president/ceo’s report The positive developments as a result of our strategic decisions have placed us in a very strong positon to grow both organically and inorganically. We now have all the elements in place to drive MISC’s sustained growth. OUR STRATEGIC PRIORITIES The financial year under review is the beginning of a new chapter for MISC in our journey of rediscovery and rebuilding. The positive developments as a result of our strategic decisions have placed us in a very strong position to grow both organically and inorganically. We now have all the elements in place to drive MISC’s sustained growth. The low oil price environment and related developments are actually opportunistic platforms for us to grow in a more invigorated manner. The mantra “as they pump it, we will move it” has become one that is embedded within our people’s consciousness and which is spurring us into action. Armed with a host of effective tools such as our new Vision, Mission, Tagline and the MISC2020 corporate strategy, plus a steely determination to remain resolute come what may, the Board of Directors and the management of MISC are confident that we are on track to realise the Group’s full potential and deliver a sustainable performance. Allow me to share some of what MISC2020, our five-year master plan to a c h i e v e s u s t a i n a b l e f i n a n c i a l performance, will entail. Beginning 2016 and ending 2020, the MISC2020 corporate strategy calls for the Group to deliver on two primary objectives, namely: • To achieve a sustainable level of secured profit by 2020; and • To achieve a sustainable return on average capital employed (ROACE) of more than 10% by 2020. In order to achieve a sustainable level of secured profit by 2020, MISC must work over the five-year timeframe to absorb all fixed costs and overheads as well as absorb losses from our cyclical business segments during the worst of cycles. This will ensure that we never fall into the red in the worst of times. Subsequently, to deliver a sustainable ROACE of more than 10% by 2020, MISC must instil the discipline to spend wisely and make the right investment decisions. These overarching objectives call for our core LNG Shipping, Petroleum Shipping, Offshore as well as Marine & Heavy Engineering business segments to prioritise specific initiatives over the next five years. To attain our first objective of achieving a sustainable level of secured profit by 2020, our business segments will pursue these pathways to prosperity: LNG Shipping: With the anticipated decline in LNG profitability, there is an urgent need to build a sustainable stream of secured profit. As such, our LNG Shipping segment will set its sights on expanding its portfolio of third party LNG time charters and ensure they are value accretive despite the current competitive landscape. Petroleum Shipping: Helmed by AET, this segment will shift its business and asset mix to secure more long-term businesses. It will look to attain a good mix of time and spot charters as well as explore expansion opportunities within the niche shuttle tanker segment that will provide long-term secured income to help mitigate any downturn in the cyclical spot market. Offshore: On the Offshore front, this business will explore acquisition opportunities arising from asset divestments by Oil & Gas players globally as well as pursue organic growth when the oil price recovers. Our Offshore business will ultimately move beyond Malaysian shores and expand its international footprint. Marine & Heavy Engineering: This segment under MHB will look to reduce the cyclicality of its revenue streams by developing a larger recurring income base (from the marine repair business for instance) while managing cost and process efficiencies. REDISCOVER I REBUILD I SUSTAIN 78
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