Seatrium Limited Unsponsored ADR

Ladies and gentlemen, a warm welcome to Seatrium's Financial Year 2024 Results Briefing. I'm Judy from the Investor Relations and Corporate Communications team.

Seatrium announced its second half and full year results this morning before market opened on the SGX. With me today, I have our Chief Executive Officer, Mr.

Chris Ong; and our Chief Financial Officer, Mr. Adrian Teng.

We'll kick off today's briefing with the CEO's address, followed by the CFO and a question-and-answer session. I'll now pass on the mic to Mr.

Ong.

Thank you, Judy. Good morning, and welcome to Seatrium Group's Full Year 2024 Results Briefing.

I'm pleased to have with me Mr. Adrian Teng, Chief Financial Officer.

2024 was a fruitful year for Seatrium, marked by strong order wins, a decade high order book and most importantly, a return to full year profitability. The progress that we have made is reflective of our collective determination and hard work.

But this is just the beginning for us in our transformation journey. As we go through the slides, I will outline how we are building a strong foundation to achieve our long-term targets.

In financial year 2024, our revenue grew to $9.2 billion, an increase of 27% year-on-year, as we recognize revenue from the execution of our larger order book, and we also saw more higher value activity in repairs and upgrades. Underlying EBITDA improved to $771 million for financial year 2024.

Reflecting our increased revenue and disciplined approach to cost management, we recorded a turnaround to full year profitability. Underlying net profit for financial year 2024 was $200 million compared to a net loss of $28 million last year.

The Board of Directors has proposed a dividend of $0.015 per share for financial year 2024. We want to thank our shareholders for their patience and continued trust in Seatrium.

2024 was a busy year for Seatrium, as we focus our efforts on operational excellence and strengthening our balance sheet. We delivered 7 projects during the year, including Singapore's first newbuild membrane-type liquefied natural gas bunker vessel.

The Repairs and Upgrades business segment also saw a strong activity with the group completing 231 projects. We have strengthened our balance sheet, reduced debt, as well as divest noncore assets, which has freed up resources for reinvesting into enhancing our capabilities.

The cash dividend of $0.015 per share for financial year 2024, if approved by shareholders at the upcoming AGM, will be paid on 19 May 2025. We will continue to focus on our growth and reinvesting in our capabilities to scale the business.

We achieved a strong net order book of $23.2 billion, a 43% increase from $16.2 billion in the previous period, including $15.2 billion worth of new orders secured from both new and repeat customer. On 13 February 2025, we announced a MOU with BP for Tiber floating production unit, and this will be BP's second project with us, with the first being Kaskida FPU.

The Tiber FPU contract award is subject to FID, which we're expecting later this year. Our sizable new order wins reflect the continued confidence that our customers have in our strong project execution and operational excellence.

In particular, it underscores the success of our series-build franchise, which allow us to achieve operational efficiencies from project repeatability. In the offshore wind space, we are executing a series of 3, 2-gigawatt offshore converter platforms, 2 wind turbine installation vessels and a heavy lift vessel for installation of larger wind turbine foundation.

For our first Jones Act-compliant wind turbine installation vessel built in the U.S., we recently completed the jacking trials and have commenced on field specific installation. The vessel is 96% complete and will be delivered this year.

In the oil and gas space, our net order book includes 6 new build FPSOs for Petrobras. Our third and fourth FPUs that leverage the group's proven topside single lift integration methodology as well as a number of topside fabrication and integration projects.

As we expand our franchise of series-build projects, we will continue to enhance productivity, reduce construction time and rework and ultimately improve project margins over time. When Seatrium was formed, we reviewed our global operation and established our One Seatrium global delivery model.

This unique end-to-end model centralizes our global expertise onto a single operating platform, ensuring consistent and efficient delivery of solutions to our customers. To enhance operational excellence, our yards are supported by engineering and technology centers of excellence internationally.

The slide shows the current status of P-78 FPSO project for Petrobras at Seatrium's Benoi Yard in Singapore. Topside modules fabricated by our yards in Brazil, China and Singapore are being integrated onto the hull.

We expect to deliver this project in the later part of this year. We have also achieved a significant milestone on Beta offshore converter platform for TenneT.

After almost 18 months of engineering and procurement work, we celebrated the topside Strike Steel ceremony in September 2024. This marks the start of construction on the platform.

In FY 2024, revenue from the Repairs and Upgrades grew 7% to $1.1 billion, driven by higher revenue per vessel as compared with financial year 2023 despite fewer vessels worked on. Maritime decarbonization and fleet rejuvenation continue to drive demand in this part of our business.

We signed and renewed several favored customer contracts in 2024, bringing our total favored customer contracts to 22 today. These contracts provide us with revenue visibility and enable forward capacity planning.

