First gas is expected in Q1 2026. Being built across our yards in Brazil, China, and integrated in Singapore, this accelerated progress is a strong testament of our One Seatrium Global Delivery Model, and also showcases the expansion of our end-to-end delivery capabilities, from engineering to offshore commissioning. P78 is the first of six advanced, greener P-series FPSOs, and it sets a strong benchmark for subsequent units. Next, on Empire Wind. The project is now over 97% complete and is situated on site in the U.S., on track for delivery this year. Once operational, it will deliver 810 MW of clean energy to New York, enough power to power more than 500,000 homes. Both the top sites and jacket were built across our Singapore and Batam yards, demonstrating our integrated delivery capability.
The remaining exposure in our net order book to the U.S. offshore wind has reduced to less than $10 million, with Empire Wind and offshore substation for Ørsted very close to completion. The WTIV for Maersk Offshore Wind targeted to complete end of the month. We are in discussion to deliver her within the next few days. Our future is taking shape with clarity, strong order book today for near-term earning visibility, and a resilient pipeline that sets us up for sustained growth tomorrow. We have been disciplined in ensuring we win high-quality contracts with world-class customers. We meet teams, risk-adjusted project margins, and progressive milestone payments. Our ability to win these projects reflect the strong trust customer place in us across conventional energy and renewables. Amidst a tough macro environment, we secured over $4 billion of new orders, supported by returning customers and new partnerships.
This include our first collaboration with Penta-Ocean Construction, marking our entry into Japanese offshore wind market, and BalWin5, our fourth 2 GW HVDC project with TenneT, and our first for Germany under the 2 GW program. Next, our net order book of over SGD 17 billion is equivalent to over 1.5x of our very strong FY 2025 revenue. 6 P-Series FPSO, three US-bound FPUs, and major HVDC and HVAC platforms are all progressing well, demonstrating the strength and depth of global delivery model. We have been transparent about the challenges we face from non-FPSO legacy projects, which now constitute just over 1% of our net order book. In the same spirit of transparency, we also like to share that the delivery of Naval Project Napan has been delayed to 2027 instead of the original 2026 schedule.
We are working closely with the customer to navigate this specialized shipbuilding project to manage execution risks. With a declining proportion of lower-margin, non-FPSO legacy projects, we expect an improving mix of higher-margin, post-merger contracts and a reducing trend of provisions moving ahead. Moving ahead, we still see ample market opportunities as we actively pursue SGD 32 billion of in-the-pipeline deals. Despite the lower oil price environment, it is widely established that the break-even price of deepwater fuels remain well below prevailing oil prices. Alongside strong demand for energy, the ongoing energy transition, and the need for energy security, especially in Europe, where we are seeing some favorable wind developments for offshore wind, this gives us a long runway to capture high-value work across the full energy spectrum. We have been asked how are we positioned competitively to capture a good share of these pipeline opportunities.
Despite being just formed three years ago during the merger, we have, under our belt, 60 years of proven track record and a unique ability to deliver projects with consistent safety standards and quality across a large global manufacturing footprint that presents scalability, geopolitical diversity, and some cost arbitrage opportunities. These are not competitive levers that many players around the world have. We do not ever stop evolving. We have been in business for over 60 years. We are not new to change. We are still standing strong today because we have successfully evolved alongside the industry, which is essentially critical now, as the whole world is in transition towards cleaner energy sources. This is only possible with robust capabilities in technology development, where we take a practical, market-led approach to innovation to stay ahead and maintain our long-term competitive edge.
Today, we own proprietary designs, such as FLEXHull, that we are already using in active FPSO tenders to sharpen our competitive edge, where proposed designs are evaluated as part of the bid. We also develop our own designs for FLNG and offshore substation, which has recently attained AIP. Longer term, we are also developing solutions for floating wind and other emerging energies to ensure we remain ahead of the curve. Our series build approach, design once, build many, reduces execution risks, shorten schedules, and improve margins, ensuring projects are delivered safely, on time, on quality, and within budget. Today, about 95% of our net order book comprises series build projects, underscoring the strength and scalability of this approach.
On top of the existing franchises in gray, where we established the series build strategy, we're expanding this to Powerships where we see strong potential, as well as applying the same principle to FSU/FSRU conversion, especially since we already done 90% of the world's FSU/FSRU conversion, which is an unparalleled track record worldwide. Last August, we signed an LOI with a long-term partner, Karpowership, for the integration of four new generation Powerships, plus the option for two more, a strong endorsement of our capability and scalability in this adjacent segment. Integration works will start 1 Q, 2027. The LOI also includes conversion, life extension, and repairs of three LNG carriers into FSRUs. These are examples of higher value work that we are refocusing our repair and upgrade business on. These capabilities and high-value franchises will position us well for the next wave of opportunities.
