Good morning. Thank you everyone for joining us today. This is our Second Half and Full Year Results Presentation for SingPost. This session is broadcast and recorded, and today we have our Group CFO, Isaac Mah, who will first bring us through the presentation before we open for Q&A. Now I will hand over the session to Isaac.
Thank you, Selena. Morning, everyone, and thank you for joining us today. Over the past year, there has been a significant shift by the group marked by a major structural change and divestments. I would like to begin by providing an overview of these key developments before walking through the financial highlights. One, we completed the sale of SPAI, which was the group's Australian business comprising Freight Management Holdings and Star Foods. This was transacted at an enterprise value of AUD 1 billion and generated a gain on disposal of SGD 302 million for SingPost. Two, Famous Holdings was formerly the largest segment contributing over 50% of the group's revenue and profit. This divestment was a major milestone and has changed the group's profile and scale. We will need to reset the group's strategic direction and are in the process of doing so.
Three, given the change in the group's profile, we have also recalibrated the organization structure to realign the cost base with the scale and structure of the business post-divestment. Duplicate functions at the corporate level were removed, and operational functions reorganized to improve operating efficiency across the organization. These actions are necessary to preserve financial agility and support sustainable performance. Four, separate to the group's strategy reset, we said that we were reviewing the international business. We assessed the long-term viability of the cross-border business amidst a difficult trade environment, evolving global regulations, and other challenges such as the competitive landscape. Given developments in the global commerce, such as the trade tensions, we made the decision to reintegrate the international cross-border business into the Singapore postal and logistics business. This move is expected to achieve business synergy and improve operational efficiency for SingPost going forward.
Five, the Post Office Network remains loss-making, and SingPost is engaged with the Singapore government on the future operating model that will place the postal service on a profitable and sustainable footing. Now, moving on to the financial results. What is important to note is that with the sale of SPAI, we have deconsolidated the business in the full year results upon completion of the transaction on 27th March 2025. These continued operations reflect the performance of the divested business, while continuing operations cover the current businesses in the group's portfolio. We faced a challenging operating environment in the second half, particularly for the international cross-border business and in the Australian market. However, two of the group's businesses, property and freight forwarding, performed well. This resulted in a marginal loss of SGD 0.5 million in the second half.
For the full year, while revenue was lower, largely due to the international business, operating profit grew by about 31% year-over-year. After-tax profit came in at SGD 245 million on the back of the exceptional gain from the sale of SPAI. Excluding such one-off items, the underlying net profit was lower year-on-year due to the higher finance and tax expenses and lower interest income and lower contributions from our discontinued operations. In the following slides, we will discuss the financial performance. To recap, at the start of the financial year, we changed the financial reporting to three segments of Singapore, International, and Australia. With the sale of SPAI, which held the bulk of our Australian business, the Australia segment now comprises the remaining business of partner solutions in that market. This table shows the performance of the remaining business that is excluding the discontinuing operations.
Overall, group revenues were lower in the second half and full year amidst a challenging environment. The Singapore segment registered a modest revenue increase of 2.9%, underpinned by the property business, which recorded strong 11.9% growth. Moving on to operating profit. On the operating profit, property and freight forwarding improved in the second half, though this was offset by lower profit from Singapore postal and logistics and losses at the international cross-border business. For the full year, the higher group operating profit was due to the increases from Singapore and property, which outweighed the lower performance in the other segments. On the full-year performance as well, we have presented a pro forma table to show how it would look if previously unallocated business-related corporate overheads were allocated into the postal and logistics business.
As you see in the table on the bottom right-hand side, if the disposal of SPAI had taken effect on 1st April 2024, the postal and logistics business would have made a loss. However, we have taken steps to rightsize the cost base. Going into the segments. In Singapore postal and logistics, the second half performance was weaker, mainly due to lower delivery volumes and lower contributions from other services such as financial services, mailroom, and warehousing, some of which ceased during the year. While this was largely reflected in the full year, the benefit of the postage fee increase in the first half helped mitigate the overall performance. As a result, full-year revenue was relatively steady while operating profit. The other business in Singapore segment, Property Leasing, comprise mainly SingPost Centre. Revenue and profit at SingPost Centre showed a good performance.