Seatrium plays a critical role in greening the maritime industry, which is a key contributor to global carbon emission. We recently completed the world's first onboard carbon capture and storage retrofit on Clipper Eris for Solvang.

The vessel is expected to be able to capture and store up to 70% of its CO2 emissions. We have also secured a second CCS retrofit project from Mitsui OSK Lines, establishing our track record in this growing space.

At Seatrium, we are advancing the development of new technologies. Our vision is to harness technology to engineer new solutions for offshore, marine and energy industries.

We achieved several milestones on this front during the year. One of the exciting development is developing our own onboard carbon capture system.

Our technology company, Aragon, delivered a CO2 liquefaction unit for Capsol Technologies in Germany and Sweden. Together, we are also designing the world's first CO2 handling hub for CCB Energy in Norway.

In the new energy space, we launched the green blue ammonia FPSO solution as part of our low-carbon energy solutions. On offshore floating wind, we received in-principle approval from DNV for 2 of our proprietary designs.

About 2/3 of the world's jackup rig fleet are based on Seatrium's designs. Our suite of design offerings enable us to provide solutions in rig design, equipment supply and maintenance.

In 2024, we expanded our footprint with a new office in Saudi Arabia and entered into partnerships with ARO Drilling and Cochin Shipyard. We announced yesterday that we have been awarded a contract from International Maritime Industries for the supply of equipment and license for jack-up rig, Kingdom 3.

At Seatrium, sustainability is at the core of our business. We aim to be a positive force for change, as we create long-term value for our stakeholders.

On the environment front, about 34% of our net order book comprises of cleaner green projects. In addition, we achieved a 30% reduction in Scope 1 and 2 greenhouse gas emissions, moving us closer to our goal of a 40% reduction from 2008 levels by 2030.

A sustainable and resilient business requires strong corporate governance. We are committed to upholding the highest standards of discipline, ethics and compliance worldwide.

Our major operating entities globally achieved the ISO 37001 anti-bribery management system certification in 2024. Regarding the joint investigation by Monetary Authority of Singapore and the Commercial Affairs of Department, we are cooperating fully with the relevant authorities and hope to resolve this matter soon.

2024 was a pivoted year for Seatrium, as we establish our foundations as a newly formed company. Today, Seatrium is a much stronger global player, providing engineering solutions for the offshore, marine and energy industries.

The need to address energy security, while transforming towards cleaner energy globally presents significant market opportunities despite near-term geopolitical volatility. Our focus on oil and gas and renewable solution, as well as maritime upgrades position us favorably to capitalize on the energy market tailwinds.

We have set our 2028 EBITDA and ROE targets and have established the pathways to achieving them. Supported by a diversified portfolio and multipronged strategy, the group is making good progress towards these targets.

Looking into 2025, Seatrium will continue to seek profitable growth. With a strong order win momentum in 2024, the group will stay focused on executing its robust order book, which underpins revenue and cash flow visibility over the next few years.

I now will hand the time over to Adrian to take you through the financial review. Thank you.

Thank you, Chris, and good morning to all. I will now take you through Seatrium's financial results.

Seatrium's revenue for the full year '24 was $9.2 billion, a 27% increase from $7.3 billion in '23 due to project execution and higher value work in Repairs and Upgrades. Underlying EBITDA grew 23% to $771 million for '24, driven by increased revenue, lower general and administrative costs and divestment of noncore assets.

FY '24 underlying figures excludes legal and corporate claims, a different basis from the FY '23 underlying figures, which exclude write-downs, provisions for onerous contracts, legal and corporate claims and merger expenses. We have taken the view that provisions for contracts are part of our ongoing operations and are now included in our '24 underlying figures.

In FY '24, Seatrium achieved our first full year profit. Underlying net profit was $200 million, achieving a positive swing from an underlying net loss of $28 million in FY '23.

Today, Seatrium has a stronger balance sheet. As at end December '24, net current assets stood at $554 million, a significant improvement from $55 million at end '23.

In the second half of '24, revenue grew 18% to $5.2 billion from $4.4 billion for second half '23, resulting from steady execution of our larger order book. Second half revenue were mainly from the 6 FPSO projects for Petrobras, the 3, 2-gigawatt HVDC offshore converter platform projects for TenneT, and increased contribution from Repairs and Upgrades.

Second half underlying EBITDA was $381 million. This was generated through higher revenue and lower general and administrative expenses, offset by incremental project costs.

Underlying net profit for second half '24 more than doubled to $85 million, attributable to lower interest, depreciation and tax expenses from underlying EBITDA. At our Investor Day in March '24, we announced a target to achieve a recurring $300 million annualized savings through synergies and overhead reductions by end '25.

I am pleased to announce that we are on track to achieve this target within the time frame. We have also identified procurement savings of $200 million from existing projects being executed.