Our $32 billion opportunity pipeline over the next 24 months is diversified across segments, geography, and asset types, some of which offer distinct market cycles for business resilience. Many of these opportunities are also aligned to our series build franchises. Over the next 24 months, we are pursuing $23 billion in oil and gas opportunities, driven mainly by Americas region. We still see strong opportunities in Brazil, where our long-term customer has disclosed its pipeline for the next five years. This is also where we have strong leadership for local content through our three established yards. We are also well positioned in Guyana for high-value integration work and topside fabrication, where we have participated in all of the FPSO work for the Stabroek Block so far.
Apart from the usual opportunities that the market expects, we are also pursuing opportunities in FLNGs and fixed platform in the Middle East and Africa region, and to a smaller extent, in Europe and Asia Pacific. For offshore wind, Europe remains the largest and the most developed market, driven by its energy security needs. TenneT continue to be an important customer for us as we pursue opportunities in both Netherlands and Germany. With the award of BalWin5, it demonstrates TenneT's confidence in our ability to deliver, and we are ready to scale up and take on more HVDC projects when the opportunity arises. Meanwhile, we will also continue to pursue opportunities from other European TSOs, as well as HVAC deals in Asia. We have also identified $2 billion in conversion opportunities, such as those with Karpowership that I've mentioned earlier.
All in all, we are well-positioned and confident in our ability to capture a healthy share of these pipeline opportunities that will fuel our ability to deliver consistent performance. I shall now hand over to Stephen to bring you through the financial review.
Thanks, Chris. Next, I'll dive deeper into our financial performance for FY 2025 and highlight the progress that we have made to shape a stronger, leaner, and more competitive Seatrium. We delivered a set of solid numbers for 2025. The 25% rise in revenue was driven by a steadfast execution of a healthy, well-diversified order book, which provides strong visibility and resilience amid the evolving market conditions. Our gross margin, which I think is a reflection of the true operational performance, has more than doubled to 7.4% in FY 2025, from 3.1% last year. We've continued to make significant progress in streamlining G&A expenses and lowering finance costs. As a result, net profit has also doubled to SGD 324 million in FY 2025, up from SGD 157 million in FY 2024.
We also saw operating cash flow grow by about 4.5 x to SGD 440 million from SGD 97 million, excluding one-off payments relating to legacy issues. On the same basis, FCF doubled to SGD 443 million. After taking into account these one-off payments, we still generated almost 46% more cash from operations year-on-year of SGD 142 million from SGD 97 million a year ago. We have also taken decisive steps to streamline our asset base by divesting non-core assets. This disciplined approach sharpens our focus, enhances operational and cost efficiencies. Diving straight into the key revenue growth drivers, the 24% growth year-on-year was mainly driven by a strong progress registered by both the oil and gas and offshore wind segments.
Revenue from oil and gas solutions grew 24% to SGD 8.1 billion, underpinned by steady execution, progressive revenue recognition of the six newbuild Petrobras FPSOs, notably P-84 and 85, which commenced work in the second half of 2024. Offshore Wind Solutions also increased its revenue to SGD 2.1 billion, driven by our three TenneT, 2 GW HVDC platform projects. The repairs and upgrade business registered lower volume and revenue, due mainly to trade-related uncertainties and weaknesses in the LNGC market. We are, however, continuing to focus the business towards higher value projects, such as FSRU conversions and the integration of Powerships that Chris mentioned earlier. In the meantime, our 23 long-standing strategic partnerships with large global customers continue to provide a steady baseload revenue of a more recurring nature.
In the other segments, increased contributions from specialized shipbuilding, chartering, as well as rig kit sales and MRO projects delivered through Seatrium Offshore Technology, or SOT, led to a 55% jump in revenue. While this business is small today, SOT capitalizes on our unparalleled track record and rigs expertise to monetize proven design IPs. It delivers a healthy margin, and we see growth potential ahead. Let's take a look at gross margin. Year-on-year, gross profit increased to SGD 848 million in FY 2025 from SGD 291 million, and gross margin increased sharply by 430 basis points to 7.4%, driven by an improved mix of higher margin projects, higher asset utilization, improved productivity, as well as cost discipline.
