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A very good afternoon, ladies and gentlemen. We welcome all of you including those viewing this conference over the web to the conference for Keppel Corporation's Fourth Quarter and Full Year Financial Results for 2017. First let me introduce members of our panel. Seated from your left to right are: Mr. Thomas Pang, Chief Executive Officer of Keppel Telecommunications & Transportation; Mr. Chris Ong, Chief Executive Officer of Keppel Offshore & Marine; Mr. Chan Hon Chew, Chief Financial Officer of Keppel Corporation; Mr. Loh Chin Hua, Chief Executive Officer of Keppel Corporation and concurrently Executive Chairman of Keppel Land; Dr. Ong Tiong Guan, Chief Executive Officer of Keppel Infrastructure; and Ms. Christina Tan, Chief Executive Officer of Keppel Capital. Our CEO Mr. Loh Chin Hua will first present the group's business review and outlook. Thereafter, our CFO Mr. Chan Hon Chew will present the group's financial results. This will be followed by a question-and-answer session on the company's performance chaired by Mr. Loh. Without further ado I would like to invite Mr. Loh Chin Hua to give his opening remarks. Mr. Loh, please.
Good evening and welcome to the conference and webcast on Keppel Corporation's results and performance for the fourth quarter and full year of 2017. 2017 was an eventful year. The global resolution reached by Keppel O&M over past misdeeds in Brazil brings an end to what has been a painful chapter for Keppel -- one that we have recognized and dealt firmly with. This is not Keppel. We care not just about results, but also how they are obtained. The board and management have thoroughly investigated the allegations and dealt with the issues that were uncovered. We have put in place enhanced compliance controls including comprehensive training and certification to prevent any repeat of such misdeeds. Our core value of integrity prohibits Keppel from engaging in any unethical practices or behavior. This is absolutely clear to me as CEO. We will not tolerate any behavior or actions from Keppelites that deviates from this fundamental principle. The board and management are determined to regain the trust that has been lost. We will win business legally and ethically based on our collective strengths of superior customer centric solutions and good track record of execution. With this chapter now behind us, we look forward to continuing on our growth trajectory and building a more disciplined and sustainable business, a Keppel that will remain trusted and admired by all our stakeholders. In the past year amidst the challenging environment, Keppel delivered on projects, entered new markets, seized new opportunities and established vehicles and engines for growth. These include the delivery of the world's first converted floating LNG vessel, commencement of construction of the iconic Keppel Marina East Desalination Plant, winning the bid for Hong Kong's first integrated waste management facility and the successful listing of the Keppel-KBS U.S. REIT on the Singapore exchange, just to name a few examples. For financial year 2017, the group achieved a net profit of $217 million after taking into account the one-off financial penalty of $570 million and $49 million of related legal, accounting and forensics costs. Excluding these one-off items the group would have achieved a net profit of $836 million, an increase of 7% over financial year 2016 underpinned by earnings growth in the property infrastructure and investments divisions. The group's Economic Value Added for the year was negative $834 million while our return on equity was 1.9%. Excluding the one-off financial penalty and related costs, our ROE would have been 7%. Free cash flow for 2017 was $1.8 billion more than 3x the $540 million for 2016. Net gearing was 0.46x at the end of 2017, lower than the 0.56x at the end of 2016 or 0.50x at the end of September 2017. As we had announced earlier, the company will ring-fence the one-off financial penalty and related costs when considering the dividend pay-out for the year. Taking into account the group's improved performance, excluding Keppel O&M's one-off financial penalty and related costs, our stronger cash flow position and the lower gearing, the board of directors will be proposing a final dividend of $0.14 per share, compared to the final dividend of $0.12 declared for 2016. We think this is a fiscally prudent proposal. Together with the interim cash dividend of $0.08 per share distributed last August, we'll be paying out a total cash dividend of $0.22 per share to shareholders for Financial Year 2017 compared to $0.20 per share for the whole of 2016. During the year, recurring income continued to be a stable contributor to the group. Recurring income amounted to $319 million, down $20 million from $339 million in 2016. This was mainly due to lower contributions from property investment and hospitality businesses, partly offset by higher contributions from our infrastructure and asset management businesses. I shall now take you through the developments in our business divisions. There's growing optimism in the O&M industry, following the recovery of oil prices on the back of extended supply cuts by OPEC and other oil producers. The increase in offshore rig transactions has also helped to improve the outlook. However, the rig market continues to be plagued by a supply overhang, and both utilization and day rates remain low. Whilst FIDs have doubled in 2017 compared to 2016, and are expected to gather momentum as oil companies restart their oil exploration and exploitation programs, it may be some time yet before they translate to orders for new drilling units. However, we continue to see opportunities in the demand for production assets, LNG solutions and specialized vessels. Notwithstanding the current challenges, we remain confident about the long-term potential of the O&M business. Energy demand remains strong, driven by global economic growth. The increasing efficiency by operators has also lowered the cost of E&P, while continued rig attrition will contribute to the eventual restoration of supply and demand equilibrium for the rig market. In financial year 2017, Keppel O&M sustained a loss of $835 million compared to a net profit of $29 million a year ago. This was mainly due to the one-off impact of the financial penalty and related costs, an additional $81 million provision for losses made on the Sete Brasil projects and $54 million in impairment on other assets. Keppel O&M secured new contracts worth about $1.2 billion from new and repeat customers, including 2 LNG dual-fuel container ships from Pasha Hawaii, FPSO jobs from SBM Offshore, Prosafe and Petrobras, as well as 3 dredgers from Jan De Nul. As at 31st December 2017, Keppel O&M's order book stood at $3.9 billion, excluding the contracts from Sete Brasil, compared with $3.7 billion at the end of 2016. Keppel O&M kept its focus on execution and 10 major projects were delivered in 2017. Earlier this month, Keppel FELS also delivered the first jackup of 2018 to Borr Drilling. Meanwhile, we have reached agreement with our customer Golar LNG to extend the notice to proceed for the Gandria and Gimi FLNG vessel conversions to mid and end 2018 respectively. Golar LNG has announced that FID for Gandria is expected in 2018, and they have provided funds to kick start some early work in the conversion of Gandria. Other key developments in Keppel O&M are as shown in the slide. In the year ahead, our yards will continue to focus on executing both new and existing contracts. About half of the order book to be delivered this year are non-drilling projects. We will continue to expand our offerings and capabilities, and explore new markets. 