Some of these savings have been realized since we first set the target in March '24, and we will realize the remaining savings over time. During the year, we strengthened our balance sheet with active loan repayments and refinancing activities, including securing a $400 million green revolving loan facility.

As at end '24, Seatrium's net debt stood at $689 million, a reduction from last year's $747 million, representing an 8% reduction through progressive and active repayment of loans, offset by increased working capital project needs. Seatrium's net leverage ratio was 1.1x at end '24, down from 3.2x at end '23.

Seatrium is proposing a dividend of $0.015 per share, amounting to a total dividend of $51 million. This distribution reaffirms our continued focus on generating positive long-term shareholder returns, while maintaining a disciplined approach to capital management.

Net cash from operating activities was $97 million, mainly due to higher working capital needs for ongoing projects, offset by lower interest expenses. Overall, free cash inflow for FY '24 was $218 million compared with $505 million for FY '23.

as the decrease in net cash from operating activities was partially offset by proceeds from the sale of noncore assets and dividends received. We have adequate liquidity of over $3.5 billion of cash and undrawn credit facilities to support our growth initiatives.

During our Investor Day, we announced our target to have 50% of our borrowings from sustainability-linked or green facilities by 2028. I am pleased to announce that we have achieved that target ahead of time, solidifying our ESG commitments.

We have also reduced our weighted average cost of debt to 4.9% as at end '24 compared with 5.7% at end '23. Meanwhile, our weighted average debt maturity profile has been extended to 29 months at end '24.

Year-to-date ' 25, our net order book stood at $23.2 billion, up from $16.2 billion in the previous period. Our order book comprises 27 projects with deliveries till 2031, giving us revenue visibility and a good foundation for the years ahead.

With that, we have come to the end of our presentation, and we will now proceed with the question-and-answer session. Thank you.

Thank you, Chris and Adrian. I'll now open up the floor for Q&As.

For those of you who are here in person with us, please raise your hand so that we can pass you the microphone. Please state your name, company and question.

We've got a question from Rahul here.

[Technical Difficulty]. Rahul Bhatia from HSBC.

Three questions, please. First, could you provide some color on revenue recognition for 2025?

Second half '24 was very strong. Can we take that as a base or second half '24 jump was down to some one-off significant milestones?

Second, evolution of cost of debt has been really good over the last 12 months, coming down nicely. Do you see more room to take it further lower?

And finally, you had a recent win on Jackup rig. Congratulations on that.

In past, you had always mentioned that new orders would be away 12 to 24 months. How are you seeing this time line now?

Thanks, Rahul. I'll quickly answer that.

I think I'll let Adrian take the debt question. I guess, the revenue recognition is always based on percentage of completion of our projects.

So it's not defined that it will be constant. But with the volume of work, I think that's a good gauge for the time being.

Now for jack-up market, I mentioned that we don't -- we will not see a meaningful renewal of jack-up fleet for the near term. And remember that I also said that any significant orders or movement will come from NOCs.

So for this case, that the one Kingdom 3 that we are participating in, it is for Saudi Aramco at the end of the day. So I think we still stand by that.

The market has to see a lot more liquidity. After the merger or the few drillers, I think that they would have to also, just like Seatrium, take a look at their balance sheet and also opportunities with their customers.

So I think the renewal of fleets will come later. So -- but our team -- this signifies our team still in the market looking at MRO or even the opportunity to be able to basically license our design for other yards to build.

I think this is not new because when you talk about LeTourneau 116E, it is a proven design that Seatrium has, and we will continue on that potential market model, right.

Thank you, Rahul. On the question on the cost of debt.

And yes, you have rightly acknowledged over year-on-year, we reduced our weighted average by 85 basis points, which if you apply it on our $2.6 billion of gross debt, that represents a significant interest expense savings. For sure, we're not going to rest on the laurels at that point.

I do have a very aggressive target for my treasury folks to continue to chip away the margins that we get from our very supportive banks. But certainly, it's something that it is laser focus for us.

And hopefully, this time next year, I will be able to demonstrate further improvement on that number.

Thank you, Rahul, for your questions. We've got some questions from Mayank.

Oh, Amanda?

Why don't Amanda go first?

Yes. Okay.

Amanda Battersby from Upstream. Two quick questions, if I may.

And firstly, congratulations on the return to profit and the very high order book. Chris, you mentioned earlier that you were going to be looking or Seatrium was improving margins on FPSO and other projects.

Can you share any figures or percentage points of what you hope to achieve in that increase, please? And secondly, does Seatrium still have the yard capacity and enough sufficient workforce to take on more FPSO projects?

Thank you, Amanda. Well, margins, I've always guided gross project margin of mid-teens before.

And that stands in our investment committee when we take a look at all risk adjusted because there are different risk profile of all projects. Some of the customers are a lot comfortable to share risk.

Then there will be plus and minuses along the way. But when I mentioned just now about improving margins, I think that's what we are -- management is here for.

