Good morning, everyone, and welcome to SingPost, to our first half corporate presentation briefing. Today we are pleased to have with us our new CEO, Mark Chong. With him, CFO Isaac Mah, and COO Neo Su Yin. This session will be webcast live and recorded. Without further ado, let me hand over to Mark.
Yeah. Thanks, Selena. Actually, before we jump in, could we know who is online?
These are audience participants on the webcast. Anyone who registered can join in.
Which are the houses then?
It is open to-
Oh.
Everyone.
Okay. Thank you everyone for coming to our results announcement for H1 of FY 2026. My name is Mark Chong. I am 10 days old on the job. I think there may be a fair bit of interest on how we are going to take the company forward, our strategy. I really would like to share those with you when we are ready. Being only 10 days on the job, I am afraid there is not much I can talk about on the future plans. Today we are really talking about the results announcement. That is going to be the focus of this session. You know that SingPost had divested some assets over [inaudible]
We have folded the international division into the domestic ops. We are now a single entity. We have dropped the word "group" from our titles. We are just as we are. The immediate order of business for us right now is to ensure that our core business run well, our customers are well-served. We are looking at, for the immediate term, operational efficiency, widening our network to serve our customers, and keep the core business running well.
Through our recent divestments, we of course received the proceeds. We have paid out a special dividend. We have paid down debt, a chunk of debt, and we will keep the rest for our working capital, et c. We will continue to maintain a disciplined capital management approach. Careful cost control. Those are the immediate priorities. On the results, I will now hand over to Isaac to take us through.
Thank you, Mark, and good morning. As Mark conveyed, our focus is on a stable and sustainable future underpinned by strong financial position. This first half really has been defined by actions that reflect that commitment. We completed a major organizational realignment following the sale of the Australia business. This was an important step to ensure that our corporate structure is right-sized, optimized for the remaining size of the business.
This included removing overlapping corporate support functions, reintegrating the cross-border operations into the postal and logistics business in Singapore, and further streamlining activity. Along with that, we have concluded several transactions. This includes the unwinding of the cross-holdings with Alibaba, leading to the divestment of 4PX and the cessation of the joint venture, Quantium Solutions. Various Quantium Solutions subsidiaries have also since been divested, and we have also completed the sale of the freight forwarding business, Famous Holdings.
The combined result of these actions is a stronger balance sheet, providing the financial flexibility and foundation for future growth. Next slide, please. Our operational developments over the first half are centered on two areas that enhance our capacity, efficiency, and reach. First, on the capacity front, the SGD 30 million investment to expand parcel sorting capacity at the eCommerce Logistics Hub in Tampines is on track, expected to be fully operational by mid-2026. eCommerce remains a growth driver for the logistics business.
As such, we are tripling our capacity to address demand, efficiency, and service quality, which in turn will enable us to scale up this business segment efficiently. On the network front, we expanded our reach across the island through strategic collaborations and partnerships to offer customers maximum convenience and choice. This includes partnerships with Pick Network, Cheers, and FairPrice Xpress outlets. We have also been deploying 24x7 POPDrop kiosks that provide a one-stop service to customers.
Our Post Office also serves as partnership touchpoints with DHL and FedEx. We have also started a trial for the posting and return of mail directly at the letterbox nest of several HDB housing blocks. If successful, this may be rolled out island-wide, which will enhance customer convenience. These investments in capacity and network are key, not just to make the business more efficient, but also to solidify our competitive position and serve customers even more effectively. On to the financials. As we move from the second half of the last financial year into the review period, cost discipline was key. This has enabled the company to reverse from a SGD 0.5 million loss in the preceding six months to an underlying net profit of SGD 5.5 million this past.
The financial-
Sorry about that.
SingPost technology discovery.
With operational discipline, costs have come down, reflecting two key drivers. One, organizational streamlining and cost management efforts. Two, the reduction in expenses intended with lower volumes and revenue. The recent divestments have led to exceptional gains on disposal of about SGD 9 million. There is also a fair value gain on SingPost Centre of SGD 5.5 million in exceptional items. As a result, profit from continuing operations was higher at SGD 20.6 million. In comparison, discontinued operations incurred a SGD 2.2 million loss this half, compared to a SGD 21 million profit in the prior period when the divested Australian business was still included.