This was partially offset by provisions to the U.S. projects, where the final project was delivered subsequent to year-end and a little bit from Naphan, which Chris mentioned earlier. Other operating income was lower in FY 2025, mainly due to a one-off provision relating to the Admiralty Yard restoration before its return to authorities in 2028, net FX movement, lower scrap sales, and a non-recurring settlement gains that was recognized in 2024. G&A expenses as a percentage of revenue declined by 50 basis points to 3%, compared to 3.5% in FY 2024, as we benefited from the continued cost optimization activities. Net finance costs also dropped by 18%, driven by debt repayment and lower financing costs, offset by a decreased interest and dividend income from equity investments such as the FLNG Hilli, which we divested in 2024.
Overall, net profit more than doubled to SGD 324 million in FY 2025 from SGD 157 million in FY 2024, underscoring the significant uplift in our core performance, powered by revenue growth, stronger margins, sustained cost optimization, and disciplined execution. As mentioned, we also reported much stronger cash flows in FY 2025, which is the reflection of the discipline that goes into ensuring that all our projects are on our progressive milestone payment terms and robust project cash flow management throughout each project. Consequently, operating cash flow increased to SGD 142 million in FY 2025 from SGD 97 million. Excluding the effect of one-off legacy payments, operating cash flow rose 4.5 x to SGD 440 million, reflecting the level of cash generation that we expect moving forward.
Investing cash flow was largely neutral, with SGD 122 million of project and safety-related CapEx, such as that for Batam Yard, to prepare for the 2 GW HVDC projects, balanced by asset divestment proceeds. We will continue to be measured in our capital expenditure, which is mostly focused on investments that will enable growth. All in all, we generated SGD 443 million in free cash flow, excluding one-off legacy payments. This is more than double that of FY 2024. We are confident in the execution and the cash flow of our post-merger contracts. Moving on to capital structure. We continue to adopt a prudent and disciplined approach to enhance resilience and afford us the financial agility to position for growth.
Our gross debt decreased 5% year-on-year to SGD 2.5 billion as at end December 2025. Through active refinancing, our cost of debt has declined from 4.9% at end December 2024 to 3.4% at end December 2025, driven both by lower base rates and tighter margins. We continue to broaden our funding sources and leverage our improved credit profile to secure favorable refinancing outcomes. Our liquidity position remains strong, with SGD 3.1 billion in cash and undrawn committed facilities, giving us ample headroom to support operations, pursue growth opportunities, and other capital allocation requirements. In summary, our balance sheet remains robust, with a low net leverage ratio of 0.8x and a net gearing of 0.1x as at 31st December 2025.
With the FY 2025 performance covered, I would like to touch on the efforts that we've been taking to transform our cost and margin profiles that will have lasting impact into the future. If we take a step back in FY 2023, when both companies first came together, Seatrium have focused on integration and harmonization, and so the new company can start on a clean slate. In FY 2024, our first financial year since merger, we quantified the benefits and scale of coming together, providing market guidance on two targets: SGD 300 million on synergies, on cost savings, and SGD 200 million in procurement savings. These targets reflect the efforts that started from the moment the two companies came together. We looked at our cost items line by line, removing what we didn't need, and leveraging our combined scale for economic benefits.
These changes have fundamentally reduced our cost levels and will continue to have a lasting impact moving forward. We are today in year three, and we are pleased to share that we have exceeded those targets, and the proof is in the numbers. Gross margins has turned from negative 2.9% at FY 2023 to 7.4% in FY 2025, alongside an improved mix of higher-margin series build projects. G&A expenses as a percentage of revenue has also declined from 5% in FY 2023 to 3% in FY 2025. As mentioned earlier, the cost of debt has also significantly declined from 5.7% - 3.4%. We are not done yet.
Initiatives implemented late last year have not seen its benefits fully baked into our financial numbers yet, and we also continue to drive greater cost discipline and internal efficiencies by embedding digitization, AI, and machine learning meaningfully into the way we work across our global business. We believe this will greatly improve visibility, control, risk management, and operational efficiencies that will reflect in our margins and financial performance in the time to come. As I've alluded earlier, gross margin is an indication of our operational performance, and we are starting to see the fruits of our labor in FY 2025, and our reported gross margin of 7.4% is a vast improvement from where we started. It is a reflection of what Seatrium is capable of. We are just getting started.
