Welcome to the conference for Keppel Corporation's second half and full year financial results for 2021. We have on the panel this evening from your left are Mr. Manjot Singh Mann, CEO of M1. Ms. Cindy Lim, CEO of Keppel Infrastructure. Mr. Chris Ong, CEO of Keppel Offshore & Marine. Our CFO, Mr. Chan Hon Chew, is unable to join us today as he is not feeling well. He is represented by Ms. Tok Soo Hwa, General Manager, Group Control & Accounts of Keppel Corporation. Next to Ms. Tok is Mr. Loh Chin Hua, CEO of Keppel Corporation. Ms. Christina Tan, CEO of Keppel Capital. Mr. Louis Lim, CEO of Keppel Land, and Mr. Thomas Pang, CEO of Keppel Telecommunications & Transportation. We will now invite our CEO, Mr. Loh Chin Hua, to address us. Mr. Loh, please.
Good evening. Thank you for joining us today. As we'll be celebrating the Lunar New Year next week, let me begin by wishing everyone a happy and healthy Year of the Tiger. 2021 saw the global economy gradually recover from the depths of the COVID-19 crisis, supported by the largest and fastest vaccine rollout in history. The IMF has projected global economic growth to be 5.9% for 2021 and 4.4% for 2022. However, as the emergence of the highly transmissible Omicron variant last November clearly demonstrated, the coronavirus has not been defeated and continues to cause disruption and hardship around the world. Beyond COVID-19, geopolitical tensions and supply chain disruptions and inflation have added further uncertainty to the operating environment.
Against this volatile backdrop, Keppel continue to accelerate the execution of Vision 2030, making significant progress across our different goals, asset monetization, business transformation, driving integration, and improving earnings. We also deepen our commitment to sustainability in terms of both how we run our business and making sustainability our business by providing solutions that contribute to sustainable development and combating climate change. As part of our efforts to be more disciplined and refocus our portfolio, last year we announced the proposed combination of Keppel O&M and Sembcorp Marine, as well as the proposed divestment of our logistics business. On the former, I'm pleased to share that discussions on the proposed combination are progressing steadily. Both sides are undertaking detailed diligence, and rightly so, as it is a highly complex transaction.
We believe that we can arrive at a mutually beneficial proposition, and we're working towards signing definitive agreements by the end of the first quarter 2022. As for the logistics business, we have received bids and are working on definitive agreements for the divestment of our logistics business in Southeast Asia and Australia, including UrbanFox. We aim to reach a conclusion also by the end of first quarter 2022. Our proposed acquisition of the SPH portfolio received overwhelming support from Keppel's shareholders at our EGM last December, and I'm grateful to shareholders for their support and confidence. We are now pending the scheme meeting to be called by SPH, where the Keppel scheme will be voted on by SPH's shareholders. On Keppel's part, we have put our best foot forward, and we will respect the outcome of the process.
Apart from the SPH portfolio, we are also exploring several other exciting M&A opportunities as we continue to grow Keppel's business in line with Vision 2030. Beyond business transformation at the portfolio level, we have also been driving innovation and transformation at each of our key business units. We're increasingly pivoting towards an asset-light business model and tapping third-party funds for growth. Supported by the macro trends of urbanization, digitalization, and growing international concerns about climate change, Keppel is well-placed to seize opportunities in renewables, clean energy, decarbonization, urban renewal, and connectivity, all of which are included in our Vision 2030 plans. For financial year 2021, the group achieved a net profit of SGD 1.02 billion, a sharp reversal from the loss of SGD 506 million in financial year 2020.
This is the highest net profit the group has made in the past six years, and the first time we have crossed SGD 1 billion in net profit since 2015 at the start of the downturn of the O&M sector. Correspondingly, return on equity improved to 9.1% for financial year 2021. Reflecting the success of our asset monetization program, as well as the enlarged equity base, net gearing fell to 0.68 as at end December 2021, compared to 0.91 a year ago. Free cash inflow was SGD 1.75 billion, a marked improvement over the outflow of SGD 72 million in financial year 2020. Taking into account the strong performance of the group, and to reward shareholders for their confidence in the company, the board of directors will be proposing a final dividend of SGD 0.21 per share.
Together with the interim cash dividend of SGD 0.12 per share, we'll be paying out a total cash dividend of SGD 0.33 per share to shareholders for the whole of 2021, which is more than triple the total dividend in 2020. This translates into a gross dividend yield of 6.4% on the company's last transacted share price of SGD 5.12, as at December 31st, 2021. We have also just announced this evening our SGD 500 million share buyback program. The program allows us to purchase Keppel's shares when they may be undervalued due to market conditions. Shares repurchased under the share buyback program will be held as treasury shares, which will be used, in part, for the annual vesting of employee share plans and also as possible currency for future M&A activities.
As we embark on acquisitions, especially of founders platforms, using Keppel's shares as an acquisition currency would help to align the interests of these founders with Keppel's interests. One of our Vision 2030 ambitions is to grow the group's recurring income. For financial year 2021, recurring income grew 33% year-on-year to SGD 292 million, with contributions from our REITs and trusts making up the largest share of recurring income, followed by infrastructure services and then asset management. Our improved earnings, strong cash flow, and proposed final dividend are underpinned by the success of our asset monetization program. Since the start of the program in October 2020, we have announced SGD 2.9 billion of asset monetization and received about SGD 2.7 billion of these in cash.