When we first educated on the largely repeating order profile, none of them are actually 100% the same, same like when we were building rigs, right? None of them were actually 100% the same.

But what it meant for the people executing the job would be familiarity or standards and relationships and also supply chain control because when you start doing projects, they are largely similar, you are able to basically control and also mitigate supply chain weaknesses. That -- those are all very important.

And that drives to the next question, right, whether do we still have capacity. I think, again, it's very difficult for me to say how many percent now that we operate on a global, and we are able to basically take a look at how do we allocate capacity right now as a global company.

And one of the biggest tool that we are using is centralized global planning. which means to say that when we take a look at all the projects that we are going to acquire, basically, the opportunity and permutation is almost infinite.

I wouldn't say that we have infinite resources, but what I'm saying is at least it allows us to put the best and most productive operation model for the contracts. I think that I shared the last time, if I really need to have a figure, it would be roughly about 70% to 80% loaded.

But this doesn't mean that we only have 20% to 30% to fill because all the projects have different time line. And on top of that, not all our facilities globally are equally loaded.

So I think there's a lot of opportunity. And the One Seatrium delivery model, I cannot emphasize enough, really unlock the value and the ability for Seatrium to react to a customer requirement.

Move on now to Mayank from Morgan Stanley with his questions.

Yes. Mayank from Morgan Stanley.

Chris, first, a big picture question on the industry itself. In your conversations that you've had with energy majors, whether it's on the power side or oil and gas side, how are you kind of seeing confidence levels in terms of giving new orders?

And how do you think Seatrium is kind of positioned because you have one reason -- announced a couple of orders in the start of the year anyways. How are you thinking about the road ahead?

And the second question was a bit more on the numbers. This was on provisioning.

As Adrian said, that now it's kind of part of your base case kind of calculations. How are you thinking about provisioning?

And also, if you can just talk a bit more about synergies that you highlighted in your slides, how are you -- what has happened there and what more can be done there?

Thanks. I think those are very wide questions.

I will try my best within a short time. Now in industry itself, we all know that I think not only the energy business, I think globally, there are a lot of volatilities and uncertainty that happened almost overnight in January.

But I think that the key focus here is that is the reason why when we had our first Investor Day, we were very clear that we can't control the geopolitical situation. And back then, we would never have [guessed], right?

But the key thing is about focusing on ourselves, what are the capabilities that we are going to build. And on top of that, get our ability to scale quickly into place, which I think we have demonstrated.

The order book wins is a very important indication for us, meaning to say that fundamentally, the foundations are viewed by our customer that the team has gelled very well so that they can place billions of dollars of contracts with us. Now moving forward, we think that there will be, of course, volatility.

I think first thing, first, the economics will have to work. Definitely, there are trade tariffs and all this that are coming up every day.

We don't know what is the outcome of that. But suffice to say, I think for energy projects and products itself so far, I think that the customers are still talking to us.

I think the ability to basically have quite a varied group of customers securing contracts from them early in the year have shown the confidence of them taking FID of their own projects. Plus, I think we give a good proposition considering against our -- some of our competitors.

I think moving forward, the confidence is a function of how much risk capital are you going to put in, right, into your projects. Some of the projects mostly are 3 to 4 years.

So I think there will be a lot of consideration in the boardroom on how do you mitigate that risk. I think Seatrium is able to provide quite a good solution for all our customers using our ability to put components in different parts of our yard.

So I think the long or the short, definitely, everybody are viewing the same volatility and issues in our boardroom. I think everybody will -- this is a big topic.

But the key thing, what we can do is just focus on the fundamentals. And I think -- again, I always stress on this One Seatrium delivery model.

One part of it in the uncertain world is the ability to choose, where you want to construct your components. And I think integration in Singapore is a very powerful tool for a lot of our customers.

So I think even for offshore wind or different part of the products, we are also keeping very close to our customers and providing solutions for them, all right? So I don't know whether I answered that question, but I think we need a much longer time for a conversation on that.

Now the next one is about numbers of provisions and all this. I think that the move for us to take that number and project provisioning into our underlying numbers signify the confidence of the management to basically resolve project issues.

And I think the commitment is that, well, every project will have their issues along the way. When it comes to regular year, you will have to assess what are the risks that you're exposed.

But that doesn't mean that overall, the projects are not being looked at for us on margin recovery too. So I mentioned all we are very focused on is to get those out of the system, and we move on with life.

Now that is also one part of how we're going to improve our margin, right, for sure. A bit on costs.

I think all -- everything that you have said already covered almost all that we are really focusing on orders, margins and now costs. Now costs, Adrian will elaborate, I guess, a bit more.

I just want to say something about -- we have came out to the market when we first merged both organization, and we said that we are not going to cut headcounts, right? And today, we are actively deploying our people, and we are very focused on productivity.

