Very good evening, ladies and gentlemen, and thank you for joining our fourth quarter FY 2025 analyst briefing. My name is Faizan from the Investor Relations team, and I will be your emcee for today's session. We are pleased to be joined by Encik Zahid Osman, President and Group Chief Executive Officer, Encik Raja Azlan, Chief Strategy and Sustainability Officer, Encik Afendy, Chief Financial Officer, and Encik [Adam Fadzil], Head Strategy and Investor Relations. Before we begin, please refer to the disclaimer statement in the presentation deck. This presentation may include forward-looking statements relating to future plans and expectations, actual results could differ due to unknown risks, uncertainties, and other factors beyond MISC's control. With that, without further ado, I would like to invite Encik Zahid, our President and Group Chief Executive Officer, to deliver his opening remarks. Encik Zahid?
Thank you, Faizan. Assalamualaikum. Good evening to everyone. Welcome to our analyst briefing for quarter four results, as well as the full year 2025. I will begin with the full year performance and strategic progress across our MISC 2030 ambitions. Afendy will cover the financial performance in detail. Raja Azlan will conclude with the market environment before we start the Q&A session. 2025 was a positive year for MISC as we continue progressing towards MISC 2030 ambitions, delivering positive outcome both in our financial performance and across all three strategic pillars. Profit after tax increased by 50% to $406 million, supported by stronger offshore business and petroleum business and lower impairment. We were able to capitalize on the stronger charter rates environment towards the end of 2025 for the tanker market. Operating cash flow rose by 41% to $1.3 billion.
The stronger cash generation enhances our balance sheet and enables the company to declare higher dividends of MYR 0.38 per share, an increase of MYR 0.02 year-on-year. This is the highest dividend declared in more than 15 years, reflecting our continued commitment to delivering sustainable shareholders' return. These results did not occur by coincidence. They reflect disciplined execution across the group and also the discipline in delivering and executing our strategy. Our strategy provides a clear framework for us as we strengthen today's earnings while positioning the group for long-term growth and energy transition opportunities. Throughout 2025, we remain focused on translating strategy into execution, delivering measurable progress across all the three pillars. Resilient Core. We have further strengthened our earnings stability and cash-generating businesses through asset deliveries and new contract awards.
Under asset deliveries, seven LNG carriers were successfully delivered to QatarEnergy under the long-term charters, with five delivered ahead of schedule. This further strengthens contracted revenue visibility and reinforces the stability of our gas earnings profile. We also commissioned FSU Puteri Delima Satu in Pengerang, adding stable recurring cash flow while supporting national gas supply security. The project was completed safely with more than 500,000 man-hours without lost-time injury. Under new contract awards, I am pleased to share with you that we recorded growth across all four key businesses in MISC in 2025. In gas, we secured long-term charters with PTT for two very large ethane carriers, expanding our ethane transportation portfolio. In petroleum, we secured long-term charter for two LNG dual fuel Suezmax, completing the dual fuel capability across all our tanker classes.
While in offshore, we secured a contract for a floating production unit for PETRONAS Carigali, making our strategic entry into the Brunei as a country. In MHB, we secured an EPCIC contract from Vestigo Petroleum for offshore infrastructure. These actions enhance portfolio quality, extend earning visibility, and strengthen future cash flow resilience across the group. Turning into our second strategic pillar, the Profitable New Energy, we made progress with our entry into new energy value chains in a more structured manner, focused on capability building ahead of large-scale investment decisions. Our first foray is into CCS, carbon capture and storage value chain. We have successfully entered into the CCS value chain through a joint venture with PETRONAS CCS Ventures and Mitsui O.S.K. Lines, or MOL, combining complementary strengths in asset ownership, operation, and customer access. The joint venture will be responsible for owning and operating a new LCO2 carrier.
Our second foray is into transition-ready offshore and shipping solutions, where we secured approval in principle for an ammonia FPSO concept and ammonia fuel LR2 tanker. This will certainly strengthen our fuel readiness across our fleet. These decisive actions demonstrate our building block for the sustainability of our business going forward. It is very clear that our approach is all about building capability today and validate commercial pathway, and only we are scaling up when returns are clear. For our third strategic pillar on the Decarbonization, we continue to strengthen our asset competitiveness and long-term commercial relevance in this area. 2025 was also the year where we achieved 36% lower emissions compared to our 2008 baseline for our fleet average greenhouse gas emissions intensity. This is reflecting of our ongoing fleet rejuvenation as well as operational efficiency improvement. Once again, this achievement show that we delivered on what we promised.