We announced in 2020 that we plan to achieve SGD 3 billion-SGD 5 billion of asset monetization over three years. Given the good progress attained, we are confident of exceeding our SGD 5 billion target by end 2023. These monetization efforts are not one-off. Asset monetization will be a consistent feature of Keppel's business model going forward, and an integral part of our ecosystem for value creation. We will not stop when we reach the 2023, SGD 5 billion target. Asset monetization, along with pivoting our portfolio to higher returning and recurring income businesses as part of Vision 2030, will see us reach our target ROE of 15% per annum.
While the O&M sector remains challenging and continues to be affected by labor and supply chain disruptions, Keppel O&M perform resiliently, seizing opportunities in the energy transition and staying laser-focused on execution, with nine major projects delivered during the year. Last January, we announced as part of the organic transformation of Keppel O&M that we expected the OpCo to be financially independent and profitable over time. I'm pleased to announce that the OpCo achieved a net profit of SGD 66 million for financial year 2021, supported by a strong order book and aggressive cost management efforts. Keppel O&M secured SGD 3.5 billion of new orders in financial year 2021. Its net order book stood at SGD 5.1 billion as at end 2021, of which 39% comprised renewables and gas solutions.
The quality of the net order book has also improved with over 90% of the contracts providing for milestone payments, thereby reducing working capital requirements and risk for the group. For financial year 2021, Keppel O&M achieved a reduction of about SGD 140 million in overheads year-on-year, higher than the projected SGD 90 million announced earlier. Since 2015, Keppel O&M has managed to shave cumulatively SGD 570 million from its overhead costs, positioning us to achieve profitability with a lower top line. With rising oil prices, the offshore drilling rig market has shown signs of improvement. Utilization and day rates for modern jackups, which make up the bulk of Keppel O&M's legacy rigs, both improved during the year and are projected to rise even further over the next few years.
With improving market conditions, we are hopeful that Keppel O&M's legacy rigs, which, based on the MoU with Kyanite, will be injected into a separate AssetCo that is majority-owned by external investors, can be substantially monetized over the next three to five years. The net zero commitments made by governments and companies around the world will create massive demand for renewables, clean energy, decarbonization, and environmental solutions. These are areas where Keppel has strong capabilities and a proven track record, and where we can make a difference. Many of the group's new business pursuits and R&D efforts in the past year were in these areas, including exploring the import of renewable energy to Singapore, developing electric vehicle charging infrastructure, securing Singapore's first energy-as-a-service contract, and studying the feasibility of developing an Asia-Pacific green ammonia supply chain.
Consistent with our business model of collaborating both within the group and with third-party investors, we have announced the acquisition of a majority stake in a leading solar energy platform by Keppel Corporation, together with Kive and a co-investor of Kive. Including this transaction, we have announced renewables projects with a total capacity of 1.1 GW. As we progress towards our target of 7 GW of renewable energy assets, we will not only pursue greenfield developments, but we'll also explore opportunities to acquire stakes in established renewable energy platforms together with co-investors in order to accelerate our growth in renewables. During the year, Keppel Land made significant progress towards becoming an asset-light urban space solutions provider. It completed the monetization of eight projects in financial year 2021, with total proceeds of about SGD 1.9 billion and net gains of SGD 450 million.
Home sales improved significantly year-on-year, with 4,870 homes sold, a 46% increase from 3,340 in 2020. The total sales value was SGD 4 billion, up 60% from SGD 2.5 billion in financial year 2020. All key markets saw improved sales year-on-year, with home sales in China growing 32% to 2,780 units, and home sales in Vietnam almost doubling to 1,090 units. In China, we continued to see healthy demand for our projects, even though market sentiments have been affected by debt issues faced by certain Chinese developers and a slowdown in the Chinese economy. In December 2021, Upview, Keppel Land China's joint venture project in Shanghai, launched 287 units, and all units were sold within a day.
We have also seen improved sentiments in Vietnam. Keppel Land Vietnam launched 693 homes at Celesta Heights in Ho Chi Minh City in December, and all units were sold out within two weeks. These examples demonstrate that despite COVID-19 and other challenges, there continues to be strong demand for well-located, high-quality projects in high-growth cities. At the same time, Keppel Land is growing its recurring income with the opening and reopening of malls in Tianjin and Singapore respectively, and is also seizing opportunities in sustainable urban renewal and senior living. Demand for connectivity solutions grew considerably during the pandemic, driving demand for Keppel's connectivity business. M1's postpaid customer base grew 6% year-on-year to SGD 1.7 million, the second-largest postpaid customer base in Singapore.
It continues to roll out its 5G standalone network, which achieved 50% outdoor coverage in Singapore as at end 2021. M1 is also growing its enterprise business and has embarked on regional expansion with its acquisition of Glocomp Systems, a digital solutions provider in Malaysia. We are also expanding our data center portfolio and exploring ways to reduce its carbon footprint of data centers, including through exploring the development of supply infrastructure to bring liquefied hydrogen into Singapore to power Keppel's data centers. We also plan to commence the development of our innovative, energy-efficient floating data center in Singapore in 2022, subject to regulatory approval. Another key highlight of 2021 was the launch of the Bifrost Cable System, whose manufacturing commenced in December 2021.