2017 marked another strong year for our Property Division, which has remained the largest contributor to the group's bottom line. The division recorded a net profit of $685 million for financial year 2017, up 10% from $620 million a year ago. We are transforming Keppel Land to be a multi-dimensional real estate player, with a strong focus on returns. For 2017, Keppel Land made a net profit of about $701 million, 25% higher than the net profit of $559 million in 2016. ROE for Keppel Land was 8.2%, while its gearing was 0.25x in 2017. Over the past 5 years, Keppel Land achieved an average ROE of 9.4%. In 2017, Keppel Land announced 5 divestments totaling more than $1 billion, including the sale of the Zhongshan residential cum marina development in China and the Tanah Lot site in West Bali, Indonesia in the fourth quarter. The divestment of the Zhongshan development is currently pending a decision by the Court of Appeal on a petition submitted by Sunsea Yacht Club Hong Kong Company. During the year, we recognized total divestment gains of $212 million in 2017. Just to be clear these divestment gains does not include the gains from the potential sale of Zhongshan, which was not completed at the end of last year. Keppel Land also seized opportunities to replenish its property portfolio and invest strategically across the region. We made investments amounting to about $1.6 billion, including the acquisition of residential sites in Wuxi, Ho Chi Minh City and Bangkok in the fourth quarter. Keppel Land continued to achieve strong home sales in 2017, transacting more than 5,480 units at a total sales value of about $2.8 billion. Of these, some 3,725 homes were sold in China, 1,110 homes in Vietnam, 380 in Singapore and 270 in Indonesia. Due to tightening measures in China and the timing of our launches in Vietnam, overall sales volume was marginally lower compared to the same period last year. We expect to recognize profits from some 7,740 overseas homes that had been sold for about $2.4 billion as they come into completion from 2018 through to 2020. In the current environment where land prices in key markets are high, a landbank with an estimated 10-year supply places Keppel Land in an enviable position. We're under no pressure to accumulate land, and can even choose to monetize part of this sizeable landbank in response to good opportunities. In 2017, Keppel Land divested 3 projects, equivalent to about 4,330 homes sold en bloc, which is significantly higher than the 630 homes so divested en bloc in 2016. In line with our goal to make Keppel Land a real estate market -- a real estate company with one of the highest returns in Asia, we will continue working our assets hard to unleash the full potential of our property portfolio. We are fortunate to have entered some markets early, particularly in China and Vietnam, where we have secured land at low cost. Today, about 70% of Keppel Land's total residential landbank has been with the company for over 7 years. In 2017, we replenished our pipeline with another 5,710 homes in our key markets, bringing Keppel Land's total supply of homes to about 63,000 units. We currently have about 1,200 homes in our Singapore landbank. We are also studying the redevelopment of Keppel Towers and Nassim Woods, which can potentially add another 500 homes in prime locations to our Singapore portfolio. On the commercial front, Keppel Land has about 1.5 million square meters of gross floor area, either completed or under development. When fully stabilized, this portfolio can generate an annual net operating income of about $300 million. Our Infrastructure Division has delivered a net profit of $132 million for financial year 2017, up 33% year-on-year. Keppel Infrastructure continued to perform well, with a net profit of $109 million and ROE of 14.9%. KI's net profit grew by 45% from 2016. Earnings from energy, environment and infrastructure services increased to $100 million in 2017 compared to $66 million in 2016. The strong profit was achieved through better performance from the energy infrastructure business as well as growing contributions from the operations and maintenance of infrastructure assets. Several milestones marked the year for our Infrastructure Division. Keppel Seghers and Zhen Hua secured a $5.3 billion contract to design, build and operate Hong Kong's first Integrated Waste Management Facility. Our share of the total contract is approximately $1.95 billion for the EPC and O&M phases. Construction of the Keppel Marina East Desalination Plant is progressing well with over 30% completed. In Qatar, the final handover of the Doha North Sewage Treatment Works was carried out in the fourth quarter. During the year, Keppel Seghers secured 2 new contracts to provide technology solutions to WTE plants in Beijing and Hunan, further reinforcing its position as a leading provider of WTE solutions in China. Meanwhile, Keppel Data Centres has partnered with the Singapore Internet Exchange in support of Singapore's Smart Nation push. In an MOU signed between the 2 parties, Singapore Internet Exchange has set up its point of presence within Keppel DC Singapore 1 in Northeast Singapore. Tapping on the growing demand for e-commerce, Keppel Logistics now offers more value to customers with a comprehensive suite of omnichannel logistics and channel management solutions through the newly launched UrbanFox. Keppel T&T contributed $42 million to the group's net profit in 2017, 14% higher than its contribution of $37 million in 2016. Keppel Infrastructure, as a developer, owner and operator of quality infrastructure assets, has contributed steadily to the group's bottom line. Over the years, we have built up a comprehensive range of operating expertise in power, WTE, district cooling and heating as well as water and wastewater facilities. In 2017, Keppel Infrastructure earned a total revenue of about $160 million from the operations and maintenance of infrastructure assets across Singapore and Qatar. When the Keppel Marina East Desalination Plant and Hong Kong's Integrated Waste Management Facility are completed in 2020 and 2024 respectively, they will augment recurring income from operations and maintenance, extending visibility into 2039. The Investments Division turned in a net profit of $235 million for financial year 2017, underscored by stronger contributions from Keppel Capital, and our investment in the Sino-Singapore Tianjin Eco-City. The Eco-City, which marks its 10th anniversary this year, is on track with its growth plans, and will continue to be a long-term contributor to Keppel as it matures. For 2017, our investment in SSTEC, the master developer of the Tianjin Eco-City, contributed $120 million to the group's net profit, a significant increase from $34 million in 2016. During the year, the REITs and trusts managed by Keppel Capital continue to deliver positive total returns to unit holders and made several strategic acquisitions that augmented their sustainable income streams. The latest addition to the stable of managed vehicles, Keppel-KBS U.S. REIT was successfully listed on the Singapore Exchange raising about USD 553 million. Keppel REIT and Keppel DC REIT made 3 acquisitions totaling about $670 million. Meanwhile, Alpha Investment Partners registered strong fund raising efforts through its private funds. The Alpha DC fund closed at USD 1 billion, double the initial target size while the Alpha Asia Macro Trends Fund III raised over USD 560 million. Collectively, the private funds under Alpha invested in over USD 910 million worth of real estate and data center assets during the year, and also captured value through the divestment of 11 assets worth over USD [ 880 ] million. With an integrated asset management platform, Keppel Capital is delivering stronger performance. Total asset management fees of $134 million earned in 2017 were higher than $128 million the year before. The REITs and trusts contributed to about 60% of total asset management fees for the current period, while about 40% came from private funds. Keppel Capital recorded a net profit of $83 million for 2017 helped by performance fees and mark-to-market gains from securities held for sale. This was 30% higher than the $64 million of net profit contributed by Keppel Capital in the previous year. Keppel Capital has been actively pursuing both organic and inorganic growth opportunities to increase recurring asset management income for the group. On a fully leveraged and invested basis, Keppel Capital's asset under management grew to $29 billion as at end 2017 from $25 billion in