As in previous year, our consistency in executions, strong operational performance, reliability, and high governance standards continue to be recognized by external parties. Together, these recognitions reinforce stakeholder confidence in how MISC operates, manage risk, and deliver performance. Having strengthened the portfolio in 2025, we entered 2026 with continued momentum. Since the year-end, we have secured additional long-term contract-backed growth across both our Resilient Core and Profitable New Energy business pillars. Under Resilient Core, in gas, we secured long-term time charter contract for three vessels with PETRONAS LNG. While in offshore, we entered into bareboat charter and operations and maintenance agreement for an FSO in Papua New Guinea with ExxonMobil. This contract represent a strategic expansion into a new production basin and strengthen our secured asset pipeline. P.N.G. also marked the second successful footprint expansion in addition to our Brunei entry.
Under Profitable New Energy, we have also made significant progress in achieving FID in this space. We secured a long-term charter for a liquefied carbon dioxide carrier, or LCO2 carrier, with the Northern Lights joint venture project. This is with our partner, K Line. This contract marks our first commercial entry into the carbon transportation value chain, with a second charter expected in later part of 2026. In petroleum, AET secured a long-term charter for a dual-fuel ethanol-ready Suezmax DPST or dynamic positioning shuttle tankers. The vessel will equip with an electric energy storage system. For us, growth remain disciplined and contract-backed with clear focus on earning visibility. We have entered 2026 as a stronger and a more resilient organization, reflecting steady progress in advancing the MISC 2030 ambitions. This is supported by higher quality portfolio, a stronger cash generation, and clear earning visibility.
Building on the progress achieved, we will continue carrying this momentum through the year, focusing on delivering long-term value for our stakeholders. With that, let me hand over the presentation to Afendy, who will take to the detailed financial performance for MISC in quarter four and in full year 2025. Thank you.
Thank you, Encik Zahid . [Non-English content] , and very good evening, ladies and gentlemen. I will share with you the performance of the fourth quarter as well as the full year of 2025. Well, financial year 2025 was a year marked by operational transition and strengthening our financial stability across the group. Performance during the year reflected a combination of market dynamics, the transition of FPSO Mero 3 into the operations, and varying stages of project execution across our business segments. In the fourth quarter of 2025, the group continued to demonstrate improved core operational performance despite the presence of accounting-related expenses and one-off items. For the quarter ended 31st December 2025, the group revenue stood at $677 million compared to $753 million in the corresponding quarter.
The year-on-year decline was mainly driven by softer contribution from gas as well as marine and heavy engineering segment. Our gas segment recorded a lower revenue, mainly driven by the tapering of construction activities for the Puteri Delima Satu FSU conversion, as the project nearing its tail end, together with reduced earning days, followed by contract expiries and vessel disposals. Revenue in marine and heavy engineering also declined materially as several major key projects are nearing completion, which led to reduced activity while newer projects are still in the early stages of execution and have yet to contribute meaningfully to the top line. This decline was partially offset by stronger contributions from petroleum segment, which has benefited from the higher freight rates and improved earning days during the quarter.
The offshore business segment also delivered an uplift to the revenue supported by contributions from the newly acquired FPSO Kikeh and the transition of FPSO Mero 3 from construction into operational phase. Against the preceding quarter, the group revenue remained broadly comparable, increasing marginally by 2%. The slight uplift was mainly driven by petroleum as well as marine and heavy engineering segment, supported by higher freight rates, improved earning days and increased project activity. The group recorded operating profit of $125 million in quarter four 2025, representing an increase of 41%. This improvement was mainly driven by stronger performance from the offshore business segment, which recorded operating profit of $43 million in quarter four 2025, marking a turnaround from an operating loss of $29 million reported in the same period last year.
The significant uplift was supported by the recognition of insurance recoveries amounting to $75 million arising from FSO Benchamas 2 settlement, partially offset by the provision for doubtful debt amounting to $43 million relating to our ongoing litigation on the remaining trade receivables balances from PCPP. In this regard, MISC Berhad solicitors continue to engage with the liquidator while exploring available avenues for the recovery. In contrast to the stronger year-on-year performance, the group operating profit declined by 11% quarter-on-quarter from $157 million in quarter three 2025 to $125 million in quarter four 2025, mainly from the gas segment. The decline was driven by the inventory write-off, accelerated depreciation for Puteri Satu class, higher operating costs, onerous contract provision for our vessel Princess Sapphire, as well as lower revenue contribution.
While the group continued to deliver resilient operating profit, our headline profitability remained impacted by impairment provisions in the gas segment. The group recorded profit after tax of $5 million in quarter four 2025, which was marginally above breakeven, with vessel impairment of $84 million recognized during the quarter. Nonetheless, this marginal profitability represent a turnaround from the loss of $91 million recorded in quarter four last year, primarily driven by stronger operating performance and lower vessel impairment. Against preceding quarter, the group profit after tax declined from $131 million recorded in quarter three 2025 to $5 million in quarter four 2025 due to higher gas vessels impairment, as mentioned earlier. Cash flow from operations strengthened to $453 million in quarter four 2025, reflecting an improved core operational performance across the group.