We have seen strong demand for our fiber pairs and are confident that most of our fiber pairs would be committed before the cable system is completed in 2024. The segment which pulls together the rest of the group and serves as a powerful catalyst to realize synergies and create value is asset management. Keppel Capital's asset under management grew 14% year-on-year to SGD 42 billion and is on track to reach our SGD 50 billion target by end 2022. Asset management fees grow steadily, growing 29% year-on-year, further boosting the group's recurring income. During the year, Keppel Capital raised total equity of about SGD 3.5 billion and completed around SGD 5.5 billion in acquisitions and divestments. Amidst international concerns about inflation, there's strong demand from investors for the real assets that we manage, which can serve as effective inflation hedges.
The harnessing and integration of technology have long been Keppel's fortes. Over the past few years, we have stepped up our investment in startups and venture capital funds to help us gain early access to intellectual property and technology, as well as build new or adjacent capabilities in areas aligned to Keppel's Vision 2030 plans. We've invested in venture capital funds such as those managed by Fifth Wall, Wavemaker Partners and Vertex, and also made direct investments in companies such as Envision AESC, Cove, Smartworks and Zero Waste Asia. In 2021, our innovation investments yielded attractive gains that contributed significantly to our bottom line.
In particular, the value of Keppel's investment in Envision AESC, a leading EV battery business, grew to $244 million from the investment of $50 million in 2019, yielding fair value gains of SGD 277 million in financial year 2021. Our investment in iGlobe Partners Platinum Fund I, which we made some years ago, also yielded dividends of SGD 56 million in financial year 2021. We will continue to invest selectively in startups and venture capital funds to sharpen Keppel's technological edge. We have also made good progress in other Vision 2030 targets, such as strengthening governance, driving innovation, enhancing employee engagement, and contributing to the community. We achieved our zero fatality target in 2021 and saw improvements across our total recordable injury, accident frequency, and accident severity rates.
Reflecting our commitment to sustainability, we've announced our target to halve the group's Scope 1 and Scope 2 carbon emissions by 2030 from 2020 levels and achieve net zero by 2050. Since 2020, we have committed to support the recommendations of the Task Force on Climate-Related Financial Disclosures. Sustainability will increasingly be a central part of Keppel's purpose and corporate identity, as well as a source of business opportunities and an important way in which we will differentiate ourselves and make a positive impact on the world. To sum up, 2021 not only marked a sharp turnaround in the group's financial performance, but also strong progress in our Vision 2030 journey. We are on track to achieve most of the Vision 2030 targets by 2025.
With a marked improvement in our net profit and strong progress in asset monetization, we are able to reward shareholders with higher dividends. We are sharpening our focus and accelerating our transformation to be one integrated business providing solutions for sustainable urbanization. As we go forward, I see sustainability being asset light and harnessing technology as key attributes and enablers which will define the Keppel of tomorrow. I'm confident that guided by Vision 2030, we will emerge stronger, more relevant, and on a faster growth path than before. I will now ask our General Manager of Group Control and Accounts, Soo Hwa, to take you through the group's financial performance. Over to you.
Thank you, CEO. A very good evening to all. I shall now take you through the group's financial performance. For the full year, the group achieved net profit of SGD 1.02 billion, reversing the net loss of SGD 506 million in 2020. Consequently, ROE improved from -4.6%- + 9.1%. All segments registered improved year-on-year performance. Urban Development continues to be the biggest contributor to the group's bottom line, earning SGD 763 million in profits for the year. Connectivity also had a strong year with an almost five-fold increase in net profit. As the financial twin to our other segments, the Asset Management business remains a major contributor, accounting for close to 30% of the group's profits.
In 2021, the group recorded strong returns from our investments in startups and venture capital funds, which are reported under Corporate and Others. Although Energy and Environment reported a net loss, the loss was significantly lower than the prior years and was largely attributable to impairment provision for KrisEnergy exposures. I will further elaborate on the performance of each segment later on. Beyond the strong growth in profitability, the group has a very healthy balance sheet. Net gearing decreased from 0.91 x a year ago to 0.68 x at the end of 2021 on the back of reduced net debt as well as higher equity base. The decline in net debt was mainly driven by cash proceeds from asset monetization completed during the year, partly offset by working capital requirements and dividend payments.
Strong earnings growth and issuance of perpetual securities during the year led to higher capital employed. Free cash inflow of SGD 1.75 billion was an improvement over the free cash outflow of SGD 72 million in 2020. This was mainly due to proceeds from en bloc sales of certain China and Vietnam property trading projects, completion of the divestment of Keppel Bay Tower, as well as the disposal of M1's network assets, all of which are part of our asset monetization program. In addition, higher dividend income, as well as lower investments in capital expenditure, partly offset by higher working capital requirements, further contributed to the improvement in free cash flow. As part of Vision 2030, we remain focused on improving earnings quality with multiple income streams.
In addition to the increase in recurring income, as highlighted by CEO earlier, most of our other income streams also perform better year on year. Recurring income increased 33% to SGD 292 million in 2021, underpinned by higher contributions from stakes in our REITs and trusts and our asset management business, as well as lower share of losses from Offshore & Marine associates. Earnings from development for sale were much higher year on year on the back of several en bloc sales from the urban development segment during the year. With the gradual recovery of the global economy from the COVID-19 crisis, the group also recorded higher revaluation gains from investment properties and data centers, as well as fair value gains on investments as compared to losses in the previous year.