As we continue to streamline operations and tighten overheads, we see accelerated pathways to further expansion through our ongoing divestments of non-core assets. This is an important lever to really reshape our cost structure to unlock efficiencies that will strengthen our long-term resilience and competitiveness. Since 2023, we started divesting assets on our books that are not really required for our global operations. These assets are broadly categorized into yards and other assets, such as vessels and floating cranes. We've accelerated the pace of these divestments in FY 2025, including BrasFELS and Aracruz Yards, G&L, PSV vessel, a fleet of tugboats, floating docks, and the Crescent Yard that is expected to complete very soon. The sale of the BrasFELS Yard and G&L vessels have already been completed, and the rest are expected to complete by first half 2026.
These transactions will deliver more than SGD 50 million in annualized cost savings. These assets, would have otherwise laid idle on our books, are also expected to unlock more than SGD 230 million in gross gains and over SGD 330 million in cash proceeds, of which SGD 110 million was received in FY 2025. We plan to do more. Having identified more than SGD 200 million in additional non-core assets to divest by 2028, alongside the scheduled return of Admiralty Yard. Together, the transactions already announced, we expected to generate cost savings over SGD 100 million by FY 2028. As our business needs evolve, we will continue to review and value opportunities to drive greater efficiencies.
These structural improvements will enable us to reduce overheads and drive operating efficiencies, which will in turn bring us closer to our target margins, enhancing our business resilience and offering stronger fundamentals, which will deliver sustainable long-term returns. With that, let me now pass back the time back to Chris.
Thanks, Stephen. To reiterate, Seatrium is at an inflection point today, and we are now ready to commit to creating tangible, lasting value for our customers, shareholders, and other stakeholders. This year, we are proposing to double the dividend to SGD 0.03 per share, in line with doubling of our net profit in FY 2025. We also plan to continue our share buyback under our existing SGD 100 million program, reflecting our confidence in the business and in the momentum ahead. You can clearly see the fruits of our labor. Total shareholder returns have turned positive at 5.2%, and ROE has nearly doubled to 4.9% in FY 2025. These are early signs of the value we are unlocking as our strategy takes hold, and we believe that there's further room for growth.
Most importantly, we are balancing reinvestment for growth with consistent capital returns. This is how we will drive long-term, durable value creation for our shareholders. Let me close by bringing this all together. Our strategy has always been clear and consistent, from driving organic growth to executing strongly and transforming our cost structure for margin expansion, ongoing financial discipline, and allocating capital prudently to enable sustainable long-term returns. Our value creation framework captures all of this, aligning everything we do from the way we deliver projects for our customers, to how we manage, to how we plan to deploy capital for sustainable return.
On capital allocation, our priorities are disciplined and focused, investing for growth in areas where we have clear competitive advantage, optimizing our balance sheet, ensuring the right debt structure to support long-term value creation, returning capital through dividends on share buyback as we grow, and exploring strategic M&As that strengthen our long-term position and business resilience. This framework keeps us focused. With clear progression towards our FY 2028 steady-state financial targets, we are on the right trajectory to building a stronger Seatrium designed to outperform for the longer term. Thank you.
Thank you, Chris. We'll now open the floor to questions. For those of you in the room with us, please raise your hand to ask a question. Hi. Zhiwei Foo, please.
Oh, thank you. Hi, Zhiwei Foo from Macquarie. Thank you for the present--. Should I just go ahead like this?
No, we need-
There are people online.
Let me try.
They need to hear you.
Right. Yes, better. Thank you for the presentation, congrats on a wonderful set of results. Two questions from me. The first one is regarding your order book, right? I think you're roughly about some $17 billion of order book, and you have a revenue run rate of about $11 billion this year. How do we think about your revenue run rate and your order replacement rate? Because from the looks of it, you'll run down this by next year if you don't have a similar amount of order intake. Your gross margin is what? I think you reported 7.4%. If you were to just look at second half and net out the provision on risk contracts, you get to about 9%.
Assuming you execute on all your cost savings, that's another SGD 100 million, and then if I'm generous, like, that adds another 1% of gross margin, which takes you to 10%. Assuming that your cost-saving programs works through, you don't have no recurrence or provisions, does that mean that we can start to anchor our thinking of 10% gross margins going forward? Thank you.
I think I'll take the order book question. I think you have asked the same question the last half, I remember. I think that the key thing is about getting close to the customers and home running the opportunities that are out there. This is order book business, and the key thing is about how do we take a look at getting quality balance between quality projects that we can get and get it in. The $11 billion, I will say that it will roughly be around there moving forward. This shows that the capacity, our capacity management has been very sharp. I believe that about two years ago, the question from all of you was that, are you sure you can consistently produce $10 billion?
