what we are seek to do or euro revenue part of a contract to match euro cost. That's the best way. Building which if we cannot achieve a natural hedge then we will try to buy forward that particular currency that we are short of. So for example we have years revenue, but euro cost we are short of euro so we buy euro forward in a wedge basis over three, four years. So in the near term it will be 100% hatched and then 80% to 100% and then in the next few periods it will be quarters or so it will be like 60%, 40% so it's a wedge basis. The reason why we do a wedge basis is to make sure that what we are trying to hedge or reduce the volatility of which is the exchange rate, it's not offset by forecasting error in a very long term, because if you go and hedge 10 years out hedge a volatility that is a VICS [ph] of a certain value actually the volatility of forecasting error is even higher and you'll be locked of a high volume, which you may not need. So there's economics and there's accounting. So accounting is about $20 million for 1% movement economics, which is more important to me is insignificant after we hatched the way we went about it. So it's sub $1 million type impact.

All right. Now Jeff, you can talk about Commercial Aerospace CapEx.

So we do have, as Vincent mentioned earlier, we do have capacity coming online that is under construction. So in fact in the next three years, meaning 2025, 2026, 2027 every year we have additional capacity coming online. At the same time we continue to look at network optimization to make sure that we have capacity in the right places, supporting the right customers. Additionally, our engine MRO is also adding capacity so that we can handle both LEAP engine MRO capacity and the CFM56 engine MRO capacity. So basically across all of our opportunities, growth markets, we are looking at growing capacity and capability. Thank you.

We will take our last question from Lorraine from Morningstar. Lorraine, please unmute your mic, please.

Yes, hi, morning. Just interested. Your working capital seems to have improved a fair bit this 2024. I'm curious whether that's part and parcel of what you've mentioned, improved productivity, but were there any sort of one-off sales or something like that which would have improved that situation as well?

Okay, Lorraine, is that your only question?

Yes, it is.

Okay, good. Yes, we do manage our working capital very closely. It is one of our internal stewardship items. We look at how to optimize networking capital and that's one of the reasons why, a key reason why we're able to reduce our working capital in 2024. We also sold some aircraft recycling our capital as we mentioned, and that also helped us in our working capital productivity as well. So it's not a one-off item, but it is a result of our constant -- consistent focus on making sure that our networking capital is optimized. Maybe Cedric can add a few points.

Yes. We have also centralized a credit control team, which enable them to use more analytical tools to look at trends, sometimes with AI credit risk. But I would say that all the segments have worked very well, especially Commercial Aerospace that has reduced receivables to quite a big extent. And we are always very focused on capital employed even when we evaluate new investments, we don't just look at P&L. If a particular project requires a lot of capital, we will scorn at it. Right. I think that's the approach that we have done for many years in a very disciplined way and speaking to yield results.

Okay, well, thanks for a question. So we don't have any more questions from online. And for those who join us here, we appreciate your attendance fiscally, for those who join us virtually, thank you for dialing in. We hope and we wish that all of you can join us at the Investor Day conference that we have organized. You should have gotten the invitation on the 18th of March where we can give you a more holistic description projection of our next five-year plan. All right. On that very positive note. Thank you very much.

Thank you.

Thank you.