Impairments in 2021 of SGD 514 million were much lower than in 2020, which had seen significant impairments largely from the Offshore and Marine business. Moving on to the performance by segment. Energy and Environment net loss for the full year was SGD 414 million as compared to net loss of SGD 1.18 billion in 2020. Excluding SGD 318 million impairments related to KrisEnergy, the segment's net loss for 2021 was SGD 96 million, a marked improvement from the prior year's net loss of SGD 1.14 billion. Net loss from the Offshore and Marine business was SGD 77 million, and it was substantially lower than SGD 1.19 billion net loss in the preceding year.
This was mainly due to the larger reimpairments recognized in 2020, while 2021 benefited from the share of Floatel's restructuring gain. Excluding RIDs in both years, net loss from Offshore and Marine decreased from SGD 301 million - SGD 181 million. The better results, despite much lower government relief measures related to the COVID-19 pandemic, was largely due to the focus on overheads reduction, as well as lower share of losses from associated companies. The contribution from our infrastructure business was resilient despite volatile global energy prices, as well as COVID-19's impact on ongoing operations and projects due to our strong execution and risk management. The 2021 results included SGD 23 million of closure costs on interest rate swaps following the refinancing plan for an asset.
For urban development, net profit grew 74% year-on-year to SGD 763 million, underpinned by en bloc sales and higher contributions from both China and Vietnam trading projects. This was partly offset by impairment provision for a hotel in Myanmar and lower fair value gains on investment properties. En bloc sales unlocked gains of SGD 337 million in 2021, arising from the disposal of interest in the Dong Nai project in Vietnam, Serenity Villas project in Chengdu, and China Chic project in Nanjing, as well as the divestment of a partial interest in Tianjin Fugui Real Estate Development Company Limited.
Profit contribution from Sino-Singapore Tianjin Eco-City was lower year on year, mainly due to lower profits from the sale of one commercial and residential land plot in 2021, as compared to two residential land plots in the prior year. The connectivity segment achieved a significantly higher net profit of SGD 64 million for the full year 2021. The improved performance from our data center business was supported by gains from the disposals of a data center in Frankfurt and our stake in Cloud Engine (Beijing) Network Technology. Earnings from our data center business are reflected not just in this segment, but include about SGD 87 million in earnings from Keppel's data center REIT and data center private funds, which are reported under the asset management segment. Despite lower service revenue, M1's profit contribution remains strong through cost and overheads management.
Excluding COVID-19 related government grants in both years, M1's net profit would have been SGD 7 million higher year-on-year. Logistics net profit of SGD 26 million was a reversal from the prior year's net loss of SGD 22 million. This was led by lower operating loss, as well as gains from the divestment of interest in Wuhu Sanshan Port Company Limited and Keppel Logistics Wushan, following agreement reached with the local authorities on the compensation for the closure of Lanshi Port. Asset management achieved higher net profit of SGD 301 million in 2021, despite the absence of the gain from the reclassification of Keppel Infrastructure Trust from an associated company to an investment in 2020. Excluding the reclassification gain, net profit was SGD 152 million higher year-on-year.
Stronger performance was underpinned by higher fee income arising from successful acquisitions and divestments by the recent trust and private funds, and from additional fund commitments secured during the year. The segment also registered fair value gains on investment properties and data centers held by Keppel REIT, Keppel DC REIT, and our data center private funds during the year, as opposed to fair value losses in 2020. In addition, mark-to-market gains from investments were recognized during the year compared to mark-to-market losses in the preceding year. Corporate and others recorded a net profit of SGD 309 million for the full year 2021, a reversal from the net loss of SGD 56 million in the previous year. As shared by CEO earlier, our investments in new technology and start-ups have yielded good returns.
Besides fair value gains of SGD 303 million, the segment also recorded higher distribution income, notably from iGlobe Partners Platinum Fund I. To round up, the group has delivered strong financial performance for 2021, with all segments performing better year-on-year, evidenced by the sharp improvement in ROE, healthy net gearing, and positive free cash flow. Guided by Vision 2030, the group is committed to improving earnings quality, maintaining financial discipline, and building a sustainable future. With that, we have come to the end of the presentation, and I shall hand the time back to CEO for the Q&A section. Thank you.
Thank you, Soo Hua. So we are moving on to the Q&A section. Please submit your questions. Okay, I think some of the questions are coming in. First question is from Ho Pei Hua of DBS. Congrats on the fantastic results. On China property market, how should we think about market dynamics and outlook ahead? Is the industry reshaping a bane or boon for Keppel? What is Keppel's near to mid-term strategy in terms of resource allocation, land bank strategy, project launches there? Maybe I'll ask Louis, if you would mind.
Thank you. Thank you very much for the question. Undoubtedly, the general sentiment in China is a little bit more cautious now, following the Evergrande debt crisis. What we're seeing are, you know, basically, the banks have started to tighten mortgages initially. Since then, however, the government has responded. They've actually loosened some of these regulations. They've also flooded the market with another $188 billion with the reserve ratio cut. They have also reduced the bank lending rate by 50 basis points. Right? All of this has. Well, the government has tried to prevent a hard landing, and I think that's being seen in the market now. We continue, I think, as described before, to see strong sales.
Our project that was fully sold out in China. And in the second half of 2021, we sold about 1000 units and, what well, the second half we sold - excuse me, let me just recall my numbers here - the first, sorry. The first half of 2021, we sold about 1,230 units. That decreased to 1,050 units in the second half. However, this was still stronger performance than in 2020. I think going forward, we actually see this as an opportunity for Keppel. A number of the local developers will need foreign capital to help them to invest, and this is where we could play a role.