Rental income was higher on the back of increased occupancy at both the retail and office space. Overall occupancy rate of the property rose 2 percentage points. It is at 98.2% compared to 96.2% last year. In the international segment, the results were mixed. As mentioned earlier, the international cross-border business has been facing recurring challenges in this competitive operating environment, currency and air freight cost volatility, as well as geopolitical risk. Cross-border delivery volumes have declining amidst these challenges, resulting in the decline in revenue and profit performance. On the other hand, the freight forwarding business under Famous Holdings has done relatively well on the back of highest cubic rates during the period, although overall profit was down for a full year on margin compression. Finally, in the Australia segment, as I have mentioned earlier, this comprises only QS Australia.
Revenue has come down mainly due to the streamlining of operations including the cessation of the QS New Zealand business. Now on to financial position. The Australia divestment has significantly enhanced the group's financial standing, supported by the proceeds and disposal gain. As we indicated previously, the unlocking of value of our assets will go towards debt reduction, shareholder returns, strengthening the balance sheet, and funding future growth of the business. All the Australian dollars denominated borrowings have since been repaid. The remaining borrowings on our books now comprise of SGD medium-term notes totaling SGD 350 million. The net cash proceeds have boosted the cash position to almost SGD 700 million. This cash position is before accounting for the proposed special dividend. To return value to shareholders, the board has proposed a special dividend of SGD 0.09 per share for shareholders at the upcoming AGM.
This amounts to SGD 202.5 million, which represents approximately 2/3 of SGD 302 million. Allow me to speak on what's ahead before we open for questions. In terms of the operating environment, uncertainty in the global economy has intensified with ongoing trade tensions and unsettled supply chains disrupting international commerce. These pressures are further exacerbated by geopolitical tensions. These challenging conditions intense by the second half are expected to continue in the financial year ahead. On the group business outlook, the impact is expected to be pronounced in the logistics sector and is particularly challenging for the cross-border business. We are responding to these challenges by sharpening our focus on the core business while reinforcing resilience to navigate the evolving landscape. Operations are being streamlined to improve efficiency.
The international cross-border business is being reintegrated with the core Singapore postal and logistics system, optimize resources, and drive operational synergies. That said, the cross-border logistics services remain a highly relevant and valued component of our service offering. It will continue to be delivered as part of SingPost integrated solutions, leveraging the international postal network. We are also working on strengthening the SingPost postal and logistics capability and enhance efficiency. We have announced a SGD 30 million investment to expand processing capacity for small parcels at the Regional eCommerce Logistics Hub, and this is targeted for completion by mid-2026. On the Post Office Network, this remains loss-making, and we are engaged with the Singapore government on the future operating model that will place the postal service on a profitable and sustainable footing.
Lastly, we remain focused on disciplined capital management, prudent cost management, and protecting cash flows to maintain financial strength. As I've shared, we are realigning the cost base to reflect the structure and scale of the post-Australia divesting organization. This will help us preserve financial agility and support sustainable performance in the challenging environment ahead. The group also continues to explore opportunities to progressively divest and unlock value of non-core business and assets. We certainly, the group's treasury post-divestment of the Australia business represents a significant step forward in our journey. This is ongoing, and we will update as appropriate. With that, I come to the end of our presentation. I'll be happy to open the floor for questions. Thank you.
If anyone has any questions you can just raise your hand. Your question?
Yeah, exactly. Just to check for your second half, likely the weakness is supposed to persist into next year. Basically for the full year, your core business should be likely break even to set losses. Is that correct, Isaac?
We have already taken action to rightsize and streamline the structure of the business as well as to a lot of business synergies. A lot of these actions we have actually started taking at the start of the year, which was the fourth quarter.
These actions continue into the current financial year as well. What we have shown previously in terms of the pro forma, that was on the basis of the full year impact of cost in 2024- 2025.
Understand.
Given the activities that we have done in the last quarter, we should see a lot of these savings in the new financial year.
Can you quantify how much is this savings roughly for, let's say, half a year or per year?
At this point, we are not able to share that there. But most definitely, you will see this in the first half itself.
Understand. Okay.