That's out of question, but it will basically hover around there. We think that the capacity would allow us to do that. If you look at the burn rate, it's not linear. The SGD 17 billion doesn't burn down just like that. Technically, it's also a mix of building up to the order book, and as mentioned, last year, even as a very challenging year, we almost half a year or more than that are quiet because of obvious reason. We still managed to home run quite a bit towards the end of the year. Technically, there are good pipelines in the market, and again, I always said I can't control the FID timing.
We are quite confident that, based on the diverse product line that we have now and the franchises that I've seen, we will continue to be the go-to person for some of these more complex projects. It is a zero-sum game. You have mentioned that we are confident that we are able to maintain that resilience. I guess the real answer is that when the projects come into the order book.
On the second question, let me take this. I think, if you look at FY 2025, your, your calculation is correct, right. I think the bigger picture is this: There are a few factors that we are, that move in our favor, right. One is, you would have seen the legacy projects, the proportion of that is coming down. The contracts that we secured post-merger with, risk-adjusted mid-teen returns, are becoming more important. Two, three, the costs and productivity measures, I think you talked about, with the divestment of the yards and all that will take out costs directly from the overheads.
I think the other factor that you have to consider is as projects move along, I think we mentioned this before, when you hit critical milestones, the contingencies which are costs that we've set aside for certain risks that we anticipated, if they don't materialize, then that will also be released. I think the margins will continue to improve from where we have achieved today. I think it will, we've guided towards project margin of mid-teens. But as you know, there are some overheads in production side, which is related to basically underutilized capacity. The number will move towards 15, but it won't hit 15. I think that's where we're looking at right now.
Just to touch, come back to the point on order book. At SGD 17 billion, if we've taken a look back in history, it is still one of the highest for the last 10 to 12 years, both combined. What is different today is that I think you all will appreciate that it's not based on one product, it is based on milestone payment, that it basically is a high quality order book right now for us to execute. The other point is that we have also been sharing that getting onto the franchise, when we signed the very first or the second FPSO or HVDC, there were also a lot of doubts and question whether it is it, are we capable to build on that?
I think today that should put it to rest. What I hope everybody see that the ability to actually deliver a very complex product straight to a Brazil field and start operating in two months, that actually builds on the reputation and our ability to get the customers on the table in a very short time.
If I have two follow-up questions. You mentioned the contingencies. I understand that they are significant. Could you share some color about how big it may be so that we can appreciate, you know, what that actual underlying margin is? Otherwise, the second question is, what would your underlying gross margin be if we were to just look at your project and take out all your other inefficiencies right now?
Look, contingency is commercially sensitive, right? But there are risks. Each contingency item is tagged to amount, right? When the risk goes away, it will be released.
Okay, thank you.
Thanks, Zhiwei Foo. Next question from Mayank, please.
Yeah. Chris, a question more in, a subjective question here. There has been a lot of commentary by your largest customer around how they are tightening their screws at their end. Like, in terms of conversations you had, and considering you were showing the order book being a large part still sitting in LATAM, how do you think about the path going forward, and what are the kind of conversations you're having with them around their objectives and how you are aligning to it? That was the first question. The second one, to the CFO, I think congratulations on reducing the interest cost quite a bit. If you think about it, your interest cost and the finance cost still has a reasonable gap.
I think there are lease liabilities and a few other things in there which are still quite chunky. Can you just give us a bit of a outlook of how you're kind of tightening your screws there? Thank you.
I will take the part on customer conversations. I think tightening of screw, whether it is challenging environment, my customers always tell them that their screws are very tight with us. The key thing is about how then do we sit across the table and determine the word value? It's a balance for them also. There's no lack of competitors, and especially after we have proven that our formula worked and we are able to deliver a functioning FPSO directly to the field and start up, and that's a very powerful signal. If you talk about LATAM, obviously, you're talking about mainly Brazil. They have various different different formula right now. One is the build, operate, and transfer, and it is now mixed with eventual EPC projects coming online.
The key thing is about it has different risks, it has different approach, but the fundamental is the ability to execute. All these projects takes many years to execute, and you can see that from their ambition. They printed out their five years of ambition. To be very honest, one of the biggest question that they have to ask themselves is that, can I expect the FPSO to arrive? Right now, especially so when you talk about the challenges of the market, it's very unpredictable, and oil price is, it can fluctuate, and volatility is quite high. They have their investment case all set up. I think that you will come online, but the key question is that when will their cash flow be realized? That is really around the assets that's gonna flow there.