If we talk about the urbanization of China, in the mid to long term, we definitely see a lot of potential there. This gives us the opportunity in the near to mid-term to really invest in opportunities, projects, where we can approach it with our asset-light strategy, and bring in investors with us to work with the Chinese investors and Chinese developers to make money. Thank you.
Louis, maybe just to add on to what you've said, I think it is true. I think the sentiment is a ton more cautious, but we still remain optimistic and very confident of the future investment opportunities in China in the medium to long term. With the deleveraging that we're seeing happening in the real estate market in China, it has not affected all cities, all projects, and all developers equally. We do see that a lot of the Tier 1 cities where we are at, where our projects are located, the demand still remains quite strong. Of course, I think we will still have to approach this market with some caution.
I think just wanted to stress that the medium to long term, we are still very positive on the Chinese market. Okay. There is a second question from Pei Hwa Ho. This is a question on the O&M yard combination. Management had previously guided definitive agreements to be achieved by end 2021 or early 2022. It seems to be taking slightly longer than expected to conclude. What are the key hurdles that needs to be cleared? As I mentioned in my remarks, it is a highly complex transaction, and both sides are taking more time in doing the diligence, and I think that is to be expected. We still remain of the belief that this is a deal that can be beneficial to all parties.
We are working towards coming to definitive agreements by the end of the first quarter. Okay. Next question. Thanks for the briefing and congrats on the strong set of results. Can management share if its energy and environment business is EBITDA positive? Maybe I can ask Soo Hwa.
Energy and environment EBITDA is SGD -376 million for the full year. Also to just highlight that, at SGD -376 million, that is inclusive of the provisions for the KrisEnergy related exposures. If we were to exclude all the impairments for that year, then we will be at EBITDA of SGD 48+ million.
Thank you. Second question, I think this has been answered by Louis. Can management also provide more color on the sales progress of its properties in China? Louis, anything?
Maybe I can just add on to that.
Yeah.
I think as CEO mentioned earlier, our sales in China has increased 32% from 2020 - 2021. Again, the situation in China is not uniform across the country. The cities that we are in, Shanghai, Nanjing and Wuxi, have been performing very well, and we have actually seen very strong sales in a number of our key projects in those cities. Again, that although there might be other cities across China that might have seen a decline in prices, we've actually seen improvement in prices in projects, for example, in Shanghai.
Thank you. Clarence has a third question. Can you provide some more details on the SPH acquisition? Is there a timeline in which the deal must be concluded? I can't really share much more than what I have said. I think, from the Keppel side, we have completed all that we are required to do, including getting our EGM approval. So all the conditions on our side has been cleared. I think, it is really up to SPH now to call the scheme meeting for its shareholders to vote. We would like to see that done, obviously, as quickly as possible. Thank you. Mr. Teo from Singapore, understand that Keppel is exploring several other exciting M&A opportunities. Could you please elaborate and shed some light on this, what this would include?
This would include, as we have, I think we mentioned before, some of the areas where we see a lot of opportunities for growth as a growth engine for the group, such as data centers. We are looking at potential M&A opportunities for data center platforms, not just in Asia but also in Europe and the U.S. We are also looking at, you know, asset management platforms that we can do bolt-on acquisition. Also on the environmental engineering space, environmental solution space. We are also looking at several opportunities there, and on the infrastructure side as well.
There are quite a few things that we're looking at, and hopefully in the months ahead, we will be able to provide the market with update when we have something to report. Thank you. Okay. This question is from Terence of Phillip Securities. Terence Chua. What drove fourth quarter 2021 energy and environment revenue? You want to answer that? Okay, sure.
I think you mean second half 2021, because that's how we have reported on half-yearly basis. For second half, the primary driver for the increase was largely from both KI and KOM. For KI, it's led by higher electricity and gas sales. Of course, for the Singapore and Hong Kong integrated waste management facility projects, we also recognize higher progressive revenue from there. For the offshore marine business, increased revenue was mainly due to higher revenue recognition from ongoing projects and also revenue from new projects in 2021.
Thank you. Next question. This question is submitted by Mr. Teo. I think he submitted a question earlier. On data centers, your larger peers, including those based in the USA, are offering interconnection and cloud related services to their customers. Would Keppel consider venturing into such areas so as to further enhance your competitiveness in the data center space? Maybe, I ask Thomas. Thomas Pang.
Thank you, CEO. Thank you, Mr. Teo, for the question. You may have seen recently, Keppel data center and M1 through its subsidiary company, AsiaPac Technology, has entered into a hybrid cloud consulting services. This is something that we hope to be able to offer to enterprises and government to look into how they could make better use of cloud technology. On the interconnect, this is something that has been offered in our data centers. What we have expanded into in a more exciting way is the launch of the submarine cable business that is, in our view, a more exciting opportunity.
We have announced the joint build agreement with two of our partners to build a Bifrost cable systems. The team is exploring looking at other systems that will connect to other continents using Singapore as the hub. These are the two areas that I agree with Mr. Teo that are exciting area that increase our competitiveness in this data center sector. Thank you.
Thanks, Thomas. Maybe I can add that besides all the things that Thomas have said, which would improve the competitiveness of our data center offering, we've mentioned before that we are very focused on energy efficiency and also trying to bring green electrons to our data centers. I think all together, I think Keppel has a very unique value proposition to our data center customers in providing energy efficient well-connected data centers. Next question. Derek Tan of DBS Singapore. Congrats on the fantastic results. I'm curious about deployment of capital. In the real estate space with the outcome of SPH still uncertain, is the group keen in M&A within Singapore?