Put together, net profit was 17% lower year-on-year. Excluding these exceptional gains, the underlying net profit or UNP was SGD 5.5 million, lower year-on-year. But as mentioned, better than the loss in the second half of last year. The lower UNP year-on-year is attributable to two main factors. The loss of profit contributions from the Australian business, which previously bolstered our results, and softer performance in the cross-border business, which I will cover next in the segments.
With the change in SingPost's profile, we have revised the business segments to Logistics & Letters, Post Office Network, and Property Assets. This change was from Australia, International, and Singapore. Logistics & Letters, which now cover the delivery business both domestically and internationally, as well as other services, is our largest segment by revenues. Post Office Network comprises agency services, product sales, and rental of space at the post office. Property Assets refer to rental and related contributions from properties, the largest contributor being SingPost Centre. Moving into a segment-by-segment review.
Logistics & Letters face a challenging operating environment, which resulted in lower revenues of SGD 153.5 million and an operating loss of SGD 4.4 million. Letter mail volume continued its structural decline, a trend that we have been managing for some time. Volume of domestic e-commerce deliveries softened about 3% over the period. In contrast, cross-border e-commerce volume fell by 63% year-on-year, a reflection of the difficult market conditions in that space. This was part of a much larger global trend, which has seen significant volatility, particularly with the U.S. tariff situation.
We have taken actions to streamline the cross-border operations and also implement cost management measures to align with the reduced business activity. Along with the drop in volume-related expenses, the segment operating costs have fallen about 27% year-on-year. Moving on to the Post Office Network. In the Post Office Network, the decline in revenues was mainly due to lower agency services revenue. This was partly cushioned by higher rental income from leasing within the Post Office Network properties. Our efforts to control costs and optimize the network yielded results.
Costs were reduced by 13%, which lowered the operating loss from SGD 6.7 million- SGD 5.8 million. Property Assets. Property Assets comprises property rental and related activities, and mainly at SingPost Centre. The segment continues to provide consistent revenue streams. With a focus on maintaining high tenancy levels, we saw improved revenue performance driven by rental growth at SingPost Centre. Overall occupancy rate was 99.2%. Operating profit was lower, primarily due to higher expenses like property management service costs and property tax. Now on to the balance sheet. There are a couple of points I would like to highlight.
One, the balance sheet movements are largely the effect of the consolidation of subsidiaries that were divested. Two, with the divestments this year, including the Australian business, our financial position has been strengthened by proceeds from the disposals. The company's cash position is SGD 594.1 million. This provides us with financial flexibility, enabling the funding of operation investments as well as future requirements. To complete the financial picture, let me highlight some points on cash flow. Cash flow generated before working capital was lower compared to the prior period. This was expected, primarily due to the absence of contributions from divested subsidiaries.
The negative operating cash flow after working capital changes was driven mainly by higher settlement of payments. Investing cash flows was largely due to proceeds from disposals, reflecting the realization of value from these non-core assets. Financing cash outflows was primarily due to the special dividend payout to shareholders in August with respect to the sale of the Australian business. Lastly, I am glad to share that the board has declared an interim dividend of SGD 0.0008 per share, which represents 30% of the UNP for the first half. That concludes my presentation. Our disciplined approach has positioned us well on the road ahead. With that, I will hand over to Selena to move on to the Q&A session. Thank you.
Right. Mark, Isaac, [inaudible] Q&A session? Mark?
Yes. Why don't we?
If anyone has any questions, please feel free to raise your hand and identify yourself for the benefit of the audience who are on the line.
Hi, my name is [Ada] from Bank of Singapore. I think just two questions from me first. First is, how should we think about margins moving forward? Should we expect the Logistics & Letters segment to return to the kind of levels we saw here? Second question is, could you give more color about segment prospects individually for the course for next quarters? Also, what is your outlook on segment and overall group asset management performance?
Right. First off, we do not typically comment on the forward-looking statements. I think what you see in our presentation is that we have actually executed very well on several cost control initiatives. We will continue to see the efforts of this in our numbers going forward. We believe that there continues to be good opportunities in the methods and logistics space, and we will continue to build on our network as well as our service levels, which will then ensure the right progress to play in this segment. Su Yin, anything you want to add to that?
Yeah, I think as you know, with the geopolitical situation, there still is a lot of costs, a lot of headwinds with the cross-border business. That is why we did the consolidation of the international business as a single unit with the group business as well. This is already one of the key assets to market status that is structurally being a lot leaner, in order for us to then take the strategic review with the board with Mark, then see what is the best way forward.
