MISC Berhad (MISC) Earnings Call Transcript & Summary

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'll be your MC for today's session. We are pleased to be joined by Encik Zahid Osman, President and Group CEO; Encik Raja Azlan, Chief Strategy and Sustainability Officer; Encik Afendy, Chief Financial Officer; and Encik [ Adam Faizal ], 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. So actual results could differ due to unknown risks, uncertainties and other factors beyond MISC's control. Now with that, without further ado, I would like to invite Encik Zahid, our President and Group CEO, to deliver his opening remarks. Encik Zahid?

Thank you, Faizan. [Foreign Language] Good evening to everyone. Welcome to our analyst briefing for quarter 4 results as well as the full year 2025. I will begin with the full year performance and strategic progress across our MISC 2030 ambitions. Then Afendy will cover the financial performance in detail, and then 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 a positive outcome both in our financial performance and across all 3 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 rate environment towards the end of 2025 for the tanker market. Operating cash flow rose by 41% to USD 1.3 billion. The stronger cash generation enhances our balance sheet and enables the company to declare higher dividends of $0.38 per share, an increase of $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 executions 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 earnings while positioning the group for long-term growth and energy transition opportunities. Throughout 2025, we remained focused on translating strategy into execution, delivering measurable progress across all the 3 pillars. Resilient core. We have further strengthened our earning stability and cash-generating businesses through asset deliveries and new contract awards. Under asset deliveries, 7 LNG carriers were successfully delivered to QatarEnergy under the long-term charters with 5 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 4 key businesses in MISC in 2025. In gas, we secured long-term charters with PTT for 2 very large ethane carriers, expanding our ethane transportation portfolio. In petroleum, we secured long-term charter for 2 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 Charigali, 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 a 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 Venture and Mitsui OSK Line or MOL, combining complementary strengths in asset ownership, operation and customer access. The joint venture will be responsible for owning and operating 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, 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 30% -- 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 shows that we delivered on what we promised. As in previous year, our consistency in execution, 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, manages 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 back 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 3 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 represents a strategic expansion into a new production basin and strengthens our secured asset pipeline. PNG 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 equipped with an electric energy storage system. For us, growth remains disciplined and contract bank with a 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 through the detailed financial performance for MISC in quarter 4 and full year 2025. Thank you.