the preceding year. We will continue to grow our AUM to the target of $50 billion by 2022, boosting the group's funding capabilities and expanding our funding base. Last October, we announced the creation of Keppel Urban Solutions as a strategic move to harness Keppel Group's strengths and diverse solutions to pursue sustainable and smart urban development opportunities in the region. Since then, we have incorporated a company and appointed its management team led by Cindy Lim as managing director. The development plans of KUS pilot project, the Saigon Sports City located in District 2 of Ho Chi Minh City are progressing on schedule. A team of international consultants have been assembled to work on the design and development plans for the sports oriented integrated hub which offers a variety of lifestyle and recreational activities. The 64-hectare development will comprise a total of 4,300 premium homes designed with emphasis on sustainability, connectivity, community and technology. The first phase will feature some 90,000 square meters GFA of commercial space and about 1,220 homes of which 620 units are slated for launch in the second half of this year. Apart from Saigon Sports City, KUS is also actively evaluating and pursuing other sustainable smart urban development prospects in the region. The global economy is experiencing a broad based upturn, and we are excited about the many opportunities presented by strong urbanization trends across the businesses that we're in, whether it's a demand for offshore production assets or LNG solutions to meet growing energy needs, attractive urban environments and reliable infrastructure to support sustainable communities or efficient data centers and logistics solutions to buttress the digital economy and growing e-commerce. Demand for homes and offices in our key markets remain robust, underpinned by strong growth prospects. Today, Keppel is not just a group of diverse companies who share a common name, but an ecosystem of companies working closely together as one Keppel to provide compelling solutions for sustainable urbanization. We recently updated our mission to depict our shared goal. Guided by our operating principles and core values, we would deliver our solutions for sustainable urbanization profitably, safely and responsibly. The refreshed mission reflects more closely the group's current focus and better prepares and positions us to compete internationally as we stride confidently into the future. Thank you. I will now hand over to our CFO, Hon Chew.
Thank you, Chin Hua, and a very good evening to all. I shall now take you through the performance of the group. The group recorded a net loss of $495 million in the fourth quarter against a net profit of $143 million in the same quarter last year. This is $638 million worse than last year. The results of the fourth quarter and full year 2017 included the one-off financial penalty arising from Keppel Offshore & Marine's global resolution with criminal authorities in the United States, Brazil and Singapore and related legal, accounting and forensics costs amounting to $619 million. As a result, earnings per share was at negative $0.273, while EVA was at negative $895 million. Given the size of the impact of global resolution and its one-off nature, the analysis of the fourth quarter results in the following slides is normalized to exclude the global resolution penalty and related costs. This is done to allow a more meaningful analysis of the underlying performance of the group. On this basis, the group's fourth quarter net profit at $124 million was $19 million or 13% lower year-on-year. Earnings per share was $0.068 while EVA was at negative $276 million. Next, the summary group profit and loss statement. The group's revenue for the fourth quarter of 2017 was 20% or $395 million lower than the same quarter in 2016. All divisions except the infrastructure division registered lower revenues during the quarter. Operating profit increased 29% or $28 million to $126 million. Higher profits from investments, property and infrastructure divisions were partially offset by higher operating loss at Offshore & Marine division. However, profit before tax increased by 1%, a lower margin than the improvement in operating profit due mainly to lower share of profits from associated companies. The share of profits from associated companies in the same quarter last year benefited from higher contribution from the Sino-Singapore Tianjin Eco-City. Despite a higher pretax profit, net profit after tax and noncontrolling interests at $124 million was 13% or $19 million lower due mainly to high effective tax rate this year, as a result of higher proportion of profits from operations in countries with higher tax rate and losses from companies in Keppel Offshore & Marine. In the next slide, we take a closer look at the group's revenue by division. In the fourth quarter of 2017, the group earned total revenues of $1.5 billion, 20% lower than the same period in 2016. This was driven largely by the 39% decrease in Offshore & Marine's revenue as a result of lower volume of work. Revenues from the property division decreased by 26% primarily due to lower revenues from China trading projects and The Glades, which were partly offset by higher revenues from the Reflections at Keppel Bay. Infrastructure Division's revenue grew 15% driven by increased sales in the power and gas business and progressive revenue recognition from the Keppel Marina East Desalination Plant project. The Investment Division saw a slight decrease in revenue due mainly to timing difference in certain performance fees earned by Keppel Capital which were recognized in 3Q this year compared to 4Q last year. Moving on to the group pretax profit, excluding the one-off financial penalty and related costs, the group recorded a pretax profit of $208 million comparable to the $206 million recorded in the same quarter in 2016. The Offshore & Marine Division's pretax loss was $253 million as compared to $142 million loss in the same quarter of 2016. This was due mainly to lower operating results and share of associated companies' losses partially offset by lower impairment provisions and lower net interest expense. Pretax profit for the Property Division increased by 24% to $366 million lifted mainly by higher fair value gains on investment properties, which were partially offset by the absence of write-back of impairment for hospitality assets compared to write-backs in respect of Sedona Yangon and Mandalay last year. Infrastructure Division reported a 75% increase in pretax profit due mainly to higher profit from the power and gas business and recognition of fair value gains on investment during the quarter. Pretax profit from investment division was $22 million higher as a result of the absence of provision for impairment on investments in 2017 partly offset by lower contribution from the Sino-Singapore Tianjin Eco-city. After tax and noncontrolling interests the group's net profit for the quarter decreased by 13% or $19 million to $124 million. Next, I shall take you through the performance for the financial year of 2017. The group recorded a net profit of $217 million for the financial year 2017. This was 72% lower as compared to the previous year. As noted earlier, the results for 2017 was affected by the impact of the global resolution with criminal authorities in United States, Brazil and Singapore. The resultant earnings per share decreased by the same extent to $0.119, this translates to an ROE of 1.9% and EVA was also lower at negative $834 million. Similar to the fourth quarter, the analysis for the financial year of 2017 in the following slides is normalized to exclude the one-off financial penalty from the global resolution and related costs to allow a more meaningful analysis of the underlying performance of the group. On this basis the group net profit was 7% higher at $836 million as compared to 2016. As a result, earnings per share increased by the same extent to $0.46, this translates to a higher ROE of 7% while EVA was lower at a negative $215 million. Free cash flow for the year was an inflow of $1.8 billion compared