Well, the short answer is that we would definitely take a look, but it has to meet with our Vision 2030 goals. If it does, certainly we can take a look. Mr. Tan has a second question. Are you able to share for Keppel DC Fund II, where are the opportunities for deployment and target IRRs? For that question, may I ask Christina Tan to address? Thank you.
Yeah. Thanks, Derek. In terms of opportunities for DC 2, actually, we have really started investing in China as well as in Europe. We are seeing a lot of opportunities actually in Asia as well. The target returns are still good because Keppel is able to actually develop and build some of these assets. That actually helped us in terms of our ability to commit faster as well as to deploy our investment faster. I think, with our close, you know, connections with all the global players in terms of the cloud players, we are able to actually bring them in as our tenants as well. Thank you.
Thank you, Chris. Next question, submitted two questions from Lim Siew Khee of CGS-CIMB Singapore. Congrats on the great results and generous dividend. I'm glad you approve, Siew Khee. Anyway, she has two questions. First question, why did O&M losses widen in the second half of 2021? Maybe I ask Chris Ong to-
Yeah. Thanks, Siew Khee. Second half of 2021, we actually had some projects with a lower gross profit as a result of continued manpower constraint on existing projects, lower revenue from projects which have not been completed and also some financial impact from certain projects.
Okay. Thank you. Siew Khee has second question, are you taking an investor stance for renewables or operator to meet your target? I guess for at the start we would probably be looking more as an investor. But we do have ambitions in the right markets to also look at playing a role in the operatorship. The group's technical capabilities in this area extends quite widely. And we are now looking at not just, as I mentioned, not just greenfield projects, but we're also looking at potential M&A platforms or platforms for M&A acquisition. Okay. Next question is from Mayuko Tani of Nikkei Singapore. Thank you for your presentation. Can you please share more details on floating data center plan, including development costs?
For that, may I ask Thomas?
Thank you, Mayuko-san. Subject to the approval of the relevant government authorities, we are looking at projects that could be in the range of 15 MW-20 MW in size.
Looking to significantly improve the energy efficiency of the project by 10%-15%. Of course, subject to the approval, you know, depending on the size of the data center, final size of the data center, it could be in the region of about $300 million. There are still details to be worked out, and we will provide the exact information once all the approvals have been obtained. Thank you.
Next question submitted by Rahul Bhatia of HSBC Research. On the SPH transaction, the deadline mentioned was February 2nd, 2022. With no announcement by SPH so far, it is likely this date will be breached.
Can you share, are you willing to extend this timeline if needed? For us, it's very clear. We have already cleared all the conditions that we needed to clear, and we are looking forward for the scheme meeting to be arranged by SPH for its shareholders to vote. Thank you. Second question from Rahul. By 2022, could you share how the management is thinking about future investments versus shareholders' remuneration? I'm trying to understand how we should think about future dividend potential. Appreciate if you could share some guidance.
Rahul, I think we have touched on this before, and we have said that the way we look at dividends, we don't have a specific payout policy, but we've been paying between 40%-50% of our net earnings over the last few years. Of course, this time around, you know, we paid a more generous final dividend on the basis not just of the profit that's made, but also the progress that we've made on our monetization. We have said before that with the asset monetization gaining traction, you allow the group, first and foremost, to reduce gearing, which we have done.
It will also allow us to improve our cash flow, and you can see that from the big turnaround from, I think, SGD -72 million cash outflow to a positive cash inflow of SGD 1.75 billion this year. Of course, we also have a lot of investment opportunities that we are pursuing. We will have to balance all of this, but you can say that, you know, as we make more progress on monetization, as the group financial performance improves, we will reward our shareholders accordingly. There's a question from Hans Tang of UBS O'Connor, Singapore. Regarding the KOM and SCM combination, would you consider potential antitrust restrictions a hurdle to the deal?
Have you done any due diligence on how large the combined entity would be in terms of global market share, such that you might face regulatory scrutiny as a result? Thanks. Well, the answer is that there will definitely be a process that the combined entity will have to go through to get clearance from anti-competition regulators around the globe. I think the last time Keppel had such an experience was when there was a partial offer by Temasek some years ago. We went through a similar type of process. It took a bit of time, but I think there is every possibility that we will get the right approvals.
We are now focused on the first part, which is to get the definitive agreement signed first before we do the second part. Okay. This is a question from Mervin Song of JP Morgan, Singapore. Real estate investment management platforms generally trade at higher EV/EBITDA multiples than Keppel Corp. Will Keppel be open to spinning off Keppel Capital to unlock value? I guess the way we look at it is Keppel Capital is a very core part of the group. We also have these similar challenges with our data center business that, you know, it could trade at a higher multiple. The solution for us right now is to make sure that Keppel Corp is appropriately valued and perhaps re-rated, and then we don't have this problem.
This is something that we are working on. Okay. Next question is from Yizhen Hu of OCBC Bank. As follow-up question on Bifrost, can you please share with us how will Bifrost and other cable system projects be funded? Would this largely be non-recourse project financing? Thomas?
Thank you, Mr. Hu. Project Bifrost will be funded on the equity front by Keppel as well as our private fund partners. We are entering the last phase of discussion with a private fund managed by Keppel Capital. The debt side, yes, will be project financing that has been on the table offered by several financial institutions. We will be finalizing those project financing agreement soon.