The increase was driven by higher cash receipts from customers, which have negated by payments to vendors and subcontractors during the quarter. Compared against both corresponding and preceding quarter, cash flow from operation increased, mainly supported by stronger cash generation from offshore, including insurance recoveries as well as higher contribution from petroleum segment driven by improved operating cash inflows. Next. For the full year financial year ended 2025, the group revenue stood at $2.6 billion, representing a 10% decline. The overall reduction primarily reflects softer contribution from gas as well as marine and heavy engineering segment, partially offset by stronger performance from petroleum as well as offshore business segment. Revenue decline within gas segment mainly due to lower earning days following contract expiries, layups and vessel disposals, together with softer charter rates and reduced construction activities on FSU conversion following this delivery during the year.
marine and heavy engineering segment also recorded lower revenue as several key projects progressed towards completion. These declines were mitigated by higher revenue from petroleum segment, which has benefited from stronger freight rates and improved earning days, while offshore business segment also delivered higher top-line contribution, supported by consolidation of FPSO Kikeh and the transition of FPSO Mero 3 into full operational phase, which has strengthened our recurring operational income. Overall, the group revenue moderated year-on-year. The portfolio mix continued to shift towards more operationally stable earnings, providing a stronger foundation for profitability as well as cash generation. For financial year 2025, the group recorded operating profit of $649 million, representing 40% increase. The improvement was primarily driven by stronger contribution from the offshore business segment, which offset the softer operational performance from gas and marine and heavy engineering.
The offshore business segment was the key driver of growth, supported by the transition of FPSO Mero 3, contribution for FPSO Kikeh, as well as the recognition of insurance recoveries. Within the petroleum segment, operating performance was supported by the gain from the unwinding of the interest rate swap of $33 million recognized during the years. The group recorded profit after tax of approximately $406 million in 2025, compared to $270 million in 2024. The improvement largely mirrors the stronger operating performance mentioned earlier, particularly the significant turnaround within the offshore business segment. At the same time, year-on-year improvement was further supported by lower impairment provisions compared to 2024, which helped uplift headline profitability, despite softer performance in gas and lower contribution from marine and heavy engineering segmen t. While the profitability within the petroleum segment was marginally higher.
Overall, the group operating cash generation remained robust, reinforced disciplined cash management, and the resilience of the portfolio. The cash flow from operations strengthened significantly to $1.3 billion in 2025, compared to $940 million in 2024, driven by stronger collection from customers, primarily supported by contribution from FPSO Mero 3. Compared with the prior year, operating cash flow increased by $388 million within the offshore business segment, being the key contributor. Offshore cash generation improved by about $292 million, largely attributed to FPSO Mero 3 following its full year of operation, as well as the insurance recovery from the FSO Benchamas 2, as I mentioned earlier. Next. Moving to the next slide on the balance sheet and gearing position. The group maintained a stable and disciplined financial profile at the year-end.
Total assets stood at $13.1 billion, lower than the prior year, mainly due to depreciation and impairment charges, together with amortization of finance lease receivables. Cash and bank balances remained broadly stable at around $1.5 billion, reflecting our continued liquidity strength and healthy cash generation. Shareholders' equity remained resilient at about $8.6 billion. Total borrowings declined to $3.2 billion, reflecting our higher debt repayment during the year. As a result, our gearing has improved both on gross as well as net gearing. Our debt profile remains prudent, with approximately 92% is at fixed-rate borrowings, which provide a protection against interest rate volatility. Overall, the group continues to maintain a strong balance sheet supported by disciplined capital management and prudent risk positioning. Next. Consistent with the previous slide, the group maintained a healthy liquidity position while continuing to optimize its debt profile in line with our disciplined capital management approach.
Cash balances remained stable at $1.5 billion as at December 2025, broadly comparable with the prior year. This reflects strong operating cash generation, which has largely offset investing and financial outflows during the period and supported overall financial flexibility. Our borrowings declined to $3.2 billion compared to the prior year, mainly driven by the repayment of our corporate bond during the year. Overall, stable cash balances together with lower debt balances reinforce the group's prudent funding strategy and supports the improvement in gearing ratios highlighted earlier, positioning the balance sheet on a stronger footing going into the next financial year. Next. I'll share with you the quarter by quarter business segment performance. I'll start with gas. Gas recorded a lower revenue. Recorded revenue of $102 million in quarter four 2025, representing a decline of $19 million compared with the corresponding quarter.
The decrease was mainly attributable to lower construction revenue from FPSO conversion, as the project has completed last year in 2025, as well as reduced earnings following contract expiries, vessel disposals, and lay-ups. Compared with the preceding quarter, revenue declined by $21 million from $123 million, primarily driven by lower construction revenue as well as weaker spot market rates, consistent with the year-on-year trend. Operating profit for the quarter declined $40 million compared with the corresponding quarter, mainly due to lower revenue, as mentioned earlier, reduced construction profit, inventory write-off, and onerous contract provision for Princess Sapphire . The inventory write-off amounted to $15 million, mainly comprising of accounting write-off of $11 million relating to few vessels under 3A and 3B leases classes, and a further $4 million relating to Puteri Satu class. In addition to the onerous contract provision for Princess Sapphire of $7 million during the quarter.