So if we take a look at the cost figures in terms of nonproject overheads and also on the onetime project costs, signify 2 areas that we are really laser-focused on. One is to optimize how Seatrium is going to have our processes streamline that, be light and be able to basically be a lot more nimble.

And I think that the progress, as what Adrian has mentioned, we are bullish that we will be able to hit our target as promised. For project, onetime it's an ongoing with a new system, new way of functioning.

I think to be able to hit that, and we said that we are very confident of hitting that shows that the team is confident of our project execution, right? So I think that's long of the short.

Do you want to add something?

Sure. Thank you, Mayank, for your question.

I think just to add on the point of provisions, I think one has to note we have to adhere to accounting standards. So that, I think, is the golden principle.

And it's not for us to decide not to put in or to take it out. That's one point.

I think second is, as Chris has mentioned, over the course of project life cycle, you will have addition of provisions, you will have subtraction of provision. And also at the conclusion of the project, we will also then have claim settlement, and we have then potentially a write-back of contingency cost or provision.

So I think one shouldn't get too hype up on a provision per se, but it's really managing the project over its life cycle. On the point of synergies, we have made massive headway.

I think I've said before, we, as a group, are very much on track to achieving those numbers. What are the things we have done?

Clearly, on procurement, on supply chain optimization is a big focus. Actually, also on pricing, customer pricing has also been optimized.

There is uniformity with regards to discounts and how we apply that and how we negotiate with our customers and also from a contracting perspective. Utilities, that's a big area of cost savings.

As you can imagine, the amount of utilities that we consume collectively, if you just negotiate a better rate with your vendors, that drops immediately to the bottom line, as well as labor force. I mean, part of the challenge, of course, is getting the quantity of labor.

And we have always said no firing of people, but it's also about labor optimization. So that is also translating into OpEx savings for us.

So we will continue to work on all of these initiatives as we work towards that $300 million annualized target.

From there, you can see that we are all very passionate. I guess, the bottom line is that, no stones are left unturned.

Yes, Horng Han.

Horng Han from CLSA. My first question is with regards to the gross margin in the second half.

We do understand in 2024, you have some loss-making contracts, which I think affected your margins. But if you look at second half 2024 margins at gross level, it seems rather soft.

Can we try to understand the drivers behind this? Were there some provisions or were there some specific projects that you may have faced cost overrun?

Horng Han, short answer, yes. As you can see from the accounts, we put in $43 million of additional provisions in the second half, which then adds to the first half numbers.

There are -- but again, as I mentioned in my reply to Mayank, that is part and parcel of project execution. 2024 ultimately is the first full year of Seatrium operations post the combination.

We are working through the order book. There are challenges, as always, with any ongoing project, and we have taken the view to provide for some of these projects.

My second question is with regards to your cost savings of $300 million target, which is on track by 2025. Can we understand how much of this has been realized in 2024?

At this point, we're not guiding a specific number, but we can say we are very much quite close to that ultimate number that we're talking about.

My last question is, is there any update with regards to TenneT contracts?

Well, TenneT contracts, existing one, we have shared. We have started work.

You will see the 18-storey platform appearing at a skyline. As for future allocation, they have came out to say that they are still on track.

It all depends on their economics and when they are ready to pull the trigger. I think the team has been working very closely with TenneT, but I mean, that will really depend on when they are ready to award.

But right now, they are actually looking -- I believe that there are 26 more, they are still on track to go.

Okay. I think the initial expectations was we could see some potential contracts to be materialized in the first half of this year.

Given the change in the macro environment globally over the last 3, 4 quarters, do you think they could have been pushed to the right in terms of time line? Or you think it's relatively intact?

Not so sure. But at the same time, if I'm not wrong, they have came out to the market and also to actively engage our team.

So time line-wise, it will really depend on, like I said, when -- just like FID or a project, when they are ready to go. But we definitely did not see softening of engagement with our team.

Yes, Siew Khee.

Siew Khee from CGSI. Just following up on the gross margin.

If we were to remove -- I know that provision for onerous contracts are part and parcel of your work. Is there any other -- and previously, we understood that onerous provision is for the U.S.

projects. In this half, is there any new projects that have been categorized in that category where you need provision for onerous cost?

Adrian, do you want to take it?

Yes. So the U.S.

projects continues to be challenging for us. There is incremental provisions associated with those projects.

So at this point in time, that's where the provisions -- the bulk of the provisions sit.

Because your onerous provision actually came down half-on-half. So actually, that helped a bit in your gross margin half-on-half if we exclude that.

But just wondering if you did anything extra for other projects?

Not materially.

Okay.

I just want to clarify that point. We don't track year-on-year provision amount.

So my point is that, the key thing is, we will do so when it's required by accounting standards. And at the end of the day, I guess, there's a lot of question around this.