Sorry, just one question. On the structural decline of the Post Office Network and also the volumes, how do you actually stop that? This is a structural problem. Is there any plans or what are the key plans to stop this structural decline? This has been happening over the last 10 years. Still a structural decline. How do you encourage people to use more mails? Like checkbook, it is also a structural decline. I think we have seen that this is not possible. [inaudible] like advertising on newspaper is also a structural decline.
I think the decline of post is structural, that cannot be denied. It will follow its course and all that. I think what was good was the arrival of eCommerce, the growth of eCommerce. Parcels came along, and I think SingPost played quite hard on the post side. What we have to do going forward is to make ourselves competitive.
I think what we have as advantages are, of course, we still have the postmen who cover all the blocks and all the letterbox nests. We will leverage on that, better quality of service in terms of touch points, et c. I think you note our investments in SGD 30 million in the sorting, the Tampines hub. That is also to lower our cost to serve, right, and provide higher [CapEx]. I think the decline in the cross-border volumes, obviously, we have to get competitive advantage for those volumes.
For your SGD 30 million investment, right, decrease your cost, right? How much cost does it decrease? For example, your average. No, as in decrease your overall cost, right? The SGD 30 million investment will help to decrease your overall cost per package sent out.
Increase or decrease?
Decrease.
Decrease.
Yeah.
Costs are reduced.
Okay, they are reduced. Reduce the cost. How much cost will it actually decrease? For example, let's say one package previously cost maybe X amount to deliver. With this SGD 30 million, based on the same volume, what is the decrease percentage?
Well, it is very specific to the processing segment of the entire delivery journey. It is meant to almost be half of the cost that is through processing. Currently, a lot of the cost is actually just manpower cost. As you know, manpower cost continues to increase year-on-year. That is something that the automation is meant to deliver as an outcome, through which we also get greater productivity, as well as give us more capacity to offer more cost-effective solutions to our customers.
This reduced cost is including depreciation of the SGD 30 million?
Yes.
Inclusive of it.
[Jacob] from ISP. Two questions. One on Logistics & Letters, the international part. How much of the decline was actually people's supply chain realignment, and how much was really a competitive loss? Two, assuming the volumes have pretty much bottomed out, let's say, all your postal volumes, and this is the worst of things here. How much more rationalization of postal network is needed to turn around?
Well, I think the structural decline of mail is really a revolution that has undertaken over the last decade or so. Emails coming in, everyone's gone digital now. There is still obviously a portion of our population that still requires physical letters and all sent there. So that will continue to be the need. The decline will continue to come given that more and more digitalization is ongoing. Government is also pushing in that direction. Clearly, government has also now taken a position that is digital first, but not digital only, so this will obviously try to buffer that decline somewhat.
That said, I think in relation to the types of the e-commerce business, which Mark alluded to earlier, where we've utilized the infrastructure as well as the network that exists mail to also deliver e-commerce. I think that's where we are, one, spreading our assets a lot harder. In that case, given change and shift in the type of volumes that we're doing, the nature of the business as well, we will continue to be looking at how we can evolve the network.
We also want to change the way we do deliveries to meet the new and coming demands of our customers. So that will be an ongoing process because why, as you know, the market is very competitive in the last-mile space. We are obviously still as part of the strategic review, reviewing how we can utilize our asset spots differently to get greater yield for what we're doing. So that's also part of the strategic review that, overall review of our business.
You think there is more upside to the international business?
I think the international-
More like a blip or is it really the new?
Well, I think if you observe what is happening in the cross-border space, whether it is with the big boys, even your DHL, FedEx and all, these are obviously issues with now planes being half empty. This is an issue that is affecting everyone globally in the logistics. I do not think it is just unique to SingPost. Now, where our position will be undertaken is we will then look at where is the space that we can play in the cross-border and international business. I think that is also part of the strategic review that we are undertaking.
Primarily on the cross-border trade, there is a lot of uncertainty right now. I think we all know. One day there are tariffs on China, another day there are no tariffs, no more tariffs. So they are also adjusting to the government side.
On the postal network, more rationalization is needed before it. Assuming everything [inaudible]
As I mentioned earlier, as we are pivoting our business with the last-mile e-commerce space as part of the network, we are still rationalizing whether that network is the most efficient in how we manage it, whether it is versus fixed space, cost space, variable cost space. So these are things that we are undertaking. So I cannot give you an answer right now, but I think what we are trying to do is to meet whatever customers need, evolving needs that our consumers have to make sure that we deliver the best cost-effective solution for our customers.