Against the preceding quarter, operating profit declined by $34 million, driven by accelerated depreciation relating to the Puteri Satu class, as well as the same onerous contract provision and inventory write-off, which I just highlighted. Loss after tax stood at $96 million, improved by 25% compared to a loss of $128 million in quarter four 2024, mainly driven by lower vessel impairment by $77 million. Included in the vessel impairment in quarter four 2025 are related to Seri Balhaf and Seri Balqis amounting to approximately $50 million. Against the preceding quarter, profit after tax declined by $108 million, primarily due to weaker operating profit and higher recognition of vessel impairments by $72 million.
For the petroleum segment, this segment continued to deliver resilient performance during the quarter, maintaining a term to spot ratio of approximately above 75%, which provided steady stability while allowing the segment to capture upside from favorable spot market condition. Revenue increased to $324 million in quarter four, compared to $277 million in the corresponding quarter and $203 million in the preceding quarter, making quarter four of 2025 the strongest quarter of the year for this segment. The improvement was mainly driven by higher freight rates and increased earnings. Operating profit of $94 million, representing an increase compared with both corresponding and preceding quarters, and similarly marking the strongest quarterly performance for the year. The uplift was broadly in line with higher revenue, supported by improved market condition.
It is worth noting that the preceding quarter included gains from unwinding of interest rate swap of $13 million. Profit after tax stood at $81 million, higher compared with the corresponding quarter, supported by stronger operating performance during the period. However, the profit after tax was lower compared with the preceding quarter, due to the gain that was recognized from the disposal of Bunga Kasturi 5 and Bunga Kasturi 6 in quarter three of 2025, amounting to $30 million. Excluding the impact of disposal gains and the gain from unwinding of interest rate swap in quarter three 2025, profit after tax in quarter four 2025 for petroleum segment would have been significantly higher, reflecting its stable underlying operating performance within the petroleum segment.
For the offshore business segment, this segment continued to be a key contributor to group profitability during the quarter and was the most improved business segment across all key financial parameters compared to the corresponding quarters. Revenue stood at $117 million, representing an increase of $22 million, compared with the corresponding quarter of $3 million higher than the preceding quarter. The year-on-year uplift was mainly attributable to FPSO Mero 3 reflecting a full quarter of operational activities, compared to the construction revenue previously. As well as the consolidation of FPSO Kikeh following its acquisition. Compared with the preceding quarter, revenue growth was supported by higher production of FPSO Mero 3, operating above its nameplate capacity of approximately 180,000 barrels per day.
Operating profit for this segment improved significantly by $43 million, compared with an operating loss of $29 million in the corresponding quarter, although marginally lower than the $47 million recorded in the preceding quarter. FPSO Mero 3 remained a key earnings driver, contributing to approximately 60% of overall offshore operating profit during the quarter. The strong year-on-year growth was mainly supported by insurance recoveries amounting to $75 million, arising from FSO Benchamas 2 settlement and lower operating costs following the operational transition of FPSO Mero 3. The positive impacts were partially offset by the provision of doubtful debt amounting to $43 million amount due from PCPP, which I have mentioned earlier.
Compared with the preceding quarter, operating profit was marginally lower than $48 million recorded in quarter three 2025, mainly due to higher costs recognized during the quarter, including the provision of FSO Bunga Kertas demob cost, as well as higher repair cost for FSO Benchamas 2, which has been offset by the insurance recoveries. Profit after tax followed a similar trajectory, increasing $16 million, compared with a loss of $43 million in the corresponding quarter, but lower than the $26 million of profit recorded in the preceding quarter. Broadly reflecting movement in operating profit and joint venture contributions. Excluding insurance recoveries and provisioning-related accounting expenses, offshore remained operationally profitable, demonstrating improved underlying asset performance and operational stability. Finally, our marine and heavy engineering.
The revenue stood at $139 million, lower than $187 million recorded in the corresponding quarter, but higher than $120 million in the preceding quarter. The year-on-year decline was mainly attributable to project phasing, including delays in Kasawari CCS project and the tapering of major projects nearing completion. The quarter-on-quarter improvement reflected higher project activity as this project progressed into more active construction phases. Operating profit improved to $13 million compared to $ 6 million in the corresponding quarter and $ 7 million in the preceding quarter. The improvement was supported by change orders and favorable finalization of several completed projects, which contributed to stronger margins. Profit after tax increased to $ 12 million compared to $ 5 million in the corresponding quarter and $7 million in the preceding quarter on the back of stronger operating performance, as mentioned earlier.