I think, we have proven ourself that we are able to execute right on time and able to deliver, compared to our competitors, deliver something that operates directly with them. The key right now is, of course, a strategy around who we partner up for BOT, the strategy around how can we also make sure that it's seamless. For EPC, of course, it's all about cost and price. I think that that part itself, I'm happy that we are not starting from ground zero. I think that we have now a very clear database, and, the organization is very clear on how to execute this type of projects. That is the type of conversations. Even with out of Latam, it's the same conversation.
With majors like ExxonMobil for Guyana, even new prospects in Africa, it's basically down to certainty, the ability to provide solution, because mega projects, you will have excitement of technology, hiccups and all this. How do you then help them to overcome that and still be able to maintain the predictability at the end of the day? That, I think, is a huge value.
Mike, on the second question, look, I think if you look at our finance costs, the largest component is still interest costs, right, to banks and et cetera. I think the key focus for us here is actually around deleveraging. I think we've done a substantial amount of refinancing with the support of our banking partners, but we have to delever. I think you would have seen the operating cash flow significantly improve. We have to think about where we can allocate capital. Do we use that for growth? Of course, we're returning capital to shareholders, but it's also important to delever over time, because I think the leverage on the gross level is still relatively high.
Thank you. Next question from Pei Hwa.
Hi, this is Pei Hwa from DBS. Congrats on the strong results. Just two questions for me. One is for Stephen. It's on the provision for your onerous contracts. It's amounted to SGD 96.5 million. Could you give us a bit more colors on the breakdown of this, especially for legacy contracts, as it was so close to completion that we didn't expect to have this much. I think second is on the project pipeline, especially from Petrobras and TenneT. Maybe you could give us a bit more colors and how, based on a conversation with your customer, is TenneT on track, or they still, as per plan, will continue to award some contract this year?
Okay.
Also maybe some, also, I mean, in general, how we think about your other pipeline and the conversion from the $32 billion pipeline to this year.
Chris, maybe I'll take the first question first. I think the provisions of about SGD 96 million, that relates principally to three projects. It's the two U.S. projects, which we have since delivered. You can think of that risk as have gone away, right? I think the reason for additional provisions is because the project took a little bit longer than we wanted, there were additional costs associated with that. On the 3rd project, which I mentioned in my speech earlier, was around Napan, which was a legacy specialized shipbuilding project that we're delivering in Brazil. The project has delayed, there are some provisions relating to that. It's a relatively small project.
I think it's the initial contract value was about SGD 200 million. We're working very closely with the customer to sort of manage that risk going forward.
When is this project going to be delivered?
2027. Initially, it was supposed to be end 2026, now it looks like 2027.
I guess for Petrobras, TenneT, and you mentioned about conversion pipeline, I wouldn't repeat what I said for Petrobras. I think they're very clear on their development plan and what's gonna come online. For TenneT, your question was around whether they are still on track, and the short answer is that as far as we know, yes. Because as promised, they have gone through the same allocation and competition end of last year. We're quite happy that we are able to land BalWin5 for that's the first Germany unit that we are getting. That also set up our potential and production line for both the Netherland projects and the Germany projects.
This year, if my memory serves me correct, please check and don't quote me, because there will be projects in coming online for tender in Germany and also followed by Netherlands. When they will FID that, when they will start engaging us, that depends on when they are ready. Those projects are real through our conversation. On conversion pipeline, as mentioned, the team has worked very hard to deliver value to the customer. We have proven that when we said that we would deliver it this way, when we have proven to the customer as one system, we are able to do that.
Customers are also seeing that they are able to assess the different capabilities of different facilities and different teams within the group. In a very short time, within three years, we've come together and deliver very differentiating value in terms of being able to provide solutions to the customer. That's not all talk, and we have delivered that to them. The key thing around conversion, of course, is also because of this ability to prove that we are able to do this, there are many people that are trying to come online as competition. That, that segment actually is. As mentioned in my speech, there are certain segments that we have a very commanding track record.
There's no difference from the new build, because it's complex, because it require capability, it requires safety, and basically practices within, and quality ability to deliver quality products. We think that this is an exciting area every year. As mentioned, Powership, if you take a look at this segment, why we highlight that? We believe that the world is starved of power and also digital, AI, the growth of it, I think the floating assets is something that is very sound. The concept is sound. We just have to make sure that our customers are able to take a look at the financial ability around the economics around that. There's also a floating data center.
There's many things that in the market that may be too premature for us to say, but all these $2 billion of conversion prospects, I think it ties into the whole energy type of products. Why conversion? Is because the speed to market is very important. Again, the ability to execute, the ability to engineer on the go and deliver them safely with quality is our hallmark, and customers know why they come to Seatrium and why we are able to build on that world-beating track record in the conversion space.