Thank you, Encik Zahid, [Foreign Language] 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. For 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 Marechal Duque de Caxias (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 USD 677 million compared to USD 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 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 have benefited from the higher freight rates and improved earning days during the quarter. While 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. Moving on, the group recorded operating profit of USD 125 million in quarter 4, 2025, representing an increase of 41%. This improvement was mainly driven by stronger performance from the Offshore business segment, which recorded operating profit of USD 43 million in quarter 4, 2025, marking a turnaround from an operating loss of USD 29 million reported in the same period last year. The significant uplift was supported by the recognition of insurance recoveries amounting to USD 75 million arising from FSO Benchamas 2 settlement, partially offset by the provision for doubtful debt amounting to USD 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 USD 157 million in quarter 3, 2025 to USD 125 million in quarter 4, 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 pregasifier 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 USD 5 million in quarter 4, 2025, which was marginally above breakeven with vessel impairment of USD 84 million recognized during the quarter. Nonetheless, this marginal profitability represents a turnaround from the loss of USD 91 million recorded in quarter 4 last year, primarily driven by stronger operating performance and lower vessel impairment. Against preceding quarter, the group profit after tax declined from USD 131 million recorded in quarter 3, 2025, to USD 5 million in quarter 4, 2025, due to higher gas vessel impairment, as mentioned earlier. Cash flow from operations strengthened to USD 453 million in quarter 4, 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 operations 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. For the financial year ended -- for the full year financial year ended 2025, the group revenue stood at USD 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 declined 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 its 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 USD 649 million, representing a 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 a key driver of growth, supported by the transition of FPSO Mero 3, contribution from 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 USD 33 million recognized during the year. The group recorded profit after tax of approximately USD 406 million in 2025 compared to USD 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 segment, 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 USD 1.3 billion in 2025 compared to USD 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 USD 388 million within the offshore business segment being the key contributor. Offshore cash generation improved by about USD 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. 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 USD 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 USD 1.5 billion, reflecting our continued liquidity strength and healthy cash generation. Shareholders' equity remained resilient at about USD 8.6 billion. Total borrowings declined to USD 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 being fixed at the fixed rate borrowings, which provides 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. And this reflects strong operating cash generation, which has largely offset the investing and financial outflows during the period and supported overall financial flexibility. Our borrowings declined to $3.2 billion compared to 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. I'll share with you the quarter 4 business -- quarter-by-quarter business segment performance. I'll start with Gas. So Gas recorded a lower revenue -- recorded revenue of USD 102 million in quarter 4 2025, representing a decline of USD 90 million compared with the corresponding quarter. The decrease was mainly attributable to lower construction revenue from FSU conversion as the project has completed last year in 2025 as well as reduced earning days following contract expiries, vessel disposals and layups. Compared with the preceding quarter, revenue declined by USD 21 million from USD 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 USD 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 process prehire. The inventory write-off amounted to USD 15 million, mainly comprising of accounting write-off of USD 11 million relating to a few vessels under Series A and Series B leases classes and a further USD 4 million relating to Puteri Satu class, in addition to the onerous contract provision for vessel supplier of USD 7 million during the quarter. Against the preceding quarter, operating profits declined by USD 34 million, driven by depreciation relating to the class as well as the same onerous contract provision and inventory write-off, which I just highlighted. Loss after tax stood at USD 96 million, improved by 25% compared to a loss of USD 128 million in quarter 4, 2024, mainly driven by lower vessel impairment by USD 77 million. Included in the vessel impairment in quarter 4, 2025, are related to Seri Balhaf and Seri Balqis amounting to approximately USD 50 million. Against the preceding quarter, profit after tax declined by USD 108 million, primarily due to weaker operating profit and higher recognition of vessel impairments by USD 72 million. For the Petroleum segment, this segment continued to deliver resilient performance during the quarter, maintaining a sell to spot ratio of approximately above 75% which provided earnings stability while allowing the segment to capture upside from favorable spot market conditions. Revenue increased to USD 324 million in quarter 4 compared to USD 277 million in the corresponding quarter and USD 303 million in the preceding quarter, making quarter 4, 2025 the strongest quarter of the year for this segment. The improvement was mainly driven by higher freight rates and increased earning days. Operating profit of USD 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 conditions. It is worth noting that the preceding quarter included gains from unwinding of interest rate swap of USD 13 million. Profit after tax stood at USD 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 3 2025, amounting to USD 30 million. Excluding the impact of disposal gains and the gain from unwinding of interest rate swap in quarter 3, 2025, profit after tax in quarter 4, 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 quarter. Revenue stood at USD 117 million, representing an increase of USD 22 million compared to the corresponding quarter of USD 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 USD 43 million compared with an operating loss of USD 29 million in the corresponding quarter, although marginally lower than the USD 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 USD 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 USD 43 million amount due from PCPP, which I have mentioned earlier. Compared with the preceding quarter, operating profit was marginally lower than USD 48 million recorded in quarter 3, 2025, mainly due to higher costs recognized during the quarter, including the provision of FPSO Bunga Kertas costs 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 USD 16 million compared with a loss of USD 43 million in the corresponding quarter but lower than the USD 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 USD 139 million, lower than USD 187 million recorded in the corresponding quarter, but higher than USD 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 USD 13 million compared to USD 6 million in the corresponding quarter and USD 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 USD 12 million compared to USD 5 million in the corresponding quarter and USD 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. So if I can just summarize briefly on the 4 business segments. We continue to see the drop in performance of Gas business as we have been highlighting this in previous quarters as well. And similarly, we have taken less small impairment this year compared to 2025. And as I mentioned, the biggest contribution is the impairment of Seri Balhaf and Seri Balqis. These are the 2 vessels that is contracted to LNG. For Petroleum segment, we have seen they have managed to improve their operational performance and striding the market 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 the cash flow, which we see for Heavy Engineering, we see stable profitability and they recorded for [indiscernible] in the black. That's what that I have sharing the financial performance. So I'd like to conclude my briefing, and I'll pass back to Faizan.

Thank you, Afendy. Next, I'd like to invite Encik Raja Azlan for the market outlook environment.

Thank you, Faizan. [Foreign Language] 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 vessel -- new vessel orders, I mean oversupply of vessels, high newbuild prices, continued regulatory uncertainty 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 to 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 U.S.A. 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. LNGC 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 low-emission vessels. The idle fleet is also likely to expand with 20 to 25 steam LNGCs 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% to 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 Suezmax and VLCC orders placed over the past 2 to 3 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 ton-mile 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 oversupplied, keeping freight rates elevated through the first quarter of 2026. Our Petroleum Products segment continues to demonstrate resilience, and 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 $220 billion by 2030, surpassing the levels seen in the mid-2010s. This trend reflects a 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 '26 to 2030 is estimated at around $80 billion. Close to 90% of these new projects is concentrated in Latin America, Asia Pac and Africa, and MISC is positioned to capitalize on this up cycle 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, and thank you, and back to you, Faizan.

Thank you, Raja Azlan. [Operator Instructions] We will begin the Q&A with a question from Raymond.

This is Raymond from CGSI. So 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 3 Balhaf and 3 Balqis. So just to confirm that these 2 ships alone would account for the entire impairment? Or are there other ships as well? And the impairment loss on receivables, is that impairment on the receivables from Yemen LNG, just to double check? And also, when you disclosed the LNG loss of USD 96 million in the fourth quarter, does that include -- does that deduct for the impairment on the vessels as well as the impairment loss on receivables? So whether those 2 one-off items were actually deducted from the USD 96 million that you disclosed for the fourth quarter? And the last question on LNG is the associates. I think you have 7 vessels from -- that are chartered to Qatar LNG. May I know how much that contributed to the earnings in the fourth quarter as well as 2025?