This marks another successive year of profitability for the segment, demonstrating continued operational discipline and stronger execution across projects. Next. If I can just summarize briefly on the four business segments. We continue to see the drop in performance of gas business as we have been highlighting this in previous quarters as well. Similarly, we have taken less small impairment this year compared to 2025. As I mentioned, the biggest contribution is the impairment of Seri Balhaf and Seri Badak. These are the two vessels that is contracted to Y LNG. For petroleum segment, we have seen they have managed to improve their operational performance and striding the bucket by improving the term to spot ratio to above 20% compared to 2024, of about less than 10%.
For offshore business, Mero 3 has been the biggest contribution to all the financial parameters for offshore business, and contributed significantly to not just operational profit, but also to the cash flow. Which we see for heavy engineering, we see stable profitability, and they have recorded for two successive years in the black. That's all that I have, sharing the financial performance. I would like to conclude my briefing, and I'll pass back to Faizan.
Thank you, Encik Afendy . Next, I'd like to invite Raja Azlan from the market environment output.
Thank you, Faizan. [Non-English content], and a very good evening to our friends, analysts, investors. I'll take you through the market environment looking at LNG, petroleum shipping, and offshore. In terms of LNG shipping, in 2025, the order book to fleet ratio now stands at 40% compared to around 50% in the previous year. Following a slowdown in new vessel orders amid oversupply of vessels, high new build prices, continued regulatory uncertainties, and the lower charter rate. However, the vessel order book is expected to recover in 2026, as owners look to future-proof the vessels amid regulatory and trade uncertainty. Vessel deliveries are expected to remain high through 2026- 2030. The LNGC fleet is projected to grow at a compounded annual growth rate of 9% up to 2030. Next slide, please. On the LNG supply side, the outlook for new LNG project approvals remains positive.
In 2025, we saw approximately 60 MTPA of new liquefaction capacity being secured through FIDs. This is expected to accelerate in 2026, with additional capacity of around 40 MTPA. 90% of this new capacity is coming from the USA and Qatar. Global liquefaction capacity is projected to grow about 11% annually, compounded annual growth rate, through 2030, driven by new capacity additions. While a new wave of liquefaction capacity is projected to enter the market, the actual supply will depend on project startups, which may be affected by feed gas availability, regulatory changes, and evolving environmental, social, and economic considerations. Next slide, please. LNG spot charter rates increased slightly in the fourth quarter of 2025, driven by short-term winter demand and increase in U.S. LNG supply.
Looking ahead, LNGC charter rates are expected to gradually improve in 2026, especially for modern vessels, as increasing global liquefaction capacity helps rebalance market fundamentals. Steam turbine vessels will continue to face challenges as the industry shifts to modern, eco-efficient, and lower emission vessels. The idle fleet is also likely to expand with 20-25 steam LNGs coming off charter in 2026. While the high delivery schedule of modern carriers will exert more pressure on older carriers. Despite these challenges, LNG shipping remains our strategic core segment. We continue to rejuvenate our fleet with modern fuel-efficient vessels secured on long-term charters, consistent with our resilient core strategy. By 2029, our gas segment is expected to deliver an additional of more than 15 modern, eco-efficient vessels, which will lift the proportion of next generation ships in our fleet to approximately 80%-90%.
This is an increase from the current proportion of 40%. Next slide, please. In petroleum shipping, the crude tanker order book expanded further in 2025 following a surge in new orders, raising the order book to fleet ratio to 16%, an increase from 10% in 2024. Between 2026 and 2030, around 430 new crude tankers are expected to be delivered with 330 demolitions. Deliveries are projected to peak in 2027, when most of the Supramax and VLCC orders placed over the past two to three years are scheduled to enter the fleet. Next slide, please. The petroleum shipping market is expected to remain positive in 2026, supported by strong vessel demand driven by increased OPEC+ output and sustained demand driven by geopolitics.
Charter rates continue to be supported by tight vessel availability stemming from ongoing sanctions and limited fleet growth in 2025, while geopolitical uncertainties continue to shape crude trade flows. The global crude oil market is forecasted to remain over supplied, keeping freight rates elevated through the first quarter of 2026. Our petroleum and product segment continues to demonstrate resilience, this is underpinned by a solid base of long-term charters, complemented by proactive efforts to optimize fleet utilization across the spot market, lightering operations, and time charter opportunities to strengthen overall earnings and profitability. Next slide, please.
Moving on to offshore, upstream capital spend is projected to grow steadily, reaching MYR 220 billion by 2030, surpassing the levels seen in the mid-2010s. This trend reflects the favorable industry outlook driven by increasing demand and investments in offshore resources. As a result, demand for floaters, particularly FPSOs, is expected to remain strong. The projected total CapEx for FPSO units from 2026- 2030 is estimated at around $80 billion. Close to 90% of these new projects is concentrated in Latin America, Asia-Pac, and Africa. MISC is positioned to capitalize on this upcycle in targeted regions such as Asia-Pac, South America, and also Africa, while managing affordability and risk through strategic partnerships and balanced contract structures. With that, I end my presentation. Thank you, and back to you, Faizan.