I just want to make sure that we are looking at some of the metrics. If we take a look at gross, definitely gross is important.

But remember what we mentioned previous half when we asked the same question was take a look at probably the EBITDA number, which is a better reflection because if it's difficult to take a look because the gross number do have some of our overhead assignment and all this inside there. So do take a look at the EBITDA number closely.

Okay. Just following on that, when will the U.S.

projects, the dredger and WTIV be delivered? Does that mean that when we deliver the provision for onerous contracts will be substantially declined?

I know you said it will be delivered this year, but can you be more specific on which quarter project?

Yes. I think there are 2 projects over there.

First, for the Dominion WTIV, we have shared that it has done its jacking trial, which is the most important milestone. We have started on some installations specific requirement by the client.

That will take some time. But suffice to say that our work is largely done, 96% of it.

So it's not about where specifically we will deliver her. The key thing is about the amount of work that we need to add on for her to be ready for the field.

So that is the main thing that's holding. And, of course, after we do the modification, we'll probably have to do the sea trial.

Now, for the dredger, I think the physical work is done. So the key right now is to start it up, and I believe that there are some equipments that we need to get fired up, then she will go for a sea trial.

So that is the status.

I just have 2 more questions. Is U.S.

going to still be a market that you will closely keep following and then just track in terms of how industry is going to progress? Or after delivering these 2, you might be looking at your strategy?

You mentioned you had 2 questions, right? Yes.

Can you ask both?

Okay. And also just on -- actually, just 3 more.

In terms of order outlook, knowing that we are not sure when TenneT is ready. And also last year was really, really a good year.

How should we be looking at in terms of order win? And I know that it's lumpy, but maybe just like a gauge or active sizable bid that you are working on, I think that would be very helpful.

The other one is just your thoughts on why do you need to declare dividend when you are still trying to work things up?

Okay. U.S., I think that -- I guess, when you asked that question, it's probably about the 2 projects, but not to forget, the team did deliver the [indiscernible] Salamanca profitably.

So there is -- I think U.S. remains a very important market for us.

Depending on what projects come along the way, it doesn't mean that when we say U.S. market is important, it depends on what products that the customer need.

If it makes sense for us to do Jones Act, then we will have to relook at project execution and margins. But U.S.

as a whole, I know that there are a lot of volatility uncertainty politically. But if you take a look at how we approach the U.S.

market, there's really multipronged. The ability to win BP actually is quite big for us.

The FPU market for the Gulf -- U.S. Gulf is important because then we can put that in a series and say that we have a good series of U.S.

projects over there. We have also delivered at least sail away the offshore wind project for Revolution Wind.

So there's still some platforms inside here for U.S. market.

So I think U.S. as a geography is an important market, definitely.

I think majority of the stakeholders are still there. Whether we will build Jones Act, I guess, that's the question.

And I think it really depends on the need. I guess, at this present moment, we need to take a look at what is the ships for America Act very closely.

But technically, I mentioned we are traveling to U.S. quite frequently.

Okay. The other one is global outlook and order wins.

The commercial guys are working very hard. It's not -- last year was really exceptional.

Of course, I always said that project wins are always very lumpy, and it doesn't respect financial years. So it's really dependent on how the customers FID their contracts.

This year, we have an active pipeline, and we are going after it. We have quite a good start to the year with 2 good news, 3 good news now.

So it really depends. I think if you talk about pipeline that we're chasing, it is still very active.

So hopefully, more of them will FID within this year, and then we can come in with a good order win news, right? And dividend.

Dividend, I guess, dividend we want to have a real balance between rewarding our patient shareholders versus reinvesting in our capabilities. So we are not really very leverage in terms of the quantum because we are still in the midst of growing and in the midst of integrating and executing our order book.

But at the same time, I think it's important for us to at least show appreciation to our shareholders, right?

If I could add on that dividend question. I mean, clearly, it was a very, very considered position.

I mean, we do not take retained earnings distribution lightly. As you rightly pointed out, we are only second year of combination.

But I think what it demonstrates is, management's confidence that we have the right level of liquidity, funding, balance sheet stability to be able to provide some returns to our very patient shareholders. Clearly, we balance our retained earnings with our capital needs for our own investments, for growth, for potential even M&A considerations, balancing all of that, balancing also the need of our shareholders, discussed with the Board thoroughly, and we have came out to this position, which I hope will be well received by the market and by the shareholders.

One more question here from Felicia.

Felicia from The Edge. Since you mentioned the market, I was going to bring up that question.

Actually, Seatrium's share price fell. So what are your thoughts on that?

Are you guys disappointed? I mean, considering you guys actually make profit and are giving dividends?

Sorry.

We actually don't track our share price day-to-day. As mentioned, I think the right for the last 2 years, we see that the share price did swing a bit, but due to various reasons.