to an inflow of $540 million in the prior year, due mainly to lower working capital requirements from the Offshore & Marine and Property divisions. Consequently, net gearing decreased from 56% at the end of 2016 to 46% this year. We are pleased to propose a final dividend of $0.14 per share for this year. Together with the interim cash dividend of $0.08 total cash dividend for 2017 will amount to $0.22 per share. Next, the summary group profit and loss statement. During the year, the group earned a total revenue of $6 billion, a decrease of 12% or $803 million from 2016. Lower revenues from Offshore & Marine and Property divisions were partially offset by higher revenues from Infrastructure and Investment divisions. Operating profit at $776 million was 2% or $19 million lower than last year. All divisions reported higher operating profits except for Offshore & Marine Division which turned in a full year operating loss. Despite lower operating profits, profit before tax of 8% or [ $80 ] million higher than in 2016 due mainly to lower interest expense and higher share of profits from associated companies. The higher profits from associated companies was contributed largely by the Sino-Singapore Tianjin Eco-city from the sale of 3 land parcels in 2017. After tax and noncontrolling interests, net profit was 7% higher at $836 million translating to earnings per share of $0.46. In the next slide, we take a closer look at the group's revenue by division. Overall, the group's revenue of $6 billion were 12% lower as compared to 2016. This was driven largely by the 37% decrease in Offshore & Marine revenues as a result of lower volume of work and deferment of some projects. Property revenues dropped by 12% due mainly to lower revenues from China trading projects and The Glades. The infrastructure division saw a 27% growth in revenue led by increase in sales in the power and gas business and progressive revenue recognition from the Keppel Marina East Desalination Plant project. Revenue from the Investments Division was 29% higher resulting from sales of equity investments as well as performance and acquisition fees earned by Keppel Capital. Moving on to the group pretax profit. The group recorded a pretax profit of $1.1 billion for 2017, which was 8% higher than in the preceding year. The Offshore & Marine Division's pretax loss was $243 million as compared to a pretax profit of $90 million in 2016. As revenues continued to fall by another 37% this year, Offshore & Marine Division incurred a full year operating loss in 2017. In addition, share of associated companies' profits was also lower. These were partially offset by lower impairment provisions and lower net interest expense. Provisions, mainly for impairment of fixed assets, stocks and work in progress, investments and an associated company, and restructuring costs amounted to $135 million in 2017. This is lower than the $277 million impairment provisions recorded in 2016. The division's operating margin for the year was a negative 3.3% compared to a positive 14.4% in 2016. Pretax profit from the property division rose 14% driven mainly by higher fair value gains on investment properties and gains from en-bloc sales of development projects in China and Indonesia. This was partly offset by lower contribution from associated companies primarily resulting from the absence of gains from the divestment of stakes in Life Hub @ Jinqiao and 77 King Street last year as well as the absence of write-back of impairment for hospitality assets in 2016. The Infrastructure Division saw an increase of 36% in pretax profit due to higher operating results, progressive recognition of Keppel Marina East Desalination Plant project, fair value gains on investment and gains from divestment of GE Keppel Energy Services Private Limited. The Investments Division's pretax profit was $260 million higher, led mainly by higher share of profit of associated companies including the Sino-Singapore Tianjin Eco-city and K1 Ventures write-back of provisions for impairment of investments and profit on the sale of equity investments. These were partially offset by fair value loss on KrisEnergy warrants and share of loss in KrisEnergy. After tax and noncontrolling interests, the group earnings increased by 7% or $52 million with the Property Division being the top contributor at 82% followed by Investments at 28% and Infrastructure at 16% while the Offshore & Marine Division contributed negative 26% to the group's net profit. The group's net profit for the financial year 2017 was $836 million, which translated to earnings per share of $0.46. ROE increased to 7% in 2017 from 6.9% in 2016. Our proposed final dividend to our shareholders for 2017 will be $0.14 per share including the interim dividend paid, the total distribution for '17 will be $0.22 per share. In 2017, cash flow from operations was $463 million as compared to $1.2 billion in 2016. After accounting for working capital changes, interest and tax, net cash inflow and operating activities was $1.3 billion as compared to $294 million in 2016. This is due mainly to lower working capital requirements in the Offshore & Marine and Property divisions. Net cash generated from investing activities amounted to $425 million comprising dividend income from associated companies and divestment proceeds of $655 million, less investments, operational capital expenditure and advances to associated companies of $230 million. As a result, there was an overall cash inflow of $1.8 billion for 2017, $1.3 billion higher than in 2016. With that, we have come to the end of the results presentation, and I shall hand it back to our CEO Chin Hua for Q&A. Thank you.
Thank you, Hon Chew. Again, a very warm welcome to all the participants to this result review today at KLI where we can -- we have a very large turnout today including a number of our friends from the local and foreign media. Some of you may have specific questions concerning the global resolution, I just wanted to say that when we announced the global resolution end of last year, we also provided a fairly comprehensive fact sheet. The company in its agreement with the different authorities on the global resolution, we also are under quite specific restrictions in terms of any public statements that we make. So to that extent we can't say much more than what is already in the public announcement and in the fact sheet, nor can we comment on the statement of facts released by the authorities or to comment on identities of individual officers. So this is a result briefing, and I would like to think that we are here to try to answer questions on the result. So to the extent that the questions relating to the global resolution has an impact on our financial results we'll be more than happy to address them. So with that I open the floor, we will take questions from the floor, we also take questions from the net. So maybe I start off with any questions from the floor. Yes, Cheryl?
I'm Cheryl from UBS. I have 4 questions. The first one is with regards to the global resolution. The number in the accounts on Page number 24 of the SGX releases of $619 million is different from the original amount [ missing dollars of $570 million ], could you just help us understand what the differences are? My second question is about Offshore & Marine where in the fourth quarter the operating loss is $215 million although the quarter-on-quarter revenue is comparable, and so even if I take into account the one-off charges, it's still a loss. Could you help us also understand what's the cause of the $80 million loss in the fourth quarter? My third question is just to clarify whether your group gearing of 46% already reflects the financial penalty that you'll have to pay, and the fourth question is about your property portfolio, and it refers to Slide number 14 where in the comparable slide from the previous quarter, you said that the annual income on a stabilized basis would be $75 million, and in this quarter it says net operating income on a stabilized basis of $300 million. So could you just help us define the different metric used, and what accounts for the, I suppose, increase in number?