Thank you, Raja Azlan. We will begin the Q&A session shortly. Thank you. For those who wish to ask a question, as per reporter, please use the Raise Hand function. Once you are called upon, kindly state your name and organization before proceeding. To ensure that as many people can ask questions, each speaker may ask up to two questions in the first round. If you have an additional question, please raise your hand again, and we will proceed. Right. We will begin the Q&A with a question from Raymond. Raymond, go ahead. Raymond.
Yeah. Hi, good evening guys. It is Raymond from CGSI. Just a couple of questions to clarify some numbers. The impairment on the ships relates to purely LNG ships, and I think you mentioned it was Seri Balhaf and Seri Balqis. Just to confirm that these two ships alone would account for the entire impairment, or are there other ships as well? The impairment loss on receivables, is that impairment on the receivables from Yemen LNG, just to double-check? Also, when you disclose the LNG loss of $96 million in the fourth quarter, does that deduct for the impairment on the vessels as well as the impairment loss on receivables? Whether those two one-off items were actually deducted from the $96 million that you disclosed for the fourth quarter? Last question on LNG is the associates.
I think you have seven vessels that are leap chartered to QatarEnergy LNG. May I know how much that contributed to the earnings in the fourth quarter as well as 2025?
Okay. Thanks for the question, Raymond. Maybe I'll address the gas vessel impairment. During the quarter 4 2025, our total impairment is about $84 million, as I highlighted in my briefing earlier, $50 million of that is relating to Seri Balhaf. It's mostly relating to Seri Balhaf. What we have taken this year or in quarter 4 is that previously Seri Balhaf, which is contracted to Yemen LNG, we have valued it based on value in use. Upon discussion internally with the management as well as with our auditor, we felt that the best way forward is actually to look at the market value of this vessel, right?
Hence for quarter 4, we have account for it as a market value instead of value in use, given the uncertainty and the geopolitics of Middle East, and the uncertainty of being able to continue with Yemen LNG. That's the impact of the impairment of $50 million. The second question, if I can recall, you were asking the impairment receivables. The impairment on receivables is relating to amount due from PCPP, which is in the offshore business. In fact-
Sorry. What's this PCPP, what?
PCPP. PCPP Operating Company, right?
What does it stand for? Sorry.
MOMPL.
No, this is not Vietnam. If you look in our notes, in Bursa , we actually have a continuous note on this litigation with PCPP, right? We have this amount of MYR 43 million that has been outstanding for over, I think, close to 10 years. Hence, again, similarly, internally, we have taken the position that we will take an impairment given the uncertainty of the recovery of this from an accounting standpoint. Yep. I think you asked the question on Yemen LNG. All the receivables of Yemen LNG was taken in 2024.
There's no more receivables taken in respect of Yemen LNG in 2025 at all.
Okay. This impairment loss on receivables was offset against the offshore sector, was it?
Correct. Yes. You're right.
Okay. Sure.
Yeah.
Okay. Understood. How about the QatarEnergy LNG charters? How much did it contribute to your share of associates for fourth quarter in 2025?
Joint venture. From the joint venture for 2025, it's quite still minimal. It's less than MYR 2 million, right? What we have done is, like mentioned by Dzikri, I think about seven vessels over the last, what? six, seven months. Effectively, second half 2025. I think I mentioned this either quarter two or quarter three. As we receive those vessels, what we did was we have a setup cost. The setup cost, including the full depreciation of those vessels, effectively negated the revenue that's being generated by those vessels. You will probably start to see the significant or more contribution coming from these vessels when we see the full year of operation in 2026 rather than 2025.
There were some set up operating costs and also the depreciation impacted.
Right.
You will get a full-time charter revenue from day one. I don't really understand why the earnings will be so low.
As an example, some of the vessels will get in the middle of the month. Right? Or towards the end of the month. From an accounting standpoint, we depreciate the full month. Right? For simplicity, because we don't depreciate by days. We depreciate the full month. We may get, let's say, one week of revenue, if it is delivered in the last week of the month. Right? The depreciation is taken on a full month basis. Overall, that has, to some extent, impacted the financial performance of these vessels. As I said, especially in the year it's being delivered.
Okay.
As an example. Yep.
Okay, sure. If I look at the front page of the P&L, right? It has other operating income of MYR 567 million. That's a pretty large number compared to the previous quarter. Could you give us some idea what is made up of that number? What the number is made up of?
The significant amount is the recovery of insurance for FSO Benchamas 2, $75 million. We actually received that in Q4 2025.
Okay. What did you insure against that you could claim against the insurance company?
What happened is, we swapped BUK, Bunga Kertas, FSO Bunga Kertas with Benchamas. Right?
Part of the agreement is that we had with the charterer, is we're able to basically claim significant amount of insurance from Benchamas II, and that's the money that we have kept ourself. You have to also remember, I think in 2023, we actually incur significant amount of cost to repair Benchamas as well as to bring it to the yard upon the completion of BUK. Those are part of the deal where we are able to claim the insurance recovery for Benchamas II.