But I think the management is now very focused basically to get the foundations and set that foundation strong and then, of course, operate profitably safely, right, and be able to have that competitive edge with the integration and the ability to control supply chain globally. So I think that's what we can control.

How the share price move, I think when we show results, we will definitely hope that the market will actually appreciate that move, right?

We actually have a big online audience. So we'll move on now to some questions from our webcast audience.

First question from Luis at Citigroup. With underlying EBITDA margins at over 8% and the newer higher-margin contracts starting to contribute this year, what level of margins do you expect to execute in 2025?

Perhaps Adrian, do you want take the question?

Well, we don't provide guidance on an annual basis on margins or actually anything financials. For sure, we continue to try and improve on whether it's gross profit margins or EBITDA margins.

There are multiple levers that we are always looking at, obviously, from both revenue, overheads, direct general and administrative expenses to try and optimize the margins for execution.

Zhiwei from Macquarie has a couple of questions as well. First question, other income in second half '24 was chunky at $46.6 million and included a gain from the settlement of balances.

What is this? And how much is this, please?

A number of the one-off income came from the sale of surplus assets and machinery. And we also had some reversal of claims from our suppliers.

The litigation expenses are primarily related to the Car Wash incident, as well as the reversal of the Keppel liability.

Second question from Zhiwei. Can you walk us through the extraordinary items you used to derive your underlying EBITDA and net profit?

Are there any one-offs in the cost of goods sold for second half 2024 that we should be aware of?

No, there isn't.

We've got another question from [Rajit from Bosch SDS]. Congratulations on the results.

Is Seatrium looking to tender more on specialized shipbuilding projects, especially in niche markets such as LNG bunker vessels or cable laying vessels as Seatrium has been relatively quiet in the specialized shipbuilding project areas?

Well, thanks, Bosch. That's a relevant question.

But we did win the heavy lift vessel beginning of the year. Now, specialized shipbuilding also falls into an opportunistic area that we take a look at.

And with the global assignment of work that gave us a leverage on what type of specialized vessels and what is the margin? I think, again, it doesn't matter what asset are we looking at.

The key thing, again, it boils down to resource allocation. And when we take a look at how we allocate resources, this goes into the same bucket for us to consider.

Basically, are we getting the right margin? And are we able to execute the project properly.

So the answer is yes. But whether are we quiet or loud in winning, that really depends on what are the projects that are in the market and the margins that we are looking at, right?

Because it does have to compete for the same resources that we have within the group.

Next question from Rajit as well. With the One Seatrium delivery model, is it realistic for Seatrium's Tuas Boulevard yard to construct FPSO new build house in the future?

Or does Seatrium plan to continue to subcontract the FPSO house to Chinese and Korean yards as they currently do for the Petrobras projects?

That is a good question. Again, it depends on project to project.

But I think taking a higher-level look at this, when we came up with outsourced model is part of our strategy actually, as we have educated during our Capital Markets Day. And the real reason behind this is about competing to our advantage and be able to scale the business.

I think if your question is about whether will we build our hull here, today, we will have a very different question and answer because the hull do take up quite a lot of labor and space, which we don't have the luxury of in Singapore. But we do have the ability to manage a global project well.

And then that gives us the leverage to be able to subcontract. Our team is able to project manage.

And at the same time, that will allow us to allocate precious resources to more complex areas. And if you can see, it's paying dividend for us.

We didn't plan or look at that scenario, but if we were to build the hull of the FPSO contracts in Singapore, perhaps then we will have a resource crunch. And then the question about how loaded you are, I might be very loaded, but whether I can do more projects or not, that will be a limitation.

So we do have to weigh that in our strategy.

Okay. Next up, we've got Adrian Loh from UOB Kay Hian.

Thank you, Chris and Adrian, for the presentation. Adrian has got 2 questions.

It appears that your average revenue per vessel has increased very strongly in 2024. It's probably referring to the repairs and upgrade space.

Is this sustainable? And what are the reasons behind the strong increase?

Okay. And again, I think I've mentioned this before.

In the R&U business, we are not too hard and fast about the number of vessels per year. The key thing is about what is the addressable market for that year.

It may go up and down. And as what we mentioned, we will always go for higher value-added jobs, meaning to say, again, it's all about resource allocation to get the best return.

And that's why you are able to observe that, that strategy actually pays dividends. We are getting a lot stronger revenue per vessel now.

And -- but that is not a constant because it really depends what ships will come across and what nature of upgrades and repairs will come across. But we are monitoring this closely, and I think that we are playing to our strength around a lot of more technical value add in most of these conversions and upgrades.

As you can see, CCUS is one of the big things that we are able to go to the market and work with the customer to do our very first one.

Okay. Second question from Adrian from UOB Kay Hian as well.

The Trump presidency's new industrial policy appears to favor U.S.-based shipyards. Can management give us a view on this?