Thanks, Chris. Pei Hwa, I hope that answers your question. Next, we'll take a question from online, Luis from Citi.
Hi, good afternoon, and thanks for hosting the call, and congrats on the good set of results. I just had, most of everything's been asked. Just two housekeeping questions, please. Just to clarify on the SGD 50 million annualized cost savings, since most of the... It will conclude in the first half, so it's essentially SGD 25 million savings in the second half. At least, in the second half. Is that the way to look at it? The second question is, I know it's difficult to discuss arbitration cases in terms of timing, but do you have a feel for, amongst those, which ones can resolve sooner? Not when, but which will resolve sooner. Are your legal fees material at all on an annual basis?
Okay.
Thank you.
Luis, you had two questions, right?
Yeah.
Okay. Sorry, what was it again?
SGD 50 million.
SGD 50 million. SGD 50 million. A part of that divestments were completed towards the end of 2025, right? That, a portion of that will be fully baked in from the 1st of January. The AmFELS, you would have seen, we completed end of January. That will be another component. I think if you, looking at it over the full year period, it's probably, if we can complete everything this month, it will be closer to the SGD 50 million than the SGD 25 million.
Okay.
Yeah. Arbitration depends, but if you want to ask for which one would probably be settled first, it is all basically time-based, right? P-52 will probably be the first one that will be settled, and we hope that we will have a conclusion this year. You asked whether the legal fees is material. It depends on material against what? But it's never. Of course, that's not always the first avenue that we will go for. But I just want to impress upon that, actually, arbitration is a professional way of basically settling differences. Usually, in this industry, we are able to differentiate what we need to settle while we professionally advance on our both interests on ongoing projects.
Yeah, P-52 will probably be the first one that we are targeting.
Thank you. It's very clear.
Thanks, Luis. Next question, also online from Amanda. Amanda, are you there?
Yes, I'm here.
Great.
Hi, Amanda.
Hi.
Hi, good morning. Yes, Amanda Battersby from Upstream. Thank you very much for the frank results, statements, and sharing as always, Chris and Stephen. A couple of questions, if I may, please. You mentioned that the potential for BOT FPSO contracts, specifically in Latin America, and one would think with Petrobras, are you actively bidding for any BOT work for floaters? If so, would you be looking for a partner on a project-by-project basis or perhaps a more formal arrangement to allow you to tender to go forward, please? The other two shorter questions, if I may: Do you foresee any more sort of legacy arbitration contracts lurking in the woodwork after, you know, sometimes more than a decade? Thirdly, please, any more plans to rightsize the headcount as some of your projects come to completion? Thank you very much.
Well, I'll take those question. Thanks, Amanda. We are missing you here. Well, for BOT contracts, we will definitely need to have a partner and a bidding strategy. Whether you'll be project-by-project basis or whether there is a long-term, type of tie-up, we have both, strategy in place, and it depends on time and space also, right? We have to look at... I guess the fundamental is that we are in for the bid and our focus is to win. It's likewise for our partners. Our operating partner will also have the same, driver. It will depends, because timing of the tender, and potential on both sides on the tender, really decides how we choose our partners.
Whether we will partner somebody for long-term and across all projects, it depends whether the interests align at the point where we are signing up. I can't have a clear answer, but we are to bid for the BOT projects, and definitely with an operating partner. On arbitration legacy, I think what I can promise you is transparency. As of now, as mentioned, we do not see that there are any that are lurking. Like what we mentioned, when there are any disagreement that we need to settle, it's always professionally been elevated to settle at arbitration if we cannot come to terms. It's very hard for us to actually forecast, but all I can say is as of now, we don't see any.
Now, about right sizing, I would actually approach the right sizing question less of a manpower issue than I think more on the operational excellence angle. I think we have always mentioned about what is our strategy going forward. I remember three years ago when we talked about integration topic, and we talked about how we optimize. During the first year, we did not even remove any headcount. I think that all of that has basically actually worked out. Our first stance is always to make sure that we take care of our people. When projects are completed or when we get more efficient and our processes get more efficient, retraining has always been the first one. All right?
We are not approaching from a headcount and a hire-fire approach, of course, with the when we look at our yards and our future footprint, which we have always been very transparent in sharing, that is strategy, right? That's strategy, it's about trimming down the non-core, building on the core, and of course, have an eye of capability building, depending on what products that we are looking at. As we have mentioned, we further invested in the Batam Yard to make sure that we have lines ready for offloading, building and offloading 30,000 ton of top sites, which is mainly your HVDC today. We expect to eagerly contest to build a more stronger pipeline behind each of them.