But maybe one way to look at it as well is that, compared from the prior year to this year, that cost has already come down, and it will continue to come down
going forward as well.
Any rough sense, like a range? Because if not, it is very hard for us to quantify what kind of cost savings, and then the only way we will know it is six months later. Because in the first four quarterly, you also do not update only under the EBIT. Yeah. Is there any range that we can roughly know what kind of range of cost savings there is? Because it is hard for us to actually even model anything based on this. Yeah.
I think what I can say is that it will be a material number. I think where we are today with the business is that we are undergoing a board transition as well as a reset of the strategy. I think it becomes very difficult for me to give you any sense at this point of time. But rest assured, there has been a lot of action taken, and we are continuing to do that work while the board transition is ongoing at the moment. That will then facilitate the acceleration of the reset of the strategy. As you have seen in our announcements, we have recently appointed three new directors, and we will be sharing more information on this transition in the coming weeks as we move into the AGM in a couple of months time.
Understand. Part of your FY 2025 revenue, how much of it is from the recent sold off?
The way that we have shown our results, the full SGD 813 million or SGD 814 million revenue is from continuing operations.
The way that we've presented our accounts does not include the revenues of the discontinued operations. The discontinued operations, the profits are shown as a single line.
Got it.
But if you were to look in the note to the accounts, you will see that for the current year, I believe, the discontinued operations had revenues of about SGD 1.1 billion.
Okay. Got it. Any updates also on the Freight Management Holdings? Because I think previously, this was part of the asset listed for sale, and we understand that more talks are ongoing. Any updates on that?
Famous, which is a freight forwarding business, it continues to be identified as a non-core business. Discussions with potential parties to acquire the business are ongoing. Unfortunately, at this point in time, there is nothing additional that I can share with you. But we are quite pleased with the performance of the business in the prior year, and it continues to generate value for us.
Previously, I think I remember the business was cutting for a slight decline, but actually the business performed well better than what all of us expected. I think it was quite soft, flat. Would that be able to get you a better pricing in terms of selling the business? More than what you previously expected? Yeah.
I think that is one factor to consider. You will also need to consider other factors like the volatility of the market as well. That space right now, facing quite a bit of uncertainty just because of the geopolitical situation. Fortunately for Famous, its exposure is somehow managed just because of the trade flows or the lanes that it is more involved in. However, if there were to be an escalation in terms of these geopolitical tensions, I do not think any freight forwarding company would be spared.
Mm-hmm. Understand. Assuming, let us say the buyer, how does he value the company? Value by estimated profits forward or he look at your historical last year's numbers to give you a value? Like how-
Most typical buyers will look at both. They will look at the historical performance as well as the potential ability to generate cash flows going forward, as well as what the market comps are trading at. Typically, this will be kind of the various angles a buyer would come from.
Okay. I understand. Because I understand that you have been discussing this for quite a while, right? Last year. Now that the numbers are slightly better than expected, would any pricing change because then the forward will be adjusted costing outwards and your historical are. The pricing should be either going up or they buy cheaper in a PE multiple.
As I shared, that is only one factor. I need to look at where the market comps are and what's the volatility going forward. There are a few factors involved.
Understand.
I think on top of that, there's also deal specific factors like certainty of closing, and what are the tail end risks, if any. All these will need to be considered in totality when we consider any offer from a buyer.
Understand. So the estimated pricing will be still same range?
Yeah, it's not changed. They'll be still within the range.
Okay, got it. Thank you so much.
Hi there. Thanks for the representation, Isaac. On your exposure to either Asia or China route, can you maybe just share what is the exposure at the group level of international business?
At the group level, our exposure is predominantly Asia. While we do have some exposure to the U.S., at this point, it is not material for overall trade flow. As I said, as I was sharing with Jerry as well, if there is any impact on the kind of U.S., China flow, essentially it will likely reshape the rest of the growth side.
The other part is on the cost savings. Where is the source of this cost savings coming from?
I think it is 2x. Firstly, we are looking at collapsing the corporate structure, and that has mostly already been executed. As you would have seen, a number of my colleagues have exited the business.
We continue to look for ways to include efficiencies within the business. Secondly, we are also looking at unlocking business synergies by relooking some of our processes as well. That is ongoing, and that can also be seen with the reintegration of the international business into the Singapore business.