Thanks, Cheryl. I'll ask CFO Hon Chew to answer the first 3 questions.
Okay, Cheryl, thanks for the question. The first -- on the $619 million, that comprises 2 component, a fine of $570 million which you have just mentioned and the remaining $49 million is in respect of accounting, forensic and legal costs related to the global resolution. As for O&M, I think your question is comparing fourth quarter to third quarter. The difference is for the fourth quarter there were lower contribution from associated companies. A couple of the associated companies also made some [ provisions ] so the share of profit was also lower. As for the gearing, yes the answer is it includes the P&L impact of the global resolution. In other words the $619 million you clearly see in the P&L in the SGX net, so that has already been factored into the 46% gearing. But do take note that we have yet to pay the fine as of December. The fine would be paid in the first half of 2018 87.5% of the fine will be paid in 2018, and the remaining 12.5% will be paid 3 years later in 2020. So assuming all the fines are paid as of December 2017 the gearing will have been 51% so the impact is another 5% points.
Okay, thank you. I think on the fourth question Cheryl if you don't mind, I will ask my [ GCC ]team to get in touch with you and run through the differences between the assumptions for the 2 slides. Okay, I have a question. Sorry, yes miss?
Mayuko from Nikkei. Firstly, when is going to be the payment of the $422 million, the charge? And can I understand that this is going to be the last time that we see in terms of the payment or is there a possibility that depending on the investigation going on with individuals there may be possibility that you may have to have some more payment on that? Another thing is about Offshore & Marine business, you have $81 million loss from [ Sete ] and $54 million of impairment from other assets, can you please give us more details on that? [ Sete ] you had put up the provisions some years back, so are we going to see more losses in the future, why is it coming out, and can you give us the market outlook a little bit more whether this is -- you are seeing this year something coming in as a revenue?
Okay, thank you for your questions. The USD 422 million U.S. in financial penalties or about SGD 570 million, about 25% of that has already been paid in January. We expect to pay another 12.5% sometime in March and 50% in probably May, and then the balance will be paid probably at the end of the third year, towards the end of the third year. We certainly -- this is global settlement with 3 criminal authorities. So this should be the final as far as these penalties are concerned. On [ Sete ] I think we made a provision in 2016, and I think we have said in numerous results briefing since that every quarter we will check on the adequacy of the provision and this quarter we did a update on the scenarios and we came up with a necessity for us to take further provision of $81 million. We believe this provision is enough but of course we will have to continuously study the situation, it's quite fluid at the moment. On your question on the outlook maybe I'll ask Chris -- maybe you can -- I suppose your question is relating to the offshore industry in general or the offshore industry in Brazil, maybe both okay.
I think for the outlook for the Offshore & Marine business, we are having a diversification drive which we updated all during the previous results. As you can see this year's delivery 50% of the delivery is non-drilling products that itself is [ taking ] -- bearing fruit, and we'll continue to work on our gas strategy, our LNG products. If all of what we are targeting comes in, we are hopeful that 2018 will be a more fruitful year than '17.
Yes, I think you also had a question on the provisions of $135 million, the $81 million I think CEO has already explained this in respect of the [ Sete ] rigs, and there's a remaining $54 million -- includes a number of items, but the large items are actually pertaining to provisions at associate level for impairment that's one of the biggest item, and also impairment in respect of investment in the associate. And lastly also losses arising from closure of one of the yards.
Maybe now I'll turn to the, one of the first questions from the web. This question is from Joshua Lee of Deutsche Bank, Singapore. He has 3 questions. First question. Good evening, would management consider a periodic revaluation of Keppel Land Tianjin JV Land. Second question what are the examples of enhanced compliance controls? And third question what sort of strategies will UrbanFox undertake to gain market share in Singapore. I think on the first question, if the Keppel Land's landbank is deemed -- or is the land in Tianjin is land that's held for sale, is part of our inventory, then we will not -- we will always keep it at book cost. So we will not revalue that. So that will not change. I suppose over a period of time you can get a sense from the sales of land as [ SSTEC ]continues to develop Tianjin Eco-City. So you can get a sense of what the valuation of the land in Tianjin Eco-City is. On the second question can I invite CFO to give some examples.
Thanks, Chin Hua. I'll just give you some specific examples starting with enhanced code of conduct containing very detailed anticorruption provisions and also guidance on dealing with intermediaries. Also includes establishment of a group wide compliance and governance framework. We also have established an independent group wide compliance function with clear reporting lines to the respective board risk communities and also addition of experienced compliance personnel. We have also introduced extensive risk based due diligence of third parties who represent Keppel in business dealings. Of course very important is training program we have rigorous and regular training program to enhance the compliance culture across the group including very comprehensive annual compliance related e-learning and attestations exercise. Other examples are a new supplier code of conduct with very specific and deep bribery provisions. We have also updated our group whistleblower policy, we've centralized procedures and also a new whistleblower committee. Last but not least also a group policy on agent fees to strengthen procedures and requirements when hiring agents. These are some of the specific item.
Thank you. Thomas can I invite you to take the third question on UrbanFox?
Thank you, Chin Hua. Thank you, Joshua for the question. UrbanFox provides end-to-end e-commerce solutions. The services range from omnichannel management on e-commerce, warehousing and inventory control as well as last mile fulfillment services. So it is differentiated from a lot of the logistics company out there. And to go to market UrbanFox work closely with parent company Keppel Logistics to approach existing customers so there existing strong relationship with potential customers already.
We have second question on web, is posted by [ Angela Teng ] of MediaCorp, Singapore. She wishes to ask Keppel about the recent bribery scandal for Keppel Offshore & Marine and the questions are any customers stop relationship with the company or is the company still receiving orders from existing customers, any strategies from the company to maintain working relationship with its customer post bribery situation? We have been engaging with all our customers, I think so far we found that some of them have asked certain questions to get a better understanding of our enhanced compliance framework and we are working with our customers on that. But by and large we have not seen any of our customers stop working with us. Of course, the company will have to continue to work very hard to demonstrate that we have very strict compliance regime, and that we will only engage in ethical and legal activities. So this is something that we'll have to work very hard on, but that has not stopped customers from working with us. Yes?