There was an incident, Raymond, back in 2023, if you recall, where water went into the engine room.
It was declared a total loss, right? These are the insurance compensate for the total loss situation.
Okay. I'll go to the back of the queue. Thanks.
Thank you, Raymond. Next, we have a question from Azmi. Go ahead, Azmi.
Hi, can you hear me?
Yes. We can hear you.
Yeah. Hi, all. Thanks for the presentation. Just a couple of questions also to follow up on Raymond's question earlier. I think on the impairment just now, you mentioned MYR 50 million out of that MYR 84 million comes from Seri Balhaf and Seri Balqis. May I know what's the remaining, bulk of it? Where is the impairment coming from?
It's coming from the other vessels. In fact, most of our vessels, the other vessels, we have benchmarked against market value. Especially those vessels that has come out from the long-term charter with PETRONAS or PLLSB. These are steam vessels that we are not able to find a charterer for them, right? On the spot rates. As a result of that, from a value in use, there's not much value. Hence, we have been depreciate, and on a quarterly basis, we benchmark the book value against the market value. We have seen about the 30% drop in market value throughout 2020-2025, right? Hence, those are the impairment on those vessels. Essentially, those are the older steam vessels that we are not able to find home for them for now.
Right. It's all LNG.
All LNG. Correct.
Just zooming into that just for my own note. I saw in the slides currently you have 41 vessels in total under the gas segment. May I know the split at the moment between old steam engine and the new modern ones?
The steam is about 60% of the 40 vessels today.
60%.
About 60%.
Right. Also, may I know what's the split between the spot exposure and the long-term charter?
It's almost 100%. I think 98% is term charter.
I think just to add to that, the remaining vessel that is not on charter, especially the steam vessel, is under lay-up.
Right. Basically now almost 100% all on long-term.
That is correct.
All right. Also may I know, in terms of all this long-term, what's the average rate as compared to the current spot rate for LNG?
We can't disclose those now because those are all contracted rates.
Right. Roughly, is it higher or lower in general?
The term rates are definitely higher than the current spot rates for the LNG vessels. Especially for the steam vessels, I think the rates are a bit like.
Just now we have that.
I think that was shared by Raja Azlan .
The current spot rate, especially steam, very low at MYR 10,000-MYR 15,000 a day.
Yeah.
The contracted rates are signed 10, 15 years ago. Those would be at very much higher rates.
How about the modern ones?
The modern ones, those are also in line with the market.
In line with the market. Similarly, for petroleum, may I know for the 67 vessels within petroleum, what's the split between spot and long-term?
For 2025, roughly the spot is about 20%-25%. Against about 10% in 2024, for the petroleum vessels.
All right. For going into 2026, will be around the same as well, 20%-25%?
That's right.
That is correct.
All right. The spot is mainly from Aframax, is it?
Yeah. Aframax and some Suezmax.
Okay. All right. Also probably just the last one from me before I jump back to the queue. You mentioned on the LNG, like Raymond's question earlier, LNG vessels to Qatar, I think overall the earnings are minimal, mainly because of the depreciation charges. Just excluding depreciation, do you know roughly how much that will be?
These are all associate joint ventures. We don't have the information handy because we'll pick up the number as a share of profit for these vessels.
All right. Got it. Thanks. I'll jump back to the queue. Thanks.
Thank you, Azmi. Next we have a question from the chat. This is from Jeremy. For your FPSO Kelidang and FSO P.N.G., are these assets recognized via finance lease accounting or operating lease accounting? That's the first question. First set from him. Are you able to share what are the CapEx for the two assets?
For most of the floaters, the accounting treatment will be finance lease accounting, finance lease receivables. Should I say, during the construction, you will see construction revenue and construction profit throughout the construction period. As regards to the CapEx, I don't think we are able to share those numbers. Those are quite confidential.
Also, there's another question from Jeremy as well, about how many projects are you pursuing in 2026- 2027?
Let me try to answer that question. There's no specific target for us. At the moment, our main focus is on the three main, on being very focused and targeted growth trajectory. We are looking at continue on LNG as our core business. Similarly, on our petroleum side. For FPSO, it's a bit unique. We are currently supporting and working with PETRONAS on a number of new projects, but that is still too early to say anything.
Right. Thank you. Thank you . Next we have a question from Raymond. Go ahead, Raymond. Raymond?
Yeah. Hi. Okay. I wanted to ask about the EPCIC revenue for Kelidang and the FSO project. Will you actually begin to recognize that from 2026 onwards? Have you started construction? What is the status of those two projects right now?
It's just at the very beginning. Minimal revenue this year. You'll start to see the revenue pick up next year.
Okay. Next year. Okay. Typically in a FPSO construction contract, you do actually start recognizing the construction from quite immediate, right? That's what I noticed from other FPSO companies.