Okay. Mr. Hu had a second question. Can you please share with us if the data center moratorium will be lifted soon? Well, I'm reading the releases earlier on. I think we understand that some statements will be made today, but so far I've not seen any public statements made yet. I guess KIV that. There's a question from Mervin Song of JP Morgan, also related to data center. Keppel is one of the largest players in Singapore data center market. Could you share your thoughts on the impact of the lifting of the data center moratorium? Maybe I ask Thomas, and then if Chris may want to weigh in on this as well.
Thank you, Mr. Hu and Mr. Song. The data center market in Singapore continues to be a very attractive one. The growth is strong, and the demand for data center continues to increase. We all understand the need to have a very efficient data center in order to help Singapore achieve its carbon goal. Keppel has been for many years focusing on energy efficient data center. Together with other business units in Keppel Group, we have been looking at many areas, as Mr. Loh has mentioned earlier, looking at areas to bring in renewable energy, to look at different types of hydrogen, ammonia or liquid hydrogen.
We, you know, as soon as the government is ready to share more details, Keppel is in very good place to provide the kind of solutions that can help to bring about a net zero data center. Thank you.
Thank you. Chris, you want to add anything? Are you okay?
Yeah, I think Thomas has answered very well. I think Keppel is really probably the best players and very well-placed in terms of our data center operations and management. We are able to actually create solutions for net zero data center. I think with the moratorium lifted, we think we are still in a good position to be able to be one of the top players here in this market. Thank you.
Thank you. Anyway, we have established our market position even without the moratorium. Right? That's the point. Okay. Next question is from Adrian Loh of UOB Kay Hian, Singapore. Thank you for the presentation and well done on a strong set of results. With inflation and supply chain issues plaguing other industries, could you please let us know how these issues are affecting Keppel overall? Specifically for KOM, when do you expect the labor and supply chain issues will normalize? Well, I think you can see from our results, Adrian, that we have been able to manage our business despite the very challenging environment. KOM has been able to deliver the nine projects, of course, not without difficulty.
We still face challenges, but I'm very confident that my colleagues will work very hard to make sure that any supply chain issues are already being thought of now, so that in case there are further disruptions, we will find alternative sources or solutions. But maybe I ask, since this question is also directed to KOM, can I ask Chris Ong to provide some color?
Thank you, Adrian, for the question. Well, for the labor and supply chain issues, we work closely with our regular suppliers to work around issues for present projects. Meaning, how do we basically make adjustment to the schedule and critical path. For labor, the labor right now due to the pandemic, the ongoing pandemic, although activities in the yard is going on as usual, we step up our diligence by doing regular testing. There are still challenges to bring in new labor. Because Keppel's KOM strategy has always been, you know, agile, some projects that we newly secure are actually done in our yards globally. That helps to spread out the risks and also give our Singapore yards the opportunity to use our integration expertise.
We are living with the limitations right now, but I think that for the ongoing projects and the projects that are newly secured, we have already factored that in.
Thank you, Chris. KI is also undertaking some major projects locally and in Hong Kong. Just wondering whether, Cindy, you want to add anything here?
Thank you, Mr. Loh. Indeed, KI is executing mega project in Hong Kong as well as in Singapore. Such project clients are typically the local municipal government. To this end, we are working very closely with our client to make sure on the ground we focus on executing the project safely, ensuring the health and safety of our workforce, and most importantly in terms of supply chain, we have very experienced project management team that has focused on de-risking by looking for alternative supplies, as well as focusing on the critical path of the project with the intent to deliver the project safely and on time. Thank you.
Thanks, Cindy. Next question submitted by Suki of CIMB. Can you help us understand the manpower situation in O&M this year? Chris, do you want to add more or you think you've answered?
I think the question is largely answered. Just to give you a feel, this year our labor actually dropped by about 6%, but that's manageable. With the global network of yards, we have actually planned to work around those issues by subcontracting some of the components outside.
Suki has a second question. Are you positive of monetization momentum this year? We are. I think, short answer. We have a transformation office that looks at all the Vision 2030 initiatives, and there's quite a bit, including the asset monetization program. We meet regularly, attended by all the CEOs. So we have been looking at projects, potential divestments and monetization for 2022. For, you know, some of these already started planning last year. But at the same time, we also have projects or potential opportunities for monetization in the latter years, 2023, 2024 and beyond. So we are also looking at possibility of, you know, shifting some to this year if there's any delays in those that were planned for this year.
We have a pipeline of monetization deals. It is important for us because with the traction from monetization, as I mentioned earlier, it will help us pivot to the new growth engines and allow us, you know, to grow faster. Thank you. Okay, this is Mayuko Tani of Nikkei Singapore. What are the types of renewable assets you're interested in acquiring? What's the size of the deals you may look at, and how much do you earmark, sorry, on M&A of brownfield renewable platforms? This question, well, depends. There are quite a few possible answers. I think maybe I start with Keppel Renewable Energy, which is under Chris Ong.
Maybe you can talk more about the greenfield side, and then maybe later I ask Christina, you want to talk a bit about the brownfield and the M&A opportunities. Thank you.