I've got 2 quick questions.
Can you please give us your name please?
Yes, I'm Saurav Chaturvedi from Wall Street Journal. Just 2 very quick questions. Is it the first ever quarterly loss for Keppel? And second would be how important is Brazilian operations in terms of its contribution to overall revenue or overseas revenue, what percentage comes from the Brazilian operations?
CFO, you have...
Okay, the first question is...
Whether it's the first quarterly loss?
Whether it's the first quarterly loss for Keppel Corp as a group, the answer is no. I think we -- just hang on -- it's the first for the group, yes.
First ever for the group?
Yes.
And if I can just add before 2003 it was annual results, I believe you have had losses in the past right? Before 2003 you [ are the boss ] Keppel would have recorded losses in its -- times of 1980 when it got listed?
Yes, I think the key here is that this $619 million that we have to take for the fourth quarter is a very significant amount. And therefore and is a one-off so it has led to this loss, I'm not sure where your question is going, but I think we should focus on now and going forward. As explained by our colleague since 2003 when quarterly reporting was put in place this would have been the first loss. But as I said the key is that this is one-off, and it's a very significant amount, it's $619 million.
What's the second one?
Can you please repeat your second question?
What is the contribution of Brazilian operations to the overseas revenue and the overall group revenue, and I'm talking about Offshore?
Maybe you just explain the financial first and then Chris can talk about just the non-financial.
We don't actually disclose that by country in terms of the revenue contribution.
How important is Brazil to KOM.
I think the operation in Brazil remains an important part of our new customer, new market new customer operation. And I think right now besides the [ Sete ] projects our team are still working hard to deliver projects like P-69 and we just delivered last year P-66, which is ahead of schedule. And what we are trying to basically enhance our presence is by our on-time on-budget operation to our customer. So if I answer your question correctly that is a very important part, still remain relevant to our global presence in terms of operation for Offshore, yes.
I think this is also perhaps important point to make that the global resolution will also allow the company to draw a line and we can continue to work in all these markets including Brazil and the U.S. and as Chris said Brazil remains a very important offshore market. And we intend to be engaged in the Brazilian market. Yes there's a question I can't see who it is, can you just...
This is Gerald from Crédit Suisse. I've got 3 questions, the first one is on Offshore & Marine, just wanted to follow up on the additional $80 million of provisions. What has really changed over the last 12 months to lead you to take this additional provision, especially since there were no provisions taken back in 2016. Second question is property for the [ revoking of $118 million ] for overseas properties which market did you change [ your cap rate ] assumption and what is the key change that was made? Third question also relating to property when you acquired Keppel Land, you mentioned that the [ true cycle ] ROE for the property division can be 12%, given the ROE of 8% in 2017 and 9% over the last 5 years, do you think that if 12% [ true cycle ]ROE is still achievable?
I think I'll try to answer the first question and then Hon Chew you see whether you can add to it.
Okay.
I answered earlier to the question from Nikkei, the [ Sete ] situation is very fluid, so every quarter we will go through the scenarios to make sure that the provisions that we had provided for is adequate and the key change, I suppose, this quarter or the fourth quarter of last year is that as we discussed on the restructuring with [ Alvarez who is working with Sete Brasil ] doing the restructuring, we have come to a certain conclusion on where the scenario might likely go and that has resulted in a shift in the way that we look at the outcomes and this has resulted in the provision. Of course there are also some -- we will look at the assumptions that are used as well in terms of the day rates, in terms of exchange rates et cetera. So all these are factored in and we will review this every quarter. On the property you mentioned [ $118 ] million mostly from the -- I think on the overseas properties the revaluation. The bulk of it would be pertaining to development that has reached a certain stage and we would then factor in revaluation above the original costs. So some of this land was purchased some time ago and as the land value has gone up this would be reflected in the increase in the value of the investment. This is for investment properties just to be clear, not for land that is part of our landbank for development for sale. Third question on 12% ROE, you're right. Good that you remind all of us, I always constantly reminded my colleagues at Keppel Land. That is still something that we're targeting for 12%. We believe through the cycle it is possible. Our net gearing, you will notice our net gearing for 2017 is actually not very high it's only above -- for Keppel Land I mean, is only about 25%. So we will be looking to see how we can turn our assets a bit faster, and if appropriate we might also look at the gearing at Keppel Land. So we believe that with a bit of tweaks, we should be able to hit the 12% true cycle ROE that will be the target. I think Siew Khee you have a question, you raised your hands.
I've got a few questions. On O&M you mentioned that -- I know that there were some provisions impairment on associate level but at the EBIT level excluding the associate level also losses this quarter. Is that mainly because of cost incurred to close certain yards -- oh I'm sorry in past provision for [ doubtful debts and rig rate ] that's why there's a loss in O&M this quarter?
Yes, exactly and also because the topline has also come down by another 39% this year.
Okay. So how much was the cost that you incurred for yard closure?
The yard closure is part of the $54 million, so it's roughly about $10 million.
Okay. And the $26 million provision for doubtful debt that is not related to Sete?
No, that's not related to Sete.
What is it related to?
It's related to O&M division, a number of customers, but I don't think it's appropriate for us to mention which are the customers.
Is it related to other undelivered rigs?
No, it's not related to the undelivered rigs.
Okay. Can you maybe just comment on the potential plans to sell the undelivered rigs to Borr?
I'll ask Chris you want to take that.
Well, on the Borr engagement, we have made SGX announcement, we are in discussion, but there's no terms and conditions confirmed yet and the discussion will continue and when there is a material contract in view, we will make the appropriate announcement.
Okay, so Chin Hua, just now you mentioned that you haven't seen any customers that have stopped working with you, but do you think with this event it might actually put you at a slightly disadvantaged position when you tender for jobs?
I don't believe so, I think as I said in my opening remarks Keppel O&M has a lot of strengths, in terms of our solutions, in terms of our on-time and safe delivery. We can rely on these strengths to win contracts legally and ethically. And I believe that many of our customers appreciate us for these strengths. So as I think Chris mentioned we are still very engaged in Brazil, we're working with SBM and we're working Petrobras, we're working with different parties in Brazil. So of course, it is really up to us to continue to stay as a very disciplined company make sure that we do things right and do the right things and I think if we can do that and we can continue to focus on our strengths in execution and in solutions I think we'll be fine.
Okay, thanks. Chris just now you mentioned that this year would be fruitful, I actually missed that actually I wanted to understand on potential for any drilling rig, new [ bill order ] at all?