This one last one. I noticed the Singapore e-commerce was down. Is it a reflection of the industry or was it more specific to you?
I think as we shared in the last quarter, we did have some service issue with one of our customers. I am glad to say that we have already recovered from those service issues. More generally, the market is also a bit softer just because of the economic uncertainty. Definitely that has kind of impacted the market. We are also starting to recover and we should see improvements.
Hi, Isaac.
Just one more question. I see that the Post Office Network is still loss-making. I think there is a few review with the government still going on. Will it basically affect this cost line or? Because I see that for the second half, it kind of improved like 10% from the previous year. Was there some rationalization of post offices as well?
Unfortunately, last year, we have not been able to make too many changes with the network. That slight improvement that you are seeing there is actually the wage credit. There was a wage credit last year that was recognized just across. It was kind of recognized for two years in the financial period. That was a bit of artificial too.
But we are continuing to engage the government, and this is one of the core focuses of my colleague, [Selena] , in terms of engaging the government to address this. I know we have been saying for a while now that we are engaging with the government for a sustainable model, but we will continue to persist. This is something that is top of our list.
Then to follow up to their question, so does the cost savings, they do not come from this line, just basically from the postal and logistics side, not the Post Office Network side?
Yes. Not the Post Office Network. That savings has not fully materialized yet.
Then what is the view on another postal rate hike with the government? So you think it is possible? Is that one on the list?
That is one of the areas where we are engaging the government.
Okay, thanks.
What is the longevity of the business like? How do you see two to three years now that you do not have Singapore Post as not doing so well? Anyway, I think 5%- 10% there is a room for. What will it look like in the next two to three years? What assets area are you looking at?
First off, I think we are very committed to our plan to continue to unlock value for shareholders. And what that has done is that not only have we crystallized value creation and brought forward the unlocking of value and return capital to shareholders, but we have also strengthened our balance sheet. So based off disposal of SPAI, we have paid down approximately SGD 600 million of debt. We are currently in a net cash position, so we are very well-positioned for the next phase of growth.
We believe that the business in Singapore is a sustainable one and there is room for growth. However, at this point in time, while we are working through the strategy reset as well as the refresh of the core, I am unable to share further details with you. But in the coming months, as we complete that transition and the reset of strategy, then we will be able to come back with more.
I have a question on the finance expenses. So of course, with the therefore the SGD 350 million debt on the balance sheet. If I remember the interest rate is about 2%, is that right?
The remaining MTNs of SGD 350 million will cost us approximately SGD 10 million in interest expenses, yes.
Yeah. You have that. It is not shown in this full year results yet, right?
No. Full year results, if I recall, our finance expense is about SGD 26 million.
That includes the amounts paid on the Australian dollar funding for the acquisitions. That number should drop.
Should drop
-to around SGD 10 million. But that doesn't include the perks.
Not includes. Okay. Yeah.
Yes, Sarah.
A couple questions from me. Just trying to get a sense of what actually goes on behind the scenes when you consolidate the Singapore and international businesses together, and what sort of synergies we can expect from there.
Right. Previously, the two teams were run by separate management team. Right now, given that the structures have collapsed, they are working a lot closer in terms of using both customers, local as well as international. Previously, the international business was focused more on growing overseas lanes, which we have found very challenging to grow, just because those commercial lanes, we face a lot of competition. Right. Where we are refocusing now is where our competitive advantages are, which is within Singapore on the Post Office Network. So providing those type of services where we have profitable lanes to our customers, both inside and outside of Singapore, but with the focus more on product or the solution that's driven through Singapore. Does that make sense?
I think you're doing more to looking into the future. I'm not sure whether you can share a specific timeline for the strategy reset so we know roughly when.
I think the first thing that must happen is the transition of the board. While the management team has already been working on the components that's required to reach the discussion and the reset of the strategy, we believe that it is only fair for the new board to be fully constituted and then work with management to finally agree the strategy. What that means is that, given the transition on board is likely to formally occur at the AGM, then that will need to happen before we will come out to announce.
Understood. One last question from me is, are there any developments or negotiations with the authorities that may help to precipitate the sale of SingPost Centre?