There are a lot of ways that we are looking at right sizing. The other thing is that one of the actions that we are taking, of course, is in the national news, that, you know, Admiralty Yard is going to be redeveloped, and we knew that even way before Seatrium was formed. We are taking that proactive step to actually rechannel resources, and that is the strength of the One Seatrium delivery model. We actually rechannel resources not only to Tuas Boulevard, but also a lot of our high pots and young managers are now in Batam, helping to build up the capabilities over there. There's many dimension to that.
I guess the main driver of this question is, I guess, about cost efficiency, and I think that has been the top-line strategy that we have always set. We are very sensitive to cost, but we are also very sensitive to capabilities, retaining capabilities, retraining capabilities, and getting ahead of the curve to be able to service our customers. I think that will differentiate us very strongly.
Thanks, Chris.
Thank you very much. Thank you.
Thanks, Amanda. Next question, Siew Khee, please.
Hi. Can I just follow up on the onerous contracts? Given that the U.S. projects have been delivered, can we expect a significant drop in the overall provision for onerous contract?
Yes.
It will be lower than 2024 because 2023 was high, and then 2024-
As I explained earlier, I think there were three projects, right?
Yeah.
The remaining risk is around Napan.
Yep
... as far as we can see today.
Mm-hmm
there is no need for additional provisions.
Okay. Within your order book, there's nothing that is lurking that you think could delay now? Therefore, that would actually help to pave the way for better margins as you execute?
Yes.
Perfect.
As I explained earlier, I think the key risks are always around the pre-merger contracts.
Yeah.
I think that portion has come down significantly. Yes.
Okay, thanks. Just wanted to check, you mentioned that you hope to actually settle the arbitration. Is there a need for any provisions if it's concluded this year?
No. No.
Is there any need for provisions for any other litigation that you might actually be in negotiation?
No. Usually, when we talk about provisions, it's about legal opinion or the chances, right? As of now, whatever that were reported, that there's no need for further provision.
Okay. Just on your order pipeline target, why did you raise from 30 to 32 so specific? What's that $2 billion?
Well, order pipeline depends on what projects come into the market. We didn't raise it. It's a customer wanting in the market to basically look at develop. These are real projects that are out there.
Is there anything significantly different or new from compared to when you told us, first told us that $30 billion now rising to $32 billion?
So-
optimism coming from?
Maybe I'll take that. In that.
Hang on. It's not optimism. Again, I said that it is the projects that are out there and the real targets that we are going after. When you talk about are there any difference? Of course, there is no secret that there are a lot more production assets, contracts that are foreseeable in the market, and that is basically public. The other point that we want trying to make is, of course, there are also conversion projects. As we mentioned, they are out there in the market. As we get knowledge, and those are the projects that we are going after, we actually actively put it in the pipeline and say that, "Okay, these are all the go get," let's, yeah, to convert into a audible.
If I may add, the number there is, we have an internal pipeline that we track, and our commercial teams update very regularly. We just summed up that total and then gave that to the market. These are all actual projects that we are chasing, right? I think if you talk about the change, I think between the 30 and the 32, there were some projects that we won, BalWin and then the BP project, and then those were replaced by other projects that customers have now inquired with us on, "Hey, we want you to submit a bid," or we're in bilateral negotiations with them. It is actual, projects that we are chasing and not managed up, as we were trying to say earlier. Yeah.
Just last two questions. Just on housekeeping-wise, the SGD 50 million cost savings you mentioned, where can we actually see it most significantly? Is it in G&A or cost of sales?
It is. Some of it will be in cost of sales.
Mm.
Some of it will be in G&A, and some of it will be other operating income. It's actually in different areas. Yeah.
Is there any, like, is there one that is, like, maybe higher, perhaps in cost of sales?
It's mostly in the cost of sales, because if it's relating to the yard, all of that goes into the COGS line.
Thanks. My last question is, the divestment gain that you actually guided, SGD 160 million, if it's completed in 2026, will be recognized in 2026. Is that right?
150, yeah.
SGD 150.
Yeah. Mm-hmm.
will be recognized.
That's right.
in 2026.
70 was recognized in FY 2025, another SGD 150 in 2026.
Thanks.
Thanks, Siew Khee. With that, we've come to the end of the briefing. Unfortunately, we've run out of time. For the two questions that we've received online, we will reach out to you directly on email. For further questions, if you require any further clarifications, please feel free to contact us at our investor relations email address. Thank you very much for joining us this morning, and we wish you a very pleasant day ahead. Thank you. Bye.