We don't give forecasts, but I think...
Whether you have any inquiries, I know the [ oversupply ] situation is well documented but just from the ground, do people actually look at...
Sure, maybe Chris you can give a very broad outlook for the market.
Yes, I think as mentioned in CEO's speech there is a uptick in terms of sentiment for the market purely from the economics and also the oil price. Nonetheless as mentioned, we are always quite vocal about -- we think that rates and utilization will have to recover before we see a meaningful uptick in the new construction for drilling rigs and that's the reason why through the few quarterly reviews we have always mentioned that we are looking at diversification, we are looking at our LNG strategy and we are engaging our customers to make sure that we have different verticals and different products to service all our customers.
Thank you, I'll take. Sorry, you're not finished, you have one more question?
No, 2 questions, okay.
Oh, 2 more questions, okay.
The Investment Division, there's a loss in share of associates in 4Q? Why? They're just purely KrisEnergy.
Okay, maybe you ask the fourth -- your last question.
There's no land sale in Tianjin for -- any hope that -- or have you seen any sale in January or if you just...
The land sale program in Tianjin Eco-City on quarter-by-quarter basis is very lumpy, because we sell -- we don't sell every quarter, but I think overall the cost of the years ahead, we expect that it will provide a very steady contribution to the group. So to answer your question, we would expect to see some, in fact you would be part of the business plan, we expect to see land sales in the first half and the second half of this year.
On the associate for fourth quarter, yes, there's a loss from Associate and Investment division. KrisEnergy is -- was the main contributor. I think I want to go back to earlier question on Brazil. I don't know whether I got the question correct. You're asking revenue or profit? If it's revenue it's actually in the segment report, Brazil revenue is about 7% of the group revenue and [ Sete is about 2% ] of the group asset, but we don't disclose profit, we only disclose revenue.
I'll take a question from the web. This is a question from [ Tan Hui Hui ] of SBH, Singapore. Your published SGX statement reflects $26.5 million provision for doubtful debts. Can you provide more color to what's the nature of this doubtful debt? I think this has been addressed by our CFO 5 minutes ago. Also where does Keppel O&M stand today with respect to impairments for the undelivered jackup rigs? So far, we have not made any impairments. The jackup rigs or the so called undelivered jackup rigs, they go through the same process every quarter as we do for Sete. We will evaluate to see whether the -- whether there's a need to make provisions. And as it stands today, we do not believe that there's a need for us to make provisions for the jackup rigs.
[ Zhiwei ] from UOB. I have 2 questions. One related to Property and another related to Infrastructure. On the first question, I think for Property, you've seen quite a bit of developments in China. First part is where China is actually talking about a policy shift towards a more rental model. And then there's also a lot of activity in the first month -- first few weeks of this year where I think Chinese land developers saw a lot of sales. So I was just curious what Keppel has basically -- what strategies Keppel has done to basically adapt to this shift in landscape, as well as to capitalize on this higher property sales during the first few weeks of this month? The second part is on infrastructure. And I think in your previous quarters, you talked about how you want to make infrastructure a key earnings driver. It's done well this quarter. We can see that -- we can see it -- in this year we've seen a growth, but wondering just what else should we expect going forward? I suppose data center is one of them, but it's been a bit quiet on that front. I think your Alpha DC Fund is something to look out for, but wondering when we could get an update here?
Sure. I think on the Property side, China is one of our key markets and we certainly are very actively involved. As we have seen in 2017, we have sold over 3,000 units in China. And we know we will continue to look for opportunities to turn our landbank there faster. We have also taken opportunities in 2017 to sell some of our projects en bloc when the opportunity there is better than for us to hold and sell. And you can see that we have also replenished land as in when, I think late December, we bidded for and successfully for a site in Wuxi. During the year, Keppel Land has also entered into the Shanghai office market to acquire an office building in Shanghai. We -- and this is also part of our multidimensional approach to property, so we don't just buy land to develop. Sometimes when it makes sense, we can sell the project en bloc. Sometimes when it makes sense, we can also buy an existing investment and add value through asset management, as we have done very successfully with Jinqiao shopping mall a couple of years ago. So I think the market in China, you will go through quite a lot of ups and downs. There will be a lot of policy risk that we have to be watchful for. But at the end, I think it's a market that we are quite well entrenched. We've been in China for Keppel Land for more than 20 years. We've developed capabilities and the network in those area and ability to execute well. And most importantly, we have also built up quite a significant landbank, so that possess an advantage that we don't have to -- we can be more selective when we purchase land. And more recently as I said, we have also started to look at not just buying land but also buying finished assets when it makes sense. Now for infrastructure, I think TG's group has had a very busy 2017. Not only has KI delivered in terms of higher net profits, significantly higher than the year before. TG's group KI has also been very active in securing projects. This is the Keppel Marina East Desalination Plant, as well as more recently the Hong Kong Integrated Waste Management Facility. So we would expect that over time, this new projects will also contribute to KI. We are also -- I think we announced, I think early part of last year on the gasifier project.
Yes.
Yes. So of course, there's a bit longer term because it will take us a bit more time to get to FID. But again this project would also be a significant contributor to the group. Anything else you want to add, TG, No?
No.
Thomas, you want to talk about the data center?
Data center market continue to be growing at a very fast pace due to the demand from the [ cloud ] service provider. And we are not just seeing the interest from American [ cloud ] service providers, but also increasingly from the Chinese giants as well. So the Keppel data center with the support from the Alpha Data Center Fund, we will be able to capture the opportunities that are coming into the Tier 1 cities around Europe and Asia, and the team is targeting new development as well as brownfield development in all these Tier 1 cities.
Okay, there's one question at the back of the room.
Aradhana from Reuters News. Firstly, one clarification I wanted to check is did you start reporting quarterly results from 2003 or was it 2001?
2003, my colleagues tell me.
And the second thing as a company that's gone through this now, do you think it's time now for Singapore to sort of strengthen these anticorruption laws that have been around for a long time?
Well, your question is very broad. I think all I can say for Keppel is that I think as I made in my opening remarks, we have a very strong core value of integrity. So what integrity means is that we have to do business legally and ethically. So for Keppel, it is very clear to us that as I said earlier, we have the capabilities and the solutions that will allow us to win business legitimately within the laws, within the rules and also ethically. And that will be something that we will pursue. Okay, I'll take a question from the web. This is from Joshua Lee of Deutsche Bank. He has 2 questions, which I will ask Chris to answer. The first question is, "Why is Keppel in talks with Borr Drilling to sell the 6 jackups?" Second question is, "With reference to Slide 48, these 6 jackups in question are, predominantly are slated to be delivered in 2018?" There's a question mark. Chris.