Those conversations are ongoing. Given the conclusion of the recent general election in Singapore, we have started to pick up pace on some of those discussions. But right now, there's nothing that we can share with you.
So as I checked, you know the end of this year, you have a cash of about SGD 696.4 million. So if you pay out about SGD 200 million, you will have probably about SGD 496 million. As your ordinary dividend, maybe you've got SGD 150 million cash left on your balance sheet. What will be the use of this cash? Because other than your normal operating expenses, which don't need to use actually, only less than 20%- 30% of this cash level. The rest are just sitting there for a long time, not being efficiently used, so your ROE is very low. This has been actually occurring for a long time. That's been back like two years ago, since you were selling the business.
I understand you have CapEx plans, but the CapEx plans is only about maybe SGD 30 million-SGD 40 million. So it doesn't even move the needle. So what's the rationale of keeping so much cash on the balance sheet rather than paying off debt or more debt so that the interest cost will be lower? Or, you know, like-
As we shared in my presentation, the cash will go towards repayment of debt in terms of share of the future growth as well as our balance sheet management. In terms of balance sheet management, on the books, we do have quite a significant current liability in terms of the terminal fees. As at year-end, that amount was about SGD 160 million, and those are current, so it is prudent to have about that amount there. On top of that, some of the plans that we have announced include the SGD 30 million investment. On top of that, if you look at our debt profile, we do have SGD 100 million of medium-term notes coming due next year. These are just some of the considerations. On top of that, as part of the strategy reset, we are also looking at growth opportunities.
I believe that while I take your point on the fact on yield and return on equity, and that is definitely something that we take into consideration. Because what we are comfortable paying out, what we protect now, does give us a bit of space to do what we need to do. I think a lot of this will be clear once the reset of the strategy has been announced.
Understood. Got it. After the strategy reset, you all deemed that you have more cash than you need. Will you then declare more dividend to shareholders, or it really depends?
That is definitely an option.
Okay.
That is one of the options. But for the current climate now, with the barriers and everything, it is actually very hard for you to buy any businesses, I would think so at the current state. So when would you think that it will be a closer state that you can actually identify some businesses to purchase? That would be our thing. And with the board accepting only by the AGM, I would think so. Right? So when you think is the earliest date that you can actually do any positions?
Thinking about it, in terms of acquisitions, we are always on the lookout for opportunities that will fit our strategy and bring goals to Singapore Post. But as I shared, I think there is a few hurdles that we need to cross first, and one is maybe the reset of the board, then the reset of the strategy.
Then going forward, we can perhaps share a bit more. But I think that that is a rough indication of where the timeline is.
Got it. And what would the new admin expenses roughly going to be like for the group? Because currently it is about SGD 160 million roughly. So what would be the new level?
So that SGD 160 million actually includes some trading elements as well. So it is not a good reflection of what the central cost is. I think a better number to look at is the unallocated corporate cost, which we have shared in the segmental reporting. That number, again, as I shared, is a full year number for 2024/ 2025, and that is already on a downtrend for 2023/ 2024.
And as I mentioned earlier, we have already taken action within the last quarter to reduce besides the cost base, of which the full effect you see in the.
On the international business, how large is the headcount?
So the international business used to have its own organization as well as a sortation or rather, an air transit side location at Changi Airport. So that team has now been collapsed into the Singapore business. So it is a lot more streamlined now. But we do still require a number of people to run the operations on the ground in Singapore.
Just on international business, if you de-emphasize the overseas part, is there an example of a route that is it the China to Singapore, then Singapore to Southeast Asia? So is it a typical route that you probably may not be so focused on?
No. That is exactly right.
So actually, before COVID, that was the focus for the business, which was from source country to Singapore and then Singapore to the rest of the world. Because Singapore has very strong connectivity to many locations as well as frequency. So high frequency and lot connectivity. During COVID, we lost some of that edge, and because of that gap in the market, a lot of our customers as well as our competitors went out to develop new solutions and products. We have also tried to do that. However, in that space, we were up against very intensive competition, and the margins and competition on pricing is very high. So what we have found in the last two to three years is that it does not really make sense for us to play in that space given the risk as well as the volatility.