Maybe just to add on to what Su Yin said, I think our press release and some connectors have also said that now 80% of our Singaporeans can reach one of our touchpoints within 10 minutes, and the total network size is going to be 2,500 points. I think this is a very core part of what we do, and this kind of ensure that we have the right to play in the space going forward.
I think just to add on to what Isaac mentioned, if you look at the network expansion that we've undertaken in the last couple of months, we have not put in any money. It is really leveraging on existing infrastructure, working with partners, using their infrastructure, still for you to extend the level of convenience that we can give your customers.
Just to follow on [Jacob's] question. I think currently, I think you have internal budgeting and stuff to turn around the business. So what's the current plan in terms of years? I know I'm asking in terms of years that if you can foresee the core business without the property income turning around to, or rather, I would say, a decent profit or rather a sizeable profit to justify the current market cap valuation.
Maybe just in the interest of what we're sharing today, which is the first half of the year. I think the key message is that last half, we were a loss-making business, and this half we have turned the corner. So we are profitable. Significant efforts have been put through. There's still work to be done. We're also in the process of reworking the strategy with Mark. Even though he's just come on Board.
Your question will be answered when we have updated our-
Okay.
..[inaudible]
Because a lot of shareholders have been waiting for this review. It has been almost one year already.
Yeah.
I understand you only come in 10 days, so sorry about that.
No, no problem. I am asking questions that I think many people have asked. We speak to many patients during this strategic review, and once we are ready, we will be very happy to answer all the questions.
Any timeline on that?
Sorry, I cannot answer to the timeline.
Yeah. We do not have answer to that, but we are doing the-
Okay. I understand. Just one side question, Mark. Actually, why did you choose to leave Singtel to come here? I mean, Singtel is quite stable and doing very well.
It is a very good question, but since we are on the results announcement and not my personal thing, maybe-
Same question as last time.
Maybe we can talk.
Okay. Thank you, guys.
Thank you.
The postal network, what additional agency services can you offer?
Sorry?
On the postal network, to optimize the revenues better, what additional agency services can you offer?
Currently, we already provide services to 0.7 agencies. We are exploring adjacencies on other parties that we can work with. Right now it is still in the early stages. I think we would like to wrap it up together with the whole strategy review because it is all kind of tied into the amount of investments we put in to lock some of these capabilities, as well as the wider play around our non-60% business. Our core really is the ability that we visit every single address every day, and how to leverage on those critical success factors.
Somehow it feels like all questions are lined up. The strategic review.
The number of touchpoints we have, the post offices, we are reviewing on the optimal number. I think that will depend on a couple of things. One, that we see, the second one, can we de-expand the business model? Maybe we do not need to fully own all our post offices. We want to balance touchpoints with cost. The cost, fixed cost, maybe we can reduce that to other models, maybe like a franchise network or something like that. These are the ideas that we are considering. We have got nothing to share with you because it is still ongoing.
How much of your Post Office rationalization is dependent rentals versus? I'm trying to see whether the focus is on improving revenues at the current network or whether the cost is also a factor. Do you think cost is just too much and now there's the impact?
I think it will have to be a combination of both. As in any kind of business case, you have to look at what's the opportunity in the market and how you can grow the top line, as well as the cost that's involved in unlocking the revenue. It's definitely a combination of the two, not one or the other.
Yes. Basically, it's the cost for the revenue. Because on your slide, you're seeing the revenue decline from the real agency services. There's also higher rental income.
So maybe, if you begin from that perspective, the Post Office segment, not only does it have income from providing services itself, but some of the post offices no longer occupy the full footprint.
Yeah.
We have actually de-leased out some of that footprint. That is in the rental income portion of that segment. However, given our network of post offices is finite and we will not be renting more space just to lease it out, if that makes sense. While there might be opportunities there to continue to grow the rental income from the network, it will be fairly limited.
Any thoughts on trying to do something with Shopee collection points, franchise out the function.
We already do that. We already do that.
Outside of the post centers.
Yes. Actually, [inaudible] in the [6,500] points, we have got also third party what you call shop agents. That means they operate on our behalf. For example, could be a mom-and-pop shop, could be a bookshop. So they also collect on our behalf. We realize that, I think in our business, because cost is the business that drives the way our consumers reach us, our further investment into infrastructure is definitely not the way to go. Which is why, as you can see, through working with even Cheers, partnerships and all, using third party, all kinds of third parties, we are open to explore to help expand our network of offices across the island and keeping costs low such that it is almost down to a minimal level cost of the item that they have to process.