And how will it affect your U.S. assets?

I think I've answered this just now, but I think it's premature to understand what the U.S. administration will do.

I think that they are still in the midst of trying to firm up ships for U.S. Act.

So we will keep close and take a look at this when opportunities allow and when the margin allows, definitely, we will be part of it, and we are there. But there are many other different factors that affect this.

It depends on how much the administration are willing to give differentiation to what they want.

We've got another question from Zhiwei at Macquarie. Noted that Seatrium now takes the view that provisions are part of our ongoing operations and included in the underlying figures.

What would the second half '24 and full year '24 underlying EBITDA and net profit be if you excluded those provisions?

Again, we do not provide that level of granularity. I think we have reported our underlying figures, and that's for us, if we start bifurcating certain line items from your version of underlying, then I think there's no end to what underlying represents.

So for us, what has been reported are the figures.

I just want to clarify this to make sure that we are very clear. In terms of provisions are our ongoing operation.

Provisions are accounting standards. So when we assess our accounts at a certain point of time, you do have to take care of risks and opportunities in your numbers.

When we say that it's part and parcel, that doesn't mean that we are signifying the more to come. What we are saying is that, when we take provisions and it becomes part of our numbers, management is confident to take ownership of all these projects under our actual numbers, and that signifies to the market that we are confident we can get it out of the system well, all right?

We've got a question from Amanda first and then later on, Pei Hwa within our physical audience.

I was going to ask a different question, but your comment on hulls being fabricated in China or certainly outside of Singapore has made me change my question. If you're subcontracting holds or rather less technical, this sort of specialized work to China or lower cost basis, would it not make sense for Seatrium to have its own facility in China that could fabricate your hulls and maybe also for other companies?

Well, this all depends about the gainful use of capital at the end of the day for our growth. Whether would we want to apportion that to -- for increased capacity and capabilities or will we want to put it in technology or new ways of working?

Well, there is a return question. Now, for hulls, unless we see that there are a lot of value add for us to have facilities to do shipbuilding, I mean, we are not just going to do FPSO hulls, right?

So you'll be in the shipbuilding type of industry. So that is another consideration that we want to do.

But I think the key thing for us right now is basically to grow the existing approach. And we do have a Chinese facility right now, and it's going to be very full with 17 modules for the P-series.

So I think that any expansion considerations will be very strategic at this moment, but it's working out fine for us. I think the key thing is also to make sure that we have a workforce that are very capable to bring us globally, whether it is to build ourselves or whether we subcontract out with the rest of the people.

We've got another question from Pei Hwa, DBS.

Pei Hwa from DBS. I have 2 questions.

One on the order book. Could you share with us of the $23 billion order book that we have, how much is attributable to projects secured pre-merger?

That's one. Second is for these pre-merger projects, what sort of gross margins?

Could you give us some sense? I maybe know post-merger, we have a target.

How about those that secure pre-merger? Based on current assessment, what sort of margin could this project fetch?

A range is fine, give us some guidance will be helpful.

I don't think I can answer that question because we don't track it that way. I don't have the answer straightaway.

But the key thing is that, because the projects are all huge, so pre-merger is quite tipsy. I think, my Board will also not want us to track that way.

Suffice to say, at what we are projecting for the market today, I think always focus on the 2028 target. When we put that up in the market, it includes everything.

And I think our statement, and I come back to that statement that we are taking in whatever project issues, there will be, right? All these EPC contracts, there will be issues.

And like I mentioned, provisions to me are just accounting standards at the end of the year that you need to do. But we are really looking at the whole life cycle of the project, and we will manage that.

So the 2028 targets, as I always said, we are very focused, and we are very confident that we will reach there. The key thing is that, all this includes whatever that we have today.

So I think that, in fact, should be how the market will be looking at the management today and our confidence around executing those projects.

We've got another question from our online audience. Does the reversal of provision mean that once Operation Car Wash penalty comes through, it is Keppel and not Seatrium paying the bill?

No. That's the short answer, okay.

Maybe I'll just remind everyone the provisions that we have taken. One is with our obligations to the Singapore authorities.

One is for the Brazilian authorities. And the other one relates to a deed of indemnity that the pre-merger deal with Keppel, all right?

What we are reversing now is the indemnity with Keppel, which, in our opinion, will expire on the 28th of February, and that hinges upon settlement with Brazil authorities only. So I think that, that is the long of the short.

It doesn't mean that -- yes, it doesn't mean that Keppel will foot the bill.

I think the numbers are quite clear in the accounts and the provision that was made against this Keppel indemnity that was in the FY '23 accounts, just to be clear, was $82 million. So we are reversing that $82 million in the FY '24 accounts.

Any other last questions? Okay.

We've got -- yes. Okay.

So thank you, everyone, for joining us in person and online at today's results briefing. I wish you a pleasant day ahead.