Okay, I think I will try to answer the 2 questions at one go. Why Keppel is in talks with Borr Drilling, this is the secondary jackup sale market, Borr has their own strategy to basically look for premium jackups to build up their fleet. And not to forget they are also a customer in the yard. We have 5 more weighted contracts on [ transaction ] to them. So we are in daily working relationship with Borr. But I must say that the jackups -- [ with each of the jackups ], the term and conditions are not firm. So we are not confirming that they are 6. We are just in talks on the opportunities that we want to take a look. So the next question on whether all of them are slated to be delivered in 2018, as mentioned, we are looking at opportunities where they will want to increase their fleet with premium built jackups with good construction and performance track record. So we have not landed on which are the jackups that they're looking at. In fact most or all of the jackups in the yard are still with valid contract with the current customers. So we cannot comment more than that.
Thank you. If no questions I'll take the next question on the web. This is from [ Derrick Heng ] of Maybank, Singapore. "Now that the global resolution is settled, will the construction of the balance order book from Sete commence again soon? We -- with global resolution he means that as I said earlier we draw a line underneath this, we are able to operate in Brazil with this resolution, but whether this signals -- or this would lead to the Sete rigs commencing, construction commencing again, will depend on other matters including the restructuring of Sete. And this would also of course, depend on their negotiations with Petrobras. Okay, if...
Hi.
Yes, there is a question?
A question here.
Oh sorry, I missed you.
My name is [ Christie ] from CNBC. There are some reports of a potential merger between Keppel O&M and Sembcorp marine, are you able to comment on that, and where is your threshold, at least where Keppel O&M is concerned?
I think this question comes up every once in a while. The way I've looked at it and have addressed it is that, if you look at KOM, we have undertaken quite a significant rightsizing exercise starting from 2015. At the peak we had about 36,000 direct employees. Today we are down to about 16,000 so it's quite significant reduction and our footprint has also been made more efficient. So we believe that this is the right size for us in light of the market outlook, and we do not see at this point in time any upside in terms of having capacity, but that of course is at our evaluation at this present time. So in other words, if there's no value in adding capacity a merger or any merger not necessarily with Sembcorp -- so I'm not commenting directly -- but any merger or any acquisition for that matter may not make sense for us at this point in time. Yes, there is a question here.
Hi there, it's Conrad from Macquarie. Just a quick question on the property volumes which are down in 2017 over 2016 and the ongoing reason for that is measures in -– especially in China and Vietnam. I'm just wondering could you just give us a bit more color on the outlook for 2018 both in terms of volume and the overall health of the Chinese and Vietnamese property markets from your perspective, maybe specifically in the areas where your projects are also located? And then is there any risk that if these measures continue that some of the completion dates for some of these projects which also trigger profit recognition get pushed out?
Okay. First of all I'll answer your second question first. The measures may not have direct impact on the completion date particularly. If a project is already sold, I think we would be -- or substantially sold, we would be very motivated to get it completed on time, there wouldn't be any -- recognition of cooling measures to affect that pace of construction. As far as the market is concerned I think Vietnam still remains very constructive, we see very good demand, not just for our projects but also for other developers' projects. The fact that our sales streak in Vietnam for 2017 is slightly lower compared to 2016 is more to do with the timing of the launches that we had rather than a reflection of the market demand there. As far as China is concerned we are in China for the long-term we have quite significant projects in number of cities like Tianjin, Shanghai, Wuxi et cetera, and we'll continue to develop this, but if you look at the market, the cooling measures are still very much in place but the [ demand side ] is actually still quite constructive we see. Some developers are holding back on their sales because they may not be able to achieve the targeted sales price that they have in mind, in the sense of not because the market couldn't support it, but they may not be able to get the pre sales permit from the authorities. So there would be a bit holding back to try and get a better pricing. So when you see the sales in China being a bit lower I am talking about as a market, it is not because -- at least at this point, it's not because the demand is weak it's just that supply -- on the supply side, some of the developers are holding back on their launches.
I have a question here. Sorry, [ Katie ] from CNBC.
Yes.
You mentioned -- at the beginning of your speech you said this is not Keppel, can you elaborate on your message to shareholders about this [ Q4 net loss ]?
Sorry, comment on what?
Can you elaborate on your message to shareholders about this loss about this fine?
About this fine is it? Okay. I think it's very clear we are -- as I said earlier Keppel has a set of core values and integrity is very much center in that core value and that core value does not allow us to act unethically or illegally. So I think we do want to encourage all our "Keppelites," as we call ourselves, to continue to take legitimate business risk for which we hope we will get suitable return for taking those risks. But there are some bright lines that we should not cross, and it's very clear to me, to the Board, to the management, and to the team here that we cannot engage in anything that's illegal or unethical. So that's why I say it's not Keppel. Yes?
May I find out if any of the current board members or senior management members are under the investigation? This is just to find out if there is any uncertainty in terms of the risk, uncertainty in terms of the management in the coming year?
No, the management team -- I think the investigation that we [ embarked on ] was very thorough when these allegations came up in 2015, and this is led by external councils. And you can also, I suppose, see from the fact that the costs of the other costs associated with this, which last year was about $48 million -- that's how you add up to the $619 million, that there was a lot of legal fees as well as forensics that was employed. So it was a very thorough investigation. We've reached resolutions with the 3 criminal authorities, and we're only able to do that if it has been thorough. And I think this is really about looking -- drawing a line and looking forward. So the management team is -- that you see here those affected persons as you can read from the statement of facts have already been separated from the group.
Hi this is [indiscernible]. To follow up on that question and your reply, it -- you mentioned that you were very thorough in the way you have investigated the incident, so on the past report said that internal inquiry started in 2015, but the management stance kind of changed in October 2016. So when exactly did you pour resources into the forensic reporting and investigations?
I think we're getting a bit too far into this so I will not answer that question, but I think -- as I said this is an ongoing process, and so this is something that the group is -- has done, has taken its responsibility very seriously. And we had made the announcement in 2016 October when we found a suspicious transaction. So we promptly acted on that. So I think we've done our part, and as a very responsible organization. If there are no further questions, thank you all for coming.
Ladies and gentlemen, we have come to the end of our conference. Thank you for joining us today, please enjoy the refreshments outside. Thank you.