What we are really doing now is going back to where we really shine, which is that from source country into Singapore and then to the rest of the world. We are really going back to that.
Seems the same. Source back to Singapore, but now it is from source to. Sorry, what I missed in the link was that
during COVID we had to come up with solutions that bypass Singapore.
Oh, okay. Sure. We tried to use other hubs, or we used to go direct commercial solutions with direct source country to the other country.
That part of the business, while it is a very big space globally, we did not have scale. We lacked scale in that space. We were not able to really compete effectively, smartly.
Now we have decided to move away from that and focus on where we have a strong competitive edge.
Which is Singapore as the hub.
Correct. Which is Singapore.
On Famous, you do not have to give me the amount, but is it a high net debt company or is it a high net cash company or not?
It is net cash.
What are the plans for the SingPost Centre? Why I am asking that is like, is there a need to actually own 100% of SingPost Centre? Why not own 51% and own the, you still control the decision. Is the hub here being moved to the new hub there? I think it came on the news in March. What are the plans? I know I should know this, but I forgot.
The plan really is to centralize all the operations in [inaudible] .
But it will take some years for us to move all the operations. Right now, with the announcement that we made last month, we are starting to build up our sortation capacity in [inaudible] , and this SGD 30 million investment will increase our sorting capacity from 100 to 400. That will enable us to potentially consolidate volumes for Singapore and perhaps even open up our network to partners. That, we feel, is a very strong push for us because not only will it improve our operations, but we will also bring efficiencies into the Singapore logistics space for e-commerce. We are quite excited by the investment, and we see that as one of the key kind of cornerstones of our Singapore business going forward. In terms of this building, currently, we still do use it for operations.
As you said, potentially selling part of it is an option, but until we complete the reset of our strategy, no decision has been taken up for partial divestment. That being said, the SingPost Centre continues to be identified as a non-core asset, so divestment of this building is definitely on the cards.
The current sorting capacity here will basically be moved. That space will be used for? What would that space be used for?
The space here, I believe we mentioned in the announcement as well, that when we eventually move out of SingPost Centre, we have about 80,000 sq ft of space that could be used for.
83,000 sq ft
83,000 sq ft of space for other purposes as well.
No, if you do more like, basically do more commercial than this itself.
Yes, potentially.
Okay. Do you need more special attention from the regulators to sell different regulatory, different building, different types and different regulatory?
Right now, the space that we use for operation is designated as an industrial space for postal activities. Unless you can find another postal user, you would definitely need to apply for a change of use for you.
Maybe [inaudible] can assist to do that or just maybe apply online the outcome for online.
No. Normally, there will be a charge, and it could be quite expensive. But obviously, when we do come to that point, there will be a whole business proposal, and we will need to make the right returns before we go ahead.
Thank you.
Thank you.
I think we have time for maybe one more question.
Is it possible, just to tap you on this outlook in terms of 3M ratio. Are you seeing more opportunities in terms of localization of supply chains, given that a return to more of a closed market in Singapore as opposed to or do you see that more risk to the downside in the near term?
Interesting question. It is quite a hard one to answer because there are just so many variables, and we do see players moving in slightly different direction. But we do know that some have chosen to forward-base their supply chains. That would definitely be a big shift, but it could also be a space where we could take advantage of. We are watching this space very closely, which is why we feel that although the international business has been challenged, it is still a key offering for us, which is why we are now reintegrating it into the business and offering it as a total offering to our customers. We definitely do see some opportunities there. But again, this space is one that is quite volatile, so we are tracking it closely.
What do you mean by bringing closer to your supply chain?
Some players, what they have done is that they have decided to forward-base their supply chains. For example, if you are selling something from China to Southeast Asia, instead of selling your parcel or goods from China to Malaysia, China to Indonesia, you might forward supply all your goods to Singapore or to Malaysia and then do your fulfillment from that country outside of the manufacturing country.
I see.
It's one of the trends that we're seeing.
Is that to get around tariff or is this just to just have better access?
Typically, it's for improved service level, so the lead times are faster.
If there is no more questions, we will bring the session to a close and thank everyone for their participation and our webcast viewers online. Thank you.
Thank you, everyone.