What is the feedback so far? Finding it more efficient running?
Yes. We obviously have to study profile of where users are. For example, a lot of it is really in our personal network. So your personal network is where your sellers are the ones that is using us through the platform to then deliver for us, like pick up items rather than us going to a door to pick up one or two items.
You can drop it off at your convenience at these locations. And given that now we have got 2,500 of them all over the island, working with the likes of Pick, Cheers, and all have been very helpful in now bringing that convenience down to 10 minutes from everywhere you are. So that has been a great extension of our convenience points to who the target audience is, which is a lot of it is the upstream customer that we have, which is the sellers. It is really huge in the success of keeping our costs of the networks quite low.
Is there anything more you can do to optimize better or most of the benefits are already captured?
Well, I think it's a matter of now finding the right partners, how more could we extend that without incurring additional cost for the pickup.
I believe we can do more. I mean, in a couple of ways. In our own post offices where our margins will be improved, I think if we can find a way to run our own post offices at lower cost, that will improve margins. Of course, in the partner network today, I think awareness is not so great because you also asked that question. So I think we probably can drum up awareness, and work out the processes in such a way that improve our margins. I mean, even the Pick Network itself, we are working together now. We also can leverage on that to make it more complete.
If you note some of the moves that I think Su Yin has undertaken, we are trialing the posting of letters at the foot of HDBs as well. That HDB letterbox there is our asset line. We are the only ones with that access and all those things, safe letters. So letters plus small parcels is one area we will be also looking at and see how we can leverage and squeeze more out of our infrastructure. So we have our own infrastructure, the partner's infrastructure. We will see how we can lower cost itself and maybe get more volumes into-
The SGD 30 million investment at the parcel sorting center is that. At what point can that center completely take over parcel and letter sorting? Is there a timeline?
Middle of next year.
Next year.
Middle of next year.
It will not fully take over. It will take over the whole city.
For parcels, yes.
Oh, okay.
For parcels, yes, but we have also got the instance facility, the cross-dock hub agency. We have also got the processing facility for larger parcels. This is really focused primarily on the small parcels. As you know, primarily about 70%-80% of parcels that come across the cross border of domestic are very small. So we will generate about 400,000 capacity just from that.
That is from the land side.
From our parcel.
The large ones will be moved to that place.
No, the large one is already at the dock.
Currently they still process mail letters.
Yes.
But I think his question was, when will we ever move mail to
Everything to that place? Because that facility is quite big. I have seen it.
Yeah.
I think it will not take over everything because we have got the sorting center for mail that is still here. There is a certain shelf life to it, and there is a certain purpose of There is still utility if it was-- Of course, if we completely write down that thing, it is going to hit our books. So over time we will migrate and concentrate more and more so that we become more efficient.
Previously, the whole management said that the SingPost Centre is for sale.
Yeah.
Is there any change in that stance?
We are reviewing that. We are reviewing that stance. Once we are ready, we will communicate there. Yeah.
Secondly, is there any thoughts with NTUC? Because I think there is a very good delivery network. I mean, not say very good, but there is a delivery network to move all their deliveries. Sometimes they hit big volume and cannot deliver.
Yeah.
I think since they are also government.
Yeah.
Is that something that-
I am not sure NTUC will call themselves government, but that is a separate matter.
Okay, never mind. Anyway.
Yeah. Thanks for the tip, we'll talk to them.
Okay. So there's no thoughts yet?
I don't know.
If like Cheers and FairPrice Xpress actually bid for a combination with NTUC. So today we are trying to see how much more facilities we can find with that.
Okay. Understood. Because I think the key performance for you is actually costing one issue, but I think a lot of costs you have taken already, but I think the key is actually growing revenue. Actually it is growing revenue.
Yeah.
Without growing revenue, I think you cut all costs also no use.
Yeah.
Yeah. It should perform well. For your first quarter, which fields are still profitable? Or is it very dependent on the Post Office Network for the profitability?
Yeah. Currently, when we reintegrated the international business back with the postal service, I think we primarily went back to our foundation, which is postal. The postal network continues to be the most cost-effective way of doing deliveries. However, as maybe compared to some commercial solutions, the service levels are probably not as high as compared to maybe a two to three day delivery versus a maybe a five to seven day.