Keppel Renewable Energy is actually looking at brownfield and greenfield development and also potential nearer to financial close type of development. As we mentioned in the past, it will mainly be in Australia, and we are venturing more into Vietnam and Philippines. This will be the area that's under the responsibility of Keppel Renewable Energy. We are looking basically grid-size type of development, working closely together with KC and KI to make sure that it is an end-to-end investment, that at financial close we are able to monetize that investment.
Thank you, Chris. Christina.
Actually, we have different pockets of money. Besides, we have value add. Also, we have KIT, which is listed, as well as core funds which are interested in renewables. Actually there's a lot of room for us to play in the renewable space, whether it's in wind and solar, and whether it's brownfield or core operating assets. The size of deals actually varies. I think anywhere from SGD 500 million - SGD 3 billion-SGD 5 billion kind of sizes that we'll look at. We remain interested in this renewable platforms play. Thank you.
Thank you, Chris. Next question. This is from Rachel Tan of DBS, Singapore. Congratulations on your fantastic results. Rachel has two questions. Okay, maybe I deal with the second question first. Given the recent M&A into giant integrated commercial S-REIT, what is your view on KRE to compete with peers? This question should rightly be directed to Keppel REIT. So if it's okay with you, we will direct this question to our colleagues at Keppel REIT, and they can circle back to you, Rachel. Your first question, would you be able to share the potential target split in asset class as you look to achieve your SGD 50 billion AUM target? Can I ask Christina to address this?
On the target split, since we are now at SGD 42 billion, so it's very close to SGD 50 billion, we will actually be quite close to our actually, the asset classes that we're looking at, whether it's in real estate, data centers and infrastructure. If we are able to, we're looking to actually grow it, the AUM to SGD 100 billion. We're looking at probably one-third in real estate, one-third in infrastructure and balance in alternative asset classes. Thank you.
Thank you. Next question. Next question submitted by Mervin Song of JPM. Mervin has two questions. First question I'll ask my colleague, Manjot to respond to. It's on M1. The question is, "How far along are we in M1's restructuring?" I don't think it's restructuring, it's more transformation, okay? "Will it be 30% or 50% completed? What else needs to be done on the cost base, retail business and enterprise business?" Manjot?
Yeah, thanks. Thanks, Mr. Song, for the question. Yes, on the transformation piece, it'll be very difficult for me to tell you whether it's 30% or 50%, but let me give you a flavor of where we are. Our digital platform is complete. It's a best-of-breed digital platform. We have close to about 40,000 customers now on our new platform, and we will start migrating our customers from our old technology stack to the new platform this year, and hope to finish it by next year. The digital platform is up and running. The other parts of transformation which are primarily enterprise business, the other digital touch points, whether it's the app or micro-site, et cetera, are also in progress.
That kind of addresses your question, the second half of the question, which is what else needs to be done on the cost base, retail business and enterprise. I think on the cost and retail business, it's a part of our digital strategy. As we become more and more digital, we expect our cost to be more rationalized. The retail business will continue as aggressively as it is happening today. Just that, we expect our digital sales to be far higher in contribution than our physical sales. Also on the enterprise side, I think there are two parts to it.
One is we expect enterprise business to be at the forefront of our growth in the future, which is our existing enterprise business, coupled with our foray into other markets that we have started with Malaysia. Also, 5G, I think it's going to play a very important role in our growth of our enterprise business. We are already earmarking verticals where we think 5G is going to play a very critical role. We are getting our organization structure in place, and our partnerships, both on the device and platform side, so that we can harness the growth that we expect to come from 5G. You will see significant progress from M1 on the 5G business in coming future. Thank you very much.
Thank you, Man. Okay. Mr. Song has a second question. In the worst case, the bid for SPH fails, will Keppel be open to buying SPH shares or a stake in M1? This is highly speculative, so I wouldn't address it. Thank you. Okay, Mr. Teo of Singapore, is the company looking at India for data center opportunities? I understand it could well be an emerging and huge market for data centers. Short answer is yes, you are right. It is a huge market. We are starting to see a lot of inquiries there. We are also setting up our teams to be able to look at this market. Second question from Mr. Teo, Keppel is a sponsor to a few REITs, including Keppel REIT, Keppel Infrastructure Trust, and Keppel DC REIT.
However, why is there limited sale of assets to your REIT vehicles over the recent years, whereby the bulk of the acquisitions are from third parties? Mr. Teo, the REITs operate independently of Keppel in the sense that they have their own independent boards. Of course, in a number of these REITs, Keppel entities are sponsors. So to that extent, we do try to provide a deal flow pipeline to these REITs. But ultimately, the REITs are open architecture. They look for the best deals in the market, and if the deals, the good deals are from the sponsor, you can go in.
If the sponsor has assets that are right and ready to be harvested, and it suits the REITs or the trust, then it would go in naturally. This is something that we cannot totally control. I think you have to leave it to the independent boards of the REITs as well as, you know, for the deal flow pipeline. For the deals to mature to a point where they have been de-risked and suitable for potential divestment to the REITs. Next question. Okay. Nicholas Tay of Credit Suisse, Singapore. For the data center business, while you are investing more to grow AUM, are there any data centers that are already stabilized which can be monetized given the tight cap rate environment?
I think this is something that, you know, Christina as the Chairman of Keppel DC REIT, is actively looking to see how we can grow the DC REIT portfolio. To the extent that our data centers are stabilized, we would expect to see more of these being sold or monetized through Keppel DC REIT. I think this is the last question. Well, thank you so much for your kind attention this evening. Again, wishing everyone a wonderful Chinese New Year ahead. Thank you.