There will be some, but it's minimal. It'll start to pick up next year.
If you look at the construction S-curve in terms of the progress, Raymond, I think it is still this year, we expect that it's going to be still at the lower end before it will pick up a lot more in 2027 and 2028.
Okay. Sure. I just wanted to ask the question about the LNG side as well. If the fourth quarter was MYR 96 million loss, and if you add back the impairment, it's still going to be a loss for the quarter. This is the first time I think I've seen LNG in the red. What happened over there actually? I think you do still have quite a number of your vessels on long-term contract to PETRONAS. Why did it actually drop to a loss in the fourth quarter?
I did mention, Raymond, earlier that we also had about MYR 15 million write-off on inventory for gas vessels. Out of the MYR 15 million, MYR 11 million is an accounting write-off. As part of our migration system on SAP from ECC to S/4, we discovered this MYR 11 million inventory that has been sitting in our books for cumulatively over the last, I would say, 10 years. That's when we discovered that it's no longer there. It's not a valid cost that we can keep in our balance sheet. Hence, we have taken an accounting write-off of that MYR 11 million. That, again, partially explains the impact to the gas profitability for quarter four.
Okay. Where did you put it on the P&L?
I think it's part of operating profit. Let me double-check. It is part of operating profit, right? Yeah. Because it is inventory.
Okay. Sure. Okay, thanks.
Thank you, Raymond. We have our next question from the chat. This is from Afif. A question on gas. How many LNGCs have been on layup to date?
I think there's about eight.
Eight or so. Eight.
Eight vessels is currently on layup, Afif.
Another question from the chat. This is from Sin Kiat. This is on the offshore segment. If we remove MYR 17 million insurance gain and the PCPP impairment for the quarter, the offshore division will still be negative?
Sorry, can you repeat that?
If we remove the insurance gain and the impairment.
It will be positive.
It will be positive?
Yeah.
Will it be positive?
It's $75 million, not MYR 75 million. Let's estimate a correction.
We have a question on new energy. What is your generated cash flow from profitable new energy pillar?
In 2025?
Yes.
At the moment
It's still negligible.
Yeah.
It is only from the construction under MHB. We have got the TenneT project as well as the CCS construction. It is negligible. It is being picked up under MHB's income.
In all the new deal that we announced, for example, the LCO2 carrier for the Northern Lights project, it will only deliver in 2029 earliest. We will not see any contribution from that project yet. Far, the only thing that is coming is the revenue recognition that we have seen under MHB for the TenneT, the offshore power station, as well as the Kasawari CCS.
Thank you . We have another question from Aimi, who is asking on CapEx guidance for 2026.
Generally, we don't give any guidance, Aimi, in terms of our capital expenditure for the year. That's not our practice. What we can say is that any project that we are proceeding or any opportunity that we're pursuing is still going to be within our affordability and our debt ceiling capability. We are going to maintain that discipline when it comes to capital expenditure. That's what we have been doing for the many years in the past.
We have a question on just a bit of clarity on the laid-up vessels. You mentioned that it's close to 100. They just want to understand that, is it more economical to leave it? Why lay up?
At the moment, the lay-up vessels are the old steam vessels. They are certainly not very competitive at all in the market at the moment. Instead of keeping it afloat with full crew and with a bunker, lay up is a better cost optimization alternative for us to reduce operating expenditure.
There's also another related question to that. I think this is good for everyone's clarity. We mentioned that it's 98% term to spot for gas, and yet we have eight laid-up vessels. How does that work? A bit of clarity in terms of what's inside that computation and what's not.
I think the way we calculate it is when the vessel is off into lay up, we don't calculate that as part of our term or spot ratio. It's completely out from that calculation. Okay?
Okay. We have time for one more last question.
We still have one? Okay.
Yeah. This is from Homing. In the third quarter, your PAT is higher versus operating profit and vice versa for Q4. Perhaps can you share again what are the extraordinary items? Get better sense how petroleum has been performing. Thank you.
Yeah. I think for comparison of third quarter to quarter four, right? Like what I mentioned earlier, third quarter, petroleum had a one-off gain on unwinding of the IRS of about MYR 12 million, as well as about MYR 13 million gain on the disposal of Bunga Kasturi five and six. The VLCC vessels. Yeah. Those are the main reason.
All right. Thank you. Before we conclude today's conference call
Just a quick one, Faizan. I think thank you very much to all the participants. We appreciate your effort and commitment to understand our results and the engagement that we have. We certainly looking forward to the next opportunity where we can meet again. Thank you so much.
Okay. Thank you for your participation, everyone. A PDF copy of today's presentation has been circulated to all attendees and will be available on our corporate website. A kind request to all sell-side analysts, we appreciate receiving your copy of your published reports. Please do send them to the IR team for our reference. Thank you once again, and we wish everyone a pleasant evening ahead.
Thank you very much.
Thank you.
Thank you.