Thanks for the question, Raymond. So maybe I'll address the Gas vessel impairment. So during the quarter 4, 2025, our total impairment is about USD 84 million. As I highlighted in my briefing earlier, $50 million of that is relating to Balhaf Balqis. So it is not -- it is mostly relating to Balhaf Balqis. So what we have taken this year or in quarter 4 is that previously Balhaf Balqis, which is contracted to LNG, we have valued based on value in use discussion internally with 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? So hence, for quarter 4, we have accounted 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 LNG. So that's the impact of the impairment of $50 million. The second question, if I can recall, you were asking the impairment on receivables. The impairment on receivables is relating to amount due from PCPP, which is in the Offshore business. In fact...

Sorry, what's this? EC...

PCPP, PCPP operating company, right? So...

What does it stand for, sorry?

PCPP -- this has been outstanding. If you look in our notes in both, we actually have a continuous note on this litigation with PCPP, right? So we have this amount of $43 million that has been outstanding for over, I think, close to 10 years. So hence, again, similarly, internally, we have taken a position that we will take an impairment given the uncertainty of the recovery of this from an accounting standpoint. So I think you asked the question on Yemen LNG, all the receivables of Yemen LNG was taken in 2024. So there's no more receivables taken in respect of Yemen LNG in 2025 at all.

Okay. So this impairment loss on receivables was offset against the offshore sector, was it?

Correct. Yes. You're right.

Okay, okay. Understood. And how about the QatarEnergy LNG charters, how much did it contribute to your share of associates for fourth quarter in 2025?

The contribution from the joint venture for 2025 is quite still minimal, is less than $2 million, right? Given if you -- what we have done is, like mentioned by, I think about 7 vessels over the last, what, 6, 7 months, the second half -- effectively second half 2025. So we -- and I think I mentioned this either quarter 2 or quarter 3, so as we received those vessels, what we did was we have a setup cost. So the setup costs, including the full depreciation of those vessels effectively negated the revenue that's generated by those vessels. So 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 than in 2025.

So there were some setup operating costs and also the depreciation impacted. But wouldn't you be able to -- I mean, you will get the full-time charter revenue from day 1. I don't really understand why the earnings will be so low.

Because, okay, I said, we will get some of the vessels we 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 this. We depreciate the full month. So we may get, let's say, 1 week of revenue if it is delivered in the last week of the month, right? But the depreciation is taken on a full month basis. So overall, that has, to some extent, impacted the financial performance of these vessels, especially in the year it's being delivered.

Okay, sure. Then if I look at the front page of the P&L, right, you have 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?

Yes. The significant amount is that is the recovery of insurance for FSO Benchamas 2, USD 75 million. So we actually received that in quarter 4, 2025.

Okay. And what did you insure against that you could claim against the insurance company?

So what happened is we swapped BUK, Bunga Kertas. FSO Bunga Kertas with Benchamas, right? And part of the agreement is that we had with the charterer is we are able to basically claim significant amount of insurance from Benchamas 2, and that's the money that we have kept ourselves. Because you have to also remember, I think in 2023, we actually incurred a significant amount of cost to repair Benchamas as well as to bring it to the yard upon the completion of BUK. So those are part of the deal where we are able to claim those insurance -- claim the insurance recovery for Benchamas 2.

There was an incident, Raymond, back in '23, if you recall, where water came -- went to the engine room, and so it was declared a total loss, right? So these are the insurance to compensate for the total loss situation.

Next we have a question from Azim.

Just a couple of questions also to follow up on Raymond's question earlier. I think on the impairment just now you mentioned $50 million out of that $84 million comes from Seri Balhaf and 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 have come out from the long-term charter with PETRONAS or PLSB. These are steam vessels that we are not able to find charter for them, right, on the spot rates. So as a result of that, from a value end use, there's not much value. Hence, we have been depreciating. And on a quarterly basis, we benchmark the book value against the market value. So we have seen about 30% drop in market value throughout 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.

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%.

60%.

Right. And also, may I know what is 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 layup.

Right. So basically now almost 100% all on long term?

That is correct.

And also, may I know in terms of all this long term, what's the sort of average rate as compared to the current spot rate for LNG?

I mean we can't disclose those because those are all contracted rates.

Roughly, is it like higher or lower in general?

The term rates are definitely higher than the current spot rates for the LNG vessels, right? Especially for the steam vessels, I think the rates are...

Now we have that.

That was shared by Raja Azlan.

Because the current spot rate, especially steam, very low, at $10,000 to $15,000 a day. 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.

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% to 25% against about 10% in 2024 for the petroleum vessels.

And for going into 2026 will be around the same as well, 20%, 25%?

That's right. That's right.