So where we have been looking for opportunities now is if there are consumers and customers that are not looking for express level delivery, actually there is a space for us to play, and it continues to be profitable in that sense because we only pay for what we use. Currently, as Isaac alluded to in his presentation, a lot of this is related because of volume-related costs, only when we have the volume, then the cost.
Have you kind of Is there still a large amount of non-postal network related cross-border logistics?
Currently not as much. As we have said, we have focused ourselves back on what we do our best on the postal network. But that obviously does not stop us from looking for partnerships. Like for example, the recent U.S. CEP or duty paid solution that we introduced, was actually working with a partner, and that is on a commercial solution.
The SGD 30 million, the new sorting center.
Yes.
You also mentioned that triples your capacity.
Yes. Our small packet sortation capacity, which is currently now housed here. Once that is ready middle of next year, it actually triples what we can do for small packets.
My understanding is the bottleneck still largely at the last. Even if you spend the, I think you know where I'm getting at.
Yeah.
Even if you triple the capacity here.
Yeah.
Does it really move the volume?
I think what we always try and get out of network is always in the, particularly in the last-mile, which is the density. I think for us, we are very fortunate because we run a postal network. We actually deliver to every address. But sometimes, you go and open your letterbox, there is no letters, right? But the moment we can increase density, which means if we can deliver more to a single location, that makes our network a lot more effective.
That bottleneck is at the sorting center.
Currently now for us, it is actually at the sorting center.
Oh.
There will probably a change. Sorting center we increase capacity. Last-mile, if you can densify, you can run more business. One postman deliver three parcels instead of one.
Oh. My impression was always the last-mile was the bottleneck rather than the sorting before.
Increasing the capacity to process is definitely one of the key drivers for the improvement of revenue per package.
Just to follow on this, because you say that it will help your e-sellers, the convenience for the e-sellers. But in this trade, I presume there will be more critical parts to ensure the inflow rather than the outflow. I am correct, am I wrong? Or maybe you are referring to the e-sellers-
Domestically.
...domestically.
Yeah.
Is that really a large part of the total volume?
There are two components actually. There is also cross-border commerce that is now coming a lot from China. There is also obviously a lot of domestic sellers that actually buy from overseas, then resell here. Essentially, they are all in the same thing. It is just a matter of who is selling what and coming from where.
Yeah, I think it is also important to note that a lot of retailers, they are selling through the platforms.
Yes. E-shop. Yeah, exactly.
Basically, it improves your convenience for them, it makes the platforms happy, and the platforms will then put more volume through you. It is kind of a virtuous cycle. While it directly benefits the convenience of these small sellers, it is part of the platform strategy also. So it is the overall ecosystem.
Just one last one for you, Mah. You know your income is for now at [SGD 16] but at the same time, your interest expense is, although you're technically net cash. I'm just wondering, would you be moving further down this interest?
Interest expense has actually fallen off quite a bit versus last year. Previously, even at SingPost group level, we carried about SGD 300 million in M&A debt to the Australian business. That has now all since been paid down. So it has actually come down a lot versus last year. If you compare it to our cash holdings, it is actually not that big because the amount of interest earned on the cash is actually higher than the expense paid on our bond. So we do still have tranches of bonds outstanding. One SGD 100 million tranche and another SGD 250 million. On top of that, there's also the perpetuals of SGD 260 million. Because that is a hybrid, right? So on the equity accounting available to us, we are seen as a net cash position.
I think your question is valid, especially if their interest rate is looking to come down, I think they will look at, could use some of that further.
Just to follow up on [inaudibel] earlier question, talking about densifying the last-mile. That has to do with the capacity of these outlets. Quickly understand, are you actually having a shortfall? So there's a pipeline which is stuck at the sorting center? Or you're thinking that once it triples, then you'll be able to attract more? This investment is to address a backlog volume, or is it to preparing for potential growth?
Both. Potentially that is both. What happens now is that, during the peak period, the boom periods where there is a lot more volume comes in, we have to throw men at the problem. In our business, unless you have the automation and the sortation capabilities, then the alternative is to use people. As you know, people cost in Singapore is always going up. This investment is reaching a point where we recognize that we need the capacity.
We need the cost for each item to then be just lower. It was the right time to then put investment in, one, address existing crises that we have in terms of requiring men to do the issue, as well as to create capacity to allow our customers to grow alongside with them as their business grows here.
We will have time for maybe one or two more questions. Anyone? If not, then we will just bring this session to an end. We want to thank everyone who has attended.